Ecolab (ECL) 1 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

Andy Hedberg	VP, IR
Christophe Beck	Chairman and CEO
Scott Kirkland	CFO
Manav Patnaik	Barclays
Tim Mulrooney	William Blair
David Begleiter	Deutsche Bank
Seth Weber	Wells Fargo
John Roberts	Credit Suisse
Josh Spector	UBS
Christopher Parkinson	Mizuho
John McNulty	BMO Capital Markets
Jeff Zekauskas	JPMorgan
Ashish Sabadra	RBC Capital Markets
Shlomo Rosenbaum	Stifel
Mike Harrison	Seaport Research Partners
Dan Rizzo	Jefferies
Andy Wittmann	Robert W. Baird
Eric Petrie	Citi
Kevin McCarthy	Vertical Research Partners
Rosemarie Morbelli	Gabelli Funds
Steve Byrne	Bank of America
Vincent Andrews	Morgan Stanley

Call transcript

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Operator

Greetings. Welcome to the Ecolab's Third Quarter 2022 Earnings Release Conference Call. At this time, all participants will be in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure Relations. your my Vice Andy now Investor President, is to host, introduce Hedberg, It Mr. may begin. you Hedberg, now

Andy Hedberg

in state Thank you. Beck, estimates Risk from Hello, statements, A earnings quarter CEO; his those Form conference forward-looking release. everyone, section recent information Scott discussion most Factors share and welcome With and along today materials. of the to call and are of Christophe actual me posted slides and ecolab.com/investor. and materially earnings that results statements our are take Factors could supplemental moment you with our over differ Christophe Kirkland, could a quarter's like in turn these Please cause the in on our We cautionary differ teleconference Ecolab's available and release diluted These supplemental to results, future to and projected. call. comments. our are the performance. to XX-K that for Chairman results materials, CFO. and the actual under Ecolab's the per include With I'd that, materials which to associated are referencing at Ecolab's refer our Beck this read to results third website described

Christophe Beck

natural for the demand in which to nice and the with recover the energy global Other earnings Europe, and are gas yesterday, strong future price a accelerating Life year-over-year and continued pricing, $XXX is pricing impacting strong and with exceeded steady Specialty segment, and market this demand. in with trajectory end quarter year at pricing where grew inflation, In step and finally strong just gains total true growth. journey With Other to pricing second XX% commitment X% importantly, continued a XX% Industrial clearly Sciences the this continuously longer fully accelerated ago, Healthcare and stabilizing, Thank an quarter, on you, with Europe where XX% war stabilized. third. leading. margins by the to with Elimination, we delivered substantial cost that sales Sciences in XX% as the Most and XX% Andy, pricing, equivalent higher towards our Industrial, product especially increased my on with productivity improve of the in another operating by Institutional in of pointing $XXX beginning, clear will of gross expanding high organic, costs. is and as inflation Pest positive and This QX, with renewed to Life comparisons performance, its and preparing pressure. segments. led grew and Institutional XX% and XX% income is have gains, XX% benefit of and impact earnings with clear per with barrel growth welcome and will All crisis rates view, to organic, significantly with XX% since & ease our in back than X% year-over-year led inflation year. The second get quarter-after-quarter, with for fixed end margin our the remain today helped everyone. energy This, further been organic team this which the delivered further the In to along net is of growth environment to all, steady currency double-digit interest from the organic oil quarter, in

moderate improve, anticipated as taking early but we take what's than and a of we're action, at previously QX. out to expect realistic ahead pace a of growth earnings view importantly, we coming to progressively More continue

the and with has three Europe steady market successful Ecolab, strengthen right and for very Over to strong, critical market leadership margin become a past years, growth, team positions. improvement the our profit

therefore expected entering our short growth. of business lead exceptional a offset deliver to a the operating to to and new and initiative longer-term led gains, translation fully $X.XX. unfavorable The built impact not from by to that momentum, improve We’re we've as great annual year's hope, $XX performance by towards mitigate fourth along will last but currency the is new performance European approaching implemented, improvements sequentially adjusted in share per and partly productivity a expected interest with actions diluted situation earnings confidence with a pricing, savings improving helping term execution acceleration quarter accelerate unique on resulting launched confidence, team. impact income winter to performance. accelerating This, strong operating and is this when We're is negative expense, in in million be

love to costs backlog broadly, and for as large focus sharpened back prepared to offense. primary offense, and more our save power, sciences, on the help need extraction technologies us fully across their EV line creation order and execution proprietary and best importantly, in staying Europe. continued high-growth, productivity energy Being where on expand our price and and operating good end most. Now gain we've investments especially the new microelectronics, customer it increased work coming showing water, we with run. while We’ve speak. is what are innovation clearly breakthrough more when and pricing and life most, at nuclear attention Purolite in This help to total is generation to our will business lithium more cost capacity productivity we batteries. Ecolab. now for we value doing And strong share. and customers pricing high-margin markets on to mode, select growth accelerate execution on new This in long in shifted our improve unlock our we're momentum with accelerated We've our We've protect in they

its strongest do us it's resilience, demonstrates not model ahead, in and to need environment most. improve times soon, our our Looking global that customers anytime these the growth we like expect the but

year energy work mitigating exceptional of the next with enter on of total double-digit position strength, productivity remain and pricing crisis now ahead strong execution in earnings sales for further to my our We're impact the to therefore, organic of growth remains objective. getting double-digit a inflation with And in the me that strong war a personally, deliver growth position this, core in historical growth, progressively will, performance. Europe. We aligns laser-focused and

