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Xylem Inc.: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 28 April 2026: press release. Guidance figures: 2 raised, 4 kept. The quarter’s numbers.

Key takeaways

  • Adjusted EPS rose 9 percent: Adjusted EPS was $1.12, up from $1.03. Adjusted figures exclude the loss on sale of businesses, purchase accounting intangible amortization, restructuring and realignment costs, and special charges. Source
  • Revenue up 3%, flat organically: Revenue was $2.1 billion, or $2,125 million against $2,069 million, up 3 percent reported and flat organically. Source
  • Orders up 3%, flat organically: Total orders were $2,228 million, up $70 million reported. Currency added $70 million and acquisitions net of divestitures added $7 million, leaving organic orders flat. Source
  • Water Solutions and Services orders fell: Orders were $566 million, down 12 percent reported and 15 percent organically. Segment revenue was $566 million, up 1 percent reported and down 2 percent organically. Source
  • Adjusted EBITDA margin up 20 basis points: Adjusted EBITDA margin was 20.6 percent. The company said productivity savings and price realization exceeded the impact of inflation, mix and lower volumes. Source
  • Operating cash flow rose to $108 million: Net cash from operating activities was $108 million against $33 million. Capital expenditures were $90 million against $71 million. Source
  • Share repurchases rose to $563 million: Repurchases of common stock were $563 million against $13 million a year earlier. Treasury shares rose to 21.2 from 16.3. Source
  • Revenue range raised: Full-year 2026 revenue is now $9.2 to $9.3 billion, up from $9.1 to $9.2 billion. Reported growth is now 2 to 3 percent, up from 1 to 3 percent. Source

“We entered the year with sustained momentum and solid demand across key end markets,”

Matthew Pine, Xylem’s CEO

Guidance

AreaPeriodFigureAgainst last quarter
Revenue (reported, $) SourceFull-year 2026approximately $9.2 to $9.3 billionRaised from $9.1 to $9.2 billion
Revenue growth (reported) SourceFull-year 2026approximately 2 to 3 percentRaised from 1 to 3 percent
Revenue growth (organic) SourceFull-year 2026approximately 2 to 4 percentKept
Adjusted EBITDA margin SourceFull-year 2026approximately 22.9 to 23.3 percentKept
Adjusted diluted EPS SourceFull-year 2026$5.35 to $5.60Kept
Free cash flow margin SourceFull-year 2026approximately 10.2 to 11.0 percentKept

What changed from last quarter

  • Guidance raised: Full-year revenue range raised to $9.2 to $9.3 billion from $9.1 to $9.2 billion; reported growth range raised to 2 to 3 percent from 1 to 3 percent. Source
  • Guidance kept: Adjusted EPS, organic growth, adjusted EBITDA margin and free cash flow margin ranges carried forward without change. Source

Results and growth drivers

  • Net income and GAAP EPS rose: Net income attributable to Xylem was $193 million, or $0.79 per share, against $169 million and $0.69 a year earlier. Net income margin reached 9.1 percent. Source
  • Adjusted EPS rose 9 percent: Adjusted EPS was $1.12, up from $1.03. Adjusted figures exclude the loss on sale of businesses, purchase accounting intangible amortization, restructuring and realignment costs, and special charges. Source
  • Revenue up 3%, flat organically: Revenue was $2.1 billion, or $2,125 million against $2,069 million, up 3 percent reported and flat organically. Source
  • Currency added to reported revenue: Currency translation added $65 million to reported revenue. Acquisitions and divestitures together added nothing, leaving organic revenue down $9 million. Source
  • Gain on sale of businesses: The company reported a $4 million gain on sale of businesses, against a $10 million loss a year earlier. The press release links the change to a reduced estimated loss on sale. Source

Segment revenue and orders

  • Orders up 3%, flat organically: Total orders were $2,228 million, up $70 million reported. Currency added $70 million and acquisitions net of divestitures added $7 million, leaving organic orders flat. Source
  • Measurement and Control orders up 18%: Orders were $475 million, up 18 percent reported and 15 percent organically. Segment revenue was $508 million, up 4 percent reported and 1 percent organically. Source
  • Water Solutions and Services orders fell: Orders were $566 million, down 12 percent reported and 15 percent organically. Segment revenue was $566 million, up 1 percent reported and down 2 percent organically. Source
  • Water Infrastructure orders up 8%: Orders were $675 million, up 8 percent reported and 2 percent organically. Segment revenue was $603 million, up 4 percent reported and down 1 percent organically. Source
  • Applied Water orders and revenue steady: Orders were $512 million, up 5 percent reported and 2 percent organically. Segment revenue was $448 million, up 3 percent reported and flat organically. Source

“Our steady progress this quarter demonstrates that our multi-year operating transformation is gaining traction, with disciplined execution and operational rigor.”

