Ecolab (ECL) 18 Feb 202019 Q4 Earnings call transcript

Company Profile

Participants

Michael Monahan	Senior Vice President, External Relations
Douglas Baker	Chairman and Chief Executive Officer
Daniel Schmechel	Chief Financial Officer
Christophe Beck	President and Chief Operating Officer
Tim Mulrooney	William Blair & Company, L.L.C.
Christopher Parkinson	Credit Suisse
David Begleiter	Deutsche Bank
Jeremy Rosenberg	Morgan Stanley
John McNulty	BMO capital Markets
Gary Bisbee	Bank of America Merrill Lynch
Scott Schneeberger	Oppenheimer & Co Inc.
Eric Petrie	Citigroup
John Roberts	UBS
Jeff Zekauskas	JPMorgan
Rosemarie Morbelli	G. Research
Laurence Alexander	Jefferies
Michael Harrison	Seaport Global Securities
Shlomo Rosenbaum	Stifel Nicolaus

Call transcript

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Operator

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

is President, pleasure External it Monahan, introduce time, Vice Senior Relations. this now to my Mike At Thank you, Mr. Monahan.

You may now begin.

Michael Monahan

Thank today Ecolab’s welcome call. Beck, you. to Ecolab’s Financial our Officer; Operating fourth and Hello, and Officer. quarter our Dan Chief With is and Chairman me Baker, Doug CEO; Christophe Chief everyone, Schmechel, conference

of the are quarter’s the our outlook, slides available ecolab.com/investor. our Ecolab’s results along at our with results, discussion referencing A earnings and website on release and

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

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

gains pricing, increase. brief a sales income with Starting with earnings adjusted growth, actions, fixed costs cost yielded which quarter’s quarter lower and efficiency business overview innovation fourth the currency operating and along the results, led fourth product acquisition delivered new and of product

adjusted discussed the offset Looking the in increased sales gains from than more Other in sales and and Institutional the release, segments acquisition decline at and some as quarter fixed Industrial, our highlights as currency press X%, showed Energy. steady

Industrial rose currency by XX Excluding led improvement. Adjusted ChampionX in growth basis steady the segments. their sales currency gains X%. continuing The operating double-digit Energy Ecolab’s fixed adjusted margins the points, acquisition fixed income increased business, and was

up our recall. continues increased ChampionX share on X% the were XX%, the excluding Healthcare of per Progress earnings business. separation to $X.XX Adjusted and

mid-XXXX. transaction to to expect by continue We completed be the

quarter, ahead, ongoing volumes our in business X%, with fourth improvement sales the the work excluding recall. showed ChampionX Looking up momentum in drive to

the lowest wins, service value customers. for of total and at new expertise focusing innovative operating our driving proposition are best and our business cost results We on products, sales

also cost productivity efficiencies. continue driving We and

XXXX, slides Our the we and fourth expect strong quarter earnings full-year for earnings to for including operating up XX% XX%. earnings as shown, bridge discussion, growth

face headwinds from the lower and currency quarter, the remainder our $X.XX $X.XX will pension from impact the in we some XXXX, unfavorable an year estimated coronavirus not forecasted plan, we on first time. rates impact estimate the exchange in However, $X.XX also at which interest outbreak, the cost will this from of the with of or us including

look adjusted to pricing benefits, share with earnings as we this, to improving range, of impact of headwinds the XXXX XX% volume $X.XX just the mentioned. $X.XX diluted and and to business the than for offset cost per Net rise further more investments efficiency X% to along gains,

earnings up XX%, diluted $X.XX an per be unfavorable to per $X.XX impact share are in estimated share $X.XX X% adjusted quarter the expected First range, the to to from including outbreak. coronavirus

we with share line adjusted top we summary, And momentum business work for XX% in improving our growth. XXXX. expect earnings margins, expand our In ongoing look to per to X% in along

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

now, And comments. with Doug here’s Baker some

Douglas Baker

Mike, Thanks, good day everybody. hello, and to

recall; QX touch outlook, going and XXXX; first, touch to I’m subjects: the on finally, and coronavirus. full-year three including I’ll So on XXXX Healthcare our then

successful and outcomes characterize QX specifically. very we XXXX. and I’d in So XXXX a realized year and for QX important us, as first, very productive

strong EPS growth it So delivered and double-digit business, we cash positioned and dramatically better for we derisked even the growth, full-year. growth flow adjusted future the we for

and lion’s is load derisked job share a of team pain-free, this. early cost never to the behind managing did risk in moving us a great base. U.S. We execution much system field and the in our QX. is the by from the XX-plus-year-old in The This fell ERP But now and of SAP.

