Q1 2026 Ecolab Inc Earnings Call

April 28, 2026

Speaker #1: Thank you, everyone, for joining the Ecolab's first quarter 2026 earnings release call. At this time, all participants will be in listen-only mode. Question-and-answer session will follow the formal presentation.

Operator: Thank you everyone for joining the Ecolab's Q1 2026 earnings release call. At this time, all participants will be in listen-only mode. Question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, today's conference is being recorded. It is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations. Thank you, Andy. You may now begin.

Operator: Thank you everyone for joining the Ecolab Q1 2026 Earnings Release Call. At this time, all participants will be in listen-only mode. Question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, today's conference is being recorded. It is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations. Thank you, Andy. You may now begin.

Speaker #1: If anyone should require operator assistance during the conference, please press star 0 from your telephone keypad. As a reminder, today's conference is being recorded.

Speaker #1: This is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations. Thank you, Andy. You may now begin.

Speaker #2: Thank you. Hello, everyone, and welcome to the Ecolab's first quarter conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO, and Scott Kirkland, our CFO.

Andrew Hedberg: Thank you. Hello, everyone, and welcome to Ecolab's Q1 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 Q1 results are available on Ecolab's website at ecolab.com/investor. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental materials include estimates of future performance. These are forward-looking statements. Actual results could differ materially from those projected. Factors that could cause actual results to differ are described under the Risk Factors section in our most recent Form 10-K and in our posted materials. We also refer you to the supplemental diluted earnings per share information in the release. With that, I'd like to turn the call over to Christophe Beck for his comments.

Andrew Hedberg: Thank you. Hello, everyone, and welcome to Ecolab's Q1 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 Q1 results are available on Ecolab's website at ecolab.com/investor. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental materials include estimates of future performance. These are forward-looking statements. Actual results could differ materially from those projected. Factors that could cause actual results to differ are described under the Risk Factors section in our most recent Form 10-K and in our posted materials. We also refer you to the supplemental diluted earnings per share information in the release. With that, I'd like to turn the call over to Christophe Beck for his comments.

Speaker #2: A discussion of our results, along with our earnings release and the slides referencing the quarter results, are available on Ecolab's website at ecolab.com/investor. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental materials, include estimates of future performance.

Speaker #2: 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 factor section in our most recent Form 10-K and in our posted materials.

Speaker #2: We also refer you to the supplemental diluted earnings per share information in the release. With that, I'd like to turn the call over to Christophe Beck for his comments.

Speaker #3: Thank you so much, Andy, and welcome to everyone. I'm joining us today. We had a great quarter with luxuriating momentum across our portfolio, and I know oil prices, energy, and supply are top of mind for most.

Christophe Beck: Thank you so much, Andy, and welcome everyone, joining us today. We had a great quarter with accelerating momentum across our portfolio, and I know oil prices, energy, and supply are top of mind for most. It's not for me. In 2022, commodities cost was up 50%, and our margins post-cycle went further up. Today, commodities cost is up 9%, and we have all the tools to address this within 1 quarter, done the right way for our customers. As I sit here today, I feel very good about the year and how we're managing a complex environment, and I feel even better about where we're going next. What matters most to me today is to keep the organization focused on growth, to supply our customers seamlessly anywhere around the world, and to support our teams, especially those operating in the Middle East.

Christophe Beck: Thank you so much, Andy, and welcome everyone, joining us today. We had a great quarter with accelerating momentum across our portfolio, and I know oil prices, energy, and supply are top of mind for most. It's not for me. In 2022, commodities cost was up 50%, and our margins post-cycle went further up. Today, commodities cost is up 9%, and we have all the tools to address this within one quarter, done the right way for our customers. As I sit here today, I feel very good about the year and how we're managing a complex environment, and I feel even better about where we're going next. What matters most to me today is to keep the organization focused on growth, to supply our customers seamlessly anywhere around the world, and to support our teams, especially those operating in the Middle East.

Speaker #3: It's not for me. In 2022, commodities costs were up 50%, and our margins both cycled went further up. Today, commodities costs are up 9%.

Speaker #3: And with all the tools to address this within one quarter, we've done the right way for our customers. As I sit here today, I feel very good about the year, and how we're managing a complex environment, and I feel even better about where we're going next.

Speaker #3: What matters most to me today is to keep the organization focused on growth. To supply our customers seamlessly anywhere around the world, and to support our teams.

Speaker #3: Especially those operating in the Middle East. In a complex environment, our teams are staying very close to customers and supporting their operations without any single disruption, because what we do is almost always mission-critical to them.

Christophe Beck: In a complex environment, our teams are staying very close to customers and supporting the operations without any single disruption because what we do is almost always mission-critical to them. When something is mission-critical to our customers, it becomes mission-critical to us too. That means supplying reliably, solving problems quickly, and delivering the outcomes they count on, and it's working. We would never, ever let a customer down. That commitment is what drives the consistency and the strength you see in our results. Now, turning to the first quarter. We delivered once again a very strong quarter with adjusted diluted EPS growth of 13%, right in the middle of our range. Momentum strengthened across the business as organic sales grew 4%, driven by continued strong value pricing of 3% and volume growth that accelerated to 1%.

Speaker #3: And when something is mission-critical to our customers, it becomes mission-critical to us too. That means supplying reliably, solving problems quickly, and delivering the outcomes they count on.

Speaker #3: And it's working. We would never ever let the customer down. That commitment is what drives the consistency and the strength you see in our results.

Speaker #3: Now, turning to the first quarter, we delivered once again a very strong quarter with adjusted WTD/PS growth of 13% right in the middle of our range.

Speaker #3: Momentum strengthened across the business as organic sales grew 4%, driven by continued strong value pricing of 3% and volume growth that accelerated to 1%.

Speaker #3: We also expanded operating income margins, reflecting the disciplined execution across our global portfolio and the strength of our One Ecolab approach, which brings together service, expertise, and breakthrough technology at scale.

Christophe Beck: We also expanded operating income margins, reflecting the disciplined execution across our global portfolio and the strength of our One Ecolab approach, which brings together service, expertise, and breakthrough technology at scale. Momentum continued to strengthen across the portfolio, led by our growth engines, which, by the way, have close to no exposure to energy costs. Global High-Tech and digital both grew more than 20%, driven by strong demand tied to digital adoption and the ongoing AI build-out. Life Sciences accelerated to 11% growth, led by bioprocessing, where sales more than doubled. We have been investing in talent, capabilities, capacity, and breakthrough innovation in this high-growth, high-margin business for quite some time, and today, these efforts are clearly paying off, and we're just getting started.

Speaker #3: Momentum continued to strengthen across the portfolio, led by our growth engines, which, by the way, have close to no exposure to energy costs. Global high-tech and digital growth grew more than 20%, driven by strong demand tied to digital adoption and the ongoing AI build-up.

Speaker #3: Life sciences accelerated to 11% growth, led by bioprocessing, where sales more than doubled. We have been investing in talent, capabilities, capacity, and breakthrough innovation in this high-growth, high-margin business for quite some time.

Speaker #3: And today, these efforts are clearly paying off. And we're just getting started. We expect life sciences growth to continue its double-digit momentum and operating income margins to expand toward our 30% target over the next few years.

Christophe Beck: We expect life sciences growth to continue its double-digit momentum and operating income margins to expand toward our 30% target over the next few years. Finally, Pest Elimination delivered a strong quarter with 7% growth, reflecting strong share gains from our One Ecolab growth initiative and naturally our new Pest Intelligence offering. Our core portfolio also performed very well. Institutional strengthened with solid growth across restaurant and lodging customers, more than offsetting somewhat softer market trends. Specialty gained share with 9% growth, driven by innovation that helps customers optimize costs. Food and Beverage outperformed its end market again, growing 5%, supported by strong execution of our One Ecolab approach, and light water delivered steady growth too. We also made progress in smaller parts of the portfolio that have been a bit under pressure.

Speaker #3: And finally, best elimination, delivered a strong quarter with 7% growth, reflecting strong share gains from our One Ecolab Growth Initiative and naturally our new past intelligence offering.

Speaker #3: Our core portfolio also performed very well, institutional strengthened with solid growth across restaurant and lodging customers more than offsetting somewhat softer market trends. Specialty gained share with 9% growth, driven by innovation that helps customers optimize costs.

Speaker #3: Food and Beverage outperformed its end market again, growing 5%, supported by strong execution of our One Ecolab approach. And Light Water delivered steady growth too.

Speaker #3: We also made progress in smaller parts of the portfolio that have been a bit under pressure. Collectively, the performance in paper and heavy water stabilized, as we supported them with new business and innovation.

Christophe Beck: Collectively, the performance in paper and heavy water stabilized as we supported them with new business and innovation. Overall, our growth engines are accelerating, our core performance is strong, and business that had been under pressure are turning the corner. Together, this continues to shift our portfolio towards higher margin, higher growth end markets, well-aligned with our long-term strategy. We also delivered solid operating income margin expansion this quarter. Underlying gross margin was steady as strong value pricing offset commodity cost inflation. Reported gross margin was slightly lower due to a short-term impact from recent M&A and a higher commodity cost inflation. The M&A impact was favorable to our SG&A ratio, and as a result, largely neutral to our OI margin. Underlying SG&A productivity improved meaningfully as we continue to scale our unique digital and agentic capabilities, resulting in strong SG&A leverage year over year.

Speaker #3: Overall, our growth engines are accelerating, our core performance is strong, and business that has been under pressure are turning the corner. Together, this continues to shift our portfolio towards higher margin, higher growth end markets, well-aligned with our long-term strategy.

Speaker #3: We also delivered solid operating income margin expansion this quarter, underlying gross margin was steady as strong value pricing offset commodity cost inflation. We reported gross margin was slightly lower due to a short-term impact from recent M&A and a higher commodity cost inflation.

Speaker #3: However, the M&A impact was favorable to our SG&A ratio, and as a result, largely neutral to our OI margin. Underlying SG&A productivity improved, meaningfully, as we continue to scale our unique digital and agency capabilities.

Speaker #3: Resulting in strong SG&A leverage, year over year. As a result, organic operating income margins extended by 70 basis points to 16.8%. We expect OI margin expansion to improve in the second half of the year, as pricing accelerates, and we remain very confident in delivering on our 20% OI margin target by '27.

Christophe Beck: As a result, organic operating income margins extended by 70 basis points to 16.8%. We expect OI margin expansion to improve in H2 of the year as pricing accelerates, and we remain very confident in delivering on our 20% OI margin target by 2027. Looking ahead, the operating environment remains dynamic, but we are ready. We remain focused on growth opportunities while we keep managing a complex global environment. The conflict in the Middle East is one example. It has driven sharply higher global energy costs, creating additional pressure across supply chains. In moments like this, customers turn to us as their partner of choice to ensure secure supply, exceptional service, and solutions that help reduce operating costs. We take decisive actions to absorb cost pressures wherever we can.

Speaker #3: Looking ahead, the operating environment remains dynamic, but we are ready. We remain focused on growth opportunities, while we keep managing a complex global environment.

Speaker #3: The conflict in the Middle East is one example. It has driven sharply higher global energy costs, creating additional pressure across supply chains, and in moments like this, customers turn to us as their partner of choice to ensure secure supply, exceptional service, and solutions that help reduce operating costs.

Speaker #3: We're taking decisive actions to absorb growth pressures wherever we can. However, the magnitude of energy cost increases requires additional action to ensure reliable supply, which is why we quickly implemented an energy surcharge.

Christophe Beck: However, the magnitude of energy cost increases requires additional action to ensure reliable supply, which is why we quickly implemented an energy surcharge. This is an approach we've used successfully before, focused on delivering incremental total value for customers that exceeds the total price increase. We know it works for our customers, and we know it works for us. As a result, Q2 will be a short transition period. Commodity costs are expected to increase high single digits starting in Q2, and we expect those costs to remain high through the end of the year. Surcharge benefits will build through the quarter following implementation on 1 April. With this, higher commodity costs will impact Q2 EPS growth by a few percentage points. However, underlying performance remains on track and within the targeted 12% to 15% range.

Speaker #3: This is an approach we've used successfully before, focused on delivering incremental total value for customers that exceeds the total price increase. We know it works for our customers, and we know it works for us.

Speaker #3: As a result, the second quarter will be a short transition period. Commodity costs are expected to increase by single digits starting in Q2, and we expect those costs to remain high through the end of the year.

Speaker #3: Surcharge benefits will build through the quarter following implementation on April 1st, with this higher commodity costs will impact second-quarter EPS growth by a few percentage points.

Speaker #3: However, underlying performance remains on track and within the targeted 12% to 15% range. Importantly, we expect to already fully offset the dollar impact from higher commodity costs as we exit the second quarter.

