Q3 2021 Ecolab Inc Earnings Call

A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder. This conference is being recorded. It is now my pleasure to introduce your host. Mike Monahan. Senior VP external relations for Ecolab. Thank you. Mr. Monahan. You may be getting thank you. Hello, everyone and welcome to Eclipse, third quarter conference call with me today are Christophe, Beck Ecolab CEO and - Michael our CFO.

By the way grew 53% in the quarter. <unk> was up 10% driven by strong demand for our innovative solutions in board and packaging, while food and beverage kept improving. Downstream remains a bit challenged in the quarter of the repositions itself from a focus on operational efficiency toward new promising sustainability offerings.

<unk> was up 10% driven by strong demand for our innovative solutions in board and packaging, while food and beverage kept improving downstream remains a bit challenged in the quarter. The repositions itself from a focus on operational efficiency toward new promising sustainability offerings.

Healthcare and life Science is also had very strong and consistent underlying sales growth in Q2 with mid single and double digit growth respectively. Reported sales were only down as they respectively compared to exceptional growth of 13% and 53% in 2020, largely driven by unusual high demand and one time is during the pandemic.

So the discussion of our results along with our earnings release, the slides referencing, the quarters results are available in ecolab's website at Ecolab.com investor. Please take a moment to read the cautionary statements in these materials which state that this teleconference and the associated supplemental materials, include estimates of future performance. These are forward looking statements, and actual results to differ materially from those projected factors that could cause actual results to differ are described under the risk factors section in our most recent Form 10-K and in our

Reported sales were only down as they respectively compared to exceptional growth of 13% and 53% in 2020, largely driven by unusual high demand and one time is during the pandemic.

And finally, the other segments grew 23% driven by continued strength of pest elimination, which was up 21% in the quarter benefiting from further market reopening and very strong new business. On the margin front things progressed very well too with overall margins improving 420 basis points. Beyond the US institutional recovery, our continued progress benefited from accelerated investments made in digital technology during the pandemic as well as overall pricing that's accelerated to 2% in the second quarter.

What materials we also refer you to the supplemental diluted, earnings per share information in the release, starting with a brief overview. Strong third quarter results, were driven by a robust, new business wins in accelerating pricing, which along with the continued recovery in the US and improving European markets, more than offset, significantly, increased delivered product, and other costs looking ahead to the fourth quarter. We expect both accelerating sales volume and pricing, momentum to leverage and expected continuing, though, and even Global recovery.

On the margin front things progressed, very well too with overall margins improving 420 basis points.

Beyond the U S institutional recovery, our continued progress benefited from accelerated investments made in digital technology during the pandemic as well as overall pricing that's accelerated to 2% in the second quarter.

With this backdrop and for the full year, we remain confident of our ability to deliver adjusted earnings that are better than 2019, excluding the Texas rates. How much better is the only question considering the delta variant, the timing of the opening in Europe and in the rest of the world as well as the speed and amplitude of the rise of inflation. More broadly our longer-term outlook has never been stronger, our new business and innovation pipelines are at record levels, our new growth engines like life Sciences, healthcare, high Tech and data centers are all very well positioned to drive incremental growth. And our digital capabilities continued to increase customer value, field productivity and customer experience.

Hurry, we expect these drivers to result in the fourth quarter showing better year-on-year, sales growth. Then the third quarter. We have also experienced continued substantial delivered product and other cost inflation that we believe will increase. Fourth quarter costs by nearly 20 cents per share. As a result. We expect fourth quarter, earnings to grow double digits though. Not as strong as the third Corner. We expect, once again, successfully manage the current inflation challenges and uneven global economic recovery to deliver.

More broadly our longer term outlook has never been stronger our new business and innovation pipelines are at record levels, our new growth engines like life Sciences healthcare high Tech and data centers are all very well positioned to drive incremental growth and our digital capabilities continued to increase customer value.

Very strong sales and earnings growth in 2021 as a strong volume and pricing gains along with productivity and cost reduction actions. Enable us to offset the higher cost and yield double-digit earnings growth, recent programs including equal website certified and Net Zero. Have further differentiated, ecolab's value proposition and then able us to help create better customer outcomes and reduce environmental impact while simultaneously reducing their costs.

Field productivity and customer experience.

Our main focus right now will be to leverage the positive pricing environment to protect and strengthen our margins and do so while further enhancing value for our customers. This is something we've accomplished many times in the past and expect to successfully accomplish once again.

This is something we've accomplished many times in the past and expect to successfully accomplish once again.

Therefore, we've now embarked on a third round of price increases, which will progressively cover the new rapid rise of input costs that we've seen in Q2 with the biggest impact to be seen in Q4, when we expect pricing to reach 4%. Overall, we feel good about our ability to deliver the second half of '21 even if the pacing between the next two quarters will be slightly different than initially anticipated. We now expect attractive sequential improvement in the third quarter and the most significant one in the fourth as pricing actions will hit the P&L.

It's our new business wins and Innovative pipelines are at record levels. New Market Focus areas are positioned well to drive growth and our leading digital capabilities. Continue to add competitive Advantage are strong business momentum along with enhanced value proposition and favourable macro Trends position us well to Leverage The Post COVID-19, environment and deliver further Superior shareholder returns next year and for the future, and now here's Christophe Beck with his comments.

Overall, we feel good about our ability to deliver the second half of 'twenty, one even if the pacing between the next two quarters will be slightly different than initially anticipated. We now expect attractive sequential improvement in the third quarter and the most significant one in the fourth as pricing actions will hit the P&L.

Thank you, Mike and good afternoon. Everyone. Great to be together with you today. Secure free has been another very good quarter for Ecolab demonstrating. Once again, that he collab is in a great shape. We strong top-line momentum and a proven ability to effectively mitigate the adverse effects of inflation and the so-called supply shortages. And the line sales Trends were strong across the board in a complex environment. We delivered ten percent reported, an eight percent fixed currency. Organic say

And finally global trends and people health like infection prevention in food safety as well as planet health like water and carbon emissions are becoming front and center for every business leader. And there is no one positioned to help customers on both fronts better than Ecolab, while helping them ensure a strong and long term business health. In other words, we strengthening of our global position as deep natural sustainability partner for our customers. All of this combined with a strengthened highly innovative portfolio, strong business momentum, terrific new wins, accelerated pricing in unique digital capabilities to position us with great momentum for '22 and will contribute to drive continued strong digital double-digit earnings growth for the years to come. With that I look forward to your questions.

And there is no one positioned to help customers on both fronts better than ecolab, while helping them ensure a strong and long term business health in other words, we strengthening of our global position as deep natural sustainability partner for our customers. All of this combined with a strengthened highly innovative portfolio strong business momentum.

driven first and foremost by continued strong momentum in

You should know and Specialty, the delivered, 17 percent sales growth in the quarter. And 24% from the institutional division. We also saw accelerated momentum in Industrial Sales with 7%, growls, and 13% In other segments driven by sustained high performance in best elimination Healthcare and Life Sciences posted negative sales growth here in Europe as they compared to exceptional growth during the pandemic. As we know, however, their respective on the line sales growth stayed on a healthy.

Terrific, new wins accelerated pricing in unique digital capabilities to position us with great momentum for 'twenty, two and will contribute to drive continued strong digital double digit earnings growth for the years to come with that and look forward to your questions.

Thanks, Chris, that concludes our formal remarks as a final note before we begin Q&A, we plan to hold our 2021 Investor day on Tuesday September 14th in St. Paul. Operator, please begin the question and answer period. Thank you, we will now be conducting a question and answer session. We ask that you please limit yourself to one question and one brief follow up question per caller, so that others will have a chance to participate if you'd like to ask a question please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

The mixing oil and double digit trajectory this Top Line, momentum combined with accelerating pricing and structure productivity. That's benefiting from our state-of-the-art, digital automation. Drove the strong adjusted EPS delivery more than offsetting short-term impact from Hurricane Ida and the rapid acceleration of global cost inflation. The team did an exceptional job minimizing. The impact of Hurricane Ida, which we were able to successfully manage to be a much lower impact.

Operator, please begin the question and answer period.

Thank you we will now be conducting a question and answer session. We ask that you. Please limit yourself to one question and one brief follow up question per caller, so that others will have a chance to participate if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment. It may be necessary to pick up your handset before pressing the star key. One moment, please while we poll for questions. Your first question comes from the line of Tim Mulrooney. With William Blair. Please proceed with your question.

Than initially expected at only 3 cents in the quarter. Most importantly, the team, mitigate the impact of additional significant supply shortages to ensure exceptional service to customers. While driving continued, new business, winds and strong price increases contributing to 31 percent, increase in free cash flow. Current State's momentum is strong and we expected to accelerate strong, your business and breakthrough Innovation, expect to continue to drive top-line growth. Also pricing.

Your first question comes from the line of Tim Mulrooney.

With William Blair. Please proceed with your question.

Good afternoon. Thank you for taking my questions. Thank you Tim and good afternoon. Okay. So I want to focus on raw materials and price which probably doesn't surprise you but in the face of raw material cost pressure and I think your typical formula is to increase price. To make up for the dollar amount in year one and then the margin in year two but in your press release, you said the recent pricing actions you took remain ahead of input costs. So I was hoping you could clarify this language a little bit if you price minus cost dynamic is currently positive it sounds like you've already moved past phase one and you're essentially already on phase II, which is working to rebuild the margin. Am I reading into that statement incorrectly or is that how you would characterize it?

We keep accelerating towards 4%, the strong volume and price. Momentum is expected to result in Q4 showing better year-over-year stage girls than what we've seen in Q3 at the same time. Delivered product cost will keep increasing rapidly, which will continue to mitigate with great pricing. However, as we know with a remodeled, it takes time to do well in a way, that's sustainable long-term and the line, which the incremental value, we create for customers. We therefore estimate that the

Thank you Tim and good afternoon.

Okay, So I want to focus on raw.

Raw materials and price was probably doesn't surprise you but.

In the face of raw material cost pressure and I think your typical formula is to increase price.

To make up for the dollar amount in year, one and then the margin in year two but in your press release, you said the recent pricing actions you took remain.

Ahead of input costs. So I was hoping you could clarify this language a little bit if you price minus cost dynamic is currently positive it sounds like you've already moved past phase one and you're essentially already on phase II, which is working to rebuild the margin am I reading into that statement incorrectly or is that how you would characterize it.

