Xylem Reports Second Quarter 2021 Results | Financial Buzz

Xylem Reports Second Quarter 2021 Results

Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported second quarter 2021 revenue of $1.35 billion. Revenues grew 16 percent on a reported basis, and 11 percent organically, reflecting strong underlying demand across all segments.

Second quarter adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin grew 200 basis points to 17.3 percent. The margin expansion was driven by productivity, mix and volume leverage from strong underlying demand. Xylem generated net income of $113 million, or $0.62 per share, and adjusted net income of $119 million, or $0.66 per share, which excludes the impact of restructuring, realignment and special charges.

“Our team capitalized on robust global demand for our offerings, driving revenues above expectations, and fuelling exceptional growth in new orders and backlog,” said Patrick Decker, Xylem’s president and CEO. “That commercial momentum puts us in a strong position for the second half and beyond, as we continue to invest in sustainable growth. We expect the team to build on continuing market recovery, giving us confidence in lifting full-year guidance.”

“During the quarter we also reported progress toward our 2025 sustainability goals – including moving major facilities onto renewable energy, and helping customers recycle more than a trillion gallons of water,” continued Decker. “The report demonstrates the strong link between our business and sustainability strategies. We partner with customers to provide more resilient infrastructure, drive affordability, and create a more sustainable water sector. That’s our purpose and our business. As climate change drives water challenges in communities around the world, we intend to be part of the solution.” (Download Xylem’s 2020 sustainability report.)

Updated Outlook

Xylem now expects full-year organic revenue growth to be in the range of 6 to 8 percent, and 9 to 11 percent on a reported basis. This represents an increase from the Company’s previous full-year organic revenue guidance of 5 to 7 percent, and 8 to 10 percent on a reported basis. Full-year adjusted earnings per share is now expected to be in the range of $2.55 to $2.70. The increased guidance reflects commercial momentum from the first half, as well as continuing demand and price realization in the second half, partially offset by incremental inflation and supply chain challenges.

Second Quarter Segment Results

Water Infrastructure

Xylem’s Water Infrastructure segment consists of its portfolio of businesses serving wastewater transport and treatment, clean water delivery, and dewatering.

  • Second quarter 2021 revenue was $569 million, up 14 percent on a reported basis, and up 6 percent organically, compared with the same period in 2020. Modest growth in utilities was driven by opex demand in Western Europe and the U.S. Industrial end markets were up double-digits driven largely by Emerging Markets mining demand.
  • Second quarter adjusted EBITDA margin was 19 percent, flat versus the prior year period. Reported operating income for the segment was $93 million and adjusted operating income, which excludes $4 million of restructuring and realignment costs, was $97 million. The segment reported operating margin was 16.3 percent, up 170 basis points versus the prior year period. Adjusted operating margin rose 80 basis points to 17 percent. Strong productivity savings and volume offset inflation and investments.

Applied Water

Xylem’s Applied Water segment consists of its portfolio of businesses in industrial, commercial building, and residential applications.

  • Second quarter 2021 revenue was $414 million, up 23 percent on a reported basis, and up 18 percent organically, compared with the same period in 2020. Growth was driven by strong demand across industrial, residential and commercial end markets driven by broad recovery from COVID challenges in the prior year.
  • Second quarter adjusted EBITDA margin was 17.4 percent, up 200 basis points from the prior year period. Reported operating income for the segment was $64 million and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was $66 million. The segment reported operating margin was 15.5 percent, up 330 basis points versus the prior year period. Adjusted operating margin rose 250 basis points to 15.9 percent. Strong volume leverage and productivity more than offset inflation.

Measurement & Control Solutions

Xylem’s Measurement & Control Solutions segment consists of its portfolio of businesses in smart metering, network technologies, advanced infrastructure analytics and analytic instrumentation.

  • Second quarter 2021 revenue was $368 million, up 14 percent on a reported basis, and up 11 percent organically, compared with the same period in 2020. Growth was driven by volume in water applications from large metrology contract deployments, and by strong demand in water quality testing applications globally.
  • Second quarter adjusted EBITDA margin was 13.9 percent, up 460 basis points from the prior year period. Reported operating income for the segment was $13 million and adjusted operating income, with no restructuring and realignment costs in the quarter, was $13 million. The segment reported operating margin was 3.5 percent, up 1780 basis points versus the prior year period. Adjusted operating margin rose 510 basis points to 3.5 percent. Strong productivity savings, favorable mix, and volume leverage more than offset inflation and investments.

