[PART I – Financial Information](index=4&type=section&id=PART%20I%20%E2%80%93%20Financial%20Information) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Xylem Inc.'s unaudited condensed consolidated financial statements, including income statements, balance sheets, and cash flows, for the periods ended June 30, 2025 [Condensed Consolidated Income Statements](index=4&type=section&id=Condensed%20Consolidated%20Income%20Statements) Xylem reported Q2 2025 revenue of **$2,301 million** and net income of **$224 million**, with diluted EPS of **$0.93**, reflecting strong year-over-year growth Q2 & H1 2025 Financial Performance (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $2,301 | $2,169 | +6.1% | $4,370 | $4,202 | +4.0% | | **Gross Profit** | $892 | $819 | +8.9% | $1,660 | $1,571 | +5.7% | | **Operating Income** | $305 | $253 | +20.6% | $536 | $462 | +16.0% | | **Net Income** | $224 | $194 | +15.5% | $391 | $347 | +12.7% | | **Diluted EPS** | $0.93 | $0.80 | +16.3% | $1.62 | $1.43 | +13.3% | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Xylem's total assets reached **$17.19 billion**, with total liabilities at **$5.88 billion** and total equity at **$11.08 billion**, indicating balance sheet growth Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $4,369 | $4,098 | | **Goodwill** | $8,237 | $7,980 | | **Total Assets** | $17,191 | $16,493 | | **Total Current Liabilities** | $2,301 | $2,336 | | **Long-term Debt** | $1,928 | $1,978 | | **Total Liabilities** | $5,882 | $5,611 | | **Total Equity** | $11,081 | $10,647 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities for H1 2025 was **$338 million**, a decrease from the prior year, while financing cash usage significantly decreased due to lower debt repayments Six-Month Cash Flow Summary (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net Cash – Operating** | $338 | $377 | | **Net Cash – Investing** | $(140) | $(128) | | **Net Cash – Financing** | $(244) | $(419) | | **Net Change in Cash** | $49 | $(204) | [Notes to the Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies, acquisitions like Vacom Systems and EnviroMix, divestitures, and restructuring charges, providing context for financial activities - In Q2 2025, the company acquired Vacom Systems, LLC for **$42 million** in cash, accounted for as an asset acquisition[24](index=24&type=chunk) - On February 7, 2025, the company divested its Evoqua Magneto business for **$61 million**, resulting in a **$10 million** loss on the sale[27](index=27&type=chunk) - Restructuring charges of **$22 million** and **$39 million** were incurred in Q2 and H1 2025, respectively, to streamline the organization[44](index=44&type=chunk) - Post-period, on July 23, 2025, Xylem acquired EMX Holdings, Inc. (EnviroMix) for **$108 million** in cash[124](index=124&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 and H1 2025 financial results, highlighting a **6.1%** Q2 revenue increase, segment performance, and a raised full-year 2025 revenue growth outlook - Q2 2025 revenue increased **6.1%** to **$2,301 million**, with organic growth of **5.5%**[131](index=131&type=chunk) - Q2 2025 orders grew **4.1%** (**3.7%** organically) to **$2,174 million**[131](index=131&type=chunk) - Adjusted EBITDA margin for Q2 2025 improved by **100 basis points** to **21.8%**[131](index=131&type=chunk) - The company raised its full-year 2025 total revenue growth outlook to **4% to 5%**, with organic growth of approximately **4%**[210](index=210&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Q2 2025 revenue grew **6.1%** to **$2.3 billion**, with gross margin expanding by **100 basis points** to **38.8%** and operating margin increasing to **13.3%** Q2 2025 vs Q2 2024 Performance Summary | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | $2,301M | $2,169M | +6.1% | | **Gross Margin** | 38.8% | 37.8% | +100 bp | | **Operating Margin** | 13.3% | 11.7% | +160 bp | | **Net Income** | $224M | $194M | +15.5% | - Gross margin improvement was driven by **210 basis points** from productivity savings and **130 basis points** from price realization, partially offset by **180 basis points** of inflation[154](index=154&type=chunk) [Segment Performance](index=45&type=section&id=Segment%20Performance) All segments reported organic revenue growth in Q2 2025, with Measurement and Control Solutions leading at **9.4%**, driven by smart metering backlog execution Q2 2025 Organic Revenue Growth by Segment | Segment | Organic Growth (%) | | :--- | :--- | | Water Infrastructure | 4.1% | | Applied Water | 4.7% | | Measurement and Control Solutions | 9.4% | | Water Solutions and Services | 4.6% | Q2 2025 Adjusted Operating Margin by Segment | Segment | Q2 2025 Adj. Op. Margin | Q2 2024 Adj. Op. Margin | Change (bp) | | :--- | :--- | :--- | :--- | | Water Infrastructure | 19.5% | 16.0% | +350 | | Applied Water | 19.5% | 