XYL

XYLEM INC

Industrials | Large Cap

$1.17

EPS Forecast

$2,184

Revenue Forecast

The company already released most recent quarter's earnings. We will publish our AI's next quarter's forecast around 2024-12-31
EX-99.1 2 xyl02032022ex991.htm EX-99.1 Document

Exhibit 99.1
xylemlogoa181.jpg

Xylem Inc.
1 International Drive, Rye Brook N.Y. 10573
Tel +1.914.323.5700 Fax +1.914.323.5752
Contacts:MediaInvestors
Houston Spencer +1 (914) 323-5723
Matt Latino +1 (914) 323-5821
Houston.Spencer@xylem.com     
Matthew.Latino@xylem.com

Xylem Reports Fourth Quarter and Full-Year 2021 Earnings

Full-year organic growth, adjusted EBITDA margin expansion, adjusted earnings per share in line with November guidance
Full-year revenue of $5.2 billion, up 7% on a reported basis, up 4% organically
Full-year reported earnings per share of $2.35, up 68%; adjusted earnings per share of $2.49, up 21%
Strong demand drives continuing commercial momentum in all business segments; fourth quarter and full-year reported and organic orders growth in excess of 20%
Provides 2022 organic revenue growth guidance range of 3% to 5% and adjusted earnings per share range of $2.35 to $2.70, reflecting ongoing chip constraints across the technology sector

RYE BROOK, N.Y., February 3, 2022 – Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported fourth quarter revenue of $1.32 billion, and full-year 2021 revenue of $5.20 billion, in line with previous guidance.

Fourth quarter adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin decreased 260 basis points to 16.2 percent. Inflation and strategic investments drove the margin decline, exceeding the benefits of price realization and productivity savings. Xylem generated net income of $113 million, or $0.62 per share, and adjusted net income of $115 million, or $0.63 per share, which excludes the impact of restructuring, realignment and special charges.

For the full year, Xylem delivered adjusted EBITDA margin of 17.1 percent, up 80 basis points year-over-year. Productivity and volume drove the increase, exceeding inflation impacts. Full-year reported net income was $427 million, or $2.35 per share, and adjusted net income, which excludes the impact of restructuring, realignment and special charges, was $452 million, or $2.49 per share. The Company generated $538 million of operating cash flow, representing a 126 percent conversion, and $330 million of free cash flow, representing a 77 percent conversion.

“The team closed out 2021 with a strong performance, delivering full-year margin expansion alongside solid growth in revenue and earnings in the face of accelerating supply chain headwinds through the quarter,” said Patrick Decker, president and CEO of Xylem. “To mitigate the effects of inflation, the team also drove solid productivity improvements and price realization above our expectations. Market demand was clearly robust, as evidenced by continued strong orders and backlog growth in both the quarter and the year.”




“We expect the first half of 2022 to continue to be supply constrained due to ongoing chip shortages,” Decker continued. “Order-to-revenue conversion is set to pick up pace progressively, as we expect those constraints to begin easing in the latter part of the year. Overall, we expect full-year growth in the mid-single digits, with significant margin expansion in the second half, keeping us on track to achieve our 2025 growth and strategic milestones.”

Xylem announced that its Board of Directors declared a dividend in the amount of $0.30 per share, an increase of 7 percent. The dividend is payable on March 17, 2022, to shareholders of record as of February 17, 2022.

Full-year 2022 Outlook

Xylem forecasts full-year 2022 revenue in the range of $5.25 to $5.35 billion, up 1 to 3 percent on a reported basis and up 3 to 5 percent on an organic basis.

Full-year 2022 adjusted EBITDA margin is expected to be in the range of 16 to 17 percent. This results in adjusted earnings per share of $2.35 to $2.70, which represents a decline of 6 percent to an increase of 8 percent from Xylem’s 2021 adjusted results. Further 2022 planning assumptions are included in Xylem’s fourth quarter 2021 earnings materials posted at www.xylem.com/investors. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort.

Fourth Quarter Segment Results

Water Infrastructure

Xylem’s Water Infrastructure segment consists of its portfolio of businesses serving clean water delivery, wastewater transport and treatment, and dewatering.

