Xylem (XYL) 30 Jul 242024 Q2 Earnings call transcript

Good day, everyone, and welcome to the Xylem's Second Quarter 2024 Results Conference Call. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Andrea van Berg, Vice President of Investor Relations. Please go ahead.

Thank you, operator. welcome second and call. XXXX everyone, morning, to quarter Xylem's earnings Good

perspectives quarter me Officer, third Grogan. Officer, their Executive are quarter They Xylem's Pine; provide With outlook. Chief Financial and Matthew full today discuss results XXXX and and year Chief will on the second Bill

address remarks, then question the and follow-up related and information keep covered Following our questions Please one prepared on to to queue. the return we will to the call. a

accompanied today's by call the midnight, this and be are available our our reminder, available slide a in a webcast Investor website. As presentation A call until of section Xth. replay August of will

available of the under Events. the will be the via Investor our for Additionally, website section Investors heading call playback

Please turn to Slide X.

on events and recent Xylem's to including uncertainties, will risks statements today's such These we the anticipate future anticipated. forward-looking annual any SEC. actual results those undertakes We call, materially or update in may that report to are circumstances, factors on Form will events reflect future most no occur in statements obligation or those the could in subsequent and as note subsequent or future. some or that Please from and references filed developments to make subject publicly company to forward-looking described the statements events with reports differ XX-K

references beginning our Please segments basis, turn with to metrics on metrics, of year. as of segment performance key of both the the with We've including and reflecting provided summary Slide in a metrics to X. being a change GAAP non-GAAP the you comparative made

otherwise reconciled in the Appendix you organic call on today's and are financials have of all been be of for an For non-GAAP and/or section unless adjusted basis, and will indicated, presentation. included the purposes references

to Matthew our Please turn Slide call and we'll Pine. CEO, X, over the turn to

to quarter. a Xylem Andrew. Good today. joining the team in second and achievements pleasure morning, thank everyone, the for the report It's you us Thanks, of

the in growth reflecting release, EBITDA also quarter, without delivered of EPS all delivered team price. high growth, team and this margin expectations on volume have similar with you morning's to XX%. metrics, basis gains the outperforming strong QX. both another adjusted we second The adjusted XXX outperformance, revenue of story As And points. in quarter seen expanded is The very organic single-digit

On demand resilient. disciplined to largest increasingly is our operational by team. our the execution the by side, markets be continue driven Internally, outperformance

and to team This they've a of engaged to is only of when for year. team Xylem's kind the difference. I possible say first momentum the dedication aligned whole the the and make the you half thank performance big whole And through want drive to is a demonstrated

margins there EBITDA across measurement were and team, and lot to revenue and mention I was XXX are time standout year. basis points segment up a up the highlights versus this XX% the control of performance MCS want solutions. last particularly While

The job. team is doing an outstanding

see performance. performance early growth Xylem's Our a above-market half margin we momentum our to both includes the It's expansion. value Day year of reflection Investor the duration in That kind is resilient accelerated in discussed at in direction of reflected and first May. the gratifying quarterly and creation set

addition, our and and well beginning off in are In our set to are XXXX. simplification work on initiatives XX/XX pay progressing

strong benefit many are momentum the both teams Evoqua to our and Xylem's looking team revenue from integrated our possible. I'll are raising who integration to pace reveal Turning late our on and the and continues X-year Evoqua a utility the also end to markets. solutions, resilient it our capabilities the on value. and half, we're EPS an In our the is on to we combination leadership and double-click outlook. will provide wherever our $X.XX increasing guidance from position quarter's operational, customers combination industrial industry-leading combined And team's its moment, successfully results, With taking first accelerate for year in our turn commercial both The on the commercial our increasing the track, XXXX in discipline, update May, sustainability well with the integration margin passed prior demand to synergies of guide of from Evoqua. Bill track going anniversary our and culture full on our high-impact goals. our alignment financial I'm to But Bill? and midpoint. over first, to Cost

great earnings Slide their and and organization to entire want another across for I revenue, our Thanks, thank QX guide X. Matthew. our work. outperformed per to against quarter, share. Please turn margin amazing was We

a see Book-to-bill is on backlog. was timing water our resilient continue year approximately in prior from to strength demand modest backlog project in as by within and down by MCS while supported MCS organic X, the X% were pass-through billion, We decline execute at WSS. quarter, orders $X.X infrastructure, driven we and

healthy combination of Total revenue price. guidance and our revenues and exceeding grew XX% volume a rose organic on X%,

