Excluding the impact of restructuring, realignment and special charges, the company delivered adjusted net income of US$42m in the quarter.
First-quarter revenue was US$1.1bn, down 9% on a reported basis and 8% organically. Xylem estimates the impact of COVID-19 to have been approximately -5%.
Orders were down 4% on a reported basis and 2%, organically, and were net positive excluding estimated impacts of COVID-19.
Reported operating margin in the quarter was 5.4%, down 340 basis points, and adjusted operating margin was 6.2%, down 460 basis points compared to the prior year. Xylem said these falls were largely due to the pandemic's impact on demand, and a discrete warranty charge in its measurement & control solutions business.
Xylem has withdrawn its 2020 guidance due to the uncertainties caused by COVID-19. The company says it is not yet reinstating full-year guidance but is providing organic revenue outlook for the second quarter to be down 20 to 30% driven by the impact of COVID-19.
To mitigate the impact of anticipated COVID-19 related volume declines, Xylem identified approximately $100 million in immediate spending reductions for the year. The company plans to take further permanent structural actions to re-shape its cost profile and reprioritise its investments around the capabilities that will enable its customers to be more resilient emerging from the COVID-19 crisis.
"We are serving utilities' mission-critical applications from a position of financial strength, and have maintained robust liquidity while also taking early action to reduce spending," said Patrick Decker, Xylem president and CEO. "Now, we are re-shaping our cost profile and re-focusing our investments on the capabilities that will maximise our and our customers' resilience as we emerge from this pandemic. These actions will enhance our competitiveness, and further differentiate our portfolio of products and solutions, positioning Xylem to out-perform over the medium and long term."
