Ecolab Inc. · NYSE:ECL
Ecolab — William Blair Growth Stock Conference 2022
37 slides from Ecolab's conference presentation, Jun 7, 2022
Slide 1: Christophe Beck, Chairman & Chief Executive Officer
Christophe Beck Chairman & Chief Executive Officer 1
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Forward-Looking Information This communication contains forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding COVID-19 pandemic trends, gl
Slide 3: Uniquely Positioned to Deliver What Matters
UNIQUELY POSITIONED TO DELIVER WHAT MATTERS HEALTHY SAFE NET ZERO CLEAN ENVIRONMENTS FOOD WATER CLIMATE 3
Slide 4: Growing Fast by Growing Our Impact
GROWING FAST BY GROWING OUR IMPACT HEALTH FOOD WATER CLIMATE AS THE GLOBAL LEADER, IN 2021 WE HELPED: CLEAN FEED SAVE AVOID 60 billion 1.4 billion 215 billion 3.6 million hands people gallons of water metric tons of GHGs 4
Slide 5: Strong Long-Term History of Growth
STRONG LONG-TERM HISTORY OF GROWTH EPS (Adjusted, Continuing Operations) $6.00 Euro Crisis Pre-COVID $5.00 Financial 15-year Double- Crisis Digit EPS CAGR $4.00 2004-2019 9/11 15 years: +11% $3.00 $2.00 10 years: +10% 5 years: +12% $1.00 2021+ $0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Slide 6: Will Overcome COVID and Inflation Too
WILL OVERCOME COVID AND INFLATION TOO COVID-19 Inflation EPS (Adjusted, Continuing Operations) $6.00 Doing what’s right, the right way $5.00 COVID: $4.00 • Focused on Institutional • Maintained global team $3.00 Inflation: $2.00 • Priced to offset over time • Ensured seamless supply $1.00 $0.00 2000
Slide 7: Strong Recovery Underway
STRONG RECOVERY UNDERWAY 20% of sales 80% of sales INSTITUTIONAL ALL OTHER DIVISION BUSINESSES 17% Sales OI 3% 18% 15% 12% 12% Sales OI -27% -94% 6% 6-8% 4% 5% 2020 2018 2019 2021 Long-term Ambition -7% -21% Organic Sales Adj. EPS 7
Slide 8: Overcoming Unprecedented Inflation
OVERCOMING UNPRECEDENTED INFLATION Internal: Strong underlying growth drivers New business, structural pricing, energy surcharge, innovation, and productivity driven by digital automation External: Substantial delivered product cost inflation 2021-2022: Overcoming >$1 billion of inflation 8
Slide 9: ...With Strong Pricing Actions
…WITH STRONG PRICING ACTIONS >$1B of Inflation Temporary Energy Surcharge $B Accelerated Structural Pricing 2020 2021 2022F Structural Pricing / Surcharge Delivered Product Cost Inflation 9
Slide 10: Surcharge Implementation Takes Time to Fully Offset Incremental Delivered Product Cost
SURCHARGE IMPLEMENTATION TAKES TIME TO FULLY OFFSET INCREMENTAL DELIVERED PRODUCT COST $M April May June Surcharge Incremental DPC Headwind 10
Slide 11: 2022 Current Outlook
2022 CURRENT OUTLOOK Continued strong double-digit organic sales growth Fueled by pricing, market recovery, new business and innovation Gross margin pressure to peak in 2Q Structural pricing and surcharge expected to deliver sequential gross margin improvement in 3Q 2Q to be seen as a “transitio
Slide 12: A Long History of Sustained Pricing
A LONG HISTORY OF SUSTAINED PRICING ~10% > 25% RETURNS FOR CUSTOMERS $B 3% 2% 2% 3% 1% 2% 2% 2% 2% 1% 1% 1% 1% 2% 2% 2% 0.5% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F Pricing Delivered Product Cost Inflation 12
Slide 13: Positioned for Strong, Long-Term Growth
