Xylem (XYL) 31 Oct 232023 Q3 Earnings call transcript

Welcome to Xylem's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] I would like to now turn the call over to Andrea van der Berg, Vice President, Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Xylem's Third Quarter 2023 Earnings Call. Officer, Chief Senior Patrick Financial Adviser Rowland; Chief are Officer, Chief Officer, today and Pine; Matthew and Financial me Executive Decker; Officer, Operating Sandy With Grogan. Bill former Chief discuss their provide year third results and on Bill the will quarter perspective fourth quarter Xylem's XXXX and outlook. full

address to remarks, a keep the to question related and information the ask covered Following our questions I'll please prepared on and you return then follow-up queue. we will to the call. one

are webcast our our by and of call this reminder, the until of a presentation slide section today's available in website. accompanied available November be As a replay X. midnight, call Investors will A

turn call our to Investors Additionally, be playback for section will website via heading of the the Please Slide the under X. available Events. Investor

the from forward-looking metrics, publicly results to reflect both SEC. no events on subject some in call, company and future the performance including you filed events Form of reports events will make to subsequent future we actual statements report subsequent annual are circumstances, developments metrics. occur Slide uncertainties those materially GAAP XX-K with statements or anticipated. with Xylem's as or may provided factors will on and and Please could key to statements X. We've references update to differ Please to forward-looking or that and summary or our in obligation note any undertakes These described including that in turn anticipate those most risks non-GAAP a recent such future. today's the We

for and presentation. of otherwise basis, Appendix the have an call, are organic For financials included be the adjusted you will in reconciled non-GAAP and today's on purposes of been indicated, unless all references section and/or

and I'll Now please over Decker. to the turn our to Patrick CEO, Slide call turn X,

quarter strong EBITDA well and revenue across We The Orders and and $X.X of our XX% margin X% everyone, each delivered delivered importantly, us. to very sets we up billion. segments. share. We $X.XX and company which this year-over-year. our Total a and our our our see you'll now earnings growth key for end growth continued markets. prior and that expectations morning, By performance segments. EPS grow, health on for first the And EBITDA grew team were represents Good backlogs Xylem M&CS more margin Evoqua quarter, growth, demonstrates per joining for together. revenue in organically. above now, year, backlog significantly as and ISS expanded exceeded thanks the especially full XX% combined Andrea. Thanks, with up of us is organic And momentum continue of

operational performance, importantly, deliver combined going And advantages give personally of full call So I'll announced team X the result, CFO, been during end strong of a on it's the January CEO on CFO our to a as continued synergies commitments. to promised. on year integrating have through as Bill succession we the team strength excite In and on performance role we to Evoqua us more for him transaction. with of both synergies experience capabilities. Overall, already the of the welcome it's to He's a guidance. I our raising new continued last October their in quarter's big to today. September, our It's of period to the Xylem real momentum, puts this a customers delivering that to cost like on Pine and the welcome the is took my Rowland. us on on remain track our The our integration and we enterprises. of well I'd large the and want of the strong Bill CEO the the Instead also out as the lead our those position customers that formally begun team. distracted, most. But serving a underwrote very Sandy shout synergies growth X, that pleasure our reflects are alongside to getting is of March. me me Matthew of planned on X. beginning as call adviser Grogan, an who CFO. CEO to Sandy it earnings Xylem. as on privileged is focus

September, over her the that's thank is results. in quarter to of the But many going opportunity Xylem. I not to team would Now the be many and a through take chair partner with where as her years third few great without contributions the going happen She's me for significant today cover before she are we we simply her leader Sandy was been last the to a great not contributions. beginning to and

Sandy. to So you, now over

Patrick. Thank you,

Matthew time over leadership I confident quarter's in adviser at Before And In more X. I've continue in to with how into quarter. role, to been taken company. the he smooth next will immersed CFO ensure short an to has company of this but a the go future. transition, moment since Bill. stepped Patrick, turn himself on he business look through and year, financial the couldn't hands like Slide quickly Bill now in will and on performance, the to be Like take to the with a Xylem's be March Please congratulate working great the the I impressed stay as let's I'd alongside I

solutions outperformed, has Each team QX, performance including the per to exceeding in integrated strong mentioned, expectations deliver expansion margin Patrick on services. growth share. As earnings and continued segment and

reporting combination fourth began As including our we with the reminder, Evoqua, segment. as ISS since a

driven down and revenue in the despite price of total growth led by while in a realization an overall, by demand robust grew U.S. Europe. market was Europe due particularly Xylem X%, and in in markets emerging healthy X% robust other largely XX%, all infrastructure. water [indiscernible] demand and double-digit end and Africa. grew in mainly both Western to rose strong utilities Asia M&CS grew in U.S. by revenues From Industrial grew demand perspective, XX%, driven For China organic strength XX%, the parts and Western healthy

