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 or qualitative 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, 2023. 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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Impact of Acquisitions and Divestitures

​

Our non-GAAP financial measures for organic sales, organic operating income and organic operating income margin are at fixed currency and exclude the impact of special (gains) and charges, the results of our acquired businesses from the first twelve months post acquisition and the results of divested businesses from the twelve months prior to divestiture. As part of the separation of ChampionX in 2020, we entered into an agreement with ChampionX to provide, receive or transfer certain products for a transitionary period. Transitionary period 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. The remaining sales to ChampionX are recorded in product and equipment sales in the Global Industrial 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.

​

Comparability of Reportable Segments

​

Effective January 1, 2024, the former Textile Care and Colloidal Technologies Group (“CTG”) operating segments are now part of the Water operating segment which continues to remain in the Global Industrial reportable segment. Additionally, the Pest Elimination operating segment, formerly aggregated with the Textile Care and CTG operating segments within Other, is now reported as the stand-alone Global Pest Elimination reportable segment. We made other immaterial changes, including the movement of certain customers and cost allocations between reportable segments. After these changes, we have eight operating segments.

​

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 SECOND QUARTER ENDED JUNE 30, 2024

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Sales Performance

​

When comparing second quarter 2024 against second quarter 2023, sales performance was as follows:

​

●	Reported net sales increased 3% to $3,985.8 million and organic sales increased 4%.

●	Organic sales for our Global Industrial segment increased 2% to $1,934.9 million driven by accelerating Water sales growth.

●	Organic sales for our Global Institutional & Specialty segment increased 7% to $1,358.8 million as the segment lapped last year’s double-digit growth.

●	Organic sales for our Global Healthcare & Life Sciences segment were stable at $395.0 million as better growth in Life Sciences offset modestly lower Healthcare sales.

●	Organic sales for Global Pest Elimination increased 9% to $295.0 million.

​

​

Financial Performance

​

When comparing second quarter 2024 against second quarter 2023, our financial performance was as follows:

​

●	Reported operating income increased 36% to $656.9 million. Organic operating income increased 32%.

●	Net income attributable to Ecolab increased 49% to $490.9 million. Excluding the impact of special (gains) and charges and discrete tax items from both 2024 and 2023 reported results, our adjusted net income attributable to Ecolab increased 35%.

●	Reported diluted EPS increased 49% to $1.71. Excluding the impact of special (gains) and charges and discrete tax items from both 2024 and 2023 reported results, adjusted diluted EPS increased 35% to $1.68 in the second quarter of 2024.

●	Our reported tax rate was 16.2% during the second quarter of 2024, compared to 20.6% during the second quarter of 2023. Excluding the tax rate impact of special (gains) and charges and discrete tax items from both 2024 and 2023 results, our adjusted tax rate was 19.5% during the second quarter of 2024, compared to 19.9% during the second quarter of 2023.

​

​

RESULTS OF OPERATIONS

​

Net Sales

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended									​	​	Six Months Ended
​	​	June 30									​	​	June 30
(millions)	​	2024			​	2023		​	Change		​	​	2024			​	2023		​	Change
Product and equipment sales	​	​	$3,173.1	​	​	​	$3,104.8	​	​	​	​	​	​	$6,159.6	​	​	​	$5,981.1	​	​	​
Service and lease sales	​	​	812.7	​	​	​	747.3	​	​	​	​	​	​	1,578.1	​	​	​	1,442.6	​	​	​
Reported GAAP net sales	​	​	3,985.8	​	​	​	3,852.1	​	3	%	​	​	​	7,737.7	​	​	​	7,423.7	​	4	%
Effect of foreign currency translation	​		35.0	​	​	​	3.6	​	​	​	​	​		44.8	​	​	​	12.8	​	​	​
Non-GAAP fixed currency sales	​	​	4,020.8	​	​	​	3,855.7	​	4	%	​	​	​	7,782.5	​	​	​	7,436.5	​	5	%
Effect of acquisitions and divestitures	​	​	(37.1)	​	​	​	(16.7)	​	​	​	​	​	​	(81.2)	​	​	​	(40.7)	​	​	​
Non-GAAP organic sales	​	​	$3,983.7	​	​	​	$3,839.0	​	4	%	​	​	​	$7,701.3	​	​	​	$7,395.8	​	4	%

​

​

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 2024 sales change are shown below:

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended					​	Six Months Ended
​	​	June 30					​	June 30
(percent)		2024						2024
Volume		​	​	1	%	​	​		​	1	%	​
Pricing		​	​	3	​	​	​		​	3	​	​
Organic sales change		​	​	4	​	​	​		​	4	​	​
Acquisitions and divestitures		​	​	1	​	​	​		​	1	​	​
Fixed currency sales change		​	​	4	​	​	​		​	5	​	​
Foreign currency translation		​	​	(1)	​	​	​		​	-	​	​
Reported GAAP net sales change		​	​	3	%	​	​		​	4	%	​

​

Amounts do not necessarily sum due to rounding.

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	Second Quarter Ended													​	Six Months Ended
​	June 30													​	June 30
​	2024						​	2023						​	2024						​	2023
​					Gross		​					Gross		​					Gross		​					Gross
(millions/percent)	COS			​	Margin		​	COS			​	Margin		​	COS			​	Margin		​	COS			​	Margin
Product and equipment cost of sales	​	$1,770.6	​	​	​	​	​	​	$1,895.3	​	​	​	​	​	​	$3,449.8	​	​	​	​	​	​	$3,693.6	​	​	​	​
Service and lease cost of sales	​	470.4	​	​	​	​	​	​	439.5	​	​	​	​	​	​	919.3	​	​	​	​	​	​	846.4	​	​	​	​
Reported GAAP COS and gross margin	​	2,241.0	​	​	43.8	%	​	​	2,334.8	​	​	39.4	%	​	​	4,369.1	​	​	43.5	%	​	​	4,540.0	​	​	38.8	%
Special (gains) and charges	​	0.7	​		​	​	​	​	8.1	​		​	​	​	​	2.3	​		​	​	​	​	11.3	​		​	​
Non-GAAP adjusted COS and gross margin	​	$2,240.3	​	​	43.8	%	​	​	$2,326.7	​	​	39.6	%	​	​	$4,366.8	​	​	43.6	%	​	​	$4,528.7	​	​	39.0	%

​

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 43.8% and 39.4% for the second quarter of 2024 and 2023, respectively. Our reported gross margin was 43.5% and 38.8% for the first six months of 2024 and 2023, 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 COS, second quarter 2024 and 2023 adjusted gross margin was 43.8% and 39.6%, respectively, and for the first six months of 2024 and 2023 was 43.6% and 39.0%, respectively.

