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 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.

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 or agreements 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; 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 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 acquisitions and divestitures; availability, regulation or interference with radio spectrum used by certain of our products; volatility in served markets or impacts on our business and operations due to weather conditions, including the effects of climate change; risks related to our sustainability comm…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Xylem reported revenue for the second quarter of 2025 of $2,301 million, an increase of 6.1% compared to $2,169 million reported in the second quarter of 2024. The revenue increase consisted primarily of organic growth of 5.5% across all of our segments, led by strong volume in our Measurement and Control Solutions segment.

Current wording

Xylem reported revenue for the third quarter of 2025 of $2,268 million, an increase of 7.8% compared to $2,104 million reported in the third quarter of 2024. The revenue increase consisted primarily of organic growth of 6.9% across all of our segments, led by double digit organic growth in our Measurement and Control Solutions and Water Solutions and Services segments.

Previous wording

•Orders of $2,174 million, up 4.1% from $2,087 million in the prior year period, and up 3.7% on an organic basis.

Current wording

•Orders of $2,181 million, down 0.9% from $2,201 million in the prior year period, and down 2.0% on an organic basis.

Previous wording

•Earnings per share of $0.93, up 16.3% compared to prior year ($1.26, up 15.6% versus prior year, on an adjusted basis).

Current wording

•Earnings per share of $0.93, up 4.5% compared to prior year ($1.37, up 23.4% versus prior year, on an adjusted basis).

Previous wording

•Net income attributable to Xylem as a percent of revenue of 9.8%, up 90 basis points compared to 8.9% in the prior year. Adjusted EBITDA margin of 21.8%, up 100 basis points when compared to 20.8% in the prior year.

Current wording

•Net income attributable to Xylem as a percent of revenue of 10.0%, down 30 basis points compared to 10.3% in the prior year. Adjusted EBITDA margin of 23.2%, up 200 basis points when compared to 21.2% in the prior year.

Previous 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.

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 adjustments 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

Revenue generated during the three and six months ended June 30, 2025 was $2,301 million and $4,370 million, respectively, reflecting an increase of $132 million, or 6.1%, and an increase of $168 million, or 4.0% compared to the prior year. Organic revenue increased $120 million, or 5.5%, and $187 million, or 4.5% for the three and six months ended June 30, 2025, respectively. Foreign currency translation had a favorable impact on revenue of $23 million for the three months ended June 30, 2025, and an unfavorable impact on revenue of $3 million for the six months ended June 30, 2025. Revenue growth was negatively impacted by $11 million, and $16 million due to acquisitions and divestitures, net, for the three and six months ended June 30, 2025, respectively. The increase in organic revenue primarily reflects strength in the U.S. and Canada, driven by price realization and increased volume for the three months ended June 30, 2025 and increased volume and backlog execution for the six months ended June 30, 2025.

Current wording

Revenue generated during the three and nine months ended September 30, 2025 was $2,268 million and $6,638 million, respectively, reflecting an increase of $164 million, or 7.8%, and an increase of $332 million, or 5.3%, compared to the prior year. Organic revenue increased $145 million, or 6.9%, and $332 million, or 5.3%, for the three and nine months ended September 30, 2025, respectively. Foreign currency translation had a favorable impact on revenue of $26 million for the three months ended September 30, 2025, and a favorable impact on revenue of $23 million for the nine months ended September 30, 2025. Revenue growth was negatively impacted by $7 million and $23 million due to acquisitions and divestitures, net, for the three and nine months ended September 30, 2025, respectively. The increase in organic revenue for the three months ended September 30, 2025 is driven by strength in the U.S. and Canada mostly due to price realization and increased volume. For the nine months ended September 30, 2025, organic growth is driven by price realization, increased volume, and backlog execution in the U.S. and Canada

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 six months ended June 30, 2025:

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 and nine months ended September 30, 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 Canadian Dollar, Mexican Peso and the Australian Dollar partially offset by the strengthening of the Euro and the British Pound.

Current wording

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

Previous wording

Water Infrastructure revenue increased $19 million, or 3.1%, for the second quarter of 2025 as compared to the prior year. Revenue growth for the quarter included organic revenue growth of $26 million, or 4.1% and $12 million of favorable impacts from foreign currency translation partially offset by a loss of $19 million of revenue from divestitures. The treatment application contributed $19 million of organic revenue growth, driven by backlog execution and capital projects in the emerging markets and price realization in the U.S. Organic growth for the transport applications was $7 million, led by increased sales volume in the U.S.

