Financial Performance - Net income for the three months ended September 30, 2024, was $217 million, compared to $152 million for the same period in 2023, representing a 42.8% increase[7]. - For the nine months ended September 30, 2024, net income was $564 million, up from $343 million in 2023, reflecting a 64.3% growth[11]. - The company reported comprehensive income of $330 million for the three months ended September 30, 2024, compared to $78 million in the same period of 2023, a significant increase of 323.1%[7]. - Basic earnings per share for Q3 2024 were $0.89, up from $0.63 in Q3 2023, representing a 41.3% increase[49]. - The company reported a total revenue of $2,104 million for Q3 2024, a slight increase from $2,076 million in Q3 2023, indicating a growth of 1.4%[101]. - Total revenue for the three months ended September 30, 2024, was $1,973 million, a slight increase from $1,950 million in the same period of 2023, representing a growth of 1.2%[35]. Assets and Liabilities - Total current assets increased to $4,013 million as of September 30, 2024, from $3,884 million at the end of 2023, marking a 3.3% rise[9]. - Cash and cash equivalents at the end of the period were $989 million, compared to $705 million at the end of September 2023, indicating a 40.4% increase[11]. - The company’s long-term debt decreased to $1,977 million as of September 30, 2024, from $2,268 million at the end of 2023, a reduction of 12.8%[9]. - Total liabilities decreased to $5,446 million as of September 30, 2024, down from $5,936 million at the end of 2023, reflecting an 8.2% decline[9]. - Total inventories as of September 30, 2024, were $1,091 million, an increase from $1,018 million as of December 31, 2023[51]. Cash Flow and Operating Activities - The company reported a net cash provided by operating activities of $688 million for the nine months ended September 30, 2024, compared to $382 million in 2023, an increase of 80.1%[11]. - The income tax provision for Q3 2024 was $52 million, resulting in an effective tax rate of 19.3%, compared to 17.8% in Q3 2023[46]. - The effective tax rate for the nine months ended September 30, 2024, was 20.7%, compared to 19.3% for the same period in 2023[46]. Acquisitions and Divestitures - Xylem completed the acquisition of Evoqua Water Technologies Corp. on May 24, 2023, enhancing its portfolio in water and wastewater applications[14]. - The company completed the acquisition of Evoqua Water Technologies Corp. on May 24, 2023, for a total consideration of $6,900 million, which included $6,121 million in common stock and $619 million to repay Evoqua's indebtedness[19]. - The acquisition resulted in the recognition of $4,801 million in goodwill, primarily due to expected synergies and economies of scale from combining operations[21]. - The company sold the former Evoqua hemodialysis concentrates business for approximately $12 million during the third quarter ended September 30, 2023[30]. - The company also divested the former Evoqua carbon reactivation and slurry operations to Desotec US LLC for approximately $91 million, equal to the fair value less costs to sell[30]. Capital Expenditures - Capital expenditures for the nine months ended September 30, 2024, were $221 million, compared to $177 million in 2023, representing a 24.9% increase[11]. - Total capital expenditures for the total company were $74 million in Q3 2024, unchanged from Q3 2023[101]. Restructuring and Impairment - Restructuring costs for the three months ended September 30, 2024, totaled $4 million, a decrease from $20 million in the same period of 2023[41]. - Total restructuring and asset impairment charges for the nine months ended September 30, 2024, were $37 million, compared to $57 million in 2023[41]. - Impairment charges recognized in Q2 2024 amounted to $16 million, primarily related to customer relationships and trademarks[43]. Shareholder Equity and Dividends - Total stockholders' equity increased from $10,176 million on January 1, 2024, to $10,600 million by September 30, 2024, reflecting a growth of 4.2%[78]. - Dividends declared for the nine months ended September 30, 2024, totaled $263 million, with a per-share dividend of $0.36, consistent with the previous year[78]. - The company has $182 million remaining under its share repurchase program as of September 30, 2024[89]. Segment Performance - Water Infrastructure revenue for the three months ended September 30, 2024, was $349 million, compared to $333 million in 2023, reflecting a growth of 4.8%[33]. - Measurement and Control Solutions segment revenue rose to $458 million in Q3 2024, up from $413 million in Q3 2023, marking an increase of 10.9%[101]. - Water Solutions and Services segment revenue was $576 million in Q3 2024, down from $586 million in Q3 2023, a decrease of 1.7%[101]. Accounting and Reporting Changes - The company plans to adopt new accounting standards related to segment reporting and income tax disclosures in its 2024 Annual Report[17]. - The company has recast prior period segment amounts to align with the new segment reporting structure effective January 1, 2024[19].

