Q1 2024 Ecolab Inc Earnings Call

Okay.

Operator: Greetings and welcome to the Ecolab first quarter 2024 earnings release conference call. At this time, all participants are in listen only mode.

Speaker Change: Greetings and welcome to the Ecolab first quarter 2024 earnings release Conference call.

Speaker Change: At this time, all participants are in listen only mode.

Operator: A question and answer session will follow the formal presentation. If anybody today should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. At this time, it is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations, for Ecolab. Mr. Hedberg, you may now begin your presentation.

Speaker Change: A question and answer session will follow the formal presentation.

If anybody today should require operator assistance during the conference. Please press star zero from your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded.

Speaker Change: At this time it is now my pleasure to introduce your host Andy Hedberg, Vice President Investor Relations for Ecolab.

Andrew Hedberg: Mr. Hedberg you may now begin your presentation.

Andrew Hedberg: Thank you and hello everyone, and welcome to Ecolab's first quarter conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO, and Scott Kirkland, our CFO. A discussion of our results, along with our earnings release and the slides referencing the quarter results, are available on Ecolab's website at ecolab.com slash investors. 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.

Andrew Hedberg: Thank you and Hello, everyone and welcome to Eagle Labs first quarter Conference call with me today are Christophe Beck, Ecolab is chairman and CEO and Scott Kirkland, our CFO a discussion of our results along with our earnings release and the slides referencing the quarter results are available on <unk> website at Ecolab Dotcom Slash investor. Please take a moment to read the cautionary statements in these.

Andrew Hedberg: Reals, which state that this teleconference and the associated supplemental materials include estimates of future performance. These are forward looking statements and actual results could differ materially from those projected factors that could cause actual results to differ are described under risk factors section in our most recent Form 10-K and in our posted materials. We also refer you to the supplemental.

Andrew Hedberg: These are forward-looking statements, and actual results could differ materially from those projected. Factors that could cause actual results to differ are described under the risk factors section in our most recent Form 10-K and in our posted materials.

Andrew Hedberg: We also refer you to the supplemental diluted earnings per share information and release. With that, I'd like to turn the call over to Christophe Beck for his comments. Thank you so much, Andy.

Andrew Hedberg: Diluted earnings per share information in release with that I'd like to turn the call over to Christophe Beck for his comments.

Christophe Beck: And welcome to everyone on the call. We're really pleased to report that Ecolab is off to a strong start in 2024 with first quarter organic sales growth of 5% and organic operating income margin expansion of 400 basis points, driving adjusted earnings per share up 52%. We remain firmly on our long-term 12-15% earnings growth trajectory, with our exceptional growth in the first quarter being the result of strong execution on fundamentals and the additional benefits of lower delivered product costs. This strong performance is a testament to the excellent dedication and execution of the entire Ecolab team, and I'm so proud of them.

Christophe Beck: Thank you so much Andy and welcome to everyone on the call. We're really pleased to report that ecolab is off to a strong start in 2024 was the first quarter organic sales growth of 5% and organic operating income margin expansion of 400 basis points driving adjusted earnings per share up 52%, we remain firmly whenever.

Andrew Hedberg: A long term, 12% to 15% earnings growth trajectory with our exceptional growth in the first quarter being the result of strong execution on fundamentals and the additional benefit of lower delivered product costs.

Speaker Change: This strong performance is a testament to the excellent dedication and execution of the entire ecolab team and I'm. So proud of this team.

Christophe Beck: We're encouraged by the current pace and momentum of our business. Our efforts resulted in the delivery of 3% pricing, which included new pricing implemented during the quarter and a modest carryover benefit from last year's pricing action and brought us slightly above our 2% target. This delivery, along with continued positive volume growth, is possible because of our customer value proposition. Because of the value we provide, the spend with Ecolab is a benefit and not a cost.

We are encouraged by the current pace and momentum of our business.

Speaker Change: Our efforts resulted in the delivery of 3% pricing, which included new pricing implemented during the quarter and a modest carryover benefit from last year's pricing action and road is slightly above our two percentage points plus long term run rate.

Delivery, along with continued positive volume growth is possible because of our customer value proposition because of the value. We provide their spend with ecolab is a benefit and not to cost.

Christophe Beck: These good top line growth, combined with the anticipated easing of delivered product costs, continued the strong organic operating income margin expansion across the majority of our businesses, our business segments, and geographical areas. We're very pleased with the margin expansion we have delivered and remain focused on achieving our 20% operating income margin target over the next. As we continue to execute against this target, gross margin is expected to continue on its positive trajectory. At the same time, we are now reinvesting some of these gains back into our business to fuel our long-term growth. Importantly, our underlying productivity remains strong, and we see opportunities to further improve by leveraging our leading digital capabilities. Looking across our segments, Institutional Specialty continued to perform exceptionally well.

Speaker Change: There's good topline growth combined with the anticipated easing of delivered product costs continued to strong organic operating income margin expansion across the majority of our businesses all of our business segments and geographical regions.

We are very pleased with the margin expansion, we have delivered and remain focused on achieving our 20% operating income margin target over the next few years.

Speaker Change: As we continue to execute against this target gross margin is expected to continue on its positive trajectory at the same time there are no.

Speaker Change: Now reinvesting some of these gains back into our business do you feel our long term growth importantly, our underlying productivity remains strong and we see opportunities to further improve by leveraging our leading digital capabilities.

Speaker Change: Looking across our segments institutional and specialty continued to perform exceptionally well. This team delivered double digit sales growth in a very attractive operating income margin as our labor savings value proposition continued to resonate with our estimates going forward, we expect our rate of organic sales growth for institutional specialty to mud.

Christophe Beck: This team delivered double-digit sales growth and a very attractive operating income margin, as our labor savings value proposition continued to resonate with our customers. Going forward, we expect the rate of organic sales growth for institutional specialty to moderate somewhat as we have lapped last year's strong pricing delivery. Industrial made good underlying progress. Improving its volume trajectory in a volatile global environment, excluding continued soft near-term paper industry demand, industrious volume grew, a nice improvement from the second half of last year. Healthcare and life sciences remained relatively flattish, but life sciences sales grew modestly, which I consider constructive news given the continued short-term soft industry trend.

Alright, somewhat as we lapped last year's strong pricing delivery.

Speaker Change: Industrial made a good underlying progress improve.

Speaker Change: Improving its volume trajectory in a volatile global environment, excluding continued soft near term paper industry demand industrial volume grew a nice improvement from the second half of last year.

<unk> and life Sciences remained relatively flattish, but life Sciences life Sciences sales grew modestly, which I consider constructive news given the continued short term soft industry trends, we therefore expect trends to progressively improve during the second half of the year.

Christophe Beck: We therefore expect trends to progressively improve during the second half of the year. As promised, we continue to take the action needed to transform our health care business. A year ago, we took the first step in our journey by adjusting our cost structure to a more competitive level. Then, in the third quarter of last year, we took our second step by bifurcating our North American health care business into two separate businesses, surgical and infection prevention.

Speaker Change: We continue to take the action needed to transform our heskett business a year ago. We took the first step in our journey by adjusting our cost structure to a more competitive level than in the third quarter of last year. We took our second step by bifurcated, our north American healthcare business into two separate businesses surgical and <unk>.

Speaker Change: <unk> prevention.

Christophe Beck: Today, we made further progress by announcing an agreement to sell our surgical drapes business to MEDLINE. Once and if this transaction closes after regulatory clearance, we will have a renewed focus on the instrument reprocessing portion of the remaining healthcare business. This business has the core elements of the classic Ecolab business model that combines an anchor platform with consumables, personal service, and digital solutions.

Speaker Change: We made further progress by announcing an agreement to sell our surgical drapes business to Medline.

Once and if this transaction closes.

Speaker Change: Regulatory clearance, we will have a renewed focus on the instrument reprocessing portion of the remaining healthcare business.

Speaker Change: This business has the core elements of the classic Ecolab business model that combines an anchor platform with consumables personal service and digital solutions.

Christophe Beck: Well, there's more to be done, but I'm proud of the progress we've made to create a more sustainable, profitable health care business that delivers for our important hospital customers. Finally, Pest Elimination, which is now a stand-alone segment due to its relevance and promising performance, continues to perform very well.

Speaker Change: There's more to be done I'm proud of the progress we've made to create a more sustainable profitable health care business that delivers for our important hospital customers.

Speaker Change: Finally, pest elimination, which is now a standalone segment due to its relevance and promising performance continued to execute very well sales grew up at Prestea.

Christophe Beck: Sales grew by a single digit with double-digit organic operating income growth, benefiting from a circle-the-customer, circle-the-globe cross-selling strategy. Looking ahead, the confidence we have in our 2024 performance continues to strengthen. We expect organic sales growth to remain relatively stable, driving 2-3% price and 1-2% volume growth.

Speaker Change: Christingle digits with double digit organic operating income growth benefiting from a circle the customer circle the growth cross selling strategy looking ahead. The confidence we have in our 2024 performance continues to strengthen we expect organic sales growth to remain relatively stable driving 2%, 3% price and 1% or two.

Speaker Change: 2% volume growth.

Christophe Beck: We're increasing our outlook for full year 2024 adjusted EPS to the range of $640 to $670, up 23% to 29% versus last year, as we now anticipate delivered product costs to ease through the third quarter, though the magnitude of cost favorability is expected to gradually diminish. Along with continued pricing and volume growth, I expect it to more than offset the estimated $15 million per quarter OI headwind from the diversity tier of our surgical healthcare business once the transaction closes.

