Xylem Reports Fourth Quarter and Full-Year 2021 Earnings
Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported fourth quarter revenue of $1.32 billion, and full-year 2021 revenue of $5.20 billion, in line with previous guidance.
Fourth quarter adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin decreased 260 basis points to 16.2 percent. Inflation and strategic investments drove the margin decline, exceeding the benefits of price realization and productivity savings. Xylem generated net income of $113 million, or $0.62 per share, and adjusted net income of $115 million, or $0.63 per share, which excludes the impact of restructuring, realignment and special charges.
For the full year, Xylem delivered adjusted EBITDA margin of 17.1 percent, up 80 basis points year-over-year. Productivity and volume drove the increase, exceeding inflation impacts. Full-year reported net income was $427 million, or $2.35 per share, and adjusted net income, which excludes the impact of restructuring, realignment and special charges, was $452 million, or $2.49 per share. The Company generated $538 million of operating cash flow, representing a 126 percent conversion, and $330 million of free cash flow, representing a 77 percent conversion.
“The team closed out 2021 with a strong performance, delivering full-year margin expansion alongside solid growth in revenue and earnings in the face of accelerating supply chain headwinds through the quarter,” said Patrick Decker, president and CEO of Xylem. “To mitigate the effects of inflation, the team also drove solid productivity improvements and price realization above our expectations. Market demand was clearly robust, as evidenced by continued strong orders and backlog growth in both the quarter and the year.”
“We expect the first half of 2022 to continue to be supply constrained due to ongoing chip shortages,” Decker continued. “Order-to-revenue conversion is set to pick up pace progressively, as we expect those constraints to begin easing in the latter part of the year. Overall, we expect full-year growth in the mid-single digits, with significant margin expansion in the second half, keeping us on track to achieve our 2025 growth and strategic milestones.”
Xylem announced that its Board of Directors declared a dividend in the amount of $0.30 per share, an increase of 7 percent. The dividend is payable on March 17, 2022, to shareholders of record as of February 17, 2022.
Full-year 2022 Outlook
Xylem forecasts full-year 2022 revenue in the range of $5.25 to $5.35 billion, up 1 to 3 percent on a reported basis and up 3 to 5 percent on an organic basis.
Full-year 2022 adjusted EBITDA margin is expected to be in the range of 16 to 17 percent. This results in adjusted earnings per share of $2.35 to $2.70, which represents a decline of 6 percent to an increase of 8 percent from Xylem’s 2021 adjusted results. Further 2022 planning assumptions are included in Xylem’s fourth quarter 2021 earnings materials posted at www.xylem.com/investors. 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.
Fourth Quarter Segment Results
Water Infrastructure
Xylem’s Water Infrastructure segment consists of its portfolio of businesses serving clean water delivery, wastewater transport and treatment, and dewatering.
Fourth quarter 2021 revenue was $622 million, a 2 percent increase compared with fourth quarter 2020. This result was driven by healthy growth in the industrial end market, particularly in the Emerging Markets, partially offset by delayed revenue conversion in the U.S. utilities market primarily due to extended lead-times for ocean transit. Fourth quarter adjusted EBITDA margin was 21.7 percent, down 50 basis points from the prior year. Reported operating income for the segment was $122 million. Adjusted operating income for the segment, which excludes $2 million of restructuring and realignment, was $124 million, flat versus the comparable period last year. Reported operating margin for the segment was 19.6 percent, up 60 basis points versus the prior year, and adjusted operating margin was 19.9 percent, down 20 basis points versus prior year. Productivity benefits and price realization were more than offset by inflation and investments.Applied Water
Xylem’s Applied Water segment consists of its portfolio of businesses in residential and commercial building services, and industrial applications.
