Core Viewpoint - Ecolab has agreed to acquire the electronic business unit of Ovivo for $1.8 billion, which specializes in ultra-pure water products and services for the semiconductor industry [1] Group 1: Acquisition Details - The acquisition is expected to generate $500 million in sales by 2025 and involves a workforce of 900 employees [1] - Ecolab aims to integrate this business with its existing high-tech operations to provide water management solutions that significantly reduce freshwater usage while maximizing chip production [1] Group 2: Business Impact - The acquisition will more than double the scale of Ecolab's global high-tech water treatment business [1] - Including this acquisition, the annual revenue for Ecolab's high-tech business is projected to reach approximately $800 million, maintaining a strong double-digit growth rate [1] - Ecolab currently generates about $300 million in annual sales from water treatment products supplied to semiconductor wafer fabs, and this transaction is expected to enhance the profitability of its high-tech business [1]

Financial Data and Key Metrics Changes - The company reported an EBITDA of $362 million, a $67 million increase compared to 2024, reflecting a 23% increase [16][20][27] - Net income reached $186 million, which is $36 million higher than the previous year [17][22] - The net debt to twelve months EBITDA ratio remained stable at 3.3 times [7][24][27] Business Line Data and Key Metrics Changes - The company added 468 megawatts of renewable capacity through three projects that reached COD during the first half of the year [6][8] - Total renewable generation reached 1,094 gigawatt hours during the first half of the year [9] - The electricity margin improved by $13 million, driven by increased own generation and higher PPA revenue [18][19] Market Data and Key Metrics Changes - The company reduced its exposure to the spot market, especially during nonsolar hours, which was crucial in a high price environment [11][19] - The company’s generation capacity composition shifted significantly, with coal representing 34%, natural gas 22%, and renewables plus batteries 44% as of February 2025 [12] Company Strategy and Development Direction - The company is focused on energy transition by converting coal assets, expanding renewable portfolios, and investing in transmission [6][10][29] - A significant investment of approximately $1.4 billion is planned for renewable and battery projects between 2025 and 2027 [13][26] - The company aims to maintain a balanced portfolio by adding new renewable generation and storage while expanding the life of LNG generation assets [14][29] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining balance sheet metrics under control during the energy transition [32] - The company is closely monitoring regulatory discussions regarding contract renegotiations and is committed to respecting existing contracts [36][37] - Future EBITDA targets for 2027 are expected to be around 4.5 times EBITDA or below, although no precise figures were provided [33] Other Important Information - The company upgraded its EBITDA guidance for 2025 from a range of $525 million to $575 million to $650 million to $700 million [7][27] - CapEx guidance was also increased from $850 million to $900 million to a range of $900 million to $975 million [8][27] Q&A Session Summary Question: How will the energy transition impact EBITDA and net leverage metrics in 2027? - Management indicated a significant energy transition plan while targeting to keep balance sheet metrics under control, aiming for around 4.5 times EBITDA or below [32][33] Question: Thoughts on recent headlines about renegotiating regulated contracts? - Management stated they are in a clear position to defend contracts and are monitoring congressional discussions closely [36][37] Question: Is the increase in CapEx mostly related to the new BESS CALPA project? - The increase in CapEx reflects good execution of projects and includes the BESS CALPA project, which adds approximately $100 million to this year's CapEx [38][39] Question: Update on the future of coal assets and potential extensions? - Management confirmed they are following regulations for coal asset exit and are in discussions regarding potential extensions based on systemic risk evaluations [40][41] Question: Current exposure to the spot market? - The company has controlled exposure during night hours and is managing risks associated with solar hours effectively [42][43] Question: Plans for funding CapEx in the second half of the year? - Management plans to issue senior debt while recycling cash flow from operations into investments [47] Question: Details on the arbitration with Total Energies? - The company has booked interest from the arbitration decision, and while the situation is largely resolved, the supplier may still challenge it [58][60]

