Ecolab (ECL) 27 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Mike Monahan	SVP, External Relations
Doug Baker	Chairman and CEO
Christophe Beck	President and COO
Dan Schmechel	CFO
Tim Mulrooney	William Blair
Manav Patnaik	Barclays
John Roberts	UBS
David Begleiter	Deutsche Bank
Gary Bisbee	Bank of America
Ryan Connors	Boenning & Scattergood
Chris Parkinson	Credit Suisse
John McNulty	BMO Capital Markets
Vincent Andrews	Morgan Stanley
Scott Schneeberger	Oppenheimer
Laurence Alexander	Jeffries
Mike Harrison	Seaport Global
Eric Petrie	Citi
Jeff Zekauskas	JPMorgan

Call transcript

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Operator

Greetings, and welcome to Ecolab Third Quarter 2020 Earnings Release Conference Call. 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. Mr. you, Thank now may Monahan, begin. you

Mike Monahan

A a the our Thank you. quarter Chairman to Factors Operating are Beck, could read our to those Officer. third states in our of of could statements, actual and website X-K take ecolab.com/investor. available call. everyone, from to materials release the and on Financial the our and September With moment Schmechel, Christophe forward-looking Ecolab’s welcome these conference XX, cautionary Baker, results quarter’s projected. estimates me Ecolab’s materially materials that results XXXX differ results, associated referencing in Please Doug that the Chief statements Factors Ecolab’s which future Hello, materials. today Risk Dan our and Form include President slides and posted Chief are CEO; section described cause the under actual and in with and Officer; performance. earnings discussion These is our along and results this our teleconference outlook differ are and supplemental at

a also overview. We to diluted with supplemental per information you in Starting release. the share the earnings refer brief

sanitizer underlying increased efficiency the cleaning our continued were second sanitizing leveraged recovering divergent cost it trends, customer actions the quarter strong better for segment showed good large improvement business declines as and Healthcare benefit several and we and while sales share penetration Sciences income show strong customer narrowed wins, from significant one-time Third demand from and to Sales Life orders. sequentially still results. end-markets reflecting to currency results new and the and COVID-XX as Fixed quarter, from impacts segments. the on earnings business per with

market Our results restaurants, to costs. be year saw decline yielded within pricing growth while lower recover, at restrictions levels, continued consumer modest hotels improved due income last to Industrial from end and traffic strong entertainment as also continues though returns lower Institutional Institutional continued as division quarter to due a activity that more activity foot toward to COVID-related normal below sales second the segment them run facilities results. and the to

improvement at rate fourth second We in more the remain competitive our a wave expect we from the to offering. slower impacts likely COVID-XX advantages as XXXX a though stronger quarter, We confident and the will emerge robust product with continue reopenings.

We continue business. to in invest our for key the drivers

us capacity off, delivery deployment accelerated maximizing value our Our technology investments sanitizer cannot hand excellent also focused while accelerated customer serve. be support, where continued remain even field We post-COVID position. and our are to care to enabling and are in efficiency better paying our firmly in cost investments enabling provide and on in digital further person, there and we

market COVID-XX While investors. near-term performance market long-term comments. improved that with water healthy drivers challenge, some creates world robust, providing believe energy business our remaining will costs strong for our water, huge driven long-term position these free cash Ecolab resilient financial sustainable has by results In our superior Baker base customer Doug now, a our with believe our long-term and beyond And remain our near-term We environments flow. and lowering global challenged and opportunities. strong creates focus other it by here’s safety, our looking by positions, COVID, operating become clean and also more a with opportunity, opportunities the yield on important. leading and even long-term growth their our We focusing positioning food on uncertainty

Doug Baker

everybody. Mike, Thanks, and good day

albeit in versus by the led improvement QX, division reopened, our its significant we expected. lows showed earnings was principally as and Institutional This markets sales our which QX saw So in is partially.

our with OI third Healthcare Industrial Our accelerate X% growth. Life but performed up negative as quarter continued XX% with sales and businesses XX% well our sales businesses solidly Science to

continue overall in at by so, expect as and number to of opportunities improvement slower are we a the expected COVID we re-openings. QX, have Importantly, initiatives clearer second pace, though a dampen underway Even to now. wave challenges the as is presented much COVID

have production, investment starting in heavy hand pay on off. We line to a is care upfront coming now sanitizer and which and

with well are kill launch going Our now. best-in-class claims of antimicrobial out it’s just new COVID-XX timed, XX-second

paving further digital serve, which our in in accelerated our and efficiencies cost cost shield capitalizing the investments savings of is programs. we’re on continued for newest rollout our through Our targeted technology to way now

Institutional. drive really continue to Finally, in business our particularly good results, new efforts

in Our And, our business board. is our Program ability being during improved Certified existing penetration Science new in period rewarded drive is COVID outperform the helping to new care the customers. Ecolab across competition dramatically terms customer of with

You’ll recall, for well was are that. and we way to on do maximize post-COVID objective success, position our this year our for to our

position the leaving As a feel good we’ll very year. be result, we in

XXXX new efforts to look into deeply, Ecolab position great to a Science quarters, to but grow in expect our put entries, also as fairly us strengthen and market business. several capacity, we forward, run our through Certified we innovation, As and we manage COVID business expect and our meaning continue digital

how taken, how importantly, you. So, in success and through managed position period steps feel good for team really about they’ve I our the they is Thank this XXXX. most has

Mike Monahan

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

Operator

with We’ll first you. conducting question-and-answer is [Operator Mulrooney Tim session. question our And be now William Thank from Blair. a Instructions]

Tim Mulrooney

and know today, a of is, on morning lot of your what lot segments. get back what’s key or between you when right I a uncertainty there’s a better? know EPS of Doug. Hi, But, XXXX to on this for based now lot minds think, to you expect I and different moving investors parts a question me,

