8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 1, 2016

ECOLAB INC.

(Exact name of registrant as specified in its charter)

Delaware	1-9328	41-0231510
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

370 Wabasha Street North, Saint Paul, Minnesota	55102
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code 1-800-232-6522

(Not applicable)

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CRF 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 1, 2016, Ecolab Inc. (“Ecolab”) announced earnings for the third quarter ended September 30, 2016.  A copy of the (i) News Release issued by Ecolab in connection with this report under Item 2.02 is furnished and attached as Exhibit (99.1), (ii) Supplemental Data to be used in connection with the conference call to be held discussing the third quarter results is furnished and attached as Exhibit (99.2), and (iii) Supplemental Discussion and related materials to be used in such conference call is furnished and attached as Exhibit (99.3), each of which is incorporated by reference herein. Ecolab also will publish the attached exhibits on its website located at www.ecolab.com.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished pursuant to Item 2.02 of Form 8-K and should not be deemed to be “filed” under the Securities Exchange Act of 1934.

(99.1) Ecolab Inc. News Release dated November 1, 2016.

(99.2) Supplemental Data for Third Quarter dated November 1, 2016.

(99.3) Supplemental Discussion for Third Quarter dated November 1, 2016.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ECOLAB INC.
Date: November 1, 2016	By:	/s/ David F. Duvick
		David F. Duvick
		Assistant Secretary

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EXHIBIT INDEX

Exhibit No.	Description	Method Of Filing
(99.1)	Ecolab Inc. News Release dated November 1, 2016.	Filed herewith electronically.
(99.2)	Supplemental Data for Third Quarter dated November 1, 2016.	Filed herewith electronically.
(99.3)	Supplemental Discussion for Third Quarter dated November 1, 2016.	Filed herewith electronically.

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EX-99.1

Exhibit 99.1

News Release

Ecolab Inc.

370 Wabasha Street North

St. Paul, Minnesota  55102

FOR IMMEDIATE RELEASE

Michael J. Monahan(651) 250-2809

Andrew C. Hedberg(651) 250-2185

ECOLAB THIRD QUARTER REPORTED DILUTED EPS $1.27; ADJUSTED DILUTED EPS $1.28,  INCLUDES $0.09 (7%) CURRENCY HEADWIND

2016 full-year adjusted EPS forecast narrowed to $4.35 to $4.45, from $4.35 to $4.50

THIRD QUARTER HIGHLIGHTS:

· Reported diluted EPS $1.27

· Adjusted diluted EPS $1.28,  as solid sales growth from the Global Institutional, Global Industrial and Other segments, plus lower delivered product costs and cost savings offset a $0.09  (7 percentage point) per share currency headwind

· Global Institutional, Global Industrial and Other segment acquisition adjusted fixed currency sales +3%, offset by a moderated Global Energy sales decline

· Adjusted fixed currency operating margin +60 bps

· Operating cash flow of $1.5 billion year to date, +7%

	Third Quarter Ended September 30
	Reported				Adjusted *
(unaudited)	Public Currency Rates		%		Public Currency Rates		%
(millions, except per share)	2016	2015	Change		2016	2015	Change
Net sales	$ 3,386.1	$ 3,446.4	(2)	%	$ 3,386.1	$ 3,446.4	(2)	%
Operating income	574.1	413.0	39	%	577.3	579.5	0	%
Net income attributable to Ecolab	374.1	257.8	45	%	378.0	384.0	(2)	%
Diluted earnings per share	$ 1.27	$ 0.86	48	%	$ 1.28	$ 1.28	0	%
					Adjusted *
	Fixed Currency Rates *		%		Fixed Currency Rates		%
	2016	2015	Change		2016	2015	Change
Net sales	$ 3,319.7	$ 3,282.7	1	%	$ 3,319.7	$ 3,282.7	1	%
Operating income	564.0	375.9	50	%	567.2	542.4	5	%

*  See “Non-GAAP Financial Information” section of this release for further discussion

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ST. PAUL, Minn., November 1,  2016: Continued Global Institutional, Global Industrial and Other segment sales growth along with margin expansion more than offset lower Global Energy segment results to deliver a  7%  third quarter adjusted diluted earnings per share growth before currency effects. Unfavorable currency of $0.09 per share (a 7 percentage point impact) offset the operating gain, with adjusted diluted earnings per share equal to last year.

CEO comment

“Ecolab delivered solid earnings growth before currency impacts in the third quarter, as continued fixed currency sales growth and margin expansion in our Institutional, Industrial and Other segments led results and outpaced lackluster global markets. New business wins led by innovative products and effective sales and service execution, along with lower delivered product costs, pricing and close attention to costs, drove the segment gains. These more than offset a moderated decline in our Energy segment. Currency translation remained a significant headwind in the quarter. 

“While global economies remain sluggish, energy markets appear to be bottoming and currency exchange headwinds have lessened. In this mixed environment, we expect our Institutional, Industrial and Other segments will show modestly better fixed currency growth in the fourth quarter versus the third quarter as we drive gains through product leadership and strong sales and service execution. Further, while fourth quarter Energy segment results are expected to be below last year, we continue to believe that this business is well-positioned for a  gradual recovery in 2017. 

“We believe we are in strong shape and strategically positioned for improved growth. The past two years have presented very challenging conditions, with sluggish economic growth, turbulent oil and mining markets, and formidable currency headwinds. Through this period, we have continued to deliver earnings growth while maintaining our focus on improving the long-term fundamental drivers for our business: investing in new products and our sales and service teams to enable them to win new business, technologies that provide customers with better results and operating information, and in work that strengthens our infrastructure’s efficiency and effectiveness.  We believe we are in a strong competitive position, and are confident in our prospects for future superior growth.”

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Third Quarter 2016 Consolidated Results

Ecolab's reported sales for the third quarter decreased 2%, while fixed currency sales increased 1%. Acquisition adjusted fixed currency sales were flat to the prior year.    

Third quarter 2016 reported operating income increased 39%, while fixed currency operating income increased 50%. Both reported third quarter 2016 and 2015 results include special gains and charges. Excluding special gains and charges, third quarter 2016 adjusted operating income was flat against third quarter 2015. Excluding special gains and charges and at fixed currency rates, adjusted fixed currency operating income increased 5%. Our reported operating income margin increased 500 basis points, and our adjusted fixed currency operating income margin increased 60 basis points. The increase in adjusted fixed currency operating income and improvement in adjusted fixed currency operating income margin was driven by appropriate pricing, sales volume growth, and cost savings in our Global Institutional, Global Industrial and Other segments, which was partially offset by a decline in Global Energy results. 

Third quarter 2016 reported net income attributable to Ecolab increased 45% and reported diluted earnings per share increased 48%.  Excluding special gains and charges and discrete tax items, adjusted net income attributable to Ecolab declined 2% and adjusted diluted earnings per share was flat against third quarter 2015. Our third quarter 2016 adjusted diluted earnings per share includes a $0.09 per share (7 percentage point)  currency headwind (including the impact of the Venezuela deconsolidation of $0.01 per share) against third quarter 2015.

The reported income tax rate for the third quarter of 2016 was 25.5%, compared with the reported rate of 29.6% in the third quarter of 2015. Excluding the tax rate impact of the special gains and charges and discrete tax items, the adjusted tax rate was 25.2% in the third quarter of 2016, compared with 25.8%  for the same period last year. The improved adjusted tax rate was primarily driven by the geographic mix of income, permanent enactment of the research and development tax credit and global tax planning strategies.

We reacquired 0.7 million shares of our common stock during the third quarter of 2016.  

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Third Quarter 2016 Segment Review

We evaluate the performance of our international operations based on fixed currency rates of foreign exchange, which eliminate the translation impact of exchange rate fluctuations on our international results. We also provide our segment results based on public currency rates for informational purposes.

Acquisition adjusted growth rates generally exclude the results of any acquired business from the first twelve months post acquisition and exclude the results of divested businesses from the previous twelve months prior to divestiture. Acquisition adjusted growth rates also exclude the Venezuelan results of operations from both the current period and comparable period of the prior year.

Global Industrial
(unaudited)	Third Quarter Ended September 30						Acq. Adj.
(millions)	2016		2015		% Change		% Change
Fixed currency
Sales	$ 1,185.2		$ 1,168.0		1	%	2	%
Operating income	199.8		179.7		11	%	12	%
Operating income margin	16.9	%	15.4	%
Acq. adj. operating income margin	16.9	%	15.3	%
Public currency
Sales	$ 1,215.9		$ 1,228.5		(1)	%
Operating income	204.9		195.5		5	%

Global Industrial acquisition adjusted fixed currency sales rose 2%, led by gains in Food & Beverage,  with modest growth in Water and Paper. Latin America led the Global Industrial regional growth, with modest gains in Europe.  Acquisition adjusted fixed currency operating income rose 12% through lower delivered product costs, appropriate pricing and cost savings initiatives.

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Global Institutional
(unaudited)	Third Quarter Ended September 30						Acq. Adj.
(millions)	2016		2015		% Change		% Change
Fixed currency
Sales	$ 1,163.4		$ 1,092.4		6	%	4	%
Operating income	266.8		256.9		4	%	6	%
Operating income margin	22.9	%	23.5	%
Acq. adj. operating income margin	24.0	%	23.5	%
Public currency
Sales	$ 1,178.4		$ 1,114.4		6	%
Operating income	269.0		259.4		4	%

Global Institutional acquisition adjusted fixed currency sales grew 4%, with results led by our Specialty and Healthcare businesses. Sales for the segment showed good growth in North America, Asia Pacific and Latin America. Acquisition adjusted fixed currency operating income increased 6%  as appropriate pricing and sales volume gains were partially offset by investments in the business and higher delivered product costs.        

Global Energy
(unaudited)	Third Quarter Ended September 30						Acq. Adj.
(millions)	2016		2015		% Change		% Change
Fixed currency
Sales	$ 760.6		$ 827.3		(8)	%	(8)	%
Operating income	100.9		111.1		(9)	%	(8)	%
Operating income margin	13.3	%	13.4	%
Acq. adj. operating income margin	13.2	%	13.2	%
Public currency
Sales	$ 780.2		$ 904.5		(14)	%
Operating income	104.2		130.4		(20)	%

Global Energy acquisition adjusted fixed currency sales declined 8% reflecting a moderated decrease in our upstream business revenues which more than offset modest growth in downstream. Acquisition adjusted fixed currency operating income decreased 8% due to reduced pricing, lower sales volumes,  and reduced plant overhead absorption  (driven by the lower sales volumes), which more than offset delivered product cost savings, synergies and other cost reduction actions.    

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Other
(unaudited)	Third Quarter Ended September 30						Acq. Adj.
(millions)	2016		2015		% Change		% Change
Fixed currency
Sales	$ 210.5		$ 195.0		8	%	8	%
Operating income	41.3		37.0		12	%	12	%
Operating income margin	19.6	%	19.0	%
Acq. adj. operating income margin	19.6	%	19.0	%
Public currency
Sales	$ 211.6		$ 199.0		6	%
Operating income	41.4		37.5		10	%

The Other segment fixed currency sales increased 8%  driven by strong growth in both Pest Elimination and Equipment Care. Sales for the segment showed good growth in North America, Latin America and Asia Pacific. Fixed currency operating income rose 12% due to pricing and sales volume gains. 

