Exhibit 99.1
Xylem Inc.
1 International Drive, Rye Brook N.Y. 10573
Tel +1.914.323.5700 Fax +1.914.323.5752
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| | | | |
| Contacts: | | Media | | Investors |
| | | Kelly McAndrew +1 (914) 323-5969 | | Matt Latino +1 (914) 323-5821 |
| | | Kelly.McAndrew@xyleminc.com | | Matthew.Latino@xyleminc.com |
Xylem reports seven percent organic revenue increase and
strong double-digit growth in 4th quarter 2017 earnings
Company completes acquisition of Pure Technologies
| |
| • | Fourth quarter 2017 reported net income was $71 million or $0.40 per share; Adjusted net income for the quarter was $137 million or $0.76 per share, up 15 percent versus the prior year period |
| |
| • | Full-year 2017 reported net income was $331 million or $1.83 per share; Adjusted net income was $433 million or $2.40 per share, up 18-percent year-over-year |
| |
| • | Xylem delivered $4.7 billion in revenue for the full year, representing pro forma organic growth of four percent |
| |
| • | Full-year free cash flow grew 41 percent to $544 million, representing a 147-percent conversion |
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| • | Company increases quarterly cash dividend by 17 percent |
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| • | Xylem projects full-year 2018 organic revenue growth of four to six percent, adjusted earnings per share of $2.82 to $2.97 |
RYE BROOK, N.Y., February 1, 2018 - Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported fourth quarter 2017 net income of $71 million, or $0.40 per share. Excluding the impact of restructuring, realignment, acquisition-related charges and other special items, the Company delivered adjusted net income of $137 million or $0.76 per share in the quarter, a 15-percent increase over the prior year period. Fourth quarter revenue was $1.3 billion, up 17 percent including the full quarter contribution from the Sensus business versus the prior year period which included only two months of Sensus results. Revenue for the quarter increased seven percent on a pro forma organic basis, driven by a strong performance in the public utility end market in nearly every geography and continued growth in industrial, commercial and residential end markets. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) improved by 40 basis points year-over-year to 20.2 percent driven by net productivity gains and volume leverage. Reported operating margin in the quarter was 14 percent and adjusted operating margin decreased 10 basis points year-over-year to 15.2 percent, including a 20-basis-point impact due to purchase accounting amortization.
For the full year 2017, Xylem generated $4.7 billion in revenue, up 25 percent on a reported basis and four percent on a pro forma organic basis. Full-year reported net income was $331 million, or $1.83 per share, with an operating margin of 11.8 percent. Adjusted net income, which excludes the impact of restructuring, realignment, acquisition-related charges and other special items, was $433 million, or $2.40 per share, an 18-percent increase over the prior year. Adjusted EBITDA improved by 80 basis points to 18.7 percent year-over-year. Xylem delivered a full-year 2017 adjusted operating margin of 13.4 percent, down 20 basis points versus the prior year including a 50-basis-point impact due to
purchase accounting amortization. The Company generated $544 million in free cash flow, an increase of 41 percent versus last year, representing a 147-percent conversion.
“Our teams delivered a strong performance throughout 2017 and I’m very pleased with our full-year results,” said Patrick Decker, President and Chief Executive Officer of Xylem. “Our relentless focus on the customer and continuing to enhance our execution in the field translated into improved results in revenue, orders and backlog growth, with the momentum we built in the second half of the year carrying into 2018. We capitalized on improving end market conditions, particularly in public utilities where we continue to gain share. Our productivity for growth initiatives continue to generate significant savings and fund critical R&D investments for our long-term growth. The successful integration of the new capabilities and capacity we gained with the addition of Sensus and Visenti are opening up new growth opportunities for us. And we’re building upon this as we continue to execute our strategy of disciplined capital deployment.”
Xylem also confirmed the completion of its previously announced acquisition of Pure Technologies, a leader in smart infrastructure assessment and management. Pure’s diagnostic and analytics solutions and services address key water and wastewater infrastructure challenges, including non-revenue water and asset management, a critical issue as infrastructure ages.
Decker continued, “Pure’s solutions are highly complementary to the broader Xylem portfolio. This business brings a unique set of proprietary technologies as well as data analytics expertise that further augment our ability to identify and address some of our customers’ most urgent needs. As we bring these and other advanced infrastructure analytics capabilities together, we will create a portfolio of solutions that is holistic, disruptive and scalable to significantly improve the economics of our customers’ operations.”
Xylem announced that its Board of Directors declared a dividend in the amount of $0.21 per share, an increase of 17 percent. The dividend is payable on March 15, 2018 to shareholders of record as of February 15, 2018.
Full-year 2018 Outlook
Xylem forecasts full-year 2018 revenue in the range of $5.1 to $5.2 billion, up eight to 10 percent, including growth from previously announced acquisitions. On an organic basis, Xylem’s revenue growth is anticipated to be in the range of four to six percent.
Full-year 2018 adjusted operating margin is expected to be in the range of 14.0 to 14.4 percent, resulting in adjusted earnings per share of $2.82 to $2.97. This represents an increase of 18 to 24 percent from Xylem’s 2017 adjusted results. The Company’s adjusted earnings outlook excludes projected integration, restructuring and realignment costs of approximately $35 million for the year. 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.
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| • | Fourth quarter 2017 revenue was $583 million, up six percent organically compared with fourth quarter 2016. This increase was driven by strong results in the public utility end market across most regions globally from wastewater transport applications and treatment project deliveries. The industrial end market also continued to show solid growth, reflecting improved market conditions in North America for dewatering applications. |
| |
| • | Fourth quarter reported operating income for the segment was $103 million. Adjusted operating income for the segment, which excludes $4 million of restructuring and realignment costs, was $107 million, a six-percent increase over the same period a year ago. Reported operating margin for the Water Infrastructure segment was 17.7 percent, down 100 basis points versus the prior year, and adjusted operating margin was down 70 basis points to 18.4 percent. This reflects inflation and higher investments in strategic initiatives, which more than offset strong productivity gains and volume leverage achieved in the quarter. |
Applied Water
Xylem’s Applied Water segment consists of its portfolio of businesses in residential and commercial building services, and industrial applications.
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| • | Fourth quarter 2017 Applied Water revenue was $373 million, a five-percent increase organically year-over-year. This performance reflects continued growth in the U.S. and Europe industrial end markets. Demand for clean water supply helped drive growth in the residential end market in Asia Pacific, and the Company also captured share gains in Europe. Commercial building applications showed solid growth from demand for projects and restocking due to cold weather conditions. |
| |
| • | Fourth quarter reported operating income for the segment was $61 million and adjusted operating income, which excludes $3 million of restructuring and realignment costs, was $64 million, a 16-percent increase over the comparable period last year. Applied Water segment reported operating margin was 16.4 percent, up 270 basis points over the prior year period. Adjusted operating margin increased 150 basis points to 17.2 percent as cost reductions and volume leverage more than offset inflation and the funding of investments. |
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.