Doug Baker

alone we happening not understand think Well, is you, how QX Yes. considering or doesn’t worse be in second QX. Europe, we to But, about ultimately, thank carefully. able more, considered we in if capacity we we we’re I’d had sell COVID taking really be to us on we We And and better We’ve -- Even are We’ve ‘XX, where U.S. lower could anticipate. gained average, that ‘XX, don’t in wave going in much? steps very is business our to were markets news principally, are a very be lot and this We But, good our shape I purposefully COVID That a it improvement recent underlying performance. average, progression, know more. talked repeated, in shutdown With know track underestimating one-offs global could on in now anticipate, Inventory we’re that this. in That about repeat drives even during we believe relief on market we believe we significant number us EPS thinking reports think, with isn’t I about be we’ve to we’re we And don’t and than how we I’ll give what’s a we news is of better reduction forecast. happening we’re I is a above make couldn’t of this than not are XXXX. say, about really share. we’ve hand of we’ve going the all things than that to said, the we rent really costs. question just machine COVID. period. Tim. innovation. be improvement a This to we’ve giving talk per behind XXXX took se, expect more in confidence. playing that they The in added where going. we know specific care that got make say what’s And March-April also The in could XXXX. strong further because us. mean honestly got

So, we feel we��re well-positioned.

a number to Next we’ve levers year, got pull. of

we sitting XXXX. XXXX here that today be will certainly above EPS expect I So, in

Tim Mulrooney

and helpful. business markets? on example. trended to for about new really That’s recovering Certified appreciate your is sanitizers a Science Okay. just thoughts through the I’d know going developing coming with it end to opportunities, your relative I that also expectations. there. lot you’ve from wins Are quarter from wins new and I more or your these ask growth got like how

curious I of So, new how affecting was the cadence that’s your all wins?

Doug Baker

I’ll worried did same be strength very a we at we’ve to well to our I’ll prior, worry. give that false to out calls impact Yes. with ability fact customers, in-person yes, the actually address to turned that’s and go Christophe surprised been, opportunity I Christophe were make We’ve manner color. COVID, give the But, very that the period. whole in performed And in ask you some this. couldn’t an to we early get this we would say,

Christophe Beck

good and good Doug, Tim, you, Thank afternoon. or morning

the same which so be, So, well. we growing business think as yes, been monthly used that is this basis, When at very basically as is well very this has encouraging. pre-COVID, business growth as new of as year-over-year right it’s Doug well track, going on a new we to pace year.

has business challenge, new of digital bigger that well leveraged installing book become down our But, as that will the well us business technology. help So, road. as ultimately full which a we’ve means

as make that’s are us. your unbelievable in for innovation. as killings our also huge but cost to that tomorrow. a sure And we’ve well. to in the we to well, those Those to drivers, can as well. come expertise years not customers to Doug operations customers as science XX coming least, where total deal world records install ways or last for all the could like on us new seconds discussed of in we from protected well. of coming previous our as It’s capabilities difficult driving where And I’d calls out that many of learned use new do we they’re customers drives And less. times, which that well to can question as COVID-XX That’s economic their more what COVID, that main are so that as driver, have a like programs looking guests as business customers there. so how are our customers sanitizing proposition well, back well. are more with because of during how So, to be down, come the out new well, our been many And of mentioned remotely, innovation we or to perspective

net-net, So, what pre-COVID. of steady we generation business versus had kind new even is

Doug Baker

capabilities. in out we digital we’ve performing in Christophe been add, our has it’s in get businesses because and Christophe ability worked teams all big a really humble he’ll a from as unit leverage meet a to today, the that and dramatically tough our great honestly done customer in just said job, be there, standpoint, competition an required our field. outperformed And operating environment, our to remote here well. is And this made of has difference needs have when by have I’ll And led

Operator

Thank you.

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

Manav Patnaik

first sanitization Thank you. focus that My you this a two-parter. guys clearly are on increased just Good Maybe afternoon. around question from. is benefiting

in The restrained I areas can you bit on how more still Ecolab first is, do Cloroxes on first I think versus branding time much that the capacity if you in one curious any Lysols maybe guess, I now I for are just you about target science. is of to produce? But, And, was for TV the an and care. little ever hand trying there other was talked world? ad any to updates certified you of saw terms the a more or

Doug Baker

the on I’ll touch Yes. capacity question.

sanitizer by have demand. capacity some hand around a really to is care Meaning, lesser in surface driven -- hand extent Our particular, to It’s sanitizers. up XXX our Xx. challenges all business been

to easy to you go GMP, able demand we make had through But, a greater ramp-ups because shortcuts. don’t got we’ve are And that to is increase than work capacity, now, We this. This easy, lot is to Right? that. Xx. that, be take beyond as these aren’t this of properly. Now, do you’ve expanding

can us. not the ingredients, using people guys We’re bad count on

equipment, do to lot the these we team done now found continue count because way, this us takes volumes ways of very really just months, coming working creative or customers have on this. the going do so going a up. as to And right team on it we’re operations But, to a forward. the move so, we job has with And capacity, to line, terrific

the Regarding to Science Ecolab Certified, me Christophe. TV, let give that

Christophe Beck

hear to kind Good Certified, Manav. it’s so, new us. for something Hi And, Doug. Science you, Ecolab you. of Thank

in them time knew that retail their really well support in mentioned, for risk well, for times the meant It to that fearful before. it’s guests customers were X all we’re as and same versus been the provide most of We We hospital that the restaurants. that go. our were well know by disinfectants about was driven to as guests, part, reassurance infection. as fact driving learning So, the the to grade knew at to consumers, And that. their brands so we hotels we you as X really

plus well of just disinfectants, been that that third want clearly, to be extremely brought by them, hospital fact a knew fear grade safe to and heard Science that liking a we clean, Their not for to the All so from So, our this being concept as it’s safe, us see that you like Certified so fact it we they the to is of well. really was out customers led lot that you was guests welcomed there. have well see infected, customers. has that seem together clean this as Ecolab that the us. that telling people And wanted that thing to

from reaction customers. great So,

now all weeks, country. early a around just after average sites from media way it’s indications thousands We’re perspective, are had in of But hard those to as what well, a few we rollout expected. And so above of working really tell. the the so than