Supplemental information on Xylem’s second quarter 2021 earnings and reconciliations for certain non-GAAP items are posted at www.xylem.com/investors.

About Xylem

Xylem (XYL) is a leading global water technology company committed to solving critical water and infrastructure challenges with innovation. Our more than 16,000 diverse employees delivered revenue of $4.88 billion in 2020. We are creating a more sustainable world by enabling our customers to optimize water and resource management, and helping communities in more than 150 countries become water-secure. Join us at www.xylem.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “contemplate,” “predict,” “project,” “forecast,” “likely,” “believe,” “target,” “will,” “could,” “would,” “should,” “potential,” “may” and similar expressions or their negative, may, but are not necessary to, identify forward-looking statements. By their nature, forward-looking statements address uncertain matters and include any statements that are not historical, such as statements about our strategy, financial plans, outlook, objectives, plans, intentions or goals; or address possible or future results of operations or financial performance, including statements relating to orders, revenues, operating margins and earnings per share growth.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Additionally, many of these risks and uncertainties are, and may continue to be, amplified by the coronavirus (“COVID-19”) pandemic. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: overall industry and economic conditions, including industrial, governmental and private sector spending and the strength of the residential and commercial real estate markets; geopolitical, regulatory, economic and other risks associated with international operations; continued uncertainty around the COVID-19 pandemic’s magnitude, duration and impacts on our business, operations, growth, and financial condition, as well as uncertainty around approved vaccines and the pace of recovery when the pandemic subsides; actual or potential other epidemics, pandemics or global health crises; manufacturing and operating cost increases due to inflation, prevailing price changes, tariffs and other factors; fluctuations in foreign currency exchange rates; disruption, competition and pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our products; disruptions in operations at our facilities or that of third parties upon which we rely; availability of products, parts, electronic components and raw materials from our supply chain; availability, regulation and interference with radio spectrum used by some of our products; our ability to retain and attract senior management and other key talent; uncertainty related to restructuring and realignment actions and related charges and savings; our ability to continue strategic investments for growth; our ability to successfully identify, execute and integrate acquisitions; risks relating to products, including defects, security, warranty and liability claims, and recalls; difficulty predicting our financial results, including uncertainties due to the nature of our short- and long-cycle businesses; volatility in our results due to weather conditions; our ability to borrow or refinance our existing indebtedness and the availability of liquidity sufficient to meet our needs; risk of future impairments to goodwill and other intangible assets; failure to comply with, or changes in, laws or regulations, including those pertaining to anti-corruption, data privacy and security, export and import, competition, and the environment and climate change; changes in our effective tax rates or tax expenses; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; and other factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Annual Report”) and in subsequent filings we make with the Securities and Exchange Commission (“SEC”).

All forward-looking statements made herein are based on information currently available to us as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

XYLEM INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)

(in millions, except per share data)

 

Three Months

 

Six Months

For the period ended June 30,

2021

 

2020

 

2021

 

2020

Revenue

$

1,351

 

 

$

1,160

 

 

$

2,607

 

 

$

2,283

 

Cost of revenue

831

 

 

726

 

 

1,597

 

 

1,440

 

Gross profit

520

 

 

434

 

 

1,010

 

 

843

 

Selling, general and administrative expenses

304

 

 

288

 

 

605

 

 

585

 

Research and development expenses

53

 

 

44

 

 

103

 

 

93

 

Restructuring and asset impairment charges

3

 

 

48

 

 

9

 

 

50

 

Operating income

160

 

 

54

 

 

293

 

 

115

 

Interest expense

21

 

 

18

 

 

42

 

 

34

 

Other non-operating expense, net

(3

)

 

(1

)

 

(1

)

 

(4

)

Gain from sale of business

2

 

 

 

 

2

 

 

 

Income before taxes

138

 

 

35

 

 

252

 

 

77

 

Income tax expense

25

 

 

4

 

 

52

 

 

8

 

Net income

$

113

 

 

$

31

 

 

$

200

 

 

$

69

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

0.63

 

