Xylem Reports First Quarter 2025 Results

"The team’s first-quarter results exceeded expectations, continuing our momentum and delivering a strong start to 2025,” said Matthew Pine, Xylem’s president and CEO. “Organic revenue grew across all segments on healthy demand, with our book-to-bill ratio exceeding one. The team’s operating discipline drove 120 basis points of margin expansion and double-digit EPS growth.”

"Our operating model transformation – including our high-impact culture, process simplification initiatives, and segment-oriented restructuring – is progressing well, strengthening our agility and driving improved profitability in an increasingly dynamic environment. We are serving our customers more effectively and seeing a reduction in wasted time and effort internally, enabling our colleagues to move faster, with more focus and accountability. Despite current market volatility, we anticipate continued resilience in volumes, supported by the essential nature of our customers’ services and Xylem’s strong alignment with opex-driven spending. We are offsetting the current tariff impacts with strategic pricing and proactive supply chain management. As a result, we are reaffirming our full-year adjusted EPS guidance."

Net income attributable to Xylem for the quarter was $169 million, or $0.69 per share. Net income margin increased 70 basis points to 8.2 percent. These results are driven by strong operational performance and decreased interest expense, partially offset by increased restructuring and realignment costs, tax expense and loss on sale of businesses. Adjusted net income was $251 million, or $1.03 per share, which excludes the impacts of purchase accounting intangible amortization, restructuring and realignment costs, special charges, the loss on sale of businesses and the net tax impact of these adjustments.

First-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 20.4 percent, reflecting a year-over-year increase of 120 basis points. Productivity savings and strong price realization drove the margin expansion, exceeding the impact of inflation and mix.

Outlook

Xylem forecasts full-year 2025 revenue of approximately $8.7 to $8.8 billion, up approximately 1 to 2 percent on a reported basis, versus 0 to 2 percent previously guided, and up approximately 3 to 4 percent on an organic basis, in line with the previous guidance.

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 $4.50 to $4.70, in line with the previous guidance range. Full-year free cash flow margin is expected to be approximately 9 to 10 percent.

Further 2025 planning assumptions are included in Xylem’s first-quarter 2025 earnings materials posted on the website. 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.