Ecolab (ECL) 30 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Mike Monahan	SVP, External Relations
Doug Baker	Chairman and CEO
Dan Schmechel	CFO
Dan Dolev	Nomura Instinet
Gary Bisbee	Bank of America Merrill Lynch
Tim Mulrooney	William Blair
Manav Patnaik	Barclays Capital
Laurence Alexander	Jefferies
John Roberts	UBS
David Begleiter	Deutsche Bank
Vincent Andrews	Morgan Stanley
Jeff Zekauskas	JPMorgan
Christopher Parkinson	Credit Suisse
Rosemarie Morbelli	Gabelli & Company
Mike Harrison	Seaport Global
P.J. Juvekar	Citi
Andrew Whitman	Robert W. Baird

Call transcript

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Operator

Greetings, and welcome to the Ecolab's Second Quarter 2019 Earnings Release. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mike Monahan, Senior Vice President, External Relations. Mr. begin. now may you Monahan,

Mike Monahan

discussion Thank ecolab.com/investor. quarter's you. conference Ecolab's Ecolab's quarter available Web the CFO. welcome and our Ecolab's along earnings on release and everyone, With me our and and A our call. Schmechel, Baker, referencing and to our today results, CEO; with the second slides Dan Hello at of results is Chairman are site Doug outlook

could this statements, posted in are Factors that Please and discussed materials. take results XX-K our future read could differ Factors to supplemental those materials, include Risk Form to in the section teleconference results a materially that differ under materials the cautionary most associated these performance. from our cause stating statements in These projected. and moment recent estimates of actual are and actual forward-looking

to earnings release. also supplemental We share the the you information in refer diluted per

results, double-digit the diluted overview with quarter's with share actions new operating growth Ecolab's efficiency drove quarter. led and second the a business which growth, adjusted income second and and brief yielded cost expansion earnings Pricing, gains continued XX% product per Starting earnings increase. share in the good the innovation margin sales sales of growth along per strong

was gains Adjusted to of unfavorable quarter. per representing $X.XX Growth share into the shown acceleration and share increased translation EPS highlights Adjusted from improved release, gain increased Other XXX fixed modest Other the segments per quarter an realized showed we segment segments. Moving acquisition-adjusted to both Energy. X% the throughout We some discussed the earnings Institutional basis income good press Industrial as growth continuing and led Industrial currency in another sales and margins adjusted Currency double-digit by the and fixed growth. quarter, from in increased XXXX. in double-digit in $X.XX, our and as currency sales XX% XXXX the strong operating a gains. points,

the on of business. energy continues Progress spin-off upstream our

We expect to completed spin-off by be mid to XXXX. continue

winning new rates to of service We continue segments. pricing, improve work new innovative our top expertise, aggressively and and all grow productivity, and as and to through products business lines bottom well across and diving as our our growth, drive cost efficiencies our to sales

digital well, we add an effectiveness. range for us, Our to them their insights look operations, investments sales new our developing working and enhance for experience are and actionable their to improve expanding of increase customers with force

rise to expect to earnings range. adjusted continue to to XX% share $X.XX per We consolidated diluted XX% the $X.XX XXXX to

delivered benefits impact price than and be efficiency and $X.XX expected and to unfavorable is the volume gains of offset increases more business cost XXXX. in Currency an share As moderated product investments. per cost translation

are per summary, growth. to up Third XX% per line expect good earnings share share XX% In to yield cost top unfavorable $X.XX than moderated actions be continued quarter adjusted XX%. expected diluted delivered offset to which X% adjusted range, cost and with to $X.XX along efficiency in momentum currency diluted exchange, XXXX, the in more earnings and we should

areas for key including growth digital and to superior future. make We investments differentiation, the develop the continue year, innovation right the for to product in investments and this

comments. And Doug with now Baker here's some

Doug Baker

our improvement which XX% at We but a solid was organic, And performances, quarter, X%, had EPS and saw in XX% importantly was up very Look, year organic, versus number pest F&B and and organic. X% Thanks, life water by we adjusted hello. solid X% led XX% organic, up Mike, it up businesses. Institutional standout healthcare also ago. X% of a sciences,

basis which improvement point fixed a So drive ratio currency. XXX reflects in operating ROI continued new efforts in pricing helped strong innovation, work, by improvement business at XX% all income, led a

us. rollout, SAP key importantly, in executing largely So which while final steps U.S. behind our delivered, is the was now

today, are here focused in via and got on sit success, a very have new legs, driving pricing all significant margins teams our we business we are having position. early. expanding as efforts, they're good growth feel initiatives our we're and opportunities, We've So saving of and cost

result, objectives and of dual quite a remain the confident with we'll I exiting momentum. meet as importantly, So our year, great delivering

