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, 2025. 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.

​

Comparability of Results

​

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.

​

Comparability of Reportable Segments

​

Effective January 1, 2026, the Company’s former Light & Heavy operating segment was divided into three new operating segments, Heavy Water, Light Water and High-Tech, which continue to remain in the Global Water reportable segment. The Global Water reportable segment includes Heavy Water, Light Water, High-Tech, Food & Beverage and Paper operating segments. The Global Institutional & Specialty reportable segment continues to include the Institutional and Specialty operating segments. The Global Life Sciences and Global Pest Elimination segments remain standalone reportable segments. After these changes, the Company has nine 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 are provided for informational purposes only.

​

​

OVERVIEW OF THE FIRST QUARTER ENDED MARCH 31, 2026

​

Sales Performance

​

When comparing first quarter 2026 against first quarter 2025, sales performance was as follows:

​

●	Reported net sales increased 10% to $4,066.1 million and organic sales increased 4%.

●	Organic sales for our Global Water segment increased 2% to $1,940.2 million driven by double-digit sales growth in High-Tech, strong growth in Food & Beverage and steady growth in Light Water.

●	Organic sales for our Global Institutional & Specialty segment increased 4% to $1,507.7 million driven by improved growth in both Institutional and Specialty.

●	Organic sales for Global Pest Elimination increased 7% to $308.5 million.

●	Organic sales for our Global Life Sciences segment increased 11% to $200.9 million.

​

​

Financial Performance

​

When comparing first quarter 2026 against first quarter 2025, our financial performance was as follows:

​

●	Reported operating income increased 12% to $622.0 million. Adjusted operating income increased 15%.

●	Net income attributable to Ecolab increased 7% to $432.6 million. Excluding the impact of special (gains) and charges and discrete tax items from both 2026 and 2025 reported results, our adjusted net income attributable to Ecolab increased 13%.

●	Reported diluted EPS increased 8% to $1.52. Excluding the impact of special (gains) and charges and discrete tax items from both 2026 and 2025 reported results, adjusted diluted EPS increased 13% to $1.70 in the first quarter of 2026.

●	Our reported tax rate was 21.8% during the first quarter of 2026, compared to 20.3% during the first quarter of 2025. Excluding the tax rate impact of special (gains) and charges and discrete tax items from both 2026 and 2025 results, our adjusted tax rate was 21.0% during the first quarter of 2026, compared to 20.8% during the first quarter of 2025.

​

​

RESULTS OF OPERATIONS

​

Net Sales

​

​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(millions)	​	2026			​	2025		​	Change
Product and equipment sales	​	​	$3,174.6	​	​	​	$2,901.9	​	​	​
Service and lease sales	​	​	891.5	​	​	​	793.1	​	​	​
Reported GAAP net sales	​	​	$4,066.1	​	​	​	$3,695.0	​	10	%
Effect of foreign currency translation	​		(12.2)	​	​	​	128.1	​	​	​
Non-GAAP fixed currency sales	​	​	$4,053.9	​	​	​	$3,823.1	​	6	%
Effect of acquisitions and divestitures	​	​	(96.6)	​	​	​	-	​	​	​
Non-GAAP organic sales	​	​	$3,957.3	​	​	​	$3,823.1	​	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 2026 sales change are shown below:

​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(percent)	​ ​ ​	2026
Volume		​	​	1	%	​
Pricing		​	​	3	​	​
Organic sales change		​	​	4	​	​
Acquisitions and divestitures		​	​	3	​	​
Fixed currency sales change		​	​	6	​	​
Foreign currency translation		​	​	4	​	​
Reported GAAP net sales change		​	​	10	%	​

​

Amounts do not necessarily sum due to rounding.

