- Second quarter 2016 earnings per share (EPS) were $0.39, down five
percent from a year ago; adjusted EPS were $0.48, a 12-percent
increase over the prior year period
- Second quarter 2016 revenue grew one percent to $932 million;
growth was three percent in constant currency in the quarter
- Reported operating margin grew 40 basis points to 11.7 percent and
adjusted operating margin increased 100 basis points to 13 percent,
both reflecting strong execution on productivity initiatives
Company Website:
http://www.xyleminc.com
RYE BROOK, N.Y. -- (Business Wire)
Xylem Inc. (NYSE:XYL), a leading global water technology company
dedicated to solving the world’s most challenging water issues, today
reported second quarter 2016 net income of $71 million, or $0.39 per
share, a decrease of five percent year-over-year reflecting debt
refinancing costs and higher restructuring and realignment charges.
Excluding those and other special charges, adjusted net income in the
quarter was $87 million or $0.48 per share, a 12-percent increase over
the prior year period. Second quarter revenue was $932 million, an
increase of one percent, or three percent in constant currency, which
includes one point of growth attributable to acquisitions. Revenue
growth reflects primarily a robust public utility end market globally,
with particular strength in the U.S. Reported operating margin in the
quarter expanded 40 basis points to 11.7 percent. On an adjusted basis,
operating margin grew 100 basis points to 13 percent as strong execution
on productivity initiatives more than offset inflation and funded
targeted investments in strategic growth initiatives.
“With our second quarter results, we are continuing to build a
compelling track record of growth that reflects a strong focus on
elevating our execution and driving productivity to expand margins,”
said Patrick Decker, Xylem President and Chief Executive Officer. “We
continued to capitalize on robust growth in the global public utility
sector, which helped to offset softness in the industrial end market.
Our teams also delivered strong performance in executing against our
productivity initiatives. These results enabled us to continue to invest
in key growth initiatives, which will drive our long-term performance.”
Full-year 2016 Outlook
Xylem reaffirmed its forecast of full-year 2016 revenue of approximately
$3.7 billion, including approximately one-percent growth from completed
acquisitions and the unfavorable impacts of foreign exchange. On an
organic basis, Xylem’s revenue growth now is anticipated to be in the
range of two to three percent.
Xylem is narrowing the range of its full-year earnings outlook, while
maintaining the same adjusted EPS mid-point. Xylem now expects to
generate full-year 2016 adjusted operating income of $495 million to
$510 million, or adjusted EPS of $2.00 to $2.06. The Company’s adjusted
earnings outlook continues to exclude projected restructuring and
realignment costs of approximately $25 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 integration and acquisition-related
costs, special charges and discrete tax impacts.
Second Quarter Segment Results
Water Infrastructure
Xylem’s Water Infrastructure segment consists of its businesses serving
clean water delivery, wastewater transport and treatment, dewatering and
analytical instrumentation.
-
Second quarter 2016 Water Infrastructure revenue was $566 million, up
three percent over the prior year period on a reported basis and up
five percent in constant currency, which includes two points of growth
attributable to acquisitions. This growth reflects continued strength
in the public utility end market, which was up 15 percent on a global
basis in the quarter and 22 percent in the U.S. In addition, major
projects in the Emerging Markets, particularly in India, contributed
to the gains. This progress was partially offset by weakness in the
industrial end market, notably the ongoing declines in oil and gas in
North America and the global mining sector.
-
Reported segment operating income was $70 million in the second
quarter, up from $65 million in the prior year. Excluding
restructuring, realignment and special charges, adjusted segment
operating income was $79 million, a 15-percent increase over the $69
million generated in the comparable period a year ago. Operating
margin for the quarter increased 60 basis points to 12.4 percent,
driven primarily by the impact of cost savings and volume leverage,
which enabled the Company to continue to invest in strategic growth
initiatives. In addition, these drivers more than offset cost
inflation, increased restructuring and realignment charges, and
acquisition costs. Similarly, strong productivity and volume growth
drove a 150-basis-point expansion in the segment adjusted operating
margin to 14 percent.