So with it Mike. turn that, back to I'll

Mike Monahan

concludes Thanks, formal Doug. That our remarks.

note Q&A, As Thursday, before a final our we X. we day hold plan to investor September on start XXXX

any office. questions, If you have please my contact

the please would begin Operator, period. you question-and-answer

Operator

Yes, question proceed the ask question Instructions] Our caller line others from with please of have Dolev is questions. conducting your will brief question-and-answer follow-up first We that We'll session. one limit yourself now per with so and participate. chance thank question be that you you. the Dan [Operator one a Please to to Nomura.

Dan Dolev

Hey taking question. my guys, you thank so much for

it looks like Two looks have margin a for about cetera. sort cost you do is, how your gross guiding the it's XX quarter the basis comes this by for like when EPS in It that guide, points year. up I $X.XX I if questions think a, et think, confidence north the much great of control, So here, potentially. the the Doug. question second of, increase impact in And your

have savings, take you. EPS up like conservative? little I the quite some a interest not guidance; do maybe mean this Thank why You shares, bit seems more

Doug Baker

inventories really versus successful was drive produced inventories, mean we in gross to negative Well, reported taking four just down QX reduced had to lower dramatically, business. And about good we in in ability on But guess we the really in QX. that in SAP actually first year-on-year fundamentally fact that And margin. the we margin, quarter. a less as also rollout the from in sales significant. so quarter, and WellChem first feel I them gross our not question improvements that by the built QX gross had was a fairly we driven that our margin, days had QX, continue I we

So sum you daylight this a year. that's really why gross of margin last the year see little between didn't total versus

So we marginally see raws better, [ph] pricing holding, getting continues.

around, that gross confidence deal XX see points improvement year. we'll basis in the year plus-minus the for it a of estimating, have So call for good we margin,

as -- year, minuses got question we've to Your pluses do. the always in well, and we

minus-plus we raw today. materials a expected, are a interest sit versus identified plus You a as couple, income we what here is

Of course as But be and in can what you've volume principally business, plan. WellChem. then really plus will the that got upstream in look But just really we our versus negative change. minor

coming so a too. And itself sort as that's each of other. There which the is of negative. They just margin some as lower a WellChem a of certainly lower little function is by increase of neutralize sales the volume margin down, consequence a

So We're significant the business. investments I we very in outlook. a balanced very think continuing we feel have

behind U.S. supply chain of risk key the it and the all is us, XXX% stuff undertaking on parts. are We finalizing The SAP. high is now,

And a number so in very we we're And feel midpoint, like good in a like forecasting XX%. areas. we're shape of

a it's importantly very year, we So, the year. we'll feel momentum good have good and exiting

Dan Dolev

Great, excellent results. Thanks again.

Operator

Thank you.

your line Bisbee proceed Our with America. with next Gary is of question the of Bank Please question. from

Gary Bisbee

Hey X% you've and last that of case as about that acceleration going about to that, of there in we walked some I certain continue. momentum some guys, bit And good yet I things thinking a year? the afternoon. you realize or would quarters, a component guess are year sales Doug, the slowed momentum that or away could expectation have sales a the a was last two X% pretty from good back-half the Institutional, Thanks. is momentum exited I forward is is and number had think how extent there from But business. is margin type overall big to that think of built, be Energy this here and low year-to-date. number the

Doug Baker

are Well, than you issues. than softer on sales I last expected two upstream and softer I year, Institutional think and one touched is losses. the mean

If would the losses you X% year. sales, X% this the and have that, exclude we upstream it Institutional business include organic,

would think the I X%. feel losses which in easily divisions. of a think growing organically, this mean will next I quarter we beginning number I X% of underneath good. be X% with So see first Institutional were year. And I normalized we highlighted standout we watered organic

shape we're think I there. in So good

point. here of is same a with at think want We continue and don't our business there's an best new this drive the pricing print which of another indicator satisfaction the whatever particularly initiatives. time we I or on always number, manage results. to institutional ever in don't point have believe the another is net sales in leading number the importantly, we accelerating But I are future two. any that's And results at other issue

