ROHSTOFF INTERNATIONAL

12:55 | 01.02.2018
Xylem reports seven percent organic revenue increase and strong double-digit growth in 4th quarter 2017 earnings

Xylem Inc. (NYSE:XYL), a leading global water technology company
dedicated to solving the world’s most challenging water issues, today
reported fourth quarter 2017 net income of $71 million, or $0.40 per
share. Excluding the impact of restructuring, realignment,
acquisition-related charges and other special items, the Company
delivered adjusted net income of $137 million or $0.76 per share in the
quarter, a 15-percent increase over the prior year period. Fourth
quarter revenue was $1.3 billion, up 17 percent including the full
quarter contribution from the Sensus business versus the prior year
period which included only two months of Sensus results. Revenue for the
quarter increased seven percent on a pro forma organic basis, driven by
a strong performance in the public utility end market in nearly every
geography and continued growth in industrial, commercial and residential
end markets. Adjusted earnings before interest, tax, depreciation and
amortization (EBITDA) improved by 40 basis points year-over-year to 20.2
percent driven by net productivity gains and volume leverage. Reported
operating margin in the quarter was 14 percent and adjusted operating
margin decreased 10 basis points year-over-year to 15.2 percent,
including a 20-basis-point impact due to purchase accounting
amortization.

For the full year 2017, Xylem generated $4.7 billion in revenue, up 25
percent on a reported basis and four percent on a pro forma organic
basis. Full-year reported net income was $331 million, or $1.83 per
share, with an operating margin of 11.8 percent. Adjusted net income,
which excludes the impact of restructuring, realignment,
acquisition-related charges and other special items, was $433 million,
or $2.40 per share, an 18-percent increase over the prior year. Adjusted
EBITDA improved by 80 basis points to 18.7 percent year-over-year. Xylem
delivered a full-year 2017 adjusted operating margin of 13.4 percent,
down 20 basis points versus the prior year including a 50-basis-point
impact due to purchase accounting amortization. The Company generated
$544 million in free cash flow, an increase of 41 percent versus last
year, representing a 147-percent conversion.

“Our teams delivered a strong performance throughout 2017 and I’m very
pleased with our full-year results,” said Patrick Decker, President and
Chief Executive Officer of Xylem. “Our relentless focus on the customer
and continuing to enhance our execution in the field translated into
improved results in revenue, orders and backlog growth, with the
momentum we built in the second half of the year carrying into 2018. We
capitalized on improving end market conditions, particularly in public
utilities where we continue to gain share. Our productivity for growth
initiatives continue to generate significant savings and fund critical
R&D investments for our long-term growth. The successful integration of
the new capabilities and capacity we gained with the addition of Sensus
and Visenti are opening up new growth opportunities for us. And we’re
building upon this as we continue to execute our strategy of disciplined
capital deployment.”

Xylem also confirmed the completion of its previously announced
acquisition of Pure Technologies, a leader in smart infrastructure
assessment and management. Pure’s diagnostic and analytics solutions and
services address key water and wastewater infrastructure challenges,
including non-revenue water and asset management, a critical issue as
infrastructure ages.

Decker continued, “Pure’s solutions are highly complementary to the
broader Xylem portfolio. This business brings a unique set of
proprietary technologies as well as data analytics expertise that
further augment our ability to identify and address some of our
customers’ most urgent needs. As we bring these and other advanced
infrastructure analytics capabilities together, we will create a
portfolio of solutions that is holistic, disruptive and scalable to
significantly improve the economics of our customers’ operations.”

Xylem announced that its Board of Directors declared a dividend in the
amount of $0.21 per share, an increase of 17 percent. The dividend is
payable on March 15, 2018 to shareholders of record as of February 15,
2018.
Full-year 2018 Outlook
Xylem forecasts full-year 2018 revenue in the range of $5.1 to $5.2
billion, up eight to 10 percent, including growth from previously
announced acquisitions. On an organic basis, Xylem’s revenue growth is
anticipated to be in the range of four to six percent.

Full-year 2018 adjusted operating margin is expected to be in the range
of 14.0 to 14.4 percent, resulting in adjusted earnings per share of
$2.82 to $2.97. This represents an increase of 18 to 24 percent from
Xylem’s 2017 adjusted results. The Company’s adjusted earnings outlook
excludes projected integration, restructuring and realignment costs of
approximately $35 million for the year. Excluding revenue, Xylem
provides guidance only on a non-GAAP basis due to the inherent
difficulty in forecasting certain amounts that would be included in GAAP
earnings, such as discrete tax items, without unreasonable effort.
Fourth Quarter Segment ResultsWater Infrastructure
Xylem’s Water Infrastructure segment consists of its portfolio of
businesses serving clean water delivery, wastewater transport and
treatment, and dewatering.

Fourth quarter 2017 revenue was $583 million, up six percent
organically compared with fourth quarter 2016. This increase was
driven by strong results in the public utility end market across most
regions globally from wastewater transport applications and treatment
project deliveries. The industrial end market also continued to show
solid growth, reflecting improved market conditions in North America
for dewatering applications.

