Ecolab (ECL) 31 Oct 172017 Q3 Earnings call transcript

Company Profile

Participants

Michael J. Monahan	Ecolab, Inc.
Douglas M. Baker, Jr.	Ecolab, Inc.
Daniel J. Schmechel	Ecolab, Inc.
Gary Bisbee	RBC Capital Markets LLC
John Quealy	Canaccord Genuity, Inc.
David E. Ridley-Lane	Bank of America/Merrill Lynch
Manav Patnaik	Barclays Capital, Inc.
John Roberts	UBS Securities LLC
Scott Goldstein	Citigroup Global Markets, Inc.
Daniel Rizzo	Jefferies LLC
David I. Begleiter	Deutsche Bank Securities, Inc.
Christopher S. Parkinson	Credit Suisse Securities (NYSE:USA) LLC
Tim M. Mulrooney	William Blair & Co. LLC
Vincent Stephen Andrews	Morgan Stanley & Co. LLC
Hamzah Mazari	Macquarie Capital (USA), Inc.
Michael Joseph Harrison	Seaport Global Securities LLC
Scott Schneeberger	Oppenheimer & Co., Inc.
Dmitry Silversteyn	Longbow Research LLC
Justin P. Hauke	Robert W. Baird & Co., Inc.
Rosemarie Jeanne Morbelli	Gabelli & Company
Dan Dolev	Instinet LLC
Robert Koort	Goldman Sachs & Co. LLC

Call transcript

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Operator

Greetings and welcome to the Ecolab third quarter 2017 earnings release conference call.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mike Monahan, Senior Vice President of External Relations. Thank you, Mr. Monahan, you may now begin.

Michael J. Monahan

you. Thank welcome quarter and call. Ecolab's to everyone, conference third Hello, Chairman Doug and With is Ecolab's and me today CFO. Baker, CEO; our Dan Schmechel, discussion quarter's along the A website at are results earnings Ecolab's our and release available with on slides and results our the ecolab.com/investor. our outlook referencing of on performance. discussion take slides and Please statements include moment that stating estimates read to materials, a future the this cautionary of the these teleconference, the materially are forward-looking actual and those These results could from projected. differ statements actual cause section recent XX-K factors, could Factors differ the under materials. to risk that described in posted results of are XA, our our Form and most in item

We also as and we continued we to with diluted Starting a momentum per refer brief third are improve overview building through profit share fundamentals the quarter, supplemental quarter sales earnings information of and finish in underlying release. to you the the XXXX. the Ecolab's

Continued offset yielded than despite hurricanes X% pricing sales earnings along gains all more currency business sales rate cost The innovation in our with third interest unfavorable fixed acquisition-adjusted gains per product well These the increase. and tax product shares drove quarter and and North delivered work quarter to work efficiency lower along with expense fewer as as the America. our new ongoing costs. business third impact segments growth outstanding our in of higher share adjusted

of increases than share release, our per reduction business the to our the quarter. years, margin were charges increased segments. estimated of hurricanes, operating by as per and more were hurricanes, be Moving income of and impacts margin an income quarter, Absent increase adjusted impact the and Absent to volume expense, in a the quarter, the Pacific both share. shares acquisition-adjusted growth. currency higher for declined adjusted acquisition-adjusted item in costs rate, X% impact currency Asia as Europe basis, sales press share tax fixed in of with diluted the Consolidated X from and related all the rose third an percentage sales operating to XXXX XXXX were Hurricane a along led gain third the diluted a points on offset negative in our representing basis and estimated $X.XX have some excluding XX growth. operating currency point EPS outstanding interest The costs regional yielded highlights the on gains lower discrete from adjusted per product lower $X.XX. is discussed quarter quarter special X%. earnings fixed and estimated delivered in acquisition-adjusted tax impact price fixed earnings fewer third a and

our to as and and We cost is pricing drive expertise, winning and new bottom at new driving continue to service growth, aggressively improved lines innovative our sales products rates. our to efficiencies grow through business and work well top

growth. We delivered also than continue segments stronger headwinds operating for product underlying business and our more across cost and of income most volume to that pricing see look offset improve to and yield continued sales

$X.XX are income X% share forecast currency pricing to higher with and range headwind the estimated EPS Equipment a are product more results delivered earnings the loss Adjusted than fixed $X.XX to estimated negative the drive and X adjusted sales expected Care sales quarter up $X.XX in income product to share diluted fourth fourth to be an offset share in $X.XX will per and to per of rising of per percentage X% to quarter earnings diluted Reflecting stronger XXXX, range delivered represent expect share. momentum our range, Hurricane reduce by costs. to to tightened increasing point the these in $X.XX XX%. we've Together, We share impact earnings net quarter higher be share rise than the per estimated costs, growth. to X% the and impacts per per in full-year related X% improved an as XX% to X%. fourth hurricanes the $X.XX more

the We do expect negative by momentum per will our XXXX on on In the full-year business. hurricanes per summary, meaningful impact have to a impact XXXX improving we see and reduce sales in share. expect of Equipment $X.XX hurricanes Care sale approximately be costs and share, a the to $X.XX We results. income not

deliver We and here's better XXXX some ahead. we now expect drive and Doug look to our And Baker diluted with in strong growth to growth comments. actions EPS for adjusted investments

Douglas M. Baker, Jr.

you, Thank Mike.

