Contacts: Media Investors
Contacts: Media Investors Press Office Greg Giometti +1 (978) 704-5149 Michael Travers PressOffice@xylem.com Investor.Relations@xylem.com
• Strong orders and backlog, solid earnings performance and margin expansion reflect operational excellence despite a more cautious spending environment
• Company accelerates transformation strategy, announces intent to divest Applied Water International and Specialty Flow Control; and move to three segment structure in 2027
October 27, 2026 – Xylem Inc. (NYSE: XYL), a leading global water solutions company dedicated to solving the world’s most challenging water issues, today reported third-quarter 2026 results and announced actions to further accelerate its portfolio transformation.
While revenue was impacted by project timing and more cautious spending decisions, strong order activity and solid earnings performance demonstrated the resilience of the business and the benefits of the company’s transformation. Xylem also announced its intent to divest Applied Water International and Specialty Flow Control, and beginning in 2027, the alignment of its businesses from four segments to three.
Third quarter results reflected a mixed operating environment. The company delivered total revenue of $2.2 billion against a dynamic backdrop. Third- quarter earnings per share were up 34 percent on a reported basis and 5 percent on an adjusted basis.
Net income attributable to Xylem for the quarter was $291 million, or $1.25 per share. Net income margin increased 320 basis points to 13.2 percent. These results are primarily driven by strong operational performance and lower loss on sale of businesses, partially offset by increased interest and income tax expense. Adjusted net income attributable to Xylem was $336 million, or $1.44 per share, which excludes purchase accounting intangible amortization, loss on sale of businesses, restructuring and realignment costs, and special charges, including the impact of IEEPA tariff refunds. 1 Third-quarter adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) margin was 23.9 percent, reflecting a year-over-year increase of 70 basis points. Productivity savings and strong price realization drove the margin expansion, exceeding the impact of inflation, lower volumes, and mix.
Xylem now forecasts full-year 2026 revenue of approximately $8.95 billion, down 1 percent year over year on a reported basis, versus prior guidance of up 2 percent, and flat on an organic basis, versus prior guidance of up 2 to 3 percent.
Full-year 2026 adjusted EBITDA margin is expected to be approximately 23.2 percent, an increase of 100 basis points versus Xylem’s 2025 adjusted results. This results in full-year adjusted earnings per share of $5.40 to $5.45, down from the previous guidance range of $5.55 to $5.70. Full-year free cash flow margin is expected to be approximately 10.2 percent, versus 10.2 to 11.0 percent previously guided.
Further 2026 planning assumptions are included in Xylem’s third-quarter 2026 earnings materials posted at www.xylem.com/investors . Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort.
Supplemental information on Xylem’s third-quarter earnings, as well as definitions of and reconciliations for certain non-GAAP items is posted at www.xylem.com/investors .
Xylem's planned divestiture of Applied Water International and Specialty Flow Control and its move to a three-segment structure are designed to create a more focused company aligned around customer needs and long-term growth priorities.
The planned divestitures further sharpen Xylem’s focus, enabling the company to direct capital toward the technologies, capabilities and markets that align most closely with its long-term strategy. Xylem is already seeing momentum in high- growth industry verticals, including data centers and microelectronics, reinforcing the opportunity to increase investment and exposure in these markets.
Beginning January 1, 2027, Xylem will align its business into three segments: Treatment and Services, Flow Solutions, and Measurement and Analytics. The new structure brings together complementary technologies and capabilities around the core activities of moving water, treating water, and measuring and optimizing water systems. By bringing together businesses with shared customers, technologies and growth opportunities, Xylem expects to unlock greater value across the portfolio and operate with greater simplicity, speed and accountability. Treatment and Services will be led by Rodney Aulick; Flow Solutions will be led by Joe Johnston; and Measurement and Analytics will be led by Meredith Emmerich.
“We’re moving with urgency to shape Xylem around the markets where our capabilities can deliver the greatest customer value and strongest long-term growth," said Matthew Pine, president and CEO of Xylem. "The resilience we’ve built, evident this quarter, allows us to make those choices deliberately and from a position of strength.” ###
Xylem (XYL) is a Fortune 500 global water solutions company that empowers customers and communities to build a more water-secure world. Our 22,000 employees delivered revenue of $9 billion in 2025, optimizing water and resource management with innovation and expertise. Join us at www.xylem.com and Let’s Solve Water. 2 Xylem uses our Investor Relations website, www.xylem.com/investors , as a means of disclosing information which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media.
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Generally, the words “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “contemplate,” “predict,” “forecast,” “likely,” “believe,” “target,” “goal,” “objective,” “will,” “could,” “would,” “should,” “potential,” “may” and similar expressions or their negative, may, but are not necessarily to, identify forward-looking statements. By their nature, forward-looking statements address uncertain matters and include any statements that: are not historical, such as statements about our strategy, financial plans, outlook, objectives, plans, intentions or goals (including those related to our social, environmental and other sustainability goals); or address possible or future results of operations or financial performance, including statements relating to orders, revenues, operating margins and earnings per share growth.
