Upon the publication of its fourth quarter financial results, global water technology company Xylem announced it was very pleased to deliver another strong quarter with upturns in revenue and earnings while continuing to execute their aggressive growth and operational improvement initiatives. Phil De Sousa, VP, Director of Investor Relations at Xylem, explains how the company has continued to grow since it was spun-off from ITT, in 2011.
Mr. De Sousa has been with Xylem since it was spun off from ITT in 2011. ITT, a global industrial group, separated the company into three, stand-alone publicly traded, independent companies at the time; according to Mr. De Sousa, this was done mainly to enhance longterm shareholder value. The name Xylem is derived from classical Greek and is the tissue that transports water in plants.
A young company in its current ownership structure, Xylem and its brands actually have a long history. “We have always been at the forefront in terms of product innovation,” says Mr. De Sousa. “Our Flygt brand, notably, has been around for over a hundred years. It is credited with a number of industry firsts such as the first submersible waste water pump, which over 50 years ago was a major game changer.” Since then, Flygt has continued to set the standard with in wastewater pumping solutions. Today, Flygt combines advanced stateof- the-art hydraulics, premium efficiency motors and intelligent controls in a unique concept, the new Flygt Experior, which is said to offer up to 50 percent energy savings compared to conventional wastewater pumps in a package that is simple to install and easy to operate. Mr. De Sousa explains, “The innovation underscores our ambition to deliver pumps that not only offer the best performance, but also are the most energy efficient. We are going from what we would call dumb infrastructure to smarter infrastructure.” Some of the other brands in the Xylem portfolio that Mr. De Sousa highlights are Bell & Gossett, a leading manufacturer of pumps, valves, heat exchangers and accessories for plumbing, wastewater and HVAC, and Goulds Water Technology, which manufactures centrifugal and turbine pumps, controllers, variable frequency drives, and accessories for agricultural, building trades, commercial and light industrial water and wastewater applications. “The beauty of the breadth of our portfolio of products and products is that we can meet a variety of water management requirements, great and small. Our technology is embedded in some of the world’s most sophisticated, modern buildings, but also in the world’s most historic buildings.”
Interesting in that regard is that Xylem pumps are a key part of the solution now in place to protect the Ancient Sphinx and Pyramids in Giza, Egypt, from suffering water deterioration. The groundwater levels at the Pyramids Plateau were too shallow and threatened the longevity of these ancient landmarks. To solve the groundwater problems, a plan was made to lower and control the water table beneath the Pyramids Plateau and preventing erosion of the limestone that would preserve the pyramids for future generations to enjoy. Xylem’s Goulds Water Technology submersible turbine pumps, motors and accessories were selected for the project because of their high quality, broad range, durability and energy efficiency. The latter, in particular, as a key consideration, because the project planners were looking for sustainable solutions in keeping with the 4,500-year-old structures they are helping to preserve. In other high-profile projects, Xylem’s dewatering pumps were instrumental in removing water out of Manhattan after Super Storm Sandy, and in cleaning up New Orleans after Hurricane Katrina. The company has identified dewatering, an area of expertise of Xylem’s Godwin brand, as one of their growth markets says Mr. De Sousa. “Dewatering is kind of obscure term but it basically refers to removing unwanted water. Godwin’s pumps and services are utilized by diverse set of customers and end market applications, including mines, oil and gas, municipal bypass and construction.”
He goes on to explain that from an end market perspective, industrial is both Xylem’s largest market and opportunity for growth, as they serve customers ranging from heavy industry players through to food producers. “You will find our pumps embedded in everything from a McDonald’s smoothie machine to pumps in a carwash through to mines, and construction sites. Our second largest market in terms of revenue is the public utility market, where again we serve a large and established customer base. We also serve customers in the Commercial building sector, like hospitals and government buildings and the residential market, on a smaller scale. We are generally the number one or two in each of the markets that we’re active in and have one of the world’s largest installed bases of pumps.”
On that note, he emphasises that safety is always a concern for Audi when they introduce new connectivity services. “We believe connectivity can actually enhance safety: with Google Voice search, for example, allowing drivers to keep their hands on the wheel while searching for information or for their favourite radio station. We also plan to offer the Audi phone box which uses a universal planar antenna integrated into the centre armrest’s phone storage tray.
Their superior distribution infrastructure has played a key role in establishing that leading position, Mr. De Sousa adds. “Serving the Water Infrastructure segment, we typically go to market with an established direct channel, which we can afford to do thanks to our size and scale, as well as third-party. This channel has been developed over decades. Generally, our competitors do not share that same benefit: they are forced to rely upon third party distributors. These distributors in our view can provide a product but do not have the application expertise that our people have, and which we believe is vital in helping our customers determine what product they actually need.” On that note he points out that there are certain products Xylem does have in its portfolio. “We partner with General Electric (GE) who has fantastic membrane technology, for example. We actually have a distribution partnership with GE and distribute products for them in Europe; clearly, they too recognize the power of our distribution channels.”
Xylem spends 2 to 2.5% of revenues on R&D, according to Mr. De Sousa. “Considering that our revenues are around 4 billion, that’s quite significant in absolute terms. Our product line already is second to none but we will continue evolve our product line. Our business comprises of five growth centers: Transport, Dewatering, Treatment, Analytics and Applied Water Systems. These businesses are interconnected, anticipating and reflecting evolving needs and sharing their applications expertise to cover every stage of the water cycle. As we continue to evolve our approach to the market we align our businesses accordingly, and we will also be rolling out a number of new products across multiple brands. It’s encouraging to see our teams deliver on customer solutions across our brands.”
Xylem at a glance
Xylem (XYL) is a leading global water technology provider, enabling customers to transport, treat, test and efficiently use water in public utility, residential and commercial building services, industrial and agricultural settings. The company does business in more than 150 countries through a number of market-leading product brands, and its people bring broad applications expertise with a strong focus on finding local solutions to the world’s most challenging water and wastewater problems. Launched in 2011 from the spinoff of the water-related businesses of ITT Corporation, Xylem is headquartered in Rye Brook, N.Y., with 2013 annual revenues of $3.8 billion and more than 12,500 employees worldwide.