Q2 2026 Ecolab Inc Earnings Call

July 28, 2026

Speaker #1: Greetings, and welcome to the EcoLab Q2 2026 earnings release conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Operator: Greetings, and welcome to the Ecolab Q2 2026 earnings release conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andrew Hedberg, Vice President, Investor Relations, Ecolab. Thank you, Mr. Hedberg. You may begin.

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

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

Speaker #2: Thank you, and hello everyone. Welcome to EcoLab Q2 conference call. With me today are Christoph Beck, EcoLab's Chairman and CEO, and Scott Ferklin, our CFO.

Andrew Hedberg: Thank you, and hello, everyone. Welcome to Ecolab's Q2 conference call. With me today are Christophe Beck, Ecolab's Chairman and Chief Executive Officer, and Scott Kirkland, our Chief Financial Officer. 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. These are forward-looking statements, and actual results could differ materially from those projected. Factors that could cause actual results to differ are described under the Risk Factors section in our most recent Form 10-K and in our posted material. We also refer you to 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: The discussion over 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 #1: Greetings, and welcome to the Ecolab Q2 2026 earnings release conference call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation.

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 factors section, in our most recent Form 10-K and in our posted materials.

Speaker #1: If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations for Ecolab.

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

Speaker #1: Thank you, Mr. Hedberg. You may begin.

Speaker #3: Thank you so much, Andy, and welcome to everyone joining us today. While we delivered another strong quarter with accelerating performance across our business, adjusted EPS grew 11%, driven by accelerating organic sales growth of 5%, stable organic gross margin, and continued strong productivity.

Christophe Beck: Well, thank you so much, Andy, and welcome to everyone joining us today. We delivered another strong quarter with accelerating performance across our business. Adjusted EPS grew 11%, driven by accelerating organic sales growth of 5%, stable organic gross margin, and continued strong productivity. This performance reflects the strength of our growth model and, most importantly, the power of our global team to deliver for our customers every day in any environment. Last quarter, we talked about the Q2 being a short transition period. We entered the quarter with commodity costs increasing and the expectation that they would remain high through the year. We started the quarter with very little surcharge pricing, but expected benefits from the surcharge would progressively build through the quarter. That's exactly what happened. We moved quickly to implement a global energy surcharge backed by incremental customer value, as we always do.

Speaker #2: Thank you, and hello everyone. Welcome to Ecolab's Q2 conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO, and Scott Ferklin, our CFO.

Speaker #2: The 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, including estimates of future performance, are forward-looking statements, and actual results could differ materially from those projected.

Speaker #3: This performance reflects the strengths of our growth model and, most importantly, the power of our global team to deliver for our customers every day in any environment.

Speaker #2: 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.

Speaker #3: Last quarter, we talked about the second quarter being a short transition period. We entered the quarter with commodity costs increasing and the expectation that they would remain high through the year.

Speaker #2: We also refer you to the supplemental dilution 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: We started the quarter with very little surcharge pricing, but expected benefits from the surcharge would progressively build through the quarter. That's exactly what happened.

Speaker #3: Thank you so much, Andy, and welcome to everyone joining us today. We delivered another strong quarter with accelerating performance across our business. Adjusted EPS grew 11%, driven by accelerating organic sales growth of 5%, stable organic gross margin, and continued strong productivity.

Speaker #3: We moved quickly to implement a global energy surcharge backed by incremental customer value as we always do. As a result, pricing strengthened to 4% in the second quarter, and we expect the second half to be in our targeted 5% to 6% range.

Christophe Beck: As a result, pricing strengthened to 4% in Q2, and we expect the H2 to be in our targeted 5% to 6% range. This is allowing us to offset the impact of rising commodity costs on our margins and EPS this year. Our global team executed extremely well through this transition period. In just one quarter, we absorbed increasing commodity costs, continued to win new business, grew volumes, stabilized organic gross margin, and delivered double-digit EPS growth. Importantly, momentum continued to strengthen across the portfolio. Volumes grew 1%, despite a nearly 1% headwind from customer operations disrupted by the conflict in the Middle East. Excluding this, underlying volume growth accelerated from Q1.

Speaker #3: This performance reflects the strength of our gross model and, most importantly, the power of our global team to deliver for our customers every day, in any environment.

Speaker #3: This is allowing us to offset the impact of rising commodity costs on our margins and EPS this year. Our global team executed extremely well through this transition period.

Speaker #3: Last quarter, we talked about Q2 being a short transition period. We entered the quarter with commodity costs increasing and the expectation that they would remain high through the year.

Speaker #3: In just one quarter, we absorbed increasing commodity costs, continued to win new business, grew volumes, stabilized organic gross margin, and delivered double-digit EPS growth.

Speaker #3: We started the quarter with very little surcharge pricing, but expected benefits from the surcharge would progressively build through the quarter. That's exactly what happened.

Speaker #3: Importantly, momentum continues to strengthen across the portfolio. Volumes grew 1% despite a nearly 1% headwind from customer operations disrupted by the conflict in the Middle East.

Speaker #3: We moved quickly to implement a global energy surcharge backed by incremental customer value, as we always do. As a result, pricing strengthened to 4% in Q2, and we expect the second half to be in our targeted 5% to 6% range.

Speaker #3: Excluding this, underlying volume growth accelerated from the first quarter. Growth in our core business is strengthened, with food and beverage accelerating to 7% growth, institutional and specialty growing 4%, and growth in like water improving.

Christophe Beck: Growth in our core businesses strengthened, with food and beverage accelerating to 7% growth, institutional and specialty growing 4%, and growth in Light Water improving, all supported by strong new business from our One Ecolab Growth initiative. At the same time, performance in Heavy Water and paper improved. Our growth engines continued to show strong momentum, delivering strong double-digit growth. Life Sciences accelerated to 15% growth, driven by very strong share gains in bioprocessing and pharma and personal care, and improved performance in purification. We have been investing in talent, capabilities, capacity, and breakthrough innovation for years in this high-growth business, and those investments now are clearly paying off. In bioprocessing, we continue to take market share with the innovative resin technologies we've launched over the last few years. As a result, our business continues to rapidly scale as customers move their drugs into commercial manufacture.

Speaker #3: This is allowing us to offset the impact of rising commodity costs on our margins and EPS this year. Our global team executed extremely well through this transition period.

Speaker #3: All supported by strong new business from our one EcoLab growth initiative. At the same time, performance in heavy water and paper improved. Our growth engines continue to show strong momentum, delivering strong double-digit growth.

Speaker #3: In just one quarter, we absorbed increasing commodity costs, continued to win new business, grew volumes, stabilized organic gross margin, and delivered double-digit EPS growth.

Speaker #3: Life Sciences accelerated to 15% growth, driven by very strong share gains in bioprocessing and pharma and personal care, and improved performance in purification. We have been investing in Thailand, capabilities, capacity, and breakthrough innovation for years in this high-growth business, and those investments now are clearly paying off.

Speaker #3: Importantly, momentum continues to strengthen across the portfolio. Volumes grew 1% despite a nearly 1% headwind from customer operations disrupted by the conflict in the Middle East.

Speaker #3: Excluding this, underlying volume growth accelerated from the first quarter. Growth in our core businesses strengthened, with Food & Beverage accelerating to 7% growth, Institutional and Specialty growing 4%, and growth in Life Sciences improving, all supported by strong new business from our One Ecolab growth team. Performance in Heavy Water and Paper improved.

Speaker #3: In bioprocessing, we continue to take market share, with the innovative resin technologies we've launched over the last few years. As a result, our business continues to rapidly scale as customers move their drugs into commercial manufacturing.

Speaker #3: Life Sciences margin performance was exceptional this quarter, delivering a mid-20% operating income margin giving a strong indication of the high margin profile this business has.

Christophe Beck: Life Sciences margin performance was exceptional this quarter, delivering a mid-20% operating income margin, giving a strong indication of the high margin profile this business has. During the quarter, we benefited from very strong sales growth and a spike in bioprocesses. While underlying operating income margin is expected to remain in the mid-20s, reported margin in Q3 is expected to be in the high teens as we continue to invest in this high-growth, high-margin business. Ecolab Digital grew 27%, reflecting strong adoption of software and connected solutions that help customers optimize performance in real time. Recent launches of solutions like DishIQ, AquaIQ, KitchenIQ, and CIP IQ are performing very well and are expected to continue to help drive long-term growth of more than 20% for Ecolab Digital.

Speaker #3: Our growth engines continue to show strong momentum, delivering strong double-digit growth. Life Sciences accelerated to 15% growth, driven by very strong share gains in bioprocessing and pharma and personal care, and improved performance in purification.

Speaker #3: During the quarter, we benefited from very strong sales growth and a spike in bioprocessing. While underlying operating income margin is expected to remain in the mid-20s, reported margin in the third quarter is expected to be in the high teens, as we continue to invest in this high-growth, high-margin business.

Speaker #3: We have been investing in Thailand, capabilities, capacity, and breakthrough innovation for years in this high-growth business, and those investments now are clearly paying off.

Speaker #3: EcoLab Digital grew 27%, reflecting strong adoption of software and connected solutions that help customers optimize performance in real time. Recent launches of solutions like DishIQ, AquaIQ, KitchenIQ, and CIPIQ are performing very well, and are expected to continue to help drive long-term growth of more than 20% for EcoLab Digital.

Speaker #3: In bioprocessing, we continue to take market share with the innovative resin technologies we've launched over the last few years. As a result, our business continues to rapidly scale as customers move their drugs into commercial manufacturing.

Speaker #3: Life Sciences margin performance was exceptional this quarter, delivering a mid-20% operating income margin, giving a strong indication of the high-margin profile this business has.

Speaker #3: Best elimination also delivered a strong quarter with 7% growth, driven by share gain from our one EcoLab growth initiative and continued expansion of our test intelligence platform.

Christophe Beck: Pest elimination also delivered a strong quarter with 7% growth, driven by share gain from our One Ecolab Growth initiative and continued expansion of our Pest Intelligence platform. We've deployed nearly 800,000 connected devices at customer sites and continue to expect to reach 1 million connected devices by year-end. With the unique insights from Pest Intelligence, we aim to deliver nearly 99% pest-free environments for customers on the platform. Growth in Global High Tech accelerated to 29%, reflecting very strong demand across both microelectronics and data centers, driven by the rapid build-out of AI infrastructure. We further strengthened our position in this market with the acquisition of CoolIT Systems, which closed on 2 July. CoolIT is off to a very strong start, with year-to-date sales growth prior to acquisition of more than 100%.

Speaker #3: During the quarter, we benefited from very strong sales growth and a spike in bioprocessing. While underlying operating income margin is expected to remain in the mid-20s, reported margin in Q3 is expected to be in the high teens, as we continue to invest in this high-growth, high-margin business.

Speaker #3: We've deployed nearly 800,000 connected devices at customer sites and continue to expect to reach 1 million connected devices by year-end. With the unique insights from test intelligence, we aim to deliver nearly 99% best free environments for customers on the platform.

Speaker #3: Ecolab Digital grew 27%, reflecting strong adoption of software and connected solutions that help customers optimize performance in real time. Recent launches of solutions like DishIQ, AquaIQ, KitchenIQ, and CIPIQ are performing very well, and are expected to continue to help drive long-term growth of more than 20% for Ecolab Digital.

Speaker #3: And growth in global high-tech accelerated to 29%, reflecting very strong demand across both microelectronics and data centers. Driven by the rapid build-out of AI infrastructure.

Speaker #3: We further strengthened our position in this market with the acquisition of Cool IT Systems, which closed on July 2nd. Cool IT is off to a very strong start, with year-to-date sales growth prior to acquisition of more than 100%.

Speaker #3: Best Elimination also delivered a strong quarter with 7% growth, driven by share gain from our One Ecolab Growth Initiative and continued expansion of our Test Intelligence platform.

Speaker #3: With this addition, global high-tech is now approaching 1.5 billion dollars in sales, annualized sales up from approximately 150 million in 2021. This reflects the strengths of our strategy and sustained investments to capture the long-term opportunity in advanced computing.

Christophe Beck: With this addition, Global High Tech is now approaching $1.5 billion in sales, annualized sales up from approximately $150 million in 2021. This reflects the strength of our strategy and sustained investments to capture the long-term opportunity in advanced computing. At the heart of AI is water. Water is required to produce, to power, and to cool chips. We are now the only company with integrated solutions across that value chain. With all the talks around data centers and AI infrastructure, the world truly needs companies that can help build data centers the right way. We're one of them, and we're committed to lead that journey. Together with Ovivo and CoolIT, our Global High Tech platform is expected to grow more than 25% annually, reaching $4 billion in sales by 2030, with an operating income margin of 25%.

Speaker #3: We've deployed nearly 800,000 connected devices at customer sites and continue to expect to reach 1 million connected devices by year-end. With the unique insights from Test Intelligence, we aim to deliver nearly 99% pest-free environments for customers on the platform.

Speaker #3: At the heart of AI is water. Water is required to produce, to power, and to cool chips. We are now the only company with integrated solutions across that value chain.

Speaker #3: And growth in global high-tech accelerated to 29%, reflecting very strong demand across both microelectronics and data centers, driven by the rapid build-out of AI infrastructure.

Speaker #3: And with all the talks around data centers and AI infrastructure, the world truly needs companies that can help build data centers the right way.

Speaker #3: We further strengthened our position in this market with the acquisition of Coolide Systems, which closed on July 2. Coolide is off to a very strong start, with year-to-date sales growth prior to acquisition of more than 100%.

Speaker #3: We're one of them, and we're committed to lead that journey. Together with Avivo and Cool IT, our global high-tech platform is expected to grow more than 25% annually, reaching 4 billion dollars in sales by 2030, with an operating income margin of 25%.

Speaker #3: With this addition, global high-tech is now approaching $1.5 billion in annualized sales, up from approximately $150 million in 2021. This reflects the strength of our strategy and sustained investments to capture the long-term opportunity in advanced computing.

Speaker #3: These targets represent an increase from our previous expectations of more than 20% growth and 20% AI margin reflecting the acceleration we're seeing in this business.

Christophe Beck: These targets represent an increase from our previous expectations of more than 20% growth and 20% OI margin, reflecting the acceleration we're seeing in this business. Global High-Tech is now our largest growth engine. On a pro forma basis, including Ovivo and CoolIT, our sales growth would have been approximately 7% in Q2, demonstrating already the 2 points of incremental growth these businesses will add to the overall company. The rapid growth of Global High-Tech and our other growth engines continues to shift Ecolab's portfolio to higher growth, higher margin businesses. In 2025, our core businesses represented about 70% of our sales, growing low single digits with OI margin just above 20%. Our growth engines were approximately 15% of sales, growing low double digits with OI margins of nearly 20%.

Speaker #3: At the heart of AI is water. Water is required to produce, to power, and to cool chips. We are now the only company with integrated solutions across that value chain.

Speaker #3: Global high-tech is now our largest growth engine, on a pro forma basis, including Avivo and Cool IT, our sales growth would have been approximately 7% in the second quarter.

Speaker #3: And with all the talk around data centers and AI infrastructure, the world truly needs companies that can help build data centers the right way.

Speaker #3: Demonstrating already the two points of incremental growth this businesses will add to the overall company. The rapid growth of global high-tech and our other growth engines continues to shift EcoLab's portfolio to higher growth, higher margin businesses.

Speaker #3: We're one of them, and we're committed to lead that journey. Together with Avivo and Coolide, our global high-tech platform is expected to grow more than 25% annually, reaching $4 billion in sales by 2030, with an operating income margin of 25%.

Speaker #3: In 2025, our core businesses represented about 70% of our sales, growing low single digits with OI margins just above 20%. Our growth engines were approximately 15% of sales, growing low double digits with OI margins of nearly 20%.

Speaker #3: These targets represent an increase from our previous expectations of more than 20% growth and a 20% AI margin, reflecting the acceleration we're seeing in this business.

Speaker #3: Global high-tech is now our largest growth engine. On a pro forma basis, including Avivo and Coolide, our sales growth would have been approximately 7% in Q2.

Speaker #3: And our underperforming businesses represented about 15% of sales, with low single digit sales declines and OI margins in the mid-teens. In 2026, performance has strengthened across all three groups.

Christophe Beck: Our underperforming businesses represented about 15% of sales, with low single-digit sales declines and OI margins in the mid-teens. In 2026, performance has strengthened across all three groups. Our core businesses are now growing mid-single digits, with OI margins getting further above 20%. Our growth engines are growing in the low teens, with OI margin of nearly 20% as we continue to invest heavily behind these attractive high-growth opportunities. At the same time, our underperforming businesses have stabilized while maintaining operating income margins in the mid-teens. What is the most encouraging is that all parts of the portfolio are moving in the right direction. Our core is performing well, our growth engines are scaling faster, and our underperforming businesses are improving. As a result, the mix of our business continues to shift toward faster-growing, higher-margin markets. Looking ahead to 2027, we expect this trend to accelerate further.

Speaker #3: Demonstrating already the two points of incremental growth these businesses will add to the overall company. The rapid growth of Global High-Tech and our other growth engines continues to shift Ecolab's portfolio to higher-growth, higher-margin businesses.

Speaker #3: Our core businesses are now growing mid-single digits, with OI margins getting further above 20%. Our growth engines are growing in the low teens, with OI margin of nearly 20% as we continue to invest heavily behind these attractive high-growth opportunities.

Speaker #3: In 2025, our core businesses represented about 70% of our sales, growing at low single digits with operating income margins just above 20%. Our growth engines were approximately 15% of sales, growing at low double digits with operating income margins of nearly 20%.

Speaker #3: At the same time, our underperforming businesses have stabilized while maintaining operating income margins in the mid-teens. What is the most encouraging is that all parts of the portfolio are moving in the right direction.

Speaker #3: Our core is performing well, our growth engines are scaling faster, and our underperforming businesses are improving. As a result, the mix of our business continues to shift toward faster growing, higher margin markets.

Speaker #3: Our underperforming businesses represented about 15% of sales, with low single-digit sales declines and operating income margins in the mid-teens. In 2026, performance has strengthened across all three groups.

Speaker #3: Looking ahead to 2027, we expect this trend to accelerate further. Our core businesses should continue to deliver strong performance while our growth engines, which are expected to approach 25% of EcoLab's sales, continue to compound at double digit rates and play an increasingly important role in driving growth and margin expansion for EcoLab.

Speaker #3: Our core businesses are now growing in the mid-single digits, with OI margins at 20%. Our growth engines are growing in the low teens, with OI margins of nearly 20%, as we continue to invest heavily behind these attractive, high-growth opportunities.

