Xylem Inc.
For the period ended Dec 31, 2025. Filed Feb 25, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 25, 2026
XYL$97.83-2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-03.
0001524472-25-000013
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-25.
0001524472-26-000012
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 193 previous paragraphs and 153 current paragraphs.
72 unchanged; 52 reworded; 28 added; 55 removed; 14 previous and 1 current paragraphs rearranged.
Tables are not compared: 23 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
(b)The tax-related special items primarily relate to one-time deferred tax benefits from internal reorganizations.
Current report
(a)Foreign currency translation impact for the year primarily due to the strengthening in value of various currencies against the U.S. Dollar, the largest being the Euro, British Pound and the Swedish Krona, offset by the weakening in the Canadian Dollar.
Current report
Water Infrastructure revenue increased $81 million, or 3.2%, to $2,636 million in 2025 compared to 2024. Revenue growth consisted of organic growth of $88 million, or 3.4%, $41 million of favorable foreign currency translation impacts and $48 million of negative impacts from net divestiture and acquisition activity. Organic revenue growth was led by the treatment application, with growth of $52 million being driven by strength in the U.S. and emerging markets due to strong price realization and backlog execution. This was partially offset by treatment declines in western Europe due to lower demand and reduced capital project work. Organic revenue for the transport applications grew by $36 million, led by strong price realization in the U.S., which was partially offset by reduced volume and reduced backlog execution due to softness in the emerging markets.
Current report
Applied Water revenue increased $56 million, or 3.1%, to $1,849 million in 2025 compared to 2024. Revenue growth included organic growth of $42 million and $14 million of favorable foreign currency translation. Organic growth included $35 million from building solutions, primarily in the commercial end markets, driven by strong price realization and higher demand in the U.S., partially offset by order softness in the emerging markets. The industrial applications grew by $7 million organically, driven by strong price realization and backlog execution in the U.S. and Canada, partially offset by order softness in the emerging markets.
Current report
Measurement and Control Solutions revenue increased $215 million, or 11.5%, to $2,086 million in 2025 compared to 2024. Revenue growth included organic revenue growth of $172 million, $30 million of revenue growth from acquisitions and favorable foreign currency translation of $13 million. Smart metering and other applications had $171 million of organic growth, led by energy growth in North America due to strong volume and price realization as well as water growth from project revenue in western Europe. This growth was partially offset by declines in water in North America due to lower demand following strong prior year backlog execution. Analytics grew $1 million organically, driven by increased volume and price realization in western Europe, partially offset by lower sales volume due to market softness in the emerging markets.
Current report
Water Solutions and Services revenue increased $121 million, or 5.2% to $2,464 million in 2025 compared to 2024. Revenue growth was driven by organic revenue growth of $117 million, favorable foreign currency translation of $3 million and revenue contributed by acquisitions of $1 million. Organic revenue growth was led by service growth of $62 million, due to favorable rental price realization in North America. Organic revenue growth from the capital and other applications of $55 million was driven by increased project revenue in North America.
Current report
(a)Foreign currency translation impact for the year primarily due to the strengthening in value of various currencies against the U.S. Dollar, the largest being the Euro, British Pound and the Swedish Krona, offset by the weakening in the Canadian Dollar.
Current report
SG&A expenses increased by $12 million, or 0.6% in 2025, representing a decrease to 21.3% of revenue in 2025, as compared to 22.3% of revenue in 2024. Cost increases were driven by inflation, spending on strategic investments and currency impacts, largely offset by productivity savings.
Current report
Restructuring
Current report
Asset Impairment
Current report
Adjusted EBITDA was $641 million (adjusted EBITDA margin of 24.3%) during 2025, an increase of $112 million, or 21.2%, when compared to adjusted EBITDA of $529 million (adjusted EBITDA margin of 20.7%) 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 did not benefit from decreased depreciation and software amortization expense.
Current report
Operating income was $312 million for our Applied Water segment (operating margin of 16.9%) during 2025, an increase of $41 million, or 15.1%, when compared to operating income of $271 million (operating margin of 15.1%) during the prior year, or a total increase of 180 basis points of operating margin. The increase in operating margin included unfavorable impacts of 60 basis points from increased restructuring and realignment costs as compared to the prior year. Operating margin also included favorable operating impacts of 690 basis points, driven by 540 basis points of productivity savings and 100 basis points of price realization. Operating margin expansion was partially offset by 450 basis points of unfavorable operating impacts, including of 290 basis points of inflation and 70 basis points of increased spending on strategic investments. Excluding restructuring and realignment costs, adjusted operating income was $340 million (adjusted operating margin of 18.4%) during 2025 as compared to adjusted operating income of $286 million (adjusted operating margin of 16.0%) during the prior year.
Current report
Operating income was $244 million for our Measurement and Control Solutions segment (operating margin of 11.7%) during 2025, a decrease of $3 million, or 1.2%, when compared to operating income of $247 million (operating margin of 13.2%) during the prior year, or a total decrease of 150 basis points of operating margin. The decrease in operating margin included unfavorable impacts of 90 basis points from increased acquired intangible asset amortization, restructuring and realignment costs, and special charges as compared to the prior year. Additionally, the operating margin decrease included 660 basis points from unfavorable operating impacts driven by 270 basis points unfavorable mix and 260 basis points of inflation. The decrease in operating margin was partially offset by 600 basis points of favorable impacts consisting of 330 basis points of productivity savings, 150 basis points of price realization and 120 basis points of increased volume. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $353 million (adjusted operating margin of 16.9%) during 2025 as compared to adjusted operating income of $327 million (adjusted operating margin of 17.5%) during the prior year.
Current report
Adjusted EBITDA was $450 million (adjusted EBITDA margin of 21.6%) during 2025, an increase of $55 million, or 13.9%, when compared to adjusted EBITDA of $395 million (adjusted EBITDA margin of 21.1%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the decrease in adjusted operating margin; however, adjusted EBITDA margin benefitted from a decrease non-operating expenses and was not negatively impacted by the relative impact of increases in depreciation and software amortization expense.
Current report
Operating income was $302 million for our Water Solutions and Services segment (operating margin of 12.3%) during 2025 an increase of $83 million, or 37.9%, when compared to operating income of $219 million (operating margin of 9.3%) during the prior year, or a total increase of 300 basis points of operating margin. The increase in operating margin included favorable impacts of 160 basis points from a net decrease in restructuring and realignment costs, special charges and acquired intangible asset amortization, as compared to the prior year. Additionally, the operating margin increase included 470 basis points from favorable operating impacts driven by 210 basis points of price realization, 100 basis points of productivity savings, 90 basis points of favorable volume, and 50 basis points of decreased spending on investments. Operating margin expansion was partially offset by 330 basis points of unfavorable operating impacts driven by 190 basis points of inflation and 70 basis points of unfavorable mix. Excluding restructuring and realignment costs, special charges, and acquired intangible asset amortization, adjusted operating income was $422 million (adjusted operating margin of 17.1%) during 2025 as compared to adjusted operating income of $368 million (adjusted operating margin of 15.7%) during the prior year.
