Xylem(XYL) - 2023 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2023, net income was $152 million, a significant increase from$12 million in the same period of 2022, representing a 1,167% growth[10]. - For the nine months ended September 30, 2023, net income reached $343 million, compared to$206 million in 2022, marking a 66% increase[10]. - The company reported comprehensive income of $78 million for the three months ended September 30, 2023, compared to$61 million in the same period of 2022, an increase of 28%[10]. - Revenue for the three months ended September 30, 2023, was $2,076 million, a 50$1,380 million in the same period of 2022[38]. - Total revenue for the three months ended September 30, 2023, was $1,950 million, a 47.7$1,319 million in the same period of 2022[40]. - Operating income for Q3 2023 was $191 million, up 13.7$168 million in Q3 2022[130]. - The net income for the three months ended September 30, 2023, was $180 million, significantly higher than the$28 million reported for the same period in 2022[34]. - The total operating income for the nine months ended September 30, 2023, was $441 million, compared to$425 million for the same period in 2022[130]. Assets and Liabilities - Total assets as of September 30, 2023, were $15,905 million, up from$7,952 million at the end of 2022, indicating a 99% growth[12]. - Long-term debt increased to $2,253 million as of September 30, 2023, from$1,880 million at the end of 2022, a growth of 20%[12]. - As of September 30, 2023, total debt outstanding is $2,270 million, an increase from$1,880 million as of December 31, 2022, representing a 20.7% increase[77]. - Total accrued and other current liabilities increased to $1,160 million as of September 30, 2023, compared to$867 million as of December 31, 2022, reflecting a 33.7% increase[75]. - The fair value of Senior Notes due 2026 was $466 million as of September 30, 2023, down from$470 million as of December 31, 2022[82]. - The fair value of Senior Notes due 2046 was $303 million as of September 30, 2023, down from$333 million at the end of 2022[82]. Cash Flow and Expenditures - Operating cash flow for the nine months ended September 30, 2023, was $382 million, compared to$234 million in 2022, reflecting a 63% increase[13]. - Capital expenditures for the nine months ended September 30, 2023, were $177 million, up from$148 million in 2022, a rise of 20%[13]. - Cash and cash equivalents decreased to $705 million as of September 30, 2023, from$944 million at the end of 2022, a decline of 25%[12]. - The company reported a net cash provided by operating activities of $382 million for the nine months ended September 30, 2023, compared to$234 million in 2022[13]. Acquisitions and Business Segments - The acquisition of Evoqua Water Technologies Corp. was completed on May 24, 2023, enhancing the company's service revenue definition to include outsourced water services and SaaS subscriptions[17][22]. - The acquisition of Evoqua Water Technologies Corp. was completed on May 24, 2023, for a total consideration of $6,900 million, including$6,121 million in Xylem common stock[24][26]. - Evoqua generated revenue of $540 million and a loss before taxes of$14 million for the three months ended September 30, 2023[29]. - The Water Infrastructure segment includes Applied Product Technologies from the Evoqua acquisition, focusing on water treatment and transportation solutions[128]. - The Applied Water segment serves residential, commercial, and industrial markets with major products including pumps and valves[128]. - The Measurement & Control Solutions segment develops advanced technology solutions for water and energy conservation[128]. - The Integrated Solutions and Services segment offers tailored services and solutions, including outsourced water and emergency response services[128]. Stock and Shareholder Information - Basic earnings per share for the three months ended September 30, 2023, was $0.63, up from$0.07 in the same period of 2022, while diluted earnings per share also increased to $0.63 from$0.07[55]. - The company declared dividends of $0.33 per share, totaling$80 million for the nine months ended September 30, 2023[102]. - The total stockholders' equity increased to $9.941 billion as of September 30, 2023, from$3.226 billion at the beginning of 2022[102][103]. - The company repurchased approximately 0.1 million shares for $10 million during the nine months ended September 30, 2023[114]. - The company has up to$182 million remaining for share repurchases under its existing program as of September 30, 2023[114]. Restructuring and Impairment - The company recognized $20 million in restructuring costs for Q3 2023, significantly higher than$3 million in Q3 2022, primarily due to the acquisition of Evoqua[44]. - Total expected restructuring costs for actions commenced in 2023 are projected to be $62 million, with$20 million already incurred by Q3 2023[48]. - The company recognized an impairment charge of $2 million for in-process software during Q1 2023, indicating a strategic shift in investment priorities[60]. - The company recognized a$1 million impairment charge for fixed assets in the Measurement & Control Solutions segment during Q3 2023[49]. Tax and Compliance - The effective tax rate for Q3 2023 was 17.8%, down from 27.8% in Q3 2022, with a tax provision of $33 million[53]. - The company has no unrecognized tax benefits related to uncertain tax positions as of September 30, 2023[54]. - The company is in compliance with all covenants for the Green Bond as of September 30, 2023[80]. Legal and Environmental Matters - The company is involved in various legal proceedings related to environmental, tax, and product liability matters, but does not expect a material adverse effect on operations[121]. - The company has received notifications from environmental agencies regarding sites requiring investigation and remediation, with liabilities considered de minimis in many cases[123]. - The company has estimated and accrued$4 million for environmental matters as of September 30, 2023, consistent with the amount accrued as of December 31, 2022[124].