WSS MCS regions growth Our U.S. in we and saw double-digit as by all performance the by was growth led in led

productivity investments EBITDA year. reflects and margin mix. the savings, from and XXX With points was price This pro forma basis. more of XX% XX% incrementals volume a basis XX.X%, a strong than basis consolidated on on prior up and offsetting inflation,

$X.XX of the $X.XX, by the end prior quarter in the year. Our was our up above and over guidance EPS XX% high

to debt flow efficiency. working given was strong Year-to-date, improvement Our cash by we from to higher net seasonality. This at XXX% increased free capital up slightly CapEx, net XX% benefit with prior sheet was is adjusted improved X.Xx. is driven by conversion and year-over-year year offset strong and versus income, of EBITDA balance continue the

turn quarter execution. MCS had by demand metering expectations. up was great smart and & revenue Please another and Solutions XX%, our Measurement exceeded backlog driven Control Slide again to X.

with up X. points quarter impressive MCS the year to However, from billion, the backlog basis and We decrease came backlog roughly worked orders sits up book-to-bill of due margins at versus and prior XX XX% project EBITDA were $X XX.X%, a and timing, XX% past year. bps down total due for down sequentially. now in We prior organic finished under XXX

Margin expansion favorable driven volume, mix productivity was offsetting and by than inflation. more price,

from expect as As a in reminder, second energy of we larger sales. mix the headwind a meters our continue half for margin portion account a to

and roughly Without improved orders and In of partially for treatment points EBITDA XX forma XX the was and was quarter points, and was the margin regions with This Adjusted Water acquisitions, incrementals. offset pro margin segment down inflation Infrastructure, by but growth adjusted by expectations by productivity, growth driven robust basis price. basis our volume of decline EBITDA organic the XX% impact acquisition, X% led the quarter. with across by XX% total Revenue demand. up all of were in strong, demand exceeded X%, healthy driven applications. for

primarily which In we'll orders Water, but were book-to-bill X, next Applied Higher of a decline The reflective by increased growth project in than on developed partially and was savings. was points were X%, down XX% up Segment line mix large Revenues comps last our XXX in year. few ship quarter basis in with second year. expectations, markets. inflation greater productivity offset strong declined X% of lapping wins, and the unfavorable sequentially. points margins was driven EBITDA softness basis year-over-year, XXX by

Organic part unfavorable resegmentation, large driven Orders offerings. volume, and the quarters timing Two EBITDA continue organically, XX% benefits Closing XX by basis and by productivity for capital offset points synergy up price, and mix XX.X%, to combining inflation. momentum we our service-based customers at see in and in business. in our Adjusted dewatering. with revenue Services. by growth X% strength was with and in most margin declined Water was projects up of healthy of strong across segments offset by Solutions the driven

Now let's turn updated to year guidance. Slide X QX and for our full

operational momentum, full Given our our first year and we commercial half are both outperformance guide. in raising

continue exit We rate versus XX% and point growth to is growth year-end. put our guide by to X% $XXX of reflects prior total potential are and with accelerate the smoothly, increasing XXXX midpoint growth approximately organic cost $XX revenue $X.X million, revenue This the X%. up going guidance. That The our billion. additional integration expect an in revenue at at approximately by X.X run of from synergies million to will at we

EBITDA and about about guidance are We raising driving our are with expansion operational further to margin productivity margin confident XX.X%.

productivity, That offsetting basis XXX the prior higher of points price versus cost and inflation. year, volume, including by represents driven expansion synergies

remains unchanged the teens due outlook $X.XX be at midpoint. low segment largely is previous MCS, the cash now exception of an expect the expected half with Free of level flow our for outlook guidance we at teens. at EPS grow of to performance over year XXX% $X.XX first year versus reflects which to to net the high The to of updated Our our increase now of conversion full $X.XX income.

quarter, anticipate to basis. For will on X% X% reported organic be a we growth the and revenue

continued volumes, up yields EPS XX%, the expect price of XXX gains. quarter to basis productivity points, margin be and $X.XX to third by We third in $X.XX. driven higher range EBITDA XX to realization quarter of This to XX.X%

our evolving needs, at services Day anticipate Our the And markets diversified products mission-critical May. and customers' XX/XX implementations our of applications. end efforts our address about driving positions across we we Investor healthy profitability and most portfolio well demand simplification through talked and and in us to

and those framework. our We through long-term operational supporting to are our initiatives, I profitability excellence, want progressing well reiterate commitment systematic on improvement to margin

including While macro the for the monitoring outlook and election remains environment, closely our year geopolitical, overall we uncertainty positive. are tariffs,

back turn closing to please Matthew that, call to turn the X, over I'll and for With Slide comments.

