Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 28, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 1-35229 | |
Entity Registrant Name | Xylem Inc. | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 45-2080495 | |
Entity Address, Address Line One | 301 Water Street SE | |
Entity Address, City or Town | Washington | |
Entity Address, State or Province | DC | |
Entity Address, Postal Zip Code | 20003 | |
City Area Code | (202) | |
Local Phone Number | 869-9150 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | XYL | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 240,828,528 | |
Entity Shell Company | false | |
Entity Central Index Key | 0001524472 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Recently Adopted Pronouncements In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-04, " Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. " This guidance requires disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. The new standard does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. The ASU became effective January 1, 2023, except for the rollforward requirement, which becomes effective January 1, 2024. The disclosures related to our adoption of the standard are included below: The Company facilitates the opportunity for suppliers to participate in voluntary supply chain financing programs with third-party financial institutions. Xylem agrees on commercial terms, including payment terms, with suppliers regardless of program participation. The company does not determine the terms or conditions of the arrangement between suppliers and the third-party financial institutions. Participating suppliers are paid directly by the third-party financial institution. Xylem pays the third-party financial institution the stated amount of confirmed invoices from its designated suppliers at the original invoice amount on the original maturity dates of the invoices, ranging from 45-180 days. Xylem does not pay fees related to these programs. Xylem or the third-party financial institutions may terminate the agreements upon at least 30 days’ notice. As of June 30, 2023, the total outstanding balance under these programs is $178 million presented on our Condensed Consolidated Balance Sheet within "Accounts payable." In October 2021, the FASB issued ASU No. 2021-08, “ Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. |
Condensed Consolidated Income S
Condensed Consolidated Income Statements (Unaudited) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenues | $ 1,722 | $ 1,364 | $ 3,170 | $ 2,636 |
Cost of revenue | 1,071 | 844 | 1,973 | 1,649 |
Gross profit | 651 | 520 | 1,197 | 987 |
Selling, general and administrative expenses | 446 | 314 | 800 | 618 |
Research and development expenses | 58 | 53 | 111 | 105 |
Restructuring and asset impairment charges | 28 | 7 | 36 | 7 |
Operating income | 119 | 146 | 250 | 257 |
Interest expense | 12 | 12 | 21 | 25 |
Other non-operating income, net | 7 | 2 | 11 | 1 |
Gain from sale of business | 0 | 0 | 0 | 1 |
Income before taxes | 114 | 136 | 240 | 234 |
Income tax expense | 22 | 24 | 49 | 40 |
Net income | $ 92 | $ 112 | $ 191 | $ 194 |
Earnings per share: | ||||
Basic (usd per share) | $ 0.45 | $ 0.62 | $ 0.99 | $ 1.07 |
Diluted (usd per share) | $ 0.45 | $ 0.62 | $ 0.98 | $ 1.07 |
Weighted average number of shares: | ||||
Basic (in shares) | 205,539 | 180,156 | 192,967 | 180,193 |
Diluted (in shares) | 206,740 | 180,650 | 194,029 | 180,835 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 92 | $ 112 | $ 191 | $ 194 |
Other comprehensive income (loss), before tax: | ||||
Foreign currency translation adjustment | (38) | (41) | (16) | (44) |
Net change in derivative hedge agreements: | ||||
Unrealized gain (loss) | (3) | (9) | 1 | (15) |
Amount of loss reclassified into net income | (1) | 3 | 4 | 5 |
Net change in post-retirement benefit plans: | ||||
Amortization of prior service credit | (1) | (1) | (1) | (1) |
Amortization of actuarial (gain) loss into net income | 0 | 4 | (1) | 8 |
Foreign currency translation adjustment | (1) | 0 | (1) | 0 |
Other comprehensive income (loss), before tax | (44) | (44) | (14) | (47) |
Income tax (benefit) expense related to items of other comprehensive income (loss) | (9) | 27 | (14) | 30 |
Other comprehensive income (loss), net of tax | (35) | (71) | 0 | (77) |
Comprehensive income | $ 57 | $ 41 | $ 191 | $ 117 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 708 | $ 944 |
Receivables, less allowances for discounts, returns and credit losses of $45 and $50 in 2023 and 2022, respectively | 1,659 | 1,096 |
Inventories | 1,143 | 799 |
Prepaid and other current assets | 225 | 173 |
Total current assets | 3,735 | 3,012 |
Property, plant and equipment, net | 1,144 | 630 |
Goodwill | 7,108 | 2,719 |
Other intangible assets, net | 3,188 | 930 |
Other non-current assets | 922 | 661 |
Total assets | 16,097 | 7,952 |
Current liabilities: | ||
Accounts payable | 968 | 723 |
Accrued and other current liabilities | 1,074 | 867 |
Short-term borrowings and current maturities of long-term debt | 240 | 0 |
Total current liabilities | 2,282 | 1,590 |
Long-term debt | 2,267 | 1,880 |
Accrued post-retirement benefits | 293 | 286 |
Deferred income tax liabilities | 738 | 222 |
Other non-current accrued liabilities | 607 | 471 |
Total liabilities | 6,187 | 4,449 |
Commitments and contingencies (Note 18) | ||
Stockholders’ equity: | ||
Common Stock | 3 | 2 |
Capital in excess of par value | 8,495 | 2,134 |
Retained earnings | 2,344 | 2,292 |
Treasury stock – at cost 15.9 shares and 15.8 shares in 2023 and 2022, respectively | (717) | (708) |
Accumulated other comprehensive loss | (226) | (226) |
Total stockholders’ equity | 9,899 | 3,494 |
Non-controlling interests | 11 | 9 |
Total equity | 9,910 | 3,503 |
Total liabilities and stockholders’ equity | $ 16,097 | $ 7,952 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowances for discounts, returns and credit losses | $ 45 | $ 50 |
Common Stock, par value | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 750,000,000 | 750,000,000 |
Common Stock, shares issued | 256,600,000 | 196,000,000 |
Treasury stock, shares | 15,900,000 | 15,800,000 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Operating Activities | ||
Net income | $ 191 | $ 194 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 69 | 56 |
Amortization | 83 | 62 |
Share-based compensation | 27 | 18 |
Restructuring and asset impairment charges | 36 | 7 |
Gain from sale of business | 0 | 1 |
Other, net | (5) | 6 |
Payments for restructuring | (9) | (5) |
Changes in assets and liabilities (net of acquisitions): | ||
Changes in receivables | (122) | (119) |
Changes in inventories | (57) | (189) |
Changes in accounts payable | 36 | 40 |
Changes in accrued and deferred taxes | (86) | (2) |
Other, net | (154) | (35) |
Net Cash – Operating activities | 9 | 32 |
Investing Activities | ||
Capital expenditures | (103) | (95) |
Acquisitions of businesses, net of cash acquired | (476) | 0 |
Proceeds from sale of business | 91 | 1 |
Proceeds from the sale of property, plant and equipment | 0 | 3 |
Cash received from investments | 0 | 4 |
Cash paid for investments | 0 | (7) |
Cash paid for equity investments | (56) | (1) |
Cash received from interest rate swaps | 38 | 0 |
Cash received from cross-currency swaps | 14 | 11 |
Other, net | 3 | 0 |
Net Cash – Investing activities | (489) | (84) |
Financing Activities | ||
Short-term debt issued, net | 74 | 0 |
Long-term debt issued, net | 275 | 0 |
Long-term debt repaid | (1) | 0 |
Repurchase of common stock | (9) | (52) |
Proceeds from exercise of employee stock options | 40 | 3 |
Dividends paid | (139) | (110) |
Other, net | (5) | 1 |
Net Cash – Financing activities | 235 | (158) |
Effect of exchange rate changes on cash | 9 | (26) |
Net change in cash and cash equivalents | (236) | (236) |
Cash and cash equivalents at beginning of year | 944 | 1,349 |
Cash and cash equivalents at end of period | 708 | 1,113 |
Cash paid during the period for: | ||
Interest | 30 | 40 |
Income taxes (net of refunds received) | $ 135 | $ 42 |
Background and Basis of Present
Background and Basis of Presentation | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Background and Basis of Presentation | Background and Basis of Presentation Background Xylem Inc. (“Xylem” or the “Company”) is a leading equipment and service provider for water and wastewater applications with a broad portfolio of products and services addressing the full cycle of water, from collection, distribution and use to the return of water to the environment. Xylem operates in four segments, Water Infrastructure, Applied Water, Measurement & Control Solutions and Integrated Solutions and Services. See Note 19, "Segment Information," to the condensed consolidated financial statements for further segment background information. Except as otherwise indicated or unless the context otherwise requires, "Xylem," "we," "us," "our" and the "Company" refer to Xylem Inc. and its subsidiaries. Acquisition of Evoqua On May 24, 2023, Xylem completed the acquisition of Evoqua Water Technologies Corp. (“Evoqua”). Refer to Note 3, "Acquisitions and Divestitures," for additional information. Basis of Presentation The interim condensed consolidated financial statements reflect our financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany transactions between our businesses have been eliminated. The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair statement of the financial position and results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Annual Report") in preparing these unaudited condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes included in our 2022 Annual Report. Certain prior year amounts have been reclassified to conform to the current year presentation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, valuation results associated with purchase accounting, post-retirement obligations and assets, revenue recognition, income taxes, valuation of intangible assets, goodwill and indefinite-lived intangible impairment testing and contingent liabilities. Actual results could differ from these estimates. Our quarterly financial periods end on the Saturday closest to the last day of the calendar quarter, except for the fourth quarter which ends on December 31. For ease of presentation, the condensed consolidated financial statements included herein are described as ending on the last day of the calendar quarter. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 6 Months Ended |
Jun. 30, 2023 | |
Business Combinations [Abstract] | |
Acquisitions and Divestitures | Acquisitions and Divestitures Evoqua Water Technologies Corp. On May 24, 2023, the Company completed the acquisition of 100% of the issued and outstanding shares of Evoqua, a leader in providing water and wastewater treatment solutions, offering a broad portfolio of products and services to support industrial, municipal, and recreational customers, pursuant to the Agreement and Plan of Merger dated January 22, 2023 (the “Merger Agreement”). The Merger Agreement provided that Fore Merger Sub, Inc., a wholly owned subsidiary of the Company, merge with and into Evoqua, with Evoqua surviving as a wholly owned subsidiary of Xylem (the “Merger”). Under the terms and conditions of the Merger Agreement, each share of Evoqua common stock issued and outstanding immediately prior to the effective time of the Merger (other than certain excluded shares as described in the Merger Agreement) was converted into the right to receive 0.48 (the “Exchange Ratio”) of a share of the common stock of Xylem. Upon the effectiveness of the Merger, legacy Evoqua stockholders owned approximately 25% and legacy Xylem shareholders owned approximately 75% of the combined company. The purchase price for purposes of the Merger consisted of an aggregate of $6,121 million of the Company’s common stock, $160 million in replacement equity awards, and $619 million to repay certain indebtedness of Evoqua (refer to Note 12. Credit Facilities and Debt). Acquisition costs for the three months and six months ended June 30, 2023 of $39 million and $55 million, respectively, have been recorded within Selling, general and administrative expense in our Consolidated Income Statement. The acquisition-date fair value of the consideration totaled $6,900, which consisted of the following: (in millions) Fair Value of Purchase Consideration Xylem Common Stock issued to Evoqua stockholders (58,779,096 shares) $ 6,121 Estimated replacement equity awards 160 Payment of certain Evoqua indebtedness 619 Total $ 6,900 The Company has applied the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”) and recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess purchase consideration recorded to goodwill. As the Company finalizes the estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months from the acquisition date). The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Evoqua: (in millions) Fair Value Cash and cash equivalents $ 143 Receivables 432 Inventories 288 Prepaid and other current assets 75 Assets held for sale 8 Property, plant and equipment, net 511 Goodwill 4,364 Other intangible assets, net 2,307 Other non-current assets 191 Non-current assets held for sale 86 Accounts payable (207) Accrued and other current liabilities (342) Short-term borrowings and current maturities of long-term debt (166) Liabilities held for sale (1) Long-term debt (111) Other non-current accrued liabilities (124) Deferred income tax liabilities (551) Non-current liabilities held for sale (3) Total $ 6,900 The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation. The above fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the reporting date. The fair values of the assets acquired and liabilities assumed were preliminarily determined using the income and cost approaches. In many cases, the determination of the fair values required estimates about discount rates, future expected cash flows and other future events that are judgmental and subject to change. The final determination of the fair value of certain assets and liabilities will be completed as soon as the necessary information becomes available but no later than one year from the acquisition date. The fair value of receivables acquired is $322 million, with the gross contractual amount being $329 million. The Company expects $7 million to be uncollectible. The amounts of sales and net loss from continuing operations before income taxes of Evoqua since the acquisition date included in the Consolidated Income Statement for the three and six months ended June 30, 2023 are $178 million and $49 million, respectively. The $4,364 million of goodwill recognized, which is not deductible for U.S. income tax purposes, is primarily attributable to synergies and economies of scale expected from combining the operations of Evoqua and Xylem as well as the assembled workforce of Evoqua. Identifiable Intangible Assets Acquired The following table summarizes key information underlying identifiable intangible assets related to the Evoqua acquisition: (in millions) Useful Life (in years) Fair Value (in millions) Trademarks 6 $ 60 Proprietary technology and patents 4 - 9 150 Customer and distributor relationships 7 - 17 1,960 Backlog 1 - 8 110 Software 1 - 3 27 Total $ 2,307 The preliminary estimate of the fair value of Evoqua’s identifiable intangible assets was determined primarily using the “income approach,” which requires a forecast of all of the expected future cash flows either through the use of the multi-period excess earnings method or the relief-from-royalty method. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement of the fair value hierarchy as defined in ASC 820, Fair Value Measurements (“ASC 820”). Intangible assets consisting of the Evoqua tradename, technology, customer relationships, and backlog were valued using the multi-period excess earnings method (“MEEM”), or the relief from royalty (“RFR”) method, both are forms of the income approach. • Trademarks and proprietary technology intangible assets were valued using the RFR method. The RFR method of valuation suggests that in lieu of ownership, the acquirer can obtain comparable rights to use the subject asset via a license from a hypothetical third-party owner. The asset’s Fair Value is the present value of license fees avoided by owning it (i.e., the royalty savings). • Customer relationship and backlog intangible assets were valued using the MEEM method. The MEEM method of valuation is an approach where the net earnings attributable to the asset being measured are isolated from other “contributory assets” over the intangible asset’s remaining economic life. • Inventory was estimated using the comparative sales method, which quantifies the Fair Value of inventory based on the expected sales price of the subject inventory (when complete), reduced for: (i) all costs expected to be incurred in its completion and disposition efforts and (ii) a profit on those value-added completion and disposition costs. Stock-Based Compensation In connection with the Merger, each outstanding and issued option, restricted stock unit (“RSU”), performance stock unit (“PSU”) and cash-settled stock appreciation right (“SAR”) was converted into the Xylem equivalent, with outstanding PSUs being converted into Xylem RSUs. As a result, Xylem issued 2 million replacement equity options, 330 thousand PSU awards, and 377 thousand RSU awards, respectively. The portion of the fair value related to pre-combination services of $160 million was included in the purchase price, and $56 million will be recognized over the remaining service periods. As of June 30, 2023, the future unrecognized expense related to the outstanding Converted Equity Options, RSU Awards and PSU Awards was approximately $5 million, $21 million, and $10 million, respectively. The future unrecognized expense related to Converted Equity Options, RSU Awards, and PSU Awards will be recognized over a weighted-average service period of 3 years. SAR awards are immaterial. Pro Forma Financial Information The following table summarizes, on an unaudited pro forma basis, the condensed combined results of operations of the Company for the three and six months ended June 30, 2023 and 2022, assuming the acquisition had occurred on January 1, 2022. (Unaudited) (Unaudited) (in millions) 2023 2022 2023 2022 Revenue $ 2,025 $ 1,803 $ 3,952 $ 3,502 Net income $ 63 $ 92 $ 170 $ 76 The foregoing unaudited pro forma results are for informational purposes only and are not necessarily indicative of the actual results of operations that might have occurred had the acquisition occurred on January 1, 2022, nor are they necessarily indicative of future results. The unaudited pro-forma information for all periods presented includes the following adjustments, where applicable, for business combination accounting effects resulting from the acquisition: (i) amortization of the fair value step up in inventory, (ii) additional amortization expense related to finite-lived intangible assets acquired, (iii) repayment of Evoqua’s term loan and revolver and the settlement of the related interest rate swap, (iv) additional interest expense related to financing for the acquisition (refer to Note 12. Credit Facilities and Debt), (v) depreciation expense on property, plant and equipment, (vi) additional incremental stock-based compensation expense for the replacement of Evoqua’s outstanding equity awards with Xylem’s replacement equity awards, and (vii) the related tax effects assuming that the business combination occurred on January 1, 2022. The significant nonrecurring adjustments reflected in the unaudited pro-forma consolidated information above include the reclassification of the transaction costs to the earliest period presented and the reversal of the impacts related to the settlement of the interest rate swap, each net of tax. Divestitures |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregation of Revenue The following table illustrates the sources of revenue: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Revenue from contracts with customers $ 1,637 $ 1,312 $ 3,020 $ 2,534 Lease Revenue 85 52 150 102 Total $ 1,722 $ 1,364 $ 3,170 $ 2,636 The following table reflects revenue from contracts with customers by application. Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Water Infrastructure Transport $ 466 $ 432 $ 902 $ 825 Treatment 168 104 256 194 Applied Water Building Solutions 257 226 510 461 Industrial Water 221 204 421 394 Measurement & Control Solutions Water 323 279 657 544 Energy 92 67 164 116 Integrated Solutions & Services 110 — 110 — Total $ 1,637 $ 1,312 $ 3,020 $ 2,534 The following table reflects revenue from contracts with customers by geographical region. Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Water Infrastructure United States $ 219 $ 165 $ 395 $ 312 Western Europe 220 190 410 376 Emerging Markets (a) 130 120 235 221 Other 65 61 118 110 Applied Water United States 248 219 492 440 Western Europe 105 101 209 195 Emerging Markets (a) 86 79 159 159 Other 39 31 71 61 Measurement & Control Solutions United States 265 212 522 393 Western Europe 69 59 146 128 Emerging Markets (a) 52 50 100 94 Other 29 25 53 45 Integrated Solutions & Services United States 98 — 98 — Western Europe 2 — 2 — Emerging Markets (a) 3 — 3 — Other 7 — 7 — Total $ 1,637 $ 1,312 $ 3,020 $ 2,534 (a) Emerging Markets includes results from the following regions: Eastern Europe, the Middle East and Africa, Latin America and Asia Pacific (excluding Japan, Australia and New Zealand, which are presented in "Other") Contract Balances We receive payments from customers based on a billing schedule as established in our contracts. Contract assets relate to costs incurred to perform in advance of scheduled billings. Contract liabilities relate to payments received in advance of performance under the contracts. Changes in contract assets and liabilities are due to our performance under the contract. The table below provides contract assets, contract liabilities, and significant changes in contract assets and liabilities: (in millions) Contract Assets (a) Contract Liabilities Balance at January 1, 2022 $ 125 $ 164 Additions, net 63 97 Revenue recognized from opening balance — (75) Billings transferred to accounts receivable (61) — Foreign currency and other (4) (3) Balance at June 30, 2022 $ 123 $ 183 Balance at January 1, 2023 $ 151 $ 183 Opening balance from the acquisition of Evoqua 110 107 Additions, net 85 94 Revenue recognized from opening balance — (80) Billings transferred to accounts receivable (73) — Foreign currency and other 1 (5) Balance at June 30, 2023 $ 274 $ 299 (a) Excludes receivable balances, which are disclosed on the Condensed Consolidated Balance Sheets Performance obligations Delivery schedules vary from customer to customer based upon their requirements. Typically, large projects require longer lead production cycles and delays can occur from time to time. As of June 30, 2023, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied for contracts with performance obligations, amount to $949 million, of which $464 million is contributed by the Evoqua acquisition. We expect to recognize the majority of revenue upon the completion of satisfying these performance obligations in the following 60 months. The Company elects to apply the practical expedient to exclude from this disclosure revenue related to performance obligations that are part of a contract whose original expected duration is less than one year. |
Restructuring Charges
Restructuring Charges | 6 Months Ended |
Jun. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | Restructuring and Asset Impairment Charges Restructuring During the three and six months ended June 30, 2023 we incurred restructuring costs of $28 million and $34 million, respectively. We incurred these charges primarily as a result of our acquisition of Evoqua. Approximately, $14 million of the charges related to stock based compensation expense due to acceleration clauses in equity compensation agreements and approximately $14 million of the charges represented the reduction of headcount. Additionally, we incurred $6 million of charges related to our efforts to reposition our European and North American businesses to optimize our cost structure, improve our operational efficiency and effectiveness, strengthen our competitive positioning and better serve our customers. The charges were incurred across all of our segments. During the three and six months ended June 30, 2022 we incurred restructuring charges of $6 million. We incurred these charges primarily as a continuation of our efforts to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. The charges included the reduction of headcount across the Water Infrastructure, Applied Water and Measurement & Control Solutions segments. The following table presents the components of restructuring expense and asset impairment charges: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 By component: Severance and other charges $ 29 $ 6 $ 35 $ 6 Reversal of restructuring accruals (1) — (1) — Total restructuring costs $ 28 $ 6 $ 34 $ 6 Asset impairment charges — 1 2 1 Total restructuring and asset impairment charges $ 28 $ 7 $ 36 $ 7 By segment: Water Infrastructure $ 1 $ 2 $ 3 $ 2 Applied Water — 1 1 1 Measurement & Control Solutions 1 4 6 4 Integrated Solutions & Services 4 — 4 — Corporate and other 22 — 22 — The following table displays a roll-forward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within "Accrued and other current liabilities" and "Other non-current accrued liabilities", for the six months ended June 30, 2023 and 2022: (in millions) 2023 2022 Restructuring accruals - January 1 $ 10 $ 7 Restructuring costs, net 34 6 Cash payments (9) (5) Stock based compensation included within AOCL (14) — Foreign currency and other (1) — Restructuring accruals - June 30 $ 20 $ 8 By segment: Water Infrastructure $ 2 $ 1 Applied Water — — Measurement & Control Solutions 3 4 Integrated Solutions & Services 4 — Regional selling locations (a) 2 1 Corporate and other 9 2 (a) Regional selling locations consist primarily of selling and marketing organizations and related support services that incurred restructuring expense that was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments. The following table presents expected restructuring spend in 2023 and thereafter: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Integrated Solutions & Services Corporate Total Actions Commenced in 2023: Total expected costs $ 4 $ 2 $ 6 $ 7 $ 33 $ 52 Costs incurred during Q1 2023 1 1 3 — — 5 Costs incurred during Q2 2023 2 — 1 4 22 29 Total expected costs remaining $ 1 $ 1 $ 2 $ 3 $ 11 $ 18 The Water Infrastructure, Applied Water, Measurement & Control Solutions, Integrated Solutions & Services and Corporate actions commenced in 2023 consist primarily of severance charges. The actions are expected to continue through the end of 2024. Asset Impairment During the first quarter of 2023, we determined that internally developed in-process software within our Measurement & Control Solutions segment was impaired as a result of actions taken to prioritize strategic investments and we therefore recognized an impairment charge of $2 million. Refer to Note 9, "Goodwill and Other Intangible Assets," for additional information. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our quarterly provision for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items within periods presented. The comparison of our effective tax rate between periods is significantly impacted by the level and mix of earnings and losses by tax jurisdiction and discrete items. The income tax provision for the three months ended June 30, 2023 was $22 million resulting in an effective tax rate of 19.1%, compared to a $24 million expense resulting in an effective tax rate of 17.5% for the same period in 2022. The income tax provision for the six months ended June 30, 2023 was $49 million resulting in an effective tax rate of 20.5%, compared to a $40 million expense resulting in an effective tax rate of 17.0% for the same period in 2022. The effective tax rate for the six month period ended June 30, 2023 was lower than the U.S. federal statutory rate primarily due to the favorable impact of earnings mix partially offset by nondeductible transaction costs. Unrecognized Tax Benefits During 2019, Xylem’s Swedish subsidiary received a tax assessment for the 2013 tax year related to the tax treatment of an intercompany transfer of certain intellectual property that was made in connection with a reorganization of our European businesses. Xylem filed an appeal with the Administrative Court of Växjö, which rendered a decision adverse to Xylem in June 2022 for SEK806 million (approximately $74 million), consisting of the full tax assessment amount plus penalties and interest. Xylem has appealed this decision with the intermediate appellate court, the Administrative Court of Appeal (the “Court”). At this time, management, in consultation with external legal advisors, continues to believe it is more likely than not that Xylem will prevail on the proposed assessment and will continue to vigorously defend our position through the appellate process. Both parties will have the ability to seek appeal of the Court’s decision to the Supreme Administrative Court of Sweden. There can be no assurance that the final determination by the authorities will not be materially different than our position. As of June 30, 2023, we do not have any unrecognized tax benefits related to this uncertain tax position. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following is a reconciliation of the shares used in calculating basic and diluted net earnings per share: Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income (in millions) $ 92 $ 112 $ 191 $ 194 Shares (in thousands): Weighted average common shares outstanding 205,505 180,123 192,938 180,164 Add: Participating securities (a) 34 33 29 29 Weighted average common shares outstanding — Basic 205,539 180,156 192,967 180,193 Plus incremental shares from assumed conversions: (b) Dilutive effect of stock options 872 438 747 513 Dilutive effect of restricted stock units and performance share units 329 56 315 129 Weighted average common shares outstanding — Diluted 206,740 180,650 194,029 180,835 Basic earnings per share $ 0.45 $ 0.62 $ 0.99 $ 1.07 Diluted earnings per share $ 0.45 $ 0.62 $ 0.98 $ 1.07 (a) Restricted stock units containing rights to non-forfeitable dividends that participate in undistributed earnings with common stockholders are considered participating securities for purposes of computing earnings per share. (b) Incremental shares from stock options, restricted stock units and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance or market conditions at the end of the reporting period. See Note 15, "Share-Based Compensation Plans," to the condensed consolidated financial statements for further detail on the performance share units. Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2023 2022 2023 2022 Stock options 2,107 1,647 1,732 1,491 Restricted stock units 606 362 469 346 Performance share units 318 270 279 252 |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of total inventories are summarized as follows: (in millions) June 30, December 31, Finished goods $ 408 $ 286 Work in process 121 58 Raw materials 614 455 Total inventories $ 1,143 $ 799 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Jun. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill Changes in the carrying value of goodwill by reportable segment for the six months ended June 30, 2023 are as follows: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Integrated Solutions & Services Total Balance as of January 1, 2023 $ 638 $ 502 $ 1,579 $ — $ 2,719 Activity in 2023 Acquisitions 1,547 241 80 2,496 4,364 Foreign currency and other 6 5 13 1 25 Balance as of June 30, 2023 $ 2,191 $ 748 $ 1,672 $ 2,497 $ 7,108 The Company has applied the acquisition method of accounting in accordance with ASC 805 and recognized assets acquired and liabilities assumed of Evoqua at their fair value as of the date of acquisition, with the excess purchase consideration recorded to goodwill. We have preliminarily allocated goodwill to segments of the Company that are expected to benefit from the synergies of the acquisition. As the Company finalizes the estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments to the amount of goodwill allocated to each segment may be necessary. Other Intangible Assets Information regarding our other intangible assets is as follows: June 30, 2023 December 31, 2022 (in millions) Carrying Amount Accumulated Amortization Net Intangibles Carrying Amount Accumulated Amortization Net Intangibles Customer and distributor relationships $ 2,749 $ (410) $ 2,339 $ 784 $ (371) $ 413 Proprietary technology and patents 294 (126) 168 165 (118) 47 Trademarks 198 (87) 111 137 (80) 57 Software 595 (299) 296 514 (268) 246 Other 115 (7) 108 5 (3) 2 Indefinite-lived intangibles 166 — 166 165 — 165 Other Intangibles $ 4,117 $ (929) $ 3,188 $ 1,770 $ (840) $ 930 Amortization expense related to finite-lived intangible assets was $51 million and $83 million for the three and six-month periods ended June 30, 2023, respectively, and $32 million and $62 million for the three and six-month periods ended June 30, 2022, respectively. During the first quarter of 2023, we determined that internally developed in-process software within our Measurement & Control Solutions segment was impaired as a result of actions taken to prioritize strategic investments and we therefore recognized an impairment charge of $2 million. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments Risk Management Objective of Using Derivatives We are exposed to certain risks arising from both our business operations and economic conditions, and we principally manage our exposures to these risks through management of our core business activities. Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates that may impact revenue, expenses, cash receipts, cash payments, and the value of our stockholders' equity. We enter into derivative financial instruments to protect the value or fix the amount of certain cash flows in terms of the functional currency of the business unit with that exposure and also reduce the volatility in stockholders' equity. As a result of Evoqua terminating their interest rate swaps prior to the Company completing the acquisition, the Company received $38 million in proceeds during the quarter ended June 30, 2023 from the termination of the interest rate swaps. Cash Flow Hedges of Foreign Exchange Risk We are exposed to fluctuations in various foreign currencies against our functional currencies. We use foreign currency derivatives, including currency forward agreements, to manage our exposure to fluctuations in the various exchange rates. Currency forward agreements involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. Certain business units with exposure to foreign currency exchange risks have designated certain currency forward agreements as cash flow hedges of forecasted intercompany inventory purchases and sales. Our principal currency exposures for which we enter into cash flow hedges relate to the Euro, Swedish Krona, British Pound, Canadian Dollar, Polish Zloty and Australian Dollar. We had foreign exchange contracts with purchased notional amounts totaling $360 million and $255 million as of June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023, our most significant foreign currency derivatives included contracts to sell U.S. Dollar and purchase Euro, purchase Swedish Krona and sell Euro, sell British Pound and purchase Euro, purchase Polish Zloty and sell Euro, purchase U.S. Dollar and sell Canadian Dollar, sell Canadian Dollar and purchase Euro, purchase Canadian Dollar and Sell U.S. Dollar, and sell Australian Dollar and purchase Euro. The purchased notional amounts associated with these currency derivatives are $144 million, $93 million, $39 million, $18 million, $17 million, $16 million, $16 million and $13 million, respectively. As of December 31, 2022 the purchased notional amounts associated with these currency derivatives were $105 million, $73 million, $29 million, $13 million, $13 million, $13 million, $0 million and $9 million, respectively. Hedges of Net Investments in Foreign Operations We are exposed to changes in foreign currencies impacting our net investments held in foreign subsidiaries. Cross-Currency Swaps Beginning in 2015, we entered into cross-currency swaps to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. During the second quarter of 2019, third quarter of 2020, and second quarter of 2022 we entered into additional cross-currency swaps. The total notional amount of derivative instruments designated as net investment hedges was $1,659 million and $1,616 million as of June 30, 2023 and December 31, 2022, respectively. Foreign Currency Denominated Debt On March 11, 2016, we issued 2.250% Senior Notes of €500 million aggregate principal amount due March 2023. On December 12th, 2022 our Senior Notes due March 2023 were settled with cash on hand for a total of $ 527 million. Previously, the entirety of the outstanding balance was designated as a hedge of a net investment in certain foreign subsidiaries. On June 2, 2022, we de-designated the entirety of the outstanding balance of the €500 million 2.250% Senior Notes, or $533 million from the net investment hedge relationship. Fair Value Hedges of Foreign Exchange Risk The de-designation of our 2.250% Senior Notes of €500 million resulted in exposure to fluctuations in the Euro-U.S. Dollar exchange rate. We use currency forward agreements to manage our exposure to fluctuations in the Euro-U.S. Dollar exchange rate. Currency forward agreements involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. On June 2, 2022, we entered into a currency forward agreement with a total notional amount of €500 million, designating the agreement as a fair value hedge of our Euro denominated notes. On December 12, 2022 the currency forward agreement matured. Effectiveness of derivatives designated as fair value hedges is assessed using the spot method. The changes in the fair value of these derivatives due to movements in spot exchange rates are recorded in Selling, general and administrative Expenses. Changes in the fair value of the 2.250% Senior Notes of €500 million related to spot exchange rates are also recorded in Selling, general and administrative expenses. Changes in the spot-forward differential and counterparty non-performance risk of the derivatives are excluded from the assessment of hedge effectiveness and will be recognized in Accumulated other comprehensive loss ("AOCL"). Amounts in AOCL are recognized in earnings, specifically Interest expense, using a systematic and rational method over the life of the hedging instrument. The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Income Statements and Statements of Comprehensive Income. Items in the table below reflect changes in "Other comprehensive loss" ("OCL") within the Statements of Comprehensive Income: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Cash Flow Hedges Foreign Exchange Contracts Amount of gain (loss) recognized in OCL $ (3) $ (13) $ 1 $ (19) Amount of (gain) loss reclassified from OCL into Revenue (1) 2 2 4 Amount of loss reclassified from OCL into Cost of revenue — 1 2 1 Net Investment Hedges Cross-Currency Swaps Amount of gain (loss) recognized in OCL $ (37) $ 93 $ (59) $ 94 Amount of income recognized in Interest expense 8 7 15 13 Foreign Currency Denominated Debt Amount of gain recognized in OCL $ — $ 23 $ — $ 31 Fair Value Hedges Foreign Exchange Contracts Amount of gain recognized in OCL $ — $ 4 $ — $ 4 Amount of (loss) recognized in Selling, general and administrative expenses $ — $ (11) $ — $ (11) Amount recognized in Interest expense $ — $ (1) $ — $ (1) As of June 30, 2023, $1 million of net losses on cash flow hedges are expected to be reclassified into earnings in the next 12 months. As of June 30, 2023, no gains or losses on the net investment hedges are expected to be reclassified into earnings over their duration. The fair values of our derivative assets and liabilities are measured on a recurring basis using Level 2 inputs and are determined through the use of models that consider various assumptions including yield curves, time value and other measurements. The fair values of our derivative contracts currently included in our hedging program were as follows: (in millions) June 30, December 31, Derivatives designated as hedging instruments Assets Cash Flow Hedges Prepaid and other current assets $ 5 $ — Net Investment Hedges Other non-current assets $ 40 $ 79 Liabilities Cash Flow Hedges Accrued and other current liabilities $ (6) $ — Net Investment Hedges Other non-current accrued liabilities $ (25) $ (6) |
