Xylem (XYL) Q4 2024 earnings summary

Executive summary

• Achieved record full-year revenue, EBITDA margins, and EPS in 2024, with Q4 revenue up 7% and strong momentum into 2025.

• All segments delivered mid-single digit or better Q4 orders growth, supporting a robust backlog and future growth.

• Integration of Evoqua delivered cost synergies faster than expected, and transformation initiatives are streamlining the operating model.

• Focused on simplifying processes, optimizing the portfolio, and targeted capital deployment, including increased stake in Idrica and divestiture of non-core businesses.

• Book-to-bill ratio remained near 1x, with a $5.1B backlog at year-end.

Financial highlights

• Q4 2024 revenue was $2.3B, up 7% year-over-year, with organic growth also at 7%.

• Q4 adjusted EBITDA margin reached 21.0%, up 140 bps year-over-year, driven by productivity, price, and volume.

• Q4 adjusted EPS was $1.18, up 19% year-over-year; full-year adjusted EPS was $4.27.

• Free cash flow for 2024 was $942M, with a conversion rate of 122% and margin of 11%.

• Year-end backlog stood at $5.1B, flat year-over-year; book-to-bill ratio near one for Q4 and above one for the year.

Outlook and guidance

• 2025 revenue guidance: $8.6–$8.7B, 0–2% reported growth, 3–4% organic growth.

• 2025 adjusted EBITDA margin expected at 21.3–21.8%, up 70–120 bps year-over-year.

• 2025 adjusted EPS guidance: $4.50–$4.70, up 8% at midpoint; FX is a headwind, with double-digit EPS growth excluding FX.

• Q1 2025 revenue growth expected at 0–2% reported, 1–2% organic; EBITDA margin 19.5–20%; EPS $0.93–$0.98.

• Free cash flow margin expected at 9–10% for 2025, with a temporary dip below long-term goals due to restructuring.