Current report
Adjusted EBITDA was $595 million (adjusted EBITDA margin of 24.1%) during 2025, an increase of $47 million, or 8.6%, when compared to adjusted EBITDA of $548 million (adjusted EBITDA margin of 23.4%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA did not benefit from the impact of flat depreciation and software amortization expense relative to increased revenue.
Current report
During 2025, net cash provided by operating activities was $1,241 million, compared to $1,263 million in 2024. The $22 million year-over-year decrease was primarily driven by an increase spending on long-term outsourced water projects, the liquidation of customer advances and deferred revenue, increased payments for strategic investments, and higher restructuring payments. These items were partially offset by higher cash earnings and decreased investment in net working capital, driven by lower growth in accounts receivables and inventory management initiatives.
Current report
See Note 15, "Credit Facilities and Debt," and Note 11, "Leases" of our consolidated financial statements for additional information on our contractual commitments.
Current report
If shipping and handling activities are performed after a customer obtains control of a good, we account for the shipping and handling activities as activities to fulfill a promise to transfer a good. Shipping and handling related costs are accrued as revenue is recognized.
Current report
For all contracts with customers, we determine the transaction price in the arrangement and allocate the transaction price to each performance obligation identified in the contract. Judgment is required to determine the appropriate unit of account, and we separate the performance obligations if they are capable of being distinct and are distinct within the context of the contract. We base our allocation of the transaction price to the performance obligations on the relative stand-alone selling prices for the goods or services contained in a particular performance obligation. The stand-alone selling prices are determined first by reference to observable prices. In the event observable prices are not available, we estimate the stand-alone selling price by maximizing observable inputs and applying an adjusted market assessment approach, expected cost plus margin approach, or a residual approach in limited situations. Revenue in these instances is recognized on individual performance obligations within the same contract as they are satisfied.
Current report
We exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer, for example sales, use, value added and some excise taxes.
Current report
For all contracts with customers, payment received for our products and services may not necessarily follow the same pattern of revenue recognition to which it relates and are dictated by the terms and conditions of our contracts with customers. Payments received for product sales typically occur following delivery and the satisfaction of the performance obligations based upon the terms outlined in the contracts. Payments received for services typically occur following the services being rendered. For long-term construction-type projects, payments are typically made throughout the contract as progress is made.
Current report
In limited situations, contracts with customers include financing components where payment terms exceed one year; however, we believe that the financing effects are not significant to Xylem. In addition, we apply a practical expedient and do not adjust the promised amount of consideration in a contract for the effects of significant financing components when we expect payment terms to be one year or less from the time the goods or services are transferred until ultimate payment.
Current report
We offer standard warranties for our products to enable compliance with agreed-upon specifications in our contracts. Standard warranties do not give rise to performance obligations and represent assurance-type warranties. In certain instances, product warranty terms are adjusted to account for the specific nature of the contract. In these instances, we assess the warranties to determine whether they represent service-type warranties, and should be accounted for as a separate performance obligation in the contract.
Current report
Costs to obtain a contract include incremental costs that the Company has incurred that it expects to recover. Incremental costs only include costs that the Company would not have incurred had the contract not been obtained. Costs that would have been incurred regardless of whether or not the contract was obtained are expensed as incurred, unless they are explicitly chargeable to the customer whether or not the contract is obtained.
Current report
Costs to obtain contracts are capitalized when incurred, and are then amortized in a manner that is consistent with the pattern of transfer of the related goods or services provided in the contract. The Company elects to apply the practical expedient to expense costs to obtain contracts when the associated amortization period of those costs would be one year or less.
Current report
The determination of the fair value of acquired assets and assumed liabilities requires the use of significant estimates and assumptions. These include judgments about the selection of valuation methodologies, the determination of appropriate discount rates and market‑participant assumptions, estimates of future cash flows attributable to the acquired assets, and expected cost synergies or other benefits arising from the acquisition. For certain assets such as technology‑based intangibles, customer‑related intangibles, and trade names, valuation techniques may require assumptions about replacement cost, expected economic obsolescence, projected revenue growth, customer attrition, and the weighted‑average cost of capital.
Current report
We develop these fair value estimates using historical experience, information obtained from the management of the acquired business, and, when appropriate, the assistance of independent third‑party valuation specialists. These estimates are inherently uncertain, rely on judgment, and may be affected by unanticipated events or changes in economic conditions. As a result, actual results may differ materially from the estimates used in acquisition accounting.
Removed paragraphs (55)
Previous report
Evoqua Acquisition
Previous report
On May 24, 2023, Xylem completed the acquisition of Evoqua. Commencing from the acquisition date, Xylem’s financial statements include the assets, liabilities, operating results and cash flows of Evoqua. Refer to Note 3, "Acquisitions and Divestitures," for additional information.
Previous report
(c)The tax-related special items in 2023 primarily relate to $70 million of tax benefits from tax exam impacts and $27 million of tax benefits relating to tax law changes.
Previous report
(a)Foreign currency translation impact for the year primarily due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Canadian Dollar, Chinese Yuan, Chilean Peso, Brazilian Real and the Hungarian Forint, offset by the strengthening in the British Pound.
Previous report
Water Infrastructure revenue increased $340 million, or 15.3%, to $2,555 million in 2024 compared to 2023. Revenue growth was partially made up of the revenue contributed by acquisitions of $221 million, with the remainder of the increase coming from organic revenue growth of $123 million, or 5.5%. Revenue was negatively impacted by $4 million of foreign currency translation. The transport application had $79 million of organic revenue growth, driven by strength in all of our major geographic regions, led by increased sales volume and price realization in the U.S. and Canada, and backlog execution and infrastructure projects in western Europe. Organic revenue for the transport application also benefited from increased infrastructure projects in the emerging markets. Organic revenue for the treatment applications grew by $44 million, led by infrastructure projects in the U.S. and emerging markets.
Previous report
Applied Water revenue decreased $60 million, or 3.3%, to $1,793 million in 2024 compared to 2023. Revenue was negatively impacted by $2 million of foreign currency translation, with the change at constant currency coming entirely from organic declines of $58 million. Industrial organic revenue decreased by $32 million due to timing of projects and softness across all major geographic regions. Organic revenue from building solutions declined $26 million driven by softness in the U.S.
Previous report
Measurement and Control Solutions revenue increased $259 million, or 16.1%, to $1,871 million in 2024 compared to 2023. Foreign currency translation was flat during the year, with the change at constant currency coming from organic growth of $255 million, and $4 million of acquisition activity. Smart metering and other applications had $261 million of organic growth, driven by increased sales volume due to backlog execution in the U.S. Organic growth was partially offset by $6 million of organic decline in analytics, driven by lapping of project deliveries and backlog execution in the U.S. and emerging markets in the prior year.
