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Ecolab (ECL)

Participants
Christophe Beck Chief Executive Officer
Mike Monahan SVP External Relations for Ecolab
Scott Kirkland Chief Financial Officer
Tim Mulrooney William Blair
Manav Patnaik Barclays
Chris Parkinson Mizuho
John McNulty BMO Capital Markets
Vincent Andrews Morgan Stanley
John Roberts UBS
Ashish Sabadra RBC
Laurence Alexander Jefferies
Scott Schneeberger Oppenheimer
Steve Byrne Bank of America
Andrew Wittmann Baird
Rosemarie Morbelli Gabelli
Jeff Zekauskas JPMorgan
Kevin McCarthy Vertical Research Partners
Mike Harrison Seaport Research Partners
Kevin McVeigh Crédit Suisse
Call transcript
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Operator

Greetings, and welcome to the Ecolab Fourth Quarter 2021 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, it is now my pleasure to introduce Mike Monahan, Senior Vice President, External Relations. Mr. Monahan, you may now begin.

Mike Monahan

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

by refer diluted well quarter product as institutional double-digit the gains in brief information to as pricing, were also and We with drove in the unprecedented innovation with specialty year-on-year business were challenging on business negative and year out partially effects overview, segment. you accelerated a the cost and sales earnings product and per in a quarter. delivered wins XX% Industrial our Starting estimated segments release. supplemental in productivity. We and supply closed aggressively continued in in in driven share other we offset key These innovation fourth invested growth and strong strong the COVID-related drivers by which constraints the an pricing, business increase XXXX and activity in

and to deliver increases year supply the cost increase. We constraints also substantial managed successfully full earnings through strong

reducing better and outcomes their simultaneously Science enable including Certified programs, have and impact, us recent ahead, Looking environmental all and proposition customer Zero Ecolab's create further Ecolab Net costs. differentiated reduced to while value

new our pipelines positioned are advantage. capabilities innovation to leading to add business and drive wins Our are areas at and and well record continue competitive digital growth focus new market levels

offset and We expect than to productivity earnings reduction growth. yield of and sales drivers cost these again gains actions volume once more higher another to year the cost double-digit along strong and pricing with to drive leverage

superior value enhanced here's trends Beck with to And along post-COVID us momentum, well the business proposition shareholder our leverage with position further macro now and strong Our long-term deliver returns. favorable comments. and his Christoph environment

Christophe Beck

so dynamic, learned Thank The again very challenges everyone. Mike, fourth that presenting remains that and quarter turn once new global the afternoon, into long-term environment we've you showed to opportunities. much, good

during line innovation top XX% in in the X% momentum a Industrial North remained Europe. environment. Elimination same our organic especially and America grew reached & pipelines came constrained XX%, strong. Our really Specialty in X% fall, or remain At and back business time, the the XX% and and growing in new strong, quarter, Institutional Pest COVID

and As the with we quarter. double rate to all we freight know, saw the impact supply QX almost substantially unfavorable And discussed and inflation of compensate which for we share by that a for costs, accelerated was to as required XX% the $X alone. the and our pressure high in inflation in material close raw of in gain much fourth then per total full still, costs quarter, on line third. to close half pricing, including year This nearly the constraints to X% kept significant incremental rising top from momentum, exited

to well while we change, run. very might ahead. best the long now customers' We aware team any confidence environment but XXXX doing our protected our enhancing are power, commitment keep margins and in to again, protect supply we our will our ensure keep all that healthcare time enter once operations stay at and with and demonstrated So for to water condition also our food, the

by straight COVID line. the be it for we The behind year. hard We as mostly expect the expect even to the not global of timing end but this to economy to if strong remains us perfect impact remain predict, middle exact of a

a at second least ready half remain to to and this, for half, the the the for it while we're inflation high expect ease of we too. during also first level, expect getting year, at We

and We generating best past strong in or very growth sciences, through business keep new investing the places We'll over our and for value X and will driving automation microelectronics, of we new growth accelerating by life few pricing. really by inflation is promising keep making digital well naturally to years done our by enhancing by the engines diverse addressing our high-margin like by which the institutional we've remain sure work data fueling most leveraging recovery, centers by global the talent. further as going innovation by productivity

the further year remaining high during costs materials of the year. the before eases it inflation expect we half raw For and to freight 'XX, full increase with second

for for pricing year times. in in and year a as with the and proven is beyond first the expected full lead a flattish and keeps growth year half certainly first model the sales 'XX the the building X% half combined range, X% very a productivity line many earnings healthy be strong dollar work to top low with these ahead has and in pricing strong to expectation growth teens full the is All enhanced get Our with 'XX second should Ecolab to actions fast. EPS steady adjusted our as quarter expected of to the of margins in which inflation and

the market and Finally, as remain the we've major against focused on disruptions, throughout will future. we pandemic done

For the our us, about it's delivering our customers long-term and short shareholders, term. managing all while to to value

important the ever better protecting mission of and it's as resources been. Our as is to life people

billion fast. never opportunity we than growing that's larger market Our global been has chase as $XXX a greater today and

will We Ecolab period right the and even they us way have ways we the our customers when back by feel and that in our things more needed right look by protecting protecting did stronger made and truly the that teams our relevant. most company on this and we confidence

customers progress company, and look line all leading double-digit forward infection questions. to consistent, on our strong helping helping us and Certified and the your customers journey, ultimately trajectory. on the back which businesses to EPS the protect our pre-COVID Net sustainability Ecolab their reliable Science Zero I As prevention top customers company, growth their earnings getting as and of with

