ECL - Earnings call transcript Q3 2018

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Operator

Greetings and welcome to the Ecolab Third Quarter 2018 Earnings Release Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation.

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

Michael J. Monahan

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

We of also release. brief the diluted quarter. a earnings Starting solid with you in overview supplemental share third information per results. momentum continued the Ecolab's growth in to the refer the

the accelerating sales quarter's segments. line increase. third drove product and acquisition-adjusted fixed third XX% with cost our share quarter along growth adjusted per tax currency gains, innovation yielded That reduced business growth New rate of pricing all top earnings in strong business strong and efficiency

America earnings was acceleration quarter along highlights business increase North rose XXXX. strong and lower income all adjusted rate our with the shown diluted growth discussed and quarter throughout per by with gain growth XX% operating America. Latin The some currency share. fixed Adjusted operating third led adjusted Regionally release, to yielded X% X% tax fixed XXXX from sales segments. on increased Moving the income in acquisition continuing currency the as press sales in across

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

We also all volume continue segments. of to see underlying pricing and across our sales business solid

cost leveraging cost line offset this strong operating the efficiency growth announced and yield good progress XX% will growth actions million to summary, X% year. year adjusted In costs the $X.XX to higher range. savings momentum business earnings continued fourth $X.XX the balance the with our a and per our top quarter. However to offsetting exchange product our per leave XXXX gains them adjusted forecast, up initial now and to see fourth rise that cost expected share per diluted quarter this earnings Fourth volume since and adjusted delivered offset $X.XX product cost we the per diluted quarter earnings after $X.XX bulk delivered further currency impact significant investments. share headwinds to We expect increased to XXXX to range offset XX% XX% previously and Work and technology investments and price benefit the we initiative, systems to $XXX as insufficient XX% which of business the of the year. recent expect will is time expect higher be on to to is of making share of are $X.XX share rate increases deliver than along to in tax income and diluted lower over XX% the more

Doug future expect Baker and comments. sustain the continuing investments differentiation, right we despite some of key now significant for investments momentum year. as the superior with to we areas and product innovation headwinds to we Importantly to develop growth make in the And strong are exit including digital the here's

Douglas M. Baker, Jr.

strong. for very our ambitious plus sales third with Volume complicated. lower growth, the X% that not our results innovation, guidance, at Organic had to we short, I'm performance. isn't but business our are were meeting cost happy In savings all the I'm are happy pricing, Mike. story quarter. targets. Thanks business The new all business

including QX We exception The XX% was be going again or QX expect mostly will comparison last again at which also QX, Energy, projections. we QX at unexpected which continued the Pricing piled leave In principally had equal better The a raw across forecast else the was another the this for is It's $X.XX. than a material defy in which their in $X.XX is X% compared were and issue. hits raws also, other QX. year so three-quarters QX Institutional to will last driven. total gravity and clip. results. of had and said more certainly we will against in we Everything FX Industrial, in in our a on onetime year cost time operationally to line costs, accelerated savings. Nearly indices board and

enemy takes not doing and Short-term is be SAP pricing, the moves like halting we foolish; on growth, it point. are to more these here. focus my to we Instead, raws, cost next don't than which So a it. quarter to or match time continue me rollout would but our slashing savings so volume investments U.S. spike brings

We're other the efforts leading our materials outpacing and raw We are are Clearly marketplace. inflation. in winning And improving cost-saving transportation We're Energy winning. we're pricing, market with segments. growth against Industrial, inflation, and EPS last three at to across the Institutional, accelerating dramatic year remains most even the OI Perhaps winning volume, pricing we new significant importantly, XXXX adjusted quarters enter Also, double-digit. our with and results volume, momentum. continue savings expected for to even QX and cost the with forecast. over in

us All year, in which we raw inflation, the an in of have continued high earnings we throughout how it. planning puts material even and our are XXXX environment a momentum building in where continue is for to good position this

back that Mike. with turn going So to I'm it to

Michael J. Monahan

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

Operator

Thank Yes, you. thank you.

Bisbee Bank Our is Lynch. first question with from Merrill America Gary of

Gary Bisbee

Hey guys. Good afternoon.

project assume you guess would think operating and just trying outside benefits raws. from anticipate up million meaningful cost we before raws right another they that question, operating FX of in that remain if now forward, where around adjusted in the first to XXXX step margins reduction I leverage So, I $XXX program? relatively guess increasing through the and are

Douglas M. Baker, Jr.

