Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

​

The following management discussion and analysis (“MD&A”) provides information we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative information about the material sales drivers including the impact of changes in volume and pricing and the effect of acquisitions and changes in foreign currency at the corporate and reportable segment level. We also provide quantitative information regarding special (gains) and charges, discrete tax items and other significant factors we believe are useful for understanding our results. Such quantitative drivers are supported by comments meant to be qualitative in nature. Qualitative factors are generally ordered based on estimated significance.

​

The MD&A should be read in conjunction with both the unaudited consolidated financial information and related notes included in this Form 10-Q, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021. This discussion contains various Non-GAAP Financial Measures and also contains various Forward-Looking Statements within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statements entitled “Non-GAAP Financial Measures” and “Forward-Looking Statements” located at the end of Part I of this report.

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Comparability of Results

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Purolite Acquisition

​

On December 1, 2021, we acquired Purolite Corporation (“Purolite”) for total consideration of $3.7 billion in cash. Purolite is a leading and fast-growing global provider of high-end ion exchange resins for the separation and purification of solutions for pharmaceutical and industrial applications. Headquartered in King of Prussia, Pennsylvania, Purolite operates in more than 30 countries. Purolite is reported within our Life Sciences operating segment. Acquisition and integration charges are recorded within special (gains) and charges. Amortization of acquisition-related intangible assets is recorded in the Corporate reportable segment.

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Impact of Acquisitions and Divestitures

​

Acquisition adjusted growth rates exclude the results of our acquired businesses from the first twelve months post acquisition and the results of our divested businesses from the twelve months prior to divestiture. As part of the separation of ChampionX in 2020, we entered into a Master Cross Supply and Product Transfer agreement with ChampionX to provide, receive or transfer certain products for a period up to 36 months. Sales of product to ChampionX under this agreement are recorded in product and equipment sales in the Corporate segment along with the related cost of sales. These transactions are removed from the consolidated results as part of the calculation of the impact of acquisitions and divestitures.

​

Fixed Currency Foreign Exchange Rates

​

Management evaluates the sales and operating income performance of our non-U.S. dollar functional currency international operations based on fixed currency exchange rates, which eliminate the impact of exchange rate fluctuations on our international operations. Fixed currency amounts are updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange rates established by management, with all periods presented using such rates. Public currency rate data provided within the “Segment Performance” section of this MD&A reflect amounts translated at actual public average rates of exchange prevailing during the corresponding period and is provided for informational purposes only.

​

​

OVERVIEW OF THE THIRD QUARTER ENDED SEPTEMBER 30, 2022

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Sales Performance

​

When comparing third quarter 2022 against third quarter 2021, sales performance was as follows:

​

●	Reported net sales increased 10% to $3,669.3 million, fixed currency sales increased 16% and acquisition adjusted fixed currency sales increased 13%.

●	Fixed currency sales for our Global Industrial segment increased 16% to $1,816.7 million, as strong double-digit growth across all divisions was driven by accelerating total pricing and new business wins.

●	Fixed currency sales for our Global Institutional & Specialty segment increased 12% to $1,183.2 million. Continued double-digit growth in the Institutional division reflected accelerating total pricing and volume growth. Specialty sales showed good growth, driven by strong quickservice sales growth.

●	Fixed currency sales for our Global Healthcare & Life Sciences segment increased 34% to $375.5 million. Acquisition adjusted fixed currency sales were flat as growth in Life Sciences was offset by slightly lower Healthcare sales. Healthcare’s decline reflected accelerating total pricing that were offset by continued softness in Europe.

●	Fixed currency sales and acquisition adjusted fixed currency sales for Other increased 13% to $362.1 million reflecting double-digit growth in Pest Elimination, Textile Care and Colloidal Technologies.

​

Financial Performance

​

When comparing third quarter 2022 against third quarter 2021, our financial performance was as follows:

​

●	Reported operating income increased 4% to $483 million. Excluding the impact of special (gains) and charges from both 2022 and 2021 reported results, adjusted operating income decreased 3% and our adjusted fixed currency operating income increased 2%.

●	Net income attributable to Ecolab increased 7% to $347.1 million. Excluding the impact of special (gains) and charges and discrete tax items from both 2022 and 2021 reported results, our adjusted net income attributable to Ecolab decreased 7%.

●	Reported diluted EPS increased 8% to $1.21. Excluding the impact of special (gains) and charges and discrete tax items from both 2022 and 2021 reported results, adjusted diluted EPS decreased 6% to $1.30 in the third quarter of 2022.

●	Our reported tax rate was 14.6% during the third quarter of 2022, compared to 18.3% during the third quarter of 2021. Excluding the tax rate impact of special (gains) and charges and discrete tax items from both 2022 and 2021 results, our adjusted tax rate was 18.3% during the third quarter of 2022, compared to 19.5% during the third quarter of 2021.

​

​

RESULTS OF OPERATIONS

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Net Sales

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended									​	​	Nine Months Ended
​	​	September 30									​	​	September 30
(millions)	​	2022			​	2021		​	Change		​	​	2022			​	2021		​	Change
Product and equipment sales	​	​	$2,963.0	​	​	​	$2,653.8	​	​	​	​	​	​	$8,473.9	​	​	​	$7,461.6	​	​	​
Service and lease sales	​	​	706.3	​	​	​	667.0	​	​	​	​	​	​	2,042.7	​	​	​	1,906.9	​	​	​
Reported GAAP net sales	​	​	$3,669.3	​	​	​	$3,320.8	​	10	%	​	​	​	$10,516.6	​	​	​	$9,368.5	​	12	%
Effect of foreign currency translation	​		96.0	​	​	​	(64.1)	​	​	​	​	​		120.3	​	​	​	(210.9)	​	​	​
Non-GAAP fixed currency sales	​	​	$3,765.3	​	​	​	$3,256.7	​	16	%	​	​	​	$10,636.9	​	​	​	$9,157.6	​	16	%

​

​

Product and sold equipment revenue is generated from providing cleaning, sanitizing and water treatment products or selling equipment used in combination with specialized products. Service and lease equipment revenue is generated from providing services or leasing equipment to customers. All of our sales are subject to the same economic conditions.

​

The percentage components of the period-over-period 2022 sales change are shown below:

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended					​	Nine Months Ended
​	​	September 30					​	September 30
(percent)		2022						2022
Volume		​	​	1	%	​	​		​	4	%	​
Price changes		​	​	12	​	​	​		​	9	​	​
Acquisition adjusted fixed currency sales change		​	​	13	​	​	​		​	13	​	​
Acquisitions and divestitures		​	​	3	​	​	​		​	4	​	​
Fixed currency sales change		​	​	16	​	​	​		​	16	​	​
Foreign currency translation		​	​	(5)	​	​	​		​	(4)	​	​
Reported GAAP net sales change		​	​	10	%	​	​		​	12	%	​

​

Amounts do not necessarily sum due to rounding.

​

Cost of Sales (“COS”) and Gross Profit Margin

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	Third Quarter Ended													​	Nine Months Ended
​	September 30													​	September 30
​	2022						​	2021						​	2022						​	2021
​					Gross		​					Gross		​					Gross		​					Gross
(millions/percent)	COS			​	Margin		​	COS			​	Margin		​	COS			​	Margin		​	COS			​	Margin
Product and equipment cost of sales	​	$1,877.1	​	​	​	​	​	​	$1,625.1	​	​	​	​	​	​	$5,371.7	​	​	​	​	​	​	$4,452.9	​	​	​	​
Service and lease cost of sales	​	414.5	​	​	​	​	​	​	391.6	​	​	​	​	​	​	1,204.4	​	​	​	​	​	​	1,119.8	​	​	​	​
Reported GAAP COS and gross margin	​	$2,291.6	​	​	37.5	%	​	​	$2,016.7	​	​	39.3	%	​	​	$6,576.1	​	​	37.5	%	​	​	$5,572.7	​	​	40.5	%
Special (gains) and charges	​	7.1	​		​	​	​	​	52.9	​		​	​	​	​	61.7	​		​	​	​	​	76.2	​		​	​
Non-GAAP adjusted COS and gross margin	​	$2,284.5	​	​	37.7	%	​	​	$1,963.8	​	​	40.9	%	​	​	$6,514.4	​	​	38.1	%	​	​	$5,496.5	​	​	41.3	%

​

Our COS and corresponding gross profit margin (“gross margin”) are shown in the table above. Gross margin is defined as net sales less cost of sales divided by net sales.

​

​

Our reported gross margin was 37.5% and 39.3% for the third quarter of 2022 and 2021, respectively. Our reported gross margin was 37.5% and 40.5% for the first nine months of 2022 and 2021, respectively. Special (gains) and charges included in items impacting cost of sales are shown within the “Special (Gains) and Charges” table below.

​

Excluding the impact of special (gains) and charges within cost of sales, third quarter 2022 adjusted gross margin was 37.7% and our adjusted gross margin for the first nine months of 2022 was 38.1%. These percentages compared against a third quarter 2021 adjusted gross margin of 40.9% and an adjusted gross margin of 41.3% for the first nine months of 2021.

