Xylem Inc

Previous wording

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: the impact of overall industry and general economic conditions, including industrial, governmental, and public and private sector spending, interest rates, inflation and related monetary policy by governments in response to inflation, and the strength of the residential and commercial real estate markets, on economic activity and our operations; geopolitical events, including the ongoing and possible escalation of the conflicts involving Russia and Ukraine, and the Middle East, as well as regulatory, economic and other risks associated with our global sales and operations, including those related to domestic content requirements applicable to projects receiving governmental funding; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, tight labor markets, prevailing price changes, tariffs and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including electronic components (in particular, semiconductors); disruptions in operations at our facilities or that of third parties upon which we rely; uncertainty related to the realization of the benefits and synergies from our acquisition of Evoqua Water Technologies Corp.; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including with respect to meeting performance guarantees and customers’ budgets, timelines and safety requirements; our ability to retain and attract leadership and other diverse and key talent, as well as competition for overall talent and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around restructuring and realignment actions and related costs and savings; our ability to execute strategic investments for growth, including related to acquisitions and divestitures; availability, regulation or interference with radio spectrum used by certain of our products; volatility in served mark…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: the impact of overall industry and general economic conditions, including industrial, governmental, and public and private sector spending, interest rates, inflation and related monetary policy by governments in response to inflation, and the strength of the residential and commercial real estate markets, on economic activity and our operations; geopolitical events, including ongoing, possible escalation or outbreak of international conflicts, as well as regulatory, economic and other risks associated with our global sales and operations, including those related to domestic content requirements applicable to projects receiving governmental funding; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, tight labor markets, prevailing price changes, tariffs, trade policies and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents or other disruptions of information technology systems on which we rely, or involving our connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including electronic components (in particular, semiconductors); disruptions in operations at our facilities or that of third parties upon which we rely; uncertainty related to the realization of the benefits and synergies from our acquisition of Evoqua Water Technologies Corp.; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including with respect to meeting performance guarantees and customers’ budgets, timelines and safety requirements; our ability to retain and attract leadership and other diverse and key talent, as well as competition for overall talent and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around restructuring and realignment actions and related costs and savings; our ability to execute strategic investments for growth, including related to acquisitions and divestitures; availability, regulation or interference with radio spectrum used by certain of our products; volatility in served markets or impacts on o…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Xylem is a leading global water technology company. We design, manufacture and service highly engineered products and solutions ranging across a wide variety of critical applications in utility, industrial, residential and commercial building solutions settings. Our broad portfolio of solutions addresses customer needs of scarcity, resilience, and affordability across the water cycle, from the delivery, measurement and use of drinking water to the collection, test, treatment and analysis of wastewater to the return of water to the environment. Our product and service offerings are organized into four reportable segments that are aligned around the critical market applications they provide: Water Infrastructure, Applied Water, Measurement and Control Solutions and Water Solutions and Services. The Company announced a change to its reportable segments effective January 1, 2024, and as such, has recast prior period segment amounts to be on a comparative basis with the new segment reporting (refer to Note 1, "Background and Basis of Presentation").

Current wording

Xylem is a leading global water technology company. We design, manufacture and service highly engineered products and solutions ranging across a wide variety of critical applications in utility, industrial, residential and commercial building services settings. Our broad portfolio of solutions addresses customer needs across the water cycle, from the delivery, measurement and use of drinking water to the collection, test, treatment and analysis of wastewater, to the return of water to the environment. Our product and service offerings are organized into four reportable segments that are aligned around the critical market applications they provide: Water Infrastructure, Applied Water, Measurement and Control Solutions and Water Solutions and Services.