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	First Quarter Ended
​	March 31
​	2026						​	2025
​	​ ​ ​ ​ ​			​ ​ ​	Gross		​	​ ​ ​ ​ ​			​ ​ ​	Gross
(millions/percent)	COS			​	Margin		​	COS			​	Margin
Product and equipment cost of sales	​	$1,786.2	​	​	​	​	​	​	$1,605.4	​	​	​	​
Service and lease cost of sales	​	509.1	​	​	​	​	​	​	454.8	​	​	​	​
Reported GAAP COS and gross margin	​	$2,295.3	​	​	43.6	%	​	​	$2,060.2	​	​	44.2	%
Special (gains) and charges	​	11.3	​		​	​	​	​	4.8	​		​	​
Non-GAAP adjusted COS and gross margin	​	$2,284.0	​	​	43.8	%	​	​	$2,055.4	​	​	44.4	%

​

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 43.6% and 44.2% for the first quarter of 2026 and 2025, 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, first quarter 2026 and 2025 adjusted gross margin was 43.8% and 44.4%, respectively. Our adjusted gross margin decreased when comparing the first quarter of 2026 against the first quarter of 2025 due to the impact of recent acquisitions. Underlying gross margin was stable as strong value pricing was offset by higher commodity costs.

​

Selling, General and Administrative Expense

​

Selling, general and administrative (“SG&A”) expenses as a percentage of sales were 27.1% for the first quarter of 2026, compared to 28.4% for the first quarter of 2025, respectively. The SG&A ratio to sales in the first quarter of 2026 improved as productivity gains and the favorable impact of recent acquisitions more than offset 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:

​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(millions)	​ ​ ​	2026			​	2025
Cost of sales	​	​	​	​	​	​	​
One Ecolab	​	​	$1.6	​	​	​	$4.8
Other restructuring	​	​	9.7	​	​	​	-
Cost of sales subtotal	​	​	11.3	​	​	​	4.8
​	​	​	​	​	​	​	​
Special (gains) and charges	​	​	​	​	​	​	​
One Ecolab	​	​	31.4	​	​	​	39.4
Acquisition and integration activities	​	​	14.1	​	​	​	1.5
Sale of global surgical solutions business	​	​	-	​	​	​	1.6
Other	​	​	0.9	​	​	​	(13.0)
Special (gains) and charges subtotal	​	​	46.4	​	​	​	29.5
​	​	​	​	​	​	​	​
Total special (gains) and charges	​	​	$57.7	​	​	​	$34.3

​

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

​

Special (Gains) and Charges were $57.7 million ($45.5 million after tax) or $0.16 per diluted share, primarily relating to our One Ecolab initiative, acquisition and integration activities, and other restructuring activities in the period ended March 31, 2026. Special (Gains) and Charges were $34.3 million ($25.1 million after tax) or $0.09 per diluted share, primarily relating to our One Ecolab initiative and a gain on sale of an equity method investment in the period ended March 31, 2025.

​

As it relates to the One Ecolab initiative, we anticipate total restructuring costs of $328 million ($256 million after tax) or $0.90 per diluted share and special charges of $97 million ($76 million after tax) or $0.26 per diluted share by the end of 2027, which is expected to generate estimated annualized cost savings of $325 million in continuing operations by 2027. One Ecolab has delivered $134 million of cumulative cost savings.

​

Further details related to special (gains) and charges are included in Note 2, “Special (Gains) and Charges,” of the Notes.

​

​

Operating Income and Operating Income Margin

​

​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(millions)	​	2026			​ ​ ​	2025		​	Change
Reported GAAP operating income	​	​	$622.0	​	​	​	$555.3	​	12	%
Special (gains) and charges	​		57.7	​	​		34.3	​	​	​
Non-GAAP adjusted operating income	​		679.7	​	​		589.6	​	15	%
Effect of foreign currency translation	​		(3.4)	​	​		26.6	​	​	​
Non-GAAP adjusted fixed currency operating income	​	​	676.3	​	​	​	616.2	​	10	%
Effect of acquisitions and divestitures	​	​	(11.4)	​	​	​	-	​	​	​
Non-GAAP organic operating income	​	​	$664.9	​	​	​	$616.2	​	8	%
​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended							​	​
​	​	March 31							​	​
(percent)	​	2026			​	2025			​	​
Reported GAAP operating income margin	​	​	15.3	%	​	​	15.0	%	​	​
Non-GAAP adjusted operating income margin	​	​	16.7	%	​	​	16.0	%	​	​
Non-GAAP adjusted fixed currency operating income margin	​	​	16.7	%	​	​	16.1	%	​	​
Non-GAAP organic operating income margin	​	​	16.8	%	​	​	16.1	%	​	​

​

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 12% in the first quarter of 2026 versus the comparable period of 2025. Our reported operating income for 2026 and 2025 was impacted by special (gains) and charges; excluding the impact of special (gains) and charges from 2026 and 2025 reported results, our adjusted operating income increased 15% in the first quarter of 2026.

