Xylem Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Background and Basis of Presentation

Background

Xylem Inc. (“Xylem” or the “Company”) is a leading equipment and service provider for water and wastewater applications with a broad portfolio of products and services addressing the full cycle of water, from collection, distribution and use to the return of water to the environment.

Xylem operates in four segments, Water Infrastructure, Applied Water, Measurement and Control Solutions and Water Solutions and Services. See Note 19, "Segment Information", to the condensed consolidated financial statements for further segment background information.

Except as otherwise indicated or unless the context otherwise requires, "Xylem," "we," "us," "our" and the "Company" refer to Xylem Inc. and its subsidiaries.

Basis of Presentation

The interim condensed consolidated financial statements reflect our financial position and results of operations in conformity with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany transactions between our businesses have been eliminated.

The unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair statement of the financial position and results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules. We believe that the disclosures made are adequate to make the information presented not misleading. We consistently applied the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2025 ("2025 Annual Report") in preparing these unaudited condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes included in our 2025 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are revised as additional information becomes available. Estimates and assumptions are used for, but not limited to, valuation results associated with purchase accounting, post-retirement obligations and assets, revenue recognition, income taxes, valuation of intangible assets, valuation of assets and liabilities classified as held for sale, goodwill and indefinite-lived intangible impairment testing and contingent liabilities. Actual results could differ from these estimates.

Our quarterly financial periods typically end on the Saturday closest to the last day of the calendar quarter, except for the fourth quarter which ends on December 31. For the third quarter of 2026, the quarter-end date was September 26. For ease of presentation, the condensed consolidated financial statements included herein are described as ending on the last day of the calendar quarter.

Tariff Developments

In February 2026, the U.S. Supreme Court ruled that certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”) were unlawful. As a result of that ruling and related Court-ordered actions by the Court of International Trade, the Company has evaluated the recoverability of IEEPA tariffs previously paid on imported goods.

The Company previously recognized amounts paid for such tariffs within cost of revenue from products and services. For the three and nine months ended September 30, 2026, the Company received $39 million and $43 million of IEEPA refunds, respectively, and also recognized a $6 million receivable as of September 30, 2026 within prepaid and other current assets in the condensed consolidated balance sheets, with a corresponding reduction to cost of revenue from products. The amount of receivable recognized was based on the Company’s determination of the portion of tariff refunds that are probable of recovery and reasonably estimable.

The Company continues to assess its ongoing submissions for refunds of IEEPA tariffs and expects to record additional recoveries as uncertainties around the refund process are resolved. To the extent there are changes in amounts that become recoverable, including any associated interest, such amounts will be recognized in the period in which information about the probable and reasonably estimable amounts becomes known to the Company.

Note 2. Recently Issued Accounting Pronouncements

Pronouncements Not Yet Adopted

In September 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”. This ASU amends the capitalization criteria for internal-use software and requires entities to make certain disclosures of costs capitalized under this subtopic. This ASU also supersedes existing guidance on web site development costs. The standard is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. Prospective, retrospective, or modified transition adoption methods are all permitted under this ASU. We are currently evaluating the impact and method of adoption of this amendment.

In November 2024, the FASB issued ASU 2024-03, "Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses". This ASU requires a footnote disclosure to disaggregate each relevant expense caption on the face of the income statement that includes specific natural expense categories. In addition, the standard requires disclosure of selling expenses on an annual and interim basis. The standard is effective in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The standard is required to be adopted prospectively, but retrospective adoption is permitted. The Company is currently evaluating the method of adoption and the impact of the guidance on our disclosures in future periods.

Recently Adopted Pronouncements

In July 2025, the FASB issued ASU 2025-05, "Financial Instruments—Credit Losses (Topic 326): "Measurement of Credit Losses for Accounts Receivable and Contract Assets". This update provides a practical expedient that allows entities to assume current conditions as of the balance sheet date remain unchanged over the remaining life of certain current trade receivables and current contract assets when developing reasonable and supportable forecasts in estimating expected credit losses. The Company adopted ASU 2025-05 effective January 1, 2026, and elected the practical expedient for applicable trade receivables and contract assets on a prospective basis. Adoption of the standard did not have a material impact on the Company’s consolidated financial statements.

Note 3. Acquisitions and Divestitures

2026 Business Combinations

Cornell Pump and Roper Pump

On August 10, 2026, the Company entered into a definitive agreement with Indicor, LLC and the other parties thereto to acquire, through a wholly-owned subsidiary of the Company,100% ownership of the Cornell Pump and Roper Pump businesses, which specialize in highly engineered pumping technologies. The acquisition expands the Company's industrial pumping capabilities and strengthens its presence in key industrial and municipal applications in North America. The purchase price is approximately $1,460 million, subject to customary adjustments for working capital and other matters, which the Company intends to finance in part using proceeds from its issuance of senior unsecured notes on September 29, 2026. Refer to Note 12, Credit Facilities and Debt, for additional information.

The acquisition will be included in the Water Infrastructure segment and is expected to close in the fourth quarter of 2026, subject to receipt of required regulatory approvals and other customary closing conditions.

WaterFleet Intermediate Holdings, Inc.

On September 2, 2026, the Company acquired 100% ownership interest in WaterFleet Intermediate Holdings, Inc. and its subsidiaries (collectively, "WaterFleet"), a leading provider of mobile water and wastewater utility services and workforce relief solutions. The acquisition expanded the breadth of the Company's service offerings in North America. Our condensed consolidated financial statements include WaterFleet's results of operations within the Water Solutions and Services segment from the date of acquisition.

The total fair value of consideration paid at closing was $217 million, which also represents the purchase price, net of cash acquired, and remains subject to working capital and other customary adjustments.

As of September 30, 2026, preliminary purchase price allocation consisted primarily of $111 million in goodwill and $65 million for customer relationships and other intangible assets. The identifiable intangible assets were valued using themulti-period excess earnings ("MPEE") method, the relief from royalty ("RFR") method, or the with and without method, all of which are forms of the income approach. The amount of goodwill recognized in the acquisition is not deductible for U.S. income tax purposes and is primarily attributable to management know-how and to costs and revenue synergies expected from combining the operations of WaterFleet with Xylem.

