Ecolab Aktie

Greetings, and welcome to the Ecolab Third Quarter 2026 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

At this time, I'll turn the conference over to Andy Hedberg, Vice President, Investor Relations for Ecolab. Thank you, Andy. You may begin.

Thank you. Hello, everyone, and welcome to Ecolab's third quarter conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO; and Scott Kirkland, our CFO.

A discussion of our results, along with our earnings release and the slides referencing the quarter's results, are available on Ecolab's website at ecolab.com/investor.

Please take a moment to read the cautionary statements in these materials, which states that this teleconference and the associated supplemental 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 in 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 so much, Andy, and welcome to everyone joining us today. I'm really super proud of what the team delivered once again.

On our last call, we described Q2 as a transition period as we mastered higher commodity costs within the quarter. The third quarter well marked an inflection point for Ecolab. Our core businesses strengthened, our growth engines accelerated, and together they drove 7% organic sales growth. But just as important, every business outperformed its end market, demonstrating the power of our One Ecolab strategy.

Despite significant commodity cost inflation, we maintained organic gross margin as our teams continue to create more value for our customers, win new business and manage supply chain costs very effectively. This will remain a critical focus in the quarters ahead as commodity costs are expected to remain high. Through continued pricing execution and disciplined supply chain management, we expect to continue to offset the impact of higher commodity costs.

Our productivity also strengthened as we leverage the investments we've made in our One Ecolab growth initiative. As a result, our organic OI margin in the quarter expanded to 19.6%, accelerating organic OI growth to 11%.

Beyond our reported results, the performance of the underlying business was even stronger as we absorbed additional amortization and interest costs from our recent M&A. On a pro forma basis, including the operating performance of CoolIT and Ovivo, Ecolab's Q3 sales would have grown high single digits and adjusted EPS would have grown mid-teens. These results reflect the strength of our core businesses and how our growth engines are materially accelerating Ecolab's growth algorithm.

One Ecolab is making a difference across the company. We bring our water, hygiene, test and digital solutions together with our field expertise to deliver best-in-class performance for customers at scale. We help customers improve business outcomes and operational performance while using fewer resources. That creates differentiated value for our customers, strengthens relationships and helps us win new business. Since launching One Ecolab, we generated over $400 million of sales growth with our largest 35 customers only, capturing more than a 10% incremental share of our targeted $3.5 billion growth opportunity with these 35 customers.

You can see this clearly in Food & Beverage, which accelerated to 8% organic growth, with broad-based growth across dairy, protein and beverage against stable end market demand. Now as we bring our integrated water and hygiene solutions, customers look to Ecolab to help protect food safety, while improving operating performance and environmental impact. We connect cleaning, sanitizing and circular water management solutions to help customers achieve all 3 at the same time.

Light Water also strengthened, accelerating to 5% growth. We're winning in the manufacturing and institutional markets as we bring our end-to-end water management capabilities to customers around the world. Paper and Heavy Water also returned to solid growth. In these businesses, strong new wins and improved pricing are helping us outperform stabilizing end markets. Now more than ever, these customers look to Ecolab to help them produce higher-quality products while significantly reducing operating costs and environmental impact, which is the Ecolab model as we all know.

Institutional & Specialty performance remained consistent despite industry trends that continue to get tougher, including restaurant foot traffic that declined mid-single digits in North America.

So while I'm pleased with what our team is doing, I'm not satisfied with our results. Given the proven value we bring to customers and the strength of our offerings, we should be outperforming the industry by a much wider margin and growing much faster. New innovations like DishIQ, AquaIQ and KitchenIQ, combined with our global service capabilities, deliver what our customers need most: improved guest experience, labor automation, and lower operating costs. So we'll be shifting gears.

To deliver even more value to our customers, we will be expanding our field sales power, maximizing our service offering across our hospitality and foodservice segments, and bring our technologies together through our One Ecolab model to drive higher solution penetration.

Our growth engines are also accelerating. Life Sciences continued to drive very strong share gains with organic sales growing 17%. Bioprocessing again led our performance. As customers advance drug molecules from development into commercial manufacturing, our opportunity grows with them. Last month, we started up our latest Life Sciences plant in China, positioning us extremely well to meet growing customer demand across Asia for the years to come. These investments are helping us win where breakthrough technologies, quality and reliability are super critical.

We've been building this major growth engine for a few years, investing in commercial and technical expertise, breakthrough innovation and additional capacity. With this critical investment, our Life Sciences businesses is soon approaching $1 billion in sales and delivering the performance we committed to you: double-digit sales growth and OI margins that are on a trajectory to expand to 30% over the next few years.

As a result, the return from our acquisition of Purolite is strong. And the NPV we expect to realize from this acquisition is actually greater than we had initially forecasted. I love how this business is performing and even more where it's headed.

Ecolab Digital also continued to grow rapidly, with sales up 34%. Customers increasingly want visibility into their operations and the ability to act in real time. ECOLAB3D and our expanding IQ solutions across water, Institutional, Life Sciences and Pest connect unique data insights with our global field expertise to deliver best-in-class customer performance.

Pest Elimination is a great example of how we're using breakthrough digital technologies to deliver superior customer outcomes and growth for Ecolab at the same time. In the third quarter, Pest sales growth accelerated to 8%, driven by strong new business wins from our One Ecolab growth platform and Pest Intelligence. Pest Intelligence today connects over 800,000 devices. Around-the-clock monitoring and predictive insights help our team identify issues sooner and target service more precisely. We combine those insights with local expertise to help deliver nearly 99% pest-free for our -- pest-free environment for our customers versus the 94%, which is the industry standard. And with $3 million of additional -- $3 billion of additional cross-sell opportunity, we're actually just getting started.

Global High-Tech, now Ecolab's largest growth engine, continues to accelerate, growing organic sales by 63%. Growth remains very strong across both data center cooling and circular water for microelectronics as AI infrastructure rapidly expands around the world. At the heart of AI is water. Water is required to produce, to power and to cool chips. Ecolab's leading innovation, expert service and digital capabilities help the world's leading tech companies maximize their growth and performance across the value chain.

Our recent acquisition in Global High-Tech add complementary strength to this leading business. CoolIT is off to an incredible start within Ecolab, more than doubling its sales with very strong profitability. Its leading liquid cooling capabilities address a critical need as advanced computing becomes more demanding. We have already fully integrated Ecolab 3D TRASAR liquid monitoring technology with CoolIT CDU platform, and we're excited about what we can now deliver to customers through one integrated liquid cooling platform.

Ovivo is also performing very well, delivering strong double-digit growth versus pre-acquisition sales. It's mission-critical ultra-pure water systems and on-site expertise provide semiconductor manufacturers with the purest water on earth. Together, we can deliver unique circular water solutions that improve chip quality and production yields while recycling more than 80% of the water used in a fab, and no one can truly do that today.

Global High-Tech significantly strengthens Ecolab long-term growth and margin potential. Last quarter, we outlined our global ambition for Global High-Tech to grow more than 25% annually, reach $4 billion in sales by 2030 and deliver 25% operating income margin. This growth platform alone adds more than 2 percentage points to Ecolab sales growth algorithm 1 year after closing. This is just one example of how we're building a higher growth Ecolab, and we look forward to sharing more at our Investor Day next month.

The acceleration we're seeing today is the result of the organic and M&A investments we've made over the last several years to strengthen our core business and build new growth engines. As our growth engines become a larger part of the business, our mix shifts towards faster-growing markets with attractive margin potential. Our growth engines win using the same proven operating model as our core businesses, providing mission-critical anchor technologies and consumables that deliver best-in-class operating performance for customers. This is fueling faster, more durable sales growth, faster earnings growth and strong returns for shareholders.

We are entering 2027 with momentum and confidence in our ability to deliver another very strong year. We expect organic sales growth to grow at the upper end of our 5% to 7% target, and Ecolab's adjusted operating income margin to reach the 20% that we promised. Adjusted EPS growth is expected to accelerate in the second half of next year as we lap M&A transaction impacts and operating performance continue to accelerate. That provides a clear path to meet or exceed our long-term adjusted EPS growth target of 12% to 15% in 2027.

In closing, the third quarter marked an inflection point for Ecolab. Our core strengthened, our growth engines accelerated and all our businesses outperformed their end markets. We're leveraging the power of One Ecolab to build a higher growth company with the same, durable and consistent core. We have a strong foundation, increasing momentum and a tremendous opportunity ahead. I want to thank our global team for making that possible and for the value they deliver to customers every single day. Thank you for your continued trust and your investment in Ecolab.

I'll now turn it back to Andy for Q&A.

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

[Operator Instructions] And our first question is from the line of Tim Mulrooney with William Blair.

Christophe, congrats on the strong quarterly performance. So I was hoping we could talk a little bit more about your High-Tech Water business in a little more detail. The legacy business that accelerated to 60% plus organic growth, that's a major step-up from the first half. CoolIT more than doubled again. Can you talk about what you're seeing in both of those businesses that's driving the strong growth there? And also, I was also wondering, as you progress towards that $4 billion target, I wonder if a 30% CAGR is the right number to use based on what you've seen over the last couple of quarters.

Thank you, Tim. I love that question, and especially that business, it's obviously early. So for us, we owned CoolIT now for almost 3 months. Ovivo for a little bit less than a year, and we've been starting our High-Tech business just a few years ago. So pretty early, pretty new, but probably one of the best businesses that we have with the best growth potential as well ahead. So we'll talk more at Investor Day in a few weeks, but I like a lot where we're positioned right now, for a few reasons. We have the best technologies and we clearly work hard at it. We have the best team. We've been building that as well for a long time. But most importantly, we offer what the industry truly needs, and especially now in that environment, which is best performance and the lowest impact on communities and nature, since we've seen that it's become a big topic in the media and in all the discussions we have now.

So if I unpack a little bit that, in microelectronics, and we'll talk more about it at Investor Day, well, ultra-pure water is becoming a critical component. It was less the case in the past. Because purity drives the chip performance for the most advanced chips that are available on the market today. And at the same time, it drives yield in manufacturing, which means that the microelectronics manufacturers can produce more chips coming out of their fabs, which is very critical. Today, it's roughly 60% to 70% for the latest chips, and we'd like to move that obviously so much closer to 100%. You can imagine how much money that represent when it's really well done.

At the same time, the amount of water that's required to produce those chips are immense. So the water circularity is absolutely essential, and this is what we do at Ecolab. So bringing together Ovivo and the capabilities of Ecolab in water circularity are providing something that no one else can truly deliver today.

Similar in data centers, well, performance drives power required, and power drives the heat. And that level of heat can only be extracted through direct-to-chip liquid cooling, which is what CoolIT does. And interestingly enough, water is the best heat extractor, but hot water is pretty hard to manage. But the good news is it's what we master really well at Ecolab.

At the same time, while this water usage and power usage question in data centers has become a top topic in all the discussions today that's impacting, obviously, the growth for the tech industry, it's creating political challenges as well at the same time. So for us, our approach is really helping tech companies build data centers, the way we call it, done the right way, which means zero water, less power and at the right places as well at the same time. And that's not including what we do for power, which is providing the electricity for data centers. And that's a business where we've been really strong at for decades. And today, this business is also gaining steam.

So you're right, we are very well positioned. We're even better positioned than what we thought a year ago. We'll share more at the Investor Day when we get together in a few weeks. But I really like how we're positioned around performance of chips and data center, making sure they can be done with the least amount of water and done in ways that are cost competitive for the customers that we serve, which is the typical Ecolab offer.

It will require investments. Obviously, we've demonstrated that in M&A, but also in technology. So we'll make sure we invest in order to fuel this growth in the future as well at the same time. And what's also important is to remain very agile because nobody knows exactly the shape of that curve in the years to come, and I want to make absolutely sure that, well, we are benefiting from the AI infrastructure build. But at the same time, we, most importantly, so driven by the recurring nature of both of those businesses.

So yes, the targets we've set out there for me are more achievable than ever. Let's talk more about how much better we can get when we get together in a few weeks.

The next question is from the line of Manav Patnaik with Barclays.

This is Ronan Kennedy on for Manav. You're now expecting '27 organic growth at the upper end of the 5% to 7% range. How should we think about the price/volume algorithm underpinning that assumption, both for the full year and then anything to be particularly mindful of in terms of first half and second half dynamics, particularly as I think surcharge pricing starts to lap at the half year mark and the move to structural. And then your expectations for volume contribution and build throughout the year.

Thank you, Ronan. So talking about '27, it's obviously a little bit early right now, but I want to give you a little bit of how I'm thinking about it and we'll go more in details when we get back together at the Investor Day, mid-November. But what was first most important to me, I made a commitment to you that we would get to this 5% to 7% organic growth, we would get to the 20% OI margin, and we would deliver this 12% to 15% earnings per share growth and all that, so in 2027. And I'm glad that commitment that we've made, we will be delivering it in '27.

And if the key question is how much better we can be? Well, this is a question I truly like. And that's why we get together in a few weeks, it's to talk about, well, how can '27, but most importantly, the years beyond '27 as well look like with all the investments, the new portfolio we have as well and how the world around us is turning into an opportunity as well for us.

So when I think today about '27, well, I think it's going to be a very strong year. It's going to be an even stronger year than what we have or will be delivering in '26. And the best way to think about it is, our underlying earnings growth is in this mid-teens type of growth. That's true today, if you strip out the cost of amortization and interest and then you have the Nalco amortization coming off as well in 2027. So it's to think about this mid-teens type of growth for earnings.

And then if you look at the first half of next year and the second half of next year, well, they will be different, mostly because of transaction cost and Nalco amortization, but the base of this mid-teens growth of earnings will remain fairly stable. And the way you can think about it is kind of mid-teens earnings growth for '27. You're going to have roughly 5 percentage point headwind in the first half and a 5 percentage point tailwind in the second half when you consider those one-time external factors in a way, but not directly related to the operating business.

When I think about the top line, it's also going to be -- and that's assuming obviously that the inflation of DPC is kind of leveling out at some point, that the first half of the year is going to be stronger in pricing and volume is going to be still in this 1% to 2%. And then the second half, volume is going to be faster, so kind of 2% to 3%, and pricing is going to be a bit lower because you'll be lapping against what we did in 2026 in the second half.

So underlying growth, it's reasonable to think it's strong top line, 1% to 2% volume, 5% to 6% pricing, and then the bottom line at this mid-teens type of growth. So thinking those 2 parts of the year, but underlying more or less stable, so at top and bottom line.

Our next question is from the line of Ashish Sabadra with RBC Capital Markets.

Really strong momentum in Life Sciences, and you talked about the new facility going live in China over the last month. How should we think about the tailwind from those? And then maybe just one quick question there. There were some negative headlines around one of the drug companies around mRNA vaccine. Have you seen any impact from a demand perspective?

Thank you, Ashish. So first, no negative news or impact from what you're describing to our business. So that's not going to impact us good or bad, generally. But when I think about Life Sciences, for me, it's probably one of the best stories in our company's history. And we know that's the intent, obviously, geared at pharma and especially biotech, is closely related to this tech revolution that we're experiencing right now, because it's an industry that's going to be one of the first and best beneficiaries of that tech revolution, because drug development itself gets a major boost. New drugs are going to be developed much quicker. That's all good news.

So as GHT or Global High-Tech keeps accelerating, I think it's going to help ultimately as well our Life Sciences business. It's a great business. It's been a hard business to build over the past few years, as we all know. But I really like where we are today, and as mentioned in my open, we're exactly where we wanted to be, just a few years later than expected. But overall, our investment thesis when we acquired Purolite is totally intact and, if anything, so we're ahead of that curve and I feel really good about that.

So why am I constructive and optimistic about this business? It's because we have the best technologies. We had to because we were the smallest in the industry, and our teams has done unbelievable work in innovation. We have the best team that's very agile as well, so to be very close to those customers, being the one that can really respond very quickly to their evolving needs. And at the same time, we're bringing water and contamination control together, which is an Ecolab play that we've played in many different industries, as you know, as well. And no one else can do that, which is pretty unique for our company.

So the 10% to 12% top line growth, I think, is a good kind of base in terms of top line trajectory for our future. When I think about the earnings, as I've said, my objective is to reach this 30% operating income margin in the next few years. Feel really good to getting towards that. It's mostly related to the pace of investments. The underlying margins are really strong in that business. It was especially strong in the third quarter because we're also lapping a maintenance period that we had in 2025, so a year ago. So we won't have that type of earnings growth continuing in the quarters to come. But solid top line growth in this 10% to 12%. So steady type of trajectory and really an operating margin that ends up at 30% in the next few years. So as we have promised and really happy with what the team is delivering here.

The next question is from the line of John McNulty with BMO Capital Markets.

So I wanted to dig into the High-Tech organic growth maybe a little bit deeper. Your 2Q level was a pretty strong 29%. This quarter, it was 63%. So you've kind of doubled even the 2Q levels. I guess in terms of what you would attribute that growth to, is it more the shift that we're seeing from data centers toward liquid cooling and some of the benefits that you're getting there? Or is it kind of early signs of now you have the CoolIT sales team and force and you're kind of integrating the kind of a total unified platform, and that's helping to grow some of the legacy business. I guess, can you help us to parse that out a little bit, just because it seems like it's been even faster than kind of the general data center growth that we've been seeing.

Thank you, John. It's a very good story, for sure. And no, there is no cross-sell yet between the different businesses. We're clearly doing it. We've integrated now those businesses as well. Maybe just for perspective, our data center business and CoolIT is now integrated, and by the way, led by the leader of CoolIT. And the same is true on microelectronics, where we've integrated with Ovivo, and the leader of Ovivo is the leader as well of our microelectronics business. A very good story from a setup perspective. But that happened in the last few weeks, there's not much cross-selling that has happened so far. That's going to come in the near, sort of the midterm future, which is really good. So no, the growth that we have today is not driven by cross-selling, but that's going to be a major opportunity, obviously, going forward.

Today, the growth that we're having, yes, the shift to direct-to-chip cooling is helping us because the technologies that we had prior to those acquisitions, well, are more in demand, because it's about fluid management, which means 3D TRASAR. It's about coolant, which is something that we master quite well as well. And it's about services as well because those tech companies who are looking for partners who can help them get the job done, especially in a steady-state manner, not just the buildup, but operating the data center afterwards and making sure that the cooling as a service is as well managed as it can be.

Just as a side note, when you think about it, you need 4 minutes of cooling disruption to kind of destroy the chips that you have in a data center. So the cooling is becoming super critical for those operators. So what we do is becoming as well more important. 63% is not going to be the steady-state growth that we're planning. Quarters are not all created equal. But I like a lot where we are now. So if you have a strong, steady legacy business on top of the new 2 acquisitions that we've made, it's a pretty good mix of things that we have here, which is why, as mentioned before, I feel really good with the commitments that we've made, and we'll work hard to exceed them.

Our next question comes from the line of David Begleiter with Deutsche Bank.

Christophe, on CoolIT, can you discuss your visibility in this business into next year in terms of sales growth? Obviously, you're going to double sales this year, which is a phenomenal performance. I suspect maybe it's a little bit less next year. But any further insight would be helpful in terms of '27 sales growth for CoolIT?

So thank you, David. We will share more when we get together. But the fact that our first lap together to the first year, obviously, since we closed in July, but if we look at the whole year in 2026, more than doubled the business of what we had in '25 on a pro forma basis, obviously. So it's a good way to start. Keeping in mind that, obviously, it was a smaller business back then, so the growth rates are obviously slowing down as well as you keep moving, even though you add significant dollars to the base business. So we feel really good about the trajectory.

If anything, we are ahead of what we had planned, a few months ago, which is a good sign so far. It's a shorter type cycle of business than microelectronics that needs a few years to build. Data centers are more quarters than years. So you have a bit less visibility than what you have in microelectronics, which, by the way, is going really well as well. So on the CoolIT data center piece, when I look a little bit about the next few quarters, I feel good, especially compared to what we had expected and committed.

So slightly ahead of what we had planned. We'll give you more visibility to that when we get together in the next few weeks. But so far, it looks really good for '27.

Our next question is from the line of Seth Weber with BNP Paribas.

Just following up on that question, can you talk about your expectations to whether you will need to add capacity for CDUs or cold plates? And can you just give us an idea of what your lead times look like on the CDUs?

Good question. It's something that we used to do. We had planned to build capacity for CDU and cold plate manufacturing and 3D TRASAR technology and coolant as well. So that was true a few months ago. It's even more true today because we apparently might need more capacity than what we had planned, kind of a good problem to have. Our base will remain in Calgary, where our business is based and will be based as well in the future. But in a typical Ecolab manner, we want to produce and supply as close to customers around the world. So we will keep expanding capacity not just at the center in Calgary, but as well as closer to our key customers around the world. So it's going to be serving a dual purpose, to getting more capacity to supply a high-growth business. But at the same time to get closer to our customers in a very Ecolab manner way to manage resilience as well as we can because we know the world is a bit complicated out there.

The next question is from the line of Laurence Alexander with Jefferies.

So just want to confirm in case there's any upside surprises on inflationary pressure next year that you see the 20% margin target is doable regardless of the environment?

Yes. So the world is a bit different than what we had expected, but I see no reason not to deliver the 20% in 2027. I feel really good about that. The path to get there is and was different than I had planned a year ago, but that's been true for the last 6 years. I'm not totally surprised that the world is not always following our plans or my plans.

So I feel really good about the 20% for next year. My focus is really what's next? Because once we've delivered the 20%, well, we're not going to stay at 20%. We have many of our businesses that are already north of 20%. My objective is to bring, obviously, to everybody north of that and getting closer to the next milestone, which we will share as well in the next few weeks. But feel good about the trajectory that we have and the annual increase that we had committed to a while ago. We'll stick to it. So there will be no major surprise for all of you. It's going to be a good story.

Our next question is from the line of Vincent Andrews with Morgan Stanley.

Maybe just to circle back on the Institutional business. Christophe, you made in your prepared remarks some comments about wanting to do better there. Obviously, tough environment with the foot traffic. But could you just give a little more detail on the new initiatives you want to put in place there? I thought I heard something along the lines of you wanted to do more cross-selling and just make sure that the customers are getting the full value that you're offering. So I don't know if that was more about getting more volume, price or mix, or just what it was that you were going to put in place over the next 12 months to improve the performance there?

So Vincent, it's a traditional place to be in one of our most traditional businesses, where we continuously need to reinvent ourselves. You remember, as we went through COVID, well, we had to refocus on labor automation for our customers because, well, they had lost most of their employees and they had a hard time to get them back. And when they got them back, it was at a higher salary. So not exactly the best mix for an industry that doesn't have a very high margin. That was really our point of focus, and it's worked really well. That's how we develop all those IQ solutions, AquaIQ, DishIQ and so on over the last few years. And it's worked well. It's driven very nice as well as the margin performance in that business.

So I like that business a lot. Our key opportunity in Institutional, in I&S, or Institutional & Services, up more broadly, serving retail, serving quick-serve as well at the same time, is to accelerate the growth in a market that is not growing. So we're getting together here as a team, we did it in the past few months and saying, okay, how do we double down on what we have in order to gain share in the market that's a volume play, obviously, but also a value/price play as we capture the benefits that we're generating for our customers or share of the benefit as we've always done, so the value/price approach here?

So the 3 things I mentioned. The first one is, we will rebalance sales and service in our team. On one hand, we will double our sales firepower in North America. That's the feet on the street, the people serving our customers and selling new customers. The second one, when I think about how we serve our customers in the various segments, restaurants, hotels, quick-serve, retail, we do it in a fragmented way today. We'll do that in an integrated way tomorrow, which allows us to get more efficiency in service, which allows us to deploy more of those efficiencies into the selling arm of our organization.

And the third is what you mentioned, it's to integrate the proposition to our customers, where we integrate hygiene, water, Pest Intelligence, audits that we provide to our customers, in a form that is much more integrated for them. We're still developing what that exactly means. But when you think about what we've done in Food & Beverage, well, we've demonstrated that it works really well, bringing hygiene and water together. So that's a little bit the direction that we're taking in Institutional as well, kind of using a playbook that has been really successful in the company in other types of businesses.

The next question is from the line of Patrick Cunningham with Citi.

Maybe just coming back to Global High-Tech. I think you already alluded to some of the differences in the sales cycle there. But in terms of initial equipment sale versus recurring margin profile and perhaps the amount of customization, how much does that differ between massive hyperscaler deployments, multi-tenant facilities and next-generation fabs?

So 2 different industries. Obviously, here, in both cases, we're trying to really evolve these businesses much more into a recurring type of business. Interestingly enough, the market evolution helps us do that. If I just unpack the 2.

First, with data centers, the chip generations are shifting to the next generation much quicker than they used to. A few years back was, a few years, you could use the same chip and then you change to the next generation. Now we're talking about less than a year and you get the next chip generation, which means that when you change the chips within an existing data center, well, you need to change the whole cooling system, being cold plates, being coolants, being control systems, being CDUs as well. And then you become a much more recurring business, which is much more an Ecolab type of business as well, which is the core reason why we like that business beyond the growth opportunity, obviously. It's a model that we're very used to it.

And that's why we integrate all those components, where it's cooling as a service, fully integrated. We're not the provider of individual pieces of equipment. We are a provider of cooling end-to-end committing to performance, committing to a cost and committing to reliability as well by providing the best service. So very naturally, this business becomes a much more Ecolab-like type of business.

When you shift to microelectronics, it's a bit similar actually. So you have a little bit of a larger part of infrastructure built at the beginning of a new fab. But once the fab is built, well, you need to provide all the 3D TRASAR technology, all the service that we have on site as well, adjusting to the new chip evolution/generation as well at the same time. And you get into a new recurring model as well at the same time.

But yes, the cycles of the 2 businesses are different. Data center is kind of month, quarters, and the fabs, microelectronics business, is more quarters and years. But I kind of like as well to that balance, which provides stability and predictability in what we do.

Our next question is from the line of Eric Boyes with Evercore ISI.

You highlighted that Ecolab Digital grew 34%. How much of that acceleration is software versus kind of enabling hardware? And maybe how does that mix affect kind of recurring revenue growth and margins going forward?

So good story in Digital. Honestly, I think that we could do much better going forward. Interestingly enough, it's more software than hardware today. I think that it will have to be more balanced going forward. But what I really like is that our Digital business has been built on our industrial businesses with 3D TRASAR, as you know, and in other businesses, more legacy Ecolab, we had much less. Today, the highest growth we have is in Institutional & Services and in Pest Intelligence as well, which is a very good news because we rebalance across all the various segments that we have.

And when I think about it today, we connect less than 100,000 locations out there with all the services that we can provide. And when you know that we have close to 3 million locations around the world, that shows the type of runway that we have ahead of us. So it will be a combination of hardware, but with recurring rent or lease, as we would do in dish machines in restaurants, for instance, and software and data consumption as well at the same time. Where it's exactly going to land in terms of share, I don't know, but it will be pretty equal going forward.

The next question is from the line of John Roberts from Mizuho.

I think of Pest Elimination as the leading indicator for your Digital deployment. When should we expect revenues to accelerate there and for margins to start improving?

So first, we've had some acceleration in Pest Elimination, from 7% in the second quarter to 8% in the third quarter. So I like what I'm seeing here. It's early on that journey. We've deployed 800,000 devices out there, as mentioned in my open. Well, that's the beginning of the story. It's not the end of the story, and we have millions of devices out there in tens of thousands of locations that we need to deploy. So this will drive growth, ultimately, and it will drive much better margins because the model is going to change over time.

As I've shared with you in past conferences or at Investor Day as well, today, well, 95% of the devices or the traps that we check are empty and 5% have activity, as we call it. Well, with the connection to the cloud, we will go only to the devices that have an activity, which means we will have a much better operating performance, which will help us serve the customer better, hence, the 94% pest-free location to 99% pest-free location. And at the same time, that will unlock a lot of margin that we can reinvest in sales, in innovation and obviously, so in bottom line margin as well.

So I expect to take it 1 year or 2 to get fully deployed around the world with Pest Intelligence that will require the upfront investments that we are doing right now. But I feel really good about the top line accelerating and the margin expectations to rise as well because of the model evolution that we're making. But it's going to take 1 year or 2 to get to the steady place.

The next question is from the line of Jeff Zekauskas with JPMorgan.

I think you said your organic sales growth in your Global High-Tech business was 63%. And maybe the base is $100 million. So that would be $63 million in growth, which is 1.5% on your previous year's consolidated sales. And in your Global Life Sciences business, it looks like you grew -- I don't know, maybe you grew your volume 10%, which is maybe another 70 basis points. So it seems that all of the volume growth that Ecolab achieved this quarter came from the Global High-Tech group and the Life Sciences group. Is that fair? And is that a function of some contraction in the Institutional business and a little bit better growth in water in volume terms?

I'm not sure I totally followed all your math, Jeff, but I'll take the time to do it. But the bottom line is that, yes, in Institutional, you have a slight volume decline, which is not totally surprising in a market that is in decline. But that's why I like the overall view on I&S, in Institutional & Services, so to get to the 3%. All the other businesses are actually saw having positive volume growth and pricing. So it's been quite broad-based, the volume growth, which is what I really like. That's why I mentioned it as well in my open. It's not 1 or 2 businesses being High-Tech and/or Life Sciences. The other one in water are doing really well. F&B is doing well as well.

And on top of it, one thing that we need to mention is -- something I'm not spending too much time explaining but we spent quite a bit of time managing, is the impact of the Middle East. That is roughly 1 point as well of growth, which is obviously a headwind in what we deliver. So when you look at it, overall, the 2% volume growth, net of what's happening in the Middle East, is pretty good, especially the fact that it's so broad-based with one exception of being in Institutional that's slightly declining.

The next question is from the line of Matthew DeYoe with Bank of America.

I wanted to just ask, with CoolIT closed, what do you think a reasonable revenue per gigawatt hour of compute installed capture rate do you think is targetable for the pro forma business? And we've seen a few reports now about poor coolant management at some of your competitors. Does this too small of a sample size? Does this just strengthen your pitch? Or do you think ultimately there's an opportunity to extract more value from TRASAR deployment? Because it feels like it's a pretty dynamic backdrop, obviously, with a lot of growth and yield management, could be more than maybe just a token revenue opportunity. So how do you think about pricing that effectively?

So there's a few elements in your question, Matt. First, the dollar per megawatt installed, it's still something that we're trying to figure out as a total number when we bring the whole Ecolab for data centers. So I don't have a final number for you. But as I mentioned when we announced CoolIT, and closed CoolIT, by the way. So CoolIT is multiplying by 3 to 5x the dollar potential we had as a legacy business. But that was directional, so the 3 to 5x, I want to have a number that's much more solid. And we'll keep working on it and share it with you once we have something that is more fine-tuned. As mentioned, we're early on that journey, the 3 months that we've been together with CoolIT. So I don't have the most detailed number that I'd like to have, but we will have it.

Now back to the other question of the reliability of the service. I can't talk about what our competition is doing out there. But almost all, if not all, of our competitors are providing or selling individual piece of equipment or a coolant, as you mentioned it as well, and someone has to put it together. Someone has to make sure that it works well together. And someone has to maintain it, because things obviously are evolving on a day-to-day basis in that industry.

So we position ourselves in a very Ecolab manner where we say, we're not a provider of individual piece of equipment. We are a provider of end-to-end solutions in cooling when we talk about data center today. And that's very different. And that's why we brought the whole 3D TRASAR technology, not just for the coolant, but also for the CDU. We'll think about how does it connect the cold plate, everything in between as well. And ultimately, so to be in a place where we can commit to performance, the cost and an environmental impact, which is the way Ecolab has always been selling as well to customers.

We're doing it the same in that industry today. It's an industry that's not used to such an approach, but we've experienced that before in other industries. But that is showing a very high interest in our approach here because it's removing one of their concerns because we will be providing, well, a cooling performance that's integrated not just short term, but long term as well, at a predictable cost, which is exactly what they're looking for. So we're the only one doing it that way, and I think that's a huge competitive advantage we have here because it's a huge moat as well at the same time.

Our next question is from the line of Josh Spector with UBS.

I wanted to ask 2 things kind of together. One just on pricing. I think in prior quarters, you talked about getting to a 5% to 6% run rate. I'm wondering, do you still see pricing accelerating into the fourth quarter? Because your top line guidance is pretty similar. And then related with that, how do you see the incremental margins in water developing? You had very strong volume growth or organic growth, but the incrementals were kind of below our expectations. Is there a catch-up in the fourth quarter linked with pricing?

So 2 different questions, they're related, obviously, Josh. First, when I think about the volume and price, so very short term, Q3, Q4. As I said, it's kind of volume 1% to 2% net of Middle East, obviously. And then this pricing, it's 5% to 6%. I think Q4 is going to be kind of similar to what we've seen in Q3. At the same time, we're working on operational performance or productivity to take a different term as well at the same time. So I like how we're managing margin as an organization. As I mentioned a few months ago as we published our second quarter, well, it took us in the past 2 years to get our margins back to where they used to be when inflation was hitting out there. It was the first year to capture the dollar, and then second year to capture the margin back.

Well, we've done that in 1 quarter, in the second quarter. We've done it again in the third quarter in an inflationary environment that was higher than what we had in Q2. I think it's going to be slightly higher in Q4 as well. But all in all, it's going to be a very similar story than what we've seen in Q3.

Now if I look at the water margin, it's been a nice improvement in Q3. It's going to keep improving. But as we know, it's a business that's more impacted by DPC fluctuations than other businesses like High-Tech that has almost no DPC because there's almost no chemistry in that business, or Life Sciences or Pest Intelligence. Every business is a little bit different. Water is more impacted by it, but has demonstrated it can manage that very well short term.

So it's going to keep improving. Nobody knows exactly where the market is going from an inflation perspective. So we'll adjust. If it keeps going higher, we will manage it. My assumption right now is that it's at a high level today, it's going to stay at that high level till the end of next year. That's the base assumption I'm taking here. And we know how to manage it. We've demonstrated it in Q2. We've demonstrated in Q3. We keep demonstrating that in the next few quarters. And if it goes up and down, we'll adjust as well accordingly. And we know that at some point, well, DPC is going to go down, and we're going to maintain our value/price because it's anchored on the performance that we're delivering to customers, and that's going to help us improve our base margin for all the businesses as we've demonstrated all the time as well at the same time.

So kind of 3 advantages here. One is that we can control our margins within a quarter. Second, we can improve our net margin after the cycle, as we've demonstrated as well in the past. And third, it's going to help earnings obviously at the moment that the cycle is going to go the other way. Those are all positive news ultimately for us and for investors.

The next question is from the line of Mike Harrison with Seaport Research Partners.

I wanted to see if we could revisit a couple of the assumptions that you've told us to think about in our models. First of all, the CoolIT $0.20 per quarter EPS headwind, is that more or less where it was in the third quarter? And how should we think about that $0.20 of headwind tracking over time?

And then the second piece is the Life Sciences margin. I think you told us to assume high teens margin and you did about 23%. So should we update our view there and assume that maybe instead of high teens, it's low 20s in the near term?

Great questions, Mike, and our CFO, Scott, was dying to get the question. So I'm just going to pass it to him for this one.

Yes. I'll give Christophe a break, Mike. So as we said in the release, if you look at the impact of CoolIT, the interest amortization, it was about a 10% headwind in Q3. So Q4 will be a little bit more about 12% because you have an extra month because of the lag of the international business. So you'll have about a 12% drag in Q4. And then as you think going forward, as Christophe talked for next year, his math there was that, hey, this EPS for the full year at this mid-teens level, but because of the now -- of the CoolIT amortization interest annualization in the first half, partially offset by the Nalco amortization, you have this minus 5% and then this plus 5% in the second half. So that's how to think about it through 2027.

And then as you think about the Life Sciences, as Christophe talked about, that business is doing really well. The margins are really strong, especially given the growth in the bioprocessing businesses, but all those businesses performing very well. Our expectation on this business right now is because we're continuing to invest in this business. So the underlying margins are higher more similar to what you saw in Q3. But expect Q4 margins to be in this mid-teens -- mid- to high teens level.

This business is going to be a 30% margin business down the road, and not so many years down the road as we've committed. I know that it's not been an easy buildup over the last few years. And I'm really pleased to see that we are back to the trajectory that we had planned initially in our investment thesis. So ultimately that we can return to shareholders what we promised when we acquired Purolite, and I will not budge from that.

