Greetings, and welcome to the Ecolab Second Quarter 2021 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce to you your host, Mr. Mike Monahan, Senior Vice President, External Relations. Thank you, sir. You may begin. Thank you. Hello, everyone, and welcome to Ecolab's Second Quarter Conference Call. With me today are Christophe Beck, Ecolab's CEO; and Dan Schmechel, 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. 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. Starting with a brief overview, strong second quarter results reflected significant year-on-year sales and earnings growth, driven by recovering markets, accelerating pricing, and new business wins, which more than offset increased delivered product costs and the slower pace of reopenings outside the U.S. We've implemented aggressive pricing actions to offset increased product costs leveraging the strong product and service value we deliver to customers. When combined with our strong new business wins, we expect to once again successfully manage the current inflation challenges and uneven global economic recovery to deliver very strong sales and earnings growth in 2021. Our position as a leader in food safety, clean water, and healthy environments has become even more important in the last 18 months. We believe this position, along with our strong long-term growth opportunities, remains robust, driven by our huge remaining market opportunity, our leading global market positions, our focus on providing our strong customer base with improved results while lowering their water, energy, and other operating costs, and through that, our ability to help them meet their growing ESG ambitions. We believe that these sustainable long-term business drivers will continue to yield superior long-term performance for Ecolab and our investors. And now here's Christophe Beck with his comments.

Thank you so much, Mike, and thanks to all of you for joining us today. As expected, Q2 was indeed a very strong quarter for our company. Acquisition adjusted sales rose 12%, driven by the U.S. and China with the reopening of Europe and the rest of the world expected to follow progressively. Adjusted earnings per share ended up a strong 88% over last year. U.S. institutional sales more than doubled in the second quarter versus the same quarter in 2020, clearly outperforming the industry. The number of restaurants we serve as well as the number of solutions they buy from us ended up almost back to 2019 levels and are growing fast. Both are strong signs of how much business we've gained during the pandemic and the growth potential we have as markets reopen. Industrial accelerated to 3% in Q2, driven by strong new business generated during the pandemic and accelerated pricing. Water sales were up 7% with light industries up 12%, driven by strong momentum in new segments like data centers, which, by the way, grew 53% in the quarter. Paper was up 10%, driven by strong demand for our innovative solutions in board and packaging, while food and beverage kept improving. Downstream remained a bit challenged in the quarter as it repositions itself from a focus on operational efficiency toward new promising sustainability offerings. Healthcare and Life Sciences also had very strong and consistent underlying sales growth in Q2 with mid-single and double-digit growth, respectively. Reported sales were only down as they respectively compared to exceptional growth of 13% and 53% in 2020, largely driven by unusually high demands and one-timers during the pandemic. And finally, the other segments grew 23%, driven by continued strengths of pest elimination, which was up 21% in the quarter benefiting from further market opening and very strong business. On the margin front things progress very well too, with overall margins improving by 420 basis points. Beyond the U.S. institutional recovery, our continued progress benefited from accelerated investment made in digital technology during the pandemic as well as overall pricing that accelerated to 2% in the second quarter. With this backdrop and for the full year, we remain confident in our ability to deliver adjusted earnings that are better than 2019, excluding the Texas freeze. How much better is the only question, considering the Delta variant, the timing of your opening in Europe and in the rest of the world, as well as the speed and amplitude of the rise of inflation. More broadly, our longer-term outlook has never been stronger. Our new business and innovation pipelines are at record levels. Our new growth engines like life sciences, healthcare, high tech, and data centers are all very well positioned to drive incremental growth. And our digital capabilities continue to increase customer value, field productivity, and customer experience. Our main focus right now will be to leverage this positive pricing environment to protect and strengthen our margins while further enhancing value for our customers. This is something we've accomplished many times in the past and expect to successfully accomplish once again. Therefore, we've now embarked on a third round of price increases, which will progressively cover the new rapid rise of input costs that we've seen in Q2, with the biggest impact to be seen in Q4 when we expect pricing to reach 4%. Overall, we feel good about our ability to deliver in the second half of '21, even if the pacing between the next two quarters will be slightly different than initially anticipated. We now expect attractive sequential improvement in the third quarter and a more significant one in the fourth as pricing actions will hit the P&L. And finally, global trends in people's health, like infection prevention and food safety, as well as planet health, like water and carbon emissions, are becoming front and center for every business leader. And there's no one positioned to help customers on both fronts better than Ecolab while helping them ensure strong and long-term business sales. In other words, we're strengthening our global position as the natural sustainability partner for our customers. All this, combined with the strengthened highly innovative portfolio, strong business momentum, terrific new wins, accelerated pricing, and unique digital capabilities to position us with great momentum for '22 and will contribute to drive continued strong double-digit earnings growth for the years to come. With that, I look forward to your questions.

