UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to             

Commission file number: 1-35229

Xylem Inc.

(Exact name of registrant as specified in its charter)

 

Indiana	45-2080495
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

301 Water Street SE, Washington, DC 20003

(Address of principal executive offices) (Zip code)

(202) 869-9150

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange of which registered
Common Stock, par value $0.01 per share	XYL	New York Stock Exchange
2.250% Senior Notes due 2023	XYL23	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes ☑   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No  ☑

As of October 28, 2022, there were 180,221,532 outstanding shares of the registrant’s common stock, par value $0.01 per share.

Xylem Inc.

Table of Contents

ITEM			PAGE
PART I – Financial Information
Item 1	-	Financial Statements:
		Condensed Consolidated Income Statements for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	3
		Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	4
		Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (Unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (Unaudited)	6
		Notes to the Condensed Consolidated Financial Statements (Unaudited)	7
Item 2	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3	-	Quantitative and Qualitative Disclosures About Market Risk	53
Item 4	-	Controls and Procedures	53
PART II – Other Information
Item 1	-	Legal Proceedings	54
Item 1A	-	Risk Factors	54
Item 2	-	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3	-	Defaults Upon Senior Securities	54
Item 4	-	Mine Safety Disclosures	54
Item 5	-	Other Information	54
Item 6	-	Exhibits	54
		Signatures	56

2

PART I

ITEM 1.             CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)

(in millions, except per share data)

	Three Months				Nine Months
For the periods ended September 30,	2022		2021		2022		2021
Revenue	$	1,380	$	1,265	$	4,016	$	3,872
Cost of revenue	856		793		2,505		2,390
Gross profit	524		472		1,511		1,482
Selling, general and administrative expenses	294		273		912		878
Research and development expenses	47		49		152		152
Restructuring and asset impairment charges (recoveries)	15		(2)		22		7
Operating income	168		152		425		445
Interest expense	12		21		37		63
U.K. pension settlement expense	140		—		140		—
Other non-operating income, net	1		2		2		1
Gain from sale of business	—		—		1		2
Income before taxes	17		133		251		385
Income tax expense	5		19		45		71
Net income	$	12	$	114	$	206	$	314
Earnings per share:
Basic	$	0.07	$	0.63	$	1.14	$	1.74
Diluted	$	0.07	$	0.63	$	1.14	$	1.73
Weighted average number of shares:
Basic	180.2		180.2		180.2		180.2
Diluted	180.9		181.6		180.9		181.5

See accompanying notes to condensed consolidated financial statements.

3

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in millions)

 

	Three Months				Nine Months
For the periods ended September 30,	2022		2021		2022		2021
Net income	$	12	$	114	$	206	$	314
Other comprehensive income (loss), before tax:
Foreign currency translation adjustment	(74)		(19)		(118)		10
Net change in derivative hedge agreements:
Unrealized gain (loss)	(8)		(1)		(23)		(8)
Amount of loss (gain) reclassified into net income	8		2		13		—
Net change in post-retirement benefit plans:
Amortization of prior service credit	—		(1)		(1)		(2)
Amortization of net actuarial loss into net income	3		6		11		17
U.K. pension settlement expense	137		—		137		—
Foreign currency translation adjustment	46		—		46		—
Income tax expense (benefit) related to items of other comprehensive income (loss)	63		11		93		26
Other comprehensive income (loss), net of tax	49		(24)		(28)		(9)
Comprehensive income	$	61	$	90	$	178	$	305

See accompanying notes to condensed consolidated financial statements.

4

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except per share amounts)

 

	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,186	$	1,349
Receivables, less allowances for discounts, returns and credit losses of $46 and $44 in 2022 and 2021, respectively	1,018		953
Inventories	837		700
Prepaid and other current assets	150		158
Total current assets	3,191		3,160
Property, plant and equipment, net	585		644
Goodwill	2,637		2,792
Other intangible assets, net	933		1,016
Other non-current assets	760		664
Total assets	$	8,106	$	8,276
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	618	$	639
Accrued and other current liabilities	828		752
Short-term borrowings and current maturities of long-term debt	483		—
Total current liabilities	1,929		1,391
Long-term debt	1,880		2,440
Accrued post-retirement benefits	361		438
Deferred income tax liabilities	260		287
Other non-current accrued liabilities	454		494
Total liabilities	4,884		5,050
Commitments and contingencies (Note 17)
Stockholders’ equity:
Common Stock – par value $0.01 per share:
Authorized 750.0 shares, issued 196.0 shares and 195.6 shares in 2022 and 2021, respectively	2		2
Capital in excess of par value	2,123		2,089
Retained earnings	2,197		2,154
Treasury stock – at cost 15.8 shares and 15.2 shares in 2022 and 2021, respectively	(708)		(656)
Accumulated other comprehensive loss	(399)		(371)
Total stockholders’ equity	3,215		3,218
Non-controlling interests	7		8
Total equity	3,222		3,226
Total liabilities and stockholders’ equity	$	8,106	$	8,276

See accompanying notes to condensed consolidated financial statements.