Corporate

Corporate expense includes amortization expense of $42 million in both the third quarter of 2016 and 2015 related to the Nalco merger intangible assets. Corporate expense also includes special gains and charges. Total special gains and charges for the third quarter of 2016 were immaterial on a net basis. Special gains and charges for the third quarter of 2015, including the non-controlling interest impact of $11 million, were a net charge of $155 million ($145 million after-tax), and primarily consisted of an approximate $125 million charge related to the devaluation of a portion of our Venezuelan net assets.

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Business Outlook

2016 – Full Year

Ecolab expects full year 2016 adjusted diluted earnings per share growth in the $4.35  to $4.45 range, compared with full year 2015 adjusted diluted earnings per share of $4.37. Ecolab previously forecasted adjusted diluted earnings per share in the $4.35 to $4.50 range.

When compared with our 2015 performance, we expect good acquisition adjusted fixed currency sales growth in our Global Institutional, Global Industrial and Other segments with a low double-digit decline in Global Energy segment sales. We anticipate improved adjusted gross margin, with a slightly unfavorable selling, general and administrative (“SG&A”) ratio to sales, higher interest expense and a moderately favorable adjusted tax rate versus 2015.    

At current rates of exchange, we expect foreign currency and the impact of the Venezuelan devaluation and deconsolidation to have an unfavorable impact of approximately  4 percentage points on full year sales and an estimated 7 percentage point (approximately $0.30 per share) unfavorable impact on diluted earnings per share.

Our detailed outlook for the full year of 2016 is as follows:

Adjusted Gross Margin, excluding special gains and charges	approx. 48%
SG&A % of Sales	32% to 33%
Interest expense, net	approx. $265 million
Adjusted tax rate	25% to 26%
Noncontrolling interest	$0.05 to $0.06
Adjusted EPS, excluding special gains and charges	$4.35 - $4.45
Diluted shares	approx. 297 million

Amounts do not reflect the impact of future special gains and charges or discrete tax items, which we expect to be immaterial.  

Reported 2015 diluted earnings per share of $3.32 included special gains and charges and discrete tax items. Excluding these items, 2015 adjusted diluted earnings per share were $4.37.

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2016 — Fourth Quarter

Ecolab expects fourth quarter 2016 adjusted diluted earnings per share in the $1.23 to $1.33 range, compared with adjusted diluted earnings per share of $1.22 a year ago. 

At current rates of exchange, we expect foreign currency and the impact of the Venezuelan devaluation and deconsolidation to have an unfavorable impact of approximately one percentage point on fourth quarter sales and a 1 percentage point  (approximately $0.02) unfavorable impact on diluted earnings per share.

Our detailed outlook for the fourth quarter of 2016 is as follows:

Adjusted Gross Margin, excluding special gains and charges	48% to 49%
SG&A % of Sales	approx. 31%
Interest expense, net	approx. $70 million
Adjusted tax rate	25% to 26%
Noncontrolling interest	$0.01 to $0.02
Adjusted EPS, excluding special gains and charges	$1.23 - $1.33
Diluted shares	approx. 296 million

Amounts do not reflect the impact of future special gains and charges or discrete tax items, which we expect to be immaterial.  

Reported fourth quarter 2015 diluted earnings per share of $0.69 included special gains and charges and discrete tax items. Excluding these items, fourth quarter 2015 adjusted diluted earnings per share were $1.22.

About Ecolab

A trusted partner at more than one million customer locations, Ecolab (ECL) is the global leader in water, hygiene and energy technologies and services that protect people and vital resources. With 2015 sales of $13.5 billion and 47,000 associates, Ecolab delivers comprehensive solutions and on-site service to promote safe food, maintain clean environments, optimize water and energy use and improve operational efficiencies for customers in the food, healthcare, energy, hospitality and industrial markets in more than 170 countries around the world. For more Ecolab news and information, visit www.ecolab.com.  

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Ecolab will host a live webcast to review the third quarter earnings announcement and earnings guidance today at 1:00 p.m. Eastern Time. The webcast, along with related materials, will be available to the public on Ecolab's website at www.ecolab.com/investor.  A replay of the webcast and related materials will be available at that site. Listening to the webcast requires Internet access, the Windows Media Player or other compatible streaming media player.

Cautionary Statements Regarding Forward-Looking Information

This communication contains certain statements relating to future events and our intentions, beliefs, expectations and predictions for the future which are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Words or phrases such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “we believe,” “we expect,” “estimate,” “project,” “may,” “will,” “intend,” “plan,” “believe,” “target,” “forecast” (including the negative or variations thereof) or similar terminology used in connection with any discussion of future plans, actions or events generally identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our financial and business performance and prospects, including forecasted 2016 fourth quarter and full-year financial and business results, including sales growth, adjusted gross margin, SG&A ratios to sales, interest expense, adjusted tax rate, noncontrolling interest, adjusted diluted earnings per share and diluted shares outstanding; energy market conditions; foreign currency and impact of the Venezuelan deconsolidation; and special gains and charges and quantifiable discrete tax items. These statements are based on the current expectations of management of the company. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this communication. In particular, the ultimate results of any restructuring, 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 and other business improvement initiatives and the level of success achieved through such actions in improving competitiveness, efficiency and effectiveness.

Additional risks and uncertainties that may affect operating results and business performance 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 vitality of the markets we serve, including the impact of oil price fluctuations on the markets served by our Global Energy segment;

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the impact of economic factors such as the worldwide economy, capital flows, interest rates and  foreign currency risk, including  reduced sales and earnings in other countries resulting from the weakening of local currencies versus the U.S. dollar; our ability to attract and retain high caliber management talent to lead our business; our ability to execute key business initiatives; potential information technology infrastructure failures and cybersecurity attacks; exposure to global economic, political and legal risks related to our international operations including with respect to our operations in Russia; the costs and effects of complying with laws and regulations, including those relating to the environment and to the manufacture, storage, distribution, sale and use of our products; the occurrence of litigation or claims, including related to the Deepwater Horizon oil spill; our ability to develop competitive advantages through innovation; difficulty in procuring raw materials or fluctuations in raw material costs; our substantial indebtedness; our ability to acquire complementary businesses and to effectively integrate such businesses; restraints on pricing flexibility due to contractual obligations; pressure on operations from consolidation of customers, vendors or competitors; public health epidemics; potential losses arising from the impairment of goodwill or other assets; potential loss of deferred tax assets; changes in tax law and unanticipated tax liabilities; potential chemical spill or release; potential class action lawsuits;  the loss or insolvency of a major customer or distributor; acts of war or terrorism; natural or man-made disasters; water shortages; severe weather conditions; and other uncertainties or risks reported from time to time in our reports to the SEC. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this communication may not occur. We caution that undue reliance should not be placed on forward-looking statements, which speak only as of the date made. Ecolab does not undertake, and expressly disclaims, any duty to update any forward-looking statement whether as a result of new information, future events or changes in expectations, except as required by law.

Non-GAAP Financial Information

This news release and certain of the accompanying tables include financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures include:

· fixed currency sales

· acquisition adjusted fixed currency sales

· adjusted cost of sales

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· adjusted gross margin

· fixed currency operating income

· adjusted operating income

· adjusted fixed currency operating income

· adjusted fixed currency operating income margin

· adjusted tax rate

· adjusted net income attributable to Ecolab

· adjusted diluted earnings per share

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 cash flows and that these measures are useful for period-to-period comparison of results.

Our non-GAAP financial measures for cost of sales, gross margin and operating income exclude the impact of special (gains) and charges, and our non-GAAP 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 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.

We evaluate the performance of our international operations based on fixed currency rates of foreign exchange. Fixed currency amounts included in this release are based on translation into U.S. dollars at the fixed foreign currency exchange rates established by management at the beginning of 2016. Fixed currency amounts also reflect all Venezuelan bolivar operations, prior to the deconsolidation of our Venezuelan operations, at a Marginal Currency System (“SIMADI”) rate of approximately 200 bolivares to 1 U.S. dollar, which was the approximate conversion rate for SIMADI at year end 2015. Fixed currency sales, acquisition adjusted fixed currency sales, fixed currency operating income, adjusted fixed currency operating income and adjusted fixed currency

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operating income margin measures eliminate the impact of exchange rate fluctuations on our international sales, acquisition adjusted sales, operating income, adjusted operating income and adjusted operating income margin, respectively. 

Acquisition adjusted growth rates generally exclude the results of any acquired business from the first twelve months post acquisition and exclude the results of divested businesses from the previous twelve months prior to divestiture. Acquisition adjusted growth rates also exclude the Venezuelan results of operations from both the current period and comparable period of the prior year.

These non-GAAP financial measures are not in accordance with, or an alternative to, 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 GAAP measures included in this news release. Reconciliations of our non-GAAP measures are included in the following "Supplemental Non-GAAP Reconciliations" and “Supplemental Diluted Earnings per Share Information” tables included in this news release.

###

(ECL-E)

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ECOLAB INC.

CONSOLIDATED STATEMENT OF INCOME

 (unaudited)

	Third Quarter Ended				Nine Months Ended
	September 30		%		September 30		%
(millions, except per share)	2016	2015	Change		2016	2015	Change
Net sales	$ 3,386.1	$ 3,446.4	(2)	%	$ 9,800.7	$ 10,133.1	(3)	%
Cost of sales (1)	1,737.2	1,820.0	(5)	%	5,153.8	5,391.8	(4)	%
Selling, general and administrative expenses	1,071.6	1,070.7	0	%	3,253.1	3,286.7	(1)	%
Special (gains) and charges (1)	3.2	142.7			35.7	216.1
Operating income	574.1	413.0	39	%	1,358.1	1,238.5	10	%
Interest expense, net	64.9	57.6	13	%	196.3	181.3	8	%
Income before income taxes	509.2	355.4	43	%	1,161.8	1,057.2	10	%
Provision for income taxes	129.7	105.3	23	%	286.7	262.9	9	%
Net income including noncontrolling interest	379.5	250.1	52	%	875.1	794.3	10	%
Net income attributable to noncontrolling interest (1)	5.4	(7.7)			11.8	1.1
Net income attributable to Ecolab	$ 374.1	$ 257.8	45	%	$ 863.3	$ 793.2	9	%
Earnings attributable to Ecolab per common share
Basic	$ 1.28	$ 0.87	47	%	$ 2.95	$ 2.67	10	%
Diluted	$ 1.27	$ 0.86	48	%	$ 2.91	$ 2.63	11	%
Weighted-average common shares outstanding
Basic	291.6	295.2	(1)	%	292.8	296.5	(1)	%
Diluted	295.7	300.0	(1)	%	297.1	301.5	(1)	%
(1) Special (gains) and charges in the Consolidated Statement of Income above include the following:
(millions)	2016	2015			2016	2015
Cost of sales
Restructuring activities	$ -	$ -			$ 0.9	$ 2.2
Energy related charges	-	-			51.0	-
Fixed asset impairment and other inventory charges	-	-			10.0	-
Venezuela related activities	-	23.8			-	33.2
Subtotal	-	23.8			61.9	35.4
Special (gains) and charges
Restructuring activities	(7.7)	12.1			(6.8)	33.1
Champion and Nalco integration costs	-	4.7			-	14.9
Energy related charges	-	-			12.6	-
Venezuela related activities	-	111.9			(7.8)	132.7
Other	10.9	14.0			37.7	35.4
Subtotal	3.2	142.7			35.7	216.1
Net income attributable to noncontrolling interest
Venezuela related activities	-	(11.1)			-	(11.1)
Total special (gains) and charges	$ 3.2	$ 155.4			$ 97.6	$ 240.4

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ECOLAB INC.