We are increasing our outlook for full year 2020 for adjusted EPS to the range of $6 40 to $6 70 up 23% to 29% versus last year as we now anticipate delivered product costs to ease through the third quarter, though the magnitude of cost favorability is expected to gradually diminish.

Speaker Change: This along with continued pricing and volume growth I expect it to more than offset the estimated $15 million per quarter Oi headwind from the divestiture of our surgical <unk> business once the transaction closes.

Christophe Beck: As a result, we anticipate quarterly adjusted diluted earnings per share growth in the second half of 2024 to progressively normalize towards the upper end of Ecolab's long-term 12 to 15 percent target as a result of short-term benefits from lower delivered product costs. As always, we will remain good stewards of capital by continuing to invest in the business, increasing our dividend, and returning cash-to-share orders. With great business momentum and cash flows, our balance sheet is in a very strong position. This provides us with many options to allocate capital to growth opportunities that will generate continued strong returns for shareholders. Ecolab's future has never looked brighter.

As a result, we anticipate quarterly adjusted diluted earnings per share growth in the second half of 2024 to progressively normalize towards the upper end of Ecolab is long term, 12% to 15% target as short term benefits from lower delivered product costs ease.

As always we will remain good stewards of capital by continuing to invest in the business, increasing our dividend and returning cash to shareholders with great business momentum in cash flows and our balance sheet is in a very strong position. This provides us with many options to allocate capital to growth opportunities that will generate continued strong returns.

Speaker Change: For shareholders.

Speaker Change: <unk> future has never looked brighter.

Speaker Change: Our leading customer value proposition.

Speaker Change: Our technologies help customers improve their operating performance, while reducing their water and energy use is proving to be increasingly irrelevant and continues to fuel our growth pricing and margin expansion.

Christophe Beck: Our leading customer value proposition, where our technologies help customers improve their operating performance while reducing water and energy use, is proving to be increasingly relevant and continues to fuel our growth, pricing, and margin expansion. Backed by the most talented team, leading technology innovation, and global capabilities, our strategic positioning enables us to consistently expand our market share within the vast and high-quality $152 billion market we serve. We therefore remain confident of delivering superior performance for our customers and for our shareholders for the years to come. Thank you for your continued support and investment in Ecolab. I look forward to your questions. Thanks, Christophe.

Backed by the most talented team, leading technology innovation and global capabilities, our strategic positioning enables us to consistently expand our market share within the vast and high quality 152 billion market we serve.

Speaker Change: We therefore remain confident in delivering superior performance for our customers and for our shareholders for years to come.

Speaker Change: Thank you for your continued support and investment in Ecolab I look forward to your questions.

Speaker Change: Thanks, Christoph that concludes our formal remarks, operator would you. Please begin the question and answer period.

Speaker Change: Okay. Thank you.

Speaker Change: A question and answer session.

Speaker Change: Please limit yourself to one question.

Speaker Change: So having the calling she'll have a chance to participate.

Speaker Change: If you'd like to ask a question at this time. Please press star one from your telephone keypad, a confirmation tone indicate your line is in the question queue.

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

Speaker Change: You May press Star two if you like to withdraw your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset Christmas turkeys.

Operator: We'll now be conducting a question and answer session. We ask you to zoom in on one question so the callers will have a chance to participate. If you'd like to ask a question at this point in time, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: One moment, please while we poll for questions. Thank you.

Speaker Change: Our first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Timothy Michael Mulrooney: And Christophe good afternoon.

Timothy Michael Mulrooney: Good afternoon, Tim.

Timothy Michael Mulrooney: I wanted to ask about your growth investments it sounds like you're stepping up SG&A a little bit so.

Timothy Michael Mulrooney: I guess my question is two fold number one yes.

Operator: You may press star 2 if you'd like to withdraw 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 poll for questions. Thank you. Our first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Timothy Michael Mulrooney: Does this impact how youre thinking about timing to achieve a 20% Oi margin I know a big chunk of gross margin expansion, but I also know you hit that target. It was a couple of hundred basis points of SG&A leverage so yes.

Timothy Michael Mulrooney: How are you thinking about that 20% target now.

Timothy Michael Mulrooney: And then secondly on the investment themselves can you talk a little bit more detail about what those are what parts of the business theyre going into.

Timothy Michael Mulrooney: I know.

Timothy Michael Mulrooney: Good afternoon, Tim. I wanted to ask you about your growth and development. You know, it sounds like you're stepping up SG&A a little bit. So I guess my question is twofold. Number one, does this impact how you're thinking about timing to achieve your 20% OI margin? I know a big chunk was gross margin expansion, but I also know, you know, to hit that target was a couple hundred basis points of SG&A leverage. So, you know, how are you thinking about that 20% target now? And then, secondly, on the investments themselves, you know, can you talk a little bit more detail about what those are, what parts of the business they're going into? I know that too.

Timothy Michael Mulrooney: Part of the reason that ecolab has sustained its competitive advantages has been its willingness to invest in areas where.

Timothy Michael Mulrooney: Others have cut costs, so I'm not saying, it's a bad thing these investments delay that 20% Oi margin timing, but just curious.

Timothy Michael Mulrooney: What the strategy is around the step up here. Thank you. Thank.

Speaker Change: Thank you Tim let me start with the second part of your question.

Speaker Change: We are.

Speaker Change: Great fortunate place a music here, where we have top line momentum and we have margin expansion in both our abuse. These so feeding our opportunities to invest behind our teams our technology and our future, which is exactly the place where we want to be on a continuous basis as well.

Speaker Change: Now as we accelerate our growth investment at the same time, we're also keeping a very close eye on our underlying productivity and I like what I see it's important to have bolt that on one hand underlying productivity productivity keeps getting better on a long term basis and we've done a good job of that and at the same time.

Christophe Beck: You know, part of the reason that Ecolab has sustained its competitive advantage has been its willingness to invest in areas where, you know, others have cut costs. So I'm not saying it's a bad thing that these investments delay that 20% OI margin timing, but I was just curious about the strategy around the step up here. Thank you, Thank you, Tim.

Speaker Change: That we can invest when time is right.

Speaker Change: For the growth for the future regarding those investments that we're making it's mostly behind three growth drivers. Jim does the first one is growth by your power <unk>.

Christophe Beck: Let me start with the second part of your question. We are in a great, fortunate place, obviously, here, where we have top line momentum, and we have margin expansion, and both, obviously, are feeding our opportunities to invest in our teams, our technology, and our future, which is exactly the place where we want to be on a continuous basis as well. Now, as we accelerate our growth investment, at the same time, we're also keeping a very close eye on our underlying productivity, and I like what I see.

Speaker Change: A machine.

Speaker Change: Year to serve more customers to serve them more broadly and more deeply as well having more people serving those customers and supporting those people serving those customers will feed into our accelerated growth the second part.

Speaker Change: As digital and AI technology and services that we can sell.

Christophe Beck: It's important to have both, that on the one hand, underlying productivity keeps getting better on a long-term basis, and we've done a good job at that, and at the same time, we can invest when the time is right for growth for the future. And regarding those investments that we're making, it's mostly behind three growth drivers, Tim. The first one is growth by your power.

Speaker Change: We are making very good progress on that front and I look forward to sharing more with you.

Speaker Change: As we move forward and especially in 25, because we see a lot of very good progress on that front.

Speaker Change: Serving our customers with digital technology with AI services.

Christophe Beck: We are a machine that's here to serve more customers, to serve them more broadly and more deeply as well. Having more people serving those customers and supporting those people serving those customers will feed into our accelerated growth. The second part is digital and AI technology and services that we can sell. We're making very good progress on that front, and I look forward to sharing more with you as we move forward, and especially in 2025, because we see a lot of very good progress on that front, serving our customers with digital technology, AI services, and data that we can sell.

Speaker Change: <unk> data that we can sell.

Speaker Change: And the third driver.

Speaker Change: The ability to serve as one ecolab, where we can bring all the businesses together to serve one customer consistently everywhere around the world and that's a unique opportunity for us to get that job done as well as we speak and in the next few quarters and back to your first.

Speaker Change: Question related to the 20%.

Speaker Change: Hawaii target, while we also growth and further margin expansion.

Speaker Change: It's making me more confidence.

Speaker Change: We will get to this 20% margin in.

Christophe Beck: And the third driver of capability is to serve as one Ecolab, where we can bring all the businesses together to serve one customer consistently everywhere around the world, and that's a unique opportunity for us to get that job done as well as we speak and in the next few quarters. And back to your first question related to the 20% OI target. Well, with faster growth and further margin expansion, it's making me more confident that we will get to this 20% margin in the next few years, as I've shared with you, and we will keep informing you as well on the progress that we're making on that path. But so far, very good progress. Thank you. Our next question is from the line of Ashish Sabadra with RBC.

Speaker Change: In the next use as I've shared with you and we will keep informing you as well on the progress that we're making on that path, but so far very good progress made.

Speaker Change: Thank you.

