Andrea van der Berg, Vice President of Investor Relations. On behalf of the leadership team, we want to thank you for your time, support, and interest in Xylem. Our last Investor Day was in 2021, and since then, we've had a few transformational years, and we're excited to share the opportunities ahead of us. First, I'd like to share where we are here today in Washington, D.C. We're at the Reservoir Center for Water Solutions. We opened up this space two years ago in 2022, and it symbolizes our dedication to advancing the shared interests of the water sector. This dedicated space, shared with over 50 affiliated partners, is a place to convene and drive action to overcome global water challenges, and we're happy to share it with you here today. Now, let me take a minute to highlight today's agenda.
First, our CEO, Matthew Pine, will provide an overview of our business, strategy, and long-term financial framework. Then you'll hear from Snehal Desai, our Chief Growth and Innovation Officer, on how he plans to drive profitable growth. Afterwards, you'll hear from our business segment presidents, Mike McGann on Measurement & Control Solutions, and Hayati Yarkadas on Water Infrastructure. We'll take a short break and then reconvene at noon, and you'll hear from Franz Cerwinka on Applied Water and Rodney Aulick to present Water Solutions and Services, followed up by our CFO, Bill Grogan. Then afterwards, after another short break, at 1:00 P.M., we'll start and conclude with a Q&A, a 30-minute Q&A session.
So we have QR codes for those in the room to log your questions, and we'll also be taking questions from those joining us virtually, and then we'll pass the mic for those in the room to share their or ask a question, and also we'll moderate for those out virtually. So please log your questions during the presentation. Before I hand it over to Matthew, I'd like to remind you that we'll make some forward-looking statements today, including references to future events or developments that we anticipate will or may occur in the future. These statements are subject to future risks and uncertainties, such as those factors described in Xylem's most recent annual report on Form 10-K and subsequent reports filed with the SEC.
We will also provide some key items as a reminder of the presentation, which relate to our 2024 full year expected results, long-term targets, market growth estimates, and financial performance metrics. And with that, I'd like to turn it over to Xylem's Chief Executive Officer, Matthew Pine.
Thanks, Andrea. Good morning, everyone. Thanks for joining us in Washington, D.C., today. Thank you to those who are on the webcast joining us wherever you are around the world, especially our colleagues. Many of our colleagues dial into our investor events, and the team and I are so proud to represent them here today. We're also very excited to walk you through our long-term framework. Our time together is gonna be very focused today, which is intentional. We're gonna concentrate on the critical few strategies that are gonna create economic value and enhance our sustainability position going forward. So let's dive in. I'll cover four key messages today that the team will build on over the next couple of hours. First, we have an industry-leading platform that we've built over the past decade to execute against.
We have a High-Impact Culture and aligned leadership team to transition to what we call a water-secure world. Second, our number one top-level improvement priority in our goal deployment process is to drive resilient, above-market growth, and that's bolstered by our revenue synergies from the Evoqua integration. Third, we have significant margin opportunity ahead of us as we work to simplify water, which is a mantra that you've heard me talk about over the course of the past several months. Finally, we have the capacity, and we've built a lot of capability recently with the Evoqua acquisition, to create substantial value through disciplined capital deployment. What this all means is we're well-positioned to solve critical water challenges, generating top-tier returns.
With population growth, aging infrastructure, and impacts for climate change, water's becoming a key risk driver for basic daily life, and so the time to solve water has never been more urgent. Every person, business, government wants access to clean, affordable water, and without it, health, prosperity, and environmental sustainability is just not possible. Just as there's an energy transition that you all think about and hear about in the news, there's a parallel transition going on in water as we speak, and Xylem's platform is in the best position to execute against that opportunity. That's why our purpose is to empower our customers and our communities to build a more water-secure world. Our how, which is our culture, enables us to execute on this purpose and our strategic execution priorities.
As we brought together two companies last year in Evoqua and Xylem, refreshed our strategic priorities, and executed a leadership transition, we took the time to develop our how. This work has produced what we call our High-Impact Culture, and you've heard me talk a lot about this as well, and it's three behaviors within the organization that we expect, and that's inspire to innovate, empower to lead, and accountable to deliver. We're gonna move faster. We're gonna be more focused with more accountable execution going forward. Culture starts at the top. Again, you've heard me talk a lot about culture. It's very important. It starts with myself, how I show up in the organization, how the senior leadership team shows up in the organization.
We've been on a years-long journey, starting last year as a leadership team, to prioritize, to simplify, and align how we run the business. We have an incredibly experienced team that brings a great deal of diversity of backgrounds from all around the world. As Andrea mentioned, you're gonna hear from Snehal Desai, our Chief Innovation and Growth Officer, after myself, our four segment presidents, and then we're gonna wrap up with Bill Grogan, our Chief Financial Officer. For those of you here in Washington, you'll have a chance to interact with the entire team over the course of the day. I am very proud to be on this team and lead this team. We have significant momentum, and we're doing it together.
Since our formation in 2012, with a spin-out from ITT, we've delivered 6% revenue growth, and although there's been some challenges along the way, we're coming into today's Investor Day with incredible momentum. It starts with an aligned team, a High-Impact Culture, focused execution priorities, and it's supported by a very healthy, strong backlog and a robust balance sheet with strong secular trends. We're well on track to deliver our 2021 Investor Day commitments, both on economics and sustainability. Most important, there's significant runway ahead. Let's start with where the platform is today. We're entering 2024 as the largest water company in the world. We have 4 segments, where Xylem has leadership positions and the ability to win more. Geographically, we have a core presence in the world's largest market, which is the U.S., and attractive exposures in Europe and emerging markets.
We built leadership positions in utility and industrial end markets through the combination with Evoqua, and we're equally proud of our sustainability impact and are top of the list of the most responsible and sustainable companies in the world. The takeaway is that we have the portfolio of solutions, the geographic exposures, the balance of end markets, and to drive profitable growth. We have three distinct levers to drive value creation over this long-term framework that you're gonna hear about over the course of the day. First is resilient above-market growth, and that's bolstered by our Evoqua revenue synergies, innovative solutions and services, and strategic pricing. Next is accelerated margin expansion through simplification, strategic pricing, and operational execution. And lastly, efficient capital deployment, starting with organic investments first in our core businesses, accretive M&A, and opportunistic share repurchases. Let me double-click on growth.
The underlying water market is growing at roughly 3% per year, and we believe that we can grow 3% above market, with 1% of that coming from Evoqua revenue synergies. Over the framework, this will be slightly offset by simplification initiatives like 80/20, and that will impact revenue by about 1%. However, this is in service of longer-term growth, and we're well positioned through 2027 for organic growth of 4%-6%. We're also working to simplify Xylem to better meet the needs of our stakeholders, and we talk to them all the time, and I'll give you a little bit of feedback here.
Our customers, they love our products and solutions, but they say, "Hey, you have to be easier to transact with." Our colleagues are drawn to our purpose as a company, but they say, "You have to simplify the business." Our communities value us as partners, but we need to do a better job of scaling our impact. And lastly, our investors like our platform and position but wanna see better operational execution. Our final value creation opportunity is capital deployment. We expect to have significant capital deployment capacity in the coming years, and you'll hear more from Bill Grogan on this topic. This is due to our strong cash flow generation and balance sheet, both strengthened by our equity transaction with Evoqua.
We'll allocate capital to organic investments, accretive M&A, continued growth in our dividend, and opportunistic share repurchases, and we're gonna remain very balanced and disciplined in our approach. We recently completed a value mapping exercise in the water market. This helped us update our portfolio view, which is well-positioned against the opportunity set, with some opportunity for optimization. Our served addressable market through our combination with Evoqua increased, as well as high-priority growth opportunities through this value mapping work that we did. In addition to investing in our core, we have opportunities in intelligent solutions, services, and advanced treatment. The bottom line is we're well-positioned in attractive parts of the water market, with further headroom to expand. Lastly, but equally as important, sustainability is integrated into everything we do as a company.
We're tracking to deliver on our 2025 enterprise-wide goals, and today I'm pleased to announce that we're raising the bar again for 2030 sustainability goals. We'll lead by example in pursuing 2030 science-based targets for our own greenhouse gas emissions and supporting our customers on their decarbonization journey. We'll accelerate water stewardship by reducing water demand across our value chain through the use of our products by 2 billion cubic meters by 2030. Finally, we'll advance water security for all by providing access to water, sanitation, and hygiene for 80 million people by 2030. These sustainability actions are an integral part of our purpose as a company and strengthen our customer relationships and the communities that they serve.
As I mentioned earlier, we're tracking well to deliver against all the commitments made at our last Investor Day in September 2021, and as we look forward, there's even more to be excited about as Xylem. Resilient mid-single-digit top-line growth, consistent margin expansion in the order of 100 basis points, which translates into mid-teens EPS growth, low double-digit free cash flow margin, and execution against our enhanced 2030 sustainability goals. We enter the next phase of our journey with momentum. There's no company in the world better positioned than Xylem to execute against the transition to a water-secure world... and we'll do it through an aligned leadership team and a High-Impact Culture, above-market revenue growth, consistent margin expansion, profitable capital deployment to compound earnings, all while continuing to set the bar high in sustainability.
With that, I'm pleased to turn it over to Snehal Desai, who'll walk us through our path to resilient above-market growth.
Good morning. This is a good day. This is a good day. Come on! I'm really pleased to be here, and thank you for giving me a reason to pull this suit out of the closet. It's been a long time. Those folks don't even recognize me 'cause they haven't seen it. It's my pleasure to be able to speak to you today. I joined Xylem a year ago through the Evoqua combination, and I have to say, what excites me and has excited all of you is just how much opportunity this company has to grow. Xylem has significantly evolved since the spin from ITT about a decade ago, and we've built a unique and unmatched portfolio of solutions and services to address the intensifying water challenges our communities around the globe face every day.
