Slide 1: 2023 Second Quarter Results & Earnings
2023 Second 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: Q2 2023 Performance Summary
Q2 2023 Performance Summary ($ in millions, unless otherwise noted) 2023 Reported Q2 Adj* Q2 Reported Q2 Adj* Q2 Reported Q2 Adj* Q2 Reported Q2 Adj* Q2 Reported Q2 Adj* Q2 Measurement & Control Integrated Solutions & Xylem Consolidated Water Infrastructure(1) Applied Water Solutions Services(2) Rev
Slide 4: CEO Commentary and Q2 2023 Highlights
“ This past quarter, we took another transformative step as a leading water solutions company to help our communities and customers solve the greatest water challenges facing our society and economies: water scarcity, resilience of our infrastructure to climate change, and the need to address these
Slide 5: Combined Company Structure With Four Reporting Segments
Combined Company Structure With Four Reporting Segments Measurement & Integrated Solutions & Water Infrastructure Applied Water Control Solutions Services Digital and smart water Treatment and Transport Product solutions primarily Specialized, mission-critical solutions primarily serving solutions p
Slide 6: Q2 2023 Xylem Performance and Key Performance Drivers
REVENUE ADJUSTED ADJUSTED EPS* EBITDA MARGIN* $1,722 19.1% $0.98 16.6% $1,364 $0.74 Q2 2023 XYLEM PERFORMANCE Organic* +250 bps +32% 15% Q2 2022 Q2 2023 Q2 2022 Q2 2023 Q2 2022 Q2 2023 Adj. Op Margin* 12.7% 15.0% KEY PERFORMANCE DRIVERS Organic Growth* by End Market • Organic* revenue growth of 15%
Slide 7: Q2 2023 Measurement & Control Solutions Performance
Q2 2023 Measurement & Control Solutions Performance REVENUE Organic Growth* by Application Highlights $415 • Organic* orders up 6% with strength across the portfolio. Continued strong Water 17% $346 Energy 38% demand for Advanced Metering Infrastructure (AMI), with book-to-bill of 1.2 • Robust $2.4B
Slide 8: Q2 2023 Water Infrastructure Performance
Q2 2023 Water Infrastructure Performance REVENUE(1) Organic Growth* by End Market Highlights $704 Utilities • Organic* orders down 4%, lapping 21% growth, with book-to-bill ratio of 1.1 12% $589 Industrial 14% • Utilities growth driven by price and strong demand, particularly in US and Western Europ
Slide 9: Q2 2023 Applied Water Performance
Q2 2023 Applied Water Performance REVENUE Organic Growth* by End Market Highlights $478 Industrial 10% • Organic* orders down 6%, with continued strength in Emerging Markets, $429 Building Solutions offset by moderation in US and Western Europe 15% Commercial 31% Residential (15%) • Industrial growt
Slide 10: Q2 2023 Integrated Solutions & Services Performance
Q2 2023 Integrated Solutions & Services Performance ADJ. REVENUE(1) EBITDA*(1) Segment Adj. Margins* Highlights Adj. EBITDA 24.0% • Healthy demand with pro forma(2) orders growth of 4%, strength across $125 industrial verticals, particularly Life Sciences Adj. Operating Income 14.4% $30 • Backlog of
Slide 11: Xylem Financial Position
Xylem Financial Position Capital Summary CASH DRIVERS June 30, 2023 $944 $9 Cash & Cash Equivalents $ 708 ($103) $708 Debt $ 2,507 ($148) $6 Net Debt $ 1,799 • Net cash for acquisitions / Shareholder’s Equity $ 9,899 divestitures: ($385M) Net Capital $ 11,698 • Debt Issuance: $349M • Other: $42M Net
Slide 12: Staying Focused on Serving Our Customers and Delivering 2023 Commitments
Staying Focused on Serving Our Customers and Delivering our 2023 Commitments 1. SERVING OUR CUSTOMERS WITH DIFFERENTIATED PORTFOLIO • World’s most advanced water platform • Meeting customer challenges with our unparalleled digital offerings 2. RELENTLESS COMMITMENT TO DELIVER MARGIN EXPANSION • Cont
Slide 13: 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 expected run- rate cost synergies withi
Slide 14: 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 15: Raising FY 2023 Organic Guidance and Incorporating Evoqua
Raising FY 2023 Organic Guidance and Incorporating Evoqua Raising Revenue Guidance to ~$7.2B Lifting Adj EPS* Guidance to $3.50 – $3.70 ~$1.1 ~$7.2B $0.20 $3.50 - $3.70 $0.28 $0.3 $5.7B - $5.8B $3.00 - $3.25 ~30% reported growth Acquisitions Include: • Evoqua: $0.45 • Legacy Xylem Deal Amortization:
Slide 16: FY 2023 and Q3 2023 Guidance
FY 2023 and Q3 2023 Guidance Prior FY 2023 Updated FY 2023 Q3 2023 Guide Guide Guide Updating full year guide to include Evoqua Revenue $5.9 – $6.0B ~$7.2B $1.9 – $2.0B • Organic* raise driven by backlog execution, • Organic* Growth 8% – 9% 9% – 10% 4% – 6% price realization and productivity savings