Financial Data and Key Metrics Changes - The company reported record EBITDA margins of 21.2%, an increase of 140 basis points from the prior year, despite modest top-line growth [16] - Earnings per share (EPS) reached a record $1.11, surpassing the midpoint of guidance by $0.01, marking a 12% increase over the prior year [16] - Total and organic revenue grew by 1%, slightly below expectations, primarily due to project timing in Measurement & Control Solutions (MCS) and Water Solutions and Services (WSS) [15][16] Business Line Data and Key Metrics Changes - In Measurement & Control Solutions, orders were strong at 12%, driven by smart metering and analytics demand, while revenue was up 11% [18][19] - Water Infrastructure saw orders increase by 6%, with revenue up 1%, driven by transport demand [21] - Applied Water experienced a 4% increase in orders but a 4% decline in revenue, primarily due to softness in emerging markets [22] - Water Solutions and Services had orders increase by 11%, while organic revenue was down 1% [23] Market Data and Key Metrics Changes - The utilities end market was up 10%, while industrial and commercial building end markets were down 4% due to project pushouts [38] - In China, orders declined in the mid-teens, and revenue was down low single digits, attributed to tight liquidity and real estate issues affecting municipalities [60][62] Company Strategy and Development Direction - The company is focused on reducing complexity and optimizing its portfolio to better serve customers and improve margins [9][12] - Plans to increase stake in the Idrica joint venture to a majority position, consolidating it into the Measurement & Control Solutions segment [12][66] - The integration of Evoqua is ahead of schedule, with expected cost synergies accelerating to an exit run rate of $130 million in 2024 [25] Management's Comments on Operating Environment and Future Outlook - Management noted resilient end market demand with some short-term softening, particularly in industrial sectors [12][29] - The company is closely monitoring macroeconomic factors, including geopolitical tensions and tariffs, but maintains a positive outlook for Q4 [29] - Management expressed confidence in continued demand and operational productivity driving margin expansion [29] Other Important Information - The company announced a change in the executive team, appointing Meredith Emerick to lead the Applied Water segment [33] - The company is implementing an 80/20 strategy to streamline operations and improve profitability [53] Q&A Session Summary Question: Impact of slower decision-making on WSS - Management acknowledged project delays due to elongated negotiations and macroeconomic uncertainties but remains confident in future demand [40][42] Question: Concerns about MCS growth normalization - Management clarified that the backlog is being worked down and expects high single-digit growth in MCS moving forward [47][48] Question: Update on segmentation and portfolio management - Management indicated that significant changes will occur in 2024, with results expected in Q1 2025 [53] Question: Pricing strategy and market conditions - Management confirmed that pricing remains strong, with a positive price/cost spread, and expects to continue leveraging pricing strategies [56][57] Question: Outlook for China and emerging markets - Management noted that while demand remains strong, economic challenges in China are causing project delays, but they expect recovery in the long term [62] Question: Financial impact of acquiring majority stake in Idrica - Management stated that the acquisition will enhance integration and R&D investments, with financial impacts expected to be more significant in 2025 [66][68] Question: Recovery expectations for Applied Water - Management expressed optimism about returning to growth in Applied Water, supported by recent project wins [70]

