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

Xylem Inc. (NYSE: XYL), a leading global water technology company that empowers customers and communities to build a more water-secure world, today reported second-quarter results. The Company’s total revenue was $2.2 billion on strong execution and demand, and second-quarter earnings per share were up 78 percent on a reported basis and 11 percent on an adjusted basis, exceeding Xylem’s previous guidance. Orders grew 12 percent on a reported basis and declined 1 percent organically.

“The team continued to build on Xylem’s momentum and outperformed expectations on all metrics in the second quarter,” said Xylem’s President and CEO, Matthew Pine. “Healthy demand, combined with the team’s disciplined operational execution, delivered significant margin expansion in the quarter. Evoqua integration and synergies are also well on track.”

“We are further raising our full-year revenue, margin and earnings guidance. We are confident in the team’s commitment to realizing our operational potential, and underlying demand in our largest markets remains resilient despite likely macro variability in the second half. Our diversified portfolio of mission-critical solutions is ideally positioned to meet global demand from intensifying water challenges.”

Net income was $194 million, or $0.80 per share. Net income margin increased 360 basis points to 8.9 percent. These results are driven by strong operational performance, partially offset by higher purchase accounting intangible amortization. Adjusted net income was $266 million, or $1.09 per share, which excludes the impacts of restructuring and realignment costs, amortization of acquired intangible assets, gain/loss from sale of businesses, special charges, and tax-related special items.

Second-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 20.8 percent, reflecting a year-over-year increase of 170 basis points. Productivity savings, volume, and price drove the margin expansion, exceeding the impact of inflation, strategic investments and mix.

Outlook

Xylem now expects full-year 2024 revenue of $8.55 billion, up approximately 16 percent on a reported basis and up approximately 5 to 6 percent on an organic basis. This represents an increase from the Company’s previous full-year guidance of 15 to 16 percent on a reported basis and 4 to 6 percent on an organic basis.

Full-year 2024 adjusted EBITDA margin is expected to be approximately 20.5 percent, increased from the previous guide of 20.0 percent. This results in adjusted earnings per share of $4.18 to $4.28, raised from the previous range of $4.10 to $4.25. Full-year free cash flow conversion to net income is expected to be at least 120 percent, an increase compared to the prior guidance of 115 percent.

Further 2024 planning assumptions are included in Xylem’s second-quarter 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.

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

About Xylem

Xylem (XYL) is a leading global water technology company committed to solving the world’s critical water challenges with innovation and expertise. Our 23,000 diverse employees delivered combined pro forma revenue of $8.1 billion in 2023. 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 and Let’s Solve Water.

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," “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 (including those related to our social, environmental and other sustainability 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. 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: the impact of overall industry and general economic conditions, including industrial, governmental, and public and private sector spending, interest rates, inflation and related monetary policy by governments in response to inflation, and the strength of the residential and commercial real estate markets, on economic activity and our operations; geopolitical events, including the ongoing and possible escalation of the conflicts involving Russia and Ukraine, and the Middle East, as well as regulatory, economic and other risks associated with our global sales and operations, including those related to domestic content requirements applicable to projects receiving governmental funding; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, tight labor markets, prevailing price changes, tariffs and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including electronic components (in particular, semiconductors); disruptions in operations at our facilities or that of third parties upon which we rely; uncertainty related to the realization of the benefits and synergies from our acquisition of Evoqua Water Technologies Corp.; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including with respect to meeting performance guarantees and customers’ budgets, timelines and safety requirements; our ability to retain and attract leadership and other diverse and key talent, as well as competition for overall talent and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around restructuring and realignment actions and related costs and savings; our ability to execute strategic investments for growth, including related to acquisitions and divestitures; availability, regulation or interference with radio spectrum used by certain of our products; volatility in served markets or impacts on our business and operations due to weather conditions, including the effects of climate change; risks related to our sustainability commitments and related disclosures; fluctuations in foreign currency exchange rates; difficulty predicting our financial results; risk of future impairments to goodwill and other intangible assets; changes in our effective tax rates or tax expenses; financial market risks related to our pension and other defined benefit plans; failure to comply with, or changes in, laws or regulations, including those pertaining to our business conduct, operations, products and services, including anti-corruption, data privacy and security, trade, competition, the environment, climate change and health and safety; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; matters related to intellectual property infringement or expiration of rights; and other factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Annual Report") and in subsequent filings we make with the Securities and Exchange Commission (“SEC”).

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