Xylem Inc.

Previous wording

This Report contains “forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” "contemplate," "predict," “forecast,” “likely,” “believe,” “target,” “will,” “could,” “would,” “should,” "potential," "may" and similar expressions or their negative, may, but are not necessary to, identify forward-looking statements. By their nature, forward-looking statements address uncertain matters and include any statements that: are not historical, such as statements about our strategy, financial plans, outlook, objectives, plans, intentions or goals (including those related to our social, environmental and other sustainability goals); or address possible or future results of operations or financial performance, including statements relating to orders, revenues, operating margins and earnings per share growth.

Current wording

This Report contains “forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” "contemplate," "predict," “forecast,” “likely,” “believe,” “target,” "goal," "objective," “will,” “could,” “would,” “should,” "potential," "may" and similar expressions or their negative, may, but are not necessary to, identify forward-looking statements. By their nature, forward-looking statements address uncertain matters and include any statements that: are not historical, such as statements about our strategy, financial plans, outlook, objectives, plans, intentions or goals (including those related to our social, environmental and other sustainability goals); or address possible or future results of operations or financial performance, including statements relating to orders, revenues, operating margins and earnings per share growth.

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 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.

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, availability of funding to our customers, inflation and governments' related monetary policy in response, and the strength of the real estate markets, on economic activity and our operations; geopolitical matters, including nationalism, protectionism and anti-global sentiment, volatility involving the U.S. and other governments, ongoing, escalation or outbreak of international conflicts, and regulatory, trade protection, economic and other risks associated with our global sales and operations; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, labor shortages, trade agreements, tariffs, and other trade protection measures, and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents, data breaches, or other disruptions of information technology systems on which we or our customers rely, or involving our connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including semiconductors or other key components; operational disruptions 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 as respects performance guarantees and customers’ budgets, timelines and safety requirements; our ability to retain, compete for, and attract leadership, other key talent, and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around productivity, simplification, 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, volatile weather events, or changing climate patterns; risks related to our sustaina…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Forward-looking and other statements in this Report regarding our environmental and other sustainability plans and goals are not an indication that these statements are necessarily material to investors, to our business, operating results, financial condition, outlook, or strategy, to our impacts on sustainability matters or other parties, or are required to be disclosed in our filings with the SEC. In addition, historical, current, and forward-looking social, environmental and sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. All forward-looking statements made herein are based on information currently available to us as of the date of this Report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Current wording

Forward-looking and other statements in this Report regarding our environmental and other sustainability plans and goals are not an indication that these statements are necessarily material to investors, to our business, operating results, financial condition, outlook, or strategy, to our impacts on sustainability matters or other parties, or are required to be disclosed in our filings with the SEC or other regulatory authorities, and are not intended to create legal rights or obligations. In addition, historical, current, and forward-looking social, environmental and sustainability-related statements may be based on: standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

Previous 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.

Current wording

•Orders of $2,228 million, up 3.2% from $2,158 million in the prior year period, and down 0.3% on an organic basis.

Previous 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).

Current wording

•Earnings per share of $0.79, up 14.5% compared to prior year ($1.12, up 8.7% versus prior year, on an adjusted basis).

Previous 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.

Current wording

•Net income attributable to Xylem as a percent of revenue of 9.1%, up 90 basis points compared to 8.2% in the prior year. Adjusted EBITDA margin of 20.6%, up 20 basis points when compared to 20.4% in the prior year.

Previous wording

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

Current wording

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

Previous 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.

Current wording

•“special charges" defined as non-recurring costs incurred by the Company, such as those related to acquisitions and integrations, divestitures, non-cash impairment charges and other non-cash special charges.

Previous wording

The following table illustrates the impact from organic growth, recent acquisitions and divestitures, and foreign currency translation in relation to revenue during the three and nine months ended September 30, 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 months ended March 31, 2026:

Previous 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, British Pound and the Swedish Krona.