Lastly, Building markets, emerging developed Solutions moderation markets. Overall, than more grew demand with in offsetting strength remains in resilient. X%,

now X% up approximately backlog up Evoqua. Orders includes on in higher favorable quarter, and EBITDA billion, margin price $X.X from organically, XX.X%, cost X. the productivity $X.X XXX contribution were prior this and and X% Our volumes, was the the savings a dynamics. billion up from is for company year was basis points book-to-bill

each XX%, U.S. was and improved driven Our Orders remains down chip bit growth supply a by saw up turn X to was All Please quarter third the XX% I'll detail. M&CS as EPS backlog measurement. for revenue test primarily in as and in up in Year-to-date, timing XX% well strong above in to this quarter and double-digit in the X, year-over-year. review impressive segment's growth. quarter performance execution of $X.XX, Slide an due saw orders, strength segment. book-to-bill by were regions metrology while Services led the Assessment more the

Infrastructure of now prior trend of up turn for backlog offsetting for M&C the productivity, execution XXX year versus of realization inflation. backlog by outperformed basis Slide versus $X.X growth cover accelerating the our year, to strong than EBITDA reported And growth X, the continuing organically digitization. and up organic billion XX% XX% the volume margin to segment demand offerings and price is of towards price was Our prior AMI points driven reflection conversion more due let's with realization Infrastructure I'll our and and and stronger-than-expected business. Water X%. Water a

stronger segment, Water reminder, applied business technology Infrastructure have further building execution. the backlog business into products integrated driven As treatment by portfolio. This expectations Evoqua's we out our a outperformed

excluding of backlog by For and XX up each Western in weakness of emerging with saw Water Evoqua. margin Please XX% growth. points resilient, U.S. modestly on U.S. year-over-year, and the than and the region for an strength better Building execution, developed Europe points basis continued double-digit both revenue the markets. saw growth, was strength XX were Solutions robust growth, orders continued turn contribution particularly Slide X in industrials, for Applied commercial, Water. Applied Organic Growth in the particular in quarter overview utilities the to segment driven markets. flat offsetting was grew while X% when in EBITDA of expectations in up proved revenues some basis

down Solutions in U.S. quarter, by offsetting than price strong quarter and implied quarter, the guidance. in outsourced reported X realization forma driven billion Book-to-bill our than revenue forma introduced was basis, markets. price offset an backlog and on up grew markets, year-over-year Services to Slide we our and durable On ISS with pro industrials provide execution. fourth Orders with strong Integrated as let's to businesses, overview first exceeded developed moderation including year-over-year customers. ISS XX margin and Adjusted were recurring in position. forma news Industrial strength of XX% And to In by by our exceeded and driven brings at EBITDA turn $X now company's on cost flows there the Please was backlog the greater XX% services year-over-year basis outcome-based treatment more its Orders from realization ISS broad-based productivity. emerging water, expectations a to XX growth pro in segment. up on volume grew a financial which declines. basis. full modestly, continued quarter pro segment EBITDA price end and Xylem, by across turn was demand for and was a a basis strong resilient productivity utilities. X% While with XX.X%, expanded in XX% the as points dynamics margin cash revenue and Slide X. Last

XX%. with and I'll cash to available debt-to-EBITDA over it we robust $X.X quarter exit X.Xx liquidity adjusted we had year-to-date, of Patrick. Our flow of leverage over XX, cash turn position in billion. and back conversion as free remains $XXX to the hand Slide Net million and Please is

of And attractive widely and trends in that solutions sustainable the remained runway clear one our intensifying and impact, significant model that effectively Thanks, and order growth XX us XXth it's fair has a Exchange. then, constant. It's Under but I building around organic that flow we ago, Xylem water confidence a and focused our very of colleagues a that durable on free water thesis. on the very challenges. platform. solutions as margin market-leading deploy business Stock creating are continue differentiated Sandy. built have to absolutely cash investable that capital financial partners an world strength New the allows made strong and say to of we serve think conversion. we it's Xylem's with excited and becoming under value both proud but platform am Xylem the as I listing pretty But evolved Today the we economic York what for thesis to composition, customers and anniversary past global recognized capable social of has also Xylem scale is years as our secular see since side-by-side of what the our worked our wasn't In the world. to for, communities leadership. Matthew expansion, meet X.X And around have Matthew's value years. a is investment I and of time, built thesis, multiyear that's

progressing is impact team in lead years handover total in value this strategy the confidence come. of will promise realize an full our he And So to I to greater very and this created the smoothly. have even

