01—Abstract
Summary
Summary of the 8-K filed March 8, 2024. Cited figures are marked; the original filing is the authoritative source.
On March 8, 2024, Xylem Inc. furnished an 8-K under Item 7.01 (Regulation FD) announcing a change to its reportable segments effective January 1, 2024.
The Company's Integrated Solutions and Services (ISS) segment, inherited from its May 24, 2023 acquisition of Evoqua Water Technologies Corp., is combined with the dewatering business (formerly in Water Infrastructure) and the assessment services business (formerly in Measurement and Control Solutions) into a new segment called Water Solutions and Services. Water Infrastructure and Measurement and Control Solutions will no longer include those businesses, and Applied Water is unchanged. The Company states the redesign creates a services platform intended to deliver a unified customer experience and accelerate growth of its services offerings.
The changes have no impact on historical consolidated financial position or results of operations, and the recast information is not a restatement. Exhibit 99.1 presents recast orders, revenue, operating income, adjusted operating income, EBITDA and adjusted EBITDA by segment for the first through fourth quarters of 2023 and the years 2021 through 2023. For full year 2023, recast total orders and revenue were $7.50 billiona and $7.36 billion, respectively, and recast total adjusted operating income and adjusted EBITDA were $1.07 billion and $1.39 billion.
Recast Water Solutions and Services orders were $1.75 billionb in 2023 versus $811 million in 2022, and its revenue was $1.68 billion in 2023 versus $794 million in 2022. The exhibit also includes organic and constant currency growth reconciliations, which show total recast revenue growth of 33% on a GAAP basis and 12% on an adjusted organic basis for 2023 versus 2022.
The recast figures are for informational purposes and should be read alongside the Company's 2023 Form 10-K. The information is furnished, not filed, and the company notes that its adjusted measures are non-GAAP and should not replace GAAP results.
02—Key points
Key Highlights
- Xylem is creating a new reportable segment, Water Solutions and Services, effective January 1, 2024, combining legacy Evoqua's ISS segment with the dewatering and assessment services businesses.
- Dewatering moves out of Water Infrastructure and assessment services moves out of Measurement and Control Solutions; Applied Water is unchanged.
- Recast 2023 total revenue was $7.36 billion and total orders were $7.50 billion, with Water Solutions and Services revenue of $1.68 billion.
- Recast 2023 total adjusted EBITDA was $1.39 billion, with an 18.9% adjusted EBITDA margin on a recast basis.
- Recast 2023 Water Solutions and Services orders were $1.75 billion, up from $811 million in 2022 on a recast basis.
- The Company states there is no impact on historical consolidated financial position or results of operations, and the recast is not a restatement.
- The recast information is furnished under Regulation FD and is to be read with the 2023 Form 10-K.
03—Questions
Frequently Asked Questions
What is changing in Xylem's segment structure?
Effective January 1, 2024, Xylem's legacy Evoqua Integrated Solutions and Services segment will be reported together with the dewatering business and the assessment services business as a new segment, Water Solutions and Services. Water Infrastructure and Measurement and Control Solutions will no longer include those businesses, and Applied Water remains unchanged.
Does this reorganization change Xylem's historical reported results?
No. The Company states that the changes have no impact on its historical consolidated financial position or results of operations, and the recast financial information does not represent a restatement of previously issued financial statements.
Why is Xylem making this change?
The Company believes the organizational redesign creates a services platform that will deliver a unified customer experience and accelerate the growth of its services offerings.
How large is the new Water Solutions and Services segment?
Exhibit 99.1 shows recast 2023 Water Solutions and Services orders of $1.75 billion and revenue of $1.68 billion, compared with recast 2022 orders of $811 million and revenue of $794 million.
Where can investors find more context for the recast figures?
The filing states that the information in Exhibit 99.1 should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The information is furnished, not filed, and the Company notes its adjusted measures are non-GAAP.
04—Continue