Thanks, Christophe. That concludes our formal remarks. As a final note before we begin Q&A, we plan to hold our 2021 Investor Day on Tuesday, September 14 in St. Paul. Operator, please begin the question-and-answer period.

Thank you. We will now be conducting a question-and-answer session. Your first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Good afternoon, Christophe. Thank you for taking my question. So, I want to focus on raw materials and price, which probably doesn't surprise you. But in the face of raw material cost pressure, I think your typical formula is to increase price to make up for the dollar amount in year one and then the margin in year two. But in your press release, you said the recent pricing actions you took remain ahead of input costs. So I was hoping you could clarify this language a little bit. If your price minus cost dynamic is currently positive, it sounds like you've already moved past Phase 1, and you're essentially already on Phase 2, which is working to rebuild the margin. Am I reading into that statement incorrectly? Or is that how you would characterize it?

The general direction, Tim, is right. Actually, when I look at the first half of 2021, I like a lot where pricing was compared to the input cost. We're usually good at that as well. Now what has changed is that the indices, as we've all seen, have changed for the much higher for the second half. And that has indicated we had to change our pricing plans quite significantly. It's been the third time we've done it over the last 12 months. We've engaged those new plans as well with the whole team. We have indicated that to customers and progress is good. So, we were ahead. The market has changed a little bit, which forced us to change our plans as well. I feel good right now that we will be in a good place for the second half, both in terms of dollar and progressively improving the margin. And to that point, it's going to impact mostly Q4, obviously, because it takes some time to agree with customers to get to that new pricing. So we will see a better improvement in Q4 than what we had expected and a lower improvement in Q3 than what we had expected, but overall, for the second half, we're basically at the same place as what we had planned initially.

Okay, very clear. And the announcement that you guys gave publicly in a press release, I think that was specifically related to the industrial segments. But presumably, you're also seeing cost pressures in institutional and healthcare as well. Are you implementing price increases across those divisions as well? Or is this really a conversation about industrial primarily?

We're implementing price increases in every business every year. Tim, this is really a practice that we have coached our teams and our customers for many past years, really making sure it's not an event, but it's really something that's happening every single year, really driven by the value we create for our customers and not directly driven by the input cost, which is one of the elements of the discussion. So you're right, industrial takes the heaviest or biggest part. Because of their cost structure, this is nothing new, and they're really good at it. So, the majority of the price increase is in industrial, but the other businesses are moving up as well at the same time.

Your next question comes from the line of Manav Patnaik with Barclays. Please proceed with your question.

I just had a broad question, which is what do you need to see happen in terms of visibility before you can start giving your detailed guidance like you used to? I was just hoping you could help us through some of the moving pieces maybe beyond just the Delta variants, I suppose.