5

XYLEM INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions)

For the nine months ended September 30,	2022		2021
Operating Activities
Net income	$	206	$	314
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	83		90
Amortization	93		96
Share-based compensation	28		25
Restructuring and asset impairment charges	22		7
U.K. pension settlement expense	140		—
Gain from sale of business	(1)		(2)
Other, net	(9)		3
Payments for restructuring	(7)		(21)
Changes in assets and liabilities (net of acquisitions):
Changes in receivables	(145)		(78)
Changes in inventories	(214)		(135)
Changes in accounts payable	47		19
Changes in accrued taxes	(12)		—
Other, net	3		—
Net Cash – Operating activities	234		318
Investing Activities
Capital expenditures	(148)		(127)
Proceeds from sale of business	1		2
Proceeds from the sale of property, plant and equipment	3		1
Cash received from investments	5		—
Cash paid for investments	(9)		—
Cash received from cross-currency swaps	24		11
Other, net	1		—
Net Cash – Investing activities	(123)		(113)
Financing Activities
Long-term debt repaid	—		(600)
Repurchase of common stock	(52)		(68)
Proceeds from exercise of employee stock options	6		15
Dividends paid	(163)		(152)
Other, net	(1)		(1)
Net Cash – Financing activities	(210)		(806)
Effect of exchange rate changes on cash	(64)		(19)
Net change in cash and cash equivalents	(163)		(620)
Cash and cash equivalents at beginning of year	1,349		1,875
Cash and cash equivalents at end of period	$	1,186	$	1,255
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	67	$	83
Income taxes (net of refunds received)	$	57	$	71

See accompanying notes to condensed consolidated financial statements.

6

XYLEM INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Background and Basis of Presentation

Background

Xylem Inc. (“Xylem” or the “Company”) is a leading equipment and service provider for water and wastewater applications with a broad portfolio of products and services addressing the full cycle of water, from collection, distribution and use to the return of water to the environment.

Xylem operates in three segments, Water Infrastructure, Applied Water and Measurement & Control Solutions. See Note 18, "Segment Information," to the condensed consolidated financial statements for further segment background information.

Except as otherwise indicated or unless the context otherwise requires, "Xylem," "we," "us," "our" and the "Company" refer to Xylem Inc. and its subsidiaries.

Basis of Presentation

The interim condensed consolidated financial statements reflect our financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany transactions between our businesses have been eliminated.

The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair statement of the financial position and results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 Annual Report") in preparing these unaudited condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes included in our 2021 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, post-retirement obligations and assets, revenue recognition, income taxes, valuation of intangible assets, goodwill and indefinite-lived intangible impairment testing and contingent liabilities. Actual results could differ from these estimates. The global outbreak of the novel coronavirus ("COVID-19") disease in March 2020, declared a pandemic by the World Health Organization, has created significant global volatility, uncertainty and related macroeconomic disruption. The COVID-19 pandemic and macroeconomic conditions have also caused increased uncertainty in estimates and assumptions affecting the condensed consolidated financial statements. Actual results could differ from these estimates.

Our quarterly financial periods end on the Saturday closest to the last day of the calendar quarter, except for the fourth quarter which ends on December 31. For ease of presentation, the condensed consolidated financial statements included herein are described as ending on the last day of the calendar quarter.

7

Note 2. Recently Issued Accounting Pronouncements

Pronouncements Not Yet Adopted

In September 2022, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2022-04, "Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations." This guidance requires disclosure of the key terms of outstanding supplier finance programs and a rollforward of the related obligations. The new standard does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. The ASU becomes effective January 1, 2023, except for the rollforward requirement, which becomes effective January 1, 2024. Early adoption is permitted. We will reflect the impact of these disclosure updates in our Form 10-Q for the quarterly period ended March 31, 2023.

Note 3. Revenue

Disaggregation of Revenue

The following table illustrates the sources of revenue:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2022		2021		2022		2021
Revenue from contracts with customers	$	1,319	$	1,214	$	3,852	$	3,726
Lease Revenue	61		51		164		146
Total	$	1,380	$	1,265	$	4,016	$	3,872

The following table reflects revenue from contracts with customers by application.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2022		2021		2022		2021
Water Infrastructure
Transport	$	410	$	390	$	1,235	$	1,173
Treatment	103		106		297		306
Applied Water
Commercial Building Services	171		152		479		454
Residential Building Services	82		71		233		211
Industrial Water	205		177		600		542
Measurement & Control Solutions
Water	278		253		822		824
Energy	70		65		186		216
Total	$	1,319	$	1,214	$	3,852	$	3,726

