Xylem Reports Third Quarter 2024 Results and Narrows Full-Year Guidance

outubro 31, 2024

Revenue of $2.1 billion, up 1% on a reported and organic basis
Earnings per share of $0.89, up 41%; $1.11 on an adjusted basis, up 12%
Updated full-year revenue guidance of $8.5 billion, up approximately 15% YoY, with organic revenue growth of ~5%
Narrowing full-year adjusted EPS guidance to $4.22 to $4.24, from $4.18 to $4.28

WASHINGTON--(BUSINESS WIRE)-- Xylem Inc. (NYSE: XYL), a leading global water technology company that empowers customers and communities to build a more water-secure world, today reported third-quarter results. The Company’s total revenue was $2.1 billion, up one percent on a reported and organic basis, and third-quarter earnings per share were up 41 percent on a reported basis and 12 percent on an adjusted basis. Orders grew 8 percent on a reported and organic basis.

“The team delivered strong results in the quarter, with earnings at the high end of guidance, and margin expansion beating our expectations,” said Matthew Pine, Xylem’s President and CEO. “Demand remained resilient, reflected in robust orders growth in all segments, and a healthy book-to-bill. Moderated organic revenue growth in the quarter was driven largely by project timing.”

“Outperformance on margin and earnings was further reinforced by momentum in our integration of Evoqua and by initial impacts from our broader simplification efforts,” Pine continued. “Evoqua integration is ahead of schedule and synergy capture continues to accelerate, giving us confidence in closing the year above target. As a result, we are narrowing our full-year earnings guidance, with continuing focus on sustainable, high-quality earnings and profitable growth.”

Net income was $217 million, or $0.89 per share. Net income margin increased 300 basis points to 10.3 percent. These results are driven by strong operational performance. Adjusted net income was $269 million, or $1.11 per share, which excludes the impacts of amortization of acquired intangible assets, restructuring and realignment costs, gain/loss from sale of businesses, special charges, and tax-related special items.

Third-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 21.2 percent, reflecting a year-over-year increase of 140 basis points. Productivity savings and price drove the margin expansion, exceeding the impact of inflation, strategic investments and mix.

Outlook

Xylem expects full-year 2024 revenue of $8.5 billion, up approximately 15 percent on a reported basis and up approximately 5 percent on an organic basis.

Full-year 2024 adjusted EBITDA margin is expected to be approximately 20.5 percent. This results in adjusted earnings per share of $4.22 to $4.24 from the previous range of $4.18 to $4.28. Full-year free cash flow conversion to net income is expected to be at least 120 percent.

Further 2024 planning assumptions are included in Xylem’s third-quarter 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.

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

About Xylem

Xylem (XYL) is a Fortune 500 global water solutions company that empowers customers and communities to build a more water-secure world. Our 23,000 diverse employees delivered combined pro forma revenue of $8.1 billion in 2023, optimizing water and resource management with innovation and expertise. Join us at www.xylem.com and Let’s Solve Water.

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. 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: the impact of overall industry and general economic conditions, including industrial, governmental, and public and private sector spending, interest rates, inflation and related monetary policy by governments in response to inflation, and the strength of the residential and commercial real estate markets, on economic activity and our operations; geopolitical events, including the ongoing and possible escalation of the conflicts involving Russia and Ukraine, and the Middle East, as well as regulatory, economic and other risks associated with our global sales and operations, including those related to domestic content requirements applicable to projects receiving governmental funding; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, tight labor markets, prevailing price changes, tariffs and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including electronic components (in particular, semiconductors); disruptions in operations at our facilities or that of third parties upon which we rely; uncertainty related to the realization of the benefits and synergies from our acquisition of Evoqua Water Technologies Corp.; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including with respect to meeting performance guarantees and customers’ budgets, timelines and safety requirements; our ability to retain and attract leadership and other diverse and key talent, as well as competition for overall talent and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around restructuring and realignment actions and related costs and savings; our ability to execute strategic investments for growth, including related to acquisitions and divestitures; availability, regulation or interference with radio spectrum used by certain of our products; volatility in served markets or impacts on our business and operations due to weather conditions, including the effects of climate change; risks related to our sustainability commitments and related disclosures; fluctuations in foreign currency exchange rates; difficulty predicting our financial results; risk of future impairments to goodwill and other intangible assets; changes in our effective tax rates or tax expenses; financial market risks related to our pension and other defined benefit plans; failure to comply with, or changes in, laws or regulations, including those pertaining to our business conduct, operations, products and services, including anti-corruption, data privacy and security, trade, competition, the environment, climate change and health and safety; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; matters related to intellectual property infringement or expiration of rights; and other factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Annual Report") and in subsequent filings we 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, to our business, operating results, financial condition, outlook, or strategy, to our impacts on sustainability matters or other parties, or are 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
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)
(in millions, except per share data)