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| • | Fourth quarter 2017 Measurement & Control Solutions revenue was $321 million, up 12 percent organically versus the prior year. This growth was driven by a strong performance in the Sensus business, which increased 15 percent on a pro forma organic basis in the quarter, reflecting double-digit growth in water, gas and software services sectors partially offset by modest declines in the electric business. Revenue from Xylem’s legacy analytics business increased one percent organically in the quarter. |
| |
| • | Fourth quarter reported operating income for the segment was $30 million, and adjusted operating income, which excludes $4 million of restructuring and realignment costs and acquisition-related costs, was $34 million. Measurement & Control Solutions segment reported operating margin was 9.3 percent. Adjusted operating margin increased 130 basis points to 10.6 percent as volume leverage and mix combined with cost reductions more than offset inflation and the funding of strategic R&D investments. |
Supplemental information on Xylem’s fourth quarter and full-year 2017 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 developing innovative technology solutions to the world’s water challenges. The Company’s products and services move, treat, analyze, monitor and return water to the environment in public utility, industrial, residential and commercial building services settings. Xylem also provides a leading portfolio of smart metering, network technologies and advanced infrastructure analytics solutions for water, electric and gas utilities. The Company’s more than 16,000 employees bring broad applications expertise with a strong focus on identifying comprehensive, sustainable solutions. Headquartered in Rye Brook, New York with 2017
revenue of $4.7 billion, Xylem does business in more than 150 countries through a number of market-leading product brands.
The name Xylem is derived from classical Greek and is the tissue that transports water in plants, highlighting the engineering efficiency of our water-centric business by linking it with the best water transportation of all - that which occurs in nature. For more information, please visit us at www.xylem.com.
Forward-Looking Statements
This press release contains information that may constitute “forward-looking statements.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “forecast,” “believe,” “target,” “will,” “could,” “would,” “should” and similar expressions identify forward-looking statements, which generally are not historical in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.
These forward-looking statements include statements about the capitalization of Xylem Inc. (the “Company”), the Company’s restructuring and realignment, future strategic plans and other statements that describe the Company’s business strategy, outlook, objectives, plans, intentions or goals. All statements that address operating or financial performance, events or developments that we expect or anticipate will occur in the future - including statements relating to orders, revenues, operating margins and earnings per share growth, and statements expressing general views about future operating results - are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such forward-looking statements. Factors that could cause results to differ materially from those anticipated include: economic, political and other risks associated with our international operations, including military actions, economic sanctions or trade embargoes that could affect customer markets, and non-compliance with laws, including foreign corrupt practice laws, export and import laws and competition laws; potential for unexpected cancellations or delays of customer orders in our reported backlog; our exposure to fluctuations in foreign currency exchange rates; competition and pricing pressures in the markets we serve; the strength of housing and related markets; ability to retain and attract key members of management; our relationship with and the performance of our channel partners; our ability to successfully identify, complete and integrate acquisitions; our ability to borrow or to refinance our existing indebtedness and availability of liquidity sufficient to meet our needs; changes in the value of goodwill or intangible assets; risks relating to product defects, product liability and recalls; governmental investigations; security breaches or other disruptions of our information technology systems; litigation and contingent liabilities; and other factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016, and those described from time to time in subsequent reports filed with the Securities and Exchange Commission. Forward-looking statements made herein are based on information currently available to the Company. The Company undertakes 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.
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XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (Unaudited)
(in millions, except per share data)
|
| | | | | | | | | | | |
| Year Ended December 31, | 2017 | | 2016 | | 2015 |
| Revenue | $ | 4,707 |
| | $ | 3,771 |
| | $ | 3,653 |
|
| Cost of revenue | 2,856 |
| | 2,310 |
| | 2,249 |
|
| Gross profit | 1,851 |
| | 1,461 |
| | 1,404 |
|
| Selling, general and administrative expenses | 1,090 |
| | 915 |
| | 854 |
|
| Research and development expenses | 180 |
| | 110 |
| | 95 |
|
| Restructuring and asset impairment charges | 25 |
| | 30 |
| | 6 |
|
| Operating income | 556 |
| | 406 |
| | 449 |
|
| Interest expense | 82 |
| | 70 |
| | 55 |
|
| Other non-operating income, net | 2 |
| | 4 |
| | — |
|
| (Loss)/gain on sale of businesses | (10 | ) | | — |
| | 9 |
|
| Income before taxes | 466 |
| | 340 |
| | 403 |
|
| Income tax expense | 136 |
| | 80 |
| | 63 |
|
| Net income | 330 |
| | 260 |
| | 340 |
|
| Less: Net loss attributable to non-controlling interests | (1 | ) | | — |
| | — |
|
| Net income attributable to Xylem | $ | 331 |
| | $ | 260 |
| | $ | 340 |
|
| Earnings per share: | | | | | |
| Basic | $ | 1.84 |
| | $ | 1.45 |
| | $ | 1.88 |
|
| Diluted | $ | 1.83 |
| | $ | 1.45 |
| | $ | 1.87 |
|
| Weighted average number of shares: | | | | | |
| Basic | 179.6 |
| | 179.1 |
| | 180.9 |
|
| Diluted | 180.9 |
| | 180.0 |
| | 181.7 |
|
| Dividends declared per share | $ | 0.7200 |
| | $ | 0.6196 |
| | $ | 0.5632 |
|
XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except per share amounts)
|
| | | | | | | |
| December 31, | 2017 | | 2016 |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 414 |
| | $ | 308 |
|
| Receivables, less allowances for discounts, returns and doubtful accounts of $35 and $30 in 2017 and 2016, respectively | 956 |