Mike Monahan

Thanks, Christoph. formal concludes That our remarks.

note, before we to National on the annual final Association XX. at hold of in our Monday, plan Restaurant booth May our a Chicago begin we show Q&A, As tour

please have contact office. any the you you If Operator, would questions, period? my please begin question-and-answer

Operator

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

TimMulrooney

Yes. I just have materials. two, not on raw surprisingly

the material for in your get inflation inflation. is built is what tell XXXX? the is inflation numbers us material could I first was And we guide? how cost X that's then hoping that Can So in into year was raw 'XX some around material raw much now complete, raw the expectation you

Christophe Beck

question. Great you, Thank Yes. Tim.

the that's of us. core So topic, obviously, all for

And and freight, us, For year. We spiked well if XX%. heard in materials we raw you've and was the we it's to you look it XX% combine XXXX, at as increase we the of as QX, know, well. read roughly that saw past as in as

the allow our So X/X sort as and in 'XX, dollars full and to half half high roughly, year and the improving second us freight to expect our the get planned. of of is get raw that aligned heads margin first with plan pricing sales during assuming that then during well we assumptions of represent the terms since the materials should similar And of to second half pretty for that XX% XX% same the to inflation XX% first 'XX half, leads ease for happen the of year, the QX what in at level, to during we've the in roughly 'XX, in of and 'XX. then we a which XX% roughly the the or in stay seen

Tim Mulrooney

Yes.

Okay.

to going You started but case it to in kind anything of else. second address I'm have ask question, you anyway my

look just go see to you gross to expect from And The all that percent stay of kind if I'm where they reason And it margin the is to following new do last closer was XX%. equal normal, ask, mean, if at plan your margin, get to there? We've how step average down years. this and over XX% gross you to XX%, over back you to we that, XX% oil assuming So wondering see about kind this historical or expansion of time? on XX-ish normalization after back XX% up the few today, else seen I I are would of if expect it prices 'XX? we

Christophe Beck

Yes, was we we time back of that look raw they where When obviously. in of taking And start, performance work as outcome were all the in expect is years, wherever that over they income an which level industrial, and the past to to you in well, absolutely at as margin pre-COVID did such. really XX%. the pre-inflation the get lower operating instance, start back performance, or towards trended material for as look was XXXX, market pricing north had the

going and what's over of as example perfect the expect Tim, when, future. improvement a beyond That's XXXX. happen in we where go performance and definitely don't to good I well. the to very half know, second So that in of we back 'XX were get but to in time Exactly

Operator

next is Our line from Barclays. Manav question of the Patnaik,

Manav Patnaik

bit was reopening. be whole the longer-term just little Science thinking you that's some And that? XXXX? elevated Ecolab pre-pandemic to Christophe, like and -- elevated, more is theme, The a sanitization trajectory towards I and why ex hoping growth just hygiene which it guys Certified. the what or about will how numbers that could think you us give do Maybe in looked have now like you be around supposed

Christophe Beck

going be Certified I higher to which more to XXXX. means is because lower level as than going double-digit going going the foreseeable forward, than expecting Science for Manav. well. In at versus hygiene level during guests increase but of question, to customers and their and Yes. use the sure. be our sales that for will remain think Good which especially it's XXXX, to pre-COVID, especially really, program, it's It's it of COVID XXXX, were are close well. Ecolab sanitizing going with elevated really future higher Customers And

but do 'XX that related sanitization, in that it bit, ease digit in as the has close the to of hotel limited trend all still we've mentioned, seen the and had to to on as expect staffing continue our to double versus fact to sales a little cleaning and pressured that happy Some XXXX, the come. quite which restaurants years sanitizing also well and probably the was

Manav Patnaik

greater might that. job all cost at that the suspect inflation. could does that -- have it or done a managing more, competitors struggling are you have here pipeline you is of not question that more. be executing a your good Appreciate relatively you mean I in M&A lot on does you a it. potential my And Got way? And guys be that looking obviously

Christophe Beck

very Well, focus we strong good Manav, on companies. in of usually M&A, terms

I at a in are that. very exclude we're not but So first companies looking doing position. not that But good and that that we right are not would foremost, great, you're

that X% X%, as value You've for seen we Manav, That's to our over and company, confident customers those and keep our if with pricing always do those improve in term And is demonstrating evolution, long it, do situation. the as so XXXX, the well. make our well, we create. going QX to can competitive we X% to exiting well we so as to in that sure which that as keep can time customers get it's

Operator

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

Chris Parkinson

Great.

gains. should pricing to as as and in your say, is momentum, anything these of, I'd 'XX labor? how the context and let's power logistics with, share conceptualizing investors all be earnings markets 'XX Just it together moderation end rebounding true and say, Just normalized put eventual market in continuing raw discuss let's terms of, say, the material difficult transportation, days, in just

You've already didn't 'XX? this power And spoken should for GM extra there are in just 'XX, any about we normality, of I about terms mention? earnings but how considerations think

