Ecolab Inc.: Form 10-Q for the period ended Sep 30, 2026

The following management discussion and analysis (“MD&A”) provides information we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative or qualitative 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 MD&A should be read in conjunction with both the unaudited consolidated financial information and related notes included in this Form 10-Q, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025. 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 entitled “Non-GAAP Financial Measures” and “Forward-Looking Statements” located at the end of Part I of this report.

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.

Comparability of Reportable Segments

Effective January 1, 2026, the Company’s former Light & Heavy operating segment was divided into three new operating segments, Heavy Water, Light Water and High-Tech, which continue to remain in the Global Water reportable segment. The Global Water reportable segment includes Heavy Water, Light Water, High-Tech, Food & Beverage and Paper operating segments. The Global Institutional & Specialty reportable segment continues to include the Institutional and Specialty operating segments. The Global Life Sciences and Global Pest Elimination segments remain standalone reportable segments. After these changes, the Company has nine 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 are provided for informational purposes only.

OVERVIEW OF THE THIRD QUARTER ENDED SEPTEMBER 30, 2026

Sales Performance

When comparing third quarter 2026 against third quarter 2025, sales performance was as follows:

• Reported net sales increased 13% to $4,694.8 million and organic sales increased 7%.
• Organic sales for our Global Water segment increased 9% to $2,239.4 million driven by accelerating growth in High-Tech, Food & Beverage and Light Water.
• Organic sales for our Global Institutional & Specialty segment increased 3% to $1,638.3 million driven by steady growth in Institutional and strong growth in Specialty.
• Organic sales for Global Pest Elimination increased 8% to $358.8 million.
• Organic sales for our Global Life Sciences segment accelerated 17% to $215.8 million.

Financial Performance

When comparing third quarter 2026 against third quarter 2025, our financial performance was as follows:

• Reported operating income increased 7% to $810.5 million. Adjusted operating income increased 14%.
• Net income attributable to Ecolab decreased 6% to $551.3 million. Excluding the impact of special (gains) and charges and discrete tax items from both 2026 and 2025 reported results, our adjusted net income attributable to Ecolab increased 4%.
• Reported diluted EPS decreased 5% to $1.95. Excluding the impact of special (gains) and charges and discrete tax items from both 2026 and 2025 reported results, adjusted diluted EPS increased 5% to $2.18 in the third quarter of 2026.
• Our reported tax rate was 20.2% during the third quarter of 2026, compared to 17.8% during the third quarter of 2025. Excluding the tax rate impact of special (gains) and charges and discrete tax items from both 2026 and 2025 results, our adjusted tax rate was 20.4% during the third quarter of 2026, compared to 20.0% during the third quarter of 2025.

RESULTS OF OPERATIONS

Net Sales

Product and sold equipment revenue is generated from providing cleaning, sanitizing and water treatment products or selling equipment used in combination with specialized products. Service and lease equipment revenue is generated from providing services or leasing equipment to customers. All of our sales are subject to the same economic conditions.

The percentage components of the period-over-period 2026 sales change are shown below:

Amounts do not necessarily sum due to rounding.

Cost of Sales (“COS”) and Gross Profit Margin

Our COS and corresponding gross profit margin (“gross margin”) are shown in the table above. Gross margin is defined as net sales less cost of sales divided by net sales.

Our reported gross margin was 44.1% and 44.8% for the third quarter of 2026 and 2025, respectively. Our reported gross margin was 43.9% and 44.6% for the first nine months of 2026 and 2025, respectively. Special (gains) and charges included in items impacting cost of sales are shown within the “Special (Gains) and Charges” table below.

Excluding the impacts of special (gains) and charges, foreign currency translation and acquisitions and divestitures within COS, third quarter 2026 and 2025 organic gross margin was 44.9% and 44.8%, respectively, and for the first nine months of 2026 and 2025 was 44.6% and 44.7%, respectively. Our organic gross margin increased when comparing the third quarter of 2026 against the third quarter of 2025 as accelerating pricing offset higher commodity costs.

Selling, General and Administrative Expense

Selling, general and administrative (“SG&A”) expenses as a percentage of sales were 25.1% and 26.0% for the third quarter and first nine months of 2026, respectively, compared to 25.9% and 26.9% for the third quarter and first nine months of 2025, respectively. The SG&A ratio to sales in the third quarter of 2026 improved as good productivity gains and the favorable impact of recent acquisitions more than offset growth-oriented investments in the business.

