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Ecolab (ECL)

Participants
Michael J. Monahan Ecolab, Inc.
Douglas M. Baker, Jr. Ecolab, Inc.
Daniel J. Schmechel Ecolab, Inc.
David E. Ridley-Lane Bank of America Merrill Lynch
Manav Patnaik Barclays Capital, Inc.
John Roberts UBS Securities LLC
Chip Moore Canaccord Genuity, Inc.
Tim M. Mulrooney William Blair & Co. LLC
Scott Goldstein Citigroup Global Markets, Inc.
Christopher S. Parkinson Credit Suisse Securities (NYSE:USA) LLC
Laurence Alexander Jefferies LLC
Vincent Stephen Andrews Morgan Stanley & Co. LLC
Mario Cortellacci Macquarie Capital (USA), Inc.
Scott Schneeberger Oppenheimer & Co., Inc.
Christopher Evans Goldman Sachs & Co. LLC
Dmitry Silversteyn Longbow Research LLC
Shlomo H. Rosenbaum Stifel, Nicolaus & Co., Inc.
Michael Joseph Harrison Seaport Global Securities LLC
Rosemarie Morbelli Gabelli & Company
Andrew John Wittmann Robert W. Baird & Co., Inc.
Call transcript
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Operator

Greetings and welcome to the Ecolab First Quarter 2018 Earnings Release Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mike Monahan, Senior Vice President, External Relations. Mr. you, Thank Monahan.

begin. now You may

Michael J. Monahan

A those materials Thank and ecolab.com/investor. the you projected. on could quarter Baker, to first in are Ecolab's and most our and our Chairman that with on XA, this results estimates read our future available earnings results discussion, statements XX-K take results the hello, from Form are Factors call. recent With and a results everyone, release stating teleconference, moment the cause Item CFO. Schmechel, conference Dan Doug slides actual CEO; welcome of Risk and to the of me to Factors, those our and posted cautionary could differ along Please our referencing Ecolab's the and and and materials. materially at actual discussion quarter's today include Ecolab's outlook differ website of is slides that under forward-looking are performance. These statements described our

business standards. These increase. our the new tax yielded share for the rate in our We earnings innovation business fixed the line growth XX% per interest reduced quarter. a earnings results, sales in new also first forecast strong along were solid brief per prior of and segments. all a top pricing, growth share supplemental acquisition-adjusted of Ecolab's adjusted line overview the diluted the lower Starting with first That and with in momentum release. Further information drove continued in you accounting cost strong gains, product as to expense, efficiency, results adjusted refer currency the with growth quarter's

X-K. April of see our the those For more XX on impact information standards, Form

a in strong earnings earnings all from the ago. decreased fixed product Pacific. diluted XX share Regionally, in income increases segments. and Adjusted compared offset operating of with volume increased by pricing The per increase share rose XXXX to interest increased Adoption diluted expense currency than rate share. XXXX sales sales adjusted first of X%, per Adjusted along delivered recognition XX%. and a our costs. led our by growth the income standard impact. X%. margins basis points revenue of press some with Asia new operating tax $X.XX discussed currency to rising were adjusted growth XX% lower lower release, a per gain currency fixed rose fixed sales yielded This first $X.XX quarter $X.XX. XX% and as a earnings more Moving as had share highlights Acquisition-adjusted was in favorable business Consolidated year with America North quarter per operating quarter

driving our aggressively our through service We grow rates. and as growth, continue sales and drive top to to pricing innovative as winning work to well business new products and expertise lines efficiencies cost bottom and new improved at

in will the higher price and impact the rise with We see business gains expected growth and stronger range, more that increasingly raised half forecast. also the $X.XX now good earnings XX% half. across a to to outpacing to headwinds underlying expect have as and offset look product greater sales than volume the XX% first half to continued of income continued product pricing first and We our XXXX volume second to investments share that segments systems costs cost offset delivered yield earnings per We and growth. for adjusted $X.XX improving delivered earnings our impact

are systems be range, to with earnings as higher lower operating growth expected momentum $X.XX per $X.XX diluted investments. product in strong accelerated to are expect margins second improved quarter pricing share and delivered sales by and more up than We sales offset costs the and momentum over now here's expect in XX%. year And earnings we to the summary, growth. of to share some began deliver Doug balance continued strong with adjusted to XXXX further XX% per In business XX% improvement we Baker saw XX% comments. our the as Adjusted

Douglas M. Baker, Jr.

Thanks, Mike.

So we leading the be will were our results. We very improved top board, a year. strong Industrial had Pest line solid. good good other, driven strong across Energy; start X% Institutional and first results; anticipate sales. had good a to also XX% was by metrics what i.e. quarter reported, We and much sales organic results; The

continues year QX believe was high be even needs it's and the because it a with product for than forecast raw basis well-managed. business a but will strong versus in-hand and significant double-digit increases. pricing we well on portfolio year-on-year performance. more represented be to, ago inflation up new to will New And progress, material originally point

pricing short, which continue large enhancing our underlying We leverage margin margin inflation, will putting our pricing and and next build further our provide have a of competence overcoming to we're pricing we efficiency year years the year the led have comprehensive provide raise added onwards. business uncertainties, SG&A strong through forecast. to leverage ability Separately, navigate In to us to the several our investments, full beginning targets together will QX system over plan momentum, lever, too. in all an which increased

So it Mike. overview, as turn to an with that back I'll

Michael J. Monahan

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

Operator

Thank you. you. Thank Yes.