Accrued and Other Current Liabi
Accrued and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued and Other Current Liabilities | Accrued and Other Current Liabilities The components of total Accrued and other current liabilities are as follows: (in millions) June 30, December 31, Compensation and other employee-benefits $ 320 $ 285 Customer-related liabilities 333 210 Accrued taxes 119 186 Lease liabilities 97 69 Accrued warranty costs 43 37 Other accrued liabilities 162 80 Total accrued and other current liabilities $ 1,074 $ 867 |
Credit Facilities and Debt
Credit Facilities and Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Credit Facilities and Debt | Credit Facilities and Debt Total debt outstanding is summarized as follows: (in millions) June 30, December 31, 3.250% Senior Notes due 2026 (a) 500 500 1.950% Senior Notes due 2028 (a) 500 500 2.250% Senior Notes due 2031 (a) 500 500 4.375% Senior Notes due 2046 (a) 400 400 Equipment Financing due 2023 to 2032 126 — Securitization Facility due 2024 150 — Term loan 275 — Commercial Paper 75 — Debt issuance costs and unamortized discount (b) (19) (20) Total debt 2,507 1,880 Less: short-term borrowings and current maturities of long-term debt 240 — Total long-term debt $ 2,267 $ 1,880 (a) The fair value of our Senior Notes was determined using quoted prices in active markets for identical securities, which are considered Level 1 inputs. The fair value of our Senior Notes due 2026 was $471 million and $470 million as of June 30, 2023 and December 31, 2022 respectively. The fair value of our Senior Notes due 2028 was $440 million and $430 million as of June 30, 2023 and December 31, 2022, respectively. The fair value of our Senior Notes due 2031 was $416 million and $406 million as of June 30, 2023 and December 31, 2022, respectively. The fair value of our Senior Notes due 2046 was $339 million and $333 million as of June 30, 2023 and December 31, 2022, respectively. (b) The debt issuance costs and unamortized discount are recognized as a reduction in the carrying value of the Senior Notes in the Condensed Consolidated Balance Sheets and are being amortized to interest expense in our Condensed Consolidated Income Statements over the expected remaining terms of the Senior Notes. Senior Notes On June 26, 2020, we issued 1.950% Senior Notes of $500 million aggregate principal amount due January 2028 (the “Senior Notes due 2028”) and 2.250% Senior Notes of $500 million aggregate principal amount due January 2031 (the “Senior Notes due 2031" and, together with the Senior Notes due 2028, the “Green Bond”). The Green Bond includes covenants that restrict our ability, and the ability of our restricted subsidiaries, to incur debt secured by liens on certain property above a threshold, to engage in certain sale and leaseback transactions involving certain property above a threshold, and to consolidate or merge, or convey or transfer all or substantially all of our assets. We may redeem the Green Bond at any time, at our option, subject to certain conditions, at specified redemption prices, plus accrued and unpaid interest to the redemption date. If a change of control triggering event (as defined in the applicable Green Bond indenture) occurs, we will be required to make an offer to purchase the notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase. Interest on the Green Bond is payable on January 30 and July 30 of each year. As of June 30, 2023, we are in compliance with all covenants for the Green Bond. On March 11, 2016, we issued 2.250% Senior Notes of €500 million aggregate principal amount due March 2023 (the "Senior Notes due 2023"). On October 11, 2016, we issued 3.250% Senior Notes of $500 million aggregate principal amount due October 2026 (the “Senior Notes due 2026”) and 4.375% Senior Notes of $400 million aggregate principal amount due October 2046 (the “Senior Notes due 2046” and, together with the Senior Notes due 2021, the Senior Notes due 2023 and the Senior Notes due 2026, the “Senior Notes”). On December 12th, 2022 our Senior Notes due 2023 were settled with cash on hand for a total of $ 527 million. The Senior Notes include covenants that restrict our ability, and the ability of our restricted subsidiaries, to incur debt secured by liens on certain property above a threshold, to engage in certain sale and leaseback transactions involving certain property above a threshold, and to consolidate or merge, or convey or transfer all or substantially all of our assets. We may redeem the Senior Notes, as applicable, in whole or in part, at any time at a redemption price equal to the principal amount of the Senior Notes to be redeemed, plus a make-whole premium. We may also redeem the Senior Notes in certain other circumstances, as set forth in the applicable Senior Notes indenture. If a change of control triggering event (as defined in the applicable Senior Notes indenture) occurs, we will be required to make an offer to purchase the Senior Notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase. Interest on the Senior Notes due 2026 and the Senior Notes due 2046 is payable on May 1 and November 1 of each year. As of June 30, 2023, we are in compliance with all covenants for the Senior Notes. Credit Facilities 2019 Five-Year Revolving Credit Facility On March 5, 2019, Xylem entered into a Five-Year Revolving Credit Facility (the “2019 Credit Facility”) with Citibank, N.A., as Administrative Agent, and a syndicate of lenders. The 2019 Credit Facility provided for an aggregate principal amount of up to $800 million (available in U.S. Dollars and in Euros), with increases of up to $200 million for a maximum aggregate principal amount of $1 billion at the request of Xylem and with the consent of the institutions providing such increased commitments. On March 1, 2023, Xylem terminated the 2019 Credit Facility among the Company, certain lenders and Citibank, N.A. as Administrative Agent as a result of signing the 2023 Five-Year Revolving Credit Facility. 2023 Five-Year Revolving Credit Facility On March 1, 2023, Xylem entered into a five year revolving credit facility (the "2023 Credit Facility") with Citibank, N.A., as Administrative Agent, and a syndicate of lenders. The 2023 Credit Facility provides for an aggregate principal amount of up to $1 billion (available in U.S. Dollars and in Euros), with increases of up to $300 million for a maximum aggregate principal amount of $1.3 billion at the request of Xylem and with the consent of the institutions providing such increased commitments. Interest on all loans under the 2023 Credit Facility is payable either quarterly or at the expiration of any Term SOFR or EURIBOR interest period applicable thereto. Borrowings accrue interest at a rate equal to, at Xylem's election, a base rate or an adjusted Term SOFR or EURIBOR rate plus an applicable margin. The 2023 Credit Facility includes customary provisions for implementation of replacement rates for Term SOFR-based and EURIBOR-based loans. The 2023 Credit Facility also includes a pricing grid that determines the applicable margin based on Xylem's credit rating, with a further adjustment based on Xylem's achievement of certain Environmental, Social and Governance ("ESG") key performance indicators. Xylem will also pay quarterly fees to each lender for such lender's commitment to lend accruing on such commitment at a rate based on Xylem's credit rating, whether such commitment is used or unused, as well as a quarterly letter of credit fee accruing on the letter of credit exposure of such lender during the preceding quarter at a rate based on the credit rating of Xylem with a further adjustment based on Xylem's achievement of certain ESG key performance indicators. The 2023 Credit Facility requires that Xylem maintain a consolidated total debt to consolidated EBITDA ratio (or maximum leverage ratio), which will be based on the last four fiscal quarters. In accordance with the terms of the agreement to the 2023 Credit Facility, Xylem may not exceed a maximum leverage ratio of 4.00 to 1.00 for a period of four consecutive fiscal quarters beginning with the fiscal quarter during which a material acquisition is consummated and a maximum leverage ratio of 3.50 to 1.00 thereafter for a minimum of four fiscal quarters before another material acquisition is consummated. In addition, the 2023 Credit Facility contains a number of customary covenants, including limitations on the incurrence of secured debt and debt of subsidiaries, liens, sale and lease-back transactions, mergers, consolidations, liquidations, dissolutions and sales of assets. The 2023 Credit Facility also contains customary events of default. Finally, Xylem has the ability to designate subsidiaries that can borrow under the 2023 Credit Facility, subject to certain requirements and conditions set forth in the 2023 Credit Facility. As of June 30, 2023, the 2023 Credit Facility was undrawn and we are in compliance with all revolver covenants. The 2023 Credit Facility has availability of $925 million, comprised of the $1 billion aggregate principal, less $75 million of U.S. Dollar commercial paper outstanding as of June 30, 2023. Term Loan Facility On May 9, 2023, the Company’s subsidiary, Xylem Europe GmbH (the “borrower”) entered into a twenty four-month €250 million (approximately $273 million) term loan facility (the “Term Facility”) the terms of which are set forth in a term loan agreement, among the borrower, the Company, as parent guarantor and ING Bank. The Company has entered into a parent guarantee in favor of ING Bank also dated May 9, 2023 to secure all present and future obligations of the borrower under the Term Loan Agreement. The net cash proceeds were used to repay a portion of Evoqua’s indebtedness pursuant to the Merger Agreement. Equipment Financing As a result of the Evoqua acquisition, the Company has secured financing agreements that require providing a security interest in specified equipment and, in some cases, the underlying contract and related receivables. As of June 30, 2023, the gross and net amounts of those assets are included on the Consolidated Balance Sheets as follows: June 30, 2023 (in millions) Gross Net Property, plant, and equipment, net $ 76 $ 75 Receivables, net 2 2 Prepaid and other current assets 4 4 Other non-current assets 55 54 $ 137 $ 135 Commercial Paper U.S. Dollar Commercial Paper Program Our U.S. Dollar commercial paper program generally serves as a means of short-term funding with a $600 million maximum issuing balance and a combined limit of $1 billion inclusive of the 2023 Credit Facility. As of June 30, 2023 and December 31, 2022, $75 million and none of the Company's $600 million U.S. Dollar commercial paper program was outstanding, respectively. The net cash proceeds from issuance of commercial paper were used to repay a portion of Evoqua’s indebtedness pursuant to the Merger Agreement. We have the ability to continue borrowing under this program going forward in future periods. Euro Commercial Paper Program On June 3, 2019, Xylem entered into a Euro commercial paper program with ING Bank N.V., as administrative agent, and a syndicate of dealers. The Euro commercial paper program provides for a maximum issuing balance of up to €500 million (approximately $546 million) which may be denominated in a variety of currencies. The maximum issuing balance may be increased in accordance with the Dealer Agreement. As of June 30, 2023 and December 31, 2022, none of the Company's Euro commercial paper program was outstanding. We have the ability to continue borrowing under this program going forward in future periods. Receivables Securitization Program On April 1, 2021, Evoqua Finance LLC (“Evoqua Finance”), now an indirect wholly-owned subsidiary of the Company, entered into an accounts receivable securitization program (the “Receivables Securitization Program”) consisting of, among other agreements, (i) a Receivables Financing Agreement (as amended, the “Receivables Financing Agreement”) among Evoqua Finance, as the borrower, the lenders from time to time party thereto (the “Receivables Financing Lenders”), PNC Bank, National Association ("PNC"), as administrative agent, EWT LLC, as initial servicer, and PNC Capital Markets LLC, as structuring agent, pursuant to which the lenders have made available to Evoqua Finance a receivables finance facility in an amount up to $150 million, (ii) a Sale and Contribution Agreement (as amended, the “Sale and Contribution Agreement”) among Evoqua Finance, as purchaser, EWT LLC, as initial servicer and as an originator, and Neptune Benson, Inc., an indirectly wholly-owned subsidiary of the Company, as an originator (together with EWT LLC, the “Originators”), and (iii) a Performance Guaranty of Xylem Inc. dated as of May 24, 2023 (the “Performance Guaranty”) in favor of PNC and for the benefit of PNC and the other secured parties under the Receivables Financing Agreement that replaced the performance guaranty of EWT Holdings II Corp. and EWT Holdings III Corp dated as of April 1, 2021. The Receivables Securitization Program contains certain customary representations, warranties, affirmative covenants, and negative covenants, subject to certain cure periods in some cases, including the eligibility of the receivables being sold by the Originators and securing the loans made by the Receivables Financing Lenders, as well as customary reserve requirements, events of default, termination events, and servicer defaults. On July 20, 2023, the Receivables Financing Agreement, the Sale and Contribution Agreement and the Performance Guaranty and the other transaction documents under the Receivables Financing Program were terminated and all outstanding obligations for principal, interest, and fees under the agreement were paid in full. |
Post-retirement Benefit Plans
Post-retirement Benefit Plans | 6 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
Post-retirement Benefit Plans | Post-retirement Benefit Plans The components of net periodic benefit cost for our defined benefit pension plans are as follows: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Domestic defined benefit pension plans: Service cost $ 1 $ — $ 2 $ 1 Interest cost 1 1 2 2 Expected return on plan assets (2) (1) (3) (3) Amortization of net actuarial loss — — — 1 Net periodic benefit cost $ — $ — $ 1 $ 1 International defined benefit pension plans: Service cost $ 1 $ 4 $ 3 $ 7 Interest cost 4 3 8 7 Expected return on plan assets (3) (3) (6) (7) Amortization of actuarial (gain) loss — 3 (1) 6 Net periodic benefit cost $ 2 $ 7 $ 4 $ 13 Total net periodic benefit cost $ 2 $ 7 $ 5 $ 14 The components of net periodic benefit cost, other than the service cost component are included in the line item "Other non-operating income, net" in the Condensed Consolidated Income Statements. The total net periodic benefit cost for other post-retirement employee benefit plans wa s less than $1 million, including net credits recognized into "Other comprehensive income (loss)" of less than $1 million, for both the three and six months ended June 30, 2023 and 2022, respectively. We contributed $9 million and $10 million to our defined benefit plans for the six months ended June 30, 2023 and 2022, respectively. Additional contributions ranging between approximately $10 million and $14 million a re expected to be made during the remainder of 2023. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Equity | Equity The following table shows the changes in stockholders' equity for the six months ended June 30, 2023: (in millions) Common Capital in Excess of Par Value Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2023 $ 2 $ 2,134 $ 2,292 $ (226) $ (708) $ 9 $ 3,503 Net income — — 99 — — — 99 Other comprehensive income, net — — — 35 — — 35 Other activity — — — — — 2 2 Dividends declared ($0.33 per share) — — (60) — — — (60) Stock incentive plan activity — 18 — — (8) — 10 Balance at March 31, 2023 $ 2 $ 2,152 $ 2,331 $ (191) $ (716) $ 11 $ 3,589 Net income — — 92 — — — 92 Other comprehensive income, net — — — (35) — — (35) Issuance of common stock 1 6,120 — — — — 6,121 Issuance of replacement equity awards 160 — — — — 160 Dividends declared ($0.33 per share) — — (79) — — — (79) Stock incentive plan activity — 63 — — (1) — 62 Balance at June 30, 2023 $ 3 $ 8,495 $ 2,344 $ (226) $ (717) $ 11 $ 9,910 The following table shows the changes in stockholders' equity for the six months ended June 30, 2022: Common Capital in Excess of Par Value Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2022 $ 2 $ 2,089 $ 2,154 $ (371) $ (656) $ 8 $ 3,226 Net income — — 82 — — — 82 Other comprehensive loss, net — — — (6) — — (6) Dividends declared ($0.30 per share) — — (55) — — — (55) Stock incentive plan activity — 10 — — (6) — 4 Repurchase of common stock — — — — (45) — (45) Balance at March 31, 2022 $ 2 $ 2,099 $ 2,181 $ (377) $ (707) $ 8 $ 3,206 Net income — — 112 — — — 112 Other comprehensive income, net — — — (71) — — (71) Dividends declared ($0.30 per share) — — (55) — — — (55) Stock incentive plan activity — 12 — — (1) — 11 Balance at June 30, 2022 $ 2 $ 2,111 $ 2,238 $ (448) $ (708) $ 8 $ 3,203 |
Share-Based Compensation Plans
