Xylem (XYL) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 profitability and margin expansion, driven by operational discipline, strong execution, and successful Evoqua integration, with synergy capture ahead of schedule and a book-to-bill ratio above one across all segments.

• Q3 2024 revenue reached $2,104 million, up 1–1.3% year-over-year, with strong organic growth in Measurement and Control Solutions and robust order intake.

• Orders grew 8–8.4% year-over-year, with backlog increasing to $5.3 billion, supporting future growth.

• Portfolio optimization and simplification efforts are delivering systematic margin improvement and reduced complexity.

• Signed agreement to acquire majority stake in Idrica, expected to close in December 2024.

Financial highlights

• Q3 2024 net income was $217 million, with a net income margin of 10.3%, and adjusted EBITDA margin reached a record 21.2%, up 140 bps year-over-year.

• Adjusted EPS was $1.11, up 12% from prior year; record quarterly EPS and above guidance midpoint.

• Year-to-date free cash flow was $467 million, with conversion rate at 94% and expected to exceed 120% for the full year.

• Q3 2024 revenue was $2,104 million, up 1% year-over-year; nine-month revenue totaled $6.3 billion, up 20% year-over-year.

• Backlog reached $5.3 billion, with orders up 8% year-over-year.

Outlook and guidance

• Full-year 2024 revenue guidance set at $8.5 billion (15% total growth; 5% organic), with adjusted EBITDA margin expected at 20.5% (160 bps expansion YoY).

• Adjusted EPS guidance narrowed to $4.22–$4.24.

• Free cash flow conversion expected to be at least 120% of net income.

• Q4 2024 revenue guidance at ~$2.2 billion, with 2–3% organic growth and adjusted EBITDA margin of 20.5–21%.

• Restructuring costs for the full year expected at $40–$50 million, mainly related to integration and competitive positioning.