 

$

0.17

 

 

$

1.11

 

 

$

0.38

 

Diluted

$

0.62

 

 

$

0.17

 

 

$

1.10

 

 

$

0.38

 

Weighted average number of shares:

 

 

 

 

 

 

 

Basic

180.1

 

 

180.0

 

 

180.2

 

 

180.1

 

Diluted

181.3

 

 

180.6

 

 

181.4

 

 

181.0

 

XYLEM INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except per share amounts)

 

June 30,

2021

 

December 31,

2020

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,840

 

 

$

1,875

 

Receivables, less allowances for discounts, returns and credit losses of $41 and $46 in 2021 and 2020, respectively

975

 

 

923

 

Inventories

642

 

 

558

 

Prepaid and other current assets

166

 

 

167

 

Total current assets

3,623

 

 

3,523

 

Property, plant and equipment, net

626

 

 

657

 

Goodwill

2,841

 

 

2,854

 

Other intangible assets, net

1,058

 

 

1,093

 

Other non-current assets

637

 

 

623

 

Total assets

$

8,785

 

 

$

8,750

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

599

 

 

$

569

 

Accrued and other current liabilities

760

 

 

787

 

Short-term borrowings and current maturities of long-term debt

600

 

 

600

 

Total current liabilities

1,959

 

 

1,956

 

Long-term debt

2,466

 

 

2,484

 

Accrued post-retirement benefits

501

 

 

519

 

Deferred income tax liabilities

264

 

 

242

 

Other non-current accrued liabilities

546

 

 

573

 

Total liabilities

5,736

 

 

5,774

 

 

 

 

 

Stockholders’ equity:

 

 

 

Common Stock – par value $0.01 per share:

 

 

 

Authorized 750.0 shares, issued 195.3 shares and 194.9 shares in 2021 and 2020, respectively

2

 

 

2

 

Capital in excess of par value

2,063

 

 

2,037

 

Retained earnings

2,029

 

 

1,930

 

Treasury stock – at cost 15.2 shares and 14.5 shares in 2021 and 2020, respectively

(656

)

 

(588

)

Accumulated other comprehensive loss

(398

)

 

(413

)

Total stockholders’ equity

3,040

 

 

2,968

 

Non-controlling interests

9

 

 

8

 

Total equity

3,049

 

 

2,976

 

Total liabilities and stockholders’ equity

$

8,785

 

 

$

8,750 

XYLEM INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)

For the six months ended June 30,

2021

 

2020

Operating Activities

 

 

 

Net income

$

200

 

 

$

69

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation

59

 

 

58

 

Amortization

65

 

 

68

 

Share-based compensation

17

 

 

16

 

Restructuring and asset impairment charges

9

 

 

50

 

Gain from sale of business

(2

)

 

 

Other, net

6

 

 

18

 

Payments for restructuring

(18

)

 

(12

)

Changes in assets and liabilities (net of acquisitions):

 

 

 

Changes in receivables

(66

)

 

48

 

Changes in inventories

(89

)

 

(63

)

Changes in accounts payable

36

 

 

(86

)

Other, net

(11

)

 

13

 

Net Cash – Operating activities

206

 

 

179

 

Investing Activities

 

 

 

Capital expenditures

(80

)

 

(95

)

Proceeds from sale of business

2

 

 

 

Other, net

9

 

 

7

 

Net Cash – Investing activities

(69

)

 

(88

)

Financing Activities

 

 

 

Short-term debt issued, net

 

 

359

 

Short-term debt repaid

 

 

(422

)

Long-term debt issued, net

 

 

987

 

Repurchase of common stock

(68

)

 

(60

)

Proceeds from exercise of employee stock options

9

 

 

5

 

Dividends paid

(102

)

 

(95

)

Other, net

(1

)

 

 

Net Cash – Financing activities

(162

)

 

774

 

Effect of exchange rate changes on cash

(10

)

 

(12

)

Net change in cash and cash equivalents

(35

)

 

853

 

Cash and cash equivalents at beginning of year

1,875

 

 

724

 

Cash and cash equivalents at end of period

$

1,840

 

 

$

1,577

 

Supplemental disclosure of cash flow information:

 

 

 

Cash paid during the period for:

 

 

 

Interest

$

58

 

 

$

45

 

Income taxes (net of refunds received)

$

60

 

 

$

11

 

Xylem Inc. Non-GAAP Measures
 
Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or “adjusted”) measures to be useful to management and investors evaluating our operating performance for the periods presented, and to provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including but not limited to, dividends, acquisitions, share repurchases and debt repayment. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. We consider the following items to represent the non-GAAP measures we consider to be key performance indicators, as well as the related reconciling items to the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
 
“Organic revenue” and “Organic orders” defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales or discontinuance of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.
 