Speaker Change: Our next question is from the line of Ashish <unk> with RBC. Please proceed with your question.

ashish: Thanks for taking my question.

ashish: On the <unk> I was wondering if you could elaborate how much was the DPC nowhere on a year on year basis.

ashish: How it is trending compared to pre pandemic level expectations for second quarter and rest of the year.

ashish: <unk>.

ashish: Thank you Ashish and thought that question to Scott will be best positioned. Thanks, Christophe. Thanks, Ashish for the question. So as you know we've talked about before we buy over 10000 raw materials. So individually, they're moving in different places, but as we expected for Q1 in totality DPC decrease in the upper single digits and that was as we.

Ashish Sabadra: Please proceed with my question. Thanks for taking my question. Just on the DPC, I was wondering if you could elaborate on how much the DPC was lower on a year-on-year basis but how it's trending compared to pre-pandemic level expectations for the second quarter and rest of the year. Thank you, Ashish.

Scott D. Kirkland: As expected and as we guided to as Christoph said in his opening statement is you talked about how we see it throughout the year expect that DPC to continue to ease through the year, but the magnitude of that favorability will diminish from Q1 to Q3, so going from this high single digits to lower single digits by Q3.

Scott D. Kirkland: And then to your last point about where we are versus pre pandemic levels commodity costs still remain as you've probably seen very high versus pre inflationary levels.

Scott D. Kirkland: I'll pass that question to Scott, who will be best positioned to answer that. Thanks, Christophe. Thanks, Ashish, for the question. So, as we talked about before, we buy over 10,000 raw materials, so individually, they're moving in different places. But, as we expected for Q1, in totality, DPC decreased in the upper single digits, and that was as we expected and as we guided to.

Scott D. Kirkland: Our pre pandemic levels. Thank you.

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

Manav Shiv Patnaik: Good afternoon, Chris I, just wanted to in the bigger picture question on the components of the growth. It sounds like from what you said, the new contingency and pricing things like that that realization should be on track and then I think a lot of the volume growth is kind of your own initiatives. This quarter. So I just wanted to confirm those two and then just.

Scott D. Kirkland: And as Christophe said in his opening statement, and as you talked about how we see it throughout the year, expect that DPC to continue to ease through the year, but the magnitude of that favorability will diminish from Q1 to Q3. So, you know, going from this high single digit to lower single digits by Q3. And then to your last point about where we are versus pre-pandemic levels, commodity costs still remain, as you've probably seen, very high versus pre-inflationary levels. Thank you.

Scott D. Kirkland: Take on the.

Manav Shiv Patnaik: The third piece, which is just the macro like what are the volumes in Europe, and USA looking like without the new business pipeline.

Speaker Change: Okay. Thank you.

Manav Shiv Patnaik: We continue to you a few things here, so maybe starting with with the with the macro.

Speaker Change: I would say kind of unchanged.

Scott D. Kirkland: A lot of puts and takes obviously in all the 40 end markets.

Speaker Change: We serve but what we've seen in 'twenty three is what we're seeing in 'twenty four overall, so feel good about the general macro at least with everything we know now we know it's an unpredictable world out there, but with everything we know.

Manav Shiv Patnaik: Our next question is from the line of Manav Patnaik with Barclays. Please proceed with your question. Thank you. Good afternoon.

Speaker Change: Feel good about where we are and where we're going then related to your two questions. So on the pricing and volume.

Christophe Beck: Christophe, I just want to ask a bigger picture question on the components of growth. It sounds like from what you said, the new kind of two to three percent pricing seems like, you know, that realization should be on track. And then I think a lot of the volume growth was kind of your own initiative this quarter. So I just wanted to confirm those two and then just get your take on the third piece, which is just the macro.

Speaker Change: We feel increasingly good about our long term pricing muscle, which you know is based always on a what we call total value delivered.

Speaker Change: Which are the savings, we generating power customers, which usually are at least two times to pricing that customers.

Christophe Beck: Like, what are the volumes in Europe and the USA looking like without your kind of new business pipeline? Hey, thank you, Manav. Good to hear from you.

Speaker Change: Giving us as well say, it's a very good win win for both the customer and for US. So when we said two plus now im saying two to three.

Christophe Beck: A few things here. So maybe starting with the macro, I would say kind of unchanged. There are a lot of puts and takes, obviously, in all the 40 N markets that we serve. But what we've seen in 23 is what we're seeing in 24 overall.

Manav: For 24, I feel very good.

Speaker Change: Delivering that and on the volume side.

Speaker Change: Well as you've seen so from Q4 to Q1 saw volume has moved up overall as a company. So thats a good indication obviously that our shift to offense that we started.

Christophe Beck: So feel good about the general macro, at least with everything we know now. We know it's an unpredictable world out there. But with everything we know, I feel good about where we are and where we're going. Then, related to your two questions on pricing and volume, we feel increasingly good about our long-term pricing muscle, which, you know, is always based on what we call total value delivered, which is the savings we're generating for our customers, which usually are at least two times the price that customers are giving us as well. So it's a very good win-win for both the customer and for us. So when we set our two plus, now I'm saying two to three for 24, I feel very good about delivering that.

Speaker Change: A year ago is really working well.

Christophe Beck: Our new business is at record levels, we investing as I've shared before with team as well as the behind our team behind technology behind capabilities in <unk>.

Speaker Change: So to sustain and accelerate that so the volume is 1% to 2% I feel really good about it as well and that every quarter is created equal, but generally we should have a very good year in 2004.

Speaker Change: Our next question is from the line of John Roberts.

John Ezekiel E. Roberts: Please go ahead with your question.

Speaker Change: Thanks, Christophe couple of quarters ago, you changed how you operate the healthcare business now with the global surgical solutions being sold are there still additional changes structural changes that youre going to make there.

Christophe Beck: And on the volume side, well, as you've seen, so from Q4 to Q1, volume has moved up overall as a company. So that's a good indication, obviously, that our shift to offense that we started a year-ish ago is really working well. Our new business is at record levels. We're investing, as I've shared just before with Tim as well, behind our team, behind technology, behind capabilities in order to sustain and accelerate that. So the volume is one to two percent. And I feel really good about it as well.

Christophe Beck: Not much there were four points.

Speaker Change: My plan.

Christophe Beck: John and I shared with you so each step.

Speaker Change: That we made when I could obesity, so do so.

Christophe Beck: First one was.

Christophe Beck: Really adjust the cost structure, we did got the second was to create that bifurcation.

Speaker Change: For infection prevention and surgical.

Speaker Change: Which happened very well.

Christophe Beck: In the latter part of last year and now so.

Christophe Beck: Not every quarter is created equal, but generally, we should have a very good year in 24. Our next question is from the line of John Roberts with Mizzouho. Please go ahead with your question. Thanks, Christophe.

Speaker Change: Pending sale.

John Ezekiel E. Roberts: Our surgical solutions business.

John Ezekiel E. Roberts: To medline that step through E.

John Ezekiel E. Roberts: It's been a great transaction. So it was a great partner feel really good with where we are and hope to close as quickly as we can on this one and then there is the point for and for it to build our infection prevention business around the typical ecolab style.

John Ezekiel E. Roberts: A couple of quarters ago, you changed how you operated the health care business; now, with the global surgical solutions being sold, are there still additional changes, structural changes that you're going to make there? Not much. There were four points on my plan, John, and I shared with you each step that we made when I could obviously do so. The first one was to really adjust the cost structure. We did that.

John Ezekiel E. Roberts: Type of business, which means with the machine was consumables with service with digital technology and that instrument.

Speaker Change: And endoscope reprocessing business.

Christophe Beck: The second was to create that bifurcation for infection prevention and surgical, which happened very well in the latter part of last year. And now, the pending sale of our surgical solutions business to Medline, that's step three. It's been a great transaction. So it was a great partner.

Speaker Change: We have as part of infection prevention so today.

Christophe Beck: We want to keep building.

Speaker Change: In the years to come because its a winning market. It's a market where we have all the right to win typical model for ecolab as well and we know exactly how to run our business that way. So it's the right focus it's the right team.

Christophe Beck: Feel really good with where we are and hope to close as quickly as we can on this one. And then there's the point four and the point four is to build our infection prevention business around the typical Ecolab style, type of business, which means with a machine. Consumables with service with digital technology and that's the instrument and endoscope reprocessing business that we have as part of infection prevention today that we want to keep building in the years to come because it's a winning market, it's a market where we have all the right to win, it's a typical model for Ecolab as well and we know exactly how to run a business that way so it's the right focus, it's the right team, we will keep adjusting obviously so how we evolve that business, we will be building that business over the years to come, there will be internal innovation, there might be some small acquisition as well to it, nothing dramatic, I want to build a great healthcare business in the years to come, it's going to take some time, it's never easy but we're going to get to the right place as we've always done with our previous new businesses in the, Our next question comes from the line of Josh Spector with UBS. Please proceed with your question. Hi, good afternoon.

Joshua David Spector: We will keep adjusting obviously saw how we evolve that business, we will be building that business.

Joshua David Spector: Over to use to come there would be internal innovation, there might be some small acquisition as well as the two it nothing dramatic I wanted to build a great healthcare business in the years to come it's going to take some time, it's never easy, but we're going to get to the right place as we've always done with our previous new businesses in the company.

Speaker Change: Our next question comes from the line of Josh Spector with UBS. Please proceed with your question.

Joshua David Spector: Yes, hi, good afternoon.

Joshua David Spector: Wanted to ask a couple of related things around institutional and specialty. So first congrats really strong performance in the quarter I think we know the optics of pricing coming down, but if we say pricing in the segment was anywhere near the ballpark and the total company. It looks like volumes were up high single digits, and it's a pretty meaningful step up on Europe.

