Question · Q3 2025
Andrew Boscaglia (BNP Paribas) asked how Xylem's Measurement & Control Solutions (MCS) segment's margins compare to larger peers after the international metering divestiture and what further actions could drive long-term improvement. He also requested a breakdown of organic sales drivers, distinguishing between market demand pickup and internal efforts, and identifying end markets that performed better or worse than expected.
Answer
CFO Bill Grogan explained that Xylem's core water business within smart metering achieves profitability at or above its peer set, with the divestiture of international metrology and the lower-margin energy business being key factors. He anticipates significantly higher profitability for the core water business. Regarding demand, Mr. Grogan highlighted resilient demand in MCS (driven by energy meter refresh), strong OpEx/CapEx in Water Infrastructure (especially transport and treatment), and continued growth in Applied Water (strong in Western markets/commercial buildings). The primary headwind was China, experiencing double-digit declines in sales and orders for Applied Water and Water Infrastructure, contributing a 2% headwind to Xylem's overall revenue. Water Solutions & Services saw double-digit growth from outsourced projects and dewatering.