Although we believe that the expectations reflected in any of our forward- looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include, among others, the following: the impact of overall industry and general economic conditions, including industrial, governmental, and public and private sector demand and spending, interest rates, availability of funding to our customers, timing of customers’ capital spending and project deployments, inflation and governments' related monetary policy in response, and the strength of the real estate markets, on economic activity and our operations; geopolitical matters, including nationalism, protectionism and anti-global sentiment, volatility involving the U.S. and other governments, ongoing, escalation or outbreak of international conflicts, and regulatory, trade protection, economic and other risks associated with our global sales and operations; manufacturing and operating cost increases due to macroeconomic conditions, including inflation, energy supply, supply chain shortages, logistics challenges, labor shortages, trade agreements, tariffs, and other trade protection measures, and other factors; demand for our products, disruption, competition or pricing pressures in the markets we serve; cybersecurity incidents, data breaches, or other disruptions of information technology systems on which we or our customers rely, or involving our connected products and services; lack of availability or delays in receiving parts and raw materials from our supply chain, including semiconductors or other key components; operational disruptions at our facilities or that of third parties upon which we rely; safe and compliant treatment and handling of water, wastewater and hazardous materials; failure to successfully execute large projects, including as respects performance guarantees and customers’ budgets, timelines and safety requirements; our ability to retain, compete for, and attract leadership, other key talent and labor; defects, security, warranty and liability claims, and recalls related to our products; uncertainty around productivity, simplification, restructuring and realignment actions and related costs and savings; our ability to execute strategic investments for growth and portfolio optimization actions, including acquisitions and divestitures; availability, regulation or interference with radio spectrum used by certain of our products; volatility in served markets or impacts on our business and operations due to weather conditions, volatile weather events, or changing climate patterns; risks related to our sustainability efforts and related disclosures; fluctuations in foreign currency exchange rates; our level of indebtedness, including debt incurred to finance the pending Cornell Pump and Roper Pump acquisition; difficulty predicting our financial results; risk of future impairments to goodwill and other intangible assets; changes in our effective tax rates or tax expenses; failure to comply with, or changes in, laws or regulations, pertaining to our business conduct, operations, products and services, including anti-corruption, artificial intelligence, data privacy and security, trade, competition, the environment, and health and safety; legal, governmental or regulatory claims, investigations or proceedings and associated contingent liabilities; matters related to intellectual property infringement or expiration of rights; and other 3 factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 and in subsequent filings we make with the Securities and Exchange Commission (“SEC”).
All forward-looking statements made herein are based on information currently available to us as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 4
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) (in millions, except per share data)
September 30, December 31, 2026 2025 ────────────────────────────────────────────────────────────────────────────── ASSETS Current assets: Cash and cash equivalents $ 708 $ 1,479 Receivables, less allowances for discounts, returns and credit losses of 1,965 1,759 $58 and $68 in 2026 and 2025, respectively Inventories 1,052 983 Prepaid and other current assets 227 244 Assets held for sale — 176 Total current assets 3,952 4,641 Property, plant and equipment, net 1,203 1,159 Goodwill 8,524 8,332 Other intangible assets, net 2,220 2,272 Other non-current assets 1,427 1,230 Total assets $ 17,326 $ 17,634 LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,055 $ 1,013 Accrued and other current liabilities 1,257 1,237 Short-term borrowings and current 530 534 maturities of long-term debt Liabilities held for sale — 72 Total current liabilities 2,842 2,856 Long-term debt 2,365 1,408 Accrued post-retirement benefit 295 317 obligations Deferred income tax liabilities 453 405 Other non-current accrued liabilities 860 899 Total liabilities 6,815 5,885 Redeemable non-controlling interest 239 258 Stockholders’ equity: Common Stock – par value $0.01 per share: Authorized 750.0 shares, issued 260.3 shares and 259.9 shares in 2026 and 3 3 2025, respectively Capital in excess of par value 8,801 8,759 Retained earnings 4,147 3,706 Treasury stock – at cost 30.0 shares and -2,375 -768 16.3 shares in 2026 and 2025, respectively Accumulated other comprehensive loss -307 -220 Total stockholders’ equity 10,269 11,480 Non-controlling interests 3 11 Total equity 10,272 11,491 Total liabilities, redeemable non-controlling interest, and $ 17,326 $ 17,634 stockholders’ equity
