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Xylem Inc.’s (XYL - Free Report) second-quarter 2024 adjusted earnings of $1.09 per share surpassed the Zacks Consensus Estimate of $1.06. Also, the bottom line increased 11% year over year.
XYL’s revenues of $2.17 billion beat the consensus estimate of $2.16 billion. The top line jumped 26% year over year, driven by strong commercial and operational execution, and resilient demand. Organic revenues in the quarter rose 9%.
Orders of $2.09 billion increased 12% year over year. Organically, orders were down 1%.
Segmental Details
Revenues in the Water Infrastructure segment totaled $631 million, up 22% year over year. Organic sales increased 7% year over year, buoyed by price realization and growth across all regions and applications.
The Applied Water segment generated revenues of $456 million, down 5% year over year. Organic sales fell 4% on a year-over-year basis. The segmental performance was hurt by softness in developed markets and an unfavorable mix. The Zacks Consensus Estimate was pegged at $453 million.
Quarterly revenues at the Measurement & Control Solutions segment totaled $482 million, up 26% year over year. The Zacks Consensus Estimate was pegged at $470 million. Organic sales were up 26% year over year, driven by smart metering demand and execution.
Quarterly revenues at the Water Solutions and Services segment totaled $600 million, up 76% year over year. Organic sales were up 12% year over year, driven by large long-term outsourced water contracts.
Xylem’s adjusted EBITDA was $452 million, up 37.3% from the year-ago quarter’s level. The margin improved to 20.8% from 19.1% in the prior year.
Adjusted operating income was $352 million, up 35.9% year over year. Adjusted operating margin increased to 16.2% from 15% in the year-earlier quarter.
Balance Sheet and Cash Flow
Exiting the second quarter, Xylem had cash and cash equivalents of $815 million compared with $1.02 billion at the end of December 2023. Long-term debt was $1.98 billion at the end of the quarter compared with $2.3 billion at the end of December 2023.
In the first six months of 2024, XYL generated net cash of $377 million from operating activities compared with $9 million generated in the year-ago period.
Capital expenditure was $147 million, up 42.7% from the year-earlier quarter. Free cash flow was $230 million in the first six months of the year against free cash outflow of $61 million in the prior year.
Rewards to Shareholders
In the first six months of 2024, Xylem paid dividends of $175 million, up 25.9% year over year. The company also bought back shares worth $18 million in the same period compared with $9 million worth of shares repurchased in the year-ago period.
2024 Guidance
Xylem now expects revenues of approximately $8.55 billion for 2024. This indicates an increase of 16% from the prior-year level on a reported basis and around 5-6% on an organic basis. Previously, the company projected revenues to increase 15-16% on a reported basis and 4-6% on an organic basis.
Adjusted EBITDA margin is estimated to be approximately 20.5%, indicating an expansion of 160 basis points from the year-earlier actual.
XYL currently forecasts adjusted earnings to be in the range of $4.18-$4.28 per share, higher than the band of $4.10-$4.25 projected earlier. This metric indicates an increase from earnings of $3.78 per share in 2023. Free cash flow conversion to net income is anticipated to be around 120%.
Zacks Rank & Stocks to Consider
XYL currently carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the same space:
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Xylem (XYL) Q2 Earnings & Revenues Beat, '24 View Raised
Xylem Inc.’s (XYL - Free Report) second-quarter 2024 adjusted earnings of $1.09 per share surpassed the Zacks Consensus Estimate of $1.06. Also, the bottom line increased 11% year over year.
XYL’s revenues of $2.17 billion beat the consensus estimate of $2.16 billion. The top line jumped 26% year over year, driven by strong commercial and operational execution, and resilient demand. Organic revenues in the quarter rose 9%.
Orders of $2.09 billion increased 12% year over year. Organically, orders were down 1%.
Segmental Details
Revenues in the Water Infrastructure segment totaled $631 million, up 22% year over year. Organic sales increased 7% year over year, buoyed by price realization and growth across all regions and applications.
The Applied Water segment generated revenues of $456 million, down 5% year over year. Organic sales fell 4% on a year-over-year basis. The segmental performance was hurt by softness in developed markets and an unfavorable mix. The Zacks Consensus Estimate was pegged at $453 million.
Quarterly revenues at the Measurement & Control Solutions segment totaled $482 million, up 26% year over year. The Zacks Consensus Estimate was pegged at $470 million. Organic sales were up 26% year over year, driven by smart metering demand and execution.
Quarterly revenues at the Water Solutions and Services segment totaled $600 million, up 76% year over year. Organic sales were up 12% year over year, driven by large long-term outsourced water contracts.
Xylem Inc. Price, Consensus and EPS Surprise
Xylem Inc. price-consensus-eps-surprise-chart | Xylem Inc. Quote
Margin Profile
Xylem’s adjusted EBITDA was $452 million, up 37.3% from the year-ago quarter’s level. The margin improved to 20.8% from 19.1% in the prior year.
Adjusted operating income was $352 million, up 35.9% year over year. Adjusted operating margin increased to 16.2% from 15% in the year-earlier quarter.
Balance Sheet and Cash Flow
Exiting the second quarter, Xylem had cash and cash equivalents of $815 million compared with $1.02 billion at the end of December 2023. Long-term debt was $1.98 billion at the end of the quarter compared with $2.3 billion at the end of December 2023.
In the first six months of 2024, XYL generated net cash of $377 million from operating activities compared with $9 million generated in the year-ago period.
Capital expenditure was $147 million, up 42.7% from the year-earlier quarter. Free cash flow was $230 million in the first six months of the year against free cash outflow of $61 million in the prior year.
Rewards to Shareholders
In the first six months of 2024, Xylem paid dividends of $175 million, up 25.9% year over year. The company also bought back shares worth $18 million in the same period compared with $9 million worth of shares repurchased in the year-ago period.
2024 Guidance
Xylem now expects revenues of approximately $8.55 billion for 2024. This indicates an increase of 16% from the prior-year level on a reported basis and around 5-6% on an organic basis. Previously, the company projected revenues to increase 15-16% on a reported basis and 4-6% on an organic basis.
Adjusted EBITDA margin is estimated to be approximately 20.5%, indicating an expansion of 160 basis points from the year-earlier actual.
XYL currently forecasts adjusted earnings to be in the range of $4.18-$4.28 per share, higher than the band of $4.10-$4.25 projected earlier. This metric indicates an increase from earnings of $3.78 per share in 2023. Free cash flow conversion to net income is anticipated to be around 120%.
Zacks Rank & Stocks to Consider
XYL currently carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the same space:
Kadant Inc. (KAI - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
It has a trailing four-quarter average earnings surprise of 19%. The Zacks Consensus Estimate for KAI’s 2024 earnings has increased 0.2% in the past 60 days.
Flowserve Corporation (FLS - Free Report) currently carries a Zacks Rank #2 (Buy). FLS delivered a trailing four-quarter average earnings surprise of 18.2%.
In the past 60 days, the consensus estimate for Flowserve’s 2024 earnings has remained stable.
Emerson Electric Co. (EMR - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 10.7%.
In the past 60 days, the Zacks Consensus Estimate for EMR’s 2024 earnings has increased 0.4%.