Yes. Hi, Manav. Good question. So it's all related to the Delta variant. As you know, if you look at the past 20 years, we've always delivered within our guidance with the exception of 9/11, unfortunately, 20 years ago. So for us, the level of assurance and certainty is very high. We focus on everything we can control, including questions of price and inflation, as we just discussed. The Delta variant is something that is really unusual, hard to predict as well. So that's the only question mark that we have out there. The clearer things become, vaccination rates, and how governments and countries are reacting will bring us closer to providing guidance. We will get back to that. We like it. It's something that has been good for us and for investors as well at the same time. So we'll get back when the time is right. But so far, I'd say if things do not change materially, our directional guidance remains true, and we will firm it up as soon as the Delta variant becomes more clear.

Got it. And just maybe on the margin front, I mean if pricing is ahead of cost and you've obviously learned a lot, I think, in terms of efficiency over the past 15 months or so. So just curious if the incrementals and the incremental margins in the business, should we think of that as getting better or more of the same? Or any color there would be helpful.

Overall, for the second half, it's going to be the same. But obviously, the input cost has changed quite dramatically and the pricing has changed as well, quite a bit. We had initially thought for the full year that our input cost would increase kind of mid-single digit. That was the initial plan. The way we look at it for the full year now, it's closer to double-digit numbers, so quite a change. And we've changed pricing as well for that. But let's keep in mind as well that in order to get the margins back to where they used to be, we need to double the pricing versus the input costs since we have a gross margin of 50%, so easy math as such. Overall, good situation in terms of pricing versus input cost. The second half is going to deliver a similar improvement than what we had expected. But as mentioned earlier, the pacing between Q3 and Q4 will be different just because we need some time in order to get agreement with customers.

Your next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question.

Thank you. Christophe, just again on price versus loss, in Q3, do you expect pricing to again exceed input costs in this quarter?

Yes, the price will be ahead of the input cost. And as mentioned before, our objective is not just to get there, but it's to get back to the margins in percent that we used to have, and that takes a little bit more time. But so far, things are going really well.

You mentioned, again, Q3 being below your initial expectations with that catch-up in Q4. How much lower is Q3 going to be below versus your prior expectations on a sequential earnings basis?

This is hard to tell because it depends on agreements with customers, and it's a question of week one or two months. We do that very thoughtfully with our customers. As you know, we are all driven by the value we create for our customers with whom we've had relationships for decades. So we are very careful in how we do that really in order to make sure that a year from now, they still believe that we did it the right way that it was good for them, well, it was good for us as well. So it's all timing-dependent for Q3. That's why I'm directionally saying it's going to be a little bit pressured in Q3, and it's going to be better in Q4.

Your next question comes from the line of Ryan Connors with Boenning and Scattergood. Please proceed with your question.

Thank you for taking my question. My first inquiry is regarding your observation that the institutional results have not only improved significantly year-over-year but have also outperformed the end market according to your assessment. Can you provide some details on the metrics you used to support this claim? Additionally, how sustainable do you believe this trend is moving forward? Is this merely a recovery in specific markets, or do you anticipate maintaining this outperformance as the institutional sector continues to rebound?

I like where we are in the U.S., especially since it's where the recovery happened first or second off China, obviously, but the size is completely different. Maybe just to give you a few numbers as winning here, you look at the restaurant sales, so we are 9% down, so for us or 91% back to where they used to be which is a better way to look at it. 15% of the end units have closed as well out there in the market. And the dine-in traffic, which means in the dining room, was down 37% as well in the second quarter. So with us being 91% of where we were before, it's much better than where the market is. The second perspective is also, we measure how many restaurants or hotels, for that matter, we serve and how many solutions they buy as well. And we are back to the levels that we were in 2019, knowing that the traffic is not as high as it used to be. So when traffic is coming back up as well, our growth is going to pick up further as well. So I see that as a sustained development.

Okay. And then on the flip side, there was a lot to like in the report, but Healthcare was a drag, which I mean, I guess we know that last year was the apex of the pandemic, but I'm a little bit surprised to see that. Can you give us some dynamics around that? Is that sort of more virtual medicine that's driving that? And what's the outlook for that Healthcare as we move into the recovery?