Core Insights - Xylem Inc. reported third-quarter 2024 adjusted earnings of $1.11 per share, meeting the Zacks Consensus Estimate, with a year-over-year increase of 12% [1] - Revenues for the quarter were $2.10 billion, missing the consensus estimate of $2.18 billion, but reflecting a 1% year-over-year growth driven by solid orders across all segments [1][2] Revenue Breakdown - Water Infrastructure segment revenues were $623 million, up 2% year over year, with organic sales increasing by 1% [3] - Applied Water segment revenues totaled $447 million, down 4% year over year, with organic sales also falling by 4% due to geographic softness [4] - Measurement & Control Solutions segment revenues reached $458 million, up 11% year over year, driven by demand for smart metering [4] - Water Solutions and Services segment revenues were $576 million, down 2% year over year, with organic sales decreasing by 1% due to capital project timing [5] Margin and Profitability - Adjusted EBITDA was $447 million, an 8.7% increase from the previous year, with a margin improvement to 21.2% from 19.8% [6] - Adjusted operating income rose to $350 million, up 11.1% year over year, with an adjusted operating margin increasing to 16.6% from 15.2% [6] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the third quarter were $989 million, down from $1.02 billion at the end of December 2023; long-term debt decreased to $1.98 billion from $2.3 billion [7] - Net cash generated from operating activities in the first nine months of 2024 was $688 million, compared to $382 million in the same period last year [7] Capital Expenditure and Shareholder Returns - Capital expenditure was $221 million, a 24.9% increase from the previous year [8] - Dividends paid in the first nine months of 2024 totaled $263 million, up 20.1% year over year, with share buybacks amounting to $19 million compared to $10 million in the prior year [9] 2024 Guidance - Xylem expects revenues of approximately $8.5 billion for 2024, indicating a 15% increase from the prior year on a reported basis and around 5% on an organic basis [11] - Adjusted EBITDA margin is projected to be approximately 20.5%, reflecting an expansion of 160 basis points from the previous year [11] - Adjusted earnings are forecasted to be in the range of $4.22-$4.24 per share, up from $3.78 per share in 2023 [12]

xylem 2024 Third Quarter Results and Earnings October 31, 2024 Forward-Looking Statements This presentation 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 ...

Core Insights - Xylem reported $2.1 billion in revenue for Q3 2024, a year-over-year increase of 1.4%, with EPS of $1.11 compared to $0.99 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $2.18 billion, resulting in a surprise of -3.31% [1] - The company did not deliver an EPS surprise, as the consensus EPS estimate was also $1.11 [1] Revenue Performance - Water Solutions and Services revenue was $576 million, below the estimated $607.43 million [3] - Applied Water revenue was $447 million, slightly below the estimated $449.78 million, representing a -3.9% change year-over-year [3] - Water Infrastructure revenue was $623 million, significantly below the estimated $637.98 million, reflecting a -22.4% year-over-year change [3] - Measurement & Control Solutions revenue was $458 million, below the estimated $479.03 million, with a year-over-year change of +4.1% [3] Adjusted Operating Income - Adjusted Operating Income for Water Infrastructure was $111 million, compared to the average estimate of $115.15 million [3] - Adjusted Operating Income for Applied Water was $73 million, slightly below the estimated $74.61 million [3] - Adjusted Operating Income for Water Solutions and Services was $94 million, compared to the average estimate of $97.41 million [3] - Adjusted Operating Income for Corporate and other was -$10 million, better than the average estimate of -$16.10 million [3] - Adjusted Operating Income for Measurement & Control Solutions was $82 million, below the estimated $87.15 million [3] Stock Performance - Xylem shares returned -3.1% over the past month, while the Zacks S&P 500 composite increased by +1% [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [4]

Core Viewpoint - Xylem reported quarterly earnings of $1.11 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.99 per share a year ago [1] - The company posted revenues of $2.1 billion for the quarter, missing the Zacks Consensus Estimate by 3.31%, but showing a slight increase from $2.08 billion year-over-year [2] Financial Performance - Earnings per share (EPS) for the recent quarter were $1.11, consistent with expectations, and up from $0.99 a year prior [1] - Revenue for the quarter was $2.1 billion, which was below the expected $2.17 billion, but an increase from the previous year's $2.08 billion [2] - Over the last four quarters, Xylem has surpassed consensus EPS estimates three times and has topped revenue estimates three times as well [2] Market Performance - Xylem shares have increased approximately 13.9% since the beginning of the year, while the S&P 500 has gained 21.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.15 on revenues of $2.21 billion, and for the current fiscal year, it is $4.26 on revenues of $8.59 billion [7] - The outlook for the industry, specifically the Manufacturing - General Industrial sector, is favorable, ranking in the top 39% of over 250 Zacks industries [8]

