Xylem Inc. (XYL) has reported 15.15 percent fall in profit for the quarter ended Mar. 31, 2017. The company has earned $56 million, or $0.31 a share in the quarter, compared with $66 million, or $0.37 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $71 million, or $0.39 a share compared with $62 million or $0.35 a share, a year ago.

Revenue during the quarter grew 26.45 percent to $1,071 million from $847 million in the previous year period. Gross margin for the quarter contracted 37 basis points over the previous year period to 38.47 percent. Total expenses were 91.97 percent of quarterly revenues, up from 90.67 percent for the same period last year. That has resulted in a contraction of 130 basis points in operating margin to 8.03 percent.

Operating income for the quarter was $86 million, compared with $79 million in the previous year period.

However, the adjusted operating income for the quarter stood at $112 million compared to $92 million in the prior year period. At the same time, adjusted operating margin contracted 40 basis points in the quarter to 10.46 percent from 10.86 percent in the last year period.

"Our performance in the first quarter was slightly better than our expectations overall," said Patrick Decker, president and chief executive officer of Xylem. "There were a number of encouraging signs of growing strength in our most important end markets and geographies. First, our Sensus business delivered strong top-line growth. Second, we continued to see positive leading indicators in the public utility sector with orders growth of three percent, driven by an eight-percent increase in treatment orders. This further bolsters our confidence in the longer-term health of this sector."

For fiscal year 2017, Xylem expects revenue to be in the range of $4,500 million to $4,600 million. The company expects adjusted operating income to grow in the range of 13.20 percent to 13.70 percent. The company projects diluted earnings per share to be in the range of $2.23 to $2.38 on adjusted basis.

The company has spent $38 million cash to meet investing activities during the quarter as against cash outgo of $105 million in the last year period.

The company has spent $41 million cash to carry out financing activities during the quarter as against cash inflow of $559 million in the last year period.

Cash and cash equivalents stood at $287 million as on Mar. 31, 2017, down 75.94 percent or $906 million from $1,193 million on Mar. 31, 2016.

Working capital drops significantly
Xylem Inc. has witnessed a decline in the working capital over the last year. It stood at $672 million as at Mar. 31, 2017, down 41.21 percent or $471 million from $1,143 million on Mar. 31, 2016. Current ratio was at 1.56 as on Mar. 31, 2017, down from 1.80 on Mar. 31, 2016.

Cash conversion cycle (CCC) has decreased to 53 days for the quarter from 102 days for the last year period. Days sales outstanding went down to 68 days for the quarter compared with 81 days for the same period last year.

Days inventory outstanding has decreased to 37 days for the quarter compared with 80 days for the previous year period. At the same time, days payable outstanding went down to 51 days for the quarter from 59 for the same period last year.