Our next question is from the line of Andrew Wittmann with Baird.

I just wanted to have you expand a little bit on some of the comments you made earlier on the High-Tech business. I think Christophe, you're talking, obviously, 63% organic growth. That was good. You mentioned that going forward, don't expect 63%. I think you said not all quarters are created equally, and that makes sense. As I understand it, some of this business is that -- you mentioned it as services, where you're doing like professional services, consulting, helping your customers manage the heat, manage the water. It's not all just product sales like I think a lot of people assume. Is that a lumpier part of the business, those consulting services? Are they more in demand maybe when you're opening a new data center than they would be on an O&M basis, if you were to say? I'm just kind of curious as to what can drive a quarter like this and maybe what was unusual about it? And if you could just talk about how services might play into that.

So a few things, Andy. When we talk about consulting, there's nothing new. That's not the way we positioned it. Obviously, when we do a plant assessment in a brewery that we've done for a very long time, I've been 20 years in the company, we did it when I started here, is really to understand what we've got. So how much water is being used, how much energy is being used, how much waste is created, what the quality of the food and so on, really to understand what's the starting base, how does it compare to the best plants out there and developing a plan for the customers to reach the next level of performance. We did the same in hotels. We did the same in hospitals. We do the same in every industry that we serve. So that's the very traditional approach to customers in the company, as you know. You've been following us for a very long time.

And data centers are not different. It's just that they are usually new when we serve them. It's not an existing data center. There's some of those, obviously, but for the most part, those are new data centers. So we sit together with the builder, with the developer, being a co-locator or being a high-tech hyperscaler company, a little bit of a different approach. But in the end, it's more or less the same thing, where we get together and try to understand what are they trying to accomplish. What can we provide in order to get the right heat extraction at the right cost, at the right level of reliability, while minimizing the impact on the environment. And in the case of water, to get to water-neutral, I call it water-neutral because it's not that you have no water in the system, it's just a circular system that you have within the data center.

So that's kind of the consulting piece that you're talking about, which, by the way, is part of the overall program. So it's not a big driver of revenue. Afterwards, it's an evolving proposition. Today, it's being sold a little bit the old-fashioned way, where it's 3D TRASAR technologies for cooling towers or coolant depending on the technology that's being used, the coolant that's based on 3D TRASAR technology and what we do for CDUs and for cold plates and every technology that you have in between.

But ultimately, it's to sell that cooling as a service, ideally that we can charge much more like a subscription versus an individual piece-by-piece type of equipment. But that's a journey that we need to get through, as we've done in other businesses, and I feel really good for the path that we're on, on this one.

Now to your point of the higher growth in some quarters, well, it depends on the deliveries that we have since we're still on that journey of making sure that it gets invoiced as an integrated proposition. Well, if you have more data centers that are getting started to operate in 1 quarter, you get higher sales. And if you have a little bit less the next quarter, you're going to have less of those sales as well. But the 30% overall Global High-Tech trajectory of growth that we've talked about, this is the baseline as I have expressed over the last 12 months. And that's the baseline. So I think that from here, it's just going to get better when we take year after year. And I don't really care if every quarter it's the same or not because they will be different for the reasons I just mentioned.

Our next question is from the line of Jason Haas with Wells Fargo.

This is Keegan Antico on for Jason. On the pricing discussions you're beginning to have for 2027, can you just outline how those are going? And if clients are generally receptive for additional price increases, obviously, alongside the surcharge. Are you seeing any pushback that could lead you to be more at the lower end of the 2% to 3% annual range, obviously, outside of the surcharge?

Thanks, Keegan. The 2% to 3% that's in steady state. Honestly, I'm not totally sure when the steady state is going to come back. Right now, we're much more in this 5% to 6%, as mentioned a little bit earlier. That was true for the third quarter, and that's going to be true for the fourth quarter, and it's probably going to be true for the first half of next year and probably even a little bit more than that as well.

When it's going to come back to the 2% to 3%? I don't know, and I don't really care, honestly, here. We'll adjust as we need to while providing incremental value to our customers in order to make sure that we can get the value price that we deserve while doing it the right way for our customers that, net-net, they get a positive outcome of the financial equation that they have set together with us.

Do they like pricing? No, they would prefer, obviously, having 100% of the upside without having to pay for it. Well, that's not exactly the way life works. But at the end of the day, when I talk to customers, I'm really pleased with what I'm hearing in the sense of saying, you guys are very high touch in what we're doing, being in Life Sciences, in Food & Beverage, in the restaurants, in High-Tech, wherever that is, you're not a big share of our spend, usually a few percentage points. So we're okay. We need to pay more premium for a service that ultimately is not only helping us keep operating, but driving better operational performance in our operations as well at the same time. And that's why our value/price approach has been so steady, sticky and so reliable for the past few years, and nothing is going to change in the years to come.

Our next question is from the line of Kevin McCarthy with Vertical Research Partners.

Christophe, in listening to your remarks today, you seem quite pleased with all of the significant acquisitions that you've done in recent years: Purolite, Ovivo, CoolIT. And so I'm tempted to ask, as you look at M&A opportunities in the private market today, are there additional high-growth, high-margin properties that you think might fit quite well under the GHT umbrella? Or should we expect deleveraging to be squarely in focus over the next, call it, a year or so as you digest CoolIT?

It's the latter, Kevin. It's really -- so it's 2 things. First of all, it's really to integrate those 2 companies, Ovivo and CoolIT, extremely well. This is something that we've done over and over again over the years. We're really good at it. But we need absolutely to have the right focus, dedication, resourcing in order to make sure that it happens as we have planned and committed. So this is priority one, making sure that Ovivo, CoolIT are perfectly well integrated, that we have those 2 businesses, data centers and microelectronics really keeping growing and accelerating as we've discussed today and over the past few calls. This is priority one.

And obviously, that's leading the deleveraging by getting so closer to this 2x that we talked about. This is my 1b priority that I have in front of me.

Now to your question of opportunities out there in our key businesses, we keep nurturing them. We're very active on the market, building those relationships, understanding what's out there, what are the good, what are the ones that are less good. We've been really good at it for a very long time. That's how we ended up with those 2, by the way, as well. So I like the pipeline, but there's nothing imminent that's going to happen because I'm going to focus on the 2 priorities I mentioned before.

Our final question is from the line of Scott Schneeberger with Oppenheimer.

Christophe, for the past few quarters, Heavy Water and Paper have been areas of softness, but both inflected to revenue growth, organic revenue growth in the quarter. So kudos there. How sustainable is that looking? And just curious, outside of Middle East, are there any other areas of the business now that you would cite under pressure? Or are you looking pretty good across the portfolio?

I feel pretty good, but I'm always a little bit paranoiac. I'm paid for that. This is my role. It's to thinking ahead, to look around the corners, to be ready for things that we didn't plan for, and I've had plenty of practice in the last 6 years. I don't know if it's a good thing or an unfortunate thing. I really like it, and we've done really well as a company navigating a difficult environment while delivering exceptional performance.

So what I like the most in our company today is really this breadth of performance. We have a very strong portfolio, some are growing faster, much faster than others, but we have no business that's really in a troubled situation. All of them have upside potential. That can be true in High-Tech, that can be true in Institutional, as we talked before, which is the magic of this company that I really like because, ultimately, you have a real strong portfolio. You have a company with a lot of key growth opportunities in front of us, like High-Tech, like Life Sciences, like Pest Intelligence, but also in our core businesses like Food & Beverage, bringing hygiene and water together. We talked about Institutional as well at the same time.

And the third component that I really like is the fact that we're less facing risk of market disruptions out there being in tech areas or in different areas because of the very well-balanced portfolio that we have, our ability as a team as well to react to external factors, being inflation, being supply disruption. We've demonstrated we can do that.

So ultimately, we are exactly in the place I wanted to be. And that's why I'm talking about this inflection point as a company. We have strong, consistent base performance as a company. We have very good growth opportunities and even bigger than we thought in front of us. And third, we are very resilient. We know how to manage things that nobody planned for, including us. And we deliver net performance that keep getting better. And that's why I feel that '27 is going to be an even better year than 2026. And our future is going to be at a very different level of performance than what we've seen in the past. A pretty good story.

Great. That wraps up our third quarter conference call. This conference call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation. I hope everyone has a great rest of your day.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Ecolab Second Quarter 2026 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations for Ecolab. Thank you. Mr. Hedberg, you may begin.

Thank you, and hello, everyone. Welcome to Ecolab's second quarter conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO; and Scott Kirkland, our CFO. A discussion of our results, along with our earnings release and the slides referencing the quarter results are available on Ecolab's website at ecolab.com/investor.

Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental 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 in the Risk Factors section in our most recent Form 10-K and in 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 so much, Andy, and welcome to everyone joining us today. Well, we delivered another strong quarter with accelerating performance across our business. Adjusted EPS grew 11% driven by accelerating organic sales growth of 5%, stable organic gross margin and continued strong productivity. This performance reflects the strength of our growth model and, most importantly, the power of our global team to deliver for our customers every day in any environment.

Last quarter, we talked about the second quarter being a short transition period. We entered the quarter with [ commodity ] costs increasing and the expectation that they would remain high through the year. We started the quarter with very little surcharge pricing, but expected benefit from the surcharge would progressively build through the quarter. That's exactly what happened. We moved quickly to implement the global energy surcharge backed by incremental customer value, as we always do. As a result, pricing strengthened to 4% in the second quarter, and we expect the second half to be in our targeted 5% to 6% range. This is allowing us to offset the impact of rising commodity costs on our margins and EPS this year.

Our global team executed extremely well through this transition period. In just 1 quarter, we absorbed increasing commodity costs, continued to win new business, grew volumes, stabilized organic gross margin and delivered double-digit EPS growth. Importantly, momentum continued to strengthen across the portfolio. Volumes grew 1% despite a nearly 1% headwind from customer operations disrupted by conflict in the Middle East. Excluding this, underlying volume growth accelerated from the first quarter.

Growth in our core businesses strengthened with Food & Beverage accelerating to 7% growth, Institutional & Specialty growing 4% and growth in Light Water improving, also buoyed by strong new business from our One Ecolab growth initiative. At the same time, performance in Heavy Water and Paper improved.

Our growth [indiscernible] continued to show strong momentum, delivering strong double-digit growth. Life Sciences accelerated to 15% growth, driven by very strong share gains in bioprocessing and pharma and personal care and improved performance in purification. We have been investing in [ Thailand ] capabilities, capacity and breakthrough innovation for years in this high-growth business, and those investments now are clearly paying off.

In value processing, we continue to take market share with the innovative resin technologies we've launched over the last few years. As a result, our business continues to rapidly scale as customers move their drugs into commercial manufacturing.

Life Sciences margin performance was exceptional this quarter, delivering a mid-20% operating income margin, giving a strong indication of the high-margin profile this business has. During the quarter, we benefited from very strong sales growth and a spike in bioprocessing. While underlying operating income margin is expected to remain in the mid-20s, reported margin in the third quarter is expected to be in the high teens as we continue to invest in this high-growth, high-margin business.

Ecolab Digital grew 27%, reflecting strong adoption of software and connected solutions that help customers optimize performance in real time. Recent launches of solutions like DishIQ, AquaIQ, KitchenIQ and CIP IQ are performing very well and are expected to continue to help drive long-term growth of more than 20% for Eco Digital.

Pest Elimination also delivered a strong quarter with 7% growth, driven by share gain from our One Ecolab growth initiative and continued expansion of our test intelligence platform. We've deployed nearly 800,000 connected devices at customer sites and continue to expect to reach 1 million connected devices by year-end. With the unique insights from Pest Intelligence, we aim to deliver nearly 99% pest-free environments for customers on the platform.

And growth in Global High-Tech accelerated to 29%, reflecting very strong demand across both microelectronics and data centers driven by the rapid build-out of AI infrastructure. We further strengthened our position in this market with the acquisition of CoolIT Systems which closed on July 2. CoolIT is off to a very strong start with year-to-date sales growth prior to acquisition of more than 100%. With this addition, Global High-Tech is now approaching $1.5 billion in sales, annualized sales, up from approximately $150 million in 2021. This reflects the strength of our strategy and sustained investments to capture the long-term opportunity in advanced computing.

At the heart of AI is water. Water is required to produce, to power and to cool chips. We are now the only company with integrated solutions across that value chain. And with all the talks around data centers and AI infrastructure, the world truly needs companies that can help build data centers the right way. We're one of them, and we're committed to lead that journey.

Together with Ovivo and CoolIT, our Global High-Tech platform is expected to grow more than 25% annually, reaching $4 billion in sales by 2030 with an operating income margin of 25%. These targets represent an increase from our previous expectations of more than 20% growth and 20% OI margin, reflecting the acceleration we're seeing in this business.

Global High-Tech is now our largest growth engine. On a pro forma basis, including Ovivo and CoolIT, our sales growth would have been approximately 7% in the second quarter, demonstrating already the 2 points of incremental growth these businesses will add to the overall company. The rapid growth of Global High-Tech and our other growth engines continues to shift Ecolab's portfolio to higher growth, higher-margin businesses. In 2025, our core businesses represented about 70% of our sales, growing low single digits with OI margins just above 20%. Our growth engines were approximately 15% of sales, growing low double digits with OI margins of nearly 20%. And our underperforming businesses represented about 15% of sales with low single-digit sales declines NOI margins in the mid-teens.

In 2026, performance has strengthened across all 3 groups. Our core businesses are now growing mid-single digits with OI margins getting further above 20%. Our growth engines are growing in the low teens, with OI margin up nearly 20% as we continue to invest heavily behind these attractive high-growth opportunities. At the same time, our underperforming businesses have stabilized while maintaining operating income margins in the mid-teens.

What is the more encouraging is that all parts of the portfolio are moving in the right direction. Our core is performing well, our growth engines are scaling faster and our underperforming businesses are improving. As a result, the mix of our business continues to shift towards faster-growing, higher-margin markets.

Looking ahead to 2027, we expect this trend to accelerate further. Our core businesses should continue to deliver strong performance, while our growth engines, which are expected to approach 25% of Ecolab sales, continue to compound at double-digit rates and play an increasingly important role in driving growth and margin expansion for Ecolab.

That future is already taking shape today. We're preparing to introduce a breakthrough innovation at SuperCompute, a new integrated end-to-end cooling platform combining CoolIT's liquid cooling technologies with Ecolab's 3D TRASAR digital capabilities to optimize water, power and compute performance at scale. We will be hosting an Investor Day at SuperCompute in Chicago on November 17, where we will share more about the growth opportunities ahead and how they will strengthen our long-term performance.

As we move into the second half, we expect continued momentum. Pricing is anticipated to strengthen to the 5% to 6% range as energy surcharge benefits are fully realized. Volumes are expected to continue to grow as strong new business wins more than offset ongoing disruption in the Middle East. As a result, we expect organic sales growth of 6% to 7%, helping drive an adjusted operating income margin of 19% in the second half, keeping us on track to deliver our 20% OI margin next year.

With this momentum, we're increasing our outlook for 2026, where we now expect EPS in the range of to $8.05 to $8.25, rising 7% to 10% versus last year. This range reflects strong underlying performance and a short-term impact from noncash amortization and financing costs from the CoolIT acquisition. Beyond this year, we continue to expect adjusted EPS growth, including CoolIT, to accelerate to a strong 12% to 15% growth trajectory.

In closing, our business continues to strengthen with the core improving and growth engine scaling. With this, our portfolio is shifting faster toward higher growth, higher-margin end markets. Just as importantly, our team continues to execute at a very high level to deliver for our customers every single day. We've never been better positioned to deliver long-term organic sales growth of 5% to 7%, expand operating income margins well beyond 20% and continue strengthening our EPS growth algorithm.

So thank you for your continued trust and investment in Ecolab. I'll now turn it back to Andy for Q&A.

Thanks, Christophe. That wraps up our promo remarks. Operator, would you please begin the question-and-answer period? .

[Operator Instructions] Our first question will come from the line of Tim Mulrooney with William Blair.

And thank you for, Christophe, for reaffirming the 20% operating margin target that you have for 2027. I was there in my model, but then when you acquired CoolIT, there's so much extra amortization there that I actually came off that margin target. But now, you reaffirmed it today. So can you just help bridge that gap for us? Because there's a lot of extra incremental amortization coming through on the CoolIT side. So I just want to make sure I heard you right. You are reaffirming the 20% operating margin target for 2027? And can you help us understand how you plan to offset those incremental expenses flowing through?

Yes, Tim. You understood that right. So we've been very consistent, by the way, on making sure that we stay on our commitment of delivering 20% operating income in 2027. So that remains unchanged. I'll ask as well, Scott, to add some color to it in a second.

But before we get there, our expectation, and everything that we do, is ultimately to drive our commitment of 5% to 7% organic sales growth to 20% OI margin and a strong 12% to 15% earnings per share growth. And ultimately, our job is to make sure that everything we're doing, well, not only leads us to that, but leads us to beyond that. And that's especially true for the 20% OI in 2027. And I spent, together with the team, a lot of time as well to think how do we get beyond the 20% after 2027. And the vast majority of our businesses today are already either close to 20% or beyond 20%. So we know well how to do that. The second half of this year, the adjusted OI margins will be at 19% as well. So all leading nicely towards the 2027 story.

It's going to be important to keep in mind that the first half and second half of '27 will be a tale of 2 stories because of the lapping, obviously, of the CoolIT acquisition that closed early July or 12 months, mid next year and then the second half of '27. In other words, the second half of '27, we'll be even stronger. But as mentioned before, my objective is really to not only deliver on those commitments beyond '26, but really making sure that we get beyond the 20%, that we can strengthen this 5% to 7% on the organic and also on the earnings per share to 12% to 15%, well, I guess that's going to get stronger as well over time. But Scott, do you want to add any color to that?

Yes. The only thing, Tim, that I would add is that next year, as you might remember, the Nalco amortization falls off. And so that's also as part of, when you said how do you reconcile that, that we do get the benefit of annualizing the CoolIT amortization, but offset by the Nalco amortization.

Our next question comes from the line of Manav Patnaik with Barclays.

Christophe, I was just hoping within High-Tech, could you just help us with the current mix of the business between data centers and microelectronics or however you want to break it out? And kind of just some more color on your confidence in getting to that $4 billion target, I guess?

Yes, Manav. So high level, obviously, since we don't go much in details for the size of the business right now, but it's roughly $1.5 billion annualized sales. Obviously, so right now, when you have our legacy business, microelectronics and data centers within legacy, and then CoolIT, and then Ovivo, which is in microelectronics. And each of them is roughly $0.5 billion today of annualized sales. That's how you get to the $1.5 billion. And for perspective, we were $150 million just a few years back. So this is a platform that we've built over the last few years extremely rapidly.

And the very good news is that all 3 elements are growing very nicely. You've heard about the legacy business growing 29%. Ovivo expected to deliver mid-teens for this year, and CoolIT being north of 100%. So you add it all up, so you get to a very good place. So our trajectory of 25% growth for the next few years leads you to the $4 billion by 2030 and feel quite confident that that's very realistic.

Our next question comes from the line of Ashish Sabadra with RBC Capital Markets.

Just wanted to follow up on the Global High-Tech. So you mentioned the integrated end-to-end cooling platform that you plan to launch at the SuperCompute. I was just wondering if you could help or discuss how that can help drive more cross-selling opportunity across all the different Global High-Tech offerings that you have.

Well, generally, as we mentioned, when we did the acquisition of CoolIT, adding CoolIT to the data center multiplies between 3x and 5x the sales opportunity that we have compared to legacy Ecolab in the data center. So much bigger, obviously, than what we had before. So that's the penetration of solutions opportunity.

But the most interesting part is when you put all the pieces together, from a CDU integrating, 3D TRASAR control technology to 3D TRASAR coolant to cold plates that are integrated in that system, and ultimately, an end-to-end optimization system to reduce the power used to cool while using 0 net incremental water, because everything is within the system, is the biggest upside obviously so for our customers. And with everything that's happening right now in the AI infrastructure and data center pushback in the communities, well, as mentioned, the world needs a company can help this industry scale part while doing it the right way both in terms of cost performance and in terms of impact on communities and natural resources.

So I think that we're very uniquely placed here to do that. And it took us just 2 weeks basically to get the 3D TRASAR technology embedded in the next generation of the CDU for CoolIT. It's a good example of how the 2 teams have come together. So it's going to be really good to share with all of you and with customers obviously at SuperCompute how everything comes together.

And last thing I'd say, we really look at it from an ecosystem perspective. We will not be owning everything. We don't want to get into a lot of hardware, obviously, out there. But we want to be the platform that ultimately all the other elements come around in order to truly maximize cooling, minimize the water and energy usage and maximize ultimately the uptime and performance of the data center as well. So a typical Ecolab story where the outcome of the operations is the main objective we have.

Our next question comes from the line of John McNulty with BMO Capital Markets.

Congrats on some really solid results. Just wanted to ask or dig a little bit deeper on the Life Sciences side of the business. And clearly, there's a lot of interest on the bioprocessing side. We've seen a number of drugs kind of hitting the market or starting to hit the market. At the same time, like you've outpaced kind of the other major competitor in the space by a decent amount. So I guess, can you help us to think about how much of it is just the end market growth, how much of it is share gain, and how much of it may be just some of the capacity unlock that you've been working on well?

John, I'm very pleased with the Life Sciences team. It's been a few years in the making. As you know, we started that business in 2017, it was less than $100 million. And today, it's close to $1 billion, so 10x the size of where it was back then. We made the acquisition of Purolite in 2021. And the COVID implications on the market have been a little bit difficult to manage, for all industry, by the way.

But when I look back and think about what the team has done in how to build capacity, capabilities, relationship with customers, trust, that we can really be the best partner in the future, well, I'm super pleased with what the team has done. We were not on the trajectory we had initially planned, as you know, since the acquisition of Purolite, but we have always been growing when the rest of the industry was not. So not in line with what we had expected, but better at competition.

The very good news right now, John, is that, well, we're not only our forming the market and competition, but we're backing on with our return expectations that we had set early in that process. So really happy with the trajectory, the returns, the work that's been done by the team.

And ultimately, the most important element is to listen to our customers, that are really pleased with the agility of the team, the innovation strength of this team, being very entrepreneurial, need to be as close to them what they need short term in order to deliver the life-saving drugs that they're trying to bring to the market. We knew we would not become in the short or medium term the largest life science player in the industry. But our objective is to be the best-performing and the best partner of our customers, I guess that we're pretty close to the ambition right now. So early, but good news for the future.

Our next question comes from the line of David Begleiter with Deutsche Bank.

Christophe, on CoolIT, when the business was acquired, you mentioned perhaps a 30% type annual growth rate to model going forward. Given the 100% plus growth rate in the first half of the year, should we update our models to a higher growth rate over the next few years here for CoolIT?

So really like this acquisition. That's one of those -- one of many where obviously before you embark on such a journey, I had my set of sleepless nights. And when I look back, well, I'm really saying, I'm glad we did it. Because this is the best technology in the market. It's the best performing business as well, so in direct shipping liquid cooling technology. And I've been so impressed with the team that I've met at CoolIT and how these 2 teams are coming together.

Maybe it's been 2 or 3 weeks that we're together. It's very early. And we're getting to know each other, starting to work together with customers. So it's so early, that we're not in a position to change anything. But if I look at the trajectories, well, they're better than what we had told. That's the good news. But when we did our plans for the next 4, 5, 10 years, a lot can happen, and that's why we've picked a trajectory of 30%, which I think is the right one.

True that the first half of this year for CoolIT has been way better than that. The acceptance by customers of the latest technologies of CoolIT is extremely good, and even better when we come together with Ecolab. So that's an even better sign.

And that's the reason why we'd like to be together with you in November at SuperCompute, is basically we will have sort of 4, 5 months of working together with CoolIT, we better understand how it works, what's to like, what we need to work on, what's the new type of trajectory. So too early to change right now, but give us the time in the next few months to really get the teams together, making it really well work together with the customers. And in November, we will sit together to share with you how do we see '27 and the years beyond.

Our next question comes from the line of Chris Parkinson with Wolfe Research.

Chris, I wanted to just circle back to Life Sciences just given the trajectory there and all the work you've been doing with your team in King of Prussia. And just a few things that I'd like to break down. First of all, just kind of how you see the trajectory of some of the biopharma applications versus some of the purification and resins, how much this is attributable to basically the beginning of the ramps in both King of Prussia and Wales? And then also correct me if I'm wrong, but a lot of that business initially started off in a larger scale in Europe, and it seems like you've been making a lot of investments [ and leeway ] with partners in the United States. So I'd love to kind of just drill down to just anything that you can do to basically increase the probability of the Street sustaining this type of growth in trajectory, especially relative to the '27 margin targets?

So it's been a few quarters now that Life Science has been on the high end of the expected performance, which is a very good sign, and I've been very open with you at the early years of that journey where we're growing, growing faster than the industry, but we were not growing as fast as we were expecting or ours expecting. But that's time behind us, and it gave us the opportunity to build those capabilities and these capacities that we needed around the world.

We just opened our latest, one of the biggest plants in China a few weeks ago. That's going to give us a big footprint in a market that's going really well for life science, the industry and for us. By the way, expanding as well around Asia. In Europe, the core of Purolite came from Europe as well, both Eastern Europe and Wales, as you mentioned, for bioprocessing, and capacity as well in North America that we've kept building and that we will keep building.

It's always been part of our strategy to be in each of the 3 continents: North America, Europe and Asia. And we're almost there. And it's never going to be enough because it's growing fast. That's a good problem to have as well. We have great teams as well that we had to build bioprocessing, is the fastest-growing one, it is a very interesting, very technology-leading type of business that we will keep the anchor in the biotechnology industry.

But I'd like to add as well our whole pharma and personal care business that's focused on contamination control, basically making sure that the environment where the drugs are being produced is as healthy as it can be. This business is doing extremely well as well at the same time. And the purification business that's kind of lower grades on the type of products, but still on the same platform, we were capped by capacity constraints. As you know, that's changing with the opening of the plant in China. So that's going to help us as well as sustain the growth trajectory of that business going forward.

So we're in a place where we have very good momentum. Our long-term target was 10% to 12%, by the way. So we are ahead of that range right now on margin. So to get towards the 30% OI target, we will get there. We see the line of sight to get there. But I want to make absolutely sure that we keep investing in capacity and capabilities in the meantime in order to get the business that has not only a critical mass, but the right momentum to keep winning in the future.

So kind of a little bit of an overview of what we're trying to build here, all driven by research, by innovation, by science, which is ultimately what's most important for our customers, and it's working really well.

Our next question comes from the line of Seth Weber with BNP Paribas.

I wanted to ask a little bit about your -- some of your old economy stuff. I was struck by your comment that you think paper could see some modest growth here in the third quarter. I mean do you feel like we're past the bottom in some of these categories? Or is it just maybe less bad and pricing is helping? Or can you just help us frame what's going on in some of your older economy stuff?

I'm not sure I would call that old economy, but it's more traditional businesses. So for sure, we know that those businesses are not going to grow as the growth engines do. That's why we have the differentiation, by the way, between growth engines, double-digit type of business, our core business, which is the key of our company kind of in this mid-single, and then you have the lower-growth businesses. But I've called, with some affection, underperforming because they were underperforming for a while.

And to your point on paper, well, the good news is that it was barely positive in Q2, which is a big deal. Obviously, it's for the business after more than a year being in negative territory, impacted by the industry that was not doing great, and then an industry that was consolidating because of that. So we lost a lot of paper mills as well. And when we lose a paper mill, that has a big impact on our sales because they use a lot of our solutions.

And we can see that the last 6 months, that consolidation stopped, paused and that things are getting slightly better. And here as well, we are a bit better than the industry, so we're gaining share, which is a good thing as well. So barely positive in Q2 for the paper team. But I feel really confident, with the great leadership that we have there, to get even more positive in Q3 and beyond. So I'm cautiously optimistic with that business. Observing good margins, by the way, important to keep that in mind. But yes, they're improving and they are in positive territories or they're generating value for shareholders, which is the first step towards greatness.

Our next question comes from the line of Laurence Alexander with Jefferies.

I'd like to revisit the Life Sciences. Can you just dig in a little bit on bioprocessing? Are you mostly winning share in the early-stage preclinical or are you also getting the equivalent share gains in the later-stage commercial? And really, I'm trying to dig into your CapEx. You're talking about big CapEx, I think, was the word you used. Are you trying to get your CapEx additions ahead of your growth rates so you can go into adjacencies? Or should we be thinking about this CapEx cycle as this is kind of the run rate that you'll be continuing into the 2030s because it's just how fast the end market is growing?

So a few things here, Laurence. First, bear with me, I'll have to be careful into how much details I'm going on the sensitivity of the competitive situation. There's very few players in that industry. We know each other very well. We all understand that what we do well is sustaining lives around the world. So I'm very careful, so I'm going to talk about that.

But generally, we have a very good position now across the whole spectrum between early innovations, clinical trials of various stages and commercial drugs, that the team has done very well in terms of jumping ahead of the queue in some cases to make sure that we were covering the whole chain. And as you know, it's a funnel type of approach, you need to have a lot early in order to get a few big ones later. So that's the rule of the game, obviously, so in Life Science. And now we are ideally positioned as the team has done in order to make sure that we can sustain and accelerate the growth in the future.

The question on investments, we've clearly been investing ahead of the growth in that business. That's why we were talking about reported growth in the mid-teens and underlying growth in the mid-20s. Well, those 10 points were investments ahead of the growth as we want to see that business driving 30%-ish type of margin at cruising speed.

But I don't want to get too quickly ahead of that. This is an industry of perfection. The quality of the products, of the team of the delivery of the innovation, it takes time, it takes steps, it takes passion and commitment to getting done. But as you can see now, so the underlying margins are getting closer to the reported margins, which is a good thing. Q2 was a little bit of an extreme because we had a spike in bioprocessing. It's not every quarter created the same. But generally, the trajectory is still good.

So I like our competitive situation. And as mentioned before, we don't have the ambition to become the biggest, we want to become the best life sciences business in the industry.

Our next question comes from the line of Vincent Andrews with Morgan Stanley.

To go back to CapEx, Christophe, when you acquired CoolIT, my recollection is you said that they had enough capacity on their own to supply a doubling of their sales, which seems like a pace that they're very much on. And I think you separately said that the plan was to go sort of asset-light, sort of similar to how you do it in your dishwashing business where you design and have the IP and then somebody else does the manufacturing. So just wondering if you can tell us where you are in that journey given it sounds like the growth rate of CoolIT is really moving maybe faster than originally thought.

Yes. So generally, directionally, absolutely no change, what you've said is still valid, with one small exception, which is a good one, is that the growth seems to be faster than what we had expected. For all the reasons I mentioned before: the leading-edge technologies that CoolIT is having, the combination of Ecolab and CoolIT coming together providing the market with something that no one else can provide in terms of higher performance, no water and less energy to do the same job as well.

So generally, for the company, I don't see big changes, but for our High-Tech business, we might have to go faster, which is exactly what we'd like to see and you'd like to see, I guess, as well. But let me ask maybe, Scott, if you'd like to add any perspective on CapEx in general.

Yes. Just more broadly, as Christophe talked about, we will invest ahead of growth in the growth engines, but expect that the CapEx as a company to remain similar to where we're at now for the next couple of years. And we've talked about this for a little while, likely remaining around the 7% in the next couple of years because we are investing ahead for the Global High-Tech business and Life Science. But then as we scale these growth engines, we'll continue to evaluate it. But we're always going to take advantage of these attractive returns.

Our next question comes from the line of Patrick Cunningham with Citi.

Maybe just on Food & Beverage, pretty strong 7% sales growth there. Pretty good execution against a flat broader industry. I guess can you share details on what is contributing to the increased traction there? And how much acceleration do you expect to see within this business over the coming quarters?

So Food & Beverage, which is one of those core businesses that we have that I think it's one of the best global businesses we have, is one of the best teams around the world, serving a very sophisticated industry of consumer goods companies with big brands everywhere around the world. So it's a business I love. And I love it even more looking at the performance that this business is driving.

You mentioned 7%. If you remember, so our long-term target for this business is 5% to 7%. So they are at the higher end of that range. And why that? I'll give you the simple answer here. It's the One Ecolab approach where the team has brought together our food safety capabilities with our water capabilities as one integrated organization. So it's not just 2 teams playing nice together to serve the customer. It's an integrated team with experts in food safety and experts in water working on the same team, for the same customers, anywhere around the world.

We're not done yet. We've done the work in North America where the teams came together and, ultimately, well, I can position it as a strategic idea of producing safe food while using less water and energy, but there is a much more mundane driver of the growth, is the cross-selling. So how do we sell food safety solutions into water customers and water solutions into food safety customers? That's the sales execution play with a good strategic intent. So that's being the main driver. The execution has worked really well. We're expanding what we've done in North America now around the world. That will take some time, but it's also driving some good runway of momentum, so for the years to come.

And last but not least is what you're hearing as well on the market, producing safe food, well, is something that is pretty top of mind for everyone right now, being in restaurants, being in retail. And what we're doing is even more in demand than what it was in the past.

Our next question comes from the line of Eric Boyes with Evercore ISI.

I think Ecolab Digital is nearly at a $500 million annual run rate and growing 20% to 30%. Smaller than Global High-Tech, but pretty attractive incremental margins. So I was wondering if there's anything you can share on the trajectory for Digital into 2027. Maybe talk to the margin contribution. Then why not push through a faster transition to the subscription model given the value proposition of the offerings?

Eric, so what you said is absolutely true as well on what you said, pushing for more faster. We're speaking the same language here. There's a lot of execution that needs to happen, obviously, in between. But I'm very pleased with the progress that we've made over the last couple of years. As you know, it's a pretty new business as a business, not as an activity, because we've been on digital since we invented 3D TRASAR. And just for memory, it was invented in 1991. So it's been a long time that we've been in connected devices, but they were obviously not connected to the cloud, to mainframes and all that complicated technology that we have.

So today, that's the good news. Well, we have hundreds of thousands of connected devices, in thousands of customer locations around the world. So we have a great installed base, with a good critical mass that only a few companies have out there. But we know that for, well, almost 30 years of that journey, we were doing that for free, without going for subscriptions and making sure that we were remunerated for the value and the offering that we are providing for our customers.

So we changed that 2 years ago. That was a change for customers, not a change for the industry because that's what tech companies are doing for a living as well, is making sure our teams know how to do that. Our customers realize that, yes, they pay for something that is something that we're used to, it's new, but it's driving as well incremental value.

And that's why we've introduced internally that playbook which we call the [ 100-100-100 ] model, Eric, which is basically to say we want to connect 100% of the customer locations, 100% of the applications within those customer location, and that 100% of them generate revenue. If you add all that, it drives a potential value of $3 billion. So $3 billion is the revenue we could generate doing exactly that within our current customers. We have $500 million today, and that's why growing towards the $3 billion is the job #1. We're all aligned that we'd like to grow even faster, and I guess we will get there at some point.

And what's even better is that the $3 billion opens incremental $10 billion to it for applications that we haven't sold yet or customers that we haven't sold yet. So early on that journey, but on a very good trajectory so far.

Our next question comes from the line of Shlomo Rosenbaum with Stifel.

Christophe, could you talk a little bit about the volume trajectory? It looks like it picked up. And the implication is if you would not have had that impact from the Mid-East war, you would have picked up to like 2% volume growth. Can you talk about where you're seeing the volume increases, where you might not be seeing them? And geographically, maybe by -- from a high level, which areas of the business? And really, what should we be thinking about that? We've seen -- we've been accustomed to seeing some of the growth in terms of the pricing, but it's been a while since we've seen volume pick up to this level on whatever is a sustainable rate. And can you give us your thoughts on that?

Yes, Shlomo. It seems like for the short term, for the next few quarters, the 1% run rate seems to be the right one. As you said, we were closer to [indiscernible] the impact of the Middle East, but okay, we live in an imperfect world and there will always be something somewhere obviously happening. We were all hoping that the Middle East resolves itself much earlier. It doesn't seem to be exactly the case right now. So we're living with it.

