Why Water Technology Company Xylem Shares Are Seeing Blue Skies Today

Xylem Inc XYL shares are trading higher after it reported fourth-quarter FY23 results.

Revenue grew 41% Y/Y to $2.12 billion (+9% organically), beating the consensus of $2.05 billion.

Orders were up 42% on a reported basis and +10% organically to $2.04 billion, while backlog grew to $5.1 billion, up 5% organically.

Adjusted EPS was $0.99 (+14% Y/Y), beating the consensus of $0.96. 

Adjusted EBITDA margin expanded to 19.6% from 18.7% a year ago. Excluding Evoqua's results, incremental margin was around 33%.

Measurement & Control Solutions revenue was $468 million (+22% Y/Y); adjusted EBITDA margin expanded by 220 bps to 17.3%.

Water Infrastructure revenue was $871 million (+30% Y/Y) and adjusted EBITDA margin was 21.6%, down 90 bps.

Applied Water revenue was $457 million (flat Y/Y); adjusted operating EBITDA margin expanded 80 bps Y/Y to 17.3%.

Integrated Solutions & Services revenue was $322 million; adjusted EBITDA margin was 21.1%.

Operating cash flow for the year stood at $837 million, compared to $596 million a year ago.

The company exited the year with cash and cash equivalents worth $1.02 billion. 

Outlook: For FY24, Xylem expects adjusted EPS of $4.00-$4.20 vs. $4.07 estimate and revenue of $8.4 billion-$8.5 billion vs street view of $8.42 billion.

For first-quarter FY24, the company expects revenue of $1.97 billion – $2.00 billion vs. consensus of $1.99 billion and adjusted EPS of $0.80 – $0.85 vs. estimate of $0.83.

Price Action: XYL shares are up 3.65% to $118.24 on the last check Tuesday.