Gary Bisbee

China. Thanks. point? the trending quick revenue, changed a much Obviously, macros, weak, Great. these in a the remains Europe follow-up, from headlines impact or having you advantage in then And just any has how Thank much seeing that it not relatively macros your that -- on is thinking slowing you. lot about of the are days, about

Doug Baker

year, it not digit to China. estimating we is it's we mean upper I headlines. a too. the have with to on that There I agree billion, But China a going the see in growth of China continue I impact. right it's of our drive so for to mid $X.X single it. overall some And is is results in in Yes, size Yes, now. significant We are can't huge hitting There affect conditions don't share us. think seesaw can the results. our front economic obviously economy were

bulletproof, most in point blame but the I we not economic time, in times. to perform than better tend this But We economy. at are wouldn't poor

is things and in what forward. to push the I do and to think the we push allow environment continue doing need do to favorable enough all us that. to sales I we are other to think And all pricing

Gary Bisbee

Great. Thank you.

Operator

Please Mulrooney, open The your line question. next the with with Tim William Mulrooney question is your Blair. for comes of proceed question. line from Mr.

Tim Mulrooney

product over in call you a know can it really organic the look business, respect cetera? wins performance Good heavy talk growth But outstanding if or that. different strong Doug. of terms with different in many at gains, combination little to maybe. has an business you about The more business last afternoon, new bit is four light about is share where the of the the factors. your et innovation you geographies; your Sorry impact been quarter business water I at and having look a the little

Doug Baker

there of water just fronts, secrets. been initiative we one of what is which the areas. Obviously area, have that really beverage the that many I business is a area call water. strong the is is have hygiene real Particularly a you particular synergy as in There an safety you I combine strength food wins It's across because huge highlighted, Yes. recently & with number coupling mean had food the in just of when number two. would we business had our

that to unique in We have way deliver do a versus competition. value and ability

advantage, only isn't that. So area seen there. have that And this bring But wins dramatic value a competitive result, share significant we i.e., can't. others to do the as can outside customers that can we we we have

leveraging move we the some we in But executing, business, taking and significant XD TRASAR, as into we gains. are -- how visibility. business now more where parts allows are in do And we the believe have fundamental us to drive things are helping the looking core give they We can also digitize how at of us forward. how for the institutional All turn much combination customers. are more impact us arena much of these much more share gives visibility

Tim Mulrooney

years second with than efforts respect in to Okay. and or that scientists any say, or That's we are then is pilot And a how your data hey, the of metrics Thanks. users Are us we share along is my two in you programs digital of moving business. today, field innovation terms place there give to quantifiable us can you question anything the were could to better point helpful. number idea in maybe a program digital staff, on ago? different with the

Doug Baker

certainly of couple over years tripled are, probably the enabled we mean what we of ago, couple a years. say Well, sales I we would called last digitally I

bearing as We last that and are wins a they this marketable you few investments we of sizeable fruit have making have over are will. had now years bunch the if been year the because technology the

hear. to What is that in in coming be real-time make we Day in working who have we detail will And that will the meeting webcast it those even in developing. September certainly this do up and can are obviously more spend person can't quantifying we Investor discussing and

leading investors metrics refining. We the leading want been that think best to, sure have of a and i.e., is indications do internal we we we we have our wins are to right that of make the metrics ones point number have results. What to

been we've lot work doing so, And a there. of

type sales. It cetera. units digitally hand, pulling, people of we're its but So touching number enabled it's that on is we're of certainly information number that of et

think to have to moving potential. And our learn with are we in ability represents I make But the more about also the technology you things those feel the difference a and this the upside direction. good feel enough. fast right the we All an the is can't learn, know move our customers. better area we effort. for We we more where This about

we're some going do So it it's but September. on spend to in all good, real now time

Tim Mulrooney

you. it. Thank Got

Operator

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

Manav Patnaik

your Doug Thank obviously afternoon, sales pipeline you. Good today.