Fourth quarter reported operating income for the segment was $103
million. Adjusted operating income for the segment, which excludes $4
million of restructuring and realignment costs, was $107 million, a
six-percent increase over the same period a year ago. Reported
operating margin for the Water Infrastructure segment was 17.7
percent, down 100 basis points versus the prior year, and adjusted
operating margin was down 70 basis points to 18.4 percent. This
reflects inflation and higher investments in strategic initiatives,
which more than offset strong productivity gains and volume leverage
achieved in the quarter.
Applied Water
Xylem’s Applied Water segment consists of its portfolio of businesses in
residential and commercial building services, and industrial
applications.

Fourth quarter 2017 Applied Water revenue was $373 million, a
five-percent increase organically year-over-year. This performance
reflects continued growth in the U.S. and Europe industrial end
markets. Demand for clean water supply helped drive growth in the
residential end market in Asia Pacific, and the Company also captured
share gains in Europe. Commercial building applications showed solid
growth from demand for projects and restocking due to cold weather
conditions.

Fourth quarter reported operating income for the segment was $61
million and adjusted operating income, which excludes $3 million of
restructuring and realignment costs, was $64 million, a 16-percent
increase over the comparable period last year. Applied Water segment
reported operating margin was 16.4 percent, up 270 basis points over
the prior year period. Adjusted operating margin increased 150 basis
points to 17.2 percent as cost reductions and volume leverage more
than offset inflation and the funding of investments.
Measurement & Control Solutions
Xylem’s Measurement & Control Solutions segment consists of its
portfolio of businesses in smart metering, network technologies,
advanced infrastructure analytics and analytic instrumentation.

Fourth quarter 2017 Measurement & Control Solutions revenue was $321
million, up 12 percent organically versus the prior year. This growth
was driven by a strong performance in the Sensus business, which
increased 15 percent on a pro forma organic basis in the quarter,
reflecting double-digit growth in water, gas and software services
sectors partially offset by modest declines in the electric business.
Revenue from Xylem’s legacy analytics business increased one percent
organically in the quarter.

Fourth quarter reported operating income for the segment was $30
million, and adjusted operating income, which excludes $4 million of
restructuring and realignment costs and acquisition-related costs, was
$34 million. Measurement & Control Solutions segment reported
operating margin was 9.3 percent. Adjusted operating margin increased
130 basis points to 10.6 percent as volume leverage and mix combined
with cost reductions more than offset inflation and the funding of
strategic R&D investments.

Supplemental information on Xylem’s fourth quarter and full-year 2017
earnings and reconciliations for certain non-GAAP items is posted at www.xylem.com/investors.
About Xylem
Xylem (XYL) is a leading global water technology company committed to
developing innovative technology solutions to the world’s water
challenges. The Company’s products and services move, treat, analyze,
monitor and return water to the environment in public utility,
industrial, residential and commercial building services settings. Xylem
also provides a leading portfolio of smart metering, network
technologies and advanced infrastructure analytics solutions for water,
electric and gas utilities. The Company’s more than 16,000 employees
bring broad applications expertise with a strong focus on identifying
comprehensive, sustainable solutions. Headquartered in Rye Brook, New
York with 2017 revenue of $4.7 billion, Xylem does business in more than
150 countries through a number of market-leading product brands.

The name Xylem is derived from classical Greek and is the tissue that
transports water in plants, highlighting the engineering efficiency of
our water-centric business by linking it with the best water
transportation of all – that which occurs in nature. For more
information, please visit us at www.xylem.com.
Forward-Looking Statements
This press release contains information that may constitute
“forward-looking statements.” Forward-looking statements by their nature
address matters that are, to different degrees, uncertain. Generally,
the words “anticipate,” “estimate,” “expect,” “project,” “intend,”
“plan,” “forecast,” “believe,” “target,” “will,” “could,” “would,”
“should” and similar expressions identify forward-looking statements,
which generally are not historical in nature. However, the absence of
these words or similar expressions does not mean that a statement is not
forward-looking.

These forward-looking statements include statements about the
capitalization of Xylem Inc. (the “Company”), the Company’s
restructuring and realignment, future strategic plans and other
statements that describe the Company’s business strategy, outlook,
objectives, plans, intentions or goals. All statements that address
operating or financial performance, events or developments that we
expect or anticipate will occur in the future – including statements
relating to orders, revenues, operating margins and earnings per share
growth, and statements expressing general views about future operating
results – are forward-looking statements. Forward-looking statements
involve known and unknown risks, uncertainties and other important
factors that could cause actual results to differ materially from those
expressed or implied in, or reasonably inferred from, such
forward-looking statements. Factors that could cause results to differ
materially from those anticipated include: economic, political and other
risks associated with our international operations, including military
actions, economic sanctions or trade embargoes that could affect
customer markets, and non-compliance with laws, including foreign
corrupt practice laws, export and import laws and competition laws;
potential for unexpected cancellations or delays of customer orders in
our reported backlog; our exposure to fluctuations in foreign currency
exchange rates; competition and pricing pressures in the markets we
serve; the strength of housing and related markets; ability to retain
and attract key members of management; our relationship with and the
performance of our channel partners; our ability to successfully
identify, complete and integrate acquisitions; our ability to borrow or
to refinance our existing indebtedness and availability of liquidity
sufficient to meet our needs; changes in the value of goodwill or
intangible assets; risks relating to product defects, product liability
and recalls; governmental investigations; security breaches or other
disruptions of our information technology systems; litigation and
contingent liabilities; and other factors set forth in Item 1A of our
Annual Report on Form 10-K for the year ended December 31, 2016, and
those described from time to time in subsequent reports filed with the
Securities and Exchange Commission. Forward-looking statements made
herein are based on information currently available to the Company. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.