That breadth of solutions, with our unparalleled presence and trusted relationships, is our competitive advantage. We have a strong foundation and are accelerating growth through synergies and scaling our expansive portfolio, and we'll talk about how the combination has already gotten great momentum in just a few minutes. Even with our comprehensive portfolio, we know we have to continue to leverage our presence and relationships to scale innovation across high-growth areas within the water sector, and our growth is further supported by our strategic pricing and disciplined execution initiatives. There are a number of levers for us to pull to improve the quality of our earnings, and through synergies, innovation, and execution, we have the ability and responsibility to achieve high quality and durable growth so we can better serve our stakeholders. Water challenges are all around us and growing.
We're all living through this, with intensifying water challenges, from droughts to floods to deep freezes. It's in the headlines, and then it impacts our lives. These challenges are driving a large addressable market of $80 billion, which is growing at low single digits. We're a leader in the water space and are best positioned to help our customers address these problems and build and support more water-secure communities. And because we can offer holistic solutions across the water cycle, we are committed to deliver above-market growth at mid-single digits through 2027. Over the past decade, the company has built a market-leading portfolio that spans the water cycle, with brand heritage dating over 100 years. Our unparalleled presence goes beyond our global physical locations. It's about being deeply embedded with customer facilities.
This close proximity provides us with line of sight into customer needs, and this uniquely positions us to partner with them on innovation and addressing emerging challenges. We're the trusted source for water expertise, from design and installation to ongoing maintenance of holistic solutions. Our customers are increasingly being challenged to meet stricter environmental regulations and consumer demands on quality and sustainability efforts, and our solutions enable them to reduce consumption and meet their sustainability goals. We're highlighting some of the impressive statistics here today, but we encourage you to check out our 2023 sustainability report, which we just released, for more details. This chart illustrates differentiation and impact, and this is what it looks like at scale. In a fragmented water market, our comprehensive approach positions us as a partner which will drive continued growth and expansion.
As I've said, we are strongly positioned to drive resilient above-market growth. This will be supported by revenue synergies, innovative solutions and services, and strategic pricing. We're committing to 1% growth above market from revenue synergies with Evoqua. These are already materializing across segments, with further acceleration expected as we continue to roll out training to support our salespeople. We'll get another 2% of growth from innovation and price. Our disciplined approach to innovation is centered on the needs of our customers. We leverage both internal expertise and strategic partnerships to develop products and go-to-market strategies that directly address their evolving challenges, and we'll talk about some of our unique business models in a few minutes. Our strategic pricing initiatives help us recognize the unique value of our holistic, mission-critical solutions.
By offering differentiated products and services, we ensure that our customers receive the full benefit of their investment, while Xylem captures our fair value for our expertise and innovation. You'll hear today about our plans to continue to simplify. In the long term, this is a growth story, and we can offer differentiated customer engagement, improved lead times, and faster innovation, but we do expect a near-term impact to growth as we assess our businesses. Taken together, these strategic pillars will lead to the long-term improved quality of growth and earnings. Integration, and particularly revenue synergies, is where I've been spending much of my time this last year. The combination of Xylem with Evoqua has expanded our scale, portfolio, and services, and injected excitement across the enterprise. We are uniquely positioned to offer holistic solutions that address a wide range of customer needs.
We're committing to growth of 1% from the Evoqua synergies. This is above-market growth, which is enabled through three main plays. Number one is scaling our industrial offering, and we've seen such a strong response here that we realigned the segments in January to better support our customers. The Dewatering and legacy ISS teams are getting traction, and our Assessment Services offering fits right into that business model. Secondly, we're deepening our utility penetration. With the addition of Evoqua's Applied Product Technologies to the Water Infrastructure portfolio, we now cover the majority of the treatment train. This includes some of the most highly valued applications and uniquely positions us to offer holistic solutions to utilities. And finally, expanding internationally. This is a longer-term implementation of our service model, and we'll utilize Xylem's global infrastructure to serve WSS relationships with US-based multinational customers in their global locations.
These opportunities were part of the thesis going into the combination, and they remain the cornerstone of our synergy plans one year in. You'll hear more about this from our segment presidents, but there's a lot of exciting synergy examples coming out already, and we're just getting started. While it may not look like it, I've been around the water industry for a couple of decades, and historically, innovation has been slow. Right? Slow. The industry is very fragmented and regional, and the inability to scale has been the leading cause for this slowness. We now have the opportunity at Xylem to change that. Our relationships keep us informed of what our customers need, and our size gives us the ability to scale at speed. We have a disciplined innovation framework to assess and prioritize water opportunities for investment with impact.
This framework is centered on customer inputs, mega trends, and a clear understanding of customer needs, the potential for value add, and the competitive landscape. It guides us toward the most profitable areas to address. We can address these needs with internal R&D, like our Concertor intelligent pump and the recently launched Hydrovar X. Or we can craft commercial partnerships with maturing technologies, like the operating platform by Idrica, to leverage our scale and accelerate innovation. We also work with emerging technology companies through Xylem Innovation Labs for technology scouting, incubation, and commercial agreements. With the breadth of our portfolio, service capabilities, and expertise, we can also go to market in innovative ways and provide holistic solutions. For example, in our WSS segment, we offer outcome-based services where we provide guaranteed quality and quantity of water with a subscription-style business model.
This innovation framework provides us with multiple shots on goal to drive profitable growth. Through the combination of presence and scale, we can capitalize on the highest long-term growth applications across the water sector. We recently refreshed our value mapping work that identified these high-growth areas, where we can actually help inform our capital allocation strategy. Our intelligence solution strategy evolved and continues to evolve as we enhance our capabilities to provide actionable insights through connectivity, along with an interoperable system, as we've seen with our R&D allocation toward M&CS. We also see a growing opportunity to provide solutions and services for high-growth end markets with mission-critical water needs, including emerging contaminants like PFAS. Growth in advanced treatment has been accelerated through our combination with Evoqua. We continue to remain committed to excellence in our core business while aggressively pursuing new growth opportunities.
Even with our scale and capabilities, sometimes it's better we look to the outside for proven solutions, and let me give you some examples. Utilities have long had connected products, but the interface and ability to access and integrate that data was lacking. The modern utility needs a technology-agnostic platform to democratize and analyze their data to make real-time decisions and optimize operations. Our interoperable software platform, powered by Idrica, empowers customers to act on data, leading to lower operating costs and increased appetite for data-driven solutions. This platform has been developed for utilities by utilities, which addresses their major pain points within the customer base, and the solution is flexible enough to allow us to meet the customers where they are in their digital journey.
The data we can collect provides insights on the future needs and helps inform our innovation pipeline, but it also gives us high growth and high margin opportunities through increased service revenue, aftermarket sales, and improved customer retention. It provides a beachhead for the broader Xylem portfolio as utilities see the benefits and look to the future to how they can integrate and optimize their operations. Mike McGann will share a case study with a Southeast U.S. utility to show the power of this partnership. Now, we've been talking about PFAS regulation for some time now, and personally, it feels like I've been talking about it for a decade. In April, the EPA finalized drinking water regulation, which will see an estimated 6,000 utilities needing to treat for removal of the contaminant to near undetectable levels.
Of that, we expect about a third will need service for treatment systems, but the EPA has given the utilities time to get treatment in place, with a 3-year deadline for testing and 5 years for solutions to be operational. We expect most utilities will push projects out as long as they can. Current technology allows for the removal of PFAS, but the forever chemical is extremely difficult to break down, so it typically goes to landfill, where it can eventually make its way back into the groundwater. There's no commercially viable on-site sensing or destruction technology, so the industry needs further development to truly solve this issue.
At Xylem, we offer the best available treatment technologies, application expertise, and service network to address this challenge, and we have over 80 installations with early adopters, including some of the largest utilities serving millions of people. But we're selective in the projects that we pursue, focusing on those with high-value service attachment opportunities, which is where we differentiate and are more profitable. Continued R&D and strategic partnerships are needed for scaling PFAS solutions, and our Xylem Innovation Labs is already working through teaming agreements on emerging technologies. We wanna be a part of the long-term solution here. While PFAS has gotten all the headlines, there's an opportunity for Xylem broadly across emerging contaminant treatment, where we can be a partner to our customers to provide solutions they need to keep our communities safe. Switching gears a bit to our commercial capabilities.
We see that our pre-COVID pricing muscle was not as strong as it could be. Now, we've seen improvement in our ability to take price in the past few years, and while we all know the impact inflation has had on that, going forward, we wanna maintain that muscle. And we expect to share in the value creation and savings our customers realize through our solutions, implementing value-based pricing programs across the businesses. And our vast installed base is a great pool of opportunity to capture service and aftermarket that we need to focus on. Overall, we have the opportunity to be more disciplined on our processes to capture price, and we've already begun that journey.
Now, you might be asking yourself, "Why is the growth guy talking about simplification?" Well, as I mentioned earlier, there'll be a short-term impact on growth during the analysis and implementation phases of 80/20, but long term, this is in service of our growth story, as it will help us focus on differentiation, value, and speed to serve our customers. We are reinvesting in these initiatives to improve the quality of earnings in the future, and this is not an overnight transition, but we've started on that journey and are already seeing operational benefits. In a minute, Mike McGann will give a quick background on 80/20 and how we expect to benefit from it. The segments will also share an update on how they've started their 80/20 implementation analysis in their journey.
To sum it up, Xylem offers a unique and unmatched portfolio of solutions and services to address the intensifying water challenges faced by our customers globally. We'll grow mid-single digits through 2027, with contributions from Evoqua synergies, innovation, and price, with a near-term offset from simplification initiatives. I'm excited about our prospects and the team we have in place to get after it. With that, I'll pass it over to Mike.
Thanks, Sneh. I'm sure you all picked up on it, but Sneh called me out twice, so I really appreciate that, pal. No pressure. Morning, everyone. My name's Mike McGann. I have the privilege of speaking with you about the M&CS segment. It's a segment that I'm deeply involved in and am extremely passionate about since before Xylem acquired Sensus. The key messages I wanna leave you with today are, number one, M&CS provides intelligent solutions that empower our customers to address the intensifying challenges that Matthew and Sneh shared. Number two, we transform the way our customers operate by delivering differentiated sensing and communications, supported by an integrated platform. The core of this offering is our market-leading technology that provides a foundation for utilities to digitally transform their operations.