Special (Gains) and Charges

Special (gains) and charges reported on the Consolidated Statements of Income include the following items:

For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with our internal management reporting.

Special (gains) and charges were $82.9 million ($65.2 million after tax) or $0.23 per diluted share and $198.3 million ($161.2 million after tax) or $0.57 per diluted share in the third quarter and first nine months of 2026, respectively, primarily relating to our One Ecolab initiative and acquisition and integration activities. Special (gains) and charges were $26.5 million ($22.0 million after tax) or $0.08 per diluted share and $87.9 million ($67.7 million after tax) or $0.24 per diluted share in the third quarter and first nine months of 2025, respectively, primarily relating to our One Ecolab initiative and acquisition and integration activities, partially offset by gains relating to the sale of a facility and an equity method investment.

As it relates to the One Ecolab initiative, we anticipate total restructuring costs of $328 million ($256 million after tax) or $0.90 per diluted share and special charges of $97 million ($76 million after tax) or $0.26 per diluted share by the end of 2027, which is expected to generate estimated annualized cost savings of $325 million in continuing operations by 2027. One Ecolab has delivered $217 million of cumulative cost savings.

Further details related to special (gains) and charges are included in Note 2, “Special (Gains) and Charges,” of the Notes.

Operating Income and Operating Income Margin

Our operating income and corresponding operating income margin are shown in the previous tables. Operating income margin is defined as operating income divided by net sales.

Our reported operating income increased 7% and 8% in the third quarter and first nine months of 2026, respectively, versus the comparable periods of 2025. Our reported operating income for 2026 and 2025 was impacted by special (gains) and charges; excluding the impact of special (gains) and charges from 2026 and 2025 reported results, our adjusted operating income increased 14% and 13% in the third quarter and first nine months of 2026, respectively.

As shown in the previous table, foreign currency had a neutral and 3 percentage point positive impact on adjusted operating income growth for the third quarter and first nine months of 2026, respectively. Foreign currency had a 1 percentage point positive and 1 percentage point negative impact on adjusted operating income growth for the third quarter and first nine months of 2025, respectively.

Other (Income) Expense

Reported other (income) expense decreased to ($8.8) million from ($12.8) million in the third quarter of 2026 compared to the third quarter of 2025, respectively, and decreased to ($26.4) million from ($38.8) million in the first nine months of 2026 compared to the first nine months of 2025, respectively.

Interest Expense, Net

Reported net interest expense was $124.8 million and $55.3 million in the third quarter of 2026 and 2025, respectively, and $270.6 million and $176.8 million in the first nine months of 2026 and 2025, respectively. The increase in net interest expense when comparing 2026 against 2025 reflects the impact of financing the Ovivo Electronics and CoolIT Systems acquisitions.

Provision for Income Taxes

The following table provides a summary of our tax rate:

Our reported tax rate was 20.2% and 17.8% for the third quarter of 2026 and 2025, respectively, and 21.4% and 19.2% for the first nine months of 2026 and 2025, respectively. The change in our tax rate for the third quarter and first nine months versus the comparable periods of 2025 was driven primarily by discrete tax items and special (gains) and charges. 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 net tax benefit related to discrete tax items of $1.1 million and net tax expense of $7.5 million in the third quarter and first nine months of 2026, respectively. This included a tax benefit of $2.0 million and $16.3 million in the third quarter and first nine months of 2026, respectively, associated with share-based compensation excess tax benefits. The remaining net tax expense of $0.9 million and $23.8 million in the third quarter and first nine months of 2026, respectively, is from prior year return adjustments, audit settlements, unrecognized tax benefits, and other changes in estimates.

We recognized net tax benefits related to discrete tax items of $16.3 million and $21.8 million in the third quarter and first nine months of 2025, respectively. This included a tax benefit of $2.7 million and $12.6 million in the third quarter and first nine months of 2025, respectively, associated with share-based compensation excess tax benefits. The remaining net tax benefit of $13.6 million and $9.2 million in the third quarter and first nine months of 2025, respectively, was from the filing of tax returns, audit settlements, unrecognized tax benefits, and other changes in estimates.

Net Income Attributable to Ecolab

Diluted EPS

Per share amounts in the above tables do not necessarily sum due to rounding.

Currency translation was neutral and had a favorable impact of approximately $0.12 per share on diluted EPS for the third quarter and first nine months of 2026, respectively, when compared to the comparable periods of 2025.