I'm like between pricing and cost inflation will impact the fourth quarter EPS by approximately 20 cents versus what we expected. Just a few months ago, but that true will address over the next few quarters. Next, we expect you for EPS to continue to grow double digits. They're not as strong as in Q3, which will help us succeed the year with great momentum. We strongly in growth continued pricing and delivered product cost. Hopefully nearing its peak will then enter 2022 in great position to the

The general direction team is right actually when I look at the first half of 2021, so unlike a lot where pricing was that compared to the input costs. We're usually really good at that as well to begin with. Now what has changed is that the indices as we've all seen, you've seen that as well so during the second quarter saw have changed. For the much higher for the second half and that has indicated we had to change our pricing plans quite significantly. It has been the third time. We've done it so over the last 12 months, we've engaged those new clients as well with the whole team, we've indicated that as well so two customers and progress is good. So we were ahead, market has changed a little bit.

Liver another great year for Ecolab. The strong fundamental business momentum, combined with continued Market. Recovery provides us with great confidence in the future and especially for 22 in a world. Full of uncertainties. We keep driving strong, business, winds and a competitive differentiation, in a world where customers struggle to find, Reliable partners for Innovation, especially product Supply and expertise to help them run their operations efficiently and serve, the customers safely. We have substantially. Strengthened our position.

<unk> seen that as well so during the second quarter saw have changed.

For the much higher for the second half and that has indicated we had to change our pricing plans quite significantly it has been the third time.

We've done it so over the last 12 months, we've engaged those new clients as well with the whole team we've indicated that as well so two customers and progress is good. So we were had market has changed a little bit.

They're clear Innovative and reliable Global partner in a world.

Our institution at specialty, customers and consumers, especially young concerned about the increased risks of infection. He collapsed and certified has become D reference. That provides guest, which the Assurance they looking for and in a world where environmental impact has become front and center. Our Net Zero offering is providing industrial segment customers, especially leading and innovative ways to deliver on their commitments when improving their own Financial returns, all these provides us with confidence that 22 will be another strong year for it.

Which forced us to change our plans as well and I feel good right now that we will be in a good place for the second half both in terms of dollar and progressively improving the margin and now to that point. It's going to impact mostly Q4, obviously because it takes some time, obviously to agree with customers to get to that new pricing. So we will see a better improvement in Q4 than what we have expected and a lower improvement in Q3 than what we had expected but overall so for the second half basically at the same place as what we had in plan initially.

It's going to impact mostly Q4, obviously because it takes some time, obviously to do agree with customers to get to that new pricing. So we will see a better improvement in Q4 than what we have expected and a lower improvement in Q3 than what we had expected but overall so for the second half basically at the <unk>.

Shut up, we sales and earnings Rose above our long-term trends. So we stat, I look forward to your questions. After please begin the question and answer period.

<unk> place as what we had.

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Thank you. You will now be conducting a question and answer session. We ask that you please limit yourself to one question and one brief. Follow-up question per call or so that others will have the chance to participate. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press start to if you'd like to remove your question from the queue. For participants using speaker equipment. It may be necessary to pick up your handset before pressing the star Keys. One moment, please while we pull for questions.

Okay, very clear, thank you. The announcement that you guys gave publicly in our press release that I think that was specifically related to the industrial segment, but presumably you're also seeing cost pressures in institutional and healthcare as well. Are you implementing price increases across those divisions as well or is this really a conversation about industrial primarily?

The announcement that you guys gave publicly.

In our press release that I think that was specifically related to the industrial segment, but presumably youre also seeing cost pressures in institutional and healthcare as well are you implementing price increases across those divisions as well or is this really a conversation about industrial primarily.

We're implementing price increases in every business every year. This is really a practice that we have coached our teams and our customers for the many past years as well really making sure it's not an event, but it's really something that's happening every single year really driven by the value we create for our customers and not directly driven by the input cost which is one of the elements, obviously of the discussion. So you're right industrial itself takes the heaviest or biggest part because of their cost structure. This is nothing new and they're really good at it. So the majority of the price increases is in industrial but the other businesses are moving up as well at the same time.

Ends. Thank you. Our first question is from Tim Mulroney from William. Blair. Please proceed with your question. Good morning. Hi. Good morning. Thanks for taking my question. So my first ones on the guide that you expect to.

This is really a practice that we have.

Coached our teams and our customers for the many past years as well really making sure. It's not an event, but it's really something thats happening every single year really driven by the value we create for our customers and not directly driven by the input cost which is one off.

Elements, obviously of the discussion so youre right industrial itself takes the heaviest or biggest part because of their cost structure. This is nothing new and they're really good at it. So the majority of the price increases is in industrial but the other businesses are moving up as well at the same time.

All right, in the fourth quarter as well, and could you talk about? You know what, some of those might be? Yeah. Thanks for the question, Jim. So you mentioned to the pricing. We keep accelerating in Q4. We have to and we can as well, so we start value that we creating for our customers. So that will help Drive organic growth. So obviously, volume growth will keep accelerating as well in most businesses industrial being one. Good example, and institutional is going to keep doing really well as it recovers.

Yeah.

Understood. Thanks Christophe. Thank you, Jim. Your next question comes from the line of Manav Patnaik with Barclays. Please proceed with your question. Yes. Thank you, I just had a broad question, which is. What do you need to see happen in terms of visibility before you can start giving your detailed guidance like you used to? I was just hoping you could help us to some of the moving pieces, maybe beyond just the delta there intangibles.

Hey, Jim.

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

And you will have as well. So Healthcare and life sciences that are going to compare such. You easier comps last year than we had in history and all that brought together. So will bring us to a better place of a key for probably nearing, so the double digit level.

Yes. Thank you I just had a broad question, which is.

What do you need to see happen in terms of visibility before you can start giving you detailed.

<unk> guidance like you used to I was just hoping you could help us to some of the moving pieces, maybe beyond just the delta there intangibles.

Oh, okay. That's even more than I then. I was thinking thank you. And in quickly on margins, you know, I saw industrial margins took another step back this quarter, but I know you guys have talked about, maintaining these margins and building upon the game's you made in 2020. So it my question is, is a step back from early related to the raw material. Raw material cost pressure. In other words. Would you still be on track to hold the margin games, you achieved last year? If not for those raw material cost pressures. I'm just trying to understand what a normalized operating margin should look like.

Yes, Hi, Manav. Good question. So it's all related to the variant Delta or D. As it's called out there as you know if you look at the past 20 years, we've always delivered so within our guidance with the exception of 911. Unfortunately, so 20 years ago, so for us the level of certainty is very high and we focus on everything we can control, including questions of price and inflation as we just discussed. The Delta variant is something that is really unusual hard to predict as well. So that's the only question Mark that we have out there to clear things are going to become with vaccination rates, with how governments and countries are reacting as well out there. Will bring us closer to us providing as well as guidance, but we'll get back to that we liked it.

Good question. So it's all related to the variant Delta or D. As it's cold out there as you know if you look at the past 20 years, we've always delivered so within our guidance with the exception of 911. Unfortunately, so 20 years ago, so for us the level of.

Astronauts and certainty is is very high and we focus on everything we can control, including questions of price and inflation as we just discussed the Delta variant is something that is really unusual hard to predict as well. So that's the only.

For that business. Yeah, that's the good way to look at it normal.

The margins of would keep improving actually, so if we think mid to long-term the margin trajectory for industrial so will become even healthier going forward because when we talk about, if back, we not giving back, anything pricing is going up quarter-over-quarter in industrial like in other businesses, by the way as well volume is going up as well. So it's kind of this short-term inflationary pressure, which is quite strong.

A question Mark that we have out there to clear things are going to become with vaccination rates with how governments and countries are reacting as well out there.

Bring us closer to us providing as well as guidance, but we'll get back to that we liked it.

It's something that has been good for us and for investors while at the same time. So we will get back when when time is right, but so far I'd say, if things do not change materially our directional guidance still remains true. And we will firm it up as soon as Varian DSO becomes more clear. Got it, and just maybe on the margin front. Pricing is the habits and the cost and you obviously launched a lot I think in terms of efficiency for the past 15 months and so I'm just curious if the incremental margins in the business should we think of that is getting better and more of the same or any color there would be helpful.

Which is growing. So quicker than the way, we price, for all good reasons, since we want to make sure that we keep all customers. While we do that and that we drop it. So by the value we create as well. Ultimately. So when delivered product cost, curve is going to ease. Margin is gonna improve again as you see last year, by the way, which was the end of another cycle as one in industrial.

And we will firm up as soon as Varian DSO becomes more clear.

Got it and just maybe on the margin front.

Pricing is the habits and the cost and you obviously launched a lot I think in terms of efficiency for the past 15 months and so I'm just curious.

Are you clear? Thank you. Thank you, Jim.

Incrementals in the incremental margins in the business should we think of that is getting better and more of the same or any color there would be helpful.

Our next question is from an apartment from Barclays. Please proceed with your question. Yeah, thank you. I was just hoping you could give us an update in a competitively, you know, in terms that you have I'm guessing everyone's raising prices and to customers are aware of that. But, you know, is has the shagging moves. One way or the other, just curious, if there's any any updated.

Overall for the second half, it's going to be the same but obviously so the input cost has changed quite dramatically and the pricing has changed as well so quite a bit. We had initially thought so for the full year that our input cost would increase getting up mid-single digits that was the initial plan. The way we look at it for the full year now so it's closer to double-digit numbers, so quite a change and we've changed pricing as well for that be good at it as well, but let's keep in mind as well that in order to get the margins back to where they used to be we need to double the pricing versus the input costs. Since we have a gross margin of 50% so easy math as such so overall a good situation in terms of pricing versus input cost second half.

Yeah, Hyman have so I wish that most competitors would be driving as much pricing as we do. If unfortunately not exactly the case, which, thank God we Drive pricing. So based on the value, we create. So we have a good discussion. So is our customers and we have opportunities to add value in your own so productivity and we will get part of that as well. So, going forward, if I,

Plan.

The way, we look at it for the full year now so at closer to double digit numbers, so quite a change and we've changed pricing as well for that be good at it as well, but let's keep in mind as well that in order to get.