​

As shown in the previous table, foreign currency had a 5 percentage point positive impact on adjusted operating income growth for the first quarter of 2026.

​

Other (Income) Expense

​

​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(millions)	​	2026			​ ​ ​	2025			Change
Reported GAAP other (income) expense	​	​	($8.8)	​	​	​	($13.0)	​	(32)	%

​

Reported other (income) expense decreased to ($8.8) million from ($13.0) million in the first quarter of 2026 compared to the first quarter of 2025.

​

Interest Expense, Net

​

​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(millions)	​	2026			​ ​ ​	2025			Change
Reported GAAP interest expense, net	​	​	$72.7	​	​	​	$58.3	​	25	%

​

Reported net interest expense was $72.7 million and $58.3 million in the first quarter of 2026 and 2025, respectively. The increase in net interest expense reflects the impact of lower cash balances and new debt used to fund the Ovivo Electronics acquisition.

​

Provision for Income Taxes

​

The following table provides a summary of our tax rate:

​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(percent)	​ ​ ​	2026		​	2025
Reported GAAP tax rate	​	21.8	%	​	20.3	%
Tax rate impact of:	​	​	​	​	​	​
Special (gains) and charges		(0.1)	​	​	0.4	​
Discrete tax items		(0.7)	​	​	0.1	​
Non-GAAP adjusted tax rate		21.0	%	​	20.8	%

​

​

​

Our reported tax rate was 21.8% and 20.3% for the first quarter of 2026 and 2025, respectively. The change in our tax rate for the first quarter versus the comparable periods of 2025 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 expense related to discrete tax items of $4.4 million in the first quarter of 2026. This included a tax benefit of $12.0 million associated with share-based compensation excess tax benefits. The remaining net tax expense of $16.4 million was primarily due to prior year return adjustments, unrecognized tax benefits, and other changes in estimates.

​

We recognized net tax benefits related to discrete tax items of $0.5 million in the first quarter of 2025. This included $7.3 million associated with share-based compensation excess tax benefits. The remaining net expense of $6.8 million is from other income tax adjustments including audit settlements, unrecognized tax benefits, and other changes in estimates.

​

Net Income Attributable to Ecolab

​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(millions)	​ ​ ​	2026			​ ​ ​	2025		​ ​ ​	Change
Reported GAAP net income attributable to Ecolab	​	​	$432.6	​	​	​	$402.5	​	7	%
Adjustments:	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges, after tax	​		45.5	​	​	​	25.1	​	​	​
Discrete tax expense (benefit)	​		4.4	​	​	​	(0.5)	​	​	​
Non-GAAP adjusted net income attributable to Ecolab	​	​	$482.5	​	​	​	$427.1	​	13	%

​

Diluted EPS

​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(dollars)	​ ​ ​	2026			​ ​ ​	2025		​ ​ ​	Change
Reported GAAP diluted EPS	​	​	$1.52	​	​	​	$1.41	​	8	%
Adjustments:	​	​	​	​	​	​	​	​	​	​
Special (gains) and charges, after tax	​		0.16	​	​	​	0.09	​	​	​
Discrete tax expense (benefit)	​		0.02	​	​	​	0.00	​	​	​
Non-GAAP adjusted diluted EPS	​	​	$1.70	​	​	​	$1.50	​	13	%

​

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

​

Currency translation had a favorable impact of approximately $0.08 per share on diluted EPS for the first quarter of 2026 when compared to the comparable period of 2025.

