Earnings call transcript Q2 2023

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Operator

Greetings and welcome to the Ecolab Second Quarter 2023 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Andy Hedberg, Director of Investor Relations. Andy, you may now begin.

Andy Hedberg

Thank you, and hello, everyone. second call. Ecolab’s to welcome quarter conference And With CEO and are Christophe Chairman and Beck, Ecolab’s Scott me today Kirkland, our CFO. our referencing are of and at discussion results, our with A earnings ecolab.com/investor. the slides on the available results quarter Ecolab’s website along release a estimates cautionary in Please of which future moment these associated the read teleconference this performance. that and to supplemental materials, the take statements state materials include differ forward-looking materially results from statements, projected. are These could and those actual the in Factors results and to differ our that recent section Factors cause most described in could actual in are our Risk Form XX-K poster materials.

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

With that, to comments. over call to I’d turn the his Christophe Beck for like

Christophe Beck

to and Andy, welcome you, Thank everyone.

strong QX the once to compared helped momentum further of improvements to earnings average our shift inflationary quarter. of trends our as growth expected the last making an historical upper and clearly and good remains performance QX, unpredictable, In In delivered range. our that’s delivering confidence continued another again to offense getting ahead team end execution get midterm to our pressure in very easing as stronger. environment continues keeps traction gain Strong us well on quarter, building that

overall organic Organic X% of growth, sales the delivering respectively. Elimination trends Pest strong softening with steady. volume driven XX% growth. remain and steady X%, Despite Institutional end by growth remained at recovery organic Specialty follow, demand, market & and XX% global Industrial

in from in In news, other QX to Europe good QX. X% growth excluding flat volume improved

the organic accelerated per by further, second. XX% are grew trends earnings operating from first XX%, growth in to strong improving the volume income So, quarter that share XX% in Adjusted led too.

last targeted in XX% new kept further pricing expected, and but performance, news. grow. including are year, strengthening which than working remained continued Institutional, Although than is is actions were costs strong harder, Sciences to year-on-year X% a sequentially Healthcare. on more as higher our getting bit further at Delivered product good pricing Life comparisons We

new had pricing penetration, sold Institutional share its which second in continued in on strong gains and business and as continue value recovery, focused delivered. to half. solutions drove expect productivity quarter remarkable improvements, drove margin Growth, served, another we it the and sales very strong units

innovation positions ultimate a technology, digital good market evolving foundational Institutional Additionally, for automation of labor in use consumer news in the the driven and leader as us. transformation, increased undergoing habits by all

Our highly which not businesses Sciences attractive Life sales. pressure, to was to the market flattish immune short-term led

takes if competition. much is market short-term Life offense. Sciences transition quarters we’re to And get to staying back the extremely growth this a better on strong. However, than few growth, Even potential remains strong

income major We’re operating opportunity to and as short-term with share if and invest an biopharma it in even results taking in customers in and undisrupted further gain capacity water, pure this to capabilities decline.

in rapid we’re our promised, transformation is rightsize also to As announced program our first progressing the Healthcare. cost This In quarter, well. restructuring we continuing a structure.

is American our for drapes become be hand, Surgical reduce Institutional our step journey and protective our Now, critical next infections, patients Healthcare business. of leverage yet Prevention. will just hygiene Healthcare significantly transform expand service mass further operating hospital-acquired reach business over to serves business, profitable organization we hospital to from will Infection improve on equipment which a exceptionally customer a separate, into few rooms, businesses provides a environmental other sales the focused and the in Infection which North to surgeons, well. Surgical, also creating North stand-alone Prevention will and the two field This on that months, and American provides productivity.

in which focus offense. accelerated QX, improved basis XXX to improvement, also continue we to we While our points on margin shift

new on to to opportunities achieved corporate reach. managers pipeline by business account drive a by enterprise new focusing leveraging expand prospects X,XXX business penetration our record Our and

than promising service exceptional resulted gains. and more new deploying field associates business, in Our which on sales share focus their sharpened XX,XXX

on X,XXX cost Our of innovations, enabled reduced focused better natural outcomes remain a through at scientists which use achieve breakthrough resources. customers lower total to

up XD, to IoT one Ecolab customers investments deliver and ramping to our deliver X,XXX the the customer field field digital customer in our technology. and exceptional experts, in unique value, best-in-class also we’re cloud productivity experience. an digital We’re empower With largest further uniquely industry positioned our improved to of performance and unleash

our some Day of September. experience in You’ll have the this at Investor opportunity to firsthand

the In exactly summary, we quarter wanted, strong bottom-line environment. delivered the way we challenging despite the with and momentum second top-