REPORTABLE SEGMENT INFORMATION

 (unaudited)

	Third Quarter Ended September 30
	Fixed Currency Rates				Public Currency Rates
			%				%
(millions)	2016	2015	Change		2016	2015	Change
Net Sales
Global Industrial	$ 1,185.2	$ 1,168.0	1	%	$ 1,215.9	$ 1,228.5	(1)	%
Global Institutional	1,163.4	1,092.4	6	%	1,178.4	1,114.4	6	%
Global Energy	760.6	827.3	(8)	%	780.2	904.5	(14)	%
Other	210.5	195.0	8	%	211.6	199.0	6	%
Subtotal at fixed currency rates	3,319.7	3,282.7	1	%	3,386.1	3,446.4	(2)	%
Currency impact	66.4	163.7	*		-	-	*
Consolidated	$ 3,386.1	$ 3,446.4	(2)	%	$ 3,386.1	$ 3,446.4	(2)	%
Operating Income
Global Industrial	$ 199.8	$ 179.7	11	%	$ 204.9	$ 195.5	5	%
Global Institutional	266.8	256.9	4	%	269.0	259.4	4	%
Global Energy	100.9	111.1	(9)	%	104.2	130.4	(20)	%
Other	41.3	37.0	12	%	41.4	37.5	10	%
Corporate	(44.8)	(208.8)	*		(45.4)	(209.8)	*
Subtotal at fixed currency rates	564.0	375.9	50	%	574.1	413.0	39	%
Currency impact	10.1	37.1	*		-	-	*
Consolidated	$ 574.1	$ 413.0	39	%	$ 574.1	$ 413.0	39	%
	Nine Months Ended  September 30
	Fixed Currency Rates				Public Currency Rates
			%				%
(millions)	2016	2015	Change		2016	2015	Change
Net Sales
Global Industrial	$ 3,416.5	$ 3,308.9	3	%	$ 3,486.9	$ 3,523.5	(1)	%
Global Institutional	3,354.4	3,121.7	7	%	3,390.1	3,205.6	6	%
Global Energy	2,275.2	2,585.7	(12)	%	2,318.6	2,834.2	(18)	%
Other	601.5	555.9	8	%	605.1	569.8	6	%
Subtotal at fixed currency rates	9,647.6	9,572.2	1	%	9,800.7	10,133.1	(3)	%
Currency impact	153.1	560.9	*		-	-	*
Consolidated	$ 9,800.7	$ 10,133.1	(3)	%	$ 9,800.7	$ 10,133.1	(3)	%
Operating Income
Global Industrial	$ 499.8	$ 430.2	16	%	$ 511.7	$ 474.9	8	%
Global Institutional	707.9	651.7	9	%	713.4	662.0	8	%
Global Energy	238.8	325.2	(27)	%	246.5	390.8	(37)	%
Other	110.2	91.9	20	%	110.5	92.9	19	%
Corporate	(222.5)	(378.4)	*		(224.0)	(382.1)	*
Subtotal at fixed currency rates	1,334.2	1,120.6	19	%	1,358.1	1,238.5	10	%
Currency impact	23.9	117.9	*		-	-	*
Consolidated	$ 1,358.1	$ 1,238.5	10	%	$ 1,358.1	$ 1,238.5	10	%

* Not meaningful.

As shown in the “Fixed Currency Rates” tables above, we evaluate the performance of our international operations based on fixed currency exchange rates, which eliminate the impact of exchange rate fluctuations on our international operations. Amounts shown in the “Public Currency Rates” tables above reflect amounts translated at actual public average rates of exchange prevailing during the corresponding period, and are provided for informational purposes. The difference between the fixed currency exchange rates and the public currency exchange rates is reported as “Currency impact” in the “Fixed Currency Rates” tables above.

The Corporate segment includes amortization from the Nalco merger intangible assets. The Corporate segment also includes special (gains) and charges reported on the Consolidated Statement of Income. 

14

ECOLAB INC.

CONSOLIDATED BALANCE SHEET

(unaudited)

	September 30	December 31	September 30
(millions)	2016	2015	2015
Assets
Current assets
Cash and cash equivalents	$ 180.6	$ 92.8	$ 184.8
Accounts receivable, net	2,349.6	2,390.2	2,450.0
Inventories	1,342.4	1,388.2	1,439.2
Deferred income taxes	-	250.0	235.0
Other current assets	299.4	326.3	333.4
Total current assets	4,172.0	4,447.5	4,642.4
Property, plant and equipment, net	3,292.9	3,228.3	3,212.2
Goodwill	6,515.5	6,490.8	6,499.2
Other intangible assets, net	3,914.3	4,109.2	4,172.4
Other assets	484.1	365.9	357.1
Total assets	$ 18,378.8	$ 18,641.7	$ 18,883.3
Liabilities and Equity
Current liabilities
Short-term debt	$ 1,571.2	$ 2,205.3	$ 1,009.1
Accounts payable	1,022.7	1,049.6	1,034.5
Compensation and benefits	505.8	509.0	465.1
Income taxes	83.3	52.2	103.6
Other current liabilities	991.0	948.3	944.3
Total current liabilities	4,174.0	4,764.4	3,556.6
Long-term debt	5,091.4	4,260.2	5,753.7
Postretirement health care and pension benefits	914.5	1,117.1	1,146.8
Deferred income taxes	1,030.7	1,281.2	1,355.8
Other liabilities	226.4	238.4	227.8
Total liabilities	11,437.0	11,661.3	12,040.7
Equity
Common stock	352.3	350.3	349.5
Additional paid-in capital	5,236.1	5,086.1	5,022.8
Retained earnings	6,716.7	6,160.3	6,055.0
Accumulated other comprehensive loss	(1,452.3)	(1,423.3)	(1,404.6)
Treasury stock	(3,983.2)	(3,263.5)	(3,239.5)
Total Ecolab shareholders’ equity	6,869.6	6,909.9	6,783.2
Noncontrolling interest	72.2	70.5	59.4
Total equity	6,941.8	6,980.4	6,842.6
Total liabilities and equity	$ 18,378.8	$ 18,641.7	$ 18,883.3

During the first quarter of 2016, we early-adopted the accounting guidance issued in November 2015 that requires all deferred tax assets and liabilities to be classified as noncurrent on the Consolidated Balance Sheet, using the prospective application method. Prior periods have not been retrospectively adjusted for adoption of this guidance.

15

ECOLAB INC.

SUPPLEMENTAL NON-GAAP RECONCILIATIONS

(unaudited)

	Third Quarter Ended				Nine Months Ended
	September 30				September 30
(millions, except percent and per share)	2016		2015		2016		2015
Net sales
Reported GAAP net sales	$ 3,386.1		$ 3,446.4		$ 9,800.7		$ 10,133.1
Effect of foreign currency translation	(66.4)		(163.7)		(153.1)		(560.9)
Non-GAAP fixed currency sales	$ 3,319.7		$ 3,282.7		$ 9,647.6		$ 9,572.2
Cost of sales
Reported GAAP cost of sales	$ 1,737.2		$ 1,820.0		$ 5,153.8		$ 5,391.8
Special (gains) and charges	-		23.8		61.9		35.4
Non-GAAP cost of sales	$ 1,737.2		$ 1,796.2		$ 5,091.9		$ 5,356.4
Gross margin
Reported GAAP gross margin	48.7	%	47.2	%	47.4	%	46.8	%
Non-GAAP adjusted gross margin	48.7	%	47.9	%	48.0	%	47.1	%
Operating income
Reported GAAP operating income	$ 574.1		$ 413.0		$ 1,358.1		$ 1,238.5
Effect of foreign currency translation	(10.1)		(37.1)		(23.9)		(117.9)
Non-GAAP fixed currency operating income	$ 564.0		$ 375.9		$ 1,334.2		$ 1,120.6
Reported GAAP operating income	$ 574.1		$ 413.0		$ 1,358.1		$ 1,238.5
Special (gains) and charges	3.2		166.5		97.6		251.5
Non-GAAP adjusted operating income	577.3		579.5		1,455.7		1,490.0
Effect of foreign currency translation	(10.1)		(37.1)		(23.9)		(117.9)
Non-GAAP adjusted fixed currency operating income	$ 567.2		$ 542.4		$ 1,431.8		$ 1,372.1
Operating income margin
Reported GAAP operating income margin	17.0	%	12.0	%	13.9	%	12.2	%
Non-GAAP adjusted fixed currency operating income margin	17.1	%	16.5	%	14.8	%	14.3	%
Net Income Attributable to Ecolab
Reported GAAP net income attributable to Ecolab	$ 374.1		$ 257.8		$ 863.3		$ 793.2
Special (gains) and charges, after tax	(0.6)		145.4		60.8		211.8
Discrete tax net expense (benefit)	4.5		(19.2)		3.6		(56.0)
Non-GAAP adjusted net income attributable to Ecolab	$ 378.0		$ 384.0		$ 927.7		$ 949.0
Diluted Earnings per Share Attributable to Ecolab ("EPS")
Reported GAAP diluted EPS	$ 1.27		$ 0.86		$ 2.91		$ 2.63
Special (gains) and charges, after tax	0.00		0.48		0.20		0.70
Discrete tax net expense (benefit)	0.02		(0.06)		0.01		(0.19)
Non-GAAP adjusted diluted EPS	$ 1.28		$ 1.28		$ 3.12		$ 3.15
Provision for Income Taxes
Reported GAAP tax rate	25.5	%	29.6	%	24.7	%	24.9	%
Special gains and charges	0.6		(7.5)		1.0		(2.6)
Discrete tax items	(0.9)		3.7		(0.3)		4.3
Non-GAAP adjusted tax rate	25.2	%	25.8	%	25.4	%	26.6	%

16

ECOLAB INC.

SUPPLEMENTAL DILUTED EARNINGS PER SHARE INFORMATION

(unaudited)

The table below provides a reconciliation of diluted earnings per share, as reported, to the non-GAAP measure of adjusted diluted earnings per share.