No, it's just a comparison versus exceptional results last year driven by the pandemic. So we're comparing some 12% or 13% growth in healthcare in 2020 and 53% growth in Life Sciences as well, driven by pharma demand and infection prevention solutions in the pharma sector. What's important for me is really to look at the underlying growth. So when we strip out the unusual demand of 2020 and one-timers, you see Healthcare, so in mid-single digit, which is better than where we used to be. So this 2%, 3% in the past has moved closer to the 5%-ish. And Life Science as well underlying is in the double-digit territory, which is very good, so kind of sustained growth going forward. So when you strip out the noise, basically, you get to this mid-single and double-digit growth for Healthcare and Life Science, respectively.

Your next question comes from the line of Gary Bisbee with Bank of America Securities. Please proceed with your question.

First question on margins, I wanted to ask a little differently. Obviously, institutional still down from pre-pandemic levels quite a bit along with the revenue and the volumes. But the other three segments all had second quarter margins ahead of the second quarter of '19. And I know you've had ongoing cost reduction efforts, and there's a lot of moving parts, obviously, with the input costs in the short term and everything else. But outside of institutional, which presumably will continue to see the margin recover with revenue. For the other three businesses, is the margin this quarter a reasonable number to use to think about moving forward other than maybe a little bit of raw material hit in Q3, and maybe you get that back in Q4? Or are some of these that are still way above the 2019 margin? Is there risk of some further give-back to get to a more normal go-forward margin base for each of the segments? Thank you.

All three segments are a bit in different places but the headline is that the margin trends are a good indication overall of where we are and where we're heading. But if I just unpack them for you, you saw industrial first. Yes, it's growing. But as mentioned before, it's impacted the most by the input cost, as is always the case, so nothing unusual in here. They have also the biggest share in pricing, and they're really good at it at the same time. So there are different elements of cost and price are different, but ultimately, industrial is going to keep its development in gross margin, and we expect the overall year to stay fairly close to where it used to be last year. Healthcare and Life Science, as mentioned before, we're comparing to very unusual growth numbers in Q2 last year. And if you strip that out, ultimately, our margins have improved very nicely in 2020. We expect as well for Healthcare and Life Science to get quite close to where we were in terms of record margins in '21. And as you mentioned, institutional is on its path to recover as such. So, it's maybe the business where the margin we had in Q2, the improvement in Q2 was a bit overstated as such because we compare in 2020 with two special events. The first one was the bad debt that we recorded for obvious reasons in Q2 during the beginning of the pandemic. And second, we foregone the lease payments for these machines. So you compare something that was lower. As such, it's going to change a little bit in Q3 and Q4. But overall, for the Company, good situation in margin, assuming that our assumption is for roles and pricing happen as planned, which I do ultimately, and margins should keep evolving as expected. All three segments are a bit in different places but the headline is that the margin trends are a good indication overall of where we are and where we're heading. But if I just unpack them, just for you, you saw industrial first. Yes, it's growing. But as mentioned before, it's impacted the most by the input cost, as is always the case, so nothing unusual in here. They have also the biggest share in pricing, and they're really good at it at the same time. So there are different elements of cost and price are different, but ultimately, industrial is going to keep its development in gross margin, and we expect the overall year to stay fairly close to where it used to be last year. Healthcare and Life Science, as mentioned before, we're comparing to very unusual growth numbers in Q2 last year. And if you strip that out, ultimately, our margins have improved very nicely in 2020. We expect as well for Healthcare and Life Science to get quite close to where we were in terms of record margins in '21. And as you mentioned, institutional is on its path to recover as such. So, it's maybe the business where the margin we had in Q2, the improvement in Q2 was a bit overstated as such because we compare in 2020 with two special events. The first one was the bad debt that we recorded for obvious reasons in Q2 during the beginning of the pandemic. And second, we foregone the lease payments for these machines. So you compare something that was lower. As such, it's going to change a little bit in Q3 and Q4. But overall, for the Company, good situation in margin and assuming that our assumption is for roles and pricing happen as planned, which I do ultimately, and margins should keep evolving as expected.