I macro GDP worried a bring maybe to think wanted the environment about gives wasn't when that as fast. that I impact doesn't India guess, medium-term. ago to line years But of that confidence you everyone's in your wasn't top couple

is there guess few that outpace that period last give the pipeline that confidence So more that executed you'd made video the the years? Does be sales in probably something changes able way time I over you today? of to it's

Doug Baker

talked a done the areas. With one just Yes, number things I look that I the area, digital the further mentioned is, of advantage, conversation that and competitive to we're we've think this, only not we safe bulletproof. mean, in said, certainly that of strengthen answer I

dramatically. episodes. So I it to us, you economy don't back go and really even pulls negative the if 'XX, yes, believe drops impact 'XX going It's it hasn't, the to us but

or above of be during nose our kept that water barely period We it time.

even what effective the going to do X returns during from the are The and technology is back i.e., a a of of we X in going very it customers, we job asked our a you're times. downturn, market. sell, difficult we trade, lot and good how nature in invest to is story So in get we

impact not any That's have impact. don't going muted history, other think but want that to say I not our a it's companies. I versus to it's So,

Manav Patnaik

on kind period, as we a the to year be assuming an of side next guidance Okay. should are or just on then should material other considering? were similar Got of or in obviously, implies expected, it. raw then and margin And kind margin moving the we side, check showing second-half have outside costs the there that expect, pieces margins

Doug Baker

we of wary the next little so we've year, once guess a was the cost I early accelerated There introduced year. conversations. what I Yes, this in talking initiative. are to about But savings alluded

improvement, call If to XXX indicate create you basis read basis up did mean, expect we we points. This run be normally that. point accelerate a to we XX that year if at XX back, I over should OI we a would acknowledge to added margins

there's equal, but a FX I being I i.e. don't about materials, You environment, I next think that know all things et it's economic raw year phenomenon, don't, don't one-year a lot cetera.

lot then that. of a the margin of that's standpoint So with is what to and in do hard we're I delivery a a I'm want scenario be. upfront little to where type We the when year momentum. comments, have the wary we you coming momentum from leaving top we as is my out the going line too year because both whatever with of leave deal tools we're reference environment the setup on i.e. have But strongly to working capability

Manav Patnaik

All right. it. Got Thank you, guys.

Operator

the question. of Jefferies. your Laurence Alexander from comes question Please proceed next with with The line

Laurence Alexander

to evolved healthcare next us top or rate is guess I give sort for then that platforms the the afternoon. to run in of sit around -- questions. could So can line One, the way now, your leverage secondly, -- energy, where what a the how's and to a in two is few remain benchmark accelerate into business keeping? the we digital from recent rates you're piece a Good think need there for to term business what that about the longer co there growth you years. scale growth? And you improve thinking the the

Doug Baker

in digital on healthcare of one healthcare has our touch already it just been in teams business and innovation first. sales. leaders significant I'll so their The Yes,

best really, measurement. which We there. big is great system in knock have system, ability forward measuring continues pick up hygiene and class acute think a I monitoring to hand adoption important rate acquired infections the We've healthcare for and monitoring to care and technology move our down got and

to So aware starting of the parts and of other as the drive are real where they innovation been of more there I are team think there's capabilities a to this program. number become areas

growth healthcare America, and our where particular they're long-term spoke teams X% those in is U.S. But that and after identifying have flat. they're them what well digital they the are medium their really was in opportunities efforts focus the of and So, X% includes other X% in I on strong that double-digit it think was in I organic, getting and and organic North increasing the areas Europe and quarter business some was doing regions, to.

had you question downstream. other The around

we executing what we've business. with as to that share well. single a share to capital, of as well for business other in on but similar comprise above and chemicals, businesses. to the WellChem, business a it the at company into three it's are grew energy average year the return we're have It'll downstream in standalone up industrial got two the industrial business $X we leading continue expect businesses. billion expanding digit year of upstream terms remaining its about and sort grew same is oilfield catching businesses that group, OI a The in business digits, when very there's today, corporation. still in spun to the with this raw market well is year it there folded our around pricing into up technology that's components we So will mid be it XXX% those out and margins size, our report of this it's being being downstream QX, the there's Great single gain materials and there, is advantage It's industrial margin last mid

Laurence Alexander

you. Thank

Operator

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

John Roberts

is that in pest segment indicator more for bit to long, quarter, in fair the it's discretionary, it the momentum so institutional a fact little Nice about argues it for well Thank pest pest that leading the think strong performing the is is institutional business? so for so elimination a you. the business,

Doug Baker

it would the it's industrial largest I fairly but over Everybody shop, bit team few the two at came really it into stepped considerably. got organic digits. business was the execution it's in where and single with for kind say execution in the has institutional too. a it's will I through digit is recall a pest and in it put years call may pest past. wrong of incredibly growing years What's about growth is it We component a a really low years We look matters went sizable you share done now out a what well really row. last, be several what's done their six rates high the quite five, the was businesses up similar single

