Q3 2026 Ecolab Inc Earnings Call

October 27, 2026

Operator: Greetings, and welcome to the Ecolab Q3 2026 earnings release conference call. At this time, all participants will be in 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 from your telephone keypad. As a reminder, this conference is being recorded. At this time, I'll turn the conference over to Andy Hedberg, Vice President of Investor Relations for Ecolab. Thank you, Andy. You may begin.

Speaker #1: Greetings, and welcome to the Ecolab's third quarter, 2026 earnings release conference call. At this time, all participants will be in listen-only mode. The question-and-answer session will follow the formal presentation.

Speaker #1: If anyone should require operative assistance during the conference, please press star or zero from your telephone keypad. As a reminder, this conference is being recorded.

Speaker #1: At this time, I'll turn the conference over to Andy Hedberg, Vice President and Investor Relations for Ecolab. Thank you, Andy. You may begin.

Andy Hedberg: Thank you. Hello, everyone, and welcome to Ecolab's Q3 conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO, and Scott Kirkland, our CFO. Our discussion of our results, along with our earnings release and the slides referencing the quarter's results are available on Ecolab's website at ecolab.com/investor. Please take a moment to read the cautionary statement in these materials, which states 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 materials. We also refer you to the supplemental diluted EPS information in the release. With that, I'd like to turn the call over to Christophe Beck for his comments.

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

Speaker #2: Our discussion of our results, along with our earnings release and the slides referencing the quarter's 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 #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 #2: We also refer you to the supplemental diluted earnings per share information in the release. With that, I'd like to turn the call over to Christophe Beck for his comments.

Christophe Beck: Thank you so much, Andy, and welcome to everyone joining us today. I'm really super proud of what the team delivered once again. On our last call, we described Q2 as a transition period as we mastered higher commodity costs within the quarter. The Q3 well-marked an inflection point for Ecolab. Our core businesses strengthened, our growth engines accelerated, and together they drove 7% organic sales growth. But just as important, every business outperformed its end market, demonstrating the power of our One Ecolab strategy. Despite significant commodity cost inflation, we maintained organic gross margin as our teams continued to create more value for our customers, win new business, and manage supply chain costs very effectively. This will remain a critical focus in the quarters ahead as commodity costs are expected to remain high.

Speaker #3: Thank you so much, Andy, and welcome to everyone joining us today. I'm really super proud of what the team delivered. Once again, on our last call, we described Q2 as a transition period, as we mastered higher commodity costs within the quarter.

Speaker #3: The third quarter well marked an inflection point for Ecolab. Our core business's strengthened, our growth engines accelerated, and together they drove 7% organic sales growth.

Speaker #3: But just as important, every business outperformed its end market, demonstrating the power of our One Ecolab strategy. Despite significant commodity cost inflation, we maintained organic gross margin as our teams continued to create more value for our customers, win new business, and manage supply chain costs very effectively.

Speaker #3: This will remain a critical focus in the quarters ahead, as commodity costs are expected to remain high. To continue pricing execution and disciplined supply chain management, we expect to continue to offset the impact of higher commodity costs.

Christophe Beck: Through continued pricing execution and disciplined supply chain management, we expect to continue to offset the impact of higher commodity costs. Our productivity also strengthened as we leveraged the investments we've made in our One Ecolab growth initiative. As a result, our organic OI margin in the quarter expanded to 19.6%, accelerating organic OI growth to 11%. Beyond our reported results, the performance of the underlying business was even stronger as we absorbed additional amortization and interest costs from our recent M&A. On a pro forma basis, including the operating performance of CoolIT and Ovivo, Ecolab's Q3 sales would have grown high single digit and adjusted EPS would have grown mid-teens. These results reflect the strength of our core businesses and how our growth engines are materially accelerating Ecolab's growth algorithm. One Ecolab is making a difference across the company.

Speaker #3: Our productivity also strengthened. As we leveraged the investments we've made in our One Ecolab growth initiative, as a result, our organic OI margin in the quarter expanded to 19.6%, accelerating organic OI growth to 11%.

Speaker #3: Beyond our reported results, the performance of the underlying business was even stronger, as we absorbed additional amortization and interest costs from our recent M&A.

Speaker #3: On a pro forma basis, including the operating performance of Cool IT and Avivo, Ecolab's Q3 sales would have grown high single-digit and adjusted EPS would have grown meetings.

Speaker #3: These results reflect the strength of our core businesses and how our growth engines are materially accelerating Ecolab's growth algorithm. One Ecolab is making a difference across the company.

Christophe Beck: We bring our water, hygiene, tests, and digital solutions together with our field expertise to deliver best-in-class performance for customers at scale. We help customers improve business outcomes and operational performance while using fewer resources. That creates differentiated value for customers, strengthens relationships, and helps us win new business. Since launching One Ecolab, we've generated over $400 million of sales growth with our largest 35 customers only, capturing more than a 10% incremental share of our targeted $3.5 billion gross opportunity with these 35 customers. You can see this clearly in Food and Beverage, which accelerated to 8% organic growth, with broad-based growth across dairy, protein, and beverage against stable end market demand. As we bring our integrated water and hygiene solutions, customers look to Ecolab to help protect food safety while improving operating performance and environmental impact.

Speaker #3: We bring our water, hygiene, pests, and digital solutions together with our feed expertise to deliver best-in-class performance for customers at scale. We help customers improve business outcomes and operational performance while using peer resources.

Speaker #3: That creates differentiated value for customers, strengthens relationships, and helps us win new business. Since launching One Ecolab, we've generated over 400 million dollars of sales growth with our largest 35 customers only, capturing more than a 10% incremental share of our targeted 3.5 billion dollar growth opportunity with these 35 customers.

Speaker #3: You can see this clearly in food and beverage, which accelerated to 8% organic growth, with broad-based growth across dairy, protein, and beverage against stable end market demand.

Speaker #3: Now, as we bring our integrated water and hygiene solutions, customers look to Ecolab to help protect food safety while improving operating performance and environmental impact.

Christophe Beck: We connect cleaning, sanitizing, and circular water management solutions to help customers achieve all three at the same time. Water also strengthened, accelerating to 5% growth. We're winning in the manufacturing and institutional markets as we bring our end-to-end water management capabilities to customers around the world. Paper and Heavy Water also returned to solid growth. In these businesses, strong new wins and improved pricing are helping us outperform stabilizing end markets. More than ever, these customers look to Ecolab to help them produce higher quality products while significantly reducing operating costs and environmental impact, which is the Ecolab model, as we all know. Institutional and specialty performance remained consistent despite industry trends that continue to get tougher, including restaurant food traffic that declined mid-single digits in North America. While I'm pleased with what our team is doing, I'm not satisfied with our results.

Speaker #3: We connect cleaning, sanitizing, and circular water management solutions to help customers achieve all three at the same time. Like water, also strengthened, accelerating to 5% growth.

Speaker #3: We're winning in the manufacturing and institutional markets as we bring our end-to-end water management capabilities to customers around the world. Paper and heavy water also returned to solid growth.

Speaker #3: In these businesses, strong new wins and improved pricing are helping us outperform stabilizing end markets. Now, more than ever, these customers look to Ecolab to help them produce higher quality products while significantly reducing operating costs and environmental impact, which is the Ecolab model as we all know.

Speaker #3: Institutional and specialty performance remain consistent. Despite industry trends that continue to get tougher, including restaurant food traffic that declined mid-single digits in North America, so while I'm pleased with what our team is doing, I'm not satisfied with our results.

Christophe Beck: Given the proven value we bring to customers and the strengths of our offering, we should be outperforming the industry by a much wider margin and growing much faster. New innovations like DishIQ, AquaIQ, and KitchenIQ, combined with our global service capabilities, deliver what our customers need most: improved guest experience, labor automation, and lower operating costs. We'll be shifting gears. To deliver even more value to our customers, we will be expanding our field sales power, maximizing our service offering across our hospitality and food service segments, and bring our technologies together through our One Ecolab model to drive higher solution penetration. Our growth engines are also accelerating. Life sciences continue to drive very strong share gains, with organic sales growing 17%. Bioprocessing, again, led our performance. As customers advance drug molecules from development into commercial manufacturing, our opportunity grows with that.

Speaker #3: Given the proven value we bring to customers and the strength of our offering, we should be outperforming the industry by a much wider margin and growing much faster.

Speaker #3: New innovations like dish IQ, Aqua IQ, and Kitchen IQ combined with our global service capabilities deliver what our customers need most. Improved guest experience, labor automation, and lower operating costs.

Speaker #3: So we'll be shifting gears. To deliver even more value to our customers, we will be expanding our field sales power, maximizing our service offering across our hospitality and food service segments, and bring our technologies together to our One Ecolab model to drive higher solution penetration.

Speaker #3: Our growth engines are also accelerating. Life Sciences continue to drive very strong share gains with organic sales growing 17%. Bioprocessing again led our performance.

Speaker #3: As customers advance drug molecules from development into commercial manufacturing, our opportunity grows with that. Last month, we started up our latest life sciences plant in China, positioning us extremely well to meet growing customer demand across Asia for the years to come.

Christophe Beck: Last month, we started up our latest life sciences plant in China, positioning us extremely well to meet growing customer demand across Asia for the years to come. These investments are helping us win where breakthrough technologies, quality, and reliability are super critical. We've been building this major growth engine for a few years, investing in commercial and technical expertise, breakthrough innovation, and additional capacity. With this critical investment, our life sciences businesses is soon approaching $1 billion in sales and delivering the performance we committed to you. Double-digit sales growth and OI margins that are on a trajectory to expand to 30% over the next few years. As a result, the return from our acquisition of Purolite is strong, and the NPV we expect to realize from this acquisition is actually greater than we had initially forecasted.

Speaker #3: This investments are helping us win where breakthrough technologies quality and reliability are super critical. We've been building this major growth engine for a few years, investing in commercial and technical expertise, breakthrough innovation, and additional capacity.

Speaker #3: With this critical investment, our life sciences businesses is soon approaching $1 billion in sales and delivering the performance we committed to you. Double-digit sales growth and OI margins that are on a trajectory to expand to 30% over the next few years.

Speaker #3: As a result, the return from our acquisition of Pure Light is strong. And the NPV we expect to realize from this acquisition is actually greater than we had initially forecasted.

Christophe Beck: I love how this business is performing and even more, where it's headed. Ecolab Digital also continued to grow rapidly, with sales up 34%. Customers increasingly want visibility into their operations and the ability to act in real time. ECOLAB3D and our expanding IQ solutions across water, institutional, life sciences, and pest connect unique data insights with our global field expertise to deliver best-in-class customer performance. Pest Elimination is a great example of how we're using breakthrough digital technologies to deliver superior customer outcomes and growth for Ecolab at the same time. in Q3, pest sales growth accelerated to 8%, driven by strong new business wins from our One Ecolab growth platform and Pest Intelligence. Pest Intelligence today connects over 800,000 devices. Around-the-clock monitoring and predictive insights help our team identify issues sooner and target service more precisely.

Speaker #3: I love how this business is performing and even more where it's headed. Ecolab Digital also continued to grow rapidly, with sales up 34%. Customers increasingly want visibility into their operations and the ability to act in real time.

Speaker #3: Ecolab 3D and our expanding IQ solutions across water, institutional, life sciences, and pests connect unique data insights with our global field expertise to deliver best-in-class customer performance.

Speaker #3: Pest elimination is a great example of how we're using breakthrough digital technologies to deliver superior customer outcomes and growth for Ecolab. At the same time, in the third quarter, best sales growth accelerated to 8%, driven by strong new business wins from our One Ecolab growth platform and pest intelligence.

Speaker #3: Pest intelligence today connects over 800,000 devices. Around the clock monitoring and predictive insights help our team identify issues sooner and target service more precisely.

Christophe Beck: We combine those insights with local expertise to help deliver nearly 99% pest free for our pest-free environment for our customers, versus 94%, which is the industry standard. With $3 billion of additional cross-sell opportunity, we're actually just getting started. Global High-Tech, now Ecolab's largest growth engine, continues to accelerate, growing organic sales by 63%. Growth remains very strong across both data center cooling and circular water for microelectronics as AI infrastructure rapidly expands around the world. At the heart of AI is water. Water is required to produce, to power, and to cool chips. Ecolab's leading innovation, expert service, and digital capabilities help the world's leading tech companies maximize their growth and performance across the value chain. Our recent acquisition in Global High-Tech adds complementary strengths to this leading business.