Applied Water
Xylem’s Applied Water segment consists of its portfolio of businesses in
residential and commercial building services, and industrial and
agricultural applications.
-
Second quarter 2016 revenue was $366 million, down from $369 million
in the prior year period and flat in constant currency. Segment sales
in Western Europe grew 14 percent as new product sales and channel
investments helped drive share gains in the industrial and commercial
end markets. This growth was offset by declines in the U.S. and China.
-
Segment operating income was $51 million in the second quarter, flat
versus second quarter 2015. Adjusted segment operating income, which
excludes restructuring and realignment charges, grew year over year by
$1 million to $54 million, reflecting strong productivity and cost
control. Segment operating margin increased 10 basis points to 13.9
percent. A strong focus on reducing costs drove this margin expansion,
which was partially offset by inflation, ongoing investment in growth
initiatives and lower volume. On an adjusted basis, segment operating
margin grew 40 basis points to 14.8 percent.
Supplemental information on Xylem’s second quarter earnings and
reconciliations for non-GAAP items are posted at http://investors.xyleminc.com.
About Xylem
Xylem (XYL) is a leading global water technology provider, enabling
customers to transport, treat, test and efficiently use water in public
utility, residential and commercial building services, industrial and
agricultural settings. The Company does business in more than 150
countries through a number of market-leading product brands, and its
people bring broad applications expertise with a strong focus on finding
local solutions to the world’s most challenging water and wastewater
problems. Xylem is headquartered in Rye Brook, New York, with 2015
revenue of $3.7 billion and more than 12,500 employees worldwide. Xylem
was named to the Dow Jones Sustainability Index, North America for the
last four years for advancing sustainable business practices and
solutions worldwide, and the Company has satisfied the requirements to
be a constituent of the FTSE4Good Index Series each year since 2013.
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, 2015, 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
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)
(in millions, except per share data)
| |
|
|
| |
|
| | |
| | | Three Months | | | Six Months | |
For the period ended June 30, |
|
| 2016 |
|
2015
| | | 2016 |
|
2015
| |
Revenue
| | | $ | 932 | |
$
|
920
| | | $ | 1,779 | |
$
|
1,757
| |
Cost of revenue
| | | 563 | |
572
| | | 1,081 | |
1,094
| |
Gross profit
| | | 369 | |
348
| | | 698 | |
663
| |
Selling, general and administrative expenses
| | | 227 | |
218
| | | 446 | |
424
| |
Research and development expenses
| | | 27 | |
25
| | | 52 | |
48
| |
Restructuring charges
| | | 6 | |
1
| | | 12 | |
4
| |
Operating income
| | | 109 | |
104
| | | 188 | |
187
| |
Interest expense
| | | 20 | |
14
| | | 34 | |
28
| |
Other non-operating income, net
| | | 1 | |
1
| | | 1 | |
—
| |
Gain from sale of businesses
| | | — | |
—
| | | — | |
9
| |
Income before taxes
| | | 90 | |
91
| | | 155 | |
168
| |
Income tax expense
| | | 19 | |
17
| | | 18 | |
30
| |
Net income
