Xylem (XYL) Q1 2026 earnings summary

Executive summary

• Q1 2026 delivered solid results with resilient demand, strong operational execution, and a book-to-bill ratio above 1, highlighted by robust orders growth in Measurement and Control Solutions and the largest-ever $850 million Water Solutions and Services contract.

• Revenue reached $2,125 million, up 2.7–3% year-over-year, with net income attributable to shareholders rising 14% to $193 million and adjusted EPS at $1.12.

• Accelerated capital deployment included $581 million in share repurchases and a $219 million acquisition of a German water quality instruments firm.

• Transformation initiatives and leadership changes are advancing long-term priorities, growth, and innovation.

• Multi-year transformation and self-improvement initiatives are mitigating macro uncertainty.

Financial highlights

• Q1 revenue was $2,125 million, up 2.7–3% year-over-year; organic revenue was flat; backlog stands at $4.7 billion.

• Adjusted EBITDA margin improved to 20.6%, up 20 basis points year-over-year; adjusted EPS rose to $1.12 from $1.03.

• Free cash flow was $18 million, up from -$38 million in Q1 2025, with a free cash flow margin of 1%.

• Net income margin increased to 9.1%, up 90 basis points year-over-year.

• Book-to-bill ratio was 105% for the quarter, indicating strong demand.

Outlook and guidance

• Full-year 2026 revenue guidance raised to $9.2–$9.3 billion (2–3% reported, 2–4% organic growth); adjusted EBITDA margin expected at 22.9–23.3%.

• Full-year adjusted EPS guidance maintained at $5.35–$5.60.

• Q2 2026 revenue guidance is $2.3–$2.4 billion, with 2–3% total growth and ~1% organic growth; Q2 EBITDA margin 22–22.5%; Q2 EPS $1.31–$1.36.

• Free cash flow margin for FY 2026 projected at 10.2–11%.

• Guidance reflects commercial and operational momentum, with margin expansion driven by productivity, volume, and price.