​

Our adjusted gross margin increased when comparing the second quarter of 2024 against the second quarter of 2023 reflecting lower supply chain costs and strong pricing.

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Selling, General and Administrative Expense

​

Selling, general and administrative (“SG&A”) expenses as a percentage of sales were 27.0% and 27.8% for the second quarter and first six months of 2024, respectively, compared to 26.3% and 27.0% for the second quarter and first six months of 2023, respectively. The SG&A ratio to sales in the second quarter of 2024 increased as sales productivity was offset by growth-oriented investments in the business.

​

Special (Gains) and Charges

​

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

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended						​	Six Months Ended						​
​	​	June 30						​	June 30						​
(millions)		2024			​	2023			2024			​	2023		​
Cost of sales	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Restructuring activities	​	​	$0.7	​	​	​	$8.1	​	​	$2.3	​	​		$11.3	​
Cost of sales subtotal	​	​	0.7	​	​	​	8.1	​	​	2.3	​	​		11.3	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Restructuring activities	​	​	6.9	​	​	​	13.7	​	​	25.0	​	​		26.3	​
Sale of global surgical solutions business	​	​	7.3	​	​	​	-	​	​	13.3	​	​	​	-	​
Acquisition and integration activities	​	​	2.3	​	​	​	3.5	​	​	4.8	​	​	​	8.5	​
Other	​	​	(4.3)	​	​	​	3.8	​	​	(2.7)	​	​		10.7	​
Special (gains) and charges subtotal	​	​	12.2	​	​	​	21.0	​	​	40.4	​	​		45.5	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total special (gains) and charges	​	​	$12.9	​	​	​	$29.1	​	​	$42.7	​	​	​	$56.8	​

​

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

​

Restructuring activities

​

Restructuring activities are primarily related to the Combined Program which is 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.

​

Further details related to our restructuring charges are included in Note 3.

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Combined Program

​

In November 2022, we approved a Europe cost savings program. In February 2023, we expanded our previously announced Europe cost savings program to focus on its Institutional and Healthcare businesses in other regions. In connection with the expanded program (“the Combined Program”), we expect to incur total pre-tax charges of $195 million ($150 million after tax) or $0.52 per diluted share. We expect that these restructuring charges will be substantially completed by the end of 2024. Program actions include headcount reductions from terminations, not filling certain open positions, and facility closures. The Combined Program charges are expected to be primarily cash expenditures related to severance and asset disposals.

​

In anticipation of this Combined Program, a limited number of actions were taken in the fourth quarter of 2022. As a result, we reclassified $19.3 million ($14.5 million after tax) or $0.05 per diluted share from other restructuring to the Combined Program in the first quarter of 2023.

​

​

During the second quarter of 2024 and 2023, we recorded total Combined Program restructuring charges of $2.3 million ($1.4 million after tax) or $0.01 per diluted share and $19.7 million ($16.2 million after tax) or $0.06 per diluted share, respectively, and during the first six months of 2024 and 2023, recorded $22.0 million ($17.2 million after tax) or $0.06 per diluted share and $33.1 million ($26.4 million after tax) or $0.09 per diluted share, respectively, primarily related to severance. We recorded $180.9 million ($150.1 million after tax), or $0.52 per diluted share of cumulative charges under the Combined Plan.

​

We reclassified $5.3 million ($4.0 million after tax) or $0.01 per diluted share from the combined restructuring program to other restructuring in the second quarter of 2024.

​

The net liability related to the Combined Program was $32.2 million and $43.1 million as of June 30, 2024 and December 31, 2023, 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.

​

The Combined Program has delivered $159 million of cumulative cost savings with estimated annualized cost savings of $175 million in continuing operations by 2024.

​

Other Restructuring Activities

​

During 2024, we incurred restructuring charges of $10.6 million ($8.0 million after tax) or $0.03 per diluted share related to an immaterial restructuring plan approved in the second quarter.

​

The restructuring liability balance for all other restructuring plans excluding the Combined Program was $9.0 million as of the end of the second quarter.

​

One Ecolab

​

On July 30, 2024, we announced the One Ecolab initiative, which will enhance our growth and margin expansion journey. As a program within this initiative, we also announced that we commenced a restructuring plan to leverage our digital technologies to realign the functional work done in many countries into global centers of excellence. We anticipate restructuring costs of $175 million ($136 million after tax) and special charges of $50 million ($39 million after tax) by the end of 2027. We anticipate that the restructuring costs will primarily be cash expenditures for severance costs relating to team reorganization.

​

We expect total program savings of approximately $140 million by 2027. Actual costs may vary from these estimates depending on actions taken.

​

Sale of global surgical solutions business

On April 27, 2024, we reached a definitive agreement to sell our global surgical solutions business. We recorded charges of $7.3 million ($3.1 million gain after tax) or ($0.01) per diluted share and $13.3 million ($1.4 million after tax) or $0.01 per diluted share in the second quarter and first six months of 2024, respectively, which are primarily related to professional fees to support the sale. The tax benefit is driven by a reduction to our valuation allowance on capital loss carryforwards.