Gary, QX I the mean guess, and stayed you not the at would start early meaning, levels, year, elevated increasing if get gross to improvement stopped certainly detailed in year-on-year. I raws Yes, very seeing profit

seeing We're that with that making not Our published forecast even at point where we of the cost difficult environment. and or than And sure to there, is perform SG&A, start you looking the margin, more you'll in the conservative $XXX not going in goods. without it until is be more time, QX, in because QX most which consistent of even indices. this might that's delay million, an indices

we're hard to question. what the year sensitivities So, that best are the to looks forecast et a right is the put deliver around fairly ourselves dynamic, Environment's hard no cetera, the not to go matter to way what. raw and at working going materials, probably take but now. answer position Obviously, we're in

Gary Bisbee

then is is? there know you. driving years, the broad-based, side obviously, in in revenue I you've much pretty pricing sustainable guess, the several of volume helped do seen that the that for follow-up, you mix had but out you'd anything improvement call growth? And think in particular than it But prior the accelerating had revenue. last really. has Great. I growth you'd how and better year, volume you've Thank

Douglas M. Baker, Jr.

Certainly, of lot would a efforts we're it, think a have Well, that it's to to I I economy. And with fairly our things. think also misleading. always be do combination a but of in own couple note good a not

increasingly innovation, our would productivity, F&B I well. and around business new great of enhanced. there our we're combination having So, only our say, Institutional And leveraging success with has the Water with as capabilities

what demonstrating economies related that results is those and think corresponding and in get are money of water capabilities you ultimately things quite around can resilient we're I the to be energy save because to going it. reducing all our because best-in-class

to it economic story too, very if the be ends which up still resonate economy will So slows. a

strong any if XXXX, we expect that's moving forward, the So, yeah, we I expect what reserve right have that to see. majority – the I results would barring everything don't change will I XXXX. an vast

than think our year economy good, next little expectation a I be year. bit the this will fairly slower is albeit

Operator

Thank you.

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

Tim M. Mulrooney

can just business? give what and How us fourth you as volume the your an And update the afternoon. quarter on environment your Institutional on competitive you work Doug, through look? does Good way are pricing Yeah. your here? thoughts

Douglas M. Baker, Jr.

little Well, to The the expect Institutional price they environment Diversey, they've we're the maybe all That its is business we our aggressive another for accelerating several of beginning QX in exit equal even forecast, in be the The at about I than wave or we accounts. And X% stronger earlier the and QX. and as a growth through they year competitor, to there that we're for Energy, quite year. had there we mentioned aggressive for Institutional. be a in will forecast been very of rate includes would except have competitive in QX. Institutional, going businesses, be where that were and would stay

don't the move do have will. business. competing, stopped sense it like because we such price if to got to or any We a you buy that Some, frankly allowed the make doesn't the to work, point

don't terribly And all with finds said, if we time. a and cases, times long In going know look as for us its to in through not losses company, not. a here considerably business number of some But gone back so, our that's of total, to you we've the if wins way that Diversey this net year, the up. happen I or a before. within at against period remain

real but and some sense has not but believe lot more doing like innovation. old-fashioned been prices advantage. they're with big couple there, and and any because we're to opportunities going we've not that people, all also us said, this, of through believe opportunities, advantage. to had do have business don't that nothing our new through we'll it's Certainly product as we're cost but line of do savings I have we have the to don't a say, With working a other Institutional, to that make Institutional a with take So fight is and go wins improving improved. way, a continuing business to they we win at capitalize would to it cost we'll we lot walk they've

next again be So performer year. expect good a to we Institutional would

Tim M. Mulrooney

Thanks color. All all right. for that

pivot in I my your quarter. great business, performance which the Water As third will follow-up, had to

Industrial or the acceleration For growth being Light there an Water, in was heavy is primarily driven uptick Industrial, by and Mining? in

Douglas M. Baker, Jr.

us, for And really we've show up little Yes, but to always also while I it of now. about, performing business which had accelerating results, seeing turned also. I for a about think we light in because improvement you're them business It year I which and a talking business really was ago takes around. heavy is the been heavy well this starting we've team new are continues talked strong there's before, not mean, perform all And well. business. And big has Mining, this. as in mentioned a – the to

while. things the a that think lot of I to business weren't would Water trying perfect, quite doing of the doing. be team We're the business been thought the that we the were well. for enhance We underneath we just covers kind exiting executing very, out doing business the and Water has other been very optically well but has and we're stuff of a

Tim M. Mulrooney

you. Thank Great.