Christophe Beck: Our core businesses should continue to deliver strong performance while our growth engines, which are expected to approach 25% of Ecolab's sales, continue to compound at double-digit rates and play an increasingly important role in driving growth and margin expansion for Ecolab. That future is already taking shape today. We're preparing to introduce a breakthrough innovation at Supercompute, a new integrated end-to-end cooling platform combining CoolIT's liquid cooling technologies with Ecolab 3D TRASAR digital capabilities to optimize water, power, and compute performance at scale. We will be hosting an investor day at Supercompute in Chicago on 17 November, where we will share more about the growth opportunities ahead and how they will strengthen our long-term performance. As we move into H2, we expect continued momentum. Pricing is anticipated to strengthen to the 5% to 6% range as energy surcharge benefits are fully realized.

Speaker #3: At the same time, our underperforming businesses have stabilized, while maintaining operating income margins in the mid-teens. What is most encouraging is that all parts of the portfolio are moving in the right direction.

Speaker #3: That future is already taking shape today. We're preparing to introduce a breakthrough innovation at supercompute. A new integrated end-to-end cooling platform combining Cool IT's liquid cooling technologies with EcoLab 3D tracer digital capabilities to optimize water, power, and compute performance at scale.

Speaker #3: We will be hosting an investor day at supercompute in Chicago on November 17th, where we will share more about the growth opportunities ahead and how they will strengthen our long-term performance.

Speaker #3: Looking ahead to 2027, we expect this trend to accelerate further. Our core businesses should continue to deliver strong performance, while our growth engines—which are expected to approach 25% of Ecolab's sales—continue to compound at double-digit rates and play an increasingly important role in driving growth and margin expansion for Ecolab.

Speaker #3: As we move into the second half, we expect continued momentum. Pricing is anticipated to strengthen to the 5% to 6% range as energy surcharge benefits are fully realized.

Speaker #3: Volumes are expected to continue to grow as strong new business wins more than offset ongoing disruption in the Middle East. As a result, we expect organic sales growth of 6% to 7%, helping drive an adjusted operating income margin of 19% in the second half, keeping us on track to deliver our 20% OI margin next year.

Christophe Beck: Volumes are expected to continue to grow as strong new business wins more than offset ongoing disruption in the Middle East. As a result, we expect organic sales growth of 6% to 7%, helping drive an adjusted operating income margin of 19% in H2, keeping us on track to deliver our 20% OI margin next year. With this momentum, we're increasing our outlook for 2026, where we now expect EPS in the range of $8.05 to $8.25, rising 7% to 10% versus last year. This range reflects strong underlying performance and a short-term impact from non-cash amortization and financing costs from the CoolIT acquisition. Beyond this year, we continue to expect adjusted EPS growth, including CoolIT, to accelerate to a strong 12% to 15% growth trajectory. In closing, our business continues to strengthen with the core improving and growth engine scaling.

Speaker #3: That future is already taking shape today. We're preparing to introduce a breakthrough innovation at Supercompute—a new, integrated, end-to-end cooling platform combining Coolide's liquid cooling technologies with Ecolab's 3D Tracer digital capabilities to optimize water, power, and compute performance at scale.

Speaker #3: With this momentum, we're increasing our outlook for 2026, where we now expect EPS in the range of 8.05 to 8.25, rising 7% to 10% versus last year.

Speaker #3: We will be hosting an investor day at Supercompute in Chicago on November 17th, where we will share more about the growth opportunities ahead and how they will strengthen our long-term performance.

Speaker #3: As we move into the second half, we expect continued momentum. Pricing is anticipated to strengthen to the 5% to 6% range, as energy surcharge benefits are fully realized.

Speaker #3: This range reflects strong underlying performance and a short-term impact from non-cash amortization and financing costs from the Cool IT acquisition. Beyond this year, we continue to expect adjusted EPS growth, including Cool IT, to accelerate to our strong 12% to 15% growth trajectory.

Speaker #3: Volumes are expected to continue to grow, as strong new business wins more than offset ongoing disruption in the Middle East. As a result, we expect organic sales growth of 6% to 7%, helping drive an adjusted operating income margin of 19% in the second half, keeping us on track to deliver our 20% OI margin next year.

Speaker #3: In closing, our business continues to strengthen. With the core improving and growth engines scaling, with this, our portfolio is shifting faster toward higher growth, higher margin, and markets.

Christophe Beck: With this, our portfolio is shifting faster toward higher growth, higher margin, and markets. Just as importantly, our team continues to execute at a very high level to deliver for our customers every single day. We've never been better positioned to deliver long-term organic sales growth of 5% to 7%, expand operating income margins well beyond 20%, and continue strengthening our EPS growth algorithm. Thank you for your continued trust and investment in Ecolab. I'll now turn it back to Andy for Q&A.

Speaker #3: Just as importantly, our team continues to execute at the very high level to deliver for our customers every single day. We've never been better positioned to deliver long-term organic sales growth of 5% to 7%, expand operating income margins well beyond 20%, and continue strengthening our EPS growth algorithm.

Speaker #3: With this momentum, we're increasing our outlook for 2026, where we now expect EPS in the range of $8.05 to $8.25, rising 7% to 10% versus last year.

Speaker #3: This range reflects strong underlying performance and a short-term impact from non-cash amortization and financing costs from the Coolide acquisition. Beyond this year, we continue to expect adjusted EPS growth, including Coolide, to accelerate toward a strong 12% to 15% growth trajectory.

Speaker #3: So thank you for your continued trust and investment in EcoLab. I'll now turn it back to Andy for Q&A.

Speaker #2: Thanks, Christophe. That wraps up our formal remarks. Operator, would you please begin the question and answer period?

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

Speaker #4: Thank you. We will now be conducting a question and answer session. We ask that you please limit yourself to one question so that others will have a chance to participate.

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

Speaker #3: In closing, our business continues to strengthen. With the core improving and our growth engines scaling, our portfolio is shifting faster toward higher-growth, higher-margin markets.

Speaker #4: If you have additional questions, please rejoin the question and answer queue. If you would like to ask a question, please press star one on your telephone keypad.

Speaker #3: Just as importantly, our team continues to execute at a very high level to deliver for our customers every single day. We've never been better positioned to deliver long-term organic sales growth of 5% to 7%, expand operating income margins well beyond 20%, and continue strengthening our EPS growth algorithm.

Speaker #4: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #4: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question will come from the line of Tim Moruni with William Blair.

Speaker #3: So, thank you for your continued trust and investment in Ecolab. I'll now turn it back to Andy for Q&A.

Speaker #4: Please proceed with your question.

Speaker #5: Yes, good afternoon. Thanks for taking my question. And thank you for, Christophe, for reaffirming the 20% operating margin target that you have for 2027.

Tim Mulrooney: Yes. Good afternoon. Thanks for taking my question. Thank you for, Christophe, for reaffirming the 20% operating margin target that you have for 2027. I was there in my model, but then when you acquired CoolIT, there's so much extra amortization there that I actually came off that margin target. Now you reaffirmed it today. Can you just help bridge that gap for us? Because there's a lot of extra incremental amortization coming through on the CoolIT side. Just want to make sure I heard you right. You are reaffirming the 20% operating margin target for 2027, and can you help us understand how you plan to offset those incremental expenses flowing through? Thank you.

Speaker #2: Thanks, Christophe. That wraps up our formal remarks. Operator, would you please begin the question-and-answer period?

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

Speaker #5: I was there in my model, but then when you acquired Cool IT, there's so much extra amortization there that I actually came off that margin target.

Speaker #4: If you have additional questions, please rejoin the question-and-answer queue. If you would like to ask a question, please press star 1 on your telephone keypad.

Speaker #4: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker #5: But now you reaffirmed it today, so can you just help bridge that gap for us? Because there's a lot of extra incremental amortization coming through on the Cool IT side.

Speaker #4: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question will come from the line of Tim Moruni with William Blair.

Speaker #5: So just want to make sure I heard you right. You are reaffirming the 20% operating margin target for 2027, and can you help us understand how you plan to offset those incremental expenses flowing through?

Speaker #4: Please proceed with your question.

Speaker #3: Yes, good afternoon. Thanks for taking my question. And thank you, Christophe, for reaffirming the 20% operating margin target that you have for 2027.

Speaker #5: Thank you. Yes, Tim. You understood that right. We've been very consistent. By the way, on making sure that we stay on our commitment of delivering 20% operating income in 2027.

Christophe Beck: Yes, Tim, you understood that right. We've been very consistent, by the way, on making sure that we stay on our commitment of delivering 20% operating income in 2027. That remains unchanged. I'll ask as well, Scott, to add some color to it in a second. Before we get there, our expectation and everything that we're doing is ultimately to drive our commitment of 5% to 7% organic sales growth to 20% OI margin and a strong 12% to 15% earnings per share growth. Ultimately, our job is to make sure that everything we're doing, well, not only leads us to that, but leads us to beyond that. That's especially true for the 20% OI in 2027. I spent, together with the team, a lot of time as well to think how do we get beyond the 20% after 2027.

Speaker #3: I was there in my model, but then when you acquired Coolide, there's so much extra amortization there that I actually came off that margin target.

Speaker #5: So that remains. Unchanged. I'll ask as well, Scott, to add some color to it in a second. But before we get there, our expectation and everything that we're doing is ultimately so to drive our commitment of 5% to 7% organic sales growth, the 20% OI margin, and the strong 12% to 15% earnings per share growth.

Speaker #3: But now you've reaffirmed it today. So can you just help bridge that gap for us? Because there's a lot of extra incremental amortization coming through on the Coolide side, so I just want to make sure I heard you right.

Speaker #3: You are reaffirming the 20% operating margin target for 2027. Can you help us understand how you plan to offset those incremental expenses flowing through?

Speaker #5: And ultimately, our job is to make sure that everything we're doing well, not only leads us to that, but leads us to beyond that.

Speaker #3: Thank you.

Speaker #5: Yes, Tim, you understood that right. We've been very consistent, by the way, in making sure that we stay committed to delivering 20% operating income in 2027.

Speaker #5: And that's especially true for the 20% OI in 2027. And I spent, together with the team, a lot of time as well to think, how do we get beyond the 20% of the 2027?

Speaker #5: So that remains unchanged. I'll ask as well, Scott, to add some color to it in a second. But before we get there, our expectation—and everything that we're doing—is ultimately to drive our commitment of 5% to 7% organic sales growth, a 20% operating income margin, and a strong 12% to 15% earnings per share growth.

Speaker #5: And the vast majority of our businesses today are already either close to 20% or beyond 20%. So we know well how to do that.

Christophe Beck: The vast majority of our businesses today are already either close to 20% or beyond 20%. We know well how to do that. The H2 of this year, the adjusted OI margins will be at 19% as well. All leading nicely towards the 2027 story. It's going to be important to keep in mind that the H1 and H2 of 2027 will be a tale of two stories because of the lapping, obviously, of the CoolIT acquisition that closed early July. After 12 months, mid-next year, and then the H2 of 2027. In other words, the H2 of 2027 will be even stronger.

Speaker #5: The second half of this year, the adjusted OI margin, so will be at 19% as well. So all leading nicely towards the 2027 story.

Speaker #5: And ultimately, our job is to make sure that everything we're doing well not only leads us to that, but leads us beyond that.

Speaker #5: It's going to be important to keep in mind that the first half and second half of '27, so will be a tale of two stories because of the lapping, obviously, of the Cool IT acquisition that closed early July of the 12-month mid next year and then the second half of '27.

Speaker #5: And that's especially true for the 20% OI in 2027. And I spent, together with the team, a lot of time as well thinking, how do we get beyond the 20% after 2027?

Speaker #5: In other words, the second half of '27. So we'll be even stronger. But as mentioned before, so my objective is really to not only deliver on those commitments beyond '26, but really making sure that we get beyond the 20% that we can strengthen this 5% to 7% on the organic and also on the earnings per share, the 12% to 15%, while I guess that's going to get stronger as well over time.

Speaker #5: And the vast majority of our businesses today are already either close to 20% or beyond 20%. So we know well how to do that.

Christophe Beck: As mentioned before, my objective is really to not only deliver on those commitments beyond 2026, but really making sure that we get beyond the 20%, that we can strengthen this 5% to 7% on the organic and also on the earnings per share, the 12% to 15%. Well, I guess that's going to get stronger as well over time. Scott, do you want to add any color to that?

Speaker #5: In the second half of this year, the adjusted OI margin will also be at 19%, so everything is leading nicely towards the 2027 story.

Speaker #5: It's going to be important to keep in mind that the first half and second half of 2027 will be a tale of two stories because of the lapping, obviously, of the Coolide acquisition that closed early July of the 12 months, mid next year, and then the second half of 2027.

Speaker #5: But Scott, do you want to add any color to that?

Speaker #3: Yeah, the only thing, Tim, that I would add is that next year, as you might remember, the NALCO amortization falls off. And so that's also as part of when you said how do you reconcile that, that we do get the benefit of annualizing on the Cool IT amortization, but offset by the NALCO amortization.

Scott Kirkland: The only thing, Tim, that I would add is that next year, as you might remember, the Nalco amortization falls off. That's also as part of when you said how do you reconcile that we do get the benefit of annualizing the CoolIT amortization, but offset by the Nalco amortization.

Speaker #5: In other words, the second half of 2027 will be even stronger. But, as mentioned before, my objective is really to not only deliver on those commitments beyond 2026, but also to make sure that we get beyond the 20%, that we can strengthen this 5% to 7% on the organic side, and also on the earnings per share, the 12% to 15%. I guess that's going to get stronger as well over time.

Speaker #4: Thank you. Our next question comes from the line of Fatah with Barkley. Please proceed with your questions.

Operator: Thank you. Our next question comes from the line of Manav Patnaik with Barclays. Please proceed with your questions.

Speaker #6: Thank you. Good afternoon. Christophe, I was just hoping within high-tech, could you just help us with the current mix of the business between data centers and microelectronics?

Manav Patnaik: Thank you. Good afternoon. Christophe, I was just hoping within high tech, could you just help us with the current mix of the business between data centers and microelectronics, or however you want to break it out and kind of just some more color on your confidence on getting to that $4 billion target, I guess?

Speaker #6: So however, you want to break it out and kind of just some more color on your confidence on getting to that $4 billion target, I guess?

Speaker #5: But, Scott, do you want to add any color to that?

Speaker #3: Yeah, the only thing, Tim, that I would add is that next year, as you might remember, the Nalco amortization falls off. And so that's also part of—when you said, how do you reconcile that—that we do get the benefit of annualizing on the Coolide amortization, but that's offset by the Nalco amortization.

Speaker #5: Yeah, I'm enough. So high-level, obviously, since we don't go much in detail, so for the size of the business right now, but it's roughly one and a half billion annualized sales.

Christophe Beck: Yeah. Hi, Manav. High lev, obviously, since we don't go much in detail, so for the size of the business right now, but it's roughly $1.5 billion annualized sales, obviously. Right now, when you have our legacy business, microelectronics, and data centers within legacy, and then CoolIT, and then Ovivo which is in microelectronics. Each of them is roughly half a billion today of annualized sales. That's how you get to the $1.5 billion. For perspective, we were $150 million just a few years back. This is a platform that we've built over the last few years extremely rapidly. The very good news is that all three elements are growing so very nicely. You heard about the legacy business growing 29%, Ovivo expected to deliver, so mid-teens for this year, and CoolIT being north of 100%.

Speaker #5: Obviously, so right now, when you have. Our legacy business, microelectronics, and data centers within legacy, and then Cool IT, and then Avivo. Which is in microelectronics.

Speaker #4: Thank you. Our next question comes from the line of Patek with Barclays. Please proceed with your question.

Speaker #6: Thank you. Good afternoon. Christophe, I was just hoping—within high tech—could you help us with the current mix of the business between data centers and microelectronics?

Speaker #5: And each of them is roughly half a billion today of annualized sales. That's how you get to the one and a half billion. And for perspective, we were 150 million just a few years back.

Speaker #6: So, do you want to break it out and give us some more color on your confidence in getting to that $4 billion target, I guess?

Speaker #5: So this is a platform that we've built over the last few years extremely rapidly. And the very good news is that all three elements are growing.

Speaker #5: Yeah, I'm up. So, high-level, obviously, since we don't go much into detail for the size of the business right now, but it's roughly $1.5 billion in annualized sales.

Speaker #5: So very nicely. You've heard about the legacy business growing 29%. Avivo expected to deliver some mid-teens for this year. And Cool IT being north of 100%.

Speaker #5: Obviously, so right now, when you have our legacy business, microelectronics and data centers within legacy, and then Coolide, and then Avivo, which is in microelectronics.

Speaker #5: So if you add it all up, so you get to a very good place. So our trajectory of 25% growth for the next few years leads you to the $4 billion by 2030 and feel quite confident that that's very realistic.

Christophe Beck: If you add it all up, so you get to a very good place. Our trajectory of 25% growth for the next few years leads you to the $4 billion by 2030 feel quite confident that that's very realistic.

Speaker #5: And each of them is roughly half a billion today of annualized sales. And that's how you get to the $1.5 billion. For perspective, we were at $150 million just a few years back.

Speaker #4: Thank you. Our next question comes from the line of Ashish Sabhadra with RBC Capital Markets. Please proceed with your question.

Speaker #5: So, this is a platform that we've built over the last few years, extremely rapidly. And the very good news is that all three elements are growing.

Operator: Thank you. Our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Please proceed with your question.

Speaker #6: Thanks for taking my question. Just wanted to follow up on the global high-tech. So you mentioned the integrated end-to-end cooling platform that you plan to launch at the supercompute.

Ashish Sabadra: Thanks for taking my question. Just wanted to follow up on the global high tech. You mentioned the integrated end-to-end cooling platform that you plan to launch at the Supercomputing. I was just wondering if you could help or discuss how that can help drive more cross-selling opportunity across all the different global high tech offerings that you have. Thanks.

Speaker #5: So very nicely. You've heard about the legacy business growing 29%. Avivo expected to deliver some mid-teens for this year, and Coolide being north of 100%.

Speaker #6: I was just wondering if you could help or discuss how that can help drive more cross-selling opportunity across all the different global high-tech offerings that you have.

Speaker #5: So, if you add it all up, you get to a very good place. Our trajectory of 25% growth for the next few years leads you to $4 billion by 2030, and we feel quite confident that that's very realistic.

Speaker #6: Thanks.

Speaker #5: Thank you, Ashish. Well, generally, as we mentioned, when we did the acquisition of Cool IT, adding Cool IT to the data center, multiplies between three and five times the sales opportunity that we have compared to legacy Ecolab in a data center.

Christophe Beck: Thank you, Ashish. Well, generally, as we mentioned when we did the acquisition of CoolIT, adding CoolIT to the data center multiplies between three and five times the sales opportunity that we have compared to legacy Ecolab in a data center. Much bigger, obviously, than what we had before. That's the penetration of solutions opportunity. The most interesting part is when you put all the pieces together from a CDU integrating 3D TRASAR control technology to a 3D TRASAR coolant to cold plates that are integrated in that system, and ultimately an end-to-end optimization system to reduce the power used to cool while using zero net incremental water because everything is within the system, is the biggest upside, obviously, for our customers.

Speaker #4: Thank you. Our next question comes from the line of Ashish Sabhadra with RBC Capital Markets. Please proceed with your question.