​

Our adjusted gross margin decreased when comparing the third quarter and first nine months of 2022 against the third quarter and first nine months of 2021, primarily reflecting accelerating total pricing that was more than offset by a significant increase in delivered product cost inflation and unfavorable mix.

​

Selling, General and Administrative Expense

​

Selling, general and administrative (“SG&A”) expenses as a percentage of sales were 23.9% and 26.0% for the third quarter and first nine months of 2022, respectively, compared to 25.1% and 27.2% for the third quarter and first nine months of 2021, respectively. The SG&A ratio to sales in the third quarter and first nine months of 2022 decreased driven by sales leverage and cost savings that more than offset investments in the business.

​

Special (Gains) and Charges

​

Special (gains) and charges reported on the Consolidated Statements of Income include the following items:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended						​	Nine Months Ended						​
​	​	September 30						​	September 30						​
(millions)		2022			​	2021			2022			​	2021		​
Cost of sales	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Restructuring activities	​	​	$2.1	​	​	​	$2.2	​	​	$5.5	​	​		$24.1	​
Acquisition and integration activities	​	​	4.2	​	​	​	-	​	​	32.7	​	​	​	-	​
COVID-19 activities, net	​	​	-	​	​	​	50.7	​	​	16.3	​	​	​	51.8	​
Russia/Ukraine activities	​	​	0.8	​	​	​	-	​	​	7.2	​	​	​	-	​
Other	​	​	-	​	​	​	-	​	​	-	​	​	​	0.3	​
Cost of sales subtotal	​	​	7.1	​	​	​	52.9	​	​	61.7	​	​		76.2	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Restructuring activities	​	​	(0.3)	​	​	​	0.4	​	​	0.8	​	​		6.5	​
Acquisition and integration activities	​	​	4.1	​	​	​	0.8	​	​	15.0	​	​	​	3.3	​
COVID-19 activities, net	​	​	2.5	​	​	​	1.5	​	​	7.1	​	​		16.2	​
Russia/Ukraine activities	​	​	-	​	​	​	-	​	​	5.9	​	​	​	-	​
Other	​	​	11.5	​	​	​	3.6	​	​	16.7	​	​		10.7	​
Special (gains) and charges subtotal	​	​	17.8	​	​	​	6.3	​	​	45.5	​	​		36.7	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating income subtotal	​	​	24.9	​	​	​	59.2	​	​	107.2	​	​	​	112.9	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other (income) expense	​	​	24.8	​	​	​	7.0	​	​	24.8	​	​	​	26.6	​
Interest expense, net	​	​	-	​	​	​	32.3	​	​	-	​	​	​	32.3	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total special (gains) and charges	​	​	$49.7	​	​	​	$98.5	​	​	$132.0	​	​	​	$171.8	​

​

For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with our internal management reporting.

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Restructuring activities

​

Restructuring activities relate to the Institutional Advancement Program, Accelerate 2020 and other immaterial restructuring programs which are described below. These activities have been included as a component of cost of sales and special (gains) and charges on the Consolidated Statements of Income. Restructuring liabilities have been classified as a component of other current and other noncurrent liabilities on the Consolidated Balance Sheets.

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Further details related to our restructuring charges are included in Note 2.

​

​

​

Institutional Advancement Program

​

We approved a restructuring plan in 2020 focused on the Institutional business (“the Institutional Plan”) which is intended to enhance our Institutional sales and service structure and allow the sales team to capture share and penetration while maximizing service effectiveness by leveraging our ongoing investments in digital technology. In February 2021, we expanded the Institutional Plan, and we expect that these restructuring charges will be completed by 2023, with total anticipated costs of $70 million ($55 million after tax) or $0.19 per diluted share. The remaining costs are expected to be primarily cash expenditures for severance and non-cash charges related to equipment disposals. Actual costs may vary from these estimates depending on actions taken.

​

In the third quarter and first nine months of 2022, we recorded restructuring charges of $1.8 million ($1.3 million after tax) or less than $0.01 per diluted share and $3.9 million ($2.9 million after tax) or $0.01 per diluted share, respectively, primarily related to severance, disposals of equipment and office closures. We have recorded $51.7 million ($39.5 million after tax), or $0.14 per diluted share of cumulative restructuring charges under the Institutional Plan. The liability related to the Institutional Plan was $2.2 million as of September 30, 2022. The majority of the pretax charges represent net cash expenditures which are expected to be paid over a period of a few months to several quarters which continue to be funded from operating activities.

​

The Institutional Plan has delivered $48 million of cumulative cost savings with estimated annual cost savings of $55 million by 2024.

​

Accelerate 2020

​

During 2018, we formally commenced a restructuring plan Accelerate 2020 (“the Plan”), to leverage technology and system investments and organizational changes. The goals of the Plan are to further simplify and automate processes and tasks, reduce complexity and management layers, consolidate facilitates and focus on key long-term growth areas by further leveraging technology and structural improvements. During 2020, we expanded the Plan for additional costs and savings to further leverage the technology and structural improvements. Following the establishment of the separate Institutional Plan, we now expect that the restructuring activities will be completed by the end of 2022, with total anticipated costs of $255 million ($195 million after tax), or $0.68 per diluted share. Remaining costs are expected to be primarily cash expenditures for severance costs and some facility closure costs relating to team reorganizations. Actual costs may vary from these estimates depending on actions taken.

​

We recorded restructuring charges (gains) of ($0.6) million ($0.3 million after tax), or less than $0.01 per diluted share and $1.5 million ($1.2 million after tax), or less than $0.01 per diluted share in the third quarter of 2022 and 2021, respectively and ($0.2) million ($0.1 million after tax), or less than $0.01 per diluted share and $2.9 million ($2.8 million after tax), or $0.01 per diluted share in the first nine months of 2022 and 2021, respectively. The liability related to the Plan was $15.5 million as of the end of the third quarter of 2022. We have recorded $244.3 million ($189.9 million after tax), or $0.66 per diluted share, of cumulative restructuring charges under the Plan. The majority of the pretax charges represent net cash expenditures which are expected to be paid over a period of a few months to several quarters which continue to be funded from operating activities.

​

The Plan has delivered $315 million of cumulative cost savings with estimated annual cost savings of $315 million by 2022.

​

Other Restructuring Activities

​

During the third quarter of 2022 and 2021, we incurred restructuring charges (gains) of $0.6 million ($0.5 million after tax), or less than $0.01 per diluted share and ($0.3) million ($0.5 million after tax), or less than $0.01 per diluted share, respectively, and during the first nine months of 2022 and 2021, we incurred $2.6 million ($2.0 million after tax), or less than $0.01 per diluted share and $18.2 million ($16.9 million after tax), or $0.06 per diluted share, respectively, related to other immaterial restructuring activity. The charges primarily related to severance and asset write-offs.

​

The restructuring liability balance for all other restructuring plans excluding the Accelerate 2020 and Institutional Plan were $4.0 million and $4.6 million as of September 30, 2022 and December 31, 2021, respectively. The remaining liability is expected to be paid over a period of a few months to several quarters and will continue to be funded from operating activities. Cash payments during the third quarter of 2022 related to all other restructuring plans excluding the Accelerate 2020 and Institutional Plan were $3.2 million.

​

​

​

Acquisition and integration related costs

​

Acquisition and integration related costs reported in product and equipment cost of sales on the Consolidated Statements of Income in the third quarter and first nine months of 2022 include $4.2 million ($3.9 million after tax) or $0.01 per diluted share and $32.7 million ($25.8 million after tax) or $0.09 per diluted share, respectively, and are related primarily to the recognition of fair value step-up in the Purolite inventory and other integration costs.

​

Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income include $4.1 million ($3.9 million after tax) or $0.01 per diluted share and $15.0 million ($11.9 million after tax) or $0.04 per diluted share in the third quarter and first nine months of 2022, respectively. Charges are related to Purolite, Copal Invest NV, including its primary operating entity CID Lines (collectively, “CID Lines”), and Bioquell PLC (“Bioquell”) acquisitions and consist of integration related costs, advisory and legal fees.

​

Acquisition and integration costs reported in special (gains) and charges on the Consolidated Statements of Income include $0.8 million ($0.8 million after tax) or less than $0.01 per diluted share and $3.3 million ($2.9 million after tax) or $0.01 per diluted share in the third quarter and first nine months of 2021, respectively. Charges are related to CID Lines, and Bioquell acquisitions and consist of integration costs, advisory and legal fees.