​

Acquisition and integration related costs

​

Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income include $2.3 million ($1.7 million after tax) or less than $0.01 per diluted share and $3.5 million ($2.7 million after tax) or $0.01 per diluted share in the second quarter of 2024 and 2023, respectively, and $4.8 million ($3.6 million after tax) or $0.01 per diluted share and $8.5 million ($6.4 million after tax) or $0.02 per diluted share in the first six months of 2024 and 2023, respectively.

​

Other operating activities

​

Other special charges recorded in special (gains) and charges on the Consolidated Statements of Income in the second quarter of 2024 and 2023 were ($4.3 million) ($3.1 million gain after tax) or ($0.01) per diluted share and $3.8 million ($2.8 million after tax) or $0.01 per diluted share, respectively, and in the first six months of 2024 and 2023 were ($2.7 million) ($2.2 million gain after tax) or ($0.01) per diluted share and $10.7 million ($8.2 million after tax) or $0.03 per diluted share, respectively, primarily related to recoveries of COVID era credits, professional fees and certain legal charges.

​

​

​

Operating Income and Operating Income Margin

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended									​	Six Months Ended
​	​	June 30									​	June 30
(millions)	​	2024				2023		​	​		​	2024				2023		​	​
Reported GAAP operating income	​	​	$656.9	​	​	​	$484.7	​	36	%	​	​	$1,174.8	​	​	​	$836.3	​	40	%
Special (gains) and charges	​		12.9	​	​		29.1	​	​	​	​		42.7	​	​		56.8	​	​	​
Non-GAAP adjusted operating income	​		669.8	​	​		513.8	​	30	%	​		1,217.5	​	​		893.1	​	36	%
Effect of foreign currency translation	​		8.7	​	​		(0.1)	​	​	​	​		9.9	​	​		0.7	​	​	​
Non-GAAP adjusted fixed currency operating income	​	​	678.5	​	​	​	513.7	​	32	%	​	​	1,227.4	​	​	​	893.8	​	37	%
Effect of acquisitions and divestitures	​	​	(1.5)	​	​	​	(0.9)	​	​	​	​	​	(2.4)	​	​	​	(1.4)	​	​	​
Non-GAAP organic operating income	​	​	$677.0	​	​	​	$512.8	​	32	%	​	​	$1,225.0	​	​	​	$892.4	​	37	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended							​	​	​	Six Months Ended							​	​
​	​	June 30							​	​	​	June 30							​	​
(percent)	​	2024			​	2023			​	​	​	2024			​	2023			​	​
Reported GAAP operating income margin	​	​	16.5	%	​	​	12.6	%	​	​	​	​	15.2	%	​	​	11.3	%	​	​
Non-GAAP adjusted operating income margin	​	​	16.8	%	​	​	13.3	%	​	​	​	​	15.7	%	​	​	12.0	%	​	​
Non-GAAP adjusted fixed currency operating income margin	​	​	16.9	%	​	​	13.3	%	​	​	​	​	15.8	%	​	​	12.0	%	​	​
Non-GAAP organic operating income margin	​	​	17.0	%	​	​	13.4	%	​	​	​	​	15.9	%	​	​	12.1	%	​	​

​

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 36% and 40% in the second quarter and first six months of 2024, respectively, versus the comparable periods of 2023. Our reported operating income for 2024 and 2023 was impacted by special (gains) and charges; excluding the impact of special (gains) and charges from 2024 and 2023 reported results, our adjusted operating income increased 30% and 36% in the second quarter and first six months of 2024, respectively.

​

As shown in the previous table, foreign currency had a 2 and 1 percentage point impact on adjusted operating income growth for the second quarter and first six months of 2024, respectively. Foreign currency had a 2 and 3 percentage point impact on adjusted operating income growth for the second quarter and first six months of 2023, respectively.

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Other (Income) Expense

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended									​	Six Months Ended						​	​		​
​	​	June 30									​	June 30						​	​		​
(millions)		2024				2023			Change			2024				2023			Change		​
Reported GAAP other (income) expense	​	​	($12.6)	​	​	​	($14.4)	​	(13)	%	​	​	($25.2)	​	​	​	($27.5)	​	(8)	%	​

​

Reported other (income) expense decreased to ($12.6) million from ($14.4) million in the second quarter of 2024 compared to the second quarter of 2023, respectively, and decreased to ($25.2) million from ($27.5) million in the first six months of 2024 compared to the first six months of 2023, respectively, driven by higher pension costs.

​

Interest Expense, Net

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended									​	Six Months Ended						​	​
​	​	June 30									​	June 30						​	​
(millions)		2024				2023			Change			2024				2023			Change
Reported GAAP interest expense, net	​	​	$78.8	​	​	​	$77.8	​	1	%	​	​	$150.4	​	​	​	$152.0	​	(1)	%

​

Reported net interest expense was stable at $78.8 million and $77.8 million in the second quarter of 2024 and 2023, respectively, and $150.4 million and $152.0 million in the first six months of 2024 and 2023, respectively.

​

​

​

Provision for Income Taxes

​

The following table provides a summary of our tax rate:

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended					​	Six Months Ended
​	​	June 30					​	June 30
(percent)		2024		​	2023			2024		​	2023
Reported GAAP tax rate	​	16.2	%	​	20.6	%	​	13.1	%	​	19.5	%
Tax rate impact of:	​	​	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges		1.6	​	​	(0.1)	​	​	1.2	​	​	0.2
Discrete tax items		1.7	​	​	(0.6)	​	​	5.4	​	​	0.2
Non-GAAP adjusted tax rate		19.5	%	​	19.9	%		19.7	%	​	19.9	%

​

Our reported tax rate was 16.2% and 20.6% for the second quarter of 2024 and 2023, respectively, and 13.1% and 19.5% for the first six months of 2024 and 2023, respectively. The change in our tax rate for the second quarter and first six months of 2024 versus the comparable periods of 2023 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 net tax benefits related to discrete tax items of $10.3 million and $58.5 million in the second quarter and first six months of 2024, respectively. This included a tax benefit of $41.9 million in the first six months of 2024, associated with transferring certain intangible property between affiliates and $3.7 million and $12.3 million in the second quarter and first six months of 2024, respectively, associated with share-based compensation excess tax benefits. The remaining net benefit of $6.6 million and $4.3 million in the second quarter and first six months of 2024, respectively, is from other income tax adjustments including the impact of changes in tax laws, audit settlements, unrecognized tax benefits and other changes in estimates.

