Economic Indicators - Nonfarm payrolls are expected to increase by +68,000 in January, with the unemployment rate remaining unchanged at 4.4% [1] - Average hourly earnings are projected to rise by +0.3% month-over-month and +3.7% year-over-year in January [1] - Initial weekly unemployment claims are anticipated to decrease by -7,000 to 224,000 [1] - Existing home sales in January are expected to decline by -4.3% month-over-month to 4.16 million [1] - January CPI is expected to rise by +2.5% year-over-year, with core CPI also expected to increase by +2.5% year-over-year [1] Retail Sales and Employment Costs - US December retail sales were unchanged month-over-month, falling short of expectations of +0.4% [2] - The employment cost index for Q4 rose by +0.7% quarter-over-quarter, which is the smallest increase in 4.5 years and below the expected +0.8% [2] Stock Market Performance - Stock indexes experienced mixed trading, with the Dow Jones reaching a new all-time high while the S&P 500 closed down -0.33% and the Nasdaq down -0.56% [6][5] - The broader market initially found support from weaker-than-expected retail sales and employment cost index reports, which lowered bond yields [5] Earnings Season Insights - Over half of the S&P 500 companies have reported earnings, with 78% beating expectations [7] - S&P earnings growth is expected to rise by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth [7] - Excluding the Magnificent Seven tech stocks, Q4 earnings are projected to increase by +4.6% [7] Interest Rates and Bond Market - The markets are pricing in a 23% chance of a -25 basis point rate cut at the next Federal Reserve meeting [8] - The 10-year T-note yield fell to a 3.5-week low of 4.13%, supported by weaker-than-expected economic reports [9] Sector Performance - AI-infrastructure stocks faced pressure, with Western Digital down more than -7% and other tech stocks also declining [12] - Wealth-management stocks dropped significantly, with Raymond James Financial down more than -8% due to concerns over AI disruption [13] - Homebuilding stocks rose after the drop in mortgage rates, with Toll Brothers up more than +6% [14] Company-Specific Developments - Goodyear Tire & Rubber Co reported Q4 adjusted EPS of 39 cents, below the consensus of 49 cents, leading to a decline of more than -14% [15] - Incyte forecasted dull-year total net product revenue of $4.77 billion to $4.94 billion, causing a drop of more than -8% [16] - Spotify reported a record 38 million monthly active users in Q4, leading to a rise of more than +17% [17]

Core Viewpoint - Xylem Inc. (XYL) shares experienced a significant decline of up to 10% following the company's 2026 revenue guidance, which did not meet Wall Street expectations [3]. Company Summary - Xylem forecasts its 2026 revenue to be approximately $9.1 billion to $9.2 billion, indicating a shortfall compared to market expectations [3].

