10-K 0001524472-26-000012 (2026-02-25) vs 10-K 0001524472-25-000013 (2025-03-03)
| Section | Compared text | Words now | Changed |
|---|
| Risk Factors | Item 1A | 9,047 |
33.3% |
| MD&A | Item 7 | 10,355 |
34.3% |
| Legal Proceedings | Item 3, via Note 20 – Commitments and Contingencies | 536 |
26.3% |
| Accounting Policies | Item 8, Note 1 – Summary of Significant Accounting Policies | 6,014 |
7.8% |
The redline: what was cut and what was added
In each section, the paragraph that changed most, marked against last year's 10-K:
cut words struck through, new words highlighted and underlined.
MD&A 364 words changed in this paragraph; it is 47% similar to last year's version.
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
Source: Item 7, 10-K 0001524472-26-000012 vs Item 7, 10-K 0001524472-25-000013
Risk Factors 278 words changed in this paragraph; it is 57% similar to last year's version.
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.
Source: Item 1A, 10-K 0001524472-26-000012 vs Item 1A, 10-K 0001524472-25-000013
Legal Proceedings 96 words changed in this paragraph; it is 57% similar to last year's version.
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.
Source: Item 3, via Note 20 – Commitments and Contingencies, 10-K 0001524472-26-000012 vs Item 3, via Note 20 – Commitments and Contingencies, 10-K 0001524472-25-000013
Accounting Policies 59 words changed in this paragraph; it is 73% similar to last year's version.
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.
Source: Item 8, Note 1 – Summary of Significant Accounting Policies, 10-K 0001524472-26-000012 vs Item 8, Note 1 – Summary of Significant Accounting Policies, 10-K 0001524472-25-000013
Every change, by type
Sentences and paragraphs of XYL's Risk Factors and MD&A, 10-K 2026-02-25 against 10-K 2025-03-03.
Each links to the text at sec.gov.
Quiet changes are sentences kept from last year with one to four words changed, at least one of them a hedge, a modal or a qualifier
(may, could, will, not, significant, material…). A year or date rolling forward is not counted.
The full word list
adverse, adversely, all, although, anticipate, anticipates, any, approximately, believe, believes, can, cannot, certain, could, expect, expects, generally, however, if, intend, intends, largely, likely, many, material, materially, may, might, most, must, never, no, not, possible, primarily, probable, should, significant, significantly, some, substantial, substantially, unlikely, will, would
AddedRisk Factors
Geopolitical changes in China-Taiwan relations could disrupt the operations of companies in Taiwan that are critical to the global supply chain for semiconductors (“chips”) and other electronic components, as well as the supply of lithium batteries, carbide seals, and rare earth elements. Such changes could have significant negative effects on the global supply chain for these components and materials and could adversely affect our ability to manufacture certain of our digitally-enabled products, such as pumps, controllers and smart meters.
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AddedRisk Factors
We cannot predict the impact that such factors might have on our business, financial condition, cash flows, results of operations an share price.
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AddedRisk Factors
and improving our competitive position requires successful management of these factors in a volatile business environment marked by rapid change and disruption.
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AddedRisk Factors
A cybersecurity incident or other damage or disruption to IT and communications networks, or involving our connected products and services, may have adverse effects on us, our customers or third parties on which we rely by interfering with operations and services, potentially with public health and safety risks involving certain of our
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedRisk Factors
security, or service may result in significant costs, reduced profitability, and negative publicity and reputational harm, reducing demand for our products and materially affecting our business, financial condition and results of operations.
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AddedRisk Factors
Sustainability-related laws, regulations, targets and objectives, and stakeholder expectations expose us to numerous risks.