Speaker #3: We combine those insights with local expertise to help deliver nearly 99% best free for our best free environment for our customers versus a 94%, which is the industry standard.

Speaker #3: And with $3 million of additional $3 billion of additional cross-sale opportunity, we're actually just getting started. Global high-tech now Ecolab's largest growth engine continues to accelerate, growing organic sales by 63%.

Speaker #3: Growth remains very strong across both data center cooling and circular water for microelectronics, as AI infrastructure rapidly expands around the world. At the heart of AI is water.

Speaker #3: Water is required to produce, to power, and to cool chips. Ecolab's leading innovation, expert service, and digital capabilities help the world's leading tech companies maximize their growth and performance across the value chain.

Speaker #3: Our recent acquisition in global high-tech adds complementary strengths to this leading business. Cool IT is up to an incredible start within Ecolab. More than doubling its sales with very strong profitability.

Christophe Beck: CoolIT is off to an incredible start within Ecolab, more than doubling its sales with very strong profitability. Its leading liquid cooling capabilities address a critical need as advanced computing becomes more demanding. We have already fully integrated Ecolab's 3D TRASAR liquid monitoring technology with CoolIT's CDU platform, and we're excited about what we can now deliver to customers through one integrated liquid cooling platform. Ovivo is also performing very well, delivering strong double-digit growth versus pre-acquisition sales. Its mission-critical, ultrapure water systems and on-site expertise provide semiconductor manufacturers with the purest water on Earth. Together, we can deliver unique circular water solutions that improve chip quality and production yield while recycling more than 80% of the water used in a fab, and no one can do it without today. Global High-Tech significantly strengthens Ecolab long-term goals and margin potential.

Speaker #3: Its leading liquid cooling capabilities address a critical need as advanced computing becomes more demanding. We have already fully integrated Ecolab 3D tracer liquid monitoring technology with Cool IT CDU platform, and we're excited about what we can now deliver to customers through one integrated liquid cooling platform.

Speaker #3: Ovivo, is also performing very well. Delivering strong double-digit growth versus pre-acquisition sales. Its mission critical ultra-pure water systems and on-site expertise provide semiconductor manufacturers with the purest water on earth.

Speaker #3: Together, we can deliver unique circular water solutions that improve chip quality and production yield while recycling more than 80% of the water used in a fab.

Speaker #3: And no one can truly do that today. Global high-tech significantly strengthens Ecolab long-term growth and margin potential. Last quarter, we outlined our global ambition for global high-tech to grow more than 25% annually, with $4 billion in sales by 2030 and deliver 25% operating income margin.

Christophe Beck: Last quarter, we outlined our global ambition for Global High-Tech to grow more than 25% annually, reach $4 billion in sales by 2030, and deliver 25% operating income margin. This growth platform alone adds more than two percentage points to Ecolab's sales growth algorithm one year after closing. This is just one example of how we're building a higher growth Ecolab, and we look forward to sharing more at our investor day next month. The acceleration we're seeing today is the result of the organic and M&A investments we've made over the last several years to strengthen our core business and build new growth engines. As our growth engines become a larger part of the business, our mix shifts towards faster-growing markets with attractive margin potential.

Speaker #3: This growth platform alone adds more than 2% support to Ecolab sales growth algorithm one year after closing. This is just one example of how we're building a higher growth Ecolab and we look forward to sharing more at our investor day next month.

Speaker #3: The acceleration we see today is the result of the organic and M&A investment we've made over the last several years to strengthen our core business and build new growth engines.

Speaker #3: As our growth engines become a larger part of the business, our mix shifts towards faster growing markets with attractive margin potential. Our growth engines win using the same proven operating model, as our core businesses.

Christophe Beck: Our growth engines, when using the same proven operating model as our core businesses, providing mission-critical anchor technologies and consumables that deliver best-in-class operating performance for customers. This is fueling faster, more durable sales growth, faster earnings growth, and strong returns for shareholders. We are entering 2027 with momentum and confidence in our ability to deliver another very strong year. We expect organic sales growth to grow at the upper end of our 5% to 7% target and Ecolab's adjusted operating income margin to reach the 20% that we promised. Adjusted EPS growth is expected to accelerate in the H2 of next year as we lap M&A transaction impacts and operating performance continue to accelerate. That provides a clear path to meet or exceed our long-term adjusted EPS growth target of 12% to 15% in 2027. In closing, the Q3 marked an inflection point for Ecolab.

Speaker #3: Providing mission critical anchor technologies and consumables that deliver best-in-class operating performance for customers. This is fueling faster more durable sales growth, faster earnings growth, and strong returns for shareholder.

Speaker #3: We're entering 2027 with momentum and confidence in our ability to deliver another very strong year. We expect organic sales growth to grow at the upper end of our five to seven percent target and Ecolab's adjusted operating income margin to reach the 20% that we promised.

Speaker #3: Adjusted EPS growth is expected to accelerate in the second half of next year as we lap M&A transaction impact and operating performance continue to accelerate.

Speaker #3: That provides a clear path to meet or exceed our long-term adjusted EPS growth target of 12 to 15% in 2027. In closing, the third quarter marked an inflection point for Ecolab.

Christophe Beck: Our core strengthened, our growth engines accelerated, and all our businesses outperformed their end markets. We are leveraging the power of One Ecolab to build a higher growth company with the same durable and consistent core. We have a strong foundation, increasing momentum, and a tremendous opportunity ahead. I want to thank our global team for making that possible and for the value they deliver to customers every single day. Thank you for your continued trust and your investment in Ecolab. I will now turn it back to Andy for Q&A.

Speaker #3: Our core strengthened, our growth engines accelerated, and all our businesses outperformed their end markets. We're leveraging the power of One Ecolab to build a higher growth company with the same durable and consistent core.

Speaker #3: We have a strong foundation, increasing momentum and a tremendous opportunity ahead. I want to thank our global team for making that possible and for the value they delivered to customers every single day.

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

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

Speaker #1: Thanks, Christophe. That concludes our formal remarks. Operator, would you please begin the question and answer period?

Operator: Thank you. We will now be conducting the question and answer session. We ask you please limit yourself to one question so others will have a chance to participate. If you have additional questions, please rejoin the question queue. To ask a question at this time, you may press star 1 from your telephone keypad, and 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. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please for our first question. Thank you, and our first question is from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Speaker #2: Thank you. We'll now be conducting the question and answer session. We ask you please zoom yourself to one question so others will have a chance to participate.

Speaker #2: If you have additional questions, please rejoin the question queue. To ask a question, this time you may press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker #2: You may press star two if you would like to remove your question from the queue. Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #2: One moment please for our first question. Thank you. And our first question is from the line of Tim Marooni with William Blair. Please receive your question.

Tim Mulrooney: Christophe, good afternoon. Congrats on the strong quarterly performance.

Speaker #3: Christophe, good afternoon. Congrats on the strong quarterly performance.

Christophe Beck: Thank you, Tim.

Speaker #4: Thank you, Tim.

Tim Mulrooney: I was hoping we could talk a little bit more about your Global High-Tech water business in a little more detail. The legacy business, that accelerated to 60%+ organic growth. That is a major step up from the H1. CoolIT more than doubled again. Can you talk about what you are seeing in both of those businesses that is driving the strong growth there? I was also wondering, as you progress towards that $4 billion target, I wonder if a 30% CAGR is the right number to use based on what you have seen over the last couple of quarters. Thank you.

Speaker #3: So I was hoping we could talk a little bit more about your high-tech water business and a little more detail. The legacy business, that accelerated to 60% plus organic growth, that's a major step up from the first half.

Speaker #3: Cool IT, more than doubled again. Can you talk about what you're seeing in both of those businesses, that's driving the strong growth there? And also, I was also wondering as you progress towards that $4 billion target, I wonder if it's 30% bigger is the right number to use based on what you've seen over the last couple of quarters.

Speaker #3: Thank you.

Christophe Beck: Thank you, Tim. I love that question, and especially the business. It is obviously early. For us, we own CoolIT now for almost 3 months, Ovivo for a little bit less than a year, and we have been starting. So pretty early, pretty new, but probably one of the best businesses that we have with the best growth potential as well. We talk more at the Investor Day in a few weeks, but I like a lot where we are positioned right now for a few reasons. We are the best technologies, and we clearly work hard at it. We are the best team. We have been building that as well for a long time.

Speaker #4: Thank you, Tim. Love that question and especially that business. It's obviously early so for us. We own Cool IT now for almost three months.

Speaker #4: Ovivo for a little bit less than a year. And we've been starting our high-tech business just a few years ago. So pretty early, pretty new, but probably one of the best businesses that we have with the best growth potential as well ahead.

Speaker #4: So we talk more at investor day in a few weeks, but I'll ask a lot where we're positioned right now. For a few reasons.

Speaker #4: With the best technologies and we clearly worked hard at it, with the best team, we've been building that as well. So for a long time.

Christophe Beck: But most importantly, we offer what the industry truly needs, especially now in that environment, which is best performance and the lowest impact on communities and nature, since we have seen that it has become a big topic in the media and in all the discussions we have now. So if I unpack a little bit that, in microelectronics, and we will talk more about it at the Investor Day, ultra pure water is becoming a critical component. It was less the case in the past. Because purity drives the chip performance for the most advanced chips that are available on the market today. At the same time, it drives yield in manufacturing, which means that the microelectronics manufacturers can produce more chips coming out of their fabs, which is very critical today.

Speaker #4: But most importantly, we offer what the industry truly needs. And especially now in that environment, which is best performance and the lowest impact on communities and nature since we've seen that it's become a big topic.

Speaker #4: In the media, and in all the discussions we have now. So if I unpack a little bit that, in microelectronics, and we'll talk more about it at investor day, well, Ultra Pure Water is becoming a critical component.

Speaker #4: It was less the case in the past. Because purity drives the cheap performance for the most advanced chips that are available on the market today.

Speaker #4: And at the same time, it drives yield in manufacturing, which means that the microelectronics manufacturers can produce more chips coming out of their fabs, which is very critical today.

Christophe Beck: It is roughly 60% to 70% for the latest chips, and we would like to move that, obviously, much closer to 100%. You can imagine how much money that represents when it is really well done. At the same time, the amount of water that is required to produce those chips are immense. So the water circularity is absolutely essential, and this is what we do as Ecolab. So bringing together Ovivo and the capabilities of Ecolab in water circularity are providing something that no one else can truly deliver today. Similar in data centers, performance drives power required and power drives the heat. That level of heat can only be extracted through direct-to-chip liquid cooling, which is what CoolIT does. Interestingly enough, water is the best heat extractor, but hot water is pretty hard to manage.

Speaker #4: It's roughly so 60 to 70% for the latest chips. And we'd like to move that, obviously, so much closer to 100% you can imagine so how much money that represents when it's really well done.

Speaker #4: Same time, the amount of water that's required to produce those chips are immense. So the water circularity is absolutely essential and this is what we do as Ecolab.

Speaker #4: So bringing together Ovivo and the capabilities of Ecolab in water circularity are providing something that's no one else can truly deliver today. Similar in data centers, well, performance drives power required and power drives the heat.

Speaker #4: And that level of heat can only be extracted through direct-to-chip liquid cooling, which is what Cool IT does. And interestingly enough, water is the best heat extractor, but hot water is pretty hard to manage, but the good news is it's what we master really well.

Christophe Beck: But the good news is, it is what we master really well at Ecolab. At the same time, this water usage and power usage question in data centers has become a top topic in all the discussions today that is impacting obviously the growth for the tech industry. It is creating political challenges as well at the same time. So for us, our approach is really helping tech companies build data centers the way we call it, done the right way, which means zero water, less power, and at the right places as well at the same time. That is not including what we do for power, which is providing the electricity for data centers, and that is a business where we have been really strong at for decades, and today this business is also gaining steam. So you are right. We are very well-positioned. We are even better positioned than what we thought a year ago.