 
XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (Unaudited)

(In Millions, except per share data)

 

 

 

 

Year Ended December 31,

 

 
2017

2016

2015

Revenue

$4,707

$

3,771

$

3,653

Cost of revenue

2,856
 

2,310

 

2,249

Gross profit

1,851

1,461

1,404

Selling, general and administrative expenses

1,090

915

854

Research and development expenses

180

110

95

Restructuring and impairment charges

25
 

30

 

6

Operating income

556

406

449

Interest expense

82

70

55

Other non-operating income, net

2

4

(Loss)/gain on sale of businesses

(10)

 

9

Income before taxes

466

340

403

Income tax expense

136
 

80

 

63

Net income

330

260

340

Less: Net loss attributable to non-controlling interests

(1)

 

Net income attributable to Xylem

$331
 

$

260

 

$

340

Earnings per share:

Basic

$1.84

$

1.45

$

1.88

Diluted

$1.83

$

1.45

$

1.87

Weighted average number of shares:

Basic

179.6

179.1

180.9

Diluted

180.9

180.0

181.7

Dividends declared per share

$0.7200

$

0.6196

$

0.5632

 

 
XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)

(In Millions, except per share amounts)

 

 

 

December 31,

 

 
2017

2016
ASSETS

Current assets:

Cash and cash equivalents

$414

$

308

Receivables, less allowances for discounts, returns and doubtful
accountsof $35 and $30 in 2017 and 2016, respectively

956

843

Inventories

524

522

Prepaid and other current assets

177
 

166

 

Total current assets

2,071

1,839

Property, plant and equipment, net

643

616

Goodwill

2,768

2,632

Other intangible assets, net

1,168

1,201

Other non-current assets

210
 

186

 
Total assets

$6,860
 

$

6,474

 
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$549

$

457

Accrued and other current liabilities

551

521

Short-term borrowings and current maturities of long-term debt


 

260

 

Total current liabilities

1,100

1,238

Long-term debt, net

2,200

2,108

Accrued postretirement benefits

442

408

Deferred income tax liabilities

252

352

Other non-current accrued liabilities

347
 

161

 
Total liabilities

4,341
 

4,267

 

 

Stockholders’ equity:

Common stock — par value $0.01 per share:

Authorized 750.0 shares, issued 192.3 and 191.4 shares in 2017 and2016,
respectively

2

2

Capital in excess of par value

1,912

1,876

Retained earnings

1,227

1,033

Treasury stock – at cost 12.4 shares and 11.9 shares in 2017 and
2016,respectively

(428)

(403

)

Accumulated other comprehensive loss

(210)

(318

)

Total stockholders’ equity

2,503
 

2,190

 

Non-controlling interest

16

17

Total equity

2,519
 

2,207

 
Total liabilities and stockholders’ equity

$6,860
 

$

6,474

 

 

 
XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) (Unaudited)

 

 

 

 

Year Ended December 31,

 

 
2017

2016

2015
Operating Activities

Net income

$330

$

260

$

340

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation

109

87

88

Amortization

125

64

45

Deferred income taxes

(33)

14

(9

)

Share-based compensation

21

18

15

Restructuring and impairment charges

25

30

6

Gain from sale of businesses

10

(9

)

Other, net

19

6

12

Payments for restructuring

(28)

(16

)

(14

)

Contributions to postretirement benefit plans

(33)

(27

)

(25

)

Changes in assets and liabilities (net of acquisitions):

Changes in receivables

(79)

(6

)

(24

)

Changes in inventories

27

(15

)

23

Changes in accounts payable

50

61

20

Changes in accrued liabilities

28

13

(11

)

Changes in accrued taxes

104

(13

)

(3

)

Net changes in other assets and liabilities

 

 
11
 

21

 

10

 
Net Cash — Operating activities
 

 
686
 

497

 

464

 
Investing Activities

Capital expenditures

(170)

(124

)

(117

)

Proceeds from the sale of property, plant and equipment

1

1

Acquisitions of businesses and assets, net of cash acquired

(33)

(1,782

)

(18

)

Proceeds from sale of businesses

16

1

Cash received from investments

10

Cash paid for investments

(11)

Other, net

 

 
6
 

19

 

2

 
Net Cash — Investing activities
 

 
(181)

(1,886

)

(132

)
Financing Activities

Short-term debt issued

274

Short-term debt repaid, net

(282)

(80

)

(3

)

Long-term debt issued, net

1,540

Long-term debt repaid

(608

)

Repurchase of common stock

(25)

(4

)

(179

)