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AddedRisk Factors
In support of our strategy, we have and will continue to establish goals, targets, and other objectives related to sustainability matters. Achieving these goals, targets and objectives requires evolving our business, making capital investments, and developing new or existing technologies. These efforts may result in additional expenses or require us to recognize impairment charges. These goals, targets and objectives reflect our current plans but there
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RemovedRisk Factors
•changes in tax laws and potential negative consequences from the interpretation, application and enforcement by governmental authorities of tax laws and policies, as well as changes in other laws, regulations and policies or how they are interpreted or administered;
Read it in 10-K 2025-03-03 at sec.gov ↗
RemovedRisk Factors
•shocks to the global financial system, including due to the outbreak or threat of war, armed conflict, other geopolitical conflicts, terrorism or global health crises, the effects of climate change, or other idiosyncratic events.
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RemovedRisk Factors
We have significant operations and direct and indirect suppliers located in China, which have been in the past, or could in the future be, adversely affected by: i) China’s evolving laws, regulations and policies, including as respects public health crises, import and export tariffs and restrictions, and information security and privacy, and ii) changes in the political and geopolitical environment, including China's relations with the U.S., European Union and Taiwan. The U.S.’s imposition of tariffs on goods imported from China or deemed to be of Chinese origin, as well as the potential for new or increased tariffs, other governmental actions, trade embargoes or sanctions by the U.S., or similar measures or countermeasures imposed by China in response, has in the past and could in the future have an adverse direct or indirect impact our global supply chain, manufacturing costs, business and operating results. Geopolitical changes in China-Taiwan relations could disrupt the operations of several companies in Taiwan that are critical to the global supply chain for semiconductors (“chips”) and other electronic components. Such changes could have significant negative effects on the global semiconductor industry and could adversely affect our ability to manufacture our digitally-enabled products, such as pumps, controllers and smart meters.
Read it in 10-K 2025-03-03 at sec.gov ↗
RemovedRisk Factors
On May 24, 2023, we completed the acquisition of Evoqua. The success of this acquisition will depend, in part, on our ability to realize the anticipated benefits from combining our and Evoqua’s businesses. We have and continue to devote substantial management attention and resources to the integration of the combined company’s business practices and operations so that we can fully realize the anticipated benefits of the acquisition, including cost and revenue synergies. Nonetheless, difficulties may arise that could impede our ability to achieve the anticipated synergies, including the loss of key talent that may be difficult to replace or our ability to maintain and expand relationships with customers, partners or suppliers. As a result, the anticipated benefits of the acquisition may take
Read it in 10-K 2025-03-03 at sec.gov ↗
RemovedRisk Factors
Many of our customers also have safety performance requirements that we must meet to be allowed access to their sites to perform our services, install our products and execute projects. Risks arising from unsafe products or
Read it in 10-K 2025-03-03 at sec.gov ↗
RemovedRisk Factors
or inefficiencies during transitional periods. Transforming, realigning and restructuring our company require a significant amount of management and other employees' time and focus, which may divert attention from operating and growing our business.
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RemovedRisk Factors
Our sustainability commitments, goals, targets, objectives and initiatives, and our public statements and disclosures regarding them or in response to mandatory reporting standards, expose us to numerous risks.
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RemovedRisk Factors
•the statutory tax rates and tax laws in jurisdictions in which we conduct business;
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RemovedRisk Factors
•the resolution of tax issues arising from tax examinations by various tax authorities; and
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RemovedRisk Factors
Our pension and other defined benefit plans are subject to regulatory and financial market risks.
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RemovedRisk Factors
Certain current and retired employees are covered by pension and other defined benefit plans (collectively, “post-retirement benefit plans”). We make contributions to fund our post-retirement benefit plans when it is necessary or we consider it advantageous to do so. Risks to the Company include significant changes in market interest rates and inflation, decreases in fair value of plan assets, changes in discount rates, or changes in minimum funding requirements established by governments, taxing authorities or other agreements, any of which could increase our funding obligations and adversely impact our earnings, financial condition and cash flows in future periods. In addition to cash funding, we attempt to mitigate these risks, including through investments in assets intended to hedge market risk and in insurance solutions to transfer risk. However, the cost of our post-retirement benefit plans is incurred over long periods of time and involves factors that can be volatile and unpredictable, including rates of return on plan assets, discount rates used to calculate liabilities and expenses, changes in laws, regulatory actions, and changes in actuarial experience and assumptions, which could adversely impact our earnings, results of operations, financial condition and cash flows.