to up X that financial events in I'd show but quarter results, fundamental impact. Thanks, like Xylem's success mention and to Bill. in the are the don't

First, days D.C. legacy after on few I've our X team next as Xylem's before how create how Xylem's top of weeks room, execution executives we'll alignment It culture our aspirations, of the in Washington, just our how stronger spoken legacy had realize Evoqua. Xylem Investor fundamental we'll time impact. was the of one deliver and global how and we'll our we our This gathered leadership Xylem, of work culture. leadership an chapter was collaboration, strategy, about spanning the energizing in focused in of June, we a Day, first XXX

the by creation aligned and You fantastic saw be with the how our our potential we results quarter in a is pleased quarter was that see publication We're team so the was much us annual already engaged value have It report. reinforced sustainability very us. XXXX more winning. towards Summit well opportunities to working the ahead tracking culture. of also Last goals. to What high-impact ahead can of see our and team Leadership well our second an team of

year's beyond goals setting But this sustainability we presented aspirations in by again bar took XXXX. opportunity report out areas. X the to We're strategic set raising the XXXX by our

own customers greenhouse is our first and reducing enabling our The gas decarbonization, emissions decarbonize. to

is stewardship provide finally, relationships for to And at aimed XX and and we'll our demand. strengthen impact. people. All million hygiene water, access customer water X reducing our water Secondly sanitation increase

Relations. Investor one that We're happy questions, This Berg's earnings Andrea special her. have new more an at opportunity within a Before helm your I quarterly note. exciting der on new is last taking turning role of announce call is to Xylem, it's to Andrea for the van and

so years, positive me professionalism, have insightful benefited circumstance. and the Andrea's many counsel value every in accessibility told deeply you energy, from Over of and and her you I encouragement

So thank you, Andrea.

combination and his Evoqua knowledge know value will of getting the have taking us and with leader. impact ago. Solutions Investor Services than Head in deep Keith, leadership has Some perspectives. business year segment, a I'm to is Keith confident He met the in the and and Finance great reins who the already as as you'll of joined IR Water our great of enjoy his you more find Buettner, had insights Relations of brings Keith to having

And with let's that, questions. your to go

question RBC first Deane will Our Instructions] come [Operator Markets. with today Dray Capital from

my Andrea of help. best Keith all luck and and thanks your add welcome for I'll wish to

you, Deane. Thank

I'll Maybe we can and start the make also with XX/XX observation.

and at how conference in been see your get to XX/XX and slimmed point. you much work right slides call prepared can the down You they've and remarks

So I that. really appreciate

the say XX-XX, Analyst the but lots I the of heard likely know XXXX on is specifics a rollout. So you we at event, payoff Day

and any updates early we're can North of initially, I share? still MCS share? can early Water in had know innings, you you what initially. the actions America you Applied kind but So Any

update. an give to happy no, No,

businesses. they of the North their week. of on implementing ahead So last progressing Applied well. And are X metering second initial they're in segmenting Water gone are tool ongoing have set. actually and really quartile quarter. those analysis AWS the of businesses few in run American M&CS smart meat now businesses. said, American the through smart they customer the have base P&Ls, their a global then highlighting through AWS started businesses, we working for resources thick that to how you in and support building and to appropriate kickoff that of kicked just want and their North transport quads again, a Like need meeting the the we their had and level Europe They their teams journey off months

some come while to those Again, initial out way the little through a backlog. with work They've benefits increases. price take their

see set new their largest They're material how hit So of quality to product me. or XXXX, at short-term them pickup the talking material P&L will really The we'll no to Xylem them. customers our improving faster, where them again, overall term, really this is benefit, how going to year, end as are our in the them. leading the a tool pick changes communicating teams impact experience more but and see these focusing excuse delivery on up, long we to improve innovation bring and and benefit the customers we into significant with a with

bases. tool excitement So around customer a lot their set externally for of the

progress continues. So

right confident with provide additional over bring years. Really is XX/XX us the tool several impact out the framework we I next that and Investor on again, the we in highlighted is laid to going in back Day. line have Yes, the for to in set value we're think and schedule. and what going

a that And operating helpful Bill. or ask expected are the results bit I really if could. broader today That's better, I given a little most as either question, update, industry a of could