Fourth quarter 2021 revenue was $622 million, a 2 percent increase compared with fourth quarter 2020. This result was driven by healthy growth in the industrial end market, particularly in the Emerging Markets, partially offset by delayed revenue conversion in the U.S. utilities market primarily due to extended lead-times for ocean transit.

Fourth quarter adjusted EBITDA margin was 21.7 percent, down 50 basis points from the prior year. Reported operating income for the segment was $122 million. Adjusted operating income for the segment, which excludes $2 million of restructuring and realignment, was $124 million, flat versus the comparable period last year. Reported operating margin for the segment was 19.6 percent, up 60 basis points versus the prior year, and adjusted operating margin was 19.9 percent, down 20 basis points versus prior year. Productivity benefits and price realization were more than offset by inflation and investments.

Applied Water

Xylem’s Applied Water segment consists of its portfolio of businesses in residential and commercial building services, and industrial applications.

Fourth quarter 2021 Applied Water revenue was $406 million, a 3 percent increase organically year-over-year. Industrial end-market strength in Emerging Markets, US and Western Europe was partially offset by weakness in the residential market in China particularly in light of strong prior-year performance.




Fourth quarter adjusted EBITDA margin was 13.8 percent, down 340 basis points from the prior year. Reported operating income for the segment was $50 million and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was $52 million, a 16 percent decrease versus the comparable period last year. The segment reported operating margin was 12.3 percent, down 310 basis points versus the prior year period. Adjusted operating margin declined 290 basis points to 12.8 percent. Productivity benefits and price realization were more than offset by inflation.

Measurement & Control Solutions

Xylem’s Measurement & Control Solutions segment consists of its portfolio of businesses in smart metering, network technologies, advanced infrastructure analytics and analytic instrumentation.

Fourth quarter 2021 Measurement & Control Solutions revenue was $295 million, down 17 percent organically versus the prior year. The decline is in-line with our expectations and a result of the ongoing chip supply shortage and the outsized impact to our North American smart metering business.

Fourth quarter adjusted EBITDA margin was 7.1 percent, down 750 basis points from the prior year. Reported operating income for the segment was -$17 million, and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was -$15 million, a 194 percent decrease versus the comparable period last year. The Measurement & Control Solutions segment reported operating margin was -5.8 percent, down 970 basis points versus the prior year period. Adjusted operating margin of -5.1 percent also decreased 950 basis points over the prior year period. Volume declines from component shortages as well as inflation more than offset productivity savings and modest price realization.

Supplemental information on Xylem’s fourth quarter 2021 earnings and reconciliations for certain non-GAAP items is posted at www.xylem.com/investors.

###
About Xylem

Xylem (XYL) is a leading global water technology company committed to solving critical water and infrastructure challenges with innovation. Our 17,000 diverse employees delivered revenue of $5.2 billion in 2021. We are creating a more sustainable world by enabling our customers to optimize water and resource management, and helping communities in more than 150 countries become water-secure. Join us at www.xylem.com.

Forward-Looking Statements

This press release contains “forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” "contemplate," "predict," “forecast,” “likely,” “believe,” “target,” “will,” “could,” “would,” “should,” "potential," "may" and similar expressions or their negative, may, but are not necessary to, identify forward-looking statements. By their nature, forward-looking statements address uncertain matters and include any statements that: are not historical, such as statements about our strategy, financial plans, outlook, objectives, plans, intentions or goals (including those related to our social, environmental and other sustainability goals); or address possible or future results of operations or financial performance, including statements relating to orders, revenues, operating margins and earnings per share growth.




Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Additionally, many of these risks and uncertainties are, and may continue to be, amplified by the ongoing coronavirus (“COVID-19”) pandemic. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: overall industry and economic conditions, including industrial, governmental and private sector spending and the strength of the residential and commercial real estate markets; geopolitical, regulatory, economic and other risks associated with international operations; continued uncertainty around the ongoing COVID-19 pandemic’s magnitude, duration and impacts on our business, operations, growth, and financial condition; actual or potential other epidemics, pandemics or global health crises; availability, shortage or delays in receiving products, parts, electronic components and raw materials from our supply chain; manufacturing and operating cost increases due to inflation, prevailing price changes, tariffs and other factors; demand for our products, disruption, competition, pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our products; disruptions in operations at our facilities or that of third parties upon which we rely; ability to retain and attract senior management and other diverse and key talent, as well as increasing competition for overall talent and labor; difficulty predicting our financial results; defects, security, warranty and liability claims, and recalls with respect to products; availability, regulation or interference with radio spectrum used by certain of our products; uncertainty related to restructuring and realignment actions and related charges and savings; our ability to continue strategic investments for growth; our ability to successfully identify, execute and integrate acquisitions; volatility in served markets or impacts on business and operations due to weather conditions, including the effects of climate change; fluctuations in foreign currency exchange rates; our ability to borrow or refinance our existing indebtedness and the availability of liquidity sufficient to meet our needs; risk of future impairments to goodwill and other intangible assets; failure to comply with, or changes in, laws or regulations, including those pertaining to anti-corruption, data privacy and security, export and import, competition, domestic content requirements, and the environment and climate change; changes in our effective tax rates or tax expenses; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; and other factors set forth under "Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in subsequent filings we have made or may make with the Securities and Exchange Commission (“SEC”).

Forward-looking and other statements in this press release regarding our environmental and other sustainability plans and goals are not an indication that these statements are necessarily material to investors or required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking social, environmental and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

All forward-looking statements made herein are based on information currently available to us as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.






XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (Unaudited)
(in millions, except per share data)
Year Ended December 31,202120202019
Revenue$5,195 $4,876 $5,249 
Cost of revenue3,220 3,046 3,203 
Gross profit1,975 1,830 2,046 
Selling, general and administrative expenses1,179 1,143 1,158 
Research and development expenses204 187 191 
Restructuring and asset impairment charges7 75 63 
Goodwill impairment charge 58 148 
Operating income585 367 486 
Interest expense76 77 67 
Other non-operating (expense) income, net (5)(4)
Gain on sale of businesses2 — 
Income before taxes511 285 416 
Income tax expense84 31 15 
Net income427 254 401 
Earnings per share:
Basic$2.37 $1.41 $2.23 
Diluted$2.35 $1.40 $2.21 
Weighted average number of shares:
Basic180.2180.1180.0
Diluted181.5181.1181.2




XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except per share amounts)
December 31,20212020
ASSETS
Current assets:
Cash and cash equivalents$1,349 $1,875 
Receivables, less allowances for discounts, returns and credit losses of $44 and $46 in 2021 and 2020, respectively953 923 
Inventories700 558 
Prepaid and other current assets158 167 
Total current assets3,160 3,523 
Property, plant and equipment, net644 657 
Goodwill2,792 2,854 
Other intangible assets, net1,016 1,093 
Other non-current assets664 623 
Total assets$8,276 $8,750 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$639 $569 
Accrued and other current liabilities752 787 
Short-term borrowings and current maturities of long-term debt 600 
Total current liabilities1,391 1,956 
Long-term debt, net2,440 2,484 
Accrued post-retirement benefits438 519 
Deferred income tax liabilities287 242 
Other non-current accrued liabilities494 573 
Total liabilities5,050 5,774 
Stockholders’ equity:
Common stock — par value $0.01 per share:
Authorized 750.0 shares, issued 195.6 and 194.9 shares in 2021 and 2020, respectively2 
Capital in excess of par value2,089 2,037 
Retained earnings2,154 1,930 
Treasury stock – at cost 15.2 shares and 14.5 shares in 2021 and 2020, respectively(656)(588)
Accumulated other comprehensive loss(371)(413)
Total stockholders’ equity3,218 2,968 
Non-controlling interest8 
Total equity3,226 2,976 
Total liabilities and stockholders’ equity$8,276 $8,750 




XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Year Ended December 31,202120202019
Operating Activities
Net income$427 $254 $401 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation118 117 117 
Amortization127 134 140 
Deferred income taxes10 (31)(77)
Share-based compensation33 26 29 
Restructuring and asset impairment charges7 75 63 
Goodwill impairment charge 58 148 
Gain from sale of businesses(2)— (1)
Other, net8 46 
Payments for restructuring(25)(36)(30)
Contributions to post-retirement benefit plans(29)(27)(19)
Changes in assets and liabilities (net of acquisitions):
Changes in receivables(70)109 (23)
Changes in inventories(167)(5)47 
Changes in accounts payable81 (39)29 
Changes in accrued liabilities7 101 15 
Changes in accrued taxes(9)20 (13)
Net changes in other assets and liabilities22 22 
Net Cash — Operating activities538 824 839 
Investing Activities
Capital expenditures(208)(183)(226)
Acquisitions of businesses and assets, net of cash acquired — (18)
Proceeds from sale of businesses10 — — 
Cash received from investments3 200 11 
Cash paid for investments (200)(7)
Cash received from cross-currency swaps14 12 
Other, net(2)— 
Net Cash — Investing activities(183)(169)(231)
Financing Activities
Short-term debt issued, net 359 281 
Short-term debt repaid, net (640)(254)
Long-term debt issued, net 985 — 
Long-term debt repaid, net(600)— — 
Repurchase of common stock(68)(61)(40)
Proceeds from exercise of employee stock options19 20 13 
Dividends paid(203)(188)(174)
Other, net(3)(2)(3)
Net Cash — Financing activities(855)473 (177)
Effect of exchange rate changes on cash
(26)23 (3)
Net change in cash and cash equivalents(526)1,151 428 
Cash and cash equivalents at beginning of year
1,875 724 296 
Cash and cash equivalents at end of year$1,349 $1,875 $724 
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest$99 $77 $77 
Income taxes (net of refunds received)$83 $41 $107 




Xylem Inc. Non-GAAP Measures
Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or “adjusted”) measures to be useful to management and investors evaluating our operating performance for the periods presented, and to provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including but not limited to, dividends, acquisitions, share repurchases and debt repayment. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. We consider the following items to represent the non-GAAP measures we consider to be key performance indicators, as well as the related reconciling items to the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

“Organic revenue” and “Organic orders” defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales or discontinuance of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.
“Constant currency” defined as financial results adjusted for foreign currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. dollar.
“EBITDA” defined as earnings before interest, taxes, depreciation and amortization expense. “Adjusted EBITDA” and “Adjusted Segment EBITDA” reflects the adjustments to EBITDA and segment EBITDA, respectively, to exclude share-based compensation charges, restructuring and realignment costs, gain or loss from sale of businesses and special charges.
“Adjusted EBITDA Margin” and “Adjusted Segment EBITDA margin” defined as adjusted EBITDA and adjusted segment EBITDA divided by total revenue and segment revenue, respectively.
“Adjusted Operating Income”, “Adjusted Segment Operating Income”, “Adjusted Net Income” and “Adjusted EPS” defined as operating income, segment operating income, net income and earnings per share, adjusted to exclude restructuring and realignment costs, gain or loss from sale of businesses, special charges and tax-related special items, as applicable.
“Adjusted Operating Margin” and “Adjusted Segment Operating Margin” defined as adjusted operating income and adjusted segment operating income divided by total revenue and segment revenue, respectively.
“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flows, less capital expenditures, and “Free Cash Flow Conversion” defined as Free Cash Flows divided by net income, excluding the gain on sale of businesses, non-cash impairment charges and significant deferred tax items. Our definitions of “free cash flow” and “free cash flow conversion” do not consider certain non-discretionary cash payments, such as debt.
“Realignment costs” defined as costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, severance, relocation, travel, facility set-up and other costs.
“Special charges” defined as costs incurred by the Company, such as acquisition and integration related costs, non-cash impairment charges and both operating and non-operating adjustments for costs related to the UK pension plan buyout.
“Tax-related special items” defined as tax items, such as tax return versus tax provision adjustments, tax exam impacts, tax law change impacts, excess tax benefits/losses and other discrete tax adjustments.




Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Orders
($ Millions)
(As Reported - GAAP)(As Adjusted - Organic)Constant Currency
(A)(B)(C)(D)(E)=B+C+D(F) = E/A(G) = (E - C) / A
OrdersOrdersChange 2021 v. 2020% Change 2021 v. 2020Acquisitions/
Divestitures
FX
Impact
Change
Adj.
2021 v. 2020
% Change
Adj. 2021 v. 2020
20212020
Year Ended December 31
Xylem Inc.6,300 5,033 1,267 25 %12 (140)1,139 23 %22 %
Water Infrastructure2,471 2,134 337 16 %— (76)261 12 %12 %
Applied Water1,860 1,483 377 25 %— (39)338 23 %23 %
Measurement & Control Solutions1,969 1,416 553 39 %12 (25)540 38 %37 %
Quarter Ended December 31
Xylem Inc.1,584 1,294 290 22 %299 23 %23 %
Water Infrastructure598 464 134 29 %— 138 30 %30 %
Applied Water451 410 41 10 %— 42 10 %10 %
Measurement & Control Solutions535 420 115 27 %119 28 %28 %
Quarter Ended September 30
Xylem Inc.1,518 1,246 272 22 %(24)250 20 %20 %
Water Infrastructure623 558 65 12 %— (12)53 %%
Applied Water446 375 71 19 %— (7)64 17 %17 %
Measurement & Control Solutions449 313 136 43 %(5)133 42 %42 %
Quarter Ended June 30
Xylem Inc.1,660 1,232 428 35 %(74)355 29 %29 %
Water Infrastructure639 598 41 %— (41)— %%
Applied Water486 326 160 49 %— (20)140 43 %43 %
Measurement & Control Solutions535 308 227 74 %(13)215 70 %69 %
Quarter Ended March 31
Xylem Inc.1,538 1,261 277 22 %(49)235 19 %18 %
Water Infrastructure611 514 97 19 %— (27)70 14 %14 %
Applied Water477 372 105 28 %— (13)92 25 %25 %
Measurement & Control Solutions450 375 75 20 %(9)73 19 %18 %




Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic & Constant Currency Revenue
($ Millions)
(As Reported - GAAP)(As Adjusted - Organic)Constant Currency
(A)(B)(C)(D)(E) = B+C+D(F) = E/A(G) = (E - C) / A
RevenueRevenueChange 2021 v. 2020% Change 2021 v. 2020Acquisitions/
Divestitures
FX
Impact
Change
Adj.
2021 v. 2020
% Change
Adj. 2021 v. 2020
20212020
Year Ended December 31
Xylem Inc.5,195 4,876 319 %13 (122)210 %%
Water Infrastructure2,247 2,079 168 %— (65)103 %%
Applied Water1,613 1,434 179 12 %— (34)145 10 %10 %
Measurement & Control Solutions1,335 1,363 (28)(2)%13 (23)(38)(3)%(4)%
Quarter Ended December 31
Xylem Inc.1,323 1,373 (50)(4)%(36)(3)%(3)%
Water Infrastructure622 616 %— 11 %%
Applied Water406 395 11 %— 13 %%
Measurement & Control Solutions295 362 (67)(19)%(60)(17)%(18)%
Quarter Ended September 30
Xylem Inc.1,265 1,220 45 %(20)27 %%
Water Infrastructure547 524 23 %— (10)13 %%
Applied Water400 364 36 10 %— (7)29 %%
Measurement & Control Solutions318 332 (14)(4)%(3)(15)(5)%(5)%
Quarter Ended June 30
Xylem Inc.1,351 1,160 191 16 %(66)128 11 %11 %
Water Infrastructure569 501 68 14 %— (36)32 %%
Applied Water414 337 77 23 %— (18)59 18 %18 %
Measurement & Control Solutions368 322 46 14 %(12)37 11 %11 %
Quarter Ended March 31
Xylem Inc.1,256 1,123 133 12 %(44)91 %%
Water Infrastructure509 438 71 16 %— (24)47 11 %11 %
Applied Water393 338 55 16 %— (11)44 13 %13 %
Measurement & Control Solutions354 347 %(9)— %(1)%



Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income
($ Millions)
Q1Q2Q3Q4YTD
2021202020212020202120202021202020212020
Total Revenue
• Total Xylem1,256 1,123 1,351 1,160 1,265 1,220 1,323 1,373 5,195 4,876 
• Water Infrastructure509 438 569 501 547 524 622 616 2,247 2,079 
• Applied Water393 338 414 337 400 364 406 395 1,613 1,434 
• Measurement & Control Solutions354 347 368 322 318 332 295 362 1,335 1,363 
Operating Income
• Total Xylem133 61 160 54 152 73 140 179 585 367 
• Water Infrastructure71 39 93 73 101 89 122 117 387 318 
• Applied Water66 47 64 41 60 56 50 61 240 205 
• Measurement & Control Solutions(12)13 (46)(62)(17)14 12 (106)
• Total Segments146 74 170 68 168 83 155 192 639 417 
Operating Margin
• Total Xylem10.6 %5.4 %11.8 %4.7 %12.0 %6.0 %10.6 %13.0 %11.3 %7.5 %
• Water Infrastructure13.9 %8.9 %16.3 %14.6 %18.5 %17.0 %19.6 %19.0 %17.2 %15.3 %
• Applied Water16.8 %13.9 %15.5 %12.2 %15.0 %15.4 %12.3 %15.4 %14.9 %14.3 %
• Measurement & Control Solutions2.5 %(3.5)%3.5 %(14.3)%2.2 %(18.7)%(5.8)%3.9 %0.9 %(7.8)%
• Total Segments11.6 %6.6 %12.6 %5.9 %13.3 %6.8 %11.7 %14.0 %12.3 %8.6 %
Special Charges
• Total Xylem— — 11 70 — 81 
• Water Infrastructure— — — — — — — — — — 
• Applied Water— — — — — — — — 
• Measurement & Control Solutions— — — 10 — 69 — — — 79 
• Total Segments— — 10 — 69 — — 79 
Restructuring & Realignment Costs
• Total Xylem43 15 10 22 77 
• Water Infrastructure12 28 
• Applied Water
• Measurement & Control Solutions— 31 (1)40 
• Total Segments43 15 10 22 77 
Adjusted Operating Income
• Total Xylem143 70 166 108 155 158 147 189 611 525 
• Water Infrastructure76 44 97 81 102 97 124 124 399 346 
• Applied Water68 49 66 45 62 58 52 62 248 214 
• Measurement & Control Solutions11 (10)13 (5)12 (15)16 15 13 
• Total Segments155 83 176 121 170 167 161 202 662 573 
Adjusted Operating Margin
• Total Xylem11.4 %6.2 %12.3 %9.3 %12.3 %13.0 %11.1 %13.8 %11.8 %10.8 %
• Water Infrastructure14.9 %10.0 %17.0 %16.2 %18.6 %18.5 %19.9 %20.1 %17.8 %16.6 %
• Applied Water17.3 %14.5 %15.9 %13.4 %15.5 %15.9 %12.8 %15.7 %15.4 %14.9 %
• Measurement & Control Solutions3.1 %(2.9)%3.5 %(1.6)%1.9 %3.6 %(5.1)%4.4 %1.1 %1.0 %
• Total Segments12.3 %7.4 %13.0 %10.4 %13.4 %13.7 %12.2 %14.7 %12.7 %11.8 %



Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
Q4 2021Q4 2020
As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjusted
Total Revenue1,323 — 1,323 1,373 — 1,373 
Operating Income140  a 147 179 10  a 189 
Operating Margin10.6 %11.1 %13.0 %13.8 %
Interest Expense(13)— (13)(21)— (21)
Other Non-Operating Income (Expense)(1) b — b
Gain/(Loss) from sale of businesses— — — — — — 
Income before Taxes126 10 136 158 11 169 
Provision for Income Taxes(13)(8) c (21)(10)(14) c (24)
Net Income attributable to Xylem113 115 148 (3)145 
Diluted Shares181.6 181.6 181.5 181.5 
Diluted EPS$0.62 $0.01 $0.63 $0.82 $(0.01)$0.81 
Year-over-year currency translation impact on current year diluted EPS$(0.01)$— $(0.01)
Diluted EPS at Constant Currency$0.63 $0.01 $0.64 