three look at business I fundamentals As our one, key QX, improving. highlight Number I takeaways. would are

up QX our innovation improving business, And are volume increase. in showing natural is to QX in the two. segments new rebuild. absolute numbers. material forecast QX expect which in in increase our as number exceed It as exception, and pricing we in Pricing point discipline raw was the and margin covered Institutional all its well. begin will the path is is regaining also Our to

growing which QX increase we growth new will continued sales help same-store large unit improvement which it to sales through these modestly additional To globally We on still in way sales. adding but looks requires XXXX. drive penetration steps, category to field in versus weak. anticipate better launching new Institutional platforms casual drive warewashing X% throughout and potential and laundry under refocusing is environment to QX to same-store starting drive full and U.S. opportunities positions, are in and in particular already X% more capability, at are In If the offense. our but the in improvements, dining are sales, improve to than is cut clutter, you short, and the offensive X% Unit expectations. North America, lead

path to winning, Finally, year have on expect fundamentals all the we third takeaway very improvement is the year. that momentum. overall The been are strong a and leave steady with results

X%. currency sales sales X%, be to to have We be reported X%, fixed to in sales be QX We to organic X% momentum. forecast X% sales to

will which in including in accelerate margin sectors energy pricing to all have forecast momentum. continue we have to We positive too. QX Pricing

with QX well divestiture XX% as business. Care net our as double-digit We exclude We midpoint. of Equipment the growth you earnings income have EPS a if momentum. forecast XX% in Be double-digit

is but well the positions notable the important deliver driving Ecolab-like QX results to is QX improvement, clearly results XXXX. So a momentum most us news in

So with that, back Mike. I to will hand it

Michael J. Monahan

Doug. remarks. Thanks, question-and-answer Operator, the formal our you concludes That please begin would period?

Operator

Markets. RBC first Our Bisbee of from Capital the question. question proceed your is with Gary line with Please

Gary Bisbee

afternoon. I up Doug, you've like It's next guess now talking struggle. been to the on months but Good question, XX first show quarter, been the positive and to continue I ex the guys. that trends guess more going Hey, and this bookings other slow way you improving What's going into I materialize I quarter is there? improvement you've its that appreciate stubbornly forward? commentary I about to it's what hurricanes guess than this just said on anything confidence far actually say going can so to to work our been revenue. help And

Douglas M. Baker, Jr.

that go Yes, I we to that XXXX-XXXX. I'm know stuff went in all the don't through rehash going

not to QX, a in we've currency been X% mean, I I though in It's QX, mean, you they're environment, QX. up It right sticky look ramp think X% basis X% the on business. XXXX, And once we're any and were if in X% rounding, that they very sales. it's never I in it. in forecast direction. at moving in going up QX, does X% sell almost in bigger pretty had fixed always, This a you quickly has. on clear it's business improvement

place and it's I have so mostly a call which on The expected hold. really have the that And honestly and where to of same is to the an would would what seen I U.S. we tougher environment, call-out see have starting of Institutional made get because share traction are we was traction excuse, after well, anticipated tons in on. we result haven't take opportunity which as the a get than isn't we we

you're short the improving seeing of would say moving been a too. a traction there signs on Institutional, of we've hold, So think we Institutional, we've got clearly little In but bit business. I

Gary Bisbee

laundry things you about in and you And Investor at new the follow this some to seems that platforms I on guess be other focus things about the talked of on to Day, of penetration, the count September head in just warewashing the new. up like increase mentioned and some point, but the

you just not this change couple last months the in Thank something is isn't that of there you this made hey, going Or discussed did acknowledge, that something but you. So we been want? way underway? already the had

Douglas M. Baker, Jr.

talking go do I No, used institutional it giving U.S. is these market of but things. mean, not the some would was say to fact there decided to. of it as And we it had I the isn't part were in about

sales same-store business. don't naturally have units. as to used traffic. having expansion of of We used result They're acquire new chain result have as adding better to You a the a traffic. We not unit

market hope you market got are a not for. you so And the in, to acknowledge you

we and up to And so the it. we as know a got offense, we're doing consequence,

we've well XXXXs, about here Now in the growing I unfortunately took over – probably if before. the a there's to X% and early we back was and would institutional. where stagnant been period it you I when two-year – go U.S. were say X% as at

would more did of say We allow launching us upped and the I that enabled capture a of now a are our information digitally we lot moves. the so And to customers, things number do will but offense. will we're are Those business. we're the for the platforms cloud launching. securing that to which already which think we're get to to leads I it allow ultimately us new more

at think So to what of do actually little performing to the is we relook this market. how bit need given a a do and market's succeed in I just this

Gary Bisbee

thank you. OK,

Operator

line proceed from Our with questions. the with your Canaccord. is next of question Quealy John Please

John Quealy

Hi, afternoon. good :

price this That's and up? price get about can of first catch caught easier The Thanks. the on a that do talk segments first delivered you comps SKUs? part the up then that point? across the all is Has can question. when at everyone on And impact point the question,

Douglas M. Baker, Jr.

but Expect mean, would say from north I points in total, across board. the X% I pricing, QX. expansion's of are that QX going we in expand to into by basis the Yes,

year mentioned, pricing we there crossed cross segment under the kind QX. positive to threshold will be Energy of on QX, the As so well, was last in as which nominally I It last is in it.

and raw fairly the end very if of terms materials, at ago first materials early, a quarter. year year started last against QX, really will, you In us of raw into moving

base the on, So goes easier. as gets year the

John Quealy

the hurricane at plus secular run, : cyclical on this you. months may then around talk Okay, picture be last maybe been of quarter. percent in question, pretty rounding Thank versus a thanks. least my Paper percent to big think and growth eyes about or business, growth in a there you I up our Can excluded And XX good it's a Paper?

