Premium water solutions provider Xylem Inc. XYL reported solid first-quarter 2016 results with its adjusted earnings of 35 cents per share beating the Zacks Consensus Estimate by a penny.Xylem Inc. (XYL) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompanyThe bottom line also increased 6.1% year over year.RevenuesXylem generated revenues of $847 million, up 1.2% year over year. The year-over-year improvement was driven by strong U.S. commercial building market and public utility trade as well as business growth across all niche marketplaces. The top line also surpassed the Zacks Consensus Estimate of $832 million.Margins/CostsXylem’s cost of revenues, which represents 61.2% of the total revenue, dipped roughly 1% to $518 million in the first quarter. Gross margin was 38.8% compared with 37.6% a year ago. Selling, general and administrative expenses increased 6.3% year over year to $219 million. Research and development expenses were $25 million versus $23 million in the year-ago quarter.First quarter adjusted operating margin was 10.9%, up 10 basis points (bps) year over year, driven by greater operational efficacy.Segmental DetailsThe Water Infrastructure segment generated revenues of $514 million compared with the year-ago figure of $500 million. The year-over-year increase came on the back of strong U.S. public utility trade.Adjusted operating margin rose 150 bps year over year to 12.1%.Revenues from the Applied Water segment totaled $333 million, down 1.2% year over year due to weak U.S. sales. Adjusted operating margin of the segment decreased 130 bps year over year to 12.6%.Balance Sheet and Cash FlowXylem exited the first quarter with cash and cash equivalents of $1,193 million, up from $680 million as of Dec 31, 2015. Long-term debt was $1,153 million, down 3.6% year over year.Xylem generated cash of $41 million from its operating activities in the quarter compared with $39 million a year ago. Capital expenditure remained flat year over year at $37 million. The company’s free cash flow was $4 million, up from $2 million in the year-ago quarter.At the end of the first quarter, the company paid dividends worth $28 million, up from $26 million in the prior-year quarter.OutlookXylem is accelerating its business performance via strong project execution. The company aims to invest more in new strategic growth projects to augment shareholders’ value in the near future. Full-year 2016 adjusted earnings are expected in the range of $1.98–$2.08 per share. Full-year revenues are expected to be roughly $3.7 billion.Other Stocks to ConsiderXylem presently carries a Zacks Rank #2 (Buy). Some of the other favorably ranked stocks in the industry include Gorman-Rupp Co. GRC, Luxfer Holdings PLC LXFR and Altra Industrial Motion Corp. AIMC. Gorman-Rupp Co. and Luxfer Holdings PLC sport a Zacks Rank #1 (Strong Buy), while Altra Industrial Motion Corp. holds the same Zacks Rank as Xylem.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ALTRA INDUS MOT (AIMC): Free Stock Analysis Report GORMAN RUPP CO (GRC): Free Stock Analysis Report LUXFER HOLDINGS (LXFR): Free Stock Analysis Report XYLEM INC (XYL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research