Financial Data and Key Metrics Changes - The company reported record revenue, EBITDA, and earnings per share for both Q4 and the full year 2025, with Q4 revenue growing by 4% despite a challenging comparison of 7% growth in the same period last year [8][9] - Full-year revenue growth was solid at 5%, with EBITDA margin expanding by 160 basis points to 22.2% [9][12] - The company achieved a record quarterly EPS of $1.42, a 20% increase over the prior year, and maintained a strong balance sheet with net debt to adjusted EBITDA of 0.2x [9][12] Business Line Data and Key Metrics Changes - In Measurement and Control Solutions (MCS), orders were up 22%, driven by smart metering demand, with revenue increasing by 10% [10][11] - Water Infrastructure saw orders down 1% in the quarter, with revenue flat due to strong demand in the U.S. offset by a nearly 30% decline in China [10][11] - Applied Water reported a 5% increase in orders and a 3% revenue growth, primarily driven by strength in U.S. commercial buildings [11] - Water Solutions and Services (WSS) experienced a 7% increase in orders and a 4% revenue growth, supported by strength in capital and services [11] Market Data and Key Metrics Changes - The backlog finished at $4.6 billion, with a book-to-bill ratio near 1 for both the quarter and the full year [8] - The company anticipates resilient demand in its largest end markets, with strong backlog conversion expected in 2026 [7][12] Company Strategy and Development Direction - The company is entering phase II of its transformation, focusing on strengthening its growth engine through sales force effectiveness, product management, and innovation [6][7] - Phase III will involve investing in long-term competitiveness, expanding breakthrough innovation, and deepening exposure to attractive future water markets [7] - The company is committed to simplifying its product offerings and focusing on higher-quality earnings, which may create short-term top-line headwinds [7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resilient demand and strong backlog conversion, despite acknowledging challenges in project timing and market conditions, particularly in China [12][51] - The company expects to see sequential revenue improvement throughout 2026 as project kickoffs accelerate in the latter half of the year [12][13] - Management highlighted the importance of water as a foundational element for economic growth and the company's unique position in providing solutions across the water value chain [18][19] Other Important Information - The company is committed to maintaining a low double-digit free cash flow margin in its long-term financial framework [16] - The anticipated divestiture of the international metering business is expected to close at the end of Q1 2026, with a small EPS impact of $0.02-$0.03 [72] Q&A Session Summary Question: Can you provide a two-year progress report on margin improvement and portfolio optimization? - Management noted significant progress in operational model transformation and integration of Evoqua, achieving synergies 18 months early and improving employee engagement ratings [26][28] Question: Can you elaborate on the 80/20 walk-away revenues? - Management explained that the 80/20 initiative is becoming integral to operations, focusing on resource allocation and simplifying the business, which may lead to a 2% headwind in revenue for 2026 [31][32] Question: When will the 80/20 initiative start benefiting the company? - Management indicated that 2026 is seen as an inflection point, with expectations of building a growth engine and improving sales force effectiveness [39] Question: What are the plans for share buybacks or M&A? - Management stated that priorities include investing in core business and M&A, with a target of around $1 billion a year for capital deployment towards M&A [40][41] Question: Can you provide context on the backlog and project hesitancy? - Management acknowledged that project timing and local competition in China have impacted backlog and revenue guidance, but expressed confidence in the commercial funnel [48][51] Question: What is the outlook for smart meters and project delays? - Management remains confident in MCS achieving high single-digit growth long-term, attributing near-term challenges to project timing and backlog normalization [56][58]

Financial Data and Key Metrics Changes - The company reported record revenue, EBITDA, and earnings per share for both Q4 and the full year 2025, with revenue growth of 4% in Q4 and 5% for the full year [8][9] - Full-year EBITDA margin expanded by 160 basis points to 22.2%, with quarterly EBITDA margin at 23.2%, up 220 basis points year-over-year [9] - The company achieved a record quarterly EPS of $1.42, representing a 20% increase over the prior year [9] Business Line Data and Key Metrics Changes - Measurement and Control Solutions (MCS) saw orders up 22% in Q4, driven by smart metering demand, with revenue up 10% [10] - Water Infrastructure orders were down 1% in Q4, with revenue flat due to strong U.S. demand offset by a nearly 30% decline in China [10] - Applied Water orders increased by 5%, with revenues up 3%, primarily driven by strength in U.S. commercial buildings [11] - Water Solutions and Services (WSS) experienced a 7% increase in orders and 4% revenue growth, supported by strength in capital and services [11] Market Data and Key Metrics Changes - The backlog finished at $4.6 billion, with a book-to-bill ratio near 1 for both the quarter and the full year [8] - The company noted resilient demand in its largest end markets, with strong backlog conversion expected [7] Company Strategy and Development Direction - The company is in phase two of its transformation, focusing on strengthening its growth engine through sales force effectiveness, product management, and innovation [6] - The strategy includes purposeful walkaways from lower-quality revenue to drive higher-quality earnings, which may create short-term top-line headwinds [7] - The company aims to build on its core franchises and expand breakthrough innovation while deepening exposure to attractive future water markets [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resilient demand and strong commercial positioning despite broader market conditions and volatility [17] - The company anticipates a challenging first quarter in 2026, with expectations for sequential revenue improvement throughout the year [12][13] - Management highlighted the importance of water as a foundational element for economic growth and the need for innovative solutions in the water sector [18][19] Other Important Information - The company is committed to a long-term financial framework with a low double-digit free cash flow margin [16] - The divestiture of the international metering business is expected to close at the end of Q1 2026, with a small EPS impact of $0.02-$0.03 [72] Q&A Session Summary Question: Can you provide a two-year progress report on margin improvement and portfolio optimization? - Management highlighted significant progress in operational model transformation and employee engagement, with a focus on leveraging simplicity for growth [26][30] Question: Why is the 80/20 walk-away revenue accelerating into the second year? - Management explained that the 80/20 approach is becoming integral to operations, focusing on resource allocation and optimizing overhead to support long-term growth [32][33] Question: When will the 80/20 strategy shift from a headwind to a tailwind? - Management indicated that 2026 is seen as an inflection point, with efforts to improve sales force effectiveness and customer engagement [38] Question: What are the plans for share buybacks versus M&A? - Management stated that priorities include investing in core business and M&A, with share buybacks being opportunistic [40][41] Question: What is the status of the backlog and project timing? - Management noted that project timing has been variable, impacting backlog and revenue guidance for 2026, but expressed confidence in the commercial funnel [48][49] Question: What steps are being taken regarding the softness in the China market? - Management acknowledged challenges in China, focusing on higher-quality opportunities and restructuring operations to align with market conditions [50][51] Question: Can you elaborate on the smart meters market and project delays? - Management remains confident in MCS's long-term growth, attributing near-term challenges to project timing and backlog normalization [56][58]

