PART I [Financial Statements](index=4&type=section&id=Item%201%20-%20Financial%20Statements%3A) This section presents the unaudited condensed consolidated financial statements for Q2 and H1 2024 and 2023, including key financial statements and detailed notes Condensed Consolidated Income Statement Highlights (Q2 2024 vs Q2 2023) | Metric (in millions, except per share) | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $2,169 | $1,722 | +26.0% | | **Gross Profit** | $819 | $651 | +25.8% | | **Operating Income** | $253 | $119 | +112.6% | | **Net Income** | $194 | $92 | +110.9% | | **Diluted EPS** | $0.80 | $0.45 | +77.8% | Condensed Consolidated Balance Sheet Highlights (as of June 30, 2024) | Metric (in millions) | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | $15,765 | $16,112 | | **Total Liabilities** | $5,417 | $5,936 | | **Total Equity** | $10,348 | $10,176 | | **Goodwill** | $7,509 | $7,587 | | **Cash and cash equivalents** | $815 | $1,019 | Condensed Consolidated Statement of Cash Flows Highlights (Six Months Ended June 30) | Metric (in millions) | 2024 | 2023 | | :--- | :--- | :--- | | **Net Cash – Operating activities** | $377 | $9 | | **Net Cash – Investing activities** | $(128) | $(489) | | **Net Cash – Financing activities** | $(419) | $235 | [Note 3: Acquisitions and Divestitures](index=9&type=section&id=Note%203.%20Acquisitions%20and%20Divestitures) This note details the **$6.9 billion** acquisition of Evoqua Water Technologies Corp, finalizing purchase price allocation and recognizing significant goodwill and intangible assets - On May 24, 2023, Xylem acquired 100% of Evoqua Water Technologies Corp. The purchase price consisted of **$6,121 million** in Xylem common stock, **$160 million** in replacement equity awards, and **$619 million** to repay Evoqua's debt[212](index=212&type=chunk) Purchase Consideration for Evoqua Acquisition (in millions) | Component | Fair Value | | :--- | :--- | | Xylem Common Stock issued to Evoqua stockholders | $6,121 | | Estimated replacement equity awards | $160 | | Payment of certain Evoqua indebtedness | $619 | | **Total** | **$6,900** | Fair Value of Acquired Intangible Assets (in millions) | Asset Type | Fair Value | | :--- | :--- | | Customer and distributor relationships | $1,395 | | Proprietary technology and patents | $120 | | Backlog | $120 | | Permits | $70 | | Trademarks | $50 | | Software | $14 | | **Total** | **$1,769** | - The acquisition resulted in **$4.8 billion** of goodwill, which is not tax-deductible and is primarily attributed to expected synergies, economies of scale, and the assembled workforce of Evoqua[213](index=213&type=chunk) [Note 5: Restructuring and Asset Impairment Charges](index=16&type=section&id=Note%205.%20Restructuring%20and%20Asset%20Impairment%20Charges) This note details **$23 million** in Q2 2024 restructuring and asset impairment charges, primarily severance and asset impairments in the Water Solutions and Services segment Restructuring and Asset Impairment Charges (in millions) | Period | Severance & Other | Asset Impairment | Total | | :--- | :--- | :--- | :--- | | **Q2 2024** | $8 | $15 | $23 | | **H1 2024** | $17 | $16 | $33 | - In Q2 2024, the company recognized **$15 million** in impairment charges, primarily for customer relationships and trademarks, due to restructuring actions in the Water Solutions and Services segment[12](index=12&type=chunk) - Restructuring actions commenced in 2024 are expected to continue through the end of 2025 and consist mainly of severance and asset impairment charges[12](index=12&type=chunk) [Note 9: Goodwill and Other Intangible Assets](index=19&type=section&id=Note%209.%20Goodwill%20and%20Other%20Intangible%20Assets) This note outlines goodwill of **$7.51 billion** and net intangible assets of **$2.37 billion** as of June 30, 2024, with increased amortization expense due to the Evoqua acquisition Goodwill and Intangible Assets (in millions) | Asset | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Goodwill** | $7,509 | $7,587 | | **Other Intangible Assets, net** | $2,374 | $2,529 | - Amortization expense for finite-lived intangible assets increased to **$83 million** in Q2 2024 and **$156 million** in H1 2024, up from **$51 million** and **$83 million** in the respective prior-year periods[20](index=20&type=chunk) [Note 12: Credit Facilities and Debt](index=23&type=section&id=Note%2012.