Supreme on thoughts, but still overruling what I remediation super know the be Chevron in at of the in might level, ripple the fun PFAS effects we're innings, Court early implications federal any timing. the Just the Doctrine. kind high-level the

to have be? in it's X-year the anyway but your are guide, way. not know at I that implications I what here idea the for the that's not remediation in numbers, all where and it's is just efforts the the states government in the can been not your waiting level, And look, state see federal might like going And the lead California

you this from out? your perspective plays just how do So and think insight,

question, Thanks Deane. see one this for the didn't We coming.

our X ago, radar. was this If on not months you had us asked

So we're some regulations does there's point. it the federal different Doctrine, this the in reacting the like out being much risk volatility to rule with down of But marketplace. on EPA's lots your Chevron and some striking the Supreme Court of PFAS and challenged final the laws, introduce uncertainty to

Additionally, at beyond as the Deane, litigation contaminant cost X parts set that's there's per trillion, level, that, already, estimates aware. challenging maximum used you're EPA's level MCL ongoing to the

what's time to X And it's only X a of mitigate years test to already and and going potentially years out push long PFAS. line phase to

reversed. the drinking So it anticipate point, you've about a gaps MCL, regulation to today and the your if are we think, water if the that. for contaminant is XX that with states ultimately, got states going maximum have PFAS don't really to fill level already. PFAS But in We national -- does,

U.S. nature guidance of You've PFAS the population. levels, got that some half another states kind either notification XX around of regulation health things that have that's or over and

challenges. too it with in We're litigation, framework. to far that's long-term it utilities, be some we there's we little emerging this bake partner and to while into out. to seeing and of So stand helping have We as contaminants. already our and didn't gates, stumble why you may and the with positioned utilities, bit just a going out in But manage know, it's them ready think partnered other we challenges well

think. but that's to come, more of we kind what So

Baird. with from And Halloran our Mike will question come next

Keith. Welcome, Andrea. Thanks

process, on how So Just earlier at, has to the want if the momentum you're much well comment of from just as year, I think level healthy how any doesn't clarify look the But setting quarter, some and of there commentary about obviously, on stuff Bill's second that. demand holds. feel trend guiding here. around your very thoughts If year? half as second you you're margins characterizing it the the that the thought half changed a like and

the Yes, No expectations Mike. for change to half. our second

think how I when update exactly playing last we gave quarter. out our it's we thought

our to increased to full the drove to some revenue take With up us X% we our accelerated up guidance full X%. had exception we performance which in M&CS, year year guide, that

looks timing like year-over-year the implied lot from the perspective lower that results Sequentially, more in driving in with a just QX rate. a comps second some QX drove of organic quarter. really And capital WSS challenging projects growth better dollars

primarily most still we a see is there's material things our high good recently, highlighted the confident, slowdown don't wins down, M&CS, again, Idrica. of with had noise differentiated large the project smart markets. deals Europe, and really we were signaling us. for sale our But there. and a and in The products that's that we're our bullish end perspective, demand timing. metering leverages still Orders There's one So but from synergy any several macro for impact in we still AMI or out a network. funnel U.S. expected strong just of that our of there's

to excellent projects just the lumpiness. continues they build of and orders dewatering really of finding across had do have new projects the an a business. again, some So winning and really strong but legacy operate and They project new job team capital we growth, WSS, last demand business. still huge there, ISS the Again, quarter. timing had strong

the We in those couple over the have orders half year. be could of back here realized a more funnel the in that the of

So kind of any high-growth verticals. bullish really there Still nothing concern. is their around that

group our of digit. expectations, pretty the markets applications large the project seen are shortest been and obviously, consistent single-digit has again, and challenged. it's businesses. low of is AWS, of that there most with single is Again, one we've bit kind little demand, business But with a cycle, It's transport what continues developed our really cyclical well. extremely orders with and our all across was healthy doing WI well. The one remains XX% infrastructure, market much strong regions. our our perform up most performance to within wins. business over all Water high differentiated pretty Treatment growth some

half Second bit easier. comps a little get

project then we road gradually get XXXX. highlighted in growth start to So lower some the And to decline. that in to a wins get the back of they'll we'll them remarks, the on organic prepared

backlog you then backlog and helpful. of once normal book-to-bill Super thoughts how And pass-through should think segments like think tracks work a Great. we couple across the track? you on and maybe some through what how here from looks

a past backlog I the MCS. new because organically, the is declined to really say again, of that's just and the build of lumpiness backlog. due would That's strong. and the just primarily MCS to projects WSS us the within work one slightly some Yes. forecast large continuing of It down just still And tough business operate. opportunities and within