to further. costs delivered progressively demand ahead, ease and to product for Looking global anticipate remain high, but soften we to

this this to environment of continue positioned of year, in the the picking keeps news that win expect is second none is well as volume margins expand good half to the new, last to In are gross versus year. improving Although momentum basis we to up. points growth XXX and our we XXX

innovative as new out we team our grew expertise our and years, few last maintained the solutions. During rolled

rates customers retention Our from shortages. as high protected supply remain we

as margins Our organic in the to and income value. with in third to improve reach quarter ways, increasing drove exit we as and we while earnings year. thoughtful recover, XX% With pricing to operating further growth to customer strong this, we XX% continue our continued accelerated expect the momentum adjusted

questions. will to we of industry, market our as leverage the the capital brighter. to the stewards the look $XXX with our words, we’ll and continuing increasing and has Finally, science high-quality cash capabilities done. to always dividend, of good our reducing to business, in billion by Most grow in looked In shareholders, share other future we’ve never serve. best returning invest importantly, team, forward our continue remain your we I

Andy Hedberg

concludes our formal That remarks. Christophe. Thanks,

XXXX note, Christophe Investor be in as mentioned, a As we XX. Day Q&A, Thursday, September Illinois we’ll final our headquarters hosting before our at Water Nalco on begin Naperville,

office. or any period? my begin you have would attending in interested question-and-answer please questions, you’re please the If contact Operator,

Operator

[Operator Instructions] And the with first line from our question Mulrooney William is Tim Blair. of

Tim Mulrooney

today. me for question one Just

quarter. to little showing bit noticed the little a progress to flat pre-pandemic your inflection the I It margins, if it that I you of Because in prepared you. in the first And think half bit dig remarks just institutional a Thank this drove margins. type jumped talk the that of back quarter, they Can your happened on those in what now? touched up essentially were that about second significantly in on year-over-year kind is of in the more. institutional you why margins, rebuilding You to second wanted in but back year? quarter, this sustainable expansion just

Christophe Beck

good Tim. as well. they quarter a remarkable had because Thank in largest Company, single question, and in is in quarter our the QX you, as a which followed Great very know, Institutional you business, QX,

how been again. I’ve with team once the impressed So, delivered very

So, you operating income XX% up it’s mentioned sales XX% growth, growth.

we which well, one, a team now few the new really, sales is that servicing gains well. and the back. made executed extremely years That back and few that on organization move organizations, one we service years perfectly customers So, with the what’s our a new important right focused is driving while really working was other And announced model, well. focused this really

customers has by has done pipeline, So, driven share highs we’re been past that gaining the executing has which this business. total as Pricing has value This they’re and business new need that months, business the at over few with delivered a excellent been it. good very job well, an they’ve which delivering new record for reached business. new

usage well market the the we’re the Ecolab at of went in that stable Penetration ever, Certified I than that’s unit of with look is more solutions in if which as in Science share more number well as driving versus with units is quite up like past business. as So, XXXX, than well, remarkable. the down, programs that the much

one point, many times. And it I other so mentioned

So dine-in is down since traffic full-service in XXXX, traffic the foot third. a restaurants,

a share here. same up of gain XX%, Our U.S. so segment sales massive delivered that the in that is in we’ve

closely delivered we expect XXXX. momentum to this had we in we from the I be in terms, So, XXXX, OI close in to means we it’s as think only year the where be, were could come. well, here. very And well, well dollars continue dollar would that pretty which in QX in close upside quarters QX even that this -- to And that

institutions It’s going. and even like we’re by where customer we lot and new did of a productivity, fundamentals of of driven So, more where of are pricing, really well. service, business, I

Operator

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

Ashish Sabadra

in back cost half pretty the delivered was a quarter, should expansion on product and gross I of cost as for there was comment you was those but the the solid to thanks quantify margin in expansion how product Thanks. we the could was help to back providing ease, for the wondering it’s quarter. well. gross costs delivered product the margin half. possible So, quantify think if I in about the And obviously year delivered if the color on wondering what

Christophe Beck

question I’ll Ashish. Scott, you, Thank pass CFO. that our to

Scott Kirkland

improved really saw you Yes. margins the up expansion but It nicely. question. points. was QX, Hi in said, Yes, Ashish, modestly for points, up thanks XX QX, as basis gross XXX in basis year-over-year great