POSITIONED FOR STRONG, LONG-TERM GROWTH Huge and expanding $152B market opportunity Investing further in new, high-growth businesses Sustained by strong macro business drivers Infection prevention, water and sustainability Powerful customer value proposition eROI – best results at the lowest t
Slide 14: Consistent, Reliable, Double-Digit EPS Growth
CONSISTENT, RELIABLE, DOUBLE-DIGIT EPS GROWTH LONG-TERM EPS (Adjusted, Continuing Operations) OBJECTIVES SALES GROWTH $6.00 6-8% $5.00 $4.00 $3.00 EPS GROWTH $2.00 $1.00 15% $0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+ Repr
Slide 15: Huge Market Opportunity, Attractive Macro Trends
15 ® HUGE MARKET OPPORTUNITY ATTRACTIVE MACRO TRENDS 15
Slide 16: Leader in Highly Fragmented, Large and Growing Market
LEADER IN HIGHLY FRAGMENTED, LARGE AND GROWING MARKET MARKET OPPORTUNITY GROWTH SINCE 1995 160 $152B 140 $135B 120 $106B 8% 100 Ecolab 80 $152B $57B 60 $32B $39B 40 $18B 20 0 1995 2000 2005 2010 2015 2020 2021 $14,000 ECOLAB SALES $12,000 Ecolab Competitors 2021: $10,000 $13 BILLION $8,000 $6,000 $4
Slide 17: With Major Opportunities in Every End-Market
WITH MAJOR OPPORTUNITIES IN EVERY END-MARKET Food & Beverage Food Service Heavy Industries Health Care Pharma Paper Lodging High Tech/Manufacturing Ed./Government Food Retail Other Building Services $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $ MILLIONS Market data reflects current estimates o
Slide 18: Serving Major Global Companies
SERVING MAJOR GLOBAL COMPANIES Largest customer <2% of sales | Top 10 customers <10% of sales 18
Slide 19: Capturing Growth Trends: People Health
CAPTURING GROWTH TRENDS: PEOPLE HEALTH PREVENTING INFECTIONS BY HELPING PROVIDE SAFE OUTCOMES IN A SAFE ENVIRONMENT HOSPITAL ACQUIRED PANDEMICS INFECTIONS FOOD SAFETY ANIMAL HEALTH 19
Slide 20: Capturing Growth Trends: Planet Health
CAPTURING GROWTH TRENDS: PLANET HEALTH UNIQUELY POSITIONED TO DELIVER NET ZERO WATER SCARCITY: CLIMATE CHANGE: 56% SUPPLY / DEMAND GAP 0 NET 5-6ºC BY 2100 ZERO WATER QUALITY: WATER + CO2 EMISSIONS: 1/5 UNDRINKABLE 25% DRIVEN BY WATER 20
Slide 21: Capturing Growth Trends: Business Health
CAPTURING GROWTH TRENDS: BUSINESS HEALTH HELPING CUSTOMERS DELIVER ON THEIR SUSTAINABILITY PROMISES Carbon negative and Zero emissions by 2040 25% reduction in emissions by 2025 water positive by 2030 100% renewable energy by 2035 Net positive water impact by 2050 100% of packaging recyclable 34% re
Slide 22: Growth Strategy: Circle the Customer, Circle the Globe
GROWTH STRATEGY: CIRCLE THE CUSTOMER, CIRCLE THE GLOBE $152B GROW DRIVE MARKET SHARE PENETRATION Corporate accounts End to end solutions UNSOLD EXISTING CUSTOMERS CUSTOMERS New offerings Proof of outcome $83B $56B New end-markets eROI >25% $13B 2021 SALES 2021 SALES Market data reflects
Slide 23: How We Grow
EC@LAB HOW WE GROW
Slide 24: Common Growth Platform, Dedicated Expertise
COMMON GROWTH PLATFORM, DEDICATED EXPERTISE FOOD & BEVERAGE HEALTHCARE/ INDUSTRIAL/ FOODSERVICE/ PROCESSING LIFE SCIENCES COMMERCIAL HOSPITALITY WATER SERVICES Hygiene, Infection Prevention and Water Treatment Innovation and Digital Platforms Business Model and Operating Principles 90%+ consumable r
Slide 25: Leveraging Enterprise Technologies
LEVERAGING ENTERPRISE TECHNOLOGIES Innovating best-in-class solutions from our advantaged technologies Chemistry Technology ECOLAB3DTM: Digital Antimicrobials, Water, Hygiene, Solids Dispensing, Clean-in-place, Sensors Real-time data, predictive, connected Leveraging deep enterprise capabilities 25