16.0% | +350 | | Measurement and Control Solutions | 18.1% | 19.9% | -180 | | Water Solutions and Services | 16.9% | 16.5% | +40 | [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) H1 2025 cash from operations was **$338 million**, with total available liquidity of approximately **$2.2 billion**, reflecting a strong capital position despite decreased operating cash flow - Total available liquidity as of June 30, 2025, is approximately **$2.2 billion**[206](index=206&type=chunk) Six-Month Cash Flow Comparison (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Operating Activities** | $338 | $377 | | **Investing Activities** | $(140) | $(128) | | **Financing Activities** | $(244) | $(419) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk disclosures have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024 - There has been no material change in market risk disclosures since the **2024 Annual Report**[211](index=211&type=chunk) [Item 4. Controls and Procedures](index=63&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[212](index=212&type=chunk) - No material changes to internal control over financial reporting were identified during the quarter[213](index=213&type=chunk) [PART II – Other Information](index=64&type=section&id=PART%20II%20%E2%80%93%20Other%20Information) [Item 1. Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal and regulatory proceedings incidental to its business operations, with further details in Note 18 - The company is involved in legal and regulatory proceedings incidental to its business, covering areas like environmental, tax, intellectual property, and product liability[216](index=216&type=chunk) [Item 1A. Risk Factors](index=64&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, have occurred - No material changes from the risk factors disclosed in the **2024 Annual Report** have occurred[218](index=218&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares in Q2 2025, with **$182 million** remaining authorized for future repurchases under the existing plan - No shares were repurchased under the company's publicly announced plan during the three months ended June 30, 2025[219](index=219&type=chunk)[220](index=220&type=chunk) - As of June 30, 2025, **$182 million** remains available for share repurchases under the authorized program[220](index=220&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 officers adopted or terminated any Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or Section 16 officers adopted or terminated any Rule 10b5-1 trading plans during the second quarter of 2025[223](index=223&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files

Financial Data and Key Metrics Changes - The company reported a record adjusted EBITDA margin of 21.8%, up 100 basis points year over year [7][12] - Adjusted EPS grew by mid-teens percentage compared to the previous year [7] - Revenue growth was strong at 6% in the quarter, driven primarily by outperformance in Measurement and Control Solutions (MCS) [12][19] - Year-to-date free cash flow decreased by $61 million year over year, mainly due to outsourced water projects and timing of tax payments [13] Business Line Data and Key Metrics Changes - **Measurement and Control Solutions (MCS)**: Orders grew 12% organically, with revenue up 10% driven by energy metering demand [14] - **Water Infrastructure**: Revenue grew 4%, with demand led by treatment solutions, although orders declined by 2% due to funding delays in the UK and Canada [15] - **Applied Water**: Orders rose 4% for the sixth consecutive quarter, with revenue increasing by 5% [16] - **Water Solutions and Services**: Orders increased by 5%, with revenue growth also at 5% [17] Market Data and Key Metrics Changes - Demand for products and solutions remains resilient, particularly in smart metering, which saw double-digit growth [8] - The backlog remains strong across all segments, except MCS, which is being normalized [12] - The company noted ongoing economic challenges in China, with orders down approximately 18% year over year [54] Company Strategy and Development Direction - The company is focused on executing its transformation plan laid out at the Investor Day, which includes simplifying operations and enhancing portfolio for growth [10][22] - Recent acquisitions in advanced treatment are aimed at strengthening the growth engine and enhancing capabilities [26] - The company is committed to mitigating tariff impacts through pricing actions and supply chain adjustments [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong performance for the remainder of 2025, despite macro uncertainties [20][22] - The company raised its full-year revenue guidance to $8.9 billion to $9.0 billion, reflecting 4% to 5% total growth [19] - Management acknowledged potential impacts from tariffs and FX movements but emphasized strong demand and backlog