EX-99.1 2 xyl02042021ex991.htm EX-99.1 Document

Exhibit 99.1
xylemlogoa181a.jpg

Xylem Inc.
1 International Drive, Rye Brook N.Y. 10573
Tel +1.914.323.5700 Fax +1.914.323.5752
Contacts:MediaInvestors
Houston Spencer +1 (914) 323-5723
Matt Latino +1 (914) 323-5821
Houston.Spencer@xyleminc.com     
Matthew.Latino@xyleminc.com

Xylem reports fourth quarter and full-year 2020 earnings

•Operational performance exceeds expectations on top and bottom line; quarter sequential gains across all segments and end markets
•Fourth quarter and full-year revenue of $1.37 billion and $4.88 billion, respectively
•Fourth quarter 2020 reported net income of $148 million or $0.82 per share; adjusted net income of $145 million or $0.81 per share
•Full-year 2020 reported net income of $254 million or $1.40 per share; adjusted full-year net income of $374 million or $2.06 per share
•Strong full-year cash performance of 324% operating cash flow conversion and 181% free cash flow conversion
•Announces 8% increase in cash dividend, representing the Company’s 10th consecutive annual dividend increase
•Provides 2021 organic revenue growth guidance range of 3% to 5% and adjusted earnings per share range of $2.35 to $2.60

RYE BROOK, N.Y., February 4, 2021 – Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, today reported fourth quarter revenue of $1.37 billion, and full-year 2020 revenue of $4.88 billion, exceeding expectations on strengthening end-market performance, despite COVID-19 related impacts.

Fourth quarter reported operating margin was 13.0 percent, and adjusted operating margin was 13.8 percent, each declining 120 basis points year-over-year. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) margin declined 170 basis points to 18.8 percent. COVID-related impacts and inflation drove the margin decline, exceeding productivity improvements and cost savings. Xylem generated net income of $148 million, or $0.82 per share, and adjusted net income of $145 million, or $0.81 per share, which excludes the impact of restructuring, realignment and special charges.

For the full year, Xylem delivered reported operating margin of 7.5 percent, down 180 basis points versus the prior year, and adjusted operating margin of 10.8 percent, down 310 basis points for the same period. Adjusted EBITDA margin was 16.3 percent, down 320 basis points year-over-year. The margin declines for the full year were driven by the same factors as in the fourth quarter. Full-year reported net income was $254 million, or $1.40 per share, with a reported operating margin of 7.5 percent. Adjusted net income, which excludes the impact of restructuring, realignment and special charges, was $374 million, or $2.06 per share. The


Company generated $824 million of operating cash flow, representing a 324 percent conversion, and $641 million of free cash flow, representing a 181 percent conversion.
“Our team again delivered solid operational performance, exceeding expectations across all major indicators, including revenue, margin, and EPS,” said Patrick Decker, president and CEO of Xylem. “We drove better-than-anticipated top-line improvements in all segments, taking full advantage of stabilizing demand, demonstrated by sequential gains globally, and with particularly strong performance in Europe and China. Our improved bottom-line performance reflects effective cost containment and supply chain execution through the pandemic, and over-delivery on our free cash flow conversion commitments on the back of disciplined working capital management.”

“That performance gives us positive momentum entering 2021,” Decker continued, “as our end markets showed encouraging signs of recovery in the fourth quarter, with healthy orders trends and significant backlog growth. We also delivered strong performance with our industry-leading digital portfolio, as the pandemic continues to accelerate customer adoption of digital technologies across the water sector. This clearly positions Xylem well in both the near and long term.”

Xylem announced that its Board of Directors declared a dividend in the amount of $0.28 per share, an increase of 8 percent. The dividend is payable on March 18, 2021, to shareholders of record as of February 18, 2021.

Full-year 2021 Outlook

Xylem forecasts full-year 2021 revenue in the range of $5.16 to $5.26 billion, up 6 to 8 percent on a reported basis and up 3 to 5 percent on an organic basis.

Full-year 2021 adjusted EBITDA margin is expected to be in the range of 16.7 to 17.7 percent and adjusted operating margin is expected to be in the range of 11.5 to 12.5 percent. This results in adjusted earnings per share of $2.35 to $2.60, which represents an increase of 14 to 26 percent from Xylem’s 2020 adjusted results. The Company’s adjusted earnings outlook excludes projected restructuring and realignment costs of approximately $50 to $60 million for the year. Further 2021 planning assumptions are included in Xylem’s fourth quarter 2020 earnings materials posted at www.xylem.com/investors. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort.