Douglas M. Baker, Jr.

in out is long a and of to of where we're but new a to we're Paper bottom frankly, had a have performed mean, can't I point China technology this it we, more is say, emphasis China, should Paper, point Yes, other other we're China, we've business, because there well been not be. the but in delayed steps. that's starting we story all lot And I doing But competency, are on going at results the not upside in which really technical a getting recall everywhere we've than I as putting China. in and would launching regions. be number to retooled, doing China clouding downside.

and mean, just very think see stabilize accelerating I growing moving So sales. start I going not or up Paper quickly. growing, it's you're

Operator

Thank you.

Please the question proceed Lynch. Ridley-Lane Our from line David with of is question. Merrill of Bank with your next America

David E. Ridley-Lane

Sure.

XXXX, in recovers business the has margins planning likely know you're rebuild, of that this Energy year raw some the I the pressures, compensation etc. had incremental what's for? range As material

Just business? wondering margin of potential that underlying the

Douglas M. Baker, Jr.

what for to XXXX on would we're I call. to low mean, and in growth, forecasting we the and it not year going for I going year the David, said expect, seeing mid that's on be and really get plus/minus specific was single-digit into details Yes, to this Energy. OI real we're

call on our And going I would XXXX would better expect give the how the detail really quarter We'll the year, of so accretive. we into in it side detailed do it be typically we Next to that be income, when first plus and at nominally aren't growth will be much. on forecast.

David E. Ridley-Lane

just then And Okay. quick numbers question. a

business On the forward? is on basis, Pest the for modeling the Equipment going estimated Care margins divestiture, proceeds? a And after-tax then stand-alone what the of

Douglas M. Baker, Jr.

Neither we've nor to. of disclosed those plan

was the north forward,-- as margin. we Pest Equipment move certainly margin obviously think of I

So margins. this to not is dilutive

David E. Ridley-Lane

you. Thank Understood.

Operator

is question Patnaik with your Manav from line question. with next of proceed Please The Barclays. the

Manav Patnaik

gentlemen. Yes. Thank Good you. afternoon,

anything the going another in is pricing about Should saw I in into looking the on it year? wondering that touched out, think like else pricing or into whether you You XXXX, offset the as was we or continue where but we guess, quarter, I we cadence this your expect question, your the anything there ahead, to call increases raws. lapses would

Douglas M. Baker, Jr.

do about our year absolute increase the you have material to seeing. call dollars pricing we to to try one recapture you're absolute be to recapture And a double and eight it six exactly historically margin in that's this roughly philosophy in in Yes, recapture to time, talked tend to pricing recapture think increase over Obviously, in raw year And period we got of what quarters. margin. I two.

obviously at increase were QX. I in So point pricing we're in QX, saw we to out saying absolute exceeds we dollars we crossed below I almost though and raw mean, QX, QX in materials from will little time. as the Even cover paid in mentioned, daylight raw what dollar. we pricing We a where material we absolute material have exactly had and in raw able like that still increases. in via threshold. were spike

So positive we that's as how I that we've because, is delta, in continue the recover and to got invested half; pay to expect delta, one, go we first of we what see on would back margin. to what two, the kind widen

over that'd steady So increase think in quarters. the a next three, four that delta I be

Manav Patnaik

I then about you on the you think it. there? rate but Got reform. understand dealing the talked And tax Was wondering breakeven tax had views updated XX% being just tax in or maybe just past I you characters reform, if corporate XXX with for on you're guys any less,

Douglas M. Baker, Jr.

which to simple now answer territorial assuming be would they contemplating, like, what And its Well, be us. focused a very XX%. not Would on seem right negative. the almost the they've XX% for is mean, fine been and I be

Manav Patnaik

guys. you, Thank Okay.

Operator

John the Please your UBS. is question next Roberts from of Our question. with line with proceed

John Roberts

that customer for Thanks. Care inability the reason was moving Doug, the circle, primary divestment, into with Equipment to on Equipment effort? wrap the the Care strategy, on

Douglas M. Baker, Jr.

that guess. substantial when a drive Food Equipment to business. but years. we the way, heart of the to at we Safety, the to Look, five how was going it it I obviously say really invest Care We we're want how would drove didn't looked over out, six good last I always run improvement did at we was really to going business, the us? not if and want our portfolio be for we we're probably in as we became business. to digital, own the man gas where we at do upside that odd where best looked not fully Equipment to put our then money, and increasingly a Care be the on in

would see So thought could who one. find if we thought we the to an owner business better for I found be and long-term, we we think

the other more want is tougher bundles that's it is a for bit in that business in businesses than new core understands. on model, businesses our it not. are and Leverage us, we which it's that other like successfully, than we had owner in sold mean, I focus to model best different and think I a but explanation. things circle So the of our

John Roberts

in more chemicals. could quarter, think the long-term? core you've now chemical Paper there's it Specialty of more long-term commodity something Paper, Is I you make bought about does acquired and then unit core you it that's Paper a part? that and the else commodity that more water talk part And in And

Douglas M. Baker, Jr.

huge the acquisition. that growing Yes. I in underread. was that's in, overread it's wouldn't part to a mean us smart really technology acquisition. not or us industry. put a It It's I it of

think the I prior million – sales the in year. base were $XX

continue do that positioning we've to acquisition positioned particular substantially what to market. the We've it, plan been So invest we business going and improved in just, operating invest piece the and doing business Paper. we're it in to better this just to and to increased since thought, that of we us our fastest-growing continue in We're do in it. that

John Roberts

you. Thank

Operator

Please Our next proceed line question. the P.J. your comes from of Citi. question with with Juvekar

Scott Goldstein

Hi. is for Scott This Goldstein P.J. on

target segment So going any back particular to the growth question. force to the market it your Are first to initiatives. add maybe more broad-based? looking is sales you or That's to

Douglas M. Baker, Jr.