Previous wording

•Water Infrastructure serves the water infrastructure sector with pump systems that transport water from aquifers, lakes, rivers and seas; with filtration, ultraviolet and ozone systems that provide treatment, making the water fit to use; and pumping solutions that move the wastewater and storm water to treatment facilities where our mixers, biological treatment, monitoring and control systems provide the primary functions in the treatment process. Additionally, our offerings use monitoring and control, smart and connected technologies to allow for remote monitoring of performance and enable products to self-optimize pump operations maximizing energy efficiency and minimizing unplanned downtime and maintenance for our customers. The Water Infrastructure segment also provides a range of highly differentiated and scalable products and technologies with product offerings in the filtration and separation, disinfection, wastewater solutions, anode and electrochlorination technology, for municipal and industrial applications. In the Water Infrastructure segment, we provide the majority of our sales directly to customers along with strong applications expertise, while the remaining amount is through distribution partners.

Current wording

•Water Infrastructure serves the water infrastructure sector with pump systems that transport water from aquifers, lakes, rivers and seas; with filtration, ultraviolet and ozone systems that provide treatment, making the water fit to use; and pumping solutions that move the wastewater and storm water to treatment facilities where our mixers, biological treatment, monitoring and control systems provide the primary functions in the treatment process.

Previous wording

•Applied Water serves the water usage applications sector with water pressure boosting systems for heating, ventilation and air conditioning, and for fire protection systems to the residential and commercial building solutions markets. In addition, our pumps, heat exchangers and controls provide cooling to power plants and manufacturing facilities, circulation for food and beverage processing, as well as boosting systems for agricultural irrigation. In the Applied Water segment, we provide the majority of our sales through long-standing relationships with many of the leading independent distributors in the markets we serve, with the remainder going directly to customers.

Current wording

•Applied Water serves the water usage applications sector with water pressure boosting systems for heating, ventilation and air conditioning, and for fire protection systems to the residential and commercial building solutions markets.

Previous wording

•Measurement and Control Solutions primarily serves the utility infrastructure solutions and services sector by delivering communications, smart metering, measurement and control capabilities and critical infrastructure technologies that allow customers to more effectively use their distribution networks for the delivery, monitoring and control of critical resources such as water, electricity and natural gas. We also provide analytical instrumentation used to measure and analyze water quality, flow and level in clean water, wastewater and outdoor water environments. Additionally, we offer software and services including cloud-based analytics, and remote monitoring and data management. In the Measurement and Control Solutions segment, we generate our sales through a combination of long-standing relationships with leading distributors and dedicated channel partners, as well as direct sales depending on the regional availability of distribution channels and the type of product.

Current wording

•Measurement and Control Solutions primarily serves the utility infrastructure solutions and services sector by delivering communications, smart metering, measurement and control capabilities and critical infrastructure technologies that allow customers to more effectively use their distribution networks for the delivery, monitoring and control of critical resources such as water, electricity and natural gas. We also provide analytical instrumentation used to measure and analyze water quality, flow and level in clean water, wastewater and outdoor water environments.

Previous wording

•Water Solutions and Services provides tailored services and solutions, in collaboration with customers, including on‑demand water, outsourced water, recycle / reuse, specialty dewatering and emergency response service alternatives to improve operational reliability, performance and environmental compliance. Key offerings within this segment also include equipment systems for industrial needs (influent water, boiler feed water, ultrahigh purity, process water, wastewater treatment, and recycle / reuse), full-scale outsourcing of operations and maintenance, and municipal services, including odor and corrosion control services, as well as leak detection, condition assessment and asset management and pressure monitoring solutions.

Current wording

•Water Solutions and Services provides tailored services and solutions, in collaboration with customers, including on‑demand water, outsourced water, recycle/reuse, pipeline assessment services, specialty dewatering and emergency response service alternatives to improve operational reliability, performance and environmental compliance.

Previous wording

Xylem reported revenue for the third quarter of 2024 of $2,104 million, an increase of 1.3% compared to $2,076 million reported in the third quarter of 2023. The revenue increase consisted primarily of organic growth of 1.1% driven by strong execution and demand in our Measurement and Control Solutions segment.