For the periods ended June 30, 2026 2025 ───────────────────────────────────────────────────────────────────────── Operating Activities Net income $ 738 $ 617 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 195 201 Amortization 222 231 Share-based compensation 39 37 Restructuring and asset impairment 50 70 charges Loss from sale of businesses 17 47 Other, net -32 3 Payments for restructuring -59 -48 Changes in assets and liabilities (net of acquisitions): Changes in receivables -201 -113 Changes in inventories -72 -30 Changes in accounts payable 29 -45 Changes in accrued and deferred taxes 14 -12 Changes in long term receivables -147 -108 Other, net -64 -152 Net Cash – Operating activities 729 698 Investing Activities Capital expenditures -268 -248 Acquisition of businesses, net of cash -425 -113 acquired Proceeds from sale of business, net of 95 48 cash disposed Proceeds from the sale of property, 12 15 plant and equipment Cash received from investments 8 5 Cash paid for investments -10 -26 Cash paid for equity investments -4 -5 Cash paid for asset acquisition -2 -37 Cash received from cross-currency swaps 39 31 Other, net 1 1 Net Cash – Investing activities -554 -329 Financing Activities Short-term debt issued, net 4 8 Short-term debt repaid -5 -7 Long-term debt issued, net 990 — Long-term debt repaid, net -10 -60 Repurchase of common stock -1,580 -14 Proceeds from exercise of employee stock 3 11 options Dividends paid -307 -293 Other, net -30 -27 Net Cash – Financing activities -935 -382 Effect of exchange rate changes on cash -23 83 Increase in cash classified within — -11 assets held for sale Decrease in cash classified within 12 11 assets held for sale Changes in cash classified within assets 12 — held for sale Net change in cash and cash equivalents -771 70 Cash and cash equivalents at beginning 1,479 1,121 of year Cash and cash equivalents at end of $ 708 $ 1,191 period Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $ 39 $ 43 Income taxes (net of refunds received) $ 221 $ 208
Xylem Inc. Non-GAAP Measures Management reviews key performance indicators including revenue, gross margins, segment operating income and margins, orders growth, working capital and backlog, among others. In addition, we consider certain non-GAAP (or "adjusted") measures to be useful to management and investors evaluating our operating performance for the periods presented, and to provide a tool for evaluating our ongoing operations, liquidity and management of assets. This information can assist investors in assessing our financial performance and measures our ability to generate capital for deployment among competing strategic alternatives and initiatives, including but not limited to, dividends, acquisitions, share repurchases and debt repayment. Excluding revenue, Xylem provides guidance only on a non-GAAP basis due to the inherent difficulty in forecasting certain amounts that would be included in GAAP earnings, such as discrete tax items, without unreasonable effort. These adjusted metrics are consistent with how management views our business and are used to make financial, operating and planning decisions. These metrics, however, are not measures of financial performance under GAAP and should not be considered a substitute for revenue, operating income, net income, earnings per share (basic and diluted) or net cash from operating activities as determined in accordance with GAAP. We consider the following items to represent non-GAAP measures that we consider to be key performance indicators, as well as the related reconciling items to the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
defined as revenue and orders, respectively, excluding the impact of fluctuations in foreign currency translation and contributions from acquisitions and divestitures. Divestitures include sales or discontinuance of insignificant portions of our business that did not meet the criteria for classification as a discontinued operation. The period-over-period change resulting from foreign currency translation impacts is determined by translating current period and prior period activity using the same currency conversion rate.
defined as earnings before interest, taxes, depreciation and amortization expense.
reflect the adjustments to EBITDA and segment EBITDA, respectively, to exclude share-based compensation charges, restructuring and realignment costs, gain or loss from sale of businesses and special charges.
defined as adjusted EBITDA and adjusted segment EBITDA divided by total revenue and segment revenue, respectively.
defined as operating income, segment operating income, net income attributable to Xylem and earnings per share attributable to Xylem, adjusted to exclude restructuring and realignment costs, amortization of acquired intangible assets, gain or loss from sale of businesses, special charges and tax-related special items, as applicable.
defined as adjusted operating income and adjusted segment operating income divided by total revenue and segment revenue, respectively.
defined as net cash from operating activities, less capital expenditures, as reported in the Statement of Cash Flows. Our definition of free cash flow does not consider certain non-discretionary cash payments, such as debt.
defined as free cash flow, adjusted (as applicable) for significant cash paid or received for non-operational tax, acquisition or divestiture activities; divided by revenue.
defined as costs not included in restructuring costs that are incurred as part of actions taken to reposition our business, including items such as professional fees, severance, relocation, travel, facility set-up and other costs.
defined as non-recurring costs incurred by the Company, such as those related to acquisitions and integrations, divestitures, non-cash impairment charges and other special charges. In 2026, these charges include reductions of expense related to the refunds of certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA").
defined as tax items, such as tax return versus tax provision adjustments, tax exam impacts, tax law change impacts, excess tax benefits/losses and other discrete tax adjustments. 8
Quarter-to-date: Restructuring & realignment costs: 2026 - $14 million and 2025 - $31 million a Special Charges: 2026 - $10 million of acquisition, divestiture & integration costs, offset by $33 million of IEEPA tariff refunds; 2025 - $9 million of acquisition, divestiture & integration costs Purchases accounting intangible amortization: 2026 - $52 million and 2025 - $55 million b Gain/(Loss) from sale of businesses as per income statement for all periods presented Quarter-to-date: 2026 - Net tax impact on pre-tax adjustments (notes a and b) of $8 c million, offset by $5 million of other tax special expense items; 2025 - Net tax impact on pre-tax adjustments (notes a and b) of $27 million, offset by $1 million of other tax special expense items;
Full text with the tables
Exhibit 99.1
Xylem Inc.