| | 843 |
|
| Inventories | 524 |
| | 522 |
|
| Prepaid and other current assets | 177 |
| | 166 |
|
| Total current assets | 2,071 |
| | 1,839 |
|
| Property, plant and equipment, net | 643 |
| | 616 |
|
| Goodwill | 2,768 |
| | 2,632 |
|
| Other intangible assets, net | 1,168 |
| | 1,201 |
|
| Other non-current assets | 210 |
| | 186 |
|
| Total assets | $ | 6,860 |
| | $ | 6,474 |
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 549 |
| | $ | 457 |
|
| Accrued and other current liabilities | 551 |
| | 521 |
|
| Short-term borrowings and current maturities of long-term debt | — |
| | 260 |
|
| Total current liabilities | 1,100 |
| | 1,238 |
|
| Long-term debt, net | 2,200 |
| | 2,108 |
|
| Accrued postretirement benefits | 442 |
| | 408 |
|
| Deferred income tax liabilities | 252 |
| | 352 |
|
| Other non-current accrued liabilities | 347 |
| | 161 |
|
| Total liabilities | 4,341 |
| | 4,267 |
|
| Stockholders’ equity: | | | |
| Common stock — par value $0.01 per share: | | | |
| Authorized 750.0 shares, issued 192.3 and 191.4 shares in 2017 and 2016, respectively | 2 |
| | 2 |
|
| Capital in excess of par value | 1,912 |
| | 1,876 |
|
| Retained earnings | 1,227 |
| | 1,033 |
|
| Treasury stock – at cost 12.4 shares and 11.9 shares in 2017 and 2016, respectively | (428 | ) | | (403 | ) |
| Accumulated other comprehensive loss | (210 | ) | | (318 | ) |
| Total stockholders’ equity | 2,503 |
| | 2,190 |
|
| Non-controlling interest | 16 |
| | 17 |
|
| Total equity | 2,519 |
| | 2,207 |
|
| Total liabilities and stockholders’ equity | $ | 6,860 |
| | $ | 6,474 |
|
XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
|
| | | | | | | | | | | |
| Year Ended December 31, | 2017 | | 2016 | | 2015 |
| Operating Activities | | | | | |
| Net income | $ | 330 |
| | $ | 260 |
| | $ | 340 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| Depreciation | 109 |
| | 87 |
| | 88 |
|
| Amortization | 125 |
| | 64 |
| | 45 |
|
| Deferred income taxes | (33 | ) | | 14 |
| | (9 | ) |
| Share-based compensation | 21 |
| | 18 |
| | 15 |
|
| Restructuring and asset impairment charges | 25 |
| | 30 |
| | 6 |
|
| Gain from sale of businesses | 10 |
| | — |
| | (9 | ) |
| Other, net | 19 |
| | 6 |
| | 12 |
|
| Payments for restructuring | (28 | ) | | (16 | ) | | (14 | ) |
| Contributions to postretirement benefit plans | (33 | ) | | (27 | ) | | (25 | ) |
| Changes in assets and liabilities (net of acquisitions): | | | | | |
| Changes in receivables | (79 | ) | | (6 | ) | | (24 | ) |
| Changes in inventories | 27 |
| | (15 | ) | | 23 |
|
| Changes in accounts payable | 50 |
| | 61 |
| | 20 |
|
| Changes in accrued liabilities | 28 |
| | 13 |
| | (11 | ) |
| Changes in accrued taxes | 104 |
| | (13 | ) | | (3 | ) |
| Net changes in other assets and liabilities | 11 |
| | 21 |
| | 10 |
|
| Net Cash — Operating activities | 686 |
| | 497 |
| | 464 |
|
| Investing Activities | | | | | |
| Capital expenditures | (170 | ) | | (124 | ) | | (117 | ) |
| Proceeds from the sale of property, plant and equipment | 1 |
| | 1 |
| | — |
|
| Acquisitions of businesses and assets, net of cash acquired | (33 | ) | | (1,782 | ) | | (18 | ) |
| Proceeds from sale of businesses | 16 |
| | — |
| | 1 |
|
| Cash received from investments | 10 |
| | — |
| | — |
|
| Cash paid for investments | (11 | ) | | — |
| | — |
|
| Other, net | 6 |
| | 19 |
| | 2 |
|
| Net Cash — Investing activities | (181 | ) | | (1,886 | ) | | (132 | ) |
| Financing Activities | | | | | |
| Short-term debt issued | — |
| | 274 |
| | — |
|
| Short-term debt repaid, net | (282 | ) | | (80 | ) | | (3 | ) |
| Long-term debt issued, net | — |
| | 1,540 |
| | — |
|
| Long-term debt repaid | — |
| | (608 | ) | | — |
|
| Repurchase of common stock | (25 | ) | | (4 | ) | | (179 | ) |
| Proceeds from exercise of employee stock options | 16 |
| | 24 |
| | 21 |
|
| Excess tax benefit from share based compensation | — |
| | — |
| | 2 |
|
| Dividends paid | (130 | ) | | (112 | ) | | (102 | ) |
| Other, net | — |
| | — |
| | (1 | ) |
| Net Cash — Financing activities | (421 | ) | | 1,034 |
| | (262 | ) |
| Effect of exchange rate changes on cash | 22 |
| | (17 | ) | | (53 | ) |
| Net change in cash and cash equivalents | 106 |
| | (372 | ) | | 17 |
|
| Cash and cash equivalents at beginning of year | 308 |
| | 680 |
| | 663 |
|
| Cash and cash equivalents at end of year | $ | 414 |
| | $ | 308 |
| | $ | 680 |
|
| Supplemental disclosure of cash flow information: | | | | | |
| Cash paid during the year for: | | | | | |
| Interest | $ | 78 |
| | $ | 49 |
| | $ | 52 |
|
| Income taxes (net of refunds received) | $ | 57 |
| | $ | 78 |
| | $ | 75 |
|
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 non-GAAP measures, which may not be comparable to similarly titled measures reported by other companies, to be key performance indicators:
“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 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, amortization expense, and share-based compensation. “Adjusted EBITDA” reflects the adjustment to EBITDA to exclude restructuring and realignment costs, Sensus acquisition related costs, gain from sale of business and special charges. For Sensus historical adjustments, see Sensus Historical - Adjusted EBITDA table.
"Adjusted Operating Income", "Adjusted Segment Operating Income", "Adjusted Net Income" and “Adjusted EPS” defined as operating income, segment operating income, adjusted net income and earnings per share, adjusted to exclude restructuring and realignment costs, Sensus acquisition related costs, gain from sale of business, special charges and tax-related special items, as applicable. For Sensus historical adjustments, see Sensus Historical - Adjusted Operating Income table.
“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures as well as adjustments for other significant items that impact current results which management believes are not related to our ongoing operations and performance. Our definition of free cash flow does 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.
“Sensus Acquisition Related Costs" defined as costs incurred by the Company associated with the acquisition of Sensus that are being reported within operating income. These costs include integration costs and costs related to the recognition of the backlog intangible asset recorded in purchase accounting.
“Special charges" defined as costs incurred by the Company, such as non-cash impairment charges, due diligence costs, initial acquisition and integration costs not related to Sensus and other special non-operating items, as well as interest expense related to the early extinguishment of debt and financing costs on the bridge loan entered into for the Sensus acquisition during 2016.
