XYLXylem Inc.

The table below provides a reconciliation of total and each segment's operating income to adjusted operating income, and a calculation of the corresponding adjusted operating margin: (In millions) 2023 2022 2025 2024 Change Water Infrastructure Operating income $ 275 462 $ 279 (1.4) 356 29.8 % Operating margin 12.4 17.5 % 16.5 13.9 % (410) 360 bp Restructuring and realignment costs 18 9 100.0 75 30 150.0 % Purchase accounting intangible amortization 47 4 1,075.0% 42 59 (28.8) % Special charges 28 — NM 4 10 (60.0) % Adjusted operating income $ 368 583 $ 292 26.0 455 28.1 % Adjusted operating margin 16.6 22.1 % 17.3 17.8 % (70) 430 bp Applied Water Operating income $ 310 312 $ 258 20.2 271 15.1 % Operating margin 16.7 16.9 % 14.6 15.1 % 210 180 bp Restructuring and realignment costs 14 13 7.7 % Purchase accounting intangible amortization — — NM % Special charges — — NM 28 15 86.7 % Adjusted operating income $ 324 340 $ 271 19.6 286 18.9 % Adjusted operating margin 17.5 18.4 % 15.3 16.0 % 220 240 bp Measurement and Control Solutions Operating income $ 133 244 $ 19 600.0 247 (1.2) % Operating margin 8.3 11.7 % 1.5 13.2 % 680 (150) bp Restructuring and realignment costs 19 16 10 90.0 60.0 % Purchase accounting intangible amortization 57 57 — 77 58 32.8 % Special charges 4 13 (69.2) 16 12 33.3 % Adjusted operating income $ 213 353 $ 99 115.2 327 8.0 % Adjusted operating margin 13.2 16.9 % 7.8 17.5 % 540 (60) bp Water Solutions and Services Operating income $ 132 302 $ 122 8.2 219 37.9 % Operating margin 7.8 12.3 % 15.4 9.3 % (760) 300 bp Restructuring and realignment costs 20 2 900.0 14 35 (60.0) % Purchase accounting intangible amortization 72 11 554.5 100 99 1.0 % Special charges 22 1 2,100.0% 6 15 (60.0) % Adjusted operating income $ 246 422 $ 136 80.9 368 14.7 % Adjusted operating margin 14.6 % 17.1 % (250) 15.7 % 140 bp Corporate and other Operating loss $ (198) (97) $ (56) 253.6 (84) 15.5 % Restructuring and realignment costs 35 — 1 (100.0) % Purchase accounting intangible amortization 1 — NM % Special charges 84 2 4,100.0 10 20 (50.0) % Adjusted operating loss $ (79) (86) $ (54) 46.3 (63) 36.5 % Total Xylem Operating income $ 652 1,223 $ 622 4.8 1,009 21.2 % Operating margin 8.9 13.5 % 11.3 11.8 % (240) 170 bp Restructuring and realignment costs 106 34 211.8 133 91 46.2 % Purchase accounting intangible amortization 176 72 144.4 220 216 1.9 % Special charges 138 16 762.5 36 57 (36.8) % Adjusted operating income $ 1,072 1,612 $ 744 44.1 1,373 17.4 % Adjusted operating margin 14.6 17.8 % 13.5 16.0 % 110 180 bp

Our manufacturing and operating costs are subject to fluctuations, particularly due to fluctuate with volatility or changes in the prices for of commodities, parts, raw materials, energy and related energy, utilities, freight and freight, logistics, and the cost of labor. Cost These fluctuations have been been, and may continue to be be, driven by a variety of factors, such as inflation, tight labor markets, prevailing price levels, exchange rates, changes in trade agreements, tariffs and other trade protection measures, and other economic and geopolitical factors. Throughout 2024, our operating costs were adversely impacted by price inflation, which could continue in 2025 to varying degrees depending, in part, on broader macroeconomic, political or geopolitical conditions. factors. For example, our global supply chain includes shipping routes through the Red Sea, where vessels have been and may continue to be impacted by armed conflicts involving rebel groups; and continued conflicts ongoing or escalation of ongoing conflicts in Ukraine or and the Middle East East, and the increasing tensions or outbreak of conflict between China and Taiwan, could adversely impact our logistics costs and result in an further increase in our costs for logistics, energy and supplies, supply costs, and potentially delay shipments to customers. customer shipments. We have rely on a large and complex network of suppliers (and their suppliers) and contract manufacturers globally, including in China and Mexico. The U.S. has enacted or threatened various trade actions, including new or additional tariffs on certain goods we import imported from China, Mexico, Canada Canada, Europe and other countries, which has or may result in retaliatory measures. On August 29, 2025, the U.S. Court of Appeals for the Federal Circuit ruled that many of the tariffs imposed by the U.S. federal government under the International Emergency Economic Powers Act exceed presidential authority and other therefore are invalid. On February 20, 2026, the U.S. Supreme Court affirmed that ruling. As of the date of this filing, tariffs issued under the different statutes remain in place, and the scope and durability of existing and future tariffs, as well as tariffs in place prior to the U.S. Supreme Court’s ruling, remain uncertain. U.S. and international trade actions. As a result, these U.S. trade measures or countermeasures by China, Mexico or other countries actions could increase the cost of our products, which we may not be able to offset through price increases pricing or productivity, and could also impede impair our ability to remain competitive. Further, in competitiveness. In a declining price environment, our operating margins may contract because we account for inventory using the first-in, first-out method. Actions we take to mitigate cost volatility in manufacturing and operating costs may not be successful and, as a result, our business, financial condition, cash flows and results of operations could be materially and adversely affected.

Accruals 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 matters are recorded on a site-by-site basis when it is probable that a liability has been incurred investigation and the amount remediation of the liability can be reasonably estimated, based on current law and existing technologies. sites in various countries. Our accrued liabilities for these environmental matters represent our best estimates related to the investigation and remediation of environmental media such as water, soil, soil vapor, air and structures, as well as related legal fees. These estimates, and related accruals, are reviewed quarterly and updated for progress of investigation and remediation efforts and changes in facts and legal circumstances. Liabilities for these environmental expenditures are recorded on an undiscounted basis. We have estimated and accrued $4 million as of both December 31, 2024 2025 and 2023, 2024, respectively, for environmental matters.

Xylem recognizes revenue in a manner that depicts the transfer of promised goods and services to customers in an amount that reflects the consideration to which it expects to be entitled for providing those goods and services. For each arrangement with a customer, we identify the contract and the associated performance obligations within the contract, determine the transaction price of that contract, allocate the transaction price to each performance obligation and recognize revenue as each performance obligation is satisfied. As a result of the Evoqua acquisition, we assessed our prior definition of service revenue and redefined service revenue for the combined company as revenue resulting from the satisfaction of performance obligations primarily related to outsourced water services, maintenance, repair, preventive and inspection services, software as a service ("SaaS") subscriptions, and spare parts sales related to these service offerings.