Adjusted earnings per share were $2.77, driven by strong productivity, restructuring actions, favorable FX impact, and lower interest expense, offset by higher input costs and plant shutdowns.
Adjusted operating income: Global Ceramic $90 million (8.1%), Flooring North America $69 million (7.3%), Flooring Rest of the World $76 million (10.4%).
Capital expenditures were $80 million in Q2 with planned investments reduced to approximately $500 million for 2025.
Cash and cash equivalents were $547 million with free cash flow of $126 million; share repurchases of approximately $42 million completed with a new $500 million authorization.
Gross margin was 25.5% as reported and 26.4% excluding charges, down approximately 70 basis points due to higher input costs, lower sales volume, and increased shutdown costs, partially offset by productivity gains and favorable FX.
Interest expense decreased to $5 million due to lower debt balance and interest income benefits.
Inventories increased by $130 million primarily due to FX and imported inventory from new tariffs.
Net sales for the second quarter were $2.8 billion, essentially flat as reported and on a constant basis.
Non-GAAP tax rate for Q2 was 19.3%, down from 20.9% prior year, with Q3 and full year tax rate forecasted at approximately 19%.
Nonrecurring restructuring charges of $34 million expected to deliver $100 million in annual cost savings in 2025.
Operating income on an adjusted basis was $223 million or 8% of sales, a decrease of approximately 120 basis points due to increased input costs, lower sales volume, and higher shutdown costs, partially offset by productivity and FX benefits.
Segment sales: Global Ceramic sales just over $1.1 billion (up 0.5% reported, 1.1% constant), Flooring North America sales $947 million (down 1.2%), Flooring Rest of the World sales $734 million (up 1% reported, down 3% constant).
Adjusted EBITDA margin reached a quarterly record of 21.8%, up 100 basis points year-over-year.
Adjusted EPS grew mid-teens, with Q2 EPS at $1.26, $0.12 above the midpoint of guidance and up 16% versus prior year.
Net debt to adjusted EBITDA stands at 0.4x, reflecting a strong balance sheet and capacity for continued investment.
Revenue growth was 6% in the quarter, driven primarily by outperformance in Measurement and Control Solutions (MCS) and contributions from all segments.
Segment highlights: MCS revenue up 10%, backlog at $1.7 billion; Water Infrastructure revenue up 4%, margin expanded 200 basis points; Applied Water revenue up 5%, margin expanded 420 basis points; Water Solutions & Services revenue up 5%, margin expanded 60 basis points.
Xylem delivered strong Q2 2025 results with broad-based organic revenue growth led by measurement and control solutions.
Year-to-date free cash flow was down $61 million year-over-year due to outsourced water projects and timing of tax payments, mostly offset by higher net income and improved net working capital.
Adjusted EBITDA was $68 million, down $6 million year-over-year, impacted by higher operating costs including start-up expenses and maintenance timing.
Aerospace and high-strength conversion revenue declined 5% due to a 4% shipment decrease amid commercial aircraft supply chain destocking.
Automotive conversion revenue declined 4% on a 15% shipment decrease due to tariff-related uncertainties, partially offset by better pricing and mix.
Cash flow from operations was $16 million with capital expenditures of $44 million; free cash flow guidance revised down to $50 million to $70 million due to working capital impacts from metal pricing and tariffs.
General engineering conversion revenue rose 3% with a 5% shipment increase driven by reshoring and strong pricing.
Kaiser Aluminum delivered second quarter results exceeding expectations, with conversion revenue of $374 million, up 1% year-over-year.
Liquidity remains strong with $13 million cash and $525 million borrowing availability; net debt leverage ratio increased to 4.2x from 3.9x.
Net income was $23 million or $1.41 per diluted share; adjusted net income was $20 million or $1.21 per diluted share, down from prior year adjusted net income of $27 million.
Packaging conversion revenue increased 9% year-over-year on improved product mix despite a 3% shipment decline due to ramp-up of new roll coat line.
Reported operating income was $38 million, up $2 million from prior year, but adjusted operating income was down $7 million after excluding prior year non-run rate charges.
Aeronautics sales increased 2% to $7.4 billion, driven by F-35 production but offset by classified program losses.
Free cash flow was negative $150 million in Q2, impacted by timing issues including delayed F-35 contract awards and tariffs.
GAAP EPS was $1.46, reduced by $5.83 due to program losses, impairments, and tax reserves.
Lockheed Martin reported $18.2 billion in sales for Q2 2025, comparable year-over-year and up sequentially from Q1.
Missiles and Fire Control sales grew 11% to $3.4 billion with a 6% increase in operating profit.
Rotary and Mission Systems sales declined 12% due to program losses and lower volumes in Seahawk and Canadian Surface Combatant programs.
Segment operating profit was $570 million, down significantly due to $1.6 billion in operational charges primarily from Skunk Works and Sikorsky programs.
Space sales increased 4% with a 5% rise in operating profit, driven by commercial civil space and strategic missile programs.
The company recognized $1.8 billion in losses related to legacy programs and a tax matter, impacting segment operating profit and EPS.
The company returned $1.3 billion to shareholders through dividends and share repurchases.
Dafinchi