“Constant currency” defined as financial results adjusted for foreign currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. dollar.
 
“EBITDA” defined as earnings before interest, taxes, depreciation and amortization expense. “Adjusted EBITDA” and “Adjusted Segment EBITDA” reflects the adjustments to EBITDA and segment EBITDA, respectively, to exclude share-based compensation charges, restructuring and realignment costs, gain or loss from sale of businesses and special charges.
 
“Adjusted EBITDA Margin” and “Adjusted Segment EBITDA margin” defined as adjusted EBITDA and adjusted segment EBITDA divided by total revenue and segment revenue, respectively.
 
“Adjusted Operating Income”, “Adjusted Segment Operating Income”, “Adjusted Net Income” and “Adjusted EPS” defined as operating income, segment operating income, net income and earnings per share, adjusted to exclude restructuring and realignment costs, gain or loss from sale of businesses, special charges and tax-related special items, as applicable.
 
“Adjusted Operating Margin” and “Adjusted Segment Operating Margin” defined as adjusted operating income and adjusted segment operating income divided by total revenue and segment revenue, respectively.
 
“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flows, less capital expenditures, and “Free Cash Flow Conversion” defined as Free Cash Flows divided by net income, excluding the gain on sale of businesses, non-cash impairment charges and significant deferred tax items. Our definitions of “free cash flow” and “free cash flow conversion” do not consider certain non-discretionary cash payments, such as debt.
 
“Realignment costs” defined as costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, severance, relocation, travel, facility set-up and other costs.
 
“Special charges” defined as costs incurred by the Company, such as acquisition and integration related costs, non-cash impairment charges and both operating and non-operating adjustments for pension costs.
 
“Tax-related special items” defined as tax items, such as tax return versus tax provision adjustments, tax exam impacts, tax law change impacts, excess tax benefits/losses and other discrete tax adjustments.
Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Orders ($ Millions)
 

(As Reported – GAAP)

 

(As Adjusted – Organic)

 

Constant Currency

 

 

(A)

 

(B)

 

 

 

(C)

 

(D)

 

(E) = B+C+D

 

(F) = E/A

 

(G) = (E – C) / A

 

 

 

 

Change

 

% Change

 

Acquisitions /

Divestitures

 

 

 

Change

 

% Change

 

 

Orders

 

Orders

 

2021 v. 2020

 

2021 v. 2020

 

 

FX Impact

 

Adj. 2021 v. 2020

 

Adj. 2021 v. 2020

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30
Xylem Inc.

3,198

2,493

705

28%

8

(123)

590

24%

23%

Water Infrastructure

1,250

1,112

138

12%

(68)

70

6%

6%

Applied Water

963

698

265

38%

(33)

232

33%

33%

Measurement & Control Solutions

985

683

302

44%

8

(22)

288

42%

41%

 
Quarter Ended June 30
Xylem Inc.

1,660

1,232

428

35%

1

(74)

355

29%

29%

Water Infrastructure

639

598

41

7%

(41)

0%

0%

Applied Water

486

326

160

49%

(20)

140

43%

43%

Measurement & Control Solutions

535

308

227

74%

1

(13)

215

70%

69%

 
Quarter Ended March 31
Xylem Inc.

1,538

1,261

277

22%

7

(49)

235

19%

18%

Water Infrastructure

611

514

97

19%

(27)

70

14%

14%

Applied Water

477

372

105

28%

(13)

92

25%

25%

Measurement & Control Solutions

450

375

75

20%

7

(9)

73

19%

18%

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Revenue ($ Millions)
 

(As Reported – GAAP)

 

(As Adjusted – Organic)

 

Constant Currency

 

 

(A)

 

(B)

 

 

 

(C)

 

(D)

 

(E) = B+C+D

 

(F) = E/A

 

(G) = (E – C) / A

 

 

 

 

Change

 

% Change

 

Acquisitions /

Divestitures

 

 

 

Change

 

% Change

 

 

Revenue

 

Revenue

 

2021 v. 2020

 

2021 v. 2020

 

 

FX Impact

 

Adj. 2021 v. 2020

 

Adj. 2021 v. 2020

 

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30
Xylem Inc.