Core Insights - Ovivo Inc. has entered into a definitive agreement to sell its Electronics division to Ecolab for an enterprise valuation of approximately 2.4 billion Canadian dollars, with the transaction expected to close in the first quarter of 2026, pending regulatory clearance [1][2][3] Group 1: Transaction Details - The sale of the Electronics division is seen as a milestone for Ovivo, providing new opportunities within Ecolab and marking the beginning of a new phase for Ovivo [2][3] - Ecolab, a global leader in sustainability, operates in over 170 countries and has annual sales of US$16 billion, employing approximately 48,000 associates [8] Group 2: Future Strategy - Following the transaction, Ovivo will focus on accelerating organic growth in its Municipal, Energy, and Cembrane divisions, as well as expanding its industrial business in North America through acquisitions [4] - The transition is expected to enhance collaboration across the SKion Water portfolio and strengthen corporate functions between SKion Water and Ovivo [4] Group 3: Company Background - Ovivo is recognized for its expertise in water treatment, with over 150 years of experience and a strong global brand presence [6][7] - The company operates in 18 countries and employs more than 1,500 experts in water treatment, providing innovative and sustainable solutions for both industrial and municipal markets [6][7]

[Part I - Financial Information](index=2&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the second quarter and six months ended June 30, 2025, including statements of income, comprehensive income, balance sheets, cash flows, and equity, along with detailed notes explaining the basis of presentation and significant accounting policies [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a year-over-year increase in net sales, operating income, and net income for the second quarter and first six months of 2025, with total assets and liabilities increasing and cash flow from operations decreasing Financial Performance | Financial Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | YTD 2025 (Millions USD) | YTD 2024 (Millions USD) | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $4,025.2 M | $3,985.8 M | $7,720.2 M | $7,737.7 M | | **Operating Income** | $710.1 M | $656.9 M | $1,265.4 M | $1,174.8 M | | **Net Income Attributable to Ecolab** | $524.2 M | $490.9 M | $926.7 M | $903.0 M | | **Diluted EPS** | $1.84 | $1.71 | $3.25 | $3.14 | Balance Sheet Summary | Balance Sheet Item | June 30, 2025 (Millions USD) | Dec 31, 2024 (Millions USD) | | :--- | :--- | :--- | | **Total Assets** | $23,736.0 M | $22,387.8 M | | **Total Liabilities** | $14,385.4 M | $13,598.6 M | | **Total Equity** | $9,350.6 M | $8,789.2 M | Cash Flow Summary | Cash Flow Activity (Six Months Ended June 30) | 2025 (Millions USD) | 2024 (Millions USD) | | :--- | :--- | :--- | | **Cash provided by operating activities** | $1,071.2 M | $1,260.5 M | | **Cash used for investing activities** | ($448.4 M) | ($445.4 M) | | **Cash provided by (used for) financing activities** | $55.7 M | ($1,335.7 M) | | **Increase (decrease) in cash** | $664.1 M | ($529.5 M) | [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant accounting events and policies, including 'One Ecolab' restructuring charges, segment reporting changes, revenue disaggregation, debt, hedging, and litigation matters - The 'One Ecolab' initiative, announced in July 2024, is a restructuring plan to leverage digital technologies and realign work into global centers of excellence. The company anticipates total restructuring costs of **$175 million** and special charges of **$50 million** by the end of 2027[21](index=21&type=chunk) Special (Gains) and Charges | Special (Gains) and Charges (Six Months Ended June 30) | 2025 (Millions USD) | 2024 (Millions USD) | | :--- | :--- | :--- | | One Ecolab | $73.2 M | - | | Other restructuring | ($12.0 M) | $27.3 M | | Sale of global surgical solutions business | $2.4 M | $13.3 M | | Acquisition and integration activities | $8.8 M | $4.8 M | | **Total Special (Gains) and Charges** | **$61.4 M** | **$42.7 M** | - Effective January 1, 2025, the company renamed its Global Industrial segment to Global Water and elevated Global Life Sciences to a standalone reportable segment, moving the former healthcare operating segment into Institutional[58](index=58&type=chunk)[114](index=114&type=chunk) - In June 2025, the company issued **$500 million** in three-year fixed-rate notes with a **4.30%** coupon, subsequently repaying **€575 million ($674 million)** on its 2015 senior notes in July 2025[47](index=47&type=chunk)[50](index=50&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 financial performance, highlighting a 1% net sales increase (3% organic) and an 8% diluted EPS rise, driven by strong pricing and productivity