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, British Pound, Australian Dollar and the Canadian Dollar.

Previous 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.

Current wording

Water Infrastructure revenue increased $22 million, or 3.8%, for the first quarter of 2026 as compared to the prior year. Revenue growth for the quarter included $29 million of favorable impacts from foreign currency translation partially offset by organic revenue declines of $5 million, or 0.9%, and the net impact of a loss of $5 million of revenue from divestitures and additional revenue of $3 million from acquisitions. Revenue in the treatment application declined $8 million organically. Organic declines in the treatment application were driven by unfavorable order volume and strong prior year project revenue in the emerging markets, and reduced backlog execution in western Europe, partially offset by favorable timing of capital projects in the U.S. Organic revenue declines in the treatment application were partially offset by organic revenue growth in the transport application of $3 million, driven by backlog execution and price realization in the U.S., partially offset by unfavorable sales volume in western Europe and project timing in the emerging markets.

Previous 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.

Current wording

Applied Water revenue increased $13 million, or 3.0% for the first quarter of 2026 as compared to the prior year. Revenue growth for the quarter included $14 million of favorable foreign currency translation partially offset by organic revenue declines of $1 million, or 0.2%. Revenue in the industrial application declined by $8 million organically, primarily due to order softness in western Europe and the emerging markets, partially offset by favorable price realization in the U.S. These declines were partially offset by organic growth of $7 million from building solutions, primarily due to commercial backlog execution in the U.S., partially offset by residential softness in the emerging markets.

Previous 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.

Current wording

Measurement and Control Solutions revenue increased $18 million, or 3.7%, for the first quarter of 2026 as compared to the prior year. The revenue growth was driven $11 million of favorable foreign currency translation and organic growth of $7 million, or 1.4%. Organic revenue growth during the quarter was driven by $7 million from the smart metering and other applications, driven by strong backlog execution and price realization in energy in the U.S. partially offset by declines in the U.S. in water with lower shippable backlog coming into the year and unfavorable sales volume in energy in Canada. Organic revenue growth in the analytics application was essentially flat year over year.

Previous 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.

Current wording

Water Solutions and Services revenue increased $3 million, or 0.5%, for the first quarter of 2026 as compared to the prior year. The revenue growth was primarily driven by $11 million of favorable impacts from foreign currency translation and $2 million of acquisition activity, partially offset by organic revenue declines of $10 million, or 1.8%. Revenue in the capital and other applications declined by $14 million organically, primarily due to reduced capital project revenue and sales volume in the U.S., partially offset by sales volume in the emerging markets. Organic revenue from the service application increased by $4 million due to rental price realization and sales volume in dewatering in the U.S.

Previous wording

The following tables illustrate the impact from organic decline/growth, recent acquisitions and divestitures, and foreign currency translation in relation to orders during the three and nine months ended September 30, 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 months ended March 31, 2026:

Previous 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, British Pound and the Swedish Krona.

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, British Pound, Australian Dollar and 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 $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.

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 $4,712 million at March 31, 2026, a decrease of $383 million, or 7.5%, as compared to March 31, 2025 backlog of $5,095 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 increased $97 million, or 2.1%, at March 31, 2026, as compared to December 31, 2025 backlog of $4,615 million. We anticipate that approximately 60% of the backlog as of March 31, 2026 will be recognized as revenue in the remainder of 2026. There were no significant order cancellations during the quarter.

Previous 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.

Current wording

Gross margin as a percentage of revenue increased 70 basis points to 37.8% for the three months ended March 31, 2026, as compared to 37.1% for the three months ended March 31, 2025. The gross margin increase was partially offset by net unfavorable impacts of 10 basis points from increases in restructuring and realignment costs, flat special charges, and decreased acquired intangible amortization and special charges as compared to the prior year. Gross margin expansion was driven by 460 basis points of favorable operational impacts, led by 310 basis points of productivity savings and 110 basis points of price realization. These increases in gross margin were partially offset by 380 basis points of unfavorable operational impacts driven by 240 basis points of inflation and 120 basis points of unfavorable mix.

