Ecolab Annual Report 2020 3 a Letter from Ecolab’S President and Chief Executive Officer, and Executive Chairman
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ANNUAL 2020 REPORT INNOVATION AND DETERMINATION Accelerating to expand our impact ECOLAB OVERVIEW INNOVATION AND DETERMINATION ECOLAB STOCK PERFORMANCE A trusted partner at nearly 3 million customer locations, Ecolab Inc. is the global leader in hygiene, infection prevention and water solutions and services that protect people HIGH LOW and vital resources. Ecolab’s 44,000 associates deliver comprehensive solutions, 2020 data-driven insights and personalized service to advance food safety, maintain clean 4Q $227.29 $181.25 and safe environments, optimize water and energy use, and improve operational 3Q 213.41 183.04 efficiencies and sustainability for customers in the food, healthcare, hospitality and industrial markets in more than 170 countries. 2Q 231.36 145.31 From restaurants, hotels and healthcare facilities to food and beverage plants and 1Q 211.24 124.60 manufacturing facilities across the globe, Ecolab’s 24,000 direct sales-and-service 2019 associates, the industry’s largest and best trained, utilize innovative technologies and 4Q $199.43 $181.43 digital solutions to help solve the most pressing operational and sustainability challenges 3Q 209.87 191.56 our customers face. Many of the world’s most recognizable companies rely on Ecolab to help ensure product quality, operational efficiencies, sustainability and brand reputation. 2Q 200.93 177.17 Ecolab is headquartered in St. Paul, Minn., and its common stock is listed under the 1Q 182.19 141.30 ticker symbol ECL on the New York Stock Exchange. For more Ecolab information, 2018 visit ecolab.com or call 1.800.2.ECOLAB. Follow us on LinkedIn @Ecolab, Twitter 4Q $162.91 $135.77 @Ecolab, Instagram @Ecolab_Inc and Facebook @Ecolab. 3Q 159.92 138.65 FORWARD-LOOKING STATEMENTS AND RISK FACTORS 2Q 150.46 132.79 We refer readers to the company’s disclosure entitled “Forward-Looking Statements and 1Q 140.50 1 25.74 Risk Factors,” which begins on page 16 of the Form 10-K. ECOLAB STOCK PERFORMANCE AND COMPARISON ECOLAB STOCK PRICE ECOLAB INDEX S&P 500 INDEX 1.90 $220 1.80 1.70 $200 CES DI 1.60 1.50 $180 1.40 1.30 $160 ECOLAB STOCK PRICE 1.20 ECOLAB, S&P 500 IN $140 1.10 1.00 $120 0.90 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2018 2019 2020 2 FINANCIALS SUMMARY MILLIONS, EXCEPT PER SHARE PERCENT CHANGE 2020 2019 2018 2020 2019 Net Sales $11,790.2 $12,562.0 $12,222.1 -6% 3% Net Income from Continuing Operations $967.4 $1,425.6 $1,250.3 -32% 14% Attributable to Ecolab Net Income from Continuing Operations 8.2% 11.3% 10.2% - - as a Percent of Sales Diluted Earnings per Share from Continuing Operations 3.33 4.87 4.27 -32% 14% Adjusted Diluted Earnings per Share 4.02 5.12 4.58 -21% 12% from Continuing Operations (non-GAAP measure) Diluted Weighted-Average Common Shares Outstanding 290.3 292.5 292.8 -1% 0% Cash Dividends Declared per Common Share 1.89 1.85 1.69 2% 9% Cash Provided by Operating Activities 1,741.8 2,046.7 2,006.9 -15% 2% from Continuing Operations Capital Expenditures 489.0 731.3 778.7 -33% -6% Ecolab Shareholders’ Equity 6,166.5 8,685.3 8,003.2 -29% 9% Return on Beginning Equity 11.1% 17.8% 16.5% - - Total Debt 6,686.6 6,353.6 7,044.2 5% -10% Net Debt to EBITDA 2.4 2.3 2.7 - - Total Assets $18,126.0 $20,869.1 $20,074.5 -13% 4% SALES BY REGION 2020 BUSINESS MIX 2020 (PERCENT OF TOTAL SALES) (PERCENT OF TOTAL SALES) 6% 3% 10% LATIN INDIA, MIDDLE EAST OTHER AMERICA AND AFRICA (IMEA) 10% GLOBAL 14% HEALTHCARE ASIA PACIFIC & LIFE SCIENCES (INCLUDING GREATER CHINA) 55% 50% NORTH GLOBAL AMERICA INDUSTRIAL 30% 22% GLOBAL EUROPE INSTITUTIONAL & SPECIALTY ECOLAB ANNUAL REPORT 2020 3 A LETTER FROM ECOLAB’S PRESIDENT AND CHIEF EXECUTIVE OFFICER, AND EXECUTIVE CHAIRMAN WELL-POSITIONED TO SOLVE THE CHALLENGES OF TODAY AND TOMORROW In a wildly unpredictable year, the Ecolab team excelled when The need for our infection prevention and public health expertise our customers and society needed us most. We are exceptionally and solutions has never been greater, and the Ecolab team delivered proud of how our team rose to the challenges of the COVID-19 when the world needed us most. pandemic, took care of each other and implemented new and innovative ways to deliver essential expertise and solutions for our ENABLING CUSTOMERS TO RESTORE customers. It was a year that tested us on many fronts, but one CONSUMER CONFIDENCE that showed the true strength of the Ecolab team, our business As the global economy reopens, businesses must maintain clean, model and our ability to positively impact the world. safe and healthy operations to gain consumer trust. To support Global need for our critical solutions and expertise yielded very our customers, we launched Ecolab Science Certified™, a science- strong sales and income performance in our Healthcare & Life based program that helps deliver a higher level of cleanliness by