Fourth Quarter Segment Results

Water Infrastructure

Xylem’s Water Infrastructure segment consists of its portfolio of businesses serving clean water delivery, wastewater transport and treatment, and dewatering.

•Fourth quarter 2020 revenue was $616 million, flat organically compared with fourth quarter 2019. This result, achieved despite difficult market conditions, was driven by modest growth in the wastewater utility end market in Europe, Asia and Canada offset by softness in the U.S. industrial market.
•Fourth quarter reported operating income for the segment was $117 million. Adjusted operating income for the segment, which excludes $7 million of restructuring and realignment, was $124 million, a less than one percent decrease versus the comparable period last year. Reported operating margin for the segment was 19.0 percent, down 70


basis points versus the prior year, and adjusted operating margin was 20.1 percent, down 60 basis points versus prior year. Adjusted EBITDA margin was 22.2 percent, down 70 basis points from the prior year. Productivity benefits, cost control and modest price realization were more than offset by inflation, increased reserves, and unfavorable volume and mix impacts.

Applied Water

Xylem’s Applied Water segment consists of its portfolio of businesses in residential and commercial building services, and industrial applications.

•Fourth quarter 2020 Applied Water revenue was $395 million, a one percent decline organically year-over-year. Volume weakness in industrial end markets continued in the quarter, with particular softness in the U.S. and Middle East, partly offset by robust growth in the residential market in the U.S. and China.
•Fourth quarter reported operating income for the segment was $61 million and adjusted operating income, which excludes $1 million of restructuring and realignment costs, was $62 million, a 5 percent decrease versus the comparable period last year. The segment reported operating margin was 15.4 percent, down 40 basis points versus the prior year period. Adjusted operating margin declined 90 basis points to 15.7 percent. Adjusted EBITDA margin was 17.2 percent, down 170 basis points from the prior year. Productivity benefits, favorable mix and modest price realization were more than offset by inflation and lower volumes.

Measurement & Control Solutions

Xylem’s Measurement & Control Solutions segment consists of its portfolio of businesses in smart metering, network technologies, advanced infrastructure analytics and analytic instrumentation.

•Fourth quarter 2020 Measurement & Control Solutions revenue was $362 million, down 5 percent organically versus the prior year, lapping large project deployments in the U.S. and Middle East. Strong sequential improvement reflects healthy demand in the test business and Advanced Infrastructure Analytics, both of which were up high single digits.
•Fourth quarter reported operating income for the segment was $14 million, and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was $16 million, a 45 percent decrease versus the comparable period last year. The Measurement & Control Solutions segment reported operating margin was 3.9 percent, down 330 basis points versus the prior year period. Adjusted operating margin of 4.4 percent also decreased 330 basis points over the prior year period. Adjusted EBITDA margin was 14.6 percent, down 350 basis points from the prior year. Strong productivity results and cost savings programs partly offset lower volume, inflation and unfavorable mix.

Supplemental information on Xylem’s fourth quarter 2020 earnings and reconciliations for certain non-GAAP items is posted at www.xylem.com/investors.


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About Xylem

Xylem (XYL) is a leading global water technology company committed to solving critical water and infrastructure challenges with innovation. Our more than 16,000 diverse employees delivered revenue of $4.88 billion in 2020. We are creating a more sustainable world by enabling our customers to optimize water and resource management, and helping communities in more than 150 countries become water-secure. Join us at www.xylem.com.