And that's why I'm saying, okay, the 1% trajectory is a healthy trajectory that I really like. But this 1% is obviously [indiscernible] the average. So you have the ones that are way ahead of that, and those are the growth engines, in High-Tech, in Life Science, in Pest, but also Food & Beverage has had some very good track record in volume.

And then you have the other extreme, of the paper and heavier industries that we're in the negative territory. So that's the beauty of the Ecolab portfolio that, ultimately, whatever happens one business or one region in the world, we can keep a steady momentum, which I believe the 1% next few quarters seems to be the right assumption to make. And things improve out there, okay, it's going to be better. But directionally, I think it's going to be 1%, 1% plus, trending in the right direction. And the Ovivo and CoolIT, by the way, which are not in those [indiscernible] organic, by definition, well, they add almost 2 percentage points [indiscernible]. Well, this 1 plus the 2, plus or minus the Middle East I talked about, you get to some very healthy type of volume growth, which is exactly the place we want to be.

Our next question comes from the line of Scott Schneeberger with Oppenheimer.

Similar question to Shlomo's, but on the pricing side. Just curious how the energy surcharge is progressing. You've spoken about, hey, it's ramping up in second quarters, likely going to be more solidly in place in the back half. So just thoughts on that. And then the second part of the question is, how is structural pricing progressing, and thoughts in the second half here?

So we've always been pretty good at pricing. I think that we've become really good at value pricing because of all the practice that we were given for the last few years to manage through that. Let's not forget, stepping back as well as, that Ecolab for a very long time had an approach of getting the incremental cost back in dollars year 1 and the margin year 2. So 2-year cycle. And now in Q2, we managed to do both within 3 months, which is really a major change of the model. And that's mostly driven by this value pricing approach, driven by this total value delivered that we're providing to customers, that customers are seeing that, yes, they pay more, but they're getting more as well. And net-net, they are in a better place financially, which is where we're laser-focused to deliver to them. It takes some time to get it done the right way, but the fact that our retention of customers has remained super stable during all those years, what is a good indication that the approach is the right one. It's good for customers. It's good for Ecolab. It's good for shareholders as well at the same time.

So to your question on energy surcharge versus pricing, it's always an imperfect science because some of the businesses go straight into structural price, others in energy surcharge and move then afterwards in [indiscernible] price. Honestly, I don't really care how the whole thing is happening, as long as we get to the right place for us and for the customer as well.

And we exited Q2 with 5% of pricing. So when we're talking about 5% to 6% in the second half, well, it's the exit trajectory of the second quarter. So it's pretty solid, to say the least, which is why I feel quite good that we can get positive gross margin -- organic gross margin in the second half because the team is really good at it. We have all the systems, the processes, the customers understand that. And we can manage almost any situation that's happening in the world that we cannot predict. But we've demonstrated not only we can do it, but we can get it done in pretty short-term timing as well.

Our next question comes from the line of John Roberts with Mizuho.

Pest Elimination has been delivering high single-digit revenue growth pretty consistently for at least a year now and the operating margins are up around 20%. Does it accelerate to low mid-teens growth as you deploy Digital and agentic AI? And do you spend the margin improvement or do margins go up as you deploy digital and agentic AI?

Well, John, it's going to be a sequential work here. First, on the top line, our targeted trajectory is 6% to 8%. So with the 7%, we're kind of like in the middle of that targeted range, which is always an important first step for me, delivering on our promise first, and then improving from it, the ambition of the team, which is an exceptional team, by the way, that we have in Pest Elimination. They're great at transforming the business, great innovation, working with the largest customers in the world in a difficult environment. The transformation they're doing is remarkable. I'm so impressed with everything that is doing. So it's going to drive top line, ultimately, even stronger. That's going to be the other.

But back to the question on margin, it's a bit of the Life Science question. When we get into new technologies, new innovation, they suddenly need to create the right foundations first before we really get the benefit of it. So yes, in the margin of Pest Elimination and in the operating income growth, you have investments behind, so Pest Intelligence, that are going to continue. As I've said, 800,000 connected devices, we'll be north of 1 million by the end of the year. No other company is there around the world. Well, that requires efforts and investments. But ultimately, we know it's going to pay out both on top line and on bottom line in one of the businesses with the highest margins and the highest return as well at the same time. So early investments and, ultimately, better returns down the road.

Our next question comes from the line of Jeff Zekauskas with JPMorgan.

Two-part question. The first is that you've acquired to accelerate your growth. Do you have goals for either return on capital or return on assets or return on equity or goals that situate those metrics relative to where Ecolab was before the acquisitions were made?

And secondly, in the Global Institutional & Specialty business, the organic growth was about 4%. And I would expect pricing in that segment to be higher than 4%. So was volume growth negative by 1% or 2%? And I guess that may have had to do with the institutional business. Can you talk about what's going on in that area?

Jeff, so 2 very different questions here. Let me start with the second, and then I'll go to the first one, and then I'll ask Scott as well to add to the returns question. So on institutional, really pleased with the steadiness, the 4% in Institutional & Specialty, as you know, the restaurants, hotels and specialty retail and quick-serve, well, allows us to capture consumers going to whatever segment, cheaper or more premium depending on the economic state of the country, wherever our customers operate. So in a place where wherever people are going, we capture that growth.

So the 4%, I think, is a pretty good steady type of performance for that business. Keeping in mind that food traffic in the U.S. in restaurants is down 5% year-over-year right now. So the growth of the 4% versus the minus 5% in the restaurants is quite remarkable. So it's not growth of Life Science, of Digital or GHT, but for such a traditional industry, we're clearly gaining share, and we're gaining margin as well at the same time. Because that business is in the low 20s to mid-20s type of operating margins, so a very strong, solid business with a franchise that's unmatched as well around the world.

So I&S, I'd love them to grow even faster, but honestly, I think that they are in a darn good place where they are now.

And second or first, your question, when you talk about organic versus nonorganic, well, the results of growth that we had in the second quarter, especially if you adjust for the Middle East, well, that growth of volume was not acquired. That was organic. Yes, now CoolIT, Ovivo, which have been acquired, are going to add a couple of points to the overall company. It's always been a kind of a combination of 2/3 or 80% core growth and 20% M&A. We're going to keep on that path as well, Jeff. And it's working quite well. I like as well the return profile of it. But I'd like to ask Scott to comment on that.

Jeff, as we talked about, obviously, just specifically to CoolIT, but with all deals that we look at, the specific investment or asset returns, and as we've talked about with CoolIT, the returns on this are well above our cost of capital. And then more specifically, as we think about just the company as a whole, we've talked about ROIC for a long time, obviously, ROIC is sort of a point-in-time measure. And when you have a significant acquisition like this, that will have a dilutive impact in the short term, but we still have a very focused on ROIC and growing ROIC, organic ROIC as we define it by at least 100 basis points a year, and feel very good about that. As we think about the impact of CoolIT, that will take 1.5 years or so to annualize because of the denominator, but expect to get back to pre-acquisition levels on our organic ROIC by 2028.

I'd like to make a comment on Life Science as well, so just underlying what I said before, Jeff. We've said what's the return expectations that we have for that business early on. We were not on track for 2 to 3 years as we know. And that was the absolute focus for the team to get back on the early promise return of that business. And that business is back on that track. So we take it super seriously.

Our next question comes from the line of Matthew DeYoe with Bank of America.

So 5%, 6% price, I don't know, $450-plus million of just EBIT tailwind year-over-year for the back half, if I just give you a 100% margin, I don't know, maybe it's too much. But that's implying like raw material inflation that candidly feels way too high. And if I'm thinking about just operating leverage through the business covering normal course inflation, which maybe isn't the case, long story with this is just why isn't margin expanding more materially in the back half? And does the guidance for raw material inflation that you're baking in reflective of the basket in March, April? Or is it reflective of the current situation as I think about things like propylene basket kind of coming under pressure?

I mean, obviously, who knows, right, with the strait-clothes. But I'm just trying to understand why the operating leverage isn't significantly higher with mid-single-digit price.

So a few comments here, and I'll pass it to Scott as well a bit more. So first, it's always, with the latest information that we update you, we don't stay stuck to assumptions that were made in March. The world has changed quite a bit, obviously, in the meantime. So it's fresh information when we talk together.

Second, I don't need to explain to you how it works to get margins in positive territory, since we have roughly 50% gross margin, well, you need double the price versus the cost that you're getting. And when you need to do that in 3 months, not in a chemical business, but in a service technology, expertise type of business, this is a remarkable accomplishment, and especially when you need to do it over and over again, while keeping, building more growth with more customers without losing any as well at the same time. So that's the simple math of the projecting gross margin. And as I said before, it took us 2 years to do the same work as we do in 3 months today a few years back.

And last point, I'd say we do it in ways that are always constructive for our customers, which means that they get the savings in their operations higher than the incremental price that we are asking from them as a share of benefit that they get as well at the same time. So it's going to lead ultimately, that's the good news, is once the delivered product cost is going to stabilize, well, then you get a much better gross margin because we never give the pricing back in the model, not because we just stay stuck on it, but because the value we're generating to our customers will remain within the customer operations. So that's why every time that there is an economic cycle, so going up in inflation, not only we manage it well. But second, it leads to a net incremental margin on our trajectory, which is why if you look at the last 10 years, our gross margin has kept going up.

Yes, a couple of things to that, Christophe, thank you. As you talked about, it's difficult to make these firm assumptions because it's dynamic environment. But as we see it here today, we're expecting these high single-digit commodity prices for the balance of the year, right? And so if you look at that -- and then also the other thing I would say, and we talked about this earlier, if you look at the gross margin, you also have the impact of Ovivo. So we had a reported gross margin. We have organic gross margin. And Ovivo, as we talked about in Q2, excluding Ovivo on an organic basis, our gross margins were stable. So there's that called [ 60 basis point ] drag just for Ovivo, and you'll see that same type of sort of difference in the second half. So that may be part of the math.

Next question comes from the line of Josh Spector with UBS.

I wanted to go back to the High-Tech piece. And really what I want to ask about is that a few weeks ago when you closed CoolIT, you took up your plan to 2030, you took up your margins. Obviously, a high degree of confidence. I thought you'd come on this call and be able to give an update on CoolIT expectations for '27, '28. And maybe if that accretion math is pulled forward. Based on your comments earlier to David, it seems like you want to talk about that maybe in a few months. So I'm just really curious like what gave you the confidence then as the start of July to raise your 2030 expectations there so much? Was it Ovivo or something else organic? Or is it that you saw the backlog on CoolIT? Just help me understand that, please.

So a few things here. First, when we share a new target with you, we want to be sure, well, sure as it can be, of what we're sharing obviously with you. And together with CoolIT since the first week of July, so that's been just a few weeks and you can't do much before you close, as you know, as well. So we're getting to know much more when we look at the trajectory of both businesses, CoolIT and Ovivo, and our core business, by the way, which has been doing really well for quite a long time now and especially in the second quarter, well, we ended up in a position where we can say the minimum has to be [ arisen ]. And we don't need to go much into math and to say, okay, we can move up the floor, which means that the middle of the range is going up as well at the same time.

But this is also the reason why we want to have an Investor Day at SuperCompute in November, because we firmly believe, with not only when the market is going, but most importantly how our businesses are leading in those technologies, that we'll be better than what we had initially planned, which is a good problem to have.

So if anything, it's going to be better than what we just communicated. But we want to do the right work. We're talking about the next 3 or 5 years to come. And that requires some in-depth work on all those businesses. But generally, the direction of travel for all of those, well, is quite a bit better than what we had expected. So I expect good news in November.

Our next question comes from the line of Mike Harrison with Seaport Research Partners.

Christophe, you kind of referenced the increased attention that's happening around food safety recently. And I'm just curious if you can comment at all on what kind of impact this Cyclospora outbreak has had on consumer behavior and maybe impacting your restaurant customers in terms of foot traffic, and then, I guess, on your customers and then coming to you for food safety solutions or with greater attention on that?

And maybe also tie in, it seems like the FDA has taken a little bit of a stepback in terms of what they're monitoring. And just curious if you view that as something that is helpful to your business or harmful to your business.

So Mike, I would not call that helpful or harmful. We're talking a little bit -- well, a lot about people being impacted by what's happening again here. We're experiencing those situations too often in our country and around the world, and that's why we exist, actually, it's to reduce and remove that risk as much as it's possible for every one of us eating food, or infection prevention in general. So we feel for everyone that's been impacted by what's happening in our country right now.

So the few key questions that you had, impact on demand on our business now, no change of consumption at all. And in F&B, you've seen as well, so no change either. What's true, however, every time that something like that happens, customers come to us, spend a lot of time with our research and development team, with our scientists to really understand what is it. How does it work? How does it impact us? How can we solve it? There is no one in the world that has more knowledge and expertise in infection prevention as an Ecolab. So customers are clearly coming to us, which is a good sign.

And in the case of the end users, the restaurants, in that case, I think that they've done a very good job. And in the specific case that we're talking about, they've been example exemplary how they've taken care of their guests, of their employees, of their processes. We've been very close to them, as we always do. But we stay behind the scene. We're there to help them. We're not there, obviously, so to get ahead of them news.

We've worked with a lot of producers as well out there to make sure that they were learning from us, that we could make sure that the risk was going down for all the other ones as well. And the one that's being talked about in the media right now is not one of our partners or customers. I can't comment on them.

But I think ultimately that the next phase, and that's a big business opportunity so for us is to connect the producers with the end users being restaurants or retailers, which is something that hasn't been done much so far, and we're uniquely placed because we protect 1/3 of the world food production and we serve even more of the end users, retail and restaurants and hotels. So connecting the 2 in the future will be a new business opportunity for us.

Our next question comes from the line of Jason Haas with Wells Fargo.

I'm curious if you could comment on what the customer and industry reaction has been to the 50-kilowatt cold plate that was announced by CoolIT. Just curious what sort of reception there is. And maybe it's going to take some time, but curious just time line for when that could start to benefit you guys.

It's been very well received actually. It's the first time in my business history, I have to admit, that I see and hear customers not only wanting to be in the queue, but to be ahead of the queue because there's limited capacity, as we know, out there. Well, that's the situation of CoolIT. Ovivo 2, by the way, in a different part of that industry. It's a very unique place to be. And that technology that you're talking about on the cold plate is one of the elements, but there's many more in terms of CDU, in terms of 3D TRASAR, in terms of coolants as well that we've developed and will be developing as well. Everybody is looking so for the latest and to have that as soon as they can.

So a very new experience for us where you need to manage supply more than demand. But I guess that's a good problem to have.

Our final question will come from the line of Kevin McCarthy with Vertical Research Partners.

Christophe, I want to follow up on a few prior questions regarding CoolIT. Is there a way to characterize or quantify the visibility that CoolIT has or you now have into the order backlog or pipeline? Is there a way to measure it in terms of months or quarters or years? Maybe you can talk a little bit about how they go to market. What are the standard contract terms, and over the next little while here, perhaps we'll learn more in November, certainly, but is that triple-digit growth rate stable, do you think, between now and the end of the year? Or maybe you could just elaborate on that visibility question there.

So a few questions into that. So the visibility for the foreseeable future, so for '26, at the end of the year, as you're calling it, is pretty clear. So yes, we feel good about the trajectory for the year, which is a very good way to start. Obviously, saw an integration. And for the years to come, as mentioned before, we've considered in all our math and projections 30% growth rate for the next 10 years. So we do the work to really understand what's the right number for it, and we share that with you when we get together at SuperCompute in November. But generally, that sounds like a good news.

Your second question on the go-to-market, it's mostly 2 different drivers. The first one are the cheap designers and chip manufacturers because the cold plates and technology of cooling for each individual chip, well, is chip related, and that needs to be developed together with the chip designers and/or manufacturers depending on who that is out there. So they're very close to them, and this is a huge strength of that business.

At the same time, they're very close to the hyperscalers as well that are interested in optimizing the overall in cooling performance of the data center. That goes beyond, obviously, individual chips, when you put all of them together in one rank and then afterwards, in one data center, the physics look very different. And that's the relationship with hyperscalers, so it's to be very close to those 2 constituents. CoolIT and Ecolab, by the way, are very strong at that type of relationship.

So that's the way the model works. It's developing together with the hyperscalers and the chip industry. And that's going very fast. As you know, every week, there's something new that's happening very different than many of our businesses.

And the last question, on the backlog and pipeline. We're learning as we are working closer together with them. They have very good sales metrics. We have, on the more traditional Ecolab side, similar but a little bit different sales metric. So we're going to try to learn from each other. And that's also something that we'd like to share with you in November. We've been 3 weeks together, so that's very early. So more is going to come in November.

So since it's the last question, I just wanted to recap briefly. We had a very strong quarter in Q2, in a tough and complicated environment, as we all know. Really happy with the team that's been able to protect gross margin in 3 months versus 2 years in the past, while accelerating the organic growth as well as the business.

Second, the second half looks promising for the company, especially as the trajectory for '27 and the years to come as well where I believe that we have really been in a better position to deliver on our growth ambitions, our margin ambitions and earnings growth ambition, and ultimately where we need to focus over time is how do we improve from there even further, which is where I spend my time, the team is aligning around, and I think that we're in a very good place as a company especially when we look into the future because we have the best team in the industry.

So thank you again for all your time and your commitment to Ecolab. All the best.

Thanks, Christophe. That's it for our second quarter conference call. This call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation. Hope everyone has a great rest of your day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Enjoy the rest of your day.

Okay. We're good to go. We're going to get started here. Thank you, everyone, for joining us today with Ecolab. My name is Tim Mulrooney. I'm the analyst here that covers Ecolab, and I'm required to inform you that for a complete list of research disclosures and conflicts of interest, please visit our website at williamblair.com.

So I'm really excited to have Ecolab here today. This has been a company that's been a fun one to follow, particularly recently. There's been a lot of news out about the company. And we recently added Ecolab to our current Better values list last month with the thesis being basically the recent spike in energy costs, which have driven the stock price down, actually isn't going to result in the impact that you'd normally see at Ecolab. Of course, I know it's famous last words to say this time is different, but we're saying this time is different. And so that was part of it. And then the other part was an expectation and acceleration of volumes next year as some of these higher-growth businesses get folded into their business.

So hopefully, Scott, you don't say anything today that contradict anything I put in the current better values write-up. I don't know. But that was basically what we were saying and are very excited when we see dislocations like this between the stock price and what we view as the fundamentals. So with that, I'm going to pass it over to -- we're very pleased to have Scott Kirkland here, the CFO; and Andy Hedberg, the Head of IR. Thank you guys for coming today. And I'll pass it over to you for some opening remarks, and then we can hop into Q&A.

Great. Thank you, Tim. Appreciate the introduction. Good morning, everybody. It's great to be here with you today, share with you, especially those new to the story, Ecolab's growth story, but also about how our model is delivering really good performance today, very strong performance, but positioning for us -- for even better performance in the future. But before we get started, I'd ask you to read the cautionary statement. I won't read it verbatim, but please read it. And with that, I will move on to the fun stuff.

So for those new to the Ecolab story, Ecolab is a global leader in water, hygiene and infection prevention, protecting people and resources vital to life. Our strong performance comes from pairing that mission with a disciplined business model. What we do matters for our customers, and it helps them improve their performance and profitability. We apply this model across more than 40 industries, driving consistent growth, margin expansion and strong earnings performance, strengthened further by our growth engines that I'll talk about in a little bit, which are scaling at double-digit rates with very attractive margins.

All of this is supported by a very clear financial framework, including strong free cash flows, a disciplined approach to capital allocation and a balance sheet that provides us flexibility to invest through a variety of economic environments. And we have the means to achieve our ambitions with unmatched capabilities and reach. We have 48,000 associates serving customers in more than 170 countries, supported by deep scientific and digital expertise. Ecolab is a trusted and innovative partner at millions of customer locations, some of the biggest brands in those industries.

In 2025, we protected 1.7 billion people from infection. We protected 1/3 of the world's food production and 1/4 of the power generated. The way we deliver those outcomes is through a very simple but powerful model. We deploy on-site experts at every customer site who understand how those customers operate. We then apply chemistry, technology, data and digital tools to improve the performance and reliability at our customer sites. The result is a best-in-class performance outcome at the lowest total cost through reduced water, energy and waste. And because the value we deliver far exceeds the cost of our solutions to our customers, the customers see clear economic returns in what we do for them.

That's what we mean by total value delivered, which is a foundation of our growth. And that value proposition creates a very resilient model. More than 90% of our revenue comes from consumable products that are mission-critical to our customers. That drives predictability and durability in our business. We also benefit from very broad industry diversification, both industries and geographies, which helps balance performance through different economic environments and reinforces that stability of our growth. That stable foundation supports the strong and consistent financial performance, and our long-term growth algorithm is clear. We target 12% to 15% of adjusted EPS growth every year through disciplined execution and balanced capital deployment.

We're on track to reach a 20% operating income margin by 2027, driven by value pricing, innovation, high-margin growth engines and productivity. And as our growth engine scales, we see a clear path to accelerating organic sales growth into that 5% to 7% long-term range. I know recent macro volatility, as Tim talked about, and the energy inflation is top of mind for many investors. We see that environment as manageable with the pricing and supply chain actions that we've taken in our history of performance. Our exposure to raw materials derived from oil and gas is about 6% of our total sales. Exposure will only decrease as our growth engines accelerate as they have a much smaller reliance on oil and gas-based raw materials.

And the inflation environment this year is also very different than 2022 when our commodity costs increased nearly 50%. Looking at the current environment and assuming that our energy costs remain high through the balance of the year, our commodity costs are expected to increase this year by about 9%. But we continue to expect to deliver 12% to 15% EPS growth this year, excluding the short-term impact of the pending CoolIT acquisition, which I'll talk about in a bit. And we're doing that as our pricing continues to strengthen with the implementation of our energy surcharge, which we launched in April.

You can see that pricing acceleration we're driving through the second quarter in the slide here. And while higher commodity costs have been a headwind, pricing is quickly building during the second quarter. And in the second half of this year, we expect organic sales growth to accelerate to 6% to 7%, with pricing roughly 2x the inflationary headwinds, helping to quickly stabilize gross margins.

In other words, we'll be fully offsetting the impact of commodity costs and earnings and margins in just a few quarters. The pricing discipline isn't a new thing for Ecolab. We have a long history of keeping and growing pricing every year because our pricing is backed, as I mentioned before, by incremental value our solutions create for our customers. Since 2021, our solutions have delivered a cumulative value to customers of more than $11 billion, and we've captured a meaningful share of that through pricing, as you can see here. This is a durable advantage that supports both the growth and margin expansion of our business.

Turning to near-term performance. With good business momentum and accelerating pricing overcoming the commodity cost inflation, as I mentioned, we expect strong second quarter with organic sales growth of at least 4%, stable organic gross margins, excluding the impact of the Ovivo acquisition and adjusted EPS growth of 9% to 12% in the second quarter, which is stronger than our initial guidance for Q2. And we expect this momentum will continue into the second half as organic sales growth accelerates to 6% to 7% and our organic gross margin expands 75 basis points. And with that, our adjusted EPS of 14% to 15% before the impact of CoolIT, which I'll talk about in a moment.

As I mentioned, in the second half of '26, we expect that underlying performance to reach the upper end of our range without the impact of CoolIT amortization and financing costs. Including the impact of CoolIT amortization financing costs, adjusted EPS is expected to grow 4% to 5% when the CoolIT deal closes. Looking beyond this year, including CoolIT and the roll-off of the Nalco amortization, we expect our 12% to 15% EPS growth trajectory to only strengthen, as I mentioned, with a clear path to the 5% to 7% organic sales growth and expanding our OI margins to and beyond the 20% target we have for 2027. We've built a portfolio that's both resilient and positioned for faster growth. Our growth engines are scaling quickly. I'll talk more about those in a second and represent roughly 1/4 of the business.

Our core businesses are also performing well, delivering steady mid-single-digit growth with strong and expanding margins. As 2026 progresses, we expect continued growth -- improvement in paper and heavy water as we drive good share gains to mitigate softer market demand. And our growth engines are compounding. With those compounding, the core business is performing well and our more challenged businesses stabilizing, we will grow faster and with strong margin expansion. Our largest core business, Institutional & Specialty, is performing very well, delivering mid-single-digit growth with good margin expansion.

This strong performance is fueled by breakthrough technology platforms like DishIQ, AquaIQ, which help foodservice and hospitality customers improve guest satisfaction while using less labor and significantly reducing their operating costs. We are expanding from anchor innovation like into digital solutions like KitchenIQ, which is our proprietary digital platform that helps foodservice customers streamline back-of-the-house workflows, enhance food safety management and ultimately optimize labor. And we're tying it all together with our One Ecolab growth model, where we can drive best-in-class performance across our customers' locations, unlocking value for them and growth for Ecolab.

All of this translates into strong performance for our Institutional & Specialty segment, growing mid-single digits despite fairly stable markets, and we expect sales growth for this segment to accelerate to the 4% to 6% range in 2026 with strong and expanding margins. The same model and performance shows up in Food & Beverage. Another one of our core businesses that is outperforming its end markets. We are bringing together new technologies like enzymatic cleaners that deliver better, faster cleaning outcomes for customers and a more attractive growth and margin profile for Ecolab as we innovate to provide alternatives to volatile raw materials like caustic.

And we're leveraging this new innovation with digital solutions like Ecolab CIP IQ, which provides real-time proof of clean. And combined with our leading water technologies, the Food & Beverage business brings a One Ecolab integrated water and hygiene program to customers to drive that best-in-class performance at customer locations. And as a result, Food & Beverage continues to grow well ahead of its end markets. We expect growth for Food & Beverage to accelerate to 6% to 8% in 2026, again, with strong and expanding margins.

Beyond our core businesses, our growth engines are an increasingly important part of our story. Pest, Life Sciences, Digital, Global High-Tech represent about 1/4 of the company today and are growing faster than the enterprise with margins accretive to Ecolab. We're investing in each of them with purpose, both organically and inorganically. In Pest, we're performing within our long-term sales target and have a long runway as we scale our Pest intelligence platform, which fundamentally changes the service -- how the service model works. Today, 95% of our time is spent checking empty traps.

With Pest Intelligence, we flip that, spending 95% of our time solving customer problems. We'll know exactly where the Pest activity is happening and focus service where it counts the most. For customers, we're able to deliver nearly 90% Pest-free locations versus an industry average in the low 90s. This creates a significantly better experience for our customers while reducing the high cost and brand damage with large-scale Pest issues. This means more value for our customers and more growth and higher margins for Ecolab. Life Sciences follows a similar pattern.

Through One Ecolab, we're bringing together drug purification technologies, cleaning and sanitation solutions, digital and water purification. This unique solution set allows our customers to produce the highest quality drugs at the lowest total cost. We have been investing in this large and expanding market, and you're seeing that show up in strong performance. Organic sales are growing double digits with our biopharma business doubling its sales in the first quarter. Growth for Life Sciences is expected to further accelerate during 2026, driving strong double-digit OI growth on our path to our 20%, 30% OI margin target. And as we leverage significant business investments we've made in this business, this will drive high growth and continued high margins in this business on the path to 30% OI margin.

AI is an important part of the Ecolab growth strategy with our Global High-Tech business that spans fabs and data centers. As you've probably heard, AI demand is reshaping digital infrastructure and AI compute is expected to roughly double over the next 3 or 4 years. Industry plans call for about 50 gigawatts of incremental compute demand. That's driving roughly 70 new fabs and 1,000 new data centers over the next few years. For us, that represents a $10 billion opportunity for our Global High-Tech business that's growing -- already growing extremely fast with accretive margins to Ecolab. And as the world's water technology and services company, we are well positioned to capture this high-growth, high-margin opportunity.

Water sits at the critical step -- every critical step of AI. You need ultra-pure water to produce the chips. You need water to generate the electricity that powers those chips and you need water to cool the chips and data centers. On the microelectronics side, we partner with fabs to deliver ultra-pure water and water circularity programs, strengthened by our recent Ovivo acquisition, allowing customers to produce more chips with less water. In data centers, we combine Ecolab's water treatment, cooling liquids, 3D TRASAR monitoring and our latest Cooling-as-a-Service offering with CoolIT's direct-to-chip liquid cooling technologies.

And together, we'll deliver more computing with less cooling through a single integrated direct-to-chip model that improves reliability, efficiency and uptime. So together with Ovivo and our pending acquisition of CoolIT, Global High-Tech will be our largest and fastest-growing growth engine with $1.5 billion in sales. The business is growing above 20% in a large and rapidly growing market. The business meaningfully accelerates our growth algorithm. Global High-Tech alone will accelerate sales growth by 200 basis points with a very attractive margin profile.

Putting this all together, we see a clear pathway to accelerate Ecolab's organic sales from the 3% to 4% last year to 5% to 6% in 2026 and 5% to 7% in next year. Within this, we expect our core businesses to contribute 3% to 4% to our total growth and for our growth engines to add another 2% to 3% growth. Our stronger top line trajectory helps to further expand our operating margins. Within our portfolio, about 2/3 of our businesses are already at or above our 2027 OI margin target of 20%. 1/3 of our businesses are below the 20%, including Life Sciences and Global High-Tech, 2 businesses where we are investing for the future and underlying operating margins are already north of 20%.

We've been driving -- delivering strong margin expansion for a long time with OI margins up 600 basis points since 2022. We exited 2025 with a record 18% OI income margin. With value pricing well ahead of DPC inflation, accelerating growth engines and One Ecolab-enabled productivity, we're confident in reaching our 20% OI margin target by 2027. But 20% is not the destination. Beyond 2027, we're targeting 100 to 150 basis points of annual OI margin accretion through 2030. All of this is guided by our disciplined financial framework I referenced before, strong organic sales growth and continuing to deliver adjusted EPS growth of 12% to 15%, a strong cash generation model, targeting free cash flow conversion of 90% to 100%, which supports rapidly deleveraging and strong liquidity.

We'll continue to focus on our fortress balance sheet with disciplined capital allocation, providing us the financial flexibility to invest through the cycle. And that discipline translates directly into strong shareholder returns. Over the past decade, we've returned more than $10 billion to shareholders and increased our dividends for more than 3 decades. Ecolab is a high-quality compounder with a durable recurring cash flow, established market leadership and accelerated growth driven by AI infrastructure. We expect gross margins to stabilize as we exit Q2. Our core businesses are outperforming and expanding their margins, and our growth engines are compounding at double-digit rates with margins accretive to the company. All of this reinforces our confidence in delivering strong financial performance in 2026 and well beyond. Thank you for listening.

Yes. Thanks, Scott. That was a great overview. There's a lot to be excited about here. And we got about 20 -- or 10 minutes left before we go to the breakout. By the way, the breakout room is in the Adler room for those that are interested in exploring some of these topics in more detail. I'm going to ask a couple of questions, and then I can open it up to you all. But I want to start it out with the guide. I think that's new news. Today so you raised it, you were looking for EPS growth of 7% to 12%, and you raised the low end to 9% to 12%. Can you just talk about what drove that increase specifically?

Yes. Good question. So as we exited Q1, and we talked about Q2 as this transition quarter that we are launching our energy surcharge with the raw material inflation, not understanding exactly how that pacing would be, but feeling very confident about the second half, but the pacing in the second quarter was hard to predict. But now as we're more than 50% through the second quarter and have very good visibility, have great confidence in that delivery, and that's why we changed the original guidance from this 7% to 12% to the 9% to 12% and brought up the bottom of the range.

Got it. So it was execution on the energy surcharge is going better than expected?

I wouldn't say better than expected, it's within our range, but it's just given us -- it's going very well.

It's not because some geography is doing better than you thought or some business is performing better than you thought.

Well, all of the businesses are continuing to perform very well. As we exited Q1, business is performing well. That's continuing. And then on top of that, also executing, as you said, very well on the energy surcharge. And that's going very well, giving us the confidence to both say the minimum on sales is that 4%. And so we feel that is the bottom on sales, but also that the bottom end of the EPS range is now 9%, so that 9% to 12%. So just great confidence given the execution and visibility we have into the second quarter, but also that confidence now as we exit the second quarter that this underlying, excluding the impact of CoolIT once it closes, but excluding CoolIT, that the second half EPS will be this 14% to 15% and top line is 6% to 7%, inclusive of 5% to 6% of pricing because of the energy surcharge implementation and the path we're seeing in Q2.

That 6% to 7% organic growth is for the second half?

For the second half year. Correct.

And I think that might be a little bit higher than my model. I'll have to go back to check, but it seems like all is going according to plan, which is why Christophe said on the first quarter call, by the way, like this isn't where his focus is, right? Like he's obviously focused, but he's like this isn't where he's...

This isn't his high priority. Because of the confidence that we have, and we've seen this movie before, right? So 4 years ago, we had a surcharge in the second quarter and learned a lot from it, executed really well and exited that cycle, as you recall, with higher margins. We've had record margins at 18% last year and showed great discipline and execution to be able to do this and build strong muscles from 4 years ago that we're flexing even now.

Yes. Okay. So this time is different, in fact.

Yes. As you think about the quarters because we're talking about the organic gross margin, excluding the impact of Ovivo because there's some P&L geography from that. So the organic gross margin, we expect to be up 75 basis points in the second half. So we're doing what used to take us a few quarters and doing that basically in 1 quarter.

I remember Mike Monahan would be coming to these conferences when there'd be a dislocation or a surge in energy costs and -- the old saying was it takes 4 quarters to build back the gross...

The dollars.

Dollars. And then 4 more quarters to...

Build back the margin.

Build back the margin. You are, in essence, building back all of the dollars in 1 quarter and your margin will be expanding in the second half of this year. So you've compressed the cycle.

Correct. We've taken the approach to TBD, the muscle that we built 4 years ago and made that an operational discipline and created scale and efficiency in doing that and efficacy because we better understand the value that we deliver more than ever, and we're able to get that pricing and prove that value to customers.

Got it. Okay. The only other question that I wanted to ask before I open it up is really around CoolIT because the headline number on CoolIT is that you spent 29x EBITDA to acquire this company. But I also note that you implied in that next 12 months outlook was 30% growth. And please correct me if I'm wrong on any of this.

Well, we said 30%, and that was over the first 3, 4, 5 years, right? And so the early years would be higher, just obviously given the small numbers. And so we said 30% over the first few years. And so that's the CAGR. Obviously, in the first year, we expect that to grow faster.

Okay. Because that was basically my question is I think it grew over 100% in the first quarter. Is it growing faster than what you expected when you first started diligencing this thing?

It's doing really well. We don't own it yet. So I'm always cautious with assets. We don't yet own and we only have limited visibility, but it is doing very well. And so we're always very disciplined about our approach to investing both organically and inorganically. And I think we always take a prudent view of it -- of these deals. And so it is performing very well from everything we can see. And as we talked about in the first quarter, yes, it basically grew 100%. So it's going to grow much faster than the 30%, but that was over the next 4- or 5-year time line.

And so this year and into next year, which is the reason we talked about this 200 basis points combined from Ovivo and CoolIT that they are going to add on a pro forma basis, if you will. But once that annualizes, that will provide a 200 basis point benefit to our top line, which is why we see this, as I said, this very clear path from this historical 3% to 4% and how do we get to that 5% to 7%, and that is going to be driven by our growth engines. Certainly, in the short term, we're going to benefit from the energy surcharge. But even as that energy surcharge annualizes in the first half of next year, we see that path to that 5% to 7% because of the benefit of the growth engines, including CoolIT.

So it would be -- the growth algorithm for next year would look a little bit differently as you break it down between price and volume?

Yes, I think so. I think there will probably be more price in the first half naturally because you'll see the -- right now, where there's 2% to 3% pricing in the first quarter, right? That's accelerating, and we're expecting pricing total, including the surcharge of 5% to 6% in the second half. So you'll have some natural annualization in the first half. But then that annualization will then -- that will happen in the first half as the CoolIT deal hopefully annualizes as well. And then you'll see the organic, including the benefit from CoolIT in the second half.

Got it. Okay. That's very clear. I appreciate that.

But obviously, the reported number will be even better because it will include both the benefit from the higher pricing and the benefit from CoolIT on a reported sales basis. So I'm talking organic.

Okay. Got it. Yes. Got it. On the organic basis. Okay. A couple of minutes left if we have any questions in the crowd for Scott. Otherwise, we can wrap it up early. But any questions -- burning questions?