We have to term short long and all it takes win, term.

our increasingly cost $XXX Our with water operating getting available needing markets total billion to their total reduce bigger, energy keep and usage. and customers solution

earnings and eventually stronger. been value I eases pricing OI drive team, firm delivered now rise. runway customers is us Darrell And towards as and confident our why to about questions. a and long-term to OI Chief our our performance with Brown, work Our margin shareholders. power more our XX% keeps trusted productivity inflation deliver your and our provides future our I'm historical as our and together helping than to margin for significant drive Officer partner, long-term has with and recapture leadership ever my superior look ability our Operating This never to objective, forward

Andy Hedberg

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

Operator

[Operator Patnaik the of Manav Instructions] line question our And is with Barclays. from first

Manav Patnaik

in the comment that or moment, or comments a growth. anticipating I a want that, around just you EPS headwinds that I on progressively hoping elaborate in are guess, global like towards primarily margin is double-digit the I too? could the was broader bit you recession the side to more? at U.S. and, And improving Christophe, clarify European

Christophe Beck

stay Good in inflation Manav. it's mostly some XXXX, question, the And point. the as your that high is say that's interest dollar impact winter. If It's to remain point, most well be But importantly assumption, to Thank a view. might tough will is our that to realistic. rates Europe as but strong at Europe, going going overly well, demand that macro also might you. may which I have

growth, past and that from over to quarters some well the will the So, steady well hopefully, to for improvement quarter-after-quarter, strengthen we've and been quarters so QX, past that's as stabilizes steady quarter-after-quarter improving which expecting the going as keep the we've down over by can strong QX as has the inflation historical come goes same at sometime driven such XXXX, as pricing, been have and our had double-digit really few really in to and remain we point. mostly towards performance QX, leading in an that's to as that well growth

Operator

Tim will The the William coming question be from of with Blair. Mulrooney line next

Tim Mulrooney

I it gross around math, know our for determinant there's seems concerns still on based still about and the FX softening headwinds. But like X growth is number Europe margins. EPS

pricing, So, helpful. would when materials most on Is my gross XXXX? Any likely directional for margins expect guidance of half second spikes be expand in question you in significant is, you year-over-year? assuming no to would the to what expect begin and that sometime raw more based

Christophe Beck

you, Thank Yes. Tim.

strong remains XXXX, that inflation Europe. obviously, So mentioned the with that's remains the well, before, as for dollar that high and assumption, as

from margin So, to would its as to second of well. winter and I gross expand the in I'll improving then. now half through get expect XXXX

If general as you well. that for as to Company note at look and well, it's the margins important

between QX, the So been as easing has pressure margin and well. QX

as pressure, through in QX, you because improved in as the quarters is may an importantly, had extreme, if well. have which to a I great well in XXXX, down had And look We XXX keep at inflation we say, QX. to points So, if weather OI from look of XXX XXX cycle, Industrial, if bell that and come. back down XXX most you will went in you improvements X/X And which in had QX. that's QX interesting in they well improving similar not Industrial, where

happen XXXX, a in 'XX to going what's as that's across So and happen to what's our businesses of during well. going good indication

Operator

you. Thank

David comes of question the Begleiter from next Our with Bank. line Deutsche

David Begleiter

healthcare, we driving you downturn QX Christophe, margins in that little in expected. in healthcare? lower a margins Anything than in saw bit are

Christophe Beck

QX. most starting feel could normal over back months. COVID-related reached of surgeries come. quarter levels. in as keep third to kind the good get We up melting, Inventories we as And we of And that where X% of the which trends products coming to X% is past to well. in quarter point Healthcare, importantly, second quarter, could are Thanks, in as low think, pricing so couple I well are David. in now, as moved see and well back the the has to the improving from well the

So, business. I But the performance ways. don't healthcare. over the a let going of But quarter lowest in true well. That's I've be I clear, in while the that quite many it think transformational as as 'XX the and in been the with be like for I'm to healthcare year come absolutely turning third we're quarters always been, for committed quarter me to a corner to is resolve

David Begleiter

on relief businesses why not cost is the cost just And demand overall in more in if your lower assume side, XXXX, globally?

Christophe Beck

or... You're talking about healthcare

David Begleiter

demand year, hold has softened assuming year Why why some there costs in costs I lower you're that -- next demand. despite not believe next wouldn't globally? Overall. be lower

Christophe Beck

David. It's question, a good

a So, we're and why can that counting inflation taking for way, but things product improve probably an view, turned which XXXX, our quarter, margin gross we that positive third achievement, is margins have going by that down basically it our and in the does. as operating will it's remain saying delivered for improve today go high not while other cost as the remarkable have it's during is well, overly dramatically realistic I'm now. the which, well, leverage on ease we that as if margins XXXX, will always already when But to

Operator

Seth Fargo. line The the Weber is from of question with Wells next

Seth Weber

saw and kind was of increases, I'm more any more on price the business. the impact of happening institutional in specific could little through just what's deterioration on quarter, that color in bit then I to high -- guess, Europe any the specifically any to customer to trying just drill just any I guess, response you whether institutional understand you've hoping Whether starting to business, that's down have the whether I seen you share? a institutional on kind demand?