%20Credit%20Facilities%20and%20Debt) This note details total debt of **$2.0 billion** as of June 30, 2024, a decrease driven by term loan settlement, with a **$1 billion** undrawn revolving credit facility - On April 19, 2024, the company settled its **€250 million ($268 million)** Term Loan Facility with cash on hand[58](index=58&type=chunk) - The company has a **$1 billion** five-year revolving credit facility which was undrawn as of June 30, 2024[296](index=296&type=chunk) - The company's supplier financing programs had an outstanding balance of **$250 million** as of June 30, 2024, up from **$176 million** at December 31, 2023[55](index=55&type=chunk) [Note 15: Share-Based Compensation Plans](index=28&type=section&id=Note%2015.%20Share-Based%20Compensation%20Plans) This note reports share-based compensation expense of **$13 million** in Q2 2024 and **$31 million** in H1 2024, with **$77 million** in unrecognized expense remaining Share-Based Compensation Expense (in millions) | Period | Q2 2024 | H1 2024 | Q2 2023 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | **Expense** | $13 | $31 | $16 | $27 | Restricted Stock Unit Activity (H1 2024) | Activity | Share units (in thousands) | Weighted Avg. Grant Date Fair Value/Share | | :--- | :--- | :--- | | **Outstanding at Jan 1, 2024** | 862 | $98.49 | | **Granted** | 271 | $128.80 | | **Vested** | (398) | $77.54 | | **Forfeited** | (52) | $100.84 | | **Outstanding at June 30, 2024** | 683 | $110.32 | [Note 19: Segment Information](index=34&type=section&id=Note%2019.%20Segment%20Information) This note details the company's new segment structure effective January 1, 2024, providing recast financial breakdowns for revenue and operating income by segment - The company realigned its segments effective January 1, 2024, creating a new 'Water Solutions and Services' segment by combining the former Integrated Solutions and Services segment with the dewatering and assessment services businesses[208](index=208&type=chunk) Segment Revenue (Q2 2024 vs Q2 2023, in millions) | Segment | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Water Infrastructure | $631 | $519 | | Applied Water | $456 | $478 | | Measurement and Control Solutions | $482 | $384 | | Water Solutions and Services | $600 | $341 | | **Total** | **$2,169** | **$1,722** | Segment Operating Income (Q2 2024 vs Q2 2023, in millions) | Segment | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Water Infrastructure | $78 | $70 | | Applied Water | $71 | $84 | | Measurement and Control Solutions | $79 | $29 | | Water Solutions and Services | $47 | $26 | | Corporate and other | $(22) | $(90) | | **Total** | **$253** | **$119** | [Management's Discussion and Analysis (MD&A)](index=36&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2024 financial performance, highlighting 26.0% revenue growth, 20.8% adjusted EBITDA margin, strong segment results, and updated 2024 outlook [Executive Summary](index=38&type=section&id=Executive%20Summary) Q2 2024 saw revenue increase 26.0% to **$2.17 billion**, driven by organic growth and the Evoqua acquisition, with adjusted EBITDA margin expanding to **20.8%** Q2 2024 Financial Highlights | Metric | Q2 2024 | YoY Change | | :--- | :--- | :--- | | **Revenue** | $2,169 million | +26.0% | | **Organic Revenue Growth** | 9.2% | - | | **Orders** | $2,087 million | +12.4% | | **EPS** | $0.80 | +77.8% | | **Adjusted EPS** | $1.09 | +11.2% | | **Adjusted EBITDA Margin** | 20.8% | +170 bps | [Results of Operations](index=42&type=section&id=Results%20of%20Operations) This section analyzes Q2 2024 operational performance, noting 26.0% revenue growth, flat gross margin, and a significant increase in operating income driven by revenue leverage Revenue Change by Driver (Q2 2024 vs Q2 2023) | Driver | Contribution to Growth | | :--- | :--- | | Organic Growth | +9.2% | | Acquisitions/(Divestitures) | +17.5% | | Foreign currency translation | -0.7% | | **Total Change in Revenue** | **+26.0%** | - Q2 2024 gross margin remained flat at **37.8%**. Favorable impacts from operations, price realization, and volume were offset by inflation, unfavorable mix, and other costs[75](index=75&type=chunk) - SG&A expenses as a percentage of revenue decreased to **22.4%** in Q2 2024 from **25.9%** in Q2 2023, primarily due to revenue leverage and lower special charges related to the Evoqua integration[76](index=76&type=chunk)[91](index=91&type=chunk) Adjusted EBITDA Reconciliation (Q2 2024 vs Q2 2023, in millions) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | **Net Income** | $194 | $92 | | EBITDA | $398 | $211 | | **Adjusted EBITDA** | **$452** | **$329** | | **Adjusted EBITDA Margin** | **20.8%** | **19.1%** | [Segment Results](index=49&type=section&id=Segment%20Results) This section details Q2 2024 segment performance, highlighting strong growth in Measurement and Control Solutions and Water Solutions and Services, while Applied Water declined - **Water Infrastructure:** Q2 operating