Slide 1: 2023 Third Quarter Results & Earnings
2023 Third Quarter Results & Earnings
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation 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,” “int
Slide 3: Q3 2023 Performance Summary
Q3 2023 Performance Summary ($ in millions, unless otherwise noted) 2023 Reported Q3 Adj* Q3 Reported Q3 Adj* Q3 Reported Q3 Adj* Q3 Reported Q3 Adj* Q3 Reported Q3 Adj* Q3 Measurement & Control Integrated Solutions & Xylem Consolidated Water Infrastructure(1) Applied Water Solutions Services Revenu
Slide 4: Patrick Decker, CEO & President, commentary
“ The team capitalized on resilient demand to deliver another quarter of robust growth and continued margin expansion, with each of our segments outperforming expectations,” said Patrick Decker, Xylem president and CEO. “In addition to healthy organic growth, we saw strong operational performance in
Slide 5: Q3 2023 Xylem Performance and Key Performance Drivers
REVENUE ADJUSTED ADJUSTED EPS* EBITDA MARGIN* $2,076 19.8% $0.99 18.3% $0.87 Q3 2023 $1,380 XYLEM PERFORMANCE Organic* +150 bps +14% 10% Q3 2022 Q3 2023 Q3 2022 Q3 2023 Q3 2022 Q3 2023 Adj. Op Margin* 14.9% 15.2% KEY PERFORMANCE DRIVERS Organic Growth* by End Market • Organic* revenue growth of 10%
Slide 6: Q3 2023 Measurement & Control Solutions Performance
Q3 2023 Measurement & Control Solutions Performance REVENUE Organic Growth* by Application Highlights $440 • Organic* orders down 11% due to timing of smart metering projects partially Water 19% $348 Energy 48% offset by strength in Assessment Services • Robust $2.3B backlog provides long-term growt
Slide 7: Q3 2023 Water Infrastructure Performance
Q3 2023 Water Infrastructure Performance REVENUE(1) Organic Growth* by End Market Highlights $803 Utilities • Organic* orders up 14% led by robust opex demand and strength in capex, 6% Industrial 10% all regions up double digits $574 • Utilities growth driven by price and strong demand, particularly
Slide 8: Q3 2023 Applied Water Performance
Q3 2023 Applied Water Performance REVENUE Organic Growth* by End Market Highlights $458 $465 Industrial (1%) • Organic* orders grew 2%, driven by growth in U.S. and Europe partially Building Solutions 3% offset by softness in Emerging Markets • Industrial decline in Emerging Markets partially offset
Slide 9: Q3 2023 Integrated Solutions & Services Performance
Q3 2023 Integrated Solutions & Services Performance ADJ. REVENUE EBITDA* Segment Adj. Margins* Highlights Adj. EBITDA 22.6% • Pro forma(1) orders growth of 12% with broad-based strength led by Power and $368 Microelectronics; book-to-bill ratio above 1 Adj. Operating Income 13.3% $83 • Backlog of ~$
Slide 10: Xylem Financial Position
Xylem Financial Position Capital Summary CASH DRIVERS September 30, 2023 $382 Cash & Cash Equivalents $ 705 $944 ($177) Debt $ 2,270 ($229) $705 Net Debt $ 1,565 ($215) Shareholder’s Equity $ 9,930 • Net cash for acquisitions / divestitures: ($373M) Net Capital $ 11,495 • Net debt issuance: $121M •
Slide 11: Operating From a Position of Strength
Operating From a Position of Strength Strongly positioned to solve the world’s greatest water challenges through our differentiated portfolio Continued focus on commercial and operational execution to deliver margin expansion Durable business model and essential nature of our solutions provides conf
Slide 12: Early Progress on Integration
Early Progress on Integration Cost Synergies Revenue Growth Opportunities $40M 1. DEEPEN UTILITY PENETRATION Projected 2023 annualized run rate achieved • Expand Evoqua service expertise to utilities $140M(1) • “One-stop-shop” across utility treatment train of projected run-rate cost synergies withi
Slide 13: FY 2023 End Market Commentary
FY 2023 End Market Commentary See appendix for end market key facts Utilities Industrial Building Solutions ~45% Pro Forma Revenue(1) ~45% Pro Forma Revenue (1) ~10% Pro Forma Revenue (1) Primarily M&CS and WI Primarily ISS and Applied Water Primarily Applied Water Clean Water Resilient demand acros
Slide 14: FY 2023 and Q4 2023 Guidance
FY 2023 and Q4 2023 Guidance Prior FY 2023 Updated FY 2023 Q4 2023 Guide Guide Guide Raising full year guide Revenue ~$7.2B ~$7.3B $2.03 – $2.05B • Organic* raise driven by backlog execution, • Organic* Growth 9% – 10% ~11% 4% – 5% price realization and productivity savings, • Reported Growth ~30% ~
Slide 15: Key Takeaways
1 Continued outperformance in Q3 on strong operational execution 2 Raising 2023 full-year guidance Key Takeaways 3 Focused on Evoqua integration and value capture 4 Xylem investment thesis is unchanged: creating economic and social value Save the Date: Investor Day Planned for May 30, 2024 Q3 2023 R
Slide 16: Appendix
Appendix
Slide 17: End Market Key Facts
End Market Key Facts Utilities ~45% Revenue(1) Industrials ~45% Revenue(1) • XYL Segments: Primarily ISS and Applied Water Wastewater Utilities • Geographic Split: US ~60% / W. Europe ~20% / Em. Mkts & Other ~20% • Revenue: ~55% of Xylem Utilities revenue • Revenue by notable verticals: • Opex/Capex