TriOS Mess-und Datentechnik GmbH

On July 1, 2026, the Company acquired 100% ownership interest in TriOS Mess-und Datentechnik GmbH and its subsidiaries (collectively, "TriOS"), a leading provider of optical sensing and measurement systems for water quality monitoring across utilities, industry, and environmental research. The integration of TriOS's advanced sensing instruments with the Company's analytical instrumentation platform is expected to enhance real-time visibility into water conditions across our systems. Our condensed consolidated financial statements include TriOS' results of operations within the Measurement and Control Solutions segment from the date of acquisition.

The total purchase price is $219 million ($210 million, net of cash acquired), of which $216 million ($207 million, net of cash acquired) was paid at closing. The purchase price remains subject to working capital and other customary adjustments.

As of September 30, 2026, preliminary purchase price allocation consisted primarily of $155 million in goodwill and $55 million for customer relationships and other intangible assets. The identifiable intangible assets were valued using the MPEE method, the RFR method, or the with and without method, all of which are forms of the income approach. The amount of goodwill recognized in the acquisition is not deductible for income tax purposes and is primarily attributable to management know-how and to costs and revenue synergies expected from combining the operations of TriOS with Xylem.

The final determination of the fair value of certain assets and liabilities from the above acquisitions will be completed as soon as the necessary information becomes available but no later than one year from the acquisition date.

2025 Business Combinations

Pac Machine Company, Inc.

On December 2, 2025, the Company acquired 100% ownership interest in Pac Machine Company, Inc. ("Pac Machine"), a leading distributor specializing in the sale, rental and service of pumps, generators, and other dewatering equipment for mining, construction, agriculture, energy and marine sectors. The acquisition strengthens the Company's presence in Northern California and Nevada, while providing synergy opportunities. Our condensed consolidated financial statements include Pac Machine's results of operations within the Water Solutions and Services segment.

The total purchase price was $66 million ($62 million, net of cash acquired), of which $54 million ($50 million, net of cash acquired) was paid at closing. The consideration transferred includes $3 million related to the non-cash settlement of a preexisting receivable owed by the acquiree to the Company. The remaining consideration of $9 million will be paid over the next four years, subject to customary holdback provisions.

As of September 30, 2026, preliminary purchase allocation includes intangible assets totaling $27 million, consisting of customer relationships valued using the MPEE method, and goodwill totaling $30 million. The amount of goodwill recognized in the acquisition is not deductible for U.S. income tax purposes and is primarily attributable to costs and revenue synergies expected from combining the operations of Pac Machine with Xylem.

The final determination of the fair value of certain assets and liabilities will be completed as soon as the necessary information becomes available but no later than one year from the acquisition date.

EMX Holdings, Inc.

On July 23, 2025, the Company acquired 100% ownership interest in EMX Holdings, Inc. and its subsidiary (collectively, "EnviroMix"). EnviroMix is headquartered in South Carolina, U.S., and provides mixing and process control products and services to municipal and industrial customers. This acquisition expands the Company's treatment offerings and provides synergy opportunities. The operating results of EnviroMix have been included in the Company's results of operations since the acquisition date within the Water Infrastructure segment.

The total fair value of consideration transferred was $106 million, which was paid in cash on the closing date. The fair value of assets and liabilities acquired resulting from the purchase price allocation consisted primarily of $74 million in goodwill and $34 million for customer relationships and other identifiable intangible assets. The identifiable intangible assets were valued using the MPEE method, the RFR method, or the with and without method, all of which are forms of the income approach. The goodwill recognized in the acquisition is not deductible for U.S. income tax purposes and is primarily attributable to management know-how and the costs and revenue synergies expected from combining the operations of EnviroMix with Xylem.

Simply Clean Air and Water, Inc.

On January 31, 2025, we acquired 100% ownership interest in Simply Clean Air and Water, Inc. ("Simply Clean"), a water service company that specializes in high-purity water systems for life sciences and pharmaceutical markets, for the net cash acquisition price of $7 million. The company is headquartered in Connecticut, U.S. with 20 employees. Our condensed consolidated financial statements include Simply Clean's results of operations within the Water Solutions and Services segment.

2025 Asset Acquisition

Vacom Systems, LLC

On April 1, 2025, we acquired Vacom Systems, LLC ("Vacom"), a wastewater treatment company that specializes in non-fouling, non-scaling evaporator and crystallizer systems, headquartered in Utah, U.S. The transaction included total cash consideration of $42 million, of which $37 million was paid at closing, $2 million was paid during the second quarter of 2026, and the rest is expected to be paid during the fourth quarter of 2026. Additionally, the transaction consideration contained an earn out of 5% royalty on future revenue generated in connection with Vacom's proprietary technologies during the first five years following the acquisition. The earn out has a maximum pay out of $25 million.

The Vacom transaction was accounted for as an asset acquisition because substantially all of the fair value of gross assets acquired were concentrated in its developed technology. On the acquisition date, the developed technology recognized in the condensed consolidated balance sheet was $49 million. The developed technology has a useful life offifteen years and it is being amortized over its useful life on a straight-line basis within the Water Solutions and Services segment.

2026 Divestitures

On May 26, 2026, we completed the divestiture of our previously held-for-sale international metering business, part of the Measurement and Control Solutions segment. As of September 30, 2026, the preliminary fair value of total consideration was $73 million ($68 million, net of cash transferred), including a third quarter adjustment to the estimated post-closing working capital consideration. Total consideration includes $63 million in cash ($58 million, net of cash transferred) and a note receivable with a fair value of $10 million. The post-closing working capital adjustment has not been finalized and remains subject to further adjustments pursuant to the terms of the purchase agreement.

As a result of the sale, the Company recognized a cumulative loss of $44 million, including $23 million recognized in 2025 and $21 million recognized in 2026, of which $7 million was recognized in the third quarter of 2026.

During the nine months ended September 30, 2026, the Company also completed certain other divestitures, which generated aggregate cash proceeds, net of cash transferred, of approximately $37 million, of which $30 million was recognized in the third quarter of 2026, and resulted in a cumulative net gain of $4 million, of which $2 million was recognized in the current quarter.

2025 Divestiture

On February 7, 2025, we completed the divestiture of our previously held-for-sale Evoqua Magneto business, which was part of the Water Infrastructure segment, for a cash selling price of $61 million ($48 million, net of cash transferred). As a result of the sale, we recorded a loss of $10 million in the first quarter of the prior year, partially offset by a $2 million favorable final working capital adjustment recorded in the third quarter of the prior year, resulting in a total loss of $8 million.