we supply right Also, This but and standalone and talent, own in with successfully now we and for our its again is of is continue as It base. future make success. work work a systems. and needed us Upstream also, the is the ERP the business. digital a behind chain operating investments separated Second, huge amount to innovation

We talked a the business our in QX the quite successful. has This, gear price shift to too, price from business then shift as order. been about new new priority

of in realize we will gains QX to and and both quarters QX, over new huge price terms have realize the wins continuing importantly, We’re had few quarters. in which business next

question and progress. event now big been had producing was a in decontaminated plant the some good in and unplanned in making again we pain QX, EPS. on the The team behind since and the us healthcare the been There’ll be significant QX but on is and planned, an Healthcare that’s while residual product unfortunate sales and full European plant our recovery mid-December. has impact So too, mode above very the had has – all cost This costs, is recall. healthcare

growth. enter So XXXX, focus a so with as we we clear do on

Upstream and enter behind very a strong with earlier. Our and is us, sales momentum selling, business wins talked separation about projects of Europe are new a we huge largely and our as Healthcare SAP back result producing

XXXX. a in with expect challenging So even the strong environment, year we

year. sales expect We the to strengthen our throughout

a modestly continued profit improvement gross material improved continued efforts environment. raw expect and We pricing from

announced innovation a to our of CID leading have expect a M&A of also provider health recently animal and digital Lines, strong continue new and bear fruit, the we acquisition technology. pipeline We and

the because first impossible pension and the adjusted FX includes the quarter yet any a also a feel $X.XX negative we year EPS the even QX, strong negative in a $X.XX from this It at QX Net, through impact at challenging with This and are $X.XX continued our point, well-positioned from from the estimate. includes include forecasting backdrop, range. cash midpoint in for but it’s coronavirus, of to not does in year. for potential flow double-digit

stand economy business. recession global avoids about very the in that as XXXX. where a feel assuming we we’re said, that Net, With we good

we that again in XXXX. optimistic quite can outperform We’re

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

Michael Monahan

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

Operator

question-and-answer [Operator Thank Instructions] a We’ll you. session. you. now be Thank conducting

from is first Our Blair. William your with Please proceed question. Tim with question Mulrooney

Tim Mulrooney

Yes. Good afternoon.

business, it quarter? And So first-half how has performance the first what through much fourth of the the was the the quarter? down been ChampionX in

Douglas Baker

down Yes. operating The sales what right from and pretty that that X%, income profitable margin business sure on we’re making a was focusing were growth. in focusing but been things on strong. really doing the And is we’ve

break business, business, do continues which Wellchem, two, to the got the well. by you Upstream quite the OFC is is closer business. the of if you’ve you’ve which And Importantly, traditional larger far OFC wellhead, got to apart our the

Tim Mulrooney

Doug. Thanks, Okay.

XX So up, Ecolab ChampionX. points up I could for growth at you at excluding RemainCo margin what X%, the provide Operating that organic is think, excluding you total, was have if But ChampionX? up was I’m margin? been what said? that in basis operating would wondering

Douglas Baker

quarter? fourth In

Tim Mulrooney

Yes. the Yes. fourth quarter. In

Douglas Baker

Yes.

up a bit. it, it’s looking We’re little

Tim Mulrooney

Okay. All right.

Douglas Baker

It’s also basis points. XX up about

Tim Mulrooney

Okay.

of So neutral kind a impact?

Douglas Baker

in quarter, the because business it really Well, you RemainCo negatively. was, impacts as had the the right, fourth recall, which well Healthcare

Tim Mulrooney

Understood. very much. you Thank

Operator

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

Christopher Parkinson

light – in factors? basis applications and versus In little your performance and this [Multiple Great. else macroeconomic in still Speakers] F&B. on There’s to sluggish chemical a Industrial, subject on relative Is simply just something appear the power a Thank best you.

Douglas Baker

Sorry, coming It’s can sort of repeat muffled? you repeat that? question? Chris, can the you

Christopher Parkinson

apologize. I Oh,

looking your in be just still new sluggish and I XXXX? And is factors, industrial, front appear So we a for performance on or we head basis power subject and product relative applications light chemical should this else F&B. to asking, is the there in simply into something macro versus was on as

Douglas Baker

Mike?

