Xylem (XYL) Q2 Earnings & Revenues Beat, '24 View Raised

Core Insights - Xylem Inc. reported revenues of $2.17 billion, exceeding the consensus estimate of $2.16 billion, with a year-over-year increase of 26% driven by strong demand and operational execution [1] - Adjusted earnings per share for the second quarter of 2024 were $1.09, surpassing the Zacks Consensus Estimate of $1.06, reflecting an 11% increase year over year [11] - The company expects revenues of approximately $8.55 billion for 2024, indicating a 16% increase from the previous year [19] Segment Performance - The Applied Water segment generated revenues of $456 million, down 5% year over year, impacted by softness in developed markets [2] - Water Solutions and Services segment revenues totaled $600 million, up 76% year over year, driven by large long-term outsourced water contracts [3] - Water Infrastructure segment revenues reached $631 million, up 22% year over year, supported by price realization and growth across regions [13] - Measurement & Control Solutions segment revenues were $482 million, up 26% year over year, driven by smart metering demand [14] Financial Metrics - Adjusted EBITDA was $452 million, a 37.3% increase from the previous year, with an adjusted EBITDA margin improvement to 20.8% [4] - Net cash generated from operating activities in the first half of 2024 was $377 million, compared to $9 million in the same period last year [5] - Adjusted operating income was $352 million, up 35.9% year over year, with an adjusted operating margin of 16.2% [15] Shareholder Returns - In the first half of 2024, Xylem paid dividends of $175 million, a 25.9% increase year over year, and repurchased shares worth $18 million [18] - Capital expenditure was $147 million, up 42.7% from the previous year, while free cash flow was $230 million compared to a cash outflow of $61 million in the prior year [17] Future Guidance - The company forecasts adjusted earnings in the range of $4.18-$4.28 per share for 2024, an increase from $3.78 per share in 2023 [20] - Adjusted EBITDA margin is expected to be approximately 20.5%, indicating an expansion of 160 basis points from the previous year [7]