Christophe Beck: Importantly, we expect to already fully offset the dollar impact from higher commodity costs as we exit Q2. As pricing continues to accelerate and volumes continue to grow, we expect organic sales to increase 6% to 7% in H2 of the year, helping to stabilize our gross margin during that period. That's net of Ovivo. Ex Ovivo, gross margins will be up 70 to 80 basis points in H2. In other words, we will be fully offsetting the significant rise in commodity costs and its impact on earnings and margins in just a few quarters. As a result, we expect EPS growth to strengthen in Q3 and Q4, resulting in unchanged full year expectations. We therefore continue to anticipate adjusted diluted EPS growth of 12% to 15% this year, excluding short-term impact from the pending CoolIT acquisition.

Speaker #3: As pricing continues to accelerate and volumes continue to grow, we expect organic sales to increase 6 to 7 percent in the second half of the year, helping to stabilize our gross margin during that period.

Speaker #3: And that's net, off of even. Ex of even, gross margins would be up 70 to 80 basis points in the second half, in other words, we will be fully offsetting the significant rise in commodity costs and its impact on earnings and margins in just a few quarters.

Speaker #3: As a result, we expect EPS growth to strengthen in Q3 and Q4, resulting in unchanged full-year expectations. We therefore continue to anticipate adjusted diluted EPS growth of 12 to 15 percent this year, excluding short-term impact from the pending Cool IT acquisition.

Speaker #3: As discussed earlier, cool IT financing and non-cash amortization are expected to have a short-term impact on adjusted EPS in the second half of the year.

Christophe Beck: As discussed earlier, CoolIT financing and non-cash amortization are expected to have a short-term impact on adjusted EPS in H2 of the year. Following the close, the impact is expected to reduce quarterly EPS by approximately $0.20. Importantly, underlying EPS growth remains unchanged. Beyond this short-term impact this year, we expect EPS growth, including CoolIT, to accelerate back into the 12% to 15% range as contributions from this high-growth, high-margin acquisition accelerate and amortization from the Nalco acquisition falls off. What's even better, the impact of our growth engines on Ecolab's global performance is accelerating as we scale down. This is especially true for Global High-Tech, where AI is driving significant new demand for circular water management and high-performance cooling.

Speaker #3: Following the close, the impact is expected to reduce quarterly EPS by approximately 20 cents. Importantly, underlying EPS growth remains unchanged. Beyond this short-term impact this year, we expect EPS growth, including cool IT, to accelerate back into the 12 to 15 percent range as contributions from this high growth, high margin acquisition accelerate, and amortization from the NALCO acquisition goes up.

Speaker #3: What's even better, the impact of our growth engines on Ecolab's global performance is accelerating as we scale down. This is especially true for global high-tech, where AI is driving significant new demand for circular water management and high-performance cooling.

Speaker #3: By bringing cool IT and of evo together with our global high-tech water business, we're building a one-and-a-half billion dollar powerhouse that will help fuel Ecolab's next phase of growth and margin expansion.

Christophe Beck: By bringing CoolIT and Ovivo together with our Global High-Tech water business, we're building a $1.5 billion powerhouse that will help fuel Ecolab's next phase of growth and margin expansion. As AI accelerates the build-out of global digital infrastructure, customers are prioritizing uptime, cooling performance, and reliable water management while driving massive increases in compute power with lower energy use and net near zero water footprint. Our circular water solutions help deliver exactly that, from ultrapure water to produce the most advanced chips, to 3D TRASAR-connected water to support power generation, and now direct-to-chip cooling to cool the chips. Ovivo expands our ultrapure water and end-to-end microelectronics, operating in a business expected to grow at mid-teens rate this year, supported by a strong pipeline tied to fab expansions and increasing water circularity needs.

Speaker #3: As AI accelerates the build-out of global digital infrastructure, customers are prioritizing uptime, cooling performance, and reliable water management while driving massive increases in compute power, with lower energy use, and net near zero, water footprint.

Speaker #3: Our circular water solutions have delivered exactly that. From ultra-few water to produce the most advanced chips, to 3D trays that are connected water to support power generation, and now direct-to-chip cooling to cool chips.

Speaker #3: OF Evo expands our ultra-few water and end-to-end microelectronics offering in a business expected to grow at a mid-teens rate this year, supported by a strong pipeline tied to fab expansions and increasing water circularity needs.

Speaker #3: Our pending acquisition of CoolIT builds on this momentum, adding a scaled direct-to-chip liquid cooling platform and positioning Global High-Tech with an integrated, service-led cooling solution for high-density AI data centers.

Christophe Beck: Our pending acquisition of CoolIT builds on this momentum, adding a scaled direct-to-chip liquid cooling platform and positioning Global High-Tech with an integrated service-led cooling solution for high-density AI data centers. Here's more good news. CoolIT shared with us that they are off to a very strong start in 2026, with Q1 sales growing well ahead of the 30% plus we discussed on the acquisition call. As demand for their leading liquid cooling technologies continues to rapidly accelerate. Together, these two businesses have the potential to add a couple points of high margin organic sales growth to Ecolab's total growth as they scale and capture more of this huge and fast-growing high-tech market. In closing, we delivered a strong quarter with accelerating top line momentum, continued margin expansion, and double EPS growth in a complex environment. Our near-term outlook is strong and consistent.

Speaker #3: And here's more good news. Cool IT has shared with us that they are off to a very strong start in 2026. With first-quarter sales growing well ahead of the 30% plus we discussed on the acquisition call, as demand for the leading liquid cooling technologies continues to rapidly accelerate.

Speaker #3: Together, these two businesses have the potential to add a couple of points of high-margin organic sales growth to Ecolab's total growth as they scale and capture more of these huge and fast-growing high-tech markets.

Speaker #3: In closing, we delivered a strong quarter with accelerating top-line momentum, continued margin expansion, and double EGTPS growth in a complex environment. Our near-term outlook is strong and consistent, gross momentum continues to build, our portfolio is shifting toward higher-margin, higher-gross markets, and is much less exposed to energy costs, and our team is executing at a very high level.

Christophe Beck: Gross momentum continues to build. Our portfolio is shifting towards higher margin, higher gross markets, and much less exposed to energy costs. Our team is executing at a very high level. We're well-positioned to deliver another year of strong performance in 2026. We remain confident in the long-term trajectory we're building. Thank you for your continued trust and your investment in Ecolab. I'll now turn it back to Andrew Hedberg.

Speaker #3: We're well positioned to deliver another year of strong performance in 2026, and we remain confident in the long-term trajectory we're building. So thank you for your continued trust and your investment in Ecolab.

Speaker #3: I'll now turn it back to Andy for Q&A. Thanks, Christophe. That concludes our formal remarks. Operator, would you please begin the question-and-answer period?

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

Speaker #4: Thank you. We'll now begin the question-and-answer session. We ask that you please limit yourself to one question so others will have a chance to participate.

Operator: Thank you. We'll now begin the question-and-answer session. We ask you please limit yourself to one question so others will have a chance to participate. If you have additional questions, you may rejoin the Q&A queue. If you'd like to ask a question at this time, you may press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. Our first question is from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Speaker #4: If you have additional questions, you may rejoin the Q&A queue. If you'd like to ask a question at this time, you may press *1 on your telephone keypad.

Speaker #4: And the confirmation tone will indicate your line is in the question queue. You may press *2 if you'd like to remove your question from the queue.

Speaker #4: For participants who are using speaker equipment, it may be necessary to pick up your handset before pressing the *keys. Thank you. And our first question is from the line of Tim Mulroney with William Blair.

Speaker #4: Please receive their question.

Speaker #5: Hey, this is Sam Cox from OfferTim. Thanks for taking our question here. In your outlook, I think you shared you expected gross margins to stabilize in the second half, which is quicker than I think some investors may have been expecting.

Sam Cox: Hey, this is Sam Cox, for and on for Tim Mulrooney. Thanks for taking our question here. You know, in your outlook, I think you shared you expected gross margins to stabilize in H2, which is quicker than I think some investors may have been expecting. I imagine that's because of the decision to implement your surcharge pricing pretty quickly when this conflict started. Can you help us understand how this fits into your goal of reaching a 20% OI margin in 2027, including with the impact that the CoolIT Systems acquisition will have?

Speaker #5: I imagine that's because of the decision to implement your surcharge pricing pretty quickly when this conflict started. But can you help us understand how this fits into your goal of reaching a 20% OI margin in 2027, including with the impact that the cool IT system acquisition will have?

Speaker #6: Thank you, Sam. As mentioned before, I know most of you have these energy costs, oil prices, top of mind. And for me, that's not the case.

Christophe Beck: Thank you, Sam. As mentioned before, I know most of you have these energy costs, oil prices top of mind, and for me, that's not the case because we've been here before, and we've learned to master this very well. As a reminder, commodities cost in 2022 was up 50%, and as you remember, margins went further up post cycle. Here, we're talking 9% up, as we see it in Q2, and we're expecting to stay high till the end of the year, at least. I'm expecting that 6 to 12 months. We're expecting in Q2 to get the dollars back as we exit Q2. As you said, to get gross margin to stabilize in H2, including our Ovivo.

Speaker #6: Because we've been here before, and we've learned to master these very well. As a reminder, so commodities cost in '22 was up 50% and, as you remember, margins went further up post-cycle.

Speaker #6: Here, we're talking 9% up as we see it in Q2, and we're expecting that to stay high. Till the end of the year, at least, I'm expecting that—6 to 12 months.

Speaker #6: So we're expecting in Q2 to get the dollars back as we exit Q2. And then, as you said, to get gross margin to stabilize in the second half, including EVO.

Speaker #6: And if you exclude of evo, as mentioned, gross margin would be up 70 to 80 basis points, which is our traditional run rate. Which is, as mentioned, in line with our model.

Christophe Beck: If we exclude our Ovivo, as mentioned, gross margin would be up 70 to 80 basis points, which is our traditional run rate, which is, as mentioned, in line with our model. OI margin will be even better because SG&A, it's gonna keep improving as well during that time. When I'm looking at the math as well of pricing and DPC and commodity costs, well, basically, as you know, 30% of our DPC is roughly impacted by energy costs while growing 9%, if that's the gross impact of inflation out there. While it's 2.5% that we need to compensate, and that's why your 5% to 6% pricing in H2 brings us in a place where margins are stabilized at the minimum.

Speaker #6: So OI margin will be even better because SG&A is going to keep improving. As well, so during that time. So when I'm looking at the math, as well of pricing and DPC and commodity cost, well, basically, as you know, 30% of our DPC is roughly impacted by energy cost, while growing 9%, if that's the gross impact of inflation, out there, well, it's 2.5% that we need to compensate, and that's why your 5 to 6% pricing in the second half brings us in a place where margins are stabilized.

Speaker #6: At the minimum. And that's obviously including of evo as well. So underlying, so we improve even further. But as mentioned before, so my priority is making sure that the organization stays focused on growth, which means affecting our core businesses and building our new gross engines on high-tech life science, best intelligence, and digital which today or tomorrow with cool IT will represent.

Christophe Beck: That's obviously including Ovivo as well. Underlying, we improve even further. As mentioned before, my priority is making sure that the organization stay focused on growth, which means perfecting our core businesses and building our new growth engines, Global High-Tech, life science, Pest Intelligence and digital. Which today or tomorrow with CoolIT would represent 20% plus of our company, which is a really good news because it's high-growth businesses in very natural growth industries, high margins, and on a side note, that have low to no dependency on energy costs and supply as well. If I put it all together, a H2 that's gonna be stable to good in gross margin, SG&A that's gonna be favorable.

Speaker #6: So, 20% plus of our company, which is really good news because it's high gross businesses in very natural growth industries, high margins, and, on a side note, have low to no dependency on energy cost.

Speaker #6: And supply as well. So if I put it all together, second half, that's going to be so stable to good in gross margin. SG&A, that's going to be favorable.

Speaker #6: So it means a stronger OI and EPS delivery. If I look at '27, including cool IT, including as well the rollout of the Nalco acquisition, well, we end up that's my objective.

Christophe Beck: It means a stronger OI and EPS delivery. If I look at 2027, including Cool IT, including as well the roll out of the Nalco acquisition, well, we end up, that's my objective, so for 2027, it's very early obviously, so to talk about a year from now. Well, I think that we have a really good chance so to be so within our 5% to 7% top line growth, and for sure to get to the 12% to 15% earnings per share growth in a pretty solid way.

Speaker #6: So for '27, it's a very early, obviously, so to talk about a year from now. Well, I think that we have a real good chance to be so within our 5 to 7 top-line goals and for sure to get to the 12 to 15 earnings per share growth in a pretty solid way.

Speaker #4: The next question's from the line of Manav Patniak with Barclays. Please receive their question.

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

Speaker #7: Hi, good afternoon. This is Ronan Kennedy on from Manav. Thank you for taking my question. Christophe, could you please help us understand the base macro scenario embedded in the guide?

Ronan Kennedy: Hi, good afternoon. This is Ronan Kennedy on for Manav. Thank you for taking my question.

Christophe Beck: No problem.

