Xylem Reports Second Quarter 2025 Results

Business Wire

31-07-2025

WASHINGTON--(BUSINESS WIRE)--Xylem Inc. (NYSE: XYL), a leading global water solutions company dedicated to solving the world's most challenging water issues, today reported second-quarter 2025 results. The Company delivered total revenue of $2.3 billion, on strong execution and demand. Second-quarter earnings per share were up 16 percent on a reported and adjusted basis.
'Our team delivered another strong quarter, exceeding expectations with robust organic revenue growth across all segments, a record-high adjusted EBITDA margin, and double-digit EPS growth,' said Matthew Pine, Xylem's president and CEO. 'Based on our team's disciplined execution on resilient underlying demand, we are raising our full-year guidance.'
'This performance underscores the transformation of our operating model. Our simplification efforts have already yielded measurable gains in speed, accountability, and customer responsiveness. We continue to build energy and momentum across the enterprise, reinforcing our confidence in delivering a strong second half and a clear path to profitable, above-market growth and long-term value creation.'
Net income attributable to Xylem for the quarter was $226 million, or $0.93 per share. Net income margin increased 90 basis points to 9.8 percent, driven by strong operational performance. Adjusted net income was $307 million, or $1.26 per share, which excludes the impacts of purchase accounting intangible amortization, restructuring and realignment costs, special charges, tax-related specials and the net tax impact of these adjustments.
Second-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 21.8 percent, reflecting a year-over-year increase of 100 basis points. Productivity savings and strong price realization drove the margin expansion, exceeding the impact of inflation and mix.
Outlook
Xylem now forecasts full-year 2025 revenue of approximately $8.9 to $9.0 billion, up approximately 4 to 5 percent on a reported basis, versus 1 to 2 percent previously guided, and up approximately 4 percent on an organic basis.
Full-year 2025 adjusted EBITDA margin is expected to be approximately 21.3 to 21.8 percent, an increase of 70 to 120 basis points from Xylem's 2024 adjusted results. This results in full-year adjusted earnings per share of $4.70 to $4.85, versus the previous guide of $4.50 to $4.70. Full-year free cash flow margin is still expected to be approximately 9 to 10 percent.
Further 2025 planning assumptions are included in Xylem's second-quarter 2025 earnings materials posted at www.xylem.com/investors. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort. Outlook is being provided in the context of the current volatility, including due to geopolitical, trade, macroeconomic and regulatory uncertainty.
Supplemental information on Xylem's second-quarter earnings, as well as definitions of and reconciliations for certain non-GAAP items, is posted at www.xylem.com/investors.
About Xylem
Xylem (XYL) is a Fortune 500 global water solutions company that empowers customers and communities to build a more water-secure world. Our 23,000 diverse employees delivered revenue of $8.6 billion in 2024, optimizing water and resource management with innovation and expertise. Join us at www.xylem.com and Let's Solve Water.
Forward-Looking Statements
This press release contains 'forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, the words 'anticipate,' 'estimate,' 'expect,' 'project,' 'intend,' 'plan,' "contemplate," "predict," 'forecast,' 'likely,' 'believe,' 'target,' 'will,' 'could,' 'would,' 'should,' "potential," "may" and similar expressions or their negative, may, but are not necessary to, identify forward-looking statements. By their nature, forward-looking statements address uncertain matters and include any statements that: are not historical, such as statements about our strategy, financial plans, outlook, objectives, plans, intentions or goals (including those related to our social, environmental and other sustainability goals); or address possible or future results of operations or financial performance, including statements relating to orders, revenues, operating margins and earnings per share growth.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: the impact of overall industry and general economic conditions, including industrial, governmental, and public and private sector spending, interest rates, inflation and related monetary policy by governments in response to inflation, and the strength of the residential and commercial real estate markets, on economic activity and our operations; geopolitical events, including ongoing, possible escalation or outbreak of international conflicts, as well as regulatory, economic and other risks associated with our global sales and operations, including those related to domestic content requirements applicable to projects receiving governmental funding; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, tight labor markets, prevailing price changes, tariffs, trade policies and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including electronic components (in particular, semiconductors); disruptions in operations at our facilities or that of third parties upon which we rely; uncertainty related to the realization of the benefits and synergies from our acquisition of Evoqua Water Technologies Corp.; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including with respect to meeting performance guarantees and customers' budgets, timelines and safety requirements; our ability to retain and attract leadership and other diverse and key talent, as well as competition for overall talent and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around restructuring and realignment actions and related costs and savings; our ability to execute strategic investments for growth, including related to acquisitions and divestitures; availability, regulation or interference with radio spectrum used by certain of our products; volatility in served markets or impacts on our business and operations due to weather conditions, including the effects of climate change; risks related to our sustainability commitments and related disclosures; fluctuations in foreign currency exchange rates; difficulty predicting our financial results; risk of future impairments to goodwill and other intangible assets; changes in our effective tax rates or tax expenses; financial market risks related to our pension and other defined benefit plans; failure to comply with, or changes in, laws or regulations, including those pertaining to our business conduct, operations, products and services, including anti-corruption, data privacy and security, trade, competition, the environment, climate change and health and safety; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; matters related to intellectual property infringement or expiration of rights; and other factors set forth under 'Item 1A. Risk Factors' in our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Annual Report") and in subsequent filings we make with the Securities and Exchange Commission ('SEC').