So little bit the but year, a for the getting through I individual progress of still think we'll XXXX. kind long-term as confident in segments our here frameworks bleed we growth into

So our to of give I a say, but us specific bit you probably lumpiness of and end a demand would robust little caution for number, most markets. outlook again, gives

to you suggesting Bill, backlog And normalized mean due a the of normalization, bleed level something or past because different? more you are

No, exactly. That's on. spot

from Our Davis Research. with next will come Melius Scott question

on have commentary to your able more there, Are Andrea, move. which we some at didn't coming Evoqua get all is certain a tipping helpful. close that? confident fine talk Are still about is be we being because deployment, to point just would you deals? do where Guys, Congrats, you capital there you in. But

Again, Evoqua. you on is our of question. integration focus mentioned, Good first like to the Scott, priority

as as job well doing can that revenue from we're both they're tracking the the well you on a synergies. results think cost the I great synergies, see

execution. the year We built and over with now planning M&A months Evoqua of lot XX the a Scott, muscle the of of past X passing have, on

would deployment. strong and over in M&A drive in place I cycle. I consistent Day we've kind to And is started organization, us Maybe that's going reiterated organic also more in our build said at I which a Investor thing other going the that of we've bottoms-up think to just I'd is what us call the to that put acquisition process help forward. So that process to the muscle going help growth

just we laid the obviously, So X-year framework. out

value tell managing. finished I It's strong well can active, that very that that pipeline up. overnight, we aligns have we're And very but mapping not going it we happen just and a to you the to we're

again, to organizational So strategic anything M&A not momentum our continue we're targets to make silly. going criteria, your execute we're of fit, run ready those to got got that our trending and to I readiness, sense. do to point, kind We're to pipeline. good well. through financial think going And really, decision We've has

an mid-teens it just of but is timing, cycle. our Investor piece is over important outlined at it as the to Day at Some we growth EPS

very it some we're So of but still is timing, we're and innings. just in early active,

you those related those wins. answer. want of good big scope color detail love like? how a the -- of to the scope on you you give stuff here, large bit size about they before that never -- color are mean think I you of And I little projects, of a we've question that little project versus historically mega plants, I'm don't I'd what guys, seen you I kind you projects? Are if don't a looks referenced semi of sure can. domestic. assume from lot many on to and get Good kind large so but Can there give a to out

Yes.

Day, positioned move but also us, uniquely that I too, we our through we at that's Applied think business, and Water for water sense then in it. treat think the ramp also pumping, I to fact up Investor talked for we're it, we Scott, and about data especially starting we centers, and back

more turnkey providers some solution. And bottoms-up centers themselves. well we're data So are we as building working as data of of can actual we're centers, these that a offer kind winning the at of kind as the

the $X had pick couple so well. to going Water. kind range had of million to some up momentum. started million $XX that's Applied that's nice We a a and We've win actually at in So

green last say hydrogen. highlighted win I'd power on quarter transition, we the Also, big a with

the ones over the we've And contract microelectronics And consistency that of power. XX-year more in space we other lot see quarter lot big. that pipeline got is water water for need and got that fit with around some have a within more not of in water well the and the these a that the have so as a We've for needed issues. and kind clean scarcity places semiconductor around momentum of are

so And water there. reuse super the is important

So see that little projects, And continuing. in We that see big momentum we of and good high-growth slowing. verticals will good of it within these pipeline. some see a and WSS lumpy specifically, we're be only I'd a but say kind seeing don't it we momentum

