Cumulative operating cash flow of $2.9B over the last ten quarters exceeds cumulative net income of $2.3B, but FCF margin swung from -1.8% in 2025Q1 to 19.2% in 2025Q4, reflecting working capital timing, while buybacks surged to $680M in 2026Q2.
Xylem Inc. (XYL) cash flow statement — 17-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 |
|---|
| Cash from Operations | 1.3B | 1.24B | 1.26B | 837M | 596M | 538M | 824M | 839M | 586M | 686M | 497M | 464M | 416M | 324M | 396M | 449M | 395M | 370M |
| Operating CF Margin % | - | 13.74% | 14.75% | 11.37% | 10.79% | 10.36% | 16.9% | 15.98% | 11.25% | 14.57% | 13.18% | 12.7% | 10.62% | 8.44% | 10.45% | 11.81% | 12.34% | 12.99% |
| Operating CF Growth % | 232.55% | -1.74% | 50.9% | 40.44% | 10.78% | -34.71% | -1.79% | 43.17% | -14.58% | 38.03% | 7.11% | 11.54% | 28.4% | -18.18% | -11.8% | 13.67% | 6.76% | - |
| Net Income | 1.01B | 950M | 890M | 609M | 355M | 427M | 254M | 401M | 549M | 330M | 260M | 340M | 337M | 228M | 297M | 279M | 329M | 263M |
| Depreciation & Amortization | 565M | 575M | 562M | 436M | 236M | 245M | 251M | 257M | 261M | 234M | 151M | 133M | 142M | 150M | 142M | 137M | 92M | 70M |
| Stock-Based Compensation | 41M | 53M | 56M | 60M | 37M | 33M | 26M | 29M | 30M | 21M | 18M | 15M | 18M | 27M | 22M | 13M | 9M | 9M |
| Deferred Taxes | -34M | -35M | -36M | -79M | -64M | 10M | -31M | -77M | -47M | -33M | 14M | -9M | -29M | -14M | 1M | 8M | -31M | -36M |
| Other Non-Cash Items | -8M | 31M | -97M | 22M | 134M | -41M | 116M | 170M | -31M | -7M | -7M | -30M | -44M | -21M | -38M | 5M | -7M | -9M |
| Working Capital Changes | -269M | -333M | -112M | -211M | -102M | -136M | 208M | 59M | -176M | 141M | 61M | 15M | -8M | -46M | -28M | 7M | 3M | 73M |
| Change in Receivables | -63M | -55M | -107M | -86M | -192M | -72M | 230M | -21M | -109M | 53M | -6M | -38M | -9M | -9M | -43M | 48M | -55M | 31M |
| Change in Inventory | 9M | 23M | -41M | 41M | -147M | -167M | -5M | 47M | -97M | 27M | -15M | 23M | -49M | -39M | 5M | -18M | 7M | 62M |
| Change in Payables | -41M | -22M | 64M | 22M | 117M | 81M | -39M | 29M | 51M | 50M | 61M | 20M | 17M | 4M | -4M | -9M | 41M | -38M |
| Cash from Investing | -429M | -471M | -482M | -628M | -191M | -183M | -169M | -231M | -643M | -181M | -1.89B | -132M | -86M | -199M | -147M | -423M | -1.09B | -84M |
| Capital Expenditures | -341M | -331M | -321M | -271M | -208M | -208M | -183M | -226M | -237M | -170M | -124M | -117M | -119M | -126M | -112M | -126M | -94M | -62M |
| CapEx % of Revenue | 3.74% | 3.66% | 3.75% | 3.68% | 3.77% | 4% | 3.75% | 4.31% | 4.55% | 3.61% | 3.29% | 3.2% | 3.04% | 3.28% | 2.95% | 3.31% | 2.94% | 2.18% |
| Acquisitions | -173M | -200M | -188M | -370M | 1M | 10M | 183M | -18M | -411M | -17M | -1.78B | -17M | 30M | -81M | -41M | -309M | -1B | -33M |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | 149M | 101M | 3M | 13M | 1M | -210M | -181M | 0 | 5M | 7M | 20M | 2M | 3M | 8M | 6M | 12M | 5M | 11M |