with Bank the comes proceed first of America your Our Lynch. from today Please David of line with question. Ridley-Lane Merrill question

David E. Ridley-Lane

Good question ask to Wanted Energy. longer-term on a Sure. morning.

back or believe Assuming do XXXX to we levels circa range, increase the crude return margin? in is prior profitability to mid-teens a could are prices need to stable oil the reasonable sustained see segment or prices of to it reach expectation operating into the a so in $XX

Douglas M. Baker, Jr.

be a will, if and of the likelihood we haven't unexpected of more terms the of the But the for been everybody continuing in if had real than ultimately CapEx you price. it into off. lot and it would as price. i.e. feels cycle. we would not. of is consider rise the that of history given mid-teens the to and which there's taken most put happen out last though demand say, What supply need end stable Ultimately, that oil and demand supply of baked foreseeable to also lot prices would future, current than in we we're seeing back the to little at risk just you would political to that environment, longer just more the if because you a the this But suspects the of a risk, did in cycle, that Well flows seen would political meet meet is the look let's get take say a balance, business inability a, and of be oil to to oil believe but demand going favorable I probably there's that I in increased

oil, we means and that like So oil. new new

commands us. market than the more our replaces, growth oil fairly of oil and environment it drives in for New that technology even flat a

$XX, why stable at would it's growing that's said if that you So a we market. see

time do back Our mid-teens. grow we'd would a to ability get to be and over of we fairly believe significant period

David E. Ridley-Lane

then a on potential risk tariffs. follow-up And quick any from just

If you've materials. directly either Thank done through on any work indirectly on you. or tariffs on that raw Ecolab

Douglas M. Baker, Jr.

we on outsized believe don't risk We tariff. Yeah. have

et been sell, cetera i.e. to currency Our to risk. we risk try materials, product, where a make raw mitigate in secure make standpoint strategy building that and and/or from both we're strategic in always the currencies trade has

as this. us will serve go that so through we well And

pain perform for larger nominal. we everybody impact of think tariffs specifically else. course with with the fairly do course risk we us to that economy relatively well. is I tariff would The well, shielded share the which in we So say wouldn't in would be but environments be least historically, overall I'd completely on And difficult of at what from,

Operator

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

Manav Patnaik

is Like think trying guys. the to less you talked any Energy review update there Thank the follow-up smaller on a but in Energy of piece or cyclical question. piece. Maybe I you. side? decyclicalize I your that on about to Good know terms afternoon, I portfolio guess make on just earlier WellChem

Douglas M. Baker, Jr.

Well, or were almost so capital both They in the drilling that and that particularly quarter occurred equipment-related, to activity. portfolio related small that They quarter. businesses Energy were we've couple a equipment-related were first cyclical. exited were completely fourth of

So I versus those what technologies occurred drilling activity, for only the performed. that's also would moving might begun. portfolio that continue the that's those call more of say that closely the stable we within a bit emphasizing But and on portfolio a That a be be that's two WellChem, growth I'd to the of in look to now. of beginning work that in little related has thing current right and review updates. would part we've and

Manav Patnaik

things back, you I our a expectations sounded was could that? this if now hoping it. timing it I It is just that performance the address blip? then Got on address Can were mean, you Healthcare like just you getting just And quarter end. quarter. way below was I guess just and you

Douglas M. Baker, Jr.

expected weaker we Sure. agree. Yeah, than quarter. a I Healthcare mean, had

We expect anticipated. the of it in balance to that range. normal Europe, through remain year the is continue of post back France, a confident particularly the slower second that be quarter. probably more We will portion going is than do

just we now by intuitive resolved. couple large also going technology U.S., we growth. year around last of Some lapping a market is rollouts. the had against hygiene And ago year underlying was We a been quarter. fairly room were were The regulatory first have Those delayed issues But issues. the in in and shipping. strong performance product a initiatives

the have, new business back that we us it this issue, to be have will we that confidence and be that rollouts the is growth. temporary a So gives going to

Manav Patnaik

it, right. Thanks, Got Doug. all

Operator

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

John Roberts

And the than looking? is How are one another? you. underway, M&A Thank market there discussions in pipeline area more say,

Douglas M. Baker, Jr.

M&A for fairly say Well, constant years. a been I we're a and have number of of driver would

it's fairly rich. doesn't And really wax remains would So and the pipeline activity I our wane, say consistent.

to not sense. growth of deals via continue virtually we've and things of those to notable. be of are valuation We because this others we'll There done think most would in, money have to And talked that cited. be upon all work force we year. that to the by exceptions, dependent and in good the we we're acquisition Paper too hard before driving agreeing if us would on shareholders' area to with other they're all probably looks them. be paying we're the a high good. stewards in businesses open Pipeline exceptions the With be as a We're would to couple we another Obviously acquisitions expect rest. going growth and open WellChem two the I multiples. it businesses. that's believe makes party all

John Roberts

be in then, on it part immaterial? large It'll a as spending of the Doug, will future, you installed we it? the digitally-enabled accelerate, won't is Or does offerings stuff, of think CapEx And do upgrading your dumb base you that's it's notice out be and And capital equipment? more accelerate I roll obsolescence something since – that budget?