Joshua David Spector: Per year and multiyear stacks. So the question is really is that momentum that you think can be maintained is that the new wins flowing through and you could deliver call. It mid to high single digit volumes on institutional through this year and the second part is more around margins and that typically is a pretty meaningful step.

Joshua David Spector: I wanted to ask a couple of related things around institutional and specialty. So, first, congrats on a really strong performance in the quarter. I think we know the optics of pricing coming down, but if we say pricing in the segment was anywhere near the ballpark for the total company, Looks like volumes were up high single digits, and it's a pretty meaningful step up on year-over-year and multi-year stacks. So the question is really, is that momentum that you think can be maintained? Is that the new winds flowing through?

Speaker Change: And that second first quarter to fourth quarter call. It four to 500 basis points any reason why we shouldnt see that in that framework for this year.

Speaker Change: Thank you, Josh, especially so for a nice comments of the team has done.

Joshua David Spector: An unbelievable work in the last quarter like in the many prior to that as well so back to your question on institutional and specialty this business has been now for quite a while.

Christophe Beck: And you could deliver, call it mid- to high-single-digit volumes on institutional through this year. And the second part is more around margins, and that typically is a pretty meaningful step up in that second, first quarter to fourth quarter. Call it 400 to 500 basis points, and a reason why we shouldn't see that in that framework for this year. Thank you, Josh, especially for a nice comment.

Speaker Change: On a great path.

Speaker Change: As I've shared with you very openly depend.

Christophe Beck: <unk> has been game changing.

Speaker Change: For this business and I mean that in a very positive way.

Christophe Beck: Generally the industry is doing quite well.

Christophe Beck: People have enjoyed going back to hotels restaurants and travel.

Christophe Beck: So the team has done unbelievable work in the last quarter, like in the many prior to that as well. So back to your question on institutional and specialty, this business has been for quite a while on a great path. As I've shared with you very openly, the pandemic has been game changing for this business, and I mean that in a very positive way. Generally, the industry is doing quite well. People have enjoyed going back to hotels, restaurants, and travel.

Christophe Beck: <unk> have been open to pay more and it's an industry that at the same time.

<unk> been able to reduce the cost because they had a hard time as well so to get all the staffing that they were looking for that meant better margin for them better traffic for them as well overall, an industry that is in a much much better place than it used to be as well when we've taken that opportunity to also improve our.

Christophe Beck: People have been open to paying more, and it's an industry that, at the same time, has been able to reduce their costs because they have had a hard time as well. So to get all the staffing that they were looking for, that meant better margins for them, better traffic for them as well. Overall, an industry that is in a much, much better place than it used to be as well. Well, we've taken that opportunity to improve our business in a dramatic manner in North America, like everywhere else around the world.

Christophe Beck: Business in dramatic manner in North America like everywhere else around the world and absolutely Love what is institutional team has done.

Christophe Beck: Round the world because we've been able to align with exactly what the customers needed short term when they were reopening mid term now we they need so solutions in order to serve the increased traffic that they see and most importantly, they need to reduce the labor cost well that's.

Christophe Beck: <unk>, what we help them do with all our automation solution. It can be software. It can be training it can be chemistry can be technology.

Christophe Beck: And I absolutely love what this institutional team has done around the world because we've been able to align with exactly what the customers needed short term when they were reopening, and midterm now where they need solutions in order to serve the increased traffic that they see. And most importantly, they need to reduce their labor costs. Well, that's exactly what we help them do with all our automation solutions. It can be software, it can be training, it can be chemistry, or it can be technology.

Christophe Beck: You will see that at the National Restaurant Association show as well in a month from now very good stuff happening, which is driving all the growth of that business and the willingness for customers.

Christophe Beck: Pay more for those solutions, because as always they get more value than the price that they're paying.

Speaker Change: Ultimately so for us so to your question on the long term trajectory so for institutional.

Christophe Beck: You will see that at the National Restaurant Association show as well a month from now. Very good stuff is happening, which is driving all the growth of that business. And the willingness for customers to pay more for those solutions because, as always, they get more value than the price that they're paying ultimately for us. So to your question on the long-term trajectory for institutional, I think that these five to seven that we've talked about for the company should be the swim lane for institutional as well, in the long term. And there will be times where they will be better than that, and sometimes they might be a little bit on the lower end.

Christophe Beck: I think that is five to seven that we've talked about for the company should be the swim lane for institution as well long term and there will be times, where there will be better than that and sometimes there might be a little bit on the lower end I think that this year theyre going to have a very good year in institutional and if you can <unk>.

Christophe Beck: That's why while it's going to line up with what.

Speaker Change: I just said in terms of long term trajectory for the margin in.

Christophe Beck: In a very good place right.

Christophe Beck: Right now they are expanding so quicker than we had expected.

Christophe Beck: As well with volume, that's a bit lower than where it used to be pre pandemic, while thats basically demonstrating that the institution that P&L is much better than it used to be as volumes recover the margins will keep improving as well and the P&L of that business, we keep getting.

Christophe Beck: I think that this year they're going to have a very good year and institutional. And if it continues that way, well, it's going to line up with what I just said in terms of the long term. For the margin, they're in a very good place. Right now, they're expanding much quicker than we had expected, as well, with volume that's a bit lower than where it used to be pre-pandemic. Well, that's basically demonstrating that the institutional P&L is much better than it used to be. As volume recovers, the margins will, [inaudible] Our next question is from the line of Chris Parkinson with Wolf Research. Great, good afternoon, I should say.

Christopher S. Parkinson: So thats a typical business, that's going to be north of 20% pretty quickly.

Christopher S. Parkinson: We will keep growing from there because it's in a great position to do so all in all a great business with a great future.

Christophe Beck: Our next question is from the line of Chris Parkinson with Wolfe Research. Please proceed with your question.

Christopher S. Parkinson: Greg Good afternoon, I should say on the global pest elimination business your I'll take a little bit more detail on we've been hearing about the business for a while but can you just offer a little bit more color on how youre thinking about that business strategically is this.

Christopher S. Parkinson: Simply just hey, it's a great institutional service driven pricing ask a business is this more of a roll up should it be emphasizing I think the old terminology was enterprise selling across your institutional clients. Just if you could offer a little bit more insights on how we should be modeling that in.

Christopher S. Parkinson: On the global pest elimination business, you're offering a little bit more detail, and we've been hearing about that business for a while, but can you just offer a little bit more color on how you're thinking about that business strategically? Is this, you know, simply just, hey, it's a great institutional, you know, service-driven pricing-esque business? Or is this more of a roll-up?

Speaker Change: Your thought process would be very helpful. Thank you.

Speaker Change: Hey, Thank you Chris.

Christopher S. Parkinson: Personally worked in the pest elimination business, but I love that business.

Christopher S. Parkinson: It's unbelievable the performance that it delivered in the best of times like in the most difficult times as we've seen as well over the past few years steady high growth high Oi.

Christophe Beck: Should we be emphasizing, I think the old terminology was enterprise selling across your institutional clients? Just, if you could offer a little bit more insights on how we should be modeling that and, you know, your thought process, that would be very helpful. Thank you. Hey, thank you, Chris.

Speaker Change: Gross business, great margin and great future and maybe a few points here.

Christophe Beck: The first one they have reached the threshold of 1 billion savings in 'twenty three for me that was the moment to separate that business and to have it report directly to direct Brown, our chief operating officer, because it's a business where we want to have all the focus all the attention all the investment that we.

Christophe Beck: I've never personally worked in the pest elimination business, but I love that business. It's unbelievable the performance that it has delivered in the best of times, like in the most difficult times, as we've seen as well, over the past few years. Steady, high-growth, high-OI growth business, great margin, and great future. And maybe a few points here. The first one is that they reached the threshold of 1 billion sales in 2023. For me, that was the moment to separate that business and to have it report directly to Darrell Brown, our Chief Operating Officer, because it's a business where we want all the focus, all the attention, all the investment that we can get as well behind it because it's high-growth, high-margin, high-return.

Christophe Beck: Can get as well behind it because its high growth high margin high return. So that's what we've done internally from a management operating perspective that led directly obviously to how we report as well that business and wanted to make sure that our segment reporting was perfectly aligned with the <unk>.

Christophe Beck: We manage as well to camping at same time and on a side note. It helps you as investors obviously to see in full transparency of this business is performing.

Christophe Beck: Operating as well at the same time and Youre going to see that it's maybe not the biggest pest elimination business on the planet, but it's the best performing highest growth highest margin, which is a pretty cool place to be now on how are we going to keep driving that business for the future, it's going to be first and foremost.

Christophe Beck: So that's what we did internally from a management operating perspective that led directly obviously to how we report that business, and we wanted to make sure that our segment reporting was perfectly aligned with the way we manage the company at the same time. And on a side note, it helps you as investors, obviously, to see in full transparency how this business is performing and how it's operating as well at the same time. And you're going to see that it's maybe not the biggest, best elimination business on the planet, but it's the best-performing one.

Christophe Beck: So organic.

Christophe Beck: Have a great team and especially on the technology side as you've seen during Investor day, and we'll see so going forward as well, we're leveraging all the digital capabilities of our companion keep in mind that we have in industrial four <unk> hundred thousand devices that are connected today we.