Current wording

Water Infrastructure revenue increased $33 million, or 5.3%, for the third quarter of 2025 as compared to the prior year. Revenue growth for the quarter included organic revenue growth of $34 million, or 5.5%, and $14 million of favorable impacts from foreign currency translation partially offset by a loss of $15 million of revenue from net divestiture and acquisition activity. The transport applications contributed $19 million of organic revenue growth, driven by increased sales volume and price realization in the U.S. and timing of projects in western Europe, partially offset by reduced backlog execution due to softness in the emerging markets. Organic growth for the treatment application was $15 million, driven by backlog execution in the U.S., partially offset by timing of project revenue in western Europe and reduced volume due to softness in the emerging markets.

Previous wording

Water Infrastructure revenue increased $26 million, or 2.2%, for the six months ended June 30, 2025 as compared to the prior year. Revenue growth included organic revenue growth of $54 million, or 4.5% and $1 million of favorable impacts from foreign currency translation partially offset by a loss of $29 million of revenue from divestitures. The treatment application contributed $31 million of organic revenue growth, led by strong volume and backlog execution in the emerging markets and the U.S. Organic growth for the transport application was $23 million, led by strong backlog execution and order intake in western Europe and emerging markets, and higher volume in the U.S.

Current wording

Water Infrastructure revenue increased $59 million, or 3.2%, for the nine months ended September 30, 2025 as compared to the prior year. Revenue growth included organic revenue growth of $88 million, or 4.8% and $15 million of favorable impacts from foreign currency translation partially offset by a loss of $44 million of revenue from net divestiture and acquisition activity. The treatment application contributed $46 million of organic revenue growth, led by strong backlog execution in the U.S. and the emerging markets. Organic growth for the transport application was $42 million, led by higher volume in the U.S., and strong backlog execution and order intake in western Europe.

Previous wording

Applied Water revenue increased $27 million, or 5.8%, for the second quarter of 2025 as compared to the prior year. Revenue growth for the quarter included organic revenue growth of $21 million, or 4.7% and $6 million of favorable foreign currency translation. Organic growth was driven by growth in the building solutions applications of $13 million, led by price and increased sales volume in the U.S, partially offset by lapping of project orders in western Europe. The industrial application had organic growth of $9 million primarily due to price realization in the U.S and western Europe.

Current wording

Applied Water revenue increased $9 million, or 2.0%, for the third quarter of 2025 as compared to the prior year. Revenue growth for the quarter included organic revenue growth of $4 million, or 0.9%, and $5 million of favorable foreign currency translation. Organic growth was driven by growth in the building solutions applications of $10 million, led by backlog execution and price realization in the U.S, partially offset by order softness in the emerging markets. These increases were partially offset by organic declines of $6 million in the industrial application, primarily due to order softness in the emerging markets.

Previous wording

Applied Water revenue increased $26 million, or 2.9%, for the six months ended June 30, 2025 as compared to the prior year, consisting entirely of organic growth. Organic growth was driven by growth in the building solutions applications of $23 million, led by price and increased sales volume in the U.S., partially offset by order softness in the emerging markets. The industrial application had organic growth of $3 million due to price and volume in north America and western Europe, partially offset by order softness in the emerging markets.

Current wording

Applied Water revenue increased $35 million, or 2.6%, for the nine months ended September 30, 2025 as compared to the prior year. Revenue growth included organic revenue growth of $30 million, or 2.2%, and $5 million of favorable foreign currency translation. Organic growth was driven by growth in the building solutions applications of $33 million, led by price and backlog execution in the U.S., partially offset by order softness in the emerging markets. These industrial application saw organic declines of $3 million due to order softness in the emerging markets, partially offset by backlog execution in Canada and increased sales volume in western Europe.

Previous wording

Measurement and Control Solutions revenue increased $58 million, or 11.9%, for the second quarter of 2025 as compared to the prior year. The revenue growth was primarily driven by organic growth of $46 million, or 9.4%, with an additional increase from acquisitions of $8 million, and $4 million of favorable foreign currency translation. Organic revenue growth during the quarter was driven by $45 million from the smart metering and other applications, due primarily to backlog execution from energy in north America, partially offset by declines in water, in the U.S.