Operator

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

John Roberts

penalties thought you was and us kind going disclosures infections you the new infection that you. Maybe second are some were after Thank Care. that. I to growth where of hospitals through of rates the accelerate. business public Healthcare segment Textile of with take help around lowest can having

Douglas M. Baker, Jr.

the better was in it would to couple talked start half. in had Healthcare which it's frankly, is calls two what in happen first second we you're considerably said well, i.e. say Yes, the year. we've analysis, lowest last as also growth, rough had the quarters, this right really second of we while the a John, And expected I acceleration than

I the it's to and simpler as not point either if the as question straightforward would any also designing and economics more we for line talking in HAIC now don't fees reduction, up where What in we're good about much healthcare doing show to design game as seeing right be. moved have think quite of our of like would straightforwardly but job, still where reimbursing it, up think the it's we've as I hospital with. around, details would transparent industry, a I'd a you I we still in how there is the which being And where To happening. clear quite like. as say us it the to team of you of we suppose customers these they talk still the everything else, is not economics don't beginnings still is extra world all of what's were if how the are we're as not even So adjusted about that. getting your light also clear prospective incentives to only deal But

do key been several for business in to our acquisition there's to aggressively Additionally still a branded in using as brand Anios will, that. Anios for of, lot quite to Healthcare. We're reasons, also more stakes using you lot it's the grow We'll putting are we in but many Ecolab, cases in the in of ground world a expand the around room And well. successful. continue France markets if

lumpily, business. organic getting on So the expect but of which I remain traction they're to we kind It continue. grows underlying in some bullish Healthcare

John Roberts

at discontinue Institutional. that? this the I segment move might you into secondly, Instead then added maybe you're you and And unit, point business where thought Elimination can now Colloidal you've Technologies some going tell with other us Pest actually

Douglas M. Baker, Jr.

Colloidal? With

John Roberts

Yeah, you've got – businesses bulking in other. – you're now got two you've

Douglas M. Baker, Jr.

to of so other. are businesses accounting SEC are need rule-driven this than different the segment. And another It's put these – other businesses, Well, from some when just an in Yeah. them standpoint. is you

really well. zero businesses, what a us there nature, it our not other. is virtually the happens SG&A. there's business past into Colloidal its other way product like different given so has component finds is as And for It is a on

as total a on consequence, as other people a business got viewed a as whole XX why in think just that's that segment, well the like simple as it's and that. And are of business. I two it's those it's

John Roberts

Okay. Thank you.

Operator

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

Manav Patnaik

you. versus I on to the just touch pricing Good Yeah. equation. afternoon. wanted back cost Thank

worse you're suppose you assuming gets So keep next I increasing that think year. or said I raws the

to going clip to You increases? raw how to talked pricing. Like on of you're those help compared push a historic other guess offset at high about sort can I ways point being the pricing? at you there X% is which have to periods, find

Douglas M. Baker, Jr.

competition expect I I get leave would choose have of or two, can I a mean on say a but us. we would there out is ceiling. – and ultimately year don't can And we probably XX% course Yes, go we everybody's be mean, that there. to for we certainly would get we pricing blacklist they

we a take executing term So pricing. on longer we've that always said view

we price – customers don't Our don't like We not big lumpy are from manage we increases. either, can't them, but through help them immune can it. we

history, If in were raws back, X% you the so look this up at year if you range. go

XXXX. both go got as If We in X% said obviously year. were we're up exiting as XXXX XXXX, pricing XXXX and XX% the the combined they to severe be you in to XXXX. unit in period, Right a going now back I

north X% of exit rate. a a little around year just was or that with to So X% it's This story. going be full X% pricing year a

XXXX. delivered So upside there's still in we what we in from pricing think

are continue And push. to so, going to we

given to, this environment. have We

So end. we the don't we're at think

are to We and Energy the in We're at to that's as move the X% exit in the rates. Industrial X% X% X% up already rate Institutional. we businesses, is year. throughout go around seeing around got

to have we're here, push, but So upside it's infinite. not continuing from

Manav Patnaik

labor, particularly are guess, in costs, add I a be as that just And the it. there up, mean, any like, noticeable, wage, of more of raws? top other terms seeing you pressure like forth, may follow I on Got so trends

Douglas M. Baker, Jr.