Current wording

Xylem reported revenue for the first quarter of 2025 of $2,069 million, an increase of 1.8% compared to $2,033 million reported in the first quarter of 2024. The revenue increase consisted primarily of organic growth of 3.3% driven by strong volume in our Measurement and Control Solutions segment and organic growth in our Water Infrastructure segment.

Previous wording

•Orders of $2,201 million, up 8.4% from $2,031 million in the prior year period, and up 8.2% on an organic basis.

Current wording

•Orders of $2,158 million, down 3.9% from $2,246 million in the prior year period, and down 2.4% on an organic basis.

Previous wording

•Earnings per share of $0.89, up 41.3% compared to prior year ($1.11, up 12.1% versus prior year, on an adjusted basis).

Current wording

•Earnings per share of $0.69, up 9.5% compared to prior year ($1.03, up 14.4% versus prior year, on an adjusted basis).

Previous wording

•Net income as a percent of revenue of 10.3%, up 300 basis points compared to 7.3% in the prior year. Adjusted EBITDA margin of 21.2%, up 140 basis points when compared to 19.8% in the prior year.

Current wording

•Net income attributable to Xylem as a percent of revenue of 8.2%, up 70 basis points compared to 7.5% in the prior year. Adjusted EBITDA margin of 20.4%, up 120 basis points when compared to 19.2% in the prior year.

Previous wording

•"adjusted net income" and "adjusted earnings per share" defined as net income and earnings per share, respectively, adjusted to exclude restructuring and realignment costs, amortization of acquired intangible assets, gain or loss from the sale of businesses, special charges and tax-related special items, as applicable. A reconciliation of adjusted net income and adjusted earnings per share is provided below.

Current wording

•"adjusted net income" and "adjusted earnings per share" defined as net income attributable to Xylem and corresponding earnings per share, respectively, adjusted to exclude restructuring and realignment costs, amortization of acquired intangible assets, gain or loss from sale of businesses, special charges and tax-related special items, as applicable. A reconciliation of adjusted net income and adjusted earnings per share is provided below.

Previous wording

•"adjusted operating expenses" defined as operating expenses adjusted to exclude amortization of acquired intangible assets, restructuring and realignment costs and special charges.

Current wording

•"adjusted operating expenses" defined as operating expenses adjusted to exclude amortization of acquired intangible assets, restructuring and realignment costs and special charges, as applicable.

Previous wording

•"adjusted operating income" defined as operating income, adjusted to exclude restructuring and realignment costs, amortization of acquired intangible assets, and special charges, as applicable; and "adjusted operating margin" defined as adjusted operating income divided by total revenue.

Current wording

•"adjusted operating income" defined as operating income, adjusted to exclude restructuring and realignment costs, amortization of acquired intangible assets, gain or loss from sale of businesses, gain on remeasurement of previously held equity interest, special charges and tax-related special items, as applicable, and "adjusted operating margin" defined as adjusted operating income divided by total revenue.

Previous wording

•“EBITDA” defined as earnings before interest, taxes, depreciation and amortization expense, "adjusted EBITDA" reflects the adjustment to EBITDA to exclude share-based compensation charges, restructuring and realignment costs, gain or loss from sale of businesses and special charges, and "adjusted EBITDA margin" defined as adjusted EBITDA divided by total revenue.

Current wording

•“EBITDA” defined as earnings before interest, taxes, depreciation and amortization expense, "EBITDA margin" defined as EBITDA divided by total revenue, "adjusted EBITDA" reflects the adjustment to EBITDA to exclude share-based compensation charges, restructuring and realignment costs, gain or loss from sale of businesses, and special charges, and "adjusted EBITDA margin" defined as adjusted EBITDA divided by total revenue.

Previous wording

•"free cash flow" defined as net cash from operating activities, as reported in the Condensed Consolidated Statement of Cash Flows, less capital expenditures. Our definition of "free cash flow" does not consider certain non-discretionary cash payments, such as debt. The following table provides a reconciliation of free cash flow.