​

COVID-19 activities

​

We recorded charges of $1.3 million during the third quarter and first nine months of 2022 to protect the wages of certain employees directly impacted by the COVID-19 pandemic. We also recorded charges of $1.6 million and $7.7 million related to employee COVID-19 testing and related expenses during the third quarter and first nine months of 2022, respectively. In addition, we received immaterial amounts of subsidies and government assistance which were recorded in special (gains) and charges in the first nine months of both 2022 and 2021. We recorded $15 million in inventory reserves related to excess sanitizer inventory and estimated disposal costs during the first quarter of 2022. COVID-19 pandemic charges are recorded in product and equipment cost of sales and special (gains) and charges on the Consolidated Statements of Income. Total after tax net charges related to the COVID-19 pandemic were $2.1 million or less than $0.01 per diluted share and $17.9 million or $0.06 per diluted share during the third quarter and first nine months of 2022, respectively.

​

During the third quarter and first nine months of 2021, we recorded charges of $2.6 million and $12.6 million, respectively, to protect the wages of certain employees directly impacted by the COVID-19 pandemic. We also recorded charges of $3.1 million and $11.5 million, respectively, during the third quarter and first nine months of 2021 related to COVID-19 testing and related expenses. In addition, we received subsidies and government assistance, which were recorded as special (gains) and charges of ($3.5) million and ($6.1) million during the third quarter and first nine months of 2021, respectively. COVID-19 pandemic charges are recorded in product and equipment sales, service and lease sales, and special (gains) and charges on the Consolidated Statements of Income. Total after tax net charges related to COVID-19 pandemic were $40.6 million or $0.14 per diluted share and $51.9 million or $0.18 per diluted share during the third quarter and first nine months of 2021, respectively.

​

Russia/Ukraine activities

​

In light of Russia’s invasion of Ukraine and the sanctions against Russia by the United States and other countries, we have made the determination that we will limit our Russian business to operations that are essential to life, providing minimal support for our healthcare, life sciences, food and beverage and certain water businesses. We recorded charges of $0.8 million ($0.7 million after tax) or less than $0.01 per diluted share and charges of $13.1 million ($14.0 million after tax) or $0.05 per diluted share in the third quarter and first nine months of 2022, respectively, primarily related to recoverability risk of certain assets in both Russia and Ukraine.

​

Other operating activities

​

Other special charges recorded in the third quarter and first nine months of 2022 in special (gains) and charges on the Consolidated Statements of Income were $11.5 million ($8.7 million after tax) or $0.03 per diluted share and $16.7 million ($12.6 million after tax) or $0.04 per diluted share, respectively, primarily related to certain legal charges.

​

Other special charges of $3.6 million ($2.7 million after tax) or $0.01 per diluted share and $10.7 million ($8.3 million after tax) or $0.03 per diluted share recorded in the third quarter and first nine months of 2021, respectively, related to certain legal charges in addition to tax consulting fees associated with the ChampionX separation, which are recorded in special (gains) and charges and product and equipment cost of sales on the Consolidated Statements of Income.

​

Other (income) expense

​

We incurred settlement expense recorded in other expense (income) on the Consolidated Statements of Income of $24.8 million ($18.8 million after tax) or $0.07 per diluted share and $7.0 million ($5.3 million after tax) or $0.02 per diluted share during the third quarter of 2022 and 2021, respectively, and $24.8 million ($18.8 million after tax) or $0.07 per diluted share and $26.6 million ($20.2 million after tax) or $0.07 per diluted share during the first nine months of 2022 and 2021, respectively. Expenses are related to U.S. pension plan lump-sum payments to retirees.

​

Interest expense

​

During the third quarter of 2021, we recorded special charges of $32.3 million ($28.4 million after tax) or $0.10 per diluted share in interest expense on the Consolidated Statement of Income primarily related to debt refinancing charges.

​

Operating Income and Operating Income Margin

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended											​	Nine Months Ended
​	​	September 30											​	September 30
(millions)	​	2022				2021		​	Change				​	2022				2021		​	Change
Reported GAAP operating income	​	​	$483.0	​	​	​	$465.8	​	​	4	%	​	​	​	$1,163.3	​	​	​	$1,210.9	​	​	(4)	%	​
Special (gains) and charges	​		24.9	​	​		59.2	​	​	​	​	​	​		107.2	​	​		112.9	​	​	​	​	​
Non-GAAP adjusted operating income	​		507.9	​	​		525.0	​	​	(3)	%	​	​		1,270.5	​	​		1,323.8	​	​	(4)	%	​
Effect of foreign currency translation	​		15.0	​	​		(12.7)	​	​	​	​	​	​		18.6	​	​		(38.7)	​	​	​	​	​
Non-GAAP adjusted fixed currency operating income	​	​	$522.9	​	​	​	$512.3	​	​	2	%	​	​	​	$1,289.1	​	​	​	$1,285.1	​	​	0	%	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended							​	​	​	​	​	Nine Months Ended							​	​	​	​
​	​	September 30							​	​	​	​	​	September 30							​	​	​	​
(percent)	​	2022			​	2021			​	​	​	​	​	2022			​	2021			​	​	​	​
Reported GAAP operating income margin	​	​	13.2	%	​	​	14.0	%	​	​	​	​	​	​	11.1	%	​	​	12.9	%	​	​	​	​
Non-GAAP adjusted operating income margin	​	​	13.8	%	​	​	15.8	%	​	​	​	​	​	​	12.1	%	​	​	14.1	%	​	​	​	​
Non-GAAP adjusted fixed currency operating income margin	​	​	13.9	%	​	​	15.7	%	​	​	​	​	​	​	12.1	%	​	​	14.0	%	​	​	​	​

​

Our operating income and corresponding operating income margin are shown in the previous tables. Operating income margin is defined as operating income divided by net sales.

​

Our reported operating income increased 4% and decreased 4% in the third quarter and first nine months of 2022, respectively, versus the comparable period of 2021. Our reported operating income for 2022 and 2021 was impacted by special (gains) and charges; excluding the impact of special (gains) and charges from 2022 and 2021 reported results, our adjusted operating income decreased 3% and 4% in the third quarter and first nine months of 2022, respectively.

​

As shown in the previous table, foreign currency had a 5 and 4 percentage points impact on adjusted operating income growth for the third quarter and first nine months of 2022, respectively. Foreign currency had a 2 and 4 percentage points impact on adjusted operating income growth for the third quarter and first nine months of 2021, respectively.

​

Other (Income) Expense

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended									​	Nine Months Ended						​	​
​	​	September 30									​	September 30						​	​
(millions)	​	2022				2021			Change		​	2022				2021			Change
Reported GAAP other (income) expense	​	​	$5.7	​	​	​	($13.0)	​	(144)	%	​	​	($32.6)	​	​	​	($27.5)	​	19	%
Special (gains) and charges	​	​	24.8	​	​		7.0	​	​	​	​	​	24.8	​	​		26.6	​	​	​
Non-GAAP adjusted other (income) expense	​	​	($19.1)	​	​	​	($20.0)	​	(4)	%	​	​	($57.4)	​	​	​	($54.1)	​	6	%

​

Other expense (income) was $5.7 million and ($13.0) million in the third quarter of 2022 and 2021, respectively. Other income was $32.6 million and $27.5 million in the first nine months of 2022 and 2021, respectively. We recognized pension settlement expense of $24.8 million in special (gains) and charges in third quarter and first nine months of 2022, and $7.0 million and $26.6 million in third quarter and first nine months of 2021, respectively.

​

Interest Expense, Net

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended									​	Nine Months Ended						​	​
​	​	September 30									​	September 30						​	​
(millions)	​	2022				2021			Change		​	2022				2021			Change
Reported GAAP interest expense, net	​	​	$65.1	​	​	​	$76.4	​	(15)	%	​	​	$174.1	​	​	​	$173.7	​	0	%
Special (gains) and charges	​	​	-	​	​		32.3	​	​	​	​	​	-	​	​		32.3	​	​	​
Non-GAAP adjusted interest expense, net	​	​	$65.1	​	​	​	$44.1	​	48	%	​	​	$174.1	​	​	​	$141.4	​	23	%

​

Reported net interest expense was $65.1 million and $76.4 million in the third quarter of 2022 and 2021, respectively. Reported net interest expense was $174.1 million and $173.7 million in the first nine months of 2022 and 2021, respectively. In the third quarter of 2021, we incurred $32.3 million of expense associated with debt refinancing. Adjusted for debt refinancing costs, the increase in interest expense when comparing 2022 against 2021 was driven primarily by the interest on debt issued to fund the Purolite acquisition and the impact from higher average interest rates on floating rate debt.

​

​

Provision for Income Taxes

​

The following table provides a summary of our tax rate:

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended					​	Nine Months Ended
​	​	September 30					​	September 30
(percent)		2022		​	2021			2022		​	2021
Reported GAAP tax rate	​	14.6	%	​	18.3	%	​	17.9	%	​	21.2	%
Tax rate impact of:	​	​	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges		0.6	​	​	-	​	​	0.2	​	​	(0.3)
Discrete tax items		3.1	​	​	1.2	​	​	0.8	​	​	(1.4)
Non-GAAP adjusted tax rate		18.3	%	​	19.5	%		18.9	%	​	19.5	%

​

Our reported tax rate was 14.6% and 18.3% for the third quarter of 2022 and 2021, respectively and 17.9% and 21.2% for the first nine months of 2022 and 2021, respectively. The change in our tax rate for the third quarter and first nine months of 2022 versus the comparable period of 2021 was driven primarily by discrete tax items and special (gains) and charges. The change in our tax rate includes the tax impact of special (gains) and charges and discrete tax items, which have impacted the comparability of our historical reported tax rates, as amounts included in our special (gains) and charges are derived from tax jurisdictions with rates that vary from our tax rate, and discrete tax items are not necessarily consistent across periods. The tax impact of special (gains) and charges and discrete tax items will likely continue to impact comparability of our reported tax rate in the future.