Speaker #5: So much bigger obviously than what we had before. So that's the penetration of solutions opportunity. But the most interesting part is when you put all the pieces together, from a CDU integrating 3D TRACER control technology, to a 3D TRACER coolant to cold plates that are integrated in that system.

Speaker #6: Thanks for taking my question. I just wanted to follow up on the global high-tech. You mentioned the integrated end-to-end cooling platform that you plan to launch at Supercompute.

Speaker #6: I was just wondering if you could help or discuss how that can help drive more cross-selling opportunities across all the different global high-tech offerings that you have.

Speaker #6: Thanks.

Speaker #5: Thank you, Ashish. Well, generally, as we mentioned, when we did the acquisition of Coolide, adding Coolide to the data center multiplies by between 3 and 5 times the sales opportunity that we have compared to legacy Ecolab in a data center.

Speaker #5: And ultimately, an end-to-end optimization system to reduce the power used to cool while using zero net incremental water, because everything is within the system, is the biggest upside, obviously, for our customers.

Speaker #5: So much bigger, obviously, than what we had before. So that's the penetration of solutions opportunity. But the most interesting part is when you put all the pieces together—from a CDU integrating 3D TRACER control technology, to a 3D TRACER coolant, to cold plates that are integrated in that system.

Speaker #5: And with everything that's happening right now in the AI infrastructure and data center pushback in the communities, well, as mentioned, the world needs a company that can help this industry scale fast while doing it the right way.

Christophe Beck: With everything that's happening right now in the AI infrastructure and data center pushback in the communities, well, as mentioned, the world needs a company that's going to help this industry scale fast while doing it the right way, both in terms of cost performance and in terms of impact on communities and natural resources. I think that we're very uniquely placed here to do that, and it took us just two weeks, basically, to get the 3D TRASAR technology embedded in the next generation of the CDU. For CoolIT, it's a good example of how the two teams have come together. It's going to be really good to share with all of you and with customers, obviously at Supercomputing, how everything comes together. Last thing I say, we really look at it from an ecosystem perspective. We will not be owning everything.

Speaker #5: Both in terms of cost performance and in terms of impact on communities and natural resources. So I think that we're very uniquely placed here to do that.

Speaker #5: And it took us just two weeks basically, so to get the 3D TRACER technology embedded in the next generation of the CDU. So for Cool IT, it's a good example of how the two teams have come together so it's going to be really good to share with all of you and with customers obviously at supercompute how everything comes together.

Speaker #5: And ultimately, an end-to-end optimization system to reduce the power used to cool, while using zero net incremental water—because everything is within the system—is the biggest upside, obviously, for our customers.

Speaker #5: And with everything that's happening right now in the AI infrastructure and data center pushback in the communities—well, as mentioned, the world needs a company that can help this industry scale fast while doing it the right way.

Speaker #5: And last thing I'd say, we really look at it from an ecosystem perspective. We will not be owning everything. We don't want to get into a lot of hardware obviously out there, but we want to be the platform that ultimately all the other elements of.

Christophe Beck: We don't want to get into a lot of hardware, obviously out there, but we want to be the platform that ultimately all the other elements have come around in order to truly maximize cooling, minimize the water and energy usage, and maximize, ultimately, the uptime, and performance of the data center as well. A typical Ecolab story where the outcome of the operations is the main objective we have.

Speaker #5: Both in terms of cost performance and in terms of impact on communities and natural resources. So, I think that we're very uniquely placed here to do that.

Speaker #5: Come around in order to truly maximize cooling, minimize the water and energy usage, and maximize ultimately the uptime and performance of the data center as well.

Speaker #5: And it took us just two weeks, basically, to get the 3D TRACER technology embedded in the next generation of the CDU. For Coolide, it's a good example of how the two teams have come together, so it's going to be really good to share with all of you, and with customers obviously at Supercompute, how everything comes together.

Speaker #5: So typically, Ecolab's story with outcome of the operations is the main objective we have.

Speaker #4: Thank you. Our next question comes from the line of John McNulty with BMO Capital Markets. Please proceed with your question.

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

Speaker #5: And the last thing I'd say is that we really look at it from an ecosystem perspective. We will not be owning everything. We don't want to get into a lot of hardware, obviously, out there.

Speaker #6: Yeah, good afternoon. Thanks for taking my question. And congrats on some really solid results. Just wanted to ask or dig a little bit deeper on the life sciences side of the business.

John McNulty: Yeah, good afternoon. Thanks for taking my question, and congrats on some really solid results. Just wanted to ask or dig a little bit deeper on the life sciences side of the business. Clearly there's a lot of interest on the bioprocessing side. We've seen a number of drugs kind of hitting the market or starting to hit the market. At the same time, you've outpaced kind of the other major competitor in the space by a decent amount. I guess, can you help us to think about how much of it is just the end market growth? How much of it is share gain, and how much of it may be just some of the capacity unlock that you've been working on as well?

Speaker #6: And clearly, there's a lot of interest on the bioprocessing side. We've seen a number of drugs kind of hitting the market or starting to hit the market.

Speaker #5: But we want to be the platform that ultimately all the other elements come around in order to truly maximize cooling, minimize water and energy usage, and ultimately maximize the uptime and performance of the data center as well.

Speaker #6: At the same time, you've outpaced kind of the other major competitor in the space by a decent amount. So I guess, can you help us to think about how much of it is just the end market growth, how much of it is share gain, and how much of it maybe just some of the capacity unlock that you've been working on as well?

Speaker #5: So, typically, Ecolab's story with the outcome of the operations is the main objective we have.

Speaker #5: Thank you, John. Very pleased. With the life sciences team, it's been a few years in the making. As you know, we started that business in 2017.

Christophe Beck: Thank you, John. Very pleased with the life sciences team. It's been a few years in the making. As you know, we started that business in 2017. It was less than $100 million, and today it's close to $1 billion, so 10 times the size of where it was back then. We made the acquisition of Purolite in 2021, the COVID implications on the market have been a little bit difficult to manage for the whole industry, by the way. When I look back and think about what the team has done in how to build capacity, capabilities, relationship with customers, trust that we can really be the best partner in the future, well, I'm super pleased with what the team has done.

Speaker #4: Thank you. Our next question comes from the line of John McNulty with BMO Capital Markets. Please proceed with your question.

Speaker #6: Yeah, good afternoon. Thanks for taking my question, and congrats on some really solid results. I just wanted to ask, or dig a little bit deeper, on the Life Sciences side of the business.

Speaker #5: It was less than 100 million. And today, it's close to a billion. So 10 times. The size of where it was back then. We made the acquisition of Pure Light in 2021.

Speaker #6: And clearly, there's a lot of interest on the bioprocessing side. We've seen a number of drugs kind of hitting the market or starting to hit the market.

Speaker #6: At the same time, you've outpaced the other major competitor in the space by a decent amount. So, I guess, can you help us think about how much of it is just end market growth?

Speaker #5: And the COVID implications on the markets have been a little bit difficult to manage for the whole industry. By the way, but when I look back and think about what the team has done in how to build capacity, capabilities, relationship with customers, trust, that we can really be the best partner in the future, well, I'm super pleased with what the team has done.

Speaker #6: How much of it is share gain and how much of it may be just some of the capacity unlock that you’ve been working on as well?

Speaker #5: Thank you, John. Very pleased. With the Life Sciences team, it's been a few years in the making. As you know, we started that business in 2017.

Speaker #5: We were not on the trajectory we had initially planned. As you know, since the acquisition of Pure Light, but we have always been growing.

Christophe Beck: We were not on the trajectory we had initially planned, as you know, since the acquisition of Purolite, but we have always been growing when the rest of the industry was not. Not in line with what we had expected, but better than competition. The very good news right now, John, is that while we are not only outperforming the market and competition, but we're back in line with our returns expectations that we had set early in that process. Really happy with the trajectory, the returns, the work that's been done by the team.

Speaker #5: It was less than $100 million. And today, it's close to a billion—so ten times the size of where it was back then. We made the acquisition of Pure Light in 2021.

Speaker #5: When the rest of the industry was not. So not in line with what we had expected, but better that competition. The very good news right now, John, is that, well, we not only outperforming the market and competition, but we're back in line with our returns.

Speaker #5: And the COVID implications on the markets have been a little bit difficult to manage for the whole industry, by the way. But when I look back and think about what the team has done in how to build capacity, capabilities, relationships with customers, and trust, that we can really be the best partner in the future—well, I'm super pleased with what the team has done.

Speaker #5: Expectations that we had set early in that process. So really happy with the trajectory, the returns, the work that's been done by the team.

Speaker #5: And ultimately, the most important element is to listen to our customers that are really pleased with the agility of the team, the innovation strengths of this team, being very entrepreneurial to be as close to them, what they need short term in order to deliver the life savings drugs that they're trying to bring into the market.

Christophe Beck: Ultimately, the most important element is to listen to our customers that are really pleased with the agility of the team, the innovation strengths of this team, being very entrepreneurial, we need to be as close to them, what they need short term in order to deliver the life-saving drugs that they're trying to bring into the market. We knew we would not become, in the short or medium term, the largest life science player in the industry, but our objective to be the best performing and the best partner of our customers, I guess that we're pretty close to that ambition right now. Early, but good news for the future.

Speaker #5: We were not on the trajectory we had initially planned. As you know, since the acquisition of Pure Light, but we have always been growing.

Speaker #5: When the rest of the industry was not. So not in line with what we had expected, but better than competition. The very good news right now, John, is that, well, we are not only outperforming the market and competition, but we're back in line with our returns.

Speaker #5: We knew you would not become in the short or medium terms of the largest life science player in the industry, but our objective to be the best performing and the best partner of our customers against that we're pretty close to that ambition right now.

Speaker #5: Expectations that we had set early in that process, so really happy with the trajectory, the returns, and the work that's been done by the team.

Speaker #5: So early, but good news for the future.

Speaker #5: And ultimately, the most important element is to listen to our customers that are really pleased with the agility of the team, the innovation strength of this team, being very entrepreneurial to be as close to them—what they need short term in order to deliver the life-saving drugs that they're trying to bring to the market.

Speaker #4: Thank you. Our next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question.

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

Speaker #7: Thank you. Good afternoon. Christoph, on Cool IT, when the business was acquired, you mentioned perhaps a 30% type annual growth rate to the model going forward.

David Begleiter: Thank you. Afternoon. Christophe, on CoolIT, when the business was acquired, you mentioned perhaps a 30% type annual growth rate to model going forward. Given the 100% plus growth rate in the H1 of the year, should we update our models to a higher growth rate over the next few years here for CoolIT?

Speaker #7: Given the 100% plus growth rate in the first half of the year, should we update our models to a higher growth rate over the next few years here for Cool IT?

Speaker #5: We knew we would not become, in the short or medium term, the largest life sciences player in the industry. But our objective was to be the best performing and the best partner for our customers. I guess that we're pretty close to that ambition right now.

Speaker #5: So really like this acquisition, that's one of those one of many where obviously so before you embark on such a journey, I had my set of sleepless nights.

Christophe Beck: Really like this acquisition. That's one of many where, obviously, before you embark on such a journey, I had my set of sleepless nights. When I look back, well, I'm really saying I'm glad we did it because this is the best technology in the market. It's the best performing business as well, in direct to chip liquid cooling technology. I've been so impressed with the team that I've met at CoolIT and how these two teams are coming together. Now, David, it's been two or three weeks that we're together. It's very early, and we're getting to know each other, starting to work together with customers. It's so early that we're not in a position to change anything. If I look at the trajectories, well, they're better than what we had thought. That's the good news.

Speaker #5: It's early, but it's good news for the future.

Speaker #5: And when I look back, well, I'm really saying I'm glad we did it. Because this is the best technology in the market. It's the best performing business as well.

Speaker #4: Thank you. Our next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question.

Speaker #5: Thank you. Good afternoon. Christophe, on Cool IT, when the business was acquired, you mentioned perhaps a 30% type annual growth rate to the model going forward.

Speaker #5: So in directorship liquid cooling technology, and I've been so impressed. With the team that I've met, at Cool IT and how these two teams are coming together.

Speaker #5: Given the 100% plus growth rate in the first half of the year, should we update our models to a higher growth rate over the next few years here for CoolIT?

Speaker #5: Now, David, it's been two or three weeks that we're together. It's very early. And we're getting to know each other starting to work together with customers.

Speaker #5: So really, like this acquisition, that's one of many where, obviously, before you embark on such a journey, I had my set of sleepless nights.

Speaker #5: So it's so early that we're not in a position so to change anything. But if I look at the trajectories where they're better than what we had thought, that's the good news.

Speaker #5: And when I look back, well, I'm really saying I'm glad we did it because this is the best technology in the market. It's the best-performing business as well.

Speaker #5: But when we did our plans for the next four, five, 10 years, a lot can happen. And that's why we've picked a trajectory of 30%, which I think is the right one.

Christophe Beck: When we did our plans for the next four, five, 10 years, a lot can happen, and that's why we've picked a trajectory of 30%, which I think is the right one. True that the H1 of this year for CoolIT has been way better than that. Acceptance by customers of the latest technologies of CoolIT is extremely good and even better when we come together with Ecolab. That's an even better sign. That's the reason why we'd like to be together with you in November at Supercomputing, is basically we will have four or five months of working together with CoolIT. We better understand how it works, what's to like, what we need to work on, what's the new type of trajectory.

Speaker #5: So, in direct-to-chip liquid cooling technology—and I've been so impressed with the team that I've met at CoolIT, and how these two teams are coming together.

Speaker #5: True that the first half of this year for Cool IT has been way better than that, acceptance by customers of the latest technologies of Cool IT is extremely good.

Speaker #5: Now, David, it's been two or three weeks that we've been together. It's very early, and we're getting to know each other, starting to work together with customers.

Speaker #5: And even better, when we come together, with Ecolab. So that's an even better sign. And that's the reason why we'd like to be together with you in November at Super Compute, is basically we will have so four, five months of working together with Cool IT, we'll better understand so how it works, what's to like, what we need to work on, what's the new type of trajectory.

Speaker #5: So, it's so early that we're not in a position to change anything. But if I look at the trajectory as well, they're better than what we had thought.

Speaker #5: That's the good news. But when we did our plans for the next four, five, ten years, a lot can happen. And that's why we've picked a trajectory of 30%, which I think is the right one.

Speaker #5: So too early to change, right now, but give us the time, the next few months, to really so get the teams together, making it really well work together with the customers.

Christophe Beck: Too early to change right now, give us the time the next few months to really get the teams together, making it really well work together with the customers. In November, we will sit together, to share with you how do we see 2027, and the years beyond.

Speaker #5: It's true that the first half of this year for Cool IT has been way better than that; acceptance by customers of the latest technologies from Cool IT is extremely good.

Speaker #5: And in November, we will sit together to share with you how do we see '27 and the years beyond.

Speaker #5: And even better, when we come together with Ecolab, so that's an even better sign. And that's the reason why we'd like to be together with you in November at Supercompute.

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

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

Speaker #6: Christoph, I'd love to just circle back to life sciences, just given the trajectory there. And all the work you've been doing with your team in King of Prussia.

Chris Parkinson: Christophe, I want to just circle back to life sciences, just given the trajectory there and all the work you've been doing with your team in King of Prussia. Just a few things that I'd like to break down. First of all, just how you see the trajectory of some of the biopharm applications versus some of the purification and resins. How much this is attributable to basically the beginning of the ramps in both King of Prussia and Wales. Also, correct me if I'm wrong, but a lot of that business initially started off in larger scale in Europe, and it seems like you've been making a lot of investments in leeway with partners in the United States.

Speaker #5: Basically, we'll have four or five months of working together with Cool IT. We better understand how it works, what to like, what we need to work on, and what's the new type of trajectory.

Speaker #6: Just a few things that I'd like to break down. First of all, just you kind of how you see the trajectory of some of the bioform applications versus some of the purification and resins.

Speaker #5: So, too early to change right now, but give us the time in the next few months to really get the teams together and make it really work well together with the customers.

Speaker #6: How much this is attributable to basically the beginning of the RAMS in both King of Prussia and Wales. And then also, correct me if I'm wrong, but a lot of that business initially started off in larger scale in Europe and it seems like you've been making a lot of investments and leeway with partners in the United States.

Speaker #5: And in November, we will sit together to share with you how we see '27 and the years beyond.

Speaker #6: So I'd love to kind of just drill down to just anything that you can do to basically increase the probability of the street sustaining this type of growth and trajectory especially relative to the '27 margin targets.

Chris Parkinson: I'd love to kind of just drill down to just anything that you can do to basically increase the probability of the Street sustaining this type of growth and trajectory, especially relative to the 2027 margin targets. Thank you.

Speaker #4: Thank you. Our next question comes from the line of Chris Parkinson with Wolfe Research. Please proceed with your question.

Speaker #6: Christoph, I want to just circle back to life sciences, given the trajectory there and all the work you've been doing with your team in King of Prussia.

Speaker #6: Thank you.

Speaker #5: So it's been a few quarters now that life science has been on the high end of the expected. Performance, which is a very good sign.

Christophe Beck: It's been a few quarters now that life science has been on the high end of the expected performance, which is a very good sign. I've been very open with you that the early years of that journey, we were growing faster than the industry, but we were not growing as fast as we were expecting, or I was expecting. That's a time behind us, and it gave us the opportunity to build those capabilities and these capacities that we needed around the world. We just opened our latest, one of the biggest plants in China a few weeks ago. That's going to give us a big footprint in a market that's going really well for life science, the industry, and for us. By the way, expanding as well around Asia.

Speaker #6: Just a few things that I'd like to break down. First of all, just your view on how you see the trajectory of some of the biopharma applications versus some of the purification and resins. How much of this is attributable to the beginning of the ramps in both King of Prussia and Wales?

Speaker #5: And I've been very open so with you that the early years of that journey where we're growing, growing faster, than the industry, but we were not growing as fast as we were expecting or hours expecting.

Speaker #6: And then also, correct me if I'm wrong, but a lot of that business initially started off on a larger scale in Europe, and it seems like you've been making a lot of investments and leeway with partners in the United States.

Speaker #5: But that's time behind us. And it gave us the opportunity to build those capabilities and these capacities that we needed around the world. We just opened our latest one of the biggest plants in China, a few weeks ago.

Speaker #6: So I'd love to kind of just drill down to anything that you can do to basically increase the probability of the Street sustaining this type of growth and trajectory, especially relative to the 2027 margin targets.

Speaker #6: Thank you.

Speaker #5: So it's been a few quarters now that Life Sciences has been on the high end of the expected performance, which is a very good sign.

Speaker #5: That's going to give us a big footprint in a market that's going really well for life science, the industry, and for us, by the way, expanding as well.

Speaker #5: And I've been very open with you that in the early years of that journey, we were growing—growing faster than the industry—but we were not growing as fast as we were expecting, or as others were expecting.