Finally, the breadth of our solutions and the strength of our platform provide a clear path for above-market growth and significant margin expansion, enabled by simplification, strategic pricing, and operational productivity. First, quick snapshot on M&CS. In 2023, the segment did about $1.6 billion in revenue and ended with a resilient $2.2 billion backlog. Business is approximately 75% smart metering and 25% analytical instrumentation. Majority of our revenue is in North America and comes from utilities. Now, a little bit more about the solutions M&CS offers. Our smart metering business provides integrated meters with a proprietary communication network that enables two-way reading and control of meters. Our analytics business is where we provide instrumentation for water quality and quantity monitoring and real-time process measurement. And our interoperable platform, through our partnership with Idrica, enables decision intelligence.
As Sneh said earlier, this platform was built by a utility, or by a utility for utilities, and helps create a single source for their data and make real-time decisions. The customer challenges and drivers in this segment are clear. Our customers are working to deliver affordable and reliable service, while grappling with water scarcity and quality, aging infrastructure, a changing workforce, and siloed data that makes it hard to make decisions. To serve this market, we deliver the number one AMI solution in North America on a dedicated communications network that enables the lowest cost of ownership compared to cellular. We build on that offering with a comprehensive portfolio of solutions to measure and test water and help utilities bring their data together in an interoperable platform. As a result, we are best positioned to serve an attractive $15 billion market that is growing mid-single digits.
Our unique portfolio creates a clear path to outperform the market at high single digits and deliver long-term revenue growth, and there are a few reasons for this. We have the best position in the AMI market. We build on our position with an interoperable platform that will accelerate digital adoption by simplifying data for utilities. Lastly, we have meaningful opportunities to grow our analytics business. We have a leadership position across environmental and wastewater monitoring, and we believe this is an attractive area with opportunities for capital deployment. Let me explain why I feel so confident about our AMI position. First, we are a leader in the most attractive segments of the AMI market. We have the highest market share with utilities in North America that make up 80% of endpoints, and that's three times that of the next competitor.
Second, this market has tremendous room to grow. There is only 45% adoption today. Third, through the long-term partnerships we develop with our customers, we capture additional sales with population growth and attractive software-as-a-service recurring revenue. We are also positioned for future wins through replacement cycles that we are already beginning to realize from the early adopters of AMI. So I've shared my confidence in the market. Now let me share my confidence in our technology. When our customers adopt AMI, they're making a long-term investment for their customers. We win by bringing them the lowest annual operating costs, the best battery life, and the best network coverage with no reliance on a third party. Our customers win with this network because, number one, it ensures resilience, particularly during increasing extreme weather conditions.
Think back to the Tuscaloosa tornado in 2011 or Hurricane Sandy in 2012. We had major customers in those areas that were able to see their outages happen as the storms were passing through and quickly be able to allocate resources more strategically to get those customers back online more quickly. This network grows with them through the life of their deployment, reducing the risk of stranded assets. For example, utilities on cellular networks were faced with costly SmartP oint replacements with the 3G to 4G conversion a few years back. So as Sneh mentioned, let me show you what this looks like in the hands of a major U.S. water utility. This customer faced several of the same intensifying challenges we've already covered. To serve them, we started with an initial AMI deployment, building an initial picture of their network.
On top of this foundation, we increased value and delivered higher margin opportunities from predictive maintenance and remote monitoring. This enabled them to use analytics to inform their operations, reduce costs, and deepen their customer relationships. Because of our interoperable platform, we are helping the utility address data silos and capture data from any source. Full network visibility is critical to this utility, and offering this solution is what enabled us to capture an additional $40 million in pull-through sales and recurring repeatable revenue from the broader Xylem portfolio. This customer is already seeing improvements in their operations and capital needs, as demonstrated on the slide, and their success makes them a strong showcase customer for demonstrating to other utilities what's possible with our combined platform.
As you can see from this example, our growth opportunity is driven by becoming partners with our customers, meeting them where they are on their digital journey. Walking through this step by step, we see some customers come to us to create a foundation for transformation by connecting products or placing sensors to build a picture of their water systems. Other customers come to us when they need infrastructure to make that data accessible, either by connecting existing meters and sensors or integrating with their newly acquired connected assets. We stand out in our ability to connect not just our own devices, but also third-party devices to the network. And still, other customers come to us struggling with what to do once the data is flowing in to enable real-time decisions. Our technology-agnostic platform empowers customers to act on data, provide actionable insights that drive this operational transformation....
It's important because by partnering at each of these stages and providing flexible entry points along the way, we create sticky relationships and a beachhead for the broader Xylem portfolio. For those here in person, I encourage you to check this out during the product demos following our presentation today. Now, I wanna shift gears to cover our ongoing work to drive profitable growth. We have already seen great traction on margins in our Q1 performance, and we still see significant opportunity for margin expansion. Our margin expansion opportunity builds on simplification, strategic pricing, and operational productivity. M&CS has significant opportunity for simplification, including 80/20, which I'll discuss in more detail shortly.
We are building on these efforts by ensuring strong pricing discipline, and we're targeting 2% growth each year through pricing, and we'll do that through a value-based pricing approach reflecting our market-leading solutions, and two, driving a more effective approach to pricing on our large, long-term contracts. Finally, we are focusing on operational productivity that will take advantage of product redesigns and accelerated value engineering practices. The result has been a large funnel of margin improvement projects and automation to improve capacity and better allocate resources. Together, we expect this to drive an additional 200 basis points of margin expansion through 2027. Let me show you how we will leverage 80/20 as one of the tools in our simplification toolkit.
Our 80/20 deployment started in late Q4 last year, and at its core, 80/20 empowers us to use data to differentiate how we serve our customers and products through segmentation. In the case of our business, 50% of our revenue is driven by our top 10 customers and distribution partners. But yet, we have historically attempted to treat all customers and products the same way. Through 80/20, we are simplifying our product and pricing strategy and focusing on our most impactful customers to drive growth. Some specific actions we're driving include: increasing prices to drive higher margins on lower runner products or what we call B products; updating pricing on certain legacy products to drive adoption of our AMI solutions; and revising our pricing strategies to fully capture the value we deliver.
Our pricing approach is supported by product line simplification that includes reducing or eliminating these B products, increasing minimum order sizes, and leveraging our strong distribution network for our products. Finally, we're focusing our efforts on our highest-value customer and partner relationship, ensuring that we deploy differentiated resources while finding better ways to serve our smaller customers through our distribution partners. So I wanna leave you with a reminder on what we're delivering in M&CS. We transform the way customers operate by delivering differentiated sensing and communications, supported by an integrated platform through our Idrica partnership. The core of this offering is our market-leading technology, which is the foundation for how utilities transform their operations.
The breadth of our solutions and the strength of our AMI platform provide a clear outlook for above-market growth, coupled with significant margin expansion enabled by simplification, strategic pricing, and operational productivity. Thank you for your time. I'll now turn it over to Hayati.
Thank you, Mike. Good morning. I'm very pleased to share insights about Water Infrastructure segment today, or WI, as we call it internally. WI segment is a very resilient business because of the mission-critical nature of our products and solutions and very strong replacement cycle. We have the most comprehensive portfolio of products and solutions to move and treat water. As mentioned earlier, this is now even stronger through the combination with Evoqua. We are confident to grow our business above market. We have an unparalleled installed base and will drive growth through synergy capture and our differentiated portfolio. And lastly, we will continue to drive steady margin expansion, and I will talk about how in a minute. But let me begin with a brief overview of our segment. As I mentioned, in Water Infrastructure, we offer solutions that move and treat water.
We have a well-balanced geographical presence, and we operate all around the world. WI is a proxy for vast water utility demand. While utilities remain our largest end market, today, 40% of our exposure now is in industrials due to the combination with Evoqua's APT business. I'm very pleased that we have fully integrated APT into our global treatment business, and our teams are off to a great start, and they are collaborating very well. Let's take a moment and look at the solutions, some of the solutions that we provide for our customers. Our combined portfolio touches every part of water cycle across utilities and diverse industrial verticals. Our solutions are enabled by connected products, such as smart pumps, which you will have a chance to see an example of here, and digital solutions to monitor our customers' assets.
We also benefit from the strong history of our iconic brands, some of which have been in the market for more than a century. Let me take a moment to show you an example how our solutions are applied in a wastewater treatment plant. Wastewater is more complex than many people realize, including myself, when I joined Xylem 4 years ago. It is not uncommon to see 5-8 steps in a treatment train. This is a critical operation for our customers and for the communities that they serve. Our presence in each step of the cycle, from source to discharge, is a differentiator. With Evoqua, we have now doubled our capabilities in treatment. Our customers want to have more and more end-to-end solutions. We are now able to have more holistic conversations with them and leverage the broader portfolio of Xylem.
For example, pulling through digital solutions, services, and in some cases, even analytics. As we look at the markets, as you heard before from my peers earlier, secular trends and regulations are driving strong demand for our solutions. We have a very strong reputation for quality and with iconic premier brands. We have a global installed base. Our relationships with our customers and our channel partners are long-standing. Some date back a century in either Europe or U.S. Now we have even a broader portfolio of offering. The addition of Evoqua has added about $5 billion to our SAM. Therefore, going forward, we expect to grow mid-single digit, outpacing the market growth of low single digit. Let me share with you an example of how we win with our customers. This example is from London Heathrow Airport.
Heathrow Airport was struggling with significant clogging at their pump stations, leading to high energy consumption and operational costs. Flygt Concertor smart pump is a perfect example how we addressed our customers' challenges. We provided them with an integrated solution across 120 pumping stations in that airport, leading to significant savings in maintenance and energy cost. As we look ahead, we see a significant opportunity in our segment to drive above-market growth. Let me unpack that for you in three pillars. First is by accelerating revenue synergies. We are already seeing significant traction with our combined offering and a very strong pipeline. As I spend more time with our teams, I'm seeing tremendous excitement about the opportunity ahead. Second, we differentiate through the speed of our innovation, enabling superior uptime and improving energy efficiency, and ultimately, lowering the total cost of ownership for our customers.