​

We recognized a net tax benefit related to discrete tax items of $14.2 million and $9.5 million in the third quarter and first nine months of 2022, respectively. This included a deferred tax benefit of $14.6 million associated with utilization of tax attributes as a result of legal entity rationalization and share-based compensation excess tax benefits of $0.7 million and $4.3 million in the third quarter and first nine months of 2022, respectively. The amount of the excess tax benefit is subject to variation in stock price and award exercises. Additionally, we recognized discrete tax expense of $1.1 million and $9.4 million in the third quarter and first nine months of 2022, respectively, primarily due to audit settlements, reserves for uncertain tax positions, prior year return adjustments, repricing of deferred tax balances, and other changes in estimates.

​

We recognized a net tax benefit related to discrete tax items of $6.3 million in the third quarter and a net tax expense of $17.5 million in the first nine months of 2021. This included a tax benefit of $4.0 million in the third quarter and a net tax expense of $5.5 million in the first nine months of 2021 related to prior year returns, and a deferred tax benefit of $0.4 million and deferred tax expense of $23.8 million associated with transferring certain intangible property between affiliates in the third quarter and first nine months of 2021, respectively. The share-based compensation excess tax benefit was $9.9 million and $20.7 million in the third quarter and first nine months of 2021, respectively. The remaining discrete tax expense of $8.0 million and $8.9 million during the quarter and first nine months of 2021, respectively, was primarily due to changes in tax law, reserves for uncertain tax positions, audit settlements, and other changes in estimates.

​

The decrease in the third quarter and first nine months of 2022 adjusted tax rate compared to 2021 was primarily due to the geographic mix of income and tax planning.

​

Net Income Attributable to Ecolab

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended											​	Nine Months Ended
​	​	September 30											​	September 30
(millions)		2022				2021			Change					2022				2021			Change
Reported GAAP net income attributable to Ecolab	​	​	$347.1	​	​	​	$324.5	​	​	7	%	​	​	​	$827.3	​	​	​	$828.9	​	​	(0)	%	​
Adjustments:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges, after tax	​		39.6	​	​	​	80.8	​	​	​	​	​	​	​	105.8	​	​	​	139.1	​	​	​	​	​
Discrete tax net expense	​		(14.2)	​	​	​	(6.3)	​	​	​	​	​	​	​	(9.5)	​	​	​	17.5	​	​	​	​	​
Non-GAAP adjusted net income attributable to Ecolab	​	​	$372.5	​	​	​	$399.0	​	​	(7)	%	​	​	​	$923.6	​	​	​	$985.5	​	​	(6)	%	​

​

Diluted EPS

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended											​	Nine Months Ended
​	​	September 30											​	September 30
(dollars)		2022				2021			Change					2022				2021			Change
Reported GAAP diluted EPS	​	​	$1.21	​	​	​	$ 1.12	​	​	8	%	​	​	​	$2.88	​	​	​	$ 2.87	​	​	0	%	​
Adjustments:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges, after tax	​		0.14	​	​	​	0.28	​	​	​	​	​	​	​	0.37	​	​	​	0.48	​	​	​	​	​
Discrete tax net expense	​		(0.05)	​	​	​	(0.02)	​	​	​	​	​	​	​	(0.03)	​	​	​	0.06	​	​	​	​	​
Non-GAAP adjusted diluted EPS	​	​	$1.30	​	​	​	$ 1.38	​	​	(6)	%	​	​	​	$3.22	​	​	​	$ 3.41	​	​	(6)	%	​

​

Per share amounts in the above tables do not necessary sum due to rounding.

​

Currency translation had an unfavorable impact of approximately ($0.08) and ($0.17) per share on diluted EPS for the third quarter and first nine months of 2022, respectively, when compared to the comparable periods of 2021.

​

​

​

SEGMENT PERFORMANCE

​

The non-U.S. dollar functional international amounts included within our reportable segments are based on translation into U.S. dollars at the fixed currency exchange rates used by management for 2022. The difference between the fixed currency exchange rates and the actual currency exchange rates is reported as “effect of foreign currency translation” in the following tables. All other accounting policies of the reportable segments are consistent with U.S. GAAP and the accounting policies described in Note 2 of our Annual Report on Form 10-K for the year ended December 31, 2021. Additional information about our reportable segments is included in Note 15.

​

Fixed currency net sales and operating income for the third quarter and first nine months of 2022 and 2021 for our reportable segments are shown in the following tables:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Sales	​	Third Quarter Ended										​	Nine Months Ended
​	​	September 30										​	September 30
(millions)		2022				2021		​	​	Change			2022				2021		​	​	Change
Global Industrial	​	​	$1,816.7	​		​	$1,565.0		​	16	%	​	​	$5,077.8	​		​	$4,452.2		​	14	%
Global Institutional & Specialty		​	1,183.2	​	​		1,057.1	​	​	12	​		​	3,323.4	​	​		2,864.7	​	​	16	​
Global Healthcare & Life Sciences	​	​	375.5	​	​	​	279.7	​	​	34	​	​	​	1,138.9	​	​	​	852.8	​	​	34	​
Other	​	​	362.1	​	​	​	319.5	​	​	13	​	​	​	1,000.4	​	​	​	885.2	​	​	13	​
Corporate		​	27.8	​	​		35.4	​	​	(21)	​		​	96.4	​	​		102.7	​	​	(6)	​
Subtotal at fixed currency		​	3,765.3	​	​		3,256.7	​	​	16	​		​	10,636.9	​	​		9,157.6	​	​	16	​
Effect of foreign currency translation		​	(96.0)	​	​		64.1	​	​	​	​		​	(120.3)	​	​		210.9	​	​	​	​
Consolidated reported GAAP net sales		​	$3,669.3	​	​	​	$3,320.8	​	​	10	%		​	$10,516.6	​	​	​	$9,368.5	​	​	12	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating Income	​	Third Quarter Ended										​	Nine Months Ended
​	​	September 30										​	September 30
(millions)	​	2022				2021		​	​	Change		​	2022				2021		​	​	Change
Global Industrial			$277.0	​		​	$258.6		​	7	%	​		$693.2	​		​	$719.7		​	(4)	%
Global Institutional & Specialty		​	199.1	​	​		190.9		​	4	​	​	​	462.5	​	​		390.5		​	18	​
Global Healthcare & Life Sciences	​	​	34.7	​	​	​	35.2	​	​	(1)	​	​	​	137.3	​	​	​	123.9	​	​	11	​
Other		​	64.4	​	​		57.8		​	11	​	​	​	153.6	​	​		140.9		​	9	​
Corporate		​	(77.2)	​	​		(89.4)	​	​	(14)	​	​	​	(264.7)	​	​		(202.8)	​	​	31	​
Subtotal at fixed currency		​	498.0	​	​		453.1		​	10	​	​	​	1,181.9	​	​		1,172.2		​	1	​
Effect of foreign currency translation		​	(15.0)	​	​		12.7	​	​	​	​	​	​	(18.6)	​	​		38.7	​	​	​	​
Consolidated reported GAAP operating income			$483.0	​	​	​	$465.8		​	4	%	​		$1,163.3	​	​	​	$1,210.9		​	(4)	%