	First	Second	Six	Third	Nine	Fourth
	Quarter	Quarter	Months	Quarter	Months	Quarter	Year
	Ended	Ended	Ended	Ended	Ended	Ended	Ended
	Mar. 31	June 30	June 30	Sept. 30	Sept. 30	Dec. 31	Dec. 31
	2015	2015	2015	2015	2015	2015	2015
Diluted earnings per share, as reported (U.S. GAAP)	$ 0.77	$ 1.00	$ 1.77	$ 0.86	$ 2.63	$ 0.69	$ 3.32
Adjustments:
Special (gains) and charges (1)	0.02	0.20	0.22	0.48	0.70	0.55	1.25
Discrete tax expense (benefits) (2)	0.01	(0.13)	(0.12)	(0.06)	(0.19)	(0.02)	(0.21)
Adjusted diluted earnings per share (Non-GAAP)	$ 0.80	$ 1.08	$ 1.87	$ 1.28	$ 3.15	$ 1.22	$ 4.37

	First	Second	Six	Third	Nine	Fourth
	Quarter	Quarter	Months	Quarter	Months	Quarter	Year
	Ended	Ended	Ended	Ended	Ended	Ended	Ended
	Mar. 31	June 30	June 30	Sept. 30	Sept. 30	Dec. 31	Dec. 31
	2016	2016	2016	2016	2016	2016	2016
Diluted earnings per share, as reported (U.S. GAAP)	$ 0.77	$ 0.87	$ 1.64	$ 1.27	$ 2.91
Adjustments:
Special (gains) and charges (3)	0.01	0.19	0.21	0.00	0.20
Discrete tax expense (benefits) (4)	(0.02)	0.01	(0.00)	0.02	0.01
Adjusted diluted earnings per share (Non-GAAP)	$ 0.77	$ 1.08	$ 1.85	$ 1.28	$ 3.12

Per share amounts do not necessarily sum due to changes in shares outstanding and rounding.

(1) Special (gains) and charges for 2015 included restructuring charges of $1.6 million, $14.6 million, $10.0 million and $49.3 million, net of tax, in the first, second, third and fourth quarters, respectively. Special (gains) and charges for 2015 also included $3.2 million, $2.8 million, $2.4 million and $2.3 million of costs, net of tax, in the first, second, third and fourth quarters, respectively, related to Champion integration costs. Special (gains) and charges for 2015 also included $0.5 million, $0.1 million, $0.6 million and $0.1 million of costs, net of tax, in the first, second, third and fourth quarters, respectively, related to Nalco integration costs. Special (gains) and charges for 2015 also include charges of $30.2 million, $124.6 million, $80.9 million, net of tax, in the second, third and fourth quarters, respectively, related to Venezuelan charges. Special (gains) and charges for 2015 also included a charge of $15.4 million, net of tax, in the fourth quarter related to a fixed asset impairment. Special (gains) and charges for 2015 also included charges of $13.4 million, $7.8 million and $17.1 million, net of tax, in the second, third and fourth quarters, respectively, primarily related to litigation related charges, a loss on the sale of a portion of our Ecovation business and the net impact of inventory reserve and inventory cost policy harmonization efforts.

(2) The first quarter 2015 discrete tax items net expense of $2.6 million was driven primarily by a change to a deferred tax liability resulting from the Naperville facility transaction. The second quarter 2015 discrete tax items net benefit of $39.4 million was driven primarily from our ability to recognize a worthless stock deduction for the tax basis in a wholly owned domestic subsidiary. The third quarter 2015 discrete tax items net benefit of $19.2 million was driven primarily by the release of valuation allowances on certain deferred tax assets and a refund claim for taxes paid in a prior period resulting from updated IRS regulations, offset partially by recognizing adjustments from filing our 2014 U.S. federal income tax return. The fourth quarter discrete tax items net benefit of $7.3 million was driven primarily by the finalization of prior year IRS audits, valuation allowance releases and other statute of limitation tax reserve releases.

(3) Special (gains) and charges for 2016 included restructuring charges of $1.8 million, net of tax in the first quarter, and gains related to restructuring of  $1.9 million and $7.2 million,  net of tax, in the second and third quarters, respectively.  Special (gains) and charges for 2016 also included a charge of $42.9 million, net of tax, during the second quarter associated with the downturn in the global energy market. Special (gains) and charges for 2016 also included a charge of $6.3 million, net of tax, during the second quarter related to other fixed asset impairments and inventory charges. Special (gains) and charges for 2016 also included a gain of $4.9 million, net of tax, during the second quarter related to the recovery of previously written off Venezuelan intercompany receivables. Special (gains) and charges for 2016 also included $2.6 million,  $14.6 million and $6.6 million, net of tax, in the first, second and third quarters, respectively, related to other charges, including litigation related charges.

(4) The first quarter 2016 discrete tax items net benefit of $4.8 million was driven primarily by the release of reserves for uncertain tax positions due to expiration of statute of limitations in non-U.S. jurisdictions. The second quarter 2016 discrete tax items net expense of $3.9 million was driven by individually immaterial items, including adjustments to deferred tax asset and liability positions. The third quarter 2016 discrete tax items net expense of $4.5 million was driven primarily by recognizing adjustments from filing our 2015 U.S. federal income tax return, partially offset by settlement of international tax matters and remeasurement of certain deferred tax assets and liabilities resulting from the application of an updated tax rate in an international jurisdiction.

17

EX-99.2

Exhibit 99.2

Third Quarter 2016
Teleconference
Supplemental Data

Cautionary Statement

Forward-Looking Information    This communication contains forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding our future financial and business performance and prospects, including forecasted 2016 fourth quarter and full year business and financial results, foreign currency impact and Venezuela devaluation and deconsolidation impact. These statements are based on the current expectations of management of the Company. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are set forth under Item 1A of our most recent Annual Report on Form 10-K and our other our public filings with the Securities and Exchange Commission (the “SEC”) and include the vitality of the markets we serve, including the markets served by our Global Energy segment; the impact of worldwide economic factors such as the worldwide economy, credit markets, interest rates and foreign currency risk, including reduced sales and earnings in other countries resulting from the weakening of local currencies versus the U.S. dollar; exposure to economic, political and legal risks related to our international operations; the costs and effects of complying with laws and regulations relating to our operations; the occurrence of litigation or claims; and other uncertainties or risks reported from time to time in our reports to the SEC. In light of these risks, uncertainties and factors, the forward-looking events discussed in this communication may not occur. We caution that undue reliance should not be placed on forward-looking statements, which speak only as of the date made. Ecolab does not undertake, and expressly disclaims, any duty to update any forward-looking statement except as required by law.

Non-GAAP Financial Information    This communication includes Company information that does not conform to generally accepted accounting principles (GAAP). Management believes that a presentation of this information is meaningful to investors because it provides insight with respect to ongoing operating results of the Company and allows investors to better evaluate the financial results of the Company. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies. Reconciliations of our non-GAAP measures included within this presentation are included in the “Non-GAAP Financial Measures” section of this presentation.

Please see Ecolab’s news release dated November 1, 2016 for additional information, including additional discussion on use of Non-GAAP financial measures. 2

3Q 2016 Overview

◢Earnings:

§ Reported diluted EPS $1.27,  +48% versus last year; adjusted diluted EPS $1.28, flat year on year

§ Reported and adjusted diluted EPS include $0.09 (7 percentage points) unfavorable currency 

◢Sales:

§ Reported sales -2%; fixed currency sales +1%; acquisition adjusted fixed currency sales flat year on year

§ Global Institutional, Global Industrial and Other segment acquisition adjusted fixed currency sales  +3%, partially offset by a moderated decline in Global Energy sales 

§ Strong new business growth and new product introductions drove market share gains

◢Operating Margin:

§ Reported operating margin +500 bps; adjusted fixed currency operating margin +60 bps 

§ Pricing,  volume growth and cost savings initiatives in our Global Institutional, Global Industrial and Other segments was partially offset by a  decline in Global Energy

◢Outlook:

§ 4Q: Adjusted diluted EPS of $1.23 to $1.33, including an approximate $0.02 unfavorable impact from FX/Venezuelan devaluation/deconsolidation

§ 2016: Adjusted diluted EPS of $4.35 to $4.45, including an approximate $0.30, or 7 percentage point, unfavorable impact from FX/Venezuelan devaluation/deconsolidation

Please see Ecolab’s news release dated November 1, 2016 for additional information, including additional discussion on use of Non-GAAP financial measures. 3

3Q 2016 Results

	Third Quarter Ended September 30
	Reported				Adjusted *
(unaudited)	Public Currency Rates		%		Public Currency Rates		%
(millions, except per share)	2016	2015	Change		2016	2015	Change
Net sales	$ 3,386.1	$ 3,446.4	(2)	%	$ 3,386.1	$ 3,446.4	(2)	%
Operating income	574.1	413.0	39	%	577.3	579.5	0	%
Net income attributable to Ecolab	374.1	257.8	45	%	378.0	384.0	(2)	%
Diluted earnings per share	$ 1.27	$ 0.86	48	%	$ 1.28	$ 1.28	0	%
					Adjusted *
	Fixed Currency Rates *		%		Fixed Currency Rates		%
	2016	2015	Change		2016	2015	Change
Net sales	$ 3,319.7	$ 3,282.7	1	%	$ 3,319.7	$ 3,282.7	1	%
Operating income	564.0	375.9	50	%	567.2	542.4	5	%

*See “Non-GAAP Financial Measures” section of this presentation for corresponding reconciliations.

Please see Ecolab’s news release dated November 1, 2016 for additional information, including additional discussion on use of Non-GAAP financial measures. 4

3Q 2016 Sales Growth Detail

	FixedRate	Acq./Div.Adj.
GlobalIndustrial	%Change	%Change	Consolidated	%Change
Food & Beverage	4%	4%	Volume & mix	<1%
Water	0%	0%	Pricing	<1%
Paper	2%	2%	Subtotal	<1%
Textile Care	2%	2%	Acq./Div.	1%
Total Global Industrial	1%	2%	Fixed currency growth	1%
			Currency impact	(3)%
Global Institutional			Total	(2)%
Institutional	7%	4%
Specialty	6%	6%
Healthcare	6%	6%
Total Global Institutional	6%	4%
Global Energy	(8)%	(8)%
Other
Pest Elimination	7%	7%
Equipment Care	10%	10%
Total Other	8%	8%

Amounts in the tables above may reflect rounding.  Acq./Div. Adj. excludes the impact of acquisitions and divestitures and Venezuela results.

