Xylem’s first quarter saw positive momentum, with management attributing the results to resilient demand across its water infrastructure and applied water segments. CEO Matthew Pine noted that revenue growth was supported by productivity improvements, disciplined operational execution, and early benefits from organizational simplification. The company’s backlog remained strong, and Pine highlighted Xylem’s ability to navigate industry challenges, stating, “We’re better positioned than most to address the water needs of communities and businesses because the portfolio we built is differentiated in every part of the water cycle.”
Is now the time to buy XYL? Find out in our full research report (it’s free).
Xylem (XYL) Q1 CY2025 Highlights:
- Revenue: $2.07 billion vs analyst estimates of $2.04 billion (1.8% year-on-year growth, 1.5% beat)
- Adjusted EPS: $1.03 vs analyst estimates of $0.95 (8% beat)
- The company lifted its revenue guidance for the full year to $8.75 billion at the midpoint from $8.65 billion, a 1.2% increase
- Management reiterated its full-year Adjusted EPS guidance of $4.60 at the midpoint
- Operating Margin: 11.2%, in line with the same quarter last year
- Organic Revenue rose 3.3% year on year (7.1% in the same quarter last year)
- Market Capitalization: $30.29 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Xylem’s Q1 Earnings Call
- Deane Dray (RBC Capital Markets) inquired about customer and company inventory positioning ahead of tariffs. CEO Matthew Pine replied that there was minimal pre-buying activity and that Xylem did not build inventory in anticipation of tariff changes.
- Mike Halloran (Baird) asked about the timing and form of pricing actions in response to tariffs. Pine clarified that pricing measures were a mix of surcharges and direct increases, with most implemented in Q1 and early Q2, and expected to impact the second half.
- Scott Davis (Melius Research) focused on Xylem’s M&A activity and portfolio optimization. Pine said the company remains “very active” in M&A, with several targets in the pipeline and ongoing divestitures of non-core assets.
- Nathan Jones (Stifel) questioned whether tariffs altered Xylem’s competitive positioning. Pine responded that the company’s reduced China exposure and diversified end markets support its resilience relative to peers.
- Sara Borodinski (Jefferies) sought detail on order trends and margin outlook in Measurement and Control Solutions. CFO Bill Grogan explained that order fundamentals remain strong and that margin headwinds are expected to ease as project mix normalizes in the second half.
Catalysts in Upcoming Quarters
In the coming quarters, our team will monitor (1) the effectiveness of pricing actions in offsetting tariff costs without stalling demand, (2) margin recovery in the Measurement and Control Solutions segment as backlog mix improves, and (3) progress on portfolio simplification and the integration of recent acquisitions. Sustained execution on these fronts will be important for maintaining momentum in a volatile macro environment.
Xylem currently trades at $125.27, up from $115.77 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).
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