Xylem (NYSE: XYL) reported Q3 EPS of $0.62, $0.11 better than the analyst estimate of $0.51. Revenue for the quarter came in at $1.22 billion versus the consensus estimate of $1.16 billion.

• Reported net income of $37 million or $0.20 per share; adjusted net income of $114 million or $0.62 per share
• Revenue declined 6% on a reported basis, and 7% organically, impacted by COVID-19
• Strong operating margin performance of 6% and 13% on a reported and adjusted basis, respectively, from disciplined execution on productivity and cost actions
• Free cash flow of $234 million, up 18%, and operating cash flow of $275 million, up 12%

“Our team delivered operational performance exceeding expectations on both the top line and bottom line,” said Patrick Decker, Xylem’s president and CEO. “Our supply chain continues to be robust, we’re maintaining discipline on cost and capital, and cash generation is healthy. Overall, we’re executing with focus and purpose to make sure our customers can continue delivering essential services to their communities.”

“Despite continuing macro uncertainty, we are serving end-markets that showed signs of increasing stability through the quarter,” continued Decker. “China returned to pre-pandemic growth, Europe grew modestly, and the US, while still lagging other regions, improved sequentially in the quarter. We continue to set strong commercial pace as utilities accelerate interest in transformational technologies that increase operational and financial resilience. Physical distancing is delaying some project revenues dependent on field-work in the short term, and we continue to closely monitor COVID-19 developments. We are well-positioned irrespective of how the pandemic plays out, and set to emerge in an even stronger position.”

Outlook

Xylem expects fourth quarter organic revenue declines in the range of 6 to 8 percent and adjusted operating margin in the range of 13.0 percent to 13.5 percent. Full-year free cash flow conversion is anticipated to be greater than 100%.

For earnings history and earnings-related data on Xylem (XYL) click here.