Christophe Beck

to pre-COVID term, this for going back long Yes. Yes, a Thanks feel we're Chris. earnings to I get few confident reasons. question, quite trajectory your for that

the recovering is going margin Here, and X first our of one, to it's businesses. highest keep institutional

going end well. a as Purolite, up of absorption gross history last which during prior creating to demonstrated company a to than we've that's as terms it to as in help going and period, in very growing so as that as we industrial leverage we inflationary well. that's that that's Then well. our price fast, the over come. work just that very margin transactional have. And but as that mix with perspective, we've a well, from not and the Then over have versus those of high fast inflation, years cycle And So are terms that's productivity, higher margin done well all you businesses you mentioned, and like that where are we things growing automation our was to digital keep obviously, in improvement of going SG&A business well to improve obviously, work the least, add

all improvement. together, positive for So you margin that our bring are all those drivers

Chris Parkinson

of follow-up, the the a been And difficult just through share earnings mentioning consistently. releases gains even you've as helpful. market times last several fairly That's quick COVID,

at can share As the disappointed years? gains XXXX, beginning us you'd we opportunities? incremental on based expect few by how of market update your And on give generate you've the even here earnings new perhaps the perceived where quick next your surprised segments today stand you over a to been just power baseline just pleasantly

Christophe Beck

Yes.

So on in always the a economic than the But general think faster by it's a environment. growing question that's is share if different good the market you one, fourth XX% business. quarter, about

when was big take down XXXX, of important down But is the macro, example in restaurants versus traffic just XXXX. shares indicating it's dining in was our which XX% taking U.S, business that or the for if you average. the of the XX% rooms, So and we're in us most in for gaining X% institutional, instance, QX,

So that's you place growth where In much it's -- share obviously as to most well paper, the data XX-plus faster as gain where definitely share, Sciences the market growing a where Purolite we're as well have term. that’s different fast market X%, objective so growing Industrial, out always than long especially compare. well extremely lot there, well, you with we're Life we in competitors really take our to we percent player as very best that difficult showing how have the gained. businesses, centers a combination so of where of with a well, we've that be of X%

mentioned, the So with you to faster good indications as leads than over just XX% look are and growth that share increases that it macro, general like examples Chris, at X time. position economic well is good the our improving I

Operator

Markets. from Next Capital John question the with of line BMO come McNulty

John McNulty

incremental as like it's customers One, you're two feet and the have up speak of that you and them. you face you nicking come different offset it's well, Can number you seems that it. given how to it something of how there’s think maybe with the Can by street have in pressure to internally. to maybe to helpful out the kind for that angles But would I with revenue you going that you your be where your can helping can to on speak with customers? coming deal solutions

Christophe Beck

Yes.

mentioned, you As John.

ways. look at So we both it in

do wage have in so a do we First, I inflation hotels. to find not time issue, have how people, help but our we who hard only customers as know, and in restaurants

less people So more expensive.

lot that that reasons So that's of and markets. our the cleaning automating why sanitation we're obviously, customers, in helping, a to growing X work, nicely solutions need are they those is of work the do

way Now back The in way. it to reasonable I wages. own look our at is a

the trying we're 'XX, stay rest competitive for market. of with So to the

the they last those than doing that sure on and always key last on of of when And the least, and been that X and whole specifically point, how company. well is but to longer retention That's question that the more over we're we've we managing over really last many Our the happy well. talent off. we talent been struggling right as making stay ones just has as The done indicating in not years -- is work our we're wages. support the what to very in we your make not last our back sure paying digital years get productivity. stay company our focus And many that in very strong terms have

But the net-net, going SG&A our that's good as in a help wage year that's and will in as that face it inflation year improving see well. we story. well improvement to You mitigate out,

John McNulty

little the XXXX?. Got much granularity in teens guess freight maybe you can to bit kind that's you helpful. or of more when it. of and back a for just color quantify more think you a I like the from -- then how material little sounds And it Got No, growth year. of it. bit It low or -- decline are on think for how looking raw you're off the give a in come EPS us these side. going half much modeled materials you raw

Christophe Beck

to should way quarter. see half the the that look first in to best be The basically what very is we fourth at similar it

So about we've the well. roughly as expecting talked we're XX% is that what

that. the half for second rate of first But base, compare a obviously. the that of for know, So I high we to the the be, 'XX. year don't of And half expect of growth half to you

the not it's rate The going Ecolab inflation the that's is that getting at know We moment point. the that down, and in And XXXX. John, only down, Industrial is goes in is best where it's when. It's eases just So of of margin as enhancement in positive news we've some lower. good with create terms to dollars. going demonstrated growth question we go that

John McNulty

Got it.

cost So the understanding go just assuming back right? slows. of the the the I you're in clear, trajectory that they you're to Am be don't year, half assuming down

Christophe Beck

John. early it's year And we XX% expecting go to for freight as kind last up inflation, -- and had yes, the year mentioned rose with 'XX. cost and we XX% on expect in Exactly, Tim, answer full of so to

right now. that's So way we assume the it

Operator

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

Vincent Andrews

fourth on were seeing raws breakdown you bit freight in expand is little and a the maybe terms just increase of just in the is the this the into to in and and And any that raws raw on logistics are you and in incremental speak there's side also the How giving change problems. freight COVID of the continuing of if of mix Could terms quarter what the disruption? you year? it versus much maybe