And congrats quarters on first couple here. the of done. it year I'll the on. of pass Well

next Jones will Our Stifel. with come Nathan question from

want in in lumpiness a off but I orders some that, backlog with bit quarter. last start burning some understand 'XX been some of have the in to and follow-up questions around have 'XX. down years, down, I little off on MCS. Orders there's declined couple the

about and expect could you the turn backlog down I we here, have amount to bit of start to guidance support significant be around into you're order a are XXXX. to that, you single long-term So that lower little that visibility maybe heading XXXX growth in burning direction the Should against comping just long-term growth. that backlog pipeline because of you fairly And the kind with talk burn? the see in high a than average the right know digits but to

so the turn call just the in to we're us just looking still book kind Nate, of and ship here is or XX% also reminder, deals. it then that out to a XX% a reminder of mid-innings continued pipeline lumpy. although convert be -- a of and a in timing, that of it anything. they runway to matter big it of of always little business see early adoption, and I AMI orders backlog of over And fairly is can contracts put just Again, we slowing But lot see, we of doesn't or innings Bill. it obviously what orders out And only start flow. I'd maybe a that that Yes. there's backlog got don't in in how room for we and show just in down. more there. the up a business. It's lot some at than some we've orders, in do growth And

year Yes. be long-term is that No, our us next It's league in there. backlog line the our just get framework. will with it to expectation

we little year. point bit digits some stronger So maybe next before time of high in that a at to get single kind

a you And asked Yes. I due. past few think are ago in where calls had about we

and of expect almost due to QX We the wrap next by that year of backlog the probably past year. in be the up end complete with

happening leading guide So to M&CS that revenue the burn at is teens. increased and obviously and high the

Second receivables next I And that the simplification on the working guidance conversion. up to one think ask impact have to capital an cash should wanted XX/XX initiatives was on would the over Obviously, average has at and on payables long-term out, cash and as I the XXX%. taken inventory of like and higher the conversion take drives than least couple work years maybe simplify stuff that you business, that. probably

in as give these working a simplification of you So can on us seeing result you're capital XX/XX opportunities any and initiatives? commentary

We think reduced the inventory. just and That's a complexity we DSO amount start lot from part right. I Nate, a of get No, set of Yes. of as long-tail of tremendous exactly the to that the through more Obviously, portfolio. reduce you lot big efficiency customers you're a faster-moving a improves of tool perspective. complexity the your product

So I that we The will to of that totally it I agree, a benefits. XX/XX the conversion. now think I be will overall team we'll take the get. job But benefits see end some with back to P&L our level. next able be the does on phenomenal But think cash right

months. implementation, through end. back P&L get second to as at months probably the to we XX realize that the the XX phase That's to XX looking of benefits, you hey, said, simplification So in the XX it's on probably

come will Cowen. next from our question TD Giordano And Joe with

Andrea, for everything. thanks

-- we'll You've it. happens been now we water a if to anything know huge who help. blame on with If infrastructure,

So...

been you, Thank Joe. a It's pleasure.

to been already, you since on conditions the this results? better changing moving like have ground A like it examples maybe leading of combining business service of on but asked concrete how touch and kind could you the guys is my WSS, lot questions for like if and of with any

we our to move water. Yes, you I I I is is few synergies treat water reasons. of it for a can think obviously, can start and mean now One a that because synergies when out. there increase this did lot

And highlighted drive able to the seeing we're that at so probably already now go quickest segment synergies, those turnkey of with we in solution. Investor the the Day. to be some We're

mature, say back leveraging across was tools business services I'd tool that a big also, Evoqua and we you companies business now had a the had common been more about together, we set. the companies put service help. has When just think the and X when much X So good office, legacy entire processes

our think thing I over across utilization, time entire will biggest be being the portfolio. the technicians utilize able to technician probably is, And

Now now completely half them, a Pros technicians our flex they Aqua to call broader before. fungible, that were not And your gives everybody is and we of also work it career do say, doing path. can other X/X types as of but what

So I'd right and it aspects working of fastest but say it's play now, revenue synergy our seeing how out, we're there's well. different the it's of part

commentary industrial-type and think because there about seeing infrastructure, center stuff ask at if other are you the I of can weakening. large project you maybe And is like but is WSS that. any your kind center bifurcation in about the strong, also like definitely like and large maybe general to I exposure pipeline data sectors data talked activity then If project around

in there? businesses puts curious and you're those of any So like takes if seeing

water synergies a around to something large is synergies we as now business. happening not China really interest. swing are, going It mentioned, mainly those and a I've from be our a continue perspective, look, scarcity sciences, because what of matter what's part high-growth that pharma, like us happening regulations whatever a that in it's life data as microelectronics, seeing Not big climate one part is be power, that's but Investor is we've not verticals we're mentioned Water, center some a I Day, we've of driving for no Applied of other centers in to robust. up And it's water really. not general, But lot But as shows doing that seen at managing some where although data seen treatment. well portfolio. huge our our of I think at we're in mean,

all of operations open we world are get CEOs saltwater the of with of I their treat. some from challenging maybe calls keep to trying dealing intrusion because different quality their with parts to in real stuff time water type the terms and dealing get the being of different -- in or able water they're phone mean, I leaders that of a

see So real slowdown. don't any we

We going verticals us, one but it's for strong is big take are centers advantage while data that's we're it in of high. and really to not high-growth

