PERFORMANCE.
GROWTH.
INNOVATION.
ANNUAL REPORT 2024
PERFORMANCE. GROWTH. INNOVATION.
his was a record-breaking
year for Ecolab.
Thanks to the best sales and
service team in the business,
we delivered record sales,
record adjusted earnings per share,
record operating income margins and
record free cash flow by taking care of
our customers. Our team’s unparalleled
reach and unique capabilities have
protected the health of 1.4 billion people,
conserved water equivalent to the
drinking needs of nearly 800 million
people, safeguarded a third of the
world’s processed food production, and
supported more than a fifth of the world’s
power production. And we delivered
our best year ever the right way, being
named the most admired company
in our industry and one of the world’s
most ethical companies for the 19th
consecutive year.
Ecolab’s performance was impressive
and broad-based:
• Industrial accelerated its performance,
generating strong new business wins
while exploring emerging micro-
electronics and global high-tech
opportunities.
• Institutional & Specialty delivered
impressive growth in a down market,
helping our restaurant and lodging
customers improve performance,
optimize labor and reduce costs.
• Healthcare & Life Sciences refocused
on the infection prevention and
instrument reprocessing needs of
hospital customers, while continuing
to emerge as a future leader in the
fast-growing biotechnology sector.
• Pest Elimination delivered robust
performance, as it made sizable
investments in the scalable digital
capabilities that will support
future growth.
This success is the product of the
passion and expertise of 48,000
Ecolab associates serving at millions of
customer locations across more than 170
countries around the world. We believe
the rich diversity of our associates,
customers and communities around
the world is our strength. That’s why we
draw a direct connection between our
best year ever and the most engaged
and inclusive workforce in our history.
While I am proud of what our winning
team achieved in 2024, I am just as
excited for what lies ahead as we invest
in our people and the solutions that will
fuel our continued growth. New digital
technologies will extend the positive
impact of our sales and service team,
with Artificial Intelligence powered
dish machines, circular water systems
and connected pest management
delivering new insights and value for our
customers.
The world is also at a moment of
incredible change and opportunity,
as it makes the transition to Artificial
Intelligence. This evolution will reward
those who can successfully address
the resource constraints presented
by a power- and water-intensive
technology. These demands play into
Ecolab’s strengths, and we are perfectly
positioned to address the water and
cooling needs of this high-growth
industry.
A fascinating chapter has just begun,
and Ecolab’s services and solutions
have never been more relevant. We
have a solid growth formula in place,
the right plan to invest in our business,
and a winning people strategy that will
fuel continued high performance for the
years ahead.
I thank you for your investment in Ecolab
and your continued belief in our team.
Christophe Beck
CHAIRMAN & CEO
1
I N T R O D U C T I O N
/ 1 /
WELCOME
T
GROWTH, IMPACT, HIGH PERFORMANCE
ECOLAB ANNUAL REPORT 2024
On behalf of the Board, I have also
worked to represent your interests by
actively seeking and responding to
feedback from our investors to align
Ecolab’s strategies with their interests
and expectations.
Finally, the Board would like to thank
you for your continued confidence in
our company. We have the privilege
of witnessing firsthand the many
reasons why that confidence is
well placed. Ecolab has a history
of delivering innovation and high
performance, even in uncertain times.
The company has the right strategy,
leadership and structure to build on
its record year and deliver continued
shareholder returns.
David W. MacLennan
LEAD INDEPENDENT DIRECTOR
2
Thanks to the best sales and service team in
the business, we delivered record sales, record
earnings per share, record operating income
margins and record free cash flow by taking care
of our customers.
— Christophe Beck
A
s we reflect on another
outstanding year for Ecolab,
the Board of Directors
would like to extend our
heartfelt thanks to the
company’s 48,000 associates. Under the
capable leadership of Christophe and his
executive team, Ecolab has consistently
met high expectations, delivered positive
impacts for our customers, and provided
sustained returns for its shareholders.
By the end of the year, the company
achieved record sales, adjusted earnings
per share, operating income margins
and free cash flow. This performance
underpinned the Board’s confidence
as we approved a 14% increase in our
quarterly cash dividend – the 33rd
consecutive annual dividend increase.
We have made positive changes to
the Board, adding new directors with
a range of perspectives and expertise
to support the company’s growth
ambitions.
In February 2024, we welcomed Judson
Althoff as an independent director
and member of the Audit and Finance
Committees. With Ecolab building a new
global high-tech business and furthering
our digital programs, Judson’s global
executive and technology experience at
Microsoft has proven to be a valuable
addition.
In February 2025, we welcomed
Michel Doukeris, Chief Executive
Officer of AB InBev, as an independent
director. Michel’s experience leading
a major global company and his deep
knowledge of complex operations,
world-class branding of innovative
products and winning in consumer
industries will make him a tremendous
asset to the Board.
We also look forward to welcoming
another independent director in
Marion Gross, currently Executive Vice
President and Global Chief Supply
Chain Officer at McDonalds. Marion
has extensive international business
expertise with specialist knowledge of
global supply chains and the foodservice
industry. Marion plans to retire from
her current executive role prior to her
election to the Ecolab Board.
Together, these directors will offer a
wealth of knowledge and insights that
will help guide Ecolab’s growth strategy.
In February 2025, Arthur Higgins
informed the board that he would not
stand for re-election at the annual
meeting. Arthur has provided so much
to our Board and to Ecolab, consistently
offering independent advice based on
his knowledge of the healthcare and
life sciences sectors. He has been a
valued colleague, and we thank him for
his many significant contributions to the
company.
As Lead Independent Director, I work
to serve the best interests of Ecolab’s
shareholders by ensuring that your
independent directors provide critical
oversight and are closely involved in the
company’s major strategic decisions.
DELIVERING FOR OUR SHAREHOLDERS
PERFORMANCE. GROWTH. INNOVATION.
A
n innovative and trusted
partner at millions of
customer locations,
Ecolab Inc. is a global
sustainability leader
offering water, hygiene and infection
prevention solutions and services that
protect people and the resources vital
to life.
Building on a century of innovation,
Ecolab’s approximately 48,000
associates deliver comprehensive
science-based solutions, data-driven
insights and world-class service
to advance food safety, maintain
clean and safe environments
and optimize water and energy
use. Ecolab’s innovative solutions
improve operational efficiencies
and sustainability for customers in
the food, healthcare, life sciences,
hospitality and industrial markets in
more than 170 countries around the
world.
From hotels, restaurants and
healthcare facilities to food and
beverage plants, manufacturing
plants and power generation
facilities across the globe, Ecolab’s
more than 25,000-strong sales-and-
service team, the industry’s largest
and best trained, uses innovative
solutions, digital technologies and
unmatched insights to help solve
the most pressing challenges our
customers face. Many of the world’s
leading companies rely on Ecolab
to help ensure product quality
and guest satisfaction, maintain
brand reputation and achieve their
operational and sustainability goals.
Ecolab is headquartered in St. Paul,
MN, and its common stock is listed
under the ticker symbol ECL on the
New York Stock Exchange. For more
information, visit ecolab.com or
call 1.800.2.ECOLAB. Follow us on
LinkedIn @Ecolab, Instagram
@Ecolab_Inc and Facebook at
@Ecolab.
FORWARD-LOOKING STATEMENTS
AND RISK FACTORS
We refer readers to the company’s
disclosures titled “Forward-Looking
Statements” and “Risk Factors,”
which begin on page 16 of Form
10-K.
C O M PA N Y O V E R V I E W
/ 2 /
A TRUSTED
PARTNER
Ecolab’s innovative
solutions improve
operational efficiencies
and sustainability
for customers in the
food, healthcare, life
sciences, hospitality
and industrial markets.
STRONG STOCK
PERFORMANCE IN 2024
ECL
3
ECOLAB ANNUAL REPORT 2024
4
50%
GLOBAL
INDUSTRIAL
34%
GLOBAL
INSTITUTIONAL
& SPECIALTY
7%
GLOBAL PEST
ELIMINATION
56%
NORTH
AMERICA
13%
ASIA PACIFIC
(INCLUDING
GREATER
CHINA)
20%
EUROPE
7%
LATIN
AMERICA
4%
INDIA, MIDDLE EAST
AND AFRICA (IMEA)
CONTINUING OPERATIONS — MILLIONS, EXCEPT PER SHARE
PERCENT CHANGE
2024
2023
2022
2021
2020
2024
2023
2022
2021
Net Sales
15,741.4
$15,320.2
$14,187.8
$12,733.1
$11,790.2
3%
8%
11%
8%
Net Income from Continuing Operations
Attributable to Ecolab
2,112.4
1,372.3
1,091.7
1,129.9
967.4
54%
26%
-3%
17%
Net Income from Continuing Operations
as a Percent of Sales
13.4%
9.0%
7.7%
8.9%
8.2%
-
-
-
-
Diluted Earnings per Share from Continuing Operations
7.37
4.79
3.81
3.91
3.33
54%
26%
-3%
17%
Adjusted Diluted Earnings per Share
from Continuing Operations (non-GAAP measure)
6.65
5.21
4.49
4.69
4.02
28%
16%
-4%
17%
Diluted Weighted-Average Common Shares Outstanding
286.6
286.5
286.6
289.1
290.3
0%
0%
-1%
0%
Cash Dividends Declared per Common Share
2.36
2.16
2.06
1.95
1.89
9%
5%
6%
3%
Cash Provided by Operating Activities
from Continuing Operations
2,813.9
2,411.8
1,788.4
2,061.9
1,741.8
17%
35%
-13%
18%
Capital Expenditures
994.5
774.8
712.8
643.0
489.0
28%
9%
11%
31%
Ecolab Shareholders’ Equity
8,757.3
8,044.7
7,236.1
7,224.2
6,166.5
9%
11%
0%
17%
Return on Beginning Equity
26.3%
19.0%
15.1%
18.3%
11.1%
-
-
-
-
Total Debt
7,564.9
8,181.8
8,580.4
8,758.2
6,686.6
-8%
-5%
-2%
31%
Net Debt to EBITDA (non-GAAP measure)
1.7
2.4
3.2
3.4
2.4
-
-
-
-
Total Assets
$22,387.8
$21,846.6
$21,464.3
$21,206.4
$18,126.0
2%
2%
1%
17%
Adjusted earnings per share amounts exclude the impact of special gains and charges, discrete taxes and the impact of the Purolite acquisition.
SALES BY REGION 2024
(PERCENT OF TOTAL SALES)
BUSINESS MIX 2024
(PERCENT OF TOTAL SALES)
9%
GLOBAL
HEALTHCARE
& LIFE
SCIENCES
PERFORMANCE. GROWTH. INNOVATION.
5
Ecolab’s new DishIQ™
program combines
digital capabilities
with proprietary data
science models to
create an adaptive dish
machine that solves
these challenges.
B U S I N E S S H I G H L I G H T S
/ 3 /
EFFICIENCY
UNLOCKED
Increasing customer productivity
while delivering best in class
performance
Dish machines are a crucial component
in any commercial kitchen, requiring
consistent operation every shift.
Variables like pre-scraping procedures,
water conditions and the number of
guests change every day and our
customers need solutions beyond what
traditional dish machines can deliver.
They expect a solution that adapts
automatically to their unique needs
delivering the best possible cleaning
performance. Our customers also
continue to experience a combination
of high labor, water and energy rates
and expect next generation solutions
to reduce their dish machine’s cost of
operation.
Ecolab’s new DishIQ™ program
combines digital capabilities with
proprietary data science models to
create an adaptive dish machine that
solves these challenges. Remote
monitoring and predictive maintenance
models identify critical issues that our
service associates can fix before they
cause costly downtime or rewash.
A new customer-facing application
provides real time operational updates
and proactively identifies when key
operational tasks are needed, supported
by built in training. This enables our
customers to focus on their operational
priorities such as inventory, staffing,
guest experience, and food quality.
Ecolab’s DishIQ™ program delivers
incredible value for our customers. The
combination of technology, equipment
and service with our best-in-class
chemistry enhances productivity,
delivers exceptional performance and
creates efficient and reliable operations
for the long-term growth and success of
our customers.
Pest Elimination delivers innovation
and value for customers
After exceeding $1 billion of revenue for
the first time, Ecolab’s Pest Elimination
business continued its strong growth
trajectory in 2024 by delivering value for
a wide range of commercial customers
across 30 countries globally.
Underpinning confidence in the
segment’s growth is our continued
investment in Pest Intelligence,
an innovative program created by
Ecolab that reduces pest activity for
our customers. The impact of Pest
Intelligence is realized through our
highly-trained service professionals who
use actionable insights from advanced
data-driven models to solve customer
problems.
Our unique, comprehensive Pest
Intelligence program builds from a
successful history of using a science-
based approach to achieve a high
level of service quality. The program
leverages sensor technology to enhance
ECOLAB ANNUAL REPORT 2024
6
Launched in 2024, our innovative
CLEEN Technology Program offers
digital solutions for environmental
control, cleaning, and validation. An
enterprise-level solution, CLEEN helps
pharmaceutical companies reduce
compliance risks, enhance quality, and
boost revenue by digitizing workflows and
minimizing downtime between production
runs. This increased efficiency allows our
customers to reallocate labor to other
valuable plant needs.
our Pest Elimination service through
advanced analytics, predictive modeling,
and stronger customer partnerships.
Our associates extend their reach and
positive customer impact through root
cause analysis and actions taken to
prevent future pest activity.
The Pest Intelligence program will
be core to the business’s continued
digital transformation. Designed to
predict pest risk, proactively address
issues, and ultimately exceed customer
expectations, we are energized by the
growth of our Pest Elimination business
and how new technologies improve our
support of customers around the world.
Future-focused innovation in
Life Sciences
Ecolab continues to elevate its Life
Sciences offering for customers,
introducing new innovations to deliver
cost efficiencies and accelerate the
production of life-saving drugs for
patients worldwide.
+
Artificial Intelligence: Driving water
demand, delivering water solutions
The AI revolution is driving demand for
data center capacity, and with it, the
demand for natural resources. Water
plays an essential role in data center
cooling, transferring heat 23.5 times
more effectively than air. This growing
sector has created an urgent need for
sustainable solutions that disconnect
AI’s rapid growth from the strain it
traditionally places on natural resources.
In 2024, Ecolab collaborated with Digital
Realty, a leading global provider of data
center co-location and interconnection
solutions, to pilot AI-driven solutions
that help minimize water use, maintain
system performance and protect data
center operations from water-related
risks.
Our collaborative efforts are helping
Digital Realty evaluate water practices
across its sites and implement digitally
enabled monitoring and measurement
tools to help track and manage progress.
Ecolab is proud to innovate AI-powered
water solutions with Digital Realty,
showcasing how next-generation
technology can elevate water
stewardship across industries.
DurA Cycle™
Ecolab also launched DurA Cycle™
Chromatography Resin, a protein A
purification resin designed for large-
scale biologic manufacturing of
monoclonal antibodies. DurA Cycle™
resin is crucial for biologic drug
developers focused on cost efficiency.
It offers high productivity, lower
aggregation and reduced processing
time, increasing manufacturing
efficiencies and a lower cost per gram
of the commercial drug product. DurA
Cycle™ resin is the latest addition
to Ecolab’s Purolite Resins toolbox,
addressing the complex purification of
modern biologic drugs.
Our unique, comprehensive Pest Intelligence
program builds from a successful history of
using a science-based approach to achieve a
high level of service quality.
— ECOLAB PEST ELIMINATION
— CLEEN TECHNOLOGY PROGRAM
PERFORMANCE. GROWTH. INNOVATION.
7
C O R P O R AT E R E S P O N S I B I L I T Y
/ 4 /
INTEGRITY
& PURPOSE
Doing Business The Right Way
We lead with our values and are
driven to uphold ethical, inclusive and
responsible policies and practices
wherever we operate. Our values
and commitment to integrity are why
we’re trusted by our customers, our
partners and our communities. Ecolab
is managed under the direction of our
13-person board of directors, comprised
of members with diverse business
backgrounds and experiences, and
we have transparent disclosure of our
corporate governance practices.
The company also has formal policies
and procedures in place to ensure we
uphold the highest legal and ethical
standards, regardless of when and
where we conduct business. The Ecolab
Code of Conduct is a guide to the
principles and ethics that the company
expects all employees to adhere to
when making decisions and acting on
its behalf. More than a policy, the Code
of Conduct serves as the foundation of
our success. The values reflected in the
Code of Conduct help us continue to
succeed in an increasingly competitive
global marketplace.
Our Impact Within Our
Company
We’re committed to an inclusive
culture where all associates belong
and are encouraged to reach their
full potential. We seek to foster an
engaged workforce that reflects our
longstanding value of working together
to integrate diverse perspectives to
challenge ourselves, reach our goals
and do what’s right. And we endeavor to
maintain vendor relationships that reflect
Ecolab’s commitment to supporting all
communities.
Our Impact Within Our
Communities
In keeping with our company’s culture of
giving, we focused on giving back and
making a positive impact, something
that is always at the heart of our ongoing
work in the community. And our
associates delivered during 2024 with
a 16 percent increase in participation
compared to the prior year.
In 2024:
• We had associates in 56 countries
donate and/or volunteer their time
with an impact value of $5 million to
our communities.
• 7,460 associates donated to and/or
volunteered for causes that matter to
them.
• We recorded more than 49,600
volunteer hours, valued at more than
$1.66 million, a value determined by
the Independent Sector.
• We awarded more than $1.7 million in
grants to organizations supporting our
global team and individual employee
volunteerism.
And we contributed our support to
the communities where we live and work
through a variety of initiatives including
cash grants to nonprofits, product
donations to communities in need and
employee volunteerism.
In 2024 we:
• Continued our foundation giving
through grants totaling $8.8 million to
global nonprofit organizations.
• Continued to grow giving in one of
our key initiatives, conserving water
and providing education around
healthy hygiene around the world
through nonprofit partnerships,
global philanthropy and employee
volunteerism. Since 2014, we’ve
donated more than $7.9 million to
global organizations and positively
impacted water projects, most
recently in Chile and the western
United States.
• Donated more than $7.9 million worth
of products that weighed more than
2 million pounds during numerous
disasters throughout the year.
In keeping with our company’s culture of giving, we
focused on giving back and making a positive
impact, something that is always at the heart of
our ongoing work in the community.
— OUR IMPACT WITHIN OUR COMMUNITIES
ECOLAB ANNUAL REPORT 2024
8
PERFORMANCE. GROWTH. INNOVATION.
9
HELPING LOTTE CHEMICAL CLEAR THE AIR TO ACHIEVE
ITS ENVIRONMENTAL IMPACT GOALS
Insights
Lotte Chemical, based in Seoul, South
Korea, is one of the world’s largest
chemical companies. It manufactures
synthetic resins and other chemical
products used in materials such
as polystyrene, a versatile plastic
commonly used in food packaging,
appliances, toys and other goods.
Actions
As part of its efforts to create a
better, more sustainable future,
Lotte Chemical wanted to source
more environmentally conscious
chemistry solutions. They chose the
dual-component PRISM™ antifoulant
program developed by Nalco
Water, Ecolab’s water and process
management business.
Testing and a rigorous technical
evaluation demonstrated that the
Ecolab solution performed as well
as hazardous alternatives, with a
significant reduction in nitrogen
oxides. As a result, Lotte Chemical
implemented the antifoulant program
to help protect critical assets
and increase the efficiency of its
manufacturing process.
Outcomes
In addition to the environmental
benefits that resulted from the switch
to the Ecolab program, Lotte Chemical
avoided a large capital expenditure
that would have been required to
meet the stronger emission standards
being set for alternative chemistries by
the Korean Ministry of Environment.
Additionally, it enhanced operational
efficiency by substantially reducing the
need for urea, a raw material used in
the chemistry manufacturing process.
Ultimately, the new approach helped
Lotte Chemical reduce costs, pursue
a more sustainable solution, and
enhance plant and operator safety.
C U S T O M E R C A S E S T U D I E S
/ 5 /
POWERING
CHANGE
Annual Savings
PRODUCTIVITY
$13.1 million
$
COST
$2.5 million
through avoidance of
a significant capital
expenditure
WASTE
$200,000
500 metric tons
of DNBP disposal avoided
SAFETY
40% reduction
(228 ton/yr) in fine dust
(NOx) generation
Total Value Delivered
$15.8M
ECOLAB ANNUAL REPORT 2024
10
Insights
Marriott Vacations Worldwide (MVW) is
a leading global vacation company that
offers vacation ownership, exchange,
rental, and resort and property
management, along with related
businesses, products and services.
MVW strives to create a positive
impact on the communities and resort
locations in which they operate.
Actions
Working with its longtime partner
Ecolab, MVW implemented several
technologies designed to help save
water and energy, increase productivity
and improve their bottom line. These
include: 3D TRASAR™ Technology for
Cooling Water, Aquanomic™ Low Temp
Laundry Program, SMARTPOWER™
Program and Wash ‘N Walk™ No Rinse
Floor Cleaner.
Outcomes
The partnership with Ecolab has led
to increased performance without
tradeoffs. MVW has achieved
significant operational cost savings
and reductions in water use, energy
use and solid packaging waste while
providing customers with the best
experience possible.
ADVANCING OPERATIONAL AND SUSTAINABLE
SUCCESS AT MARRIOTT VACATIONS WORLDWIDE
Annual Savings
WATER
23.4 million gallons
(~88,578 m3)
ENERGY
12 billion BTU
GREENHOUSE GASES
1,400 metric tons
of CO2e
WASTE
46,000 LBS
reduced waste
LABOR PROTECTION
9,100 hours
of labor gained
ASSET PROTECTION
$279,000
repair and replacement
savings
SAFETY
Enhanced safety via
automated dispensing and
closed packaging systems
Total Value Delivered
$627,000
Innovation is at the heart of what we do at Ecolab.
By collaborating closely with our customers and
partners, we can develop solutions that not only
meet their needs but also drive sustainability and
efficiency across industries. Together, we can
create a better future.
— CHRISTOPHE BECK, CHAIRMAN AND CEO
PERFORMANCE. GROWTH. INNOVATION.
Year ended December 31, millions, except per share amounts and
employees
2024
2023
2022
2021
2020
OPERATIONS
Net sales
$15,741.4
$15,320.2
$14,187.8
$12,733.1
$11,790.2
Cost of sales (including special (gains) and charges) (1)
8,899.7
9,154.9
8,831.0
7,615.8
6,905.8
Selling, general and administrative expenses
4,228.2
4,061.6
3,653.8
3,416.1
3,309.1
Special (gains) and charges
(188.9)
111.4
140.5
102.6
179.6
Operating income
2,802.4
1,992.3
1,562.5
,598.6
1,395.7
Other (income) expense (1)
(51.3)
(59.9)
(24.5)
(33.9)
(55.9)
Interest expense, net (including special (gains) and charges) (1)
282.5
296.7
243.6
218.3
290.2
Income before income taxes
2,571.2
1,755.5
1,343.4
1,414.2
1,161.4
Provision for income taxes
439.3
362.5
234.5
270.2
176.6
Net income from continuing operations attributable to
noncontrolling interest (1)
19.5
20.7
17.2
14.1
$17.4
Net income from continuing operations attributable to Ecolab
2,112.4
1,372.3
1,091.7
1,129.9
967.4
Net income (loss) from discontinued operations, net of tax (1)
-
-
-
-
(2,172.5)
Net income (loss) attributable to Ecolab
$2,112.4
$1,372.3
$1,091.7
$1,129.9
$(1,205.1)
Diluted earnings per common share from continuing operations, as
reported (U.S. GAAP)
Adjustments:
$7.37
$4.79
$3.81
$3.91
$3.33
Special (gains) and charges
(0.44)
0.38
0.72
0.74
0.88
Discrete tax expense (benefits)
(0.28)
0.04
(0.04)
0.02
(0.19)
Impact of Purolite on adjusted earnings per share
-
-
-
0.02
-
Diluted earnings per common share, as adjusted (Non-GAAP)
$6.65
$5.21
$4.49
$4.69
$4.02
Weighted-average common shares outstanding — diluted
286.6
286.5
286.6
289.1
290.3
SELECTED INCOME STATEMENT RATIOS
Gross margin
43.5%
40.2%
37.8%
40.2%
41.4%
Selling, general and administrative expenses
26.9%
26.5%
25.8%
26.8%
28.1%
Operating income
17.8%
13.0%
11.0%
12.6%
11.8%
Net income from continuing operations attributable to Ecolab
13.4%
9.0%
7.7%
8.9%
8.2%
Effective income tax rate
17.1%
20.6%
17.5%
19.1%
15.2%
FINANCIAL POSITION
Current assets
$6,025.7
$5,644.1
$5,494.2
$4,687.1
$5,117.4
Property, plant and equipment, net
3,752.4
3,474.6
3,293.4
3,288.5
3,124.9
Goodwill, intangible and other assets
12,609.7
12,727.9
12,676.7
13,230.8
9,883.7
Total assets
$22,387.8
$21,846.6
$21,464.3
$21,206.4
$18,126.0
Current liabilities
$4,792.8
$4,345.8
$4,210.4
$3,553.2
$2,932.2
Long-term debt
6,949.2
7,551.4
8,075.3
8,347.2
6,669.3
Post-retirement healthcare and pension benefits
634.9
651.7
670.3
894.2
1,226.2
Other liabilities
1,221.7
1,225.5
1,249.7
1,158.7
1,096.8
Total liabilities
13,598.6
13,774.4
14,205.7
13,953.3
11,924.5
Total equity
8,789.2
8,072.2
7,258.6
7,253.1
6,201.5
Total liabilities and equity
$22,387.8
$21,846.6
$21,464.3
$21,206.4
$18,126.0
SELECTED CASH FLOW INFORMATION
Cash provided by operating activities
$2,813.9
$2,411.8
$1,788.4
$2,061.9
$1,860.2
Depreciation and amortization
935.4
923.6
938.7
843.1
812.7
Capital expenditures
994.5
774.8
712.8
643.0
489.0
Cash dividends declared per common share
2.36
2.16
2.06
1.95
1.89
SELECTED FINANCIAL MEASURES/OTHER
Year-end market capitalization
$66,350.5
$56,618.8
$41,459.6
$67,225.8
$61,825.4
Annual common stock price range
$262.61 to
$201.62 to
$237.38 to
$238.93 to
$231.36 to
$193.46
$143.91
$131.04
$201.15
$124.60
Number of employees
48,000
48,000
47,000
47,000
44,000
(1) Cost of sales includes special charges of $5.3 in 2024, $22.5 in 2023, $69.9 in 2022, $93.9 in 2021 and $48.2 in 2020; Other (income) expense includes special (gains)
charges of $50.6 in 2022, $37.2 in 2021 and $0.4 in 2020; Interest expense, net includes special charges of $33.1 in 2021 and $83.8 in 2020.
Net income (loss) from discontinued operation, net of tax includes noncontrolling interest of $2.2 in 2020.
(2) The ChampionX business met the criteria to be reported as discontinued operations in 2020. Therefore, the historical results of ChampionX were retrospectively reclassified
to discontinued operations for 2020.
Per share amounts do not necessarily sum due to rounding.
Adjusted earnings per share amounts exclude the impact of special gains and charges, discrete taxes and the impact of the Purolite acquisition.
FIVE-YEAR HISTORICAL FINANCIAL DATA
11
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 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
incorporation or organization)
(I.R.S. Employer
Identification No.)
1 Ecolab Place, St. Paul, Minnesota 55102
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 1-800-232-6522
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
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. x Yes o No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. o Yes x No
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. x Yes o 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.
x Yes o 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ YES ☒ NO
Aggregate market value of voting and non-voting common equity held by non-affiliates of registrant on June 30, 2024, the last business day of the
Registrant’s most recently completed second fiscal quarter: $58,992,719,690 (see Item 12, under Part III hereof), based on a closing price of registrant’s
Common Stock of $238.00 per share.
The number of shares of registrant’s Common Stock, par value $1.00 per share, outstanding as of January 31, 2025: 282,997,058 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held May 8, 2025, and to be filed within 120 days after the
registrant’s fiscal year ended December 31, 2024 (hereinafter referred to as “Proxy Statement”), are incorporated by reference into Part III.
Table of Contents
2
ECOLAB INC.
FORM 10-K
For the Year Ended December 31, 2024
TABLE OF CONTENTS
Beginning
Page
PART I
Item 1. Business.
3
Item 1A. Risk Factors.
16
Item 1B. Unresolved Staff Comments.
22
Item 1C. Cybersecurity.
22
Item 2. Properties.
24
Item 3. Legal Proceedings.
24
Item 4. Mine Safety Disclosures.
24
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
25
Item 6. [Reserved].
25
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
26
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
47
Item 8. Financial Statements and Supplementary Data.
48
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
98
Item 9A. Controls and Procedures.
98
Item 9B. Other Information.
98
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
98
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
99
Item 11. Executive Compensation.
99
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
99
Item 13. Certain Relationships and Related Transactions, and Director Independence.
99
Item 14. Principal Accounting Fees and Services.
99
PART IV
Item 15. Exhibit and Financial Statement Schedules.
100
Item 16. Form 10-K Summary.
106
Table of Contents
3
PART I
Except where the context otherwise requires, references in this Form 10-K to (i) “Ecolab,” “Company,” “we” and “our” are to Ecolab Inc.
and its subsidiaries, collectively; (ii) “Nalco” are to Nalco Company LLC, a wholly-owned subsidiary of the Company; (iii) “Purolite” are to
Purolite LLC, a wholly-owned subsidiary of the Company and its subsidiaries, collectively; and (iv) “Purolite transaction” are to the
Company’s acquisition of the shares of the subsidiaries and certain other affiliated entities of Purolite Corporation and substantially all of
the assets of Purolite Corporation used or held for use in connection with its filtration and purification resins business in December 2021.
Item 1. Business.
General Development of Business.
Ecolab was incorporated as a Delaware corporation in 1924. Our fiscal year is the calendar year ending December 31. International
subsidiaries are included in the consolidated financial statements on the basis of their U.S. GAAP (accounting principles generally
accepted in the United States of America) November 30 fiscal year ends to facilitate the timely inclusion of such entities in our
consolidated financial reporting.
Narrative Description of Business.
General
A trusted partner for millions of customers, we are a global sustainability leader offering water, hygiene and infection prevention solutions
and services that protect people and the resources vital to life. Building on a century of innovation, we have annual sales of $15.7 billion,
employ approximately 48,000 associates and sell to customers in more than 170 countries around the world. We deliver comprehensive
science-based solutions, data-driven insights and world-class service to advance food safety, maintain clean and safe environments, and
optimize water and energy use. Our innovative solutions improve operational efficiencies and sustainability for customers in the food,
healthcare, life sciences, hospitality and industrial markets.
We pursue a “One Ecolab” enterprise selling strategy, built on the legacy of 'circle the customer – circle the globe', where we provide an
array of innovative programs, products and services designed to meet the specific operational and sustainability needs of our customers
throughout the world. Through this strategy and our varied product and service mix, one customer may utilize the offerings of several of
our operating segments. Important in our business proposition for customers is our ability to produce improved results while reducing
their water and energy use. With that in mind, we focus on continually innovating to optimize both our own operations and the solutions
we provide to customers, aligning with our corporate strategy to address some of the world’s most pressing and complex sustainability
challenges such as water scarcity and climate change. The work we do matters, and the way we do it matters to our employees,
customers, investors and the communities in which we and our customers operate.
Sustainability is core to our business strategy. We deliver sustainable solutions that help companies around the world achieve their
business goals while reducing environmental impacts. We partner with customers around the world to reduce water and energy use as
well as greenhouse gas emissions through our high-efficiency solutions. By partnering with our customers to help them do more with less
through the use of our innovative and differentiated solutions, we aim to help our customers conserve more than 300 billion gallons of
water annually by 2030. In 2023, we helped our customers conserve more than 226 billion gallons of water and avoid more than 3.8
million metric tons of greenhouse gas emissions.
The following description of our business is based upon our reportable segments as reported in our consolidated financial statements for
the year ended December 31, 2024, which are located in Item 8 of Part II of this Form 10-K. Operating segments that share similar
economic characteristics and future prospects, including the nature of the products and production processes, end-use markets,
channels of distribution and regulatory environment, have been aggregated into four reportable segments: Global Industrial, Global
Institutional & Specialty, Global Healthcare & Life Sciences and Global Pest Elimination.
Table of Contents
4
Global Industrial
This reportable segment consists of the Water, Food & Beverage and Paper operating segments, which provide water treatment and
process applications, and cleaning and sanitizing solutions, primarily to large industrial customers within the manufacturing, food and
beverage processing, transportation, chemical, primary metals and mining, power generation, global refining, petrochemical, pulp and
paper industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic
characteristics. Descriptions of the three operating segments which comprise our Global Industrial reportable segment follow below.
Water
Water serves customers across industrial and institutional markets. Within Water, our light industry markets include food and beverage,
manufacturing and transportation, institutional clients including commercial buildings, hospitals, universities and hotels, and global high
technology serving customers including data centers and microelectronics. Heavy industries served include power, chemicals and
primary metals, mining and petroleum refining and fuels industry.
Water provides water treatment products and technology programs for cooling water, wastewater, boiler water and process water
applications. In addition to these solutions, we offer specialty programs to the petroleum and fuels industry – refining process
applications, fuels and feedstocks additives. Our cooling water treatment programs are designed to control challenges associated with
cooling water systems — corrosion, scale and microbial fouling and contamination — in open recirculating, once-through and closed
systems. Our wastewater products and programs focus on improving overall plant economics, addressing compliance issues, optimizing
equipment efficiency and improving operator capabilities and effectiveness. We provide integrated chemical and digitally-based solutions,
process improvements and mechanical component modifications to optimize boiler performance and control corrosion and scale build-up.
Our programs assist in more effectively managing water use for plant processes by optimizing the performance of treatment chemicals
and equipment in order to minimize costs and maximize returns on investment.
Our offerings include specialty products such as scale and corrosion inhibitors, antifoulants, pre-treatment solutions, membrane
treatments, coagulants and flocculants, anti-foamers, hydrogen sulfide removal, cold flow improvers, lubricity inhibitors, crude desalting
and reactive monomer inhibitors, as well as our 3D TRASARTM technologies, which combine chemistry, remote services and monitoring
and control. We provide products and programs for water treatment and process applications aimed at combining environmental benefits
with economic gains for our customers. Typically, water savings, energy savings and operating efficiency are among our primary sources
of value creation for our customers, with product quality and production enhancement improvements also providing key differentiating
features for many of our offerings. Our offerings are sold primarily by our corporate account and field sales employees.
We believe we are one of the leading global suppliers of products and programs for chemical applications within the industrial water
treatment and petroleum refining industries.
Food & Beverage
Food & Beverage provides cleaning and sanitation products and programs to facilitate the processing of products for human
consumption. Food & Beverage provides detergents, cleaners, sanitizers, lubricants and animal health products, as well as cleaning
systems, digitally-based dispensers, monitors and chemical injectors for the application of chemical products, primarily to dairy plants;
dairy, swine and poultry farms; breweries and soft-drink bottling plants as well as meat, poultry and other food processors. Food &
Beverage is also a leading developer and marketer of antimicrobial products used in direct contact with meat, poultry, seafood and
produce during processing in order to reduce microbial contamination. Food & Beverage also designs, engineers and installs CIP
(“clean-in-place”) process control systems and facility cleaning systems for its customer base. Water savings, energy savings, and
operating efficiency are among our sources of value creation for our customers. Products for use in processing facilities are sold primarily
by our corporate account and field sales employees, while products for use on farms are sold through dealers and independent, third-
party distributors.
We believe we are one of the leading global suppliers of cleaning and sanitizing products to the dairy plant, dairy, swine and poultry farm,
beverage/brewery, food, meat and poultry, and beverage/brewery processing industries.
Paper
Paper provides water and process applications for the pulp and paper industries, offering a comprehensive portfolio of programs that are
used in all principal steps of the papermaking process and across all grades of paper, including graphic grades, board and packaging,
and tissue and towel. While Paper provides its customers similar types of products and programs for water treatment and wastewater
treatment as those offered by Water, Paper also offers two specialty programs that differentiate its offerings from Water—pulp
applications and paper applications. Our pulp applications maximize process efficiency and increase pulp cleanliness and brightness in
bleaching operations, as well as predict and monitor scaling potential utilizing on-line monitoring to design effective treatment programs
and avoid costly failures. Our paper process applications focus on improving our customers’ operational efficiency, in part through water
savings, energy savings and operating efficiency. Advanced digital sensing, monitoring and automation combine with innovative
chemistries and detailed process knowledge to provide a broad range of customer solutions. Specialty products include flocculants,
coagulants, dewatering aids and digester yield additives. Our offerings are sold primarily by our corporate account and field sales
employees.
We believe we are one of the leading global suppliers of water treatment products and process aids to the pulp and papermaking
industry.
Table of Contents
5
Global Institutional & Specialty
This reportable segment consists of the Institutional and Specialty operating segments, which provide specialized cleaning and sanitizing
products to the foodservice, hospitality, lodging, government, education and retail industries. The underlying operating segments exhibit
similar manufacturing processes, distribution methods and economic characteristics. Descriptions of the two operating segments which
comprise our Global Institutional & Specialty reportable segment follow below.
Institutional
Institutional sells specialized cleaners and sanitizers for washing dishes, glassware, flatware, foodservice utensils and kitchen equipment
(“warewashing”), plus specialized cleaners for various applications throughout food service operations, on-premise laundries (typically
used by hotel and healthcare customers) and general housekeeping functions. We also sell food safety products and equipment, water
filters, dishwasher racks and related kitchen sundries to the foodservice, lodging, educational and healthcare industries. Institutional also
provides pool and spa treatment programs for hospitality and other commercial customers, as well as a broad range of janitorial cleaning
and floor care products and programs to customers in hospitality, healthcare and commercial facilities. Institutional develops various
digital monitoring and chemical dispensing systems which are used by our customers to efficiently and safely dispense our cleaners and
sanitizers, and through these products, systems and our on-site sales and service expertise, develop better results for our customers
including water savings, energy savings and operating efficiency. In addition, Institutional markets a lease program comprised of energy-
efficient dishwashing machines, detergents, rinse additives and sanitizers, including full machine maintenance. Through our EcoSure
Brand Protection business, Institutional also provides customized on-site evaluations, training and quality assurance services to
foodservice and hospitality operations.
Institutional sells its products and programs primarily through its direct field sales and corporate account sales personnel. Corporate
account sales personnel establish relationships and negotiate contracts with larger multi-unit or “chain” customers. We also utilize
independent, third-party foodservice, broad-line and janitorial distributors to provide logistics to end customers that prefer to work through
these distributors. Many of these distributors also participate in marketing our product and service offerings to the end customers.
Through our field sales personnel, we generally provide the same customer support to end-use customers supplied by these distributors
as we do to direct customers.
We believe we are one of the leading global suppliers of warewashing and laundry products and programs to the food service, hospitality
and lodging markets.
Specialty
Specialty supplies cleaning and sanitizing products and related items primarily to regional, national and international quick service
restaurant (“QSR”) chains and food retailers (i.e., supermarkets and grocery stores). Its products include specialty and general purpose
hard surface cleaners, degreasers, sanitizers, polishes, hand care products and assorted cleaning tools and equipment which are
primarily sold under the “Ecolab” and “Kay” brand names. QSR’s program also includes a lease program comprised of energy-efficient
dishwashing machines, detergents, rinse additives and sanitizers, including full machine maintenance. Specialty’s cleaning and sanitation
programs are customized to meet the needs of the market segments it serves and are designed to provide highly effective cleaning
performance, promote food safety, reduce labor, water and energy costs and enhance user and guest safety. A number of dispensing
options are available for products in the core product range. Specialty supports its product sales with training programs and technical
support designed to meet the special needs of its customers.
Both Specialty’s QSR business and its food retail business utilize their corporate account sales force which manages relationships with
customers at the corporate and regional office levels (and, in the QSR market segment, at the franchisee level) and their field sales force
which provides program support at the individual restaurant or store level. QSR customers are primarily supplied through third party
distributors while most food retail customers utilize their own distribution networks. While Specialty’s customer base has broadened
significantly over the years, Specialty’s business remains largely dependent upon a limited number of major QSR chains and franchisees
and large food retail customers.
Food Safety Solutions supplies a digital platform that combines software, hardware and multiple services to automate kitchen procedures
for efficiency and compliance. It also offers a unique variety of products, tools and equipment for food preparation, food rotation labeling,
temperature management, cleaning and employee safety across all food service customers.
We believe we are one of the leading suppliers of cleaning and sanitizing products to the global QSR market and the global food retail
market.
Table of Contents
6
Global Healthcare & Life Sciences
This reportable segment consists of the Healthcare and Life Sciences operating segments, which provide specialized cleaning and
sanitizing products to the healthcare, personal care and pharmaceutical industries. The underlying operating segments exhibit similar
manufacturing processes, distribution methods and economic characteristics. Descriptions of the two operating segments which
comprise our Global Healthcare & Life Sciences reportable segment follow below.
Healthcare
Healthcare provides infection prevention solutions to acute care hospitals, surgery centers and medical device Original Equipment
Manufacturers (“OEM”). Healthcare’s proprietary infection prevention solutions (hand hygiene, hard surface disinfection, digital
monitoring systems and instrument cleaning) are sold primarily under the "Ecolab" and “Anios” brand names to various departments
within the acute care environment (Infection Control, Environmental Services, Central Sterile and Operating Room). Healthcare sells its
products and programs principally through its field sales personnel and corporate account personnel but also sells through healthcare
distributors.
We believe we are one of the leading suppliers of infection prevention solutions in the United States and Europe.
Life Sciences
Life Sciences provides end-to-end cleaning and contamination control solutions to pharmaceutical and personal care manufacturers.
These products are primarily sold under the “Ecolab” brand name, and include detergents, cleaners, sanitizers, disinfectants, surface
wipes, as well as cleaning systems, electronic dispensers and chemical injectors for the application of chemical products. The Life
Sciences portfolio includes premium fluid treatment and purification solutions with a broad range of unique products sold under the
“Purolite” brand name, particularly focusing on biopharma purification solutions, active pharmaceutical ingredients (“API’s”) and high
value industrial applications. The Life Sciences portfolio also includes decontamination systems and services utilizing hydrogen peroxide
vapor, which are sold under the “Bioquell” brand name. The pharmaceutical clean room environment is the primary area that Ecolab and
Bioquell products are utilized. Products and programs are sold primarily through our field sales and corporate account personnel, and to
a lesser extent through distributors.
Life Sciences is comprised of customers and accounts related to manufacturing in the following industries: pharmaceutical, animal health
and medicine, blood purification and dialysis, biologic products, cosmetics and medical devices. Our tailored, comprehensive solutions
and technical know-how focus on ensuring product quality, safety and compliance standards are met while improving operational
efficiency in customers’ cleaning, sanitation and disinfection processes. We believe we are one of the leading suppliers of process
purification solutions in Europe and North America and of contamination control solutions in Europe, with a growing presence in North
America and other regions.
Global Pest Elimination
This reportable segment consists of the Pest Elimination operating segment.
Pest Elimination
Pest Elimination provides services designed to detect, prevent and eliminate pests, such as rodents and insects, in full-service and quick-
service restaurants, food and beverage processors, hotels, grocery operations and other commercial segments including education, life
sciences and healthcare.
In addition to the United States, which constitutes our largest operation, we operate in various countries in Asia Pacific, Greater China,
Western Europe, Latin America, and Africa.
We believe Pest Elimination is a leading service provider of effective, high-quality pest elimination programs that deliver high quality
outcomes to commercial segments in the geographies it serves.
Table of Contents
7
Additional Information
International Operations
We directly operate in approximately 100 countries outside of the United States through wholly-owned subsidiaries or, in some cases,
through a joint venture with a local partner. In certain countries, selected products are sold by our export operations to distributors,
agents or licensees, although the volume of those sales is not significant in terms of our overall revenues. In general, our businesses
conducted outside the United States are similar to those conducted in the United States.
Our business operations outside the United States are subject to the usual risks of foreign operations, including possible changes in
trade and foreign investment laws, international business laws and regulations, tax laws, currency exchange rates and economic and
political conditions. The profitability of our international operations is generally lower than the profitability of our businesses in the United
States, due to (i) the additional cost of operating in numerous and diverse foreign jurisdictions with varying laws and regulations, (ii)
higher costs of importing certain raw materials and finished goods in some regions, (iii) the smaller scale of international operations
where certain operating locations are smaller in size, and (iv) the additional reliance on distributors and agents in certain countries which
can negatively impact our margins. Proportionately larger investments in sales and technical support are also necessary in certain
geographies in order to facilitate the growth of our international operations.
Competition
In general, the markets in which the businesses in our Global Industrial reportable segment compete are led by a few large companies,
with the rest of the market served by smaller entities focusing on more limited geographic regions or a smaller subset of products and
services. Our businesses in this segment compete on the basis of their demonstrated value, technical expertise, innovation, digital
technology, chemical formulations, global customer support, detection equipment, monitoring capabilities, and dosing and metering
equipment. Through the combination of our digitally enabled end-to-end water management and hygiene solutions, data-driven insights
and personalized service, our Global Industrial businesses deliver outcomes that help our customers optimize water and energy use,
improve productivity, advance food safety, and achieve sustainability and net zero goals, while optimizing total cost of operations.