The margins back to where they used to be we need to double the pricing versus the input costs. Since we have a gross margin of 50% so easy math as such so overall a good situation in terms of pricing versus input cost second half.

Look at most of the competitors, in most of the businesses, they all behind us in terms of price Evolution. So we see ourselves as being the leader in most of those Industries as well. So we need to show the way as well. So part of the reason, but ultimately I wish that they would be a bit stronger as well in terms of price evolution.

It's going to deliver a similar improvement than what we had expected, but as mentioned earlier the pacing between Q3 and Q4 will be different just because we need some time in order to get the agreement with customers.

Alright. Thank you, Amanda. Your next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question. Thank you Christophe just again on price versus raws. In Q3, do you expect pricing to organic seed input costs in this quarter? Yes.

Thank you Amanda.

Got it, and then, you know, just recently, you know, in in Europe universe is your biggest competitor there or any update to how your recovery in Europe is progressing.

Your next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question.

Thank you Christophe just again on price versus raws.

It's generally quite good. The recovery was a little bit of steeper in Europe than in the u.s. Because as you know, so they went from kind of totally lockdown. So to almost wholly opening it up which was different in the US and then you have a bit of the bumps in the UK or in Germany because cases numbers are going up, but generally the trends are quite positive an hour.

In Q3, do you expect pricing to organic seed input costs in this quarter.

Yeah.

Yes.

The price will be ahead of the input cost.

And as mentioned before our objective is not just to get there but is to get back to the margins in the sense that we used to have and that takes a little bit more time, but so far things are going really well.

You mentioned again in Q3 being below your initial expectations with that catch up in Q4, how much lower if Q3 is going to be below.

International.

Business is growing positively as well. And keep in mind that last year, we were flat as well. So we were not declining and international. So, having a positive growth, this year is a good indication that things are recovering quite nicely.

Versus your prior expectations on a sequential earnings basis?

This is hard to tell because it depends on agreement with customers and it's a question of weeks plus.

Thank you.

One or two months, we do that very thoughtfully with our customers. So we know the commodity driven company.

Thank you, madam.

Our next question is from David bug, leader from Deutsche Bank. Please proceed with your question. Thank you. Good afternoon. Christophe just on price versus Ross. When do you expect a fully catch up to these high raw material costs?

You know we are all driven by the value we create for our customers with whom we've had relationships so for decades.

So we are very careful in how we do that really in order to make sure that a year from now while they still believe that we did it the right way that it was good for them. While it was good for us as well. So it's all timing depending for Q3, that's why I'm directionally, saying, it's going to be a little bit pressured in Q3.

So David, if if you just take the dollar value you today, we are ahead already, which is really so in the Ecolab model. So it's not within the quarter. But if I take so year-to-date pricing is ahead of the delivered product cost dollar pressure. And and for the most part, we will remain ahead. It's not a perfect science, but he comes in lockstep to me.

And it's going to be better in Q4.

Very good thank you very much.

Thank you David.

Your next question comes from the line of Ryan Connors with Boenning and Scattergood.

Objective is making sure that we can drive margin in percent, and that takes more time of you see. So, to get there because the inflationary pressures are grows faster than our pricing capability. Very good. I know it's early for next year. But as we approach November, these are early thoughts and how to think about the earnings of progression for next year.

Hey, Thanks for taking my question.

My first one was just on you noted that the institutional results were actually not only up.

Up nicely year over year, but actually outpaced the end market at least as you saw that can you kind of give us some color around what metrics or quantitative metrics you have around making that.

Yeah, it's very early as you say David. I think so. First on the, the inflation side. I believe it's going to be very similar to the pressure that that we have or that we are experiencing in 21, and that's why the, the pricing Evolution that we have this year, roughly 2%, We're expecting to get towards four percent. Next year, will be a good equation, at least all

Assertion and then talk about how sustainable that is going forward is that just a snapback in some specific markets you're in or do you think you can continue to outperform.

As institutional recovers.

I like where we are.

In the U S, especially since it's where the recovery sort of happened first or second after China.

But the sizes are completely different maybe just to give you a few numbers is winning here you look at the restaurant.

Over time and generally. So for the transform4 22. When I just step back a bit. I think it's going to be fairly consistent with what we've seen in this second. Half of the years old overall. It's going to be probably better than what we've seen Pre-K COVID-19 if I may say so kind of good to apply momentum was good leverage with it.

Sales so were.

9% down so for us or 91% back to where they used to be which is a better way to look at it.

15% of the end unit so have closed.

Well out there in the market and the dine in traffic, which means so in the dining room, so was down 37% as well in the second quarter, so with us being 91% of where we were before so he is much better than where the market is in a second perspective is also we measure how many restaurants.

Very good. Thank you very much. Thank you, David.

Our next question is from John McNulty from BMO Capital markets. Please proceed with your question.

Our hotels for that matter, so we serve and how many solutions they buy as well and we are back to the levels that we were in 2019, knowing that the traffic is not as high as it used to be so when traffic is coming back up as well our growth is going to pick up further as well so I see that as a

Yeah, thanks for taking my questions. On the topic of the institutional business. Can you speak to where you are from a volume perspective relative to 2019 for your third quarter?

Order. It's a good question and a needs, a some have. So for that we are recovering very nicely in institutional. So in general, maybe just to give you an idea of the trajectory. We expect to be ahead of 2019, kind of early 22. I don't know which months that's exactly going to be that's depending on a bunch of things. But generally, we see that in the next three to six months. It's going to happen. So for sure. So,

sustained development.

Okay, and then on the flip side there was a lot to like in the report, but healthcare was a drag which.

I mean, I guess, we know that last year was the apex of the pandemic, but a little bit surprised to see that can you give us some dynamics around that is that sort of more virtual medicine, that's driving that and.

What's what's the outlook for that.

Right now, we are kind of roughly.

Healthcare as we move into the recovery.

No it's just a.

Until three to eleven percent down in volume, and we will be expecting so to be close to 19. So early, 22.

Comparison, so versus exceptional results last year, driven by that pandemic. So we can peering saw 12% or 13% growth in healthcare in Q2 of 2020 and 53% growth in life science as well so in Q2, driven as well so by pharma.

To got it. Okay. So you come back a good bit of the way, I guess. As a as a follow-up, you mentioned, a bunch of Labor issues for a handful of your kind of General customer bases. Can you speak to how much of an issue that is for them? How does it impact the overall growth of, you know, for that business to recover? And then also maybe some of the solutions that you can provide that, you know, some of these customers that help them with their labor issues.

Demand.

And as well infection prevention solutions as well in the pharma sector. What's important for me is really to look at the underlying growth. So when we strip out so the.

Unusual demand of 2020, and one timers you see healthcare so in mid single digit which is better than where we used to be so these 2-3% in the bar has moved so closer to the 5% ish and life science as well underlying is in the double digit territory.

Yeah, it's a great question because it's a real challenge for the industry not just for our end customers in and really specific to institutional here so that the whole distribution channel is also struggling with that. So getting trucks unloaded from our plants at the distribution center and then afterwards getting the Peking right as well. So for our customers, it's an interesting world out there, but I'd like to say as well. What's what's really important. Is that most it?

Which is a very good so it kind of sustained growth as well going forward. So when you strip out the noise basically you get to this mid single and double digit growth for healthcare and life science, respectively.

Got it thanks for your time. Thank you. Your next question comes from the line of Gary Bisbee with Bank of America Securities. Please proceed with your question.

Thank you.

All of our customers including the Distributors of our clearly South and aligning our service quality. We've done huge efforts to make sure that we can deliver to our Distributors and to our customers, which is first and foremost, what needs to happen, especially we sir, are we can either that didn't help, but I think that we've ended up in a in a very good place in terms of service level. Now to your question on understaffing, if you just look at the numbers.

Your next question comes from the line of Gary Bisbee with Bank of America Securities. Please proceed with your question.

Hey, guys. Good afternoon first question on margins I wanted to ask a little differently, obviously institutional still down from pre pandemic levels quite a bit along with the revenue and the volumes, but the other three segments. All had second quarter margins ahead of the second quarter of 19.

And I know you've had ongoing cost reduction efforts and there's a lot of moving parts, obviously with the input costs in the short term and everything else but.

The institutional business 24 percent. So, very good progression. We are almost at the same level as 2019. In terms of customers that we serving as well. We have our restaurant sales that are not even 10 to send down some versus last year when the dining foot traffic is down over 20%. So generally, we doing very well versus the

Outside of institutional, which presumably will continue to see the margin recover with revenue. For the other three businesses. Is the margin this quarter, a reasonable number to use to think about moving forward other than maybe a little bit of raw material hit in Q3, and maybe you'll get that back in Q4 or some of these that are still way above the 2019 margin is there risk of some further give back.

For the other three businesses.

The margin this quarter, a reasonable number to use to think about moving forward other than maybe a little bit of raw material hit in Q3, and maybe you'll get that back in Q4 or or or some of these that are still way above the 2019 margin is there risk of some further give back.

Market, but at the same time when you go to restaurants and you see that they can't serve all the tables so they can't be open every single day of the week as well. So it's basically showing an indication that we could be even better or will be better the moment that they get sore the Staffing right then last but not least. Do you point on how we help them? Get there? Obviously the service that we provide? So on a regular basis going there. Well, is very helpful.

To get to. A more normal go forward margin. For each of the segments. Thank you. The all three segments are in different places, but the headline is that the margin trends are a good indication overall of where we are and where we are heading, but if I just unpack them. Just for you saw industrial first. Yes, he is growing but as mentioned before so is impacted the most by the input cost and it's always the case. So nothing unusual in here. They have all also the biggest share in pricing and they are really good at it as well at the same time, so the different elements of cost and price are different but ultimately saw.

A more normal go forward margin.

For each of the segments. Thank you.

The all three segments are in different places, but the headline is that the margin trends are a good indication overall of where we are and where we are hedging, but if I just unpack them.

For them because if the kitchens if the housekeeping, if the whitewashing is not done properly. Well, it's even worse because they usually don't have people who can truly do the work. Since they all knew changing so often as well. That's problematic and we provide a lot of products as well that need much less labor as well. At the same time. You think about the disinfectants we talked about against COVID-19. Well, you don't need to rinse for instance as well. So you save a lot of time doing the same work that either.

Just for you saw industrial first.