Proceeds from exercise of employee stock options

16

24

21

Excess tax benefit from share based compensation

2

Dividends paid

(130)

(112

)

(102

)

Other, net

 

 

 

 

(1

)
Net Cash — Financing activities
 

 
(421)

1,034

 

(262

)
Effect of exchange rate changes on cash
 

 
22
 

(17

)

(53

)

Net change in cash and cash equivalents

106

(372

)

17

Cash and cash equivalents at beginning of year

 

 
308
 

680

 

663

 
Cash and cash equivalents at end of year
 

 
$414
 

$

308

 

$

680

 

Supplemental disclosure of cash flow information:

Cash paid during the year for:

Interest

$78

$

49

$

52

Income taxes (net of refunds received)

$57

$

78

$

75

 

 

Xylem Inc. Non-GAAP Measures

 

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

 
“Organic revenue” and “Organic orders” defined as
revenue and orders, respectively, excluding the impact of
fluctuations in foreign currency translation and contributions from
acquisitions and divestitures. Divestitures include sales of
insignificant portions of our business that did not meet the
criteria for classification as a discontinued operation. The
period-over-period change resulting from foreign currency
translation impacts is determined by translating current period and
prior period activity using the same currency conversion rate.

 
“Constant currency” defined as financial results adjusted for
foreign currency translation impacts by translating current period
and prior period activity using the same currency conversion rate.
This approach is used for countries whose functional currency is not
the U.S. dollar.

 
“EBITDA” defined as earnings before interest, taxes,
depreciation and amortization expense. “Adjusted EBITDA”
reflects the adjustment to EBITDA to exclude share-based
compensation charges, restructuring and realignment costs, Sensus
acquisition related costs, gain or loss from sale of businesses and
special charges. For Sensus historical adjustments, see Sensus
Historical – Adjusted EBITDA table.

 
“Adjusted Operating Income”, “Adjusted Segment Operating Income”,
“Adjusted Net Income” and “Adjusted EPS” defined as
operating income, segment operating income, adjusted net income and
earnings per share, adjusted to exclude restructuring and
realignment costs, Sensus acquisition related costs, gain or loss
from sale of businesses, special charges and tax-related special
items, as applicable. For Sensus historical adjustments, see Sensus
Historical – Adjusted Operating Income table.

 
“Free Cash Flow” defined as net cash from operating
activities, as reported in the Statement of Cash Flow, less capital
expenditures as well as adjustments for other significant items that
impact current results which management believes are not related to
our ongoing operations and performance. Our definition of free cash
flow does not consider certain non-discretionary cash payments, such
as debt.

 
“Realignment costs” defined as costs not included in
restructuring costs that are incurred as part of actions taken to
reposition our business, including items such as professional fees,
severance, relocation, travel, facility set-up and other costs.

 
“Sensus Acquisition Related Costs” defined as costs
incurred by the Company associated with the acquisition of Sensus
that are being reported within operating income. These costs include
integration costs, acquisition costs, costs related to the
recognition of the backlog intangible asset amortization and
inventory step-up recorded in purchase accounting.

 
“Special charges” defined as costs incurred by the
Company, such as non-cash impairment charges, due diligence costs,
initial acquisition and integration costs not related to Sensus and
other special non-operating items, as well as interest expense
related to the early extinguishment of debt and financing costs on
the bridge loan entered into for the Sensus acquisition during 2016.

 
“Tax-related special items” defined as tax items, such
as tax return versus tax provision adjustments, tax exam impacts,
tax law change impacts, significant reserves for cash repatriation,
excess tax benefits/losses and other discrete tax adjustments.

 
“Pro forma” defined as including the results of
Sensus for the calendar period prior to the acquisition of Sensus by
Xylem Inc. on October 31, 2016.

 

 

Xylem Inc. Non-GAAP Reconciliation

Reported vs. Organic & Constant Currency Orders

($ Millions)

 

 

 

 

 

 

 

 

 

(As Reported – GAAP)

(As Adjusted – Organic)

Constant Currency

 

(A)

 

(B)

 

(C)

 

(D)

 

(E) = B+C+D

 

(F) = E/A

(G) = (E – C) / A

 

Orders

Orders

Change

2017 v. 2016

% Change

2017 v. 2016

Acquisitions /

Divestitures

FX Impact

Change

Adj. 2017 v. 2016

% Change

Adj. 2017 v. 2016

2017

2016

Year Ended December 31

 

Xylem Inc.

4,868

3,824

1,044

27%

(751)

(33)

260

7%

26%

 

Water Infrastructure

2,112

1,957

155

8%

(16)

139

7%

7%

Applied Water

1,476

1,405

71

5%

11

(3)

79

6%

5%

Measurement & Control Solutions

1,280

462

818

177%

(762)

(14)

42

9%

174%

 
Quarter Ended December 31

 
Xylem Inc.

1,270

1,067

203

19%

(63)

(37)

103

10%

16%

 

Water Infrastructure

566

492

74

15%

(20)

54

11%

11%

Applied Water

373

348

25

7%

6

(9)

22

6%

5%

Measurement & Control Solutions

331

227

104

46%

(69)

(8)

27

12%

42%

 
Quarter Ended September 30

 
Xylem Inc.