The businesses in our Global Institutional & Specialty and Global Pest Elimination reportable segments have two significant classes of
competitors. First, we compete with a small number of large companies selling directly or through distributors on a national or
international scale. Second, we have numerous smaller regional or local competitors which focus on more limited geographies, product
lines and/or end-use customer segments. We believe we compete principally by providing superior value, premium customer support,
training, service, and innovative and differentiated products to help our customers protect their brand reputation and improve their
operational efficiency.
Within the Global Healthcare & Life Sciences reportable segment, the Healthcare business competes geographically with companies
primarily focused on a smaller range of product categories, with few globally scaled competitors. The Life Sciences business competes in
the European market versus several mid-size and regional competitors and competes against two large and other mid-size or regional
competitors in North America. Outside of North America and Europe competitors are much more fragmented and do not offer the same
level of service or coverage as Ecolab. Our businesses in this segment compete by enabling our customers success through improved
hygiene, digitally enabled programs in operating room and patient room space as well as a tailored approach to delivering key inputs that
directly impact our customers patients globally.
Sales
Our products, systems and services are primarily marketed in domestic and international markets by our Company-trained direct field
sales personnel who also advise and assist our customers in the proper and most efficient use of the products and systems in order to
meet a full range of cleaning and sanitation, water treatment and process chemistry needs. Independent, third-party distributors and, to a
lesser extent, sales agents, are utilized in several markets, as described in the segment descriptions found above.
Customers and Classes of Products
We believe our business is not materially dependent upon a single customer. Additionally, although we have a diverse customer base
and no customer or distributor constituted 10 percent or more of our consolidated revenues in 2024, 2023 or 2022, we do have
customers and independent third-party distributors, the loss of which could have a material adverse effect on results of operations for the
affected earnings periods; however, we consider it unlikely that such an event would have a material adverse impact on our financial
position. No material part of our business is subject to renegotiation or termination at the election of a governmental unit.
We sold one class of products within the Global Institutional & Specialty reportable segment which comprised 10% or more of
consolidated net sales in the last three years. Sales of warewashing products were approximately 12% of consolidated net sales in 2024,
2023 and 2022.
Table of Contents
8
Human Capital
As of December 31, 2024, Ecolab employed approximately 48,000 employees. The largest component of our workforce is more than
25,000 sales and service employees. Our innovation efforts are supported by approximately 3,000 research, development, engineering
and digital experts. Approximately 44% of the employees are employed in North America, 21% in Europe, 12% in Latin America, 8% in
Asia Pacific, 8% in India, Middle East and Africa, and 7% in Greater China.
We believe that doing the right thing, the right way, is good for business. We believe that driving performance and growing fast, we can
deliver a net positive impact in our own operations and what we deliver for our customers. We believe that Ecolab’s century-long growth,
innovation and high performance have benefited from a workplace where individuals from all backgrounds are encouraged to reach their
full potential. We believe in providing training and career development opportunities to all employees and in compensating and rewarding
our employees equitably.
Our commitment to the safety of our employees, contractors, and customers is evident in the way we operate, the products we develop,
and the customers we serve. In addition, we are committed to promoting the health and well-being of our employees, our customers, and
their customers by contributing to programs and initiatives that enhance the quality of life in the communities where they work and live. In
support of these overall objectives, key areas of focus include:
Workplace Culture: With approximately 48,000 associates in more than 170 countries, Ecolab representatives engage daily with a
diverse range of colleagues, customers, and communities. We are committed to developing a culture where all voices are heard and
equitable employment opportunities are available to everyone. To sustain our success, we work to embed our values of inclusivity and
engagement throughout our people processes, including recruitment, retention and development.
We also have a vibrant and growing community of 11 Employee Resource Groups (“ERGs”) that are open to all Ecolab associates, to
help employees connect with colleagues, take part in career and leadership development experiences, and provide important insights
that help advance our workplace culture. All employees are welcome and encouraged to join, participate, or become leaders and allies
within any of our ERGs.
Employee Training and Development: Ecolab’s growth has been characterized by a century of supporting customers by combining
science, technology and innovation with the expertise of our associates. Beyond rigorous technical, functional, and business-specific
training courses, our Global Corporate Flagship Development Programs for supervisors, managers and leaders are designed to deepen
leadership capability and prepare potential successors for key leadership roles.
Compensation and Benefits: Ecolab has a market-competitive and performance-based pay philosophy, and we believe in compensating
our employees fairly and equitably. We are committed to rewarding and recognizing employees for their contributions to the success of
the organization. This includes our global merit increase program and our short- and long-term variable pay programs, which include
goals and targets that are tied to the success of the business. We test our pay and wage data against compensation surveys to align our
pay with the competitive external market. In the U.S., we conduct pay equity studies, and we are in the process of expanding pay equity
studies outside the U.S.
Ecolab also provides market-competitive benefits based on country-specific needs and government requirements. While our benefits
packages vary by market, they are designed to attract top talent and build long-term connections with our associates. Aligned to the
applicable market and local regulations, elements of our benefits programs may include medical and dental insurance, retirement
savings, employee stock purchase plan, paid time off, parental leave and adoption assistance, life and disability insurance, and employee
assistance plans.
Safety, Health, and Wellness: At Ecolab, the safety of our employees and contractors is a top priority and is embedded into our company
values. Our safety goals are simple: zero accidents, zero injuries, and zero violations. We communicate that this is a collective goal all
employees commit to, own, and deliver on every day. Our leadership teams and a network of Safety, Health, and Environment
professionals around the world support employees with robust safety programs, processes, and platforms. Understanding underlying and
potential risks is a critical component to improving safety outcomes. Our Global Safety Dashboard tracks our performance on a range of
leading and lagging safety indicators and helps us measure the effectiveness of our safety programs.
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Additionally, a Be Well Program is available to U.S. employees and their families to empower, educate and support their personal journey
to overall well-being by making positive lifestyle choices while creating a culture of wellness throughout Ecolab. Over the last few years,
we’ve expanded our offerings to include comprehensive child and elder caregiver resources to help employees balance the demands of
work and personal responsibilities. Wellness initiatives are also underway outside the U.S. aligned to country-specific needs and market
practices.
Patents and Trademarks
We own and license a number of patents, trademarks and other intellectual property. While we have an active program to protect our
intellectual property by filing for patents or trademarks and pursuing legal action, when appropriate, to prevent infringement, except for
the items listed below, we do not believe our overall business is materially dependent on any individual patent or trademark.
•
Trademarks related to Ecolab, Nalco and 3D TRASAR, which collectively are material to all of our reportable segments. The
Ecolab, Nalco and 3D TRASAR trademarks are registered or applied for in all of our key markets and we anticipate maintaining
them indefinitely.
Seasonality
We experience variability in our quarterly operating results due to seasonal sales volume and business mix fluctuations in our operating
segments. Part II, Item 8, Note 20, entitled “Quarterly Financial Data” of this Form 10-K is incorporated herein by reference.
Investments in Equipment
We have invested, and plan to continue to invest, in process control and monitoring equipment consisting primarily of systems used by
customers to dispense our products as well as to monitor water systems. The investment in such equipment is discussed under the
heading "Investing Activities" in Management's Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-
K.
Manufacturing and Distribution
We manufacture most of our products and related equipment in Company-operated manufacturing facilities. Some products are also
produced for us by third-party contract manufacturers. Other products and equipment are purchased from third-party suppliers. Additional
information on product/equipment sourcing is found in the segment discussions above and additional information on our manufacturing
facilities is located under Part I, Item 2. “Properties,” of this Form 10-K.
Deliveries to customers are made from our manufacturing plants and a network of distribution centers and third-party logistics service
providers. We use common carriers, our own delivery vehicles, and distributors for transport. Additional information on our plant and
distribution facilities is located under Part I, Item 2. “Properties,” of this Form 10-K.
Raw Materials
Raw materials purchased for use in manufacturing our products are inorganic chemicals, including alkalis, acids, biocides, phosphonates,
phosphorous materials, silicates and salts; and organic chemicals, including acids, alcohols, amines, fatty acids, surfactants, solvents,
monomers and polymers. Pesticides used by Pest Elimination are purchased as finished products under contract or purchase order from
the producers or their distributors. We also purchase packaging materials for our manufactured products and components for our
specialized cleaning equipment and systems. We purchase more than 10,000 raw materials, with the largest single raw material
representing approximately four percent of raw material purchases. Our raw materials, with the exception of a few specialized chemicals
which we manufacture, are generally purchased on an annual contract basis and are ordinarily available in adequate quantities from a
diverse group of suppliers globally. When practical, global sourcing is used so that purchasing or production locations can be shifted to
control product costs.
Research and Development
Our research and development program consists principally of developing and validating the performance of new products, processes,
techniques and equipment, improving the efficiency of those already existing, improving service program content, evaluating the
environmental compatibility of products and technical support. Key disciplines include analytical and formulation chemistry, microbiology,
data science and predictive analytics, process and packaging engineering, digital and remote monitoring engineering and product
dispensing technology. Substantially all of our principal products have been developed by our research, development and engineering
personnel.
We believe continued research and development activities are critical to maintaining our leadership position within the industry and will
provide us with a competitive advantage as we seek additional business with new and existing customers.
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Joint Ventures
Over time, we have entered into partnerships or joint ventures in order to meet local ownership requirements, to achieve quicker
operational scale, to expand our ability to provide our customers a more fully integrated offering or to provide other benefits to our
business or customers. During 2024, the impact on our consolidated net income of our joint ventures, in the aggregate, was
approximately three percent. We will continue to evaluate the potential for partnerships and joint ventures that can assist us in increasing
our geographic, technological and product reach.
Environmental and Regulatory Considerations
Our businesses are subject to various legislative enactments and regulations relating to the protection of the environment and public
health. While we cooperate with governmental authorities and take commercially practicable measures to meet regulatory requirements
and avoid or limit environmental effects, some risks are inherent in our businesses. Among the risks are costs associated with
transporting and managing hazardous materials and waste disposal and plant site clean-up, fines and penalties if we are found to be in
violation of law, as well as modifications, disruptions or discontinuation of certain operations or types of operations including product
recalls and reformulations. Similarly, the need for certain of our products and services is dependent upon or might be limited by
governmental laws and regulations. Changes in such laws and regulations, including among others, air, water, chemical and product
regulations, could impact the sales of some of our products or services. In addition to an increase in costs of manufacturing and
delivering products, a change in production regulations or product regulations could result in interruptions to our business and potentially
cause economic or consequential losses should we be unable to meet the demands of our customers for products.
Additionally, although we are not currently aware of any such circumstances, there can be no assurance that future legislation or
enforcement policies will not have a material adverse effect on our consolidated results of operations, financial position or cash flows.
Environmental and regulatory matters most significant to us are discussed below.
Ingredient Legislation: Various laws and regulations have been enacted by state, local and foreign jurisdictions pertaining to
the sale of products which contain phosphorous, volatile organic compounds, per- and polyfluoroalkyl substances (“PFAS”) or
other ingredients that may impact human health or the environment. Under California Proposition 65, for example, label
disclosures are required for certain products containing chemicals listed by California. Chemical management initiatives that
promote pollution prevention through research and development of safer chemicals and safer chemical processes are being
advanced by several states.
Environmentally preferable purchasing programs for cleaning products have been enacted in a number of states to date, and in
recent years have been considered by several other state legislatures. Cleaning product ingredient disclosure legislation has
been introduced in the U.S. Congress in each of the past few years but has not passed, and several states are considering
further regulations in this area. In 2017, California passed the Cleaning Product Right to Know Act of 2017, that required
ingredient transparency on-line and on-label by 2020 and 2021, respectively. The U.S. Government is monitoring “green
chemistry” initiatives through a variety of initiatives, including its “Design for the Environment” (“DfE”)/“Safer Choice” program.
DfE/Safer Choice has three broad areas of work (recognition of safer products on a DfE/Safer Choice label, development of
best practices for industrial processes and evaluation of safer chemicals), and we are involved in these to varying degrees. Our
Global Institutional and Global Industrial cleaning products are subject to the regulations and may incur additional stay-in-
market expenses associated with conducting the required alternatives analyses for chemicals of concern. To date, we
generally have been able to comply with such legislative requirements by reformulation or labeling modifications. Such
legislation has not had a material adverse effect on our consolidated results of operations, financial position or cash flows to
date.
TSCA: The nation’s primary chemicals management law, the Toxic Substances Control Act (“TSCA”), was updated with the
passage of the Frank R. Lautenberg Chemical Safety for the 21st Century Act (“LCSA”) in 2016. The LCSA modernizes the
original 1976 legislation, aiming to establish greater public confidence in the safety of chemical substances in commerce and
improve the U.S. Environmental Protection Agency’s (“EPA”) capability and authority to regulate existing and new chemical
substances. For Ecolab, the TSCA changes mainly impact testing and submission costs for new and existing chemical
substances in the United States. As a result of reform and multiple administration changes, EPA reviews are resulting in the
majority of new substances being regulated in some manner by the agency. As the agency continues to review existing
chemistries, the likelihood that substances manufactured, imported, or processed by Ecolab may be subject to additional
testing costs and/or risk management decisions is increasing. Future EPA risk evaluation decisions may result in the reduction
or elimination of future uses for some products. Compliance with new requirements under TSCA are similar to the costs
associated with REACH in the European Union, which is discussed below.
REACH: The European Union has enacted a regulatory framework for the Registration, Evaluation and Authorization of
Chemicals (“REACH”), which aims to manage chemical safety risks. REACH established a European Chemicals Agency
(“ECHA”) in Helsinki, Finland, which is responsible for evaluating data to determine hazards and risks and to manage this
program for authorizing chemicals for sale and distribution in Europe. We met all REACH registration requirements. To help
manage this program, we have been simplifying our product lines and working with chemical suppliers to comply with
registration requirements. In addition, Korea, Taiwan, Turkey, India, Chile and Colombia and other countries have implemented
or are implementing similar requirements. In addition, the European Green Deal will include the revision of chemical
management regulation to achieve a circular economy and toxic-free environment (Chemical Strategy for Sustainability) which
may impact sales in Ecolab’s raw material portfolio. Potential costs to us are not yet fully quantifiable but are not expected to
have a material adverse effect on our consolidated results of operations or cash flows in any one reporting period or on our
financial position.
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GHS: In 2003, the United Nations adopted a standard on hazard communication and labeling of chemical products known as
the Globally Harmonized System of Classification and Labeling of Chemicals (“GHS”). GHS is designed to facilitate
international trade and increase safe handling and use of hazardous chemicals through a worldwide system that classifies
chemicals based on their intrinsic hazards and communicates information about those hazards through standardized product
labels and safety data sheets (“SDSs”). As of 2024, most countries in which we operate have adopted or are expected to adopt
GHS-related legislation. The primary cost of compliance revolves around reclassifying products and revising SDSs and product
labels. We have met applicable deadlines and are working toward a phased-in approach to mitigate the costs of GHS
implementation in remaining countries (e.g., Peru, Chile, India). We are also implementing updates, where applicable, of GHS
revisions in countries where it is already present (e.g., US, Canada, Malaysia, Singapore). Potential costs to us are not
expected to have a material adverse effect on our consolidated results of operations or cash flows in any one reporting period
or on our financial position.
Pesticide and Biocide Legislation: Various international, federal and state environmental laws and regulations govern the
manufacture and/or use of pesticides. We manufacture and sell certain disinfecting, sanitizing and material preservation
products that kill or reduce microorganisms (bacteria, viruses, fungi) on hard environmental surfaces, in process fluids and on
certain food products. Such products constitute “pesticides” or “antimicrobial pesticides” under the current definitions of the
Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”), as amended by the Food Quality Protection Act of 1996, the
principal federal statute governing the manufacture, labeling, handling and use of pesticides. We maintain several hundred
product registrations with the U.S. Environmental Protection Agency (“EPA”). Registration entails the necessity to meet certain
efficacy, toxicity and labeling requirements and to pay on-going registration fees. In addition, each state in which these
products are sold requires registration and payment of a fee. In general, the states impose no substantive requirements
different from those required by FIFRA. However, California and certain other states have adopted additional regulatory
programs, and California imposes a tax on total pesticide sales in that state. While the cost of complying with rules as to
pesticides has not had a material adverse effect on our consolidated results of operations, financial condition, or cash flows to
date, the costs and delays in receiving necessary approvals for these products continue to increase. Total fees paid to the EPA
and the states to obtain or maintain pesticide registrations are not expected to significantly affect our consolidated results of
operations or cash flows in any one reporting period or our financial position.
In Europe, the Biocidal Products Regulation established a program to evaluate and authorize marketing of biocidal active
substances and products. We are working with suppliers and industry groups to manage these requirements and have met all
relevant deadlines of the program by the timely submission of dossiers for active substances and biocide products. Anticipated
registration costs, which will be incurred through the multi-year phase-in period, will be significant; however, these costs are not
expected to significantly affect our consolidated results of operations or cash flows in any one reporting period or our financial
position. The same is true for emerging biocide regulations in Asia.
In addition, Pest Elimination applies restricted-use pesticides that it generally purchases from third parties. That business must
comply with certain standards pertaining to the use of such pesticides and to the licensing of employees who apply such
pesticides. Such regulations are enforced primarily by the states or local jurisdictions in conformity with federal regulations. We
have not experienced material difficulties in complying with these requirements.
FDA Antimicrobial Product Requirements: Various laws and regulations have been enacted by federal, state, local and
foreign jurisdictions regulating certain products manufactured and sold by us for controlling microbial growth on humans,
animals and foods. In the United States, these requirements generally are administered by the U.S. Food and Drug
Administration ("FDA"). However, the U.S. Department of Agriculture and EPA also may share in regulatory jurisdiction of
antimicrobials applied to food. The FDA codifies regulations for these product categories in order to ensure product quality,
safety and effectiveness. The FDA also has been expanding requirements applicable to such products, including proposing
regulations for over-the-counter antiseptic drug products, which may impose additional requirements associated with
antimicrobial hand care products and associated costs when finalized by the FDA.
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Medical Device, Drug and Cosmetic Product Requirements: As a manufacturer, distributor and marketer of medical devices
and human drugs, we also are subject to regulation by the FDA and corresponding regulatory agencies of the state, local and
foreign governments in which we sell our products. These regulations govern the development, testing, manufacturing,
packaging, labeling, distribution and marketing of medical devices and medicinal products, including Advanced Pharmaceutical
Ingredients (“API”), excipients and resins for biopharmaceutical processing.
•
In the United States, we are required to register with the FDA as a medical device, drug and cosmetic
manufacturer, comply with post-market reporting (e.g., Adverse Event Reporting, MDR and Recall)
requirements, and to comply with the FDA’s current Good Manufacturing Practices and Good Practice
Guidelines (“GxPs”), which ensure that products are consistently produced and controlled according to quality
standards and must be approved by the competent authorities.
•
Countries in the European Union require that certain products being sold within their jurisdictions obtain a “CE
mark,” an international symbol of adherence to quality assurance standards, and be manufactured in
compliance with certain requirements (e.g., Medical Device Regulation (EU) 2017/745 (“MDR”), and ISO
13485). We have CE mark approval to sell various medical devices. Implementation of the MDR has required
additional investments, including system, product, process, technical file and product improvements.
Additionally, pharmaceutical products in the EU must comply with regulations such as the GxP guidelines.
•
In Australia, products must comply with the regulations set by the Therapeutic Goods Administration (“TGA”).
Medical devices must be included in the Australian Register of Therapeutic Goods (“ARTG”) and meet the
Essential Principles for safety and performance. Therapeutic goods, including drugs and cosmetics, must
adhere to specific standards and regulatory frameworks for safety, quality, efficacy, labelling, and claims.
•
Non-EU export markets are also subject to government regulation and country-specific rules and regulations.
Equipment: Ecolab’s products are dispensed by equipment that is subject to state and local regulatory requirements, as well
as being subject to UL, NSF, and other approval requirements. For certain digitally connected product offerings, Federal
Communication Commission (“FCC”) and corresponding international requirements are applicable. We have both dedicated
manufacturing facilities and third-party production of our equipment. We are developing processes to monitor and manage
changing regulatory regimes and assist with equipment systems compliance. To date, such requirements have not had a
material adverse effect on our consolidated results of operations, financial position or cash flows.
Other Environmental Legislation: Our manufacturing plants are subject to federal, state, local or foreign jurisdiction laws and
regulations relating to discharge of hazardous substances into the environment and to the transportation, handling and
disposal of such substances. The primary federal statutes that apply to our activities in the United States are the Clean Air Act,
the Clean Water Act and the Resource Conservation and Recovery Act. We are also subject to the Superfund Amendments
and Reauthorization Act of 1986, which imposes certain reporting requirements as to emissions of hazardous substances into
the air, land and water. The products we produce and distribute into Europe are also subject to directives governing electrical
waste (WEEE Directive 2012/19/EU) and restrictive substances (RoHS Directive 2011/65/EU). Similar legal requirements apply
to Ecolab’s facilities globally. We make capital investments and expenditures to comply with environmental laws and
regulations, to promote employee safety and to carry out our announced environmental sustainability principles. To date, such
expenditures have not had a significant adverse effect on our consolidated results of operations, financial position or cash
flows. Our capital expenditures for environmental, health and safety projects worldwide were approximately $56 million in 2024,
$46 million in 2023 and $35 million in 2022. Approximately $60 million has been budgeted globally for projects in 2025.
Climate Change: Various laws and regulations addressing climate change are being implemented or considered at
international, national, regional, and state levels, particularly focusing on reducing greenhouse gas (“GHG”) emissions. Notable
regulations include California's 2023 GHG emissions reporting regulations addressing emissions, climate-related risks, and
reduction claims, and the European Commission’s Corporate Sustainability Reporting Directive, which became effective
January 2024 and is applicable to both EU and certain non-EU companies with a phased introduction. We are or may become
subject to many of these laws. We continue to monitor and evaluate these regulations and incorporate reporting and disclosure
obligations as appropriate.
Ecolab recognizes that climate change presents both risks and opportunities. We assess climate-related risks within our
Enterprise Risk Management process, aligned with the Financial Stability Board’s Task Force on Climate-related Financial
Disclosures (“TCFD”) recommendations. Our TCFD disclosures are available in our annual CDP Climate report on our website.
Since our first TCFD-aligned climate risk assessment in 2021, we have continued to review and adapt our strategies to
manage climate risks and leverage opportunities for customer impact. We also evaluate potential water-related risks in our
operations, disclosing the results in our Growth and Impact Report. Future analyses will explore nature-related risks linked to
climate and water, aligned with the Task Force on Nature-Related Financial Disclosures (“TNFD”) recommendations.
As a corporate policy, we support a balanced approach to reducing GHG emissions while sustaining economic growth. We
have established climate related goals to further our commitment. In 2019, we announced goals to reduce operational GHG
emissions by half by 2030 and achieve net zero by 2050, in alignment with the UN Global Compact’s Business Ambition for
1.5°C. In 2020, we further committed to move to 100% renewable energy by 2030 and set a science-based target (“SBT”) for
Scope 1, 2, and 3 GHG emissions. In 2024, our net zero target for Science Based Targets initiative (“SBTi”) validation was
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approved, including a near term Scope 3 target. Our near-term SBT aims to reduce absolute Scope 1 and 2 emissions by 50%
from 2018 levels, and Scope 3 emissions by 25% from 2022 levels, by 2030.
In 2023, we invested $63 million and $5.7 million in capital and operating environmental program expenses, respectively. The
investments resulted in a reduction of total energy consumption by almost 5.7 billion BTUs; reduction of emissions by 700
metric tons CO2e; and over 153 million gallons (~580,000 cubic meters) of water savings from reduction and recycling projects.
These reductions are calculated using direct measurements (such as meter readings and utility reports for water) and best-
practice methodologies, with 2018 as the baseline year.
Beyond our operations, we help customers in over 170 countries reduce their energy and GHG emissions through high-
efficiency solutions in cleaning, sanitation, water, paper, and energy services. Our 2030 goals include: customer GHG
emissions reduction of 6.0 million metric tons; water stewardship to restore over 50% of our water withdrawal and achieve
Alliance for Water Stewardship Standard certification in high-risk watersheds; and water conservation to reduce net water
withdrawals by 40% per unit of production and help customers conserve over 300 billion gallons of water annually.
The science of sustainability is evolving. For factors that may affect our sustainability initiatives, goals, and targets, see Item 1A
of this Form 10-K, entitled “Risk Factors.”
Environmental Remediation and Proceedings: Along with numerous other potentially responsible parties (“PRP”), we are
currently involved with waste disposal site clean-up activities imposed by the federal Comprehensive Environmental Response,
Compensation and Liability Act (“CERCLA”) or state equivalents at 16 sites in the United States. Additionally, we have similar
liability at six sites outside the United States. In general, under CERCLA, we and each other PRP that actually contributed
hazardous substances to a Superfund site are jointly and severally liable for the costs associated with cleaning up the site.
Customarily, the PRPs will work with the EPA to agree and implement a plan for site remediation.
Based on an analysis of our experience with such environmental proceedings, our estimated share of all hazardous materials
deposited on the sites referred to in the preceding paragraph, and our estimate of the contribution to be made by other PRPs
which we believe have the financial ability to pay their shares, we have accrued our best estimate of our probable future costs
relating to such known sites. In establishing accruals, potential insurance reimbursements are not included. The accrual is not
discounted. It is not feasible to predict when the amounts accrued will be paid due to the uncertainties inherent in the
environmental remediation and associated regulatory processes.
We have also been named as a defendant in a number of lawsuits alleging personal injury due to exposure to hazardous
substances, including multi-party lawsuits alleging personal injury in connection with our products and services. While we do
not believe that any of these suits will be material to us based upon present information, there can be no assurance that these
environmental matters could not have, either individually or in the aggregate, a material adverse effect on our consolidated
results of operations, financial position or cash flows.
We have also been named as a defendant in lawsuits where our products have not caused injuries, but the claimants wish to
be monitored for potential future injuries. We cannot predict with certainty the outcome of any such tort claims or the
involvement we or our products might have in such matters in the future, and there can be no assurance that the discovery of
previously unknown conditions will not require significant expenditures. In each of these chemical exposure cases, our
insurance carriers have accepted the claims on our behalf (with or without reservation) and our financial exposure should be
limited to the amount of our deductible; however, we cannot predict the number of claims that we may have to defend in the
future and we may not be able to continue to maintain such insurance.
Our worldwide net expenditures for contamination remediation were approximately $0.7 million in 2024, $0.3 million in 2023 and
$1.4 million in 2022. Our worldwide accruals at December 31, 2024 for probable future remediation expenditures, excluding
potential insurance reimbursements, totaled approximately $19.6 million. We review our exposure for contamination remediation
costs periodically and our accruals are adjusted as considered appropriate. While the final resolution of these issues could result in
costs below or above current accruals and, therefore, have an impact on our consolidated financial results in a future reporting
period, we believe the ultimate resolution of these matters will not have a material effect on our consolidated results of operations,
financial position or cash flows.
Available Information.
We file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website that
contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the
SEC at https://www.sec.gov.
General information about us, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through our website at
https://investor.ecolab.com as soon as reasonably practicable after we file them with, or furnish them to, the SEC.
In addition, the following governance materials are available on our web site at https://investor.ecolab.com/governance/corporate-
governance: (i) charters of the Audit, Compensation & Human Capital Management, Finance, Governance, and Safety, Health &
Environment Committees of our Board of Directors; (ii) our Board's Corporate Governance Principles; and (iii) our Code of Conduct.
We include our website addresses throughout this report for reference only. The information contained on our websites, including the
corporate responsibility, and climate reports identified in this report, is not incorporated by reference into this report.
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Information about our Executive Officers.
The persons listed in the following table are our current executive officers. Officers are elected annually. There is no family relationship
among any of the directors or executive officers and no executive officer has been involved during the past ten years in any legal
proceedings described in applicable Securities and Exchange Commission regulations.
Name
Age Office
Positions Held Since
Jan. 1, 2020
Nicholas J. Alfano
63
Executive Vice President and President – Global Industrial Group
Apr. 2023 – Present
Executive Vice President and General Manager – Global Light Sector
Jan. 2021 – Mar. 2023
Executive Vice President and General Manager – Global Food &
Beverage
Jan. 2020 – Dec. 2020
Christophe Beck
57
Chairman and Chief Executive Officer
Oct. 2022 – Present
Chairman, Chief Executive Officer and President
May 2022 – Oct. 2022
President and Chief Executive Officer
Jan. 2021 – May 2022
President and Chief Operating Officer
Jan. 2020 – Dec. 2020
Larry L. Berger
64
Executive Vice President and Chief Technical Officer
Jan. 2020 – Present
Jandeen M. Boone
51
Executive Vice President, General Counsel and Secretary
Jan. 2025 – Present
Executive Vice President, General Counsel, Secretary and Interim Chief
Compliance Officer
June 2024 – Jan. 2025
Senior Vice President, Chief Compliance Officer and Interim General
Counsel
May 2024 – June 2024
Interim General Counsel and Assistant Secretary
Apr. 2024 – May 2024
Sector General Counsel, Institutional and International Markets
Feb. 2023 – Apr. 2024
Sector General Counsel, Institutional and Specialty
Jan. 2021 – Jan. 2023
Associate General Counsel, Institutional
Jan. 2020 – Dec. 2021
Jennifer J. Bradway
48
Senior Vice President and Corporate Controller
Jan. 2022 – Present
Senior Vice President Finance - Global Institutional
Jan. 2020 – Dec. 2021
Darrell R. Brown
61
President and Chief Operating Officer
Oct. 2022 – Present
Executive Vice President and President – Global Industrial
Jan. 2020 – Sept. 2022
Gregory B. Cook
56
Executive Vice President and President – Institutional Group
Aug. 2023 – Present
Executive Vice President and General Manager – Global Institutional
June 2021 – July 2023
Senior Vice President and General Manager – Global Pest
Jan. 2020 – May 2021
Alexander A. De Boo
57
Executive Vice President and President – Global Markets
Feb. 2021 – Present
Executive Vice President and President – Western Europe
Apr. 2020 – Jan. 2021
Senior Vice President and General Manager – Industrial, Europe
Jan. 2020 – Apr. 2020
Machiel Duijser (1)
53
Executive Vice President and Chief Supply Chain Officer
Feb. 2020 – Present
Alexandra M. A. Hlila
49
Executive Vice President and General Manager – Global Pest
Dec. 2024 – Present
Senior Vice President – Strategy Institutional Group
Mar. 2024 – Dec. 2024
Senior Vice President & General Manager – Institutional Europe
May 2022 – Feb. 2024
Vice President Global & Corporate Accounts – Institutional Europe
May 2021 – Apr. 2022
Vice President Field Sales Europe – Institutional Division
Jan. 2020 – Apr. 2021
Scott D. Kirkland
51
Chief Financial Officer
Jan. 2022 – Present
Senior Vice President and Corporate Controller
Jan. 2020 – Dec. 2021
Laurie M. Marsh
61
Executive Vice President – Human Resources
Jan. 2020 – Present
Harpreet Saluja (2)
56
Executive Vice President – Corporate Strategy & Business
Development
Nov. 2024 - Present
(1) Prior to joining Ecolab in February 2020, Mr. Duijser was employed by Reckitt Benckiser Group plc (RB), a global provider of health,
hygiene and home products, as Chief Supply Officer from 2018 until 2020.
(2) Prior to joining Ecolab in November 2024, Ms. Saluja was employed by Eaton Corporation plc, a power management company, as
Senior Vice President, Corporate Development and Planning from 2013 until 2024.
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Forward-Looking Statements
This Form 10-K, including Part I, Item 1, entitled “Business,” and the MD&A within Part II, Item 7, contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include expectations concerning items such
as:
•
amount, funding and timing of cash expenditures relating to our restructuring and other initiatives, as well as savings from such
initiatives
•
future cash flows, access to capital, targeted credit rating metrics and impact of credit rating downgrade
•
adequacy of cash reserves
•
uses for cash, including dividends, share repurchases, debt repayments, capital investments and strategic business
acquisitions
•
global economic and political environment
•
long-term potential of our business
•
impact of changes in exchange rates and interest rates, including the assessment and management of associated risks
•
customer retention rate
•
bad debt experience, non-performance of counterparties and losses due to concentration of credit risk
•
disputes, claims and litigation
•
environmental contingencies
•
impact and cost of complying with laws and regulations
•
sustainability targets
•
returns on pension plan assets
•
contributions to pension and postretirement healthcare plans
•
amortization expense
•
impact of new accounting pronouncements
•
income taxes, including tax attributes, valuation allowances, unrecognized tax benefits, permanent reinvestment assertions
and goodwill deductibility
•
recognition of share-based compensation expense
•
payments under operating leases
•
future benefit plan payments
•
market position
Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will be,” “will continue,” “is anticipated,” “we
believe,” “we expect,” “estimate,” “project” (including the negative or variations thereof), “intends,” “could,” or similar terminology,
generally identify forward-looking statements. Forward-looking statements may also represent challenging goals for us. These
statements, which represent our expectations or beliefs concerning various future events, are based on current expectations that involve
a number of risks and uncertainties that could cause actual results to differ materially from those of such forward-looking statements. We
caution that undue reliance should not be placed on such forward-looking statements, which speak only as of the date made. For a
further discussion of these and other factors which could cause results to differ from those expressed in any forward-looking statement,
see Item 1A of this Form 10-K, entitled “Risk Factors.” Except as may be required under applicable law, we undertake no duty to update
our forward-looking statements.
Forward-looking and other statements in this document may also address our sustainability initiatives, goals, targets and progress, and
the inclusion of such statements is not an indication that these contents are necessarily material to investors or required to be disclosed
in our filings with the SEC. In addition, historical, current, and forward-looking sustainability-related statements may be based on
standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that
are subject to change in the future and performance against our goals and targets may differ from such forward-looking statements in
such event.
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Item 1A. Risk Factors.
The following are important factors which could affect our financial performance and could cause our actual results for future periods to
differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statements made in
this Form 10-K. See the section entitled “Forward-Looking Statements” set forth above.
We may also refer to this disclosure to identify factors that may cause results to differ materially from those expressed in other forward-
looking statements including those made in oral presentations, including telephone conferences and/or webcasts open to the public.
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below in addition to the
other information set forth in this Annual Report on Form 10-K, including "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operation" and our consolidated financial statements and the related notes, before making an investment
decision. The risks described below are not the only risks or uncertainties we face. The occurrence of any of the following risks or
additional risks and uncertainties not presently known to us, or that we currently believe to be immaterial, could materially and adversely
affect our business, financial condition, prospects, or results of operations. In such case, the trading price of our common stock could
decline, and you may lose all or part of your original investment. Our actual results could differ materially from those anticipated in the
forward-looking statements as a result of specific factors, including the risks and uncertainties described below.
Additionally, macroeconomic and geopolitical developments, including public health crises, escalating global conflicts, supply chain
disruptions, labor market constraints, rising rates of inflation and high interest rates may amplify many of the risks discussed below to
which we are subject. The extent of the impact of macroeconomic and geopolitical developments, including public health crises, on our
financial and operating performance depends significantly on the duration and severity of such macroeconomic and geopolitical
developments, the actions taken to contain or mitigate its impact and any changes in consumer behaviors as a result thereof.
Economic & Operational Risks
Our results are impacted by general worldwide economic factors.
Over the past year, global interest rates aimed at curbing inflation, as well as implications of geopolitical situations in Europe, the Middle
East and China, have resulted in economic and demand uncertainty. Previously, the COVID pandemic, geopolitical instability and other
global events have resulted in supply chain challenges, inflation, high interest rates, foreign currency exchange volatility, and volatility in
global capital markets, which have affected our business and could have a material adverse impact on our business in the future.
Countries such as Argentina and Turkey have experienced economic upheaval and similar upheaval in other countries with Ecolab
operations could have a material adverse impact on our consolidated results of operations, financial position and cash flows by
negatively impacting economic activity, including in our key end-markets, and by further weakening the local currency versus the U.S.
dollar, resulting in reduced sales and earnings from our foreign operations, which are generated in the local currency, and then
translated to U.S. dollars.
Our results depend upon the continued vitality of the markets we serve.
Economic downturns, and in particular downturns in our larger markets including the foodservice, hospitality, travel, health care, food
processing, refining, pulp and paper, mining and steel industries, can adversely impact our customers, and we may find it difficult to
restore margins by maintaining pricing due to easing inflation from slowing economic growth. Recently, the war and energy crisis in
Europe have resulted in a more challenging macroeconomic environment with significantly impacted costs and demand. Previously, the
COVID-19 pandemic negatively impacted the demand for our products and services provided to customers in the full-service restaurant,
hospitality, lodging and entertainment industries. In prior years, a weaker global economic environment has also negatively impacted
certain of our other end-markets. During these periods of weaker economic activity, our customers and potential customers may reduce
or discontinue their volume of purchases of cleaning and sanitizing products and water treatment and process chemicals, which has had,
and may continue to have, a material adverse effect on our business, financial condition, results of operation or cash flows.
Our significant non-U.S. operations expose us to global economic, political and legal risks that could impact our profitability.
We have significant operations outside the United States, including joint ventures and other alliances. We conduct business in more than
170 countries and, in 2024, approximately 47% of our net sales originated outside the United States. There are inherent risks in our
international operations, including:
•
exchange controls and currency restrictions;
•
currency fluctuations and devaluations;
•
tariffs and trade barriers;
•
export duties and quotas;
•
changes in the availability and pricing of raw materials, energy and utilities;
•
changes in local economic conditions;
•
changes in laws and regulations, including the imposition of economic or trade sanctions affecting international commercial
transactions;
•
difficulties in managing international operations and the burden of complying with international and foreign laws;
•
requirements to include local ownership or management in our business;
•
economic and business objectives that differ from those of our joint venture partners;
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•
exposure to possible expropriation, nationalization or other government actions;
•
restrictions on our ability to repatriate dividends from our subsidiaries;
•
unsettled political conditions, military action, civil unrest, acts of terrorism, force majeure, war or other armed conflict,
including the Russian invasion of Ukraine, the Israel-Hamas conflict and other hostilities in the Middle East; and
•
countries whose governments have been hostile to U.S.-based businesses.
Following Russia’s invasion of Ukraine and the United States’ and other countries’ sanctions against Russia, we have limited our Russian
business to operations that are essential to life, providing minimal support for our healthcare, life sciences, food and beverage and
certain water businesses, and we may further narrow our presence in Russia depending on developments in the conflict or otherwise.
While our operations in Russia and areas experiencing conflict are not material to our business and financial results, the escalation of
these conflicts, or the imposition of additional sanctions by the United States, may also heighten many other risks disclosed in our report
on Form 10-K, any of which could materially and adversely affect our business and financial results. Such risks include, but are not
limited to, adverse effects on macroeconomic conditions, including increased inflation, constraints on the availability of commodities,
supply chain disruption and decreased business spending; disruptions to our or our business partners’ global technology infrastructure,
including through cyber-attack or cyber-intrusion; adverse changes in international trade policies and relations; claims, litigation and
regulatory enforcement; our ability to implement and execute our business strategy; terrorist activities; our exposure to foreign currency
fluctuations; reputational risk; and constraints, volatility, or disruption in the capital markets.
Additionally, changes in international trade policies by governments around the world, including the imposition or continuation of tariffs,
could materially and adversely affect our business. In 2018, the U.S. imposed tariffs on certain imports from China and other countries,
resulting in retaliatory tariffs by China and other countries. In February 2025, the U.S. proposed a 25% additional tariff on imports from
Canada and Mexico and a 10% additional tariff on imports from China. These tariffs, any new tariffs or policies imposed by governments
around the world, or any resulting retaliatory measures, to the extent implemented, could increase our costs, reduce our sales and
earnings or otherwise have an adverse effect on our operations.
Further, our operations outside the United States require us to comply with a number of United States and non-U.S. laws and regulations,
including anti-corruption laws such as the United States Foreign Corrupt Practices Act and the United Kingdom Bribery Act, as well as
U.S. and non-U.S. economic sanctions regulations. We have internal policies and procedures relating to such laws and regulations;
however, there is risk that such policies and procedures will not always protect us from the misconduct or reckless acts of employees or
representatives, particularly in the case of recently acquired operations that may not have significant training in applicable compliance
policies and procedures. Violations of such laws and regulations could result in disruptive investigations, significant fines and sanctions,
which could have a material adverse effect on our consolidated results of operations, financial position or cash flows.
Also, because of uncertainties regarding the interpretation and application of laws and regulations and the enforceability of intellectual
property and contract rights, we face risks in some countries that our intellectual property rights and contract rights would not be enforced
by local governments. We are also periodically faced with the risk of economic uncertainty, which has impacted our business in some
countries. Other risks in international business also include difficulties in staffing and managing local operations, including managing
credit risk to local customers and distributors.
Our overall success as a global business depends, in part, upon our ability to succeed in differing economic, social, legal and political
conditions. We may not continue to succeed in developing and implementing policies and strategies that are effective in each location
where we do business, which could have a material adverse effect on our consolidated results of operations, financial position or cash
flows.
We may experience business disruption if we fail to execute organizational change and management transitions.
Our continued success will depend on the efforts and abilities of our executive officers and certain other key employees, particularly
those with sales and sales management responsibilities, to drive business growth, development and profitability. Our operations could be
materially and adversely affected if for any reason we are unable to successfully execute organizational change and management
transitions at leadership levels.
We are subject to information technology system failures, network disruptions and breaches in data security.
We rely to a large extent upon information technology systems and infrastructure to operate our business. The size and complexity of our
information technology systems and those of strategic vendors make them vulnerable to failure, malicious intrusion and random attack.
Acquisitions have resulted in further de-centralization of systems and additional complexity in our systems infrastructure. Likewise, data
security breaches by employees or others with permitted access to our systems or to the systems of strategic vendors pose a risk that
sensitive data may be exposed to unauthorized persons or to the public. Geopolitical tensions or conflicts, such as Russia’s invasion of
Ukraine, may further heighten the risk of cybersecurity attacks. While we have continually matured our security program and capabilities
and have had no material incidents to date, cyber threats continue to evolve and there can be no assurance that our efforts will prevent
cybersecurity attacks or breaches in our systems or in the systems of strategic vendors, including cloud providers, that could cause
reputational damage, business disruption or legal and regulatory costs; could result in third-party claims; could result in compromise or
misappropriation of our intellectual property, trade secrets or sensitive information; or could otherwise materially adversely affect our
business, including our business strategy, results of operations, or financial condition. Certain of our customer offerings include digital
components, such as remote monitoring of certain customer operations. A breach of those remote monitoring systems could expose
customer data giving rise to potential third-party claims and reputational damage. There may be other related challenges and risks as we
complete implementation of our ERP system upgrade.
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Our results could be materially and adversely affected by difficulties in securing the supply of certain raw materials or by
fluctuations in the cost of raw materials.
The prices of raw materials used in our business fluctuate, and in recent years we have experienced periods of significant increased raw
material costs. Changes in raw material prices, unavailability of adequate and reasonably priced raw materials or substitutes for those
raw materials, or the inability to obtain or renew supply agreements on favorable terms has materially and adversely affected our
business and can in the future materially and adversely affect our consolidated results of operations, financial position or cash flows. In
addition, volatility and disruption in economic activity and conditions could disrupt or delay the performance of our suppliers and thus
impact our ability to obtain raw materials at favorable prices or on favorable terms, which may materially and adversely affect our
business.
Our increasing reliance on artificial intelligence (“AI”) technologies in our products, services, and operations presents several
risks that could adversely impact our business, financial condition, and results of operations.
We are increasingly incorporating AI capabilities into the development of technologies and our business operations, and into our products
and services. AI technology is complex and rapidly evolving, and may subject us to significant competitive, legal, regulatory, operational
and other risks, including the following:
•
Operational and Technical Risks: AI technologies are complex and rapidly evolving. Flaws in AI algorithms, training
methodologies, or datasets may lead to unintended consequences, such as operational disruptions, erroneous decision-
making, or data loss. These issues could impair the effectiveness of our AI systems and result in significant operational
challenges. Additionally, software we purchase or lease from third-party vendors could become inoperable (via attack
from a bad actor, network failure, code error, etc.), such that it adversely impacts Ecolab’s ability to deliver products or
services to its customers, resulting in financial losses, legal liabilities, and damages to our reputation.
•
Legal and Regulatory Risks: The legal and regulatory landscape for AI is still developing and varies across jurisdictions.
Compliance with evolving AI regulations may impose significant costs, limit our ability to incorporate AI capabilities, and
expose us to legal liabilities. Additionally, new regulations could conflict with our current AI practices, requiring costly
changes to our development and deployment strategies.
•
Reputational Risks: The use of AI raises social and ethical concerns, which could harm our reputation if not managed
responsibly. Incidents related to AI, such as biased outcomes or privacy breaches, could lead to negative publicity and
reduce public trust in our AI solutions.
•
Competitive Risks: Our competitors may develop and implement AI technologies more effectively, gaining a competitive
advantage. If we fail to keep pace with advancements in AI, our market position could be weakened, adversely affecting
our business performance.
•
Financial Risks: The development, testing, and deployment of AI systems are resource-intensive and may increase our
operational costs. There is no assurance that our investments in AI will yield the anticipated benefits or that customers will
adopt our AI-enhanced offerings, potentially impacting our financial results.
•
Cybersecurity Risks: AI systems can be vulnerable to cybersecurity threats, such as data breaches and unauthorized
access. These threats could result in financial losses, legal liabilities, and damage to our reputation.