| Cash from Financing | -741M | -501M | -615M | -157M | -790M | -855M | 473M | -177M | -40M | -421M | 1.03B | -262M | -147M | -100M | -74M | 172M | 745M | -292M |
| Debt Issued (Net) | 927M | -81M | -284M | 118M | -527M | -600M | 704M | 27M | 164M | -282M | 1.13B | -3M | 52M | 37M | -1M | 1.2B | 0 | 0 |
| Equity Issued (Net) | -1.23B | 5M | -20M | -25M | -52M | -68M | -61M | -40M | -59M | -25M | -4M | -179M | -134M | -51M | 11M | 0 | 0 | 0 |
| Dividends Paid | -402M | -391M | -350M | -299M | -217M | -203M | -188M | -174M | -152M | -130M | -112M | -102M | -94M | -87M | -75M | -19M | 0 | 0 |
| Share Repurchases | -1.25B | -15M | -20M | -25M | -52M | -68M | -61M | -40M | -59M | -25M | -4M | -179M | -134M | -73M | -13M | 0 | 0 | 0 |
| Other Financing | -41M | -34M | 39M | 49M | 6M | 16M | 18M | 10M | 7M | 16M | 24M | 22M | 29M | 1M | -9M | -1B | 745M | -292M |
| Net Change in Cash | 106M | 358M | 102M | 75M | -405M | -526M | 1.15B | 428M | -118M | 106M | -372M | 17M | 130M | 29M | 186M | 187M | 50M | 0 |
| Free Cash Flow | 960M | 910M | 942M | 566M | 388M | 330M | 641M | 613M | 349M | 516M | 373M | 347M | 297M | 198M | 284M | 323M | 301M | 308M |
| FCF Margin % | 10.52% | 10.07% | 11% | 7.69% | 7.03% | 6.35% | 13.15% | 11.68% | 6.7% | 10.96% | 9.89% | 9.5% | 7.58% | 5.16% | 7.49% | 8.49% | 9.4% | 10.81% |
| FCF Growth % | 8.97% | -3.4% | 66.43% | 45.88% | 17.58% | -48.52% | 4.57% | 75.64% | -32.36% | 38.34% | 7.49% | 16.84% | 50% | -30.28% | -12.07% | 7.31% | -2.27% | - |
| FCF per Share | 4.06 | 3.73 | 3.87 | 2.59 | 2.14 | 1.82 | 3.54 | 3.38 | 1.93 | 2.85 | 2.07 | 1.91 | 1.61 | 1.06 | 1.53 | 1.74 | 1.63 | 1.67 |
| FCF Conversion (FCF/Net Income) | 0.95x | 1.30x | 1.42x | 1.37x | 1.68x | 1.26x | 3.24x | 2.09x | 1.07x | 2.07x | 1.91x | 1.36x | 1.23x | 1.42x | 1.33x | 1.61x | 1.20x | 1.41x |
| Interest Paid | 58M | 61M | 67M | 69M | 76M | 99M | 77M | 77M | 78M | 78M | 49M | 52M | 51M | 51M | 53M | 0 | 0 | 0 |
| Taxes Paid | 249M | 267M | 219M | 211M | 91M | 83M | 41M | 107M | 75M | 57M | 78M | 75M | 81M | 65M | 104M | 64M | 110M | 52M |
Quick answers to the most common questions about buying XYL stock.
Xylem Inc. (XYL) generated $1.24B in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Xylem Inc. (XYL) generated $910.0M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Xylem Inc. (XYL) spent $331.0M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Xylem Inc. (XYL) returned $391.0M to shareholders via cash dividends and spent $15.0M on share repurchases. This shows the company's commitment to returning capital to its equity investors.
Key Metrics
Top Statement Risk
Working capital volatility and integration risks
Metrics are mathematically derived from official filings.
Cash Conversion Volatility Signals Timing Distortions
OCF/NI swung from 0.20 in 2025Q1 to 1.62 in 2025Q4, per reported figures, indicating that earnings quality is heavily influenced by working capital timing rather than operational deterioration.