Your next question comes from the line of John McNulty with BMO Capital Markets. Please proceed with your question.

So I guess maybe two quick ones. Just with regard to Europe and how you see the reopening or gradual reopening impacting the businesses, can you give us a little bit of color or thoughts on how to think about things sequentially from 2Q to 3Q and the pace of that reopening for both the institutional and the industrial segment?

Yes, John, the reopening of Europe occurred in early Q3. As you may have read, I spent several weeks in Europe toward the end of June. Europe was largely closed until June, but then everything reopened. We've seen a significant increase in our institutional business as it transitioned from zero to fully operational, which is a considerable change reflected in our numbers, showing very promising trends in institutional Europe. The industrial sector, while not shut down like restaurants and hotels, is also experiencing improvement. Overall, Europe is performing reasonably well so far. On an international level, it’s worth noting that last year international business was flat outside North America, but we are now seeing a return to growth not only in Q2 but with even better prospects for Q3, so this is good news as well.

Got it. That's helpful color. And then I guess from a raw material perspective, can you speak to whether or not you had any issues in terms of sourcing raw materials and if that had any impact on the businesses? Or has it really just been a function of inflation and just getting that through in terms of pricing?

It's a great question. The market is tight out there. The Texas freeze made it harder in February for everyone out there. We're lucky enough to have a great procurement team and a great supply chain team that could find alternative sourcing and reformulate products. So overall, it's been a heavy lifting within the organization. But we've been able to supply our customers in a fairly continued manner during the second quarter, and we see that improving as well in the quarters to come. So, bottom line, a lot of work, but the great teams are helping customers being supplied as they should.

Your next question comes from the line of John Roberts with UBS. Please proceed with your question.

Labor is an issue for your institutional customers right now. Is your Lobster software or any of your other digital offerings enabling you to help your customers with their labor issues?

It does. Actually, we're expecting to have close to 1 million users with Lobster Ink by the end of the year, which is driven by exactly what you're saying. Those labor shortages in hotels and restaurants are creating some new challenges for that industry. They need to train a lot of people coming into restaurants and hotels, and that kind of solutions are definitely helpful. So that's the good side of the story.

And then could you talk about some of your other new product offerings? So many of the new products like fast-acting, hard surface cleaners had a surge last year, but are you still penetrating new customers? Maybe talk about it in terms of market penetration or customers that you're adding.

We are currently seeing that the number of restaurants purchasing solutions has returned to pre-pandemic levels, despite a 15% decline in units during that period. This positive trend is largely attributed to the Ecolab Science Certified program, which requires customers to purchase a variety of solutions to achieve certification. This initiative has gained strong traction, with companies like McDonald's endorsing it and many corporate clients experiencing significant success. In terms of sanitizing products, our focus has shifted over the past 18 months due to the pandemic. The surface sanitizers we launched are performing exceptionally well, showing double-digit growth compared to pre-pandemic levels, which is encouraging. We plan to continue innovating in this area, including the introduction of disinfecting wipes. Additionally, we have acquired two companies, one in the U.S. and one in the U.K., to further strengthen our market presence. Overall, we are pleased with our progress in innovation, particularly in the disinfecting sector.

Next question comes from the line of Kevin McVeigh with Credit Suisse. Please proceed with your question.

I would like to clarify something. Is the 4% price increase applicable to all of Ecolab or just the industrial business? If it applies to the whole company, does that mean 75% of it is industrial, or is there no way to delineate that 4% increase you mentioned?

Yes. Kevin, so 4% is for the whole company, and you will have more in industrial because that's where we bear the brunt of the cost increases as well. So you're going to have higher than 4% in industrial. And in the other businesses, you're going to have lower than four ultimately.