Michael Monahan

chemical and Chris, water? what I’m was power why hearing softer asking is, you’re for

Christopher Parkinson

what something do it is subsegment improve mean, else to you or can can macro to I those Yes. macro – two there do needs you is that it is improvements, the performance? drive – primarily

Michael Monahan

Power chemical, less somewhat the I natural primarily some the reflected trends requires new and timing I probably just, was gas And natural gas than industry business. where towards think, the think, of coal. shift U.S., in

Douglas Baker

fundamental impact the right, business, on clearly, talked nothing are just business about. we that broadly going levels than to too. There’s transition the other big on going some have And heavy Industrial, performance in

Christopher Parkinson

and it. just still to geographies replicate in pest as And elimination these in whether comment as you the of about follow-up. your not broaden about driving think And just efforts then benefits? pest the we bulk selling Got the driving you water, benefits the or will to your need assuming which global you are then these within quick i.e., can breadth elimination, U.S.?Thank presence latter, light is momentum you. When talk to F&B a enterprise and on

Douglas Baker

The pest The We’ve combined business, and F&B in food beverage is pest, to as the and businesses not a the F&B combining business Yes. way water market go water traditional bring in too. we global. and space, truly the are and the often lot global. then business of

and but do all businesses presence obviously, cover America, America, good Europe, in in few have then a we cover We North Latin Asia have markets. and in those all not

With that that’s in just be if quite large Europe presence. along going we’ve will, But efforts, where pest success most and a said, business found frequently of gains particularly you Pest U.S. had food comes lot focus selling are enterprise frequently. our we first. and because driving, beverage in the to

Christopher Parkinson

much. very you Thank

Operator

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

David Begleiter

of the early late segment. XXXX? looking you Doug, to do from year? the you. in course think over grow Institutional, entire of the not division, What Thank can the what’s the at that And progression

Douglas Baker

Yes.

when number, strengthen got continue X-ish-percent. run is expectation talk we’ll U.S., particularly we we of you about end about we to rate – in that, if if a at round So you Institutional expected And that talked that up. the we underlying The last, sales, at sequentially. to close for the business very at look

some to year. different, going What underlying to impacts, we be business a be as report the end, other the probably little strengthen, of going coronavirus we than beginning it’s the we go expect the can less continue year given more the to and a the expect at and which but means a to little little to X-ish be as throughout in the range,

fundamentals of But business you’re the better. But our We think, are better than perspective. do are wish are would getting team the to We, that’s better right Institutional direction. challenging always I I faster, getting say, in that. course, but the the moving in they

David Begleiter

I competitive any in vis-à-vis discussed you months the last few here? over same Doug, bent, the think, dynamics And, diversity

Douglas Baker

few last or there the months. change in No, activity been any hasn’t big

in they’re had change I some – think, still their business. they’ve

We consequence haven’t direction any a as of that. seen difference in

going be really wouldn’t fundamental for think So no, I really say, to don’t change us. I that’s the

David Begleiter

Thank you very much.

Operator

you. Thank

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

Jeremy Rosenberg

Thanks start is for off my taking on this I Rosenberg cost Vincent. savings the question. for Jeremy program. want Hi, to

did baked much incremental then million XXXX? how I’m wondering $XXX do $XX it’s have a have you I follow-up? of And think you just for million, guys year. last that in I

Douglas Baker

year. this plan the into baked incremental million $XXX have We

Jeremy Rosenberg

it. cash thank just free got I year. your thoughts thoughts mean, working on I then you. And thinking the for Okay, CapEx? just any about on capital the outlook, flow And mean, and

Douglas Baker

that to I’ll Dan. hand Yes.

Daniel Schmechel

Yes, thank you.

recap we’ll just and referenced had cash maybe XXXX, very start with as finished a strong the well. quick of upfront? flow year as We So throughout year the strong Doug

$XXX you pension XXXX. cash voluntary conversion rate. a flow up XXX% our with had that, And we contribution XX%, So free exclude of million about if in was

during behind SAP as commented building maybe having year pushing good focused and, that some finished reductions We So inventory hard the fact, so consequences in Go-Live number on of the one supply quite inventory. that the inventory. of was as in chain improvement was not the

that – in fundamentally see which of anticipate I cash strong cash the to reported steer is what very think maybe income. net the the and I about of slightly will the strong again XXX%, north we ahead would be it, continue we to we guess, XXXX, to looking you So is which flow range conversion, – way that flow toward

Ecolab. be So another XXXX year for cash will flow strong free

Operator

Thank you.