We are committed to developing and using AI responsibly, but there can be no guarantee that we will successfully mitigate all associated
risks. Any failure in our AI initiatives could materially harm our business, financial condition, and results of operations.
Severe public health outbreaks not limited to COVID-19 may adversely impact our business.
The COVID-19 pandemic had a rapid and significant negative impact on the global economy, including a significant downturn in the
foodservice, hospitality and travel industries. Measures taken to alleviate the pandemic (such as stay-at-home orders and other
responsive measures) significantly impacted our restaurant and hospitality customers and negatively affected demand for our products
and services in these segments, resulting in a material adverse effect on our business and results of operations. Besides the COVID-19
pandemic, the United States and other countries have experienced, and may experience in the future, public health outbreaks such as
Zika virus, Avian Flu, SARS and H1N1 influenza. A prolonged occurrence of a contagious disease such as these could result in a
significant downturn in the foodservice, hospitality and travel industries and also may result in health or other government authorities
imposing restrictions on travel further impacting our end markets. Any of these events could result in a significant drop in demand for
some of our products and services and materially and adversely affect our business.
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Strategic Risks
If we are unsuccessful in integrating acquisitions our business could be materially and adversely affected.
We seek to acquire complementary businesses as part of our long-term strategy. There can be no assurance that we will find attractive
acquisition candidates or succeed at effectively managing the integration of acquired businesses. If the underlying business performance
of such acquired businesses deteriorates, the expected synergies from such transactions do not materialize or we fail to successfully
integrate new businesses into our existing businesses, our consolidated results of operations, financial position or cash flows could be
materially and adversely affected.
If we are unsuccessful in executing on key business initiatives, our business could be materially and adversely affected.
We continue to execute key business initiatives as part of our ongoing efforts to improve our efficiency and returns. In particular, we are
making supply chain investments to secure supply and add new capacity in our Life Sciences business. Additionally, we are continuing
implementation of our ERP system upgrades, which are expected to continue in phases over the next several years. These upgrades,
which include sales, supply chain and certain finance functions, are expected to improve the efficiency of certain financial and related
transactional processes. These upgrades involve complex business process design and a failure of certain of these processes could
result in business disruption. We are also undertaking restructuring programs including the One Ecolab initiative leveraging our digital
technologies to realign the functional work done in many countries into global centers of excellence. This program is discussed along with
other restructuring activities under Note 3 of this Form 10-K. If the projects in which we are investing or the initiatives which we are
pursuing are not successfully executed, our consolidated results of operations, financial position or cash flows could materially and
adversely be affected.
Our growth depends upon our ability to compete successfully with respect to value, innovation and customer support.
We have numerous global, national, regional and local competitors. Our ability to compete depends in part on providing high quality and
high value-added products, technology and service. We must also continue to identify, develop and commercialize innovative, profitable
and high value-added products for niche applications and commercial digital applications. We have made significant investments in
commercial digital product offerings, and our culture and expertise must continue to evolve to develop, support and profitably deploy
commercial digital offerings, which are becoming an increasingly important part of our business. There can be no assurance that we will
be able to accomplish our technology development goals or that technological developments by our competitors, including in the area of
artificial intelligence, will not place certain of our products, technology or services at a competitive disadvantage in the future. In addition,
certain of the new products that we have under development will be offered in markets in which we do not currently compete, and there
can be no assurance that we will be able to compete successfully in those new markets. If we fail to introduce new technologies or
commercialize our digital offerings on a timely and profitable basis, we may lose market share and our consolidated results of operations,
financial position or cash flows could be materially and adversely affected.
Consolidation of our customers and vendors could materially and adversely affect our results.
Customers and vendors in the foodservice, hospitality, travel, healthcare, energy, life sciences, food processing and pulp and paper
industries, as well as other industries we serve, have consolidated in recent years and that trend may continue. This consolidation could
have a material adverse impact on our ability to retain customers and on our pricing, margins and consolidated results of operations.
We enter into multi-year contracts with customers that could impact our results.
Our multi-year contracts with some of our customers include terms affecting our pricing flexibility. There can be no assurance that these
restraints will not have a material adverse impact on our margins and consolidated results of operations.
Legal, Regulatory & Compliance Risks
Our business depends on our ability to comply with laws and governmental regulations and meet our contractual commitments
and failure to do so could materially and adversely impact our business; and we may be materially and adversely affected by
changes in laws and regulations.
Our business is subject to numerous laws and regulations relating to the environment, including evolving climate change standards, and
to the manufacture, storage, distribution, sale and use of our products as well as to the conduct of our business generally, including
employment and labor laws and anti-corruption laws. Furthermore, increasing public and governmental awareness and concern
regarding the effects of climate change has led to significant legislative and regulatory efforts to limit greenhouse gas emissions and will
likely result in further environmental and climate change laws and regulations. Compliance with these laws and regulations exposes us to
potential financial liability and increases our operating costs. A violation of these laws and regulations could expose us to financial liability
that may have a material adverse effect on our results of operations and cash flows. Regulation of our products and operations continues
to increase with more stringent standards, causing increased costs of operations and potential for liability if a violation occurs. The
potential cost to us relating to environmental and product registration laws and regulations is uncertain due to factors such as the
unknown magnitude and type of possible contamination and clean-up costs, the complexity and evolving nature of laws and regulations,
and the timing and expense of compliance. Changes to current laws (including tax laws), regulations and policies could impose new
restrictions, costs or prohibitions on our current practices which would have a material adverse effect on our consolidated results of
operations, financial position or cash flows. Changes to labor and employment laws and regulations, as well as related rulings by courts
and administrative bodies, could materially and adversely affect our operations and expose us to potential financial liability.
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Defense of litigation, particularly certain types of actions such as antitrust, patent infringement, personal injury, product liability, breach of
contract, wage hour and class action lawsuits, can be costly and time consuming even if ultimately successful, and if not successful could
have a material adverse effect on our consolidated results of operations, financial position or cash flows.
A chemical spill or release could materially and adversely impact our business.
As a manufacturer and supplier of chemical products, there is a potential for chemicals to be accidentally spilled, released or discharged,
either in liquid or gaseous form, during production, transportation, storage or use. Such a release could result in environmental
contamination as well as a human or animal health hazard. Accordingly, such a release could have a material adverse effect on our
consolidated results of operations, financial position or cash flows.
Potential indemnification liabilities pursuant to the separation and split-off of our Upstream Energy business could materially
and adversely affect our business and financial statements.
With respect to the separation and subsequent split-off of our Upstream Energy business, we entered into a separation and distribution
agreement with ChampionX Holding Inc. and ChampionX Corporation (f/k/a Apergy Corporation and taken together with ChampionX
Holding Inc., “ChampionX”) as well as certain other agreements to govern the separation and related transactions and our relationship
with ChampionX going forward. These agreements provide for specific indemnity and certain other obligations of each party and could
lead to disputes between ChampionX and us. If we are required to indemnify ChampionX under the circumstances set forth in these
agreements, we may be subject to substantial related liabilities. In addition, with respect to the liabilities for which ChampionX has agreed
to indemnify us under these agreements, there can be no assurance that the indemnity rights we have against ChampionX will be
sufficient to protect us against the full amount of such liabilities, or that ChampionX will be able to fully satisfy its indemnification
obligations. Each of these risks could negatively affect our business and our consolidated results of operations, financial position or cash
flows could be materially and adversely affected.
Extraordinary events may significantly impact our business.
The occurrence of (a) litigation or claims, (b) the loss or insolvency of a major customer or distributor, (c) repeated or prolonged federal
government shutdowns or similar events, (d) war (including acts of terrorism or hostilities which impact our markets), (e) natural or
manmade disasters, (f) water shortages or (g) severe weather conditions affecting our operations or the energy, foodservice, hospitality
and travel industries may have a material adverse effect on our business.
While we have a diverse customer base and no customer or distributor constitutes 10 percent or more of our consolidated revenues, we
do have customers and independent, third-party distributors, the loss of which could have a material adverse effect on our consolidated
results of operations or cash flows for the affected earnings periods.
Government shutdowns can have a material adverse effect on our consolidated results of operations or cash flows by disrupting or
delaying new product launches, renewals of registrations for existing products and receipt of import or export licenses for raw materials or
products.
War (including acts of terrorism or hostilities), natural or manmade disasters, water shortages or severe weather conditions, including the
effects of climate change, affecting the energy, foodservice, hospitality, travel, health care, food processing, pulp and paper, mining, steel
and other industries can cause a downturn in the business of our customers, which in turn can have a material adverse effect on our
consolidated results of operations, financial position or cash flows. In particular, the U.S. Gulf Coast is a region with significant refining,
petrochemicals and chemicals operations which provide us raw materials, as well as being an important customer base for our Water
operating segment. Hurricanes or other severe weather events impacting the Gulf Coast, such as the winter freeze in Texas and the Gulf
Coast in February 2021, can materially and adversely affect our ability to obtain raw materials at reasonable cost, or at all, and could
adversely affect our business with our customers in the region.
Our commitments, goals, targets, objectives and initiatives related to sustainability, and our public statements and disclosures
regarding them, expose us to numerous risks.
We have developed, and will continue to establish, goals, targets, and other objectives related to sustainability matters, including our
sustainability goals in alignment with the United Nations Global Compact’s Business Ambition for 1.5⁰C and our commitments to science-
based targets addressing Scope 1, 2 and 3 GHG emissions, discussed in Item 1 of Part I of this Form 10-K, entitled “Business.”
Achieving these goals and commitments will require evolving our business, capital investment and the development of technology that
might not currently exist. We might incur additional expense or be required to recognize impairment charges in connection with our
efforts. These commitments, goals, targets and other objectives reflect our current plans and there is no guarantee that they will be
achieved. Our efforts to research, establish, accomplish, and accurately report on these commitments, goals, targets, and objectives
expose us to operational, reputational, financial, legal, and other risks. Our ability to achieve any stated commitment, goal, target, or
objective is subject to factors and conditions, many of which are outside of our control, including the pace of changes in technology, the
availability of requisite financing, and the availability of suppliers that can meet our sustainability and other standards.
Our business may face increased scrutiny from the investment community, other stakeholders, regulators, and the media related to our
sustainability activities, including our commitments, goals, targets, and objectives, and our methodologies and timelines for pursuing
them. If our sustainability practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our
reputation, our ability to attract or retain employees, and our attractiveness as an investment, business partner, or as an acquiror could
be negatively impacted. Similarly, our failure or perceived failure to pursue or fulfill our commitments, goals, targets, and objectives, to
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comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy reporting standards with respect to these
matters, within the timelines we announce, or at all, could have operational, reputational, financial and legal impacts.
Financial Risks
If the separation and split-off of our Upstream Energy business or certain internal transactions undertaken in anticipation of the
divestiture are determined to be taxable in whole or in part, we and our stockholders may incur significant tax liabilities.
In connection with the separation and split-off of our Upstream Energy business that was consummated on June 3, 2020, we obtained
opinions of outside tax counsel that the related merger and exchange offer will qualify as tax-free transactions to us and our stockholders,
except to the extent that cash was paid to Ecolab stockholders in lieu of fractional shares. We have not sought or obtained a ruling from
the Internal Revenue Service (“IRS”) on the tax consequences of these transactions. An opinion of counsel is not binding on the IRS or
the courts, which may disagree with the opinion. Even if the merger and exchange offer otherwise qualified as tax-free transactions, they
may become taxable to us if certain events occur that affect either Ecolab or ChampionX Corporation. While ChampionX Corporation has
agreed not to take certain actions that could cause the transactions not to qualify as tax-free transactions and is generally obligated to
indemnify us against any tax consequences if it breaches this agreement, the potential tax liabilities could have a material adverse effect
on us if we were not entitled to indemnification or if the indemnification obligations were not fulfilled. If the merger or exchange offer were
determined to be taxable, we could be subject to a substantial tax liability, and each U.S. holder of our common stock who participated in
the exchange offer could be treated as exchanging the Ecolab shares surrendered for ChampionX Corporation shares in a taxable
transaction.
Changes in tax laws and unanticipated tax liabilities could materially and adversely affect the taxes we pay and our profitability.
We are subject to income and other taxes in the United States and foreign jurisdictions, and our operations, plans and results are
affected by tax and other initiatives around the world. We are also impacted by actions taken to tax-related matters by associations such
as the Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, and the
European Commission which influence tax policies in countries where we operate. In particular, the OECD has coordinated negotiations
among more than 140 jurisdictions with the goal of achieving consensus on various substantial changes to the international tax
framework, including a 15% global minimum taxation regime (“Pillar Two”). Pillar Two took effect in several jurisdictions in which we
operate starting in 2024 and will increase the burden and costs of our tax compliance. We continue to monitor these legislative
developments, which based on information available, have not had material impacts to the 2024 financial statements. In addition, we are
impacted by settlements of pending or any future adjustments proposed by the IRS or other taxing authorities in connection with our tax
audits, all of which will depend on their timing, nature and scope. Increases in income tax rates, changes in income tax laws or
unfavorable resolution of tax matters could have a material adverse impact on our financial results.
Future events may impact our deferred tax position, including the utilization of foreign tax credits and undistributed earnings of
international affiliates that are considered to be reinvested indefinitely.
We evaluate the recoverability of deferred tax assets and the need for deferred tax liabilities based on available evidence. This process
involves significant management judgment about assumptions that are subject to change from period to period based on changes in tax
laws or variances between future projected operating performance and actual results. We are required to establish a valuation allowance
for deferred tax assets if we determine, based on available evidence at the time the determination is made, that it is more likely than not
that some portion or all of the deferred tax assets will not be realized. In making this determination, we evaluate all positive and negative
evidence as of the end of each reporting period. Future adjustments (either increases or decreases), to the deferred tax asset valuation
allowance are determined based upon changes in the expected realization of the net deferred tax assets. The realization of the deferred
tax assets ultimately depends on the existence of sufficient taxable income in either the carry-back or carry-forward periods under the tax
law. Due to significant estimates used to establish the valuation allowance and the potential for changes in facts and circumstances, it is
reasonably possible that we will be required to record adjustments to the valuation allowance in future reporting periods. Changes to the
valuation allowance or the amount of deferred tax liabilities could have a material adverse effect on our consolidated results of operations
or financial position. Further, should we change our assertion regarding the permanent reinvestment of the undistributed earnings of
international affiliates, a deferred tax liability may need to be established.
Our indebtedness may limit our operations and our use of our cash flow, and any failure to comply with the covenants that
apply to our indebtedness could materially and adversely affect our liquidity and financial statements.
As of December 31, 2024, we had approximately $7.6 billion in outstanding indebtedness, with approximately $1.5 billion in the form of
floating rate debt. Our debt level and related debt service obligations may have negative consequences, including:
•
requiring us to dedicate significant cash flow from operations to the payment of principal and interest on our debt, which
reduces the funds we have available for other purposes such as acquisitions and capital investment;
•
reducing our flexibility in planning for or reacting to changes in our business and market conditions;
•
exposing us to interest rate risk since a portion of our debt obligations are at variable rates. For example, a one percentage
point increase in the average interest rate on our floating rate debt at December 31, 2024 would increase future interest
expense by approximately $15 million per year; and
•
increasing our cost of funds and materially and adversely affecting our liquidity and access to the capital markets should we fail
to maintain the credit ratings assigned to us by independent rating agencies.
If we add new debt, the risks described above could increase.
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We incur significant expenses related to the amortization of intangible assets and may be required to report losses resulting
from the impairment of goodwill or other assets recorded in connection with the Nalco and Purolite transactions and other
acquisitions.
We expect to continue to complete selected acquisitions and joint venture transactions in the future. In connection with acquisition and
joint venture transactions, applicable accounting rules generally require the tangible and intangible assets of the acquired business to be
recorded on the balance sheet of the acquiring company at their fair values. Intangible assets other than goodwill are required to be
amortized over their estimated useful lives and this expense may be significant. Any excess in the purchase price paid by the acquiring
company over the fair value of tangible and intangible assets of the acquired business is recorded as goodwill. If it is later determined
that the anticipated future cash flows from the acquired business may be less than the carrying values of the assets and goodwill of the
acquired business, the assets or goodwill may be deemed to be impaired. In this case, the acquiring company may be required under
applicable accounting rules to write down the value of the assets or goodwill on its balance sheet to reflect the extent of the impairment.
This write-down of assets or goodwill is generally recognized as a non-cash expense in the statement of operations of the acquiring
company for the accounting period during which the write down occurs. As of December 31, 2024, we had goodwill of $7.9 billion which
is maintained in various reporting units, including goodwill from the Nalco and Purolite transactions. If we determine that any of the assets
or goodwill recorded in connection with the Nalco and Purolite transactions or any other prior or future acquisitions or joint venture
transactions have become impaired, we will be required to record a loss resulting from the impairment. Impairment losses could be
significant and could have a material adverse effect on our consolidated results of operations and financial position.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity.
Since 2014, when the Ecolab Cybersecurity program was established, we have continuously matured our cybersecurity program to
proactively address evolving cybersecurity trends and risks. Ecolab has an Information Security Steering Committee (“ISSC”), a cross-
functional team chaired by our Chief Information Security Officer (“CISO”).
Our CISO, who holds a CISO certification, has been our CISO since 2024 and has more than 25 years of information systems
experience in total, including in the financial services and defense sectors and the U.S. military, as well as serving in information security
and other information technology leadership positions at Ecolab since 2017.
Senior management provides in-depth reviews of cybersecurity matters to the Board and the Audit Committee. Cybersecurity is also
considered in the annual enterprise risk assessment presented to the Board by management as part of the Board’s oversight of our
enterprise risk management (“ERM”) program.
Ecolab’s cybersecurity policies, standards, processes, and practices are integrated into our ERM program and are based on recognized
frameworks established by the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework (“CSF”), the
International Organization for Standardization and other applicable industry standards. We are formally assessed by an independent third
party against NIST CSF and industry standards, including peer benchmarking.
Risk Management and Strategy
Cybersecurity presents strategic and operating risks and is an area of continued focus for our Board and management under its ERM
program. Ecolab’s cybersecurity program addresses the following key areas:
•
Governance: As discussed in more detail under the heading “Cybersecurity Governance,” the Audit Committee and the Board
of Directors provide oversight of cybersecurity risk management.
•
Technical Safeguards: We have implemented multi-layer controls designed to protect our information systems from
cybersecurity threats, including general, backup, recovery, resiliency, processing, access, change and risk controls. These
controls are evaluated by Ecolab’s cybersecurity team and enhanced through controls audits and assessments, internal
testing, and third-party cybersecurity threat intelligence.
•
Incident Response and Recovery Planning: We have established and maintain comprehensive cybersecurity incident
response and recovery plans that coordinate multidisciplinary internal teams and cybersecurity partners to assess, triage,
escalate, contain, mitigate, investigate, remediate, and recover from a potential cybersecurity incident. Through ongoing
communications with these teams, management monitors the incidents and reports incidents to the Audit Committee when
appropriate. Management is responsible for timely disclosure of cybersecurity incidents as required by law.
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23
•
Third-Party Risk Management: We maintain a risk-based approach to identify, monitor, and manage third-party cybersecurity
risks associated with our use of third-party service providers who have access to our systems, data or are critical to our
continued business operations. Additionally, cybersecurity considerations affect the selection and oversight of our third-party
service providers. We require certain third-party vendors to agree to manage their cybersecurity risks in specified ways, and to
agree to be subject to cybersecurity audits, which we conduct as appropriate.
•
Education and Awareness: We provide training for personnel regarding cybersecurity trends and threats to equip them with
the knowledge to recognize and tools to report suspected cybersecurity threats. We also conduct simulations for employees
and contractors to enhance awareness and responsiveness to such possible threats. In addition, we send global cybersecurity
awareness communications to our personnel.
•
Assessment: We engage in the periodic assessment, testing and updating of our policies, standards, processes, and
practices that are designed to address cybersecurity threats and incidents. These efforts include a wide range of activities,
including audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on
evaluating the effectiveness of our cybersecurity measures, and planning. We engage third parties to perform assessments on
our cybersecurity measures, including information security maturity assessments, audits and independent reviews of our
information security control environment and operating effectiveness. Additionally, we leverage third party cybersecurity rating
agency data to inform our assessment of risk. The results of such assessments, audits and reviews are reported to the Audit
Committee and the Board.
While we have continually matured our security program and capabilities and have had no material incidents to date, cyber threats
continue to evolve and there can be no assurance that our efforts will prevent cybersecurity attacks or breaches in our systems such as
those described in the risk factor entitled, “We are subject to information technology system failures, network disruptions and breaches in
data security” under “Item 1A. Risk Factors” of this Form 10-K.
Cybersecurity Governance
Ecolab’s ISSC, chaired by our CISO, meets as needed. The Committee is comprised of executive leaders including the Executive Vice
President and General Manager - Ecolab Digital (“EVP & GM Digital”), the Senior Vice President IT Enterprise Operations, the Chief
Operating Officer, the Chief Financial Officer, the Chief Technical Officer, the General Counsel, the Executive Vice Presidents of our
commercial divisions, the Executive Vice President Global Supply Chain, the Executive Vice President Human Resources, the Vice
President of Global Business Transformation, and the Vice President Internal Audit.
The ISSC assists the CISO in fulfilling our responsibilities regarding our information security program to protect the confidentiality,
integrity and availability of our information assets, financial assets, and information systems. ISSC responsibilities include, but are not
limited to, evaluation of relevant information security risks, prioritization of information security initiatives, determination of, and advocacy
for, appropriate investments, review of related legal and regulatory compliance initiatives, review of effective security communication
initiatives, establishing specific requirements of the program in documented policies which all Ecolab associates, customers, and partners
are obligated to follow, partner with Ecolab’s business, functional and regional leaders to ensure effective, risk-based security controls
and practices are in place to achieve the program’s intent, and assist in monitoring the integrity and evaluating the effectiveness of the
program.
The Board, in coordination with the Audit Committee, provides oversight of our ERM program, including the management of risks arising
from cybersecurity threats. The Board receives an overview from our EVP & GM Digital and the Audit Committee receives reports from
our CISO regarding our cybersecurity threat risk management and strategy processes. These reports cover a wide range of topics, and
may include current and emerging cybersecurity threat risks, third-party assessments, risk-mitigation tactics and programs, information
security considerations arising with respect to our peers and third parties, and our incident response plan.
Through a risk-based approach consistent with Ecolab’s ERM framework, the CISO identifies cyber incidents that are brought forward to
a cross-functional cyber-incident response team including our CEO, CFO, EVP & GM Digital, General Counsel, CISO and Executive Vice
President Supply Chain. This cyber incident response team, or, in the event of more minor incidents, the CISO and his team, takes steps
to promptly assess and address the incident, including engaging third parties according to pre-established guidelines. The Board and the
Audit Committee also receive prompt and timely information regarding any cybersecurity incident that meets established reporting
thresholds, including ongoing updates regarding any such incident until it has been addressed.
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24
Item 2. Properties.
We operate 32 manufacturing facilities in 14 states in the U.S. Internationally, we operate 67 manufacturing facilities in 37 countries. We
own most of our manufacturing locations. Our manufacturing philosophy is to manufacture products wherever an economic, process or
quality assurance advantage exists or where proprietary manufacturing techniques dictate in-house production. Currently, most products
that we sell are manufactured at our facilities. We position our manufacturing locations and warehouses in a manner to permit ready
access to our customers. In general, manufacturing facilities located in the United States serve our U.S. markets and facilities located
outside of the United States serve our international markets. However, most of the United States facilities do manufacture products for
export. Many of our properties are used by multiple segments.
Our manufacturing facilities produce chemical products as well as medical devices and equipment for all our operating segments,
although Pest Elimination purchases the majority of their products and equipment from outside suppliers. Our chemical production
process consists of blending purchased raw materials into finished products in powder, liquid, and solid form. Additionally, intermediates
from reaction chemistries are used in some of the blends and are also packaged directly into finished goods. Our devices and equipment
manufacturing operations consist of producing chemical product dispensers and injectors and other mechanical equipment, medical
devices, dishwasher racks, related sundries, dish machine refurbishment and water monitoring and maintenance equipment system from
purchased components and subassemblies.
Generally, our manufacturing facilities are adequate to meet our existing in-house production needs. We continue to invest in our plant
sites to maintain viable operations and to add capacity as necessary to meet business imperatives.
Most of our manufacturing plants also serve as distribution centers. In addition, we operate distribution centers around the world, most of
which are leased, and utilize third party logistics service providers to facilitate the distribution of our products and services.
Our corporate headquarters is comprised of a 17-story building that we own in St. Paul, Minnesota. We also own a 115-acre campus in
Eagan, Minnesota that houses a significant research and development center and training facilities as well as several of our
administrative functions. We also have a significant business presence in Naperville, Illinois, where our Water and Paper operating
segments maintain their principal administrative offices and research center, as well as in Greensboro, North Carolina, where our
Specialty operating segment maintains its principal administrative offices and a research center. Our Water operating segment leases
administrative and research facilities in Houston, Texas. Our Life Sciences operating segment maintains leased and owned facilities in
the greater King of Prussia, PA area for administrative functions, and research and development.
Significant regional administrative and/or research facilities are located in Campinas, Brazil; Leiden, Netherlands, which we own; and in
Bangalore, India; Dubai, UAE; Monheim, Germany; Pune, India; Singapore; Shanghai, China; and Zurich, Switzerland, which we lease.
We also have a network of small leased sales offices in the United States and, to a lesser extent, in other parts of the world.
Item 3. Legal Proceedings.
Discussion of legal proceedings is incorporated by reference from Part II, Item 8, Note 15, “Commitments and Contingencies,” of this
Form 10-K and should be considered an integral part of Part I, Item 3, “Legal Proceedings.”
Discussion of other environmental-related legal proceedings is incorporated by reference from Part I, Item 1 above, under the heading
“Environmental and Regulatory Considerations.”
In accordance with 17 CFR § 229.103(c)(iii)(3), we have established a threshold of $1 million for reporting potential monetary sanctions
relating to administrative or judicial proceedings brought by a governmental authority under any Federal, State, or local provisions that
have been enacted or adopted regulating the discharge of materials into the environment or primarily for the purpose of protecting the
environment. We have no such proceedings exceeding this threshold to report.
Item 4. Mine Safety Disclosures.
Not applicable.
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25
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Market Information
Our common stock is listed on the New York Stock Exchange under the symbol “ECL.” Our common stock is also traded on an unlisted
basis on certain other United States exchanges.
Holders
On January 31, 2025, we had 4,561 holders of record of our Common Stock.
Issuer Purchases of Equity Securities
Total number of shares
Maximum number of
purchased as part of
shares that may yet be
Total number of
Average price paid
publicly announced
purchased under the
Period
shares purchased
per share
plans or programs (1)
plans or programs (1)
October 1-31, 2024
-
$-
-
8,781,585
November 1-30, 2024
-
-
-
8,781,585
December 1-31, 2024
-
-
-
8,781,585
Total
-
$-
-
8,781,585
(1) As announced on November 3, 2022, our Board of Directors authorized the repurchase of up to 10,000,000 common shares.
Subject to market conditions, we expect to repurchase all shares under this authorization, for which no expiration date has been
established, in open market or privately negotiated transactions, including pursuant to Rule 10b5-1 and accelerated share
repurchase program.
Item 6. [Reserved].
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26
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following management discussion and analysis (“MD&A”) provides information that we believe is useful in understanding our
operating results, cash flows and financial condition. We provide quantitative information about the material sales drivers including the
impact of changes in volume and pricing and the effect of acquisitions and changes in foreign currency at the corporate and reportable
segment level. We also provide quantitative information regarding special (gains) and charges, discrete tax items and other significant
factors we believe are useful for understanding our results. Such quantitative drivers are supported by comments meant to be qualitative
in nature. Qualitative factors are generally ordered based on estimated significance.
The discussion should be read in conjunction with the consolidated financial statements and related notes included in this Form 10-K.
Our consolidated financial statements are prepared in accordance with U.S. GAAP. This discussion contains various Non-GAAP
Financial Measures and also contains various forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995. We refer readers to the statements and information set forth in the sections entitled “Non-GAAP Financial Measures” at the
end of this MD&A, and “Forward-Looking Statements” and “Risk Factors” within Items 1 and 1A of this Form 10-K. We also refer readers
to the tables within the section entitled “Results of Operations” of this MD&A for reconciliation information of Non-GAAP measures to U.S.
GAAP.
Comparability of Results
Impact of Acquisitions and Divestitures
Our non-GAAP financial measures for organic sales, organic operating income and organic operating income margin are at fixed
currency and exclude the impact of special (gains) and charges, the results of our acquired businesses from the first twelve months post
acquisition and the results of divested businesses from the twelve months prior to divestiture. As part of the separation of ChampionX in
2020, we entered into an agreement with ChampionX to provide, receive or transfer certain products for a transitionary period.
Transitionary period sales of product to ChampionX under this agreement are recorded in product and equipment sales in the Corporate
segment along with the related cost of sales. The remaining sales to ChampionX are recorded in product and equipment sales in the
Global Industrial segment along with the related cost of sales. Further, due to the sale of the global surgical solutions business on August
1, 2024, we have excluded the results of the business for August through December 2023 from these organic measures for the year
ended December 31, 2023 to remain comparable to the corresponding period in 2024. These transactions are removed from the
consolidated results as part of the calculation of the impact of acquisitions and divestitures.
Comparability of Reportable Segments
Effective January 1, 2024, the former Textile Care and Colloidal Technologies Group (“CTG”) operating segments are now part of the
Water operating segment which continues to remain in the Global Industrial reportable segment. Additionally, the Pest Elimination
operating segment, formerly aggregated with the Textile Care and CTG operating segments within Other, is now reported as the stand-
alone Global Pest Elimination reportable segment. We made other immaterial changes, including the movement of certain customers and
cost allocations between reportable segments. After these changes, we have eight operating segments.
Fixed Currency Foreign Exchange Rates
Management evaluates the sales and operating income performance of our non-U.S. dollar functional currency international operations
based on fixed currency exchange rates, which eliminate the impact of exchange rate fluctuations on our international operations. Fixed
currency amounts are updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange
rates established by management, with all periods presented using such rates. Public currency rate data provided within the “Segment
Performance” section of this MD&A reflect amounts translated at actual public average rates of exchange prevailing during the
corresponding period and is provided for informational purposes only.
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27
EXECUTIVE SUMMARY
In 2024, we delivered record sales, operating income margin, free cash flow, and adjusted diluted earnings per share. Our team
generated high single digit sales growth in Institutional & Specialty and Pest Elimination while Industrial and Healthcare and Life
Sciences generated good sales growth. Operating income grew by strong double digits, as strong value pricing, lower delivered product
costs, and higher volumes overcame investments in the business.
Sales
Reported sales increased 3% to $15.7 billion in 2024 from $15.3 billion in 2023. When measured in fixed rates of foreign currency
exchange, fixed currency sales increased 3% compared to the prior year. Organic sales increased 4% compared to the prior year.
Gross Margin
Our reported gross margin was 43.5% of sales for 2024, compared to our 2023 reported gross margin of 40.2%. Excluding the impact of
special (gains) and charges included in cost of sales, our adjusted gross margin was 43.5% in 2024 and 40.4% in 2023. Our gross profit
increase reflected strong value pricing and lower delivered product costs.
Operating Income
Reported operating income increased 41% to $2.8 billion in 2024, compared to $2.0 billion in 2023. Adjusted operating income, excluding
the impact of special (gains) and charges increased 23% in 2024 as strong value pricing, lower delivered product costs, and higher
volumes were partially offset by investments in the business. Organic operating income increased 26% in 2024.
Earnings from Continuing Operations Attributable to Ecolab Per Common Share (“EPS”)
Reported diluted EPS increased 54% to $7.37 in 2024 compared to $4.79 in 2023. Special (gains) and charges had an impact on both
years. Special (gains) and charges in 2024 were driven primarily by the gain on sale of the global surgical solutions business and
restructuring expense and 2023 were driven primarily by restructuring expense. Adjusted diluted EPS, which excludes the impact of
special (gains) and charges and discrete tax items increased 28% to $6.65 in 2024 compared to $5.21 in 2023 which reflected solid
organic sales growth, lower delivered product costs and continued investments in the business.
Balance Sheet
We remain committed to maintaining “A” range ratings metrics over the long-term, supported by our current credit ratings of A-/A3/A- by
Standard & Poor’s, Moody’s Investor Services and Fitch, respectively. Our strong balance sheet has allowed us continued access to
capital at attractive rates.
Cash Flow
Cash flow from operating activities was $2.8 billion in 2024 compared to $2.4 billion in 2023. We continued to generate strong cash flow
from operations, allowing us to fund our ongoing operations, investments in our business, acquisitions, debt repayments, pension
obligations and return cash to our shareholders through share repurchases and dividend payments.
Dividends
Dividends declared per common share in 2024 was $2.36 per share. In December 2024 we increased our quarterly cash dividend by
14% to $0.65 per share, representing our 33rd consecutive annual dividend rate increase. We have paid cash dividends on our common
shares for 88 consecutive years. Our outstanding dividend history reflects our long-term growth and development, strong cash flows,
solid financial position and confidence in our business prospects for the years ahead.
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28
CRITICAL ACCOUNTING ESTIMATES
Our consolidated financial statements are prepared in accordance with U.S. GAAP. We have adopted various accounting policies to
prepare the consolidated financial statements in accordance with U.S. GAAP. Our significant accounting policies are disclosed in Note 2
of the Notes to the Consolidated Financial Statements (“Notes”).
Preparation of our consolidated financial statements, in conformity with U.S. GAAP, requires us to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are considered to be critical if
they meet both of the following criteria: (1) the estimate requires assumptions to be made about matters that are highly uncertain at the
time the accounting estimate is made, and (2) different estimates that we reasonably could have used for the accounting estimate in the
current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, have a material impact on
the presentation of our financial condition or results of operations.
Besides estimates that meet the “critical” estimate criteria, we make many other accounting estimates in preparing our financial
statements and related disclosures. All estimates, whether or not deemed critical, affect reported amounts of assets, liabilities, revenues
or expenses as well as disclosures of contingent assets and liabilities. Estimates are based on experience and other information
available prior to the issuance of the financial statements. Materially different results can occur as circumstances change and additional
information becomes known, even from estimates not deemed critical. Our critical accounting estimates include the following:
Revenue Recognition
Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service.
Revenue from product and sold equipment is recognized when obligations under the terms of a contract with the customer are satisfied,
which generally occurs with the transfer of the product or delivery of the equipment. Revenue from service and leased equipment is
recognized when the services are provided, or the customer receives the benefit from the leased equipment, which is over time. Service
revenue is recognized over time utilizing an input method and aligns with when the services are provided. Typically, revenue is
recognized over time using costs incurred to date because the effort provided by the field selling and service organization represents
services provided, which corresponds with the transfer of control. Revenue for leased equipment is accounted for under Topic 842
Leases and recognized on a straight-line basis over the length of the lease contract.
Our revenue policies do not provide for general rights of return. We record estimated reductions to revenue for customer programs and
incentive offerings including pricing arrangements, promotions and other volume-based incentives based primarily on historical
experience and anticipated performance over the contract period. Depending on market conditions, we may increase customer incentive
offerings, which could reduce gross profit margins over the term of the incentive. We also record estimated reserves for product returns
and credits based on specific circumstances and credit conditions. We record an allowance for uncollectible accounts based on our
estimates of expected future credit losses.
The revenue standard can be applied to a portfolio of contracts with similar characteristics if it is reasonable that the effects of applying
the standard at the portfolio would not be significantly different than applying the standard at the individual contract level. We apply the
portfolio approach primarily within each operating segment by geographical region. Application of the portfolio approach was focused on
those characteristics that have the most significant accounting consequences in terms of their effect on the timing of revenue recognition
or the amount of revenue recognized. We determined the key criteria to assess with respect to the portfolio approach, including the
related deliverables, the characteristics of the customers and the timing and transfer of goods and services, which most closely aligned
within the operating segments. In addition, the accountability for the business operations, as well as the operational decisions on how to
go to market and the product offerings, are performed at the operating segment level. For additional information on revenue recognition,
refer to Note 17.
Litigation and Environmental Liabilities
Our business and operations are subject to extensive environmental laws and regulations governing, among other things, air emissions,
wastewater discharges, the use and handling of hazardous substances, waste disposal and the investigation and remediation of soil and
groundwater contamination. Some risk of environmental liability is inherent in our operations.
We record liabilities related to pending litigation, environmental claims and other contingencies when a loss is probable and can be
reasonably estimated. Estimates used to record such liabilities are based on our best estimate of probable future costs. We record the
amounts that represent the points in the range of estimates that we believe are most probable or the minimum amount when no amount
within the range is a better estimate than any other amount. Potential insurance reimbursements generally are not anticipated in our
accruals for environmental liabilities or other insured losses. Expected insurance proceeds are recorded as receivables when recovery is
deemed certain. While the final resolution of litigation and environmental contingencies could result in amounts different than current
accruals, and therefore have an impact on our consolidated financial results in a future reporting period, we believe the ultimate outcome
will not have a significant impact on our consolidated financial position. For additional information on our commitments and
contingencies, refer to Note 15.
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29
Actuarially Determined Liabilities
Pension and Postretirement Healthcare Benefit Plans
The measurement of our pension and postretirement benefit obligations are dependent on a variety of assumptions determined by
management and used by our actuaries in their valuations and calculations. These assumptions affect the amount and timing of future
pension contributions, benefit payments and expense or income recognized.
The significant assumptions used in developing the required estimates are the discount rates, expected returns on assets, projected
salary and health care cost increases and mortality tables.
•
The discount rate assumptions for our U.S. plans are assessed using a yield curve constructed from a subset of bonds yielding
greater than the median return from a population of non-callable, corporate bonds that have an average rating of AA when
averaging available Moody’s Investor Services, Standard & Poor’s and Fitch ratings. The discount rates are calculated by matching
each plans’ projected cash flows to the bond yield curve. For 2024 and 2023, we measured service and interest costs by applying
the specific spot rates along that yield curve to the plans’ liability cash flows. We believe this approach provides a more precise
measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on
the yield curve. In determining our U.S. pension obligations and U.S. postretirement health care obligation for 2024, our weighted-
average discount rate increased to 5.58% from 4.95% at year-end 2023.
•
The expected rate of return on plan assets reflects asset allocations, investment strategies and views of investment advisors, and
represents our expected long-term return on plan assets. Our weighted-average expected returns on U.S. plan assets used in
determining the U.S. pension and U.S. postretirement health care expenses was 8.00% for 2024, 7.75% for 2023 and 7.00% for
2022.
•
Projected salary is based on our long-term actual experience, the near-term outlook and assumed inflation. Our weighted-average
projected salary increase used in determining the U.S. pension expenses was 3.60% for 2024 and 4.03% for 2023 and 2022.
•
For postretirement benefit measurement purposes as of December 31, 2024, the annual rates of increase in the per capita cost of
covered health care were assumed to be 8.59% for pre-65 costs. Post-65 costs are no longer used. The rates are assumed to
decrease each year until they reach 4.5% in 2035 and remain at those levels thereafter.
•
We use mortality tables appropriate in the circumstances, which generally are the recently available mortality tables as of the
respective U.S. and international measurement dates. Our year-end U.S. valuations reflect mortality tables that estimate the impacts
of COVID in an endemic state. This represents a change from prior year when the impact of COVID on future mortality could not be
reasonably estimated.
The effects of actual results differing from our assumptions, as well as changes in assumptions, are reflected in the unrecognized gains
or losses and amortized into earnings in the future. Significant differences in actual experience or significant changes in assumptions
may materially affect future pension and other postretirement obligations and income or expense. The unrecognized net losses on our
U.S. qualified and non-qualified pension plans increased to $526 million as of December 31, 2024, from $495 million as of December 31,
2023 (both before tax), primarily due to lower actual return on assets partially offset by current year net actuarial gains.
The effect of a decrease in the discount rate or in the expected return on assets assumption as of December 31, 2024, on the December
31, 2024 defined benefit obligation and 2025 expense is shown below, assuming no changes in benefit levels. Expense amounts reflect
the accounting for gains or losses as a component of other comprehensive income or expense and recognition of the impacts into
earnings over time:
Effect on U.S. Pension Plans
Increase in
Higher
Assumption
Recorded
2025
(millions)
Change
Obligation
Expense
Discount rate
-.25 pts
$33.5
$2.5
Expected return on assets
-.25 pts
N/A
4.6
Effect on U.S. Postretirement
Health Care Benefits Plans
Increase in
Higher
Assumption
Recorded
2025
(millions)
Change
Obligation
Expense
Discount rate
-.25 pts $2.0
$-
Expected return on assets
-.25 pts
N/A
-
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30
Our international pension obligations and underlying plan assets represent approximately one third of our global pension plans, with the
majority of the amounts held in the U.K. and Eurozone countries. We use assumptions similar to our U.S. plan assumptions to measure
our international pension obligations, however, the assumptions used vary by country based on specific local country requirements and
information.
Refer to Note 16 for further discussion concerning our accounting policies, estimates, funded status, contributions and overall financial
positions of our pension and postretirement plan obligations.
Self-Insurance
Globally we have insurance policies with varying deductible levels for property and casualty losses. We are insured for losses in excess
of these deductibles, subject to policy terms and conditions and have recorded both a liability and an offsetting receivable for amounts in
excess of these deductibles. We are self-insured for health care claims for eligible participating employees, subject to certain deductibles
and limitations. We determine our liabilities for claims on an actuarial basis.
Income Taxes
Judgment is required to determine the annual effective income tax rate, deferred tax assets and liabilities, valuation allowances recorded
against net deferred tax assets and unrecognized tax benefits.
Effective Income Tax Rate
Our effective income tax rate is based on annual income, statutory tax rates and tax planning available in the various jurisdictions in
which we operate. Our annual effective income tax rate includes the impact of unrecognized tax benefits. We recognize the amount of tax
benefit that is greater than 50% likely of being realized upon settlement with a taxing authority. We adjust these liabilities for
unrecognized tax benefits in light of changing facts and circumstances.
Tax regulations require items to be included in our tax returns at different times than the items are reflected in our financial statements.
As a result, the effective income tax rate reflected in our financial statements differs from that reported in our tax returns. Some of these
differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as
depreciation expense.
Deferred Tax Assets and Liabilities and Valuation Allowances
Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets
and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. Based on
the evaluation of available evidence, both positive and negative, we recognize tax assets, such as net operating loss carryforwards and
tax credit carryforwards, to the extent that realizing these benefits is considered to be more likely than not. Relevant factors in
determining the realizability of deferred tax assets include historical results, sources of future taxable income, the expected timing of the
reversal of temporary differences, tax planning strategies and the expiration dates of the various tax attributes.
Unrecognized Tax Benefits
A number of years may elapse before a particular tax matter, for which we have established a liability for unrecognized tax benefits, is
audited and finally resolved. The number of tax years with open tax audits varies depending on the tax jurisdiction. The Internal Revenue
Service (“IRS”) has completed examinations of our U.S. federal income tax returns through 2018 and the years 2019 through 2020 are
currently under audit. In addition to the U.S. federal examinations, we have ongoing audit activity in several U.S. state and foreign
jurisdictions.
The tax positions we take are based on our interpretations of tax laws and regulations in the applicable federal, state and international
jurisdictions. We believe our tax returns properly reflect the tax consequences of our operations, and our liabilities for unrecognized tax
benefits are appropriate and sufficient for the positions taken. Because of the uncertainty of the final outcome of these examinations, we
have established a liability for potential reductions of tax benefits (including related interest and penalties) for amounts that do not meet
the more-likely-than-not thresholds for recognition and measurement as required by authoritative guidance. The liability for unrecognized
tax benefits is reviewed throughout the year, taking into account new legislation, regulations, case law and audit results. Settlement of
any particular issue could result in offsets to other balance sheet accounts, cash payments or receipts and/or adjustments to tax
expense. Liabilities for unrecognized tax benefits are presented in the Consolidated Balance Sheets within other non-current liabilities.
Our gross liability for unrecognized tax benefits was $34.1 million and $24.2 million as of December 31, 2024 and 2023, respectively. For
additional information on income taxes refer to Note 12.
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31
Long-Lived Assets, Intangible Assets and Goodwill
Long-Lived and Amortizable Intangible Assets
Purchased long-lived and amortizable intangible assets not acquired as part of a business combination are recorded as of their
acquisition date at cost, whereas long-lived and amortizable assets acquired as part of a business combination are recorded as of their
acquisition date at their fair values based on the fair value requirements defined in U.S. GAAP. This requires us to make significant
estimates and assumptions relating to the present value of its future cash flows, such as growth rates, royalty rates or discount rates.
We review our long-lived and amortizable intangible assets, the net value of which was $6.5 billion and $6.3 billion as of December 31,
2024 and 2023, respectively, for impairment when significant events or changes in business circumstances indicate that the carrying
amount of the assets may not be recoverable. Such circumstances may include a significant decrease in the market price of an asset or
asset group, a significant adverse change in the manner in which asset or asset groups are being used or history of operating or cash
flow losses associated with the use of the asset or asset group. Impairment losses could occur when the carrying amount of an asset or
asset group exceeds the anticipated future undiscounted cash flows expected to result from the use of the asset or asset group and its
eventual disposition. The amount of the impairment loss to be recorded, if any, is calculated as the excess of the asset’s or assets
group’s carrying amount over its estimated fair value.