Fourth quarter 2021 Applied Water revenue was $406 million, a 3 percent increase organically year-over-year. Industrial end-market strength in Emerging Markets, US and Western Europe was partially offset by weakness in the residential market in China particularly in light of strong prior-year performance. Fourth quarter adjusted EBITDA margin was 13.8 percent, down 340 basis points from the prior year. Reported operating income for the segment was $50 million and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was $52 million, a 16 percent decrease versus the comparable period last year. The segment reported operating margin was 12.3 percent, down 310 basis points versus the prior year period. Adjusted operating margin declined 290 basis points to 12.8 percent. Productivity benefits and price realization were more than offset by 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.
Fourth quarter 2021 Measurement & Control Solutions revenue was $295 million, down 17 percent organically versus the prior year. The decline is in-line with our expectations and a result of the ongoing chip supply shortage and the outsized impact to our North American smart metering business. Fourth quarter adjusted EBITDA margin was 7.1 percent, down 750 basis points from the prior year. Reported operating income for the segment was -$17 million, and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was -$15 million, a 194 percent decrease versus the comparable period last year. The Measurement & Control Solutions segment reported operating margin was -5.8 percent, down 970 basis points versus the prior year period. Adjusted operating margin of -5.1 percent also decreased 950 basis points over the prior year period. Volume declines from component shortages as well as inflation more than offset productivity savings and modest price realization.Supplemental information on Xylem’s fourth quarter 2021 earnings and reconciliations for certain non-GAAP items is 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 17,000 diverse employees delivered revenue of $5.2 billion in 2021. 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," “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 (including those related to our social, environmental and other sustainability 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 ongoing 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 ongoing COVID-19 pandemic’s magnitude, duration and impacts on our business, operations, growth, and financial condition; actual or potential other epidemics, pandemics or global health crises; availability, shortage or delays in receiving products, parts, electronic components and raw materials from our supply chain; manufacturing and operating cost increases due to inflation, prevailing price changes, tariffs and other factors; demand for our products, disruption, competition, 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; ability to retain and attract senior management and other diverse and key talent, as well as increasing competition for overall talent and labor; difficulty predicting our financial results; defects, security, warranty and liability claims, and recalls with respect to products; availability, regulation or interference with radio spectrum used by certain of our products; 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; volatility in served markets or impacts on business and operations due to weather conditions, including the effects of climate change; fluctuations in foreign currency exchange rates; 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, domestic content requirements, 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 and in subsequent filings we have made or may make with the Securities and Exchange Commission (“SEC”).