Share-Based Compensation Plans | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation Plans | Share-Based Compensation Plans Share-based compensation expense was $16 million and $27 million during the three and six months ended June 30, 2023, respectively, and $9 million and $18 million during the three and six months ended June 30, 2022, respectively. The unrecognized compensation expense related to our stock options, restricted stock units and performance share units was $13 million, $62 million and $19 million, respectively, at June 30, 2023 and is expected to be recognized over a weighted average period of 1.8, 1.9 and 2.2 years, respectively. The amount of cash received from the exercise of stock options was $40 million and $3 million for the six months ended June 30, 2023 and 2022, respectively. On May 24, 2023, there were an additional 2.7 million of shares registered for issuance. As of June 30, 2023, there were approximately 5 million shares of common stock available for future awards. Stock Option Grants The following is a summary of the changes in outstanding stock options for the six months ended June 30, 2023 : Share units (in thousands) Weighted Average Exercise Price / Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2023 1,935 $ 67.55 5.9 $ 83 Granted 2,153 38.13 Exercised (1,412) 28.26 Forfeited and expired (14) 98.95 Other 14 73.16 Outstanding at June 30, 2023 2,676 $ 64.42 6.0 $ 129 Options exercisable at June 30, 2023 1,979 $ 58.18 5.1 $ 108 Vested and expected to vest as of June 30, 2023 2,603 $ 63.69 5.7 $ 127 The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the six months ended June 30, 2023 was $109 million. Stock Option Fair Value The fair value of each option grant was estimated on the date of grant using the binomial lattice pricing model which incorporates multiple and variable assumptions over time, including employee exercise patterns, stock price volatility and changes in dividends. The following are weighted-average assumptions for 2023 grants: Volatility 27.30 % Risk-free interest rate 4.25 % Dividend yield 1.31 % Expected term (in years) 5.4 Weighted-average fair value / share $ 29.06 Expected volatility is calculated based on an analysis of historic volatility measures for Xylem. We use historical data to estimate option exercise and employee termination behavior within the valuation model. Employee groups and option characteristics are considered separately for valuation purposes. The expected term represents an estimate of the period of time options are expected to remain outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of option grant. Restricted Stock Unit Grants The following is a summary of restricted stock unit activity for the six months ended June 30, 2023 . The fair value of the restricted share unit awards is determined using the closing price of our common stock on date of grant: Share units (in thousands) Weighted Outstanding at January 1, 2023 553 $ 88.88 Granted 1,005 103.29 Vested (264) 101.43 Forfeited (22) 95.65 Outstanding at June 30, 2023 1,272 $ 96.05 Adjusted EBITDA Performance Share Unit Grants As approved by the Leadership Development & Compensation Committee of the Company's Board of Directors, for the 2023-2025 performance period, the completion of the acquisition of Evoqua transitioned one of the performance share unit metrics from a pre-set, three-year adjusted Return on Invested Capital ("ROIC") performance target to a pre-set, third-year adjusted earnings before interest, taxes, depreciation and amortization expense (“EBITDA”) performance target for the combined company. The following is a summary of our ROIC and EBITDA grants for the six months ended June 30, 2023. The fair value of the adjusted EBITDA performance share units is equal to the closing share price on the date of the grant: Share units (in thousands) Weighted Outstanding at January 1, 2023 146 $ 88.78 Granted 33 101.11 Forfeited (a) (66) 81.94 Outstanding at June 30, 2023 113 $ 97.75 (a) Includes adjusted ROIC performance share unit awards forfeited during the period as a result of the final performance condition not being achieved on vest date. TSR Performance Share Unit Grants The following is a summary of our Total Shareholder Return ("TSR") performance share unit grants for the six months ended June 30, 2023: Share units (in thousands) Weighted Outstanding at January 1, 2023 178 $ 100.67 Granted 66 109.57 Adjustment for Market Condition Achieved (a) 40 102.55 Vested (102) 102.55 Forfeited (4) 114.09 Outstanding at June 30, 2023 178 $ 103.76 (a) Represents an increase in the number of original TSR performance share units awarded based on the final market condition achievement at the end of the performance period of such awards. The fair value of TSR performance share units was calculated on the date of grant using a Monte Carlo simulation model utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features. The following are weighted-average assumptions for 2023 grants: Volatility 35.9 % Risk-free interest rate 4.66 % Revenue Performance Share Unit Grants The following is a summary of our Revenue performance share unit grants for the six months ended June 30, 2023: Share units (in thousands) Weighted Outstanding at January 1, 2023 32 86.77 Granted 33 101.11 Forfeited (1) 88.28 Outstanding at June 30, 2023 64 $ 93.36 The fair value of the Revenue performance share unit awards is determined using the closing price of our common stock on date of grant. The shares will vest contingent upon the achievement of a pre-set, three-year Revenue target. |
Capital Stock
Capital Stock | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Capital Stock | Capital Stock For the three and six months ended June 30, 2023, the Company repurchased less than 0.1 million shares of common stock for approximately $1 million and approximately 0.1 million shares of common stock for $9 million, respectively. For the three and six months ended June 30, 2022, the Company repurchased less than 0.1 million shares of common stock for $0.5 million and approximately 0.6 million shares of common stock for $52 million, respectively. Repurchases include share repurchase programs approved by the Board of Directors and repurchases in relation to settlement of employee tax withholding obligations due as a result of the vesting of restricted stock units. The details of repurchases by each program are as follows: On August 24, 2015, our Board of Directors authorized the repurchase of up to $500 million in shares with no expiration date. The program's objective is to deploy our capital in a manner that benefits our stockholders and maintains our focus on growth. There were no shares repurchased under the program for the three and six months ended June 30, 2023. There were no shares repurchased under the program for the three months ended June 30, 2022. For the six months ended June 30, 2022, we repurchased 0.5 million shares for approximately $46 million. There are up to $182 million in shares that may still be purchased under this plan as of June 30, 2023. Aside from the aforementioned repurchase program, we repurchased less than 0.1 million shares and approximately 0.1 million shares for $1 million and $9 million for the three and six months ended June 30, 2023, respectively, in relation to settlement of employee tax withholding obligations due as a result of the vesting of restricted stock units. Likewise, we repurchased less than 0.1 million shares and approximately 0.1 million shares for less than $1 million and approximately $6 million for the three and six months ended June 30, 2022. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Loss The following table provides the components of AOCL for the six months ended June 30, 2023: (in millions) Foreign Currency Translation Post-retirement Benefit Plans Derivative Instruments Total Balance at January 1, 2023 $ (180) $ (41) $ (5) $ (226) Foreign currency translation adjustment 22 — — 22 Tax on foreign currency translation adjustment 5 — — 5 Amortization of actuarial gain on post-retirement benefit plans into other non-operating income, net — (1) — (1) Income tax impact on amortization of post-retirement benefit plan items — 1 — 1 Unrealized gain on derivative hedge agreements — — 4 4 Income tax benefit on unrealized gain on derivative hedge agreements — — (1) (1) Reclassification of unrealized loss on foreign exchange agreements into revenue — — 3 3 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 2 2 Balance at March 31, 2023 $ (153) $ (41) $ 3 $ (191) Foreign currency translation adjustment (38) — — (38) Tax on foreign currency translation adjustment 9 — — 9 Amortization of prior service credit and actuarial gain on post-retirement benefit plans into other non-operating income, net — (1) — (1) Foreign currency translation adjustment for post-retirement benefit plans — (1) — (1) Unrealized loss on derivative hedge agreements — — (3) (3) Reclassification of unrealized gain on foreign exchange agreements into revenue — — (1) (1) Balance at June 30, 2023 $ (182) $ (43) $ (1) $ (226) The following table provides the components of AOCL for the six months ended June 30, 2022: (in millions) Foreign Currency Translation Post-retirement Benefit Plans Derivative Instruments Total Balance at January 1, 2022 $ (101) $ (268) $ (2) $ (371) Foreign currency translation adjustment (3) — — (3) Tax on foreign currency translation adjustment (2) — — (2) Amortization of actuarial loss on post-retirement benefit plans into other non-operating income, net — 4 — 4 Income tax impact on amortization of post-retirement benefit plan items — (1) — (1) Unrealized loss on derivative hedge agreements — — (6) (6) Reclassification of unrealized loss on foreign exchange agreements into revenue — — 2 2 Balance at March 31, 2022 $ (106) $ (265) $ (6) $ (377) Cumulative effect of change in accounting principle — Foreign currency translation adjustment (41) — — (41) Tax on foreign currency translation adjustment (28) — — (28) Changes in post-retirement benefit plans — Amortization of prior service cost and net actuarial loss on post-retirement benefit plans into other non-operating income, net — 4 — 4 Other non-operating income — Income tax impact on amortization of post-retirement benefit plan items — (1) — (1) Unrealized gain on derivative hedge agreements — — (9) (9) Income tax benefit on unrealized gain on derivative hedge agreements — — 1 1 Reclassification of unrealized loss on foreign exchange agreements into revenue — — 2 2 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 1 1 Balance at June 30, 2022 $ (175) $ (262) $ (11) $ (448) |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings From time to time, we are involved in legal and regulatory proceedings that are incidental to the operation of our businesses (or the business operations of previously-owned entities). These proceedings may seek remedies relating to matters including environmental, tax, intellectual property, acquisitions or divestitures, product liability, property damage, personal injury, privacy, employment, labor and pension, government contract issues and commercial or contractual disputes. See Note 6, "Income Taxes," of our condensed consolidated financial statements for a description of a pending tax litigation matter. Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claims, we do not believe it is reasonably possible that any asserted or unasserted legal claims or proceedings, individually or in aggregate, will have a material adverse effect on our results of operations, or financial condition. We have estimated and accrued $12 million and $5 million as of June 30, 2023 and December 31, 2022, respectively, for these general legal matters. Guarantees We obtain certain stand-by letters of credit, bank guarantees, surety bonds and insurance letters of credit from third-party financial institutions in the ordinary course of business when required under contracts or to satisfy insurance-related requirements. As of June 30, 2023 and December 31, 2022, the amount of surety bonds, bank guarantees, insurance letters of credit, stand-by letters of credit as well as revenue and customs guarantees was $716 million and $451 million, respectively. Environmental In the ordinary course of business, we are subject to federal, state, local, and foreign environmental laws and regulations. We are responsible, or are alleged to be responsible, for ongoing environmental investigation and remediation of sites in various countries. These sites are in various stages of investigation and/or remediation and in many of these proceedings our liability is considered de minimis. We have received notification from the U.S. Environmental Protection Agency, and from similar state and foreign environmental agencies, that a number of sites formerly or currently owned and/or operated by Xylem or for which we are responsible, and other properties or water supplies that may be or have been impacted from those operations, contain disposed or recycled materials or wastes and require environmental investigation and/or remediation. These sites include instances where we have been identified as a potentially responsible party under federal and state environmental laws and regulations. Accruals for environmental matters are recorded on a site-by-site basis when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. Our accrued liabilities for these environmental matters represent our best estimates related to the investigation and remediation of environmental media such as water, soil, soil vapor, air and structures, as well as related legal fees. These estimates, and related accruals, are reviewed quarterly and updated for progress of investigation and remediation efforts and changes in facts and legal circumstances. Liabilities for these environmental expenditures are recorded on an undiscounted basis. We have estimated and accrued $4 million as of June 30, 2023 and December 31, 2022 for environmental matters. It is difficult to estimate the final costs of investigation and remediation due to various factors, including incomplete information regarding particular sites and other potentially responsible parties, uncertainty regarding the extent of investigation or remediation and our share, if any, of liability for such conditions, the selection of alternative remedial approaches, and changes in environmental standards and regulatory requirements. We believe the total amount accrued is reasonable based on existing facts and circumstances. Warranties We warrant numerous products, the terms of which vary widely. In general, we warrant products against defect and specific non-performance. The table below provides changes in the combined current and non-current product warranty accruals over each period: (in millions) 2023 2022 Warranty accrual – January 1 $ 54 $ 57 Net charges for product warranties in the period 13 11 Net Evoqua additions 10 — Settlement of warranty claims (13) (12) Foreign currency and other — (2) Warranty accrual - June 30 $ 64 $ 54 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Our business has four reportable segments: Water Infrastructure, Applied Water, Measurement & Control Solutions and Integrated Solutions & Services. The Water Infrastructure segment focuses on the transportation and treatment of water, offering a range of products including water, wastewater and storm water pumps, treatment equipment, and controls and systems. The Water Infrastructure segment also includes Applied Product Technologies (APT) from the Evoqua acquisition. APT provides a range of highly differentiated and scalable products and technologies with product offerings in the filtration and separation, disinfection, wastewater solutions, anode and electrochlorination technology, and aquatics technologies and solutions spaces. The Applied Water segment serves many of the primary uses of water and focuses on the residential, commercial and industrial markets. The Applied Water segment's major products include pumps, valves, heat exchangers, controls and dispensing equipment. The Measurement & Control Solutions segment focuses on developing advanced technology solutions that enable intelligent use and conservation of critical water and energy resources as well as analytical instrumentation used in the testing of water. The Measurement & Control Solutions segment's major products include smart metering, networked communications, measurement and control technologies, critical infrastructure technologies, software and services including cloud-based analytics, remote monitoring and data management, leak detection and pressure monitoring solutions and testing equipment. As a result of the Evoqua acquisition, Xylem has a new segment for Integrated Solutions and Services. This segment provides tailored services and solutions in collaboration with the customers backed by life‑cycle services including on‑demand water, outsourced water, recycle / reuse, and emergency response service alternatives to improve operational reliability, performance, and environmental compliance. Key offerings within this segment also include equipment systems for industrial needs (influent water, boiler feed water, ultrahigh purity, process water, wastewater treatment, and recycle / reuse), full-scale outsourcing of operations and maintenance, and municipal services, including odor and corrosion control services. Additionally, we have Regional selling locations, which consist primarily of selling and marketing organizations and related support services, that offer products and services across our reportable segments. Corporate and other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges related to certain matters, such as environmental matters, that are managed at a corporate level and are not included in the business segments in evaluating performance or allocating resources. The accounting policies of each segment are the same as those described in the Summary of Significant Accounting Policies section of Note 1 in the 2022 Annual Report. The following table contains financial information for each reportable segment: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Revenue: Water Infrastructure $ 704 $ 589 $ 1,293 $ 1,122 Applied Water 478 429 931 854 Measurement & Control Solutions 415 346 821 660 Integrated Solutions & Services 125 — 125 — Total $ 1,722 $ 1,364 $ 3,170 $ 2,636 Operating Income (Loss): Water Infrastructure $ 106 $ 108 $ 176 $ 182 Applied Water 84 61 167 120 Measurement & Control Solutions 26 (5) 46 (15) Integrated Solutions & Services (7) — (7) — Corporate and other (90) (18) (132) (30) Total operating income $ 119 $ 146 $ 250 $ 257 Interest expense $ 12 $ 12 $ 21 $ 25 Other non-operating income, net 7 2 11 1 Gain from sale of business — — — 1 Income before taxes $ 114 $ 136 $ 240 $ 234 Depreciation and Amortization: Water Infrastructure $ 24 $ 14 $ 38 $ 27 Applied Water 5 5 10 10 Measurement & Control Solutions 35 34 69 68 Integrated Solutions & Services 20 — 20 — Regional selling locations (a) 6 4 11 9 Corporate and other 2 2 4 4 Total $ 92 $ 59 $ 152 $ 118 Capital Expenditures: Water Infrastructure $ 18 $ 13 $ 32 $ 30 Applied Water 7 5 15 8 Measurement & Control Solutions 14 21 32 43 Integrated Solutions & Services 6 — 6 — Regional selling locations (b) 5 5 11 10 Corporate and other 4 2 7 4 Total $ 54 $ 46 $ 103 $ 95 (a) Depreciation and amortization expense incurred by the Regional selling locations was included in an overall allocation of Regional selling location costs to the segments; however, a certain portion of that expense was not specifically identified to a segment. That expense is captured in this Regional selling location line. (b) Represents capital expenditures incurred by the Regional selling locations not allocated to the segments. |
Background and Basis of Prese_2
Background and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The interim condensed consolidated financial statements reflect our financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany transactions between our businesses have been eliminated. The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair statement of the financial position and results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2022 ("2022 Annual Report") in preparing these unaudited condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes included in our 2022 Annual Report. Certain prior year amounts have been reclassified to conform to the current year presentation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, valuation results associated with purchase accounting, post-retirement obligations and assets, revenue recognition, income taxes, valuation of intangible assets, goodwill and indefinite-lived intangible impairment testing and contingent liabilities. Actual results could differ from these estimates. Our quarterly financial periods end on the Saturday closest to the last day of the calendar quarter, except for the fourth quarter which ends on December 31. For ease of presentation, the condensed consolidated financial statements included herein are described as ending on the last day of the calendar quarter. |
Recently Issued Accounting Pr_2
