Ecolab Inc. · NYSE:ECL
Ecolab — Investor Presentation (June 2022)
40 slides from Ecolab's investor 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 Ac t of 1995. These forward - looking statements include, but are not limited to, statements regarding COVID - 19 pandemic tre
Slide 3: Uniquely Positioned to Deliver What Matters
3 UNIQUELY POSITIONED TO DELIVER WHAT MATTERS SAFE FOOD NET ZERO WATER HEALTHY ENVIRONMENTS CLEAN CLIMATE
Slide 4: Growing Fast by Growing Our Impact
4 CLIMATE 3.6 million metric tons of GHGs AVOID CLEAN 60 billion hands HEALTH FOOD 1.4 billion people FEED 215 billion gallons of water SAVE WATER AS THE GLOBAL LEADER, IN 2021 WE HELPED: GROWING FAST BY GROWING OUR IMPACT
Slide 5: Strong Long-Term History of Growth
$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 5 2021+ Pre - COVID 15 - year Double - Digit EPS CAGR 2004 - 2019 15 years : +11% 10 years : +10% 5 years : +12% STRONG LONG - TERM HISTORY OF GROWT
Slide 6: Will Overcome COVID and Inflation Too
WILL OVERCOME COVID AND INFLATION TOO 6 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 EPS (Adjusted, Continuing Operations) Represents Adjusted EPS, excluding the estimated impact of the Upstrea
Slide 7: Strong Recovery Underway
7 STRONG RECOVERY UNDERWAY 6% 4% - 7% 5% 6 - 8% 12% 12% - 21% 17% 15% Organic Sales Adj. EPS 2018 2019 2020 2021 Long - term Ambition 18 % 3% - 27% - 9%
Slide 8: Strong Recovery Underway
8 6% 4% - 7% 5% 6 - 8% 12% 12% - 21% 17% 15% Organic Sales Adj. EPS 2018 2019 2020 2021 Long - term Ambition Sales 20% of sales INSTITUTIONAL DIVISION 80% of sales ALL OTHER BUSINESSES 18 % 3% OI OI Sales - 27% - 94% STRONG RECOVERY UNDERWAY
Slide 9: Overcoming Unprecedented Inflation
9 OVERCOMING UNPRECEDENTED INFLATION Internal: Strong underlying growth drivers ▪ New business, structural pricing, energy surcharge, innovation, and productivity driven by digital automation External: Substantial d elivered product cost inflation ▪ 2021 - 2022: Overcoming >$1 billion of inflation
Slide 10: Overcoming Unprecedented Inflation
10 OVERCOMING UNPRECEDENTED INFLATION… 2020 2021 2022F Structural Pricing / Surcharge Delivered Product Cost Inflation $B >$1B of Inflation +10% +25%
Slide 11: ...With Strong Pricing Actions
11 …WITH STRONG PRICING ACTIONS 2020 2021 2022F Structural Pricing / Surcharge Delivered Product Cost Inflation $B >$1B of Inflation Temporary Energy Surcharge Accelerated Structural Pricing
Slide 12: Surcharge Implementation Takes Time to Offset Cost
12 SURCHARGE IMPLEMENTATION TAKES TIME TO FULLY OFFSET INCREMENTAL DELIVERED PRODUCT COST April May June Surcharge Incremental DPC Headwind $M
Slide 13: 2022 Current Outlook
13 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 “tran
Slide 14: A Long History of Sustained Pricing
14 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F Pricing Delivered Product Cost Inflation $B > 25% 2% 2% 2% 2% 3% 0.5 % 2% 2% 1% 1% 1% 1% 1% 2% 3% 2% 2% ~10% RETURNS FOR CUSTOMERS A LONG HISTORY OF SUSTAINED PRICING
Slide 15: Demonstrating Earnings Power
15 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022F Pricing Delivered Product Cost Inflation $B > 25% 2% 2% 2% 2% 3% 0.5 % 2% 2% 1% 1% 1% 1% 1% 2% 3% 2% 2% ~10% RETURNS FOR CUSTOMERS DEMONSTRATING EARNINGS POWER