We use the straight-line method to recognize amortization expense related to our amortizable intangible assets, including our customer
relationships. We consider various factors when determining the appropriate method of amortization for our customer relationships,
including projected sales data, customer attrition rates and length of key customer relationships.
Globally, we have a broad customer base. Our retention rate of significant customers has aligned with our acquisition assumptions,
including the customer bases acquired from our Nalco, Laboratoires Anios (“Anios”), Copal Invest NV, including its primary operating
entity CID Lines (collectively, “CID Lines”) and Purolite transactions, which make up the majority of our unamortized customer
relationships. Our historical retention rates, coupled with our consistent track record of keeping long-term relationships with our
customers, supports our expectation of consistent sales generation for the foreseeable future from the acquired customer bases. If our
customer retention rates or other post-acquisition operational activities change materially, we would evaluate the financial impacts and
significance of the events given rise to the change which could result in impairment of our customer relationship intangible assets, or
absent an impairment, an acceleration of amortization expense.
In addition, we periodically reassess the estimated remaining useful lives of our long-lived and amortizable intangible assets. Changes to
estimated useful lives would impact the amount of depreciation and amortization expense recorded in earnings. We have experienced no
significant changes in the carrying amount or estimated remaining useful lives of our long-lived or amortizable intangible assets.
Goodwill and Indefinite Life Intangible Assets
Goodwill arises from our acquisitions and represents the excess of the fair value of the purchase consideration exchanged over the fair
value of net assets acquired. We had total goodwill of $7.9 billion and $8.1 billion as of December 31, 2024 and 2023, respectively. We
test our goodwill for impairment at the reporting unit level. Our reporting units are our eight operating segments. We assess goodwill for
impairment on an annual basis during the second quarter. If circumstances change or events occur that demonstrate it is more likely than
not that the carrying amount of a reporting unit exceeds its fair value, we complete an interim goodwill impairment assessment of that
reporting unit prior to the next annual assessment. If the results of an annual or interim goodwill impairment assessment demonstrate the
carrying amount of a reporting unit is greater than its fair value, we will recognize an impairment loss for the amount by which the
reporting unit’s carrying amount exceeds its fair value, but not to exceed the carrying amount of goodwill assigned to that reporting unit.
For our annual 2024 goodwill impairment assessment, we completed our impairment assessment for our eight reporting units using
discounted cash flow analyses that incorporated assumptions regarding future growth rates, terminal values and discount rates. Our
goodwill impairment assessments for 2024 indicated the estimated fair values of each of these eight reporting units exceeded the
carrying amounts of the respective reporting units by a significant margin. No events were noted during the second half of 2024 that
required completion of an interim goodwill impairment assessment in the second half of 2024 for any of our eight reporting units. There
has been no impairment of goodwill in any of the periods presented.
The Nalco trade name is our only indefinite life intangible asset, which is tested for impairment on an annual basis during the second
quarter. For our annual 2024 indefinite life intangible asset impairment assessment, we completed our impairment assessment of the
Nalco trade name using the relief from royalty discounted cash flow method, which incorporates assumptions regarding future sales
projections, royalty rates and discount rates. Our Nalco tradename impairment assessment for 2024 indicated the estimated fair value of
the Nalco trade name exceeded its $1.2 billion carrying amount by a significant margin. No events were noted during the second half of
2024 that required completion of an interim impairment assessment of our Nalco trade name in the second half of 2024. There has been
no impairment of the Nalco trade name intangible since it was acquired.
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32
RESULTS OF OPERATIONS
Net Sales
Percent Change
(millions)
2024
2023
2022
2024
2023
Product and equipment sales
$12,473.6
$12,316.8
$11,446.2
Service and lease sales
3,267.8
3,003.4
2,741.6
Reported GAAP net sales
15,741.4
15,320.2
14,187.8
3 %
8 %
Effect of foreign currency translation
131.6
55.3
5.0
Non-GAAP adjusted fixed currency sales
15,873.0
15,375.5
14,192.8
3 %
8 %
Effect of acquisitions and divestitures
(131.5)
(252.5)
*
Non-GAAP organic sales
$15,741.5
$15,123.0
*
4 %
*
* Not meaningful
The percentage components of the year-over-year sales change are shown below:
(percent)
2024
2023
Volume
2 %
* %
Price changes
2
*
Organic sales change
4
*
Acquisitions and divestitures
(1)
*
Fixed currency sales change
3
8
Foreign currency translation
-
-
Reported GAAP net sales change
3 %
8 %
* Not meaningful
Amounts do not necessarily sum due to rounding.
Cost of Sales (“COS”) and Gross Profit Margin (“Gross Margin”)
2024
2023
2022
Gross
Gross
Gross
(millions/percent)
COS
Margin
COS
Margin
COS
Margin
Product and equipment cost of sales
$6,990.0
$7,389.2
$7,212.8
Service and lease cost of sales
1,909.7
1,765.7
1,618.2
Reported GAAP COS and gross margin
8,899.7
43.5 % 9,154.9
40.2 % 8,831.0
37.8 %
Special (gains) and charges
5.3
22.5
69.9
Non-GAAP adjusted COS and gross margin
$8,894.4
43.5 % $9,132.4
40.4 % $8,761.1
38.2 %
Our COS values and corresponding gross margin are shown above. Our gross margin is defined as sales less cost of sales divided by
sales.
Our reported gross margin was 43.5%, 40.2%, and 37.8% for 2024, 2023 and 2022, respectively. Our 2024, 2023 and 2022 reported
gross margins were negatively impacted by special (gains) and charges of $5.3 million, $22.5 million, and $69.9 million, respectively.
Special (gains) and charges items impacting COS are shown within the “Special (Gains) and Charges” table below.
Excluding the impact of special (gains) and charges, our 2024 adjusted gross margin was 43.5% compared against a 2023 adjusted
gross margin of 40.4%. Our adjusted gross margin increased when comparing 2024 against 2023 reflecting strong value pricing and
lower delivered product costs.
Excluding the impact of special (gains) and charges, our adjusted gross margin was 40.4% and 38.2% for 2023 and 2022, respectively.
The increase primarily reflected accelerating value pricing that overcame higher supply chain costs.
Selling, General and Administrative Expenses (“SG&A”)
(percent)
2024
2023
2022
SG&A Ratio
26.9 %
26.5 %
25.8 %
The increased SG&A ratio (SG&A expenses as a percentage of reported net sales) comparing 2024 against 2023 was driven by growth-
oriented investments in the business which was partially offset by sales productivity. The increased SG&A ratio (SG&A expenses as a
percentage of reported net sales) comparing 2023 against 2022 was driven by higher incentive compensation compared to last year
which was partially offset by strong productivity including cost savings initiatives.
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33
Special (Gains) and Charges
Special (gains) and charges reported on the Consolidated Statements of Income included the following items:
(millions)
2024
2023
2022
Cost of sales
One Ecolab
$1.9
$-
$-
Other restructuring
3.4
22.5
21.4
Acquisition and integration activities
-
-
25.0
Other
-
-
23.5
Cost of sales subtotal
5.3
22.5
69.9
Special (gains) and charges
One Ecolab
98.3
-
-
Other restructuring
21.8
63.2
85.8
Sale of global surgical solutions business
(340.3)
10.3
-
Acquisition and integration activities
12.6
16.1
14.5
Other
18.7
21.8
40.2
Special (gains) and charges subtotal
(188.9)
111.4
140.5
Operating income subtotal
(183.6)
133.9
210.4
Other (income) expense
-
-
50.6
Total special (gains) and charges
($183.6)
$133.9
$261.0
For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with our
internal management reporting.
One Ecolab
On July 30, 2024, we announced the One Ecolab initiative, which will enhance our growth and margin expansion journey. As a program
within this initiative, we also announced that we commenced a restructuring plan to leverage our digital technologies to realign the
functional work done in many countries into global centers of excellence. We anticipate restructuring costs of $175 million ($136 million
after tax) or $0.47 per diluted share and special charges of $50 million ($39 million after tax) or $0.14 per diluted share by the end of
2027. We anticipate that the restructuring costs will primarily be cash expenditures for severance costs relating to team reorganization.
In anticipation of this One Ecolab initiative, a limited number of actions were taken in the first and second quarter of 2024. As a result, we
reclassified $5.3 million ($4.0 million after tax) or $0.01 per diluted share from other restructuring to One Ecolab in the third quarter of
2024.
In 2024 we recorded restructuring charges of $76.5 million ($59.0 million after tax), or $0.21 per diluted share primarily related to
severance and professional services. In addition, we recorded non-restructuring special charges of $23.7 million ($17.9 million after tax),
or $0.06 per diluted share in 2024 primarily related to professional services. We have recorded $81.8 million ($63.0 million after tax), or
$0.22 per diluted share of cumulative restructuring charges and $23.7 million ($17.9 million after tax), or $0.06 per diluted share of
cumulative special charges under the One Ecolab initiative. Net cash payments were $26.9 million during 2024.
The net restructuring liability related to the One Ecolab initiative was $54.9 million as of December 31, 2024. 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.
One Ecolab has delivered $12 million of cumulative cost savings with estimated annualized cost savings of $140 million in continuing
operations by 2027.
Other restructuring
Other 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.
Further details related to our restructuring charges are included in Note 3.
Combined Program
In November 2022, we approved a Europe cost savings program. In February 2023, we expanded our previously announced Europe cost
savings program to focus on our Institutional and Healthcare businesses in other regions. In connection with the expanded program (the
“Combined Program”), we expected to incur total pre-tax charges of $195 million ($150 million after tax) or $0.52 per diluted share. These
restructuring charges were completed at the end of 2024. Program actions included headcount reductions from terminations, not filling
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34
certain open positions, and facility closures. The Combined Program charges were 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, we
reclassified $19.3 million ($14.5 million after tax) or $0.05 per diluted share from other restructuring to the Combined Program in the first
quarter of 2023.
In 2024, 2023 and 2022 we recorded restructuring charges of $25.2 million ($18.6 million after tax) or $0.06 per diluted share, $77.7
million ($66.4 million after tax) or $0.23 per diluted share and $67.2 million ($56.0 million after tax) or $0.20 per diluted share,
respectively, primarily related to severance and professional services. Restructuring activities were completed at the end of 2024, with
total costs $184.1 million ($151.5 million after tax), or $0.53 per diluted share.
We reclassified $5.3 million ($4.0 million after tax) or $0.01 per diluted share from the combined restructuring program to other
restructuring activities in the second quarter of 2024.
The net liability related to the Combined Program was $12.8 million and $43.1 million as of December 31, 2024 and 2023, respectively.
Net cash payments were $48.9 million and non-cash net charges were $1.3 million during 2024.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.
The Combined Program has delivered our targeted $175 million of annual cost savings.
Other Restructuring Activities
During 2024, we recorded restructuring charges of $10.6 million ($8.0 million after tax), or $0.03 per diluted share related to an
immaterial restructuring plan approved in the second quarter. This plan became part of the One Ecolab initiative in the third quarter.
During 2023 and 2022, we recorded restructuring charges of $8.0 million ($6.0 million after tax), or $0.03 per diluted share and $40.0
million ($31.1 million after tax), or $0.11 per diluted share, respectively, related to immaterial or subsequently concluded restructuring
programs. The charges were primarily related to severance and asset write-offs.
The restructuring liability balance for all other restructuring plans excluding the One Ecolab and Combined Program, were $6.5 million
and $8.2 million as of December 31, 2024 and 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. Cash payments during 2024 related to all other
restructuring plans excluding the One Ecolab and Combined Programs were $2.2 million.
Sale of global surgical solutions business
On April 27, 2024, we reached a definitive agreement to sell our global surgical solutions business, which closed on August 1, 2024.
During 2024 we recorded a gain on sale of $355.9 million ($257.7 million after tax) or ($0.90) per diluted share, as described in Note 4.
Excluding the gain on sale, we recorded charges of $15.6 million ($12.0 million after tax) or $0.05 per diluted share in 2024, which are
primarily related to professional fees to support the sale. During 2023 we recorded charges of $10.3 million ($7.7 million after tax) or
$0.03 per diluted share, primarily related to professional fees to support the sale.
Acquisition and integration related costs
Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income in 2024
include $12.6 million ($9.6 million after tax) or $0.03 per diluted share, primarily related to the Purolite transaction.
Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income in 2023
include $16.1 million ($12.0 million after tax) or $0.04 per diluted share. Charges are integration related costs primarily related to the
Purolite transaction.
Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income in 2022
include $14.5 million ($11.4 million after tax) or $0.04 per diluted share. Charges are related primarily to the Purolite transaction and
consist of integration related costs, advisory and legal fees. Acquisition and integration related costs reported in product and equipment
cost of sales on the Consolidated Statements of Income in 2022 include $25.0 million ($19.6 million after tax) or $0.07 per diluted share.
Charges are related primarily to the recognition of fair value step-up in the Purolite inventory and other integration costs.
Other operating activities
During 2022, we recorded other operating activities to cost of sales on the Consolidated Statements of Income of $23.5 million ($19.6
million after tax), or $0.06 per diluted share relating primarily to COVID-19 activities.
During 2024, we recorded other operating activities to special (gains) and charges on the Consolidated Statements of Income of $18.7
million ($13.9 million after tax), or $0.05 per diluted share, relating primarily to a liability relating to a prior divestiture, COVID-19 activities,
and certain legal charges. During 2023 and 2022, we recorded other operating activities to special (gains) and charges on the
Consolidated Statements of Income of $21.8 million ($16.7 million after tax), or $0.05 per diluted share, and $40.2 million ($31.4 million
after tax), or $0.11 per diluted share, respectively, relating primarily to certain legal charges.
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35
Other (income) expense
During 2022, we incurred settlement expense recorded in other (income) expense on the Consolidated Statements of Income of $50.6
million ($38.2 million after tax) or $0.13 per diluted share, respectively, related to U.S. pension plan lump-sum payments to retirees.
Operating Income and Operating Income Margin
Percent Change
(millions)
2024
2023
2022
2024
2023
Reported GAAP operating income
$2,802.4
$1,992.3
$1,562.5
41 %
28 %
Special (gains) and charges
(183.6)
133.9
210.4
Non-GAAP adjusted operating income
2,618.8
2,126.2
1,772.9
23
20
Effect of foreign currency translation
32.9
9.4
(5.3)
Non-GAAP adjusted fixed currency operating income
2,651.7
2,135.6
1,767.6
Effect of acquisitions and divestitures
(7.5)
(38.4)
*
Non-GAAP organic operating income
$2,644.2
$2,097.2
*
26 %
*
* Not meaningful
(percent)
2024
2023
2022
Reported GAAP operating income margin
17.8 %
13.0 %
11.0 %
Non-GAAP adjusted operating income margin
16.6 %
13.9 %
12.5 %
Non-GAAP adjusted fixed currency operating income
margin
16.7 %
13.9 %
12.5 %
Non-GAAP organic operating income margin
16.8 %
13.9 %
*
* Not meaningful
Our operating income and corresponding operating income margin are shown in the previous tables. Operating income margin is defined
as operating income divided by sales.
Our reported operating income was $2,802.4 million, $1,992.3 million and $1,562.5 for 2024, 2023 and 2022, respectively. Our 2024,
2023 and 2022 operating incomes were negatively (positively) impacted by special (gains) and charges of ($183.6 million), $133.9
million, and $210.4 million, respectively.
Excluding the impacts of special (gains) and charges, 2024 adjusted operating income increased 23% as strong value pricing, lower
delivered product costs, and higher volumes were partially offset by investments in the business. Excluding the impacts of special (gains)
and charges 2023 adjusted operating income increased 20% as strong pricing overcame investments in the business including incentive
compensation, higher supply chain costs and unfavorable mix.
Other (Income) Expense
(millions)
2024
2023
2022
Reported GAAP other (income) expense
($51.3)
($59.9)
($24.5)
Special (gains) and charges
-
-
50.6
Non-GAAP adjusted other (income) expense
($51.3)
($59.9)
($75.1)
Our reported other income was $51.3 million, $59.9 million and $24.5 million in 2024, 2023 and 2022, respectively. Other (income)
expense decreased when comparing 2024 against 2023 primarily due to higher pension costs. Other (income) expense increased when
comparing 2023 against 2022 as higher pension costs were more than offset by the comparison to last year’s $50.6 million settlement
expense related to U.S. pension plan lump-sum payments to retirees. Excluding the impact of settlements and curtailments recorded in
special (gains) and charges during 2024, 2023 and 2022, our adjusted other income was $51.3 million, $59.9 million and $75.1 million,
respectively.
Interest Expense, Net
(millions)
2024
2023
2022
Reported GAAP interest expense, net
$282.5
$296.7
$243.6
Our reported net interest expense totaled $282.5 million, $296.7 million and $243.6 million during 2024, 2023 and 2022, respectively.
The decrease in net interest expense when comparing 2024 against 2023 was driven primarily by lower interest expense from the
repayment of our January 2024 note and the impact from higher interest income earned on cash balances driven by strong free cash
flows and proceeds from the sale of the global surgical solutions business. The increase in interest expense when comparing 2023
against 2022 was driven primarily by the higher average interest rates on outstanding debt.
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36
Provision for Income Taxes
The following table provides a summary of our tax rate:
(percent)
2024
2023
2022
Reported GAAP tax rate
17.1 %
20.6 %
17.5 %
Tax rate impact of:
Special (gains) and charges
(1.1)
(0.1)
0.5
Discrete tax items
3.3
(0.6)
0.7
Non-GAAP adjusted tax rate
19.3 %
19.9 %
18.7 %
Our reported tax rate was 17.1%, 20.6%, and 17.5%, for 2024, 2023 and 2022, respectively. The change in our tax rate includes the tax
impact of special (gains) and charges and discrete tax items, which have impacted the comparability of our historical reported tax rates,
as amounts included in our special (gains) and charges are derived from tax jurisdictions with rates that vary from our tax rate, and
discrete tax items are not necessarily consistent across periods. The tax impact of special (gains) and charges and discrete tax items will
likely continue to impact comparability of our reported tax rate in the future.
We recognized a net tax benefit related to discrete tax items of $78.6 million during 2024. Discrete items include tax benefits of $62.1
million associated with capital losses and $30.4 million of additional basis of foreign intangible assets. The remaining net discrete tax
expense of $13.9 million was primarily related to the filing of federal, state and foreign tax returns and other income tax adjustments
including the impact of changes in tax laws, audit settlements, share-based compensation excess tax benefit and other changes in
estimates.
We recognized a net tax expense related to discrete tax items of $11.2 million during 2023. The net discrete tax expense was primarily
related to the filing of federal, state and foreign tax returns and other income tax adjustments including the impact of changes in tax laws,
audit settlements, share-based compensation excess tax benefits and other changes in estimates.
We recognized a net tax benefit related to discrete tax items of $11.8 million during 2022. This included a deferred tax benefit of $14.6
million associated with utilization of tax attributes as a result of legal entity rationalization and share-based compensation excess tax
benefits of $6.0 million. The remaining discrete tax expense of $8.8 million was primarily related to the filing of federal, state and foreign
tax returns and other income tax adjustments including the impact of changes in tax laws, audit settlements and other changes in
estimates.
The change in our adjusted tax rates from 2023 to 2024 was primarily driven by geographic income mix. Future comparability of our
adjusted tax rate may be impacted by various factors, including but not limited to other changes in global tax rules, further tax planning
projects and geographic income mix.
Net Income Attributable to Ecolab
Percent Change
(millions)
2024
2023
2022
2024
2023
Reported GAAP net income attributable to Ecolab
$2,112.4
$1,372.3
$1,091.7
54 %
26 %
Adjustments:
Special (gains) and charges, after tax
(126.7)
109.2
207.3
Discrete tax net (benefit) expense
(78.6)
11.2
(11.8)
Non-GAAP adjusted net income attributable to Ecolab
$1,907.1
$1,492.7
$1,287.2
28 %
16 %
Diluted EPS
Percent Change
(dollars)
2024
2023
2022
2024
2023
Reported GAAP diluted EPS
$7.37
$4.79
$3.81
54 %
26 %
Adjustments:
Special (gains) and charges, after tax
(0.44)
0.38
0.72
Discrete tax net (benefit) expense
(0.28)
0.04
(0.04)
Non-GAAP adjusted diluted EPS
$6.65
$5.21
$4.49
28 %
16 %
Per share amounts do not necessarily sum due to rounding.
Currency translation had an unfavorable ($0.09) impact on reported and adjusted diluted EPS when comparing 2024 to 2023 and
unfavorable ($0.05) impact when comparing 2023 to 2022.
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37
SEGMENT PERFORMANCE
The non-U.S. dollar functional currency international amounts included within our reportable segments are based on translation into U.S.
dollars at the fixed currency exchange rates established by management for 2024. The difference between the fixed currency exchange
rates and the actual currency exchange rates is reported as “effect of foreign currency translation” in the following tables. All other
accounting policies of the reportable segments are consistent with U.S. GAAP and the accounting policies described in Note 2. Additional
information about our reportable segments is included in Note 18.
Fixed currency net sales and operating income for 2024, 2023 and 2022 for our reportable segments are shown in the following tables.
Net Sales
Percent Change
(millions)
2024
2023
2022
2024
2023
Global Industrial
$7,857.2
$7,640.5
$7,172.6
3 %
7 %
Global Institutional & Specialty
5,413.9
5,014.6
4,433.2
8
13
Global Healthcare & Life Sciences
1,434.1
1,607.5
1,534.3
(11)
5
Global Pest Elimination
1,167.8
1,070.2
963.5
9
11
Corporate
-
42.7
89.2
(100)
(52)
Subtotal at fixed currency
15,873.0
15,375.5
14,192.8
3
8
Effect of foreign currency translation
(131.6)
(55.3)
(5.0)
Consolidated reported GAAP net sales
$15,741.4
$15,320.2
$14,187.8
3 %
8 %
Operating Income
Percent Change
(millions)
2024
2023
2022
2024
2023
Global Industrial
$1,300.6
$1,122.0
$948.9
16 %
18 %
Global Institutional & Specialty
1,182.7
841.8
631.9
40
33
Global Healthcare & Life Sciences
147.2
160.8
193.4
(8)
(17)
Global Pest Elimination
220.4
210.4
197.3
5
7
Corporate
(15.8)
(332.8)
(414.3)
(95)
(20)
Subtotal at fixed currency
2,835.1
2,002.2
1,557.2
42
29
Effect of foreign currency translation
(32.7)
(9.9)
5.3
Consolidated reported GAAP operating income
$2,802.4
$1,992.3
$1,562.5
41 %
28 %
The following tables reconcile the impact of acquisitions and divestitures within our reportable segments.
Year ended
December 31
Net Sales
2024
2023
(millions)
Fixed
Currency
Impact of
Acquisitions
and
Divestitures Organic
Fixed
Currency
Impact of
Acquisitions
and
Divestitures Organic
Global Industrial
$7,857.2
($89.3) $7,767.9 $7,640.5
($26.7) $7,613.8
Global Institutional & Specialty
5,413.9
(32.0) 5,381.9
5,014.6
- 5,014.6
Global Healthcare & Life Sciences
1,434.1
- 1,434.1
1,607.5
(183.1) 1,424.4
Global Pest Elimination
1,167.8
(10.2) 1,157.6
1,070.2
- 1,070.2
Corporate
-
-
-
42.7
(42.7)
-
Subtotal at fixed currency
15,873.0
(131.5) 15,741.5 15,375.5
(252.5) 15,123.0
Effect of foreign currency translation
(131.6)
(55.3)
Consolidated reported GAAP net sales
$15,741.4
$15,320.2
Operating Income
2024
2023
(millions)
Fixed
Currency
Impact of
Acquisitions
and
Divestitures Organic
Fixed
Currency
Impact of
Acquisitions
and
Divestitures Organic
Global Industrial
$1,300.6
($6.1) $1,294.5 $1,122.0
($1.3) $1,120.7
Global Institutional & Specialty
1,182.7
(1.8) 1,180.9
841.8
-
841.8
Global Healthcare & Life Sciences
147.2
-
147.2
160.8
(35.7)
125.1
Global Pest Elimination
220.4
0.4
220.8
210.4
-
210.4
Corporate
(199.2)
-
(199.2)
(199.4)
(1.4)
(200.8)
Non-GAAP adjusted fixed currency operating income
2,651.7
(7.5) 2,644.2
2,135.6
(38.4) 2,097.2
Special (gains) and charges
(183.4)
133.4
Subtotal at fixed currency
2,835.1
2,002.2
Effect of foreign currency translation
(32.7)
(9.9)
Consolidated reported GAAP operating income
$2,802.4
$1,992.3
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38
Global Industrial
2024
2023
2022
Sales at fixed currency (millions)
$7,857.2
$7,640.5
$7,172.6
Sales at public currency (millions)
7,777.2
7,626.5
7,197.1
Organic sales change
2 %
*
Acquisitions and divestitures
1 %
*
Fixed currency sales change
3 %
7 %
Foreign currency translation
(1) %
(1) %
Public currency sales change
2 %
6 %
Operating income at fixed currency (millions)
$1,300.6
$1,122.0
$948.9
Operating income at public currency (millions)
1,280.5
1,122.0
959.8
Fixed currency operating income change
16 %
18 %
Fixed currency operating income margin
16.6 %
14.7 %
13.2 %
Organic operating income change
16 %
*
Organic operating income margin
16.7 %
14.7 %
*
Public currency operating income change
14 %
17 %
* Not meaningful
Percentages in the above table do not necessarily sum due to rounding.
Net Sales
Organic sales for Global Industrial increased in 2024 driven by strong new business wins and value pricing which overcame uneven end-
market trends. Organic sales for Global Industrial increased in 2023 driven by strong pricing and new business wins partially offset by
weaker markets.
At an operating segment level, Water organic sales increased 3% in 2024 reflecting strong growth in downstream and light water. Water
organic sales increased 8% in 2023 driven by strong pricing and new business wins. Light water reported strong sales growth in 2024
driven by strong performance across institutional, food & beverage and high-tech and good sales growth in 2023 driven by strong
performance across high-tech and institutional. Heavy water in 2024 reported sales growth driven by new business wins that overcame
softer market trends in primary metals and chemicals and good sales growth in 2023 driven by strong pricing, gains in primary metals
and growth in chemicals. Downstream reported strong sales growth in 2024 driven by strong growth in refining and water management
and strong growth in 2023 driven by innovative water treatment programs. Food & Beverage organic sales increased 1% in 2024 as
good new business wins more than offset continued soft industry trends and comparisons to last year’s strong growth. Organic sales
increased 9% in 2023 reflecting continued pricing, strong performance in dairy, and solid growth in beverage & brewing and animal
health. Paper organic sales were flat in 2024 as strong new business wins were offset by soft but stabilizing customer production rates.
Organic sales decreased 1% in 2023 as pricing and new business wins were offset by easing customer production rates.
Operating Income
Organic operating income and organic operating income margins for Global Industrial increased in both 2024 and 2023 when compared
to prior periods.
Organic operating income margins increased 2.0 percentage points during 2024 compared to 2023, as the 4.2 percentage point positive
impacts of lower delivered product costs, strong pricing, and higher volumes were partially offset by the 2.3 percentage point negative
impacts of investments in the business. Organic operating income margins increased in 2023 compared to 2022, as the positive impacts
of strong pricing overcame the negative impacts of investments in business including incentive compensation, lower volume, and higher
supply chain costs.
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39
Global Institutional & Specialty
2024
2023
2022
Sales at fixed currency (millions)
$5,413.9
$5,014.6
$4,433.2
Sales at public currency (millions)
5,382.6
4,999.2
4,432.1
Organic sales change
7 %
*
Acquisitions and divestitures
1 %
*
Fixed currency sales change
8 %
13 %
Foreign currency translation
- %
- %
Public currency sales change
8 %
13 %
Operating income at fixed currency (millions)
$1,182.7
$841.8
$631.9
Operating income at public currency (millions)
1,173.8
838.7
632.5
Fixed currency operating income change
40 %
33 %
Fixed currency operating income margin
21.8 %
16.8 %
14.3 %
Organic operating income change
40 %
*
Organic operating income margin
21.9 %
16.8 %
*
Public currency operating income change
40 %
33 %
* Not meaningful
Percentages in the above table do not necessarily sum due to rounding.
Net Sales
Organic sales for Global Institutional & Specialty increased in 2024 continuing to significantly outperform end-market trends. The 2023
sales increased driven by strong pricing and new business wins.
At an operating segment level, Institutional organic sales increased 7% in 2024 reflecting sales growth across restaurants and lodging.
Organic sales increased 12% in 2023, driven by strong pricing and new business wins. Specialty organic sales increased 7% in 2024
and 13% in 2023 reflecting growth in quick service and food retail in both years.
Operating Income
Organic operating income and organic operating income margin for our Global Institutional & Specialty segment increased in both 2024
and 2023 when compared to prior periods.
Organic operating income margins increased 5.1 percentage points during 2024, as the 6.6 percentage point positive impacts from
strong pricing, lower supply chain costs and higher volumes were partially offset by the 1.9 percentage point negative impacts of
investments in the business. Organic operating income margins increased during 2023, as the positive impact from strong pricing and
cost savings initiatives overcame the negative impacts of investments in the business including incentive compensation and higher
supply chain costs.
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40
Global Healthcare & Life Sciences
2024
2023
2022
Sales at fixed currency (millions)
$1,434.1
$1,607.5
$1,534.3
Sales at public currency (millions)
1,418.8
1,586.0
1,510.5
Organic sales change
1 %
*
Acquisitions and divestitures
(11) %
*
Fixed currency sales change
(11) %
5 %
Foreign currency translation
- %
- %
Public currency sales change
(11) %
5 %
Operating income at fixed currency (millions)
$147.2
$160.8
$193.4
Operating income at public currency (millions)
143.3
154.9
189.4
Fixed currency operating income change
(8) %
(17) %
Fixed currency operating income margin
10.3 %
10.0 %
12.6 %
Organic operating income change
18 %
*
Organic operating income margin
10.3 %
8.8 %
*
Public currency operating income change
(7) %
(18) %
* Not meaningful
Percentages in the above table do not necessarily sum due to rounding.
Net Sales
Reported sales for 2024 reflected the sale of Ecolab’s global surgical solutions business, which closed in the third quarter 2024. Organic
sales for Global Healthcare & Life Sciences increased in 2024 as compared to 2023 driven by continued growth in Life Sciences partially
offset by modestly lower Healthcare sales. Organic sales for Global Healthcare & Life Sciences increased in 2023 as compared to 2022
driven by strong pricing and new business wins.
At an operating segment level, Healthcare organic sales decreased 1% in 2024 as strategic low margin business exits were partially
offset by value pricing. Organic sales increased 7% in 2023 driven by pricing and strong growth in North America. Life Sciences organic
sales increased 3% in 2024 reflecting new business wins and progressively improving industry trends. Organic sales increased 1% in
2023 as pricing was more than offset by soft near-term industry demand.
Operating Income
Organic operating income and organic operating income margins for our Global Healthcare & Life Sciences segment both increased in
2024 when compared to 2023. Organic operating income and organic operating income margins for our Global Healthcare & Life
Sciences segment both decreased in 2023 when compared to 2022.
Organic operating income margins increased 1.5 percentage points in 2024, as the 3.5 percentage point positive impact from strong
pricing and lower supply chain costs were partially offset by the 1.6 percentage point negative impacts from lower volumes in the
business. Organic operating income margins decreased in 2023, as the positive impact from strong pricing was more than offset by the
negative impacts from targeted investments in the business, unfavorable mix and higher supply chain costs.
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41
Global Pest Elimination
2024
2023
2022
Sales at fixed currency (millions)
$1,167.8
$1,070.2
$963.5
Sales at public currency (millions)
1,162.8
1,066.0
959.0
Organic sales change
8 %
*
Acquisitions and divestitures
1 %
*
Fixed currency sales change
9 %
11 %
Foreign currency translation
- %
- %
Public currency sales change
9 %
11 %
Operating income at fixed currency (millions)
$220.4
$210.4
$197.3
Operating income at public currency (millions)
219.5
209.7
195.6
Fixed currency operating income change
5 %
7 %
Fixed currency operating income margin
18.9 %
19.7 %
20.5 %
Organic operating income change
5 %
*
Organic operating income margin
19.1 %
19.7 %
*
Public currency operating income change
5 %
7 %
* Not meaningful
Percentages in the above table do not necessarily sum due to rounding.
Net Sales
Organic sales for Global Pest Elimination increased 8% in 2024 led by strong growth in food & beverage, restaurants and food retail.
Operating Income
Organic operating income in Global Pest Elimination increased in 2024 compared to 2023. Organic operating income margins decreased
in 2024 when compared to 2023.
Organic operating income margins in Global Pest Elimination decreased 0.6 percentage points in 2024, as the 4.4 percentage point
positive impacts from strong pricing and higher volumes were more than offset by the 5.8 percentage point negative impacts of
investments in the business and costs associated with a fourth quarter spike in accidents.
Corporate
Consistent with our internal management reporting, Corporate amounts in the table on page 37 include sales to ChampionX in
accordance with the transitional supply agreement entered into with the transaction post-separation, as discussed in Note 17, intangible
asset amortization specifically from the Nalco and Purolite transactions and special (gains) and charges that are not allocated to our
reportable segments. Items included within special (gains) and charges are shown in the table on page 33.
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42
FINANCIAL POSITION, CASH FLOW AND LIQUIDITY
Financial Position
Total assets were $22.4 billion as of December 31, 2024, compared to total assets of $21.8 billion as of December 31, 2023.
Total liabilities were $13.6 billion as of December 31, 2024, compared to total liabilities of $13.8 billion as of December 31, 2023. Total
debt was $7.6 billion as of December 31, 2024 and $8.2 billion as of December 31, 2023. See further discussion of our debt activity
within the “Liquidity and Capital Resources” section of this MD&A.
Our net debt to EBITDA is shown in the following table. EBITDA is a non-GAAP measure discussed further in the “Non-GAAP Financial
Measures” section of this MD&A.
2024
2023
2022
(ratio)
Net debt to EBITDA
1.7
2.4
3.2
(millions)
Total debt
$7,564.9
$8,181.8
$8,580.4
Cash
1,256.8
919.5
598.6
Net debt
$6,308.1
$7,262.3
$7,981.8
Net income including noncontrolling interest
$2,131.9
$1,393.0
$1,108.9
Provision for income taxes
439.3
362.5
234.5
Interest expense, net
282.5
296.7
243.6
Depreciation
634.9
616.7
618.5
Amortization
300.5
306.9
320.2
EBITDA
$3,789.1
$2,975.8
$2,525.7
Cash Flows
Operating Activities
Dollar Change
(millions)
2024
2023
2022
2024
2023
Cash provided by operating activities
$2,813.9
$2,411.8
$1,788.4
$402.1
$623.4
We continue to generate cash flow from operations allowing us to fund our ongoing operations, acquisitions, investments in the business
and pension obligations along with returning cash to our shareholders through dividend payments and share repurchases.
Cash provided by operating activities increased $402 million in 2024 compared to 2023, driven by a $739 million increase in net income
less $258 million net gain on sale of global surgical solutions business.
Cash provided by operating activities increased $623 million in 2023 compared to 2022, driven primarily by $332 million net favorable
change in working capital and $284 million increase in net income. The cash flow impact from working capital was primarily driven by
improvement in inventory due to management efforts following easing global supply chain constraints and an improvement in receivables
offset by a decrease in accounts payable primarily associated with our inventory reduction efforts.
The impact on operating cash flows of pension and postretirement plan contributions, cash activity related to restructuring, cash paid for
income taxes and cash paid for interest, are shown in the following table:
Dollar Change
(millions)
2024
2023
2022
2024
2023
Pensions and postretirement plan contributions
$54.4
$109.3
$64.3
($54.9)
$45.0
Restructuring payments
78.0
118.3
41.0
(40.3)
77.3
Income tax payments
647.4
469.2
308.9
178.2
160.3
Interest payments
342.6
324.8
222.4
17.8
102.4
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43
Investing Activities
Dollar Change
(millions)
2024
2023
2022
2024
2023
Cash used for investing activities
($433.8)
($990.5)
($716.8)
$556.7
($273.7)
Cash provided by (used for) investing activities is primarily impacted by the timing of business acquisitions and dispositions as well as
from capital investments in the business.
We continue to make capital investments in the business, including merchandising and customer equipment and manufacturing facilities.
Total capital expenditures were $995 million, $775 million and $713 million in 2024, 2023 and 2022, respectively.
Total cash provided by (used for) acquisitions, net of cash acquired along with dispositions, net of cash divested, in 2024, 2023 and 2022
was $313 million, $180 million and $7 million, respectively. Our acquisitions and divestitures are discussed further in Note 4. We continue
to target strategic business acquisitions which complement our growth strategy and expect to continue to make capital investments and
acquisitions in the future to support our long-term growth.
Financing Activities
Dollar Change
(millions)
2024
2023
2022
2024
2023
Cash used for financing activities
($2,024.1)
($1,054.7)
($837.3)
($969.4)
($217.4)
Our cash flows from financing activities primarily reflect the issuances and repayment of debt, common stock repurchases, proceeds from
common stock issuances related to our equity incentive programs and dividend payments.
There were no long-term debt issuances in 2024 or 2023. We issued $500 million par value and received $494 million in proceeds of
long-term debt in 2022. The proceeds received from the debt issuances were used for repayment of outstanding debt, repayment of
commercial paper and general corporate purposes. In addition, we had commercial paper and notes payable net issuances of $2 million
in 2024 and net repayments of $2 million and $404 million in 2023 and 2022, respectively. We repaid $630 million and $500 million of
long-term debt in 2024 and 2023, respectively.
Shares are repurchased for the purpose of partially offsetting the dilutive effect of our equity compensation plans, to manage our capital
structure and to efficiently return capital to shareholders. We repurchased a total of $987 million, $14 million, and $518 million of shares
in 2024, 2023 and 2022, respectively.
The impact on financing cash flows of commercial paper and notes payable repayments, long-term debt borrowings and long-term debt
repayments, are shown in the following table:
Dollar Change
(millions)
2024
2023
2022
2024
2023
Net issuances (repayments) of commercial paper and
notes payable
$1.9
($1.9) ($404.3)
$3.8
$402.4
Long-term debt borrowings
-
-
494.0
-
(494.0)
Long-term debt repayments
(630.4)
(500.0)
-
(130.4)
(500.0)
In December 2024, we increased our quarterly dividend rate by 14%. This represents the 33rd consecutive year we have increased our
dividend. We have paid dividends on our common stock for 88 consecutive years. We paid dividends of $664 million, $617 million and
$603 million in 2024, 2023 and 2022, respectively. Cash dividends declared per share of common stock, by quarter, for each of the last
three years were as follows:
First
Second
Third
Fourth
Quarter
Quarter
Quarter
Quarter
Year
2024
$0.57
$0.57
$0.57
$0.65
$2.36
2023
$0.53
$0.53
$0.53
$0.57
$2.16
2022
$0.51
$0.51
$0.51
$0.53
$2.06
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44
Liquidity and Capital Resources
We currently expect to fund all of our cash requirements which are reasonably foreseeable for the next twelve months, including
scheduled debt repayments, new investments in the business, share repurchases, dividend payments, possible business acquisitions
and pension and postretirement contributions with cash from operating activities, and as needed, additional short-term and/or long-term
borrowings. We continue to expect our operating cash flow to remain strong.
As of December 31, 2024, we had $1,257 million of cash and cash equivalents on hand, of which $382 million was held outside of the
U.S. As of December 31, 2023, we had $920 million of cash and cash equivalents on hand, of which $880 million was held outside of the
U.S. Our cash balance is intended to fund current maturities of long-term debt. We will continue to evaluate our cash position in light of
future developments.
In January 2024, we repaid €575 million ($630 million) of long-term debt.
As of December 31, 2024, we had a $2.0 billion multi-year credit facility, which expires in April 2026. The credit facility has been
established with a diverse syndicate of banks and supports our U.S. and Euro commercial paper programs. The maximum aggregate
amount of commercial paper that may be issued under our U.S. commercial paper program and our Euro commercial paper program
may not exceed $2.0 billion. At year end, we had no commercial paper outstanding under our U.S. program nor our Euro program. There
were no borrowings under our credit facility as of December 31, 2024 or 2023. As of December 31, 2024, both programs were rated A-2
by Standard & Poor’s, P-2 by Moody’s and F-1 by Fitch.
Additionally, we have uncommitted credit lines with major international banks and financial institutions. These credit lines support our
daily global funding needs, primarily our global cash pooling structures. As of December 31, 2024 we had $165 million of bank supported
letters of credit, surety bonds and guarantees outstanding in support of our commercial business transactions. We do not have any other
significant unconditional purchase obligations or commercial commitments.
As of December 31, 2024, Standard & Poor’s, Fitch and Moody’s rated our long-term credit at A- (stable outlook), A- (stable outlook) and
A3 (stable outlook), respectively. A reduction in our credit ratings could limit or preclude our ability to issue commercial paper under our
current programs or could also adversely affect our ability to renew existing, or negotiate new, credit facilities in the future and could
increase the cost of these facilities.
As of December 31, 2024, we were in compliance with our debt covenants and other requirements of our credit agreements and
indentures.
A schedule of our various obligations as of December 31, 2024 are summarized in the following table:
Payments Due by Period
Less
More
Than
2-3
4-5
Than
(millions)
Total
1 Year
Years
Years
5 Years
Notes payable
$4
$4
$-
$-
$-
One-time transition tax
68
32
36
-
-
Long-term debt
7,561
612
1,696
500
4,753
Operating leases
809
159
268
130
252
Interest*
3,526
295
543
379
2,309
Total
$11,968
$1,102
$2,543
$1,009
$7,314
*Interest on variable rate debt was calculated using the interest rate at year end 2024.
As of December 31, 2024, our gross liability for unrecognized tax benefits was $34 million. We are not able to reasonably estimate the
amount by which the liability will increase or decrease over an extended period of time or whether a cash settlement of the liability will be
required. Therefore, these amounts have been excluded from the schedule of contractual obligations.
We do not have required minimum cash contribution obligations for our qualified pension plans in 2024. We are required to fund certain
international pension benefit plans in accordance with local legal requirements. We estimate contributions to be made to our international
plans will approximate $48 million in 2025. These amounts have been excluded from the schedule of contractual obligations.
We lease certain sales and administrative office facilities, distribution centers, research and manufacturing facilities and other equipment
under longer-term operating leases. Vehicle leases are generally shorter in duration. Vehicle leases have residual value requirements
that have historically been satisfied primarily by the proceeds on the sale of the vehicles.
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45
Market Risk
We enter into contractual arrangements (derivatives) in the ordinary course of business to manage foreign currency exposure and
interest rate risks. We do not enter into derivatives for speculative or trading purposes. Our use of derivatives is subject to internal
policies that provide guidelines for control, counterparty risk, and ongoing monitoring and reporting, and is designed to reduce the
volatility associated with movements in foreign exchange and interest rates on our income statement and cash flows.
We enter into foreign currency forward contracts to hedge certain intercompany financial arrangements, and to hedge against the effect
of exchange rate fluctuations on transactions related to cash flows denominated in currencies other than U.S. dollars. We use net
investment hedges as hedging instruments to manage risks associated with our investments in foreign operations. As of December 31,
2024, we had a total of €575 million senior notes designated as net investment hedges.
We enter into cross-currency swap derivative contracts to hedge certain Euro denominated exposures from our investments in certain of
its Euro denominated functional currency subsidiaries. We use net investment hedges as hedging instruments to manage risks
associated with our investments in foreign operations. As of December 31, 2024, we had €1,575 million of cross-currency swap
derivative contracts outstanding designated as a net investment hedge.
We enter into cross-currency swap derivative contracts to hedge certain Chinese Yuan (“CNY”) denominated exposures from our
investments in certain CNY denominated functional currency subsidiaries. We use net investment hedges as hedging instruments to
manage risks associated with our investments in foreign operations. As of December 31, 2024, we had CNH 3,619 million (CNH is the
CNY traded in the offshore market) of cross-currency swap derivative contracts outstanding designated as a net investment hedge.
We manage interest expense using a mix of fixed and floating rate debt. To help manage borrowing costs, we may enter into interest rate
swap agreements. Under these arrangements, we agree to exchange, at specified intervals, the difference between fixed and floating
interest amounts calculated by reference to an agreed-upon notional principal amount. As of December 31, 2024, we had $1,500 million
of interest rate swaps outstanding.
Refer to Note 8 for further information on our hedging activity.
Based on a sensitivity analysis (assuming a 10% change in market rates) of our foreign exchange and interest rate derivatives and other
financial instruments, changes in exchange rates or interest rates would increase/decrease our financial position and liquidity by
approximately $262 million. The effect on our results of operations would be substantially offset by the impact of the hedged items.
GLOBAL ECONOMIC AND POLITICAL ENVIRONMENT
Global Economies
Approximately half of our sales are outside of the U.S. Our international operations subject us to changes in economic conditions and
foreign currency exchange rates as well as political uncertainty in some countries which could impact future operating results.