1,249

946

303

32%

(223)

(22)

58

6%

30%

 

Water Infrastructure

558

521

37

7%

(12)

25

5%

5%

Applied Water

374

342

32

9%

2

(4)

30

9%

8%

Measurement & Control Solutions

317

83

234

282%

(225)

(6)

3

4%

275%

 
Quarter Ended June 30

 
Xylem Inc.

1,212

923

289

31%

(228)

14

75

8%

33%

 

Water Infrastructure

521

483

38

8%

9

47

10%

10%

Applied Water

375

361

14

4%

2

5

21

6%

5%

Measurement & Control Solutions

316

79

237

300%

(230)

7

9%

300%

 
Quarter Ended March 31

 
Xylem Inc.

1,137

888

249

28%

(237)

12

24

3%

29%

 

Water Infrastructure

467

461

6

1%

7

13

3%

3%

Applied Water

354

354

0%

1

5

6

2%

1%

Measurement & Control Solutions

316

73

243

333%

(238)

5

7%

333%

 

 

 

 

 

 

 

 

 

 

Xylem Inc. Non-GAAP Reconciliation

Reported vs. Organic & Constant Currency Revenue

($ Millions)

 

 

 

(As Reported – GAAP)
(As Adjusted – Organic)
Constant Currency

(A)

(B)

(C)

(D)

(E) = B+C+D

(F) = E/A

(G) = (E – C) / A

 

Revenue

Revenue

Change

2017 v. 2016

% Change

2017 v. 2016

Acquisitions /

Divestitures

FX Impact

Change

Adj. 2017 v. 2016

% Change

Adj. 2017 v. 2016

2017

2016

Year Ended December 31

 

Xylem Inc.

4,707

3,771

936

25%

(780)

(34)

122

3%

24%

 

Water Infrastructure

2,004

1,932

72

4%

(16)

56

3%

3%

Applied Water

1,421

1,393

28

2%

10

(4)

34

2%

2%

Measurement & Control Solutions

1,282

446

836

187%

(790)

(14)

32

7%

184%

 
Quarter Ended December 31

 
Xylem Inc.

1,277

1,095

182

17%

(70)

(37)

75

7%

13%

 

Water Infrastructure

583

530

53

10%

(21)

32

6%

6%

Applied Water

373

351

22

6%

5

(9)

18

5%

4%

Measurement & Control Solutions

321

214

107

50%

(75)

(7)

25

12%

47%

 
Quarter Ended September 30

 
Xylem Inc.

1,195

897

298

33%

(232)

(22)

44

5%

31%

 

Water Infrastructure

520

478

42

9%

(10)

32

7%

7%

Applied Water

354

343

11

3%

2

(5)

8

2%

2%

Measurement & Control Solutions

321

76

245

322%

(234)

(7)

4

5%

313%

 
Quarter Ended June 30

 
Xylem Inc.

1,164

932

232

25%

(236)

14

10

1%

26%

 

Water Infrastructure

482

484

(2)

0%

9

7

1%

1%

Applied Water

361

366

(5)

-1%

2

5

2

1%

0%

Measurement & Control Solutions

321

82

239

291%

(238)

1

1%

291%

 
Quarter Ended March 31

 
Xylem Inc.

1,071

847

224

26%

(242)

11

(7)

-1%

28%

 

Water Infrastructure

419

440

(21)

-5%

6

(15)

-3%

-3%

Applied Water

333

333

0%

1

5

6

2%

2%

Measurement & Control Solutions

319

74

245

331%

(243)

2

3%

331%

 

 

Xylem Inc. Non-GAAP Reconciliation – Pro forma with Sensus

Reported vs. Organic & Constant Currency Revenue

($ Millions)

 

 

 

 

 

 

(As Reported – GAAP)
(As Adjusted – Organic)
Constant Currency

 

(A)

 

(B)

 

(C)

 

(D)

 

(E) = B+C+D

 

(F) = E/A

(G) = (E – C) / A

 

Revenue

Revenue

Change

2017 v. 2016

% Change

2017 v. 2016

Acquisitions /

Divestitures

FX Impact

Change

Adj. 2017 v. 2016

% Change

Adj. 2017 v. 2016

2017

2016 (a)

Year Ended December 31

 

Xylem Inc.

4,707

4,533

174

4%

6

(21)

159

4%

3%

 

Water Infrastructure

2,004

1,932

72

4%

(16)

56

3%

3%

Applied Water

1,421

1,393

28

2%

10

(4)

34

2%

2%

Measurement & Control Solutions

1,282

1,208

74

6%

(4)

(1)

69

6%

6%

 
Quarter Ended December 31

 
Xylem Inc.

1,277

1,164

113

10%

3

(37)

79

7%

7%

 

Water Infrastructure

583

530

53

10%

(21)

32

6%

6%

Applied Water

373

351

22

6%

5

(9)

18

5%

4%

Measurement & Control Solutions

321

283

38

13%

(2)

(7)

29

10%

11%

 
Quarter Ended September 30

 
Xylem Inc.