2,607

2,283

324

14%

5

(110)

219

10%

9%

Water Infrastructure

1,078

939

139

15%

(60)

79

8%

8%

Applied Water

807

675

132

20%

(29)

103

15%

15%

Measurement & Control Solutions

722

669

53

8%

5

(21)

37

6%

5%

 
Quarter Ended June 30
Xylem Inc.

1,351

1,160

191

16%

3

(66)

128

11%

11%

Water Infrastructure

569

501

68

14%

(36)

32

6%

6%

Applied Water

414

337

77

23%

(18)

59

18%

18%

Measurement & Control Solutions

368

322

46

14%

3

(12)

37

11%

11%

 
Quarter Ended March 31
Xylem Inc.

1,256

1,123

133

12%

2

(44)

91

8%

8%

Water Infrastructure

509

438

71

16%

(24)

47

11%

11%

Applied Water

393

338

55

16%

(11)

44

13%

13%

Measurement & Control Solutions

354

347

7

2%

2

(9)

0%

(1%)

Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income ($ Millions)
 
 

Q1

 

Q2

 

YTD

2021

2020

 

2021

2020

 

2021

2020

Total Revenue
• Total Xylem

1,256

1,123

 

1,351

1,160

 

2,607

2,283

 

• Water Infrastructure

509

438

 

569

501

 

1,078

939

 

• Applied Water

393

338

 

414

337

 

807

675

 

• Measurement & Control Solutions

354

347

 

368

322

 

722

669

 

 
Operating Income (Loss)
• Total Xylem

133

61

 

160

54

 

293

115

 

• Water Infrastructure

71

39

 

93

73

 

164

112

 

• Applied Water

66

47

 

64

41

 

130

88

 

• Measurement & Control Solutions

9

(12

)

13

(46

)

22

(58

)

• Total Segments

146

74

 

170

68

 

316

142

 

 
Operating Margin
• Total Xylem

10.6%

5.4

%

11.8%

4.7

%

11.2%

5.0

%

• Water Infrastructure

13.9%

8.9

%

16.3%

14.6

%

15.2%

11.9

%

• Applied Water

16.8%

13.9

%

15.5%

12.2

%

16.1%

13.0

%

• Measurement & Control Solutions

2.5%

(3.5

%)

3.5%

(14.3

%)

3.0%

(8.7

%)

• Total Segments

11.6%

6.6

%

12.6%

5.9

%

12.1%

6.2

%

 
Special Charges
• Total Xylem

2

 

11

 

2

11

 

• Water Infrastructure

 

 

 

• Applied Water

1

 

 

1

 

• Measurement & Control Solutions

 

10

 

10

 

• Total Segments

1

 

10

 

1

10

 

 
Restructuring & Realignment Costs
• Total Xylem

8

9

 

6

43

 

14

52

 

• Water Infrastructure

5

5

 

4

8

 

9

13

 

• Applied Water

1

2

 

2

4

 

3

6

 

• Measurement & Control Solutions

2

2

 

31

 

2

33

 

• Total Segments

8

9

 

6

43

 

14

52

 

 
Adjusted Operating Income (Loss)
• Total Xylem

143

70

 

166

108

 

309

178

 

• Water Infrastructure

76

44

 

97

81

 

173

125

 

• Applied Water

68

49

 

66

45

 

134

94

 

• Measurement & Control Solutions

11

(10

)

13

(5

)

24

(15

)

• Total Segments

155

83

 

176

121

 

331

204

 

 
Adjusted Operating Margin
• Total Xylem

11.4%

6.2

%

12.3%

9.3

%

11.9%

7.8

%

• Water Infrastructure

14.9%

10.0

%

17.0%

16.2

%

16.0%

13.3

%

• Applied Water

17.3%

14.5

%

15.9%

13.4

%

16.6%

13.9

%

• Measurement & Control Solutions

3.1%

(2.9

%)

