Why Is Xylem (XYL) Up 1.7% Since Last Earnings Report?

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].