Christophe Beck

it's It materials that are X was Industrial. in various raw pressure increasing always roughly at the time. giving evolving same same inflation because quarter our in of in us as Vincent, was across XXXX, as well businesses and That's the not not the geographies well problems. It's

good So in is a a way, this thing.

spread out specific becoming everybody out as our Industrial, But inflation freight not and to So the just geographies, cost businesses not is knows drivers across it's well. North of as America. is more This becoming the there. especially us new

need So X is, on good logistics that's very news hand, X the well new we're on X on with. deal side. the to organized that we this The

'XX and sure lot XX get any as logistics, optimize a And helps. people as only as logistics the surcharges new that of leading more even well former have. in not have that our logistics might over for we policies, months making Amazon we well we've our engaged We well as well paid last as increase that but

Vincent Andrews

And you in just maybe health care your this could Okay. give and Sciences? outlook us Life for year

Christophe Beck

our outlook Vincent, in of mean, You terms what?

Vincent Andrews

terms through expect in year? move you how business of perform Just the to the we as

Christophe Beck

that. Like

that we've shared, a as Well, of we fourth business stay X%, in the expect going kind going we've 'XX so entering XX% it's in terms to good as and Okay. of as is X% evolve since very Obviously, to volume 'XX, over The quite something mix in momentum. quarter mentioned to steady position pricing pricing. move well. generally, to that closer delivered the between we're we're

kind of in So a the it to for the year. growth, teens And expect EPS as steady, be good the full we momentum. for low mentioned,

the half John. side easing, to second by and on as going on The the higher going before the improvement margin to pricing just more steadily XX driven is mentioned first up of half because and the with the be I inflation going of is side be lower

Operator

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

John Roberts

Scott. Barron's XXX congratulations, sustainability Welcome, Christophe, And on ranking. the

Christophe Beck

John. you, Thank

John Roberts

who this there's new programs? up of enjoying interest Are out signed less know on, Science are don't you I if there's sign-ups or up as Ecolab new that adding goes in on. for signing you there Certified, the early everybody fatigue just benefits still for

Christophe Beck

Wanted a right way their them, for sign. really as even which their to any good enough, was McDonald's the for was make taken well. well many that that sure own don't on their It's board we really on would kind it brand. brand guests it right perceived as that No, example is slowdown been front, well. it time, has of supporting interestingly was it to get what perfect with mean so understanding for see a customers

fairly say. So I they if came the late COVID journey, in may

interesting, we are not the be healthy. So offices if because, that sure the to anything, less it welcome becoming mostly now it's where interest, your point, more people which interest, is and more it's hotels, COVID so for And would places related. thought to safe that restaurants, John, encouraging make

Operator

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

Ashish Sabadra

delivering quarter. another I to to 'XX? going fourth focus in just into show think momentum about solid momentum, on which X% growth should water, continues wanted we How really the that strong

Christophe Beck

been while, a water bit I'm the business I've a leading for Ashish. Well, about passionate quite

well, this going issue X water we are bigger So is we're keep water reasons, that here On to we're X as going something use but a for more X well hand I -- growing going to positioned earth, hand, on believe because on get water to reasons. scarcity uniquely X becomes not more forward.

So that's the first point.

energy and not the time. water always companies water, there, XXXX, And but XXXX -- Second, both for more time. benefits, realizing to same save have less well, same get the have, the that at half because if net-zero only water you companies can carbon good they reducing you footprint that getting whatever a you water, issues carbon they save perspective getting by from always more so it's or well as are and commitment committing by

and the same well it very science expertise who And mention the probably new get companies of that can only for is help point is to I'd well, technology high we time a the well the in as trend, net-zero, can X as at company last So which because the kind so digital only us. we're which really bring do margin great that a there. at much

together, we forward. about bringing do fact high that can the going and for need business me really that it at scarcity, all net-zero bullish makes So water X margin

Ashish Sabadra

with going how And commercial growth players small follow-up control of been acquired, if That's engine on about in very environment X Again, X your -- position And a a think the just I business. forward? ask expand maybe also you. you but to color. in quick consider business, And the strong commercial do you a changing can competitive control? particularly would for elimination pest helpful has M&As the pest potential getting separately, commercial large the pest

Christophe Beck

fairly point it's So billion your a of a business, maybe small us. to for almost

So really during fourth it and as fast, it's during quite XX% growing grew It's the significant. been quarter well. extremely and it's it's profitable, growing COVID

So you the just you the to pest. make show of and safety beverage same a really a to infection with plant, business. food need elimination I the pest pest you that that everything as In a about And strength that in you resilience, other perfect so else to we create do do. thing bring issue, that need the in complement to In is like eliminate hotel, it's well, when restaurants. think to the a same not prevention, sure hospital food

a for a the times we a fit don't as to gain in big as comment pest And in now perfect getting in in past, us. of have a M&A into of well so details, open we for we us way. best well will the of competitors future elimination the those to in value as they're M&A ultimately the consider the that are but for to respect And share. valuable we we definitely our in a doing in that busy terms are are means M&A, terms proposition businesses field, by it's our one lot, well when So company. lot them, integration, as But to company doing point, of a your distractions us