Douglas M. Baker, Jr.

don't a I it'll change. think be material

are We we equipment isn't working the in that, of to have installed the that much connected Internet. say,

device cost-effective don't collecting to cost-effectively. to us the se. are working have that information move And That, that's get the cloud, so we from device the enable cloud, on ability it per to it retrofit that the items the we're will to fairly current from

not significantly would add and it's over So a going retrofit, all near-term. rip replace whole out like which the entail to with capital to new,

think I So be noise. going a don't to it's big

John Roberts

you. thank Okay,

Operator

of question. Our Genuity. is line the with Please Chip next question your Canaccord Moore proceed from with

Chip Moore

a Maybe Maybe investments. you on margins. the like returns, the a you some framework ERP of can you bit sounded about Thanks. were on comfortable little thanks. particularly more provide talk for the us. Yeah, a little could It

Douglas M. Baker, Jr.

in would than on say May it's U.S. on billing, crudely the there's the other across finance effectively, going Yeah. put And collecting, happen. the meaning first turned that we're in of be the and go, system. that on supply investments would the being this waves X, you all on second manufacturing plant our in sitting Well, as new rolling we've no and got things a call. run loaded news time package are the That the well half. in I the out we're more went in U.S. to balance things particular on effectively report hope here ERP these And of would as we'll half and shipping, And XX% We U.S.

noise I quarter. the this the the expect anything, So better same I second don't it real in And thing we see If think to move was our fears a this is quarter be than year. you would as first worst would in little forward. going

Chip Moore

Got it. you. Thank

Operator

Tim question. of Blair. line your the from comes question next The with Please William Mulrooney with proceed

Tim M. Mulrooney

function improvement of of also as happening traffic good the any Is a think well. details on maybe up, or what's has the in Would fundamental It customer Yeah, looks morning. that stronger just division Institutional specifically. like division picked distributor which Institutional some some I pricing probably restocking retention is but or appreciate trends?

Douglas M. Baker, Jr.

things call. we say launch market I offense during as wasn't recall, that particular that we foresaw Yeah. soft December. offense occurring by if much call given last warewash impacted would our in you played And been during sufficient our conditions was our in in which out really discussed a delayed has

So it's materially huge better. marginally the certainly I'd driver it I'm think better. say execution are offense it's not is The markets sure better. I but

So while the good in market the decent was it was globally underlying U.S.

of which brought retention our in be Our very kind history. results, the to versus best-in-class you continue range good up, and

delayed. referred had strong been happened earlier a So What SMARTPOWER of there. there driven which big launch had lot the I is that new really we launch room previously is wasn't improvement a by for to improved business warewash

field the the about introductions I think leading also Swisher of we've that the past. talked we're and technology shadow in

a so from of growth view, refill. really second the underlying XXX a And last X% basis that's growth underlying had growth reported X% X%; year. that and half in X% really we the probably compares underlying Our channel points to

it's and would the a QX anticipated continued I that accelerating underlying we So decent market, ticking foresee at the good year, X% up a end X% underlying to expect through as we in rate. and execution growth it's up, growth well as year ticked say

Tim M. Mulrooney

the Maybe business. are to and supplemental In conditions Food highlighted wins Doug. switching business Thanks, Okay. industry. continued beverage & new that challenging gears industry you in your offsetting Beverage your food

you can guys and had industry so mean you conditions here, on there? expand you what expect results challenging just by great You what

Douglas M. Baker, Jr.

I just many difficult a say our are Yeah. in would of customers environment.

lot issues managed So closures, performance remain gains driving many this start year. We've I We've large over in balance will we cetera. new than F&B said, our processors business. that about some a through of in more some the quite year. sales beverage say even situations et quite enhanced normal, same that business, challenging always successfully; think plant large consolidations, It the expect that had to and, the which food time cases, or has these to brewer do net could and impact. of I are would With of bullish lead for

sit we we pretty from think Beverage a comfortable as I at So in a now see place can right least Food & standpoint.

Tim M. Mulrooney

you. Thank Okay.

Operator

with from coming with Citigroup. line proceed the questions. P.J. your is question of next Please Juvekar The

Scott Goldstein

on can about can give pressure material from costs is talk how any maybe of margin came some Energy year-over-year, that and year-over-year. Hi. for of higher product Scott some Thank point we prices the you. decline the much separate you This in compensation of we P.J. on XXX-basis If rebuild just other raw versus Can perhaps that the more color out?

Douglas M. Baker, Jr.

Yeah.

or are are OI referring GP? you So referring to to you

Scott Goldstein

Operating income.

Douglas M. Baker, Jr.

Yeah.

was and if So acquisitions currency a of operating I off income, adjust would I XX and rest, things. think couple the you points. basis And out say

will We become dissipate do not that mean as That They're an impact. it raw year-on-year largest to earlier a material I difficult base and year. against was year with year-on-year cheaper. up, going situation a ago, more the materials simply began mentioned last because really easier go expect you in If clearly the QX you're raw dealing I impact.

start QX, us some OI in And there's gross raw in moving margins of so the we but through big year, seeing rounding as that's rounding to will we here early pricing end businesses businesses around of for throughout to one-time X% improved day, now the some sometimes from X% the throughout margin But both build in balance rise Pricing real as QX. but for noise. is sometimes of a which year X% the building the down some beginning a bit but as to the that think comparison little obviously us. will and we There's accelerate year; north maybe the balance of up, about eases kind enable at The of the this. is going build as mostly material, the little news. continue (XX:XX) compensation not that's go go to

investments it's are raws, half, throughout of versus have We first the year. second which the it's half that predominantly so both investments the in ease

Scott Goldstein

you Colloidal just provide a for thank start as business and And that why sense you. business can on you reporting on to separate out, that separated Okay, the Technologies background did it you some it line? makes

Douglas M. Baker, Jr.