Forward-Looking Statements

This press release 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," “project,” “forecast,” “likely,” “believe,” “target,” “will,” “could,” “would,” “should,” "potential," "may" and similar expressions or their negative, may, but are not necessary to, identify forward-looking statements. By their nature, forward-looking statements address uncertain matters and include any statements that: are not historical, such as statements about our strategy, financial plans, outlook, objectives, plans, intentions or goals; or address possible or future results of operations or financial performance, including statements relating to orders, revenues, operating margins and earnings per share growth.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Additionally, many of these risks and uncertainties are, and may continue to be, amplified by the coronavirus (“COVID-19”) pandemic. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: overall industry and economic conditions, including industrial, governmental and private sector spending and the strength of the residential and commercial real estate markets; geopolitical, regulatory, economic and other risks associated with international operations; continued uncertainty around the COVID-19 pandemic’s magnitude, duration and impacts on our business, operations, growth, and financial condition, as well as uncertainty around approved vaccines and the pace of recovery when the pandemic subsides; actual or potential other epidemics, pandemics or global health crises; manufacturing and operating cost increases due to inflation, prevailing price changes, tariffs and other factors; fluctuations in foreign currency exchange rates; disruption, competition and pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our products; disruptions in operations at our facilities or that of third parties upon which we rely; availability of products, parts and raw materials from our supply chain; availability, regulation and interference with radio spectrum used by some of our products; our ability to retain and attract senior management and other key talent; uncertainty related to restructuring and realignment actions and related charges and savings; our ability to continue strategic investments for growth; our ability to successfully identify, execute and integrate acquisitions; difficulty predicting our financial results, including uncertainties due to the nature of our short- and long-cycle businesses; volatility in our results due to weather conditions; risks relating to products, including defects, security, warranty and liability claims, and recalls; our ability to borrow or refinance our existing indebtedness and the availability of liquidity sufficient to meet our needs; risk of future impairments to goodwill and


other intangible assets; failure to comply with laws or regulations, including those pertaining to anti-corruption, data privacy and security, export and import, competition, and the environment; changes in our effective tax rates or tax expenses; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; and other factors set forth in “Part I Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, “Item 1A. Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in subsequent filings we may make with the Securities and Exchange Commission. All forward-looking statements made herein are based on information currently available to us as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.









XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS (Unaudited)
(in millions, except per share data)
Year Ended December 31,202020192018
Revenue$4,876 $5,249 $5,207 
Cost of revenue3,046 3,203 3,181 
Gross profit1,830 2,046 2,026 
Selling, general and administrative expenses1,143 1,158 1,161 
Research and development expenses187 191 189 
Restructuring and asset impairment charges75 63 22 
Goodwill impairment charge58 148 — 
Operating income367 486 654 
Interest expense77 67 82 
Other non-operating (expense) income, net(5)(4)13 
Gain on sale of businesses— 1 — 
Income before taxes285 416 585 
Income tax expense31 15 36 
Net income254 401 549 
Earnings per share:
Basic$1.41 $2.23 $3.05 
Diluted$1.40 $2.21 $3.03 
Weighted average number of shares:
Basic180.1180.0179.8
Diluted181.1181.2181.1



XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions, except per share amounts)
December 31,20202019
ASSETS
Current assets:
Cash and cash equivalents$1,875 $724 
Receivables, less allowances for discounts, returns and credit losses of $46 and $35 in 2020 and 2019, respectively923 1,036 
Inventories558 539 
Prepaid and other current assets167 151 
Total current assets3,523 2,450 
Property, plant and equipment, net657 658 
Goodwill2,854 2,839 
Other intangible assets, net1,093 1,174 
Other non-current assets623 589 
Total assets$8,750 $7,710 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$569 $597 
Accrued and other current liabilities787 628 
Short-term borrowings and current maturities of long-term debt600 276 
Total current liabilities1,956 1,501 
Long-term debt, net2,484 2,040 
Accrued post-retirement benefits519 445 
Deferred income tax liabilities242 310 
Other non-current accrued liabilities573 447 
Total liabilities5,774 4,743 
Stockholders’ equity:
Common stock — par value $0.01 per share:
Authorized 750.0 shares, issued 194.9 and 193.9 shares in 2020 and 2019, respectively2 2 
Capital in excess of par value2,037 1,991 
Retained earnings1,930 1,866 
Treasury stock – at cost 14.5 shares and 13.7 shares in 2020 and 2019, respectively(588)(527)
Accumulated other comprehensive loss(413)(375)
Total stockholders’ equity2,968 2,957 
Non-controlling interest8 10 
Total equity2,976 2,967 
Total liabilities and stockholders’ equity$8,750 $7,710 