Operator

Alexander Next question line is Laurence from with the Jefferies. of

Laurence Alexander

guess of effects. about questions I X lag sort

up mentioned, of so? with compared couple of your of initiatives the the of how of next is if improved we've reassess the can other their the relative in that and than you environment, as years versus -- should pace couple stable in And seen pick or the kind you the productivity of -- your some XX, Ecolab and that in share period? of has peers? water top the sort the more portfolio, first The position gains secondly, to years digitalization your And faster to line should it, last all a sales the decade able and pace recalibrate volatility of sort gains over customers of growth improve XX-year the productivity factor in say, last you've and the from be and last are

Christophe Beck

question. Great

see big all questions, obviously, X here. related I So

as So I'll extent try that. to I can on be as

mentioned most before, the in growing in our businesses. of fast fact that we're So first, as share, terms of

So X going all the indication obviously, once we're good it's share. dividend gaining be that's whole slow, are position And of and not well we're that's growing as going behind ones an stronger just world business us other because afterwards. a that pay craziness to going is the is the to in even

always focus been the us. for it's So

in and useful to is We Well, something, future. have sell this pretty doubt company, mantra which unpredictable in in the the those times. go for that's going pay dividend

SG&A of in well. that that the firmly we any in of there technology, our terms ahead technology, about the as And is, monitoring has see field productivity that remote right our dividend all in for customers, ahead what to the lead improve believe that's together, seen a I I X think it's but all momentum. to second to in in I it pre-COVID, productivity, in in is years of believe top that few going growth line the the bring not ERP made performance improved, future of going see the as well better in well. your now over years good see pay me with we've we've will is such if Yes, can even question that, as pre-COVID. be we growth come investments in thing all past as feel leads should I So which to you you that AI, only When terms to

Operator

Scott Next Oppenheimer. question of is Schneeberger with the from line

Scott Schneeberger

environment. the I the think revenue in percent major forward? spend beyond X% levels bring probably of in it's CapEx logical Where increased a categories CapEx the one. of see prepandemic. XXXX as Scott you I'll XXXX, But perhaps given below going do first some in in still pretty on and

Scott Kirkland

been -- we've there's know, of certainly question. the customers. lower big on for CapEx. thanks portion during X% CapEx as range, merchandising And you it to been in And historical that's around was have sales Scott, a lower. with relative of 'XX, equipment as Yes, of sales our our

back, the to CapEx expect be as those come historical rebounds So customer X%. that trends similar around to

Scott Schneeberger

And It's of And approach at and the perhaps it's a looking tumultuous kind you should 'XX? we level on since how initiatives curious, both been high that the of How Christophe, be efficiency discussion a been but time savings. just Great. as that? of 'XX of period, there's overriding theme you. progressing end long-term and while just a then, been the we are cost of or

Christophe Beck

Yes.

we're all results Let in made a one, I'll not comment had The in to technology, savings it's that Those pure mentioned And has initiatives. past initiatives were me that. initiatives and mind the on only the technology those back And were this all cost Scott, far. had past -- delivered quick in have investments as that efficiency not in really here. keep ERP we've initiatives we well. digital great and leveraging that it who progressed years the so details few I've the pass that let's make over before,

well as going forward. it's I margin going improvement to even think give better

Scott but it's we're a that, going So doing, that. something few on going with way, more to that in forward. do we're a going But not organic so that stop to maybe comments

Scott Kirkland

Thanks, Sure. Christoph. Yes.

a cost we and have XX% with of programs. big on the institutional all up complete XXXX XXXX As were end on If a through it. wrap the tail savings think programs and north program, both advancement those Christoph XXXX, from and the big of of bit time perspective we about those, and going the well very X little programs of to we the XXXX we X have the said, and on we'll into progressed a programs,

Operator

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

Steve Byrne

had share You've view do couple had Purolite months, in outlook business changed the a relative your what you profitability on of previously that? now business how Life to that that gains you industrial the both and expectations anything has Sciences, from on about wallet

Christophe Beck

We're with No. acquisition. that happy really

As months of in. you X kind mentioned, we're

So we're really the at beginning.

It's building synergy that purely have, well have play is to need industry X keep enough capacity in U.S. challenge they're And to we doing significant having, new and a an in in point a they supposed manufacturing challenge or do really it's sure of good. the that And U.K. in and interesting the first harm in well. which was extensions, is they is synergy second for that as half 'XX, give going objective we coming we is as inflection growing, on which any growing the and not order cost because to we challenge had, not to and as We're that in really biggest first working can no is have to growth see. the extension keep that that's that's keep integration a be which past, half. plant an play. the the Our making the synergy all a we line a well

so what So, with really far, seeing happy we're Purolite. with

Steve Byrne

between you expense? do not will one. Or I out follow-up offset Do you results your include more change the that think amortization business and you on expect operating quick want amortization than if view to can that of in COGS? don't also of through the what months you purchases flows and earnings? raw And adjusted average your on comment number materials of is when you your it mind,

Christophe Beck

So we on well 'XX. in on how as is neutral. been in to the on as going amortization, clear business it's we've is that the the But is question neutral Obviously first be in see to to very amortization mind $X.XX 'XX. to happen question related important since the keep evolving 'XX expected

amortization since coming, cash obviously, noncash So that's as item it's a relevant such. and well it's is as all the

in are much what at that change we're indicating definitely anything, going we've So share looking not done with going Science past. Life companies to we're you we're usually it's but the handled in doing also to how amortization. is arena, than and what I'm other the

So the business at want you what's can same know to we well. well, of that it as the cash time, true return since know

Operator

comes with from line Our next the Andrew of Wittmann question Baird.

