01—Abstract
Summary
Summary of the 10-Q filed October 27, 2026. Cited figures are marked; the original filing is the authoritative source.
Xylem Inc. reported third-quarter 2026 revenue of $2,201 milliona, a decrease of 3.0% from $2,268 million a year earlier.
The filing attributes the decline mainly to $80 millionb of revenue lost from divestitures, partly offset by $17 million from acquisitions, while organic revenue fell $7 million. Profitability improved: operating income rose to $385 million from $334 million, and net income attributable to Xylem reached $291 million, or $1.25 per diluted share, versus $227 million, or $0.93, a year earlier. Adjusted EBITDA was flat at $527 million.
For the nine months, revenue was $6,662 millionc (up $24 million), operating income was $1,019 million, and diluted EPS was $3.14 compared with $2.55. Orders were $2,331 million in the quarter, up from $2,181 million, and total backlog reached $5,466 million at September 30, 2026, compared with $4,819 million a year earlier. Management updated its 2026 outlook to a decline in total revenue of approximately 1% and flat organic revenue.
The balance sheet shifted meaningfully. Total debt rose to $2,895 milliond from $1,942 million after new senior notes were issued, and the company repurchased shares for $1,580 million in cash during the nine months.
Cash fell to $708 million from $1,479 million. The company also agreed to acquire the Cornell Pump and Roper Pump businesses for approximately $1,460 million, expected to close in the fourth quarter of 2026, and completed the WaterFleet and TriOS acquisitions in 2026.
02—Key points
Key Highlights
- Third-quarter 2026 revenue was $2,201 million, down 3.0% from $2,268 million, while nine-month revenue of $6,662 million was up slightly from $6,638 million.
- Operating income increased to $385 million in the quarter from $334 million, and to $1,019 million for the nine months from $870 million.
- Diluted EPS was $1.25 for the quarter versus $0.93, and $3.14 for the nine months versus $2.55; adjusted EPS for the quarter was $1.44 versus $1.37.
- Orders were $2,331 million in the quarter versus $2,181 million, and backlog rose to $5,466 million from $4,819 million a year earlier.
- Total debt increased to $2,895 million from $1,942 million, and the company repurchased $1,580 million of common stock in cash during the nine months.
- The company agreed to acquire Cornell Pump and Roper Pump for approximately $1,460 million, expected to close in the fourth quarter of 2026, and entered a new $1.5 billion undrawn revolving credit facility.
- The 2026 outlook now calls for a decline in total revenue of approximately 1% and flat organic revenue for the year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Xylem kept $0.13.
- Revenue$2.20B100.0%
- Cost of revenue−$1.29B58.8%
- Gross profit$907.0M41.2%
- Operating costs−$522.0M23.7%
- Operating income$385.0M17.5%
- Interest, other & tax−$94.0M4.3%
- Net income$291.0M13.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed October 27, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $2.20B$2.27B | −3.0% |
| Cost of Revenue | $1.29B$1.39B | −6.6% |
| Gross Profit | $907.00M$883.00M | +2.7% |
| R&D Expenses | $56.00M$52.00M | +7.7% |
| SG&A Expenses | $458.00M$474.00M | −3.4% |
| Operating Income | $385.00M$334.00M | +15.3% |
| Net Income | $291.00M$227.00M | +28.2% |
| EPS (Basic) | $1.25$0.93 | +34.4% |
| EPS (Diluted) | $1.25$0.93 | +34.4% |
| Shares Outstanding (Basic) | 232.72M243.45M | −4.4% |
| Shares Outstanding (Diluted) | 233.04M244.09M | −4.5% |
05—Questions
Frequently Asked Questions
Why did revenue decline in the third quarter despite growth in orders?
Revenue fell 3.0% to $2,201 million, driven by $80 million of revenue lost from divestitures, particularly the international metering business, and a $7 million organic decline. Orders rose to $2,331 million, up 9.9% organically, which the filing indicates should support future revenue as backlog is worked off.
How did profitability change in 2026?
Operating income rose to $385 million in the quarter from $334 million, and net income attributable to Xylem increased to $291 million from $227 million. The filing cites productivity savings, price realization, IEEPA tariff refunds recorded in special charges, and lower restructuring and realignment costs and acquired intangible amortization. Adjusted EBITDA was flat at $527 million.
How is Xylem funding its acquisitions and share repurchases?
The company issued $500 million of 5.200% senior notes due 2033 and $500 million of 5.450% senior notes due 2036 in May 2026, and later issued additional senior notes in September 2026, raising long-term debt to $2,365 million. It also entered a $1.5 billion five-year revolving credit facility that was undrawn at September 30, 2026. The Cornell Pump and Roper Pump purchase price of approximately $1,460 million is expected to be financed in part with the September notes proceeds.
What are the notable contingencies and risks disclosed?
Xylem is in litigation with the Swedish Tax Agency over a 2013 intercompany intellectual property transfer. The Administrative Court of Appeal oral hearing is scheduled for November 2026, and the company has not recorded any unrecognized tax benefit for this position. Management believes it is more likely than not to prevail, but the filing acknowledges the final outcome could differ materially. The company also cites geopolitical, tariff and macroeconomic uncertainty as factors affecting its outlook.
06—Continue