Forward-looking and other statements in this press release regarding our environmental and other sustainability plans and goals are not an indication that these statements are necessarily material to investors, to our business, operating results, financial condition, outlook, or strategy, to our impacts on sustainability matters or other parties, or are required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking social, environmental and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. All forward-looking statements made herein are based on information currently available to us as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
XYLEM INC. AND SUBSIDIARIES
(in millions)
June 30,
2025
ASSETS
Current assets:
Cash and cash equivalents
$
1,170
$
1,121
Receivables, less allowances for discounts, returns and credit losses of $61 and $59 in 2025 and 2024, respectively
1,837
1,668
Inventories
1,071
996
Prepaid and other current assets
283
236
Assets held for sale
8
77
Total current assets
4,369
4,098
Property, plant and equipment, net
1,189
1,152
Goodwill
8,237
7,980
Other intangible assets, net
2,354
2,379
Other non-current assets
1,042
884
Total assets
$
17,191
$
16,493
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
1,047
$
1,006
Accrued and other current liabilities
1,186
1,271
Short-term borrowings and current maturities of long-term debt
68
38
Liabilities held for sale
—
21
Total current liabilities
2,301
2,336
Long-term debt
1,928
1,978
Accrued post-retirement benefit obligations
340
304
Deferred income tax liabilities
427
497
Other non-current accrued liabilities
886
496
Total liabilities
5,882
5,611
Redeemable non-controlling interest
228
235
Stockholders' equity:
Common stock – par value $0.01 per share:
Authorized 750.0 shares, issued 259.7 shares and 259.2 shares in 2025 and 2024, respectively
3
3
Capital in excess of par value
8,720
8,687
Retained earnings
3,339
3,140
Treasury stock – at cost 16.3 shares and 16.2 shares in 2025 and 2024, respectively
(766
)
(753
)
Accumulated other comprehensive loss
(222
)
(435
)
Total stockholders' equity
11,074
10,642
Non-controlling interests
7
5
Total equity
11,081
10,647
Total liabilities, redeemable non-controlling interest, and stockholders' equity
$
17,191
$
16,493
Expand
XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions)
For the six months ended June 30,
2025
2024
Operating Activities
Net income
$
395
$
347
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
137
123
Amortization
153
156
Share-based compensation
25
31
Restructuring and asset impairment charges
47
33
Loss from sale of business
10
4
Other, net
6
(4
)
Payments for restructuring
(36
)
(18
)
Changes in assets and liabilities (net of acquisitions):
Changes in receivables
(103
)
(84
)
Changes in inventories
(27
)
(75
)
Changes in accounts payable
6
(2
)
Changes in accrued and deferred taxes
(50
)
(14
)
Other, net
(225
)
(120
)
Net Cash – Operating activities
338
377
Investing Activities
Capital expenditures
(169
)
(147
)
Acquisitions of businesses, net of cash acquired
(7
)
(5
)
Proceeds from sale of businesses, net of cash disposed
50
11
Proceeds from the sale of property, plant and equipment
5
3
Cash received from investments
—
4
Cash paid for investments
—
(7
)
Cash paid for equity investments
(3
)
(2
)
Cash paid for asset acquisition
(37
)
—
Cash received from cross-currency swaps
21
14
Other, net
—
1
Net Cash – Investing activities
(140
)
(128
)
Financing Activities
Short-term debt issued, net
4
—
Short-term debt repaid
—
(268
)
Long-term debt repaid
(28
)
(9
)
Repurchase of common stock
(13
)
(18
)
Proceeds from exercise of employee stock options
8
63
Dividends paid
(196
)
(175
)
Other, net
(19
)
(12
)
Net Cash – Financing activities
(244
)
(419
)
Effect of exchange rate changes on cash
84
(34
)
Changes in cash classified within assets held for sale
11
—
Net change in cash and cash equivalents
49
(204
)
Cash and cash equivalents at beginning of year
1,121
1,019
Cash and cash equivalents at end of period
$
1,170
$
815
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest
$
32
$
36
Income taxes (net of refunds received)
$
175
$
110
Expand
Xylem Inc. Non-GAAP Measures
Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or "adjusted") measures to be useful to management and investors evaluating our operating performance for the periods presented, and to provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including but not limited to, dividends, acquisitions, share repurchases and debt repayment. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. We consider the following items to represent the non-GAAP measures that we consider to be key performance indicators, as well as the related reconciling items to the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
'Organic revenue" and "Organic orders' defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales or discontinuance of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.