[Performance Summary and Outlook](index=1&type=section&id=Xylem%20Reports%20Third%20Quarter%202024%20Results%20and%20Narrows%20Full-Year%20Guidance) Xylem reported strong third-quarter earnings and robust order growth, leading to narrowed full-year guidance [Third Quarter 2024 Performance Highlights](index=1&type=section&id=Third%20Quarter%202024%20Performance%20Highlights) Xylem reported modest revenue growth but strong earnings and robust order demand in Q3 2024 Q3 2024 Key Financial Metrics | Metric | Value | Growth (YoY) | | :--- | :--- | :--- | | Revenue | $2.1 billion | 1% (Reported & Organic) | | Orders | - | 8% (Reported & Organic) | | Earnings Per Share (EPS) | $0.89 | 41% | | Adjusted EPS | $1.11 | 12% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted strong earnings, margin expansion, resilient demand, and accelerated Evoqua integration - The management team emphasized strong earnings and margin expansion, which beat internal expectations[2](index=2&type=chunk) - Demand remained resilient, evidenced by robust orders growth across all segments[2](index=2&type=chunk) - The integration of Evoqua is progressing ahead of schedule, with synergy capture accelerating and expected to close the year above target[2](index=2&type=chunk) [Full-Year 2024 Outlook](index=2&type=section&id=Outlook) Xylem updated its full-year 2024 guidance, projecting $8.5 billion in revenue and adjusted EPS between $4.22 and $4.24 Updated Full-Year 2024 Guidance | Metric | Guidance | | :--- | :--- | | Revenue | $8.5 billion | | Reported Revenue Growth | ~15% | | Organic Revenue Growth | ~5% | | Adjusted EBITDA Margin | ~20.5% | | Adjusted EPS | $4.22 to $4.24 | | Free Cash Flow Conversion | At least 120% of Net Income | [Financial Statements](index=4&type=section&id=Financial%20Statements) Xylem's financial statements reflect improved profitability and cash flow, alongside a strengthened balance sheet [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Xylem's Q3 2024 income statement shows slight revenue growth but significant increases in operating income and net income Q3 Income Statement Highlights (in millions, except EPS) | Metric | Q3 2024 | Q3 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $2,104 | $2,076 | +1.3% | | Gross Profit | $784 | $764 | +2.6% | | Operating Income | $280 | $191 | +46.6% | | Net Income | $217 | $152 | +42.8% | | Diluted EPS | $0.89 | $0.63 | +41.3% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, Xylem's balance sheet reflects a slight decrease in total assets, a reduction in total liabilities, and an increase in stockholders' equity Balance Sheet Summary (in millions) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $4,013 | $3,884 | | Total Assets | $16,046 | $16,112 | | Total Current Liabilities | $2,052 | $2,205 | | Total Liabilities | $5,446 | $5,936 | | Total Stockholders' Equity | $10,593 | $10,166 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2024, operating cash flow significantly improved, while investing and financing activities resulted in net cash outflows Nine-Month Cash Flow Summary (in millions) | Activity | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Net Cash – Operating | $688 | $382 | | Net Cash – Investing | ($193) | ($539) | | Net Cash – Financing | ($520) | ($71) | | **Net Change in Cash** | **($30)** | **($239)** | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) Xylem provides non-GAAP financial measures to offer a clearer view of its operational performance and facilitate comparability [Explanation of Non-GAAP Measures](index=7&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Xylem uses non-GAAP measures like Organic Revenue, Adjusted EBITDA, and Adjusted EPS to provide a clearer view of operational performance - Key non-GAAP metrics used by management include Organic Revenue/Orders, Constant Currency results, Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, Adjusted EPS, and Free Cash Flow[17](index=17&type=chunk) [Orders Reconciliation (Reported vs. Organic)](index=8&type=section&id=Orders%20Reconciliation%20%28Reported%20vs.%20Organic%29) Q3 2024 orders grew 8% on both a reported and organic basis, driven by strong performance in Measurement and Control Solutions and Water Solutions and Services Q3 2024 Orders Growth by Segment (YoY) | Segment | Reported Growth | Organic Growth | | :--- | :--- | :--- | | **Xylem Inc.** | **8%** | **8%** | | Water Infrastructure | 7% | 6% | | Applied Water | 4% | 4% | | Measurement and Control Solutions | 13% | 12% | | Water Solutions and Services | 11% | 11% | [Revenue Reconciliation (Reported vs. Organic)](index=9&type=section&id=Revenue%20Reconciliation%20%28Reported%20vs.%20Organic%29) Q3 2024 total revenue grew 1% reported and organic, with varied segment performance including strong growth in Measurement and Control Solutions Q3 2024 Revenue Growth by Segment (YoY) | Segment | Reported Growth | Organic Growth | | :--- | :--- | :--- | | **Xylem Inc.** | **1%** | **1%** | | Water Infrastructure | 2% | 1% | | Applied Water | (4)% | (4)% | | Measurement and Control Solutions | 11% | 11% | | Water Solutions and Services | (2)% | (1)% | [Net Income and EPS Reconciliation](index=10&type=section&id=Net%20Income%20and%20EPS%20Reconciliation) Xylem reconciled Q3 2024 GAAP net income of $217 million to an adjusted net income of $269 million, resulting in adjusted diluted EPS of $1.11 Q3 2024 GAAP to Non-GAAP Reconciliation (in millions, except EPS) | Metric | As Reported (GAAP) | Adjustments | As Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating Income | $280 | $70 | $350 | | Net Income | $217 | $52 | $269 | | Diluted EPS | $0.89 | $0.22 | $1.11 | [EBITDA Reconciliation](index=11&type=section&id=EBITDA%20Reconciliation) Xylem reconciled Q3 2024 net income of $217 million to an Adjusted EBITDA of $447 million, achieving a 21.2% Adjusted EBITDA margin Q3 2024 Net Income to Adjusted EBITDA Reconciliation (in millions) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Income | $217 | $152 | | D&A, Interest, Taxes | $198 | $186 | | EBITDA | $415 | $338 | | Other Adjustments* | $32 | $73 | | **Adjusted EBITDA** | **$447** | **$411** | | Adjusted EBITDA Margin | 21.2% | 19.8% | - *Other Adjustments include Share-based Compensation, Restructuring & Realignment, Special Charges, and Loss/Gain from sale of business[26](index=26&type=chunk)[27](index=27&type=chunk)