gains despite strategic investments and divestitures [Overview of the Second Quarter](index=30&type=section&id=Overview%20of%20the%20Second%20Quarter) Ecolab reported a 1% net sales increase to **$4.0 billion** in Q2 2025, with 3% organic growth and an 8% rise in diluted EPS to **$1.84**, driven by strong segment performance and a 14% increase in organic operating income Q2 2025 Performance Overview | Metric (Q2 2025 vs Q2 2024) | Reported Change | Organic Change | | :--- | :--- | :--- | | **Net Sales** | +1% | +3% | | **Operating Income** | +8% | +14% | | **Net Income Attributable to Ecolab** | +7% | N/A | | **Diluted EPS** | +8% | N/A | | **Adjusted Diluted EPS** | N/A | +13% | [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q2 2025 organic sales grew 3% (1% volume, 2% pricing), with reported gross margin improving to **44.8%** from **43.8%** due to strong value pricing, supporting operating income growth despite business investments Sales Change Components | Sales Change Components (Q2 2025) | Percentage | | :--- | :--- | | Volume | 1% | | Pricing | 2% | | **Organic Sales Change** | **3%** | | Acquisitions and divestitures | (2)% | | **Fixed Currency Sales Change** | **1%** | | Foreign currency translation | 0% | | **Reported GAAP Net Sales Change** | **1%** | - Adjusted gross margin increased to **44.8%** in Q2 2025 from **43.8%** in Q2 2024, primarily due to strong value pricing[154](index=154&type=chunk) - The reported tax rate for Q2 2025 was **19.9%**, up from **16.2%** in Q2 2024, mainly due to the impact of discrete tax items and special charges in the prior year[175](index=175&type=chunk) [Segment Performance](index=36&type=section&id=Segment%20Performance) Global Water achieved 2% organic sales growth, Global Institutional & Specialty grew 4% organically, Global Pest Elimination increased 6%, and Global Life Sciences grew 4% with significantly improved margins Segment Performance Overview | Segment (Q2 2025 vs Q2 2024) | Organic Sales Change | Organic Operating Income Change | | :--- | :--- | :--- | | **Global Water** | +2% | +6% | | **Global Institutional & Specialty** | +4% | +16% | | **Global Pest Elimination** | +6% | +1% | | **Global Life Sciences** | +4% | +105% | - Global Institutional & Specialty's organic operating income margin expanded by **2.6 percentage points** due to strong pricing, lower supply chain costs, and productivity improvements[199](index=199&type=chunk) - Global Pest Elimination's organic operating income margin decreased by **1.0 percentage point** as strategic investments more than offset positive pricing impacts[204](index=204&type=chunk) [Financial Position, Cash Flow and Liquidity](index=42&type=section&id=Financial%20Position,%20Cash%20Flow%20and%20Liquidity) As of June 30, 2025, total assets were **$23.7 billion** and total debt **$8.2 billion**, with operating cash flow decreasing to **$1.1 billion** due to working capital timing, while maintaining strong liquidity - Cash provided by operating activities decreased by **$189 million** in the first six months of 2025 compared to 2024, primarily driven by a **$200 million** unfavorable change in working capital, specifically the timing of accounts payable[215](index=215&type=chunk) Debt and Liquidity Metrics | Metric | June 30, 2025 (Millions USD) | Dec 31, 2024 (Millions USD) | | :--- | :--- | :--- | | **Total Debt** | $8,210.7 M | $7,564.9 M | | **Cash** | $1,920.9 M | $1,256.8 M | | **Net Debt** | $6,289.8 M | $6,308.1 M | | **Net Debt to EBITDA Ratio** | 1.6 | 1.7 | - In March 2025, the company amended and restated its **$2.0 billion** revolving credit facility, extending the maturity to March 2030, with no borrowings outstanding as of June 30, 2025[225](index=225&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company uses derivative financial instruments, including foreign currency forward contracts and interest rate swaps, to manage foreign exchange and interest rate risks, not for speculation - Ecolab uses foreign currency forward contracts, interest rate swap agreements, and foreign currency debt to manage market risks, avoiding speculative derivative instruments[248](index=248&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, disclosure controls and procedures were effective, with an ongoing multi-year ERP system upgrade expected to impact internal control over financial reporting processes - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[249](index=249&type=chunk) - The company is undergoing a multi-year ERP system upgrade, which will affect processes related to internal control over financial reporting[251](index=251&type=chunk) [Part II - Other Information](index=47&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference legal matters detailed in Note 16 of the financial statements, covering various lawsuits, claims, and environmental actions, including