Okay. I think we'll leave it -- yes, we got one over here. Sir?

Can you talk a little bit about the data center buildout and how maybe the [indiscernible] states, how does that impact your timing for CoolIT and the growth rates you're expecting?

And would you repeat the question just because I think this being webcast.

Yes, there was a question on how moratoriums in certain states and data centers may affect the growth of CoolIT. Well, the growth of CoolIT is going to be correlated to what's happening from a chip perspective as much as it is from a CapEx perspective. And I don't think what's happening in the data center build-out, whether -- and our data center slows is going to slow down the innovation happening from an AI perspective and the chips being designed for AI. And because that will change the cooling needs, whether it's from the cold plates or the CDUs, that's where the growth from CoolIT is going to happen. So we believe the growth is going to continue, and we don't have concerns around that growth because of what's happening in the AI and the chip space.

Okay. Thank you all, and we'll see you in the Adler room. Thank you, Scott.

Thank you.

Thank you, everyone, for joining the Ecolab's First Quarter 2026 Earnings Release Call. [Operator Instructions] As a reminder, today's conference is being recorded. It is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations. Thank you, Andy. You may now begin.

Thank you. Hello, everyone, and welcome to Ecolab's first quarter conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO; and Scott Kirkland, our CFO.

A discussion of our results, along with our earnings release and the slides referencing the quarter results are available on Ecolab's website at ecolab.com/investor. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental 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 in 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 so much, Andy, and welcome to everyone joining us today. We had a great quarter with accelerating momentum across our portfolio. And I know oil prices, energy and supply are top of mind for most, it's not for me. In 2022, commodities cost was up 50% and our margins for cycle went further up. Today, commodities cost is up 9%, and we have all the tools to address this within 1 quarter, done the right way for our customers. As I sit here today, I feel very good about the year and how we're managing a complex environment, and I feel even better about where we're going next.

What matters most for me today is to keep the organization focused on growth, to supply our customers seamlessly anywhere around the world and to support our teams, especially those operating in the Middle East. In a complex environment, our teams are staying very close to customers and supporting their operations without any single disruption because what we do is almost always mission-critical to them. And when something is mission-critical to our customers, it becomes mission-critical to us, too. That means supplying reliably, solving problems quickly and delivering the outcomes they count on, and it's working. We would never ever let the customer down. That commitment is what drives the consistency and the strength you see in our results.

Now turning to the first quarter. We delivered once again a very strong quarter with adjusted diluted EPS growth of 13%, right in the middle of our range. Momentum strengthened across the business as organic sales grew 4%, driven by continued strong value pricing of 3% and volume growth that accelerated to 1%. We also expanded operating income margins reflecting the disciplined execution across our global portfolio and the strength of our One Ecolab approach, which brings together service, expertise and breakthrough technology at scale.

Momentum continued to strengthen across the portfolio, led by our growth engines, which, by the way, have close to no exposure to energy costs. Global High-Tech and digital both grew more than 20%, driven by strong demand tied to digital adoption and the ongoing AI build-out. Life Sciences accelerated to 11% growth, led by bioprocessing where sales more than doubled. We have been investing in talent, capabilities, capacity and breakthrough innovation in this high-growth, high-margin business for quite some time. And today, these efforts are clearly paying off, and we're just getting started. We expect Life Sciences growth to continue its double-digit momentum and operating income margins to expand toward our 30% target over the next few years. And finally, Pest Elimination delivered a strong quarter with 7% growth, reflecting strong share gains from our One Ecolab growth initiative and naturally, our new Pest Intelligence offering.

Our core portfolio also performed very well. Institutional strengthened with solid growth across restaurant and lodging customers more than offsetting somewhat softer market trends. Specialty gained share with 9% growth driven by innovation that helps customers optimize costs. Food & Beverage outperformed its end markets again. Growing 5%, supported by strong execution of our One Ecolab approach and Light Water delivered steady growth, too. We also progress in smaller parts of the portfolio that have been a bit under pressure. Collectively, the performance in Paper and Heavy Water stabilized as we supported them with new business and innovation.

Overall, our growth engines are accelerating. Our core performance is strong and business that have been under pressure are turning the corner. Together, this continues to shift our portfolio towards higher-margin, higher-growth end markets well aligned with our long-term strategy.

We also delivered solid operating income margin expansion this quarter. Underlying gross margin was steady as strong value pricing offset commodity cost inflation. Reported gross margin was slightly lower due to a short-term impact from recent M&A and higher commodity cost inflation. However, the M&A impact was favorable to our SG&A ratio and as a result, largely neutral to our OI margin. Underlying SG&A productivity improved meaningfully as we continue to scale our unique digital and agency capabilities, resulting in strong SG&A leverage year-over-year. As a result, organic operating income margin expanded by 70 basis points to 16.8%. We expect OI margin expansion to improve in the second half of the year as pricing accelerates, and we remain very confident in delivering on our 20% OI margin target by '27.

Looking ahead, the operating environment remains dynamic, but we are ready. We remain focused on growth opportunities while we keep managing a complex global environment. The conflict in the Middle East is one example. It has driven sharply higher global energy costs, creating additional pressure across supply chains. And in a moment like this, customers turn to us as their partner of choice to ensure secure supply, exceptional service and solutions that help reduce operating costs.

We take decisive actions to absorb cost pressures wherever we can. However, the magnitude of energy cost increases requires additional action to ensure reliable supply, which is why we quickly implemented an energy surcharge. This is an approach we've used successfully before, focused on delivering incremental total value for customers that exceeds the total price increase. We know it works for our customers, and we know it works for us.

As a result, the second quarter will be a short transition period. Commodity costs are expected to increase high single digits starting in the second quarter and we expect those costs to remain high through the end of the year. Surcharge benefits will build through the quarter following implementation on April 1. With this, higher commodity costs will impact second quarter EPS growth by a few percentage points. However, underlying performance remains on track and within the targeted 12% to 15% range.

Importantly, we expect to already fully offset the dollar impact from higher commodity costs as we exit the second quarter as pricing continues to accelerate and volumes continue to grow. We expect organic sales to increase 6% to 7% in the second half of the year, helping to stabilize our gross margin during that period. And that's net of Ovivo. Ex Ovivo, gross margins would be up 70 to 80 basis points in the second half. In other words, we will be fully offsetting the significant rise in commodity costs and its impact on earnings and margins in just a few quarters.

As a result, we expect EPS growth to strengthen in Q3 and Q4, resulting in unchanged full year expectations. We, therefore, continue to anticipate adjusted diluted EPS growth of 12% to 15% this year, excluding short-term impact from the pending CoolIT acquisition. As discussed earlier, CoolIT financing and noncash amortization are expected to have a short-term impact on adjusted EPS in the second half of the year. Following the close, the impact is expected to reduce quarterly EPS by approximately $0.20. Importantly, underlying EPS growth remains unchanged. Beyond the short-term impact this year, we expect EPS growth, including CoolIT to accelerate back into the 12% to 15% range as contributions from this high-growth, high-margin acquisition accelerate and amortization from the Nalco acquisition rolls up.

What's even better, the impact of our growth engines on Ecolab's global performance is accelerating as we scale down. This is especially true for global high-tech, where AI is driving significant demand for circular water management and high-performance cooling. By bringing CoolIT and Ovivo together with our global high-tech water business, we're building a $1.5 billion powerhouse that will help fuel Ecolab's next phase of growth and margin expansion.

As AI accelerates the build-out of global digital infrastructure, customers are prioritizing uptime, cooling performance and reliable water management while driving massive increases in compute power with lower energy use and net near zero water footprint. Our circular water solutions help deliver exactly that from ultra-pure water to produce the most advanced chips to 3D TRASAR connected water to support power generation and now direct-to-chip cooling to cooler chips.

Ovivo expands our ultra-pure water and end-to-end microelectronics offering in a business expected to grow at mid-teens rate this year, supported by a strong pipeline tied to fab expansions and increasing water circularity needs. Our pending acquisition of CoolIT builds on this momentum, adding a scaled direct-to-chip liquid cooling platform and positioning Global Hi-Tech with an integrated service-led cooling solution for high-density AI data centers.

And here's more good news. CoolIT has shared with us that they are off to a very strong start in 2026, with first quarter sales growing well ahead of the 30% plus we discussed on the acquisition call as demand for the leading liquid cooling technologies continues to rapidly accelerate. Together, these two businesses have the potential to add a couple of points of high-margin organic sales growth to Ecolab's total growth as they scale and capture more of this huge and fast-growing high-tech market.

In closing, we delivered a strong quarter with accelerating top line momentum, continued margin expansion and double-digit EPS growth in a complex environment. Our near-term outlook is strong and consistent. Growth momentum continues to build. Our portfolio is shifting towards higher-margin, higher-growth markets and much less exposed to energy costs, and our team is executing at a very high level. We're well positioned to deliver another year of strong performance in 2026, and we remain confident in the long-term trajectory we built in.

So thank you for your continued trust and your investment in Ecolab. I'll now turn it back to Andy for Q&A.

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

[Operator Instructions] And our first question is from the line of Tim Mulrooney with William Blair.

This is Sam Kusswurm on for Tim. In your outlook, I think you shared your expected gross margins to stabilize in the second half, which is quicker than I think some investors may have been expecting. I imagine that's because of the decision to implement your surcharge pricing pretty quickly when this conflict started. But can you help us understand how this fits into your goal of reaching a 20% OI margin in 2027, including with the impact that the CoolIT system acquisition will have?

Thank you, Sam. As mentioned before, I know most of you have these energy costs, oil prices top of mind. And for me, that's not the case because we've been here before, and we've learned to master this very well. As a reminder, so commodities cost in '22 was up 50%. And as you remember, margins went further up post cycle. Here, we're talking 9% up as we see it in Q2, and we're expecting to stay high until the end of the year, at least. I'm expecting that 6 to 12 months. So we're expecting in Q2 to get the dollars back as we exit Q2. And then as you said, to get gross margin to stabilize in the second half, including Ovivo. And if you exclude Ovivo, as mentioned, gross margin would be up 70 to 80 basis points, which is our traditional run rate, which is, as mentioned, in line with our model. So OI margin will be even better because SG&A is going to keep improving as well during that time.

So when I'm looking at the math as well of pricing and DPC and commodity cost, well, basically, as you know, 30% of our DPC is roughly impacted by energy cost, while growing 9%, if that's the gross impact of inflation out there, while it's 2.5% that we need to compensate, and that's why a 5% to 6% pricing in the second half brings us in a place where margins are stabilized at the minimum. And that's obviously including Ovivo as well. So underlying, so we improve even further.

But as mentioned before, so my priority is making sure that the organization will stay focused on growth, which means affecting our core businesses and building our new growth engines around high-tech, life science, Pest Intelligence and digital, which today or tomorrow with CoolIT will represent 20% plus of our company, which is really good news because it's high-growth businesses in very natural growth industries, high margins and on a side note that have low to no dependency on energy cost and supply as well.

So if I put it all together, a second half that's going to be stable to good in gross margin, SG&A, that's going to be favorable. So it means a stronger OI and EPS delivery. If I look at '27, including CoolIT, including as well the roll-off of the Nalco acquisition, where we end up, that's my objective. So for '27, it's very early, obviously, so to talk about a year from now. Well, I think that we have a real good chance to be within our 5% to 7% top line growth and for sure, to get to the 12% to 15% earnings per share growth in a pretty solid way.

The next question is from the line of Manav Patnaik with Barclays.

This is Ronan Kennedy on for Manav. Christophe, could you please help us understand the base macro scenario embedded in the guide? Does it assume broadly stable demand environment with modest improvement? Or does it contemplate an already cautious consumer posture and customer posture rather, given the higher energy costs, geopolitical certainty, et cetera? And given the backdrop and your comments regarding not necessarily having the higher energy costs and oil prices top of mind, is there macro sensitivity? Or is it just a function of your internal execution levers like the pricing, productivity and mix?

It's 90% execution we live on the same planet as everybody else, obviously here. But that's why our assumptions, I think, are pretty conservative with this 9% commodity inflation in the second quarter and expecting it's going to stay until the end of the year and probably into next year as well at the same time. From a demand perspective, we're expecting this 1% in the second half. Q2 is always a little bit harder to define in details as it's a transition quarter as we're here. But I look at the second half, I feel good about the 1% growth. This is our assumption. This is not my plan. We're going to accelerate, obviously, our volume growth and pricing in that range of 5% to 6%, as I mentioned before. So you end up with 6% to 7% top line growth for the second half.

So that's assumption for pricing, that's the assumption, 9% on commodity cost as well and kind of this 1% volume, which means that there might be some pluses and minuses in terms of demand around the world. But for me, controlling what we can control, the fact that our growth engines are doing really well. Collectively, they're growing 12% at high margins. Our new business is at record level as well. I feel really good about that. Our core business is in a very strong and steady growth performance, as you've seen. And our underperformers, well are stabilizing the paper and heavy industries as well.

So you bring it all together, I think that between our assumption and controlling what we can control by focusing on growth, managing performance at the same time, well, we end up in a place where the second half is a little bit better than we even thought a few months ago. So feel good about where we're going here.

The next question is from the line of Ashish Sabadra with RBC.

So very strong growth, obviously, in high-tech, 20% plus. You talked about CoolIT also growing really above that 30% growth in 1Q. I was wondering if you could also talk about Ovivo, how that's tracking compared to your expectation? If you could talk about the cross-sell opportunities of Ovivo with your core offerings in hi-tech and also as you're thinking about cross-selling once the CoolIT acquisition closes?

Thank you, Ashish. So Global Hi-Tech is going to become most probably our strongest growth engine in the near to long-term future. And together with life science, I think that we have two amazing growth engines for the future of our company, really focused on industries that are growth industries, high-margin industries and very little depending on any energy impact as well at the same time. So kind of really a combination of sweet spots that I really like.

So on high tech, as mentioned, you bring everything together, our legacy business, Ovivo, CoolIT, you get to a business of $1.5 billion that's growing 20%, 25% or more at high margin as well at the same time. We're exactly at the place we wanted to be strategically. We wanted to be the partners of the industry to help them produce better outcome chips or data compute, obviously, with low to no water usage, which is a big issue for most of those industries and socially as well around fabs or data centers. This is exactly what we're doing with Ovivo that's helping in microelectronics will move from 5% water recycling to north of 95%. So it's absolutely game-changing for fabs.

And keep in mind, so by 2030, 10 new fabs are going to be opened. That's roughly a month. And Ovivo is the most advanced technology to recycle water at ultra-pure level. And something that's really interesting with Ovivo that we've discovered is that the quality of the ultra-pure water is having a direct impact on the yield of the chips manufacturing, which is game changing for the microelectronics industry. So great for them in terms of performance, cheap manufacturing, quality of the chip and yields and at the same time, reducing by 95% the net water usage.

On the other hand, CoolIT, well, you're all familiar with all the app that's happening around data center on water impact. Well, with our end-to-end technology that we're going to bring to the market, well, data centers are going to have the water footprint of a car wash in one of the largest in the country in Milwaukee. Well, the humans in the data center use more water than the data center itself, just to showcase a little bit of the power of that technology.

So all in all, it's the first time in my career actually that I see on both fronts, customers coming to us because they know there's not enough capacity to supply everyone, and we have the two best technologies for microelectronics and data centers out there and customers want to jump the queue in order to be able on their side, obviously, to gain share in their own respective industry.

So CoolIT, as mentioned, first quarter of the year, way north of the 30% that we were planning, which is a very good problem to have, obviously. I think it's going to be a great story for all of us and Ovivo will be [ up ] as well in this mid-teens type of growth. It's a longer cycle, obviously, business, building pads takes more time than building data centers. But the backlog at Ovivo is way higher than what we had thought as well because of all the reasons I mentioned before. So I think that we've bet exactly on the right things that are going to pay off short and long term.

Our next question is from the line of John McNulty with BMO Capital Markets.

Maybe just shifting tack to One Ecolab. Sales growth, you called out noticeably above kind of the core. I guess can you highlight how much better it was than the core? And if you've got any ways to further accelerate the program now that you've been running on this program for a couple of years now?

Yes, John, it's been a bit less than 2 years, but it's been a very good story. So the most obvious outcomes of it are, on one hand, so Food & Beverage United, where we're bringing food safety, hygiene and water together. Well, you see the results of F&B have been very strong. So 5% growth major multibillion business in an industry that's not growing. Consumer goods are not exactly so growing really fast at the moment. F&B United is. And we've done only North America, by the way, so far. So we're expanding around the world, and that's going to extend and expand, obviously, the impact on that very promising business.

Second is our largest customers, our top 35, as I've shared with you, our top 20 and emerging 15, those are the 35 that we focus on. They're growing quite a bit faster than the average of the company because of One Ecolab. And last but not least, through agentic technology, and we're really at the forefront of any industry in how we're using that. Well, our savings in terms of performance have been remarkable while making sure that our teams remain confident that ultimately, so we will really focus most of our attention on growth while we drive performance as well at the same time. So early on the journey, but we see the pace picking up, which is exactly what we wanted and what we need in an environment or a global environment that's a little bit complex at the moment.

Our next question is from the line of David Begleiter with Deutsche Bank.

Christophe, on CoolIT, can you help us with the $0.20 of dilution in Q4? And what is your expectation or forecast for dilution in 2027 from CoolIT.

Yes. So thank you, David. So let me pass it to Scott. And by the way, it's $0.20 per quarter in the second half, as we've described that as well in the release and talked about during the acquisition call as well, and it's going to neutralize in '27. But let me pass it to Scott, and I can add any comment on to that.

Yes. David, as we talked about a month ago when we had the CoolIT call and as Christophe talked about, is that the $0.20 per quarter this year, again, because the close date, we don't know that exactly yet. So I want to make sure you understand what it is by quarter depending on the close. But as we've talked about a month ago, first of all, excluding CoolIT this year, we're going to deliver the 12%, 15%, as Christophe talked about before. And then this is the $0.20 reduction this year. But as we think about to 2027, all with CoolIT, including the amortization, but the net impact, the roll-off of the Nalco and amortization really offsets the noncash amortization from CoolIT. So that's why we feel very good next year of staying in that 12% to 15% range from an EPS growth perspective.

Which adds as well to it to the top line, which is why we did those two investments, by the way, so on Ovivo and CoolIT, both going better than we thought, while it's adding a couple of points on the top line as well. So it's acceleration on the top line, aiming at this 5% to 7% for the overall company and strengthening the 12% to 15% earnings per share growth as well. So as we enter next year, these are the objectives that I have that we will build towards to. But so far, things are going really well on both fronts.

Our next question comes from the line of Seth Weber with BNP Paribas.

I wanted to ask about the life science business, the strength in the organic growth. Is this a step change that we've been kind of waiting for? I think, Christophe, you mentioned that double digits is kind of in the near-term foreseeable future. But can you just help us contextualize how this business is going to then react once the new capacity comes online? And what type of operating leverage should we expect to see kind of intermediate term in this business? I know you have the 30% number long term, but if you are growing double digits, how much leverage can we see on the margin side there?

Thank you, Seth. Well, the short answer is yes. This is the performance that we were looking for, that we've been building towards to. And I'm really, really pleased with what the team has done, both internally, getting the capacity, getting quality, getting our systems, getting our platforms, R&D, everything together in order to get Life Sciences to the performance we're all planning for. So 11% in the first quarter. We've said we're building a double-digit growth business all in. So with life science, this is where we are. This is where we're going to stay. And honestly, that's the idea, it's to grow even faster than that as well with an operating income leverage of getting close to 30%.

I want to make absolutely sure that we keep investing behind that business. So short to midterm, we might be in this mid-20s type of thing as we keep building like the plant that we're going to open in the second half of the year as well, that's going to unleash even more capacity for that business. And then knowing that we get to the 30%, I have no doubt that we're going to get there because it's all impacted by investments, basically, so the performance in terms of leverage that we're getting now.

I'd like to remind you as well what I said earlier as well, our bioprocessing business, which is the core of our business, will grew north of 100% in the first quarter. This is very encouraging. It's not going to be every quarter the same like that, but the steady growth is going to be very strong in that business here. We packed for now, we'll need more capacity as well. So for it, a good problem to have as well and with the fastest-growing business in the life science industry. So right now, and I think that we're going to stay that way with the smaller, most agile, most innovative, probably most aggressive team as well that we have in the industry, very happy with what the life science team has done. We finally where we were hoping to be.

Our next question is from the line of Chris Parkinson with Wolfe Research.

Christophe, obviously, there's a lot to go on in terms of raw materials over the next 2 quarters. But in terms of your '27 CMD margin targets, it seems like you're actually well ahead in certain cases, [ flash ] in line. But I'd love it if you could kind of walk us through the intermediate to longer-term puts and takes of those targets and specifically how you're thinking about any newer dynamics across institutional markets as well as kind of the impending ramp of Life Sciences as well.

Thank you, Chris. I feel really good with where we're heading. But let me have Scott answer that question first, and I'll build on it.

Yes. Thanks, Chris. As Christophe said, we're very confident in the margin expansion we're delivering and the path to 20%. I mean, as you probably know, over the last few years, we've delivered north of 500 basis points of OI margin expansion and feel very good about delivering the 19% this year. So that's 100 basis points year-on-year. And then there's 100 basis points left to get to the 20% next year, which we feel very good about. And as Christophe said, the surcharge is going well, and so that Q2 will be a transition quarter, but feel very good about the second half gross margin, as you talked about.

And in addition, as part of that driver of that confidence, we talked about that business mix where this higher growth, higher-margin businesses, GHT, Life Sciences, pest, digital are also supporting that confidence in that 20% by 2027, but also in our longer-term algorithm, which we talked about, that 100 to 150 basis points through 2030.

And to build on that, as I've shared with you so many times, I'm really focused on beyond the 20%. For me, the 20% is a given next year. And when I think about it, our institutional specialty is already north of the 20%. When we talk about Life Sciences, as mentioned before, so underlying is north of 20% as well [indiscernible] before the investment that we're making that you're seeing, it's getting north of 20% as well. Pest Elimination is north of 20% as well at the same time. And most of water is as well at the same time. So we know exactly how to get north of 20%.

For me, it's just said what's the next milestones that we want to get I'll share with you as soon as I have clear solid view on that, but it's going to be quite a bit north of the 20%. And when you think about Ovivo and CoolIT joining us, that's on top of it, obviously, with businesses that are growing really fast at very good margins. So I feel really good about the 20%. So for next year, 90% of my focus is really on what's next post the 20% to make sure that we keep growing the margins of the company.

Our next question is from the line of Vincent Andrews with Morgan Stanley.

I did want to talk a bit more about Global Water and the margins. And I think in the quarter, there were three dynamics going on. There was the Ovivo acquisition. You called out some raw material inflation. I suspect that hit you pretty hard in March, which you obviously couldn't price right away for. And then the stabilization of the headwind of the softer sales in heavy water and paper. But that -- you called out an upper single-digit operating income growth decline, which I would have thought would have helped the percentage margin. So maybe you could just unpack the margin performance in Global Water, the decline and how those three different buckets contributed to it and how we should think about it over the next couple of quarters?

So I'll pass it to Scott. But generally here, so overall water was flat in terms of OI growth. So slightly 0.5%, so down in Q1. If you exclude Paper and Heavy Water, well, water has been growing top line mid-single and operating income high single digit as well [indiscernible]. So generally, water is doing really well ex Paper and heavy. We're working on these two, Paper and heavy. But honestly, most of my focus is really on the growth part of water. The combination of both, most of water getting better through higher growth, higher-margin businesses like Global High-Tech, well, we'll get to a much, much better place very soon. And at the same time, getting the underperformance Paper and Heavy Water stabilized and improving. We've reached the bottom for these two businesses, while the combination of both will lead to good results for the second half in water. I'm not worried in water. But Scott, anything you'd like to add?

Yes. The only thing you mentioned as well is on Ovivo and Ovivo, as we talked about for the total company, there's a geographical mix between gross margin and SG&A, but not a material impact in OI. So there's a little bit of that geography in the water business as well. But as Christophe said, we feel good about the business. The OI growth, excluding the Paper and heavy, which we talked about, is very good, and we expect the water OI to progressively accelerate throughout the year.

Our next question is from the line of Patrick Cunningham with Citibank.

The specialty division within INS, pretty impressive organic growth. In an environment where you see weaker foot traffic in consumer, highly sensitive to wage inflation, is most of your growth coming from deeper penetration of digital suites and productivity tools versus traditional chemical volume at this point?

Yes, Patrick, the short answer is yes. It's mostly focused on solutions that are helping them get the job done at a lower cost because they use less labor and less natural resources, energy and water. And it's working very well. When we think about the One Ecolab approach, well, we have a great example in F&B United, but we have a great example as well in specialty. It's a business of scale, of standards at scale, of performance at scale. And the way the team is approaching those large quick-serve fast food companies is to help them understand, where is the best performance? What's the best restaurant out there in terms of guest satisfaction, cost and environmental impact and to scale those solutions across the system around the world. And those are customers that are used to that approach, that are welcoming that approach. As you know, they're mostly franchised.

So we have the opportunity with our team to influence every unit anywhere around the world the same way. And this is a huge upside for those customers, and you see it in the results. Growing 9% at the type of margins that we have in this business. This is quite remarkable. And the last thing I'd say, it's the beauty of the Institutional and Specialty business that we have is that wherever the consumer is going to go based on the economic development, let's put it that way, well, we will capture them somewhere. It can be in a luxury restaurant. It can be in a mid-scale restaurant or it can be in a quick serve. We're going to be there. Margins are very similar.

So in a way, we're extremely well positioned wherever the consumer is going to eat because ultimately, some people are going to keep eating. And if they don't go out, well, they're going to buy from food retail, which is a business that's doing really well as well, which is explaining why Institutional and Specialty is such a steady, stable, strong business with high margin because it's a great offering for our customers to drive their own performance around the world and at the same time, so for us, we drive this huge stability and consistency because wherever the consumer goes, we will capture them.

Our next question is from the line of Shlomo Rosenbaum with Stifel.

Christophe, I was just hoping to get a little bit more detail on what you meant that the Paper and the basic industries are turning the corner. Is the growth getting better over there? Is it that you've just seen -- you haven't seen any more paper mills that are closing? Like what's going on with the metal side of it? Are we going to see those businesses get to flat this year? Like just if you could give us a little bit more color because obviously, the other parts of the business are already running in the range where you want, and these are the ones that are kind of pulling you down below that range.

Yes. Because the -- I mean, the whole company, so if you exclude these two, is growing 5% plus top line. So we're in a very good place. Water is also in that range with good volume growth as well. But any company has a few kids that need a little bit some special care because they are in older industries that are growing less fast.

So the short answer is it's stabilized. We haven't been impacted by closures. anymore in the last few months, 3 to 6 months, which is something that's hard to mitigate because when they close a factory, well, there's not much you can do. Obviously, you didn't lose it to a competitor. It's just the factory of the mill closed. So we see that it's stabilized. For me, if it gets into slightly positive in the second half, we'll be fine. This is what the team is heading towards to. I'm feeling pretty good that we're going to get there, to be very honest. This is not where I'm spending my time. I'm spending my time on 80% of the company that's doing extremely well, building those new engines as well at the same time. I want to be absolutely growth focused, driving the performance at the leverage at the operating income side, while we manage those businesses that are a little bit more struggling.

But as I look at the second half, I feel that these two are going to get to a more positive territory. And just also mentioning so they have good margins. It's not great, but they're pretty good as well. So in a way, they're not destroying value for the company, which is the most important for me. So 80% doing great, I mentioned north of 5% of the company. So without these two at the top line as well. But these two doing better, well, it's going to help the overall company as well in the second half and in '27.

The next question is from the line of John Roberts with Mizuho.

Is your inflation higher on raw materials? Or is it higher on your CapEx because you purchase a lot of equipment that has metals and plastics contained in it?

John, it's mostly on the commodity raw material side of things, logistics as well because logistic costs are going up, shortage of drivers, fuel costs, I mean, traditional stuff that we used to. But no, on the -- what you call CapEx, which is more technology equipment, we don't call it CapEx. Yes, there's some inflation, but there's nothing dramatic here. It's not energy related, as you know. So nothing to see there.

The next question is from the line of Jeff Zekauskas with JPMorgan.

Christophe, you said that CoolIT is growing a lot faster than 30%. Is it growing 50% or 70% or 60%? Or can you quantify that? And secondly, when you think about competing in the data center markets in direct-to-chip technology, does the competition emphasize water treatment chemistry? Or is their direction more equipment based? And how do you see your competitive status in offering water treatment technology in the direct-to-chip area?

So Jeff, great question. Actually, the true growth, you haven't even mentioned it in all the numbers that you listed. So it's even higher than that. To be honest, it's close to the triple-digit range, which is pretty cool. But I want to also mention, we haven't closed that acquisition. So I just want to be clear here. We need to have the regulatory approvals for that. It feels good so far that it should happen sometime in the third quarter. That's not depending on us. But so far, exceptional performance that those guys are having.

And Jeff as mentioned, I've met many customers in the meantime because we meet the same [indiscernible] obviously. They want what CoolIT does more than anything. This is the company they want to focus on. You're familiar with a few others, obviously, out there that are doing pretty well, one starting with a V, obviously, is performing very nicely, has a very good backlog as well. This is the case as well for CoolIT.

So generally, great growth trajectory. It's not going to be a straight line to have -- forever. We'll see how that goes. But generally, I think it's going to be a very high run rate. And for me, the biggest challenge we have is to make sure we can build enough capacity behind it in order to feed the growth. Great problem to have first time that we see really customers trying to jump the line in order to get the services from what CoolIT can provide.

Then the second part of your question. So for us, as you know, I don't really care whether products are chemistry-based or technology-based or service-based or digital based. What we are offering to the data centers is ultimately a higher uptime at a lower water usage and lower or better power performance. This is the outcome that we're promising to them. The fact that we can go from low to 0 net water usage is game changing for them. Jeff, you're familiar with the upward that's happening around data centers in our country and around the world. Well, what we do here is solving that problem. This is a big deal for the hyperscalers. At the same time, obviously, it's enabling the more advanced chips that require the direct-to-chip cooling as well.

So we're exploring various models as well here. They're all recurring models in a typical Ecolab manner. That's the way we're developing the business as we get together with what we do in terms of services, 3D TRASAR optimization of water and power cooling, coolant as well, which is by design, a recurring product as well and all the technology that comes with it as well, as I've shared during the acquisition call. Well, every time that the new generation of chips coming, well, you change all the system for the direct-to-chip cooling, which means new cold plates, new coolant and as the power demand goes up, you change the CDUs as well at the same time. So it's inherently a recurring business.

The next question is from the line of Matthew DeYoe with Bank of America.

Thanks for kind of addressing that. I feel like one of the concerns we hear from investors all the time on the CoolIT deal is just it doesn't feel like a consumables business. But I had two to kind of backfill on this. One, the $0.20 per share dilution that you're talking about per quarter, is that math based on the 30% sales growth that you had been laying out there? Or is that reflective of the 100% near 100% sales growth that it's currently looking at? And -- or does that matter over the near term?

And then how R&D intensive do you expect CoolIT to be? Because presumably, the technology changeover here could be pretty rapid. And cold plates and things like that, it's not really like a core competency of Ecolab. 3D TRASAR, yes, but maybe not so much this architecture and tech infrastructure stuff. So I'll leave it there.

So a few things, Matt, and then I'll pass it to Scott, if there's anything that needs to be added. So generally, so the base case is the 30% growth plus that we've talked about. So that's the base assumption. That's what we knew back then. That's what we based our assumptions on as well. And anything that's better is going to help us, obviously. But Scott is going to add to that as well.

That question on the R&D and the knowledge, I'd like just to remind you that it's a water business because direct-to-chip cooling, well, the next technology is to get towards water. Even the coolants that we are offering to customers today are not water-based, but water-based are the best heat transfer coolant that we can imagine. Then you get all the challenges to work with water, obviously, of scaling, of fouling, of corrosion and all the things that comes together with water, especially when you work at lukewarm temperature, which are the latest NVIDIA chips, the type of temperature that they're going to have.

This is a business -- this is a technology that we've been mastering for a very long time, mastering water at higher temperature, mastering heat transfer. We are the leading cooling company. We can't forget that for 80 years. So we know thermal management really, really well. We have a lot of R&D here. And the last thing is CoolIT is super strong in R&D as well. You add to it the 3D TRASAR technology that we're going to bring together. It's going to be CoolIT plus 3D TRASAR technology is going to become the new Ecolab offering for customers the moment that we close as well. Well, it's going to be game changing for our customers ultimately.

So I feel really good in terms of R&D, in terms of expertise, it's a typical 1 plus 1 equals 3, which is exactly where we want it to be. It's a water business, removing heat. which is what we've done basically for 80 years in both other industries and now in this new industry. Scott, do you want to add anything on the EPS impact?

Yes. One thing I would say, Matt, on the EPS is, as we've talked about, we think this is a very high-growth, high-margin business and that 30% sales growth is over the next few to several years. And obviously, in the earlier years with that averaging, it will grow faster. So certainly, as Christophe said, we like what we see, and we see growth accelerating. But I still think that $0.20 is a good base case to have once we close per quarter. And then we'll adjust from there once we get hold of the asset.

For the second half of this year and then it gets neutralized in '27 because of the amortization that's rolling off as well at the same time. So it's almost perfect timing for that.

The next question is from the line of Mike Harrison with Seaport Research.

I was hoping that I could ask a question on the pest business. Just in terms of the digital and kind of smart connected traps that you're rolling out, can you give us a sense of what percentage of customer locations are using those new traps? Maybe just give a little more color on the timing of that rollout and when you might expect to see some margin benefits as you get better efficiency from your sales and service force with those new traps.

Thanks for that question, Mike. I love that business, and I love it even more moving towards the Pest Intelligence. We have roughly 700,000 smart devices that have been implemented so far. As you know, it's been driven by the largest retailer in the world with whom we've developed that proposition. It's working extremely well, really resulting in close to 99% of pest-free environment with much better service because well, 95% of the time we were spending in the past checking empty traps, well, is now sort of transformed into value add, which means selling more new accounts as well out there.

The plan we have, Mike, is that in the next 3 to 4 years, the whole Pest Elimination business is going to be a Pest Intelligence business. It's not going to be a straight line. We have to make sure that things would be working well. We're going to reach probably 1 million connected devices by the end of this year and we'll keep ramping up in the next few years. That's going to have an impact on growth. It's going to have an impact on retention. It's going to have an impact on performance for our customers. And yes, it's going to have an impact on our margins as well at the same time. And so far, it's working really, really well. We have a great team of that project and customers are really thrill about what they're experiencing.

Our next question is from the line of Laurence Alexander with Jefferies.

As you think about the surcharges and the pricing traction you have and how that has changed over the years, is your percentage value capture across your portfolio increasing? Or is it a matter of delivering more value, but capturing the same percentage? And as you think about those dynamics, are the newer businesses where you prefer to focus your time right now, do they have a higher value capture level relative to the value create for the customer than kind of some of the older legacy Ecolab businesses?

Laurence, it's something that we perfected over the past 4, 5 years, I would say. We always do that in a way that is beneficial to our customers at the same time. And that's been a clear rule, which is why we make absolutely sure that the total value delivered to our customers is north of what we are capturing in terms of price. And not every business is created equal. So if you go to a biotech manufacturer or you talk about Pest Intelligence in a retailer or Food & Beverage for a brewery, it's very different, and we do it in a very thoughtful manner. Over the last 5 years, we haven't lost customers doing it as well. Our margins went up. retention has remained strong as well at the same time.

That's why when we talk about the surcharge, it's kind of a direction. It's providing a framework for our teams and our customers to understand where we're going. While in some places around the world, you have more. In some places, you have a bit less in some of the businesses, it's going straight to structural pricing as well at the same time. It's working really well. That's why I was saying early on the call as well, this is something that we master really well. I'm not worried about it. This is an execution play that our teams are doing really well, the right way, and we're going to be fine with it as well, and we're going to keep sharing with you the progress we're making here. But so far, it's going really well.

Our next question is from the line of Andy Wittmann with Baird.