Ronan Kennedy: Heidi, could you please help us understand the base macro scenario embedded in the guide? Does it assume broadly stable demand environment with modest improvement? Does it contemplate an already cautious consumer posture, a customer posture rather, given the higher energy costs, geopolitical uncertainty, et cetera? Given the backdrop and your comments regarding not necessarily having the higher energy costs and oil prices top of mind, is there macro sensitivity or is it just a function of your internal execution levers like the pricing, productivity, and mix?

Speaker #7: Does it assume a broadly stable demand environment with modest improvement? Or does it contemplate an already cautious consumer and customer posture, rather? Given the higher energy costs, geopolitical uncertainty, etc.?

Speaker #7: And given the backdrop and your comments regarding not necessarily having the higher energy costs and oil prices top of mind, is there macro sensitivity or is it just a function of your internal execution levers like the pricing, productivity, and mix?

Speaker #6: It's 90% execution. We live on the same planet, as everybody else. Obviously, here. But that's why our assumptions I think are pretty conservative. With this 9% commodity inflation in the second quarter and expecting it's going to stay, till the end of the year and probably into next year as well, at the same time.

Christophe Beck: It's 90% execution, involvement. We live on the same planet as everybody else, obviously here. That's why our assumptions, I think, are pretty conservative, with this 9% commodity inflation in Q2 and expecting it's gonna stay till the end of the year and probably into next year as well, at the same time. From a demand perspective, we're expecting this 1%. In the H2, Q2 is always a little bit harder to define in details as it's a transition quarter as we're here. I look at the H2, I feel good about the 1% growth. This is our assumption. This is not my plan. We're gonna accelerate, obviously, our volume growth.

Speaker #6: From a demand perspective, we're expecting this 1%. So in the second half, Q2 is always a little bit harder. To define in detail, it's a transition quarter as we're here.

Speaker #6: But I look at the second half, I feel good about the 1% growth. This is our assumption. This is not my plan. When I accelerate obviously.

Speaker #6: So our volume growth. And pricing. So in that range of 5 to 6%, as I mentioned before. So you end up with 6 to 7% top-line growth for the second half.

Christophe Beck: Pricing, in that range of 5% to 6%, as I mentioned before. You end up with 6% to 7% decline growth for the H2. That's assumption. For pricing, that's the assumption, 9% on commodity cost as well, and kind of steadying this 1% volume, which means that there might be some pluses and minuses in terms of demand around the world. For me, controlling what we can control, the fact that our growth engines are doing really well. Collectively, they're growing 12% at high margins. Our new business is at record level as well. I feel really good about that. Our core business is in a very strong and steady growth performance as you've seen.

Speaker #6: So that's assumption. So for pricing, that's the assumption. 9% on commodity cost as well. And kind of steadying this 1% volume, which means that there might be some pluses and minuses in terms of demand around the world.

Speaker #6: But for me, controlling what we can control—the fact that our gross engines are doing really well, collectively, they're growing 12% at high margins.

Speaker #6: Our new business is at record levels as well. I feel really good about that. Our core business is in a very strong and steady gross performance, as you've seen.

Speaker #6: And our underperformers, well, are stabilizing the paper and heavy industries as well. So you bring it all together, I think that between our assumption and controlling what we can control, by focusing on growth, by managing performance at the same time, well, we end up in a place where the second half is a little bit better than we even thought a few months ago.

Christophe Beck: Our underperformance, well, are stabilizing the paper and heavy industries as well. You bring it all together. I think that between our assumption and controlling what we can control by focusing on growth, by managing performance at the same time, well, we end up in a place where the H2 is a little bit better than we even thought a few months ago. Feel good about where we're going here.

Speaker #6: So, feel good about where we're going here.

Speaker #4: The next question's from the line of Ashish Subhadra with RVC. Let's see what's your question.

Operator: The next question is from the line of Ashish Sabadra with RBC. Ashish, your question.

Speaker #8: Thanks for taking my question. So very strong growth, obviously, in high-tech, 20% plus. You talked about cool IT also growing. Really about a 30% growth in 1Q.

Ashish Sabadra: Thanks for taking my question. Very strong growth, obviously, in high tech, 20% plus. You talked about Cool IT also growing, really about that 30% growth in Q1. I was wondering if you could also talk about Ovivo, how that's tracking compared to your expectation. If you could talk about the cross-sell opportunities of Ovivo with your core offerings in high tech, and also as you're thinking about cross-selling once the Cool IT acquisition closes. Thanks.

Speaker #8: I was wondering if you could also talk about OVivo, how that's tracking compared to your expectation. If you could talk about the cross-sell opportunities of OVivo with your core offerings in high-tech and also as you're thinking about cross-selling once the cool IT acquisition closes.

Speaker #8: Thanks.

Speaker #6: Thank you, Ashish. So global high-tech is going to become, most probably, our strongest growth engine in the near- to long-term future. And together with life sciences, I think that we have two amazing growth engines.

Christophe Beck: Thank you, Ashish. Global High-Tech is gonna become most probably our strongest growth engine in the near to long-term future. Together with life science, I think that we have two amazing growth engines. For the future of our company, really focused on industries that are growth industries, high margin industries, and very little depending on any energy impact as well at the same time. Kind of really a combination of sweet spots that I really like. On High-Tech, as mentioned, you bring everything together, our legacy business, Ovivo, CoolIT, you get to a business of $1.5 billion that's growing 20% to 25% or more at a high margin as well. At the same time, we're exactly at the place we wanted to be strategically.

Speaker #6: So, for the future of our company, we're really focused on industries that are growth industries, high-margin industries, and very little depending on any energy impact as well, at the same time.

Speaker #6: So kind of really a combination of sweet spots that are really liked. So on high-tech, as mentioned, you bring everything together. Our legacy business, OVivo, cool IT, you get to a business of one and a half billion that's growing 20, 25 percent or more at high margin as well at the same time.

Speaker #6: We're exactly at the place we want it to be. Strategically, we want to be the partners of the industry to help them produce better outcomes—chips or data compute—obviously, with low to no water usage, which is a big issue.

Christophe Beck: We wanted to be the partners of the industry to help them produce better outcome, chips or data compute, obviously, with low to no water usage, which is a big issue, so for most of those industries and socially as well around fabs or data centers. This is exactly what we're doing. With Ovivo, that's helping in microelectronics. We'll move from 5% water recycling to north of 95%. It's absolutely game-changing for fabs. Keep in mind, by 2030, 17 new fabs are gonna be open. That's roughly 1 a month. Ovivo is the most advanced technology to recycle water at ultra-pure level.

Speaker #6: So for most of those industries, and socially as well, around fabs or data centers, this is exactly what we're doing. With Ovivo, that's helping—in microelectronics, we'll move from 5% water recycling to north of 95%.

Speaker #6: So it's absolutely a game-changing for fabs and keep in mind, so by 2030, 70 new fabs are going to be opened. That's roughly one a month.

Speaker #6: And Ovivo is the most advanced technology to recycle water at an ultra-pure level. And something that's really interesting with Ovivo that we've discovered is that the quality of the ultra-pure water is having a direct impact on the yield of the chip manufacturing, which is game-changing for microelectronics.

Christophe Beck: Something that's really interesting with Ovivo that we've discovered is that the quality of the ultra-pure water is having a direct impact on the yield of the chips manufacturing, which is game-changing for the microelectronics industry. Great for them in terms of performance, chip manufacturing, quality of the chip, and yields, and at the same time, reducing by 95% the net water usage. On the other hand, CoolIT, well, you're all familiar with all the uproar that's happening around data center on water impact. Well, with our end-to-end technology that we're going to bring to the market, well, data centers are going to have the water footprint of a car wash in one of the largest in the country, in Milwaukee.

Speaker #6: Industry—so great for them in terms of performance, chip manufacturing, quality of the chip, and yield. And at the same time, reducing by 95% the net water usage, on the other hand.

Speaker #6: Cool IT, well, you're all familiar with all the rapport that's happening around data center on water impact. Well, with our end-to-end technology that we're going to bring to the market, well, data centers are going to have the water footprint of a car wash in one of the largest in the country, in Milwaukee.

Speaker #6: Well, the humans in the data center use more water than the data center itself, just to showcase a little bit of the power of that technology.

Christophe Beck: Well, the humans in the data center use more water than the data center itself, just to showcase a little bit of the power of that technology. All in all, it's the first time in my career, actually, that I see on both fronts, customers coming to us because they know there's not enough capacity to supply everyone, and we have the two best technologies for microelectronics and data centers out there, and customers wanna jump the queue in order to be able, on their side, obviously, to gain share in their own respective industry. CoolIT, as mentioned, Q1 of the year, way north of the 30% that we were planning, which is a very good problem to have, obviously. I think it's gonna be a great story.

Speaker #6: So, all in all, it's the first time in my career, actually, that I see on both fronts—customers coming to us because they know there's not enough capacity to supply everyone.

Speaker #6: And we have the two best technologies for microelectronics and data centers out there. And customers want to jump the queue in order to be able, on their side obviously, to gain share.

Speaker #6: In their own respective industry. So cool IT, as mentioned, first quarter of the year, way north of the 30% that we were planning, which is a very good problem to have, obviously, I think it's going to be a great story for all of us.

Christophe Beck: For all of us, and Ovivo will be as well in this mid-teens type of growth. It's a longer cycle, obviously, business. Building pads takes more time than building data centers. The backlog at Ovivo is way higher than what we had thought as well because of all the reasons I mentioned before. I think that we bet exactly on the right things that are gonna pay off short and long term.

Speaker #6: And OVivo will be as well in this mid-teens type of growth. It's a longer cycle, obviously—business building fabs takes more time than building data centers.

Speaker #6: But the backlog at OVivo is way higher than what we had thought as well because of all the reasons I mentioned before. So I think that we've bet exactly on the right things that are going to pay off short and long term.

Speaker #4: Our next question is from the line of John McNulty with a BMO Capital Markets. Please introduce the question.

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

Speaker #9: Yeah, thanks for taking my question. Maybe just shifting tack to one on Ecolab—sales growth, you called out noticeably above kind of the core. I guess, can you highlight how much better it was than the core?

John McNulty: Yeah. Thanks for taking my question. Maybe just shifting tack to One Ecolab. Sales growth, you called out noticeably above kind of the core. I guess, can you highlight how much better it was than the core? If you've got any ways to further accelerate the program now that you're, you know, you've been running on this program for, you know, for a couple of years now.

Speaker #9: And if you've got any ways to further accelerate the program, now that you've been running on this program for a couple of years now?

Speaker #6: Yeah, John, it's been, well, a bit less than two years. But it's been a very good story. So, the most obvious outcomes of it are, on one hand, the Food and Beverage United, where we're bringing food safety, hygiene, and water together.

Christophe Beck: Well, John, it's been a bit less than 2 years. It's been a very good story. The most obvious outcomes of it are, on one hand, Food and Beverage United, where we're bringing food safety, hygiene, and water together. Well, you see, the results of F&B have been very strong. 5% growth. It's a major multi-billion business in an industry that's not growing. Consumer goods are not exactly growing really fast at the moment. F&B United is. We've done only North America, by the way, so far, we're expanding around the world, and that's gonna extend and expand, obviously, the impact on that very promising business. Second is our largest customers, our top 35, as I've shared with you.

Speaker #6: Well, you see, so the results of F&B have been very strong. So, 5% growth—it's a major, multi-billion-dollar business in an industry that's not growing. Consumer goods are not exactly.

Speaker #6: So, growing really fast at the moment—F&B United is—and we've done only North America, by the way, so far. So we're expanding around the world, and that's going to extend and expand, obviously, the impact on that very promising business.

Speaker #6: Second is our largest customers, our top 35, as I've shared with you. So our top 20 and emerging 15, those are the 35 that we focus on.

Christophe Beck: Our top 20 and emerging 15, those are the 35 that we focus on. They're growing quite a bit faster than the average of the company because of One Ecolab. Last but not least, through agentic new technology, and we're really at the forefront of any industry in how we're using that. Well, our savings in terms of performance have been remarkable while making sure that our teams remain confident that ultimately, we will really focus most of our attention on growth while we drive performance as well at the same time. Early on the journey, but we see the pace picking up, which is exactly what we wanted and what we need in an environment or a global environment that's a little bit complex at the moment.

Speaker #6: They're growing quite a bit faster than the average of the company because of one, Ecolab. And last but not least, through Agentic technology, we're really at the forefront of any industry in how we're using that.

Speaker #6: Well, our savings in terms of performance have been remarkable while making sure that our teams remain confident that ultimately, so we will really focus most of our attention on growth while we drive performance as well at the same time.

Speaker #6: So early on the journey, but we see the pace picking up, which is exactly what we wanted and what we need in an environment or a global environment that's a little bit complex at the moment.

Speaker #4: Our next question's from the line of David Begleiter with Deutsche Bank. Please just see it's your question.

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

Speaker #10: Thank you. Good afternoon. Christoph, on cool IT, can you help us with the 20 cents of dilution in Q4? And what is your expectation or forecast for dilution in 2027 from cool IT?