Speaker #4: At Ecolab. At the same time, well, this water usage and power usage question in data centers has become a top topic. In all the discussions today, that's impacting obviously the growth for the tech industry.

Speaker #4: It's creating political challenges as well, at the same time. So for us, our approach is really helping tech companies build data centers the way we call it, done the right way, which means zero water, less power, and at the right places as well, at the same time.

Speaker #4: And that's not including what we do for power. Which is providing the electricity for data centers and that's a business where we've been really strong at for decades and today this business is also gaining speed.

Speaker #4: So you're right. We're very well positioned with even better position than what we thought a year ago. We share more at investor day when we get together in a few weeks.

Christophe Beck: We will share more at the Investor Day when we get together in a few weeks. But I really like how we positioned around performance of chips and data center, making sure they can be done with the least amount of water, and done in ways that are cost competitive for the customers that we serve, which is the typical Ecolab offer. It will require investments. Obviously, we have demonstrated that in M&A, but also in technology. So we will make sure we invest in order to fuel this growth in the future as well at the same time. What is also important is to remain very agile because nobody knows exactly the shape of that curve in the years to come.

Speaker #4: But I really like how we positioned around performance of chips and data center making sure they can be done with the least amount of water and done in ways that are cost competitive.

Speaker #4: For the customers that we serve, which is the typical Ecolab offer. It will require investments obviously. We've demonstrated that in M&A, but also in technology.

Speaker #4: So we'll make sure we invest in order to fuel this growth in the future as well, at the same time. And what's also important is to remain very agile because nobody knows exactly the shape of that curve in the years to come.

Christophe Beck: I want to make absolutely sure that, while we are benefiting from the AI infrastructure build, at the same time, we most importantly are driven by the recurring nature of both of those businesses. The targets we have set out there, for me, are more achievable than ever. Let us talk more about how much better we can get when we get together in a few weeks.

Speaker #4: And I want to make absolutely sure that, well, we are benefiting from the AI infrastructure built, but at the same time, we most importantly so driven by the recurring nature of both of those businesses.

Speaker #4: So yes, the targets we've set out there for me are more achievable than ever. Let's talk more about how much better we can get when we get together in a few weeks.

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

Speaker #2: Thank you. The next question. It's in the line of Manath Patniak with Barclays. Please receive three questions.

Ronan Kennedy: Hi, good afternoon. This is Ronan Kennedy on for Manav. Thank you for taking our questions. You are now expecting 2027 organic growth at the upper end of the 5% to 7% range. How should we think about the price volume algorithm underpinning that assumption, both for the full year and then anything to be particularly mindful of in terms of H1 and H2 dynamics, particularly as I think surcharge pricing starts to lap at the half year mark and then move to structural, and then your expectations for volume contribution in build throughout the year?

Speaker #5: Hi, good afternoon. This is Ronan Kennedy from Manath. Thank you for taking our questions. You're now expecting 27 organic growth at the upper end of the five to seven percent range.

Speaker #5: How should we think about the price volume algorithm underpinning that assumption, both for the full year and then anything to be particularly mindful of in terms of first half and second half dynamics?

Speaker #5: Particularly as I think surcharge pricing starts to lap at the half-year mark, and the move to structural, and then your expectations for volume contribution and built throughout the year.

Christophe Beck: Thank you, Ronan. Talking about 2027, it is obviously a little bit early right now. But I want to give you a little bit how I am thinking about it, and we will go more in details when we get back together at Investor Day mid-November. But what was first most important to me, I made a commitment to you that we would get to this 5% to 7% organic growth. We would get to the 20% OI margin, and we would deliver these 12% to 15% earnings per share growth, and all that in 2027. I am glad that that commitment that we have made, we will be delivering it in 2027. If the key question is how much better we can be, well, this is a question I truly like. That is why we get together in a few weeks.

Speaker #4: Thank you. Ronan. So talking about 27, it's obviously a little bit early right now, but I want to give you a little bit of time.

Speaker #4: Thinking about it, and we'll go more in detail when we get back together. At investor day. Mid-November. But what was first most important to me?

Speaker #4: I made a commitment to you that we would get to these five to seven percent organic growth. We would get to the 20% OI margin, and we would deliver these 12 to 15% earnings per share growth.

Speaker #4: And all that. So in 2027. And I'm glad that that commitment that we've made will be delivering it. In 2027. And if the key question is how much better we can be, well, this is a question I truly like.

Speaker #4: And that's why we get together in a few weeks. It's to talk about, well, how can 2027. But most importantly, the years beyond 2027 as well look like with all the investments, the new portfolio we have as well, and how the world around us is turning into an opportunity as well so for us.

Christophe Beck: It is to talk about, well, how can 2027, but most importantly, the years beyond 2027 as well, look like with all the investments, the new portfolio we have as well, and how the world around us is turning into an opportunity as well for us. Well, when I think today about 2027, I think it is going to be a very strong year. It is going to be an even stronger year than what we have or will be delivering in 2026. The best way to think about it is our underlying earnings growth is in this mid-teens type of growth. That is true today if you strip out the cost of amortization and interest. Then you have the Nalco amortization coming off as well in 2027. So it is to think about this mid-teens type of growth for earnings.

Speaker #4: So when I think today about 2027, well, I think it's going to be a very strong year. It's going to be an even stronger year than what we have or will be delivering in 2026.

Speaker #4: And the best way to think about it is our underlying earnings growth is in this mid-teens type of growth. That's true today. If you strip out the cost of amortization and interest and then you have the narco amortization, so coming off as well.

Speaker #4: So in 2027, so it's to think about this mid-teens type of growth for earnings. And then if you look at the first half of next year, the second half of next year, well, there will be a different mostly because of transaction cost and narco amortization.

Christophe Beck: If you look at the H1 of next year and the H2 of next year, well, they will be different mostly because of transaction cost and Nalco amortization. But the base of this mid-teens growth of earnings will remain fairly stable. The way you can think about it is mid-teens earnings growth. For 2027, you are going to have roughly 5 percentage point headwind in the H1 and a 5 percentage point tailwind in the H2 when you consider those one-time external factors in a way that is not directly related to the operating business.

Speaker #4: But the base of this mid-teens growth of earnings will remain so fairly stable. And the way you can think about it, it's kind of mid-teens earnings growth for 2027.

Speaker #4: You're going to have roughly 5% each point headwind in the first half and a 5% each point tailwind in the second half when you consider so those one-time external factors in a way that not directly related to the operating business.

Christophe Beck: When I think about the top line, it is also going to be, and that is assuming obviously that the inflation of DPC is leveling out at some point, that the H1 of the year is going to be stronger in pricing and volume is going to be still in this 1% to 2%. Then the H2 volume is going to be faster, 2% to 3%, and pricing is going to be a bit lower because you will be lapping against what we did in 2026 in the H2. So underlying growth, it is really to think this strong top line, 1% to 2% volume, 5% to 6% pricing, and then the bottom line at this mid-teens type of growth. So I am thinking those two parts of the year, but underlying more or less stable, at top and bottom line.

Speaker #4: When I think about the top line, it's also going to be, and that's assuming obviously that the inflation of DPC is kind of leveling out at some point, that the first half of the year is going to be stronger in pricing and volume is going to be still in this one to two percent.

Speaker #4: And then the second half volume is going to be faster. So kind of two to three percent and pricing is going to be a bit lower because you'll be lapping against what we did in 2026 in the second half.

Speaker #4: So underlying growth, it's really so to think this strong top line one to two percent volume, five to six percent pricing, and then the bottom line at this mid-teens type of growth.

Speaker #4: So thinking those two parts of the year, but underlying more or less stable. So a top and bottom line.

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

Speaker #2: Our next question is from the line of Ashish Sabandra with RBC Capital Markets. Please receive your question.

Ashish Sabadra: Thanks for taking my question. Really strong momentum in life sciences, and you talked about the new facility going live in China over the last month. How should we think about the tailwinds from those? Then just one quick clarity question there. There were some negative headlines around one of the drug companies around mRNA vaccine. Have you seen any impact from a demand perspective? Thank you.

Speaker #3: Thanks for taking my question. Really strong momentum in life sciences, and you talked about the new facility going live in China over the last month.

Speaker #3: How should we think about the tailwind from those? And then maybe just one quick clarifying question there. There were some negative headlines around one of the drug companies around mRNA vaccine.

Speaker #3: Have you seen any impact from a demand perspective? Thank you.

Christophe Beck: Thank you, Ashish. First, no negative news or impact from what you're describing to our business. That's not going to impact us good or bad, generally. When I think about life sciences, for me, it's probably one of the best stories in our company's history. We know that the intent, obviously, here that pharma and especially biotech, is closely related to this tech revolution that we're experiencing right now because it's an industry that's going to be one of the first and best beneficiaries of that tech revolution because drug development gets a major boost. New drugs are going to be developed much quicker. That's all good news. As Global High-Tech keeps accelerating, I think it's going to help ultimately as well our life sciences business. It's a great business.

Speaker #4: Thank you, Ashish. So first, no negative news or impact from what you're describing, so to our business. So that's not going to impact us or good or bad.

Speaker #4: Generally. But when I think about life sciences, for me, it's probably one of the best stories in our company's history. And we know that's the intent obviously here that pharma and especially biotech is closely related to this tech revolution that we're experiencing right now because it's an industry that's going to be one of the first and best beneficiaries of that tech revolution because drug development gets a major boost.

Speaker #4: New drugs are going to be developed much quicker. That's all good news. So as GHT or Global High Tech keeps accelerating, I think it's going to help ultimately as well our life sciences business.

Speaker #4: It's a great business. It's been a hard business to build over the past two years as we all know. But I really like where we are today and as mentioned in my open, we're exactly where we wanted to be, just a few years later than expected.

Christophe Beck: It's been a hard business to build over the past 2 years as we all know, but I really like where we are today, and as mentioned in my open, we're exactly where we wanted to be just a few years later than expected. Overall, our investment thesis when we acquired Purolite is totally intact and if anything, we're ahead of that curve, and I feel really good about that. Why am I constructive and optimistic about this business? It's because we have the best technologies. We had to because we were the smallest in the industry and our teams have done unbelievable work in innovation. We have the best team that's very agile as well, to be very close to those customers, being the one that can really respond very quickly to their evolving needs.

Speaker #4: But overall, our investment thesis, when we acquired Pure Light, is totally intact. And if anything, so we ahead of that curve. And I feel really good about that.

Speaker #4: So why am I constructive and optimistic about this business? It's because we have the best technologies. We had two because we were the smallest in the industry.

Speaker #4: And our teams have done unbelievable work in innovation. We have the best team that's very agile as well. So to be very close to those customers being the one that can really respond very quickly to their evolving needs and at the same time, we're bringing water and contamination control together which is Nicola play that we've played in many different industries as you know as well.

Christophe Beck: At the same time, we're bringing water and contamination control together, which is an Ecolab play that we've played in many different industries as you know as well. No one else can do that, which is pretty unique for our company. The 10% to 12% top-line growth I think is a good kind of a base in terms of top-line trajectory for our future. When I think about the earnings, as I've said, my objective is to reach this 30% operating income margin in the next few years. Feel really good for getting towards that. It's mostly related to the pace of investments. The underlying margins are really strong in that business. It was especially strong in Q3 because we're also lapping a maintenance period that we had in 2025, a year ago.

Speaker #4: And no one else can do that which is pretty unique to our company. So the 10 to 12 percent top line growth, I think, is a good kind of base in terms of top line trajectory.

Speaker #4: For our future, when I think about the earnings as I've said, my objective is to reach this 30 percent operating income margin in the next few years.

Speaker #4: Feel really good. So getting towards that, it's mostly related to the pace of investments, the underlying margins are really strong in that business. It was especially strong in the third quarter because we also lapping a maintenance period that we had in 2025.

Speaker #4: So a year ago. So we won't have that type of earnings growth. So continuing in the quarters to come. But solid top line growth in this 10 to 12 percent.

Christophe Beck: We won't have that type of earnings growth continuing in the quarters to come. But solid top line growth in this 10% to 12%, so steady type of trajectory and really an operating margin that ends up at 30% in the next few years. As we have promised and really happy with what the team is delivering here.