​

​

​

The following tables reconcile the impact of acquisitions and divestitures within our reportable segments:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended												​
​	​	September 30												​
Net Sales	​	2022					​	​	2021					​
(millions)		Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​
Global Industrial	​	$1,816.7	​	($7.9)	​	$1,808.8	​	​	$1,565.0	​	$-	​	$1,565.0	​
Global Institutional & Specialty		1,183.2	​	-	​	1,183.2	​	​	1,057.1	​	-	​	1,057.1	​
Global Healthcare & Life Sciences	​	375.5	​	(95.5)	​	280.0	​	​	279.7	​	-	​	279.7	​
Other		362.1	​	-	​	362.1	​	​	319.5	​	-	​	319.5	​
Corporate		27.8	​	(27.8)	​	-	​	​	35.4	​	(35.4)	​	-	​
Subtotal at fixed currency		3,765.3	​	(131.2)	​	3,634.1	​	​	3,256.7	​	(35.4)	​	3,221.3	​
Effect of foreign currency translation		(96.0)	​	​	​	​	​	​	64.1	​	​	​	​	​
Total reported net sales		$3,669.3	​	​	​	​	​	​	$3,320.8	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating Income	​	2022					​	​	2021					​
(millions)		Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​
Global Industrial	​	$277.0	​	($1.3)	​	$275.7	​	​	$258.6	​	$-	​	$258.6	​
Global Institutional & Specialty		199.1	​	-	​	199.1	​	​	190.9	​	-	​	190.9	​
Global Healthcare & Life Sciences	​	34.7	​	(15.6)	​	19.1	​	​	35.2	​	-	​	35.2	​
Other		64.4	​	-	​	64.4	​	​	57.8	​	-	​	57.8	​
Corporate		(52.3)	​	22.4	​	(29.9)	​	​	(30.2)	​	-	​	(30.2)	​
Non-GAAP adjusted fixed currency operating income		522.9	​	5.5	​	528.4	​	​	512.3	​	-	​	512.3	​
Special (gains) and charges		24.9	​	​	​	​	​	​	59.2	​	​	​	​	​
Subtotal at fixed currency		498.0	​	​	​	​	​	​	453.1	​	​	​	​	​
Effect of foreign currency translation		(15.0)	​	​	​	​	​	​	12.7	​	​	​	​	​
Total reported operating income		$483.0	​	​	​	​	​	​	$465.8	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Nine Months Ended												​
​	​	September 30												​
Net Sales	​	2022					​	​	2021					​
(millions)		Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​
Global Industrial	​	$5,077.8	​	($21.0)	​	$5,056.8	​	​	$4,452.2	​	$-	​	$4,452.2	​
Global Institutional & Specialty		3,323.4	​	-	​	3,323.4	​	​	2,864.7	​	-	​	2,864.7	​
Global Healthcare & Life Sciences	​	1,138.9	​	(307.5)	​	831.4	​	​	852.8	​	-	​	852.8	​
Other		1,000.4	​	-	​	1,000.4	​	​	885.2	​	-	​	885.2	​
Corporate	​	96.4	​	(96.4)	​	-	​	​	102.7	​	(102.7)	​	-	​
Subtotal at fixed currency		10,636.9	​	(424.9)	​	10,212.0	​	​	9,157.6	​	(102.7)	​	9,054.9	​
Effect of foreign currency translation		(120.3)	​	​	​	​	​	​	210.9	​	​	​	​	​
Total reported net sales		$10,516.6	​	​	​	​	​	​	$9,368.5	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating Income	​	2022					​	​	2021					​
(millions)		Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​
Global Industrial	​	$693.2	​	($3.4)	​	$689.8	​	​	$719.7	​	$-	​	$719.7	​
Global Institutional & Specialty		462.5	​	-	​	462.5	​	​	390.5	​	-	​	390.5	​
Global Healthcare & Life Sciences		137.3	​	(65.1)	​	72.2	​	​	123.9	​	-	​	123.9	​
Other	​	153.6	​	-	​	153.6	​	​	140.9	​	-	​	140.9	​
Corporate		(157.5)	​	68.0	​	(89.5)	​	​	(89.9)	​	-	​	(89.9)	​
Non-GAAP adjusted fixed currency operating income		1,289.1	​	(0.5)	​	1,288.6	​	​	1,285.1	​	-	​	1,285.1	​
Special (gains) and charges		107.2	​	​	​	​	​	​	112.9	​	​	​	​	​
Subtotal at fixed currency		1,181.9	​	​	​	​	​	​	1,172.2	​	​	​	​	​
Effect of foreign currency translation		(18.6)	​	​	​	​	​	​	38.7	​	​	​	​	​
Total reported operating income		$1,163.3	​	​	​	​	​	​	$1,210.9	​	​	​	​	​

​

​

Unless otherwise noted, the following segment performance commentary compares the third quarter and first nine months of 2022 against the third quarter and first nine months of 2021.

​

​

Global Industrial

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended							​	Nine Months Ended
​	​	September 30							​	September 30
​		2022			​	2021				2022			​	2021
Sales at fixed currency (millions)	​	​	$1,816.7	​	​	​	$1,565.0	​	​	​	$5,077.8	​	​	​	$4,452.2	​
Sales at public currency (millions)	​	​	1,769.6	​	​	​	1,603.1	​	​	​	5,025.2	​	​	​	4,578.6	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Volume	​		-	%	​		​	​	​		2	%	​		​	​
Price changes	​		15	%	​		​	​	​		11	%	​		​	​
Acquisition adjusted fixed currency sales change	​	​	16	%	​	​	​	​	​	​	14	%	​	​	​	​
Acquisitions and divestitures	​		1	%	​		​	​	​		-	%	​		​	​
Fixed currency sales change	​		16	%	​		​	​	​		14	%	​		​	​
Foreign currency translation	​	​	(5)	%	​	​	​	​	​	​	(4)	%	​	​	​	​
Public currency sales change	​		10	%	​		​	​	​		10	%	​		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$277.0	​	​	​	$258.6	​	​	​	$693.2	​	​	​	$719.7	​
Operating income at public currency (millions)	​	​	269.0	​	​	​	267.1	​	​	​	684.2	​	​	​	748.2	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	7	%	​	​	​	​	​	​	(4)	%	​	​	​	​
Fixed currency operating income margin	​		15.2	%	​		16.5	%	​		13.7	%	​		16.2	%
Acquisition adjusted fixed currency operating income change	​		7	%	​		​	​	​		(4)	%	​		​	​
Acquisition adjusted fixed currency operating income margin	​		15.2	%	​		16.5	%	​		13.6	%	​		16.2	%
Public currency operating income change	​	​	1	%	​	​	​	​	​	​	(9)	%	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

Percentages in the above table do not necessarily sum due to rounding.

​

Net Sales

​

Fixed currency sales for Global Industrial increased in both the third quarter and first nine months of 2022, as strong double-digit growth across all divisions was driven by accelerating total pricing and new business wins.

​

All operating segments reported double-digit growth, Water fixed currency sales increased 15% (14% acquisition adjusted) and 13% (12% acquisition adjusted) in the third quarter and first nine months of 2022, respectively, reflecting accelerating total pricing and new business wins. Light industry water treatment sales reported strong growth, driven by double-digit growth across data centers and microelectronics, food & beverage, manufacturing, and institutional. Heavy industry sales also recorded a strong increase led by double digit growth in power and chemicals. Mining showed very strong growth, benefiting from our strategic shift toward high-value metals and fertilizers, as well as strong new business wins. Food & Beverage fixed currency sales increased 14% and 12% in the third quarter and first nine months of 2022, respectively, reflecting accelerating total pricing. Downstream fixed currency sales increased 22% and 16% in the third quarter and first nine months of 2022, respectively, driven by accelerating pricing, new business wins and improved customer utilization rates. Paper fixed currency sales increased 19% and 17% in the third quarter and first nine months of 2022, respectively, driven by accelerating total pricing and new business wins.

​

Operating Income

​

Fixed currency operating income increased for the third quarter and decreased for first nine months of 2022, while fixed currency operating income margins decreased for Global Industrial in both the third quarter and first nine months of 2022.

​

Acquisition adjusted fixed currency operating income margins decreased 1.3 percentage points during the third quarter of 2022, as the 11.2 percentage point positive impacts of accelerating total pricing was more than offset by the 12.1 percentage points negative impacts of significantly higher Delivered Product Costs and unfavorable mix. Acquisition adjusted fixed currency operating income margins decreased 2.6 percentage points during the first nine months of 2022, as the 8.7 percentage point positive impacts of strong accelerating pricing were more than offset by the 12.0 percentage point negative impacts of significantly higher Delivered Product Costs and investments in the business.

​

​

​

Global Institutional & Specialty

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended							​	Nine Months Ended
​	​	September 30							​	September 30
​		2022			​	2021				2022			​	2021
Sales at fixed currency (millions)	​	​	$1,183.2	​	​	​	$1,057.1	​	​	​	$3,323.4	​	​	​	$2,864.7	​
Sales at public currency (millions)	​	​	1,163.1	​	​	​	1,070.6	​	​	​	3,297.3	​	​	​	2,904.0	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Volume	​		2	%	​		​	​	​		9	%	​		​	​
Price changes	​		10	%	​		​	​	​		7	%	​		​	​
Acquisition adjusted fixed currency sales change	​	​	12	%	​	​	​	​	​	​	16	%	​	​	​	​
Acquisitions and divestitures	​		-	%	​		​	​	​		-	%	​		​	​
Fixed currency sales change	​		12	%	​		​	​	​		16	%	​		​	​
Foreign currency translation	​	​	(3)	%	​	​	​	​	​	​	(2)	%	​	​	​	​
Public currency sales change	​		9	%	​		​	​	​		14	%	​		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$199.1	​	​	​	$190.9	​	​	​	$462.5	​	​	​	$390.5	​
Operating income at public currency (millions)	​	​	196.1	​	​	​	193.4	​	​	​	458.5	​	​	​	393.9	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	4	%	​	​	​	​	​	​	18	%	​	​	​	​
Fixed currency operating income margin	​		16.8	%	​		18.1	%	​		13.9	%	​		13.6	%
Acquisition adjusted fixed currency operating income change	​		4	%	​		​	​	​		18	%	​		​	​
Acquisition adjusted fixed currency operating income margin	​		16.8	%	​		18.1	%	​		13.9	%	​		13.6	%
Public currency operating income change	​	​	1	%	​	​	​	​	​	​	16	%	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

Percentages in the above table do not necessarily sum due to rounding.