1,195

1,125

70

6%

2

(18)

54

5%

5%

 

Water Infrastructure

520

478

42

9%

(10)

32

7%

7%

Applied Water

354

343

11

3%

2

(5)

8

2%

2%

Measurement & Control Solutions

321

304

17

6%

(3)

14

5%

5%

 
Quarter Ended June 30

 
Xylem Inc.

1,164

1,169

(5)

0%

2

19

16

1%

1%

 

Water Infrastructure

482

484

(2)

0%

9

7

1%

1%

Applied Water

361

366

(5)

-1%

2

5

2

1%

0%

Measurement & Control Solutions

321

319

2

1%

5

7

2%

2%

 
Quarter Ended March 31

 
Xylem Inc.

1,071

1,075

(4)

0%

(1)

15

10

1%

1%

 

Water Infrastructure

419

440

(21)

-5%

6

(15)

-3%

-3%

Applied Water

333

333

0%

1

5

6

2%

2%

Measurement & Control Solutions

319

302

17

6%

(2)

4

19

6%

7%

 

(a) Includes Measurement & Control Solutions and Visenti revenue for
the ten months ended October 31, 2016 which was prior to Xylem
acquiring the businesses.

 

 

Xylem Inc. Non-GAAP Reconciliation

Adjusted Operating Income

($ Millions)

 

 

 

 

 

 

 

 

 

 

 

 

Q1

Q2
Q3
Q4
YTD

2017
 
2016

2017
 
2016
2017
 
2016
2017
 
2016
2017
 
2016
Total Revenue

• Total Xylem

1,071

847

1,164

932

1,195

897

1,277

1,095

4,707

3,771

• Water Infrastructure

419

440

482

484

 

520

478

 

583

530

2,004

1,932

• Applied Water

333

333

361

366

 

354

343

 

373

351

1,421

1,393

• Measurement & Control Solutions

319

74

321

82

321

76

321

214

1,282

446

 

Operating Income

• Total Xylem

86

79

139

109

152

109

179

109

556

406

• Water Infrastructure

40

51

74

66

 

91

75

 

103

99

308

291

• Applied Water

36

39

49

51

 

51

50

 

61

48

197

188

• Measurement & Control Solutions

25

3

29

4

26

4

30

(11)

110

• Total Segments

101

93

152

121

168

129

194

136

615

479

 

Operating Margin

• Total Xylem

8.0%

9.3%

11.9%

11.7%

12.7%

12.2%

14.0%

10.0%

11.8%

10.8%

• Water Infrastructure

9.5%

11.6%

15.4%

13.6%

17.5%

15.7%

17.7%

18.7%

15.4%

15.1%

• Applied Water

10.8%

11.7%

13.6%

13.9%

14.4%

14.6%

16.4%

13.7%

13.9%

13.5%

• Measurement & Control Solutions

7.8%

4.1%

9.0%

4.9%

8.1%

5.3%

9.3%

-5.1%

8.6%

0.0%

• Total Segments

 

 

9.4%

 

11.0%

 

 

13.1%

 

13.0%

 

14.1%

 

14.4%

 

15.2%

 

12.4%

 

13.1%

 

12.7%

 

Sensus Acquisition Related Costs

• Total Xylem

10

4

5

10

3

43

22

53

• Water Infrastructure

• Applied Water

• Measurement & Control Solutions

6

3

4

2

25

15

25

• Total Segments

6

3

4

2

25

15

25

 

Special Charges

• Total Xylem

5

4

1

3

3

11

5

• Water Infrastructure

2

2

• Applied Water

5

5

• Measurement & Control Solutions

2

1

3

• Total Segments

5

4

1

5

5

 

Restructuring & Realignment Costs

• Total Xylem

11

9

12

11

9

12

9

15

41

47

• Water Infrastructure

4

3

5

6

3

5

4

2

16

16

• Applied Water

4

3

5

3

5

3

3

7

17

16

• Measurement & Control Solutions

3

1

2

2

1

4

2

6

8

13

• Total Segments

11

7

12

11

9

12

9

15

41

45

 

Adjusted Operating Income

• Total Xylem

112

92

155

121

169

131

194

167

630

511

• Water Infrastructure

44

56

79

72

 

94

80

 

107

101

324

309

• Applied Water

45

42

54

54

 

56

53

 

64

55

219

204

• Measurement & Control Solutions

34

6

34

7

 

31

8

 

34

20

133

41

• Total Segments

123

104

167

133

181

141

205

176

676

554

 

Adjusted Operating Margin

• Total Xylem

10.5%

10.9%

13.3%

13.0%

14.1%

14.6%

15.2%

15.3%

13.4%

13.6%

• Water Infrastructure

10.5%

12.7%

16.4%

14.9%

18.1%

16.7%

18.4%

19.1%

16.2%

16.0%

• Applied Water

13.5%

12.6%

15.0%

14.8%

15.8%

15.5%

17.2%

15.7%

15.4%

14.6%

• Measurement & Control Solutions

10.7%

8.1%

10.6%

8.5%

9.7%

10.5%

10.6%

9.3%

10.4%

9.2%

• Total Segments

 