execution [20] Other Important Information - The company has made significant progress in its simplification initiatives, which have improved productivity and customer responsiveness [9][10] - The integration of Evoqua is ahead of schedule, with strong traction on cost and revenue synergies [22][23] Q&A Session Summary Question: Update on MCS order outlook and destocking - Management noted resilient demand across the board, with expectations for MCS to return to positive book-to-bill by year-end [34] Question: Progress on simplification initiatives - Management reported tracking ahead of the timeline for simplification, with improved decision-making and customer metrics [36] Question: Applied Water segment performance and eightytwenty impact - Management highlighted strong orders and revenue growth, with eightytwenty helping to focus on growth while simplifying operations [48] Question: Municipal utility funding concerns - Management expressed confidence that Congress will appropriate funds to maintain healthy state revolving fund levels, despite concerns [90] Question: MCS legacy energy business margin drag - Management indicated that legacy projects would pressure margins in the near term but expect sequential improvement in Q4 [106]

Financial Data and Key Metrics Changes - The company reported a record adjusted EBITDA margin of 21.8%, an increase of 100 basis points year over year [6][12] - Adjusted EPS grew by mid-teens percentage compared to the previous year [6] - Revenue growth was strong at 6% in the quarter, driven primarily by outperformance in Measurement and Control Solutions (MCS) [12][20] - Year-to-date free cash flow decreased by $61 million year over year, mainly due to outsourced water projects and timing of tax payments [13] Business Line Data and Key Metrics Changes - **Measurement and Control Solutions (MCS)**: Orders grew 12% organically, with revenue up 10% driven by energy metering demand [14] - **Water Infrastructure (WI)**: Revenue grew 4%, with demand led by treatment solutions, although orders declined by 2% due to funding delays in the UK and Canada [15] - **Applied Water**: Orders increased by 4%, with revenue up 5%, driven by strength in commercial buildings [16] - **Water Solutions and Services**: Orders increased by 5%, with revenue growth also at 5%, reflecting strong execution on pricing and productivity [17] Market Data and Key Metrics Changes - Demand for products and solutions remains resilient, with strong orders pace and particularly solid growth in smart metering [7] - The backlog remains strong, exceeding $5 billion, with a book-to-bill ratio near one [12] Company Strategy and Development Direction - The company is focused on executing its transformation plan laid out at the Investor Day, which includes simplifying operations and enhancing portfolio for growth through targeted acquisitions [9][26] - Recent acquisitions in advanced treatment are aimed at strengthening the company's growth engine and enhancing capabilities [26] - The company is committed to navigating tariff uncertainties and inflation through pricing actions and supply chain adjustments [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong performance for the remainder of 2025, despite macro uncertainties [20] - The company raised its full-year revenue guidance to $8.9 billion to $9 billion, reflecting 4% to 5% total growth [20] - Management noted that while there are uncertainties around tariffs and foreign exchange movements, the team is effectively controlling internal factors [21] Other Important Information - The company has implemented simplification initiatives that have improved productivity and customer responsiveness, contributing to margin expansion [7][10] - The integration of Evoqua is progressing well, with cost synergies being delivered ahead of schedule [24] Q&A Session Summary Question: Update on MCS order outlook and destocking - Management noted resilient demand across the board, with expectations for MCS to return to a positive book-to-bill ratio by year-end [35] Question: Progress on simplification initiatives - Management reported tracking ahead of the timeline for simplification, with improved decision-making and customer metrics [36][41] Question: Applied Water performance and eightytwenty impact - Management highlighted strong orders and revenue growth in Applied Water, with ongoing focus on simplifying the business to drive growth [50] Question: Municipal utility funding concerns - Management expressed confidence that Congress will appropriate funds to maintain healthy state revolving fund levels, despite concerns about potential cuts [88] Question: MCS margin drag from legacy projects - Management indicated that legacy projects would pressure margins in the short term but expect sequential improvement in the coming quarters [106] Question: Capital deployment strategy - Management remains forward-leaning on M&A, focusing on assets that fit the strategy and have strong financial returns [80]