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RemovedRisk Factors
climate change laws and regulations, enforcement actions or litigation, discovery of previously unknown or more extensive contamination conditions, obsolescence of our products, interruption or suspension of our operations, an inability to recover costs associated with any such developments, or the financial insolvency of other responsible parties, could have material adverse effects on our business, financial condition, cash flows, results of operations, and reputation.
Read it in 10-K 2025-03-03 at sec.gov ↗
RewordedRisk Factors
Our facilities, operations, customers, contract manufacturers, subcontractors or other and third parties on which we rely, have experienced, or may in the future experience, disruptions or delays resulting from an actual or threatened event events or circumstance, circumstances, including due to: equipment, technological equipment or system failure; application upgrades or implementations (such as our Enterprise Resource Planning software); natural disaster; disasters; weather event events or effects of climate change; water, communications, power or energy curtailment or outage; volatile weather patterns; utility outages; fire; explosion; critical supply chain failure; failures; export restrictions on critical materials; terrorism; cybersecurity incident; incidents; political disruption; outbreak of a pandemic pandemics or other public health crisis; crises; insurrection; armed conflict or war, including the ongoing conflicts involving Russia war; rising tensions or potential outbreak of conflict between China and Ukraine, the Middle East, and rebel attacks on vessels in the Red Sea; Taiwan; labor dispute, stoppage disputes; or slowdown; lack of financial viability or other reason. distress.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
We are exposed to the availability Availability of these items, which items has in the past been, and may in the future be subject to delay, shortage, curtailment be, affected by delays, shortages, curtailment, or change changes due to macroeconomic, geopolitical and other factors, including: supply and demand dynamics; labor shortages or disputes; changes in suppliers’ supplier strategy or production planning including decisions to exit production of key components upon on which we rely; production interruptions in suppliers' production, including as a result of from cybersecurity or information technology disruptions, or humanmade or natural disasters; a supplier’s impaired supplier financial condition; suppliers’ distress; capacity allocations to other purchasers; changes in trade agreements and agreements, or trade protection measures including tariffs or export restrictions; ability to meet regulatory requirements; weather emergencies and the effects of climate change; public health crises; and threatened or actual terrorism, armed conflict or war, including the ongoing conflicts between Russia and Ukraine, in the Middle East, and rebel attacks on commercial vessels in the Red Sea.
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RewordedRisk Factors
These A portion of our revenue comes from complex, multi-year projects are subject to a number of that involve significant risks, including delays; delays, cost overruns; changes in scope; overruns, scope changes, unanticipated site conditions; conditions, design and engineering issues; issues, incorrect cost assumptions; increases in the cost of materials assumptions, rising material and labor; labor costs, health and safety hazards; hazards, subcontractor performance issues; issues, supply chain disruptions, weather issues; events, and changes in laws, regulations or permitting requirements.
