Ecolab Reports 7% Organic Sales Growth in Third Quarter

Ecolab (NYSE: ECL ) reported third-quarter financial results on Tuesday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

Access the full call at Summary Ecolab Inc. reported 7% organic sales growth for Q3 2026, with significant contributions from core businesses and new growth engines. Organic gross margin was maintained despite high commodity cost inflation, while organic operating income margin expanded to 19.6%. Ecolab's Life Sciences segment saw 17% organic sales growth, driven by bioprocessing, and aims to achieve $1 billion in sales with a 30% operating margin in the coming years.

Ecolab Digital continued its rapid expansion with a 34% increase in sales, emphasizing customer demand for operational visibility and real-time action capabilities. Global High Tech grew organic sales by 63%, fueled by data center cooling and circular water for microelectronics, with an aim to reach $4 billion in sales by 2030. The company plans to focus on expanding its field sales force and enhancing service offerings to drive growth in its Institutional segment. Looking ahead, Ecolab expects 2027 organic sales growth at the upper end of the 5% to 7% range, with a 20% adjusted operating income margin.

Management expressed confidence in achieving long-term adjusted EPS growth of 12% to 15% in 2027, supported by strategic investments and operational efficiencies. Full Transcript OPERATOR Greetings and welcome to the Ecolab Third Quarter 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, Investor Relations for Ecolab. Thank you, Andy.

You may begin. Andy Hedberg (Vice President, Investor Relations) 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.

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 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 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 (Chairman, President and CEO) 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 managed higher commodity costs within the quarter. The third quarter 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 continue 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. 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 leverage the investments we've made in our One Ecolab Growth initiative.

As a result, 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 digits 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. We bring our water, hygiene, health 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 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 growth opportunity with these customers. You can see this clearly in Food & Beverage, which accelerated to 8% organic growth with broad-based growth across dairy, protein and beverage against stable end market demand. 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.

We connect cleaning, sanitizing and circular water management solutions to help customers achieve all three. At the same time, Nalco 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 Industry Water also returned to solid growth.

In these businesses, strong new wins and improved pricing are helping us outperform, with 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, Institutional and Specialty performance remained consistent despite industry trends that continue to get tougher, including restaurant foot 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.

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 Tiche 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. 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 bringing our technologies together through our One Ecolab model to drive higher solution penetration.

Our growth engines are also accelerating. Life Sciences continued 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.

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 business 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. I love how this business is performing and even more where it's heading. 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. Ecolab 3D 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 the third quarter, 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. We combine those insights with local expertise to help deliver nearly a 99% pest-free environment for our customers versus the 94% which is the industry standard. And 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 strength to this leading business. 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 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 ultra-pure 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 truly do that today. Global High Tech significantly strengthens Ecolab's long-term growth and margin potential. Last quarter we outlined our 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 2 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 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. 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, 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'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 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 second half of next year as we lap M&A transaction impact and operating performance continues 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 third quarter marked an inflection point for Ecolab. Our core strengthened, our growth engines accelerated and all our businesses outperformed the end market. We're 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'll now turn it back to Andy for Q&A.

Andy Hedberg (Vice President, Investor Relations) Thanks, Christophe. That concludes our formal remarks. Operator, would you please begin the question and answer period? OPERATOR Thank you.

We'll 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 one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue.

You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. 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. Tim Mulrooney (Analyst) Christophe, good afternoon. Congrats on the strong quarterly performance.

Christophe Beck (Chairman, President and CEO) Thank you, Tim. Tim Mulrooney (Analyst) So I was hoping we could talk a little bit more about your high-tech water business in a little more detail. The legacy business, you know, that accelerated to 60% plus organic growth, that's a major step up from the first half. 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, as you progress towards that $4 billion target, I wonder if a 30% CAGR is the right number to use based on what you've seen over the last couple of quarters. Thank you. Christophe Beck (Chairman, President and CEO) Thank you, Tim.

Love that question and especially that business. It's obviously early. For us, we own CoolIT now for almost three months, 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.

We'll talk more at Investor Day in a few weeks. But I like a lot where we're positioned right now for a few reasons, with the best technologies—and we clearly worked hard at it—with the best team. We've been building that as well for a long time. 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.

We've seen that become a big topic in the media and in all the discussions we have now. If I unpack that a little bit: in microelectronics—and we'll talk more about it at 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. 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 it's roughly 60% to 70% for the latest chips, and we'd like to move that up much closer to 100%, you can imagine how much money that represents when it's really well done. At the same time, the amount of water that's required to produce those chips is immense. So water circularity is absolutely essential. And this is what we do at Ecolab.

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 heat. And 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. The good news is it's what we master really well at Ecolab. At the same time, water usage and power usage questions in data centers have become a top topic in all the discussions today. That's impacting obviously the growth for the tech industry, creating political challenges as well.

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.