[Performance Summary and Outlook](index=1&type=section&id=Xylem%20Reports%20Third%20Quarter%202024%20Results%20and%20Narrows%20Full-Year%20Guidance) Xylem reported strong third-quarter earnings and robust order growth, leading to narrowed full-year guidance [Third Quarter 2024 Performance Highlights](index=1&type=section&id=Third%20Quarter%202024%20Performance%20Highlights) Xylem reported modest revenue growth but strong earnings and robust order demand in Q3 2024 Q3 2024 Key Financial Metrics | Metric | Value | Growth (YoY) | | :--- | :--- | :--- | | Revenue | $2.1 billion | 1% (Reported & Organic) | | Orders | - | 8% (Reported & Organic) | | Earnings Per Share (EPS) | $0.89 | 41% | | Adjusted EPS | $1.11 | 12% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted strong earnings, margin expansion, resilient demand, and accelerated Evoqua integration - The management team emphasized strong earnings and margin expansion, which beat internal expectations[2](index=2&type=chunk) - Demand remained resilient, evidenced by robust orders growth across all segments[2](index=2&type=chunk) - The integration of Evoqua is progressing ahead of schedule, with synergy capture accelerating and expected to close the year above target[2](index=2&type=chunk) [Full-Year 2024 Outlook](index=2&type=section&id=Outlook) Xylem updated its full-year 2024 guidance, projecting $8.5 billion in revenue and adjusted EPS between $4.22 and $4.24 Updated Full-Year 2024 Guidance | Metric | Guidance | | :--- | :--- | | Revenue | $8.5 billion | | Reported Revenue Growth | ~15% | | Organic Revenue Growth | ~5% | | Adjusted EBITDA Margin | ~20.5% | | Adjusted EPS | $4.22 to $4.24 | | Free Cash Flow Conversion | At least 120% of Net Income | [Financial Statements](index=4&type=section&id=Financial%20Statements) Xylem's financial statements reflect improved profitability and cash flow, alongside a strengthened balance sheet [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Xylem's Q3 2024 income statement shows slight revenue growth but significant increases in operating income and net income Q3 Income Statement Highlights (in millions, except EPS) | Metric | Q3 2024 | Q3 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $2,104 | $2,076 | +1.3% | | Gross Profit | $784 | $764 | +2.6% | | Operating Income | $280 | $191 | +46.6% | | Net Income | $217 | $152 | +42.8% | | Diluted EPS | $0.89 | $0.63 | +41.3% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2024, Xylem's balance sheet reflects a slight decrease in total assets, a reduction in total liabilities, and an increase in stockholders' equity Balance Sheet Summary (in millions) | Account | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $4,013 | $3,884 | | Total Assets | $16,046 | $16,112 | | Total Current Liabilities | $2,052 | $2,205 | | Total Liabilities | $5,446 | $5,936 | | Total Stockholders' Equity | $10,593 | $10,166 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2024, operating cash flow significantly improved, while investing and financing activities resulted in net cash outflows Nine-Month Cash Flow Summary (in millions) | Activity | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Net Cash – Operating | $688 | $382 | | Net Cash – Investing | ($193) | ($539) | | Net Cash – Financing | ($520) | ($71) | | **Net Change in Cash** | **($30)** | **($239)** | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) Xylem provides non-GAAP financial measures to offer a clearer view of its operational performance and facilitate comparability [Explanation of Non-GAAP Measures](index=7&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Xylem uses non-GAAP measures like Organic Revenue, Adjusted EBITDA, and Adjusted EPS to provide a clearer view of operational performance - Key non-GAAP metrics used by management include Organic Revenue/Orders, Constant Currency results, Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, Adjusted EPS, and Free Cash Flow[17](index=17&type=chunk) [Orders Reconciliation (Reported vs. Organic)](index=8&type=section&id=Orders%20Reconciliation%20%28Reported%20vs.%20Organic%29) Q3 2024 orders grew 8% on both a reported and organic basis, driven by strong performance in Measurement and Control Solutions and Water Solutions and Services Q3 2024 Orders Growth by Segment (YoY) | Segment | Reported Growth | Organic Growth | | :--- | :--- | :--- | | **Xylem Inc.** | **8%** | **8%** | | Water Infrastructure | 7% | 6% | | Applied Water | 4% | 4% | | Measurement and Control Solutions | 13% | 12% | | Water Solutions and Services | 11% | 11% | [Revenue Reconciliation (Reported vs. Organic)](index=9&type=section&id=Revenue%20Reconciliation%20%28Reported%20vs.%20Organic%29) Q3 2024 total revenue grew 1% reported and organic, with varied segment performance including strong growth in Measurement and Control Solutions Q3 2024 Revenue Growth by Segment (YoY) | Segment | Reported Growth | Organic Growth | | :--- | :--- | :--- | | **Xylem Inc.** | **1%** | **1%** | | Water Infrastructure | 2% | 1% | | Applied Water | (4)% | (4)% | | Measurement and Control Solutions | 11% | 11% | | Water Solutions and Services | (2)% | (1)% | [Net Income and EPS Reconciliation](index=10&type=section&id=Net%20Income%20and%20EPS%20Reconciliation) Xylem reconciled Q3 2024 GAAP net income of $217 million to an adjusted net income of $269 million, resulting in adjusted diluted EPS of $1.11 Q3 2024 GAAP to Non-GAAP Reconciliation (in millions, except EPS) | Metric | As Reported (GAAP) | Adjustments | As Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Operating Income | $280 | $70 | $350 | | Net Income | $217 | $52 | $269 | | Diluted EPS | $0.89 | $0.22 | $1.11 | [EBITDA Reconciliation](index=11&type=section&id=EBITDA%20Reconciliation) Xylem reconciled Q3 2024 net income of $217 million to an Adjusted EBITDA of $447 million, achieving a 21.2% Adjusted EBITDA margin Q3 2024 Net Income to Adjusted EBITDA Reconciliation (in millions) | Line Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Net Income | $217 | $152 | | D&A, Interest, Taxes | $198 | $186 | | EBITDA | $415 | $338 | | Other Adjustments* | $32 | $73 | | **Adjusted EBITDA** | **$447** | **$411** | | Adjusted EBITDA Margin | 21.2% | 19.8% | - *Other Adjustments include Share-based Compensation, Restructuring & Realignment, Special Charges, and Loss/Gain from sale of business[26](index=26&type=chunk)[27](index=27&type=chunk)