Yeah.

this to prior in is Nalco it business. divestiture. that the it all plan while is start Care the to truth even reporting businesses year Our the to existed Equipment I formal takes mean, a unpack of

same It's a in It's really more it's little all a other managed than the consider of was of I a buried. a chemical Specialty we it's more have, we business. mean, it, is virtually our and would so business. about Colloidal the that businesses knew think as business. differently good it. have sort we I component about balance. Doesn't and service bit learn different the But

really was made saying into the as the if of Nalco consequence I'm business, category and over in polishing used other in to be by we'd we you other technology business, its got that XXXXs a sense the But moving decision in this will the – technology saying uniqueness. basically So this late be of made was The cetera. a supplanted other used we, glass, year into industries, last history royal metal, this molding, water area lot technology it in XXXXs et that that polishing the time learned they – areas. treatment

business good well we a this because as year. We growth solid margin grew business. pressure a it'll It as there with materials margins. last raw in slower much very have every digits customers, it's anticipate So year pretty pretty probably are double on focus

other. in So it's that a us but for good it belongs business

Scott Goldstein

you. Thank Okay.

Operator

Thank with Please Credit your Parkinson Securities question question. S. - Suisse Great. from Christopher the Suisse. Credit proceed Parkinson with (USA) comes LLC Christopher you. next The of line

but of proposition terms the on the balance side, expect it still on that have through is linked the magnitude pricing of service-level and a little current necessarily terms you in Thanks. about roll pricing in this more Is sounds or initiatives a the a way the long-term? neutrality cost just over on through You value walk us of think case just solid base can that them that you to best you to cost. that and and It price how pretty cost year? the lot not hit

Douglas M. Baker, Jr.

in hard customers work continually the say if if I will, difficult. of to work, getting be we because simply always the with I you mean, Yeah. will, you is price pricing sort we would our with program, to ups material downs on smooth I and represent, prefer don't the businesses of market raw know, sort XX-some and odd raws versus sharp total our all We of steady impacts customers. because impacts. would shock P&L, can percent

discussions. period need an we obviously we pricing amount for better when a So that. pricing lose a don't the an and you standpoint. It drives also that want more backdrop there's secure to having environment from We it. Certainly, inflationary get gives frankly on out to inflationary seek up critical

We scenarios with many have customers. pricing different very

At clauses. Some pricing have we clauses. worst, pricing have quarterly annual

a very raw one increase don't price concessions few the businesses are years businesses fixed lockstep, know, don't We different any material. contracts, you Water in percentage the during case, that also you and have larger in to started their our any we we other I cover and turn, market. businesses have an last of how price I'm the or work really cover given Energy because XXXX. of really that's Energy all price we downturn are, in and in from energy far have pressures but in price customers Obviously, raws pricing. hard move seeking, as than price And worked if to over view sure that more I as out different get find to have somewhere, could will, in these; steps as and pressure any back

on the last this very a improvement starting first it. So real of team. been in steady year. work seen in quarter is for They've our sequential pricing We've

this the we positive S. includes material that to in done. full to and which can you that see to offset Institutional is using foot the that's growth it move little your I'd long-term freight new growth traffic? we to best set continued of how intermediate your through say, that get you Christopher for Suisse based industry and tool into is service confident we delta improvement challenging and gap which trends, is expect and the your Great. will turns What's critical Securities in overall if I'm you. service year, given foot full raw Parkinson - but inflationary We have talk way, pertains next numer initiatives one this think just environment restaurants appreciated the year. traffic, that versus Just by And the more And moving about sustainable (USA) the a let's way or work as some Thank that? what's positive year products? as versus team Credit it to even QSRs? sequential ourselves to is about the solid say also expectation we positively real it's up on LLC expanded growth stabilizes by new we're the it

Douglas M. Baker, Jr.

Yeah.

even might range think conditions. this call things market range, to are into from times, I sustainable little modest is better, market is given would X% a Institutional alone, that what reach think I bit I semi-challenging X% at or X% when X%

pressure pressure warewash and good units technology job labor-saving devices, and to of when between healthcare wages read looks QSR their increasingly our We in makes and share or, make grow hard we and ability environments. a for We've securing It's very as So rising segment the as We done we the market both been a the partnering chains. best machines Institutional, in casual other worked done predict in look, via always the all on just we and that positions good $XX. and QSR to job I way there. sense well. secure to good mean, there all great customers fast share because it after in labor sure do protect continue on almost – a segments. emerging secure We've develop can job wages

all So come these of to play. things

So very I think I was clear.

was than a I while, when And terminal bake this rate, rate were growth. X% for we we're It's Institutional bake the believe lower and I was in. Parkinson that quite anticipate to the of not is S. don't future. going we in and forward. X%, see. - this think This we're Don't and to going expectation also For range (USA) at our I faster and see LLC this at than reasonable reasonable, you. foreseeable Suisse back in. Credit it's achievable X% growing saying, said Securities Getting going it's Christopher is a That's helpful. Thank

Operator

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

Laurence Alexander

in bit get effort? (XX:XX) gave. bit complicating Can about afternoon. about that any customer to you're that any regional are a the the you going issues little close to of concessions back Energy? energy you back or I seeing talk trends crash Good talk is demand Can difference sort you there a so sort price mix where traction in of the you're mean, little

Douglas M. Baker, Jr.

Yeah.