| | | $ | 71 | |
$
|
74
| | | $ | 137 | |
$
|
138
| |
Earnings per share:
| | | | | | | | | | | |
Basic
| | | $ | 0.39 | |
$
|
0.41
| | | $ | 0.77 | |
$
|
0.76
| |
Diluted
| | | $ | 0.39 | |
$
|
0.41
| | | $ | 0.76 | |
$
|
0.76
| |
Weighted average number of shares:
| | | | | | | | | | | |
Basic
| | | 179.1 | |
181.5
| | | 178.8 | |
181.8
| |
Diluted
| | | 179.9 | |
182.3
| | | 179.6 | |
182.7
| |
Dividends declared per share
| | | $ | 0.1549 | |
$
|
0.1408
| | | $ | 0.3098 | |
$
|
0.2816
| |
|
|
XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except per share amounts)
|
|
|
| |
| |
|
|
| June 30,
2016 | |
December 31, 2015
|
| | | | |
|
ASSETS | | | | | |
Current assets:
| | | | | |
Cash and cash equivalents
| | | $ | 586 | | |
$
|
680
| |
Receivables, less allowances for discounts and doubtful accounts of
$26 and $33 in 2016 and 2015, respectively
| | | 784 | | |
749
| |
Inventories
| | | 483 | | |
433
| |
Prepaid and other current assets
| | | 154 |
| |
143
|
|
Total current assets
| | | 2,007 | | |
2,005
| |
Property, plant and equipment, net
| | | 438 | | |
439
| |
Goodwill
| | | 1,616 | | |
1,584
| |
Other intangible assets, net
| | | 453 | | |
435
| |
Other non-current assets
| | | 180 |
| |
194
|
|
Total assets | | | $ | 4,694 |
| |
$
|
4,657
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities:
| | | | | |
Accounts payable
| | | $ | 339 | | |
$
|
338
| |
Accrued and other current liabilities
| | | 390 | | |
407
| |
Short-term borrowings and current maturities of long-term debt
| | | 91 |
| |
78
|
|
Total current liabilities
| | | 820 | | |
823
| |
Long-term debt
| | | 1,143 | | |
1,196
| |
Accrued postretirement benefits
| | | 336 | | |
335
| |
Deferred income tax liabilities
| | | 117 | | |
118
| |
Other non-current accrued liabilities
| | | 104 |
| |
101
|
|
Total liabilities | | | 2,520 |
| |
2,573
|
|
| | | | |
|
Stockholders’ equity:
| | | | | |
Common Stock – par value $0.01 per share:
| | | | | |
Authorized 750.0 shares, issued 191.1 shares and 190.2 shares in
2016 and 2015, respectively
| | | 2 | | |
2
| |
Capital in excess of par value
| | | 1,860 | | |
1,834
| |
Retained earnings
| | | 966 | | |
885
| |
Treasury stock – at cost 11.9 shares and 11.8 shares in 2016 and
2015, respectively
| | | (402 | ) | |
(399
|
)
|
Accumulated other comprehensive loss
| | | (252 | ) | |
(238
|
)
|
Total stockholders’ equity | | | 2,174 |
| |
2,084
|
|
Total liabilities and stockholders’ equity | | | $ | 4,694 |
| |
$
|
4,657
|
|
|
|
XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
|
|
|
| |
| |
For the six months ended June 30, |
|
| 2016 | |
2015
|
Operating Activities | | | | | |
Net income
| | | $ | 137 | | |
$
|
138
| |
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | | |
Depreciation
| | | 41 | | |
47
| |
Amortization
| | | 24 | | |
22
| |
Share-based compensation
| | | 10 | | |
8
| |
Restructuring charges
| | | 12 | | |
4
| |
Gain from sale of businesses
| | | — | | |
(9
|
)
|
Other, net
| | | 8 | | |
3
| |
Payments for restructuring
| | | (6 | ) | |
(9
|
)
|
Changes in assets and liabilities (net of acquisitions):
| | | | | |
Changes in receivables
| | | (19 | ) | |
(28
|
)
|
Changes in inventories
| | | (39 | ) | |
(27
|
)
|
Changes in accounts payable
| | | 9 | | |
3
| |
Other, net
