01—Abstract
Summary
Summary of the 8-K filed October 27, 2026. Cited figures are marked; the original filing is the authoritative source.
Xylem Inc. (NYSE: XYL) reported third-quarter 2026 results on October 27, 2026, with orders of $2.3 billiona, up 7% on a reported basis and 10% organically, and revenue of $2.2 billion, down 3% on a reported basis and flat organically.
Reported diluted EPS was $1.25b, up 34%, while adjusted EPS was $1.44, up 5%. Net income attributable to Xylem was $291 million, and the adjusted EBITDA margin was 23.9%, up 70 basis points year over year, driven by productivity savings and price realization. Xylem lowered its full-year 2026 outlook.
Revenue is now forecast at approximately $8.95 billionc, down 1% on a reported basis (previously up 2%), and flat organically (previously up 2 to 3%). Adjusted EPS guidance is $5.40 to $5.45, down from $5.55 to $5.70, and free cash flow margin is expected at approximately 10.2%, versus 10.2% to 11.0% previously. The company also announced its intent to divest Applied Water International and Specialty Flow Control, and to reorganize from four segments into three (Treatment and Services, Flow Solutions, and Measurement and Analytics) beginning January 1, 2027.
In a related 8-K item, Hayati Yarkadas, EVP and President of Water Infrastructure, will cease to be an executive officer effective January 1, 2027, as the Water Infrastructure segment is eliminated. He will remain employed through a transition period to lead the planned divestitures, with a $1.2 milliond special success incentive tied to closing the final divestiture and enhanced equity treatment on involuntary termination.
02—Key points
Key Highlights
- Q3 2026 orders were $2.3 billion, up 7% reported and 10% organically, with Water Solutions and Services orders up 7% on a reported basis for the quarter.
- Q3 2026 revenue was $2.2 billion, down 3% reported and flat organically; net income attributable to Xylem was $291 million, or $1.25 per diluted share.
- Adjusted EPS of $1.44 rose 5% year over year, and the adjusted EBITDA margin of 23.9% expanded 70 basis points.
- Full-year 2026 guidance was cut: revenue now about $8.95 billion (down 1% reported, flat organic) and adjusted EPS of $5.40 to $5.45, versus prior $5.55 to $5.70.
- Xylem intends to divest Applied Water International and Specialty Flow Control and will reorganize into three segments beginning January 1, 2027.
- Hayati Yarkadas will cease to be an executive officer on January 1, 2027, and will lead the divestitures under a transition arrangement that runs through March 31, 2028 at the latest.
- Year-to-date share repurchases of $1.58 billion in the nine months ended September 30, 2026 were funded in part by $990 million of new long-term debt issued.
03—Questions
Frequently Asked Questions
Why did Xylem lower its full-year 2026 adjusted EPS guidance?
The filing states that Xylem now expects full-year 2026 adjusted EPS of $5.40 to $5.45, down from $5.55 to $5.70, alongside lowered revenue guidance. The press release attributes the revenue softness to project timing and more cautious spending decisions by customers. It does not provide a detailed breakdown of the EPS reduction.
What are the Applied Water International and Specialty Flow Control divestitures?
Xylem stated its intent to divest Applied Water International (AW Int'l) and Specialty Flow Control (SFC). The company retains sole discretion over whether and when to pursue or complete either divestiture, the identity of the purchaser, the transaction value and other terms. The filing does not state expected proceeds or timing beyond the March 31, 2028 date in the transition arrangement.
How will the segment reorganization affect reporting?
Beginning January 1, 2027, Xylem will align its business into three segments: Treatment and Services, Flow Solutions, and Measurement and Analytics, led by Rodney Aulick, Joe Johnston and Meredith Emmerich, respectively. The Water Infrastructure segment is being eliminated as part of this change.
What compensation does Hayati Yarkadas receive during his transition?
During the Transition Period he will receive a base salary at an annual rate of CHF 557,469 prorated through the period, continued benefits, payment of his 2026 Annual Incentive Plan award subject to committee certification, and a special Success Incentive of $1,200,000 payable upon closing of the final divestiture. If he is involuntarily terminated without cause before both divestitures close, the Success Incentive is paid within 30 days of termination.
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