Will Grippin

Walkaway more weighted to first 2-3 quarters. Some longer-tail treatment business in Water Infrastructure may extend past that. More heavily weighted in first half.

Limited forward fixed contracts on raw commodities. Supply chain team uses alternate sources and competitive bids. Pricing is first lever. Rising fuel costs could compress margins slightly (not 40% flow-through on tariff pass-through pricing). Next 4 weeks critical re Middle East conflict. Confident can manage dollar-for-dollar.

WSS is mix between quarters, nothing structural. Applied Water Q4 had negative project mix, execution timing, one-time items - back to 20%+ in Q1 with sequential improvement. Applied Water expects robust margin expansion in 2026.

AI ecosystem needs 30 trillion liters/year by 2050 (130% increase). Data centers only 4% direct; 96% is power and chip fab. Chip fab to grow ~600%. Solutions exist: water reuse, leak mitigation. For Xylem, opportunity primarily outside data center walls in WSS segment - mining, power generation, chip fabrication.

M&A spending related to international metering divestiture transaction costs.

~100bp margin accretion to MCS segment on run rate basis from divesting international metering.

CEO confirmed M&A bias with $1B deployed year-to-date. Active cultivation activities in both segments. Share buyback provides lever during M&A lighter periods. Board decision on potential authorization increase.

CFO confirmed cost optimization savings layer on top of existing 30-35% fall-through algorithm. Think of it as a step change in 2027 and 2028, with exact details to be provided in future guidance.

CEO described secular drivers from brand proliferation, SKU growth, package size changes, and regulatory influences as positive volume drivers. More packages equals more coding and marking equipment and consumables.

CFO attributed Western Europe Q4 weakness entirely to 3 fewer shipping days, which disproportionately impacts 60% recurring revenue business. Full year Western Europe growth execution described as strong across Water Quality and PQI.

CEO confirmed Emerald partnership progressing with technology vetting in treatment, monitoring, and emerging contaminants. No specific developments to announce. Steady-as-she-goes characterization.

CFO explained the fuel recovery mechanism targets a holistic, roughly neutral EBITDA impact including indirect costs, so no sustained margin catch-up, only lag timing.

Jon identified life sciences, biopharma, and high-tech verticals plus 20 geographic field services gaps and any post-collection infrastructure assets.

Brian quantified $16M revenue credit impact included in the $56M total adjustment. Going forward, competitive positioning maintained with no lasting cost inflation impact.

Hemmer noted EPA slightly raised RVO, RIN prices steady at $2.40 (above $2 investment thesis). Half of long-term offtake targeted for voluntary markets. 80% of 2026 volume locked.

Tara confirmed $235-255M sustainability growth EBITDA for 2026 splits approximately 60% renewable energy, 40% recycling including royalty.

Tara confirmed recycling automation exceeding expectations, higher throughput, higher commodity price points, over 30% labor improvement. The $700M vs $760M gap is almost entirely commodity-price-driven, not execution-driven.