| | | (52 | ) | |
(29
|
)
|
Net Cash – Operating activities | | | 125 |
| |
123
|
|
Investing Activities | | | | | |
Capital expenditures
| | | (62 | ) | |
(57
|
)
|
Acquisition of business, net of cash acquired
| | | (70 | ) | |
—
| |
Proceeds from sale of businesses
| | | — | | |
1
| |
Other, net
| | | 5 |
| |
3
|
|
Net Cash – Investing activities | | | (127 | ) | |
(53
|
)
|
Financing Activities | | | | | |
Short-term debt issued
| | | 89 | | |
—
| |
Short-term debt repaid
| | | (77 | ) | |
(2
|
)
|
Long-term debt issued
| | | 540 | | |
—
| |
Long-term debt repaid
| | | (608 | ) | |
—
| |
Repurchase of common stock
| | | (3 | ) | |
(53
|
)
|
Proceeds from exercise of employee stock options
| | | 16 | | |
9
| |
Dividends paid
| | | (56 | ) | |
(51
|
)
|
Other, net
| | | 1 |
| |
1
|
|
Net Cash – Financing activities | | | (98 | ) | |
(96
|
)
|
Effect of exchange rate changes on cash | | | 6 |
| |
(37
|
)
|
Net change in cash and cash equivalents
| | | (94 | ) | |
(63
|
)
|
Cash and cash equivalents at beginning of year
| | | 680 |
| |
663
|
|
Cash and cash equivalents at end of period | | | $ | 586 |
| |
$
|
600
|
|
Supplemental disclosure of cash flow information: | | | | | |
Cash paid during the period for:
| | | | | |
Interest
| | | $ | 34 | | |
$
|
26
| |
Income taxes (net of refunds received)
| | | $ | 49 | | |
$
|
42
| |
|
|
Xylem Inc. Non-GAAP Measures
|
|
Management reviews key performance indicators including revenue,
gross margins, segment operating income and margins, orders
growth, free cash flow, 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 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.
However, other than with respect to total revenue, we only provide
guidance on a non-GAAP basis and do not provide reconciliations of
such forward-looking measures to GAAP due to the inherent
difficulty in forecasting certain amounts that would be included
in GAAP earnings, such as, integration and acquisition-related
costs, special charges and tax related special items. 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 assumes no change in exchange rates from the prior
period.
|
|
“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, amortization expense, and share-based compensation. “Adjusted
EBITDA” reflects the adjustment to EBITDA to exclude
restructuring and realignment costs, gain on sale of business and
special charges.
|
|
"Adjusted Operating Income", "Adjusted Segment Operating Income",
and “Adjusted EPS” defined as operating income, segment
operating income and earnings per share, adjusted to exclude
restructuring and realignment costs, gain on sale of businesses,
special charges and tax-related special items, as applicable.
|
|
“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
flows 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.
|
|
“Special charges" defined as costs incurred by the Company,
such as interest expense related to the early extinguishment of debt
during Q2 2016, initial acquisition related costs, costs incurred
for the contractual indemnification of tax obligations to ITT and
other special non-operating items.
|
|
“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.
|
|
|
|
|
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
| |
| | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | |
Change
| |
% Change
| | |
Acquisitions /
| | | |
Change
| |
% Change
| | | | |
| | |
Orders
| |
Orders
| |
2016 v. 2015
| |
2016 v. 2015
| | |
Divestitures
| |
FX Contribution
| |
Adj. 2016 v. 2015
| |
Adj. 2016 v. 2015
| | | | |
| | |
2016
| |
2015
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
Six Months Ended June 30 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
Xylem Inc. | | |
1,811
| |
1,859
| |
(48
|
)
| |
-3
|
%
| | |
(14
|
)
| |
44
| |
(18
|
)
| |
-1
|
%
| | |
0
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
| | |
1,096
| |
1,147
| |
(51
|
)
| |
-4
|
%
| | |
(14
|
)
| |
35
| |
(30
|
)
| |
-3
|
%
| | |
-1
|
%
| |
Applied Water
| | |
715
| |
712
| |
3
| | |
0
|
%
| | |
-
| | |
9
| |
12
| | |
2
|
%
| | |
2
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Quarter Ended June 30 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
Xylem Inc. | | |
923
| |
944
| |
(21
|
)
| |
-2
|
%
| | |
(9
|
)
| |
13
| |
(17
|
)
| |
-2
|
%
| | |
-1
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
| | |
562
| |
585
| |
(23
|
)
| |
-4
|
%
| | |
(9
|
)
| |
11
| |
(21
|
)
| |
-4
|
%
| | |
-2
|
%
| |
Applied Water
| | |
361
| |
359
| |
2
| | |
1
|
%
| | |
-
| | |
2
| |
4
| | |
1
|
%
| | |
1
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Quarter Ended March 31 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
Xylem Inc. | | |
888
| |
915
| |
(27
|
)
| |
-3
|
%
| | |
(5
|
)
| |
31
| |
(1
|
)
| |
0
|
%
| | |
0
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
| | |
534
| |
562
| |
(28
|
)
| |
-5
|
%
| | |
(5
|
)
| |
24
| |
(9
|
)
| |
-2
|
%
| | |
-1
|
%
| |
Applied Water
| | |
354
| |
353
| |
1
| | |
0
|
%
| | |
-
| | |
7
| |
8
| | |
2
|
%
| | |
2
|
%
| |
|
|
|
|
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
| |
| | | | | | | | | | | | | | | | | | | | | |
|
| | | | | | |
Change
| |
% Change
| | |
Acquisitions /
| | | |
Change
| |
% Change
| | | | |
| | |
Revenue
| |
Revenue
| |
2016 v. 2015
| |
2016 v. 2015
| | |
Divestitures
| |
FX Contribution
| |
Adj. 2016 v. 2015
| |
Adj. 2016 v. 2015
| | | | |
| | |
2016
| |
2015
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
Six Months Ended June 30 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
Xylem Inc. | | |
1,779
| |
1,757
| |
22
| | |
1
|
%
| | |
(17
|
)
| |
40
| |
45
| | |
3
|
%
| | |
4
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
| | |
1,080
| |
1,051
| |
29
| | |
3
|
%
| | |
(17
|
)
| |
32
| |
44
| | |
4
|
%
| | |
6
|
%
| |
Applied Water
| | |
699
| |
706
| |
(7
|
)
| |
-1
|
%
| | |
-
| | |
8
| |
1
| | |
0
|
%
| | |
0
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Quarter Ended June 30 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
Xylem Inc. | | |
932
| |
920
| |
12
| | |
1
|
%
| | |
(11
|
)
| |
13
| |
14
| | |
2
|
%
| | |
3
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
| | |
566
| |
551
| |
15
| | |
3
|
%
| | |
(11
|
)
| |
11
| |
15
| | |
3
|
%
| | |
5
|
%
| |
Applied Water
| | |
366
| |
369
| |
(3
|
)
| |
-1
|
%
| | |
-
| | |
2
| |
(1
|
)
| |
0
|
%
| | |
0
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Quarter Ended March 31 | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
|
Xylem Inc. | | |
847
| |
837
| |
10
| | |
1
|
%
| | |
(6
|
)
| |
27
| |
31
| | |
4
|
%