Core Insights - Xylem reported quarterly earnings of $1.26 per share, exceeding the Zacks Consensus Estimate of $1.14 per share, and showing an increase from $1.09 per share a year ago, resulting in an earnings surprise of +10.53% [1] - The company achieved revenues of $2.3 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 3.93% and up from $2.17 billion year-over-year [2] - Xylem's stock has increased by approximately 12.6% since the beginning of the year, outperforming the S&P 500's gain of 8.2% [3] Earnings Outlook - The future performance of Xylem's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4] - The current consensus EPS estimate for the upcoming quarter is $1.17 on revenues of $2.17 billion, and for the current fiscal year, it is $4.65 on revenues of $8.76 billion [7] Industry Context - The Waste Removal Services industry, to which Xylem belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Xylem's stock may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8] Competitor Insights - Montrose Environmental, another company in the same industry, is expected to report quarterly earnings of $0.25 per share, reflecting a year-over-year change of +25%, with revenues anticipated to be $186.61 million, up 7.7% from the previous year [9][10]

Financial Performance - Second quarter revenue reached $2.301 billion, representing a 6% overall growth[6] - Organic revenue growth was 6%[6] - Adjusted EBITDA margin hit a record quarterly high, expanding by 100 bps[7] - Earnings per share reached $0.93, with adjusted EPS at $1.26[6] - The company is raising its full-year revenue guidance to $8.9 - $9.0 billion, reflecting a 4-5% total growth[20] - The company is raising its full-year adjusted EPS guidance to $4.70 – $4.85[20] Segment Performance - Measurement and Control Solutions saw order growth of 12% and revenue growth of 10%[14] - Water Infrastructure experienced a 2% decline in orders but a 4% revenue growth[14] - Applied Water orders grew by 4% and revenue by 5%[14] - Water Solutions and Services orders grew by 5% and revenue by 5%[14] Tariff Impact - The company estimates a total tariff impact of $255 million on imports of $1.1 billion[17] - Net tariff exposure is estimated at $160 million after accounting for USMCA compliant imports from Mexico[17] - Tariff costs are being mitigated through pricing and supplier management[19]

[Second Quarter 2025 Earnings Release](index=1&type=section&id=Second%20Quarter%202025%20Earnings%20Release) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Xylem reported strong Q2 2025 results, exceeding expectations with 6% revenue growth and double-digit EPS growth Q2 2025 Key Financial Metrics | Metric | Value | Growth vs. Q2 2024 | | :--- | :--- | :--- | | Total Revenue | $2.3 billion | +6% (Reported & Organic) | | Reported EPS | $0.93 | +16% | | Adjusted EPS | $1.26 | +16% | | Net Income | $226 million | - | | Adjusted EBITDA Margin | 21.8% | +100 bps YoY | - CEO Matthew Pine attributed the strong performance to **disciplined execution and resilient underlying demand**, highlighting measurable gains in speed and customer responsiveness[3](index=3&type=chunk) - The expansion in adjusted EBITDA margin was primarily driven by **productivity savings and effective price realization**, which more than offset inflation and product mix impacts[4](index=4&type=chunk) [Full-Year 2025 Outlook](index=2&type=section&id=Full-Year%202025%20Outlook) Following strong Q2 performance, Xylem raised its full-year 2025 guidance for revenue and adjusted earnings per share Updated Full-Year 2025 Guidance | Metric | New Guidance | Previous Guidance | | :--- | :--- | :--- | | Reported Revenue | $8.9B - $9.0B (+4% to +5%) | +1% to +2% | | Organic Revenue | Approx. +4% | Not specified | | Adjusted EBITDA Margin | 21.3% - 21.8% | Not specified | | Adjusted EPS | $4.70 - $4.85 | $4.50 - $4.70 | - The full-year free cash flow margin guidance remains unchanged, expected to be **approximately 9% to 10%**[7](index=7&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated income statement, balance sheet, and statement of cash flows [Condensed Consolidated Income Statements](index=4&type=section&id=Condensed%20Consolidated%20Income%20Statements) The company's Q2 2025 revenue grew to $2.301 billion, with operating and net income showing significant increases Q2 Income Statement Highlights (in millions, except EPS) | Account | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $2,301 | $2,169 | | Gross Profit | $892 | $819 | | Operating Income | $305 | $253 | | Net Income Attributable to Xylem | $226 | $194 | | Diluted EPS | $0.93 | $0.80 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $17.191 billion as of June 30, 2025, supported by increases in