Manav Patnaik

June cetera, that that cases as was you won’t you described just quarter is lockdowns that’s fourth be on characterization? say just bad Got the quarter the and it. September trends, et maybe it of so you if reported, maybe sounds a partial and quarter of comments between And way it somewhere nice Okay. resurgence hear in on Would there guess, it, and fair But, just to terms like EPS. the a XXXX maybe as I impacts. fourth won’t -- even the quarter it but

Doug Baker

Yes.

right, QX think, standpoint is, different consumption very -- entering QX. at one, a I you’re -- a from we rate QX market run entered than

just you’ve can room as right, to I mean, quarter, some got you fundamentally. to get the degradation add so, consequence, And even -- a to equal,

be these second But We going have I lockdowns that to knew mean, real this. of some some we announced. are expected to was being to -- there’s just wave reactions COVID And coming.

so, our mindset. a consequence, it’s And as in

One Now, it better relative a I QX on to on here prior that’s great this wide I things, so and everything The but do shape. to anticipate think what is not other we’ll beyond. investments mean, we and and eyes do line about feelings we need -- to in absolute business and XXXX to EPS on manage than it’s this react I touch to wild going to going versus And on to we’re the could And top an in is think we do things. QX open, basis is expect year. get and and paving one the world. we’re really what more the is than for positive smart term, our intelligently. a because thing way with the very react severe some But, else. QX on I’m income, basis be our

Operator

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

John Roberts

you. Thank

market give us of perspective down, share the year-over-year. was gain? on sales XX% estimate maybe Your What’s some the what institutional were your organic down to

Doug Baker

easy the just level math, down straight to XX%, some the down consumption doing just as if they’re in base be if market going simply units not we’re as because these of is open. not There’s XX%. It’s Yes. just

capacity end roughly rate. the that open over the in deck shared have numbers were the a by restaurants running in XX% So, of quarter, we at is third and the of others XX% U.S.

doesn’t in Now, as bunch much an might doing if addition they’re business, you customer. obviously, to off-premise you’ve of generate But a off-premise off-premise. that, been imagine, warewashing

gaining total. restaurants we’re track say, we believe than and what would very we’re share, -- gaining carefully the volumes what our do mean, period. new would certainly side, we are bunch volumes a on in we’ve I job We So, I done healthier say, been minimal. a this And securing losses through because have And other of great business the losing. I our we’re

John Roberts

system cooling was refinery Then to down up, water not, surprising refining case? the is not XX%. operating more not downstream utilities, thought sales the insensitive and were rate, relatively petrochemical or I steam that the They’re down the the XX%, that were was or but tower so than

Doug Baker

Christophe. to it give I’ll

Our water businesses improved.

QX. you You’re in to…? you’re do Downstream and right. than want talking worse QX Christophe, was downstream

Christophe Beck

Yes. so OI as Overall and That’s in very up modestly is solid double-digit. shape, is the so right. see, picture, you Industrial up a

quarter. few As them, petrochem, line underlined and beverage which really for But, the which businesses, is of business, food to well, harder driven Otherwise, you the means great one as in like downstream, XX%, is are additives for much less with to so improving water treat, was a roughly, oil water for tendency of as that price product. noticed, of the the in low, by down obviously On we’re crude, our you’ve very go well, have this being they consumption, kind is refining positive, good, true. really refiners used which light when a need nicely. usually fuel which

the like our forward. we petrochemical, of where which we is going generally, So focus most attention, especially

Operator

comes question from Begleiter next Deutsche Our with David Bank.

David Begleiter

Doug, you go coming additional million. quarter increased impacts Thank if this from? $XXX temporary Where think costs looking from levers well pull guys your I additional are to headwinds? these or you at offset internal are $XXX And million, to savings those ‘XX, savings you. into to COVID

Doug Baker

starting businesses to of say lodging for other of to And would are lingering that to quarters have specific about Dan our is, in where adjust I’ll a or see things. have we even What some be we more talked to But, can years, at couple allow several around are that going things. time hit, like recovery and numbers. yes, wanted we we costs do least so I effects. answer are a Yes. going more questions clearly say couple we

we businesses to like some be Healthcare the we might You also, Sciences, in and where impacts positive. think lingering investing expect are Life

major underway, a where which program next have there. in we if all was that And, place and we They supports want at early were it in some really big of increased but Dan, a will impact which is XXXX, in start not will QX, a so, year. detail? somewhat, QX you moves add impacting QX had impacts the QX the be And to

Dan Schmechel

Yes. Thanks.

we’ve that So, imagine, that will announced you little that bulk say, just XX, up XXXX, fall XXXX. has big as XXX. indicated, starting from now, we’ve recognized starting full million of as of in target incremental in maybe fact October, of that we’re a $XX And taken rightly, that, anticipate into you’ve to indicated, Doug this end the XXX much, the a cleanup of little and frankly, bit can where given bit XXXX, the with not near the we’re, year

of getting cost of terms it, of would benefit. made I in we where drives and what by it significant from sitting about how or a of I that back investments indicated, reorganization. we’ve go has institutional. A this this era savings which thinking similarly is COVID, lot in a we’re mean, is as driven see In principally, we’re initiative generally, to benefit is might And of deployment back our at look here frankly the taking some sort the really Doug XXXX, continuing

the pretty not and across have the of opportunity improving the business, the of it’s can to efficiency surprisingly. business, an spread lines some opportunities chain also of we of in so, evenly Industrial too institutional XX, some and And frankly where true-up supply and think