Slide 26: How We Drive Value – Ensuring the Best Outcomes
HOW WE DRIVE VALUE – ENSURING THE BEST OUTCOMES BREAKTHROUGH ON-SITE TECHNOLOGY EXPERTISE BEST RESULTS AT LOWEST TOTAL COST (Reduced water, energy, waste impact) GLOBAL PREDICTIVE KNOW-HOW INSIGHTS 26
Slide 27: Small Cost – Major Customer Benefits
SMALL COST – MAJOR CUSTOMER BENEFITS Ecolab’s customer value proposition The best results at every location Labor Lower total operating costs Other Minimal environmental impact Water & Asset Dramatic sustainability story Energy Protection Exceptional customer experience Specific customer a
Slide 28: Case Study: Data Center Provider
CASE STUDY: DATA CENTER PROVIDER DELIVERING MEASURABLE IMPACT ANNUAL SAVINGS AND OUTCOMES INSIGHT Measurement of global water strategy >60% SOLUTIONS Consistency & standardization 30 Million 17 Million Water Flow Intelligence Continuous improvement & TCO reduction Gallons kWh 3D TRASAR™ Te
Slide 29: Sustainability Leader
29 ® SUSTAINABILITY LEADER 29
Slide 30: The World's Trusted Sustainability Company
THE WORLD’S TRUSTED SUSTAINABILITY COMPANY IN OUR OWN OPERATIONS THROUGH OUR CUSTOMERS Embodying corporate responsibility and Driving exponential operational and sustainability in our own operations sustainability results with our customers 2021 Climate and Water 2022 World and A Lists & Supplier 6t
Slide 31: Delivered Safe and Sustainable Operations
DELIVERED SAFE AND SUSTAINABLE OPERATIONS 2030 goals: DIVERSITY, EQUITY, AND WATER CLIMATE INCLUSION SAFETY 40% 50% 35% and 25% GOAL ZERO reduction in overall water impact reduction in CO2e management level gender and ethnic/racial diversity, respectively As of 2021, we delivered: in Total 44% Recor
Slide 32: Delivered Major Global Customer Impact
DELIVERED MAJOR GLOBAL CUSTOMER IMPACT 2030 goals: WATER CLIMATE FOOD HEALTH 300 BILLION 6 MILLION 2 BILLION 90 BILLION gallons of water saved metric tonnes of CO2e avoided people provided high-quality and safe food hands cleaned As of 2021, we delivered: 72% 60% Progress 70% 67% Progress Progress t
Slide 33: Strong Financial Position
33 ® STRONG FINANCIAL POSITION 33
Slide 34: Consistent Financial Objectives
CONSISTENT FINANCIAL OBJECTIVES POSITIONED TO DRIVE SUSTAINABLE, PROFITABLE GROWTH SALES GROWTH EPS GROWTH FREE CASH FLOW CONVERSION 90% - 100% of cash +6-8% +15% from operations LEVERAGE FREE CASH FLOW PRIORITIES 1.Grow dividend in line with EPS growth ~2x net debt / adjusted EBITDA 2.Acquisitions
Slide 35: Cash Returned to Shareholders
CASH RETURNED TO SHAREHOLDERS ~$9B Cumulative Cash Returned 2012-2021 Increased cash dividend for 30 consecutive ($ Billions) Common Dividends Paid Shares Repurchased $9.0 years $8.0 $7.0 Total Returns $4.2 2012-2021 $6.0 $4.1 $5.0 $3.6 $4.0 $4.2B SHARES REPURCHASED $4.0 $3.1 $4.3B $3.0 $2.5 $1.7 $4
Slide 36: Ecolab Summary
ECOLAB SUMMARY STRONG BUSINESS MODEL FOR CONSISTENT, SUPERIOR GROWTH GLOBAL LEADER WITH SMALL SHARE OF $152+B, GROWING MARKET $139+ Billion Remains to be Sold SERVING FUNDAMENTAL, GLOBAL AND INCREASINGLY COMPLEX LONG-TERM NEEDS Water, Food Safety, Infection Prevention, Sustainability POWERFUL,
Slide 37: Supplemental Non-GAAP Reconciliations
SUPPLEMENTAL NON-GAAP RECONCILIATIONS 37