Ecolab Inc. (ECL) May 2026 Annual General Meeting Transcript

Welcome to the annual meeting for Ecolab, Inc. Our host for today's call is Christophe Beck, Chairman, President, and CEO. I will now turn the call over to your host. Mr. Beck, you may begin.

Good morning, everyone, and welcome to Ecolab's annual meeting of stockholders. I'm Christophe Beck, Ecolab's Chairman, President, Chief Executive Officer. It's now 9.30 a.m. Central Time. I note that the polls are open, and I now call the meeting to order. Joining me today is Jandine Boone, our Executive Vice President, General Counsel, and Corporate Secretary will be conducting the formal portion of the meeting. In addition, we are joined by Dave McLennan, our Lead Director, Philip Maher of Rice Waterhouse Coopers, the company's independent registered public accounting firm, and U.A. Don, our Deputy General Counsel Securities and Assistant Secretary. Links to the agenda and the procedures for this meeting are available on this virtual meeting platform, so please review these procedures as contain important information including how this meeting may be coherent if we experience technical issues to conduct an orderly meeting. We ask that participants abide by these procedures. Following the formal portion of the meeting, I will speak to you about Ecolab's business. After that, we'll have a short general question and answer session. Let me start by extending a special welcome to any former Ecolab associates and retirees listening to the broadcast and we are pleased that you are part of our audience today. I would like also to who are attending this virtual meeting, the hard work and commitment from you and your teams is the reason for our continued success. Now I'll introduce the 30 directors standing for re-election today and who are also in attendance at this virtual meeting. Jonathan Althoff, Chief Executive Officer of Microsoft's commercial business, Director of Ecolab since 2024. Sherry Ballard, Chief Executive Officer of Minnesota United, Director of Ecolab since 2018. Michel Ducaris, Chief Executive Officer of Anheuser-Busch InBev, Director of Ecolab since Harry Green, Chairman, President, Chief Executive Officer of West Pharmaceutical Services and Director of Ecolab since 2022. Aaron Gross, former Executive Vice President and Global Chief Supply Chain Officer of McDonald's Corporation, Director of Ecolab since 2025. Michael Larson, Chief Investment Officer to Bill Gates and Business Manager of Cascade Investment, Director of Ecolab since 2012. Dave McLennan, former Executive Chairman and former Chief Executive Officer of Cargill, Director of Ecolab since 2015, and our Lead Independent Director since 2023. Tracy McKibben, Founder and Chief Executive Officer of Mike Energy Advisors, Director of Ecolab since 2015. Lyna Noel, Lead Director of Bank of America and former Senior Vice President and Treasury of PepsiCo, Director of Ecolab since 2018. Dan Botrino, President of Kilobot Consulting and Retired Major General of the United States Air Force, Director of Ecolab since 2014. Julie Whelan, former Executive Vice President and Chief Financial Officer of Expedia Group, Director of Ecolab since 2025. John Zilmer, Chief Executive Officer and Director of Paramark, Director of Ecolab since 2006. And I'm the final nominee standing for re-election. Before we move on to our next agenda item, I'd like to take a moment to acknowledge a Director who is not standing for re-election, Vicky Hart. Vicky joined our board in 2009 and has since served three years on the Finance Committee, six years on the Safety, Health, and Environment Committee, eight years on the Governance Committee, and 17 years on the Audit Committee, including three years as Vice Chair and seven years as Chair. Vicky has been a valued colleague and trusted advisor, consistently offering independent perspectives and her deep financial expertise and global leadership experiences. On behalf of my fellow board members, we thank Vicky for her distinguished service and wish her the very best. And I'll turn the meeting over to Jandine Goon, our Executive Vice President, General Counsel.

