Ecolab’s building in St. Paul, Minnesota, photographed in 2018. Photo: Ken Lund, Wikimedia Commons, CC BY-SA 2.0. Image resized.
Ecolab reported a 63% jump in organic sales in its high-tech business Tuesday, driven by microelectronics and data centers, as demand for water treatment and cooling added another dimension to the expansion of artificial intelligence infrastructure.
The water, hygiene and infection-prevention company posted third-quarter sales of $4.695 billion, up 13% from a year earlier. Organic sales, which separate underlying growth from effects including acquisitions and currency changes, rose 7%.
The results also showed pressure beyond the technology industry. Ecolab said stronger pricing helped offset higher commodity costs, while its restaurant-facing business operated against declining North American foot traffic. The company serves industries ranging from food production and hospitality to hospitals and chip manufacturing.
AI investment reaches water and cooling suppliers
Ecolab said the 63% organic increase in Global High-Tech reflected strong growth in both microelectronics and data centers. That figure describes a business within the company, not Ecolab’s overall sales growth.
Its technology business supplies water solutions for semiconductor manufacturing and liquid-cooling technology for AI data centers. Chairman and Chief Executive Christophe Beck said those areas offer long-term opportunities as the company combines its existing operations with recently acquired Ovivo Electronics and CoolIT.
Ecolab expects Ovivo Electronics sales to grow by a mid-teens percentage this year and CoolIT sales to more than double compared with their pre-acquisition sales. Those are management forecasts, not completed full-year results.
The broader Global Water segment, which also includes food and beverage, heavy and light industrial water treatment, and paper, reported 9% organic sales growth. Food and Beverage organic sales rose 8%.
Higher prices offset rising input costs
Across Ecolab, pricing increased 5% and volume grew 2%. Beck said stronger pricing helped mitigate higher commodity costs and stabilize the company’s organic gross margin.
That is a business-to-business pricing measure. It does not mean restaurant checks, grocery bills or household water bills rose by the same amount. It does show a supplier to those industries still working to recover higher costs.
In Institutional & Specialty, organic sales increased 3%. The company said pricing and new business wins helped its Institutional operations despite increasingly difficult industry conditions, including a mid-single-digit decline in North American restaurant foot traffic.
Life Sciences organic sales increased 17%, supported by bioprocessing, personal care and purification, while Ecolab Digital sales rose 34% to $129 million.
Acquisition costs weigh on reported profit
Reported net income attributable to Ecolab fell 6% to $551.3 million, from $585 million. Diluted earnings declined to $1.95 a share from $2.05.
Adjusted earnings, which exclude selected items, rose 5% to $2.18 a share from $2.07. Ecolab said CoolIT-related amortization and financing costs were still an approximately 10% headwind to adjusted per-share earnings.
Reported operating income increased 7% to $810.5 million, while adjusted operating income rose 14% to $893.4 million. Net interest expense increased $70 million, reflecting financing for the Ovivo Electronics and CoolIT acquisitions.
The distinction matters for investors: underlying operating growth improved, but the expense of expanding the business limited the amount reaching the bottom line.
Company sets out 2027 expectations
Ecolab expects full-year 2026 adjusted earnings of $8.10 to $8.20 a share, up 8% to 9% from last year. For the fourth quarter, it expects adjusted earnings of $2.13 to $2.23 a share and organic sales growth of 6% to 7%.
Looking to 2027, Beck said Ecolab expects organic sales growth at the upper end of its 5% to 7% target and an adjusted operating margin of 20%. The company sees a path to meet or exceed its long-term adjusted earnings growth target of 12% to 15%, with growth expected to accelerate in the second half as it passes the comparison period for acquisition-related effects.
Those expectations remain subject to risks including commodity costs, geopolitical disruptions and the integration of acquired businesses. Ecolab said disruptions in the Middle East continued to affect customers during the quarter.
JBizNews Desk | St. Paul
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