Sort upturn. moving of I we U.S. in is moving and, experienced guess downturn did the WellChem is in mirror the it I it's the the what is and it opposite of quickest and and in quickest, downturn. mean, it's

which largest the that WellChem the had as most big so through is we growth the protected, clearly also the price would it earliest expect from had taking decline. price decline you because had business, it price as as degradation most swap the we we news declines. largest so is, technologies efficacious seeing And in we price had when traction, most good technology The well It's also lower but the we we're cases, out went our went through. fastest would

to of experienced of went year. broadly next like North of that say the in pickup expect to more would sales down in we get now starting global it's recovery would of see recovering now I We again the needs i.e., you're working. America, before, around ground. existing in terms holes fastest, reintroducing quickest. OFC We mirroring out what regions, the That's because in U.S. market, are more i.e., technology better seeing

environment. So this there's front us of still think more we price in even in current

So going you're had Downstream steady, helps. to concessions pricing, getting there It's again don't because be I areas. we think digits if and Those are I But mid-single more impact. we that have the more year. was we're raw this material steady. know some seeing

WellChem. pricing three but a areas, the in seeing in dramatic you're focus is So most pickup all the of

Laurence Alexander

And Institutional, looking XXXX? expanding then sales force, last there few are that or the over rate increasing areas developing it faster competitive force at see after which the in to to you've Does the at make grow any the you're growth where given sales the been sense then wider years? you're advantage

Douglas M. Baker, Jr.

try particularly add maturity we're in almost would Yeah, continue as Europe, that situation more at I the expected would don't in a of mean, are much mean, and grow. think people say We think be growth parts team business, are we average. East through. you growth. this is you if that to little hire the at into of where going sales very it's more mix U.S. I to in of anybody Southeast we to where hire markets, beginning in to bit globally a not Institutional if certainly it. of you that advance have out i.e., But where to of and/or of you many a Western in of you the – growth – that's of a really I on smaller a if go more Europe read of cases in do we're sales have percentage hard given There size to other underdeveloped growth, Asia, the development, sales, point doing given And and equation markets, in. even advance you're add or Institutional, get are in sales need I businesses where specific and we'll China, do they mature I we some areas, as in terms

are not at adding but rate. We a dramatic

Laurence Alexander

Great. you. Thank

Operator

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

Vincent Stephen Andrews

Thank everyone. you. Good afternoon,

understand customers us are plus versus from much minus sort or you you going to achievement to goes segments? of between deltas more, from to that how could are come Thanks. plus understand important minus, increases, giving differences And or X% haven't? X% price already are help that giving just any price or that the there that As of that's you customers are

Douglas M. Baker, Jr.

very think period pricing, of I'd touched who customers year a two-year been certainly at year. last i.e., few Well, and the on end Yeah. be haven't this there'll

and/or in have several in their upon a some raw business very It's pressures area mix. the asked for been price And fact given and the increases. will material dependent product

I say will So it's just hard have I'd two. have one. will mean but many virtually to generalize, all

Vincent Stephen Andrews

And all on it inflation with just materials you on have Or then completely just and things do control? what's affected Okay. going been in that? your are a within expense own at freight follow-up by you as general, truck like or raw

Douglas M. Baker, Jr.

mean, looking mean all reduced clearly. doing way we're our shipments. of at to breaks. tonnage. customer I the well common use We're impacted Freight both and number reduce reduce our for a reevaluating We're carriers and of shipments I best is shipments rest and minimums as We're shipments, a facilities stuff. a lot is in between of No, We things. at the we're own our real freight policies. freight challenge as the freight don't of looking

our this is to at say in in got everyone look smarter U.S. and business interest would too. it's customers' and of first the we've it here, fully experiencing being and in economizing best ways hand. So that's understands I

news, nobody and this not a issue. can pretend made it's not it's real is new, up So

Vincent Stephen Andrews

you much. very Okay. Thank

Douglas M. Baker, Jr.

bet. You

Operator

give an Mario question. Hamzah is for with update Mario could in business, next Cortellacci European in Hamzah. the (USA), you're Hi, the Cortellacci proceed Please This your you Institutional Mazari Macquarie. of seeing environment? guys. question competitive line Capital Inc. - on Macquarie us what from the In Our is filling with

Douglas M. Baker, Jr.

That's environment. there. We That's competitive competitive that change decades. difficult the we've been It our Yeah. always to environment the most remains truism last for change dramatic I don't so. expect know a seen several in it dramatically. don't

tough remain Our admit. price and a company, price as almost competitor They're is Diversey. quite now. been for to aggressive that's I've decades new three the largest aggressive at owner been with now which they've long They as is but

mean, now. expect not flat it that target? stabilized nothing half, significant, right relatively minorly about Cortellacci timeline We Perfect, - it's the the update move just half the (USA), more first performing indicators and but think I our on based reaching Macquarie the to we'll growth of Capital it know but to one don't would and I'll you business turn looks half sales. in I XX% how second that best margin as you on So say. in to your in up second in leading Inc. region. what us improved Could Mario over. We've be

Douglas M. Baker, Jr.

a the say say up points finally have appreciate. I'd we say we clear OI going this. got is that but And even Well I XXXX magic little this were gods up coughed hung least on we occur we to would fairly by alliteration and out which XX%. greatly XX% target, few rolled business. at I it the when wasn't FX a to of or believe Yeah. a still XXXX

certainly key a would if on willing with great great at isn't, brings company to and see we margin; I them, pay. a the job customer customers. it. the goal our the any we in also. I I to that's be do to in to measure don't going XXXXs. what advantages to reason can't value have bringing and that it make key what think continue value, from but it's standpoint, that calculate say they customers, a and would going to early value. benefit it's on they're The other your the they're this for is XXXX, how not achievable what i.e. And look companies we hope They but is We technology pursue. achieve why with to before this reasonable is capabilities I So we

great it, - So to we've so (USA), Inc. technology. for Macquarie and what much. we've new to keep delivering the developing got in us do you Cortellacci Mario pipeline. Thank We'll see. like got I Capital