Thank you, Christophe, and good morning, everyone. Before we proceed with the formal portion of the meeting, I will cover the mechanics of our virtual meeting. If you'd like to submit a question during the meeting, you may do so on the webcast screen. We will answer questions on the matters to be voted on during the formal portion of the meeting. There will also be a general Q&A period immediately following the remarks of our Chairman, President, and CEO, Chris Stocksback. Note that only validated stockholders as of the record date for today's meeting will be able to ask questions on the web portal. Additionally, if you have not already voted your shares, you may do so on the webcast screen. The polls will remain open until the conclusion of the Q&A period on the matters to be voted on. We will now conduct the formal portion of our meeting. We have received an affidavit signed by Broadridge Financial Solutions that notice of this meeting, along with related proxy and annual report materials, was mailed or made available on March 23, 2026 to Ecolab stockholders of record as of the close of business on March 10, 2026, our record date. Accordingly, notice of this meeting was timely given to the holders of our common stock. With more than a majority of the issued and outstanding shares presented in person or by proxy, a quorum is present for the conducting of business. There are four items properly brought before the stockholders today. The first item is to elect 13 nominees to the Board of Directors for a one-year term ending at the 2027 Annual Meeting. The Board recommends a vote for each of these nominees. The second item is to approve on an advisory basis the compensation of the company's named executive officers disclosed in the proxy statement. The Board recommends a vote for this proposal. The third item is to ratify the appointment of PwC as the company's independent registered public accounting firm for the current year ending December 31st, 2026. The board recommends a vote for this proposal. The fourth item is a stockholder proposal regarding an independent board chair policy. Operator, please open our line for Mr. John Chavetan to introduce himself and to present this proposal. Mr. Chavetan, the procedures for today's meeting allot three minutes for your presentation.

This is John Chauvin, Proposal 4, Independent Board Chairman. So I request the Board of Directors to adopt an enduring policy and amend the governing documents, including the corporate governance guidelines, in order that two separate people hold the office of chairman and the office of CEO as soon as possible. The chairman of the board shall be an independent director, and an independent lead director shall not be a substitute for an independent board chairman. The board shall have the discretion to select the interim chairman of the board, who is not an independent director to serve while the board is required to seek an independent chairman of the board on an accelerated basis. Independent board chairman at all times improves corporate governance by bringing impartiality, objective oversight, and external expertise to board decisions, mitigating conflicts of interest, enhancing transparency, and boosting shareholder confidence. This detached perspective allows the chairman to focus on shareholder interest, strength and management accountability, and provide for critical checks and balances, ultimately contribute to long-term sustainability and profitability. Independent Board Chairman could help Ecolab deal with a relative plateau in its stock price. The Ecolab stock price was at $238 in 2021 and only at $265 now in spite of a robust stock market. Please vote yes to Independent Board Chairman, Proposal 4.

Thank you, Mr. Cheveden.

The Board recommends a vote against this proposal for the reasons set forth in the company's proxy statement. I will now open the floor for stockholder questions on the matters to be voted on. There will be a general Q&A period immediately following the remarks of our Chairman, President, and CEO, Mr. Back. As a reminder, you may submit questions on the webcast screen. Up to one minute will be allocated to read each question. I now invite Yu Hao Dong, our Assistant Secretary, to read out questions submitted by our stockholders on the matters to be voted on.

There are no such questions submitted.

Further questions, we will resume the formal portion of the meeting. The polls are now closed and I will report the preliminary voting results based on the proxies already received. The 13 director nominees were elected. The proposals to approve the compensation of the company's named executive officers disclosed in the proxy statement and ratify the employment of auditors were approved. Finally, the proposal regarding an independent board share policy was not approved. The vital vote results will be reported to the SEC on a form 8K, a copy of which will be made available on Ecolab's website. This concludes the formal portion of our meeting. Before turning the meeting over to Mr. Beck, let me note that remarks made during the following presentation by Mr. Beck concerning future expectations, plans, and prospects for Ecolab constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected by these forward-looking statements. Information concerning factors that could cause actual results to differ include those factors discussed in the company's annual report on Form 10-K, found under Item 1A, Risk Factors. I now turn the meeting back to Mr. Beck to adjourn the formal portion of the meeting and to offer comments on the businesses.