– business other because looked almost resources Energy, in been in people we're, particular the – we but we have after No, added, adds exception In not businesses adding the existing too three would I huge all of we've this in say we business base albeit in as get right year had Yes. numbers. opportunities, major at account new because significant the we and we've most businesses, don't commanding most corporate felt few of to time. analyzed our opportunities was now, their

Scott Goldstein

details around penetration that you sales? is, maybe optimization same-store program Okay. more give you're can to And using the stimulate follow-up

Douglas M. Baker, Jr.

And extend say number over is of But rhythms. categories. our happens would to business. lead on Yes. a time-tested to that little in introduced way it or I is, time line, a what also I of can rhythms we've we of mean, which the honored time, over and there's lack Institutional a a our period grow categories focus largest

want focusing in in we what make we're that penetration we doing so important case sure a And And this those everybody's the we on restaurant. in make most categories, attention to is sure areas. drive

Our penetration defensive expect Institutional, importantly would to challenge. reemphasize growth. say a challenge over a hasn't would have as We is do we so it hasn't need not our And period, really it. but accelerating we been in I declined, increasing it to

the we're required losing same offensive losses business, lows we're just at it's have we what ourselves. it penetration, used it's so to, do so it's that not going historic having giving it Our that impact market's aren't because in are business, account grow that not losing that we're to to not to that's the part

Scott Goldstein

you. Okay. Thank

Operator

question Laurence from Jefferies. with Alexander proceed line of next Please question. Our with the is your

Daniel Rizzo

Rizzo is on Laurence. This Hi. Dan for

wondering just of improving your you're was future be I be if a acquisition. when recent most the of doing about focus will that M&A? part will part thinking technology, as technology or growing mentioned technology You

Douglas M. Baker, Jr.

of been areas. say focus would one the I it's Yes, historically

buy So business some better we the create when for want at meaning same company, get the we bigger, to want just advantage to a we're we a get company, don't looking or to time.

And so adding and/or adding a talent, that technology. industry. it and does case the most portfolio believe growth Paper importantly that portfolio from our part comes recent we fastest acquisition, of we're In the current to technology portfolio, adding either adding fast-growing your in which the strengthens of

Daniel Rizzo

Thank very you much.

Operator

is Begleiter proceed next questions. the your David from Bank. line with Please of Our with question Deutsche

David I. Begleiter

know your it Does double Thank Does you. Doug, guidance, mentioned but there? thoughts that XXXX, are XXXX you I results. what Ecolab-like in early digits? XX%? mean for mean it's

Douglas M. Baker, Jr.

double-digit normal explicit hedge it guidance point would we to number not implied work give don't any quarter, clearly carry I'm in EPS but growth. cadence. expect February, certainly you imply front I want And we say And through at in momentum to just trying this get of in up our that to time. on XXXX. the to see coming fourth will in the I forward

David I. Begleiter

you Understand. company the too isn't of if some the on assess money here? U.S., in areas the Doug, other growth as limited do there, impact just for Institutional to money opposed how spending growth of much spending

Douglas M. Baker, Jr.

deal there, to one, guess when we're get I it there. I'll with going get believe I but Well, don't we

quite what's can And we're where of done is there's work confident business it's of lot mean, where service it. that's plenty happening, why certainty exactly I with So we U.S. not. in a growth understand we've to opportunity say and trying food the

on is So us. problem. a us and comes it. it this making market longer back, for planning If This hallelujah. we're used give what not giving no isn't the just to is up defend But

the confident $XX If market company chasing prove and absolute we're smart making, we which term, billion-plus handily. we $XXX are that we're a So I'm and huge wrong, pay in investments back billion. aren't investments quite will are any

ones, there. opportunities happens not service the we'll after confident growth I'm U.S. it's most to and on appropriate So quite in but get be we're food like short

David I. Begleiter

much. Thank you very

Operator

of next with comfortable. Parkinson are - Christopher proceed quick, Credit guys Suisse with is Securities Our the question Real from question. & Food Parkinson (USA) fairly Suisse. Thanks, Please your Beverage, guys. line S. in you Credit Christopher LLC

hundred the points. You're market by few basis a outgrowing

through where expect XXXX? even this balance the Thank a you'd kind was selling? know of And area and you even preliminary comment what this you of wins, gains, then percent the can comment attribute you Given in you. share out on pricing just on year focus would any account all to XXXX, also, just enterprise

Douglas M. Baker, Jr.

itself has say would very a good business very the setting job Yes, because F&B had a done I for up good it's XXXX. year

selling. driving to successfully. customers. business accelerate, in Water And very the and to what, enterprise F&B in so F&B. superior in Together, fourth. new have with the it. mentioned value they sustainable going we Water be And to you It's was, both They going They're up bring driving latched XXXX. our business in we running rate X% a believe, at third that's believe and our

do a leveraging So done it. business, technology new they've new to great driving job

that quick And (USA) so Parkinson And - LLC we that water. Christopher heavy business Great. Suisse off. just in emphasis put all follow-up paying Securities the just on is Credit within S. a

gives hurricane You've et at there's a you exited Thank rebound XXXX? the for which XXXX you key anything of China, business and effects. just walk Can in you broadly? see obviously a cetera, markets, bit confidence that in just material little some end very and present some of more you. the some of geographies, through And

Douglas M. Baker, Jr.