SEGMENT PERFORMANCE

The non-U.S. dollar functional international amounts included within our reportable segments are based on translation into U.S. dollars at the fixed currency exchange rates used by management for 2026. 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, “Significant Accounting Policies,” of the Notes to the Consolidated Financial Statements within our Annual Report on Form 10-K for the year ended December 31, 2025. Additional information about our reportable segments is included in Note 15, “Operating Segments,” of the Notes.

Fixed currency net sales and operating income for the third quarter and nine months ended September 30, 2026 for our reportable segments are shown in the following tables:

* Not meaningful

The following tables reconcile the impact of acquisitions and divestitures within our reportable segments:

38

Unless otherwise noted, the following segment performance commentary compares the third quarter and first nine months of 2026 against the third quarter and first nine months of 2025.

Global Water

Percentages in the above table do not necessarily sum due to rounding.

Net Sales

Fixed currency sales increased 20% and 13% for the third quarter and first nine months of 2026, respectively, including a benefit from the acquisitions of Ovivo Electronics and CoolIT Systems. Organic sales for Global Water increased 9% and 5% in the third quarter and first nine months of 2026, respectively, driven by accelerating growth in High-Tech, Food & Beverage and Light Water. Heavy Water and Paper both returned to solid growth.

Food & Beverage organic sales increased 8% and 6% in the third quarter and first nine months of 2026, respectively, driven by new business wins and pricing. Heavy Water organic sales increased 4% and remained flat in the third quarter and first nine months of 2026, respectively, as growth in downstream was offset by softer sales in basic industries. High-Tech organic sales increased 63% and 40% in the third quarter and first nine months of 2026, respectively, reflecting new business wins across microelectronics and data centers. Light Water organic sales increased 5% and 3% in the third quarter and first nine months of 2026 driven by new business wins. Paper organic sales increased 6% and 1% in the third quarter and first nine months of 2026, respectively, driven by new business wins that overcame stabilizing customer production rates.

Operating Income

Organic operating income increased for Global Water in the third quarter and first nine months of 2026, respectively. Organic operating income margins increased and decreased for Global Water in the third quarter and first nine months of 2026.

Organic operating income margins increased 0.1 percentage points during the third quarter of 2026 as the 5.0 percentage point positive impact of strong pricing and improved productivity was offset by the 4.6 percentage point impact of investments in the business and higher commodity costs. Organic operating income margins decreased 0.2 percentage points during the first nine months of 2026 as the 3.3 percentage point negative impact of investments in the business and higher commodity costs was partially offset by the 3.5 percentage point positive impact of strong pricing and productivity.

Global Institutional & Specialty

Percentages in the above table do not necessarily sum due to rounding.

Net Sales

Fixed currency and organic sales increased 3% in both the third quarter and first nine months of 2026, respectively, with steady growth in Institutional and strong growth in Specialty.

At an operating segment level, Institutional organic sales increased 2% in both the third quarter and first nine months of 2026, respectively, driven by strong pricing and new business wins, which more than offset softer industry trends. Specialty organic sales increased 5% and 7% in the third quarter and first nine months of 2026, respectively, as new business wins and continued pricing more than offset softer industry trends.

Operating Income

Organic operating income and organic operating income margin increased in the third quarter and first nine months of 2026 for our Global Institutional & Specialty segment.

Organic operating income margins increased 1.1 percentage points during the third quarter of 2026 as the 4.2 percentage point positive impact from strong pricing and improved productivity was partially offset by the 3.1 percentage point impact of higher commodity costs and investments in the business. Organic operating income margins increased 1.2 percentage points during the first nine months of 2026 as the 3.0 percentage point positive impact of strong pricing was partially offset by the 2.0 percentage point impact of higher commodity costs and investments in the business.

Global Pest Elimination

Percentages in the above table do not necessarily sum due to rounding.

Net Sales

Fixed currency sales increased 9% in both the third quarter and first nine months of 2026, respectively, reflecting a 1% benefit from acquisitions in the third quarter and first nine months. Organic sales for Global Pest Elimination increased 8% in both the third quarter and first nine months of 2026, driven by new business in food & beverage, food retail, and restaurants.

Operating Income

Organic operating income increased for Global Pest Elimination in the third quarter and first nine months of 2026, respectively. Organic operating income margins decreased and increased for Global Pest Elimination in the third quarter and first nine months of 2026.

