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.
Cash at quarter end was $137 million with total debt of approximately $1 billion; leverage ratio was approximately 1.7x including Sigma & Omega acquisition.
Consolidated segment income grew by $18 million or 15.5% to $136 million, with segment margin increasing by 110 basis points.
Detection & Measurement segment revenues increased 21% year-over-year, with 5.5% organic growth and 14.9% from the KTS acquisition; segment income grew 18% but margin declined 60 basis points.
HVAC segment revenues grew 5.7% year-over-year with 4.9% organic growth; segment income grew 14.5% with margin up 190 basis points.
Q2 adjusted EPS grew 16% year-over-year to $1.65.
Q2 adjusted free cash flow was approximately $37 million.
Segment backlog at quarter end was $540 million for HVAC (up 19.5% from Q1) and $365 million for Detection & Measurement (up 6% sequentially).
Total company revenues increased 10% year-over-year, driven by acquisitions and higher project sales in Detection & Measurement.
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).
Celanese reported a second quarter 2025 EPS run rate target of $2 per share, with Q3 guidance midpoint at $1.25.
Free cash flow guidance remains strong at $700 million to $800 million for 2025, driven primarily by operations despite $650 million to $700 million in interest expense.
Inventory reduction efforts in Engineered Materials caused a sequential $25 million negative earnings impact in Q3, offset by a prior Q2 benefit.
The company experienced volume weakness in China automotive orders, European demand in Engineered Materials, and the Western Hemisphere Acetyl Chain.
Volumes in the Western Hemisphere acetyl demand are at the lowest levels in 20 years, with Engineered Materials volumes down 5-6% year-over-year.
Adjusted EBITDA for Mobile Modular decreased 1% to $53.1 million due to higher inventory center expenses and SG&A costs.
Adjusted EBITDA grew by 3% to $86.5 million.
Average fleet utilization was 73.7% for Mobile Modular, 61.1% for Portable Storage, and 64.8% for TRS-RenTelco.
Interest expense decreased by $5.2 million to $7.8 million due to lower rates and debt levels.
Mobile Modular total revenues increased 8% to $156 million with rental revenues up 5%, rental-related services up 11%, and sales revenues up 13%.
Net borrowings at quarter end were $573 million with funded debt to adjusted EBITDA ratio of 1.6:1.
Net cash provided by operating activities was $110 million, down from $139 million prior year.
Portable Storage revenues decreased 3% to $23.3 million with rental revenues down 5% but sequentially up 5% from Q1; adjusted EBITDA decreased 11% to $9.8 million but increased 15% sequentially.
Rental equipment purchases were $50 million, down from $145 million last year.
Total revenues increased 11% to $235.6 million in Q2 2025.
TRS-RenTelco revenues increased 11% to $36.4 million with rental revenues up 7%; adjusted EBITDA increased 7% to $19.3 million.
Dafinchi