Financial Data and Key Metrics Changes - The company reported record revenue, EBITDA, and earnings per share for both Q4 and the full year 2025, with revenue growth of 4% in Q4 and 5% for the full year [8][9] - Full-year EBITDA margin expanded by 160 basis points to 22.2%, with quarterly EBITDA margin at 23.2%, up 220 basis points year-over-year [9] - The company achieved a record quarterly EPS of $1.42, representing a 20% increase over the prior year [9] Business Line Data and Key Metrics Changes - Measurement and Control Solutions (MCS) saw orders up 22% in Q4, driven by smart metering demand, with revenue up 10% [10] - Water Infrastructure orders were down 1% in Q4, with revenue flat due to strong demand in the U.S. offset by a nearly 30% decline in China [10] - Applied Water orders increased by 5%, with revenues up 3%, primarily driven by strength in U.S. commercial buildings [11] - Water Solutions and Services (WSS) reported a 7% increase in orders and 4% revenue growth, with an EBITDA margin of 23.9%, up 110 basis points year-over-year [11] Market Data and Key Metrics Changes - The backlog finished at $4.6 billion, with a book-to-bill ratio near 1 for both the quarter and the full year [8] - The company anticipates resilient demand in its largest end markets, despite short-term headwinds from strategic walkaways from lower-quality revenue [6][12] Company Strategy and Development Direction - The company is entering phase two of its transformation, focusing on strengthening its growth engine through sales force effectiveness, product management, and innovation [5][6] - Phase three will involve investing in long-term competitiveness and expanding into attractive future water markets [6] - The company is committed to simplifying its product offerings and enhancing customer focus, which may create short-term top-line headwinds but aims to drive higher-quality earnings [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resilient demand and strong backlog conversion, expecting to build on commercial and operational momentum in 2026 [6][17] - The company is monitoring broader market conditions, including tariffs, but maintains a positive outlook for the year [17] - Management highlighted the importance of water as a foundational element for economic growth and the need for innovative solutions in the water sector [18][19] Other Important Information - The company plans to close the divestiture of its international metering business by the end of Q1 2026, with an EPS impact of $0.02-$0.03 [72] - The company is targeting around $1 billion a year for capital deployment towards M&A, focusing on small to medium bolt-on acquisitions [41] Q&A Session Summary Question: Can you provide a two-year progress report on margin improvement and portfolio optimization? - Management acknowledged significant progress in operational model transformation and integration of Evoqua, with early delivery of synergies [26][28] Question: Why is the 80/20 walk-away revenue increasing into the second year? - Management explained that the 80/20 approach is becoming integral to operations, focusing on resource allocation and optimizing overhead to support long-term growth [32][33] Question: When will the 80/20 actions transition from a headwind to a tailwind? - Management indicated that 2026 is an inflection point, with expectations for improved sales force effectiveness and customer focus [40] Question: What is the outlook for the backlog and project hesitancy? - Management noted that the backlog is healthy but acknowledged project delays due to various factors, including inflation and project scope changes [50][68] Question: What are the expectations for smart meters and project delays? - Management remains confident in MCS achieving high single-digit growth long-term, attributing near-term challenges to project timing and backlog normalization [58] Question: What is the impact of divestitures on EPS? - The divestiture of the international metering business is expected to have a small EPS impact of $0.02-$0.03 for the year [72]