David Begleiter: Thank you. Good afternoon. Christophe, on CoolIT, can you help us with the $0.20 of dilution in Q4? What is your expectation or forecast for dilution in 2027 from CoolIT? Thank you.

Speaker #10: Thank you.

Speaker #6: Yeah. So thank you, David. Let me pass it to Scott. And by the way, it's $0.20 per quarter in the second half, as we've described that as well in the release and talked about.

Christophe Beck: Yeah. Thank you, David. Let me pass it to Scott. By the way, it's $0.20 per quarter, in H2, as we described that as well in the release and talked about, so, during the acquisition call, as well, and it's gonna neutralize, in 2027. Let me pass it to Scott, and I can add any comment after that.

Speaker #6: So during the acquisition call as well, and it's going to neutralize in ’27. But let me pass it to Scott, then I can add any comment after that.

Speaker #6: Yeah. Hey, David. As we talked about, about a month ago, and we had the cool IT call, and as Christoph talked about, is that the 20 cents per quarter this year, again, because the close date, we don't know that exactly yet.

Scott Kirkland: Yeah. Hey, David. As we talked about about a month ago when we had the CoolIT call, as Christophe talked about, is the $0.20 per quarter this year. Again, because the close date, we don't know that exactly yet, I want to make sure you understand what it is by quarter, dependent on the close. As we've talked about a month ago, first of all, excluding CoolIT this year, we're going to deliver the 12 to 15, as Christophe talked about before. Then this is the $0.20 reduction this year. As we think about to 2027, all with CoolIT, including the amortization, the net impact of the roll-off of an outgoing amortization really offsets the amortized non-cash amortization from CoolIT.

Speaker #6: So I want to make sure you understand what it is by quarter, depending on the close. But as we've talked about a month ago, first of all, excluding Cool IT this year, we're going to deliver the 12 to 15, as Christoph talked about before.

Speaker #6: And then this is the 20 cent reduction this year. But as we think about to 2027, all with cool IT, including the amortization, but the net impact, the rolloff of the now going amortization really offsets the non-cash amortization from cool IT.

Speaker #6: So that's why we feel very good next year about staying in that 12 to 15 percent range from an EPS growth perspective. Which adds as well to the top line, which is why we did those two investments, by the way.

Scott Kirkland: That's why we feel very good next year of staying in that 12% to 15% range from an EPS growth perspective.

Christophe Beck: Which adds as well to it, so to the top line, which is why we did those two investments, by the way. On Ovivo, and CoolIT both going better than we thought. While it's adding so a couple points on the top line as well. It's acceleration on the top line, aiming at this 5 to 7 for the overall company and strengthening the 12 to 15 earnings per share growth as well. As we enter next year, these are the objectives that I have that we build towards to, but so far things are going really well on both fronts.

Speaker #6: So on OVivo, and cool IT, both going better. Than we thought. Well, it's adding, so a couple of points on the top line as well.

Speaker #6: So it's acceleration on the top line, aiming at these 5 to 7 for the overall company and strengthening the 12 to 15 earnings per share growth as well.

Speaker #6: So, as we enter next year, these are the objectives that I have that we will build towards too. But so far, things are going really well on both fronts.

Speaker #4: Our next question comes from the line of Seth Weber with BMP Parva. Please proceed with your question.

Operator: Our next question comes from the line of Seth Weber with BNP Paribas. Please proceed with your question.

Speaker #11: Hey, guys. Good afternoon. I wanted to ask about the Life Sciences business and the strength in the organic growth. Is this the step change that we've been kind of waiting for?

Seth Weber: Hi, guys. Good afternoon. Wanted to ask about the life science business, the strength in the organic growth. You know, is this the step change that we've been kinda waiting for? I think, Christophe, you mentioned that double digits is kind of in the near-term foreseeable future. Like, can you just help us contextualize how this business is going to then react once the new capacity comes online? You know, what type of operating leverage should we expect to see kind of intermediate term in this business? I know you have the 30% number long term, but if you are growing double digits, how much leverage can we see on the margin side there? Thank you.

Speaker #11: I think, Christoph, you mentioned that double digits is kind of in the near-term foreseeable future. But can you just help us contextualize how this business is going to then react once the new capacity comes online?

Speaker #11: And what type of operating leverage should we expect to see, kind of intermediate term, in this business? I know you have the 30% number long term, but if you are growing double digits, how much leverage can we see on the margin side there?

Speaker #11: Thank you. Great. Thank you. Seth, well, the short answer is yes. This is the performance that we were looking for, that we've been building towards.

Christophe Beck: Hey, thank you, Seth. Well, the short answer is yes. This is the performance that we were looking for, that we've been building towards to. I'm really, really pleased with what the team has done, both internally, getting the capacity, getting the quality, getting our systems, getting our platforms, R&D, everything together in order so to get life sciences to the performance we're all planning for. 11% in Q1. We've said we're building a double-digit growth business all in. With life science, this is where we are, this is where we're gonna stay. Honestly, Seth, the idea is to grow even faster than that as well.

Speaker #11: And I'm really, really pleased with what the team has done both internally—getting the capacity, getting the quality, getting our systems, getting our platforms, R&D, everything together—in order to get Life Sciences to the performance we're all planning for.

Speaker #11: So, 11% in the first quarter. We've said we're building a double-digit growth business, all in. So with Life Science, this is where we are.

Speaker #11: This is where we're going to stay. And honestly, Seth, the ID, it's to grow even faster. And that as well. With an operating income leverage, so getting close to 30%, I want to make absolutely sure that we keep investing behind that business.

Christophe Beck: With an operating income leverage of getting close to 30%, I wanna make absolutely sure that we keep investing behind that business. Short to mid-term, we might be in this mid-20s type of thing as we keep building, like the plant, that we're gonna open, in the H2 of the year as well. That's gonna unleash even more capacity for that business. Knowing that we get to the 30%, I have no doubt that we're gonna get there because it's all impacted by investments, basically. The performance in terms of leverage that we're getting now. I'd like to remind you as well what I said earlier as well.

Speaker #11: So short to mid-term, we might be in this mid-20s type of thing as we keep building like the plant that we're going to open in the second half of the year as well.

Speaker #11: That's going to unleash even more capacity for that business. And then, so knowing that we get to the 30%, I have no doubt that we're going to get there because it's all impacted by investments.

Speaker #11: So, the performance in terms of leverage that we're getting now—I’d like to remind you as well what I said earlier.

Speaker #11: Our buyer processing business, which is the core of our business, will grow north of 100% in the first quarter. This is very encouraging. It's not going to be every quarter the same like that, but the steady growth is going to be very strong in that business here.

Christophe Beck: Our bio processing business, which is the core of our business, we grew north of 100% in the Q1. This is very encouraging. It's not gonna be every quarter the same like that, but the steady growth is gonna be very strong in that business here. We packed for now. We need more capacity as well. For it, a good problem to have as well. With the fastest growing business in the life science industry, so right now. I think that we're gonna stay that way with the smaller, most agile, most innovative, probably most aggressive team as well that we have in the industry. Very happy with what the life science team has done. We finally where we were hoping to be.

Speaker #11: We packed for now. We'll need more capacity as well. So for it, a good problem to have as well. And with the fastest growing business in the life science industry, so right now, and I think that we're going to stay that way with the smaller most agile, most innovative, probably most aggressive team as well that we have in the industry, very happy with what the life science team has done.

Speaker #11: We finally were hoping to be.

Speaker #4: Our next question is from the line of Chris Parkinson, Wolf Research. Please proceed with your question.

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

Chris Parkinson: Thank you, Christophe. Obviously, there's a lot to go on in the, you know, in terms of raw materials over the next, you know, 2 quarters. In terms of your 2027 CMD margin targets, it seems like you're actually well ahead on, you know, in certain cases, you know, slash in line. I'd love it if you can kinda walk us through the intermediate to longer term puts and takes of those targets, and specifically how you're thinking about any newer dynamics across institutional markets, as well as kind of the impending ramp of life sciences as well. Thank you so much.

Speaker #5: Thank you. Christoph, obviously, there's a lot to go on in the in terms of raw materials over the next two quarters. But in terms of your 2017 margin targets, it seems like you're actually well ahead in certain cases.

Speaker #5: Slash in-line. But I'd love it if you could kind of walk us through the intermediate- to longer-term puts and takes of those targets.

Speaker #5: And specifically, how you're thinking about any newer dynamics across institutional markets as well as kind of the impending ramp of life sciences as well.

Speaker #5: Thank you so much.

Speaker #11: Thank you, Chris. I feel really good about where we're heading. But let me have Scott answer that question first, and I'll build on it. Yeah.

Christophe Beck: Thank you, Chris. Feel really good with where we're heading, but let me have Scott answer that question first, and I'll build on it.

Speaker #11: Thanks, Chris. Hey, as Christophe said, we're very confident in the margin expansion we're delivering in the past of 20%. I mean, as you probably know, over the last few years, we've delivered north of 500 basis points of year-over-year margin expansion.

Scott Kirkland: Thanks, Chris. As Christophe said, we're very confident in the margin expansion we're delivering and the path to 20%. I mean, as you probably know, over the last few years, we've delivered north of 500 basis points of OI margin expansion and feel very good about delivering the 19% this year. That's 100 basis points year-on-year. There's 100 basis points left to get to the 20% next year, which we feel very good about. As Christophe said, the surcharge is going well, the Q2 will be a transition quarter, but feel very good about the H2 gross margin as he talked about.

Speaker #11: And feel very good about delivering the 19% this year. So that's 100 basis points year on year. And then there's 100 basis points left to get to the 20% next year, which we feel very good about.

Speaker #11: And as Christoph said, the surcharge is going well. And so that the Q2 will be a transition quarter. But feel very good about the second half gross margin as he talked about.

Speaker #11: And in addition, as part of that driver, that confidence, we talked about that business mix where these higher growth, higher margin businesses—GHT, Life Sciences, Pest, Digital—are also supporting that confidence in that 20% by 2027, but also in our longer-term algorithm, which we talked about: that 100 to 150 basis points through 2030.

Scott Kirkland: In addition, as part of that driver, that confidence, we talked about that business mix where this higher growth, higher margin, businesses, GHT, Life Sciences, and Pest Intelligence, are also supporting that confidence in that 20% by 2027. Also in our longer term algorithm, which we talked about, that 100 to 150 basis points through 2024.

Speaker #5: And to build on that, as I've shared with you so many times, I'm really focused on beyond the 20%. For me, the 20% is a given.

Christophe Beck: To build on that, as I've shared with you so many times, I'm really focused on beyond the 20%. For me, the 20% is a given next year. When I think about it, our Institutional & Specialty is already north of the 20%. When we talk about life sciences, as mentioned before, so underlying is north of 20% as well. The thing before the investment that we're making, but you're seeing it's getting north of 20% as well. Pest Elimination is north of 20% as well at the same time. Most of Water is as well at the same time. We know exactly how to get north of 20%. For me, it's just that what's the next milestones that we wanna get.

Speaker #5: Next year, and when I think about it, so institutional specialty is already north of the 20%. When we talk about life sciences, as mentioned before, so underlying is north of 20% as well.

Speaker #5: And before the investment that we're making, that you're seeing, it's getting north of 20% as well. Pest Elimination is north of 20% as well, at the same time, and most of Water is as well, at the same time.

Speaker #5: So we know exactly how to get north of 20%. For me, it's just that what's the next milestones that we want to get? I'll share with you as soon as I have clear solid view on that.

Christophe Beck: I'll share with you as soon as I have clear, solid view on that, but it's gonna be quite a bit north of the 20%. When you think about Ovivo and CoolIT joining us, that's on top of it, obviously, with businesses that are growing really fast at very good margins. Feel really good about the 20%. For next year, 90% of my focus is really so what's next post the 20% to make sure that we keep growing the margins of the company.

Speaker #5: But it's going to be quite a bit north of the 20%. And when you think about Oviedo and Cool IT, joining us, that's on top of it.

Speaker #5: Obviously, with businesses that are growing really fast, at very good margin. So, feel really good about the 20%. So for next year, 90% of my focus is really on what's next post the 20%, to make sure that we keep growing the margins of the company.

Speaker #4: Our next question is from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.

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

Speaker #12: Thank you. Good afternoon. I did want to talk a bit more about global water and the margins. And I think in the quarter, there were three dynamics going on.

Vincent Andrews: Thank you. Good afternoon. I did wanna talk a bit more about global water and the margins. I think in the quarter, there were three dynamics going on. There was the Ovivo acquisition. You called out some raw material inflation. I suspect that hit you pretty hard in March, which you obviously couldn't price right away for. Then the stabilization of the headwind of the softer sales in heavy water and paper. That you called out upper single-digit operating income growth decline, which I would have thought would have helped.

Speaker #12: There was the Oviedo acquisition. You called out some raw material inflation. I suspect that hit you pretty hard in March, which obviously you couldn't price right away for.