Christophe Beck: Highest growth, highest margin, which is a pretty cool place to be. Now, on how we're going to keep driving that business for the future, it's going to be first and foremost internal, so it's organic. We have a great team, and especially on the technology side, as you've seen during Invest Today and we'll see going forward as well, we're leveraging all the digital capabilities of our company. And keep in mind that we have an industrial, for instance, 100,000 devices that are connected today. We have over 1,000 people in digital technology that have been working for years as well behind all the capability built that we have today.

Christophe Beck: Over 1000 people in digital technology.

Christophe Beck: That had been working so for years as well behind all the capability built.

Christophe Beck: That we have today, while we're going to leverage all of that.

Christophe Beck: Pest elimination business to ultimately so really transform that business into digital business to the question of M&A.

Christophe Beck: Don't make comments on that but we will keep doing some small bolt ons as we've done in the past because we know how to do it. It works really well. So every time, we will find good companies that we can add to our pest elimination franchise.

Christophe Beck: We're going to leverage all that in our best elimination business to ultimately really transform that business into a digital business. To the question of M&A, I can't make big comments on that, but we will keep doing some small bolt-ons, as we've done in the past, because we know how to do it. It works really well.

Christophe Beck: We will do so so a great story that keeps getting better and will get better in the years to come.

Christophe Beck: Our next question comes from the line of John Mcnulty with BMO capital markets. Please proceed with your question.

Speaker Change: Yes, Thanks for taking my question goes up.

Christophe Beck: So every time we find good companies that we can add to our best elimination franchise, we will do so. So a great story that keeps getting better and will get better in the years to come. Our next question comes from the line of John McNulty with BMO Capital Markets. Please ask your question. Yeah, thanks for taking my question, Chris. I just wanted a little bit more clarity on the life science business.

Christophe Beck: So just wanted a little bit more clarity on the life Sciences business I know it has struggled a bit but it does seem like it's finally, starting to pick up a little bit of momentum can you flush that out for us in terms of what youre seeing and maybe how that pipeline is filling out as we kind of look to the back half of this year.

John Patrick McNulty: Yeah, It's a good story, John we know.

John Patrick McNulty: That building.

John Patrick McNulty: New growth platforms is hard takes time, but we've done it many times pest elimination that we just discussed was a perfect example that we did so euros back as well life Sciences is one of the newest one that we have and if you look at just the results in Q1 to five.

John Patrick McNulty: I know it's struggled a bit, but it does seem like it's finally starting to pick up a little bit of momentum. Can you flush that out for us in terms of what you're seeing and maybe how that pipeline is filling out as we kind of look to the back half of this year? Yeah, it's a good story, John.

John Patrick McNulty: Life Sciences is growing.

John Patrick McNulty: In a market that is currently down.

Christophe Beck: We know that building new growth platforms is hard, takes time, but we've done it many times. Best Elimination, which we just discussed, was a perfect example that we did years ago, as well. Life Sciences is one of the newest ones that we have. And if you look at just the results in Q1, the fact that Life Sciences is growing in a market that's currently down double digits shows how well that business is performing and how interested our customers are in what we can offer.

John Patrick McNulty: Double digit is showing saw outperforming that business is and how interested our customers are in what we can offer so I like where we are versus the market and I know that that market is going to recover.

Christophe Beck: Is it mid this year second half of this year early next year from a market perspective, I don't know I cant influence that but I can influence how we serve our customers how we generate in your business and I like a lot what I'm seeing here.

Christophe Beck: So I like where we are versus the market, and I know that the market is going to recover. Is it mid this year, the second half of this year, early next year, from a market perspective? I don't know.

Christophe Beck: Asian.

Christophe Beck: Is best in the industry as well, we just smaller one the more agile one.

Christophe Beck: I can't influence that. But I can influence how we serve our customers, how we generate new business, and I like a lot what I'm seeing here. Our innovation is the best in the industry as well. With the smaller one, the more agile one, the one that can truly answer immediate special needs for the biotech industry.

Christophe Beck: The one that can truly answer immediate special needs for.

Christophe Beck: For the biotech industry I like a lot that position of the emerging leader that we shaping error. So we came from.

Christophe Beck: A place where we we're building now a place where we're seeing some positive signs of growth, we will keep investing in capabilities and capacities because I firmly believe that this business is going to be a multibillion business down the road at margins that are going to be way north.

Christophe Beck: I like a lot that position of the emerging leader that we're shaping here. So we came from a place where we were building, and now we're in a place where we're seeing some positive signs of growth. We will keep investing in capabilities and in capacities because I firmly believe that this business is going to be a multi-billion dollar business down the road at margins that are going to be way north of our target for 2020. Our next question is from David Begleiter with Deutsche Bank. Please proceed with your question. Thank you. Good afternoon,

David L. Begleiter: Our target up to 20%.

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

David L. Begleiter: Thank you good afternoon.

David L. Begleiter: Christophe back on the growth investments.

David L. Begleiter: In terms of the timing right now is there anything youre seeing in the market vis vis competitors opportunities.

David L. Begleiter: Enhance your decision and exactly where are the investments being focused by by business and by geography, where is the biggest portion of that about that.

David L. Begleiter: Christophe, back on the growth investments... In terms of the timing right now, is there anything you're seeing in the market? Transcription by CastingWords. Thank you, David.

David L. Begleiter: <unk>.

David L. Begleiter: Thank you David.

Christophe Beck: Maybe so to your first question. So where, as I've shared with so many of you, do we look at our businesses. So in four key categories, the fuel for growth, the protect growth, transform growth, and fix. Those are the four big, broad categories where we put our businesses and our markets and invest accordingly to make sure that we do a very smart capital allocation based on projected returns. So they are the obvious candidates here.

David L. Begleiter: So to your first question, so where as I've shared with many of you. So we look at our businesses. So in four key categories.

Christophe Beck: Fueled the growth.

Christophe Beck: The protector growth transformed the growth and fix those are the four big broad categories, where we put our businesses in our markets and invest accordingly to make sure that we do very smart capital allocation based on projected returns. So they are the obvious.

Christophe Beck: Candidate here, we talked about life science, just before we talked about pest elimination just before we talked about institutional just before and especially in industrial there are two new areas that are.

Christophe Beck: We talked about life science just before we talked about pest elimination just before we talked about institutional just before. And especially in industrial, there are two new areas that are having outsized growth opportunities. And those are data centers and semiconductors. We have a good position in both those end markets. As you know, those are two end markets that need a huge amount of energy slash water.

Christophe Beck: Having outsized growth opportunities and those are data centers and semiconductors, we have good position in both stores and markets.

Christophe Beck: As you know those are two end market that needs huge amount.

Christophe Beck: Energy Slash water and we help our customers ultimately is a disconnect there.

Christophe Beck: And we help our customers ultimately to disconnect the growth related to AI from the impact on natural resources, water, and energy. And that's exactly what we do for high-tech companies. It's to help them manage data centers that are, well, much more highly powered, and much, many more data centers, but at the same time, reducing to zero the impact on the environment, and the same on the semiconductor side.

Christophe Beck: The growth related.

Christophe Beck: AI from impact on natural resources water and energy and Thats exactly what we do for the high Tech companies to help them manage data centers that are.

Christophe Beck: Much more high powered and much many more data centers, but at the same time, reducing to zero day impact on the environment and the same on the semiconductor side. We're also investing in digital technology.

Christophe Beck: We are also investing in digital technology, which I'm really proud of what the team has done over the past few years. And it keeps accelerating because we have so much data, so much knowledge, so much capability, ultimately to leverage the knowledge that Ecolab has in every industry in order to help every industry to reach the maximum potential in terms of performance, in terms of business results, and in terms of the environment. So that's the way we think in terms of growth.

Christophe Beck: Which I'm really proud of what the team has done over the past few years and it keeps accelerating because we have so much data so much knowledge so much capabilities ultimately to leverage the knowledge that ecolab has in every industry in order to help every industry to reach the Max potential in terms of performance in terms of business results and in terms of <unk>.

Christophe Beck: Mental impact so that's the way we think in terms of.

Christophe Beck: Our next question is from the line of Pavel Molchanov with Raymond James. Thanks for taking the question. PFAS has been in the headlines in the U.S., and I guess I would just ask you to comment generally on what the US opportunity looks like for you in the U.S. as well as internationally. You know, Pavel, we've been on that topic for a very long time, but we don't want to be part of the marketing fray or political fray of PFAS.

Christophe Beck: Growth investments.

Christophe Beck: Our next question is from the line of Mark with Raymond James. Please proceed with your question.

Pavel S. Molchanov: Yeah. Thanks for taking the question.

Christophe Beck: <unk> has been in the headlines in the U S and I guess I would just ask you comment generally on what.

Christophe Beck: He is.

Pavel S. Molchanov: Opportunity it looks like for you.

Christophe Beck: In the U S as well as international.

Pavel S. Molchanov: We've been on that topic for a very long time.

Christophe Beck: But we don't want to be part of the marketing Fray.

Christophe Beck: Political phrase so.

Christophe Beck: We're by far the leader in water globally, and we've been in the business of mastering water purity for a very long time, like almost 100 years, as you know. So PFAS purification is one of the many things that we do and can do with water.

Christophe Beck: P fast we by far the leader in water globally.

Christophe Beck: And we've been in the business of monitoring water purity for very long time like almost 100 use.

Christophe Beck: So P fast verification.

Christophe Beck: Is one of the many things that we do and can do in water. So we are working very closely with our customers, but mostly <unk>.