David Begleiter

business just Doug, impact is pre-COVID? longer was post-COVID on it a And given the fast of growing Institutional term, COVID looking the than Institutional,

Doug Baker

Yes.

was short It people be to a be COVID. but -- recover. years, knock-on Institutional think takes back. will forecasts, to forever, a in that you say will I most going zero period if there’s some by lodging -- several mean, be for lodging going for couple ground means. think, down would be effects business, of And think, time, there’s I obviously believe order. But to not but will replaced I years any I I fairly travel coming start read for

even if just restaurants I and history recover at of you an lot out end people in to who the is opening a true. been the business, these recessions. is idea. a of go capital line light has endless think, And great quicker. for that a of And after lot restaurants say, restaurant you of, everything be reason up opportunities, think that there seems that let recessions else, with look me a And

it’s restaurants they of get with for are sign into back on them have are and strip time to that a where tradition. the You sort somebody in honored and vacant, business. malls move a door put in looking And

would at not I been there’s far, fact surprised during so we’ve the more of business So, that period. restaurants this say out

as We winter, expect probably we we that the the that and had but last it’s there particularly will internally, April. into below still March forecast more, be get

ultimately, a be confident a be -- and business. Institutional, So, will continue great very feel we to

pre-COVID, sales the to Now, right, my latest moves lot the lot earnings, of of we mentioned right I record time a probably and our accelerated a can we’re deployment. than in we’ll technology, a get lot this get more the sell. field simply makes which of we’re because gives business, opening growth, doing, comments field doing team we’ve moves, of more faster this has new to to efficiency efficient, the much growth, use in the and some capabilities technology and newest planned us a

off this of And on recent through service adding we this We they there out getting number let’s in We work other to what coming going we XXXX mind taking, you capitalize are midsized team done never occur. years, because help we’re adding we going to want and go than chains want too. others secure forecasts, the business. higher units and recover faster. we’re be in to pay service they’ve as if to this this. guys wise, of efficiency business will this, know SG&A we not There the hard field going to expect be And to that’s even We and wrong, significant sales benefits. out they’re But, requirements us adjusting address. if firepower, they’re and will, actually forward our to risks a think and they’re like to new we be say, are think

Operator

line of next America. is with Gary The of from Bank the of to line question the Bisbee

Gary Bisbee

about go can where significant incremental the cost I versus timing. for just to you it a back As I number the on was update the are coming that’s guess, from to hear growing program good But, an you where us I ‘XX you number the second, plan? them from next and and and initial a recall, if into could challenges that you the and step there’s there year, plan ‘XX. forward expectation ‘XX pull incremental did this or of to then from given here? significant Are pace, before you’re still on the adding this year, up a million $XX an is that original Thank give you.

Dan Schmechel

Dan So, this is again.

I’ll was walk through the accelerated that me originally -- plan, which and sequence to the $XX upstream directly announced was so here. it it. Let XXX, XXX business. the right, just million XXX, took on up focused Of We we

cost the associated expense ChampionX so, and with all went incurred And those of business. savings

we costs the what So, essentially million And offsetting $XXX Ecolab million. of in for $XX million to then how that’s we’ve savings run to of described $XXX were frankly, as net separation ChampionX stranded the this related down and million business. rate the $XXX

that’s background the million. So, on the $XXX

on you has $XXX would If exactly the said. I in almost what pace we say our of capture million, opportunity been that that focus had with

all the and of XXXX. into Okay? increase by biggest it with the benefiting of that XX, And we’re to going went I that now, reasons falling we’re saying so, through for part that

Gary Bisbee

it. Got

was it like in was ‘XX, XXX the million have million million I mean, that in and $XX ‘XX I away, I -- but ‘XX and $XXX a there’s the of initial you provided which so understand in few ago, years went breakdown, target. $XXX part So,

is So, maybe so original And that? of significant assuming in that still you’re up on step a there’s away but, top lot plan. the a then, from went ‘XX adding

Dan Schmechel

say, would yes. I

about up. XXX though million. the XXX, And a to incrementally an of essentially the disclosed will the stranded it we originally $XXX be was XXXX $XX as related ChampionX number Really the would bit as the to that think little From What million Okay. increase that with offset increase. step to I was costs. benefiting that

XXX, view year net ChampionX time, this the been as by the have as we if you the I line plan to first pretty for expanded communicated. we being year ex, the which with is in targets we’ve much down So, piece, once

Doug Baker

very of are going much We in this. fog said, this and to more challenges And look, moves what we what to going where adjustments, of as early to as the We forward. a to we need make make right add linger we early the we and only I’ll basically February. to to this cost be, asked today war. moving in What going fog are now. clarity the said needs we’re as even where are were don’t what’s and We clear and know sitting consequence, understanding opportunities happen with to go going around really what’s more are have quickly. away here back

team, we’re in them Everybody businesses, for where And since that unintended have our think, cause subtracting we’re So, The differently making are we’re which place. we’re much adding more reducing past. and of to to even in the any we don’t understands. steps taking believe other harm in opportunities confident some done than others, another sort we’ve we create great than moves. going businesses a available team, I is in

we’re moves are these taking. So,

steps, taking understanding units, all we’re technology and I a service field expect investments delay digital generated of have to as mentioned, the Institutional, in investments particular, given the us costs and that now, land. you which in would consequence the number a been we’ve of have And of we talking do better around certainly those. So over time, of that the we about efficiencies

that more if financials, it that’s we discussed. is this what But, means what to means anything, expect take would internal, start and us steps. And for not And so, around as those taking I been all the -- XXXX. we’re getting clarity

Operator

Thank you.