income grew **11.4%** to **$78 million**, but operating margin decreased **110 bps** to **12.4%** due to inflation and costs related to the Evoqua acquisition, which offset productivity savings[123](index=123&type=chunk) - **Applied Water:** Q2 operating income decreased **15.5%** to **$71 million**, with operating margin contracting **200 bps** to **15.6%**, driven by inflation, unfavorable mix, and higher employee costs[85](index=85&type=chunk) - **Measurement and Control Solutions:** Q2 operating income increased **172.4%** to **$79 million**. Operating margin expanded significantly by **880 bps** to **16.4%**, driven by higher volume, price realization, and productivity[102](index=102&type=chunk) - **Water Solutions and Services:** Q2 operating income grew **80.8%** to **$47 million**. Operating margin expanded **20 bps** to **7.8%**, as strong volume growth and productivity offset unfavorable mix and inflation[103](index=103&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity of approximately **$1.8 billion** as of June 30, 2024, with operating cash flow significantly improving to **$377 million** in H1 2024 Cash Flow Summary (Six Months Ended June 30, in millions) | Activity | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | **Operating Activities** | $377 | $9 | +$368 | | **Investing Activities** | $(128) | $(489) | +$361 | | **Financing Activities** | $(419) | $235 | -$654 | - The increase in operating cash flow was primarily driven by higher cash earnings and the absence of 2023 payments for Evoqua's pre-closing transaction costs[133](index=133&type=chunk) - As of June 30, 2024, the company has available liquidity of approximately **$1.8 billion**, comprising **$815 million** of cash and **$1 billion** of available credit facilities[137](index=137&type=chunk) [2024 Outlook](index=58&type=section&id=2024%20Outlook) The company updated its full-year 2024 outlook, forecasting **16%** total revenue growth and **5% to 6%** organic revenue growth - The company updated its 2024 outlook, now forecasting total revenue growth of **16%** and organic revenue growth of **5% to 6%**[139](index=139&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in market risk disclosures compared to the 2023 Annual Report - There has been no material change in the information concerning market risk as stated in the 2023 Annual Report[139](index=139&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204%20-%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024[140](index=140&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[140](index=140&type=chunk) PART II [Legal Proceedings](index=60&type=section&id=Item%201%20-%20Legal%20Proceedings) This section details Evoqua's non-prosecution agreement with the U.S. Attorney's Office, resolving a pre-acquisition investigation with an **$8.5 million** penalty - On May 13, 2024, Evoqua entered into a non-prosecution agreement with the U.S. Attorney's Office to resolve an investigation into pre-acquisition financial statements[142](index=142&type=chunk) - Evoqua paid a criminal monetary penalty of **$8.5 million**. The agreement does not include a compliance monitorship but requires ongoing compliance obligations for two years[142](index=142&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A%20-%20Risk%20Factors) There have been no material changes to the company's risk factors as previously disclosed in its 2023 Annual Report on Form 10-K - There have been no material changes from the risk factors previously disclosed in the 2023 Annual Report[142](index=142&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock in Q2 2024, with **$182 million** remaining available under its share repurchase program Share Repurchases (Q2 2024) | Period | Total Shares Purchased (Public Plan) | Approx. Dollar Value Remaining Under Plan | | :--- | :--- | :--- | | April 2024 | 0 | $182 million | | May 2024 | 0 | $182 million | | June 2024 | 0 | $182 million | - The Board of Directors authorized a **$500 million** share repurchase program on August 24, 2015, with no expiration date. As of June 30, 2024, **$182 million** remains available under this plan[143](index=143&type=chunk)

Xylem Inc. (NYSE:XYL) Q2 2024 Earnings Conference Call July 30, 2024 9:00 AM ET Company Participants Andrea van der Berg - Vice President, Investor Relations Matthew Pine - Chief Executive Officer Bill Grogan - Chief Financial Officer Conference Call Participants Deane Dray - RBC Capital Markets Mike Halloran - Robert W. Baird Scott Davis - Melius Research Nathan Jones - Stifel Nicolaus Joseph Giordano - TD Cowen Andrew Kaplowitz - Citigroup Bryan Blair - Oppenheimer Operator Good day, everyone, and welcome ...

