Revenue during the quarter went down marginally by 0.55 percent to $897 million from $902 million in the previous year period. Gross margin for the quarter expanded 89 basis points over the previous year period to 39.80 percent. Total expenses were 87.85 percent of quarterly revenues, up from 86.70 percent for the same period last year. That has resulted in a contraction of 115 basis points in operating margin to 12.15 percent.

Operating income for the quarter was $109 million, compared with $120 million in the previous year period.

However, the adjusted operating income for the quarter stood at $131 million compared to $124 million in the prior year period. At the same time, adjusted operating margin improved 86 basis points in the quarter to 14.60 percent from 13.75 percent in the last year period.

"I am pleased with our team’s performance this quarter as they executed well in a mixed market environment, while successfully advancing on our capital deployment strategy as well," said Patrick Decker, Xylem President and Chief Executive Officer. "We continued to capitalize on a strong public utility end market, where we grew 10 percent globally and 25 percent in the U.S. in the quarter. This growth helped offset the softness in the broader industrial sector. We continue to drive cost savings from global procurement and lean and six sigma initiatives. In addition, we are accelerating certain restructuring actions to mitigate the weaker industrial sector and enable us to continue to drive margin expansion. Our productivity and business simplification initiatives will be key contributors as we continue to invest for stronger growth in the marketplace while further expanding operating margins to enhance our long-term earnings growth."

For financial year 2016, Xylem Inc. forecasts adjusted operating income to be in the range of $509 million to $513 million. The company expects diluted earnings per share to be in the range of $2.02 to $2.04 on adjusted basis.

The company has spent $155 million cash to meet investing activities during the nine month period as against cash outgo of $74 million in the last year period.

The company has spent $150 million cash to carry out financing activities during the nine month period as against cash outgo of $194 million in the last year period.

Cash and cash equivalents stood at $659 million as on Sep. 30, 2016, up 7.86 percent or $48 million from $611 million on Sep. 30, 2015.

Working capital increases marginally
Xylem Inc. has recorded an increase in the working capital over the last year. It stood at $1,251 million as at Sep. 30, 2016, up 4.08 percent or $49 million from $1,202 million on Sep. 30, 2015. Current ratio was at 2.49 as on Sep. 30, 2016, up from 2.47 on Sep. 30, 2015.

Cash conversion cycle (CCC) has decreased to 66 days for the quarter from 107 days for the last year period. Days sales outstanding went up to 80 days for the quarter compared with 78 days for the same period last year.

Days inventory outstanding has decreased to 42 days for the quarter compared with 81 days for the previous year period. At the same time, days payable outstanding went up to 56 days for the quarter from 53 for the same period last year.