So now Matthew. you, over to

a on our integrated strategy turn grateful as is our this said, is put the you, strength stakeholders approach the Thank team His we with having that in water advanced the growth complex penetration, creating to range full capabilities Patrick our the critical most The path us leadership. visionary to profitability, of we next next impact. team also world. We'll our year. I is future, opportunity our even legacy competitive water essential the ahead easier need a they is is most our all is prospect building to it their Day the in next more the guidance And solving growth end constant, deeply advantage. of provide of period. of fragmented and Xylem make our May thesis look further and I'm plan update picture a passionate the in easy then Bill Investor a grow making update our access on customers are I'm the and The long-range the provide plan, an And committed finally, company more about solutions it challenges. In sharing offering In distinctive A as for year. am growth. combined sound, we and opportunity remainder the then. our The near-term process, to our of customers' the and handover continuing durability of Xylem's of impact. phase our to greatest markets challenges and in as color integration Patrick's provide of ask Evoqua solve of platform to what to market, at next deliver the year. I we'll phase forward to energized momentum our pleased meantime, on and continuity on our is of expect Patrick. firmly in over outlook share grateful bright a partnership for then profitable long-range our I'll I'll for Xylem's of brief

to Moving Slide XX.

X a together. you on years can run team and rate. always applied Evoqua's growing the offerings been life $XXX as opportunity geographically, treatment products with bringing will the value of us customers committed But deepen see, were to with solutions penetration, Both purpose by technology wastewater. In through comprehensive presence There's cultures rationale in the leaders the We both we the sciences of addition platform. product fast. offerings Infrastructure beverage. leveraging Xylem's great with the more million provide their about X more verticals create see Evoqua And food has market as we services especially Patrick well own. for in growth. As allows Industrial, verticals in segment. even long-term well our with highly the utilities, and and ] But together, momentum, expansion In remarkably attractive that's a including And as collaboration, our exiting complemented quick we in internationally, scale cost Xylem even market such We business as with stronger combination the ISS. and mentioned, global come water distribution service and combination million gained $XX power, our microelectronics, clean capabilities. assembly-strong Water integration Evoqua together Evoqua's has combined track. we'll of position. benefit [ has within of serving on XXXX have and scale of will we're solutions our The and to sense synergies of

of robust The portfolio our of coordinate We are offerings and combined a customers our address more teams wins are businesses for we'll for markets growth. that as global having are as take simpler That advantage reach make opportunity vendors to even matched opportunities solutions how as job it optimize to multiple benefits integrated already end the to of integrate the and and deeply, domains. is will pipeline already they well seeing include access appreciate both X offerings them scale, even our structuring ways the in posting. And to to our we're water across management. need how hearing fewer we

and to our turn for outlook end markets. Slide let's XX, Now cover I'll the

macroeconomic third teams shout build It's of outperformance commitment quarter. provides in our delivering for want Our discipline the monitoring outlook performance through the three first this of year China a on of the Applied level addressed kind take in year to softness especially That the to dynamic some demonstrates momentum team's signs echo such and great on. to Water continue Patrick said, quarters and particularly a environment. regional to a I standout balanced all are segment. by markets out and that that of to end we and in execute our ability a

show of a At anticipate resilient high steady utilities be to and provide expect outlook organic approximately demand they to of As will industrial we is compromise that continue demand, continue to demand growth. revenue, level, mid-teens. an a on healthy basis. Utilities growth XX% XXXX our will expressed reminder, we continue and

We see driving execution we backlog seeing chip growth we're On digital improved low top and for clean of as robust value AMI traction continue anticipate supply, with we're demand our increasingly the on even offerings. XXs up from mid-XXs, selling customers side, of that, solution solutions. On on more to water platform our previously. now bundled

CapEx developed On side, resilient markets in alongside spend wastewater underpinning steady remain regions, the demand. across is to expected OpEx

see wastewater in overall. We growth expect to single-digit high

mid-single be markets expect Developed is industrial emerging our of digits. of market, there single revenue, in pockets XX% to Turning to of continue markets. up which global are digits, we from end moderation high although about resilient, growth now

about we continue particularly positive be steady Solutions, mid-single despite in is Building growth to in of XX% continues expect macro Overall, applications. replacement business, digits, Lastly, which by our outlook to revenue, driven in the of some variability commercial indicators. demand

business. revenues While resilient our the organic not further durability the of in does include view profile foundation of the demand recurring Evoqua, is the on ISS increasing

have turning time of I through over pleasure the QX our guidance. for the to Now to call the walk Bill first

admired for incredibly and I've team join in for both and also saying endeavors. thanks to built of long the by team this value even their a wish sector I'm excited Thanks, its and during grateful a opportunities will platform compelled part ahead words. the I'm and now handover. performance. Xylem I social Sandy, building I us. and is to the so because both forward, team. distinctive your of and new for business about Sandy to because rise be a that her to this leadership on extraordinary start of privilege her to has Patrick to the in, its economic I kind of creation. culture, being generous by And want commitment well the more insight take She Matthew, month Xylem It and strong how company, am

previously. EPS growth mentioned, This approximately are year and about be ] total XX% revenue, XX%, growth [ our will billion. Patrick to up $X.X revenue of Full about increasing from organic of now we year guidance. XX% full revenue margin and As X% EBITDA revenue to translates

margin XX%, higher reflects price initiatives. XXX EBITDA realization productivity This about of year. up of raising versus by the driven volume, from stronger basis approximately prior points and expansion margin are We XX%,