Xylem (XYL) came out with quarterly earnings of $1.09 per share, beating the Zacks Consensus Estimate of $1.06 per share. This compares to earnings of $0.98 per share a year ago. These figures are adjusted for nonrecurring items. Over the last four quarters, the company has surpassed consensus EPS estimates four times. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earning ...

Xylem Reports Second Quarter 2024 Results and Raises Full-Year Guidance • Revenue of $2.2 billion, up 26% on a reported basis and 9% organically • Earnings per share of $0.80, up 78%; $1.09 on an adjusted basis, up 11% • Raising full-year revenue guidance to $8.55 billion, up approximately 16%, with organic revenue growth of 5% to 6%, up from 4% to 6% • Increasing full-year adjusted EPS guidance to $4.18 to $4.28, from $4.10 to $4.25 WASHINGTON, D.C., (July 30, 2024) – Xylem Inc. (NYSE: XYL), a leading glob ...

The consensus EPS estimate for the quarter has undergone a downward revision of 0.9% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe. In light of this perspective, let's dive into the average estimates of certain Xylem metrics that are commonly tracked and forecasted by Wall Street analysts. Analysts forecast 'Revenue- Measurement & Control Solutions' to reach $470.39 million. The esti ...

Let's see how things have shaped up for Xylem this earnings season. Growth in the transport application business, driven by backlog execution and the timing of projects in Western Europe, is expected to have boosted the Water Infrastructure segment's performance. The Water Solutions and Services segment is anticipated to have performed strongly, driven by strength in the dewatering application business. Earnings Whispers The company has a stellar earnings surprise history, having outperformed the Zacks Cons ...

Company Overview - Xylem (XYL) is expected to report quarterly earnings of $1.06 per share, reflecting a year-over-year increase of +8.2% [4] - Revenues are anticipated to reach $2.16 billion, representing a 25.2% increase from the same quarter last year [5] Earnings Expectations - The market consensus indicates a year-over-year increase in earnings driven by higher revenues for Xylem's upcoming report [2] - The consensus EPS estimate has been revised down by 0.88% over the last 30 days, indicating a reassessment by analysts [5] Earnings Surprise Prediction - Xylem's Earnings ESP (Expected Surprise Prediction) is currently at -1.62%, suggesting a bearish outlook from analysts [16] - A positive Earnings ESP is generally a strong predictor of an earnings beat, particularly when combined with a favorable Zacks Rank [8] Historical Performance - Over the last four quarters, Xylem has consistently beaten consensus EPS estimates [10] - In the last reported quarter, Xylem was expected to post earnings of $0.84 per share but exceeded expectations with earnings of $0.90, resulting in a surprise of +7.14% [18] Industry Context - Flowserve (FLS), another player in the same industry, is expected to report earnings of $0.63 per share, indicating a year-over-year change of +21.2% [25] - Flowserve's revenues for the quarter are projected to be $1.12 billion, up 3.9% from the previous year [25]

CAMBRIDGE, Mass., July 9, 2024 /PRNewswire/ -- Sense, the leader in embedded intelligence that transforms the relationship between people, homes, and the grid, and the Sensus team of Xylem (NYSE: XYL), which provides remotely-managed products and solutions for investor-owned utilities, cooperatives, and municipalities, are collaborating on what is expected to be the first electric meter capable of capturing and processing 1 MHz data in North America. The increase in fidelity from the high-resolution data (1 ...

