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    ECL
    Earnings call· Jun 2026(Q2 FY26)

    ECOLAB Q2 FY26 earnings call ECL

    Jul 28, 2026 Source

    Executive summary

    Ecolab Q2 FY26 — Growth Engines Accelerate, FY26 EPS Outlook Raised

    Ecolab delivered a strong second quarter, driven by accelerating organic sales and robust performance from its growth engines, particularly Global High-Tech following the CoolIT acquisition. The company successfully navigated rising commodity costs through effective pricing strategies, stabilizing gross margins and raising its full-year EPS outlook. Management remains committed to its 2027 operating margin target, with a strategic focus on high-growth, high-margin businesses and continued investment in innovation.

    Highlights

    5

    • Adjusted EPS grew 11% year-over-year.

    • Organic sales growth accelerated to 5%.

    • Global High-Tech sales grew 29%, approaching $1.5 billion annualized, with targets raised to $4 billion by 2030 and 25% OI margin.

    • Life Sciences accelerated to 15% growth with mid-20% operating income margin.

    • Ecolab Digital grew 27% and Pest Elimination grew 7%.

    Concerns

    4

    • Volumes grew 1% despite a nearly 1% headwind from customer operations disrupted by conflict in the Middle East.

    • Life Sciences reported margin in Q3 expected to be in the high teens, down from mid-20s in Q2, due to continued investments.

    • Short-term impact from noncash amortization and financing costs from the CoolIT acquisition on FY26 EPS.

    • Expected high single-digit commodity prices for the balance of the year.

    Guidance & targets

    14
    CategoryTargetConfidence
    Adjusted EPS
    $8.05 to $8.25
    high materiality
    High
    Organic Sales Growth
    6% to 7%
    high materiality
    High
    Adjusted Operating Income Margin
    19%
    high materiality
    High
    Adjusted Operating Income Margin
    20%
    high materiality
    High
    Adjusted EPS Growth
    12% to 15%
    high materiality
    High
    Global High-Tech Annual Growth
    more than 25% annually
    high materiality
    High
    Global High-Tech Sales
    $4 billion
    high materiality
    High
    Global High-Tech Operating Income Margin
    25%
    high materiality
    High
    Pest Elimination Connected Devices
    1 million
    medium materiality
    High
    Ecolab Digital Long-term Growth
    more than 20%
    medium materiality
    High
    Life Sciences Operating Income Margin
    high teens
    medium materiality
    High
    Life Sciences Long-term Growth
    10% to 12%
    medium materiality
    High
    Capital Expenditure as % of Sales
    around the 7%
    medium materiality
    Medium
    Organic Return on Invested Capital (ROIC)
    pre-acquisition levels
    medium materiality
    Medium

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Food & Beverage
    Accelerated to 7% growth, driven by the 'One Ecolab' approach integrating food safety and water capabilities, leading to cross-selling opportunities. Performing at the higher end of its long-term target range.
    Long-term target growth: 5% to 7%
    		—7%——
    Institutional & Specialty
    Grew 4%, showing strong performance despite a 5% decline in US restaurant foot traffic, indicating market share gains. Maintains strong operating margins.
    		—4%—low 20s to mid-20s operating margins
    Life Sciences
    Accelerated to 15% growth, driven by strong share gains in bioprocessing and pharma/personal care. Achieved exceptional Q2 operating margin, but Q3 margin expected lower due to continued investments. Business started in 2017, less than $100M.
    Underlying operating income margin: mid-20sLong-term target growth: 10% to 12%
    		close to $1 billion annualized15%—mid-20% operating income margin
    Ecolab Digital
    Reflecting strong adoption of software and connected solutions. Introduced solutions like DishIQ, AquaIQ, KitchenIQ, CIP IQ. Aims to connect 100% of customer locations and applications to generate revenue.
    Long-term growth target: >20%Potential revenue from current customers: $3 billion
    		nearly at a $500 million annual run rate27%——
    Pest Elimination
    Driven by share gains and expansion of its Pest Intelligence platform. Long-term growth target is 6% to 8%. Operating margins are strong, with ongoing investments in Pest Intelligence.
    Connected devices deployed: nearly 800,000Target connected devices by year-end: 1 millionPest-free environment target: nearly 99%
    		—7%—around 20% operating margins
    Global High-Tech
    Accelerated to 29% growth, reflecting strong demand in microelectronics and data centers, driven by AI infrastructure build-out. Includes Ovivo and CoolIT. Pro forma sales growth with Ovivo and CoolIT would have been approximately 7% in Q2.
    Sales by 2030 target: $4 billionAnnual growth target: >25%
    		approaching $1.5 billion annualized sales29%—25% operating income margin
    Paper
    Was barely positive in Q2 after more than a year in negative territory, impacted by industry consolidation. Management expects it to be more positive in Q3 and beyond, gaining share.
    		—barely positive—good margins
    Heavy Water
    Performance improved.
    		—improved——