Slide 18: Segment Key Facts
Segment Key Facts Measurement & Control Solutions ~20% Revenue(1) Applied Water ~25% Revenue(1) Advanced technology solutions that enable intelligent use and conservation of critical water and Water applications for industrial, commercial, residential, and agricultural markets including energy resou
Slide 19: FY 2023 Guidance Key Assumptions
FY 2023 Guidance Key Assumptions Prior Assumptions Updated Assumptions Corporate Expense ~$90M ~$75M Restructuring & Realignment Costs* ~$90M ~$95M Dividends ~$300M ~$300M Capex ~$300M ~$275M Interest / Other Expense ~$30M ~$30M Estimated Tax Rate* ~22% ~22% Share Count ~217M ~218M Purchase Accounti
Slide 20: Foreign Exchange Translation Sensitivity
Foreign Exchange Translation Sensitivity The table below illustrates the impact of FX fluctuations on Xylem’s reported results Currency FY 2023 Guidance Rate Revenue Impact* on FY 2023 EPS Impact* on FY 2023 of 5% Decrease in Rate of 5% Decrease in Rate Euro 1.09 ($49M) ($0.09) GBP 1.26 ($17M) ($0.0
Slide 21: Xylem Inc. Non-GAAP Measures
Appendix Xylem Inc. Non-GAAP Measures Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or "adjusted") measures to be useful to man
Slide 22: Reported vs. Organic & Constant Currency Revenue
Xylem Inc. Non-GAAP Reconciliation Appendix Reported vs. Organic & Constant Currency Revenue ($ 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 / Change % Change Revenue Revenue 2023 v. 2022
Slide 23: Reported vs. Organic & Constant Currency Orders
Xylem Inc. Non-GAAP Reconciliation Appendix 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 / Change % Change Orders Orders 2023 v. 2022 20
Slide 24: Adjusted Operating Income
Xylem Inc. Non-GAAP Reconciliation Appendix Adjusted Operating Income ($ Millions) Q1 Q2 Q3 YTD (1) (1) (1) 2023 2022 2023 2022 2023 2022 2023 2022 (1) Total Revenue • Total Xylem 1,448 1,272 1,722 1,364 2,076 1,380 5,246 4,016 • Water Infrastructure 589 533 704 589 803 574 2,096 1,696 • Applied Wat
Slide 25: Adjusted Operating Income (continued)
Xylem Inc. Non-GAAP Reconciliation Appendix Adjusted Operating Income ($ Millions) Q1 Q2 Q3 YTD 2023 2022 (1) 2023 2022 (1) 2023 2022 (1) 2023 2022 (1) Special Charges • Total Xylem 25 1 67 1 24 13 116 15 • Water Infrastructure - - 12 - 6 - 18 - • Applied Water - - - - - - - - • Measurement & Contro
Slide 26: Adjusted Diluted EPS Q3
Xylem Inc. Non-GAAP Reconciliation Appendix Adjusted Diluted EPS ($ Millions, except per share amounts) (1) Q3 2023 Q3 2022 As Reported Adjustments Adjusted As Reported Adjustments Adjusted Total Revenue 2,076 - 2,076 1,380 - 1,380 Operating Income 191 124 a 315 168 37 a 205 Operating Margin 9.2% 15
Slide 27: Adjusted Diluted EPS Q3 YTD
Xylem Inc. Non-GAAP Reconciliation Appendix Adjusted Diluted EPS ($ Millions, except per share amounts) (1) Q3 YTD 2023 Q3 YTD 2022 As Reported Adjustments Adjusted As Reported Adjustments Adjusted Total Revenue 5,246 - 5,246 4,016 4,016 Operating Income 441 318 a 759 425 87 a 512 Operating Margin 8
Slide 28: EBITDA and Adjusted EBITDA by Quarter
Xylem Inc. Non-GAAP Reconciliation Appendix EBITDA Xylem Inc. Non-GAAP Reconciliation and Adjusted EBITDA by Quarter ($ Millions) EBITDA and Adjusted EBITDA by Quarter ($ Millions) Water Infrastucture 2023 2023 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Net Income 99 92 152 343 Operating Income 70 106 128
Slide 29: EBITDA and Adjusted EBITDA: Applied Water and Measurement & Control
Appendix Xylem Inc. Non-GAAP Reconciliation Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter ($ Millions) EBITDA and Adjusted EBITDA by Quarter ($ Millions) Applied Water Measurement & Control Solutions 2023 2023 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Operating Income 20 26 27 7
Slide 30: EBITDA and Adjusted EBITDA: Integrated Solutions & Services
Appendix Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter ($ Millions) Integrated Solutions & Services 2023 Q1 Q2 Q3 Q4 Total Operating Income - (7) (3) (10) Operating Margin 0.0% -5.6% -0.8% -2.0% Depreciation - 8 30 38 Amortization - 12 36 48 EBITDA - 13 63 - 76 Share-based
Slide 31: Net Cash - Operating Activities vs. Free Cash Flow
Xylem Inc. Non-GAAP Reconciliation Appendix Net Cash - Operating Activities vs. Free Cash Flow ($ Millions) Q1 Q2 Q3 Year-to-Date 2023 2022 2023 2022 2023 2022 2023 2022 Net Cash - Operating Activities ($19) ($81) $28 $113 $373 $202 $382 $234 Capital Expenditures - PP&E (33) (31) (42) (30) (57) (37)
Slide 32: Thank you. Q3 2023 Earnings & Results
Andrea van der Berg, VP, Investor Relations Kristina Lee, Director, Investor Relations Michael Travers, Senior Manager, Investor Relations Jacob Frisbee, IR Associate, Finance Leadership Development Program Thank you. Jalin Mathews, IR Associate, Finance Leadership Development Program NYSE: XYL Q3 2