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

John McNulty

we regard how about articulate question. which areas you to little Thanks the the of a the the the of Yes. shift be bit starting year? you’re from away Can kind volume maybe for With little how to price seeing the and that kind as more the early to traction, into areas taking wins front. see a early my increased should you’re throughout and thinking progress that bit volume from

Douglas Baker

and QX, other Christophe which very last middle answer a the important pricing, why mean, get going We Yes. results to and team John, I’ll Christophe shift year, seeing have shift I just inflation early got focused this we moving ultimately, mean, us. for in add. we very this. had volume and QX, you is was to is of on growth you forever given started the it know things again. I carry

volume. in improvement We saw a XX-point

If ask for little quarter to expect to the give expect to we I’ll color on it. see recall to you more. you adjust fourth, Healthcare where a we see from third Christophe,

Christophe Beck

strong Doug. that of XXXX, Thank XXXX. during business mid it’s new itself of really Yes, been to very second-half generation effort collective really you, started has in become record a generated which the

beginning, forward X% We’ve well as seen have that’s in XX% And then seen and lead as businesses well, better at that will water where pest that strong and Industrial mostly we as progressively momentum had well the been Institutional, up XXXX. in the well. well, F&B as why to so results going science life moving as Specialty, towards you’ve

John McNulty

notable insight on the with for with just that. the America, on Thanks color start opportunities, capital on of up North the that? new the whether then working front Great. in anything system efficiency it’s any And SAP early measures, into targets

Douglas Baker

things we’ve review targeted they those I recently say, had didn’t before business. Institutional is, that happening our in have with in be all early or – talking would categories. that ultimately about already the will customers after. expect would specific specific terms what’s seen get I they And they’re of a What transparency will we Yes. have

you much policies, cheaper. needs, how see but of customer say, if more you might tweak both understand, will, to meet shipment cost They and I their and would can those ability it do shipping our clearly ramifications enhance,

there’s lifetime to it Putting to twice. do because we’re areas. going like starting So bear we’re a I But think it’s you’re multitude through glad, nobody fruit. these now be happy of it very and in, event, a

John McNulty

color. the for much very Thanks Great.

Operator

you. Thank

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

Gary Bisbee

just think and coronavirus in sort guess how but any the first customer the to you water is more much in I demand ability prepared little than color guys. pull produce Can give called a impact? that? pest, the the would Hey, of on you this helpful? where fluid, to be realized impacting one. you out expect remarks color your see color I it versus point, anymore I on at broader but And it’s product it’s business

Douglas Baker

let – just coronavirus. just me on I’ll Yes. state

where zero I think, this. in question. I there’s coronavirus. it Christophe we’ll certainly now specific after demand do of three China, answer that’s market There’s levels of have impact the go ground and right your through I’ll principle

So market impact. an is demand

So supply it are what’s the won’t supply going do chains? Now, it secondary impact our to global impacts really to chain. global

we as the We they’re plants an consumption. China, per se, really China parts on in specific other China production have We rely but for export world. market don’t use from do and nor it for around regions

its It’s is think, a for about it supply specific a on So big I chains. not broadly worry, worry impact us.

But to third it if and And traditional long global question and China? is burnout. deep impacts. The of obviously, early GDP? these outage scenarios. going to does a it exactly it How and long hard but this is, very got Fairly as into the are spread? what’s do it even spread, does scenario And say to of it’s really impact And what how going ultimately predict deeper, April, it it goes do. doesn’t last you’ve like kinds it And are of if then is June, to other impacts. in really is spread broader there it’s warmer, for does that you all have supply have additional gets March, chain, in if weather any

turns ours. specific, for it’s China to as have I goes global company, impacted impacts GDP to companies. any probably If we’re would the remain been be really global us, into But, them China not specific. if not For including healthy going obviously, it down, other as expect GDP,

Christophe about the now. So turn seeing to I’ll we’re talk impacts right with to that, it

Christophe Beck

Yes.

things. two say Just

the in business. So on hand, prevention infection are one we

So for help part customers infection. natural to tendency little help. a come of a But to spread us of the that’s business to the to have them prevent

plants for And going long-term, restaurants So as much well with thing. globally we’re the as closed it’s in are and that to meantime. relationship that, good the there’s on be and we do customers strengthening locally can well but a not

our a kind long-term, but short-term customers. negative is something, which of So relationship positive probably impact, with for

Gary Bisbee

quarters do it row, And or about takes that think you And currency we How Is to yet. – long flow new a momentum you. very to building, different growth Great, a – lot don’t follow-up, rates business it should of past, bookings in we’ve a it we businesses? and of in to organic Thank the talked seen you’ve business? this obviously, then how a quickly onboard start to from about constant couple revenue? in the thanks. see just how through

Christophe Beck

This Yes. Good question. Christophe. is

some much obviously, depends, are it So by simpler. business, business

it business, or can of be So so quicker, type the more goes institutions like restaurants done.

months, a to two get or We about a in chains, quarter think talk that few So rolled usually, out. we usually.

chain, a needs talk global the where so about about kind much chain, and but think When happen done. we three two we be work when So of well, to businesses, quarters. can’t it’s or That’s two. overnight, plants, quarter between a usually engineering more regional that Industrial it’s

Gary Bisbee

Thank you.