As said, continue maintaining that seeing pricing had new in peak pricing a well continue already pricing that to pricing the QX, drive and as in hit to Christophe that drive bit. as new achieved easing and we’d then DPC but inflation

as easing the basis that year-over-year. expansions as is in continued DPC you XXX is drive going that, well to that help with points as said new on XXX inflation pricing to So, is margin what

just as in at the half So, to rate we the up DPC year. see second be expect year-on-year, of continue to a we smaller

X% up in QX, in QX said, low-single-digits the X% we in probably half. as second So, and

Operator

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

Seth Weber

strength back go in the a to for margin the wanted minute. to I institutional

-- that where just you’re gauge have versus of to talk kind is but process? in at a initiatives to, not I’m you can cost-saving how actual you the the -- the have trying that on cost Thanks. versus you price where of of function guys us of expansion the to kind margin volume clear Just, program? you’re started provide at much

Christophe Beck

done that more the well but question do by well. provide Scott, main that I’d well as volume/new and really pass to we details of as some quite business so, pricing announced have the drivers, to they’ve that? so and earlier, two on also fed I’ll Scott the like new institutional I restructuring is But that business well, before going

Scott Kirkland

Christophe Yes, happy of institutional Yes, as margins that. a well. are combination said, do to very It’s everything. really doing

expect of of of to this we that a year. XX-plus percent program, the this program expanded earlier by it, total $XXX of year about end million. call of talked vast part we as it savings that, expanded realize As majority run the let’s the And rate about had

the end We’re for business. progressing pace about institutional, that of as program for that, that represents as the the I&S QX, and well track full through on the

Operator

[Operator next Instructions] Suisse. Roberts line of Credit John The the comes with question from

John Roberts

a Can why North smaller in so Thank Infection you Nice Europe? and Surgical between of rough quarter. much America? business give us Surgical Healthcare split you. And the is in

Christophe Beck

Europe, in on I’ve in is mostly And prevention in half-half. different business, why talked the is it’s Infection about Prevention, reason it’s in bifurcation which Europe, infection So because today focused it’s already. America, almost that America, North roughly saw the a happening North

Operator

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

Josh Spector

Just Christophe, them your about continuing I’m by around comments volume to improve. intrigued

of I some of I Europe. a sizable little think lot a the been for companies it’s about trends bit still relatively in a market you. cautious have mean, And

see you gives when And So, that, that what you up improving? that confidence are you that the that sequential? or is talk is drivers that about year-on-year, about volumes

Christophe Beck

it’s that And pleased Yes, over business. the volumes driving going that’s are flat in But soften, all X% our I everywhere world see to to end in tendency, year-on-year, plus the everywhere. by honestly, was softening year-on-year improvement Europe, around so quarter-after-quarter, we the in And from QX we to for Josh. hopefully, It’s not excluding QX. way driven so a the time. most will change and that went once the true part, so see again. to it’s so Because have markets, well the as the QX,

counting that. not on We’re

continue is the clear, market that in next few will Just to end quarters. be really the our soften trends assumption to

since all-time grow-to-win as are It’s need a we customer or Industrial, executing driving call by In perfected install. customer. is new This by a really some driving equipment so is business we fundamentals. right deliver the And business. over it’s high old-fashioned it’s with But obviously, to growth? it, like in we practice business which pipeline, takes pipeline, it, an in How we businesses, It that good. at to now. heavy bit it is a years/decades, new quicker, more new it, is our that need starts Institutional, by time way, have we

also solutions new good a is it’s cost customers in so of within priority is as us we very Penetration a go customers as execute, is because to lower well improving the to Innovation existing because anyway. place. for well. those This

all-time an at also is high. pipeline innovation Our

So, it’s question an execution as well.

around we So world. to and in the while especially Europe call other markets follow Western what in in in we done, the closely China, after America, markets get that mega North the

businesses, those the time. centers growing So, doing our well. data are as That’s the Microelectronics, driven our it’s also And same business. reasons. growth to by And XX%. like new big really at close that over well water

So, can can’t we it’s really control, focusing the because what market. happening on in control fundamentals, what’s the we

Operator

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

David Begleiter

business. how Thank Christophe, more you to relative the last quantify investing year in absolute you. this way Any on a an either investing are you’re or year much basis? than

Christophe Beck

question. Good

as well, forward half he to question. Last so I a looking think that’s time more for he is our CFO questions. had

can do glad I’m tandem we in So, that it today.

Scott? So,

Scott Kirkland

invest the we in to wouldn’t specific I Yes. say give say you significantly David, what than different here. number would I the continued not past. business have a we’ve I’d in is,

through few continued the in the years, the we’ve investing business, invest adding As maintaining we’ve team. to last capacity, the team, said in

that So of not margin any in proportionately, you’re seeing the the what it’s driver that big OI expansion, change from investment.