	Three Months					Nine Months
For the periods ended September 30,	2024			2023		2024			2023
Revenue from products	$	1,744		$	1,720	$	5,236		$	4,535
Revenue from services		360			356		1,070			711
Revenue		2,104			2,076		6,306			5,246
Cost of revenue from products		1,047			1,043		3,147			2,730
Cost of revenue from services		273			269		804			555
Cost of revenue		1,320			1,312		3,951			3,285
Gross profit		784			764		2,355			1,961
Selling, general and administrative expenses		445			491		1,404			1,291
Research and development expenses		55			61		172			172
Restructuring and asset impairment charges		4			21		37			57
Operating income		280			191		742			441
Interest expense		10			14		35			35
Other non-operating income, net		1			8		11			19
(Loss) on sale of businesses		(2	)		—		(6	)		—
Income before taxes		269			185		712			425
Income tax expense		52			33		148			82
Net income	$	217		$	152	$	564		$	343
Earnings per share:
Basic	$	0.89		$	0.63	$	2.33		$	1.64
Diluted	$	0.89		$	0.63	$	2.32		$	1.63
Weighted average number of shares:
Basic		242.9			240.9		242.5			208.9
Diluted		243.8			242.2		243.4			210.1

XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except per share amounts)

	September 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	989		$	1,019
Receivables, less allowances for discounts, returns and credit losses of $60 and $56 in 2024 and 2023, respectively		1,707			1,617
Inventories		1,091			1,018
Prepaid and other current assets		226			230
Total current assets		4,013			3,884
Property, plant and equipment, net		1,158			1,169
Goodwill		7,593			7,587
Other intangible assets, net		2,326			2,529
Other non-current assets		956			943
Total assets	$	16,046		$	16,112
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	930		$	968
Accrued and other current liabilities		1,105			1,221
Short-term borrowings and current maturities of long-term debt		17			16
Total current liabilities		2,052			2,205
Long-term debt		1,977			2,268
Accrued post-retirement benefits		332			344
Deferred income tax liabilities		535			557
Other non-current accrued liabilities		550			562
Total liabilities		5,446			5,936
Stockholders’ equity:
Common stock – par value $0.01 per share:
Authorized 750.0 shares, issued 259.2 shares and 257.6 shares in 2024 and 2023, respectively		3			3
Capital in excess of par value		8,673			8,564
Retained earnings		2,902			2,601
Treasury stock – at cost 16.2 shares and 16.0 shares in 2024 and 2023, respectively		(753	)		(733	)
Accumulated other comprehensive loss		(232	)		(269	)
Total stockholders’ equity		10,593			10,166
Non-controlling interests		7			10
Total equity		10,600			10,176
Total liabilities and stockholders’ equity	$	16,046		$	16,112

XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions)

For the nine months ended September 30,	2024			2023
Operating Activities
Net income	$	564		$	343
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		191			132
Amortization		229			167
Share-based compensation		43			45
Restructuring and asset impairment charges		37			57
Loss from sale of business		6			—
Other, net		(4	)		(20	)
Payments for restructuring		(24	)		(12	)
Changes in assets and liabilities (net of acquisitions):
Changes in receivables		(101	)		(142	)
Changes in inventories		(88	)		(41	)
Changes in accounts payable		(31	)		15
Changes in accrued and deferred taxes		(11	)		(77	)
Other, net		(123	)		(85	)
Net Cash – Operating activities		688			382
Investing Activities
Capital expenditures		(221	)		(177	)
Acquisitions of businesses, net of cash acquired		(5	)		(476	)
Proceeds from sale of business		11			103
Proceeds from the sale of property, plant and equipment		3			2
Cash received from investments		5			1
Cash paid for investments		(8	)		(1	)
Cash paid for equity investments		(4	)		(58	)
Cash received from interest rate swaps		—			38
Cash received from cross-currency swaps		25			25
Other, net		1			4
Net Cash – Investing activities		(193	)		(539	)
Financing Activities
Short-term debt issued, net		—			1
Short-term debt repaid		(268	)		—
Long-term debt issued, net		—			275
Long-term debt repaid		(13	)		(155	)
Repurchase of common stock		(19	)		(10	)
Proceeds from exercise of employee stock options		66			45
Dividends paid		(263	)		(219	)
Other, net		(23	)		(8	)
Net Cash – Financing activities		(520	)		(71	)
Effect of exchange rate changes on cash		(5	)		(11	)
Net change in cash and cash equivalents		(30	)		(239	)
Cash and cash equivalents at beginning of year		1,019			944
Cash and cash equivalents at end of period	$	989		$	705
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	49		$	43
Income taxes (net of refunds received)	$	160		$	159