I'd normal costs And it's do not costs Traditionally, wage of we've is past. view way what wage call, I our, to work in experienced say like. what to use this would see the continue we that. offset inconsistent productivity a and the and inflation, lot to we healthcare Well, we but we've with the continued

announced spiky so, really that efforts. our $XXX top transportation, costs normal we of is last serve we on those pricing normal and et sure raw The use And not million to It's offset after that of make call efforts. of place incremental our go really materials, can to in like cetera, sort there.

Manav Patnaik

Thanks, guys. it. Got

Operator

Laurence with Please with line the Next question Alexander Jefferies. from proceed your questions. is of

Laurence Alexander

Hello. extent as of if pressure of, any actual to give in on to bit currently? you're can't a all, And just you couple you're regionally, any then seeing seeing areas the little at volume opposed pushback pushback, you of Could in seeing where the Institutional but being that or years, pushing you're theoretically markets, particularly you it for more sort color do price the what Europe? are a secondly,

Douglas M. Baker, Jr.

whenever virtually Well, in there's I price mean, situation. answer seek the is every pushback always simple you

it's And why valued need price. and always it a delivering with why demonstrate even still to discussion. to supplier the we so, economic the And benefit price are important we new begets

It to execute, practice. this there's in and ongoing being time So get with always go our a impacted better team sales that's where takes of we're an also discussion. you by price. are people and do who real environment from And number an

not the the if in you room, waiting will. guys we're only So

we continues what sales our little In what I business X% seeing perform would is over regionally, growth seeing terms we're there. a we're Europe of say, decently, to

We expect forward. more that the going be to trend less or

say, is doing days board. is sort of the if the Latin relatively So, Latin than, but across than little basically strong would strong of well. easier off, but a America balance coming results, well Asia balance certainly America. world, our The you good we to in pretty having base, I double as almost Europe. continue digits, slower will, see results in of darker China, better

the of would trends solace. in match don't say in point but of don't also certainly at just would of so We're big business a economy, We're in I underlying downturn one that this this, looking, the markets. harbinger not indicate a watching usually take and lot see a softness So, the we in not time. the don't we volatility a lot

Laurence Alexander

it. you. Got Thank

Operator

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

David I. Begleiter

Thank most materials, on you. to which inflated drive ones raw here? the Doug, just guidance reduction the

Douglas M. Baker, Jr.

the Oh, period? latest so in

David I. Begleiter

Yes.

Douglas M. Baker, Jr.

I continually stars and And basically and Well, our for mean will. plastic pails, ethylene if propylene, year, you et caustic are caustic the got recently, it's HDPE. for we've cetera,

David I. Begleiter

of previous the I'm of end just in more slowing here? any side or are And about again signs on it. key destocking any markets, thinking on there Industrial Got either Laurence's question, your

Douglas M. Baker, Jr.

material not we've in seen segments. any No, in our change behavior Industrial

David I. Begleiter

much. very you Thank

Operator

Andrew Wittmann the Please The of your next line Baird. W. question comes with Robert proceed questions. from with

Andrew John Wittmann

fully for cost about the today savings then you Doug, of at taking But are deliver of kind from hoping the of and sooner to end And nailed developed be down and wasn't year SG&A it million plan. of it here the well developed update bit. more quarter benefits just on versus suggested us sounds could question. is given was time, any path. probably like you year? sooner talked the last needed just you maybe the being it, about little Thanks that last that maybe give my But that has by thoughts the still any line, it benefits a but headwind that phasing; a could previously an $XXX kind over the incremental be talk suggested three where you about just plan or it'd quarter raws Great. here? it's And linear that are evolving sense how I the you an had your

Douglas M. Baker, Jr.

work done have Well, a then. since we of Yeah. lot

to of as the if layers, the reduce making and to tweak things aren't is will other goal. We looking benefit you organization really probably we're reducing doing final, increase fundamental It also some of costs at decision ways well. speed have which also will, the because

talked the a quite to that In confident third, third, sitting today, We we're a So our a some work. over the here about years. still third three end, deliver. of in ability we're doing

to The first challenge. year not going be was a

million XXXX, number, explicit what $XXX that. and If take announced we range you're and on be under, the from the the expect at not going you for to we we're we'll take very still give finalizing that over our a a time. but When

Andrew John Wittmann

That's I had for Thank you. Great. all today.

