UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)                                                                                                                                                                                                                       

☒            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

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	(I.R.S. Employer
incorporation or organization)	Identification No.)

1 Ecolab Place, St. Paul, Minnesota 55102

(Address of principal executive offices)(Zip Code)

1-800-232-6522

(Registrant’s telephone number, including area code)

(Not applicable)

(Former name, former address and former fiscal year,

if changed since last report)

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 1.000% Euro Notes due 2024	ECL ECL 25 ECL 24	New York Stock Exchange New York Stock Exchange New York Stock Exchange

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. Yes ⌧ 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). Yes ⌧ 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

The number of shares of each of the registrant’s classes of Common Stock outstanding as of September 30, 2022: 284,828,060 shares, par value $1.00 per share.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

	Third Quarter Ended				Nine Months Ended
	September 30				September 30
(millions, except per share amounts)	2022		2021		2022		2021
Product and equipment sales		$2,963.0		$2,653.8		$8,473.9		$7,461.6
Service and lease sales		706.3		667.0		2,042.7		1,906.9
Net sales		3,669.3		3,320.8		10,516.6		9,368.5
Product and equipment cost of sales		1,877.1		1,625.1		5,371.7		4,452.9
Service and lease cost of sales		414.5		391.6		1,204.4		1,119.8
Cost of sales (including special (gains) and charges (a))		2,291.6		2,016.7		6,576.1		5,572.7
Selling, general and administrative expenses		876.9		832.0		2,731.7		2,548.2
Special (gains) and charges		17.8		6.3		45.5		36.7
Operating income		483.0		465.8		1,163.3		1,210.9
Other (income) expense (b)		5.7		(13.0)		(32.6)		(27.5)
Interest expense, net (c)		65.1		76.4		174.1		173.7
Income before income taxes		412.2		402.4		1,021.8		1,064.7
Provision for income taxes		60.2		73.8		182.4		226.0
Net income including noncontrolling interest		352.0		328.6		839.4		838.7
Net income attributable to noncontrolling interest		4.9		4.1		12.1		9.8
Net income attributable to Ecolab		$347.1		$324.5		$827.3		$828.9
Earnings attributable to Ecolab per common share
Basic		$ 1.22		$ 1.13		$ 2.90		$ 2.90
Diluted		$ 1.21		$ 1.12		$ 2.88		$ 2.87
Weighted-average common shares outstanding
Basic		284.9		286.4		285.4		286.1
Diluted		286.3		289.2		287.0		289.0

(a) Cost of sales includes special (gains) and charges of $7.1 and $52.9 in the third quarter of 2022 and 2021, respectively, and $61.7 and $76.2 in the first nine months of 2022 and 2021, respectively, which is recorded in product and equipment cost of sales and service and lease cost of sales.

(b) Other expense (income) includes special charges of $24.8 in the third quarter and first nine months of 2022 and $7.0 and $26.6 in the third quarter and first nine months of 2021, respectively.

(c) Interest expense, net includes special charges of $32.3 in the third quarter and first nine months of 2021.

The accompanying notes are an integral part of the consolidated financial statements.

2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

	Third Quarter Ended				Nine Months Ended
	September 30				September 30
(millions)	2022		2021		2022		2021
Net income including noncontrolling interest		$352.0		$328.6		$839.4		$838.7
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments
Foreign currency translation		(246.7)		(107.2)		(367.2)		60.9
Gain on net investment hedges		82.7		35.2		173.0		8.8
Total foreign currency translation adjustments		(164.0)		(72.0)		(194.2)		69.7
Derivatives and hedging instruments		11.6		15.3		13.1		16.7
Pension and postretirement benefits		(62.3)		33.4		(20.6)		172.7
Subtotal		(214.7)		(23.3)		(201.7)		259.1
Total comprehensive income, including noncontrolling interest		137.3		305.3		637.7		1,097.8
Comprehensive income attributable to noncontrolling interest		2.8		3.7		6.1		8.0
Comprehensive income attributable to Ecolab		$134.5		$301.6		$631.6		$1,089.8

The accompanying notes are an integral part of the consolidated financial statements.