XX% full are $X.XX from $X.XX M&CS, guidance up adjusted lifting by revised the as midpoint. low breaks growth follows: XXs at guidance EPS year we addition, to in to down The In $X.XX, segment of growth from net mid-single-digit income. growth in high achieving flow Applied And XXX% Water. single-digit infrastructure above conversion free cash committed previously, approximately and to we up remain in water of

growth and We M&CS, expect have infrastructure in on quarter. in Water. be on also Applied appendix in to revenue in down with the will reported [ By total the growth fourth Slide segment, you water full mid-teens single provided XX. And anticipate in X% remained assumptions drilling ] of basis a year range revenue digits to now a We XX% number flat be X% XX% in organically. and to we low the

expect We approximately XX.X% This to volumes, of higher be yields $X.XX fourth EBITDA by quarter gains. margin EPS price fourth driven realization quarter and to $X.XX. continued productivity

Our and of and and long-term delivering commercial year remainder plan. With us momentum over confidence give the back operational Slide turn that, discipline, Patrick closing to the the comments. strength to XX, call for please backlog turn I'll in our

Sandy. and and last Matthew what our of strong has to me, to note team me you, my than absolutely just the career. solving XX helping solutions thank to under that forward work and full This the clear years. a my that gratifying more of been momentum and to greatest leadership it's team. build the we've going incredibly serving Of realize together. Xylem. greater is said, partners done for bittersweet are never an potential. enterprise is that call past I'm has XX,XXX are privilege earnings need the It's our work customers a of colleagues strongly beginning of water my challenges. value proud in positioned, this been me. we our and has there exceptionally take Bill, I'm accelerating communities the Thanks, Xylem up Xylem with water achieved created so our wrapping the in to personally, That is moment the only our we've for alongside and partners, world's Leading

each note We the more final our to to create that whose have analyzing many you to I've business, and tracking respect greater very keep poised an making a jobs do, of you Xylem's years even all you well and the to even you know go admire come the many of and are come. On followed and the difference. as in simply you a work include closely personal I quite to best impact to value growth.

take Now, your to we're questions. going

let's And it open Q&A. operator, so for up

our Capital [Operator first Instructions] Dray We'll RBC Markets. from Deane with question take

You indulge with have start important to to I need some me. congratulations.

them me here. let So through just rattle

Xylem got the you all help Sandy, so at in saw but to all we for set congrats. Bill, same you the skill Matthew, on have are But and connected you So already welcome, from you, want [ leadership and for pressure don't And too your person twice we announcement. you've much contribution lead of ]. right I expecting my the in wish and put sort the years IDEX and CFO to I thank since best. that elite view, here,

to So All congrats and welcome you. right.

truly and a Patrick, that's you're no I here, company remember, joined you how a And company. I thought Xylem, they from it XX-year had -- where what has off water. and just but entire the you've it I fabulous handing as pump a was you're phrase you So it, run in said reins when love strength. tissues to the of that solving itself evolved a of portfolio mean, position

team. you the So the proud develop really leadership how portfolio about and company the feel just and you should

congrats. So

Deane, and you. from lot you, a coming that Thank means

the from here been beginning. You've

sir. Yes, Yes, right. sir. All

maybe if So new how Evoqua referenced quarter the the wins. business -- let's just with some could, we start and about -- you're Matthew talk and

opportunities have as what maybe first take existing to the Europe. conversations customers, customers be how Just will revenue the with synergies to started business with Evoqua

color be So there would any helpful.

think were question. to execution. talk Yes. the at high Maybe we the Thanks, about principles the just guiding just really I I'll a and really deal our Patrick that important did start stated which Deane, level when very for

to from strong QX, we see performance. 'XX you on plans. have our was we first as said really And deliver The can

QX. QX was As past fiscal business the most that know, this calendar legacy Evoqua's of you in