Operator

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

Vincent Stephen Andrews

Hi. Thank you everyone.

going year on flow, But happen? were capital year-end cash looks material straighten how going higher Is the you you'll like up the working out? to just little made a the question raw things or to Just think versus it into keep where pushing the a second quarter. at going something do progress pressure you else

Douglas M. Baker, Jr.

cash Yeah, Dan gets flow.

Daniel J. Schmechel

Yes. Sure. Thank you.

thank Dan. from think I quarter this you. much was Yeah, So QX, trends. a improved is

year working So to XXX% – pricing inventory. we a costs like that saw in receivable. to conversion, also working to from tends a on benefit from the correct, I'll capital us XX%. And perspective, perspective higher higher inflate something XX%. a little north quarter benefit to tends target full accounts of about up our bringing We you're point out that close capital

It the an about And improvement I so, quarter. from feel good is trend.

that we line end, quarter towards the flow the as billion expectation okay. I billion, I'm a and thinking But in deliver surprises the by QX. more feel maybe year encouraged range, net to fourth the no our full higher expect, with real $X.X cash in I fine expect think And would or to and about income. less compares it $X.X

Vincent Stephen Andrews

a last some the remind And was? production year just answered about just you've had on a Energy. talks this business due against sales. Thanks. And follow-up, comparison the us apologize strong period to that XQ a if what supplement But I you in question Can already. I us

Douglas M. Baker, Jr.

those was under of have annualizing that. it like run a just a one-time when A rate and East. announced prior Yeah. in the were half and lot we sales Middle X% in a that it little the run significant fairly even the was And and it we're Last the equipment negative wasn't of last exact XX% I X% fourth in three sales have things. a roughly and But QX other X% included quarter verbiage. said the quarters. rate, year, year we like of don't against Energy after wasn't maybe

QX. single-digits you If not you which take that in with inconsistent in QX, out be high and would saw what look is like it

Vincent Stephen Andrews

much. so Okay. Thanks Great.

Operator

McNulty with is questions. BMO your question John Capital Please next Markets. the proceed from of The with line

John P. McNulty

Yeah. taking my Thanks for question.

the you to we'll $X.XX raw material back or then of it recoup of is in how of that see by something headwinds year? of do the this to year, catch-up how much much end expect And XXXX? – the the you On see on it that you expect before

Douglas M. Baker, Jr.

$X.XX The as FX Yeah. includes well.

and So FX our versus plan. materials original that was really raw

it's at – look in be exact impacts, you to year-on-year I'll get a going you If the numbers minute.

So you we're going will. basically recoup to if

plan So and versus are and the pricing DPC plan just plan. around so be going versus under over or FX $X.XX $X.XX to is

pricing year Ultimately, than So it versus in the on response us. But late ultimately we've higher upped it. this we what recoup we all very will all FX. expected to think materials weren't to of we moved to because raw we and able on deliver year of recoup forecast it

So we the for including already got is if bill, two to will typically the dollar material recoup say fourth incremental quarter. is you But raw pricing year our which now over we've work. we are in dollar always margin,

John P. McNulty

looks bit, have then it or you whether thinking some raw it's the started And the in propylene come actually like to materials, so. how No, helpful. have guess, you a benefit that's let's assume raws these off of terms you that? wait that? how before do they've in to long Like have a about before to exposure long I are it. do we How Got or bit, of the of quickly to the for – that see last month actually dipped start real how prices see caustic

Douglas M. Baker, Jr.

different. outside because in are Well, rules U.S. it's the the accounting than different the U.S.

through got U.S. the comes quickly. outside inventory... it you've fairly So the And in U.S.,

Daniel J. Schmechel

days. XX

Douglas M. Baker, Jr.

maybe of – XX Yeah, XX, months. couple

John P. McNulty

Thanks Prefect. very it. Got much.