Current wording

•"free cash flow" defined as net cash from operating activities, as reported in the Statement of Cash Flows, less capital expenditures. Our definition of "free cash flow" does not consider certain non-discretionary cash payments, such as debt. The following table provides a reconciliation of free cash flow.

Previous wording

Revenue generated during the three and nine months ended September 30, 2024 was $2,104 million and $6,306 million, respectively, reflecting an increase of $28 million, or 1.3%, and $1,060 million, or 20.2%, respectively, compared to the prior year. Revenue growth contributed by acquisitions and divestitures, net, was $0 million for the three months ended and $782 million for the nine months ended September 30, 2024, respectively. Organic revenue increased $22 million, or 1.1%, and $283 million, or 5.4%, for the three and nine months ended September 30, 2024. Foreign currency translation had a favorable impact on revenue of $6 million and an unfavorable impact on revenue of $5 million, for the three and nine months ended September 30, 2024 respectively. The increases in organic revenue reflect strong organic growth in the U.S., and other North America, partially offset by organic declines in western Europe and the emerging markets for the three months ended September 30, 2024, and strong organic growth across all major regions, led by the U.S., for the nine months ended September 30, 2024.

Current wording

Revenue generated during the three months ended March 31, 2025 and 2024 was $2,069 million and $2,033 million, respectively, reflecting an increase of $36 million, or 1.8%, compared to the prior year. Revenue growth contributed by acquisitions and divestitures, net, was $5 million for the three months ended March 31, 2025. Organic revenue increased $67 million, or 3.3% for the three months ended March 31, 2025. Foreign currency translation had an unfavorable impact on revenue of $26 million for the three months ended March 31, 2025. The increase in organic revenue reflects strong organic growth in the U.S. and Canada, driven by increased volume and partially offset by organic declines in western Europe and the emerging markets for the three months ended March 31, 2025.

Previous wording

The following table illustrates the impact from organic growth, recent acquisitions and divestitures, and foreign currency translation in relation to revenue during the three and nine months ended September 30, 2024:

Current wording

The following table illustrates the impact from organic growth, recent acquisitions and divestitures, and foreign currency translation in relation to revenue during the three months ended March 31, 2025:

Previous wording

(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Chinese Yuan, Chilean Peso, Canadian Dollar and the Egyptian pound, offset by the strengthening in the British Pound.

Current wording

(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Euro, Canadian Dollar, Mexican Peso, Australian Dollar and the Hungarian Forint.

Previous wording

Measurement and Control Solutions revenue increased $45 million, or 10.9%, for the third quarter of 2024 as compared to the prior year. Revenue was positively impacted by $1 million of foreign currency translation, with the change at constant currency coming entirely from organic growth of $44 million, or 10.7%. Organic revenue growth during the quarter was driven by $50 million in the smart metering and other applications in the U.S. due to increased sales volume due to supply chain improvements, which was partially offset by $6 million in organic declines from analytics driven by lapping of project deliveries and backlog execution in the U.S. in the prior year.

Current wording

Measurement and Control Solutions revenue increased $28 million, or 6.1%, for the first quarter of 2025 as compared to the prior year. The revenue increase was primarily driven by organic growth of $27 million, or 5.8%, with an additional increase from acquisitions of $5 million, mostly offset $4 million of unfavorable foreign currency translation. Organic revenue growth during the quarter was driven by $25 million in the smart metering and other applications, due primarily to increased energy demand in the U.S, partially offset by organic declines in water due to lower demand in the U.S. and backlog execution and timing of capital projects in western Europe and the emerging markets. The analytics application was up $2 million organically, driven by increased demand in the U.S.