Andrew Wittmann

just guess, Great. start a wanted out I revenue on outlook. X-part guess I the a, to with question I

fourth above XQ X% ramp clarify it the going part clarify here. think was for in quarter, X%. think mentioned And to if for that pricing that be rate to the guess X% the to question wanted Q&A, said that or you just could first Christophe, X% the is, I year. I for presumably or would in going to to wanted I will you to X% X% I in year, it's be remarks, your think I the I suggest the be X%. exit your X% prepared pricing

could mean growth So you could revenue throughout in rates to your gets they And are? could performance that with FX just where X% clarify the then what for Scott, you talk year here X%. or 'XX the cadence you to about to current maybe the

Christophe Beck

for quarter, is take for On exiting and quarter the to and year, I'll Andy, so the X%. pricing, one, mentioned, FX first I'll between first at towards and fourth the as of X% X% give the full being the so we're Scott. moving X%

pretty current in considering that's steady, plan, of our it's terms inflation. all we So know and

exactly and same inflation As mentioned dealt with but relatively before, rolls the freight not are steady. way,

'XX during X% Scott, to to And this FX? So between which the these X% of average and X% X% leads on ultimately.

Scott Kirkland

increases Yes, certainly. Yes, are year, drag where U.S., some as the $X.XX going rates of the in expected as given just probably result that it's you have in during we FX, a XXXX. expect, the will range in might

Andrew Wittmann

XXXX. Okay. charges we I here, kind And I gains just a expect to that you just here follow-up special wanted guess regarding that and the expect in ask then of

And You the synergy thinking programs, there COVID the the because be kind COVID charges considering have Am the special the other right are don't I just But then looks much notable. you're I shouldn't XX% like should it that not were play, with big think. cost like things it's of Scott? of it subsiding there with I in 'XX done in life Purolite, bucket, costs less and and guess, gains ‘XX. in an to integration that Or other be should mentioned kind about that? used getting way, I COVID, feels that too

Scott Kirkland

Yes.

next inventory the the there up impact step in will including special you purchase year, accounting with about big charges we ongoing the the As big be from but buckets, did have Purolite talk XXXX.

that. As as you a it. mentioned the a it relates of pay And protection to XXXX, was as you had of COVID, COVID couple think piece buckets that -- really it in big large was about

XXXX. We And pay can't to but going that react, predict COVID's how the the in reserve to protection, disclosed. expect that we protection had inventory also variable be pay less

some had in little we expect be that be costs will tail expect, testings. of than XXXX. a bit that in also was of less XXXX I but We it in a on There medical given pace COVID, to our

Operator

the comes next line with of Morbelli Rosemarie use question Gabelli. Our from

Rosemarie Morbelli

could impact, much we wondering and But nevertheless, large which you Russia let's on how those to regions if say, touch an go I are that we of X probably your won't. Ukraine, was business? war, for how

Christophe Beck

nothing hope obviously. going I is happen, Well, that to Yes.

too So impacted. would lives many be human

For had us, be And than X.X% used we less much reasonably today, It whole you for as to Energy, it's when it's Upstream business. know. a company. bigger the

managed us, issue. us, energy a business impact. focus when impact it's that sure indirect a that so that's was And for have from in in for Crimea not much people It So some we obviously, place. Unfortunately, really could on a everyone cost, we've is experience well. as but making it's back an an company, our and good team had years few a

a if have team, one. small We it's even a good

energy, impact, is and no big that on team business to sure Rosemary, want well. our make we doing So maybe

Rosemarie Morbelli

great. is Okay. That

mask I as was people COVID that a a impressive? not to by little give a everyone detail going performance the lot that double-digit to surprised was on the more in why Can are is that road. us We there of is And hotel. back not so you considering institutional, and growth still have

Christophe Beck

good really which in that Well, positions, it's business, is helps. leading a

We haven't lost customers.

They're have solutions similar of as number well. units We number a than well roughly same of as we pre-COVID. had buying the

good in as well generation, Certified as has been than have has business pricing extremely acquired. lot more been And new good have well. of good We They've Science needed customers us times during during a new been business Ecolab as well. we've ever COVID. that the COVID

plans come they honestly, changed at bit, keep COVID grow that expecting to Rosemary, we to the QX as hopefully, while But we to us. stalled behind were going and of when move reopen, in except So growth. the even it growing, that's faster level little Omicron going and QX is a

business in forward. So that going confident I'm really

Rosemarie Morbelli

may. I if And Great.

XXXX as it is can is SG&A was in And reasonable go Your the down sales? going some you low that or are ratio ratio and think to you to XXXX, XX.X% about impact do talked to to a obviously, ratio. think made this you progress thereabout. in factors as How XX% have you

Christophe Beck

created. teams we remotely speak. they've work, as order well. that's make They instance, as sure, that improves, travel, a in Keep they customers team. very or That that That's the time the that our and productivity. better is are X, to sales after customers knows million preparation of it's technology visit for customers today. going drive to we reduces it's where large the the It's head value met and in a been and a that great that meet around to to serving I'm before question. prep Well, go but not world. to going office helping us sure reach They lot be Digital getting do need as go X a have we lot, managing SG&A than well mind obviously, works customers automated our

still only the our not value think we potential moving for automation the instead lot team, have improve with are that making Rosemarie, such but our or on So large productivity creating I and road. of data papers, sure teams, that a of customers focused collecting driving a to on

Rosemarie Morbelli

Okay.

reasonably -- expect basis can speaking, points? we So I maybe XXX another mean,

Christophe Beck

going It's and is think years seen we've past in going past every demonstrated that the you've question. don't the to to future. to in it's keep I What but a going And the a for many improve going see straight what it's be to it's you're Rosemarie, improving. great line, year.