Please see Ecolab’s news release dated November 1, 2016 for additional information, including additional discussion on use of Non-GAAP financial measures. 5

3Q 2016 Income Statement / Margins

($millions, unaudited)	2016	%sales	2015	%sales	%change		Comments*
Gross Profit	$ 1,648.9	48.7%	$ 1,626.4	47.2%	1	%	Excluding special charges, our adjusted gross margin was 48.7% vs. 47.9%, increasing 80 bps, resulting from lower delivered product costs, cost efficiencies and the impact of the decline in Global Energy, which on average has a lower gross profit margin.
SG&A	1,071.6	31.6%	1,070.7	31.1%	0	%	The 50 bps increase in 2016 primarily reflects the impact of acquisitions, investments in the business and the decline in Global Energy, which on average has a lower SG&A ratio.
Operating Income (fixed FX)
Global Industrial	199.8	16.9%	179.7	15.4%	11	%	2016 acquisition adjusted fixed currency margins were 16.9% vs. 15.3% in 2015. The 160 bps improvement was due to lower delivered product costs, appropriate pricing and cost savings initiatives.
Global Institutional	266.8	22.9%	256.9	23.5%	4	%	2016 acquisition adjusted fixed currency margins were 24.0% vs. 23.5% in 2015. The 50 bps improvement reflected appropriate pricing and sales volume gains, which more than offset investments in the business and higher delivered product costs.
Global Energy	100.9	13.3%	111.1	13.4%	(9)	%	2016 acquisition adjusted fixed currency margins were 13.2% in both 2016 and 2015 reflecting delivered product cost savings, synergies, and other cost reduction actions, which offset reduced pricing, lower sales volumes and reduced plant overhead absorption (driven by the lower sales volumes).
Other	41.3	19.6%	37.0	19.0%	12	%	The 60 bps improvement was due to pricing and sales volume gains.
Subtotal at fixed FX	608.8	18.3%	584.7	17.8%	4	%
Corporate
Special Gains/(Ch.)	(3.2)		(166.5)				2016: Wage-hour litigation charges, offset by restructuring related gains. 2015: Venezuela devaluation, restructuring and wage-hour litigation charges.
Corp. Expense	(41.6)		(42.3)				Includes Nalco intangible amortization of $42 million in 2016 and 2015.
Total Corporate Exp.	(44.8)		(208.8)
FX	10.1		37.1
Consolidated Op. Inc.	$ 574.1	17.0%	$ 413.0	12.0%	39	%	2016 adjusted fixed currency margin was 17.1%, +60 bps vs. the equivalent 2015 margin of 16.5%. The strong margin expansion was driven by appropriate pricing, continued sales volume growth and cost savings in our Global Institutional, Global Industrial and Other segments, which were partially offset by a decline in Global Energy results.

*See Non-GAAP Financial Measures” section of this presentation for corresponding reconciliations.

Please see Ecolab’s news release dated November 1, 2016 for additional information, including additional discussion on use of Non-GAAP financial measures. 6

3Q 2016 Balance Sheet / Cash Flow

SummaryBalanceSheet
	September 30			September 30
(millions, unaudited)	2016	2015	(millions, unaudited)	2016	2015
Cash and cash eq.	$ 180.6	$ 184.8	Short-term debt	$ 1,571.2	$ 1,009.1
Accounts receivable, net	2,349.6	2,450.0	Accounts payable	1,022.7	1,034.5
Inventories	1,342.4	1,439.2	Other current liabilities	1,580.1	1,513.0
Other current assets	299.4	568.4	Long-term debt	5,091.4	5,753.7
PP&E, net	3,292.9	3,212.2	Pension/Postretirement	914.5	1,146.8
Goodwill and intangibles	10,429.8	10,671.6	Other liabilities	1,257.1	1,583.6
Other assets	484.1	357.1	Total equity	6,941.8	6,842.6
Total assets	$ 18,378.8	$ 18,883.3	Total liab. and equity	$ 18,378.8	$ 18,883.3
SelectedCashFlowitems			SelectedBalanceSheetmeasures
	Nine Months Ended
	September 30			September 30
(millions, unaudited)	2016	2015	(unaudited)	2016	2015
Cash from op. activities	$ 1,491.7	$ 1,395.2	Total Debt/Total Capital	49.0%	49.7%
Depreciation	420.9	422.7	Net Debt/Total Capital	48.3%	49.0%
Amortization	217.2	224.4	Net Debt/EBITDA*	2.6	2.5
Capital expenditures	478.6	551.6	Net Debt/Adjusted EBITDA*	2.3	2.3

* EBITDA and Adjusted EBITDA are non-GAAP measures.  EBITDA is defined as the sum of operating income, depreciation and amortization. Adjusted EBITDA is defined as the sum of adjusted operating income, depreciation and amortization. The inputs to EBITDA reflect the trailing twelve months of activity for the period presented. See “Non-GAAP Financial Measures” section of this presentation corresponding reconciliations.

Please see Ecolab’s news release dated November 1, 2016 for additional information, including additional discussion on use of Non-GAAP financial measures. 7

Appendix

Please see Ecolab’s news release dated November 1, 2016 for additional information, including additional discussion on use of Non-GAAP financial measures. 8

Non-GAAP Financial Measures

	Third Quarter Ended				Nine Months Ended
(unaudited)	September 30				September 30
(millions, except percent)	2016		2015		2016		2015
Net Sales
Reported GAAP net sales	$ 3,386.1		$ 3,446.4		$ 9,800.7		$ 10,133.1
Effect of foreign currency translation	(66.4)		(163.7)		(153.1)		(560.9)
Non-GAAP fixed currency sales	$ 3,319.7		$ 3,282.7		$ 9,647.6		$ 9,572.2
Cost of Sales
Reported GAAP cost of sales	$ 1,737.2		$ 1,820.0		$ 5,153.8		$ 5,391.8
Special (gains) and charges	-		23.8		61.9		35.4
Non-GAAP adjusted cost of sales	$ 1,737.2		$ 1,796.2		$ 5,091.9		$ 5,356.4
Gross Margin
Reported gross margin	48.7	%	47.2	%	47.4	%	46.8	%
Non-GAAP adjusted gross margin	48.7	%	47.9	%	48.0	%	47.1	%
Operating Income
Reported GAAP operating income	$ 574.1		$ 413.0		$ 1,358.1		$ 1,238.5
Effect of foreign currency translation	(10.1)		(37.1)		(23.9)		(117.9)
Non-GAAP fixed currency operating income	$ 564.0		$ 375.9		$ 1,334.2		$ 1,120.6
Reported GAAP operating income	$ 574.1		$ 413.0		$ 1,358.1		$ 1,238.5
Special (gains) and charges	3.2		166.5		97.6		251.5
Non-GAAP adjusted operating income	577.3		579.5		1,455.7		1,490.0
Effect of foreign currency translation	(10.1)		(37.1)		(23.9)		(117.9)
Non-GAAP adjusted fixed currency operating income	$ 567.2		$ 542.4		$ 1,431.8		$ 1,372.1
Operating Income Margin
Reported GAAP operating income margin	17.0	%	12.0	%	13.9	%	12.2	%
Non-GAAP adjusted fixed currency operating income margin	17.1	%	16.5	%	14.8	%	14.3	%

Please see Ecolab’s news release dated November 1, 2016 for additional information, including additional discussion on use of Non-GAAP financial measures. 9

Non-GAAP Financial Measures

	Third Quarter Ended				Nine Months Ended
(unaudited)	September 30				September 30
(millions, except percent and per share)	2016		2015		2016		2015
Net Income Attributable to Ecolab
Reported GAAP net income attributable to Ecolab	$ 374.1		$ 257.8		$ 863.3		$ 793.2
Special (gains) and charges, after tax	(0.6)		145.4		60.8		211.8
Discrete tax net expense (benefit)	4.5		(19.2)		3.6		(56.0)
Non-GAAP adjusted net income attributable to Ecolab	$ 378.0		$ 384.0		$ 927.7		$ 949.0
Diluted Earnings per Share Attributable to Ecolab ("EPS")
Reported GAAP diluted EPS	$ 1.27		$ 0.86		$ 2.91		$ 2.63
Special (gains) and charges, after tax	0.00		0.48		0.20		0.70
Discrete tax net expense (benefit)	0.02		(0.06)		0.01		(0.19)
Non-GAAP adjusted diluted EPS	$ 1.28		$ 1.28		$ 3.12		$ 3.15
Provision for Income Taxes
Reported GAAP tax rate	25.5	%	29.6	%	24.7	%	24.9	%
Special gains and charges	0.6		(7.5)		1.0		(2.6)
Discrete tax items	(0.9)		3.7		(0.3)		4.3
Non-GAAP adjusted tax rate	25.2	%	25.8	%	25.4	%	26.6	%
EBITDA (trailing twelve months ended)
Net income including non-controlling interest	$ 1,098.0		$ 1,137.6
Provision for income taxes	324.3		378.1
Interest expense, net	258.6		243.3
Depreciation	557.7		563.4
Amortization	292.8		301.7
EBITDA	$ 2,531.4		$ 2,624.1
Special (gains) and charges impacting EBITDA	341.5		296.2
Adjusted EBITDA	$ 2,872.9		$ 2,920.3

Please see Ecolab’s news release dated November 1, 2016 for additional information, including additional discussion on use of Non-GAAP financial measures. 10

EX-99.3

Exhibit 99.3

ECOLAB THIRD QUARTER 2016

3Q 2016 Overview

◢Earnings:

§ Reported diluted EPS $1.27, +48% versus last year; adjusted diluted EPS $1.28, flat year on year

§ Reported and adjusted diluted EPS include $0.09 (7 percentage points) unfavorable currency 

◢Sales:

§ Reported sales -2%; fixed currency sales +1%; acquisition adjusted fixed currency sales flat year on year

§ Global Institutional, Global Industrial and Other segment acquisition adjusted fixed currency sales +3%, partially offset by a moderated decline in Global Energy sales 

§ Strong new business growth and new product introductions drove market share gains

◢Operating Margin:

§ Reported operating margin +500 bps; adjusted fixed currency operating margin +60 bps 

§ Pricing, volume growth and cost savings initiatives in our Global Institutional, Global Industrial and Other segments was partially offset by a decline in Global Energy

◢Outlook:

§ 4Q: Adjusted diluted EPS of $1.23 to $1.33, including an approximate $0.02 unfavorable impact from FX/Venezuelan devaluation/deconsolidation

§ 2016: Adjusted diluted EPS of $4.35 to $4.45, including an approximate $0.30, or 7 percentage point, unfavorable impact from FX/Venezuelan devaluation/deconsolidation

SUMMARY

Continued attractive new business gains and new product introductions drove acquisition adjusted fixed currency sales growth in our Global Institutional, Global Industrial and Other segments during the third quarter, offsetting a

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moderated decline in Global Energy sales. Product innovation, lower delivered product costs and ongoing cost efficiency work led the strong adjusted fixed currency operating margin expansion, more than offsetting the impact of soft economies, challenging end markets and continued currency headwinds. These drove the 7% adjusted earnings per share increase before currency translation. 

Looking to the fourth quarter, we expect our Global Institutional, Global Industrial and Other segments to continue to show modestly better year-on-year acquisition adjusted fixed currency growth versus the third quarter, outpacing their markets and soft international economies as they leverage investments we have made to further improve sales and service force effectiveness and profitability. We expect lower year-on-year results from our Global Energy business. We look for fourth quarter adjusted diluted earnings per share to be in the $1.23 to $1.33 range, with that range including approximately $0.02 per share of unfavorable impact from the Venezuela devaluation and deconsolidation and currency translation, as we continue to aggressively drive business growth. 