Argentina, Turkey and Egypt are classified as highly inflationary economies in accordance with U.S. GAAP, and the U.S. dollar is the
functional currency for our subsidiaries in Argentina, Turkey and Egypt. During 2024, sales in Argentina, Turkey and Egypt represented
approximately 1% of our consolidated sales. Assets held in Argentina, Turkey and Egypt at the end of 2024 represented less than 1% of
our consolidated assets.
In light of Russia’s invasion of Ukraine and the sanctions against Russia by the United States and other countries, we have made the
determination to limit our Russian business to operations that are essential to life, providing minimal support for our healthcare, life
sciences, food and beverage and certain water businesses. We may further narrow our presence in Russia depending on future
developments, such as the imposition of additional sanctions by the United States. Our Russian and Ukraine operations represented
approximately 1% of our 2024 consolidated net sales. We recorded charges of $1.4 million and $13.1 million in 2023 and 2022,
respectively, primarily related to recoverability risk of certain assets in both Russia and Ukraine. We cannot predict the progress or
outcome of world geopolitical events, including the Russia and Ukraine conflict, or the consequences thereof.
NEW ACCOUNTING PRONOUNCEMENTS
Information regarding new accounting pronouncements is included in Note 2.
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46
SUBSEQUENT EVENTS
In February 2025, we entered into cross-currency swap derivative contracts with notional amounts of €300 million and CAD 280 million.
These cross-currency swap derivative contracts are designated as net investment hedges of our Euro or CAD denominated exposures
from our investments in certain of our Euro or CAD denominated functional currency subsidiaries.
Effective in the first quarter of 2025, we modified our organizational structure. As a result, our Global Industrial reportable segment was
renamed Global Water and includes the Light & Heavy (previously named Water), Food & Beverage, and Paper operating segments. Our
Global Institutional & Specialty reportable segment continues to include the Institutional and Specialty operating segments. Our former
healthcare operating segment moved into the Institutional operating segment. Global Life Sciences was elevated to a standalone
reportable segment. The Global Pest Elimination segment remains a standalone reportable segment.
NON-GAAP FINANCIAL MEASURES
This MD&A includes financial measures that have not been calculated in accordance with U.S. GAAP. These non-GAAP measures
include:
•
Fixed currency sales
•
Adjusted net sales
•
Adjusted fixed currency sales
•
Organic sales, formerly known as acquisition adjusted fixed currency sales
•
Adjusted cost of sales
•
Adjusted gross margin
•
Fixed currency operating income
•
Fixed currency operating income margin
•
Adjusted operating income
•
Adjusted operating income margin
•
Adjusted fixed currency operating income
•
Adjusted fixed currency operating income margin
•
Organic operating income, formerly known as acquisition adjusted fixed currency operating income
•
Organic operating income margin, formerly known as acquisition adjusted fixed currency operating income margin
•
Adjusted other (income) expense
•
Adjusted interest expense, net
•
EBITDA
•
Adjusted tax rate
•
Adjusted net income attributable to Ecolab
•
Adjusted diluted EPS
We provide these measures as additional information regarding our operating results. We use these non-GAAP measures internally to
evaluate our performance and in making financial and operational decisions, including with respect to incentive compensation. We
believe that our presentation of these measures provides investors with greater transparency with respect to our results of operations and
that these measures are useful for period-to-period comparison of results.
Our non-GAAP adjusted financial measures for cost of sales, gross margin, operating income and other (income) expense exclude the
impact of special (gains) and charges and our non-GAAP adjusted financial measures for tax rate, net income attributable to Ecolab and
diluted earnings per share further exclude the impact of discrete tax items. We include items within special (gains) and charges and
discrete tax items that we believe can significantly affect the period-over-period assessment of operating results and not necessarily
reflect costs and/or income associated with historical trends and future results. After tax special (gains) and charges are derived by
applying the applicable local jurisdictional tax rate to the corresponding pre-tax special (gains) and charges.
EBITDA is defined as the sum of net income including non-controlling interest, provision for income taxes, net interest expense,
depreciation and amortization. EBITDA is used in our net debt to EBITDA ratio, which we view as important indicators of the operational
and financial health of our organization.
We evaluate the performance of our international operations based on fixed currency rates of foreign exchange. Fixed currency amounts
included in this Form 10-K are based on translation into U.S. dollars at the fixed foreign currency exchange rates established by
management at the beginning of 2024. We also provide our segment results based on public currency rates for informational purposes.
Our reportable segments do not include the impact of intangible asset amortization from the Nalco and Purolite transactions or the impact
of special (gains) and charges as these are not allocated to our reportable segments.
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47
Our non-GAAP financial measures for organic sales, organic operating income and organic operating income margin are at fixed
currency and exclude the impact of special (gains) and charges, the results of our acquired businesses from the first twelve months post
acquisition and the results of divested businesses from the twelve months prior to divestiture. Further, due to the sale of the global
surgical solutions business on August 1, 2024, we have excluded the results of the business for August through December 2023 from
these organic measures for the years ended December 31, 2023 to remain comparable to the corresponding period in 2024. As part of
the separation of ChampionX in 2020, we entered into an agreement with ChampionX to provide, receive or transfer certain products for
a transitionary period. Transitionary period sales of product to ChampionX under this agreement are recorded in product and equipment
sales in Corporate along with the related cost of sales. The remaining sales to ChampionX are recorded in product and equipment sales
in the Global Industrial segment along with the related cost of sales. These transactions are removed from the consolidated results as
part of the calculation of the impact of acquisitions and divestitures.
These non-GAAP measures are not in accordance with, or an alternative to U.S. GAAP and may be different from non-GAAP measures
used by other companies. Investors should not rely on any single financial measure when evaluating our business. We recommend that
investors view these measures in conjunction with the U.S. GAAP measures included in this MD&A and we have provided reconciliations
of reported U.S. GAAP amounts to the non-GAAP amounts in this MD&A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
The discussion under the heading entitled "Market Risk" and “Global Economic and Political Environment” is incorporated by reference
from Part II, Item 7 of this Form 10-K.
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48
Item 8. Financial Statements and Supplementary Data.
REPORTS OF MANAGEMENT
To our Shareholders:
Management’s Responsibility for Financial Statements
Management is responsible for the integrity and objectivity of the consolidated financial statements. The statements have been prepared
in accordance with accounting principles generally accepted in the United States of America and, accordingly, include certain amounts
based on management’s best estimates and judgments.
The Board of Directors, acting through its Audit Committee composed solely of independent directors, is responsible for determining that
management fulfills its responsibilities in the preparation of financial statements and maintains internal control over financial reporting.
The Audit Committee recommends to the Board of Directors the appointment of the Company’s independent registered public accounting
firm, subject to ratification by the shareholders. It meets regularly with management, the internal auditors and the independent registered
public accounting firm.
The independent registered public accounting firm has audited the consolidated financial statements included in this annual report and
have expressed their opinion regarding whether these consolidated financial statements present fairly in all material respects our
financial position and results of operation and cash flows as stated in their report presented separately herein.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including the principal executive officer
and principal financial officer, an evaluation of the design and operating effectiveness of internal control over financial reporting was
conducted based on the 2013 framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on the evaluation under the framework in Internal Control — Integrated Framework,
management concluded that internal control over financial reporting was effective as of December 31, 2024.
The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2024 as stated in their report which is included herein.
Christophe Beck
Scott D. Kirkland
Chairman and Chief Executive Officer
Chief Financial Officer
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49
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Ecolab Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Ecolab Inc. and its subsidiaries (the “Company”) as of December 31,
2024 and 2023, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the
three years in the period ended December 31, 2024, including the related notes (collectively referred to as the “consolidated financial
statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express opinions on the Company’s
consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating
the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are
material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
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50
Valuation of Certain U.S. Defined Benefit Pension Plan Obligations
As described in Note 16 to the consolidated financial statements, the Company’s projected benefit obligations for U.S. pension plans was
$1,790.6 million as of December 31, 2024, of which a majority relates to certain U.S. pension plans. The measurement of the Company’s
pension benefit obligations are dependent on a variety of assumptions determined by management and used by actuaries in their
valuation method and calculations. The significant assumptions used in developing the required estimates of the projected benefit
obligations are the discount rates, expected returns on assets, projected salary increases, and mortality tables.
The principal considerations for our determination that performing procedures relating to the valuation of certain U.S. defined benefit
pension plan obligations is a critical audit matter are (i) the significant judgment by management when developing the estimate of certain
U.S. defined benefit pension plan obligations; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and
evaluating management’s significant assumptions related to the discount rates and expected return on assets; and (iii) the audit effort
involved the use of professionals with specialized skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on
the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s valuation
of the defined benefit pension plan obligations, including controls over the valuation of the U.S. defined benefit pension plan obligations.
These procedures also included, among others (i) testing management’s process for developing the estimate of certain U.S. defined
benefit pension plan obligations; (ii) evaluating the appropriateness of the actuarial valuation method and calculations used by
management; (iii) testing the completeness and accuracy of underlying data used in the actuarial valuation method and calculations; and
(iv) evaluating the reasonableness of the significant assumptions used by management related to the discount rates and expected return
on assets. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the actuarial
valuation method and calculations and (ii) the reasonableness of the discount rates and expected return on assets assumptions.
/s/ PricewaterhouseCoopers LLP
Minneapolis, Minnesota
February 21, 2025
We have served as the Company’s auditor since 1970.
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51
CONSOLIDATED STATEMENTS OF INCOME
(millions, except per share amounts)
2024
2023
2022
Product and equipment sales
$12,473.6 $12,316.8
$11,446.2
Service and lease sales
3,267.8
3,003.4
2,741.6
Net sales
15,741.4 15,320.2
14,187.8
Product and equipment cost of sales
6,990.0
7,389.2
7,212.8
Service and lease cost of sales
1,909.7
1,765.7
1,618.2
Cost of sales (including special charges (a))
8,899.7
9,154.9
8,831.0
Selling, general and administrative expenses
4,228.2
4,061.6
3,653.8
Special (gains) and charges
(188.9)
111.4
140.5
Operating income
2,802.4
1,992.3
1,562.5
Other (income) expense (b)
(51.3)
(59.9)
(24.5)
Interest expense, net
282.5
296.7
243.6
Income before income taxes
2,571.2
1,755.5
1,343.4
Provision for income taxes
439.3
362.5
234.5
Net income including noncontrolling interest
2,131.9
1,393.0
1,108.9
Net income attributable to noncontrolling interest
19.5
20.7
17.2
Net income attributable to Ecolab
$2,112.4 $1,372.3
$1,091.7
Earnings attributable to Ecolab per common share
Basic
$ 7.43
$ 4.82
$ 3.83
Diluted
$ 7.37
$ 4.79
$ 3.81
Weighted-average common shares outstanding
Basic
284.3
285.0
285.2
Diluted
286.6
286.5
286.6
(a) Cost of sales includes special (gains) and charges of $5.3 in 2024, $14.5 in 2023, and $65.0 in 2022, which is recorded in product
and equipment cost of sales. Cost of sales includes special (gains) and charges of $8.0 in 2023 and $4.9 in 2022, which is recorded
in service and lease cost of sales.
(b) Other (income) expense includes special charges of $50.6 in 2022.
The accompanying notes are an integral part of the consolidated financial statements.
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52
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions)
2024
2023
2022
Net income including noncontrolling interest
$2,131.9
$1,393.0
$1,108.9
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
Foreign currency translation
(187.1)
10.0
(333.4)
Gain (loss) on net investment hedges
52.4
(73.1)
108.3
Total foreign currency translation adjustments
(134.7)
(63.1)
(225.1)
Derivatives and hedging instruments
8.7
(7.8)
(1.2)
Pension and postretirement benefits
(5.6)
(55.1)
130.3
Subtotal
(131.6)
(126.0)
(96.0)
Total comprehensive income, including noncontrolling interest
2,000.3
1,267.0
1,012.9
Comprehensive income attributable to noncontrolling interest
19.5
18.5
13.0
Comprehensive income attributable to Ecolab
$1,980.8
$1,248.5
$999.9
The accompanying notes are an integral part of the consolidated financial statements.
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53
CONSOLIDATED BALANCE SHEETS
(millions, except per share amounts)
2024
2023
ASSETS
Current assets
Cash and cash equivalents
$1,256.8
$919.5
Accounts receivable, net
2,865.0
2,834.2
Inventories
1,464.9
1,497.2
Other current assets
439.0
393.2
Total current assets
6,025.7
5,644.1
Property, plant and equipment, net
3,752.4
3,474.6
Goodwill
7,907.3
8,148.2
Other intangible assets, net
3,308.8
3,493.5
Operating lease assets
723.2
553.5
Other assets
670.4
532.7
Total assets
$22,387.8
$21,846.6
LIABILITIES AND EQUITY
Current liabilities
Short-term debt
$615.7
$630.4
Accounts payable
1,810.0
1,566.3
Compensation and benefits
727.4
655.5
Income taxes
127.0
158.7
Other current liabilities
1,512.7
1,334.9
Total current liabilities
4,792.8
4,345.8
Long-term debt
6,949.2
7,551.4
Pension and postretirement benefits
634.9
651.7
Deferred income taxes
280.0
418.2
Operating lease liabilities
575.5
425.5
Other liabilities
366.2
381.8
Total liabilities
13,598.6
13,774.4
Commitments and contingencies (Note 15)
Equity (a)
Common stock
367.8
365.7
Additional paid-in capital
7,159.6
6,766.7
Retained earnings
11,517.1
10,075.4
Accumulated other comprehensive loss
(1,982.0)
(1,850.4)
Treasury stock
(8,305.2)
(7,312.7)
Total Ecolab shareholders’ equity
8,757.3
8,044.7
Noncontrolling interest
31.9
27.5
Total equity
8,789.2
8,072.2
Total liabilities and equity
$22,387.8
$21,846.6
(a) Common stock, 800.0 shares authorized, $1.00 par value, 283.4 shares outstanding at December 31, 2024 and 285.4 shares
outstanding at December 31, 2023. Shares outstanding are net of treasury stock.
The accompanying notes are an integral part of the consolidated financial statements.
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54
CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
2024
2023
2022
OPERATING ACTIVITIES
Net income including noncontrolling interest
$2,131.9
$1,393.0
$1,108.9
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation
634.9
616.7
618.5
Amortization
300.5
306.9
320.2
Deferred income taxes
(190.5)
(55.7)
(142.6)
Share-based compensation expense
134.8
95.1
87.8
Pension and postretirement plan contributions
(54.4)
(109.3)
(64.3)
Pension and postretirement plan expense (income), net
14.3
3.1
45.5
Restructuring charges, net of cash paid
23.7
(32.6)
66.2
Gain on sale of global surgical solutions business
(381.7)
-
-
Other, net
24.3
31.9
24.9
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable
(146.7)
(84.3)
(319.6)
Inventories
(115.6)
320.3
(402.9)
Other assets
(24.3)
72.2
(278.2)
Accounts payable
300.0
(232.3)
394.7
Other liabilities
162.7
86.8
329.3
Cash provided by operating activities
2,813.9
2,411.8
1,788.4
INVESTING ACTIVITIES
Capital expenditures
(994.5)
(774.8)
(712.8)
Property and other assets sold
11.3
9.9
2.2
Acquisitions and investments in affiliates, net of cash acquired
(312.9)
(180.4)
(7.2)
Divestiture of businesses, net of cash divested
889.7
-
-
Other, net
(27.4)
(45.2)
1.0
Cash used for investing activities
(433.8)
(990.5)
(716.8)
FINANCING ACTIVITIES
Net issuances (repayments) of commercial paper and notes payable
1.9
(1.9)
(404.3)
Long-term debt borrowings
-
-
494.0
Long-term debt repayments
(630.4)
(500.0)
-
Reacquired shares
(986.5)
(13.7)
(518.2)
Dividends paid
(664.3)
(617.3)
(602.8)
Exercise of employee stock options
259.4
96.8
29.1
Hedge settlements
(0.6)
(15.3)
172.0
Other, net
(3.6)
(3.3)
(7.1)
Cash used for financing activities
(2,024.1)
(1,054.7)
(837.3)
Effect of exchange rate changes on cash and cash equivalents
(18.7)
(45.7)
4.4
Increase in cash and cash equivalents
337.3
320.9
238.7
Cash and cash equivalents, beginning of period
919.5
598.6
359.9
Cash and cash equivalents, end of period
$1,256.8
$919.5
$598.6
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid
$647.4
$469.2
$308.9
Net interest paid
342.6
324.8
222.4
The accompanying notes are an integral part of the consolidated financial statements.
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55
CONSOLIDATED STATEMENTS OF EQUITY
Year ended December 31, 2024, 2023 and 2022
(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, 2021
$364.1
$6,464.6
$8,814.5
($1,634.8)
($6,784.2)
$7,224.2
$28.9
$7,253.1
Net income
1,091.7
1,091.7
17.2
1,108.9
Other comprehensive income
(loss) activity
(91.8)
(91.8)
(4.2)
(96.0)
Cash dividends declared (a)
(587.4)
(587.4)
(20.0)
(607.4)
Fair value adjustment of prior
acquisition
-
0.6
0.6
Stock options and awards
0.6
115.6
1.4
117.6
117.6
Reacquired shares
(518.2)
(518.2)
(518.2)
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
1,372.3
1,372.3
20.7
1,393.0
Other comprehensive income
(loss) activity
(123.8)
(123.8)
(2.2)
(126.0)
Cash dividends declared (a)
(615.7)
(615.7)
(13.5)
(629.2)
Changes in noncontrolling
interests
(4.5)
(4.5)
(4.5)
Stock options and awards
1.0
191.0
2.0
194.0
194.0
Reacquired shares
(13.7)
(13.7)
(13.7)
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
2,112.4
2,112.4
19.5
2,131.9
Other comprehensive income
(loss) activity
(131.6)
(131.6)
(131.6)
Cash dividends declared (a)
(670.7)
(670.7)
(15.1)
(685.8)
Stock options and awards
2.1
392.9
3.6
398.6
398.6
Reacquired shares
(996.1)
(996.1)
(996.1)
Balance, December 31, 2024
$367.8
$7,159.6
$11,517.1
($1,982.0)
($8,305.2)
$8,757.3
$31.9
$8,789.2
(a) Dividends declared per common share were $2.36, $2.16, and $2.06 in 2024, 2023 and 2022, respectively.
COMMON STOCK ACTIVITY
2024
2023
2022
Common
Treasury
Common
Treasury
Common
Treasury
Year ended December 31
Stock
Stock
Stock
Stock
Stock
Stock
Shares, beginning of year
365,748,640
(80,300,109) 364,711,841
(80,261,501) 364,139,362
(77,255,713)
Stock options
1,772,396
31,531
802,645
14,629
276,059
14,525
Stock awards
297,139
51,791
234,154
30,437
296,420
17,794
Reacquired shares
-
(4,246,642)
-
(83,674)
-
(3,038,107)
Shares, end of year
367,818,175
(84,463,429) 365,748,640
(80,300,109) 364,711,841
(80,261,501)
The accompanying notes are an integral part of the consolidated financial statements.
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56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS
Ecolab is a global leader in water, hygiene and infection prevention solutions and services that protect people and vital resources. The
Company delivers comprehensive solutions, data-driven insights and personalized service to advance food safety, maintain clean and
safe environments, optimize water and energy use and improve operational efficiencies and sustainability for customers in the food,
healthcare, high-tech, life sciences, hospitality and industrial markets in more than 170 countries.
The Company’s cleaning and sanitizing programs and products and pest elimination services support customers in the foodservice, food
and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management
sectors. The Company’s products and technologies are also used in water treatment, pollution control, energy conservation, refining,
primary metals manufacturing, papermaking, mining and other industrial processes.
The Company is aligned into four reportable segments: Global Industrial, Global Institutional & Specialty, Global Healthcare & Life
Sciences and Global Pest Elimination as discussed in Note 18 Operating Segments and Geographical Information.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and all subsidiaries in which the Company has a controlling
financial interest. Investments in companies, joint ventures or partnerships in which the Company does not have control but has the
ability to exercise significant influence over operating and financial decisions, are reported using the equity method of accounting. The
measurement alternative is used for investments in companies, joint ventures and partnerships over which the Company has neither
control nor significant influence and for which the investment does not have a readily determinable fair value. Under the measurement
alternative, investments are recorded at cost and adjusted for impairments, if any, or observable price changes. International subsidiaries
are included in the financial statements on the basis of their U.S. GAAP November 30 fiscal year ends to facilitate the timely inclusion of
such entities in the Company’s consolidated financial reporting. All intercompany transactions and profits are eliminated in consolidation.
Use of Estimates
The preparation of the Company’s financial statements requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from these estimates. The Company’s critical accounting estimates include
revenue recognition, litigation and environmental reserves, actuarially determined liabilities, income taxes, long-lived assets, intangible
assets and goodwill.
Foreign Currency Translation
Financial position and reported results of operations of the Company’s non-U.S. dollar functional currency international subsidiaries are
measured using local currencies as the functional currency. Assets and liabilities of these operations are translated at the exchange rates
in effect at each fiscal year end. The translation adjustments related to assets and liabilities that arise from changes in exchange rates
from period to period are included in accumulated other comprehensive income (loss) in shareholders’ equity. Income statement
accounts are translated at average rates of exchange prevailing during the year. As discussed in Note 18 Operating Segments and
Geographic Information, the Company evaluates its international operations based on fixed rates of exchange; however, changes in
exchange rates from period to period impact the amount of reported income from consolidated operations.
Concentration of Credit Risk
Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed to perform as contracted.
The Company believes the likelihood of incurring material losses due to concentration of credit risk is minimal. The principal financial
instruments subject to credit risk are as follows:
Cash and Cash Equivalents - The Company maintains cash deposits with major banks, which from time to time may exceed insured
limits. The possibility of loss related to financial condition of major banks has been deemed minimal. Additionally, the Company’s
investment policy limits exposure to concentrations of credit risk and changes in market conditions.
Accounts Receivable - A large number of customers in diverse industries and geographies, as well as the practice of establishing
reasonable credit lines, limits credit risk. Based on historical trends and experiences, the allowance for expected credit losses is
adequate to cover expected credit risk losses.
Foreign Currency and Interest Rate Contracts and Derivatives - Exposure to credit risk is limited by internal policies and active monitoring
of counterparty risks. In addition, the Company uses a diversified group of major international banks and financial institutions as
counterparties. The Company does not anticipate nonperformance by any of these counterparties.
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Cash and Cash Equivalents
Cash equivalents include highly-liquid investments with a maturity of three months or less when purchased.
Accounts Receivable and Allowance for Expected Credit Losses
Accounts receivable are carried at the invoiced amounts, less an allowance for expected credit losses, and generally do not bear interest.
The Company’s allowance for expected credit losses estimates the amount of expected future credit losses by analyzing accounts
receivable balances by age and applying historical write-off and collection experience. The Company’s estimates separately consider
macroeconomic trends, specific circumstances and credit conditions of customer receivables. Account balances are written off against
the allowance when it is determined the receivable will not be recovered.
The Company’s allowance for the expected return of products shipped and credits related to pricing or quantities shipped was $53
million, $72 million, and $59 million as of December 31, 2024, 2023 and 2022, respectively. Returns and credit activity is recorded
directly as a reduction to revenue.
The following table summarizes the activity in the allowance for expected credit losses:
(millions)
2024
2023
2022
Beginning balance
$77.3
$71.9
$52.8
Bad debt expense
46.9
54.0
38.1
Write-offs
(51.0)
(46.2)
(21.1)
Other (a)
(3.2)
(2.4)
2.1
Ending balance
$70.0
$77.3
$71.9
(a) Other amounts are primarily the effects of changes in currency translations and acquired balances.
Inventory Valuations
Inventories are valued at the lower of cost or net realizable value. Certain U.S. inventory costs are determined on a last-in, first-out
(“LIFO”) basis. LIFO inventories represented 31% and 30% of consolidated inventories as of December 31, 2024 and 2023 respectively.
All other inventory costs are determined using either the average cost or first-in, first-out (“FIFO”) methods. Inventory values at FIFO, as
shown in Note 5, approximate replacement cost.
Property, Plant and Equipment
Property, plant and equipment assets are stated at cost. Merchandising and customer equipment consists principally of various
dispensing systems for the Company’s cleaning and sanitizing products, warewashing machines and process control and monitoring
equipment. Certain dispensing systems capitalized by the Company are accounted for on a mass asset basis, whereby equipment is
capitalized and depreciated as a group and written off when fully depreciated. The Company capitalizes both internal and external costs
to develop or purchase computer software. Costs incurred for data conversion, training and maintenance associated with capitalized
software are expensed as incurred. Expenditures for major renewals and improvements, which significantly extend the useful lives of
existing plant and equipment, are capitalized and depreciated. Expenditures for repairs and maintenance are charged to expense as
incurred. Upon retirement or disposition of plant and equipment, the cost and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is recognized in income.
Depreciation is charged to operations using the straight-line method over the assets’ estimated useful lives ranging from 5 to 40 years for
buildings and leasehold improvements, 3 to 20 years for machinery and equipment, 3 to 20 years for merchandising and customer
equipment and 3 to 7 years for capitalized software. The straight-line method of depreciation reflects an appropriate allocation of the cost
of the assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period.
Depreciation expense was $635 million, $617 million and $619 million for 2024, 2023 and 2022, respectively.
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58
Goodwill and Other Intangible Assets
Goodwill
Goodwill arises from the Company’s acquisitions and represents the excess of the fair value of the purchase consideration exchanged
over the fair value of net assets acquired. The Company’s reporting units are its eight operating segments. The Company assesses
goodwill for impairment on an annual basis during the second quarter. If circumstances change or events occur that demonstrate it is
more likely than not that the carrying amount of a reporting unit exceeds its fair value, the Company completes an interim goodwill
impairment assessment of that reporting unit prior to the next annual assessment. If the results of an annual or interim goodwill
impairment assessment demonstrate the carrying amount of a reporting unit is greater than its fair value, the Company will recognize an
impairment loss for the amount by which the reporting unit’s carrying amount exceeds its fair value, but not to exceed the carrying
amount of goodwill assigned to that reporting unit.
During the second quarter of 2024, the Company completed its annual goodwill impairment assessment for its eight reporting units using
discounted cash flow analyses that incorporated assumptions regarding future growth rates, terminal values and discount rates. The
Company’s goodwill impairment assessments for 2024 indicated the estimated fair values of each of these eight reporting units exceeded
the carrying amounts of the respective reporting unit by a significant margin. The Company evaluates the need to complete interim
goodwill impairment assessments when significant events or changes in business circumstances indicate that it is more likely than not
that the carrying amount of a reporting unit may be higher than its fair value. No events were noted during the second half of 2024 that
required completion of an interim goodwill impairment assessment for any of the Company’s eight reporting units. There has been no
impairment of goodwill in any of the periods presented.
The changes in the carrying amount of goodwill for each of the Company’s reportable segments were as follows:
Global
Global
Global
Global
Institutional Healthcare &
Pest
(millions)
Industrial & Specialty Life Sciences Elimination
Other
Total
December 31, 2022
$4,081.8
$567.6
$3,125.4
$-
$237.9
$8,012.7
Segment change (a)
102.3
-
-
135.6 (237.9)
-
December 31, 2022 recast
4,184.1
567.6
3,125.4
135.6
-
8,012.7
Current year business combinations (b)
30.8
39.3
-
-
-
70.1
Effect of foreign currency translation
28.6
3.1
33.0
0.7
-
65.4
December 31, 2023
$4,243.5
$610.0
$3,158.4 $136.3
$-
$8,148.2
Current year business combinations (b)
116.2
6.5
-
33.9
-
156.6
Prior year business combinations (c)
1.2
-
-
-
-
1.2
Divestiture of businesses (d)
-
-
(305.9)
-
-
(305.9)
Effect of foreign currency translation
(56.0)
(3.3)
(32.7)
(0.8)
-
(92.8)
December 31, 2024
$4,304.9
$613.2
$2,819.8 $169.4
$-
$7,907.3
(a) Relates to reclassifications made to reportable segments in the current year. Effective January 1, 2024, the Company’s former
Textile Care and Colloidal Technologies Group (“CTG”) operating segments are now part of the Water operating segment which
continues to remain in the Global Industrial reportable segment. Additionally, the Pest Elimination operating segment, formerly
aggregated with the Textile Care and CTG operating segments within Other, is now reported as the stand-alone Global Pest
Elimination reportable segment. After these changes, the Company has eight operating segments aligned with eight reporting units.
Refer to Note 18 for further information.
(b) Represents goodwill associated with current year acquisitions. For 2024, approximately $132 of goodwill related to businesses
acquired is expected to be tax deductible related primarily to the acquisition of Barclay Water Management. For 2023,
approximately $62 of goodwill related to businesses acquired is expected to be tax deductible related primarily to the acquisitions of
Chemlink Laboratories LLC and Flottec, LLC. Refer to Note 4 for additional information.
(c)
Represents purchase price allocation adjustments for acquisitions deemed preliminary as of the end of the prior year.
(d) Represents goodwill associated with the sale of the global surgical solutions business (refer to Note 4 for additional information).
Other Intangible Assets
The Nalco trade name is the Company’s only indefinite life intangible asset, which is tested for impairment on an annual basis during the
second quarter. During the second quarter of 2024, the Company completed its annual impairment assessment of the Nalco trade name
using the relief from royalty discounted cash flow method, which incorporates assumptions regarding future sales projections, royalty rate
and discount rates. The Company’s Nalco trade name impairment assessment for 2024 indicated the estimated fair value of the Nalco
trade name exceeded its $1.2 billion carrying amount by a significant margin. No events were noted during the second half of 2024 that
required completion of an interim impairment assessment of the Company’s Nalco trade name. There has been no impairment of the
Nalco trade name intangible asset since it was acquired.
The Company’s intangible assets subject to amortization include customer relationships, trademarks, patents and other technology
primarily acquired through business acquisitions. The fair value of intangible assets acquired in business acquisitions are estimated
primarily using discounted cash flow valuation methods at the time of acquisition. Intangible assets are amortized on a straight-line basis
over their estimated lives. The weighted-average useful life of amortizable intangible assets was 15 years as of both December 31, 2024
and 2023.
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59
The weighted-average useful life by type of amortizable asset at December 31, 2024 were as follows:
(years)
Customer relationships
15
Patents
15
Trademarks
13
Other technology
12
The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to
the amount of economic benefits obtained by the Company in each reporting period. The Company evaluates the remaining useful life of
its intangible assets subject to amortization each reporting period to determine whether events and circumstances warrant a change to
the estimated remaining period of amortization. If the estimate of an intangible asset’s remaining useful life is changed, the remaining
carrying amount of the intangible asset will be amortized prospectively over the updated remaining useful life. Amortization expense
related to other intangible assets during the last three years and future estimated amortization were as follows:
(millions)
2022
$320
2023
307
2024
301
2025
293
2026
287
2027
165
2028
157
2029
149
Long-Lived Assets
The Company reviews its long-lived and amortizable intangible assets for impairment when significant events or changes in business
circumstances indicate that the carrying amount of the assets, or asset group to which it is assigned, may not be recoverable. Such
circumstances may include a significant decrease in the market price of an asset or asset group, a significant adverse change in the
manner in which the asset or asset group is being used or history of cash flow losses associated with the use of an asset or asset group.
Impairment losses could occur when the carrying amount of an asset or asset group exceeds the anticipated future undiscounted cash
flows expected to result from the use of the asset or asset group and its eventual disposition. The amount of the impairment loss to be
recorded, if any, is calculated by the excess of the asset’s or asset group’s carrying value over its fair value.
In addition, the Company periodically reassesses the estimated remaining useful lives of its long-lived assets. Changes to estimated
useful lives would impact the amount of depreciation and amortization recorded in earnings. The Company has not experienced
significant changes in the carrying amount or estimated remaining useful lives of its long-lived or amortizable intangible assets.
Rental and Leases
Lessee
The Company determines whether a lease exists at the inception of the arrangement. In assessing whether a contract is or contains a
lease, the Company evaluates whether the arrangement conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. The Company accounts for lease components separately from the nonlease components (e.g., common-
area maintenance costs, property taxes, parking, etc.). Operating leases are recorded in operating lease assets, other current liabilities
and operating lease liabilities in the Consolidated Balance Sheets.
Operating lease assets and operating lease liabilities are measured and recognized based on the present value of the future minimum
lease payments over the estimated lease term at the lease commencement date. The Company uses the rate implicit in the lease when
available or determinable. When the rate implicit in the lease is not determinable, the Company uses its incremental borrowing rate
based on the information available at the lease commencement date to determine the present value of future payments. Lease expense
for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the
lease liability and are recognized as incurred. The Company identified real estate, vehicles and other equipment as the primary classes
of its leases. Certain leases with a similar class of underlying assets are accounted for as a portfolio of leases.
The Company does not record operating lease assets or liabilities for leases with terms of twelve months or less. Those lease payments
are recognized in the Consolidated Statements of Income over the lease term as incurred.
Many of the Company’s leases include options to renew or cancel, which are at the Company’s sole discretion. Renewal terms can
extend the lease term from one month to multiple years, whereas, cancellation terms can shorten the lease term by multiple years. The
lease start date is the date when the leased asset is available for use and in possession of the Company. The lease end date, which
includes any options to renew or cancel that are reasonably certain to be exercised, is based on the terms of the contract. The
depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or
purchase option reasonably certain of exercise. The Company’s lease agreements do not contain any material restrictive covenants.
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60
Lessor
The Company accounts for lease and nonlease components separately. The nonlease components, such as product and service
revenue, are accounted for under Topic 606 Revenue from Contracts with Customers, refer to Note 17 for more information. Revenue
from leasing equipment is recognized on a straight-line basis over the life of the lease. Cost of sales includes the depreciation expense
for assets under operating leases. The assets are depreciated over their estimated useful lives. Initial lease terms range from one year to
five years and most leases include renewal options.
Lease contracts convey the right for the customer to control the equipment for a period of time as defined by the contract. There are no
options for the customer to purchase the equipment and therefore the equipment remains the property of the Company at the end of the
lease term. Refer to Note 13 for additional information regarding rental and leases.
Income Taxes
Income taxes are recognized during the period in which transactions enter into the determination of financial statement income, with
deferred income taxes provided for the tax effect of temporary differences between the carrying amount of assets and liabilities and their
tax bases. The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability
exists. Relevant factors in determining the realizability of deferred tax assets include historical results, sources of future taxable income,
the expected timing of the reversal of temporary differences, tax planning strategies and the expiration dates of the various tax attributes.
The Company records liabilities for unrecognized tax benefits in accordance with the U.S. GAAP recognition and measurement criteria
guidance. The Company has elected the period cost method and considers the estimated global intangible low taxed income (“GILTI”)
impact in tax expense. The Company recognizes interest and penalties related to unrecognized tax benefits in the income tax provision.
Refer to Note 12 for additional information regarding income taxes.
Share-Based Compensation
The Company measures compensation expense for share-based awards at fair value at the date of grant and recognizes compensation
expense over the service period for awards expected to vest. The majority of grants to retirement eligible recipients (age 55 with required
years of service) are recorded to expense using the non-substantive vesting method and are fully expensed over a six-month period
following the date of grant. In addition, the Company includes a forfeiture estimate in the amount of compensation expense being
recognized based on an estimate of the number of outstanding awards expected to vest.
All excess tax benefits or deficiencies are recognized as discrete income tax items on the Consolidated Statements of Income. The
extent of excess tax benefits is subject to variation in stock price and stock option exercises. Refer to Note 11 for additional information
regarding equity compensation plans.
Restructuring Activities
The Company’s restructuring activities are associated with plans to enhance its efficiency, effectiveness and sharpen its competitiveness.
These restructuring plans include net costs associated with significant actions involving employee-related severance charges, contract
termination costs and asset write-downs and disposals. Employee termination costs are largely based on policies and severance plans,
and include personnel reductions and related costs for severance, benefits and outplacement services. These charges are reflected in
the quarter in which the actions are probable and the amounts are estimable, which typically is when management approves the
associated actions. Contract termination costs include charges to terminate leases prior to the end of their respective terms and other
contract termination costs. Asset write-downs and disposals include leasehold improvement write-downs, other asset write-downs
associated with combining operations and disposal of assets. Refer to Note 3 for additional information regarding restructuring activities.
Revenue Recognition
Revenue is measured as the amount of consideration expected to be received in exchange for transferring goods or providing service.
Product and Sold Equipment
Revenue from product and sold equipment is recognized when obligations under the terms of a contract with the customer are satisfied,
which generally occurs with the transfer of the product or delivery of the equipment.
Service and Lease Equipment
Revenue from service and leased equipment is recognized when the services are provided, or the customer receives the benefit from the
leased equipment, which is over time. Service revenue is recognized over time utilizing an input method and aligns with when the
services are provided. Typically, revenue is recognized using costs incurred to date because the effort provided by the field selling and
service organization represents services provided, which corresponds with the transfer of control. Revenue for leased equipment is
accounted for under Topic 842 Leases and recognized on a straight-line basis over the length of the lease contract.
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61
Other Considerations
Contracts with customers may include multiple performance obligations. For contracts with multiple performance obligations, the
consideration is allocated between products and services based on their stand-alone selling prices. Stand-alone selling prices are
generally based on the prices charged to customers when the good or service is not bundled with other product or services or using an
expected cost plus margin. Judgment is used in determining the amount of service that is embedded within the Company’s contracts,
which is based on the amount of time spent on the performance obligation activities. The level of effort, including the estimated margin
that would be charged, is used to determine the amount of service revenue. Depending on the terms of the contract, the Company may
defer the recognition of revenue when a future performance obligation has not yet occurred.
Taxes assessed by a governmental authority that are both imposed on, and concurrent with, a specific revenue-producing transaction,
which are collected by the Company from a customer, are excluded from revenue. Shipping and handling costs associated with outbound
freight are recognized in cost of sales when control over the product has transferred to the customer.
Other estimates used in recognizing revenue include allocating variable consideration to customer programs and incentive offerings,
including pricing arrangements, promotions and other volume-based incentives at the time the sale is recorded. These estimates are
based primarily on historical experience and anticipated performance over the contract period. Based on the certainty in estimating these
amounts, they are included in the transaction price of the contracts and the associated remaining performance obligations. The Company
recognizes revenue when collection of the consideration expected to be received in exchange for transferring goods or providing services
is probable.
The Company’s revenue policies do not provide for general rights of return. Estimates used in recognizing revenue include the delay
between the time that products are shipped and when they are received by customers, when title transfers and the amount of credit
memos issued in subsequent periods. Depending on market conditions, the Company may increase customer incentive offerings, which
could reduce gross profit margins over the term of the incentive.
Earnings Per Common Share
The difference in the weighted average common shares outstanding for calculating basic and diluted earnings attributable to Ecolab per
common share is a result of the dilution associated with the Company’s equity compensation plans. As noted in the table below, certain
stock options and units outstanding under these equity compensation plans were not included in the computation of diluted earnings
attributable to Ecolab per common share because they would not have had a dilutive effect.
The computations of the basic and diluted earnings attributable to Ecolab per share amounts were as follows:
(millions, except per share)
2024
2023
2022
Net income attributable to Ecolab
$2,112.4
$1,372.3
$1,091.7
Weighted-average common shares outstanding
Basic
284.3
285.0
285.2
Effect of dilutive stock options and units
2.3
1.6
1.4
Diluted
286.6
286.5
286.6
Earnings attributable to Ecolab per common share
Basic EPS
$7.43
$4.82
$3.83
Diluted EPS
$7.37
$4.79
$3.81
Anti-dilutive securities excluded from the computation of diluted EPS
0.6
4.3
3.9
Amounts do not necessarily sum due to rounding.
Assets Held for Sale
Assets and liabilities are classified as held for sale and presented separately on the balance sheet when all of the following criteria for a
plan of sale have been met: (1) management, having the authority to approve the action, commits to a plan to sell the assets; (2) the
assets are available for immediate sale, in their present condition, subject only to terms that are usual and customary for sales of such
assets; (3) an active program to locate a buyer and other actions required to complete the plan to sell the assets have been initiated; (4)
the sale of the assets is probable and transfer of the assets is expected to be completed within one year; (5) the assets are being actively
marketed for a price that is reasonable in relation to their current fair value; and (6) actions required to complete the plan indicate that it is
unlikely that significant changes to the plan will be made or the plan will be withdrawn. Assets held for sale are measured at the lower of
carrying value or fair value less costs to sell. Any loss resulting from the measurement is recognized in the period the held-for-sale
criteria are met. Gains are not recognized until the date of the sale. When the disposal group is classified as held for sale, depreciation
and amortization for long-lived assets ceases and the Company tests the assets for impairment.
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62
Supplier Finance
In the second quarter of 2024, the Company commenced a voluntary supply chain finance program (the “Program”) to provide certain
suppliers with the opportunity to sell receivables due from the Company to a participating financial institution at the sole discretion of both
the suppliers and the financial institution. These participating suppliers negotiate their outstanding receivable arrangements directly with
the financial institution, and the Company’s obligation to its suppliers, including amounts due and scheduled payment terms, are not
impacted by the Company’s suppliers’ decisions to sell amounts under these arrangements. All Company payments to participating
suppliers are paid to the financial institution on the invoice due date, regardless of whether the individual invoice is sold by the supplier to
the financial institution. The range of payment terms the Company negotiates with its suppliers is consistent, irrespective of whether a
supplier participates in the Program.
All outstanding payments owed under the Program are recorded within Accounts payable in the Consolidated Balance Sheets. The
Company accounts for all payments made under the Program as a reduction to operating cash flows in Accounts payable within the
Consolidated Statements of Cash Flows. The amounts owed to a participating financial institution under the Program are not material as
of December 31, 2024.
Other Significant Accounting Policies
The following table includes a reference to additional significant accounting policies that are described in other notes to the financial
statements, including the note number:
Policy
Note
Fair value measurements
7
Derivatives and hedging transactions
8
Share-based compensation
10
Research and development expenditures
14
Legal contingencies
15
Pension and post-retirement benefit plans
16
Reportable segments
18
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63
New Accounting Pronouncements
Standards That Are Not Yet Adopted:
Date of
Required Date of
Effect on the
Standard
Issuance
Description
Adoption
Financial Statements
ASU 2024-03 and ASU 2025-01 Income Statement
- Reporting Comprehensive Income - Expense
Disaggregation Disclosures (Subtopic 220-40):
Disaggregation of Income Statement Expenses
November 2024
The amendments in this ASU are
intended to improve expense
disclosures, primarily by requiring
disclosure of disaggregated
information about certain income
statement expense line items on an
annual and interim basis.
Effective for
annual reporting
periods
beginning after
December 15,
2026 and
interim periods
within annual
reporting periods
beginning after
December 15,
2027, with early
adoption
permitted.
The updates required by
this standard should be
applied prospectively, but
retrospective application is
permitted. The Company is
currently evaluating the
impact of adoption and
additional disclosure
requirements.
ASU 2023-09 Income taxes (Topic 740):
Improvements to Income Tax Disclosures
December 2023
The amendments in this Update
require that public business entities
on an annual basis (1) disclose
specific categories in the rate
reconciliation and (2) provide
additional information for
reconciling items that meet a
quantitative threshold.
January 1, 2025
The Company is currently
evaluating the impact of
adoption and additional
disclosure requirements.
Standards That Were Adopted:
Date of
Date of
Effect on the
Standard
Issuance
Description
Adoption
Financial Statements
ASU 2023-07 - Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures
November 2023
The amendments in this ASU are
to improve the disclosures about
reportable segments and add
more detailed information about a
reportable segment’s expenses.
The amendments in the ASU
require public entities to disclose
on an annual and interim basis
significant segment expenses that
are regularly provided to the chief
operating decision maker
(“CODM”) and included within
each reported measure of
segment profit or loss, other
segment items by reportable
segment, the title and position of
the CODM, and an explanation of
how the CODM uses the reported
measures of segment profit or
loss in assessing segment
performance and deciding how to
allocate resources. The ASU does
not change the definition of a
segment, the method for
determining segments, the criteria
for aggregating operating
segments into reportable
segments, or the current
specifically enumerated segment
expenses that are required to be
disclosed.
January 1, 2024
The Company adopted the
standard and applied the
amendments
retrospectively to all
periods presented.
Adoption of this standard
impacted the disclosures
within the financial
statements, but did not
have an impact on the
Company's financial
position or the results of
operations.
No other new accounting pronouncement issued or effective has had or is expected to have a material impact on the Company’s
consolidated financial statements.
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64
3. SPECIAL (GAINS) AND CHARGES
Special (gains) and charges reported on the Consolidated Statements of Income included the following:
(millions)
2024
2023
2022
Cost of sales
One Ecolab
$1.9
$-
$-
Other restructuring
3.4
22.5
21.4
Acquisition and integration activities
-
-
25.0
Other
-
-
23.5
Cost of sales subtotal
5.3
22.5
69.9
Special (gains) and charges
One Ecolab
98.3
-
-
Other restructuring
21.8
63.2
85.8
Sale of global surgical solutions business
(340.3)
10.3
-
Acquisition and integration activities
12.6
16.1
14.5
Other
18.7
21.8
40.2
Special (gains) and charges subtotal
(188.9)
111.4
140.5
Operating income subtotal
(183.6)
133.9
210.4
Other (income) expense
-
-
50.6
Total special (gains) and charges
($183.6)
$133.9
$261.0
For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with the
Company’s internal management reporting.