Gains and losses on the above divestitures presented on the condensed consolidated income statement within "Loss on sale of businesses".

Note 4. Revenue

Disaggregation of Revenue

The following table illustrates the sources of revenue:

The following table reflects revenue from contracts with customers by application:

The following table reflects revenue from contracts with customers by geographical region:

(a)Emerging markets includes results from the following regions: Eastern Europe, the Middle East and Africa, Latin America and Asia Pacific (excluding Japan, Australia and New Zealand, which are presented in "Other")

Contract Balances

We receive payments from customers based on a billing schedule as established in our contracts. Contract assets relate to costs incurred to perform in advance of scheduled billings. Contract liabilities relate to payments received in advance of performance under the contracts. Changes in contract assets and liabilities are due to our performance under the contract. The table below provides contract assets, contract liabilities, and significant changes in contract assets and liabilities:

(a)Excludes receivable balances, which are disclosed on the Condensed Consolidated Balance Sheets

(b)Additions include revenue recorded in the current year of $36 million pertaining to performance obligations that were partially satisfied during previous periods. Such amount relates primarily to changes in scope and price.

Performance obligations

Delivery schedules vary from customer to customer based upon their requirements. Typically, large projects require longer lead production cycles and delays can occur from time to time. As of September 30, 2026, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied for contracts with performance obligations, amount to $3,192 million. The Company elects to apply the practical expedient to exclude from this disclosure revenue related to performance obligations that are part of a contract whose original expected duration is one year or less.

Note 5. Restructuring and Asset Impairment Charges

Restructuring

From time to time, the Company will incur costs related to restructuring actions in order to streamline our organization, optimize our cost base, and strengthen our competitive position and ability to better serve our customers. During the three and nine months ended September 30, 2026, we incurred restructuring charges of $8 million and $50 million, respectively. During the three and nine months ended September 30, 2025, we incurred restructuring charges of $23 million and $62 million, respectively.

The following table presents the components of restructuring expense and asset impairment charges:

The following table displays a roll-forward of the restructuring accruals, presented on our Condensed Consolidated Balance Sheets within "Accrued and other current liabilities" and "Other non-current accrued liabilities," for the nine months ended September 30, 2026 and 2025:

(a)Centralized support facilities consist primarily of support functions, including selling and marketing organizations, that incurred restructuring expense which was allocated to the segments. However, the liabilities associated with restructuring expense were not allocated to the segments.

The following table presents the total costs expected to be incurred, the amount incurred in the period, and the cumulative costs incurred to date for our 2026 and 2025 restructuring actions:

The actions commenced in 2026 consist primarily of severance charges. The actions are expected to continue through the end of 2027.

The actions commenced in 2025 consist primarily of severance charges. The actions are expected to continue through the end of 2026.

During the second quarter of 2026, we also incurred charges of $1 million within the Measurement and Control Solutions segment, related to actions commenced prior to 2024.

During the first quarter of 2026, we recognized $1 million in fixed asset impairment charges due to restructuring actions within our Measurement and Control Solutions segment.

During the third quarter of 2025, we recognized $3 million in fixed asset impairment charges due to restructuring actions within our Water Infrastructure segment.

During the second quarter of 2025, we recognized $1 million in fixed asset impairment charges due to restructuring actions within our Measurement and Control Solutions segment.

Asset Impairment

During the second quarter of 2025, we recognized $4 million of impairment charges for internally developed software and software assets within our Measurement and Control Solutions and Corporate segments.

During the first quarter of 2025, we recognized $4 million of impairment charges for internally developed software within our Water Solutions and Services and Water Infrastructure segments.

Refer to Note 9, "Goodwill and Other Intangible Assets," for additional information.

Note 6. Income Taxes

Our quarterly provision for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items within the periods presented. The comparison of our effective tax rate between periods is significantly impacted by the level and mix of earnings and losses by tax jurisdiction and discrete items.

The income tax provision for the three months ended September 30, 2026 was $77 million resulting in an effective tax rate of 21.1%, compared to a $71 million expense resulting in an effective tax rate of 23.9% for the same period in 2025. The income tax provision for the nine months ended September 30, 2026 was $235 million resulting in an effective tax rate of 24.2%, compared to a $196 million expense resulting in an effective tax rate of 24.1% for the same period in 2025. The effective tax rate for the three months ended September 30, 2026 was generally consistent with the U.S. federal statutory rate. The effective tax rate for the nine months ended September 30, 2026 was higher than the U.S. federal statutory rate primarily due to the mix of earnings across jurisdictions and the tax impact of the 2026 international metering business divestiture.

Unrecognized Tax Benefits

During 2019, Xylem’s Swedish subsidiary received a tax assessment from the Swedish Tax Agency (the "STA") for the 2013 tax year related to the tax treatment of an intercompany transfer of certain intellectual property that was made in connection with a reorganization of our European businesses. Xylem filed an appeal with the Administrative Court of Växjö, which rendered a decision adverse to Xylem in June 2022 for SEK 837 million (approximately $84 million USD) consisting of the full tax assessment amount plus penalties and interest. Xylem appealed this decision with the intermediate appellate court, the Administrative Court of Appeal, and on May 15, 2024, that court rendered a decision in favor of Xylem and also remanded an issue to the trial court for resolution. In December 2025, the trial court issued a ruling on the remanded issue in Xylem's favor. The STA has appealed this ruling to the Administrative Court of Appeal. An oral hearing before the Administrative Court of Appeal is scheduled for November 2026. Management, in consultation with external legal advisors, continues to believe it is more likely than not that Xylem will prevail on the proposed assessment and will continue to vigorously defend our position through this litigation. There can be no assurance that the final determination by the authorities will not be materially different than our position. As of September 30, 2026, we have not recorded any unrecognized tax benefits related to this uncertain tax position.

Note 7. Earnings Per Share

The following is a reconciliation of the shares used in calculating basic and diluted net earnings per share:

(a)Restricted stock units containing rights to non-forfeitable dividends that participate in undistributed earnings with common stockholders are considered participating securities for purposes of computing earnings per share.

(b)Incremental shares from stock options, restricted stock units and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units are included in the treasury stock calculation of diluted earnings per share based upon achievement of underlying performance and market conditions at the end of the reporting period. See Note 15, "Share-Based Compensation Plans," to the condensed consolidated financial statements for further detail on the performance share units.