XYLEM INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Year Ended December 31,202020192018
Operating Activities
Net income$254 $401 $549 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation117 117 117 
Amortization134 140 144 
Deferred income taxes(31)(77)(47)
Share-based compensation26 29 30 
Restructuring and asset impairment charges75 63 22 
Goodwill impairment charge58 148 — 
Gain from sale of businesses— (1)— 
Other, net46 9 9 
Payments for restructuring(36)(30)(21)
Contributions to post-retirement benefit plans(27)(19)(41)
Changes in assets and liabilities (net of acquisitions):
Changes in receivables109 (23)(103)
Changes in inventories(5)47 (97)
Changes in accounts payable(39)29 51 
Changes in accrued liabilities101 15 (6)
Changes in accrued taxes20 (13)— 
Net changes in other assets and liabilities22 4 (21)
Net Cash — Operating activities824 839 586 
Investing Activities
Capital expenditures(183)(226)(237)
Acquisitions of businesses and assets, net of cash acquired— (18)(433)
Proceeds from sale of businesses— — 22 
Cash received from investments200 11 11 
Cash paid for investments(200)(7)(11)
Cash received from cross-currency swaps12 9 — 
Other, net2 — 5 
Net Cash — Investing activities(169)(231)(643)
Financing Activities
Short-term debt issued, net359 281 335 
Short-term debt repaid, net(640)(254)(52)
Long-term debt issued, net985 — 1 
Long-term debt repaid, net— — (120)
Repurchase of common stock(61)(40)(59)
Proceeds from exercise of employee stock options20 13 7 
Dividends paid(188)(174)(152)
Other, net(2)(3)— 
Net Cash — Financing activities473 (177)(40)
Effect of exchange rate changes on cash
23 (3)(21)
Net change in cash and cash equivalents1,151 428 (118)
Cash and cash equivalents at beginning of year
724 296 414 
Cash and cash equivalents at end of year$1,875 $724 $296 
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest$77 $77 $78 
Income taxes (net of refunds received)$41 $107 $75 



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

“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 or discontinuance of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.
“Constant currency” defined as financial results adjusted for foreign currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. dollar.
“EBITDA” defined as earnings before interest, taxes, depreciation and amortization expense. “Adjusted EBITDA” and “Adjusted Segment EBITDA” reflects the adjustments to EBITDA and segment EBITDA, respectively, to exclude share-based compensation charges, restructuring and realignment costs, gain or loss from sale of businesses and special charges.
“Adjusted EBITDA Margin” and “Adjusted Segment EBITDA margin” defined as adjusted EBITDA and adjusted segment EBITDA divided by total revenue and segment revenue, respectively.
“Adjusted Operating Income”, “Adjusted Segment Operating Income”, “Adjusted Net Income” and “Adjusted EPS” defined as operating income, segment operating income, net income and earnings per share, adjusted to exclude restructuring and realignment costs, gain or loss from sale of businesses, special charges and tax-related special items, as applicable.
“Adjusted Operating Margin” and “Adjusted Segment Operating Margin” defined as adjusted operating income and adjusted segment operating income divided by total revenue and segment revenue, respectively.
“Free Cash Flow” defined as net cash from operating activities, as reported in the Statement of Cash Flow, less capital expenditures, and “Free Cash Flow Conversion” defined as Free Cash Flow divided by net income, excluding the gain on sale of businesses, non-cash impairment charges and significant deferred tax items. Our definitions of “free cash flow” and “free cash flow conversion” do 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 acquisition and integration related costs, non-cash impairment charges and both operating and non-operating adjustments for pension costs.
“Tax-related special items” defined as tax items, such as acquisition and integration related costs, non-cash impairment charges and both operating and non-operating adjustments for pension costs.