301 Water Street SE, Suite 200
Washington, DC 20003
Tel +1.202.869.9150
Contacts: Media Investors
Press Office Greg Giometti
+1 (978) 704-5149 Michael Travers
PressOffice@xylem.com Investor.Relations@xylem.com
Xylem Reports Third Quarter 2026 Results and Announces
Strategic Actions to Accelerate Growth
• Strong orders and backlog, solid earnings performance and margin expansion
reflect operational excellence despite a more cautious spending environment
• Company accelerates transformation strategy, announces intent to divest
Applied Water International and Specialty Flow Control; and move to three
segment structure in 2027
WASHINGTON, D.C.,
October 27, 2026 – Xylem Inc. (NYSE: XYL), a leading global water solutions
company dedicated to solving the world’s most challenging water issues, today
reported third-quarter 2026 results and announced actions to further accelerate
its portfolio transformation.
While revenue was impacted by project timing and more cautious spending
decisions, strong order activity and solid earnings performance demonstrated the
resilience of the business and the benefits of the company’s transformation.
Xylem also announced its intent to divest Applied Water International and
Specialty Flow Control, and beginning in 2027, the alignment of its businesses
from four segments to three.
Third Quarter Results
Highlights:
• Orders of $2.3 billion, up 7% on a reported basis and 10% organically
• Revenue of $2.2 billion, down 3% on a reported basis and flat organically
• Earnings per share of $1.25, up 34%; $1.44 on an adjusted basis, up 5%
Third quarter results reflected a mixed operating environment. The company
delivered total revenue of $2.2 billion against a dynamic backdrop. Third-
quarter earnings per share were up 34 percent on a reported basis and 5 percent
on an adjusted basis.
Net income attributable to Xylem for the quarter was $291 million, or $1.25 per
share. Net income margin increased 320 basis points to 13.2 percent. These
results are primarily driven by strong operational performance and lower loss on
sale of businesses, partially offset by increased interest and income tax
expense. Adjusted net income attributable to Xylem was $336 million, or $1.44
per share, which excludes purchase accounting intangible amortization, loss on
sale of businesses, restructuring and realignment costs, and special charges,
including the impact of IEEPA tariff refunds.
1
Third-quarter adjusted earnings before interest, tax, depreciation, and
amortization (EBITDA) margin was 23.9 percent, reflecting a year-over-year
increase of 70 basis points. Productivity savings and strong price realization
drove the margin expansion, exceeding the impact of inflation, lower volumes,
and mix.
Outlook
Xylem now forecasts full-year 2026 revenue of approximately $8.95 billion, down
1 percent year over year on a reported basis, versus prior guidance of up 2
percent, and flat on an organic basis, versus prior guidance of up 2 to 3
percent.
Full-year 2026 adjusted EBITDA margin is expected to be approximately 23.2
percent, an increase of 100 basis points versus Xylem’s 2025 adjusted results.
This results in full-year adjusted earnings per share of $5.40 to $5.45, down
from the previous guidance range of $5.55 to $5.70. Full-year free cash flow
margin is expected to be approximately 10.2 percent, versus 10.2 to 11.0 percent
previously guided.
Further 2026 planning assumptions are included in Xylem’s third-quarter 2026
earnings materials posted at www.xylem.com/investors . Excluding revenue, Xylem
provides guidance only on a non-GAAP basis due to the inherent difficulty in
forecasting certain amounts that would be included in GAAP earnings, such as
discrete tax items, without unreasonable effort.
Supplemental information on Xylem’s third-quarter earnings, as well as
definitions of and reconciliations for certain non-GAAP items is posted at
www.xylem.com/investors .
Sharpening Xylem’s Focus for Growth
Xylem's planned divestiture of Applied Water International and Specialty Flow
Control and its move to a three-segment structure are designed to create a more
focused company aligned around customer needs and long-term growth priorities.
The planned divestitures further sharpen Xylem’s focus, enabling the company to
direct capital toward the technologies, capabilities and markets that align most
closely with its long-term strategy. Xylem is already seeing momentum in high-
growth industry verticals, including data centers and microelectronics,
reinforcing the opportunity to increase investment and exposure in these
markets.