Note 8. Inventories

The components of total inventories are summarized as follows:

Note 9. Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying value of goodwill by reportable segment for the nine months ended September 30, 2026 are as follows:

Other Intangible Assets

Information regarding our other intangible assets is as follows:

(a)Includes capitalized software developed as a product or service offered directly to external customers. As of September 30, 2026 and December 31, 2025, we had net capitalized software used in sales and services to external customers of $160 million and $175 million, respectively.

Amortization expense related to finite-lived intangible assets was $72 million and $222 million for the three and nine-month periods ended September 30, 2026, respectively. Amortization expense related to finite-lived intangible assets was $78 million and $231 million for the three and nine-month periods ended September 30, 2025, respectively.

During the second quarter of 2025, we recognized a $2 million impairment charge for internally developed software within our Measurement and Control Solutions segment and a $2 million impairment charge for software within our Corporate segment.

During the first quarter of 2025, we recognized $1 million and $3 million impairment charges for internally developed software within our Water Infrastructure and Water Solutions and Services segments, respectively.

Note 10. Derivative Financial Instruments

Risk Management Objective of Using Derivatives

We are exposed to certain risks arising from both our business operations and economic conditions, and we principally manage our exposures to these risks through management of our core business activities. Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates that may impact revenue, expenses, cash receipts, cash payments, and the value of our stockholders' equity. We enter into derivative financial instruments to protect the value or fix the amount of certain cash flows in terms of the functional currency of the business unit with that exposure and also reduce the volatility in stockholders' equity.

In addition, we use interest rate swap agreements designated as fair value hedges to manage exposure to changes in benchmark interest rates associated with certain fixed-rate debt obligations.

Cash Flow Hedges of Foreign Exchange Risk

We are exposed to fluctuations in various foreign currencies against our functional currencies. We use foreign currency derivatives, including currency forward agreements, to manage our exposure to fluctuations in the various exchange rates. Currency forward agreements involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date.

Certain business units with exposure to foreign currency exchange risks have designated certain currency forward agreements as cash flow hedges of forecasted intercompany inventory purchases and sales. Our principal currency exposures for which we enter into cash flow hedges relate to the Euro, Swedish Krona, British Pound, Canadian Dollar, Polish Zloty, and Australian Dollar. We had foreign exchange contracts with purchased notional amounts totaling $138 million and $759 million as of September 30, 2026 and December 31, 2025, respectively. The most significant foreign currency derivatives are as follows:

Hedges of Net Investments in Foreign Operations

We are exposed to changes in foreign currencies impacting our net investments held in foreign subsidiaries.

Cross-Currency Swaps

We have foreign currency exposure in the Euro-U.S. Dollar and Chinese Yuan (CNY) -U.S. Dollar exchange rates, due to our net investment in foreign operations. We use cross-currency swaps to partially mitigate the impact of the foreign currency rate changes on the Company’s net investments denominated in such foreign currencies. The Company’s cross-currency swaps are designated as net investment hedges.

The total notional amount of derivative instruments designated as net investment hedges was $4,404 million and $3,171 million as of September 30, 2026 and December 31, 2025, respectively.

Fair Value Hedges of Fixed-Rate Debt

During the quarter ended September 30, 2026, the Company entered into interest rate swap agreements with an aggregate notional amount of $600 million and designated the swaps as fair value hedges of benchmark interest rate risk associated with portions of its fixed-rate senior notes due 2036 and 2046.

The Company uses interest rate swap agreements to manage exposure to changes in the fair value of fixed-rate debt resulting from changes in benchmark interest. Under these arrangements, the Company receives fixed-rate interest payments and makes variable-rate payments based on Secured Overnight Financing Rate ("SOFR"). The

Company accounts for these interest rate swap agreements as fair value hedges using the shortcut method of accounting under which the hedges are assumed to be perfectly effective.

The table below provides information regarding the Company's outstanding interest rate derivatives that were used to hedge changes in fair value attributable to interest rate risk:

The table below presents the effect of our derivative financial instruments on the Condensed Consolidated Income Statements and Statements of Comprehensive Income. Items in the table below reflect changes in "Other comprehensive income (loss)" ("OCI/L") within the Statements of Comprehensive Income:

As of September 30, 2026, $8 million of net gain on cash flow hedges are expected to be reclassified into earnings in the next 12 months.

As of September 30, 2026, no gains or losses on the net investment hedges are expected to be reclassified into earnings over their duration.

The fair values of our derivative assets and liabilities are measured on a recurring basis using Level 2 inputs and are determined through the use of models that consider various assumptions including yield curves, time value and other measurements.

The fair values of our derivative contracts currently included in our hedging program were as follows:

Note 11. Current Liabilities

The components of total Accrued and other current liabilities are as follows:

The Company facilitates the opportunity for suppliers to participate in voluntary supply chain financing programs with third-party financial institutions. Xylem agrees on commercial terms, including payment terms, with suppliers regardless of program participation. The Company does not determine the terms or conditions of the arrangement between suppliers and the third-party financial institutions. Participating suppliers are paid directly by the third-party financial institution. Xylem pays the third-party financial institution the stated amount of confirmed invoices from its designated suppliers at the original invoice amount on the original maturity dates of the invoices, ranging from 45-180 days. Xylem does not pay fees related to these programs. Xylem or the third-party financial institutions may terminate the agreements upon at least 30 days notice. The total outstanding balance presented within "Accounts payable" on our Condensed Consolidated Balance Sheets under these programs is $250 million and $244 million as of September 30, 2026 and December 31, 2025, respectively.

The table below provides changes in the confirmed obligations outstanding related to our supplier financing programs over the nine months ended September 30, 2026:

Note 12. Credit Facilities and Debt

Total debt outstanding is summarized as follows:

(a)The fair value of our Senior Notes was determined using quoted prices in active markets for identical securities, which are considered Level 1 inputs. The fair value of our Senior Notes due 2026 was $499 million and $497 million as of September 30, 2026 and December 31, 2025, respectively. The fair value of our Senior Notes due 2028 was $480 million and $480 million as of September 30, 2026 and December 31, 2025, respectively. The fair value of our Senior Notes due 2031 was $438 million and $454 million as of September 30, 2026 and December 31, 2025 respectively. The fair value of our Senior Notes due 2033 was $484 million as of September 30, 2026. The fair value of our Senior Notes due 2036 was $483 million as of September 30, 2026. The fair value of our Senior Notes due 2046 was $314 million and $340 million as of September 30, 2026 and December 31, 2025, respectively.