​

Net Sales

​

Fixed currency sales for Global Institutional & Specialty increased in the third quarter and first nine months of 2022.

​

At an operating segment level, Institutional fixed currency sales increased 14% and 20% in the third quarter and first nine months of 2022, respectively, driven by accelerating total pricing and new business wins. Specialty fixed currency sales increased 8% and 6% in third quarter and first nine months of 2022, respectively, driven by strong quick service sales and modest growth in food retail sales.

​

Operating Income

​

Fixed currency operating income increased for both the third quarter and first nine months of 2022 while fixed currency operating income margins decreased and increased for the third quarter and first nine months of 2022, respectively, for our Global Institutional & Specialty segment.

​

Acquisition adjusted fixed currency operating income margins decreased 1.3 percentage points during the third quarter of 2022, as the 7.7 percentage point positive impacts from accelerating pricing were more than offset by the 8.6 percentage point negative impacts by higher Delivered Product Costs and investments in the business. Acquisition adjusted fixed currency operating income margins increased 0.3 percentage points during the first nine months of 2022, as the 8.7 percentage point positive impacts from accelerating total pricing and strong volume growth overcame the 8.5 percentage point negative impacts of higher Delivered Product Costs and investments in the business.

​

​

Global Healthcare & Life Sciences

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended							​	Nine Months Ended
​	​	September 30							​	September 30
​		2022			​	2021			​	2022			​	2021
Sales at fixed currency (millions)	​	​	$375.5	​	​	​	$279.7	​	​	​	$1,138.9	​	​	​	$852.8	​
Sales at public currency (millions)	​	​	356.6	​	​	​	286.9	​	​	​	1,110.3	​	​	​	881.4	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Volume	​		(9)	%	​		​	​	​		(8)	%	​		​	​
Price changes	​		9	%	​		​	​	​		6	%	​		​	​
Acquisition adjusted fixed currency sales change	​	​	-	%	​	​	​	​	​	​	(2)	%	​	​	​	​
Acquisitions and divestitures	​		34	%	​		​	​	​		36	%	​		​	​
Fixed currency sales change	​		34	%	​		​	​	​		34	%	​		​	​
Foreign currency translation	​	​	(9)	%	​	​	​	​	​	​	(6)	%	​	​	​	​
Public currency sales change	​		24	%	​		​	​	​		26	%	​		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$34.7	​	​	​	$35.2	​	​	​	$137.3	​	​	​	$123.9	​
Operating income at public currency (millions)	​	​	31.4	​	​	​	36.4	​	​	​	132.4	​	​	​	129.4	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	(1)	%	​	​	​	​	​	​	11	%	​	​	​	​
Fixed currency operating income margin	​		9.2	%	​		12.6	%	​		12.1	%	​		14.5	%
Acquisition adjusted fixed currency operating income change	​		(46)	%	​		​	​	​		(42)	%	​		​	​
Acquisition adjusted fixed currency operating income margin	​		6.8	%	​		12.6	%	​		8.7	%	​		14.5	%
Public currency operating income change	​	​	(14)	%	​	​	​	​	​	​	2	%	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

Percentages in the above table do not necessarily sum due to rounding.

​

Net Sales

​

Acquisition adjusted fixed currency sales for Global Healthcare & Life Sciences were flat for the third quarter, as growth in Life Sciences was offset by slightly lower Healthcare sales.

​

At an operating segment level, Healthcare fixed currency sales decreased 2% (2% acquisition adjusted) and 3% (5% acquisition adjusted) in the third quarter and first nine months of 2022, respectively, as accelerating total pricing was offset by continued softness in Europe. Life Sciences fixed currency sales increased 158% (5% acquisition adjusted) and 161% (6% acquisition adjusted) in the third quarter and first nine months of 2022, respectively, reflecting the acquisition of Purolite. Excluding the acquisition of Purolite, the Life Sciences business growth was driven by accelerating total pricing and double-digit growth in consumable pharmaceutical and personal care products were partially offset by normalizing demand for Bioquell’s biocontamination systems.

​

Operating Income

​

Fixed currency operating income decreased and increased for the third quarter and first nine months of 2022, respectively, while fixed currency operating income margins decreased for our Global Healthcare & Life Sciences segment in both the third quarter and first nine months of 2022.

​

Acquisition adjusted fixed currency operating income margins decreased 5.8 percentage points during the third quarter of 2022, as the 7.0 percentage point positive impacts from accelerated pricing was more than offset by the 13.7 percentage point negative impact from higher Delivered Product Costs, lower volumes and unfavorable mix. Acquisition adjusted fixed currency operating income margins decreased 5.8 percentage points during the first nine months of 2022, as the 4.5 percentage point positive impacts from impacts from accelerating pricing was more than offset by the 10.7 percentage point negative impact from higher Delivered Product Costs, lower volumes and investments in the business.

​

​

​

Other

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended							​	Nine Months Ended
​	​	September 30							​	September 30
​		2022			​	2021				2022			​	2021
Sales at fixed currency (millions)	​	​	$362.1	​	​	​	$319.5	​	​	​	$1,000.4	​	​	​	$885.2	​
Sales at public currency (millions)	​	​	352.3	​	​	​	324.2	​	​	​	987.4	​	​	​	900.4	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Volume	​		6	%	​		​	​	​		7	%	​		​	​
Price changes	​		7	%	​		​	​	​		6	%	​		​	​
Acquisition adjusted fixed currency sales change	​	​	13	%	​	​	​	​	​	​	13	%	​	​	​	​
Acquisitions and divestitures	​		-	%	​		​	​	​		-	%	​		​	​
Fixed currency sales change	​		13	%	​		​	​	​		13	%	​		​	​
Foreign currency translation	​	​	(4)	%	​	​	​	​	​	​	(3)	%	​	​	​	​
Public currency sales change	​		9	%	​		​	​	​		10	%	​		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$64.4	​	​	​	$57.8	​	​	​	$153.6	​	​	​	$140.9	​
Operating income at public currency (millions)	​	​	63.0	​	​	​	58.7	​	​	​	152.1	​	​	​	143.3	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	11	%	​	​	​	​	​	​	9	%	​	​	​	​
Fixed currency operating income margin	​		17.8	%	​		18.1	%	​		15.4	%	​		15.9	%
Acquisition adjusted fixed currency operating income change	​		11	%	​		​	​	​		9	%	​		​	​
Acquisition adjusted fixed currency operating income margin	​		17.8	%	​		18.1	%	​		15.4	%	​		15.9	%
Public currency operating income change	​	​	7	%	​	​	​	​	​	​	6	%	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

Percentages in the above table do not necessarily sum due to rounding.

​

Net Sales

​

Fixed currency sales for Other increased in the third quarter and first nine months of 2022, reflecting double-digit growth in Pest Elimination, Textile Care, and Colloidal Technologies.

​

At an operating segment level, Pest Elimination fixed currency sales increased 12% and 11% in the third quarter and first nine months of 2022, respectively, reflecting strong growth across food retail, food and beverage, hospitality, and restaurants. Textile Care fixed currency sales increased 17% and 19% in the third quarter and first nine months of 2022, respectively. Colloidal Technologies Group fixed currency sales increased 16% and 13% in the third quarter and first nine months of 2022, respectively.

​

Operating Income

​

Fixed currency operating income increased and fixed currency operating income margins decreased for Other both in the third quarter and first nine months of 2022.

​

Acquisition adjusted fixed currency operating income margins decreased 0.3 percentage points during the third quarter of 2022, as the 5.6 percentage point positive impact from accelerating total pricing was more than offset by the 5.9 percentage point negative impact of higher Delivered Product Costs and investments in the business. Acquisition adjusted fixed currency operating income margins decreased 0.5 percentage points during the first nine months of 2022 as the 5.2 percentage point positive impact from accelerating pricing and volume growth was more than offset by the 5.4 percentage point negative impact of higher Delivered Product Costs and investments in business.

​

​

Corporate

​

Consistent with our internal management reporting, Corporate amounts in the table on page 39 include sales to ChampionX in accordance with the long-term supply agreement entered into with the Transaction post-separation, as discussed in Note 14, intangible asset amortization specifically from the Nalco and Purolite acquisitions and special (gains) and charges that are not allocated to our reportable segments. Items included within special (gains) and charges are shown in the table on page 34.

​

​

FINANCIAL POSITION, CASH FLOWS AND LIQUIDITY

​

Financial Position

​

Total assets were $21.0 billion as of September 30, 2022, compared to total assets of $21.2 billion as of December 31, 2021.