Speaker #5: Around Asia, in Europe, the core of Pure Lights are came from Europe as well. Both Eastern Europe and Wales as you mentioned so for bioprocessing and capacity as well in North America that we've kept building and that we will keep building.

Christophe Beck: In Europe, the core of Purolite came from Europe as well, both Eastern Europe and Wales, as you mentioned, for bioprocessing and capacity as well in North America that we've kept building and that we will keep building. It's always been part of our strategy to be on each of the three continents, North America, Europe, and Asia. We're almost there, and it's never going to be enough because it's growing fast. That's a good problem to have as well. We have great teams as well that we had to build. Bioprocessing is the fastest growing one. It is a very interesting, very technology leading type of business that we will keep as the anchor in the biotechnology industry.

Speaker #5: But that's time behind us. And it gave us the opportunity to build those capabilities and these capacities that we needed around the world. We just opened one of the biggest plants in China a few weeks ago.

Speaker #5: It's always been part of our strategy so to be on each of the three continents, North America, Europe, and Asia. And we almost there and it's never going to be enough because it's growing fast.

Speaker #5: That's going to give us a big footprint in a market that's performing really well for life sciences, the industry, and for us, by the way, as we continue to expand.

Speaker #5: That's a good problem to have as well. We have great teams as well that we had to build bioprocessing is the fastest growing one.

Speaker #5: It is a very interesting, very technology-leading type of business that we will keep as the anchor in the biotechnology industry. But I'd like to add as well our whole pharma and personal care business that's focused on contamination control, basically making sure that the environment, where the drugs are being produced, is as healthy as it can be.

Christophe Beck: I'd like to add as well our whole pharma and personal care business that's focused on contamination control, basically making sure that the environment where the drugs are being produced is as healthy as it can be. This business is doing extremely well, as well at the same time. The purification business, that's kind of lower grades type of products, but still on the same platform. We were capped by capacity constraints. As you know, that's changing with the opening of the plant in China. That's going to help us as well sustain the growth trajectory of that business going forward. We're in a place where we have very good momentum. Our long-term target was 10% to 12%, by the way, so we are ahead of that range right now. Our margins, so to get towards the 30% OI target, will we get there?

Speaker #5: And that we will keep building. It's always been part of our strategy to be on each of the three continents: North America, Europe, and Asia.

Speaker #5: This business is doing extremely well as well at the same time. And the purification business that's kind of lower grades type of products, but still on the same platform, we were capped by capacity constraints.

Speaker #5: And we're almost there, and it's never going to be enough because it's growing fast. That's a good problem to have as well. We have great teams as well that we had to build. Bioprocessing is the fastest-growing one.

Speaker #5: As you know, that's changing with the opening of the plant in China. So that's going to help us as well sustain the growth trajectory of that business going forward.

Speaker #5: It is a very interesting, very technology-leading type of business that we will keep as the anchor in the biotechnology industry. But I'd like to add, as well, our whole pharma and personal care business that's focused on contamination control—basically making sure that the environment where the drugs are being produced is as healthy as it can be.

Speaker #5: So we're in a place where we have very good momentum. Our long-term target was 10 to 12%, by the way. So we are ahead of that range right now.

Speaker #5: Our margin so to get towards the 30% OI target, we will get there. We see the line of sight to get there, but I want to make absolutely sure that we keep investing in capacity and capabilities in the meantime, in order to get the business that has not only the critical mass, but the right momentum to keep winning in the future.

Speaker #5: This business is doing extremely well, as well. At the same time, in the purification business—that's kind of lower grades type of products but still on the same platform—we were capped by capacity constraints.

Christophe Beck: We see the line of sight to get there, I want to make absolutely sure that we keep investing in capacity and capabilities in the meantime, in order to get the business that has not only the critical mass, but the right momentum to keep winning in the future. A little bit of an overview of what we're trying to build here, all driven by research, by innovation, by science, which is ultimately what's most important for our customers, and it's working really well.

Speaker #5: As you know, that's changing with the opening of the plant in China. So that's going to help us as well, sustaining the growth trajectory of that business going forward.

Speaker #5: So kind of a little bit of an overview of what we're trying to build here. All driven by research, by innovation, by science, which is ultimately what's most important for our customers and it's working really well.

Speaker #5: So, we're in a place where we have very good momentum. Our long-term target was 10% to 12%, by the way. So, we are ahead of that range right now.

Speaker #4: Thank you. Our next question comes from the line of Seth Weber with BNP Paribas. Please proceed with your question.

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

Speaker #7: Hey guys, good afternoon. I wanted to ask a little bit about your some of your old economy stuff. I was struck by your comment that you think paper could see some modest growth here in the third quarter.

Speaker #5: Our margin, so to get towards the 30% OI target, we will get there. We see the line of sight to get there. But I want to make absolutely sure that we keep investing in capacity and capabilities in the meantime in order to get the business that has not only the critical mass, but the right momentum to keep winning in the future.

Seth Weber: Hey, guys. Good afternoon. Wanted to ask a little bit about some of your old economy stuff. I was struck by your comment that you think paper could see some modest growth here in Q3. Do you feel like we're past the bottom in some of these categories, or is it just maybe less bad and pricing is helping? Can you just help us frame what's going on in some of your older economy stuff? Thank you.

Speaker #7: I mean, do you feel like we're past the bottom in some of these categories or is it just maybe less bad and pricing is helping?

Speaker #7: Or can you just help us frame what's going on in some of your older economy stuff? Thank you.

Speaker #5: So, kind of a little bit of an overview of what we're trying to build here—all driven by research, by innovation, by science—which is ultimately what's most important for our customers, and it's working really well.

Speaker #5: I'm going to go with cold that bold economy. But it's more for traditional businesses. So for sure, we know that those businesses are not going to grow.

Christophe Beck: I'm not sure I would call that old economy. It's more traditional businesses. For sure, we know that those businesses are not going to grow as the growth engines do. That's why we have that differentiation, by the way, between growth engines, double-digit type of business. Our core business, which is the key of our company, kind of in this mid-single, and then you have the lower growth businesses. Of course, with some affection, underperforming because they were underperforming for a while. To your point on paper, well, the good news is that it was fairly positive in Q2, which is a big deal, obviously, so for that business after more than a year being in negative territory, impacted by the industry that was not doing great. Then an industry that was consolidated because of that.

Speaker #5: As the growth engines do, that's why we have that differentiation, by the way, between growth engines double digit type of business. Our core business, which is the key of our company, kind of in this mid single and then you have the lower growth businesses.

Speaker #4: Thank you. Our next question comes from the line of Seth Weber with BNP Paribas. Please proceed with your question.

Speaker #7: Hey guys, good afternoon. I wanted to ask a little bit about some of your old economy stuff. I was struck by your comment that you think paper could see some modest growth here in the third quarter.

Speaker #5: But of course, with some affection underperforming because there were underperforming. For a while. And to your point on paper, well, the good news is that it was barely positive in Q2.

Speaker #7: I mean, do you feel like we're past the bottom in some of these categories, or is it just maybe less bad and pricing is helping?

Speaker #7: Or can you just help us frame what's going on in some of your older economy stuff? Thank you.

Speaker #5: I'm going to call that the old economy, but it's more for traditional businesses. So, for sure, we know that those businesses are not going to grow as the growth engines do.

Speaker #5: Which is a big deal obviously so for that business after more than a year being in negative territory. Impacted by the industry. That was not doing great.

Speaker #5: That's why we have that differentiation, by the way, between growth engines—double-digit type of business—our core business, which is the key of our company, kind of in this mid-single, and then you have the lower growth businesses.

Speaker #5: And then an industry that was consolidated because of that. So we lost a lot of paper mills as well. And when we lose a paper mill that has a big impact on our sales because they use a lot of our solutions.

Christophe Beck: We lost a lot of paper mills as well. When we lose a paper mill, that has a big impact on our sales because they use a lot of our solutions. We can see that the last six months, that consolidation has stopped, paused, and that things are getting slightly better. Here as well, we are a bit better than the industry. We're gaining share, which is good thing as well. Very positive in Q2 for the paper team. I feel really confident with the great leadership that we have there to get even more positive in Q3 and beyond. I'm cautiously optimistic with that business. I'm saving good margins, by the way, important to keep that in mind. Yeah, they're improving and they're in positive territory, so they're generating value for shareholders, which is the first step towards greatness.

Speaker #5: And we can see that the last six months that consolidation stopped or paused and that things are getting slightly better. And here as well, we are a bit better than the industries.

Speaker #5: But I've, with some affection, called them underperforming because they were underperforming for a while. And to your point on paper, well, the good news is that it was barely positive in Q2.

Speaker #5: So we're gaining share which is good thing as well. So barely positive in Q2 for the paper team. But I feel really confident with a great leadership that we have there to get even more positive in Q3 and beyond.

Speaker #5: Which is a big deal, obviously. So, for that business, after more than a year being in negative territory, impacted by the industry that was not doing great.

Speaker #5: And then, an industry that was consolidated because of that—so we lost a lot of paper mills as well. And when we lose a paper mill, that has a big impact on our sales because they use a lot of our solutions.

Speaker #5: So I'm cautiously optimistic. With that business, it's having good margins, by the way, important to keep that in mind. But yeah, they improving and they're in positive territory.

Speaker #5: And we can see that, in the last six months, that consolidation stopped or paused and that things are getting slightly better. And if you look as well, we're a bit better than the industries.

Speaker #5: So they're generating value for shareholders which is the first step towards greatness.

Speaker #4: Thank you. Our next question comes from the line of Lawrence Alexander with Jefferies. Please proceed with your question.

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

Speaker #5: So we're gaining share, which is a good thing as well. So, barely positive in Q2 for the paper team. But I feel really confident, with the great leadership that we have there, to get even more positive in Q3 and beyond.

Speaker #6: Hi, I'd like to revisit the life sciences. Can you just dig in a little bit on bioprocessing? Are you mostly winning share in the early stage preclinical or are you also getting the equivalent share gains in the later stage commercial?

Laurence Alexander: Hi, I'd like to revisit the life sciences. Can you just dig in a little bit on bioprocessing? Are you mostly winning share in the early-stage preclinical, or are you also getting equivalent share gains in later-stage commercial? Really, I'm trying to dig into your CapEx. You're talking about big CapEx, I think was the word you used. Are you trying to get your CapEx additions ahead of your growth rate so you can go into adjacencies? Or should we be thinking about this CapEx cycle as this is kind of the run rate that you'll be continuing into the 2030s because that's just how fast the end market is growing?

Speaker #6: And really I'm trying to dig into your capex. You're talking about big capex. I think was the word you used. Are you trying to get your capex additions ahead of your growth rate so you can go into adjacencies?

Speaker #5: So I'm cautiously optimistic with that business. It's having good margins, by the way—important to keep that in mind. But yeah, they're improving, and they're in positive territory.

Speaker #6: Or should we be thinking about this capex cycle as this is kind of the run rate that you'll be continuing into the 2030s because that's just how fast the end market is growing?

Speaker #5: So they're generating value for shareholders, which is the first step toward greatness.

Speaker #4: Thank you. Our next question comes from the line of Lawrence Alexander with Jefferies. Please proceed with your question.

Speaker #5: So a few things. Here, Lawrence, first, bear with me. I'll have to be careful into how much details I'm going. On the sensitivity of the competitive situation, there's very few players.

Christophe Beck: A few things, Laurence. First, bear with me. I'll have to be careful into how much details I'm going on the sensitivity of the competitive situation. There's very few players in that industry. We know each other very well. We all understand that work we do well is sustaining lives around the world. I'm very careful how I'm going to talk about that. Generally, we have a very good position now across the whole spectrum, between early innovations, clinical trials of various stages, and commercial drugs, that the team has done very well in terms of jumping ahead the queue, in some cases, to make sure that we were covering the whole chain. As you know, it's another type of approach. You need to have a lot early in order to get a few big ones later.

Speaker #6: Hi, I'd like to revisit the life sciences. Can you just dig in a little bit on bioprocessing? Are you mostly winning share in the early-stage, preclinical?

Speaker #6: Or are you also getting the equivalent share gains in the later-stage commercial? I'm really trying to dig into your capex. You're talking about big capex.

Speaker #5: In that industry, we know each other very well. We all understand that what we do, well, is sustaining lives around the world. So I'm very careful.

Speaker #6: I think that was the word you used. Are you trying to get your CapEx additions ahead of your growth rate so you can go into adjacencies?

Speaker #5: So I'm going to talk about that. But generally, we have a very good position now across the whole spectrum between early innovations clinical trials, or various stages, and commercial drugs.

Speaker #6: Or should we be thinking about this CapEx cycle as, this is kind of the run rate that you'll be continuing into the 2030s because that's just how fast the end market is growing?

Speaker #5: So, a few things here, Lawrence. First, bear with me—I'll have to be careful about how much detail I'm going into on the sensitivity of the competitive situation. There are very few players.

Speaker #5: The team has done very well in terms of jumping ahead the queue in some cases to make sure that we were covering the whole chain.

Speaker #5: And as you know, it's another type of approach. You need to have a lot early in order to get a few big ones later.

Speaker #5: In this industry, we know each other very well. We all understand that what we do is sustaining lives around the world. So I'm very careful.

Speaker #5: So that's the rule of the game, obviously. So in life science. And now we are ideally positioned as the team has done in order to make sure that we can sustain and accelerate the growth in the future.

Christophe Beck: That's the rule of the game, obviously, in life sciences. Now we are ideally positioned as the team has done in order to make sure that we can sustain and accelerate the growth in the future. The question on our investments. We've clearly been investing ahead of the growth in that business. That's why we were talking about reported growth in the mid-teens and underlying growth in the mid-20s. Well, those 10 points were investments ahead. growth as we want to see that business driving 30% each type of margin at cruising speed. I don't want to get too quickly ahead of that. This is an industry of perfection. The quality of the products, of the team, of the delivery, of the innovation. It takes time. It takes depth. It takes passion and commitment to getting done.

Speaker #5: So I'm going to talk about that. But generally, we have a very good position now across the whole spectrum, between early innovations, clinical trials at various stages, and commercial drugs.

Speaker #5: The question on our investments we've clearly been investing ahead of the growth. In that business, that's why we were talking about reporting growth in the mid teens and underlying growth in the mid 20s.

Speaker #5: The team has done very well in terms of jumping ahead in the queue, in some cases, to make sure that we were covering the whole chain.

Speaker #5: Well, those 10 points were investments ahead of the growth as we want to see that business driving 30% each type of margin at cruising speed.

Speaker #5: And as you know, it's a funnel-type of approach. You need to have a lot early in order to get a few big ones later.

Speaker #5: But I don't want to get too quickly ahead of that. This is an industry of perfection. The quality of the products, of the team, of the delivery, of the innovation, it takes time, it takes depth, it takes passion and commitment to get it done.

Speaker #5: So that's the rule of the game, obviously. So, in Life Sciences. And now we are ideally positioned, as the team has done, in order to make sure that we can sustain and accelerate the growth in the future.

Speaker #5: The question on our investments—we've clearly been investing ahead of the growth in that business. That's why we were talking about, we bought it with growth in the mid-teens and underlying growth in the mid-20s.

Speaker #5: But as you can see now, so the underlying margins are getting so closer to the reported margins, which is a good thing. Q2 was a little bit of an extreme because we had a spike in bioprocessing.

Christophe Beck: As you can see now, the underlying margins are getting closer to the reported margins, which is a good thing. Q2 was a little bit of an extreme because we had a spike in bioprocessing. Not every quarter created the same, generally, the trajectory is very good. I like our competitive situation, and as mentioned before, we don't have the ambition to become the biggest. We want to become the best life sciences business in the industry.

Speaker #5: It's not every quarter created the same. But generally, the trajectory is very good. So I like our competitive situation. And as mentioned before, we don't have the ambition to become the biggest.

Speaker #5: Well, those 10 points were investments ahead of the growth, as we want to see that business driving approximately 30% margins at cruising speed.

Speaker #5: We want to become the best life sciences business in the industry.

Speaker #5: But I don't want to get too quickly ahead of that. This is an industry of perfection. The quality of the products, of the team, of the delivery, of the innovation—it takes time.

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

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

Speaker #1: Thank you very much. To go back to capex, Christophe, when you acquired Cool IT, my recollection is you said that they had enough capacity on their own to supply a doubling of their sales, which seems like a pace that they're very much on.

Vincent Andrews: Thank you very much. To go back to CapEx, Christophe, when you acquired CoolIT, my recollection is you said that they had enough capacity on their own to supply a doubling of their sales, which seems like a pace that they are very much on. I think you separately said that the plan was to go asset light, similar to how you do it in your dishwashing business, where you design and have the IP and then somebody else does the manufacturing. Just wondering if you can tell us where you are in that journey, given it sounds like the growth rate of CoolIT is really moving maybe faster than originally thought.

Speaker #5: It takes depth. It takes passion and commitment to get it done. But as you can see now, the underlying margins are getting much closer to the reported margins, which is a good thing.

Speaker #5: Q2 was a bit of an outlier because we had a spike in bioprocessing. Not every quarter is the same, but generally the trajectory is very good.

Speaker #1: And I think you separately said that the plan was to go sort of asset light, sort of similar to how you do it in your dishwashing business where you design and have the IP and then somebody else does the manufacturing.

Speaker #5: So I like our competitive situation. And as mentioned before, we don't have the ambition to become the biggest; we want to become the best life sciences business in the industry.

Speaker #1: So just wondering if you can tell us where you are in that journey given it sounds like the growth rate of Cool IT is really moving maybe faster than originally thought.

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

Speaker #5: Yeah. So generally, directionally, absolutely no change. What you've said is still valid. We want small exception, which is a good one. Is that the growth seems to be faster than what we had expected for all the reasons I mentioned before.

Christophe Beck: Yeah. Generally, directionally, absolutely no change. What you've said is still valid with one small exception, which is a good one, is that the growth seems to be faster than what we had expected for all the reasons I mentioned before. The leading-edge technologies that CoolIT is having, the combination of Ecolab and CoolIT coming together, providing the market with something that no one else can provide in terms of higher performance, no water, and less energy to do the same job as well. Generally, for the company, I don't see big changes. For our high-tech business, we might have to go faster, which is exactly what we'd like to see and you'd like to see, I guess, as well. Let me ask maybe Scott, if you'd like to add any perspective on CapEx in general.

Speaker #3: Thank you very much. To go back to CapEx, Christophe, when you acquired CoolIT, my recollection is you said that they had enough capacity on their own to supply a doubling of their sales, which seems like a pace that they're very much on.

Speaker #5: The leading edge technologies that Cool IT is having the combination of Ecolab and Cool IT coming together providing the market with something that no one else can provide in terms of higher performance, no water and less energy.

Speaker #3: And I think you separately said that the plan was to go sort of asset-light, similar to how you do it in your dishwashing business, where you design and have the IP, and then somebody else does the manufacturing.

Speaker #3: So, just wondering if you can tell us where you are in that journey, given it sounds like the growth rate of CoolIT is really moving, maybe faster than originally thought.