Citigroup. question And will our from with Andrew Kaplowitz next come

your so thanks much help. Andrea, for

you, Thank Andy.

said particularly the more And price Did just you're there. could what lumpiness? on exposure after and materially Matt I you anything is versus we seeing inflation acquisition, change? you into in color have cost give nicely know Infrastructure in being you bit in that margin So you Water up that and related. segment. some QX know a side, was QX. was that that in Bill, segment mentioned year-over-year down But in in it Or acquisition China

in could talk competitive you environment maybe about So the China.

was positive cost Price there.

the low of that biggest had the the margin, last element teens. XXs think impact, segment. during that was and the the its versus was acquisition year, time APT in second we short that's of why it kind quarter It high rate normalized part highlighted just unusually I of

expansion So at was why forma just biggest that forma was in and That's pro it added XX margin XX% the bps we incremental. pro difference. the

So It strong. fundamentally, there the is profit sequentially still improved.

margin to the expect as sequentially year-over-year we We back expansion. progress have it continue to through and improve half

been perspective, a were infrastructure -- lumpy largest down, piece bit perspective. actually, from they get kind economic see Orders I revenue larger China projects, some It's would say, little do our of us. a half probably situation, continue the positive within the to fund first treatment investment their has the of how they're from has for been across exposure. to especially water a think China framework. just we is of going I trying the several overall things delayed to figure out but as and China have

continuing are eye to of to kind our as perpetually things we area keep be on seem one right. just the shifting probably to the that's So

half the And maybe you? the just on the the kind more mentioned helpful. telling along Is Maybe talk a second Applied as about the orders, business you channel from the good. Very see said, then of you short-cycle long-cycle focusing Water bottom? were year. of it. market in you They little the What's comparison bouncing projects. And look easier obviously as

they year? know Water 'XX, So the but about the end growth I can of Applied before you returning talked that in do

Yes.

markets the I negative XX macro think Again, line. third is relatively our and quarter institutional from amounts. is the probably it's the decline been developed closer quarter, still months. perspective, down mean, ABI sequentially, commercial in in dollar low consecutive single digits. in Fourth largely for primarily has seen industrial space. and X. It's it's to I -- a Again,

are their these a next for We see They're teams technology a of highlighted, PMI, for track back to own I they're which to manufacturing growth the on leveraging making get win to lot larger that credit. give luck. of differentiated continue their indicators good business. into But Matthew year. some projects us

question next Bryan Blair with will our come from Oppenheimer. And

help. Andrea, thank you very your much for

Thank you, Bryan.

MCS, this out. Very sorry strength you if relative you that Bill, willing sequential some -- upfront going the being headwinds size very detail. mix with MCS into to there have been I called headwind again to back stood Are missed deployments. the of But solid and I'm about XH? energy quarter out, margin half again you've

points we the mean I decrease sequential could where around from first think be finished Yes. XXX back basis the half, it we half. in

on the was Okay. pace how quarter. through hoping treatment a offer that. little Understood. orders Appreciate color I you more

momentum that the confidence how growth team's your differences does you tends treatment Any call for so think in meaningful to robust back by that a leading indicator. region influence I out? business be around cited you half very XX% there, outlook? And a would

it's momentum in themselves. in up Matthew, markets. bit In And Yes, probably Like roughly and the good and this emerging entire really We've regions. you we've we're all treatment XX% -- said, across seen the U.S. business is up for Bryan. seen by led was in actually, China low digits a on little pointed single weak. treatment. bit spot China, that of been little were We slightly as orders a Bill bright out,

it's So only flow, is We water not investment continues all that treatment, scarcity a big also but and capital capital continuing the indicator quality, really which momentum all, of part funding. a water. in good for to good of see

those see continuing. trends we So

the I to would call. Pine like to for earnings concludes turn back this any Matthew QX And closing remarks. it

Thanks who for there. joined it questions, and wrap for We'll your thanks everyone today. you. Thank

and As very always, we Xylem your interest all best. the appreciate in

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