One Ecolab
On July 30, 2024, the Company announced the One Ecolab initiative, which will enhance its growth and margin expansion journey. As a
program within this initiative, the Company also announced that it commenced a restructuring plan to leverage its digital technologies to
realign the functional work done in many countries into global centers of excellence. The Company anticipates restructuring costs of
$175 million ($136 million after tax) and special charges of $50 million ($39 million after tax) by the end of 2027. The Company
anticipates that the restructuring costs will primarily be cash expenditures for severance costs relating to team reorganization.
In anticipation of this One Ecolab initiative, a limited number of actions were taken in the first and second quarter of 2024. As a result, the
Company reclassified $5.3 million ($4.0 million after tax) from other restructuring to One Ecolab in the third quarter of 2024.
In 2024 the Company recorded restructuring charges of $76.5 million ($59.0 million after tax) related to severance and professional
services. In addition, the Company recorded non-restructuring special charges of $23.7 million ($17.9 million after tax) in 2024 primarily
related to professional services. The Company has recorded $81.8 million ($63.0 million after tax) of cumulative restructuring charges
and $23.7 million ($17.9 million after tax) of cumulative special charges under the One Ecolab initiative. Net cash payments were $26.9
million during 2024.
The net restructuring liability related to the One Ecolab initiative was $54.9 million as of December 31, 2024. 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 One Ecolab initiative since inception of the underlying actions includes the following items:
Employee
Asset
Costs
Disposals
Other
Total
(millions)
2024 Activity
Recorded expense (income) and accrual
$46.3
$-
$30.2
$76.5
Net cash payments
-
-
(26.9)
(26.9)
Non-cash net charges
-
-
-
-
Reclassification
-
-
5.3
5.3
Restructuring liability, December 31, 2024
$46.3
$-
$8.6
$54.9
Other 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, special (gains) and charges, other (income) expense and interest expense, net 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.
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Combined Program
In November 2022 the Company approved a Europe cost savings program. 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 expected to incur total pre-tax charges of $195 million ($150 million after tax).
The Company completed these restructuring charges at the end of 2024. Program actions included headcount reductions from
terminations, not filling certain open positions, and facility closures. The Combined Program charges were 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.
In 2024, 2023 and 2022 the Company recorded restructuring charges of $25.2 million ($18.6 million after tax), $77.7 million ($66.4 million
after tax) and $67.2 million ($56.0 million after tax), respectively, primarily related to severance and professional services. Restructuring
activities were completed at the end of 2024, with total costs $184.1 million ($151.5 million after tax).
The Company reclassified $5.3 million ($4.0 million after tax) from the Combined restructuring program to other restructuring activities in
the second quarter of 2024.
Net cash payments were $48.9 million and non-cash net charges were $1.3 million during 2024. The net liability related to the Combined
Program was $12.8 million and $43.1 million as of December 31, 2024 and 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:
Employee
Asset
(millions)
Costs
Disposals
Other
Total
2022 Activity
Recorded expense and accrual
$67.2
$-
$-
$67.2
Net cash payments
(5.2)
-
-
(5.2)
Net restructuring liability, December 31, 2022
62.0
-
-
62.0
2023 Activity
Recorded expense and accrual
47.0
14.0
16.7
77.7
Net cash payments
(85.2)
-
(16.7)
(101.9)
Non-cash charges
-
(14.0)
-
(14.0)
Reclassification
19.3
-
-
19.3
Net restructuring liability, December 31, 2023
43.1
-
-
43.1
2024 Activity
Recorded expense and accrual
3.8
1.3
20.1
25.2
Net cash payments
(34.1)
-
(14.8)
(48.9)
Non-cash charges
-
(1.3)
-
(1.3)
Reclassification
-
-
(5.3)
(5.3)
Net restructuring liability, December 31, 2024
$12.8
$-
$-
$12.8
Other Restructuring Activities
During 2024, the Company recorded restructuring charges of $10.6 million ($8.0 million after tax) related to an immaterial restructuring
plan approved in the second quarter. This plan became part of the One Ecolab initiative in the third quarter.
During 2023 and 2022, the Company recorded restructuring charges of $8.0 million ($6.0 million after tax) and $40.0 million ($31.1
million after tax), respectively, related to immaterial or subsequently concluded restructuring programs. The charges primarily related to
severance and asset write-offs.
The restructuring liability balance for all other restructuring plans excluding the One Ecolab and Combined Program, were $6.5 million
and $8.2 million as of December 31, 2024 and 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. Cash payments during 2024 related to all other
restructuring plans excluding the One Ecolab and Combined Programs were $2.2 million.
Sale of global surgical solutions business
On April 27, 2024, the Company reached a definitive agreement to sell its global surgical solutions business, which closed on August 1,
2024. During 2024 the Company recorded a gain on sale of $355.9 million ($257.7 million after tax) as described in Note 4. Excluding the
gain on sale, the Company recorded charges of $15.6 million ($12.0 million after tax) in 2024, which are primarily related to professional
fees to support the sale. During 2023 the Company recorded charges of $10.3 million ($7.7 million after tax) primarily related to
professional fees to support the sale.
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66
Acquisition and integration related costs
Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income in 2024
include $12.6 million ($9.6 million after tax) related primarily to the Purolite transaction.
Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income in 2023
include $16.1 million ($12.0 million after tax). Charges are integration related costs primarily related to the Purolite transaction.
Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income include $14.5
million ($11.4 million after tax) in 2022. Charges are related primarily to the Purolite transaction and consisted of integration costs,
advisory and legal fees. Acquisition and integration costs reported in product and equipment cost of sales on the Consolidated
Statements of Income in 2022 include $25.0 million ($19.6 million after tax) and are related to the recognition of fair value step-up in the
Purolite inventory and other integration costs.
Other operating activities
During 2022, the Company recorded other operating activities to cost of sales on the Consolidated Statements of Income of $23.5 million
($19.6 million after tax), relating primarily to COVID-19 activities.
During 2024, the Company recorded other operating activities to special (gains) and charges on the Consolidated Statements of Income
of $18.7 million ($13.9 million after tax), relating primarily to a liability relating to a prior divestiture, COVID-19 activities, and certain legal
charges. During 2023 and 2022, the Company recorded other operating activities to special (gains) and charges on the Consolidated
Statements of Income of $21.8 million ($16.7 million after tax) and $40.2 million ($31.4 million after tax), respectively, relating primarily to
certain legal charges.
Other (income) expense
During 2022, the Company incurred pension settlement expense recorded in other (income) expense on the Consolidated Statements of
Income of $50.6 million ($38.2 million after tax), respectively, related to U.S. pension plan lump-sum payments to retirees.
4. ACQUISITIONS AND DISPOSITIONS
Acquisitions
The Company makes business acquisitions that align with its strategic business objectives. The assets and liabilities of acquired
businesses are recorded in the Consolidated Balance Sheets based on estimates of the fair value of assets acquired, liabilities assumed
and noncontrolling interests acquired as of the acquisition date. Goodwill is recognized in the amount that the purchase consideration
paid exceeds the fair value of the net assets acquired. Purchase consideration includes both cash paid and the fair value of noncash
consideration exchanged, including stock and/or contingent consideration exchanged, and is reduced by the amount of cash or cash
equivalents acquired. Acquisitions during 2024, 2023 and 2022 were not significant to the Company’s consolidated financial statements;
therefore, pro forma financial information is not presented.
2024 Activity
In November 2024, the Company acquired Barclay Water Management, a fast-growing provider of water safety and digital monitoring
solutions for industrial and institutional customers based primarily in the northeastern U.S for total consideration of $262.2 million in cash.
The acquisition became part of the Global Industrial reporting segment. The purchase accounting for this acquisition is preliminary and
subject to change as the Company finalizes the valuation of intangible assets, income tax balances and working capital. The goodwill
arising from the acquisition of Barclay Water Management is tax deductible.
During 2024, the Company completed an immaterial acquisition which became part of the Global Institutional & Specialty reporting
segment. The Company also completed two immaterial acquisitions both of which became part of the Global Pest Elimination reporting
segment. The purchase accounting for these acquisitions is preliminary and subject to change as the Company finalizes the valuation of
intangible assets, income tax balances and working capital. The goodwill arising from these acquisitions is tax deductible.
2023 Activity
In November 2023, the Company acquired Flottec, LLC, a U.S.-based provider of flotation products and services for the mineral
processing industry. The move will expand Nalco Water’s flotation offerings and its work to serve the industry from mine to metal. The
acquisition became part of the Global Industrial reporting segment. The purchase accounting for this acquisition was finalized in the
fourth quarter of 2024 and no further purchase accounting adjustments will be recorded. The goodwill arising from the acquisition of
Flottec, LLC is tax deductible.
In May 2023, the Company acquired Chemlink Laboratories LLC, a U.S.-based producer of small format cleaning solutions. The
Company made two other immaterial acquisitions during the second quarter of 2023. All three acquisitions became part of the Global
Institutional & Specialty reporting segment. The purchase accounting for these acquisitions was finalized in the second quarter of 2024
and no further purchase accounting adjustments will be recorded. The goodwill arising from the acquisition of Chemlink Laboratories LLC
is tax deductible.
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67
2022 Activity
No acquisitions occurred during 2022.
Acquisitions
The components of the cash paid for acquisitions (as further disclosed above), for 2024, 2023 and 2022, are shown in the following table:
(millions)
2024
2023
2022
Net tangible assets (liabilities) acquired
$22.7
$20.8
$-
Identifiable intangible assets
Customer relationships
118.3
60.8
-
Trademarks
5.7
-
-
Non-compete agreements
1.6
2.1
-
Other technologies
17.6
25.8
-
Total intangible assets
143.2
88.7
-
Goodwill
156.7
70.2
-
Total aggregate purchase price
322.6
179.7
-
Acquisition-related liabilities and contingent consideration
(12.9)
(3.9)
-
Total cash paid for acquisitions, including acquisition-related
liabilities and contingent consideration, net of cash acquired
$309.7
$175.8
$-
During 2024, the Company recorded purchase accounting adjustments associated with its 2023 acquisition of Flottec, LLC and two other
immaterial acquisitions. As a result of these purchase accounting adjustments, the Company made $3.2 million of acquisition-related
payments, acquisition related net tangible assets decreased by $2.5 million, definite-lived intangible assets increased by $1.0 million and
goodwill increased by $1.2 million.
During 2023, the Company recorded purchase accounting adjustments. As a result of these purchase accounting adjustments, the
Company made $4.1 million of acquisition-related payments, acquisition related net tangible assets increased by $1.7 million, acquisition
related liabilities and contingent consideration decreased by $1.7 million and goodwill increased by $0.7 million.
During 2022, the Company recorded purchase accounting adjustments associated with the finalization of the purchase accounting for its
acquisitions of Purolite, LLC, TechTex Holdings Limited, National Wiper Alliance, Inc. and EPN Water Col, Ltd. As a result of these
purchase accounting adjustments, the Company made $7.2 million of acquisition-related payments, acquisition related net tangible
assets decreased by $55.6 million, definite-lived intangible assets decreased by $191.0 million, and goodwill increased by $253.8 million.
The weighted average useful lives of identifiable intangible assets acquired during 2024 and 2023 were 15 and 12 years, respectively.
No intangible assets were acquired during 2022.
Dispositions
On April 27, 2024, the Company entered into an agreement to sell its global surgical solutions business for total consideration of $950
million, subject to certain working capital and other purchase price adjustments. On August 1, 2024, the Company closed the sale and
received $926 million in cash, after deducting for defined working capital and other purchase price adjustments. In December 2024, the
Company recorded an additional purchase price adjustment, reducing the purchase price by approximately $16.1 million, which is
expected to be paid in cash in the first quarter of 2025. For the year ended December 31, 2024, the Company recorded an associated
pre-tax gain within Special (Gains) and Charges in the Consolidated Statements of Income of $355.9 million ($257.7 million after tax),
which includes $49.7 million of transaction costs and other adjustments.
The global surgical solutions business did not meet the criteria to be classified as a discontinued operation. As a result, the Company
continued to report its operating results in the Global Healthcare & Life Sciences reportable segment through closing of the transaction
on August 1, 2024.
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68
The global surgical solutions business was included in the Company’s continuing operations and classified as current assets and current
liabilities held for sale on the Company’s consolidated balance sheets through the closing of the transaction on August 1, 2024. As a
result of closing the transaction, the Company derecognized $504.6 million of net assets, the principal components of which were as
follows:
August 1
(millions)
2024
Assets held for sale
Cash and cash equivalents
$36.6
Accounts receivable, net
55.0
Inventories
89.0
Other current assets
7.6
Property, plant and equipment, net
65.1
Goodwill
305.9
Other intangible assets, net
22.4
Operating lease assets
8.2
Other assets
43.0
Total assets held for sale
$632.8
Liabilities held for sale
Accounts payable
$38.6
Compensation and benefits
5.9
Other current liabilities
40.6
Postretirement health care and pension benefits
6.7
Operating lease liabilities
5.6
Other liabilities
30.8
Total liabilities held for sale
$128.2
No dispositions were significant to the Company’s consolidated financial statements for 2023 or 2022.
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69
5. BALANCE SHEET INFORMATION
December 31
December 31
(millions)
2024
2023
Accounts receivable, net
Accounts receivable
$2,987.5
$2,983.2
Allowance for expected credit losses and other accruals
(122.5)
(149.0)
Total
$2,865.0
$2,834.2
Inventories
Finished goods
$962.2
$911.4
Raw materials and parts
607.4
704.7
Inventories at FIFO cost
1,569.6
1,616.1
FIFO cost to LIFO cost difference
(104.7)
(118.9)
Total
$1,464.9
$1,497.2
Other current assets
Prepaid assets
$151.4
$143.9
Taxes receivable
163.3
186.9
Derivative assets
13.4
3.3
Other
110.9
59.1
Total
$439.0
$393.2
Property, plant and equipment, net
Land
$144.5
$155.6
Buildings and leasehold improvements
1,152.8
1,171.0
Machinery and equipment
2,248.5
2,113.8
Merchandising and customer equipment
2,925.3
2,758.4
Capitalized software
1,037.8
985.9
Construction in progress
679.3
470.1
8,188.2
7,654.8
Accumulated depreciation
(4,435.8)
(4,180.2)
Total
$3,752.4
$3,474.6
Other intangible assets, net
Intangible assets not subject to amortization
Trade names
$1,230.0
$1,230.0
Intangible assets subject to amortization
Customer relationships
3,279.8
3,385.1
Patents
504.6
503.6
Trademarks
371.9
406.5
Other technologies
541.8
551.2
4,698.1
4,846.4
Accumulated amortization
Customer relationships
(1,814.1)
(1,805.0)
Patents
(340.6)
(319.4)
Trademarks
(236.3)
(238.0)
Other technologies
(228.3)
(220.5)
(2,619.3)
(2,582.9)
Net intangible assets subject to amortization
2,078.8
2,263.5
Total
$3,308.8
$3,493.5
Other assets
Deferred income taxes
$155.5
$119.3
Pension
151.0
118.4
Derivative asset
45.1
23.6
Other
318.8
271.4
Total
$670.4
$532.7
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70
December 31
December 31
(millions)
2024
2023
Other current liabilities
Discounts and rebates
$452.2
$438.8
Dividends payable
184.2
162.7
Interest payable
62.6
68.5
Taxes payable, other than income
171.8
153.2
Derivative liability
3.0
3.7
Restructuring
71.6
48.9
Contract liability
102.0
110.9
Operating lease liabilities
142.3
126.1
Other
323.0
222.1
Total
$1,512.7
$1,334.9
Accumulated other comprehensive income (loss)
Unrealized (loss) gain on derivative financial instruments, net of tax
$4.6
($4.1)
Unrecognized pension and postretirement benefit expense, net of tax
(538.4)
(534.7)
Cumulative translation, net of tax
(1,448.2)
(1,311.6)
Total
($1,982.0)
($1,850.4)
6. DEBT AND INTEREST
Short-term Debt
The following table provides the components of the Company’s short-term debt obligations, along with applicable interest rates as of
December 31, 2024 and 2023:
2024
2023
Average
Average
Carrying
Interest
Carrying
Interest
(millions)
Value
Rate
Value
Rate
Short-term debt
Commercial paper
$-
- %
$-
- %
Notes payable
3.6
7.28 %
1.8
8.29 %
Long-term debt, current maturities
612.1
628.6
Total
$615.7
$630.4
Line of Credit
As of December 31, 2024, the Company had in place a $2.0 billion multi-currency revolving credit facility which expires in April 2026. The
credit facility has been established with a diverse syndicate of banks and supports the Company’s U.S. and Euro commercial paper
programs. There were no borrowings under the Company’s credit facility as of December 31, 2024 and 2023.
The Company has $301 million of available bank supported letters of credit, surety bonds and guarantees available in support of its
commercial business transactions of which $165 million is outstanding as of December 31, 2024.
Commercial Paper
The Company’s commercial paper program is used as a potential source of liquidity and consists of a $2.0 billion U.S. commercial paper
program and a $2.0 billion Euro commercial paper program. The maximum aggregate amount of commercial paper that may be issued
by the Company under its commercial paper programs may not exceed $2.0 billion.
The Company had no outstanding commercial paper under its U.S. and Euro commercial paper programs as of December 31, 2024 and
2023.
As of December 31, 2024, the Company’s short-term borrowing program was rated A-2 by Standard & Poor’s, P-2 by Moody’s and F-1
by Fitch.
Notes Payable
The Company’s notes payable consists of uncommitted credit lines with major international banks and financial institutions, primarily to
support global cash pooling structures. As of December 31, 2024 and 2023, the Company had $3.6 million and $1.8 million, respectively,
outstanding under these credit lines. Approximately $2,153 million and $1,829 million of these credit lines were available for use as of
December 31, 2024 and 2023, respectively.
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71
Long-term Debt
The following table provides the components of the Company’s long-term debt obligations, along with applicable interest rates as of
December 31, 2024 and 2023:
2024
2023
Stated Effective
Stated
Effective
Maturity
Carrying Interest Interest Carrying
Interest
Interest
(millions)
by Year
Value
Rate
Rate
Value
Rate
Rate
Long-term debt
Public notes (2024 principal amount)
Seven year 2016 senior notes (€575 million)
2024
$-
- %
- % $625.9
1.00 %
1.19 %
Ten year 2015 senior notes (€575 million)
2025
607.8 2.63 % 2.88 %
625.1
2.63 %
2.88 %
Ten year 2016 senior notes ($750 million)
2026
735.2 2.70 % 3.96 %
728.2
2.70 %
4.07 %
Ten year 2017 senior notes ($500 million)
2027
456.5 3.25 % 8.54 %
448.3
3.25 %
8.43 %
Six Year 2021 senior notes ($500 million)
2027
498.2 1.65 % 1.73 %
497.4
1.65 %
1.83 %
Five Year 2022 senior notes ($500 million)
2028
495.6 5.25 % 5.08 %
494.2
5.25 %
5.60 %
Ten year 2020 senior notes ($698 million)
2030
657.2 4.80 % 6.52 %
662.7
4.80 %
6.19 %
Ten year 2020 senior notes ($600 million)
2031
559.3 1.30 % 3.17 %
561.0
1.30 %
3.21 %
Eleven year 2021 senior notes ($650 million)
2032
645.8 2.13 % 1.59 %
645.2
2.13 %
2.06 %
Thirty year 2011 senior notes ($389 million)
2041
385.0 5.50 % 5.62 %
384.7
5.50 %
5.62 %
Thirty year 2016 senior notes ($200 million)
2046
197.5 3.70 % 3.80 %
197.4
3.70 %
3.80 %
Thirty year 2017 senior notes ($484 million)
2047
428.2 3.95 % 4.79 %
426.8
3.95 %
4.79 %
Thirty year 2020 senior notes ($500 million)
2050
491.4 2.13 % 2.23 %
491.1
2.13 %
2.23 %
Thirty year 2021 senior notes ($850 million)
2051
839.7 2.70 % 2.78 %
839.3
2.70 %
2.78 %
Thirty-four year 2021 senior notes ($685 million)
2055
541.2 2.75 % 3.86 %
539.2
2.75 %
3.86 %
Finance lease obligations and other
22.7
13.5
Total debt
7,561.3
8,180.0
Long-term debt, current maturities
(612.1)
(628.6)
Total long-term debt
$6,949.2
$7,551.4
Public Notes
In November 2022, the Company issued $500 million in aggregate principal five year fixed rate notes with a coupon rate of 5.25%. The
proceeds are intended to be used for general corporate purposes, which may include, without limitation, repayment of commercial paper
borrowings or other indebtedness. The notes mature January 2028.
The Company’s public notes may be redeemed by the Company at its option at redemption prices that include accrued and unpaid
interest and a make-whole premium. Upon the occurrence of a change of control accompanied by a downgrade of the public notes below
investment grade rating, within a specified time period, the Company would be required to offer to repurchase the public notes at a price
equal to 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase. The public
notes are senior unsecured and unsubordinated obligations of the Company and rank equally with all other senior and unsubordinated
indebtedness of the Company.
In January 2024, the Company repaid €575 million ($630 million) of long-term debt.
Covenants and Future Maturities
The Company is in compliance with all covenants under the Company’s outstanding indebtedness at December 31, 2024.
As of December 31, 2024, the aggregate annual maturities of long-term debt for the next five years were:
(millions)
2025
$612
2026
738
2027
958
2028
498
2029
2
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72
Net Interest Expense
Interest expense and interest income incurred during 2024, 2023 and 2022 were as follows:
(millions)
2024
2023
2022
Interest expense
$340.3
$348.9
$252.1
Interest income
(57.8)
(52.2)
(8.5)
Interest expense, net
$282.5
$296.7
$243.6
Interest expense generally includes the expense associated with the interest on the Company’s outstanding borrowings, including the
impact of the Company’s interest rate swap agreements. Interest expense also includes the amortization of debt issuance costs and debt
discounts, which are both recognized over the term of the related debt.
7. FAIR VALUE MEASUREMENTS
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, contingent
consideration obligations, commercial paper, notes payable, foreign currency forward contracts, interest rate swap agreements, cross-
currency swap derivative contracts and long-term debt.
Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants as of the measurement date. A hierarchy has been established for inputs used in measuring fair value that maximizes
the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs be used when
available. The hierarchy is broken down into three levels:
Level 1 - Inputs are quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2 - Inputs include observable inputs other than quoted prices in active markets.
Level 3 - Inputs are unobservable inputs for which there is little or no market data available.
The carrying amount and the estimated fair value for assets and liabilities measured on a recurring basis were:
December 31, 2024
(millions)
Carrying
Fair Value Measurements
Amount
Level 1
Level 2
Level 3
Assets
Foreign currency forward contracts
$38.4
$-
$38.4
$-
Cross-currency swap derivative contracts
119.0
-
119.0
-
Liabilities
Foreign currency forward contracts
28.0
-
28.0
-
Interest rate swap agreements
138.5
-
138.5
-
Cross-currency swap derivative contracts
56.4
-
56.4
-
December 31, 2023
(millions)
Carrying
Fair Value Measurements
Amount
Level 1
Level 2
Level 3
Assets
Foreign currency forward contracts
$26.6
$-
$26.6
$-
Cross-currency swap derivative contracts
29.1
-
29.1
-
Liabilities
Foreign currency forward contracts
27.0
-
27.0
-
Interest rate swap agreements
146.5
-
146.5
-
Cross-currency swap derivative contracts
24.9
-
24.9
-
The carrying value of foreign currency forward contracts is at fair value, which is determined based on foreign currency exchange rates
as of the balance sheet date and classified within Level 2. The carrying value of interest rate swap agreements is at fair value, which is
determined based on current forward interest rates as of the balance sheet date and are classified within Level 2. The cross-currency
swap derivative contracts are used to partially hedge the Company’s net investments in foreign operations against adverse movements
in exchange rates between the U.S. dollar and the Euro and the U.S. dollar and CNH (CNH is the Chinese Yuan traded in the offshore
market). The carrying value of the cross-currency swap derivative contracts is at fair value, which is determined based on the income
approach with the relevant interest rates and foreign currency current exchange rates and forward curves as inputs as of the balance
sheet date and are classified within Level 2. For purposes of fair value disclosure above, derivative values are presented gross. Further
discussion of gross versus net presentation of the Company's derivatives within Note 8.
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73
Contingent consideration obligations are recognized and measured at fair value at the acquisition date and thereafter until settlement or
expiration. Contingent consideration is classified within Level 3 as the underlying fair value is determined using income-based valuation
approaches appropriate for the terms and conditions of each respective contingent consideration. The consideration expected to be
transferred is based on the Company’s expectations of various financial measures. The ultimate payment of contingent consideration
could deviate from current estimates based on the actual results of these financial measures. Contingent consideration during 2024,
2023 and 2022 were not significant to the Company’s consolidated financial statements.
The carrying values of accounts receivable, accounts payable, cash and cash equivalents, commercial paper and notes payable
approximate fair value because of their short maturities, and as such are classified within Level 1.
The fair value of long-term debt is based on quoted market prices for the same or similar debt instruments (classified as Level 2). The
carrying amount, which includes adjustments related to the impact of interest rate swap agreements, premiums and discounts, and
deferred debt issuance costs, and the estimated fair value of long-term debt, including current maturities, held by the Company were:
December 31, 2024
December 31, 2023
Carrying
Fair
Carrying
Fair
Amount
Value
Amount
Value
Long-term debt, including current maturities
$7,561.3
$6,662.1
$8,180.0
$7,552.5
8. DERIVATIVES AND HEDGING TRANSACTIONS
The Company uses foreign currency forward contracts, interest rate swap agreements, cross-currency swap derivative contracts and
foreign currency debt to manage risks associated with foreign currency exchange rates, interest rates and net investments in foreign
operations. The Company does not hold derivative financial instruments of a speculative nature or for trading purposes. The Company
records derivatives as assets and liabilities in the Consolidated Balance Sheets at fair value. Changes in fair value are recognized
immediately in earnings unless the derivative qualifies and is designated as a hedge. Cash flows from derivatives are classified in the
Consolidated Statements of Cash Flows in the same category as the cash flows from the items subject to designated hedge or
undesignated (economic) hedge relationships. The Company evaluates hedge effectiveness at inception and on an ongoing basis. If a
derivative is no longer expected to be effective, hedge accounting is discontinued.
The Company is exposed to credit risk in the event of nonperformance of counterparties for foreign currency forward exchange contracts
and interest rate swap agreements. The Company monitors its exposure to credit risk by using credit approvals and credit limits and by
selecting major global banks and financial institutions as counterparties. The Company does not anticipate nonperformance by any of
these counterparties, and therefore, recording a valuation allowance against the Company’s derivative balance is not considered
necessary.
Derivative Positions Summary
Certain of the Company’s derivative transactions are subject to master netting arrangements that allow the Company to net settle
contracts with the same counterparties. These arrangements generally do not call for collateral and as of the applicable dates presented
in the following table, no cash collateral had been received or pledged related to the underlying derivatives.
The respective net amounts are included in other current assets, other assets, other current liabilities and other liabilities on the
Consolidated Balance Sheets.
The following table summarizes the gross fair value and the net value of the Company’s outstanding derivatives:
Derivative Assets
Derivative Liabilities
December 31
December 31
December 31
December 31
(millions)
2024
2023
2024
2023
Derivatives designated as hedging instruments
Foreign currency forward contracts
$11.4
$6.7
$3.2
$5.2
Interest rate swap agreements
-
-
138.5
146.5
Cross-currency swap derivative contracts
82.1
29.1
19.5
24.9
Derivatives not designated as hedging instruments
Foreign currency forward contracts
27.0
19.9
24.8
21.8
Cross-currency swap derivative contracts
36.9
-
36.9
-
Gross value of derivatives
157.4
55.7
222.9
198.4
Gross amounts offset in the Consolidated Balance Sheets
(98.9)
(28.8)
(98.9)
(28.8)
Net value of derivatives
$58.5
$26.9
$124.0
$169.6
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The following table summarizes the notional values of the Company’s outstanding derivatives:
Notional Values
December 31 December 31
(millions)
2024
2023
Foreign currency forward contracts
$3,175
$3,745
Interest rate swap agreements
1,500
1,500
Cross-currency swap derivative contracts
2,745
998
Cash Flow Hedges
The Company utilizes foreign currency forward contracts to hedge the effect of foreign currency exchange rate fluctuations on forecasted
foreign currency transactions, including inventory purchases and intercompany royalty, intercompany loans, management fee and other
payments. These forward contracts are designated as cash flow hedges. The changes in fair value of these contracts are recorded in
accumulated other comprehensive income (loss) (“AOCI”) until the hedged items affect earnings, at which time the gain or loss is
reclassified into the same line item in the Consolidated Statements of Income as the underlying exposure being hedged. Cash flow
hedged transactions impacting AOCI are forecasted to occur within the next year. For forward contracts designated as hedges of foreign
currency exchange rate risk associated with forecasted foreign currency transactions, the Company excludes the changes in fair value
attributable to time value from the assessment of hedge effectiveness. The initial value of the excluded component (i.e., the forward
points) is amortized on a straight-line basis over the life of the hedging instrument and recognized in the same line item in the
Consolidated Statements of Income as the underlying exposure being hedged for intercompany loans. For all other cash flow hedge
types, the forward points are mark-to-market monthly and recognized in the same line item in the Consolidated Statements of Income as
the underlying exposure being hedged. The difference between fair value changes of the excluded component and the amount amortized
in the Consolidated Statements of Income is recorded in AOCI.
Fair Value Hedges
The Company manages interest expense using a mix of fixed and floating rate debt. To help manage exposure to interest rate
movements and to reduce borrowing costs, the Company may enter into interest rate swaps under which the Company agrees to
exchange, at specified intervals, the difference between fixed and floating interest amounts calculated by reference to an agreed upon
notional principal amount. The mark-to-market of these fair value hedges is recorded as gains or losses in interest expense, net and is
offset by the gain or loss of the underlying debt instrument, which also is recorded in interest expense, net. These fair value hedges are
highly effective and thus, there is no impact on earnings due to hedge ineffectiveness.
In aggregate, the Company has entered into a series of interest rate swap agreements to convert $1.5 billion of its debt from a fixed
interest rate to a floating interest rate. The fixed interest rates range from 1.3% to 4.8% and mature between 2026 and 2031. These
interest rate swap agreements are designated as fair value hedges.
The following amounts were recorded in the Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges
as of December 31 2024 and 2023:
Line item in which the hedged item is included
Carrying amount of the hedged
liabilities
Cumulative amount of the fair value
hedging adjustment included in the
carrying amount of the hedged
liabilities
(millions)
2024
2023
2024
2023
Long-term debt
$1,361.1
$1,353.7
($141.3)
($148.6)
Net Investment Hedges
In November 2023, the Company elected to de-designate as a net investment hedge €316 million of its Euro debt maturing on January
15, 2024. In January 2024, the Company repaid €575 million ($630 million) of long-term debt and settled the remaining €259 million net
investment hedge related to that Euro debt. The Company designates its remaining outstanding €575 million ($608 million as of year-end
2024) senior notes (“Euronotes”) and related accrued interest as a hedge of its Euro denominated exposures from the Company’s
investments in certain of its Euro denominated functional currency subsidiaries.
In May 2024, the Company entered into a Euro cross-currency swap derivative contract with a notional amount of €300 million. In July
2024, the Company entered into Euro cross-currency swap derivative contracts with notional amounts of €200 million, €100 million and
€100 million. In October 2024, the Company entered into Euro cross-currency swap derivative contracts with notional amounts €150
million and €100 million. In November 2024, the Company entered into a series of Euro cross-currency swap derivative contracts
effectively replacing two existing cross-currency swap derivative contracts with a total notional amount of €300 million. As a result, the
Company has swapped €300 million of notional value.
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75
In aggregate, the Company maintains a series of Euro cross-currency swap derivative contracts that are designated as net investment
hedges of the Company’s Euro denominated exposures from the Company’s investments in certain of its Euro denominated functional
currency subsidiaries. The cross-currency swap derivative contracts exchange fixed-rate payments in one currency for fixed-rate
payments in another currency. As of December 31, 2024, the Company had €1,575 million ($1,631 million) cross-currency swap
derivative contracts outstanding designated as a hedge of the Company’s net investment in foreign operations. The changes in the spot
rate of these instruments are recorded in AOCI in stockholders’ equity, partially offsetting the foreign currency translation adjustment of
the Company’s related net investment that is also recorded in AOCI. Any ineffective portions of net investment hedges are reclassified
from AOCI into earnings during the period of change. The interest income or expense from these swaps are recorded in interest expense
on the accompanying Consolidated Statements of Income consistent with the classification of interest expense attributable to the
underlying debt.
In October 2024, the Company entered into CNH cross-currency swap derivative contracts with a notional amount of CNH 714 million
and CNH 713 million. In aggregate, the Company maintains a series of CNH cross-currency swap derivative contracts that are
designated as net investment hedges of its Chinese Yuan (“CNY”) denominated exposures from the Company’s investments in certain
CNY denominated functional currency subsidiaries. The cross-currency swap derivative contracts exchange fixed-rate payments in USD
for fixed-rate payments in CNH. As of December 31, 2024, the Company had CNH 3,619 million ($493 million) cross-currency swap
derivative contracts outstanding designated as a hedge of the Company’s net investment in foreign operations. The changes in the spot
rate of these instruments are recorded in AOCI in stockholders’ equity, partially offsetting the foreign currency translation adjustment of
the Company’s related net investment that is also recorded in AOCI. The interest income or expense from these swaps is recorded in
interest expense on the accompanying Consolidated Statements of Income consistent with the classification of interest expense
attributable to the underlying debt.
The revaluation gains and losses on the Euronotes and cross-currency swap derivative contracts, which are designated and effective as
hedges of the Company’s net investments, have been included as a component of the cumulative translation adjustment account, and
were as follows:
(millions)
2024
2023
2022
Revaluation gain (loss), net of tax:
Euronotes
$12.8
($42.3)
$81.9
Cross-currency swap derivative contracts
39.6
(30.8)
26.4
Total revaluation gain (loss), net of tax
$52.4
($73.1)
$108.3
Derivatives Not Designated as Hedging Instruments
The Company also uses foreign currency forward contracts to offset its exposure to the change in value of certain foreign currency
denominated assets and liabilities held at foreign subsidiaries, primarily receivables and payables, which are remeasured at the end of
each period. Although the contracts are effective economic hedges, they are not designated as accounting hedges. Therefore, changes
in the value of these derivatives are recognized immediately in earnings, thereby offsetting the current earnings effect of the related
foreign currency denominated assets and liabilities.
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76
Effect of all Derivative Instruments on Income
The gain (loss) of all derivative instruments recognized in product and equipment cost of sales (“COS”), selling, general and
administrative expenses (“SG&A”) and interest expense, net (“interest”) is summarized below:
2024
2023
2022
(millions)
COS
SG&A Interest
COS
SG&A Interest
COS
SG&A Interest
Gain (loss) on derivatives designated as
hedging instruments:
Foreign currency forward contracts
Amount of gain (loss) reclassified
from AOCI to income
$4.0
$5.8
$-
$10.6 ($18.9)
$-
$6.4
$95.0
$-
Amount excluded from the
assessment of effectiveness
recognized in earnings based on
changes in fair value
-
-
-
-
-
7.7
-
-
13.9
Interest rate swap agreements
Amount of (loss) gain reclassified
from AOCI to income
-
-
(1.9)
-
-
(1.9)
-
-
(2.3)
Gain (loss) on derivatives not designated
as hedging instruments:
Foreign currency forward contracts
Amount of gain (loss) recognized in
income
-
(3.4)
-
-
(26.2)
-
-
62.0
-
Total gain (loss) of all derivative
instruments
$4.0
$2.4
($1.9)
$10.6 ($45.1)
$5.8
$6.4 $157.0
$11.6
Subsequent Events
In February 2025, the Company entered into cross-currency swap derivative contracts with notional amounts of €300 million and CAD
280 million. These cross-currency swap derivative contracts are designated as net investment hedges of its Euro or CAD denominated
exposures from the Company’s investments in certain of its Euro or CAD denominated functional currency subsidiaries.
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77
9. OTHER COMPREHENSIVE INCOME (LOSS) INFORMATION
Other comprehensive income (loss) includes net income, foreign currency translation adjustments, defined benefit pension and
postretirement plan adjustments, gains and losses on derivative instruments designated and effective as cash flow hedges and non-
derivative instruments designated and effective as foreign currency net investment hedges that are charged or credited to the AOCI
account in shareholders’ equity.
The following table provides other comprehensive income (loss) information related to the Company’s derivatives and hedging
instruments and pension and postretirement benefits. Refer to Note 8 for additional information related to the Company’s derivatives and
hedging transactions. Refer to Note 16 for additional information related to the Company’s pension and postretirement benefits activity.
(millions)
2024
2023
2022
Derivative and Hedging Instruments
Unrealized gain (loss) on derivative and hedging instruments
Amount recognized in AOCI
$19.2
($12.8)
$112.9
(Gain) loss reclassified from AOCI into income
COS
(4.0)
(10.6)
(6.4)
SG&A
(5.8)
18.9
(95.0)
Interest (income) expense, net
1.9
(5.8)
(11.6)
(7.9)
2.5
(113.0)
Other activity
-
-
1.1
Tax impact
(2.6)
2.5
(2.2)
Net of tax
$8.7
($7.8)
($1.2)
Pension and Postretirement Benefits
Amount recognized in AOCI
Current period net (loss) gain
($19.0)
($80.7)
$83.3
Amount reclassified from AOCI into income
Settlement charge (income)
0.9
(2.7)
51.6
Amortization of losses and prior period service credits, net
10.6
6.9
47.7
11.5
4.2
99.3
Tax impact
1.9
21.4
(52.3)
Net of tax
($5.6)
($55.1)
$130.3
10. SHAREHOLDERS’ EQUITY
Authorized common stock, par value $1.00 per share, was 800 million shares at December 31, 2024, 2023 and 2022. Treasury stock is
stated at cost. Dividends declared per share of common stock were $2.36 for 2024, $2.16 for 2023 and $2.06 for 2022.
The Company has 15 million shares, without par value, of authorized but unissued and undesignated preferred stock.
Share Repurchase Authorization
In November 2022, the Company’s Board of Directors authorized the repurchase of up to 10,000,000 shares of its common stock,
including shares to be repurchased under Rule 10b5-1. As of December 31, 2024, 8,781,585 shares remained to be repurchased under
the Company’s repurchase authorization. The Company intends to repurchase all shares under its authorization, for which no expiration
date has been established, in open market or privately negotiated transactions, subject to market conditions.
Share Repurchases
During 2024, 2023 and 2022, the Company reacquired 4,246,642, 83,674 and 3,038,107 shares, respectively, of its common stock, of
which 4,135,512, 0 and 2,933,090, respectively, related to share repurchases through open market or private purchases, and 111,130,
83,674 and 105,017, respectively, related to shares withheld for taxes on exercise of stock options and vesting of stock awards and units.
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78
11. EQUITY COMPENSATION PLANS
The Company’s equity compensation plans provide for grants of stock options, performance-based restricted stock units (“PBRSUs”) and
non-performance-based restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). Common shares available for grant as of
December 31, 2024, 2023 and 2022 were 18,052,830, 18,840,265 and 5,475,903, respectively. The Company generally issues
authorized but previously unissued shares to satisfy stock option exercises and stock award vesting.
The Company’s annual long-term incentive share-based compensation program is made up of 40% stock options and 60% PBRSUs for
2024 and 2023, and 50% stock options and 50% PBRSUs for 2022. The Company also periodically grants RSUs. Total compensation
expense related to all share-based compensation plans was $134.8 million ($111.8 million net of tax benefit), $95.1 million ($81.4 million
net of tax benefit) and $87.8 million ($74.8 million net of tax benefit) for 2024, 2023 and 2022, respectively. As of December 31, 2024,
there was $182.6 million of total measured but unrecognized compensation expense related to non-vested share-based compensation
arrangements granted under all of the Company’s plans. That cost is expected to be recognized over a weighted-average period of 2.1
years.
Stock Options
Stock options are granted to purchase shares of the Company’s stock at the average daily share price on the date of grant. These
options generally expire within ten years from the grant date. The Company generally recognizes compensation expense for these
awards on a straight-line basis over the three year vesting period. Stock option grants to retirement eligible recipients are attributed to
expense using the non-substantive vesting method.
A summary of stock option activity and average exercise prices is as follows:
2024
2023
2022
Number of Exercise
Number of
Exercise
Number of
Exercise
Options
Price (a)
Options
Price (a)
Options
Price (a)
Outstanding, beginning of year
6,921,356
$168.65
7,031,103
$160.45
6,217,161
$160.91
Granted
595,791
247.02
861,840
190.53
1,228,673
148.79
Exercised
(1,838,103)
144.58
(832,050)
119.41
(294,228)
101.08
Canceled
(130,774)
173.95
(139,537)
183.77
(120,503)
210.26
Outstanding, end of year
5,548,270
$184.92
6,921,356
$168.65
7,031,103
$160.45
Exercisable, end of year
4,095,681
$178.24
5,107,518
$165.77
5,168,161
$155.45
Vested and expected to vest, end of year
5,396,495
$184.32
(a) Represents weighted average price per share.
The total aggregate intrinsic value of options (the amount by which the stock price exceeded the exercise price of the option on the date
of exercise) that were exercised during 2024, 2023 and 2022 was $162.4 million, $47.7 million and $21.0 million, respectively.
The total aggregate intrinsic value of options outstanding as of December 31, 2024 was $283.4 million, with a corresponding weighted-
average remaining contractual life of 6.5 years. The total aggregate intrinsic value of options exercisable as of December 31, 2024 was
$231.0 million, with a corresponding weighted-average remaining contractual life of 5.5 years. The total aggregate intrinsic value of
options vested and expected to vest as of December 31, 2024 was $278.2 million, with a corresponding weighted-average remaining
contractual life of 6.4 years.
The lattice (binomial) option-pricing model is used to estimate the fair value of options at grant date. The Company’s primary employee
option grant occurs during the fourth quarter. The weighted-average grant-date fair value of options granted and the significant
assumptions used in determining the underlying fair value of each option grant, on the date of grant were as follows:
2024
2023
2022
Weighted-average grant-date fair value of options
granted at market prices
$66.80
$50.26
$37.04
Assumptions
Risk-free rate of return
4.1 %
4.1 %
3.5 %
Expected life
6 years
6 years
6 years
Expected volatility
22.6 %
22.4 %
23.5 %
Expected dividend yield
1.0 %
1.2 %
1.4 %
The risk-free rate of return is determined based on a yield curve of U.S. treasury rates from one month to ten years and a period
commensurate with the expected life of the options granted. Expected volatility is established based on historical volatility of the
Company’s stock price. The expected dividend yield is determined based on the Company’s annual dividend amount as a percentage of
the average stock price at the time of the grant.
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79
PBRSUs, RSUs and RSAs
The expense associated with PBRSUs is based on the average of the high and low share price of the Company’s common stock on the
date of grant, adjusted for the absence of future dividends. The awards vest based on the Company achieving a defined performance
target from 0% to 200% and with continued service for a three year period. Upon vesting and following certification of performance by the
Compensation & Human Capital Management Committee of the Board of Directors, the Company issues shares of its common stock
such that one award unit equals one share of common stock. The Company assesses the probability of achieving the performance target
and recognizes expense over the three year vesting period when it is probable the performance target will be met. PBRSU awards
granted to retirement eligible recipients are attributed to expense using the non-substantive vesting method. The awards are generally
subject to forfeiture in the event of termination of employment.
The expense associated with shares of non-performance based RSUs and RSAs is based on the average of the high and low share
price of the Company’s common stock on the date of grant, adjusted for the absence of future dividends and is amortized on a straight-
line basis over the periods during which the restrictions lapse. The Company currently has RSUs that vest over periods between 24 and
48 months. The awards are generally subject to forfeiture in the event of termination of employment.
A summary of non-vested PBRSUs and restricted stock activity is as follows:
PBRSU
Grant Date
RSAs and
Grant Date
Awards
Fair Value (a)
RSUs
Fair Value (a)
December 31, 2021
788,529
$189.96
232,274
$195.95
Granted
291,496
142.24
240,370
146.90
Vested / Earned
(232,210)
152.63
(68,864)
163.81
Canceled
(24,645)
207.05
(18,683)
201.39
December 31, 2022
823,170
$181.68
385,097
$170.50
Granted
328,739
185.10
156,618
165.81
Vested / Earned
(180,674)
178.26
(61,776)
191.22
Canceled
(26,409)
175.05
(24,449)
166.22
December 31, 2023
944,826
$183.71
455,490
$166.31
Granted
245,868
240.66
78,386
230.47
Vested / Earned
(180,993)
215.26
(121,400)
196.78
Canceled
(44,499)
171.30
(37,177)
160.90
December 31, 2024
965,202
$192.87
375,299
$170.39
(a) Represents weighted average price per share.
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80
12. INCOME TAXES
Income before income taxes consisted of:
(millions)
2024
2023
2022
United States (U.S.)