So great execution be by the and team, I happier. couldn't

and of sure if you -- capture companies what X both make and really on retain cultures I make together. the we equally we the we revenue you top bring And cost second, call when side, is We've together, this to on of pitch, talent. lastly, field as done will, on talent the would bringing need sure the then we important softer sure get nice deliver right the of value the best job And make is there. which to a synergies. The the

the So is we're done, really a guiding start, obviously, not work the good but helped to momentum get have principles in business. those off and

talked integration in cost quickly which to both focused the win. in to incentives customers the buckets momentum you us. X term, leads which cross-selling one synergies, for give term, of a those are products sales infrastructure, term, you're and Europe leverage regional Just team and in on in training milestone international regions strong. the the in moving ongoing well services to back water short early bring I capture. place we're surprise to We've that that wanted completed synergy international. And appointed the as long talk we is Deane, from The then folks as really I to the rate an the touch far, drive getting tracking midterm, lastly, to into short been the a But our of products the organization. The synergy the about, our into value on million you an to services internationally. example about We've for we're footprint each is we're bringing exit going the services, But which capital are so and $XX But the U.S. synergies, Evoqua municipal. footprint. think more those really, the we're the has of revenue is corporate in cost, procurement on on the Xylem at, minute, so industrial to APT I'll biggest just as into products

it we customer. oil water wastewater. operations. operate, We do them, gas process the power and they their well, a gas customer. have we a it's and crippling do go down not Where It's it's wastewater And the -- build their system for an had do oil was and actually, on

running really and within legacy And up We've that hours, to bring in well treatment pumping keep having several transport them able one a solution and fines. on So were examples important. with wastewater that the I call. the had customer both where we businesses XX as we facility of the can away think keep full to together, from them that's side bring as really and phone and also the like

like off start. lot give many to we'll examples a able but more So a as be XXXX. roll that, There's great context we to into

That's And good I follow-up all have really a if could hear. to on M&CS.

it about the the on your there. like? the of just chip improvement looks a comment orders quarter any Just update like see continue we funnel to looks third gradual And in the and supply, kind what

start chip and orders, I'll I'll Yes, with back to come supply.

the really was ], reason of timing a more were in ratio the the decline in quarter M&CS, metrology. $X.X strong. Although orders down especially M&CS, backlog XX%, conversion remains orders. [ up the X. XX% to of Really, billion we is for activity in book-to-bill greater than Deane, backlog in bid that

ready of an you X for when sit backlog receive order. is As larger to the in getting when PO time, they period the AMI while as utility deals, XX months, it the book A and know, lot of we for deployment is anywhere a the from we

that So it's of AMI issue be more and bullish But it's we're lumpy. a innings. timing on can a in early general, fairly still and bit adoption really little

the was supply, guide for in teens, the chip low we're the year this On original low XXs. the business

continual quarter-over-quarter. So chip improvement we've seen gradual

we product had and it with of obviously, be backlog, but than potential QX have quarter, that in M&CS. in faster then in we've QX, We I a our really And chip the lumpy, redesigns. got supply 'XX can strong. we was little especially with it this came continued think see -- a thought, in lot momentum into

Deane, Patrick. this is

happened placed. Matthew is North is a again, metric win rate in impressive And and of The what's is POs to is backlog and Just America, key pipeline the for are with said, The backlog. punctuate very orders the only healthy AMI. that has are especially segment, very healthy. function what again, when there very deal

Halloran Mike with Baird. And we'll question next from take our

run, but as So the and It's of like quite Bill Sandy, with best forward to really thanks, appreciate working I you. been Matthew, long moving for same, Patrick, obviously, a not everything. both years. of luck long over everything look but And forward.

So appreciate it, everyone.

I don't before. X on think had I've call the congratulations

Mike, here. orthodox we things do don't

the through called So do way them -- but planning. it's we succession right

you. thank So

No right. problem. All

up bit. question, a M&CS on broaden little Deane's So out following it maybe order

XXXX, really you moving itself. optimistic I Where think about of into quarter where the strong the on have pieces points? And backlog. fourth comments are Matthew's end a points here, appreciate As concern markets lot heading You the right? certainly

some regulatory that hit in some have macro this also tailwinds it less regions like You little market clarity. emerging backdrop at to there's where it. uncertain of a these are least or you have starting But seems