I guess I just wanted to maybe elaborate just to touch more on that one. It seems like the achievement of the energy surcharge is be important for that second half ramp here. And so just given that, Christophe, as you look at the total customers that you expect to approach with the energy surcharge versus how many you've approached today and are aware that this is coming, can you just help us understand how many of them or what percentage of them have been approached and are aware of this coming? And how many are still in the go-get for the balance of the year for you to achieve your ultimate target there?

Thank you, Andy. Well, it's everyone is impacted. There's no exception. We've said it's 100% of our customers in 100% of our businesses in 100% of the countries that we operate in. And it's not an easy task. Obviously, we have a few million customers in 172 countries in 40 different industries, but it's the third time we're doing it. We started April 1. So it's a few weeks back. It's pretty new. It's progressing very well. The mechanics are there, the systems are there. The tracking is there. I know every week where we are on pricing overall as well. That's why I feel good with the progress that we're making here as well at the same time. And the objective that we have is to be mostly done at the end of Q2, early Q3, while we keep building as well on the structural price.

And as you know, Andy, ultimately, all the surcharge is going to be converted into structural as well as quickly as we can. And in some of the businesses, it goes straight to structural as well, institutional being one of them as well. So the mechanics are there, and that's why we can go much faster and we can do it with a much higher level of confidence as well than in the past because, well, maybe unfortunately, we've become really good at it.

Our next question is from the line of Jason Haas with Wells Fargo.

I was curious if the conflict in the Middle East has had any impact on any of your end markets in terms of like hitting your customers' confidence in any way in any segment.

So short answer is yes. But Middle East is a pretty small business. So for us, it's a few hundred million. It's critical for the customers that are there. And that's why we take it very seriously, and we don't let any customer down over there. There's no customer location that we have left. No, we're there. We're helping them, especially in difficult time. Some of the units were closed for all the reasons that we're familiar with. So it's immaterial, and we want to do things the right way for our customers, for our teams as well. We have practice with it as well. Our customers trust us as well to be with them as well at the same time.

And most importantly, our competition has a very hard time to supply and to serve those customers, a great opportunity for us to gain share as well at the same time. So it might impact slightly our volume growth in Q2. Honestly, I don't care because it's going to help us in the second half, ultimately as we build on new shares in the Middle East. So I look at Q2 as a transition quarter, but the way customers are reacting, they love what we're doing. The fact that we here in the toughest of times as well, it's working well. Really proud of what the team is doing over there, and it always pays back after those phases are behind us.

The next question is from the line of Josh Spector with UBS.

I'm unfortunately going to continue to ask on the price cost side of things, but I just wanted to get some clarity that it's a little bit odd to me that you're talking about high single-digit raws inflation in 2Q. I mean that's coming quicker than I think I would have anticipated. And then you're not really saying that it's going to increase through the rest of the year, which most other companies are expecting higher inflation in the second half. So I'm wondering, one, what's different or unique there? And then two, just your ability to ratchet up that surcharge automatically if inflation goes to mid-teens from the high single digits. Is that baked in? Or is that something that has to be retrieved by you?

So we buy a lot of products like over 10,000, as you know. So that's kind of the good news. It's very broad. So it's pretty stable as well so how it's increasing. It started in February, as you know. So it's impacting the second quarter because of the inventories in between as well. So this expected impact of 8%, 9% of commodity cost in the second quarter. Some are thinking it's going to go down. I don't. I think it's going to be flat to up to your point as well here. We're counting so for that as well. We can manage that in terms of how we buy, how we save cost and most importantly, so how we price as well at the same time. It's impacting 1/3 of our commodities. So not everything, obviously, here.

So we're pretty well insulated with it. And in the extreme case where things change completely, well, we're going to go to the next level of energy surcharge. We did it in the past as well. We know exactly how to do it. Our customers are familiar with those discussions as well. This is not something I'm spending a lot of time on. This is something that our teams master extremely well. They've had the opportunity to do that a few times with our customers. And don't forget that we're providing more cost savings value to our customers' operations than what we're asking them to pay in price as well. That's the reason why surcharges get into structural price, and that's the reason why customers staying with us as well at the same time.

So this is something that is not high on my priority list because I know it works. I know our customers are familiar with it, and I know that we're going to master it whatever happens in the market out there. 80% of my focus is really start to grow the company while we manage that, like many other things that are happening in the world as well at the same time. This is just one of them.

The next question is from the line of Kevin McCarthy with Vertical Research Partners.

Christophe, I'd appreciate your updated thoughts on the subject of SG&A leverage. It looks like you were able to decrease your ratio of SG&A to sales by 130 basis points in the March quarter. Is that a reasonable trajectory to think about for the next several quarters? Maybe you could provide some updated thoughts on what you're doing productivity-wise and the effect of acquisitions on that ratio as we model the company going forward?

Yes. Thank you, Kevin. I'll pass it to Scott. But talking about what I said before that the whole price surcharge delivered product cost is not exactly high on my agenda. SG&A leverage is not high on my agenda either. And it's not because it doesn't matter. It's because it's very well mastered. We know how to manage price DPC. We know how to manage SG&A through technology. By the way, we're clearly at the forefront of all agentic in our organization, and it's delivering great results. So these two things, not very high on my agenda. Those ones are really well mastered while we focus on the growth of the company. But let me have Scott give some color on the SG&A evolution here.

Yes. Thanks, Kevin. So as you said, really good productivity on SG&A in Q1, up 130 basis points. We are getting the benefit of what we're doing for the One Ecolab program as we're launching digital and AI programs. As you noted, there is some shift, and I mentioned before, between gross margin and SG&A from M&A, primarily Ovivo. So in the first quarter, that accounted for 20 to 30 basis points, but still driving 100 basis points underlying, which is above our long-term target we've talked about in leverage being that 25 to 50 basis points.

So on a full year basis, I expect that SG&A leverage to be around 100 basis points, again, including some benefit from Ovivo because of the geography between gross margin and SG&A. But still the underlying is above our long-term 25 to 50 basis points target because of, in part, the faster sales growth, but also because of the great productivity we're driving. But over the long term, I still feel very good about that 25 to 50 basis points.

Our final question is from the line of Scott Schneeberger with Oppenheimer.

Just I'm going to touch on Light Water. You saw some solid sales in the first quarter, expecting that again in second quarter. Do you expect transportation and green energy, which were cited to remain the primary drivers going forward? And what's driving those verticals? Is it something just from a few large projects? Or is it a structural formation that's creating here?

Well, Scott, Light Water is doing quite well. Actually, transportation is one of them. What we do for them is ultimately better paint while using much less water and creating much less waste. It's a great offering that we are providing to the most advanced car manufacturers around the world. They like the idea of better products at a lower impact and lower cost as well at the same time. This is something that we've built over the last few years. We have not been very known at it, but it's working really well with great technology. The green manufacturers as well, total different industry, obviously, but a very interesting one. When you think about solar panels as well, it's a technology that's very close to the semiconductor type of manufacturing. This is something that we master quite well and in some places around the world. So it's growing very nicely.

And the last part that's in Light Water is what we call institutional water. Those are hotels and public buildings, office buildings, air conditioning, water management, Legionnaires' disease management, and those ones are working well. We used to be much more in that business going. So one unit by one unit. Now we're working with the large real estate companies around the world, the facility management companies as well around the world because they like this approach of a standard implemented anywhere around the world that's driving cost down and environmental impact at the same time down. So like what I'm seeing in the Light Water business, and that's why you're seeing the performance keeping getting better, and it's going to keep improving as we move forward into the year, so which is a really good story actually here.

So since it was the last question as well, so just to wrap up and recap a few things. We had a very good start of the year with strong momentum driven by what we like the most, which is record new business. That's exactly where we want to be in a world that's quite complicated. Our new engines are doing extremely well. High-tech, life science are really sort of driving growth in dramatically good ways at high margin with very low impact from energy costs as well at the same time. And I have full confidence in our team in managing margins, both on the price of DPC equation and SG&A, as we were saying before, those are not priorities to me as the CEO, but much more so counting on the team to deliver as this team has always delivered. And that's why I feel really good that '26 is going to be a great year for the company, both at top line and at the bottom line.

And when I look a little bit ahead, well, the new engines that we have with CoolIT and Ovivo, you've heard about the performance, both top line and bottom line are putting us in a very unique leak to serve this industry, the same on life science as well. And that's why I think that '27 is going to be an even better year for us. So a strong '26 and an even stronger '27, which is what I've been committing to you for quite a while and every single year, wanted to make some progress towards that ambition. And I think that we're getting towards that as we enter the next year. So I feel really good and even better about where we're going.

So thank you so much for attending the call today, and I'll pass it back to Andy.

Yes. Great. Thanks, Christophe and Scott. That wraps up our first quarter conference call. This conference call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation. Hope everyone has a great rest of your day.

This concludes today's conference. You may disconnect your lines at this time. Have a wonderful day.

Greetings. Welcome to Ecolab's acquisition of CoolIT Systems Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, it is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations. Thank you, Andy. You may now begin.

Thank you. Hello, everyone, and welcome to Ecolab's conference call to discuss our announced acquisition of CoolIT Systems. With me today is Christophe Beck, Ecolab's Chairman and CEO; and Scott Kirkland, our CFO.

Today's presentation deck is available on our Investor Relations website. You can access it now and follow along throughout the call. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental 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 in the Risk Factors section in our most recent Form 10-K and in our posted materials.

With that, I'd like to turn the call over to Christophe.

Thank you, Andy, and hello, everyone, and welcome to our Monday morning call on this great acquisition of CoolIT. I'm very excited to announce Ecolab's acquisition of CoolIT Systems. On Friday, we shared that Ecolab has entered into a firm agreement with KKR to acquire CoolIT for $4.75 billion. We expect the deal to close in the third quarter of 2026, subject to the normal customary approvals.

Before we dive into this exciting acquisition and what it means for Ecolab, I want to give you an update on the strong performance we're expecting to deliver for the first quarter and how we currently see 2026 trending. We actually feel very good because we are ready and what we're building prepares Ecolab for a future of accelerated growth.

Despite the uncertainty in the macro environment and rising geopolitical challenges we're all facing, our customers count on Ecolab to deliver every single day, anywhere around the world. We're executing and supplying reliably serving customers when they need us the most.

Turning to Slide 3. For the first quarter, which we'll report in about a month, we expect to deliver adjusted EPS of $1.69 to $1.71, representing 13% to 14% growth year-over-year. This is a tightened range around our original midpoint and reflects the confidence we have in our strong delivery. We see organic sales growth trending as expected, with continued strong margin expansion to deliver double-digit earnings growth.

For full year 2026, excluding CoolIT, we are reiterating our original EPS guidance, where we expect to deliver 12% to 15% adjusted EPS growth. Organic sales growth is expected to be higher than our original 3% to 4% target given our recently announced energy surcharge. This surcharge is expected to mitigate the impact of higher delivered product costs, which are expected to increase further in the second quarter. Bottom line, our near-term plan is steady. We're serving customers without disruption and staying focused on delivering superior returns for shareholders in 2026.

Now looking at Slide 4. Our long-term algorithm is steady as well. And with CoolIT, it has strengthened even more. We remain committed to 12% to 15% adjusted EPS growth supported by disciplined execution and balanced capital deployment. We're on track to reach an operating income margin of more than 20% by 2027, driven by 100 to 150 basis points of annual OI expansion from value pricing, strong growth in our high-margin growth engines, innovation and productivity. As our growth engine scale, we see a clear path towards 5% to 7% organic sales growth accelerating from our current 3% to 4% trajectory. And adding high growth, high-margin businesses like CoolIT further strengthened our durable growth algorithm.

Turning to Slide 5. Our growth engines, you're familiar with them, Global High-Tech, Ecolab Digital, Pest Elimination, and Life Sciences are growing really fast. Collectively, they are compounding at double-digit rates, and now with CoolIT represent nearly 25% of the portfolio. Our core businesses are performing well, delivering steady mid-single-digit underlying growth with strong and expanding margins. And as 2026 progresses, we expect improvement in basic industries and paper, which will support better volume performance for Ecolab. With growth engines compounding, the Core performing well, and the Challenged business is improving, we will grow faster, and we will do it with strong margins.

Now on Slide 6. Our growth engines are central to our long-term growth targets, so we're investing in each of them with purpose, capacity where demand is constrained, new technologies where high performance wins and digital scale where connectivity compounds value.

In pest elimination, we're already performing within our long-term sales target range and have a long runway as we scale our pest intelligence platform. It's an outcome-based offering that nobody else has at that scale and that grows share and margin. In Life Sciences, momentum is accelerating with very high margin. New capacity comes online in the second half of 2026, which will remove constraints and unlock further growth for our business where long-term margins can reach 30%. In Ecolab Digital, we're growing more than 20% with a run rate of $400 million in sales in a $13 billion market and growing. We're still in the early stages and expanding connection and monetization across applications gives us a long runway from here. And in Global High-Tech, we're performing extremely well as the AI build-out continues. We're uniquely positioned across fabs and data centers. We entered the high-tech industry in 2021 with only about $150 million in sales and with very strong organic growth and the addition of Ovivo and now CoolIT, Global High-Tech will be a $1.5 billion business, delivering strong double-digit growth with margins north of 20%.

Focusing more closely on Global High-Tech on Slide 7. AI demand is reshaping the digital infrastructure and globally high compute power is expected to roughly double over the next 3 to 4 years. Industry plants call for about 50 gigawatts of incremental compute demand driving roughly 70 new fabs and 1,000 new data centers over the next few years. Today, that represents a $10 billion opportunity for our Global High-Tech alone, and it is growing extremely fast. This is why AI is central to Ecolab's growth strategy, large visible demand, a platform that spans fabs and data centers and a model that scales with above average margins.

As a world's water technology and services company, we are best positioned to support the industry's growing needs and capture a leading share of that growth. This is actually a high-tech water business, serving critical water needs on the world's most demanding customers. This is Ecolab at its best.

Looking at Slide 8, water sits at every critical step of AI. You need ultrapure water to produce the chips. You need water to generate the electricity that powers those chips, and you need water to cool the chips in data centers. On the microelectronic side, we partnered with fabs to deliver ultrapure water and water circularity programs, capabilities strengthened by Ovivo, which we acquired in the fourth quarter of 2025. So together, we now provide end-to-end water offerings for microelectronic productions. This allows customers to produce more chips with less water.

In data centers, we combine Ecolab's water treatment, chemistry, cooling liquids and 3D TRASAR monitoring and our latest cooling as a service platform offering with CoolIT's direct-to-chip liquid cooling platform. Together, we deliver more computing with less cooling through a single integrated site-to-chip model that improves reliability, efficiency and uptime. That's why Global High-Tech is scaling as a growth engine, a business with about $1.5 billion in sales, including CoolIT and expected to compound up more than 20% per year with margins expanding above 20%.

On Slide 9, you can see just how quickly the liquid cooling market is expanding. AI is making liquid cooling the default for high-density compute, and the market is scaling fast. Industry estimates project more than 30% annual growth, with the addressable market reaching approximately $50 billion by 2035. This growth is being driven by rising compute demand, increasing heat output and higher right densities, all of which require more effective cooling solutions. That is exactly where our combined platform plays.

Together, Ecolab and CoolIT provide a single platform that meets customers where they are already investing as they standardize high-density deployments. The secular tailwind is strong and durable, more AI, more data, higher heat equal more liquid cooling and an expanded platform positions us to capture that growth.

Turning to Slide 10. Within this market, CoolIT is a clear leader. Direct-to-chip liquid cooling is a $5 billion market today within the $10 billion Global High-Tech opportunity we just discussed, and it's growing at about 30% annually as high-density AI deployments become a standard. And for perspective, only 5% of data centers already use this technology, which means 95% of the existing ones with [indiscernible] at some point.

CoolIt is a scale leader with a double-digit share and a top 3 position in North America. Demand is expanding so quickly that supply is tight across the industry, leaving room for multiple winners. What sets CoolIT apart is its anchor technology, validated by hyperscale customers and engineered to perform with hotter chips and denser racks. That leadership in a large, fast-growing market sets up the acceleration you will see as our Global High-Tech scales rapidly with CoolIT.

Now on Slide 11, view through the lens of growth. The impact is compelling. CoolIT brings a scale $550 million revenue base with 30% margins, driving EBITDA that is growing much faster than its rapid sales growth. By adding CoolIT, we expand our High-Tech total addressable market from $5 billion to $10 billion. Because this is a high-growth, high-margin business, CoolIT is expected to lead Ecolab's total organic sales growth by more than 1 percentage point, beginning 1 year after close. It's a powerful addition that strengthens the long-term growth trajectory of our fastest growth engine. Together, Ecolab and CoolIT create the industry's most complete cooling platform, a single integrated service-led offering that spans site-to-chip pairing world-class anchor technologies with water expertise, chemistry, monitoring and global service. That combination, which is a typical Ecolab combination positions us to deliver more value to customers and capture a leading share of this expanding market.

Looking at Slide 12. you'll see a snapshot of CoolIT's capabilities. CoolIT is a global leader in advanced direct-to-chip cooling solutions built on deep engineering expertise and real-world performance across the AI ecosystem. The company employs more than 600 people with strong design and manufacturing capabilities and active deployments with major hyperscalers and chip makers, including NVIDIA and AMD. Its platform includes next-generation CDUs, cold plates, rack manifolds and cooling loops, all engineered to perform together as one closed-loop liquid cooling system.

CoolIT's innovation centers in Canada and Taiwan provide rapid prototyping, testing and engineering depth at a time when customers need high-performance solutions very quickly. These capabilities directly complement Ecolab's strength in water management, chemistry, digital monitoring and global service delivery. Together, we create a differentiated end-to-end cooling platform designed to scale with the industry's most demanding customers.

Now turning to Slide 13. This is a growth acquisition, one that fits squarely within our strategy. Ecolab will acquire CoolIT for approximately $4.75 billion in cash. The deal is accretive to our long-term sales and EPS growth algorithm with returns expected to be significantly above our weighted average cost of capital, and we expect to maintain our strong investment-grade profile. On a pro forma basis, net debt to adjusted EBITDA is anticipated to be 3x at close, turning back to about 2x by the end of the second year after closing already. Closing is targeted for the third year -- third quarter of 2026, subject to customary closing conditions and regulatory approvals.

On Slide 14, you can see how CoolIT reinforces our long-term successful Ecolab business model. In a liquid cooled data center, the CDU serve as the anchor points of the cooling loops, and there are up to 100 CDUs data center. These CDUs are the central interface between facility water and the coolant circulating through the thousands of cold plates and chips in service. Cold plates change every time chips change generations, with chip innovation happening faster than ever as new chips come to market every 6 to 12 months and CDUs change as power requirements go up. It's in a way, a consumable business. Around that anchor, Ecolab brings a robust recurring portfolio, chemistry, coolants, digital monitoring through 3D TRASAR, utility water management, pretreatment and water safety programs. This is the Ecolab model we have practiced for more than 100 years in all the industries we serve, and it scales very effectively.

As customers add service, increase density or activate additional roles, the system runs harder and requires more consumables, monitoring and service. Cold plates refresh with each new chip generation and CDUs upgraded as thermal loads rise. Most importantly, with CoolIT, customer spend with Ecolab increases significantly, expanding by 3 to 5x compared with today. With this, we have identified significant sales synergies between the 2 offerings. CoolIT strengthens the Ecolab model. It anchors our consumable digital capabilities and service with high-performance technologies that allow us to deliver better customer performance.

Now on Slide 15, we see further differentiation with digital intelligence is embedded directly into the platform. CoolIT CDU is the inroad liquid cooling unit built for today's high-power AI rooms. These units deliver stable flow, efficient heat transfer and modern controls that allow operators to deploy high-density AI rights consistently across sites. When we embed Ecolab 3D TRASAR technology inside the CDU, the system becomes significantly more capable. 3D TRASAR provides real-time visibility into cooling quality, temperature, flow rate and system health. It enables automated adders, precision dosing, predictive maintenance and continuous optimization, all of which protect the loop and improve data center performance. This is 3D TRASAR at its best and Ecolab at its past. So as thermal loads continue to rise, this level of intelligence becomes essential. Together, CoolIT's anchored technologies and Ecolab's digital capabilities create a differentiated hyperscale-ready CDU that improves performance, reduces pump and chiller load, accelerates commissioning and allows global standardization. This is a meaningful advantage as customers race to deploy infrastructure consistently across regions.

On Slide 16, you can see why the customer value proposition is so compelling. Across the large AI sites, the total spend with Ecolab, including CoolIT technologies, chemistry and service is less than 10% of the customers' annual operating cost, yet we influence the part of the P&L that matters most, cooling. Cooling determines uptime, energy use, power availability and the lifespan of critical equipment, and that's where we add meaningful value. Historically, about 40% of a data center's power went to cooling. Our integrated site-to-chip system, combining CDUs, cold plates, cooling quality, monitoring and service can shift that closer to 10%. That means operator gains significantly more usable power for AI compute without expanding their electrical footprint. In an environment where power availability is one of the biggest constraints on new capacity, this advantage is material. By improving thermal efficiency, stabilizing the loop, lowering energy use and shrinking the water footprint to that of a car wash, we help customers get more performance out of every megawatt. That's why the combination of Ecolab and CoolIT resonates so strongly with hyperscale operators.

Bringing it all together on Slide 17. CoolIT meaningfully accelerates Ecolab's growth profile. It adds more than $550 million of high-growth, high-margin revenue and lift Ecolab total organic sales growth by about 1 percentage point at 30% margin. It strengthens Global High-Tech, our largest and fastest-growing engine and improves the overall quality of our portfolio. This accelerates our path towards our long-term financial targets, 5% to 7% organic sales growth, more than 20% adjusted operating income margin and 12% to 15% adjusted EPS growth. CoolIT contributes meaningfully to each part of that, each part of that algorithm through faster growth, stronger margins and sustained visible demand tied to the global AI build-out.

Finally, on Slide 18, CoolIT extends our proven disciplined approach to strategic M&A. We focus on high-return businesses that strengthen our platform and compound value over time. CoolIT fits well within that playbook. It's supported by visible and durable market expansion and reinforces the same model that has driven our consistent adjusted EPS compounding time. In summary, our year plan is steady. Our long-term algorithm is strengthening, and our growth engines are compounding with Global High-Tech meaningfully enhanced by CoolIT. We couldn't be more excited about this addition.

And with that, we'll open it up for questions. Andy?

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

[Operator Instructions] And the first question is from the line of Tim Mulrooney with William Blair.

Christophe, I appreciate the overview there. I just have one question. With this acquisition of CoolIT, how much of your High-Tech Water business will be equipment sales versus consumables. We typically think of Ecolab as is having a core anchor and then surrounding that with services and consumables, high recurring revenue. But is this acquisition changing your model at all? Are you moving more towards capital equipment?

And the quick answer is absolutely not. Our recurring revenue model has been part of our winning formula, Tim, for 103 years now, and it will not change. It will never change. That's really part of our recipe for success. And when we think about it, both microelectronics and data centers are water-based businesses that are focused on the fastest growth end markets. I see it as my duty, obviously, to make sure that our main capabilities, which in that case, is water, but it's focused on the markets that are growing the most and especially growing the most tomorrow.

And both businesses, microelectronics and data centers are water as a service models that are enabled by technology. That's true in every single business of the company. We need technology in order to drive the consumables, the famous razor that required the razor blades. So the model we have is 90% recurring. It will remain 90% recurring in the future.

If I unpack a little bit, so in microelectronics, we helping customers move from 5% water recycling and it's huge amount of water as we know, to 95% water recycling. Nobody does that. And we're selling outcomes and Ovivo that we acquired in December provides the technology, this ultra pure water technology that enables it. We needed to have that technology in order to bring the water back to the system at the highest purity level, which is called in the industry, so ultra pure water.

CoolIT for data center is recurring, too. But there's a different frequency. Cold plates, as I've mentioned, so I exchanged at every new chip generation change. Every time that NVIDIA comes with something new, well, they need to change the chips, they need to change the cold plates, they need to change the coolant as well. And the CDUs are switched when cooling power goes up as compute power goes up, and it goes very quickly up as we know. So in data centers, our growth is mostly driven by data usage and new chips generations from the likes of NVIDIA. And it's important to keep that in mind.

Obviously, new data centers accelerate the growth but our main focus is making sure that the current data centers, as they refurbish with the new generations of chips are liquid cooled as well with the right CDUs. So you have recurring revenue as well, both on cold plates and on CDUs, albeit at a different frequency. It's not happening every day, but it's a matter of months or quarters.

And the CDUs are like the dishwasher in a restaurant. It's the main dispenser and controlled unit which all other services are anchored around. And the good news is that there is up to 100 in one data center. So bottom line, our 90% recurring business doesn't change and will not change.

Our next question is from the line of Manav Patnaik with Barclays.

This is Ron Kennedy on for Manav. As a follow-up to Tim's question, Christophe, your response in relation to the 90% historical consumable revenue model that mostly avoided direct sales manufacturing with heavy in favor of leasing anchor machines. What gives you confidence in Ecolab successfully managing and scaling a highly tech fast-paced [ hardware ] design and manufacturing operation? And given that it generates revenue primarily through upfront sale of that complex liquid cooling systems like CDUs and cold plates, is there a road map and time line for transitioning into recurring razor blade and razor revenue streams?

So Ron, it's a bit of a similar question, obviously, as what Tim was asking. So I'm not going to repeat, obviously the same. But our model has been 90% recurring and will remain 90% recurring. To close those loops being in a microelectronics fab to reuse and recycle water, you need upfront technology in order to get the direct-to-chip liquid cooling system in a data center, you need additional technology as well. So as mentioned before, the cold plates are changing every time you change the chips, which is related to every time you hear obviously, NVIDIA announcing their new chips. And the very good news is that it's happening to the older data center. Only 5% of the data centers today use direct-to-chip liquid technology because that's the newest technology for the future, obviously. So you still have 95% of the data centers out there that are going to have the retrofit to the newer technology of chips. That means new consumables as the cold plates and the CDUs that come in.

When it accelerates again in terms of compute power, well, you need different cold plates, new coolant, new CDUs as well in there. So you can see that recurring theme. So coming back for old data centers as well as for the new ones, so a different approach. But the good thing is that we're not depending on the number of data centers that are being built because there's so much work that can be done on the existing data centers as well today, which is a huge advantage when people are thinking about, well, how much investments are truly going to happen in new data centers. Well, we have 95% of the data centers out there that still need to be retrofitted because we will need -- they will need the hyperscalers and co-locators. So more power, which means more cooling, which means more cold plates, new cold plates, new CDUs as well at the same time.

And to your question, Ronan, on the technology, I feel really good. We have thousands of engineers in our company. We've demonstrated that we can master high-tech technology in every single of our businesses. Think about even so Pest Elimination, moving to Pest Intelligence. It's been a remarkable technological move that's been done in 18 months. And now we have thousands -- hundreds of thousands going towards 1 million devices in the Pest Elimination group as well, and it's happening as we speak, and it's driving great results. This is true in Life Sciences as well. This is true in Ecolab Digital. This is true in F&B as well with all the new systems that we're bringing as well to life. So investing in new technology allows us to increase our moat, increase our growth, increase our margins and increasing the stickiness as well so with customers for all the right reasons because it's driving better performance to them. So I feel really good with where we're going, both in terms of model and in our ability to stay ahead of technology.

Our next question is from the line of Ashish Sabadra with RBC Capital Markets.

Congrats on the acquisition. My question is on revenue synergies. Can you talk about the opportunity to cross-sell both Ecolab's core offering, the consumables and 3D TRASAR into the CoolIT customer base and the other way around? And how does that improve CoolIT's competitive positioning? Right now it's the #3 player, how can it further improve its competitive positioning plus revenue synergies?

Ashish, thank you. Synergies are quite significant in that case because it's true when we think about individual offering like the CDU and I'll come back to that and how we integrate the overall system as well together. As I shared earlier on, Ashish, the CDUs that CoolIT is providing are the most advanced that are available out there. They have great technology as well to stay ahead of that curve. They don't have the 3D TRASAR monitoring technology, which is something that we've practiced for 30 years now, which is enabling any piece of technology to stay connected with the liquid fluid that's being managed and making sure that the system is running at optimum performance.

Well, we're going to bring together the CDU technology and the scale of manufacturing at high-quality standards that CoolIT has demonstrated in the past few years together with the 3D key technology in order to create the next generation of CDUs to make them really differentiated to what competition out there can provide. And as you know, so with 3D TRASAR, we can connect every element within the system, in that case, so the cooling system in a data center in order to optimize the overall cooling performance of the data center and no one does that today. So that's the first component. It's the individual offering and especially around the CDU, which is 2/3 of the CoolIT's revenue.

The second one, which is the most important one, is when we get together, we become an end-to-end provider of cooling technology. It's not individual offerings within the data center. It's an end-to-end offering of a closed-loop liquid cooling system with coolants, with services, with recurring revenue, everything that I shared as well early on. And the most important news in here is when we add CoolIT to our existing offering, it multiplies the opportunity for Ecolab times 3 to 5x what we sell today. So being able to bring CoolIT to the data centers that we serve today as Ecolab, and it's over 1,000 already today and the same -- the other direction, obviously, so bringing Ecolab in the data centers where CoolIT is present, that's driving a lot of very natural synergies, which is a very natural Ecolab approach when we think about synergies when we acquire a new business as well.

So overall, a very unique story that's helping CoolIT leverage the scope of Ecolab and Ecolab, leveraging, obviously, so the customer scope of CoolIT. And last thing is, ultimately, it's an Ecolab model. It's less than 10% of the overall spend annual OpEx of the data center that's impacting almost half of the overall cost, which is total value delivered at its best, which is what we've been doing for a very longtime.

Our next question is from the line of John McNulty with BMO Capital Markets.

So it sounds like a lot of the longer-term future value of this is really going to be coming together and putting the 2 assets together where you've got a fully closed-loop system. I guess how long before you feel like you've got -- or how long will it take to get a fully integrated product where 3D TRASAR is fully looped into the CDU system and you can kind of offer a full one-stop shop approach. Is that something that can be done in whatever the first 9 to 12 months? Does it take a few years to kind of get that rolling? I guess, how should we be thinking about that?

So it's going to evolve all the time, and it's never really going to stop, John. The good thing is that before we announced the acquisition of CoolIT, we had already launched our service that we call Cooling as a Service, which is a very Ecolab way of selling a service that's driving committed outcome of cooling at certain cost preference and reduced water footprint. This is something that we have already launched. So that exists. We had our own CDU as part of it as well. Now we're adding, obviously, a huge capabilities from CoolIT to come behind our CDU offering, and we add the cold plate to it, which makes the system even more comprehensive.

So we're talking about quarters or 1 to 2 years in front of us. So we're not talking about a very long-term development here. 80% of the work is already done. Getting together will make it even stronger. This is really what attracted the 2 teams because basically, CoolIT needed what we can provide and we needed what CoolIT can provide, which is really our CDUs and cold plates at scale that we plug together and provide our customers with this committed value of more cooling or less power for more cooling, which means more compute, which means better cost per data and reduced water usage as well. So it's going to happen as we speak in the next few quarters and the next 2 years, a lot of game-changing offerings that will be coming on the market.

Our next question comes from the line of Seth Weber with BNP Paribas.

Thank you, Seth. The Ecolab CapEx model will not change. So what you've seen so far will remain. That's really something that we really liked and CoolIT compared to its peers without naming them is in the same swim lane. So no surprise on that side. Now in terms of capacity, obviously, mid- to longer term, considering all the growth that industry is on will require investment as we grow, but that's pay as you grow, which is a very Ecolab-like type of model. Now back to short term, CoolIT has the capacity today to double again their sales, which is actually a very reassuring place to be. At the same time, they're working as well with partners, manufacturers in Asia. We do too as Ecolab, which means that when we bring together CoolIT's capabilities and capacity with Ecolab capabilities and capacity, what it makes that situation even better. So no constraint short term. We feel good about where we're going for the next few years.

We'll keep building capacity and capability as we think a little bit more down the road, but it will be a mix between what we manufacture ourselves that we absolutely want to protect and what is something that we can let produce by someone else under our own design. This is something that we've done as a company for a very long time. Take dish machines. We have hundreds of thousands of dish machines out there. Well, we don't produce any, but the design and the IP is ours. So it's going to be a similar idea as we go forward with Hi-Tech and CoolIT.

The next question is from the line of Andrew Wittmann with Baird.

I guess kind of a 2-parter here. I guess just for context here, Christophe, could you just talk about what the trailing 12 revenue was here? Maybe how the backlog compares of orders compares like this today versus its size last year at this time? Just for some context of what's been happening here in the recent term. And just thought maybe it would be helpful for you to comment on how your 2 companies have worked together so far to this point. Obviously, there's been a lot of integration that's been done by someone else, and that's the opportunity for you. But I'm just wondering the familiarity or any integration that you've had to do that maybe gotten you to this point with this company already, if any?

Good question. Thank you, Andy. So two questions, as you said. So the past trajectory is similar to the future trajectory, which is not too surprising. And in a typical Ecolab manner, obviously. So we're projecting sort of the trajectory for the future in realistic ways and it might well be better/much better than that. So we will see. So when we look at the past, we look at where they are exactly today, how 2026 looks like. So we feel very comfortable.

And that leads to your question as well of the backlog that covers the majority of '26 is supposed to be delivering as well. So we feel very good about 2026. They feel very good. We spend a lot of time together to really understand what was in the pipeline. We're very familiar with that type of approach, obviously. And we feel good. And when we look down the road of '27 and beyond, actually it's even better. And the fact that we get together will open, obviously, the synergies. I was mentioning to Ashish a little bit earlier as well.

Now to the second part of your question, the relationship between the two companies. So we've been connecting so for quite a while together even before they were on the market because, obviously, most people were familiar with them. And we were trying to get to know each other to learn from each other, to understand what's out there? What are the capabilities that we will need? What are the opportunities that are out there.

And it's actually the more we were talking together, the more that we realized we made for each other because CoolIT is 100% data center liquid cooling technology company. There's none out there that was existing, 2/3 in CDUs, 1/3 in cold plate, exactly the mix that we were looking for half in North America, 1/3 in Europe, 20% in Asia, the geographic footprint that is aligned with investments of data center as well at the same time. And most importantly, the best quality and technology that was out there, and the teams really had pleasure working together, and that's how it accelerated ultimately so the process of thinking of getting together at some point.

It's obviously attracted a lot of others on our path. But ultimately, we ended up exactly where we wanted to be when we started to get to know each other.

The next question is from the line of Vincent Andrews with Morgan Stanley.

This is Steve Haynes on for Vincent. I wanted to ask a question about the guide for the full year. And I understand that you're reiterating it ex the acquisition, but maybe you could just give a bit more color on what you've one assumed for price raws and if there's any change to the kind of the cadence of the second quarter through the fourth quarter versus your prior outlook?

Thank you, Steve. I'll pass it to Scott first, and then I'll make a few comments if needed.

Thanks, Christophe. Yes, Steve, so excluding CoolIT, just to set the baseline, there's no change to our 12% to 15% growth for the full year. And obviously, given what's happening in the world, we're overcoming significant DPC inflation in doing that with doing the surcharge, which we announced effective April 1, but also just generating growth to our One Ecolab performance. Specific to CoolIT, obviously, dependent on timing of close. We've said we expect it to close in the third quarter.

And with the CoolIT financing costs, we expect a low to mid-single drag on the overall 2026 EPS relative to the 12% to 15% I mentioned before, okay? But all in, expect CoolIT and with the amortization, we still expect both the impact of CoolIT and [ ACO ] amortization next year. We expect the 2027 to remain in that 12% to 15% growth scenario. So really sort of a perfect timing for us. But ultimately, as Christophe mentioned before, we think CoolIT strengthens the overall long-term EPS algorithm as you think about, this is adding 1 point of sales growth to overall Ecolab, and it's at a 30% EBITDA margin.

Maybe a few additional comments here in my role here looking at '26. It's one of those years as well where we spend a lot of time planning for our delivery of the coming year. And well, the delivery plan is quite different than what we had expected. That's been true for the past many years for all of us, obviously, on this planet. So we've gotten very used to doing great plans that do not happen as planned, but that doesn't compromise the outcome, the delivery. The path to get there changes, obviously, because the environment has changed. But I'm looking at our team and saying, okay, we've been here before. We have 2 options. One is to step back, sit back, observe what's happening and becoming more cautious.

