Xylem : 3Q 2020 Earnings Package

Xylem Third Quarter 2020 Results

October 29, 2020

This presentation contains information that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, the words "anticipate," "estimate," "expect," "project," "intend," "plan," " contemplate," " predict," "forecast," "believe," "target," "will," "could," "would," "should," " potential," " may" and similar expressions may, but are not necessary 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 the Company's capitalization, restructuring and realignment plans, and future strategic plans; describe the Company's business strategy, outlook, objectives, plans, intentions or goals; or address operating or financial performance, events or developments that we expect or anticipate will occur in the future - including statements relating to orders, revenues, operating margins and earnings per share growth, and expressing general views about future operating results . Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed or implied in, or reasonably inferred from, such statements. The novel coronavirus ("COVID-19") pandemic is and may continue to amplify many of these risks and uncertainties.

Factors that could cause results to differ materially from those anticipated include: overall economic and business conditions; the COVID-19 pandemic's uncertain magnitude, duration, geographic reach and impact on the global economy; the current and future impact of the COVID-19 pandemic on our business, growth, projections, financial condition, operations, cash flows, and liquidity, including from adverse economic conditions on our performance or customer markets caused by the COVID-19 pandemic ; actual or potential other epidemics, pandemics or global health crises; geopolitical and other risks associated with our international operations that could affect customer markets and our business , such as military actions, protectionism, economic sanctions or trade barriers, including tariffs and embargoes, and non-compliance with laws or regulations , including those pertaining to foreign corrupt practices, data privacy, export and import and competition; potential for unexpected cancellations or delays of customer orders in our reported backlog; fluctuations in foreign currency exchange rates; disruption, competition and pricing pressures in the markets we serve; industrial, governmental and private sector spending; the strength of housing and related markets; weather conditions; ability to retain and attract talent and key members of management; our relationship with and the performance of our supply chain, including channel partners; our ability to successfully identify, complete and integrate acquisitions; our ability to borrow or refinance our existing indebtedness; availability of liquidity sufficient to meet our needs; uncertainty from the expected discontinuance of LIBOR and transition to another interest rate benchmark; changes in the value of goodwill or intangible assets; uncertainty related to restructuring and realignment actions and related charges and savings , including with respect to the amount and timing of estimated costs and savings, the timing of or delays in implementing actions, and our ability to realize all of the anticipated cost savings, all of which are subject to change as the Company makes decisions and refines plans and estimates over time; management and employee distraction resulting from restructuring actions; timing delays in implementing strategic initiatives; our ability to continue strategic investments for growth; risks relating to products, including defects, security, liability and recalls; governmental or regulatory claims or investigations; cybersecurity attacks, breaches or other disruptions of information technology systems on which we rely, or on our products ; our sustainability initiatives; the use of proceeds from our green bond offering, including failure to appropriately allocate the net proceeds or meet the investment requirements of certain environmentally-focused investors; litigation and contingent liabilities; and other factors set forth under "Item 1A. Risk Factors" in our Annual Report on Form10-K for the year ended December 31, 2019, " Item 1A. Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in subsequent filings we have made or may make with the Securities and Exchange Commission. All forward-looking statements made herein are based on information currently available to the Company as of the date of this press release. The Company undertakes 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.

Xylem Q3 2020 Earnings Release

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($ in millions, unless otherwise noted)

Q3 2020	GAAP	Adjusted*
	Xylem Consolidated
Revenue	$1,220	$1,220
Overall Growth	(6%)	(6%)
Constant Currency Growth	(7%)
Organic Growth		(7%)
Operating Income	73	158
Operating Margin	6.0%	13.0%
Earnings per Share	$0.20	$0.62

Earnings Call Notes:

• All references today will be on an adjusted basis unless otherwise indicated.
• Non-GAAPfinancials are reconciled in the appendix section of the presentation.

Q3 2020	GAAP	Adjusted*
Water Infrastructure
Revenue	$524	$524
Overall Growth	(1%)	(1%)
Constant Currency Growth		(2%)
Organic Growth		(2%)
Operating Income	89	97
Operating Margin	17.0%	18.5%
	Applied Water
Revenue	$364	$364
Overall Growth	(3%)	(3%)
Constant Currency Growth		(4%)
Organic Growth		(4%)
Operating Income	56	58
Operating Margin	15.4%	15.9%
Measurement & Control Solutions
Revenue	$332	$332
Overall Growth	(15%)	(15%)
Constant Currency Growth		(15%)
Organic Growth		(15%)
Operating Income	(62)	12
Operating Margin	(18.7%)	3.6%

Xylem Q3 2020 Earnings Release

*See appendix for definitions of non-GAAP measures and non-GAAP reconciliations

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• Our teams continue to execute on our commitments to our stakeholders with strength, purpose and focus in a challenging environment
• Strong operational performance in 3Q …
• • Organic* Revenue modestly better than expected as parts of our diverse global business see early signs of recovery from pandemic
  • Adjusted Operating Margin* exceeds previous guidance driven by productivity and execution of cost actions
  • Healthy Free Cash Flow* performance from disciplined execution on capex spend, timing of payments and working capital
• Customer interest in transformative technology continues to accelerate
• • Operational and financial resilience are top of mind … our differentiated technology and portfolio positions us well long-term

Xylem Q3 2020 Earnings Release

*See appendix for definitions of non-GAAP measures and non-GAAP reconciliations

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