We have narrowed our forecast for adjusted diluted earnings per share for the full year 2016 to the $4.35 to $4.45 range from $4.35 to $4.50, which includes expected currency headwinds of approximately $0.30 per share (of which $0.17 per share is from the Venezuela devaluation and deconsolidation). 

HIGHLIGHTS

· Third quarter diluted earnings per share were $1.27.

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· On an adjusted basis, excluding special gains and charges and discrete tax items from both years, third quarter 2016 adjusted diluted earnings per share were $1.28, and included a $0.09, or 7 percentage point, currency headwind. This compared with adjusted diluted earnings per share of $1.28 a year ago.  

· Our consolidated acquisition adjusted fixed currency sales were modestly higher as our Global Institutional, Global Industrial and Other segments grew 3% but were offset by lower Global Energy sales. Regional sales growth was led by Latin America.

· Reported operating margins increased 500 basis points. Adjusted fixed currency operating margins expanded 60 basis points ascontinued sales growth from the Global Institutional, Global Industrial and Other segments, lowerdelivered product costs and cost efficiencies offset lower Global Energy results.

· In 2016’s difficult operating environment, we have focused on driving new business gains by helping customers to lower their costs. We are using our industry-leading product innovation and service strengths to help customers achieve the best results and lowest operating costs, and through these aggressively drive new account gains across all of our segments.

· We expect fourth quarter adjusted diluted earnings per share in the $1.23 to $1.33 range, reflecting a combined Venezuela devaluation and deconsolidation impact and currency translation drag of approximately $0.02.

· We narrowed our full year adjusted diluted earnings per share forecast to the $4.35 to $4.45 per share range from $4.35 to $4.50. This forecast

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includes expected unfavorable currency exchange of approximately $0.30 per share, of which $0.17 per share is from the Venezuela devaluation and deconsolidation.  

· In summary, despite a very challenging global economic and market environment, we expect to deliver solid fundamental results in 2016. We remain confident in our business, our markets and our people, as well as our capacities to meet our aggressive growth objectives over the coming years.

VENEZUELA

As previously disclosed, Ecolab deconsolidated its Venezuela operations at year-end 2015. This change in accounting treatment, in which we stopped consolidating the results of our local Venezuelan operations in our 2016 financial statements, does not directly affect the local operations of our Venezuelan businesses. We continue to serve customers in Venezuela after the deconsolidation.

Also as previously disclosed, the earnings per share impact of currency on growth rates versus 2015 includes the $0.15 per share effect of the Venezuela bolivar devaluation during 2015. The combined impact of the Venezuela bolivar devaluation and deconsolidation on adjusted earnings per share represents a total year-on-year 2016 headwind of approximately $0.17 per share. 

To provide useful period-to-period comparison of results, acquisition adjusted growth rates generally exclude the results of any acquired business from the

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first twelve months post-acquisition, exclude the results of divested businesses from the previous twelve months prior to divestiture, and exclude the Venezuelan results of operations from both the current period and comparable period of the prior year.

SALES DISCUSSION

Consolidated sales	% Change
Volume & mix	<1%
Pricing	<1%
Subtotal	<1%
Acq./Div.	1%
Fixed currency growth	1%
Currency impact	(3)%
Total	(2)%

Ecolab’s consolidated reported sales for the third quarter decreased 2%.  Consolidated fixed currency sales for the quarter increased 1%. Acquisition adjusted fixed currency sales were modestly higher when compared to the year ago period. Looking at the growth components, both volume and mix and pricing were modestly positive. Acquisitions and divestitures were 1% and currency was a negative 3%. 

GLOBAL INDUSTRIAL SEGMENT

	Fixed Rate	Acq./Div. Adj.
Global Industrial	% Change	% Change
Food & Beverage	4%	4%
Water	0%	0%
Paper	2%	2%
Textile Care	2%	2%
Total Global Industrial	1%	2%

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FOOD & BEVERAGE

Third quarter fixed currency Food & Beverage sales increased 4% as corporate account and share gains more than offset generally flat industry trends. Globally, we enjoyed good growth in our food and beverage markets, with flat sales in dairy and agri.Regional growth was strong in Latin America and Asia Pacific, while Europe and North America recorded modest gains.

Food & Beverage continues to drive growth using its enterprise selling approach to customers, in which we combine Ecolab’s industry-leading cleaning and sanitizing, water treatment and pest elimination capabilities to demonstrate our value through the delivery of improved food safety results, lower operating costs and enhanced product quality for customers. This has enabled us to win business with key global customers. We look to more than offset tough industry conditions with further customer penetration, new business capture, new market growth and leverage from our strong innovation pipeline, and show good growth in the fourth quarter. 

WATER

Fixed currency Water sales were flat when compared to prior year.  Mining’s double-digit decline offset modest heavy and solid light industry sales growth.  Regionally, we saw strong sales growth in Latin America, modest growth in Europe and Middle East & Africa, and modest declines in Asia Pacific (led by China) and North America.

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We continue to drive penetration and share gains in all of our water markets, leveraging our innovative solutions to help customers optimize water usage, improve results and lower our customers’ total operating costs. We continue to invest in additional new water technologies to improve customers’ operating performance, lower their operating costs and improve safety. 

We remain focused on strengthening our corporate account and enterprise sales teams as well as growing our new accounts pipeline. We also continue to enhance our total water management solutions that deliver improved efficiency and decreased operating costs for our customers. We expect low single digit growth in the fourth quarter from continued share gains in light industries and lapping comparisons in mining, and as we invest in our fundamental drivers for better growth next year.

PAPER

Third quarter fixed currency Paper sales increased 2%. Good growth in Latin America and moderate growth in North America and Europe, driven by strong sales efforts and business wins, more than offset declines in Asia Pacific.

We continue to focus on maximizing results for our customers through minimizing water and optimizing their total cost in the growth segments of board & packaging, tissue & towel and pulp. Paper expects to show continued growth in the fourth quarter as it continues its focus on delivering increased customer value through innovative solutions. 

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GLOBAL INSTITUTIONAL SEGMENT

	Fixed Rate	Acq./Div. Adj.
Global Institutional	% Change	% Change
Institutional	7%	4%
Specialty	6%	6%
Healthcare	6%	6%
Total Global Institutional	6%	4%

INSTITUTIONAL

Fixed currency sales growth for the Institutional business was 7%. Acquisition adjusted fixed currency sales for Institutional grew 4%. Global lodging demand continued to show slight growth, while restaurant foot traffic data remains soft. Looking at our regional sales, North America, Asia Pacific and Latin America turned in solid sales gains, and Europe rose modestly. New business wins, led by demand for our leading product innovation in key platforms, along with appropriate pricing, drove our results. Sales to our end users remained strong in the third quarter; however softer sales into our distributor channel moderated the quarter’s increase.  

We remain focused on delivering increased customer value, offering an increasing range of effective solutions that reduce our customers’ water, energy and labor costs, backed by superior on-site service. We expect our investments in improved field technology, sales firepower and innovation to drive future growth and improve on our industry leadership position. Looking ahead, we expect continued solid Institutional sales growth in the fourth quarter.

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SPECIALTY

Third quarter sales for Specialty grew 6% in fixed currencies. Quickservice sales growth was solid as we continue to see growth in our global accounts and as food safety gains greater focus among our customers. New business gains, increased service coverage and additional customer solutions leveraged generally modest industry trends to drive growth. The food retail business posted a strong gain, with the improved sales growth reflecting continued new customer additions and product introductions.

New account wins have been solid, and with our ongoing investments in new products, the sales and service force and increased solutions for customers, we expect a strong fourth quarter and solid full year in 2016 for Specialty.

HEALTHCARE

Fixed currency Healthcare sales rose 6% in the third quarter. We achieved strong growth in both North America and Europe as we continued our focus on executing the Ecolab value proposition: offering innovative product and premium on-site service programs to improve hygiene, and in acute care, reduce healthcare acquired infections and increase operating efficiencies, and thereby deliver improved outcomes in hospital operating rooms, patient rooms and central sterile areas. Ecolab’s outcome-based programs are still a relatively new approach for the industry, but the need is great, and we are well-positioned help customers.  The improving sales traction and new business pipeline makes us confident regarding the long term growth potential for our business.

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Further, the pending acquisition of Anios should bolster our position in Europe and accelerate our international expansion. We look for fourth quarter 2016 Healthcare sales to show further solid organic growth as the new business gains benefit results. 

GLOBAL ENERGY SEGMENT

	Fixed Rate	Acq./Div. Adj.
Global Energy	% Change	% Change
Energy	(8)%	(8)%

Third quarter fixed currency Global Energy segment sales decreased 8%, a slower decline than the first half, but still reflecting continued difficult operating conditions during the quarter. Within our upstream businesses, the well stimulation business (representing less than 10% of Energy segment sales) recorded a significant decline. Our production business (which represents approximately 65% of Energy segment sales) also declined due to continued lower price and customer product usage.Sales in downstream grew modestly.

Looking ahead, improved oil prices and increased drilling rig counts have contributed to a more stable energy market environment. We continue to expect industry activity will take time to gain momentum, with demand and pricing improvement developing gradually in 2017. We look for the fourth quarter 2016 to reflect this lag. We expect the fourth quarter and full year 2016 acquisition-adjusted Energy segment sales to decrease in the low double-digit range year on year, as the quarter compares to a period which had several large one-time sales.  In this environment, we remain aggressive,

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using both our industry-leading product innovation and our outstanding sales and service team to drive sales and share gains, as well as strengthen our position for future growth. We expect these factors to enable us to show improving growth over the next several years as the energy markets recover.

OTHER SEGMENT

	Fixed Rate	Acq./Div. Adj.
Other	% Change	% Change
Pest Elimination	7%	7%
Equipment Care	10%	10%
Total Other	8%	8%

PEST ELIMINATION

Fixed currency Pest Elimination sales increased 7% in the third quarter. Sales to food retail, hospitality and restaurant customersled the growth. Regionally, we enjoyed double-digit growth in Latin America and strong growth in North America and Asia Pacific. We continue to drive market penetration, using innovative service offerings, new technologies and leading capabilities in our service offerings to address key customer needs and global trends. Additionally, we continue expanding benefits as we globalize our market-focused capabilities and field technologies.We expect Pest Elimination sales to show further good growth in the fourth quarter led by gains in all markets.

EQUIPMENT CARE

Equipment Care sales grew 10% in the third quarter.New customer additions and productivity improvements from our technology and training investments continue to benefit sales growth. While the fourth quarter sales growth will reflect comparison against a strong period last year, Equipment Care’s solid

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underlying trends and operating improvements should yield a strong full year 2016 increase and drive further good growth ahead.  

CONSOLIDATED MARGIN PERFORMANCE

($ millions, unaudited)	2016	% sales	2015	% sales	% change
Gross Profit	$ 1,648.9	48.7%	$ 1,626.4	47.2%	1	%

Third quarter gross margins were 48.7%. When adjusted for special charges, third quarter 2016 gross margins were also 48.7% and rose 80 basis points above last year. The improvement was driven by lower delivered product costs, cost efficiencies and the decline in Global Energy (which on average has a lower gross profit margin).