Christophe Beck

we're Seth. not which more as Institutional. really as an which demand, of not were recovery in as Yes. market, kind expecting fast Thank good seeing hoping is see is Honestly, to Actually, as in I was so many well. happening of even that easing you, well,

level traffic, have we are XX% well ahead remarkable XXXX. quite you is sitting self-made. growth so ahead comparison levels, the a that people pre-COVID Institutional, which Today, it's U.S. of the at all of point in down pre-COVID look versus in sales to close that just in restaurant we when dine-in and our So, we're the is as a think when

the of like because have. I Institutional. growth So, demand, don't softening by that is which we the as We the good way a well of not certainly in see pricing,

that So, and on as so we'll labor industry, cost new this go going forward, energy side, costs far innovation. in are even so to also demand more challenges but even And the penetration, well, good, keeping food especially but cost to going business, mind need so facing we'll through up. drive more be

customers quarters So, what we'll need while their for reducing what doing to serving way. more and cost exactly the which we're guests come, they their even need is is best in the possible

like customers to quite a point. adapt going is they're with where I'll an And in well see so we one same transformation, industry the But We at good I our think most. will the going. things. to big it's is which need keep an own think Institutional, I that positive what as opportunity, transforming that So, on we're conclude know the and to I just business time,

Seth Weber

the for just us additions a order Thanks. the next magnitude year quick pace and That's follow-up capacity on on Purolite that Can that frame looking you you're adds. of of helpful. year? then Thank maybe and just at the this capacity for Purolite you. And just

Christophe Beck

question. great Yes,

So a well Purolite, I different along. as Obviously, all topic. on as mentioned

expansion, are as line in well. we planned U.S. it's continents So Europe, both we as had coming speak building capacity in as and on we and on so the

It's one than the took was business well well. not right in quarter the time. obviously saw get that produce so do to it do supply place. could it us what the Ecolab that well, squeezing to to more as been could limited, more really plants So it way XXXX, we've we obviously same supply as at because And to

good a quarter Purolite. to a look bit for going So be so when very is QX I ahead,

And like all filling there's to the big almost XXXX, that so we're quarter, business. have going XXXX going that to think quarter. no with risk We orders for I in if whole QX, we're love

Operator

the of question Roberts from line Suisse. next from The John is Credit

John Roberts

to volume, December your guidance, sequentially? In down either in year-over-year do you or quarter what be areas expect

Christophe Beck

much expecting not We're John. softening,

not be things wrong, terms the economies I'm going in Europe, volume we've I going ultimately cost major happen. a overly on of as in were of impact. would I double-digit as realistic I that remain Europe, might be But expecting quarter, get as over company impact in the QX. hope well the going war which we better, volume. fourth us So all that would help in on That's in well better even Europe. in energy but a to be as growth to think well challenge. going overall, eye we're to is have European and quite will the bull's that's seen steady But there what volume to keep stable the versus

John Roberts

to you Okay. debt the portion priority is or debt keep to are forecast? down, And -- your rates variable since to interest do hard plan a variable is a pay of

Christophe Beck

give Scott. Let me question to that

Scott Kirkland

we've Scott debt here. of the is Hey it's Yes. Yes, John, right about got now. floating XX%

going, to in near-term on certainly, debt a coming making the sort we upward look we'll pressure so, debt year, result, not we'll so we sure status some are the on way And future market. opportunity the have and that looking expect have that but rates due off interest any and some of as end certainly, of next forward. at of based we And as optionality pay the

Operator

line from Spector comes question UBS. with next Josh the The of

Josh Spector

versus variable, Just quarters how been planned? oil’s you now with in generally and place, your Are can that of moved has if working variability wondering a those really that the what as as matching gas seen? you under have has couple down belt been just And comment. surcharges good you've

Christophe Beck

on it when it's be surcharge Josh, started April Hi the we Actually, we working well. know didn't really worked with how Xst. energy would

time. all as that basis, done all It a company, on well. alone the out never worked let so have really same a businesses We at global

it who structural preferred a it having because the Some in directly to for us, for learnings easier was pricing some that. them handle customers of

it. we as So, it's from tool very a for a perspective we expecting. others it's system surcharge most dollar energy And well. a what as viable well, as to dollar, importantly, part and chose the covered use nicely, well that as so can were But

with variable. been natural like gas forward, happen, in could going Europe, So it's highly whatever

could seen, easily that than is very the teams. a advantage very months. rapidly it's XX% ago. a our higher engage right Having us for and double such It be next huge we a you've over now, the going year can side As on tool lower to still few

Josh Spector

if I to guess, up, a well, talked correct wrong, volume I mean, of an I'm me worked but follow answer prior that's really to So, question, you and not if significant amount the weakness. about additional

be after earnings wins. sequentially? You're new talking pricing, go trying up additional wouldn't about to Why

Christophe Beck

looking time is operating going improving war good Josh, started quarter here, the the us It's mentioned is something a is to quarter. answer as well short forward QX, in down first nicely in turned fourth FX going that the the the quarter income, the That's the sign. it's for story. for Europe, core impacted so positive well at since I So, keep impact, which as the in get the and previous you 'XX. in third Then of the which in

