Xylem (XYL) Q2 2026 earnings summary

Executive summary

• Orders surged 42% year-over-year to $3.1 billion, reflecting robust demand across utilities, industrials, and high-growth verticals such as data centers, semiconductors, and life sciences.

• Revenue for Q2 2026 was $2,336 million, up 2% year-over-year, driven by strong U.S. municipal and data center demand, with China remaining a headwind.

• Net income attributable to shareholders was $263 million, with a net income margin of 11.3%, up 150 basis points year-over-year.

• Major contract wins, including the largest in company history and a 20-year commitment from a leading chemical company, highlight commercial momentum.

• Portfolio reshaped through over $400 million in divestitures and targeted acquisitions, including TriOS and WaterFleet, to strengthen digital and mobile water treatment capabilities.

Financial highlights

• Q2 2026 revenue was $2,336 million, up 2% year-over-year; organic revenue growth was 1%.

• Adjusted EBITDA margin for Q2 was 23.3%, up 150 basis points year-over-year, driven by productivity, price, and mix.

• Adjusted EPS for Q2 was $1.46, up 16% year-over-year.

• Free cash flow for the first half was $219 million, with a margin of 5%.

• Ending backlog at $5.3 billion, with book-to-bill ratio well above one.

Outlook and guidance

• Full-year 2026 revenue forecast is approximately $9.2 billion, up 2% reported and 2–3% organically.

• Adjusted EBITDA margin for 2026 expected at 23.1%–23.5%, up 90–130 basis points from 2025.

• Adjusted EPS guidance raised to $5.55–$5.70, reflecting strong first half, share repurchases, and higher margins.

• Q3 2026 revenue expected flat reported, up ~3% organically; EBITDA margin 23.5%–24%; EPS $1.42–$1.47.

• Free cash flow margin for FY 2026 expected at 10.2–11%.