Got it. And then just within the downstream business overall, as you're clearly repositioning that, any thoughts as to what percentage of the revenues refining today and then where that ultimately bottoms, and ultimately, you're going into higher growth areas as well? Just at 100%, is there ways to think about those end markets just within the downstream business itself?

It's hard to tell, but I would say that we've reached the bottom in the refining part of downstream right now, so petrochem has been doing well all along. So that's a different story, obviously, as such. I think it's going to improve progressively as of now in downstream refining. But it's going to take us a year or so to get to the right place where we can say we truly like the trajectory of that business. It's an industry that is in complete transformation as well. The good news is that we are uniquely positioned to work with those companies to help them get to a better place. I've had great discussions with some of the CEOs of those companies lately as well. They need us more than ever, especially true with European companies, but also in the U.S. So longer term, I think it's going to be a very good opportunity for us.

Your next question comes from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.

Thank you and good afternoon. You mentioned in the prepared comments in specialty in the food retail business that you were seeing sales reversion as expected, some of it, I think, coming just from less consumer demand, but also there were labor issues from a customer perspective. And one of those things seems temporal and the other one seems sort of a little bit more structural. So could you help us understand how to think about those trends on a go-forward basis?

Yes. Hi, Vincent. So, it's really because we're comparing to a strong Q2 in specialty last year. It's a business that's doing well actually. So it's a comparison question underlying. I like a lot where quick-serve and food retail are heading, very strong businesses, very profitable and serving successful industries right now as well. So it's the comparison that's skewing the numbers, otherwise, underlying very good, and I see a future that's going to keep on what you've seen pre-pandemic as well with those two businesses. Yes, let me give that question to Dan. I was looking forward to a question as well there. So that's a perfect opportunity.

Such a great question, so thank you. Yes, we remain very much on track to deliver our incremental $120 million year-on-year. And more broadly, maybe the A 2020 program, which has gone through a couple of iterations, we feel very good about the progress that we've made sequentially, and we'll continue to.

Your next question comes from the line of Scott Schneeberger with Oppenheimer. Please proceed with your question.

So my first, I want to inquire about new business wins. A lot of the description today has been recovering markets, but we in the press release, a lot of highlighted new business wins, and that's across water, paper, sign certified, you talked about, and even pest. Could you just elaborate a little bit on maybe where you're getting the most strength and what type of wins you're getting? Thanks.

Great question. Thank you, Scott. So new business, interestingly enough, is gaining traction in every end market. We thought that in some markets like the institutional markets over the past 18 months, it would have been way harder. Actually, it's one of the areas where we've made the most progress, which is really good news. Industrial is doing really well in Healthcare as well as Life Science has always been great at it, which we see in the numbers as such, so a really good story. I would say one of the new emerging stories in your business is what many goals is this net zero, with many customers trying to get closer to their sustainability ambitions, like water neutral or carbon neutral. Those discussions with those forward-looking companies interestingly enough are strengthening our relationships with them because they need our help even more than before, and that's growing as well as our new business opportunities because they need our help in all the units around the world and need much more solutions from us in order to get closer to the net zero ambition. So that's one of the new drivers that we're seeing emerging, which is good for our company.

Great. And then I think a good follow-up to that would be just to ask specifically on data centers and animal health, some of your other emerging growth opportunities, just a progress report there. And any quantification on the pace of growth or margin expansion?

Yes. Starting with data centers. As mentioned earlier, we've been growing, I think, 53% in the second quarter. It's been a terrific story. It used to be part of our light water industries business. In the past, we've created a dedicated unit 12 or 18 months ago, which is really a division focused on data centers and microelectronics, by the way, the Intel of that world as well. And interestingly enough, its new expertise that we could build, its new offering that we could provide to those companies that are really interested in close to 100% uptime for all the reasons that we understand, our secure solutions from a digital technology perspective; they want to make sure that any access that we have with them is done in a totally secure way as well. And those are companies that are very sustainability-friendly as well. So they all want to get close to the net zero as fast as they can, all that is really driving that business in a great way. Animal health is a completely different story. Obviously, this is something that takes time as well. We've created a dedicated unit. We've made acquisitions in that field, and underlying, I like where we're going. Q2 has been a bit subpar because we compare it to a very high Q2 in 2020. But that's a business that's going to be very interesting moving forward for at least one important reason: most of the farmers won't be or are not allowed to use antibiotics to protect the animals, and they need way more solutions to ensure that they are in a healthy environment in order not to get sick. This is exactly what animal health is doing in our business. So, it's an evolving proposition, but that's clearly aligned with the longer-term trends that customers and consumers like you and I ultimately are expecting from the food manufacturers.