​

We recognized net tax expense related to discrete tax items of $2.8 million and a net tax benefit of $1.2 million in the second quarter and first six months of 2023, respectively. This included share-based compensation excess tax benefits of $1.8 million and $1.9 million in the second quarter and first six months of 2023, respectively. Additionally, we recognized net tax expense related to discrete tax items of $4.6 million and $0.7 million in the second quarter and first six months of 2023, respectively, primarily due to audit settlements, uncertain tax positions, prior year return adjustments, repricing of deferred tax balances, and other changes in estimates.

​

The Organization for Economic Co-operation’s (“OECD”) global minimum tax regime (“Pillar Two”) became effective in certain countries where we operate starting in 2024. As such, an estimate of Pillar Two tax has been considered within the provision for income taxes. We continue to monitor these legislative developments, but based on information available we do not anticipate material impacts to the 2024 financial statements.

​

Net Income Attributable to Ecolab

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended											​	Six Months Ended
​	​	June 30											​	June 30
(millions)		2024				2023			Change					2024				2023			Change
Reported GAAP net income attributable to Ecolab	​	​	$490.9	​	​	​	$329.7	​	​	49	%	​	​	​	$903.0	​	​	​	$563.1	​	​	60	%	​
Adjustments:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges, after tax	​		0.9	​	​	​	23.3	​	​	​	​	​	​	​	24.0	​	​	​	44.4	​	​	​	​	​
Discrete tax net expense	​		(10.3)	​	​	​	2.8	​	​	​	​	​	​	​	(58.5)	​	​	​	(1.2)	​	​	​	​	​
Non-GAAP adjusted net income attributable to Ecolab	​	​	$481.5	​	​	​	$355.8	​	​	35	%	​	​	​	$868.5	​	​	​	$606.3	​	​	43	%	​

​

Diluted EPS

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended											​	Six Months Ended
​	​	June 30											​	June 30
(dollars)		2024				2023			Change					2024				2023			Change
Reported GAAP diluted EPS	​	​	$1.71	​	​	​	$1.15	​	​	49	%	​	​	​	$3.14	​	​	​	$1.97	​	​	59	%	​
Adjustments:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges, after tax	​		-	​	​	​	0.08	​	​	​	​	​	​	​	0.08	​	​	​	0.15	​	​	​	​	​
Discrete tax net expense	​		(0.03)	​	​	​	0.01	​	​	​	​	​	​	​	(0.20)	​	​	​	-	​	​	​	​	​
Non-GAAP adjusted diluted EPS	​	​	$1.68	​	​	​	$1.24	​	​	35	%	​	​	​	$3.02	​	​	​	$2.12	​	​	42	%	​

​

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

​

Currency translation had an unfavorable impact of approximately ($0.04) and ($0.05) per share on diluted EPS for the second quarter and first six months of 2024, respectively, when compared to the comparable period of 2023.

​

​

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 2024. 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 3 of our Annual Report on Form 10-K for the year ended December 31, 2023. Additional information about our reportable segments is included in Note 16.

​

Fixed currency net sales and operating income for the second quarter and first six months of 2024 for our reportable segments are shown in the following tables:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net Sales	​	Second Quarter Ended										​	Six Months Ended
​	​	June 30										​	June 30
(millions)		2024				2023		​	​	Change			2024				2023		​	​	Change
Global Industrial	​	​	$1,956.0	​		​	$1,906.4		​	3	%	​	​	$3,797.7	​		​	$3,714.6		​	2	%
Global Institutional & Specialty		​	1,372.7	​	​		1,273.7	​	​	8	​		​	2,643.0	​		​	2,404.9	​	​	10	​
Global Healthcare & Life Sciences	​	​	395.0	​	​	​	395.3	​	​	0	​	​	​	777.9	​	​	​	781.4	​	​	0	​
Global Pest Elimination	​	​	297.1	​	​	​	269.7	​	​	10	​	​	​	563.9	​	​	​	514.3	​	​	10	​
Corporate		​	-	​	​		10.6	​	​	(100)	​		​	-	​	​		21.3	​	​	(100)	​
Subtotal at fixed currency		​	4,020.8	​	​		3,855.7	​	​	4	​		​	7,782.5	​	​		7,436.5	​	​	5	​
Effect of foreign currency translation		​	(35.0)	​	​		(3.6)	​	​	​	​		​	(44.8)	​	​		(12.8)	​	​	​	​
Consolidated reported GAAP net sales		​	$3,985.8	​	​	​	$3,852.1	​	​	3	%		​	$7,737.7	​	​	​	$7,423.7	​	​	4	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating Income	​	Second Quarter Ended										​	Six Months Ended
​	​	June 30										​	June 30
(millions)	​	2024				2023		​	​	Change		​	2024				2023		​	​	Change
Global Industrial			$311.9	​		​	$264.9		​	18	%	​		$576.9	​		​	$484.7		​	19	%
Global Institutional & Specialty		​	320.7	​		​	213.4		​	50	​	​	​	568.7	​		​	343.5		​	66	​
Global Healthcare & Life Sciences	​	​	33.7	​		​	33.2	​	​	2	​	​	​	70.7	​		​	68.6	​	​	3	​
Global Pest Elimination		​	62.2	​		​	52.4		​	19	​	​	​	111.0	​		​	96.9		​	15	​
Corporate		​	(62.8)	​		​	(79.3)	​	​	(21)	​	​	​	(142.6)	​		​	(156.7)	​	​	(9)	​
Subtotal at fixed currency		​	665.7	​	​		484.6		​	37	​	​	​	1,184.7	​	​		837.0		​	42	​
Effect of foreign currency translation		​	(8.8)	​		​	0.1	​	​	​	​	​	​	(9.9)	​		​	(0.7)	​	​	​	​
Consolidated reported GAAP operating income			$656.9	​	​	​	$484.7		​	36	%	​		$1,174.8	​	​	​	$836.3		​	40	%