For example, our Flygt pump is the number 1 brand in water transport due to its superior anti-clogging capabilities and digital connectivity. Lastly, we will leverage our install base that leads to sticky replacement revenue, while in emerging markets, we have the opportunity to capture new customers as they build out critical infrastructure. Let me share an example of how we are already seeing synergy traction with holistic treatment portfolio I referred to. One of our customers needed to pilot advanced treatment solutions to use water reuse for recharging a local river, which was experiencing water deficit. By the way, this is a problem faced by many utilities across the world. Our combined treatment offering with Evoqua was differentiated and allowed them to test first a suite of solutions, and then they can ultimately implement in full scale, leading to significant synergy and sales opportunity for Xylem.
On top of growth, we also have a very disciplined approach for achieving additional margin expansion. Key drivers: number one, with simplification. Our simplification initiatives include implementation of 80/20 principles in our businesses. And we just launched this April in our 80/20 principles and process in our global transport business. We see a substantial opportunity to streamline our business, particularly within our product portfolio and footprint. Second, we will continue to drive pricing and capture greater value for our differentiated solutions. And lastly, productivity continues to be a focus, and we are primarily addressing this through footprint optimization and cost synergies with Evoqua. We are still early in Water Infrastructure with 80/20 journey. But let me share a few points with you based on what we've learned. Based on initial analytics, there's tremendous opportunity here.
For example, about 85% of our revenue is driven by 25% of our products in our global transport business, and we see a similar spread with our customers. We see opportunities across pricing, product simplification, customer segment strategy in supply chain, and working capital. In summary, we are very confident in our ability to grow our business mid-single digit, outpacing the market while driving steady margin expansion. We are very excited about the opportunities we have to create value to the combination with Evoqua. Thank you. With that, I'm gonna hand over to Andrea.
Ten-minute break and reconvene at noon. Thank you. There's snacks in the hallway. ... Who leads Applied Water?
All right. Thank you, Andrea. Thanks for the introduction. Good afternoon, everyone. Welcome back from the break. My name is Franz Cerwinka, and I lead our Applied Water segment. I'd like to give you an overview of the business, and I'm gonna start with a few of the takeaways that I'd like to leave you with. You know, first and foremost, we have a leading global position in the applied water market, with a strong portfolio of well-established brands, a broad network of trusted channel partners around the world, which gives us a strong competitive advantage. Secondly, our customer needs are evolving, and we continue to develop innovative products and solutions to meet their needs and enable them to manage their resources in the most efficient way.
We now also have the opportunity to share industrial channels with legacy Evoqua, supporting their product sales through our channel partners and also accessing their industrial customers directly. Finally, we have undertaken several operational excellence initiatives to reduce costs and improve productivity, including the launch of 80/20 methodology, to simplify our business and to drive profitable growth. Let me now give you a snapshot of our Applied Water segment. We primarily serve customers in two distinct market segments: industrials and buildings, and within buildings, both residential and commercial buildings. This business is a cash generator with good margins and a robust presence in North America, with a potential to expand further into international markets. We have a vast installed base, and around 65% of our revenue stems from products being replaced, and the other 35% are either new builds or new installations.
Let me describe to you a bit further the markets where we participate. Our brands have a reputation for quality and reliability, with several of our product brands going back over 100 years. AWS solutions are at the heart of every step in the water cycle, and we provide best-in-class efficiency and environmental sustainability with our product. In the industrial space, such as manufacturing, agriculture, mining, and clean water treatment, our products move water from the source to the point of use. So, for example, we pump water from a stream, a river, or a pond to clean water treatment facilities and throughout the treatment process, or we move water throughout the different manufacturing processes.
In the building space, our products transport water throughout the commercial and residential buildings, whether it's to bring groundwater into homes for domestic use, or to boost pressure for drinking water, or even to provide energy-efficient heating and cooling. And we do all this while meeting our customers' sustainability and energy efficiency requirements. So now let me touch on the growth drivers within these markets and why we're in the position to take advantage of these, of these, drivers. As I mentioned, we already enjoy a, a leading market position in a large and growing market. Our global served addressable market is about $25 billion, and we will grow above market at low single digits in the short term, and we expect to grow mid-single digits in the mid to long term.
As I mentioned earlier, market needs are shifting due to changes in regulation, driving the need for improved efficiency and reduced energy consumption. For example, new regulations around decarbonization require buildings to replace gas boilers with heat pumps, where the entire water circulation system needs to be replaced. At the same time, labor shortages are driving the need for less human intervention throughout the product lifecycle and the need to make products easier to operate and easy to maintain. Lastly, water applications continue to grow, putting more stress on our existing water resources. A good example of this would be the water used in data centers. The good news is we're really well positioned to capitalize on these trends with our R&D capabilities around the world, manufacturing footprint, channels to market, and our outstanding brands...
Now, two critical elements that we're focused on to drive accelerated growth is innovation and customer centricity. As we all know, water is very heavy, and it requires a significant amount of energy to move around. This makes efficiency a very important part of our product design, and innovation is critical for us to deliver on customers' demands for solutions that help them meet their zero emissions commitments. One specific area of focus for our product development is connectivity and intelligent solutions that help us deliver these efficiency goals, as well as lower total cost of ownership, sorry. Through the combination with Evoqua, we have expanded our direct access to industrial customers, and we will be able to serve them better than ever with a wider set of products and solutions.
At the same time, we're introducing Evoqua brands and products to our trusted partners. Finally, having local engineering and development capabilities around the world allows us to be close to the markets and with speed to market, reduce costs, and regional knowledge. I would now like to share with you a couple of examples of our Applied Water business. First, I'll start with Hydrovar X, which is one of the products that we have outside on display. Hopefully, those of you that are here in Washington can go take a look a little bit later. Earlier, this is a product that we launched earlier this year, and it's an innovative line of integrated variable speed drives and motors that have built-in intelligence to optimize drive speed for specific customer applications.
This reduces energy consumption and improving the useful life of the product. This technology is now best-in-class in the market, and it's giving us a competitive advantage. In this example, a New York-based customer was experiencing increased operating costs due to aging equipment and a lack of qualified resources to operate and perform services. We're able to offer them a significantly more efficient, compact, and easy-to-operate pumping solution for their heating system, which fit in the tight space that they had available. Next is a case study in China. In this example, I'd like to highlight how innovation and the application of different technologies, both from Xylem and from legacy Evoqua, created a differentiated solution for a large data center customer in China.
This data center needed a solution to efficiently move and treat and measure water for cooling, to reduce consumption and stress on local water systems. On-site, on-site installation was costly and cumbersome and didn't meet the customer's timing needs, so our team designed a modular and containerized solution that was built off-site to accommodate our customer's needs and also provide optionality for future expansion. This would not have been possible without the combination of Evoqua treatment capabilities and our pumping solutions. Lastly, I would like to touch on margin expansion. We're focused on expanding margins and reinvesting in our business by doing three things. Number one, simplifying our business. I'm gonna talk more about that in my next slide. Number two, the relentless pursuit of operational excellence. And number three is value engineering and product design.
We have started the deployment of 80/20, as I mentioned before, in North America. Our intent is to bring focus in the areas of the business where we can actually create more value, and ultimately grow with our key customers. We're also driving operational productivity initiatives such as lean transformation, Industry 4.0 practices, supplier consolidation, and footprint rationalization. This will result in a 10% conversion cost improvement in this lifecycle. Finally, we continue to optimize our product costs through value engineering and new product design improvements. With this, we aim to increase our product vitality index by refreshing our product lineup through all these actions. Now, let me go a little bit deeper in our activities around 80/20.
As we look at our product portfolio and channels to market, over the years, our business has become complex, and this complexity is conspiring against us. To give you an example, 90% of our revenue is generated by less than 25% of our customers. In the case of our products, half the SKUs that we carry drive less than 5% of our revenue. For years, we have added new and better products to our lineup, but frankly, in many cases, we have not had the discipline to sunset other older products. On the other hand, we also have not done enough to overserve our largest and most loyal customers, working closer together with them to take further market share. We've already started implementing changes, from price increases for certain options for customized products, and also the discontinuation of dated product lines.
We're looking at ways to improve our mix, incentivize core product sales, and focusing on key accounts and providing them the best service possible. However, we need to be clear that our ultimate goal is to accelerate growth. We need to be laser-focused in areas where we can create the most value and then absolutely thrive in those areas. These efforts have already been showing benefits, but this is just the beginning, it's gonna be a long journey, and it's gonna be a journey that's gonna require quite a bit of cultural shift. So to wrap things up, you know, we will continue to leverage our leading global market position and strong portfolio of iconic brands as a platform for growth. We will strategically invest in innovation to differentiate our products and address customer needs in high-growth areas.
We will continue to be laser-focused on operational excellence through 80/20 initiatives that will fund our growth. Thank you very much, and with that, I'd like to turn it over to Rodney. Thank you.
Thanks. Thank you, Franz, and good afternoon, everyone. For those of you that don't know me, my name is Rodney Aulick, and I joined Xylem through the Evoqua combination. As my picture can attest, I've been in this business for a while, a little over 2 decades, to be exact. For the past 5 years, I led Evoqua's Integrated Solutions and Services business, and I'm honored to be leading the newest segment within Xylem, the Water Solutions and Services segment, or WSS, which combines the service business of both legacy organization. I'm equally excited about the future of this segment, so let's jump into it.
The main takeaways I want to leave you with today are: our combined service portfolio is unique and differentiated in the marketplace, both due to its breadth of capabilities as well as its flexible business models, which I'll share more on in a moment. We have significant opportunity to capture service revenue synergies through our global expansion of services, which we've already started. And lastly, we've an action pathway to accelerate margin expansion. Before we get into the strategy and growth outlook, though, I want to briefly introduce the segment, which was formed January 1st. When I joined Xylem, I was pleasantly surprised to learn that there was already a robust presence in services with a global footprint, as well as strong capabilities and frankly, a quite common service-oriented culture with the business I was leading at the time.
