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Call sheet · Q2'26

Xylem (XYL)

Q2'26 earnings call · held July 28, 2026 · compared with the Q1'26 call · management-credibility review
7/12
Disclosure score
3 medium, 5 low flags
Financial quality
Bottom line
The sleeper story is that data center orders are exploding at 300% growth while the core electric metering business is imploding, yet management buried the metering guide cut in segment commentary. The Dow deal validates the Evoqua thesis but strip out the mega contracts and WSS is barely growing despite all the AI ecosystem rhetoric. The binding constraint isn't demand, it's execution: they missed the electric metering slowdown entirely and are using China (2% of revenue!) as cover. Most revealing quote: 'politicians take a hard stand on electricity rate increases' which means the metering headwinds are political not economic. My view changes if they can show WSS organic growth ex-mega deals above 3% or electric metering books firm 2027 commitments.

The 30-second version

  • Data center orders up 300% while electric metering is falling apart
  • The Dow $850M deal is real but WSS organic growth is still MIA
  • China went from 3% to 2% of revenue in one year and they're still talking about it every quarter

What changed this quarter

MetricQ1'26Q2'26Change
Revenue$2,256M (flat YoY)$2,279M (+1% YoY)+1pp acceleration
EPS$1.12 (+9% YoY)$1.46 (+16% YoY)+700 bps acceleration
EBITDA Margin20.6% (+20 bps YoY)23.3% (+150 bps YoY)+270 bps sequential expansion
MCS Revenue+1% YoY-1% YoY200 bps deceleration
Water Infrastructure Revenue-1% YoY+3% YoY+400 bps acceleration
Applied Water Revenueflat YoY+3% YoY+300 bps acceleration
WSS Revenue-2% YoY+1% YoY+300 bps acceleration
Free Cash FlowPositiveStrongNo specific number given
Backlog$4.7B$5.3B+$600M sequential build
China Revenue-30% YoY-27% YoYSlight improvement but still hemorrhaging

Accountability tracked

8 new promises made5 narrative shifts flagged7 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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