I Europe in show a perfect proxy The if not business, significant a I can would we institutional second faster in not. we developed still it get is know our seeing penetration product upside markets. from business. long-term largest albeit about this that Yes in we Europe the year. I up am what thing focus focus be to but the don't or business moving worried it's expect standpoint; it growing world, starting was Europe. wish I have in slowly say business that results every to institutional. and it institutional would are this net have and driving execution me the With such We're innovation they driving exactly particularly towards what they signs doing institutional in need think improve in is more positive align and we to need the double-digits they execution they're that to innovation with said, sales, driving are team. member do, I of

I but that execution and water water alluded upside we have really but globally. business Nalco sizable for this significant to involve We potential opportunities ones don't se, our the also think per which we have new business opportunities share

track direction. XX/XX going new So and be year. as we everybody, to like I to loss point a and in. continues kick this is business we're at that fundamentals importantly, about on I I'll to lapped all look the the on believe business X% at run the most we being X% talked rate And as remind mean a in business that to to exit

team So to thing believe doing. we're the time to just into be shape that this asking going doing in heals We XXXX. moving in good keep very we're what they're

John Roberts

National Rich of lot Institutional Is the meeting ratio at the digital secondly inter segment, a towards segment. is previewed Restaurant opportunities as the over the focused and the then markets. And digital Association you activities institutional in obviously Industrial in

don't perception I So we is give can didn't balance effort across how two? talk of us digital the about the if there but you a

Doug Baker

we Pune, system Yes, if start was because in could water catch work But we to side tip use to started that of connected playing capabilities. XD knowledge a for anything, assurance digital was innovation that because the up has to the first industrial we continue side, we are which of I'd center technology the go kind lot part we develop had leverage. Institutional acquired develop there head the Nalco a and our say, That of really we particular our spear India. a been that this and as technology the traits place as that had with

hand. of obviously the We've And at taken learnings for and that's that the in challenges of really base the customizing other businesses, knowledge a it applying then we're lot there.

September, and side. being right clearly of many in that about, anything, I commercialized have quite, that if think there, like we're do see you'll significant we we now just which quite So the excited innovations are institutional huge on

John Roberts

Okay. you. Thank

Operator

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

David Begleiter

the Thank coming you. out for pricing, in there pricing also decelerated down. raws given are to Is some on Doug, just some back your of potential now the half year? flattening

Doug Baker

if have year. on strong throughout don't balance but too go we future, the watched you pricing. an the in We expect Obviously to have it raw years as a ability it give pricing expect this the half of over and decelerate the negative don't pricing get don't typically get does impact on in material back you've of our for We ups, to significant year. the this to expect we year,

David Begleiter

be what in S&P to you the good. the would now? from you just implementation expect on guys tailwinds done, Very for place that And fully

Doug Baker

mean - I of said, a be I behind done I, bring Not is big the we've in got to in work as Well, really what of the would I to divisions big us. couple on, divisions of but as in consider still risk front some is mentioned, in you kind we're is the we've mostly done to we go had largely tell through number any This the didn't I we of a most when there quarter, don't this. things, because and have you And us. look, negative

One, had during increased we we know costs implementation.

are these have because did. you more consequences, this you're have of production, inventory naturally we've know do out, to to a product is negative significant of can shipments a this have there and any as see freight Some you team of out, your when job that you get inter-company lot shift than more but I starting doing consequence not you it thought to our service come got did go to impacted you it a we you extra have a through levels heck shift, have this, supply are but managing build

So it's to it's forward. we make but the defense, go it back margin also investment And isn't gives visibility through to some we come this, we're know us as this going see most a that offense. reason going just importantly

the money, job trends of all things a a do delivering managing our So, business more as our to I do we've better going of which important things delivery few have like freight escalation it today and ability look customer freight, forward. the it's at think given less seen pricing better years, is benefits do last that go like understand to a job even we in number

build, the XXXX even year try that's our good is shape way, in put decent kind perfect this with our Now, we're it's levers are these manage to worse want we're that through that to want cost of type opportunities if are to have we the but to because we of into we a course, shape. we it's these in. in build savings to throws ourselves forecast, that continue situation environment similar of whatever And

David Begleiter

Thank you very much.

