Xylem Inc

Q1 performance: solid, resilient start; margins up; cash flow positive - Demand “consistent with expectations”; ending backlog up sequentially to $4.7B and book-to-bill > 1 (orders flat YoY due to project timing in WSS, offsetting strength elsewhere). - Revenue flat YoY (vs expectations), with China/80-20 actions moderating short-term revenue outlook. - EBITDA margin 20.6% (up +20 bps YoY) driven by productivity + price offsetting inflation/mix/volume. - EPS $1.12, +9% YoY. - Free cash flow positive (timing/accruals + lower payments offset by restructuring costs and higher CapEx).

Guidance outlook (updated): modest growth, steady margin expansion, EPS unchanged - Full-year 2026 (reported): $9.2B–$9.3B revenue (+2%–3%, raised from prior $9.1B–$9.2B). - Organic revenue growth: 2%–4% (unchanged). - EBITDA margin: 22.9%–23.3% (implies +70 to +110 bps expansion YoY; benefits from productivity/price and mitigation of MCS mix pressure from simplification). - EPS guidance kept unchanged: $5.35–$5.60, despite share repurchases—management is being prudent given macro uncertainty (and said no material impact from recently announced tariff changes). - Q2 guidance: reported revenue +2%–3% YoY, ~+1% organic; EBITDA margin ~22%–22.5%; EPS $1.31–$1.36.

Segment highlights: where growth is coming from vs. where drag persists - MCS (Measurement & Control Solutions): orders +15%; backlog flat sequentially ~ $1.4B; book-to-bill < 1 but stabilizing. International metering divestiture now expected to close end of Q2 (timing reflected in guidance). - Water Infrastructure: orders +2%, but revenue -1% YoY (treatment softness from “walkaway actions” partly offset by transport strength). EBITDA margin +120 bps. - Applied Water: orders +2% and book-to-bill > 1 (large projects + data center wins); revenue ~flat; margin below expectations but +10 bps YoY, with confidence in sequential improvement in the back half. - WSS (Water Solutions & Services): orders down due to capital project timing, but then a major upside surprise: largest order ever booked in April—$850M outsourced water contract (with ~20-year service tail).