Speaker #4: So steady type of trajectory. And really an operating margin that ends up at 30 percent in the next few years. So as we have promised and really happy with what the team is delivering here.

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

Speaker #2: The next question is from the line of John McNulty with BMO Capital Markets. Please receive your question.

John McNulty: Yeah, good afternoon. Thanks for taking my question. I wanted to dig into the Global High-Tech organic growth maybe a little bit deeper. Your Q2 level was a pretty strong 29%. This quarter it was 63%, so you've kind of doubled even the Q2 levels. I guess, in terms of what you would attribute that growth to, is it more the shift that we're seeing from data centers toward liquid cooling and some of the benefits that you're getting there? Or is it kind of early signs of now you have the CoolIT sales team and force and you're kind of integrating a total unified platform and that's helping to grow some of the legacy business?

Speaker #5: Yeah, good afternoon. Thanks for taking my question. So wanted to dig into the high-tech organic growth, maybe a little bit deeper. You're two Q level was a pretty strong 29 percent.

Speaker #5: This quarter, it was 63. So you've kind of doubled even the two Q levels. I guess in terms of what you would attribute that growth to, is it more the shifts that we're seeing from data centers toward liquid cooling and some of the benefits that you're getting there, or is it kind of early signs of now you have the cool IT sales team and force and you're kind of integrating the kind of a total unified platform and that's helping to grow some of the legacy business?

John McNulty: I guess, can you help us to parse that out a little bit just because it seems like it's been even faster than kind of the general data center growth that we've been seeing.

Speaker #5: I guess can you help us to parse that out a little bit just because it seems like it's been even faster than kind of the general data center growth that we've been seeing.

Christophe Beck: Thank you, John. It is a very good story, for sure. There is no cross-sell yet. Between the different businesses, we are clearly doing it. We have integrated now those businesses as well, maybe just for perspective. Our data center business and CoolIT is now integrated and by the way led by the leader of CoolIT. The same is true on microelectronics, where we have integrated with Ovivo, and the leader of Ovivo is the leader as well of our microelectronics business. So a very good story from a setup perspective, but that happened the last few weeks. There is not much cross-selling that has happened so far. That is going to come in the near, to the mid-term future, which is really good.

Speaker #4: Thank you, John. It's a very good story. So for sure. And now there's no cross-sell yet. So between the different businesses, we clearly doing it.

Speaker #4: We've integrated now those businesses as well. Maybe so just for perspective. So our data center business and cool IT is now integrated. And by the way, led by the leader of cool IT.

Speaker #4: And the same is true on microelectronics where we've integrated with Avivo and the leader of Avivo is the leader. As well of our microelectronics business.

Speaker #4: So a very good story from a setup perspective. But that happened the last few weeks. So there's not much cross-selling that has happened so far.

Speaker #4: So that's going to come. In the near so to the mid-term future, which is really good. So no, the growth that we have today is not driven by cross-selling, but that's going to be a major opportunity obviously so going forward.

Christophe Beck: The growth that we have today is not driven by cross-selling, but that is going to be a major opportunity, obviously, going forward. Today, the growth that we are having, yes, the shift to direct-to-chip cooling is helping us because the technologies that we had prior to those acquisitions are more in demand because it is about fluid management, which means 3D TRASAR. It is about coolants, which is something that we master quite well as well. It is about services as well, because those tech companies were looking for partners who can help them get the job done, especially in a steady state manner. Not just the build-up, but operating the data center afterwards and making sure that the cooling as a service is as well managed as it can be.

Speaker #4: Today, the growth that we're having, yes, the shift to direct to cheap cooling is helping us. Because the technologies that we had prior to those acquisitions well are more in demand.

Speaker #4: Because it's about fluid management, which means 3D tracer. It's about coolants, which is something that we must quite well as well. And it's about services.

Speaker #4: As well because those tech companies were looking for partners who can help them get the job done. Especially so in a steady state manner, not just a build-up, but operating the data center afterwards and making sure that the cooling as a service is as well managed as it can be.

Christophe Beck: Just as a side note, when you think about it, you need four minutes of cooling disruption to destroy the chips that you have in a data center. So the cooling is becoming super critical for those operators. What we do is becoming as well more important. 63% is not going to be the steady state growth that we are planning. Quarters are not all created equal, but I like a lot where we are now. So you have a strong, steady legacy business on top of the two new acquisitions that we have made. It is a pretty good mix of things that we have here, which is why, as mentioned before, I feel really good with the commitments that we have made and we will work hard to exceed them.

Speaker #4: Just as a side note, when you think about it, you need four minutes of cooling disruption to kind of destroy the chips that you have in a data center.

Speaker #4: So the cooling is becoming super critical for those operators. So what we do is becoming as well more important. 63 percent is not going to be the steady state growth that we're planning.

Speaker #4: Quarters are not all created equal. But I like a lot where we are now. So if you have a strong steady legacy business on top of the two, new acquisitions that we've made, it's a pretty good mix of things that we have here, which is why as mentioned before, I feel really good with the commitments that we've made.

Speaker #4: And we'll work hard to exceed them.

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

Speaker #2: Thank you. Our next question comes from the line of David Begleiter with Deutsche Bank. Please receive your question.

David Begleiter: Thank you. Good afternoon. Christophe, on CoolIT, can you discuss your visibility in this business into next year in terms of sales growth? Obviously, you are going to double sales this year, which is a phenomenal performance. I suspect maybe it is a little bit less next year. But any further insight would be helpful in terms of 2027 sales growth for CoolIT. Thank you.

Speaker #4: Thank you. Good afternoon. Christoph, on cool IT, can you discuss your visibility in this business into next year in terms of sales growth? Obviously, we're going to double sales this year, which is a phenomenal performance.

Speaker #4: I suspect maybe it's a little bit less next year. Any further insight would be helpful in terms of 27 sales growth for cool IT.

Speaker #4: Thank you.

Christophe Beck: Thank you, David. We will share more when we get together. But the fact that our first lap together, it is the first year, obviously since we closed in July. But if we look at the whole year in 2026, more than doubled the business of what we had in 2025 pro forma basis obviously. It is a good way to start. Keeping in mind that obviously it was a smaller business back then, so the growth rates are obviously slowing down as well as you keep moving even though you add significant dollars to the base business. We feel really good about the trajectory. If anything, we are ahead of what we had planned a few months ago, which is a good sign so far. It is a shorter type cycle of business than microelectronics that needs a few years.

Speaker #3: So thank you, David. We would share more when we get together but the fact that our first lap together, it's the first year, obviously since we closed in July.

Speaker #3: But if we look at the whole year, in 2026, more than double the business of what we had in '25 pro forma basis. Obviously, so is a good way to start.

Speaker #3: Keeping in mind that obviously it was a smaller business back then. So the growth rates are obviously slowing down as well as you keep moving, even though you had so significant dollars to the base business.

Speaker #3: So we feel really good about the trajectory. If anything, we are ahead of what we had planned. A few months ago, which is a good sign so for it.

Speaker #3: It's a shorter type cycle of business than microelectronics. That needs a few years so to build data centers are more quarters than years. So you have a bit less visibility than what you have in microelectronics, which by the way, is going really well as well.

Christophe Beck: To build data centers are more quarters than years, so you have a bit less visibility than what you have in microelectronics, which, by the way, is going really well as well. On the CoolIT data center piece, when I looked a little bit about the next few quarters, I feel good, especially compared to what we had expected and committed, so slightly ahead of what we had planned. We will give you more visibility to that when we get together in the next few weeks. But so far, looks really good for 2027.

Speaker #3: So on the cool IT data center piece, when I looked a little bit about the next two quarters, I feel good, especially so compared to what we had expected and committed.

Speaker #3: So slightly ahead of what we had planned. We'll give you more visibility to that when we get together in the next few weeks. But so far, looks really good for '27.

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

Speaker #2: Our next question is from the line of Seth Weber with BNP Paribas. Please receive your question.

Seth Weber: Hey, good afternoon. Just following up on that question, can you talk about your expectations whether you will need to add capacity for CDUs or cold plates? Can you just give us an idea of what your lead times look like on the CDUs? Thank you.

Speaker #4: Hey, good afternoon. Just following up on that question. Can you talk about your expectations to whether you will need to add capacity for CDUs or cold plates?

Speaker #4: And can you just give us an idea of what your lead times look like on the CDUs? Thank you.

Christophe Beck: Good question. It is something that we used to do. We had planned to build capacity for CDU and cold plates manufacturing and 3D TRASAR technology and coolants as well. That was true a few months ago. It is even more true today because we apparently might need more capacity than what we had planned. Kind of a good problem to have. Our base will remain in Calgary, where our business is based and will be based as well in the future. But in a typical Ecolab manner, we want to produce and supply as close to customers around the world. We will keep expanding capacity, not just at the center in Calgary, but as well as closer to our key customers around the world. It is going to be serving a dual purpose.

Speaker #3: Good question. It's something that we used to do. We had planned so to build capacity for CDU and cold plates manufacturing and 3D tracer technology and coolant as well.

Speaker #3: So that was true a few months ago. It's even more true today because we apparently might need more capacity than what we had planned.

Speaker #3: Kind of a good problem to have. Our base will remain in Calgary where our business is based and will be based. As well in the future.

Speaker #3: But in a typically collab manner, we want to produce and supply as close to customers around the world. So we will keep expanding capacity not just at the center in Calgary but as well so closer to our key customers around the world.

Speaker #3: So it's going to be serving a dual purpose. So getting more capacity to supply a high growth business but at the same time to get closer to our customers in a very eco-lab manner way to manage resilience as well as we can because we know the world is a bit complicated out there.

Christophe Beck: Getting more capacity to supply high growth in business, but at the same time to get closer to our customers in a very Ecolab manner way to manage resilience as well as we can, because we know the world is a bit complicated out there.

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

Speaker #2: The next question is from the line of Lawrence Alexander with Jefferies. Please receive your question.

Laurence Alexander: Just want to confirm in case there is any upside surprises on inflationary pressure next year that you see the 20% margin target is doable regardless of the environment.

Speaker #5: So just want to confirm in case there's any upside surprises on inflationary pressure next year, that you see the 20 percent margin target as doable regardless of the environment.

Christophe Beck: Yes. The world a bit different than what we had expected, but I see no reason not to deliver the 20% in 2027. I feel really good about that. The path to get there is and was different than I had planned a year ago, but that has been true for the last six years. I am not totally surprised that the world is not always following our plans or my plans. Feel really good about the 20% for next year. My focus is really so what is next? Because once we have delivered the 20%, we are not going to stay at 20%. We have many of our businesses that are already north of 20%. My objective is to bring, obviously, everybody north of that and getting closer to the next milestone, which we will share as well in the next few weeks.

Speaker #3: Yes. So the world a bit different than what we had expected but I see no reason not to deliver the 20 percent in 2027.

Speaker #3: I feel really good about that. The path to get there is and was different than I had planned a year ago but that's been true for the last six years.

Speaker #3: I'm not totally surprised that the world is not always following our plans or my plans. So I feel really good about the 20 percent for next year.

Speaker #3: My focus is really so what's next because once we've delivered the 20 percent, well, we're not going to stay at 20 percent. We have many of our businesses that are already north of 20 percent.

Speaker #3: My objective is to bring obviously so everybody north of that and getting closer to the next milestone which we will share as well in the next few weeks but feel good about the trajectory that we have and annual increase that we had committed to a while ago.

Christophe Beck: But feel good about the trajectory that we have and annual increase that we had committed to a while ago. We will stick to it. There will be no major surprise for all of you. It is going to be a good story.

Speaker #3: We'll stick to it. So there will be no major surprise for all of you it's going to be a good story.

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

Speaker #2: Our next question is from the line of Vincent Andrews with Morgan Stanley. Please receive your question.

Vincent Andrews: Thank you. Maybe just to circle back on the institutional business. Christophe, you made in your prepared remarks some comments about wanting to do better there. Obviously, tough environment with the foot traffic, but could you just give a little more detail on the new initiatives you want to put in place there? I thought I heard something along the lines of you wanted to do more cross-selling, and just make sure that the customers were getting the full value that you were offering. I did not know if that was more about getting more volume, price, or mix or just what it was that you were going to put in place over the next 12 months to improve the performance there.