Organic operating income margins decreased 0.1 percentage points during the third quarter of 2026, as the 4.8 percentage point negative impact of investments in the business, including pest intelligence was partially offset by the 4.4 percentage point positive impact from strong pricing, higher volume and improved productivity. Organic operating income margins increased 0.4 percentage points during the first nine months of 2026, as the 4.5 percentage point positive impact from strong pricing, improved productivity and higher volume was partially offset by the 4.6 percentage point impact of investments in the business, including pest intelligence.

Global Life Sciences

Percentages in the above table do not necessarily sum due to rounding.

Net Sales

Fixed currency and organic sales for Global Life Sciences increased 17% and 14% in the third quarter and first nine months of 2026, respectively, driven by continued growth in bioprocessing, pharmaceuticals & personal care, and purification.

Operating Income

Organic operating income and organic operating income margins increased in the third quarter and first nine months of 2026 for our Global Life Sciences segment.

Organic operating income margins increased 5.0 percentage points during the third quarter of 2026, as the 14.2 percentage point positive impact from supply chain efficiencies and strong pricing was partially offset by the 8.6 percentage point negative impact from investments in the business and higher commodity costs. Organic operating income margins increased 4.1 percentage points during the first nine months of 2026, as the 9.7 percentage point positive impact from strong pricing, supply chain efficiencies and higher volume was partially offset by the 5.6 percentage point negative impact from investments in the business, higher commodity costs and unfavorable mix.

Corporate

Consistent with our internal management reporting, Corporate amounts in the tables beginning on page 37 include intangible asset amortization specifically from the Nalco, Purolite, Ovivo Electronics and CoolIT Systems 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 34.

FINANCIAL POSITION, CASH FLOWS AND LIQUIDITY

Financial Position

Total assets were $31.1 billion as of September 30, 2026 and $24.7 billion as of December 31, 2025.

Total liabilities were $20.7 billion as of September 30, 2026, compared to total liabilities of $14.9 billion as of December 31, 2025. Total debt was $13.2 billion as of September 30, 2026 and $8.2 billion as of December 31, 2025. See further discussion of our debt activity within the “Liquidity and Capital Resources” section of this MD&A.

Our net debt to earnings before interest, taxes, depreciation and amortization (“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.

The inputs to EBITDA reflect the trailing twelve months of activity for the period presented:

Cash Flows

Operating Activities

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 by $77 million in the first nine months of 2026 compared to the first nine months of 2025, primarily driven by higher net income excluding noncash depreciation, amortization and deferred taxes, partially offset by one-time incentive payments of $200 million to the CoolIT Systems and Ovivo Electronics employees relating to the acquisitions.

Investing Activities

Cash used for investing activities is primarily impacted by business acquisitions and capital investments in the business.

Cash used for acquisitions and investments in affiliates, net of cash acquired, in the first nine months of 2026 and 2025 was $4.7 billion and $0.5 million, respectively. Cash used for acquisitions and investments in affiliates, net of cash acquired, in 2026 primarily relates to the CoolIT Systems acquisition.

We continue to make capital investments in the business, including dispensing and monitoring equipment, manufacturing equipment and facilities. Total capital expenditures were $902 million and $716 million in the first nine months of 2026 and 2025, respectively.

Financing Activities

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.

We had net (repayments) issuances of commercial paper and notes payable of ($95 million) and $1 million in the first nine months of 2026 and 2025, 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 reacquired a total of $672 million and $375 million of shares in the first nine months of 2026 and 2025, respectively. Cash proceeds and tax benefits from stock option exercises provide a portion of the funding for repurchase activity.

During the first nine months of 2026, we issued $5 billion of long-term debt. We issued $1.0 billion of long-term debt and repaid €575 million ($674 million) of long-term debt in the first nine months of 2025.

We paid dividends of $629 million and $564 million in the first nine months of 2026 and 2025, respectively.

Liquidity and Capital Resources

We currently expect to fund the 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 September 30, 2026, we had $722 million of cash and cash equivalents on hand, of which $610 million was held outside of the U.S. We will continue to evaluate our cash position in light of future developments.