Christophe Beck: So we are working very closely with our customers, but mostly B2B, with very limited interest in going to municipal, government, and residential. This is not where we are as a company. We remain commercial, we remain B2B, and we're working with our customers to really understand what they need, where they want to go. The very good news is that we have the technology, we have the science, we have the expertise to solve it. We want to do it in a way that is safe for the company, safe for the customers, and that it can make a lot of money as well for investors going forward. So more to come.

Christophe Beck: Very limited interest to go to municipal government residential this is not where we are.

Christophe Beck: The company remain on commercial we remain on <unk> and we're working with.

Christophe Beck: Our customers to really understand what they need where they want to go the very good news is that we have the technology. We have the science, we have the expertise to solve it we're going to do it in a way which is safe for the company safe for their customers and that it can make a lot of money as well so for investors going forward, so multi come alike.

Christophe Beck: I like where we are, and we'll see where we go on this one. Our next question is from the line of Lawrence Alexander with Jeffreys. I have a question around sort of your growth investments on the targeted returns. I think Ecolab usually has a metric for almost everything that we can think about, so do you have a sense for what your historical kind of hit rate is?

Christophe Beck: Where we are and we'll see where we're going on this one.

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

Christophe Beck: Yes.

Laurence Alexander: A question around sort of your growth investments in the targeted returns.

Christophe Beck: I think ecolab, usually has a metric for almost everything that we can think about so do you have a sense for what your historical kind of hit rate is.

Laurence Alexander: Unknown Attendee, Dr. Jeffrey Zekauskas, Unknown Attendee, compared to your expectations for how your investments in staff, training, and marketing are performing, Well, the short answer is that the heat rate is getting much better, especially when we think in terms of digital technology, data, and AI. We are uniquely positioned, serving a million customers around the world in 40 different industries in 172 countries, and connecting, as you've Today, as we speak, we have capabilities that no one else has and data that no one else has as well, at the same time.

Christophe Beck: For those types of investments.

Laurence Alexander: And I guess, what I'm getting at is as you move more into sort of the data.

Laurence Alexander: Marketing to customers.

Laurence Alexander: The hit rate getting better or worse compared to your expectations for how kind of your investments in staff and training and marketing are playing out.

Laurence Alexander: Okay.

Laurence Alexander: Well the short answer is that the heat rate is getting much better.

Laurence Alexander: <unk> when we think in terms of digital technology.

Laurence Alexander: Data AI, we are uniquely positioned serving 1 million customers.

Laurence Alexander: In the World in 40 different industries, and 172 countries and connecting as you've heard so thousands of devices and operations around the world today as we speak we have capabilities that no one else has and data that no. One else has as well at the same time, so we know that <unk>.

Laurence Alexander: So we know that investing in digital technology is an almost 100% heat rate. When you think in terms of margins, well, there's no raw material in our digital technology, so margins are way higher as well there.

Laurence Alexander: <unk> and digital technology.

Laurence Alexander: Is an almost 100% heat rate when you think in terms of margins, while there is no raw material needs.

Laurence Alexander: Through our digital technology, so our margins are way higher as we're there. So it's kind of a combination of large potential unique capabilities that we have and certain high margin investing behind digital and AI for US is a no brainer and we've done it for 30 years.

Christophe Beck: So it's kind of a combination of large potential, unique capabilities that we have, and certain high margin. Investing in digital and AI for us is a no brainer. And we've done it for 30 years. And we've accelerated the last five, six years, quite remarkably. So this one, it's kind of a 100% heat rate.

Christophe Beck: And we've accelerated the last five six years quite remarkably. So this one it's kind of a 100% heat rate for all the other ones.

Christophe Beck: For all the other ones, it's like I've said before; we make absolutely sure that our SG&A productivity, underlying productivity, improves continuously. And it does. And it's important that it continues to do so. But at some moments, like now, I want to accelerate our investments, as mentioned, so in our frontline firepower, at the same time beyond the digital investments, as well as in our capabilities as well. Our frontline, so it's going to drive our ratio of SG&A slightly higher for a while.

Christophe Beck: I've said before we make absolutely sure that our SG&A productivity underlying productivity improves continuously and it does and it's important that it continues to do so but in some moments like now I won't do accelerate our investments as mentioned so in our frontline firepower.

Christophe Beck: At the same time beyond the digital investments as well in our capabilities as well to support.

Christophe Beck: Our frontline so it's going to drive our ratio of SG&A, so slightly higher for a while but when I think about the second half in 2025, I think it's going to normalize pretty nicely and underlying productivity is going to remain strong.

Christophe Beck: But when I think about the second half and 2025, I think it's going to normalize pretty nicely, and underlying productivity is going to remain. The next question is from Jeff Zekauskas with J.P. Morgan. Thanks for, I think the overall volume growth of the company was 2%. And I think that what they said was that in the industrial business, if you excluded paper volumes increased. So I take it that industrial volumes were down year over year. Is that right?

Christophe Beck: The next question is from the line of Jeff Zekauskas with Jpmorgan. Please proceed with your question.

Jeffrey John Zekauskas: Thanks very much.

Jeffrey John Zekauskas: I think the overall volume growth of the company was 2%.

Jeffrey John Zekauskas: And I think that what you.

Jeffrey John Zekauskas: With that in the industrial business, if you excluded paper.

Jeffrey John Zekauskas: Volumes increased so I take it that.

Jeffrey John Zekauskas: Industrial volumes were down year over year is that right.

Jeffrey John Zekauskas: In the institutional business.

Jeffrey John Zekauskas: and in the institutional setting, volumes were up. I don't know. I guess that's the end of your question, Jeff. That is the end of my question. Okay, good. I wanted to make sure I was not missing something, abusing here so much on volume. You're right.

Jeffrey John Zekauskas: Were volumes up I don't know.

Jeffrey John Zekauskas: Five or six.

Jeffrey John Zekauskas: I guess, that's the answer to your question Jeff.

Jeffrey John Zekauskas: And at the end of my question.

Speaker Change: Hey, good to make sure it was not so missing something obviously here so a lot on volume.

Christophe Beck: So with the 2% for the company, that's the way we reported, so that's not a surprise. That's why I'm saying the 1 to 2%, so for the year, I feel really good about getting that. Again, not every quarter is created the same.

Jeffrey John Zekauskas: Youre right, so with the 2%.

Christophe Beck: For the company that's the way we report it so that's not a surprise.

Christophe Beck: That's why I'm, saying, 1% to 2% so for the euro.

Speaker Change: Really good.

Christophe Beck: In in getting that again not every quarter is created.

Christophe Beck: We have some year-on-year comparisons we need to manage with, but the 1 to 2% feels good, and I'm talking 24 here. And individually here, institutionally, you're right. It's directionally, so kind of half price, half volume, doing really well, as I've shared previously as well in some of the questions. And industrial, overall volumes were flat-ish for the first quarter, all in, and they were positive ex-paper. I don't want to correct too much, Jeff, as well, within the industrial setting.

Christophe Beck: We have some year on year comparison, we need to manage with but the 1% to 2% a feel good and I am talking 24.

Christophe Beck: Tiara and individually here institutional.

Christophe Beck: Youre right.

Christophe Beck: Directionally, so kind of half price half volume doing really well as I've shared as well so previously as well in some of the question and industrial.

Christophe Beck: Overall volumes.

Christophe Beck: We're flat ish.

Christophe Beck: For the first quarter, all in and there were a positive <unk>.

Christophe Beck: Paper I don't want to correct too much Jeff as well within industrial when I think about the various businesses I feel I feel really good.

Christophe Beck: When I think about the various businesses, I feel really good about where we are because if I go a little bit more under the hood, well, you have heavy water, and light water are kind of in the low-mid-single digits for total growth here, not just volume. Downstream is high-mid-single, so we are in a very good place as well.

Christophe Beck: Where we are because if I go a little bit more under the hood.

Christophe Beck: Well you have heavy water lightwater are kind of in the low mid single total growth not just volume downstream is high.

Christophe Beck: Mid single.

Christophe Beck: Very good place as well and then we had mining that's a little bit negative because is comparing against a crazy quarter in Q1 last year, but underlying doing really well and then you have pay per softness so generally in.

Christophe Beck: And then we have mining that's a little bit negative because it's comparing against a crazy quarter in Q1 last year, but underlying, it's doing really well, and then you have paper softness. Generally, industrial is moving in the right direction. In a world where manufacturing demand is not exactly accelerating, so I like where we are and even more where we're going. The next question is from Steve Byrne with Bank of America.

Christophe Beck: Industrial is moving in the right direction.

Christophe Beck: In a world, where our manufacturing demand is not exactly accelerating so I like where we are and even more where we're going here.

Christophe Beck: Our next questions are from the line of Steve Byrne with Bank of America. Please proceed with your question.

Christophe Beck: Yes, thank you for following up on the pest control business. Do you have an estimate of what fraction of your customers within industrial and institutional are customers within pest control? And what could that fraction get to?

Stephen V. Byrne: Yes, Thank you kind of follow up on the.

Stephen V. Byrne: On the test.

Stephen V. Byrne: Control business.

Stephen V. Byrne: Do you have an estimate of what fraction of your customers within industrial and institutional.

Stephen V. Byrne: Customers within pest control and what could that fraction get too.