the TPC Group litigation - Information regarding legal proceedings is provided by reference to Note 16, 'Commitments and Contingencies,' in Part I, Item 1 of this report[254](index=254&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) The company states there are no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024, referring readers to that filing - The company refers to its Form 10-K for the fiscal year ended December 31, 2024, for a detailed discussion of risk factors, indicating no material changes during the quarter[255](index=255&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section summarizes common stock repurchases during Q2 2025, totaling **149,600** shares under the publicly announced plan Common Stock Repurchases | Period (2025) | Total Shares Purchased | Average Price Paid per Share (USD) | | :--- | :--- | :--- | | April | 137,600 | $244.41 | | May | 12,000 | $249.79 | | June | 0 | - | | **Total** | **149,600** | **$244.84** | - As of June 30, 2025, **8,051,273** shares remained available for repurchase under the company's board-authorized program[256](index=256&type=chunk)[257](index=257&type=chunk)

Group 1 - Ecolab Inc reported second-quarter adjusted earnings per share of $1.89, missing the analyst consensus estimate of $1.90, while quarterly sales reached $4.025 billion, exceeding the expected $4.016 billion [1] - The company's growth engines, including Life Sciences, Pest Elimination, Global High-Tech, and Ecolab Digital, collectively experienced double-digit sales growth and strong operating income growth, as stated by CEO Christophe Beck [1] - Ecolab reaffirmed its fiscal year 2025 adjusted EPS guidance in the range of $7.42 to $7.62, compared to the $7.50 analyst estimate, and provided third-quarter adjusted EPS guidance of $2.02 to $2.12, against the $2.06 consensus [2] Group 2 - Following the earnings announcement, Ecolab shares increased by 2.1%, trading at $264.70 [2] - Baird analyst Andrew Wittmann upgraded Ecolab from Neutral to Outperform and raised the price target from $273 to $300, while Citigroup analyst Patrick Cunningham maintained a Buy rating but lowered the price target from $320 to $315 [4]

Group 1 - The core viewpoint is a reiterated Sell rating on Ecolab Inc. due to soft demand in the heavy industrial market [1] - The company is experiencing low demand across the overall industrial market [1] - Management has effectively leveraged value pricing strategies to navigate the challenging market conditions [1]

Core Insights - Ecolab Inc. reported second-quarter 2025 adjusted earnings per share (EPS) of $1.89, reflecting a year-over-year increase of 12.5%, but missed the Zacks Consensus Estimate by $0.01 [1][9] - Revenues for the quarter reached $4.03 billion, up 0.9% year over year, exceeding the Zacks Consensus Estimate by 0.4% [2][9] - The company experienced strong organic sales growth of 2.8%, driven by segments such as Institutional & Specialty, Pest Elimination, and Life Sciences [2][13] Revenue Details - Ecolab's total revenues were $4.03 billion, marking a 0.9% increase year over year, and organic sales were $3.88 billion, up 2.8% [2][9] - The Global Water segment reported fixed currency sales of $1.91 billion, reflecting a 2.4% growth year over year, with organic sales at $1.89 billion, up 1.7% [3] - The Global Institutional & Specialty segment saw fixed currency sales decline by 2.4% to $1.51 billion, while organic sales increased by 3.5% [4] - The Global Pest Elimination segment's fixed currency sales improved by 7.3% to $311.3 million, with organic sales up 6.2% [5] - The Global Life Sciences segment reported fixed currency and organic sales of $176.7 million, both reflecting a growth of 4.1% year over year [6] Margin Analysis - Gross profit for the quarter improved by 3.3% year over year to $1.80 billion, with a gross margin expansion of 100 basis points to 44.8% [7][9] - Selling, general and administrative expenses decreased by 0.7% to $1.07 billion year over year [7] - Adjusted operating profit totaled $734.7 million, a 9.8% increase from the prior year, with an adjusted operating margin expansion of 147 basis points to 18.3% [7][9] Financial Position - Ecolab ended the second quarter of 2025 with cash and cash equivalents of $1.92 billion, up from $1.16 million at the end of the first quarter [10] - Total debt increased to $8.21 billion from $7.61 billion at the end of the first quarter [10] - The company has a consistent dividend-paying history, with a five-year annualized dividend growth of 6.86% [10] Guidance - Ecolab provided an adjusted EPS outlook for the third quarter of 2025, expecting a range of $2.02 to $2.12, which represents a year-over-year increase of 10-16% [11] - For the full year 2025, the adjusted EPS is expected to be in the range of $7.42 to $7.62, reflecting a 12-15% increase from 2024 [12] Overall Assessment - Ecolab's second-quarter results showed better-than-expected revenues and solid year-over-year growth in both top and bottom lines, with strong performances across most segments [13] - The company benefited from share gains and strong value pricing, particularly in the Institutional & Specialty and Global Water segments [14] - However, the decline in reported revenues for the Global Institutional & Specialty segment due to the sale of the global surgical solutions business was a point of concern [15]