Previous wording

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

Current wording

The following table presents operating expenses for the three months ended March 31, 2026 and 2025:

Previous 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.

Current wording

R&D expense was $56 million, or 2.6% of revenue, in the first quarter of 2026, as compared to $56 million, or 2.7% of revenue, in the first quarter of 2025. R&D expense was fairly consistent year over year and in line with planned spending in this area.

Previous 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.

Current wording

There were no actions commenced in the three months ended March 31, 2026. Actions commenced in 2025 were primarily related to simplification actions, informed by 80/20 principles, to streamline the organization and better serve our customers. We currently expect to incur between $40 and $55 million in restructuring costs for the full year.

Previous wording

Refer to Note 9, "Goodwill and Other Intangible Assets" for more information on intangible asset impairment charges incurred during the three months ended September 30, 2025.

Current wording

Refer to Note 9, "Goodwill and Other Intangible Assets" for more information on intangible asset impairment charges incurred during the three months ended March 31, 2026 and March 31, 2025.

Previous 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.

Current wording

Operating income was $244 million (operating margin of 11.5%) during the first quarter of 2026, an increase of $13 million, or 5.6%, when compared to operating income of $231 million (operating margin of 11.2%) during the prior year. Operating margin increased 30 basis points. Operating margin expansion was partially offset by 10 basis points of net unfavorable impacts from increased restructuring and realignment costs, flat acquired intangible amortization and decreased special charges relative to the prior year period. Additionally, operating margin expansion included 610 basis points of favorable operational impacts driven by 430 basis points of productivity savings and 150 basis points of price realization. These favorable impacts were partially offset by 570 basis points of unfavorable operational impacts, consisting of 300 basis points of inflation, 120 basis points of unfavorable mix, 100 basis points of decreased volume, and 50 basis points of increased spending on strategic investments. Excluding restructuring and realignment costs, acquired intangible asset amortization, and special charges, adjusted operating income was $342 million (adjusted operating margin of 16.1%) for the first quarter of 2026 as compared to adjusted operating income of $325 million (adjusted operating margin of 15.7%) during the comparable quarter in the prior year.

Previous 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.

Current wording

Net income attributable to Xylem for the first quarter was $193 million (net income margin of 9.1%), an increase of $24 million as compared to net income attributable to Xylem in the prior year of $169 million (net income margin of 8.2%). The increase in net income attributable to Xylem was driven by increased operating income of $13 million, $14 million of decreased loss on sale of businesses, decreased interest expense of $4 million, and an increase in the net loss attributable to non-controlling interest of $2 million, partially offset by increased income tax expense of $5 million and decreased non-operating income of $4 million.

Previous 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.

Current wording

Adjusted EBITDA was $437 million (adjusted EBITDA margin of 20.6%) during the first quarter of 2026, an increase of $14 million, or 3.0%, when compared to adjusted EBITDA of $423 million (adjusted EBITDA margin of 20.4%) during the comparable quarter in the prior year, an increase to adjusted EBITDA margin of 20 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 for our Measurement and Control Solutions segment was $64 million (operating margin of 12.3%) during the third quarter of 2025, a decrease of $2 million, or 3.0%, when compared to operating income of $66 million (operating margin of 14.4%) during the prior year, or a total decrease in operating margin of 210 basis points. The operating margin decline included unfavorable impacts of 140 basis points from an increase in acquired intangible asset amortization, special charges, and restructuring and realignment costs as compared to the prior year. Additionally, operating margin declines included 640 basis points of unfavorable operational impacts, primarily consisting of 290 basis points of unfavorable mix, 240 basis points of inflation, 70 basis points of increased spending on strategic investments, and 70 basis points of inventory management costs. The decline in margin was partially offset by positive operational impacts of 570 basis points consisting of 340 basis points of productivity savings, 150 basis points of price realization, and 80 basis points of increased volume. Excluding acquired intangible asset amortization, restructuring and realignment costs and special charges, adjusted operating income was $90 million (adjusted operating margin of 17.2%) for the third quarter of 2025 as compared to adjusted operating income of $82 million (adjusted operating margin of 17.9%) for the third quarter of 2024.