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 that 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" reflect 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, amortization of acquired intangible assets, 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 and other non-recurring, significant non-cash impacts, such as 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.

"Adjusted Free Cash Flow" defined as free cash flow adjusted for significant cash items for which the corresponding income statement impact does not occur within the same fiscal year.

“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 non-recurring costs incurred by the Company, such as those related to acquisitions and integrations, divestitures and non-cash impairment charges.

“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 and 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	2024 v. 2023		2024 v. 2023		Book-to-Bill		Acquisitions / Divestitures		FX Impact		Adj. 2024 v. 2023		Adj. 2024 v. 2023
	2024	2023
Nine Months Ended September 30
Xylem Inc.	6,534	5,457	1,077		20	%	104	%	(886	)	6		197		4	%	20	%
Water Infrastructure	2,036	1,680	356		21	%	111	%	(243	)	(1	)	112		7	%	21	%
Applied Water	1,382	1,350	32		2	%	103	%	-		3		35		3	%	3	%
Measurement and Control Solutions	1,199	1,228	(29	)	(2	%)	86	%	-		(1	)	(30	)	(2	%)	(2	%)
Water Solutions and Services	1,917	1,199	718		60	%	110	%	(643	)	5		80		7	%	60	%

Quarter Ended September 30
Xylem Inc.	2,201	2,031	170		8	%	105	%	-		(4	)	166		8	%	8	%
Water Infrastructure	700	656	44		7	%	112	%	-		(4	)	40		6	%	6	%
Applied Water	437	422	15		4	%	98	%	-		-		15		4	%	4	%
Measurement and Control Solutions	386	343	43		13	%	84	%	-		(2	)	41		12	%	12	%
Water Solutions and Services	678	610	68		11	%	118	%	-		2		70		11	%	11	%

Quarter Ended June 30
Xylem Inc.	2,087	1,856	231		12	%	96	%	(265	)	11		(23	)	(1	%)	13	%
Water Infrastructure	690	563	127		23	%	109	%	(89	)	5		43		8	%	23	%
Applied Water	465	445	20		4	%	102	%	-		3		23		5	%	5	%
Measurement and Control Solutions	384	470	(86	)	(18	%)	80	%	-		1		(85	)	(18	%)	(18	%)
Water Solutions and Services	548	378	170		45	%	91	%	(176	)	2		(4	)	(1	%)	46	%

Quarter Ended March 31
Xylem Inc.	2,246	1,570	676		43	%	110	%	(621	)	(1	)	54		3	%	43	%
Water Infrastructure	646	461	185		40	%	113	%	(154	)	(2	)	29		6	%	40	%
Applied Water	480	483	(3	)	(1	%)	110	%	-		-		(3	)	(1	%)	(1	%)
Measurement and Control Solutions	429	415	14		3	%	93	%	-		-		14		3	%	3	%
Water Solutions and Services	691	211	480		227	%	123	%	(467	)	1		14		7	%	228	%

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic and 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	2024 v. 2023		2024 v. 2023		Acquisitions / Divestitures		FX Impact		Adj. 2024 v. 2023		Adj. 2024 v. 2023
	2024	2023
Nine Months Ended September 30
Xylem Inc.	6,306	5,246	1,060		20	%	(782	)	5		283		5	%	20	%
Water Infrastructure	1,828	1,541	287		19	%	(221	)	-		66		4	%	19	%
Applied Water	1,339	1,396	(57	)	(4	%)	-		1		(56	)	(4	%)	(4	%)
Measurement and Control Solutions	1,402	1,175	227		19	%	-		-		227		19	%	19	%
Water Solutions and Services	1,737	1,134	603		53	%	(561	)	4		46		4	%	54	%