8

The following table reflects revenue from contracts with customers by geographical region.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2022		2021		2022		2021
Water Infrastructure
United States	$	155	$	137	$	467	$	402
Western Europe	172		175		548		538
Emerging Markets (a)	135		137		356		391
Other	51		47		161		148
Applied Water
United States	235		197		675		593
Western Europe	90		90		285		281
Emerging Markets (a)	100		81		258		240
Other	33		32		94		93
Measurement & Control Solutions
United States	221		189		614		625
Western Europe	55		59		183		202
Emerging Markets (a)	48		46		142		141
Other	24		24		69		72
Total	$	1,319	$	1,214	$	3,852	$	3,726

(a)Emerging Markets includes results from the following regions: Eastern Europe, the Middle East and Africa, Latin America and Asia Pacific (excluding Japan, Australia and New Zealand, which are presented in "Other")

9

Contract Balances

We receive payments from customers based on a billing schedule as established in our contracts. Contract assets relate to costs incurred to perform in advance of scheduled billings. Contract liabilities relate to payments received in advance of performance under the contracts. Changes in contract assets and liabilities are due to our performance under the contract. The table below provides contract assets, contract liabilities, and significant changes in contract assets and liabilities:

(in millions)	Contract Assets (a)		Contract Liabilities
Balance at January 1, 2021	$	117	$	166
Additions, net	99		109
Revenue recognized from opening balance	—		(106)
Billings transferred to accounts receivable	(85)		—
Foreign currency and other	(1)		(2)
Balance at September 30, 2021	$	130	$	167
Balance at January 1, 2022	$	125	$	164
Additions, net	91		110
Revenue recognized from opening balance	—		(94)
Billings transferred to accounts receivable	(71)		—
Foreign currency and other	(8)		(12)
Balance at September 30, 2022	$	137	$	168

(a)Excludes receivable balances, which are disclosed on the Condensed Consolidated Balance Sheets

Performance obligations

Delivery schedules vary from customer to customer based upon their requirements. Typically, large projects require longer lead production cycles and delays can occur from time to time. As of September 30, 2022, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied for contracts with performance obligations, amount to $567 million. We expect to recognize the majority of revenue upon the completion of satisfying these performance obligations in the following three years. The Company elects to apply the practical expedient to exclude from this disclosure revenue related to performance obligations that are part of a contract whose original expected duration is less than one year.

Note 4. Restructuring and Asset Impairment Charges

Restructuring

From time to time, the Company will incur costs related to restructuring actions in order to optimize our cost base and more strategically position itself. During the three and nine months ended September 30, 2022, we incurred restructuring costs of $3 million and $9 million, respectively. We incurred these charges primarily as a continuation of our efforts to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. The charges included the reduction of headcount across all segments.

During the three and nine months ended September 30, 2021, we recognized net restructuring (recoveries) expense of $(2) million and charges of $6 million, respectively, of which $(2) million and $4 million, respectively, relate to actions previously announced in 2020 and earlier. These charges included reduction of headcount across all segments and asset impairments within our Measurement & Control Solutions segment and accrual recoveries in our Measurement & Control Solutions segment.

10

The following table presents the components of restructuring expense and asset impairment charges:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in millions)	2022		2021		2022		2021
By component:
Severance and other charges	$	3	$	1	$	9	$	9
Asset impairment	—		—		—		1
Reversal of restructuring accruals	—		(3)		—		(4)
Total restructuring costs	$	3	$	(2)	$	9	$	6
Asset impairment charges	12		—		13		1
Total restructuring and asset impairment charges	$	15	$	(2)	$	22	$	7
By segment:
Water Infrastructure	$	2	$	—	$	4	$	7
Applied Water	—		1		1		2
Measurement & Control Solutions	13		(3)		17		(2)

The following table displays a roll-forward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within "Accrued and other current liabilities" and "Other non-current accrued liabilities", for the nine months ended September 30, 2022 and 2021:

(in millions)	2022		2021
Restructuring accruals - January 1	$	7	$	29
Restructuring costs, net	9		6
Cash payments	(7)		(21)
Asset impairment	—		(1)
Foreign currency and other	(1)		(2)
Restructuring accruals - September 30	$	8	$	11
By segment:
Water Infrastructure	$	1	$	1
Applied Water	—		2
Measurement & Control Solutions	3		6
Regional selling locations (a)	2		2
Corporate and other	2		—

(a)Regional selling locations consist primarily of selling and marketing organizations and related support services that incurred restructuring expense that was allocated to the segments. The liabilities associated with restructuring expense were not allocated to the segments.

