Xylem Shares Gain On Q2 Beat, Raised FY22 Top-Line Guidance

Xylem Inc XYL reported second-quarter FY22 revenue growth of 1% year-over-year to $1.36 billion, beating the consensus of $1.31 billion.
Adjusted EPS was $0.66, beating the consensus of $0.54.
Sales by segments: Water Infrastructure $589 million (+4% Y/Y), Applied Water $429 million (+4% Y/Y), and Measurement & Control Solutions $346 million (-6% Y/Y).
Adjusted operating income declined 6.63% Y/Y to $155 million, and margin contracted by 92 bps to 11.4%.
The company generated $32 million in cash from operating activities during six months, representing a 16% conversion. Free cash outflow was $(63) million.
Adjusted EBITDA was $226 million (-3.4% Y/Y), and the margin was down 75 bps to 16.6%.
"On the strength of robust backlog and orders growth and the team's demonstrated success mitigating the effects of inflation, we are raising our full-year guidance on revenue and earnings. This further reinforces our longer-term growth and value creation thesis for Xylem," said CEO Patrick Decker.
FY22 Outlook raised: Xylem now expects organic revenue growth of 8% - 10% and 3% - 5% on a reported basis, increase from previous guidance of 4% - 6% and 1% - 3%, respectively.
It expects an adjusted EPS of $2.50 - $2.70 (prior expectation $2.40 - $2.70) vs. consensus of $2.56. Adjusted EBITDA margin of 16.5% - 17% (prior 16% - 17%).
Price Action: XYL shares traded higher by 6.46% at $97.10 on the last check Tuesday.

Overview Rating:

Speculative

0100

Earnings Calendar