Xylem Inc. (NYSE:XYL) Q4 2022 Earnings Call Transcript

Sandy Rowland: Andy, let me take the China part of your question. So China was tough for us this year. We were down in China about 20% in the first half of the year. We saw a moderation in the second half — and as we — a little bit stronger Q3 than Q4 given the outbreak of COVID in Q4. And I think we’ve taken a measured approach to China and our guide for 2023. We do expect more of a recovery in the second half of the year in China. The slowdown has been more acute more on the utility side of the business, and we’ve seen stronger performance on the industrial side. And so our focus for our team is building orders momentum again. And we remain very bullish long term on China. We’re just working through some of the dynamics there now.

Andy Kaplowitz: Appreciate that, Sandy. And then it seems like industrial dewatering continues to hold up well as it does tend to be more historically cyclical, but could the business be much less cyclical during the current cycle given the amount of activity that’s out there. I know you mentioned mining. Maybe you could comment on the support you’re getting from your strategic growth investments as well, what exactly you’re doing there?

Matthew Pine: Yes. We made a constant effort back a few years ago to be a bit more balanced in our segmentation of that business, especially shifting more to the muni side, which is a bit more stable. And we’ve seen that part of the portfolio grow and also just making investments in our fleet and upgrading our technology. We are digitizing those assets and making those remotely connectable so we can improve the productivity for our customers. So it’s a mixed bag of really, I’d say, some innovation as well as being thoughtful about being more balanced in the segmentation of the business.

Operator: It appears that we have no further questions at this time. I will now turn the program back over to Patrick Decker for any additional or closing remarks.

Patrick Decker: Thank you. So again, thanks, everybody, for your time today. I know you’re all very, very busy at this time of the year. Really appreciate your ongoing continued interest in Xylem. I very much look forward to providing you updates on our progress around the Evoqua transaction. And between now and then, safe travels, everyone and all the very best. Thank you.

Operator: Thank you. This concludes today’s Xylem fourth quarter and full year 2022 earnings conference call. Please disconnect your lines at this time, and have a wonderful day.