Operator

the proceed The is with Schneeberger next Scott your of from line coming Oppenheimer. question questions. with Please

Scott Schneeberger

Thanks. Good afternoon.

Just a the I about, question start think, on quick handoff, in follow-up for me Doug, to Gary’s on real Christophe.

what I just covered it’s follow-up. $X.XX, a in – release the in is by then pest, Thanks. But press broad-based? And of China or was three then, $X.XX, kind Is of on and just You consistent and have those it curious it’s like water have it categories. you segment? in more it with coronavirus,

Douglas Baker

sense, are is it’s industries, in Service it food Yes. say mean, we’re impacted. is hotels – all down would No, impacts it clearly China, I seeing makes impacted, travel right? clearly. clearly way the in I specific Hospitality,

many in units half have instances. number You have their a of that chains shutdown of

and which been Year I different really by at to, then, China curtailed. has for week It’s they obviously, talked mean, extended another province. have New also least We week. another speaking they’ve you’re which industrial production,

of have working You a that to start some back number plants up are have.

they producing All it’s weeks up several take closer and longer this were as widespread are outbreak to at to start are the were centers, back going down of others point to time, them but up. up longer for the for production. ours Then and you some ramp in and take well, to

Scott Schneeberger

Thanks. impact the businesses And of exiting get exiting the just optimizing you’ve to recently. XXXX? on from in what that. institutional, perspective. a And stand been on then early lower-margin that you I And a in might where portfolio be feel want curve appreciate margin

Douglas Baker

Yes.

I’m lion’s behind us. go. that in, I’m little the it. coming a the is There’s going and we’re The share answer Fundamentally, what give going seen talking we’ve that but So to about to dribs drabs done impact.

We’re moving on. start. We

We will expect like sequentially improvement forward. fourth, in continued we saw moving

much say what normal we more it’s of in would I range the have.

We attrition time, we have is as at day. normal every have this we some especially and point throughout But this in It’s keeping year. more some in that small. much the go

Scott Schneeberger

very Thanks much. Okay.

Operator

of you. PJ with Please question Thank is Citi. questions. with The Juvekar line the next proceed from your

Eric Petrie

Hi, on good is Petrie for Doug. Eric This morning, PJ.

you XXXX, year, think, look your at I since been As the XXXX. share since any lowest it’s in repurchases level

you do how see versus this up year them in into and a forward pipeline? buyback So going shaping

Douglas Baker

the lot RMT. of around last the announced Yes. the out negotiations of year of market impact A of was because the the consequences being subsequent

we about negotiating. out in because we’re a unusual. right? or of And for to buy, were this And so talk time that others, consequence, We we were quarter blacked periods third can able weren’t really as

about I’ll to it talk to said, forward Dan that With view. hand

Daniel Schmechel

Sure. Yes.

Apergy consequences that, is the for will of of first-half of the the RMT we of split one be year. transaction market to the essentially out with the So the prior

beginning or cash and that the part it payment at we say guess, that, free whether have of payment or the before, debt of year the the RMT, dividend we I at what that uses forward cash the said and at when I’ll as repurchase or time, will not look in We look second-half again, better evaluate or receive Apergy share flow will per of retirement. cash

least on looking priorities, decision we that best a comfortable the the this flow far cash remain we plans of at offset saying point, compensation And guess to we a opportunities will and at are. be I so forward, consistent. to the will I’m will importantly, Our shares share-based the refer level at make margin, that what our when impact market get and clarity this

Eric Petrie

Okay.

that being internally? or in do you Institutional. XX% Investor at you mind about Industrial step per to view do roughly XXXX? in Day, enabled Or target talked up you do sales of How expect you of annum, digitally X% grow that have how and Secondly, in a

Christophe Beck

of give maybe those start. are one, So to of don’t categories: to at that formal enabled, numbers growing that ones digitally Day, basically, But have good ones sort $X.X, said right. have we sales, just roughly. you other and connected so which what It’s are on based we is which enabled both are the Investor cloud; double two the we What’s we together, the the still colors, are usually digits. numbers them we that, some share

So is the type continuing basically it’s which good, we growth XXXX, which is business continue same XXXX, rest to we’ve of that of and the grow. something, the helping expect seen in