​

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended												​
​	​	June 30												​
Net Sales	​	2024					​	​	2023					​
(millions)		Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Organic	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Organic	​
Global Industrial	​	$1,956.0	​	($21.1)	​	$1,934.9	​	​	$1,906.4	​	($6.1)	​	$1,900.3	​
Global Institutional & Specialty		1,372.7	​	(13.9)	​	1,358.8	​	​	1,273.7	​	-	​	1,273.7	​
Global Healthcare & Life Sciences	​	395.0	​	-	​	395.0	​	​	395.3	​	-	​	395.3	​
Global Pest Elimination		297.1	​	(2.1)	​	295.0	​	​	269.7	​	-	​	269.7	​
Corporate		-	​	-	​	​	​	​	10.6	​	(10.6)	​	-	​
Subtotal at fixed currency		4,020.8	​	(37.1)	​	3,983.7	​	​	3,855.7	​	(16.7)	​	3,839.0	​
Effect of foreign currency translation		(35.0)	​	​	​	​	​	​	(3.6)	​	​	​	​	​
Consolidated reported GAAP net sales		$3,985.8	​	​	​	​	​	​	$3,852.1	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating Income	​	2024					​	​	2023					​
(millions)		Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Organic	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Organic	​
Global Industrial	​	$311.9	​	($1.1)	​	$310.8	​	​	$264.9	​	($0.5)	​	$264.4	​
Global Institutional & Specialty		320.7	​	(1.0)	​	319.7	​	​	213.4	​	-	​	213.4	​
Global Healthcare & Life Sciences	​	33.7	​	-	​	33.7	​	​	33.2	​	-	​	33.2	​
Global Pest Elimination		62.2	​	0.6	​	62.8	​	​	52.4	​	-	​	52.4	​
Corporate		(50.0)	​	-	​	(50.0)	​	​	(50.2)	​	(0.4)	​	(50.6)	​
Non-GAAP adjusted fixed currency operating income		678.5	​	(1.5)	​	677.0	​	​	513.7	​	(0.9)	​	512.8	​
Special (gains) and charges		12.8	​	​	​	​	​	​	29.1	​	​	​	​	​
Subtotal at fixed currency		665.7	​	​	​	​	​	​	484.6	​	​	​	​	​
Effect of foreign currency translation		(8.8)	​	​	​	​	​	​	0.1	​	​	​	​	​
Consolidated reported GAAP operating income		$656.9	​	​	​	​	​	​	$484.7	​	​	​	​	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended												​
​	​	June 30												​
Net Sales	​	2024					​	​	2023					​
(millions)		Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Organic	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Organic	​
Global Industrial	​	$3,797.7	​	($47.2)	​	$3,750.5	​	​	$3,714.6	​	($19.4)	​	$3,695.2	​
Global Institutional & Specialty		2,643.0	​	(31.9)	​	2,611.1	​	​	2,404.9	​	-	​	2,404.9	​
Global Healthcare & Life Sciences	​	777.9	​	-	​	777.9	​	​	781.4	​	-	​	781.4	​
Global Pest Elimination		563.9	​	(2.1)	​	561.8	​	​	514.3	​	-	​	514.3	​
Corporate	​	-	​	-	​	-	​	​	21.3	​	(21.3)	​	-	​
Subtotal at fixed currency		7,782.5	​	(81.2)	​	7,701.3	​	​	7,436.5	​	(40.7)	​	7,395.8	​
Effect of foreign currency translation		(44.8)	​	​	​	​	​	​	(12.8)	​	​	​	​	​
Consolidated reported GAAP net sales		$7,737.7	​	​	​	​	​	​	$7,423.7	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating Income	​	2024					​	​	2023					​
(millions)		Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Organic	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Organic	​
Global Industrial	​	$576.9	​	($1.1)	​	$575.8	​	​	$484.7	​	($0.7)	​	$484.0	​
Global Institutional & Specialty		568.7	​	(1.9)	​	566.8	​	​	343.5	​	-	​	343.5	​
Global Healthcare & Life Sciences		70.7	​	-	​	70.7	​	​	68.6	​	-	​	68.6	​
Global Pest Elimination	​	111.0	​	0.6	​	111.6	​	​	96.9	​	-	​	96.9	​
Corporate		(99.9)	​	-	​	(99.9)	​	​	(99.9)	​	(0.7)	​	(100.6)	​
Non-GAAP adjusted fixed currency operating income		1,227.4	​	(2.4)	​	1,225.0	​	​	893.8	​	(1.4)	​	892.4	​
Special (gains) and charges		42.7	​	​	​	​	​	​	56.8	​	​	​	​	​
Subtotal at fixed currency		1,184.7	​	​	​	​	​	​	837.0	​	​	​	​	​
Effect of foreign currency translation		(9.9)	​	​	​	​	​	​	(0.7)	​	​	​	​	​
Consolidated reported GAAP operating income		$1,174.8	​	​	​	​	​	​	$836.3	​	​	​	​	​

​

​

​

Unless otherwise noted, the following segment performance commentary compares the second quarter and first six months of 2024 against the second quarter and first six months of 2023.