Stephen V. Byrne: Is that the primary driver for that business? Or would you say, you know, expanding the platform and getting into other products, like fumigation, and so forth, is the gross driver? Hey, thank you, Steve. The Peth business has grown over the last many years, almost entirely through what we call the customer circle around the globe, which is the penetration of customers that the company has, even if this elimination does. As pest elimination grew over the last few years, obviously, they got their new customers as well at the same time, which is feeding the opportunity for other non-pest elimination businesses.

Stephen V. Byrne: The primary driver for that business or would you say.

Stephen V. Byrne: Expanding the platform and getting into other products like fumigation, and so forth is the growth driver.

Speaker Change: Thank you Steve.

Stephen V. Byrne: Pet business.

Stephen V. Byrne: <unk> has grown over the last many years.

Speaker Change: Almost entirely.

Stephen V. Byrne: Through what we call circle, the customer circle, the globe, which is penetration of customers that the company has even if pest elimination doesn't have.

Stephen V. Byrne: As pest elimination and grew over the last few years, obviously, they got Dan you customers as well at the same time, which are feeding as well the opportunity, but other non pest elimination businesses, but if I look at the opportunity of pest elimination within our customer base.

Christophe Beck: But if I look at the opportunity for pest elimination within our customer base, well, it's worth billions out there. So the sky is the limit. That's why this business is something that I like. The next question is from the line of Kevin McCarthy with Vertical Research. Yes, good afternoon.

Kevin William McCarthy: It's worth billions out there. So sky is the limit that's why this business is something that I like so much.

Christophe Beck: Next question is from the line of Kevin Mccarthy with vertical research. Please proceed with your question.

Kevin William McCarthy: Yes, good afternoon, and thank you.

Kevin William McCarthy: And thank you. Perhaps a few housekeeping questions on your surgical divestiture. Would you comment on the level of EBITDA attached to that business? I'm not sure what the tax basis might be, but perhaps you could also comment on the expected cash proceeds and the deployment of those proceeds when the deal closes in the back half. Okay. Thank you.

Kevin William McCarthy: Perhaps a few housekeeping questions on your surgical divestiture.

Kevin William McCarthy: Would you comment on the level of EBITDA attached to that business I'm not sure what the tax basis might be but perhaps you could also comment on the expected cash proceeds and the deployment of those proceeds when the deal closes in the back half of the year.

Christophe Beck: I'm going to pass that question to Scott, but before I get there, you've heard in my opening basically how we look at it. So we're not disclosing too much detailed business information. So underneath what we publish, that's the case, obviously. So for a business within healthcare, the 15 million headwind per quarter, once we close, is kind of a good direction. But more to that.

Speaker Change: Okay. Thank you I'm going to pass that question to Scott, but before I get there. So you have heard in my opening basically saw how we look at it so we're not disclosing.

Christophe Beck: Too much detailed business information so underneath what we publish that's the case, obviously, so far our business within.

Christophe Beck: Health care, so the $15 million headwind per quarter. Once we close is kind of a good direction, but more to that Scott.

Scott D. Kirkland: So Yeah, Kevin, I'll talk about the proceeds and gains, but at a very high level at this point, don't want to get ahead of ourselves; we need to close the transaction first, which we feel very good about. And the proceeds themselves, you know, we're going to remain committed to our capital allocation priorities, which are focused on investing in the business. And from a tax perspective, we do expect to realize a very attractive gain on the sale.

Scott: Yes, Kevin I'll talk on the proceeds and gain but very high level at this point I don't want to get ahead of ourselves we need to close the transaction first which we feel very good in.

Scott D. Kirkland: And the proceeds themselves, we're going to remain committed to our capital allocation priorities, which is focused on investing in the business and from a tax perspective gain yes, we do expect to realize a very attractive gain on the sale, but we'll disclose that amount once the deal closes and once the accounting accounting is finalized, but and that gain will be in special.

Scott D. Kirkland: But we'll disclose that amount once the deal closes, and once the accounting line counting is finalized, but that gain will be in special charges for just from a housekeeping perspective. And that's not included in the 15 cent estimate we had on the full year special. Our next question is from the line of Patrick Cunningham with Citibank. Please proceed to the question. Hi, good afternoon.

Patrick David Cunningham: Charges, just from a housekeeping perspective and Thats not included in the 15 estimate we had on the on the full year special charges.

Scott D. Kirkland: Our next question is from the line of Patrick Cunningham with Citibank. Please proceed with your question.

Patrick David Cunningham: Hi, good afternoon. Thanks for taking my question. So Europe has been a drag on growth for several quarters can you give us your latest thoughts on that region and maybe how volumes trended in the quarter and institutional stands out as particularly strong there is that mostly market outperformance or is that traffic is starting to improve.

Patrick David Cunningham: Thanks for taking my question. So Europe's been a drag on growth for several quarters. Can you give us your latest thoughts on the region and maybe how volumes trended in the quarter? And institutional stands out as particularly strong there.

Christophe Beck: Is that mostly market outperformance, or is foot traffic starting to improve? So two questions here. So in Europe, I like a lot what this business has done. It just takes the bigger picture.

Christophe Beck: Okay.

Christophe Beck: So two questions in here so.

Christophe Beck: On Europe I like a lot what this business is done.

Christophe Beck: Just take the big picture 10 years ago.

Christophe Beck: 10 years ago, it was a market where we used to make no money. And today, it's a business that's close to the average of the company today. So it has done remarkable work and has grown very nicely last year.

Christophe Beck: It's a market, where we used to make no money and today, it's a business that.

Christophe Beck: Close to the average.

Christophe Beck: The company today, So has done a remarkable work has grown very nicely last year.

Christophe Beck: is growing as well in the first quarter in a very difficult environment, and margins have kept expanding very significantly in Europe as well at the same time. So overall, Europe is performing very well in a difficult environment. Now to your question on institutional and food traffic, it's mostly share gains between our customers and customers we don't have. Food traffic is not up versus 2019 right now, and especially the traffic in the dining room. So people are sitting in a restaurant, not just taking a drive through or ordering digitally as well.

Christophe Beck: <unk> is growing as well in the <unk>.

Christophe Beck: First quarter in a very difficult environment and margin have kept expanding very significantly in Europe as well at the same time so overall.

Christophe Beck: Europe, performing very well.

Christophe Beck: As the environment now to your question.

Christophe Beck: On institutional.

Christophe Beck: And the foot traffic.

Christophe Beck: It's mostly share gains within our customers and customers. We don't want to have foot traffic is not up versus 2019, right now and especially the traffic in the dining room. So people sitting in a restaurant not just.

Christophe Beck: Taking a drive through.

Christophe Beck: Ordering digitally as well while this traffic is even further down.

Christophe Beck: Well, this traffic is even further down, obviously. So if I look at where we are in terms of growth, where we are in terms of margin in that business, well, it makes the performance of that business even better in a market that hasn't fully recovered yet because it's all driven by market share. Our next question is from Andy Wittmann and Liz Baird. Liz, here's your question.

Christophe Beck: Obviously, so if I look at where we are in terms of growth, where we are in terms of margin in that business. While it makes the performance of that business, even better in a market that hasnt fully recovered yet because it's all driven by market share.

Christophe Beck: Our next question is from the line of Andy Wittmann.

Liz Baird: With Baird. Please proceed with your question.

Andrew John Wittmann: Great. Good morning, and thanks for taking my question. Christophe, earlier in the Q&A, you were talking about how you're investing across three growth vectors, more people to help serve your customers, digital, and AI. Then you talked about investing to serve more as one Ecolab. So, there have been various initiatives to bring the whole solution to customers over time, so I guess I'd like to understand a little bit more about what you're doing here that's different from the past to try to, you know, circle that customer even better, to use your terminology. Yeah, thank you, Andy.

Liz Baird: Okay great.

Andrew John Wittmann: And thanks for taking my question I am Christophe earlier in the Q&A you were talking about how you're investing across three growth vectors kind of more people to help serve our customers digital and AI and then you talked about investing.

Andrew John Wittmann: Investing to serve more as one ecolab.

Andrew John Wittmann: So.

Andrew John Wittmann: There's been various initiatives to bring the whole solution to customers over time, So I guess I'd like to understand a little bit more about what youre doing here that's different from the past to try to.

Andrew John Wittmann: Circle that customer even better to use your terminology I guess.

Speaker Change: Yeah. Thank you Andy it's been a long journey and it's going to be a continued.

Christophe Beck: It's been a long journey, and it's going to be a continued long journey. At the end of the day, we call it our One Ecolab Growth Program. It's to provide our customers with a transparent view of all the businesses that are serving them and all the opportunities that they have if they were to work even more with them. At the end of the day, we want to help them drive the performance of all units to the level of the best performing unit. We know which one that is.

Christophe Beck: <unk> journey at the end of the day.

Christophe Beck: We call it our one ecolab growth program is to provide our customers with a transparent view of all the businesses that are serving them and all the opportunities that they have.

Christophe Beck: They wear to work even more wisdom.

Christophe Beck: At the end of today, we want to help them drive the performance of all the units at the performance level of the best performing unit, we know, which one that is we know how to get there we know how to help them get there we need data transparency, we're making very good progress on that and we will keep it.

Christophe Beck: We know how to get there. We know how to help them get there, too. We need data transparency. We're making very good progress on that, and we will keep investing in that. And the second part is making sure that our teams also have real-time data at their fingertips on their phone, knowing what the potential that this specific unit is having versus the best performing unit of that customer and how to get there. What are the best practices that I can use that I'm not familiar with?