Forward-looking and other statements in this press release regarding our environmental and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking social, environmental and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
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
CONSOLIDATED INCOME STATEMENTS (Unaudited)
(In Millions, except per share data)
Year Ended December 31,
2021
2020
2019
Revenue
$
5,195
$
4,876
$
5,249
Cost of revenue
3,220
3,046
3,203
Gross profit
1,975
1,830
2,046
Selling, general and administrative expenses
1,179
1,143
1,158
Research and development expenses
204
187
191
Restructuring and asset impairment charges
7
75
63
Goodwill impairment charge
—
58
148
Operating income
585
367
486
Interest expense
76
77
67
Other non-operating (expense) income, net
—
(5
)
(4
)
Gain on sale of businesses
2
—
1
Income before taxes
511
285
416
Income tax expense
84
31
15
Net income
427
254
401
Earnings per share:
Basic
$
2.37
$
1.41
$
2.23
Diluted
$
2.35
$
1.40
$
2.21
Weighted average number of shares:
Basic
180.2
180.1
180.0
Diluted
181.5
181.1
181.2
XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Millions, except per share amounts)
December 31,
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,349
$
1,875
Receivables, less allowances for discounts, returns and credit losses of $44 and $46 in 2021 and 2020, respectively
953
923
Inventories
700
558
Prepaid and other current assets
158
167
Total current assets
3,160
3,523
Property, plant and equipment, net
644
657
Goodwill
2,792
2,854
Other intangible assets, net
1,016
1,093
Other non-current assets
664
623
Total assets
$
8,276
$
8,750
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
639
$
569
Accrued and other current liabilities
752
787
Short-term borrowings and current maturities of long-term debt
—
600
Total current liabilities
1,391
1,956
Long-term debt, net
2,440
2,484
Accrued post-retirement benefits
438
519
Deferred income tax liabilities
287
242
Other non-current accrued liabilities
494
573
Total liabilities
5,050
5,774
Stockholders’ equity:
Common stock — par value $0.01 per share:
Authorized 750.0 shares, issued 195.6 and 194.9 shares in 2021 and 2020, respectively
2
2
Capital in excess of par value
2,089
2,037
Retained earnings
2,154
1,930
Treasury stock – at cost 15.2 shares and 14.5 shares in 2021 and 2020, respectively
(656
)
(588
)
Accumulated other comprehensive loss
(371
)
(413
)
Total stockholders’ equity
3,218
2,968
Non-controlling interest
8
8
Total equity
3,226
2,976
Total liabilities and stockholders’ equity
$
8,276
$
8,750
XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) (Unaudited)
Year Ended December 31,
2021
2020
2019
Operating Activities
Net income
$
427
$
254
$
401
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
118
117
117
Amortization
127
134
140
Deferred income taxes
10
(31
)
(77
)
Share-based compensation