​

​

Global Industrial

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended							​	Six Months Ended
​	​	June 30							​	June 30
​		2024			​	2023				2024			​	2023
Sales at fixed currency (millions)	​	​	$1,956.0	​	​	​	$1,906.4	​	​	​	$3,797.7	​	​	​	$3,714.6	​
Sales at public currency (millions)	​	​	1,936.5	​	​	​	1,909.5	​	​	​	3,775.7	​	​	​	3,718.6	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Organic sales change	​	​	2	%	​	​	​	​	​	​	1	%	​	​	​	​
Acquisitions and divestitures	​		1	%	​		​	​	​		1	%	​		​	​
Fixed currency sales change	​		3	%	​		​	​	​		2	%	​		​	​
Foreign currency translation	​	​	(1)	%	​	​	​	​	​	​	(1)	%	​	​	​	​
Public currency sales change	​		1	%	​		​	​	​		2	%	​		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$311.9	​	​	​	$264.9	​	​	​	$576.9	​	​	​	$484.7	​
Operating income at public currency (millions)	​	​	306.7	​	​	​	266.6	​	​	​	572.1	​	​	​	487.9	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	18	%	​	​	​	​	​	​	19	%	​	​	​	​
Fixed currency operating income margin	​		15.9	%	​		13.9	%	​		15.2	%	​		13.0	%
Organic operating income change	​		18	%	​		​	​	​		19	%	​		​	​
Organic operating income margin	​		16.1	%	​		13.9	%	​		15.4	%	​		13.1	%
Public currency operating income change	​	​	15	%	​	​	​	​	​	​	17	%	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

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

​

Net Sales

​

Organic sales for Global Industrial increased in the second quarter and first six months of 2024 driven by accelerating Water sales growth.

​

Water organic sales increased 4% and 3% in the second quarter and first six months of 2024, respectively, driven by strong growth in downstream and light water. Light water reported sales growth driven by strong high-tech (data centers and microelectronics) growth and good growth in the food & beverage, transportation, and institutional markets. ​Heavy industry recorded sales were stable as good growth in primary metals was offset by modestly lower power sales. Downstream industry reported sales growth reflecting good performance across all segments. Food ​& Beverage organic sales increased 0% and 1% in the second quarter and first six months of 2024, respectively, as good new business was offset by soft industry demand. Paper organic sales decreased 1% and 3% in the second quarter and first six months of 2024, respectively, reflecting new business wins that were offset by soft but stabilizing customer production rates.

​

Operating Income

​

Organic operating income and organic operating income margins both increased for Global Industrial in the second quarter and first six months of 2024, respectively.

​

Organic operating income margins increased 2.2 percentage points during the second quarter of 2024 as the 4.8 percentage point positive impact of lower delivered product costs and strong pricing overcame the 2.3 percentage point impact of investments in the business. Organic operating income margins increased 2.3 percentage points during the first six months of 2024 as the 3.9 percentage point positive impact of lower delivered product costs overcame the 2.1 percentage point impact of investments in the business.

​

​

​

​

​

Global Institutional & Specialty

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended							​	Six Months Ended
​	​	June 30							​	June 30
​		2024			​	2023				2024			​	2023
Sales at fixed currency (millions)	​	​	$1,372.7	​	​	​	$1,273.7	​	​	​	$2,643.0	​	​	​	$2,404.9	​
Sales at public currency (millions)	​	​	1,363.9	​	​	​	1,272.2	​	​	​	2,630.6	​	​	​	2,401.0	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Organic sales change	​	​	7	%	​	​	​	​	​	​	9	%	​	​	​	​
Acquisitions and divestitures	​		1	%	​		​	​	​		1	%	​		​	​
Fixed currency sales change	​		8	%	​		​	​	​		10	%	​		​	​
Foreign currency translation	​	​	(1)	%	​	​	​	​	​	​	-	%	​	​	​	​
Public currency sales change	​		7	%	​		​	​	​		10	%	​		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$320.7	​	​	​	$213.4	​	​	​	$568.7	​	​	​	$343.5	​
Operating income at public currency (millions)	​	​	318.3	​	​	​	213.0	​	​	​	565.3	​	​	​	342.8	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	50	%	​	​	​	​	​	​	66	%	​	​	​	​
Fixed currency operating income margin	​		23.4	%	​		16.8	%	​		21.5	%	​		14.3	%
Organic operating income change	​		50	%	​		​	​	​		65	%	​		​	​
Organic operating income margin	​		23.5	%	​		16.8	%	​		21.7	%	​		14.3	%
Public currency operating income change	​	​	49	%	​	​	​	​	​	​	65	%	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

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

​

Net Sales

​

Organic sales for Global Institutional & Specialty increased in the second quarter and first six months of 2024, with strong growth in both the Institutional and Specialty divisions.

​

At an operating segment level, Institutional organic sales increased 7% and 9% in the second quarter and first six months of 2024, respectively, reflecting sales growth across foodservice, lodging and long term care. Specialty organic sales increased 6% and 8% in the second quarter and first six months of 2024, respectively, reflecting sales growth driven by quick service and food retail.

​

Operating Income

​

Organic operating income and organic operating income margin both increased in the second quarter and first six months of 2024 for our Global Institutional & Specialty segment.

​

Organic operating income margins increased 6.7 percentage points during the second quarter of 2024, as the 8.3 percentage point positive impact from lower supply chain costs, strong pricing and higher volumes overcame the 1.9 percentage point impact from investments in the business. Organic operating income margins increased 7.4 percentage points during the first six months of 2024, as the 9.5 percentage point positive impact from lower supply chain costs, strong pricing and higher volumes overcame the 1.5 percentage point impact from investments in the business.