Beginning January 1, 2027, Xylem will align its business into three segments:
Treatment and Services, Flow Solutions, and Measurement and Analytics. The new
structure brings together complementary technologies and capabilities around the
core activities of moving water, treating water, and measuring and optimizing
water systems. By bringing together businesses with shared customers,
technologies and growth opportunities, Xylem expects to unlock greater value
across the portfolio and operate with greater simplicity, speed and
accountability. Treatment and Services will be led by Rodney Aulick; Flow
Solutions will be led by Joe Johnston; and Measurement and Analytics will be led
by Meredith Emmerich.
“We’re moving with urgency to shape Xylem around the markets where our
capabilities can deliver the greatest customer value and strongest long-term
growth," said Matthew Pine, president and CEO of Xylem. "The resilience we’ve
built, evident this quarter, allows us to make those choices deliberately and
from a position of strength.”
###
About Xylem
Xylem (XYL) is a Fortune 500 global water solutions company that empowers
customers and communities to build a more water-secure world. Our 22,000
employees delivered revenue of $9 billion in 2025, optimizing water and resource
management with innovation and expertise. Join us at www.xylem.com and Let’s
Solve Water.
2
Xylem uses our Investor Relations website, www.xylem.com/investors , as a means
of disclosing information which may be of interest or material to our investors
and for complying with disclosure obligations under Regulation FD. Accordingly,
investors should monitor our Investor Relations website, in addition to
following our press releases, SEC filings, public conference calls, webcasts,
and social media.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Generally, the words “anticipate,”
“estimate,” “expect,” “project,” “intend,” “plan,” “contemplate,” “predict,”
“forecast,” “likely,” “believe,” “target,” “goal,” “objective,” “will,” “could,”
“would,” “should,” “potential,” “may” and similar expressions or their negative,
may, but are not necessarily to, identify forward-looking statements. By their
nature, forward-looking statements address uncertain matters and include any
statements that: are not historical, such as statements about our strategy,
financial plans, outlook, objectives, plans, intentions or goals (including
those related to our social, environmental and other sustainability goals); or
address possible or future results of operations or financial performance,
including statements relating to orders, revenues, operating margins and
earnings per share growth.
Although we believe that the expectations reflected in any of our forward-
looking statements are reasonable, actual results could differ materially from
those projected or assumed in any of our forward-looking statements. Our future
financial condition and results of operations, as well as any forward-looking
statements, are subject to change and to inherent risks and uncertainties, many
of which are beyond our control. Important factors that could cause our actual
results, performance and achievements, or industry results to differ materially
from estimates or projections contained in or implied by our forward-looking
statements include, among others, the following: the impact of overall industry
and general economic conditions, including industrial, governmental, and public
and private sector demand and spending, interest rates, availability of funding
to our customers, timing of customers’ capital spending and project deployments,
inflation and governments' related monetary policy in response, and the strength
of the real estate markets, on economic activity and our operations;
geopolitical matters, including nationalism, protectionism and anti-global
sentiment, volatility involving the U.S. and other governments, ongoing,
escalation or outbreak of international conflicts, and regulatory, trade
protection, economic and other risks associated with our global sales and
operations; manufacturing and operating cost increases due to macroeconomic
conditions, including inflation, energy supply, supply chain shortages,
logistics challenges, labor shortages, trade agreements, tariffs, and other
trade protection measures, and other factors; demand for our products,
disruption, competition or pricing pressures in the markets we serve;
cybersecurity incidents, data breaches, or other disruptions of information
technology systems on which we or our customers rely, or involving our connected
products and services; lack of availability or delays in receiving parts and raw
materials from our supply chain, including semiconductors or other key
components; operational disruptions at our facilities or that of third parties
upon which we rely; safe and compliant treatment and handling of water,
wastewater and hazardous materials; failure to successfully execute large
projects, including as respects performance guarantees and customers’ budgets,
timelines and safety requirements; our ability to retain, compete for, and
attract leadership, other key talent and labor; defects, security, warranty and
liability claims, and recalls related to our products; uncertainty around
productivity, simplification, restructuring and realignment actions and related
costs and savings; our ability to execute strategic investments for growth and
portfolio optimization actions, including acquisitions and divestitures;
availability, regulation or interference with radio spectrum used by certain of
our products; volatility in served markets or impacts on our business and
operations due to weather conditions, volatile weather events, or changing
climate patterns; risks related to our sustainability efforts and related
disclosures; fluctuations in foreign currency exchange rates; our level of
indebtedness, including debt incurred to finance the pending Cornell Pump and
Roper Pump acquisition; difficulty predicting our financial results; risk of
future impairments to goodwill and other intangible assets; changes in our
effective tax rates or tax expenses; failure to comply with, or changes in, laws
or regulations, pertaining to our business conduct, operations, products and
services, including anti-corruption, artificial intelligence, data privacy and
security, trade, competition, the environment, and health and safety; legal,
governmental or regulatory claims, investigations or proceedings and associated
contingent liabilities; matters related to intellectual property infringement or
expiration of rights; and other
3
factors set forth under “Item 1A. Risk Factors” in our Annual Report on Form
10-K for the year ended December 31, 2025 and in subsequent filings we make with
the Securities and Exchange Commission (“SEC”).