Operator

of from is question with JPMorgan. Jeff Next Zekauskas line the

Jeff Zekauskas

had But your points. XXX volume margins in thing know, Same Healthcare. and In margins were basis good had don't also you were down, what very growth, your good in growth. volume Industrial business, sequentially your where you I Institutional, flat,

on the versus You is in difference segments a there had in two? the the the margins or is basis? less it Industrial accounts margin your up effective? weakness sequential more between raw stability are that business other there. going price materials more What for pass-through Why Is

Christophe Beck

by basically share and freight business. Well, the P&L macro the of different the total materials very raw versus is is business cost that

have And it. different is you as it's exactly business business, the at and you can P&L so then inflation, is we margins well, business speed when by different impact So the the described on business. the pricing by the drive way very which

have you purchasing Sometimes organizations. group

street Sometimes is This different. it's individual accounts.

the are those So X Jeff. main drivers,

long those The as at first speed freight while you of term keeping over just increase that And which raws for what's mentioned. really customers both second, and for of for well, the creates the essential combination we time the distortion one us. the And the is can it's share P&L. is prices, which

Jeff Zekauskas

Okay.

question XXXX $X $XXX business in XXXX, help expense get back make with million. to you bought your in now you you've is the billion? us billion, and Second for now When Institutional Purolite? $X make what used you out you is, do And interest that can to

Christophe Beck

Yes.

So questions, X obviously.

thank our keep I'll And a we did in Jeff, team we've interest piece, very mind, So obviously. to leave it up for Scott the kept Institutional, that. question, In different God, intentionally. that

labor would yourself So in we dramatic place keep you be bed do do today own when it, they you look and your don't didn't your need to to our we team today XXXX when at a in and started. do have COVID if housekeeping because where restaurants hotels

though That has business. even So our impact so team, whole the bit we're that going on during was the totally income in COVID. conscious. We that quite a a went said down to direct business maintain

XXXX So happen. which business to gets to the as the back level, we expect

So going year gains are it. improve on time, had same get this going to margins get well, before. productivity over And in to well you you're of top it, that we as to the 'XX, than

Institutional. I So have trajectory about we that good in feel the really

you that, Scott, -- comment with can maybe, So if

Scott Kirkland

answering on expense. the question interest your Jeff,

as just $X.X had And you of billion was recall, XXXX. of the we Purolite -- expense in million north interest adjusted through debt the So $XXX transactions.

million higher, million it, interest in expense of we'll XXXX. so $XXX about call roughly it And see $XX

Operator

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

Kevin McCarthy

stable I'd the Christophe, better interested do you of hear first that be or half perhaps to labor-related versus be the thoughts subject think If will about challenges 'XX? any we back of or the on worse 'XX, labor. your of updated think half

Christophe Beck

mean And you labor you when our or both? or say labor, our Kevin, customers' labor

Kevin McCarthy

meaningful downstream to customers, I'd if those well. issues referring really your you among like was but to have hear about as internally, I

Christophe Beck

well. we issues Thank but internally. don't it had share, managed really have we've Yes. We've big God, our

probably have of that we in team over the XX% -- our has vaccinated heard been well U.S. as You've

XX,XXX well people team over that are keep time. as helped our it's projected, to So that during has operating that us dramatically

in had internally bit a we unload we our customers a So different were well the centers as reasonably for know. trucks. good time place Distribution been that's a hard to as

supposed having retail the it. well have to as a that they're because as they're time to such can't cleaning do hotels the be it. stores as The right talent You doing to hard well find same in do

So customers month. But it's as improving having work to don't have people the an impact our the in because every impact demand in do logistics, it's well. it's an having and

until improve. in to think place. to I it's time, over going it's probably So are stable a more our But 'XX whole the customers take going

Kevin McCarthy

see. subject I of wanted then come secondly, back to pricing. the And to I

you path I X% for glide X% think X% to to for on the year. quarter indicated the first a

here. that from I relatively modest imply, price think, so contributions And would incremental

that ask would be there trajectory? model. frame elasticity greater have are you not for of you I there? terms aggressive on to you, some combination or considerations, tempted depending a was how would more I the so Or revisit appreciate But a or might you contribution And price? cost value-in-use why potential to upside competitive contract preclude

Christophe Beck

X% few know, given well so answers same happening in to say first, exactly. is when as pricing the time. I'd Well, going happen QX, so QX, at it's you But as so during say a the you -- you've

quarters evolve well. as as So

So we crossed the X% in QX.

