Ecolab Inc. (ECL) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

August 1, 2023 1:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Ecolab Second Quarter 2023 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Andy Hedberg, Director of Investor Relations. Andy, you may now begin.

Andy Hedberg

Thank you, and hello, everyone. And welcome to Ecolab’s second quarter conference call. With me today are Christophe Beck, Ecolab’s Chairman and CEO and Scott Kirkland, our CFO. A discussion of our results, along with our earnings release and the slides referencing the quarter results are available on Ecolab’s website at ecolab.com/investor. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental materials include estimates of future performance. These are forward-looking statements, and actual results could differ materially from those projected. Factors that could cause actual results to differ are described in the Risk Factors section in our most recent Form 10-K and in our poster materials. We also refer you to the supplemental diluted earnings per share information in the release.

With that, I’d like to turn the call over to Christophe Beck for his comments.

Christophe Beck

Thank you, Andy, and welcome to everyone.

In Q2, our team delivered another very good quarter, building on continued strong momentum and once again making further improvements compared to the last quarter. Strong execution as well as easing inflationary pressure helped us get to the upper end of our expected Q2 earnings growth range. In an environment that remains unpredictable, our shift to offense continues to gain traction and our confidence in delivering midterm performance that’s ahead of historical average trends clearly keeps getting stronger.

Organic sales growth remained strong at 9%, driven by the steady recovery of Institutional & Specialty with 13% organic growth. Pest Elimination and Industrial follow, delivering 11% and 9% organic growth, respectively. Despite softening global end market demand, overall volume trends remain steady.

In other good news, volume excluding Europe improved from flat in Q1 to 1% growth in Q2. So, volume trends are improving further, too. Adjusted earnings per share grew 13%, led by strong organic operating income growth that accelerated from 19% in the first quarter to 21% in the second. Although year-on-year comparisons are getting harder, pricing remained strong at 10% as further new pricing continued to grow. Delivered product costs were 5% higher than last year, but is sequentially a bit more than expected, which is further good news. We kept working on strengthening our performance, including targeted actions in Institutional, Life Sciences and Healthcare.