We quickly saw the potential of combining the services business under one segment to create greater value, greater value for our customers, greater value for our colleagues, as well as our investors and other stakeholders. WSS combines the legacy Evoqua ISS business with Dewatering from Water Infrastructure and Assessment Services from M&CS. On a pro forma basis, our revenue was $2.2 billion in 2023. We have highly durable business model, with roughly 2/3 of the revenue being sticky, repeatable service and aftermarket revenue. Also, we're supported by diversity of our end markets, where we are focused on various high-growth industrial vertical markets. While we're primarily a U.S. business today, we see tremendous opportunity for global expansion, which I'll share more on. Let's talk about the benefits of bringing these groups together.
The benefit of our combined solutions is that we're now able to cover more of the water cycle, from water intake, to transporting the water, to treating it either centrally or at point of use, and distributing it back to various points for our customers, all while being able to assess the integrity of the networks. Our capabilities are second to none. Our solutions and services are also enabled by digital to improve the efficiency of our operations and interface with our customers. We leverage tools such as remote monitoring and predictive maintenance to manage our customers' water needs, as well as the required assets. We are supported by our renowned AQUA pro service professionals, approximately 3,500 strong, with full access to the Xylem portfolio for our integrated systems.
Our AQUA pros are passionate about being the trusted partner to our customers and communities, a strong trait shared equally with both legacy organizations. The market we serve is growing low to mid-single digits, driven by increasing complexity of water. Customers are waking up to either too little or too much, but they're all coming in with unpredicted, challenged water quality and environmental regulations, and namely, emerging contaminants. All this leads to increased business risk and intensifies the criticality of our solutions. We see this trend, particularly in industrials. Industry production takes a tremendous amount of water as an input. For example, it takes 1,500 gallons of ultrapure water to manufacture one computer chip. Our biggest competition remains customer insourcing, but more and more, our customers are facing labor constraints, which makes it more burdensome for them to keep key water expertise in-house.
We expect a large driver of market growth to continue to come from adoption of outsourced water services. We're best positioned to meet this need, given our leading application expertise, our comprehensive portfolio, which is now made stronger through the merged companies, and distinctive business model, which provides customers with guaranteed outcomes to their water challenges. We are confident in growing mid-single digits and outpacing the market. We will do this by continuing to lead with outcome-based solutions, by growing our wallet share in North America, and by taking our services globally. As I mentioned, customers are facing increasingly complex water challenges. Our leading offering remains outcome-based solutions, which guarantee water quality and quantity for our customers. We will leverage our differentiation and leadership position to scale and get our fair share of value....
Our leading position in North America has been built through our expertise, extensive application expertise, industry-leading talent across engineering, design, and of course, service. Our AQUA pros are benefiting from the service capabilities of the combined organization. While North America is our largest market, we still see significant room for continued growth and synergy here. We've shared the traction we've been seeing from the Dewatering and legacy ISS business, particularly in emergency situations. We expect in the near term, this will drive the majority of revenue synergies. But longer term, we are taking our service business to other countries. Many existing customers in North America are multinational, and we have ongoing relationships with more than 40% of the Fortune 500. We've started with existing customer base and leveraging our existing Xylem footprint globally. But let me expand a bit, a little bit on the outcome-based solutions.
As I mentioned, our customers' needs are intensifying. Physical risks to water are increasing, and at the same time, they've got labor constraints. Water is not a core expertise, but it is critical, mission-critical, and they are increasingly looking for help in managing water processes and the associated risk. This is where we provide our differentiated value proposition. We provide outcome-based solutions tailored to customers' needs. Guaranteeing quality and quantity of water frees up our customers to focus on their core operations. We're also seeing increased adoption of outsourced water services, including build-own-operate. For those not familiar, build-own-operate are typically large-scale, permanent water installations that include subscription-based services over many years.
Through our unique offering, we address our customers' pain points, and at the same time, increase the durability of our portfolio as services are margin accretive and provide a great source of sticky, recurring revenues. Even on capital sales, we lead with our service offering, resulting in the majority of those capital projects having some form of service attachment ongoing. Now, let me expand a bit on our international growth strategy. We've already started on this journey, but it is in the early innings. It will take several years and require both organic and inorganic investments. So where are we at today? We've unified our services portfolio, we've invested in training our sales organizations, and we've already began following existing customers, which I'll share a couple of examples on shortly. Our current customer list will take us to very specific geographies.
At the same time, we will leverage Xylem's existing service footprint in more than 30 countries, selectively taking the offering where it makes sense on customer demand as well as market dynamics. A prime example of that is in Europe, where we have more than 100 branch locations to leverage. We are taking a phased approach with certain offerings, such as expanding our aftermarket offering or specific mobile treatment technologies to add to our fleet, to be rolled out in the short term, while other things, such as outsourced water, will take longer just based upon their sales cycle. Lastly, M&A continues to be a key part of our growth strategy, and we will continue to do bolt-on deals as we expand. So let's walk through a couple of examples of our recent success.
As I mentioned, we're letting our customers, existing customers, lead the way, and these customers have been asking us in the past to assist them globally, but we've been limited in our capability, especially around service. So far, we've seen early opportunities with some of our North American customers who have been eager for us to provide international support. Two early wins are in high-growth industrial vertical markets, pharmaceutical and microelectronics. Both are initially capital projects, but we are looking to attach a sticky service component to each and support those customers in their new plants, for the long term. In both cases, we feel strongly that the differentiator was our existing relationship, combined with our new presence and scale abroad. But as I mentioned, in the near term, the majority of our synergy opportunities will come from North America.
We've previously shared some of our wins, combining the legacy ISS and Dewatering into an integrated solution, one of the reasons why we formed the WSS segment. The examples shown here all showcase how we have leveraged our unified service portfolio. First example is how quickly we mobilized in response to a customer facing an emergency situation. Of course, we received a request over a weekend from a large multi-site customer, and within 24 hours, we deployed a comprehensive engineered solution to treat and move contaminated wastewater over a 7-mile distance. A great example of our local High-Impact Culture being so similar as they kept pace with one another throughout the event.
The second example is how our expanded offerings, enabled by technologies from two of the segments you heard from earlier, helping a customer with a new greenfield location, helped them to minimize the number of vendors they had to depend upon, as well as meet critical milestones, ranging from construction timing to startup. All while dealing with one company that can be there through the long term, providing service and operations across their water and wastewater footprint. The last example is on the utility side, where we see opportunities as well. A customer needed a mission-critical bypass solution in a location that required high safety and environmental compliance. We were not only able to bundle our solution and provide that comprehensive solution for them, but we were also able to provide mission-critical, 24/7 service and support to ensure reliability.
These are enormous benefits for our customers, with greater optimization and faster speed of response, enabling our customers to depend upon one vendor and not have to work with three or four. We have a significant pipeline and see much more opportunity on the horizon. I'm very excited about the growth opportunities ahead, but at the same time, we remain diligent on driving margin expansion. First, through simplification. While we have not started our 80/20 journey yet, we have been on our own journey for the past several years to drive greater efficiency and simplicity in the business, and we see even more opportunities going forward in standardizing our combined service offerings and processes. Secondly, we will continue to utilize value-based pricing to capture a greater share of the pie and expand this defined process across a greater portion of our offerings.
And last but not least, we see tremendous productivity opportunities with our combined AQUA p ro service technician workforce. We've been on this journey a couple of years in Evoqua and are taking those learnings and applying them throughout the entire service organization moving forward. Here, you will see us use digital to enable greater service efficiency through tools such as predictive maintenance, remote monitoring, and smart routing. In summary, I wanna leave you with the takeaway that we have a unique, differentiated offering that addresses our customers' most challenging water issues, giving us significant runway to capture revenue synergies and drive profitable growth. With that, I'll turn it over to Bill.
Well, thanks, Rodney, and thank you to everyone for joining us here today. I'm just hitting my 8 months at Xylem, and I couldn't be more excited that I've joined such a promising organization. The value creation opportunities that you see in the company are the same factors that drew me here today, along with a chance to work with such an outstanding leadership team. I think we have a strong future ahead, driving strong growth outperformance, significant margin improvement opportunities, and executing on a disciplined capital allocation strategy. Now, I'll spend some time walking you through our long-term financial framework and the outcome of the great initiatives that the team has highlighted this morning. To start with, we are the best-positioned company in the water industry to leverage the strong secular growth trends in the most resilient parts of the market.
The other elements I'm going to cover are additive to the strong foundation we are building upon. We plan to outperform the durable markets we operate in, driven by revenue synergies, focused innovation for our customers, and increased strategic pricing. We have significant opportunity to accelerate margin expansion through our simplification initiatives, a key area of value creation, as well as a foundational element to the cultural journey we're on, with additional opportunities to drive value by optimizing our portfolio, taking a hard look at the assets that we have, and making sure they align to our go-forward strategy and meet our financial expectations. Lastly, we are targeting top-quartile shareholder returns by accelerating our organic growth performance and leveraging our strong balance sheet to support a disciplined approach to capital allocation.
Just to remind everyone, just a few weeks ago, we reported strong first quarter earnings, and we raised our full-year guidance, increased our organic growth, raising our EBITDA margin expectations to 20%, and raising our full-year guidance for adjusted EPS up $0.08 at the midpoint. This really reflects, you know, strong Q1 performance and continued commercial and operational momentum across all our businesses. Now I'll talk about growth acceleration. You know, Snehal walked you through our growth framework earlier today, where we plan to grow 4%-6% over the next three years. We'll outperform the market by two points from strategic pricing and more velocity and focus around innovation with our customers. With additional point of growth from Evoqua revenue synergies, I hope you got a better picture of what some of those synergy sales look like from the segment discussions.