Speaker #5: To do the same job as well. So generally for the company, I don't see big changes. But for our high-tech business, we might have to go faster which is exactly what we'd like to see and you'd like to see.

Speaker #5: Yes, so generally, directionally, absolutely no change. What you've said is still valid. We want—small exception, which is a good one—is that the growth seems to be faster than what we had expected, for all the reasons I mentioned before.

Speaker #5: I guess as well. But let me ask maybe Scott, if you'd like to add any perspective on capex in general.

Speaker #3: Yeah. Just more broadly, as Christophe talked about, we will invest ahead of growth in the growth engines. But expect that the capex as a company to remain similar to where we're at now for the next couple of years.

Scott Kirkland: Yeah, just more broadly, as Christophe talked about, we will invest ahead of growth in the growth engines, but expect that the CapEx as a company to remain similar to where we are at now for the next couple of years, and we've talked about this for a little while. Likely remaining around the 7% the next couple of years because we are investing ahead for the global high-tech business and life science. As we scale these growth engines, we will continue to evaluate it. We are always going to take advantage of these attractive returns.

Speaker #5: The leading-edge technologies that Cool IT is having, the combination of Ecolab and Cool IT coming together, are providing the market with something that no one else can provide in terms of higher performance, no water, and less energy.

Speaker #3: And we've talked about this for a little while. Likely remaining around the 7% the next couple of years because we are investing ahead for the global high-tech business and life science.

Speaker #3: But then as we scale these growth engines, we'll continue to evaluate it. But we're always going to we're always going to take advantage of these attractive returns.

Speaker #5: To do the same job as well. So, generally, for the company, I don't see big changes. But for our high-tech business, we might have to go faster, which is exactly what we'd like to see and what you'd like to see, I guess, as well.

Operator: Thank you. Our next question comes from the line of Patrick Cunningham with Citi. Please proceed with your question.

Speaker #4: Thank you. Our next question comes from the line of Patrick Cunningham with Citi. Please proceed with your question.

Speaker #1: Hi. Good afternoon. Maybe just on food and beverage. Pretty strong 7% sales growth there. Pretty good execution against a flat broader industry. I guess can you share details on what has contributing to the increased traction there?

Speaker #5: But let me ask maybe Scott if you'd like to add any perspective on CapEx in general.

Patrick Cunningham: Hi, good afternoon. Maybe just on food and beverage, pretty strong 7% sales growth there. A pretty good execution against a flat broader industry. I guess, can you share details on what is contributing to the increased traction there, and how much acceleration do you expect to see within this business over the coming quarters?

Speaker #2: Yeah. Just more broadly, as Christophe talked about, we will invest ahead of growth in the growth engines. But expect the capex as a company to remain similar to where we're at now for the next couple of years.

Speaker #1: And how much acceleration do you expect to see within this business over the coming quarters?

Speaker #2: And we've talked about this for a little while. It's likely to remain around 7% for the next couple of years, because we are investing ahead for the global high-tech business and life sciences.

Speaker #5: So food and beverage, which is one of those core businesses that we have, that I think is one of the best global businesses we have is one of the best teams around the world.

Christophe Beck: Food and beverage, which is one of those core businesses that we have that I think is one of the best global businesses we have, is one of the best teams around the world. Serving a very sophisticated industry of consumer goods companies with big brands everywhere around the world. It's a business I love. I love it even more looking at the performance that this business is driving. You mentioned 7%. If you remember, our long-term target for this business is 5% to 7%, they are at the higher end of that range. Why that? I'll give you the simple answer here. It's the One Ecolab approach, where the team has brought together our food safety capabilities with our water capabilities as one integrated organization. It's not just two teams playing nice together to serve the customer.

Speaker #2: But then, as we scale these growth engines, we'll continue to evaluate it. But we're always going to take advantage of these attractive returns.

Speaker #5: Serving a very sophisticated industry of consumer goods, companies with big brands everywhere around the world. So it's a business I love. And I love it even more looking at the performance.

Speaker #4: Thank you. Our next question comes from the line of Patrick Cunningham with Citi. Please proceed with your question.

Speaker #3: Hi, good afternoon. Maybe just on Food & Beverage—pretty strong 7% sales growth there, and pretty good execution against a flat broader industry. I guess, can you share details on what has contributed to the increased traction there?

Speaker #5: That this business is driving. You mentioned 7%. If you remember, so our long-term target for this business is 5 to 7%. So there are at the higher end of that range.

Speaker #3: And how much acceleration do you expect to see within this business over the coming quarters?

Speaker #5: So, Food & Beverage, which is one of those core businesses that we have, and that I think is one of the best global businesses we have, is supported by one of the best teams around the world.

Speaker #5: And why that? I'll give you the simple answer here. It's the one Ecolab approach. Where the team has brought together our food safety capabilities with our water capabilities as one integrated organization.

Speaker #5: Serving a very sophisticated industry of consumer goods companies with big brands everywhere around the world. So it's a business I love, and I love it even more looking at the performance.

Speaker #5: So it's not just two teams playing nice together to serve the customer. It's an integrated team with experts in food safety and experts in water working on the same team for the same customers anywhere around the world.

Christophe Beck: It's an integrated team with experts in food safety and experts in water working on the same team for the same customers anywhere around the world. We're not done yet. We've done the work in North America, where the teams came together and ultimately, well, again, position it as a strategic idea of producing safe food while using less water and energy. There is a much more mundane driver of the growth, is the cross-selling. How do we sell food safety solutions into water customers and water solutions into food safety customers? That's a sales execution play with a good strategic intent. That's been the main driver. The execution has worked really well. We're expanding what we've done in North America now around the world. That will take some time, it's also driving some good runway of momentum, for the years to come.

Speaker #5: This business is really driving growth. You mentioned 7%. If you remember, our long-term target for this business is 5% to 7%, so they are at the higher end of that range.

Speaker #5: We're not done yet. We've done the work in North America. Where the teams came together and ultimately well, again, position it as a strategic idea of producing safe food while using less water and energy.

Speaker #5: And why is that? I'll give you the simple answer here: it's the One Ecolab approach, where the team has brought together our food safety capabilities with our water capabilities as one integrated organization.

Speaker #5: But there is a much more mundane driver of the growth is the cross-selling. So how do we sell food safety solutions into water customers and water solutions into food safety customers?

Speaker #5: So, it's not just two teams playing nicely together to serve the customer—it's an integrated team, with experts in food safety and experts in water, working on the same team for the same customers anywhere around the world.

Speaker #5: That's a sales execution play with a good strategic intent. So that's been the main driver. The execution has worked really well. We expanding what we've done in North America now around the world that will take some time.

Speaker #5: We're not done yet. We've done the work in North America, where the teams came together and ultimately, again, positioned it as a strategic idea of producing safe food while using less water and energy.

Speaker #5: But it's also driving some good runway of momentum. So for the years to come. And last but not least is what you're hearing as well on the markets.

Christophe Beck: Last but not least, is what you're hearing as well on the market. Producing safe food Well, it's something that is pretty top of mind for everyone right now, being in restaurants, being in retail. What we're doing is even more in demand than what it was in the past.

Speaker #5: But there is a much more mundane driver of the growth, and that is the cross-selling. So, how do we sell food safety solutions into water customers and water solutions into food safety customers?

Speaker #5: Producing safe food while is something that is pretty top of mind for everyone right now being a restaurant, being in retail, and what we're doing is even more in demand.

Speaker #5: Than what it was in the past.

Speaker #5: That's a sales execution play with good strategic intent. So that's been the main driver. The execution has worked really well. We're expanding what we've done in North America now around the world.

Speaker #4: Thank you. Our next question comes from the line of Eric Boys with Evercore SI. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Eric Boyes with Evercore ISI. Please proceed with your question.

Speaker #2: Thanks and good afternoon. I think Ecolab Digital. Is nearly at a 500 million annual run rate and growing 20 to 30%. Smaller than global high-tech but pretty attractive incremental margin.

Eric Boyes: Thanks. Good afternoon. I think Ecolab Digital is nearly at a $500 million annual run rate and growing 20% to 30%, smaller than global high tech, but pretty attractive incremental margin. I was wondering if there's anything you can share on the trajectory for digital into 2027. Maybe talk to the margin contribution then. Why not push through a faster transition to the subscription model, given the value proposition of the offerings? Thank you.

Speaker #5: That will take some time, but it's also driving some good runway of momentum for the years to come. And last but not least is what you're hearing as well in the market.

Speaker #2: So I was wondering if there's anything you can share on the trajectory for digital into 2027. Maybe talk to the margin contribution then. Why not push through a faster transition to the subscription model given the value proposition of the offerings?

Speaker #5: Producing safe food is something that is pretty top of mind for everyone right now—being a restaurant, being in retail—and what we're doing is even more in demand than it was in the past.

Speaker #2: Thank you.

Speaker #3: Thank you, Eric. So what you said is absolutely true.

Christophe Beck: Thank you, Eric. What you said is absolutely true. As well, on what you said, pushing for more faster. We're speaking the same language here. There's a lot of execution that needs to happen, obviously in between. I'm very pleased with the progress that we've made over the last couple of years. As you know, it's a pretty new business as a business, not as an activity. Because we've been on digital since we invented 3D TRASAR. Just for memory, it was invented in 1991. It's been a long time that we've been in connected devices, but they were obviously not connected to the cloud, to mainframes and all the complicated technology that we had. Today, that's the good news. Well, we have hundreds of thousands of connected devices and thousands of customer locations around the world.

Speaker #5: As well. On what you said. So pushing for more faster we're speaking the same language here. There's a lot of execution. That needs to happen.

Speaker #4: Thank you. Our next question comes from the line of Eric Boys with Evercore SI. Please proceed with your question.

Speaker #5: Obviously in between. But I'm very pleased with the progress that we've made over the last couple of years. As you know, it's a pretty new business as a business.

Speaker #6: Thanks, and good afternoon. I think Ecolab Digital is nearly at a $500 million annual run rate and growing 20% to 30%. It's smaller than Global High-Tech, but has a pretty attractive incremental margin.

Speaker #5: Not as an activity. Because we've been on digital since we invented. 3D Tresor and just for memory. It was invented in 1991. So it's been a long time that we've been in connected devices but there were obviously not connected.

Speaker #6: So I was wondering if there's anything you can share on the trajectory for Digital into 2027. Maybe talk to the margin contribution then. Why not push through a faster transition to the subscription model given the value proposition of the offerings?

Speaker #6: Thank you.

Speaker #2: Thank you, Eric. So what you said is—

Speaker #5: The cloud to mainframes and all the complicated technology that we had. So today that's the good news. Well, we have hundreds of thousands of connected devices and thousands of customer locations around the world.

Speaker #5: Absolutely true. As well, on what you said—so, pushing for more, faster—we're speaking the same language here. There's a lot of execution that needs to happen.

Speaker #5: Obviously, in between. But I'm very pleased with the progress that we've made over the last couple of years. As you know, it's a pretty new business, as a business.

Speaker #5: So we have a great installed base with a good critical mass. That only a few companies have up there but we know that for well, almost 30 years of that journey, we were doing that for free.

Christophe Beck: We have a great installed base with a good critical mass, that only a few companies have out there. We know that for almost 30 years of that journey, we were doing that for free without going for subscriptions, and making sure that we were remunerated for the value, and the offering that we are providing for our customers. We changed that 2 years ago. That was a change for customers, not a change for the industry, because that's what tech companies are doing for a living. As well as making sure our teams know how to do that. Our customers realize that, yes, they pay for something that is something they were used to. It's new, but it's driving as well, incremental value. That's why we've introduced internally that playbook, which we call the 100, 100 model, Eric.

Speaker #5: Not as an activity, because we've been on digital since we invented 3D Tresor. And just for memory, it was invented in 1991. So it's been a long time that we've been in connected devices, but they were obviously not connected.

Speaker #5: Without going for subscriptions and making sure that we were remunerated for the value and the offering that we are providing for our customers. So we changed that two years ago.

Speaker #5: That was a change for customers. Not a change for the industry because that's what tech companies are doing for a living. As well is making sure our teams know how to do that.

Speaker #5: The cloud, mainframes, and all the complicated technology that we had. So today, that's the good news. We have hundreds of thousands of connected devices and thousands of customer locations around the world.

Speaker #5: Our customers realize that yes, they pay for something that is something they were used to. It's new but it's driving as well incremental value.

Speaker #5: So we have a great installed base with a good critical mass that only a few companies have out there. But we know that for, well, almost 30 years of that journey, we were doing that for free.

Speaker #5: And that's why we've introduced internally that playbook. Which we call the 100-100-100 model Eric. Which is basically to say we want to connect 100% of the customer locations 100% of the applications within those customer location and that 100% of them generate revenue.

Christophe Beck: Which is basically to say we want to connect 100% of the customer locations, 100% of the applications within those customer location, and that 100% of them generate revenue. If you add all that, it drives a potential value of $3 billion. $3 billion is the revenue we could generate doing exactly that within our current customers. We are at $500 today, and that's why growing towards the $3 billion is the job number one. We all aligned that we'd like to grow even faster, I guess we will get there at some point. What's even better is that the $3 billion opens $10 incremental billion to it for applications that we haven't sold yet or customers that we haven't sold yet. Early on that journey, but on a very good trajectory so far.

Speaker #5: Without going for subscriptions, and making sure that we were remunerated for the value and the offering that we are providing for our customers. So, we changed that two years ago.

Speaker #5: If you add all that it drives a potential value of 3 billion. So 3 billion is the revenue we could generate doing exactly that within our current customers.

Speaker #5: That was a change for customers, not a change for the industry, because that's what tech companies are doing for a living, as well as making sure our teams know how to do that.

Speaker #5: Our customers realize that, yes, they are paying for something that is different from what they were used to. It's new, but it's also driving incremental value.

Speaker #5: We had 500 today. And that's why growing towards the 3 billion is the job number one we all aligned that we'd like to grow even faster.

Speaker #5: And that's why we've introduced internally that playbook, which we call the 100-100-100 model, Eric. Basically, it's to say we want to connect 100% of the customer locations, 100% of the applications within those customer locations, and have 100% of them generate revenue.

Speaker #5: And I guess we will get there. At some point. And what's even better is that the 3 billion opens 10 incremental billion to it for applications that we haven't sold yet or customers that we haven't sold yet.

Speaker #5: So early on that journey but on a very good trajectory so far.

Speaker #4: Thank you. Our next question comes from the line of Shloma Rosenbaum with Steeple. Please proceed with your question.

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

Speaker #5: If you add all that, it drives a potential value of $3 billion. So, $3 billion is the revenue we could generate doing exactly that within our current customers.

Speaker #6: Hi. Thank you very much for taking my question. Christoph, could you talk a little bit about the volume trajectory? It looks like it picked up and the implication is if you would not have had that the impact from the Middle East war you would have picked up to like 2% volume growth.

Shlomo Rosenbaum: Hi, thank you very much for taking my question. Christophe, could you talk a little bit about the volume trajectory? It looks like it picked up, and the implication is if you would not have had the impact from the Middle East war, you would have picked up to 2% volume growth. Could you talk about where you're seeing the volume increases? Where you might not be seeing them and geographically, maybe from a high level, which areas of the business? Really, what should we be thinking about that? We've been accustomed to seeing some of the growth in terms of the pricing. It's been a while since we've seen volume pick up to this level on what I would say a sustainable way. Can you give us your thoughts on that?

Speaker #5: We had 500 today, and that's why growing towards the $3 billion is job number one. We all aligned that we'd like to grow even faster.

Speaker #6: Could you talk about where you're seeing the volume increases where you might not be seeing them and geographically maybe by from a high level which areas the business and really what should we be thinking about that we've seen we've been accustomed to seeing some of the growth in terms of the pricing but it's been a while since we've seen volume pick up to this level on what I would say a sustainable rate and can you give us your thoughts on that?

Speaker #5: And I guess we will get there at some point. And what's even better is that the $3 billion opens $10 billion incremental to it for applications that we haven't sold yet or customers that we haven't sold yet.

Speaker #5: We're still early on that journey, but we're on a very good trajectory so far.

Speaker #4: Thank you. Our next question comes from the line of Shloma Rosenbaum with Stifel. Please proceed with your question.

Speaker #5: Yeah. Thank you, Shlomo. It seems like for the short term for the next few quarters that the 1% run rate seems to be the right one as you said.

Christophe Beck: Yeah. Thank you, Shlomo. It seems like for the short term, for the next few quarters, the 1% run rate seems to be the right one. As you said, we were closer to 2% without the impact of the Middle East. Okay, we live in an imperfect world and there will always be something somewhere, obviously happening. We were all hoping that the Middle East would solve itself much earlier. Doesn't seem to be exactly the case right now. We're living with it. That's why I'm saying, okay, the 1% trajectory is a healthy trajectory that I really like. This 1% is obviously the company average. You have the ones that are way ahead of that, and those are the growth engines, in high tech, in life science, in tests. Also, food and beverage has had some very good track records in volume.

Speaker #7: Hi, thank you very much for taking my question. Christophe, could you talk a little bit about the volume trajectory? It looks like it picked up, and the implication is that if you would not have had the impact from the Middle East war, you would have picked up to, like, 2% volume growth.

Speaker #5: We were closer to 2 without the impact of the Middle East. But okay, we're living in an imperfect world and there will always be something somewhere.

Speaker #7: Could you talk about where you're seeing the volume increases and where you might not be seeing them, geographically? Maybe from a high level, which areas of the business?

Speaker #5: Obviously happening. We were all hoping that the Middle East would solve itself much earlier. Doesn't seem to be exactly the case. Right now. So we're living with it.

Speaker #7: And really, what should we be thinking about with that? We've been accustomed to seeing some of the growth in terms of pricing, but it's been a while since we've seen volume pick up to this level at what I would say is a sustainable rate. Can you give us your thoughts on that?

Speaker #5: And that's why I'm saying okay, the 1% trajectory is a healthy trajectory that I really like. But this 1% is obviously the company average.

Speaker #5: So you have the ones that are way ahead of that. And those are the growth engines. In high-tech in life science in past. But also food and beverage has had some very good track records in volume.

Speaker #5: Yeah, thank you. Next few quarters, the 1% run rate seems to be the right one. As you said, we were closer to 2% without the impact of the Middle East.

Speaker #5: But okay, we live in an imperfect world, and there will always be something happening somewhere. Obviously, we were all hoping that the Middle East would solve itself much earlier.

Speaker #5: And then you have the other on the other extreme of the paper and heavier industries that were in the negative territory. So that's the beauty of the Ecolab portfolio that ultimately whatever happens one business or one region in the world we can keep a steady momentum which I believe the 1% for the next few quarters seems to be the right assumption to make.

Christophe Beck: You have the other on the other extreme, of the paper and heavier industries that were in the negative territory. That's the beauty of the Ecolab portfolio, that ultimately whatever happens to one business or one region in the world, we can keep a steady momentum, which I believe the 1% for the next few quarters seems to be the right assumption to make. If things improve out there, okay, it's going to be better, but directionally, I think it's going to be one plus, trending in the right direction. The Ovivo, and CoolIT, by the way, which are not in those numbers because they're not organic, by definition. Well, they add almost 2 percentage points, new to it as well.