(b)The debt issuance costs and unamortized discount are recognized as a reduction in the carrying value of the Senior Notes in the Condensed Consolidated Balance Sheets and is being amortized to interest expense in our Condensed Consolidated Income Statements over the expected remaining terms of the Senior Notes.

Senior Notes

In the fourth quarter of 2026, we issued $500 million aggregate principal amount of 5.250% Senior Notes due September 2029 (the “Senior Notes due 2029”), $500 million aggregate principal amount of 5.450% Senior Notes due January 2032 (the “Senior Notes due 2032”) and $500 million aggregate principal amount of 5.850% Senior Notes due January 2037 (the “Senior Notes due 2037” and, together with the Senior Notes due 2029 and the Senior Notes due 2032, the “September 2026 Notes”). The September 2026 Notes are unsecured and unsubordinated obligations of the Company and rank equally in right of payment with all of our other unsecured and unsubordinated indebtedness. The September 2026 Notes are not guaranteed by any of our subsidiaries.

The September 2026 Notes include covenants that restrict our ability, and the ability of our restricted subsidiaries, to incur debt secured by liens on certain property above a threshold, to engage in certain sale and leaseback transactions involving certain property above a threshold, and to consolidate or merge, or convey or transfer all or substantially all of our assets. We may redeem the September 2026 Notes, as applicable, in whole or in part, at any time at a redemption price equal to the principal amount of the Notes to be redeemed, plus a make-whole premium. We may also redeem the September 2026 Notes in certain other circumstances, as set forth in the applicable September 2026 Notes indenture.

If a change of control triggering event (as defined in the indenture) occurs, the Company is required to offer to repurchase the September 2026 Notes at a price equal to 101% of their principal amount plus accrued and unpaid interest. The indenture also contains customary provisions regarding events of default, defeasance, and amendment, including the ability to modify certain terms with the consent of holders of a majority in principal amount of the outstanding September 2026 Notes.

The September 2026 Notes are also subject to a special mandatory redemption. If (i) the Company does not complete the acquisition of the Cornell Pump and Roper Pump businesses described in Note 3, “Acquisitions and Divestitures,” on or before August 10, 2027 (or such later date to which the termination date under the definitive agreement for the acquisition may be extended in accordance with its terms), (ii) the definitive agreement is terminated on or before that date, or (iii) the Company notifies the trustee in writing that it will not pursue completion of the acquisition, the Company will be required to redeem all of the September 2026 Notes of each series at a redemption price equal to 101% of their principal amount, plus accrued and unpaid interest to the redemption date.

Interest on the Senior 2029 Notes is payable on March 28 and September 28 of each year, commencing on March 28, 2027. Interest on the Senior 2032 Notes and the Senior 2037 Notes is payable on January 15 and July 15 of each year, commencing on January 15, 2027.

On May 29, 2026, we issued $500 million aggregate principal amount of 5.200% Senior Notes due June 2033 (the “Senior Notes due 2033”) and $500 million aggregate principal amount of 5.450% Senior Notes due June 2036 (the “Blue Notes due 2036” and, together with the Senior Notes due 2033, the “May 2026 Notes”). The May 2026 Notes are unsecured and unsubordinated obligations of the Company and rank equally in right of payment with all of our other unsecured and unsubordinated indebtedness. The May 2026 Notes are not guaranteed by any of our subsidiaries.

The May 2026 Notes include covenants that restrict our ability, and the ability of our restricted subsidiaries, to incur debt secured by liens on certain property above a threshold, to engage in certain sale and leaseback transactions involving certain property above a threshold, and to consolidate or merge, or convey or transfer all or substantially all of our assets. We may redeem the May 2026 Notes, as applicable, in whole or in part, at any time at a redemption price equal to the principal amount of the May 2026 Notes to be redeemed, plus a make-whole premium. We may also redeem the May 2026 Notes in certain other circumstances, as set forth in the applicable May 2026 Notes Indenture.

If a change of control triggering event (as defined in the applicable Senior Notes indenture) occurs, the Company is required to repurchase the May 2026 Notes at a price equal to 101% of their principal amount plus accrued and unpaid interest. The indenture also contains customary provisions regarding events of default, defeasance, and amendment, including the ability to modify certain terms with the consent of holders of a majority in principal amount of the outstanding May 2026 Notes.

Interest on the May 2026 Notes is payable on June 1 and December 1 of each year. As of September 30, 2026, we are in compliance with all covenants for the May 2026 Notes.

On June 26, 2020, we issued 1.950% Senior Notes of $500 million aggregate principal amount due January 2028 (the “Senior Notes due 2028”) and 2.250% Senior Notes of $500 million aggregate principal amount due January 2031 (the “Senior Notes due 2031” and, together with the Senior Notes due 2028, the “Green Bond”).

The Green Bond includes covenants that restrict our ability, and the ability of our restricted subsidiaries, to incur debt secured by liens on certain property above a threshold, to engage in certain sale and leaseback transactions involving certain property above a threshold, and to consolidate or merge, or convey or transfer all or substantially all of our assets. We may redeem the Green Bond at any time, at our option, subject to certain conditions, at specified redemption prices, plus accrued and unpaid interest to the redemption date.

If a change of control triggering event (as defined in the applicable Green Bond indenture) occurs, we will be required to make an offer to purchase the Green Bond notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase.

Interest on the Green Bond is payable on January 30 and July 30 of each year. As of September 30, 2026, we are in compliance with all covenants for the Green Bond.

On October 11, 2016, we issued 3.250% Senior Notes of $500 million aggregate principal amount due November 2026 (the "Senior Notes due 2026") and 4.375% Senior Notes of $400 million aggregate principal amount due November 2046 (the "Senior Notes due 2046" and, together with the Senior Notes due 2026, the "October 2016 Notes").

The October 2016 Notes include covenants that restrict our ability, and the ability of our restricted subsidiaries, to incur debt secured by liens on certain property above a threshold, to engage in certain sale and leaseback transactions involving certain property above a threshold, and to consolidate or merge, or convey or transfer all or substantially all of our assets. We may redeem the October 2016 Notes, as applicable, in whole or in part, at any time at a redemption price equal to the principal amount of our October 2016 Notes to be redeemed, plus a make-whole premium. We may also redeem the October 2016 Notes in certain other circumstances, as set forth in the applicable October 2016 Notes indenture.