​

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 2026. 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, “Significant Accounting Policies,” of the Notes to the Consolidated Financial Statements within our Annual Report on Form 10-K for the year ended December 31, 2025. Additional information about our reportable segments is included in Note 15, “Operating Segments,” of the Notes.

​

​

​

Fixed currency net sales and operating income for the first quarter of 2026 for our reportable segments are shown in the following tables:

​

​	​	​	​	​	​	​	​	​	​	​	​
Net Sales	​	First Quarter Ended
​	​	March 31
(millions)	​ ​ ​	2026			​ ​ ​	2025		​	​	Change
Global Water	​	​	$2,035.2	​	​ ​ ​	​	$1,899.5	​ ​ ​	​	7	%
Global Institutional & Specialty		​	1,507.7	​	​		1,454.8	​	​	4	​
Global Pest Elimination	​	​	310.1	​	​	​	287.4	​	​	8	​
Global Life Sciences	​	​	200.9	​	​	​	181.4	​	​	11	​
Subtotal at fixed currency		​	4,053.9	​	​		3,823.1	​	​	6	​
Effect of foreign currency translation		​	12.2	​	​		(128.1)	​	​	​	​
Consolidated reported GAAP net sales		​	$4,066.1	​	​	​	$3,695.0	​	​	10	%
​	​	​	​	​	​	​	​	​	​	​	​
Operating Income	​	First Quarter Ended
​	​	March 31
(millions)	​	2026			​ ​ ​	2025		​	​	Change
Global Water	​ ​ ​		$297.8	​	​ ​ ​	​	$278.7	​ ​ ​	​	7	%
Global Institutional & Specialty		​	347.5	​	​		308.4		​	13	​
Global Pest Elimination		​	51.7	​	​		47.7		​	8	​
Global Life Sciences	​	​	37.5	​	​	​	31.0	​	​	21	​
Corporate		​	(114.8)	​	​		(83.5)	​	​	*****	​
Subtotal at fixed currency		​	619.7	​	​		582.3		​	6	​
Effect of foreign currency translation		​	2.3	​	​		(27.0)	​	​	​	​
Consolidated reported GAAP operating income			$622.0	​	​	​	$555.3		​	12	%

• Not meaningful

​

​

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
Net Sales	​	2026					​	​	2025
(millions)	​ ​ ​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted
Global Water	​	$2,035.2	​	($95.0)	​	$1,940.2	​	​	$1,899.5	​	$-	​	$1,899.5
Global Institutional & Specialty		1,507.7	​	-	​	1,507.7	​	​	1,454.8	​	-	​	1,454.8
Global Pest Elimination		310.1	​	(1.6)	​	308.5	​	​	287.4	​	-	​	287.4
Global Life Sciences	​	200.9	​	-	​	200.9	​	​	181.4	​	-	​	181.4
Subtotal at fixed currency		4,053.9	​	(96.6)	​	3,957.3	​	​	3,823.1	​	-	​	3,823.1
Effect of foreign currency translation		12.2	​	​	​	​	​	​	(128.1)	​	​	​	​
Consolidated reported GAAP net sales		$4,066.1	​	​	​	​	​	​	$3,695.0	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating Income	​	2026					​	​	2025
(millions)	​ ​ ​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted	​	​	Fixed Currency	​	Impact of Acquisitions and Divestitures	​	Acquisition Adjusted
Global Water	​	$297.8	​	($20.4)	​	$277.4	​	​	$278.7	​	$-	​	$278.7
Global Institutional & Specialty		347.5	​	-	​	347.5	​	​	308.4	​	-	​	308.4
Global Pest Elimination		51.7	​	0.6	​	52.3	​	​	47.7	​	-	​	47.7
Global Life Sciences	​	37.5	​	-	​	37.5	​	​	31.0	​	-	​	31.0
Corporate		(58.2)	​	8.4	​	(49.8)	​	​	(49.6)	​	-	​	(49.6)
Non-GAAP adjusted fixed currency operating income		676.3	​	(11.4)	​	664.9	​	​	616.2	​	-	​	616.2
Special (gains) and charges at fixed currency rates		56.6	​	​	​	​	​	​	33.9	​	​	​	​
Subtotal at fixed currency		619.7	​	​	​	​	​	​	582.3	​	​	​	​
Effect of foreign currency translation		2.3	​	​	​	​	​	​	(27.0)	​	​	​	​
Consolidated reported GAAP operating income		$622.0	​	​	​	​	​	​	$555.3	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

Unless otherwise noted, the following segment performance commentary compares the first quarter of 2026 against the first quarter of 2025.