Speaker #12: And then the stabilization of the headwind of the software sales, and heavy water and paper. But then you called out an upper single-digit operating income growth decline, which I would have thought would have helped the percentage margin.

Vincent Andrews: The percentage margin. Maybe you could just unpack, you know, the margin performance in global water, the decline and how those three different buckets contributed to it, and how we should think about it over the next couple of quarters. Thank you.

Speaker #12: So maybe you could just unpack the margin performance in global water, the decline, and how those three different buckets contributed to it, and how we should think about it over the next couple of quarters.

Speaker #12: Thank you.

Speaker #11: So I'll pass it to Scott. But generally here, so overall water, so was flat in terms of OI growth. So slightly 0.5%. So down in Q1.

Christophe Beck: I'll pass it to Scott. Generally here, overall water was flat in terms of OI growth. Slightly open 5%. Down in Q1. If you exclude paper and heavy water, well, water has been growing top line mid-single and operating high single digit as well here. Generally, water is doing really well, ex paper and heavy. We're working on these two, paper and heavy, but honestly, most of my focus is really on the growth part of water. The combination of both, most of water getting better through higher growth, higher margin businesses like Global High-Tech.

Speaker #11: If you exclude Paper and Heavy Water, well, Water has been growing top line mid-single and operating high single digit. As well here. So generally, Water is doing really well.

Speaker #11: Ex-paper and Heavy were working on these two—Paper and Heavy—but honestly, most of my focus is really on the gross part of Water.

Speaker #11: The combination of both, most of water getting better through higher growth, higher margin businesses like global high-tech. Well, we'll get to a much, much better place very soon.

Christophe Beck: Well, we get to a much, much better place very soon and at the same time, getting the underperformance paper and heavy water stabilized and improving. We've reached the bottom for these two businesses, while the combination of both will lead to good results for H2 in water. I'm not worried in water. But Scott, anything you'd like to add?

Speaker #11: And, at the same time, getting the underperformance in Paper and Heavy Water stabilized and improving, we've reached the bottom for these two businesses. Well, the combination of both will lead to good results.

Speaker #11: For the second half in Water, I'm not worried—in Water. But Scott, anything you'd like to add?

Speaker #12: Yeah. The only thing you'd mentioned as well is on Oviedo. And Oviedo, as we talked about for the total company, there's a geographical mix between gross margin and SG&A.

Scott Kirkland: Yeah. The only thing you'd mentioned as well is on Ovivo. Ovivo, as we talked about for the total company, there's a geographical mix between gross margin and SG&A, but not a material impact at OI. There's a little bit of that geography in the water business as well. As Christophe said, we feel good about the business. The OI growth, excluding the paper and heavy, which we talked about, is very good, and we expect the water OI to progressively accelerate throughout the year.

Speaker #12: But not a material impact at OI. So there's a little bit of that geography in the Water business as well. But as Christophe said, we feel good about the business.

Speaker #12: The OI growth, excluding the paper and heavy, which we talked about, is very good. And we expect the water OI to progressively accelerate throughout the year.

Speaker #4: Our next question is from the line of Patrick Cunningham with Citibank. Please proceed with your question.

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

Speaker #13: Hi. Good afternoon. The specialty division within INS, I'm pretty impressive organic growth. In an environment where you see weaker foot traffic at consumer, highly sensitive to wage inflation, is most of your growth coming from deeper penetration of digital suites and productivity tools versus traditional chemical volume at this point?

Patrick Cunningham: Hi, good afternoon. The specialty division within, you know, I&S, you know, pretty impressive organic growth. You know, in an environment where, you know, you see, you know, weaker foot traffic at consumer, you know, highly sensitive to wage inflation, is most of your growth coming from deeper penetration of digital suites and productivity tools versus traditional chemical volume at this point?

Speaker #11: Yeah. Patrick, the short answer is yes. It's mostly focused on solutions that are helping them get the job done. At the lower cost because they use less labor and less natural resources.

Christophe Beck: Yeah, Patrick, the short answer is yes. It's mostly focused on solutions that are helping them get the job done at a lower cost because they use less labor and less natural resources, energy, and water. It's working very well. Well, when we think about the One Ecolab approach, we have a great example in F&B United, but we have a great example as well, so in specialty. It's a business of scale, of standards at scale, of performance at scale. The way the team is approaching those large quick serve, fast food companies is to help them understand where is the best performance, what's the best restaurant out there in terms of guest satisfaction, cost, and environmental impact, and to scale those solutions across the system around the world.

Speaker #11: The energy and water. And it's working very well. When we think about the One Ecolab approach, well, we have a great example in F&B United.

Speaker #11: But we have a great example as well. So in specialty, it's a business of scale, of standard at scale, of performance at scale. And the way the team is approaching those large quick-serve fast food companies is to help them understand where is the best performance, what's the best restaurant out there, in terms of guest satisfaction, cost, and environmental impact.

Speaker #11: And to scale those solutions across the system, around the world. And those are customers that are used to that approach, that are welcoming that approach, as you know, they're mostly franchised.

Christophe Beck: Those are customers that are used to that approach, that are welcoming that approach. As you know, they're mostly franchised. We have the opportunity with our team to influence every unit anywhere around the world the same way. This is a huge upside for those customers, and you see it in the results, growing 9% at the type of margins that we have in this business, this is quite remarkable. Last thing I'd say, it's the beauty of the Institutional & Specialty business that we have, is that wherever the consumer is gonna go, based on the economic development, let's put it that way, well, we will capture them somewhere. It can be in a luxury restaurant, it can be in a mid-scale restaurant, or it can be in a quick serve. We're gonna be there. Margins are very similar.

Speaker #11: So we have the opportunity with our team to influence every unit, anywhere around the world, the same way. And this is a huge upside.

Speaker #11: So for those customers—and you see it in the results—growing 9% at the type of margins that we have in this business, this is quite remarkable.

Speaker #11: And last thing, I'd say it's the beauty of the institutional and specialty business that we have. Is that wherever the consumer is going to go, based on the economic development, let's put it that way, well, we will capture them somewhere.

Speaker #11: It can be in a luxury restaurant. It can be in a mid-scale restaurant. Or it can be in a quick-serve. We're going to be there.

Speaker #11: Margins are very similar. So, in a way, we're extremely well positioned wherever the consumer is going to eat, because ultimately, some people are going to keep eating.

Christophe Beck: In a way, we're extremely well-positioned wherever the consumer is gonna eat, because ultimately, some people are gonna keep eating, and if they don't go out, well, they're gonna buy from food retail, which is a business that's doing really well as well, which is explaining why Institutional & Specialty is such a steady, stable, strong business with high margin because it's a great offering for our customers to drive their own performance around the world. At the same time, for us, we drive this huge stability and consistency because wherever the consumer goes, we will capture them.

Speaker #11: And if they don't go out, well, they're going to buy from food retail, which is a business that's doing really well as well. Which is explaining why institutional and specialty is such a steady, stable, strong business with high margin.

Speaker #11: Because it's a great offering for our customers to drive their own performance around the world. And at the same time, so for us, we drive this huge stability and consistency because wherever the consumer goes, we will capture them.

Speaker #4: Our next question is from the line of Shlomo Rosenbaum with Stifel. Please proceed with your question.

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

Speaker #12: Hi. Thank you very much. Christoph, I was just hoping to get a little bit more detail on what you meant that the paper and the basic industries are turning the corner.

Shlomo Rosenbaum: Hi, thank you very much. Christophe, I was just hoping to get a little bit more detail on what you meant that the paper and the basic industries are turning the corner. Is the growth getting better over there? Is it that you know, you haven't seen any more paper mills that are closing? Like, what's going on with the metal side of it? Are we gonna see those businesses get to flat this year? Like, just if you could give us a little bit more color, because obviously the other parts of the business are already running in the range where you want, and these are the ones that are kind of pulling you down below that range.

Speaker #12: Is the growth getting better over there? Is it that you just haven't seen any more paper mills that are closing? What's going on with the metal side of it?

Speaker #12: Are we going to see those businesses get to flat this year? Just if you could give us a little bit more color, because obviously the other parts of the business are already running in the range where you want.

Speaker #12: And these are the ones that are kind of pulling you down below that range.

Speaker #11: Yeah. Because I mean, the whole company, so if you exclude these two, is growing. So 5% plus. Top line. So in a very good place.

Christophe Beck: The whole company, if you exclude these two, is growing 5% plus top line. We're in a very good place. Here water is also in that range with good volume growth as well. Okay, any company has a few kids that need a little bit some special care because they are in older industries that are growing less fast. The short answer is it's stabilized. We haven't been impacted by closures anymore in the last 3 to 6 months, which is something that's hard to mitigate because when they close a factory, well, there's not much you can do. Obviously, you didn't lose it to a competitor. It's just a factory or the mill closed.

Speaker #11: Here, water is also in that range, with good volume growth as well. But okay. Any company, so it has a few kids that need a little bit some special care.

Speaker #11: Because they are in older industries that are growing less fast. So the short answer is it's stabilized. We haven't been impacted by closures. Anymore.

Speaker #11: In the last few months, three to six months. Which is something that's hard to mitigate because when they close a factory, well, there's not much you can do.

Speaker #11: Obviously, you didn't lose it to a competitor. It's just a factory, or the mill, closed. So we see that it's stabilized. For me, if it gets into slightly positive in the second half, we'll be fine.

Christophe Beck: We see that it stabilized. For me, if it gets into slightly positive in H2, we'll be fine. This is what the team is heading towards to. I'm feeling pretty good that we're gonna get there, to be very honest. This is not where I'm spending my time. I'm spending my time on 80% of the company that's doing extremely well, building those new engines as well at the same time. I wanna be absolutely growth-focused, driving the performance at the leverage, at the operating income side, while we manage those businesses that are a little bit more struggling. As I look at H2, I feel that these two are gonna get to a more positive territory. Just also mentioning, they have good margins.

Speaker #11: This is what the team is heading towards, too. I'm feeling pretty good that we're going to get there, to be very honest. This is not where I'm spending my time.

Speaker #11: I'm spending my time on 80% of the company that's doing extremely well, building those new engines as well at the same time. I want to be absolutely growth-focused.

Speaker #11: Driving the performance at the leverage, at the operating income side, while we manage those businesses that are a little bit more struggling. But as I look at the second half, I feel that these two are going to get, so to a more positive territory.

Speaker #11: And just also mentioning, so they have good margins. It's not great. But they're pretty good as well. So in a way, they're not destroying value for the company.

Christophe Beck: It's not great, but they're pretty good as well. In a way, they're not destroying value for the company, which is the most important so for me. 80% doing great. Mentioned so another 5% the company, without these two at the top line as well. These two doing better, well, it's gonna help the overall company as well in H2 and in 2027.

Speaker #11: Which is the most important. So, for me, 80% doing great. Mentioned, so north of 5% the company. So, without these two at the top line as well.

Speaker #11: But these two are doing better. Well, it's going to help the overall company as well in the second half, and in 2027.

Speaker #4: The next question is from the line of John Roberts with Mizuho. Please proceed with your question.

Operator: The next question is from the line of John Roberts with Mizuho. Please proceed with your question.

Speaker #12: Thank you. Is your inflation higher on raw materials, or is it higher on your CapEx? Because you purchase a lot of equipment that has metals and plastics contained in it.

John Roberts: Thank you. Is your inflation higher on raw materials or is it higher on your CapEx because you purchase a lot of equipment that has metals and plastics contained in it?

Speaker #11: John, it's mostly on the commodity raw materials side of things. Logistics as well, because logistics costs are going up—shortage of drivers, fuel costs.

Christophe Beck: John, it's mostly on the commodity raw material side of things. Logistics as well, because logistic costs are going up. Shortage of drivers, fuel costs, I mean, traditional stuff that we used to. No, on what you call CapEx, which is more technology equipment, we don't call it CapEx. Yeah, there's some inflation, but there's nothing dramatic here. It's not energy related, as you know, nothing to see there.

Speaker #11: I mean, traditional stuff that we used to. But no, on what you call CapEx, which is more technology equipment, we don't call it CapEx.

Speaker #11: Yeah, there's some inflation. But there's nothing dramatic here. It's not energy related. As you know. So nothing to see there.

Speaker #4: The next question is from the line of Jeff Sikaskis with JPMorgan. Please proceed with your question.

Operator: The next question is in the line of Jeffrey Zekauskas with JPMorgan. Please proceed with your question.

Speaker #12: Thanks very much. Christoph, you said that cool IT is growing a lot faster than 30%. Is it growing 50 or 70 or 60 or can you quantify that?

Jeffrey Zekauskas: Thanks very much. Christophe, you said that CoolIT is growing a lot faster than 30%. Is it growing 50 or 70 or 60? Can you quantify that? Secondly, when you think about competing in the data center markets in direct to chip technology, does the competition emphasize water treatment chemistry, or is their direction, you know, more equipment-based? How do you see your competitive status in offering water treatment technology in the direct to chip area?