If a change of control triggering event (as defined in the applicable Senior Notes indenture) occurs, we will be required to make an offer to purchase the October 2016 Notes at a price equal to 101% of their principal amount plus accrued and unpaid interest to the date of repurchase.

Interest on the October 2016 Notes due 2026 and the Senior Notes due 2046 is payable on May 1 and November 1 of each year. As of September 30, 2026, we are in compliance with all covenants for the October 2016 Notes.

Credit Facilities

2023 Five-Year Revolving Credit Facility

On March 1, 2023, Xylem entered into afive-year revolving credit facility (the "2023 Credit Facility") with Citibank, N.A., as Administrative Agent, and a syndicate of lenders. The 2023 Credit Facility provided for an aggregate principal amount of up to $1 billion (available in U.S. Dollars and in Euros), with increases of up to $300 million for a maximum aggregate principal amount of $1.3 billion at the request of Xylem and with the consent of the institutions providing such increased commitments. On September 8, 2026, Xylem terminated the 2023 Credit Facility among the Company, certain lenders and Citibank, N.A. as Administrative Agent as a result of signing the 2026 Five-Year Revolving Credit Facility.

2026 Five-Year Revolving Credit Facility

On September 8, 2026 Xylem entered into afive-year revolving credit facility (the "2026 Credit Facility") with Citibank, N.A., as Administrative Agent, and a syndicate of lenders. The 2026 Credit Facility provides for an aggregate principal amount of up to $1.5 billion (available in U.S. Dollars and in Euros), with increases of up to $500 million for a maximum aggregate principal amount of $2.0 billion at the request of Xylem and with the consent of the institutions providing such increased commitments.

Interest on all loans under the 2026 Credit Facility is payable either quarterly or at the expiration of any Term SOFR or EURIBOR interest period applicable thereto. Borrowings accrue interest at a rate equal to, at Xylem's election, a base rate or an adjusted Term SOFR or EURIBOR rate plus an applicable margin. The 2026 Credit Facility includes customary provisions for implementation of replacement rates for Term SOFR-based and EURIBOR-based loans. The 2026 Credit Facility also includes a pricing grid that determines the applicable margin based on Xylem's credit rating, with a further adjustment based on Xylem's achievement of certain Environmental, Social and Governance ("ESG") key performance indicators. Xylem will also pay quarterly fees to each lender for such lender's commitment to lend accruing on such commitment at a rate based on Xylem's credit rating, whether such commitment is used or unused, as well as a quarterly letter of credit fee accruing on the letter of credit exposure of such lender during the preceding quarter at a rate based on the credit rating of Xylem with a further adjustment based on Xylem's achievement of certain ESG key performance indicators.

The 2026 Credit Facility requires that Xylem maintain a consolidated total debt to consolidated EBITDA ratio (or maximum leverage ratio), which will be based on the last four fiscal quarters. In accordance with the terms of the agreement to the 2026 Credit Facility, Xylem may not exceed a maximum leverage ratio of 4.00 to 1.00 for a period of four consecutive fiscal quarters beginning with the fiscal quarter during which a material acquisition is consummated and a maximum leverage ratio of 3.50 to 1.00 thereafter for a minimum of four fiscal quarters before another material acquisition is consummated. In addition, the 2026 Credit Facility contains a number of customary covenants, including limitations on the incurrence of secured debt and debt of subsidiaries, liens, sale and lease-back transactions, mergers, consolidations, liquidations, dissolutions and sales of assets. The 2026 Credit Facility also contains customary events of default. Finally, Xylem has the ability to designate subsidiaries that can borrow under the 2026 Credit Facility, subject to certain requirements and conditions set forth in the 2026 Credit Facility. As of September 30, 2026, the 2026 Credit Facility was undrawn, and we are in compliance with all revolver covenants. The 2026 Credit Facility has availability of $1.5 billion, comprised of the $1.5 billion aggregate principal as of September 30, 2026.

As of September 30, 2026, the future maturities of our debt were as follows:

(a)The debt issuance costs and unamortized discount is recognized as a reduction in the carrying value of the Senior Notes in the Consolidated Balance Sheets and is being amortized to interest expense in our Consolidated Income Statements over the expected remaining terms of the Senior Notes.

Commercial Paper

U.S. Dollar Commercial Paper Program

Our U.S. Dollar commercial paper program generally serves as a means of short-term funding with a $600 million maximum issuing balance and a combined limit of $1.5 billion inclusive of the 2026 Credit Facility. As of September 30, 2026 and December 31, 2025, none of the Company's $600 million U.S. Dollar commercial paper program was outstanding, respectively.

Euro Commercial Paper Program

On June 3, 2019, Xylem entered into a Euro commercial paper program with ING Bank N.V., as administrative agent, and a syndicate of dealers. The Euro commercial paper program provides for a maximum issuing balance of up to €500 million (approximately $569 million) which may be denominated in a variety of currencies. The maximum issuing balance may be increased in accordance with the Dealer Agreement. As of September 30, 2026 and December 31, 2025, none of the Company's Euro commercial paper program was outstanding. We have the ability to continue borrowing under this program going forward in future periods.

Note 13. Post-retirement Benefit Plans

The components of net periodic benefit cost for our defined benefit pension plans are as follows:

The components of net periodic benefit cost, other than the service cost component, are included in the line item Other non-operating income, net in the Condensed Consolidated Income Statements.

The total net periodic benefit cost for other post-retirement employee benefit plans was $1 million and $2 million for the three and nine months ended September 30, 2026, respectively, and $1 million for both the three and nine months ended September 30, 2025. The cost includes net credits recognized into "Other comprehensive income (loss)" of less than $1 million, for each of the three and nine months ended September 30, 2026 and 2025, respectively.

We contributed $20 million and $18 million to our defined benefit plans for the nine months ended September 30, 2026 and 2025, respectively. Additional contributions ranging between approximately $3 million and $7 million are expected to be made during the remainder of 2026.