All forward-looking statements made herein are based on information currently
available to us as of the date of this press release. We undertake no obligation
to publicly update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, except as required by law.
4
XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS (Unaudited) (in millions, except per
share data)
For the
periods
ended Three Nine
Septem… Months Months
30, 2026 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
Revenue
from $ 1,807 $ 1,867 $ 5,517 $ 5,487
produc…
Revenue
from 394 401 1,145 1,151
servic…
Revenue 2,201 2,268 6,662 6,638
Cost of
revenue 1,026 1,109 3,176 3,279
from
produc…
Cost of
revenue 268 276 813 816
from
servic…
Cost of 1,294 1,385 3,989 4,095
revenue
Gross 907 883 2,673 2,543
profit
Sellin…
general
and 458 474 1,433 1,437
admini…
expens…
Resear…
and 56 52 171 166
develo…
expens…
Restru…
and
asset 8 23 50 70
impair…
charges
Operat… 385 334 1,019 870
income
Intere… -21 -6 -32 -23
expense
Other
non-op… 6 6 3 13
income,
net
Loss on
sale of -5 -37 -17 -47
busine…
Income
before 365 297 973 813
taxes
Income
tax -77 -71 -235 -196
expense
Net $ 288 $ 226 $ 738 $ 617
income
Net
loss
attrib… 3 1 9 5
to
non-co…
intere…
Net
income
attrib… 291 227 747 622
to
Xylem
Earnin…
per
share:
Basic $ 1.25 $ 0.93 $ 3.15 $ 2.56
Diluted $ 1.25 $ 0.93 $ 3.14 $ 2.55
Weight…
average
number
of
shares:
Basic 232.7 243.5 237.3 243.3
Diluted 233.0 244.1 237.7 243.9
5
XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
September 30, December 31,
2026 2025
──────────────────────────────────────────────────────────────────────────────
ASSETS
Current assets:
Cash and cash equivalents $ 708 $ 1,479
Receivables, less allowances for
discounts, returns and credit losses
of 1,965 1,759
$58 and $68 in 2026 and 2025,
respectively
Inventories 1,052 983
Prepaid and other current assets 227 244
Assets held for sale — 176
Total current assets 3,952 4,641
Property, plant and equipment, net 1,203 1,159
Goodwill 8,524 8,332
Other intangible assets, net 2,220 2,272
Other non-current assets 1,427 1,230
Total assets $ 17,326 $ 17,634
LIABILITIES, REDEEMABLE
NON-CONTROLLING
INTEREST AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,055 $ 1,013
Accrued and other current liabilities 1,257 1,237
Short-term borrowings and current 530 534
maturities of long-term debt
Liabilities held for sale — 72
Total current liabilities 2,842 2,856
Long-term debt 2,365 1,408
Accrued post-retirement benefit 295 317
obligations
Deferred income tax liabilities 453 405
Other non-current accrued liabilities 860 899
Total liabilities 6,815 5,885
Redeemable non-controlling interest 239 258
Stockholders’ equity:
Common Stock – par value $0.01 per
share:
Authorized 750.0 shares, issued 260.3
shares and 259.9 shares in 2026 and 3 3
2025, respectively
Capital in excess of par value 8,801 8,759
Retained earnings 4,147 3,706
Treasury stock – at cost 30.0 shares
and -2,375 -768
16.3 shares in 2026 and 2025,
respectively
Accumulated other comprehensive loss -307 -220
Total stockholders’ equity 10,269 11,480
Non-controlling interests 3 11
Total equity 10,272 11,491
Total liabilities, redeemable
non-controlling interest, and $ 17,326 $ 17,634
stockholders’ equity
6
XYLEM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
For the periods ended June 30, 2026 2025
─────────────────────────────────────────────────────────────────────────
Operating Activities
Net income $ 738 $ 617
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 195 201
Amortization 222 231
Share-based compensation 39 37
Restructuring and asset impairment 50 70
charges
Loss from sale of businesses 17 47
Other, net -32 3
Payments for restructuring -59 -48
Changes in assets and liabilities (net
of acquisitions):
Changes in receivables -201 -113
Changes in inventories -72 -30
Changes in accounts payable 29 -45
Changes in accrued and deferred taxes 14 -12
Changes in long term receivables -147 -108
Other, net -64 -152
Net Cash – Operating activities 729 698
Investing Activities
Capital expenditures -268 -248
Acquisition of businesses, net of cash -425 -113
acquired
Proceeds from sale of business, net of 95 48
cash disposed
Proceeds from the sale of property, 12 15
plant and equipment
Cash received from investments 8 5
Cash paid for investments -10 -26
Cash paid for equity investments -4 -5
Cash paid for asset acquisition -2 -37
Cash received from cross-currency swaps 39 31
Other, net 1 1
Net Cash – Investing activities -554 -329
Financing Activities
Short-term debt issued, net 4 8
Short-term debt repaid -5 -7
Long-term debt issued, net 990 —
Long-term debt repaid, net -10 -60
Repurchase of common stock -1,580 -14
Proceeds from exercise of employee stock 3 11
options
Dividends paid -307 -293
Other, net -30 -27
Net Cash – Financing activities -935 -382
Effect of exchange rate changes on cash -23 83
Increase in cash classified within — -11
assets held for sale
Decrease in cash classified within 12 11