My approach here is to say, this is an Ecolab moment. This is an exact time where customers need us more than ever in order to ensure their operations that we can supply them all the time, that we can help them so get their productivity as well up in a difficult environment. So this is an Ecolab moment. This is a moment where I want the whole organization to gain share, to bring innovation and to acquire new capabilities for growth in the future. And that's why what we did with Ovivo in December, what we're doing with CoolIT today is all in that spirit of saying this is a great opportunity for Ecolab, and we won't miss that opportunity to get there.

So feel pretty good for '26 with everything we know now, okay? We'll see what we learn, obviously, in the next few days, weeks, months. But we're very agile as an organization, and we demonstrated that year in and year out. I feel really good for '26, and I feel even better for '27 with the growth engines that we're building and how we're strengthening our core business at the same time.

The next question comes from the line of Patrick Cunningham with Citi.

So it seems the interest expense to fund this deal is higher than the EBITDA contribution at least initially. How should we think about sensitivity and level of risk tolerance in order to achieve 2x leverage by the end of year 2, given there could be some potential fluctuations in the broader AI investment cycle?

I'll pass this right over to Scott much more for this year for...

Yes, Patrick, I'll just talk on the interest itself. So as you know, we've talked about for the year, our interest expense coming into the year is about $290 million. This will add about $260 million. But given the strong growth and the strong margins of this business and you add on top of that, just the strong cash generation we have as an Ecolab business, we feel very good about getting to that 2x within 24 months. The peak leverage after close is going to be around 3x, as I think Christophe mentioned earlier. But just given that strong cash generation model, given our strong balance sheet, which is in great shape, we feel very good about delivering that leverage back to about 2x in 2 years.

And if you just consider what we did in the past with previous acquisitions, we practice that very well. We take it very seriously, getting back to [ 2x ] as quickly as we can, which means just a few years is something we demonstrated in the past. We know how to do it. We have the right cash flow as well to do it. This is the beauty of the Ecolab model, and we will not diverge from our commitment to get back to [ 2x ] in a very short period of time.

The next question is from the line of David Begleiter with Deutsche Bank.

Christophe, post CoolIT and Ovivo, are there other technologies you'd be looking at to possibly add to the Global High-Tech platform? And secondly, is the potential at some point to have Global High-Tech being its own segment in the reporting structure of Ecolab?

Thank you, David. So two very different questions, obviously. So starting with the first one. The second, you might stress a little bit to our science team that loves having new reporting segments. It's -- maybe starting with the second might be easier, so the reporting segment. We're trying to give you as much transparency as we allowed to obviously, from an accounting perspective around our growth engines in General and Global High-Tech as well. So more specifically, so GHT, Global High-Tech is an operating segment within our reported segment water already today. So we're going to keep building on that and give you as much transparency as we can. That's been our approach, our philosophy and our practice, and we will keep doing that always more as well going forward. So more to come here, but as much transparency as we can as we've always done.

And your first question in terms of acquisitions, I guess, with CoolIT and with Ovivo, I think we are in the exact right place for us. We wanted to really build scale on how chips are being produced, which are produced in water. As you know, we wanted to have those water capabilities in data centers where chips need to be cooled. Well, we created the critical mass that we needed in data centers with CoolIT. And there's a third component that we're not talking about here is how do you power, obviously, the chips. We have a very strong presence in the power industry that interestingly enough, has been growing the past few years between 0% and 0.5%. It's expected to grow 10x that growth rate, which means 5% in the many years to come, starting right now, by the way.

Well, this is why our power business, which is not in High-Tech is obviously benefiting as well from that AI drive, which is a very good thing. But in short, we feel that we have what we need right now, so with CoolIT and with Ovivo. And we will keep working with partners out there to really be at the center of this ecosystem to really own water as a service for our customers. That's going to be true in microelectronics for the fabs, and that's going to be true for data centers as well. But for the most part, we have what we needed in both those segments.

The next question is from the line of Shlomo Rosenbaum with Stifel.

Christophe, I understand the future positioning with the 3D TRASAR together with the CoolIT. What I'm trying to understand is the positioning of the business right now within the market versus the other two larger competitors, what is unique about CoolIT? What do they do that they don't -- other ones don't do? Or does everyone have kind of a similar type of technology and they're all kind of growing with the market growth?

Well, generally, as mentioned before, so it's a new technology for data centers that's been brought to the market just a few years back. We're talking about 2 to 3 years here. So it's not that long ago that, that technology is truly took off in the data center world. So there is room for plenty of players, obviously, out there because -- well, every supply that's out there gets taken by the customers, the hyperscalers and the colocators as well at the same time. So plenty of room to grow for the few players that you mentioned as well before.

What I really like in CoolIT and second, in the combination of the two companies. So first on CoolIT. As mentioned before, it's a pure-play cooling data center business. That's the only one out there. That's all they do. It's 2/3 CDUs. It's 1/3 cold plate. It's exactly the right mix, exactly the right geographic presence, as I mentioned as well before. So that's all they do. They have those relationships with chip designers and manufacturers as well as the hyperscaler to know what's to come, to design together with them. They have great testing capabilities that most don't have at that scale and that we certainly Ecolab do not have as well today. So it's kind of the best property out there, the best asset. And that's why for me, when I was looking at what was out there, well, it was well, half the price of others out there, higher quality, higher growth opportunity, a pure play at a higher return. So that was pretty easy.

So for us and for me to say, this is the one we need because it's exactly the right balance for us and for our customers. That's when I look just CoolIT. When I compare -- so Ecolab plus CoolIT compared to the other 1 or 2 guys that you're mentioning out there, the other ones are product companies. So they sell products. They sell most of it through distribution as well. It's like electric supplies type of companies doing very well, different model. This is not the way Ecolab runs business because we are driven by outcomes that we commit to. And then so we get this revenue model with consumables that we provide to our customers. We've seen that in many of our businesses. Most of our competitors are product companies in most of the other segments that we serve. Well, we're not. We're outcome-driven with a recurring service model to deliver that outcome.

That's exactly what we're planning to do as soon as we close, obviously, with CoolIT is to strengthen this cooling as a service offering for our customers that's bringing all the aspects, all the products, bringing all together through 3D TRASAR and having service capabilities on the ground in those data centers anywhere around the world. Competition does not have service people going to data centers as well. So I think that the differentiation is going to be pretty strong compared to the other two.

The next question is from the line of John Roberts with Mizuho Securities.

This is Edlain Rodriguez for John. I mean, Christophe, technology keeps changing. I mean now it's direct-to-chip, but this may not be the future of data center cooling. I mean single phase immersion cooling seems to be the next leap. Like how confident are you that CoolIT is future-proof?

So future proof is always depending on your ability to keep innovating out there. But this is true in all of our businesses, obviously. So when I think about Pest Intelligence, when I think about Life Science, when I think about Institutional, when I think about F&B, it's always been driven by innovation. And that's why as a company, when we launched our mega innovation program 5 years ago, you've seen some of those during Investor Day as well last year. Well, I feel much better today with all that breakthrough innovation portfolio that we have and that we're strengthening for the future because it's allowing us in each of our businesses to stay at the forefront of what's required, obviously, so by each of those customers in each of those industry segments. So this is something that is true for most of the segments that we're serving.

This one is more extreme. It's growing fast. Technology is moving really fast as well. This is something I really like because this is good ultimately for that industry. This is even better for the overall company because that mindset of innovating in big leaps and really fast what is exactly something I'd like to have for every other segment of our organization. So it's going to help us indirectly for the overall company as well at the same time.

So back to your practical question, as mentioned before, liquid cooling is in 5% of the data centers today, which means 95% do not have think about shifting those 95% towards liquid cooling. Well, that's going to provide a pretty long runway out there. Thinking about the next generation of cooling with 2 phases, for instance. Well, we're thinking about this one. Don't forget that Ecolab is the leading cooling company in the world. We've done that for 80 years. So that's something that's very familiar. We have the physical capabilities. We have the scientific capabilities. We have the digital capabilities.

And most importantly, we have thousands of scientists and engineers that are doing that every single day. If there is one company that understands cooling, this is Ecolab. We've done that for nuclear plants to hotels, to data centers as we are talking today, it's the same physics, obviously here. So I feel good about what we can do here. And -- where it's going to go? Well, the fact that we're very close together with CoolIT with the chips designers and the chips manufacturers that those 2 are separate usually, well, is helping us understand, well, what do they need? What can we provide? That's going to happen so years down the road. Well, this is the power of innovation. This is exactly what I like, and this is exactly what we're good at as well. So liquid cooling is, for sure, the next generation of cooling solutions for the years to come, and we keep thinking about what's coming next after that as we've always done in every single other business too.

We're nearing the end of our question-and-answer session. We have time for one final question, which will be from the line of Jason Haas with Wells Fargo.

I want to take a step back and just ask a bigger picture question on the philosophy behind doing this deal. I'm curious like how this plus Ovivo shifts the focus and growth of Ecolab like over the next, call it, 5 to 10 years. I'm just curious like for how long you'd be considering doing an acquisition to get bigger in data centers like this.

Thank you, Jason. If I step back as a company, Ecolab has always done that. That's always been our driving force is making sure that we're building new businesses that are capturing the next growth opportunity. That was true 25 years ago with Pest Elimination. That was true more or less the same time when we started with F&B with cleaning in place. That was true with water in 2011 when we acquired Nalco. That was true when we created Life Science in 2017. That was true when we created our Digital Business as well so a couple of years ago. And this is true with Global High-Tech today. So it's always been a combination of affecting our core businesses for the future, making sure that the core business is doing extremely well, while we're building new growth engines for the future. So I feel really good with the fact that tomorrow with CoolIT, our growth engines familiar with them with Pest Intelligence, with Global Hi-Tech, with Life Science and with Ecolab Digital.

Well, it's 25% of our sales and having 25% of our sales that are growing double digit at higher margins and with stronger earnings growth as well, but it's continuously shifting our portfolio towards higher growth, higher-margin businesses. This is exactly what we've done since we began as a company. We've accelerated that over the last 20 years. We accelerated it even more in the last 5 years with Life Sciences, Pest Intelligence and now start with Global High-Tech. So it's a very traditional Ecolab approach of making sure that we keep shifting, obviously, our business where the puck is.

And as the world's water company and knowing that water is central to AI, chips are produced in ultra pure water, chips are powered with electricity that requires a lot of water and chips are cooled tomorrow with water technology. Well, this is an obvious place for us to invest, to own and to be really the game-changing partner for each of those customers in those several industries. So I feel really good about this continuous shift that we've always done towards higher growth, higher margins, higher returns, higher moat with the same model of 90% recurring revenue model that has made us successful for a very long time. And it's going to be even more the case tomorrow because High-Tech, well, is the highest growth industry in the world out there with whatever risk out there, the demand of AI is going to keep going up in a really pay-as-you-go type of approach model for Ecolab. This is an Ecolab model. This is a water business. This is the highest growth industry. This is exactly what we need. So that's why I feel really good about the strategic relevance of this deal, building those growth engines for the future.

And if I step further back, well, I feel good about how it fits into our commitment to deliver our performance short and mid- and long term for you, for our shareholders, the 12% to 15% algorithm of earnings growth has just gotten stronger with it. We're adding 1 percentage point to the top line as well of the company at 30% margin. This is a really good thing as well and getting to the 20% OI margin in '27 remains absolutely unchanged as well. And my eyes are clearly focused on what's next, how high can it truly go after 20%. So pieces are coming very well together in a world that's hard to predict, that's complex out there. But as mentioned before, I see that as an Ecolab moment. That's where we are at our best. This is what we like. We will capture that opportunity as we've always done in the past, and that's going to drive higher return for shareholders as it has as well over time in the past done as well.

So thank you so much for joining us today, a big moment for our company, for our team, really proud of all the great work that our teams have done, specifically for that acquisition, but more broadly in delivering a very strong 2025, starting strong in '26 as well and building the future as we've always done as a company. So thank you for joining us. We will see each other, obviously, in a month from now for the Q1 earnings. And if you have any questions in between, reach out to us at any time. Thank you so much. Have a great day and stay safe. Bye, everyone.

Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to Ecolab's Fourth Quarter 2025 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, it is now my pleasure to introduce your host, Andy Hedberg, Vice President of Investor Relations. Andy, you may now begin.

Thank you. Hello, everyone, and welcome to Ecolab's fourth quarter conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO; and Scott Kirkland, our CFO.

A discussion of our results along with our earnings release and the slides referencing the quarter's results are available on Ecolab's website at ecolab.com/investors. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental 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 in our poster 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 so much, Andy, and welcome to everyone joining us today. 2025 was another record year for Ecolab with record-breaking sales, margins, earnings per share and free cash flow. This was all enabled by the exceptional total value of our team and technologies delivered to customers, helping them achieve better business outcomes, operational performance and environmental impact. Thanks to our team's dedication expertise, we're entering 2026 with strong momentum and are very well positioned to deliver continued high performance with confidence.

In Q4, we delivered 15% adjusted EPS growth with quarterly growth strengthening throughout the year. This was driven by accelerating underlying sales growth and continued strong OI margin expansion. Organic sales grew 3%, driven by 3% value pricing and positive volume growth. Volume actually was stronger than it appeared, with performance improving across most of our businesses. Food & Beverage accelerated to 5%, Pest Elimination and Life Sciences both accelerated to 7% and Specialty continued to drive significant share gains, growing 7% as well. Institutional underlying sales growth was consistent with prior quarters, excluding the unexpected short-term impact from lower distributor inventories.

We also maintained strong double-digit growth in Global High Tech and Ecolab Digital. And taken together, this strong momentum lifted Ecolab's underlying volume growth to 2%, driving mid-single-digit underlying organic sales growth when we exclude impact from basic industries, paper and this lower distributor inventories. In other words, our core businesses and our growth engines are doing very well.

We expect the distributor impact to largely normalize in the first quarter of 2026. We also continue to anticipate basic industries and paper's performance to progressively improve in 2026. Combined with strong new business wins and continued momentum across our growth engines, we expect volume growth to get back to 1% as we exit the first quarter, with growth accelerating further as the year progresses.

Our strengthening underlying sales drove organic operating income growth of 12% and expanded our organic operating income margin by 140 basis points to 18.5%. This resulted in a full year operating income margin of 18%, up 150 basis points versus last year. We're confident we can continue to expand our OI margin well beyond the 20%.

Now before I move into our 2026 outlook, I want to take a moment to acknowledge current events in Minnesota. Ecolab has customers in more than 170 countries, but Minnesota has been our home for more than a century. It is where our headquarter sits, and where thousands of our colleagues, customers and communities counting us every single day. In recent weeks, Ecolab, along with other business leaders across the state, have come together to call for de-escalation and a constructive path forward. As a company that has always believed in doing well by doing good, we stepped in early to have rally business leadership and support the efforts underway. I'm proud of the progress we're seeing and encouraged by the positive momentum.

As expressed in an open letter signed by 60 Minnesota-based CEOs, the business community has an important role in supporting stability, strengthening local businesses and helping build the brighter future for Minnesota. We will continue to work together to help ensure Minnesota remains a strong and resilient place to live, work and grow.

Now looking ahead to 2026. Our priorities are very clear. First is rapidly grow total value delivered to customers across our core businesses; second is to accelerate our One Ecolab growth initiative; and third is to fuel our growth engines. We expect 3% to 4% organic sales growth this year with growth accelerating as the year progresses, driven by strengthening volume gains and continued 2% to 3% value price.

Total reported sales, including the Ovivo Electronics acquisition, is expected to grow upper single digits in 2026. And with this strong growth, OI margin is anticipated to expand 100 to 150 basis points to more than 19%, resulting in an OI growth of 14% to 16%. Altogether, this is expected to drive strong EPS growth of 12% to 15%, which includes the headwind of additional noncash amortization from the Ovivo acquisition.

Our first priority is to rapidly grow total value delivered, or as we call it, TVD. Across our core businesses, TVD is our formal framework for measuring the business outcomes, operational performance and environmental impact we deliver to customers. When we deliver measurable value across these 3 dimensions, it not only drives share gains, but it earns Ecolab collapse the ability to value price. And with the strong customer value pipeline heading into 2026, we remain very confident in delivering 2% to 3% pricing this year.

What makes our value model so powerful is our best-in-class approach. With our scale, digital intelligence and global service, Ecolab partners with customers to define what best-in-class looks like and scale it across their operations, helping them achieve peak performance. This has consistently help customers lower costs, reduce risk and improve performance across the entire enterprise.

Innovation is also essential to our best-in-class value model, and our 2026 lineup is strong and keeps getting stronger. In Global High Tech, we're launching direct chip pooling as a service to the data center market. This brings liquid cooling right where it's needed the most, the chip. By combining our CDO platform with Ecolab 3D trays, our real-time monitoring, advanced cooling technology and on-site service, we improve uptime, lower cooling costs and allow more power to be put towards compute.

In Food & Beverage, we're launching CIP IQ an AI-enabled digital solution that uses real-time analytics for a smarter way to optimize cleaning places. It decreases capacity, reduces water and energy use and improves quality control and product safety, helping customers run more efficiently at the time when every hour of production matters. Earn interest is strong, and we're looking forward to a healthy rollout in 2026.

In Institutional & Specialty, we focused on scaling our IQ suite, DisiQ, AquaIQ, KitchenIQ and BeverageIQ. These solutions directly address labor shortages, guest satisfaction and rising operating costs, giving operators smarter, more automated ways to run their kitchens and front of the house operations. We expect strong growth from the suite in 2026 as well.

And in Pest Elimination, we're expanding beyond our rodent-focused smart devices with the new smart solution for approaches extending the reach and impact of our paste diligence platforms.

Moving into our second priority, 2026: expanding the One Ecolab growth initiative. We've demonstrated immense success over the last year. We've aligned our global resources to better serve our top 35 global customers, where there is a INR 3.5 billion growth opportunity. In 2025, sales growth with this group outpaced total company by approximately 2 percentage points. This year, we're expanding this model to our largest regional customers around the world, leveraging the tools, processes and sales structures bid for our top 35 customers.

Within One Ecolab, we've also delivered more than $100 million in SG&A savings as of year-end 2025. We achieved this by consolidating functional work into our global centers of excellence and deploying a number of agentic AI applications as 1 of the most advanced companies.

As we shared at Investor Day, our initial One Ecolab rollout exceeded expectations, allowing us to increase our savings target from $140 million to $225 million by 2027. And today, we're increasing our savings target again to $325 million by the same year, 2027, due to the continued success of the overall program.

Finally, looking at our growth engines, they now represent about 20% of our portfolio, including Ovivo Electronics, which closed earlier than expected. Together, our growth engines have very attractive long-term OI margin profiles, and in 2026, we expect them to collectively grow double digits, lifting Ecolab sales crops. When we look at what's skirting that trajectory, Global High Tech is leading the way as AI expands and every part of its value chain depends on water: the fabs that make the chips, the power plants that fuel the chips and the data centers that run and cool them. Ecolab is uniquely positioned in all these markets to help enable the AI build-out. With Ovivo Electronics now part of Ecolab, we provide the ultra-pure water essential for semiconductor manufacturing, supporting the fabs producing the world's most advanced chips. As we bring our unmatched capabilities together, we're building a unique circular water offering for the fast-growing microelectronics sector. And Ovivo is off to a strong start in 2026 as we have already secured several new fabs where leading ultra-pure water technologies will be deployed.

On the data center side, the industry expects unprecedented demand for AI to continue to rapidly expand. Higher rack densities and rising chip heat make liquid cooling mission critical. Our direct to chip cooling platform, including integrated 3 trays monitoring and on-site service positions us to help data centers improve cooling asset performance, reduce the power required to cool and return more power to compute. And as the industry increasingly turns to water to cool next-generation chips like NVIDIA's [indiscernible] platform, we're very well positioned backed by more than a century of experience managing cooling and water systems in complex environments at scale.

As strong as that momentum is, it's only part of our growth engine story. Another major contributor is Pest Elimination. Nearly every Ecolab customer today uses some form of pest elimination. With our One Ecolab strategy, we're unlocking a $3 billion cross-sell opportunity by delivering the most compelling outcomes in the industry, targeting 99% pest relocation through our digital connected pest intelligence platform. We're leaders in deploying digital technologies to this commercial market and expect to have more than 1 million smart devices in the field in 2026.

This technology not only drives best-in-class outcomes for our customers, but it also frees our team to spend more time driving strong sales growth while continuing to expand margin.

We're also seeing exceptional progress in Life Sciences. We delivered our best year yet in bioprocessing. We saved up nearly 75% in 2025. Life Sciences has the potential to be one of Ecolab's highest-margin businesses, where we target long-term operating margins of 30%. We're investing behind these attractive and significant long-term opportunity with breakthrough biopharma purification innovations, new digital solutions and capacity expansions. That includes the capacity expansion of our Life Sciences' industrial water purification business, which is expected to begin production in the second half of this year, removing the constraints that created a drag in 2025 and positioning us for strong growth in the years ahead.

And the fourth engine powering our growth is Ecolab Digital. We've grown this business to nearly $400 million in annual sales, increasing more than 20% in 2025, and we're still in the very early days. We're investing heavily to bring market-leading digital solutions to our customers across our portfolio. In 2025, more than 25% of our innovation pipeline was digital, which has grown significantly over the last few years.

The strength of Ecolab Digital comes from its focus on solving critical customer challenges and increasing the total value delivered to our customers.

With all of this, we enter 2026 confident in our ability to deliver continued strong performance, and we're off to a strong start in the first quarter. For the year, we expect reported sales growth of 7% to 9% and organic sales growth of 3% to 4%, with organic growth accelerating as the year progresses, driven by strengthening volume growth. And with 100 to 150 basis points of OI margin expansion, we expect 14% to 16% OI growth, and EPS growth of 12% to 15%, including the impact of Oviva. And we are often [indiscernible]. The best of Ecolab is yet to come. Our ability to improve customers' business outcomes, operational performance and environmental impact is more relevant than ever and it's powering consistent double-digit EPS growth.

So thanks so much for your interest and your investment in Ecolab. I look forward to your questions.

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

[Operator Instructions] And our first question is from the line of Tim Mulrooney with William Blair.

I just wanted to double click on the -- you gave a lot of good color in the prepared remarks, but I just wanted to double click on that volume cadence as you move through the year, specifically organic volumes. Because I know you've got a couple of headwinds from paper and basic and as well the inventory thing with institutional. So how do you think about these headwinds moving through the year as well as then on the other side of it, you got that solid momentum in some of these other businesses. Can you walk me through these pieces, and taking that all into account, how you're thinking about the trajectory for organic volumes, specifically as you move through the year?

I'd love to, Tim. And our framework remains the same with the 1% to 2% volume growth and 2% to 3% to get to the 3% to 4%, so the year accelerating in 2026. And when I step back, the truth is that the volume growth in Q4 was almost the same as in Q3. As you know, so we round up or down our volume. And the difference versus around and around 1 was actually only a few million dollars. So at the end of the day, was almost the same in Q4 as in Q3, which is why earnings were strong, and I feel great about where we're going. But what makes me the most optimistic about our future is that Well, 85% of our businesses are doing great. As mentioned, F&B, which we're building around this F&B united idea of bringing hygiene and water very closely together, that's done in North America, well have accelerated to 5%, Life Science 7%, Pest 7%, water ex paper and basic to 5%, and INS ex the distribution inventory story there, well, we're growing the same at 4%, with specialty is steady at 7%.

So in other words, what I really like is that our portfolio is shifting to higher growth, higher margin businesses, which is exactly where we want to go. And we did obviously saw, with the 15% of the portfolio that needs to work, and there will always be something and I expect paper and basics to kind of get to a much better place as we progress in 2026.

So if I put all that together, improving the underperforming businesses of paper and basic, normalization of the distributor inventory in institutional and 85% of the company growing very nicely, I expect the Q1 to be pretty similar to Q4, but with acceleration towards the end of the quarter and acceleration continuing in the quarters to come during the year of 2026.

So overall, a very good trajectory, especially from the underlying growth.

Our next question is from the line of Manav Patnaik with Barclays.

Christophe, I was hoping you could just double click on the global high-tech piece, the water, the semi, the data center piece, post Ovivo, just help us size, what do you think the growth rate is, where the opportunities are? And perhaps if you see any roadblocks to you achieving some of your growth ambitions there?

I'd love to, Manav, for that question. So global Hitech is kind of a new business for us, started it 3, 4 years ago. really focused on data centers and on fabs, which is the short name so for manufacturing of microelectronics chips. And if I step back as I mentioned so many times, why are we so interested in that field. On one hand, well, AI demand is booming. Is that going to be a straight line to heaven? Probably not. There's going to be apps and slower apps probably as well going forward, but the trend are clearly up and we see it from an investment perspective. Second, the power and water that's required for that is incredible. As mentioned, so by 2030, we expect an incremental need of power for the whole of the electrical consumption of India and the incremental needs of the freshwater use of the whole United States. So at the end of the day, when at the heart of AI is water. As mentioned before, to produce the chips because they produced in ultrapure water, to power the chips because power generation is the second largest water user in the world of the agriculture, and the third one is to cool chips, which is shifting towards water at the same time. So high-growth market, where water is a heat of it and especially on those 2 key areas of fabs and data centers and one might argue that power generation is also part of it was kind of a flat market for a very long time, but that's changing because we need much more power that's going to help as well up on the side, but it's not part of our global high tech.

So the way we're thinking about building it on fabs, since one fab requires the amount of water equivalent to 17 million people, that's an example in Korea, for instance, there, well, the solution is to provide technology where you can recirculate water within the fab, which is really hard because at the same time, the quality of the water that's used to produce the chip is directly correlated to the quality of the advanced chips, and that 1,000x more pure than water that's used in our blood injections by the way. So recycling water tha's difficult to recycle at a super high standard, but that's exactly what Ovivo helps us to do. That was the piece of the puzzle that was missing for us. and now we can provide so the semiconductor manufacturers with circular water solutions and we're seeing very high interest from the key players out there.

And the second and last I'll mention is data centers. Well, for a long time, they've been air cooled. That required cooling towers with a lot of water that we've been used to manage for a very long time. Now that's shifting to liquid cooling, which means that you you reuse the liquid in the data center, a liquid that's coming [indiscernible] on top of the chip and that liquid is not water today, but it's getting towards water [indiscernible] because it's the liquid with the best thermal properties, which is what we mastered the most as well at the same time.

So liquid cooling in circular mode for data centers and circular water for fabs manufacturing. That's the way we're thinking about it. We added Ovivo for fabs, and we will keep building our capabilities on data center. Today, combined, these 2 businesses are roughly $1 billion, growing strong double digit right now at very high margin. And we see many opportunities to make that business way bigger in the years to come.

Our next question is from the line of Ashish Sabadra with RBC Capital Markets.

I just wanted to drill down further on the drivers for the 100- to 150-basis-point of margin expansion you obviously raised the 1 collapse saving targets and talked about $100 million of savings already achieved in 2025. I was wondering if you could provide any incremental color on the savings in '26, but also tailwinds from pricing as well as mix shift in '26?

Thank you, Ashish. I'll pass it to Scott, just to start the answer.

Yes. Thanks, Ashish. Similar to the targets we set out at Investor Day last fall, this 100 to 150 basis points is anchored on really 2 things: gross margins which is at 75 to 100 basis points annually, which we're thinking about that long term, same sort of targets for 2026, and then this 25 to 50 basis points of SG&A leverage annually through 2030. So that's how we get to this 100 to 150 basis points. And then just diving into the gross margin, the drivers of that being the value-based pricing that Christophe referenced, our mix of businesses, as you see these growth engines being higher-margin businesses, but also innovation. And then on the SG&A savings, if you look at over the last 5 years, we've delivered sales productivity almost 30%, which is sort of sales per head, which is part of that driver. And on top of that, with that, we're also driving the One Ecolab program, which Christophe announced that will now increased that savings target of $325 million. And that $325 million, as we think about it, about $120 million. So I think that's sort of 1/3, 1/3, 1/3, a little bit more than 1/3 through the end and then the remaining $200 million will be sort of equally over the next 2 years. And so that will be a driver of that 25 to 50 basis points as well.

Our next question is from the line of John McNulty with BMO Capital Markets.

So I wanted to drill down a little bit into the incremental margins because it looks like what we saw in the Past was kind of a really explosive incremental margin in terms of how much kind of came down to the bottom line. And then when I look at things like the Life Sciences side, it was dramatically less so. It was probably the weaker of the performers of your businesses. So I guess can you unpack that a little bit in terms of what some of those dynamics might be? Why we're seeing such different results by segment, and how we should be thinking about that going forward?

Thank you, John. It looks like Scott is on a roll, so he's going to take the first part of the answer here.

Yes. Thanks, John. As we've talked about in the past, we don't really think about incremental margins in that way. But I get your point on Life Sciences and Pest, the Life Sciences, you saw the OI growth in low single digits in Q4. But frankly, that was as we expected because we had targeted OI margins in that mid-teen range. It was due to 2 things. One, as we talked about, we're investing in that business. Underlying margins are actually better. And on top of it, you had a year-on-year comparison, sort of bad comp, if you will, on Life Sciences really because of performance-based compensation. And that business, sales accelerate throughout the year, as Christophe talked about, and the OI growth for the full year was 30%, and so they've earned that performance-based compensation. But we really expect that business going forward to increase OI to increase double digits into '26 and going forward. And then Pest, as you mentioned, was sort of the opposite, and again, that was comparing against a comp last year. As you might remember, we had a spike in accidents at the end of last year, which was creating a lower base point for them. But again, that business is doing really well, as Christophe said, growing 7% top line and OI margins north of 20%, and we expect to continue that trajectory.

So maybe a few points here to build on what Scott just said. Not every quarter is treated equal. You can have year-on-year obviously some comparisons like our accidents in Pest Elimination, which were unfortunate a year prior, obviously, that's changing, obviously, the March profile on a year-on-year basis. It's also investment pacing by business. We're all in the spirit of investing the right way, the right time. It's not always equal in every quarter. And here, I'm speaking about Life Science, for instance, as well, but generally is really making sure that we get or beat the 20% OI margin that we've talked about over 2027. We feel really good about it. So we were 18% last year, we are planning to be north of 19% '26. And I'm already thinking about what's beyond to 20% because many of our businesses or either beyond 20% already or have underlying margins that are already north of it, which is the case of Life Science.

Our next question is from the line of Chris Parkinson with Wolfe Research.

Christophe, if you can just dig in a little bit to what you're seeing in the global water business. Over the last couple of quarters, there's been a bit of a divergence between light and heavy within water. Mining seems mix, perhaps some [indiscernible] metals. F&B, it seems like it's inflected and papers continue to be a drag. But can you just kind of give the way you -- if you can give us some insights on how you're thinking about that business in 2026? What you would need to see at the top and the bottom end? And forgive me for coming my own range, but to the 3.5% to 4.5% range, call it midpoint, obviously, just how are you thinking about this business? And what are you hearing from your teams to kind of confirm or deny the bottom or the top end of that range?

I'd love to, Chris. Water is half the company -- sorry, it's a big chunk of it. We've built that business since 2011, obviously, when we acquired Nalco. And our ambition was really to create the world's water company, and we come to that ambition over the last 10 years. And there is that feeling that we're just getting started on that journey.

Now that being said, we're serving many end markets. with water. Obviously, some are growing very fast, and some are growing a little bit less. But no one has the capabilities that we do have and the reach that we have around the world plus the digital technology that we bring into it in order for our customers to reduce and recycled water so in a closed circle as mentioned, so for the GHT or global high-tech example as I described a little bit before.

So if we look at the performance of that business, Chris, yes, we grew 2% organic in Q4 as a whole. But if you exclude basic and paper, which are down part of the cycle, well, water was growing 5% in Q4, which is very strong performance, and we still want to get better than that. As I mentioned, the biggest business in there is Food & Beverage. We are merging hygiene and water to provide the best solutions for our customers around the world. We've done it in North America. It's led to very good results, 5% for that business is good in an industry that's flat by the way. I mean, the end customers that we are serving as well here. And we've only done North America with that can be united. We're going to keep expanding around the world. Then there is the global high-tech story that I just described before, Chris, which is close to $1 billion, which is growing, so in strong double-digit rate with very high margins as well at the same time.

And then you have all the businesses in between from manufacturing areas, for instance, to our institutional water business as well, which is providing water services to our institutional businesses as well. But bottom line, so we end up with a business that underlying growth is close to the mid-single, so this 5%, drag down by basic and paper. But those two will recover. That's the good and the less good things are a little bit more cyclical businesses, and we will deal with that. So you bring together strong underlying growth acceleration in global high tech and recovering of basic and paper industries and you end up in a pretty good place in a business that has strong margins. We had a very good quarter in Q4. I think it was the second highest quarter of the last 5 years from a margin perspective and water will get as well to the 20% and move beyond the 20% in the years to come.

The next question is from the line of Seth Weber with BNP Paribas.

Christophe, in your prepared remarks and the slide deck, there were a bunch of mentions about new business wins, I'm wondering, can you just give a little bit more color around that? Are these conquest from other providers or just new -- companies that are new to the space that are kind of just adding suppliers? Or any color around these new business wins would be helpful.

Yes. New business is the #1 focus of the whole company. We have this mantra of all-in sales. So no one is not selling in the company, it's either you're dealing with customers every single day or you're supporting someone with serving customers every single day. I have this objective myself to meet once a week, the CEO of a customer. And last year, I met close to 100 customers as well. So this is where we all collectively spend most of our time.

Now we are focusing, first and foremost, on our current customers and our largest customers as well. As mentioned earlier, so our top 35 customers have a growth potential of $3.5 billion. Well, this is where we want to focus our attention first and foremost, because it's the most obvious growth to get, and that's why we're growing much faster with those customers than everyone else. And it's the most cost-effective way, obviously, to get new business because we have service people going into those sites already today. So it's expanding the share of wallet, and at the same time, it's helping our customers because we go with end-to-end solutions, helping them get to best-in-class performance. They get better total value delivered, better for their P&L, we get a share of it. So at the same time, we get higher growth, better margin for us, and it's a better deal for our customers. That's the first priority that we have.

And second, it's to do the same for our local large customers around the world. And the third priority are more the individual customers around the world. And the last thing I'd say, we had our global blitz 2 weeks ago, which is engaging the whole organization around the world on new business. And within 1 week, we managed to grow our new business versus the same week a year ago by over 30% during that week as well. So a very good story. Our value proposition is very well received by our customers because they needed more than ever, either because they don't have enough water or they're trying to improve their cost performance because they have price pressure, cost pressure and so on. This is the value that Ecolab provides to them. This is the way we sell, and this is why our new business is going very well, while retention remains very stable as well across our businesses around the world.

The next question is from the line of Andrew Wittmann with Baird.

Great. I guess I wanted to ask a couple of kind of maybe kind of punch list items here. But usually, you all have a view on FX that's included in your guidance. And I didn't see one in this press release, Scott. I was wondering if you could talk about the FX rates that are implicit in your EPS guidance raise. So that was kind of one there. And then just on the expected volume improvements on the water side, Christophe, is -- are you seeing that -- is this just going to be a comp game where the comps get easier? Or are you, in fact, expecting the volumes in some of those more challenged industries to actually improve? And if so, what are you looking at that gives you that indication?

Thank you, Andy. So let me start with the second part, and then I'll ask the FX to Scott, 2 very different questions, obviously. The new business in -- for the whole companies has kept going up in absolute terms, so dollar of net new business. So net of what we might have lost, which is very little usually. This is true for water, and this is true for the challenged businesses as well of basic and paper. They also got to record new business. It's just that the demand then afterwards of those businesses is lower year-on-year, and that's driving the growth or the slight decline that these 2 businesses are experiencing as well at the same time. But generally, new business, Andy, is a very strong proposition for us. why we focus the whole organization on it, making sure that whatever happens out there, your business is where you need to focus your time, gain share even in a market that might be declining. So good story even in our challenged businesses. Now on FX, Scott?