​

​

Global Water

​

​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended							​
​	​	March 31							​
​	​ ​ ​	2026			​	2025			​ ​ ​
Sales at fixed currency (millions)	​	​	$2,035.2	​	​	​	$1,899.5	​	​
Sales at public currency (millions)	​	​	2,043.0	​	​	​	1,826.4	​	​
​	​	​	​	​	​	​	​	​	​
Organic sales change	​	​	2	%	​	​	​	​	​
Acquisitions and divestitures	​		5	%	​		​	​	​
Fixed currency sales change	​		7	%	​		​	​	​
Foreign currency translation	​	​	4	%	​	​	​	​	​
Public currency sales change	​		12	%	​		​	​	​
​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$297.8	​	​	​	$278.7	​	​
Operating income at public currency (millions)	​	​	299.3	​	​	​	264.1	​	​
​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	7	%	​	​	​	​	​
Fixed currency operating income margin	​		14.6	%	​		14.7	%	​
Organic operating income change	​		0	%	​		​	​	​
Organic operating income margin	​		14.3	%	​		14.7	%	​
Public currency operating income change	​	​	13	%	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​

​

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

​

Net Sales

​

Fixed currency sales increased 7% in the first quarter of 2026, driven by a 5% benefit from the Ovivo Electronics acquisition. Organic sales for Global Water increased 2% in the first quarter of 2026, driven by double-digit growth in High-Tech, strong growth in Food & Beverage and steady growth in Light Water.

​

Food & Beverage organic sales increased 5% in the first quarter of 2026 driven by new business and value pricing. Heavy Water organic sales decreased 2% in the first quarter of 2026, as growth in downstream was offset by softer sales in basic industries. High-Tech organic sales increased 25% in the first quarter of 2026, reflecting new business wins across microelectronics and data centers. Light Water organic sales increased 2% in the first quarter of 2026, driven by accelerating performance in transportation and green energy, and continued strong performance in pharmaceuticals. Paper organic sales decreased 2% in the first quarter of 2026, as continued new business wins were offset by stabilizing customer production rates.

​

Operating Income

​

Organic operating income was stable for Global Water in the first quarter of 2026. Organic operating income margin decreased in the first quarter of 2026.

​

Organic operating income margins decreased 0.4 percentage points during the first quarter of 2026 as the 1.7 percentage point positive impact of value pricing and higher volumes were more than offset by the 2.3 percentage point impact of higher commodity costs and investments in the business.

​

​

Global Institutional & Specialty

​

​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended							​
​	​	March 31							​
​	​ ​ ​	2026			​	2025			​ ​ ​
Sales at fixed currency (millions)	​	​	$1,507.7	​	​	​	$1,454.8	​	​
Sales at public currency (millions)	​	​	1,511.4	​	​	​	1,418.0	​	​
​	​	​	​	​	​	​	​	​	​
Organic sales change	​	​	4	%	​	​	​	​	​
Acquisitions and divestitures	​		-	%	​		​	​	​
Fixed currency sales change	​		4	%	​		​	​	​
Foreign currency translation	​	​	3	%	​	​	​	​	​
Public currency sales change	​		7	%	​		​	​	​
​	​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$347.5	​	​	​	$308.4	​	​
Operating income at public currency (millions)	​	​	348.2	​	​	​	301.2	​	​
​	​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	13	%	​	​	​	​	​
Fixed currency operating income margin	​		23.0	%	​		21.2	%	​
Organic operating income change	​		13	%	​		​	​	​
Organic operating income margin	​		23.0	%	​		21.2	%	​
Public currency operating income change	​	​	16	%	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​

​

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

​

Net Sales

​

Fixed currency and organic sales increased 4% in the first quarter of 2026, with improved growth in both operating segments.