Operator

Christopher Great, next S. - The Credit the Christopher comes questions. Please question line (USA) Credit Parkinson thanks Suisse Parkinson with proceed Securities of from with LLC Suisse. your you.

recovery right investors is the it appear but than Energy bit a on direction, many in slower margins, little does expecting. the Just moving were

where offset costs void markets As taken sanctions, Thank shortfalls to the to out the given XXXX? of outlook, think East Iranian likely ways rebalancing over few the Middle the heading company of about should we you've the are how potential about already of about just your some last the development in Energy even are across into you. given the what production potential following U.S. And thinking the think years, the specific globe? best the the volatility net onshore

Douglas M. Baker, Jr.

mean Yes, a well I right. touched few you've on look

to because the turned So some big they Iran get production back two ultimately. haven't to probably the ability going maintain markets have leak in will values. the Permian or shifts. And on turned slow the is capital off, got other you They're

by it and share done walk out. that Iranian for had Permian we large that area to don't think well I well We bodes we've us. an in. given is significant have And

of see Parkinson last your that have to you discipline have years or over the the segments, just effect comments pricing Credit shape of on industry as bunch it in it the changes or may Got deal you your a if fashion for ability changes factored us. last comment industry changes bode landscape allude an can and So Diversey. But given and/or the M&A And (USA) wasn't few to you obviously year major the well pricing? on all this any how we a with in that competitive this pretty on any into that across Just much will areas Securities S. so? big just shift, had - And various color act did believe these Christopher Suisse LLC form good. little it. in on if a or timely the a your over fashion

Douglas M. Baker, Jr.

even I'd Diversey is with inconsistent put history. not Yes. the activity

than our not always more for the it. intelligent aggressive at gone it's always price competing look the you customers. So been information fashion person as doing most the business, we in of in P&Ls quite have you're and always they've always we've But because minds easier because

what the know you are, costs the what know others You are consumption and guessing. the is

more even really – GE I XX would Or priced, come Suez. terms know say seems there's kind Suez, like has we've if dramatic so. umbrella, last we'll (USA) much. mean say I competition. predict. S. you change costs Baker upside of new. I'd off or intelligently only that's pricing on Christopher the Parkinson on And to for don't Energy and mean and with be based do say LLC pricing years. also only I I Great. of things. more from So that's would going appears in dealing to seen Thank And this I the not, been most really to haven't very continue can't imagine, Securities not under Suisse Hughes from we our Credit I'd of other - they're behavior

Operator

comes Please Shlomo Rosenbaum line questions. from Stifel. with your question with next The the of proceed

Shlomo H. Rosenbaum

questions. you Hey very my Dan, you this. thank taking much Hi, for with maybe help could

constant be current where just what leave to the anything, headwind are today, guidance what FX next So represent If but they headwind asking for does it year? from numbers? not to FX a or you as XXXX rates would

Daniel J. Schmechel

Yes.

FX would see you okay, or of $X.XX, so just if current EPS. of year's exposure rates, spot a minus So plus X% about headwind read next at we

Shlomo H. Rosenbaum

be normalized for or something? Okay you would the that or rate X% the great. X% growth to third that down the comp And easy in you kind that Hurricane then quarter? what if was have be of in would at an quarter Would come still

Douglas M. Baker, Jr.

Hurricane points. was XX basis probably

So, not probably end X%. to rounding up you'd probably but above X%,

Shlomo H. Rosenbaum

Okay, great. Thank you.

Operator

questions. with line The P.J. with Citigroup. of next question comes Juvekar Please your from the proceed

Scott Goldstein

is this Goldstein P.J. Scott on Hi, for

growing looks businesses. meaningfully like it's Textiles So, other Industrials your in slower it Care, than

it what your view as that business expectations still do you term So, of part portfolio? longer are and core for the

Douglas M. Baker, Jr.

to accelerate Textile reasoning business it. behind That's a forecast sound expect We from here.

continue portfolio it's some to it's others, X% going but in going accelerate. the customer transitions to it's be growth to expect part in and business win. a not would But it to Some business. be to a to that business was grow business. of organically, and Yes, and just good a It's to we'll we but mid-single-digits our invest X% through going

Scott Goldstein

have the checking, how you're or tariffs supply impact distribution? on just thinking had chain about And your Thanks. Okay. any