assets held for sale
Changes in cash classified within assets 12 —
held for sale
Net change in cash and cash equivalents -771 70
Cash and cash equivalents at beginning 1,479 1,121
of year
Cash and cash equivalents at end of $ 708 $ 1,191
period
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest $ 39 $ 43
Income taxes (net of refunds received) $ 221 $ 208
7
Xylem Inc. Non-GAAP Measures
Management reviews key performance indicators including revenue, gross margins,
segment operating income and margins, orders growth, working capital and
backlog, among others. In addition, we consider certain non-GAAP (or "adjusted")
measures to be useful to management and investors evaluating our operating
performance for the periods presented, and to provide a tool for evaluating our
ongoing operations, liquidity and management of assets. This information can
assist investors in assessing our financial performance and measures our ability
to generate capital for deployment among competing strategic alternatives and
initiatives, including but not limited to, dividends, acquisitions, share
repurchases and debt repayment. Excluding revenue, Xylem provides guidance only
on a non-GAAP basis due to the inherent difficulty in forecasting certain
amounts that would be included in GAAP earnings, such as discrete tax items,
without unreasonable effort. These adjusted metrics are consistent with how
management views our business and are used to make financial, operating and
planning decisions. These metrics, however, are not measures of financial
performance under GAAP and should not be considered a substitute for revenue,
operating income, net income, earnings per share (basic and diluted) or net cash
from operating activities as determined in accordance with GAAP. We consider the
following items to represent non-GAAP measures that we consider to be key
performance indicators, as well as the related reconciling items to the most
directly comparable measure calculated and presented in accordance with GAAP.
The non-GAAP measures may not be comparable to similarly titled measures
reported by other companies.
“Organic revenue”
and
“Organic orders”
defined as revenue and orders, respectively, excluding the impact of
fluctuations in foreign currency translation and contributions from acquisitions
and divestitures. Divestitures include sales or discontinuance of insignificant
portions of our business that did not meet the criteria for classification as a
discontinued operation. The period-over-period change resulting from foreign
currency translation impacts is determined by translating current period and
prior period activity using the same currency conversion rate.
“EBITDA”
defined as earnings before interest, taxes, depreciation and amortization
expense.
“Adjusted EBITDA”
and
"Adjusted Segment EBITDA"
reflect the adjustments to EBITDA and segment EBITDA, respectively, to exclude
share-based compensation charges, restructuring and realignment costs, gain or
loss from sale of businesses and special charges.
“Adjusted EBITDA Margin”
and
“Adjusted Segment EBITDA Margin”
defined as adjusted EBITDA and adjusted segment EBITDA divided by total revenue
and segment revenue, respectively.
“Adjusted Operating Income”
,
“Adjusted Segment Operating Income”
,
“Adjusted Net Income”
and
“Adjusted EPS”
defined as operating income, segment operating income, net income attributable
to Xylem and earnings per share attributable to Xylem, adjusted to exclude
restructuring and realignment costs, amortization of acquired intangible assets,
gain or loss from sale of businesses, special charges and tax-related special
items, as applicable.
“Adjusted Operating Margin”
and
“Adjusted Segment Operating Margin”
defined as adjusted operating income and adjusted segment operating income
divided by total revenue and segment revenue, respectively.
“Free Cash Flow”
defined as net cash from operating activities, less capital expenditures, as
reported in the Statement of Cash Flows. Our definition of free cash flow does
not consider certain non-discretionary cash payments, such as debt.
"Free Cash Flow Margin"
defined as free cash flow, adjusted (as applicable) for significant cash paid or
received for non-operational tax, acquisition or divestiture activities; divided
by revenue.
“Realignment costs”
defined as costs not included in restructuring costs that are incurred as part
of actions taken to reposition our business, including items such as
professional fees, severance, relocation, travel, facility set-up and other
costs.
“Special charges”
defined as non-recurring costs incurred by the Company, such as those related to
acquisitions and integrations, divestitures, non-cash impairment charges and
other special charges. In 2026, these charges include reductions of expense
related to the refunds of certain tariffs previously imposed under the
International Emergency Economic Powers Act ("IEEPA").