Speaker #1: Thank you. Maybe just to circle back on the institutional business. Christoph, you made your prepared remarks and comments about wanting to do better there.

Speaker #1: Obviously, tough environment with the foot traffic. But could you just give a little more detail on the new initiatives you want to put in place there?

Speaker #1: I thought I heard something along the lines of you wanted to do more cross-selling and just make sure that the customers were getting the full value that you were offering.

Speaker #1: So I don't know if that was more about getting more volume, price, or mix or just what it was that you were going to put in place over the next 12 months to improve the performance there.

Christophe Beck: Vincent, it is a traditional place to be in one of our most traditional businesses where we continuously need to reinvent ourselves. You remember, as we went through COVID, we had to refocus on labor automation for our customers because they had lost most of their employees and they had a hard time to get them back. When they got them back, it was at a higher salary. So not exactly the best mix for an industry that does not have very high margin. That was really our point of focus, and it has worked really well. That is how we developed all those IQ solutions, AquaIQ, DishIQ, and so on over the last few years. It has worked well, it has driven very nice margin performance in that business. So I like that business a lot.

Speaker #3: So Vincent, it's a traditional place to be. In one of our most traditional businesses where we continuously need to reinvent ourselves you remember so as we went through COVID, well, we had to refocus on labor alternation.

Speaker #3: For our customers because well, they had lost most of their employees and they had a hard time to get them back. And when they got them back, it was at a higher salary.

Speaker #3: So not exactly the best mix for an industry that doesn't have very high margin. That was really our point of focus and it's worked really well.

Speaker #3: That's how we developed all those IQ solutions, Aqua IQ, Dish IQ, and so on over the last few years. And it's worked really well.

Speaker #3: It's driven very nice as well. So margin performance in that business. So I like that business a lot. Our key opportunity in institutionally in INS or institutional services more broadly is serving retail, serving quick serve as well at the same time.

Christophe Beck: Our key opportunity in institutional, in INS or institutional services, more broadly, serving retail, serving quick serve as well at the same time, is to accelerate the growth in a market that is not growing. So we are getting together here as a team. We did it the past few months and saying, "Okay, how do we double down on what we have in order to gain share in the market?" That is a volume play, obviously, but also a value price play as we capture the benefits that we are generating for our customers or share of the benefit as we have always done. So the value price approach here. The three things I mentioned, the first one is we will rebalance sales and service in our team. On one hand, we will double our sales firepower in North America.

Speaker #3: It's to accelerate the growth in a market that is not growing. So we're getting together here as a team. We did it the past few months and saying, "Okay, how do we double down on what we have in order to gain share in the market?" That's a volume play.

Speaker #3: Obviously. But also a value price play as we capture the benefits that we're generating for our customers or share of the benefit as we've always done.

Speaker #3: So the value price approach here. So the three things I mentioned the first one is we will rebalance sales and service in our team.

Speaker #3: On one hand, so we will double our sales firepower in North America that's the feet on the street, the people serving our customers and selling new customers.

Christophe Beck: That is the feet on the street, the people serving our customers and selling new customers. The second one, when I think about how we serve our customers in the various segments, restaurants, hotels, quick serve, retail, we do it in a fragmented way today. We will do that in an integrated way tomorrow, which allows us to get more efficiency in service, which allows us to deploy more of those efficiencies into the selling arm of our organization. The third is what you mentioned, is to integrate the proposition to our customers where we integrate hygiene, water, Pest Intelligence, audits that we provide to our customers in a form that is much more integrated for them. We are still developing what that exactly means. But when you think about what we have done in food and beverage, we have demonstrated that it works really well bringing hygiene and water together.

Speaker #3: The second one, when I think about how we serve our customers in the various segments restaurants, hotels, quick serve, retail, we do it in a fragmented way today.

Speaker #3: We'll do that in an integrated way tomorrow which allows us to get more efficiency in service which allows us to deploy more of those efficiencies into the selling arm.

Speaker #3: Of our organization and the third is what you mentioned is to integrate the proposition to our customers where we integrate. So hygiene, water, pest intelligence, audits that we provide to our customers.

Speaker #3: In a form that is much more integrated for them we'll still developing what that exactly means. But when you think about what we've done in food and beverage, well, we've demonstrated that it works really well bringing hygiene and water together.

Christophe Beck: That is a little bit the direction that we are taking in Institutional as well, kind of using a playbook that has been really successful in the company in other types of businesses.

Speaker #3: So that's a little bit the direction that we're taking in institutional as well kind of using a playbook that has been really successful in the company in other types of businesses.

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

Speaker #2: The next question is from the line of Patrick Cunningham with Citi. Please receive your question.

Patrick Cunningham: Hi, good afternoon. Maybe just coming back to Global High-Tech. I think you already alluded to some of the differences in the sales cycle there. But in terms of initial equipment sale versus recurring margin profile and perhaps the amount of customization, how much does that differ between massive hyperscaler deployments, multi-tenant facilities, and next generation fabs?

Speaker #4: Hi, good afternoon. Maybe just coming back to global high tech. I think you already alluded to some of the differences in the sales cycle there but in terms of initial equipment sale versus recurring margin profile and perhaps the amount of customization how much does that differ between massive hyperscaler deployments multi-tenant facilities and next-generation fabs?

Christophe Beck: So two different industries. Obviously here, in both cases, we are trying to really evolve these businesses much more into a recurring type of business. Interestingly enough, the market evolution helps us do that. If I just unpack the two. First, with data centers. The chip generations are shifting to the next generation much quicker than they used to. A few years back was a few years you could use the same chip, and then you change to the next generation. Now we are talking about less than a year, and you get the next chip generation, which means that when you change the chips within an existing data center, well, you need to change the whole cooling system, being cold plates, being coolant, being control systems, being CDUs as well.

Speaker #3: So two different industries. Obviously here in both cases we're trying to really evolve these businesses much more into a recurring type of business. Interestingly, enough, the market evolution helps us do that.

Speaker #3: If I just unpack the two. First, with data centers, the cheap generations are shifting to the next generation much quicker than they used to.

Speaker #3: A few years back was a few years you could use the same chip and then you change to the next generation. Now we're talking about less than a year and you get the next cheap generation which means that when you change the chips within an existing data center, well, you need to change the whole cooling system.

Speaker #3: Being cold plates, being coolant, being control systems, being CDUs as well. And then you become a much more recurring business which is much more an Ecolab type of business as well which is the core reason why we like that business beyond the growth opportunity.

Christophe Beck: And then you become a much more recurring business, which is much more an Ecolab type of business as well, which is the core reason why we like that business beyond the growth opportunity. Obviously, it is a model that we are very used to it, and that is why we integrate all those components where it is a cooling as a service, fully integrated. We are not the provider of individual pieces of equipment. We are provider of cooling end-to-end, committing to performance, committing to a cost, and committing to reliability as well by providing the best service. So very naturally, this business becomes a much more Ecolab-like type of business. When you shift to microelectronics, it is a bit similar, actually. You have a little bit of a larger port of infrastructure built at the beginning of a new fab.

Speaker #3: Obviously, it's a model that we very used to it. And that's why we integrate all those components. Where it's cooling as a service fully integrated.

Speaker #3: We're not the provider of individual pieces of equipment. We are provider of cooling end-to-end committing to performance, committing to a cost, and committing to reliability as well by providing the best service.

Speaker #3: So very naturally this business becomes a much more Ecolab-like type of business. When you shift to microelectronics, it's a bit similar actually. So you have a little bit of a larger part of infrastructure built at the beginning of a new fab.

Christophe Beck: But once the fab is built, well, you need to provide all the 3D TRASAR technology, all the service that we have on site, as well, adjusting to the new chip evolution/generation as well at the same time. And you get into a new recurring model as well at the same time. But yes, the cycles of the two businesses are different. Data center is kind of a month quarters, and the fabs microelectronics business is more quarters than years. But I kind of like as well, so that balance, which provides stability and predictability in what we do.

Speaker #3: But once the fab is built, well, you need to provide all the 3D tracer technology all the service that we have on site as well.

Speaker #3: Adjusting so to the new chip evolution slash generation as well at the same time. And you get into a new recurring model as well at the same time.

Speaker #3: But yes, the cycles of the two businesses are different. Data center is kind of a month quarters and the fabs microelectronics business is more quarters and years.

Speaker #3: But I kind of like as well so that balance which provides stability and predictability in what we do.

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

Speaker #2: Our next question is in the line of Eric Boyce with Evercore ISI. Please receive your question.

Eric Boyes: Good afternoon, and thanks. You highlighted that Ecolab Digital grew 34%. How much of that acceleration is software versus kind of enabling hardware? And maybe how does that mix affect kind of recurring revenue growth and margins going forward? Thank you.

Speaker #5: Good afternoon and thanks. You highlighted that Ecolab Digital grew 34%. How much of that acceleration is software versus kind of enabling hardware and maybe how does that mix affect kind of recurring revenue growth and margins going forward?

Speaker #5: Thank you.

Christophe Beck: So good story in digital. Honestly, I think that we could do much better going forward. Interestingly enough, it is more software than hardware today. I think that it will have to be more balanced going forward. What I really like is that our digital business has been built on our industrial businesses with 3D TRASAR, as you know, and in other businesses, more legacy Ecolab, so we had much less. Today, the highest growth we have is in Institutional and Services and in Pest Intelligence as well, which is very good news because we rebalance across all the various segments that we have. When I think about it today, we connect less than 100,000 locations out there with all the services that we can provide.

Speaker #3: So good story in digital. Honestly, I think that we could do much better going forward. Interestingly enough, so it's more software than hardware today.

Speaker #3: I think that it will have to be more balanced going forward. But what I really like is that our digital business so has been built on our industrial businesses with 3D tracer as you know and in other businesses more legacy Ecolab.

Speaker #3: So we had much less today the highest growth we have is in institutional and services and invest intelligence as well which is a very good news because we rebalance across all the various segments that we have.

Speaker #3: And when I think about it today, we connect less than 100,000 locations out there with all the services that we can provide. And when you know that we have close to 3 million locations around the world, that shows the type of runway that we have ahead of us.

Christophe Beck: When you know that we have close to 3 million locations around the world, that shows the type of runway that we have ahead of us. So it will be a combination of hardware, but with recurring rent or lease, as we would do in dish machines in a restaurant, for instance, and software and data consumption as well, at the same time. Where it is exactly going to land in terms of share, I do not know, but it will be pretty equal, going forward.

Speaker #3: So it will be a combination of hardware, but with recurring rent or lease as we would do in these machines in a restaurant. For instance, and software and data consumption as well at the same time.

Speaker #3: Where it's exactly going to land in terms of share, I don't know. But it will be so pretty equal. So going forward.

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

Speaker #2: The next question is in the line of John Roberts with Mizuho. Please receive your question.

John Roberts: Thank you. I think of Pest Elimination as the leading indicator for your digital deployment. When should we expect revenues to accelerate there for margins to start improving?

Speaker #6: Thank you. I think of pest elimination as the leading indicator for your digital deployment. When should we expect revenues to accelerate there in for margins to start improving?

Christophe Beck: First, we've had some acceleration in Pest Elimination, from 7% in Q2 to 8% in Q3. I like what I am seeing here. It is early on that journey. We have deployed 800,000 devices out there as mentioned in my open. Well, that is the beginning of the story. It is not the end of the story, and we have millions of devices out there in tens of thousands of locations that we need to deploy. This will drive growth, ultimately, and it will drive much better margins because the model is going to change all the time. As I have shared with you in past conferences or at Investor Day as well, today, 95% of the devices or the traps that we check are empty and 5% have activity, as we call it.

Speaker #3: So first, we've had some acceleration in pest est elimination. So from 7% in the second quarter so to 8% in the third quarter. So I like what I'm seeing here.

Speaker #3: It's early on that journey. We've deployed 800,000 devices out there as mentioned in my open. Well, that's the beginning of the story. It's not the end of the story and we have millions of devices out there in tens of thousands of locations that we need to deploy.

Speaker #3: So this will drive growth ultimately. And it will drive much better margins because the model is going to change. All the time as I've shared with you in past conferences or at investor day as well.