Yes.

we Our light includes upper a just rate. into mid-single we continues it's about, single which to digits. very business sustained F&B Pops think at that well; growing business, And is up that very market growing strong talked digits. and the at do

most good now what's been feel of business about going improvement. been show China. notably bottom impacted is that. to we signs starting So by on in That has Heavy and

is well well. improve see other numbers global done heavy quite So you'll I think regions, in what because heavy's as

would forward. not be in positive look at Credit third in and included expect Water And of Thank we've and it - X-plus would business Parkinson end is going we year. unit. positive recovered think largest I you. throughout that move particular, the mining core into accelerate S. about, the as to we Securities LLC to expects has the in Suisse be Christopher growing mining, (USA) expect talked the XXXX you If at we as year Water, percent, What's our to core

Operator

line proceed William your with Tim Our Please Mulrooney the of question questions. from Blair. next with is

Tim M. Mulrooney

business. Good talk organic – Can the is X%. This on Healthcare first there saw first than half organic think to the of question's happening year? was morning, the what slowdown what's in we guys. rate different I about growth My quite of you the just

Douglas M. Baker, Jr.

trying X% range. would growing in to still way X% I the Healthcare Yes. – to the think Without about it's to say the business,

So we we Anios efforts international and our to moved bought expansion Anios. largely

Anios organic So I up in mean organic X% sales moved the have sales were dramatically. QX.

was we business. that terminal which out Anios, international don't the expansion what legacy have Now Anios growth big of drivers we're the work our running one international versus as of done business But our we've is in lot value. was of of XX%. And really, a the or and taken other out

at And those. look of both so acquisitions, to you all we strip it. of we out sort strip of out When have

growth of which brand from isn't one the been and to there. away best happening taking it's some which just what's efforts business another, the to have probably portray So shifted way the

up those expanding in through mid in this the now Anios. single KAY others, Life drive HIC big When you up two put digits lumpy, That's well. until going and we're Sciences, year, continue as growing lot was Healthcare like you see which Xs. and expect to be to We're in the a at high emphasis to to international principally continue there programs. but are success. together, historically have end we growth So success is having in

all, So accelerate. significant I all to that fine think's in doing with opportunity

Tim M. Mulrooney

Okay.

Doug. sense, makes I think that

we organic back expect, see of accelerate the of to lap expect then you rate growth would the after the to anniversary historical acquisition I should rates? So Anios,

Douglas M. Baker, Jr.

Yes.

But as to it's up to we number be I those better together our remains We mid-single see think in in realistic, we year. we single you'll would digits QX. upper think things even expect we talked, That heading the expect next quite ambition. QX, digits. this yes, versus and give early you, it to be, reported put

Tim M. Mulrooney

makes on When Thank the XXXX? in And quarter business? Is sometime low-margin sense. do is the that or lap in you. that exit my Institutional then the fourth you of the second question is That division.

Douglas M. Baker, Jr.

first second considerably diminished half. has impact Its half versus Yes.

bit QX, little be a very there's in overlap of small think it's by and I an all but XXXX. gone it'll

Operator

Thank you.

the Andrews question. with Please from is your proceed Stanley. question next Vincent Our of line with Morgan

Vincent Stephen Andrews

Thanks.

there ones. Just of shipments Global How onetime it is ongoing to a just was reference to Industrial, couple issue? quick And is a distributors. sort is or lower In that? that of also a material

Douglas M. Baker, Jr.

no, Yes, was Institutional, that Industrial. reference, the distributor not

Vincent Stephen Andrews

is either Okay. was balance Yes. question a way, of issue material just how the it. onetime it the Well, was or

Douglas M. Baker, Jr.

points, In America, basis XXX was it basis Yes. about globally Institutional points. was and about North XXX

Vincent Stephen Andrews

it be this you lap it? to that face until just you will is And in Or housed quarter? have something that

Douglas M. Baker, Jr.

No.

You episodically. There's What hard before, know movie what, seen happens these a it to are predict. we've say I traditionally, this and disconnect. would always

all data, get the case for we United where us States out So end distributors every the the meaning that sell us by provide in goes user.

quarter, the distributor. occasionally, third quarter. so have if coming in between really happened you distributors. obviously, And So we these very what below distributor a about find specifics outs, a is. consumption It's next back. going outs, hard Traditionally, the inventories, And, were in get we what in into mismatch absolutely it's ins to be predict well that purchases distributor and shrunk if that's will, you to

the in fourth inventories there's of rebuild that assumes forecast no quarter. Our

way level. its sort we'll as It's they goes. happens water seeking back. their Traditionally, what like it see find So of

Vincent Stephen Andrews

helpful. Very Thank much. Okay. very you

Operator

Our line used your to mentioned - had next Mazari with question the of the what it in Please Inc. is Mazari from you (USA), Hamzah go Macquarie Doug, questions. not market Good afternoon. Capital Institutional. Hamzah giving Macquarie. with ahead

or have from you. if shifting to Just casual behavior with delivery, that what any in home consumer dining either seeing structural curious market changes you're

investor just there's yet. market have through sense that change visibility is of any invest going whether some more more have base whereby structural gain sort the Just and to change, you any the to share maybe just a cannot of seek to out

Douglas M. Baker, Jr.

vogue. well. consumer. just times, is little a restaurants, say Yes. we're – even QSRs and is dining there's get Fast there – casual this even now. would pressure, move now I because I of in clearly relatively under temporarily casual mean, the change segment doing probably right into has this or many fastest-growing by market But happened a some the is out right are the QSR full-service you they're is seeing

traffic same seeing that historically. you're restaurants kind increase So in of and/or saw not those the you

that episode isn't through first same this things we're the see Now, many gone this of we've the going and trade. through when you