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RewordedRisk Factors
In addition, as As a result of such infringement or misappropriation claims, result, we could lose our rights to use or license critical technology, sell critical products and services, be required to pay substantial damages or license fees with respect to the use of third-party intellectual property rights, fees, or be required incur significant costs to redesign our products at substantial cost, products, any of which could adversely impact our competitive position, position and financial condition and results of operations. results.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Although we maintain a cybersecurity program that we believe is reasonably designed to protect our information technology, IT, products and services, because the timing, unpredictable and evolving nature and modes of cybersecurity attacks and incidents change frequently, evolve incidents, and are unpredictable, and because the difficulty of detecting unauthorized accesses access may be difficult to detect for long periods of time, we may be unable to anticipate prevent us from anticipating or prevent these preventing intrusions or implement implementing adequate protective or remedial measures.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Similarly, our failure Failure or perceived failure to pursue or fulfill meet our sustainability commitments, goals, targets, targets and objectives, to or comply with ethical, environmental or other standards, regulations, or expectations, or to comply with reporting and disclosure requirements and evolving standards related to these matters, within the timelines we announce, or at all, could have adverse operational, reputational, financial and legal impacts.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Workplace or product-related accidents or near-accidents, or the failure to follow our own or our customers’ safety policies could also damage our reputation or our customers’ perception of our safety record, which could have a material adverse impact on reputation, reduce demand for our products and services, result in additional costs to our business, the increase costs, cause customer loss of customers or litigation against us, litigation, or increase government or regulatory oversight.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
If supply disruptions in our supplies occur (including in the rare earths or global semiconductor industries earths, semiconductors, or other key inputs), or if our mitigation efforts to mitigate these shortages and disruptions are insufficient or unsuccessful, we may be delayed or unable to execute on our backlog, fill new customer orders orders, or timely deliver products to our customers, products, which could have a material adverse effect on materially and adversely affect our business, financial condition or results of operations.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Our failure Failure to obtain obtain, maintain or maintain protect intellectual property rights that convey competitive advantage, adequately protect our intellectual property, – or detect or prevent circumvention, misappropriation or unauthorized use of such property, as well as the cost of enforcing our intellectual property rights, them - could adversely impact our business, financial condition and results of operations.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
(i) the failure to efficiently, effectively and timely integrate acquired businesses into our operations, technology, financial and other systems, (ii) the failure of acquired businesses to meet or exceed expected returns, which in the past has led to, and in the future may lead to, accounting impairments, impairments; or (iii) the discovery of unanticipated failure to discover liabilities, adverse operational issues, cybersecurity concerns, issues, control or compliance issues, environmental matters, labor relations difficulties, or other issues for which we lack contractual protections, insurance or indemnities.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Although we have maintain insurance related to coverage for business continuity and supply chain, we cannot be certain that this chain risks, such coverage will continue to be may not remain available at a reasonable cost or will be adequate to adequately cover any or all aspects of our supply chain disruptions.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedRisk Factors
Although we continue to assess the aforementioned risks, implement policies, processes, standards, measures, technologies and redundancies safeguards to mitigate these risks risks, and perform conduct business continuity and disaster recovery planning, we cannot be sure ensure that material cybersecurity incidents or other disruptions with material adverse effects will not occur, or that our business continuity and disaster recovery efforts will be effective and adequate. fully effective.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesRisk Factors
Economic and industry factors that have had, or could may in the future have, a material impact on our businesses and demand for our products and services include:
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesRisk Factors
Moreover, a Any delay in or failure to detect a cybersecurity incident or the full extent of an incident could exacerbate the effects of the incident.
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Quiet changesRisk Factors
As implementation and compliance is the responsibility of employees across the enterprise, we cannot guarantee full adherence in all instances with our policies, standards and procedures, or that our technologies will be sufficient to fully mitigate the aforementioned or evolving risks.
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Quiet changesRisk Factors
Our businesses are impacted by short cycle and book-and-bill business to varying degrees, which may be difficult to predict, or we may have limited visibility into, into particularly for the business that we transact through our significant distribution network.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesRisk Factors
In addition, certain Some of our products may be subject to product safety regulations.
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Quiet changesRisk Factors
Infringement or expiration of our intellectual property rights, or allegations that we have infringed upon on the intellectual property rights of third parties could negatively adversely affect us.
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AddedMD&A
external partners, and extensive service branch networks across the globe, including a rental fleet of transfer and treatment assets to serve our customers.
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AddedMD&A
If shipping and handling activities are performed after a customer obtains control of a good, we account for the shipping and handling activities as activities to fulfill a promise to transfer a good. Shipping and handling related costs are accrued as revenue is recognized.
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AddedMD&A
We exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected from a customer, for example sales, use, value added and some excise taxes.
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AddedMD&A
For all contracts with customers, payment received for our products and services may not necessarily follow the same pattern of revenue recognition to which it relates and are dictated by the terms and conditions of our contracts with customers. Payments received for product sales typically occur following delivery and the satisfaction of the performance obligations based upon the terms outlined in the contracts. Payments received for services typically occur following the services being rendered. For long-term construction-type projects, payments are typically made throughout the contract as progress is made.
