Ecolab Inc.

on our CFO. A discussion of our results, along with the earnings release and the slides referencing the quarter's results, are available on Ecolab's website at ecolab.com slash investor. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplement materials include estimates of future performance. These are forward-looking statements, and actual results could differ materially from those projected. Factors that could cause actual results to differ are described under the risk factors section in our most recent Form 10-K and our posted materials. We also refer you to the supplemental diluted earnings per share information in the release. With that, I'd like to turn the call over to Christophe Beck for his comments.

Thank you, Andy, and welcome to everyone joining us today. And I'd like to start by recognizing the strength and the resilience of the Ecolab team. Because in a year defined by persistent macro uncertainty that we've all lived through and shifting global dynamics, our team continues to deliver consistent double-digit earnings growth. And they focus on what matters most, our customers, our strategy, and our long-term goals is what enables us to perform at the very high level, quarter after quarter. And we've seen that in the third quarter with sales growth improved, fueled by extra rating pricing, up to 3% from 2% last quarter, while volumes increased 1%. This momentum was driven by double-digit organic growth in our growth engines, which is remarkable. and which includes pest elimination, life sciences, global high-tech, and Ecolab digital. Our core business, institutional specialty, and the rest of global water delivered solid growth. All of this supported by exceptional total value delivery through best-in-class, breakthrough innovation, and disciplined execution of our one Ecolab enterprise growth strategy. In total, our growth engines and core businesses represent about 85% of our total sales, And they delivered 4% organic sales growth and mid-teens organic operating income growth. This strong performance more than offset ongoing market softness in our underperforming businesses, basic industries, and paper, which together represent the remaining 50% of our global sales. And these two businesses declined 3% and had an impact of 1% each point of volume in the quarter. So let me briefly expand on each of these drivers before sharing how we're thinking about the remainder of the year and how we position to deliver another strong year of double-digit EPS growth in 2026. Pricing accelerated to 3% this quarter, driven by the full implementation of our trade surcharge and continued value pricing that's working really well. As always, the total value we deliver to customers continue to outpace and by far our total pricing. as our technologies and services help to deliver enhanced business outcomes, operational performance, and environmental impact for our customers. Our breakthrough innovation is the strongest it's ever been, delivering significant value for customers and growth for Ecolab. In institutional and specialty, breakthrough innovations like the ones you've seen at Invest Today, like Dish IQ, Aqua IQ, and ReadyDolls are growing double digits as these solutions help our customers improve operational performance optimize their scarce labor resources, and reduce total cost. In our past intelligence platform, we've now installed over 400,000 intelligent devices, formerly called mousetraps, on our way to deploying over 1 million devices. With this leading technology, we aim to deliver 99% test-free outcomes as we harness the power of our Ecolab 3D digital infrastructure and our expert service capabilities. Within Global Water, we recently launched 3D Tracer for direct-to-chip liquid cooling for next-generation AI data centers, which uniquely monitors and optimizes coolant performance in real time. And when combined with our full portfolio of data center cooling technologies, we're helping to reduce up to 10% of the power used to cool data centers, which can now be utilized for compute power. And this is just the beginning. As we build our leadership position in data center cooling, And finally, within Global Life Sciences, we've launched a series of cutting-edge drug purification resins for the bioprocessing industry, which drives improved product quality and significant operational efficiencies for our customers. When Ecolab focuses its breakthrough innovation on solving critical customer challenges like these, everyone wins. is helping us unlock significant cross-sell opportunities across our customer base. In total, it represents a $65 billion gross opportunity with $3.5 billion of this sitting with our largest customers. And we're seeing early successes in businesses like institutional specialty and food and beverage that are growing very nicely. Talking about that, in institutional specialty, well, organic sales grew by 4% outpacing in market trends, And this good performance is being fueled by the exceptional value we are delivering to customers, which we capture through value pricing and growth from Winnicola. With this, we're working to deliver best-in-class operating performance for customers as they utilize more of our breakthrough technologies across more of their locations. In food and beverage, growth continues to accelerate with organic sales up 4% this quarter, once again ahead of market trends. This strong acceleration is being driven by OneEcoLab, where we bring together our industry-leading cleaning and sanitizing, water treatment, and digital technologies. This comprehensive offering delivers significant customer value to improve food safety, lower operating costs, and optimized water usage, which was always our promise. And of course, our growth engine delivered another quarter of double-digit sales growth. These businesses are gaining momentum, and Ecolab is well positioned to capitalize on the strong secular tailwinds driving these markets. So let me unpack them one by one. Pest elimination delivered 6% organic sales growth. And as mentioned earlier, the pest intelligence rollout is going extremely well. Our pest team has just won another very large retailer here