Speaker #5: Doesn't seem to be exactly the case right now, so we're living with it. And that's why I'm saying: okay, the 1% trajectory is a healthy trajectory that I really like.

Speaker #5: But this 1% is obviously the company average. So you have some that are way ahead of that, and those are the growth engines.

Speaker #5: And things improve out there okay, it's going to be better but directionally I think it's going to be 1 plus trending in the right direction and the Aviva and Cool IT by the way which are not in those numbers because they're not organic.

Speaker #5: In high-tech, in life sciences, in the past, but also food and beverage has had some very good track records in volume. And then you have the other ones.

Speaker #5: On the other extreme, the paper and heavier industries were in negative territory. So, that's the beauty of the Ecolab portfolio: ultimately, whatever happens in one business or one region in the world, we can keep a steady momentum.

Speaker #5: By definition well, they add almost 2 percentage points to it as well. So you have this 1 plus the 2 plus or minus the Middle East that talked about you get to some very healthy type of volume growth which is exactly the place we want it to be.

Christophe Beck: You have this one plus the two, plus or minus the Middle East I talked about, you get to some very healthy type of volume growth, which is exactly the place we want it to be.

Speaker #5: Which, I believe, the 1% for the next few quarters seems to be the right assumption to make. And if things improve out there? Okay, it's going to be better.

Speaker #4: Thank you. Our next question comes from the line of Scott Schneberger with Oppenheimer. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Scott Schneeberger with Oppenheimer. Please proceed with your question.

Speaker #6: Thanks very much. Similar question to Shlomo's but on the pricing side. Just curious how the energy surcharge is progressing. You've spoken about hey, it's ramping up its second quarters.

Scott Schneeberger: Thanks very much. Similar question to Shlomo's, but on the pricing side. Just curious how the energy surcharge is progressing. You've spoken about, hey, it's ramping up in Q2, likely going to be more solidly in place in the back half. Just thoughts on that. The second part of the question is, how is structural pricing progressing and thoughts in H2 here? Thanks.

Speaker #5: But directionally, I think it's going to be 1-plus, trending in the right direction. And the Aviva and CoolIT, by the way, which are not in those numbers because they're not organic.

Speaker #6: Likely going to be more solidly in place in the back half. So just thoughts on that. And then the second part of the question is how is structural pricing progressing and thoughts in second half here?

Speaker #5: By definition, well, they add almost 2 percentage points to it as well. So you have this 1 plus the 2, plus or minus the Middle East that I talked about.

Speaker #6: Thanks.

Speaker #5: So we've always been pretty good at pricing. I think that we've become really good. At value pricing. Because of all the practice that we were given to the last few years to manage.

Christophe Beck: We've always been pretty good at pricing. I think that we've become really good at value pricing, because of all the practice that we were given for the last few years to manage through that. Let's not forget stepping back as well, that Ecolab, for a very long time, had an approach of getting the incremental cost back in USD year one and the margin year two. A 2-year cycle. Now in Q2, we managed to do both within 3 months, which is really a major change of the model. That's mostly driven by this value pricing approach, driven by this total value delivered that we're providing to customers, that customers are seeing that, yes, they're paying more, but they're getting more as well. Net-net, they are in a better place, financially, which is where we laser focus to deliver to them.

Speaker #5: You get to some very healthy type of volume growth, which is exactly the place we want it to be.

Speaker #4: Thank you. Our next question comes from the line of Scott Schneberger with Oppenheimer. Please proceed with your question.

Speaker #5: Through that. Let's not forget stepping back as well that Ecolab for a very long time had an approach of getting so the incremental cost back in dollars year one and the margin year two.

Speaker #7: Thanks very much. Similar question to Shlomo's, but on the pricing side—just curious how the energy surcharge is progressing. You've spoken about how it's ramping up in the second quarter.

Speaker #5: So two years cycle. And now in Q2 we managed to do both. Within three months. Which is really a major change. Of the model.

Speaker #7: It's likely going to be more solidly in place in the back half. So just thoughts on that. And then the second part of the question is, how is structural pricing progressing, and your thoughts on the second half here?

Speaker #5: And that's mostly driven by these value pricing approach driven by these total value delivered that we providing to customers that customers are seeing that yes, they're paying more but they're getting more as well and net net.

Speaker #7: Thanks.

Speaker #5: So, we've always been pretty good at pricing. I think that we've become really good at value pricing because of all the practice that we were given over the last few years to manage.

Speaker #5: They are in a better place financially which is where we laser focused to deliver to them. It takes some time to get it done the right way but the fact that our retention of customers as remain super stable during all those years well is a good indication that the approach is the right one.

Speaker #5: Through that, let's not forget—stepping back as well—that Ecolab, for a very long time, had an approach of getting the incremental cost back in dollars in year one.

Christophe Beck: It takes some time to get it done the right way. The fact that our retention of customers has remained super stable during all those years, well, it's a good indication that the approach is the right one. It's good for customers, it's good for Ecolab, it's good for shareholders as well at the same time. To your question on energy surcharge versus pricing, it's always an imperfect science because some of the businesses go straight into structural price. Others go in energy surcharge and move then afterwards, in structural price. Honestly, I don't really care how the whole thing is happening, as long as we get to the right place for us and for the customer as well. We exited to Q2 with 5% of pricing.

Speaker #5: And the margin year two. So, a two-year cycle. And now, in Q2, we managed to do both—within three months—which is really a major change.

Speaker #5: It's good for customers. It's good for Ecolab. It's good for shareholders. As well at the same time. So to your question on energy surcharge versus pricing it's always an imperfect science because some of the businesses go straight into structural price.

Speaker #5: Of the model. And that's mostly driven by this value pricing approach, driven by this total value delivered that we're providing to customers. Customers are seeing that, yes, they're paying more, but they're getting more as well, and net-net they are in a better place.

Speaker #5: Others go in energy surcharge and move then afterwards in structural price honestly I don't really care. So how the whole thing is happening as long as we get to the right place.

Speaker #5: Financially, which is where we laser-focused to deliver to them, it takes some time to get it done the right way. But the fact that our retention of customers has remained super stable during all those years is a good indication that the approach is the right one.

Speaker #5: For us and for the customer as well. And we accepted to Q2 with 5% of pricing. So when we talking about 5 to 6% in the second half well it's the exit trajectory of the second quarter.

Christophe Beck: When we're talking about 5% to 6% in H2, well, it's the exit trajectory of Q2. It's pretty solid, to say the least, which is why I feel quite good that we can get this positive gross margin, organic gross margin in H2 because the team is really good at it. We have all the systems, the processes, the customers understand that. We can manage almost any situation that's happening in the world that we cannot predict. We've demonstrated not only we can do it, but we can get it done in pretty short-term timing as well.

Speaker #5: So it's pretty solid to say the least. Which is why I feel quite good that we can get this positive gross margin organic gross margin in the second half because the team is really good at it.

Speaker #5: It's good for customers, it's good for Ecolab, and it's good for shareholders as well, at the same time. So, to your question on energy surcharge versus pricing, it's always an imperfect science because some of the businesses go straight into structural price.

Speaker #5: We have all the systems, the processes, the customers understand that. And we can manage almost any situation that's happening in the world that we cannot predict.

Speaker #5: Others go in energy surcharge and move. Then, afterwards, in structural price—honestly, I don't really care. It's about how the whole thing is happening, as long as we get to the right place.

Speaker #5: But we've demonstrated not only we can do it but we can get it done. In pretty short term. Timing as well.

Speaker #5: For us, and for the customer as well. And we accepted Q2 with 5% of pricing. So, when we're talking about 5% to 6% in the second half, well, it's the exit trajectory of the second quarter.

Speaker #4: Thank you. Our next question comes from the line of John Roberts with Mizuho. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of John Roberts with Mizuho. Please proceed with your question.

Speaker #6: Thank you. Pest elimination has been delivering high single digit revenue growth pretty consistently for at least a year now. And the operating margins are up around 20%.

John Roberts: Thank you. Pest elimination has been delivering high single-digit revenue growth pretty consistently for at least a year now, and the operating margins are up around 20%. Does it accelerate to low mid-teens growth as you deploy digital and agentic AI? Do you spend the margin improvement or do margins go up as you deploy digital and agentic AI?

Speaker #5: So it's pretty solid, to say the least. Which is why I feel quite good that we can get this positive organic gross margin in the second half, because the team is really good at it.

Speaker #6: Does it accelerate to low mid-teens growth as you deploy digital and agentic AI and do you spend the margin improvement or do margins go up as you deploy digital and agentic AI?

Speaker #5: We have all the systems and processes, and the customers understand that. We can manage almost any situation that's happening in the world that we cannot predict.

Speaker #5: Well John it's going to be a sequential work here. First on the top line is our targeted trajectory is 6 to 8%. So with the 7% we kind of right in the middle.

Christophe Beck: Well, John, it's going to be a sequential work here. First on the top line. Our targeted trajectory is 6% to 8%. With the 7%, we kind of right in the middle of that targeted range, which is always an important first step to me, delivering on our promise first and then improving from it the ambition of the team, which is an exceptional team, by the way, that we have in pest elimination. They're great at transforming the business, great innovation, working with the largest customers in the world in a difficult environment. The transformation they're doing is remarkable. I'm so impressed with everything that they're doing. It's going to drive top line ultimately even stronger. That's going to be the other good news. Back to the question on margin. It's a bit like the life science question.

Speaker #5: But we've demonstrated not only that we can do it, but we can get it done in a pretty short-term timeframe as well.

Speaker #4: Thank you. Our next question comes from the line of John Roberts with Mizuho. Please proceed with your question.

Speaker #5: Of that targeted range which is always an important first step. To me delivering on our promise first and then improving from it the ambition of the team which is an exceptional team.

Speaker #7: Thank you. Pest Elimination has been delivering high single-digit revenue growth pretty consistently for at least a year now, and the operating margins are up around 20%.

Speaker #5: By the way that we have invest elimination a great transforming the business. Great innovation. Working with the largest customers in the world in a difficult environment.

Speaker #7: Does it accelerate to low- to mid-teens growth as you deploy digital and agentic AI? And do you spend the margin improvement, or do margins go up as you deploy digital and agentic AI?

Speaker #5: The transformation they're doing is remarkable. I'm so impressed. With everything that they're doing. So it's going to drive top line ultimately even stronger. That's going to be the other good things.

Speaker #5: Well, John, it's going to be sequential work here. First, on the top line—this is our targeted trajectory: 6% to 8%. So with the 7%, we're kind of right in the middle.

Speaker #5: But back to the question on margin. It's a bit the life science question. When we get into new technologies new innovation they some need to create the right foundations first before we really get the benefits of it.

Speaker #5: Of that targeted range, which is always an important first step. To me, delivering on our promise first, and then improving from it—the ambition of the team, which is an exceptional team, by the way, that we have in pest elimination.

Christophe Beck: When we get into new technologies, new innovation, there is some need to create the right foundations first, before we can really get the benefits of it. Yes, in the margin of pest elimination and in the operating income growth, you have investments behind. Pest Intelligence that are going to continue. As I've said, 800,000 connected devices will be north of one million by the end of the year. No other company is there around the world. Well, that requires effort And investments. Ultimately, we know it's going to pay off both on top line and on bottom line in one of the businesses with the highest margins and the highest return as well at the same time. Early investments and ultimately better returns down the road.

Speaker #5: So yes in the margin of pest elimination and in the operating income growth you have investments behind. So pest intelligence that are going to continue as I've said so 800,000 connected devices will be north of 1 million.

Speaker #5: They're great at transforming the business—great innovation, working with the largest customers in the world, in a difficult environment. The transformation they're doing is remarkable.

Speaker #5: I'm so impressed with everything that they're doing. So it's going to drive top-line ultimately even stronger. That's going to be the other good thing.

Speaker #5: By the end of the year no other company is there around the world. Well that requires efforts and investments but ultimately we know it's going to pay off both of top line and on bottom line in one of the businesses with the highest margins and the highest return as well at the same time.

Speaker #5: But back to the question on margin, it's a bit like the life science question. When we get into new technologies, new innovation, they sometimes need to create the right foundations first before we really get the benefits of it.

Speaker #5: So early investments and ultimately better returns down the road.

Speaker #4: Thank you. Our next question comes from the line of Jeff Zakakis with JP Morgan. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Jeff Zekauskas with J.P. Morgan. Please proceed with your question.

Speaker #5: So, yes, in the margin of best elimination and in the operating income growth, you have investments behind—so best intelligence. But they're going to continue, as I've said. So, 800,000 connected devices will be north of 1 million.

Speaker #7: Thanks very much.

Jeff Zekauskas: Thanks very much. A two-part question. The first is that you've acquired to accelerate your growth. Do you have goals for either return on capital or return on assets or return on equity or goals that situate those metrics relative to where Ecolab was before the acquisitions were made? Secondly, in the global Institutional and Specialty business, the organic growth was about 4%. I would expect pricing in that segment to be higher than 4%. Was volume growth negative by 1% or 2%? I guess that may have had to do with the Institutional business. Can you talk about what's going on in that area?

Speaker #6: A two-part question. The first is that you've acquired two accelerate your growth. Do you have goals for either return on capital or return on assets or return on equity or goals that situate those metrics relative to where Ecolab was before the acquisitions were made?

Speaker #5: By the end of the year, no other company is there around the world. Well, that requires efforts and investments, but ultimately, we know it's going to pay off both on the top line and on the bottom line in one of the businesses with the highest margins and the highest return as well, at the same time.

Speaker #5: So, early investments and ultimately better returns down the road.

Speaker #6: And secondly in the global institutional and specialty business the organic growth was about 4%. And I would expect pricing in that segment to be higher than 4%.

Speaker #4: Thank you. Our next question comes from the line of Jeff Zakakis with JP Morgan. Please proceed with your question.

Speaker #6: Thanks very much.

Speaker #7: A two-part question. The first is that you've acquired to accelerate your growth. Do you have goals for either return on capital, return on assets, or return on equity?

Speaker #6: So was volume growth negative by one or two percent and I guess that may have had to do with the institutional business. Can you talk about what's going on in that area?

Speaker #5: Yeah. Thank you Jeff. So two very different questions. Here let me start with the second and then I'll go to the first one and then I'll ask Scott.

Christophe Beck: Yeah. Thank you, Jeff. Two very different questions. Let me start with the second, then I'll go to the first one, then I'll ask Scott as well to add to the return question. On Institutional, really pleased with the steadiness, the 4% in Institutional and Specialty is the restaurants, hotels, and specialty retail and quick serve. Well, allows us to capture consumers going to whatever segment, cheaper or more premium, depending on the economic state of the country, wherever our customers operate. In a place wherever people are going, we capture that growth. The 4%, I think is a pretty good, steady type of performance for that business. Keeping in mind that foot traffic in the US in restaurants is down 5% year over year right now.

Speaker #7: Are there goals that situate those metrics relative to where Ecolab was before the acquisitions were made? And secondly, in the Global Institutional and Specialty business, the organic growth was about 4%.

Speaker #5: As well as to add to the return question. So on institutional really pleased with the steadiness. The 4% in institutional and specialty is in our restaurants hotels and specialty retail and quick serve.

Speaker #7: And I would expect pricing in that segment to be higher than 4%. So, was volume growth negative by one or two percent? And I guess that may have had to do with the institutional business.

Speaker #5: Well allows us to capture consumers going to whatever segment cheaper or more premium depending on the economic state of the country wherever. Our customers so operate.

Speaker #7: Can you talk about what's going on in that area?

Speaker #5: So in a place where wherever people are going we capture that growth. So the 4% I think is a pretty good steady type of performance for that business.

Speaker #5: Yeah, thank you, Jeff. So, two very different questions here. Let me start with the second, and then I'll go to the first one, and then I'll ask Scott.

Speaker #5: As well as to add to the return question. So, on Institutional, really pleased with the steadiness—the 4% in Institutional and Specialties. The restaurants, hotels, specialty retail, and quick serve all allow us to capture consumers going to whatever segment, cheaper or more premium, depending on the economic state of the country, wherever.

Speaker #5: Keeping in mind that food traffic in the US in restaurants is down 5% year over year right now. So the growth of the 4% versus the minus 5 in the restaurants is quite remarkable.

Christophe Beck: The growth of the 4% versus the -5% in the restaurants is quite remarkable. It's not growth of life science, of digital, or of GHT. For such a traditional industry, we're clearly gaining share, and we're gaining margin as well at the same time because that business is in the low 20s to mid-20s type of operating margin. A very strong, solid business with a franchise that's unmatched as well around the world. I&S, I'd love them to grow even faster, but honestly, I think that they are in a darn good place where they are now. Second or first, you question when you talk about organic versus non-organic, well, the results of growth that we had in Q2, especially if you adjust for the Middle East, well, that growth of volume was not acquired. That was organic. Yes.

Speaker #5: So it's not growth of life science of digital or of GHT. But for such a traditional industry we clearly gaining share and we're gaining margin as well at the same time.

Speaker #5: Our customers operate—so in a place where, wherever people are going, we capture that growth. So the 4% I think is a pretty good, steady type of performance for that business.

Speaker #5: Because that business is in the low 20s to mid 20s type of operating margins. So a very strong solid business with a franchise that's unmatched as well around the world.

Speaker #5: Keep in mind that food traffic in the U.S. in restaurants is down 5% year over year right now. So, the growth of 4% versus the minus 5% in restaurants is quite remarkable.

Speaker #5: So INS I'd love them to grow even faster but honestly I think that they are in a darn good place. Where they are now.

Speaker #5: And second or first you question when you talk about organic versus non-organic. Well the results of growth that we had in the second quarter especially if you adjust for the Middle East.

Speaker #5: So it's not growth of Life Sciences, of Digital, or of GHT. But for such a traditional industry, we're clearly gaining share, and we're gaining margin as well at the same time.

Speaker #5: Well that growth of volume was not acquired. That was organic. Yes now cool IT and Avivo which have been acquired are going to add a couple of points to the overall company.

Speaker #5: Because that business is in the low-20s to mid-20s type of operating margins. So, a very strong, solid business with a franchise that's unmatched as well around the world.

Christophe Beck: Now CoolIT and Ovivo, which have been acquired, are going to add a couple of points to the overall company. It's always been kind of a combination of two-thirds or 80% core growth and 20% M&A. We're going to keep on that path as well, Jeff, it's working quite well. I like as well the return profile of it, I'd like to ask Scott to comment on that.

Speaker #5: It's always been kind of a combination of two thirds or 80% core growth. And 20% M&A we're going to keep on that path as well Jeff.

Speaker #5: So, Ionas, I'd love them to grow even faster, but honestly, I think that they are in a darn good place where they are now.

