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Xylem now projects to generate organic
revenue growth of four to six percent through
2020, up from the previous forecast of three
to five percent. The Company expects to
achieve 400 to 500 basis points of operating
margin expansion by 2020 – a 100 basis-point
increase from the previous target of 300 to 400
basis points – driven by its ongoing focus on
driving productivity as well as the expected
impact from the cost and revenue synergies
from its recent acquisitions. Xylem anticipates
delivering adjusted core earnings per share
growth in the mid-teen range and, with the
impact of capital deployment, the growth range
is projected to be in the high teens.
Xylem also announced that it will combine
its Analytics, Sensus and Visenti businesses,
effective second quarter 2017. As a result
of this change, the Company will report the
financial and operational results from these
businesses as one segment. Xylem’s Water
Infrastructure segment will no longer include
the results of its Analytics business. The
Applied Water segment remains unchanged.
Reaffirming 2017 Outlook
Xylem also reaffirmed its 2017 outlook,
including full-year revenue in the range of $4.5
to $4.6 billion, up 20 to 22 percent from the
2016 results, including growth from previously
announced acquisitions and projected
unfavorable impacts of foreign exchange
translation. On an organic basis, Xylem’s
revenue growth is expected to be in the
range of one to three percent, and two to four
percent on a pro forma basis.
The Company continues to project full-year
2017 adjusted operating margin to be in
the range of 13.2 to 13.7 percent, resulting
in adjusted earnings per share of $2.20 to
$2.35. This represents an increase of 8 to 16
percent from Xylem’s 2016 adjusted results.
Excluding projected unfavorable impacts of
foreign exchange translation, Xylem’s adjusted
earnings per share growth is anticipated
to be in the range of 12 to 20 percent. The
Company’s adjusted operating margin
and earnings outlook excludes projected
integration, restructuring and realignment
costs of approximately $30 million for the year.
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.
Water Leaders • May 2017
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