3.5%

(1.6

%)

3.3%

(2.2

%)

• Total Segments

12.3%

7.4

%

13.0%

10.4

%

12.7%

8.9

%

Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
 

Q2 2021

 

Q2 2020

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

Total Revenue

 

1,351

 

 

 

 

1,351

 

 

1,160

 

 

 

 

1,160

 

Operating Income

 

160

 

 

6

 

a

 

166

 

 

54

 

 

54

 

a

 

108

 

Operating Margin

 

11.8

%

 

12.3

%

 

4.7

%

 

9.3

%

Interest Expense

 

(21

)

 

 

 

(21

)

 

(18

)

 

 

 

(18

)

Other Non-Operating Income (Expense)

 

(3

)

 

3

 

b

 

 

 

(1

)

 

2

 

b

 

1

 

Gain/(Loss) From Sale of Business

 

2

 

 

(2

)

 

 

 

 

 

 

 

 

Income before Taxes

 

138

 

 

7

 

 

145

 

 

35

 

 

56

 

 

91

 

Provision for Income Taxes

 

(25

)

 

(1

)

c

 

(26

)

 

(4

)

 

(14

)

c

 

(18

)

Net Income Attributable to Xylem

 

113

 

 

6

 

 

119

 

 

31

 

 

42

 

 

73

 

Diluted Shares

 

181.3

 

 

181.3

 

 

180.6

 

 

180.6

 

Diluted EPS

$

0.62

 

$

0.04

 

$

0.66

 

$

0.17

 

$

0.23

 

$

0.40

 

 
Year-over-year currency translation impact on current year diluted EPS

$

0.05

 

$

 

$

0.05

 

Diluted EPS at Constant Currency

$

0.57

 

$

0.04

 

$

0.61

 

 
 
 

Q2 YTD 2021

 

Q2 YTD 2020

As Reported

 

Adjustments

 

Adjusted

 

As Reported

 

Adjustments

 

Adjusted

Total Revenue

 

2,607

 

 

 

 

2,607

 

 

2,283

 

 

 

 

2,283

 

Operating Income

 

293

 

 

16

 

a

 

309

 

 

115

 

 

63

 

a

 

178

 

Operating Margin

 

11.2

%

 

11.9

%

 

5.0

%

 

7.8

%

Interest Expense

 

(42

)

 

 

 

(42

)

 

(34

)

 

 

 

(34

)

Other Non-Operating Income (Expense)

 

(1

)

 

4

 

b

 

3

 

 

(4

)

 

3

 

b

 

(1

)

Gain/(Loss) From Sale of Business

 

2

 

 

(2

)

 

 

 

 

 

 

 

 

Income before Taxes

 

252

 

 

18

 

 

270

 

 

77

 

 

66

 

 

143

 

Provision for Income Taxes

 

(52

)

 

3

 

c

 

(49

)

 

(8

)

 

(20

)

c

 

(28

)

Net Income Attributable to Xylem

 

200

 

 

21

 

 

221

 

 

69

 

 

46

 

 

115

 

Diluted Shares

 

181.4

 

 

181.4

 

 

181.0

 

 

181.0

 

Diluted EPS

$

1.10

 

$

0.13

 

$

1.23

 

$

0.38

 

$

0.25

 

$

0.63

 

 
Year-over-year currency translation impact on current year diluted EPS

$

0.09

 

$

0.02

 

$

0.11

 

Diluted EPS at Constant Currency

$

1.01

 

$

0.11

 

$

1.12

 