33
26
29
Restructuring and asset impairment charges
7
75
63
Goodwill impairment charge
—
58
148
Gain from sale of businesses
(2
)
—
(1
)
Other, net
8
46
9
Payments for restructuring
(25
)
(36
)
(30
)
Contributions to post-retirement benefit plans
(29
)
(27
)
(19
)
Changes in assets and liabilities (net of acquisitions):
Changes in receivables
(70
)
109
(23
)
Changes in inventories
(167
)
(5
)
47
Changes in accounts payable
81
(39
)
29
Changes in accrued liabilities
7
101
15
Changes in accrued taxes
(9
)
20
(13
)
Net changes in other assets and liabilities
22
22
4
Net Cash — Operating activities
538
824
839
Investing Activities
Capital expenditures
(208
)
(183
)
(226
)
Acquisitions of businesses and assets, net of cash acquired
—
—
(18
)
Proceeds from sale of businesses
10
—
—
Cash received from investments
3
200
11
Cash paid for investments
—
(200
)
(7
)
Cash received from cross-currency swaps
14
12
9
Other, net
(2
)
2
—
Net Cash — Investing activities
(183
)
(169
)
(231
)
Financing Activities
Short-term debt issued, net
—
359
281
Short-term debt repaid, net
—
(640
)
(254
)
Long-term debt issued, net
—
985
—
Long-term debt repaid, net
(600
)
—
—
Repurchase of common stock
(68
)
(61
)
(40
)
Proceeds from exercise of employee stock options
19
20
13
Dividends paid
(203
)
(188
)
(174
)
Other, net
(3
)
(2
)
(3
)
Net Cash — Financing activities
(855
)
473
(177
)
Effect of exchange rate changes on cash
(26
)
23
(3
)
Net change in cash and cash equivalents
(526
)
1,151
428
Cash and cash equivalents at beginning of year
1,875
724
296
Cash and cash equivalents at end of year
$
1,349
$
1,875
$
724
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest
$
99
$
77
$
77
Income taxes (net of refunds received)
$
83
$
41
$
107
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 costs related to the UK pension plan buyout. “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
Year Ended December 31 Xylem Inc.6,300
5,033
1,267
25
%
12
(140
)
1,139
23
%
22
%
Water Infrastructure2,471
2,134
337
16
%
-
(76
)
261
12
%
12
%
Applied Water1,860
1,483
377
25
%
-
(39
)
338
23
%
23
%
Measurement & Control Solutions1,969
1,416
553
39
%
12
(25
)
540
38
%
37
%
Quarter Ended December 31 Xylem Inc.1,584
1,294
290
22
%
2
7
299
23
%
23
%
Water Infrastructure598
464
134
29
%
-
4
138
30
%
30
%
Applied Water451
410
41
10
%
-
1
42
10
%
10
%
Measurement & Control Solutions535
420
115
27
%
2
2
119
28
%
28
%
Quarter Ended September 30 Xylem Inc.1,518
1,246
272
22
%
2
(24
)
250
20
%
20
%
Water Infrastructure623
558
65
12
%
-
(12
)
53
9
%
9
%
Applied Water446
375
71
19
%
-
(7
)
64
17
%
17
%
Measurement & Control Solutions449
313
136
43
%
2
(5
)
133
42
%
42
%
Quarter Ended June 30 Xylem Inc.1,660
1,232
428
35
%
1
(74
)
355
29
%
29
%
Water Infrastructure639
598
41
7
%
-
(41
)
-
0
%
0
%
Applied Water486
326
160
49
%
-
(20
)
140
43
%
43
%
Measurement & Control Solutions535
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 Infrastructure611
514
97
19
%
-
(27
)
70
14
%
14
%
Applied Water477
372
105
28
%
-
(13
)
92
25
%
25
%
Measurement & Control Solutions450
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
Year Ended December 31 Xylem Inc.5,195
4,876
319
7
%
13
(122
)
210
4
%
4
%
Water Infrastructure2,247
2,079
168
8
%
-
(65
)
103
5
%
5
%
Applied Water1,613
1,434
179
12
%
-
(34
)
145
10
%
10
%
Measurement & Control Solutions1,335