Operator

from Oppenheimer. The of the question. next question your line with Schneeberger Scott proceed with comes Please

Scott Schneeberger

– Thanks. maybe compare the minute? kind end to margin on half? markets, Good as Thanks. afternoon. and contrast for any Doug, of speak can pricing Water and there, going progress to a we just are second then thoughts first Could objectives geography, we how focus on half you

Douglas M. Baker, Jr.

Yeah.

in organic a Water strengthen been it that rate of every in business And sell facility with in growth obviously and had to fourth, the first versus happening what's and would down if too plants at I goes heavy still recovering in do core you That results you i.e. continues Water heavy/light and a that business. of lot The of and will industry, a heavy Water really strong core in shutting we its the China the number they've business place facilities in and are industry, pass. so is So look really only the sort accelerated when region. say the lot China don't region that been to areas. pretty virtually the of only out has

business a there think that Water pricing. I moving I good say generally feel in so to From accelerate about having we pricing success we are forward, where we're in would position good good we're broadly. in standpoint,

we as pushing Asia But guess tougher well. going remain that in pricing there I environment that secure start seeing that than are and margin in to we well. very QX we pricing the to I as is a get but also the are confident business team to other make our beginning always markets need we sure to pricing Water hard leverage secure

Scott Schneeberger

a return? thanks, that so probably been Okay, two near-term, will remain in Is again not never that years just over unorthodox it's that? was for the for a it's geography. thinking will quiet about should better on how follow-up something that things Venezuela and we probably And gone but think – or and longer-term helpful. about have Ecolab Obviously probably not since deconsolidated, that the but unfortunately then and is question, been clearly little

Douglas M. Baker, Jr.

the either around or have my one private wrong. of change public been Well everything Venezuela regime predictions every else completely and and

track I record, salt. So my on a based grain on would this all take with

will deconsolidate. over I business longer Someday companies reasonable way, Venezuela. of a I when out have in play no that control going that for have politically few I over imagine last and did to change occur. any idea in We no had got to that's to We years. things number think you've the seen

still are not operating easy. in We It's Venezuela.

to literally we entities customers continue hard as regime. this will market to before likely forward. customers have that They this go very support XX-year that we've post worked were be We ongoing regime. They in

to And making that don't and do, the trek, good. think so just company the that describe it's for what and because we've cetera, hard dollars, so them these We far been important can, I'll very we to near-term, it's I so support it make want for harm's But They've challenging it's we we years a in anybody and if a worked is sure business very, illegal. way, going support very by for customers. situation. we put more of to et that's reason. within sure happen investing this anything important very do without preserve number we over can a the us We option won't the maintain, to we everything in won't but do

for I wouldn't and to based stock certainly wouldn't do we but the option So company. a on I open count work keep Venezuela the it turnaround buy on the

Scott Schneeberger

sharing for All right. that. Thanks

Operator

Please line the is question. Our with Goldman with Bob next of proceed your from Sachs. question Koort

Christopher Evans

line the the know what more you kind up a other the what Evans forward. of that some of impact Hey, to maybe segments changes get on little the for that assume on was expect going margin just have I hoping a for of to accounting Bob. we may quarter. want consequence showed I income and made. had I guys. that's Chris color in It's could

Douglas M. Baker, Jr.

this Yeah. to handle I'm – the Dan and pension new to changes. accounting it's because going gets

Daniel J. Schmechel

Right.

guy below the yeah, is sort of now reporting. shows what of non-service, I'll income pension part good the which reported describe up what operating as our So, the means

a a and pretty on as that strong return is income expected depression pension return of out up just I think plus the pension income of would plus The but line impact of margins and the across basically pulling about on performance breaking operated it's minus. on of segments to would And evenly and it you primarily or you the favorable the operating asset income think about pension pluses can the tell, as have significantly out bunch reported minuses, based So other last being expected assets. that assets pretty the year-on-year of on of I other point corporately as year. aspect public XX-basis

Christopher Evans

Thanks And and then a going minute. for appreciate into maybe that. Energy just

pressure previously to the in comp kind quarter, some ending of lapsing rebuild raws You've of sort the here of some first of the bit. guided a

trajectory turn second time the get tough is quarter the we see positive a margin actually as after that maybe So years? first into couple you'll the

Douglas M. Baker, Jr.

be turn year-on-year confident be QX. Yeah. positive QX, I margin-positive it we're would dramatic. potentially QX, will say going it to Energy by is won't quite

months it say is what QX I know but over QX. it's of going turn couple exactly margin the in from turning going So standpoint. be positive tell I'd next in to don't math is to the a I will be you will

Christopher Evans

Thank you.

Operator

of line Please next with Our the question Silversteyn comes from with Research. proceed Longbow Dmitry your question.

