How did Xylem change its full-year 2024 guidance?

Xylem raised full-year revenue guidance to $8.55 billion (about 16% reported growth, 5% to 6% organic, up from 4% to 6%), raised adjusted EPS guidance to $4.18 to $4.28 from $4.10 to $4.25, and lifted the adjusted EBITDA margin outlook to about 20.5% from 20.0%.

What drove the margin improvement?

The filing states that productivity savings, volume, and price drove the adjusted EBITDA margin expansion, exceeding the impact of inflation, strategic investments and mix. Net income margin rose 360 basis points to 8.9%, partly offset by higher purchase accounting intangible amortization.

What did management say about the outlook for the rest of the year?

Management said underlying demand in its largest markets remains resilient despite likely macro variability in the second half, and that Evoqua integration and synergies are well on track.

What was Xylem's financial position at June 30, 2024?

Cash and cash equivalents were $815 million, long-term debt was $1,981 million, and total stockholders' equity was $10,341 million. Operating cash flow for the six months ended June 30, 2024 was $377 million, against $147 million of capital expenditures.

XYL 8-K: Earnings & Results

Q: What did Xylem report for the second quarter of 2024?

Revenue was $2,169 million, up 26% on a reported basis and 9% organically. GAAP net income was $194 million, or $0.80 per diluted share, and adjusted EPS was $1.09. Orders grew 12% reported and declined 1% organically.

01—Abstract

Summary

Summary of the 8-K filed July 30, 2024. Cited figures are marked; the original filing is the authoritative source.

Xylem Inc. filed this Form 8-K on July 30, 2024 under Item 2.02 (Results of Operations and Financial Condition) to furnish a press release, Exhibit 99.1, reporting results for the quarter ended June 30, 2024.

Second-quarter revenue was $2.2 billion^a ($2,169 million), up 26% on a reported basis and 9% organically. Net income was $194 million, or $0.80 per diluted share, compared with $92 million, or $0.45, a year earlier. Adjusted net income was $266 million, or $1.09 per share, and adjusted EBITDA margin was 20.8%, up 170 basis points year over year.

Orders grew 12% on a reported basis but declined 1% organically. Xylem raised its full-year 2024 outlook. Revenue guidance is now $8.55 billion^b, up approximately 16% on a reported basis and 5% to 6% organically, versus the prior 4% to 6% organic range.

Full-year adjusted EPS guidance is $4.18 to $4.28^c, up from $4.10 to $4.25, and the adjusted EBITDA margin outlook rose to approximately 20.5% from 20.0%. Free cash flow conversion to net income is now expected to be at least 120%, versus the prior 115%. Management cited the Evoqua integration and synergies as on track and noted possible macro variability in the second half.

For the six months ended June 30, 2024, revenue was $4,202 million^d and net income was $347 million, or $1.43 per diluted share. Cash and cash equivalents were $815 million at June 30, 2024, and long-term debt was $1,981 million. Operating cash flow for the six months was $377 million, and capital expenditures were $147 million.

02—Key points

Key Highlights

Q2 2024 revenue of $2,169 million, up 26% reported and 9% organic; Xylem attributed the strong execution and demand to the quarter's results.
Q2 2024 GAAP diluted EPS of $0.80 versus $0.45 in Q2 2023; adjusted EPS of $1.09, up 11% from $0.98 (per the adjusted diluted EPS reconciliation).
Q2 2024 orders grew 12% on a reported basis but declined 1% organically; Water Solutions and Services orders rose 45% reported.
Full-year 2024 revenue guidance raised to $8.55 billion (approximately 16% reported growth; 5% to 6% organic, up from 4% to 6%).
Full-year adjusted EPS guidance raised to $4.18 to $4.28 from $4.10 to $4.25; adjusted EBITDA margin outlook raised to approximately 20.5% from 20.0%.
Free cash flow conversion to net income now expected to be at least 120%, up from the prior 115% outlook.
Q2 2024 adjusted EBITDA margin of 20.8%, up 170 basis points year over year; management cited productivity savings, volume and price as drivers.

03—Questions

Frequently Asked Questions

What did Xylem report for the second quarter of 2024?
Revenue was $2,169 million, up 26% on a reported basis and 9% organically. GAAP net income was $194 million, or $0.80 per diluted share, and adjusted EPS was $1.09. Orders grew 12% reported and declined 1% organically.
How did Xylem change its full-year 2024 guidance?
Xylem raised full-year revenue guidance to $8.55 billion (about 16% reported growth, 5% to 6% organic, up from 4% to 6%), raised adjusted EPS guidance to $4.18 to $4.28 from $4.10 to $4.25, and lifted the adjusted EBITDA margin outlook to about 20.5% from 20.0%.
What drove the margin improvement?
The filing states that productivity savings, volume, and price drove the adjusted EBITDA margin expansion, exceeding the impact of inflation, strategic investments and mix. Net income margin rose 360 basis points to 8.9%, partly offset by higher purchase accounting intangible amortization.
What did management say about the outlook for the rest of the year?
Management said underlying demand in its largest markets remains resilient despite likely macro variability in the second half, and that Evoqua integration and synergies are well on track.
What was Xylem's financial position at June 30, 2024?
Cash and cash equivalents were $815 million, long-term debt was $1,981 million, and total stockholders' equity was $10,341 million. Operating cash flow for the six months ended June 30, 2024 was $377 million, against $147 million of capital expenditures.

04—Continue

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