​

Total liabilities were $13.9 billion as of September 30, 2022, compared to total liabilities of $14.0 billion as of December 31, 2021. Total debt was $8.5 billion as of September 30, 2022 and $8.8 billion as of December 31, 2021. See further discussion of our debt activity within the “Liquidity and Capital Resources” section of this MD&A.

​

Our net debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) is shown in the following table. EBITDA is a non-GAAP measure discussed further in the “Non-GAAP Financial Measures” section of this MD&A.

​

The inputs to EBITDA reflect the trailing twelve months of activity for the period presented:

​

​	​	​	​	​	​	​	​	​	​
​	​	September 30, 2022				December 31, 2021			​
(ratio)	​	​	​	​	​	​	​	​	​
Net debt to EBITDA		​	3.4	​		​	3.4	​	​
​	​	​	​	​	​	​	​	​	​
(millions)		​	​	​	​	​	​	​	​
Total debt	​	​	$8,524.6	​	​	​	$8,758.2	​	​
Cash	​		112.9	​	​	​	359.9	​	​
Net debt	​	​	$8,411.7	​	​	​	$8,398.3	​	​
​	​	​	​	​	​	​	​	​	​
Net income including noncontrolling interest	​	​	$1,144.7	​	​	​	$1,144.0	​	​
Provision for income taxes	​		226.6	​	​	​	270.2	​	​
Interest expense, net	​		218.7	​	​	​	218.3	​	​
Depreciation	​		614.7	​	​	​	604.4	​	​
Amortization	​		303.1	​	​	​	238.7	​	​
EBITDA	​		$2,507.8	​	​	​	$2,475.6	​	​

​

Cash Flows

​

Operating Activities

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Nine Months Ended
​	​	September 30
(millions)		2022			​	2021				Change
Cash provided by operating activities	​	​	$929.2	​	​	​	$1,421.0	​	​	​	($491.8)	​

​

We continue to generate cash flow from operations, allowing us to fund our ongoing operations, acquisitions, investments in the business and pension obligations along with returning cash to our shareholders through dividend payments and share repurchases. Cash provided by operating activities decreased $492 million in first nine months of 2022 compared to the first nine months of 2021, driven primarily by $381 million increase in working capital excluding the impact of non-cash special charges. The increase in working capital is primarily driven by receivables higher than last year due to pricing and surcharge rollout but expected to improve by year-end. Additionally inventory was impacted by inflationary environment and higher stock holding to mitigate supply disruption.

​

​

Investing Activities

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Nine Months Ended
​	​	September 30
(millions)		2022			​	2021				Change
Cash used for investing activities	​	​	($506.4)	​	​	​	($638.5)	​	​	​	$132.1	​

​

Cash used for investing activities is primarily impacted by the timing of business acquisitions and dispositions as well as capital investments in the business.

​

We continue to make capital investments in the business, including merchandising equipment, manufacturing equipment and facilities. Total capital expenditures were $510 million and $424 million in the first nine months of 2022 and 2021, respectively.

​

Total cash paid for acquisitions, net of cash acquired along with net cash received from dispositions, during the first nine months of 2022 and 2021, was $7 million and $210 million, respectively. Our acquisitions are discussed further in Note 3. We continue to target strategic business acquisitions which complement our growth strategy and expect to continue to make capital investments and acquisitions in the future to support our long-term growth.

​

Financing Activities

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Nine Months Ended
​	​	September 30
(millions)		2022			​	2021				Change
Cash used for financing activities	​	​	($675.6)	​	​	​	($1,159.3)	​	​	​	$483.7	​

​

Our cash flows from financing activities primarily reflect the issuances and repayment of debt, common stock repurchases, proceeds from common stock issuances related to our equity incentive programs and dividend payments.

We issued $88 million and $1 million of commercial paper and notes payable in the first nine months of 2022 and 2021, respectively. We issued $300 million par value and received $294 million in proceeds of long-term debt and repaid $900 million of long-term debt in the first nine months of 2021.

Shares are repurchased for the purpose of partially offsetting the dilutive effect of our equity compensation plans, to manage our capital structure and to efficiently return capital to shareholders. We reacquired a total of $445 million and $78 million of shares in the first nine months of 2022 and 2021, respectively. Cash proceeds and tax benefits from stock option exercises provide a portion of the funding for repurchase activity.

We paid dividends of $445 million and $427 million in in the first nine months of 2022 and 2021, respectively.

The impact on financing cash flows of commercial paper and notes payable issuances are shown in the following table:

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Nine Months Ended
​	​	September 30
(millions)	​	2022			​	2021				Change
Net issuances of commercial paper and notes payable	​	​	$87.6	​	​	​	$0.5	​	​	​	$87.1	​
Long-term debt borrowings	​	​	-	​	​	​	293.7	​	​	​	(293.7)	​
Long-term debt repayments	​	​	-	​	​	​	(1,017.9)	​	​	​	1,017.9	​

​

Liquidity and Capital Resources

​

We currently expect to fund the cash requirements which are reasonably foreseeable for the next twelve months, including scheduled debt repayments, new investments in the business, share repurchases, dividend payments, possible business acquisitions and pension and postretirement contributions with cash from operating activities, and as needed, additional short-term and/or long-term borrowings. We continue to expect our operating cash flow to remain strong.

​

As of September 30, 2022, we had $113 million of cash and cash equivalents on hand, of which $78 million was held outside of the U.S. We will continue to evaluate our cash position in light of future developments.

​

As of September 30, 2022, we have a $2.0 billion multi-year credit facility which expires in April 2026. The credit facility has been established with a diverse syndicate of banks and supports our U.S. and Euro commercial paper programs. The maximum aggregate amount of commercial paper that may be issued under our U.S. commercial paper program and our Euro commercial paper program may not exceed $2.0 billion. At the end of the third quarter of 2022, we had $485 million outstanding commercial paper under our U.S. program and no outstanding commercial paper under our Euro program. There were no borrowings under our credit facility as of September 30, 2022 or 2021. As of September 30, 2022, both programs were rated A-2 by Standard & Poor’s, P-2 by Moody’s and F-1 by Fitch.

​

​

There was no long-term debt issuance or repayment activity through the first nine months of 2022. Our long-term debt issuance and repayment activity through the first nine months of 2021 is discussed in the Cash Flows – Financing Activities section of this MD&A.

​

We are in compliance with our debt covenants and other requirements of our credit agreements and indentures. We believe we have sufficient borrowing capacity to meet our foreseeable operating activities, as needed.

​

The schedule of contractual obligations included in the Financial Position and Liquidity section of our Form 10-K for the year ended December 31, 2021 disclosed total notes payable and long-term debt due within one year of $11 million. As of September 30, 2022, the total notes payable and long-term debt due within one year was $13 million. There was $485 million commercial paper outstanding as of September 30, 2022 and $400 million as of December 31, 2021.

​

Our gross liability for uncertain tax positions was $20 million as of September 30, 2022 and $25 million as of December 31, 2021. We are not able to reasonably estimate the amount by which the liability will increase or decrease over time; however, at this time, we do not expect significant payments related to these obligations within the next year.

​

​

GLOBAL ECONOMIC ENVIRONMENT

​

Coronavirus disease 2019 (COVID-19)

​

In March 2020, the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization. The COVID-19 pandemic is continuing to affect major economic and financial markets and industries are facing the challenges with the economic conditions resulting from efforts to address the pandemic, including supply shortages, inflation and other challenges, such as those resulting from the introduction of vaccination mandates. While many government restrictions in the U.S. have eased, restrictions on activities continue in many other regions, particularly those where vaccination rates lag, continuing to impact consumer activity in those regions. Concerns remain that our markets could see a resurgence of cases triggering additional government mandated lockdowns or similar restrictions on activity, for example due to the emergence of a variant against which existing vaccines are not as effective or which may be more easily transmitted, particularly to those unvaccinated. These conditions have had and will continue to have a negative impact on market conditions and customer demand throughout the world.

​

Global Economies

​

Approximately half of our sales are outside of the U.S. Our international operations subject us to changes in economic conditions and foreign currency exchange rates as well as political uncertainty in some countries which could impact future operating results. We expect a more challenging macroeconomic environment, especially in Europe, as the war and the energy crisis is having a significant impact on costs and demand. We also assume continued high delivered product costs and significant unfavorable currency translation impacts that persist well into 2023.

​

Argentina is classified as a highly inflationary economy in accordance with U.S. GAAP, and the U.S. dollar is the functional currency for our subsidiaries in Argentina. During the first nine months of 2022, sales in Argentina represented less than 1% of our consolidated sales. Assets held in Argentina at the end of the third quarter of 2022 represented less than 1% of our consolidated assets. Turkey was also classified as a highly inflationary economy in accordance with U.S. GAAP. During the first nine months of 2022, sales in Turkey represented less than 1% of our consolidated sales. Assets held in Turkey at the end of the third quarter of 2022 represented less than 1% of our consolidated assets.

