Xylem Inc
For the period ended Sep 30, 2024. Filed Oct 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 31, 2024
XYL$97.83-2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0001524472-24-000033
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0001524472-24-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 136 previous paragraphs and 138 current paragraphs.
73 unchanged; 49 reworded; 16 added; 14 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 19 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
(a)Foreign currency translation impact for the year due to the strengthening in value of various currencies against the U.S. Dollar, the largest being the British Pound and the Euro.
Current report
For the nine months ended September 30, 2024, revenue increased $227 million, or 19.3% as compared to the prior year, coming entirely from organic revenue growth. Smart metering and other applications had $234 million of organic growth for the nine months, which was partially offset by $7 million of organic decline in analytics, both impacted by similar dynamics experienced in the current quarter.
Current report
Water Solutions and Services revenue decreased $10 million, or 1.7%, for the third quarter of 2024 as compared to the prior year. Revenue declines for the quarter included organic revenue declines of $8 million, or 1.4%, and $2 million of unfavorable impacts from foreign currency translation. Organic revenue declines were primarily driven by declines in the U.S. driven by lapping of large capital projects in the prior year, partially offset by demand in the dewatering rental application, and demand in dewatering applications in the emerging markets.
Current report
(a)Foreign currency translation impact for the year due to the strengthening in value of various currencies against the U.S. Dollar, the largest being the British Pound and the Euro.
Current report
Gross margin as a percentage of revenue increased 50 basis points to 37.3% for the three months ended September 30, 2024, as compared to 36.8% for the three months ended September 30, 2023. Gross margin for the quarter included favorable impacts of 50 basis points from decreases in special charges and realignment costs as compared to the prior year. Additionally, gross margin included 290 basis points of favorable operational impacts, consisting of 180 basis points of productivity savings and 110 basis points of price realization. These increases in gross margin were offset by 290 basis points of unfavorable operational impacts driven by 170 basis points of inflation, 30 basis points of unfavorable mix and 30 basis points of increased spending on strategic investments.
Current report
During the three and nine months ended September 30, 2023, we incurred restructuring costs of $20 million and $54 million, respectively. We incurred these charges primarily as a result of our acquisition of Evoqua and the related integration activities. Approximately, $11 million and $25 million of the charges, respectively, are related to stock based compensation expense due to acceleration clauses in Evoqua's equity compensation agreements and approximately $1 million and $14 million of the charges, respectively, resulted from the reduction of headcount related to the Evoqua integration for the three and nine months ended September 30, 2023. Additionally, during the three and nine month ended September 30, 2023, we incurred $8 million and $15 million, respectively of charges related to our efforts to reposition our businesses to optimize our cost structure, improve our operational efficiency and effectiveness, strengthen our competitive positioning and better serve our customers. The charges were incurred across all of our segments.
Current report
Adjusted EBITDA was $127 million (adjusted EBITDA margin of 20.4%) for the third quarter of 2024, an increase of $5 million, or 4.1%, when compared to adjusted EBITDA of $122 million (adjusted EBITDA margin of 19.9%) during the prior year. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin; however, adjusted EBITDA margin also benefited from the exclusion of incremental depreciation and amortization as compared to the prior year.
Current report
Adjusted EBITDA was $354 million (adjusted EBITDA margin of 19.4%) for the nine months ended September 30, 2024, an increase of $66 million, or 23%, when compared to adjusted EBITDA of $288 million (adjusted EBITDA margin of 18.7%) during the prior year. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin; however, adjusted EBITDA margin also benefited from the relative incremental increase in depreciation and software amortization expense.
Current report
Operating income for our Measurement and Control Solutions segment was $66 million (operating margin of 14.4%) during the third quarter of 2024, an increase of $31 million, or 88.6%, when compared to operating income of $35 million (operating margin of 8.5%) during the prior year, or a total increase in operating margin of 590 basis points. Operating margin expansion included favorable impacts of 160 basis points from a decrease in restructuring and realignment costs, offset by slight increases to acquired intangible asset amortization and special charges as compared to the prior year on increased revenue. Additionally, operating margin expansion included 920 basis points of favorable operational impacts, primarily consisting of 340 basis points of productivity savings, 330 basis points of price realization and 190 basis points of increased volume. Margin expansion was partially offset by negative operational impacts of 490 basis points driven by 330 basis points of inflation and 100 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs and special charges, adjusted operating income was $82 million (adjusted operating margin of 17.9%) for the third quarter of 2024 as compared to adjusted operating income of $56 million (adjusted operating margin of 13.6%) for the third quarter of 2023.
Current report
Operating income for our Measurement and Control Solutions segment was $215 million (operating margin of 15.3%) during the nine months ended September 30, 2024, an increase of $125 million, or 138.9%, when compared to operating income of $90 million (operating margin of 7.7%) during the prior year, or a total increase in operating margin of 760 basis points. Operating margin expansion included favorable impacts of 160 basis points from reduced restructuring and realignment costs and flat special charges, and acquired intangible asset amortization on increased revenue as compared to the prior year. Additionally, operating margin expansion included 1,010 basis points of favorable operational impacts, consisting of 340 basis points of productivity savings, 300 basis points of price realization, 290 basis points of increased volume, and 80 basis points of favorable mix. Margin expansion was partially offset by negative operational impacts of 410 basis points driven by 240 basis points of inflation, 70 basis points of increased inventory management costs, and 70 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs and special charges, adjusted operating income was $264 million (adjusted operating margin of 18.8%) for the nine months ended September 30, 2024 as compared to adjusted operating income of $150 million (adjusted operating margin of 12.8%) for the nine months ended September 30, 2023.
Current report
Adjusted EBITDA was $315 million (adjusted EBITDA margin of 22.5%) for the nine months ended September 30, 2024, an increase of $114 million, or 57%, when compared to adjusted EBITDA of $201 million (adjusted EBITDA margin of 17.1%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA margin did not benefit from decreases in share-based compensation or the relative impact of depreciation and software amortization on increased revenue.
Current report
Operating income for our Water Solutions and Services segment was $63 million (operating margin of 10.9%) during the third quarter of 2024, an increase of $30 million, or 90.9%, when compared to operating income of $33 million (operating margin of 5.6%) during the prior year, or a total increase in operating margin of 530 basis points. Operating margin expansion included favorable impacts of 400 basis points from decreased acquired intangible asset amortization, special charges, and restructuring and realignment as compared to the prior year. Additionally, operating margin expansion included 510 basis points of favorable operational impacts, driven by 220 basis points of productivity savings and 130 basis points of price realization. Margin expansion was offset by negative operational impacts of 380 basis points driven by 190 basis points of inflation, 70 basis points of increased spending on strategic investments, 60 basis points of unfavorable foreign currency exchange, and 50 basis points of decreased volume. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $94 million (adjusted operating margin of 16.3%) for the third quarter of 2024 as compared to adjusted operating income of $88 million (adjusted operating margin of 15.0%) for the third quarter of 2023.
Current report
Adjusted EBITDA was $142 million (adjusted EBITDA margin of 24.7%) for the third quarter of 2024, an increase of $9 million, or 6.8%, when compared to adjusted EBITDA of $133 million (adjusted EBITDA margin of 22.7%) during the prior year. The increase in adjusted EBITDA margin was primarily due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA margin expansion was lower due to the relative impacts of incremental increases in depreciation and software amortization expense, stock-based compensation expense and other non-operating expense in the quarter.