Previous wording

The following tables illustrate the impact from organic decline/growth, recent acquisitions and divestitures, and foreign currency translation in relation to orders during the three and nine months ended September 30, 2024:

Current wording

The following tables illustrate the impact from organic decline/growth, recent acquisitions and divestitures, and foreign currency translation in relation to orders during the three months ended March 31, 2025:

Previous wording

(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Chinese Yuan, Chilean Peso, Canadian Dollar and the Egyptian pound, offset by the strengthening in the British Pound.

Current wording

(a)Foreign currency translation impact for the year due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Euro, Canadian Dollar, Mexican Peso, Australian Dollar and the Hungarian Forint.

Previous wording

Backlog includes orders on hand as well as contractual customer agreements at the end of the period. Delivery schedules vary from customer to customer based on their requirements. Annual or multi-year contracts are subject to rescheduling and cancellation by customers due to the long-term nature of the contracts. As such, beginning total backlog, plus orders, minus revenues, will not equal ending total backlog due to contract adjustments, foreign currency fluctuations, and other factors. Typically, capital projects require longer lead production cycles and deployment schedules and delays occur from time to time. Total backlog was $5,253 million at September 30, 2024, an increase of $84 million or 1.6%, as compared to September 30, 2023 backlog of $5,169 million. The increase in backlog was driven by the order intake and contract wins in the current period outpacing revenue, as well as favorable impacts from foreign currency translation. Backlog grew in the Water Solutions and Services and Water Infrastructure segments, partially offset by a decrease in the Measurement and Control Solutions segment's backlog due to execution on previously elevated backlog levels. Backlog increased $165 million or 3.2%, as compared to December 31, 2023 backlog of $5,088 million. We anticipate that approximately 30% of the backlog at September 30, 2024 will be recognized as revenue in the remainder of 2024. There were no significant order cancellations during the quarter.

Current wording

Backlog includes orders on hand as well as contractual customer agreements at the end of the period. Delivery schedules vary from customer to customer based on their requirements. Annual or multi-year contracts are subject to rescheduling and cancellation by customers due to the long-term nature of the contracts. As such, beginning total backlog, plus orders, minus revenues, will not equal ending total backlog due to contract adjustments, foreign currency fluctuations, and other factors. Typically, capital projects require longer lead production cycles and deployment schedules and delays occur from time to time. Total backlog was $5,095 million at March 31, 2025, a decrease of $177 million or 3.4%, as compared to March 31, 2024 backlog of $5,272 million. The decrease in backlog was driven by increased revenue outpacing order intake and contract wins in the current period, as well as unfavorable impacts from foreign currency translation. Backlog decreased in the Measurement and Control Solutions segment due to strong backlog execution and improved lead times, partially offset by backlog growth in the Water Solutions and Services, Water Infrastructure, and Applied Water segments primarily due to order growth. Backlog increased $25 million or 0.5%, as compared to December 31, 2024 backlog of $5,070 million. We anticipate that approximately 50% of the backlog as of March 31, 2025 will be recognized as revenue in the remainder of 2025. There were no significant order cancellations during the quarter.

Previous wording

Gross margin as a percentage of revenue increased 50 basis points to 37.3% for the three months ended September 30, 2024, as compared to 36.8% for the three months ended September 30, 2023. Gross margin for the quarter included favorable impacts of 50 basis points from decreases in special charges and realignment costs as compared to the prior year. Additionally, gross margin included 290 basis points of favorable operational impacts, consisting of 180 basis points of productivity savings and 110 basis points of price realization. These increases in gross margin were offset by 290 basis points of unfavorable operational impacts driven by 170 basis points of inflation, 30 basis points of unfavorable mix and 30 basis points of increased spending on strategic investments.

Current wording

Gross margin as a percentage of revenue increased 10 basis points to 37.1% for the three months ended March 31, 2025, as compared to 37.0% for the three months ended March 31, 2024. The gross margin increase of 10 basis points was driven by favorable impacts of 350 basis points, driven almost entirely by 240 basis points of productivity savings and 100 basis points of price realization. These increases in gross margin were offset by 340 basis points of unfavorable operational impacts driven by 170 basis points of inflation and 110 basis points of unfavorable mix.