[PART I – Financial Information](index=4&type=section&id=PART%20I%20%E2%80%93%20Financial%20Information) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company reported strong Q1 2024 financial results, with revenue up 40.4% to $2.03 billion and net income increasing to $153 million, significantly impacted by the Evoqua acquisition Condensed Consolidated Income Statement Highlights (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $2,033 | $1,448 | +40.4% | | **Gross Profit** | $752 | $546 | +37.7% | | **Operating Income** | $209 | $131 | +59.5% | | **Net Income** | $153 | $99 | +54.5% | | **Diluted EPS** | $0.63 | $0.54 | +16.7% | Condensed Consolidated Balance Sheet Highlights (As of March 31, 2024) | Metric | March 31, 2024 (in millions) | December 31, 2023 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $947 | $1,019 | | Goodwill | $7,509 | $7,587 | | Total Assets | $15,924 | $16,112 | | Total Liabilities | $5,721 | $5,936 | | Total Equity | $10,203 | $10,176 | Condensed Consolidated Statement of Cash Flows Highlights (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Net Cash – Operating activities | $89 | $(19) | | Net Cash – Investing activities | $(51) | $(37) | | Net Cash – Financing activities | $(82) | $(63) | | Net change in cash | $(72) | $(107) | [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Notes detail accounting policies, the Evoqua acquisition's impact, segment realignment, and debt structure, including $9 million in restructuring charges - Effective January 1, 2024, the company changed its reportable segments to Water Infrastructure, Applied Water, Measurement and Control Solutions, and Water Solutions and Services, with prior periods recast for comparability[23](index=23&type=chunk) - The **Evoqua acquisition** on May 24, 2023, for **$6.9 billion**, resulted in **$4.8 billion in goodwill** and contributed **$480 million in Q1 2024 revenue** and **$6 million in income before taxes**[29](index=29&type=chunk)[30](index=30&type=chunk)[34](index=34&type=chunk) Revenue from Contracts with Customers by Segment (Q1 2024 vs Q1 2023) | Segment | Q1 2024 (in millions) | Q1 2023 (in millions) | | :--- | :--- | :--- | | Water Infrastructure | $574 | $410 | | Applied Water | $436 | $453 | | Measurement and Control Solutions | $462 | $378 | | Water Solutions and Services | $561 | $207 | | **Total** | **$2,033** | **$1,448** | - In Q1 2024, the company incurred **$9 million in restructuring costs**, primarily for headcount reduction related to Evoqua integration[44](index=44&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported strong Q1 2024 results with 40.4% revenue growth to $2.03 billion, 43.1% order growth, and an updated full-year 2024 outlook Q1 2024 Financial Highlights | Metric | Q1 2024 | Change vs. Q1 2023 | | :--- | :--- | :--- | | Revenue | $2,033 million | +40.4% | | Organic Revenue Growth | 7.1% | - | | Orders | $2,246 million | +43.1% | | Organic Orders Growth | 3.4% | - | | Diluted EPS | $0.63 | +16.7% | | Adjusted Diluted EPS | $0.90 | +13.9% | | Adjusted EBITDA Margin | 19.2% | +290 bps | - The company updated its full-year 2024 outlook, projecting total revenue growth between **15% and 16%** and organic revenue growth between **4% and 6%**[183](index=183&type=chunk) - Total backlog increased to **$5.3 billion** at the end of Q1 2024, a **40.8% increase** year-over-year, with **$1.4 billion from acquired backlog**, and **45% expected to be recognized in 2024**[147](index=147&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Q1 2024 total revenue increased 40.4% to $2.03 billion, driven by acquisitions and organic growth, while gross margin slightly decreased and operating margin expanded Q1 2024 Revenue Growth Breakdown by Segment | Segment | Total Change | Organic Growth | Acquisitions | FX Impact | | :--- | :--- | :--- | :--- | :--- | | Water Infrastructure | +40.0% | +6.3% | +33.4% | +0.2% | | Applied Water | -3.8% | -4.0% | 0.0% | +0.2% | | Measurement & Control Solutions | +22.2% | +22.0% | 0.0% | +0.3% | | Water Solutions & Services | +171.0% | +5.8% | +165.7% | -0.5% | | **Total Xylem** | **+40.4%** | **+7.1%** | **+33.1%** | **+0.1%** | - Gross margin decreased by **70 basis points to 37.0%**, primarily due to **special charges and inflation**, partially offset by **productivity savings and price realization**[148](index=148&type=chunk) - Operating margin increased by **130 basis points to 10.3%**, driven by **productivity savings, price realization, and increased volumes**, partially offset by **inflation and strategic investment costs**[154](index=154&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $1.9 billion available, driven by improved operating cash flow and increased cash usage in financing activities - The company has available liquidity of approximately **$1.9 billion**, comprising **$947 million in cash** and **$1 billion in available credit facilities**[179](index=179&type=chunk) - Net cash provided by operating activities improved to **$89 million** in Q1 2024 from a **$19 million use** in Q1 2023, primarily due to **higher cash earnings**[172](index=172&type=chunk)[173](index=173&type=chunk) - Cash used in financing activities increased to **$82 million** from **$63 