Yes, he is growing but as mentioned before so is impacted the most by the input cost and it's always the case. So nothing unusual in here. They have all also the biggest share in pricing and they are really good at it as well at the same time, so the different elements of cost and price are different but ultimately saw.

Industrial is going to keep its development. In gross margin and we expect the overall year or so to stay fairly close to where it used to be as well so last year. Healthcare and life science. It's as mentioned before so we comparing two very unusual as the growth numbers in Q2, as well last year, and if you strip that out ultimately so our margins have improved very nicely in 2020, and we expect as well in healthcare and life science, so to get quite close to where we were in terms of record margins in 21 and as you mentioned so institutional saw it's path to recover. Such saw eats maybe sort of the business, where the margin we had in Q2 the improvement in Q2, so it was a bit overstated. Because we compare in 2020 as well with two special events. The first one was the bad debt that we recorded for obvious reasons in Q2 during the beginning of the pandemic and second we foregone as well so the lease payments for dish machine. So you compare to something that was lower.

In gross margin and we expect the overall year or so to stay fairly close to where it used to be as well so last year health.

Cantonese Opera, so that's helping as well with the with the labor shortage.

Thank you very much for the calling.

Thank you.

Healthcare and life science.

As mentioned before so we comparing two very unusual as the growth numbers in.

Our next question is from Chris Parkinson with Mizzou who please proceed with your questions. Great. Thank you very much. You're clearly not only enthusiastic on but you are executing on the the share game fronts, which seems to be across the portfolio. But what's the primary driver here? Is it Enterprise selling, is you spoken in the past new platforms, like signed certified digitization, new customers desire to go at the brand name. Could you just briefly dice that, you know the recent success if you know what?

In Q2, as well last year, and if you strip that out ultimately so our margins have improved very nicely.

2020, and we expect as well.

<unk> life science, so to get quite close to where we were in.

In terms of record margins in 'twenty, one and as you mentioned so institutional saw is on its path to recover.

Such saw eats maybe sort of the business, where the margin we had in Q2 the improvement in Q2, so it was a bit overstated.

Multi-year competence, it would be greatly appreciated. Thank you very much. Hey, you're welcome Chris. So they're the main one. We have is really so the new business generation. It's not you, you're familiar. We start. We have those two thousand people managing. So corporate accounts as we call them. And we're very proud of that team and your business generation is at an all-time high, which is good because

Because we compare in 2020 as well with two special events. The first one was the bad debt that we recorded for obvious reasons in Q2 during the beginning of the pandemic and second we foregone as well so the lease payments for dish machine. So you compare to something that was lower.

So it's going to change a little bit in Q3, and Q4, but overall for the company good situation in margin and assuming that our assumption of USD four roles and pricing happiness plans, which I do ultimately so margins should keep evolving as expected.

It's the pipeline of new business as well for the future and it's driven by by two main drivers. If I may say one you mentioned. It's the Ecolab. Science certified, especially on the institutional side. So customers are looking for ways to provide the right confidence for their own customers, their guests, as they call them and science. Certified requires the full economic program to be certified. Well,

Thanks, and then a quick follow up you mentioned in the prepared remarks that you put out their refocus and mining away from coal and alumina. I think you alluded to that in the past, but also I saw in downstream. Some low margin refinery exits. Are these material or is this more just coming out of the pandemic trying to refocus the portfolio on the best opportunities? Any color on if there is any other strategic sort of yes, Gary. It's mostly the latter so it's really so refocusing the portfolio towards the better opportunities.

Thanks, and then a quick follow up you mentioned in the prepared remarks that you put out their refocus and mining away from coal and alumina. I think you alluded to that in the past, but also I saw in downstream. Some low margin refinery exits. Are these material or is this more just coming out of the pandemic trying to refocus the portfolio on the best opportunities? Any color on if there is any other strategic sort of yes, Gary. It's mostly the latter so it's really so refocusing the portfolio towards the better opportunities.

Put out their refocus and mining away from coal and alumina.

Alluded to that in the past, but also I saw in downstream.

That means higher penetration of most of the solutions. As the door. We get more units and most solutions are within the existing units in order for those customers. So to get to the certification, one of the Lakes as I mentioned on investor day, so is McDonald's. Which is being a great story which them endorsing science certified. On the industrial side is our Net. Zero program is getting some very interesting.

Some low margin refinery exit.

Are these are these material or is this more just coming out of the pandemic trying to refocus the portfolio on the best opportunities.

Any color on.

If there is any other strategic sort of yes, Gary it is.

Mostly the latter so it's really so refocusing the portfolio towards the better opportunities there.

Traction, because many of our customers, if not most have made a lot of sustainability, commitments out there that some of them have a hard time. So to reach, or get closer to, to stay on track for that. So they need our help even more in order to get their own commitment, that helping generating as well, new business. And last but not least, you know, new engines like data centers and high.

The mining point moving away from coal and refocusing towards fertilizers for instance, which are related to AG into food is something that we start TWC is a way before the pandemic and it's working really well. So our exposure to coal so has become minimal over the past few years and our exposure to the growth segments has become much better as well. So risks are lower and growth potential are higher which is good. On the downstream side.

Fertilizers for instance, which are related to AG into food is something that we start TWC is a way before.

The pandemic and it's working really well so our exposure to coal so has become minimal over the past few years and our exposure to the growth segments. So has become much better as well so risks are lower and growth potential.

Our extraordinary growth drivers really addressing. You needs that existed pre-pandemic, but the pandemic is given a huge boost to cloud computing. As we all know, since we all using this virtual Technologies, well, that's driving our own business as well at the same time.

Higher which is which is good on the downstream side.

It's a bit different. Downstream is a bit of a tale of two stories in here. So you have Petro Chem. Kind of plastics. Which is an end market that's doing well, we've been growing for a long time, we are still growing right now and when we were growing during the pandemic. So this is an end market that we like and an end market that we want to further focus on and we are bringing new solutions as well as the to recycle better plastic for instance.

Downstream.

It's a bit of it.

Tale of two stories in here, So you have Petro Chem.

Kind of plastics.

Which is an end market that's doing well we've been growing for a long time, we are still growing right now and when we were growing during the pandemic. So this is an end market that we like and then end market that we want to further focus on and we are bringing new solutions as well as the to recycle better plastic for instance.

That's very helpful. And just as a very quick, corollary of that just turning to European institutional, you know, recently. It was a little bit sluggish versus its Regional peers, but it did be edging in the right direction. Please briefly comment on what trends you're seeing there across the region, sharing an opportunity and just your ability to further Drive margins higher across the region. Thank you very much.

Which is, traditionally we have a sustainable solutions approach for this business and then the last point is refining. Which is an industry that is in a complete transformation as we all know they have to reduce their footprint in terms of carbon footprint as well in Europe, and that's going to take a few years so for us to get it right in the way that we had refineries first to produce we saw lower carbon footprint and very good pilot project in there and help those companies as well refocus on renewable.

Traditionally we have a sustainable solutions approach.

Yeah, good question.

This business and then the last point is refining.

Chris we've done the last 10 years and you've been following us for a long time. A lot of fundamental work in in in Europe for all our businesses. When you think about it, 10 years ago. We were making no money as a company in Europe. Now. We are in the Loyalty in thirteen, fourteen percent in that in that region. That's been a remarkable. So profitability Improvement, interestingly enough.

Which is an industry that is in a complete transformation as we all know they have to reduce their footprint in terms of carbon footprint as well in Europe, and that's going to take a few years so for us to get it right in the way that we had refineries first to produce we saw lower carbon.

Print and very good.

Pilot project in there and help those companies as well refocus on renewable.

Optional has not made as much progress as all the other businesses in Europe because there was so much fundamental work that had to be done in terms of organization, in terms of systems, in terms of leadership, in terms of innovation, while it's taken us more time, but I would say, the pandemic has helped us in a way. It's hurt us short term, obviously when everything so it was shut down. But ultimately, our customers have seen that, they needed a partner that could help them. So provide assurance,

So I like where we're going here, but that's going to take quite some time in order to get to a place where it sustained high level of growth as well in refining. So that's the way I would express it. Yeah. Thank you. Your next question comes from line of John Mcnulty with BMO capital markets. Please proceed with your question.

Yeah.

Thank you.

Your next.

Question comes from line of John Mcnulty with BMO capital markets. Please proceed with your question.

That guests which was new. That does not exactly the focus. They were having pre-pandemic and now. So we get to enjoy the fruit of all the work. We've done over the past few years, where customers are recognizing that? Well we adding value that other suppliers called provider.

Yes, thanks for taking my questions. So I guess, maybe two quick ones just with regard to Europe, and how you see the reopening or gradual reopening impacting the businesses. Can you give us a little bit of color or thoughts on how to think about things sequentially from 2Q to 3Q and the pace of that reopening for both the institutional and the industrial segments? Yeah. So. John. The Europe reopening happen until early Q3, let's put it that way as you read as well in the newspaper AD chances wanted to spend a few weeks as well in Europe. So towards the end of June and Europe was clearly closed. Until June then suddenly we opened everything so we've really seen a pick up in our institutional business, so first and foremost because kind of went from zero to kind of open obviously, that's quite a dramatic change and we've seen that in our numbers, so very encouraging trends and institutions in Europe. And we see industrial which was in a very different place. They went up close to obviously like restaurants and hotels.

Thank you. Thank you.

<unk> <unk> and the industrial segments.

Yeah.

So.

Our next question is from John Roberts with UBS. Please. Proceed with your question. Thank you. Just a little clarification in the labor comment, customer labor comments. He made earlier, are you, do you have any lost revenues because the customers don't just don't have enough staff to do all the cleaning that they would prefer to do. Absolutely. When restaurants are open John 3 days a week, instead of 7 or whatever their schedule is. Well, this is lost revenue for the

John.

Europe reopening.

Happen until early Q3, let's put it that way.

<unk> as well in the newspaper AD chances wanted to spend a few weeks as well in Europe. So towards the end of June and Europe was clearly closed.

Until June then suddenly.

Opened everything so we've really seen a pick up in <unk>.

Our institutional business, so first and foremost because kind of went from zero to kind of open obviously, that's quite a dramatic change and we've seen that in our numbers, so very encouraging trends and institutions in Europe, and we see industrial which was in a very different place. They went up close to obviously like restaurants and hotels.