Operator

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

Vincent Andrews

were that I much, talked you Institutional, very XQ issues couldn't would could you there more where thought stand update exactly be and could ask would about, over if inventory so it great. detail the on last if you Thank we for just Doug, you tell quarter on customer we just XQ us timing, on that some reset

Doug Baker

more back third Yes, back in But around some little would is this at that fourth. really X% a the expect stuff easy the rate of adjust us and it's that but We quarter. I for level we level for that, kind that coming in this the second I've if in of of got balance and some expect bounce business the to about. you year, the like losses to exit get very it four better for five the talked to to

it coming we what that's naturally back So inventory does. see in some is that of is

Vincent Andrews

cash Dan, which up is gain. year-over-year quite the at from gets ahead first question and is Okay. just actually for the months for of flow looking the operations me That six net income right nicely

so how free overall conversation should should So trend can year? cash working inventory about about builds of the there the half and were how a capital back some we thinking year, the give us just forth. and of Maybe flow SAP you sense in for the be around

Dan Schmechel

Sure. Thank you.

really AP in and all the significantly a in we in year-on-year a is So you're capital is year-on-year, as in relatively we clearly working that was of weak security performance, call flipped indicated, Doug quarter but building and quarter year was of in on and last part is anticipation that look that right, a second for so sort particular, and quarter would. expected And big inventories comparison, we first improvement Right, all when we what the inventory cash to flow it about communicated inventory very to were favorable the trends strong cash and at questions in slipped cash receivable go-live, least second year-on-year flow, it taking as it were at in also clearly the quarter as a accounts if you SAP for fairness that flow.

what to there the If over so guess if I would that - somewhat, the cash XX% which that's down, will be for balances down to said of cash continue you last expect focus come expect you the free flow, and look we activities take say improve started, we I that is flow where year-to-date you performance other metric full-year, net to we time, is to but the on strong opportunities is I on income to which continue to be I course inventory I would capital like way that drop free all of full-year. very in focus delivering be we conversion something that dependent on the is number working

great So flow to deliver results. good cash free with business about full-year our in feel quarter strong the line position for

Okay.

Vincent Andrews

very Thank much. you

Operator

next is with question. Zekauskas Please the JPMorgan. proceed from Jeff line with question your The of

Jeff Zekauskas

and sales and Thanks your service up so and very sales so service consolidated your equipment income product was growing and much. product statement, year-over-year lease quickly? lease were slow and six, On up your why equipment were and X% and

Doug Baker

was this get remind CFO the work, I really on the consequence, will distorts because service about foisted indicator look Yes, and also and best volume upon se being to doesn't picture. outsized go and of but down when was don't didn't service issue way we you'll us, it's split it's WellChem so don't Dan because believe now create WellChem it's but product we we're fans the which the it a an business a ways, my as we the by down others component. manage big talking at have really driven of really believe not per and product it me different was in I'll component the you're probably best impact the also kicked WellChem by consequence internally, say as has product

Jeff Zekauskas

the lease one also and differential equipment XXX, and basis and margin can other lower case product and that in property why of service was margins It's XXX was cost about talk piece higher? maybe the the one in dropped and lifted you points the the equipment -

Doug Baker

to outsize so QX earlier biggest and what's expected we terms Yes, SG&A we a going well, of would in the across what we we've conversation separately. was board. we was best was would flat we at negative from it, G&A initiatives, less was the days those so a we look combined actual down, impact was in product quarter, little we one, or and et and year-on-year - about in got was impact the down inventories you was this on the where had surface single look absorption issue which gets is product profit The We illustrates back price double I pricing improvement expected the gross was inventory absorption. you WellChem pricing. service, cetera. in QX made out is do it move four roughly, don't what it, what we as and the the the we component It we took say, in overall And if believe say stuff we yes and when don't business. at as had take bundled in to

for us. bit So things an of is separating artificial these game a

Jeff Zekauskas

so you much. Thank great. Okay,

Operator

line the proceed Suisse. from of with Christopher is Please next question. Parkinson with The question your Credit

Christopher Parkinson

When in you long-term on could and you. comment all of look well go term business global and growth your the down a utility should you cetera, you get off on basis, your this can industrial expectations, of sense capabilities, would the so platform, power over relative Thank market pricing at drivers we longer as term any rates, broadly as longer business commercial of appreciated. terms the where chemical, by you. et opportunities margin the just break mix be on Thank could your just

Doug Baker

world, not those increase, be GDP in They're i.e. water but areas. very see something are for ours currents going in only to we they the going still we world's we very with to a the or relatively the if I'd the favorable the is water are across will, the like is to XX% Well, leader, pressures to balance; we of you share. are wind, worsen water similar in are favorable for water scarcity low know like water area where are technology scarce the going favorable. And it's the say while market story board