“Tax-related special items" defined as tax items, such as tax return versus tax provision adjustments, tax exam impacts, tax law change impacts, significant reserves for cash repatriation, excess tax benefits/losses and other discrete tax adjustments.
"Pro forma" defined as including the results of Sensus for the calendar period prior to the acquisition of Sensus by Xylem Inc. on October 31, 2016.
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 |
| | Orders | | Orders | | Change 2017 v. 2016 | | % Change 2017 v. 2016 | | Acquisitions/
Divestitures | | FX Impact | | Change
Adj.
2017 v. 2016 | | % Change
Adj. 2017 v. 2016 | | |
| | 2017 | | 2016 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Year Ended December 31 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 4,868 |
| | 3,824 |
| | 1,044 |
| | 27 | % | | (751 | ) | | (33 | ) | | 260 |
| | 7 | % | | 26 | % |
| Water Infrastructure | 2,112 |
| | 1,957 |
| | 155 |
| | 8 | % | | — |
| | (16 | ) | | 139 |
| | 7 | % | | 7 | % |
| Applied Water | 1,476 |
| | 1,405 |
| | 71 |
| | 5 | % | | 11 |
| | (3 | ) | | 79 |
| | 6 | % | | 5 | % |
| Measurement & Control Solutions | 1,280 |
| | 462 |
| | 818 |
| | 177 | % | | (762 | ) | | (14 | ) | | 42 |
| | 9 | % | | 174 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended December 31 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 1,270 |
| | 1,067 |
| | 203 |
| | 19 | % | | (63 | ) | | (37 | ) | | 103 |
| | 10 | % | | 16 | % |
| Water Infrastructure | 566 |
| | 492 |
| | 74 |
| | 15 | % | | — |
| | (20 | ) | | 54 |
| | 11 | % | | 11 | % |
| Applied Water | 373 |
| | 348 |
| | 25 |
| | 7 | % | | 6 |
| | (9 | ) | | 22 |
| | 6 | % | | 5 | % |
| Measurement & Control Solutions | 331 |
| | 227 |
| | 104 |
| | 46 | % | | (69 | ) | | (8 | ) | | 27 |
| | 12 | % | | 42 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended September 30 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 1,249 |
| | 946 |
| | 303 |
| | 32 | % | | (223 | ) | | (22 | ) | | 58 |
| | 6 | % | | 30 | % |
| Water Infrastructure | 558 |
| | 521 |
| | 37 |
| | 7 | % | | — |
| | (12 | ) | | 25 |
| | 5 | % | | 5 | % |
| Applied Water | 374 |
| | 342 |
| | 32 |
| | 9 | % | | 2 |
| | (4 | ) | | 30 |
| | 9 | % | | 8 | % |
| Measurement & Control Solutions | 317 |
| | 83 |
| | 234 |
| | 282 | % | | (225 | ) | | (6 | ) | | 3 |
| | 4 | % | | 275 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended June 30 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 1,212 |
| | 923 |
| | 289 |
| | 31 | % | | (228 | ) | | 14 |
| | 75 |
| | 8 | % | | 33 | % |
| Water Infrastructure | 521 |
| | 483 |
| | 38 |
| | 8 | % | | — |
| | 9 |
| | 47 |
| | 10 | % | | 10 | % |
| Applied Water | 375 |
| | 361 |
| | 14 |
| | 4 | % | | 2 |
| | 5 |
| | 21 |
| | 6 | % | | 5 | % |
| Measurement & Control Solutions | 316 |
| | 79 |
| | 237 |
| | 300 | % | | (230 | ) | | — |
| | 7 |
| | 9 | % | | 300 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended March 31 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 1,137 |
| | 888 |
| | 249 |
| | 28 | % | | (237 | ) | | 12 |
| | 24 |
| | 3 | % | | 29 | % |
| Water Infrastructure | 467 |
| | 461 |
| | 6 |
| | 1 | % | | — |
| | 7 |
| | 13 |
| | 3 | % | | 3 | % |
| Applied Water | 354 |
| | 354 |
| | — |
| | 0 | % | | 1 |
| | 5 |
| | 6 |
| | 2 | % | | 1 | % |
| Measurement & Control Solutions | 316 |
| | 73 |
| | 243 |
| | 333 | % | | (238 | ) | | — |
| | 5 |
| | 7 | % | | 333 | % |
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 |
| | Revenue | | Revenue | | Change 2017 v. 2016 | | % Change 2017 v. 2016 | | Acquisitions / Divestitures | | FX Impact | | Change
Adj.
2017 v. 2016 | | % Change
Adj. 2017 v. 2016 | | |
| | 2017 | | 2016 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Year Ended December 31 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 4,707 |
| | 3,771 |
| | 936 |
| | 25 | % | | (780 | ) | | (34 | ) | | 122 |
| | 3 | % | | 24 | % |
| Water Infrastructure | 2,004 |
| | 1,932 |
| | 72 |
| | 4 | % | | — |
| | (16 | ) | | 56 |
| | 3 | % | | 3 | % |
| Applied Water | 1,421 |
| | 1,393 |
| | 28 |
| | 2 | % | | 10 |
| | (4 | ) | | 34 |
| | 2 | % | | 2 | % |
| Measurement & Control Solutions | 1,282 |
| | 446 |
| | 836 |
| | 187 | % | | (790 | ) | | (14 | ) | | 32 |
| | 7 | % | | 184 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended December 31 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 1,277 |
| | 1,095 |
| | 182 |
| | 17 | % | | (70 | ) | | (37 | ) | | 75 |
| | 7 | % | | 13 | % |
| Water Infrastructure | 583 |
| | 530 |
| | 53 |
| | 10 | % | | — |
| | (21 | ) | | 32 |
| | 6 | % | | 6 | % |
| Applied Water | 373 |
| | 351 |
| | 22 |
| | 6 | % | | 5 |
| | (9 | ) | | 18 |
| | 5 | % | | 4 | % |
| Measurement & Control Solutions | 321 |
| | 214 |
| | 107 |
| | 50 | % | | (75 | ) | | (7 | ) | | 25 |
| | 12 | % | | 47 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended September 30 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 1,195 |
| | 897 |
| | 298 |
| | 33 | % | | (232 | ) | | (22 | ) | | 44 |
| | 5 | % | | 31 | % |
| Water Infrastructure | 520 |
| | 478 |
| | 42 |
| | 9 | % | | — |
| | (10 | ) | | 32 |
| | 7 | % | | 7 | % |
| Applied Water | 354 |
| | 343 |
| | 11 |
| | 3 | % | | 2 |
| | (5 | ) | | 8 |
| | 2 | % | | 2 | % |
| Measurement & Control Solutions | 321 |
| | 76 |
| | 245 |
| | 322 | % | | (234 | ) | | (7 | ) | | 4 |
| | 5 | % | | 313 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended June 30 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 1,164 |
| | 932 |
| | 232 |
| | 25 | % | | (236 | ) | | 14 |
| | 10 |
| | 1 | % | | 26 | % |
| Water Infrastructure | 482 |
| | 484 |
| | (2 | ) | | 0 | % | | — |
| | 9 |
| | 7 |
| | 1 | % | | 1 | % |
| Applied Water | 361 |
| | 366 |
| | (5 | ) | | -1 | % | | 2 |
| | 5 |
| | 2 |
| | 1 | % | | 0 | % |
| Measurement & Control Solutions | 321 |
| | 82 |
| | 239 |
| | 291 | % | | (238 | ) | | — |
| | 1 |
| | 1 | % | | 291 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended March 31 | | | | | | | | | | | | | | | | | |
| Xylem Inc. | 1,071 |
| | 847 |
| | 224 |
| | 26 | % | | (242 | ) | | 11 |
| | (7 | ) | | -1 | % | | 28 | % |
| Water Infrastructure | 419 |
| | 440 |
| | (21 | ) | | -5 | % | | — |
| | 6 |
| | (15 | ) | | -3 | % | | -3 | % |
| Applied Water | 333 |
| | 333 |
| | — |
| | 0 | % | | 1 |
| | 5 |
| | 6 |
| | 2 | % | | 2 | % |
| Measurement & Control Solutions | 319 |
| | 74 |
| | 245 |
| | 331 | % | | (243 | ) | | — |
| | 2 |
| | 3 | % | | 331 | % |
Xylem Inc. Non-GAAP Reconciliation - Pro forma with Sensus
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 |
| | Revenue | | Revenue | | Change 2017 v. 2016 | | % Change 2017 v. 2016 | | Acquisitions / Divestitures | | FX Impact | | Change
Adj.