Eric Petrie

Helpful. you. Thank

Operator

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

John Roberts

cause Thank happening root in the fixes been in that was what contamination from the have Europe? place plant you. put What And keep again? to of

Douglas Baker

bacteria other cleaning And facilities. up make biofilm Yes. a that of business we biofilms of waterborne parts the It was plant. and biofilms ended up are, in creating a a

good go contaminated, is, some itself with the which sort biofilm the batches don’t be they the the not. more envelops the this. technology are is but some would leak bacteria some news up is, end so protected. clean So know-how cases, to by evenly, we And contaminated, in challenge had out and of killed When bacteria, sporadic, and it’s they you biofilms product, with the normally

bit a they’re So gnarly.

is and we know said, believe in just occurred we the equipment sources. know a before in moved that bought done water found with part, is one-time of source But what naturally this we’ve and to occurring number was It’s One, of, So impact business. it many the we a things. waterborne a that illness.

ensure that absolutely plant is the have areas. the of significantly a redesigned dead We’ve opt end have gone So bacteria-free. inbound the to capability and number we through water we

continue to do going We’re that. to

is aggressive than We think have protocol But make place frankly, more new we forward. to new mistake a we’re in going that, aggressive need. put much going we

taken we’ve over steps. team all of number The So a been this. has

the previous heading volume and We’re back of XX% through XX% production producing, then XXX%. then We’re over to

this a So done running and job contamination up getting free. good I think the back team has

John Roberts

And then Does sales X% the were here cause X% the business healthcare you excluding or you lose grow will business up to X%, that come that is some while plan below now near-term, before recall. that you did fixed, above grow for a little back?

Douglas Baker

I Yes. this Europe. In occurred the nature, in mean,

the And there’s going is quarter. so in quarter, of to still December impact international part be first our because first

not And is, quarter. at but hit That so, still the in is level that did forecast. as we’re the going by of but through fourth to it same impact QX, way, part in the it, our nearly

new news any pike. coming not down it’s that’s So the

recall Yes, the event pipeline we’re against I Certainly, going the there’s going expect quarter. would go to refill in to be fourth will a annualize occur. that

are believe the going in At have would You this. time, It’s this if that. something of larger to that any not lost fact, business in earn a true. as we that work that’s we any at if point real sales I be this to and point in that’s, see I to blow-by-blow a don’t expect certainly consequence consequence on a as to We do main you back story. but possibility, to numbers give can’t going time,

John Roberts

you. Thank Yes.

Operator

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

Jeff Zekauskas

much. Thanks very

your the revenues you fourth profitability quarter, XX%. I in think, Your much? that How up so million How’d had profits fell were do improve that? did by operating business Energy and $XX

Douglas Baker

Well, at equivalent efficacious i.e., work formulation Yes. calls. least work input on not raw savings, lower in talked value, of previous We there work do lot on a material you at produce how been this of has work, a at cost about formulas, better costs. lot

We’ve compete I high much When you lower, if basis. here, on you’re we’ve is reformulate the done period demand. of do them good all kind a environment that. has effectively. And think been to trajectory time will, tougher goods of the of growth cost you’re very you’re had where really team a It working a to job rate, – able permanent meet on allows a doing the in

So the going down where retooled a needs those some businesses, on a There OFC standpoint, America upside made can in been way. to that we’re forward customer work a of were cost. the of There’s all big business quarter. work we lot meet more work in sure specific in not from parts the has we North things that focus a head first we math It’s combined, expect out they’ve efficient moving taken even there.

significant business. We’re have to probably OI decline in growth sales that going in

the to fundamentally that and going business trajectory So the It’s OI EBITDA seen is longer last well oil, hard of don’t is Ultimately, ever the spike XX-year story. believe business cyclical believe I forward. kind think the poised like of that oil just quite favorable. I call in a don’t we’ve no business, I cyclical.

Jeff Zekauskas

Okay.

was returns? Was the in improvement incremental Your margin your price how or or incremental that would XXX% quarter. in gross you analyze mostly materials, sharp fourth raw over

Douglas Baker

a I also price secure had secure continue the combination Yes. of forward. forecast mean, had well. raw which continue to material going we and to it’s we And I was mean, as of it two markets, price softening we we’ll – things.

So of gross when your you those, combination happy get end the line. news profit you with up in

Jeff Zekauskas

you Thank much. so Great.