China, is down where food, very do For so And I might presence the in too. say, frankly, us, because the have and see casual, quite you in fast of leaders just in trades we technology, down. a and – the where, the in any as that with program safety the business, strongly up interesting God, quickly. all of I one just don't We we're structural home QSR company, change headaches this a food and a delivery obviously was casual, would in that we've segments, big food. they're We so have by see the of with when we're terms food road. there's got strong met they using not there, legacy significant them, a deliver proposal moving safety burgeoning of of matters, I

at I'm have know now, up is sales and the they don't because And among a so to we've creates versus what on is you're just got product category. growth, Macquarie now. service just exposure. (USA), pricing transparency Capital don't major Mazari a comfortable question, the and components overcome, get see it your the it more category. Inc. accounting we to It from And They're it, new competitive we've product Great. see So definitely mentioned a past, follow-up I because trade that's with you curious, rules, standpoint? with look And classic And have down this don't do just and the we it. just - we'll you that done disclosing Hamzah adding same-store traffic. units, I'm Right online you And around the got of the not we've pretty confident revenue. in after something right growth.

just disclose very to that level So do at comfortable you're just and that there? or curious, you high-level a intend segment is

Douglas M. Baker, Jr.

really do required, so requirements. we what's do all I mean, been Yes, going and we're say I to going now spirit FASB's are to we're of been going would I mean, and at meet and letter to level. it the we're And meet the consolidated this but too. a busy

hope - anywhere have We'll create and any the It and/or going in for believe Inc. any create have work. the financial a different else. much. impact charts OI. additional some We undue challenges little competitive I light. community. impact Hamzah creates not not (USA), Mazari it don't business you Thank on very to helpfulness any to Right. it's it's does on us Capital have going challenges Importantly, have EPS. It's Macquarie show

Operator

the proceed Our with was next line Global. Please Mike question of from your Seaport Harrison question. is

Michael Joseph Harrison

get like you little bit sales as their looks to Happy and and afternoon. pretty talked wondering actually Good Doug, desire dip Hi. just just of Institutional it the on of is the what such the new on it a about penetration maybe good rate? and we toe number kind your new that accounts, they accounts? do water small talked to moving weighs the Institutional bit get start, penetration and some in a uptake you very overall of look But business existing take the Or accounts. about up little you to products better. Halloween. the a When compare same-store penetration

Douglas M. Baker, Jr.

I and go there, penetration from grow But program, mean, with representing tend we in say we undoubtedly, would presenting. I time. at is hygiene a we we're Well, really products kitchen enough to comprehensive out. have that build which usually over existing least accounts to within what

of accounts pre-soak, of over look or care, go anchor at or there's money soap, on, a penetration, pot don't more and on. restaurant is we our all, or which and, to on lot just makes importantly, think penetration, warewash Importantly, in every save we and categories time, hand room capture and I make floor those to mean, it sanitizer if significant one helps of on, field I as categories. in can money degreaser, – increase you There upside our and look all dramatic helps at team – or pan money. the

and go So and of on need to and refocusing, win a are levels. getting it we I reemphasizing, mean, bear sort all fruit. will We after it it's

Michael Joseph Harrison

side that you you on side regions some then performance Was wondering you there production hurricanes. business, that about if related And you're you of in can in the and might've the the key the of Energy much weakness had could your how that to the about that noticed globe of production been and then talk the the seeing mentioned on I weaker around production in walk business? And talk business. production trends that

Douglas M. Baker, Jr.

more it's think we Yes, a temporary story.

So production, X%. about And I we're X%. mean, talking world production in the up is

it's not quarter not deal, huge So a it's and long-term a a mismatch issue. ongoing

as think in story be to we forward. that don't business ongoing that's an move going So I

Michael Joseph Harrison

hurricane And was related, it Doug?

Douglas M. Baker, Jr.

but really side few modestly a platforms, production very impacted the that the wasn't issue. No, was by no,

Michael Joseph Harrison

Thanks right. All much. very

Operator

Scott the of question. question proceed is with Oppenheimer. line Please next your with from Our Schneeberger

Scott Schneeberger

you how on Yes, certainly influence with afternoon. them next oil moved are that year up energy, recently. segment thanks. and How Staying looking would Thanks. they've results? thinking about Good prices, into Doug,

Douglas M. Baker, Jr.

think probably $XX they prices be don't I be range do is to sustained We think around are through believe will XXXX. what move going planning we're to later the up the even is move what XXXX. believe until we energy and into that Yes, we roughly the true XXXX, that real but

focus when about I $XX our energy about asked minus spoke barrel. on, $XX, the and really a earlier call predicated was So I it, plus, is numbers

Scott Schneeberger

you thanks of care Great, industry? today lumpiness Life upstart, you pharma are the then the And to you're in to an something looking Sciences. new an conversations and wins. How there? talk the going release personal for just customer Could as more about speak of then just, having And contract that.

Just little you're more seeing Thanks. detail. with a progress

Douglas M. Baker, Jr.

and makeup Life mean, several us, market is I Sciences ideal. for billion-dollar the Yes. is opportunity

consistently perfect a globe. which consolidated big technology can the So you've people and our we set, very customer advantage, we're works – competitive think well and set a fragmented do got so to needs, fulfill the i.e., has market huge around and This world-class that we fragmented very them. a multinationals to

that two and in So are with Legionella of, from these need customers sterile areas together Healthcare the from in knowhow the coupled and are we most our Healthcare CIP F&B and have of environment have we that F&B expertise experience capabilities. management the sort coupled with water

went to the understanding level we entered throughput the went ago. bring. of years benefits local KAY when we they many This out, company there's with and through we have cases, that in think worked terms food an of benefits in improvement. as plant-level been we exist. F&B through hard had of capability centralize those So we what It's Traditionally, consistency, what In And can ultimately go things you is and market. decision-making. centralizing cost-saving were I retail the understand all make in decisions the we terms of

top positive, we've the to years, it's about we're It what see. great which exactly of expect is takes top takes of in business the but X to old organizations. built back Life a in no new overnight. in done XX wasn't position sell XX-some the would quite And today had out – I same we And expect we few not and talking it changes been conversation's our take in we that retail, XX. we So food anymore a Sciences. globally. It mean results – business to type see but big you we're seeing time. some I is years news what If

Scott Schneeberger

Thanks.