| | |
4
|
%
| |
| | | | | | | | | | | | | | | | | | | | | |
|
Water Infrastructure
| | |
514
| |
500
| |
14
| | |
3
|
%
| | |
(6
|
)
| |
21
| |
29
| | |
6
|
%
| | |
7
|
%
| |
Applied Water
| | |
333
| |
337
| |
(4
|
)
| |
-1
|
%
| | |
-
| | |
6
| |
2
| | |
1
|
%
| | |
1
|
%
| |
|
|
|
|
Xylem Inc. Non-GAAP Reconciliation
| |
Adjusted Operating Income
| |
($ Millions)
| |
|
|
|
|
|
|
|
|
|
| |
| | | Q1 | | | Q2 | | | YTD | |
| | | 2016 |
| 2015 | | | 2016 |
| 2015 | | | 2016 |
| 2015 | |
Total Revenue
| | | | | | | | | | | | | | | | |
• Total Xylem
| | |
847
| |
837
| | |
932
| |
920
| | |
1,779
| |
1,757
| |
• Water Infrastructure
| | |
514
| |
500
| | |
566
| |
551
| | |
1,080
| |
1,051
| |
• Applied Water
| | |
333
| |
337
| | |
366
| |
369
| | |
699
| |
706
| |
| |
Operating Income
| | | | | | | | | | | | | | | | |
• Total Xylem
| | |
79
| |
83
| | |
109
| |
104
| | |
188
| |
187
| |
• Water Infrastructure
| | |
54
| |
47
| | |
70
| |
65
| | |
124
| |
112
| |
• Applied Water
| | |
39
| |
46
| | |
51
| |
51
| | |
90
| |
97
| |
• Total Segments
| | |
93
| |
93
| | |
121
| |
116
| | |
214
| |
209
| |
| | | | | | | | | | | | | | | |
|
Operating Margin
| | | | | | | | | | | | | | | | |
• Total Xylem
| | |
9.3%
| |
9.9%
| | |
11.7%
| |
11.3%
| | |
10.6%
| |
10.6%
| |
• Water Infrastructure
| | |
10.5%
| |
9.4%
| | |
12.4%
| |
11.8%
| | |
11.5%
| |
10.7%
| |
• Applied Water
| | |
11.7%
| |
13.6%
| | |
13.9%
| |
13.8%
| | |
12.9%
| |
13.7%
| |
• Total Segments
|
|
|
11.0%
|
|
11.1%
|
|
|
13.0%
|
|
12.6%
|
|
|
12.0%
|
|
11.9%
| |
| | | | | | | | | | | | | | | |
|
Special Charges
| | | | | | | | | | | | | | | | |
• Total Xylem
| | |
4
| |
1
| | |
1
| |
-
| | |
5
| |
1
| |
• Water Infrastructure
| | |
4
| |
1
| | |
1
| |
-
| | |
5
| |
1
| |
• Applied Water
| | |
-
| |
-
| | |
-
| |
-
| | |
-
| |
-
| |
• Total Segments
| | |
4
| |
1
| | |
1
| |
-
| | |
5
| |
1
| |
| | | | | | | | | | | | | | | |
|
Restructuring & Realignment Costs
| | | | | | | | | | | | | | | | |
• Total Xylem
| | |
9
| |
6
| | |
11
| |
6
| | |
20
| |
12
| |
• Water Infrastructure
| | |
4
| |
5
| | |
8
| |
4
| | |
12
| |
9
| |
• Applied Water
| | |
3
| |
1
| | |
3
| |
2
| | |
6
| |
3
| |
• Total Segments
| | |
7
| |
6
| | |
11
| |
6
| | |
18
| |
12
| |
| |
Adjusted Operating Income*
| | | | | | | | | | | | | | | | |
• Total Xylem
| | |
92
| |
90
| | |
121
| |
110
| | |
213
| |
200
| |
• Water Infrastructure
| | |
62
| |
53
| | |
79
| |
69
| | |
141
| |
122
| |
• Applied Water
| | |
42
| |
47
| | |
54
| |
53
| | |
96
| |
100
| |
• Total Segments
| | |
104
| |
100
| | |
133
| |
122
| | |
237
| |
222
| |
| | | | | | | | | | | | | | | |
|
Adjusted Operating Margin*
| | | | | | | | | | | | | | | | |
• Total Xylem
| | |
10.9%
| |
10.8%
| | |
13.0%
| |
12.0%
| | |
12.0%
| |
11.4%
| |
• Water Infrastructure
| | |
12.1%
| |
10.6%
| | |
14.0%
| |
12.5%
| | |
13.1%
| |
11.6%
| |
• Applied Water
| | |
12.6%
| |
13.9%
| | |
14.8%
| |
14.4%
| | |
13.7%
| |
14.2%
| |
• Total Segments
|
|
|
12.3%
|
|
11.9%
|
|
|
14.3%
|
|
13.3%
|
|
|
13.3%
|
|
12.6%
| |
|
*Adjusted Operating Income excludes restructuring & realignment
costs and special charges, which consisted of initial acquisition
costs and other acquisition related charges in 2016 and other
special non-operating items in 2015.
|
|
|
|
| |
| | |
| |
|
| |
| | |
| |
| | | | | | | | | | | | | | | | |
|
Xylem Inc. Non-GAAP Reconciliation
|
Adjusted Diluted EPS
|
($ Millions, except per share amounts)
|
| | | |
| | |
|
| | | | Q2 2016 | | | Q2 2015 |
| | | | As Reported | | Adjustments | | | Adjusted | | | As Reported | | Adjustments | | | Adjusted |
Total Revenue
| | | | |
932
| | | | | | |
932
| | | | |
920
| | | | | | |
920
| |
Operating Income
| | | | |
109
| | | |
12
| |
a
| | |
121
| | | | |
104
| | | |
6
| |
a
| | |
110
| |
Operating Margin
| | | | | 11.7 | % | | | | | | 13.0 | % | | | | 11.3 | % | | | | | | 12.0 | % |
Interest Expense
| | | | |
(20
|
)
| | |
8
| |
b
| | |
(12
|
)
| | | |
(14
|
)
| | | | | |
(14
|
)
|
Other Non-Operating Income (Expense)
| | | |
|
1
|
| |
| | |
|
1
|
| | |
|
1
|
| |
|
1
|
|
b
| |
|
2
|
|
Income before Taxes
| | | | |
90
| | | |
20
| | | | |
110
| | | | |
91
| | | |
7
| | | | |
98
| |
Provision for Income Taxes
| | | |
|
(19
|
)
| |
|
(4
|
)
|
c
| |
|
(23
|
)
| | |
|
(17
|
)
| |
|
(3
|
)
|
c
| |
|
(20
|
)
|
Net Income
| | | |
|
71
|
| |
|
16
|
| | |
|
87
|
| | |
|
74
|
| |
|
4
|
| | |
|
78
|
|
Diluted Shares
|
|
|
|
|
179.9
|
|
|
|
|
|
|
179.9
|
|
|
|
|
182.3
|
|
|
|
|
|
|
182.3
|
|
Diluted EPS |
|
|
| $ | 0.39 |
|
| $ | 0.09 |
|
|
| $ | 0.48 |
|
|
| $ | 0.41 |
|
| $ | 0.02 |
|
|
| $ | 0.43 |
|
| | | | | | | | | | | | | | | | |
|
| | | |
| | |
|
| | | | Q2 YTD 2016 | | | Q2 YTD 2015 |
| | | | As Reported | | Adjustments | | | Adjusted | | | As Reported | | Adjustments | | | Adjusted |
Total Revenue
| | | | |
1,779
| | | | | | |
1,779
| | | | |
1,757
| | | | | | |
1,757
| |
Operating Income
| | | | |
188
| | | |
25
| |
a
| | |
213
| | | | |
187
| | | |
13
| |
a
| | |
200
| |
Operating Margin
| | | | | 10.6 | % | | | | | | 12.0 | % | | | | 10.6 | % | | | | | | 11.4 | % |
Interest Expense
| | | | |
(34
|
)
| | |
8
| |
b
| | |
(26
|
)
| | | |
(28
|
)
| | | | | |
(28
|
)
|
Other Non-Operating Income (Expense)
| | | | |
1
| | | | | | |
1
| | | | |
-
| | | |
2
| |
b
| | |
2
| |
Gain from sale of businesses
| | | |
|
-
|
| |
| | |
|
-
|
| | |
|
9
|
| |
|
(9
|
)
| | |
|
-
|
|
Income before Taxes
| | | | |
155
| | | |
33
| | | | |
188
| | | | |
168
| | | |
6
| | | | |
174
| |
Provision for Income Taxes
| | | |
|
(18
|
)
| |
|
(21
|
)
|
c
| |
|
(39
|
)
| | |
|
(30
|
)
| |
|
(6
|
)
|
c
| |
|
(36
|
)
|
Net Income
| | | |
|
137
|
| |
|
12
|
| | |
|
149
|
| | |
|
138
|
| |
|
-
|
| | |
|
138
|
|
Diluted Shares
|
|
|
|
|
179.6
|
|
|
|
|
|
|
179.6
|
|
|
|
|
182.7
|
|
|
|
|
|
|
182.7
|
|
Diluted EPS |
|
|
| $ | 0.76 |
|
| $ | 0.07 |
|
|
| $ | 0.83 |
|
|
| $ | 0.76 |
|
| $ | - |
|
|
| $ | 0.76 |
|
a
|
|
Restructuring & realignment costs of $11 million and $6 million in
the second quarter of 2016 and 2015, respectively, and special
charges of $1 million of initial acquisition costs in the second
quarter of 2016. Restructuring & realignment costs of $20 million
and $12 million in the first half of 2016 and 2015, respectively,
and special charges of $5 million of initial acquisition costs and
$1 million of other special charges in the first half of 2016 and
2015, respectively.