Current wording

Measurement and Control Solutions revenue increased $64 million, or 14.0%, for the third quarter of 2025 as compared to the prior year. The revenue growth was primarily driven by organic growth of $50 million, or 10.9%, with an additional increase from acquisitions of $8 million, and $6 million of favorable foreign currency translation. Organic revenue growth during the quarter was driven by $45 million from the smart metering and other applications, driven by increased volumes and price realization primarily in energy for north America, and increased backlog execution in western Europe in water. The analytics application was up $5 million due to increased project revenue and price realization in western Europe.

Previous wording

Measurement and Control Solutions revenue increased $86 million, or 9.1%, for the six months ended June 30, 2025 as compared to the prior year. The revenue increase was primarily driven by organic growth of $73 million, or 7.7%, with an additional increase from acquisitions of $13 million. Organic revenue increased by $70 million in the smart metering and other applications, due primarily to backlog execution from energy in north America and water project deliveries in the emerging markets. These increases were partially offset by organic declines in water due to lower demand in the U.S. following strong prior year backlog execution. The analytics application was up $3 million organically, driven by increased demand in the U.S.

Current wording

Measurement and Control Solutions revenue increased $150 million, or 10.7%, for the nine months ended September 30, 2025 as compared to the prior year. The revenue increase was primarily driven by organic growth of $123 million, or 8.8%, with an additional increase from acquisitions of $21 million. Organic revenue increased by $116 million in the smart metering and other applications, due primarily to backlog execution from energy in North America and water project deliveries in the western Europe. These increases were partially offset by organic declines in water in the U.S. due to lower demand, following strong prior year backlog execution. The analytics application was up $7 million organically, driven by price realization in western Europe and the U.S., partially offset by lower sales volume due to market softness in the emerging markets.

Previous wording

Water Solutions and Services revenue increased $28 million, or 4.7%, for the second quarter of 2025 as compared to the prior year. The revenue growth was primarily driven by organic revenue growth of $27 million, or 4.6% and $1 million of favorable impacts from foreign currency translation. Organic revenue growth was led by service growth of $16 million, primarily due to increased volume and price realization in the U.S. Organic revenue from the capital and other applications increased by $11 million due to increased capital project revenue in the U.S. and volume in the emerging markets.

Current wording

Water Solutions and Services revenue increased $58 million, or 10.1%, for the third quarter of 2025 as compared to the prior year. The revenue growth was primarily driven by organic revenue growth of $57 million, or 9.9%, and $1 million of favorable impacts from foreign currency translation. Organic revenue growth was led by growth in the capital and other applications of $38 million, primarily due to increased project execution and price realization in the U.S. and sales volume in the emerging markets. Organic revenue from the service application increased by $19 million due to increased volume and price realization in the U.S.

Previous wording

Water Solutions and Services revenue increased $30 million, or 2.6%, for the six months ended June 30, 2025 as compared to the prior year. The revenue growth was primarily driven by organic revenue growth of $34 million, or 3.0%, partially offset by $4 million of unfavorable impacts from foreign currency translation. Organic revenue growth was led by service growth of $24 million, primarily due to increased volume and price realization in the U.S. and emerging markets. Organic revenue from the capital and other applications increased by $10 million due to increased project revenue in the U.S., partially offset by lapping of capital project revenue in the emerging markets.

Current wording

Water Solutions and Services revenue increased $88 million, or 5.1%, for the nine months ended September 30, 2025 as compared to the prior year. The revenue growth was primarily driven by organic revenue growth of $91 million, or 5.2%, partially offset by $3 million of unfavorable impacts from foreign currency translation. Organic revenue growth was led by service growth of $52 million, primarily due to increased volume and price realization in the U.S. and increased volume in the emerging markets. Organic revenue from the capital and other applications increased by $39 million due to increased project revenue in the U.S. and increased volume in the emerging markets.

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 six months ended June 30, 2025:

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 and nine months ended September 30, 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 Canadian Dollar, Mexican Peso and the Australian Dollar partially offset by the strengthening of the Euro and the British Pound.

