Morningstar | We Think Xylem's Smart Water Strategy Will Help Widen Its Moat
Xylem is one of the leading water technology companies in the world. Its extensive portfolio spans a wide range of equipment and solutions for the water industry, including the transport, treatment, testing, and efficient use of water for public utilities as well as industrial, commercial, and residential customers. Xylem operates three business segments: water infrastructure, applied water, and measurement and control solutions.The water infrastructure segment serves primarily utilities and industrial customers and accounted for approximately 40% of Xylem’s revenue and 50% of segment EBIT in 2018. Water infrastructure supports the entire water supply network, with solutions ranging from collection of water from a source (aquifer, lake, river, and so on), transport, treatment (including filtration, disinfection, and desalination), and distribution to users, through the treatment and transport of wastewater to either prepare it for reuse or release it to the environment. Water infrastructure also provides dewatering solutions that are used in construction, fracking, and mining applications.The applied water segment, which primarily serves the industrial and commercial sectors, generated approximately 30% of Xylem’s revenue and 35% of segment EBIT in 2018. Applied water offers building services and industrial water technologies for a variety of end markets, such as apartment buildings, retail stores, restaurants, hospitals, schools, and hotels. Applications include water pumps, valves, fire suppression systems, and boosting systems for farming irrigation.The measurement and control solutions segment was formed in 2017 by combining Xylem’s analytics business with the Sensus and Visenti businesses acquired in 2016. The segment contributed approximately 30% of Xylem’s revenue and 15% of segment EBIT in 2018. Measurement and control solutions offers a wide array of smart meters, networking, and advanced analytics for utilities.Xylem is water technology company. The company designs, manufactures and services engineered solutions ranging across a variety of applications primarily in the water sector, but also in electric and gas. The company's business segments are: water infrastructure, which serves the water infrastructure sector with pump systems, filtration, ultraviolet and ozone systems and pumping solutions; Applied Water, which serves the usage applications sector with water pressure boosting systems; and Measurement and Control Solutions, which serves the utility infrastructure solutions and services sector by delivering communications, smart metering, measurement and control technologies and infrastructure technologies.
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