Previous report
Water Solutions and Services revenue increased $659 million, or 39.2% to $2,343 million in 2024 compared to 2023. Revenue growth was partially made up of the revenue contributed by acquisitions of $561 million, with the remainder of the increase coming from organic revenue growth of $104 million, or 6.2%. Revenue was negatively impacted by $6 million of foreign currency translation. Organic revenue growth was primarily from strength in the dewatering applications in the emerging markets and the U.S. due to increased sales volume, strong rental demand and increased capital project revenue in Canada.
Previous report
(a)Foreign currency translation impact for the year primarily due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Canadian Dollar, Chinese Yuan, Chilean Peso, Brazilian Real and the Hungarian Forint, offset by the strengthening in the British Pound.
Previous report
SG&A expenses increased by $154 million (increase of 8.8%) to 22.3% of revenue in 2024, as compared to 23.9% of revenue in 2023. Cost increases were driven by $146 million of additional operational SG&A from the acquisition of Evoqua, $49 million of inflation, $36 million of increased spending on strategic investments, $24 million of increased acquired intangible asset amortization and $11 million of increased volume, partially offset by $61 million of savings from productivity initiatives and $56 million of decreased special charges, primarily costs associated with the Evoqua acquisition in the prior year.
Previous report
For the year ended December 31, 2023, we incurred these charges primarily as a result of our acquisition of Evoqua. Approximately $27 million of the charges related to share-based compensation expense due to acceleration clauses in Evoqua's equity compensation agreements. Approximately $15 million of the charges represented the reduction of headcount related to the integration of Evoqua. Additionally, during 2023 we incurred $30 million of charges related to our efforts to reposition our businesses to optimize our cost structure, improve our operational efficiency and effectiveness, strengthen our competitive positioning and better serve our customers. The charges were incurred across all of our segments.
Previous report
Adjusted EBITDA was $529 million (adjusted EBITDA margin of 20.7%) during 2024, an increase of $103 million, or 24.2%, when compared to adjusted EBITDA of $426 million (adjusted EBITDA margin of 19.2%) 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 was not negatively impacted by the relative impact of increased depreciation and software amortization expense.
Previous report
Operating income was $271 million for our Applied Water segment (operating margin of 15.1%) during 2024, a decrease of $39 million, or 12.6%, when compared to operating income of $310 million (operating margin of 16.7%) during the prior year, or a total decrease of 160 basis points of operating margin. The decrease in operating margin included unfavorable impacts of 10 basis points from a slight increase in restructuring and realignment costs as compared to the prior year. Operating margin also included negative operating impacts of 470 basis points, driven by 220 basis points of inflation, 110 basis points of unfavorable volume, and 80 basis points of unfavorable mix. Declines were partially offset by 320 basis points of favorable operating impacts, consisting of 270 basis points from productivity savings and 50 basis points of price realization. Excluding restructuring and realignment costs, adjusted operating income was $286 million (adjusted operating margin of 16.0%) during 2024 as compared to adjusted operating income of $324 million (adjusted operating margin of 17.5%) during the prior year.
Previous report
Operating income was $247 million for our Measurement and Control Solutions segment (operating margin of 13.2%) during 2024, an increase of $114 million, or 85.7%, when compared to operating income of $133 million (operating margin of 8.3%) during the prior year, or a total increase of 490 basis points of operating margin. Operating margin increases included favorable impacts of 60 basis points from the net impact of restructuring and realignment costs, acquired intangible asset amortization, and special charges being flat as compared to the prior year relative to an increase in revenue. Additionally, the operating margin increase included 870 basis points from favorable operating impacts driven by 340 basis points from productivity savings, 260 basis points of price realization, and 240 basis points from favorable volume. Favorable impacts were partially offset by 440 basis points of unfavorable impacts driven by 270 basis points of inflation, 80 basis points of increased spending on strategic investments, and 60 basis points of increased inventory management costs. Excluding restructuring and realignment costs, acquired intangible asset amortization, and special charges, adjusted operating income was $327 million (adjusted operating margin of 17.5%) during 2024 as compared to adjusted operating income of $213 million (adjusted operating margin of 13.2%) during the prior year.
Previous report
Adjusted EBITDA was $395 million (adjusted EBITDA margin of 21.1%) during 2024, an increase of $114 million, or 40.6%, when compared to adjusted EBITDA of $281 million (adjusted EBITDA margin of 17.4%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA margin was negatively impacted by increased non-operating expense and did not benefit from the relative impact of decreased share-based compensation expense.
Previous report
Operating income was $219 million for our Water Solutions and Services segment (operating margin of 9.3%) during 2024 an increase of $87 million, or 65.9%, when compared to operating income of $132 million (operating margin of 7.8%) during the prior year, or a total increase of 150 basis points of operating margin. Operating margin increases included favorable impacts of 40 basis points from increases in revenue outpacing a net increase in acquired intangible asset amortization, restructuring and realignment costs, and special charges as compared to the prior year. Additionally, the operating margin increase included 490 basis points from favorable operating impacts consisting of 160 basis points from productivity savings, 150 basis points from favorable volume, 130 basis points of price realization, and 50 basis points of positive operating impact from the impact of the Evoqua acquisition. Favorable impacts were partially offset by 380 basis points of unfavorable impacts driven by 150 basis points of inflation, and 150 basis points of increased spending on strategic investments. Excluding acquired intangible asset amortization, restructuring and realignment costs, and special charges, adjusted operating income was $368 million (adjusted operating margin of 15.7%) during 2024 as compared to adjusted operating income of $246 million (adjusted operating margin of 14.6%) during the prior year.
Previous report
Adjusted EBITDA was $548 million (adjusted EBITDA margin of 23.4%) during 2024, an increase of $179 million, or 49%, when compared to adjusted EBITDA of $369 million (adjusted EBITDA margin of 21.9%) during the prior year. The increase in adjusted EBITDA margin was due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA was not unfavorably impacted by the increase in depreciation and software amortization expense.
Previous report
2023 versus 2022
Previous report
Revenue
Previous report
Revenue generated for 2023 was $7,364 million, an increase of $1,842 million, or 33.4%, compared to $5,522 million in 2022. On a constant currency basis, revenue grew 33.8% during 2023. The increase at constant currency consists of revenue from acquisitions of $1,177 million and an increase in organic revenue of $690 million, reflecting strong organic growth in all segments as well as across all major geographic regions.
Previous report
The following table illustrates the impact from organic growth, recent acquisitions and divestitures, and foreign currency translation in relation to revenue during 2023 as recast by segment structure change effective on January 1, 2024:
Previous report
(a)Foreign currency translation impact for the year primarily due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Chinese Yuan, the Canadian Dollar and the Norwegian Krone
Previous report
Water Infrastructure revenue increased $529 million, or 31.4%, to $2,215 million in 2023 (31.9% increase on a constant currency basis) compared to 2022. Revenue growth was partially made up of the revenue contributed by acquisitions from Applied Product Technologies of $362 million, with the remainder of the increase coming from organic revenue growth of $175 million, or 10.4%. Revenue was negatively impacted by $8 million of foreign currency translation. Organic revenue growth was driven by our transport applications. Transport experienced $160 million of revenue growth. All three of our major geographic regions contributed to the organic revenue growth in transport. Western Europe also experienced increases driven by strong price realization and delivery on capital projects. Organic revenue growth for the treatment application was $15 million for the year due to increased sales volume in the U.S. driven by strong backlog execution.