Matt, this is lost revenue for us. But the good news is that. Well, they going to open up at some point as they did pre-pandemic as well. That's going to help us as well. No, I meant just they're open but they're short-staffed while they were open. And so cleaning is getting deprioritized. It was the case John early on. It's evolving quite nicely because you and I being guests in hole.

Yes.

Improving as well so overall Europe is doing okay so far in international overall as well, it's an interesting perspective as well to keep in mind. Where last year International was kind of flat, which means outside North America. So it was kind of flat for the whole company and we see coming back to growth not only in Q2 but it's going to get even better in Q3, so good news from that front too.

Well so overall.

Europe doing okay. So far in international overall as well, it's an interesting perspective as well to keep in mind. We're last year International was kind of flat, which means outside North America. So it was kind of flat for the whole company and we see coming back to growth not only in Q.

Hotels and restaurants. Well, we had some understanding for the lower cleaning standards during the pandemic. We paying the same price at the end for whom or for a meal, so we expect as well. So a similar quality of service and of cleanliness as well. So this is something that's coming back progressively. But the labor shortage is is hurting that. So the trends are good. It just takes time.

Two but it's going to get even better in Q3, so good news from that front too.

Got it. That's helpful color, and then I guess from a raw material perspective can you speak to whether or not you had any issues in terms of sourcing raw materials and if that had any impact on the business or has it really just been a function of inflation and just getting that through in terms of pricing? It's a great question the market is tight out there that the Texas phrase made it harder. As you saw in February for everyone out there. We're lucky enough to have a great procurement team a great supply chain team as well that could that could find alternative sourcing that could work formulate product. So overall, it's been heavy lifting within the organization, but we've been able to supply our customers.

That's helpful color and then I guess from a raw material perspective can you speak to whether or not you had any issues in terms of sourcing raw materials and if that had any impact on the business or has it really just been a function of inflation and just getting that through in terms of pricing.

Time to get back to the right place then. I don't think health care and life science is very seasonal. So could you talk a little about the sequential change on a sequential basis? Assume hand sanitizer were still down. Sequentially. I don't know when that bottoms and you get up cops and in what was up offsetting that though if you think here, you're right. It's not really a season of business. That's not the way we look at it, for sure.

It's a great question the market is tight out there that the Texas phrase made it harder.

As you saw in February for everyone out there.

Enough to have a great procurement team a great supply chain team as well that could that could find alternative sourcing that could work formulate product. So overall, it's been heavy lifting within the organization, but we've been able to supply our customers.

Or not. But last year was a, was an exceptional year because of demand and because of a lot of government-driven demand for forehand care and Care sanitizers. And all those products. Ultimately. These are exceptionally high back, then if you just look at the Q3 say, it's a 17 percent down versus last year, but they were up eight percent versus 19 if you just do the math and you,

In a fairly continued manner during the second quarter, and we see that saw improving as well in the quarters to come so bottom line. A lot of work, but a great team saw helping customers being supplied as they should. Great. Thanks, very much for the color. Thank you, John.

Whatever work, but a great team saw helping customers being supplied as they should.

Great. Thanks, very much for the color.

Sons of of of mixed nuts.

Thank you John.

How much seasonality? What's driving profitability in in healthcare is mostly the surgical part and COVID-19 as you know, so has shifted way the elective surgeries which is shifted our business as well. So towards a lower profitability type of business, but this is short term. It's driven by COVID-19. The moment that surgeries are coming back ultimately will have the double combination.

Your next question comes from the line of John Roberts with UBS. Please proceed with your question. Labor is an issue for your institutional customers right now. Is your lobster software or any of your other digital offerings, enabling you to help your customers with their labor issues?

Labor is an issue for your institutional customers right now is your lobster software or any of your other digital offerings, enabling you to help your customers with their labor issues.

It does actually we are expecting to have close to a million users with lobster ink by the end of the year, which is driven by exactly what you're saying those labor shortages and hotels and restaurants are creating new challenges for that industry. They need to train a lot of people coming into our restaurants and hotels and that kind of solutions are definitely helpful. So that's the good side of the story.

First on seeing gross because we will be comparing against a more normal period. And second profitability is going to come very naturally back because surgical is going to come back as well.

<unk> solutions are definitely helpful. So that's the good side of the story.

And then could you talk about some of your other new product offering so many of the new products like fast acting hard surface cleaners had a surge last year, but are you still penetrating new customers? Maybe talk about it in terms of market penetration or customers that you're adding. We are actually. When you think about it the fact that we have as many restaurants buying as many solutions as pre pandemic today in a market which has seen.

Thank you. You're welcome.

Our next question is from Gary Bisbee with Bank of America. Please proceed with your question.

We are actually.

Ian endemic Revenue levels in the quarter and you know you commented you thought volumes in the next three to six months would get back to pre-pandemic levels. Does, you know, does that equate to that Revenue Gap?

When you think about it the fact that we have as many restaurants buying as many solutions as pre pandemic today in a market which has seen.

Unit saw declining by 15% during that time is a direct outcome of first and foremost Ecolab science certified which is the circle the customer program since the customers' heads to buy older solutions in order to be certified as such so that's been a great story, that's progressing very well, you've maybe seen that Mcdonald's as well for instance has endorsed as well that that program as well as the corporate companies are great stories here. Just driven penetration of units and solution, so really good and you're right. So when we think about sanitizing products.

Program since the customers' heads to buy older solutions in order to be certified as such so that's been a great story, that's progressing very well, you've maybe seen that Mcdonald's as well for instance has endorsed as well that that program as well as the corporate companies are great.

Getting back to pre-pandemic levels, are there other puts and takes that could lead Revenue to take longer and and as part of that, you know, I guess I also wondered, you know what sort of unit level customer level. Do you think you'll be at when Revenue gets to pre-pandemic levels? And and you know, I ask that from the perspective of you talked about more products per unit, particularly for those clients that are using Eclipse IDE certified. Thank you.

<unk> here.

Just driven penetration of units and solution, so really good and youre right. So when we think about sanitizing products.

We've refocused quite a bit over the last 18 months, partly driven by the pandemic as well all the surface sanitizers that we brought on the market are doing really well.

You. Yeah, so Gary big picture is mentioned earlier institutional expected so early, 22, so to get back to 2019 levels at the Top Line level or exactly which months that's going to be. But within the next six months, it's going to be the the case which is, which is a very steady and healthy recovery with that the

By the way and we still see so double-digit growth versus what we had some pre-pandemic, which is a good sign and we will keep innovating as well in that you'd like with disinfecting wipes for instance, as well. So we've acquired two companies one in the US. One in the UK. In order to supply as well that market. So far so good on the innovation front, and especially under disinfecting side.

In order to supply as well.

That market. So so far so good on the innovation front, and especially under disinfecting side.

That we had very good your business. Well that's going to be installed as well in in the months to come. So if today we have almost the same number of units and the same number of solutions within units out there. Well, he's going to compound then afterwards. Once we get more units, more days that are going to be open more Staffing in the restrooms as mentioned as well before. So all those elements ultimately are going to help.

Okay. Thank you nice quarter.

Thank you John.

Your next question comes from the line of Kevin Mcveigh with Credit Suisse. Please proceed with your question.

Great. Thanks, so much hey, I wonder. Just a point of clarification, the 4% price increases is that across all of Ecolab or just the industrial business and if it's across all is it 75% industrial or just any way to frame up a 4% increase overall that you talked to?

Just a point of clarification, the 4% price increases is that across all of ecolab or just the industrial business and if its across all is it Tim.

Institutional.

Their weight versus what we saw in nineteen pre-pandemic as well. On top of it yet pricing. That's also evolving in the right direction as in every business that we have in the company that's going to add to it as well. And last but not least the from from an earnings perspective as well, institutional has done remarkable work in terms of feel organization system implementation that really helped as well drive and

75% industrial or just any way to frame up a 4% increase overall that you talked to.

Yes, hi, Kevin So a full percentage for the whole company.

And you will have more in industrial. It is, that's where we bear the brunt of the cost increases as well, so you're going to have higher than four in industrial and in the other businesses, you're going to have lower than for energy mezzanine.

Is that that's where we bear the brunt of the cost increases.

As well, so youre going to have higher than four in industrial and in the other businesses, you're going to have lower than for energy mezzanine.

even better leverage in that business. So overall trending in the right direction. It's going to take a few quarters in order to get there at. But I feel confident that we really saw on a good path.

Got it and then just within kind of the downstream business overall as you clearly repositioning that.

Any thoughts as to what percentage of the revenues refining today.

Okay, great. And then, you know, you've talked a lot about your own pricing and how you're handling the raw material pressures, you know, if we just think supply chain in general, not not so much the cost and pricing angle. But are you seeing any volume issues of your own? Or do you feel like any of your customers in any of the segments are really being impacted in the volumes? They're using based on, you know, the widespread supply chain challenges that are going on globally.

And then where that ultimately bottoms and ultimately you're going to kind of the higher growth areas as well just to add a 100% ish. We used to think about those end markets just within the downstream business itself.

It's hard to tell but I would say that we've reached the bottom.

In the refining part of downstream right now so Petro Chem Sol has been doing well all along so that's a bit of a different story, obviously as such so I think it's going to improve progressively.

Thank you to a certain extent. Yes. So they the labor shortage as we mentioned before but that's not the one that that you're talking about obviously here but take the example of the of the car industry. So Autos the the cheap shortage that's happening out there as well as nothing to do with our own operation, but it's reducing the demands just

As of as of now.

In downstream refining, but its going to take us.

A year or two to get to the right place, where we can say, so which really like the trajectory of that business. It's an industry that is in total transformation as well. The good news is that we are uniquely positioned.

To work with those companies to help them get to the better place I've had great discussions with some of the Ceos of those companies lately as well they need us more than ever.

They're less calls being produced because they can't produce down because of the chips ultimately out there. So that's one. So that that's something we can't control. Obviously, what we can control. They always making sure that we can supply our customers in a way that doesn't stop or impact on operations. And in this crazy world of shortages and hurry K and in Texas for a reason,

Especially true with European companies.

That's also in the U S. So longer term I think it's going to be a very good opportunity for us.

Thank you so much.

Thank you Kevin.