Current report
Operating income for our Water Solutions and Services segment was $160 million (operating margin of 9.2%) during the nine months ended September 30, 2024, an increase of $83 million, or 107.8%, when compared to operating income of $77 million (operating margin of 6.8%) during the prior year, or a total increase in operating margin of 240 basis points. Operating margin expansion included favorable impacts of 90 basis points due to decreases in special charges and increases in acquired intangible asset amortization and restructuring and realignment costs as compared to the prior year. Additionally, operating margin expansion included 460 basis points of favorable operational impacts, driven by 150 basis points of increased volume, 140 basis points of productivity savings and 110 basis points of price realization. Margin expansion was offset by negative operational impacts of 310 basis points driven by 140 basis points of inflation and 90 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, special charges, and restructuring and realignment costs, adjusted operating income was $276 million (adjusted operating margin of 15.9%) for the nine months ended September 30, 2024 as compared to adjusted operating income of $163 million (adjusted operating margin of 14.4%) for the nine months ended September 30, 2023.
Current report
Adjusted EBITDA was $410 million (adjusted EBITDA margin of 23.6%) for the nine months ended September 30, 2024, an increase of $166 million, or 68%, when compared to adjusted EBITDA of $244 million (adjusted EBITDA margin of 21.5%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA margin was not negatively impacted by increased depreciation and software amortization expense or the relative impact of share-based compensation expense on increased revenue.
Current report
Interest expense remained consistent at $35 million for both the nine months ended September 30, 2024 and 2023.
Removed paragraphs (14)
Previous report
(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Euro, British Pound, Chinese Yuan and the Chilean Peso.
Previous report
For the six months ended June 30, 2024, revenue increased $182 million, or 23.9% (24.0% increase on a constant currency basis) as compared to the prior year. Revenue was negatively impacted by $1 million of foreign currency translation, with the change at constant currency coming entirely from an organic increase of $183 million (24.0% increase). Organic revenue growth during the quarter was driven by $184 million in the smart metering and other applications, primarily in the U.S. driven by increased sales volume and backlog execution due to supply chain improvements. This growth was partially offset by a $1 million organic decline in analytics.
Previous report
Water Solutions and Services revenue increased $259 million, or 76.0%, for the second quarter of 2024 (76.2% increase on a constant currency basis) as compared to the prior year. Revenue growth for the quarter contributed by acquisitions was $218 million, with the remainder of the increase coming from organic revenue growth of $42 million, or 12.3%, and $1 million of unfavorable impacts from foreign currency translation. Organic revenue growth was primarily driven by strength in the dewatering application across all major geographic markets, led by the U.S. due to increased sales volume and favorable price realization and the emerging markets due to increased capital project revenue, as well as organic growth in the integrated solutions and services ("ISS") applications in the U.S.
Previous report
(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Euro, British Pound, Chinese Yuan and the Chilean Peso.
Previous report
Adjusted EBITDA was $125 million (adjusted EBITDA margin of 19.8%) for the second quarter of 2024, an increase of $19 million, or 17.9%, when compared to adjusted EBITDA of $106 million (adjusted EBITDA margin of 20.4%) during the prior year. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin; however, adjusted EBITDA margin was not negatively impacted by the relative impact of depreciation, and software amortization expense.
Previous report
Adjusted EBITDA was $227 million (adjusted EBITDA margin of 18.8%) for the six months ended June 30, 2024, an increase of $61 million, or 37%, when compared to adjusted EBITDA of $166 million (adjusted EBITDA margin of 17.9%) during the prior year. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin; however, adjusted EBITDA margin was not negatively impacted by the relative impact of depreciation, and software amortization expense.
Previous report
Operating income for our Measurement and Control Solutions segment was $79 million (operating margin of 16.4%) during the second quarter of 2024, an increase of $50 million, or 172.4%, when compared to operating income of $29 million (operating margin of 7.6%) during the prior year, or a total increase in operating margin of 880 basis points. Operating margin expansion included favorable impacts of 110 basis points from a net decrease in acquired intangible asset amortization, restructuring and realignment costs and special charges as compared to the prior year. Additionally, operating margin expansion included 1,040 basis points of favorable operational impacts, primarily consisting of 320 basis points of increased volume, 310 basis points of price realization, 300 basis points of productivity savings, and 100 basis points of favorable mix. Margin expansion was partially offset by negative operational impacts of 270 basis points driven by 170 basis points of inflation, 60 basis points of increased inventory management costs, and 40 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs and special charges, adjusted operating income was $96 million (adjusted operating margin of 19.9%) for the second quarter of 2024 as compared to adjusted operating income of $47 million (adjusted operating margin of 12.2%) for the second quarter of 2023.
Previous report
Operating income for our Measurement and Control Solutions segment was $149 million (operating margin of 15.8%) during the six months ended June 30, 2024, an increase of $94 million, or 170.9%, when compared to operating income of $55 million (operating margin of 7.2%) during the prior year, or a total increase in operating margin of 860 basis points. Operating margin expansion included favorable impacts of 160 basis points from reduced restructuring and realignment costs, special charges, and acquired intangible asset amortization as compared to the prior year. Additionally, operating margin expansion included 1,060 basis points of favorable operational impacts, consisting of 340 basis points of productivity savings, 340 basis points of increased volume, 290 basis points of price realization, and 90 basis points of favorable mix. Margin expansion was partially offset by negative operational impacts of 360 basis points driven by 200 basis points of inflation, 70 basis points of increased inventory management costs, and 50 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs and special charges, adjusted operating income was $182 million (adjusted operating margin of 19.3%) for the six months ended June 30, 2024 as compared to adjusted operating income of $94 million (adjusted operating margin of 12.3%) for the six months ended June 30, 2023.
Previous report
Adjusted EBITDA was $218 million (adjusted EBITDA margin of 23.1%) for the six months ended June 30, 2024, an increase of $90 million, or 70%, when compared to adjusted EBITDA of $128 million (adjusted EBITDA margin of 16.8%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA margin did not benefit from the relative impact of share based compensation and depreciation and software amortization.
Previous report
Operating income for our Water Solutions and Services segment was $47 million (operating margin of 7.8%) during the second quarter of 2024, an increase of $21 million, or 80.8%, when compared to operating income of $26 million (operating margin of 7.6%) during the prior year, or a total increase in operating margin of 20 basis points. Operating margin expansion included unfavorable impacts of 50 basis points from increased acquired intangible asset amortization and restructuring and realignment costs, partially offset by decreases in special charges as compared to the prior year. Additionally, operating margin expansion included 610 basis points of favorable operational impacts, consisting of 370 basis points of increased volume, 120 basis points of productivity savings and 120 basis points of price realization. Margin expansion was offset by negative operational impacts of 540 basis points driven by 190 basis points of unfavorable mix, 150 basis points of inflation, and 60 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $99 million (adjusted operating margin of 16.5%) for the second quarter of 2024 as compared to adjusted operating income of $54 million (adjusted operating margin of 15.8%) for the second quarter of 2023.