​

​

​

​

Global Healthcare & Life Sciences

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended							​	Six Months Ended
​	​	June 30							​	June 30
​		2024			​	2023			​	2024			​	2023
Sales at fixed currency (millions)	​	​	$395.0	​	​	​	$395.3	​	​	​	$777.9	​	​	​	$781.4	​
Sales at public currency (millions)	​	​	389.7	​	​	​	390.8	​	​	​	769.6	​	​	​	770.5	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Organic sales change	​	​	0	%	​	​	​	​	​	​	0	%	​	​	​	​
Acquisitions and divestitures	​		-	%	​		​	​	​		-	%	​		​	​
Fixed currency sales change	​		0	%	​		​	​	​		0	%	​		​	​
Foreign currency translation	​	​	-	%	​	​	​	​	​	​	-	%	​	​	​	​
Public currency sales change	​		0	%	​		​	​	​		0	%	​		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$33.7	​	​	​	$33.2	​	​	​	$70.7	​	​	​	$68.6	​
Operating income at public currency (millions)	​	​	32.5	​	​	​	32.0	​	​	​	68.8	​	​	​	65.7	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	2	%	​	​	​	​	​	​	3	%	​	​	​	​
Fixed currency operating income margin	​		8.5	%	​		8.4	%	​		9.1	%	​		8.8	%
Organic operating income change	​		2	%	​		​	​	​		3	%	​		​	​
Organic operating income margin	​		8.5	%	​		8.4	%	​		9.1	%	​		8.8	%
Public currency operating income change	​	​	2	%	​	​	​	​	​	​	5	%	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

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

​

Net Sales

​

Organic sales for Global Healthcare & Life Sciences was stable the second quarter and first six months of 2024 as growth in Life Sciences was offset by modestly lower Healthcare sales.

​

At an operating segment level, Healthcare organic sales decreased 3% in both the second quarter and first six months of 2024 reflecting strategic low margin business exits. Life Sciences organic sales increased 4% and 3% in the second quarter and first six months of 2024, respectively, reflecting improved underlying business momentum that offset soft near-term industry demand.​

​

Operating Income

​

Organic operating income and organic operating income margins both increased in the second quarter and first six months of 2024 for both our Global Healthcare & Life Sciences segment.

​

Organic operating income margins increased 0.1 percentage points during the second quarter of 2024, as the 2.8 percentage point positive impact from strong pricing overcame the 2.8 percentage point impacts from targeted investments in the business. Organic operating income margins increased 0.3 percentage points during the first six months of 2024, as the 2.9 percentage point positive impact from strong pricing overcame the 2.4 percentage point impacts from targeted investments in the business.

​

​

​

Global Pest Elimination

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Second Quarter Ended							​	Six Months Ended
​	​	June 30							​	June 30
​		2024			​	2023				2024			​	2023
Sales at fixed currency (millions)	​	​	$297.1	​	​	​	$269.7	​	​	​	$563.9	​	​	​	$514.3	​
Sales at public currency (millions)	​	​	295.7	​	​	​	269.0	​	​	​	561.8	​	​	​	512.4	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Organic sales change	​	​	9	%	​	​	​	​	​	​	9	%	​	​	​	​
Acquisitions and divestitures	​		1	%	​		​	​	​		-	%	​		​	​
Fixed currency sales change	​		10	%	​		​	​	​		10	%	​		​	​
Foreign currency translation	​	​	-	%	​	​	​	​	​	​	-	%	​	​	​	​
Public currency sales change	​		10	%	​		​	​	​		10	%	​		​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$62.2	​	​	​	$52.4	​	​	​	$111.0	​	​	​	$96.9	​
Operating income at public currency (millions)	​	​	61.9	​	​	​	52.4	​	​	​	110.6	​	​	​	96.7	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	19	%	​	​	​	​	​	​	15	%	​	​	​	​
Fixed currency operating income margin	​		20.9	%	​		19.4	%	​		19.7	%	​		18.8	%
Organic operating income change	​		20	%	​		​	​	​		15	%	​		​	​
Organic operating income margin	​		21.3	%	​		19.4	%	​		19.9	%	​		18.8	%
Public currency operating income change	​	​	18	%	​	​	​	​	​	​	14	%	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

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

​

Net Sales

​

Organic sales for Global Pest Elimination increased in the second quarter and first six months of 2024 driven by growth in food & beverage, restaurants, and food retail.

​

Operating Income

​

Organic operating income and organic operating income margins increased for Global Pest Elimination in both the second quarter and first six months of 2024.

​

Organic operating income margins increased 1.9 percentage points during the second quarter of 2024, as the 4.9 percentage point positive impact from strong pricing and higher volumes overcame the 3.9 percentage point impact of investments in the business. Organic operating income margins increased 1.1 percentage points during the first six months of 2024, as the 4.5 percentage point positive impact from strong pricing and higher volumes overcame the 4.0 percentage point impact of investments in the business.

​

​

Corporate

​

Consistent with our internal management reporting, Corporate amounts in the table on page 36 include sales to ChampionX in accordance with the transitional supply agreement entered into with the transaction post-separation, as discussed in Note 15, intangible asset amortization specifically from the Nalco and Purolite transactions 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 32.

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FINANCIAL POSITION, CASH FLOWS AND LIQUIDITY

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Financial Position

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Total assets were $21.5 billion as of June 30, 2024, compared to total assets of $21.8 billion as of December 31, 2023.

​

Total liabilities were $13.2 billion as of June 30, 2024, compared to total liabilities of $13.8 billion as of December 31, 2023. Total debt was $7.5 billion as of June 30, 2024 and $8.2 billion as of December 31, 2023. See further discussion of our debt activity within the “Liquidity and Capital Resources” section of this MD&A.

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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.

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

​

​	​	​	​	​	​	​	​	​
​	​	June 30, 2024				December 31, 2023
(ratio)	​	​	​	​	​	​	​	​
Net debt to EBITDA		​	2.2	​		​	2.4	​
​	​	​	​	​	​	​	​	​
(millions)		​	​	​	​	​	​	​
Total debt	​	​	$7,544.7	​	​	​	$8,181.8	​
Cash	​		384.0	​	​	​	919.5	​
Net debt	​	​	$7,160.7	​	​	​	$7,262.3	​
​	​	​	​	​	​	​	​	​
Net income including noncontrolling interest	​	​	$1,731.8	​	​	​	$1,393.0	​
Provision for income taxes	​		361.5	​	​	​	362.5	​
Interest expense, net	​		295.1	​	​	​	296.7	​
Depreciation	​		622.3	​	​	​	616.7	​
Amortization	​		307.4	​	​	​	306.9	​
EBITDA	​		$3,318.1	​	​	​	$2,975.8	​

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Cash Flows

​

Operating Activities

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended
​	​	June 30
(millions)		2024			​	2023				Change
Cash provided by operating activities	​	​	$1,260.5	​	​	​	$771.6	​	​	​	$488.9	​

​

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 increased $489 million in the first six months of 2024 compared to the first six months of 2023, driven primarily by a $174 million net favorable change in working capital and $339 million increase in net income. The cash flow impact from working capital was primarily driven by improvement in accounts payable, partially offset by a seasonal increase in inventory.

