Xylem Delivers Strong Q4 and Full-Year Results with Margin Expansion and Raised Dividend
Operational Improvements Boost Margins and Record Results
Xylem (NYSE: XYL) wrapped up 2025 with strong operational momentum, reporting fourth-quarter revenue of $2.4 billion—up 6% on a reported basis—as well as earnings per share climbing to $1.37 (GAAP) and $1.42 (adjusted, up 20%). Full-year revenue reached a record $9.0 billion, growing 6%, supported by broad-based market demand and strategic execution. These figures reflect the company’s ongoing business transformation and focus on productivity and price realization.
Productivity and Price Drive Adjusted Margins Above Expectations
The quarter's performance was fueled by productivity gains and effective pricing strategies. Xylem’s adjusted EBITDA margin increased by 220 basis points year-over-year to 23.2% in Q4, outpacing inflation headwinds, lower volumes, and continued tariff impacts. On an annual basis, adjusted EBITDA margin rose 160 basis points to 22.2%, highlighting robust margin management and cost discipline.
| Key Financial Metric | Q4 2025 | Q4 2024 | Full-Year 2025 | Full-Year 2024 |
|---|---|---|---|---|
| Total Revenue (M) | $2,397 | $2,256 | $9,035 | $8,562 |
| Net Income Attributable to Xylem (M) | $335 | $326 | $957 | $890 |
| Diluted EPS (GAAP) | $1.37 | $1.34 | $3.92 | $3.65 |
| Adjusted EPS | $1.42 | $1.18 | $5.08 | $4.27 |
| Adjusted EBITDA Margin | 23.2% | 21.0% | 22.2% | 20.6% |
Broad-Based Growth Across Divisions
Fourth-quarter orders totaled $2.4 billion, increasing 9% on a reported basis and 7% organically. Segments such as Measurement and Control Solutions stood out with a 24% Q4 orders increase, while Applied Water and Water Solutions and Services also posted mid- and high-single-digit growth. Full-year performance demonstrated consistency, with organic revenue growing 5%, showing resilience despite varied end-market conditions.
Dividend Raised, Signaling Confidence in Cash Flow and Outlook
The Board of Directors approved an 8% increase in the quarterly dividend to $0.43 per share, to be paid on March 24, 2026, reflecting expectations for continued strong free cash flow. For 2025, free cash flow totaled $910 million, with a free cash flow margin of 10.1%—setting the stage for the company’s guidance of 10.2-11% margin in 2026.
2026 Outlook: Moderated Growth but Higher Profitability
Xylem’s 2026 guidance anticipates revenue rising to $9.1–$9.2 billion (up 2–4% organically), with an adjusted EPS range of $5.35–$5.60. Adjusted EBITDA margin is expected to increase toward 22.9–23.3%, further improving profitability despite a moderating top-line growth rate. Management emphasizes ongoing transformation of the product portfolio and productivity initiatives to deliver long-term, sustainable value.
| 2026 Guidance | Outlook |
|---|---|
| Revenue | $9.1–$9.2 billion (+2–4% organic growth) |
| Adjusted EPS | $5.35–$5.60 |
| Adjusted EBITDA Margin | 22.9–23.3% (up 70–110 bps) |
| Free Cash Flow Margin | 10.2–11% |
Key Takeaway: Margin Expansion and Operational Discipline Set the Stage for 2026
Xylem’s performance highlights how operational improvements, disciplined capital deployment, and pricing power can drive earnings and margin growth even as sales momentum moderates. Investors may want to watch the company’s execution on productivity initiatives and portfolio transformation in the coming year, as these remain crucial to sustaining margin expansion and delivering on 2026 guidance.
For more details on Xylem’s quarterly and annual results, including non-GAAP reconciliations and divisional breakdowns, visit the company’s investor relations section at www.xylem.com/investors.
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