Core Insights - Xylem reported quarterly earnings of $1.26 per share, exceeding the Zacks Consensus Estimate of $1.14 per share, and showing an increase from $1.09 per share a year ago, resulting in an earnings surprise of +10.53% [1] - The company achieved revenues of $2.3 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.93% and up from $2.17 billion year-over-year [2] - Xylem's stock has increased by approximately 12.6% since the beginning of the year, outperforming the S&P 500's gain of 8.2% [3] Earnings Outlook - The future performance of Xylem's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $1.17 on revenues of $2.17 billion, and for the current fiscal year, it is $4.65 on revenues of $8.76 billion [7] Industry Context - The Waste Removal Services industry, to which Xylem belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Xylem's stock may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8] Competitor Insights - Montrose Environmental, another company in the same industry, is expected to report quarterly earnings of $0.25 per share, reflecting a year-over-year change of +25%, with revenues anticipated to be $186.61 million, up 7.7% from the previous year [9][10]

Financial Performance - Second quarter revenue reached $2.301 billion, representing a 6% overall growth[6] - Organic revenue growth was 6%[6] - Adjusted EBITDA margin hit a record quarterly high, expanding by 100 bps[7] - Earnings per share reached $0.93, with adjusted EPS at $1.26[6] - The company is raising its full-year revenue guidance to $8.9 - $9.0 billion, reflecting a 4-5% total growth[20] - The company is raising its full-year adjusted EPS guidance to $4.70 – $4.85[20] Segment Performance - Measurement and Control Solutions saw order growth of 12% and revenue growth of 10%[14] - Water Infrastructure experienced a 2% decline in orders but a 4% revenue growth[14] - Applied Water orders grew by 4% and revenue by 5%[14] - Water Solutions and Services orders grew by 5% and revenue by 5%[14] Tariff Impact - The company estimates a total tariff impact of $255 million on imports of $1.1 billion[17] - Net tariff exposure is estimated at $160 million after accounting for USMCA compliant imports from Mexico[17] - Tariff costs are being mitigated through pricing and supplier management[19]