Previous report
Adjusted EBITDA was $143 million (adjusted EBITDA margin of 23.8%) for the second quarter of 2024, an increase of $64 million, or 81.0%, when compared to adjusted EBITDA of $79 million (adjusted EBITDA margin of 23.2%) during the prior year. The increase in adjusted EBITDA margin was primarily due to the same factors as those impacting the increase in adjusted operating margin.
Previous report
Operating income for our Water Solutions and Services segment was $97 million (operating margin of 8.4%) during the six months ended June 30, 2024, an increase of $53 million, or 120.5%, when compared to operating income of $44 million (operating margin of 8.0%) during the prior year, or a total increase in operating margin of 40 basis points. Operating margin expansion included unfavorable impacts of 160 basis points from increases in acquired intangible asset amortization, restructuring and realignment costs, and special charges as compared to the prior year. Additionally, operating margin expansion included 560 basis points of favorable operational impacts, consisting of 260 basis points of increased volume, 110 basis points of accretive margin from the Evoqua acquisition, 100 basis points of price realization, and 90 basis points of productivity savings. Margin expansion was offset by negative operational impacts of 350 basis points driven by 110 basis points of inflation, 90 basis points of increased spending on strategic investments, and 20 basis points of unfavorable mix. Excluding acquired intangible asset amortization, special charges, and restructuring and realignment costs, adjusted operating income was $182 million (adjusted operating margin of 15.7%) for the six months ended June 30, 2024 as compared to adjusted operating income of $75 million (adjusted operating margin of 13.7%) for the six months ended June 30, 2023.
Previous report
Adjusted EBITDA was $268 million (adjusted EBITDA margin of 23.1%) for the six months ended June 30, 2024, an increase of $157 million, or 141%, when compared to adjusted EBITDA of $111 million (adjusted EBITDA margin of 20.3%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA margin was not negatively impacted by the relative impact of depreciation and software amortization expense.
Previous report
For the six months ended June 30, 2024 interest expense was $25 million compared to $21 million for the six months ended June 30, 2023. The increase in interest expense was primarily driven by a term loan entered into in May 2023 for use in funding the acquisition of Evoqua and securitization and equipment financing facilities assumed as part of our acquisition of Evoqua. The term loan was repaid on April 19, 2024.
Reworded paragraphs (49)
Previous wording
•Water Solutions and Services provides tailored services and solutions, in collaboration with customers and backed by life‑cycle services, including on‑demand water, outsourced water, recycle / reuse, specialty dewatering and emergency response service alternatives to improve operational reliability, performance and environmental compliance. Key offerings within this segment also include equipment systems for industrial needs (influent water, boiler feed water, ultrahigh purity, process water, wastewater treatment, and recycle / reuse), full-scale outsourcing of operations and maintenance, and municipal services, including odor and corrosion control services, as well as leak detection, condition assessment and asset management and pressure monitoring solutions.
Current wording
•Water Solutions and Services provides tailored services and solutions, in collaboration with customers, including on‑demand water, outsourced water, recycle / reuse, specialty dewatering and emergency response service alternatives to improve operational reliability, performance and environmental compliance. Key offerings within this segment also include equipment systems for industrial needs (influent water, boiler feed water, ultrahigh purity, process water, wastewater treatment, and recycle / reuse), full-scale outsourcing of operations and maintenance, and municipal services, including odor and corrosion control services, as well as leak detection, condition assessment and asset management and pressure monitoring solutions.
Previous wording
Xylem reported revenue for the second quarter of 2024 of $2,169 million, an increase of 26.0% compared to $1,722 million reported in the second quarter of 2023. The revenue increase consisted primarily of organic growth of 9.2% on continued strong execution and demand across most of our reportable segments, as well as revenue contributed by acquisitions and divestitures, net, of $302 million.
Current wording
Xylem reported revenue for the third quarter of 2024 of $2,104 million, an increase of 1.3% compared to $2,076 million reported in the third quarter of 2023. The revenue increase consisted primarily of organic growth of 1.1% driven by strong execution and demand in our Measurement and Control Solutions segment.
Previous wording
•Orders of $2,087 million, up 12.4% from $1,856 million in the prior year period, and down 1.2% on an organic basis.
Current wording
•Orders of $2,201 million, up 8.4% from $2,031 million in the prior year period, and up 8.2% on an organic basis.
Previous wording
•Earnings per share of $0.80, up 77.8% compared to prior year ($1.09, up 11.2% versus prior year, on an adjusted basis).
Current wording
•Earnings per share of $0.89, up 41.3% compared to prior year ($1.11, up 12.1% versus prior year, on an adjusted basis).
Previous wording
•Net income as a percent of revenue of 8.9%, up 360 basis points compared to 5.3% in the prior year. Adjusted EBITDA margin of 20.8%, up 170 basis points when compared to 19.1% in the prior year.
Current wording
•Net income as a percent of revenue of 10.3%, up 300 basis points compared to 7.3% in the prior year. Adjusted EBITDA margin of 21.2%, up 140 basis points when compared to 19.8% in the prior year.
Previous wording
(a) The special charges for the three and six months ended June 30, 2024 and 2023 consist primarily of acquisition and integration costs related to the Evoqua transaction.
Current wording
(a) The special charges for the three and nine months ended September 30, 2024 and 2023 consist primarily of acquisition and integration costs related to the Evoqua transaction.
Previous wording
Revenue generated during the three and six months ended June 30, 2024 was $2,169 million and $4,202 million, respectively, reflecting an increase of $447 million, or 26.0%, and $1,032 million, or 32.6%, respectively, compared to the prior year. On a constant currency basis, revenue grew 26.7% and 32.9% for the three and six months ended June 30, 2024. Revenue growth contributed by acquisitions and divestitures, net, was $302 million and $782 million for the three and six months ended June 30, 2024 and organic revenue increased $158 million, or 9.2%, and $261 million, or 8.2%, for the three and six months ended June 30, 2024, with foreign currency translation having unfavorable impacts on revenue of $13 million and $11 million, respectively. The increases reflect strong organic growth across all of our major geographic regions, led by the U.S. for the three and six months ended June 30, 2024.
Current wording
Revenue generated during the three and nine months ended September 30, 2024 was $2,104 million and $6,306 million, respectively, reflecting an increase of $28 million, or 1.3%, and $1,060 million, or 20.2%, respectively, compared to the prior year. Revenue growth contributed by acquisitions and divestitures, net, was $0 million for the three months ended and $782 million for the nine months ended September 30, 2024, respectively. Organic revenue increased $22 million, or 1.1%, and $283 million, or 5.4%, for the three and nine months ended September 30, 2024. Foreign currency translation had a favorable impact on revenue of $6 million and an unfavorable impact on revenue of $5 million, for the three and nine months ended September 30, 2024 respectively. The increases in organic revenue reflect strong organic growth in the U.S., and other North America, partially offset by organic declines in western Europe and the emerging markets for the three months ended September 30, 2024, and strong organic growth across all major regions, led by the U.S., for the nine months ended September 30, 2024.
Previous wording
The following table illustrates the impact from organic growth, recent acquisitions and divestitures, and foreign currency translation in relation to revenue during the three and six months ended June 30, 2024:
Current wording
The following table illustrates the impact from organic growth, recent acquisitions and divestitures, and foreign currency translation in relation to revenue during the three and nine months ended September 30, 2024:
Previous wording
(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Chinese Yuan, Chilean Peso, Australian Dollar and the Egyptian pound, offset by the strengthening in the British Pound.