in the U.S., which has thousands of locations which we will be deploying in the coming month. This innovation is transforming our pest elimination model as we shift from spending 95% of our time physically checking every device to 95% of our time solving critical customer problems and selling new solutions. Even with ongoing investment in pest intelligence, operating income margins improved to nearly 21%, driven by our strong sales growth and the leverage we're generating from pest intelligence. Life science is sales growth. also improved to 6%, led by double-digit growth in biopharma and pharma and personal care. This very strong performance overcame capacity constraints within our water purification business. Looking at the fourth quarter, we expect life sciences year-on-year sales growth to moderate a little bit from third quarter's 6% growth as we compare against nearly 70% growth in our bioprocessing business last year. But underlying, same trend. Despite this strong comparison, we expect bioprocessing to still grow double digits in the fourth quarter as we continue to gain share in this super attractive market. Global high-tech continues to grow rapidly with sales up 25%. We've built an incredible growth platform where we're uniquely positioned to serve the high-growth data center and microelectronics industries. And the pending acquisition of Avivo Electronics, will more than double the size of Ecolab's global high-tech business to nearly 900 million, further strengthening this cross-engine by bringing together Vivo's very unique ultra-few water technologies with Ecolab's leading water solutions, digital technologies, and global service capabilities. The combined technology platform will enable Ecolab to expand our offerings to provide circular water solutions for microelectronics, helping to maximize cheap production and quality for this booming industry. Ecolab Digital maintained its strong momentum, delivering 25% sales growth this quarter. Ecolab Digital now has annualized sales of more than 380 million, driven by rapid growth in subscription revenue and digital hardware. Overall, digital is a $13 billion growth opportunity for Ecolab, with $3 billion of this sitting within our existing customer base. So we remain focused on capturing this high margin as we leverage our leading digital technologies and monetize our large and expanding install base. We're not only leveraging AI to build new fast-growing capabilities in global high-tech and Ecolab digital, we're rapidly leveraging it in our own operations to dramatically improve our customer experience and enterprise performance. With this, I'm very proud to share that Ecolab is ranked number nine on the Fortune AIQ 50 list recognizing the companies most prepared for the age of AI. Our global teams are quickly scaling AI to drive innovation, deliver customer impact to our best-in-class model, and deliver significant cost savings. Finally, we remain confident in our team's ability to get our two underperforming businesses, basic industries and paper, back to ground. And they're already making meaningful progress. We've shifted resources to support emerging opportunities, like in power and precious metals, where they're supporting AI-driven power build-outs. When markets still facing near-term demand headwinds, like paper, we're focusing on innovation that can draw significant operational savings for customers. We're also leveraging our OneEcoLab growth strategy in these businesses to expand relationships with existing customers. These actions are working. as evidenced by our share gains and relative outperformance in these end markets, but we're not satisfied. When we expect these markets to remain soft in the near term, with actions well underway, we anticipate these businesses to return to growth during 2026. One of the greatest strengths of Ecolab for decades has been the breadth and diversity of our portfolio. While not every business delivers strong performance at all times, portfolio is the key reason Ecolab collectively delivers double-digit EPS growth in nearly any environment. With our strong performance, we drove a 110 basis points increase in our organic operating income margin, which reached a record 18.7% this quarter. We continue to expect our operating income margin to expand at steady levels due to growth in high margin businesses value price, share gains, and productivity improvements, reaching a strong 18% for the full-year 25. Importantly, our margin expansion also includes significant and ongoing investments in our business. We continue to make these gross investments as they fuel high performance in the quarters and years ahead. As a result, we're increasing our 25 full-year adjusted value to DPS midpoint to 7.53, with a range of $7.48 to 758. Beyond this year, we remain firmly on track to achieve a 20% OI margin by 27. And as mentioned during our investor day last month, we expect to continue our momentum with 100 to 150 basis points of annual OI margin expansion to 23. This positions us extremely well to continue to deliver steady 12 to 15% earnings growth in 26 and beyond. In closing, our third quarter results reflect the strength of our business and the power of our strategy. Our pricing discipline, breakthrough innovation, and OneEcoLab execution continue to drive share gains and margin expansion across our core business. Our growth engines are scaling rapidly and positioned to benefit from long-term secular tailwinds. All of this is enabling us to deliver consistent earnings growth, even in a complex and complicated macro environment. With strong and resilient pre-cash flow and an extremely strong balance sheet, we're very well positioned to capitalize on both organic and inorganic growth opportunities to create significant value for our customers and drive attractive returns for our shareholders. I remain very confident in our ability to deliver sustained strong performance in Q4 this year and beyond. Thanks again for your continued trust and your investment in Ecolab. I look forward to your questions.

Thanks, Christophe. That concludes our formal remarks. Operator, would you please begin the question and answer period?