Your next question comes from the line of Rosemarie Morbelli with Gabelli & Company. Please proceed with your question.

I was wondering if you could talk a little bit about M&A. You have been making small acquisitions. Do you have an appetite for larger ones? And are there targets that you would be interested in?

So the short answer is, yes. We're interested in M&A and larger ones. We've done smaller ones over the past few months, as mentioned earlier, in the wipes area, which is a perfect complement to our offering in institutional, in healthcare and in industrial, and we couldn't produce that ourselves. We've seen during the pandemic that that could be a great business for us today and especially going forward. So we've done that as well. We've done animal health last year, as I just mentioned as well as to the previous question. And we've been extremely active on the M&A front over the last six months. We have a very rich pipeline. We are in very serious discussions with many out there. But at the end of the day, we have this very disciplined line on what we do and what we don't do. And when I look at all the discussions that we've had so far, we didn't find the exact opportunity right now. But I feel confident that in the future, we will get to a bigger opportunity at the right time.

Can you share with us any particular area where you are more likely to make a larger acquisition?

So I can't go too much into detail, Rosemarie, for obvious reasons. But the core areas of water is interesting for us; life science, which is a very successful business serving a very large and high growth end market; and third, related to digital technology as well. So those are three areas that are very interesting for us.

All right. And then, if I may, what is the size of your animal health business currently?

I'm not sure we've disclosed that so far…

But you can do it now.

A few hundred million, let's put it that way, Rosemarie.

Your next question comes from the line of P.J. Juvekar with Citi. Please proceed with your question.

Christophe, it's Eric Petrie on for P.J. You noted you were gaining share in U.S. restaurants. I was wondering if you had a similar data point on lodging. And then in both restaurants and lodging, how does that compare in Europe and Asia?

So my comment was mostly focused on restaurants because it was a highly impacted area. I like the progress we make in hotels a lot as well. And mostly because of the offering that we provide them in terms of our automation of an application of our solutions. You've heard about the staff shortages that they all have. I've had the chance to talk to a few CEOs as well lately from large hotel chains in the U.S. and abroad. This is top of mind. So the solutions that we have which are not new, those are things that we've been doing for many, many years ultimately helping them clean quicker, which is something they really saw challenged with right now or in the dish room as well as to clean dishes in an easier way, passed away with less labor as well, the same on water, the same on housekeeping and so on. And those are solutions that are ultimately helping us sell new business in lodging. So good progress in lodging as we've seen as well in food service.

And just a follow-up then to clarify, would you say you're gaining share in restaurants in Europe and Asia as well? Or is that not settled out?

We have less numbers over there, and to be honest, those markets are reopening right now. So we've gained new business. We have to see how it looks in practice then afterwards. I think that in the months and quarters to come, I will be in a better position to really share whether we've gained, which I believe we will, but I want to have the facts first or not.

Okay. And second from my follow-up question. How much were your sanitizer and hard surface cleaners sales down in the quarter? And what do you expect in terms of moderation for the second half?

Sanitizing sales make up 10% of our overall sales for the Company. We experienced significant growth last year, but we anticipate being lower than last year's numbers overall. While we don't disclose all the specific figures, our sales are substantially higher than those in 2019. It's important to view it in this context: although we are below the peak of the pandemic, our sales have exceeded those from 2019 due to changes in practices across most end markets and countries.