Current wording
(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Chinese Yuan, Chilean Peso, Canadian Dollar and the Egyptian pound, offset by the strengthening in the British Pound.
Previous wording
Water Infrastructure revenue increased $112 million, or 21.6%, for the second quarter of 2024 (22.7% increase on a constant currency basis) as compared to the prior year. Revenue growth for the quarter contributed by acquisitions was $84 million, with the remainder of the increase coming from organic revenue growth of $34 million, or 6.6%, and $6 million of unfavorable impacts from foreign currency translation. The transport application experienced $24 million of organic revenue growth, driven by strength across all of our major geographic regions, led by western Europe and the emerging markets due to increased revenue from capital projects and in the U.S. due to increased sales volume and execution on infrastructure projects. Organic revenue for the treatment applications grew by $10 million, led by increased volume in the U.S.
Current wording
Water Infrastructure revenue increased $11 million, or 1.8%, for the third quarter of 2024 as compared to the prior year. Revenue growth for the quarter included organic revenue growth of $6 million, or 1.0% and $5 million of favorable impacts from foreign currency translation. The transport application contributed $15 million of organic revenue growth, driven by strength across all of our major geographic regions and other North America. Growth was led by western Europe due to increased revenue from capital projects, and price realization. Organic revenue for the treatment applications decreased by $9 million, with declines across all major geographic regions, led by declines in the U.S. driven by project timing.
Previous wording
For the six months ended June 30, 2024, revenue increased $276 million, or 29.7% (30.2% increase on a constant currency basis) as compared to the prior year. Revenue growth contributed by acquisitions was $221 million, with the remainder of the increase coming from organic revenue growth of $60 million, or 6.4%, and $5 million of unfavorable impacts from foreign currency translation.The transport application experienced $38 million of organic revenue growth, driven by strength in all of our major geographic regions, led by backlog execution and timing of projects in western Europe and the emerging markets and increased volumes and execution on infrastructure projects in the U.S. Organic revenue for the treatment applications grew by $22 million, led by increased sales volume in the U.S. and increased revenue from capital projects in the emerging markets.
Current wording
For the nine months ended September 30, 2024, revenue increased $287 million, or 18.6% as compared to the prior year. Revenue growth contributed by acquisitions was $221 million, with the remainder of the increase coming from organic revenue growth of $66 million, or 4.3%. The transport application had $53 million of organic revenue growth, driven by strength in all of our major geographic regions, driven by backlog execution, infrastructure projects, and price realization in western Europe, the U.S. and other North America. Organic revenue for the treatment applications grew by $13 million, led by increased sales volume in the U.S. and project revenue in other Asia Pacific.
Previous wording
Applied Water revenue decreased $22 million, or 4.6%, for the second quarter of 2024 (3.8% decrease on a constant currency basis) as compared to the prior year. Revenue was negatively impacted by $4 million of foreign currency translation, with the change at constant currency coming entirely from an organic decline of $18 million. The decline was driven by the industrial applications as a result of softness in the U.S. and western Europe. Organic revenue was flat within the building solutions applications, due to modest growth in the emerging markets offset by declines in the U.S.
Current wording
Applied Water revenue decreased $18 million, or 3.9%, for the third quarter of 2024 as compared to the prior year. Revenue was positively impacted by $2 million of foreign currency translation, with the change at constant currency coming entirely from an organic decline of $20 million, or 4.3%. Organic weakness was driven by declines in both the building solutions and industrial applications. Building solutions organic revenue decreased by $13 million due to softness across all major geographic regions, led by the U.S. Industrial organic revenue declined $7 million as a result of softness in the emerging markets and western Europe, partially offset by modest organic growth in the U.S.
Previous wording
For the six months ended June 30, 2024, revenue decreased $39 million, or 4.2% (3.9% decrease on a constant currency basis) as compared to the prior year. Revenue was negatively impacted by $3 million of foreign currency translation during the six month period, with the change at constant currency coming primarily from organic declines of $36 million. Organic weakness was driven by declines in both the industrial and building solutions applications. Industrial organic revenue decreased by $23 million due to softness in the U.S. and western Europe. Within building solutions, organic revenue declined $13 million as a result of softness in the U.S. and western Europe.
Current wording
For the nine months ended September 30, 2024, revenue decreased $57 million, or 4.1% as compared to the prior year. Revenue was negatively impacted by $1 million of foreign currency translation during the nine month period, with the change at constant currency coming entirely from organic declines of $56 million, or 4.0%. Organic weakness was driven by declines in both the industrial and building solutions applications. Industrial organic revenue decreased by $30 million due to timing of projects in the emerging markets and softness in the U.S. and western Europe. Organic revenue from building solutions declined $26 million as a result of softness in the U.S. and western Europe.
Previous wording
Measurement and Control Solutions revenue increased $98 million, or 25.5%, for the second quarter of 2024 (26.0% increase on a constant currency basis) as compared to the prior year. Revenue was negatively impacted by $2 million of foreign currency translation, with the change at constant currency coming entirely from organic growth of $100 million, or 26.0%. Organic revenue growth during the quarter was driven by $99 million in the smart metering and other applications, primarily in the U.S. driven by increased sales volume due to supply chain improvements, as well as $1 million in organic growth from analytics.
Current wording
Measurement and Control Solutions revenue increased $45 million, or 10.9%, for the third quarter of 2024 as compared to the prior year. Revenue was positively impacted by $1 million of foreign currency translation, with the change at constant currency coming entirely from organic growth of $44 million, or 10.7%. Organic revenue growth during the quarter was driven by $50 million in the smart metering and other applications in the U.S. due to increased sales volume due to supply chain improvements, which was partially offset by $6 million in organic declines from analytics driven by lapping of project deliveries and backlog execution in the U.S. in the prior year.
Previous wording
For the six months ended June 30, 2024, revenue increased $613 million, or 111.9% (112.2% increase on a constant currency basis) as compared to the prior year. Revenue growth contributed by acquisitions was $561 million, with the remainder of the increase coming from organic revenue growth of $54 million, or 9.8%, and $2 million of unfavorable impacts from foreign currency translation. Organic revenue growth was primarily from strength in the dewatering application across all major geographic markets, led by the U.S. due to increased sales volume and favorable price realization, and the emerging markets due to increased capital project revenue, as well as organic growth in the ISS applications in the U.S.
Current wording
For the nine months ended September 30, 2024, revenue increased $603 million, or 53.2% as compared to the prior year. Revenue growth contributed by acquisitions was $561 million, with the remainder of the increase coming from organic revenue growth of $46 million, or 4.0%, partially offset by $4 million of unfavorable impacts from foreign currency translation. Organic revenue growth was primarily from strength in the dewatering applications in the U.S. and the emerging markets due to increased sales volume, strong rental demand and increased capital project revenue.