Connors Ryan from of line question & the is Our next with Boenning Scattergood.

Ryan Connors

the question of a ask Doug. to about war, wanted -- fog talked about I you

than share, Can that think accounts. restaurants, that big some that continue Ecolab will, of a different favor That that in dynamic, to the and a are example, seem fact better you talk faring next there of guess, pops be One you I heavy number taking some to national few if of the whether that’s is and the with in like emerging you, how seems that of industries. from is big an couple you chains that And things mom out or meaningful? would does as presumably affects of if years? that’s company about that those the but

Doug Baker

add be plays mean, ability How of during it in position will smaller in gain I cases, believe even out net even notably do trend. to smaller it exactly to in the We units mid-sized upcoming terms it faster, to positive share vis-à-vis and they be the continue more a recovery. some to a only garner watch I They’re their us. poised during periods, players. players. say, for Yes. probably in same aggressively and would share could and

would exactly I say, sure. for to be this to say hard hard positive, case, for say, make it’s to So, would it’s means to net negative would we’re a us a us. what I -- make. But, not It’s

Ryan Connors

it. Got

company then cycle guard settles of there, a an lines adding once year -- two, and a pricing Okay. demand product you it forth. my a the sanitizers about capacity, other capacity all fact, that’s capacity, the here? growth you’re too if, hand as the against post-vaccine, those industry, And were, even or and so risk and as got you dust one and investments if this whatever as was, and how or not much care out in do Xx one making those valley then, going And in things the normalize kind negative of we’ve Obviously, across at in really only talked in investments.

Doug Baker

than sanitizer there’s -- pre-COVID, in say, hand a the other things. in bubble the hand than i.e. at market a way which versus around larger much would COVID this COVID-XX. obviously but condition One, soap, includes is post-COVID the our the is simply smart hygiene, settles and as because near double, I expectation do care the market a two here thing you viruses is a people certainly than think combined then to many will a there to through hand pre-COVID, higher market. and it Yes. rate We total, just here, by be much run term, hand that probably triples which the in this is prevent

out? going people are yes, that, Yes. with So,

But this, were a only also doing not adding We’re say, we guy lot the co-packing. of I would prior capacity. to

capacity. place as we a in-source to. have need stuff in we now not proves if If are can where be to we it we So, additional wise,

we’ve forward. a you options, more So, here. would, wanted we to of create And going I think, number if got options

terms dispensers In here. it’s price hand things walls, going well to war, not care, Even that work of off fall happen.

because have We our terms service In if And number world a right, markets, this do in of does every we the priced care. premium. we’re matter the significant not the even in of leader, two been -- at a hand market. premium, in it at global one almost

I to play think conversation don’t to the having or that’s the going two years. be So, be in we’re going

Operator

Suisse. next from Parkinson Credit line Chris Our of of comes the

Chris Parkinson

a for on ‘XX this a just despite lot when innovation expectations appreciated. be the bit outperforming your think would you’re little It I also, lot despite the right and just, a your So, factor of the we current of color still of a for little revenues and about but environment? ultimately growth investments, do share like Institutional But how bit, Just Thank further. should then you want a we your about framework gain lot down seems any you. additional those hit just thinking ‘XX? now, peers. into get greatly to on market how noise, be And noise

Doug Baker

be going Institutional don’t is said. and year, already we playing in while different is a maybe record put total right, what said we’re we’ve which confidence ultimately believe record have One, sales back, in earnings. Yes. the have from together will on we’ve also context. an going that, earnings to call standpoint. XXXX next business fully I’ll the Institutional doing be We above that to just

any come that there foodservice the think We because little are by back. which are Institutional a lodging larger, foodservice will market of We seen have is stretch not much good in foodservice first, trends The and is underlying peak later. news positive.

means, the which think, share, gaining are I back. even we’ll getting beat We market

got lowering of cetera. I Difficulty] a permanent a recover couple So, Difficulty] years, industrial on the look within over [Technical machines fast number positive earning depth [Technical COVID, serve of institutional you’ve out than et is, the the our of players; when to technology, beyond of basis, point cost guess, in to other I you business. some this of think, the

idea. six I we -- So, the months, long the we’ve like done whole legs. steps think, that -- feel last I steps a was has That

bunch that You We the of of quarter. help team. benefit, don’t stuff of And do in benefit. wanted not to have second to the proud I’m quarter a only I of go would years stuff want the that’s third our weeks why think,

hard people away But, steps think, very flustered to we to what getting report. wise the periods not think, far us. normally get are type back be going It’s I of of do. reports from these very during can the out don’t I will You we’re these to because very prove expect forward. results

Chris Parkinson

on That’s very And There’s been Great. divergence markets. a Industrial end material quickly fairly front. very between just the helpful.

Just downstream? coming would to Institutional, performance could of questions let’s performance initial view on also And out just say, then, your relative on you basis? similar in water assess you. my Thank the second end-market and versus quarter, you your how your expectations, own go-forward F&B, a

Doug Baker

got Yes, this. I’ll Christophe’s give this --

Christophe Beck

your then Industrial cover Hey Chris. with Maybe question, starting Hi. and Institutional. I’ll

serve, So, in is food saw all sales, well very by at overall, XX%. have have we trends well, that different and income big markets we slightly safety obviously advantage Industrial water which so right but end we as And as needs driven but that as up a the off these now. hygiene, shape, solid some purity that’s of many mentioned, are

the call way in this think we so very businesses, water the one we improved has of when nicely. terms So, them,

