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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)                                                                                                                                                                                                                       

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to              

Commission File No. 1-9328

ECOLAB INC.

(Exact name of registrant as specified in its charter)

Delaware

41-0231510

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

1 Ecolab Place, St. Paul, Minnesota 55102

(Address of principal executive offices)(Zip Code)

1-800-232-6522

(Registrant’s telephone number, including area code)

(Not applicable)

(Former name, former address and former fiscal year,

if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $1.00 par value

2.625% Euro Notes due 2025

ECL

ECL 25

New York Stock Exchange

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The number of shares of each of the registrant’s classes of Common Stock outstanding as of March 31, 2024: 285,569,775 shares, par value $1.00 per share.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

First Quarter Ended 

March 31

(millions, except per share amounts)

2024

    

2023

Product and equipment sales

$2,986.5

$2,876.3

Service and lease sales

765.4

695.3

Net sales

3,751.9

3,571.6

Product and equipment cost of sales

1,679.2

1,798.3

Service and lease cost of sales

448.9

406.9

Cost of sales (including special charges (a))

2,128.1

2,205.2

Selling, general and administrative expenses

1,077.7

990.3

Special (gains) and charges

28.2

24.5

Operating income

517.9

351.6

Other (income) expense

(12.6)

(13.1)

Interest expense, net

71.6

74.2

Income before income taxes

458.9

290.5

Provision for income taxes

42.3

52.4

Net income including noncontrolling interest

416.6

238.1

Net income attributable to noncontrolling interest

4.5

4.7

Net income attributable to Ecolab

$412.1

$233.4

Earnings attributable to Ecolab per common share

Basic

$1.44

$0.82

Diluted

$1.43

$0.82

Weighted-average common shares outstanding

Basic

 

 

285.7

284.6

Diluted

 

 

287.8

285.9

(a)Cost of sales includes special (gains) and charges of $1.6 and $3.2 in the first quarter of 2024 and 2023, respectively, which is recorded in product and equipment cost of sales and service and lease cost of sales.

The accompanying notes are an integral part of the consolidated financial statements.

2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

First Quarter Ended 

March 31

(millions)

    

2024

    

2023

Net income including noncontrolling interest

$416.6

$238.1

Other comprehensive income (loss), net of tax

Foreign currency translation adjustments

Foreign currency translation

 

(46.6)

11.1

Gain (loss) on net investment hedges

 

8.9

(16.7)

Total foreign currency translation adjustments

 

(37.7)

(5.6)

Derivatives and hedging instruments

 

5.1

(4.7)

Pension and postretirement benefits

2.3

0.2

Subtotal

 

(30.3)

(10.1)

Total comprehensive income, including noncontrolling interest

 

386.3

228.0

Comprehensive income attributable to noncontrolling interest

 

5.0

5.2

Comprehensive income attributable to Ecolab

$381.3

$222.8

The accompanying notes are an integral part of the consolidated financial statements.

3

CONSOLIDATED BALANCE SHEETS

(unaudited)

March 31

December 31

(millions, except per share amounts)

    

2024

2023

ASSETS

Current assets

Cash and cash equivalents

$479.9

$919.5

Accounts receivable, net

 

2,786.6

2,834.2

Inventories

 

1,565.9

1,497.2

Other current assets

379.3

393.2

Total current assets

 

5,211.7

5,644.1

Property, plant and equipment, net

 

3,451.1

3,474.6

Goodwill

 

8,111.4

8,148.2

Other intangible assets, net

 

3,413.6

3,493.5

Operating lease assets

566.3

553.5

Other assets

544.4

532.7

Total assets

$21,298.5

$21,846.6

LIABILITIES AND EQUITY

Current liabilities

Short-term debt

$11.3

$630.4

Accounts payable

 

1,607.1

1,566.3

Compensation and benefits

 

527.0

655.5

Income taxes

 

201.6

158.7

Other current liabilities

1,354.1

1,334.9

Total current liabilities

 

3,701.1

4,345.8

Long-term debt

 

7,528.6

7,551.4

Pension and postretirement benefits

 

640.4

651.7

Deferred income taxes

352.0

418.2

Operating lease liabilities

434.0

425.5

Other liabilities

416.8

381.8

Total liabilities

 

13,072.9

13,774.4

Commitments and contingencies (Note 16)