receivables, inventories, and goodwill Balance Sheet Highlights (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,170 | $1,121 | | Total current assets | $4,369 | $4,098 | | Total assets | $17,191 | $16,493 | | Total liabilities | $5,882 | $5,611 | | Total equity | $11,081 | $10,647 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities for the first six months of 2025 was $338 million, a decrease from the prior-year period Six-Month Cash Flow Highlights (in millions) | Activity | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Net Cash – Operating activities | $338 | $377 | | Net Cash – Investing activities | ($140) | ($128) | | Net Cash – Financing activities | ($244) | ($419) | | Net change in cash | $49 | ($204) | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) This section defines non-GAAP metrics and provides detailed reconciliations from GAAP to non-GAAP results [Definitions of Non-GAAP Measures](index=7&type=section&id=Definitions%20of%20Non-GAAP%20Measures) Defines key non-GAAP terms like Organic revenue, Adjusted EBITDA, and Adjusted EPS used for performance evaluation - Key non-GAAP measures used by management include[20](index=20&type=chunk)[22](index=22&type=chunk)[24](index=24&type=chunk): - **Organic revenue:** Excludes impacts from foreign currency translation, acquisitions, and divestitures - **Adjusted EBITDA:** Excludes share-based compensation, restructuring, and other special charges from EBITDA - **Adjusted EPS:** Excludes restructuring, amortization of acquired intangibles, and other special items from GAAP EPS [Revenue Reconciliation (Reported vs. Organic)](index=8&type=section&id=Revenue%20Reconciliation%20(Reported%20vs.%20Organic)) The reconciliation shows Q2 2025 reported and organic revenue growth were both 6% after accounting for FX impact Q2 2025 Revenue Growth Reconciliation (Xylem Inc.) | Metric | Percentage | | :--- | :--- | | Reported Revenue Growth | 6% | | Impact of Acquisitions/Divestitures | 0% | | Impact of Foreign Exchange (FX) | -1% | | **Organic Revenue Growth** | **6%** | [Adjusted Diluted EPS Reconciliation](index=9&type=section&id=Adjusted%20Diluted%20EPS%20Reconciliation) Details the adjustments of $0.33 that reconcile Q2 2025 GAAP EPS of $0.93 to an adjusted EPS of $1.26 Q2 2025 EPS Reconciliation (GAAP to Adjusted) | Metric | Per Share Amount | | :--- | :--- | | Reported Diluted EPS (GAAP) | $0.93 | | Adjustments | $0.33 | | **Adjusted Diluted EPS (Non-GAAP)** | **$1.26** | [EBITDA and Adjusted EBITDA Reconciliation](index=10&type=section&id=EBITDA%20and%20Adjusted%20EBITDA%20Reconciliation) Reconciles net income to Adjusted EBITDA, which reached $502 million with a margin of 21.8% in Q2 2025 Adjusted EBITDA Performance (in millions) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income attributable to Xylem | $226 | $194 | | Adjusted EBITDA | $502 | $452 | | Revenue | $2,301 | $2,169 | | **Adjusted EBITDA Margin** | **21.8%** | **20.8%** | [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section outlines inherent risks and uncertainties that could cause actual results to differ from projections - The company cautions that forward-looking statements are subject to inherent risks and uncertainties[11](index=11&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk): - Geopolitical events and global economic conditions - Manufacturing and operating cost increases due to inflation and supply chain shortages - Cybersecurity incidents - Failure to realize benefits from the Evoqua acquisition

Core Viewpoint - Analysts forecast that Xylem (XYL) will report quarterly earnings of $1.14 per share, reflecting a year-over-year increase of 4.6%, with anticipated revenues of $2.21 billion, showing a 2.1% increase compared to the previous year [1] Earnings Estimates - Over the last 30 days, there has been a 0.2% upward revision in the consensus EPS estimate for the quarter, indicating a collective reassessment by covering analysts [2] - Revisions to earnings estimates are crucial indicators for predicting potential investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock price performance [3] Revenue Projections - Analysts predict 'Revenue- Measurement & Control Solutions' will reach $509.46 million, a change of +5.7% year-over-year [5] - The consensus estimate for 'Revenue- Applied Water' stands at $459.40 million, suggesting a change of +0.8% year-over-year [5] - 'Revenue- Water Infrastructure' is projected to reach $639.53 million, indicating a +1.4% change from the year-ago quarter [5] - The average prediction for 'Revenue- Water Solutions and Services' is $605.08 million, reflecting a +0.9% change from the prior-year quarter [6] Adjusted Operating Income Estimates - Analysts expect 'Adjusted Operating Income- Water Infrastructure' to be $124.64 million, up from $101.00 million reported in the same quarter last year [6] - The estimated 'Adjusted Operating Income- Applied Water' is $80.10 million, compared to $73.00 million in the same quarter of the previous year [7] - 'Adjusted Operating Income- Water Solutions and Services' is projected at $98.21 million, slightly down from $99.00 million reported in the same quarter last year [7] - The consensus for 'Adjusted Operating Income- Measurement & Control Solutions' is $84.05 million, compared to $96.00 million from the previous year [8] Stock Performance - Over the past month, shares of Xylem have returned +3.4%, while the Zacks S&P 500 composite has changed by +4.9% [8] - Currently, XYL holds a Zacks Rank 3 (Hold), suggesting its performance may align with the overall market in the near future [8]