XXXX and freshwater demand environment. mismatch middle macro so supply, as water those going a of XX% there's lead between consequence be things and class soon as favorable all As to finite growing supply a

what they too time they every starts energy dramatically. compete consequence, are you of we with execute, saving as very too, continue our consumption ability itself terms industry to savings. in to these in about us every water class given and a think discuss, footprint of sit could us. This energy see it made be they feel significant capabilities you with their is that and here types our can vertical a more This and so a customers, water we we water, to capability, long-term the are to end investments money, technology give positioning we because saving in in water that up where same as consider customers things but opportunities get, are light cheap, end and in all what it's up best will to types on up make, return, turn is we reduce end difference true virtually what so in industry then, enabling and the bill, reduces in And stand we what we digital favorable our saving helping in shining their good to carbon

the important would is and even I it's know mix. than more was. technology how coupling knew it it's we've probably going the issue on and really thought potent lab name equal to that's game And we all then execute. we since And be incumbent important felt say believe it leading we we because what here And was that it's bought We that done in to an a of water. is customers, our been it learned very already for us of

Christopher Parkinson

just And you. a follow-up. thank as quick Great,

time, see the opportunities opportunities? Do are elimination institutional certainly still but the what specialty? Thank can this selling successful in as self-report come. you done some opportunities clearly On the for on largest a areas, card initiative, how you do to you think the and the just enterprise you. ongoing obviously been recently, pest do still you've week and and as well It's F&B

Doug Baker

and the the what time another us. opportunities are. more how, would terms for chasing to I delivered anything, what how chapter I we've F&B development memory not on say, next both way believe Yes, with billion said than let's more objective. synergy is many, significant of a learned back The the my if customers merger, even who that against development i.e. I across is in flawless, the we here we choose continuing buy we've would And sales. synergistic and and of I'm where half And innovation call but when were is that a water and bring outsized -- together, side from how coupled one the advantage innovation on say going

well more to believe of a We even institution have segments as going we code, market the But say opportunity we look, are all. And same as going as, we crack we forward. that number have it's we largest chased would early I opportunity and of in still in $XXX success conservatively are $XX market and a the $XX opportunity billion is single water billion. billion -

really new ability we And and capture making go do generate out to here green that about sure well are in execute we so, it. It's space worried the it business. so we of running that not of terms sitting

Christopher Parkinson

you. Thank

Operator

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

Rosemarie Morbelli

everyone, you. strong Thank afternoon and a on congratulations quarter. Good

flat. in you share details industry Looking excluding trends segments about you acquisitions, beverage, the was cetera. food? what yet, growth at Doug, you -- And like the price are brewery, account talk dairy, the Can a corporate et F&B, seeing gains, reported sub more different strong in

Doug Baker

business the what's Yes. And the we F&B recent brewing trends. have over happening had gaining one, share. of we outside I overall share say and beverage are parts gains business in particularly our is would in

And segment. those most probably the have importantly been so, growth fastest

quite it's an strong XX%. cetera. dairy. for Our about exactly And par et beverage, brewery, But not X% market on at ideal food is dairy is also

measurements. this also is scenarios. we i.e., operational under and a better it's water This less; equal do helping say what savings energy they these you without or brings because doing outside water market, sacrifice, more savings less when customers efficiency to very real. savings in to and are with storyline safety, get they food produce And And less And any and around sustainability are I resultant get them. measurements are energy. all with the and flat So, a are would important.

So it's that the concert leading success in drive flat developed the our business. water And with relatively and formula in team. that's to a ability Nalco to team that partnership has

Rosemarie Morbelli

Are seem cans versus mean that industry water that use for plastic beverage, an substantially the aluminum helpful. increase plastic more a moves Thanks, to you do and of is be if bottle? least at noise is soft drinks. be in at you plastic I category? fit there looking particular a And I bottles And other going versus to How to in around there wondering lot of cans bottles. the hurt

Doug Baker

let's No, carton that do will all have have for what's in milk position negative business. I And would will not type either our said, business. aluminum say, our first, impact and/or bottle cans is smart to trade With plastic on a our to collectively adjust we earth. a

Rosemarie Morbelli

categories? So are both in you

Doug Baker

Yes.

Rosemarie Morbelli

Okay, thank you.

