Xylem (XYL) Q3 2026 earnings summary

Executive summary

• Q3 revenue was $2.201B, down 3.0% reported and 0.3% organically; orders rose 6.9% reported and 9.9% organically to $2.331B.

• Backlog reached $5.466B, up 13.4% YoY, with shipments scheduled for later periods as utility spending slowed and projects shifted.

• Adjusted EBITDA margin expanded 70 bps to 23.9%; portfolio changes aim to focus investment on higher-growth markets.

Financial highlights

• Gross profit rose 2.7% to $907M and gross margin expanded 230 bps to 41.2%; operating income rose 15.3% to $385M, with reported margin up 280 bps to 17.5%.

• Adjusted operating income was $428M, with a 19.4% margin versus 18.9%; adjusted EBITDA was $527M, with a 23.9% margin versus 23.2%.

• Attributable net income rose to $291M from $227M; diluted EPS was $1.25 versus $0.93, and adjusted EPS was $1.44 versus $1.37, including a $0.11 IEEPA tariff-refund benefit.

• Nine-month revenue was $6.662B versus $6.638B; operating income was $1.019B versus $870M, and attributable net income was $747M versus $622M.

Outlook and guidance

• FY26 revenue guidance is ~$8.95B, down ~1% reported with flat organic growth, versus prior guidance of ~$9.2B and 2%–3% organic growth.

• FY26 adjusted EPS guidance is $5.40–$5.45, down from $5.55–$5.70; adjusted EBITDA margin is expected at 23.1%–23.5%, with free cash flow margin of ~10.2%.

• Q4 guidance: revenue ~$2.3B, down 5% reported and 1%–2% organically; adjusted EPS $1.39–$1.44 and adjusted EBITDA margin ~24.5%.

• MCS and WSS project conversion remain timing variables; ~20% of September backlog is expected to convert to revenue during the remainder of 2026.