Sciences segment and steady sales and strong income growth in combining advanced chemistries, comprehensive public health our Industrial segment. Overall, 80% of our business showed good procedures, training and auditing to help consumers feel more sales and strong income growth, partially offsetting impacts to our confident to return to the places where they eat, stay and shop. Institutional business from the unprecedented global declines in Through Ecolab Science Certified and other innovative solutions, traffic at restaurants, hotels and entertainment venues. we are well-positioned to support the global recovery and to help customers thrive as higher levels of hygiene are expected. PROVIDING ESSENTIAL EXPERTISE AND SOLUTIONS TO COMBAT COVID-19 ACCELERATING OUR ENVIRONMENTAL, SOCIAL AND From the onset of the pandemic, we focused on two priorities: GOVERNANCE (ESG) PERFORMANCE protect the safety of our people and safely serve our customers. Ecolab is a recognized leader in ESG performance, and we keep To protect our people, we enhanced our stringent cleaning and striving for greater positive impact. In 2020, we launched sanitizing protocols, provided personal protection equipment aggressive 2030 Impact Goals, which will guide us as we expand and implemented social distancing. We also supported our team our impact with customers, accelerate sustainable outcomes through pay protection and expanded healthcare coverage. within our operations and live our values in our workplace. These actions helped ensure our ability to safely serve customers By 2030, we aim to restore more water than we consume in and meet increased demand for our critical cleaners, disinfectants water-stressed areas, halve our carbon emissions and attain 100% and hygiene solutions, which rose five to 15 times over normal renewable electricity use. We’ll also continue to support a diverse volumes. We increased production capacity for these core products and inclusive workforce by ensuring gender pay equity globally and accelerated the use of remote monitoring and servicing and increasing management diversity. We also set aggressive technologies for customer sites with restricted access. Our R&D goals to help customers conserve water, ensure high-quality food, and Regulatory teams worked quickly to ensure that our products provide safe medical care and become carbon neutral. were recognized by governmental authorities for their ability to Ecolab also joined with others to drive positive action. We fight SARS-CoV-2, the virus that causes COVID-19. Ecolab offers signed on to the Business Ambition for 1.5ºC, a growing group one of the broadest product portfolios proven to kill SARS-CoV-2, of companies committed to reducing carbon emissions by 50% including our Sink & Surface Cleaner Sanitizer, the first registered by 2030 and to net-zero by 2050. We also were a co-founder of by the U.S. EPA to kill the virus in 15 seconds. the Water Resilience Coalition, a corporate-led initiative to drive collective action and net positive water impact by 2050. 4 A LEGACY OF IMPRESSIVE GROWTH Through his 31 years with Ecolab, and 16+ years as Ecolab’s chief executive officer, Doug Baker built the company to become the global leader in water, hygiene, infection prevention solutions and services. He also has been an exemplary leader in the community, supporting many initiatives to advance economic growth, social equity and sustainability. Ecolab’s growth under Doug’s leadership has been remarkable. The company expanded into water, a critical customer need, and built the food retail, healthcare and life sciences businesses, quadrupling the company’s global market opportunity from $35 billion to $135 billion. He also positioned Ecolab as a purpose-driven company and a true leader in sustainability, recognized for its ethical practices and positive impact on the world. BAKER Sales grew Net income Earnings Share price of Market Number of More BY THE by more grew by more per share Ecolab stock capitalization Ecolab associates than 120 NUMBERS: than 213% than 347% grew by more grew by more grew by more increased by acquisitions than 318% than 690% than 775% more than 111% Net income and earnings per share amounts are adjusted to exclude the impact of special gains and charges and discrete tax items. MAINTAINING OUR FOCUS ON THE FUTURE fundamentals that have driven Ecolab’s success will remain While we successfully managed the impacts of the pandemic, we constant: We will continue to grow our company and our impact, kept our focus on the long term and maintained the investments and do so the right way. We’ll continue to invest in our key that will enable us to capitalize on future opportunities, including differentiators and business drivers — people, products and new chemistry platforms, core infrastructure improvements and digital — to drive even better results and value for our customers global roll-out of digital technologies to enhance field service and ultimately, our shareholders.