Xylem Stock Falls As FY22 Outlook Lags Consensus

Xylem Inc XYL reported a fourth-quarter FY21 revenue decline of 3.6% year-over-year to $1.32 billion, beating the consensus of $1.31 billion.
Sales by segments: Water Infrastructure $622 million (+1% Y/Y), Applied Water $406 million (+2.8% Y/Y), and Measurement & Control Solutions $295 million (-18.5% Y/Y).
Adjusted EPS was $0.63, beating the consensus of $0.61.
Adjusted operating income declined 22.2% Y/Y to $147 million, and margin contracted by 265 bps to 11.1%.
The company generated $538 million of operating cash flow, representing a 126% conversion, and $330 million of free cash flow, representing a 77% conversion for the fiscal.
Adjusted EBITDA was $214 million, compared to $258 million in 4Q20, and the margin was down 260 bps to 16.2%.
Dividend: Xylem board declared a dividend of $0.30 per share, an increase of 7%, payable on March 17, 2022, to shareholders of record as of February 17, 2022.
"We expect the first half of 2022 to continue to be supply-constrained due to ongoing chip shortages," said CEO Patrick Decker.
"Overall, we expect full-year growth in the mid-single digits, with significant margin expansion in the second half, keeping us on track to achieve our 2025 growth and strategic milestones," Decker added.
FY22 Outlook: Xylem expects revenue of $5.25 billion - $5.35 billion (consensus $5.49 billion), up 1% - 3% on a reported basis and up 3% - 5% on an organic basis.
It expects an adjusted EPS of $2.35 - $2.70 (vs. consensus of $2.97), representing a decline of 6% to an increase of 8% year-over-year.
Price Action: XYL shares traded lower by 7.90% at $95.95 on the last check Thursday.

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