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AddedMD&A
In limited situations, contracts with customers include financing components where payment terms exceed one year; however, we believe that the financing effects are not significant to Xylem. In addition, we apply a practical expedient and do not adjust the promised amount of consideration in a contract for the effects of significant financing components when we expect payment terms to be one year or less from the time the goods or services are transferred until ultimate payment.
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AddedMD&A
We offer standard warranties for our products to enable compliance with agreed-upon specifications in our contracts. Standard warranties do not give rise to performance obligations and represent assurance-type warranties. In certain instances, product warranty terms are adjusted to account for the specific nature of the contract. In these instances, we assess the warranties to determine whether they represent service-type warranties, and should be accounted for as a separate performance obligation in the contract.
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AddedMD&A
Costs to obtain a contract include incremental costs that the Company has incurred that it expects to recover. Incremental costs only include costs that the Company would not have incurred had the contract not been obtained. Costs that would have been incurred regardless of whether or not the contract was obtained are expensed as incurred, unless they are explicitly chargeable to the customer whether or not the contract is obtained.
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AddedMD&A
Costs to obtain contracts are capitalized when incurred, and are then amortized in a manner that is consistent with the pattern of transfer of the related goods or services provided in the contract. The Company elects to apply the practical expedient to expense costs to obtain contracts when the associated amortization period of those costs would be one year or less.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
Business Combinations. We record acquisitions using the acquisition method of accounting. Under this method, we recognize the identifiable assets acquired, liabilities assumed, contractual contingencies, and any contingent consideration at their estimated fair values as of the acquisition date. The excess of the consideration transferred over the fair value of the identifiable net assets acquired is recorded as goodwill.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
The determination of the fair value of acquired assets and assumed liabilities requires the use of significant estimates and assumptions. These include judgments about the selection of valuation methodologies, the determination of appropriate discount rates and market‑participant assumptions, estimates of future cash flows attributable to the acquired assets, and expected cost synergies or other benefits arising from the acquisition. For certain assets such as technology‑based intangibles, customer‑related intangibles, and trade names, valuation techniques may require assumptions about replacement cost, expected economic obsolescence, projected revenue growth, customer attrition, and the weighted‑average cost of capital.
Read it in 10-K 2026-02-25 at sec.gov ↗
AddedMD&A
We develop these fair value estimates using historical experience, information obtained from the management of the acquired business, and, when appropriate, the assistance of independent third‑party valuation specialists. These estimates are inherently uncertain, rely on judgment, and may be affected by unanticipated events or changes in economic conditions. As a result, actual results may differ materially from the estimates used in acquisition accounting.
Read it in 10-K 2026-02-25 at sec.gov ↗
RemovedMD&A
On May 24, 2023, Xylem completed the acquisition of Evoqua. Commencing from the acquisition date, Xylem’s financial statements include the assets, liabilities, operating results and cash flows of Evoqua. Refer to Note 3, "Acquisitions and Divestitures," for additional information.
Read it in 10-K 2025-03-03 at sec.gov ↗
RemovedMD&A
During 2023, we incurred these charges primarily as a result of our acquisition of Evoqua. Approximately $27 million of the charges related to share-based compensation expense due to acceleration clauses in Evoqua's equity compensation agreements. Approximately $15 million of the charges represented the reduction of headcount related to the integration of Evoqua. Additionally, during 2023 we incurred $30 million of charges related to our efforts to reposition our businesses to optimize our cost structure, improve our operational efficiency and effectiveness, strengthen our competitive positioning and better serve our customers. The charges were incurred across all of our segments.
Read it in 10-K 2025-03-03 at sec.gov ↗
RemovedMD&A
During 2022, we incurred restructuring charges primarily as a continuation of our efforts to reposition our European and North American businesses to optimize our cost structure and improve our operational efficiency and effectiveness. The charges included the reduction of headcount across all of our segments.