Recently Issued Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Recently Adopted Pronouncements | Recently Adopted Pronouncements In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-04, " Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. " This guidance requires disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. The new standard does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. The ASU became effective January 1, 2023, except for the rollforward requirement, which becomes effective January 1, 2024. The disclosures related to our adoption of the standard are included below: The Company facilitates the opportunity for suppliers to participate in voluntary supply chain financing programs with third-party financial institutions. Xylem agrees on commercial terms, including payment terms, with suppliers regardless of program participation. The company does not determine the terms or conditions of the arrangement between suppliers and the third-party financial institutions. Participating suppliers are paid directly by the third-party financial institution. Xylem pays the third-party financial institution the stated amount of confirmed invoices from its designated suppliers at the original invoice amount on the original maturity dates of the invoices, ranging from 45-180 days. Xylem does not pay fees related to these programs. Xylem or the third-party financial institutions may terminate the agreements upon at least 30 days’ notice. As of June 30, 2023, the total outstanding balance under these programs is $178 million presented on our Condensed Consolidated Balance Sheet within "Accounts payable." In October 2021, the FASB issued ASU No. 2021-08, “ Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Business Combinations [Abstract] | |
Business Combination, Separately Recognized Transactions | The acquisition-date fair value of the consideration totaled $6,900, which consisted of the following: (in millions) Fair Value of Purchase Consideration Xylem Common Stock issued to Evoqua stockholders (58,779,096 shares) $ 6,121 Estimated replacement equity awards 160 Payment of certain Evoqua indebtedness 619 Total $ 6,900 |
Purchase Price Allocation | The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Evoqua: (in millions) Fair Value Cash and cash equivalents $ 143 Receivables 432 Inventories 288 Prepaid and other current assets 75 Assets held for sale 8 Property, plant and equipment, net 511 Goodwill 4,364 Other intangible assets, net 2,307 Other non-current assets 191 Non-current assets held for sale 86 Accounts payable (207) Accrued and other current liabilities (342) Short-term borrowings and current maturities of long-term debt (166) Liabilities held for sale (1) Long-term debt (111) Other non-current accrued liabilities (124) Deferred income tax liabilities (551) Non-current liabilities held for sale (3) Total $ 6,900 |
Summary of Intangible Assets Acquired | The following table summarizes key information underlying identifiable intangible assets related to the Evoqua acquisition: (in millions) Useful Life (in years) Fair Value (in millions) Trademarks 6 $ 60 Proprietary technology and patents 4 - 9 150 Customer and distributor relationships 7 - 17 1,960 Backlog 1 - 8 110 Software 1 - 3 27 Total $ 2,307 |
Pro Forma Information | The following table summarizes, on an unaudited pro forma basis, the condensed combined results of operations of the Company for the three and six months ended June 30, 2023 and 2022, assuming the acquisition had occurred on January 1, 2022. (Unaudited) (Unaudited) (in millions) 2023 2022 2023 2022 Revenue $ 2,025 $ 1,803 $ 3,952 $ 3,502 Net income $ 63 $ 92 $ 170 $ 76 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table illustrates the sources of revenue: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Revenue from contracts with customers $ 1,637 $ 1,312 $ 3,020 $ 2,534 Lease Revenue 85 52 150 102 Total $ 1,722 $ 1,364 $ 3,170 $ 2,636 The following table reflects revenue from contracts with customers by application. Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Water Infrastructure Transport $ 466 $ 432 $ 902 $ 825 Treatment 168 104 256 194 Applied Water Building Solutions 257 226 510 461 Industrial Water 221 204 421 394 Measurement & Control Solutions Water 323 279 657 544 Energy 92 67 164 116 Integrated Solutions & Services 110 — 110 — Total $ 1,637 $ 1,312 $ 3,020 $ 2,534 The following table reflects revenue from contracts with customers by geographical region. Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Water Infrastructure United States $ 219 $ 165 $ 395 $ 312 Western Europe 220 190 410 376 Emerging Markets (a) 130 120 235 221 Other 65 61 118 110 Applied Water United States 248 219 492 440 Western Europe 105 101 209 195 Emerging Markets (a) 86 79 159 159 Other 39 31 71 61 Measurement & Control Solutions United States 265 212 522 393 Western Europe 69 59 146 128 Emerging Markets (a) 52 50 100 94 Other 29 25 53 45 Integrated Solutions & Services United States 98 — 98 — Western Europe 2 — 2 — Emerging Markets (a) 3 — 3 — Other 7 — 7 — Total $ 1,637 $ 1,312 $ 3,020 $ 2,534 (a) Emerging Markets includes results from the following regions: Eastern Europe, the Middle East and Africa, Latin America and Asia Pacific (excluding Japan, Australia and New Zealand, which are presented in "Other") |
Contract with Customer, Asset and Liability | The table below provides contract assets, contract liabilities, and significant changes in contract assets and liabilities: (in millions) Contract Assets (a) Contract Liabilities Balance at January 1, 2022 $ 125 $ 164 Additions, net 63 97 Revenue recognized from opening balance — (75) Billings transferred to accounts receivable (61) — Foreign currency and other (4) (3) Balance at June 30, 2022 $ 123 $ 183 Balance at January 1, 2023 $ 151 $ 183 Opening balance from the acquisition of Evoqua 110 107 Additions, net 85 94 Revenue recognized from opening balance — (80) Billings transferred to accounts receivable (73) — Foreign currency and other 1 (5) Balance at June 30, 2023 $ 274 $ 299 (a) Excludes receivable balances, which are disclosed on the Condensed Consolidated Balance Sheets |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Restructuring and Related Activities [Abstract] | |
Components of restructuring and asset impairment charges | The following table presents the components of restructuring expense and asset impairment charges: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 By component: Severance and other charges $ 29 $ 6 $ 35 $ 6 Reversal of restructuring accruals (1) — (1) — Total restructuring costs $ 28 $ 6 $ 34 $ 6 Asset impairment charges — 1 2 1 Total restructuring and asset impairment charges $ 28 $ 7 $ 36 $ 7 By segment: Water Infrastructure $ 1 $ 2 $ 3 $ 2 Applied Water — 1 1 1 Measurement & Control Solutions 1 4 6 4 Integrated Solutions & Services 4 — 4 — Corporate and other 22 — 22 — |
Restructuring Accruals | The following table displays a roll-forward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within "Accrued and other current liabilities" and "Other non-current accrued liabilities", for the six months ended June 30, 2023 and 2022: (in millions) 2023 2022 Restructuring accruals - January 1 $ 10 $ 7 Restructuring costs, net 34 6 Cash payments (9) (5) Stock based compensation included within AOCL (14) — Foreign currency and other (1) — Restructuring accruals - June 30 $ 20 $ 8 By segment: Water Infrastructure $ 2 $ 1 Applied Water — — Measurement & Control Solutions 3 4 Integrated Solutions & Services 4 — Regional selling locations (a) 2 1 Corporate and other 9 2 (a) Regional selling locations consist primarily of selling and marketing organizations and related support services that incurred restructuring expense that was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments. |
Expected Restructuring Costs | The following table presents expected restructuring spend in 2023 and thereafter: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Integrated Solutions & Services Corporate Total Actions Commenced in 2023: Total expected costs $ 4 $ 2 $ 6 $ 7 $ 33 $ 52 Costs incurred during Q1 2023 1 1 3 — — 5 Costs incurred during Q2 2023 2 — 1 4 22 29 Total expected costs remaining $ 1 $ 1 $ 2 $ 3 $ 11 $ 18 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Basic and diluted net earnings per share | The following is a reconciliation of the shares used in calculating basic and diluted net earnings per share: Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 Net income (in millions) $ 92 $ 112 $ 191 $ 194 Shares (in thousands): Weighted average common shares outstanding 205,505 180,123 192,938 180,164 Add: Participating securities (a) 34 33 29 29 Weighted average common shares outstanding — Basic 205,539 180,156 192,967 180,193 Plus incremental shares from assumed conversions: (b) Dilutive effect of stock options 872 438 747 513 Dilutive effect of restricted stock units and performance share units 329 56 315 129 Weighted average common shares outstanding — Diluted 206,740 180,650 194,029 180,835 Basic earnings per share $ 0.45 $ 0.62 $ 0.99 $ 1.07 Diluted earnings per share $ 0.45 $ 0.62 $ 0.98 $ 1.07 (a) Restricted stock units containing rights to non-forfeitable dividends that participate in undistributed earnings with common stockholders are considered participating securities for purposes of computing earnings per share. (b) Incremental shares from stock options, restricted stock units and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance or market conditions at the end of the reporting period. See Note 15, "Share-Based Compensation Plans," to the condensed consolidated financial statements for further detail on the performance share units. Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2023 2022 2023 2022 Stock options 2,107 1,647 1,732 1,491 Restricted stock units 606 362 469 346 Performance share units 318 270 279 252 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | (in millions) June 30, December 31, Finished goods $ 408 $ 286 Work in process 121 58 Raw materials 614 455 Total inventories $ 1,143 $ 799 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the carrying value of goodwill by operating segment | Changes in the carrying value of goodwill by reportable segment for the six months ended June 30, 2023 are as follows: (in millions) Water Infrastructure Applied Water Measurement & Control Solutions Integrated Solutions & Services Total Balance as of January 1, 2023 $ 638 $ 502 $ 1,579 $ — $ 2,719 Activity in 2023 Acquisitions 1,547 241 80 2,496 4,364 Foreign currency and other 6 5 13 1 25 Balance as of June 30, 2023 $ 2,191 $ 748 $ 1,672 $ 2,497 $ 7,108 |
Other Intangible Assets | Information regarding our other intangible assets is as follows: June 30, 2023 December 31, 2022 (in millions) Carrying Amount Accumulated Amortization Net Intangibles Carrying Amount Accumulated Amortization Net Intangibles Customer and distributor relationships $ 2,749 $ (410) $ 2,339 $ 784 $ (371) $ 413 Proprietary technology and patents 294 (126) 168 165 (118) 47 Trademarks 198 (87) 111 137 (80) 57 Software 595 (299) 296 514 (268) 246 Other 115 (7) 108 5 (3) 2 Indefinite-lived intangibles 166 — 166 165 — 165 Other Intangibles $ 4,117 $ (929) $ 3,188 $ 1,770 $ (840) $ 930 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Effect of derivative financial instruments | The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Income Statements and Statements of Comprehensive Income. Items in the table below reflect changes in "Other comprehensive loss" ("OCL") within the Statements of Comprehensive Income: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Cash Flow Hedges Foreign Exchange Contracts Amount of gain (loss) recognized in OCL $ (3) $ (13) $ 1 $ (19) Amount of (gain) loss reclassified from OCL into Revenue (1) 2 2 4 Amount of loss reclassified from OCL into Cost of revenue — 1 2 1 Net Investment Hedges Cross-Currency Swaps Amount of gain (loss) recognized in OCL $ (37) $ 93 $ (59) $ 94 Amount of income recognized in Interest expense 8 7 15 13 Foreign Currency Denominated Debt Amount of gain recognized in OCL $ — $ 23 $ — $ 31 Fair Value Hedges Foreign Exchange Contracts Amount of gain recognized in OCL $ — $ 4 $ — $ 4 Amount of (loss) recognized in Selling, general and administrative expenses $ — $ (11) $ — $ (11) Amount recognized in Interest expense $ — $ (1) $ — $ (1) |
Fair values of foreign exchange contracts | The fair values of our derivative contracts currently included in our hedging program were as follows: (in millions) June 30, December 31, Derivatives designated as hedging instruments Assets Cash Flow Hedges Prepaid and other current assets $ 5 $ — Net Investment Hedges Other non-current assets $ 40 $ 79 Liabilities Cash Flow Hedges Accrued and other current liabilities $ (6) $ — Net Investment Hedges Other non-current accrued liabilities $ (25) $ (6) |
Accrued and Other Current Lia_2
Accrued and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued and Other Current Liabilities | The components of total Accrued and other current liabilities are as follows: (in millions) June 30, December 31, Compensation and other employee-benefits $ 320 $ 285 Customer-related liabilities 333 210 Accrued taxes 119 186 Lease liabilities 97 69 Accrued warranty costs 43 37 Other accrued liabilities 162 80 Total accrued and other current liabilities $ 1,074 $ 867 |
Credit Facilities and Debt (Tab
Credit Facilities and Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Credit Facilities and Long-Term Debt | Total debt outstanding is summarized as follows: (in millions) June 30, December 31, 3.250% Senior Notes due 2026 (a) 500 500 1.950% Senior Notes due 2028 (a) 500 500 2.250% Senior Notes due 2031 (a) 500 500 4.375% Senior Notes due 2046 (a) 400 400 Equipment Financing due 2023 to 2032 126 — Securitization Facility due 2024 150 — Term loan 275 — Commercial Paper 75 — Debt issuance costs and unamortized discount (b) (19) (20) Total debt 2,507 1,880 Less: short-term borrowings and current maturities of long-term debt 240 — Total long-term debt $ 2,267 $ 1,880 (a) The fair value of our Senior Notes was determined using quoted prices in active markets for identical securities, which are considered Level 1 inputs. The fair value of our Senior Notes due 2026 was $471 million and $470 million as of June 30, 2023 and December 31, 2022 respectively. The fair value of our Senior Notes due 2028 was $440 million and $430 million as of June 30, 2023 and December 31, 2022, respectively. The fair value of our Senior Notes due 2031 was $416 million and $406 million as of June 30, 2023 and December 31, 2022, respectively. The fair value of our Senior Notes due 2046 was $339 million and $333 million as of June 30, 2023 and December 31, 2022, respectively. (b) The debt issuance costs and unamortized discount are recognized as a reduction in the carrying value of the Senior Notes in the Condensed Consolidated Balance Sheets and are being amortized to interest expense in our Condensed Consolidated Income Statements over the expected remaining terms of the Senior Notes. |
Schedule of Other Assets | As of June 30, 2023, the gross and net amounts of those assets are included on the Consolidated Balance Sheets as follows: June 30, 2023 (in millions) Gross Net Property, plant, and equipment, net $ 76 $ 75 Receivables, net 2 2 Prepaid and other current assets 4 4 Other non-current assets 55 54 $ 137 $ 135 |
Post-retirement Benefit Plans (
Post-retirement Benefit Plans (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
Components of net periodic benefit cost and other amounts recognized in other comprehensive income | The components of net periodic benefit cost for our defined benefit pension plans are as follows: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Domestic defined benefit pension plans: Service cost $ 1 $ — $ 2 $ 1 Interest cost 1 1 2 2 Expected return on plan assets (2) (1) (3) (3) Amortization of net actuarial loss — — — 1 Net periodic benefit cost $ — $ — $ 1 $ 1 International defined benefit pension plans: Service cost $ 1 $ 4 $ 3 $ 7 Interest cost 4 3 8 7 Expected return on plan assets (3) (3) (6) (7) Amortization of actuarial (gain) loss — 3 (1) 6 Net periodic benefit cost $ 2 $ 7 $ 4 $ 13 Total net periodic benefit cost $ 2 $ 7 $ 5 $ 14 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Schedule of Stockholders Equity | The following table shows the changes in stockholders' equity for the six months ended June 30, 2023: (in millions) Common Capital in Excess of Par Value Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2023 $ 2 $ 2,134 $ 2,292 $ (226) $ (708) $ 9 $ 3,503 Net income — — 99 — — — 99 Other comprehensive income, net — — — 35 — — 35 Other activity — — — — — 2 2 Dividends declared ($0.33 per share) — — (60) — — — (60) Stock incentive plan activity — 18 — — (8) — 10 Balance at March 31, 2023 $ 2 $ 2,152 $ 2,331 $ (191) $ (716) $ 11 $ 3,589 Net income — — 92 — — — 92 Other comprehensive income, net — — — (35) — — (35) Issuance of common stock 1 6,120 — — — — 6,121 Issuance of replacement equity awards 160 — — — — 160 Dividends declared ($0.33 per share) — — (79) — — — (79) Stock incentive plan activity — 63 — — (1) — 62 Balance at June 30, 2023 $ 3 $ 8,495 $ 2,344 $ (226) $ (717) $ 11 $ 9,910 The following table shows the changes in stockholders' equity for the six months ended June 30, 2022: Common Capital in Excess of Par Value Retained Accumulated Other Treasury Stock Non-Controlling Interest Total Balance at January 1, 2022 $ 2 $ 2,089 $ 2,154 $ (371) $ (656) $ 8 $ 3,226 Net income — — 82 — — — 82 Other comprehensive loss, net — — — (6) — — (6) Dividends declared ($0.30 per share) — — (55) — — — (55) Stock incentive plan activity — 10 — — (6) — 4 Repurchase of common stock — — — — (45) — (45) Balance at March 31, 2022 $ 2 $ 2,099 $ 2,181 $ (377) $ (707) $ 8 $ 3,206 Net income — — 112 — — — 112 Other comprehensive income, net — — — (71) — — (71) Dividends declared ($0.30 per share) — — (55) — — — (55) Stock incentive plan activity — 12 — — (1) — 11 Balance at June 30, 2022 $ 2 $ 2,111 $ 2,238 $ (448) $ (708) $ 8 $ 3,203 |
Share-Based Compensation Plans
Share-Based Compensation Plans (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary of restricted stock activity | The following is a summary of restricted stock unit activity for the six months ended June 30, 2023 . The fair value of the restricted share unit awards is determined using the closing price of our common stock on date of grant: Share units (in thousands) Weighted Outstanding at January 1, 2023 553 $ 88.88 Granted 1,005 103.29 Vested (264) 101.43 Forfeited (22) 95.65 Outstanding at June 30, 2023 1,272 $ 96.05 |
Summary of performance based share grants | Share units (in thousands) Weighted Outstanding at January 1, 2023 146 $ 88.78 Granted 33 101.11 Forfeited (a) (66) 81.94 Outstanding at June 30, 2023 113 $ 97.75 (a) Includes adjusted ROIC performance share unit awards forfeited during the period as a result of the final performance condition not being achieved on vest date. TSR Performance Share Unit Grants The following is a summary of our Total Shareholder Return ("TSR") performance share unit grants for the six months ended June 30, 2023: Share units (in thousands) Weighted Outstanding at January 1, 2023 178 $ 100.67 Granted 66 109.57 Adjustment for Market Condition Achieved (a) 40 102.55 Vested (102) 102.55 Forfeited (4) 114.09 Outstanding at June 30, 2023 178 $ 103.76 |
Summary of the changes in outstanding stock options | The following is a summary of the changes in outstanding stock options for the six months ended June 30, 2023 : Share units (in thousands) Weighted Average Exercise Price / Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding at January 1, 2023 1,935 $ 67.55 5.9 $ 83 Granted 2,153 38.13 Exercised (1,412) 28.26 Forfeited and expired (14) 98.95 Other 14 73.16 Outstanding at June 30, 2023 2,676 $ 64.42 6.0 $ 129 Options exercisable at June 30, 2023 1,979 $ 58.18 5.1 $ 108 Vested and expected to vest as of June 30, 2023 2,603 $ 63.69 5.7 $ 127 |
Stock option valuation assumptions | The following are weighted-average assumptions for 2023 grants: Volatility 27.30 % Risk-free interest rate 4.25 % Dividend yield 1.31 % Expected term (in years) 5.4 Weighted-average fair value / share $ 29.06 |
Performance-based shares valuation assumptions | The fair value of TSR performance share units was calculated on the date of grant using a Monte Carlo simulation model utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features. The following are weighted-average assumptions for 2023 grants: Volatility 35.9 % Risk-free interest rate 4.66 % |