2017 v. 2016 | | % Change
Adj. 2017 v. 2016 | | |
| | 2017 | | 2016 (a) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Year Ended December 31 | | | | | | | | | | | | | | | | | |
Xylem Inc. | 4,707 |
| | 4,533 |
| | 174 |
| | 4 | % | | 6 |
| | (21 | ) | | 159 |
| | 4 | % | | 3 | % |
| Water Infrastructure | 2,004 |
| | 1,932 |
| | 72 |
| | 4 | % | | — |
| | (16 | ) | | 56 |
| | 3 | % | | 3 | % |
| Applied Water | 1,421 |
| | 1,393 |
| | 28 |
| | 2 | % | | 10 |
| | (4 | ) | | 34 |
| | 2 | % | | 2 | % |
| Measurement & Control Solutions | 1,282 |
| | 1,208 |
| | 74 |
| | 6 | % | | (4 | ) | | (1 | ) | | 69 |
| | 6 | % | | 6 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended December 31 | | | | | | | | | | | | | | | | | |
Xylem Inc. | 1,277 |
| | 1,164 |
| | 113 |
| | 10 | % | | 3 |
| | (37 | ) | | 79 |
| | 7 | % | | 7 | % |
| Water Infrastructure | 583 |
| | 530 |
| | 53 |
| | 10 | % | | — |
| | (21 | ) | | 32 |
| | 6 | % | | 6 | % |
| Applied Water | 373 |
| | 351 |
| | 22 |
| | 6 | % | | 5 |
| | (9 | ) | | 18 |
| | 5 | % | | 4 | % |
| Measurement & Control Solutions | 321 |
| | 283 |
| | 38 |
| | 13 | % | | (2 | ) | | (7 | ) | | 29 |
| | 10 | % | | 11 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended September 30 | | | | | | | | | | | | | | | | | |
Xylem Inc. | 1,195 |
| | 1,125 |
| | 70 |
| | 6 | % | | 2 |
| | (18 | ) | | 54 |
| | 5 | % | | 5 | % |
| Water Infrastructure | 520 |
| | 478 |
| | 42 |
| | 9 | % | | — |
| | (10 | ) | | 32 |
| | 7 | % | | 7 | % |
| Applied Water | 354 |
| | 343 |
| | 11 |
| | 3 | % | | 2 |
| | (5 | ) | | 8 |
| | 2 | % | | 2 | % |
| Measurement & Control Solutions | 321 |
| | 304 |
| | 17 |
| | 6 | % | | — |
| | (3 | ) | | 14 |
| | 5 | % | | 5 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended June 30 | | | | | | | | | | | | | | | | | |
Xylem Inc. | 1,164 |
| | 1,169 |
| | (5 | ) | | 0 | % | | 2 |
| | 19 |
| | 16 |
| | 1 | % | | 1 | % |
| Water Infrastructure | 482 |
| | 484 |
| | (2 | ) | | 0 | % | | — |
| | 9 |
| | 7 |
| | 1 | % | | 1 | % |
| Applied Water | 361 |
| | 366 |
| | (5 | ) | | -1 | % | | 2 |
| | 5 |
| | 2 |
| | 1 | % | | 0 | % |
| Measurement & Control Solutions | 321 |
| | 319 |
| | 2 |
| | 1 | % | | — |
| | 5 |
| | 7 |
| | 2 | % | | 2 | % |
| | | | | | | | | | | | | | | | | | |
| Quarter Ended March 31 | | | | | | | | | | | | | | | | | |
Xylem Inc. | 1,071 |
| | 1,075 |
| | (4 | ) | | 0 | % | | (1 | ) | | 15 |
| | 10 |
| | 1 | % | | 1 | % |
| Water Infrastructure | 419 |
| | 440 |
| | (21 | ) | | -5 | % | | — |
| | 6 |
| | (15 | ) | | -3 | % | | -3 | % |
| Applied Water | 333 |
| | 333 |
| | — |
| | 0 | % | | 1 |
| | 5 |
| | 6 |
| | 2 | % | | 2 | % |
| Measurement & Control Solutions | 319 |
| | 302 |
| | 17 |
| | 6 | % | | (2 | ) | | 4 |
| | 19 |
| | 6 | % | | 7 | % |
|
| |
| (a) | Includes Measurement & Control Solutions and Visenti revenue for the ten months ended October 31, 2016 which was prior to Xylem acquiring the businesses. |
Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income
($ Millions)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Q1 | | Q2 | | Q3 | | Q4 | | YTD |
| | 2017 | 2016 | | 2017 | 2016 | | 2017 | 2016 | | 2017 | 2016 | | 2017 | 2016 |
| Total Revenue | | | | | | | | | | | | | | |
| • Total Xylem | 1,071 |
| 847 |
| | 1,164 |
| 932 |
| | 1,195 |
| 897 |
| | 1,277 |
| 1,095 |
| | 4,707 |
| 3,771 |
|
| • Water Infrastructure | 419 |
| 440 |
| | 482 |
| 484 |
| | 520 |
| 478 |
| | 583 |
| 530 |
| | 2,004 |
| 1,932 |
|
| • Applied Water | 333 |
| 333 |
| | 361 |
| 366 |
| | 354 |
| 343 |
| | 373 |
| 351 |
| | 1,421 |
| 1,393 |
|
| • Measurement & Control Solutions | 319 |
| 74 |
| | 321 |
| 82 |
| | 321 |
| 76 |
| | 321 |
| 214 |
| | 1,282 |
| 446 |
|
| Operating Income | | | | | | | | | | | | | | |
| • Total Xylem | 86 |
| 79 |
| | 139 |
| 109 |
| | 152 |
| 109 |
| | 179 |
| 109 |
| | 556 |
| 406 |
|
| • Water Infrastructure | 40 |
| 51 |
| | 74 |
| 66 |
| | 91 |
| 75 |
| | 103 |
| 99 |
| | 308 |
| 291 |
|
| • Applied Water | 36 |
| 39 |
| | 49 |
| 51 |
| | 51 |
| 50 |
| | 61 |
| 48 |
| | 197 |
| 188 |
|
| • Measurement & Control Solutions | 25 |
| 3 |
| | 29 |
| 4 |
| | 26 |
| 4 |
| | 30 |
| (11 | ) | | 110 |
| — |
|
| • Total Segments | 101 |
| 93 |
| | 152 |
| 121 |
| | 168 |
| 129 |
| | 194 |
| 136 |
| | 615 |