The wide quarterly swings in OCF/NI, from 0.20 to 1.62, suggest that net income is not consistently translating into cash, with working capital changes (e.g., -$314M in 2025Q1) driving the divergence. This pattern implies that investors should focus on annualized cash conversion rather than quarterly snapshots, as the underlying business appears to generate cash but with significant timing distortions.
FCF Recovery Masked by Seasonal Working Capital
FCF margin improved from -1.8% in 2025Q1 to 19.2% in 2025Q4, as reported, but the trajectory is lumpy, with 2026Q2 at 8.6% reflecting a normalization after a strong Q4.
The free cash flow margin shows a clear seasonal pattern, with Q1 typically weak (0.7% in 2024Q1, -1.8% in 2025Q1) and Q4 strong (21.1% in 2024Q4, 19.2% in 2025Q4). This suggests that the underlying FCF generation is stable, but the timing of collections and payments creates significant quarterly volatility. The 2026Q2 margin of 8.6% is below the prior year's 9.0%, indicating a slight deceleration, though still positive.
Capital Intensity Remains Moderate and Stable
CapEx/Revenue has held between 3.4% and 4.4% over the past ten quarters, per financial statements, indicating a mature asset base with maintenance-focused spending rather than aggressive expansion.
The consistent capital intensity, averaging around 3.8% of revenue, suggests that Xylem's growth is not heavily dependent on new capital investment, which is typical for a company with a large installed base and recurring service revenue. This stability implies that FCF is largely driven by operational efficiency and working capital management, not by capex cycles.
Working Capital Swings Drive Cash Flow Timing
Working capital changes ranged from -$314M in 2025Q1 to +$242M in 2024Q4, as reported, indicating that cash flow is highly sensitive to the timing of receivables and payables, particularly in Q1.
The negative working capital changes in Q1 quarters (e.g., -$218M in 2024Q1, -$314M in 2025Q1) suggest a seasonal build-up of receivables or inventory, which then reverses in Q4 (e.g., +$242M in 2024Q4, +$127M in 2025Q4). This pattern is consistent with municipal budget cycles and project timing, but it also implies that quarterly cash flow figures should be interpreted with caution. The 2026Q2 working capital change of -$119M is less severe than prior Q2s, which may indicate improved collection efficiency.
Aggressive Buybacks and Dividend Growth
Share repurchases surged to $680M in 2026Q2, per reported figures, while dividends grew to $101M, indicating a shift toward aggressive capital return despite modest FCF of $201M.
The buyback activity in 2026Q2 ($680M) far exceeds the quarter's FCF ($201M), suggesting that the company is funding repurchases with balance sheet cash or debt, which may be a deliberate strategy to offset dilution from acquisitions. Dividends have grown steadily from $87M in 2024Q1 to $101M in 2026Q2, reflecting a consistent commitment to shareholder returns. However, the sustainability of this pace depends on future FCF generation, as the buyback level is not supported by current cash flow.
Cumulative Cash Generation Exceeds Net Income
Over the last ten quarters, cumulative operating cash flow of $2.9B exceeds cumulative net income of $2.3B, as reported, indicating that earnings are backed by real cash generation.
The cumulative OCF/NI ratio of approximately 1.26 over the period suggests that Xylem's earnings quality is solid, with cash conversion exceeding reported net income. This is a positive signal, as it implies that the company is not relying on aggressive accruals to boost earnings. However, the quarterly volatility in OCF/NI, particularly the low readings in Q1, warrants monitoring to ensure that the cumulative trend persists.
What the Cash Flow Statement Obscures
Despite strong cumulative cash generation, the cash flow statement may obscure the impact of acquisition-related intangibles and the sustainability of buybacks funded by balance sheet strength, as reported figures show.
The cash flow statement does not fully capture the economic cost of acquisitions, as amortization of intangibles from the Evoqua deal depresses GAAP earnings but is added back in operating cash flow, potentially overstating cash generation relative to maintenance needs. Additionally, the aggressive buyback in 2026Q2, which exceeded FCF, may be funded by existing cash reserves, suggesting that the pace of capital return is not solely dependent on operating cash flow. Investors should monitor whether such buybacks are sustainable without increasing leverage, especially given the reported low debt-to-equity ratio.