($ millions, unaudited)	2016	% sales	2015	% sales	% change
SG&A	$ 1,071.6	31.6%	$ 1,070.7	31.1%	0	%

SG&A expenses represented 31.6% of third quarter sales, which is 50 basis points above last year, primarily reflecting the impact of acquisitions,  investments in the business and the decline in Global Energy (which on average has a lower SG&A ratio).

($ millions, unaudited)	2016	% sales	2015	% sales	% change
Consolidated Op. Inc.	$ 574.1	17.0%	$ 413.0	12.0%	39	%
Consolidated Fixed
Currency Op. Inc. (adj.)	$ 567.2	17.1%	$ 542.4	16.5%	5	%

Consolidated operating income margins were 17.0%. Adjusted for special charges, fixed currency operating income margins were 17.1%, rising 60 basis points over last year’s comparable margin. The strong margin expansion was driven by appropriate pricing, sales volume growth and cost savings in our

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Global Institutional, Global Industrial and Other segments, which were partially offset by a decline in Global Energy results.

SEGMENT MARGIN PERFORMANCE

($ millions - fixed currency, unaudited)	2016	% sales	2015	% sales	% change
Global Industrial Op. Inc.	$ 199.8	16.9%	$ 179.7	15.4%	11	%

Fixed currency operating income for the Global Industrial segment increased 11%. Acquisition adjusted fixed currency operating income grew 12% and margins increased 160 basis points to 16.9%. Lower delivered product costs, appropriate pricing and cost savings initiatives drove the increase.

($ millions - fixed currency, unaudited)	2016	% sales	2015	% sales	% change
Global Institutional Op. Inc.	$ 266.8	22.9%	$ 256.9	23.5%	4	%

Fixed currency operating income for the Global Institutional segment increased 4%. Acquisition adjusted fixed currency operating income grew 6% and margins increased 50 basis points to 24.0%. Results reflected appropriate pricing and sales volume gains which more than offset investments in the business and higher delivered product costs.

($ millions - fixed currency, unaudited)	2016	% sales	2015	% sales	% change
Global Energy Op. Inc.	$ 100.9	13.3%	$ 111.1	13.4%	(9)	%

Fixed currency Global Energy segment operating income decreased 9%.  Acquisition adjusted fixed currency operating income declined 8% and margins were steady at 13.2%. The decrease reflected delivered product cost savings, synergies and other cost reduction actions which more than offset

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reduced pricing, lower sales volumes and reduced plant overhead absorption (driven by the lower sales volumes).

($ millions - fixed currency, unaudited)	2016	% sales	2015	% sales	% change
Other Op. Inc.	$ 41.3	19.6%	$ 37.0	19.0%	12	%

Fixed currency operating income for the Other segment increased 12% and margins expanded 60 basis points due to pricing and sales volume gains. 

($ millions, unaudited)	2016	2015
Corporate
Special Gains/(Charges)	($3.2)	($166.5)
Corp. Expense	(41.6)	(42.3)
Total Corporate Expense	($44.8)	($208.8)

Corporate expense includes amortization expense of $42 million in both the third quarter of 2016 and 2015, related to the Nalco merger intangible assets. Corporate expense also includes special gains and charges. Total special gains and charges for the third quarter of 2016 were immaterial on a net basis. Special gains and charges for the third quarter of 2015, including the non-controlling interest impact of $11 million, were a net charge of $155 million ($145 million after-tax), and primarily consisted of an approximate $125 million charge related to the devaluation of a portion of our Venezuelan net assets.

TAX RATE, SHARES AND CONSOLIDATED INCOME

The reported income tax rate for the third quarter of 2016 was 25.5%, compared with the reported rate of 29.6% in the third quarter of 2015. Excluding the tax rate impact of the special gains and charges and discrete tax items, the adjusted tax rate was 25.2% in the third quarter of 2016,

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compared with 25.8% for the same period last year. The improved adjusted tax rate was primarily driven by the geographic mix of income, the permanent enactment of the research and development tax credit and global tax planning strategies.

Ecolab reacquired 0.7 million shares of its common stock during the third quarter.

The net of this performance is that Ecolab reported third quarter diluted earnings per share of $1.27 compared with $0.86 reported a year ago.  When adjusted for special gains and charges and discrete tax items in both years, adjusted earnings were equal to last year at $1.28.

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BALANCE SHEET, CASH FLOW AND LEVERAGE

Summary Balance Sheet and Selected Balance Sheet Measures

(unaudited)	September 30
($ millions)	2016	2015
Cash and cash eq.	$ 180.6	$ 184.8
Accounts receivable, net	2,349.6	2,450.0
Inventories	1,342.4	1,439.2
Other current assets	299.4	568.4
PP&E, net	3,292.9	3,212.2
Goodwill and intangibles	10,429.8	10,671.6
Other assets	484.1	357.1
Total assets	$ 18,378.8	$ 18,883.3
Short-term debt	$ 1,571.2	$ 1,009.1
Accounts payable	1,022.7	1,034.5
Other current liabilities	1,580.1	1,513.0
Long-term debt	5,091.4	5,753.7
Pension/Postretirement	914.5	1,146.8
Other liabilities	1,257.1	1,583.6
Total equity	6,941.8	6,842.6
Total liab. and equity	$ 18,378.8	$ 18,883.3

	September 30
(unaudited)	2016	2015
Total Debt/Total Capital	49.0%	49.7%
Net Debt/Total Capital	48.3%	49.0%
Net Debt/EBITDA	2.6	2.5
Net Debt/Adjusted EBITDA	2.3	2.3
The inputs to EBITDA reflect the trailing twelve months of activity for the period presented.

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Selected Cash Flow items

	Nine Months Ended
(unaudited)	September 30
($ millions)	2016	2015
Cash from op. activities	$ 1,491.7	$ 1,395.2
Depreciation	420.9	422.7
Amortization	217.2	224.4
Capital expenditures	478.6	551.6

Net debt to total capital was 48%, with the net debt to adjusted EBITDA ratio at 2.3 times. Year to date cash from operations showed a strong increase, primarily reflecting improved working capital metrics (accounts receivable, inventory and accounts payable).

FORECAST

Looking ahead, we remain focused on our long term fundamentals: driving fixed currency organic growth through the effective implementation of our successful Ecolab business model, which means offering the best products, backed by the best service, to yield the best results at the lowest total use cost to the customer. We will use this model, along with our well-developed corporate accounts and independent customer approach, to drive superior fixed currency organic growth in the expected turbulent economic environment. While we are carefully watching our costs, we continue to make key long term investments in our growth model and critical support systems. We also continue to invest in key acquisitions that improve our competitive set for the future.  

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As a result of this focus on our fundamentals, and as mentioned in the opening discussion, we look for our fourth quarter Global Institutional, Global Industrial and Other segments to continue to deliver good acquisition adjusted fixed currency sales growth, and expect lower Global Energy segment results. We expect the Venezuela devaluation and deconsolidation impact and foreign currency to have an unfavorable impact on sales of approximately one percentage point on fourth quarter sales and an unfavorable $0.02 per share impact to earnings growth. As a result, we expect fourth quarter adjusted earnings to be in the $1.23 to $1.33 range compared with $1.22 earned last year.   

We have narrowed our full year earnings to be in the $4.35 to $4.45 per share range from the prior $4.35 to $4.50 per share range. This forecast includes an expected unfavorable $0.30 per share currency impact. 

SUMMARY

In summary, we delivered on our forecast in the third quarter, while offsetting significant market and currency challenges and investing in our future. We will stay focused on driving fundamental growth in our businesses. We expect to deliver another year of superior earnings per share growth in 2016 before the impact of currency and the Venezuela devaluation and deconsolidation while continuing to make the right investments to sustain our future growth.

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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

This communication contains forward looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding our future financial and business performance and prospects, including forecasted 2016 fourth quarter and full-year financial and business results, energy market forecast, sales growth, performance against the market, innovation, investments, pricing, cost savings, foreign currency, Venezuela devaluation and deconsolidation impact, pending Anios acquisition and merger and acquisition opportunities. These statements are based on the current expectations of management of the Company. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties are set forth under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 and other public filings with the Securities and Exchange Commission (the “SEC”) and include the vitality of the markets we serve, including the impact of oil price fluctuations on the markets served by our Global Energy segment; the impact of economic factors such as the worldwide economy, capital flows, interest rates and foreign currency risk, including  reduced sales and earnings in other countries resulting from the weakening of local currencies versus the U.S. dollar; our ability to attract and retain high caliber management talent to lead our business; our ability to execute key business initiatives; potential information technology infrastructure failures and cybersecurity attacks; exposure to global economic, political and legal risks related to our international operations including with respect to our operations

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in Russia; the costs and effects of complying with laws and regulations, including those relating to the environment and to the manufacture, storage, distribution, sale and use of our products; the occurrence of litigation or claims, including related to the Deepwater Horizon oil spill; our ability to develop competitive advantages through innovation; difficulty in procuring raw materials or fluctuations in raw material costs; our substantial indebtedness; our ability to acquire complementary businesses and to effectively integrate such businesses; restraints on pricing flexibility due to contractual obligations; pressure on operations from consolidation of customers, vendors or competitors; public health epidemics; potential losses arising from the impairment of goodwill or other assets; potential loss of deferred tax assets; changes in tax law and unanticipated tax liabilities; potential chemical spill or release; potential class action lawsuits;  the loss or insolvency of a major customer or distributor; acts of war or terrorism; natural or man-made disasters; water shortages; severe weather conditions; and other uncertainties or risks reported from time to time in our reports to the SEC. In light of these risks, uncertainties and factors, the forward-looking events discussed in this communication may not occur. We caution that undue reliance should not be placed on forward-looking statements, which speak only as of the date made. Ecolab does not undertake, and expressly disclaims, any duty to update any forward-looking statement except as required by law.

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NON-GAAP FINANCIAL INFORMATION

This discussion and certain of the accompanying tables include financial measures that have not been calculated in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These non-GAAP financial measures include:

· fixed currency sales

· acquisition adjusted fixed currency sales

· adjusted cost of sales

· adjusted gross margin

· adjusted operating income

· adjusted fixed currency operating income

· adjusted fixed currency operating income margin

· EBITDA

· adjusted EBITDA

· adjusted tax rate

· adjusted net income attributable to Ecolab

· adjusted diluted earnings per share

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 cash flows and that these measures are useful for period-to-period comparison of results.

