Xylem Reports First Quarter Results

Key Terms

ebitda financial

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It measures a company's profitability by focusing on the money it makes from its core operations, ignoring expenses like taxes and accounting adjustments. Investors use EBITDA to compare how well different companies are performing financially, as it provides a clearer picture of operational success without the influence of financial structure or accounting choices.

adjusted ebitda financial

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

free cash flow financial

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

non-gaap financial

Non-GAAP refers to financial measures that companies use to show their earnings or performance without including certain expenses or income that are often added back to give a different picture. It matters because it can make a company's results look better or more favorable, but it may also hide important costs, so investors need to look at both GAAP (official rules) and non-GAAP numbers to get a full understanding.

basis points financial

Basis points are a way to measure small changes in interest rates or percentages, where one basis point equals 0.01%. For example, if a loan's interest rate increases by 50 basis points, it's gone up by 0.50%. They help people understand tiny differences in rates that can add up over time, making financial comparisons clearer.

First-Quarter Highlights

• Orders of $2.2 billion, up 3% on a reported basis and flat organically
• Revenue of $2.1 billion, up 3% on a reported basis and flat organically
• Earnings per share of $0.79, up 14%; $1.12 on an adjusted basis, up 9%

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 first-quarter 2026 results. The Company delivered total revenue of $2.1 billion, on strong execution. First-quarter earnings per share were up 14 percent on a reported basis and 9 percent on an adjusted basis.

“We entered the year with sustained momentum and solid demand across key end markets,” said Matthew Pine, Xylem’s CEO. “While the external environment remains dynamic, our teams are executing well, staying close to customers, and advancing long-term priorities.” Pine added, “Our steady progress this quarter demonstrates that our multi-year operating transformation is gaining traction, with disciplined execution and operational rigor.”

Net income attributable to Xylem for the quarter was $193 million, or $0.79 per share. Net income margin increased 90 basis points to 9.1 percent. These results are driven by strong operational performance and a reduction in the estimated loss on sale of businesses, partially offset by increased restructuring and realignment costs. Adjusted net income attributable to Xylem was $272 million, or $1.12 per share, which excludes the loss on sale of businesses, purchase accounting intangible amortization, restructuring and realignment costs, and special charges.

First-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 20.6 percent, reflecting a year-over-year increase of 20 basis points. Productivity savings and strong price realization drove the margin expansion, exceeding the impact of inflation, mix, and lower volumes.

Outlook

Xylem now forecasts full-year 2026 revenue of approximately $9.2 to $9.3 billion, up approximately 2 to 3 percent on a reported basis, versus 1 to 3 percent previously guided, and up approximately 2 to 4 percent on an organic basis, as previously guided.

Full-year 2026 adjusted EBITDA margin is expected to be approximately 22.9 to 23.3 percent, an increase of 70 to 110 basis points from Xylem’s 2025 adjusted results. This results in full-year adjusted earnings per share of $5.35 to $5.60, in line with the previous guidance range. Full-year free cash flow margin is still expected to be approximately 10.2 to 11.0 percent.

Further 2026 planning assumptions are included in Xylem’s first-quarter 2026 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.

Supplemental information on Xylem’s first-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 22,000 employees delivered revenue of $9 billion in 2025, optimizing water and resource management with innovation and expertise. Join us at www.xylem.com and Let’s Solve Water.

Xylem uses our Investor Relations website, www.xylem.com/en-us/investors, as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media.

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,” “goal,” “objective,” “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, availability of funding for our customers, inflation and governments’ related monetary policy in response, and the strength of the real estate markets, on economic activity and our operations; geopolitical matters, including nationalism, protectionism and anti-global sentiment, volatility involving the U.S. and other governments, ongoing, escalation or outbreak of international conflicts, and regulatory, trade protection, economic and other risks associated with our global sales and operations; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, labor shortages, trade agreements, tariffs, and other trade protection measures, and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents, data breaches, or other disruptions of information technology systems on which we or our customers rely, or involving our connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including semiconductors or other key components; operational disruptions at our facilities or that of third parties upon which we rely; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including as respects performance guarantees and customers’ budgets, timelines and safety requirements; our ability to retain, compete for and attract leadership, other key talent and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around productivity, simplification, restructuring and realignment actions and related costs and savings; our ability to execute strategic investments for growth, including 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, volatile weather events, or changing climate patterns; risks related to our sustainability efforts 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; failure to comply with, or changes in, laws or regulations, pertaining to our business conduct, operations, products and services, including anti-corruption, artificial intelligence, data privacy and security, trade, competition, the environment, 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, 2025 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 or other regulatory authorities, and are not intended to create legal rights or obligations. 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
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited)
(in millions, except per share data)
For the three months ended March 31,	2026				2025
Revenue from products	$	1,757			$	1,709
Revenue from services		368				360
Revenue		2,125				2,069
Cost of revenue from products		1,057				1,041
Cost of revenue from services		265				260
Cost of revenue		1,322				1,301
Gross profit		803				768
Selling, general and administrative expenses		472				460
Research and development expenses		56				56
Restructuring and asset impairment charges		31				21
Operating income		244				231
Interest expense		(4	)			(8	)
Other non-operating income, net		—				4
Gain/(Loss) on sale of businesses		4				(10	)
Income before taxes		244				217
Income tax expense		(55	)			(50	)
Net income	$	189			$	167
Net loss attributable to non-controlling interests		4				2
Net income attributable to Xylem	$	193			$	169
Earnings per share:
Basic	$	0.79			$	0.69
Diluted	$	0.79			$	0.69
Weighted average number of shares:
Basic		242.8				243.1
Diluted		243.4				243.8

XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions)
	March 31, 2026				December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	808			$	1,479
Receivables, less allowances for discounts, returns and credit losses of $53 and $68 in 2026 and 2025, respectively		1,796				1,759
Inventories		991				983
Prepaid and other current assets		243				244
Assets held for sale		192				176
Total current assets		4,030				4,641
Property, plant and equipment, net		1,151				1,159
Goodwill		8,292				8,332
Other intangible assets, net		2,213				2,272
Other non-current assets		1,268				1,230
Total assets	$	16,954			$	17,634
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	969			$	1,013
Accrued and other current liabilities		1,182				1,237
Short-term borrowings and current maturities of long-term debt		531				534
Liabilities held for sale		73				72
Total current liabilities		2,755				2,856
Long-term debt		1,407				1,408
Accrued post-retirement benefit obligations		308				317
Deferred income tax liabilities		437				405
Other non-current accrued liabilities		818				899
Total liabilities		5,725				5,885
Redeemable non-controlling interest		249				258
Stockholders’ equity:
Common stock – par value $0.01 per share:
Authorized 750.0 shares, issued 260.3 shares and 259.9 shares in 2026 and 2025, respectively		3				3
Capital in excess of par value		8,772				8,759
Retained earnings		3,794				3,706
Treasury stock – at cost 21.2 shares and 16.3 shares in 2026 and 2025, respectively		(1,368	)			(768	)
Accumulated other comprehensive loss		(229	)			(220	)
Total stockholders’ equity		10,972				11,480
Non-controlling interests		8				11
Total equity		10,980				11,491
Total liabilities, redeemable non-controlling interest, and stockholders’ equity	$	16,954			$	17,634

XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions)
For the three months ended March 31,	2026				2025
Operating Activities
Net income	$	189			$	169
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		65				68
Amortization		75				77
Share-based compensation		13				12
Restructuring and asset impairment charges		31				21
(Gain) Loss from sale of businesses		(4	)			10
Other, net		(8	)			11
Payments for restructuring		(37	)			(21	)
Changes in assets and liabilities (net of acquisitions):
Changes in receivables		(58	)			(48	)
Changes in inventories		(18	)			(9	)
Changes in accounts payable		(61	)			(64	)
Changes in long term receivables		(31	)			(32	)
Other, net		(48	)			(161	)
Net Cash – Operating activities		108				33
Investing Activities
Capital expenditures		(90	)			(71	)
Acquisitions of businesses, net of cash acquired		—				(7	)
Proceeds from sale of businesses, net of cash disposed		—				48
Proceeds from the sale of property, plant and equipment		1				5
Cash paid for investments		—				(1	)
Cash paid for asset acquisition		(1	)			—
Cash received from cross-currency swaps		14				12
Other, net		—				(1	)
Net Cash – Investing activities		(76	)			(15	)
Financing Activities
Short-term debt issued, net		—				1
Long-term debt repaid		(4	)			(4	)
Repurchase of common stock		(563	)			(13	)
Proceeds from exercise of employee stock options		—				6
Dividends paid		(106	)			(98	)
Other, net		(10	)			(8	)
Net Cash – Financing activities		(683	)			(116	)
Effect of exchange rate changes on cash		(15	)			25
Increase in cash classified within assets held for sale		(5	)			—
Decrease in cash classified within assets held for sale		—				11
Changes in cash classified within assets held for sale		(5	)			11
Net change in cash and cash equivalents		(671	)			(62	)
Cash and cash equivalents at beginning of year		1,479				1,121
Cash and cash equivalents at end of period	$	808			$	1,059
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	11			$	12
Income taxes (net of refunds received)	$	28			$	37

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.

“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, 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 as 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.