Dmitry Silversteyn

for good Thanks afternoon. question. taking Hello, my

high in expansions? it there. your or European excluding Just to scale acquisitions both continue also, was It domestic going and you're seen more driven and up difference acquisitions. or just I by X% but Number this wanted can make in sure Pest maybe of from when to your we to Should getting we is continue Europe are smaller have on business to that some single-digit and expect X% so in a business. on what's that want growth couple is contribution to it growth one businesses touch on and the better anniversary expect SBU? And is

Douglas M. Baker, Jr.

the which businesses old other they're think of so a a growth fashioned think yeah, really type And, I is I ones. level business. Dmitry, high U.S. It's Yeah. the years it I at doing businesses also the they're look single-digit performance for high keeping been new way. performance has mean, have expectation. year, but expect continue Europe several we selling very our performing and fair business to customers it certainly Pest we at it now are and this I as in scale. strong good

standpoint and job fairly income have that good years, from the businesses. as you businesses They're operating as those a improved smaller they've went a well back improved well. performing it's and certainly a So few doing couple of on We satisfactory manner uniform. an businesses if there weren't in international had, some

good So about where are in Pest. I we feel

Dmitry Silversteyn

And the quarter event? that acquisition anniversarying, a is second

Douglas M. Baker, Jr.

For Pest?

Dmitry Silversteyn

Yes.

Douglas M. Baker, Jr.

triples, I The what I mean, think, fourth Pest call acquisition, second internally half. we

Dmitry Silversteyn

half. Second

Douglas M. Baker, Jr.

I date the my I to don't want – exact say head fourth December but here, remember quarter. October, sitting I don't – in

Dmitry Silversteyn

Okay.

it'll driver couple be a of So to continue the through next quarters.

Douglas M. Baker, Jr.

it favorable acquisition-adjusted that. but We is take of growth, too. out right, very Yeah,

Dmitry Silversteyn

which why Right, wanted two. the to is I differentiate

every a but know then And not I follow-up, fairly quarter you a to Okay. it as is been of consistently. as mid-single-digit looking a to grower it for you mid-single-digit grower mentioned been the you're hasn't low lately it and all that one areas but invest has Paper certainly

minimum making as mind without making does how do your to of to have Sort value your business guess? to proposition? viewing long-term what or the about investments a you above contributor and P&L And your this that I investments change without do do it to

Douglas M. Baker, Jr.

still adding desire Well, don't the my is to Paper like like not it onto through our clear, on be we to we like acquisition it. to don't business, home plan and add but statement it. not too I a that I

win standpoint, do needed it. in need make in We meet it in sure And would we're in the invXestments business, needs to we I we're tomorrow. invest If in we stay say invest R&D. the customer punches. today and to we in pull So a Paper that do not We it. to

active we so And portfolio. have R&D a very

to in come have of breakthrough that In fact, think that other quite we are Paper we as parts be through our business well. development items have frankly several going R&D the real positive

comment. I want that differentiate So to

and long we working We're decision. grow as incremental do management want on a There's so And as go diffXerent that's to we're put you it. really business, portfolio own where dollars, to a the some gas. about

still Paper accomplished since attractive improved have rest We've so So the said maybe going what all then, goes lot that they're forward. accomplish a and margins business. when third but proud well back EBITDA I'm years. Paper purchased is seven, business, what always look And for to history us. quite of attractive we're that We most team's was you. and now handily. to that done was going Nalco, it the like the eight forward it But we It's I this with of invested.

Dmitry Silversteyn

very much. you Hey, helpful. Thank that's Doug,

Operator

your comes Stifel. Please from Our with next with Rosenbaum the question line of question. proceed Shlomo

Shlomo H. Rosenbaum

for you bit Hey, gotten might think a you number, of where each think of up like organic the that the of a Hi, good in given the little Doug, quarters. good growth some two talk you've in you level. morning. questions. had and my row water Thank could afternoon, in that a that more seeing be seems business down terms versus X% but high momentum? things X% of that's about what could about mark sustainable or taking near-term – that you that now? we've that we for talk within and kind be improvements one-time-ish, co quarters to being thank it is There's a something right Or at with Can that growth? the you're Should the you're put

Douglas M. Baker, Jr.

for Whether it, I exactly year would could number or growth. every be organic in of at the kind above, I a our X% going the be rate X%, range quarter around But time the be could a No, sales year. for the right talked rate for for believe our going think some that balance below. of for it's that's I we believe expectations a think that Yeah. long business. we've

Shlomo H. Rosenbaum

in looking you just comprehensive the accomplish generally this can more out, Is with details what And a you great. little of for day Okay, What it? business? efficiencies to kind to about in, in exactly it this follow-up, multi-year? is efficiency give initiative? day a versus What's meant do

Douglas M. Baker, Jr.

is about has water think justifying us those typically obviously internally, difference important for return is we've that marks future. and the stage this on investments a the that we return efficiencies. driven the had and talked that And setting Well, to been Well, there's high we've about and in it, And the systems. sizable investment. we've whenever you're Yeah. talked by

of but over potential. quite on kind a These that harvest, time get full realize start and at get the point that maturation place will, the to system getting you efficiencies. got implementation enable. overnight to we're efficiencies if fairly never are this pushing it aren't So now aggressively, plans. putting these years, these after efficiencies in And several specifically plans And you or you've some is to these you your where on build date there's a start

to sort And that's benefits what efficiency implementing that we're this of it's investing so is and going talking what see, to is about declaring the now to switch we're about. also from that time

there'll arsenal. going be drive of certainly in This do about to So to periods continuing OI be talk is going lever forward. this that and more over that. tools conversation to will one We be the this another us important margin always our about of enables time