Previous report
Applied Water revenue increased $86 million, or 4.9%, in 2023 (5.4% increase on a constant currency basis) compared to 2022. Revenue was negatively impacted by $10 million of foreign currency translation, with the change at constant currency coming entirely from organic growth during the year of $96 million. Organic growth was led by strength in building solutions, with commercial revenue growth of $97 million, driven by the U.S. with increased sales volume from backlog execution in the first half of the year and strong price realization, partially offset by the residential declines in revenue of $33 million primarily in the emerging markets, driven by softness in the Middle East, and volume declines in the U.S. The industrial water application had organic growth of $32 million, led by the emerging markets due to increased sales volume, and western Europe where we benefited from strong price realization.
Previous report
Measurement and Control Solutions revenue increased $337 million, or 26.4%, in 2023, consisting entirely of organic growth. Organic revenue growth during the year was led by growth in the smart metering and other applications of $312 million led by the U.S., where we saw increased sales volume enabled by recovery on prior year component constraints, and western Europe due to strong backlog execution. We also had organic revenue growth in the analytics application of $25 million, driven by strong backlog execution in the U.S.
Previous report
Water Solutions and Services revenue increased $890 million, or 112.1%, in 2023 compared to 2022. The increase in revenue consisted primarily of $815 million contributed from the Evoqua acquisition and $82 million of organic growth. Revenue was negatively impacted by $7 million of foreign currency translation. Organic revenue growth was led by the U.S. due to higher volume in the dewatering business.
Previous report
Orders/Backlog
Previous report
(a)Foreign currency translation impact for the year primarily due to the weakening in value of various currencies against the U.S. Dollar, the largest being the Chinese Yuan, the Canadian Dollar and the Norwegian Krone.
Previous report
Backlog
Previous report
Gross Margin
Previous report
Gross margin as a percentage of consolidated revenue decreased 80 basis points to 36.9% in 2023 as compared to 37.7% in 2022. The gross margin decline for the year included 60 basis points from increases in acquired intangible asset amortization and special charges as compared to 2022. Additionally, the gross margin decline for the year included 530 basis points of negative operating impacts, driven by 230 basis points of inflation, 140 basis points of unfavorable impacts from the Evoqua acquisition, 80 basis points of unfavorable mix, and 30 basis points of increased spending on strategic investments. These impacts were partially offset by favorable impacts of 510 basis points, driven by 270 basis points of price realization and 210 basis points of productivity savings.
Previous report
Operating Expenses
Previous report
SG&A expenses increased by $530 million (increase of 43.2%) to 23.9% of revenue in 2023, as compared to 22.2% of revenue in 2022. Cost increases were driven by $188 million of additional operational SG&A from the acquisition of Evoqua, increased special charges (mostly Evoqua acquisition related costs) and realignment costs of $115 million, increased acquired intangible asset amortization of $58 million, $54 million of inflation, and $51 million in increased spending on strategic investments.
Previous report
R&D expense was $232 million, or 3.2% of revenue, in 2023 which was fairly consistent with the 2022 expense of $206 million, or 3.7% of revenue.
Previous report
Restructuring and Asset Impairment Charges
Previous report
During 2023, we incurred these charges primarily as a result of our acquisition of Evoqua. Approximately $27 million of the charges related to share-based compensation expense due to acceleration clauses in Evoqua's equity compensation agreements. Approximately $15 million of the charges represented the reduction of headcount related to the integration of Evoqua. Additionally, during 2023 we incurred $30 million of charges related to our efforts to reposition our businesses to optimize our cost structure, improve our operational efficiency and effectiveness, strengthen our competitive positioning and better serve our customers. The charges were incurred across all of our segments.
Previous report
During 2022, we incurred restructuring charges primarily as a continuation of our efforts to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. The charges included the reduction of headcount across all of our segments.
Previous report
Operating income was $652 million (operating margin of 8.9%) during 2023, an increase of $30 million, or 4.8%, when compared to operating income of $622 million (operating margin of 11.3%) during 2022. Operating margin included unfavorable impacts of 350 basis points from increases in special charges, acquired intangible asset amortization, and restructuring and realignment costs as compared to 2022. Additionally, operating margin included 780 basis points of expansion from favorable operating impacts, consisting of a 370 basis point increase from price realization, 280 basis points from productivity savings and 130 basis points from favorable volume. Margin expansion was offset by 670 basis points of unfavorable impacts driven by 310 basis points of inflation, 110 basis points of increased spending on strategic investments, 80 basis points of unfavorable mix, and 50 basis points of increased employee related costs. Excluding special charges, acquired intangible asset amortization, and restructuring and realignment costs, adjusted operating income was $1,072 million (adjusted operating margin of 14.6%) for 2023 as compared to adjusted operating income of $744 million (adjusted operating margin of 13.5%) during 2022.
Previous report
Net income was $609 million (net income margin of 8.3%) during 2023, an increase of $254 million as compared to net income in 2022 of $355 million (net income margin of 6.4%). The increase in net income was almost entirely due to increased operating income of $30 million, $140 million of charges related to the U.K. pension plan buy-out in the prior year that did not recur, decreased income tax expense of $59 million, and an increase in other non-operating income of $24 million. Adjusted EBITDA was $1,392 million (adjusted EBITDA margin of 18.9%) during 2023, an increase of $452 million, or 48.1%, when compared to adjusted EBITDA of $940 million (adjusted EBITDA margin of 17.0%) during 2022. The increase in adjusted EBITDA margin was primarily due to the same factors impacting adjusted operating margin noted above; however, adjusted EBITDA was not negatively impacted by the relative impact of depreciation and software amortization expense.
Previous report
Operating income was $275 million for our Water Infrastructure segment (operating margin of 12.4%) during 2023, a decrease of $4 million, or 1.4%, when compared to operating income of $279 million (operating margin of 16.5%) during 2022, or a total decrease of 410 basis points of operating margin. Operating margin declines included unfavorable impacts of 340 basis points from an increase in acquired intangible asset amortization, special charges and restructuring and realignment costs as compared to 2022. Additionally, operating margin declines included 910 basis points from unfavorable operating impacts, driven by 340 basis points of inflation, 210 basis points of unfavorable mix, 160 basis points of increased spending on strategic investments, 30 basis points of increased inventory management costs and 20 basis points of negative operating impact from the impact of the Evoqua acquisition. Operating margin declines were offset by 840 basis points of favorable impacts, consisting of 440 basis points of price realization, 280 basis points from productivity savings and 120 basis points of favorable volume. Excluding acquired intangible asset amortization, special charges and restructuring and realignment costs, adjusted operating income was $368 million (adjusted operating margin of 16.6%) during 2023 as compared to adjusted operating income of $292 million (adjusted operating margin of 17.3%) during 2022.