We've all already made considerable traction with some early wins and have a strong funnel of opportunities. This is an area where I see a lot of momentum and excitement as our teams continue to work together and the combined portfolio sale becomes second nature. In the short term, we do expect to give back a point of growth through our simplification initiatives as we look at the long tail of products and customers that are impacting our profitability and creating unnecessary complexity across our businesses. However, long term, this will enable us to grow faster by having differentiated engagement with our largest customers, solving their most challenging problems, improving our lead times, and increasing our speed of innovation. We have upside from M&A as we get more consistent with our deployment, as we focus on higher growth verticals within the water market.
What we can do with our margins is probably the number one question that we've gotten over the last several months, and we have significant margin runway and confident in expanding our margins systematically by 100 basis points over the next few years. We plan to convert low 30s incrementals to provide 50-70 basis points of margin expansion, with our increased price capture and strong operational productivity more than offsetting our inbound inflation. The teams continue to work on our pricing capabilities and are focused on continuous improvement in our factories, with robust funnels looking at ways to drive our labor, material, and overhead efficiencies. We will accelerate our margin further through our simplification initiatives that will drive an incremental 20-50 basis points of margin expansion.
We are in early days of 80/20 implementation, but I am extremely confident that we will have a material impact on our financial results through 2027 and beyond. As we look at the significant cost it takes to support the long tail of products and customers, and we will reallocate those costs, some to the bottom line and some to reinvest in our growth initiatives. And there's additional margin opportunity by optimizing our portfolio. We are in the early days of our assessment, but as we segment the portfolio, we think there are additional margin tailwinds as we have assets that no longer align to our go-forward strategy or meet our financial expectations. Moving on to 80/20.
As you've seen in M&CS, Water Infrastructure, and AWS, we have kicked off the data analytic portion of 80/20 across those businesses, representing about 40% of the portfolio. We expect the analytic to take around 12 months for each of the launches, and this will inform our simplification actions that we'll execute on over the next 1-2 years. You know, everyone always asks: "Well, what specifically... or how do you specifically get value from the tool set?" I like to think about that in 3 buckets. First, pricing. As you recalibrate the benefits you're bringing to the low-volume customers and products, you have to take significant price actions to capture the value you're creating for them.
Second, you know, you saw in various segment presentations, you know, in some cases, you have 90% of your sales driven by only 25% of your customers. The amount of cost you have to support the thousands of customers that are only generating 10% of your sales is significant, and the tool set clearly highlights those costs, and the teams can take those costs to the bottom line or, again, reinvest them back in the business. Finally, slow-moving products bring complexity to the shop floor and weigh on our cash flows with inventory levels to support it. As you eliminate those products, you get more efficient with your manufacturing cells, with less changeovers and improved conversion cost, and better cash flows as you get to reduce your inventory levels.
With any new initiative, we'll be implementing incentives to align the behaviors to drive the change we need. This will help us sustain our momentum from simplification going forward. I just want to reiterate, this is a long-term journey, and we are just getting started, but we see a significant amount of opportunity. Moving on to our portfolio work. You know, we have additional opportunities, as I highlighted, to strengthen the quality of growth and profitability of the company by optimizing our portfolio. Some of this will be formed by the 80/20 work, but the balance by the work on the back of the value mapping, the team is doing.
We will, we'll assess our portfolio through a strategic and financial filter, looking at businesses that don't align to where we think the future of water is headed, and those businesses that don't meet the financial hurdles of the business going forward. This analysis will help us accelerate profitable growth, make us more agile to do accretive M&A, and provide additional capital to support our growth aspirations. The following slide lays out all our simple growth framework of growth outperformance, margin acceleration, and capital deployment will support mid-teens EPS growth rate through a cycle. A 4%-6% organic growth at low 30% incrementals will enable us to drive high single-digit EPS growth. We'll accelerate this to low teens through our planned simplification initiatives, driving 40+% incrementals.
Then, deploying capital consistently on accretive M&A or share buybacks will drive us to deliver mid-teens EPS growth through 2027. So a little bit more color on capital deployment. We are extremely well-positioned to support our strategy with more than $10 billion to fund deployment across our framework. Our highest priority remains investing in our organic growth and productivity initiatives that have our highest returns. Whether that's capital support tooling for a new product introduction, building additional capacity, or incremental capital to support our outsourced water projects, we are fully committed to support our organic growth initiatives first. Then, we plan to be more consistent with our execution on M&A through bolt-on transactions to drive incremental shareholder value. And I'll walk you through a little bit more detail of that framework on the next slide.
We're gonna maintain our current dividend philosophy to grow our dividend in line with earnings, and then leverage any free remaining cash flow to support opportunistic share repurchases. We understand that if we cannot put our money to work at a pace equivalent with our strong operational free cash flow performance, we will return the excess to our shareholders more frequently than we have done historically. We have a great balance sheet and are operating from a position of strength, and we'll leverage a disciplined capital deployment strategy as a strong leg in our value creation formula. Now, I'll talk a little bit more about our M&A framework. We're doing M&A to enhance our strategy and to drive incremental value for our shareholders, and we have a disciplined framework to guide our strategy and deal execution. First, we're gonna focus. Where are we gonna focus?
We're gonna continue to invest in our core, but on the back of our value mapping work, we've identified three high-growth areas that we're prioritizing: intelligence solutions, services, and advanced treatment. From an economic perspective, we'll ensure these deals are accretive to the enterprise with strong financial fundamentals, with some key requirements around their economics. First, they must have strong synergy potential with the portfolio. And with the breadth of our portfolio, we think we'll be advantaged in a lot of competitive bidding situations. Second, revenue growth greater than mid-single digits and businesses that have a path to accretive EBITDA margins. And finally, companies with business models that are durable and non-cyclical, with high replacement revenue components.
These transactions will have strong returns, with return on invested capital greater than our cost of capital, and we look for them to be EPS accretive after the first year. We have a strong funnel that aligns to this framework, and we look to be more consistent around our M&A deployment to help us compound our earnings going forward. We are on track to deliver our 2021 Investor Day milestones and are extremely excited about the new framework we've laid out for the through 2027. Our new long-term framework accelerates growth performance along revenue, margin expansion, EPS, and free cash flow growth. We plan to grow mid-single digits with 100 basis points of margin expansion and to deliver mid-teens EPS growth, bolstered by increased capital deployment. With a strong quality of earnings, we're also gonna generate low double-digit free cash flow yield.
To sum it up, we have a strong financial future ahead of us with significant value creation opportunities. We are strongly positioned to grow above market, accelerate our margins through simplification, and compound earnings through a disciplined approach to capital allocation to help us drive top quartile shareholder returns. And with that, we're gonna take a brief break until 1:00 P.M. to set up for our question and answers. Thank you very much for your time. So you got about a 20-minute break.
... portion. So we'll have 30 minutes, and then Matthew will conclude with a couple brief remarks. As a reminder, please leverage the QR code, and also those who are attending virtually as well. We'll go ahead in the live audience, have questions live, and Mike will be passing the mic. So the first question, leveraging the QR code, is from Deane Dray from RBC.
Thank you, and we appreciate all the detail and the management team and the presentations here this morning. I've got a couple of questions. The first, I guess, to Matthew and to Bill on the 1% give back, combination of divestitures and the simplification costs. Is there any way you can unpack how much of that might be divestitures, maybe some timing, sizing of those, versus the kind of sunsetting, exiting some businesses? So that's the first question, and then the second is, and Sneh, you probably have to weigh in here on PFAS. I mean, I agree that you were very thoughtful about not over-hyping what that opportunity is, and it's a long, long tail. We're gonna be talking about this for, you know, 15 years in terms of the remediation.
But your use of the EPA estimates, that 5,000 or 6,000, the E&C companies are saying that's off by multiples. It could be, two times higher to six times higher. Does that change your thinking at all in terms of the number of utilities that will test much, much higher on what that growth rate and opportunity might be for Xylem? So thanks.
Thanks, Deane. So first, on portfolio optimization, I'll hand it to Matthew.
Okay. Yeah, I'll take that one. I think first, your direct question on the 1% is all just exiting of products and customers. That doesn't consider any divestitures. That would be an inorganic impact. So as we roll out 80/20 across the portfolio, and we look at where we're driving the most value with our product and customers, we're gonna step back and look at the portfolio. And obviously these are, you know, businesses I talked about. We're gonna run through a filter of, you know, the things that don't necessarily align to where we think the water is going. They don't meet our financial expectations, or they'd be too costly to invest in to fix them, or they might just be businesses that don't have scale within the portfolio.
So we're going through that exercise. We don't think it's a meaningful amount. You know, it's not gonna be a huge carve-out of a chunk of business or a segment of something like that, but it's gonna be very specific work that we're gonna do over the next couple quarters to really lean out and eliminate some of that portfolio complexity we have in the business.
... and on PFAS?
Yeah, maybe I'll, maybe I'll kick it off on PFAS, and then Sneh can get into a little bit more color. But I, you know, we completely agree with what you just said in terms of it's, it's gonna be an IV drip for many years. We're glad to have the rule final so we have more clarity. It is a little bit longer in terms of testing and capture than was originally contemplated, so it's like two more years. There's a lot of uncertainty, right? Number of utilities that are gonna show up PFAS in their water when they do test. There's litigation that's potentially gonna push this out further. You know, what else is out there? Innovation, you know, when you capture it, you know, what do you do with it?
Incineration, the potential of that then recontaminating waterways is still something, you know, something we're deeply focused on and something that has to get solved. So, you know, there's a lot of unknowns out there that we're gonna uncover over the next 2-3 years, but it's not a big part of our long-term framework because of that. But, you know, maybe Snehal, you can weigh in a little bit, too.
No, I think Matthew covered all the ground. I think the key thing is the next three years we're gonna learn a lot, right? Everybody's got a number in their head, but we're gonna learn who's above the limit, who's below the limit. And, frankly, I think the liability question is a big one, because if you're in the chain of custody, if you will, of treating, there is right now a question mark on that of whether or not the last person touched it, owns it, and that's not something you can just walk into lightly. So right now, we're working through that and working with our customers. Today, they make choices, the customers do.