a Quarter-to-date: Restructuring & realignment costs of $6 million in 2021 and $43 million in 2020, as well as special charges of $11 million ($10 million of intangible asset impairment and $1 million of other charges) in 2020.
Year-to-date: Restructuring & realignment costs of $14 million and $52 million in 2021 and 2020, respectively; special charges of $2 million ($1 million of intangible asset impairment charges and $1 million of other charges) and $11 million of special charges in 2020 ($10 million of intangible asset impairment charges and $1 million of other charges).
b Quarter-to-date: Special non-operating charges consist of $3 million in 2021 and $2 million in 2020, of pension costs related to the UK pension plan that is going to be part of a buyout.
Year-to-date: Special non-operating charges consist of $4 million in 2021 and $3 million in 2020, of pension costs related to the UK pension plan that is going to be part of a buyout.
c Quarter-to-date: Net tax impact on restructuring & realignment costs of $1 million in 2021 and $10 million in 2020; and $1 million of tax on special tax items in 2021 and $3 million of tax on special tax items in 2020; $1 million positive adjustment in 2021 from tax related special charges and $1 million of negative adjustment from tax related special benefits in 2020, respectively.
Year-to-date: Net tax impact on restructuring & realignment costs of $3 million and $12 million in 2021 and 2020, respectively; $1 million and $3 million of tax impact on special charges in 2021 and 2020, respectively; and $7 million of positive adjustment from tax related special charges in 2021 and $5 million of negative adjustment from tax related special benefits in 2020, respectively.
Xylem Inc. Non-GAAP Reconciliation
Net Cash – Operating Activities vs. Free Cash Flow ($ Millions)
 

Q1

 

Q2

 

Year-to-Date

 

 

 

 

 

 

 

 

 

 

 

2021

 

2020

 

2021

 

2020

 

2021

 

2020

 
Net Cash – Operating Activities

$(26

)

$(2

)

$232

 

$181

 

$206

 

$179

 

Capital Expenditures – PP&E

(22

)

(32

)

(25

)

(24

)

(47

)

(56

)

Capital Expenditures – Software

(17

)

(19

)

(16

)

(20

)

(33

)

(39

)

Capital Expenditures

(39

)

(51

)

(41

)

(44

)

(80

)

(95

)

Free Cash Flow

$(65

)

$(53

)

$191

 

$137

 

$126

 

$84

 

Net Income

87

 

38

 

113

 

31

 

200

 

69

 

Gain/(Loss) from sale of business

 

 

2

 

 

2

 

 

Restructuring & Realignment Charges – non-cash impairment

(1

)

 

 

(17

)

(1

)

(17

)

Special Charges – non-cash impairment

(1

)

 

 

(10

)

(1

)

(10

)

Net Income, excluding gain on sale of businesses, non-cash impairment charges and significant deferred tax items

$89

 

$38

 

$111

 

$58

 

$200

 

$96

 

Operating Cash Flow Conversion

(30

%)

(5

%)

205

%

584

%

103

%

259

%

Free Cash Flow Conversion

(73

%)

(139

%)

172

%

236

%

63

%

88

%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
 
 

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Net Income

87

 

113

 

200

 

Income Tax Expense

27

 

25

 

52

 

Interest Expense (Income), net

19

 

19

 

38

 

Depreciation

30

 

29

 

59

 

Amortization

32

 

33

 

65

 

EBITDA

195

 

219

 

 

 

414

 

Share-based Compensation

9

 

8

 

17

 

Restructuring & Realignment

8

 

6

 

14

 

Loss/(Gain) from sale of business

 

(2

)

(2

)

Special Charges

3

 

3

 

6

 

Adjusted EBITDA

215

 

234

 

 

 

449

 

Revenue

1,256

 

1,351

 

2,607

 

Adjusted EBITDA Margin

17.1

%

17.3

%

17.2

%

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Net Income

38

 

31

 

37

 

148

 

254

 

Income Tax Expense

4

 

4

 

13

 

10

 

31

 

Interest Expense (Income), net

14

 

16

 

20

 

20

 

70

 

Depreciation

29

 

29

 

30

 

29

 

117

 

Amortization

35

 

33

 

33

 

33

 

134

 

EBITDA

120

 

113

 

133

 

240

 

606

 

Share-based Compensation

8

 

8

 

3

 

7

 

26

 

Restructuring & Realignment

9

 

43

 

15

 

10

 

77

 

Special Charges

1

 

13

 

71

 

1

 

86

 

Adjusted EBITDA

138

 

177

 

222

 

258

 

795

 

Revenue

1,123

 

1,160

 

1,220

 

1,373

 

4,876

 

Adjusted EBITDA Margin

12.3

%

15.3

%

18.2

%

18.8

%

16.3

%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
Water Infrastructure
 

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

70

 

92

 

162

 

Interest Expense (Income), net

(1

)

(1

)

(2

)

Depreciation

11

 

11

 

22

 

Amortization

2

 