Yes, happy to answer the mechanical questions, Andy. So on the FX for '26, we're not expecting a significant health for hurt. We're sort of thinking it's neutral to the year. Just given the current position of the dollar, probably slightly favorable in the first half, but really assuming neutral in the second half going in. Obviously, the FX is pretty dynamic, the macro environment, so that could change. But that's our going in assumption, but even any upside in the first half, as you look at sort of all items below OI, there's going to be offsets to that as we had in our guidance the tax rate is going to go up from the 20.2% we had this year to somewhere between 20.5% to 21.5%. And then also, which wasn't in our specific guidance, but other income is going to be a little bit of a headwind. It will be about $30 million next year. So that's about a $20 million decrease on that other income just due to pension assumptions. So if you look at as a whole below OI items, they're not a net help to us.

But maybe a point on this FX because it's always -- when we think about sort of the next year or at the beginning of the year what are the assumptions that we've taken? When I think a year ago or even all the years prior, Andy, we were almost never right. We thought that FX would be a massive headwind in 2025, while it was not. We thought that our delivered product cost would be pretty benign, [indiscernible] situation changed quite a bit during the year as we now and we adjusted. So we've got us to become very agile to adapt to local conditions and make absolutely sure that we still deliver our [ 12 to 15 ] earnings per share. We hope -- we think that FX is going to be pretty benign in '26. Maybe it's not. And if it's not, we will adjust accordingly as well as we've done in the past few years.

The next question is from the line of Vincent Andrews with Morgan Stanley.

Just a question on the One Ecolab cost savings. You raised it again. I'm just wondering if your assessment is that this will probably be the last raise to it or if you still think there's opportunity there, maybe there's some conservatism in the number because it looks like the the cash costs associated with achieving these benefits are still nicely above the benefits themselves. And I often think of those 2 lines, those 2 numbers ultimately intersecting. So maybe just your latest thoughts there, and how that might carry forward into '27.

Maybe a comment before I pass it to Scott. I don't think it's conservatism. It could have been, but it's not in that case. We're leveraging, obviously, the technology, AI agents, agentic technology as well here that no one has really done so far. So there is no real benchmark blueprint out there. You've probably seen that we ranked #9 on the Fortune AI list of most prepared companies. So for the age of AI, I really encourage the whole team to embrace technology, to stay at the frontier of what's out there and to see how it works. And for the most part, it's been a very good story. It's not a perfect story. There are places where it didn't work, but 80% of the time it's working really well, where it's driving better outcome for our customers, for our teams to where we operate, while at the same time, driving huge productivity gains. And my feeling is that it's going to keep improving in the years to come, but we don't know exactly where it's going to come from because the technology, in some cases, doesn't even exist. Scott?

Yes. Christophe said it very well, Vincent. The savings momentum is better than we expected, as you said, moving from that $225 million to $325 million now by 2027. And it's that way as we're learning, but also moving up the value chain as we deploy technology and AI and tie touch processes and then leveraging the global COEs that Christophe referenced before, which allows us to deploy that technology at scale. But I think as we think about '26 to '27, that incremental $200 million from what we've already realized, I would think about that pretty evenly. And then long term, this is really an enabler to this 25 to 50 basis points of SG&A leverage, which is our long-term target. And that's relative to historically what we've done about 20 to 30 basis points. So really almost doubling our SG&A leverage that we've had historically enabled by the One Ecolab and the scalability that it provides.

At this time, we'll go the next line, and the question is from the line of Patrick Cunningham with Citibank.

Just on the digital sales piece, could you maybe give us an update on how your ability to monetize these technologies has evolved in 2025, where you ultimately see it going and where you're getting the best traction with customers?

Thanks, Patrick. [indiscernible] question. Well, as we go, we've been for a long time in the business of building great new businesses and Ecolab Digital, as we know, as you know, is a fairly new business that we started 2 years ago. It's not that we started digital technology and digital offerings to our customers 2 years ago. We just did it as part of our offering for 30 years when we invested in 3D TRASAR technology. And we haven't monetized directly that offering to our customers for 28 years of the last 30 years that we've been in that field. So we're building that new organization. We created a dedicated organization on that opportunity. It is in the early years. It's not perfect. It's a bit rough on the edges at the beginning, but that's always been true when we build new businesses. But the fact that we are already generating close to $400 million of sales, which encompasses only 2 components of it, it's connected hardware and it's software. Those are the 2 elements that are driving those $400 million, very high margin and growing, obviously, north of 20%. And I think we'll grow probably 25% in '26 as well as here. And we're really at the beginning of it. The way we think about digital sales at Ecolab and especially in the future is what we call the 100%, 100%, 100%, where 100% of the customer locations that we serve will have to be connected, 10% of the applications that we provide to each of those locations think about the hotel, where you have the dish machine, a laundry machine, an AC unit, Pest Elimination, EcoSure audit systems and all that, those are the applications, 100% of them need to be connected. And the third element is 100% of the time where people pay for its own, 100% of the units or 100% of the applications, 100% and billable offering. This is the way we think about it. And that's why when I think about the $400 million we have today, we have just scratched the surface of what we can do.

We still have a lot of customers using those technologies that do not pay because they're still on the old programs, and we have a lot of customers that do not use it today, especially in institutional because it's relatively new that the cost barrier is not the barrier anymore so for most of our customers as well, and we have millions of customers out there that can use it. That's why Ecolab Digital is a great story, very early in that development. And I think it's going to become one of the biggest growth drivers of our company going forward by driving customer benefits ultimately because our promise is to help them reduce their total operating cost. That's the TVD that we've always promised to our customers.

The next question is from the line of David Begleiter with Deutsche Bank.

Christophe, back to Basic Industries and Paper. Is your confidence in the back half recovery just because of easier comps? Or are you seeing some underlying improvement in these end markets as we progress through the quarter?

Thanks, David. It's a combination of both that industry for the paper and packaging industry had a dual challenge. On one hand, okay, a demand that was pretty low and at the same time, related to it consolidation of the industry. So consolidation means that they were closing paper mills and a paper mill for us is a big chart. So it can be up to $10 million or $15 million of sales in 1 location. Well, if it happens that, that location gets closed, okay, there's not much you can do because you're not going to sell much to that location anymore. So we had to go through that the last 12 to 24 months. And that seems to be behind us.

We haven't seen in our environment, mill closures in the last few months, which obviously is a good news for us as we enter 2026. New business is good in that business as well. Innovation is strong as well at the same time. And the margin of that business was, what, 13% last year. It's not Ecolab average, but okay, if I may say. So the combination of both kind of recovering progressively and pretty good margins even in a down environment in 2025 makes me a bit more optimistic for 2026, but I'm not even close to declaring victory on this one. Same for basic industries, different industries, obviously, but similar model as well.

So we're dealing with it, making sure we make money in all of those businesses. We will keep gaining share as well. And as those industries recover, that's going to help us as well over the next few quarters.

The next question is from the line of Shlomo Rosenbaum Stifel.

Quick questions. Christophe has normalized for that distributor inventory reductions. Just looking at a normalized way, what's going on with the volumes? Are the volumes actually going up? Like if you didn't have that surprise, are the volumes going up? Or are you still -- you're kind of at a flattish trajectory? And then it's just a technical question I want to ask afterwards. On Slide 13, on the top left, it talks about Water's organic operating income growth is expected to something in the first quarter of 2026, and there's -- it's a blank or there's a word missing. Is that expected to go up, go down, be flat? If someone could just answer that.

So thank you, Shlomo. So a few questions, obviously, that you have in there. I&S, Institutional & Specialty, basically nothing changed from a demand perspective. And if you normalize, it was 4% organic for I&S and 3% for the institution division at 7% for specialty. So generally, nothing to see in I&S in a market, that's a difficult market, as you probably noticed, the restaurant and hospitality industry is not doing great right now, but we're gaining a lot of share, which is really good.

Maybe a comment on this distributor event, why did they go down and that's not under our control. It's obviously our customers ceciding that. But the better we become in our supply chain service, the more reliable, the more accurate we become, well, the less inventory they need to carry from our products. We've seen that in the past a few times already. That happens mostly at the end of the year as well. Well, that's exactly what happened in the fourth quarter, and that takes a few weeks to happen and then it takes a few weeks or months to normalize as well. But it's driven by 2 good things. On 1 hand, demand hasn't changed. And on the other hand, inventories went down because our service improved.

Okay, we don't like the optics, but generally, it's a good thing as well as going forward. And your question on the water. So for the Slide 13, I don't know what Slide 13 was to be honest. So I'm glad I have some help here. I think that the word was missing. And what I'm seeing here, it should have said expected to accelerate [indiscernible].

The next question is from the line of Jeff Zekauskas with JPMorgan.

I have a couple of questions about Ovivo. Is Ovivo roughly $500 million in sales, maybe growing to $550 million? And is the EBIT, I don't know, $75 million, the EBITDA $100 million. Can you give us an idea about that? And Ovivo is a combination, I think, of sale of equipment and consumables. What's the balance between equipment sales and consumables? And in the fourth quarter, it seems that you excluded it, that is you took out the interest costs that were connected with the acquisition and the revenues of Ovivo [indiscernible]. Why did you treat it that way from an accounting standpoint? And what do you plan to do in the first quarter?

Thank you, Jeff. So I start looking at me because I'm not the accountant here in the group there. So he's going to take that question of the December accounting. And I'll cover your other questions after that. Scott?

Yes. Thanks, Jeff. So as you know, Ovivo closed a bit earlier than we expected and wanted to show that Q4 really show the underlying business without the transaction noise, which was very consistent on how we handle both the Purelite and Nalco acquisitions. So if you look at it because in Q4, the deal closed in the middle of December. In Q4, we had like half a month of interest expense, but very minimal sales and OI benefit just given the timing of flows and mix of the business geographically. So it would have been very noisy. It was not part of our guidance that we had for Q4. And again, it's consistent with how we treated PureLight and Nalco.

That's the first part of the question. So I hope it answered your question, Jeff. And so now on Ovivo as a business. It's roughly $0.5 billion. Yes, it's a bit less than that. And it's growing double digit. The way it looks for the first quarter is double-digit growth as well. I've been very pleased with the new business in that field. It's focused 99% on fabs, as you know. And we've closed a few very interesting deals in Singapore and in the U.S. It's very few customers as we know that are producing some microelectronic chips. But those are very big every single time. There's no one that can do what Ovivo can do. And there's no one that can do what together we can do, which is the circular approach of reusing and recycling ultra-pure water. 95% of the water does not get recycled in microelectronics today, which is a major issue. Our ambition is to get north of 80% recycled. So from 5% to 80%, or in some cases, even 100% of reuse.

Now to your question on equipment and consumables. The Ovivo as such, is mostly technology and much less consumable. What's important to us is the combination of Ecolab and Ovivo, which then becomes very much like an Ecolab business where it's mostly consumables and technology as a secondary growth driver. That's why we really like it. It was technology that was really hard to develop. No one is even coming close to them, Jeff. We could have developed it ourselves. It would have taken years.

The second issue is to get the credibility with those microelectronics manufacturers. They're very few and they're not exactly risk takers for technologies that are absolutely critical to the chip manufacturing. That would have been a second hurdle for us as well. And everything is happening as we speak as well at the same time. So a great business coming with what we have done for a very long time in terms of water management. Well, it's a typical 1 plus 1 equals 3, I think that for our fabs business, it's going to be game changing.

The next question is from the line of Matthew DeYoe with Bank of America.

Think you're done with year 1 of One Ecolab that you'd rolled out to like the 3 largest customers. What's the feedback and any wins, learnings you can take as you deploy this to I think it's the top 25 customers in 2026, so an incremental 20 so to adds. And when do we see this as more of a top line driver? What kind of rollout do you ultimately need? Because it didn't feel like you have a pretty considerable amount of sales opportunity just with that top 35 based on the kind of conversations we've had over time?

Yes. So it's 35 customers. So it's our top 20 largest customers in the world and what we call our emerging 15. So those are not the biggest, but the ones having the potential to become some of our biggest, microelectronics being a perfect example of one of those 15. So you get to 35, that could drive $3.5 billion of share increase potential. That's why we focus on those ones first and foremost.

It's simpler because it's fewer customers, and it's the biggest potential, the $3.5 billion in many locations around the world. So we've gotten organized behind our 35 customers, which are the biggest brands, obviously, that you know in all industries as well at the same time. So that organization component has been done. The growth of those 35, as mentioned before, so it's 2 percentage points higher than the rest of the company. So facts of demonstrating that it's working. And it's probably the second biggest moat that we have as a company, our first being our team, serving our customers everywhere around the world, is delivering best-in-class performance. Basically, we help each of those customers understand what's the best-in-class performance within their own company if it's a restaurant with the best guest satisfaction, what's the best cost performance, what's the best environmental impact. If it's a data center, it's uptime, cost and impact, you get the system here, and we have them drive the performance of all the units towards the best-in-class performing unit within the company. And we do the same across the industry, not sharing the names, obviously, to help our customers understand all [indiscernible] from a best-in-class performance.

So it's been developed based on an idea from a few of our customers a few years back. And those customers are ultimately asking even more than what we can deliver today, which is kind of a good problem to have because our customers, I would say, are ahead of us in terms of what they would like to see from us and what we can deliver. Well, that's a good problem to have, and that's where we are.

Our next question is from the line of Mike Harrison with Seaport Research.

Christophe, you mentioned the IQ suite. I was wondering if you could talk about what penetration looks like today versus where you think penetration could go over the next, say, 2 to 3 years? Just curious, are you 5% or 10% of the way to where you hope to be or more like 30%, 40%, 50%?

And I guess as we think about growth in the IQ suite, where would we expect that to show up? Does it show up in digital sales? Does it show up in institutional volume growth? Or does it show up in margin expansion or all 3?

The short answer is all 3, Mike. So first your questions penetration. It's in the low single digit. Today, we're very early here. As mentioned often, this is something we did not exactly do in our institutional end markets because it was too expensive for our customers to embrace that technology, things that changed dramatically in the last 2 years, and we have the knowledge and expertise our water industrial businesses. So we're kind of very well positioned for that. So very early on that journey.

Second question, where it comes. Well our reporting segments are our traditional 4 reported segments that we have. The digital sales that we're mentioning are the digital sales of those 4 segments. so included in the 4 segments, which is the way we've presented at the last 12 or 13 months that we're doing that. And last but not least, yes, it improves the margin because digital sales have a way higher margins because there is no real cost or hardware cost related to it on the software side. On the hardware side, it's a little bit different, but it's much higher than the average gross margin we have in the company. So it's all 3.

Our next question comes from the line of Laurence Alexander with Jefferies.

Just wanted to flesh out a little bit how your thinking is evolving around the interplay between your M&A targets and your margin targets. The 20% margin has been kind of an elusive 1 over the years and kind of now it's within reach. You hinted earlier, you may be thinking about moving it higher sooner rather than later. Would you -- what type of M&A would you consider that would structurally push back the margin target a few years? Or do you see that as, given the types of things you look at, just sort of structurally unnecessary?

So just to be clear, we're not trying to push back any margin target. 20% by '27%, that remains the same. We had 18% last year. We'll get north of 19% in 2026, and we will get to 20% in '27. And then we'll keep growing so 100 basis points, as we shared as well on Investor Day. And M&A needs to help getting there. We will never do an M&A deal that is destroying value for shareholders. So return on investment needs to be at the right level. It needs to be growth and margin accretive. Those are the plans. Afterwards, whether everything happens as planned, well, that's an execution question, obviously. But we are very disciplined in how we do M&A. We will never do something that's destroying value because what we say inside the company that's buying work and it's done for shareholders. Well, those are 2 reasons for not doing that, at least not consciously. And we've done 100 deals in the last 10 years. We have a lot of practice, we've learned a lot, and we are very successful in how we do M&A in general. So no change for the margin targets.

Our next question is from the line of John Roberts with Mizuho Securities.

This is Edwin Witbier for John. Christoph, just 1 quick 1 on the 2026 guide. Can you talk about the factors that could drive the higher end or lower end of that range, like what are the swing factors in there?

I guess all the things that we don't know are going to happen. If we look at the last 5 years, there was not 1 year that happened as planned, not because of us, but because of what's happening around the world. So we have this range of the 12% to 15%. The fact that we are very agile as a company on how we run our businesses, how we manage value price, how we drive surcharges if we need, getting as well more performance out of One Ecolab as we discussed before as well, we have a great supply chain and procurement team as well doing unbelievable work in whatever conditions out there. So the big questions are the things, I don't know. But I know that the team knows how to deal with them.

With everything we know now, I feel that the year is very well balanced, and I feel really good about the 12 to 15.

Our next question is from the line of Jason Haas with Wells Fargo.

I'm curious if you can talk about I'm curious if you could talk about the cadence of the contribution from pricing as we go through 2026? And the reason I ask is because I believe you put in a tariff surcharge that went into effect the second half of 2025. So I'm curious if there's like a go over factor where you'll have more contribution from price in the first half of 2026 and then less in the second half. Is that the right way to think about it?

Well, the key point is also that surcharge, which was a trade surcharge. We had an energy surcharge in '21 or '22, I'm losing track of the year. We convert all that into structural pricing and everything has been done as well as we speak. That's why on one hand, whatever happened on tariffs with the Supreme Court, I'm not worried about that. And on the other hand, well, it's going to drive this 2% to 3% price in 2026 pretty consistently for the quarters to come. That's obviously assuming that nothing else happens in 2026, but that's not at the heart of your question here. So basically, a traditional year in '26 with 2% to 3% value price, which is obviously a 100% margin driven by the total value delivered that we generate for our customers, which is a big growth driver for us and probably one of the best ones that I really like, and we'll keep focusing on that in the future.

Our next question is from the line of Josh Spector with UBS.

Just a quick 1 here. I know you guys were spending a bit more on CapEx the last couple of years to basically grow into some new wins that I think you had in specialty. I guess with specialty growing 7% the last couple of quarters, is that now in the run rate? Or is there more of that to come? And will CapEx step down into next year as a result or stay at similar levels?

Let me pass it to Scott.

Josh, yes, on CapEx, as you know, our historical CapEx has been in this 5% to 6% range and about half of that is equipment at customer locations so -- which is why this thing grows in proportion to sales. The 2026 CapEx came in at about 6.5% of sales, to your point, because we're investing in growth like the new business but also the innovations around DISHIQ, Pest Intelligence, Global High-tech, and that will continue into 2027. I expect that the CapEx -- sorry, the '26. I expect the CapEx for '26 to be around 7% and probably for the next couple of years because we're continuing to invest in those growth engines, really to focus on accelerating sales and expand margins. So we're investing organically and inorganically, both to expand margins and drive sales. And at the end of the day, it comes down to ROIC, and we like where we're at in ROAC, continue to expand that in line with our long-term targets.

Our next question is from the line of Kevin McCarthy with Vertical Research Partners.

Christophe, on Slide 6, you indicate organic sales growth of 3% to 4% accelerating through the year. And I just wanted to understand that acceleration piece better. Is that to do with the aforementioned normalization or stabilization in basic industries? Or are you expecting your higher growth platforms to accelerate as well? And then related to that, would you make a comment on the expected growth in your data center linked businesses this year?

The 2 questions, [indiscernible]. So you're right, the 3% to 4% where we are now, obviously, and do the upper range or more after 3% to 4%, driven by both actually, so the normalization of the more challenged industries in paper and basic. And our core and growth engine businesses that are doing extremely well. As we discussed before, our gross engines are growing double digit today and some of our core businesses like institutional and specialties at 4%, F&B at 5%, So our core business growth engines are doing really well at great margins and great margin development as well. So it's a combination of the 2, and more specifically, the data center, which we don't exactly disclose as such, but our global high-tech business is growing pretty strong double-digit sales.

We will publish our exact numbers in the first quarter by the way, so I want to make sure I'm not getting ahead of my skis here, but we will get more color in the first quarter, but it's one of our best businesses that we have here, very strong margin, growing double digits at strong rates and Ovivo is going to help and all the innovation I mentioned before on the cooling as a service is getting great reception from our customers that needed more than ever because chips get more powerful, they get more concentrated on a rack. They create more heat that requires more cooling. And if that doesn't happen, obviously, the data center stops operating. So it's absolutely essential as a component of the compute offering here.

So a very good story and early on that story. I think that that's one of the businesses that's going to become one of the best and biggest businesses we will have in the future.

The next question is from the line of Scott Schneeberger with Ampeheimer.

Just a quick one. In Life Sciences, you had great momentum, a little step back in the fourth quarter on the margin trajectory. It looks like you're doing some investments, some global capability build-out. Just curious if that -- is that going to be something that is pressured for multiple quarters? Or are we going to get back to inflect and had higher towards that target?

It's going to be a great story in '26. We've been building that business for years, as you know. I always love that opportunity. The first figures were more complicated than we were hoping, not because of internal questions, but the market. So it was a bit in a more challenging place after COVID. It helped us gain share, build further our business, and now we're collecting the fruits of what we've built in Life Science, and you've seen the growth acceleration. Bioprocessing, which is a core part of it, is doing extremely well in there, is really at the forefront of innovation for the biotech industry as well at the same time. So we're all going to really like the growth of that business starting in Q1, by the way, for Life Sciences. And our objective is to get to 30% margin, but we will not reduce our investment in the meantime to get the margin quicker.

What we want to make sure is that we get as much share as we can in order to get the returns ultimately in the long run, that business. So overall, a great story that keeps getting stronger.

Our final question is from the line of Bob Zolper with Raymond James.

How is your customer retention in institutional and specialty?

It hasn't changed. So it's always in the low to mid-90s in terms of retention attrition is obviously the reverse of that. It stays very stable over the years. We're looking at that very carefully because, well, we want to make absolutely sure that we do not lose our customers. We have this mantra of never ever letting our customers down in institutional and specialty. Well, there's another dimension, it's restaurants close, there's not much we can do for that. It's very different by country obviously, but the customers we have and the numbers I gave you include the closures that we can't do anything against obviously.

So short answer, very stable. That's why I really like what our institutional is doing, has done over the last as well, shifting towards digital technology, all those IQ platforms that we talked about, AquaIQ, for instance, which is remote service for pools around the world. When you think about the work that's required, while that's taken over by AI with that application, those are game-changing innovations in that business that didn't exist 5 years ago. So institutionally in a very good place, specialty that's some more quick serve as part of this hospitality business, as you've heard, it's growing very nicely, so at 7% very consistently with great margin as well. So I think that I&S is in a very good shape. So I'll end where I started. The company is doing well, and I especially like the growth development we have in our core businesses. On top of it, the gross engines that are 20% of the company today are growing double digit with over average margins as well. So our portfolio is shifting towards higher growth businesses, higher margins, which is exactly where we want to get to, and that's why I feel as good as I can be in 2026 with everything I know to that.

Thank you. That wraps up our fourth quarter conference call. This conference call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation. I hope everyone has a great rest of the day.

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time, and have a wonderful day.

Thanks, everyone, for joining us at the next session here at Baird's Global Industrial Conference. I'm Andy Wittmann. I'm the senior analyst that covers facility services.

And the next session here is with Ecolab. Obviously, we've got the company's Chairman and CEO, Christophe Beck, here. This one is going to be done as a formal presentation. And we also do have a breakout session after this. So if you do have Q&A, you can see us at that with a little bit more detail.

So this is a stock that we've recently upgraded a couple of quarters ago. There's some really interesting growth areas of the company that we find pretty attractive. Certainly, there are opportunities in advanced technologies, are new and growing and relevant to the conference. It's obviously been a thematic thing. And we're seeing a little bit more price coming out of the company, which is also kind of new and different, and I'm sure Christophe is going to talk a lot about that during his remarks.

So I'm going to leave it there, turn it over to Christophe, and we'll go from there.

Great. Thank you so much. Thank you, Andy, for having me. Thanks for joining us as well today. As mentioned, so I'm going to share with you the story of our company and we can have time for Q&A in a separate room afterwards. And we'll see, maybe we have a few minutes as well here.

So always a pleasure to share the 102 years story of the company and still having that feeling that we're just getting started. So before get started, obviously, reminding you of the cautionary statement that we managed to have on just 1 page. I'm sure that you've all read it, especially since we're going to talk a little bit about the future or mostly about the future of our company.

Because our company has been a great success story for a very long time; I'm the seventh CEO in 102 years, which is demonstrating the steadiness, the long-term focus of this company. It's a company that has been focused on growth and creating value long term for customers, for shareholders, for our teams and for our communities for a very long time, as mentioned before.

It's a success story of delivering double-digit growth. 12% to 15% is our commitment year in and year out, and that's been the case for a very long time as most of you know as well. By driving steady top line growth; our sweet spot is this 3% to 4% that we've been delivering as well consistently.

While we build high-margin, high-growth new engines for the future, and I'm going to talk about that. That's been true for this company for a very long time as well. We're in the business of building new businesses in new industries as well in the world that we serve. Which ultimately helps us to expand our margins towards 20%. We're 18% this year, getting towards the 20% by '27, and going beyond that, and I'll cover that as well in a second.

And one of the core reasons why this company has been so successful for such a long time is because what we do matters and has mattered for a very long time. There will be 1/3 more people on the planet in the next 25 years, by 2050. We will need 56% more food. We will need almost 50% more energy. And we will need, by 2030 alone, 56% more water, that we don't have. And that's a problem. We can create new energy; we cannot create new water, as we know. We need to use it and recycle, and that's what we do for a living, which is essential as a company, which is at the core of who we are.

We're the world's water and infection prevention company. We've been protecting people for a very long time, 1.7 billion people, of infection, protecting natural resources, while helping our customers around the world improve their operating performance. So it's a really win-win-win proposition for our customers, for our company and our shareholders and the communities that we serve as well around the world.

And it's leading to a very good story that by doing good, we're doing well as well at the same time. We've been driving this double-digit earnings growth for a very long time. And that's been true, especially so during difficult times as well out there, which are obviously behind us.

And even after 102 years, as mentioned, so we still have that feeling that we're just getting started, because we have unique capabilities, some we're talking this morning about the moat that Ecolab has. Because we have 48,000 people serving 3 million customers around the world in 40 different industries and 172 countries. We have 3,000 people in R&D and digital technology supporting those people. It's a critical mass that's really hard, obviously, to replicate.

And when you think about the impact that we have as well around the world, as mentioned, we protected 1.7 billion people from infection last year, enough water for the drinking needs of 780 million people in 2024. And we protect 1/3 of the world food production and almost 1/4 of power that's generated as well. So what we do matters and has a big impact on all the customers that we're serving.

We keep expanding as well the markets that we're serving. $165 billion is the total available market that we have out there. We keep growing it. We want to keep roughly 10% of the overall market that we're serving, which means 90% is up for grab. And we do it by adding businesses, like 20 years ago, Pest Elimination, which has become one of our best franchises. We've built our Water business to become the world's water company as well over time. We had the Life Science in 2017, and Global High-Tech in the last few years as well with data centers and microelectronics, which are big, high-growth businesses, as we know.

What's interesting is that $60 billion of this available market is in customers we already have a connection with. In other words, it's a penetration play, which is a core element of our strategy. How do we capture more of this $60 billion of our customers that we are serving already today that could get even more of the services that we're providing?

The breadth of our end markets and geographies is a real strength for this company because not every end market, not every geography out there will be facing challenges at the same time. So it drives a lot of resilience as a company, and that's why we have this steady top line growth kind of no matter what is happening around the world. And 90% of our revenue is consumables, it's typical razor, razor-blade type of business. And we work really hard to make sure that we focus 99% of our time on the blades, not on the razors, because this is the model that we've developed for a very long time.

And it leads to very great performance, this 12% to 15% earnings per share, which has been our commitment for quite a while now, driving towards this 20% OI margin and, ultimately, reinvesting to accelerate the top line as well towards this 5% to 7%, which I believe should be the next steady state for this company. So let me unpack each of them quickly, so for you to understand, what are the mechanics behind them? And how does it work to deliver such performance?

3% to 4% for me is the steady growth. It's not the ultimate growth, as mentioned before. This is what we need to deliver 12% to 15% earnings growth while we invest in our new engines, that I will cover as well in a second. Obviously, as we move towards the 5% to 7%, it's going to help us drive, obviously, to 12% to 15% earnings growth and invest even more in our future. And we're very transparent, with the ones who are familiar with us, on how do we share the over-delivery between reinvesting in the business, providing that cash to shareholders or a combination of both as well. But the core is really driving this 12% to 15% while we keep investing in the business to accelerate the company.

The good thing is, a little bit like the end markets and the geographies we serve, the good news is that we have a portfolio where we will never have a place where all the businesses are in the red. We won't have all the businesses in the green at the same time either, we know that. But 85% of the company is growing in a mid-single or mid-teens type of operating income growth, which is a very good place to be, with 20% of the company, you can see $3 billion, growing double digit with even better growth from an operating income perspective. And I'm going to come back to that because those are the key growth engines for the future, while we keep building our core business which are ultimately financing the future of the company as well at the same time.

But what's key for us is how do we gain share in the markets we serve? Because not all are created equal, if we think data centers or if we think the Paper business, where it's not exactly the same dynamics that we have out there. So we're looking at our growth versus the industry growth. Keep in mind that we are in 172 countries, so it's not just U.S., which is our best market, by the way, as well, which is a good place to be. And we're gaining share almost in every market. And this is the way we measure our people and making sure that we are ahead of the market and competition in every market that we serve.

So why that? Because especially in more difficult times, our promise, which is anchored in -- the first name of the company in 1923, Ecolab meant Economics Laboratory. It was an economic idea, not an ecological idea, just to remind a little bit the history here. Our promise to customer is better outcomes at a lower total cost because you're going to use less labor, less natural resources and create less waste. And we do it by bringing chemistry, technology, data science and local expertise anywhere in the 3 million locations that we're serving around the world.

So our promise is to help our customers do more with less, improve their P&L. So we have this advantage that in more difficult times or a tougher cycle, whatever industry we serve, well, they need us even more. Because they need to improve their P&L in more difficult times, they buy more from us, which is one of the reasons that we can gain share in most of the markets that we're serving as well around the world.

And we measure it in a very consistent way. We call it total value delivered. It's a combination of business outcome. It can be a guest satisfaction in a hotel, it can be an uptime in a data center, it can be an infection rate in a hospital, whatever is that industry-specific outcome that you're looking for. We add to it the cost improvement and we add to it the environmental impact, which is another word how much water, how much energy, how much waste could you optimize in the process. And you have a total dollar number or whatever you currency is. This is our promise at the local level and this is our promise at the enterprise level at the same time. This is the core metric of the company that we use in all industries, all locations around the world.

And interestingly enough, if we do it for 3 million locations around the world, well, ultimately, we know which restaurant is the best restaurant out there, which one is the best data center, which one is the best brewing site out there, hospitals, you name it, because we do that in every industry, in every country around the world.

We have a good knowledge of what best-in-class is in terms of performance, and we know how to deliver it because we have delivered it together with the customer. And that's a core element of our strategy, that when we talk to whoever in any industry, we serve mostly large customers, large companies, as you probably know, well, we can tell them, well, what's the best-in-class performance that you should be delivering in each of your locations? And our job together with them is to help them get all the locations within the company at the best-in-class performance. So we have the knowledge and the capability to deliver that for them anywhere around the world, which is a core element of our strategy.

And at the end of the day, when we've delivered total value, delivered for our customer, we discuss about how do we share what's our share of it versus their share of it? And order of magnitude is usually they get 3 and we get 1, in what we call value price. So we get 1 value price, and they get 3. It's 25% for us and 75% for the customer, which is a very good story. And we've done that as well during tariff times, really making sure that our customers always get much more total value delivered than the increase that they pay for our own services as well, which is why the return is higher for our customers, they buy more from us, which is a good story, which allows us to invest even more in innovation in order to provide them even more value.

Which brings me to innovation, which, as mentioned, is a core element of our company, 3,000 people in R&D and in digital technology around the world. We've been a digital technology for 30 years. It was called many times different ways, obviously, then we call it AI today. But that's feeding all the breakthrough innovations that we have around the world, we can help ultimately get to net-zero water data centers or we can reuse and recycle the water in a microchip fab, or we can have a system in a restaurant that allows anyone going to a Chick-fil-A and not having to wait too long in the line. So just in case you go into the drive-through, or you go down the line of all the innovation that we're bringing on the market, which all are focused on not having a new product, but delivering a new outcome for a restaurant, for a data center, for a fab or for any manufacturing site that we have out there.

And last but not least, we focus our attention on large companies. We serve 80% of the Fortune 500 around the world and the local large companies as well. But every innovation, every focus on best-in-class, we start on our top 7 customers. We move towards our top 35 that are split in our top 20 and the ones that we call Emerging 15, the ones with the potential to get much bigger in the future, and our local 10 customers in every country around the world, which is roughly 100 customers in total like that.

That's how we deploy our innovation. That's how we deploy our best technologies. And as we can see on that chart, our top 35 customers have a potential of $3.5 billion of growth potential, and it's accelerating growth as well, because of all the focus that we have on them and the innovation that we're providing them.

The next part is investing in future growth. We have our core businesses, our hospitality that we call institutionals, our restaurants and hotels and retail stores. We have our Food & Beverage business, which is all the consumer goods companies around the world. This is core business for us. This is where I focus most of my attention. It's making sure those businesses keep getting better year in and year out. At the same time, it's making sure we're building the future.

And we have 4 businesses that we are focusing on that represent roughly $3 billion of the company. I'm going to share with you each of those, so depending on how familiar you are with our company. The first one is Pest Intelligence; the second is Life Sciences; the third one is Global High-Tech; and the fourth one is Global Digital.

And as you can see, good businesses, good-sized businesses, still small versus the size of our company, obviously. Serving big markets, high-growth markets, high-margin markets. And that's how we choose them, also aligned with the capabilities and technologies that we have that we can offer to those industries down the road. Let me take them one by one.

So Pest Intelligence, which is always a bit of an interesting word. We're talking about the technology here, so not the pest that we're dealing with, obviously, that are really smart as well at the same time. But we're serving, okay, millions of devices around the world, so-called mousetraps, for the ones who are closer to that industry.

The real truth is that 95% of the traps that we go and visit have absolutely nothing in there because the traps do not tell us yet where and what is in them, until Pest Intelligence came to life 2 years ago when the largest retailer on the planet embarked on that journey with us and said, we need to change the way we do it. On the one hand, I want to have 99% pest-free environment because this is a brand issue, it's a food safety issue and all the challenges that are related, obviously, to pests in any location out there.

In the last 2 years, we've been developing with them a very unique technology that we've been leveraging from our Water business, where we have a few hundred thousand systems that are already connected, and we've leveraged that technology for our Pest Elimination business. And today, that retailer, part of it has been, 1 of the 2 brands that they have, so without going too much in detail, obviously, is fully covered with them. All the devices are connected. We're getting closer to 99% of pest-free environment, at 95% less effort to get there because we only go and check the devices where there is something or someone, or whatever is the right word, in that device.

A great story, and we're expanding that across the country and around the world, which is a good example of how do we leverage a technology in other businesses into a business that didn't have much technology. And now it's becoming a purely AI-driven business, which who would have thought that pest elimination would become an AI business at some point? Great story, growing fast, high margin. And I think that we're differentiating ourselves in great ways with that business.

Life Sciences is a new business, we created in 2017, was less than $100 million back then. So it's getting closer to $1 billion today. Where we help keep white rooms, clean rooms where drugs are being produced, super sterile, and at the same time, purify the drugs that are being produced as well in those environments. So you get this combination of perfect drug quality produced in the right environment, at the right cost, with the right environmental impact as well. A very good new story for us.

High-Tech, a very interesting new field for us. It's 2 pillars. One is microelectronics, the fabs. It's really making sure that you can reuse and recycle water in a fab. Just for perspective, 1 fab uses roughly the equivalent of the drinking water of 17 million people. There are 500 fabs around the world, 100 are going to get built in the next 10 years. Well, there's a water problem there.

And to reuse and recycle the water is a bigger problem because the quality of the water that's being used in a fab is ultra-pure water, 1000x more pure than the water you use in a drug that gets injected in your blood. So it's hard from a technology perspective. So it's a lot of water that you need to bring back at a super high level of standard that allows you to produce the next-generation chips as well. That's on the fab side.

On the data center is really helping data centers use less energy to cool the data centers, that the energy can be used ultimately more for compute than for cooling, which has been a very good journey for us. Started 4 years ago, one of the new growth engines we have.