1,363
(28
)
(2
%)
13
(23
)
(38
)
(3
%)
(4
%)
Quarter Ended December 31 Xylem Inc.1,323
1,373
(50
)
(4
%)
6
8
(36
)
(3
%)
(3
%)
Water Infrastructure622
616
6
1
%
-
5
11
2
%
2
%
Applied Water406
395
11
3
%
-
2
13
3
%
3
%
Measurement & Control Solutions295
362
(67
)
(19
%)
6
1
(60
)
(17
%)
(18
%)
Quarter Ended September 30 Xylem Inc.1,265
1,220
45
4
%
2
(20
)
27
2
%
2
%
Water Infrastructure547
524
23
4
%
-
(10
)
13
2
%
2
%
Applied Water400
364
36
10
%
-
(7
)
29
8
%
8
%
Measurement & Control Solutions318
332
(14
)
(4
%)
2
(3
)
(15
)
(5
%)
(5
%)
Quarter Ended June 30 Xylem Inc.1,351
1,160
191
16
%
3
(66
)
128
11
%
11
%
Water Infrastructure569
501
68
14
%
-
(36
)
32
6
%
6
%
Applied Water414
337
77
23
%
-
(18
)
59
18
%
18
%
Measurement & Control Solutions368
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 Infrastructure509
438
71
16
%
-
(24
)
47
11
%
11
%
Applied Water393
338
55
16
%
-
(11
)
44
13
%
13
%
Measurement & Control Solutions354
347
7
2
%
2
(9
)
-
0
%
(1
%)
Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) Q1 Q2 Q3 Q4 YTD2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Total Revenue • Total Xylem1,256
1,123
1,351
1,160
1,265
1,220
1,323
1,373
5,195
4,876
• Water Infrastructure
509
438
569
501
547
524
622
616
2,247
2,079
• Applied Water
393
338
414
337
400
364
406
395
1,613
1,434
• Measurement & Control Solutions
354
347
368
322
318
332
295
362
1,335
1,363
Operating Income (Loss) • Total Xylem
133
61
160
54
152
73
140
179
585
367
• Water Infrastructure
71
39
93
73
101
89
122
117
387
318
• Applied Water
66
47
64
41
60
56
50
61
240
205
• Measurement & Control Solutions
9
(12
)
13
(46
)
7
(62
)
(17
)
14
12
(106
)
• Total Segments146
74
170
68
168
83
155
192
639
417
Operating Margin • Total Xylem
10.6
%
5.4
%
11.8
%
4.7
%
12.0
%
6.0
%
10.6
%
13.0
%
11.3
%
7.5
%
• Water Infrastructure13.9
%
8.9
%
16.3
%
14.6
%
18.5
%
17.0
%
19.6
%
19.0
%
17.2
%
15.3
%
• Applied Water16.8
%
13.9
%
15.5
%
12.2
%
15.0
%
15.4
%
12.3
%
15.4
%
14.9
%
14.3
%
• Measurement & Control Solutions2.5
%
(3.5
%)
3.5
%
(14.3
%)
2.2
%
(18.7
%)
(5.8
%)
3.9
%
0.9
%
(7.8
%)
• Total Segments11.6
%
6.6
%
12.6
%
5.9
%
13.3
%
6.8
%
11.7
%
14.0
%
12.3
%
8.6
%
Special Charges • Total Xylem2
-
-
11
1
70
1
-
4
81
• Water Infrastructure
-
-
-
-
-
-
-
-
-
-
• Applied Water
1
-
-
-
-
-
-
-
1
-
• Measurement & Control Solutions
-
-
-
10
-
69
-
-
-
79
• Total Segments
1
-
-
10
-
69
-
-
1
79
Restructuring & Realignment Costs • Total Xylem
8
9
6
43
2
15
6
10
22
77
• Water Infrastructure
5
5
4
8
1
8
2
7
12
28
• Applied Water
1
2
2
4
2
2
2
1
7
9
• Measurement & Control Solutions
2
2
-
31
(1
)
5
2
2
3
40
• Total Segments
8
9
6
43
2
15
6
10
22
77
Adjusted Operating Income (Loss) • Total Xylem
143
70
166
108
155
158
147
189
611
525
• Water Infrastructure
76
44
97
81
102
97
124
124
399
346
• Applied Water
68
49
66
45
62
58
52
62
248
214
• Measurement & Control Solutions
11
(10
)
13
(5
)
6
12
(15
)
16
15
13
• Total Segments
155
83
176
121
170
167
161
202
662
573
Adjusted Operating Margin • Total Xylem
11.4
%
6.2
%
12.3
%
9.3
%
12.3
%
13.0
%
11.1
%
13.8
%
11.8
%
10.8
%
• Water Infrastructure14.9
%
10.0
%
17.0
%
16.2
%
18.6
%
18.5
%
19.9
%
20.1
%
17.8
%
16.6
%
• Applied Water17.3
%
14.5
%
15.9
%
13.4
%
15.5
%
15.9
%
12.8
%
15.7
%
15.4
%
14.9
%
• Measurement & Control Solutions3.1
%
(2.9
%)
3.5
%
(1.6
%)
1.9
%