Slide 17: Key Takeaways
1 Outperformed Q2 with double digit growth and strong margin expansion 2 Raising full-year organic guidance for 2023, including Evoqua Key Takeaways 3 Focused on delivering 2023 and gaining early momentum on Evoqua integration 4 Xylem investment thesis is strong: creating economic and social value Q
Slide 18: Appendix
Appendix
Slide 19: 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 20: 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 21: FY 2023 Guidance Key Assumptions
FY 2023 Guidance Key Assumptions Prior Assumptions Updated Assumptions Corporate Expense*(1) ~$60M ~$90M Restructuring & Realignment Costs* ~$25 - $35M ~$90M Dividends ~$240M ~$300M Capex ~$235M ~$300M Interest / Other Expense ~$30M ~$30M Estimated Tax Rate* ~20% ~22% Share Count ~182M ~217M Purchas
Slide 22: 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 ($51M) ($0.10) GBP 1.26 ($18M) ($0.0
Slide 23: Xylem Inc. Non-GAAP Measures
Appendix Xylem Inc. Non-GAAP Measures Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or "adjusted") measures to be useful to man
Slide 24: Reported vs. Organic & Constant Currency Revenue
Appendix Xylem Inc. Non-GAAP Reconciliation Reported vs. Organic & Constant Currency Revenue ($ 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 / Change % Change Revenue Revenue 2023 v. 2022
Slide 25: Reported vs. Organic & Constant Currency Orders
Appendix 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 / Change % Change Orders Orders 2023 v. 2022 20
Slide 26: Adjusted Operating Income
Appendix Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) Q1 Q2 YTD (1) (1) (1) 2023 2022 2023 2022 2023 2022 Total Revenue • Total Xylem 1,448 1,272 1,722 1,364 3,170 2,636 • Water Infrastructure 589 533 704 589 1,293 1,122 • Applied Water 453 425 478 429 931 854 • Measurem
Slide 27: Adjusted Operating Income (continued)
Xylem Inc. Non-GAAP Reconciliation Adjusted Operating Income ($ Millions) Appendix Q1 Q2 YTD (1) (1) (1) 2023 2022 2023 2022 2023 2022 Special Charges • Total Xylem 25 1 67 1 92 2 • Water Infrastructure - 12 - 12 - • Applied Water - - - - - • Measurement & Control Solutions 2 - - 1 2 1 • Integrated
Slide 28: Adjusted Diluted EPS Q2
Appendix Xylem Inc. Non-GAAP Reconciliation Adjusted Diluted EPS ($ Millions, except per share amounts) (1) Q2 2023 Q2 2022 As Reported Adjustments Adjusted As Reported Adjustments Adjusted Total Revenue 1,722 - 1,722 1,364 - 1,364 Operating Income 119 140 a 259 146 27 a 173 Operating Margin 6.9% 15
Slide 29: Adjusted Diluted EPS Year-to-Date
Appendix Xylem Inc. Non-GAAP Reconciliation Adjusted Diluted EPS ($ Millions, except per share amounts) Q2 YTD 2023 Q2 YTD 2022 (1) As Reported Adjustments Adjusted As Reported Adjustments Adjusted Total Revenue 3,170 3,170 2,636 - 2,636 Operating Income 250 194 a 444 257 50 a 307 Operating Margin 7
Slide 30: EBITDA and Adjusted EBITDA by Quarter: Xylem, Water Infrastructure
Xylem Inc. Non-GAAP Reconciliation Appendix EBITDAXylem Inc. Non-GAAP Reconciliation and Adjusted EBITDA by Quarter ($ Millions) EBITDA and Adjusted EBITDA by Quarter ($ Millions) Water Infrastructure 2023 2023 Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Net Income 99 92 191 Operating Income 70 106 176 Net
Slide 31: EBITDA and Adjusted EBITDA: Applied Water, 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 83 84 167
Slide 32: EBITDA and Adjusted EBITDA: Integrated Solutions and Services
Appendix Xylem Inc. Non-GAAP Reconciliation EBITDA and Adjusted EBITDA by Quarter ($ Millions) Integrated Solutions and Services 2023 Q1 Q2 Q3 Q4 Total Operating Income - (7) (7) Depreciation - 8 8 Amortization - 12 12 EBITDA - 13 - - 13 Share-based Compensation - 3 3 Restructuring & Realignment - 7
Slide 33: Net Cash Operating Activities vs. Free Cash Flow
Appendix Xylem Inc. Non-GAAP Reconciliation Net Cash - Operating Activities vs. Free Cash Flow ($ Millions) Q1 Q2 Year-to-Date 2023 2022 2023 2022 2023 2022 Net Cash - Operating Activities ($19) ($81) $28 $113 $9 $32 Capital Expenditures - PP&E (33) (31) (42) (30) (75) (61) Capital Expenditures - So
Slide 34: Thank you. Q2 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. NYSE: XYL Xylem Investor Relations Website Q2 2023 Earnings & Results LinkedIn | T