​

At an operating segment level, Institutional organic sales increased 2% in the first quarter of 2026, as growth in hospitality more than offset softer sales to hospitals. Specialty organic sales increased 9% in the first quarter of 2026, driven by new business wins and continued value pricing.

​

Operating Income

​

Organic operating income and organic operating income margin increased in the first quarter of 2026 for our Global Institutional & Specialty segment.

​

Organic operating income margins increased 1.8 percentage points during the first quarter of 2026 as the 2.7 percentage point positive impact from value pricing was partially offset by the 0.9 percentage point impact of higher commodity costs.

​

​

Global Pest Elimination

​

​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
​	​ ​ ​	2026			​	2025
Sales at fixed currency (millions)	​	​	$310.1	​	​	​	$287.4	​
Sales at public currency (millions)	​	​	310.8	​	​	​	280.6	​
​	​	​	​	​	​	​	​	​
Organic sales change	​	​	7	%	​	​	​	​
Acquisitions and divestitures	​		1	%	​		​	​
Fixed currency sales change	​		8	%	​		​	​
Foreign currency translation	​	​	3	%	​	​	​	​
Public currency sales change	​		11	%	​		​	​
​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$51.7	​	​	​	$47.7	​
Operating income at public currency (millions)	​	​	51.9	​	​	​	46.5	​
​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	8	%	​	​	​	​
Fixed currency operating income margin	​		16.7	%	​		16.6	%
Organic operating income change	​		10	%	​		​	​
Organic operating income margin	​		17.0	%	​		16.6	%
Public currency operating income change	​	​	12	%	​	​	​	​
​	​	​	​	​	​	​	​	​

​

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

​

Net Sales

​

Fixed currency sales increased 8% in the first quarter of 2026 reflecting a benefit from attractive, targeted acquisitions in North America. Organic sales for Global Pest Elimination increased 7% in the first quarter of 2026 driven by gains in restaurants, food retail, food & beverage and healthcare.

​

Operating Income

​

Organic operating income and organic operating income margin increased in the first quarter of 2026 for our Global Pest Elimination segment.

​

Organic operating income margins increased 0.4 percentage points during the first quarter of 2026, as the 5.4 percentage point positive impact from value pricing, higher volumes and improved productivity were partially offset by the 4.9 percentage point impact of investments in the business, including pest intelligence.

​

​

​

Global Life Sciences

​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
​	​ ​ ​	2026			​	2025
Sales at fixed currency (millions)	​	​	$200.9	​	​	​	$181.4	​
Sales at public currency (millions)	​	​	200.9	​	​	​	170.0	​
​	​	​	​	​	​	​	​	​
Organic sales change	​	​	11	%	​	​	​	​
Acquisitions and divestitures	​		-	%	​		​	​
Fixed currency sales change	​		11	%	​		​	​
Foreign currency translation	​	​	7	%	​	​	​	​
Public currency sales change	​		18	%	​		​	​
​	​	​	​	​	​	​	​	​
Operating income at fixed currency (millions)	​	​	$37.5	​	​	​	$31.0	​
Operating income at public currency (millions)	​	​	37.7	​	​	​	26.6	​
​	​	​	​	​	​	​	​	​
Fixed currency operating income change	​	​	21	%	​	​	​	​
Fixed currency operating income margin	​		18.7	%	​		17.1	%
Organic operating income change	​		21	%	​		​	​
Organic operating income margin	​		18.7	%	​		17.1	%
Public currency operating income change	​	​	42	%	​	​	​	​
​	​	​	​	​	​	​	​	​

​

​

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

​

Net Sales

​

Fixed currency and organic sales for Global Life Sciences increased 11% in the first quarter of 2026, driven by new business wins. Continued growth in bioprocessing and pharmaceutical & personal care overcame temporary capacity constraints within Life Sciences’ industrial water purification business.

​

Operating Income

​

Organic operating income and organic operating income margins increased in the first quarter of 2026 for our Global Life Sciences segment.