Q4 YTD 2021Q4 YTD 2020
As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjusted
Total Revenue5,195 — 5,195 4,876 — 4,876 
Operating Income585 26  a 611 367 158  a 525 
Operating Margin11.3 %11.8 %7.5 %10.8 %
Interest Expense(76)— (76)(77)— (77)
Other Non-Operating Income (Expense)—  b (5) b — 
Gain/(Loss) from sale of businesses(2)— — — — 
Income before Taxes511 32 543 285 163 448 
Provision for Income Taxes(84)(7) c (91)(31)(43) c (74)
Net Income attributable to Xylem427 25 452 254 120 374 
Diluted Shares181.5 181.5 181.1 181.0 
Diluted EPS$2.35 $0.14 $2.49 $1.40 $0.66 $2.06 
Year-over-year currency translation impact on current year diluted EPS$0.08 $0.01 $0.09 
Diluted EPS at Constant Currency$2.27 $0.13 $2.40 

aQuarter-to-date: Restructuring & realignment costs of $6 million in 2021 and $10 million in 2020, as well as special charges of $1 million in 2021.
Year-to-date: Restructuring & realignment costs of $22 million and $77 million in 2021 and 2020, respectively; special charges of $4 million ($1 million of intangible asset impairment charges and $3 million of other charges) and $81 million of special charges in 2020 ($79 million of intangible asset and goodwill impairment charges and $2 million of other charges).
bQuarter-to-date: Special non-operating charges consist of $3 million in 2021 and $1 million in 2020 for costs related to the UK pension plan that is going to be part of a buyout.
Year-to-date: Special non-operating charges consist of $8 million in 2021 and $5 million in 2020 for costs related to the UK pension plan that is going to be part of a buyout .
cQuarter-to-date: Net tax impact on restructuring & realignment costs of $1 million in 2021 and $2 million in 2020; $1 million net tax impact on special charges in each of 2021 and 2020 and $6 million and $11 million in 2021 and 2020, respectively, of negative impact from tax related special benefits to GAAP tax.
Year-to-date: Net tax impact on restructuring & realignment costs of $5 million and $17 million in 2021 and 2020, respectively; $2 million and $10 million of net tax impact on special charges in 2021 and 2020, respectively; and $16 million in 2020 of negative impact from tax related special benefits to GAAP tax.



Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow
($ Millions)
Q1Q2Q3Q4Year Ended
2021202020212020202120202021202020212020
Net Cash - Operating Activities$(26)$(2)$232 $181 $112 $275 $220 $370 $538 $824 
Capital Expenditures - PP&E(22)(32)(25)(24)(33)(24)(62)(29)(142)(109)
Capital Expenditures - Software(17)(19)(16)(20)(14)(17)(19)(18)(66)(74)
Capital Expenditures(39)(51)(41)(44)(47)(41)(81)(47)(208)(183)
Free Cash Flow$(65)$(53)$191 $137 $65 $234 $139 $323 $330 $641 
Net Income87 38 113 31 114 37 113 148 427 254 
Gain/(Loss) from sale of businesses — 2 —  —  — 2  
Restructuring & Realignment Charges - non-cash impairment(1)—  (17) (3) (1)(1)(21)
Special Charges - non-cash impairment (1)—  (10) (69) — (1)(79)
Net Income, excluding gain on sale of businesses, non-cash impairment charges and significant deferred tax items$89 $38 $111 $58 $114 $109 $113 $149 $427 $354 
Operating Cash Flow Conversion(30)%(5)%205 %584 %98 %743 %195 %250 %126 %324 %
Free Cash Flow Conversion(73)%(139)%172 %236 %57 %215 %123 %217 %77 %181 %




Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
($ Millions)
2021
Q1Q2Q3Q4Total
Net Income87 113 114 113 427 
Income Tax Expense27 25 19 13 84 
Interest Expense (Income), net19 19 20 11 69 
Depreciation 30 29 31 28 118 
Amortization32 33 31 31 127 
EBITDA195 219 215 196 825 
Share-based Compensation33 
Restructuring & Realignment22 
Loss/(Gain) from sale of business— (2)— — (2)
Special Charges12 
Adjusted EBITDA215 234 227 214 890 
Revenue 1,256 1,351 1,265 1,323 5,195 
Adjusted EBITDA Margin17.1 %17.3 %17.9 %16.2 %17.1 %
2020
Q1Q2Q3Q4Total
Net Income38 31 37 148 254 
Income Tax Expense (Benefit)13 10 31 
Interest Expense (Income), net14 16 20 20 70 
Depreciation 29 29 30 29 117 
Amortization35 33 33 33 134 
EBITDA120 113 133 240 606 
Share-based Compensation26 
Restructuring & Realignment43 15 10 77 
Special Charges13 71 86 
Adjusted EBITDA138 177 222 258 795 
Revenue 1,123 1,160 1,220 1,373 4,876 
Adjusted EBITDA Margin12.3 %15.3 %18.2 %18.8 %16.3 %




Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Water Infrastructure
($ Millions)
2021
Q1Q2Q3Q4Total
Pre-Tax Income70 92 102 121 385 
Interest Expense (Income), net(1)(1)— (1)(3)
Depreciation11 11 11 10 43 
Amortization
EBITDA82 104 114 133 433 
Share-based Compensation— — 
Restructuring & Realignment12 
Adjusted EBITDA88 108 116 135 447 
Revenue509 569 547 622 2,247 
Adjusted EBITDA Margin17.3 %19.0 %21.2 %21.7 %19.9 %
2020
Q1Q2Q3Q4Total
Pre-Tax Income37 71 85 116 309 
Interest Expense (Income), net— (1)— — (1)
Depreciation11 11 11 11 44 
Amortization13 
EBITDA52 86 98 129 365 
Share-based Compensation— — 
Restructuring & Realignment28 
Adjusted EBITDA57 95 106 137 395 
Revenue438 501 524 616 2,079 
Adjusted EBITDA Margin13.0 %19.0 %20.2 %22.2 %19.0 %




Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Applied Water
($ Millions)
2021
Q1Q2Q3Q4Total
Pre-Tax Income66 65 60 48 239 
Interest Expense (Income), net— — — — — 
Depreciation20 
Amortization— — 
EBITDA72 71 65 53 261 
Share-based Compensation
Restructuring & Realignment
Loss/(Gain) from sale of business— (2)— — (2)
Special Charges— — — 
Adjusted EBITDA75 72 68 56 271 
Revenue393 414 400 406 1,613 
Adjusted EBITDA Margin19.1 %17.4 %17.0 %13.8 %16.8 %
2020
Q1Q2Q3Q4Total
Pre-Tax Income47 42 55 60 204 
Interest Expense (Income), net— — — — — 
Depreciation21 
Amortization— 
EBITDA53 47 62 66 228 
Share-based Compensation— 
Restructuring & Realignment
Adjusted EBITDA56 52 64 68 240 
Revenue338 337 364 395 1,434 
Adjusted EBITDA Margin16.6 %15.4 %17.6 %17.2 %16.7 %




Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Measurement & Control Solutions
($ Millions)
2021
Q1Q2Q3Q4Total
Pre-Tax Income12 (17)10 
Interest Expense (Income), net— — — — — 
Depreciation10 11 38 
Amortization27 27 27 26 107 
EBITDA44 49 45 17 155 
Share-based Compensation
Restructuring & Realignment— (1)
Adjusted EBITDA47 51 45 21 164 
Revenue354 368 318 295 1,335 
Adjusted EBITDA Margin13.3 %13.9 %14.2 %7.1 %12.3 %
2020
Q1Q2Q3Q4Total
Pre-Tax Income(13)(46)(62)14 (107)
Interest Expense (Income), net— — — — — 
Depreciation35 
Amortization27 26 27 27 107 
EBITDA23 (12)(26)50 35 
Share-based Compensation
Restructuring & Realignment31 40 
Special Charges— 10 69 — 79 
Adjusted EBITDA27 30 49 53 159 
Revenue347 322 332 362 1,363 
Adjusted EBITDA Margin7.8 %9.3 %14.8 %14.6 %11.7 %