Speaker #5: And it's working quite well. I like as well the return profile of it but I'd like to ask Scott to comment on that.

Speaker #5: And second or first, you questioned when you talk about organic versus non-organic. Well, the results of growth that we had in the second quarter, especially if you adjust for the Middle East—well, that growth of volume was not acquired.

Speaker #3: Yeah. Jeff as we talked about obviously the specific cool IT but with all deals that we look at the specific investment or asset returns and as we've talked about with cool IT the returns on this are well above our cost of capital.

Scott Kirkland: Jeff, as we talked about, obviously, specifically to CoolIT, but with all deals, that we look at the specific investment or asset returns. As we've talked about with CoolIT, the returns on this are well above our cost of capital. Then more specifically, as we think about just the company as a whole, we've talked about ROIC for a long time. Obviously, ROIC is sort of a point-in-time measure, and when you have a significant acquisition like this, that will have a dilutive impact in the short term, but we still have a very focus on ROIC and growing ROIC, organic ROIC as we define it by at least 100 basis points a year and feel very good about that.

Speaker #3: And then more specifically as we think about just the company as a whole we've talked about ROC for a long time. Obviously ROC is sort of a point in time measure and when you have a significant acquisition like this that will have a dilutive impact in the short term.

Speaker #5: That was organic. Yes, now Cool IT and Avimo, which have been acquired, are going to add a couple of points to the overall company.

Speaker #5: It's always been kind of a combination of two-thirds or 80% core growth and 20% M&A. We're going to keep on that path as well, Jeff.

Speaker #3: But we still have a very focused on ROC and growing ROC organic ROC as we define it by at least 100 basis points a year.

Speaker #3: And feel very good about that as we think about the impact of cool IT that will take a year and a half or so to annualize because of the denominator.

Scott Kirkland: As we think about the impact of CoolIT, that will take a year and a half or so to annualize because of the denominator, but expect to get back to pre-acquisition levels on our organic ROIC by 2028.

Speaker #5: And it's working quite well. I like the return profile of it as well, but I'd like to ask Scott to comment on that.

Speaker #3: But expect to get back to pre-acquisition levels on our organic ROC by 2028.

Speaker #3: Yeah. Jeff, as we talked about, obviously, the specifically cool IT, but with all deals that we look at the specific investment or asset returns and as we've talked about with cool IT, the returns on this are well above our cost of capital.

Speaker #5: I'd like to make a comment on life science as well. So just I'm lying what I said before. Jeff we're set what's the return expectation that we have.

Christophe Beck: I'd like to make a comment on life science as well. I'll just underline what I said before, Jeff. With that, what's the return expectation that we have so for that business? Early on, we were not on track for two, three years as we know, that was the absolute focus for the team to get back on the early promised return of that business, that business is back on that track. We take it super seriously.

Speaker #3: And then, more specifically, as we think about the company as a whole, we've talked about ROC for a long time. Obviously, ROC is a set, point-in-time measure.

Speaker #5: So for that business early on we were not on track for two three years. As we know and that was the absolute focus for the team to get back on the early promised return.

Speaker #3: And when you have a significant acquisition like this, that will have a dilutive impact in the short term. But we still are very focused on ROC and growing ROC—organic ROC, as we define it—by at least 100 basis points a year.

Speaker #5: Of that business and that business is back on that track. So we take it super seriously.

Speaker #3: And we feel very good about that as we think about the impact of Cool IT, which will take a year and a half or so to annualize because of the denominator.

Speaker #4: Thank you. Our next question comes from the line of Matthew DeYo with Bank of America. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Matthew DeYoe with Bank of America. Please proceed with your question.

Speaker #3: But we expect to get back to pre-acquisition levels on our organic ROC by 2028.

Matthew DeYoe: Thank you for squeezing me in. 5%, 6% price. That's $450 plus million of just EBIT tailwind year-over-year for the H2. If I just give you a 100% margin, which I don't know, maybe it's too much, but that candidly feels way too high. If I'm thinking about just operating leverage through the business, covering normal course inflation, which maybe isn't the case. Long story, this is just why isn't margin expanding more materially in the H2? Does the guidance for raw material inflation that you're baking in reflective of the basket in March, April, or is it reflective of the current situation? As I think about things like propylene baskets kind of coming under pressure. I mean, obviously who knows, right?

Speaker #5: I'd like to make a comment on Life Sciences as well, so I'll just underline what I said before. Jeff, we're set. What's the return?

Speaker #2: Thank you for squeezing me in. So five six percent price I don't know it's 450 plus million dollars of just EBIT tailwind year over year for the back half if I just give you a 100% margin which I don't know maybe it's too much.

Speaker #5: The expectation that we have for that business—early on, we were not on track for two or three years, as we know. That was the absolute focus for the team: to get back on the early promised return of that business.

Speaker #2: But that's implying like raw material inflation that's candidly feels way too high. And if I'm thinking about just operating leverage through the business covering normal course inflation which maybe isn't the case.

Speaker #5: And that business is back on that track, so we take it super seriously.

Speaker #4: Thank you. Our next question comes from the line of Matthew DeYo with Bank of America. Please proceed with your question.

Speaker #2: Long story that this is just why isn't margin expanding more materially in the back half. And does the guidance for raw material inflation that you're baking in reflective of the basket in March April or is it reflective of the current situation as I think about things like propylene baskets kind of coming under pressure.

Speaker #6: Thank you for squeezing me in. So, five, six percent price—I don't know. It's $450-plus million of just EBIT tailwind year over year for the back half, if I just give you a 100% margin—which, I don't know, maybe it's too much.

Speaker #2: I mean obviously who knows right with the straight close. But I'm just trying to understand why the operating leverage isn't significantly higher with mid single digit price.

Matthew DeYoe: With the straight close, I'm just trying to understand why the operating leverage isn't significantly higher with mid-single-digit price.

Speaker #6: But that’s implying raw material inflation that, candidly, feels way too high. And if I’m thinking about just operating leverage through the business covering normal course inflation—which maybe isn’t the case, long story—that this is just... why isn’t margin expanding more materially in the back half?

Speaker #5: So a few comments here. And I'll pass it to Scott as well a bit more. So first it's always with the latest information that we update you.

Christophe Beck: A few comments here, and I'll pass it to Scott as well a bit more. First, it's always with the latest information that we update you. We don't stay stuck to assumptions that were made in March. The world has changed quite a bit, obviously, in the meantime. It's fresh information, when we talk together. Second, I don't need to explain to you how it works to get margins in positive territory. Since we have roughly 50% gross margin, well, you need double the price versus the cost that you're getting. When you need to do that in three months, not in a chemical business, but in a service, technology, expertise type of business, this is a remarkable accomplishment.

Speaker #5: We don't stay stuck. So two assumptions that were made in March the world has changed quite a bit. Obviously so in the meantime. So it's fresh information.

Speaker #6: And does the guidance for raw material inflation that you're baking in reflect the basket in March, April, or is it reflective of the current situation? As I think about things like propylene baskets kind of coming under pressure?

Speaker #5: When we talk together. Second I don't want to explain to you so how it works to get margins. In positive territory since we have roughly 50% gross margin well you need double the price versus the cost that you're getting.

Speaker #6: I mean, obviously, who knows, right, with the straight close? But I'm just trying to understand why the operating leverage isn't significantly higher with mid-single-digit price.

Speaker #5: And when you need to do that in three months not in a chemical business but in a service technology expertise type of business. This is a remarkable accomplishment and especially when you need to do it over and over again while keeping building more growth with more customers without losing any as well at the same time.

Speaker #5: So, a few comments here, and I'll pass it to Scott in just a bit as well. First, it's always with the latest information that we update you.

Christophe Beck: Especially when you need to do it over and over again, while keeping building more growth with more customers without losing any, as well at the same time. That's the simple math of the protecting gross margin. As I said before, it took us two years to do the same work as we do in three months today, a few years back. Last point, I'd say we do it in ways that are always constructive for our customers, which means that they get the savings in their operations higher than the incremental price that we are asking from them as a share of the benefits that they're getting as well at the same time. It's going to lead ultimately, that's the good news.

Speaker #5: We don't stay stuck. So, two assumptions that were made in March—the world has changed quite a bit, obviously, in the meantime. So, it's fresh information.

Speaker #5: So that's the simple math. Of the protecting gross margin and as I said before it took us two years to do the same work as we do in three months today a few years back.

Speaker #5: When we talk together, second, I don't want to explain to you how it works to get margins. In positive territory, since we have roughly a 50% gross margin, well, you need double the price versus the cost that you're getting.

Speaker #5: And last point I'd say we do it in ways that are always constructive for our customers which means that they get the savings in their operations higher than the incremental price that we are asking from them as a share of the benefits.

Speaker #5: And when you need to do that in three months, not in a chemical business but in a service technology expertise-type of business, this is a remarkable accomplishment—especially when you need to do it over and over again, while continuing to build more growth with more customers without losing any at the same time.

Speaker #5: That they get as well at the same time. So it's going to lead ultimately that's the good news. Once the delivered product cost is going to stabilize well then you get a much better gross margin because we never give the pricing back in our model.

Christophe Beck: Once the delivered product cost is going to stabilize, well, then you get a much better gross margin because we never give the pricing back in our model, not because we just stay stuck on it, but because the value we're generating to our customers will remain within the customer operations. That's why every time that there is an economic cycle, going up in inflation, not only we manage it well, but second, it leads to a net incremental margin on our trajectory, which is why if you look at the last 10 years, our gross margin has kept going up.

Speaker #5: So that's the simple math. After protecting gross margin, and as I said before, it took us two years to do the same work as we do in three months today.

Speaker #5: Not because we just stay stuck on it but because the value we're generating to our customers well remain within the customer operations. So that's why every time that there is an economic cycle so going up in inflation not only we manage it well but second it leads to a net incremental margin on our trajectory which is why if you look at the last 10 years our gross margin has kept going up.

Speaker #5: A few years back. And last point, I'd say we do it in ways that are always constructive for our customers, which means that they get the savings in their operations, higher than the incremental price that we are asking from them as a share of the benefits.

Speaker #5: That they're getting as well at the same time, so it's going to lead ultimately—that's the good news. Once the delivered product cost is going to stabilize, well, then you get a much better gross margin, because we never give the pricing back in our model. Not because we just stay stuck on it, but because the value we generate into our customers will remain within the customer operations.

Speaker #3: Yeah. A couple of things that Christophe thank you. As you've talked about it's difficult to make these firm assumptions as that dynamic environment. But as we see it here today we're expecting these high single digit commodity prices for the balance of the year.

Scott Kirkland: Yeah, I'll just add a couple of things to that, Christophe. Thank you. As you talked about, it's difficult to make these firm assumptions. It's a dynamic environment, but as we see it here today, we're expecting these high single-digit commodity prices for the balance of the year, right? If you look at that, and then also the other thing I would say, and we talked about this earlier, if you look at the gross margin, you also have the impact of Ovivo. We had our reported gross margin, we have organic gross margin and Ovivo, as we talked about in Q2, excluding Ovivo on an organic basis, our gross margins were stable. There's that call, 60 basis point drag just for Ovivo, and you'll see that same type of sort of difference in H2. That may be part of the math.

Speaker #3: Right. So if you look at that and then also the other thing I would say and we talked about this earlier if you look at the gross margin you also have the impact of a vivo so we had a reported gross margin we have organic gross margin and a vivo as we talked about in Q2 excluding a vivo on an organic basis our gross margins were stable.

Speaker #5: So that's why, every time there is an economic cycle—so, going up in inflation—not only do we manage it well, but second, it leads to a net incremental margin on our trajectory. Which is why, if you look at the last 10 years, our gross margin has kept going up.

Speaker #3: So there's that called 60 basis point drag just from a vivo and you'll see that same type of sort of difference in the second half.

Speaker #3: So that may be part of the math.

Speaker #4: Thank you. Our next question comes from the line of Josh Specter with UBS. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Josh Spector with UBS. Please proceed with your question.

Speaker #3: Yeah, a couple of things there, Christophe. Thank you. As you've mentioned, it's difficult to make these firm assumptions in that dynamic environment. But as we sit here today, we're expecting these high single-digit commodity prices for the balance of the year, right?

Speaker #6: Hey. Good afternoon guys. Thanks for squeezing me in. I wanted to go back to the high tech piece and really what I want to ask about is that a few weeks ago when you closed your plan to 2030.

Josh Spector: Hey, good afternoon, guys. Thanks for squeezing me in. I wanted to go back to the high tech piece, and really what I want to ask about is that a few weeks ago when you closed CoolIT, you took up your plan to 2030. You took up your margins. Obviously a high degree of confidence. I thought you'd come on this call and be able to give an update on CoolIT expectations for 2027, 2028, and maybe if that accretion math is pulled forward. Based on your comments earlier to David, it seems like you want to talk about that maybe in a few months. I'm just really curious, what gave you the confidence then at the start of July to raise your 2030 expectations there so much? Was it Ovivo or something else organic, or is it that you saw the backlog on CoolIT?

Speaker #6: You took up your margins. Obviously a high degree of confidence. I thought you'd come on this call and be able to give an update on Cool IT expectations for 2027 2028.

Speaker #3: So, if you look at that—and then also, the other thing I would say, and we talked about this earlier—if you look at the gross margin, you also have the impact of Avivo.

Speaker #3: So, we had a reported gross margin, and we have organic gross margin. And, as we talked about in Q2, excluding Avivo, on an organic basis, our gross margins were stable.

Speaker #6: And maybe if that accretion math has pulled forward based on your comments earlier to David it seems like you want to talk about that maybe in a few months.

Speaker #6: So I'm just really curious what gave you the confidence then at the start of July to raise your 2030 expectations there so much? Was it a vivo or something else organic or is it that you saw the backlog on Cool IT?

Speaker #3: So there's that called 60 basis point drag just for Avivo. And you'll see that same type of sort of difference in the second half.

Speaker #3: So, that may be part of the math.

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

Speaker #6: Just help me understand that please.

Josh Spector: Just help me understand that, please.

Speaker #7: Hey, good afternoon, guys. Thanks for squeezing me in. I wanted to go back to the high-tech piece. And really, what I want to ask about is that a few weeks ago, when you closed CoolIT, you took up your plan to 2030.

Speaker #5: So a few things here. First when we share so you target with you we want to be sure as sure as it can be.

Christophe Beck: A few things here. First, when we share some new targets with you, we want to be sure or as sure as it can be of what we're sharing, obviously, with you and together with CoolIT since the first week of July. That's been just a few weeks. You can't do much before you close, as you know as well. We're getting to know much more, when we look at the trajectory of both businesses, CoolIT and Ovivo and our core business, by the way, which has been doing really well for quite a long time now and especially in Q2.

Speaker #5: Of what we sharing. Obviously so with you and we're together so with Cool IT since the first week of July. So that's been just a few weeks.

Speaker #7: You took up your margins, obviously a high degree of confidence. I thought you'd come on this call and be able to give an update on Cool IT expectations for 2027, 2028.

Speaker #7: And maybe if that accretion math has pulled forward, based on your comments earlier to David, it seems like you want to talk about that maybe in a few months.

Speaker #5: And you come to much before you close as you know as well. So we're getting to know much more when we look at the trajectory of both businesses.

Speaker #7: So I'm just really curious—what gave you the confidence, then, at the start of July to raise your 2030 expectations there so much? Was it Avivo or something else organic?

Speaker #5: Cool IT and Avivo and our core business by the way which has been doing really well for quite a long time. Now and especially in the second quarter well we ended up in a position where we can say the minimum has to be risen and we don't need to go much into math and to say okay we can move up the floor which means that the middle of the range is going up as well at the same time.

Speaker #7: Or is it that you saw the backlog on Cool IT? Just help me understand that, please.

Speaker #5: So, a few things here. First, when we share some new targets with you, we want to be as sure as we can be.

Christophe Beck: Well, we ended up in a position where we can say the minimum has to be risen. We don't need to go much into math and to say, okay, we can move up the floor, which means that the middle of the range is going up as well at the same time. This is also the reason why we want to have an Investor Day at Supercomputing in November, because we firmly believe with not only where the market is going, but most importantly how our businesses are leading in those technologies that we will be better than what we had initially planned, which is a good problem to have. If anything, it's going to be better than what we just communicated, because we want to do the right work.

Speaker #5: Of what we're sharing, obviously. So, with you and together, so with Cool IT since the first week of July. So, that's been just a few weeks.

Speaker #5: But this is also the reason why we want to have an investor day at super compute in November because we firmly believe with not only when the market is going but most importantly how our businesses are leading those technologies that we will be better than what we had initially planned which is a good problem to have so if anything it's going to be better than what we've just communicated but we want to do the right work.

Speaker #5: And you can't do much before you close, as you know as well. So we're getting to know much more when we look at the trajectory of both businesses.

Speaker #5: Cool IT and Avivo, and our core business, by the way, which has been doing really well for quite a long time now—and especially in the second quarter—well, we ended up in a position where we can say the minimum has to be raised, and we don't need to go much into math to say, okay, we can move up the floor, which means that the middle of the range is going up as well at the same time.

Speaker #5: We're talking about the next three four five years to come and that requires some in-depth work on all those businesses but generally the direction of travel for all of those well is quite a bit better than what we had expected.

Christophe Beck: We're talking about the next three, four, five years to come, that requires some in-depth work on all those businesses. Generally, the direction of travel for all of those, well, is quite a bit better than what we had expected. Expect good news in November.

Speaker #5: But this is also the reason why we want to have an investor day at Supercompute in November, because we firmly believe that, not only with where the market is going, but most importantly, how our business is leading those technologies, that we will be better than what we had initially planned—which is a good problem to have.

Speaker #5: So expect good news in November.

Speaker #4: Thank you. Our next question comes from the line of Mike Harrison with Seaport Research Partners. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Michael Harrison with Seaport Research Partners. Please proceed with your question.

Speaker #7: Hi. Good afternoon. Christophe you kind of referenced the increased attention that's happening around food safety recently and I'm just curious if you can comment at all on what kind of impact this cyclospora outbreak has had on consumer behavior and maybe impacting your restaurant customers in terms of foot traffic.

Michael Harrison: Hi, good afternoon. Christophe, you kind of referenced the increased attention that's happening around food safety recently, I'm just curious if you can comment at all on what kind of impact this Cyclospora outbreak has had on consumer behavior and maybe impacting your restaurant customers in terms of foot traffic. I guess on your customers and them coming to you for food safety solutions or with greater attention on that. Maybe also tie in, it seems like the FDA has taken a little bit of a step back in terms of what they're monitoring and just curious if you view that as something that is helpful to your business or harmful to your business.

Speaker #5: So if anything, it's going to be better than what we've just communicated, but we want to do the right work. We're talking about the next three, four, five years to come.

Speaker #5: And that requires some in-depth work on all those businesses, but generally, the direction of travel for all of those, well, is quite a bit better than what we had expected.