'Constant currency' defined as financial results adjusted for foreign currency translation impacts by translating current period and prior period activity using the same currency conversion rate. This approach is used for countries whose functional currency is not the U.S. dollar.
'EBITDA' defined as earnings before interest, taxes, depreciation and amortization expense. 'Adjusted EBITDA' and "Adjusted Segment EBITDA" reflect the adjustments to EBITDA and segment EBITDA, respectively, to exclude share-based compensation charges, restructuring and realignment costs, gain or loss from sale of businesses and special charges.
"Adjusted EBITDA Margin" and "Adjusted Segment EBITDA Margin" defined as adjusted EBITDA and adjusted segment EBITDA divided by total revenue and segment revenue, respectively.
"Adjusted Operating Income", "Adjusted Segment Operating Income", "Adjusted Net Income" and 'Adjusted EPS' defined as operating income, segment operating income, net income attributable to Xylem and earnings per share attributable to Xylem, adjusted to exclude restructuring and realignment costs, amortization of acquired intangible assets, gain or loss from sale of businesses, gain on remeasurement of previously held equity interest, special charges and tax-related special items, as applicable.
"Adjusted Operating Margin" and "Adjusted Segment Operating Margin" defined as adjusted operating income and adjusted segment operating income divided by total revenue and segment revenue, respectively.
'Free Cash Flow' defined as net cash from operating activities, as reported in the Statement of Cash Flows, less capital expenditures. Our definition of free cash flow does not consider certain non-discretionary cash payments, such as debt.
"Free Cash Flow Margin" defined as free cash flow, adjusted (as applicable) for significant cash paid or received for non-operational tax, acquisition or divestiture activities; divided by revenue.
'Realignment costs' defined as costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, severance, relocation, travel, facility set-up and other costs.
'Special charges" defined as non-recurring costs incurred by the Company, such those related to acquisitions and integrations, divestitures and non-cash impairment charges.
'Tax-related special items" defined as tax items, such as tax return versus tax provision adjustments, tax exam impacts, tax law change impacts, excess tax benefits/losses and other discrete tax adjustments.