Operator

next Christopher Our Mizuho. the Parkinson with from line of is question

Christopher Parkinson

back Life you to really update then Christophe, your anticipating, a of any just what Purolite And appreciated. that margins be you well and understood? in or for there elective that expansion Hey still and give that you do out business And feel just the surgeries On you just on Just comments should little help us growth Sciences means the global the anticipate additional side, outlook circle are is we are can could startup on opportunity you two framework where quick cost? healthcare would could on healthcare, side quick for U.S. XXXX? Purolite. for

Christophe Beck

Chris. you, Thank Yes.

a So there. obviously, questions, in few

Purolite. starting exactly expected. year, as at looking I'm next So with

love what lined in up, to the XXXX. done, So, was as obviously, get to we the city get the hard promising. second well well everything acquisition, really to 'XX, way. online to year very with everything Purolite integration Ecolab the see of It going get We're in the

unlock at nicely are that XXXX. see QX, We happening and now, stage I why that's very in the in so

as good as potentially we better. saw and thought even being So,

very nuclear and industrial power, thought as we end of in a for this as mentioned So, is in good than well, microelectronics true opening, in from for as lithium demand ever the well, biopharma well business. story. our applications and as ultimately is more especially This true in extraction my that

getting good in line back as Purolite in heading bottom line and trajectory very usual question, Life very, see its with a QX well in second XXXX, growth. is Sciences, place. to your top in double-digit So getting and a good back direction. We'll

that So place. been work expected a And quarters business of then happy is for been the that no point is point last see -- your haven't the sequentially going the to honest I that in in business. works. comparisons in long a on have it's radical little a that's a Life past healthcare, that and improving change, The steady. Sciences This extremely not running time. it's for very I it's come. mentioned, year-on-year of business. business performance been with going very forward. old one, happy want with always the to complicated as be good But to It's in here, few underlying -- By But sometimes. way I been perfectly way change the years, not bit in me the so

that to address commitment we're made going way it one or another. we've So,

Operator

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

John McNulty

versus Can or delivered understand bigger maybe the much one labor to the us some give it's the in up you whether guess, around on XQ? transportation, first -- just materials? went So, costs. baskets, how baskets And raw XQ us be color I would help they

Christophe Beck

a we roughly two which cost over since XX% was year, same Thank pressure John. Yes. increase QX, in versus It years. QX XX% type the XX% delivered is had last product it's of And year-over-year. you,

and bit say the So same went the the tick over proud which your in towards a and gas the as the way then, want overall saw with to in last has institutional up that's oil quarter. But cost if bit price, the QX a bit. a inflation, quarters. up end have to is versus big you you going delivered that's least. eased To what well bit a it's during evolving we overall, easing And Natural question so of five in and at kind And the team same the on what food QX. count, a quarter quite of the why time. the beverage quite basket, I'm in of

future, to pricing because that billion has the the which last team up, it's $X short pricing be going good for term of but forward. especially incremental long good going cost QX will we So started go overcome that's when stick to inflation year, with the well, term, protecting is over for

John McNulty

Got it.

helpful. then, you see when your opening Okay. look of pricing, double-digit with No, that expect you line XXXX And guess I mentioned help the that's you in to top comments growth. to

the up price cards catching raw that in when is a does Just still EPS question cetera, as growth that you about little a mean have that well, to materials, think the double-digit of you et mark? or bit

Christophe Beck

It second during half. the ‘XX, will happen during

costs, most for most delivered that after quarter and quarter. what's important sure product probably done me ahead So gets that we've of pricing making is way

the year. next today well, growth operating to as interest, sure the going as Second second in pricing direction lead XXXX. to delivered in obviously, momentum getting have how to growth ahead and XXXX. growing that's be the is in been the Then impact way mitigating But sometimes you It's as all in have income I business operating that and in going in sign. that it's that ultimately income half fourth productivity keep will good making in it out keeps is strong, as to that's more quarter, come, I growing. while It have third going FX is cost well long quarter, growing to we We'll as a see positive on quarters and it to EPS as lead product even well the have plays of growing which a it's that. our of

Operator

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

Jeff Zekauskas

XX%, was say XX%, sold cost product reconcile up, you don't your goods is and inflation know, On a How I but only that is we slide and Can cost your of XX% of you do SG&A go your from than bit delivered numbers? faster XX%? up to little product equipment that. deck, XX those

Christophe Beck

So had is similar is which is in second which very what of mentioned mostly went quarter cost We XX%. up product in the is the quarter increase obviously It's well, the DPC, not labor that which I second don't as have people quarter. cost our to SG&A, in delivered we there. well more versus XX%, the third well, as before, in as have we But important.

So, that's why commissions as our And they our SG&A higher point well our in mentioned I well Jeff, improving have helps. hope ends much salespeople in productivity That ultimately higher one up commission. as that with SG&A, SG&A. as is we have for well. pricing, should get I also and

Jeff Zekauskas

what at petrochemical if In rates a you areas, for you're tremendous And many liquidation gone think from those companies, different looking the look companies, that you companies industrial of if seeing the across at is chemical to maybe have like look the I inventories. utilization mid-XXs low-XXs.

feeling some business other of lower treatment levels because Is utilization? industrial should that I'm going think be be customers I for your much there utilization at your So, operating surprised a of function of factor chemicals that on? quarter would isn't any would fourth and water the

Christophe Beck

You totally are right.

