Xylem Inc.’s XYL third-quarter 2024 adjusted earnings of $1.11 per share met the Zacks Consensus Estimate. The bottom line increased 12% year over year. Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

XYL’s revenues of $2.10 billion missed the consensus estimate of $2.18 billion. The top line increased 1% year over year, driven by resilient demand reflected by solid orders growth across all segments and healthy book-to-bill. Organic revenues rose 1%.

Orders of $2.2 billion increased 8% year over year on a reported and organic basis.

XYL's Segmental Details

Revenues in the Water Infrastructure segment totaled $623 million, up 2% year over year. Organic sales increased 1% year over year, buoyed by solid demand for its products and solutions for the transportation and treatment of water, including pumps, filtration and treatment equipment. The Zacks Consensus Estimate was pegged at $638 million.

The Applied Water segment generated revenues of $447 million, down 4% year over year. Organic sales fell 4% on a year-over-year basis. The segmental performance was hurt by softness across geographies. The consensus estimate was pegged at $450 million.

Quarterly revenues of the Measurement & Control Solutions segment totaled $458 million, up 11% year over year. The Zacks Consensus Estimate was pegged at $479 million. Organic sales were up 11% year over year, driven by smart metering demand and execution.

Quarterly revenues at the Water Solutions and Services segment totaled $576 million, down 2% year over year. Organic sales were down 1% year over year, due to capital projects timing.

XYL’s Margin Profile

Xylem’s adjusted EBITDA was $447 million, up 8.7% from the year-ago quarter’s level. The margin improved to 21.2% from 19.8% in the prior year.

Adjusted operating income was $350 million, up 11.1% year over year. Adjusted operating margin increased to 16.6% from 15.2% in the year-earlier quarter.

Balance Sheet and Cash Flow

Exiting the third quarter, Xylem had cash and cash equivalents of $989 million compared with $1.02 billion at the end of December 2023. Long-term debt was $1.98 billion at the end of the quarter compared with $2.3 billion at the end of December 2023.

In the first nine months of 2024, XYL generated net cash of $688 million from operating activities compared with $382 million in the year-ago period. 

Capital expenditure was $221 million, up 24.9% from the year-earlier quarter. Adjusted free cash flow was $467 million in the first nine months of the year compared with $368 million in the prior year period.

Xylem’s Rewards to Shareholders

In the first nine months of 2024, Xylem paid dividends of $263 million, up 20.1% year over year. The company also bought back shares worth $19 million in the same period compared with $10 million in the year-ago period.

XYL's 2024 Guidance

Xylem now expects revenues of approximately $8.5 billion for 2024. This indicates an increase of 15% from the prior-year level on a reported basis and around 5% on an organic basis. Previously, the company projected revenues to increase 16% on a reported basis and 5-6% on an organic basis.

Adjusted EBITDA margin is estimated to be approximately 20.5%, indicating an expansion of 160 basis points from the year-earlier actual.

XYL currently forecasts adjusted earnings to be in the range of $4.22-$4.24 per share compared with $4.18-$4.28 projected earlier. This metric indicates an increase from earnings of $3.78 per share in 2023. Free cash flow conversion to net income is anticipated to be at least 120%.

XYL’s Zacks Rank & Stocks to Consider

XYL currently carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks from the same space:

Graham Corporation GHM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GHM delivered a trailing four-quarter average earnings surprise of 133.2%. In the past 60 days, the Zacks Consensus Estimate for Graham’s fiscal 2025 earnings has remained stable.

Ingersoll-Rand plc IR presently carries a Zacks Rank of 2. IR delivered a trailing four-quarter average earnings surprise of 11%.

In the past 60 days, the consensus estimate for Ingersoll-Rand’s 2024 earnings has inched up 0.6%.

Parker-Hannifin Corporation PH currently carries a Zacks Rank of 2. PH delivered a trailing four-quarter average earnings surprise of 11.2%.

In the past 60 days, the consensus estimate for Parker-Hannifin’s fiscal 2025 (ending June 2025) earnings has increased 0.3%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Parker-Hannifin Corporation (PH) : Free Stock Analysis Report

Ingersoll Rand Inc. (IR) : Free Stock Analysis Report

Graham Corporation (GHM) : Free Stock Analysis Report

Xylem Inc. (XYL) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research