$1,035.3
$408.9
$295.6
International
1,535.9
1,346.6
1,047.8
Total
$2,571.2
$1,755.5
$1,343.4
The provision (benefit) for income taxes consisted of:
(millions)
2024
2023
2022
U.S. federal and state
$301.3
$137.6
$145.7
International
322.6
280.0
231.4
Total current
623.9
417.6
377.1
U.S. federal and state
(143.1)
(40.1)
(78.9)
International
(41.5)
(15.0)
(63.7)
Total deferred
(184.6)
(55.1)
(142.6)
Provision for income taxes
$439.3
$362.5
$234.5
The Company’s overall net deferred tax assets and deferred tax liabilities were comprised of the following:
December 31 (millions)
2024
2023
Deferred tax assets
Pension and post-retirement benefits
$68.2
$82.1
Other accrued liabilities
152.5
162.0
Lease liability
176.7
135.9
Credit carryforwards
105.1
83.7
Capitalization of R&D costs
246.5
180.9
Loss carryforwards
92.9
57.3
Share-based compensation
54.2
54.5
Deferred income
72.4
27.9
Deferred interest
85.2
64.3
Other, net
32.8
49.0
Valuation allowance
(77.8)
(65.7)
Total deferred tax assets
1,008.7
831.9
Deferred tax liabilities
Goodwill
(133.9)
(160.1)
Intangible assets
(410.4)
(451.3)
Property, plant and equipment
(310.7)
(332.3)
Lease asset
(177.8)
(136.1)
Financing
(43.3)
(32.1)
Other, net
(57.1)
(18.9)
Total deferred tax liabilities
(1,133.2)
(1,130.8)
Net deferred tax liabilities balance
($124.5)
($298.9)
Presentation of prior year amounts relating to other deferred tax assets and deferred interest are now presented separately and have
been reclassified to conform with the current year presentation. These reclassifications had no effect on the reported result of operations.
As of December 31, 2024 the Company has tax effected federal, state and international net operating loss carryforwards of $13.7 million,
$13.2 million and $39.3 million, respectively, and a tax effected federal tax capital loss carryforward of $26.7 million which will be
available to offset future taxable income. The federal and state net operating loss carryforwards of $26.9 million expire from 2025 to
2045. The international loss carryforwards of $18.7 million expire from 2025 to 2045 and $20.6 million have no expiration. The federal
capital loss carryforwards of $26.7 million expire from 2025 to 2029. The tax loss carryforwards expiring in 2025 are not material.
Additionally, the Company has $105.1 million of net credit carryforwards that are primarily related to U.S. foreign tax credits and various
state and international credits. The U.S. foreign tax credit carryforwards of $88.5 million expire from 2028 to 2034. Other state and
international credit carryforwards will expire from 2025 to 2038. The tax credit carryforwards expiring in 2025 are not material.
The Company has valuation allowances on certain deferred tax assets of $77.8 million and $65.7 million at December 31, 2024 and
2023, respectively. The increase in valuation allowance from year end 2023 to year end 2024 was primarily due to U.S. federal capital
losses.
In connection with the implementation of Organization for Economic Co-operation and Development (“OECD”) global minimum tax
initiative known as Pillar Two, any existing deferred taxes not disclosed in the Company’s financial statements will not be available in the
future to reduce tax otherwise due under Pillar Two. Accordingly, the Company is disclosing the existence of gross tax loss carryforwards
in Luxembourg of $1.5 billion. The losses are determined to have a remote possibility of realization and, therefore, are not reported in the
table above.
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81
The Company obtained tax benefits from a tax holiday in the Dominican Republic. The Company received a permit of operation, which
expires in April 2036, from the National Council of Free Zones of Exportation for the Dominican Republic. Companies operating under the
Free Zones are not subject to income tax in the Dominican Republic on export income. The tax reduction as the result of the tax holiday
for 2024 was $2.7 million ($0.01 per diluted share), 2023 was $6.6 million ($0.02 per diluted share) and 2022 was $5.8 million ($0.02 per
diluted share). The tax holiday was associated with an entity that was divested as part of the sale of the global surgical solutions
business in 2024.
A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective income tax rate is as follows:
2024
2023
2022
Statutory U.S. rate
21.0 %
21.0 %
21.0 %
State income taxes, net of federal benefit
1.5
1.4
1.3
Foreign operations
(1.2)
(0.5)
(0.8)
Excess stock benefits
(0.7)
(0.3)
(0.4)
R&D credit
(0.9)
(1.3)
(1.4)
Foreign derived intangible income
(1.9)
(1.2)
(1.8)
Change in valuation allowance
0.6
0.5
0.7
Legal entity rationalization
-
0.1
(1.5)
Sale of global surgical solutions business
1.1
-
-
Capital losses
(3.4)
-
-
Other, net
1.0
0.9
0.4
Effective income tax rate
17.1 %
20.6 %
17.5 %
The change in the Company’s effective income tax rate includes the tax impact of special (gains) and charges and discrete tax items,
which have impacted the comparability of the Company’s historical effective income tax rates, as amounts included in special (gains) and
charges are derived from tax jurisdictions with rates that vary from the statutory U.S. rate, and discrete tax items are not necessarily
consistent across periods. The tax impact of special (gains) and charges and discrete tax items will likely continue to impact
comparability of the Company’s effective income tax rate in the future.
The Company’s 2024 effective tax rate of 17.1% includes $56.9 million of net tax expenses on special (gains) and charges, and net tax
benefit of $78.6 million associated with discrete items. Discrete items include a tax benefit of $62.1 million associated with capital losses
and $30.4 million in additional basis of foreign intangible assets. The remaining net discrete tax expense of $13.9 million was primarily
related to the filing of federal, state and foreign tax returns and other income tax adjustments including the impact of changes in tax laws,
audit settlements, share-based compensation excess tax benefit and other changes in estimates.
The Company’s 2023 effective tax rate of 20.6% includes $24.7 million of net tax benefits on special (gains) and charges, and net tax
expense of $11.2 million associated with discrete items. The net discrete tax expense was primarily related to the filing of federal, state
and foreign tax returns and other income tax adjustments including the impact of changes in tax laws, audit settlements, share-based
compensation excess tax benefit and other changes in estimates.
The Company’s 2022 effective tax rate of 17.5% includes $53.7 million of net tax benefits on special (gains) and charges, and net tax
benefit of $11.8 million associated with discrete items. Discrete items included deferred tax benefits of $14.6 million associated with
utilization of tax attributes as a result of legal entity rationalization and share-based compensation excess tax benefits of $6.0 million. The
remaining discrete tax expense of $8.8 million was primarily related to the filing of federal, state and foreign tax returns and other income
tax adjustments including the impact of changes in tax laws, audit settlements and other changes in estimates.
The Company continues to assert permanent reinvestment of the undistributed earnings of international affiliates unless the earnings can
be remitted in a net income tax benefit or tax-neutral manner. If there are policy changes, the Company would record the applicable
taxes in the period of change. Due to the complexity of the legal entity structure, the number of legal entities and jurisdictions involved,
and the complexity of the laws and regulations, the Company believes it is not practicable to estimate the amount of additional taxes
which may be payable upon distribution of these undistributed earnings. Accordingly, no deferred taxes have been provided for
withholding taxes or other taxes on permanently reinvested earnings.
A reconciliation of the beginning and ending amount of gross liability for unrecognized tax benefits is as follows:
(millions)
2024
2023
2022
Balance at beginning of year
$24.2
$24.9
$25.1
Additions based on tax positions related to the current year
4.6
5.8
2.7
Additions for tax positions of prior years
11.6
1.7
3.6
Reductions for tax positions of prior years
-
-
(1.5)
Reductions for tax positions due to statute of limitations
(0.7)
(2.7)
(0.7)
Settlements
(5.3)
(5.5)
(3.4)
Foreign currency translation
(0.3)
-
(0.9)
Balance at end of year
$34.1
$24.2
$24.9
The total amount of unrecognized tax benefits, if recognized would affect the effective tax rate by $31.5 million as of December 31, 2024,
$21.6 million as of December 31, 2023 and $23.1 million as of December 31, 2022.
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82
The Company files U.S. federal income tax returns and income tax returns in various U.S. state and non- U.S. jurisdictions. With few
exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2018. The
IRS has completed examinations of the Company’s U.S. federal income tax returns through 2018, and the years 2019 through 2020 are
currently under audit. In addition to the U.S. federal examination, there is ongoing audit activity in several U.S. state and foreign
jurisdictions. The Company anticipates changes to unrecognized tax benefits due to closing of various audits and statutes closing on
years mentioned above. The Company does not believe these changes will result in a material impact during the next twelve months.
Decreases in the Company’s gross liability could result in offsets to other balance sheet accounts, cash payments, and adjustments to
tax expense. The occurrence of these events and/or other events not included above within the next twelve months could change
depending on a variety of factors.
The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. The Company had
$5.5 million, $4.0 million and $4.0 million of accrued interest, including minor amounts for penalties, at December 31, 2024, 2023 and
2022, respectively.
13. RENTALS AND LEASES
Lessee
The Company leases sales and administrative office facilities, distribution centers, research and manufacturing facilities, as well as
vehicles and other equipment under operating leases. Certain of the Company’s lease arrangements are finance leases, which are
immaterial individually and in the aggregate.
The Company’s operating lease cost was as follows:
(millions)
2024
2023
2022
Operating lease cost*
$218.0
$215.4
$196.9
*Includes immaterial short-term and variable lease costs
Future maturity of operating lease liabilities as of December 31, 2024 were as follows:
(millions)
2025
$159
2026
148
2027
120
2028
80
2029
50
Thereafter
252
Total lease payments
809
Less: imputed interest
91
Present value of lease liabilities
$718
The Company’s operating leases term and discount rate were as follows:
December 31
December 31
December 31
2024
2023
2022
Weighted-average remaining lease terms (years)
7.01
6.44
6.71
Weighted-average discount rate
4.76 %
4.02 %
2.98 %
The Company’s other lease information was as follows:
December 31
December 31
December 31
(millions)
2024
2023
2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$207.7
$170.6
$157.3
Leased assets obtained in exchange for new operating lease liabilities
336.0
251.5
202.7
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83
Lessor
The Company leases warewashing and water treatment equipment to customers under operating leases.
Gross assets under operating leases recorded in Property, plant and equipment, net is $1,481.7 million and $1,397.5 million, and related
accumulated depreciation is $932.9 million and $878.9 million, as of December 31, 2024 and 2023, respectively.
The Company’s operating lease revenue was as follows:
(millions)
2024
2023
2022
Operating lease revenue*
$534.9
$511.8
$466.7
*Includes immaterial variable lease revenue
Future revenue from operating leases for existing contracts as of December 31, 2024 were as follows:
(millions)
2025
$438
2026
315
2027
252
2028
174
2029
90
Thereafter
51
Total lease revenue
$1,320
The Company mitigates the risk of residual value subsequent to the lease term by redeploying assets. As such, the Company expects to
receive revenue from the operating lease assets through the remaining useful life and therefore subsequent to the initial contract
termination date.
14. RESEARCH AND DEVELOPMENT EXPENDITURES
Research expenditures that relate to the development of new products and processes, including significant improvements and
refinements to existing products, are expensed as incurred. Such costs were $207 million in 2024, $192 million in 2023 and $190 million
in 2022. The Company did not participate in any material customer sponsored research during any of the years.
15. COMMITMENTS AND CONTINGENCIES
The Company is subject to various claims and contingencies related to, among other things, workers’ compensation, general liability
(including product liability), automobile claims, health care claims, environmental matters and lawsuits. The Company is also subject to
various claims and contingencies related to income taxes, which are discussed in Note 12. The Company also has contractual
obligations including lease commitments, which are discussed in Note 13.
The Company records liabilities when a contingent loss is probable and can be reasonably estimated. If the reasonable estimate of a
probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within
the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or
the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred.
Insurance
Globally, the Company has insurance policies with varying deductible levels for property and casualty losses. The Company is insured
for losses in excess of these deductibles, subject to policy terms and conditions and has recorded both a liability and an offsetting
receivable for amounts in excess of these deductibles. The Company is self-insured for health care claims for eligible participating
employees, subject to certain deductibles and limitations. The Company determines its liabilities for claims on an actuarial basis.
Litigation and Environmental Matters
The Company and certain subsidiaries are party to various lawsuits, claims and environmental actions that have arisen in the ordinary
course of business. These include from time to time antitrust, employment, commercial, patent infringement, tort, product liability and
wage hour lawsuits, as well as possible obligations to investigate and mitigate the effects on the environment of the disposal or release of
certain chemical substances at various sites, such as Superfund sites and other operating or closed facilities. The Company has
established accruals for certain lawsuits, claims and environmental matters. The Company currently believes that there is not a
reasonably possible risk of material loss in excess of the amounts accrued related to these legal matters. Because litigation is inherently
uncertain, and unfavorable rulings or developments could occur, there can be no certainty that the Company may not ultimately incur
charges in excess of recorded liabilities. A future adverse ruling, settlement or unfavorable development could result in future charges
that could have a material adverse effect on the Company’s results of operations or cash flows in the period in which they are recorded.
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84
The Company currently believes that such future charges related to suits and legal claims, if any, would not have a material adverse
effect on the Company’s consolidated financial position.
TPC Group Litigation
On November 27, 2019, a Butadiene production plant owned and operated by TPC Group, Inc. (“TPC”) in Port Neches, Texas,
experienced an explosion and fire that resulted in personal injuries, the release of chemical fumes and extensive property damage to the
plant and surrounding areas in and near Port Neches, Texas.
Nalco Company LLC, a subsidiary of Ecolab, supplied process chemicals to TPC used in TPC’s production processes. Nalco did not
operate, manage, maintain or control any aspect of TPC’s plant operations.
In connection with its provision of process chemicals to TPC, Nalco was named in numerous lawsuits stemming from the plant explosion.
Nalco has been named a defendant, along with TPC and other defendants, in multi-district litigation (“MDL”) proceedings pending in
Orange County, Texas, alleging among other things claims for personal injury, property damage and business losses (In re TPC Group
Litigation – A2020-0236-MDL, Orange County, Texas). Numerous other lawsuits were filed against Nalco, including TPC Group v. Nalco,
E0208239, Jefferson County, Texas, a subrogation claim by TPC’s insurers seeking reimbursement for property damage losses. Over
5,000 plaintiffs (including the subrogation matter) currently have asserted claims against Nalco. All claims have been consolidated for
pretrial purposes into the MDL.
All of these cases make similar allegations and seek damages for personal injury, property damage, business losses and other damages,
including exemplary damages. Due to the large number of plaintiffs, the early stage of the litigation and the fact that many of the claims
do not specify an amount of damages, any estimate of any loss or range of losses cannot be made at this time.
On June 1, 2022, TPC and seven of its affiliated companies filed for bankruptcy under Chapter 11 (Case No. 22-10493-CTG, United
States Bankruptcy Court for the District of Delaware). In connection with the bankruptcy cases, TPC disclosed an estimated range of its
liability related to the Port Neches incident to individuals and homeowners (including subrogation claims) of approximately $152 million to
$520 million. As part of their bankruptcy plan, TPC and its affiliates announced a settlement which allows the MDL plaintiffs a $500
million claim solely for purposes of claim allowance in the chapter 11 case and distribution of value pursuant to TPC’s bankruptcy plan.
Other key terms of the settlement between TPC and the MDL plaintiffs include the establishment of a settlement trust for the benefit of
certain general unsecured creditors, which is funded with $30 million and the assignment of TPC’s claims and causes of action, if any,
against certain third parties, including Nalco, related to the TPC plant explosion. As part of the bankruptcy process, TPC and its debtor
affiliates received a discharge of all MDL related claims, as did certain non-debtor affiliates to the extent third parties did not opt out of the
non-debtor releases. As a result, TPC is no longer a defendant in the MDL. Nalco opted out of these releases, preserving any direct
causes of action it may have against non-debtors. Furthermore, the allowance of the $500 million claim should have no effect on any
claims or defenses asserted against or by Nalco in the MDL litigation. On December 1, 2022, the bankruptcy court confirmed the TPC
bankruptcy plan, including the approval of the settlement and establishment of the aforementioned settlement trust. On December 16,
2022, the TPC bankruptcy plan went effective. As a result of the bankruptcy, the MDL was stayed. The stay was lifted in the fourth
quarter of 2023 and various activities advancing discovery have resumed.
The Company believes the claims asserted against Nalco in the lawsuits stemming from the TPC plant explosion are without merit and
intends to defend the claims vigorously. The Company also believes any potential loss should be covered by insurance subject to
deductibles. However, the Company cannot predict the outcome of these lawsuits, the involvement the Company might have in these
matters in the future or the potential for future litigation.
Vehicle Accident Litigation
In June 2024, an Ecolab employee was driving a company vehicle when it collided with another vehicle, resulting in fatalities and serious
injuries. The Company was recently named in a lawsuit arising out of the collision in which the plaintiffs seek monetary damages. The
Company believes any potential loss should be covered by insurance subject to its deductible. Due to the early stage of the litigation, an
estimate of any loss or range of losses cannot be made at this time.
Environmental Matters
The Company is currently participating in environmental assessments and remediation at approximately 25 locations, the majority of
which are in the U.S., and environmental liabilities have been accrued reflecting management’s best estimate of future costs. Potential
insurance reimbursements are not anticipated in the Company’s accruals for environmental liabilities.
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85
16. RETIREMENT PLANS
Pension and Postretirement Health Care Benefits Plans
The Company has a non-contributory, qualified, defined benefit pension plan covering the majority of its U.S. employees. The Company
also has U.S. non-contributory, non-qualified, defined benefit pension plans, which provide for benefits to employees in excess of limits
permitted under its pension plans. The U.S. non-qualified plans are not funded and the recorded benefit obligations for the non-qualified
plans were $78 million and $87 million at December 31, 2024 and 2023, respectively. The measurement date used for determining the
U.S. pension plan assets and obligations is December 31.
Various international subsidiaries have defined benefit pension plans. International plans are funded based on local country
requirements. The measurement date used for determining the international pension plan assets and obligations is November 30, the
fiscal year end of the Company’s international subsidiaries.
The Company provides postretirement health care and life insurance benefits to certain U.S. employees and retirees. The U.S.
postretirement health care plans are contributory based on years of service and choice of coverage (family or single), with retiree
contributions adjusted annually. The Company also maintains several U.S. postretirement life insurance plans. The measurement date
used to determine the U.S. postretirement health care and life insurance plan assets and obligations is December 31. Certain employees
outside the U.S. are covered under government-sponsored programs, which are not required to be fully funded. The expense and
obligation for providing international postretirement health care benefits are not significant.
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86
The following table sets forth financial information related to the Company’s pension and postretirement benefit plans:
U.S.
International
U.S. Postretirement
Pensions
Pensions
Benefits
(millions)
2024
2023
2024
2023
2024
2023
Accumulated benefit obligation, end of year
$1,790.6 $1,859.5 $1,123.4 $1,125.8 $101.4
$112.0
Projected benefit obligation
Projected benefit obligation, beginning of year
$1,859.5 $1,799.0 $1,174.0 $1,221.9 $112.0
$115.5
Service cost
46.3
40.9
19.0
21.7
0.3
0.4
Interest cost
87.0
88.1
48.9
45.9
5.2
5.6
Participant contributions
-
-
2.9
2.8
3.0
3.8
Plan amendments
-
-
(0.5)
(1.5)
-
-
Actuarial (gain) loss
(68.4)
90.2
14.8
(101.0)
(8.0)
(0.1)
Acquisitions and divestitures
-
-
(13.3)
-
-
-
Other events
-
-
1.6
2.9
-
-
Benefits paid
(133.8)
(158.7)
(58.1)
(69.8) (11.1)
(13.2)
Foreign currency translation
-
-
(22.7)
51.1
-
-
Projected benefit obligation, end of year
$1,790.6 $1,859.5 $1,166.6 $1,174.0 $101.4
$112.0
Plan assets
Fair value of plan assets, beginning of year
$1,719.7 $1,668.5 $871.2 $905.1
$2.4
$3.2
Actual returns on plan assets
45.1
149.1
76.5
(44.0)
-
0.2
Company contributions
8.0
60.8
35.3
35.4
10.3
12.2
Participant contributions
-
-
2.9
2.8
-
-
Acquisitions and divestitures
-
-
(6.3)
2.9
-
-
Benefits paid
(133.8)
(158.7)
(57.9)
(67.6) (11.1)
(13.2)
Foreign currency translation
-
-
(10.8)
36.6
-
-
Fair value of plan assets, end of year
$1,639.0 $1,719.7 $910.9 $871.2
$1.6
$2.4
Funded Status, end of year
($151.6) ($139.8) ($255.7) ($302.8) ($99.8)
($109.6)
Amounts recognized in the Consolidated Balance Sheets:
Other assets
$-
$- $151.0 $118.4
$-
$-
Other current liabilities
(8.8)
(9.2)
(36.2)
(33.0)
(8.3)
(8.7)
Pension and postretirement benefits
(142.8)
(130.6)
(370.5)
(388.2) (91.5)
(100.9)
Net liability
($151.6) ($139.8) ($255.7) ($302.8) ($99.8)
($109.6)
Amounts recognized in accumulated other comprehensive loss
(income):
Unrecognized net actuarial loss (gain)
$526.5 $495.2 $253.5 $278.5 ($45.4)
($40.8)
Unrecognized net prior service (benefits) costs
(12.1)
(16.7)
(1.1)
(0.4)
-
-
Tax (benefit) expense
(131.6)
(122.8)
(58.1)
(64.4)
6.7
6.2
Accumulated other comprehensive loss (income), net of tax $382.8 $355.7 $194.3 $213.7 ($38.7)
($34.6)
Change in accumulated other comprehensive loss (income):
Amortization of net actuarial gain (loss)
($6.1)
($0.2)
($12.2)
($14.8)
$3.2
$3.1
Amortization of prior service credits
4.6
4.5
(0.1)
0.5
-
-
Current period net actuarial loss (gain)
37.4
83.5
(10.1)
(1.0)
(7.8)
(0.3)
Current period prior service costs
-
-
(0.5)
(1.5)
-
-
Curtailments and settlements
-
-
(0.9)
2.7
-
-
Tax (benefit) expense
(8.8)
(22.0)
6.3
2.1
0.5
(1.5)
Foreign currency translation
-
-
(1.9)
12.2
-
-
Other comprehensive loss (income)
$27.1
$65.8
($19.4)
$0.2 ($4.1)
$1.3
Estimate amounts in accumulated other comprehensive loss expected to be reclassified to net period cost during 2025 were as follows:
U.S. Post-
U.S.
International
Retirement
(millions)
Pensions
Pensions
Benefits
Net actuarial loss (gain)
$8.6
$8.1
($3.6)
Net prior service benefits
(4.6)
(0.3)
-
Total
$4.0
$7.8
($3.6)
Service cost is included with employee compensation cost in either cost of sales and selling, general and administrative expenses in the
Consolidated Statements of Income based on employee roles in the Company while all non-service components are included in other
(income) expense in the Consolidated Statements of Income.
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87
The aggregate projected benefit obligation, accumulated benefit obligation and fair value of pension plan assets for plans with
accumulated benefit obligations in excess of plan assets were as follows:
December 31, (millions)
2024
2023
Aggregate projected benefit obligation
$2,292.5
$2,428.8
Accumulated benefit obligation
2,265.5
2,392.4
Fair value of plan assets
1,738.6
1,868.9
The projected benefit obligation and fair value of pension plan assets for plans with projected benefit obligations in excess of plan assets
were as follows:
December 31, (millions)
2024
2023
Projected benefit obligations
$2,373.4
$2,449.1
Fair value of plan assets
1,815.1
1,888.2
These plans include the U.S. non-qualified pension plans which are not funded as well as various international pension plans which are
funded consistent with local practices and requirements.
Net Periodic Benefit Costs and Plan Assumptions
Pension and postretirement benefits expense for the Company’s operations were as follows:
U.S.
International
U.S. Postretirement
Pensions
Pensions
Benefits
(millions)
2024 2023 2022 2024 2023 2022 2024 2023 2022
Service cost
$46.3
$40.9
$40.8
$19.0
$21.7
$28.4
$0.3
$0.4
$0.8
Interest cost on benefit obligation
87.0
88.1
65.3
48.9
45.9
22.0
5.2
5.6
3.3
Expected return on plan assets
(150.8)
(145.1)
(144.4)
(50.1)
(56.1)
(69.8)
(0.2)
(0.2)
(0.3)
Recognition of net actuarial loss (gain)
6.1
0.2
30.2
9.6
12.5
22.8
(3.2)
(3.1)
(0.6)
Amortization of prior service benefit
(4.6)
(4.5)
(4.5)
(0.1)
(0.5)
(0.1)
-
-
-
Curtailments and settlements (a)
-
-
51.6
0.9
(2.7)
-
-
-
-
Total expense (benefit)
($16.0)
($20.4)
$39.0
$28.2
$20.8
$3.3
$2.1
$2.7
$3.2
(a) $50.6 of settlement expense was recognized as special charges in 2022.
During 2022, the Company incurred settlement expense in the U.S. of $51.6 million ($38.9 million after tax) related to lump-sum
payments to retirees in its U.S. pension plans. In addition to the U.S. qualified plan settlements in 2022, the Company has historically
recognized settlements and curtailment gains and losses associated with its U.S. nonqualified pension plans and International pension
plans, the amounts of which have been historically not material. These charges have been included as a component of other (income)
expense on the Consolidated Statements of Income.
The measurement of the Company’s pension and postretirement benefit obligations are dependent on a variety of assumptions
determined by management and used by actuaries in their valuation method and calculations. The significant assumptions used in
developing the required estimates of the projected benefit obligations are the discount rates, expected returns on assets, projected salary
increases, and mortality tables. Assumptions for the Company were as follows:
Plan Assumptions
U.S.
International
U.S. Postretirement
Pensions
Pensions
Benefits
(percent)
2024
2023 2022 2024
2023 2022
2024
2023
2022
Weighted-average actuarial assumptions
used to determine benefit obligations
as of year end:
Discount rate
5.58 % 4.95 % 5.17 %
3.99 % 4.34 % 3.70 % 5.58 % 4.95 % 5.14 %
Projected salary increase
3.60
4.03 4.03 2.69 2.84 2.81
Weighted-average actuarial assumptions
used to determine net cost:
Interest credit rate for cash balance
plans
4.50
3.89 1.56 N/A
N/A N/A N/A
N/A N/A
Discount rate
4.95
5.17 2.86 4.34 3.70 1.46 4.95 5.14 2.75
Expected return on plan assets
8.00
7.75 7.00 6.00 6.27 6.18 8.00 7.75 7.00
Projected salary increase
4.03
4.03 4.03 2.84 3.08 2.47
Discount rate assumptions for the U.S. plans are developed using a bond yield curve constructed from a population of high-quality, non-
callable, corporate bonds with maturities ranging from six months to thirty years. Discount rates are estimated for the U.S. plans based
on the timing of the expected benefit payments.
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The Company measures service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash
flows. The Company believes this approach provides a more precise measurement of service and interest costs by aligning the timing of
the plans’ liability cash flows to the corresponding spot rates on the yield curve.
The expected long-term rate of return used for the U.S. plans is based on the respective pension plan’s asset mix. The Company
considers expected long-term real returns on asset categories, expectations for inflation, and estimates of the impact of active
management of the assets in determining the expected long-term rate of return to use. The Company also considers historical returns.
The expected long-term rate of return used for the Company’s international plans is determined in each local jurisdiction and is based on
the assets held in that jurisdiction, the expected rate of returns for the type of assets held and any guaranteed rate of return provided by
the investment. The other assumptions used to measure the international pension obligations, including discount rate, vary by country
based on specific local requirements and information.
The Company uses mortality tables appropriate in the circumstances, which generally are the recent available mortality tables as of the
respective U.S. and international measurement dates. The Company’s 2024 and 2023 year-end U.S. valuations reflect mortality tables
that estimate the impacts of COVID in an endemic state. This represents a change from 2022 when the impact of COVID on future
mortality could not be reasonably estimated.
For postretirement benefit measurement purposes as of December 31, 2024, the annual rates of increase in the per capita cost of
covered health care were assumed to be 8.59% for pre-65 costs. Post-65 costs are no longer used. The rates are assumed to decrease
each year until they reach 4.5% in 2035 and remain at those levels thereafter. Health care costs for certain employees which are eligible
for subsidy by the Company are limited by a cap on the subsidy.
Plan Asset Management
The Company’s U.S. investment strategy and policies are designed to maximize the possibility of having sufficient funds to meet the
long-term liabilities of the qualified pension plan, while achieving a balance between the goals of asset growth of the qualified pension
plan and keeping risk at a reasonable level. Investment income is not a primary goal of the policy.
The asset allocation position reflects the Company’s ability and willingness to accept relatively more short-term variability in the
performance of the qualified pension plan asset portfolio in exchange for the expectation of better long-term returns, lower pension costs
and better funded status in the long run. The U.S. qualified pension plan’s assets are diversified across a number of asset classes and
securities. Selected individual portfolios within the asset classes may be undiversified while maintaining the diversified nature of total plan
assets. The Company has no significant concentration of risk in its U.S. qualified pension plan assets.
Assets of funded international retirement plans are managed in each local jurisdiction and asset allocation strategy is set in accordance
with local rules, regulations and practices; therefore, no overall target asset allocation is presented. Although foreign equity securities are
all considered international for the Company, some equity securities are considered domestic for the local plan. The funds are invested in
a variety of equities, bonds and real estate investments and, in some cases, the assets are managed by insurance companies which may
offer a guaranteed rate of return. The Company has no significant concentration of risk in the assets of its international pension plans.
The fair value hierarchy is used to categorize investments measured at fair value in one of three levels in the fair value hierarchy. This
categorization is based on the observability of the inputs used in valuing the investments. Refer to Note 7 for definitions of these levels.
The fair value of the Company’s U.S. qualified pension plan assets were as follows:
Fair Value as of
Fair Value as of
(millions)
December 31, 2024
December 31, 2023
Level 1
Level 2
Total
Level 1 Level 2
Total
Cash
$41.5
$-
$41.5
$30.1
$-
$30.1
Equity securities:
Large cap equity
367.1
-
367.1
276.1
-
276.1
Small cap equity
12.1
26.4
38.5
14.6
29.6
44.2
International equity
93.8
137.4
231.2
40.4
19.2
59.6
Fixed income:
Core fixed income
183.2
371.3
554.5
150.7
669.6
820.3
High-yield bonds
38.8
-
38.8
34.7
-
34.7
Emerging markets
-
42.0
42.0
-
24.8
24.8
Total investments at fair value
736.5
577.1
1,313.6
546.6
743.2
1,289.8
Investments measured at net asset value
327.0
432.3
Total
$736.5
$577.1
$1,640.6
$546.6
$743.2
$1,722.1
The Company had no Level 3 assets as part of its U.S. qualified pension plan assets as of December 31, 2024 or 2023.
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89
The allocation of the Company’s U.S. qualified pension plan assets plans were as follows:
Target Asset
Asset Category
Allocation
Percentage
Percentage
of Plan Assets
December 31
2024
2023 2024
2023
Cash
- %
- %
3 %
2 %
Equity securities:
Large cap equity
27
21
22
16
Small cap equity
3
3
2
3
International equity
17
13
14
9
Fixed income:
Core fixed income
35
48
34
48
High-yield bonds
3
3
2
2
Emerging markets
3
2
3
1
Other:
Real estate
3
3
3
3
Private equity
6
5
14
14
Distressed debt
3
2
3
2
Total
100 % 100 %
100 % 100 %
The fair value of the Company’s international plan assets for its defined benefit pension plans were as follows:
Fair Value as of
Fair Value as of
(millions)
December 31, 2024
December 31, 2023
Level 1 Level 2
Total
Level 1 Level 2
Total
Cash
$8.1
$-
$8.1
$12.6
$-
$12.6
Equity securities:
International equity
-
193.9
193.9
-
182.5
182.5
Fixed income:
Corporate bonds
-
157.5
157.5
-
147.5
147.5
Government bonds
-
339.6
339.6
-
321.4
321.4
Insurance company accounts
-
163.2
163.2
-
163.4
163.4
Total investments at fair value
8.1
854.2
862.3
12.6
814.8
827.4
Investments measured at net asset value
48.6
43.8
Total
$8.1
$854.2
$910.9
$12.6
$814.8
$871.2
The Company had no Level 3 assets as part of its international plan assets as of December 31, 2024 or 2023.
The allocation of plan assets of the Company’s international plan assets for its defined benefit pension plans were as follows:
Percentage
Asset Category
of Plan Assets
December 31
2024
2023
Cash
1 %
1 %
Equity securities:
International equity
21
21
Fixed income:
Corporate bonds
17
17
Government bonds
37
37
Total fixed income
54
54
Other:
Insurance contracts
18
19
Real estate
6
5
Total
100 %
100 %
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90
Cash Flows
As of year-end 2024, the Company’s estimate of pension and postretirement benefits expected to be paid in each of the next five fiscal
years and in the aggregate for the five fiscal years thereafter are as follows:
(millions)
All Plans
2025
$247
2026
245
2027
246
2028
250
2029
247
2030 - 2034
1,217
Depending on plan funding levels, the U.S. qualified pension plan provides certain terminating participants with an option to receive their
pension benefits in the form of a lump sum payout.
The Company is currently in compliance with all funding requirements of its U.S. pension and postretirement benefit plans. There were
no voluntary contributions made to its non-contributory qualified U.S. pension plan in 2024. The Company is required to fund certain
international pension benefit plans in accordance with local legal requirements. The Company estimates contributions to be made to its
international plans will approximate $48 million in 2025.
The Company seeks to maintain balance in its U.S. assets that meet the long-term funding requirements identified by the projections of
the pension plans’ actuaries while simultaneously satisfying the fiduciary responsibilities prescribed in ERISA. The Company also takes
into consideration the tax deductibility of contributions to the benefit plans.
Savings Plan and ESOP
The Company provides a 401(k) savings plan for the majority of its U.S. employees under the Company’s 401(k) savings plans, the
Ecolab Savings Plan and ESOP (the “Ecolab Savings Plan”).
Under the Ecolab Savings Plan, Employee before-tax contributions of up to 4% of eligible compensation are matched 100% by the
Company and employee before-tax contributions over 4% and up to 8% of eligible compensation are matched 50% by the Company.
The Company’s matching contributions are 100% vested immediately. The Company’s matching contribution expense was $92.4 million,
$88.2 million and $81.6 million in 2024, 2023 and 2022, respectively.
17. REVENUES
Revenue Recognition
Product and Sold Equipment
Product revenue is generated from sales of cleaning, sanitizing, water treatment, process treatment and colloidal silica products. In
addition, the Company sells equipment which may be used in combination with its specialized products. Revenue recognized from
product and sold equipment is recognized at the point in time when the obligations in the contract with the customer are satisfied, which
generally occurs with the transfer of the product or delivery of the equipment.
Service and Lease Equipment
Service and lease equipment revenue is generated from providing services or leasing equipment to customers. Service offerings include
installing or repairing certain types of equipment, activities that supplement or replace headcount at the customer location, or fulfilling
deliverables included in the contract. Global Industrial segment services are associated with water treatment and paper process
applications. Global Institutional & Specialty services include cleaning and sanitizing programs and wash process solutions. Global
Healthcare & Life Sciences segment services include pharmaceutical, personal care, infection and containment control solutions.
Revenues included in Other primarily related to services designed to detect, eliminate and prevent pests. Service revenue is recognized
over time utilizing an input method and aligns with when the services are provided. Typically, revenue is recognized over time using costs
incurred to date because the effort provided by the field selling and service organization represents services provided, which corresponds
with the transfer of control. Revenue recognized from leased equipment primarily relates to warewashing and water treatment equipment
recognized on a straight-line basis over the length of the lease contract pursuant to Topic 842 Leases. Refer to Note 13 for additional
information related to lease equipment.
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91
Practical Expedients and Exemptions
The revenue standard can be applied to a portfolio of contracts with similar characteristics if it is reasonable that the effects of applying
the standard at the portfolio level would not be significantly different than applying the standard at the individual contract level. The
Company applies the portfolio approach primarily within each operating segment by geographical region. Application of the portfolio
approach was focused on those characteristics that have the most significant accounting consequences in terms of their effect on the
timing of revenue recognition or the amount of revenue recognized. The Company determined the key criteria to assess with respect to
the portfolio approach, including the related deliverables, the characteristics of the customers and the timing and transfer of goods and
services, which most closely aligned within the operating segments. In addition, the accountability for the business operations, as well as
the operational decisions on how to go to market and the product offerings, are performed at the operating segment level.
The following table shows principal activities, separated by reportable segments, from which the Company generates its revenue. The
reportable segments have been revised to align with the Company’s reportable segments in the current year. Corporate includes sales to
ChampionX under the transitional supply agreement entered into as part of the ChampionX Separation. For more information about the
Company’s reportable segments, refer to Note 18.
Net sales at public exchange rates by reportable segment were as follows:
(millions)
2024
2023
2022
Global Industrial
Product and sold equipment
$6,810.8
$6,710.8
$6,303.9
Service and lease equipment
966.4
915.7
893.2
Global Institutional & Specialty
Product and sold equipment
4,362.2
4,087.3
3,655.1
Service and lease equipment
1,020.4
911.9
777.0
Global Healthcare & Life Sciences
Product and sold equipment
1,300.6
1,476.2
1,398.1
Service and lease equipment
118.2
109.8
112.4
Global Pest Elimination
Service and lease equipment
1,162.8
1,066.0
959.0
Corporate
Product and sold equipment
-
42.5
89.1
Total
Total product and sold equipment
$12,473.6
$12,316.8
$11,446.2
Total service and lease equipment
3,267.8
3,003.4
2,741.6
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92
Net sales at public exchange rates by geographic region were as follows:
Global Industrial
Global Institutional & Specialty
(millions)
2024
2023
2022
2024
2023
2022
United States
$3,320.7 $3,232.5
$3,129.2
$3,713.5 $3,410.5
$3,008.1
Europe
1,593.7 1,573.0
1,433.9
706.4
682.3
624.4
Asia Pacific
948.9
947.4
888.8
249.7
238.8
220.9
Latin America
810.5
772.5
656.2
201.6
197.8
169.2
India, Middle East and Africa
493.0
491.8
459.3
84.5
77.8
66.2
Greater China
400.4
407.0
435.8
177.5
161.0
138.3
Canada
210.0
202.3
193.9
249.4
231.0
205.0
Total
$7,777.2 $7,626.5
$7,197.1
$5,382.6 $4,999.2
$4,432.1
Global Healthcare & Life Sciences
Global Pest Elimination
(millions)
2024
2023
2022
2024
2023
2022
United States
$465.8 $633.6
$600.7
$805.6 $733.6
$650.3
Europe
705.5
719.2
675.6
187.5
171.0
154.7
Asia Pacific
111.3
103.9
100.4
32.1
28.7
27.9
Latin America
29.1
35.5
32.9
58.7
57.5
51.8
India, Middle East and Africa
40.6
29.6
29.0
7.1
6.9
8.1
Greater China
59.0
56.4
65.6
60.0
57.4
56.8
Canada
7.5
7.8
6.3
11.8
10.9
9.4
Total
$1,418.8 $1,586.0
$1,510.5
$1,162.8 $1,066.0
$959.0
Corporate
(millions)
2024
2023
2022
United States
$-
$38.4
$84.0
Europe
-
2.7
2.7
Asia Pacific
-
0.2
0.3
Latin America
-
1.1
1.6
Canada
-
0.1
0.5
Total
$-
$42.5
$89.1
Net sales by geographic region were determined based on sales destination. There were no sales from a single foreign country or
individual customer that were material to the Company’s consolidated net sales. Sales of warewashing products were approximately 12%
of consolidated net sales in 2024, 2023 and 2022.
Contract Liability
Payments received from customers are based on invoices or billing schedules as established in contracts with customers. Accounts
receivable are recorded when the right to consideration becomes unconditional. The contract liability relates to billings in advance of
performance (primarily service obligations) under the contract. Contract liabilities are recognized as revenue when the performance
obligation has been performed, which primarily occurs during the subsequent quarter.
December 31 December 31
(millions)
2024
2023
Contract liability as of beginning of the year
$110.9
$116.5
Revenue recognized in the year from:
Amounts included in the contract liability at the beginning of the year
(110.9)
(116.5)
Increases due to billings excluding amounts recognized as revenue during the year ended
102.0
110.9
Contract liability as of end of year
$102.0
$110.9
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93
18. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION
The Company’s organizational structure consists of global business unit and global regional leadership teams. The Company’s eight
operating segments follow its commercial and product-based activities and are based on engagement in business activities, availability of
discrete financial information and review of operating results by the Chief Operating Decision Maker (“CODM”) at the identified operating
segment level. The CODM is the Company’s Chief Executive Officer.
The Company’s operating segments that share similar economic characteristics and future prospects, nature of the products and
production processes, end-use markets, channels of distribution and regulatory environment have been aggregated into four reportable
segments: Global Industrial, Global Institutional & Specialty, Global Healthcare & Life Sciences and Global Pest Elimination.
The Company’s operating segments are aggregated as follows:
Global Industrial
Includes the Water, Food & Beverage and Paper operating segments, which provide water treatment and process applications, and
cleaning and sanitizing solutions, primarily to large industrial customers within the manufacturing, food and beverage processing,
transportation, chemical, primary metals and mining, power generation, global refining, petrochemical, pulp and paper industries. The
underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics.
Global Institutional & Specialty
Includes the Institutional and Specialty operating segments, which provide specialized cleaning and sanitizing products to the
foodservice, hospitality, lodging, government and education and retail industries. The underlying operating segments exhibit similar
manufacturing processes, distribution methods and economic characteristics.
Global Healthcare & Life Sciences
Includes the Healthcare and Life Sciences operating segments, which provide specialized cleaning and sanitizing products to the
healthcare, personal care and pharmaceutical industries. The underlying operating segments exhibit similar manufacturing processes,
distribution methods and economic characteristics.
Global Pest Elimination
Includes the Pest Elimination operating segment which provides services to detect, prevent and eliminate pests, such as rodents and
insects, in full-service and quick-service restaurants, food and beverage processors, hotels, grocery operations and other commercial
segments including education, life sciences and healthcare. No other operating segments are aggregated into the Global Pest
Elimination reportable segment.
Corporate
Consistent with the Company’s internal management reporting, Corporate amounts in the table below include sales to ChampionX under
the transitional supply agreement entered into as part of the ChampionX Separation. Corporate also includes intangible asset
amortization specifically from the Nalco and Purolite acquisitions and special (gains) and charges, as discussed in Note 3, that are not
allocated to the Company’s reportable segments.
Comparability of Reportable Segments
Effective January 1, 2024, the Company’s former Textile Care and Colloidal Technologies Group (“CTG”) operating segments are now
part of the Water operating segment which continues to remain in the Global Industrial reportable segment. Additionally, the Pest
Elimination operating segment, formerly aggregated with the Textile Care and CTG operating segments within Other, is now reported as
the stand-alone Global Pest Elimination reportable segment. The Company made other immaterial changes, including the movement of
certain customers and cost allocations between reportable segments. Prior period amounts have been recast to conform with current
period presentation.
The Company evaluates the performance of its non-U.S. dollar functional currency international operations based on fixed currency
exchange rates, which eliminate the impact of exchange rate fluctuations on its international operations. Fixed currency amounts are
updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange rates established by
management, with all periods presented using such rates. The “Fixed Currency Rate Change” column shown in the following table
reflects international operations at fixed currency exchange rates established by management at the beginning of 2024, rather than the
2023 established rates. The difference between the fixed currency exchange rates and the actual currency exchange rates is reported
within the “Effect of foreign currency translation” row in the following table. The “Other” column shown in the following table reflects
immaterial changes between reportable segments, including the movement of certain customers and cost allocations.