Equity (a)

Common stock

 

366.8

365.7

Additional paid-in capital

 

6,917.6

6,766.7

Retained earnings

 

10,324.5

10,075.4

Accumulated other comprehensive loss

 

(1,881.2)

(1,850.4)

Treasury stock

 

(7,522.1)

(7,312.7)

Total Ecolab shareholders’ equity

 

8,205.6

8,044.7

Noncontrolling interest

 

20.0

27.5

Total equity

 

8,225.6

8,072.2

Total liabilities and equity

$21,298.5

$21,846.6

(a)Common stock, 800.0 shares authorized, $1.00 par value per share, 285.6 shares outstanding as of March 31, 2024 and 285.4 shares outstanding as of December 31, 2023. Shares outstanding are net of treasury stock.

The accompanying notes are an integral part of the consolidated financial statements.

4

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

First Quarter Ended 

March 31

(millions)

2024

2023

OPERATING ACTIVITIES

Net income including noncontrolling interest

$416.6

$238.1

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation

157.0

158.7

Amortization

77.8

75.6

Deferred income taxes

(74.4)

(18.0)

Share-based compensation expense

47.0

31.4

Pension and postretirement plan contributions

(15.3)

(14.6)

Pension and postretirement plan (income) expense, net

4.0

2.6

Restructuring charges, net of cash paid

0.2

(27.3)

Other, net

1.5

2.3

Changes in operating assets and liabilities, net of effect of acquisitions:

Accounts receivable

49.0

41.0

Inventories

(65.5)

70.6

Other assets

21.3

3.5

Accounts payable

82.7

(268.5)

Other liabilities

(52.5)

(97.2)

Cash provided by operating activities

649.4

198.2

INVESTING ACTIVITIES

Capital expenditures

(201.5)

(173.7)

Property and other assets sold

0.7

4.8

Other, net

(0.2)

(20.5)

Cash used for investing activities

(201.0)

(189.4)

FINANCING ACTIVITIES

Net issuances of commercial paper and notes payable

7.2

5.5

Long-term debt repayments

(629.6)

-

Reacquired shares

(196.4)

(10.6)

Dividends paid

(175.2)

(157.7)

Exercise of employee stock options

105.5

15.5

Hedge settlements

-

(18.4)

Other, net

(0.8)

(0.7)

Cash used for financing activities

(889.3)

(166.4)

Effect of exchange rate changes on cash and cash equivalents

1.3

(21.6)

Decrease in cash and cash equivalents

(439.6)

(179.2)

Cash and cash equivalents, beginning of period

919.5

598.6

Cash and cash equivalents, end of period

$479.9

$419.4

The accompanying notes are an integral part of the consolidated financial statements.

5

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)

First Quarter Ended March 31, 2024 and 2023

(millions, except per share amounts)

    

Common
Stock

    

Additional
Paid-in
Capital

    

Retained
Earnings

    

AOCI
(Loss)

    

Treasury
Stock

    

Ecolab Shareholders'
Equity

    

Non-Controlling
Interest

    

Total
Equity

Balance, December 31, 2022

 

$364.7

$6,580.2

$9,318.8

($1,726.6)

($7,301.0)

 

$7,236.1

 

$22.5

 

$7,258.6

Net income

233.4

 

233.4

 

4.7

 

238.1

Other comprehensive income (loss)

(10.6)

 

(10.6)

 

0.5

 

(10.1)

Cash dividends declared (a)

(150.9)

 

(150.9)

 

(6.9)

 

(157.8)

Stock options and awards

 

 

0.3

46.3

0.2

 

46.8

 

46.8

Reacquired shares

(10.6)

 

(10.6)

 

(10.6)

Balance, March 31, 2023

$365.0

$6,626.5

$9,401.3

($1,737.2)

($7,311.4)

$7,344.2

$20.8

$7,365.0

Balance, December 31, 2023

 

$365.7

$6,766.7

$10,075.4

($1,850.4)

($7,312.7)

 

$8,044.7

 

$27.5

 

$8,072.2

Net income

412.1

412.1

4.5

416.6

Other comprehensive income (loss)

(30.8)

 

(30.8)

 

0.5

 

(30.3)

Cash dividends declared (a)

(163.0)

 

(163.0)

 

(12.5)

 

(175.5)

Stock options and awards

 

 

1.1

150.9

0.6

 

152.6

 

152.6

Reacquired shares

(210.0)

 

(210.0)

 

(210.0)

Balance, March 31, 2024

$366.8

$6,917.6

$10,324.5

($1,881.2)

($7,522.1)

$8,205.6

$20.0

$8,225.6

(a)Dividends declared per common share were $0.57 and $0.53 in the first quarter of 2024 and 2023, respectively.