3.6
%
(5.1
%)
4.4
%
1.1
%
1.0
%
• Total Segments12.3
%
7.4
%
13.0
%
10.4
%
13.4
%
13.7
%
12.2
%
14.7
%
12.7
%
11.8
%
Xylem Inc. Non-GAAP Reconciliation Adjusted Diluted EPS ($ Millions, except per share amounts) Q4 2021 Q4 2020 As Reported Adjustments Adjusted As Reported Adjustments Adjusted Total Revenue
1,323
-
1,323
1,373
-
1,373
Operating Income
140
7
a
147
179
10
a
189
Operating Margin
10.6
%
11.1
%
13.0
%
13.8
%
Interest Expense
(13
)
-
(13
)
(21
)
-
(21
)
Other Non-Operating Income (Expense)
(1
)
3
b
2
-
1
b
1
Gain/(Loss) From Sale of Business
-
-
-
-
-
-
Income before Taxes
126
10
136
158
11
169
Provision for Income Taxes
(13
)
(8
)
c
(21
)
(10
)
(14
)
c
(24
)
Net Income Attributable to Xylem
113
2
115
148
(3
)
145
Diluted Shares
181.6
181.6
181.5
181.5
Diluted EPS
$
0.62
$
0.01
$
0.63
$
0.82
$
(0.01
)
$
0.81
Year-over-year currency translation impact on current year diluted EPS
$
(0.01
)
$
-
$
(0.01
)
Diluted EPS at Constant Currency$
0.63
$
0.01
$
0.64
Q4 YTD 2021 Q4 YTD 2020 As Reported Adjustments Adjusted As Reported Adjustments Adjusted Total Revenue
5,195
-
5,195
4,876
-
4,876
Operating Income
585
26
a
611
367
158
a
525
Operating Margin
11.3
%
11.8
%
7.5
%
10.8
%
Interest Expense
(76
)
-
(76
)
(77
)
-
(77
)
Other Non-Operating Income (Expense)
-
8
b
8
(5
)
5
b
-
Gain/(Loss) From Sale of Business
2
(2
)
-
-
-
-
Income before Taxes
511
32
543
285
163
448
Provision for Income Taxes
(84
)
(7
)
c
(91
)
(31
)
(43
)
c
(74
)
Net Income Attributable to Xylem
427
25
452
254
120
374
Diluted Shares
181.5
181.5
181.1
181.0
Diluted EPS
$
2.35
$
0.14
$
2.49
$
1.40
$
0.66
$
2.06
Year-over-year currency translation impact on current year diluted EPS
$
0.08
$
0.01
$
0.09
Diluted EPS at Constant Currency
$
2.27
$
0.13
$
2.40
a Quarter-to-date: Restructuring & realignment costs of $6 million in 2021 and $10 million in 2020, as well as special charges of $1 million in 2021. Year-to-date: Restructuring & realignment costs of $22 million and $77 million in 2021 and 2020, respectively; special charges of $4 million ($1 million of intangible asset impairment charges and $3 million of other charges) and $81 million of special charges in 2020 ($79 million of intangible asset and goodwill impairment charges and $2 million of other charges). b Quarter-to-date: Special non-operating charges consist of $3 million in 2021 and $1 million in 2020 for 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 $8 million in 2021 and $5 million in 2020 for 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 $2 million in 2020; $1 million net tax impact on special charges in each of 2021 and 2020 and $6 million and $11 million in 2021 and 2020, respectively, of negative impact from tax related special benefits to GAAP tax. Year-to-date: Net tax impact on restructuring & realignment costs of $5 million and $17 million in 2021 and 2020, respectively; $2 million and $10 million of net tax impact on special charges in 2021 and 2020, respectively; and $16 million in 2020 of negative impact from tax related special benefits to GAAP tax. Xylem Inc. Non-GAAP Reconciliation Net Cash - Operating Activities vs. Free Cash Flow ($ Millions)
Q1
Q2
Q3
Q4
Year-to-Date
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Net Cash - Operating Activities$
(26
)
$
(2
)
$
232
$
181
$
112
$
275
$
220
$
370
$
538
$
824