million** year-over-year, due to **higher dividend payments and increased share repurchases**[175](index=175&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk disclosures were reported since the 2023 Annual Report on Form 10-K - There has been **no material change** in market risk disclosures since the **2023 Annual Report**[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the reporting period[185](index=185&type=chunk) - **No material changes** in internal control over financial reporting were identified during the fiscal quarter[186](index=186&type=chunk) [PART II – Other Information](index=52&type=section&id=PART%20II%20%E2%80%93%20Other%20Information) [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is cooperating with an investigation into Evoqua's past financial filings, not expecting a material adverse effect - The company is cooperating with a U.S. Attorney's Office investigation regarding **potential financial misstatements in Evoqua's historical public filings**[189](index=189&type=chunk) - Management currently believes the Evoqua investigation will **not have a material adverse effect** on the company's financial condition or operations[189](index=189&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported compared to those disclosed in the 2023 Annual Report on Form 10-K - **No material changes** to risk factors were reported compared to those disclosed in the **2023 Annual Report**[191](index=191&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares in Q1 2024, with approximately $182 million remaining under the existing share repurchase authorization - **No shares were repurchased** under the company's publicly announced plan during the first quarter of 2024[192](index=192&type=chunk)[194](index=194&type=chunk) - As of March 31, 2024, **$182 million remains available** for share repurchases under the existing authorization from August 2015[194](index=194&type=chunk)

Financial Data and Key Metrics Changes - Xylem reported a strong first quarter with total revenues growing by 40% and organic revenues rising by 7%, exceeding guidance [15][23] - Adjusted EBITDA margin increased to 19.2%, up 290 basis points from the prior year, driven by productivity savings and strong volume [15][16] - Earnings per share (EPS) for the quarter was $0.90, reflecting a 14% increase year-over-year [16] Business Line Data and Key Metrics Changes - Measurement & Control Solutions (M&CS) saw organic revenue growth of over 20% with EBITDA margins up 550 basis points year-over-year [9][18] - Water Solutions and Services (WSS) achieved the highest orders growth among all segments, with organic revenue up 6% and pro forma revenue increasing by 9% [21][22] - Water Infrastructure reported a total revenue growth of 40% and organic growth of 6%, driven by robust demand [19] Market Data and Key Metrics Changes - The backlog increased by 4% to $5.3 billion, with organic orders growing by 3% in the quarter [14][15] - Strong demand was noted across developed markets, particularly in the U.S., which experienced double-digit growth [15] Company Strategy and Development Direction - The company is focused on maximizing value from incremental volume and simplifying operations to enhance efficiency [11][12] - Xylem's strategic outlook is supported by secular trends in water security, with increasing demand for solutions that enhance water security [13] - An Investor Day is scheduled for May 30, where updates on strategic outlook and sustainability goals will be shared [14][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational momentum and resilient demand across most segments, despite monitoring macroeconomic factors like inflation and geopolitical uncertainty [27] - The company is raising its full-year guidance for revenue to approximately $8.5 billion, reflecting an additional point of growth [23][24] Other Important Information - The company is tracking well on cost synergies from the Evoqua acquisition, with expectations of around $100 million in exit rate cost synergies for 2024 [25] - Free cash flow conversion for the year is expected to be 115% of net income [25] Q&A Session Summary Question: Insights on Evoqua integration and revenue synergies - Management highlighted strong momentum in the Evoqua integration, with cost synergies tracking well and revenue synergies ramping up [35][36] Question: Focus on portfolio optimization and M&A opportunities - Management emphasized a focus on executing the platform built over the past decade, with a commitment to driving above-market growth [40][41] Question: Dynamics in orders and market trends - Management noted healthy demand across most end markets, with government funding supporting growth [51][52] Question: Update on IIJA related growth opportunities - Management indicated that government funding will trickle in over the next three to five years, supporting market growth [76] Question: Impact of new EPA rules regarding PFAS - Management stated that compliance timelines for utilities will take time, but Xylem is well-positioned to partner with utilities on PFAS solutions [70] Question: Margin performance in M&CS - Management reported significant margin expansion in M&CS due to productivity and pricing strategies [72][73]