Speaker #12: And secondly, when you think about competing in the data center markets, in direct-to-chip technology, does the competition emphasize water treatment chemistry? Or is their direction more equipment-based?

Speaker #12: And how do you see your competitive status in offering water treatment technology in the direct-to-chip area?

Speaker #11: So, great question. Actually, the true growth—you haven't even mentioned it. In all the numbers that you listed, so it's even higher. To be honest, it's close to the triple-digit range.

Christophe Beck: Jeff, great question. Actually, the true growth, you haven't even mentioned yet, in all the numbers that you listed. It's even higher than that. To be honest, it's close to the triple-digit range, which is pretty cool. I wanna also mention, hey, we haven't closed that acquisition, just wanna be clear here. We need to have the regulatory approval so for that. Feels good so far that it should happen sometime in Q3. That's not depending on us. So far, exceptional performance that those guys are having. Jeff has mentioned, I've met many customers in the meantime because we need the same customers. Obviously, they want what Cool IT does more than anything. This is the company they wanna focus on.

Speaker #11: Which is pretty cool. But I want to also mention, hey, we haven't closed that acquisition. So just to be clear here, we need to have the regulatory approvals for that.

Speaker #11: Feels good so far. That it should happen sometime in the third quarter. That's not depending on us. But so far, exceptional performance. That those guys are having.

Speaker #11: And Jeff has mentioned, I've met many customers in the meantime because we meet the same customers. Obviously, they want what Cool IT does more than anything.

Speaker #11: This is the company they want to focus on. You're familiar with a few others. Obviously, out there, they're doing pretty well. One starting with a V, obviously, is performing very nicely.

Christophe Beck: You're familiar with a few others, obviously out there. They're doing pretty well. One starting with a V, obviously is performing very nicely, has a very good backlog as well. This is the case, as well, so for CoolIT. Generally, a great growth trajectory. It's not gonna be a straight line to heaven, so forever, we see how that goes. Generally, I think it's gonna be a very high run rate. For me, the biggest challenge we have is to make sure we can build enough capacity behind it in order to feed the growth. Great problem to have. First time that we see really customers trying to jump the line, in order so to get the services from, what CoolIT can provide.

Speaker #11: Has a very good backlog as well. This is the case as well, so for Cool IT. So generally, great growth trajectory. It's not going to be a straight line to heaven.

Speaker #11: So, forever, we'll see how that goes. But generally, I think it's going to be a very high run rate, and for me, the biggest challenge we have is to make sure we can build enough capacity behind it in order to feed the growth.

Speaker #11: Great problem to have. First time that we see, really, customers trying to jump the line in order to get the services from what cool IT can provide.

Speaker #11: Then the second part, of your question, so for us, as you know, I don't really care whether products are industry-based or technology-based or service-based or digital-based.

Christophe Beck: The second part of your question. For us, as you know, I don't really care whether products are industry-based, or technology-based, or service-based, or digital-based. What we are offering to the data centers is ultimately a higher uptime at a lower water usage and lower or better power performance. This is the outcome that we promising to them. The fact that we can go from low to zero net water usage is game-changing for them. Jeff, you're familiar with the uproar that's happening around data centers in our country and around the world. Well, what we do here is solving that problem. This is a big deal for the hyperscalers. Same time, obviously enabling the more advanced chips that require direct-to-chip cooling as well.

Speaker #11: What we are offering, so to the data centers, is ultimately a higher uptime at a lower water usage and lower or better power performance.

Speaker #11: This is the outcome that we're promising to them. The fact that we can go from low to zero net water usage is game-changing for them.

Speaker #11: Jeff, you're familiar with the rapport that's happening around data centers in our country, and around the world. Well, what we do here is solving that problem.

Speaker #11: This is a big deal for the hyperscalers. At the same time, obviously, it's enabling the more advanced chips that require direct-to-chip cooling as well. So we're exploring various models here as well.

Christophe Beck: We're exploring various models, as with Europe. They're all recurring models in a typical Ecolab manner. That's the way we're developing the business as we get together with what we do in terms of services, 3D TRASAR optimization of water and power cooling, coolant, as well, which is by design a recurring product as well, and all the technology that comes with it, as well as I've shared during the acquisition call. Well, every time that the new generation of chips coming, well, you change all the system for the direct-to-chip cooling, which means new cold plates, new coolant. As the power demands goes up, you change the CDUs as well at the same time. It's inherently a recurring business.

Speaker #11: They're all recurring models in a typical Ecolab manner. That's the way we're developing the business as we get together. With what we do in terms of services—3D TRASAR optimization of water and power cooling, coolant as well—which is by design a recurring product as well.

Speaker #11: And all the technology that comes with it as well. As I've shared during the acquisition call—well, every time that the new generation of chips is coming, well, you change.

Speaker #11: All the system for the direct-to-chip cooling, which means new cold plates, new coolants, and as the power demands of those go up, you change the CDUs as well at the same time.

Speaker #11: So it's inherently a recurring business.

Speaker #4: The next question is from the line of Matthew Deo with Bank of America. Please proceed with your question.

Operator: The next question is from the line of Matthew DeYoe with Bank of America. Please proceed with your question.

Matthew DeYoe: Christophe, thank you, and thanks for kind of addressing that. I feel like one of the concerns we hear from investors all the time on the CoolIT deal is just it doesn't feel like a consumables business. I had two to kind of backfill on this. One, the $0.20 per share dilution that you're talking about per quarter, is that math based on the, you know, 30% sales growth that you had been laying out there? Or is that reflective of the 100%, near 100% sales growth that it's currently looking at? Does that matter over the near term? How R&D intensive do you expect CoolIT to be? Because presumably the technology changeover here could be pretty rapid, cold plates and things like that, it's not really like a core competency of Ecolab.

Speaker #12: Christoph, thank you. And thanks for kind of addressing that. I feel like one of the concerns we hear from investors all the time on the Cool IT deal is just, it doesn't feel like a consumables business.

Speaker #12: But I had two to kind of backfill on this. One, the 20 cents per share dilution that you're talking about per quarter, is that math based on the 30% sales growth that you had been laying out there?

Speaker #12: Or is that reflective of the 100%, near 100% sales growth that it's currently looking at? And does that matter? Over the near term? And then how R&D intensive do you expect cool IT to be?

Speaker #12: Because presumably the technology changeover here could be pretty rapid. And cold plates and things like that, it's not really like a core competency of Ecolab.

Matthew DeYoe: Now I have 3D TRASAR, yes, but maybe not so much this architecture and tech infrastructure stuff. I'll leave it there.

Speaker #12: Now, I have 3D trace. Sorry, yes, but maybe not so much this architecture and tech infrastructure stuff. So I'll leave it there.

Matthew DeYoe: Now I have 3D TRASAR, yes, but maybe not so much this architecture and tech infrastructure stuff. I'll leave it there.

Speaker #11: So a few things here, Matt, and then I'll pass it to Scott if there's anything that needs to be added. So generally, the base case is these 30% plus.

Christophe Beck: A few things here Matt, and then I'll pass it to Scott, if there's anything that needs to be added. Generally, the base case is the 30% growth plus that we talked about. That's the base assumption. That's what we knew back then. That's what we based our assumptions on as well. Anything that's better is gonna help us obviously. Scott is gonna add to that as well. The question on the R&D and the knowledge, I'd like just to remind you that it's a water business, because direct chip cooling, well, the next technology is to get towards water.

Speaker #11: That we talked about. So that's the base assumption. That's what we knew back then. That's what we based our assumptions on as well. And anything that's better is going to help us.

Speaker #11: Obviously. But Scott is going to add to that. As well. But that question on the R&D and the knowledge, I'd like just to remind you that it's a water business.

Speaker #11: Because direct-to-chip cooling, well, the next technology is to get towards water even the coolants that we are offering to customers today. So are not water-based.

Christophe Beck: Even the coolants that we are offering to customers today are not water-based, but water-based are the best heat transfer coolant that we can imagine. You get all the challenges to work with water. Obviously, of scaling, of fouling, of corrosion, and all the things that comes together with water, especially when you work at a lukewarm temperature, which are the latest Nvidia chips, the type of temperature that they're gonna have. This is a business, this is a technology that we've been mastering for a very long time, mastering water at higher temperature, mastering heat transfer. We are the leading cooling company. We can't forget that for 80 years. We know thermal management really, really well. We have a lot of R&D here.

Speaker #11: But water-based are the best heat transfer coolant that we can imagine. Then you get all the challenges to work with water—obviously, scaling, fouling, corrosion, and all the things that come together with water, especially when you work at lukewarm temperature, which are the latest NVIDIA chips.

Speaker #11: The type of temperature that they're going to have. This is a business. This is a technology that we've been mastering for a very long time.

Speaker #11: Mastering water at higher temperature. Mastering heat transfer. We are the leading cooling company. We can't forget that. So for 80 years. So we know thermal management really, really well.

Speaker #11: We have a lot of R&D here in the last thing is cool IT is super strong. In R&D as well. You add to it the 3D trace of technology that we're going to bring together.

Christophe Beck: The last thing is CoolIT is super strong in R&D as well. You add to it the 3D TRASAR technology that we're gonna bring together, it's gonna be CoolIT plus 3D TRASAR technology is gonna become the new Ecolab offering. For customers, the moment that we close as well, well, it's gonna be game changing for our customers ultimately. Feel really good in terms of R&D, in terms of expertise. It's a typical one plus one equals three, which is exactly where we want it to be. It's a water business, removing heat, which is what we've done basically for 80 years in both other industries and now in this new industry. Scott, do you wanna add anything on the EPS impact?

Speaker #11: It's going to be cool IT, plus 3D trace of technology is going to become the new Ecolab offerings for customers the moment that we close as well.

Speaker #11: Well, it's going to be game-changing—for our customers, ultimately. So, I feel really good in terms of R&D, in terms of expertise. It's a typical one plus one equals three.

Speaker #11: Which is exactly where we want it to be. It's a water business. We're moving heat, which is what we've done basically for 80 years.

Speaker #11: In most other industries and now in this new industry. Scott, do you want to add anything on the EPS impact? Yeah. One thing I would say, Matt, on the EPS is as we've talked about, we think this is a very high growth, high margin business.

Speaker #11: And that 30% sales growth is over the next few to several years. And obviously, in the earlier years with that averaging, it will grow faster.

Scott Kirkland: Yeah. One thing I would say, Matt, on the EPS as we've talked about, we think this is a very high growth, high margin business, and that 30% sales growth is over the next few to several years. Obviously, in the earlier years with that averaging, we'll grow faster. Certainly, as Christophe said, we like what we see and we see growth accelerating. I still think that $0.20 is a good base case to have once we close per quarter. Then we'll adjust from there once we get a hold of the asset.

Speaker #11: So, certainly, as Christophe said, we like what we see, and we see growth accelerating. But I still think that 20 cents is a good base case to have.

Speaker #11: Once we close per quarter, and then we'll adjust from there once we get a hold of the asset.

Speaker #12: But a second half of this year, and then it gets neutralized in '27 because of the narkomatization that's rolling off as well at the same time.

Christophe Beck: For the H2 of this year, then it gets neutralized in 2027 because of the Nalco amortization that's rolling off as well at the same time. It's almost perfect timing for that.

Speaker #12: So it's almost perfect timing for that.

Speaker #4: The next question is from the line of Mike Harrison with C4 Research. Please proceed with your question.

Operator: The next question is from the line of Mike Harrison with Seaport Research.

Speaker #13: Hi, good afternoon. I was hoping that I could ask a question on the pest business, just in terms of the digital and kind of smart connected traps that you're rolling out.

Mike Harrison: Hi, good afternoon. Was hoping that I could ask a question on the pest business, just in terms of the digital and smart connected traps that you're rolling out. Can you give us a sense of what percentage of customer locations are using those new traps? Maybe just give a little more color on the timing of that rollout, and when you might expect to see some margin benefits, as you get better efficiency from your sales and service force with those new traps.

Speaker #13: Can you give us a sense of what percentage of customer locations are using those new traps? Maybe just give a little more color on the timing of that rollout.

Speaker #13: And when you might expect to see some margin benefits as you get better efficiency from your sales and service force with those new traps.

Speaker #11: Thanks for that question. Mike, I love that business. And I love it even more, moving so towards the best intelligence. We have roughly 700,000 smart devices that have been implemented so far.

Christophe Beck: Thanks for that question, Mike. I love that business, and I love it even more, moving towards the Pest Intelligence. We have roughly 700,000 smart devices that have been implemented so far. As you know, it's been driven by the largest retailer in the world, with whom we've developed that proposition. It's working extremely well, really resulting in a close to 99% of pest-free environment, with much better service because, well, the 95% of the time we were spending in the past, checking empty traps, well, is now sort of transformed into value add, which means selling more new accounts as well out there. The plan we have, Mike, is that in the next 3 to 4 years, the whole Pest Elimination business is gonna be a Pest Intelligence business.

