Ecolab CEO Beck Says 'I'm Not Satisfied With Our Results' And Will Double North American Sales Firepower
The CEO says restaurant traffic fell mid-single digits and institutional volumes slipped, so the company is rebuilding how it sells there.
Ecolab Chairman and CEO Christophe Beck said on the company's third-quarter earnings call Tuesday that the company should be outperforming its industry by a much wider margin, and that Ecolab will double its sales firepower in North America to get there. Ecolab, which sells water treatment, cleaning, hygiene and infection prevention products and services, also posted 7% organic sales growth in the quarter.
A weak restaurant market
Beck said institutional and specialty performance stayed consistent while industry trends got tougher, including North American restaurant food traffic that fell mid-single digits. "So while I'm pleased with what our team is doing, I'm not satisfied with our results," he said.
Asked by an analyst from JPMorgan about volume, Beck acknowledged a slight volume decline in institutional, which he called unsurprising in a declining market. He said every other business had positive volume growth and pricing.
He also said the Middle East costs roughly one point of growth, and that volume growth of about 2% net of that effect is "pretty good" given how broad-based it is.
Three steps for institutional
Responding to a Morgan Stanley analyst, Beck laid out three moves for the institutional business:
- Double sales firepower in North America, which he described as the people serving and selling to customers.
- Serve restaurants, hotels, quick-serve and retail in an integrated way rather than the fragmented way used today.
- Bundle hygiene, water, pest intelligence and audits into one offer.
Beck said the bundle borrows from food and beverage, where combining hygiene and water has worked well. "We're still developing what that exactly means" for institutional, he said.
Pest growth and the rest of the quarter
Beck said pest elimination sales growth accelerated to 8% in the third quarter from 7% in the second, with pest intelligence now connecting over 800,000 devices. He said full deployment will take a year or two and will require upfront investment.
Elsewhere, he cited 8% organic growth in food and beverage, 17% in life sciences and 63% in global high-tech, though he said 63% is not the steady-state rate. Organic operating income margin rose to 19.6%.
For 2027, Beck said he expects organic sales growth at the upper end of the 5% to 7% target and an adjusted operating income margin of 20%.
Beck said he will give more detail on 2027 and beyond at the company's investor day in mid-November.
Sources
- Ecolab Q3 Earnings In-Line With Estimates, Revenues Increase Y/Y — Yahoo Finance
- Ecolab (ECL) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates — Yahoo Finance
- Ecolab Inc. (NYSE:ECL) : Articles :: Law360 — law360.com
- Ecolab Inc. (NYSE:ECL) : Ttab Cases :: Law360 — law360.com
- FEDERAL TRADE COMMISSION et al v. STAPLES, INC. et al — law360.com