Current wording

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

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 $5,018 million at June 30, 2025, a decrease of $138 million or 2.7%, as compared to June 30, 2024 backlog of $5,156 million. The decrease in backlog was driven by increased revenue outpacing order intake and contract wins in the current period, partially offset by favorable 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 Infrastructure, Water Solutions and Services, and Applied Water segments primarily due to orders and contract wins outpacing revenue. Backlog decreased $52 million or 1.0% at June 30, 2025, as compared to December 31, 2024 backlog of $5,070 million. We anticipate that approximately 40% of the backlog as of June 30, 2025 will be recognized as revenue in the remainder of 2025. 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 $4,819 million at September 30, 2025, a decrease of $434 million, or 8.3%, as compared to September 30, 2024 backlog of $5,253 million. The decrease in backlog was driven by increased revenue outpacing order intake and contract wins in the current period, partially offset by favorable impacts from foreign currency translation. The backlog decrease was led by the Measurement and Control Solutions and Water Solutions and Services segments due to strong backlog execution and improved lead times. These backlog declines were partially offset by backlog growth in the Water Infrastructure and Applied Water segments primarily due to orders and contract wins outpacing revenue, and favorable foreign currency impacts. Backlog decreased $251 million, or 5.0%, at September 30, 2025, as compared to December 31, 2024 backlog of $5,070 million. We anticipate that approximately 30% of the backlog as of September 30, 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 60 basis points to 38.0% for the six months ended June 30, 2025, as compared to 37.4% for the six months ended June 30, 2024. The gross margin increase included favorable impacts of 20 basis points from decreases in acquired intangible amortization and special charges as compared to the prior year and favorable operational impacts of 380 basis points, driven almost entirely by 240 basis points of productivity savings and 130 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 80 basis points of unfavorable mix.

Current wording

Gross margin as a percentage of revenue increased 160 basis points to 38.9% for the three months ended September 30, 2025, as compared to 37.3% for the three months ended September 30, 2024. The gross margin increase was partially offset by unfavorable impacts of 20 basis points from increases in acquired intangible amortization and restructuring and realignment costs as compared to the prior year. Gross margin expansion was driven by 430 basis points of favorable operational impacts, led by 230 basis points of productivity savings and 140 basis points of price realization. These increases in gross margin were partially offset by 250 basis points of unfavorable operational impacts driven by 200 basis points of inflation and 40 basis points of unfavorable mix.

Previous wording

Gross margin as a percentage of revenue increased 100 basis points to 38.8% for the three months ended June 30, 2025, as compared to 37.8% for the three months ended June 30, 2024. The gross margin increase included favorable impacts of 30 basis points from decreases in acquired intangible amortization and special charges as compared to the prior year, and 360 basis points of favorable operational impacts, driven almost entirely by 210 basis points of productivity savings and 130 basis points of price realization. These increases in gross margin were offset by 330 basis points of unfavorable operational impacts driven by 180 basis points of inflation and 60 basis points of unfavorable mix.

Current wording

Gross margin as a percentage of revenue increased 100 basis points to 38.3% for the nine months ended September 30, 2025, as compared to 37.3% for the nine months ended September 30, 2024. The gross margin increase included favorable impacts of 20 basis points from decreases in acquired intangible amortization and special charges, partially offset by increased restructuring and realignment charges as compared to the prior year. Gross margin expansion included favorable operational impacts of 360 basis points, driven almost entirely by 220 basis points of productivity savings and 130 basis points of price realization. These increases in gross margin were offset by 280 basis points of unfavorable operational impacts driven by 190 basis points of inflation and 70 basis points of unfavorable mix.

Previous wording

The following table presents operating expenses for the three and six months ended June 30, 2025 and 2024:

Current wording

The following table presents operating expenses for the three and nine months ended September 30, 2025 and 2024:

Previous wording

SG&A expenses increased by $18 million to $503 million, or 21.9% of revenue, in the second quarter of 2025, as compared to $485 million, or 22.4% of revenue, in the comparable 2024 period and increased $4 million to $963 million, or 22.0% of revenue, in the six-month period ended June 30, 2025. The increase in SG&A in the second quarter of 2025 as compared to the prior year primarily consisted of $16 million of inflation, $10 million in increased spending on strategic investments, and $7 million in unfavorable foreign exchange, partially offset by $20 million in productivity savings. The increase in SG&A in the six-month period ended June 30, 2025 as compared to the prior year primarily consisted of $29 million of inflation, $12 million of increased spending on strategic investments, $6 million of acquired intangible amortization, partially offset by of $44 million of productivity savings.

Current wording

SG&A expenses increased by $29 million to $474 million, or 20.9% of revenue, in the third quarter of 2025, as compared to $445 million, or 21.2% of revenue, in the comparable 2024 period, and increased $33 million to $1,437 million, or 21.6% of revenue, in the nine month period ended September 30, 2025. The increase in SG&A in the third quarter of 2025 as compared to the prior year was driven by $15 million of increased spending on strategic investments and $13 million of inflation. The increase in SG&A in the nine month period ended September 30, 2025 as compared to the prior year was primarily driven by $42 million of inflation with increased spending on strategic initiatives being more than offset by productivity savings.