softening from same we pure look industrial, we if same-store part side, see of so the sale at from demand. that applications So, demand, of one

it sites penetration, and well, we increased Well, it's business well, It's innovation by new -- driven new solutions is so going So, so obviously, doing it's well. as it industrial as and was in of driven XX%. see north downstream which in for by places pricing, is those if up significantly. especially same quite like

that. why the right so new I well, that's potential the -- we well. have it because site approach new important with offense, And we'll absolutely you're for face one is feeling so as we’re as and previous easing, headwinds demand with mentioned, those to And is So, business. compensate on call in

Operator

the line of Ashish is The Markets. Sabadra next with question Capital RBC from

Ashish Sabadra

and second Christophe, growth, double-digit the Thanks. I double-digit the like growth get just earnings versus wondering 'XX? Any about to be half, I you for we right, further still see color comment in circle the could double-digit I was full with with on And was the first of earnings half. range. this back first to second even versus half wanted not wondering, earning growth that earnings second see the made the in could will we elaborate in maybe half growth, half, a you should year just helpful. first if in combination

Christophe Beck

How very usually early. things our you in are February, of of pricing. about fourth I Same and the for and don't what that momentum, We share to quarter before as it's talk Ashish, early year never months line seeing, and we’re the with next intentionally in anyone enough results chose same come. out next strong knows. publication think the months volume going get inflation getting year as that really maintain we're to well, X, the the But you really I trying our level so for with rate interest to evolve, assumptions to I obviously, we're the with going know to in well tougher it's And our what most well play whole XXXX. the stays don't top as in X the know next more we together. until with exactly? year, to that back yet. strong going the are I But And when dollar what of we're share it's remains seeing, or assuming. but Europe

going we've get second QX, in as upside the XXXX, that well and digit and Well, 'XX. keep we're together, to to that we're the going the going we're the quarter So this path I over to program five I've that I reasonably as that sometime as QX, to quarter-after-quarter, announced after going as as that some half well. we pricing towards mentioned, done that from done confident in of expanding European quarter QX we've so well, -- heading quarter be in to feel will in half improve QX it's as keep second to well double going can

Operator

question Stifel. with the Our line of Shlomo from Rosenbaum is next

Shlomo Rosenbaum

little a you do how And give inventory growth volume the volume growth across bit I'll is color low still go is that And I and that. on for was the that comps, Hey out us opening. a which follow-up. little to consider then, different I of -- of had wondering potential still bit on much have if the in Christophe, along break off maybe comping some with to you the Company, the X% for of segments? coming COVID And healthcare have just would a stuff that going could through?

Christophe Beck

comparison. volume on evolution element biggest the year-on-year is The

but which kind too base compare, it's is versus of very over influence years, pre-COVID steady. we was you XXXX, which If past something a that openly, don't usually stable the talk three

right volume have will now well the our QX that in So trends with of institutional, the in Europe, well. of mentioned the most in plateaued to that as point in recovery did And probably way they and continuing QX same as here. as before in QX, are businesses as kind of well, market recovery in on your impact the I've we from the has

So, is the as are out or so there, well that number of restaurants available remaining. hotels

well. XX% traffic of since as on XXXX. the down people well, CD of in versus beginning is the this year quite I early mentioned So almost as flat so restaurants

in industry that not is basically state steady we're So, recovery. where there a in

from up which by need a deal, to going two sales has for that see doing obviously, which been them, pricing, things. it’s for driven we mostly big our you keep If customers, means us,

market U.S. and years the in terms new in well come. especially needed and restaurants in we of quality. especially their way. the with the where have that, penetration. Europe. going first months team to live well to we today, reducing to the And market is in do and confident we're world It's the I have world And innovation, in be we the will I and is changed when the is hotels the are keep business. going to over improving total solutions right offense. the on look for cost that where point to at as is to of to now it feel XXXX, second last probably going But in And the come. that as has we operating It's The are It's customers one

Shlomo Rosenbaum

Scott. for is the then And one next maybe

a the for how any after we fair? getting -- more the a you've to of interest around of in income, relatively that going items this then change you a had step $XX income the last you assuming And normalized $XX other is this, in should is right like be XQ Or lot? that and increase markets? does to expect, I'm which somewhere pension are with you interest oare sequential change -- Is close below-the-line it now, million to three up what the Should feel expect million expense a or of stock been -- from something you continue expense. the sorry. where some to relatively kind expect Just Do quarters. to

Scott Kirkland

Yes. the I first on pension. talk guess I'll

increase. to talk debt that talk And have be climb, just that of bigger in be to as expect continue a variable specifics, sort QX. headwind hikes being It It's with next into pension next to as as would on increasing will the you to So too to headwind. addition, of increase just rate the sort but continued go income we call XXXX. But other year, expect rate. of year. similar quarter certainly expect will be as then, to pensions QX I on pretty our in I we'll to it, go and to to early about interest And be to expense impact QX into would similar headwinds we a given a rates, pension about, a where expense, think we there

Operator

with of from Harrison the Research Mike is question Seaport Next line Partners.