Showing the first 40 of 55 passages. Open the source sections for the rest.
Reworded paragraphs (52)
Previous wording
This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Due to the change in reportable segments effective January 1, 2024, we have provided an updated discussion covering 2023 and 2022 and year-to-year comparisons between 2023 and 2022, reflective of the current reportable segments.
Current wording
This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
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, and wastewater solutions, 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. 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, and wastewater solutions, for municipal and industrial applications. In the Water Infrastructure segment we reach customers indirectly, through channel partners and distributors, directly and through our service capabilities.
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. In addition, our pumps, heat exchangers and controls provide cooling to power plants and manufacturing facilities, circulation for food and beverage processing, and 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.
Previous 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. 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. 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. In the Water Solutions and Services segment, we leverage our internal and external partners, and extensive service branch networks across the globe, including a rental fleet of transfer and treatment assets to serve our customers.
Previous wording
•"organic revenue" and "organic orders" defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales or discontinuance of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.
Current wording
•"organic revenue" and "organic orders" defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales or discontinuance of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the prior period currency conversion rate.
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 sale of businesses, gain on remeasurement of previously held equity interest, 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
(a)The special charges in the years end December 31, 2024 and 2023 primarily relate to $50 million and $134 million of acquisition and integration related costs, respectively.
Current wording
(a)The special charges in the years end December 31, 2025 and 2024 primarily relate to $28 million and $50 million, respectively, of acquisition, divestiture and integration related costs.
Previous wording
(b)The tax effects of adjustments are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction.
Current wording
(c)The tax effects of adjustments are calculated using the statutory tax rate, taking into consideration the nature of the item and the relevant taxing jurisdiction.
Previous wording
▪“special charges" defined as costs incurred by the Company, such as acquisition and integration related costs, non-cash impairment charges and both operating and non-operating adjustments for costs related to the U.K. pension plan buy-out.
Current wording
▪“special charges" defined as non-recurring costs incurred by the Company, such as those related to acquisitions and integrations, divestitures and non-cash impairment charges.
Previous wording
Xylem reported revenue of $8,562 million for 2024, an increase of $1,198 million, or 16.3%, from $7,364 million reported in 2023. On a constant currency basis, revenue increased by $1,210 million, or 16.4%, during the year. The increase at constant currency consists of revenue from acquisitions of $786 million and an increase in organic revenue of $424 million reflecting organic growth across all major geographic regions, with organic growth in the Measurement and Control Solutions, Water Infrastructure, and Water Solutions and Services segments, more than offsetting organic declines in the Applied Water segment.
Current wording
Xylem reported revenue of $9,035 million for 2025, an increase of $473 million, or 5.5%, from $8,562 million reported in 2024. The increase consists of organic growth of $419 million and favorable foreign currency impacts of $71 million, partially offset by net revenue declines from acquisitions and divestitures of $17 million, reflecting organic growth across all segments and most major geographic regions, with organic growth in the U.S. and western Europe more than offsetting organic declines in the emerging markets.
Previous wording
Operating income for 2024 was $1,009 million, reflecting an increase of $357 million, or 54.8%, compared to $652 million in 2023. Operating margin was 11.8% in 2024, up 290 basis points from 8.9% in 2023. The increase in operating income for 2024 included a decrease in special charges of $81 million, an increase in purchased intangible amortization of $40 million, and a decrease in restructuring and realignment costs of $15 million as compared to 2023. Excluding the impact of these items, adjusted operating income was $1,373 million, with an adjusted operating margin of 16.0% in 2024 as compared to adjusted operating income of $1,072 million with an adjusted operating margin of 14.6% in 2023, an increase of 140 basis points.
Current wording
Operating income for 2025 was $1,223 million, reflecting an increase of $214 million, or 21.2%, compared to $1,009 million in 2024. Operating margin was 13.5% in 2025, up 170 basis points from 11.8% in 2024. The operating margin increase included negative impacts from increases in restructuring and realignment costs of $42 million and purchased intangible amortization of $4 million, partially offset by a decrease in special charges of $21 million. Excluding the impact of these items, adjusted operating income was $1,612 million, with an adjusted operating margin of 17.8% in 2025 as compared to adjusted operating income of $1,373 million with an adjusted operating margin of 16.0% in 2024, an increase of 180 basis points.
Previous wording
•Net income of $890 million, or $3.65 per diluted share, up 30.8% ($1,041 million or $4.27 per diluted share on an adjusted basis, up 13.0% from 2023)
Current wording
•Net income attributable to Xylem of $957 million, or $3.92 per diluted share, up 7.4% ($1,240 million or $5.08 per diluted share on an adjusted basis, up 19.0% from 2024)
Previous wording
•Net cash provided by operating activities of $1,263 million, up 51% from 2023, and free cash flow of $942 million, up 66% from 2023
Current wording
•Net cash provided by operating activities of $1,241 million, down 2% from 2024, and free cash flow of $910 million, down 3% from 2024
Previous wording
•Orders of $8,730 million, up 16.4% from $7,501 million in 2023 (up 4.7% on an organic basis)
Current wording
•Orders of $8,904 million, up 2.0% from $8,730 million in 2024 (up 1.6% on an organic basis)
Previous wording
•Dividends paid to shareholders increased 9% in 2024.
Current wording
•Dividends per share paid to shareholders increased 11% in 2025.
Previous wording
Revenue generated for 2024 was $8,562 million, an increase of $1,198 million, or 16.3%, compared to $7,364 million in 2023. The increase at constant currency consists of revenue from acquisitions of $786 million and an increase in organic revenue of $424 million, reflecting organic growth across all major geographic regions, with organic growth in the Measurement and Control Solutions, Water Infrastructure, and Water Solutions and Services segments, more than offsetting organic declines in the Applied Water segment.
Current wording
Revenue generated for 2025 was $9,035 million, an increase of $473 million, or 5.5%, compared to $8,562 million in 2024. The increase consists of organic growth of $419 million and favorable foreign currency impacts of $71 million, partially offset by net revenue declines from acquisitions and divestitures of $17 million, reflecting organic growth across all segments and most major geographic regions, with organic growth in the U.S. and western Europe more than offsetting organic declines in the emerging markets.
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, large projects require longer lead production cycles and deployment schedules and delays occur from time to time. Total backlog was $5,070 million at December 31, 2024 and $5,088 million at December 31, 2023, a decrease of 0.4%. We anticipate that more than 50% of our total backlog at December 31, 2024 will be recognized as revenue during 2025.
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, large projects require longer lead production cycles and deployment schedules and delays occur from time to time. Total backlog was $4,615 million at December 31, 2025 and $5,070 million at December 31, 2024, a decrease of 9.0%. We anticipate that more than 60% of our total backlog at December 31, 2025 will be recognized as revenue during 2026.