Speaker #3: Today, well, 95% of the devices or the traps that we check are empty and 5% have activity. As we call it, well, with the connection to the cloud, we will go only to the devices that I have.

Christophe Beck: Well, with the connection to the cloud, we will go only to the devices that have an activity, which means we will have a much better operating performance, which will help us serve the customer better, hence the 94% pest free location to 99% pest free location, and at the same time, that will unlock a lot of margin that we can reinvest in sales, in innovation, and obviously, in bottom line margin as well. I expect it to take a year or two to get fully deployed around the world with Pest Intelligence that will require the upfront investments that we are doing right now. But I feel really good about the top line accelerating and the margin expectations to rise as well because of the model evolution that we are making. But it is going to take a year or two to get to the steady place.

Speaker #3: And activity which means we will have a much better operating performance which will help us serve the customer better and the 94% best free location to 99% best free location and at the same time that will unlock a lot of margin that we can reinvest in sales in innovation and obviously so in bottom line margin as well.

Speaker #3: So I expect to take it a year or two to get fully deployed around the world with best intelligence that will require the upfront investments that we are doing right now.

Speaker #3: But I feel really good about so the top line accelerating and the margin expectations to rise. As well because of the model evolution that we make it.

Speaker #3: But it's going to take a year or two to get to the steady place.

Operator: The next question is in the line of Jeff Zekauskas with JP Morgan. Please just use your question.

Speaker #2: The next question is in the line of Jeff Sikasis with JP Morgan. Please receive your question.

Jeff Zekauskas: Thanks very much. I think you said your organic sales growth in your Global High-Tech business was 63%, and maybe the base is $100 million. That would be $63 million in growth, which is 1.5% on your previous year's consolidated sales. In your Global Life Sciences business, it looks like you grew, I do not know, maybe you grew your volumes 10%, which is maybe another 70 basis points. It seems that all of the volume growth that Ecolab achieved this quarter came from the Global High-Tech group and the Life Sciences group. Is that fair? Is that a function of some contraction in the Institutional business and a little bit better growth in Water in volume terms?

Speaker #7: Thanks very much. I think you said your organic sales growth in your global high-tech business was 63%. And maybe the base is 100 million.

Speaker #7: So that would be 63 million in growth which is one and a half percent on your previous year's consolidated sales. And in your global life sciences business, it looks like you grew, I don't know, maybe you grew your volumes 10% which is maybe another 70 basis points.

Speaker #7: So it seems that all of the volume growth that Ecolab achieved this quarter came from the global high-tech group and the life sciences group.

Speaker #7: Is that fair? And is that a function of some contraction in the institutional business and a little bit better growth than in water and volume terms?

Christophe Beck: I am not sure I totally follow all your math, Jeff, but I will take the time to do it. The bottom line is that, yes, in Institutional, you have a slight volume decline, which is not totally surprising in a market that is in decline. That is why I like the overall view on INS and Institutional and services. To get to the 3%, all the other businesses are actually still having positive volume growth and pricing. It has been quite growth-based, the volume growth, which is what I really like. That is why I mentioned it as well in my open. It is not one or two businesses being a High-Tech and or Life Sciences. The other one in Water are doing really well. F&B is doing well as well.

Speaker #3: I'm not sure I totally follow. So all your math, Jeff, but I'll take the time to do it. But the bottom line is that yes, in institutional you have a slight volume decline.

Speaker #3: Which is not totally surprising. In a market that is in decline. But that's why I like so the overall view on INS and institutional and services.

Speaker #3: So to get to the 3%. All the other businesses are actually so having positive volume growth and pricing. So it's been quite broad based the volume growth which is what I really like.

Speaker #3: That's why I mentioned it as well in my open. It's not one or two businesses. Being a high-tech and/or life sciences. The other one in water are doing really well.

Speaker #3: F&B is doing well as well. And on top of it, one thing that we need to mention is something I'm not spending too much time explaining but we spend quite a bit of time managing is the impact of the Middle East.

Christophe Beck: On top of it, one thing that we need to mention is something I am not spending too much time explaining, but we spent quite a bit of time managing, is the impact of the Middle East. That is roughly 1 point as well of growth, which is obviously a headwind in what we deliver. When you look at it, overall, the 2% volume growth net of what is happening in the Middle East is pretty good, especially the fact that it is so broad based is one exception of being an Institutional that is slightly declining.

Speaker #3: That is roughly one point as well of growth which is obviously a headwind. In what we deliver. So when you look at it overall the 2% volume growth net of what's happening in the Middle East is pretty good especially with the fact that it's so broad based is one exception.

Speaker #3: Being an institutional that's slightly declining.

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

Speaker #2: The next question is in the line of Matthew Deo with Bank of America. Please receive your question.

Matthew DeYoe: Thanks. I wanted to just ask, with CoolIT closed, what do you think a reasonable revenue per gigawatt hour of compute installed capture rate do you think is targetable for the pro forma business? We have seen a few reports now about poor coolant management at some of your competitors. Is this too small of a sample size? Does this just strengthen your pitch? Do you think ultimately there is an opportunity to extract more value from TRASAR deployments? Because it feels like it is pretty dynamic backdrop, obviously with a lot of growth and yield management could be more than maybe just a token revenue opportunity. How do you think about pricing that effectively?

Speaker #5: Thanks. I wanted to just ask with cool IT closed what do you think a reasonable revenue per gigawatt hour of compute installed capture rate?

Speaker #5: Do you think is targetable for the pro forma business? And we've seen a few reports now about poor coolant management at some of your competitors.

Speaker #5: Is this too small of a sample size? Does this just strengthen your pitch? Or do you think ultimately there's an opportunity to extract more value from trace our deployment?

Speaker #5: Because it feels like it's pretty dynamic backdrop obviously with a lot of growth and yield management could be a more than maybe just a token revenue opportunity.

Speaker #5: So how do you think about pricing that effectively?

Christophe Beck: Let me. In your question, came out. First, the dollar per megawatt installed is still something that we are trying to figure out as a total number when we bring the whole Ecolab for data centers. I do not have a final number for you, but as I mentioned when we announced CoolIT and both CoolIT, by the way. CoolIT is multiplying by 3 to 5 times the dollar potential we had as a legacy business. But that was directional. The 3 to 5 times, I want to have a number that is much more solid, and we keep working on it and share it with you once we have something that is more fine-tuned, as mentioned. We early on that journey, the 3 months that we have been together with CoolIT.

Speaker #3: So a few elements. In your question came out. First, the dollar per megawatt installed is still something that we're trying to figure out as a total number when we bring the whole Ecolab.

Speaker #3: For data centers. So I don't have a final number for you but as I mentioned when we announced cool IT and closed cool IT by the way.

Speaker #3: So cool IT is multiplying by three to five times the dollar potential we had as a legacy business. But that was directional. So the three to five times.

Speaker #3: I want to have a number that's much more solid and we'll keep working on it and share it with you once we have something that it's more fine-tuned.

Speaker #3: As mentioned so early on that journey that three months that we've been together so with cool IT so I don't have the most detailed number that I'd like to have but we will have it.

Christophe Beck: I do not have the most detailed number that I would like to have, but we will have it. Now back to the other question of the reliability of the service. I cannot talk about what our competition is doing out there. But almost all, if not all of our competitors are providing or selling individual piece of equipment or a coolant, as you mentioned it as well, and someone has to put it together, someone has to make sure that it works well together, and someone has to maintain it, because things obviously are evolving on a day-to-day basis in that industry. We position ourselves in a very Ecolab manner where we say we are not the provider of individual piece of equipment. We are provider of end-to-end solutions in cooling when we talk about data center today.

Speaker #3: Now back to the other question. Of the reliability of the service I can't talk about what our competition is doing out there. But almost all if not all of our competitors are providing or selling individual piece of equipment or a coolant.

Speaker #3: As you mentioned it as well. And someone has to put it together someone has to make sure that it works well together. And someone has to maintain it because things obviously so are evolving on a day-to-day basis in that industry.

Speaker #3: So we position ourselves in a very Ecolab manner where we say we're not the provider of individual piece of equipment. We are provider of end-to-end solutions in cooling.

Speaker #3: When we talk about data center today. And that's very different and that's why we brought the whole 3D tracer technology not just for the coolant but also for the CDU.

Christophe Beck: That is very different, and that is why we brought the whole 3D TRASAR technology, not just for the coolants, but also for the CDU. We will think about how does it connect the cold plates, everything in between as well, and ultimately, to be in a place where we can commit to performance, the cost, and an environmental impact, which is the way Ecolab has always been selling as well to customers. We are doing it the same in that industry today. It is an industry that is not used to such an approach, but we have experienced that before in other industries. But that is showing a very high interest in our approach here because it is removing one of their concerns because we will be providing, well, a cooling performance that is integrated, not just short term, but long term as well at a predictable cost, which is exactly what they are looking for.

Speaker #3: We'll think about how does it connect the cold plate everything in between as well. And ultimately so to be in a place where we can commit to performance the cost and an environmental impact which is the way Ecolab has always been selling as well to customers.

Speaker #3: We're doing it the same in that industry today. It's an industry that's not used to such an approach but we've experienced that before in other industries.

Speaker #3: But that is showing a very high interest in our approach here because it's removing one of their concerns because we will be providing well a cooling performance that's integrated not just short-term but long-term as well at a predictable cost which is exactly what they're looking for.

Christophe Beck: We are the only one doing it that way, and I think that is a huge competitive advantage we have here because it is a huge halt as well at the same time.

Speaker #3: So we're the only one are doing it that way and I think that's a huge competitive advantage we have here because it's a huge moat as well at the same time.

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

Speaker #2: Our next question is in the line of Josh Spector with UBS. Please receive your question.

Josh Spector: Yeah, hi. Good afternoon. I wanted to ask two things kind of together is one just on pricing. I wonder, do you still see pricing accelerating into Q4 because your top-line guidance is pretty similar? And then related with that, how do you see the incremental margins in Water developing? You had very strong volume growth or organic growth, but the incrementals were kind of below our expectations. Is there a catch-up in Q4 linked with pricing? Thanks.

Speaker #6: Yeah. Hi. Good afternoon. I wanted to ask two things kind of together is one just on pricing I think in prior quarters you talked about getting to a five to six percent run rate I wonder do you still see pricing accelerating into fourth quarter because your top line guidance is pretty similar and then related with that how do you see the incremental margins and water developing?

Speaker #6: You had very strong volume growth or organic growth but the incrementals were kind of below our expectations. Is there a catch-up in fourth quarter linked with pricing?

Speaker #6: Thanks.

Christophe Beck: So two different questions. They are related obviously. So Josh, first, when I think about volume and price or very short term, Q3, Q4, as I said, so it is kind of volume 1 to 2 net at least, obviously, and then this pricing is 5% to 6%. I think Q4 is going to be similar to what we have seen in Q3. At the same time, we are working on operational performance or productivity to take a different term as well at the same time. So I like how we are managing margins as an organization. As I mentioned, a few months ago, as we published our Q2, while it took us in the past two years to get our margins back to where they used to be when inflation was hitting out there. It was the first year to capture the dollar, then the second year to capture the margin back.

Speaker #3: So two different questions. They're related. Obviously so Josh first when I think about volume and price or very short-term Q3, Q4 as I've said so it's kind of volume one to two net of Middle East.

Speaker #3: Obviously and then this pricing is five to six. I think Q4 is going to be kind of similar to what we've seen in Q3 at the same time.

Speaker #3: We're working on operational performance or productivity to take a different term as well at the same time. So I like how we managing margins as an organization.

Speaker #3: As I mentioned a few months ago as we published our second quarter well it took us in the past two years to get our margins back to where they used to be when inflation was hitting out there.

Speaker #3: It was the first year of the capture to dollar and the second year to capture the margin back. Well we've done that in one quarter in the second quarter.

Christophe Beck: Well, we have done that in one quarter, in Q2. We have done it again, in Q3 in an inflationary environment that was higher than what we had in Q2. I think it is going to be slightly higher in Q4 as well. But all in all, it is going to be a very similar story than what we have seen in Q3. Now, if I look at the Water margin, it has been a nice improvement in Q3. It is going to keep improving, but as we know, it is a business that is more impacted by DPC fluctuations than other businesses like Global High-Tech that has almost no DPC because there is almost no chemistry in that business, or Life Science or Pest Intelligence. Every business is a little bit different. Water is more impacted by it, but has demonstrated it can manage that very well short term. So it is going to keep improving.