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Investing Activities

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended
​	​	June 30
(millions)		2024			​	2023				Change
Cash used for investing activities	​	​	($445.4)	​	​	​	($463.5)	​	​	​	$18.1	​

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Cash used for investing activities is primarily impacted by 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 $398 million and $346 million in the first six months of 2024 and 2023, respectively.

​

Total cash paid for acquisitions, net of cash acquired along with net cash received from dispositions, during the first six months of 2024 and 2023, was $39 million and $105 million, respectively. Our acquisitions are discussed further in Note 4. 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.

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Financing Activities

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​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended
​	​	June 30
(millions)		2024			​	2023				Change
Cash used for financing activities	​	​	($1,335.7)	​	​	​	($322.2)	​	​	​	($1,013.5)	​

​

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 had net issuances of commercial paper and notes payable of $2 million in both the first six months of 2024 and 2023.

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 $519 million and $11 million of shares in the first six months of 2024 and 2023, respectively. Cash proceeds and tax benefits from stock option exercises provide a portion of the funding for repurchase activity.

There was no long-term debt issuance activity through the first six months of 2024 or 2023. We repaid $630 million of long-term debt in the first six months of 2024.

We paid dividends of $341 million and $309 million in the first six months of 2024 and 2023, respectively.

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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 June 30, 2024, we had $384 million of cash and cash equivalents on hand, of which $241 million was held outside of the U.S. We will continue to evaluate our cash position in light of future developments.

​

As of June 30, 2024, 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 second quarter of both 2024 and 2023, we had no outstanding commercial paper under our U.S. program nor our Euro program. There were no borrowings under our credit facility as of June 30, 2024 or 2023. As of June 30, 2024, 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 activity through the first six months of 2024. We repaid $630 million of long-term debt in the first six months of 2024.

​

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, 2023 disclosed total notes payable and long-term debt due within one year of $630 million. As of June 30, 2024, the total notes payable and long-term debt due within one year was $6 million. We had no outstanding commercial paper under our U.S. program as of June 30, 2024 and as of December 31, 2023.

​

Our gross liability for uncertain tax positions was $29 million and $24 million as of June 30, 2024 and December 31, 2023, respectively. 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

​

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.

​

Argentina and Turkey are classified as highly inflationary economies in accordance with U.S. GAAP, and the U.S. dollar is the functional currency for our subsidiaries in Argentina and Turkey. During the first six months of 2024, sales in Argentina and Turkey represented less than 1% of our consolidated sales. Assets held in Argentina and Turkey at the end of the second quarter of 2024 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. During the first six months of 2024, our Russian and Ukraine operations represented approximately 1% of our 2024 consolidated net sales.

​

​

NEW ACCOUNTING PRONOUNCEMENTS

​

For information on new accounting pronouncements, refer to Note 18 to the Consolidated Financial Statements.

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SUBSEQUENT EVENTS

​

Subsequent to the second quarter of 2024, we formally commenced a restructuring plan to leverage our investments in technology and emerging AI tools to transform the way we work and deliver scalable operations through our global centers of excellence.

​

In July 2024, we entered into cross-currency swap derivative contracts with notional amounts of €200 million, €100 million and €100 million maturing in 2028, 2028 and 2026, respectively. These cross-currency swap derivative contracts are designated as net investment hedges of our Euro denominated exposures from our investments in certain of its Euro denominated functional currency subsidiaries.

​

On August 1, 2024, we completed the sale of our global surgical solutions business pursuant to the definitive agreement dated April 27, 2024.

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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

	●	Organic 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

	●	Organic operating income

	●	Organic 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 adjusted financial measures for cost of sales, gross margin and operating income exclude the impact of special (gains) and charges and our non-GAAP adjusted financial measures for tax rate, net income attributable to Ecolab and diluted earnings per share 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 2024. 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 to our reportable segments.

​

Our non-GAAP financial measures for organic sales, organic operating income and organic operating income margin are at fixed currency and exclude the impact of special (gains) and charges, the results of our acquired businesses from the first twelve months post acquisition and the results of divested businesses from the twelve months prior to divestiture. As part of the separation of ChampionX in 2020, we entered into an agreement with ChampionX to provide, receive or transfer certain products for a transitionary period. Transitionary period 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. The remaining sales to ChampionX are recorded in product and equipment sales in Global Industrial 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.

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​

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 our business performance and prospects; expectations concerning timing, amount and type of restructuring costs and savings from restructuring activities; Russian operations; working capital; 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 and tax laws; cash flows, borrowing capacity and funding of cash requirements, including repayment of debt; payments related to uncertain tax positions; and implementation of ERP system upgrade.

​

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 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.

​

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 and our other public filings with the Securities and Exchange Commission (the "SEC"), and include the impact of economic factors such as the worldwide economy, interest rates, foreign currency risk, reduced sales and earnings in our international operations resulting from the weakening of local currencies versus the U.S. dollar, demand uncertainty, supply chain challenges and inflation; the vitality of the markets we serve; exposure to global economic, political and legal risks related to our international operations, including geopolitical instability and the escalation of armed conflicts; our ability to successfully execute organizational change and management transitions; information technology infrastructure failures or breaches in data security; difficulty in procuring raw materials or fluctuations in raw material costs; the occurrence of severe public health outbreaks not limited to COVID-19; our ability to acquire complementary businesses and to effectively integrate such businesses; our ability to execute key business initiatives; 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; the costs and effects of complying with laws and regulations, including those relating to the environment, climate change

​

standards, 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; our commitments, goals, targets, objectives and initiatives related to sustainability; 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.

​

​