Current wording

Operating income for our Measurement and Control Solutions segment was $57 million (operating margin of 11.2%) during the first quarter of 2026, an increase of $1 million, or 1.8%, when compared to operating income of $56 million (operating margin of 11.4%) during the prior year, or a total decrease in operating margin of 20 basis points. The operating margin declines were partially offset by net favorable impacts of 20 basis points from flat acquired intangible asset amortization, lower special charges and increased restructuring and realignment costs on increased revenue compared to the prior year. Additionally, operating margin declines included 570 basis points of unfavorable operational impacts, primarily consisting of 230 basis points of unfavorable mix, 210 basis points of inflation, 60 basis points of increased spending on strategic investments, and 60 basis points of decreased volume. The decline in margin was partially offset by positive operational impacts of 530 basis points driven by 320 basis points of productivity savings and 200 basis points of price realization. Excluding restructuring and realignment costs, acquired intangible asset amortization and special charges, adjusted operating income was $83 million (adjusted operating margin of 16.3%) for the first quarter of 2026 as compared to adjusted operating income of $82 million (adjusted operating margin of 16.7%) for the first quarter of 2025, a decrease of 40 basis points.

Previous 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.

Current wording

Adjusted EBITDA was $125 million (adjusted EBITDA margin of 22.1%) for the first quarter of 2026, an increase of $3 million, or 2%, when compared to adjusted EBITDA of $122 million (adjusted EBITDA margin of 21.7%) during the prior year, an increase of 40 basis points. The increase in adjusted EBITDA margin was primarily due to the same factors as those impacting the increase in adjusted operating margin; however, adjusted EBITDA margin did not benefit from the relative impact of decreased depreciation and amortization expense.

Previous wording

Operating loss for corporate and other increased $10 million, or 62.5%, during the third quarter of 2025 compared to the prior year period. Operating loss increased primarily due to increased spending on and timing of strategic investments and inflation. Excluding special charges and restructuring and realignment costs, adjusted operating loss for corporate and other increased $12 million, or 120.0%, for the three months ended September 30, 2025, driven by the same factors as those driving the increase in operating loss.

Current wording

Operating loss for corporate and other increased $1 million, or 4.8%, during the first quarter of 2026 compared to the prior year period. Operating loss increased primarily due to increased spending on and timing of strategic investments and inflation. Excluding special charges, adjusted operating loss for corporate and other increased $1 million, or 5.3%, for the three months ended March 31, 2026, driven by the same factors as those driving the increase in operating loss.

Previous wording

Interest expense was $6 million for the three months ended September 30, 2025, compared to $10 million for the comparable prior year period. The decrease in interest expense was primarily driven by increased interest income generated on cross currency swaps offsetting interest expense.

Current wording

Interest expense was $4 million for the three months ended March 31, 2026, compared to $8 million for the comparable prior year period. The decrease in interest expense was primarily driven by increased interest income generated on cross currency swaps reducing interest expense.

Previous wording

The income tax provision for the three months ended September 30, 2025 was $71 million resulting in an effective tax rate of 23.9%, compared to $52 million of expense resulting in an effective tax rate of 19.3% for the same period in 2024. The income tax provision for the nine months ended September 30, 2025 was $196 million resulting in an effective tax rate of 24.1%, compared to $148 million of expense resulting in an effective tax rate of 20.7% for the same period in 2024. The effective tax rate for the three and nine month period ended September 30, 2025 was higher than the effective tax rate for the same period in 2024, primarily due to the mix of earnings and the impact of discrete tax benefits recognized in the prior period.