Core Viewpoint - Xylem (XYL) is positioned well to continue its trend of beating earnings estimates, having surpassed expectations in its last two quarterly reports [1][2]. Earnings Performance - Xylem has recorded an average earnings surprise of 4.99% over the last two quarters, with the most recent quarter showing a surprise of 2.83% (actual earnings of $1.09 per share vs. expected $1.06) and the previous quarter a surprise of 7.14% (actual $0.90 vs. expected $0.84) [1][2]. Earnings Estimates - Estimates for Xylem have been trending higher, supported by its history of earnings surprises, and the stock currently has a positive Zacks Earnings ESP of +0.10%, indicating bullish sentiment among analysts regarding its near-term earnings potential [2][3]. Zacks Rank and Predictive Power - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a high likelihood of another earnings beat, with research indicating that such combinations result in positive surprises nearly 70% of the time [2][3]. Upcoming Earnings Report - Xylem's next earnings report is anticipated to be released on October 31, 2024, and the positive Earnings ESP indicates potential for continued strong performance [3].

Xylem Inc. (XYL) is well-poised for growth in the coming quarters, courtesy of its businesses and accretive acquisitions. The company's efforts to reward its shareholders add to its appeal. Headquartered in Rye Brook, NY, Xylem is one of the leading providers of water solutions worldwide. It is involved in the full water-process cycle, including the collection, distribution and return of water to the environment. XYL has a significant presence in the United States, the Asia Pacific, Europe and various other ...

onuma Inthapong/E+ via Getty Images Xylem Inc. (NYSE:XYL) has been performing well over the past 12 months, with the share price increasing 45% since November 2023. In this article, I considered reviewing Xylem's recent financial performance, with a focus on the headwinds and pressures that the company is currently facing, including a significant decline in orders in their water infrastructure segment due to delays in large infrastructure projects in China. In my view, shareholders have fully priced in the ...

LEXINGTON, Ky., Sept. 6, 2024 /PRNewswire/ -- ElectraMet® has entered into a memorandum of understanding with Xylem Inc. (NYSE: XYL) to explore collaboration on scalable peroxide and metals removal solutions for North American lithium-ion battery recyclers and microelectronics manufacturers. The potential solutions will leverage ElectraMet's technology for the targeted removal and recovery of metals, as well as peroxide abatement – crucial deliverables in microelectronics waste treatment and battery recycli ...

Core Insights - An analyst downgrade from buy to hold has led to a nearly 5% decline in Xylem's stock, raising concerns about earnings momentum and valuation [1] - Despite the downgrade, the water technology sector has performed well this year, with companies like Badger Meter and Xylem benefiting from increased spending by water utilities on technology solutions [2][3] Company Performance - Xylem is currently trading at 30 times its expected earnings, prompting questions about future stock performance [4] - The current valuation, while high, is not unusual for Xylem, and a lower interest rate environment could positively impact utility and residential spending [4] Market Outlook - The unexpected strength in water utility spending indicates significant growth potential in smart meters and technology aimed at reducing leakage and improving water infrastructure [3] - The recent stock dip may present a buying opportunity for investors [5]