And the last one, Ecolab Digital. For 30 years, we started with connected chemistry in 1991. The web didn't exist by then. And we've built that technology of measuring fluid properties in real time anywhere around the world. And now we have over 100,000 locations that are connected and a few hundred thousand devices that are connected to our cloud today.

For 28 of the 30 years that we've been on digital technology, we did it for free, as part of everything we were doing for our customers. That has changed over the last few years where we start to put value, in other words, we monetize the services we provide to our customers in terms of digital technology. We're close to $400 million today, as you've seen in the third quarter, at very high margin. A very good story here for our customers and for our shareholders, obviously.

And last but not least, AI has been a blessing for us, not just in terms of digital technology, but there's the whole infrastructure of data centers and microelectronics, as mentioned before. Well, that's driving business growth with the services that we're providing. At the same time, we're monetizing all the digital value, as mentioned before, that we're providing to our customers.

We're leveraging One Ecolab, which is having all our processes run by agents, the last few years, has helped us save, well, $225 million in the next 2 years, as we've mentioned during Investor Day. A year ago, we thought it would be $140 million; we think it's going to be closer to $225 million today. And it keeps getting better. And we want to be -- I want to stay at the forefront of how we leverage and utilize AI technology in our operations everywhere around the world.

And last but not least, we have so much data about the 3 million customers that we serve in those 40 industries, in 172 countries, that we want to provide to our customers to understand what best-in-class performance is and how to get there. So AI, a good story for us.

Last but not least, margin. 20% has been our objective; 18% is where we are roughly. So this year, 2/3 of our businesses are already at or beyond 20%. So we know exactly how to get there. And the ones that are below, well, are usually because we're investing or overinvesting in those businesses, like Life Sciences, since we're building them for the future as well.

And 20% is not the end of the story. It's 2027. And after that, we will keep moving between 100 and 150 basis points a year towards 2030. So you can do the math where we are expecting to be by 2030.

Last but not least, really proud of the performance of the company, but also the strength of the balance sheet that we have, with a leverage lower than 2. It's a very good story, a great cash generation machine as well. Really making sure that our priorities remain really strong, and it's around dividends, it's acquisitions, investing in the business and share repurchase as well. Which we've done as well regularly, as you will see in a second, where we reinvest in the business continuously year in and year out as well at the same time.

And as mentioned, we return as well cash to shareholders. Last 10 years, roughly $10 billion as well. We've done it for a long time and we'll keep doing it as well for a long time. Nothing changes. It's all part of our long-term model.

So bottom line, a very good story that keeps getting better in good, like in less good times as well, while we focus on the core, making sure our business keeps getting better, delivers better value for our customers, while reducing the impact on the environment. We keep building as well the new engines for the future that are going to drive better margins, better earnings and better results for our customers and our shareholders.

So in short, that was our story. And we even have a few minutes, Andy, if we want to get on a few questions.

Yes. I've got a couple here lined up. And I really wanted to start, one of your key businesses is the institutional business you referred to. In that, that's where you serve hotels, restaurants, like you said. The restaurant business has actually been pretty tough, but your results, I thought, in the quarter that you just reported were pretty strong and maybe suggested that you're kind of bucking some of the challenges there.

What is it about the Ecolab model that has allowed you to give pretty steady performance in that business despite some tougher foot traffic trends? And can you just talk about some of the dynamics that are good for you or challenging for you in that business today?

Yes. Great question. So we've gone through all those industry cycles for a very long time. Obviously, as you've seen, so the industry is kind of flat, today. Foot traffic is flat to down. We're growing roughly 4%.

Two reasons. Interestingly enough, so since we serve all end markets, so from quick serves, the McDonald's of that world, to the fine dining, depending on where consumers are going, we always capture them in a way. And you could see in the third quarter, our specialty business, which is QSR, so quick serve, grew 7% plus. It's been a great story there, while the core business was closer to 4%, which is still a very good story, around the world, not just in the U.S. In the U.S., it's even better actually, which is a really good story, at very high margin.

Why that? It's in more difficult times, the industry needs even more help from us to reduce their total cost. They have a hard time to find labor. When they find labor, it's more expensive, as we know as well. The cost of goods are going up. Meat has doubled the last few years as we know as well. So they need to find ways to reduce their cost or optimize their performance. This is a perfect time for them to come to us and say, "How can you help me?"

And the best-in-class approach, Andy, to help especially those chain restaurants understand what's the best-performing location they have in their enterprise, and bring all the other ones towards the best-in-class performance, resonates extremely well with them because it's a dollar promise at the end.

Great. And then just maybe the last question for me was on your Life Sciences business. I'd say this is one of the bigger opportunities in your company right now. The margin performance is in the mid-teens, but you have aspirations that are much higher than that. So my question is, what are those aspirations? If you could talk about what's going to help you get there. Do you need share gains or do the secular trends in the business lend itself to the kind of leverage that you need to get your margins up?

So maybe if you could just talk about kind of what you see there. Obviously, we'd all love a time frame of what you're thinking about how long it takes you get you there. I think you're probably going to punt on that. But anything you could talk about kind of your plan there, I think, would be helpful.

I love that business. As mentioned, so we started 2017, less than $100 million. We're getting closer to $1 billion right now. There was an acquisition with Purolite in the biotech area that we did in '21. We're going to love that business. It's a high-growth business, high margin. The ambition is to get to 30% in terms of operating income.

The underlying performance in terms of margins is in the mid-20s right now. We're building plants, we're building systems, we're building capabilities and capacities. So we know exactly how much we are over-investing as we're building that business. So the reported margin in the mid-teens is actually underlying mid-20s. That's why I feel pretty good to get towards the 30%. And part of that business is already north of 30% as well. So we know how to get there, we have the path pretty well laid out.

But to your point, for me, it's to gain share. We are -- in most of the segments that we serve, we're the clear leader globally, even though we have 10% global market share of the markets we serve. In Life Science, we're kind of the third one out there, so behind some strong companies like Danaher and Thermo Fisher, just to name some of them. It's not a secret, obviously, there. We're much smaller than they are. We're very agile, very entrepreneurial, very innovative.

So it's about gaining share in a market that's growing, that's generating very high margin. For me, it's the perfect combination of a market where Ecolab should be winning.

Great. Cool. I think we're going to leave it there. Then again, we'll see you in the breakout room that's located in the Chestnut Room. So we'll see you there if you have any follow-up questions. Thanks all very much.

Thank you so much.

Greetings. Welcome to Ecolab's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded.

At this time, it is now my pleasure to introduce your host, Andy Hedberg, Vice President, Investor Relations for Ecolab. Thank you, Andy. You may now begin.

Thank you, and hello, everyone. Welcome to Ecolab's third quarter conference call. With me today are Christophe Beck, Ecolab's Chairman and CEO; and Scott Kirkland, our CFO.

A discussion of our results along with our earnings release and the slides referencing the quarter's results are available on Ecolab's website at ecolab.com/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 Ecolab's 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 a very high level quarter after quarter. And we've seen that in the third quarter where sales growth improved fueled by escalating 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. The 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 2 businesses declined 3% and had an impact of 1 percentage 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're positioned 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 & Specialty, breakthrough innovations like the ones you've seen at Investor Day, like DishIQ, AquaIQ and ReadyDose are growing double digits as these solutions help our customers improve operational performance, optimize the scarce labor resources and reduce total cost.

In our Pest 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% pest-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 TRASAR 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 water [indiscernible].

And finally, within Global Life Sciences, we've launched a series of cutting-edge drug purification [indiscernible] for the bioprocessing industry, which drives the improved product quality and significant operational efficiencies for our customers. When Ecolab focuses its breakthrough innovation on solving critical customer challenges like this, everyone wins.

One Ecolab is helping us unlock significant cross-sell opportunities across our customer base. In total, this represents a $65 billion growth 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 & Beverage that are growing very nicely. Talking about that, in Institutional & Specialty where organic sales grew by 4%, outpacing end 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 One Ecolab. 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 & Beverage, growth continued to accelerate with organic sales up 4% this quarter, once again ahead of market trends. This strong acceleration is being driven by One Ecolab 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 cost and optimize 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 have thousands of locations which we will be deploying in the coming months. 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 Sciences 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 6% growth as we compare against nearly 70% growth in our bioprocessing business last year, but underlying, 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 Ovivo electronics will more than double the size of Ecolab's Global High-Tech business to nearly $900 million, further strengthening this growth engine by bringing together Ovivo's very unique, attractive 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 chip 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 opportunity as we leverage our leading digital technologies and monetize our large and expanding installed 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 has ranked #9 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 2 underperforming businesses, Basic Industries and Paper, back to growth, 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. For end markets still facing near-term demand headwinds, like Paper, we're focusing on innovation that can drive significant operational savings for customers.

We're also leveraging our One Ecolab 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. While 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, our diverse 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 point 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, [indiscernible] 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 growth investments as [ they feel ] high performance in the quarters and years ahead.

As a result, we're increasing our '25 full year adjusted diluted EPS midpoint to $7.53, with a range of $7.48 to $7.58. 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 2030. 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 One Ecolab execution continued 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 free 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?

[Operator Instructions] And the first question is from the line of Tim Mulrooney with William Blair.

This is Luke McFadden on for Tim. I wanted to ask about Global High-Tech business. We noticed the slides mentioned some recent market share wins in data centers. Can you talk a bit more about how you're achieving and measuring the gains here? And I know you haven't closed the deal yet, but curious to hear any updated thoughts on the Ovivo acquisition and how you would characterize the growth opportunity in microelectronics post deal close relative to your already strong performance in this end market today.

Thank you, Luke. Love that field, as you know. So let me step back a bit because it's important. So for all of us to understand, so High-Tech for us is a combination of data centers and microelectronic plants, many call it fabs, which at some point will be 2 businesses focused on different technologies, obviously. But for now, it's really high-tech, combining data centers and microelectronics. And it's a field that attracts most of the global investment, as we know. And we expect these global investments to continue to drive that growth trend even though we don't expect it to be a straight line to heaven, there will be, obviously, some more difficult and some better times ahead, but generally, it's going to be the growth of our times.

When we think about some of the facts, talking about metrics, Luke, 1 data center opens in the world every 1 to 2 weeks, with an investment ranging from $500 million to $3 billion, and there are 10,000 data centers in the world today. So showing a strong base that's getting even bigger as we speak.

On the other hand, you have 1 fab, 1 microelectronics plant that's opening up roughly every month or so with average investments in the billions. There are 500 fabs today and expected to be 100 more, getting to 600 in the next 10 years. So we can see the pace at which those data centers and fabs are opening up, and our objective is ultimately to be in and hopefully own each of them around the world.

So the key thing is that all of this will require way more power and way more water, which is where our role comes into it. Because as mentioned as well, by 2030, we expect that this industry, powering AI with fabs and data centers, will need the incremental power of the whole of India in the next 4 years and the drinking water needs of the whole of the United States as well at the same time, because data centers will need to be cooled and fabs require vast amounts of ultrapure water.

And the cool news is that those are technologies that we master, we've been mastering for a very long time. Nobody understands water better than Ecolab. We've been in the cooling business for a very long time and we've been in the water business, obviously, for a very long time as well.

So we're building offerings that are helping data centers to be cooled in more efficient way by reducing the amount of water and moving towards direct-to-chip technologies. That helps cooling faster. This means more compute power and this means less power for cooling and more power for compute, which is exactly what the tech industry is looking for.

On the other hand, we're providing circular water solutions for microelectronics manufacturers because 1 fab requires roughly the drinking water needs of 17 million people, and the pace at which it's being built, well, that's not going to work for the communities, obviously. So the tech industries, famous ones, especially in Asia, but in the U.S. as well, are looking for solutions to reuse and recycle water. But here is the key point, that water that's being used in those fabs needs to be ultrapure water, which means roughly 1,000x more pure than the water that you would use in drugs, that you inject in your bloodstream, which is exactly what Ovivo is doing.

So by bringing what Ecolab has always done in border circularity plus the capabilities of Ovivo in ultrapure water, we help microelectronics, ultimately, will use and recycle water at ultrapure water level.

So at the end, '26 for Global High-Tech, assuming we close, obviously, so on Ovivo, will be roughly a $900 million business, growing double digits with very strong margins. And it's important to keep in mind that, for us, it's a new step, a further step on our high-tech journey and one that will change over time the growth profile of our company. So a very good new chapter for our company.

Our next question comes from the line of Ashish Sabadra with RBC Capital Markets.

I just wanted to focus on the Basic Industries and Paper returning back to growth in 2026. I was wondering if you could drill down further about on shifting resources, innovation as well as share gains, how that can help offset some of the end market weakness?

Yes. Thank you, Ashish. I really like the underlying performance of that business. It's a good margin business, just that you know as well, it's slightly below our company average. But it's still a good business, good margin and good underlying performance. The biggest issue we have in that industry is it's consolidating, which means that they are closing mills, and mills are very big. And those mills, obviously, when they close are impacting our growth, and there's not much we can do. We lose very little to competition, we gain share in the existing and new mills. But when a mill is closing, well, we lose those sales.

And that's what happened over the last 18 months. We see that process of consolidation slowing down. We see our underlying performance driven by what you were saying, innovation improving as well. And I think the combination of both ultimately so will be positive for Paper. So I think that we are reaching the bottom of that cycle in Paper. And I think in the next, I don't know, 1, 2, 3 quarters, Paper is going to get back to a growth trajectory, and the sooner the better, obviously.

And on the Basic Industries, we have regrouped our resources, we're driving critical mass as well, driving efficiencies. But it's really making sure that we capture as much market share as we can right now as the market recovers as well. And similar to Paper, but for different reasons, we see as well kind of the bottom come in the next couple of quarters, and then we should get back to a good place.

So in both business here, 50% of our company, we need to keep that in mind, and there will always be a few businesses that are having subpar performance. I like the underlying performance, the market trends have been hard in the past. This is changing. So that's why I'm quite optimistic we will like where those 2 businesses are going to go. But at the end of the day, keep in mind that 85% of the company is growing very well with mid-teens operating income growth, so in a very healthy place.

Our next question comes from the line of John McNulty with BMO Capital Markets.

So I had a question on pricing. I guess if you can take the tariff surcharge out of the equation, I guess, would you say that pricing is getting easier to push through just because the value proposition is becoming more evident? Or would you say -- or would you characterize it as maybe getting tougher just because there may be price fatigue, inflation may be moderating a little bit? I guess, how would you characterize it?

Thank you, John. I would say the same [indiscernible] metric obviously on that. But generally, the fact that pricing is getting stronger -- our total value delivered by the way, is getting much stronger too. And we're always trying to get 2 to 3 -- sorry, more total value delivered than pricing that's being captured. So it's a good deal for customers.

I feel that we're in a pretty good place, and our retention is very high, in the 90s, as you know, and it's remaining very stable as well at the same time. So a good story of customer for life with good retention, sharing the savings that they get in their operations, that translates into value pricing. And you're right on top of it, so the tariff surcharge or trade surcharge, as we called it, is helping as well. But that's why we feel that 2% to 3% value price for the long run seems to be the sweet spot for our company.

Next question is from the line of Andrew Wittmann with Baird.

Great. I had 2 questions. I guess, Christophe, just talking about the Water business as well here, you discussed the top line impact, the quarter, very detailed. I'm just wondering if you could just help us understand a little bit about how that top line is affecting that segment's margin performance. So maybe if you could bifurcate that as well.

And then just quickly, kind of a technical question here. You mentioned a large new Pest customer. I was just wondering, was that reference into an entirely new customer that is not a customer today? Or were you saying that's just a conversion to the new technology?

Thank you, Andy. So 2 different questions, obviously. I think the easiest way to talk about Water, top line and margin, if you exclude Basic Industries and Paper, which I know is a bit of a challenge in accounting approach here to make sure I remain in GAAP. But generally, Water would be having a 4% top line growth and a 15% operating income growth excluding those 2 businesses. So it's pretty fair where our work is focused on, and that's why we're focusing on these 2 businesses, to make sure that we enjoy, so all the good side of the Water business that we really love, and that keeps getting better.

Now on the Pest question, so we never mentioned which customer that is, just to respect, obviously, their own confidentiality. But it's a new one, which has been really interested by that new technology. The fact that we focused early on, on the biggest out there, helps obviously, so everyone else see that it's good. The leading companies are embarking on that journey and that it's really working. So that's going to be, I think, helping us for the future as well because the more of those great retailers we have on board, the more others will join as well. It's an ideal proposition for them. 99% [indiscernible] a good deal for their own operations, it's good for us. It's exactly the model that we want to build in the future.

We're early on that journey, as mentioned, 400,000 devices today, but we will be at 1 million first half of next year. So it's showing how quick we're moving here, and we're clearly leading the industry, which is helping customers come to us.

Our next question is from the line of Vincent Andrews with Morgan Stanley.

Christophe, if I could ask you for an update on One Ecolab. In particular, I know the focus initially was the top 35 customers. So as we get to year-end 2025, where will you be in terms of sort of the work you wanted to do with that top 35? As we get into '26, will you be rolling it out more aggressively to the next 25 or 50 or what have you? Or how should we think about the layering in of incremental One Ecolab efforts from '25 to '26?

Thank you, Vincent. So the way we approached it, and I don't remember how public I was with it. So we launched One Ecolab a year plus ago, as you remember, mid of last year. And we said we will start with 3 customers in 3 major industries of the company, to move to the [indiscernible] we called it internally the MAX 7, they're not exactly the same as the ones you would have in mind, but some are obviously in '25. And then to move towards the top 20 [ E15 ] in 2026, to really make sure we can demonstrate that customer after customer and learn as an organization as well without boiling the ocean.

It's progressing very well. Customers are very receptive. And the best example is really Food & Beverage united, where we brought hygiene and water together in North America, which you see the results in Food & Beverage, so how the growth trends have shifted towards higher growth. It's exactly driven by One Ecolab, focused on some of those critical customers. It's where the whole idea came from when we acquired [ Nalco ], by the way, in 2011. So it's an old idea that's coming to life, very well received by customers working in terms of growth, and we will expand as we move forward in 2026.

The next question is from the line of Patrick Cunningham with Citigroup.

I think -- how should we think about SG&A leverage, particularly Pest and Life Sciences, next year as you start to lap some of the growth investments you've made across both businesses? Is it a relatively linear path to your 2027 targets? Or is there sort of a continued step-up in growth investments embedded next year?

Thank you, Patrick. Scott was looking for a question, so this is a perfect segue. And I would suggest we start with SG&A in general as well and then focusing on these 2.

Yes. Thanks, Patrick. As we've talked about, SG&A productivity has been a great story over the last several years -- since 2019, our SG&A leverage has improved 150 basis points, and we're expecting to improve another 20 to 30 basis points this year for full year 2025.

As we talked about at Investor Day, beyond 2025, with the benefit of the One Ecolab savings that we're driving and net of investments, we'll continue to invest in the business. And that leverage, I expect it to be pretty broad-based. Certainly, we are investing in the growth businesses, the growth engines, but expect going forward to deliver 25 to 50 basis points of SG&A leverage, benefiting from the One Ecolab program and the technology we're deploying.

And what I really love on that whole journey, it's not becoming cheap and saving money left and right. It's leveraging digital technology agents. We have many now in our organization. That's why being recognized as one of the leading AI companies in the world was a really cool news. So for us. It's really leveraging technology to do more with less. And we are still early on that journey. So I think it's going to keep getting better. So really good work here that's feeding ultimately the growth story that we want to capture.

The next question is from the line of Manav Patnaik with Barclays.

I just had a question. The 85% of your business core, I guess, that you said was growing 4%. Assuming the macro stay the same, I guess, it sounds like it's the growth engines that could take that higher. And so I'm just trying to understand from your perspective, how long do you think before that mix is big enough to start moving the needle? Because you've obviously delivered well on the margins and EPS, and I think we're all looking to see if revenue growth can be better.

It's a great question. As I was sharing, so I think [indiscernible] with the team, the beauty of the company is our broad exposure to end markets, which means that we won't have all end markets in the red at the same time, but which means that we won't have all end markets in the green at the same time as well. So focusing on this 15% a little bit of our time to make sure that those ones are becoming less of a drag and, ultimately, a positive driver.

But when we look at this 85% growing 4% and mid-teens, the growth engines are growing 12% and even more on operating income. So which is a very good story. Ovivo is going to add to it, as mentioned earlier, obviously, so High-Tech is going to get bigger. Since that growth of gross engines is growing double digit, obviously, the mix is going to shift towards them over time. And I think that in the next few years, growth engines are going to become a really relevant part of our company. It's roughly 20% today, $3 billion. I would not be surprised if it becomes 30% to 40% in a few years down the road.

The next question is from the line of David Begleiter with Deutsche Bank.

Christophe, on the price surcharge, how much did you realize? And with the surcharge now fully in place, should we think about this 3% pricing continuing for the next perhaps 2 to 3 quarters?

It's hard to know exactly because some businesses, like institutional, for instance, [indiscernible] and that was the same in '22, so [indiscernible] directly within the structural price. So we don't have a perfect tracking of that. And obviously, I don't really care because, anyway, also converging towards a structural price. So with the surcharge, we're closer to 3%, obviously. That's why I'm saying 2% to 3% is the sweet spot. And since we ramped those numbers, sometimes you might be rounding down to 2% and sometimes 3%, but I feel pretty good with where we are now.

Our objective is to stay closer to 3%, but it depends what's happening with the tariffs as well. We're looking as well as what's happening with China this week. We will know that in the next few days as well. The good news is that we know exactly how to manage that if we need to, and it leads to very good margin performance. So for me, 2% to 3% is the sweet spot, and our objective is to be as close to 3% as we can.

The next question is from the line of Chris Parkinson with Wolfe Research.

Could we just dig in a little bit more into the Life Sciences segment? Understanding it's been volatile over the last few years. However, it seems like there's a decent recovery pending in bioprocessing and pharma, so on and so forth. So if you could hit on the top line first, that would be helpful.

And then if we could move into just the capacity additions, where we stand there and your ultimate progress towards '27 goals and how you feel about them.

Thank you, Chris. It's a business and an industry that I love. And as hard as it's been in the last few years, I would do it again and we will love where this business is heading. Great team focused exactly on the right innovations that the pharma industry is looking for to produce faster, high-quality, lower-cost drugs at a lower environment that impacts, really converging with an Ecolab model.

When I look at the 3 elements that you mentioned, so top line, capacity and margins, let me take them one by one. So the top line, we've been growing low to mid-single in the last few years. That was less than what we had planned for when we acquired [ Purelite ]. Well, that was during a time when the market went down, most of our competitors went down in terms of growth. Doesn't make it great for us, but at least it's adding some perspective.

When I look at the growth trajectory that we have now, it's clearly accelerating. I mentioned this Q4 is going to be a little bit softer because it compares to a huge growth in Q4 last year. But underlying, it's clearly accelerating. The new business is very strong. We're getting more commercial drugs as well in our pipeline, which makes a big difference, obviously. And the team keeps getting stronger and better as well. We're one of the only few companies having as well capacities in various places around the world that adds to the resilience as well to it. And we have a whole water components and environmental hygiene that the other ones do not as well.

So top line, finally, so getting from good to much better, and it's going to keep accelerating, with one caveat. If this capacity challenge that we have in our purification business, just because we have max capacity of what we can manufacture. But our plant in China in mid-2026 is going to open and it's going to enable us to unleash that growth in that part as well as the business, which is going to be great for the local market and as well for some international markets.

And last point, on the margin, as we've shared as well at the Investor Day, we are kind of in this mid-teens today. But underlying, it's more mid-20s because of the investments that we are making in that business as we build that franchise. So from the mid-20s to the 30, we see a clear path. But our focus is really to drive growth in that phase of the investment and then start to drive margins once we get enough growth that we can leverage the critical mass that we've built.

Our next question is from the line of John Roberts with Mizuho Securities.

In hospitality, you use a metric called seats in the seats. Could you give us an update on that? It seems like we have a lot of mix trends going on in the full-service restaurant market.

So thank you, John. So I'm using the terms of food traffic for our business here. It's -- as you know, it's been very different versus than 2019, so before COVID, so people going and sitting in restaurants, so down 30% versus 2019. And that hasn't changed. Unfortunately, or fortunately, depending on how we want to look at it, 1/3 of the people are just going for takeaway, for delivery or for drive-through, same as [ 3D].

So we see a stabilization of the food traffic, which is kind of a good news. But we've gotten used to that new model. And ultimately, with all the digital solutions that we have offered to that industry to manage this different way of selling products with less people as well, it's been a very good story because we could grow very nicely, because what we did was even more important to the hospitality industry, and it was sold at a higher margin. as well. So less volume, better margins, very good growth.

And I think for us, it's been exactly what we needed and it's made institutional or the hospitality business even much better than what it used to be, and you can see it in the margin that's north of 20% today. And it's going to keep moving up with very nice top line growth as well. So far, so good.

And the last point, I'd say as well our Specialty business is doing extremely well, doing even better than full service restaurants. So the QSR, the fast food businesses growing in the high single. It's a very good story as well there, which helps us capture wherever people go depending on the economic times that we're facing. So overall, net-net, a very good story in a very new market.

The next question is from the line of Jeff Zekauskas with JPMorgan.

In the Water business, this quarter, did volume grow? And in Basic Industries and Paper, was volume growth negative high single digits? And did that represent a deceleration from the numbers you would experience in the previous quarters?

So thank you, Jeff. We -- as you know, so we don't disclose volumes by business, for obvious reasons. But as mentioned, so every segment had positive growth, that we reported. So that's the good news. So there was no segment that was going down. And for me, it's really important that all businesses maintain positive growth whether you're in high tech where it's much more obvious because the flow of the river is very strong or you're in more challenged businesses, like hospitality, as we talked about before, and still there. So our teams are doing really well.

So Water was positive with that perspective, obviously. Paper within quarter was not, and it's in the low to mid-single. But it's improving. So that's why I feel quite optimistic with the next few quarters with our so-called underperforming businesses of Paper and Basic Industries. They're not where they should be. They do exactly the right things. So the underperforming -- underlying performance of underperforming businesses is strong. Markets are not. But net-net, we're going to get to a good place in the next few quarters. So we're doing all the right things here.

The next question is from the line of Matthew DeYoe with Bank of America.

Follow up on Vincent's question earlier on cross-selling in One Ecolab. Do you have any idea how much that contributed to organic growth in the quarter or an expectation you can kind of give us for this year as it relates to just overall revenue generation?

Well, Matt, it's very good, actually. So we are a corporate account, as call it, driven organization, enterprise customers, to use a different term as well. And the top 20 E15 focus is contributing over average to the growth of the company. So this is exactly the right place to focus. It's always been true as a company. But to get the whole One Ecolab within an enterprise is harder, to make it work very well. And that's why we've chosen to go with all our innovation, all our technology, bringing One Ecolab digital services together towards [indiscernible] as mentioned before, then the T20 E15 or the top 20 customers and emerging 15, so for next year as well. But they're doing better than the average of the company as well.

So it's clearly a strategy that's working. And as we expand the focus beyond those 35 customers, it's going to help drive as well better performance for the overall company at higher margin because it's helping customers drive even more efficiencies within their own operations. And the best example is Food & Beverage, Food & Beverage United, as we call it, within our own company, where we brought Hygiene and Water together, and you can see the performance of Food & Beverage has been remarkable in the third quarter, and it's going to keep getting better. It's only North America that we've done it, by the way, and it's very global business, serving global customers with global quality standards, as you would imagine. And this one is going really well. It's a great team with customer feedback, also because no one else can do it as well, which is a great way for us to strengthen our moat.

So generally, this One Ecolab approach, our enterprise customers, it's really working, and it's going to be a growth driver for the years to come.

The next question is from the line of Mike Harrison with Seaport Research Partners.

Christophe, just kind of following up on what you were just talking about with Food & Beverage. The performance this quarter was, I think, the best organic growth that you've shown in several quarters. You mentioned that there is some momentum from One Ecolab and from pricing. But I was hoping you could help us understand a little bit more about what's going on with underlying market dynamics that you're seeing there. And to the extent that you are winning new business, is that mostly share of wallet and One Ecolab opportunities with existing customers? Or are you seeing some new wins in that business in Food & Beverage as well?

It's good question, Mike. It's -- 4% organic growth in Food & Beverage is strong, so for sure. It's much better than the market. Consumer goods are not exactly growing fast, when you look at the companies out there or the, obviously, saw famous names out there, closer to flat than to mid-single type of growth. So really pleased with the performance that we're driving.

And we're doing it while increasing our margins as well at the same time. So it's almost a perfect play what's happening in Food & Beverage here, with this unification of Hygiene and Water. And again, it's only North America that we've done it so far, which is less than half our global business, but it's showing how well it's working, that whole approach.

And to your point on the share of wallet and white spaces, it's a combination of both. We get [indiscernible] gaining definitely some new customers, new plants as well within existing customers as well. Because by bringing Water and Hygiene together, we help them not only produce higher-quality, safer food, but reduce a lot of costs as well at the same time. So in a slow growth industry, that's exactly what they're looking for. So what we're doing for them is exactly what they're expecting.

But at the same time, we're adding digital technology that we monetize, charge for using a different term. And we get as well the value share, so our share of the savings we're generating for them in terms of value pricing, that's also incremental. So it's a combination of white spaces and share gains overall, and also story for probably 1 of our best global businesses that we have.

Our next question is from the line of Laurence Alexander with Jefferies.

It looks like your operating results are running -- I mean, your organic growth is running pretty much in line or better than what you thought earlier in the year. FX looks like it's basically double the tailwind of what it was last year. Can you talk a little bit about the gives and takes and what levers you have to pull if currency moves the other way next year?

Yes. Good question, Laurence. Let me pass it to Scott because it's an FX [ DPC ]question.

Yes. Thanks, Laurence. As we've talked about, the underlying performance remains really strong. So with FX, I mean the underlying EPS is -- why it's growing double digits. And as you think about just in Q3 itself, while FX is in line with what we expected and as we guided, you also have the impact of year-over-year SG&A comp that is offsetting that FX and benefit of the nonoperating. So that underlying growth is really very strong. We previewed the year-over-year comp in SG&A during the Q2 call and expect that Q2 -- our Q4 performance to continue as the SG&A normalizes, but we also are seeing commodity costs growing low to mid-single digits and overcoming that as well. .

The next question is from the line of Jason Haas with Wells Fargo.

I'm curious if you could talk about the Pest business, if you've seen any increasing costs for lead or any increased competition in that space recently.

If I understood well your question, so on Pest, Jason, so the SG&A versus competition? Is that what you asked?

Sorry, just to be more clear, I'm asking if the customer acquisition costs have gone up at all, if you've seen any step-up in competition from one of the major players out there?

Customer acquisition costs Okay. I wanted to make sure I got it right, Jason. Actually, it's a bit of easier because -- and we're early on that journey, as mentioned. So we got 1 major retailer in the U.S. We're getting the second as we speak. We wanted to do it large customer by large customer. It's not a geographic play. It's a customer play because ultimately, one brand wants to be safe and not have any issue in social media or whatever related to concentrate and guest satisfaction and quality of the experience of the food, obviously, here.

But what we offer here, with all the digital technology, all the AI that we've developed within the company for many years now, well, is serving the needs of our Pest Intelligence business. No one else can provide as much technology as we can and have such a backbone like Ecolab 3D as well at the same time. So it's a leading offering. It's ahead of the competition. Customers are very open to it.

And what I really like as well with it is that the whole industry, even if not moving all at the same pace, is trying to add value to customers and get paid for it as well at the same time. So very healthy competition, and it's a good thing for customers and for the guests or the ultimate consumer [indiscernible] whatever [indiscernible] are ultimately.

And in terms of operating costs, well, when 95% a few time was spent in the past, checking devices that were empty and you spend 5% of your time doing it tomorrow within your system, your operating costs are getting better and you can spend much more time acquiring new customers and serving them even better, which is why our margin is improving as well at the same time. We love that business. It's going to keep -- it's on a strong base of performance right now. It's going to keep improving as we move forward. And margin is going to improve as well. But I want to make sure that we keep investing as well in there because until we are 100% with the Pest Intelligence model around the world, well, we will not slow down our investments that has real impact on the operating margin, but it's still improving, as you could see since our [indiscernible] 20% now.

Our next question is from the line of Josh Spector with UBS.

I wanted to ask from a general context. You talked about '26 confident in the low to mid-teens EPS growth. I think around this time a year ago, you made comments around you don't really need strong volumes to get there. You're really confident in the price/cost equation. I guess when you sit here today and look out a year, do you feel the same way that you can kind of get there with 0% to 1% volumes? And if you start to see an acceleration, that's upside? Or would you frame it differently?

I see exactly the same way, the way that you described it. With the only caveat, we don't know also how the environment is going to be in '26. We had some very firm plans for '25 with very strong FX headwinds and delivered product cost that would be really helping. Well, it was exactly the other way around that it happened in 2025. And still we delivered what we had promised in terms of top line, but most importantly, in terms of bottom line.

So when I think about '26 for me, it's going to be a strong year, very similar to '25, with 3% to 4% top line, positive volume, 2% to 3% price to drive this 12% to 15% EPS, and at least 100 basis points in terms of operating income margins, to get to 19% plus, which is bringing us closer to the 20% that we committed to for '27. FX are going to be a help. Inflation might be a little bit of a headwind in '26 and everything else that we don't know.

But I feel really good on that trajectory. And to your point, if things improve, if our end markets are even more open to what we do, well, that's going to be upside. That's why I feel really good with where we're heading in 2026 one more time like it's been in the past few years.

Our final question is from the line of Kevin McCarthy with Vertical Research Partners.

This is [ Matt Hatwear ] on for Kevin McCarthy. Thanks for color on data centers that you gave earlier. Just following up on that conversation, I wanted to get your thoughts on how Ecolab is positioned with regards to next-generation cooling technologies such as direct-to-chip cooling. Do you have everything you need to compete and win there? Or should we expect additional bolt-on deals in that arena?

Love that question, Matt. No one has everything they need for direct-to-chip cooling. This is leading-edge technology. It's 5% of the data centers, those are the newest. But interestingly enough, when you say direct-to-chip cooling, liquid cooling, this is fluid management. This is exactly what we've done for a very long time. So managing fluids in a bunch of different industries, obviously. So in a way, it's coming closer to our own mastery of science and technology.

So when I think direct to chip cooling, well, we talked about our cooling distribution units that we call Coolant Intelligence Unit because they integrate 3D TRASAR technology that we've been obviously developing for many, many years. So we have that technology in the middle of a data center integrating 3D TRASAR. We've developed as well Connected Coolant, so the liquid itself, so to make sure that you have the best thermal performance to cool the chips as well.

We have coolant monitoring systems as well to make sure that you don't have leaks, you don't have fouling, you don't have anything bad that's happening as well, to maximize as well the performance of the data center. And you have everything else obviously that's going up the chain, in chillers and towers, on the roof. The latest data centers that we're serving have no cooling towers on the roof and have no water in there as well.

So we have many pieces that we need and we're developing and exploring the new pieces that we will need as well in the future. And that's why I think we're just at the beginning of that journey, but that's a field that's exactly what Ecolab should be focused on. We should become the owner of cooling technology for data centers in the world. And that's we're focusing all our efforts, all our resources and all our investments as well in Global High-Tech.

On top of it, we do similar, obviously, with microelectronics, different technology. I mentioned before, it's reuse and recycle of ultrapure water, and that's where Ovivo is playing exactly in that field. So it's really serving our dual strategy in high tech, to be the owner of circular water -- ultrapure water standards in microelectronics, and cooling technologies in data centers. And that's why I'm so bullish about what we've done, where we are today, but most importantly, where we're going.

And that's why I'm saying, it's going to change over time the growth profile of this company because it's a huge growth wave, and we're very well positioned on that wave. So really like where we are. The competitive set is strong out there, but no one understands cooling and water better than we do. So I would clearly bet on the Ecolab team.

Thank you. At this time, we've reached the end of our question-and-answer session. I'll turn the floor back to management for closing comments.

Thank you. That wraps up our third quarter conference call. This conference call and the associated discussion slides will be available for replay on our website. Thank you for your time and participation. I hope everyone has a great rest of your day.

Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Have a wonderful day.