分组1 - Xylem reported quarterly earnings of $1.42 per share, matching the Zacks Consensus Estimate, and showing an increase from $1.18 per share a year ago, resulting in an earnings surprise of +0.35% [1] - The company achieved revenues of $2.4 billion for the quarter ended December 2025, exceeding the Zacks Consensus Estimate by 0.86%, and up from $2.26 billion year-over-year [2] - Xylem has surpassed consensus EPS estimates in all four of the last quarters, indicating consistent performance [2] 分组2 - The stock has gained approximately 2.9% since the beginning of the year, outperforming the S&P 500's gain of 1.7% [3] - The current consensus EPS estimate for the upcoming quarter is $1.15 on revenues of $2.15 billion, and for the current fiscal year, it is $5.52 on revenues of $9.33 billion [7] - The Waste Removal Services industry, to which Xylem belongs, is currently ranked in the bottom 28% of over 250 Zacks industries, which may impact stock performance [8]

2025 Fourth Quarter Results and Earnings February 10, 2026 Forward-looking and other statements in this presentation regarding our environmental and other sustainability efforts, plans and goals are not an indication that these statements are necessarily material to investors, to our business, operating results, financial condition, outlook, or strategy, to our impacts on sustainability matters or other parties, or are required to be disclosed in our filings with the SEC or other regulatory authorities, and ...