But in terms of what the opportunity looks like, I think the range we gave you was pretty much where we're standing right now, but we're very close to the market, so we'll know how that changes. The other thing to absolutely underline is that not every opportunity is gonna be a good opportunity, and what I mean by that is that there needs to be a service component, there needs to be a level of profitability, because that is not, you know, you don't load up at the PFAS buffet on that one. You do not go off that, and right now that's where we're getting really disciplined on how we participate. We have the solutions, but we also know that this has to be an endeavor that actually is accretive to the enterprise.
Our next question comes from Mike Halloran from Baird.
Hey, everybody. So two questions. First question, just could you unpack how you get to the 3% market growth and then the, call it, 1% or so of internally driven growth, excluding the price component? Essentially, you listen to all of the secular drivers that you're discussing today, and it doesn't necessarily support something that's that close to maybe what GDP looks like or even the 3.6% or whatever you did over the previous ten years. So maybe you can unpack what's in there secularly versus not, if that's part of something else, if there's some conservatism embedded, just the moving pieces. And then secondarily, I really like the detail around the, you know, percentage of revenue that drives... is driven by 80% of products and things like that.
Could you give some context on what the margin difference looks like between the customers that are very profitable, or the ones you're targeting, or the products that you're targeting versus the ones that you're moving away from? Thanks.
Thanks, Mike. So on the first one, on market growth rate, Snehal, you want-
Yeah, I can take that. So, and when you think about this, I mean, you saw our addressable market, but the overall water market is quite vast, right? And so it's like a big numbers game, whereas we have some sectors, and we talk about high growth verticals, which are growing faster. We have others that we do participate in that are not growing at that rate. So the blended on that is really where you get to still in the 3% range. I think the other thing to point out there is that, you know, over the course of time, some of these trends, which we talk about, could be funding, could be, you know, climate adaptation, these are taking longer to roll out, right? So while the underlying trend is there, whether it's financial or market demand, we aren't seeing it.
It's not, you know, coming in at a spike. So we still see that as a consistent market growth, but it's the puts and takes probably more than anything else, that's really keeping it in that range.
From the differentiation and profitability between, you know, each of the segments highlighted their initial take on their quartile analytics, and, you know, they were all 90% or 95% are in that first quartile. And really, they're driving 125%-140% of the profit within those businesses. The long tail, they're losing money, right? So the profit difference is significant. As you say, we have resources that are there to support all those thousands of customers and products that we're really not getting a return on. So as we look at the tool set, and again, I think it clearly articulates, you know, where we're spending too much time and money on products and customers and how do we shift that.
Again, we'll take some of the bottom line and some to reinvest, where that's where I think you'll see, after we get through this cycle of implementation across the portfolio, an acceleration of our organic growth. So that other 1% that we have on the innovation side, you know, can increase.
Our next question comes from Scott Davis, from Melius.
Okay, thank you. I want to go back to Deane's question on the one point of give back. Is that an input or an output? Meaning, are you managing to a one, or you expect it to be one when you do the 80/20 process?
It's our best estimate, so it, you know, it's not... We're targeting that. As we go through the tool set, it could be higher, it could be lower. And again, if it was a little bit higher, I think the quality of profitability we would get would offset, you know, any of the top-line loss.
Okay, that's helpful. Then if we move on to the data center market, you know, the size of these data centers is changing, right? And you know, and the scale and the water needs, et cetera. But has the RFP process changed, and how... where... Are you guys spec'd in on a full product line and on kinda day one, or are you in a standard design- build? I mean, just-
... kind of leave it at that.
It's evolving, but maybe, Snehal, you could give some color on it.
Yeah. Yeah, I, I mean, look, it's, it is evolving, and there's—we've had participation in the market for several years. It's just obviously gone up in a very different way. So kind of think about it top-down, bottom-up, right? Top-down, we have been working with some of the largest providers, historically, putting solutions in primarily in the cooling loop. But we are starting now to see some standardized programs since they're trying to build them so fast, and they're, it's getting more into with the design firms and the construction companies. And that actually, a lot of that ends up sometimes getting supported by our channel partners, too, right? So it's kind of that, that whole solutioning, some pieces of which we don't do, some we do. So it's really kind of working it on both ends. But that, that market's maturing, too, right?
We'll see how that goes with standards and such.
Yeah, and the China example that the team showed and highlighted, that's something that we went in and designed a solution. Now they want to scale it.
Yeah.
So...
I'm gonna take a question from a virtual attendee. So you talked about the opportunity, increased water stewardship impact. How is the combination with Evoqua helping you to achieve that impact? And we have Claudia Toussaint here, our Chief People and Sustainability Officer, who's joining us in this Q&A in light of us releasing our annual sustainability report.
Great. So first, thank you for the question. We are really excited about the 2030 impact goals that Matthew shared with you this morning. And in terms of the water stewardship, let me break it down into kind of three parts. The first one is looking at it from a customer perspective, and there, the combination between Xylem and Evoqua has really enabled us to have a broader set of solutions to address corporate water stewardship goals and ambitions. So a lot of industrial users of water are facing water challenges, and access challenges, and quality challenges, and the broader set of portfolio allows us to address those. In addition, as part of water stewardship, we also always walk the talk, so we have an element of that goal related to water stewardship that addresses our own operations.
Then we also work closely, you know, in our supply chain around making our supply chain water intensity visible, and also looking obviously at our suppliers as potential customers.
We'll take the next question in the room from Andy Kaplowitz from Citi.
Thank you. I'll try to look around the hall to see you guys.
Yeah, that's the one to see.
That's why-
This is the cheap seat. So, just maybe two quick questions. How difficult is it really to up the game in strategic pricing? You know, it's somewhat fragmented markets, and so what's the risk that you kind of lose that B customer that you talked about, just, you just lose them? And then in, on the M&A side, you have a pretty sizable difference between, you know, the low teens growth, EPS growth for the core and the mid-teens for the M&A. And so does that mean, you know, maybe this is for Bill or Matt, like, you start really now, and can you handle sort of, you know, the focus on 80/20 with, you know, pretty sizable M&A impact over the next couple of years?
Yeah, so the first one on price, thanks, Andy. On price, what, Snehal, you want to take that, please?
Yeah. Yeah, I'm the winner. So, on strategic pricing and really value pricing, I'd say is the way to think about it, there's a few things that are happening. I mean, first of all, through 80/20, I mean, we're just really getting some very, very good toolkits and, and tool sets to understand not only what we're, you know, as Bill talked about, the profitability by customer and some of the things that they're buying from us are much more valuable to them than we really had the time and paid attention to. So the opportunity to raise price there and still retain them, we see that as a, as a, a key thing. The other one I would say is we're spending a lot more time on the applications we serve, the value of a solution, and what problem we're solving for the customer.
And I would say that's a little bit easier now that we have a lot more close, direct interaction with customers, particularly through the Evoqua transaction. But even where we're not, more of the things that we do directly with the customer, you can nearly actually get a lot more value, calculation. And I think as Matthew put it, as the value is over the price, they're buying, right? And we have to help them understand the value. In a lot of cases, we're doing that. You know, considering uptime in an industrial plant, it's almost priceless if the thing, you know, keeps going. You gotta keep it going, they'll pay the price to make sure that they have the service.
So really getting super focused on the applications, really understanding how the value actually relates to what it is they do every day, and then being able to feed that into our sales teams as we go all the way from proposal through closing the contract.
Yeah, maybe I'll start on M&A, Andy, and maybe, Bill, you want to weigh in here. You know, we're focused on Evoqua. I mean, you can see that today, and we've got good traction, and we have built a lot of capability over the past 18 months. If you think about kind of the planning process we went through, we announced that in January, then we planned till May, we closed the deal, and now we just had our 1-year anniversary of kind of what I would call execution. And so we built a lot of muscle in the organization, so that feels good. You know, we've got a good M&A pipeline, and one of the things we changed at the end of last year is our process, and really having more of a bottoms-up approach to M&A versus a top-down.
I think it's gonna help us be more consistent deployers of capital in an accretive way. So, you know, we've been working as a team on this over the past 5-7 months, and I think we're in a pretty good place. You know, at the end of the day, I mean, like Bill said, there's a framework we go through. Is it strategic? Does it financially make sense? And we're not gonna do things that are silly. We have financial measures that we look at. And, you know, those are. And then, the last thing is organizationally, are we ready? And each asset, you know, may sit differently in the organization, and can we put rings around the parts of the organization that aren't, you know, the rings around the pieces of that will be impacted.
So that's how we think about it in those kind of three ways. And, you know, again, we're not, you know, the key I hope you walk away today from is focus. So we're not, we're not gonna do anything that disrupts our focus, but I think we've got a lot of capability.
Yeah, and then, and then on the timing, obviously, we wanna be purposeful with that as a key value driver for us. You know, Matthew highlighted, we've got much more a greater part of the team actually working on the effort. You should combine the funnel with more folks' time and attention on it. Not in saying that, you know, deals are actionable when they're actionable, and you can make them actionable if you pay crazy multiples. Obviously, we're not gonna do that. So, you know, our mid-teens is through this cycle. You know, some years maybe it's a little bit higher, some years maybe it's slightly lower. But, yeah, for us to hit that, you know, we just need to be more consistent here over the next couple quarters.
There is things that we're looking at. So, there's a lot of opportunities out there.
The next question comes from Nathan Jones, from Stifel.
Good afternoon. I wanted to follow up on the strategic pricing opportunities and one of the comments you made, Bill, of 125%-140% of profit comes from the top quartile of customers and products. I mean, that means there's a whole lot of stuff Xylem does, it doesn't make any money on. Maybe you could just comment on the longer-term opportunity to potentially rationalize some more of these kind, more of these businesses, or to be more aggressive on the strategic pricing side. I assume, you know, a lot of these 100 basis points of price per year comes from, you know, the Quad 4, the B products, B customers.
Are there opportunities to expand that and to be more aggressive with that kind of pricing over the next few years, just given you're not making any money off a lot of these customers and a lot of these products anyway?