[Second Quarter 2025 Earnings Release](index=1&type=section&id=Second%20Quarter%202025%20Earnings%20Release) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Xylem reported strong Q2 2025 results, exceeding expectations with 6% revenue growth and double-digit EPS growth Q2 2025 Key Financial Metrics | Metric | Value | Growth vs. Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $2.3 billion | +6% (Reported & Organic) | | Reported EPS | $0.93 | +16% | | Adjusted EPS | $1.26 | +16% | | Net Income | $226 million | - | | Adjusted EBITDA Margin | 21.8% | +100 bps YoY | - CEO Matthew Pine attributed the strong performance to **disciplined execution and resilient underlying demand**, highlighting measurable gains in speed and customer responsiveness[3](index=3&type=chunk) - The expansion in adjusted EBITDA margin was primarily driven by **productivity savings and effective price realization**, which more than offset inflation and product mix impacts[4](index=4&type=chunk) [Full-Year 2025 Outlook](index=2&type=section&id=Full-Year%202025%20Outlook) Following strong Q2 performance, Xylem raised its full-year 2025 guidance for revenue and adjusted earnings per share Updated Full-Year 2025 Guidance | Metric | New Guidance | Previous Guidance | | :--- | :--- | :--- | | Reported Revenue | $8.9B - $9.0B (+4% to +5%) | +1% to +2% | | Organic Revenue | Approx. +4% | Not specified | | Adjusted EBITDA Margin | 21.3% - 21.8% | Not specified | | Adjusted EPS | $4.70 - $4.85 | $4.50 - $4.70 | - The full-year free cash flow margin guidance remains unchanged, expected to be **approximately 9% to 10%**[7](index=7&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated income statement, balance sheet, and statement of cash flows [Condensed Consolidated Income Statements](index=4&type=section&id=Condensed%20Consolidated%20Income%20Statements) The company's Q2 2025 revenue grew to $2.301 billion, with operating and net income showing significant increases Q2 Income Statement Highlights (in millions, except EPS) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $2,301 | $2,169 | | Gross Profit | $892 | $819 | | Operating Income | $305 | $253 | | Net Income Attributable to Xylem | $226 | $194 | | Diluted EPS | $0.93 | $0.80 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $17.191 billion as of June 30, 2025, supported by increases in receivables, inventories, and goodwill Balance Sheet Highlights (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,170 | $1,121 | | Total current assets | $4,369 | $4,098 | | Total assets | $17,191 | $16,493 | | Total liabilities | $5,882 | $5,611 | | Total equity | $11,081 | $10,647 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities for the first six months of 2025 was $338 million, a decrease from the prior-year period Six-Month Cash Flow Highlights (in millions) | Activity | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net Cash – Operating activities | $338 | $377 | | Net Cash – Investing activities | ($140) | ($128) | | Net Cash – Financing activities | ($244) | ($419) | | Net change in cash | $49 | ($204) | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines non-GAAP metrics and provides detailed reconciliations from GAAP to non-GAAP results [Definitions of Non-GAAP Measures](index=7&type=section&id=Definitions%20of%20Non-GAAP%20Measures) Defines key non-GAAP terms like Organic revenue, Adjusted EBITDA, and Adjusted EPS used for performance evaluation - Key non-GAAP measures used by management include[20](index=20&type=chunk)[22](index=22&type=chunk)[24](index=24&type=chunk): - **Organic revenue:** Excludes impacts from foreign currency translation, acquisitions, and divestitures - **Adjusted EBITDA:** Excludes share-based compensation, restructuring, and other special charges from EBITDA - **Adjusted EPS:** Excludes restructuring, amortization of acquired intangibles, and other special items from GAAP EPS [Revenue Reconciliation (Reported vs. Organic)](index=8&type=section&id=Revenue%20Reconciliation%20(Reported%20vs.%20Organic)) The reconciliation shows Q2 2025 reported and organic revenue growth were both 6% after accounting for FX impact Q2 2025 Revenue Growth Reconciliation (Xylem Inc.) | Metric | Percentage | | :--- | :--- | | Reported Revenue Growth | 6% | | Impact of Acquisitions/Divestitures | 0% | | Impact of Foreign Exchange (FX) | -1% | | **Organic Revenue Growth** | **6%** | [Adjusted Diluted EPS Reconciliation](index=9&type=section&id=Adjusted%20Diluted%20EPS%20Reconciliation) Details the adjustments of $0.33 that reconcile Q2 2025 GAAP EPS of $0.93 to an adjusted EPS of $1.26 Q2 2025 EPS Reconciliation (GAAP to Adjusted) | Metric | Per Share Amount | | :--- | :--- | | Reported Diluted EPS (GAAP) | $0.93 | | Adjustments | $0.33 | | **Adjusted Diluted EPS (Non-GAAP)** | **$1.26** | [EBITDA and Adjusted EBITDA Reconciliation](index=10&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) Reconciles net income to Adjusted EBITDA, which reached $502 million with a margin of 21.8% in Q2 2025 Adjusted EBITDA Performance (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income attributable to Xylem | $226 | $194 | | Adjusted EBITDA | $502 | $452 | | Revenue | $2,301 | $2,169 | | **Adjusted EBITDA Margin** | **21.8%** | **20.8%** | [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section outlines inherent risks and uncertainties that could cause actual results to differ from projections - The company cautions that forward-looking statements are subject to inherent risks and uncertainties[11](index=11&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk): - Geopolitical events and global economic conditions - Manufacturing and operating cost increases due to inflation and supply chain shortages - Cybersecurity incidents - Failure to realize benefits from the Evoqua acquisition

Core Viewpoint - Analysts forecast that Xylem (XYL) will report quarterly earnings of $1.14 per share, reflecting a year-over-year increase of 4.6%, with anticipated revenues of $2.21 billion, showing a 2.1% increase compared to the previous year [1] Earnings Estimates - Over the last 30 days, there has been a 0.2% upward revision in the consensus EPS estimate for the quarter, indicating a collective reassessment by covering analysts [2] - Revisions to earnings estimates are crucial indicators for predicting potential investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock price performance [3] Revenue Projections - Analysts predict 'Revenue- Measurement & Control Solutions' will reach $509.46 million, a change of +5.7% year-over-year [5] - The consensus estimate for 'Revenue- Applied Water' stands at $459.40 million, suggesting a change of +0.8% year-over-year [5] - 'Revenue- Water Infrastructure' is projected to reach $639.53 million, indicating a +1.4% change from the year-ago quarter [5] - The average prediction for 'Revenue- Water Solutions and Services' is $605.08 million, reflecting a +0.9% change from the prior-year quarter [6] Adjusted Operating Income Estimates - Analysts expect 'Adjusted Operating Income- Water Infrastructure' to be $124.64 million, up from $101.00 million reported in the same quarter last year [6] - The estimated 'Adjusted Operating Income- Applied Water' is $80.10 million, compared to $73.00 million in the same quarter of the previous year [7] - 'Adjusted Operating Income- Water Solutions and Services' is projected at $98.21 million, slightly down from $99.00 million reported in the same quarter last year [7] - The consensus for 'Adjusted Operating Income- Measurement & Control Solutions' is $84.05 million, compared to $96.00 million from the previous year [8] Stock Performance - Over the past month, shares of Xylem have returned +3.4%, while the Zacks S&P 500 composite has changed by +4.9% [8] - Currently, XYL holds a Zacks Rank 3 (Hold), suggesting its performance may align with the overall market in the near future [8]