Operator

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

Mike Harrison

impression in mines, was associated with wondering I take typically business I water existing if it's I some the share mentioned and taking to was as existing to wins sticky new that from business new that mines? these guess share be I the fills you the are mines wondering tends at afternoon. under just good within mining. mines, business. are new difficult pretty Hi, you was the

Doug Baker

working, the that find like strategies and it coal to we might These just and rebound Yes. business move from But to some we are going things reflects taking in moves mining. others. which better new of are cyclical you position so, obvious in there But, a term. success is biggest with two long and And targeting trying away in have the are Look, mining on also broadly. that the some industry. increasingly mining. areas It's business we phosphates the had

Mike Harrison

also and changing over right. like looks And that to about what has then you healthcare ask evolving the talk business profitability that been maybe or wanted about in how All time? can business,

Doug Baker

great Anios couple avenue a in a beachhead stronger we'd of healthcare acquisition. for decisions business. markets made Yes, expect even us other most years of to reflects gave world, really importantly has that year in to but But be be OI ago, number it flat. roughly which the to the The proven the Europe, France, acquisition we in around in a really an invest

And organic real in growth in continue mentioned strong seeing earlier, opportunities. that. growth the as feed And that. to to business, do X% we're and we're happy so we we'll In Europe, healthcare invest I

Mike Harrison

very much. thanks right, All

Operator

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

Eric Petrie

& now Historically food This the you this market growth Doug. XXXX? Hi, digits. in your upper gains mid for with But do PJ. beverage single-digit see on Eric digital rates and is single into sustainable Petrie and are water investments share

Doug Baker

to we mean consider bit you bring know what momentum don't see that us. our hard Well, And what today the that's of We business. here we are I anything a a change is lot good has -- in working view there's us water normal. what think we legs; I momentum. to quite sitting -- be increase growing always F&B. XXXX look, we'll of should We've got the know that's make don't be going I growing also should going that's what to rate got

terminal and there's on executing value. sit With and in We don't great got organically team, well. technology, X% I want significant to upside water said, that great a So as commit business. they're here our that to

So I expect would to growth the average that for rate be above company.

Eric Petrie

Okay.

guidance XX% pipeline M&A bolt-on in does about terms Secondly, XX% include And ask I and second-half? any your of deals of in EPS you're to what valuations. your wanted seeing to

Doug Baker

focus really of in not and all for out a we're But deal, of good that Yes, comes shareholders there's But us a not likely is doing dilutive is because We year. does in this obviously already. of to any going as accretive incorporate believe be much remainder include doesn't our anything look, it the it bolt-ons, to get we dilution. probably them stop deals. look immediate just that the would do from on left time the return be accretion, on year forecast

Our pipeline slower I is say large, and would multiples.

so to And we're a disciplined. remain consequence as going

our you are and We very deals, significant us upside prices are know discipline, to. expect we we're into deal we for we can shareholders, doing We we're the might than it like. that. would turn do a But we we'll to to good with even return such going higher buying as have exercise companies, that continue

Eric Petrie

you. Thank Great.

Operator

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

Andrew Whitman

the materials dig two to be cost bit margin raw been more as costs for Thanks here, in by just a savings or which you material program we taking the I biggest quantify good so the the to recognized that I in my that you could increase little maybe your as a you profile quarter in savings sense question. to what as are could that hoping very of the amount well have of in Great. as at get undergoing what's and looking year-over-year the saw, annualized the wanted factors, you seems well exit guess cost margin improvement raw rate that just driving quarter? guys

Doug Baker

year-on-year in savings million a Yes, $XX over in cost quarter. of little what it the it terms for was delivered

were following in bill fairly of fairly raw terms benign hefty QX QX. a in materials In

in Let the up get and them wrong don't so second-half. me materials in be to Yes, we that, number. last just you just to raw the QX, give year modestly I below were expect

QX one on significant impact negative. material way or a another, or just wasn't a wasn't it but it -- positive So

Andrew Whitman

Great. Thank color. the you for That's I had. all

Operator

closing At for remarks. you. Mike Thank to time, floor the this back Monahan turn I'll over

Mike Monahan

will slides for our wishes replay Thank today, you. participation, be wraps of the your second best discussion site. call. Web time rest the in our for call and This day. That for up and and Thanks quarter conference associated available

Operator

gentlemen, this today's and Ladies concludes conference.

participation. for your You this at may time. lines you your Thank disconnect

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