Xylem (XYL) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $2.17–$2.2 billion, up 26% year-over-year, with 9% organic growth and strong execution across segments.

• Adjusted EPS was $1.09, up 11% year-over-year; net income was $194 million, with net income margin up to 8.9%.

• Evoqua integration is progressing well, driving revenue, margin expansion, and synergy realization.

• Orders grew 12% reported but declined 1% organically; backlog at $5.2 billion, book-to-bill ratio near 1.

• Launched 2030 sustainability goals focused on decarbonization, water stewardship, and access to water for 80 million people.

Financial highlights

• Q2 2024 revenue rose 26% to $2,169 million; organic revenue up 9%; adjusted EBITDA margin at 20.8%, up 170 bps year-over-year.

• Adjusted EPS was $1.09, up from $0.98 in Q2 2023; net income for Q2 was $194 million.

• Free cash flow for the first half was $230 million, up from $9 million prior year; FCF conversion improved to 62%.

• Q2 gross profit was $819 million (37.8% margin); operating income was $253 million (11.7% margin).

• Net debt/adjusted EBITDA at 0.7x, reflecting a strong balance sheet.

Outlook and guidance

• Full-year 2024 revenue guidance raised to ~$8.55 billion, with 16% total and 5–6% organic growth expected.

• Adjusted EBITDA margin guidance increased to about 20.5%, up 160 bps year-over-year.

• Adjusted EPS guidance raised to $4.18–$4.28; free cash flow conversion expected over 120% of net income.

• Q3 2024 revenue expected at $2.14–$2.18 billion, with 3–5% growth and EBITDA margin of 20.5–21%.

• Management expects $40–$50 million in restructuring costs for 2024, mainly related to Evoqua integration.