Speaker #11: As you know, it's been driven by the largest retailer in the world, with whom we've developed that proposition. It's working extremely well, really resulting in close to a 99% pest-free environment with much better service because, well, 95% of the time we were spending in the past was checking empty traps.

Speaker #11: Well, it's now so transformed into value add, which means selling more new accounts as well out there. The plan we have, Mike, is that in the next three to four years, the whole pest elimination business is going to be a pest intelligence business.

Speaker #11: It's going to be a straight line. We have to make sure that things would be working well. We're going to reach probably a million connected devices by the end of this year.

Christophe Beck: It's gonna be a straight line. We have to make sure that things would be working well. We're gonna reach probably 1 million connected devices by the end of this year, and we'll keep ramping up in the next few years. That's gonna have an impact on growth. It's gonna have an impact on retention. It's gonna have an impact on performance for our customers. Yes, it's gonna have an impact on our margins as well at the same time. So far it's working really, really well. We have a great team on that project, and customers are really thrilled about what they're experiencing, yeah.

Speaker #11: And we'll keep ramping up in the next few years. That's going to have an impact on growth. It's going to have an impact on retention.

Speaker #11: It's going to have an impact on performance for our customers. And yes, it's going to have an impact on our margins. As well at the same time.

Speaker #11: And so far, it's working really, really well. We have a great team on that project. And customers are really thrilled about what they're experiencing here.

Speaker #4: Our next question is from the line of Lawrence Alexander, with Jefferies. Please proceed with your question.

Speaker #13: Good afternoon. As you think about the surcharges and the pricing traction you have, and how that has changed over the years, is your percentage value capture across your portfolio increasing?

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

Laurence Alexander: Good afternoon. As you think about the surcharges and the pricing, traction you have and how that has changed over the years, is your percentage value capture across your portfolio increasing, or is it a matter of delivering more value but just capturing the same percentage? As you think about those dynamics, are the newer businesses where you prefer to focus your time right now, do they have a higher value capture level relative to the value created for the customer than kind of some of the older legacy Ecolab businesses?

Speaker #13: Or is it a matter of delivering more value, but capturing the same percentage? And as you think about those dynamics, are the newer businesses where you prefer to focus your time right now—do they have a higher value capture level relative to the value created for the customer than some of the older, legacy Ecolab businesses?

Speaker #11: You know, Lawrence, it's something that we've perfected over the past four or five years. I would say we always do that in a way that is beneficial to our customers at the same time.

Christophe Beck: You know, Laurence, it's something that we perfected over the past four, five years, I would say. We always do that in a way that is beneficial to our customers at the same time. That's been a clear rule, which is why we make absolutely sure that the total value delivered to our customers is north of what we are capturing in terms of price. Not every business is created equal. If you go also to a biotech manufacturer or you talk about Pest Intelligence in a retailer, or food and beverage for a brewery, it's very different, and we do it in a very thoughtful manner. Over the last five years, we haven't lost customers doing it as well.

Speaker #11: And that's been a clear rule, which is why we make absolutely sure that the total value delivered to our customers is north of what we are capturing in terms of price.

Speaker #11: And not every business is created equal. So if you go also to a biotech manufacturer or you talk about pest intelligence in a retailer, or food and beverage, for a brewery, it's very different.

Speaker #11: And we do it in a very thoughtful manner. Over the last five years, we haven't lost customers doing it as well. Our margins went up.

Speaker #11: Retention has remained strong. As well at the same time. That's why when we talk about the surcharge, it's kind of a direction. It's providing a framework for our teams and our customers to understand where we're going.

Christophe Beck: Our margins went up, our retention has remained strong, as well at the same time. That's why, when we talk about the surcharge, it's kind of a direction. It's providing a framework for our teams and our customers to understand where we're going. While in some places around the world you have more, in some places you have a bit less. In some of the businesses, it's going straight to structural pricing, as well at the same time. It's working really well. That's why I was saying early on the call, as well, this is something that we master really well. I'm not worried about it. This is an execution play that our teams are doing really well, the right way, and we're gonna be fine. We did this well, and we're gonna keep sharing with you the progress we're making here.

Speaker #11: Well, in some places around the world, you have more. In some places, you have a bit less. In some of the businesses, it's going straight to structural pricing.

Speaker #11: As well, at the same time, it's working really well. That's why I was saying early on the call as well. This is something that we master really well.

Speaker #11: I'm not worried about it. This is an execution play. Our teams are doing really well, the right way, and we're going to be fine.

Speaker #11: We did as well. And we're going to keep sharing with you the progress we're making here. But so far, it's going really well.

Speaker #4: Our next question is in the line of Andy Whitman with Baird. Please proceed with your question.

Christophe Beck: So far, it's going really well.

Operator: Our next question is in the line of Andrew Wittmann with Baird. Please just give your question.

Speaker #12: Great. Thanks for taking my question. I guess I just wanted to maybe elaborate just a touch more on that one. It seems like the achievement of the energy surcharges.

Andrew Wittmann: Great. Thanks for taking my question. I guess I just wanted to have you elaborate, just to touch more on that one. It seems like the achievement of the energy surcharges will be important for that H2 ramp here. Just given that, Christoph, as you look at, you know, the total customers that you expect to approach with the energy surcharge versus how many you've approached today and have, and are aware that this is coming, can you just help us, help us understand, how many of them or what percentage of them have been approached and are aware of this coming, and how many are still in the go get for the balance of the year for you to achieve your ultimate target there? Thanks.

Speaker #12: It’ll be important for that second-half ramp here. And so, just given that, Christoph, as you look at the total customers that you expect to approach with the energy surcharge versus how many you've approached today and are aware that this is coming, can you just help us understand how many of them, or what percentage of them, have been approached and are aware of this coming?

Speaker #12: And how many are still in the go-get for the balance of the year for you to achieve your ultimate target there? Thanks.

Speaker #11: Thank you, Andy. Well, it's everyone. It's impacted. There's no exception. We've said it's 100% of our customers in 100% of our businesses in 100% of the countries.

Christophe Beck: Thank you, Andy. Well, it's everyone is impacted. There's no exception. We said it's 100% of our customers in 100% of our businesses in 100% of the countries that we operate in. It's not an easy task. Obviously, we have a few million customers in 172 countries and 40 different industries. It's the 3rd time we're doing it. We started 1 April, so it's a few weeks back. It's pretty new. It's progressing very well. The mechanics are there, the systems are there, the tracking is there. I know every week where we are on pricing overall as well. That's why I feel good with the progress that we're making here as well at the same time.

Speaker #11: That we operate in. And it's not an easy task because we have a few million customers in 172 countries and 40 different industries. But it's the third time we're doing it.

Speaker #11: We started April 1st, so it's a few weeks back. It's pretty new. It's progressing very well—the mechanics are there, the systems are there, the tracking is there.

Speaker #11: I know every week where we are on pricing overall as well, that's why I feel good with the progress that we're making here as well at the same time.

Speaker #11: And the objective that we have, it's to be mostly done at the end of Q2, early Q3. While we keep building as well on the structural price and as you know, Andy, ultimately all the surcharge is going to be converted into structural as well as quickly as we can.

Christophe Beck: The objective that we have is to be mostly done at the end of Q2, early Q3, while we keep building as well on the structural price. As you know, Andy, ultimately all the surcharge is gonna be converted into structural as well, as quickly as we can. In some of the businesses, it goes straight to structural as well, institutional, so being one of them as well. The mechanics are there, and that's why we can go much faster, and we can do it with a much higher level of confidence as well than in the past because, well, maybe unfortunately, we've become really good at it.

Speaker #11: And in some of the businesses, it goes straight to structure as well institutional. So being one of them, as well. So the mechanics are there.

Speaker #11: And that's why we can go much faster, and we can do it with a much higher level of confidence as well than in the past because, well, maybe unfortunately, we've become really good at it.

Speaker #4: Our next question is from the line of Jason Haas with Wells Fargo. Please proceed with your question.

Speaker #13: Hey, good afternoon, and thanks for taking my question. I was curious if the conflict in the Middle East has had any impact on any of your end markets in terms of hitting your customers' confidence in any way, in any segment.

Operator: Our next question is from the line of Jason Haas with Wells Fargo. Please proceed with your question.

Jason Haas: Hey, good afternoon, and thanks for taking my question. I was curious if the conflict in the Middle East has had any impact on any of your end markets in terms of, like hitting your customers' confidence, in any way, in any segment? Thanks.

Speaker #13: Thanks.

Speaker #11: So short answer is yes. But in the Middle East, it's a pretty small business. So for us, it's a few hundred million. It's critical for the customers.

Christophe Beck: Short answer is yes. Middle East is a pretty small business. For us, it's $few hundred million. It's critical for the customers that are there. That's why we take it very seriously, and we don't let any customer down. Over there's no customer location that we have left. No, we're there. We are helping them, especially in difficult time. Some of the units were closed for all the reasons that we familiar with. It's immaterial. We want to do things the right way for our customers, for our teams, as well. We have practice with it as well. Our customers trust us as well, so to be with them as well at the same time.

Speaker #11: They are there. And that's why we take it very seriously. And we don't let any customer down over there. There's no customer location that we have left—no, we're there.

Speaker #11: We're helping them, especially in difficult times. Some of the units were closed for all the reasons that we're familiar with, so it's immaterial. And we want to do things the right way for our customers, for our teams as well.

Speaker #11: We have practiced with it as well. Our customers trust us as well. So to be with them as well at the same time. And most importantly, our competition has a very hard time to supply and to serve those customers—a great opportunity for us to gain share as well at the same time.

Christophe Beck: Most importantly, our competition has a very hard time to supply and to serve those customers. A great opportunity for us to gain share as well at the same time. It might impact slightly our volume growth in Q2. Honestly, I don't care because it's gonna help us in the second half ultimately, as we build on new shares in the Middle East. I look at Q2 as a transition quarter, but the way customers are reacting, they love what we're doing. The fact that we share in the toughest of times as well, it's working well. Really proud of what the team is doing over there, it always pays back after those phases are behind us.

Speaker #11: So, it might impact us slightly—our volume growth in Q2. Honestly, I don't care because it's going to help us in the second half, ultimately, as we build on new shares.

Speaker #11: In the Middle East. So I look at Q2 as a transition quarter. But the way customers are reacting, they love what we're doing. The fact that we share in the toughest of times as well.

Speaker #11: It's working well; really proud of what the team is doing over there. And it always pays back after those phases are behind us.

Speaker #4: Our next question is from the line of Josh Spector with UBS. Please proceed with your question.

Speaker #1: Yeah. Good afternoon. Thanks for squeezing me in. I'm unfortunately going to continue to ask on the price-cost side of things, but I just wanted to get some clarity. It's a little bit odd to me that you're talking about high single-digit ROS inflation in Q2.

Operator: The next question is from the line of Joshua Spector with UBS. Please proceed with your question.

Joshua Spector: Yeah. Hey, good afternoon. Thanks for squeezing me in. I'm unfortunately gonna continue to ask on the price cost side of things, but I just wanted to get some clarity that it's a little bit odd to me that you're talking about high single-digit raw inflation in Q2. That's coming quicker than I think I would've anticipated. You're not really saying that it's gonna increase through the rest of the year, which most other companies are expecting higher inflation in the H2. I'm wondering, one, what's different or unique there? Two, just your ability to ratchet up that surcharge automatically if inflation goes to mid-teens from the high single digits. Is that baked in or is that something that has to be retrieved by you? Thanks.

Josh Spector: Yeah. Hey, good afternoon. Thanks for squeezing me in. I'm unfortunately gonna continue to ask on the price cost side of things, but I just wanted to get some clarity that it's a little bit odd to me that you're talking about high single-digit raw inflation in Q2. That's coming quicker than I think I would've anticipated. You're not really saying that it's gonna increase through the rest of the year, which most other companies are expecting higher inflation in the H2. I'm wondering, one, what's different or unique there? Two, just your ability to ratchet up that surcharge automatically if inflation goes to mid-teens from the high single digits. Is that baked in or is that something that has to be retrieved by you? Thanks.

Speaker #1: I mean, that's coming quicker than I think I would have anticipated. And then you're not really saying that it's going to increase through the rest of the year, which most other companies are expecting higher inflation in the second half.

Speaker #1: So I'm wondering, one, what's different or unique there? And then two, just your ability to ratchet up that surcharge automatically if inflation goes to mid-teens from the high single digits.

Speaker #1: Does that bake in? Or is that something that has to be retrieved by you? Thanks.

Speaker #11: So, we buy a lot of products—over 10,000. As you know, that's going to be good news. It's very broad, so it's pretty stable as well.

Christophe Beck: We buy a lot of products, like over 10,000, as you know, so that's kind of the good news. It's very broad, so it's pretty stable as well as how it's increasing. It started in February, as you know, so it's impacting the Q2 because of the inventories in between as well. This expected impact of 8% and 9% of commodity costs in the Q2. Some are thinking it's gonna go down. I don't. I think it's gonna be flat to up to your point as well here. We're accounting, so for that, as well, we can manage that in terms of how we buy, how we save costs, and most importantly, so how we price as well at the same time.