Summary of Key Points from the Conference Call Industry Overview - The focus is on the **US power sector** and its **Green Capex** (capital expenditures related to green energy initiatives) in light of the **One Big, Beautiful Bill Act (OBBBA)** and its implications for future investments [1][13][22]. Core Insights and Arguments 1. **Investment Projections**: The US power sector is expected to see **$2.0 trillion** in Green Capex from **2023 to 2032**, despite uncertainties surrounding updated Treasury Department guidance [1][22]. 2. **Power Demand Growth**: The Utilities team anticipates a **2.5% annual growth** in power demand through **2030** in the US, driven by factors such as AI and data center power demand [1][13][22]. 3. **Impact of OBBBA**: The OBBBA is projected to reduce US government outlay by approximately **$600 billion** from **2023 to 2032**, primarily due to the elimination of electric vehicle (EV) incentives [12][18][22]. 4. **Investment Opportunities**: Attractive investment opportunities remain in the power/water infrastructure supply chain, particularly in companies like **First Solar**, **GE Vernova**, **MasTec**, **Quanta Services**, **Xcel Energy**, and **Xylem** [11][27]. 5. **Resiliency in Power Sector**: The power sector is expected to remain resilient due to the **Reliability Imperative**, which emphasizes the need for investment to meet rising demand, replace aging infrastructure, and enhance resiliency against extreme weather events [1][25][38]. 6. **Green Reliability Premium**: The Green Reliability Premium is expected to rise from **$40/MWh to $48/MWh** post-sunset of solar and wind incentives, although this increase is modest due to retained battery storage incentives [56][57]. Additional Important Insights 1. **Data Center Demand**: Data center power demand is projected to grow by **165%** by **2030**, significantly impacting overall power demand [64][70]. 2. **Investment Shifts**: There is a notable shift in investment focus towards power generation and infrastructure, with a **15% reduction** in overall Green Capex investment compared to previous estimates [12][39][44]. 3. **Electric Vehicle Market**: The outlook for electric vehicles has been downgraded, with a **40% reduction** in investment anticipated due to the elimination of incentives [39][41]. 4. **Cost Competitiveness**: Despite rising supply costs, utility-scale solar and onshore wind remain competitive without requiring a Green Premium [47][51]. 5. **Long-term Emissions Outlook**: The pace of nuclear expansion and coal plant retirements will be critical in determining future US carbon dioxide emissions levels [12][22]. Conclusion The US power sector is navigating a complex landscape shaped by legislative changes, evolving demand dynamics, and the imperative for infrastructure resilience. Investment opportunities remain robust, particularly in green technologies and infrastructure, despite anticipated reductions in government incentives and shifts in market dynamics.

Group 1 - The core recommendation for Xylem Inc. (NYSE: XYL) is a buy rating, driven by its exposure to structural water scarcity, aging infrastructure, and PFAS treatment themes, which create durable, non-discretionary demand [1] - Management's 80/20 transformation is yielding tangible margin gains, indicating effective operational improvements [1] - The investment strategy focuses on long-term investments while also considering short-term opportunities to uncover alpha, emphasizing a bottom-up analysis of individual companies' fundamentals [1] Group 2 - The investment duration is medium to long-term, aiming to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

XYLEM INC. Q4 2014 EARNINGS RELEASE FEBRUARY 5, 2015 XYLEM PROPRIETARY / CONFIDENTIAL Q4 2014 EARNINGS RELEASE FORWARD-LOOKING STATEMENTS This presentation contains information that may constitute "forward-looking statements." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Generally, the words "anticipate," "estimate," "expect," "project," "intend," "plan," "forecast," "believe," "target," "will," "could," "would," "should" and similar expressions ident ...