Xylem Inc. Q4 FY2024 earnings call

• Strong 2024 results: Revenue grew 6%, EBITDA margins expanded 170 basis points, and EPS was up double digits. - Evoqua integration delivering cost synergies faster than expected. - Operating model transformation underway, moving to a simpler structure to strengthen competitive positioning. - Targeted capital deployment actions: Increased stake in Idrica, acquired tuck-ins, and divested a noncore business. - Sustainability commitments renewed with 2030 targets. - Responded to over 40 water-related disasters in 2024.

Measurement and Control Solutions (MCS): Organic revenue down 13% from prior year, driven by smart metering conversion. Orders up 6%, revenue up 6%, EBITDA margin 17.1% (120 basis points lower than prior year) due to mix, inflation, and investments. Water Infrastructure: Orders up 10%, revenue up 8%, EBITDA margin up 360 basis points, driven by productivity, price, mix, and volume. Applied Water: Orders up 5%, revenue essentially flat to prior year, EBITDA margin up 60 basis points, offsetting higher inflation and lower volumes. Water Solutions and Services (WSS): Orders up 8%, revenue up 11%, EBITDA margin 22.8% (10 basis points higher than prior year), driven by productivity, price, and volume.

• Full year 2025 revenue guidance: $8.6 billion to $8.7 billion (0% to 2% growth, 3% to 4% organic). - EBITDA margin expected to be 21.3% to 21.8% (70 to 120 basis points expansion vs prior year). - EPS range: $4.50 to $4.70 (up 8% midpoint over prior year). - Q1 2025: Revenue growth 0% to 2% reported, 1% to 2% organic; EBITDA margin approximately 19.5% to 20%.

• Tariffs: Recently enacted tariffs by the US administration, though no material impact expected currently, but monitored closely. - Restructuring impacts: Workforce reductions and associated costs, with benefits expected over time but initial impact on margins. - Market uncertainties: Potential softness in some end markets and regions, affecting segment performances.

Q: On-time deliveries and new administration's impact on Water Solutions.

A: On-time performance improved by 500 basis points in 2024, with plan to improve further via 80/20. New administration seen as positive for water infrastructure funding, with strong bipartisan support for safe water services; focus on PFAS and aging infrastructure remains key.