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Xylem Reports First Quarter 2020 Results

Reported net income of $38 million or $0.21 per share; adjusted net income of $42 million or $0.23 per share

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Xylem

Xylem Inc. (NYSE: XYL), a leading global water technology company dedicated to solving the world’s most challenging water issues, has reported first quarter 2020 net income of $38 million, or $0.21 per share. Excluding the impact of restructuring, realignment and special charges, the Company delivered adjusted net income of $42 million or $0.23 per share in the quarter

First quarter 2020 revenue was $438 million, down 7 percent organically compared with first quarter 2019. Double-digit organic decline in the Industrial end-market was affected by COVID-19 impacts and Dewatering sales and rental into construction and oil and gas applications.

First quarter reported operating income for the segment was $39 million. Adjusted operating income for the segment, which excludes $5 million of restructuring and realignment costs, was $44 million.

Reported operating margin for the segment was 8.9 percent, down 170 basis points versus prior year. Adjusted operating margins of 10.0 percent were down 240 basis points versus prior year from inflation, unfavorable mix and volume declines partially offset by strong productivity and modest price realization.

Applied Water

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

First quarter 2020 Applied Water revenue was $338 million, a 10 percent decline organically year-over-year, driven by market softness.

There were declines in all major geographic regions, with double-digit declines in Emerging Markets and Western Europe.

First quarter reported operating income for the segment was $47 million and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was $49 million.

The segment’s reported operating margin was 13.9 percent, down 90 basis points versus prior year, and adjusted operating margin was 14.5 percent, down 110 basis points versus prior year.

Margin contraction was driven by inflation as well as volume decline from COVID-19 partially offset by strong productivity.

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.

First quarter 2020 Measurement & Control Solutions revenue was $347 million, down 7 percent organically versus the prior year.

The business incurred a warranty charge of $15 million, in the quarter, due to a firmware issue limited to a specific set of customers in North America, which is now being quickly resolved.

Reported operating income for the segment was -$12 million, and adjusted operating income, which excludes $2 million of restructuring and realignment costs, was -$10 million.

The segment reported operating margin was -3.5 percent, down 780 basis points versus prior year. Adjusted operating margin contracted to -2.9 percent driven by a 430 basis point impact from the warranty charge, and unfavorable volume and mix impacts from COVID-19.

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