Speaker #7: And then I guess on your customers and them coming to you for food safety solutions or with greater attention on that. And maybe also tie in it seems like the FDA has taken a little bit of a step back in terms of what they're monitoring and just curious if you view that as something that is helpful to your business or harmful to your business.

Speaker #5: So, expect good news in November.

Speaker #4: Thank you. Our next question comes from the line of Mike Harrison with Seaport Research Partners. Please proceed with your question.

Speaker #6: Hi, good afternoon. Christophe, you kind of referenced the increased attention that's happening around food safety recently, and I'm just curious if you can comment at all on what kind of impact this cyclospora outbreak has had on consumer behavior, and maybe impacting your restaurant customers in terms of foot traffic.

Speaker #5: So Mike I would not call that helpful or harmful. We're talking a little bit or a lot about people. Being impacted by what's happening again here.

Christophe Beck: Mike, I would not call that helpful or harmful. We're talking a little bit or a lot about people being impacted by what's happening again here. We're experiencing those situations too often in our country and around the world, and that's why we exist. Actually, it's to reduce and remove that risk as much as it's possible for every one of us eating foods or infection prevention in general. We feel for everyone that's been impacted by what's happening in our country right now. The few key questions that you had, impact on demand on our business. Now, no change of consumption at all, and in S&B, you've seen as well, so no change either.

Speaker #5: We're experiencing those situations too often in our country and around the world and that's why we exist. Actually it's to reduce and remove that risk as much as it's possible for every one of us eating food or infection prevention in general.

Speaker #6: And then I guess on your customers, with them coming to you for food safety solutions or with greater attention on that, and maybe also tie in—it seems like the FDA has taken a little bit of a step back in terms of what they're monitoring. I'm just curious if you view that as something that is helpful to your business or harmful to your business.

Speaker #5: So we feel for everyone that's been impacted by what's happening in our country right now. So the few key questions that you had impact on demand on our business now no change of consumption at all and in F&B you've seen as well.

Speaker #5: So, Mike, I would not call that helpful or harmful. We're talking a little bit, or a lot, about people being impacted by what's happening.

Speaker #5: So no change either. What's true however is every time that something like that happens customers come to us spend a lot of time with our research and development team with our scientists to really understand what is it.

Speaker #5: Again, here we're experiencing those situations too often—in our country and around the world. And that's why we exist, actually: to reduce and remove that risk as much as possible for every one of us, whether it's eating food or infection prevention in general.

Christophe Beck: What's true, however, is every time that something like that happens, customers come to us, spend a lot of time with our research and development team, with our scientists, to really understand what is it? How does it work? How does it impact us? How can we solve it? There is no one in the world that has more knowledge and expertise in infection prevention than Ecolab. Customers are clearly coming to us, which is a good sign. In the case of the end users, the restaurants, in that case, I think that they've done a very good job. In the specific case that we're talking about, they've been exemplary how they've taken care of their guests, of their employees, of their processes. We've been very close to them, as we always do, but we stay behind the scenes. We're there to help them.

Speaker #5: How does it work. How does it impact us. How can we solve it. There is no one in the world that has more knowledge and expertise in infection prevention than Ecolab.

Speaker #5: So, we feel for everyone that's been impacted by what's happening in our country right now. To the few key questions that you had: impact on demand.

Speaker #5: So customers are clearly coming to us which is a good sign. So and in the case of the end users the restaurants in that case I think that they've done a very good job.

Speaker #5: On our business now, no change of consumption at all. And in F&B, you've seen as well—so no change either. What's true, however, is every time something like that happens, customers come to us and spend a lot of time with our research and development team, with our scientists, to really understand: what is it?

Speaker #5: And in the specific case that we're talking about they've been exemplary. How they've taken care of their guests of their employees of their processes we've been very close to them as we always do.

Speaker #5: But we stay behind the scenes. We're there to help them. We're not there obviously so to get ahead of them in terms of news.

Christophe Beck: We're not there, obviously, so to get ahead of them in terms of news. We've worked with a lot of producers as well out there to make sure that they were learning from it, that we could make sure that the risk was going down for all the other ones as well. The one that's being talked about in the media right now is not one of our partners or customers, so I can't comment on them. I think ultimately that the next phase, and that's a big business opportunity, so for us, is to connect the producers with the end users being restaurants or retailers, which is something that hasn't been done much so far. We're uniquely placed because we protect a third of the world's food production, and we serve even more of the end users, retail, restaurants, and hotels.

Speaker #5: How does it work? How does it impact us? How can we solve it? There is no one in the world who has more knowledge and expertise in infection prevention than Ecolab.

Speaker #5: We've worked with a lot of producers as well out there to make sure that they were learning from it. That we could make sure that the risk was going down for all the other ones as well and the one that's being talked about in the media right now is not one of our partners or customers or account comment on them.

Speaker #5: So, customers are clearly coming to us, which is a good sign. And in the case of the end users—the restaurants—in that case, I think that they've done a very good job.

Speaker #5: But I think ultimately that the next phase and that's a big business opportunity so for us is to connect the producers with the end users being restaurants or retailers which is something that hasn't been done much so far and we uniquely placed because we protect a third of the world food production and we serve even more of the end users retail and restaurants and hotels.

Speaker #5: And in the specific case that we're talking about, they've been exemplary—how they've taken care of their guests, their employees, their processes.

Speaker #5: We've been very close to them, as we always do, but we stay behind the scenes. We're there to help them; we're not there, obviously.

Speaker #5: So, to get ahead of them in terms of news, we've worked with a lot of producers as well out there to make sure that they were learning from it.

Speaker #5: That we could make sure that the risk was going down for all the other ones as well. And the one that's being talked about in the media right now is not one of our partners or customers, so I won't comment on them.

Speaker #5: So connecting the two in the future will be a new business opportunity for us.

Christophe Beck: Connecting the two in the future will be a new business opportunity for us.

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

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

Speaker #5: But I think ultimately that the next phase—and that's a big business opportunity for us—is to connect the producers with the end users, being restaurants or retailers, which is something that hasn't been done much so far.

Speaker #8: Hey. Good afternoon and thanks for taking my question. I'm curious if you could comment on what the customer and industry reaction has been to the 50 kilowatt cold plate that was announced by Cool IT.

Jason Haas: Hey, good afternoon, and thank you for taking my question. I'm curious if you could comment on what the customer and industry reaction has been to the 50 kW cold plate that was announced by CoolIT. Curious what sort of reception there is and maybe it's gonna take some time, but curious just timeline for when that could start to benefit you guys. Thanks.

Speaker #8: Just curious what sort of reception there is and maybe it's going to take some time but curious just timeline when that could start to benefit you guys.

Speaker #8: Thanks.

Speaker #5: And we're uniquely placed because we protect a third of the world's food production. And we serve even more of the end users—retail, restaurants, and hotels.

Speaker #5: It's been very well received actually. It's the first time in my business history I have to admit that I see and hear customers not only wanting to be in the queue but to be ahead of the queue because there's limited capacity as we know out there.

Christophe Beck: It's been very well received actually. It's the first time in my business history, I have to admit that I see and hear customers not only wanting to be in the queue but to be ahead of the queue because there's limited capacity as we know out there. Well, that's the situation of CoolIT, of EVO too, by the way, in a different part of that industry. It's a very unique place to be. That technology that you're talking about on the cold plate is one of the elements, but there's many more in terms of CDU, in terms of 3D TRASAR, in terms of coolants as well that we've developed and will be developing as well. Everybody is looking for the latest and to have that as soon as they can. A very new experience for us where you need to manage supply more than demand.

Speaker #5: So, connecting the two in the future will be a new business opportunity for us.

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

Speaker #5: Well that's the situation of Cool IT. Avivo too by the way in a different part of that industry. It's a very unique place to be and that technology that you're talking about so on the cold plate is one of the elements but there's many more in terms of CDU in terms of 3D tracer in terms of coolant as well that we've developed and will be developing as well.

Speaker #7: Hey, good afternoon, and thanks for taking my question. I'm curious if you could comment on what the customer and industry reaction has been to the 50-kilowatt cold plate that was announced by CoolIT.

Speaker #7: Just curious what sort of reception there is, and maybe it's going to take some time, but I'm curious about the timeline for when that could start to benefit you guys.

Speaker #7: Thanks.

Speaker #5: It's been very well received. Actually, it's the first time in my business history, I have to admit, that I see and hear customers not only wanting to be in the queue, but wanting to be ahead of the queue because there's limited capacity, as we know, out there.

Speaker #5: Everybody is looking so for the latest and to have that as soon as they can so a very new experience. For us where you need to manage supply more than demand but I guess that's a good problem to have.

Christophe Beck: I guess that's a good problem to have.

Speaker #5: Well, that's the situation with Cool IT. Vivo too, by the way, in a different part of that industry. It's a very unique place to be.

Speaker #4: Thank you. Our final question will come from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question.

Operator: Thank you. Our final question will come from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question.

Speaker #6: Yes. Good afternoon and thank you for squeezing me in. Christoph I want to follow up on a few prior questions regarding Cool IT. Is there a way to characterize or quantify the visibility that Cool IT has or you now have into the order backlog or pipeline?

Kevin McCarthy: Yes. Good afternoon, and thank you for squeezing me in. Christophe, I want to follow up on a few prior questions regarding CoolIT. Is there a way to characterize or quantify the visibility that CoolIT has, or you now have into the order backlog or pipeline? Is there a way to measure it in terms of months or quarters or years? Maybe you can talk a little bit about how they go to market. What are the standard contract terms and over the next little while here, perhaps we'll learn more in November, certainly, but is that triple digit growth rate stable, do you think, between now and the end of the year? Maybe you could just elaborate on that visibility question there. Thank you.

Speaker #5: And that technology that you're talking about—so on the cold plate is one of the elements, but there are many more in terms of CDU, in terms of 3D tracer, in terms of coolant as well, that we've developed and will be developing as well.

Speaker #6: Is there a way to measure it in terms of months or quarters or years? Maybe you can talk a little bit about how they go to market.

Speaker #5: Everybody is looking for the latest and to have that as soon as they can, so it's a very new experience. For us, we're used to needing to manage supply more than demand, but I guess that's a good problem to have.

Speaker #6: What are the standard contract terms and over the next little while here perhaps we'll learn more in November certainly but is that triple digit growth rate stable do you think between now and the end of the year or maybe you could just elaborate on that visibility question there.

Speaker #4: Thank you. Our final question will come from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question.

Speaker #8: Yes, good afternoon, and thank you for squeezing me in. Christophe, I want to follow up on a few prior questions regarding Cool IT. Is there a way to characterize or quantify the visibility that Cool IT has, or that you now have, into the order backlog or pipeline?

Speaker #6: Thank you.

Speaker #5: So a few question into that. So the visibility so for the foreseeable future so for 26 at the end of the year as you're calling it is pretty clear.

Christophe Beck: A few questions into that. The visibility for the foreseeable future, for 2026 at the end of the year, as you are calling it, is pretty clear. Yes, we feel good about the trajectory for the year, which is a very good way to start. Obviously, saw an integration. For the years to come, as mentioned before, we have considered in all our math and projections of 30% growth rate for the next 10 years. We do the work to really understand what is the right number for it, and we share that with you when we get together at Supercomputing in November. Generally, that sounds like a good news. Your second question on the go-to-market. It is mostly two different drivers.

Speaker #5: So yes we feel good. About the trajectory so for the year which is a very good way to start. Obviously so an integration and for the years to come as mentioned before we've considered in all our mass and projections so a 30% so growth rate for the next 10 years.

Speaker #8: Is there a way to measure it in terms of months, quarters, or years? Maybe you can talk a little bit about how they go to market.

Speaker #8: What are the standard contract terms? And over the next little while here—perhaps we'll learn more in November, certainly—but is that triple-digit growth rate stable, do you think, between now and the end of the year?

Speaker #5: So we'll do the work to really understand what's the right number for it and we share that with you. When we get together at Super Compute in November.

Speaker #8: Or maybe you could just elaborate on that visibility question there. Thank you.

Speaker #5: But generally that sounds like a good news. The second question on the go-to-market. It's mostly to different drivers. The first one are the cheap designers and cheap manufacturers.

Speaker #5: So, a few questions into that. So, the visibility for the foreseeable future—for '26, at the end of the year, as you're calling it—is pretty clear.

Christophe Beck: The first one are the chip designers and chip manufacturers because the cold plates and technology of cooling for each individual chip, well, is chip related. That needs to be developed together with the chip designers and/or manufacturers depending on who that is out there. They are very close to them. This is a huge strength of that business. At the same time, they are very close to the hyperscalers as well that are interested in optimizing the overall cooling performance of the data center that goes beyond obviously individual chips when you put all of them together in one rack and then afterwards in one data center, the physics look very different. That is the relationship with hyperscalers. It is to be very close to those two constituents and CoolIT and Ecolab, by the way, are very strong at that type of relationship.

Speaker #5: So yes, we feel good about the trajectory so far this year, which is a very good way to start. Obviously, so is integration, and for the years to come, as mentioned before, we've considered it in all our models and projections.

Speaker #5: Because the cold plates and technology of cooling for each individual chip well is cheap related and that needs to be developed together with the cheap designers and/or manufacturers.

Speaker #5: So a 30% growth rate for the next 10 years. So we'll do the work to really understand what's the right number for it, and we'll share that with you.

Speaker #5: Depending on who that is. Out there. So they're very close to them and this is a huge strength of that business. At the same time they're very close to the hyperscalers.

Speaker #5: When we get together at Super Compute in November. But generally, that sounds like good news. Your second question on the go-to-market—it's mostly two different drivers.

Speaker #5: As well that are interested in optimizing the overall cooling performance of the data center that goes beyond obviously individual chips when you put all of them together in one rack and then afterwards in one data centered physics look very different.

Speaker #5: The first ones are the cheap designers and cheap manufacturers. Because the cold plates and technology of cooling for each individual chip, well, is cheap related.

Speaker #5: And that's the relationship with hyperscalers. So it's to be very close to those two constituents and Cool IT and Ecola by the way are very strong.

Speaker #5: And that needs to be developed together with the chief designers and/or manufacturers, depending on who that is out there. So they're very close to them.

Speaker #5: That type of relationship. So that's the way the model works. It's developing together with the hyperscalers and the cheap industry and that's going very fast as you know.

Christophe Beck: That is the way the model works. It is developing together with the hyperscalers and the chip industry, and that is going very fast. As you know, every week there is something new that is happening very different than many of our businesses. The last question on the backlog and pipeline. We are learning as we are working closer together with them. They have very good sales metrics. We have on the more traditional Ecolab side, similar but a little bit different sales metric. We are going to try to learn from each other. That is also something that we would like to share with you in November. We have been three weeks together, that is very early. More is going to come in November. Since it is the last question, just wanted to recap briefly. We had a very strong quarter in Q2 in a tough and complicated environment.

Speaker #5: And this is a huge strength of that business. At the same time, they're very close to the hyperscalers as well, who are interested in optimizing the overall cooling performance of the data center. That goes beyond, obviously, individual chips—when you put all of them together in one rack, and then afterwards in one data center, the physics look very different.

Speaker #5: Every week there's something new that's happening very different than many of our businesses. And the last question on the backlog and pipeline. We're learning as we're working closer together with them they have very good sales metrics we have on the more traditional Ecolab side similar but a little bit different sales metric.

Speaker #5: And that's the relationship with hyperscalers. So it's to be very close to those two constituents, and CoolIT and Ecolab, by the way, are very strong.

Speaker #5: So we're going to try to learn from each other and that's also something that we'd like to share with you in November. We've been three weeks together so that's very early.

Speaker #5: That type of relationship. So that's the way the model works. It's developing together with the hyperscalers and the chip industry, and that's going very fast.

Speaker #5: So more is going to come in November. So since it's the last question just wanted to recap briefly. We had a very strong quarter in Q2.

Speaker #5: As you know, every week there's something new that's happening, very different than many of our businesses. And the last question, on the backlog and pipeline, we're learning as we're working closer together with them.

Speaker #5: Tough and complicated environment. As we all know. Really happy with the team that's been able to protect gross margin in three months versus two years in the past while accelerating the organic growth.

Christophe Beck: As we all know, really happy with the team that has been able to protect gross margin in three months versus two years in the past while accelerating the organic growth as well as the business. Second, the second half looks promising for the company, especially as a trajectory for 2027 and the years to come as well, where I believe that we have rarely been in a better position to deliver on our growth ambitions, our margin ambitions, and earnings growth ambition. Ultimately where we need to focus over time is how do we improve from there even further, which is where I spend my time, where the team is aligning around. I think that we are in a very good place as a company, especially when we look into the future because we have the best team in the industry.

Speaker #5: They have very good sales metrics. We have, on the more traditional Ecolab side, similar but a little bit different sales metrics. So we're going to try to learn from each other.

Speaker #5: As well as the business. Second the second half looks promising for the company especially as a trajectory so for 27 and the years to come as well.

Speaker #5: And that's also something that we'd like to share with you in November. We've been three weeks together, so that's very early. So more is going to come in November.

Speaker #5: Where I believe that we're really being in a better position so to deliver on our growth ambitions our margin ambitions and earnings growth ambition.

Speaker #5: So, since it's the last question, I just wanted to recap briefly. We had a very strong quarter in Q2, in a tough and complicated environment, as we all know.

Speaker #5: And ultimately where we need to focus over time is how do we improve from there even further which is where I spend my time but the team is aligning around and I think that we're in a very good place as a company especially when we look into the future because we have the best team in the industry.

Speaker #5: Really happy with the team that's been able to protect gross margin in three months versus two years in the past, while accelerating the organic growth.

Speaker #5: So thank you again for all your time and your commitment to Ecolab. All the best. Talk to you soon.

Christophe Beck: Thank you again for all your time and your commitment to Ecolab. All the best. Talk to you soon.

Speaker #5: As well as the business. Second, the second half looks promising for the company, especially as a trajectory—so for '27 and the years to come as well.

Speaker #4: Thanks Christoph. Wraps up our second quarter conference call. This call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation.

Operator: Thanks, Christophe.

Andrew Hedberg: For our Q2 conference call. This call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation. Hope everyone has a great rest of your day.

Speaker #4: Hope everyone has a great rest of your day.

Speaker #5: Where I believe that we're really in a better position now to deliver on our growth ambitions, our margin ambitions, and earnings growth ambition.

Speaker #1: Ladies and gentlemen thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Enjoy the rest of your day.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Enjoy the rest of your day.

Speaker #5: Ultimately, where we need to focus our time is on how we improve even further from there. That's where I spend my time, and the team is aligning around that as well.

Speaker #5: And I think that we're in a very good place as a company, especially when we look into the future, because we have the best team in the industry.

Speaker #5: So, thank you again for all your time and your commitment to Ecolab. All the best. Talk to you soon.

Speaker #4: Thanks, Christophe. That wraps up our second quarter conference call. This call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation.

Speaker #4: Hope everyone has a great rest of your day.

Speaker #1: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Enjoy the rest of your day.

Q2 2026 Ecolab Inc Earnings Call

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