Group 1 - The core recommendation for Xylem Inc. (NYSE: XYL) is a buy rating, driven by its exposure to structural water scarcity, aging infrastructure, and PFAS treatment themes, which create durable, non-discretionary demand [1] - Management's 80/20 transformation is yielding tangible margin gains, indicating effective operational improvements [1] - The investment strategy focuses on long-term investments while also considering short-term opportunities to uncover alpha, emphasizing a bottom-up analysis of individual companies' fundamentals [1] Group 2 - The investment duration is medium to long-term, aiming to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Core Insights - The markets started 2025 strong but have faced increased volatility due to the Trump administration's tariff plans and geopolitical uncertainties, leading to cautious investor behavior [1] Stock Selection Strategy - A conventional method for selecting stocks is focusing on those with steady sales growth, with The Walt Disney Company (DIS), Agnico Eagle Mines Limited (AEM), Adobe Inc. (ADBE), and Xylem Inc. (XYL) highlighted as potential candidates [2][10] - Revenue growth is prioritized over earnings as it indicates an expanding customer base and long-term potential, while stagnant revenue may signal operational challenges [3] - An effective investment strategy should also analyze a company's cash position alongside sales, as strong cash reserves and healthy cash flow provide flexibility for growth and stability [4] Screening Parameters - Stocks are shortlisted based on criteria including 5-Year Historical Sales Growth (%) greater than the industry average and Cash Flow exceeding $500 million [5] - Additional metrics include a Price-to-Sales (P/S) Ratio lower than the industry average, positive % Change in F1 Sales Estimate Revisions, Operating Margin greater than 5%, Return on Equity (ROE) above 5%, and a Zacks Rank of 1 or 2 [6][7][8] Company Highlights - The Walt Disney Company (DIS) has a projected sales growth rate of 4.1% for 2025 and currently holds a Zacks Rank of 2 [11] - Agnico Eagle Mines (AEM) is expected to see a sales growth rate of 24.6% in 2025 and has a Zacks Rank of 1 [12] - Adobe Inc. (ADBE) anticipates a sales increase of 9.5% for fiscal 2025 and holds a Zacks Rank of 2 [12] - Xylem Inc. (XYL) has a projected sales growth of 2.2% for 2025 and also carries a Zacks Rank of 2 [13]

XYLEM INC. Q4 2014 EARNINGS RELEASE FEBRUARY 5, 2015 XYLEM PROPRIETARY / CONFIDENTIAL Q4 2014 EARNINGS RELEASE FORWARD-LOOKING STATEMENTS This presentation contains information that may constitute "forward-looking statements." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words "anticipate," "estimate," "expect," "project," "intend," "plan," "forecast," "believe," "target," "will," "could," "would," "should" and similar expressions ident ...

Financial Performance - Q4 2015 organic revenue grew by 2%[9, 18]; adjusted EPS was $0.60, up 3% excluding FX translation[9, 22] - FY 2015 organic revenue grew by 2%[9]; adjusted EPS was $1.85, up 5% excluding FX translation[9] - FY 2015 free cash flow conversion was 105%, driven by working capital improvement[9] - Full year 2015 revenue was $3.653 billion, compared to $3.916 billion in 2014[15] - The company repurchased 1.4 million shares for $50 million during Q4 and 5.1 million shares for $175 million in FY 2015[13] Segment Performance - Water Infrastructure Q4 2015 revenue was $629 million, with organic growth of 1%[27] - Applied Water Q4 2015 revenue was $365 million, with organic growth of 3%[33] - Water Infrastructure full year 2015 revenue was $2.231 billion, with organic growth of 1%[39] - Applied Water full year 2015 revenue was $1.422 billion, with organic growth of 3%[39] Capital Deployment and Outlook - The company announced a dividend increase of 10% on a per share basis[13] - The company acquired Tideland for $69 million, which is expected to generate $43 million in revenue in FY 2016 (11 months)[13] - 2016 revenue is projected to be between $3.675 billion and $3.745 billion[46]

XYLEM INC. Q4 2016 EARNINGS RELEASE FEBRUARY 2, 2017 2 Q4'16 PERFORMANCE SUMMARY XYLEM PROPRIETARY / CONFIDENTIAL Q4 2016 EARNINGS RELEASE FORWARD-LOOKING STATEMENTS This presentation contains information that may constitute "forward-looking statements." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words "anticipate," "estimate," "expect," "project," "intend," "plan," "forecast," "believe," "target," "will," "could," "would," "should" a ...

XYLEM INC. Q4 2017 EARNINGS RELEASE FEBRUARY 1, 2018 Q4 2017 EARNINGS RELEASE FORWARD-LOOKING STATEMENTS This presentation contains information that may constitute "forward-looking statements." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words "anticipate," "estimate," "expect," "project," "intend," "plan," "forecast," "believe," "target," "will," "could," "would," "should" and similar expressions identify forward- looking statements. ...