Ecolab — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported net sales increased 13% year-over-year to $4,694.8 million; organic sales growth accelerated to 7%.
• Reported operating income increased 7% to $810.5 million; adjusted operating income increased 14% to $893.4 million.
• Reported diluted earnings per share (EPS) decreased 5% to $1.95; adjusted diluted EPS increased 5% to $2.18.
• Reported gross margin was 44.1%; adjusted gross margin declined 70 basis points due to M&A impact, while organic gross margin remained stable.
• Reported operating income margin was 17.3%; organic operating income margin was 19.6%, an increase of 70 basis points.
• Net income attributable to Ecolab decreased 6% to $551.3 million; adjusted net income increased 4% to $615.4 million.
• Interest expense, net increased 126% to $124.8 million, reflecting financing costs for the Ovivo Electronics and CoolIT acquisitions.
• Reported income tax rate was 20.2% compared to 17.8% in the prior year; adjusted tax rate was 20.4% compared to 20.0%.

Guidance and Future Outlook:

• Full-year 2026 adjusted diluted EPS outlook is $8.10 to $8.20, representing 8% to 9% growth.
• Fourth quarter 2026 adjusted diluted EPS outlook is $2.13 to $2.23, representing 2% to 7% growth.
• 2026 outlook reflects strong underlying performance and an approximate 6 percentage point short-term headwind from CoolIT acquisition-related amortization and financing costs.
• Fourth quarter 2026 reported sales are expected to increase 12% to 14%; organic sales growth is expected to be 6% to 7%.
• Fourth quarter 2026 adjusted operating income margin is expected to be approximately 19%, with an organic margin of approximately 20%.
• Management expects 2027 organic sales growth at the upper end of the 5% to 7% target and adjusted operating income margin to reach 20%.
• 2027 adjusted EPS growth is expected to accelerate, providing a path to meet or exceed the long-term target of 12% to 15%.
• Quantifiable special charges for full-year 2026 are anticipated at approximately $0.83 per share; fourth quarter 2026 special charges are expected at approximately $0.26 per share.

Business Segments and Product Lines:

• Global Water segment sales grew 20% (fixed currency), driven by 9% organic growth and a 11% benefit from Ovivo Electronics and CoolIT acquisitions.
• Global High-Tech, a sub-component of Global Water, grew 63% organically, fueled by microelectronics and data center demand.
• Food & Beverage sales growth accelerated to 8%, driven by new business wins from the One Ecolab strategy.
• Light Water delivered improved growth driven by manufacturing and institutional markets.
• Heavy Water and Paper segments returned to solid growth.
• Global Institutional & Specialty sales grew 3% (fixed currency) with steady performance; Specialty sales grew mid-single digits with share gains in quick service and food retail.
• Global Pest Elimination sales grew 9% (fixed currency), with 8% organic growth driven by food & beverage, food retail, and restaurants.
• Global Life Sciences sales grew 17% (fixed currency), driven by share gains in bioprocessing, personal care, and purification.
• Ecolab Digital sales increased 34% to $129 million.
• Ovivo Electronics and CoolIT are expected to contribute approximately 2 percentage points to annual organic sales growth one year after close.
• Pest Elimination organic operating income margin is expected to be in the high-teens to 20% range over the next few quarters.
• Life Sciences organic operating income margin is expected to remain on a high-teens mid-term trajectory.

Market and Competitive Landscape:

• Long-term growth trends in water, hygiene, infection prevention, and digital technologies continue to fuel durable demand.
• Global operating environment remains complex due to evolving geopolitics, international trade policies, and rising commodity costs.
• Ongoing disruptions in the Middle East impacted volume growth, though volume growth accelerated to 2% despite these challenges.
• Pricing strengthened to 5% as the company leveraged total value delivered to mitigate higher commodity costs.
• Ecolab is well-positioned to capitalize on long-term growth opportunities in AI data centers via next-gen liquid cooling technologies and in microelectronics via water circularity solutions.
• The company continues to outperform market trends in Institutional & Specialty, including a mid-single-digit decline in North American restaurant foot traffic.

Risks and Challenges:

• Rising commodity costs and customer disruptions in the Middle East.
• Short-term headwinds from CoolIT acquisition-related amortization and financing costs.
• Geopolitical instability and international trade policy changes.
• Integration costs associated with acquisitions (Ovivo Electronics, CoolIT, Nalco, Purolite).
• Special gains and charges related to restructuring and acquisition activities.

Management Commentary and Tone:

• CEO Christophe Beck described the third quarter results as an "inflection point" in Ecolab's performance.
• Management expressed confidence in delivering another strong year in 2027, citing momentum and the ability to deliver exceptional value.
• The tone highlighted "exceptional execution," "broad-based acceleration," and "double-digit adjusted operating income growth."
• Management noted that the breadth of performance across core businesses and growth engines is encouraging.
• The company emphasized its ability to adjust quickly to dynamic macroeconomic conditions.

Other Key Points:

• The CoolIT acquisition-related amortization and financing costs created an approximate 10% headwind to adjusted diluted EPS in the third quarter.
• Corporate segment operating expense included $79.1 million in transformational acquisition amortization ($28M Nalco, $21M Purolite, $10M Ovivo Electronics, $20M CoolIT).
• Special gains and charges in the third quarter were a net charge of $83 million, primarily related to acquisition and integration costs.
• Ecolab serves customers in more than 170 countries and 40 industries, employing 48,000 associates.
• The company aims to help protect 2 billion people from infections and conserve enough drinking water for 1 billion people by 2030.
• Ecolab protects one-third of the world's food production and a quarter of the power generated.
• The company hosts a live webcast to review earnings, with materials available at www.ecolab.com/investor.