Core Viewpoint - Xylem's recent earnings report shows strong performance with adjusted earnings and revenues exceeding expectations, leading to an optimistic outlook for 2024 [2][9]. Financial Performance - Adjusted earnings for Q2 2024 were $1.09 per share, surpassing the Zacks Consensus Estimate of $1.06, and increased by 11% year over year [2]. - Revenues reached $2.17 billion, beating the consensus estimate of $2.16 billion, and reflecting a 26% year-over-year increase driven by strong demand and operational execution [2]. - Orders totaled $2.09 billion, marking a 12% increase year over year, although organic orders decreased by 1% [3]. Segment Performance - Water Infrastructure segment revenues were $631 million, up 22% year over year, with organic sales increasing by 7% [4]. - Applied Water segment revenues were $456 million, down 5% year over year, with organic sales falling by 4% due to market softness [4]. - Measurement & Control Solutions segment revenues reached $482 million, up 26% year over year, driven by smart metering demand [5]. - Water Solutions and Services segment revenues were $600 million, up 76% year over year, with organic sales increasing by 12% [5]. Margin and Cash Flow - Adjusted EBITDA was $452 million, a 37.3% increase from the previous year, with a margin improvement to 20.8% [6]. - Adjusted operating income was $352 million, up 35.9% year over year, with an operating margin increase to 16.2% [6]. - Cash and cash equivalents at the end of Q2 were $815 million, down from $1.02 billion at the end of December 2023, while long-term debt decreased to $1.98 billion [7]. Capital Expenditure and Shareholder Returns - Capital expenditure was $147 million, a 42.7% increase from the previous year, with free cash flow of $230 million compared to a cash outflow of $61 million in the prior year [8]. - Dividends paid in the first half of 2024 totaled $175 million, up 25.9% year over year, and share buybacks amounted to $18 million [8]. 2024 Guidance - Xylem expects revenues of approximately $8.55 billion for 2024, indicating a 16% increase from the prior year [9]. - Adjusted EBITDA margin is projected to be around 20.5%, reflecting a 160 basis point expansion from the previous year [9]. - Adjusted earnings are forecasted to be in the range of $4.18-$4.28 per share, an increase from $3.78 per share in 2023 [10].

Xylem Inc. (XYL) is witnessing growth across most of its businesses. The Measurement & Control Solutions (M&CS) segment is benefiting from the robust demand for advanced technology solutions like smart metering and other applications, primarily in the United States. The segment's organic sales were up 26% year over year, driven by smart metering demand and execution. Growth in the transport application business, driven by a strong pipeline of capital projects in Western Europe and increased infrastructure p ...

Investment Rating - The report initiates coverage of Xylem Inc with a Buy rating and a price target of $165, indicating a favorable outlook for the company [1][5][9]. Core Viewpoints - Xylem Inc is positioned as the leading pure-play water company, expected to achieve a mid-single-digit (MSD+) growth profile, which is less cyclical compared to peers. The company has a margin expansion opportunity of approximately 100 basis points per year [1][5][9]. - The growth outlook is supported by several secular trends, including aging water infrastructure, government funding for upgrades, stricter regulations on water quality, and global urbanization [3][5][25]. - The company generated approximately $7.4 billion in sales for FY23, with a diverse product suite that includes water flow, test and measurement, and treatment/filtration equipment [7][9]. Summary by Sections Investment Thesis - Xylem is expected to benefit from substantial demand for replacement and new equipment due to aging infrastructure in developed economies, supported by government funding and regulations addressing water contamination [3][5][25]. - The company is projected to achieve a sales compound annual growth rate (CAGR) of around 6% through 2028, which is above the market's expectations [3][5][27]. Financial Projections - Revenue projections for Xylem are as follows: $8.6 billion in 2024, $9.0 billion in 2025, and $9.6 billion in 2026, with net earnings expected to reach $1.0 billion in 2024 and $1.2 billion in 2025 [1][12]. - The report anticipates an EBITDA margin improvement from 16% in 2024 to 20% by 2028, reflecting the company's operational efficiency and strategic pricing actions [4][12]. Market Drivers - Key market drivers include the estimated $625 billion funding need for national drinking water infrastructure over the next 20 years, with over $50 billion allocated by the Bipartisan Infrastructure Law for improvements [6][26]. - Urbanization trends indicate that approximately 68% of the global population will live in urban areas by 2050, increasing the demand for water infrastructure and treatment solutions [6][26]. Competitive Positioning - Xylem's balance sheet is strong, with a net debt to EBITDA ratio of 0.7x, positioning the company favorably against its peers [5][11]. - The company is currently trading at a premium compared to its peers, reflecting its higher growth potential and lower cyclicality [14][18].

Xylem beat second-quarter estimates, but investors were not impressed. As a result, the stock finished the day down 5.7% on Tuesday. Revenue in the quarter jumped 26% or 9% organically, reaching $2.17 billion and topping estimates of $2.14 billion. The organic results exclude the impact of its acquisition of Evoqua Water Technologies. What's next for Xylem Xylem might have gained on today's news, but the stock was already up roughly 20% year to date and trades at a forward price-to-earnings ratio of more th ...