Shlomo H. Rosenbaum

Great. you. Thank

Operator

of Our Seaport proceed with Global. next Mike comes with question line question. the your Please from Harrison

Michael Joseph Harrison

to see the business, and that from last that the in costs? new and leverage the something the get Is those of when and several see see good Maybe there? what's we referenced we later quarters for afternoon. bit, a Hey, the on customer see cost to little then of couple Institutional question quarters you start leverage investments that the building covered you over kind you innovation a expect return installation really the should kind accelerate timeframe

Douglas M. Baker, Jr.

the look you some period talking it you but a that of the that going on so mean, more new within install make up year, have when so that P&L, so, have What we out Yeah. of which near-term outsized happens is start if rate, happens But have about of I we may a do we've your you just installs and need max, is XX-week at a only couple large of reference a reporting, you quarters in pain that margin and typically there's little get end will. consuming you distortion cost. can quickly out. going certainly up you and just end periods, That's start rates, can getting us with the smoothing taken of any reporting of if end at context upfront. expense, depreciated, it. is lot chosen But that why to a significant which when And to Once understand will, to the people some little impact. big customers business, and sort the that look it reason whole was fairly odd. specific it's it we since we smoothed P&L. we we're over of it If that up covering of gets years, – behind do quarterly

long. all that's this, it's in it's of We'll Institutional and Now in take this this good much this. how this segment, like is the this But pain. news, is shows A lot good of Specialty business up particular. why. in We day but our

Michael Joseph Harrison

of reference we rolling in All you couple and was was those related? delays it right. things Institutional. over that can some past rollout and just two Were SMARTPOWER, and happen the North and also And supposed SMARTPOWER both the mentioned Europe to out America wondering soft then was in delayed? you Europe that quarters are in I'm

Douglas M. Baker, Jr.

in go The XXXX. U.S. late It SMARTPOWER went the supposed delay very was to in was principally in early It XXXX.

were see we the one one to pickup sort we that of last beginning of it's which and also and did it reasons we So confident going old I quarter referenced but it were news talked about a as in of impacts the QX, see.

Michael Joseph Harrison

being year? right. All is But Europe out in rolled this SMARTPOWER

Douglas M. Baker, Jr.

It's not too. out it's rolled being U.S. It's rolled Europe in the and out. in out rolled

Michael Joseph Harrison

you Thank Okay. much. very

Douglas M. Baker, Jr.

Yes.

Operator

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

Rosemarie Morbelli

a was everyone. I by X%. looking you. year-out Thank X% increases mean, your afternoon, pricing, at price year-in I rule as Good Doug. to general and

are costs Are missing you something? are So raw I an we as and higher speak, I pricing. was increase something expecting environment and doing a so we still up going material different? in now Am in inflationary

Douglas M. Baker, Jr.

to those would a, X% exactly. say, I moving typically, or getting We It's close we'll now same even non-inflationary Well not we're when up. let's Rosemarie, business. say a may isn't X% not I corporately price. to about X%. every continue in would but or This deflationary, we're even talking in environments over the seek we're in say typically a round exactly

be that, You are above have so some some different to pressures going below.

new is, the other this; in talked use technology. platforms, one And price typically is pound, you the equate it if a platform platform we or that the of priced the to as kilo, past, pricing other new tools is as per the liter rollout ahead to basis. we've old double-digit is we new offset of The

say that's historically I number one our so would And tool.

naked rely on call So it's these you this sure you're well, $XX, together. only inflation you're to now it, of you I working have you and have on new make can't technology; i.e. driving this $XX just, we But as that all like getting pricing when need stuff as $XX.

Rosemarie Morbelli

in addition the surcharges to freight price on not increase, up are side, pricing? showing And Sure. setting you probably the X% that up which in are

Douglas M. Baker, Jr.

go Well geographies start around certain utilizing because revenue fastest it's we freight certainly surcharges cover to are of businesses and in additional some to those costs. the securing way

So we are doing that.

Rosemarie Morbelli

then may and if And I in attention of size it of the with it Okay. the separated on order really to or us to grow dispose you order And share Could in a of it? you lot it to pay Technologies. have it profitably? Colloidal

Douglas M. Baker, Jr.

million It's move rules more other based mean, last year. a segment how this what things. amongst in $XX Well on you it's No, about a strategic or accounting do I of big isn't manage was what's move.

it at double with on managed business it it's don't grew all. year where I the issue well. mean, focus real belongs. any in digits, it's been Last place so the that's So I have

Rosemarie Morbelli

Okay. you Thank

Operator

you. Thank

Our Wittmann Baird. line is question with question. from Andrew Please of W. next proceed the your with Robert

Andrew John Wittmann

Hi, guys.

guidance contributed fact the the fundamentally $X.XX range? outlook midpoint in of Is the by, raise your than or there changed? just beat here to Was on that like there anything the $X.XX what, that you Just anything that $X.XX. more

Douglas M. Baker, Jr.

Well we didn't.

on moves time. since the not consensus always say, I focus we it our all around As range,

it So we beat consensus really because a the number. the average wasn't versus had or

each much to was I point and when really so underlying looking on sort time, business based obviously initial were at factors strength. have underlying of really it's further other trends, we We're was other it looking the A we et in our think at at of cetera. give the sales neutralize this the lot than range it strengths. in year

Andrew John Wittmann

you. Thank Okay.

Operator

floor Thank you. closing I time, will back to Mr. the for At Monahan remarks. this turn

Michael J. Monahan

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

Our best rest the the for of wishes day.

Operator

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

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