Financial Data and Key Metrics Changes - Ecolab achieved double-digit earnings growth of 13% in Q2 2025, with organic sales growth of 3% driven by strong value pricing and core business momentum [6][14] - Operating income margin increased by 170 basis points, reaching a solid 18% for the full year 2025 target, with a long-term goal of 20% by 2027 [14][16] - The company expects adjusted EPS growth of 12% to 15% for the upcoming quarters in 2025 and into 2026 [15][24] Business Line Data and Key Metrics Changes - Institutional and Specialty business grew 4% in organic sales, while Global Water sales growth accelerated to 4% excluding Paper and Basic Industries [8][11] - Pest Elimination's organic sales growth accelerated to 6%, benefiting from the shift to a digital Pest Intelligence model [12][40] - Life Sciences experienced mid-single-digit growth, with strong double-digit growth in biopharma and core Pharma [12][104] Market Data and Key Metrics Changes - The remaining 85% of Ecolab's business grew organic sales by 4%, while Paper and Basic Industries, which represent only 15% of total sales, faced uneven demand [7][8] - Global Hi-Tech business grew over 30%, with operating income margins exceeding 20% [12][112] - Ecolab Digital achieved nearly 30% sales growth, reaching an annualized run rate of €380 million [12][113] Company Strategy and Development Direction - Ecolab's strategy focuses on value pricing, innovation, and enhancing operational performance to drive growth [9][16] - The company is investing in growth engines such as Life Sciences, Data Centers, and Pest Intelligence to fuel long-term momentum [24][26] - Ecolab aims to leverage its strong balance sheet and low leverage ratio of 1.7 to capitalize on both organic and inorganic growth opportunities [16][82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver sustained strong performance despite a complicated global environment [15][16] - The company anticipates continued operating income margin expansion due to growth in high-margin businesses and productivity improvements [14][16] - Management acknowledged the need for conservatism in guidance while continuing to invest in growth businesses [24][26] Other Important Information - Ecolab will host an Investor Day on September 4, 2025, to provide an in-depth review of the company's strategy [18] - The company is focused on maintaining a strong cash flow and balance sheet while exploring M&A opportunities [82][84] Q&A Session Summary Question: Why was there no increase in guidance despite strong Q2 results? - Management indicated a combination of conservatism and ongoing investments in growth businesses, maintaining a commitment to deliver 12% to 15% EPS growth [22][24] Question: What are the expectations for pricing in the second half? - Management expects pricing to strengthen closer to 3% in Q3 and Q4, supported by value delivery to customers [29][31] Question: Can you elaborate on the Pest Intelligence rollout? - Management highlighted the transition to Pest Intelligence, which will enhance service delivery and customer satisfaction, aiming for a 99% pest-free environment [36][40] Question: What are the trends in delivered product costs? - Management noted that commodity costs are expected to rise low to mid-single digits, but supply chain efficiencies are helping maintain favorable net delivered product costs [44][46] Question: How is the company positioned for inorganic growth? - Management expressed confidence in the M&A pipeline, focusing on water, high-tech, life sciences, and digital technology, while remaining disciplined in capital deployment [82][84]