Capital Expenditures - PP&E
(22
)
(32
)
(25
)
(24
)
(33
)
(24
)
(62
)
(29
)
(142
)
(109
)
Capital Expenditures - Software
(17
)
(19
)
(16
)
(20
)
(14
)
(17
)
(19
)
(18
)
(66
)
(74
)
Capital Expenditures
(39
)
(51
)
(41
)
(44
)
(47
)
(41
)
(81
)
(47
)
(208
)
(183
)
Free Cash Flow$
(65
)
$
(53
)
$
191
$
137
$
65
$
234
$
139
$
323
$
330
$
641
Net Income
87
38
113
31
114
37
113
148
427
254
Gain/(Loss) from sale of business
-
-
2
-
-
-
-
-
2
-
Restructuring & Realignment Charges - non-cash impairment
(1
)
-
-
(17
)
-
(3
)
-
(1
)
(1
)
(21
)
Special Charges - non-cash impairment
(1
)
-
-
(10
)
-
(69
)
-
-
(1
)
(79
)
Net Income, excluding gain on sale of businesses, non-cash impairment charges and significant deferred tax items$
89
$
38
$
111
$
58
$
114
$
109
$
113
$
149
$
427
$
354
Operating Cash Flow Conversion
(30
%)
(5
%)
205
%
584
%
98
%
743
%
195
%
250
%
126
%
324
%
Free Cash Flow Conversion
(73
%)
(139
%)
172
%
236
%
57
%
215
%
123
%
217
%
77
%
181
%
Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter ($ Millions)2021
Q1 Q2 Q3 Q4 Total Net Income87
113
114
113
427
Income Tax Expense
27
25
19
13
84
Interest Expense (Income), net
19
19
20
11
69
Depreciation
30
29
31
28
118
Amortization
32
33
31
31
127
EBITDA
195
219
215
196
825
Share-based Compensation
9
8
8
8
33
Restructuring & Realignment
8
6
2
6
22
Loss/(Gain) from sale of business
-
(2
)
-
-
(2
)
Special Charges3
3
2
4
12
Adjusted EBITDA
215
234
227
214
890
Revenue
1,256
1,351
1,265
1,323
5,195
Adjusted EBITDA Margin
17.1
%
17.3
%
17.9
%
16.2
%
17.1
%
2020
Q1 Q2 Q3 Q4 Total Net Income38
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 Infrastructure2021
Q1 Q2 Q3 Q4 Total Pre-Tax Income70
92
102
121
385
Interest Expense (Income), net
(1
)
(1
)
-
(1
)
(3
)
Depreciation11
11
11
10
43
Amortization
2
2
1
3
8
EBITDA
82
104
114
133
433
Share-based Compensation
1
-
1
-
2
Restructuring & Realignment
5
4
1
2
12
Adjusted EBITDA
88
108
116
135
447
Revenue
509
569
547
622
2,247
Adjusted EBITDA Margin
17.3
%
19.0
%
21.2
%
21.7
%
19.9
%
2020
Q1 Q2 Q3 Q4 Total Pre-Tax Income37
71
85
116
309
Interest Expense (Income), net
-
(1
)
-
-
(1
)
Depreciation11
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 Water2021
Q1 Q2 Q3 Q4 Total Pre-Tax Income66
65
60
48
239
Interest Expense (Income), net
-
-
-
-
-
Depreciation
5
5
5
5
20
Amortization
1
1
-
-
2
EBITDA
72
71
65
53
261
Share-based Compensation
1
1
1
1
4
Restructuring & Realignment
1
2
2
2
7
Loss/(Gain) from sale of business
-
(2
)
-
-
(2
)
Special Charges1
-
-
-
1
Adjusted EBITDA
75
72
68
56
271
Revenue
393
414
400
406
1,613
Adjusted EBITDA Margin
19.1
%
17.4
%
17.0
%
13.8
%
16.8
%
2020
Q1 Q2 Q3 Q4 Total Pre-Tax Income47
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 Solutions2021
Q1 Q2 Q3 Q4 Total Pre-Tax Income*
8
12
7
(17
)
10
Interest Expense (Income), net
-
-
-
-
-
Depreciation
9
10
11
8
38
Amortization
27
27
27
26
107
EBITDA
44
49
45
17
155
Share-based Compensation
1
2
1
2
6
Restructuring & Realignment
2
-
(1
)
2
3
Adjusted EBITDA
47
51
45
21
164
Revenue
354
368
318
295
1,335
Adjusted EBITDA Margin
13.3
%
13.9
%
14.2
%
7.1
%
12.3
%
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
%
*Revised from previously reported Q1 income to adjust for a one-time income item that offsets with Corporate and Other in consolidation.
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