Previous wording
An order represents a legally enforceable, written document that includes the scope of work or services to be performed or equipment to be supplied to a customer, the corresponding price and the expected delivery date for the applicable products or services to be provided. An order often takes the form of a customer purchase order or a signed quote from a Xylem business. Orders received during the second quarter of 2024 were $2,087 million, an increase of $231 million, or 12.4%, over the prior year (13.0% increase on a constant currency basis). Orders received during the six months ended of 2024 were $4,333 million, an increase of $907 million, or 26.5%, over the prior year (26.8% increase on a constant currency basis). Orders contributed by acquisitions were $265 million and $886 million in the three and six months ended ended June 30, 2024. Order intake was negatively impacted by $11 million and $10 million of foreign currency translation for the three and six months ended June 30, 2024, respectively with organic orders being a decline of $23 million (1.2%) and growth of $31 million (0.9%) for the three and six months ended June 30, 2024, respectively.
Current wording
An order represents a legally enforceable, written document that includes the scope of work or services to be performed or equipment to be supplied to a customer, the corresponding price and the expected delivery date for the applicable products or services to be provided. An order often takes the form of a customer purchase order or a signed quote from a Xylem business.
Previous wording
The following table illustrates the impact from organic decline/growth, recent acquisitions and divestitures, and foreign currency translation in relation to orders during the three and six months ended June 30, 2024:
Current wording
The following tables illustrate the impact from organic decline/growth, recent acquisitions and divestitures, and foreign currency translation in relation to orders during the three and nine months ended September 30, 2024:
Previous wording
(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Chinese Yuan, Chilean Peso, Australian Dollar and the Egyptian pound, offset by the strengthening in the British Pound.
Current wording
(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Chinese Yuan, Chilean Peso, Canadian Dollar and the Egyptian pound, offset by the strengthening in the British Pound.
Previous wording
Backlog includes orders on hand as well as contractual customer agreements at the end of the period. Delivery schedules vary from customer to customer based on their requirements. Annual or multi-year contracts are subject to rescheduling and cancellation by customers due to the long-term nature of the contracts. As such, beginning total backlog, plus orders, minus revenues, will not equal ending total backlog due to contract adjustments, foreign currency fluctuations, and other factors. Typically, capital projects require longer lead production cycles and deployment schedules and delays occur from time to time. Total backlog was $5,156 million at June 30, 2024, a decrease of $115 million or 2.2%, as compared to June 30, 2023 backlog of $5,271 million. The decrease in backlog was driven by backlog execution in the Measurement and Control Solutions segment. Backlog increased $68 million or 1.3%, as compared to December 31, 2023 backlog of $5,088 million. The increase in backlog was driven by the order intake and contract wins in the current period outpacing revenue and cancellations. We anticipate that approximately 40% of the backlog at June 30, 2024 will be recognized as revenue in the remainder of 2024. There were no significant order cancellations during the quarter.
Current wording
Backlog includes orders on hand as well as contractual customer agreements at the end of the period. Delivery schedules vary from customer to customer based on their requirements. Annual or multi-year contracts are subject to rescheduling and cancellation by customers due to the long-term nature of the contracts. As such, beginning total backlog, plus orders, minus revenues, will not equal ending total backlog due to contract adjustments, foreign currency fluctuations, and other factors. Typically, capital projects require longer lead production cycles and deployment schedules and delays occur from time to time. Total backlog was $5,253 million at September 30, 2024, an increase of $84 million or 1.6%, as compared to September 30, 2023 backlog of $5,169 million. The increase in backlog was driven by the order intake and contract wins in the current period outpacing revenue, as well as favorable impacts from foreign currency translation. Backlog grew in the Water Solutions and Services and Water Infrastructure segments, partially offset by a decrease in the Measurement and Control Solutions segment's backlog due to execution on previously elevated backlog levels. Backlog increased $165 million or 3.2%, as compared to December 31, 2023 backlog of $5,088 million. We anticipate that approximately 30% of the backlog at September 30, 2024 will be recognized as revenue in the remainder of 2024. There were no significant order cancellations during the quarter.
Previous wording
Gross margin as a percentage of revenue remained flat at 37.8% for the three months ended June 30, 2024 and decreased 40 basis points to 37.4% for the six months ended June 30, 2024, as compared to 37.8% for the comparative 2023 period. Gross margin for the quarter included unfavorable impacts of 10 basis points from increases in special charges and acquired intangible asset amortization as compared to the prior year. Additionally, gross margin included 320 basis points of favorable operational impacts, driven by 170 basis points of favorable operational impacts, 90 basis points of price realization, and 50 basis points of increased volume. These increased in gross margin were offset by 310 basis points of unfavorable operational impacts driven by 120 basis points of inflation, 60 basis points of unfavorable mix, 30 basis points of inventory management costs, and 20 basis points of increased spending on strategic investments. The gross margin decrease for the six-month period included 50 basis points from increases in special charges and acquired intangible asset amortization as compared to the prior year. Additionally, gross margin decline included 290 basis points of unfavorable operational impacts, driven by 120 basis points of inflation and 100 basis points of unfavorable impacts from the Evoqua acquisition. The gross margin decrease was partially offset by 300 basis points of favorable operational impacts driven by 170 basis points of productivity savings, 80 basis points of favorable price realization, and 30 basis points of increased volume.
Current wording
Gross margin as a percentage of revenue decreased 10 basis points to 37.3% for the nine months ended September 30, 2024, as compared to 37.4% in the prior year. The gross margin decrease included 20 basis points of unfavorable impacts from increases in acquired intangible asset amortization, partially offset by decreases in realignment costs and special charges as compared to the prior year. Additionally, gross margin decline included 270 basis points of unfavorable operational impacts, driven by 130 basis points of inflation, 70 basis points of unfavorable impacts from the Evoqua acquisition, 30 basis points in increased spending on strategic investments, and 30 basis points of increased inventory management costs. The gross margin decrease was partially offset by 280 basis points of favorable operational impacts driven by 180 basis points of productivity savings and 90 basis points of favorable price realization.
Previous wording
The following table presents operating expenses for the three and six months ended June 30, 2024 and 2023:
Current wording
The following table presents operating expenses for the three and nine months ended September 30, 2024 and 2023:
Previous wording
SG&A expenses increased by $39 million to $485 million, or 22.4% of revenue, in the second quarter of 2024, as compared to $446 million, or 25.9% of revenue, in the comparable 2023 period and increased $159 million to $959 million, or 22.8% of revenue, in the six-month period ended June 30, 2024, as compared to $800 million, or 25.2% of revenue, in the comparable 2023 period. Increases in SG&A in the second quarter of 2024 as compared to the prior year primarily consisted of $57 million of additional operational SG&A from the acquisition of Evoqua, inflation of $12 million, increased spending on strategic investments of $11 million, and $9 million of volume. These increases to SG&A expenses were partially offset by decreased realignment costs and special charges of $42 million and $14 million of productivity savings. Increases in SG&A in the six-month period ended June 30, 2024 as compared to the prior year primarily consisted of $148 million of additional operational SG&A from the acquisition of Evoqua, inflation of $23 million, increased spending on strategic investments of $18 million and $10 million of volume. These increases to SG&A expenses were partially offset by decreased realignment costs and special charges of $50 million and $25 million of productivity savings
Current wording
SG&A expenses decreased by $46 million to $445 million, or 21.2% of revenue, in the third quarter of 2024, as compared to $491 million, or 23.7% of revenue, in the comparable 2023 period and increased $113 million to $1,404 million, or 22.3% of revenue, in the nine-month period ended September 30, 2024, as compared to $1,291 million, or 24.6% of revenue, in the comparable 2023 period. Decreases in SG&A in the third quarter of 2024 as compared to the prior year primarily consisted of a $29 million decrease in acquired intangible asset amortization, special charges, and realignment costs, $22 million of productivity savings, including cost synergies from the Evoqua acquisition, partially offset by inflation of $11 million. Increases in SG&A in the nine-month period ended September 30, 2024 as compared to the prior year were primarily driven by $148 million of additional operational SG&A from the acquisition of Evoqua, inflation of $34 million, increased spending on strategic investments of $20 million and an increase in acquired intangible asset amortization of $12 million. These increases to SG&A expenses were partially offset by decreases in special charges and realignment costs of $65 million and $47 million of productivity savings, including Evoqua cost synergies.