Slide 16: 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 total costs ▪ Delivered personally at 3
Slide 17: Consistent, Reliable, Double-Digit EPS Growth
CONSISTENT, RELIABLE, DOUBLE - DIGIT EPS GROWTH 17 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022+ EPS (Adjusted, Continuing Operations) Represents Adjusted EPS, excluding the estimated impa
Slide 18: Huge Market Opportunity
18 18 HUGE MARKET OPPORTUNITY ATTRACTIVE MACRO TRENDS ®
Slide 19: Leader in Highly Fragmented, Large and Growing Market
19 LEADER IN HIGHLY FRAGMENTED, LARGE AND GROWING MARKET 0 20 40 60 80 100 120 140 160 1995 2000 2005 2010 2015 2020 2021 MARKET OPPORTUNITY GROWTH SINCE 1995 $152B $57B $39B $32B $18B Ecolab $106B 8% $135B ECOLAB SALES 2021: $13 BILLION Ecolab Competitors Market data reflects current estimates of p
Slide 20: Major Opportunities in Every End-Market
20 WITH MAJOR OPPORTUNITIES IN EVERY END - MARKET $ MILLIONS Market data reflects current estimates of potential opportunities $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 Building Services Other Food Retail Ed./Government High Tech/Manufacturing Lodging Paper Pharma Health Care Heavy Industrie
Slide 21: Serving Major Global Companies
SERVING MAJOR GLOBAL COMPANIES 21 Largest customer <2% of sales | Top 10 customers <10% of sales
Slide 22: Capturing Growth Trends: People Health
CAPTURING GROWTH TRENDS: PEOPLE HEALTH 22 PANDEMICS HOSPITAL ACQUIRED INFECTIONS FOOD SAFETY ANIMAL HEALTH PREVENTING INFECTIONS BY HELPING PROVIDE SAFE OUTCOMES IN A SAFE ENVIRONMENT
Slide 23: Capturing Growth Trends: Planet Health
CAPTURING GROWTH TRENDS: PLANET HEALTH 23 WATER SCARCITY: 56% SUPPLY / DEMAND GAP CLIMATE CHANGE: 5 - 6ºC BY 2100 WATER QUALITY: 1/5 UNDRINKABLE WATER + CO 2 EMISSIONS: 25% DRIVEN BY WATER NET ZERO 0 UNIQUELY POSITIONED TO DELIVER NET ZERO
Slide 24: Capturing Growth Trends: Business Health
CAPTURING GROWTH TRENDS: BUSINESS HEALTH 24 Carbon negative and water positive by 2030 Zero emissions by 2040 100% renewable energy by 2035 25% reduction in emissions by 2025 Net positive water impact by 2050 100% of packaging recyclable or reusable by 2025 34% reduction in carbon emissions by 2025
Slide 25: Growth Strategy: Circle the Customer, Circle the Globe
25 GROWTH STRATEGY: CIRCLE THE CUSTOMER, CIRCLE THE GLOBE 2021 SALES C orporate accounts New offerings New end - markets Market data reflects current estimates of potential opportunities 2021 SALES UNSOLD CUSTOMERS $83B $56B $13B $152B GROW MARKET SHARE DRIVE PENETRATION End to end solutions
Slide 26: How We Grow
EC@LAB | HOW WE GROW
Slide 27: Common Growth Platform, Dedicated Expertise
27 COMMON GROWTH PLATFORM, DEDICATED EXPERTISE Business Model and Operating Principles Innovation and Digital Platforms 90%+ consumable revenue FOODSERVICE/ HOSPITALITY FOOD & BEVERAGE PROCESSING HEALTHCARE/ LIFE SCIENCES INDUSTRIAL/ COMMERCIAL WATER SERVICES Hygiene, Infection Prevention and Water
Slide 28: Leveraging Enterprise Technologies