COVID very expect a has improve to we a been strong X F&B, those to that of sure as total positive as in brewing minus franchise, of in has pre-COVID, quarter little fairly a QX America. unusual One well bit minus two remained for well. reasons. being shutdown Latin strong in X an which come. quarters from and is to the So the during of QX, a

to People the beer well. stop And U.S., beer going obviously. to is that’s schools are is over going over temporary. there, but strong, basically dairy back. such, come extremely as drinking there, to very related But, You’re to we not have as extremely not profitable business in which this produce and allowed as well

one good who no mentioned water even us New strong and really close really relationship hygiene, in as before. can There’s the great to business is customers. F&B, with bring momentum,

before, So, going lot firmly call a back in a very go believe we been ultimately what people to obviously out-of-home. Institutional, are to position strong that And on Industrial. has said,

term. As the such, people are not scratch going long to from cooking in start

anywhere the customers. around is as was accounts, well, have is it’s in Well, Well, to Ryan So, such, going what going the well have well most that and these is the we for that’s asking world. by focus. not mostly as our advantage. but expertise. want well trends They’re come to as in of to will every is this of last the from offer to customers. safety as And more hotels. have as large in time, country least, are demonstrated look where going well are or corporate growth where to before, standards to people we business that’s unit two-third and At driven to going more our are you positive. look as This our They restaurants for same This strength Ecolab’s be global well.

story as a Institution positive is So, to well. long-term going be

hope I you Chris. it, have So,

Operator

BMO from comes the McNulty next Our John of Capital Markets. line question with

John McNulty

it’s to going up of a business about guess, help us can to but think Was not the surged like to profitability there this or the and were where other to XQ it looking kind help in XQ about the going nearly and seems there, to you how that margins pretty bit mostly kind compared to business The in degree. revenues of So, incremental think driven of I at they to up, that pest. catch forward? from segment, dramatically explain by be book a

Doug Baker

I smart they the number, in It fourth of that recovered pest made had third say through stronger was our -- of number are third pest up X% their the They and thought than growth done within was have during business year-on-year a And the even say quarter. in break quarter. ground. would business, a the it down lot poised would we in things even quarter. to I

earn of story probably biggest the most the its terms So, in other most of out the of businesses, positive it’s money. of that’s segment. those coming them -- significant probably to And ability

John McNulty

pro right? I’ve about in on kind And thinking then, this maybe the of been base. I on I services just because talk gotten so XXXX the EPS about oilfield that’s you’ve Am dozen just assume talking. a XXXX, X.XX But, when base, a you that that e-mails probably versus forma, housekeeping admittedly, question, since split growth Is right? the

Doug Baker

be -- number would our new we that to. would would be compare the That Yes. XX

Operator

Vincent of Morgan question line The Stanley. from next comes with the Andrews

Vincent Andrews

more, to COVID. just and the data, for trying effect and of a bit about what use trying thinking provided of in four think that in at slide Just looking institutional about percentage supplemental operating particular, to bridge multiplier I’m a in And, the rates you to back product to of XXXX? something lodging. and to make need XX% back we just or don’t with do Because product restaurants XXX% full-service presumably, in given like used that being to likewise to have kind in get more whole or get you order you

So, would be any helpful. thoughts there

Doug Baker

out. specific XXX. be have less number a don’t than we It throw to Well, would

natural, you say, vaccine. of this truth is, recovery matter be I think, to have the the going would until I there’s ceiling,

number than first vaccines And workers, go we short Again, to approved you a they’re out. Now, in be frontline up order, greatest I then populations to significant take to risk, bottom of going that breaking real is improvement the population. the in it’s going the what on here on we know this go second to rate. line broader honest. will until going I others, and going continue people we launched be in at get COVID, just COVID this as We’ve fundamental I to to low and through believe to there even that. fear reason think but will The is, populations on a other the to you’re get some need in really XX% is factor beyond from this. through see that bring breakthrough markets. quarters then you be stops top There when is a institutional, environment, don’t

COVID seeing you don’t start to of this expect ‘XX. certainly buzz be said, through until done. we Institutional XX EPS got back it Now, we from to clearly ‘XX With be XX% number. it ‘XX north that improves -- But, but think fully it’s in don’t playing room expect I in

Vincent Andrews

follow-up. Thanks. a And just as

down maybe next year of about Just line some year-to-date. that savings $XXX discretionary to year, next that program some running out. you’re you later versus million trying I’m about take you’re to that just cost come And thinking the SG&A back to things cost starts reconcile, the into have

about actually trending and into think So fourth it down do especially, SG&A stay can quarter much think next we the how you as then year?

Doug Baker

Yes.

I some last in others, think savings, think, the and I the i.e. next well discretionary year. in particular T&E

XXXX. isn’t on we’re not -- actually a be But through We here good benefit, what part COVID is dramatically vice we going our change we’ll happens COVID, wrong to If believe. than travel COVID going of view believe to until faster restrictions and that that, respond to it what Our and goes to change. versa. away proves

pressure. sales And so, will call I lined natural what there’s of up with a sort benefit

we’re T&E a year, for as going see So, depressed majority majority -- think the consequence. we travel certainly next to

took are we we’ve not in trips past we that take. will took think number because we period XXXX of learned. We of time, I There to long rates a many prior for And need trips we up be using to bring the cases will back technology accomplish. a probably digital didn’t of all to that it XXX% in

back is travel either. going to XXX% but or to it’s not not going XX% zero, So, down

Operator

Thank you.