So have as some those points? be thinking about pieces maybe talk about or sustainability next just bit year there some think concern you're demand could where a you you where moving more and of little

great were really, momentum it's get It we're been combination. question. out. we into No, the committed back year that's that great in that long-range just a both presented to next have And Evoqua-Xylem and platform Mike, there businesses by plans the a legacy heading start 'XX. with right did built

ago, X has in of years Patrick's from really If strength didn't company that of the past back a or the operating decade leadership, and short XX% of exist we're you look the position of built. over platform terms been X

really a as point. that good jump-off feels So

strong drivers about developed scarcity increasingly is many all and seen to think I continue quality of water, of as and the flooding happening the drivers, have be macro secular markets. over year with this aged think trends you if an issue Water the us favorable kind world. infrastructure or of

a to X they'll business. Government years, to lot the funding next It's It's But and over dimmer we continue, to of funding. continued in be globally, trickle switch. buoy a period continue going time. will going the see the U.S. the a trends funding, talk come those So not we'll only about X to

point. I OpEx be and our think a continue utilities the to resiliency of will strong

improvements, with about aftermarket more lastly, which I [ I 'XX. as ] positive. backlog, then together And the durable gives into think us M&CS flows the the combination business we they coming we just with think, ISS and with diversity chain move of lot XX% talked all are services a model supply cash

more of I think when you pieces end business. to the that's China, But opening I'd definitely the a in up but item. industrials been pretty to our China Applied push mentioned more weakness. Obviously, has well. think it's industrial hold I It's of a or on in or more which our utilities, niche little pockets more for but just general, with very Water items, think cyclical more pretty mention And then thing I watch watch small China, the color, really give a that's few they're of which us. portfolio is if ag marine, in had tended talk the we mention bit about but pieces about anything last our There's markets right in earnings a than the Industrial the February been kind I to call, insights But of remained give. later. that in what to resilient see comments, be we in I the that right we'll able it's can now.

Great. that. and appreciate And then mix. just second question, on pricing I

better it resilient X think of and of price is just on things ability the you're as should the dynamics backlog inflation sounds M&CS how margin to mix about forward, looking Makes the about profile Maybe for cost a manage price like the a to talk side continue we than So some forward those lot today. basis? in of quarter, sense. against

Yes.

for in cost continue Xylem. be bps. price Just QX up We're XX to positive

previous increases. moderate pricing lap We expect to we as in XXXX

line fall cost into going But We've QX step 'XX. and M&CS this a in up to of incrementals a little in positive the is contributed historical definitely, quarter. But of more 'XX in think price with we really in will into feel energy, bit taken that I really start and terms in to working that of some but to 'XX. it we will terms actions materialize we into be And to to pricing that down, with lumpy get a backlog little normalize 'XX. bit mix, as expect continue the trends. we're

with Davis take Melius we'll Scott And question next Research. our from

to Deane's on as right. I between it's the And and there him, OpEx kind a us -- push China, the kind defer so you can he well? assume OpEx take agree -- you of but everybody. and that's I But the for Matthew, mean interplay elder of to said, with the can congrats decline everything impact CapEx congratulations CapEx? when just help all is understand statesman, me. will let he's I guys since to certain I I'll lead

it's Yes. I think Yes,

a little But for -- China, also business it's bit to really as bit of a In more been China, mixed be under more resilient we've OpEx the OpEx-centric. regard yes, piece only industrial in terms of in tends bit the than Like demand does more resilient been bag. well. of treatment our utilities, of to but actually has the remain than said, a funding, a timing I'd just with And as CapEx seen It's underlying it's of say utilities. fairly I been Transport more transport. not for little healthy.

of it it's and when both So to a a mixed funding, little bag, CapEx it's bit comes OpEx. Scott, the

ago, customers, team Scott have say the Scott, ping was feel leadership ago, sense weeks my is time I still say all market before, X I met with X gets when around, for purpose on as side, really some underlying very get right our heard And and there. but and very the I have was converted the the Yes, near-term I a is in positive. shifting of backlog many based guess, demand locations to Shenyang, with as portfolio, of on me met can strong our are a week, traveled utility -- you a environment. for father and China I And China. my demand. weeks time thinks demand of how for future was the we felt visited Nanjing, talking is last, there robust team what good and terms very, spent terms of upon the kind things there. water in there underlying every in of third is theirs Shanghai things and And very generation our this with in about That said, is to whole there

an and there'd assume I of prioritizing that? And integrating things of some if some you would you then are -- integration, are think think sense. you guess, that. Xylem, you eliminating is there don't I between didn't efforts R&D things remember. just kind comment haven't don't this level I projects let I That and but you've makes -- like Evoqua I any, or But question. I how integrating ever there guys on just duplication, how like like talked and asked maybe I'll sure have maybe are the with PFAS was I how -- about and be I I'm -- not assuming