Douglas M. Baker, Jr.

the is currencies Well, historically make chain world, or the tariff in FX. fortunate markets supply mitigating strategic born a and in. we from that we exchange issue. But want you in we It was a had if sell got as which suddenly originally you're because to are not where somewhat to issue, we've the of go the competitive standpoint, translation right, We make strong, a foreign it's sell. price our become anybody if a hence in made only U.S. didn't and is in strategy dollar strategy

a China XX% we of in made what China. exposure. have As China, In don't like sell in we big instance, is consequence, for

going So, bigger will by that we it The for British that the one don't impact be imports exit to have affected us and tariffs. market be significant are into depends.

to calls. So, a this than but that and think it's that that talking a mitigate, managing WTO Anything point our we in at don't plan big as assuming it. and to the way we're the exit rates fall are I hard we there, better that with have and have even looking quarterly we'll we that's

Scott Goldstein

Got Thank for Okay. you it. the detail.

Operator

Hamzah is The Macquarie - (USA), Good next Mazari line Hamzah Capital question proceed the Group. Macquarie with Thank you. questions. with Mazari your from Please of afternoon. Inc.

paper question it on is ramp. business; first nice the just had The a

If anything you could in just it touch rebound marketplace? or doing is of on the that cyclical differently sustainability growth, you're just largely a that

Douglas M. Baker, Jr.

contracts. has lot Well, a big of That's piece business price-plus was price. of a that ramp the

those years. been over price see has to contracts, have where of have material we that starting tick raw You're don't occurred increases last couple recouping the aggressive our team up;

been is half there innovation been new at so of that's other tick and a volume, by that's up customers. really that's successful and well. introduced helped both drive new the existing business sales new And that's new volume The as driven

got Capital back So, sort reasons so picture technologies. Mazari - Thank the big shouldn't just like on now. that that's any margin, (USA), they know continue they've Macquarie on go It are international, and everybody you. the Hamzah benefits new right exactly what more we Institutional, and team's rebuild structural of the invest in a in doing industry of can to equation; mix to the question they're any international term thoughts on more follow-up U.S. QSR, that? longer why look Inc. whether it's Great. And just the there price

Douglas M. Baker, Jr.

if Well, I on it will don't average. know

think its Institutional undersized other markets. if With the is have like food U.S. head. service population market I potential to, spent will, You and per low that non-U.S. versus our has got and has in outsized an compared – share said, markets our given you dollars

in certainly significant Mazari Macquarie the is it on - as upside it the from today, is of total of Capital it same won't world. be (USA), has So, but Hamzah you. Great. the where balance the percentage it enterprise U.S. Inc. the Thank likely

Operator

Mike proceed line with Please the of questions. Harrison comes The next Global. question from Seaport your with

Michael Joseph Harrison

little Can quarters? margin of margin performance if the cadence in tiny about the you despite over margin about next bit bit the improvement bit a also in the sequential you talk little was some the and some business. Hi. talk on a decline, and could provide some Energy performance I Energy a few just in was There wondering of the top-line. puts in of the thoughts takes

Douglas M. Baker, Jr.

just Yes, the would certainly to I have almost sizable They exposure blip mean propylene. fairly propylene. been have

you'll needs didn't new point, margins, And it. so, team The up driving They're continued things their material I real the in a much XX but in moves job teens. to kind Energy and and it rebuild this blips be also down, pricing, it; year, enhanced input and cost All story margin. these occur years. cetera, XX will drive mean we they're be prior in raw It innovation mix, middle of as recouping the better basis will see point which on the doing driving inflation. is et just help still doing believe and basis customers.

Michael Joseph Harrison

the years? consolidation paper conversation, expectations? year well All right. past relative over And how back seeing was the past the on can you you in related to progressing segments been some to wondering as to paper going your are benefits acquisition then several And that's happened as the the has industry Georgia-Pacific comment

Douglas M. Baker, Jr.

a Yes. great to start. Well, acquisition you referenced the off is

we above is often and one, the own and it on we virtually listening, the it's XX team's one this do one So, of year year years. this every plan In targets. for our case to

performance. the It's start. thrive. industries competitive to period the to us in consolidating got consolidation, the been We to would it's us. one of prefer off preconditions a typically generally, we but in for benefits terms sets consolidation customer say can of continue almost I good But sets. fragmented and unsettling, And So of be consolidation

view as we long-term so that And would a positive.