Operator

Silversteyn Our line next Research. question is from Please proceed of with with your questions. Longbow Dmitry the

Dmitry Silversteyn

with my taking I a I to follow-ups, couple for follow up question. just Thanks of if wanted may. afternoon. Good

North Asia as talked your that the First leading get it, fourth APAC Latin outperform of dynamics sort sustainable and Kind I of you in XXXX? quarter, quarter? Europe Pacific the imagine about growth all, as it made the region were America America the Europe are well two into of into your of was quarter. And as but that about that in regions the what those portion would

Douglas M. Baker, Jr.

half, Yes. X% I grow to in which to mean, is total, in is going second good. Europe, the X% pretty

terms lot Europe particular of activity. was a very through the by driven light Industrial. the was on really Water think early good digits both the new A heavy year Europe I we probably of driving job side. and that was this has an economic benefit focus out in done and upper-single called the business surprise in increased

Dmitry Silversteyn

growth better the execution? Was both So it one more as impactful market other? it's sounds than as like the well

Douglas M. Baker, Jr.

growth. we there had certainly But but expected, high have the Well, Industrial would market put you in better execution we're it and capturing more we mean Europe, overall than say I at low share. isn't we I is Water market than expectations. on digits, so Europe to in know the just single growing business the

Dmitry Silversteyn

you Chinese a and paper that geography? and it. and region. had up Or And chemicals was going you just Is that products the producing of where out on your problem specifically the a then as the kind follow called paper discussion that general you that Got you to into business China pulp on comment more paper for and have market? Paper

Douglas M. Baker, Jr.

No, us. say that's I would unfortunately,

say a So I in don't mistakes reside it's would I problem business is have any paper is the insight China say guess here. and the This my not. our that is own overall. execution, I'd

but So we're dealing with comment them it, it's on overall that and after an getting not no, market.

Dmitry Silversteyn

Okay.

it's So be the good is going that quickly. news fixed to

Thank Okay. you.

Douglas M. Baker, Jr.

bet. You

Operator

of from Robert with is questions. W. line Hauke your Baird. Our proceed with next question Justin Please the

Justin P. Hauke

beat growing that kind as the a Great. Not you're seeing big what dead chains I you. one the right, they All one other to in are any just street put the one more established of on that the of more you've there about Institutional. Thank think between or the quick horse, versus years? more of difference so but Ecolab any faster difference both in is Is business couple in legacy the that last there emphasis trends on same? doing than

Douglas M. Baker, Jr.

Yes, deal a no, deal. versus I more independent a This on. is is don't think this chain much going that's segment

So doing well, it's that the i.e. doing segments that the are QSR, particular well. are chains in

at a no, So, think in independent and mix street don't all. I it's between

Justin P. Hauke

$XXX on still hadn't to where Is allocation you talked The buyback the this M&A comments your then pipeline? this million we call. expectation and bit. a do on it capital about activity slowed about are year there? And Okay. little really Any

Daniel J. Schmechel

Sure.

repurchase. me So start share with the let

year-to-date. expectation hopper. did the good we'll depend lots materials, of My in the the the in is course which as the which of that typically noted $XXX is year would describe finish we've million release ideas million that year, you've the last of So I M&A pipeline, does we of that but on north number $XXX robust, of like done south

repurchase to the share would expect south it of $XXX end million but year. are I watching we so And for closely,

Justin P. Hauke

guys. Thank Great. you,

Operator

with is questions. Our question your of Company. with Gabelli Rosemarie line & next from Morbelli proceed the Please

Rosemarie Jeanne Morbelli

you. so concerned, Ecolab wondering. you that products due you accounts driven I Good Doug, gains? was everyone. was progress could market your to new to be improving what versus as rather, seems Thank Good separate improvement afternoon, are morning. do on far as Industrial was the

Douglas M. Baker, Jr.

let's look, and spend don't mean, plus I Yes, now mentioned a know being guess say I large, of this. the say, By acceleration, got would we've heavy, bottoming. traction every close. exception good our is best GDP of in ton and where's that minus of would as what believe very market gaining consumption water to have chemicals nuance China earlier, in accounts. we're time in terms We share, of, be I the where's We is existing would is understand trying the I and the we on but we

emphasis solid F&B, the very have where We across board, particularly in of in on put traction cross-selling. light industry a lot the we've

one quick look mentioned as as China, everywhere just as not we're doing to It's we in would address there is it problem, have it's we say just I are executing Our have and a story, and do going not Food working go market very China of But it. a And and we we we'll talked execution accelerating Food else. problem & I it are lot and it. we business really already is fix and through. as and story an and own we should. forward we of is don't a and Beverage, Safety we well the Paper those

good movement. say the board So Industrial I would think got we've the I across

and We above are momentum us. gaining what I confident we're importantly, share, market's gaining the giving we're think most and beyond

Rosemarie Jeanne Morbelli

are back inflations, increases talking go offset more material can about the to do margins? I'm – have to you on about and price you than talking also then am XXXX you And Do to the think I again, rate margin you And as go Thanks. for for you growth not everything. public company Okay. basis, currency overall. you adjusted think a once expect can back

of example, look XXXX XX.X% quarter it on XXXX went go first first margin quarter we that I XX.X% XXXX, to to if and to the XXXX? the for was in So down back at growth in numbers basis. Can

Douglas M. Baker, Jr.