Previous wording

R&D expense was $58 million, or 2.5% of revenue, in the second quarter of 2025, as compared to $58 million, or 2.7% of revenue in the second quarter of 2024, and was $114 million, or 2.6% of revenue, in the six months ended June 30, 2025, as compared to $117 million, or 2.8% of revenue, in the six months ended June 30, 2024. R&D expense was fairly consistent year over year.

Current wording

R&D expense was $52 million, or 2.3% of revenue, in the third quarter of 2025, as compared to $55 million, or 2.6% of revenue, in the third quarter of 2024, and was $166 million, or 2.5% of revenue, in the nine months ended September 30, 2025, as compared to $172 million, or 2.7% of revenue, in the nine months ended September 30, 2024. R&D expense was fairly consistent year over year and in line with planned spending in this area.

Previous wording

During the three and six months ended June 30, 2025, we incurred restructuring charges of $22 million and $39 million, respectively. During the three and six months ended June 30, 2024, we incurred restructuring charges of $23 million and $32 million, respectively For the three and six months ended June 30, 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.

Current wording

During the three and nine months ended September 30, 2025, we incurred restructuring charges of $23 million and $62 million, respectively. 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, 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 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.

Current wording

Actions commenced in 2025 and 2024 consist primarily of severance charges. We currently expect to incur between $90 and $100 million in restructuring costs for the full year.

Previous wording

The following is a roll-forward for the six months ended June 30, 2025 and 2024 of employee position eliminations associated with restructuring activities:

Current wording

The following is a roll-forward for thenine months ended September 30, 2025 and 2024 of employee position eliminations associated with restructuring activities:

Previous wording

Operating income was $305 million (operating margin of 13.3%) during the second quarter of 2025, an increase of $52 million, or 20.6%, when compared to operating income of $253 million (operating margin of 11.7%) during the prior year. Operating margin increased 160 basis points, which included 30 basis points of favorable impacts from decreased acquired intangible amortization and flat restructuring, realignment and special charges relative to increasing revenue. Additionally, operating margin expansion included 560 basis points of favorable operational impacts driven by 330 basis points of productivity savings, 180 basis points of price realization, and 40 basis points of increased volume. These favorable impacts were partially offset by 430 basis points of unfavorable operational impacts, driven by 240 basis points of inflation, 60 basis points of unfavorable mix, and 50 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $402 million (adjusted operating margin of 17.5%) for the second quarter of 2025 as compared to adjusted operating income of $352 million (adjusted operating margin of 16.2%) during the comparable quarter in the prior year.

Current wording

Operating income was $334 million (operating margin of 14.7%) during the third quarter of 2025, an increase of $54 million, or 19.3%, when compared to operating income of $280 million (operating margin of 13.3%) during the prior year. Operating margin increased 140 basis points. Operating margin expansion was partially offset by 90 basis points of unfavorable impacts from increased restructuring and realignment costs, acquired intangible amortization, and special charges relative to the prior year period. Additionally, operating margin expansion included 560 basis points of favorable operational impacts driven by 320 basis points of productivity savings and 190 basis points of price realization. These favorable impacts were partially offset by 330 basis points of unfavorable operational impacts, driven by 230 basis points of inflation, 40 basis points of increased spending on strategic investments, and 40 basis points of unfavorable mix. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $429 million (adjusted operating margin of 18.9%) for the third quarter of 2025 as compared to adjusted operating income of $350 million (adjusted operating margin of 16.6%) during the comparable quarter in the prior year.

Previous wording

Net income attributable to Xylem for the second quarter was $226 million (net income margin of 9.8%), an increase of $32 million as compared to net income attributable to Xylem in the prior year of $194 million (net income margin of 8.9%). The increase in net income attributable to Xylem was driven by increased operating income of $52 million, decreased interest expense of $2 million, and the net loss attributable to non-controlling interest of $2 million, partially offset by increased income tax expense of $22 million, decreased non-operating income of $1 million and decreased gain from sale of businesses of $1 million.

Current wording

Net income attributable to Xylem for the third quarter was $227 million (net income margin of 10.0%), an increase of $10 million as compared to net income attributable to Xylem in the prior year of $217 million (net income margin of 10.3%). The increase in net income attributable to Xylem was driven by increased operating income of $54 million, increased non-operating income of $5 million, decreased interest expense of $4 million, and the net loss attributable to non-controlling interest of $1 million, partially offset by increased loss from sale of businesses of $35 million and increased income tax expense of $19 million.