Previous wording

The following table presents operating expenses for the three and nine months ended September 30, 2024 and 2023:

Current wording

The following table presents operating expenses for the three months ended March 31, 2025 and 2024:

Previous wording

During the three and nine months ended September 30, 2024, we incurred restructuring charges of $4 million and $36 million, respectively. For the three and nine months ended September 30, 2024, the charges incurred primarily related to strengthening our competitive positioning and the integration of Evoqua.

Current wording

During the three months ended March 31, 2025 and 2024, we incurred restructuring charges of $17 million and $9 million, respectively. For the three months ended March 31, 2025, the incurred charges primarily related to actions taken to further streamline our organization through simplification efforts in order to strengthen our competitive positioning and ability to better serve our customers.

Previous wording

Actions commenced in 2024 and 2023 consist primarily of severance and asset impairment charges. We currently expect to incur between $40 and $50 million in restructuring costs for the full year related to these actions.

Current wording

Actions commenced in 2025 and 2024 consist primarily of severance charges. We currently expect to incur between $60 and $70 million in restructuring costs for the full year related to these actions.

Previous wording

The following is a roll-forward for the nine months ended September 30, 2024 and 2023 of employee position eliminations associated with restructuring activities:

Current wording

The following is a roll-forward for the three months ended March 31, 2025 and 2024 of employee position eliminations associated with restructuring activities:

Previous wording

Refer to Note 9, "Goodwill and Other Intangible Assets" for more information on intangible asset impairment charges incurred during the three and nine months ended September 30,2024.

Current wording

Refer to Note 9, "Goodwill and Other Intangible Assets" for more information on intangible asset impairment charges incurred during the three months ended March 31, 2025.

Previous wording

Net income for the third quarter was $217 million (net income margin of 10.3%), an increase of $65 million as compared to net income in the prior year of $152 million (net income margin of 7.3%). The increase in net income was driven by increased operating income of $89 million and decreased interest expense of $4 million, partially offset by increased income tax expense of $19 million and decreased non-operating income of $7 million and increased loss from sale of businesses of $2 million. Adjusted EBITDA was $447 million (adjusted EBITDA margin of 21.2%) during the third quarter of 2024, an increase of $36 million, or 8.8%, when compared to adjusted EBITDA of $411 million (adjusted EBITDA margin of 19.8%) during the comparable quarter in the prior year, an increase to adjusted EBITDA margin of 140 basis points. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin.

Current wording

Net income attributable to Xylem for the first quarter was $169 million (net income margin of 8.2%), an increase of $16 million as compared to net income attributable to Xylem in the prior year of $153 million (net income margin of 7.5%). The increase in net income attributable to Xylem was driven by increased operating income of $22 million, decreased interest expense of $6 million, and the net loss attributable to non-controlling interest of $2 million, partially offset by increased income tax expense of $7 million, decreased non-operating income of $2 million and increased loss from sale of businesses of $5 million.

Previous wording

Operating income for our Water Infrastructure segment was $96 million (operating margin of 15.4%) during the third quarter of 2024, an increase of $12 million, or 14.3%, when compared to operating income of $84 million (operating margin of 13.7%) during the prior year, or a total increase in operating margin of 170 basis points. Operating margin expansion included favorable impacts of 140 basis points from decreases in special charges and acquired intangible asset amortization, partially offset by increased restructuring and realignment costs as compared to the prior year. Additionally, operating margin expansion included 460 basis points from favorable operating impacts driven by 330 basis points of productivity savings and 90 basis points of price realization. Margin expansion was partially offset by 430 basis points of unfavorable operational impacts, driven by 230 basis points of inflation, 90 basis points of unfavorable mix, and 50 basis points of inventory management costs. Excluding amortization of acquired intangibles, restructuring and realignment cost and special charges, adjusted operating income was $111 million (adjusted operating margin of 17.8%) for the third quarter of 2024 as compared to adjusted operating income of $107 million (adjusted operating margin of 17.5%) for the third quarter of 2023.