Yes.

the – get here's You well, know what will we history.

as march every from, onwards. And saw steady comes a mid-XXXXs the XXXX like in had really of – increase from mid-XXXXs. well, midst in raw have until it, about a three, And It we waves. another we no then a So years we're how four material call company wave.

inflation. look back at and spite to owned you that increased have we've not that margin all continue. our in you in I to go XXXX pattern going then, businesses steadily no material If of them raw of reason this is know that

lot inflation, and about we've So executed well. it's but we complain a and by large friend, been our

ultimately, of new will our we pricing, is, well. eroded this expectation other innovation lot to my new And innovation have that's So the get that's been as right of out but customers. of piece raw play have drive recover we as have it's our also materials, yes, for a we Yes, that a consequence now that on margins things. makes but predicated being two and sense played

pricing. both plays So very typically those We important. through are don't raw of Innovation a important it role. do just

Rosemarie Jeanne Morbelli

Okay. Thank you.

Operator

go with questions. Please The Instinet. the of James your from ahead with line question Nomura next is Dolan

Dan Dolev

you. Dan is And for got One legal Two actually recovery? your Thanks taking Energy cost the segment that from the non-GAAP in It's was that Thank questions. question. Dolev. you then, Yes. is my in what included EPS? benefit

Douglas M. Baker, Jr.

we that segment were it incurred. costs segment, that a in was It because also was the the prosecuting and Yes. all legal it got, in settlement and of benefit

they we it shows So match. up cost so on benefit P&L, match the to try and wherever

Dan Dolev

And from non-GAAP? included non-GAAP Or that EPS excluded is it number? is in it

Douglas M. Baker, Jr.

included in It's non-GAAP.

Dan Dolev

And you. it. Got Thank then...

Douglas M. Baker, Jr.

the So costs. were

Dan Dolev

Right. and headwind. you where think second if Right. about expecting my at question take started Understood. you is you EPS step $X.XX And $X.XX to $X.XX, the No. you back of a were year

like hurricane, lower the about Now, it's it's have it's interest the neutral. and Obviously, you add of equipment, lower And you $X.XX. back But about taxes. $X.XX also $X.XX.

versus coming like comparison? coming Thank the in the at mean, net-net, apples-to-apples I midpoint of you. I'm weakness from most up just the with, terms So, say, Where's $X.XX. $X.XX

Douglas M. Baker, Jr.

of were a into Because year. the same that going And I big rec. would our started Good you're about part, hurt better Yes. right, we expected is the in missing FX the And wild materials probably the say, expectation raw card. front I have we versus year. when rec only the me. than was $X.XX $X.XX

basically you materials. You It expected more – performed The go through as less wasn't adjustments got in hurricanes, natural would've a you're we been or this. big as that business there, base really surprise. so raw so our have

Dan Dolev

did you a better the just And cost that Or SG&A. on Is more? it. little cutting? Got

Douglas M. Baker, Jr.

have adjust what and you look, mean, I markets to the you to do. you're going Well, to

and that continue in those we competitive. it to back and parts drives, to efficiency cost world, to the need there's all certain stay our do do other take certainly So centralize of office you things

Dan Dolev

Thank Got very you. appreciated. you it. Thank much. Much

Operator

Bob Koort next question. with Sachs. Our with go comes line Goldman ahead Please of question from the your

Robert Koort

time you very through from? terms much through commonality much. there it a moved see wondering market enough the Institutional, went that I Doug, of as going a you of Thank that time? that your guys in Was low-margin Was was you getting was an weren't it from stuff, that you continuous there too a we'll Or And more that that to in price? wrong portfolio? this was across the away Was learn involved? process you products cost way? episodic there did the event can what is make then,

Douglas M. Baker, Jr.

losing it host But And they you underpricing this delivering via cash cash. of say delivering was is you and were the one lose when in is of accounts what a bought I'd they underprice, they unique. it. whole Well, we way and were how were Swisher, sort

to to can't those you, just we cash say, worked continue accounts so basis. with to a at serve And negative look, basically we we'd it love do

to price through. So we went service, we bring and discontinue are up the those we the the or exercises that have either

repairing on And mean, you one So at a broken going the time And thing out. this to going you basis. as take a basically Swisher us that business. can't what was heralded sustain recall, I was it's was maybe as really

proven money So strategic We of reasons to any It's me in time. don't accounts. go unique. Swisher is – over period somewhat believe never to in very I really we losing would to be We exit. strategic say for had weren't

and wanted get after clean it it. up to we So

going we to that, see end netted with business need base returns some at that's so And but with giving returns there's once associated a out stable it's we be it. But acquired pain us us very price, a so is. Swisher those what our to attractive

Robert Koort

And search for? issues so that is across other Swisher-like something routinely no you segments? that Or

Douglas M. Baker, Jr.

more Much routinely.

bottom time. contracts be organically looking how rarely terms any We like get in over cash and are of understanding profitability them always to – We at we we right don't into can know we're improve I – our situations of now negative. where don't

Robert Koort

Thanks.

Operator

you. Thank

We our the turn call. have to closing end for will allotted call reached back remarks. Monahan today's I time Mike of the for

Michael J. Monahan

your the quarter our for Thanks. and and slides and for up conference be call. will today, third our associated Thanks of on best That wishes our wraps website. the and the rest This conference available call replay discussion time day. for participation

Operator

teleconference. thank Ladies gentlemen, and for does you you. participation. This Thank today's conclude your

a and have lines, your day. wonderful disconnect You made

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