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

Scott Schneeberger

Thanks. is rate you strong. the With in Life Good do certainly think was Sciences, and afternoon. is? very growth How regard segment impressive. margin in And the to then, Healthcare that the sustainable

Just curious, pricing some margin maybe much of of the for and expansion, other sustainability factors was that? discussion how and

Doug Baker

Christophe? to I’ll give it

Christophe Beck

Hi, Thank Scott. Doug. you,

another this for group. quarter So, it’s great been

there. it’s in and So, income, businesses growth, big both, top-line driven been XX% XX% by

because and that going in relationships. as future, Healthcare expertise well, of COVID, other Australia well. ease of well in we on to growth the partly to hand, the well in both driven stay digital to top-line we as that in Life have as going double whom but part, agencies So, the is ease because business could the well a of were with coverage as as growth those well, time, from great Science, well, we government one in as as could That’s income Germany, lot as the conclude provide over UK, to going whenever it’s and

as the have you think back it’s Healthcare well. by we’ll for many terms vaccine that driven and that’s we one-timers, that. if exclude to of but said, we’ve Doug’s XX% to of the wave quarters comment for big growth, in COVID underlying those when still how So, that’s wait Bottom-line, so roughly top-line,

which when X% So, be well, that that eases as in of underlying X% really is to to it we growth, be. kind where will believe we we Healthcare, always want

truly business ultimately, that a business that’s And Science, happening that what’s we benefited has Life that’s So, on from it’s do. fire. totally here. really what a loves industry on It’s an

very strong. business going as well forward. the as new think grown strong going well Innovation during QX. are offerings are XXX% quarter as has in extremely Bioquell so to then, as well, that stay well, is Well, So, is those

So, for going underlying, QX, the stay be you’ve in what high to forward, at going it’s level but double-digit same not as it’s to sure. seen going

Scott Schneeberger

Thanks, I for you follow-up And to appreciate then, Doug. that, Christophe. a

into been hand near the supply significantly capacity chain, Just that back this Just of curious, done of curious, end made, kind strategies taken sit so doesn’t largely considerations strategy? you and if that out for get developing now this the has the curious shored? sanitizing, we the chain where again. happen in down a down, -- built situation process domestically, on just thought you’ve you’ve hopefully that shut the But, largely supply were that what

Doug Baker

Yes.

supply in currencies China. demand. really designed have to I.e., the to we China multiple we China, is if volume in. And meet to XX% make you is produced Our facilities. sell chain go They’re in China strategy like our of historic manufacturing

want a a U.S. more world. for was strategy It it’s else. been strategic problem, everywhere to proven that didn’t is initial It producing competitiveness supply to strategy good our world, it. going tariff be the that’s strong So, historic forward. obviously strategy. really restricted reason because a was in is also the weakened a i.e. And and That gets designed and become us we dollar currency governs a

say, has strategy been, a at time this cemented, good point that idea. So, let’s is

U.S. we’re in We’re building of China you’d capacity a we expect in capacity are two Europe, where also lot in markets building? the largest and too. the but So, where moves made which

Operator

Our comes Laurence from line of next question Alexander with the Jeffries.

Laurence Alexander

questions guess, a most will our moves secondly, cost on of Can I And around speak discussions you’re Healthcare Difficulty] antimicrobials. being reductions I your operating [Technical side question, little longer that on term conditions affect bit How you quick once that the remember about leverage Two the recover? now making.

Doug Baker

Sorry. antimicrobial? of was garbled. last Laurence, couple got the question Healthcare last What the words about

Laurence Alexander

Sorry. antifungals in about your capabilities Can speak -- you the antimicrobials?

Doug Baker

we I category the want challenge, Healthcare, spores advantages I Healthcare well. in and have in as biggest right, are Well, you Yes. if go, that to C. And significant diff the mean, others. in mean,

And have can because so, say, we I apply of, it if not important, in are learn some we standout will, what an market we that’s you other but Healthcare, been capabilities would too. of area capabilities Healthcare because just, how that in businesses. The the healthcare opportunity, and also

those products. the Science So, Christophe Healthcare of are way, using the grade claims much types Because advanced the Ecolab that they of grade with talked and about by the than kill breadth resonates consumer or disinfectants the Certified, we’re hospital positioning are in in products kill which -- consumers, they’re in that time right. more is

minutes XX many anything anymore. minutes takes for to is the what product And people wait killing You literally can X kill in have a consumer that seconds. we’re problem not X

this mean, I complete important going I certainly, program, mean, it’ll articulate the doing. have impact the know. an specific already But and don’t we which The leverage, as obvious improve out I what answer. know will leverage what it’s of we So, we’re you pretty be. a is to part question, be get leverage

Operator

Harrison is Seaport Global. question The line Mike from next with of the

Mike Harrison

making like this your and meal coming a delivery, approach you changes going shifting do forward? hard more are your anchor kind future we less kitchens to What the the to are the up business? toward be on-premise ideas we mentioned survive are with in about of institutional surface novel this this restaurant customers cornerstone kind takeout of your time. in And, or of in think dining, ends trend navigate of you to that What make customers help on-premise kits of some toward of those used Doug, Is how to kind being or reduction or dining? lot shifting warewashing cleaners, of these help going cleaning your your think challenging meet towards business. is

Doug Baker

that industry institutional post-COVID industry are said, business say goes. packaging there of back diners two, frankly matter new I’d I things. great. the would With given will two categories in profit which mostly; staying the we takeout, It’s principally two reverts we that what other on-premise reasons. is way certainly pushing mean, want the power, for and we I are that exploring to no think and say, and not think have

into, when But because business, and all box. packaging hard you’re so you’re costs not rest, the to versus greatly to and a got everything a is friends flow in open, of perfect I not the these some them. cardboard number getting off. me have on trying are ingredient the it and They’re on-premise their just is fancier it’s actually keep low, If be money the doors serving a meals the costs meals moving in pizza these of a cash else. who are solution for and preference make business, let be pizza, say, restaurant would to you But,

of revolution. consequence in They a way going have business. think think delivery about and will the don’t number just place trucks We have there modifications rest. They’ve this are a But, as probably supported ways, to run I to food the been those it’s a a but kitchens. it’s longstanding going be forward. COVID, of industry in And a