Financial Data and Key Metrics Changes - Ecolab achieved double-digit earnings growth of 13% in the second quarter, with organic sales growth of 3% driven by strong value pricing and solid core business momentum [4][12]. - The operating income margin increased by 170 basis points, reaching a solid 18% for the full year 2025 target, with aspirations to reach 20% by 2027 [12][78]. Business Line Data and Key Metrics Changes - The remaining 85% of Ecolab's business grew organic sales by 4% and operating income by 18%, showcasing the strength of its diversified portfolio [5][12]. - The Pest Elimination segment saw organic sales growth accelerate to 6%, benefiting from the shift to a digital Pest Intelligence model [10][39]. - Life Sciences experienced mid-single-digit growth, with strong double-digit growth in biopharma and core Pharma, while Water Purification faced production limitations [10][104]. Market Data and Key Metrics Changes - Global Water sales growth accelerated to 4%, with operating income growing double digits, driven by strong performance in Food and Beverage [9][10]. - The Paper and Basic Industries segments, which represent 15% of total sales, faced uneven demand, impacting overall growth [4][5]. Company Strategy and Development Direction - Ecolab's strategy focuses on value pricing, innovation, and enhancing operational performance, with a commitment to delivering superior customer value [6][12]. - The company is investing in growth engines such as Life Sciences, Global Hi-Tech, and Ecolab Digital, which collectively represent nearly €3 billion in annual sales and are growing double digits [9][10]. - Ecolab aims to leverage its strong balance sheet and low leverage ratio of 1.7 to capitalize on both organic and inorganic growth opportunities [13][85]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering 12% to 15% adjusted EPS growth for the upcoming quarters, supported by strong business fundamentals and a diversified portfolio [12][25]. - The company acknowledges the complexities of the global operating environment but remains optimistic about future growth driven by macro trends in water, AI infrastructure, and productivity [23][25]. Other Important Information - Ecolab will host an Investor Day on September 4 in Minnesota to provide an in-depth review of its strategy and showcase breakthrough innovations [15]. - The company is focused on maintaining a disciplined approach to capital allocation, prioritizing dividends, business investments, and potential buybacks [81][85]. Q&A Session Summary Question: Expectations for Guidance Adjustments - Management indicated a combination of conservatism and ongoing investments in growth businesses, maintaining a commitment to deliver on promised growth targets [21][22]. Question: Pricing Trends and Expectations - Management expects pricing to strengthen closer to 3% in the third and fourth quarters, supported by value delivery to customers [28][31]. Question: Pest Elimination Business Transition - The transition to Pest Intelligence is significant and requires investment, but management is optimistic about long-term growth and customer satisfaction [34][39]. Question: Delivered Product Costs and Inflation - Management noted that commodity costs are expected to rise low to mid-single digits, but efficiencies from the supply chain are helping to maintain favorable margins [42][45]. Question: Water Business Capacity Constraints - Management confirmed capacity limitations in the Water business, particularly in Water Purification, but expressed confidence in the overall growth trajectory [61][66]. Question: Free Cash Flow Expectations - Management expects free cash flow conversion to be around 90% for the year, with strong earnings growth driving improvements in the second half [95][99]. Question: Life Sciences Margin Expectations - Management indicated that while margins may drop back towards mid-teens, strong growth in biopharma will continue to drive overall performance [102][104].

Financial Performance - Ecolab's reported diluted EPS was $1.84, with adjusted diluted EPS at $1.89, a 13% increase[7, 12] - The company anticipates full-year 2025 adjusted diluted earnings per share to be in the range of $7.42 to $7.62, representing a 12% to 15% increase compared to 2024[8, 15] - Ecolab projects third-quarter 2025 adjusted diluted earnings per share to be between $2.02 and $2.12, a 10% to 16% rise from the previous year[8, 15] - Reported sales increased by 1%, which includes an unfavorable impact of 2% from the sale of the global surgical solutions business[8] - Organic sales grew by 3%, driven by Institutional & Specialty and Water segments[8] - Reported operating income (OI) increased by 8%, with organic OI rising by 14%[8] - Organic operating income margin expanded by 170 bps to 18.3%, attributed to value pricing and improved productivity[8] Segment Performance - Global Water segment sales increased by 2%[16] - Global Institutional & Specialty segment sales increased by 4%[16] - Global Pest Elimination segment sales increased by 6%[16] - Global Life Sciences segment sales increased by 4%[16] Strategic Outlook - Ecolab expects to achieve a 20% operating income margin by 2027[7] - The company is focused on capitalizing on long-term growth opportunities, maximizing service effectiveness, and leveraging investments in digital technology[37] - Ecolab is well-prepared to manage the dynamic international trade environment through its world-class supply chain, 'local for local' production model, and recently implemented trade surcharge[15]