As of September 30, 2026, we had a $2.0 billion multi-year revolving credit facility which expires in March 2030. The credit facility has been established with a diverse syndicate of banks and supports our U.S. and Euro commercial paper programs. At the end of the third quarter of 2026, we had no outstanding commercial paper under our U.S. and Euro commercial paper programs. As of December 31, 2025, we had $100 million outstanding commercial paper under our U.S. program and none outstanding under our Euro commercial paper program. There were no borrowings under our credit facility as of September 30, 2026 or December 31, 2025. As of September 30, 2026, both programs were rated A-2 by Standard & Poor’s, P-2 by Moody’s and F-1 by Fitch.

During the first nine months of 2026, we issued $5.0 billion aggregate principal amount of senior notes consisting of notes due in 2029, 2031, 2033 and 2036. The proceeds were used to fund the CoolIT Systems acquisition and for general corporate purposes. We had $1 billion of long-term debt issuance activity in the first nine months of 2025. There were no repayments of long-term debt in the first nine months of 2026, and we repaid €575 million ($674 million) of long-term debt in the first nine months of 2025.

One of our Chinese subsidiaries maintains a construction loan facility that provides up to 1.1 billion in Chinese Yuan (“CNY”) ($164 million) of proceeds to fund capital expenditures. This loan facility has a tenor of 13 years and is secured by certain assets of our Chinese subsidiaries.

We are in compliance with our debt covenants and other requirements of our credit agreements and indentures. We believe we have sufficient borrowing capacity to meet our foreseeable operating activities, as needed.

The schedule of contractual obligations included in the Financial Position and Liquidity section of our Form 10-K for the year ended December 31, 2025 disclosed total commercial paper, notes payable and long-term debt due within one year of $870 million. As of September 30, 2026, the total notes payable and long-term debt due within one year was $1,277 million. We had no outstanding commercial paper under our U.S. program as of September 30, 2026.

Our gross liability for unrecognized tax benefits was $66.1 million and $53.9 million as of September 30, 2026, and December 31, 2025, respectively. We are not able to reasonably estimate the amount by which the liability will increase or decrease over time; however, at this time, we do not expect significant payments related to these obligations within the next year.

GLOBAL ECONOMIC 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. In the near-term, the global operating environment remains unpredictable, including constantly evolving geopolitics and international trade policy, which are resulting in rising commodity costs. Due to the war in the Middle East, global energy markets have experienced significant price volatility in recent months driven by supply chain disruptions, transportation constraints, and geopolitical developments, contributing to major cost increases for raw materials, manufacturing, and logistics throughout our global supply chain. We began implementing our announced energy surcharge in the second quarter of 2026 to offset the recent surge in such costs. This energy surcharge will be monitored closely and may be adjusted as market conditions evolve. We expect our pricing actions, along with continued volume growth and our other cost savings and productivity improvement efforts, to successfully offset the recent cost pressures.

Argentina, Turkiye 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, Turkiye and Egypt. During the third quarter of 2026, sales in Argentina, Turkiye and Egypt represented approximately 1% of our consolidated sales. Assets held in Argentina, Turkiye and Egypt at the end of the third quarter of 2026 represented approximately 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 that we will 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. During the third quarter of 2026, our Russian and Ukraine operations represented less than 1% of our consolidated net sales.

NEW ACCOUNTING PRONOUNCEMENTS

For information on new accounting pronouncements, refer to Note 17, “New Accounting Pronouncements,” of the Notes to the Consolidated Financial Statements.

SUBSEQUENT EVENTS

In October 2026, we settled ₣550 million of our existing Swiss Franc cross-currency swap derivative contracts that were designated as net investment hedges and simultaneously executed replacement cross-currency swap derivative contracts for the same notional value. There was no material impact on the Consolidated Statements of Income as a result of these transactions.

NON-GAAP FINANCIAL MEASURES

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, contains financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (GAAP). These non-GAAP measures include:

• Fixed currency sales
• Organic sales
• Adjusted cost of sales
• Adjusted gross margin
• Adjusted fixed currency cost of sales
• Adjusted fixed currency gross margin
• Organic cost of sales
• Organic 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
• Organic operating income margin
• EBITDA
• Adjusted interest expense, net
• 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 interest expense, net 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 net income including noncontrolling interest with the sum of provision for income taxes, net interest expense, depreciation and amortization added back. 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-Q are based on translation into U.S. dollars at the fixed foreign currency exchange rates established by management at the beginning of 2026. 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, Purolite, Ovivo Electronics and CoolIT Systems transactions or the impact of special (gains) and charges as these are not allocated to our reportable segments.