Previous wording
R&D expense was $58 million, or 2.7% of revenue, in the second quarter of 2024, as compared to $58 million, or 3.4% of revenue in the second quarter of 2023, and was $117 million, or 2.8% of revenue, in the six months ended June 30, 2024, as compared to $111 million, or 3.5% of revenue in the six months ended June 30, 2023. The R&D spend has remained fairly consistent year over year.
Current wording
R&D expense was $55 million, or 2.6% of revenue, in the third quarter of 2024, as compared to $61 million, or 2.9% of revenue in the third quarter of 2023, and was $172 million, or 2.7% of revenue, in the nine months ended September 30, 2024, as compared to $172 million, or 3.3% of revenue in the nine months ended September 30, 2023. The R&D spend has remained fairly consistent year over year.
Previous wording
During the three and six months ended June 30, 2024, we incurred restructuring charges of $23 million and $32 million, respectively. For the three and six months ended June 30, 2024, the charges incurred primarily related to strengthening our competitive positioning and the integration of Evoqua.
Current wording
During the three and nine months ended September 30, 2024, we incurred restructuring charges of $4 million and $36 million, respectively. For the three and nine months ended September 30, 2024, the charges incurred primarily related to strengthening our competitive positioning and the integration of Evoqua.
Previous wording
Actions commenced in 2024 and 2023 consist primarily of severance charges. We currently expect to incur between $40 and $50 million in restructuring costs for the full year.
Current wording
Actions commenced in 2024 and 2023 consist primarily of severance and asset impairment charges. We currently expect to incur between $40 and $50 million in restructuring costs for the full year related to these actions.
Previous wording
Refer to Note 5, "Restructuring and Asset Impairment Charges."
Current wording
Refer to Note 5, "Restructuring and Asset Impairment Charges" for more information.
Previous wording
The following is a roll-forward for the six months ended June 30, 2024 and 2023 of employee position eliminations associated with restructuring activities:
Current wording
The following is a roll-forward for the nine months ended September 30, 2024 and 2023 of employee position eliminations associated with restructuring activities:
Previous wording
Refer to Note 9, "Goodwill and Other Intangible Assets."
Current wording
Refer to Note 9, "Goodwill and Other Intangible Assets" for more information on intangible asset impairment charges incurred during the three and nine months ended September 30,2024.
Previous wording
Operating income was $253 million (operating margin of 11.7%) during the second quarter of 2024, an increase of $134 million, or 112.6%, when compared to operating income of $119 million (operating margin of 6.9%) during the prior year. Operating margin increased 480 basis points, which included net favorable impacts of 360 basis points from decreases in special charges and restructuring and realignment costs, partially offset by increases in acquired intangible asset amortization compared to the prior year. Additionally, operating margin expansion included 530 basis points of favorable operational impacts driven by 240 basis points of productivity savings, 150 basis points of increased volumes, and 120 basis points of price realization. These favorable impacts were partially offset by 420 basis points of unfavorable operational impacts, driven by 180 basis points of inflation, 70 basis points of increased spending on strategic investments, 60 basis points of unfavorable mix and 50 basis points of increased employee costs. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $352 million (adjusted operating margin of 16.2%) for the second quarter of 2024 as compared to adjusted operating income of $259 million (adjusted operating margin of 15.0%) during the comparable quarter in the prior year.
Current wording
Operating income was $280 million (operating margin of 13.3%) during the third quarter of 2024, an increase of $89 million, or 46.6%, when compared to operating income of $191 million (operating margin of 9.2%) during the prior year. Operating margin increased 410 basis points, which included net favorable impacts of 270 basis points from decreases in restructuring and realignment costs, special charges and acquired intangible asset amortization compared to the prior year. Additionally, operating margin expansion included 510 basis points of favorable operational impacts driven by 290 basis points of productivity savings and 150 basis points of price realization. These favorable impacts were partially offset by 370 basis points of unfavorable operational impacts, driven by 230 basis points of inflation, followed by 60 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $350 million (adjusted operating margin of 16.6%) for the third quarter of 2024 as compared to adjusted operating income of $315 million (adjusted operating margin of 15.2%) during the comparable quarter in the prior year.
Previous wording
Net income for the second quarter was $194 million (net income margin of 8.9%), an increase of $102 million as compared to Net income in the prior year of $92 million (net income margin of 5.3%). The increase in net income was driven by increased operating income of $134 million, decreased non-operating income and gains from sale of businesses of $2 million, decreased interest expense of $1 million and increased income tax expense of $31 million. Adjusted EBITDA was $452 million (adjusted EBITDA margin of 20.8%) during the second quarter of 2024, an increase of $123 million, or 37%, when compared to adjusted EBITDA of $329 million (adjusted EBITDA margin of 19.1%) during the comparable quarter in the prior year, an increase to adjusted EBITDA margin of 170 basis points. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin; however, adjusted EBITDA margin also benefited from the exclusion of incremental depreciation and amortization.
Current wording
Net income for the third quarter was $217 million (net income margin of 10.3%), an increase of $65 million as compared to net income in the prior year of $152 million (net income margin of 7.3%). The increase in net income was driven by increased operating income of $89 million and decreased interest expense of $4 million, partially offset by increased income tax expense of $19 million and decreased non-operating income of $7 million and increased loss from sale of businesses of $2 million. Adjusted EBITDA was $447 million (adjusted EBITDA margin of 21.2%) during the third quarter of 2024, an increase of $36 million, or 8.8%, when compared to adjusted EBITDA of $411 million (adjusted EBITDA margin of 19.8%) during the comparable quarter in the prior year, an increase to adjusted EBITDA margin of 140 basis points. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin.
Previous wording
Operating income was $462 million (operating margin of 11.0%) during the six months ended June 30, 2024, an increase of $212 million, or 84.8%, when compared to operating income of $250 million (operating margin of 7.9%) during the prior year. Operating margin increased 310 basis points, which included net favorable impacts of 170 basis points from decreases in special charges and restructuring and realignment costs, partially offset by increases in acquired intangible asset amortization compared to the prior year. Additionally, operating margin expansion included 520 basis points of favorable operational impacts driven by 250 basis points of productivity savings, 130 basis points of increased volumes and 110 basis points of price realization. These favorable impacts were partially offset by 380 basis points of unfavorable operational impacts, driven by a 180 basis points of inflation, 80 basis points of increased spending on strategic investments and 40 basis points of increased inventory management costs. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $646 million (adjusted operating margin of 15.4%) for the six months ended June 30, 2024 as compared to adjusted operating income of $444 million (adjusted operating margin of 14.0%) during the comparable period in the prior year.