Share-based Payment Arrangement, Outstanding Award, Activity, Excluding Option | The following is a summary of our Revenue performance share unit grants for the six months ended June 30, 2023: Share units (in thousands) Weighted Outstanding at January 1, 2023 32 86.77 Granted 33 101.11 Forfeited (1) 88.28 Outstanding at June 30, 2023 64 $ 93.36 The fair value of the Revenue performance share unit awards is determined using the closing price of our common stock on date of grant. The shares will vest contingent upon the achievement of a pre-set, three-year Revenue target. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table provides the components of AOCL for the six months ended June 30, 2023: (in millions) Foreign Currency Translation Post-retirement Benefit Plans Derivative Instruments Total Balance at January 1, 2023 $ (180) $ (41) $ (5) $ (226) Foreign currency translation adjustment 22 — — 22 Tax on foreign currency translation adjustment 5 — — 5 Amortization of actuarial gain on post-retirement benefit plans into other non-operating income, net — (1) — (1) Income tax impact on amortization of post-retirement benefit plan items — 1 — 1 Unrealized gain on derivative hedge agreements — — 4 4 Income tax benefit on unrealized gain on derivative hedge agreements — — (1) (1) Reclassification of unrealized loss on foreign exchange agreements into revenue — — 3 3 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 2 2 Balance at March 31, 2023 $ (153) $ (41) $ 3 $ (191) Foreign currency translation adjustment (38) — — (38) Tax on foreign currency translation adjustment 9 — — 9 Amortization of prior service credit and actuarial gain on post-retirement benefit plans into other non-operating income, net — (1) — (1) Foreign currency translation adjustment for post-retirement benefit plans — (1) — (1) Unrealized loss on derivative hedge agreements — — (3) (3) Reclassification of unrealized gain on foreign exchange agreements into revenue — — (1) (1) Balance at June 30, 2023 $ (182) $ (43) $ (1) $ (226) The following table provides the components of AOCL for the six months ended June 30, 2022: (in millions) Foreign Currency Translation Post-retirement Benefit Plans Derivative Instruments Total Balance at January 1, 2022 $ (101) $ (268) $ (2) $ (371) Foreign currency translation adjustment (3) — — (3) Tax on foreign currency translation adjustment (2) — — (2) Amortization of actuarial loss on post-retirement benefit plans into other non-operating income, net — 4 — 4 Income tax impact on amortization of post-retirement benefit plan items — (1) — (1) Unrealized loss on derivative hedge agreements — — (6) (6) Reclassification of unrealized loss on foreign exchange agreements into revenue — — 2 2 Balance at March 31, 2022 $ (106) $ (265) $ (6) $ (377) Cumulative effect of change in accounting principle — Foreign currency translation adjustment (41) — — (41) Tax on foreign currency translation adjustment (28) — — (28) Changes in post-retirement benefit plans — Amortization of prior service cost and net actuarial loss on post-retirement benefit plans into other non-operating income, net — 4 — 4 Other non-operating income — Income tax impact on amortization of post-retirement benefit plan items — (1) — (1) Unrealized gain on derivative hedge agreements — — (9) (9) Income tax benefit on unrealized gain on derivative hedge agreements — — 1 1 Reclassification of unrealized loss on foreign exchange agreements into revenue — — 2 2 Reclassification of unrealized loss on foreign exchange agreements into cost of revenue — — 1 1 Balance at June 30, 2022 $ (175) $ (262) $ (11) $ (448) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Changes in product warranty accrual | We warrant numerous products, the terms of which vary widely. In general, we warrant products against defect and specific non-performance. The table below provides changes in the combined current and non-current product warranty accruals over each period: (in millions) 2023 2022 Warranty accrual – January 1 $ 54 $ 57 Net charges for product warranties in the period 13 11 Net Evoqua additions 10 — Settlement of warranty claims (13) (12) Foreign currency and other — (2) Warranty accrual - June 30 $ 64 $ 54 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Financial information for each reportable segment | Additionally, we have Regional selling locations, which consist primarily of selling and marketing organizations and related support services, that offer products and services across our reportable segments. Corporate and other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges related to certain matters, such as environmental matters, that are managed at a corporate level and are not included in the business segments in evaluating performance or allocating resources. The accounting policies of each segment are the same as those described in the Summary of Significant Accounting Policies section of Note 1 in the 2022 Annual Report. The following table contains financial information for each reportable segment: Three Months Ended Six Months Ended June 30, June 30, (in millions) 2023 2022 2023 2022 Revenue: Water Infrastructure $ 704 $ 589 $ 1,293 $ 1,122 Applied Water 478 429 931 854 Measurement & Control Solutions 415 346 821 660 Integrated Solutions & Services 125 — 125 — Total $ 1,722 $ 1,364 $ 3,170 $ 2,636 Operating Income (Loss): Water Infrastructure $ 106 $ 108 $ 176 $ 182 Applied Water 84 61 167 120 Measurement & Control Solutions 26 (5) 46 (15) Integrated Solutions & Services (7) — (7) — Corporate and other (90) (18) (132) (30) Total operating income $ 119 $ 146 $ 250 $ 257 Interest expense $ 12 $ 12 $ 21 $ 25 Other non-operating income, net 7 2 11 1 Gain from sale of business — — — 1 Income before taxes $ 114 $ 136 $ 240 $ 234 Depreciation and Amortization: Water Infrastructure $ 24 $ 14 $ 38 $ 27 Applied Water 5 5 10 10 Measurement & Control Solutions 35 34 69 68 Integrated Solutions & Services 20 — 20 — Regional selling locations (a) 6 4 11 9 Corporate and other 2 2 4 4 Total $ 92 $ 59 $ 152 $ 118 Capital Expenditures: Water Infrastructure $ 18 $ 13 $ 32 $ 30 Applied Water 7 5 15 8 Measurement & Control Solutions 14 21 32 43 Integrated Solutions & Services 6 — 6 — Regional selling locations (b) 5 5 11 10 Corporate and other 4 2 7 4 Total $ 54 $ 46 $ 103 $ 95 (a) Depreciation and amortization expense incurred by the Regional selling locations was included in an overall allocation of Regional selling location costs to the segments; however, a certain portion of that expense was not specifically identified to a segment. That expense is captured in this Regional selling location line. (b) Represents capital expenditures incurred by the Regional selling locations not allocated to the segments. |
Recently Issued Accounting Pr_3
Recently Issued Accounting Pronouncements (Textuals) (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Termination notice | 30 days |
Outstanding balance under supplier finance programs | $ 178 |
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Invoice payment terms | 45 days |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Invoice payment terms | 180 days |
Acquisitions and Divestitures_2
Acquisitions and Divestitures (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 15, 2023 | May 24, 2023 | Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | ||||||
Acquisition of business, net of cash acquired | $ 476 | $ 0 | ||||
Goodwill | $ 7,108 | 7,108 | $ 2,719 | |||
Disposal Group, Not Discontinued Operations | ||||||
Business Acquisition [Line Items] | ||||||
Proceeds from sale of business | $ 91 | |||||
Evoqua Acquisition | ||||||
Business Acquisition [Line Items] | ||||||
Business Combination, Share Conversion Ratio | 0.48 | |||||
Business Acquisition, Percentage of Voting Interests Acquired | 100% | |||||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 6,121 | |||||
Business Combination, Consideration Transferred | 6,900 | |||||
Business Combination, Consideration Transferred, Liabilities Paid | 619 | |||||
Business Combination, Consideration Transferred, Equity Interest Issued And Issuable, Replacement Equity Awards | 160 | |||||
Receivables, net | 322 | |||||
Receivables, net | 329 | |||||
Accounts Receivable, Allowance for Credit Loss | 7 | |||||
Revenue | 178 | |||||
Goodwill | 4,364 | |||||
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 56 | |||||
Acquisition costs | 39 | 55 | ||||
Operating income (loss) | 49 | |||||
Evoqua Acquisition | Equity Option | ||||||
Business Acquisition [Line Items] | ||||||
Stock Issued During Period, Shares, Acquisitions | 2,000,000 | |||||
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | 5 | 5 | ||||
Evoqua Acquisition | Performance Based Shares | ||||||
Business Acquisition [Line Items] | ||||||
Stock Issued During Period, Shares, Acquisitions | 330,000 | |||||
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | 10 | 10 | ||||
Evoqua Acquisition | Restricted Stock Units (RSUs) | ||||||
Business Acquisition [Line Items] | ||||||
Stock Issued During Period, Shares, Acquisitions | 377,000 | |||||
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount | $ 21 | $ 21 | ||||
Evoqua Acquisition | Stock Appreciation Rights (SARs) | ||||||
Business Acquisition [Line Items] | ||||||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 3 years | |||||
Evoqua Acquisition | Legacy Evoqua Stockholders | ||||||
Business Acquisition [Line Items] | ||||||
Subsidiary, Ownership Percentage, Noncontrolling Owner | 25% | |||||
Evoqua Acquisition | Legacy Xylem Stockholders | ||||||
Business Acquisition [Line Items] | ||||||
Subsidiary, Ownership Percentage, Parent | 75% |
Acquisitions and Divestitures_3
Acquisitions and Divestitures (Purchase Price Allocation) (Details) - USD ($) $ in Millions | Jun. 30, 2023 | May 24, 2023 | Dec. 31, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 7,108 | $ 2,719 | |
Evoqua Acquisition | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 143 | ||
Receivables | 432 | ||
Inventories | 288 | ||
Prepaid and other current assets | 75 | ||
Assets held for sale | 8 | ||
Property, plant and equipment, net | 511 | ||
Goodwill | 4,364 | ||
Other intangible assets, net | 2,307 | ||
Other non-current assets | 191 | ||
Non-current assets held for sale | 86 | ||
Accounts payable | (207) | ||
Short-term borrowings and current maturities of long-term debt | (166) | ||
Accrued and other current liabilities | (342) | ||
Liabilities held for sale | (1) | ||
Long-term debt | (111) | ||
Other non-current accrued liabilities | (124) | ||
Deferred income tax liabilities | (551) | ||
Non-current liabilities held for sale | (3) | ||
Total | $ 6,900 |
Acquisitions and Divestitures_4
Acquisitions and Divestitures (Summary of Intangible Assts Acquired) (Details) - Evoqua Acquisition $ in Millions | May 24, 2023 USD ($) |
Business Acquisition [Line Items] | |
Other intangible assets, net | $ 2,307 |
Trademarks | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 6 years |
Other intangible assets, net | $ 60 |
Proprietary technology and patents | |
Business Acquisition [Line Items] | |
Other intangible assets, net | $ 150 |
Proprietary technology and patents | Minimum | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 4 years |
Proprietary technology and patents | Maximum | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 9 years |
Customer and distributor relationships | |
Business Acquisition [Line Items] | |
Other intangible assets, net | $ 1,960 |
Customer and distributor relationships | Minimum | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 7 years |
Customer and distributor relationships | Maximum | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 17 years |
Backlog | |
Business Acquisition [Line Items] | |
Other intangible assets, net | $ 110 |
Backlog | Minimum | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 1 year |
Backlog | Maximum | |
Business Acquisition [Line Items] | |
Weighted-average useful life | 8 years |
Software | |
Business Acquisition [Line Items] | |
Other intangible assets, net | $ 27 |
Acquisitions and Divestitures_5
Acquisitions and Divestitures (Summary of Pro Forma Information) (Details) - Evoqua Acquisition - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Business Acquisition, Pro Forma Revenue | $ 2,025 | $ 1,803 | $ 3,952 | $ 3,502 |
Business Acquisition, Pro Forma Net Income (Loss) | $ 63 | $ 92 | $ 170 | $ 76 |
Acquisitions and Divestitures_6
Acquisitions and Divestitures (Details) - Evoqua Acquisition $ in Millions | May 24, 2023 USD ($) |
Business Acquisition [Line Items] | |
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 6,121 |
Business Combination, Consideration Transferred, Equity Interest Issued And Issuable, Replacement Equity Awards | 160 |
Business Combination, Consideration Transferred, Liabilities Paid | 619 |
Business Combination, Consideration Transferred | $ 6,900 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 1,637 | $ 1,312 | $ 3,020 | $ 2,534 |
Lease Revenue | 85 | 52 | 150 | 102 |
Total | 1,722 | 1,364 | 3,170 | 2,636 |
Water Infrastructure | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 219 | 165 | 395 | 312 |
Water Infrastructure | Western Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 220 | 190 | 410 | 376 |
Water Infrastructure | Emerging Markets | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 130 | 120 | 235 | 221 |
Water Infrastructure | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 65 | 61 | 118 | 110 |
Water Infrastructure | Transport | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 466 | 432 | 902 | 825 |
Water Infrastructure | Treatment | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 168 | 104 | 256 | 194 |
Applied Water | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 248 | 219 | 492 | 440 |
Applied Water | Western Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 105 | 101 | 209 | 195 |
Applied Water | Emerging Markets | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 86 | 79 | 159 | 159 |
Applied Water | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 39 | 31 | 71 | 61 |
Applied Water | Industrial Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 221 | 204 | 421 | 394 |
Applied Water | Building Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 257 | 226 | 510 | 461 |
Measurement & Control Solutions | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 265 | 212 | 522 | 393 |
Measurement & Control Solutions | Western Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 69 | 59 | 146 | 128 |
Measurement & Control Solutions | Emerging Markets | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 52 | 50 | 100 | 94 |
Measurement & Control Solutions | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 29 | 25 | 53 | 45 |
Measurement & Control Solutions | Water | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 323 | 279 | 657 | 544 |
Measurement & Control Solutions | Energy | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 92 | 67 | 164 | 116 |
Integrated Solutions & Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 110 | 0 | 110 | 0 |
Integrated Solutions & Services | United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 98 | 0 | 98 | 0 |
Integrated Solutions & Services | Western Europe | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 2 | 0 | 2 | 0 |
Integrated Solutions & Services | Emerging Markets | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | 3 | 0 | 3 | 0 |
Integrated Solutions & Services | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contracts with customers | $ 7 | $ 0 | $ 7 | $ 0 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Change in Contract with Customer, Asset [Abstract] | ||
Beginning balance | $ 151 | $ 125 |
Additions, net | 85 | 63 |
Billings transferred to accounts receivable | (73) | (61) |
Foreign currency and other | 1 | (4) |
Ending balance | 123 | 274 |
Contract With Customer, Liability, Business Acquisitions | 107 | |
Contract With Customer, Asset, Acquisitions | 110 | |
Change in Contract with Customer, Liability [Abstract] | ||
Beginning balance | 183 | 164 |
Additions, net | 94 | 97 |
Revenue recognized from opening balance | (80) | (75) |
Foreign currency and other | (5) | (3) |
Ending balance | $ 183 | $ 299 |
Revenue (Narrative) (Details)
Revenue (Narrative) (Details) $ in Millions | Jun. 30, 2023 USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | $ 949 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Remaining performance obligation | 949 |
Evoqua Acquisition | |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligation | 464 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Remaining performance obligation | $ 464 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-07-01 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Expected timing of recognition | 60 months |
Restructuring Charges (Textuals
Restructuring Charges (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 28 | $ 6 | $ 34 | $ 6 |
Impairment of intangible assets | 2 | |||
Restructuring costs, net | 28 | 6 | 34 | 6 |
2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 6 | 6 | ||
Restructuring costs, net | $ 6 | $ 6 | ||
Maximum | 2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost incurred | $ 28 | 34 | ||
Share-Based Payment Arrangement | 2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost incurred | 14 | |||
Employee Severance | 2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost incurred | 14 | |||
Other Restructuring | 2020 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring cost incurred | $ 6 |
Restructuring Charges (Restruct
Restructuring Charges (Restructuring Charges) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | ||
Restructuring Cost and Impairment Charge | |||||||
Severance and other charges | $ 29 | $ 6 | $ 35 | $ 6 | |||
Restructuring charges | 28 | 6 | 34 | 6 | |||
Asset impairment charges | 0 | 1 | 2 | 1 | |||
Total restructuring and asset impairment charges | 28 | 7 | 36 | 7 | |||
Reversal of restructuring accruals | (1) | 0 | (1) | 0 | |||
Restructuring Reserve | 20 | 8 | 20 | 8 | $ 10 | $ 7 | |
Cash payments | (9) | (5) | |||||
Restructuring Reserve, Share Based Compensation | (14) | 0 | |||||
Foreign currency and other | (1) | 0 | |||||
Corporate and other | |||||||
Restructuring Cost and Impairment Charge | |||||||
Restructuring charges | 22 | 0 | 22 | 0 | |||
Restructuring Reserve | 9 | 2 | 9 | 2 | |||
Water Infrastructure | Operating Segments | |||||||
Restructuring Cost and Impairment Charge | |||||||
Restructuring charges | 1 | 2 | 3 | 2 | |||
Restructuring Reserve | 2 | 1 | 2 | 1 | |||
Applied Water | Operating Segments | |||||||
Restructuring Cost and Impairment Charge | |||||||
Restructuring charges | 0 | 1 | 1 | 1 | |||
Restructuring Reserve | 0 | 0 | 0 | 0 | |||
Measurement & Control Solutions | Operating Segments | |||||||
Restructuring Cost and Impairment Charge | |||||||
Restructuring charges | 1 | 4 | 6 | 4 | |||
Restructuring Reserve | 3 | 4 | 3 | 4 | |||
Integrated Solutions & Services | Operating Segments | |||||||
Restructuring Cost and Impairment Charge | |||||||
Restructuring charges | 4 | 0 | 4 | 0 | |||
Restructuring Reserve | [1] | $ 4 | $ 0 | $ 4 | $ 0 | ||
[1]Regional selling locations consist primarily of selling and marketing organizations and related support services that incurred restructuring expense that was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments. |
Restructuring Charges (Accrual
Restructuring Charges (Accrual Rollfoward) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accruals - January 1 | $ 10 | $ 7 | |||
Restructuring costs, net | $ 28 | $ 6 | 34 | 6 | |
Cash payments | (9) | (5) | |||
Restructuring Reserve, Share Based Compensation | (14) | 0 | |||
Restructuring accruals - June 30 | 20 | 8 | 20 | 8 | |
Regional selling locations | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring accruals - June 30 | 2 | 1 | 2 | 1 | |