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic ($ Millions)
	(As Reported - GAAP)													(As Adjusted - Organic)
			(A)		(B)									(C)			(D)		(E)			(F) = B+C+D+E			(G) = F/(A-D)
					Change			% Change						Acquisitions			Divestitures					Change			% Change
	Orders		Orders		2026 v. 2025			2026 v. 2025			Book-to-Bill								FX Impact			Adj. 2026 v. 2025			Adj. 2026 v. 2025
	2026		2025
Quarter Ended March 31
Xylem Inc.	2,228		2,158		70			3	%		105	%		(12	)		5		(70	)		(7	)		0	%
Water Infrastructure	675		626		49			8	%		112	%		(8	)		5		(32	)		14			2	%
Applied Water	512		486		26			5	%		114	%		-			-		(15	)		11			2	%
Measurement and Control Solutions	475		402		73			18	%		94	%		-			-		(11	)		62			15	%
Water Solutions and Services	566		644		(78	)		(12	%)		100	%		(4	)		-		(12	)		(94	)		(15	%)

Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic ($ Millions)
	(As Reported - GAAP)									(As Adjusted - Organic)
			(A)		(B)					(C)			(D)		(E)			(F) = B+C+D+E			(G) = F/(A-D)
					Change		% Change			Acquisitions			Divestitures					Change			% Change
	Revenue		Revenue		2026 v. 2025		2026 v. 2025								FX Impact			Adj. 2026 v. 2025			Adj. 2026 v. 2025
	2026		2025
Quarter Ended March 31
Xylem Inc.	2,125		2,069		56		3	%		(5	)		5		(65	)		(9	)		0	%
Water Infrastructure	603		581		22		4	%		(3	)		5		(29	)		(5	)		(1	%)
Applied Water	448		435		13		3	%		-			-		(14	)		(1	)		0	%
Measurement and Control Solutions	508		490		18		4	%		-			-		(11	)		7			(1	%)
Water Solutions and Services	566		563		3		1	%		(2	)		-		(11	)		(10	)		(2	%)

Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
		Q1 2026												Q1 2025
		As Reported				Adjustments				Adjusted				As Reported				Adjustments				Adjusted
	Total Revenue		2,125				-				2,125				2,069				-				2,069
	Operating Income		244				98		a		342				231				94		a		325
	Operating Margin		11.5	%							16.1	%			11.2	%							15.7	%
	Interest Expense		(4	)			-				(4	)			(8	)			-				(8	)
	Other Non-Operating Income (Expense)		-				5		b		5				4				-				4
	Gain/(Loss) From Sale of Businesses		4				(4	)	c		-				(10	)			10		c		-
	Income before Taxes		244				99				343				217				104				321
	Provision for Income Taxes		(55	)			(20	)	d		(75	)			(50	)			(22	)	d		(72	)
	Net Income		189				79				268				167				82				249
	Net Loss Attributable to Non-controlling Interests		4				-				4				2				-				2
	Net Income Attributable to Xylem		193				79				272				169				82				251
	Diluted Shares		243.4								243.4				243.8								243.8
	Diluted EPS	$	0.79			$	0.33			$	1.12			$	0.69			$	0.34			$	1.03
a	Restructuring & realignment costs: 2026 - $38 million; 2025 - $27 million
	Special charges: 2026 - $5 million of acquisition, divestiture & integration costs; 2025 - $8 million of acquisition, divestiture & integration costs and $4 million of intangible asset impairment charges
	Purchase accounting intangible amortization: 2026 - $55 million; 2025 - $55 million
b	Other special charges
c	Gain/(Loss) from sale of businesses as per income statement for all periods presented
d	2026 - Net tax impact on pre-tax adjustments (notes a, b and c) of $21 million and $1 million of other tax special expense items; 2025 - Net tax impact on pre-tax adjustments (note a and b) of $22 million

Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter ($ Millions)
2026
		Q1			Q2			Q3			Q4			Total
Net Income attributable to Xylem		193												193
Net Income margin		9.1	%											9.1	%
Depreciation		65												65
Amortization		75												75
Interest Expense (Income), net		(4	)											(4	)
Income Tax Expense		55												55
EBITDA		384												384
Share-based Compensation		13												13
Restructuring & Realignment		38												38
Special Charges		10												10
Loss/(Gain) from sale of businesses		(4	)											(4	)
Loss attributable to non-controlling interest		(4	)											(4	)
Adjusted EBITDA		437												437
Revenue		2,125												2,125
Adjusted EBITDA Margin		20.6	%											20.6	%
2025
		Q1			Q2			Q3			Q4			Total
Net Income attributable to Xylem		169			226			227			335			957
Net Income margin		8.2	%		9.8	%		10.0	%		14.0	%		10.6	%
Depreciation		68			69			64			66			267
Amortization		77			76			78			77			308
Interest Expense (Income), net		-			3			-			(1	)		2
Income Tax Expense		50			75			71			35			231
EBITDA		364			449			440			512			1,765
Share-based Compensation		12			13			12			16			53
Restructuring & Realignment		27			29			30			45			131
Special Charges		12			13			9			2			36
Loss/(Gain) from sale of businesses		10			-			37			(16	)		31
Loss attributable to non-controlling interest		(2	)		(2	)		(1	)		(2	)		(7	)
Adjusted EBITDA		423			502			527			557			2,009
Revenue		2,069			2,301			2,268			2,397			9,035
Adjusted EBITDA Margin		20.4	%		21.8	%		23.2	%		23.2	%		22.2	%

 

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Media
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Source: Xylem Inc.