The accompanying notes are an integral part of the consolidated financial statements.

6

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. CONSOLIDATED FINANCIAL INFORMATION

The unaudited consolidated financial information for the first quarter ended March 31, 2024 and 2023 reflects, in the opinion of management, all adjustments necessary for a fair statement of the financial position, results of operations, comprehensive income, equity and cash flows of Ecolab Inc. ("Ecolab" or "the Company") for the interim periods presented. Any adjustments consist of normal recurring items.

The financial results for any interim period are not necessarily indicative of results for the full year. The consolidated balance sheet data as of December 31, 2023 was derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. The unaudited consolidated financial information should be read in conjunction with the consolidated financial statements and notes thereto incorporated in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on February 23, 2024.

With respect to the unaudited financial information of the Company for the first quarter ended March 31, 2024 and 2023 included in this Form 10-Q, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. Their separate report dated May 2, 2024 appearing herein states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933, as amended (the "Act"), for their report on the unaudited financial information because that report is not a "report" or a "part" of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

2. SPECIAL (GAINS) AND CHARGES

Special (gains) and charges reported on the Consolidated Statements of Income include the following:

First Quarter Ended 

March 31

(millions)

    

2024

2023

Cost of sales

Restructuring activities

$1.6

$3.2

Cost of sales subtotal

1.6

3.2

Special (gains) and charges

Restructuring activities

18.1

12.6

Acquisition and integration activities

2.5

5.0

Other

7.6

6.9

Special (gains) and charges subtotal

28.2

24.5

Total special (gains) and charges

$29.8

$27.7

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

Restructuring activities

Restructuring activities are primarily related to the Combined Program which is described below. These activities have been included as a component of cost of sales and special (gains) and charges on the Consolidated Statements of Income. Restructuring liabilities have been classified as a component of other current and other noncurrent liabilities on the Consolidated Balance Sheets.

Combined Program

In November 2022 the Company approved a Europe cost savings program. In connection with these actions, the Company expected to incur pre-tax charges of $130 million ($110 million after tax). In February 2023, the Company expanded its previously announced Europe cost savings program to focus on its Institutional and Healthcare businesses in other regions. In connection with the expanded program (“Combined Program”), the Company expects to incur total pre-tax charges of $195 million ($150 million after tax). The Company expects that these restructuring charges will be substantially completed by the end of 2024. Program actions include headcount reductions from terminations, not filling certain open positions, and facility closures. The Combined Program charges are expected to be primarily cash expenditures related to severance and asset disposals.

In anticipation of this Combined Program, a limited number of actions were taken in the fourth quarter of 2022. As a result, the Company reclassified $19.3 million ($14.5 million after tax) from other restructuring to the Combined Program in the first quarter of 2023.

7

During the first quarter of 2024 and 2023, the Company recorded restructuring charges of $19.7 million ($15.8 million after tax) and $13.4 million ($10.2 million after tax), respectively, primarily related to severance and professional services. The Company has recorded $183.9 million ($152.7 million after tax) of cumulative charges under the Combined Plan. The net liability related to the Combined Program was $44.1 million and $43.1 million as of March 31, 2024 and December 31, 2023, respectively. The remaining liability is expected to be paid over a period of a few months to several quarters and will continue to be funded from operating activities.

Restructuring activity related to the Combined Program since inception of the underlying actions includes the following items:

    

    

    

    

    

Employee

Asset

(millions)

    

Costs

    

Disposals

    

Other

    

Total

2022-2023 Activity

Recorded expense and accrual

$114.2

$14.0

$16.7

$144.9

Net cash payments

 

(90.4)

-

(16.7)

 

(107.1)

Non-cash charges

-

(14.0)

-

(14.0)

Reclassification

19.3

-

-

19.3

Net restructuring liability, December 31, 2023

43.1

-

-