Current wording
Operating income was $742 million (operating margin of 11.8%) during the nine months ended September 30, 2024, an increase of $301 million, or 68.3%, when compared to operating income of $441 million (operating margin of 8.4%) during the prior year. Operating margin increased 340 basis points, which included net favorable impacts of 210 basis points from decreases in special charges and restructuring and realignment costs, partially offset by increased acquired intangible asset amortization compared to the prior year. Additionally, operating margin expansion included 470 basis points of favorable operational impacts driven by 260 basis points of productivity savings, 120 basis points of price realization, and 80 basis points of increased volume. These favorable impacts were partially offset by 340 basis points of unfavorable operational impacts, driven by 200 basis points of inflation, followed by 70 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $996 million (adjusted operating margin of 15.8%) for the nine months ended September 30, 2024 as compared to adjusted operating income of $759 million (adjusted operating margin of 14.5%) during the comparable period in the prior year.
Previous wording
Net income for the six months ended June 30, 2024 was $347 million (net income margin of 8.3%), an increase of $156 million as compared to Net income in the prior year of $191 million (net income margin of 6.0%). The increase in net income was driven by increased operating income of $212 million, decreased non-operating income of $1 million, increased loss from sale of businesses of $4 million, increased interest expense of $4 million and increased income tax expense of $47 million. Adjusted EBITDA was $843 million (adjusted EBITDA margin of 20.1%) during the six months ended June 30, 2024, an increase of $278 million, or 49%, when compared to adjusted EBITDA of $565 million (adjusted EBITDA margin of 17.8%) during the comparable quarter in the prior year, an increase to adjusted EBITDA margin of 230 basis points. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin; however, adjusted EBITDA margin also benefited from the exclusion of incremental depreciation and amortization.
Current wording
Net income for the nine months ended September 30, 2024 was $564 million (net income margin of 8.9%), an increase of $221 million as compared to Net income in the prior year of $343 million (net income margin of 6.5%). The increase in net income was driven by increased operating income of $301 million, partially offset by decreased non-operating income of $8 million, increased loss from sale of businesses of $6 million, and increased income tax expense of $66 million. Adjusted EBITDA was $1,290 million (adjusted EBITDA margin of 20.5%) during the nine months ended September 30, 2024, an increase of $314 million, or 32%, when compared to adjusted EBITDA of $976 million (adjusted EBITDA margin of 18.6%) during the comparable prior year period, an increase to adjusted EBITDA margin of 190 basis points. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin; however, adjusted EBITDA margin also benefited from the exclusion of incremental depreciation and amortization as compared to the prior year.
Previous wording
Operating income for our Water Infrastructure segment was $78 million (operating margin of 12.4%) during the second quarter of 2024, an increase of $8 million, or 11.4%, when compared to operating income of $70 million (operating margin of 13.5%) during the prior year, or a total decrease in operating margin of 110 basis points. Operating margin declines included favorable impacts of 60 basis points from only a slight net increase in acquired intangible asset amortization, offset by special charges as compared to the prior year on increased revenue. Additionally, operating margin declines included 530 basis points of unfavorable operational impacts, driven by 160 basis points of inflation, 90 basis points of increased employee related costs, 90 basis points of decreased operating margin related to the Evoqua acquisition, 40 basis points of increased spending on strategic investments, and 40 basis points of decreased volume. Margin declines were offset by 360 basis points from favorable operating impacts driven by 240 basis points of productivity savings and 60 basis points of price realization. Excluding amortization of acquired intangibles, restructuring and realignment cost and special charges, adjusted operating income was $101 million (adjusted operating margin of 16.0%) for the second quarter of 2024 as compared to adjusted operating income of $92 million (adjusted operating margin of 17.7%) for the second quarter of 2023.
Current wording
Operating income for our Water Infrastructure segment was $96 million (operating margin of 15.4%) during the third quarter of 2024, an increase of $12 million, or 14.3%, when compared to operating income of $84 million (operating margin of 13.7%) during the prior year, or a total increase in operating margin of 170 basis points. Operating margin expansion included favorable impacts of 140 basis points from decreases in special charges and acquired intangible asset amortization, partially offset by increased restructuring and realignment costs as compared to the prior year. Additionally, operating margin expansion included 460 basis points from favorable operating impacts driven by 330 basis points of productivity savings and 90 basis points of price realization. Margin expansion was partially offset by 430 basis points of unfavorable operational impacts, driven by 230 basis points of inflation, 90 basis points of unfavorable mix, and 50 basis points of inventory management costs. Excluding amortization of acquired intangibles, restructuring and realignment cost and special charges, adjusted operating income was $111 million (adjusted operating margin of 17.8%) for the third quarter of 2024 as compared to adjusted operating income of $107 million (adjusted operating margin of 17.5%) for the third quarter of 2023.
Previous wording
Operating income for our Water Infrastructure segment was $138 million (operating margin of 11.5%) during the six months ended June 30, 2024, an increase of $22 million, or 19.0%, when compared to operating income of $116 million (operating margin of 12.5%) during the prior year, or a total decrease in operating margin of 100 basis points. Operating margin declines included net unfavorable impacts of 140 basis points from increases in acquired intangible asset amortization and restructuring and realignment costs partially offset by decreases in special charges as compared to the prior year. Additionally, operating margin declines included 460 basis points of unfavorable operational impacts, driven by 170 basis points of inflation, 60 basis points of increased spending on strategic investments, and 60 basis points of decreased operating margin related to the Evoqua acquisition. Margin declines were offset by 500 basis points from favorable operating impacts consisting of 240 basis points of productivity savings, 120 basis points of favorable mix, 60 basis points of price realization, 50 basis points of favorable currency impacts and 30 basis points of increased volume. Excluding amortization of acquired intangibles, restructuring and realignment cost and special charges, adjusted operating income was $189 million (adjusted operating margin of 15.7%) for the six months ended June 30, 2024 as compared to adjusted operating income of $142 million (adjusted operating margin of 15.3%) for the six months ended June 30, 2023.
Current wording
Operating income for our Water Infrastructure segment was $234 million (operating margin of 12.8%) during the nine months ended September 30, 2024, an increase of $34 million, or 17.0%, when compared to operating income of $200 million (operating margin of 13.0%) during the prior year, or a total decrease in operating margin of 20 basis points. Operating margin declines included net unfavorable impacts of 40 basis points from increases in acquired intangible asset amortization and restructuring and realignment costs partially offset by decreases in special charges as compared to the prior year. Additionally, operating margin declines included 430 basis points of unfavorable operational impacts, driven by 190 basis points of inflation, 50 basis points of decreased operating margin related to the Evoqua acquisition, 30 basis points of increased employee related costs, and 30 basis points of increased spending on strategic investments. Margin declines were largely offset by 450 basis points from favorable operating impacts driven by of 270 basis points of productivity savings, 70 basis points of price realization, 50 basis points of favorable mix, and 40 basis points of favorable currency impacts. Excluding amortization of acquired intangibles, restructuring and realignment cost and special charges, adjusted operating income was $300 million (adjusted operating margin of 16.4%) for the nine months ended September 30, 2024 as compared to adjusted operating income of $249 million (adjusted operating margin of 16.2%) for the nine months ended September 30, 2023.