Speaker #3: We've done it again in the third quarter in an inflationary environment that was higher than what we had in Q2. I think it's going to be slightly higher in Q4 as well but all in all it's going to be a very similar story than what we've seen in Q3.

Speaker #3: Now if I look at the water margin it's been a nice improvement. In Q3 it's going to keep improving but as we know it's a business that's more impacted by DPC fluctuations than other businesses like high-tech that has almost no DPC because there's almost no chemistry.

Speaker #3: In that business or life science or past intelligence every business is a little bit different water is more impacted by it but has demonstrated it can manage that very well short-term.

Speaker #3: So it's going to keep improving. Nobody knows exactly where the market is going from an inflation perspective so we'll adjust if it keeps going higher we will manage it.

Christophe Beck: Nobody knows exactly where the market is going from an inflation perspective. We will adjust. If it keeps going higher, we will manage it. My assumption right now is that it is at a high level today. It is going to stay at that high level until the end of next year. That is the base assumption I am taking here, and we know how to manage it. We have demonstrated in Q2, we have demonstrated in Q3, we keep demonstrating that in the next few quarters. If it goes up and down, we will adjust accordingly.

Speaker #3: My assumption right now is that it's at a high level today it's going to stay at that high level till the end of next year.

Speaker #3: That's the base assumption I'm taking here and we know how to manage it. We've demonstrated in Q2. We've demonstrated in Q3. We keep demonstrating that in the next few quarters and if it goes up and down we'll adjust as well accordingly and we know that at some point well DPC is going to go down and we're going to maintain our value price because it's anchored on the performance that we're delivering to customers and that's going to help us improve our base margin for all the businesses as we've demonstrated all the time as well at the same time.

Christophe Beck: We know that at some point, DPC is going to go down and we are going to maintain our value price because it is anchored on the performance that we are delivering to customers, and that is going to help us improve our base margin for all the businesses as we demonstrated all the time as well at the same time. So, three advantages here. One is that we can control our margins within a quarter. Second, we can improve our net margin after the cycle as we have demonstrated as well in the past. Third, it is going to help earnings, obviously, the moment that the cycle is going to go the other way. Those are all positive news ultimately for us and for investors.

Speaker #3: So kind of three advantages here. One is that we can control our margins within a quarter. Second we can improve our net margins after the cycle as we've demonstrated as well in the past.

Speaker #3: And third it's going to help earnings obviously at the the moment that the cycle is going to go the other way. Those are all positive news ultimately for us and for investors.

Operator: Next question is from the line of Mike Harrison with Seaport Research Partners. Please proceed with your question.

Speaker #2: Next question's in the line of Mike Harrison with Seaport Research Partners. Please receive your question.

Mike Harrison: Hi, good afternoon. I wanted to see if we could revisit a couple of the assumptions that you have told us to think about in our models. First of all, the CoolIT $0.20 per quarter EPS headwind, is that more or less where it was in Q3? How should we think about that $0.20 of headwind tracking over time? The second piece is the life science margin. I think you told us to assume high teens margin and you did about 23%. Should we update our view there and assume that maybe instead of high teens, it is low 20s in the near term? Thank you.

Speaker #7: Hi. Good afternoon. I wanted to see if we could revisit a couple of the assumptions that you've told us to think about in our models.

Speaker #7: First of all the cool IT 20 cent per quarter EPS headwind. Is that more or less where it was in the third quarter and how should we think about that 20 cents of headwind tracking over time?

Speaker #7: And then the second piece is the life science margin I think you told us to assume high teens margin and you did about 23 percent.

Speaker #7: So should we update our view there and assume that maybe instead of high teens it's low 20s in the near term. Thank you.

Christophe Beck: Great questions, Mike, and our CFO, Scott, was dying to get the question, so I am just going to pass it to him for this one.

Speaker #3: Great questions Mike and I was CFO Scott was dying so to get the questions I'm just going to pass it to him for this one.

Scott Kirkland: Yeah, I will give Christophe a break, Mike. As we said in the release, if you look at the impact of CoolIT, the interest amortization, it was about a 10% headwind in Q3. Q4 will be a little bit more, about 12% because you have an extra month because of the lag of the international business. So you will have about a 12% drag in Q4. Then if you think going forward, as Christophe talked for next year, his math there was that, hey, this EPS for the full year at this mid-teens level, but because of the CoolIT amortization interest annualization the H1, partially offset by the Nalco amortization, you have this -5% and then this +5% in the H2. So that is how to think about it through 2027.

Speaker #5: Yeah. I'll give Christophe a break Mike. So as we said in the release if you look at the impact of cool IT the interest standardization it was about a 10 percent headwind in Q3.

Speaker #5: So Q4 will be a little bit more about 12 percent because you have an extra month because of the lag of the international business.

Speaker #5: So you'll have about a 12 percent drag in Q4 and then as you think going forward as Christophe talked for next year his math there was that hey this EPS for the full year at this mid-teens level but because of the cool IT amortization interest annualization the first half partially offset by the now going amortization you'll have this minus 5 percent and then this plus 5 percent in the second half.

Speaker #5: So that's how to think about it through 2027. And then as you think about the life sciences as Christophe talked about that business is doing really well the margins were really strong especially given the growth in the bioprocessing businesses but all those businesses performing very well.

Scott Kirkland: As you think about the life sciences, as Christophe talked about, that business is doing really well. The margins were really strong, especially given the growth in the biopharma processing businesses, but all those businesses performing very well. Our expectation on this business right now is because we are continuing to invest in this business, so the underlying margins are higher, more similar to what you saw in Q3, but expect Q4 margins to be in this mid to high teens level.

Speaker #5: Our expectation on this business right now is because we're continuing to invest in this business so the underlying margins are higher more similar to what you saw in Q3 but expect Q4 margins to be in this mid-teens mid to high teens level.

Christophe Beck: This business is going to be a 30 margin business down the road, and not so many years down the road as we committed. I know that it has not been an easy build up over the last few years, and I am really pleased to see that we are back to the trajectory that we had planned initially in our investment thesis. So ultimately, that we can return to shareholder what we promised when we acquired Purolite, and I will not budge from that.

Speaker #3: This business is going to be a 30 margin business. Down the road and not so many years down the road as we committed. I know that it's not been an easy build-up over the last few years and I'm really pleased to see that we are back to the trajectory that we had planned initially in our investment thesis.

Speaker #3: So ultimately that we can return to shareholder what we promised when we acquired Pure Light and I will not much from that.

Operator: Our next question is from the line of Andrew Wittmann with Baird. Please proceed with your question.

Speaker #2: Our next question's in the line of Andrew Whitman with Baird. Please receive their question.

Andrew Wittmann: Yeah, great. Thanks. I just wanted to have you expand a little bit on some of the comments you made earlier on the Global High-Tech business. I think, Christophe, you were talking obviously 63% organic growth. That is good. You mentioned that going forward, going to spec 63, I think you said not all quarters are created equally, and that makes sense. As I understand it, some of this business is that service. You mentioned it as services where you were doing professional services consulting, helping your customers manage the heat, manage the water. It is not all just product sales like I think a lot of people assume. Is that a lumpier part of the business, those consulting services? Are they more in demand maybe when you are opening a new data center than they would be on an O&M basis, if you were to say?

Speaker #7: Yeah. Great. Thanks. I just wanted to have you expand a little bit on some of the comments you made earlier on the high-tech business.

Speaker #7: I think Christophe you were talking obviously 63 percent organic growth. That's good. You mentioned that going forward don't expect 63. I think you said not all quarters are created equally.

Speaker #7: And that makes sense. As I understand it some of this business is that you mentioned it as services where we're doing professional services consulting helping your customers manage the heat manage the water it's not all just product sales like I think a lot of people assume.

Speaker #7: Is that a lumpier part of the business those consulting services? Are they more in demand maybe when you're opening a new data center than they would be on an O&M basis if you were to say?

Andrew Wittmann: I just kind of curious as to what can drive a quarter like this and maybe what was unusual about it, and if you could just talk about how services might play into that. Thanks.

Speaker #7: I just kind of curious as to what can drive a quarter like this and maybe what was unusual about it and if you could just talk about how services might play into that.

Speaker #7: Thanks.

Christophe Beck: So a few things, Andy. When we talk about consulting, there is nothing new. That is not the way we position it. Obviously, when we do a plant assessment in a brewery that we have done for a very long time, I have been 20 years in the company, we did it. So when I started here, it is really to understand what we have got. So how much water is being used, how much energy is being used, how much waste is created, what the quality of the food and so on, really to understand. So what is the starting base, how does it compare to the best plants out there and developing a plan for the customers so to reach the next level of performance. We did the same in hotels, we did the same in hospitals, we did the same in every industry that we serve.

Speaker #3: Sure. A few things. Andy when we talk about consulting there's nothing new. That's not the way we position it. Obviously when we do a plant assessment in a brewery that we've done for a very long time I've been 20 years in the company we did it.

Speaker #3: So when I started here it's really to understand what we've got so how much water is being used how much energy is being used how much waste is created what's the quality of the food and so on.

Speaker #3: Really to understand so what's the starting base how does it compare to the best plants out there and developing a plan for the customers to reach the next level of performance because the same in hotels with the same in hospitals with the same in every industry that we serve.

Christophe Beck: That is the very traditional approach to customers in the company, as you know. You have been following us for a very long time. Data centers are no different. It is just that they are usually new when we serve them. It is not an existing data center. There are some of those obviously, but for the most part, those are new data centers. So we sit together with the builder, with the developer, being a co-locator or being a high-tech hyperscaler company, a little bit of a different approach. But in the end, it is more or less the same thing where we get together and try to understand what are they trying to accomplish, what can we provide in order to get the right heat extraction at the right cost, at the right level of reliability while minimizing the impact on the environment.

Speaker #3: So that's the very traditional approach. To customers in the company as you know. We've been following as so for a very long time. And data centers are no different.

Speaker #3: It's just that they are usually new when we serve them. It's not an existing data center. There's some of those obviously but for the most part those are new data centers.

Speaker #3: So we sit together with the builder with the developer being a colocator or being a high-tech hyperscaler company a little bit of a different approach but in the end it's more or less the same thing where we get together and try to understand what are they trying to accomplish what can we provide in order to get the right heat extraction at the right cost at the right level of reliability while minimizing the impact on the environment and in the case of water to get to water neutral.

Christophe Beck: In the case of water, so to get to water neutral, I call it water neutral because it is not that you have no water in the system, it is just a circular system that you have within the data center. So that is kind of this consulting piece that you are talking about, which by the way, is part of the overall program. So it is not a big driver of revenue. Afterwards, it is an evolving proposition. Today, it is being sold a little bit the old-fashioned way, where it is 3D TRASAR technologies for cooling towers or coolant, depending on the technology that is being used. The coolant that is based on 3D TRASAR technology and what we do for CDUs and for cold plates and every technology that you have in between.

Speaker #3: Cooling water neutral because it's not that you have no water in the system it's just a circular system that you have within the data center.

Speaker #3: So that's kind of this consulting piece that you're talking about which by the way is part of the overall program. So it's not a big driver of revenue.

Speaker #3: Afterwards it's an evolving proposition. Today it's being sold a little bit the old-fashioned way where it's 3D trays are technologies for cooling towers or coolant depending on the technology that's being used.

Speaker #3: The coolant that's based on 3D trays are technology and what we do for CDUs and for cold plates and every technology that you have in between but ultimately it's to sell that as cooling as a service ideally that we can charge much more like a subscription versus an individual piece by piece type of equipment but that's a journey that we need to get through as we've done in other businesses and I feel really good for the past that we're on this one.