Current wording

Operating income for our Water Infrastructure segment was $80 million (operating margin of 13.8%) during the first quarter of 2025, an increase of $20 million, or 33.3%, when compared to operating income of $60 million (operating margin of 10.5%) during the prior year, or a total increase in operating margin of 330 basis points. Operating margin expansion included favorable impacts of 20 basis points from decreases in acquired intangible asset amortization, largely offset by increased restructuring and realignment costs as compared to the prior year. Additionally, operating margin expansion included 760 basis points from favorable operating impacts driven by 500 basis points of productivity savings and 150 basis points of price realization. Margin expansion was partially offset by 450 basis points of unfavorable operational impacts, driven by 290 basis points of inflation and 100 basis points of unfavorable mix. Excluding amortization of acquired intangibles, restructuring and realignment costs and special charges, adjusted operating income was $107 million (adjusted operating margin of 18.4%) for the first quarter of 2025 as compared to adjusted operating income of $88 million (adjusted operating margin of 15.3%) for the first quarter of 2024.

Previous wording

Operating loss for corporate and other decreased $18 million, or 53%, during the third quarter of 2024 compared to the prior year period. The decrease in operating loss was primarily due to decreased restructuring and realignment costs and special charges, primarily relating to the acquisition and integration of Evoqua, as compared to the prior year. Excluding special charges and restructuring and realignment costs, adjusted operating loss for corporate and other decreased $5 million, or 33.3%, for the three months ended September 30, 2024 due to decreased spending on strategic initiatives and timing of profit-based expenses in the quarter.

Current wording

Operating loss for corporate and other decreased $11 million, or 34%, during the first quarter of 2025 compared to the prior year period. The decrease in operating loss was primarily due to decreased special charges and restructuring and realignment costs, as compared to the prior year. Excluding special charges and restructuring and realignment costs, adjusted operating loss for corporate and other decreased $7 million, or 26.9%, for the three months ended March 31, 2025 due to a decrease in prior year employee related expenses that were non-recurring.

Previous wording

Interest expense was $10 million for the three months ended September 30, 2024, compared to $14 million for the comparable prior year period. The decrease in interest expense was primarily driven by lower debt due to the repayment of the term loan entered into in May 2023 for use in funding the acquisition of Evoqua, which was repaid on April 19, 2024, as well as a reduction of interest on commercial paper.

Current wording

Interest expense was $8 million for the three months ended March 31, 2025, compared to $14 million for the comparable prior year period. The decrease in interest expense was primarily driven by lower debt due to the repayment of the term loan entered into in May 2023 for use in funding the acquisition of Evoqua, which was repaid on April 19, 2024, as well as increased interest income generated on cross currency swaps offsetting interest expense, and a reduction of interest on commercial paper.

Previous wording

The income tax provision for the three months ended September 30, 2024 was $52 million resulting in an effective tax rate of 19.3%, compared to $33 million of expense resulting in an effective tax rate of 17.8% for the same period in 2023. The income tax provision for the nine months ended September 30, 2024 was $148 million resulting in an effective tax rate of 20.7%, compared to a $82 million expense resulting in an effective tax rate of 19.3% for the same period in 2023. The effective tax rate for the three and nine month periods ended September 30, 2024 was higher than the effective tax rate for the same period in 2023, primarily due to earnings mix.

Current wording

The income tax provision for the three months ended March 31, 2025 was $50 million resulting in an effective tax rate of 23.1%, compared to $43 million of expense resulting in an effective tax rate of 21.8% for the same period in 2024. The effective tax rate for the three month period ended March 31, 2025 was higher than the effective tax rate for the same period in 2024, primarily due to the mix of earnings and the impact of discrete tax benefits recognized in the prior period.

