Xylem Stock

Xylem Inc. (Xylem) operates as a global water technology company.

The company designs, manufactures, and services highly engineered products and solutions across a wide variety of critical applications primarily in the water sector. The company's broad portfolio of products, services and solutions addresses customer needs of scarcity, resilience, quality, and affordability across the water cycle, from the delivery, treatment, measurement and use of drinking water, to the collection, testing, analysis and treatment of wastewater, to the return of water to the environment.

The company has differentiated market positions in core application areas, including transport, treatment, dewatering, analytic instrumentation and measurement, smart metering, infrastructure assessment services, digital software solutions for utilities, industrial processes, outsourced water services, filtration and separation, applied water systems for commercial and residential business services, disinfection, wastewater treatment, and anodes. On May 24, 2023, the company completed the acquisition of Evoqua.

Business Strategy

The company's overarching strategy is to help customers solve the world's greatest water challenges with innovative products, services, and solutions to deliver sustainable economic, social and environmental benefits. The company's strategic pillars include driving customer success; growing in the emerging markets; and strengthening innovation and technology.

Business Segments

The company has four reportable business segments: Water Infrastructure, Applied Water, Measurement and Control Solutions and Integrated Solutions and Services.

Water Infrastructure

The company's Water Infrastructure segment primarily supports the process that collects water from a source, treats it and distributes it to users, and then treats and returns the wastewater responsibly to the environment through two closely linked applications: Transport and Treatment. The Transport application also includes sales and rental of specialty dewatering pumps, scalable products, and related equipment, technology, and services, which provide the safe removal or draining of groundwater and surface water from construction sites or other industrial sites and bypass pumping for the repair of aging utility infrastructure, as well as emergency water transport and removal during severe weather events.

The customer base consists of two primary end markets: utility and industrial. The utility market includes public, private and public-private entities that support water, wastewater and storm water networks. The industrial market includes customers that require similar water and wastewater infrastructure applications to support various industrial operations.

Water Infrastructure sells primarily through direct channels with remaining sales through indirect channels and service capabilities. Both utility and industrial facility customers increasingly require the company's teams' global but locally proficient expertise to use the company's equipment in their specific applications.

In the sale or rental of products and provision of services, the company benefits from its large installed base, which requires maintenance, repair and replacement parts due to the critical application and nature of the products and the conditions under which they operate.

The company's key competitors in the Water Infrastructure segment include KSB Inc., Sulzer Ltd., Grundfos, United Rentals, Trojan (Veralto Corporation), Veolia, De Nora, and ProMinent.

Applied Water

Applied Water encompasses the uses of water to serve a diverse set of customers in the commercial, residential and industrial end markets. Residential consumers represent the end users in the residential market, while owners and managers of properties, such as apartment buildings, retail stores, institutional buildings, restaurants, schools/universities, hospitals and hotels are examples of end users in the commercial market. The industrial market includes original equipment manufacturers ('OEMs'), exploration and production firms, agricultural customers, and developers and managers of industrial facilities, such as electrical power generators, chemical manufacturers, machine shops, clothing manufacturers, marine, food and beverage companies and car washes.

In the Applied Water segment, end markets vary widely and, as a result, specialized distribution partners are often preferred. As such, the Applied Water segment provides the majority of its sales through strong indirect channels with the remaining sales going through the company's global direct sales channels. The company has long-standing relationships with many of the leading independent distributors in the markets the company serves and the company provides incentives to distributors, such as specialized loyalty and training programs.

The company's distribution through well-established channels and the company's reputation for quality significantly enhance the company's market position. The company's ability to deliver innovative product offerings has enabled the company to compete effectively, to cultivate and maintain customer relationships and to serve and expand into many niche and new markets.

The company's key competitors in the Applied Water segment include Grundfos, Wilo SE, Pentair plc and Franklin Electric Co., Inc.

Measurement and Control Solutions

Measurement and Control Solutions develops advanced technology solutions that enable intelligent use and conservation of critical water and energy resources. The segment delivers communications, smart metering, measurement and control capabilities and critical infrastructure technologies that allow customers to more effectively use their distribution networks for the delivery, monitoring and control of critical resources, such as water, electricity and natural gas. The company also provides analytical instrumentation used to measure and analyze water quality, flow and level in clean water, wastewater, outdoor water environments. Additionally, the company offers software and services, including cloud-based analytics, remote monitoring and data management, leak detection, condition assessment, asset management and pressure monitoring solutions.