3

CONSOLIDATED BALANCE SHEETS

(unaudited)

	September 30		December 31
(millions, except per share amounts)	2022		2021
ASSETS
Current assets
Cash and cash equivalents		$112.9		$359.9
Accounts receivable, net		2,714.3		2,478.4
Inventories		1,802.7		1,491.8
Other current assets		469.4		357.0
Total current assets		5,099.3		4,687.1
Property, plant and equipment, net		3,260.9		3,288.5
Goodwill		7,741.4		8,063.9
Other intangible assets, net		3,915.0		4,224.1
Operating lease assets		427.0		396.8
Other assets		593.4		546.0
Total assets		$21,037.0		$21,206.4
LIABILITIES AND EQUITY
Current liabilities
Short-term debt		$497.9		$411.0
Accounts payable		1,584.4		1,384.2
Compensation and benefits		434.2		509.5
Income taxes		110.4		104.3
Other current liabilities		1,145.4		1,144.2
Total current liabilities		3,772.3		3,553.2
Long-term debt		8,026.7		8,347.2
Postretirement health care and pension benefits		878.0		894.2
Deferred income taxes		577.1		622.0
Operating lease liabilities		317.5		282.6
Other liabilities		375.5		254.1
Total liabilities		13,947.1		13,953.3
Commitments and contingencies (Note 16)
Equity (a)
Common stock		364.6		364.1
Additional paid-in capital		6,551.8		6,464.6
Retained earnings		9,205.1		8,814.5
Accumulated other comprehensive loss		(1,830.5)		(1,634.8)
Treasury stock		(7,228.4)		(6,784.2)
Total Ecolab shareholders’ equity		7,062.6		7,224.2
Noncontrolling interest		27.3		28.9
Total equity		7,089.9		7,253.1
Total liabilities and equity		$21,037.0		$21,206.4

(a) Common stock, 800.0 shares authorized, $1.00 par value per share, 284.8 shares outstanding as of September 30, 2022 and 286.9 shares outstanding as of December 31, 2021. Shares outstanding are net of treasury stock.

The accompanying notes are an integral part of the consolidated financial statements.

4

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Nine Months Ended
	September 30
(millions)	2022		2021
OPERATING ACTIVITIES
Net income including noncontrolling interest		$839.4		$838.7
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation		463.4		453.1
Amortization		238.8		174.4
Deferred income taxes		(106.6)		52.7
Share-based compensation expense		67.2		72.5
Pension and postretirement plan contributions		(51.8)		(51.3)
Pension and postretirement plan expense, net		20.5		29.9
Restructuring charges, net of cash paid		(17.8)		(35.1)
Debt refinancing		-		29.4
Other, net		13.2		19.7
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable		(350.8)		(101.0)
Inventories		(385.7)		(79.8)
Other assets		(345.0)		(48.1)
Accounts payable		260.2		71.5
Other liabilities		284.2		(5.6)
Cash provided by operating activities		929.2		1,421.0
INVESTING ACTIVITIES
Capital expenditures		(510.0)		(423.8)
Property and other assets sold		1.4		12.3
Acquisitions and investments in affiliates, net of cash acquired		(7.2)		(209.9)
Other, net		9.4		(17.1)
Cash used for investing activities		(506.4)		(638.5)
FINANCING ACTIVITIES
Net issuances of commercial paper and notes payable		87.6		0.5
Long-term debt borrowings		-		293.7
Long-term debt repayments		-		(1,017.9)
Reacquired shares		(445.4)		(77.8)
Dividends paid		(445.0)		(426.5)
Exercise of employee stock options		20.8		94.3
Debt refinancing		-		(29.4)
Hedge settlements		109.6		9.4
Other, net		(3.2)		(5.6)
Cash used for financing activities		(675.6)		(1,159.3)
Effect of exchange rate changes on cash and cash equivalents		5.8		14.5
Decrease in cash and cash equivalents		(247.0)		(362.3)
Cash and cash equivalents, beginning of period		359.9		1,260.2
Cash and cash equivalents, end of period		$112.9		$897.9