    Operational metrics

    18
    Adjusted EPS
    11%YoY growth
    Q2 FY26

    Driven by accelerating organic sales growth, stable organic gross margin, and strong productivity.

    Organic Sales Growth
    5%YoY growth
    Q2 FY26

    Accelerating performance across the business.

    Pricing
    4%YoY increase
    Q2 FY26

    Strengthened due to implementation of global energy surcharge.

    Volume Growth
    1%YoY growth
    Q2 FY26

    Underlying volume growth accelerated from Q1 excluding Middle East impact.

    Organic Gross Margin
    stable
    Q2 FY26

    Achieved despite increasing commodity costs, due to effective pricing.

    CoolIT Sales Growth
    more than 100%YoY growth
    YTD

    Prior to acquisition, reflecting strong start.

    Global High-Tech Sales
    $150 million
    FY21

    Baseline for rapid growth to current $1.5 billion annualized.

    Sales Mix
    70%
    FY25

    Reflects portfolio composition and performance in prior year.

    Sales Mix
    15%
    FY25

    Reflects portfolio composition and performance in prior year.

    Sales Mix
    15%
    FY25

    Reflects portfolio composition and performance in prior year.

    Core Businesses Sales Growth
    mid-single digitsYoY growth
    FY26

    Performance strengthened, with OI margins further above 20%.

    Growth Engines Sales Growth
    low teensYoY growth
    FY26

    Performance strengthened, with OI margin up nearly 20% despite heavy investment.

    Underperforming Businesses Sales Status
    stabilized
    FY26

    Maintaining operating income margins in the mid-teens.

    Sales Mix
    approach 25%
    FY27

    Expected to continue compounding at double-digit rates.

    CoolIT Amortization
    —
    FY26

    Short-term impact from noncash amortization and financing costs on FY26 EPS. Offset by Nalco amortization falling off next year.

    Commodity Prices Trend
    high single-digitYoY increase
    Balance of FY26

    Expected to remain high for the rest of the year.

    Ovivo Gross Margin Impact
    60 basis pointdrag
    Q2 FY26

    Drag on reported gross margin; organic gross margins were stable excluding Ovivo.

    Organic ROIC Growth
    at least 100 basis points
    Annual

    Company is focused on growing organic ROIC by this amount annually.

    Industry KPIs

    1
    MetricValueDetails
    Volume vs price splitVolume: 1%, Price: 4%%

    Product announcements

    1
    ProductTypeDetails
    Integrated End-to-End Cooling Platformlaunch

    Deals & partnerships

    1
    CoolIT SystemsAcquisition of a direct liquid cooling technology company.

    Closed on July 2. CoolIT had >100% YTD sales growth prior to acquisition. Strengthens Ecolab's position in Global High-Tech market, especially for AI infrastructure cooling.

    Risks & headwinds

    4
    Customer operations disrupted by conflict in the Middle EastQ2 FY26, ongoing

    nearly 1% headwind on underlying volume growth

    Mitigation: Strong new business wins are expected to more than offset this in H2.

