Research Desk Line-up: Middleby Post Earnings Coverage
LONDON, UK / ACCESSWIRE / August 16, 2017 /Pro-Trader Daily has just published a free post-earnings coverage on Xylem Inc. (NYSE: XYL), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=XYL, following the Company's release of its second quarter fiscal 2017 results on August 01, 2017. The water and wastewater treatment Company outperformed earnings expectations and also raised it earnings guidance for fiscal year 2017. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
Get more of our free earnings reports coverage from other constituents of the Diversified Machinery industry. Pro-TD has currently selected The Middleby Corporation (NASDAQ: MIDD) for due-diligence and potential coverage as the Company reported net sales and earnings for Q2 2017 which ended on July 01, 2017. Register for a free membership today, and be among the early birds that get access to our report on Middleby when we publish it.
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For the quarter ended June 30, 2017, Xylem's revenue, including the contribution from its Sensus business, was $1.16 billion, up 25% compared to revenue of $932 million in Q2 2016. Xylem's pro-forma organic revenue, which includes Sensus, grew more than 1% in the reported quarter. The Company's revenue numbers fell short of analysts' estimates of $1.17 billion.
During Q2 2017, Xylem's reported operating margin increased 20 basis points to 11.9% and adjusted operating margin was 13.3%. Excluding the negative impact of purchase accounting amortization related to the Sensus' acquisition, the adjusted operating margin expanded by 100 basis points on a y-o-y basis.
Xylem reported net income of $99 million, or $0.55 per diluted share, in Q2 2017 compared to net income of $71 million, or $0.39 per diluted share. The Company delivered adjusted net income of $106 million, or $0.59 per share, in the quarter, a 23% increase on a y-o-y basis. Xylem's bottom-line beat Wall Street's earnings estimate of $0.57 per share.
During Q2 2017 Xylem's Water Infrastructure segment revenue was $482 million, up 1% organically on a y-o-y basis. Strong industrial sector growth was fueled by dewatering demand in the construction industry as well as improved conditions in mining and oil and gas. For the reported quarter, the division's operating income was $74 million, while adjusted operating income for the segment, which excludes $5 million of restructuring and realignment costs, was $79 million, reflecting a 10% gain on a y-o-y basis. During Q2 2017, reported operating margin for the Water Infrastructure segment was 15.4%, reflecting a 180-basis-point increase on a y-o-y basis, while adjusted operating margin increased 150 basis points to 16.4% due to benefits from global procurement and continuous improvement initiatives as well as operating leverage on volume growth.
For Q2 2017, Xylem's Applied Water segment generated revenue of $361 million, reflecting 1% growth y-o-y on an organic basis. The segment's reported operating income was $49 million, down 4% on a y-o-y basis, while adjusted operating income remained flat on a y-o-y basis at $54 million. During the reported quarter, Applied Water segment reported operating margin was 13.6%, down 30 basis points over the prior year's same period, and adjusted operating margin increased 20 basis points to 15% as cost reductions and productivity initiatives more than offset inflation.
During Q2 2017, Xylem's Sensus & Analytics segment recorded revenue of $321 million, up 2% on a pro-forma organic basis over the prior year's corresponding period. The Sensus business delivered operating income of $29 million, including $5 million of restructuring and acquisition-related costs. Excluding those costs, adjusted operating income for the segment was $34 million, with an adjusted operating margin of 10.6%, which grew 210 basis points primarily due to the addition of higher operating margins from Sensus.
Xylem closed the quarter with a cash balance of $288 million. The Company's free cash flow in the reported quarter increased approximately 20% to $70 million on a y-o-y basis. Xylem's free cash flow conversion was 56% for H1 2017, which is on track with the Company's expectations to deliver greater than 110% conversion for the full year.
During Q2 2017, Xylem invested $34 million in capital expenditures and returned $52 million to its shareholders through dividends and share repurchases, of which $21 million was for share repurchases to manage dilution.
For full year 2017, Xylem is forecasting revenue in the range of $4.65 billion to $4.70 billion, up 24% to 25%. On a pro-forma organic basis, Xylem projects revenue growth of 3% to 4%.
For FY17, Xylem's adjusted operating margin is expected to be in the range of 13.2% to 13.7%. The Company increased its forecast for full-year earnings to reflect its updated assumption for foreign exchange impact. The Company now expects to deliver adjusted earnings per share of $2.30 to $2.40, which represents an increase of 13% to 18% from its 2016 adjusted results.
At the closing bell, on Tuesday, August 15, 2017, Xylem's stock marginally slipped 0.03%, ending the trading session at $59.86. A total volume of 706.57 thousand shares have exchanged hands. The Company's stock price surged 15.63% in the last three months, 25.62% in the past six months, and 18.96% in the previous twelve months. Moreover, the stock rallied 20.88% since the start of the year. The stock is trading at a PE ratio of 38.87 and has a dividend yield of 1.20%. The stock currently has a market cap of $10.72 billion.
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