Note 14. Equity

The following table shows the changes in stockholders' equity for the nine months ended September 30, 2026:

The following table shows the changes in stockholders' equity for the nine months ended September 30, 2025:

Note 15. Share-Based Compensation Plans

Share-based compensation expense was $14 million and $39 million during the three and nine months ended September 30, 2026, respectively, and $12 million and $37 million during the three and nine months ended September 30, 2025, respectively. The unrecognized compensation expense related to our stock options, restricted stock units and performance share units was $13 million, $46 million and $24 million, respectively, at September 30, 2026 and is expected to be recognized over a weighted average period of 1.9,2.0 and 1.9 years, respectively. The amount of cash received from the exercise of stock options was $3 million and $11 million for the nine months ended September 30, 2026 and 2025, respectively.

As of September 30, 2026, there were 4.2 million shares of common stock available for future awards.

Stock Option Grants

The following is a summary of the changes in outstanding stock options for the nine months ended September 30, 2026:

The total intrinsic value of options exercised (which is the amount by which the stock price exceeded the exercise price of the options on the date of exercise) during the nine months ended September 30, 2026 was $2 million.

The fair value of each option grant was estimated on the date of grant using the binomial lattice pricing model which incorporates multiple and variable assumptions over time, including employee exercise patterns, stock price volatility and changes in dividends. The following are weighted-average assumptions used for 2026 grants:

Expected volatility is calculated based on an analysis of historic volatility measures for Xylem. We use historical data to estimate option exercise and employee termination behavior within the valuation model. Employee groups and option characteristics are considered separately for valuation purposes. The expected term represents an estimate of the period of time options are expected to remain outstanding. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of option grant.

Restricted Stock Unit Grants

Restricted stock units awarded to employees typically vest over athree-year period. Prior to the time a restricted stock unit becomes fully vested, the awardees cannot transfer, pledge or encumber such units. Prior to the time a restricted stock unit is fully vested, the awardees are not granted certain rights of a stockholder, such as the right to vote and receive dividends; however, dividends accrue during the vesting period and are paid upon vesting. If an employee leaves prior to vesting, whether through resignation or termination for cause, the restricted stock unit and related accrued dividends are forfeited. If an employee retires prior to vesting, a portion or the entirety of the restricted stock unit will vest in accordance with the terms of the applicable grant agreements. Restricted stock units awarded to members of our Board become fully vested upon the day prior to the next annual meeting. The fair value of the restricted stock unit awards is determined using the closing price of our common stock on date of grant.

The following is a summary of restricted stock unit activity for the nine months ended September 30, 2026:

Performance Share Units

Performance share units awarded under the long-term incentive plan vest based upon performance by the Company over athree-year period against targets approved by the Leadership Development & Compensation Committee of the Company's Board of Directors prior to the grant date. The performance share units were each awarded at a target of 100% with actual payout for each type of grant contingent upon the achievement of performance targets as follows:

•EBITDA performance share units — a third-year adjusted EBITDA performance target

•TSR performance share units — a relative TSR performance target

•Revenue performance share units — a pre-set third year revenue target

•EPS performance share units — a cumulative three-year EPS performance target

The calculated compensation cost for EBITDA, Revenue and EPS performance share units is adjusted based on an estimate of awards ultimately expected to vest and our assessment of the probable outcome of the performance condition.

Adjusted EBITDA Performance Share Unit Grants

The fair value of the adjusted EBITDA performance share unit awards is determined using the closing price of the grant.

The following is a summary of our adjusted EBITDA grants for the nine months ended September 30, 2026:

(a) Represents an increase in the number of original EBITDA performance share units awarded based on the final performance condition achievement at the end of the performance period of such awards.

TSR Performance Share Unit Grants

The following is a summary of the changes in outstanding TSR performance share units for nine months ended September 30, 2026:

(a)Represents an increase in the number of original TSR performance share units awarded based on the final market condition achievement at the end of the performance period of such awards.

The fair value of TSR performance share units were calculated on the date of grant using a Monte Carlo simulation model utilizing several key assumptions, including expected Company and peer company share price volatility, correlation coefficients between peers, the risk-free rate of return, the expected dividend yield and other award design features. The following are weighted-average key assumptions for 2026 grants.

Revenue Performance Share Unit Grants

The fair value of the Revenue performance share unit awards is determined using the closing price of our common stock on date of grant.

The following is a summary of our Revenue performance share unit grants for the nine months ended September 30, 2026:

(a)Represents an increase in the number of original revenue performance share units awarded based on the final performance condition achievement at the end of the performance period of such awards.

EPS Performance Share Unit Grants

The fair value of the earnings per share ("EPS") performance share unit awards is determined using the closing price of our common stock on date of grant.

The following is a summary of the changes in outstanding EPS performance share units for nine months ended September 30, 2026:

Employee Stock Purchase Plan

Effective May 18, 2026, we adopted an Employee Stock Purchase Plan ("ESPP"). The ESPP allows eligible employees to contribute up to 15% of their base compensation to purchase shares of our common stock at 85% of the lesser of the closing market price on the first or last day of the offering period. There are 4.0 million shares authorized for sale in connection with the ESPP, which may include treasury or newly issued shares.

The initial offering period under the ESPP began on June 1, 2026 and will close on November 30, 2026. For the three and nine months ended September 30, 2026, no shares have been sold under the ESPP. We accrued less than $1 million of expense for the three and nine months ended September 30, 2026 associated with the ESPP.

Note 16. Capital Stock

For the three and nine months ended September 30, 2026 the Company repurchased 3.2 million shares of common stock for $349 million and 13.7 million shares of common stock for $1,592 million, respectively. For the three and nine months ended September 30, 2025, the Company repurchased less than 0.1 million shares of common stock for $1 million and 0.1 million shares of common stock for $14 million, respectively. Repurchases may include share repurchase programs approved by the Board of Directors and repurchases in relation to settlement of employee tax withholding obligations due as a result of the vesting of restricted stock units. The detail of repurchases by each program are as follows:

On August 24, 2015, our Board of Directors authorized the repurchase of up to $500 million in shares with no expiration date. The program's objective is to deploy our capital in a manner that benefits our shareholders and maintains our focus on growth. During the first quarter of 2026, the Company repurchased 1.4 million shares of common stock for $182 million under this program. As of September 30, 2026 there is no additional capacity for share repurchases under this program.

On February 25, 2026, our Board of Directors authorized the repurchase of up to $1.5 billion in shares with no expiration date. The program's objective is to deploy our capital in a manner that benefits our shareholders and maintains our focus on growth. For the three and nine months ended September 30, 2026, the Company repurchased 3.2 million shares and 12.2 million shares of common stock for $349 million and $1,396 million, respectively, under this program, of which $337 million and $1,384 million, respectively, was paid in cash, and $12 million was accrued as of September 30, 2026. As of September 30, 2026 there are $105 million in additional shares that may still be repurchased under this program.

