Xylem cuts 2026 outlook, plans to sell two businesses and reorganize

Xylem cut its 2026 revenue and earnings outlook as customers grew more cautious with spending, and the water technology company said it plans to sell two businesses and reorganize into three segments next year.

The company now expects 2026 adjusted EPS of $5.40 to $5.45, down from its previous range of $5.55 to $5.70, according to the earnings release attached to its 8-K on Tuesday. It forecasts full-year revenue of about $8.95 billion, down 1% on a reported basis versus prior guidance for 2% growth, and flat organically versus a prior 2% to 3% increase.

Divestitures and new structure

Xylem said it intends to divest its Applied Water International and Specialty Flow Control businesses and, starting in 2027, align its businesses into three segments from four. The company said the moves are designed to "create a more focused company" and let it direct capital toward its core long-term priorities.

As part of the reorganization, Hayati Yarkadas will cease serving as executive vice president and president of Water Infrastructure and will no longer be an executive officer effective Jan. 1, 2027, because the Water Infrastructure segment is being eliminated, according to the 8-K. Under a transition agreement reached Oct. 22, he will remain employed to lead the planned divestitures.

Third-quarter results

Orders rose 7% to $2.3 billion, or 10% organically, while revenue fell 3% to $2.2 billion and was flat organically. The company cited project timing and more cautious spending decisions.

Net income was $291 million, or $1.25 per share, up 34%, helped by a lower loss on sale of businesses. Adjusted EPS rose 5% to $1.44, and the adjusted EBITDA margin expanded 70 basis points to 23.9%, driven by productivity savings and price realization.

By the numbers

• Q3 orders: $2.3 billion, up 7%
• Q3 revenue: $2.2 billion, down 3%
• Adjusted EPS: $1.44, up 5%
• New 2026 adjusted EPS outlook: $5.40 to $5.45 (was $5.55 to $5.70)

Sources

1. Xylem Inc., Form 8-K with third quarter 2026 earnings release, filed Oct. 27, 2026 (accession 0001524472-26-000146)

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