| |
b
| |
Special charges consisting of $8 million of costs related to the
early extinguishment of debt for the second quarter and first half
of 2016, and $1 million and $2 million of other special charges for
the second quarter and first half of 2015, respectively.
| |
c
| |
Net tax impact on restructuring & realignment costs of $3 million
and $1 million and on special charges of $4 million and $0 million,
and tax-related special items of $3 million of benefit and $2
million of expense for the second quarter of 2016 and 2015,
respectively. Net tax impact on restructuring & realignment costs of
$5 million and $3 million and on special charges of $5 million and
$0 million, and tax-related special charges of $11 million and $3
million for the first half of 2016 and 2015, respectively.
| |
|
|
|
|
Xylem Inc. Non-GAAP Reconciliation
| |
Net Cash - Operating Activities vs. Free Cash Flow
| |
($ Millions)
| |
|
|
| |
| |
|
| |
| |
|
| |
| | |
| | |
Q1
| | |
Q2
| | |
Six Months Ended
| |
| | |
2016
| |
2015
| | |
2016
| |
2015
| | |
2016
| |
2015
| |
| | | | | | | | | | | | | | | |
|
Net Cash - Operating Activities | | |
$
|
41
| | |
$
|
39
| | | |
$
|
84
| | |
$
|
84
| | | |
$
|
125
| | |
$
|
123
| | |
| | | | | | | | | | | | | | | |
|
Capital Expenditures
| | | |
(37
|
)
| | |
(37
|
)
| | | |
(25
|
)
| | |
(20
|
)
| | | |
(62
|
)
| | |
(57
|
)
| |
| | |
| |
| | |
| |
| | |
| |
| |
Free Cash Flow | | |
$
|
4
|
| |
$
|
2
|
| | |
$
|
59
|
| |
$
|
64
|
| | |
$
|
63
|
| |
$
|
66
|
| |
| | | | | | | | | | | | | | | |
|
Net Income
| | | |
66
| | | |
64
| | | | |
71
| | | |
74
| | | | |
137
| | | |
138
| | |
| | | | | | | | | | | | | | | |
|
Gain from sale of businesses
| | | |
-
| | | |
9
| | | | |
-
| | | |
-
| | | | |
-
| | | |
9
| | |
| | | | | | | | | | | | | | | |
|
Special Charges - Interest
| | |
|
-
|
| |
|
-
|
| | |
|
(8
|
)
| |
|
-
|
| | |
|
(8
|
)
| |
|
-
|
| |
| | | | | | | | | | | | | | | |
|
Net Income, excluding gain on sale of businesses and Special
Charges - Interest | | |
$
|
66
|
| |
$
|
55
|
| | |
$
|
79
|
| |
$
|
74
|
| | |
$
|
145
|
| |
$
|
129
|
| |
| | | | | | | | | | | | | | | |
|
Free Cash Flow Conversion | | |
|
6
|
%
| |
|
4
|
%
| | |
|
75
|
%
| |
|
86
|
%
| | |
|
43
|
%
| |
|
51
|
%
| |
View source version on businesswire.com: http://www.businesswire.com/news/home/20160802005938/en/
Contacts:
Xylem Inc.
Media
Kelly McAndrew, +1 914-323-5969
Kelly.McAndrew@xyleminc.com
or
Investors
Phil
DeSousa, +1 914-323-5930
Phil.DeSousa@xyleminc.com
Source: Xylem Inc.
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