Quarter Ended September 30
Xylem Inc.	2,104	2,076	28		1	%	-		(6	)	22		1	%	1	%
Water Infrastructure	623	612	11		2	%	-		(5	)	6		1	%	1	%
Applied Water	447	465	(18	)	(4	%)	-		(2	)	(20	)	(4	%)	(4	%)
Measurement and Control Solutions	458	413	45		11	%	-		(1	)	44		11	%	11	%
Water Solutions and Services	576	586	(10	)	(2	%)	-		2		(8	)	(1	%)	(1	%)

Quarter Ended June 30
Xylem Inc.	2,169	1,722	447		26	%	(302	)	13		158		9	%	27	%
Water Infrastructure	631	519	112		22	%	(84	)	6		34		7	%	23	%
Applied Water	456	478	(22	)	(5	%)	-		4		(18	)	(4	%)	(4	%)
Measurement and Control Solutions	482	384	98		26	%	-		2		100		26	%	26	%
Water Solutions and Services	600	341	259		76	%	(218	)	1		42		12	%	76	%

Quarter Ended March 31
Xylem Inc.	2,033	1,448	585		40	%	(480	)	(2	)	103		7	%	40	%
Water Infrastructure	574	410	164		40	%	(137	)	(1	)	26		6	%	40	%
Applied Water	436	453	(17	)	(4	%)	-		(1	)	(18	)	(4	%)	(4	%)
Measurement and Control Solutions	462	378	84		22	%	-		(1	)	83		22	%	22	%
Water Solutions and Services	561	207	354		171	%	(343	)	1		12		6	%	171	%

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

	Q3 2024										Q3 2023
	As Reported			Adjustments				Adjusted			As Reported			Adjustments				Adjusted
Total Revenue		2,104			-				2,104			2,076			-				2,076
Operating Income		280			70		a		350			191			124		a		315
Operating Margin		13.3	%						16.6	%		9.2	%						15.2	%
Interest Expense		(10	)		-				(10	)		(14	)		-				(14	)
Other Non-Operating Income (Expense)		1			-				1			8			-				8
Gain/(Loss) From Sale of Business		(2	)		2		b		-			-			-				-
Income before Taxes		269			72				341			185			124				309
Provision for Income Taxes		(52	)		(20	)	c		(72	)		(33	)		(36	)	c		(69	)
Net Income		217			52				269			152			88				240
Diluted Shares		243.8							243.8			242.2							242.2
Diluted EPS	$	0.89		$	0.22			$	1.11		$	0.63		$	0.36			$	0.99



	Q3 YTD 2024										Q3 YTD 2023
	As Reported			Adjustments				Adjusted			As Reported			Adjustments				Adjusted
Total Revenue		6,306			-				6,306			5,246			-				5,246
Operating Income		742			254		a		996			441			318		a		759
Operating Margin		11.8	%						15.8	%		8.4	%						14.5	%
Interest Expense		(35	)		-				(35	)		(35	)		-				(35	)
Other Non-Operating Income (Expense)		11			-				11			19			-				19
Gain/(Loss) From Sale of Business		(6	)		6		b		-			-			-				-
Income before Taxes		712			260				972			425			318				743
Provision for Income Taxes		(148	)		(70	)	c		(218	)		(82	)		(75	)	c		(157	)
Net Income		564			190				754			343			243				586
Diluted Shares		243.4							243.4			210.1							210.1
Diluted EPS	$	2.32		$	0.78			$	3.10		$	1.63		$	1.16			$	2.79

Quarter-to-date:

Restructuring & realignment costs: 2024 - $11 million and 2023 - $34 million

Special charges: 2024 - $6 million of acquisition & integration cost and $1 million of other special charges; 2023 - $23 million of acquisition & integration related costs and $1 million of asset impairment charges

Purchase accounting intangible amortization: 2024 - $52 million and 2023 - $66 million

Year-to-date:

Restructuring & realignment costs: 2024 - $55 million and 2023 - $82 million

Special charges: 2024 - $31 million of acquisition & integration related costs, $4 million of other special charges and $1 million of asset impairment charges; 2023 - $107 million of acquisition & integration related costs, $6 million of other special charges and $3 million of intangible asset impairment charges

Purchase Accounting Intangible Amortization: 2024 - $163 million and 2023 - $120 million

Gain/Loss from sale of business as per income statement for all periods presented