Thank you so much, Antonin. I now declare the formal business portion of the meeting adjourned. We now transition to the business review, followed by the Q&A session. It's always a pleasure to recap highlights of our prior year and share updates on our continued growth story. The theme this year is winning in a complex world. I told it for a simple reason. The world is moving fast, expectations are rising, and managing complexity well is becoming a true competitive advantage. We see this as a world of opportunities, a world where we can win big by doing what's right, the right way. Customers need partners who can help them perform through uncertainty. We've always been here for our customers for more than a century, and we will never, ever let them down. At ECODOT, we win by doing what we've always done, protecting what's vital by protecting people from infections, protecting natural resources for the generations to come, and by protecting business performance in any environment. That focus is what carried us through 2025 and into 2026. Today, I'll briefly share where we've been, where we are, and where we're headed, and why I remain confident in our ability to deliver high performance in almost any environment. 2025 was another record year for E.C.O.L.A. We delivered record sales, record-adjusted earnings per share, record operating income margins, and record-free cash flow, all while continuing to invest in innovation, digital capabilities, and our team. We finished the year with strong momentum. we delivered 13% adjusted EPS crawls driven by strengthening underlying sales and continued margin expansion. For the full year, organic operating income margin reached 18%, up 150 basis points versus last year, and we will remain confident in our path to expand well beyond 20% over time. This performance reflects the incredible team we have at Ecolab that are in value for our customers, no matter the environment. Growth and impact go together at Ecolab. We protect people from infections, we protect natural resources, and we protect businesses by improving operational performance. Working side-by-side with our customers, we delivered measurable results in 2025. We conserved the annual drinking water needs of more than 849 million people, equivalent to 245 billion gallons of water. We safeguarded 7.7 million people from pollution-induced illnesses by avoiding imaging 4.7 million metric tons of greenhouse gas emissions. We protected 1.7 billion people from foodborne illnesses and infections, and we realized $12.9 billion in cumulative value for our customers. This is delivering our purpose, year after year, and when you do that, it builds trust. That trust shows up in how we recognize. In 2025, Ecolab was again named the number one company in our industry on Fortune's World's Most Admired Companies list. We earned top-tier ratings from CDP. we were recognized among the world's most ethical companies for the 20th year in a row, one of only six companies, and named one of the best employers globally. These recognitions are never the goal, but they are proof that doing the right thing, the right way, delivers results. I'm proud of our team and how they show up, everything in that. The world has once again become a bit more complicated. We've seen direct geopolitics, wars, you name it. We experienced it in 2025 and now in 2026. Some see these as challenges. We see them as opportunities. What sets us apart is our commitment to taking care of each other and being there for our customers in times like these. Our project is to serve them exceptionally well and good, like in less good times. We will never, ever let them down. I believe no company is better positioned to lead and win in this environment than Ecolab. We have 48,000 associates serving customers in more than 170 countries and 40 industries. We manage water at millions of customer locations. We help protect one-third of the world's food production and a quarter of the power that's generated. We protected 1.7 billion people from infections, and by 2030, we aim to help protect 2 billion people, along with providing enough drinking water for 1 billion people. is to deliver incremental value to customers and help them achieve best-in-class outcomes. We combine on-site expertise, global know-how, and digital intelligence to deliver best-in-class performance at the lowest total cost. That combination, expertise, technology, and service at scale is hard to replicate, and it's what customers rely on when performance matters most. That foundation allows us to keep growing even as the world gets better. This slide makes a simple point. Through our technologies and services, we consistently deliver significant value to our customers. We get to share in a portion of this value through price, what we call value price, and we've gotten very good at doing this over the last five years. Because of this model, we are able to consistently price ahead of community cost inflation. That discipline matters, especially in environments like the one we are in today. I know all prices and supply are top of mind for most. They're not for me. We've proven this model through much tougher cycles. In 2022, commodities costs were up 50%, and our margins post-cycle went further up. Today, commodities costs are expected to be up about 9%, but importantly, our pricing is also rapidly accelerating. As we look ahead, we have a good line of sight of to pricing, strengthening to the 5% to 6% range in the second half of the year. This level of pricing upsets inflationary costs as we exceed the second quarter and puts us in a position where gross margins stabilize in the second half of the year and further strengthens long-term. I feel very good about the year and how we manage a complex environment, and I feel even better about where we're going next. That confidence comes from where we're investing and where we invest intelligence, Life Sciences, Global High Tech, Ecolab Digital are growing faster than the rest of the portfolio and carry attractive margin profiles. They