Christophe Beck: But ultimately, it is to sell that as cooling as a service, ideally, that we can charge much more like a subscription versus an individual piece by piece type of equipment. But that is a journey that we need to get through as we have done in other businesses and actually a really good sort of path that we on this one. Now to your point of the higher growth in some quarters. Well, it depends on the deliveries that we have since we are still on that journey of making sure that it gets invoiced as an integrated proposition. Well, if you have more data centers that are getting started to operate in one quarter, you get higher sales. If you have a little bit less the next quarter, you are going to have less of those sales as well.

Speaker #3: Now to your point of the higher growth in some quarters well it depends on the deliveries that we have since we're still on that journey of making sure that it gets invoiced as an integrated proposition.

Speaker #3: Well if you have more data centers that are getting started to operate in one quarter you get higher sales and if you have a little bit less the next quarter you're going to have less of those sales as well.

Christophe Beck: But the 30% overall Global High-Tech trajectory of growth that we have talked about, this is the baseline as I have expressed over the last 12 months, and that is the baseline. So I think that from here, it is just going to get better when we take year after year. I do not really care if every quarter is the same or not because they will be different for the reasons I just mentioned.

Speaker #3: But the 30 percent overall global high-tech trajectory of growth that we've talked about this is the baseline as I've expressed over the last 12 months and that's the baseline.

Speaker #3: So I think that from here it's just going to get better when we take year off to year and I don't really care if every quarter is the same or not because there will be different for the reasons I just mentioned.

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

Speaker #2: Our next question's from the line of Jason Hass with Wells Fargo. Please receive their question.

Keegan Antico: Hey, this is Keegan Antico on for Jason. Thanks for taking my question. On the pricing discussions you are beginning to have for 2027, can you just outline how those are going and if clients are generally receptive for additional price increases, obviously alongside the surcharge? Are you seeing any pushback that could lead you to be more at the lower end of the 2% to 3% annual range, obviously, outside of the surcharge? Thanks.

Speaker #8: Hey. This is Keegan Antiquo on for Jason. Thanks for taking my question. On the pricing discussions you're beginning to have for 2027. Could you just outline how those are going and if clients are generally receptive for additional price increases obviously alongside the surcharge?

Speaker #8: Are you seeing any pushback that could lead you to be more at the lower end of the 2 to 3 percent annual range? Obviously outside of the surcharge.

Speaker #8: Thanks.

Christophe Beck: Thanks, Keegan. The 2% to 3% that is in steady state. Honestly, I am not totally sure when the steady state is going to come back. Right now, we are much more in this 5% to 6%, as mentioned a little bit earlier. That was true for Q3. That is going to be true for Q4, and it is probably going to be true for H1 of next year, and probably even a little bit more than that as well. When it is going to come back to the 2% to 3%? I do not know, and I do not really care, honestly care.

Speaker #3: Thanks Keegan. The 2 to 3 that's in steady state honestly are not an issue when the steady state is going to come back. Right now we're much more in this 5 to 6 percent as mentioned a little bit earlier that was true for the third quarter.

Speaker #3: That's going to be true for the fourth quarter and it's probably going to be true for the first half of next year and probably even a little bit more than that as well.

Speaker #3: When it's going to come back to the 2 to 3 I don't know and I don't really care honestly here. We'll adjust as we need to while providing incremental value to our customers in order to make sure that we can get the value price that we deserve while doing it the right way for our customers that net net they get a positive outcome.

Christophe Beck: We will adjust as we need to while providing incremental value to the customers in order to make sure that we can get the value price that we deserve. While doing it the right way for our customers that net that they get a positive outcome of the financial equation that they have so together with us. Do they like pricing? No. They would prefer, obviously, having 100% of the upside without having to pay for it. Well, that is not exactly the way life works. But at the end of the day, when I talk to customers, I am really pleased with what I am hearing in the sense of saying, "You guys are very high touch in what we are doing," being in life sciences, food and beverage, in restaurants, in Global High-Tech, wherever that is. You are not a big share of our spend. You are usually a few percentage points.

Speaker #3: Of the financial equation that they have so together with us. The light pricing no. They would prefer obviously having 100 percent of the upside without having to pay for it.

Speaker #3: Well that's not exactly the way life works but at the end of the day when I talk to customers I'm really pleased with what I'm hearing in the sense of saying you guys are very high touch in what we're doing being in life science in food and beverage in restaurants in high-tech wherever that is.

Speaker #3: You're not a big share of our spend. You're usually a few percentage points. So we're okay. To pay more premium for a service that ultimately is not only helping us keep operating but driving better operational performance in our operations as well at the same time.

Christophe Beck: So we need to pay more premium for a service that ultimately is not only helping us keep operating, but driving better operational performance in our operations as well at the same time. That is why our value price approach has been so steady, sticky, and so reliable for the past few years, and nothing is going to change in the years to come.

Speaker #3: And that's why our value price approach has been so steady sticky and so reliable for the past few years and nothing is going to change in the years to come.

Operator: Our next question is on the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question.

Speaker #2: Our next question's from the line of Kevin McCarthy with Vertical Research Partners. Please receive their question.

Kevin McCarthy: Yeah. Thank you, and good afternoon. Christophe, in listening to your remarks today, you seem quite pleased with all of the significant acquisitions that you have done in recent years, Purolite, Ovivo, CoolIT. I am tempted to ask, as you look at M&A opportunities in the private market today, are there additional high growth, high margin properties that you think might fit quite well under the GHT umbrella? Or should we expect deleveraging to be squarely in focus over the next, call it, year or so as you digest CoolIT?

Speaker #5: Yes. Thank you and good afternoon. Christophe in listening to your remarks today you seem quite pleased with all of the significant acquisitions that you've done in recent years.

Speaker #5: Pure Light, Ovivo, Cool IT and so I'm tempted to ask as you look at M&A opportunities in the private market today are there additional high-growth high-margin properties that you think might fit quite well under the GHG umbrella or should we expect deleveraging to be squarely in focus over the next call it year or so as you digest Cool IT?

Christophe Beck: It is the latter, Kevin. It is two things. First of all, it is really to integrate those two companies, Ovivo and CoolIT, extremely well. This is something that we have done over and over again over the years. We are really good at it, but we need absolutely to have the right focus, dedication, resourcing, in order to make sure that it happens as we have planned and committed. This is priority one, making sure that Ovivo, CoolIT, are perfectly well integrated, that we have those two businesses, data centers and microelectronics, really keeping growing and accelerating as we have discussed today and over the past few calls. This is priority one, and obviously, that is leading the deleveraging by getting so closer to these 2 times that we talked about. This is my 1B priority that I have in front of me.

Speaker #3: It's the latter. Kevin it's really so it's two things. First of all it's really to integrate those two companies Ovivo and Cool IT extremely well.

Speaker #3: This is something that we've done over and over again. Over the years we're really good at it but we need absolutely to have the right focus dedication resourcing in order to make sure that it happens as we have planned and committed.

Speaker #3: So this is probably Q1 making sure that Ovivo, Cool IT are perfectly well integrated that we have those two businesses data centers and micro electronics really keeping growing and accelerating as we've discussed today and over the past few calls this is priority one.

Speaker #3: And obviously that's leading the deleveraging getting so closer to these two times that we've talked about. This is my plan B priority that I have in front of me.

Christophe Beck: Now to your question of opportunities out there in our key businesses. We keep nurturing them. We are very active on the market, building those relationships, understanding what is out there. What are the good, what are the ones that are less good. We have been really good at it for a very long time. That is how we ended up with those two, by the way, as well. I like the pipeline, but there is nothing imminent that is going to happen because I am going to focus on the two priorities I mentioned before.

Speaker #3: Now to your question of opportunities out there in our key businesses we keep nurturing them. We're very active on the market building those relationships.

Speaker #3: Understanding what's out there. What are the good what are the ones that are less good. We've been really good at it. For a very long time.

Speaker #3: That's how we ended up with those two. By the way as well. So I like the pipeline but there's nothing imminent that's going to happen because I'm going to focus on the two priorities I mentioned before.

Operator: Thank you. Our final question is on the line of Scott Schneeberger with Oppenheimer. Please proceed with your question.

Speaker #2: Thank you. Our final question's from the line of Scott Sneeburger with Oppenheimer. Please receive their question.

Scott Schneeberger: Thanks very much. Christophe, for the past few quarters, Heavy Water and paper have been areas of softness, but both inflected to organic revenue growth in the quarter. Kudos there. How sustainable is that looking? Just curious, outside of Middle East, are there any other areas of the business now that you would cite under pressure, or are you looking pretty good across the portfolio?

Speaker #4: Thanks very much. Christophe the for the past few quarters heavy water and paper have been areas of softness but both inflected to revenue growth organic revenue growth in the quarter so kudos there.

Speaker #4: How sustainable is that looking and just curious outside of Middle East are there any other areas of the business now that you would cite under pressure or are you looking pretty good across portfolio?

Christophe Beck: I feel pretty good, but I am always a little bit paranoiac. I am paid for that. This is my role. It is to thinking ahead, to look around the corners, to be ready for things that we did not plan for. And I have had plenty of practice in the last six years. I do not know if it is a good thing or an unfortunate thing. I really like it, and we have done really well as a company navigating a difficult environment while delivering exceptional performance. So what I like the most in our company today is really this breadth of performance. We have a very strong portfolio. Some are growing faster, much faster than other, but we have no business that is really in a troubled situation. All of them have upside potential. That can be true in Global High-Tech, and that can be true in Institutional, as we talked before.

Speaker #3: I feel pretty good. But I'm always a little bit paranoiac. I'm paid for that. This is my role. It's to thinking ahead to look around the corners to be ready for things that we didn't plan for and I've had plenty of practice.

Speaker #3: The last six years I don't know if it's a good thing or an unfortunate thing. I really like it and we've done really well as a company navigating a difficult environment while delivering exceptional performance.

Speaker #3: So what I like the most in our company today is really this graph of performance. We have a very strong portfolio some are growing faster much faster than other but we have no business that's really in a troubled situation.

Speaker #3: All of them have upside potential that can be true in high-tech and that can be true in institutional as we talked before. Which is the magic.

Christophe Beck: Which is the magic of this company that I really like, because ultimately you have a real strong portfolio. You have a company with a lot of key growth opportunities in front of us, like Global High-Tech, like life science, like Pest Intelligence, but also in our core businesses like F&B, bringing hygiene and water together. We talked about Institutional as well at the same time. And the third component that I really like is the fact that we are less facing risk of market disruptions out there, being in tech areas or in different areas, because of the very well-balanced portfolio that we have, our ability as a team as well to react to external factors, being inflation, being supply disruption. We have demonstrated we can do that. So ultimately, we are exactly in the place I wanted to be, and that is why I am talking about this inflection point.

Speaker #3: Of these companies that are really like because ultimately you have a real strong portfolio. You have a company with a lot of key growth opportunities in front of us like high-tech like life science like best intelligence but also in our core businesses like food and beverage bringing hygiene and water together we talked about institutional as well at the same time and the third component that I really like is the fact that we less facing risk of market disruptions out there being in tech areas or in different areas because of the very well balanced portfolio that we have our ability as a team as well to react to external factors being inflation being supply disruption we've demonstrated we can do that.

Speaker #3: So ultimately we are exactly in the place I want it to be and that's why I'm talking about this inflection point as a company.

Christophe Beck: As a company, we have strong, consistent base performance as a company. We have very good growth opportunities and even bigger than we thought in front of us. And third, we are very resilient. We know how to manage things that nobody planned for, including us. And we deliver net performance that keep getting better. And that is why I feel that 2027 is going to be an even better year than 2026, and our future is going to be at a very different level of performance than what we have seen in the past. A pretty good story.

Speaker #3: We have strong consistent base performance as a company. We have very good growth opportunities and even bigger than we thought in front of us.

Speaker #3: And third we are very resilient. We know how to manage things that nobody planned for including us and we deliver net performance that keep getting better and that's why I feel that 27 is going to be an even better year than 2026 and our future is going to be at the very different level of performance than what we've seen in the past.

Speaker #3: A pretty good story.

Andy Hedberg: Great. That wraps up our Q3 conference call. This conference call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation. Hope everyone has a great rest of your day.

Speaker #4: Great that wraps up our third quarter conference call. This conference call and the associated discussion slides will be available for replay on our website.

Speaker #4: Thank you for your time and participation. Hope everyone has a great rest of your day.

Operator: This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.