| 479 |
|
| Operating Margin | | | | | | | | | | | | | | |
| • Total Xylem | 8.0 | % | 9.3 | % | | 11.9 | % | 11.7 | % | | 12.7 | % | 12.2 | % | | 14.0 | % | 10.0 | % | | 11.8 | % | 10.8 | % |
| • Water Infrastructure | 9.5 | % | 11.6 | % | | 15.4 | % | 13.6 | % | | 17.5 | % | 15.7 | % | | 17.7 | % | 18.7 | % | | 15.4 | % | 15.1 | % |
| • Applied Water | 10.8 | % | 11.7 | % | | 13.6 | % | 13.9 | % | | 14.4 | % | 14.6 | % | | 16.4 | % | 13.7 | % | | 13.9 | % | 13.5 | % |
| • Measurement & Control Solutions | 7.8 | % | 4.1 | % | | 9.0 | % | 4.9 | % | | 8.1 | % | 5.3 | % | | 9.3 | % | (5.1 | )% | | 8.6 | % | — | % |
| • Total Segments | 9.4 | % | 11.0 | % | | 13.1 | % | 13.0 | % | | 14.1 | % | 14.4 | % | | 15.2 | % | 12.4 | % | | 13.1 | % | 12.7 | % |
| Sensus Acquisition Related Costs | | | | | | | | | | | | | | |
| • Total Xylem | 10 |
| — |
| | 4 |
| — |
| | 5 |
| 10 |
| | 3 |
| 43 |
| | 22 |
| 53 |
|
| • Water Infrastructure | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
|
| • Applied Water | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
|
| • Measurement & Control Solutions | 6 |
| — |
| | 3 |
| — |
| | 4 |
| — |
| | 2 |
| 25 |
| | 15 |
| 25 |
|
| • Total Segments | 6 |
| — |
| | 3 |
| — |
| | 4 |
| — |
| | 2 |
| 25 |
| | 15 |
| 25 |
|
| Special Charges | | | | | | | | | | | | | | |
| • Total Xylem | 5 |
| 4 |
| | — |
| 1 |
| | 3 |
| — |
| | 3 |
| — |
| | 11 |
| 5 |
|
| • Water Infrastructure | — |
| 2 |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| 2 |
|
| • Applied Water | 5 |
| — |
| | — |
| — |
| | — |
| — |
| | — |
| — |
| | 5 |
| — |
|
| • Measurement & Control Solutions | — |
| 2 |
| | — |
| 1 |
| | — |
| — |
| | — |
| — |
| | — |
| 3 |
|
| • Total Segments | 5 |
| 4 |
| | — |
| 1 |
| | — |
| — |
| | — |
| — |
| | 5 |
| 5 |
|
| Restructuring & Realignment Costs | | | | | | | | | | | | | | |
| • Total Xylem | 11 |
| 9 |
| | 12 |
| 11 |
| | 9 |
| 12 |
| | 9 |
| 15 |
| | 41 |
| 47 |
|
| • Water Infrastructure | 4 |
| 3 |
| | 5 |
| 6 |
| | 3 |
| 5 |
| | 4 |
| 2 |
| | 16 |
| 16 |
|
| • Applied Water | 4 |
| 3 |
| | 5 |
| 3 |
| | 5 |
| 3 |
| | 3 |
| 7 |
| | 17 |
| 16 |
|
| • Measurement & Control Solutions | 3 |
| 1 |
| | 2 |
| 2 |
| | 1 |
| 4 |
| | 2 |
| 6 |
| | 8 |
| 13 |
|
| • Total Segments | 11 |
| 7 |
| | 12 |
| 11 |
| | 9 |
| 12 |
| | 9 |
| 15 |
| | 41 |
| 45 |
|
| Adjusted Operating Income | | | | | | | | | | | | | | |
| • Total Xylem | 112 |
| 92 |
| | 155 |
| 121 |
| | 169 |
| 131 |
| | 194 |
| 167 |
| | 630 |
| 511 |
|
| • Water Infrastructure | 44 |
| 56 |
| | 79 |
| 72 |
| | 94 |
| 80 |
| | 107 |
| 101 |
| | 324 |
| 309 |
|
| • Applied Water | 45 |
| 42 |
| | 54 |
| 54 |
| | 56 |
| 53 |
| | 64 |
| 55 |
| | 219 |
| 204 |
|
| • Measurement & Control Solutions | 34 |
| 6 |
| | 34 |
| 7 |
| | 31 |
| 8 |
| | 34 |
| 20 |
| | 133 |
| 41 |
|
| • Total Segments | 123 |
| 104 |
| | 167 |
| 133 |
| | 181 |
| 141 |
| | 205 |
| 176 |
| | 676 |
| 554 |
|
| Adjusted Operating Margin | | | | | | | | | | | | | | |
| • Total Xylem | 10.5 | % | 10.9 | % | | 13.3 | % | 13.0 | % | | 14.1 | % | 14.6 | % | | 15.2 | % | 15.3 | % | | 13.4 | % | 13.6 | % |
| • Water Infrastructure | 10.5 | % | 12.7 | % | | 16.4 | % | 14.9 | % | | 18.1 | % | 16.7 | % | | 18.4 | % | 19.1 | % | | 16.2 | % | 16.0 | % |
| • Applied Water | 13.5 | % | 12.6 | % | | 15.0 | % | 14.8 | % | | 15.8 | % | 15.5 | % | | 17.2 | % | 15.7 | % | | 15.4 | % | 14.6 | % |
| • Measurement & Control Solutions | 10.7 | % | 8.1 | % | | 10.6 | % | 8.5 | % | | 9.7 | % | 10.5 | % | | 10.6 | % | 9.3 | % | | 10.4 | % | 9.2 | % |
| • Total Segments | 11.5 | % | 12.3 | % | | 14.3 | % | 14.3 | % | | 15.1 | % | 15.7 | % | | 16.1 | % | 16.1 | % | | 14.4 | % | 14.7 | % |
Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Q4 2017 | | Q4 2016 |
| | As Reported | | Adjustments | | Adjusted | | As Reported | | Adjustments | | Adjusted |
| Total Revenue | 1,277 |
| | | | 1,277 |
| | 1,095 |
| | | | 1,095 |
|
| Operating Income | 179 |
| | 15 |
| a | 194 |
| | 109 |
| | 58 |
| a | 167 |
|
| Operating Margin | 14.0 | % | | | | 15.2 | % | | 10.0 | % | | | | 15.3 | % |
| Interest Expense | (20 | ) | | | | (20 | ) | | (20 | ) | | 1 |
| e | (19 | ) |
| Other Non-Operating Income (Expense) | (1 | ) | | 2 |
| b | 1 |
| | 1 |
| | | | 1 |
|