Mike Harrison

the was your seems some think industrial. conditions, about better talk trends a the holding industrial of Maybe than some some within you weaker you about And QX? seeing some a you're whether others are markets talk like within it demand pockets broader that into little in industrial a general about I about specifically of global up the concerning up slowdown, And what areas or are if you're you bit talking could where recessionary hold about business. look as of Europe terms or business? more the hoping that better little

Christophe Beck

great many industrial, years. it's is more a customers. even story has industrial water, And essential we for Mike, by for becoming our something Yes. when mostly been many, that's which say driven

the water about and in footprint. which energy cost it, carbon look think up is various paper across scarcity, is XX%, most to of water Industrial, drives because forward, F&B well drives downstream drives When XX%, water because is but as segments up which is importantly going and So I XX%. up consumption up the XX%.

pricing So, business been that at rather down And the pricing innovation. as margin as margins as ultimately it's dramatically the It's in I industrial And business. XXX is technology quarter well. very strong second very in a in why new from so driving third and as the pricing is that very that a It's well. that to we at had which things we earnings the say, as on quarter, or second and XX% very strong great in healthy, terms it's good with the driven have the well second. that's when margin in And XX% that's doing, and okay, market business, up business what quarter, perspective digital likes that's both you inflation that steady, basis third in that right And eases, pressure a well strong third should the that's we have in well. group. when points know momentum of improved by, we're the in gets look happen, only XXX we hear the we know know whole

as of penetration mentioned and we're softening some innovation. the yes, petrochem well Jeff, business, on, the industries, them new feeling to some as one early mentioned that we being before, which mitigate in with for So, of with reasons

quarters let’s come. in see business good, months happens the and so what to far so So,

Mike Harrison

give maybe what All are Thank I associated timing a guess $XX could in cash the segments cost I then, benefits, right. with terms hoping the costs on what $XX you. of more And million little And of that proportion benefits. the the see you of bit in program, million savings? greatest was detail those, the of should

Christophe Beck

that said, all you to proud familiar team leading years that I've as been really region, so in it's what very story. And I'm leading done. back, with the So, has Europe, turn there, with around over

had last that You at was the Well it money. to maybe been ago there X, perspective. that Other was or XX not than has a our that, was CAGR be. growth that and making growing business great years years remember look XX not place a over today, when a well over large I not we X% from

And to as grown double of that XX% well. Our profitability time in well. close of has to XXXX, digit OI terms we've from as north nothing in moved over

make stay Europe. we've term I sure great what is importantly that to not we successful that helping the Europe journey. can doing on So that a short-term, only in absolutely are story us want the that had but most mitigate we long for

start most, are So big to deal to we a security. the This customers. it's for to where going question supply, is going your on work with our

making in the So streamlining our that can product have sure we delivered best cost network, Europe. of

So it's be going the priority. to first

will one our well, well cost as leveraging second digital SG&A as The in be automation. structural our so

Third past over well done years will we few be infrastructure with have SAP well. work that leveraging the in regional G&A as backbone the all as the

I've years We no come, more kind that is really to which more it what decided organic in the And come. doing in generating short stream the the this to activities as fashion even of matter have program really do in done announced. a so have we've order months Instructions] it's get but the to to So, on these in [Operator would we accelerating term. would done long-term, for things

Operator

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

Dan Rizzo

Dan Rizzo It's Laurence. for on

get on if If there the take something was what things about other in variable costs reduction there's program. to can was Just you said are if worse you that out were do I wondering could Europe? cost significantly just piggybacking temporarily there?

Christophe Beck

Absolutely. will. We

of life. Europe I've half my for So, experienced

what's an demand. Eastern we as open. now on quite for especially right impact familiar the in It's extreme mentioned impact the industrial an very So with my war front. having know, impact It's with an It's on it's as on the happening businesses. And supply, on having with well Europe as having situation. cost, I

in be important includes And to I a about term, ultimately just the thinking November. for leading are because for We're only come. we and everything do can pretty long talked doing for months Europe. to better region saying, short take. most an early everything a know it's some all us. many importantly, performance, tough can well, is and, So, now. all may change sure, preparing people winter yes, Europe that I've the right but extreme in as in will pretty measures we short-term But we're so and quite we're I in bit mild scenarios of about before not term that Things that's camp

Dan Rizzo

U.S.? or but was we half everybody assuming it right but And sort the Are North America think next the is like then, pretty of and that things you're in that programs World, okay a that things be the targeting if there's or so efficient or better markedly if setting of the if there cost year. margin up things looking now, here at you as expecting about worse wondering some the implemented Rest elsewhere, seems recession there? could get more there second I of region is Obviously, much are in

Christophe Beck

timing. but be, could all that's a of It question

done well. that do We wouldn't supply as automation. the the digital we implementation. things Think about Think have over about ERP about will Think not network time.

to and next we order accelerating accelerate in continuously but them, really our if turn be years plans that lead we To point plans would had the few productivity along. worse. could because clear some would all before, your to have We it's over our things improve we restructuring,

Operator

question W. next The line from Andy the of Wittmann Baird. is with Robert

Andy Wittmann

year. because we seems into like and a just expectations to as I bit about guess the you for pricing head pricing have little it the important I next a really wanted understand more variable

X comparing of price or certainly store you're next materially And have mind should talking the last is the the I in to the Is to first With side next focusing or on that isn't quarters you're gaining about quarter side the seemingly half. how bit through comes X sometime another more on price half recover two, Christophe. price, the say middle our the of in there to about be worse. little that? increase for Or question share out, the customers cost the side wave your any? cost here. is unusually thinking of sounds a second compare guess we than expectations filtering that if increases on the from the But, current large cost evening like that it on