Michael Joseph Harrison

Thanks very much.

Operator

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

Rosemarie Jeanne Morbelli

afternoon, M&A at? for answered. mean, lot a most could have about looking come you down I of Thank of you are everyone. what Well, you. have my seems Doug been the valuation environment the potential talk questions to properties. Good for

Douglas M. Baker, Jr.

done expect will where would a environment seems to generally Not going there – some like we we to be say a more these better. going going by Rosemarie to be may in seasonal. I agree deals this. winter, it's more too before year-end. do want And than fall. to that would I committed others, Yeah. force years the are And There be deals. bit doing where have means paying to position really We're successful spring, this much. smart think we're I'd remain And we a we're couple be to little getting because don't can we a it

stronger. view that's it. we yeah, few said, is we're So expect I looking the that would the have way and at, talking getting I that With a And we of we're list say, term. near sort to, look at better if who we'll what would

Rosemarie Jeanne Morbelli

in are specifically? that particular Any you targeting size

Douglas M. Baker, Jr.

and same is if only company a because doing or the can real waste size almost it mean, million we will, million think I to effort, of a too $X takes money $XX limit I parameter time amount $XXX the a look of of deal buy you be or million. little a as a have

we be way return. we shareholders try this owner. kind be we things not can size, We're the with It's invest money. happy it money. return a and makes can return. we say, to don't shareholder going are at. you're In a mean it's are have financial is of their big that on we look do investing it, look preference-to-preference rightful Other really We've does really to best those I the able tiny to at got we So deals. really terms, sense a get than strategically, really to the around, that

Rosemarie Jeanne Morbelli

All if That technology us helpful. right. is you digital could Thanks. investments? on your And update and

Douglas M. Baker, Jr.

not all. blinked at We've there Yeah.

In fact, year we're than investing year. last more this

the job some I we're out call investing. near got in marketplace for we've point dramatically not get to think with money more really large money – had developing. But at in the starting term. it's We've with a customers. the learning, we're great do where already to we're look We're a to very going

said the is As think for world repeatedly, great I've I us. digital

We are advantaged.

all that X customer dropping. that have the of We today, are connected cost but collecting sites, data technically of complicated or it. not which of are fraction all cloud, to a to virtually which, which million do It's that's

and able are learned act people world. the We have digital only what unique through knowhow, the information unique upon to we've streams of

there once fix and are we there units, we customers get actually in in our So out can problems help them. find

is great advantage. don't us we to make we're a whole for squander long-term I think sure and hard combination that this very advantage working

Rosemarie Jeanne Morbelli

very Thank Great. you much.

Operator

floor no this you. over for to there Thank you Monahan, Mr. like time, questions. turn I are At further to closing the would back comments.

Michael J. Monahan

our Thank up wraps our participation. Thank call. call time This and your replay conference be the quarter for will available you you. on slides That third conference and website. for discussion associated

rest Our wishes the day. of best the for

Operator

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

wonderful a day. have and lines your disconnect now may You

Michael J. Monahan	Ecolab, Inc.
Douglas M. Baker, Jr.	Ecolab, Inc.
Daniel J. Schmechel	Ecolab, Inc.
Gary Bisbee	Bank of America Merrill Lynch
Tim M. Mulrooney	William Blair & Co. LLC
John Roberts	UBS Securities LLC
Manav Patnaik	Barclays Capital, Inc.
Laurence Alexander	Jefferies LLC
David I. Begleiter	Deutsche Bank Securities, Inc.
Andrew John Wittmann	Robert W. Baird & Co., Inc.
Vincent Stephen Andrews	Morgan Stanley & Co. LLC
John P. McNulty	BMO Capital Markets (United States)
Christopher S. Parkinson	Credit Suisse Securities (NYSE:USA) LLC
Shlomo H. Rosenbaum	Stifel, Nicolaus & Co., Inc.
Scott Goldstein	Citigroup Global Markets, Inc.
Hamzah Mazari	Macquarie Capital (USA), Inc.
Michael Joseph Harrison	Seaport Global Securities LLC
Rosemarie Jeanne Morbelli	Gabelli & Company

Ecolab (ECL) 30 Oct 182018 Q3 Earnings call transcript