| (Loss)/Gain from sale of business | (14 | ) | | 14 |
| | — |
| | — |
| | — |
| | — |
|
| Income before Taxes | 144 |
| | 31 |
| | 175 |
| | 90 |
| | 59 |
| | 149 |
|
| Provision for Income Taxes | (74 | ) | | 36 |
| c | (38 | ) | | (40 | ) | | 9 |
| c | (31 | ) |
| Gain/(Loss) attributable to minority interest | 1 |
| | (1 | ) | d | — |
| | — |
| | — |
| | — |
|
| Net Income attributable to Xylem | 71 |
| | 66 |
| | 137 |
| | 50 |
| | 68 |
| | 118 |
|
| Diluted Shares | 181.3 |
| | | | 181.3 |
| | 180.6 |
| | | | 180.6 |
|
| Diluted EPS | $ | 0.40 |
| | $ | 0.36 |
| | $ | 0.76 |
| | $ | 0.28 |
| | $ | 0.38 |
| | $ | 0.66 |
|
|
| | | | | | | | | | | |
| Year-over-year currency translation impact on current year diluted EPS | $ | 0.02 |
| | — |
| | $ | 0.02 |
|
| Diluted EPS at Constant Currency | $ | 0.38 |
| | $ | 0.36 |
| | $ | 0.74 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Q4 YTD 2017 | | Q4 YTD 2016 |
| | As Reported | | Adjustments | | Adjusted | | As Reported | | Adjustments | | Adjusted |
| Total Revenue | 4,707 |
| | | | 4,707 |
| | 3,771 |
| | | | 3,771 |
|
| Operating Income | 556 |
| | 74 |
| a | 630 |
| | 406 |
| | 105 |
| a | 511 |
|
| Operating Margin | 11.8 | % | | | | 13.4 | % | | 10.8 | % | | | | 13.6 | % |
| Interest Expense | (82 | ) | | | | (82 | ) | | (70 | ) | | 13 |
| e | (57 | ) |
| Other Non-Operating Income (Expense) | 2 |
| | 2 |
| b | 4 |
| | 4 |
| | | | 4 |
|
| (Loss)/Gain from sale of business | (10 | ) | | 10 |
| | — |
| | — |
| | | | — |
|
| Income before Taxes | 466 |
| | 86 |
| | 552 |
| | 340 |
| | 118 |
| | 458 |
|
| Provision for Income Taxes | (136 | ) | | 17 |
| c | (119 | ) | | (80 | ) | | (14 | ) | c | (94 | ) |
| Income attributable to minority interest | 1 |
| | (1 | ) | d | — |
| | | | | | |
| Net Income attributable to Xylem | 331 |
| | 102 |
| | 433 |
| | 260 |
| | 104 |
| | 364 |
|
| Diluted Shares | 180.9 |
| | | | 180.9 |
| | 180.0 |
| | | | 180.0 |
|
| Diluted EPS | $ | 1.83 |
| | $ | 0.57 |
| | $ | 2.40 |
| | $ | 1.45 |
| | $ | 0.58 |
| | $ | 2.03 |
|
|
| | | | | | | | | | | |
| Year-over-year currency translation impact on current year diluted EPS | $ | (0.02 | ) | | 0.02 |
| | $ | — |
|
| Diluted EPS at Constant Currency | $ | 1.85 |
| | $ | 0.55 |
| | $ | 2.40 |
|
|
| |
| a | Fourth quarter: Restructuring & realignment costs of $9 million and $15 million in 2017 and 2016, respectively, Sensus acquisition related costs of $3 million and $43 million in 2017 and 2016 and special charges of $3 million of other acquisition costs in 2017. |
| | Year-to-date: Restructuring & realignment costs of $41 million and $47 million in 2017 and 2016, respectively, Sensus acquisition related costs of $22 million and $53 million in 2017 and 2016, respectively and special charges of $11 million ($5 million of asset impairment, $3 million of due diligence costs and $3 of other acquisition costs) in 2017 and $5 million of initial acquisition costs in 2016. |
| b | Special charges of a write-down of investment in joint venture of $2 million in the fourth quarter of 2017. |
| c | Fourth quarter: Net tax impact on restructuring & realignment costs of $2 million and $4 million in 2017 and 2016, respectively, net tax impact on Sensus acquisition related costs of $1 million and $15 million in 2017 and 2016, respectively, net tax impact on special charges of $1 million in 2017 and tax-related special items of $40 million and $28 million of benefit in 2017 and 2016, respectively. |
| | Year-to-date: Net tax impact on restructuring & realignment costs of $13 million in both 2017 and 2016, respectively, net tax impact on Sensus acquisition related costs of $8 million and $15 million in 2017 and 2016, respectively , net tax impact on special charges of $4 million and $7 million in 2017 and 2016, respectively, net tax impact of $2 million on the gain from sale of business in 2017 and tax-related special items of $40 million and $21 million of benefit in 2017 and 2016, respectively. |
| d | Special item consisting of minority interest income attributable to the loss on a joint venture held for sale in the fourth quarter of 2017. |
| e | Fourth quarter special charges of $1 million of financing costs related to the bridge loan entered into for the Sensus acquisition in 2016. Year-to-date special charges of $5 million of financing costs related to the bridge loan entered into for the Sensus acquisition and $8 million of costs related to the early extinguishment of debt in 2016. |
Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow
($ Millions)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Q1 | | Q2 | | Q3 | | Q4 | | Year Ended |
| | 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 | | 2017 | | 2016 |
| Net Cash - Operating Activities | $ | 58 |
| | $ | 41 |
| | $ | 93 |
| | $ | 84 |
| | $ | 228 |
| | $ | 149 |
| | $ | 307 |
| | $ | 223 |
| | $ | 686 |
| | $ | 497 |
|
| Capital Expenditures | (49 | ) | | (37 | ) | | (28 | ) | | (25 | ) | | (42 | ) | | (28 | ) | | (51 | ) | | (34 | ) | | (170 | ) | | (124 | ) |
| Free Cash Flow | $ | 9 |
| | $ | 4 |
| | $ | 65 |
| | $ | 59 |
| | $ | 186 |
| | $ | 121 |
| | $ | 256 |
| | $ | 189 |
| | $ | 516 |
| | $ | 373 |
|
| Cash paid for Sensus acquisition related costs | (17 | ) | | — |
| | (5 | ) | | — |
| | (1 | ) | | (3 | ) | | (5 | ) | | (10 | ) | | (28 | ) | | (13 | ) |
| Free Cash Flow, excluding Sensus Acquisition Related Costs | $ | 26 |
| | $ | 4 |
| | $ | 70 |
| | $ | 59 |
| | $ | 187 |
| | $ | 124 |
| | $ | 261 |
| | $ | 199 |
| | $ | 544 |
| | $ | 386 |
|
| Net Income | 56 |
| | 66 |
| | 100 |
| | 71 |
| | 104 |
| | 73 |
| | 70 |
| | 50 |
| | 330 |
| | 260 |
|
| Gain/(Loss) from sale of businesses | 5 |
| | — |
| | — |
| | — |
| | (1 | ) | | — |
| | (14 | ) | | — |
| | (10 | ) | | — |
|
| Special Charges - non-cash impairment and early debt extinguishment | (5 | ) | | — |
| | — |
| | (8 | ) | | — |
| | — |
| | (2 | ) | | — |
| | (7 | ) | | (8 | ) |
| Sensus acquisition related costs | (10 | ) | | — |
| | (4 | ) | | — |
| | (5 | ) | | (10 | ) | | (3 | ) | | (43 | ) | | (22 | ) | | (53 | ) |
| Net Income, excluding gain on sale of businesses, non-cash impairment charges and Sensus Acquisition Related Costs | $ | 66 |
| | $ | 66 |
| | $ | 104 |
| | $ | 79 |
| | $ | 110 |
| | $ | 83 |
| | $ | 89 |
| | $ | 93 |
| | $ | 369 |
| | $ | 321 |
|
| Free Cash Flow Conversion | 39 | % | | 6 | % | | 67 | % | | 75 | % | | 170 | % | | 149 | % | | 293 | % | | 214 | % | | 147 | % | | 120 | % |
| | | | | | | | | | | | | | | | | | | | |
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
($ Millions)
|
| | | | | | | | | | | | | | |
| 2017 |
| | Q1 | | Q2 | | Q3 | | Q4 | | Total |
| Net Income | 56 |
| | 100 |
| | 104 |
| | 70 |
| | 330 |
|
| Income Tax Expense | 14 |
| | 21 |
| | 27 |
| | 74 |
| | 136 |
|
| Interest Expense (Income), net | 20 |
| | 20 |
| | 20 |
| | 19 |
| | 79 |
|
| Depreciation | 28 |
| | 27 |
| | 28 |
| | 26 |
| | 109 |
|
| Amortization | 31 |
| | 30 |
| | 30 |
| | 34 |
| | 125 |
|
| EBITDA | 149 |
| | 198 |
| | 209 |
| | 223 |
| | 779 |
|
| Share-based Compensation | 6 |
| | 5 |
| | 5 |
| | 5 |
| | 21 |
|
| Restructuring & Realignment | 11 |
| | 12 |
| | 9 |
| | 9 |
| | 41 |
|
| Gain on sale of business | (5 | ) | | — |
| | 1 |
| | 14 |
| | 10 |
|
| Sensus acquisition related costs | 7 |
| | 2 |
| | 3 |
| | 2 |
| | 14 |
|
| Special Charges | 5 |
| | — |
| | 3 |
| | 5 |
| | 13 |
|
| Adjusted EBITDA | 173 |
| | 217 |
| | 230 |
| | 258 |
| | 878 |
|
| Revenue | 1,071 |
| | 1,164 |
| | 1,195 |
| | 1,277 |
| | 4,707 |
|
| Adjusted EBITDA Margin | 16.2 | % | | 18.6 | % | | 19.2 | % | | 20.2 | % | | 18.7 | % |
| | | | | | | | | | |
| 2016 |
| | Q1 | | Q2 | | Q3 | | Q4 | | Total |
| Net Income | 66 |
| | 71 |
| | 73 |
| | 50 |
| | 260 |
|
| Income Tax Expense | (1 | ) | | 19 |
| | 22 |
| | 40 |
| | 80 |
|
| Interest Expense (Income), net | 14 |
| | 19 |
| | 16 |
| | 19 |
| | 68 |
|
| Depreciation | 20 |
| | 21 |
| | 20 |
| | 26 |
| | 87 |
|
| Amortization | 12 |
| | 12 |
| | 12 |
| | 28 |
| | 64 |
|
| EBITDA | 111 |
| | 142 |
| | 143 |
| | 163 |
| | 559 |
|
| Share-based Compensation | 5 |
| | 5 |
| | 5 |
| | 3 |
| | 18 |
|
| Restructuring & Realignment | 9 |
| | 11 |
| | 12 |
| | 15 |
| | 47 |
|
| Sensus acquisition related costs | — |
| | — |
| | 10 |
| | 36 |
| | 46 |
|
| Special Charges | 4 |
| | 1 |
| | — |
| | — |
| | 5 |
|
| Adjusted EBITDA | 129 |
| | 159 |
| | 170 |
| | 217 |
| | 675 |
|
| Revenue | 847 |
| | 932 |
| | 897 |
| | 1,095 |
| | 3,771 |
|
| Adjusted EBITDA Margin | 15.2 | % | | 17.1 | % | | 19.0 | % | | 19.8 | % | | 17.9 | % |
| | | | | | | | | | |