 

11.5%

 

12.3%

 

 

14.3%

 

14.3%

 

15.1%

 

15.7%

 

16.1%

 

16.1%

 

14.4%

 

14.7%

 

 

 

 

 

 

 

 

 

Xylem Inc. Non-GAAP Reconciliation

Adjusted Diluted EPS

($ Millions, except per share amounts)

 

 

Q4 2017

Q4 2016

As Reported
Adjustments

Adjusted

As Reported
Adjustments

Adjusted
Total Revenue

1,277

1,277

1,095

1,095

Operating Income

179

15

a

194

109

58

a

167

Operating Margin

14.0%

15.2%

10.0%

15.3%
Interest Expense

(20

)

(20

)

(20

)

1

e

(19

)

Other Non-Operating Income (Expense)

(1

)

2

b

1

1

1

(Loss)/Gain from sale of business

 

(14

)

 

14

 

 

 

 

 

 

Income before Taxes

144

31

175

90

59

149

Provision for Income Taxes

(74

)

36

c

(38

)

(40

)

9

c

(31

)

Gain/(Loss) attributable to minority interest

 

1

 

 

(1

)

d

 

 

 

 

 

 

 

Net Income attributable to Xylem

 

71

 

 

66

 

 

137

 

 

50

 

 

68

 

 

118

 

Diluted Shares

 

 

 

181.3

 

 

 

 

 

 

181.3

 

 

 

 

180.6

 

 

 

 

 

 

180.6

 
Diluted EPS
 

 
$0.40
 

 
$0.36
 

 

 
$0.76
 

 

 
$0.28
 

 
$0.38
 

 

 
$0.66
 

 

Year-over-year currency translation impact on current year diluted
EPS

 

 

$

0.02

 

 

$

 

 

 

$

0.02

 

Diluted EPS at Constant Currency
 

 
$0.38
 

 
$0.36
 

 

 
$0.74
 

 

 

 

Q4 YTD 2017

Q4 YTD 2016

As Reported
Adjustments

Adjusted

As Reported
Adjustments

Adjusted
Total Revenue

4,707

4,707

3,771

3,771

Operating Income

556

74

a

630

406

105

a

511

Operating Margin

11.8%

13.4%

10.8%

13.6%
Interest Expense

(82

)

(82

)

(70

)

13

e

(57

)

Other Non-Operating Income (Expense)

2

2

b

4

4

4

(Loss)/Gain from sale of business

 

(10

)

 

10

 

 

 

 

 

 

 

 

Income before Taxes

466

86

552

340

118

458

Provision for Income Taxes

(136

)

17

c

(119

)

(80

)

(14

)

c

(94

)

Income attributable to minority interest

 

1

 

 

(1

)

d

 

 

 

 

 

Net Income attributable to Xylem

 

331

 

 

102

 

 

433

 

 

260

 

 

104

 

 

364

 

Diluted Shares

 

 

 

180.9

 

 

 

 

 

 

180.9

 

 

 

 

180.0

 

 

 

 

 

 

180.0

 
Diluted EPS
 

 
$1.83
 

 
$0.57
 

 

 
$2.40
 

 

 
$1.45
 

 
$0.58
 

 

 
$2.03
 

 

Year-over-year currency translation impact on current year diluted
EPS

 

 

$

(0.02

)

 

$

0.02

 

 

 

$

 

Diluted EPS at Constant Currency
 

 
$1.85
 

 
$0.55
 

 

 
$2.40
 

 

a

Fourth quarter: Restructuring & realignment costs of $9 million and
$15 million in 2017 and 2016, respectively, Sensus acquisition
related costs of $3 million and $43 million in 2017 and 2016 and
special charges of $3 million of other acquisition costs in 2017.

 

Year-to-date: Restructuring & realignment costs of $41 million and
$47 million in 2017 and 2016, respectively, Sensus acquisition
related costs of $22 million and $53 million in 2017 and 2016,
respectively and special charges of $11 million ($5 million of asset
impairment, $3 million of due diligence costs and $3 of other
acquisition costs) in 2017 and $5 million of initial acquisition
costs in 2016.

 

b

Special charges of a write-down of investment in joint venture of $2
million in the fourth quarter of 2017.

 

c

Fourth quarter: Net tax impact on restructuring & realignment costs
of $2 million and $4 million in 2017 and 2016, respectively, net tax
impact on Sensus acquisition related costs of $1 million and $15
million in 2017 and 2016, respectively, net tax impact on special
charges of $1 million in 2017 and tax-related special items of $40
million and $28 million of benefit in 2017 and 2016, respectively.

 

Year-to-date: Net tax impact on restructuring & realignment costs of
$13 million in both 2017 and 2016, respectively, net tax impact on
Sensus acquisition related costs of $8 million and $15 million in
2017 and 2016, respectively , net tax impact on special charges of
$4 million and $7 million in 2017 and 2016, respectively, net tax
impact of $2 million on the gain from sale of business in 2017 and
tax-related special items of $40 million and $21 million of benefit
in 2017 and 2016, respectively.

 

d

Special item consisting of minority interest income attributable to
the loss on a joint venture held for sale in the fourth quarter of
2017.