Expand
Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
Q2 2025 Q2 2024
As Reported Adjustments Adjusted As Reported Adjustments Adjusted
Total Revenue
2,301
-
2,301
2,169
-
2,169
Operating Income
305
96
a
401
253
99
a
352
Operating Margin
13.3
%
17.4
%
11.7
%
16.2
%
Interest Expense
(9
)
-
(9
)
(11
)
-
(11
)
Other Non-Operating Income (Expense)
3
-
3
4
-
4
Gain/(Loss) From Sale of Business
-
-
b
-
1
(1
)
b
-
Income before Taxes
299
96
395
247
98
345
Provision for Income Taxes
(75
)
(15
)
c
(90
)
(53
)
(26
)
c
(79
)
Net Income
224
81
305
194
72
266
Net Loss Attributable to Non-controlling Interests
2
-
2
-
-
-
Net Income Attributable to Xylem
226
81
307
194
72
266
Diluted Shares
243.9
243.9
243.5
243.5
Diluted EPS
$
0.93
$
0.33
$
1.26
$
0.80
$
0.29
$
1.09
Q2 YTD 2025 Q2 YTD 2024
As Reported Adjustments Adjusted As Reported Adjustments Adjusted
Total Revenue
4,370
-
4,370
4,202
-
4,202
Operating Income
536
191
a
727
462
184
a
646
Operating Margin
12.3
%
16.6
%
11.0
%
15.4
%
Interest Expense
(17
)
-
(17
)
(25
)
-
(25
)
Other Non-Operating Income (Expense)
7
-
7
10
-
10
Gain/(Loss) From Sale of Business
(10
)
10
b
-
(4
)
4
b
-
Income before Taxes
516
201
717
443
188
631
Provision for Income Taxes
(125
)
(37
)
c
(162
)
(96
)
(50
)
c
(146
)
Net Income
391
164
555
347
138
485
Net Loss Attributable to Non-controlling Interests
4
-
4
-
-
-
Net Income Attributable to Xylem
395
164
559
347
138
485
Diluted Shares
243.8
243.8
243.3
243.3
Diluted EPS
$
1.62
$
0.67
$
2.29
$
1.43
$
0.56
$
1.99
a
Quarter-to-date:
Restructuring & realignment costs: 2025 - $29 million and 2024 - $29 million
Special charges: 2025 - $9 million of acquisition, divestiture & integration costs and $4 million of intangible asset impairment charges; 2024 - $13 million of acquisition & integration costs
Purchase accounting intangible amortization: 2025 - $54 million and 2024 - $57 million
Year-to-date:
Restructuring & realignment costs: 2025 - $56 million and 2024 - $44 million
Special charges: 2025 - $17 million of acquisition, divestiture & integration costs and $8 million of intangible asset impairment charges; 2024 - $28 million of acquisition & integration related costs and $1 million of asset impairment charges
Purchase accounting intangible amortization: 2025 - $110 million and 2024 - $111 million
b
Gain/(Loss) from sale of business as per income statement for all periods presented
c
Quarter-to-date: 2025 - Net tax impact on pre-tax adjustments (note a and b) of $20 million and $5 million of other tax special expense items; 2024 - Net tax impact on pre-tax adjustments (note a and b) of $20 million and other tax special benefit items of $6 million;
Year-to-date: 2025 - Net tax impact on pre-tax adjustments (note a and b) of $42 million and other tax special expense items of $5 million; 2024 - Net tax impact on pre-tax adjustments (note a and b) of $42 million and other tax special benefits of $8 million;
Expand
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
2025
Q1 Q2 Q3 Q4 Total
Net Income attributable to Xylem
169
226
395
Net Income margin
8.2
%
9.8
%
N/A
N/A
9.0
%
Depreciation
68
69
137
Amortization
77
76
153
Interest Expense (Income), net
-
3
3
Income Tax Expense
50
75
125
EBITDA
364
449
-
-
813
Share-based Compensation
12
13
25
Restructuring & Realignment
27
29
56
Special Charges
12
13
25
Loss/(Gain) from sale of business
10
-
10
Loss attributable to non-controlling interest
(2
)
(2
)
(4
)
Adjusted EBITDA
423
502
-
-
925
Revenue
2,069
2,301
4,370
Adjusted EBITDA Margin
20.4
%
21.8
%
N/A
N/A
21.2
%
2024
Q1 Q2 Q3 Q4 Total
Net Income
153
194
217
326
890
Net Income margin
7.5
%
8.9
%
10.3
%
14.5
%
10.4
%
Depreciation
61
62
68
67
258
Amortization
73
83
73
75
304
Interest Expense (Income), net
7
6
5
(2
)
16
Income Tax Expense
43
53
52
49
197
EBITDA
337
398
415
515
1,665
Share-based Compensation
18
13
12
13
56
Restructuring & Realignment
15
29
11
36
91
Special Charges
16
13
7
21
57
Gain on joint venture remeasurement
-
-
-
(152
)
(152
)
Loss/(Gain) from sale of business
5
(1
)
2
40
46
Adjusted EBITDA
391
452
447
473
1,763
Revenue
2,033
2,169
2,104
2,256
8,562
Adjusted EBITDA Margin
19.2
%
20.8
%
21.2
%
21.0
%
20.6
%
Expand