Xylem Cuts 2026 Outlook After Flat Organic Sales

The Tip Desk · November 8, 2026 · 3 min read

Third-quarter revenue was $2.201 billion, down 3% reported and flat organically, as the water-solutions company lowered full-year revenue to about $8.95 billion.

Xylem Inc. (XYL), a global water solutions company, reported third-quarter revenue of $2.201 billion, down 3% on a reported basis and unchanged organically, after a 2% reported and 1% organic increase in the second quarter.

The company said revenue was affected by project timing and more cautious spending decisions. Orders were $2.331 billion, up 7% reported and 10% organically, after a 42% reported and 41% organic surge in the prior quarter. Book-to-bill was 106%.

Net income attributable to Xylem was $291 million; diluted earnings per share rose 34% from a year earlier to $1.25. Adjusted net income was $336 million; adjusted diluted earnings per share rose 5% to $1.44. The company said the results were driven primarily by strong operational performance and a lower loss on sale of businesses, partially offset by higher interest and income tax expense.

Net income margin rose 320 basis points to 13.2%. Adjusted EBITDA margin was 23.9%, a 70 basis point year-over-year increase. Xylem said productivity savings and strong price realization drove the expansion, exceeding the impact of inflation, lower volumes and mix.

Segment results were mixed. Measurement and Control Solutions revenue was $436 million, down 16% reported and 5% organically. Applied Water revenue was $489 million, up 7% reported and 9% organically. Water Infrastructure revenue was $645 million, down 2% reported and 1% organically. Water Solutions and Services revenue was $631 million, down 2% organically.

Xylem now forecasts full-year 2026 revenue of approximately $8.95 billion, down 1% year over year on a reported basis, versus prior guidance of up 2%, and flat on an organic basis, versus prior guidance of up 2 to 3 percent. Full-year adjusted EBITDA margin is expected to be approximately 23.2%, an increase of 100 basis points versus 2025 adjusted results. That implies full-year adjusted earnings of $5.40 to $5.45 a share, down from the previous range of $5.55 to $5.70. Full-year free cash flow margin is expected to be approximately 10.2%, versus 10.2 to 11.0 percent previously guided.

The company also announced its intent to divest Applied Water International and Specialty Flow Control and, beginning January 1, 2027, to align its businesses from four segments to three: Treatment and Services, Flow Solutions, and Measurement and Analytics. Xylem said the planned divestitures are designed to direct capital toward technologies, capabilities and markets that align most closely with its long-term strategy, and that it is already seeing momentum in high-growth industry verticals including data centers and microelectronics. Treatment and Services will be led by Rodney Aulick, Flow Solutions by Joe Johnston, and Measurement and Analytics by Meredith Emmerich.

President and CEO Matthew Pine said the company is moving to shape Xylem around the markets where its capabilities can deliver the greatest customer value and strongest long-term growth.