Christophe Beck: Vesting on that and then the second part is making sure that our teams also have real time data at their fingertips on their phone knowing what's the potential that this specific unit is having versus the best performing unit of that guest and how to get there what are the best practices that I can.

Christophe Beck: And use that I'm not familiar with they have been primarily used in another country, maybe in another business as well I have all that information on my phone and I can deliver that value as well so for the customer and last but not least needs to make sure that our back office, where we've made huge progress with SAP.

Christophe Beck: They've probably been used in another country, maybe in another business as well. I have all that information on my phone, and I can deliver that value as well for the customer. And last but not least, we need to make sure that our back office, where we've made huge progress with SAP over the last 10 years, 80% plus of our business is on SAP. So today, it's perfectly aligned with that proposition behind customers. So there's no revolution here. It's pure evolution.

Christophe Beck: Over the last 10 years, we have <unk>.

Christophe Beck: 80% plus of our business on SAP. So today is perfectly aligned with that proposition behind customers. So there is no resolution in Europe, it's pure evolution I am taking the advantage of moving even faster in order to capture even more share.

Christophe Beck: I'm taking advantage of moving even faster in order to capture even more share, in order to grow faster and get a higher margin. Our next question is from the line of Mike Harrison with Seaport Research. Please answer your question. Hi, good afternoon.

Michael Joseph Harrison: To grow faster and get iron margin at the same time.

Christophe Beck: Our next question is from the line of Mike Harrison with Seaport Research. Please proceed with your question.

Michael Joseph Harrison: Hi, good afternoon, good afternoon Michael.

Michael Joseph Harrison: Good afternoon, Michael. I was wondering if we could dig in a little bit more on the mining business. You mentioned that it was weaker year on year against the tough comp, but I'm just curious if you can give a little more color on what's going on and kind of how that's expected to trend the rest of the year. And then where are we in the process of shifting that mining business toward higher-value segments of the market?

Michael Joseph Harrison: I was wondering if we could dig in a little bit more on the mining business you mentioned that it was weaker year on year against the tough comp, but I'm. Just curious if you could give a little more color.

Michael Joseph Harrison: What's what's going on and kind of how that's expected to trend the rest of the gear.

Michael Joseph Harrison: And then where are we in the process of shifting that mining business toward higher value segments of the market and I know you did an acquisition back in November how does that acquisition help you.

Michael Joseph Harrison: And I know you did an acquisition back in November. How does that acquisition help you further move along in that shift toward higher value segments and fertilizers? Thank you. You know, Mike, 10 years ago, I was not exactly in love with our mining business because it was focused on segments of the past. Coal, primary metals, all those things where the world is not exactly going towards in the longer term.

Michael Joseph Harrison: Move along in that shift towards higher value segments and fertilizers. Thank you.

Michael Joseph Harrison: 10 years ago.

Michael Joseph Harrison: I wasn't exactly in love with our mining business because it was focused on.

Michael Joseph Harrison: On segments of the past.

Michael Joseph Harrison: Coal primary metals.

Michael Joseph Harrison: All of those things, where the world is not exactly going towards too.

Christophe Beck: And we made the conscious decision back then to shift everything towards being much less cyclical, much more growth focused, and much higher margin, as well. And we've made a total transformation of that business over the last 10 years. And what was 80-20 yesterday is closer to 20-80 today, which is why I like where we are and even more where we're going with mining. When you think about mining, well, think about the green transformation, think about copper, think about lithium.

Michael Joseph Harrison: Longer term and we made the conscious decision back then to shift everything towards.

Christophe Beck: Much less cyclical much more growth focus and.

Christophe Beck: And much higher margin as well at the same time and we've made a total transformation of that business over the last 10 years and what was 80 20 yesterday is closer to 2082 day, which is why I like where we are and even more where we going with mining.

Christophe Beck: When you think about.

Christophe Beck: Mining well think about green transformation think about copper think about lithium.

Christophe Beck: That's where we spend a lot of time. So it's precious metals, as well as water, to say the least. Because most of the time, there's not enough water, and the water they produce is not exactly great for the environment.

Christophe Beck: That's where we spend a lot of time, so it's precious metals as well at the same time in the mining industry has a lot to do with water to say the least because most of the time there is not enough water underwater. They produce is not exactly great for the environment. We can help on both ends we use in recycled water for ultimately.

Christophe Beck: We can help on both ends; we use and recycle water for, ultimately, a much better mining operation with a much lower environmental impact. So we've really driven that transformation, which takes time. Changing a portfolio within a business is something that takes years to get to the right place, and we've reached that place. And the acquisition we did last year, as you just mentioned, well, he's helping towards that because he's towards the new mining, as we call it as well.

Christophe Beck: A much better mining operation with a much lower.

Christophe Beck: Environmental impact so we've really driven that transformation that takes time changing portfolio within the business is something that takes years to get to the right place and we have reached that place ending.

Christophe Beck: Yes.

Christophe Beck: The acquisition we did.

Christophe Beck: Last year as you just mentioned well is helping towards that because is towards.

Christophe Beck: The new mining as we call it as well so at the end of today.

Christophe Beck: So at the end of the day, the right portfolio, much less cyclical, almost no cyclicality, and margin much better. We had that year-on-year comparison. So for the first quarter of 2023, it was up 42%. Last year, so it's just a year-on-year comparison.

Christophe Beck: Bright portfolio much less cyclical almost no cyclicality.

Christophe Beck: And margin much better we had that year on year comparison, so with the first quarter of 2003 was up 42% last year. So it's just a year on year comparison, the next quarters to come for the most part is going to be a very good story. So if I didn't like mining so much 10 years ago like mining a lot.

Christophe Beck: The next quarters to come, for the most part, are going to be a very good story. So if I didn't like mining so much 10 years ago, I like mining a lot today. Our next question is from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question. Thank you. Christophe, I could go back to investment spending. I'd love just to get your thought process on how you sort of came up with the amount to spend.

Christophe Beck: Hey.

Christophe Beck: Our next question is from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.

Vincent Stephen Andrews: Thank you Christoph I could go back to the investment spending I would love just to get your thought process on how you sort of came up with the amount to spend and I guess I'm just asking.

Vincent Stephen Andrews: And I guess I'm just asking, you know, did you set a bar or hurdle somewhere? Are you trying to achieve a certain outcome, either in terms of your near-term earnings or your medium-term volume growth? And, you know, I guess, why wasn't the number higher or lower? What, what, what things did you say no to, versus what things did you absolutely have to do?

Vincent Stephen Andrews: Did you set a bar hurdle somewhere.

Vincent Stephen Andrews: Are you trying to achieve a certain outcome either in terms of your near term earnings are your medium term volume growth.

Vincent Stephen Andrews: And I guess why wasn't the number higher or lower what things did you say no to versus what things would you absolutely have to do.

Christophe Beck: Yeah, Vincent, the guiding principle is to invest in ways that help us raise the probability of delivering our targets of the five to seven, the 20% ROI margin, as you know, and the 12 to 15% EPS growth, as well, in the long run. This is my job. This is our promise. This is what we're working all together towards. So that's the way we're looking at those investments. It's not meant in a short-term way at all.

Speaker Change: Yeah, Vincent the guiding principle is to invest in ways that help us.

Christophe Beck: Raise the probability of delivering our targets of the 5% to 720% Oi margin.

Christophe Beck: Now ended 12% to 15% EPS growth as well at the same time for the long run. This is my job. This is our promise. This is what we are working all together.

Christophe Beck: Towards too so that's the way we're looking.

Christophe Beck: Those investments.

Christophe Beck: It's not meant in a short term way at all.

Christophe Beck: It's all about delivering on our long-term commitment. So there's not the threshold. Well, there's a threshold for making intelligent moves and trying to avoid dumb moves, at least willingly. That's probably the only one we have there.

Christophe Beck: All about delivering our long term commitment so theres not a threshold.

Christophe Beck: There is a threshold of making intelligent moves and trying to avoid them moves at least willingly.

Christophe Beck: Probably the only one we have there and in some places when we think about global high Tech and data centers in semiconductors, I'm, saying well, let's go there as fast and as deep as we can we have a leadership position, it's a huge market that keeps getting bigger.

Christophe Beck: And in some places, when we think about global high tech in data centers, in semiconductors, I'm saying, well, let's go there as fast and as deep as we can. We have a leadership position. It's a huge market that keeps getting bigger as well out there.

Christophe Beck: I'm not putting a threshold here. It's getting done as fast and as well as you can. But at the end of the day, it's making sure that we get the five to seven, the 12 to 15 EPS, and the 20% ROI margin, as we've talked about in the next few years. This is my guidepost and my promise to you. Mr. Hedberg, there are no further questions at this time. I would like to turn the floor back over to you for closing comments.

Christophe Beck: Well out there I'm not putting a threshold here.

Speaker Change: Get it done as fast and as well as you can but at the end of today, it's making sure that we get 5% to seven.

Speaker Change: <unk> 15, EPS ended 20% Oi margin as we've talked about in the next few years. This is my guidepost in my promise to you.

Christophe Beck: Thank you Mr. Hedberg there are no further questions at this time I would like to turn the floor back over to you for closing comments.

Christophe Beck: Thank you. That wraps up our first 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 I hope everyone has a great rest of their day. Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day.

Hedberg: That wraps up our first 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 hope everyone has a great rest of your day.

Speaker Change: Thank you ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day.