Xylem(US:XYL)2025-07-31 11:02Second Quarter 2025 Earnings Release Financial Highlights 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 responsiveness3 - The expansion in adjusted EBITDA margin was primarily driven by productivity savings and effective price realization, which more than offset inflation and product mix impacts4 Full-Year 2025 Outlook 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 Financial Statements This section presents the unaudited condensed consolidated income statement, balance sheet, and statement of cash flows Condensed Consolidated Income Statements 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 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 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 This section defines non-GAAP metrics and provides detailed reconciliations from GAAP to non-GAAP results Definitions of Non-GAAP Measures Defines key non-GAAP terms like Organic revenue, Adjusted EBITDA, and Adjusted EPS used for performance evaluation - Key non-GAAP measures used by management include202224: - 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) 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 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 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 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 uncertainties111213: - 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