Yes. question. a That's great

We talked for about a lot they're synergies, haven't there. the but R&D sure,

start leadership with leading his team, me Let that actually first out I'm Desai, by team. and D.C. Snehal in here today

get there, being from fashion. can the over there more separately. the So get when we that's we in And we especially required. X he were we from there can we that business. But were a in the Evoqua that the some that X is combined and about sensing there capture obviously, about leverage in the can in obviously, spend effort. on you -- yes, together, we that as think is both PFAS, But come is really -- expedited yes, really plus innovation both X comes work overlap, destruction working think working And were solutions legacy separately on general, technologies the done equal efficiently different where together, there now that more

of effort us. start-ups only partnerships of And through was that one capital, I have think, coming And academia, to I like innovation, relationships venture benefit was other Scott, treatment and solutions platform what to the think I would because R&D just is innovation add that through we looking and Xylem that's but of PFAS, facing business customers. will part the our our part the where our things legacy around scale capture Evoqua

from take Jones Stifel. with question Nathan our next And we'll

Bill and you've particular maybe just add And and China your of the emerging to talked about China. during Sandy. could But China. market business, issues talk Maybe I Matthew. Patrick don't emerging congratulations think. the the some to and of of I'll congratulations outside to you I outside performance mean, markets that quarter my about

Yes.

different emerging I has China think for been pretty markets, ex across us Nate. end all resilient markets

the Southeast businesses, Water be our East and with helped in really Applied of India, have all the and right push That's the general, and regions, to buoy probably the of Africa, -- look Asia, little New Asia, outside been think in seen China. we've you other in they've of different across a I the Middle resilient that bit Australia bit of a China tough kind and Zealand. Northern exception But the would business. little if weakness at

ask for partnership, about I'll the I Idrica follow-up, Xylene adoption. think [indiscernible] the

year. [ ACE some and at You broad Westech [ guys this ] had at pretty presentations ]

you kinds maybe customer those uptake to those about of kinds So customer for can and reception talk things. things of

sales large the One deployment. I'm We've been bolted fabulous. if then -- and aggregate land applications, in -- a million executing I working highlight digital platform, Europe to now we a the say, globe, it's about, a globally. we to city really it's the customers we're exceeded and was been the of expectations. U.S., Actually, you And We've $XX city for our No, then emerging over deal. of into it's got markets. took what Yes. remember, XXX then making in it's platform our applications tremendous I from orders both And We're to did utility recurring which I'm Southeastern able engaged expand, I'd them, and couple their highlighted build. the revenue. and easy balanced all up U.S. going the examples. to, thing pipeline the own there, -- on of is from excited we AMI it X on the picked across

but and also land it's through pulling and of expand, solutions. our kind products it's So

through we're leverage from to solution. [ our a just we in Europe treatment Southern AMI metrology up that, and of pull in and situation. also picked heels Europe, $XX treatment large have utility, same implemented, the of and platform million able ] European On the relationship in They

us So pull-through utilities information. I've in true, we're believe bundle about the but the of really exciting. and offerings our that's lot the that's We a building we're talked to being the relationships getting allows consolidator platform

a about opportunity few over so in services sell And the And cultivating involved And I is, where think customers a on infrastructure we've over going customer. where they is spend have best turn effort the understand, already, the that here What I much years. the been, offer Nate, a the on cultivating our to would Idrica as or to helping mentioned been their of as And it's the Evoqua when dollar lights the feel opportunity what's this opportunities it. up next obviously, led to initial just Matthew, that spend always that said, better years. infrastructure on. Matthew has of as he's he number the pull-through few CapEx the the for OpEx opportunity.

discussion the on you'll from to at Evoqua [indiscernible] synergies the synergies have a revenue add Analyst the from Idrica revenue to Maybe

Yes.

has comment good into building focused services a it's scalability the think utilities it stay we're on platform the because to think do Obviously, and we first. I industrial going to business.

So expand we industrial. ability to stay into focused have does but it and deliver,

We'll take Cowen. Joe from next Giordano TD with our question

done Patrick calls with earnings sounds Sandy, thank going the Congratulations for with X you simultaneous for everything. and wonderful. being today me, on calls,

you. kind the maybe bring IDEXX of like kind start both you do involved want in for as you ] you, jealous with of best of it I'll very over XX/XX I'm to you culture kick Bill, doing and really like at what So here? from What's and [ come driving start of to in Congratulations. the that of kind that firm forefront. be had. Like how

right? eliminate here. There's focus tools No, our thinking matter customer had from the complexity, strategy. core got team issue core already a that ultimately leveraging great things organizational perspective, those the Its that They focus but on -- frees help Yes. and most. more about broadly And enhance and to to obviously analytics tool recognize capacity, the product up it's before I that started question. is a that

as getting successes and it doing wins. locations, piloting much in like very the folks we initial it at concepts thoroughly tools we IDEXX, and they're couple of with it did we're familiar and have the out a more So rolling

both is to So our amount velocity innovation creating for and our it that's for a I top of returns value, something, line, creating the customers tremendous going think, to on bottom longer-term shareholders. and have

for look this last the think, this just their actually to have that needs, to I'll then building decade investors way I a growth. think And platform, access I you add something means encourage to. that Patrick, can apply you is that the when would I at is build platform And which XX/XX spent customers we've

of be perfect what his right table but value the And this time The the I to that's incredibly together the coming think he why to be creation. working been and going is team enterprise terms for with this, to already toolkit. in had brings Bill valuable combination coming in now so on is to