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

And you name it immediately not one. Customers had to stop. Ultimately because of what we were not able to supply of met or a bunch of CEOs, over the past few months as well, and all have been very complimentary as well in, in our ability, to serve them in a difficult environment. So net net. Yes, it's not helping grows. If they were no shortage. We would be probably growing faster, but I don't think that Itza.

Thank you and good afternoon.

You mentioned in the prepared comments.

And the specialty in the food retail business that you were seeing sales.

Sales reversion is expecting some of that I think coming from less consumer demand, but also the labor issues from.

From a customer perspective.

One of those things seems temporal and the other one seems sort of a little bit more structural so could you help us understand how to think about those trends on a go forward basis.

Yeah, Hi, Vincent so it's really because we're comparing to.

Major Impact on us.

<unk> strong Q2.

In specialty.

Last year it is.

Our next question is from Vincent Andrews. With Morgan Stanley. Please proceed with your question. Thank you. And good afternoon everyone. A bit of a follow-up on the supply Dynamics. And when you speak to your suppliers, these days, you know, how much of the issue at this point? And as we look into 2022 is still that they're struggling to get their plants back up and running it. A full run rate versus just at the broader customer base, you know.

It's a business that's doing well actually so it's a comparison question underlying so unlike a lot. So we're quick serve in food retail all heading very strong businesses very profitable and serving successfully industries.

Right now as well so it's ticked up a reason that's kind of a little bit so skewing the numbers otherwise underlying very good and I see a future that's going to keep steady on what you've seen pre-pandemic as well, with those two businesses.

Much wants to rebuild inventory. And is also probably seen very good.

Going to keep steady on what you've seen pre pandemic as well, which those two businesses.

So is this how much of a risk you see that either a there's another run up and enroll material costs, even if Supply normalizes just because people want to rebuild inventory or be just at the raste, stickier at these higher levels. Well, through next well until her through next year.

Okay, and then just as a follow up I assume you're on track for the $120 million of cost savings you've targeted for this year I think.

The total number overall eventually will be $3 65 billion still the right numbers.

Yeah, Let me give that question to Dan who is looking forward to a question as well there. So that's a perfect opportunity.

Here. Well, there's short answer is that? I think it's going to lost 12 plus months what we're experiencing now and that's the way we organized us to where we are dressing it. That's the way we planning for ages. Well supply shortages are going to be cure. So for a while, you familiar with the China, us transport issues that are existing as well. There are many suppliers as well in the US.

[laughter], such and such a great question. So thank you, yes, we remain very much on track to deliver our incremental $120 million year on year.

And more broadly maybe the 2020 program, which has gone through a couple of iterations, we feel very good about that.

The progress that we've made sequentially and we will continue to okay.

Thanks, so much.

Yeah.

So, who have gone through Force measures as well over the past few months. Sometimes, for great reasons and sometimes not so much, just to get some more margins, as well with costs are going up as well. So the way we thinking through that is that as mentioned earlier, I expected inflationary pressure, in dollars in 22 to be very similar to the one. In twenty one with kind of easing plateauing during the second half of next year, which is why

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

Alright, Thanks, very much for my first I wanted to enquire about new business wins, a lot of the description today has been recovering markets, but in the press release, a lot of highlighted new business wins.

And thats across.

Why are paper side.

<unk> certified and talked about and even past can you just elaborate a little bit on maybe where you're getting the most strength and what type of wins you're getting thanks.

Why on one hand? So thank God. We've gotten very well organized. In order to become more resilient to make sure we can supply our customers and second that we doubling our pricing sore from two to four percent, 21 verses 22 in order to address that. Then if the world gets better earlier. Well, we all going to be happier.

Great question.

So new business interestingly enough is gaining traction in every end market.

We felt that in some markets like the institutional markets over the past 18 months it would have been way harder.

Actually each one of the areas, where we've made the most progress which is really good news industrial.

Okay. Thank you very much. You're welcome meeting.

Our next question is from Lawrence. Alexander with Jeffries. Please proceed with your question, good morning or good afternoon, just in terms of pricing, that you that we've talked about a lot is there are situations where there's pricing rebates or placing givebacks if things were to he's dramatically. I mean, obviously, that's not expected. What if the world changes in the? I don't know. Six months nine months. Would you give pricing concessions?

Industrial is doing really well.

In healthcare as well in life Science has always been great at it which we see in the numbers as such so really good story I would say.

One of the new emerging story is in your business is what many call. This is.

Net zero.

With many customers so trying to get closer to this sustainability ambitions, so walter neutral or water positive carbon neutral carbon positive and those discussions with those forward looking companies interestingly enough are strengthening our relationships with them because they need our help even more than <unk>.

Overall, we don't Don, you know, we serving 3 million customers in the world. So I won't say that it's the case for hundred percent of all those locations that we serving. But generally, if you look at just the last 10 years Ecolab, never went backwards in pricing, you have years with higher pricing, in some ways lower pricing and in average, you get to one percent plus, something like that, which is a good indication of the fact that that

Before and Thats growing as well, so our new business opportunities because they need our help in all the units around the world and need multiple solutions as well from us in order to get closer to their net zero ambition. So that's one of the new drivers that we're seeing emerging which is good for our company.

Seeing you something that we hold going forward. And why that is because we always linked the pricing that we asking with the value that we create things of our customers, how much dollar value, we've had them create by reducing the usage of Natural Resources, their improved productivity reduced waste. And so on ultimately that doesn't go away when the raw materials will go down it, seemed Italy.

Great. Thanks, and then I think a good follow up to that would be just to ask specifically on data centers and animal health. Some of your other emerging growth opportunities just a progress report there and any quantification on pace of growth or margin expansion.

Yeah.

Yes, so starting with data centers as I mentioned earlier, so we've been growing I think 50.

Which is on one hand. The reason why pricing is always going to go up and second that the margins ultimately solve for the company gets better because you get lower input costs for a price that keeps going up as well. And last point is innovation as well, which is always brought in the market with higher margin that helps as well. Improving the leverage in a much more natural way. That's really helpful. And then, just one. Clarification on something you said.

53%.

In the second quarter, it's been a terrific story it used to be part of our life water industry as business.

The past we've created a dedicated unit.

<unk> 18 months ago, which is really a division that's focused on data centers and microelectronics baidu at the Intel of that world.

Or did you say that you expect the raw material or the the inflation environment?

As well and interestingly enough fits new expertise that we could build this new offering that we could provide to those companies that are really interested in close to 100% uptime for all the reasons that we understand our secure solutions as well from a digital technology perspective, they want to make sure that.

That's for all of 2022 or most of 2022 that if they catch that right? Yeah, II. Wish I could know, exactly. But I'm saying the next 12 months. It's going to be the case, and that's the way we planning. That's the way we getting organized or I think it's going to ease the second half of next year. When is it going to start? How much is it going to be? I don't know. We planning with the fact that it's going to be a tough year next year, in terms of inflation. And if it gets better than okay. It's going to make everything easier.

Any access that we have with them is done in a totally secure world well and those are companies that are very sustainability friendly as well. So they all want to get so close to the net zero as fast as they can all of that is really driving that business.

Here. Thank you very much. You're welcome.

<unk> animal health is a complete different story.

Our next question is from Eric Petry with Citigroup. Please. Proceed with your question.

Obviously as such this is something that takes time as well we've created a dedicated unit we've made acquisitions.

Ian. Hi. Thank you and good afternoon. Christophe. Good afternoon. Have you seen the greatest initial interest in your Net Zero program?

As well in that she is underlying our like where we're going.

Q2 has been a bit soft ball, because we compared to a very high Q2 in 2020, but thats a business thats going to be very interesting going forward for at least one important reason that most of the.

Damn, that's a great question. It depends when the ones over the last few years have been the food and beverage customers. Those are the consumer goods brands that are the most on the Leading Edge because their own consumers, are asking them to behave the right way, in terms of Environmental Protection and natural resources usage, but then

Farmers would be or honored allowed so to use antibiotics.

To protect the animals and they need William all solutions in order to make sure that they are in a healthy environment.

To get sick and this is exactly what animal health is doing.

The ones that are the most forward-looking, interestingly enough, all the high-tech companies like Microsoft, with, put the most ambitious commitments by 2030 you've read that. So they want to be. So carbon positive and water positive as well, which means our kind of giving back all the view since the beginning being in operations whenever that was early nineties as as Microsoft. So there we do.

In our business. So, it's an evolving proposition, but thats clearly aligned with the longer term trend that customers and consumers like you and I ultimately I expecting so from the food manufacturers.

Okay. Thanks, Chris I appreciate the color.

Thank you Scott.

Your next question comes from the line of Rosemarie <unk>, Rosemary more belly with Gabelli <unk> Company. Please proceed with your question. Thank you good morning, just us anyway.

Use a lot of new technology for that. And the last one I'll just mention Eric, which is becoming very interested that was not interested. Six months ago. Interestingly enough is Downstream in oil and gas because while investors and consumers are truly asking them, so to shift and those ones are coming to us, and it's not 12 months ago. So very different types of Industries, but the trends is clearly going all in the same direction.

I was wondering if you could calculate a bit about M&A you have been making small acquisitions.

You have an appetite for larger ones and their targets.

Targets that you would be interested in.

So the short answer is yes.

Yes, we're interested.

M&A and larger ones, we've done smaller ones over the past few months as mentioned earlier.

Thank you. And then a question on equal sign certified. The program was launched some time in third quarter of twenty. When do you think you'll reach a point of Market saturation, or for the program, doesn't add to the Top Line.

In the wipes area, which is a perfect complement to our offering and institutional and healthcare and industrial and we couldnt produce that ourselves we were told manufacturing.

With other companies and we've seen during this pandemic that that could get great business for us.

Fine, that's a great question. I hope never. But well, there's a hundred percent somewhere obviously, but interestingly enough. So, you know, we have today 33, thousand locations, that are Ecolab science certified in the US and and and we surveying so close to 200,000 locations. So there's a lot of Runway and that's just in the u.s. We expanding in Canada in the you.

Sudan, especially gone going forward, so we've done that.

Well, we've done animal health as well last Europe.

As just mentioned as well as the previous question and we've been extremely active on the.

M&A front over the last six months do you have a very rich pipeline, we have very serious discussions with many as well out there, but at the end of the day.

We have this very discipline line.