​

Organic operating income margins increased 1.6 percentage points during the first quarter of 2026, as the 4.3 percentage point positive impact from value pricing, higher volumes and lower supply chain costs were partially offset by the 2.9 percentage point impact of unfavorable mix and investments in the business.

​

​

Corporate

​

Consistent with our internal management reporting, Corporate amounts in the tables on pages 32 and 33 include intangible asset amortization specifically from the Nalco, Purolite and Ovivo Electronics 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 30.

​

​

​

FINANCIAL POSITION, CASH FLOWS AND LIQUIDITY

​

Financial Position

​

Total assets were $25.0 billion as of March 31, 2026 and $24.7 billion as of December 31, 2025.

​

Total liabilities were $15.0 billion as of March 31, 2026, compared to total liabilities of $14.9 billion as of December 31, 2025. Total debt was $8.5 billion as of March 31, 2026 and $8.2 billion as of December 31, 2025. 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:

​

​	​	​	​	​	​	​	​	​	​
​	​	March 31, 2026			​ ​ ​	December 31, 2025			​
(ratio)	​	​	​	​	​	​	​	​	​
Net debt to EBITDA		​	2.1	​		​	2.0	​	​
​	​	​	​	​	​	​	​	​	​
(millions)		​	​	​	​	​	​	​	​
Total debt	​	​	$8,495.7	​	​	​	$8,236.3	​	​
Cash	​		519.8	​	​	​	646.2	​	​
Net debt	​	​	$7,975.9	​	​	​	$7,590.1	​	​
​	​	​	​	​	​	​	​	​	​
Net income including noncontrolling interest	​	​	$2,123.4	​	​	​	$2,093.3	​	​
Provision for income taxes	​		472.6	​	​	​	454.6	​	​
Interest expense, net	​		255.5	​	​	​	241.1	​	​
Depreciation	​		691.9	​	​	​	672.6	​	​
Amortization	​		311.5	​	​	​	303.8	​	​
EBITDA	​		$3,854.9	​	​	​	$3,765.4	​	​

​

Cash Flows

​

Operating Activities

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(millions)	​ ​ ​	2026			​	2025			​ ​ ​	Change
Cash provided by operating activities	​	​	$445.9	​	​	​	$369.4	​	​	​	$76.5	​

​

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 by $77 million in the first quarter of 2026 compared to the first quarter of 2025, primarily driven by a favorable change in working capital and higher net income, partially offset by $60 million of one-time, equity incentive payments to the Ovivo Electronics employees relating to the acquisition.

​

Investing Activities

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(millions)	​ ​ ​	2026			​	2025			​ ​ ​	Change
Cash used for investing activities	​	​	($355.5)	​	​	​	($224.0)	​	​	​	($131.5)	​

​

Cash (used for) provided by investing activities is primarily impacted by capital investments in the business. We continue to make capital investments in the business, including dispensing and monitoring equipment, manufacturing equipment and facilities. Total capital expenditures were $349 million and $238 million in the first quarter of 2026 and 2025, respectively.

​

Cash used for dispositions, net of cash divested in the first quarter of 2025 related to the divestiture of our global surgical solutions business was $15 million.

​

​

Financing Activities

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	First Quarter Ended
​	​	March 31
(millions)	​ ​ ​	2026			​	2025			​ ​ ​	Change
Cash used for financing activities	​	​	($225.8)	​	​	​	($241.6)	​	​	​	$15.8	​

​

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 $202 million and $5 million in the first quarter of 2026 and 2025, respectively.

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 $344 million and $154 million of shares in the first quarter of 2026 and 2025, respectively. Cash proceeds and tax benefits from stock option exercises provide a portion of the funding for repurchase activity.

During the first quarter of 2026, there was no long-term debt issuance activity other than borrowings under our Chinese construction loan facility. There was no long-term debt issuance activity in the first quarter of 2025.

​

We paid dividends of $216 million and $192 million in the first quarter of 2026 and 2025, respectively.

