Xylem Inc. (NYSE:XYL) is set to report profits for the second quarter of 2023 on August 2, before the market opens.
The firm has a remarkable track record of earnings surprises, having surpassed the Consensus Estimate in each of the last four quarters, with an average beat of 17.7%.
Let’s see how things go for Xylem this earnings season.
Important Considerations
XYL’s second-quarter performance is anticipated to have been hampered by rising raw material, labor, freight, and overhead costs. In addition, rising selling, general, and administration costs are likely to affect Xylem’s bottom line. Furthermore, larger strategic investments are expected to have eroded the company’s profits in the upcoming quarter.
Foreign currency headwinds are likely to have dragged on the company’s bottom line in the second quarter, given its significant overseas footprint.
However, the Water Infrastructure segment’s effective price realization and success in both utility and industrial end markets are projected to have bolstered the company’s performance in the to-be-reported quarter. The Consensus Estimate for the Water Infrastructure segment’s revenues in the second quarter is 7.8% higher than the year-ago figure.
The acquisition of Evoqua (May 2023), which boosted Xylem’s position in water technology, solutions, and services as well as its footing in profitable end markets, is likely to have aided the company’s performance in the second quarter. The Consensus Estimate for second-quarter sales is 23% higher than the previous year. The average forecast for adjusted earnings for the quarter is a 28.8% increase over the year-ago reported figure.
Highlights of First-Quarter Earnings
Xylem’s first-quarter 2023 adjusted earnings (excluding non-recurring items of 18 cents per share) of 72 cents per share above the Consensus Estimate of 62 cents per share. Year on year, the bottom line increased by 53%. Xylem’s sales of $1,448 million were likewise above the average forecast of $1,340.7 million and increased 13.8% year on year.
Featured Image: Freepik @ macrovector
Author Stephanie Bédard-Châteauneuf 