Current wording

The income tax provision for the three months ended March 31, 2026 was $55 million resulting in an effective tax rate of 22.3%, compared to $50 million of expense resulting in an effective tax rate of 23.1% for the same period in 2025. The effective tax rate for the three month period ended March 31, 2026 was lower than the effective tax rate for the same period in 2025, primarily due to earnings mix.

Previous wording

(a)The impact is primarily due to strengthening of the Euro and the Canadian Dollar against the U.S. Dollar.

Current wording

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

Previous wording

Cash generated by operating activities was $698 million for the nine months ended September 30, 2025 as compared to cash generated by operating activities of $688 million in the comparable prior year period. The increase in cash provided was primarily driven by higher cash earnings, and reduced investment in working capital, reflecting inventory management initiatives. The recognition of receivables on long term contracts, increased payments for infrastructure costs and higher tax payments, partially offset these items.

Current wording

Cash generated by operating activities was $108 million for the three months ended March 31, 2026 as compared to cash generated by operating activities of $33 million in the comparable prior year period. The increase in cash provided was primarily driven by timing of payments for accrued expenses and lower annual incentives, offset by increased investment in working capital and higher payments for restructuring.

Previous wording

Cash used in investing activities was $329 million for the nine months ended September 30, 2025 as compared to $193 million used in the comparable prior year period. The increase in cash used primarily reflects cash paid for an acquisitions, including an asset acquisition, higher capital expenditures and increased cash paid for investments. Increased proceeds from the sale of businesses, including the sale of the former Evoqua Magneto business, and cash received from the sale of property plant and equipment partially offset these items.

Current wording

Cash used in investing activities was $76 million for the three months ended March 31, 2026 as compared to $15 million used in the comparable prior year period. The increase in cash used primarily reflects lower proceeds from sale of businesses, and increased investments in capital expenditures.

Previous wording

Cash used in financing activities was $382 million for the nine months ended September 30, 2025 as compared to cash used of $520 million in the comparable prior year period. The decrease in cash used reflects the repayment of a term loan in 2024, partially offset by lower proceeds from employee stock option exercises, increased repayments of equipment financing debt, and higher dividend payments.

Current wording

Cash used in financing activities was $683 million for the three months ended March 31, 2026 as compared to cash used of $116 million in the comparable prior year period. The increase in cash used reflects the repurchase of common stock during the quarter, 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. during the year. Currently, we have available liquidity of approximately $2.2 billion, consisting of $1.2 billion of cash and $1 billion of available credit facilities as disclosed in Note 12, "Credit Facilities and Debt", of our condensed consolidated financial statements.

Current wording

Based on our current global cash positions, cash flows from operations and access to the capital markets, we believe there is sufficient liquidity to meet our funding requirements and service debt and other obligations in both the U.S. and outside of the U.S. during the year. Currently, we have available liquidity of approximately $1.8 billion, consisting of $808 million of cash and $1 billion of available credit facilities as disclosed in Note 12, "Credit Facilities and Debt", of our condensed consolidated financial statements.

Previous wording

We are raising our total revenue growth outlook to 5% to 6%, and organic revenue growth to 4% to 5% in 2025. Our outlook is being provided in the context of the current volatility, including due to geopolitical, trade, macroeconomic and regulatory uncertainty. Our ability to meet our expectations is subject to a number of risks, including, but not limited to, those described in "Item 1A. Risk Factors" in our 2024 Annual Report.

Current wording

We are raising our total revenue growth outlook to 2% to 3%, and maintaining our organic revenue growth outlook at 2% to 4% in 2026. Our outlook is being provided in the context of the current volatility, including due to geopolitical, trade, macroeconomic and regulatory uncertainty. Our ability to meet our expectations is subject to a number of risks, including, but not limited to, those described in "Item 1A. Risk Factors" in our 2025 Annual Report.