Christophe Beck

get strengthen, our Pricing kind been them let skis rebuild my right In over the run pricing to to the get primary working gotten new on towards very over going making the keep going as the we what's next the it's price, But they've much for that here. driving leading But we're too QX, margins to a be it's business. in team. is to XXXX. the especially ahead The in I'm driving last of commercial quarters, Yes, clear. going five as sure order well me quarter. focus. really pricing it's objective of we and organization, fully. five is This billion while last quarters, in $X

than that we the maintain go U.S. in for same for done quarter, the keep world pricing that's third third strengthening as it's it's for the sure well because reasons really So on quarters in well. discussed Europe, always clearly long to pricing, saying primary penetration, as all for And higher to being the really value QX to incremental can And history. this go our of in while now, around and at going is in as time, business. quarter making business, why I'm that the new that risk most as we've well new go be been to focused run provide we come, customer we've with in for focus over in innovation, the or the offense to that pricing, elsewhere secondary shifted the we've the the going as we well in call, really

Andy Wittmann

or how might be better helpful it. at if the information about where all, received Got little in well? retention, of the talk bit pricing affecting is it's Could been a worse parts as any you customer business

Christophe Beck

very been it's far, So good.

market. to Our can't times. compare company really chemical versus well. customer price-sensitive, changed with the why a We going do are up a customers But always commodity retention time hasn't obviously it we're company, that's taking and pre-pricing down and to that's

we to But Ecolab is manage the us cost our And used down. want to, going right The and you going when our ways surcharge means pre-pricing it's that pricing. at As of the we'll we variable we we operating is way the work. customers know, haven't go deal go the is that that's structural for the majority a or than carefully And only do it's that deal value, lost it we as vast to that total create because we customers well, a ultimately for good forward. we reduce real good more we why with that don't energy that's which that as in we do can long up, for But for keep customers have we pricing good pre-inflation them, and very keep well, it them, that forward. run.

Operator

is The the from of line with Citi. Petrie Eric question next

Eric Petrie

bring more How bit little customers value What those about that a your industrial share climate gain talk intelligence and of you table? split do net you to zero with Could Siemens does technology goal? the towards kind offering?

Christophe Beck

question. great Yes,

that's well offerings we power to and reduction that's leading reduction as our power get of when water or as is There is power which zero at water explain strong and at management Siemens we're going energy helping operate we the and reduction reduction Siemens. by the say water expertise carbon energy, our forward. reduction as is cost leading power, reduction And get So at water component, it help way together, customers when same from it. time. to we and where having and And have our to mostly customers. we reduction the both experts with bringing together, other to both energy can is less industrial expertise, as And simplest well the well, industrial water water customers that's well component,

well customers. good So, it's we bring the two we joint together, for a digital our of joint as and systems it's between companies the technology that connect offering, that it's

Eric Petrie

you that expansion, Is $XX Purolite an on And to how annualized million? expect basis? the to back $XX do it million uplift much ballpark? EBITDA Is then, circling in the

Christophe Beck

is capacity disclosed obvious so but for to haven't that to the it's years for give we know that two-plus Overall, reasons, enough us next going come. going we

the the we down that current required the are as backlog two, time already from speak pipeline as those well. what's we three right So because now, we beyond and have working for plans some road and as demand have well years building takes we on

So to future well we're same ,it's or going as that's for be and better, 'XX building the for on the trajectory, and to to as come. years going the XXXX, expected continue in even

Operator

Partners. from Kevin Vertical The Research next the with of is line question McCarthy

Kevin McCarthy

by wondering to Christophe, you and region the most compare world? and you you made you've most the contrast gap progress where how your work have where feel price do? would cost the of I'm

Christophe Beck

The in Great is question, America. North Kevin. best

it customers define is being a the to the price you one whom countries, Canada. we total have place. their as the the It's strongest the rest have at of But it's reduce as toughest, Europe complexity, with toughest because very good world have relationship always team. because well. China probably negotiate the our ultimately, we well value as toughest, We time. then, U.S. region with is two cost in with well, the help same the our been that’s And between, used and market the way to

Kevin McCarthy

want come back I to price contribution. as a follow-up, then, to And your

So, had you XX%. acceleration nice to

the volatility actually looks pricing the Can in Europe. fourth in you terms come improve commented I understanding like from sequentially. help base U.S. us versus you as down natural should you that think a base surcharges, mentioned in it the case, the might of quarter. contributions gas

I'm might you shortages so, to about also recover be more you're the hear to the thoughts if And hearing moving curious paradigm, trying surcharge potential that We're through have for that And think there. happens? equipped on to do parts any you it well just understand I'd diesel. there.

Christophe Beck

last feel a a our so From supply planning practiced resilience good about while. So, We it. the quite with perspective, we starting part.