Christophe Beck

one that, that our maybe David, business. I’d is add invest as to so differentiate we like we how behind But well, comment to

faster. share a little growth our margin as thinking grow call we’re as about that They higher So just well. investments because for engines how We well. a more have to bit they

better get another need focused bit which could in as ones investments more And the transforming that are profitability of our that to get get the then, they’re is better drive become margin. kind we They third margins. can they profitable. to less We a category, get have have less, categories how until They businesses you more but the right very well.

best So, by we the manner, can. really by thoughtful we we market, do that in a way business, invest making sure

Operator

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

Jeff Zekauskas

Your sequentially of are going growth. up X%. SG&A your which cost SG&A is goods rate? costs up Why is sold By sales your rate it at about of X%, a lower are up contrast, is revenues up your X.X%,

your I it’s correct? raw been lastly, So that you it hot that like it falling, giving that’s looks take then Is and materials some benefit. a are And summer.

that third So, in the you treatment water or average better quarter. demand above gives chemical

Christophe Beck

you, Thank Jeff. question. Great

Scott, guess. So questions three for here I

Scott Kirkland

come last year, The over X.X% sales We’ve SG&A. the really question. actually SG&A modestly I’d Jeff. over -- on headcount Yes, touch I’ll quarter. up the the increased. in you Hey underlying is What tell Good strong. was year-on-year a has second remains little the has down productivity the while

But Our as just reminder, XXX was a SG&A over down the ratio in about QX. points we’re flat basis last three years.

we than More what of driven performance. strong that increased. SG&A QX half incentive The was really compensation, the higher is our call really and by by driven

I I as that second on half, what in to be the expect what around QX. you SG&A, saw the well would dollars is stable in pretty SG&A say would So, that from the

also But made leveraging recall, longer year. expect mean that last would -- in digital we’re might QX, drive which So we’re high-single-digits Certainly, for the going mid- the continue we to QX as investments a time. sort productivities year. you comp as we’ve over to tougher it’s of the to up in term

Christophe Beck

SG&A. So, reached said. have so question here. Maybe had We’ve short is the ratio? just of SG&A because that’s in Jeff, so that what terms many comment additional on on The bottom times, answer you no, of Scott an

the organization. to implementing, performance technology the works been plus All all come improve will of digital our we’ve that

say. our time, of less customers. mind of if remain well, dollars is we the we automate spend that SG&A because is We expect the kind work, year, So time as transactional this at quarter-after-quarter, I not slightly driving same keeping but time most may stable down productivity, in for more with that are headcount spend which to our

delivered faster a was it’s It question bit cost. that had easing mind, product to important ago, we is two keep in second years versus but up on it’s expected, XX% pre-inflation. Your still

pricing, pricing trend is and us, well. margins that is most that, to really trend work of obviously, and So I’ll improve on obviously, the new for going well. positive as a is But which take

summer. And the your question on last

countries. We XXX are in

at So, business, the impacting it’s way ways material the we it. in not look

So, at no no that, least influence one. significant of

Operator

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

Christopher Parkinson

Institutional the in underscoring dive more just is America. have volume very little of the era. on I down a on And by volume you trends Just just geographies, obviously, the various what share bit helpful kind region. was to in market North the specifically hoping given commentary side, the the on volatility some just ultimately post-COVID of gains, confidence all

and extrapolate, any heading on where is opportunity and the into Just just that, trying ‘XX to color ‘XX? real

Christophe Beck

and been Europe in the in Good them as all On pretty Greater mega it’s here, Institutional, a America, China. improvements, the true which again, call Western progress in been North on fronts main of broad-based, our markets, then that’s the the well we markets, X which are terms at have though us. secondary time, we in they’re And our as in focused. for terms all and even very investments of well other is same doing priorities in

exclusive who they that that around It’s do us the deliver well. is define want, same world. time leveraging are the customers way of at is improve customers. in as an The so Circle their well, when The same all guests, America way volume North at with means our -- in to the guest as at well Customer, they at modern performance we A like program the we as only Institutional, mostly customer organizations, with Certified, our The to our and have exclusive get partnerships helps Many global deliver standards or as improve time. secure it, they to on better Ecolab anywhere CTG, satisfaction enterprise their more helping quality which CTC, today, the or that is can franchised focused describe to Science close the what Globe, products, grow Circle sale ultimately well level which central even use really

and managed to higher customers have them that it’s margins. what keep those solution not but the is initially cheap last lower a and ultimately the good their shortage cost, that have innovation margins by labor. better years by way And years two very a noticed labor to labor our automation. prices would call least, I improve have And automating done they’ve good it helping last terms to improve had used in Institutional be because of focused of because on work margins was the to

Institutional. So, the the for growth main those are so drivers in

Operator

the from Barclays. The line next Patnaik with of Manav comes question

Manav Patnaik

Christophe, I perhaps to splitting understand just is here. focus, the tried you things I wondering us guess, could how if in business a was Healthcare, help apart different you’ve few Healthcare. from the trajectory increased obviously growth change going Because in

So one last attempt Just would portfolio? the be as in just guess, fit wondering, some thoughts I does is longer-term or this it well appreciated.

Christophe Beck

Healthcare. Good question on

money so committed making stay we been a infection have business do commitment point growing for what’s and pretty I hospital-acquired time So, hospitals protecting very a quite vital, not The change. reducing we to a clearly ago. of is so year has with will focus. something that what company, not a I our And remains that fact serving that Healthcare long has made as

we’re doing a plan. very thoughtful is what So,

get want I to moves nicely. make going we that’s to It’s growth, growing a quarter-after-quarter, business it’s but We’re that us place be good that profitability. a high are where driving to not

cost evolving really pretty in And that’s The in North to first do in was Europe, so nicely. to restructuring cost get and base. move right the QX, America this

ago focused is front. on drapes is businesses, the And organization different on step, as patient’s, I we have infection They’re a two afford parts make and and much those cost announced equipment more Prevention Ecolab our profitability, with have traditional which and as of our wanted a They’re share have that those on to well where the we and the surgeons’ release than second hygiene want to delivering Surgical, hospital. is different in lowest serving Infection We’re which focused. protecting we today. to Prevention really to we with very business on two which businesses, prevention. business, in that to one call, them separate. week you want Infection the the that well wanted plan is structure Well, most disinfection, more two the which cannot And importantly, which business,

service much huge other hospitals the terms already time, the market cost Institutional institutionally huge in reach get that boost hand, on on productivity. serving a force On the leveraging well, in the get we the immediately they sales today North have and of same hospitality broader food in a and side America, at because

there, thing. and kind So, going sure well of with of few focused improving overnight, take, in doing but good kind so to which Infection get Prevention our performance, is it’s to obviously, almost business hands, is a margins, Surgical going months business, quite the while business. It’s a it’s to remain a

good place, we business two those businesses and ambition step Healthcare that execute next a in have ultimately. that’s have better towards we to the So, our want to a

Operator

The of next Stifel. question Rosenbaum comes line Shlomo with from the

Shlomo Rosenbaum

make of folded want organization, going actually the on to question. you’re it does their leveraging kind If also Infection on easier, you of you be the Manav’s off piggyback them to get Is to Institutional? want pieces? and what business can’t these it to And to is businesses, them I bite-sized kind to in sales into going of by be Protection own? its kind place separating to service sell if be going standalone be

Christophe Beck

to question, So Shlomo. in a unpack your lot

let’s businesses. structure, more our the we’ll about way. comment business, going to going One, Drape those not it chain. I’m have be our with options, future. supply But standalone us Surgical It to business put own is gives So, that divisional two its

I say. may if So verticalized, very

much a have while really time. focused driving well we’re commercial a cost is business, innovation, get same R&D, business both strategically, you at Prevention so going accounts, on have more going where best Institutional, the reach execution of much be as Infection The corporate better structure done to that and we’re by that’s marketing, worlds, on going to to the because division on

commercial Infection focused So, separate verticalized; a their but arm. division, businesses. Institutional as two Prevention, leveraging totally Surgical,

Operator

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

Andy Wittmann

you there’s of all the was the and need and cause things to perhaps marketplace. elaborate like Sciences maybe of in that’s disruption? dig the what’s that on years, short-term that, period, about few we wanted how vaccines short-term into I I don’t to quarter Christophe, Or could prior some perhaps in hoping address performance with I the that other comments, and related to the Life maybe know. this, come off disruption COVID your the just

you have talk here the few that to that necessarily quarters. But confidence could maybe that you ago? can the the And sounded or that I Life detail the comment be any in you give Life just to newer to legacy year you not to the filtration in support like and in the a It whether if business was a third growth right the it’s recovery. you’d said, think including going Sciences that’s or so business return Sciences, acquired quarter,

Christophe Beck

you, Andy. Thank

So, be we It’s great when started to of to the new way been and it’s Sciences future a going going forward is rolled and since is drugs is while past years. the business, various producing over demonstrated XXXX, a pieces been Life it’s of together. better, few vaccines great biopharma And golden COVID in pharma, age because be we the as with business. the -- going even the

great business very with delivered very future. has So, well good a a that

we’ve drug other saltwater to other new business, filtrate that capabilities to which in it liquid, as filtration industries, is well as to especially as element Purolite adds new mentioned. a any

to well, it is down. under growth are great the is So because way the good I I today. way, compare by competition, their companies, feel growth with pretty which a our industry pressure if flattish bit

COVID, It’s is good the going that. last pretty you an the industry outcome It’s feel that few I as to future. going quarters. getting flattish, production the by well. ready with It’s of about of being not still in kind COVID-related a And for long. years It’s So basically to past few mentioned. last driven what inventories

going next major not in we’re happen I So, think to pickup going quarters. few the see to over but it’s a QX,

But I not looking going, with is I look Life the the when really better on we’re which I where if decided at and offense. ago, was forever. while, good a why at a so feel business where pressured today going back, year last am we’ve Even the Science, even stay market for market to how it’s to is looking and anything, I how if

for it’s the that capacity the people has That’s capabilities, me, it’s because people we build we a for time making sure long-term best the kind at that XX% the impact expertise, do of basis, on business So, as time, some R&D, means an income on well, it. the more street, customers, of rate okay, operating same well which new can can worth to to on building in innovation, we and that produce That it. know north doing future, that run margin. get is

been. few a better So, a ever than place, quarters going promising to to business pressured, more get a it’s we’re but that bit and is

I So, Sciences. about good feel Life

Operator

Our with line next question is from the of Patrick Cunningham Citi.

Patrick Cunningham

the the customer pricing think you Do to pricing? expect position that So, And sustainability we’re relative into objectives. starting we highlighted you’ve unique power from and translate to can going historical on business, see forward? some pricing water higher deceleration What specifically on pricing. will normalized competitive

Christophe Beck

here, answers Patrick. short two So,

The first one is the deceleration pricing. of

by as as value become of related organization. new XXX% positive well customers, over top surcharge, expanding because we’ve way. which we’re is the XXX% on energy it’s years, better. We’ve kept net-net, always as we’ve to it, the been it sure Well, well an a because mentioned it, The two for And to story pricing to that the the creating so customers we’re in is. been their our much it’s become for make want operations savings you we’ve dollar. of carryover, year-on-year even including related good we And past As it, absolutely or even pricing at comparison. the in better

year-on-year and comparison. to X% leads We’ve XX than sure. the where related shake of that’s this to is exactly range that. the better out. going I that years a entirely the to know, whenever the don’t over, the inflationary So, always for answer, don’t within exactly for the first That’s it’s question, to be that pricing pricing the but going to I in past is which X% going cycle, second to know is it’s entirely, slowdown two. be, north of going is so cycle future. what expanding, to is stable, been be pre or time. Post Carryover number

Operator

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

Laurence Alexander

it the can spread compresses Do the if widening volume wider expand versus sort end end developing you that markets. back volumes spreads see So, it think bit kind you’re XXXX? in path little the countercyclical? XXXX, can spread as half Ecolab bit? recover, sounds Ecolab’s How a this do as get of you you further, see the that new positive in is or of the And a as keep to or you do markets maybe the

Christophe Beck

We’ll we territory at looking see sign. the in improving I’m as fact well that end that ex-Europe, are evolution well. in we Europe that the ‘XX. I’m up currently, QX like I better fact pleased we’re we’re the market. with as is positive and good If in having we’re in than The that a where very

have We a doing very great over team good there. work

improve So, going Europe is well. as to

earlier. very new time, strong, mentioned over business So, as is

been focusing the control, we enterprise penetration, selling. volume. good fashioned old ways what driving are new innovation, so far. business, So successful can on it’s We’ve really Those of

on remains And few We momentum, when on primarily quarter hold two in years, we focused working. two a take margin. trends have it’s organization. last it ago, shifted as As or mentioned, primarily volume attention those good the our our well. a pricing we and attention and to But take usually, quarters our

shouldn’t where I for reason see it about half, going no why positive ‘XX good well. the so feel I for as we’re And be for sure. second So,

Operator

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

Kevin McCarthy

sequential most to would where Christophe, where struggle Perhaps seeing price you’re more and momentum realizations you call on two-part out positive on areas the side, the the other sequentially? perhaps particular question a spread. and it’s on of price-cost any a out price areas flatten starting

And stubborn the have really call similar on fast are you question costs that, there basis increases? you areas where other your sequential on areas a are would out, a side, particular and where cost or dropping in approach

Christophe Beck

drive we sure pricing. Scott. we don’t But really at And we It’s, underlining Yes, mentioning Kevin, I’ll get insights. to give give in working the well board that back. some the well keep I’ll on question new Scott And in organization. same to been price and we how that more again, that’s up give with look the But before pricing that can really one the that, that’s as hand, as to and leave It’s there, across working twofold. time businesses. been at us carryover, making it well all well we very

Scott Kirkland

really, Christophe Hi. But there’s the the Yes. pricing that but last as across peaked new last strong price strong Sciences by the very as pricing to we said think we I&S, carry-in, continue mostly Industrial, pricing, this really segment, aware. you’re year as pricing accelerate continue did we year, pricing as Life our had which well the that is will both segments, the QX, pricing, it which year. across had structural Yes, pricing. the at and the the this XX% that Healthcare, passed other to about in as we -- we said, executed Thanks, new talk as I And board, drive that in Kevin. carry-in

to cost environment over this the As think over lion’s the increases took a about the other question, I perspective, inflationary last couple DPC, from share years. of cost Industrial of your

ease, we to that’s started have as costs year. So to going that DPC biggest we’re X% which X% QX, impact which in relative the was where talked to last about see the

likely that share took they that last benefit as the given the in of see Industrial, continues the biggest So the two years. over to just increase ease, lion’s we’ll

Christophe Beck

like is to remind just two well. before I And Kevin, I’d mentioned facts you as

the QX, income well. & Institutional year quarter as being in reached operating having of sign. not fourth Specialty is in in terms, good Industrial saw margins, a dollar we very margin, this So, so I&S, back XXXX to in XXXX already the And which

our big on margin that well for our indications and really two improving. is going keep not recovery stop businesses major track, there. two It’s going to So, it’s to

Operator

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

Steve Byrne

or would scoop that that? an you estimate competitors, of business. that I of are you that competitive you have as own to proprietary was and be Are curious such sales from up to to come say what changes And coming the respect seeing out customers Solenis-Diversey were any that anything dynamics combination? out competitor with you in -- there, in to seeing you fraction your equipment on would at is to if a that hear removed you your either involve

Christophe Beck

So, questions a few in here.

first, on to XX% unpack, to you So, our Steve, remind of are question, on the would is like sales just recurring. equipment

programs sales recurringly equipment you This lease or So a or subscriptions by it’s in not get that chemistry weekly monthly, on definition. is or digital on a basis.

So the equipment components is really, really small.

obvious time, it to customers. of equipment the increases well customer At change. those as our have our with business location, the Not you well, since stickiness same in

But with is since from of we’re our way going else, say is because stay to customers. it’s not be same us, the especially, So with the level carbon need business but technology, they usage to to the want the experience, their least. the them at service, well this equipment, labor. of the not the We natural hard someone reduce driving customer best not is cost resources, change same to us time, our their best get and the water as total and of and they operation because importantly, as at most down that because to going equipment

So, we than X% that’s the less our equipment. way XX% recurring, drive business,

the to busy business is that is fact doing taken last our but about winning as the our kind seriously a situation, very we’re question is we always that generation And we’ve now, competition them. war. really new that them good your well competitive take right of indication And

Operator

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

Vincent Andrews

total segment. mean, you but more just volume for us basis, by can said about little company us on the an you key specifics segments? give wondering I particular the can on you see in ex-Europe I’m the if I what tell anything a

Christophe Beck

Yes, Vincent.

is what like lot Institutional profile doing. & every the is generally, the a business. similar volume in I Specialty So

in positive As are accelerating. times that they keeping mentioned are territory so and many during call,

but had at as at the the time, really, same most to forefront. basically, So they’re recover well They the so well. really doing

what before, similar Industrial, in work a business, is this helping shifting new over quarter, in margins the a to pricing had quarter past over of XXXX they years. deliver the that to Industrial. last in as position forget so And let’s in the as do what being in not improve the they in two well than mentioned quarters, volume few lot the had is second a remarkable accomplishment. on And now

out Industrial the new paper. well driven a has -- in is positive and well in in few is here. the paper, our And that call they is as I drag has disruptions that Water to business have But as like mostly that after we been story positive, inventories, had. past And by all, very reducing the which years, remains good customers or

of well, the going to the quarters. improve to paper meltdown over going is So is customers our as inventory improve few next well as

in, forward. strong better quarters. getting better all the over paper next getting the businesses is and And So, as Institutional and improving few move I’ve mentioned as other Industrial with well, stronger. becoming we Specialty as well,

Operator

The next Oppenheimer question & Scott of the comes with line Schneeberger from Company.

Scott Schneeberger

for one steady going This about year. then had ask Scott. few -- mentioned in absolute them years. back looks incentive that? one have of Because How the really both comp, Scott, Is and upfront. headcount And SG&A pretty that like how challenging you was year which you. for next but delta? on the year? we you a down, think we about think balance into the a that I good is should through quick I’ll both the of half A -- level. an the should

going Christophe, to was paper, on on but in And the to also you, I for want ask segment. ask -- I Industrial

big trajectory look? double-digit And seeing? the you’re little Food could beverage X.X cover gosh, business? years. because a continuing there. of well. that give dairy, color you of down maybe a And the into bear us submarkets: a if little food? to How just bit and brewing does bit win lot of strength Are and subsegment pretty for, paper did think you growth a But I you That’s just new been Beverage,

Christophe Beck

Scott, you I start? guess,

Scott Kirkland

because done XXX productivity talked future, which forward. programs as driver really, be this would that very of expect it the question. of or see the similar as drive big well start be to importantly, it over in the leverage SG&A to the more we’ve we’ve increase rebuilt of points and last expect, modest to to the the you have for continuing years, biggest but SG&A incentive less the SG&A very the a the level in would compensation, incentive incentive why for about Granted, that be than headwind we’re the would well. Scott, saw said, well certainly, the basis we performing continue expect I’ll that SG&A ratio, the it. compensation, although of incentive But leveraging expect on half opportunity expect especially will over for incentive savings But reason compensation, on the year, the piece few sort compensation, that and drive next -- to SG&A more of headwind as QX Yes, on this to year-over-year compensation as few the we’ve Yes. second the is we made, of sort year. was as drive I the and years, we’re SG&A productivity of continue rebuilding great we as we’d it’s cost leverage going investments that last on to

Christophe Beck

difference I’m they’ve They’ve F&B on delivered performance. part business, team the that with the recovery. the largest impacted, I margin our our one believe, done the well well in on been question, businesses. work has and by managed second pleased business, really cost, both the this to but product Then and inflationary of your of and manage able growth costs to new margin been obviously, work business

industry. Second, positive it’s a

industries. it’s So serving goods consumer

done You’re familiar with last years, the still and well quite They’ve they’re most of well over them. today. few doing

as a So, to industry. it’s an place good be

total non-negotiable, usage, is lower same water it. And is footprint, well very brands it’s the are for them. them. very most do. It’s the do essential what time, with management what do of of and that’s those companies obviously, on they our for which the on that interested in commitment It’s on safety, cost, terms carbon industries a one And is about their food exactly for at at advanced in waste third we we make customers point which I’ll

So, they are in interested very we what do.

one food And make the no which can offer. I’ll of have unique water last company bringing we in position this safety today management is point offering, and

are perfect we doing and where reasons customers. for, a this looking so like our to all exactly positioned heading to And is the lot what those the model that that because why uniquely I that’s business offer are time, which We’re well. customers we’re

Operator

Roberts the of from is line John Our Suisse. a from Credit next question follow-up

John Roberts

Infection North American sort other Institutional. within you that? And collaboration have Do Ecolab, to financial Healthcare any use Protection organization the from like examples reporting? result in cross-segment any is intersegment going that commercial of of will

Christophe Beck

will, you done hand, we So, reporting But now, for being, parts that two made we’re the what that it now. I to the longer going to consistent consistency On business. for the we’ve it. a term. that one to folding show we’re for want It’s clarity. for to John. your I still the commitment of want with keep making. Healthcare to will truly question, improvements speak I keep time something can’t by we that improve I the improve in else that keep not

we’re So, consistent going to remain transparent. and

labor for order QSR, best have The machine restaurant. dish question their automate can Serve King, Now, in the they Institutional example your more using of by other are so and in Restaurants, the to on, I you on second businesses. used McDonald’s, Quick part being Burger always is Wendy’s provide the so

know, separate years. the and been It’s for exactly XX business, is new you not As thing. true it’s a QSR a

really everywhere in here, those having. the the cost the one In Institutional dish we because get and productivity Institutional well, well. mass have and we critical works It well that Institutional get is of reach, the because country, team the the that’s serving they is because density as machines

Institutional for QSR Healthcare looking similar of than we’re to is So, for what kind do doing is as what well.

the model that a past it’s in practiced we’ve already. So,

Operator

at remarks. are questions the I’d turn Mr. back you Hedberg, like to there to closing no time, for floor this further

Andy Hedberg

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

Operator

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

now this you. your may lines at You Thank time. disconnect

Ecolab (ECL) 1 Aug 232023 Q2 Earnings call transcript