Previous wording

Adjusted EBITDA was $502 million (adjusted EBITDA margin of 21.8%) during the second quarter of 2025, an increase of $50 million, or 11.1%, when compared to adjusted EBITDA of $452 million (adjusted EBITDA margin of 20.8%) during the comparable quarter in the prior year, an increase to adjusted EBITDA margin of 100 basis points. The increase in adjusted EBITDA margin was primarily driven by the same factors impacting the adjusted operating margin increase.

Current wording

Adjusted EBITDA was $527 million (adjusted EBITDA margin of 23.2%) during the third quarter of 2025, an increase of $80 million, or 18.0%, when compared to adjusted EBITDA of $447 million (adjusted EBITDA margin of 21.2%) during the comparable quarter in the prior year, an increase to adjusted EBITDA margin of 200 basis points. The increase in adjusted EBITDA margin was primarily driven by the same factors impacting the adjusted operating margin increase.

Previous wording

Operating income was $536 million (operating margin of 12.3%) during the six months ended June 30, 2025, an increase of $74 million, or 16.0%, when compared to operating income of $462 million (operating margin of 11.0%) during the prior year. Operating margin increased 130 basis points, which included net favorable impacts of 10 basis points from increasing revenue more than offsetting the impact of increased restructuring and realignment costs, as well as decreases in acquired intangible amortization and in special charges compared to the prior year. Additionally, operating margin expansion included 530 basis points of favorable operational impacts driven by 340 basis points of productivity savings and 160 basis points of price realization. These favorable impacts were partially offset by 410 basis points of unfavorable operational impacts, driven by 240 basis points of inflation, 80 basis points of unfavorable mix, and 40 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $727 million (adjusted operating margin of 16.6%) for the six months ended June 30, 2025 as compared to adjusted operating income of $646 million (adjusted operating margin of 15.4%) during the comparable period in the prior year.

Current wording

Operating income was $870 million (operating margin of 13.1%) during the nine months ended September 30, 2025, an increase of $128 million, or 17.3%, when compared to operating income of $742 million (operating margin of 11.8%) during the prior year. Operating margin increased 130 basis points, which included net unfavorable impacts of 30 basis points from increased restructuring and realignment costs and acquired intangible amortization, slightly offset by decreased special charges compared to the prior year. Additionally, operating margin expansion included 560 basis points of favorable operational impacts driven by 350 basis points of productivity savings and 170 basis points of price realization. These favorable impacts were partially offset by 400 basis points of unfavorable operational impacts, driven by 240 basis points of inflation, 70 basis points of unfavorable mix, and 40 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $1,156 million (adjusted operating margin of 17.4%) for the nine months ended September 30, 2025 as compared to adjusted operating income of $996 million (adjusted operating margin of 15.8%) during the comparable period in the prior year.

Previous wording

Net income attributable to Xylem for the six months ended June 30, 2025 was $395 million (net income margin of 9.0%), an increase of $48 million as compared to net income attributable to Xylem in the prior year of $347 million (net income margin of 8.3%). The increase in net income attributable to Xylem was driven by increased operating income of $74 million and decreased interest expense of $8 million partially offset by decreased non-operating income of $3 million, increased loss from sale of businesses of $6 million, and increased income tax expense of $29 million.

Current wording

Net income attributable to Xylem for the nine months ended September 30, 2025 was $622 million (net income margin of 9.4%), an increase of $58 million as compared to net income attributable to Xylem in the prior year of $564 million (net income margin of 8.9%). The increase in net income attributable to Xylem was driven by increased operating income of $128 million, decreased interest expense of $12 million, increased non-operating income of $2 million, and the net loss attributable to non-controlling interest of $5 million offset by increased loss from sale of businesses of $41 million, and increased income tax expense of $48 million.

Previous wording

Adjusted EBITDA was $925 million (adjusted EBITDA margin of 21.2%) during the six months ended June 30, 2025, an increase of $82 million, or 9.7%, when compared to adjusted EBITDA of $843 million (adjusted EBITDA margin of 20.1%) during the comparable prior year period, an increase in adjusted EBITDA margin of 110 basis points. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin.