Core Viewpoint - Xylem (XYL) is positioned well to continue its trend of beating earnings estimates, having surpassed expectations in its last two quarterly reports [1][2]. Earnings Performance - Xylem has recorded an average earnings surprise of 4.99% over the last two quarters, with the most recent quarter showing a surprise of 2.83% (actual earnings of $1.09 per share vs. expected $1.06) and the previous quarter a surprise of 7.14% (actual $0.90 vs. expected $0.84) [1][2]. Earnings Estimates - Estimates for Xylem have been trending higher, supported by its history of earnings surprises, and the stock currently has a positive Zacks Earnings ESP of +0.10%, indicating bullish sentiment among analysts regarding its near-term earnings potential [2][3]. Zacks Rank and Predictive Power - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with research indicating that such combinations result in positive surprises nearly 70% of the time [2][3]. Upcoming Earnings Report - Xylem's next earnings report is anticipated to be released on October 31, 2024, and the positive Earnings ESP indicates potential for continued strong performance [3].

Xylem Inc. (XYL) is well-poised for growth in the coming quarters, courtesy of its businesses and accretive acquisitions. The company's efforts to reward its shareholders add to its appeal. Headquartered in Rye Brook, NY, Xylem is one of the leading providers of water solutions worldwide. It is involved in the full water-process cycle, including the collection, distribution and return of water to the environment. XYL has a significant presence in the United States, the Asia Pacific, Europe and various other ...

onuma Inthapong/E+ via Getty Images Xylem Inc. (NYSE:XYL) has been performing well over the past 12 months, with the share price increasing 45% since November 2023. In this article, I considered reviewing Xylem's recent financial performance, with a focus on the headwinds and pressures that the company is currently facing, including a significant decline in orders in their water infrastructure segment due to delays in large infrastructure projects in China. In my view, shareholders have fully priced in the ...