    Increasing commodity costsH2 FY26

    high single-digit commodity prices expected for the balance of the year

    Mitigation: Implemented global energy surcharge and value pricing, stabilizing organic gross margin and expecting 5-6% pricing in H2.

    Continued investments in Life Sciences businessQ3 FY26

    Reported margin in Q3 expected to be in the high teens, down from mid-20s in Q2.

    Mitigation: Investments are strategic for long-term growth and higher margins (underlying margin expected to remain mid-20s).

    Noncash amortization and financing costs from CoolIT acquisitionFY26

    Short-term impact on FY26 EPS

    Mitigation: Offset by strong underlying performance and Nalco amortization falling off in FY27.

    What to watch in Q3 FY26

    5

    Global High-Tech Growth Trajectory Update

    November Investor Day at SuperCompute
    CurrentCoolIT >100% YTD growth; GHT 29% Q2 growth
    TargetUpdated long-term growth rate for CoolIT and GHT beyond 30% / 25% respectively

    Why it matters

    Global High-Tech is the largest growth engine, and an accelerated trajectory would significantly impact the company's overall growth and margin profile.

    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... And in November, we will sit together to share with you how do we see '27 and the years beyond.

    Q&A highlights

    6

    Reconcile the reaffirmed 20% operating margin target for 2027 with the incremental amortization from the CoolIT acquisition.

    Christophe Beck reaffirmed the 20% OI margin target for 2027, noting that the vast majority of businesses are already near or above 20%. Scott Kirkland added that the Nalco amortization falls off next year, offsetting the CoolIT amortization.

    “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.”

    asked by Timothy Mulrooney · answered by Christophe Beck

    2 min read6 chapters

    Detailed Narrative

    01

    Accelerating Performance and Strategic Shift

    Ecolab delivered strong Q2 results with adjusted EPS growth of 11% and organic sales growth of 5%, reflecting accelerating momentum across the business. The company is strategically shifting its portfolio towards higher-growth, higher-margin businesses, with growth engines expected to approach 25% of sales by 2027, compounding at double-digit rates and driving margin expansion.

    02

    Global High-Tech Expansion

    The Global High-Tech platform, including Ovivo and the recently acquired CoolIT Systems, is now Ecolab's largest growth engine, approaching $1.5 billion in annualized sales, up from $150 million in 2021. The company raised its long-term targets for this segment to over 25% annual growth, $4 billion in sales by 2030, and a 25% operating income margin, driven by strong demand in microelectronics and AI infrastructure.

    03

    Life Sciences Momentum

    The Life Sciences business accelerated to 15% growth, reaching nearly $1 billion in annualized sales. This growth is fueled by strong share gains in bioprocessing and pharma/personal care, supported by strategic investments in capabilities and capacity globally. The segment achieved a mid-20% operating income margin in Q2, though Q3 is expected to be in the high teens due to continued investments.

    04

    Digital and Pest Elimination Growth

    Ecolab Digital demonstrated 27% growth, driven by strong adoption of connected solutions like DishIQ and AquaIQ, with a long-term growth target exceeding 20%. Pest Elimination also delivered a strong quarter with 7% growth, expanding its intelligence platform to nearly 800,000 connected devices, aiming for 1 million by year-end to deliver 99% pest-free environments.

    05

    Effective Pricing and Margin Management

    The company successfully navigated increasing commodity costs by implementing a global energy surcharge and strengthening pricing to 4% in Q2, with expectations of 5-6% in the second half. This strategy allowed for stabilization of organic gross margins and is crucial for achieving the reaffirmed 20% operating income margin target by 2027.

    06

    Core Business Strength and Outlook

    Core businesses like Food & Beverage (7% growth) and Institutional & Specialty (4% growth) are performing well, while previously "underperforming" businesses like Paper are stabilizing. The company increased its FY26 adjusted EPS outlook to $8.05-$8.25, reflecting strong underlying performance despite short-term amortization impacts from the CoolIT acquisition.

    AI-generated summary of the company’s earnings call. Not investment advice.