Is given like that platform. concept breadth available that more almost business. built of just to of even might to from like been more for it fair like Is we feels being is I products. the It ethos, appropriately? Or of everything like of having Evoqua that right, just and think SKUs applicable it's it different that like having like think. there, nationally keeping as maybe them the tons appropriate have be just of discharging and feels everything something whether this, kind

-- balance is similar the Xylem. different a we there's not models. have It's Obviously, would opportunities business On hugely at there. all be differentiated applicable XX/XX to to

that a still service the it's organization, tool significant drive aspect So will value. a versus product-based

number Okay. that it's then being rate, stable last a order infrastructure probably caught that just feel it's Because most here? surprise a Is you me. And pretty that's the -- by for do like strong. people

of kind dollars a in So is that number? good

demand, Yes. But good rate. ex order a markets. general, we're custom It in of big in and infrastructure projects developed included water demand emerging in China seeing resilient both pump. The yes, Yes. markets and couple

it's been and good pretty pretty feel we resilient. So

Kaplowitz from take question next with our Citigroup. Andy We'll

interest congrats. we're forward rates based your on you. outside look with I Patrick, to could behavior start, but Matt uncertainty. miss are Bill, it doesn't working changing like Maybe at and economic it, you. China We'll just all of customers looking their -- Sandy, higher or

American holding in your are us can companies some doing, public maybe but some municipalities competitor North give new water Your it on color more like you're what industrial are upgrade is seeing? and plant utility doesn't seem investments, or space you mentioned the but that some that on what

just just to specific -- and Yes, would wastewater. utilities I maybe

the question. for a think I is proxy

XX% said, that We're is leading a markets China, up emerging CapEx, kind that to With revenue treatment with nicely. to point way bit the healthy different in in which outside like QX orders, the reminder the X% X%. Joe can funnel a minus markets developed which of our U.S. and I'd of is contributing and to have OpEx regard and continued I terms Just a our pipeline we of mix. in be in up seeing XX% were little orders resiliency of

out in of across in a reaching But don't to the have And kind funding they customers U.S., really globe. the qualitatively customers major see of money spending, addition in trickle think will the section that's be shift across stimulus been plus for of We specifically haven't Andy, of of that's watch general, over I stable. going we really a time, help alarming to would seen in anything kind kind keep us also item. that things

is Patrick. this I Again, offer to you new Andy, about, as space. the know we one into entrants thing some I would investors have think

got understand important it's platform broadest think we've there. out investors the that I that's that water our

continues think, I is to high alluded And the time. to, mid- out our an that to And single The Matthew of what as to. utilities pipeline, to the most thing total digits. are some indicator so of our competitors of treatment actually I think as drilling into percentage there is that overlaps be important important with pay bidding the down single health over up, attention revenue

offer are. for as again, So the of what that underlying the that's I something you of focus a on. to And reflection health just all utilities

in more then specifically inventory little Water that Applied what sell-in, you Definitely just see Can us a channel slower could channel and to bit lumpy? on you're to for you And be segment appreciate color continue sellout orders segment? and in you for Will balance? guys. that your maybe do the versus they a period a of ask And I see color, still there. seeing give do you color across inventories

business, our a are a orders, we the amount Yes. Andy, only configured to it's of XX%. to commercial don't of of within our it's at engineered Applied Andy, you order, of lot Water -- stocking. tremendous order. if have look But business, resi Again, overall Xylem kind

It's of has a job. mainly itself and kind we that ship. and Yes, out. So of bit book resi specific in business lot have And they're a worked our commercially. little for a

a X% you resi. business, up our of If of again, up the the and at basis, hit the compares year-over-year it's kind our we're on look of bottom on small our part out a portfolio. and makes we're which of we've business, downturn resi But coming on

to today's would concludes This for I of Q&A call. like turn the now over portion to closing the floor Decker Patrick remarks.

an as thank great make to next world. Xylem a positioned work we're be doing years. you, where has forward mean nearly looking this the everyone, its difference and do to Well, today. all thank that to committed set families. I been XX -- and work never The chapter. couldn't company as want you to to the with with tail into them such extraordinary [ going and and to and all Matthew, we as best doing customers more Again, has privilege partners the proud It's been are are colleagues your better team I over past I'm I Bill what communities And never a to the more and to of is of been ]. very around saying our important they

line you. at XXXX a your Third and this time, concludes Quarter Conference disconnect wonderful day. This have Please Xylem Thank Call. today's Earnings