In relation to the aforementioned share repurchase programs, the Company has accrued a total $15 million in excise taxes as of September 30, 2026. There were no excise taxes accrued related to share repurchase programs as of December 31, 2025.

Aside from the aforementioned repurchase programs, we repurchased less than 0.1 million shares and 0.1 million shares for $0.2 million and $14 million for the three and nine months ended September 30, 2026, respectively and less than 0.1 million shares and 0.1 million shares for $1 million and $14 million for the three and nine months ended September 30, 2025, respectively, in relation to settlement of employee tax withholding obligations due as a result of the vesting of restricted stock units.

Note 17. Accumulated Other Comprehensive Loss

The following table provides the components of accumulated other comprehensive loss ("AOCL") for the nine months ended September 30, 2026:

The following table provides the components of AOCL for the nine months ended September 30, 2025:

Note 18. Commitments and Contingencies

Legal Proceedings

From time to time, we are involved in legal and regulatory proceedings that are incidental to the operation of our businesses (or the business operations of previously owned entities). These proceedings may seek remedies relating to matters including environmental, tax, intellectual property, acquisitions or divestitures, product liability, property damage, personal injury, privacy, employment, labor and pension, government investigations or contract issues and commercial or contractual disputes.

See Note 6, "Income Taxes" of our condensed consolidated financial statements for a description of a pending tax litigation matter.

Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including our assessment of the merits of the particular claims, we do not believe it is reasonably possible that any asserted or unasserted legal claims or proceedings, individually or in aggregate, will have a material effect on the Company's financial position, results of operations, or cash flows.

We have estimated and accrued $6 million and $4 million as of September 30, 2026 and December 31, 2025, respectively, for these general legal matters.

Guarantees

We obtain certain stand-by letters of credit, bank guarantees, surety bonds and insurance letters of credit from third-party financial institutions in the ordinary course of business when required under contracts or to satisfy insurance-related requirements. As of September 30, 2026 and December 31, 2025, the amount of surety bonds, bank guarantees, insurance letters of credit and stand-by letters of credit was $870 million and $822 million, respectively.

Environmental

In the ordinary course of business, we are subject to federal, state, local, and foreign environmental laws and regulations. We are responsible, or are alleged to be responsible, for ongoing environmental investigation and remediation of sites in various countries. Our accrued environmental liabilities represent our best estimates related to the investigation and remediation of environmental media such as water, soil, soil vapor, air and structures at these sites, as well as related legal fees. Liabilities for these environmental expenditures are recorded on an undiscounted basis. We have estimated and accrued $3 million and $4 million as of September 30, 2026 and December 31, 2025, respectively, for environmental matters.

Given the complexities and uncertainties involved in on-going and future investigation and remediation projects, the process to estimate environmental remediation liabilities requires judgment. We believe the total amount accrued is reasonable based on existing facts and circumstances.

Warranties

We warrant numerous products, the terms of which vary widely. In general, we warrant products against defects and specific non-performance. The table below provides changes in the combined current and non-current product warranty accruals over each period.

Note 19. Segment Information

Our business hasfour reportable segments: Water Infrastructure, Applied Water, Measurement and Control Solutions and Water Solutions and Services.

The Water Infrastructure segment focuses on the transportation and treatment of water, offering a range of products including water, wastewater and storm water pumps, controls and systems; treatment equipment: filtration and separation, disinfection, wastewater solutions for municipal and industrial applications.

The Applied Water segment serves many of the primary uses of water and focuses on the residential, commercial and industrial markets. The Applied Water segment's major products include pumps, valves, heat exchangers, controls and dispensing equipment.

The Measurement and Control Solutions segment focuses on developing advanced technology solutions that enable intelligent use and conservation of critical water and energy resources as well as analytical instrumentation used in the testing of water. The Measurement and Control Solutions segment's major products include smart metering, networked communications, measurement and control technologies, critical infrastructure technologies, software and services including cloud-based analytics, and remote monitoring and data management.

The Water Solutions and Services segment provides tailored services and solutions, in collaboration with customers, including on‑demand water, outsourced water, recycle/reuse, pipeline 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.

Corporate and other consists of corporate office expenses including compensation, benefits, occupancy, depreciation, and other administrative costs, as well as charges related to certain matters that are managed at a corporate level and are not included in the business segments in evaluating performance or allocating resources. The accounting policies of each segment are the same as those described in the "Summary of Significant Accounting Policies" section of Note 1 in the 2025 Annual Report.

The chief operating decision maker (“CODM”) for the Company is our President and Chief Executive Officer. The CODM uses segment operating income/(loss) as a primary factor in allocating resources to the segments. The CODM considers budget-to-actual variances on a quarterly basis for the profit measure to assess segment performance. Disaggregated asset information by segment is not provided to the CODM for review, therefore, such information is not presented.

The following tables contain financial information provided to the CODM for each reportable segment:

(a)Adjusted cost of revenue and adjusted operating expenses represent segment-level information that are regularly provided to the CODM. These balances represent cost of revenue and operating expenses, respectively, adjusted to exclude purchase accounting intangible amortization, restructuring and realignment expenses and special charges.

(b)Other segment items for each segment represents purchase accounting intangible amortization, restructuring and realignment expenses and special charges, which are excluded from the above significant expense categories regularly provided to the CODM in line with our adjusted measures as outlined in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2025 Annual Report.

(a) Represents capital expenditures incurred by the centralized support facilities that are not allocated to the segments.

Note 20. Redeemable Non-controlling Interests

The holders of the non-controlling interest in Idrica, a consolidated subsidiary of the Company, have a right to sell the remaining equity interest in Idrica to the Company for cash (the “Put Right”). The Put Right is exercisable after December 10, 2027 and has a fixed strike price of €168 million during the firsttwo years after it is exercisable. Beginning in the third year of exercisability, the Put Right is exercisable at the fair market value of underlying equity interests. Redeemable non-controlling interest is reflected in the consolidated balance sheets at the greater of the carrying value or the redemption value. As of September 30, 2026, the Redeemable Non-Controlling Interest is reflected in the consolidated balance sheet at its carrying value.

The following table shows the changes in the redeemable non-controlling interest for the nine months ended September 30, 2026 and September 30, 2025: