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<p>Minnesota-based Ecolab, which offers cleaning and sanitizing products, water treatment systems, and consulting services, aims to reduce water use. Ecolab provided its expertise in water technology and digital monitoring solutions to Moeve, a leading Madrid-based energy company, to develop a circular recycling system, lowering water use at San Roque Energy Park, a refining, chemical, and biofuel production hub in southern Spain. The system sends a reusable stream back into San Roque’s operations by means of a membrane water system, ultrafiltration, and specialized chemistry. The collaboration between Moeve and Ecolab reduced fresh-water intake, and the San Roque lab was able to recycle up to 317 million gallons of water per year and cut down on exposure to risks from drought. 
</p>

Change the World

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Industries included in the sector are diversified and specialty chemical manufacturers.

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F500-2021-237-Ecolab

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Current All-Star Rank

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Use of Corporate Assets

Social Responsibility

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Long-Term Investment Value

Quality of Products/Services

Global Competitiveness

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Change The World

Impact Segment

Ecolab provides water, hygiene, and energy technologies and services that support safety, sustainability, and operational efficiency. The company serves a wide range of industries including food service, health care, hospitality, and manufacturing. Its solutions include cleaning and sanitizing products, water treatment systems, and consulting services. Ecolab operates globally with a focus on helping customers manage resources and meet regulatory standards.

Q2 2026

Q1 2026

Q4 2025

Q3 2025

Q2 2025

Q1 2025

Q4 2024

Ecolab (ECL): Company Profile, Stock Price, News, Rankings

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Ecolab

ecolab

Greetings, and welcome to Ecolab's Fourth Quarter twenty twenty four Earnings Release Conference Call. At this time, all participants are in listen only mode. A question and answer session will follow today's formal presentation. As a reminder, this conference is being recorded. At this time, it is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations.

Thank you, Mr. Hedberg. You may now begin.

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

Factors that could cause actual results to differ are described under the Risk Factors section in our most recent Form 10 K and in our posted materials. We also refer you to the supplemental diluted earnings per share information in the release. With that, I'd like to turn the call over to Christophe Beck for his comments.

Thank you, Andy, and welcome to everyone on the call. As we wrap up another incredible year at Ecolab, I wanted to take a moment to acknowledge the hard work and dedication of our exceptional team. The unwavering commitment to our mission has been instrumental in delivering unmatched value and best in class outcomes for our customers driving Ecolab's record performance. It's a true privilege to lead such a talented group and I'm proud of what we've achieved together over the last few years. Twenty twenty four was another record year for us with record sales, record earnings, record margins and record free cash flow, all supported by the exceptional total value we delivered to our customers.

As we look ahead to 2025 and beyond, our results position us well to continue delivering superior performance for both our customers and our shareholders. In Q4, our organic sales growth was solid and steady at 4% driven by consistent volume growth and value pricing. Regionally, our performance continues to be led by The United States, where organic sales grew mid single digits. The United States makes up more than half of Ecolab sales and is our most profitable region. We expect this region to strengthen further in 2025, fueling continued strong performance for Ecolab.

Sales across the rest of the world grew low single digits driven by resilient demand for our leading solutions, good new business wins and value pricing, which more than offset the uneven macroeconomic trends in these regions. Our organic operating income margin in the fourth quarter increased a robust 150 basis points. This underscores our commitment to driving margins higher, while making continued critical investments in sales firepower, capabilities and capacity to fuel our future growth. For the full year, our organic operating income margin was 16.8%, up two ninety basis points on top of 140 basis points delivered in 2023. With all of this, my confidence in reaching our 20% operating income margin target over the next three years continues to strengthen.

As we move into 2025, I'm confident in Eckelab's ability to drive continued solid organic sales growth and 12% to 15% earnings growth. Our strategy centers on capturing market share through our One Ecolab initiative and accelerating momentum in our new growth engines, specifically in data centers, microelectronics, life sciences and our newest offerings from Ecolab Digital. Externally, currency translation is expected to have an approximate 3% unfavorable impact on Ecolab's twenty twenty five reported sales growth and an approximate 4% unfavorable impact on adjusted EPS growth. We plan to mitigate the earnings impact in two ways. One, through stronger value pricing, which is expected to be slightly higher than twenty twenty four's pricing as the total value delivered to customers continues to expand.

And two, through slightly faster than expected 1E Collab savings. As a result, we look for continued superior performance in 2025 with adjusted diluted earnings per share expected to increase 12% to 15%, even with organic sales growth improving slightly from the 4% we delivered in 2024. With a solid growth formula in place to deliver again in 2025, we also plan to build and invest in our business to feel continued strong performance for the years ahead. Two of these critical areas include Ecolab's global high-tech business and Ecolab Digital. Our global high-tech business operates in the rapidly growing multi billion dollar data center and microelectronics industries.

Sales in this business have reached over $300,000,000 and we expect strong growth to continue in the coming years with OI margins well above 20%. The rise of AI is prompting data centers to rethink the cooling strategies, leading to a shift from air cooled to liquid cooled servers. This transition presents Ecolab with a significant opportunity to apply our extensive expertise in fluid management, micro bio control and naturally high performance cooling, which is one of our core competencies to help our customers optimize their operations, maximize uptime and protect the substantial investments. Our new business pipeline in these markets is very strong, driven by robust demand for our breakthrough innovation focused on high performance cooling for data centers and water circularity for microelectronic fabs. We're well positioned to leverage these innovations along with our leading digital applications and global sales and service expertise to serve the world's largest technology companies.

Ecolab Digital will also add to our momentum by leveraging the power of our extensive digital and AI capabilities to identify insights and deliver best in class performance across the 40 industries we serve. Ecolab Digital manages more than 100,000 customer systems around the world today. Last year alone, we captured more than 120,000,000,000 proprietary data points across the systems. This data was used to identify ways to deliver improved operational performance and profitability for our customers' global enterprises. We're monetizing this enhanced customer value through patented device leases, application subscriptions and digital content consumption, all of which is supported by Ecolab's global sales and service organization to make it work.

As previously indicated, we'll begin to report our digital sales in 2025 to provide even greater transparency to this high growth, high margin opportunity. To support these efforts and our other growth engines, we will continue to accelerate smart organic and inorganic investments. With this, we expect our CapEx to sales to be around 7% in 2025 as we continue to expand digitally connected systems like our Ecolab three d Cloud, three d Trezor, AI dish machine program and Pest Intelligence. With our record free cash flows and very healthy balance sheet, we are also in a unique position to take advantage of inorganic opportunities in water, digital and life sciences to deliver even more value to customers and attractive returns for shareholders. With these initiatives, we remain focused on further enhancing shareholder returns through increased dividends and share buybacks.

In December, Ecolab's board declared a 14% increase in our quarterly cash dividend. And in 2024, we bought back $1,000,000,000 of Ecolab stock at very attractive prices, all signs of confidence in our team and in our future. Overall, I firmly believe the best of Ecolab is yet to come. Our ability to deliver innovative solutions that improve our customers' operational performance while reducing the water and energy use is increasingly relevant in today's macro landscape. We're well positioned to deliver another stronger in 2025 and beyond.

So thanks again for your continued support and your investments in Ecolab. I look forward to your questions.

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

Yes. Thank you. We'll now be conducting a question and answer session. We ask you to please limit yourself to one question per caller, so others will have a chance to participate. Thank you.

Our first question is from the line of Tim Barone with William Blair.

Hello. So it sounds like your confidence around that 20% OI margin target by 2027 continues to go up. And it looks like the market's coming around to that idea as well based on the stock price today. I wonder if you could help us though think through the cadence of that expansion over the next three years And remind me about the primary drivers behind this.

Great question. Thank you, Tim. So you're right. I feel we feel really good about getting to 20% by 2027 just to be accurate as well, even though the exact timing will also depend on external factors, but we're talking quarters here, not years. So 2027 is for me the year where we should cross that 20% line.

So why am I confident? Well, first, we've been on a steady trajectory for a few years now. Our OI margin went up, as mentioned earlier, so up 140 basis points in 2023, '2 '90 basis points in 2024. We had 16.8 in 2024. And second, we focused on the right things to drive margins.

It's top line momentum, which is pretty steady. I like it. Second, value pricing, solid. We didn't exactly know where it would land. So this 2% to 3% seems to be the sweet spot.

So for us, innovation keeps to add margin in a very steady way. And fourth, productivity driven by technology. So for 2025 with everything I know today, I think that we should cross the 18% OI margin this year. And beyond that, when I think about the new engines, team that we are building and fueling to accelerate momentum like the global high-tech I mentioned before, data centers and fabs, while it's north of 20% those businesses. Life sciences underlying as well, we're investing behind it to really sell get ultimately, so this north of 20% margin in the P and L, but that's going to take a few years to get there.

And last but not least, Ecolab Digital, which is doing really well, which we will report in the first quarter as promised as well, while has very good margin as well at the same time. So great track record so far focused on the right drivers to drive margins. So feel good about crossing the 18% line in 2025. And with what we're building in terms of new businesses ultimately, so we'll get the 20 by 2027, as I promised for a while now.

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

Thank you. Good afternoon, Christophe. I apologize if I missed this, but I know you said you report the digital numbers, I guess, throughout the year. Any sense of just sizing it? And I suppose, how intertwined is it with your One Ecolab initiative and the importance of that?

Yes. So I promised that we would be disclosing that in 2025. We want to do it obviously the right way. It's going to be top line in 2025 and it's going to be more of the P and L in 2026 hopefully that we can have numbers that you can trust, that are transparent. It's all in the spirit of giving you as much visibility as we can.

But today, it's a few hundred million. We'll provide the exact numbers as we report the first quarter. It's high growth, high margin, high touch, very sticky, because it's a combination of mostly three things and it's purely digital, like you would use with your iPhone or Samsung whatever you have Manav. Well, we get lease or rent for our devices and we have 100,000 of those connections around the world. So it's first digital equipment, Liz.

Second is software or think applications on a phone, but for us it's software like Omni to improve, optimize the performance of a power plant for instance between the cooling tower and the condenser while we

And the third one is consumption. And the

subscription for it. And the third one is consumption of data, of transaction, of minutes of support, of emergency service and so on. So those are the three components that we'll be feeding our numbers that we'll be reporting under Ecolab Digital. And last point, the relationship to One Ecolab, well, it's very clearly intertwined and on purpose, obviously, because all the information that we're getting with all our connected systems and our service data by the way that we captured from our field sales force or from our customers or from other systems all feed into Ecolab three d that ultimately provides data for the software and the consumption as well that's being used by our customers. So it's two sides of the same coin, but more to come at the end of the first quarter, so when we can really report our top line numbers.

Thank you. The next question is from the line of Ashish Sabadra with RBC Capital Markets. Please proceed with your question.

Thanks for taking my question. I just wanted to better understand the volume growth expectation as we get into 2025 and if you could provide any color by segments as well as any impact any potential impact from tariff? Thanks and congrats on Salazar.

Thank you so much, Ashish. So if I understood you're right. So the last part of your question was the impact of tariffs, so which is obviously a bit of a different topic here. But generally with what we know now and it's an evolving proposition as we know as well, we don't see a big impact on our business for a very simple reason is that 92% of what we sell is produced locally. And in places like China, it's 99% of what we sell is produced locally.

So we kind of well protected from a supply chain perspective. That's the reason why tariffs for now not a big deal for the company and hopefully it's staying so. And if it doesn't, I'd like to remind you and all as well online that a few years back, so we established that surcharge mechanism that we used for the energy spike in 2022. While this is a mechanism that in the extreme case we can use as well. We're not planning to, but we're prepared to use it if we need to.

So kind of feeling good about that tariff story. Now the first part of your question on volume, 2025, the way we need to think about it, not every quarter is created equal, but trajectory is basically, so these are around 2% volume growth. This is kind of the cruising speed we've had for a few quarters now. The price value price two to three, but better than in 2024, I believe, which will lead to a 4% plus overall trajectory. So for 2025, that's kind of the top line expectation for 2025.

That's for organic, obviously, and then you have an FX component for reported numbers. But last point I'll make, two elements. First, in terms of long term directional growth, I'd like to just to refer what I shared with you almost two years ago by business in terms of top line and margins at Investor Day. Those ones are still valid. No change on this one.

And the last point is The United States is our largest market. It's over half our sales. It's our best performing market with the highest margin as well at the same time, which is a good place to be in the world that we're living in right now. And around the world, it's obviously different market by market. But generally, I feel good.

All the markets are in a reasonably good place, good profitability as well. We have no underdog as well out there. So pretty well balanced in terms of business performance and market performance at the same time, while The U. S. Is the leading market, which is a good thing nowadays.

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

Yes, good afternoon. Thanks for taking my question. So I was just curious if you could give us some color or thoughts on how you're thinking about delivered product costs in 2025. It seems like there's a bunch of kind of puts and takes out there.

Thank you, John. I'll pass it to Scott so he can work as well a little bit.

Thanks for the question, John. Yes, as we think about the DPC, as we started seeing in 2024 where we're starting to see that the DPC tailwinds normalize and really turn to normal levels of inflation, our expectation going into next year as we talked about after Q3 is this normal level of low single digit inflation for delivered product costs. But certainly we will continue to offset as much of that with supply chain efficiencies but that is our net expectation for DPC next year is low single digits.

Next question is from the line of Jason Haas with Wells Fargo. Please proceed with your question.

Hey, good afternoon and thanks for taking my question.

what it will take to get the 2% volume growth to the long term target of 3% to 4%. How much of that is reliant on some of these industries you're in improving versus what you can accomplish with ONE EqualAB and your other initiatives? Thank you.

It's our main focus, Jason. So I feel good about what we're doing about it. You mentioned OneEcolab. It's all about unlocking a bigger share of the $55,000,000,000 of penetration in existing customers that we have. And as mentioned, so separately as well, just our top 35 customers have a potential of over 3,000,000,000 of penetration as well.

So OneEcola focused on our major customer partners is the main driver of how much we can accelerate underlying growth as a company. The second component is really those new engines like I mentioned in my open, so global high-tech with data centers and fabs. These are really interesting engines for the future. Life science is another one. Ecolab Digital, as mentioned, that we're going to start reporting at the top line levels after Q1 will be one as well.

And ultimately, really keeping improving the performance of our core businesses, institutional pest elimination, our core water businesses by focusing really on new business generation. And I feel good with the trajectory that we're having, the backlog that we have in terms of new business, we need to install it. So we have all the elements that we need in order to improve the performance at the volume level. But I'd like to make sure that we also look at volume plus value pricing because for us as you know value pricing is not price. It's mostly our share of the value that we deliver to our customers, which as a proxy is usually twice the pricing that our customers are paying for us.

So it's a very good deal for our customers while it's a good deal for our shareholders at the same time.

Our next question is from the line of Patrick Cunningham with Citigroup. Please proceed with your question.

Hi, good afternoon. Thank you for taking my question. This is Rachel Leon for Patrick. It looks like Lifesciences performed better. And what is driving the underlying business momentum and improving outlook in 1Q?

Thank you, Rachel. Life sciences is a business that we started building in 2016, '20 '17, really focusing on pharma, the acquisition of Purolite in 2021 added really the ultra purification for the biotech world, because we firmly believe that drug development, drug production, disease prevention is going to be and is a growth market long term. So feel really good about where the market is going to go. We know that the industry had to go through a bit of a transition over the past few years, but it doesn't change where we're coming from and it doesn't change where we're going. It's just a few years of transition.

During those few years, we've kept growing as well, not as far as we were hoping, but our competition was declining during that time. So feel pretty good as well about that. But the last few years, we've built new capabilities, plants, systems, quality systems. We've strengthened our team as well in dramatic ways, which is something that Ecolab is very strong at. So I feel really good about the industry we serve, how we serve that industry in being the smaller player, very agile, very innovative, very responsive, very close to customers and the capabilities that we've built for the future.

And we see early fruits, so coming out, which is a very good sign. So I feel good about where we are, where we're going with life science. It's not going to be a straight line to heaven for the quarters to come, not every quarter is created equal, but the direction of travel is good and we keep getting better.

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

Thank you. Wondering if you could talk a little bit more about sort of the leverage point. It looks like you're going to get to maybe it's in both data centers and in pet where you've had to make some meaningful investment to go after that business and it's kind of more of a percolates in the backlog for a while before it actually shows up in revenue. So maybe you could just help us understand where you are in terms of the level of spend that you've had to make versus starting to see a real ramp up or an inflection in the volume and therefore the margins that new volume will drive as the volume becomes greater than the spend?

Well, it's already a good business with good margins, so to begin with. So we are investing behind these two businesses, data centers and fabs, but not in crazy ways. It's to do it in a smart way, in a typical Ecolab manner that it's pay as you go, even though it's a little bit more than we would normally, it's not much more. So it's done in a very healthy way. And to your question of how far are we down that journey, well, it's early because it's early for everyone.

The very good news is that it's new technologies that nobody has truly developed yet. And I think that we are best positioned for that. The way we presented internally and I might get a little bit ahead of my skis here. You have NVIDIA that's developing the best chips in the world. You have ASML producing the machines to produce the chips.

You have TSMC and Samsung producing the chips and you will have us providing all the cooling technology and the water recycling in the fabs. Two comments on that. On data centers technology today, while you have a lot of computers in a room that's cooled with air conditioning, we're very strong at that. We know how to master that. Well, the new generation now is direct to cheap cooling.

So you have a cold fluid going to the chip. Well, that's a very different technology. Can you imagine? So bring that fluid to the chip, all the challenges of scaling, of fouling, of managing all that in real time. This is what three d Trezor was made for initially.

So we uniquely placed in terms of technology, so close to the chip, managing that fluids and cooling that fluid as well at the same time. Feel really good with the developments that we've made and very close to some of the largest tech companies out there. So all the big names are working pretty closely to us. And the last point, for the fabs, one fab just for perspective is using an equivalent of the drinking needs of 17,000,000 people. So that can't go forever because obviously we won't have enough water in order to feed all those fabs while feeding people as well at the same time.

So we need technology to reuse and recycle water within the fab, which is exactly what we're doing. And we're having some very good development projects with some very famous tech companies as well out there. So it's early because the industry is early, but I think that we are the leading edge and we will be the ones hopefully leading for the years to come as well.

The next question is from the line of John Roberts with Mizuho Securities. Please proceed with your question. Mr. Roberts for Hampshire, the line is on mute.

Sorry about that. In the Pest Elimination segment, could you discuss the accidents that you had and how much of the earnings headwind was the accidents versus the increased spending on Pest Intelligence?

Yes. First, we are an extremely safety focused organization, as you know, John. So my first thought is really about the people and the families who have been hurt. We have some very good safety records, really at world class levels. So when a few accidents happen, you can see it in the records, you can see it in our cost evolution as well.

So the OI decrease that we had, the majority of it was driven by the accidents. This is something that we're working on. We're very focused on. It can happen even though we are having that objective of goal zero in every business, every function, anywhere around the world. And when it happens, we deal with it.

And that's exactly what happened. Unfortunately, in pest elimination, we need to live with it. But most importantly, we need to address it.

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

Hi. Thank you very much. I wanted to ask if you could just unpack the CapEx a little bit. We talked about some investments into digital and some of the other areas. CapEx typically for the company was 5%.

It moved up to a little over 6% last year and we're talking about 7%. Are we into a new normal type of kind of business model or is there something that there's a short term increase in investment or acceleration of investments?

Let me pass it to Scott and I'll comment after that.

Hey, Shlomo. Thanks for the question. As you know CapEx by nature is a little lumpy as you said. Historically we've been in this 5% to 6% range, but just to ground you, about half of that CapEx as percentage of sales is related to customer equipment. So customer equipment locations, so as we're growing CapEx will grow and as we move to that 7% in 2025 as Christophe said, we're continuing to invest and we're growing.

So as sales accelerate, we'll continue to invest there. But in addition to that, we have programs that he has mentioned around AI Dish Machine, which you may have seen at some of our shows, the Pest Intelligence, which we've referenced, as well as the digital investments that Christophe talked before. So those programs themselves as we accelerate in the near term certainly in 2025 I would expect possibly a little bit more elevated in 2026 but I don't think this is a long term trend above 7%.

So it's not the new normal, but we have very strong cash flow, a very strong balance sheet, very good growth opportunities. Well, I want to leverage the capital that we have also to feed those growth opportunities while we return cash to shareholders as well at the same time and keep the strong balance sheet that we have. So all in all pretty healthy investments.

Thank you. Our next question comes from the line of Steve Byrne with Bank of America. Please proceed with your question.

Yes. Thank you. In order for your customers to utilize your products, whether it's in waste, whether water treatment, laundry cleaning, dishwashing, pest elimination, all of that equipment that they have, how much of it does ZColab own or that you've sold to them or you have installed? Is this part of the loyalty and pricing power that you have with those industrial customers?

It's a great question, Steve. We own virtually all of it and we want to keep it that way because it's a proprietary new technology. It's much more sticky. This is good for us, but it's also good for the customer, because they always get the latest technology, the upgrades in software, they might pay for the new subscriptions for the new softwares as well. But generally dispensing equipment, digital technology, all of that all belongs to us.

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

Thank you. Christophe, on the '25 volume growth of 2%, is that faster than the market? And if it is, how much faster than the market is it?

It is clearly faster than the market. You take the example of institutional 6% growth in a down market and you can look at different ways of looking at it, but the food traffic is down. So we're clearly gaining share. This is true in our water business as well at the same time. I feel really good about the share that we're gaining.

The 2% is kind of the steady volume growth that we have. Our focus is to keep working on it, to accelerate it. As I mentioned before as well, with our growth engines, with capturing more share of the 55,000,000,000 by leveraging OneEcolab, adding digital as well. So all feeding into stronger than 2% for the long run, but we want to do it in a very smart way. I will never trade volume for price.

And as you know, so we have strong value price as well. So it's keeping that equation in a good balance and that's why you don't see so big swings around these two. We want to really do it in a very steady way that ultimately you can trust the direction of travel that we're having.

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

Thanks very much. I have a three part question, but I think your answers will be brief. If you compare industrial and institutional in the quarter, which segment grew its volumes faster? In terms of your 20% margin target, it turns out that in 2027, your amortization costs will drop from today's level by about $150,000,000 So your EBIT margin will go up about 90 basis points, but it won't affect your EBITDA margin. So when you have that 20% margin target, does that include the drop in amortization or is your EBIT target really 21 and it doesn't take that into account?

And then lastly, in pest elimination, what exactly happened? Were Ecolab employees insured or customers injured? And why is this something which seems to have an effect over the next several quarters? Thanks.

So Jeff, you paid for one question only, but I'm going to give you sort of two bonus questions as well as a good friend. So first, the volume difference between institutional and industrial. So as you know, we're not disclosing, so volume and price, especially for competitive reasons. So I can't really answer that question, but in both cases, it's pretty good. So I feel good about the balance volume and price, which is something as mentioned before that I want to keep a very good balance off and you can see it at the overall company level.

Second question, amortization is not included in 2027 there. So when amortization of the existing obviously saw acquisitions that we've made, so comes off the book, that's going to be on top, but I'm not counting that. So to get to the 20%. And third one, in pest elimination, it's always a combination of two, it's insurance cost. So depending on who owns the accident, well, we have to pay.

It's been unfortunate accidents as you know in pest elimination. We have a few thousand people on the road 20 fourseven in sometimes remote places, in sometimes difficult customer locations as well. So it's been unfortunate. It happens. It was mostly in Q4.

There's going to be a little bit in Q1, but that's it.

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

Good afternoon. Could you give us a sense of your assumptions for 2025 around SG and A leverage, taxes, interest expense and buybacks?

Ecolab (ECL) Q4 2024 Earnings Call Transcript

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