So I mean, but, so I think to start with, I mean, just the fact is, if you've got 75% of your, your, or 75% of your customers that are less than, you know, mid-single digits of your revenue, if you know, 8%-9% of your customers, 75% of your customers generate 8%-9% of your revenue, that's actually a small amount. So within that, yeah, there's definitely products and customers that are loss-making there, and those are the actions that, one, we're gonna go after with significant prices. Some of those, right, we don't want to do that business, so we'll just continue raising prices until they exit. Some of them, they will get to a level that, you know, will be profitable if they will keep them in the organization.
Maybe if you wanna talk about just kind of process more broadly.
Yeah, I, I think, Nate, you're asking a good question, but that first step of data and, and visibility has been huge, right? So the slide you saw from the business presidents has been the first eye-opener. Because, you know, all sales guys like to take orders until you show them the data, and even then they'd like to take the orders. But I think when you get right down to it, is understanding how much those products mean to those customers, too. Because in some cases we've been moving on, and we've actually developed new innovations, but they're really just happy buying the old stuff. There's a way to change them and keep them and just move them to the right product. Makes it better for them, makes it better for us.
There are gonna be situations, as Bill pointed out, and there are plenty of them, where there's probably somebody else out there that might be able to help them out. Not to lose sight of the fact, too, that many of those customers we see as actually prime for our distribution partners, who in many ways can serve them, at least on a cost to serve basis, much more efficiently than we can. We have several ways for us to be able to go through this. At the end of the day, yeah, some of them are just not gonna be there, but probably for lots of good reasons.
Hey, just one fine point on this. This is not a Xylem issue. I mean, any company that does 80/20, this is kind of the results. That's why I think it's a tool that everybody should be leveraging. You know, it's really helping our teams shine a light on areas that we can redeploy effort to grow profitably.
Right, the headwind from 80/20, you're doing it wrong, right?
Exactly. Yeah.
My follow-up's on the WSS side. A little more color I'd like to hear on the international expansion of the outsourced water model. And one of the comments, Rodney, you made in your presentation was that there will be some inorganic investments needed to expand that business. If you could just, you know, expand on that, what kind of inorganic investments you're looking at? Obviously, they'll be opportunistic as well, but just, you know, the kinds of footprint that you think you need in order to expand that business. Thanks.
Like I mentioned, we're starting first with our existing customers-
Mm-hmm.
And they're taking us into new geographies. Some of those customers, what we do for them here is outsource water, longer-term projects, and we may do that for them in other locations. But the sales cycle in many of those opportunities is over years. It is not a quick sales cycle. As far as the geographies, we're going through the market analysis adjacent to where the dynamics... You know, where can we deliver the most value? Where we have existing Xylem footprint, and where we've got existing service business that we can couple with to build on. We're, like I mentioned, early innings, but the potential is greatly there. I think following customers out of the gate, it makes the most sense.
You know, one of the areas from a capital deployment standpoint or reinvestment standpoint from 80/20, I mean, some of that's gonna go to the bottom line, but one of the two or three areas we're gonna focus on is, you know, putting that money to work in international expansion.
... whether that's organic, and then obviously there's gonna be inorganic opportunity there as well.
Great, thank you. All right, next question comes from Bryan Blair from Oppenheimer.
Good afternoon, thank you. Bill, you mentioned there's understandably a lot of focus on margin potential, you know, across Xylem. That M&CS plays a, you know, really critical, you know, role in that, that outlook and that upside. Q1 was significantly ahead of expectations. You know, very strong. You've walked through two points of pricing upside today, so presumably price- cost positive looking forward. Productivity gains, 200 basis points+ . Additional simplification benefit, volume should certainly be a good guide for the foreseeable future. Are you willing to speak to, by 2027 or any other medium-term kind of timeframe, you know, where that margin should shake out for, for M&CS?
Well, I'd give you my thoughts, but my brother's gonna answer that question.
Yeah, thanks. So I mean, kind of as I walk through, I mean, our view of it is as that backlog begins to bleed down and we get to a more normalized growth, which is high single digits, we do expect with the efforts we've got that we will be—our margin performance should be slightly above the enterprise in the long-term framework that we laid out today.
Okay, understood. Follow-up, the $25 billion in incremental SAM or, you know, market opportunity looking forward, that's pretty notable relative to the $80 billion baseline. Any additional color you can offer on your team's, you know, positioning and readiness overall to pursue each of those categories? Just curious whether there are portfolio gaps or, you know, capability issues at hand right now that could drive, you know, significantly accelerated organic investment, or perhaps within one of the categories of the intelligence solution services. And then advanced treatment, whether M&A would play a really outsized role going forward?
Snehal?
Yeah, I can, I can at least start that. First of all, that 25, the additional 25, as we looked at it, there's a couple of things to keep in mind. Each of those categories, we're already playing in it, so it's not gonna be fresh for us. That puts us in a good position to be very selective as we grow into that additional market. It's probably split about a third, a third, a third, so from a sizing perspective, that's kind of how also to think about it. And then when it comes to how to play, I think the comments that were already made is that if our internal capabilities are there, which we have significant capabilities to go further in each of those vectors, then we'll take it.
But if inorganic is the path to take, we also have that as an option. But right now, we see that as really three strong pillars that are continuing to grow, at pace. Getting back to the comment about the unevenness of growth, those are the ones that are growing, and there's some others that would be drawing back. I don't know if you want to add anything to that?
No.
All right, great.
Thank you.
We have a virtual question that asks, just, "Can you give us a status of how the integration is going within WSS, as well as Water Infrastructure?" So maybe first, Snehal, as the leader for the integration, we can hear from the segment president.
Wow, it was so close. So close. Yeah, look, overall, I'd say a few things. Number one, you know, the thoughtfulness that was put into the integration planning, setting up dedicated teams, really, I mean, two in a box all the way through, has served us quite well. We just came on the 1-year anniversary last week of the close of the deal, and we were ahead on all metrics in terms of just tasks and others, and we talked about how we're on pace for cost synergies. I think that's been tremendous.
I'd say the other thing that came through, and I think you saw it more today, is it started as a conversation that was an integration that was about culture and the behaviors that we want as an organization, but that's now obviously become much more widespread. So it wasn't simply about the two businesses and where the businesses fit in and the culture that we want there, but they apply everywhere. So I'd say overall, our progress has been stellar, and Matthew made the comment about muscle. This is, this is new muscle, and I think a year plus at it, pretty physically fit right now for this. But I'll turn it over to Hayati and, and-
Yeah, I'll start. I mean, very, very briefly to add from an APT and treatment point of view, I'm very pleased how it's gone the last one year. We put our teams together, we've integrated two businesses, and we have done cross-training across the sales forces, and that's gonna continue, but it's at a great place that, you know, as we expected. So, maybe on the...
Yeah, on the services side, as I mentioned, I think our integration has gone incredibly well. We've worked together very early on some very mission-critical events for our customers, and the local teams were arm in arm, in really delivering the value that we could. I just love the fact that the organization, as we brought the two organizations together, is very deliberate. Very deliberate to take the best of both going forward. And our people have felt that, and you see that in our High-Impact Culture.
I think we have time for one more question, so, we'll take a question from Richard Radbourne from Redburn Atlantic.
Yeah, thank you. Actually, it was following on from that comment around the High-Impact Culture, which, Matthew, you mentioned at the beginning, was one of the important cornerstones of, I guess, the whole framework.
Right.
It's clearly less tangible, but maybe you could give us maybe two or three examples of culture and how you would see that manifest itself in-
Yeah, I mean, we're... When you think about, you know, the- all that's happened with a leadership change, with two companies coming together-
... you know, a change in our priorities and focus to being a bit, you know, talking more about profitable growth, we needed to have a culture shift, because how you do it is equally as important as setting strategies. And so, you know, we have been very vocal in the organization and in starting with ourselves, showing up on how we do things. How do we simplify the business? How do we live that culture of inspired to innovate, empowered to lead, and accountable to deliver? And I'll give you a very simple example that came from me. I said, "Why do we have 1-hour meetings? We're gonna go to 25-minute meetings and 50-minute meetings." Are we aligned as a leadership team on that? Yes, go. It's already implemented across the organization.
So, you know, our earnings calls used to be an hour plus, now they're 45 minutes. The preparation for those is now half the time. Our business reviews are now cut in half. I mean, so this has to start with this leadership team and me, and how we show up in the organization. We've been on a journey together for over a year on how we, how we work together, how we align. Agreement is not alignment. We can all talk about a topic in our leadership team meetings and agree, and then walk out and we do 8 different things. And so now we're forcing ourselves, we create the space to have quality conversation as a team and challenge each other in a healthy way, and we get aligned, and that helps you move faster and execute better.
I'd say the last thing we're focused on now is we're putting our top 150 leaders through an alignment journey, and also helping them adopt these three behaviors in our culture transition. That's gonna kind of come to a crescendo here in June at our global leadership team meeting here in D.C. We're bringing in the top 150. So it starts with us. We get to report the news, the 150 makes the news with the 23,000 colleagues. And you have to have that alignment through the organization and that culture to execute on everything we talked about today. And so, you know, we're trying to put the proof points out there. We're being very intentional, and it's not a weekend retreat, it's months of intentional work that we're doing together.
Thank you.
You're welcome.
We'll finish with some closing remarks.
Well, I think I should disclose there. Because, I mean, what I was gonna say, because the culture and team comment didn't come up, is I think that's. Team is so important. I'm a team person. I kind of came up in my life playing sports, and team is so important. And having that galvanized team, you can't execute properly unless we have alignment. So we've done the work. We have to continue to do the work and be a team. The second is culture. To change and pivot to this profitable growth narrative that we're putting out today and our priorities that we're talking about, we have to change the culture. And so those are things that we're committed to and we're working to as a team.
I hope you're as excited about the opportunity at Xylem over the next, you know, horizon, long-term cycle, that we are. We just really appreciate your interest and your questions today, and engaging. I know that we're gonna have some more time to kind of get into more detail with our product teams, and where a lot of what we talked about will come to life even further. Thank you very much, and really appreciate today. Thank you.