11

The following table presents expected restructuring spend in 2022 and thereafter:

(in millions)	Water Infrastructure		Applied Water		Measurement & Control Solutions		Corporate		Total
Actions Commenced in 2022:
Total expected costs	$	4	$	1	$	3	$	—	$	8
Costs incurred during Q1 2022	—		—		—		—		—
Costs incurred during Q2 2022	2		1		2		—		5
Costs incurred during Q3 2022	2		—		1		—		3
Total expected costs remaining	$	—	$	—	$	—	$	—	$	—
Actions Commenced in 2021:
Total expected costs	$	3	$	—	$	1	$	—	$	4
Costs incurred during 2021	3		—		—		—		3
Costs incurred during Q1 2022	—		—		—		—		—
Costs incurred during Q2 2022	—		—		—		—		—
Costs incurred during Q3 2022	—		—		—		—		—
Total expected costs remaining	$	—	$	—	$	1	$	—	$	1

During the second quarter of 2022, we also incurred charges of $1 million within the Measurement & Control Solutions segment, related to actions commenced prior to 2021.

The Water Infrastructure, Applied Water and Measurement & Control Solutions actions commenced in 2022 consist primarily of severance charges. The actions commenced in 2022 are complete.

The Water Infrastructure and Measurement & Control Solutions actions commenced in 2021 consist primarily of severance charges. The Water Infrastructure actions are complete and the Measurement & Control Solutions actions are expected to continue through the first quarter of 2023.

Asset Impairment

During the third quarter of 2022, we determined that certain assets including software and customer relationships within our Measurement & Control Solutions segment were impaired. Accordingly, we recognized an impairment charge of $12 million. Refer to Note 8, "Goodwill and Other Intangible Assets," for additional information.

Note 5. Income Taxes

Our quarterly provision for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items within periods presented. The comparison of our effective tax rate between periods is significantly impacted by the level and mix of earnings and losses by tax jurisdiction and discrete items.

The income tax provision for the three months ended September 30, 2022 was $5 million resulting in an effective tax rate of 27.8%, compared to a $19 million expense resulting in an effective tax rate of 13.9% for the same period in 2021. The income tax provision for the nine months ended September 30, 2022 was $45 million resulting in an effective tax rate of 17.8%, compared to a $71 million expense resulting in an effective tax rate of 18.3% for the same period in 2021. The effective tax rate for the three month period ended September 30, 2022 was higher than the U.S. federal statutory rate primarily due to the impact of earnings mix. The effective tax rate for the nine month period ended September 30, 2022 was lower than the U.S. federal statutory rate primarily due to favorable earnings mix, partially offset by the Global Intangible Low Taxed Income ("GILTI") inclusion.

12

Unrecognized Tax Benefits

During 2019, Xylem’s Swedish subsidiary received a tax assessment for the 2013 tax year related to the tax treatment of an intercompany transfer of certain intellectual property that was made in connection with a reorganization of our European businesses. Xylem filed an appeal with the Administrative Court of Vaxjo, which rendered a decision adverse to Xylem in June 2022 for SEK788 million (approximately $70 million USD), consisting of the full tax assessment amount plus penalties and interest. Xylem has appealed this decision with the intermediate appellate court, the Administrative Court of Appeal (the “Court”). At this time, management, in consultation with external legal advisors, continues to believe it is more likely than not that Xylem will prevail on the proposed assessment and will continue to vigorously defend our position through the appellate process. The appeal to the Court is expected to take approximately one year; however, there can be no assurance as to the timing of the Court’s decision. Both parties will have the ability to seek appeal of the Court’s decision to the Supreme Administrative Court of Sweden. There can be no assurance that the final determination by the authorities will not be materially different than our position. As of September 30, 2022, we have not recorded any unrecognized tax benefits related to this uncertain tax position.

Note 6. Earnings Per Share

The following is a reconciliation of the shares used in calculating basic and diluted net earnings per share:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Net income (in millions)	$	12	$	114	$	206	$	314
Shares (in thousands):
Weighted average common shares outstanding	180,191		180,221		180,173		180,182
Add: Participating securities (a)	26		15		28		21
Weighted average common shares outstanding — Basic	180,217		180,236		180,201		180,203
Plus incremental shares from assumed conversions: (b)
Dilutive effect of stock options	523		949		516		880
Dilutive effect of restricted stock units and performance share units	199		457		153		405
Weighted average common shares outstanding — Diluted	180,939		181,642		180,870		181,488
Basic earnings per share	$	0.07	$	0.63	$	1.14	$	1.74
Diluted earnings per share	$	0.07	$	0.63	$	1.14	$	1.73

(a)Restricted stock unit awards containing rights to non-forfeitable dividends that participate in undistributed earnings with common stockholders are considered participating securities for purposes of computing earnings per share.

(b)Incremental shares from stock options, restricted stock units and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance or market conditions at the end of the reporting period. See Note 14, "Share-Based Compensation Plans," to the condensed consolidated financial statements for further detail on the performance share units.

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(in thousands)	2022	2021	2022	2021
Stock options	1,508	1,031	1,496