Quarter-to-date: 2024 - Net tax impact on pre-tax adjustments (note a and b) of $17 million and other tax special items of $3 million; 2023 - Net tax impact on pre-tax adjustments (note a) of $28 million and other tax special items of $8 million

Year-to-date : 2024 - Net tax impact on pre-tax adjustments (note a and b) of $59 million and other tax special items of $11 million; 2023 - Net tax impact on pre-tax adjustments (note a) of $67 million and other tax special items of $8 million

Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow ($ Millions)

	Q1				Q2				Q3				Year-to-Date

	2024		2023		2024		2023		2024		2023		2024		2023

Net Cash - Operating Activities	$89		($19	)	$288		$28		$311		$373		$688		$382

Capital Expenditures - PPE	(59	)	(33	)	(59	)	(42	)	(60	)	(57	)	(178	)	(132	)
Capital Expenditures - Software	(15	)	(16	)	(14	)	(12	)	(14	)	(17	)	(43	)	(45	)
Capital Expenditures	(74	)	(49	)	(73	)	(54	)	(74	)	(74	)	(221	)	(177	)


Free Cash Flow	$15		($68	)	$215		($26	)	$237		$299		$467		$205

Cash paid in excess of tax provision for R&D law change adoption	-		33		-		-		-		-		-		33
Cash paid by Xylem for Evoqua's pre-close transaction costs	-		-		-		70		-		-		-		70
Cash paid for Idrica distribution agreement	-		-		-		60		-		-		-		60

Adjusted Free Cash Flow	$15		($35	)	$215		$104		$237		$299		$467		$368

Net Income	$153		$99		$194		$92		$217		$152		$564		$343
Gain/(Loss) from sale of business	(5	)	-		1		-		(2	)	-		(6	)	-

Restructuring Charges - non-cash stock acceleration and asset impairment	(2	)	-		(16	)	(14	)	(3	)	(11	)	(21	)	(25	)

Special Charges - Inventory step-up	-		-		-		(15	)	-		(5	)	-		(20	)
Special Charges - non-cash impairment	(1	)	(2	)	-		-		-		(1	)	(1	)	(3	)
Net Income, excluding gain/(loss) on sale of businesses, non-cash restructuring and special charges	$161		$101		$209		$121		$222		$169		$592		$391

Operating Cash Flow Conversion	58	%	(19	%)	148	%	30	%	143	%	245	%	122	%	111	%
Free Cash Flow Conversion	9	%	(35	%)	103	%	86	%	107	%	177	%	79	%	94	%

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


2024
	Q1		Q2		Q3		Q4		Total

Net Income	153		194		217				564
Net Income margin	7.5	%	8.9	%	10.3	%			8.9	%
Depreciation	61		62		68				191
Amortization	73		83		73				229
Interest Expense (Income), net	7		6		5				18
Income Tax Expense	43		53		52				148
EBITDA	337		398		415		-		1,150
Share-based Compensation	18		13		12				43
Restructuring & Realignment	15		29		11				55
Special Charges	16		13		7				36
Loss/(Gain) from sale of business	5		(1	)	2				6
Adjusted EBITDA	391		452		447		-		1,290
Revenue	2,033		2,169		2,104				6,306
Adjusted EBITDA Margin	19.2	%	20.8	%	21.2	%			20.5	%


2023
	Q1		Q2		Q3		Q4		Total

Net Income	99		92		152		266		609
Net Income margin	6.8	%	5.3	%	7.3	%	12.6	%	8.3	%
Depreciation	28		41		63		61		193
Amortization	32		51		84		76		243
Interest Expense (Income), net	2		5		6		8		21
Income Tax Expense	27		22		33		(56	)	26
EBITDA	188		211		338		355		1,092
Share-based Compensation	12		15		18		15		60
Restructuring & Realignment	11		36		33		23		103
Special Charges	25		67		22		22		136
Loss/(Gain) from sale of business	-		-		-		1		1
Adjusted EBITDA	236		329		411		416		1,392
Revenue	1,448		1,722		2,076		2,118		7,364
Adjusted EBITDA Margin	16.3	%	19.1	%	19.8	%	19.6	%	18.9	%

Media
Houston Spencer +1 (914) 240-3046
Houston.Spencer@xylem.com

Investors
Keith Buettner +1 (724) 772-1531
Keith.Buettner@xylem.com

Source: Xylem Inc.

Xylem

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Xylem Reports Third Quarter 2024 Results and Narrows Full-Year Guidance