Right now, it's easier because the same language. So for the most part as well, and then we have the rest of the world, but we careful in expanding internationally because since it's a new program, as you mentioned, so Lounge, don't need last year. Really want to understand how it works? How it's perceived. What's right, what's not right as well? So I think that the runway is is quite long and it's been much more successful than I thought it would be.

What we do and what we don't do and when I look at all the discussions that we've had so far we didn't find the exact opportunity so right now, but I feel confident that in the.

In the future. So we will get to a bigger opportunity at the right time.

Can you share with us any particular elas.

All of that came through.

Make a larger acquisition.

So I can't go too much in details Rosemary for obvious reasons, but the core.

Initially, I thought it would be just COVID-19 ated. While this is not the case, interestingly enough, not judging customers a hotel are becoming increasingly interested in that program because guests want to have so that feeling of well-being, when they go to a hotel, the same for offices as well. So those are new opportunities that we didn't think about earlier on that adds ultimately. So to the accessible Market that we have in front of us.

Areas of <unk>.

Water is interesting so for us life science.

Which is.

Every successful business, serving a very large and high growth as well and market.

And third so related to digital technology as well. So those are kind of three areas that are very interesting for us.

Thank you Krista. Thank you.

Alright, and then if I may what is the size of your animal health business guarantee.

Our next question is from Kevin McCarthy, with vertical, research Partners. Please, proceed with your question.

I'm not sure we've.

Ian, yes, good afternoon Christoph. I was wondering if you could talk through the hurricane impacts. It looks as though the impact is expected to be half of what you thought. It might have been on September 13th and you're prepared remarks, suggest you attack that through pricing and productivity. So is one of you could address each of those things and provide some more color as to how you went about, mitigating that great question.

Clothes that so far.

$100 million, let's put it that way Rosemarie I'm, sorry did you say 200, a few hundred.

Okay.

Great. Thank you and good luck. Thank you so much was nine.

Your next question comes from the line of P. J <unk> with Citi. Please proceed with your question.

Hey, Chris It's Eric Petrie on for P. J.

You noted your now that you are gaining share in U S. Restaurants, I was wondering if you had a similar data point on lodging and then in bullets restaurant margin, how does that compare in Europe and Asia.

Well, it's you know, I would practice is when we see something happening that was not planned. We always get to you as quickly as we can to be transparent with what we see at that moment. So the downside of that practice is obviously a week or two later if things have changed for the better in that case, well, the forecast is a bit different as such to give you some color on the

So my comment was mostly focused on our restaurants because.

He was a highly impacted area. Unlike the progress we're making in hotels.

But as well and mostly because of the offering that we provide them in terms of.

And Ida we have systems to showing where the hurricanes are going to go through. What's the path of the hurricane? And we initially thought that it would really. So, avoid one of the large plants that we have in Louisiana in Gary evil. Well, unfortunately, a few hours before a changed and it's hit. Exactly. So one of our main plants in the

Alternation.

Yes.

Application of our solutions, you've heard about the staff shortages that they all have had a chance to talk to a few ceos as well so lately from large hotel chains in the U S and abroad and this is top of mind for them. So the solutions that we have which are new those are things that we've been doing so for me.

Many years.

Italy has been them clear.

<unk> quicker, which is something they really still challenged with right now or in the <unk> as well so to clean dishes.

And with the damage we had their we told the plant would be closed for three months. And I was supply chain team that fortunately or unfortunately depending on how you want to look at it. Is that a lot of practice this year? We saw with natural catastrophes as such. Well, has brought all the teams we had. So from other plans as well, in order to help them rebuild part of the production lines that had been damaged because you couldn't find contractors in the area either.

An easier way passed away with less labor as well the same on water at the same on a housekeeping.

So on and those are solutions that are ultimately, helping us sell new business in lodging. So good progress in lodging as we've seen as well in foodservice.

And just a follow up to clarify would you say youre gaming Sharon restaurant in Europe, and Asia, as well or or is that not.

For all the reasons we know, well, that has helped us or reduce the three months, top, two, three weeks. Ultimately. Well, that has been great for our customers first and foremost. And second. It's allowed us to reduce the impact quite dramatically. So that's an additional point to the ones you mentioned. I see men as a brief follow-up. Have you implemented incremental price increases over the last few months and I guess regardless of the answer,

Not settled out.

We have less numbers over there and to be honest. So those markets are reopening right now so we've gained new business.

We have to see how it looks in practice then afterwards, so I think that in the month and quarter to come.

It will be in a better position to really share salt, whether we've gained which I believe we will but I don't have the facts for us.

How would you expect price?

Contributions to Trend in for Q versus 3Q. So the short answer is that, we've gone. So too many customers three times this year, usually in normal times, whatever that truly means we do that once a year and it's a very natural practice that the company has where we discussed the plan for next year. How much value we creating for the customer? What's going to be the our share of that?

Why not.

Okay and my follow up question, how much square sanitizer and hard surface cleaners.

Sales down in the quarter and what do you expect in terms of moderation for second half.

So sanitizing say, so where you so just to put in perspective, it's 8% to 10% of our overall sales.

For the company, we had significant growth.

That in other words of the price that we're going to get for it as well and making sure that the returns for customers to improve. That's normal practice once a year, we did three times in average these years or very unusual. I assume it's going to be similar next year or so between 1 and 3 times. It's going to be more than one that I'm sure. So we go for a bunch of pricing rounds. Now to you question. Do you for versus G3? We heading towards 4% to enter.

Last year, and we expect to be lower than last year. Overall, so we don't disclose all the detailed numbers, but quite a bit higher than 2019, and thats, probably the way you.

Need to think about that so lower than the peak of the pandemic. Thank god.

But higher than 2019, because practices have changed in most end markets and countries.

Thank you.

20:22. So is it going to be the full quarter in Q4? I'm not totally sure yet. It's gonna happen sometime during the fourth quarter. So depending on when we get it done it will be for the full quarter or it's going to be as we enter so 22, but I have a high confidence level that we're going to get the pricing that we looking for. Very helpful. Thanks so much. You're welcome.

Your next question comes from the line of Laurence Alexander with Jefferies. Please proceed with your question Hi, just a quick one to follow up on the discussion earlier of the shifts away from some of the lower margin businesses like refining.

If you look at the moves you've done over the last couple of years can you give a rough sense for how much.

Sales you've moved away from some of the out of paper business segment.

Our next question is from rosemary, more belly with Kelly and Company. Please proceed with your question. Thank you. Good afternoon sister. Looking at the price of oil having reached $80 a barrel of their about is that do you see that already beginning to to help your Downstream business and still on the downstream side? How, how is your Net Zero carry?

Last couple of years now how much stronger yourselves line would have been if you hadn't done that calling up the mix. It's a great question Laurence but I have no idea because it's something that we're doing all along in every business. The focus is really sort of move up the chain move up the margins.

Don't be driven only by pricing.

Need to be because we are focusing on the higher margin segments higher margin offering as well so it's a continuous work.

Are we going to help them? Which areas are you focusing on?

In some areas, it's more extreme like the coal as mentioned before.

On.

On yeah, great question the high price of oil. So make some people happy, you know, organization. That's a downstream team and and most of the rest of the company, a bit less happy, because that's an input cost that's going up. But that Nets, okay. It's a teat. Okay, we know how to manage that it generally. So you've seen Downstream, so when we're not, so, in Q3, so 2 percent. So we cross the ball of the of the zero, which is good.

Refining and downstream that our most significant but.

I Couldnt put a number exactly on that because it's a continuous process.

Thank you.

The next question comes from line of.

Slo-mo Rosenbaum with Stifel. Please proceed with your question.

Hi, good afternoon, and thank you for taking my questions Christoph I wanted to ask you a little bit about how.

So we see so really good evolution in Downstream. So yes, there's the price of oil is helping on the demand. They've done some very good work as well in our Downstream team, in terms of new business. This is helping and not directly related to the price of oil for sure. And when when you talk about the Net Zero, it's very interesting early discussions as such but to take one example of

The company is leveraging the technology investments.

As it approaches the sea level in the organization in terms of their sustainability. So I'm understanding is this is enabling ecolab to start discussions with the C suite as opposed to starting discussions more at the plant level and I'm wondering.

How are those discussions progressing is there an increased pace are you seeing a large potential to accelerate or an incremental potential for you to accelerate Ecolab's revenue growth by being able to sell further up the chain within the organizations?

one European company actually with him. So we are working on that Net Zero program. They basically saying, you know, you need to help us improve the environmental footprint of our old energy, which is the refining part before we can focus on the new energy, the Renewables as the soap. We've really help them understand that by reducing the water consumption in a Refinery which by the way is the number

Hey, Thank you Shlomo this is a great topic.

Just kind of one more time, so we view on that but maybe sold to two quick answers the Watson there how.

First on the what we have always more customers, it's not new but it is clearly accelerating so guests.

Customers that are asking us so partner with us in order to find a path in order to get to net zero or positive.

One natural resource that's being used, you know, in a refinery.

Well, you reduce the energy usage as well, electricity. So for the most part as well, so they're reduce their water consumption. They reduce their carbon footprint, by doing it and they're reduce the cost. So interestingly enough. It's an industry that was not so much interested in, even having that discussion has changed dramatically. That's helping creating the demand for us.

Water or carbon Microsoft being one of the obvious ones and its not the secret since they've been expressing that CNN. So.

Over the past year or so so in order to get there you need to have digital technology, because you need to understand to make it easy to recycled water.

Which is a physical product we need to understand in real time to quality of the water or lack thereof, actually which indicates what kind of chemistry, we need or what kind of technology is required in order to bring it back to the standard level, that's being used in a data center or in a food plant as such this is a direct application of our digital.

Okay, and then saying that is looking at what is a well I understand that you will never get the institutional business to reach the level of the institutional, you know, high-end and the normal circumstances in in North America. So what is the

Energy and second it.

Is the how it seems we are serving.

<unk>.

Locations out there in the World. We are uniquely placed to know what's the world class performance that can be achieved take a brewery for instance, how much water per hectoliter of beer Thats being produced when we can compare within the company Brewing company.

Other than the fact that you have multitude of countries and different advertisements. And so on is a competitive Arena also very different. What is your new management? They're doing to offset some of that.

<unk>.