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RemovedMD&A
Business Combinations. We record acquisitions using the purchase method of accounting. All of the assets acquired, liabilities assumed, contractual contingencies and contingent consideration is recorded at fair value as of the acquisition date. The excess of the purchase price over the estimated fair values of the net tangible and intangible assets acquired is recorded as goodwill. The application of the purchase method of accounting for business combinations requires management to make significant estimates and assumptions in the determination of the fair value of assets acquired and liabilities assumed, in order to properly allocate purchase price consideration between assets that are depreciated and amortized from goodwill. These assumptions and estimates include a market participant’s use of the asset and the appropriate discount rates for a market participant. Our estimates are based on historical experience, information obtained from the management of the acquired companies and, when appropriate, includes assistance from independent third-party appraisal firms. Significant assumptions and estimates include, but are not limited to, the cash flows that an asset is expected to generate in the future, the cost to build/recreate certain technology, the appropriate weighted-average cost of capital, and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable. In addition, unanticipated events and circumstances may occur which may affect the accuracy or validity of such estimates.
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RemovedMD&A
year. Asset values for other positions were generally measured using market observable prices. We estimate that a 5.00% change in asset values will impact funded status by approximately $11 million.
Read it in 10-K 2025-03-03 at sec.gov ↗
RemovedMD&A
On January 28, 2025, at the delegation of the Company’s Board of Directors, management committed to a restructuring plan. The plan consists of workforce reductions across all of our businesses and functions. Inclusive of these actions, we expect to incur between $90 million and $110 million in restructuring and realignment charges in 2025. Associated with these actions we expect to realize between $75 million and $95 million in incremental savings during 2025.
Read it in 10-K 2025-03-03 at sec.gov ↗
RewordedMD&A
(In millions) 2025 2024 2023 Change Water Infrastructure Operating income $ 462 $ 356 $ 275 29.5 29.8 % Operating margin 17.5 % 13.9 % 12.4 % 150 360 bp Restructuring and realignment costs 75 30 18 66.7 150.0 % Purchase accounting intangible amortization 42 59 47 25.5 (28.8) % Special charges 4 10 28 (64.3) (60.0) % Adjusted operating income $ 583 $ 455 $ 368 23.6 28.1 % Adjusted operating margin 22.1 % 17.8 % 16.6 % 120 430 bp Applied Water Operating income $ 312 $ 271 $ 310 (12.6) 15.1 % Operating margin 16.9 % 15.1 % 16.7 % (160) 180 bp Restructuring and realignment costs 28 15 14 7.1 % Purchase accounting intangible amortization — — NM % Special charges — — NM 86.7 % Adjusted operating income $ 340 $ 286 $ 324 (11.7) 18.9 % Adjusted operating margin 18.4 % 16.0 % 17.5 % (150) 240 bp Measurement and Control Solutions Operating income $ 244 $ 247 $ 133 85.7 (1.2) % Operating margin 11.7 % 13.2 % 8.3 % 490 (150) bp Restructuring and realignment costs 16 10 19 (47.4) 60.0 % Purchase accounting intangible amortization 77 58 57 1.8 32.8 % Special charges 16 12 4 200.0 33.3 % Adjusted operating income $ 353 $ 327 $ 213 53.5 8.0 % Adjusted operating margin 16.9 % 17.5 % 13.2 % 430 (60) bp Water Solutions and Services Operating income $ 302 $ 219 $ 132 65.9 37.9 % Operating margin 12.3 % 9.3 % 7.8 % 150 300 bp Restructuring and realignment costs 14 35 20 75.0 (60.0) % Purchase accounting intangible amortization 100 99 72 37.5 1.0 % Special charges 6 15 22 (31.8) (60.0) % Adjusted operating income $ 422 $ 368 $ 246 49.6 14.7 % Adjusted