Previous wording
Gross margin as a percentage of consolidated revenue increased 60 basis points to 37.5% in 2024 as compared to 36.9% in 2023. The gross margin increase included 40 basis points of favorable impacts from decreases in realignment costs and special charges as compared to the prior year and 10 basis points of unfavorable impacts from increased intangible amortization expense. The gross margin increase for the year included favorable operational impacts of 280 basis points, driven by 180 basis points of productivity savings and 90 basis points of price realization. These impacts were partially offset by 250 basis points of negative operating impacts, driven by 150 basis points of inflation, 50 basis points of unfavorable impacts from the Evoqua acquisition, and 30 basis points of increased spending on strategic investments.
Current wording
Gross margin as a percentage of consolidated revenue increased 100 basis points to 38.5% in 2025 as compared to 37.5% in 2024. The gross margin increase for the year included favorable operational impacts of 370 basis points, consisting of 230 basis points of productivity savings and 140 basis points of price realization. These impacts were partially offset by 290 basis points of unfavorable operating impacts, driven by 190 basis points of inflation and 60 basis points of unfavorable mix. The gross margin increase also included 20 basis points of favorable impacts from a net decrease in acquired intangible asset amortization, special charges, and realignment costs as compared to the prior year.
Previous wording
R&D expense was $230 million, or 2.7% of revenue, in 2024 which was fairly consistent with the 2023 expense of $232 million, or 3.2% of revenue.
Current wording
R&D expense was $226 million, or 2.5% of revenue in 2025, consistent with the 2024 expense of $230 million, or 2.7% of revenue.
Previous wording
From time to time, the Company will incur costs related to restructuring actions in order to optimize our cost base and more strategically position itself. Restructuring charges were $55 million in 2024 as compared to $72 million in 2023.
Current wording
From time to time, the Company will incur costs related to restructuring actions in order to optimize our cost base and more strategically position itself. Restructuring charges were $95 million in 2025 as compared to $55 million in 2024.
Previous wording
For the year ended December 31, 2024, the charges incurred primarily related to actions taken to further streamline our organization in order to strengthen our competitive positioning and the ability to better serve our customers. The charges incurred were across all of our segments, with the majority of the charges impacting the Water Solutions and Services and Water Infrastructure segments.
Current wording
For the year ended December 31, 2024, the charges incurred primarily related to actions taken to further streamline our organization in order to strengthen our competitive positioning and ability to better serve our customers. The charges incurred were across all of our segments, with the majority of the charges impacting the Water Solutions and Services and Water Infrastructure segments.
Previous wording
As a result of the actions initiated in 2024, we achieved savings of approximately $8 million in 2024 and estimate annual future net savings beginning in 2025 of approximately $55 million, resulting in $47 million of incremental savings from 2024 actions.
Current wording
As a result of the actions initiated in 2025, we achieved savings of approximately $29 million in 2025 and estimate annual future net savings beginning in 2026 of approximately $80 million to $120 million, the majority of which is expected to be realized in 2026.
Previous wording
Operating income was $1,009 million (operating margin of 11.8%) during 2024, an increase of $357 million, or 54.8%, when compared to operating income of $652 million (operating margin of 8.9%) during the prior year. Operating margin included favorable impacts of 150 basis points from a net decrease in special charges, restructuring and realignment costs, and acquired intangible asset amortization as compared to the prior year. Additionally, operating margin included 490 basis points of expansion from favorable operating impacts, driven by a 270 basis point increase from productivity savings, 130 basis points from price realization, and 80 basis points from favorable volume. Margin expansion was offset by 350 basis points of unfavorable impacts driven by 210 basis points of inflation and 80 basis points of increased spending on strategic investments. Excluding special charges, acquired intangible asset amortization, and restructuring and realignment costs, adjusted operating income was $1,373 million (adjusted operating margin of 16.0%) for 2024 as compared to adjusted operating income of $1,072 million (adjusted operating margin of 14.6%) during the prior year.
Current wording
Operating income was $1,223 million (operating margin of 13.5%) during 2025, an increase of $214 million, or 21.2%, when compared to operating income of $1,009 million (operating margin of 11.8%) during the prior year. Operating margin expansion included unfavorable impacts of 10 basis points from a net increase in restructuring and realignment costs, acquired intangible asset amortization, and special charges as compared to the prior year. Additionally, operating margin included 540 basis points of expansion from favorable operating impacts, driven by a 330 basis point increase from productivity savings and 190 basis points from price realization. Margin expansion was offset by 360 basis points of unfavorable impacts driven by 240 basis points of inflation and 50 basis points of unfavorable mix. Excluding restructuring and realignment costs, acquired intangible asset amortization, and special charges, adjusted operating income was $1,612 million (adjusted operating margin of 17.8%) for 2025 as compared to adjusted operating income of $1,373 million (adjusted operating margin of 16.0%) during the prior year.
Previous wording
Net income was $890 million (net income margin of 10.4%) during 2024, an increase of $281 million as compared to net income in the prior year of $609 million (net income margin of 8.3%). The increase in net income was driven by increased operating income of $357 million and a non-recurring gain on the remeasurement of our previously held equity interest in Idrica of $152 million. Net income growth was partially offset by increased income tax expense of $171 million, increased loss on sale of businesses of $45 million, and increased interest and non-operating expense of $12 million. Adjusted EBITDA was $1,763 million (adjusted EBITDA margin of 20.6%) during 2024, an increase of $371 million, or 26.7%, when compared to adjusted EBITDA of $1,392 million (adjusted EBITDA margin of 18.9%) during the prior year. The increase in adjusted EBITDA margin was primarily due to the same factors impacting adjusted operating margin noted above; however, adjusted EBITDA was not negatively impacted by the relative impact of increased depreciation and software amortization expense.
Current wording
Net income attributable to Xylem was $957 (net income margin of 10.6%) during 2025, an increase of $67 million as compared to net income attributable to Xylem in the prior year of $890 million (net income margin of 10.4%). The increase in net income attributable to Xylem was driven by increased operating income of $214 million as well as decreased interest and other non-operating expense of $17 million and $15 million less loss from sale of businesses as compared to the prior year. These increases were partially offset by the absence of a $152 million gain on joint venture remeasurement that did not recur in 2025, as well as increased income tax expense of $34 million. In addition to these fluctuations, net income attributable to Xylem excludes an increase of $7 million of net loss attributable to non-controlling interests. Adjusted EBITDA was $2,009 million (adjusted EBITDA margin of 22.2%) for 2025, an increase of $246 million, or 14.0%, when compared to adjusted EBITDA of $1,763 million (adjusted EBITDA margin of 20.6%) for the prior year. The increase in adjusted EBITDA margin was primarily due to the same factors impacting adjusted operating margin noted above.
