Xylem Inc.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 28 July 2026: press release. Guidance figures: 2 raised, 2 lowered, 1 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Orders rose sharply in the quarter: Orders were $3.1 billion, up 42% reported and 41% organically; the company reported $3,086 million against $2,174 million a year earlier. Source
• Revenue grew 2% reported: Revenue was $2.3 billion, up 2% reported and 1% organically, or $2,336 million against $2,301 million a year earlier. Source
• Diluted and adjusted EPS rose: Diluted EPS was $1.11, up 19% from $0.93; adjusted EPS was $1.46, up 16% from $1.26. Source
• Water Solutions and Services orders surged: Water Solutions and Services orders were $1,449 million against $577 million, up 151% reported and 147% organically. Source
• Adjusted EBITDA margin rose to 23.3%: Second-quarter adjusted EBITDA margin was 23.3%, up 150 basis points year over year; adjusted EBITDA was $544 million. Source
• Productivity and price drove margin gain: Management said productivity savings, price realization and mix drove the margin expansion, exceeding the effect of inflation and lower volumes. Source
• Repurchases and dividends rose: Share repurchases were $1,243 million for the six months, against $13 million; dividends paid were $207 million, against $196 million. Source

“The demand drivers behind our business continue to strengthen,”

Matthew Pine, Xylem’s CEO

Guidance

What changed from last quarter

• Guidance lowered: Reported revenue growth guidance moved from 2% to 3% to about 2%, and organic growth guidance from 2% to 4% to 2% to 3%. Source
• Guidance raised: Full-year adjusted EBITDA margin guidance moved to 23.1% to 23.5% from 22.9% to 23.3%. Source
• Guidance raised: Full-year adjusted EPS guidance moved to $5.55 to $5.70 from $5.35 to $5.60. Source
• Guidance kept: Full-year free cash flow margin expectation of 10.2% to 11.0% was kept. Source
• New: The special charges definition now covers reductions of expense from IEEPA tariff refunds; the first-quarter release did not include this language. Source

Results and growth drivers

• Orders rose sharply in the quarter: Orders were $3.1 billion, up 42% reported and 41% organically; the company reported $3,086 million against $2,174 million a year earlier. Source
• Revenue grew 2% reported: Revenue was $2.3 billion, up 2% reported and 1% organically, or $2,336 million against $2,301 million a year earlier. Source
• Diluted and adjusted EPS rose: Diluted EPS was $1.11, up 19% from $0.93; adjusted EPS was $1.46, up 16% from $1.26. Source
• Net income margin rose 150 basis points: Net income attributable to Xylem was $263 million, and net income margin increased 150 basis points to 11.3 percent. Source
• Tax and loss on sale offset gains: Management said the gains were partly offset by higher income tax expense and a loss on sale of businesses. Source

Segments and orders by business

• Water Solutions and Services orders surged: Water Solutions and Services orders were $1,449 million against $577 million, up 151% reported and 147% organically. Source
• Water Infrastructure orders were flat: Water Infrastructure orders were $669 million, flat reported and down 4% organically, against $672 million a year earlier. Source
• Applied Water orders rose 10%: Applied Water orders were $538 million, up 10% reported and 9% organically, against $488 million a year earlier. Source
• Measurement and Control orders reported down 2%: Measurement and Control Solutions orders were $430 million, down 2% reported and up 2% organically, against $437 million a year earlier. Source
• Water Solutions and Services revenue rose: Water Solutions and Services revenue was $644 million, up 3% reported and 1% organically, against $628 million a year earlier. Source

“The growth of AI infrastructure is increasing the strategic importance of water across a broader industrial ecosystem from semiconductors and power generation to mining and other critical industries.”

Matthew Pine, Xylem’s CEO

Demand and strategic markets

• Book-to-bill was 132% in the quarter: The company reported a quarterly book-to-bill of 132% on total orders. Source
• Six-month orders rose 23%: Six-month orders were $5,314 million, up 23% reported and 20% organically, against $4,332 million; six-month book-to-bill was 119%. Source
• Food, beverage and life sciences demand rising: Management said demand is increasing across sectors such as food and beverage and life sciences, where water quality and reliability matter. Source
• Water seen as increasingly strategic: Management described water as increasingly strategic for both utilities and industrial customers. Source

Margins, costs and pricing

• Adjusted EBITDA margin rose to 23.3%: Second-quarter adjusted EBITDA margin was 23.3%, up 150 basis points year over year; adjusted EBITDA was $544 million. Source
• Productivity and price drove margin gain: Management said productivity savings, price realization and mix drove the margin expansion, exceeding the effect of inflation and lower volumes. Source
• Restructuring and realignment costs declined: Restructuring and realignment costs were $15 million, against $29 million a year earlier. Source
• IEEPA tariff refunds offset special charges: Special charges included $16 million of IEEPA tariff refunds, which offset $6 million of acquisition, divestiture and integration costs. Source
• Gross profit rose; SG&A held flat: Gross profit was $963 million, against $892 million; selling, general and administrative expenses were $503 million in both periods. Source

Income tax and below-the-line items

• Income tax expense rose: Income tax expense was $103 million, against $75 million; six-month income tax expense was $158 million, against $125 million. Source
• Loss on sale of businesses recorded: The company recorded a $16 million loss on sale of businesses in the quarter, against no loss a year earlier; the six-month loss was $12 million. Source
• Adjusted net income of $345 million: Adjusted net income attributable to Xylem was $345 million, excluding purchase accounting amortization, loss on sale, restructuring and special charges. Source

Capital, cash and shareholder returns

• Operating cash flow rose; capex up: Six-month operating cash flow was $398 million, against $338 million; capital expenditures were $179 million, against $169 million. Source
• Repurchases and dividends rose: Share repurchases were $1,243 million for the six months, against $13 million; dividends paid were $207 million, against $196 million. Source
• Long-term debt issued in six months: The company issued $990 million of long-term debt, net, in the six months; long-term debt was $2,395 million at June 30, 2026, against $1,408 million at December 31, 2025. Source

Coming up, as management said on 28 July 2026

• Planning assumptions in earnings materials: Management pointed to further 2026 planning assumptions in the second-quarter 2026 earnings materials posted on the investor website. No dated event was given. Source

Figures management reported

Risks management discussed

• Demand: Lower volumes were named as a factor that the margin expansion exceeded. Source
• External: Inflation was named as a cost pressure that the margin expansion exceeded. Source

Earlier plans management reported on

• Not stated: Management said the company spent several years positioning Xylem for the current demand, and that the strategy now creates new opportunities. Source

Other quarters

• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

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.