LEVERAGING ENTERPRISE TECHNOLOGIES Chemistry ECOLAB 3D TM : Digital Technology Innovating best - in - class solutions from our advantaged technologies Leveraging deep enterprise capabilities Antimicrobials, Water, Hygiene, Solids Dispensing, Clean - in - place, Sensors Real - time data, predictive,
Slide 29: How We Drive Value – Ensuring the Best Outcomes
HOW WE DRIVE VALUE – ENSURING THE BEST OUTCOMES 29 BEST RESULTS AT LOWEST TOTAL COST (Reduced water, energy, waste impact) BREAKTHROUGH TECHNOLOGY ON - SITE EXPERTISE GLOBAL KNOW - HOW PREDICTIVE INSIGHTS
Slide 30: Small Cost – Major Customer Benefits
SMALL COST – MAJOR CUSTOMER BENEFITS 30 Labor Asset Protection Water & Energy Other Specific customer application cost Ecolab’s customer value proposition The best results at every location Lower total operating costs Minimal environmental impact Dramatic sustainability story Exceptional c
Slide 31: Delivering Measurable Impact and Outcomes: Data Center Provider
31 ANNUAL SAVINGS INSIGHT ▪ Measurement of global water strategy ▪ Consistency & standardization ▪ Continuous improvement & TCO reduction INNOVATION Our comprehensive solutions include: ▪ Holistic water strategy ▪ Real - time digital insights delivered enterprise - wide ▪ Optimized cooling treatment
Slide 32: Sustainability Leader
32 32 SUSTAINABILITY LEADER ®
Slide 33: The World's Trusted Sustainability Company
33 15 th Consecutive Year 2021 Climate and Water A Lists & Supplier Leadership List 2022 World and North America Indices 6 th Consecutive Year #3 Driving exponential operational and sustainability results with our customers THROUGH OUR CUSTOMERS Embodying corporate responsibility and sustainability
Slide 34: Delivered Safe and Sustainable Operations
WATER DIVERSITY, EQUITY, AND INCLUSION SAFETY 40 % reduction in overall water impact 50% reduction in CO 2 e 35% and 25% management level gender and ethnic/racial diversity, respectively GOAL ZERO 62 % Progress toward goal 56% Progress toward goal 74% Progress toward goal 44% 39% Reduction Reduction
Slide 35: Delivered Major Global Customer Impact
300 BILLION gallons of water saved 6 MILLION metric tonnes of CO 2 e avoided 2 BILLION people provided high - quality and safe food 90 BILLION hands cleaned As of 2021, we delivered: 35 WATER FOOD HEALTH CLIMATE 2030 goals: DELIVERED MAJOR GLOBAL CUSTOMER IMPACT 60% Progress toward goal 70% Progress
Slide 36: Strong Financial Position
36 36 STRONG FINANCIAL POSITION ®
Slide 37: Consistent Financial Objectives
CONSISTENT FINANCIAL OBJECTIVES 37 SALES GROWTH ~2x net debt / adjusted EBITDA LEVERAGE 1. Grow dividend in line with EPS growth 2. Acquisitions 3. Share repurchase FREE CASH FLOW CONVERSION FREE CASH FLOW PRIORITIES +15% POSITIONED TO DRIVE SUSTAINABLE, PROFITABLE GROWTH 90% - 100% of cash from ope
Slide 38: Cash Returned to Shareholders
$0.3 $0.5 $0.9 $1.3 $1.7 $2.1 $2.6 $3.2 $3.7 $4.3 $0.2 $0.5 $1.0 $1.7 $2.5 $3.1 $3.6 $4.0 $4.1 $4.2 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Common Dividends Paid Shares Repurchased CASH RETURNED TO SHAREHOLDERS 38 ~$9B Cumulative Cash Retur
Slide 39: Ecolab Summary
ECOLAB SUMMARY 39 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, Sustainab ility P
Slide 40: Supplemental Non-GAAP Reconciliations
SUPPLEMENTAL NON - GAAP RECONCILIATIONS 40