Q4 2025 Xylem Inc Earnings Call Transcript
Key Points
- Xylem Inc (XYL) delivered record revenue, EBITDA, and earnings per share for both the fourth quarter and the full year of 2025.
- The company achieved a significant EBITDA margin expansion of 160 basis points to 22.2% for the full year.
- Orders were healthy, with a 7% increase in the fourth quarter and a 2% increase for the full year, driven by over 20% growth in Measurement and Control Solutions (MCS).
- Xylem Inc (XYL) has a strong backlog of $4.6 billion, indicating resilient demand in its largest end markets.
- The company is entering Phase 2 of its transformation plan, focusing on strengthening its growth engine through sales force effectiveness, product management, and innovation.
- Xylem Inc (XYL) faces a short-term top-line headwind due to its strategy of walking away from lower-quality revenue, impacting revenue growth.
- The company anticipates continued weakness in China's utility market, which is expected to impact the first half of 2026.
- Measurement and Control Solutions (MCS) orders were below expectations, with several projects pushing out into 2026.
- The company expects a 2% headwind to its top line in 2026 due to its 80/20 efforts around product and customer simplification.
- Free cash flow decreased by 2% year-to-date from the prior year, driven by outsourced water projects, system investments, and restructuring costs.
Good day, everyone, and welcome to Xylem's fourth-quarter 2025 results conference call. (Operator Instructions) Please also note today's event is being recorded.
At this time, I'd like to turn the floor over to Mr. Keith Buettner, Vice President, Investor Relations and FP&A. Please go ahead.
Thank you, operator. Good morning, everyone, and welcome to Xylem's fourth-quarter 2025 earnings call. With me today are Chief Executive Officer, Matthew Pine; and Chief Financial Officer, Bill Grogan. They will provide their perspective on Xylem's fourth-quarter full-year 2025 results, and discuss the first quarter and full-year 2026 outlook. Following our prepared remarks, we will address questions related to the information covered on the call. I'll ask that please keep to one question and a follow-up and then return to the queue.
As a reminder, this call and our webcast are accompanied by a slide presentation available in the Investors section of
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