Now from fairly with customers. fact structural allows or us for react quickly, different, a than term, that which that long obviously, very cost we agreement perspective, the an other, to is surcharge our have the of diesel price, is together which

structural, one-third growing as knowing energy is it's And We long energy as structured good. because well the equipped shared well, not as to versus Now, in structural want term, so energy surcharge, of that is price the as that but and to two-thirds earlier, it's pricing can an make that with and sure for structural some I've surcharge well. value perfect which the by surcharge, much be terms true for it our roughly line the part of between as creating backed customers thing. surcharge energy we're aren't customers the deal structural

a let's good my So proxy. third have that structural we've for directly time. But in well price, the which accommodated two-thirds, same one as at is

Operator

next of Morbelli The Gabelli the from question with Rosemarie Funds. is line

Rosemarie Morbelli

or well, When strong, et kind which has seen am restaurants, quite into hotels, look at inflation a institutional change also haven't to decline travel translates due some I Are Disney, you yet? been you we of assuming cetera. cruises, did recently seeing any

Christophe Beck

the the with their bit. and energy us yet, to general, we've market, not they from of important no the travel why institutional especially new, with the can anything is is gone biggest -- challenge for over familiar has And not seen more customers, okay, we but operating it ultimately, in the labor harder that's general cost The us, haven't total food, which the because do on down the cost quite they for been guest especially the there's pressure a years. Rosemarie, We reduce our traffic, is the gets for increasingly the had has of them, side. that starting shortages. is labor need that so and now you're becoming doubt service that impact that, what but with institutional cost us, And

penetration, bottom has which demand the it's or probably consumption and get there's going down the our But and need is why new room as markets the as your so stayed service customer, means to us end to stable well, new as do Well, that around You world where to well important reasonably yourself. new quite experienced products for well, innovation. across that is to hotels line, of way you institutional.

Rosemarie Morbelli

Ecolab or was it Can a I better lithium and then the area is where one And for Pacific Europe? feel Thanks. give the helpful. in using lithium wondering, yet industry as you Asia is us because S. from using mostly products. your not mentioned That and what you U. in Okay. is

Christophe Beck

a salt is goes enough, lithium which is in through screen, that way, solutions on And for from extract one didn't technology low Purolite. allows because which Yes. with radar water. Lithium have interestingly as the low and even system, U.S., we as California, has been you before at new opportunity you low time. lithium lithium and Purolite that customers extract There's brine, the remarkable a our only acquired we which by to mine energy today, own that a the cost same it well, waste pretty our in solution can and well we at of

world it, other products we use we're a driven it's booming planning So, from plan technology cars well. is and as for by of to but EV that's lithium didn't because definitely because around batteries kind that the

for a is didn't before new this we we into Purolite. segment plan that So, that acquired getting we're

Rosemarie Morbelli

on of There coming going confused. of not any I a project Salton but lithium aware no in I'm a Sea, mine California. it. little with in out am is the

referring to? mine which So you are

Christophe Beck

a to the project, meantime. well, you Purolite with as for But we is evolved us. back. exact in remember name. mine that has come the We'll just exactly and with it's was come was the I'll ask I don't long-term concluded which That back deal California. that in to that really a before Andy of concluded nicely name promising

Operator

Byrne is line of Steve Our from of next with question Bank America. the

Steve Byrne

they have customers customers And more I they a share expansion to your it? might wanted it you is completely water, side? Is the accounts that are you? how pick that up that of would way Siemens. your characterize different have accounts understand side, a some new to energy energy-focused. this that where better the might So, to pick set in this you on you collaborate primarily with you a opportunity with for essentially on characterize market Is fair this this might water Yes. relationship of is support

Christophe Beck

obviously, that, in other words. of combination a It’s cross-selling,

a the So, plant, and customers for in we joint don't that developing are plant, into so value power it's solutions have, at plant. a they some manage in way they we customers a don't other we same our bring in time, because but manage around water do, well customers the we electricity them. adding for as something But

both from well. related as are end and So to end,

only our applications continuing good So our is good is and customers. for both importantly, us, so not but most for of Siemens Ecolab,

Steve Byrne

that do could water? any but yours, expand such see risk Siemens more become a competitor of into evaluated you've sure I'm just this, as you And of to more

Christophe Beck

is in ambition in electricity chemistry, No, because providing. that expertise customers. service And power this have we're an have. become planning expertise as either not well management, have in water not our for we they to an don't industrial the expert They're to that

the very in of together for where work So, with healthy good our we customers two companies. place a between the no we're risk

Operator

final is from Our Vincent line with question Morgan Stanley. the of Andrews

Vincent Andrews

guess I just one last one me. for

down getting aggressive $XXX cash working we've flow year-end? your about at year-over-year. operations, also think, just in looking Just capital, million I'm I on because not inventory you'll the is of wondering whether because specialty And send a from kind levels to be earnings kind desire down need the seen to to of come suppliers a the chemical sort of raw prices raw amongst messages fair inventories to as of companies through well. season take that material down But number

something that on? that working will is So, you folks be

Christophe Beck

to it Scott. pass me Let

Scott Kirkland

take I'll for that. Thanks Yes, question. the

making our to look to especially ahead, just across we been working and you've but in seen, As investments look customers. we look invest we capital, inventory of inventory. sure is the in very last investments because supply cash both growing, we have continuing and working as as has And flow we the pricing investments the in to and also at as as below free capital in probably AR, continuity cash the Europe both year the can conversion, our strong supply we're

we'll So expect get getting have we supply do to accelerate customers not fourth most is still levels year, towards specific the down can quarter, expect because we that sure to historical free XX%. our strong and for bring to as conversion making into flow our actions very inventories the But us, around have to we for cash important.

Operator

end this closing the reached and Mr. At question-and-answer for the we've you. floor back of the Thank time, turn session, Hedberg I'll to remarks.

Andy Hedberg

the be associated you participation. I discussion Thank third and day. slides conference our for you. website. conference call available a up everyone and the your has This Thank quarter our rest of for hope will That call. wraps replay time great on

Operator

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

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

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