Xylem Reports Third Quarter 2020 Results

10.11.2020
Xylem Inc. reported third quarter 2020 net income of $37 million, or $0.20 per share. Excluding the impact of restructuring, realignment and special charges, the Company delivered adjusted net income of $114 million or 0.62 per share in the quarter.

Third quarter revenue was $1.2 billion, down 6 percent on a reported basis and 7 percent organically, declining less than previously expected, primarily driven by the resilience of the wastewater utility business and healthy residential demand. Orders were down 7 percent on a reported basis and 8 percent, organically. Reported operating margin in the quarter was 6 percent, up 520 basis points versus the prior year. Adjusted operating margin was 13.0 percent, down 210 basis points compared to the prior year. The decline was driven largely by the pandemic’s impact on volume in the quarter.

Xylem generated $275 million of operating cash flow and $234 million of free cash flow in the quarter, representing a conversion of 215%, driven by discipline on capital spending and working capital, as well as favourable timing of interest and tax payments. The Company’s liquidity remains strong, at approximately $2.4 billion, including cash and committed credit facilities.
“Our team delivered operational performance exceeding expectations on both the top line and bottom line,” said Patrick Decker, Xylem’s president and CEO. “Our supply chain continues to be robust, we’re maintaining discipline on cost and capital, and cash generation is healthy. Overall, we’re executing with focus and purpose to make sure our customers can continue delivering essential services to their communities.”

“Despite continuing macro uncertainty, we are serving end-markets that showed signs of increasing stability through the quarter,” continued Decker. “China returned to pre-pandemic growth, Europe grew modestly, and the US, while still lagging other regions, improved sequentially in the quarter. We continue to set strong commercial pace as utilities accelerate interest in transformational technologies that increase operational and financial resilience. Physical distancing is delaying some project revenues dependent on field-work in the short term, and we continue to closely monitor COVID-19 developments. We are well-positioned irrespective of how the pandemic plays out, and set to emerge in an even stronger position.”

Outlook
Xylem expects fourth quarter organic revenue declines in the range of 6 to 8 percent and adjusted operating margin in the range of 13.0 percent to 13.5 percent. Full-year free cash flow conversion is anticipated to be greater than 100%.

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

  • Third quarter 2020 revenue was $524 million, down 2 percent organically, and down 1 percent as reported, compared with third quarter 2019. Resilience in wastewater transport and treatment spending continued as the utilities end market returned to mid-single digit growth. The industrial end market declined mid-teens driven by softness in dewatering applications.
  • Third quarter reported operating income for the segment was $89 million. Adjusted operating income for the segment, which excludes $8 million of restructuring and realignment costs, was $97 million. Reported operating margin for the segment was 17.0 percent, down 130 basis points versus prior year. Adjusted operating margin of 18.5 percent was down 110 basis points versus prior year from lower sales volume, unfavourable mix and higher inflation partially offset by productivity benefits and cost reductions

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

  • Third quarter 2020 revenue was $364 million, a 4 percent decline organically year-over-year, a 3 percent decline as reported. Modest growth from demand in the residential end market was offset by softness in industrial and commercial end markets.
  • Third quarter reported operating income for the segment was $56 million and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was $58 million. The segment’s reported operating margin was 15.4 percent, down 80 basis points versus prior year, and adjusted operating margin was 15.9 percent, down 110 basis points versus prior year. Lower sales volume and inflation were partially offset by productivity gain

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.

  • Third quarter 2020 revenue was $332 million, down 15 percent organically and as reported, driven primarily by project deployment delays and site access restrictions related to COVID-19 in our metrology and pipeline assessment services businesses.
  • Reported operating income for the segment was negative $62 million, and adjusted operating income was $12 million, which excludes $5 million of restructuring and realignment costs and $69 million of special charges, including an accounting charge against goodwill in the pipeline assessment services business. Reported operating margin was up 16.3 percent versus prior year, at negative 18.7 percent. The segment’s adjusted EBITDA margin was 14.8%, down 450 bps from the prior year, driven by short-term volume declines and inflation, partially offset by productivity.

Source: Xylem Inc.

More articles on this topic

Ozone Solution Disinfects Wastewater Up To 99.9 Percent

17.11.2020 -

Collodi, part of the municipality of Pescia in the Tuscany region of central Italy, has a strong industrial sector, especially for the production of paper and cardboard. The water discharges of the entire industrial sector are delivered through a sewage pipe to the Veneri treatment plant, managed by Consorzio del Torrente Pescia (Pescia River Consortium).

Read more

UK-India water MoU offers “great boost” to trade

13.10.2020 -

British Water chief executive Lila Thompson says a new Memorandum of Understanding (MoU) agreed between India and the UK’s leading water sector trade association will “bring a great boost” to trading relationships between the two countries. Thompson’s comments came at the India-UK Water Partnership Forum, a virtual event which took place on 22 September 2020.

Read more
Directly to the product selection in

PumpSelector

LATEST NEWS

  • Events

    « December 2020 » loading...
    M T W T F S S
    30
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12
    13
    14
    15
    16
    17
    18
    19
    20
    21
    22
    23
    24
    25
    26
    27
    28
    29
    30
    31
    1
    2
    3
  • JOB MARKET