Current wording

Adjusted EBITDA was $1,452 million (adjusted EBITDA margin of 21.9%) during the nine months ended September 30, 2025, an increase of $162 million, or 12.6%, when compared to adjusted EBITDA of $1,290 million (adjusted EBITDA margin of 20.5%) during the comparable prior year period, an increase in adjusted EBITDA margin of 140 basis points. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin.

Previous wording

Adjusted EBITDA was $153 million (adjusted EBITDA margin of 24.4%) for the second quarter of 2025, an increase of $10 million, or 7%, when compared to adjusted EBITDA of $143 million (adjusted EBITDA margin of 23.8%) during the prior year. The increase in adjusted EBITDA margin was primarily due to the same factors as those impacting the increase in adjusted operating margin.

Current wording

Adjusted EBITDA was $160 million (adjusted EBITDA margin of 24.4%) for the third quarter of 2025, an increase of $33 million, or 26.0%, when compared to adjusted EBITDA of $127 million (adjusted EBITDA margin of 20.4%) during the prior year. The increase in adjusted EBITDA margin was primarily driven by the same factors impacting the increase in adjusted operating margin.

Previous wording

Operating income for our Water Infrastructure segment was $183 million (operating margin of 14.9%) during the six months ended June 30, 2025, an increase of $45 million, or 32.6%, when compared to operating income of $138 million (operating margin of 11.5%) during the prior year, or a total increase in operating margin of 340 basis points. Operating margin expansion included net favorable impacts of 10 basis points from decreases in acquired intangible amortization and special charges as increases, largely offset by increases in restructuring and realignment costs as compared to the prior year. Additionally, operating margin expansion included 740 basis points of favorable operational impacts, driven by 420 basis points of productivity savings and 190 basis points of price realization. Margin expansion was partially offset by 410 basis points of unfavorable operating impacts driven by 270 basis points of inflation and 50 basis points of unfavorable mix. Excluding amortization of acquired intangibles, restructuring and realignment cost and special charges, adjusted operating income was $234 million (adjusted operating margin of 19.0%) for the six months ended June 30, 2025 as compared to adjusted operating income of $189 million (adjusted operating margin of 15.7%) for the six months ended June 30, 2024.

Current wording

Operating income for our Water Infrastructure segment was $296 million (operating margin of 15.7%) during the nine months ended September 30, 2025, an increase of $62 million, or 26.5%, when compared to operating income of $234 million (operating margin of 12.8%) during the prior year, or a total increase in operating margin of 290 basis points. Operating margin growth included unfavorable impacts of 80 basis points from increases in restructuring and realignment costs partially offset by declines in acquired intangible amortization compared to the prior year. Operating margin expansion included 740 basis points of favorable operational impacts, driven by 420 basis points of productivity and restructuring savings and 210 basis points of price realization. Margin expansion was partially offset by 370 basis points of unfavorable operating impacts driven by 230 basis points of inflation, 40 basis points of decreased volume and 30 basis points of increased spending on strategic investments. Excluding amortization of acquired intangibles, restructuring and realignment costs, and special charges, adjusted operating income was $379 million (adjusted operating margin of 20.1%) for the nine months ended September 30, 2025 as compared to adjusted operating income of $300 million (adjusted operating margin of 16.4%) for the nine months ended September 30, 2024.

Previous wording

Adjusted EBITDA was $262 million (adjusted EBITDA margin of 21.3%) for the six months ended June 30, 2025, an increase of $35 million, or 15.4%, when compared to adjusted EBITDA of $227 million (adjusted EBITDA margin of 18.8%) during the prior year. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin; however, adjusted EBITDA margin did not benefit from the relative impact of decreased depreciation and software amortization and share-based compensation.

Current wording

Adjusted EBITDA was $422 million (adjusted EBITDA margin of 22.4%) for the nine months ended September 30, 2025, an increase of $68 million, or 19.2%, when compared to adjusted EBITDA of $354 million (adjusted EBITDA margin of 19.4%) during the prior year. Adjusted EBITDA margin was impacted by the same offsetting factors impacting the adjusted operating margin; however, adjusted EBITDA margin did not benefit from the relative impact of decreased depreciation and software amortization.