Our non-GAAP financial measures for organic sales, organic cost of sales, organic gross margin, 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.

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.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include our business performance and prospects; expectations concerning timing, amount and type of restructuring costs and savings from restructuring activities; Russian operations; working capital; capital investments, acquisitions and share repurchases; amortization expense; non-performance of financial counterparties; payments and contributions to pension and postretirement health care benefit plans; the impact of lawsuits, claims and environmental matters; impact of new accounting pronouncements and tax laws; cash flows, borrowing capacity and funding of cash requirements, including repayment of debt; payments related to uncertain tax positions; and implementation of ERP system upgrades.

Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “we believe,” “we expect,” “estimate,” “project” (including the negative or variations thereof) 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. In particular, the ultimate results of any restructuring or efficiency initiative, integration and business improvement actions, including cost synergies, depend on a number of factors, including the development of final plans, the impact of local regulatory requirements regarding employee terminations, the time necessary to develop and implement the restructuring or efficiency initiative and other business improvement initiatives and the level of success achieved through such actions in improving competitiveness, efficiency and effectiveness. We caution that undue reliance should not be placed on such forward-looking statements, which speak only as of the date made.

Some of the factors which could cause results to differ materially from those expressed in any forward-looking statements are set forth under Item 1A of our most recent Form 10-K and our other public filings with the Securities and Exchange Commission (the "SEC"), and include the impact of economic factors such as the worldwide economy, interest rates, foreign currency risk, reduced sales and earnings in our international operations resulting from the weakening of local currencies versus the U.S. dollar, demand uncertainty, supply chain challenges and inflation; the vitality of the markets we serve; exposure to global economic, political and legal risks related to our international operations, including international trade policies, geopolitical instability and the escalation of armed conflicts; our ability to successfully execute organizational change and management transitions; information technology infrastructure failures or breaches in data security; difficulty in procuring raw materials or fluctuations in raw material costs; the occurrence of severe public health outbreaks not limited to COVID-19; our ability to acquire complementary businesses and to effectively integrate such businesses; our ability to execute key business initiatives; our ability to successfully compete with respect to value, innovation and customer support; our increasing reliance on artificial intelligence technologies in our products, services and operations; pressure on operations from consolidation of customers or vendors; restraints on pricing flexibility due to contractual obligations and our ability to meet our contractual commitments; the costs and effects of complying with laws and regulations, including those relating to the environment, 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 labor and employment and anti-corruption; potential chemical spill or release; our commitments, goals, targets, objectives and initiatives related to sustainability; potential to incur significant tax liabilities or indemnification liabilities relating to the separation and split-off of our ChampionX business; the occurrence of litigation or claims, including class action lawsuits; the loss or insolvency of a major customer or distributor; repeated or prolonged government and/or business shutdowns or similar events; acts of war or terrorism; natural or man-made disasters; water shortages; severe weather conditions; changes in tax laws and unanticipated tax liabilities; potential loss of deferred tax assets; our indebtedness, and any failure to comply with covenants that apply to our indebtedness; potential losses arising from the impairment of goodwill or other assets; and other uncertainties or risks reported from time to time in our reports to the SEC. There can be no assurances that our earnings levels will meet investors’ expectations. Except as may be required under applicable law, we do not undertake, and expressly disclaim, any duty to update our Forward-Looking Statements.

We use foreign currency cross currency swaps, foreign currency forward contracts, foreign currency option contracts, interest rate swap agreements, forward-starting interest rate lock contracts and foreign currency debt to manage risks associated with foreign currency exchange rates, interest rates and net investments in our foreign operations. We do not hold derivative financial instruments of a speculative nature or for trading purposes. For a more detailed discussion of derivative instruments, refer to Note 8, entitled “Derivatives and Hedging Transactions”, of the consolidated financial statements located under Part I, Item 1 of this quarterly report on Form 10-Q.

As of September 30, 2026, we carried out an evaluation, under the supervision and with the participation of our management, including our Chairman, President and Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chairman, President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective.

During the period July 1, 2026 through September 30, 2026, 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.

In our report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on February 23, 2026, we identify under Item 1A 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-Q. See the section entitled Forward-Looking Statements located on pages 47 and 48 of this Form 10-Q. We may also refer to such disclosure to identify factors that may cause results to differ from those expressed in other forward-looking statements made in oral presentations, including telephone conferences and/or webcasts open to the public.