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Our non-GAAP financial measures for cost of sales, gross margin and operating income exclude the impact of special (gains) and charges, and our non-GAAP 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 associated with historical trends and future results. After tax special (gain) 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 the sum of net income including non-controlling interest, provision for income taxes, net interest expense, depreciation and amortization. Adjusted EBITDA is defined as the sum of EBITDA and special (gains) and charges impacting EBITDA. EBITDA and adjusted EBITDA are used as inputs to our net debt to EBITDA and net debt to adjusted EBITDA ratios. We view these ratios 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 supplemental discussion are based on translation into U.S. dollars at the fixed foreign currency exchange rates established by management at the beginning of 2016. Fixed currency amounts also reflect all Venezuelan bolivar operations, prior to the deconsolidation of our Venezuelan operations, at a Marginal Currency System (“SIMADI”) rate of approximately 200 bolivares to 1

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U.S. dollar, which was the approximate conversion rate for SIMADI at year end 2015. Fixed currency sales, acquisition adjusted fixed currency sales, adjusted fixed currency operating income and adjusted fixed currency operating income margin measures eliminate the impact of exchange rate fluctuations on our international sales, acquisition adjusted sales, adjusted operating income and adjusted operating income margin, respectively.  

Acquisition adjusted growth rates generally exclude the results of any acquired business from the first twelve months post acquisition and exclude the results of divested businesses from the previous twelve months prior to divestiture. Acquisition adjusted growth rates also exclude the Venezuelan results of operations from both the current period and comparable period of the prior year.

These non-GAAP financial measures are not in accordance with, or an alternative to, 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 GAAP measures included in this supplemental discussion. Reconciliations of our non-GAAP measures are included in the following "Supplemental Non-GAAP Reconciliations" and “Supplemental Diluted Earnings per Share Information” tables included in the third quarter 2016 supplemental discussion.

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SUPPLEMENTAL NON-GAAP RECONCILIATIONS

(unaudited)

	Third Quarter Ended				Nine Months Ended
(unaudited)	September 30				September 30
(millions, except percent)	2016		2015		2016		2015
Net Sales
Reported GAAP net sales	$ 3,386.1		$ 3,446.4		$ 9,800.7		$ 10,133.1
Effect of foreign currency translation	(66.4)		(163.7)		(153.1)		(560.9)
Non-GAAP fixed currency sales	$ 3,319.7		$ 3,282.7		$ 9,647.6		$ 9,572.2
Cost of Sales
Reported GAAP cost of sales	$ 1,737.2		$ 1,820.0		$ 5,153.8		$ 5,391.8
Special (gains) and charges	-		23.8		61.9		35.4
Non-GAAP adjusted cost of sales	$ 1,737.2		$ 1,796.2		$ 5,091.9		$ 5,356.4
Gross Margin
Reported gross margin	48.7	%	47.2	%	47.4	%	46.8	%
Non-GAAP adjusted gross margin	48.7	%	47.9	%	48.0	%	47.1	%
Operating Income
Reported GAAP operating income	$ 574.1		$ 413.0		$ 1,358.1		$ 1,238.5
Effect of foreign currency translation	(10.1)		(37.1)		(23.9)		(117.9)
Non-GAAP fixed currency operating income	$ 564.0		$ 375.9		$ 1,334.2		$ 1,120.6
Reported GAAP operating income	$ 574.1		$ 413.0		$ 1,358.1		$ 1,238.5
Special (gains) and charges	3.2		166.5		97.6		251.5
Non-GAAP adjusted operating income	577.3		579.5		1,455.7		1,490.0
Effect of foreign currency translation	(10.1)		(37.1)		(23.9)		(117.9)
Non-GAAP adjusted fixed currency operating income	$ 567.2		$ 542.4		$ 1,431.8		$ 1,372.1
Operating Income Margin
Reported GAAP operating income margin	17.0	%	12.0	%	13.9	%	12.2	%
Non-GAAP adjusted fixed currency operating income margin	17.1	%	16.5	%	14.8	%	14.3	%

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SUPPLEMENTAL NON-GAAP RECONCILIATIONS

(unaudited)

	Third Quarter Ended				Nine Months Ended
(unaudited)	September 30				September 30
(millions, except percent and per share)	2016		2015		2016		2015
Net Income Attributable to Ecolab
Reported GAAP net income attributable to Ecolab	$ 374.1		$ 257.8		$ 863.3		$ 793.2
Special (gains) and charges, after tax	(0.6)		145.4		60.8		211.8
Discrete tax net expense (benefit)	4.5		(19.2)		3.6		(56.0)
Non-GAAP adjusted net income attributable to Ecolab	$ 378.0		$ 384.0		$ 927.7		$ 949.0
Diluted Earnings per Share Attributable to Ecolab ("EPS")
Reported GAAP diluted EPS	$ 1.27		$ 0.86		$ 2.91		$ 2.63
Special (gains) and charges, after tax	0.00		0.48		0.20		0.70
Discrete tax net expense (benefit)	0.02		(0.06)		0.01		(0.19)
Non-GAAP adjusted diluted EPS	$ 1.28		$ 1.28		$ 3.12		$ 3.15
Provision for Income Taxes
Reported GAAP tax rate	25.5	%	29.6	%	24.7	%	24.9	%
Special gains and charges	0.6		(7.5)		1.0		(2.6)
Discrete tax items	(0.9)		3.7		(0.3)		4.3
Non-GAAP adjusted tax rate	25.2	%	25.8	%	25.4	%	26.6	%
EBITDA (trailing twelve months ended)
Net income including non-controlling interest	$ 1,098.0		$ 1,137.6
Provision for income taxes	324.3		378.1
Interest expense, net	258.6		243.3
Depreciation	557.7		563.4
Amortization	292.8		301.7
EBITDA	$ 2,531.4		$ 2,624.1
Special (gains) and charges impacting EBITDA	341.5		296.2
Adjusted EBITDA	$ 2,872.9		$ 2,920.3

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SUPPLEMENTAL DILUTED EARNINGS PER SHARE INFORMATION

(unaudited)

The table below provides a reconciliation of diluted earnings per share, as reported, to the non-GAAP measure of adjusted diluted earnings per share.

	First	Second	Six	Third	Nine	Fourth
	Quarter	Quarter	Months	Quarter	Months	Quarter	Year
	Ended	Ended	Ended	Ended	Ended	Ended	Ended
	Mar. 31	June 30	June 30	Sept. 30	Sept. 30	Dec. 31	Dec. 31
	2015	2015	2015	2015	2015	2015	2015
Diluted earnings per share, as reported (U.S. GAAP)	$ 0.77	$ 1.00	$ 1.77	$ 0.86	$ 2.63	$ 0.69	$ 3.32
Adjustments:
Special (gains) and charges (1)	0.02	0.20	0.22	0.48	0.70	0.55	1.25
Discrete tax expense (benefits) (2)	0.01	(0.13)	(0.12)	(0.06)	(0.19)	(0.02)	(0.21)
Adjusted diluted earnings per share (Non-GAAP)	$ 0.80	$ 1.08	$ 1.87	$ 1.28	$ 3.15	$ 1.22	$ 4.37

	First	Second	Six	Third	Nine	Fourth
	Quarter	Quarter	Months	Quarter	Months	Quarter	Year
	Ended	Ended	Ended	Ended	Ended	Ended	Ended
	Mar. 31	June 30	June 30	Sept. 30	Sept. 30	Dec. 31	Dec. 31
	2016	2016	2016	2016	2016	2016	2016
Diluted earnings per share, as reported (U.S. GAAP)	$ 0.77	$ 0.87	$ 1.64	$ 1.27	$ 2.91
Adjustments:
Special (gains) and charges (3)	0.01	0.19	0.21	0.00	0.20
Discrete tax expense (benefits) (4)	(0.02)	0.01	(0.00)	0.02	0.01
Adjusted diluted earnings per share (Non-GAAP)	$ 0.77	$ 1.08	$ 1.85	$ 1.28	$ 3.12

Per share amounts do not necessarily sum due to changes in shares outstanding and rounding.

(1) Special (gains) and charges for 2015 included restructuring charges of $1.6 million, $14.6 million, $10.0 million and $49.3 million, net of tax, in the first, second, third and fourth quarters, respectively. Special (gains) and charges for 2015 also included $3.2 million, $2.8 million, $2.4 million and $2.3 million of costs, net of tax, in the first, second, third and fourth quarters, respectively, related to Champion integration costs. Special (gains) and charges for 2015 also included $0.5 million, $0.1 million, $0.6 million and $0.1 million of costs, net of tax, in the first, second, third and fourth quarters, respectively, related to Nalco integration costs. Special (gains) and charges for 2015 also include charges of $30.2 million, $124.6 million, $80.9 million, net of tax, in the second, third and fourth quarters, respectively, related to Venezuelan charges. Special (gains) and charges for 2015 also included a charge of $15.4 million, net of tax, in the fourth quarter related to a fixed asset impairment. Special (gains) and charges for 2015 also included charges of $13.4 million, $7.8 million and $17.1 million, net of tax, in the second, third and fourth quarters, respectively, primarily related to litigation related charges, a loss on the sale of a portion of our Ecovation business and the net impact of inventory reserve and inventory cost policy harmonization efforts.

(2) The first quarter 2015 discrete tax net expense of $2.6 million was driven primarily by a change to a deferred tax liability resulting from the Naperville facility transaction. The second quarter 2015 discrete tax net benefit of $39.4 million was driven primarily from our ability to recognize a worthless stock deduction for the tax basis in a wholly owned domestic subsidiary. The third quarter 2015 discrete tax net benefit of $19.2 million was driven primarily by the release of valuation allowances on certain deferred tax assets and a refund claim for taxes paid in a prior period resulting from updated IRS regulations, offset partially by recognizing adjustments from filing our 2014 U.S. federal tax return. The fourth quarter discrete tax net benefit of $7.3 million was driven primarily by the finalization of prior year IRS audits, valuation allowance releases and other statute of limitation tax reserve releases.

(3) Special (gains) and charges for 2016 included restructuring charges of $1.8 million, net of tax in the first quarter, and gains related to restructuring of  $1.9 million and $7.2 million, net of tax, in the second and third quarters, respectively. Special (gains) and charges for 2016 also included a charge of $42.9 million, net of tax, during the second quarter associated with the downturn in the global energy market. Special (gains) and charges for 2016 also included a charge of $6.3 million, net of tax, during the second quarter related to other fixed asset impairments and inventory charges. Special (gains) and charges for 2016 also included a gain of $4.9 million, net of tax, during the second quarter related to the recovery of previously written off Venezuelan intercompany receivables. Special (gains) and charges for 2016 also included $2.6 million, $14.6 million and $6.6 million, net of tax, in the first, second and third quarters, respectively, related to other charges, including litigation related charges.

(4) The first quarter 2016 discrete tax items net benefit of $4.8 million was driven primarily by the release of reserves for uncertain tax positions due to expiration of statute of limitations in non-U.S. jurisdictions. The second quarter 2016 discrete tax items net expense of $3.9 million was driven by individually immaterial items, including adjustments to deferred tax asset and liability positions. The third quarter 2016 discrete tax items net expense of $4.5 million was driven primarily by recognizing adjustments from filing our 2015 U.S. federal income tax return, partially offset by settlement of international tax matters and remeasurement of certain deferred tax assets and liabilities resulting from the application of an updated tax rate in an international jurisdiction.

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