address markets with long-term demand and they're central to our strategy going forward. These businesses are meaningful and growing part of Ecolab and they're exactly where we're headed next. AI sits at the center of our growth strategy, both externally and internally. Externally, AI is driving demand for best-in-class performance and AI infrastructure. Internally, AI is helping us scale our high-performance model much faster through Ecolab Digital and OneEcolab. What's important in this, AI is amplifying the exact challenges Ecolab was built to solve. The guessing results is higher performance expectations and zero tolerance for downtime. Best-in-class is our promise to customers. With millions of customer locations, we know what best-in-class looks like in the real world. AI helps turn that vision, that visibility into action, improving reliability, safety, and resource efficiency at scale. AI infrastructure is mission-critical infrastructure. It has to operate continuously at extreme intensity with zero tolerance for downtime, and it is increasingly constrained by water, energy. That's exactly where Ecolab's water technology and service expertise make the difference. Ecolab Digital makes best-in-class scalable, converting data into insights and action so performance improves in real-time, not after the fact. One Ecolab is how we deliver it across an entire enterprise, bringing our expertise, digital intelligence, and service together to help customers perform consistently everywhere they operate. Put together, this is a system that's really hard to replicate, and it's why AI accelerates our purpose and our growth. Focusing on global high-tech, AI demand is reshaping its digital infrastructure. Global AI compute power is expected to roughly dabble over the next three to four years. Industry plants call for about 50 gigawatts of incremental compute demand, the power equivalent of roughly 50 nuclear plants, driving the build-out of nearly 70 new fabs and 1,000 data centers. That represents a $10 billion opportunity for global high-tech alone, and it's growing fast. This is why AI is centered to our growth strategy, large, visible demand, a platform that spans paths and data centers, and a model that scales, with strong margins. As the world's water company, we're best positioned to serve global high-tech, because water sits at every critical step of AI. You need ultra-pure water to produce chips. You need water to generate the electricity that powers those chips, and you need water to cool those chips in data centers. In microelectronics, Ovevo enables us to deliver ultra-q water and circular water programs, allowing customers to produce more chips with much less water. In data centers, we seek to combine Ecolab's water treatment, chemistry, cooling liquids, and 3D Tracer monitoring with CoolITs, direct-to-chip liquid cooling. Once we complete the CoolIT acquisition, we'll be able to support more computing with less cooling integrated site-to-chip model. Our momentum in AI was also recognized on Fortune's AIQ ranking, which identifies companies best prepared to lead in the age of AI. Ecolab's number nine position reflects how we apply advanced analytics and AI technologies that help customers operate more efficiently, drive growth, and conserve water and energy. We have been shaped the future of AI by combining deep technical expertise with purposeful innovation. So when you step back, the reason for our confidence becomes even more clear. We operate in large and growing markets with significant runway both within our existing customers and across wide spaces. Our long-term objectives remain unchanged. Consistent sales growth, continued margin expansion, strong earnings growth. By selling more to existing customers, we could multiply the size of the company by three halves. This is not about one year. It's about disciplined execution and compounding progress over time. At Q2, we've built the future by delivering every single day, every single quarter. In Q2, we've introduced the energy surcharge and will stabilize cross-margin as we exit the quarter. In Q3 and in Q4, underlying performance will reach the upper end of our range without Cool And as we look into the future, including Cool IT and Avivo, and the roll-off of the NACO acquisition, we expect our 12% to 15% EPS growth trajectory. So to wrap up, we had a very strong year, a very strong start of the year with good momentum driven by record new business. That's exactly where we want to be in a complicated world. Our new engines are doing extremely well. High tech and life sciences are driving growth in very attractive ways with high margins and limited exposure to energy costs. I have full confidence in our team's ability to accelerate pricing to offset commodity cost inflation and quickly stabilize our gross margin. That's why I feel good about 2026, both at the top line and the bottom line. And when I look ahead, I feel even better about 2020 in a complex world. I mean this. We have the portfolio, the capabilities, and the team to help customers perform and to keep compounding growth. So at this time, I'd like to thank you for all your investment and trust in the collab. Let's move now to the question and answer section, and I welcome questions submitted by stockholders online and invite Yuhal Dong, our Deputy General's Counsel, to read the questions submitted. We have one question asking the company to comment on analysts lowering their planning shifting views and in some cases lower than expected growth in late 2025. Thank you, Yuhal. Well, this is the traditional question. I've addressed some of it during my remarks, obviously. Fully understand the questions are related to inflation, are driven by what's happening in the Middle East and our ability to manage that with a good value price. And as I mentioned on the earnings call, this is important. This is something that we, this is not my doubly trusting the team to address that.

This now concludes the meeting. Thank you for joining and have a pleasant day.