01—Abstract
Summary
Summary of the 8-K filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Xylem Inc. reported third-quarter 2024 results on October 31, 2024.
Revenue was $2.1 billiona, up 1% on both a reported and organic basis, and orders grew 8% on a reported and organic basis. Net income was $217 million, or $0.89 per share, compared with $152 million, or $0.63 per share, a year earlier. Adjusted net income was $269 million, or $1.11 per share, and adjusted EBITDA margin was 21.2%, a 140 basis point year-over-year increase driven by productivity savings and price.
Management attributed the moderated organic revenue growth largely to project timing. For full-year 2024, Xylem expects revenue of $8.5 billionb, up approximately 15% on a reported basis and approximately 5% on an organic basis. It expects a full-year adjusted EBITDA margin of approximately 20.5% and narrowed its adjusted EPS guidance to $4.22 to $4.24, from the prior range of $4.18 to $4.28.
Free cash flow conversion to net income is expected to be at least 120%. Management said the Evoqua integration is ahead of schedule and that synergy capture continues to accelerate, which supports confidence in closing the year above target. Year-to-date through September 30, 2024, net cash from operating activities was $688 millionc, compared with $382 million in the prior-year period, and capital expenditures were $221 million.
02—Key points
Key Highlights
- Q3 2024 revenue of $2.1 billion, up 1% on a reported and organic basis; orders grew 8% on a reported and organic basis.
- Q3 2024 net income of $217 million, or $0.89 per share, up 41% on a reported basis; adjusted EPS of $1.11, up 12%.
- Adjusted EBITDA margin of 21.2% in Q3 2024, a 140 basis point year-over-year increase, with net income margin up 300 basis points to 10.3%.
- Full-year 2024 revenue guidance of $8.5 billion, up approximately 15% reported and approximately 5% organic.
- Adjusted EPS guidance narrowed to $4.22 to $4.24 from $4.18 to $4.28; full-year adjusted EBITDA margin expected at approximately 20.5%.
- Full-year free cash flow conversion to net income expected to be at least 120%.
- Evoqua integration described as ahead of schedule, with synergy capture accelerating.
03—Questions
Frequently Asked Questions
Why was organic revenue growth only 1% in the third quarter?
Management said moderated organic revenue growth in the quarter was driven largely by project timing, while demand remained resilient and orders grew 8% on a reported and organic basis.
What drove the improvement in earnings and margins?
Third-quarter adjusted EBITDA margin rose 140 basis points to 21.2%. The company attributed the expansion to productivity savings and price, which exceeded the impact of inflation, strategic investments and mix. Net income margin increased 300 basis points to 10.3%.
How did Xylem change its full-year 2024 outlook?
Revenue guidance of $8.5 billion, up approximately 15% reported and approximately 5% organic, was updated. Adjusted EPS guidance was narrowed to $4.22 to $4.24 from $4.18 to $4.28, and full-year adjusted EBITDA margin is expected to be approximately 20.5%.
What is the status of the Evoqua integration?
Management said the Evoqua integration is ahead of schedule and synergy capture continues to accelerate, giving it confidence in closing the year above target.
How did cash flow compare year over year?
Net cash from operating activities for the nine months ended September 30, 2024 was $688 million, compared with $382 million in the same period of 2023. Capital expenditures were $221 million, compared with $177 million. Full-year free cash flow conversion to net income is expected to be at least 120%.
04—Continue