Xylem Orders Jump 42% While Revenue Growth Stalls Near 1%
Xylem posted a 42% surge in orders to $3.1 billion even as quarterly revenue growth slowed to just 1% organically.
Xylem (XYL) reported orders of $3.1 billion in the second quarter, up 42% on a reported basis and 41% organically, a sharp acceleration from the flat organic order growth the water-technology company posted in the first quarter and the 7% organic gain in the fourth quarter of 2025.
The surge stood in contrast to the revenue line. Sales rose just 2% reported and 1% organically to $2.336 billion, decelerating from 3% reported growth in the first quarter and well below the 8% reported growth Xylem posted a year earlier in the third quarter of 2025. The gap between booming orders and stalled revenue points to a backlog building for delivery in future periods rather than current-quarter output.
The order strength was concentrated almost entirely in one segment. Water Solutions and Services orders grew 151% reported and 147% organically to $1.449 billion, reversing a 12% organic decline in that segment just one quarter earlier. Water Infrastructure orders were roughly flat, down 4% organically to $669 million after 2% organic growth in the first quarter, while Measurement and Control Solutions revenue fell 6% reported and 1% organically to $508 million, a reversal from the 18% organic order growth that segment posted in the first quarter.
Margins improved even as revenue growth slowed. Net income margin expanded 150 basis points year over year to 11.3%, building on a 90-basis-point gain in the first quarter and marking a second straight quarter of expansion after two quarters of compression in the second half of 2025. Adjusted EBITDA margin rose 150 basis points to 23.3%, a reacceleration from the first quarter's 20-basis-point gain, though still short of the 220-basis-point expansion Xylem delivered in the fourth quarter of 2025. Adjusted earnings grew 16% year over year to $1.46 a share, ahead of the first quarter's 9% pace but below the 20% and 23% growth rates posted in the fourth and third quarters of 2025, respectively.
Xylem trimmed its full-year revenue outlook to roughly $9.2 billion, or about 2% reported growth, from a prior guide of $9.2 billion to $9.3 billion, and narrowed organic growth guidance to 2%-3% from 2%-4%. At the same time, the company raised its adjusted earnings guidance to $5.55 to $5.70 a share from $5.35 to $5.60, and lifted its adjusted EBITDA margin guidance to 23.1%-23.5% from 22.9%-23.3%. The combination signals confidence in cost discipline and mix even as top-line growth expectations narrow.
Xylem also accelerated share repurchases sharply, buying back $1,243 million of common stock in the first half of 2026 compared with just $13 million in the same period a year earlier, lifting treasury shares to 26.8 million from 16.3 million at year-end. The company funded the buyback in part with new borrowing, issuing $990 million of net long-term debt in the first half of the year versus none a year earlier, pushing long-term debt to $2.395 billion from $1.408 billion at the end of 2025.
Restructuring and realignment costs fell to $15 million from $29 million a year earlier, continuing a decline from the $26 million charge recorded in the year-ago period, while Xylem recorded a $16 million loss on the sale of businesses that had no year-earlier counterpart. The company also disclosed $16 million of IEEPA tariff refunds offsetting acquisition and divestiture costs, a line item not present in prior reconciliations.