Matthew Pine, Xylem’s CEO

Costs, margins and pricing

  • Adjusted EBITDA margin up 20 basis points: Adjusted EBITDA margin was 20.6 percent. The company said productivity savings and price realization exceeded the impact of inflation, mix and lower volumes. Source
  • Operating margin higher on both bases: Operating margin was 11.5 percent as reported, against 11.2 percent a year earlier, and 16.1 percent adjusted, against 15.7 percent. Source
  • Restructuring and realignment costs rose: Restructuring and realignment costs were $38 million, against $27 million a year earlier. The company cited these costs as partly offsetting gains in net income. Source
  • Gross profit rose with revenue: Gross profit was $803 million against $768 million. Cost of revenue was $1,322 million against $1,301 million, and SG&A was $472 million against $460 million. Source

Cash flow and balance sheet

  • Operating cash flow rose to $108 million: Net cash from operating activities was $108 million against $33 million. Capital expenditures were $90 million against $71 million. Source
  • Cash balance fell over the quarter: Cash and cash equivalents were $808 million at March 31, down from $1,479 million at December 31, a $671 million decrease for the quarter. Source
  • Receivables and payables used cash: Changes in receivables used $58 million and accounts payable used $61 million, against $48 million and $64 million a year earlier. Source
  • Debt little changed: Current borrowings and maturities were $531 million and long-term debt was $1,407 million, against $534 million and $1,408 million at December 31. Source

“While the external environment remains dynamic, our teams are executing well, staying close to customers, and advancing long-term priorities.”

Matthew Pine, Xylem’s CEO

Capital and shareholder returns

  • Share repurchases rose to $563 million: Repurchases of common stock were $563 million against $13 million a year earlier. Treasury shares rose to 21.2 from 16.3. Source
  • Dividends paid rose to $106 million: Dividends paid were $106 million against $98 million. Total financing outflows were $683 million against $116 million. Source
  • Treasury stock balance increased: Treasury stock at cost was $1,368 million against $768 million at December 31. Total stockholders’ equity fell to $10,972 million from $11,480 million. Source

Full-year 2026 guidance

  • Revenue range raised: Full-year 2026 revenue is now $9.2 to $9.3 billion, up from $9.1 to $9.2 billion. Reported growth is now 2 to 3 percent, up from 1 to 3 percent. Source
  • Organic growth range kept: Organic growth stays at 2 to 4 percent, as previously guided. Source
  • Adjusted EBITDA margin range kept: Adjusted EBITDA margin of 22.9 to 23.3 percent is an increase of 70 to 110 basis points from 2025 adjusted results. Source
  • Adjusted EPS range kept: Full-year adjusted EPS of $5.35 to $5.60 is described as in line with the previous guidance range. Source
  • Free cash flow margin range kept: Free cash flow margin is still expected at 10.2 to 11.0 percent for full-year 2026. Source

Coming up, as management said on 28 April 2026

  • Planning assumptions posted online: Further 2026 planning assumptions are in the first-quarter earnings materials on the investor website. No dated events are given in the release. Source

Figures management reported

FigureReported
Orders Source$2.2 billion, up 3% reported, flat organically
Book-to-bill Source105%

Risks management discussed

  • External: Management said the external environment remains dynamic. Source
  • Demand: Inflation, mix and lower volumes were the impacts that productivity and price gains exceeded in the quarter. Source
  • Financial: Restructuring and realignment costs increased and partly offset gains in net income. Source

Earlier plans management reported on

  • Not stated: Organic growth range carried forward as previously guided. Source
  • Not stated: Range described as in line with the previous guidance range. Source
  • Not stated: Management said the range is still expected. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.