“Tax-related special items”
defined as tax items, such as tax return versus tax provision adjustments, tax
exam impacts, tax law change impacts, excess tax benefits/losses and other
discrete tax adjustments.
8
Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic Orders
($ Millions)
…
… … … … % … … … … …
… … … 2 % … … … … …
… … … 9 % — … … … 9
… … … … % … … … … …
… … … … % … — … … …
… … … 7 % … … … … …
… … … … % … 4 … … …
… … … … % — … — … …
… … … … % … … — … …
… … … 7 % … — … … 6
… … … … % … … … … …
… … … — % … 3 … … …
… … … … % — — … … 9
… … … … % — … … … 2
… … … … % … — … … …
… … … 3 % … 5 … … —
… … … 8 % … 5 … … 2
… … … 5 % — — … … 2
… … … … % — — … … …
… … … … % … — … … …
9
Xylem Inc. Non-GAAP Reconciliation
Reported vs. Organic Revenue
($ Millions)
… …
… …
- -
… …
… … … … … …
… % …
… … … …
… … … … … … … …
… … …
… …
… …
… … … — % … … … … —
… … … 2 % … … … 4 —
… … … 5 % — 6 … … 4
… … … … % … … … … …
… … … 1 % … — … … …
… … … … % … … … … —
… … … … % … 6 … … …
… … … 7 % — 6 — … 9
… … … … % … … 1 … …
… … … — % … — … … …
… … … 2 % … … … … 1
… … … 5 % … 2 … … 3
… … … 4 % — — … … 3
… … … … % — … … … …
… … … 3 % … — … 7 1
… … … 3 % … 5 … … —
… … … 4 % … 5 … … …
… … … 3 % — — … … —
… … … 4 % — — … 7 1
… … 3 1 % … — … … …
10
Xylem Inc. Non-GAAP Reconciliation
Adjusted Diluted EPS
($ Millions, except per share amounts)
Q3 Q3
2… 2…
As A… A… As A… A…
R… R…
… — … … — …
… … a … … … a …
… % … % … % … %
… — … … — …
6 — 6 6 — 6
… 5 b — … … b —
… … … … … …
… … c … … … c …
… … … … … …
3 — 3 1 — 1
… … … … … …
… … … …
$ … $ … $ … $ … $ … $ …
Quarter-to-date:
Restructuring & realignment costs: 2026 - $14 million and 2025 - $31
million
a Special Charges: 2026 - $10 million of acquisition, divestiture &
integration costs, offset by $33 million of IEEPA tariff refunds; 2025
- $9 million of acquisition, divestiture & integration costs
Purchases accounting intangible amortization: 2026 - $52 million and
2025 - $55 million
b Gain/(Loss) from sale of businesses as per income statement for all
periods presented
Quarter-to-date:
2026 - Net tax impact on pre-tax adjustments (notes a and b) of $8
c million, offset by $5 million of other tax special expense items; 2025
- Net tax impact on pre-tax adjustments (notes a and b) of $27 million,
offset by $1 million of other tax special expense items;
11
Xylem Inc. Non-GAAP Reconciliation
EBITDA and Adjusted EBITDA by Quarter
($ Millions)
2…
Q1 Q2 Q3 Q4 To…
N…
I…
a… 193 263 291 747
to
X…
N…
I… 9.1 % 11… % 13… % N/A 11.2 %
M…
D… 65 65 65 195
A… 75 75 72 222
I…
E… -4 2 15 13
(…
n…
I…
T… 55 103 77 235
E…
E… 384 508 520 — 1,4…
E… 18… % 21… % 23… % N/A 21.2 %
M…
S… 13 12 14 39
C…
R…
& 38 13 14 65
R…
S… 10 -3 -23 -16
C…
L…
f…
s… -4 16 5 17
of
b…
L…
a…
to -4 -2 -3 -9
n…
i…
A… 437 544 527 — 1,5…
E…
R… 2,… 2,… 2,… 6,6…
A…
E… 20… % 23… % 23… % N/A 22.6 %
M…
2…
Q1 Q2 Q3 Q4 To…
N…
I…
a… 169 226 227 335 957
to
X…
N…
I… 8.2 % 9.8 % 10… % 14… % 10.6 %
M…
D… 68 69 64 66 267
A… 77 76 78 77 308
I…
E… — 3 — -1 2
(…
n…
I…
T… 50 75 71 35 231
E…
E… 364 449 440 512 1,7…
E… 17… % 19… % 19… % 21… % 19.5 %
M…
S… 12 13 12 16 53
C…
R…
& 27 29 30 45 131
R…
S… 12 13 9 2 36
C…
L…
f…
s… 10 — 37 -16 31
of
b…
L…
a…
to -2 -2 -1 -2 -7
n…
i…
A… 423 502 527 557 2,0…
E…
R… 2,… 2,… 2,… 2,… 9,0…
A…
E… 20… % 21… % 23… % 23… % 22.2 %
M…
12