Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| Obviously, that will compress a little bit next year as pricing goes down, but also our expectations relative to inflation will be price material cost positive and then look for productivity to really enhance our margins as we move forward |
| Segment EBITDA margin expanded 80 basis points, with productivity and price more than offsetting inflation and volume declines |
| The team delivered both Q4 and full-year results exceeding expectations on revenue and earnings per share |
| Looking at the fourth quarter, strong demand drove organic revenue growth of 9% |
| With disciplined execution, delivering EBITDA margin expansion of 90 basis points that drove double-digit orders growth |
| So, we have, I'd say, really strong strategic continuity as we transition this year |
| Full-year organic revenues were up 12%, with EBITDA margin expansion of 190 basis points, and adjusted earnings per share growth of 20% |
| It's a pleasure to share the Xylem team's exceptional performance in the fourth quarter of a transformational year for the enterprise |
| Both the quarter and the full-year give us very strong momentum entering 2024 |
| We closed out 2023 very strong following the close of our largest transformational deal in our history |
| To your point, we do have a strong M&A pipeline, and the structure of the Evoqua deal allows us flexibility with a strong balance sheet |
| That's really strong flow through |
| The team does a really good job driving operational productivity as a second lever to offset inflation |
| Obviously, that one point plus varies across the different segments with M&CS and WSS going forward, probably stronger price capture opportunities |
| And it puts Xylem in an even stronger position to capture value by serving industrial water customers who are increasingly outsourcing water management as water stresses intensify |
| Looking forward, we are starting strong in 2024 with momentum from our outperformance in '23 and continued healthy demand in our major end-markets, though we're keeping a close eye on demand dynamics in China, and are taking a prudent view of end-markets for Applied Water, which is our most cyclical segment |
| Our backlog across the business is a source of continuing strength, especially at M&CS |
| We also feel very confident in our ability to drive continuing margin expansion by focusing our energy on the parts of the business delivering the greatest value |
| Overall, we're well-positioned for profitable and sustainable growth |
| We expect 2024 organic revenues to be up 3% to 5%, with solid EBITDA margin expansion, resulting in earnings per share between $4.00 and $4.20 |
| As Matthew mentioned, we are pleased with the strong finish to 2023 |
| We're seeing strong momentum there, especially in power, life sciences, microelectronics, we're seeing a lot of bid activity there and we feel good about that |
| We continue to see resilient demand and are supported by our $5.1 billion backlog, which grew 5% organically for the year |
| Organic orders grew 10% in the quarter, with book-to-bill approximately 1 for the quarter, and greater than 1 for the full-year |
| Total revenues grew 41%, while organic revenues rose 9%, exceeding our guidance of 4% to 5% |
| with the Infrastructure Bill, which Includes PFAS funding or if you get into Europe with The Recovery and Resilience Act and then the AMP cycle in the U.K., that gives us a lot of confidence that we'll continue to see those markets do well |
| So, excited about the opportunities the team has laid out here as we look for a really strong year on our margin expansion journey |
| And we continue to execute on the strategy that has positioned us so strongly for further economic and social value creation |
| You did have nice improvement, margin improvement in MCS in Q4 |
| And so, that gives us a lot of confidence |
| Statement |
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| EBITDA margin for the segment was down 90 basis points driven by the impacts of legacy Evoqua |
| We also expect to see headwinds as we lap price increases and our backlog returns to more historic levels |
| In Applied Water, although orders grew, book-to-bill was 0.9 times as we continue to work down our backlog and we saw softer demand environment in the U.S., our largest geography |
| We continue to see pockets of softness across our end-markets, particularly in developed markets which make up about 80% of our business |
| We've got that flat year-over-year, but there could be some potential headwinds there |
| In Applied Water, we expect a modest decline of low single digits |
| But if you look back on a two year stack, we're down mid-single-digits in China |
| And then obviously we had a leadership change, all that while dealing with a lot of macro challenges out there around the globe |
| And you also know that the impact on educational outcomes, health, and quality of life is likely to be profound |
| And then also, Nate, there's obviously a volatile macro environment that you want to make sure that we're more prudent relative to the guide that we have the ability to account for things that come up |
| We've seen a little bit of lumpiness in the Applied Water end markets, especially resi |
| Scott Davis Wanted to, you made some comments incrementally on China seemed a little bit more cautious, which is not a surprise just given what we've heard from others |
| There's exciting things relative to product launches and market expansions that put a little bit of pressure on some of the significant accretion relative to productivity and the synergies that you highlighted |
| So, price expectations for next year are going to ramp down versus the capture that we experienced in 2023, will be a little over a point |
| And then, my follow-up, Bill, I think you just mentioned that the chip supply issue has basically worked itself out |
| We don't want people to feel a fear of failure |
| I think if you read the news, you continue to see the government's intervention in the economy there and that's taking some of the funds away from investing in some of the infrastructure |
| I'd say, industrially it's a little bit of a mixed bag on the new segment WSS, which is a Legacy ISS business, which contains assessment services and dewatering now |
| But it looks like your business there has held up okay, at least versus some peers out there |
| And so, we've seen some lumpiness there in the U.S |
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