Speaker #11: So how it's increasing, it started in February. As you know, so it's impacting the second quarter. Because of the inventories, in between as well.

Speaker #11: So, this expected impact of 8 to 9 percent of commodity costs in the second quarter—some are thinking it's going to go down. I don't.

Speaker #11: I think it's going to be flat to up to your point as well here. We're counting so for that as well. We can manage that in terms of how we buy, how we save costs, and most importantly, so how we price as well at the same time.

Speaker #11: It's impacting a third of our commodities, so not everything, obviously, here. So, we're pretty well insulated with it. And in the extreme case where things change completely, well, we're going to go to the next level of energy surcharge.

Christophe Beck: It's impacting a third of our commodities. Not everything, obviously here. We're pretty well insulated with it. In the extreme case where things change completely, well, we're gonna go to the next level of energy surcharge. We did it in the past as well. We know exactly how to do it. Our customers are familiar with those discussions as well. This is not something I'm spending a lot of time on. This is something that our teams master extremely well. They've had the opportunity to do that a few times with our customers. Don't forget that we're providing more cost savings value to our customers' operations than what we're asking them to pay in price as well.

Speaker #11: We did it in the past as well. We know exactly how to do it. Our customers are familiar with those discussions as well. This is not something I'm spending a lot of time on.

Speaker #11: This is something that our teams master extremely well. They've had the opportunity to do that a few times with our customers. And don't forget, that we providing more cost savings value to our customers' operations than what we're asking them.

Speaker #11: To pay in price as well. That's the reason why surcharges get into structural price. And that's the reason why customers are staying with us as well at the same time.

Christophe Beck: That's the reason why surcharge is getting to structured price, and that's the reason why customers are staying with us as well at the same time. This is something that is not high on my priority list because I know it works, I know our customers are familiar with it, and I know that we're gonna master it. Whatever happens, in the market out there, 80% of my focus is really so to grow the company while we manage that, like many other things that are happening in the world as well at the same time, this is just one of them.

Speaker #11: So this is something that is not high on my priority list because I know it works. I know our customers are familiar with it.

Speaker #11: And I know that we're going to master it. So, whatever happens in the market out there, 80% of my focus is really to grow the company while we manage that—like many other things that are happening in the world as well at the same time.

Speaker #11: This is just one of them.

Speaker #4: The next question is from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your questions.

Speaker #1: Yes, thank you for taking my question, and good afternoon. Christophe, I'd appreciate your updated thoughts on the subject of SG&A leverage. It looks like you were able to decrease your ratio of SG&A to sales by 130 basis points in the March quarter.

Operator: The next question is from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your questions.

Kevin McCarthy: Yeah. Thank you for taking my question, and good afternoon. Christophe, I'd appreciate your updated thoughts on the subject of SG&A leverage. Looks like you were able to decrease your ratio of SG&A to sales by 130 basis points in the Q1. Is that a reasonable trajectory to think about for the next several quarters? Maybe you could provide some updated thoughts on what you're doing productivity-wise and the effect of acquisitions on that ratio as we model the company going forward.

Speaker #1: Is that a reasonable trajectory to think about for the next several quarters? Maybe it could provide some updated thoughts on what you're doing productivity, y, wise, and the effect of acquisitions on that ratio as we model the company going forward.

Speaker #11: Yeah. Thank you, Kevin. I'll pass it to Scott. But talking about what I said before, that the whole price surcharge delivered product costs is not exactly high on my agenda.

Christophe Beck: Thank you, Kevin. I was happy to Scott, but talking about what I said before, that the whole price, surcharge, delivered product cost, is not exactly high on my agenda. SG&A leverage is not high on my agenda either. It's not because it doesn't matter, it's because it's very well mastered. We know how to manage price DPC. We know how to manage SG&A through technology. By the way, we're clearly at the forefront of all agentic in our organization, and it's delivering great results. These two things, not very high on my agenda. Those ones are really well mastered while we focus on the growth of the company. Let me have Scott give some color on the SG&A evolution here.

Speaker #11: SG&A leverage is not high on my agenda, either. And it's not because it doesn't matter. It's because it's very well mastered. We know how to manage price DPC.

Speaker #11: We know how to manage SG&A through technology. By the way, we're clearly at the forefront of all agentic in our organization, and it's delivering great results.

Speaker #11: So these two things, not very high on my agenda. Those ones are really well mastered. While we focus on the growth of the company.

Speaker #11: But let me ask Scott. So give some color. On the SG&A evolution here. Yeah. Thanks, Kevin. So as you said, really good productivity on SG&A.

Speaker #11: Q1 up 130 basis points. We are getting the benefit of what we were doing for the one Ecolab program as we're launching digital and AI programs.

Scott Kirkland: Thanks, Kevin. As you said, really good productivity on SG&A in Q1, up 130 basis points. You know, we are getting the benefit of what we're doing for the One Ecolab program as we're launching digital and AI programs. As you noted, there is some shift, and I mentioned before, between gross margins and SG&A from M&A, primarily Ovivo. In Q1, that accounted for 20 to 30 basis points, but still driving 100 basis points underlying, which is above our long-term target. We've talked about in leverage being that 25 to 50 basis points. On a full year basis, I expect that SG&A leverage to be around 100 basis points, again, including some benefit from Ovivo because of the geography between gross margin and SG&A.

Speaker #11: As you noted, there is some shift, and I mentioned before, between gross margin and SG&A from M&A, primarily of Evo. So, in the first quarter, that accounted for 20 to 30 basis points.

Speaker #11: But still driving 100 basis points underlying, which is above our long-term target we've talked about in leverage being that 25 to 50 basis points.

Speaker #11: So on a full-year basis, I expect that SG&A leverage to be around 100 basis points. Again, including some benefit from Avivo because of the geography between gross margin and SG&A.

Speaker #11: But still, the underlying is above our long-term 25 to 50 basis points target, because of, in part, the faster sales growth, but also because of the great productivity we're driving.

Scott Kirkland: Still the underlying is above our long-term 25 to 50 basis points target, because of, in part, the faster sales growth, but also because of the great productivity we're driving. Over the long term, still feel very good about that 25 to 50 basis points.

Speaker #11: But over the long term, still very good about that 25 to 50 basis points.

Speaker #4: Our final question is from the line of Scott Schneeburger with Oppenheimer. Please proceed with your question.

Speaker #12: Thanks very much for fitting me in. I'm going to touch on Light Water. You saw some solid sales in the first quarter. Are you expecting that again in the second quarter?

Operator: Our final question's from the line of Scott Schneeberger with Oppenheimer. Please proceed with your question.

Scott Schneeberger: Thanks very much for fitting me in. Yes, just, I'm gonna touch on light water. You saw some solid sales in Q1, expecting that again in Q2. Do you expect transportation and green energy, which we're excited to remain the primary drivers going forward? What's driving those verticals? Is it something just from a few large projects or is it a structural formation that's creating here?

Speaker #12: Do you expect transportation and green energy, which were cited, to remain the primary drivers going forward? And what's driving those verticals? Is it something just from a few large projects?

Speaker #12: Or is it a structural formation that's creating here?

Speaker #11: Well, Scott, light water is doing quite well. Actually, transportation is one of them. What we do for them is ultimately so better paint, while using much less water and creating much less waste.

Christophe Beck: Well, Scott, light water is doing quite well. Actually, transportation is one of them. What we do for them is ultimately is a better paint, while using much less water and creating much less waste. It's a great offering that we are providing to the most advanced car manufacturers around the world. They like the idea of better products, at a lower impact and lower cost, as well at the same time. This is something that we've built over the last 2 years. We've not been very long at it, but it's working really well, with great technology. The green manufacturers as well, total different industry, obviously, but a very interesting one when you think about solar panels as well.

Speaker #11: It's a great offering that we are providing. So to the most advanced car manufacturers around the world, the light idea of better products at the lower impact and lower cost.

Speaker #11: As well, at the same time, this is something that we've built over the last few years. We have not been at it very long.

Speaker #11: But it's working really well, with great technology. The green manufacturers as well—totally different industry, obviously, but a very interesting one when you think about solar panels.

Speaker #11: As well, it's a technology that's very close to the semiconductor type of manufacturing. This is something that we master quite well, and in some places around the world.

Christophe Beck: It's a technology that's very close to the semiconductor type of manufacturing. This is something that we master quite well and in some places around the world, so it's growing very nicely. The last part that's in light water is what we call institutional water. Those are hotels, public buildings, office buildings, air conditioning, water management, Legionnaires' disease management, and those ones are working well. We used to be much more in that business going, so, one unit by one unit. Now we working with the large real estate companies around the world, the facility management companies as well around the world, because they like this approach of a standard performance implemented anywhere around the world that's driving costs down and environmental impact at the same time down.

Speaker #11: So it's growing very nicely in the last part. That's in light water. Is what we call so institutional water. Those are hotels. And public buildings.

Speaker #11: Office buildings, air conditioning, water management, Legionnaires' disease management—those ones are working well. We used to be much more in that business going.

Speaker #11: So one unit by one unit. Now we're working with the large real estate companies around the world. The facility management companies as well around the world.

Speaker #11: Because the likely approach of a standard performance implemented anywhere around the world that's driving costs down and environmental impact at the same time. So, like what I'm seeing in the light water business.

Speaker #11: And that's why you're seeing the performance keeping getting better. And it's going to keep improving. As we move forward. Into the year or so.

Christophe Beck: Like what I'm seeing in the light water business, and that's why you're seeing the performance keeping getting better, and it's gonna keep improving as we move forward into the year. Which is a really good story actually here. Since it was the last question as well, just to wrap up and recap a few things. We had a very good start of the year with strong momentum, driven by what we like the most, which is record new business. That's exactly where we wanna be in a world that's quite complicated. Our new engines are doing extremely well.

Speaker #11: Which is a really good story, actually. So, since it was the last question as well, just to wrap up and recap a few things.

Speaker #11: We had a very good start of the year, with strong momentum driven by what we liked the most, which is record new business. That's exactly where we want to be.

Speaker #11: In a world that's quite complicated, our new engines are doing extremely well. High tech, life science, are really driving growth in dramatically good ways at high margin.

Christophe Beck: The High-Tech and Life Science are really so driving growth in dramatically good ways at high margin with very low impact from energy costs as well at the same time. I have full confidence in our team in managing margins, both of the price of DPC equation and SG&A, as we were saying before. Those are not priorities of me as the CEO, but much more so counting on the team to deliver as this team has always delivered. That's why I feel really good that 2026 is gonna be a great year for the company, both at top line and at the bottom line.

Speaker #11: With very low impact from energy costs, as well at the same time. And I have full confidence in our team in managing margins, both on the price of DPC equation.

Speaker #11: And SG&A. As we were saying before, those are not priorities to me as the CEO, but much more so counting on the team to deliver, as this team has always delivered.

Speaker #11: And that's why I feel really good. That 26 is going to be a great year. For the company. Both that top line and at the bottom line.

Speaker #11: And when I look a little bit ahead—well, the new engines that we have, with cool IT and Avivo—you've heard about the performance.

Christophe Beck: When I look a little bit ahead, well, the new engines that we have with CoolIT and Ovivo, you've heard about the performance, both top line and bottom line, are putting us in a very unique league, to serve this industry. The same on life science as well, and that's why I think that 2027 is gonna be an even better year for us. A strong 2026 and an even stronger 2027, which is what I've been committing to you for quite a while, and every single year wanted to make some progress towards that ambition. I think that we're getting towards that as we enter the next year. Feel really good and even better about where we're going. Thank you so much for attending the call today, and I'll pass it back to Andy.

Speaker #11: Both top line and bottom line are putting us in a very unique position to serve this industry. The same is true in life sciences as well. And that's why I think that '27 is going to be an even better year.

Speaker #11: For us, so a strong ’26, and an even stronger ’27—which is what I’ve been committing to you for quite a while. And everything is here.

Speaker #11: Wanted to make some progress towards that ambition. And I think that we're getting towards that. As we enter the next year. So feel really good.

Speaker #11: And even better about where we're going. So, thank you so much for attending the call today. And I'll pass it back to Andy.

Speaker #13: Yeah. Great. Thanks, Christophe. Wraps up our first quarter conference call. This conference call and the associated discussion just slides will be available for replay on our website.

Andrew Hedberg: Yeah, great. Thanks, Christophe Beck. That wraps up our Q1 conference call. This conference call and the associated discussion, just slides will be available for replay on our website. Thanks for your time and participation. Hope everyone has a great rest of your day.

Speaker #13: Thank you for your time and participation. Hope everyone has a great rest of your day.

Operator: This concludes today's conference. You may disconnect your lines at this time. Have a wonderful day.

Q1 2026 Ecolab Inc Earnings Call

Request DemoDemo

Ecolab

Earnings