01—Abstract
Summary
Summary of the 10-Q filed April 29, 2025. Cited figures are marked; the original filing is the authoritative source.
Xylem Inc. reported first-quarter 2025 revenue of $2,069 milliona, up 1.8% from $2,033 million a year earlier, with organic revenue growth of 3.3% led by strong volume in Measurement and Control Solutions and organic growth in Water Infrastructure.
Operating income rose to $231 millionb (operating margin 11.2%) from $209 million, and net income attributable to Xylem increased to $169 million, or $0.69 per diluted share, from $153 million, or $0.63. Adjusted earnings per share were $1.03, up from $0.90 in the prior year period, according to the filing's non-GAAP reconciliation. Gross margin was essentially flat at 37.1%, with productivity savings and price offsetting inflation and unfavorable mix.
Cash flow was weaker. Operating cash flow fell to $33 millionc from $89 million, and free cash flow was negative $38 million, compared with $15 million a year earlier. The filing attributes the decline mainly to higher accounts payable outflows, higher receivables and timing of customer payments.
Orders declined 3.9% to $2,158 milliond, and total backlog was $5,095 million at March 31, 2025, down 3.4% year over year. Cash and equivalents were $1,059 million, and the company reported about $2.1 billion of available liquidity, including a $1 billion undrawn revolving credit facility.
Management maintained its 2025 outlook of 1% to 2% total revenue growth and 3% to 4% organic revenue growth. The filing also reports restructuring charges of $17 million, an expected 2025 restructuring cost range of $60 to $70 million, the acquisition of Simply Clean, the divestiture of Evoqua Magneto for $61 million in cash, and a pending Swedish tax matter in which the company believes it is more likely than not to prevail.
02—Key points
Key Highlights
- Revenue rose 1.8% to $2,069 million, with organic growth of 3.3%, led by Measurement and Control Solutions (organic growth of 5.8%) and Water Infrastructure (organic growth of 4.9%).
- Operating income increased 10.5% to $231 million, and operating margin expanded 90 basis points to 11.2%.
- Diluted EPS was $0.69, up from $0.63; adjusted EPS was $1.03, up from $0.90 per the filing's non-GAAP reconciliation.
- Orders fell 3.9% to $2,158 million (down 2.4% organically), and total backlog decreased 3.4% year over year to $5,095 million.
- Operating cash flow was $33 million versus $89 million a year earlier, and free cash flow was negative $38 million, driven by accounts payable outflows and higher receivables.
- Cash and cash equivalents were $1,059 million, with approximately $2.1 billion of available liquidity including a $1 billion undrawn credit facility.
- Management maintained its 2025 outlook of 1% to 2% total revenue growth and 3% to 4% organic revenue growth.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Xylem kept $0.08.
- Revenue$2.07B100.0%
- Cost of revenue−$1.30B62.9%
- Gross profit$768.0M37.1%
- Operating costs−$537.0M26.0%
- Operating income$231.0M11.2%
- Interest, other & tax−$62.0M3.0%
- Net income$169.0M8.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed April 29, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $2.07B$2.03B | +1.8% |
| Cost of Revenue | $1.30B$1.28B | +1.6% |
| Gross Profit | $768.00M$752.00M | +2.1% |
| R&D Expenses | $56.00M$59.00M | −5.1% |
| SG&A Expenses | $460.00M$474.00M | −3.0% |
| Operating Income | $231.00M$209.00M | +10.5% |
| Net Income | $169.00M$153.00M | +10.5% |
| EPS (Basic) | $0.69$0.63 | +9.5% |
| EPS (Diluted) | $0.69$0.63 | +9.5% |
| Shares Outstanding (Basic) | 243.10M241.85M | +0.5% |
| Shares Outstanding (Diluted) | 243.78M243.02M | +0.3% |
05—Questions
Frequently Asked Questions
How did Xylem's first-quarter 2025 profitability compare with the prior year?
Operating income rose to $231 million from $209 million, and net income attributable to Xylem increased to $169 million from $153 million. Diluted EPS was $0.69 versus $0.63. Operating margin improved to 11.2% from 10.3%, driven by productivity savings and price realization, partly offset by inflation and unfavorable mix.
Why was operating cash flow weak in the quarter?
Operating cash flow was $33 million compared with $89 million a year earlier. The filing cites increased use of cash for accounts payable, including payments for strategic initiatives, higher accounts receivable reflecting increased volume and timing of customer payments, and increased investment in other assets tied to large projects. Higher cash earnings and lower inventory partially offset these items.
How did order intake and backlog trend?
Orders were $2,158 million, down 3.9% from $2,246 million, and down 2.4% organically. Total backlog was $5,095 million at March 31, 2025, down $177 million or 3.4% from a year earlier, though up $25 million from December 31, 2024. The company anticipates that approximately 50% of the backlog will be recognized as revenue in the remainder of 2025.
What is Xylem's liquidity position and debt profile?
Xylem reported cash and cash equivalents of $1,059 million and total debt of $2,015 million at March 31, 2025. Its $1 billion 2023 Five-Year Revolving Credit Facility was undrawn. The company states that its securities are rated investment grade and that it believes it has sufficient liquidity to meet funding requirements.
What are the notable items affecting the outlook?
Management maintained its 2025 outlook of 1% to 2% total revenue growth and 3% to 4% organic revenue growth. The company expects $60 to $70 million of restructuring costs for the full year. A pending Swedish tax matter involves SEK837 million (approximately $84 million) of assessed tax, penalties and interest, and the company believes it is more likely than not to prevail, with no unrecognized tax benefit recorded for this position.
06—Continue