operating margin 17.1 % 15.7 % 14.6 % 110 140 bp Corporate and other Operating loss $ (97) $ (84) $ (198) (57.6) 15.5 % Restructuring and realignment costs — 1 35 (97.1) (100.0) % Purchase accounting intangible amortization 1 — NM Special charges 10 20 84 (76.2) (50.0) % Adjusted operating loss $ (86) $ (63) $ (79) (20.3) 36.5 % Total Xylem Operating income $ 1,223 $ 1,009 $ 652 54.8 21.2 % Operating margin 13.5 % 11.8 % 8.9 % 290 170 bp Restructuring and realignment costs 133 91 106 (14.2) 46.2 % Purchase accounting intangible amortization 220 216 176 22.7 1.9 % Special charges 36 57 138 (58.7) (36.8) % Adjusted operating income $ 1,612 $ 1,373 $ 1,072 28.1 17.4 % Adjusted operating margin 17.8 % 16.0 % 14.6 % 140 180 bp
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Year Ended December 31, 2023 2025 (in millions) Water Infrastructure Applied Water Systems Measurement and Control Solutions Water Solutions and Services Operating Income $ 275 462 $ 310 312 $ 133 244 $ 132 302 Operating margin 12.4 17.5 % 16.7 16.9 % 8.3 11.7 % 7.8 12.3 % (Loss) Loss (gain) attributable to non-controlling interests — (1) 9 (1) Loss from sale of business businesses (7) — — (1) (24) — Depreciation 34 25 27 105 44 29 33 159 Amortization 55 3 97 79 54 4 135 108 Other non-operating expense, excluding interest 3 (6) — (2) (4) 1 (1) EBITDA $ 367 547 $ 336 344 $ 252 395 $ 317 567 Share-based compensation 13 3 10 5 8 7 10 Restructuring and realignment 18 13 17 20 73 28 16 14 Special charges 28 4 — 4 22 16 6 Loss from sale of business businesses 7 — 24 — (Loss) gain attributable to non-controlling interests $ — $ 1 — $ (9) $ 1 Adjusted EBITDA $ 426 641 $ 352 378 $ 281 450 $ 369 595 Adjusted EBITDA margin 19.2 24.3 % 19.0 20.4 % 17.4 21.6 % 21.9 24.1 %
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
(in millions) Year Ended December 31, 2025 2024 2023 Change Net Income attributable to Xylem $ 957 $ 890 $ 609 46 8 % Net Income margin 10.6 % 10.4 % 8.3 % 210 20 bp Depreciation 267 258 193 34 3 % Amortization 308 304 243 25 1 % Interest expense, net 2 16 21 (24) (88) % Income tax expense 231 197 26 658 17 % EBITDA $ 1,765 $ 1,665 $ 1,092 52 6 % Share-based compensation 53 56 60 (7) (5) % Restructuring and realignment 131 91 103 (12) 44 % Special charges 36 57 136 (58) (37) % Gain on remeasurement of previously held equity interest — (152) — NM (100) % Loss from sale of business businesses 31 46 1 4500 (33) % Loss attributable to non-controlling interest (7) — NM Adjusted EBITDA $ 2,009 $ 1,763 $ 1,392 27 14 % Adjusted EBITDA margin 22.2 % 20.6 % 18.9 % 170 160 bp
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
(in millions, except per share data) 2025 2024 2023 Net income and attributable to Xylem & Earnings per share $ 957 $ 3.92 $ 890 $ 3.65 $ 609 $ 2.79 Restructuring and realignment 133 0.54 91 0.37 106 0.49 Acquired intangible amortization 220 0.90 216 0.89 176 0.81 Special charges (a) 36 0.15 57 0.23 138 0.63 Gain on remeasurement of previously held equity interest — — (152) (0.62) — — Tax-related special items (b) (52) (0.21) (19) (0.08) (115) (c) (0.53) Loss from sale of business businesses 31 0.13 46 0.19 1 — Tax effects of adjustments (b) (c) (85) (0.35) (88) (0.36) (90) (0.41) Adjusted net income and & Adjusted earnings per share $ 1,240 $ 5.08 $ 1,041 $ 4.27 $ 825 $ 3.78 Weighted average number of shares - diluted 244.0 243.5 218.2
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
The increase at constant currency consists of organic growth of $419 million and favorable foreign currency impacts of $71 million, partially offset by net revenue declines from acquisitions and divestitures of $786 million and an increase in organic revenue of $424 million $17 million, reflecting organic growth across all segments and most major geographic regions, with organic growth in the Measurement U.S. and Control Solutions, Water Infrastructure, and Water Solutions and Services segments, western Europe more than offsetting organic declines in the Applied Water segment. emerging markets.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