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
OrdersOrdersChange 2020 v. 2019% Change 2020 v. 2019Acquisitions/
Divestitures		FX
Impact		Change
Adj.
2020 v. 2019		% Change
Adj. 2020 v. 2019
20202019
Year Ended December 31
Xylem Inc.5,033 5,339 (306)-6 %4 18 (284)-5 %-5 %
Water Infrastructure2,134 2,234 (100)-4 %— 20 (80)-4 %-4 %
Applied Water1,483 1,556 (73)-5 %— — (73)-5 %-5 %
Measurement & Control Solutions1,416 1,549 (133)-9 %4 (2)(131)-8 %-9 %
Quarter Ended December 31
Xylem Inc.1,294 1,286 8 1 %4 (31)(19)-1 %-2 %
Water Infrastructure464 530 (66)-12 %— (18)(84)-16 %-16 %
Applied Water410 387 23 6 %— (7)16 4 %4 %
Measurement & Control Solutions420 369 51 14 %4 (6)49 13 %12 %
Quarter Ended September 30
Xylem Inc.1,246 1,346 (100)-7 %— (10)(110)-8 %-8 %
Water Infrastructure558 586 (28)-5 %— (4)(32)-5 %-5 %
Applied Water375 376 (1)0 %— (3)(4)-1 %-1 %
Measurement & Control Solutions313 384 (71)-18 %— (3)(74)-19 %-19 %
Quarter Ended June 30
Xylem Inc.1,232 1,392 (160)-11 %— 36 (124)-9 %-9 %
Water Infrastructure598 586 12 2 %— 27 39 7 %7 %
Applied Water326 399 (73)-18 %— 6 (67)-17 %-17 %
Measurement & Control Solutions308 407 (99)-24 %— 3 (96)-24 %-24 %
Quarter Ended March 31
Xylem Inc.1,261 1,315 (54)-4 %— 23 (31)-2 %-2 %
Water Infrastructure514 532 (18)-3 %— 15 (3)-1 %-1 %
Applied Water372 394 (22)-6 %— 4 (18)-5 %-5 %
Measurement & Control Solutions375 389 (14)-4 %— 4 (10)-3 %-3 %



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
RevenueRevenueChange 2020 v. 2019% Change 2020 v. 2019Acquisitions/
Divestitures		FX
Impact		Change
Adj.
2020 v. 2019		% Change
Adj. 2020 v. 2019
20202019
Year Ended December 31
Xylem Inc.4,876 5,249 (373)-7 %2 7 (364)-7 %-7 %
Water Infrastructure2,079 2,177 (98)-5 %— 9 (89)-4 %-4 %
Applied Water1,434 1,541 (107)-7 %— (1)(108)-7 %-7 %
Measurement & Control Solutions1,363 1,531 (168)-11 %2 (1)(167)-11 %-11 %
Quarter Ended December 31
Xylem Inc.1,373 1,371 2 0 %2 (28)(24)-2 %-2 %
Water Infrastructure616 603 13 2 %— (15)(2)0 %0 %
Applied Water395 392 3 1 %— (7)(4)-1 %-1 %
Measurement & Control Solutions362 376 (14)-4 %2 (6)(18)-5 %-5 %
Quarter Ended September 30
Xylem Inc.1,220 1,296 (76)-6 %— (9)(85)-7 %-7 %
Water Infrastructure524 531 (7)-1 %— (4)(11)-2 %-2 %
Applied Water364 376 (12)-3 %— (3)(15)-4 %-4 %
Measurement & Control Solutions332 389 (57)-15 %— (2)(59)-15 %-15 %
Quarter Ended June 30
Xylem Inc.1,160 1,345 (185)-14 %— 25 (160)-12 %-12 %
Water Infrastructure501 561 (60)-11 %— 16 (44)-8 %-8 %
Applied Water337 394 (57)-14 %— 6 (51)-13 %-13 %
Measurement & Control Solutions322 390 (68)-17 %— 3 (65)-17 %-17 %
Quarter Ended March 31
Xylem Inc.1,123 1,237 (114)-9 %— 19 (95)-8 %-8 %
Water Infrastructure438 482 (44)-9 %— 12 (32)-7 %-7 %
Applied Water338 379 (41)-11 %— 3 (38)-10 %-10 %
Measurement & Control Solutions347 376 (29)-8 %— 4 (25)-7 %-7 %