Revenue and Earnings - Fourth-quarter revenue reached $2.4 billion, up 6% year-over-year, with adjusted earnings per share increasing by 20% to $1.42[3] - Full-year revenue for 2025 was $9.0 billion, reflecting a 6% increase, with adjusted earnings per share of $5.08, up 19%[3] - The company initiated 2026 full-year revenue guidance of $9.1 to $9.2 billion, representing a 2% to 4% organic growth[3] - Orders for the fourth quarter totaled $2.4 billion, up 9% on a reported basis and 7% organically[3] - Xylem Inc. reported total revenue of $9,035 million for 2025, representing a 6% increase compared to $8,562 million in 2024[30] - For the quarter ended December 31, 2025, Xylem Inc. reported revenue of $2,397 million, a 6% increase from $2,256 million in the same quarter of 2024[30] - Year-to-date total revenue for 2025 reached $9,035 million, compared to $8,562 million in 2024, reflecting a 5.5% growth[32] - Total revenue for Q4 2025 was $2,397 million, a 6.3% increase from $2,256 million in Q4 2024[32] Profitability Metrics - Adjusted EBITDA margin for the fourth quarter was 23.2%, an increase of 220 basis points year-over-year, driven by productivity savings and strong price realization[4] - Full-year 2026 adjusted EBITDA margin is expected to be approximately 22.9% to 23.3%, an increase of 70 to 110 basis points from 2025[6] - Adjusted EBITDA for Q4 2025 was $557 million, maintaining an adjusted EBITDA margin of 23.2%[35] - The company reported a net income margin of 10.6% for the full year 2025, up from 10.4% in 2024[35] - Operating income for Q4 2025 was $456 million, up from $377 million in Q4 2024, resulting in an operating margin of 19.0% compared to 16.7%[32] Net Income and Dividends - Net income attributable to Xylem for the fourth quarter was $335 million, or $1.37 per share, with a net income margin of 14.0%[2] - Net income for 2025 reached $950 million, an increase of 6.7% from $890 million in 2024 and a significant rise from $609 million in 2023[16] - The Board of Directors declared a first-quarter dividend of $0.43 per share, an increase of 8%[5] - Dividends paid in 2025 amounted to $391 million, an increase from $350 million in 2024 and $299 million in 2023, reflecting a commitment to returning value to shareholders[16] Cash Flow and Investments - Operating cash flow for 2025 was $1,241 million, slightly down from $1,263 million in 2024 but up from $837 million in 2023[16] - Free cash flow for 2025 was calculated as $910 million, derived from operating cash flow minus capital expenditures[24] - Capital expenditures in 2025 totaled $331 million, compared to $321 million in 2024 and $271 million in 2023, indicating ongoing investment in growth[16] - The company reported a net cash decrease from financing activities of $501 million in 2025, compared to $615 million in 2024[16] - Xylem's cash and cash equivalents at the end of 2025 were $1,479 million, up from $1,121 million in 2024, indicating improved liquidity[16] Segment Performance - Measurement and Control Solutions segment saw a revenue increase of 11%, reaching $2,086 million in 2025, up from $1,871 million in 2024[30] - The Applied Water segment experienced a revenue growth of 3%, totaling $1,849 million in 2025 compared to $1,793 million in 2024[30] - The company’s Water Solutions and Services segment reported a revenue increase of 5%, reaching $2,464 million in 2025, up from $2,343 million in 2024[30] Strategic Focus and Growth - The company emphasizes organic revenue growth, excluding impacts from foreign currency and acquisitions, to provide a clearer view of performance[19] - The company plans to continue focusing on strategic acquisitions and investments to drive future growth and enhance operational capabilities[18] - The company achieved a book-to-bill ratio of 99% for the year ended December 31, 2025, indicating strong order growth[28] - The company’s adjusted revenue growth, excluding acquisitions and divestitures, was 5% for 2025 compared to the previous year[30] Special Charges and Costs - Restructuring and realignment costs for Q4 2025 were $46 million, compared to $36 million in Q4 2024[33] - The company incurred special charges of $2 million related to acquisition and integration costs in Q4 2025, down from $15 million in Q4 2024[33] - The gain from the sale of businesses was $16 million in Q4 2025, compared to a loss of $40 million in Q4 2024[32] - Interest expense decreased to $6 million in Q4 2025 from $9 million in Q4 2024[32]

Group 1 - Xylem Inc (NYSE:XYL) is recognized as one of the top 15 Industrial Machinery and Supplies stocks favored by hedge funds [1] - Brian Drab from William Blair initiated coverage of Xylem Inc with an Outperform rating, highlighting the company's extensive offerings in the water and wastewater cycle, which are deemed mission critical for utility and industrial customers [1] - Xylem Inc is described as the world's largest pure-play water company, providing a comprehensive suite of products and solutions for water treatment and efficient usage [4] Group 2 - Brett Linzey from Mizuho Securities reaffirmed a Hold rating on Xylem Inc, lowering the price target from $160 to $150 due to broader adjustments in the electrical equipment and multi-industry group [3] - The downward revision in price target reflects Mizuho's 2026 outlook, indicating expectations of uneven terrain ahead for the segment, although uncertainties related to tariffs are diminishing [3]

Core Insights - Xylem (XYL) is positioned well to continue its trend of beating earnings estimates in the upcoming quarterly report [1] Earnings Performance - Xylem has a strong history of surpassing earnings estimates, averaging a 10.51% beat over the last two quarters [2] - In the last reported quarter, Xylem achieved earnings of $1.37 per share, exceeding the Zacks Consensus Estimate of $1.24 per share by 10.48% [3] - For the previous quarter, the company reported earnings of $1.26 per share against an expected $1.14 per share, resulting in a surprise of 10.53% [3] Earnings Estimates and Predictions - Estimates for Xylem have been trending higher, supported by its history of earnings surprises [6] - The stock has a positive Zacks Earnings ESP of +0.88%, indicating bullish sentiment among analysts regarding its earnings prospects [9] - The combination of a positive Earnings ESP and a Zacks Rank 3 (Hold) suggests a high likelihood of another earnings beat [9] Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [7] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [8]