the assumed, where pricing we've cross This to over quarter. want we When And we for X%, QX. But the few opening the the for should like absolutely it that it. customers, that moves have differently to confident it I quarter value not we company that exactly? And we long is of reasonably and impact full well the will long did, cyclical your so it we'll much in to we in them run. will the right we is cyclical individual And in keep we point, X% company, well. at as what inflation what know, we deliver order the well, can feels would play, what they if chemical pricing. on If well, we do. that us, don't a on as We to what's sticks for it's would months. remarks, create not get past nets my well, our than amount first feel an we term. the think be. ambition the inflation a see margins X% were based out And a when have pricing pure But pricing that happens to to no way adjust the will give get as get at back but speed described as that critical, I go company, behind We're some point. for which has pricing which when faster, we from back about on an means become the we it we to as year,

of on last the while. is a go point margins. paying dividend And slower, it's But XX% and is raws our for lower ultimately, us it's on make off I'll having freight a we impact our big margin So sales. for

sales. well our you XX% talked that I the about it's get, inflation XX% of on 'XX, for the So

pricing the good to get compare of X%, you XX% on a when X% place. So to reasonably the XX% the you to

Operator

Seaport Harrison Mike Partners. Next question is with Research from

Mike Harrison

showcase talked you've new a for in products. of show Chicago your while Institutional bit had we've you business. restaurant since innovation the in It's some a little the Christophe, about been to

looking that guess. some Are hard May. a here I'm safety a us in there of sanitizing you're bit I So give maybe or preview, in service food launching But XXXX? around products about forward to warewashing or excited that key little

Christophe Beck

do. we Well,

Mike, As just about not you programs. us, know, about product it's time, at so it's for the same

seconds. products driven It achievement, one whole a within force especially the XX before. the where months have especially together. all over put labor So are Institutional, was we by as that last remarkable products a killing the COVID you customers in brought But we COVID, in the name not to when do XX range of so discussed market

So guests, it's the well, good to it good well do work, for if this clean time. is for effectively, same not the only can as customers but very quickly, at

interesting, uniquely really all as well same NRA. the make the how programs program that's program is if I've Science which we're well that's that in together I driving so-called all major the we're products order terms guests positioned see brings are Net you getting whole And with and And time, of which Industrial, or water forward that. good. are as to the the a but At time, getting, your mention it program zero company. fast a protected. very the need that usage deliver Ecolab as is need program use time, in over looking sales customers our new units zero commitments of where good you'll to in at to Zero -- the this in at be Well, to their many same to story the water Zero the Net deliver sure well to in is water So it's you help And certified, keep mind Certified, on whatever of is. commitment net order them

you're that we of cover see more we going So an an that's Purolite, NRA. which going innovation well as in to and to ahead one. will the you the when that more well, But is And get be at NRA, together. interesting as won't at

Mike Harrison

on that And then Can seeing Specialty consistent of very single-digit frame All in and sense growth XXXX, has XXXX? That help is where right. high And my see up us there? volume grower. declined. In Specialty a business. other you the pricing you question historically us dynamics you're in a give maybe the been it

Christophe Beck

in COVID, from the and Yes. restaurants were The certain Specialty since for during to QSR. growth in very a and 'XX hotels high by to takeout closed, comparisons drive-through people or going was impacted were XXXX mostly because retailers well, extent

not saying fourth well But a suddenly are driven high going to X% evolved, going keep unfortunately, during generally, And high COVID that's I'm strong very growing those X businesses been going that when well. away, very when the quarter, doing underlying, name one. are forward just to comparison. has COVID compare QSR you was growth in as to So and

Operator

line Our Suisse. next question Kevin is McVeigh the of from with Crédit

Kevin McVeigh

through thoughts But any on bit seems business? oil, our recent you to It could that a XXXX? give based the business wonder, some like as it quarter. in I in the move on actions little thoughts Christophe, we the way as recovered Downstream pricing say,

Christophe Beck

the oil, for well. in the the their And and its things ambitions productivity acceptance today, them you most we're in refinery, of doing Downstream, than all at our a hasn't It's things away customers. even into business. some did the more assets. That very second sustainable was help And the majors the is the differentiate We gone element, operations, beyond business well. and to crude We're so that's the less that but much are water. dramatically good turning different And to water. no towards the as using the other today interesting In we're really #X that totally focus is operations business, efficiency, obviously, because working going we past. through capacity about that evolving. was in the well new past can go the new. pick It past, had about zero get utilization, this tomorrow, really When as with And news That the that's are is where best what that has improving it's refineries net Downstream and think maximizing #X to very today, ourselves. super to focus. shifted

we going want seen So we've very past, to a than who forward company what much in matches well and are more the become a in the one different as who future. we as which

Kevin McVeigh

of guide? in of Very then And it know traffic unit course How the in in real type assume could of XXXX? about over XXXX QX. I levels was thinking about you quick the we what helpful. full on just XXXX that XX% are service

Christophe Beck

good Well, a it's and difficult question.

So expecting in towards to of year and be back probably hotels, the the year industry more the restaurants the after. end is in

of well curve mentioned mentioned, on. that ahead we you as are as as early We

the I of should So be half year, ahead/quite a second that this think we during bit.

Operator

at over questions are for this time. Monahan, floor no further Mr. like to turn to the closing I'd comments. there you back

Mike Monahan

and your associated rest wishes you of best wraps day. This up conference call. and call our website. our Rob. will for the for for Thank and Thanks, today, conference That quarter replay fourth be participation on time and the discussion slides the available

Operator

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

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