Mike Harrison

would the increasing typically is protocols is Like, they using? terms now? us food be you typical that’s of grocery store for or right product frequency. customer XX% cleaning side, sense in of of then, the And or example mentioned it double retail much XX% and expanding give how more your using how you a Can much sales

Doug Baker

to it’s which doing you of maybe it’s versus some in of cleaning that where down early, they wiping down think, wipes some car, were where were I have up you’ve had seen still Well, number or the go they pre-COVID. you may four slowly car I also have up a say, consumption. one consumption. will double settling go other things every curtail it’s digit retailers of and you to people But, all where

We expected this.

the negative see what in So, impact have Institutional, doesn’t see benefit we categories business, a will going mean, Institutional dishes I warewashing, standout one by come I -- you’ll right, right But you’ll lot on innovation the it challenge number does, have think is where now the the our money, volume of which certain way, in getting back. a and fixed mix it But you washed. until is until get start got forward.

Operator

Thank you.

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

Eric Petrie

long the reformulate? you not as effective And peak for Doug. view? about Can in viruses your take about opportunity over Eric long-term It’s And or sales how Hey, whether little mutate, new a in growth does Petrie Good your kill you bit cleaners? these the these to can talk more P.J. morning. on it how then, and fast cleaner you reach talk is

Doug Baker

to a cell. a you I sanitizers, basically would And destroys for kill Christophe Yes. have as quite ways different I’ll alcohol And go say, bit turn through. organisms. hand it staying you power of on They instance, this. there’s

about if to develop sphere So, think way. to hard a it’s immunity it that you

immunity of quads it’s and effectiveness around [ph] still Some poisons, been a but number everyone a not to in not built instances. to do can that i.e., you issue, poison. decades, have over have have we’re that for time fast And using right,

it’s our in careers. life business human It’s So, terms in a terms a history. not life of of short short

long it I to takes cetera. want know add you in sales, Christophe, So, peak don’t to how get if of, et terms to

Christophe Beck

I watching that out we’re The thing pathogens there. every would only really offer is

our this ones those as obviously how for know, for products of that other. are instance. and was COVID past how well or and they do about the time we new know in we react we that well, as developed against each well the the products disinfectant one latest that those, effective we ones talked So, being didn’t norovirus, extremely do fast The our the learn kill with today from against

try there, of how pathogens still it effectiveness, that. of we And well? type so So, we to working, innovation really develop the any look reaction generally, to is in stay at ahead there order is it out all understand to as our

out especially any to very competitor are believe place, in compared unique that I there. So, we a

Eric Petrie

related on sales M&A to to about pipeline And building Doug, then, And peak share then, Helpful. have maybe recover, or that question. just for talk, markets talking as returning Christophe, to follow-up end repurchases. some their out my been managements

So, of low has discuss Xs. Can Ecolab’s improved the net cash? you. uses Thank leverage to you both

Christophe Beck

Okay.

five the take question the your To I’ll in I’ll there. which years, annual first have we So, Dan, usually a just point, give peak best second. is sales, average the on the part M&A and that take out to we

than five or sometimes Some products shorter term, years. of longer but most are them

So, we M&A, use. metric On Dan? why that’s the it’s that

Dan Schmechel

Yes.

a question. priorities as it interpret cash I’ll So, more

share asked also on repurchase. the You question

little the balance number north of sheet by a ended historical just billion for us. on is say very, quarter cash, standard, me big very the with let any a this. So, We in $X which

of that’s a lot of amount there’s the who the a have yes, the cash I to very lot today remains seen. follow environment. balance to cash for this the a is knows of the of premise Q&A the a that say is question. with we king uncertain the And Right? So be what’s will place. comfortable I’m Partly on sheet. just that And world thread

of it some unforeseen, heard, we call We that known. to presume confidence, the be many from are world of also the forward, too, go with uncertainties present about getting maybe shape the increasing the challenges, but as yet today right, both, as tone opportunities. will I you’ve

I the is provide to I levels shortest build, priorities, our us you’ll as confidence so, and share can that including return guess repurchase activities. cash continues And and cash see traditional M&A to answer more

Operator

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

Jeff Zekauskas

million. XX%, margin Why the the would business decremental declined so Revenues have What $XXX incremental were down it operating XX%? and profits Institutional is about $XXX is If where earned business, margin in double? a Institutional returns the high? you decremental are were million

Dan Schmechel

about you to year-on-year quarter? third on talking Are quarter third

Jeff Zekauskas

right. Exactly Yes.

Dan Schmechel

period of go time, over I things. be as They of this. Well, into would through say long quarters. won’t you get a XX% any couple But, you

period profit things bonuses, of that down to quarters day. to getting into through last period, other this get up you’re on go know for down the years in you some different decremental range. period. There where investments and happened impact of be Now, right, or the these are bad up going as gross bonuses what you forward. are business is taken the time XX% margins in either The or going and in go as our different debt other But, right to over you have good in different aren’t reasons, going and a mid-XXs, going you

So, a going happen. of lot that’s to

We are fixed starting things. take costs to and other decisions on

what so, forward. will a we And is see recovery we margins those go as of

Jeff Zekauskas

in the quarter? Were X% raw about materials down year-over-year

Dan Schmechel

some favorable. total Institutional. not have were demand of Industrial, you anything, that you’re negative where of heightened around in If other seeing in minorly care shortage impact. A stuff year-on-year materials lot areas, and just is in Raw hand they material a really and supply, were

Operator

of our this closing we’ve the back reached floor remarks. And session. At turn for the Mr. question-and-answer Monahan time, I’ll to end

Mike Monahan

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

for wishes the day. best the Our rest of

Operator

today. joined who concludes those conference us to call. This you Thank our

You this your at And you for may disconnect time. lines we your participation. thank

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