Operator

you. Thank

with next proceed line G. the of your Research. Rosemarie Please Morbelli question. question Our from with comes

Rosemarie Morbelli

XX, morning, cetera. Thank water, X; look sciences, you. acquisition, there line the so exclude particular level to was food growth XXXX? And at and continue beverage, life anything top demand? et we you have X% Can this specific up it type everyone. growth in Were we rate? X; Good Doug, in we do adjusted expect for mostly that price the those put them, demand or of in of when all at

Douglas Baker

is our Yes. levels. growth XXXX additional follow economic up with sales we positive, to I good XXXX in say comment, us, XXXX ask then in for for end saw that, that I’ll assumption it’s I’ll we on below some believe, in Christophe add with better to than that’s specifics. a XXXX. but would growth But enough

but that business strong recession, reason lag. new at while we the QX, global show for And had is, business the not to up. we that it’s not So XXXX about one, feel positive, that results the way a the in we takes It talked QX, level.

We’re to fourth starting of to see quarter. it. We in see bit started it a

to QX. of in We see more expect it

And is do virtually looking ex there. business just obviously, And to – can QX I in beyond ex it coronavirus every look the China everything just coronavirus. the that’s out we But take to The QX, efforts. of trying hardest impact to of of expectation thing say right, likely, reason clear new to I going China, predict. sure. the is at be We’ll because But to category, is, be it’s equation. our sales strengthens. for that going is it’s hard if the business away the unknown we

it I’ll you if And to throw any want additional add to Christophe, color.

Christophe Beck

is Christophe. This Rosemarie. Hello,

disease build strong extremely It’s impact So not from so is customers. I’m trying as to mostly the here. on so that, But in internally-driven. the covered so the – such – excluding demand and Doug has virus that

unique. customers far so our that are offering have very We

expertise that environment the and for helps at safer total them You mostly operating were in absolutely those of the cost, to to science, operating the Many about, and a do well. customers bring are is Well, talking soap we the lower that much with as much so cleaning chemistry, instance. life customers service, to technology, be our water. and unique

very unique structure. that, management have we account corporate Beyond

do corporate solution, hygiene in food is we beverage bringing know, the global Most that. on account you place. unique together very a organization this can’t competition of that really water As and have

well, also in position very do high a we our that So in ultimately, to customers. what’s return. a that gives to that, interesting that And them way offer a we is unique

a not they with better it’s demand total of cost invest with us, doing. are a their And we’re own off It’s driving So The the more cost. they question. a lot operations. that’s what of

So – two three that’s or ultimately, we’ve been last Rosemarie. years, doing what the

Rosemarie Morbelli

And quickly pricing. thanks. Okay, up then on following

two? rate be raw year be to not and kind overall anticipate You anymore had than down this should X% eventually some a that of going year, growth is as there are materials balance between will next X%, we the coming

Douglas Baker

the XXXX difference, above not be we It’s pricing going probably as than dramatically. and not two be going XXXX, this round clearly, two year, positive but What, vast reported Yes. to XXXX. round to to – in lower or it’s in two a a be at our but we expect Rosemarie, we’ll rate what

Rosemarie Morbelli

Thank you. right. All

Operator

is you. Alexander with from proceed Jefferies. with questions. Please line of Laurence The your next question Thank the

Laurence Alexander

afternoon. Good

in to a want for affected into Just look earlier sustainable coronavirus Can or in growth had turn this follow-up it opposed rate as What of brand position longer-term region does the experience when you you outbreaks longer-term in at Ecolab on a has context that in take it one other the blip discussions. change to with? to Ecolab’s put operations?

Douglas Baker

And most ones, times past easy I probably effective it SARS unfortunately, is different one really It how like mean, it from to but to how to factor transmitted or be the to HXNX a another the use, the is at easier coronavirus other more this contain, term. like and contain. number five difficult pretty – Well, people easy mean, the is SARS, science or but less contagious, one host probably well-known. because to deadly, being more transmit is the to I appears SARS is it was it’s deadly, animal. one

this. I say would

people’s seasons, the in the and if read think, whatever have other literature flu perception during likely see I our our is, And us. this we’ve is guess going others. season in like you – scientists’ going fundamentally much don’t viewpoint to this from huge a to is coronavirus I happens of is know from I change reoccur

go you et number FDA, worked years. to that work. of food for coordination and government a as very cetera, China, to China, Chinese in well had the viewed in We’ve antimicrobial that We’ll good relations continue with the if think very safety, country. I we’re experts

instances. Our on these us customers rely in

think, I in lobbies you go before if really that it of that back of all to commercial all advent was the didn’t buildings exist. see you hand sanitizers HXNX, the

clearly it sanitizing changed for the hand demand et permanently cetera. So products,

predict. well kind consequence too, harder to of may that as the You see of a that’s outcome coronavirus,