Corporate and other | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring costs, net | 22 | 0 | 22 | 0 | |
Restructuring accruals - June 30 | 9 | 2 | 9 | 2 | |
Water Infrastructure | Operating Segments | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring costs, net | 1 | 2 | 3 | 2 | |
Restructuring accruals - June 30 | 2 | 1 | 2 | 1 | |
Applied Water | Operating Segments | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring costs, net | 0 | 1 | 1 | 1 | |
Restructuring accruals - June 30 | 0 | 0 | 0 | 0 | |
Measurement & Control Solutions | Operating Segments | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring costs, net | 1 | 4 | 6 | 4 | |
Restructuring accruals - June 30 | 3 | 4 | 3 | 4 | |
Integrated Solutions & Services | Operating Segments | |||||
Restructuring Reserve [Roll Forward] | |||||
Restructuring costs, net | 4 | 0 | 4 | 0 | |
Restructuring accruals - June 30 | [1] | $ 4 | $ 0 | $ 4 | $ 0 |
[1]Regional selling locations consist primarily of selling and marketing organizations and related support services that incurred restructuring expense that was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments. |
Restructuring Charges (Estimate
Restructuring Charges (Estimated Restructuring Costs) (Details) - 2021 Plan - USD ($) $ in Millions | 3 Months Ended | |
Jun. 30, 2023 | Mar. 31, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||
Total expected costs | $ 52 | |
Restructuring costs incurred during period | 29 | $ 5 |
Total expected costs remaining | 18 | |
Operating Segments | Water Infrastructure | ||
Restructuring Cost and Reserve [Line Items] | ||
Total expected costs | 4 | |
Restructuring costs incurred during period | 2 | 1 |
Total expected costs remaining | 1 | |
Operating Segments | Applied Water | ||
Restructuring Cost and Reserve [Line Items] | ||
Total expected costs | 2 | |
Restructuring costs incurred during period | 0 | 1 |
Total expected costs remaining | 1 | |
Operating Segments | Measurement & Control Solutions | ||
Restructuring Cost and Reserve [Line Items] | ||
Total expected costs | 6 | |
Restructuring costs incurred during period | 1 | 3 |
Total expected costs remaining | 2 | |
Operating Segments | Integrated Solutions & Services | ||
Restructuring Cost and Reserve [Line Items] | ||
Total expected costs | 7 | |
Restructuring costs incurred during period | 4 | 0 |
Total expected costs remaining | 3 | |
Corporate and other | ||
Restructuring Cost and Reserve [Line Items] | ||
Total expected costs | 33 | |
Restructuring costs incurred during period | 22 | $ 0 |
Total expected costs remaining | $ 11 |
Income Taxes (Textuals) (Detail
Income Taxes (Textuals) (Details) kr in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 USD ($) | Jun. 30, 2022 SEK (kr) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | |
Income Tax Disclosure [Abstract] | ||||||
Income tax provision | $ 22 | $ 24 | $ 49 | $ 40 | ||
Effective tax rate | 19.10% | 17.50% | 20.50% | 17% | ||
Assessment for tax, penalties and interest | $ 74 | kr 806 |
Earnings Per Share (Calculation
Earnings Per Share (Calculations for EPS) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||
Basic and diluted net earnings per share: | |||||
Net income attributable to Xylem (in usd) | $ 92 | $ 112 | $ 191 | $ 194 | |
Shares | |||||
Weighted average common shares outstanding | 205,505 | 180,123 | 192,938 | 180,164 | |
Add: Participating securities | [1] | 34 | 33 | 29 | 29 |
Weighted average common shares outstanding — Basic | 205,539 | 180,156 | 192,967 | 180,193 | |
Plus incremental shares from assumed conversions: | |||||
Weighted average common shares outstanding — Diluted | 206,740 | 180,650 | 194,029 | 180,835 | |
Basic earnings per share (usd per share) | $ 0.45 | $ 0.62 | $ 0.99 | $ 1.07 | |
Diluted earnings per share (usd per share) | $ 0.45 | $ 0.62 | $ 0.98 | $ 1.07 | |
Stock Options | |||||
Plus incremental shares from assumed conversions: | |||||
Dilutive effect of common shares | [2] | 872 | 438 | 747 | 513 |
Restricted Stock | |||||
Plus incremental shares from assumed conversions: | |||||
Dilutive effect of common shares | [2] | 329 | 56 | 315 | 129 |
[1]Restricted stock units containing rights to non-forfeitable dividends that participate in undistributed earnings with common stockholders are considered participating securities for purposes of computing earnings per share.[2]Incremental shares from stock options, restricted stock units and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance or market conditions at the end of the reporting period. See Note 15, "Share-Based Compensation Plans," to the condensed consolidated financial statements for further detail on the performance share units. |
Earnings Per Share (Summary of
Earnings Per Share (Summary of Antidilutive Securities) (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Stock Options | ||||
Incremental shares from stock options and restricted stock: | ||||
Antidilutive securities (in shares) | 2,107 | 1,647 | 1,732 | 1,491 |
Restricted Stock | ||||
Incremental shares from stock options and restricted stock: | ||||
Antidilutive securities (in shares) | 606 | 362 | 469 | 346 |
Performance Based Shares | ||||
Incremental shares from stock options and restricted stock: | ||||
Antidilutive securities (in shares) | 318 | 270 | 279 | 252 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Inventories | ||
Finished goods | $ 408 | $ 286 |
Work in process | 121 | 58 |
Raw materials | 614 | 455 |
Total inventories | $ 1,143 | $ 799 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Goodwill Rollforward) (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Changes in the carrying value of goodwill by operating segment | |
Balance as of January 1, 2023 | $ 2,719 |
Acquired | 4,364 |
Foreign currency and other | 25 |
Balance as of June 30, 2023 | 7,108 |
Water Infrastructure | |
Changes in the carrying value of goodwill by operating segment | |
Balance as of January 1, 2023 | 638 |
Acquired | 1,547 |
Foreign currency and other | 6 |
Balance as of June 30, 2023 | 2,191 |
Applied Water | |
Changes in the carrying value of goodwill by operating segment | |
Balance as of January 1, 2023 | 502 |
Acquired | 241 |
Foreign currency and other | 5 |
Balance as of June 30, 2023 | 748 |
Measurement & Control Solutions | |
Changes in the carrying value of goodwill by operating segment | |
Balance as of January 1, 2023 | 1,579 |
Acquired | 80 |
Foreign currency and other | 13 |
Balance as of June 30, 2023 | 1,672 |
Integrated Solutions & Services | |
Changes in the carrying value of goodwill by operating segment | |
Balance as of January 1, 2023 | 0 |
Acquired | 2,496 |
Foreign currency and other | 1 |
Balance as of June 30, 2023 | $ 2,497 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets (Summary of Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Goodwill and Other Intangible Assets | |||||
Accumulated Amortization | $ (929) | $ (929) | $ (840) | ||
Intangible Assets Gross, Carrying Amount | 4,117 | 4,117 | 1,770 | ||
Intangible Assets, Net Intangibles | 3,188 | 3,188 | 930 | ||
Amortization | 51 | $ 32 | 83 | $ 62 | |
Customer and distributor relationships | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 2,749 | 2,749 | 784 | ||
Accumulated Amortization | (410) | (410) | (371) | ||
Net Intangibles | 2,339 | 2,339 | 413 | ||
Proprietary technology and patents | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 294 | 294 | 165 | ||
Accumulated Amortization | (126) | (126) | (118) | ||
Net Intangibles | 168 | 168 | 47 | ||
Trademarks | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 198 | 198 | 137 | ||
Accumulated Amortization | (87) | (87) | (80) | ||
Net Intangibles | 111 | 111 | 57 | ||
Software | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 595 | 595 | 514 | ||
Accumulated Amortization | (299) | (299) | (268) | ||
Net Intangibles | 296 | 296 | 246 | ||
Other | |||||
Goodwill and Other Intangible Assets | |||||
Carrying Amount | 115 | 115 | 5 | ||
Accumulated Amortization | (7) | (7) | (3) | ||
Net Intangibles | 108 | 108 | 2 | ||
Indefinite-lived intangibles | |||||
Goodwill and Other Intangible Assets | |||||
Accumulated Amortization | 0 | 0 | 0 | ||
Indefinite-lived intangibles | $ 166 | $ 166 | $ 165 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Textual) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Finite-Lived Intangible Assets | ||||
Amortization expense related to finite-lived intangible assets | $ 51 | $ 32 | $ 83 | $ 62 |
Impairment of intangible assets | 2 | |||
Asset Impairment Charges | 0 | $ 1 | $ 2 | $ 1 |
Software | ||||
Finite-Lived Intangible Assets | ||||
Asset Impairment Charges | $ 2 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Effect of Deriative Instruments on Income Statement and Statement of Comprehensive Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | $ 3 | $ 9 | $ (1) | $ 15 |
Amount of gain reclassified from OCI into revenue | (1,722) | (1,364) | (3,170) | (2,636) |
Reclassification out of Accumulated Other Comprehensive Income | Foreign Exchange Contract | Cash Flow Hedges | ||||
Derivative Financial Instruments | ||||
Amount of gain reclassified from OCI into revenue | (1) | 2 | 2 | 4 |
Amount of (gain) loss reclassified from OCI into cost of revenue | 0 | 1 | 2 | 1 |
Cash Flow Hedging [Member] | Foreign Exchange Contract | Cash Flow Hedges | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | (3) | (13) | 1 | (19) |
Cash Flow Hedging [Member] | Foreign Exchange Contract | Fair Value Hedges | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | 0 | (4) | 0 | (4) |
Cash Flow Hedging [Member] | Cross Currency Swaps | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | (37) | 93 | 59 | 94 |
Cash Flow Hedging [Member] | Foreign Currency Denominated Debt | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | 0 | 23 | 0 | 31 |
Interest Expense | Cash Flow Hedging [Member] | Foreign Exchange Contract | Fair Value Hedges | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | 0 | 1 | 0 | 1 |
Interest Expense | Cash Flow Hedging [Member] | Cross Currency Swaps | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | 8 | 7 | 15 | 13 |
Selling, General and Administrative Expenses | Cash Flow Hedging [Member] | Foreign Exchange Contract | Fair Value Hedges | ||||
Derivative Financial Instruments | ||||
Amount of gain (loss) recognized in OCI | $ 0 | $ 11 | $ 0 | $ 11 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Balance Sheet Location of Derivative Instruments) (Details) - Derivatives designated as hedging instruments - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Prepaid and other current assets | ||
Derivatives, Fair Value | ||
Assets | $ 5 | $ 0 |
Other non-current assets | ||
Derivatives, Fair Value | ||
Assets | 40 | 79 |
Accrued and other current liabilities | Cash Flow Hedges | ||
Derivatives, Fair Value | ||
Liabilities | (6) | 0 |
Other non-current accrued liabilities | ||
Derivatives, Fair Value | ||
Liabilities | $ (25) | $ (6) |
Derivative Financial Instrume_5
Derivative Financial Instruments (Textual) (Details) $ in Millions | Jun. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Mar. 11, 2016 USD ($) | Mar. 11, 2016 EUR (€) |
Derivative [Line Items] | ||||
Net losses expected to be reclassified in next 12 months | $ 1 | |||
Foreign Exchange Contract | ||||
Derivative [Line Items] | ||||
Notional amount | 360 | $ 255 | ||
Derivatives designated as hedging instruments | Sell USD Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 144 | 105 | ||
Derivatives designated as hedging instruments | Buy KR Sell EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 93 | 73 | ||
Derivatives designated as hedging instruments | Sell GBP Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 39 | 29 | ||
Derivatives designated as hedging instruments | Sell CDN Buy EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 18 | 13 | ||
Derivatives designated as hedging instruments | Buy USD Sell CDN | ||||
Derivative [Line Items] | ||||
Notional amount | 17 | 13 | ||
Derivatives designated as hedging instruments | Sell ASD Buy Euro | ||||
Derivative [Line Items] | ||||
Notional amount | 16 | 13 | ||
Derivatives designated as hedging instruments | Buy PLN Sell EUR | ||||
Derivative [Line Items] | ||||
Notional amount | 13 | 9 | ||
Derivatives designated as hedging instruments | Cross Currency Swaps | ||||
Derivative [Line Items] | ||||
Notional amount | $ 1,659 | $ 1,616 | ||
Senior Notes Due 2023, 2.250% | Senior Notes | ||||
Derivative [Line Items] | ||||
Interest on notes due | 2.25% | 2.25% | ||
Face amount | $ 533 | € 500,000,000 |
Accrued and Other Current Lia_3
Accrued and Other Current Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Accrued and Other Current Liabilities | ||
Compensation and other employee-benefits | $ 320 | $ 285 |
Customer-related liabilities | 333 | 210 |
Accrued taxes | 119 | 186 |
Lease liabilities | 97 | 69 |
Accrued warranty costs | 43 | 37 |
Other accrued liabilities | 162 | 80 |
Total accrued and other current liabilities | $ 1,074 | $ 867 |
Credit Facilities and Debt (Sum
Credit Facilities and Debt (Summary of Debt Outstanding) (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 | Jun. 26, 2020 | Oct. 11, 2016 | |
Credit Facilities and Long-Term Debt : | |||||
Debt issuance costs and unamortized discount | [1] | $ (19) | $ (20) | ||
Total debt | 2,507 | 1,880 | |||
Less: short-term borrowings and current maturities of long-term debt | 240 | 0 | |||
Long-term debt | $ 2,267 | 1,880 | |||
Senior Notes due 2026 | |||||
Credit Facilities and Long-Term Debt : | |||||
Interest rate | 3.25% | 3.25% | |||
Long-term debt, fair value | $ 471 | 470 | |||
Senior Notes due 2026 | Senior Loans | |||||
Credit Facilities and Long-Term Debt : | |||||
Senior Notes Due | [2] | $ 500 | 500 | ||
Senior Notes Due Twenty Twenty Eight | |||||
Credit Facilities and Long-Term Debt : | |||||
Interest rate | 1.95% | 1.95% | |||
Long-term debt, fair value | $ 440 | 430 | |||
Senior Notes Due Twenty Twenty Eight | Senior Loans | |||||
Credit Facilities and Long-Term Debt : | |||||
Senior Notes Due | $ 500 | 500 | |||
Senior Notes Due Twenty Thirty One | |||||
Credit Facilities and Long-Term Debt : | |||||
Interest rate | 2.25% | 2.25% | |||
Long-term debt, fair value | $ 416 | 406 | |||
Senior Notes Due Twenty Thirty One | Senior Loans | |||||
Credit Facilities and Long-Term Debt : | |||||
Senior Notes Due | $ 500 | 500 | |||
Senior Notes due 2046 | |||||
Credit Facilities and Long-Term Debt : | |||||
Interest rate | 4.375% | 4.375% | |||
Long-term debt, fair value | $ 339 | 333 | |||
Senior Notes due 2046 | Senior Loans | |||||
Credit Facilities and Long-Term Debt : | |||||
Senior Notes Due | [2] | 400 | 400 | ||
Commercial Paper | |||||
Credit Facilities and Long-Term Debt : | |||||
Senior Notes Due | 75 | 0 | |||
Equipment Financing | Secured Debt | |||||
Credit Facilities and Long-Term Debt : | |||||
Senior Notes Due | 126 | 0 | |||
Securitization Facility, Due 2024 | Secured Debt | |||||
Credit Facilities and Long-Term Debt : | |||||
Securitization Facility due 2024 | 150 | 0 | |||
Term loan | Secured Debt | |||||
Credit Facilities and Long-Term Debt : | |||||
Senior Notes Due | $ 275 | $ 0 | |||
[1]The debt issuance costs and unamortized discount are recognized as a reduction in the carrying value of the Senior Notes in the Condensed Consolidated Balance Sheets and are being amortized to interest expense in our Condensed Consolidated Income Statements over the expected remaining terms of the Senior Notes.[2]The fair value of our Senior Notes was determined using quoted prices in active markets for identical securities, which are considered Level 1 inputs. The fair value of our Senior Notes due 2026 was $471 million and $470 million as of June 30, 2023 and December 31, 2022 respectively. The fair value of our Senior Notes due 2028 was $440 million and $430 million as of June 30, 2023 and December 31, 2022, respectively. The fair value of our Senior Notes due 2031 was $416 million and $406 million as of June 30, 2023 and December 31, 2022, respectively. The fair value of our Senior Notes due 2046 was $339 million and $333 million as of June 30, 2023 and December 31, 2022, respectively. |
Credit Facilities and Debt (Tex
Credit Facilities and Debt (Textuals) (Details) | 6 Months Ended | ||||||||||||
Mar. 01, 2023 USD ($) Rate | Jun. 26, 2020 USD ($) | Sep. 20, 2011 | Jun. 30, 2023 USD ($) | May 09, 2023 EUR (€) | May 09, 2023 USD ($) | Dec. 31, 2022 USD ($) | Jun. 03, 2019 EUR (€) | Mar. 05, 2019 USD ($) | Jan. 26, 2018 USD ($) | Oct. 11, 2016 USD ($) | Mar. 11, 2016 EUR (€) | Mar. 11, 2016 USD ($) | |
Senior Notes | |||||||||||||
Debt Instrument | |||||||||||||
Redemption price percentage | 101% | ||||||||||||
Line of Credit [Member] | |||||||||||||
Debt Instrument | |||||||||||||
Face amount | $ 546,000,000 | ||||||||||||
Senior Notes Due 2023, 2.250% | Senior Notes | |||||||||||||
Debt Instrument | |||||||||||||
Interest rate | 2.25% | 2.25% | |||||||||||
Face amount | € 500,000,000 | $ 533,000,000 | |||||||||||
Senior Notes due 2026 | |||||||||||||
Debt Instrument | |||||||||||||
Fair value of senior notes due | $ 471,000,000 | $ 470,000,000 | |||||||||||
Interest rate | 3.25% | 3.25% | |||||||||||
Face amount | $ 500,000,000 | ||||||||||||
Senior Notes due 2046 | |||||||||||||
Debt Instrument | |||||||||||||
Fair value of senior notes due | $ 339,000,000 | 333,000,000 | |||||||||||
Interest rate | 4.375% | 4.375% | |||||||||||
Face amount | $ 400,000,000 | ||||||||||||
2019 Five-Year Revolving Credit Facility | Revolving Credit Facility | |||||||||||||
Debt Instrument | |||||||||||||
Term of debt | 5 years | ||||||||||||
Debt instrument aggregate principal amount | $ 1,000,000,000 | $ 800,000,000 | |||||||||||
Permitted increases in Credit Facility borrowing base | 200,000,000 | ||||||||||||
Maximum permitted increases in Credit Facility borrowing base | $ 1,000,000,000 | ||||||||||||
US Dollar Commercial Paper Program | |||||||||||||
Debt Instrument | |||||||||||||
Face amount | $ 600,000,000 | ||||||||||||
Euro Commercial Paper Program | |||||||||||||
Debt Instrument | |||||||||||||
Face amount | € | € 500,000,000 | ||||||||||||
Senior Notes Due Twenty Twenty Eight | |||||||||||||
Debt Instrument | |||||||||||||
Fair value of senior notes due | $ 440,000,000 | 430,000,000 | |||||||||||
Interest rate | 1.95% | 1.95% | |||||||||||
Face amount | $ 500,000,000 | ||||||||||||
Senior Notes Due Twenty Thirty One | |||||||||||||
Debt Instrument | |||||||||||||
Fair value of senior notes due | $ 416,000,000 | 406,000,000 | |||||||||||
Interest rate | 2.25% | 2.25% | |||||||||||
Face amount | $ 500,000,000 | ||||||||||||
Green Bond | Senior Notes | |||||||||||||
Debt Instrument | |||||||||||||
Redemption price percentage | 101% | ||||||||||||
Five Year Revolving Credit Facility 2023 | Revolving Credit Facility | |||||||||||||
Debt Instrument | |||||||||||||
Term of debt | 5 years | ||||||||||||
Debt instrument aggregate principal amount | $ 1,000,000,000 | ||||||||||||
Permitted increases in Credit Facility borrowing base | 300,000,000 | ||||||||||||
Maximum permitted increases in Credit Facility borrowing base | $ 1,300,000,000 | ||||||||||||
Maximum leverage ratio, after acquisition | Rate | 400% | ||||||||||||
Maximum leverage ratio, before acquisition | Rate | 350% | ||||||||||||
ING Bank Term Loan Facility | Line of Credit [Member] | |||||||||||||
Debt Instrument | |||||||||||||
Face amount | € 250,000,000 | $ 273,000,000 | |||||||||||
Commercial Paper | |||||||||||||
Debt Instrument | |||||||||||||
Senior Notes Due | $ 75,000,000 | $ 0 |
Credit Facilities and Debt (Det
Credit Facilities and Debt (Details) - USD ($) $ in Millions | Jun. 30, 2023 | May 24, 2023 | Dec. 31, 2022 |
Gross | |||
Prepaid and other current assets | $ 225 | $ 173 | |
Net | |||
Property, plant, and equipment, net | 1,144 | 630 | |
Prepaid and other current assets | 225 | 173 | |
Other non-current assets | 922 | 661 | |
Total assets | 16,097 | $ 7,952 | |
Evoqua Acquisition | |||