Previous wording
The table below provides a reconciliation of net income to consolidated EBITDA and adjusted EBITDA:
Current wording
The table below provides a reconciliation of net income attributable to Xylem to consolidated EBITDA and adjusted EBITDA:
Previous wording
Operating income was $356 million for our Water Infrastructure segment (operating margin of 13.9%) during 2024, an increase of $81 million, or 29.5%, when compared to operating income of $275 million (operating margin of 12.4%) during the prior year, or a total increase of 150 basis points of operating margin. Operating margin growth included favorable impacts of 30 basis points from a minor overall net increase in acquired intangible asset amortization, restructuring and realignment costs, and special charges relative to the increase in revenue as compared to the prior year. Additionally, operating margin increases included 520 basis points from favorable operating impacts, driven by 270 basis points from productivity savings, 90 basis points of price realization, 60 basis points of favorable mix, and 40 basis points of favorable volume. Operating margin growth was partially offset by negative operating impacts of 400 basis points including 190 basis points of inflation, 60 basis points of increased spending on strategic investments and 40 basis points of negative operating impact from the impact of the Evoqua acquisition. Excluding acquired intangible asset amortization, special charges and restructuring and realignment costs, adjusted operating income was $455 million (adjusted operating margin of 17.8%) during 2024 as compared to adjusted operating income of $368 million (adjusted operating margin of 16.6%) during the prior year.
Current wording
Operating income was $462 million for our Water Infrastructure segment (operating margin of 17.5%) during 2025, an increase of $106 million, or 29.8%, when compared to operating income of $356 million (operating margin of 13.9%) during the prior year, or a total increase of 360 basis points of operating margin. Operating margin expansion included unfavorable impacts of 70 basis points from an increase in restructuring and realignment costs, offset by decreases in acquired intangible asset amortization and special charges as compared to the prior year. Additionally, operating margin increases included 830 basis points from favorable operating impacts, driven by 460 basis points from productivity savings, 230 basis points of price realization, and 70 basis points of favorable mix. Operating margin growth was partially offset by negative operating impacts of 400 basis points including 230 basis points of inflation and 90 basis points of unfavorable volume. Excluding restructuring and realignment costs, acquired intangible asset amortization, and special charges, adjusted operating income was $583 million (adjusted operating margin of 22.1%) during 2025 as compared to adjusted operating income of $455 million (adjusted operating margin of 17.8%) during the prior year.
Previous wording
Adjusted EBITDA was $317 million (adjusted EBITDA margin of 17.7%) during 2024, a decrease of $35 million, or (9.9)%, when compared to adjusted EBITDA of $352 million (adjusted EBITDA margin of 19.0%) during the prior year. The decrease in adjusted EBITDA margin was primarily due to the same factors impacting the decrease in adjusted operating margin.
Current wording
Adjusted EBITDA was $378 million (adjusted EBITDA margin of 20.4%) during 2025, an increase of $61 million, or 19.2%, when compared to adjusted EBITDA of $317 million (adjusted EBITDA margin of 17.7%) 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 loss was $84 million for corporate and other during 2024, a decrease of $114 million, or 57.6% when comparing to operating loss of $198 million during the prior year. The decrease in operating loss for the year was primarily due to lower special charges and restructuring and realignment costs as compared to the prior year. Excluding special charges and restructuring and realignment costs, adjusted operating loss decreased $16 million during 2024 or 20.3%, compared to the prior year. The decrease in adjusted operating loss is primarily driven by lower employee costs and productivity savings.
Current wording
Operating loss was $97 million for corporate and other during 2025, an increase of $13 million, or 15.5% when comparing to operating loss of $84 million during the prior year. The increase in operating loss for the year was partially offset by lower special charges as compared to the prior year. Excluding special charges, restructuring and realignment costs, and acquired intangible asset amortization, adjusted operating loss increased $23 million during 2025 or 36.5%, compared to the prior year. The increase in adjusted operating loss is primarily driven by increased spending on strategic investments and sustainability goals, as well as inflation.
Previous wording
Interest expense was $44 million and $49 million for 2024 and 2023, respectively. The decrease in interest expense was primarily driven by increased interest income generated on cross currency swaps offsetting interest expense, and decreased interest from commercial paper. See Note 15, "Credit Facilities and Debt", of our consolidated financial statements for a description of our credit facilities and long-term debt and related interest.
Current wording
Interest expense was $29 million and $44 million for 2025 and 2024, respectively. The decrease in interest expense was primarily driven by increased income generated on cross currency swaps offsetting interest expense, and 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. See Note 15, "Credit Facilities and Debt", of our consolidated financial statements for a description of our credit facilities and long-term debt and related interest.
Previous wording
The income tax provision for 2024 was $197 million at an effective tax rate of 18.1% as compared to $26 million at an effective tax rate of 4.1% in 2023. The 2024 effective tax rate differs from that of 2023 primarily due to the impact of audit settlements and tax rate changes in the prior period. See Note 7, "Income Taxes", of our consolidated financial statements for additional details on our tax attributes and related tax expense.
Current wording
The income tax provision for 2025 was $231 million at an effective tax rate of 19.5% as compared to $197 million at an effective tax rate of 18.1% in 2024. The 2025 effective tax rate differs from that of 2024 primarily due to the tax effects of the gain on remeasurement of equity interest in the prior period, partially offset by one-time deferred tax benefits from internal reorganizations. See Note 7, "Income Taxes", of our consolidated financial statements for additional details on our tax attributes and related tax expense.
Previous wording
(a)The impact of foreign exchange is primarily due to weakening of the Euro, Canadian Dollar and the Chilean Peso.
Current wording
(a)The impact of foreign exchange is primarily due to strengthening of the Euro, Canadian Dollar, Chinese Yuan and the Chilean Peso.
Previous wording
Cash used in investing activities was $482 million in 2024, compared to $628 million in 2023. This decrease in cash used of $146 million reflects higher spending in 2023 on acquisitions, primarily the acquisition of Evoqua, and reduced cash used to fund equity investments in 2024. Reduced proceeds from the sale of businesses, higher capital expenditures and cash received from interest rates swaps in 2023 that did not recur in 2024 partially offset the decrease in cash used.
Current wording
Cash used in investing activities was $471 million in 2025, compared to $482 million in 2024. The year-over-year decrease in cash used of $11 million reflects increased proceeds from the sale of businesses, including the sale of the former Evoqua Magneto business, less cash used for acquisitions, and higher proceeds from the sale of assets. These items were partially offset by spending on an asset acquisition, increased cash paid for investments, and higher capital expenditures.
Previous wording
Cash used in financing activities was $615 million in 2024, compared to $157 million in 2023. The year-over-year increase in cash used was mainly driven by cash received from a term loan in connection with the Evoqua acquisition in 2023 that was repaid in 2024 and higher dividend payments. These increased outflows were partially offset by the repayment of a receivable securitization program in 2023 that did not recur in the current year.
Current wording
Cash used in financing activities was $501 million in 2025, compared to $615 million in 2024. The year-over-year decrease in cash used reflects the repayment of a term loan in 2024, partially offset by increased repayments of equipment financing debt, lower proceeds from employee stock options, and higher dividend payments.
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. over the next twelve months. 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 15, "Credit Facilities and Debt", of our 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. over the next twelve months. Currently, we have available liquidity of approximately $2.5 billion, consisting of $1.5 billion of cash and $1 billion of available credit facilities as disclosed in Note 15, "Credit Facilities and Debt", of our consolidated financial statements.