Laurence Alexander

of really has discussion moving to in Would Ecolab China, of rate? provide growth as it China been we industrial food think open there from in ramp for affecting or that not growth more some your a markets of then And sort should faster the production,

Douglas Baker

the has live I about you. going while. food that there that prepared, to some in mean, probably they markets there’ll think I as think been agree be way changes – more And the going going I trend. forward. would with slow Certainly, of is certainly shifting the a that an to be quite trend, not And This for to accelerant food more production down. It’s more trend

food, safety need a you’re really that make at of That’s positive to you time. or your good, you’re for because food large going sure people lot when been is us, poison to trend very a one scale doing

us. quite to all again, that. forward. positive that, to But has so always expected don’t coronavirus been I going that for continue to but hard going predict. do is And accelerate anything, And think move that We’ve

Laurence Alexander

you. Thank

Operator

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

Michael Harrison

was in the Good business. wondering food strength prepared portion that some the in afternoon. remarks, business, I retail the of of in you your noted specialty

new you bit the You driving mentioned give what Can has business? program detail retail strength been new in accounts, as as some well more little as introductions. us that to a food

Douglas Baker

was digital. That adopters the earlier Yes. of of one

So clearly, us more coupled with customers. and now is which our even communication allow with program, transparency better digital

in of more have elephant We secured their helped. stores businesses. as what’s we game. has they as been chains of an that a little That’s to visibility a new number business in number on have in hunting always a of going So bit

business, grow that’s after faster, chains, the is, it of couple It obviously, truth situation these will strong in gains, F&B very of growth, of large number securing Institutional But in. business to a sales as fourth lot of a a So in water a terms continue the good quarter and sales those performance can the every quarter. land had grows net stories. have new has we and you new a well. had – we’re business Pest we success

Board. the net quicker including we across say, the it’s business the the off Industrial wins, in mark. across But I’d FRS. see side success in new was now businesses So it the

Michael Harrison

business. ask Energy wanted abut the to And then Right.

helped You growth temporary mentioned Downstream some sustainable wins something increase meaning in there international was sales maybe business, going that more for were International driving this you the or downstream should there business. Did the quarter? that new on you end up that get some

Douglas Baker

quarter, programs notable. focus fundamental believe new in there. dividends Yes, execution change. the is better increased on pay business. execution but I to no focused probably on That We’ve And business would great nothing say, is got going it’s we well. there as

Michael Harrison

right. Thanks All much. very

Operator

is The Shlomo Stifel. your line question Please from questions. with coming Rosenbaum Thank the you. proceed next with of

Shlomo Rosenbaum

for when percentage business. the quarter? questions. mid really variations going Doug, And – Can of retain is you growth business kind part more business thank steady was that the that Hi, of business you’re part do of of talk in up moderately in see about what to Hey, taking Downstream business, of that my what – energy kind what single-digit understand the revenue was you kind on generally the of a it’s very and what you part going that moves in around? and

Douglas Baker

and that embedded the I et Yes. the of to be understanding and that annuity our it’s done, captive water cetera. are the what do the treat an service is to in water, cooling, with being be and similar you needs quite boiling water deep to capability of business honest, which type mean, around crude fundamentals the technology of are rest types business, refined business how

an also additive there’s that said, to component that With business.

So also in like we’ve industry industries, and a the number other the customer execution much same that years. done for circle of

and/or for down were a sales the around the had year fairly rate. growth The It we up They best were in solid. the based seasonality. that more business, little be business. that so additives all that consumption and And X% fourth can was quarter on

efficiency counting do long-term fuel a type or don’t out say we other on. lightweighting also and sustainability, make are what good the business mid mean, plastics under to plastics going but that’s products going view the I forward. to So only I we I plastics. would point, It plastics. and There the is bad single-digit yes, pressure. of derivative-type sure know we businesses, plastics for to bad enable as things. fuel refinery need And in a not are lot good world this throw plastics your we treats petrochemical are And plants.

Shlomo Rosenbaum

kind been that’s some general? pest out And timing just the to just the X% as generally business. great. and X%. business, there, kind over call of flows to anything there it’s of Okay, follow-up, X% of the or in kind business at just of a ebbs Is of know I there’s came on new in

Douglas Baker

fact that in QX, when portfolio pretty the feeling about an honestly, No, don’t we the it coupled we’re But was pest. new business We Yes. incredibly like good with X%. like too. strong

expect we to So business accelerate. that

Shlomo Rosenbaum

Great. Thank you.

Operator

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

Michael Monahan

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

the of best Our rest wishes for the day.

Operator

participation. Ladies teleconference. today’s gentlemen, This you and for thank concludes your

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

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