​

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 March 31, 2026, we had $520 million of cash and cash equivalents on hand, of which $385 million was held outside of the U.S. We will continue to evaluate our cash position in light of future developments.

​

As of March 31, 2026, we had a $2.0 billion multi-year revolving credit facility which expires in March 2030. The credit facility has been established with a diverse syndicate of banks and supports our U.S. and Euro commercial paper programs. At the end of the first quarter of 2026, we had $300 million outstanding commercial paper under our U.S. program and none outstanding under our Euro program. As of December 31, 2025, we had $100 million outstanding commercial paper under our U.S. program and none outstanding under our Euro program. There were no borrowings under our credit facility as of March 31, 2026 or December 31, 2025. As of March 31, 2026, both programs were rated A-2 by Standard & Poor’s, P-2 by Moody’s and F-1 by Fitch.

​

During the first quarter of 2026, there was no long-term debt issuance activity other than borrowings under our Chinese construction loan facility. There was no long-term debt issuance activity in the first quarter of 2025.

​

One of our Chinese subsidiaries maintains a construction loan facility that provides up to 1.1 billion in Chinese Yuan (“CNY”) ($160 million) of proceeds to fund capital expenditures. This loan facility has a tenor of 13 years and is secured by certain assets of our Chinese subsidiaries.

​

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, 2025 disclosed total commercial paper, notes payable and long-term debt due within one year of $870 million. As of March 31, 2026, the total notes payable and long-term debt due within one year was $1,273 million. We had $300 million outstanding commercial paper under our U.S. program as of March 31, 2026.

​

Our gross liability for unrecognized tax benefits was $61 million and $54 million as of March 31, 2026, and December 31, 2025, 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. In the near-term, the global operating environment remains unpredictable, including constantly evolving geopolitics and international trade policy, which are resulting in rising delivered product costs and soft end-market demand. Due to the war in the Middle East, global energy markets have experienced significant price volatility in recent months driven by supply chain disruptions, transportation constraints, and geopolitical developments, contributing to major cost increases for raw materials, manufacturing, and logistics throughout our global supply chain. We have begun implementing our recently announced energy surcharge in the second quarter to offset the recent surge in such costs. This energy surcharge will be monitored closely and might be adjusted as market conditions evolve. We expect our pricing actions, along with continued volume growth and our other cost savings and productivity improvement efforts, to successfully offset the recent cost pressures.

​

Argentina, Turkey and Egypt 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, Turkey and Egypt. During the first quarter of 2026, sales in Argentina, Turkey and Egypt represented approximately 1% of our consolidated sales. Assets held in Argentina, Turkey and Egypt at the end of the first quarter of 2026 represented approximately 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 quarter of 2026, our Russian and Ukraine operations represented less than 1% of our 2026 consolidated net sales.

​

NEW ACCOUNTING PRONOUNCEMENTS

​

For information on new accounting pronouncements, refer to Note 17, “New Accounting Pronouncements,” of the Notes to the Consolidated Financial Statements.

​

SUBSEQUENT EVENTS

​

On April 10, 2026, we entered into a term credit agreement providing for a $4.75 billion unsecured committed delayed draw term loan credit facility, the proceeds from which may only be used to finance the pending acquisition of CoolIT Systems and to pay fees, costs and expenses related to the acquisition and the credit facility. No amounts had been drawn under the facility as of the date of this filing.

​

In April 2026, we entered into forward-starting interest rate lock contracts to hedge the interest rate risk related to anticipated debt issuances for a total notional amount of $450 million.

​

In April 2026, we entered into cross-currency swap derivative contracts with aggregate notional amounts of ₣500 million. These cross-currency swap derivative contracts are designated as net investment hedges of our Swiss Franc denominated exposures from our investments in certain of our Swiss Franc denominated functional currency subsidiaries.

​

​

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 net income including noncontrolling interest with the sum of provision for income taxes, net interest expense, depreciation and amortization added back. 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 2026. 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, Purolite, and Ovivo Electronics 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.

​

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 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 international trade policies, 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; our increasing reliance on artificial intelligence technologies in our products, services and operations; 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.

​

​