Previous wording
Material contractual obligations arising in the normal course of business primarily consist of debt obligations and related interest payments, lease obligations and unconditional purchase obligations. Refer Note 15, “Credit Facilities and Debt” and Note 11, “Leases” of the consolidated financial statements for related to these matters.
Current wording
Material contractual obligations arising in the normal course of business primarily consist of debt obligations and related interest payments, lease obligations and unconditional purchase obligations.
Previous wording
The Company has future unconditional purchase commitments which are legally binding and that specify all significant terms including price and/or quantity. Total future commitments within the next twelve months for these obligations is $664 million, excluding contracts that can be canceled without penalty.
Current wording
The Company has future unconditional purchase commitments that are legally binding and specify all significant terms including price and/or quantity, which are not reflected within the liabilities on our Consolidated Balance Sheets. Total future commitments within the next twelve months for these obligations is $775 million, excluding contracts that can be canceled without penalty.
Previous wording
We are a party to certain off-balance sheet arrangements including certain guarantees. For discussion of these arrangements, see Note 20, “Commitments and Contingencies” of the consolidated financial statements.
Current wording
We are a party to certain off-balance sheet arrangements including certain guarantees. For discussion of these arrangements, see Note 20, “Commitments and Contingencies” of our consolidated financial statements.
Previous wording
Significant accounting policies used in the preparation of the consolidated financial statements are discussed in Note 1, “Summary of Significant Accounting Policies,” of the consolidated financial statements. Accounting estimates and assumptions discussed in this section are those that we consider most critical to an understanding of our financial statements because they are inherently uncertain, involve significant judgments and include areas where different estimates reasonably could have been used, and because changes in such estimates that are reasonably possible could materially impact the financial statements. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results in these areas could differ from management’s estimates under different assumptions or conditions.
Current wording
Significant accounting policies used in the preparation of the consolidated financial statements are discussed in Note 1, “Summary of Significant Accounting Policies,” of our consolidated financial statements. Accounting estimates and assumptions discussed in this section are those that we consider most critical to an understanding of our financial statements because they are inherently uncertain, involve significant judgments and include areas where different estimates reasonably could have been used, and because changes in such estimates that are reasonably possible could materially impact the financial statements. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results in these areas could differ from management’s estimates under different assumptions or conditions.
Previous wording
For product sales, other than long-term construction-type contracts, we recognize revenue once control has passed at a point in time, which is generally when products are shipped. In instances where contractual terms include a provision for customer acceptance, revenue is recognized when either (i) we have previously demonstrated that the product meets the specified criteria based on either seller or customer-specified objective criteria, or (ii) upon formal acceptance received from the customer where the product has not been previously demonstrated to meet customer-specified objective criteria. We recognize revenue on product sales to channel partners, including resellers, distributors or value-added solution providers, at the point in time when the risks and rewards, possession, and title have transferred to the customer, which usually occurs at the point of delivery.
Current wording
For product sales, other than long-term construction-type contracts, we recognize revenue once control has passed at a point in time, which is generally when products are shipped. In instances where contractual terms include a provision for customer acceptance, revenue is recognized when either (i) we have previously demonstrated that the product meets the specified criteria based on either seller or customer-specified objective criteria, or (ii) upon formal acceptance received from the customer where the product has not been previously demonstrated to meet customer-specified objective criteria. We recognize revenue on product sales to channel partners, including resellers, distributors or value-added solution providers, at the point in time when control is transferred, which is determined based on when the risks and rewards, possession and title have transferred to the customer, which usually occurs at the point of delivery.
Previous wording
Revenue from performance obligations related to services is primarily recognized over time, as the performance obligations are satisfied. In these instances, the customer consumes the benefit of the service as Xylem performs.
Current wording
Service revenue is primarily related to outsourced water services, maintenance, repair, preventive and inspection services, software as a service ("SaaS") subscriptions, and spare parts sales related to these service offerings. Revenue from performance obligations related to services is primarily recognized over time, as the performance obligations are satisfied. In these instances, the customer consumes the benefit of the service as Xylem performs.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the years ended December 31, 2025, the charges incurred primarily related to simplification actions, informed by 80/20 principles, to streamline the organization and better serve our customers. The charges incurred were across all of our segments, with the majority of the charges impacting the Water Infrastructure and Applied Water segments.
Rearranged previous paragraphs (14)
Previous report — wording carried elsewhere
An order represents a legally enforceable, written document that includes the scope of work or services to be performed or equipment to be supplied to a customer, the corresponding price and the expected delivery date for the applicable products or services to be provided. An order often takes the form of a customer purchase order or a signed quote from a Xylem business.
Previous report — wording carried elsewhere
The following table illustrates the impact from organic growth, recent acquisitions and divestitures, and foreign currency translation in relation to orders during 2023:
Previous report — wording carried elsewhere
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, large projects require longer lead production cycles and deployment schedules and delays occur from time to time. Total backlog was $5,088 million at December 31, 2023 and $3,605 million at December 31, 2022, an increase of 41.1%, with backlog from the acquisition of Evoqua contributing $1,268 million, or 35.2%, of the increase.
Previous report — wording carried elsewhere
Selling, General and Administrative ("SG&A") Expenses
Previous report — wording carried elsewhere
Research and Development ("R&D") Expenses
Previous report — wording carried elsewhere
From time to time, the Company will incur costs related to restructuring actions in order to optimize our cost base and more strategically position itself. Restructuring charges were $72 million in 2023 as compared to $15 million in 2022.
Previous report — wording carried elsewhere
The following is a roll-forward of employee position eliminations associated with restructuring activities for the years ended December 31, 2023 and 2022:
Previous report — wording carried elsewhere
Refer to Note 12, "Goodwill and Other Intangible Assets," for more information on intangible asset impairment charges incurred during the years ended December 31, 2023 and 2022.
Previous report — wording carried elsewhere
Operating Income, Net Income, and Adjusted EBITDA
Previous report — wording carried elsewhere
The table below provides a reconciliation of total and each segment's operating income to adjusted operating income, and a calculation of the corresponding adjusted operating margin:
Previous report — wording carried elsewhere
The table below provides a reconciliation of net income to consolidated EBITDA and adjusted EBITDA:
Previous report — wording carried elsewhere
The tables below provide a reconciliation of each segment's operating income (loss) to EBITDA and adjusted EBITDA:
Previous report — wording carried elsewhere
The income tax provision for 2023 was $26 million at an effective tax rate of 4.1% as compared to $85 million at an effective tax rate of 19.2% in 2022. The 2023 effective tax rate differs from that of 2022 primarily due to the impact of audit settlements and tax rate changes in 2023. See Note 7, "Income Taxes", of our consolidated financial statements for a description of our credit facilities and long-term debt and related interest.
Previous report — wording carried elsewhere
See Note 15, "Credit Facilities and Debt" of our consolidated financial statements for a description of our credit facilities and long-term debt.