​

In light of Russia’s invasion of Ukraine and the sanctions against Russia by the United States and other countries, we have made the determination that we will limit our Russian business to operations that are essential to life, providing minimal support for our healthcare, life sciences, food and beverage and certain water businesses. We may further narrow our presence in Russia depending on future developments. Our Russian and Ukraine operations represented approximately 1% of our 2021 annual sales. We recorded charges of $0.8 million in the third quarter of 2022 and $13.1 million in the first nine months of 2022 primarily related to recoverability risk of certain assets in both Russia and Ukraine.

​

​

NEW ACCOUNTING PRONOUNCEMENTS

​

For information on new accounting pronouncements, refer to Note 17 to the Consolidated Financial Statements.

​

Subsequent Events

​

In October 2022, we entered into a cross currency swap agreement with a notional amount of €200 million maturing in 2026. The cross currency swap is designated as a net investment hedge of our Euro denominated exposures from our investments in certain of its Euro denominated functional currency subsidiaries.

​

In November 2022, our Board of Director's authorized the repurchase up to 10 million additional shares of Ecolab common stock.

​

​

In November 2022, we announced a Europe cost savings program (the “Europe Program”) targeting $80 million of annualized pre-tax savings after completion of the program. The Europe Program is expected to be completed by mid-2024 and is expected to result in approximately $80 million of pre-tax annualized operating expense savings ($70 million after tax) by the end of 2024. In connection with these actions, we expect to incur pre-tax charges of $130 million ($110 million after tax), beginning with approximately $60 million of pre-tax charges in the fourth quarter of 2022. The Europe Program charges are expected to be primarily cash expenditures related to severance and asset disposals.

​

​

NON-GAAP FINANCIAL MEASURES

​

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operation” in Item 2, contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP measures include:

	●	Fixed currency sales

	●	Acquisition adjusted fixed currency sales

	●	Adjusted cost of sales

	●	Adjusted gross margin

	●	Fixed currency operating income

	●	Fixed currency operating income margin

	●	Adjusted operating income

	●	Adjusted operating income margin

	●	Adjusted fixed currency operating income

	●	Adjusted fixed currency operating income margin

	●	Acquisition adjusted fixed currency operating income

	●	Acquisition adjusted fixed currency operating income margin

	●	EBITDA

	●	Adjusted tax rate

	●	Adjusted net income attributable to Ecolab

	●	Adjusted diluted EPS

​

We provide these measures as additional information regarding our operating results. We use these non-GAAP measures internally to evaluate our performance and in making financial and operational decisions, including with respect to incentive compensation. We believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations and that these measures are useful for period-to-period comparison of results.

​

Our non-GAAP financial measures for cost of sales, gross margin and operating income exclude the impact of special (gains) and charges, and our non-GAAP measures for tax rate, net income attributable to Ecolab and diluted EPS further exclude the impact of discrete tax items. We include items within special (gains) and charges and discrete tax items that we believe can significantly affect the period-over-period assessment of operating results and not necessarily reflect costs and/or income associated with historical trends and future results. After tax special (gains) and charges are derived by applying the applicable local jurisdictional tax rate to the corresponding pre-tax special (gains) and charges.

EBITDA is defined as the sum of net income including noncontrolling interest, provision for income taxes, net interest expense, depreciation and amortization. EBITDA is used in our net debt to EBITDA ratio, which we view as important indicators of the operational and financial health of our organization.

We evaluate the performance of our international operations based on fixed currency rates of foreign exchange. Fixed currency amounts included in this Form 10-Q are based on translation into U.S. dollars at the fixed foreign currency exchange rates established by management at the beginning of 2022. We also provide our segment results based on public currency rates for informational purposes.

​

Our reportable segments do not include the impact of intangible asset amortization from the Nalco and Purolite transactions or the impact of special (gains) and charges as these are not allocated our reportable segments.

​

Acquisition adjusted growth rates exclude the results of our acquired businesses from the first twelve months post acquisition and exclude the results of our divested businesses from the twelve months prior to divestiture. In addition, as part of the separation of ChampionX in 2020, we entered into a Master Cross Supply and Product Transfer agreement with ChampionX to provide, receive or transfer certain products for a period up to 36 months. Sales of product to ChampionX under this agreement are recorded in product and equipment sales in the Corporate segment along with the related cost of sales. These transactions are removed from the consolidated results as part of the calculation of the impact of acquisitions and divestitures.

​

These non-GAAP measures are not in accordance with, or an alternative to U.S. GAAP, and may be different from non-GAAP measures used by other companies. Investors should not rely on any single financial measure when evaluating our business. We recommend that investors view these measures in conjunction with the U.S. GAAP measures included in this MD&A and we have provided reconciliations of reported U.S. GAAP amounts to the non-GAAP amounts.

​

​

FORWARD-LOOKING STATEMENTS

​

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include the COVID-19 pandemic outlook; business performance and prospects; expectations concerning timing, amount and type of restructuring costs and savings from restructuring activities; delivered product cost inflation, pricing actions, volume growth, cost savings and productivity improvements; Russian operations; tax deductibility of goodwill; capital investments, acquisitions and share repurchases; amortization expense; non-performance of financial counterparties; payments and contributions to pension and postretirement health care benefit plans; the impact of lawsuits, claims and environmental matters; impact of new accounting pronouncements; cash flows, borrowing capacity and funding of cash requirements; payments related to uncertain tax positions; and implementation of ERP system upgrade.

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Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “we believe,” “we expect,” “estimate,” “project” (including the negative or variations thereof) or similar terminology, generally identify forward-looking statements. Forward-looking statements may also represent challenging goals for us. These statements, which represent our expectations or beliefs concerning various future events, are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ materially from those of such forward-looking statements. In particular, the effects of the COVID-19 pandemic depend on numerous factors, including the severity of the disease, the duration of the outbreak, the distribution and efficacy of vaccines, the likelihood of a resurgence of the outbreak, including as result of emerging variants, actions that may be taken by governmental authorities intended to minimize the spread of the pandemic, including vaccination mandates, or to stimulate the economy, and other unintended consequences. Further, the ultimate results of any restructuring or efficiency initiative, integration and business improvement actions, including cost synergies, depend on a number of factors, including the development of final plans, the impact of local regulatory requirements regarding employee terminations, the time necessary to develop and implement the restructuring or efficiency initiative and other business improvement initiatives and the level of success achieved through such actions in improving competitiveness, efficiency and effectiveness. We caution that undue reliance should not be placed on such forward-looking statements, which speak only as of the date made.

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Some of the factors which could cause results to differ materially from those expressed in any forward-looking statements are set forth under Item 1A of our most recent Form 10-K, as updated by Item 1A of this Form 10-Q, and our other public filings with the Securities and Exchange Commission (the "SEC"), and include the effects and duration of the COVID-19 pandemic, including the impact of vaccination mandates; difficulty in procuring raw materials or fluctuations in raw material costs; the vitality of the markets we serve; the impact of economic factors such as the worldwide economy, capital flows, interest rates, foreign currency risk, and reduced sales and earnings in our international operations resulting from the weakening of local currencies versus the U.S. dollar; information technology infrastructure failures or breaches in data security; our ability to attract, retain and develop high caliber management talent to lead our business and successfully execute organizational change and changing labor market dynamics in the wake of the COVID-19 pandemic; exposure to global economic, political and legal risks related to our international operations, including the impact of sanctions or other actions taken by the U.S. or other countries, and retaliatory measures taken by Russia in response, in connection with the conflict in Ukraine; public health outbreaks, epidemics or pandemics, such as the current outbreak of COVID-19; our ability to execute key business initiatives, including restructurings and our Enterprise Resource Planning system upgrades; our ability to successfully compete with respect to value, innovation and customer support; pressure on operations from consolidation of customers or vendors; restraints on pricing flexibility due to contractual obligations and our ability to meet our contractual commitments; realization of anticipated benefits of the Purolite acquisition; our ability to acquire complementary businesses and to effectively integrate such businesses; the costs and effects of complying with laws and regulations, including those relating to the environment and to the manufacture, storage, distribution, sale and use of our products, as well as to the conduct of our business generally, including labor and employment and anti-corruption; potential chemical spill or release; potential to incur significant tax liabilities or indemnification liabilities relating to the separation and split-off of our ChampionX business; the occurrence of litigation or claims, including class action lawsuits; the loss or insolvency of a major customer or distributor; repeated or prolonged government and/or business shutdowns or similar events; acts of war or terrorism; natural or man-made disasters; water shortages; severe weather conditions; changes in tax laws and unanticipated tax liabilities; potential loss of deferred tax assets; our indebtedness, and any failure to comply with covenants that apply to our indebtedness; potential losses arising from the impairment of goodwill or other assets; and other uncertainties or risks reported from time to time in our reports to the SEC. There can be no assurances that our earnings levels will meet investors’ expectations. Except as may be required under applicable law, we do not undertake, and expressly disclaim, any duty to update our Forward-Looking Statements.

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