Xylem (XYL) Q1 2025 earnings summary

Executive summary

• Q1 2025 results exceeded expectations, with revenue up 2% to $2.1 billion and organic growth of 3%, driven by strong demand and execution across all segments, despite FX headwinds.

• Book-to-bill ratio remained above one, supported by a $5.1 billion backlog and resilient demand across regions and end markets.

• EBITDA margin expanded by 120 basis points, driving double-digit adjusted EPS growth year-over-year.

• The business remains agile, benefiting from simplification, structural changes, and a high-impact culture, with ongoing transformation and restructuring initiatives.

• Full-year 2025 guidance for revenue and EPS reaffirmed, reflecting confidence in execution and tariff mitigation.

Financial highlights

• Q1 revenue grew 2% year-over-year to $2.07 billion, with organic growth of 3% and strong performance in Measurement & Control Solutions.

• Adjusted EBITDA margin reached 20.4%, up 120 basis points from the prior year, driven by productivity, simplification, and pricing.

• Adjusted EPS was $1.03, up 14% year-over-year and above guidance midpoint; reported EPS was $0.69, up 10%.

• Net income attributable to shareholders was $169 million, with a net income margin of 8.2%.

• Free cash flow was negative $38 million, down from positive $15 million in the prior year, due to higher working capital needs and outsourced water projects.

Outlook and guidance

• Full-year 2025 revenue expected at $8.7–$8.8 billion, up 1–2% reported and 3–4% organic, with Q2 revenue guidance at ~$2.2 billion.

• Adjusted EBITDA margin guidance of 21.3–21.8%, representing 70–120 basis points expansion year-over-year.

• Adjusted EPS guidance reaffirmed at $4.50–$4.70; free cash flow margin target of 9–10%.

• Q2 EPS guidance of $1.12–$1.16; margin expansion driven by productivity and price, offsetting tariffs and inflation.

• Guidance reflects ongoing market volatility, including geopolitical, trade, macroeconomic, and regulatory uncertainty.