The increase at constant currency consists of organic growth of $419 million and favorable foreign currency impacts of $71 million, partially offset by net revenue declines from acquisitions and divestitures of $786 million and an increase in organic revenue of $424 $17 million, reflecting organic growth across all segments and most major geographic regions, with organic growth in the Measurement U.S. and Control Solutions, Water Infrastructure, and Water Solutions and Services segments, western Europe more than offsetting organic declines in the Applied Water segment. emerging markets.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Excluding restructuring and realignment costs, acquired intangible asset amortization, and special charges and restructuring and realignment costs, charges, adjusted operating income was $583 million (adjusted operating margin of 22.1%) during 2025 as compared to adjusted operating income of $455 million (adjusted operating margin of 17.8%) during 2024 as compared to adjusted operating income of $368 million (adjusted operating margin of 16.6%) during the prior year.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Excluding special charges, acquired intangible asset amortization, and restructuring and realignment costs, adjusted operating Operating income was $1,373 $1,223 million (adjusted operating (operating margin of 16.0%) for 2024 as 13.5%) during 2025, an increase of $214 million, or 21.2%, when compared to adjusted operating income of $1,072 $1,009 million (adjusted operating (operating margin of 14.6%) 11.8%) during the prior year.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Operating Excluding restructuring and realignment costs, acquired intangible asset amortization, and special charges, adjusted operating income was $1,009 $1,612 million (operating (adjusted operating margin of 11.8%) during 2024, an increase of $357 million, or 54.8%, when 17.8%) for 2025 as compared to adjusted operating income of $652 $1,373 million (operating (adjusted operating margin of 8.9%) 16.0%) during the prior year.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Excluding the impact of these items, adjusted operating income was $1,612 million, with an adjusted operating margin of 17.8% in 2025 as compared to adjusted operating income of $1,373 million, million with an adjusted operating margin of 16.0% in 2024 as compared to adjusted operating income of $1,072 million with an adjusted operating margin of 14.6% in 2023, 2024, an increase of 140 180 basis points.
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
(in millions) 2025 2024 2023 Change Selling, general and administrative expenses $ 1,923 $ 1,911 $ 1,757 8.8 0.6 % SG&A as a % of revenue 21.3 % 22.3 % 23.9 % (160) (100) bp Research and development expenses 226 230 232 (0.9) (1.7) % R&D as a % of revenue 2.5 % 2.7 % 3.2 % (50) (20) bp Restructuring and asset impairment charges 103 62 76 (18.4) 66.1 % Operating expenses $ 2,252 $ 2,203 $ 2,065 6.7 2.2 % Expense to revenue ratio 25.0 % 25.7 % 28.0 % (230) (70) bp
Read it in 10-K 2026-02-25 at sec.gov ↗
RewordedMD&A
Excluding acquired intangible asset amortization, restructuring and realignment costs, acquired intangible asset amortization, and special charges, adjusted operating income was $353 million (adjusted operating margin of 16.9%) during 2025 as compared to adjusted operating income of $327 million (adjusted operating margin of 17.5%) during 2024 as compared to adjusted operating income of $213 million (adjusted operating margin of 13.2%) during the prior year.
Read it in 10-K 2026-02-25 at sec.gov ↗
Quiet changesMD&A
The increase in adjusted EBITDA margin was primarily due to the same factors impacting the increase in adjusted operating margin.
Read it in 10-K 2026-02-25 at sec.gov ↗