Your next question comes from the line of Laurence Alexander with Jefferies. Please proceed with your question.

Just a quick one to follow up on the discussion earlier of the shifts away from some of the lower margin businesses like refining. If you look at the moves you've done over the last couple of years, can you give a rough sense for how much sales you've moved away from some of the out-of-favor business segments over the last couple of years? And how much stronger your sales line would have been if you hadn't done that?

It's a great question, Laurence, but I have no idea because it's something that we're doing all along in every business. The focus is really to move up the chain, move up the margins. It can't be driven only by pricing. It needs to be because we are focusing on the higher-margin segments, higher-margin offerings as well. So, its continuous work, where in some areas, it's more extreme, like the coal, as mentioned before, or refining in downstream that are more significant. But I couldn't put a number exactly on that because it's a continuous process.

Your next question comes from the line of Shlomo Rosenbaum with Stifel. Please proceed with your question.

Christophe, I want to ask you a little bit about how the Company is leveraging the technology investments as it approaches the C-level of an organization in terms of their sustainability. So my understanding is this is enabling Ecolab to start discussions with the C-suite as opposed to starting discussions more at the plant level. And I'm wondering, how are those discussions progressing? Is there an increased pace? Are you seeing a large potential for you to accelerate or an incremental potential for you to accelerate Ecolab's revenue growth by being able to sell further up the chain within the organizations?

Thank you, Shlomo. This is a great topic. I'd love to have more time to zero in on that, but maybe two quick answers, the what and the how. First, on the what, we have always more customers. It's not new, but it's clearly accelerating. So customers that are asking us to partner with us in order to find a path in order to get to net zero or positive water or carbon, Microsoft being one of the obvious ones. It's not a secret since they've been expressing that on CNN over the past year or so. To get there, you need to have digital technology because you need to understand to make it easy to recycle water, which is a physical product. We need to understand in real time the quality of the water which indicates what kind of chemistry we need or what kind of technology is required to bring it back to the standard level that's being used in a data center or in a food plant as such. This is a direct application of our digital technology. And second is the how. Since we are serving thousands of locations out there in the world, we are uniquely placed to know what's world-class performance that can be achieved. Take a brewery, for instance, how much water per hectoliter of beer is being produced. Well, we can compare within a company, a brewing company, how the performance of the individual plants compares to the best-in-class. We can compare across brewers as well. We can compare across industries as well as a company. So we can provide customers with good benchmark of what good looks like; and second, how to get there as well. That's all enabled by digital technology that we've been building, developing, and implementing over the last 10, 20 years around the world.

Okay. So, do you see the potential for incremental revenue growth for the business because you're able to sell at these higher levels, and thus you can offer capabilities that other companies can also provide?

Yes, absolutely. What you saw with data centers, so the growth of 53% is directly driven by that. And where light as well, which has been growing 7% in the quarter is also driven by that kind of solutions. Early indications are positive and the more we can implement that across the end market the more it's going to help us as well as a company.

Okay, great. If you don't mind my sneaking in one more. Just the areas that are completely open now in terms of restaurants, let's say, taking Florida or Texas, how does the chemical usage compare to what it was pre-COVID? What are the levels in the restaurants that more customers before and there are still customers?

It's still lower today, Shlomo, because the dining rooms are as mentioned before, down 37% as well versus pre-pandemic, which means that the usage of cleaning and sanitizing solutions has been lower as well. But as dine-in is going up, the demand is going up as well at the same time. So, the fact that we have the same number of units buying the same number of solutions today ultimately is a good sign as well as compound growth when dine-in is going to pick up in the weeks and months to come.

Ladies and gentlemen, there are no further questions at this time. And I would like to turn the floor back over to management for closing remarks.

Thanks, everyone. That wraps up our second quarter conference call. This call and the associated discussion and slides will be available for replay on our website. Thanks very much for your participation today, and have a great rest of the day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.