Previous wording

Operating income for our Applied Water segment was $84 million (operating margin of 17.4%) during the second quarter of 2025, an increase of $13 million, or 18.3%, when compared to operating income of $71 million (operating margin of 15.6%) during the prior year, or a total increase in operating margin of 180 basis points. Operating margin expansion was negatively impacted by 170 basis points from increases in restructuring and realignment costs as compared to the prior year. Operating margin expansion included 830 basis points of favorable operational impacts, driven by 600 basis points of productivity savings and 140 basis points of price realization. Operating margin expansion was offset by 480 basis points of unfavorable operational impacts driven primarily by 280 basis points of inflation, 40 basis points of increased spending on strategic investments, and 30 basis points of inventory management costs. Excluding restructuring and realignment costs, adjusted operating income was $94 million (adjusted operating margin of 19.5%) for the second quarter of 2025 as compared to adjusted operating income of $73 million (adjusted operating margin of 16.0%) for the second quarter of 2024.

Current wording

Operating income for our Applied Water segment was $85 million (operating margin of 18.6%) during the third quarter of 2025, an increase of $14 million, or 19.7%, when compared to operating income of $71 million (operating margin of 15.9%) during the prior year, or a total increase in operating margin of 270 basis points. Operating margin expansion was negatively impacted by 50 basis points from increases in restructuring and realignment costs as compared to the prior year. Operating margin expansion included 750 basis points of favorable operational impacts, driven by 550 basis points of productivity savings, 90 basis points of favorable mix, and 70 basis points of price realization. Operating margin expansion was offset by 430 basis points of unfavorable operational impacts driven primarily by 270 basis points of inflation, 60 basis points of inventory management costs, 50 basis points of increased spending on strategic investments, and 50 basis points of decreased volume. Excluding restructuring and realignment costs, adjusted operating income was $89 million (adjusted operating margin of 19.5%) for the third quarter of 2025 as compared to adjusted operating income of $73 million (adjusted operating margin of 16.3%) for the third quarter of 2024.

Previous wording

Adjusted EBITDA was $105 million (adjusted EBITDA margin of 21.7%) for the second quarter of 2025, an increase of $25 million, or 31%, when compared to adjusted EBITDA of $80 million (adjusted EBITDA margin of 17.5%) during the prior year. The increase in adjusted EBITDA margin was primarily due to the same factors impacting the increase in adjusted operating margin; however, adjusted EBITDA margin was not negatively impacted by the relative impact of depreciation and software amortization expense and was favorably impacted by increased other non-operating income versus prior year.

Current wording

Adjusted EBITDA was $99 million (adjusted EBITDA margin of 21.7%) for the third quarter of 2025, an increase of $16 million, or 19%, when compared to adjusted EBITDA of $83 million (adjusted EBITDA margin of 18.6%) during the prior year. The increase in adjusted EBITDA margin was primarily due to the same factors impacting the increase in adjusted operating margin.

Previous wording

Operating income for our Applied Water segment was $156 million (operating margin of 17.0%) during the six months ended June 30, 2025, an increase of $24 million, or 18.2%, when compared to operating income of $132 million (operating margin of 14.8%) during the prior year, or a total increase in operating margin of 220 basis points. Operating margin expansion was negatively impacted by 120 basis points from an increase in restructuring and realignment costs as compared to the prior year. Operating margin expansion included 830 basis points of favorable operational impacts driven by 590 basis points of productivity savings and 130 basis points of price realization. Margin expansion was partially offset by 490 basis points of unfavorable operational impacts driven by 310 basis points of inflation and 50 basis points of increased spending on strategic investments. Excluding restructuring and realignment costs, adjusted operating income was $171 million (adjusted operating margin of 18.6%) for the six months ended June 30, 2025 as compared to adjusted operating income of $136 million (adjusted operating margin of 15.2%) for the six months ended June 30, 2024.

Current wording

Operating income for our Applied Water segment was $241 million (operating margin of 17.5%) during the nine months ended September 30, 2025, an increase of $38 million, or 18.7%, when compared to operating income of $203 million (operating margin of 15.2%) during the prior year, or a total increase in operating margin of 230 basis points. Operating margin expansion was negatively impacted by 100 basis points from an increase in restructuring and realignment costs as compared to the prior year. Operating margin expansion included 750 basis points of favorable operational impacts driven by 570 basis points of productivity savings, 110 basis points of price realization, and 50 basis points of favorable mix. Margin expansion was partially offset by 420 basis points of unfavorable operational impacts driven by 270 basis points of inflation and 50 basis points of increased spending on strategic investments. Excluding restructuring and realignment costs, adjusted operating income was $260 million (adjusted operating margin of 18.9%) for the nine months ended September 30, 2025 as compared to adjusted operating income of $209 million (adjusted operating margin of 15.6%) for the nine months ended September 30, 2024.