 

e

Fourth quarter special charges of $1 million of financing costs
related to the bridge loan entered into for the Sensus acquisition
in 2016. Year-to-date special charges of $5 million of financing
costs related to the bridge loan entered into for the Sensus
acquisition and $8 million of costs related to the early
extinguishment of debt in 2016.

 

 

Xylem Inc. Non-GAAP Reconciliation

Net Cash – Operating Activities vs. Free Cash Flow

($ Millions)

 

 

 

 

 

 

 

 

 

 

 

Q1

Q2

Q3

Q4

Year Ended

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

 
Net Cash – Operating Activities

$

58

$

41

$

93

$

84

$

228

$

149

$

307

$

223

$

686

$

497

 

Capital Expenditures

(49

)

(37

)

(28

)

(25

)

(42

)

(28

)

(51

)

(34

)

(170

)

(124

)

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

$

9

 

$

4

 

$

65

 

$

59

 

$

186

 

$

121

 

$

256

 

$

189

 

$

516

 

$

373

 

 

Cash paid for Sensus acquisition related costs

(17

)

(5

)

(1

)

(3

)

(5

)

(10

)

(28

)

(13

)

 

 

 

 

 

 

 

 

 

 

Free Cash Flow, excluding Sensus Acquisition Related Costs

$

26

 

$

4

 

$

70

 

$

59

 

$

187

 

$

124

 

$

261

 

$

199

 

$

544

 

$

386

 

 

Net Income

56

66

100

71

104

73

70

50

330

260

 

Gain/(Loss) from sale of businesses

5

(1

)

(14

)

(10

)

 

Special Charges – non-cash impairment and early debt extinguishment

(5

)

(8

)

(2

)

(7

)

(8

)

 

Sensus acquisition related costs

 

(10

)

 

 

 

(4

)

 

 

 

(5

)

 

(10

)

 

(3

)

 

(43

)

 

(22

)

 

(53

)

 
Net Income, excluding gain on sale of businesses, non-cashimpairment
charges and Sensus Acquisition Related Costs

$

66

 

$

66

 

$

104

 

$

79

 

$

110

 

$

83

 

$

89

 

$

93

 

$

369

 

$

321

 

 
Free Cash Flow Conversion

 

39

%

 

6

%

 

67

%

 

75

%

 

170

%

 

149

%

 

293

%

 

214

%

 

147

%

 

120

%

 

 

 

 

 

 

 

 

Xylem Inc. Non-GAAP Reconciliation

EBITDA and Adjusted EBITDA by Quarter

 

($ Millions)

 
                2017

Q1

Q2

Q3

Q4

Total

 

Net Income

56

100

104

70

330

 

Income Tax Expense

14

21

27

74

136

 

Interest Expense (Income), net

20

20

20

19

79

Depreciation

28

27

28

26

109

Amortization

31

 

30

 

30

 

34

 

125

 

EBITDA

149

198

209

223

779

 

Share-based Compensation

6

5

5

5

21

 

Restructuring & Realignment

11

12

9

9

41

 

Gain on sale of business

(5

)

1

14

10

 

Sensus Acquisition Related Costs

7

2

3

2

14

 

Special Charges

5

3

5

13

 

 

 

 

 

Adjusted EBITDA

173

 

217

 

230

 

258

 

878

 

 

Revenue

1,071

 

1,164

 

1,195

 

1,277

 

4,707

 

 

Adjusted EBITDA Margin

16.2

%

18.6

%

19.2

%

20.2

%

18.7

%

 

 
                 2016

Q1

Q2

Q3

Q4

Total

 

Net Income

66

71

73

50

260

 

Income Tax Expense

(1

)

19

22

40

80

 

Interest Expense (Income), net

14

19

16

19

68

Depreciation

20

21

20

26

87

Amortization

12

12

12

28

64

 

 

 

 

 

EBITDA

111

142

143

163

559

 

Share-based Compensation

5

5

5

3

18

 

Restructuring & Realignment

9

11

12

15

47

 

Sensus Acquisition Related Costs

10

36

46

 

Special Charges

4

1

5

 

 

 

 

 

Adjusted EBITDA

129

 

159

 

170

 

217

 

675

 

 

Revenue

847

 

932

 

897

 

1,095

 

3,771

 

 

Adjusted EBITDA Margin

15.2

%

17.1

%

19.0

%

19.8

%

17.9

%

View source version on businesswire.com: http://www.businesswire.com/news/home/20180201005594/en/


NEWSLETTER

Abonnieren Sie jetzt unseren
aktuellen Newsletter

WIRTSCHAFTSNACHRICHTEN

08:15 Uhr | 16.08.2018
Aktien Frankfurt Ausblick: Dax ...


07:53 Uhr | 16.08.2018
Zahlungsdienstleister und ...


07:37 Uhr | 16.08.2018
ANALYSE-FLASH: HSBC hebt HHLA auf ...


07:33 Uhr | 16.08.2018
dpa-AFX Börsentag auf einen ...


06:55 Uhr | 16.08.2018
ROUNDUP: USA wollen harten Kurs ...