At the heart of the company's leading technologies are automation, data management and decision support. Communications networks enable customers to automate and optimize meter reading, bill customers, monitor flow rates and detect and enable rapid response to changing and unsafe conditions. In short, they provide insight into operations and enable the company's customers to manage the entire scope of their operations remotely through their networks. At the center of the company's offering is the FlexNet communication network, which provides a common communications platform and infrastructure for essential metering services. This two-way communication technology remotely connects a wide variety of smart points in a given network with protocols, frequently on Federal Communications Commission ('FCC') licensed spectrum in the U.S., to enable reliable, resilient and secure transmissions. These technologies allow the company's customers to remotely and continuously monitor their water and energy distribution infrastructure, prioritize and manage maintenance, and use data to optimize many aspects of their networks. The company's digital software solutions complement these offerings with intelligent applications that help utility decision-makers manage and maintain their networks more effectively in real time.

The majority of the company's sales in the U.S. are conducted through strong, long-standing relationships with leading distributors and dedicated channel partners for the water and energy markets. Internationally, direct sales are often made in markets without established distribution channels, however, some distribution channels are used in more developed markets. A direct sales approach, with key account management, is employed for large utilities and government programs.

The company's Sensus-branded meters are well positioned in the smart metering sector, the fastest growing sector of the global meter industry. The company set itself apart in the industry by focusing on the company's communication network, innovation, new product development and service offerings that deliver tangible savings from efficiency of operating costs in meter reading and billing, as well as reduction of non-revenue water through improved meter accuracy, reduced theft and identification of leaks. The company's YSI and WTW-branded instruments have a strong position in the analytical instrumentation market and provide critical readings of various water quality, level and flow parameters for customers. The company provides a differentiated offering in the reliability and accuracy of the company's products often in rugged, remote, and hazardous locations. The company's Pure Technologies equipment and services are also well positioned in the leak detection sector, which is attracting considerable attention as aging infrastructure and increased regulatory scrutiny exert pressure on operating budgets.

The company's key competitors in the Measurement and Control Solutions segment include Itron, Badger Meter, Landis+Gyr, Neptune (Roper), Kamstrup, Echologics (Mueller Water Products), Hach (Veralto Corporation) and Teledyne.

Integrated Solutions and Services

The company's Integrated Solutions and Services segment provides application-specific solutions and full lifecycle services to treat process water, utility water, and wastewater for customers in a variety of end markets. Integrated Solutions and Services also provides odor and corrosion control services and drinking water treatment systems for municipalities. Integrated Solutions and Services offers customers outsourced water service contracts, capital systems and related recurring aftermarket services, parts and consumables, and emergency services. The company's outsourced water service contracts include short-term service deionization contracts, averaging one to two years in duration, longer-term build-own-operate contracts, averaging eight to ten years in duration, and event driven mobile fleet deployments, including a growing portfolio of digitally connected technologies encompassed in the company's Water One service platform. Key capital and related aftermarket service and product offerings include filtration, reverse osmosis, ion exchange and continuous deionization.

Integrated Solutions and Services supports service and aftermarket sales through what the company believe to be the largest integrated industrial service branch network in North America, which is consisted of approximately 1,060 highly qualified professionals in field service and application engineering roles and the company's extensive fleet of mobile reverse osmosis and deionization water treatment systems. This is complemented by the company's digitally connected Water One service platform, which uniquely combines the company's water expertise, proactive service, proven technology, and data intelligence to continually improve customers' water operation management. The company's remote monitoring capabilities enable the company to optimize its routine service calls through predictive analytics and provide customers a more predictable, cost-efficient water solution.

Integrated Solutions and Services partners with customers through the company's direct sales and service team, which is organized geographically and by end market and is complemented by an inside sales force, field sales engineers, and a growing e-commerce platform.

The company's key competitors in the Integrated Solutions and Services segment include Veolia, Ecolab, MPW Industrial Services, and Ovivo.

Governmental Regulations

Environmental Regulations

The company's global operations are subject to various laws and regulations governing the environment and climate change, such as those promulgated by the U.S. Environmental Protection Agency and similar state and foreign environmental agencies, including related to the discharge of pollutants and the management and disposal of hazardous substances.

Other Regulations

As a company with global operations, the company is subject to complex U.S. federal, state and local and foreign laws, regulations, and permits in the countries where the company conducts business, including related to trade, such as tariffs, imports and exports; anti-bribery and corruption; antitrust and competition; data security and privacy, such as the EU General Data Protection Regulation ('GDPR') and the China Personal Information Protection Law ('PIPL'); use of regulated radio spectrum, including that of the U.S. FCC; lobbying activity; health and safety; the environment; air emissions; potable and non-potable water; wastewater discharge; and the generation, handling, storage, use, transport, treatment and disposal of non-hazardous and hazardous materials and wastes, among other matters. The company has policies and procedures in place to promote compliance with these laws, regulations, and permits.

Research and Development

The company's research and development expenses were $232 million in 2023.

History

The company was incorporated in Indiana in May 2011. It was formerly known as ITT WCO, Inc. and changed its name to Xylem Inc. in July 2011.