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94
The impact of the preceding changes on previously reported full year 2023 and 2022 reportable segment net sales and operating income
is summarized as follows:
December 31, 2023
2023 Reported
Fixed
2023 Reported
Valued at 2023
Currency
Valued at 2024
(millions)
Fixed Currency Rates Other Rate Change Fixed Currency Rates
Net Sales
Global Industrial
$7,193.1
$407.3
$40.1
$7,640.5
Global Institutional & Specialty
4,994.0
-
20.6
5,014.6
Global Healthcare & Life Sciences
1,576.9
-
30.6
1,607.5
Global Pest Elimination
- 1,061.5
8.7
1,070.2
Other
1,442.3 (1,442.3)
-
-
Corporate
69.1
(26.5)
0.1
42.7
Subtotal at fixed currency rates
15,275.4
-
100.1
15,375.5
Effect of foreign currency translation
44.8
-
(100.1)
(55.3)
Consolidated reported GAAP net sales
$15,320.2
$-
$-
$15,320.2
Operating Income
Global Industrial
$1,080.7
$39.0
$2.3
$1,122.0
Global Institutional & Specialty
823.0
14.9
3.9
841.8
Global Healthcare & Life Sciences
160.0
(6.7)
7.5
160.8
Global Pest Elimination
-
209.0
1.4
210.4
Other
255.0 (255.0)
-
-
Corporate
(331.7)
(1.2)
0.1
(332.8)
Subtotal at fixed currency rates
1,987.0
-
15.2
2,002.2
Effect of foreign currency translation
5.3
-
(15.2)
(9.9)
Consolidated reported GAAP operating income
$1,992.3
$-
$-
$1,992.3
December 31, 2022
2022 Reported
Fixed
2022 Reported
Valued at 2023
Currency
Valued at 2024
(millions)
Fixed Currency Rates Other Rate Change Fixed Currency Rates
Net Sales
Global Industrial
$6,736.3 $392.5
$43.8
$7,172.6
Global Institutional & Specialty
4,414.3
-
18.9
4,433.2
Global Healthcare & Life Sciences
1,505.8
-
28.5
1,534.3
Global Pest Elimination
-
955.4
8.1
963.5
Other
1,313.3 (1,313.3)
-
-
Corporate
123.7
(34.6)
0.1
89.2
Subtotal at fixed currency rates
14,093.4
-
99.4
14,192.8
Effect of foreign currency translation
94.4
-
(99.4)
(5.0)
Consolidated reported GAAP net sales
$14,187.8
$-
$-
$14,187.8
Operating Income
Global Industrial
$935.8
$10.3
$2.8
$948.9
Global Institutional & Specialty
621.7
8.1
2.1
631.9
Global Healthcare & Life Sciences
193.3
(4.1)
4.2
193.4
Global Pest Elimination
-
195.6
1.7
197.3
Other
209.9 (209.9)
-
-
Corporate
(414.4)
-
0.1
(414.3)
Subtotal at fixed currency rates
1,546.3
-
10.9
1,557.2
Effect of foreign currency translation
16.2
-
(10.9)
5.3
Consolidated reported GAAP operating income
$1,562.5
$-
$-
$1,562.5
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95
Reportable Segment Information
The Company has determined its significant segment expenses are cost of sales (“COS”) and selling, general and administrative
expenses (“SG&A”), which are regularly provided to the CODM at fixed currency exchange rates. Financial information for each of the
Company’s reportable segments were as follows:
December 31, 2024
(millions)
Net Sales
COS
SG&A
Special
(gains) and
charges
Operating
Income
(Loss)
Global Industrial
$7,857.2
$4,691.2
$1,865.4
$-
$1,300.6
Global Institutional & Specialty
5,413.9
2,727.5
1,503.7
-
1,182.7
Global Healthcare & Life Sciences
1,434.1
895.1
391.8
-
147.2
Global Pest Elimination
1,167.8
655.0
292.4
-
220.4
Corporate
-
5.4
199.3
(188.9)
(15.8)
Subtotal at fixed currency rates
$15,873.0
$8,974.2
$4,252.6
($188.9)
$2,835.1
Effect of foreign currency translation
(131.6)
(32.7)
Consolidated reported GAAP
$15,741.4
$2,802.4
December 31, 2023
(millions)
Net Sales
COS
SG&A
Special
(gains) and
charges
Operating
Income (Loss)
Global Industrial
$7,640.5
$4,769.7
$1,748.8
$-
$1,122.0
Global Institutional & Specialty
5,014.6
2,727.3
1,445.5
-
841.8
Global Healthcare & Life Sciences
1,607.5
1,026.9
419.8
-
160.8
Global Pest Elimination
1,070.2
595.0
264.8
-
210.4
Corporate
42.7
63.3
200.8
111.4
(332.8)
Subtotal at fixed currency rates
$15,375.5
$9,182.2
$4,079.7
$111.4
$2,002.2
Effect of foreign currency translation
(55.3)
(9.9)
Consolidated reported GAAP
$15,320.2
$1,992.3
December 31, 2022
(millions)
Net Sales
COS
SG&A
Special
(gains) and
charges
Operating
Income (Loss)
Global Industrial
$7,172.6
$4,692.1
$1,531.6
$-
$948.9
Global Institutional & Specialty
4,433.2
2,491.3
1,310.0
-
631.9
Global Healthcare & Life Sciences
1,534.3
956.2
384.7
-
193.4
Global Pest Elimination
963.5
537.8
228.4
-
197.3
Corporate
89.2
159.0
204.0
140.5
(414.3)
Subtotal at fixed currency rates
$14,192.8
$8,836.4
$3,658.7
$140.5
$1,557.2
Effect of foreign currency translation
(5.0)
5.3
Consolidated reported GAAP
$14,187.8
$1,562.5
The profitability of the Company’s operating segments is evaluated by management based on operating income, which is used by the
CODM in assessing segment performance, including to determine operational targets, make strategic decisions for the organization, and
allocate capital and resources to the segments. Segment operating income is also used in determining the compensation of certain
employees.
Consistent with the Company’s internal management reporting, Corporate amounts in the table above include sales to ChampionX in
accordance with the transitional supply agreement entered into with the Transaction, as discussed in Note 17. Corporate also includes
intangible asset amortization specifically from the Nalco and Purolite acquisitions and special (gains) and charges, as discussed in Note
3, that are not allocated to the Company’s reportable segments.
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96
The Company has an integrated supply chain function that serves all of its reportable segments. As such, asset and capital expenditure
information by reportable segment has not been provided and is not available, since the Company does not produce or utilize such
information internally. In addition, although depreciation and amortization expense is a component of each reportable segment’s
operating results, it is not discretely identifiable.
Geographic Information
Long-lived assets, which includes property, plant and equipment and right of use assets, at public exchange rates by geographic region
were as follows:
Long-Lived Assets, net
(millions)
2024
2023
United States
$3,075.4
$2,708.6
Europe
660.6
631.2
Asia Pacific
241.6
213.0
Greater China
176.0
167.4
Latin America
170.1
175.1
India, Middle East and Africa
78.6
68.2
Canada
73.3
64.6
Total
$4,475.6
$4,028.1
Geographic data for long-lived assets is based on physical location of those assets. Refer to Note 17 for net sales by geographic region.
Subsequent Event
Effective in the first quarter of 2025, the Company modified its organizational structure. As a result, the Company’s Global Industrial
reportable segment was renamed Global Water and includes the Light & Heavy (previously named Water), Food & Beverage, and Paper
operating segments. The Company’s Global Institutional & Specialty reportable segment continues to include the Institutional and
Specialty operating segments. The Company’s former healthcare operating segment moved into the Institutional operating segment.
Global Life Sciences was elevated to a standalone reportable segment. The Global Pest Elimination segment remains a standalone
reportable segment.
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97
19. QUARTERLY FINANCIAL DATA (UNAUDITED)
First
Second
Third
Fourth
(millions, except per share)
Quarter
Quarter
Quarter
Quarter
Year
2024
Net sales
$3,751.9
$3,985.8
$3,998.5
$4,005.2
$15,741.4
Operating expenses
Cost of sales (a)
2,128.1
2,241.0
2,261.5
2,269.1
8,899.7
Selling, general and administrative expenses
1,077.7
1,075.7
1,024.8
1,050.0
4,228.2
Special (gains) and charges
28.2
12.2
(332.6)
103.3
(188.9)
Operating income
517.9
656.9
1,044.8
582.8
2,802.4
Other (income) expense
(12.6)
(12.6)
(12.9)
(13.2)
(51.3)
Interest expense, net
71.6
78.8
70.4
61.7
282.5
Income before income taxes
458.9
590.7
987.3
534.3
2,571.2
Provision for income taxes
42.3
95.7
246.5
54.8
439.3
Net income including noncontrolling interest
416.6
495.0
740.8
479.5
2,131.9
Net income attributable to noncontrolling interest
4.5
4.1
4.3
6.6
19.5
Net income attributable to Ecolab
$412.1
$490.9
$736.5
$472.9
$2,112.4
Earnings attributable to Ecolab per common share
Basic
$ 1.44
$ 1.72
$ 2.60
$ 1.67
$ 7.43
Diluted
$ 1.43
$ 1.71
$ 2.58
$ 1.66
$ 7.37
Weighted-average common shares outstanding
Basic
285.7
284.6
283.6
283.3
284.3
Diluted
287.8
287.0
286.0
285.7
286.6
2023
Net sales
$3,571.6
$3,852.1
$3,958.1
$3,938.4
$15,320.2
Operating expenses
Cost of sales (a)
2,205.2
2,334.8
2,330.5
2,284.4
9,154.9
Selling, general and administrative expenses
990.3
1,011.6
1,024.9
1,034.8
4,061.6
Special (gains) and charges
24.5
21.0
36.7
29.2
111.4
Operating income
351.6
484.7
566.0
590.0
1,992.3
Other (income) expense
(13.1)
(14.4)
(14.5)
(17.9)
(59.9)
Interest expense, net
74.2
77.8
74.3
70.4
296.7
Income before income taxes
290.5
421.3
506.2
537.5
1,755.5
Provision for income taxes
52.4
86.6
96.8
126.7
362.5
Net income including noncontrolling interest
238.1
334.7
409.4
410.8
1,393.0
Net income attributable to noncontrolling interest
4.7
5.0
5.4
5.6
20.7
Net income attributable to Ecolab
$233.4
$329.7
$404.0
$405.2
$1,372.3
Earnings attributable to Ecolab per common share
Basic
$ 0.82
$ 1.16
$ 1.42
$ 1.42
$ 4.82
Diluted
$ 0.82
$ 1.15
$ 1.41
$ 1.41
$ 4.79
Weighted-average common shares outstanding
Basic
284.6
284.9
285.1
285.3
285.0
Diluted
285.9
286.3
286.9
287.1
286.5
Per share amounts do not necessarily sum due to changes in the calculation of shares outstanding for each discrete period and
rounding. Gross profit is calculated as net sales minus cost of sales.
(a) Cost of sales includes special charges of $1.6, $0.7, $0.9 and $2.1 in Q1, Q2, Q3 and Q4 of 2024, respectively, and $3.2, $8.1,
$5.9 and $5.3 in Q1, Q2, Q3 and Q4 of 2023, respectively.
Table of Contents
98
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
As of December 31, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including
our Chairman and Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 as amended).
Based upon that evaluation, our Chairman and Chief Executive Officer and our Chief Financial Officer concluded that, as of December
31, 2024, our disclosure controls and procedures were effective.
Management’s Report on Internal Control Over Financial Reporting
Refer to page 48 of this Annual Report for “Management’s Report on Internal Control Over Financial Reporting.”
Report of Registered Public Accounting Firm
Refer to page 49 of this Annual Report for the “Report of Independent Registered Public Accounting Firm.”
Changes in Internal Control Over Financial Reporting.
During the period October 1, 2024 through December 31, 2024 there were no changes in our internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We are continuing our implementation of our enterprise resource planning (“ERP”) system upgrades, which are expected to occur in
phases over the next several years. These upgrades, which include supply chain and certain finance functions, are expected to improve
the efficiency of certain financial and related transactional processes. These upgrades of the ERP systems will affect the processes that
constitute our internal control over financial reporting and will require testing for effectiveness.
Item 9B. Other Information.
Rule 10b5-1 Plan Adoptions and Modifications.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
Table of Contents
99
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Information about our directors is incorporated by reference from the discussion under the heading “Proposal 1: Election of Directors”
located in the Proxy Statement. Information about our Audit Committee, including the members of the Committee, and our Audit
Committee financial experts, is incorporated by reference from the discussion under the heading “Corporate Governance,” and sub-
headings “Board Committees” and “Audit Committee,” located in the Proxy Statement. Information about our Code of Conduct is
incorporated by reference from the discussion under the heading “Corporate Governance” located in the Proxy Statement. Information
regarding our executive officers is presented under the heading “Information about our Executive Officers” in Part I, Item 1 of this
Form 10-K, and is incorporated herein by reference.
The Company’s Global Insider Trading Policy governs the trading of our securities by our directors, officers, employees, and consultants.
It also requires the Company to comply with all applicable securities and state laws when engaging in transactions in its own securities.
We believe that the policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing
standards applicable to the Company. A copy of the Global Insider Trading Policy is filed as Exhibit 19.1 to this Form 10-K.
Item 11. Executive Compensation.
Information appearing under the following headings of the Proxy Statement is incorporated herein by reference:
•
Director Compensation for 2024
•
Compensation & Human Capital Management Committee Interlocks and Insider Participation
•
Compensation & Human Capital Management Committee Report
•
Compensation Discussion and Analysis
•
Compensation Tables
•
Pay Ratio Disclosure
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
Information appearing under the heading entitled “Security Ownership” and “Equity Compensation Plan Information” located in the Proxy
Statement is incorporated herein by reference.
A total of 36,669,046 shares of Common Stock held by our directors and executive officers, some of whom may be deemed to be
“affiliates” of the Company, have been excluded from the computation of market value of our Common Stock on the cover page of this
Form 10-K. This total represents that portion of the shares reported as beneficially owned by our directors and executive officers as of
June 30, 2024 which are actually issued and outstanding.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information appearing under the headings entitled “Director Independence” and “Related Person Transactions” located in the Proxy
Statement is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
Information appearing under the heading entitled “Audit Fees” located in the Proxy Statement is incorporated herein by reference.
Table of Contents
100
PART IV
Item 15. Exhibit and Financial Statement Schedules.
The following information required under this item is filed as part of this report:
(a)(1)
Financial Statements.
Document:
Page:
(i)
Report of Independent Registered Public Accounting Firm.
(PCAOB ID 238)
49
(ii)
Consolidated Statements of Income for the years ended
December 31, 2024, 2023 and 2022.
51
(iii) Consolidated Statements of Comprehensive Income for the
years ended December 31, 2024, 2023 and 2022.
52
(iv) Consolidated Balance Sheets at December 31, 2024 and 2023.
53
(v)
Consolidated Statements of Cash Flows for the years ended
December 31, 2024, 2023 and 2022.
54
(vi) Consolidated Statements of Equity for the years ended
December 31, 2024, 2023 and 2022.
55
(vii) Notes to Consolidated Financial Statements.
56
Exhibit No.: Document:
Method of Filing:
(a)(2)
Financial Statement Schedules.
All financial statement schedules are omitted because they are not applicable or the required information is shown in the
consolidated financial statements or the accompanying notes to the consolidated financial statements. The separate
financial statements and summarized financial information of subsidiaries not consolidated and of fifty percent or less
owned persons have been omitted because they do not satisfy the requirements for inclusion in this Form 10-K.
(a)(3)
The documents below are filed as exhibits to this Report. We will, upon request and payment of a fee not exceeding the
rate at which copies are available from the Securities and Exchange Commission, furnish copies of any of the following
exhibits to stockholders.
(2.1)
Agreement and Plan of Merger and Reorganization, dated
December 18, 2019, by and among Ecolab Inc., ChampionX
Holding Inc., Apergy Corporation and Athena Merger Sub, Inc.
Incorporated by reference to Exhibit (2.1) of our
Form 8-K, dated December 18, 2019.
(2.2)
Separation and Distribution Agreement, dated December 18,
2019, by and among Ecolab Inc., ChampionX Holding Inc. and
Apergy Corporation.
Incorporated by reference to Exhibit (2.2) of our
Form 8-K, dated December 18, 2019.
(2.3)
Stock and Asset Purchase Agreement, dated October 28,
2021, by and among Ecolab Inc., Purolite Corporation, a
Delaware corporation (“Purolite”), Stefan E. Brodie and Don B.
Brodie (the “Founder Sellers” and together with Purolite, the
“Sellers”) and Stefan E. Brodie, solely in his capacity as the
representative of the Sellers.
Incorporated by reference to Exhibit (2.1) of our
Form 8-K, dated December 1, 2021.
(3.1)
Restated Certificate of Incorporation of Ecolab Inc., dated
January 2, 2013.
Incorporated by reference to Exhibit (3.2) of our
Form 8-K, dated January 2, 2013.
(3.2)
By-Laws, as amended through May 24, 2023.
Incorporated by reference to Exhibit (3.1) of our
Form 8-K, dated May 4, 2023.
(4.1)
Common Stock.
See Exhibits (3.1) and (3.2)
Table of Contents
101
Exhibit No.: Document:
Method of Filing:
(4.2)
Amended and Restated Indenture, dated January 9, 2001,
between Ecolab Inc. and The Bank of New York Mellon Trust
Company, N.A. (formerly known as The Bank of New York
Trust Company, N.A.) (as successor in interest to J.P. Morgan
Trust Company, N.A. and Bank One, N.A.), as Trustee.
Incorporated by reference to Exhibit (4)(A) of our
Form 8-K, dated January 23, 2001.
(4.3)
Second Supplemental Indenture, dated December 8, 2011,
between Ecolab Inc., Computershare Trust Company, N.A. (as
successor to Wells Fargo Bank, National Association), as
Trustee and The Bank of New York Mellon Trust Company, N.A.
(formerly known as The Bank of New York Trust Company, N.A.)
(as successor in interest to J.P. Morgan Trust Company, N.A.
and Bank One, N.A.), as original trustee.
Incorporated by reference to Exhibit (4.2) of our
Form 8-K, dated December 5, 2011.
(4.4)
Form of 5.500% Notes due 2041.
Included in Exhibit (4.3) above.
(4.5)
Indenture, dated January 12, 2015, between Ecolab Inc. and
Computershare Trust Company, N.A. (as successor to Wells
Fargo Bank, National Association), as Trustee.
Incorporated by reference to Exhibit 4.1 of our
Form 8-K, dated January 15, 2015.
(4.6)
Second Supplemental Indenture, dated July 8, 2015, by and
among Ecolab Inc., Computershare Trust Company, N.A. (as
successor to Wells Fargo Bank, National Association), as
Trustee, Elavon Financial Services Limited, UK Branch, as
paying agent, and Elavon Financial Services Limited, as
transfer agent and registrar.
Incorporated by reference to Exhibit (4.2) of our
Form 8-K, dated July 8, 2015.
(4.7)
Form of 2.625% Euro Notes due 2025.
Included in Exhibit (4.6) above.
(4.8)
Fourth Supplemental Indenture, dated October 18, 2016,
between Ecolab Inc. and Computershare Trust Company, N.A.
(as successor to Wells Fargo Bank, National Association), as
Trustee.
Incorporated by reference to Exhibit (4.2) of our
Form 8-K, dated October 13, 2016.
(4.9)
Forms of 2.700% Notes due 2026 and 3.700% Notes due
2046.
Included in Exhibit (4.8) above.
(4.10)
Seventh Supplemental Indenture, dated November 27, 2017,
between Ecolab Inc. and Computershare Trust Company, N.A.
(as successor to Wells Fargo Bank, National Association), as
Trustee.
Incorporated by reference to Exhibit (4.2) of our
Form 8-K, dated November 30, 2017.
(4.11)
Form of 3.250% Notes due 2027.
Included in Exhibit (4.10) above.
(4.12)
Form of 3.950% Notes due 2047.
Included in Exhibit (4.10) above.
(4.13)
Eighth Supplemental Indenture, dated March 24, 2020,
between Ecolab Inc. and Computershare Trust Company, N.A.
(as successor to Wells Fargo Bank, National Association), as
Trustee.
Incorporated by reference to Exhibit (4.2) of our Form
8-K filed on March 24, 2020.
(4.14)
Form of 4.800% Notes due 2030.
Included in Exhibit (4.13) above.
(4.15)
Ninth Supplemental Indenture, dated August 13, 2020,
between Ecolab Inc. and Computershare Trust Company, N.A.
(as successor to Wells Fargo Bank, National Association), as
Trustee.
Incorporated by reference to Exhibit (4.2) of our Form
8-K filed on August 13, 2020.
(4.16)
Form of 1.300% Notes due 2031.
Included in Exhibit (4.15) above.
(4.17)
Form of 2.125% Notes due 2050.
Included in Exhibit (4.15) above.
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102
Exhibit No.: Document:
Method of Filing:
(4.18)
Tenth Supplemental Indenture, dated August 18, 2021,
between Ecolab Inc. and Computershare Trust Company, N.A.
(as successor to Wells Fargo Bank, National Association), as
Trustee.
Incorporated by reference to Exhibit (4.2) of our Form
8-K filed on August 19, 2021.
(4.19)
Form of 2.750% Notes due 2055.
Included in Exhibit (4.18) above.
(4.20)
Eleventh Supplemental Indenture, dated December 15, 2021,
between Ecolab Inc. and Computershare Trust Company, N.A.,
as Trustee.
Incorporated by reference to Exhibit (4.2) of our Form
8-K filed on December 15, 2021.
(4.21)
Form of 1.650% Notes due 2027.
Included in Exhibit (4.20) above.
(4.22)
Form of 2.125% Notes due 2032.
Included in Exhibit (4.20) above.
(4.23)
Form of 2.700% Notes due 2051.
Included in Exhibit (4.20) above.
(4.24)
Twelfth Supplemental Indenture, dated as of November 17,
2022, between Ecolab Inc. and Computershare Trust
Company, N.A., as Trustee.
Incorporated by reference to Exhibit (4.2) of our Form
8-K filed on November 17, 2022.
(4.25)
Form of 5.250% Notes due 2028.
Included in Exhibit (4.24) above.
(4.27)
Description of Securities.
Filed herewith electronically.
Copies of other constituent instruments defining the rights of holders of our long-term debt are not filed herewith, pursuant
to Section (b)(4)(iii) of Item 601 of Regulation S-K, because the aggregate amount of securities authorized under each of
such instruments is less than 10% of our total assets on a consolidated basis. We will, upon request by the Securities and
Exchange Commission, furnish to the Commission a copy of each such instrument.
(10.1)
(i)
Third Amended and Restated $2.0 billion 5-Year
Revolving Credit Facility, dated as of April 16, 2021,
among Ecolab Inc., the lenders party thereto, the issuing
lenders party thereto, Bank of America, N.A., as
administrative agent and swing line bank, and Citibank,
N.A., JPMorgan Chase Bank, N.A. and MUFG Bank, Ltd.,
as co-syndication agents.
Incorporated by reference to Exhibit (10.1) of our
Form 8-K, dated April 20, 2021.
(ii)
First Amendment, dated as of March 17, 2023, to the
Third Amended and Restated Multicurrency Credit
Agreement dated as of April 16, 2021, among Ecolab Inc.,
the banks from time to time party thereto and Bank of
America, N.A., as Agent.
Incorporated by reference to Exhibit (10.1) of our
Form 10-Q, for the quarter ended March 31, 2023.
(10.2)
Documents comprising global Commercial Paper Programs.
(i)
U.S. $2,000,000,000 Euro-Commercial Paper Programme.
(a) Amended and Restated Dealer Agreement, dated 30
October 2023, between Ecolab Inc., Ecolab NL 10
B.V., Ecolab NL 11 B.V. and Nalco Overseas Holding
B.V. (as Issuers), Ecolab Inc. (as Guarantor in
respect of the notes issued by Ecolab NL 10 B.V.,
Ecolab NL 11 B.V. and Nalco Overseas Holding
B.V.), Barclays Bank PLC (as Arranger), and
Barclays Bank Ireland PLC, Barclays Bank PLC,
Citigroup Global Markets Europe AG and Citigroup
Global Markets Limited (as Dealers).
Incorporated by reference to Exhibit (10.2)(i)(a) of our
Form 10-K Annual Report for the year ended
December 31, 2023.
Table of Contents
103
Exhibit No.: Document:
Method of Filing:
(b) Amended and Restated Note Agency Agreement,
dated 30 October 2023, between Ecolab Inc., Ecolab
NL 10 B.V. Ecolab NL 11 B.V. and Nalco Overseas
Holding B.V. (as Issuers), Ecolab Inc. (as Guarantor
in respect of the notes issued by Ecolab NL 10 B.V.,
Ecolab NL 11 B.V. and Nalco Overseas Holding
B.V.), and Citibank, N.A., London Branch (as Issue
and Paying Agent).
Incorporated by reference to Exhibit (10.2)(i)(b)of our
Form 10-K Annual Report for the year ended
December 31, 2023.
(c) Deed of Covenant made on 30 October 2023 by
Ecolab Inc., Ecolab NL 10 B.V., Ecolab NL 11 B.V.
and Nalco Overseas Holding B.V. (as Issuers).
Incorporated by reference to Exhibit (10.2)(i)(c) of our
Form 10-K Annual Report for the year ended
December 31, 2023.
(d) Deed of Guarantee made on 30 October 2023 by
Ecolab Inc. (in respect of notes issued by Ecolab NL
10 B.V., Ecolab NL 11 B.V. and Nalco Overseas
Holding B.V.).
Incorporated by reference to Exhibit (10.2)(i)(d)of our
Form 10-K Annual Report for the year ended
December 31, 2023.
(ii)
U.S. $2,000,000,000 U.S. Commercial Paper Program.
(a) Form of Commercial Paper Dealer Agreement for
4(a)(2) Program, dated September 22, 2014. The
dealers for the program are Barclays Capital Inc.,
Citigroup Global Markets Inc., BofA Securities, Inc.,
and Wells Fargo Securities, LLC.
Incorporated by reference to Exhibit (10.1)(a) of our
Form 10-Q for the quarter ended September 30,
2014.
(b) Issuing and Paying Agent Agreement, dated
September 18, 2017, between Ecolab Inc. and U.S.
Bank National Association, as Issuing and Paying
Agent (as successor, effective as of June 7, 2021, to
MUFG Union Bank, N.A.).
Incorporated by reference to Exhibit (10.1)(a) of our
Form 10 Q for the quarter ended September 30,
2017.
(c) Corporate Commercial Paper – Master Note, dated
June 7, 2021, together with annex thereto.
Incorporated by reference to Exhibit (10.3)(ii) of our
Form 10 Q for the quarter ended June 30, 2021.
(10.3)
†
(i)
Ecolab Inc. 2001 Non-Employee Director Stock Option
and Deferred Compensation Plan, as amended and
restated, effective as of August 1, 2013.
Incorporated by reference to Exhibit (10.6) of our
Form 10-K Annual Report for the year ended
December 31, 2013.
†
(ii)
Declaration of Amendment, dated May 5, 2016, to Ecolab
Inc. 2001 Non-Employee Director Stock Option and
Deferred Compensation Plan, as amended and restated,
effective as of August 1, 2013.
Incorporated by reference to Exhibit (10.1) of our
Form 10-Q for the quarter ended June 30, 2016.
†
(iii) Master Agreement Relating to Periodic Options, as
amended, effective as of May 1, 2004.
Incorporated by reference to Exhibit (10)D(ii) of our
Form 10-Q for the quarter ended June 30, 2004.
†
(iv) Amendment No. 1 to Master Agreement Relating to
Periodic Options, as amended, effective as of May 2,
2008.
Incorporated by reference to Exhibit (10)B of our
Form 10-Q for the quarter ended September 30,
2008.
(10.4)
†
Form of Indemnification Agreement, effective as of December
7, 2023. Substantially identical agreements are in effect as to
each of our directors and certain of our officers.
Incorporated by reference to Exhibit (10.4) of our
Form 10-K Annual Report for the year ended
December 31, 2023.
(10.5)
†
(i)
Ecolab Executive Death Benefits Plan, as amended and
restated, effective as of March 1, 1994.
Incorporated by reference to Exhibit (10)H(i) of our
Form 10-K Annual Report for the year ended
December 31, 2006. See also Exhibit (10.12) hereof.
†
(ii)
Amendment No. 1 to Ecolab Executive Death Benefits
Plan, effective as of July 1, 1997.
Incorporated by reference to Exhibit (10)H(ii) of our
Form 10-K Annual Report for the year ended
December 31, 1998.
Table of Contents
104
Exhibit No.: Document:
Method of Filing:
†
(iii) Second Declaration of Amendment to Ecolab Executive
Death Benefits Plan, effective as of March 1, 1998.
Incorporated by reference to Exhibit (10)H(iii) of our
Form 10-K Annual Report for the year ended
December 31, 1998.
†
(iv) Amendment No. 3 to the Ecolab Executive Death Benefits
Plan, effective as of August 12, 2005.
Incorporated by reference to Exhibit (10)B of our
Form 8-K, dated December 13, 2005.
†
(v)
Amendment No. 4 to the Ecolab Executive Death Benefits
Plan, effective as of January 1, 2005.
Incorporated by reference to Exhibit (10)H(v) of our
Form 10-K Annual Report for the year ended
December 31, 2009.
†
(vi) Amendment No. 5 to the Ecolab Executive Death Benefits
Plan, effective as of May 6, 2015.
Incorporated by reference to Exhibit 10.2 of our
Form 10-Q for the quarter ended June 30, 2015.
†
(vii) Amendment No. 6 to the Ecolab Executive Death Benefits
Plan, effective as of June 23, 2017.
Incorporated by reference to Exhibit 10.1(vii) of
Ecolab’s Form 8-K dated June 23, 2017.
(10.6)
†
(i)
Ecolab Executive Long-Term Disability Plan, as amended
and restated, effective as of January 1, 1994.
Incorporated by reference to Exhibit (10)I of our
Form 10-K Annual Report for the year ended
December 31, 2004. See also Exhibit (10.12) hereof.
†
(ii)
Amendment No. 1 to the Ecolab Executive Long-Term
Disability Plan, effective as of August 21, 2015.
Incorporated by reference to Exhibit 10.1 of our
Form 10-Q for the quarter ended September 30,
2015.
(10.7)
†
(i)
Ecolab Supplemental Executive Retirement Plan, as
amended and restated, effective as of January 1, 2022.
Incorporated by reference to Exhibit (10.7)(i) of our
Form 10-K Annual Report for the year ended
December 31, 2021.
(10.8)
†
(i)
Ecolab Mirror Savings Plan, as amended and restated,
effective as of January 1, 2022.
Incorporated by reference to Exhibit (10.8)(i) of our
Form 10-K Annual Report for the year ended
December 31, 2021.
(10.9)
†
(i)
Ecolab Mirror Pension Plan, as amended and restated,
effective as of January 1, 2022.
Incorporated by reference to Exhibit (10.9)(i) of our
Form 10-K Annual Report for the year ended
December 31, 2021.
(10.10)
†
(i)
Ecolab Inc. Administrative Document for Non-Qualified
Plans, as amended and restated, effective as of
January 1, 2022.
Incorporated by reference to Exhibit (10.10)(i) of our
Form 10-K Annual Report for the year ended
December 31, 2021.
(10.11)
†
(i)
Ecolab Inc. Change in Control Severance Compensation
Policy, as amended and restated, effective as of February
26, 2010.
Incorporated by reference to Exhibit (10) of our
Form 8-K, dated February 26, 2010.
†
(ii)
Amendment No. 1 to Ecolab Inc. Change-in-Control
Severance Policy, as amended and restated, effective as
of February 26, 2010.
Incorporated by reference to Exhibit (10.18)(ii) of our
Form 10-K Annual Report for the year ended
December 31, 2011.
(10.12)
†
Description of Ecolab Management Incentive Plan.
Filed herewith electronically.
(10.13)
†
(i)
Ecolab Inc. 2010 Stock Incentive Plan, as amended and
restated, effective as of May 2, 2013.
Incorporated by reference to Exhibit (10.1) of our
Form 8-K, dated May 2, 2013.
†
(ii)
Declaration of Amendment, effective as of February 22,
2019, to Ecolab Inc. 2010 Stock Incentive Plan, as
amended and restated, effective as of May 2, 2013.
Incorporated by reference to Exhibit (10.3) of our
Form 10-Q, for the quarter ended March 31, 2019.
†
(iii) Sample form of Non-Statutory Stock Option Agreement
under the Ecolab Inc. 2010 Stock Incentive Plan, adopted
May 6, 2010.
Incorporated by reference to Exhibit (10)B of our
Form 8-K, dated May 6, 2010.
Table of Contents
105
Exhibit No.: Document:
Method of Filing:
†
(iv) Sample form of Restricted Stock Unit Award Agreement
under the Ecolab Inc. 2010 Stock Incentive Plan, adopted
August 4, 2010.
Incorporated by reference to Exhibit (10)A of our
Form 10-Q, for the quarter ended September 30,
2010.
†
(v) Sample form of Performance-Based Restricted Stock Unit
Award Agreement under the Ecolab Inc. 2010 Stock
Incentive Plan, adopted December 1, 2021.
Incorporated by reference to Exhibit (10.13)(ix) of our
Form 10-K Annual Report for the year ended
December 31, 2021.
(10.14)
†
(i)
Ecolab Inc. 2023 Stock Incentive Plan, effective as of May
4, 2023.
Incorporated by reference to Exhibit (10.1) of our
Form 10-Q, for the quarter ended June 30, 2023.
†
(ii)
Amendment No. 1 to Ecolab Inc. 2023 Stock Incentive
Plan, adopted December 4, 2024.
Filed herewith electronically.
†
(iii) Sample form of Non-Statutory Stock Option Agreement
under the Ecolab Inc. 2023 Stock Incentive Plan, adopted
May 4, 2023.
Incorporated by reference to Exhibit (10.2) of our
Form 10-Q, for the quarter ended June 30, 2023.
†
(iv) Sample form of Restricted Stock Unit Award Agreement
under the Ecolab Inc. 2023 Stock Incentive Plan, adopted
May 4, 2023.
Incorporated by reference to Exhibit (10.4) of our
Form 10-Q, for the quarter ended June 30, 2023.
†
(v)
Sample form of Performance-Based Restricted Stock Unit
Award Agreement under the Ecolab Inc. 2023 Stock
Incentive Plan, adopted December 6, 2023.
Incorporated by reference to Exhibit (10.14)(iv) of our
Form 10-K Annual Report for the year ended
December 31, 2023.
(10.15)
†
Nalco Company Supplemental Retirement Income Plan, as
Amended and Restated effective as of December 31, 2012.
Incorporated by reference to Exhibit (10.3) of our
Form 10-Q, for the quarter ended March 31, 2023.
(10.16)
†
Nalco Company Supplemental Profit Sharing Plan, as
Amended and Restated effective as of December 31, 2012.
Incorporated by reference to Exhibit (10.4) of our
Form 10-Q, for the quarter ended March 31, 2023.
(10.17)
†
Form of Nalco Company Death Benefit Agreement and
Addendum to Death Benefit Agreement.
Incorporated by reference from Exhibit (99.2) on
Form 8-K of Nalco Holding Company filed on May 11,
2005. (File No. 001-32342)
(10.18)
†
Death Benefit Agreement between Nalco Company and Laurie
M. Marsh effective as of December 17, 2009.
Incorporated by reference to Exhibit (10.5) of our
Form 10-Q, for the quarter ended March 31, 2023.
(19.1)
†
Ecolab Inc. Global Insider Trading Policy, effective December
5, 2024.
Filed herewith electronically.
(21.1)
List of Subsidiaries.
Filed herewith electronically.
(23.1)
Consent of Independent Registered Public Accounting Firm.
Filed herewith electronically.
(24.1)
Powers of Attorney.
Filed herewith electronically.
(31.1)
Rule 13a-14(a) CEO Certification.
Filed herewith electronically.
(31.2)
Rule 13a-14(a) CFO Certification.
Filed herewith electronically.
(32.1)
Section 1350 CEO and CFO Certifications.
Filed herewith electronically.
(97.1)
Ecolab Inc. Rule 10D-1 Clawback Policy, adopted
November 2, 2023.
Incorporated by reference to Exhibit (97.1) of our
Form 10-K Annual Report for the year ended
December 31, 2023.
(101.INS)
Inline XBRL Instance Document – the instance document does
not appear in the Interactive Data File because its XBRL tags
are embedded within the Inline XBRL document.
Filed herewith electronically.
(101.SCH)
Inline XBRL Taxonomy Extension Schema.
Filed herewith electronically.
(101.CAL)
Inline XBRL Taxonomy Extension Calculation Linkbase.
Filed herewith electronically.
Table of Contents
106
Exhibit No.: Document:
Method of Filing:
(101.DEF)
Inline XBRL Taxonomy Extension Definition Linkbase.
Filed herewith electronically.
(101.LAB)
Inline XBRL Taxonomy Extension Label Linkbase.
Filed herewith electronically.
(101.PRE)
Inline XBRL Taxonomy Extension Presentation Linkbase.
Filed herewith electronically.
(104)
Cover Page Interactive Data File.
Formatted as Inline XBRL and contained in Exhibit
101.
† This exhibit is an executive compensation plan or arrangement.
Item 16. Form 10-K Summary.
None.
Table of Contents
107
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Ecolab Inc. has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on the 21st day of February, 2025.
ECOLAB INC.
(Registrant)
By: /s/ Christophe Beck
Christophe Beck
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of Ecolab Inc. and in the capacities indicated, on the 21st day of February, 2025.
/s/ Christophe Beck
Chairman and Chief Executive Officer
Christophe Beck
(Principal Executive Officer and Director)
/s/ Scott D. Kirkland
Chief Financial Officer
Scott D. Kirkland
(Principal Financial Officer)
/s/ Jennifer J. Bradway
Senior Vice President and Corporate Controller
Jennifer J. Bradway
(duly authorized officer and Principal Accounting Officer)
/s/ Jandeen M. Boone
Directors
Jandeen M. Boone
as attorney-in-fact for:
Judson B. Althoff, Shari L. Ballard, Eric M. Green, Michael Larson,
David W. MacLennan, Tracy B. McKibben, Lionel L. Nowell, III,
Victoria J. Reich, Suzanne M. Vautrinot and John J. Zillmer
PERFORMANCE. GROWTH. INNOVATION.
INVESTOR INFORMATION
ANNUAL MEETING
Ecolab’s annual meeting of stockholders will be held virtually on May 8,
2025, by means of a live webcast. To attend, vote and submit questions
during our Annual Meeting, visit www.virtualshareholdermeeting.com/
ECL2025 and enter the 16-digit control number included in your Notice
of Internet Availability of Proxy Materials, voting instruction form or proxy
card.
COMMON STOCK
Our stock trading symbol is ECL. Ecolab common stock is listed and
traded on the New York Stock Exchange (NYSE). Ecolab stock is also
traded on an unlisted basis on certain other exchanges. Options are
traded on the NYSE.
Ecolab common stock is included in the S&P 500 Materials sector of the
Global Industry Classification Standard. As of January 31, 2025, Ecolab
had 4,561 stockholders of record. The closing stock price on the NYSE on
January 31, 2025, was $250.19 per share.
DIVIDEND POLICY
Ecolab has paid common stock dividends for 88 consecutive years.
Quarterly cash dividends are typically paid on the 15th of January, April,
July and October, or the ensuing business day.
DIVIDEND REINVESTMENT PLAN
Stockholders of record may elect to reinvest their dividends. Plan
participants also may elect to purchase Ecolab common stock through
this service. To enroll in the plan, stockholders may contact the plan
sponsor, Computershare, for a brochure and enrollment form.
GOVERNANCE
Disclosures concerning our board of directors’ policies, governance
principles and corporate ethics practices, including our Code of Conduct,
are available online at www.investor.ecolab.com/governance.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
45 South Seventh Street, Suite 3400
Minneapolis, MN 55402
INVESTOR INQUIRIES
Securities analysts, portfolio managers and representatives of financial
institutions should contact:
Ecolab Investor Relations
1 Ecolab Place
St. Paul, MN 55102
Phone: 651.250.2500
INVESTOR RESOURCES
SEC FILINGS: Copies of Ecolab’s Form 10-K, 10-Q and 8-K reports as
filed with the Securities and Exchange Commission (SEC) are available
free of charge. These documents may be obtained on our website at
www.investor.ecolab.com/financials/sec-filings promptly after such
reports are filed with, or furnished to, the SEC, or by contacting:
Ecolab Inc.
Attn: Corporate Secretary
1 Ecolab Place
St. Paul, MN 55102
Email: investor.info@ecolab.com
INVESTMENT PERFORMANCE
The following stock performance graph assumes investment of
$100 on December 31, 2019, in Ecolab Common Stock, the S&P 500
Index, and the S&P 500 Materials Index, and daily reinvestment of all
dividends.
TRANSFER AGENT, REGISTRAR AND DIVIDEND
PAYING AGENT
Stockholders of record may contact the transfer agent,
Computershare Trust Company, N.A., to request assistance with a
change of address, transfer of share ownership, replacement of lost
stock certificates, dividend payment or tax reporting issues. If your
Ecolab stock is held in a bank or brokerage account, please contact
your bank or broker for assistance.
COURIER ADDRESS
Computershare
150 Royall St., Suite 101
Canton, MA 02021
GENERAL CORRESPONDENCE AND DIVIDEND
REINVESTMENT PLAN CORRESPONDENCE
Computershare
150 Royall St., Suite 101
Canton, MA 02021
WEBSITE
www.computershare.com
TELEPHONE
1.312.360.5203 or 1.800.322.8325
HEARING IMPAIRED
1.312.588.4110 or 1.800.822.2794
Computershare provides telephone assistance to stockholders Our
agents are available: 8am - 8pm ET on weekdays, 9am - 5.30pm ET
on Saturdays. Around-the-clock service is also available online and
via the telephone Interactive Voice Response system.
$50
$100
$150
$200
2019
2020
2021
2022
2023
2024
DOLLARS
ECOLAB
S&P 500 INDEX
S&P 500
MATERIALS INDEX
ECOLAB ANNUAL REPORT 2024
BOARD OF DIRECTORS
Judson B. Althoff
Executive Vice President and Chief Commercial
Officer, Microsoft Corporation (technology
provider), Director since 2024, Audit and Finance
Committees
Shari L. Ballard
Chief Executive Officer of Minnesota United
FC (professional soccer team of Minnesota),
Director since 2018, Audit and Safety, Health &
Environment Committees
Christophe Beck
Chairman and Chief Executive Officer of Ecolab
Inc., Director since 2020, Safety, Health &
Environment Committee
Michel D. Doukeris
Chief Executive Officer of Anheuser-Busch InBev
SA/NV (global beverage and brewing company),
Director since 2025
Eric M. Green
Chairman, President and Chief Executive
Officer of West Pharmaceutical Services Inc.
(life sciences company), Director since 2022,
Compensation & Human Capital Management*
and Governance Committees
Arthur J. Higgins
Operating Advisor to Abu Dhabi Investment
Authority (investment company), Director
since 2010, Compensation & Human Capital
Management and Safety, Health &
Environment Committees
Michael Larson
Chief Investment Officer to William H. Gates, III
and Business Manager of Cascade Investment,
L.L.C., Director since 2012, Finance* and Safety,
Health & Environment Committees
David W. MacLennan
Lead Independent Director. Former Chairman
and Chief Executive Officer of Cargill,
Incorporated (food, agricultural, financial, and
industrial products and services company),
Director since 2015, Compensation & Human
Capital Management and Governance*
Committees
Tracy B. McKibben
Founder and Chief Executive Officer of MAC
Energy Advisors LLC (investment and consulting
company for climate-conscious energy
and infrastructure solutions), Director since
2015, Compensation & Human Capital and
Governance Committees
Lionel L. Nowell III
Former Senior Vice President and Treasurer of
PepsiCo, Inc. (food and beverage company),
Director since 2018, Audit* and Finance
Committees
Victoria J. Reich
Former Senior Vice President and Chief
Financial Officer of Essendant Inc. (wholesale
distributor of business products), Director since
2009, Audit and Governance Committees
Suzanne M. Vautrinot
President of Kilovolt Consulting Inc. (consulting
company for cybersecurity strategy and
technology) and a retired Major General of the
U.S. Air Force, Director since 2014, Audit and
Safety, Health & Environment* Committees
John J. Zillmer
Chief Executive Officer and Director of Aramark
(provider of food, facilities management,
and uniform services), Director since 2006,
Compensation & Human Capital Management
and Finance Committees
*Denotes committee chair
COMMUNICATION WITH DIRECTORS
Stakeholders and other interested parties,
including our investors and associates, with
substantive matters requiring the attention of
our board (e.g., governance issues or potential
accounting, control or auditing irregularities)
may use the contact information for our board
located on our website at www.investor.
ecolab.com/governance/contact-the-board.
Matters not requiring the direct attention of our
board — such as employment inquiries, sales
solicitations, questions about our products and
other such matters — should be submitted
to the company’s management at our Global
Headquarters in St. Paul, MN. In addition to
online communication, interested parties may
direct correspondence to our board at:
Ecolab Inc.
Attn: Corporate Secretary
1 Ecolab Place
St. Paul, MN 55102
CORPORATE OFFICERS
Nicholas J. Alfano
Executive Vice President and President –
Global Industrial Group
Tiffany M. Atwell
Executive Vice President – Government
Relations
Christophe Beck
Chairman and Chief Executive Officer
Larry L. Berger
Executive Vice President and Chief Technical
Officer
David L. Bingenheimer
Executive Vice President and General Manager
– Ecolab Digital
Melissa Blais
Vice President – Tax
Jandeen M. Boone
Executive Vice President, General Counsel and
Secretary
Jennifer J. Bradway
Senior Vice President and Corporate Controller
Darrell R. Brown
President and Chief Operating Officer
Gregory B. Cook
Executive Vice President and President —
Institutional Group
Hayley E. Crowe
Executive Vice President and General Manager
– Global Life Sciences
Alexander (Sam) De Boo
Executive Vice President and President —
Global Markets
Machiel (Mike) Duijser
Executive Vice President and Chief Supply
Chain Officer
Alexandra (Soraya) Hlila
Executive Vice President and General Manager
– Global Pest
Scott D. Kirkland
Chief Financial Officer
Catherine Loh
Vice President and Treasurer
Laurie M. Marsh
Executive Vice President — Human Resources
Harpreet Saluja
Executive Vice President — Corporate Strategy
& Business Development
Delivering innovations
for the next century.
Protecting people and the resources vital to life
Ecolab offers water, hygiene and infection prevention solutions and services to
advance food safety, maintain clean and safe environments and optimize water
and energy use.
All product names appearing in the text of this Annual Report
are the trademarks, brand names, service marks or copyrights of
Ecolab USA Inc. or affiliated Ecolab group companies.
Global Headquarters
1 Ecolab Place, St. Paul, MN 55102
1 800 2 ECOLAB
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©2025 Ecolab USA Inc. All rights reserved. 62178-0800-0225