That, yes, you said it the right way. So we will not reach the profitability level of 30 us because it's not one country. And the complexity is, is bigger. As you mentioned, languages, Logistics Regulatory, and so on, that's the cost of doing business, that's higher. Than in the u.s. That that's true for most companies, obviously, but that's not the reason why we shouldn't get close to it.

How does the performance of the individual plants compared to the best in class, we can compare across Brewers as well, we can compare across industries as well as the company as well. So we can provide customers with good benchmark of what good looks like in second half to get there as well that's all enabled by digital technology.

That we've been building developing and implementing so over the last 10 20 years around the world.

Okay.

And so is that I guess, some just to keep that go in there.

But we had to really do some, some fundamental work over there in getting our structure, right? Getting our talent right getting of logistics, right? And most importantly, we can't forget that 10 plus years ago. Institutional in Europe was a product business. We were selling products versus programs and outcomes, you know, in the u.s. Because it was a joint venture with consumer goods company.

Do you see a potential for that to really incrementally improve the revenue growth of the business because youre able to sell.

At these higher levels, obviously, you're bringing the capabilities that other companies can't bring to the table.

Yeah, absolutely. So what you saw was that our centers. So the growth of 53% is directly driven by that.

One light as well, which has been growing 7% as well in the quarter is also driven by that kind of solutions. So early indications are positive and the more we can implement that across the end markets. The more it's going to help us as well as a company.

Ten plus years ago that we had over there. Well, that's a major cultural shift as well. So far. We're team that needed to happen. So, you we are patient company, you know, that we've been working on businesses of four years, take pest elimination. Took us 10 years to bring it profitable. And now it's one of our most profitable businesses. Globally that we have. I feel confident that in Europe, we will get to very healthy place. Even if it's not at the

Okay, Great. If you don't mind my sneaking in one more. The areas that are completely open now in terms of restaurants, let's say, taking the Florida, Texas, how does the chemical usage compared to what it was. Pre COVID-19 what are the levels in the restaurants that were customers before and there are still customers.

The areas that are completely open now in terms of restaurants, let's say, taking the Florida, Texas, how does the chemical usage compared to what it was.

Pre COVID-19 what are the levels in the restaurants that were customers before and there are still customers.

Love the us. It's going to be a very solid business down the road, but it's still going to take some time. Okay, Missy and potential.

It's still lower today Shlomo because the dine in so.

The dining rooms.

Our next question is from Scott schneeberger with Oppenheimer. Please, proceed with your question.

As mentioned before so in Q2, 837% down so versus.

Ian, thanks very much. Good afternoon, Chris. I've just kind of taking a question of something. You just mentioned the other segments, the margin really rebounding strongly, and it's now above the 2019 level, despite commentary and markets that have not fully recovered from. Just just curious if you could do in a little bit to what is driving the margin and other and where that possibly could go. Since since we're now above 19th, actually.

Pre pandemic.

As such which means that the usage of.

Cleaning and sanitizing solutions has been lower as well, but as dine in is going up so the demand is going up as well at the same time. So the fact that we had the same number of.

Units buying the same number of solutions today.

This is a good sign as well so the compounded growth when dining is going to pick up as well in the weeks and months to come.

So, you know that.

Yeah, if, you know, you know, I was segments. So you have a combination of different businesses, of yours, east of pest, elimination, being the bigger and, and best one, you have textile care that's in there. And he have so ctg or color ideal Technology Group. Very different businesses, obviously, so it's hard to talk about an average as such the main driver. Especially me nation that has done a remarkable work during the pandemic.

Thank you.

Thank you Shlomo.

Ladies and gentlemen.

No further questions at this time and I would like to turn the floor back over to management for closing remarks. Thanks.

Thanks, everyone that wraps up our second quarter conference call this call and associated discussion slides will be available.

By the way, so they've recovered very quickly during 2020 and kept growing as well in 21, and at the same time have managed as well to improve the profitability versus 19. Three and a half percentage Point as such. So large business growing, very nicely profitable and get more profitable. Obviously, you get a lot of Leverage and Scott that drives. So the good results that you've seen in our so-called.

Other segments.

Excellent. Thanks. Appreciate that. And my follow-up on that kind of delve into in the supplemental discussed in the in the summary section. There's commentary expecting to enter 2022 solid momentum, driving strong top, bottom line, through product and service Innovation, digital Solutions, new markets and specifically what you had in mind. If not,

But yeah, just wanted to help on that. Thanks.

Yeah, so it's it's kind of all of the above starting first with new business. It always feels a bit mundane, but we have this manager in the company that in doubt go and sell something. And it's really, so having everyone trying to sell new customers, new solutions to existing customer. This is job one and we want to make sure that we don't lose obviously. So that's that art and interestingly enough, when you do more pricing that hasn't he

Back to as well on how much new business or it's not the perfect science, but we managed that's a reason to be well, very well. If I may say in terms of new markets, you know, I'll mention a few. So the one I expressed before our data center business, which is driven by the whole Boomer for cloud computing. We've created that high tech division, which is really dedicated. So to those

Companies with their own needs up, time, quality, cybersecurity, and all that, which is growing extremely fast. So that's one of the new markets Animal Health is another one which has been here to bit by the pandemic and some difficulties in some countries. But ultimately that's also one that's going to grow very fast in the in the years to come and most importantly you have life science.

which is a business that we

Did five years ago. It's a 300 million business growing double-digit with extremely high profitability as well. This one is just at the beginning of its growth story in as you know, like scientist serving mostly the Pharma industry, which is the trillion dollar industry growing double-digit. And for me, we have so much to offer to that industry. I think that's going to be the number one New Market to use you term. That's going to help.

Us grow as well. Next year, and the years to come.

Excellent, sounds good, and that's what I expected to hear. Just want to make sure there wasn't anything in geographical or perhaps a expanding, but I'll turn it over. Thanks so much for some. You're welcome.

Mmm, our next question is from Shlomo Rosenbaum from stifel. Please proceed with your question. Hey Christoph a couple quick questions. Just leave these some of the growth in water and paper particularly strong. Can you dissect how much is would you say? Is coming from easier comms and how much is really an accelerated? Can some of those businesses that we should be thinking about just in a more regular basis?

Yes, the First on water. It's, you know, a steady business or for many many years because of all the right reasons is that water, scarcity is a becomes a bigger issue and by reducing the water usage, you reduce energy usage. You reduce your carbon footprint. So it fits really well with the Net Zero idea. So the water business which is a very large business. Private company has been successful for years and will keep

Wing. Well, because customers need. Even more because of these NetZero approaches search there now. On paper. It's it's been an unbelievable year growing. So 19% you have kind of a third of it is pricing to third. Is volume some is comp but a lot of new business as well has been generated in our paper division, so it's not going to

Which is a trillion dollar industry growing double digit and for me we have so much to offer.

Stay at that high level as such because the comp are going to normalize going forward, but it's going to remain a healthy business. Going forward with very nice profitable margin as well.

That industry I think that's going to be the number one new market to use your term that's going to help us grow as well next year and the years to come.

Excellent sounds good and that's what I expected to hear just did what we wanted to make sure there wasn't anything in geographical or perhaps expanding but I'll turn it over thanks, so much with shell.

Okay, great. And what's the interest internally at Ecolab to pursue m&a within that pest business? There's been more consolidation outside, you know, with other players have bought, a lot of small businesses. Is that something that you guys would be interested in going in and doing more activity over there or alternatively? If someone approached you about your business, would you be interested in doing a deal with someone else?

Welcome.

Our next question is from Shlomo Rosenbaum from Stifel. Please proceed with your question.

Christoph.

Quick questions, just maybe some of the growth in water and paper, particularly strong can you dissect how much would you say is coming from easier comps and how much is really an accelerated cadence of those businesses that we should be thinking about just on a more regular basis.

Else so hard for me to comment on MMA as you know, slow mo but it's it's it's a great business or for us. So it's definitely not excluded from what we looking at out there. We've done a lot of Acquisitions. That's the way it's grown to a certain extent as well. We started with an acquisition in North Dakota's or a few decades ago as well. So we know how to do it. It works really well.

Yeah. So first on water it has been.

A steady business so for many many years.

Because of all the right reasons, you said water scarcity is a becomes a bigger issue and by reducing the water usage you reduce energy usage you reduce your carbon footprint. So it fits really well.

With the net zero.

So the water business, which is a very large business <unk> has been successful for years, and we'll keep going well because customers need it even more because of this net zero approaches such depth.

We do know that the excluded, is it?

But one priority in terms of MMA know, I've always mentioned, its its life science, water Healthcare and digital out the big ones out there. But normally we would not have a strategy getting under way of making money. So if there is a good opportunity out there will consider it as we've always done.

On paper.

It's been an unbelievable year.

Q3 saw growing so 19%.

A third of it is pricing to Wizard is volume some is comp, but a lot of new business as well has been generated with paper division. So that's going to stay at that high level as such because the comps are going to normalize going forward, but it's going to remain a healthy business.

Okay, great. Thank you.

Mr. Monaghan, there are no questions at this time. I would like to turn the floor back over to you for closing remarks. Thank you that wraps up our third quarter conference. Call this conference call, and the associated discussion, slides will be available for replay on our website. Thank you, your time and participation and best wishes for the rest of the day.

This going forward.

Nice profitable margin as well.

Okay, great and what's the interest internally at.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Equal lab.

To pursue.

M&A within their test business, there's been more consolidation outside with other players who bought a lot of small businesses.

Day.

Something that you guys would be interested in going in and doing more activity over there or alternatively, if someone approached you about your business would you be interested in doing a deal with someone else.

So hard for me to comment on.

On M&A.

As you know Shlomo, but.

It's a great business so for us so it's definitely not excluded from what we're looking at.

Out there we've done a lot of acquisitions, that's the way, it's grown to a certain extent as well.

We started with an acquisition in North Dakota, So a few decades ago as well. So we know how to do it. It works really well we do not exclude it is at number one priority in terms of M&A no.

Always mentioned, it's life science water healthcare and digital are the big ones out there but.

We would not have.

<unk> J.

Getting under way of making money. So if there's a good opportunity out there we will consider it as we've always done.

Okay, great. Thank you.

Mr. Monahan there are no questions at this time I would like to turn the floor back over to you for closing remarks.

Thank you that wraps up our third quarter Conference call. This conference call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation and best wishes for the rest of the day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Okay.