2

 

4

 

EBITDA

82

 

104

 

 

 

186

 

Share-based Compensation

1

 

 

1

 

Restructuring & Realignment

5

 

4

 

9

 

Adjusted EBITDA

88

 

108

 

 

 

196

 

Revenue

509

 

569

 

1,078

 

Adjusted EBITDA Margin

17.3

%

19.0

%

18.2

%

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

37

 

71

 

85

 

116

 

309

 

Interest Expense (Income), net

 

(1

)

 

 

(1

)

Depreciation

11

 

11

 

11

 

11

 

44

 

Amortization

4

 

5

 

2

 

2

 

13

 

EBITDA

52

 

86

 

98

 

129

 

365

 

Share-based Compensation

 

1

 

 

1

 

2

 

Restructuring & Realignment

5

 

8

 

8

 

7

 

28

 

Adjusted EBITDA

57

 

95

 

106

 

137

 

395

 

Revenue

438

 

501

 

524

 

616

 

2,079

 

Adjusted EBITDA Margin

13.0

%

19.0

%

20.2

%

22.2

%

19.0

%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
Applied Water
 

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

66

 

65

 

131

 

Interest Expense (Income), net

 

 

 

Depreciation

5

 

5

 

10

 

Amortization

1

 

1

 

2

 

EBITDA

72

 

71

 

 

 

143

 

Share-based Compensation

1

 

1

 

2

 

Restructuring & Realignment

1

 

2

 

3

 

Loss/(Gain) from sale of business

(2

)

(2

)

Special Charges

1

 

 

1

 

Adjusted EBITDA

75

 

72

 

 

 

147

 

Revenue

393

 

414

 

807

 

Adjusted EBITDA Margin

19.1

%

17.4

%

18.2

%

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

47

 

42

 

55

 

60

 

204

 

Interest Expense (Income), net

 

 

 

 

 

Depreciation

5

 

5

 

6

 

5

 

21

 

Amortization

1

 

 

1

 

1

 

3

 

EBITDA

53

 

47

 

62

 

66

 

228

 

Share-based Compensation

1

 

1

 

 

1

 

3

 

Restructuring & Realignment

2

 

4

 

2

 

1

 

9

 

Adjusted EBITDA

56

 

52

 

64

 

68

 

240

 

Revenue

338

 

337

 

364

 

395

 

1,434

 

Adjusted EBITDA Margin

16.6

%

15.4

%

17.6

%

17.2

%

16.7

%

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
Measurement & Control Solutions
 

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax Income

16

 

12

 

28

 

Interest Expense (Income), net

 

 

 

Depreciation

9

 

10

 

19

 

Amortization

27

 

27

 

54

 

EBITDA

52

 

49

 

 

 

101

 

Share-based Compensation

1

 

2

 

3

 

Restructuring & Realignment

2

 

 

2

 

Adjusted EBITDA

55

 

51

 

 

 

106

 

Revenue

354

 

368

 

722

 

Adjusted EBITDA Margin

15.5

%

13.9

%

14.7

%

 

2020

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Total

 
Pre-Tax (Loss) Income

(13

)

(46

)

(62

)

14

 

(107

)

Interest Expense (Income), net

 

 

 

 

 

Depreciation

9

 

8

 

9

 

9

 

35

 

Amortization

27

 

26

 

27

 

27

 

107

 

EBITDA

23

 

(12

)

(26

)

50

 

35

 

Share-based Compensation

2

 

1

 

1

 

1

 

5

 

Restructuring & Realignment

2

 

31

 

5

 

2

 

40

 

Special Charges

 

10

 

69

 

 

79

 

Adjusted EBITDA

27

 

30

 

49

 

53

 

159

 

Revenue

347

 

322

 

332

 

362

 

1,363

 

Adjusted EBITDA Margin

7.8

%

9.3

%

14.8

%

14.6

%

11.7

%

 

Contacts

Media

Houston Spencer +1 (914) 323-5723

houston.spencer@xylem.com

Investors

Matt Latino +1 (914) 323-5821

matthew.latino@xylem.com

Opt-into our eNewsletter NOW! For the Latest Trending Financial News Topics in Cannabis, Tech, Biotechs, Precious Metals, Energy, Renewable Energy and much more!