Xylem Inc. Non-GAAP Reconciliation
Adjusted Operating Income
($ Millions)
Q1Q2Q3Q4YTD
2020201920202019202020192020201920202019
Total Revenue
• Total Xylem1,123 1,237 1,160 1,345 1,220 1,296 1,373 1,371 4,876 5,249 
• Water Infrastructure438 482 501 561 524 531 616 603 2,079 2,177 
• Applied Water338 379 337 394 364 376 395 392 1,434 1,541 
• Measurement & Control Solutions347 376 322 390 332 389 362 376 1,363 1,531 
Operating Income
• Total Xylem61 109 54 171 73 11 179 195 367 486 
• Water Infrastructure39 51 73 98 89 97 117 119 318 365 
• Applied Water47 56 41 62 56 61 61 62 205 241 
• Measurement & Control Solutions(12)16 (46)26 (62)(136)14 27 (106)(67)
• Total Segments74 123 68 186 83 22 192 208 417 539 
Operating Margin
• Total Xylem5.4 %8.8 %4.7 %12.7 %6.0 %0.8 %13.0 %14.2 %7.5 %9.3 %
• Water Infrastructure8.9 %10.6 %14.6 %17.5 %17.0 %18.3 %19.0 %19.7 %15.3 %16.8 %
• Applied Water13.9 %14.8 %12.2 %15.7 %15.4 %16.2 %15.4 %15.8 %14.3 %15.6 %
• Measurement & Control Solutions(3.5)%4.3 %(14.3)%6.7 %(18.7)%(35.0)%3.9 %7.2 %(7.8)%(4.4)%
• Total Segments6.6 %9.9 %5.9 %13.8 %6.8 %1.7 %14.0 %15.2 %8.6 %10.3 %
Special Charges
• Total Xylem— 4 11 — 70 155 — — 81 159 
• Water Infrastructure— — — — — — — — — — 
• Applied Water— — — — — — — — — — 
• Measurement & Control Solutions— 4 10 — 69 155 — — 79 159 
• Total Segments— 4 10 — 69 155 — — 79 159 
Restructuring & Realignment Costs
• Total Xylem9 20 43 21 15 30 10 11 77 82 
• Water Infrastructure5 9 8 9 8 7 7 6 28 31 
• Applied Water2 3 4 4 2 3 1 3 9 13 
• Measurement & Control Solutions2 8 31 8 5 20 2 2 40 38 
• Total Segments9 20 43 21 15 30 10 11 77 82 
Adjusted Operating Income
• Total Xylem70 133 108 192 158 196 189 206 525 727 
• Water Infrastructure44 60 81 107 97 104 124 125 346 396 
• Applied Water49 59 45 66 58 64 62 65 214 254 
• Measurement & Control Solutions(10)28 (5)34 12 39 16 29 13 130 
• Total Segments83 147 121 207 167 207 202 219 573 780 
Adjusted Operating Margin
• Total Xylem6.2 %10.8 %9.3 %14.3 %13.0 %15.1 %13.8 %15.0 %10.8 %13.9 %
• Water Infrastructure10.0 %12.4 %16.2 %19.1 %18.5 %19.6 %20.1 %20.7 %16.6 %18.2 %
• Applied Water14.5 %15.6 %13.4 %16.8 %15.9 %17.0 %15.7 %16.6 %14.9 %16.5 %
• Measurement & Control Solutions(2.9)%7.4 %(1.6)%8.7 %3.6 %10.0 %4.4 %7.7 %1.0 %8.5 %
• Total Segments7.4 %11.9 %10.4 %15.4 %13.7 %16.0 %14.7 %16.0 %11.8 %14.9 %


Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
Q4 2020Q4 2019
As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjusted
Total Revenue1,373 — 1,373 1,371 — 1,371 
Operating Income179 10  a 189 195 11  a 206 
Operating Margin13.0 %13.8 %14.2 %15.0 %
Interest Expense(21)— (21)(15)— (15)
Other Non-Operating Income (Expense)— 1  b 1 (2)8 b6 
Gain/(Loss) from sale of businesses— — — — — — 
Income before Taxes158 11 169 178 19 197 
Provision for Income Taxes(10)(14) c (24)(60)24  c (36)
Net Income attributable to Xylem148 (3)145 118 43 161 
Diluted Shares181.5 181.5 181.2 181.2 
Diluted EPS$0.82 $(0.01)$0.81 $0.65 $0.24 $0.89 
Year-over-year currency translation impact on current year diluted EPS$0.04 $— $0.04 
Diluted EPS at Constant Currency$0.78 $(0.01)$0.77 
Q4 YTD 2020Q4 YTD 2019
As ReportedAdjustmentsAdjustedAs ReportedAdjustmentsAdjusted
Total Revenue4,876 — 4,876 5,249 — 5,249 
Operating Income367 158  a 525 486 241  a 727 
Operating Margin7.5 %10.8 %9.3 %13.9 %
Interest Expense(77)— (77)(67)— (67)
Other Non-Operating Income (Expense)(5)5  b — (4)19  b 15 
Gain/(Loss) from sale of businesses— — — 1 (1)— 
Income before Taxes285 163 448 416 259 675 
Provision for Income Taxes(31)(43) c (74)(15)(113) c (128)
Net Income attributable to Xylem254 120 374 401 146 547 
Diluted Shares181.1 181.1 181.2 181.2 
Diluted EPS$1.40 $0.66 $2.06 $2.21 $0.81 $3.02 
Year-over-year currency translation impact on current year diluted EPS$0.02 $0.01 $0.03 
Diluted EPS at Constant Currency$1.38 $0.65 $2.03 
aQuarter-to-date: Restructuring & realignment costs of $10 million in 2020 and $11 million in 2019.
Year-to-date: Restructuring & realignment costs of $77 million and $82 million in 2020 and 2019, respectively; special charges of $81 million ($79 million of intangible asset and goodwill impairment charges and $2 million of other charges) and $159 million of special charges in 2019 ($158 million of goodwill and asset impairment charges and $1 million of acquisition related costs).
bSpecial non-operating charges consist of pension costs related to the UK pension plan that has been transferred to an annuity in 2020 as part of the planned buyout activities ($1 million and $5 million in 2020, and $6 million and $17 million in 2019, quarter-to-date and year-to-date, respectively). Also, $2 million of other non-operating charges in 2019, both quarter-to-date and year-to-date.
cQuarter-to-date: Net tax impact on restructuring & realignment costs of $2 million in both 2020 and 2019, respectively; $1 million of tax on special charges in 2020 and $4 million in 2019; and $11 million and $30 million of positive impact from tax related special Expense adjustments in 2020 and 2019, respectively.
Year-to-date: Net tax impact on restructuring & realignment costs of $17 million and $19 million in 2020 and 2019, respectively; $10 million and $6 million of tax impact on special charges in 2020 and 2019; and $16 million and $88 million of negative impact from tax related special benefit adjustments in 2020 and 2019, respectively.


Xylem Inc. Non-GAAP Reconciliation
Net Cash - Operating Activities vs. Free Cash Flow
($ Millions)
Q1Q2Q3Q4Year Ended
2020201920202019202020192020201920202019
Net Cash - Operating Activities$(2)$83 $181 $123 $275 $245 $370 $388 $824 $839 
Capital Expenditures - PP&E(32)(53)(24)(40)(24)(28)(29)(29)(109)(150)
Capital Expenditures - Software(19)(16)(20)(20)(17)(18)(18)(22)(74)(76)
Capital Expenditures(51)(69)(44)(60)(41)(46)(47)(51)(183)(226)
Free Cash Flow$(53)$14 $137 $63 $234 $199 $323 $337 $641 $613 
Net Income38 79 31 139 37 65 148 118 254 401 
Gain/(Loss) from sale of businesses— 1 — — — — — — — 1 
Restructuring & Realignment Charges - non-cash impairment— — (17)— (3)— (1)— (21)— 
Special Charges - non-cash impairment — (3)(10)— (69)(155)— — (79)(158)
Significant deferred tax benefit/(charge)— — — — — 97 — (33)— 64 
Net Income, excluding gain on sale of businesses, non-cash impairment charges and significant deferred tax items$38 $81 $58 $139 $109 $123 $149 $151 $354 $494 
Operating Cash Flow Conversion(5)%105 %584 %88 %743 %377 %250 %329 %324 %209 %
Free Cash Flow Conversion(139)%17 %236 %45 %215 %162 %217 %223 %181 %124 %



Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
($ Millions)
2020
Q1Q2Q3Q4Total
Net Income38 31 37 148 254 
Income Tax Expense4 4 13 10 31 
Interest Expense (Income), net14 16 20 20 70 
Depreciation 29 29 30 29 117 
Amortization35 33 33 33 134 
EBITDA120 113 133 240 606 
Share-based Compensation8 8 3 7 26 
Restructuring & Realignment9 43 15 10 77 
Special Charges1 13 71 1 86 
Adjusted EBITDA138 177 222 258 795 
Revenue 1,123 1,160 1,220 1,373 4,876 
Adjusted EBITDA Margin12.3 %15.3 %18.2 %18.8 %16.3 %
2019
Q1Q2Q3Q4Total
Net Income79 139 65 118 401 
Income Tax Expense (Benefit)15 17 (77)60 15 
Interest Expense (Income), net17 18 14 13 62 
Depreciation 29 29 30 29 117 
Amortization35 34 35 36 140 
EBITDA175 237 67 256 735 
Share-based Compensation9 7 7 6 29 
Restructuring & Realignment20 21 30 11 82 
Loss/(Gain) from sale of business(1)— — — (1)
Special Charges4 — 166 8 178 
Adjusted EBITDA207 265 270 281 1,023 
Revenue 1,237 1,345 1,296 1,371 5,249 
Adjusted EBITDA Margin16.7 %19.7 %20.8 %20.5 %19.5 %



Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Water Infrastructure
($ Millions)
2020
Q1Q2Q3Q4Total
Pre-Tax Income37 71 85 116 309 
Interest Expense (Income), net— (1)— — (1)
Depreciation11 11 11 11 44 
Amortization4 5 2 2 13 
EBITDA52 86 98 129 365 
Share-based Compensation— 1 — 1 2 
Restructuring & Realignment5 8 8 7 28 
Adjusted EBITDA57 95 106 137 395 
Revenue438 501 524 616 2,079 
Adjusted EBITDA Margin13.0 %19.0 %20.2 %22.2 %19.0 %
2019
Q1Q2Q3Q4Total
Pre-Tax Income50 96 97 117 360 
Interest Expense (Income), net(1)1 (1)— (1)
Depreciation11 12 11 10 44 
Amortization4 4 4 5 17 
EBITDA64 113 111 132 420 
Share-based Compensation1 — — 1 2 
Restructuring & Realignment9 9 7 5 30 
Adjusted EBITDA74 122 118 138 452 
Revenue482 561 531 603 2,177 
Adjusted EBITDA Margin15.4 %21.7 %22.2 %22.9 %20.8 %



Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Applied Water
($ Millions)
2020
Q1Q2Q3Q4Total
Pre-Tax Income47 42 55 60 204 
Interest Expense (Income), net— — — — — 
Depreciation5 5 6 5 21 
Amortization1 — 1 1 3 
EBITDA53 47 62 66 228 
Share-based Compensation1 1 — 1 3 
Restructuring & Realignment2 4 2 1 9 
Adjusted EBITDA56 52 64 68 240 
Revenue338 337 364 395 1,434 
Adjusted EBITDA Margin16.6 %15.4 %17.6 %17.2 %16.7 %
2019
Q1Q2Q3Q4Total
Pre-Tax Income57 62 62 63 244 
Interest Expense (Income), net— — — (1)(1)
Depreciation5 5 5 6 21 
Amortization1 1 — 1 3 
EBITDA63 68 67 69 267 
Share-based Compensation1 — 1 1 3 
Restructuring & Realignment3 4 3 4 14 
Adjusted EBITDA67 72 71 74 284 
Revenue379 394 376 392 1,541 
Adjusted EBITDA Margin17.7 %18.3 %18.9 %18.9 %18.4 %



Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
Measurement & Control Solutions
($ Millions)
2020
Q1Q2Q3Q4Total
Pre-Tax Income(13)(46)(62)14 (107)
Interest Expense (Income), net— — — — — 
Depreciation9 8 9 9 35 
Amortization27 26 27 27 107 
EBITDA23 (12)(26)50 35 
Share-based Compensation2 1 1 1 5 
Restructuring & Realignment2 31 5 2 40 
Special Charges— 10 69 — 79 
Adjusted EBITDA27 30 49 53 159 
Revenue347 322 332 362 1,363 
Adjusted EBITDA Margin7.8 %9.3 %14.8 %14.6 %11.7 %
2019
Q1Q2Q3Q4Total
Pre-Tax Income16 26 (137)28 (67)
Interest Expense (Income), net— — — — — 
Depreciation9 9 9 10 37 
Amortization27 26 27 27 107 
EBITDA52 61 (101)65 77 
Share-based Compensation1 2 1 1 5 
Restructuring & Realignment8 8 20 2 38 
Loss/(Gain) from sale of business(1)— — — (1)
Special Charges4 — 155 — 159 
Adjusted EBITDA64 71 75 68 278 
Revenue376 390 389 376 1,531 
Adjusted EBITDA Margin17.0 %18.2 %19.3 %18.1 %18.2 %