Gross | |||
Receivables, net | $ 329 | ||
Net | |||
Receivables, net | 322 | ||
Securitization Facility due 2024 | $ 150 | ||
Equipment Financing | Asset Pledged as Collateral | |||
Gross | |||
Property, plant, and equipment, net | 76 | ||
Receivables, net | 2 | ||
Prepaid and other current assets | 4 | ||
Other non-current assets | 55 | ||
Gross assets | 137 | ||
Net | |||
Property, plant, and equipment, net | 75 | ||
Receivables, net | 2 | ||
Prepaid and other current assets | 4 | ||
Other non-current assets | 54 | ||
Total assets | $ 135 |
Post-retirement Benefit Plans_2
Post-retirement Benefit Plans (Summary of Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Net periodic benefit cost: | ||||
Net periodic benefit cost | $ 2 | $ 7 | $ 5 | $ 14 |
Domestic defined benefit pension plans | ||||
Net periodic benefit cost: | ||||
Service cost | 1 | 2 | 1 | |
Interest cost | 1 | 1 | 2 | 2 |
Expected return on plan assets | (2) | (1) | (3) | (3) |
Amortization of net actuarial loss | 0 | 0 | 1 | |
Net periodic benefit cost | 0 | 1 | 1 | |
International defined benefit pension plans | ||||
Net periodic benefit cost: | ||||
Service cost | 1 | 4 | 3 | 7 |
Interest cost | 4 | 3 | 8 | 7 |
Expected return on plan assets | (3) | (3) | (6) | (7) |
Amortization of net actuarial loss | 0 | 3 | (1) | 6 |
Net periodic benefit cost | $ 2 | $ 7 | $ 4 | $ 13 |
Post-retirement Benefit Plans_3
Post-retirement Benefit Plans (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ||||
Employer contribution to defined benefit plan | $ 9 | $ 10 | ||
Minimum | ||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ||||
Additional contributions | $ 10 | 10 | ||
Maximum | ||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ||||
Other postretirement benefit expense | 1 | $ 1 | 1 | 1 |
Amortization of net actuarial loss | 1 | 1 | 1 | 1 |
Additional contributions | 14 | 14 | ||
Foreign Plan [Member] | ||||
Defined Benefit Plans And Other Postretirement Benefit Plans Table Text Block | ||||
Amortization of net actuarial loss | $ 0 | $ 3 | $ (1) | $ 6 |
Equity - Summary of Shareholder
Equity - Summary of Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | |
Dividends declared per share (usd per share) | $ 0.33 | $ 0.33 | $ 0.30 | $ 0.30 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | $ 3,589 | $ 3,503 | $ 3,206 | $ 3,226 | $ 3,503 | $ 3,226 | ||
Net income | 92 | 99 | 112 | 82 | 191 | 194 | ||
Other comprehensive income (loss), net | (35) | 35 | (71) | (6) | ||||
Issuance of common stock | 6,121 | |||||||
Issuance of replacement equity awards | 160 | |||||||
Other activity | 2 | |||||||
Dividends declared | (79) | (60) | (55) | (55) | ||||
Stock incentive plan activity | 62 | 10 | 11 | 4 | ||||
Repurchase of common stock | (45) | |||||||
Ending balance | 9,910 | 3,589 | $ 3,503 | 3,203 | 3,206 | $ 3,226 | 9,910 | 3,203 |
Common Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 2 | 2 | 2 | 2 | 2 | 2 | ||
Issuance of common stock | 1 | |||||||
Ending balance | 3 | 2 | 2 | 2 | 2 | 2 | 3 | 2 |
Capital in Excess of Par Value | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 2,152 | 2,134 | 2,099 | 2,089 | 2,134 | 2,089 | ||
Issuance of common stock | 6,120 | |||||||
Issuance of replacement equity awards | 160 | |||||||
Stock incentive plan activity | 63 | 18 | 12 | 10 | ||||
Ending balance | 8,495 | 2,152 | 2,134 | 2,111 | 2,099 | 2,089 | 8,495 | 2,111 |
Retained Earnings | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 2,331 | 2,292 | 2,181 | 2,154 | 2,292 | 2,154 | ||
Net income | 92 | 99 | 112 | 82 | ||||
Dividends declared | (79) | (60) | (55) | (55) | ||||
Ending balance | 2,344 | 2,331 | 2,292 | 2,238 | 2,181 | 2,154 | 2,344 | 2,238 |
Accumulated Other Comprehensive Income (Loss) | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | (191) | (226) | (377) | (371) | (226) | (371) | ||
Other comprehensive income (loss), net | (35) | 35 | (71) | (6) | ||||
Ending balance | (226) | (191) | (226) | (448) | (377) | (371) | (226) | (448) |
Treasury Stock | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | (716) | (708) | (707) | (656) | (708) | (656) | ||
Stock incentive plan activity | (1) | (8) | (1) | (6) | ||||
Repurchase of common stock | (45) | |||||||
Ending balance | (717) | (716) | (708) | (708) | (707) | (656) | (717) | (708) |
Non-Controlling Interest | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Beginning balance | 11 | 9 | 8 | 8 | 9 | 8 | ||
Other comprehensive income (loss), net | 0 | |||||||
Other activity | 2 | |||||||
Ending balance | $ 11 | $ 11 | $ 9 | $ 8 | $ 8 | $ 8 | $ 11 | $ 8 |
Share-Based Compensation Plan_2
Share-Based Compensation Plans (Textuals) (Details) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | |||
May 24, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Share-based compensation | $ 16 | $ 9 | $ 27 | $ 18 | |
Shares Awarded (in shares) | 2,153 | ||||
Commons tock available for future awards (in shares) | 5,000 | ||||
Proceeds from exercise of employee stock options | $ 40 | $ 3 | |||
Total intrinsic value of options exercised | 109 | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Additional Shares Authorized | 2,700 | ||||
Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Unamortized compensation expense | 13 | $ 13 | |||
Weighted average period | 1 year 9 months 18 days | ||||
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Unamortized compensation expense | 62 | $ 62 | |||
Weighted average period | 1 year 10 months 24 days | ||||
Shares Awarded (in shares) | 1,005 | ||||
Performance Based Shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award | |||||
Unamortized compensation expense | $ 19 | $ 19 | |||
Weighted average period | 2 years 2 months 12 days |
Share-Based Compensation Plan_3
Share-Based Compensation Plans (Summary of Stock Options Grant) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | |
Summary of the changes in outstanding stock options | |||
Outstanding, beginning of period (in shares) | 1,935 | 1,935 | |
Granted (in shares) | 2,153 | ||
Exercised (in shares) | (1,412) | ||
Forfeited (in shares) | (14) | ||
Share Based Compensation Arrangement By Share Based Payment Award, Weighted Average Exercise Price, Other Changes To Option Activity | $ 73.16 | ||
Share Based Compensation Arrangement By Share Based Payment Award, Other Changes In Stock Option Activity, Number Of Shares | 14 | ||
Outstanding, end of period (in shares) | 2,676 | ||
Options exercisable, ending of period (in shares) | 1,979 | ||
Vested and expected, end of period (in shares) | 2,603 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding, beginning of period (in usd per share) | $ 67.55 | $ 67.55 | |
Granted (in usd per share) | 38.13 | ||
Exercised (in usd per share) | 28.26 | ||
Forfeited (in usd per share) | 98.95 | ||
Outstanding, end of period (in usd per share) | 64.42 | ||
Options exercisable, end of period (in usd per share) | 58.18 | ||
Vested and expected, end of period (in usd per share) | $ 63.69 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Term [Roll Forward] | |||
Outstanding, weighted average remaining contractual term | 5 years 10 months 24 days | 6 years | |
Aggregate intrinsic value, outstanding | $ 129 | $ 83 | |
Options exercisable, end of period | 5 years 1 month 6 days | ||
Aggregate intrinsic value, exercisable | $ 108 | ||
Vested and expected to vest, end of period | 5 years 8 months 12 days | ||
Aggregate intrinsic value, vested and expected to vest | $ 127 |
Share-Based Compensation Plan_4
Share-Based Compensation Plans (Stock Option Fair Value Assumptions) (Details) - Stock Options | 6 Months Ended |
Jun. 30, 2023 $ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility | 27.30% |
Risk-free interest rate | 4.25% |
Dividend yield | 1.31% |
Expected term (in years) | 5 years 4 months 24 days |
Weighted-average fair value / share (in usd per share) | $ 29.06 |
Share-Based Compensation Plan_5
Share-Based Compensation Plans (Summary of Restricted Stock Unit Grants) (Details) shares in Thousands | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Restricted Stock | |
Shares | |
Outstanding, beginning of period (in shares) | shares | 553 |
Granted (in shares) | shares | 1,005 |
Vested (in shares) | shares | (264) |
Forfeited (in shares) | shares | (22) |
Outstanding, end of period (in shares) | shares | 1,272 |
Weighted Average Grant Date Fair Value Per Share | |
Outstanding, beginning of period (in usd per share) | $ / shares | $ 88.88 |
Granted (in usd per share) | $ / shares | 103.29 |
Vested (in usd per share) | $ / shares | 101.43 |
Forfeited (in usd per share) | $ / shares | 95.65 |
Outstanding, end of period (in usd per share) | $ / shares | $ 96.05 |
REV Performance Shares | |
Shares | |
Outstanding, beginning of period (in shares) | shares | 32 |
Granted (in shares) | shares | 33 |
Forfeited (in shares) | shares | (1) |
Outstanding, end of period (in shares) | shares | 64 |
Weighted Average Grant Date Fair Value Per Share | |
Outstanding, beginning of period (in usd per share) | $ / shares | $ 86.77 |
Granted (in usd per share) | $ / shares | 101.11 |
Forfeited (in usd per share) | $ / shares | 88.28 |
Outstanding, end of period (in usd per share) | $ / shares | $ 93.36 |
Share-Based Compensation Plan_6
Share-Based Compensation Plans Share-Based Compensation Plans (Summary of ROIC Performance Share Unit Grants) (Details) - Return on Invested Capital Performance-Based Shares [Member] - Performance Based Shares shares in Thousands | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Summary of performance share activity | |
Outstanding, beginning of period (in shares) | shares | 146 |
Granted (in shares) | shares | 33 |
Forfeited (in shares) | shares | (66) |
Outstanding, end of period (in shares) | shares | 113 |
Weighted Average Grant Date Fair Value Per Share | |
Outstanding, beginning of period (in usd per share) | $ / shares | $ 88.78 |
Granted (in usd per share) | $ / shares | 101.11 |
Forfeited (in usd per share) | $ / shares | 81.94 |
Outstanding, end of period (in usd per share) | $ / shares | $ 97.75 |
Share-Based Compensation Plan_7
Share-Based Compensation Plans (Summary of Performance-Based Share Grants) (Details) - Total Shareholder Return Performance-Based Shares - Performance Based Shares shares in Thousands | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Summary of performance share activity | |
Outstanding, beginning of period (in shares) | shares | 178 |
Granted (in shares) | shares | 66 |
Adjustment for Condition Achieved (in shares) | shares | 40 |
Vested (in shares) | shares | (102) |
Forfeited (in shares) | shares | (4) |
Outstanding, end of period (in shares) | shares | 178 |
Weighted Average Grant Date Fair Value Per Share | |
Outstanding, beginning of period (in usd per share) | $ / shares | $ 100.67 |
Granted (in usd per share) | $ / shares | 109.57 |
Adjustment for Condition Achieved (in usd per share) | $ / shares | 102.55 |
Vested (in usd per share) | $ / shares | 102.55 |
Forfeited (in usd per share) | $ / shares | 114.09 |
Outstanding, end of period (in usd per share) | $ / shares | $ 103.76 |
Share-Based Compensation Plan_8
Share-Based Compensation Plans (TSR Performance-Based Shares Fair Value Assumptions) (Details) - Total Shareholder Return Performance-Based Shares - Performance Based Shares shares in Thousands | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Forfeited | shares | (4) |
Volatility | 35.90% |
Risk-free interest rate | 4.66% |
Forfeited | $ / shares | $ 114.09 |
Share-Based Compensation Plan_9
Share-Based Compensation Plans - Summary of REV Performance Share Unit Grants (Details) - REV Performance Shares shares in Thousands | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Shares | |
Outstanding, beginning of period (in shares) | shares | 32 |
Shares Awarded (in shares) | shares | 33 |
Forfeited | shares | (1) |
Outstanding, end of period (in shares) | shares | 64 |
Weighted Average Grant Date Fair Value Per Share | |
Outstanding, beginning of period (in usd per share) | $ / shares | $ 86.77 |
Granted (in usd per share) | $ / shares | 101.11 |
Forfeited | $ / shares | 88.28 |
Outstanding, end of period (in usd per share) | $ / shares | $ 93.36 |
Capital Stock (Textuals) (Detai
Capital Stock (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Aug. 24, 2015 | |
Equity, Class of Treasury Stock [Line Items] | ||||||
Shares repurchased (less than $1 million) | $ 45 | |||||
Share Repurchase Programs | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Shares repurchased (in shares - less than 0.1 million) | 100,000 | 100,000 | ||||
Shares repurchased (less than $1 million) | $ 1 | $ 9 | ||||
2015 Stock Repurchase Program | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Stock repurchase program, authorized amount | $ 500 | |||||
Shares repurchased (in shares - less than 0.1 million) | 500,000 | |||||
Shares repurchased (less than $1 million) | $ 46 | |||||
Remaining authorized amount of repurchase | $ 182 | $ 182 | ||||
Settlement of Employee Tax Withholding Obligations | ||||||
Equity, Class of Treasury Stock [Line Items] | ||||||
Shares repurchased (in shares - less than 0.1 million) | 100,000 | 100,000 | 100,000 | 100,000 | ||
Shares repurchased (less than $1 million) | $ 1 | $ 1 | $ 9 | $ 6 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | $ (226) | $ (226) | ||||
Foreign currency translation adjustment | $ (38) | $ (41) | (16) | $ (44) | ||
Other Nonoperating Income (Expense) | 7 | 2 | 11 | 1 | ||
Ending balance | (226) | (226) | ||||
Foreign Currency Translation | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | (153) | (180) | (106) | $ (101) | (180) | (101) |
Foreign currency translation adjustment | (38) | 22 | (41) | (3) | ||
Tax on foreign currency translation adjustment | 9 | 5 | (28) | (2) | ||
Ending balance | (182) | (153) | (175) | (106) | (182) | (175) |
Post-retirement Benefit Plans | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | (41) | (41) | (265) | (268) | (41) | (268) |
Other Nonoperating Income (Expense) | ||||||
Income tax impact on amortization of post-retirement benefit plan items | 1 | (1) | ||||
Other Comprehensive Income (Loss), Foreign Exchange for Pension and Non-Pension Postretirement Benefit Plans, before tax | (1) | (1) | ||||
Ending balance | (43) | (41) | (262) | (265) | (43) | (262) |
Derivative Instruments | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | 3 | (5) | (6) | (2) | (5) | (2) |
Unrealized gain (loss) on derivative hedge agreements | (3) | 4 | (9) | (6) | ||
Income tax benefit on unrealized gain on derivative hedge agreements | (1) | 1 | ||||
Ending balance | (1) | 3 | (11) | (6) | (1) | (11) |
Total | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Beginning balance | (191) | (226) | (377) | (371) | (226) | (371) |
Foreign currency translation adjustment | (38) | 22 | (41) | (3) | ||
Tax on foreign currency translation adjustment | 9 | 5 | (28) | (2) | ||
Other Nonoperating Income (Expense) | 0 | |||||
Income tax impact on amortization of post-retirement benefit plan items | 1 | (1) | ||||
Other Comprehensive Income (Loss), Foreign Exchange for Pension and Non-Pension Postretirement Benefit Plans, before tax | (1) | (1) | ||||
Unrealized gain (loss) on derivative hedge agreements | (3) | 4 | (9) | (6) | ||
Income tax benefit on unrealized gain on derivative hedge agreements | (1) | 1 | ||||
Ending balance | (226) | (191) | (448) | (377) | $ (226) | $ (448) |
Other non-operating income | Post-retirement Benefit Plans | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Amortization of actuarial loss on post-retirement benefit plans into other non-operating income, net | (1) | (1) | 4 | 4 | ||
Other non-operating income | Total | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Amortization of actuarial loss on post-retirement benefit plans into other non-operating income, net | (1) | (1) | 4 | 4 | ||
Revenue | Derivative Instruments | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | (1) | 3 | 2 | 2 | ||
Revenue | Total | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | $ (1) | 3 | 2 | $ 2 | ||
Cost of Revenue | Derivative Instruments | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | 1 | |||||
Reclassification of unrealized loss on foreign exchange agreements into cost of revenue | (2) | |||||
Cost of Revenue | Total | ||||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||||
Reclassification of unrealized gain (loss) on foreign exchange agreements | $ 1 | |||||
Reclassification of unrealized loss on foreign exchange agreements into cost of revenue | $ (2) |
Commitments and Contingencies_2
Commitments and Contingencies (Summary of Warranties) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Warranties | ||
Warranty accrual – January 1 | $ 54 | $ 57 |
Net charges for product warranties in the period | 13 | 11 |
Net Evoqua additions | 10 | 0 |
Settlement of warranty claims | (13) | (12) |
Foreign currency and other | 0 | 2 |
Warranty accrual - June 30 | $ 64 | $ 54 |
Commitments and Contingencies_3
Commitments and Contingencies (Textual) (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
Legal contingency accrual | $ 12 | $ 5 |
Guarantee amounts | 716 | $ 451 |
Estimated environmental matters | $ 4 |
Segment Information (Textuals)
Segment Information (Textuals) (Details) | 6 Months Ended |
Jun. 30, 2023 Segment | |
Segment Information (Textual) [Abstract] | |
Number of reportable segments | 4 |
Segment Information (Summary of
Segment Information (Summary of Operations by Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | ||
Financial information for each reportable segment | |||||
Revenues | $ 1,722 | $ 1,364 | $ 3,170 | $ 2,636 | |
Operating income | 119 | 146 | 250 | 257 | |
Interest Expense | 12 | 12 | 21 | 25 | |
Other Nonoperating Income (Expense) | 7 | 2 | 11 | 1 | |
Gain from sale of business | 0 | 0 | 0 | 1 | |
Income before taxes | 114 | 136 | 240 | 234 | |
Depreciation and amortization | 92 | 59 | 152 | 118 | |
Capital expenditures | 54 | 46 | 103 | 95 | |
Regional selling locations | |||||
Financial information for each reportable segment | |||||
Depreciation and amortization | [1] | 6 | 4 | 11 | 9 |
Capital expenditures | [2] | 5 | 5 | 11 | 10 |
Corporate and other | |||||
Financial information for each reportable segment | |||||
Operating income | (90) | (18) | (132) | (30) | |
Depreciation and amortization | 2 | 2 | 4 | 4 | |
Capital expenditures | 4 | 2 | 7 | 4 | |
Water Infrastructure | Operating Segments | |||||
Financial information for each reportable segment | |||||
Revenues | 704 | 589 | 1,293 | 1,122 | |
Operating income | 106 | 108 | 176 | 182 | |
Depreciation and amortization | 24 | 14 | 38 | 27 | |
Capital expenditures | 18 | 13 | 32 | 30 | |
Applied Water | Operating Segments | |||||
Financial information for each reportable segment | |||||
Revenues | 478 | 429 | 931 | 854 | |
Operating income | 84 | 61 | 167 | 120 | |
Depreciation and amortization | 5 | 5 | 10 | 10 | |
Capital expenditures | 7 | 5 | 15 | 8 | |
Measurement & Control Solutions | Operating Segments | |||||
Financial information for each reportable segment | |||||
Revenues | 415 | 346 | 821 | 660 | |
Operating income | 26 | (5) | 46 | (15) | |
Depreciation and amortization | 35 | 34 | 69 | 68 | |
Capital expenditures | 14 | 21 | 32 | 43 | |
Integrated Solutions & Services | Operating Segments | |||||
Financial information for each reportable segment | |||||
Revenues | 125 | 0 | 125 | 0 | |
Operating income | (7) | 0 | (7) | 0 | |
Depreciation and amortization | 20 | 0 | 20 | 0 | |
Capital expenditures | $ 6 | $ 0 | $ 6 | $ 0 | |
[1]Depreciation and amortization expense incurred by the Regional selling locations was included in an overall allocation of Regional selling location costs to the segments; however, a certain portion of that expense was not specifically identified to a segment. That expense is captured in this Regional selling location line.[2]Represents capital expenditures incurred by the Regional selling locations not allocated to the segments. |