Previous wording

(a)The impact is primarily due to strengthening of the Chinese Yuan and various other currencies against the U.S. Dollar These impacts were partially offset by the weakening of the Euro.

Current wording

(a)The impact is primarily due to strengthening of the Euro, Canadian Dollar, Chilean Peso and various other currencies against the U.S. Dollar.

Previous wording

Cash used in investing activities was $193 million for the nine months ended September 30, 2024 as compared to $539 million in the comparable prior year period. The decrease in cash used reflects payments related to the 2023 Evoqua acquisition, and reduced cash paid for equity investments in 2024. Cash received from the termination of acquired interest rate swaps in 2023 that did not recur in 2024, lower proceeds from the sale of a businesses and higher capital expenditures partially offset these items.

Current wording

Cash used in investing activities was $15 million for the three months ended March 31, 2025 as compared to $51 million used in the comparable prior year period. The decrease in cash used primarily reflects cash received from proceeds from the sale of the former Evoqua Magneto business, partially offset by cash paid for an acquisition in the current year.

Previous wording

Based on our current global cash positions, cash flows from operations and access to the capital markets, we believe there is sufficient liquidity to meet our funding requirements and service debt and other obligations in both the U.S. and outside of the U.S. during the year. Currently, we have available liquidity of approximately $2 billion, consisting of $989 million of cash and $1 billion of available credit facilities as disclosed in Note 12, "Credit Facilities and Debt", of our condensed consolidated financial statements.

Current wording

Based on our current global cash positions, cash flows from operations and access to the capital markets, we believe there is sufficient liquidity to meet our funding requirements and service debt and other obligations in both the U.S. and outside of the U.S. during the year. Currently, we have available liquidity of approximately $2.1 billion, consisting of $1.1 billion of cash and $1 billion of available credit facilities as disclosed in Note 12, "Credit Facilities and Debt", of our condensed consolidated financial statements.

Previous wording

As we continue to grow our operations in the emerging markets and elsewhere outside of the U.S., we expect to continue to generate significant revenue from non-U.S. operations and expect that a substantial portion of our cash will be held by our foreign subsidiaries. We expect to manage our worldwide cash requirements considering available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We may transfer cash from certain international subsidiaries to the U.S. and other international subsidiaries when we believe it is cost-effective to do so. We continually review our domestic and foreign cash profile, expected future cash generation and investment opportunities, and reassess whether there is a need to repatriate funds held internationally to support our U.S. operations.

Current wording

As we continue to grow our operations outside of the U.S., we expect to continue to generate significant revenue from non-U.S. operations and expect that a substantial portion of our cash will be held by our foreign subsidiaries. We expect to manage our worldwide cash requirements considering available funds among the many subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We may transfer cash from certain international subsidiaries to the U.S. and other international subsidiaries when we believe it is cost-effective to do so. We continually review our domestic and foreign cash profile, expected future cash generation and investment opportunities, and reassess whether there is a need to repatriate funds held internationally to support our U.S. operations.

Previous wording

We are updating our total revenue growth to be 15%, and organic revenue growth to be approximately 5% in 2024. Our outlook reflects our current visibility and expectations based on the current market environment and other factors and is largely consistent with the outlook provided in our 2023 Annual Report. Our ability to meet our expectations is subject to a number of risks, including, but not limited to, those described in "Item 1A. Risk Factors" in our 2023 Annual Report.

Current wording

We are maintaining our total revenue growth outlook at 1% to 2%, and organic revenue growth at 3% to 4% in 2025. Our outlook is being provided in the context of the current volatility, including due to geopolitical, trade, macroeconomic and regulatory uncertainty and is consistent with the outlook provided in our 2024 Annual Report. Our ability to meet our expectations is subject to a number of risks, including, but not limited to, those described in "Item 1A. Risk Factors" in our 2024 Annual Report.