Previous wording
Operating income for our Applied Water segment was $71 million (operating margin of 15.6%) during the second quarter of 2024, decrease of $13 million, or 15.5%, when compared to operating income of $84 million (operating margin of 17.6%) during the prior year, or a total decrease in operating margin of 200 basis points. Operating margin declines included 490 basis points from unfavorable operational impacts, driven by 200 basis points of inflation, 140 basis points of unfavorable mix, 60 basis points of inventory management costs, and 50 basis points of increased employee related costs. The decline in margin was partially offset by favorable operational impacts of 290 basis points driven by 250 basis points of productivity savings. Excluding restructuring and realignment costs, adjusted operating income was $73 million (adjusted operating margin of 16.0%) for the first quarter of 2024 as compared to adjusted operating income of $86 million (adjusted operating margin of 18.0%) for the second quarter of 2023.
Current wording
Operating income for our Applied Water segment was $71 million (operating margin of 15.9%) during the third quarter of 2024, a decrease of $2 million, or 2.7%, when compared to operating income of $73 million (operating margin of 15.7%) during the prior year, or a total increase in operating margin of 20 basis points. Operating margin expansion included favorable impacts of 90 basis points from decreases in restructuring and realignment costs as compared to the prior year. Operating margin expansion included 390 basis points of favorable operational impacts, driven by 220 basis points of productivity savings and 60 basis points of price realization. Operating margin expansion was offset by 460 basis points of unfavorable operational impacts, driven by 170 basis points of inflation, 140 basis points of decreased volume and 70 basis points of unfavorable mix. Excluding restructuring and realignment costs, adjusted operating income was $73 million (adjusted operating margin of 16.3%) for the third quarter of 2024 as compared to adjusted operating income of $79 million (adjusted operating margin of 17.0%) for the third quarter of 2023.
Previous wording
Adjusted EBITDA was $80 million (adjusted EBITDA margin of 17.5%) for the second quarter of 2024, a decrease of $13 million, or 14%, when compared to adjusted EBITDA of $93 million (adjusted EBITDA margin of 19.5%) during the prior year. The decrease in adjusted EBITDA margin was primarily due to the same factors impacting the decrease in adjusted operating margin.
Current wording
Adjusted EBITDA was $83 million (adjusted EBITDA margin of 18.6%) for the third quarter of 2024, a decrease of $4 million, or 4.6%, when compared to adjusted EBITDA of $87 million (adjusted EBITDA margin of 18.7%) during the prior year. The decrease in adjusted EBITDA margin was primarily due to the same factors impacting the decrease in adjusted operating margin; however, adjusted EBITDA margin was not negatively impacted by increased share-based compensation expense.
Previous wording
Operating income for our Applied Water segment was $132 million (operating margin of 14.8%) during the six months ended June 30, 2024, a decrease of $35 million, or 21.0%, when compared to operating income of $167 million (operating margin of 17.9%) during the prior year, or a total decrease in operating margin of 310 basis points. Operating margin declines included favorable impacts of 20 basis points from a decrease in restructuring and realignment costs as compared to the prior year. Additionally, operating margin declines included 630 basis points from unfavorable operational impacts, driven by 220 basis points of inflation, 200 basis points of unfavorable mix, 90 basis points of decreased volume and 50 basis points of inventory management costs. The decline in margin was partially offset by favorable operational impacts of 300 basis points of productivity savings. Excluding restructuring and realignment costs, adjusted operating income was $136 million (adjusted operating margin of 15.2%) for the six months ended June 30, 2024 as compared to adjusted operating income of $172 million (adjusted operating margin of 18.5%) for the six months ended June 30, 2023.
Current wording
Operating income for our Applied Water segment was $203 million (operating margin of 15.2%) during the nine months ended September 30, 2024, a decrease of $37 million, or 15.4%, when compared to operating income of $240 million (operating margin of 17.2%) during the prior year, or a total decrease in operating margin of 200 basis points. Operating margin declines included favorable impacts of 40 basis points from a decrease in restructuring and realignment costs as compared to the prior year. Additionally, operating margin declines included 540 basis points from unfavorable operational impacts, driven by 200 basis points of inflation, 160 basis points of unfavorable mix and 110 basis points of decreased volume. The decline in margin was partially offset by 300 basis points of favorable operational impacts consisting of 270 basis points of productivity savings and 30 basis points of price realization. Excluding restructuring and realignment costs, adjusted operating income was $209 million (adjusted operating margin of 15.6%) for the nine months ended September 30, 2024 as compared to adjusted operating income of $251 million (adjusted operating margin of 18.0%) for the nine months ended September 30, 2023.
Previous wording
Adjusted EBITDA was $152 million (adjusted EBITDA margin of 17.0%) for the six months ended June 30, 2024, a decrease of $33 million, or 18%, when compared to adjusted EBITDA of $185 million (adjusted EBITDA margin of 19.9%) during the prior year. The decrease in adjusted EBITDA margin was primarily due to the same factors impacting the decrease in adjusted operating margin.
Current wording
Adjusted EBITDA was $235 million (adjusted EBITDA margin of 17.6%) for the nine months ended September 30, 2024, a decrease of $37 million, or 14%, when compared to adjusted EBITDA of $272 million (adjusted EBITDA margin of 19.5%) during the prior year. The decrease in adjusted EBITDA margin was primarily due to the same factors impacting the decrease in adjusted operating margin; however, adjusted EBITDA margin was not negatively impacted by increased share-based compensation expense, or the relative impact of depreciation, and software amortization expense.
Previous wording
Adjusted EBITDA was $113 million (adjusted EBITDA margin of 23.4%) for the second quarter of 2024, an increase of $50 million, or 79%, when compared to adjusted EBITDA of $63 million (adjusted EBITDA margin of 16.4%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA margin did not benefit from the relative impact of share-based compensation expense and depreciation and software amortization.
Current wording
Adjusted EBITDA was $97 million (adjusted EBITDA margin of 21.2%) for the third quarter of 2024, an increase of $24 million, or 32.9%, when compared to adjusted EBITDA of $73 million (adjusted EBITDA margin of 17.7%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA margin did not benefit from the relative impact of decreases in depreciation and software amortization on increased revenue.
Previous wording
Operating loss for corporate and other decreased $78 million, or 59%, during six months ended June 30, 2024 compared to the prior year period. The decrease in operating loss was primarily due to decreased special charges and decreased restructuring costs related to the acquisition and integration of Evoqua. Excluding special charges and restructuring and realignment costs, adjusted operating loss for corporate and other increased $4 million, or 10.3%, for the six months ended June 30, 2024 driven primarily by increased spending on strategic investments.
Current wording
Operating loss for corporate and other decreased $18 million, or 53%, during the third quarter of 2024 compared to the prior year period. The decrease in operating loss was primarily due to decreased restructuring and realignment costs and special charges, primarily relating to the acquisition and integration of Evoqua, as compared to the prior year. Excluding special charges and restructuring and realignment costs, adjusted operating loss for corporate and other decreased $5 million, or 33.3%, for the three months ended September 30, 2024 due to decreased spending on strategic initiatives and timing of profit-based expenses in the quarter.
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