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) May  2, 2017

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.)

1 Ecolab Place, 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 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). 
Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition.

On May  2, 2017, Ecolab Inc. (“Ecolab”) announced earnings for the first quarter ended March 31, 2017.  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 first 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 May 2, 2017.

(99.2) Supplemental Data for First Quarter dated May 2, 2017.

(99.3) Supplemental Discussion for First Quarter dated May 2, 2017.

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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: May 2, 2017	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 May 2, 2017.	Filed herewith electronically.
(99.2)	Supplemental Data for First Quarter dated May 2, 2017.	Filed herewith electronically.
(99.3)	Supplemental Discussion for First Quarter dated May 2, 2017.	Filed herewith electronically.

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EX-99.1

Exhibit 99.1

News Release

Ecolab Inc.

1 Ecolab Place,

St. Paul, Minnesota  55102

FOR IMMEDIATE RELEASE

Michael J. Monahan(651) 250-2809

Andrew C. Hedberg(651) 250-2185

ECOLAB FIRST QUARTER REPORTED DILUTED EPS $0.86

ADJUSTED DILUTED EPS $0.80, +4%

EXPECTS FULL YEAR 2017 ADJUSTED DILUTED EPS OF $4.70 TO $4.90

FIRST QUARTER HIGHLIGHTS:

· Reported diluted EPS $0.86, +12%

· Adjusted diluted EPS $0.80, +4%, excluding special gains and charges and discrete tax items

· Discrete tax items included a $16 million ($0.05 per share) tax benefit resulting from the adoption of accounting changes regarding the treatment of excess tax benefits on share-based compensation (these are not included in our adjusted results)

· Acquisition adjusted Global Institutional, Global Industrial and Other segment sales growth of 3% along with a 17% Global Energy income increase and expected favorable interest/taxes/shares offset higher delivered product costs (which included an unfavorable $0.04 per share currency hedge year-on-year comparison)

2017 FORECAST:

· 2017 adjusted diluted EPS forecast of $4.70 to $4.90, +8% to 12%, as improving volume growth and pricing across all segments overcome delivered product cost headwinds which slow as the year progresses 

	First Quarter Ended March 31
	Reported				Adjusted *
(unaudited)	Public Currency Rates		%		Public Currency Rates		%
(millions, except per share)	2017	2016	Change		2017	2016	Change
Net sales	$ 3,161.6	$ 3,097.4	2	%	$ 3,161.6	$ 3,097.4	2	%
Operating income	373.3	371.5	0	%	381.0	377.8	1	%
Net income attributable to Ecolab	253.5	230.8	10	%	235.9	230.4	2	%
Diluted earnings per share	$ 0.86	$ 0.77	12	%	$ 0.80	$ 0.77	4	%
					Adjusted *
	Fixed Currency Rates *		%		Fixed Currency Rates		%
	2017	2016	Change		2017	2016	Change
Net sales	$ 3,160.5	$ 3,091.2	2	%	$ 3,160.5	$ 3,091.2	2	%
Operating income	372.6	368.3	1	%	380.3	374.6	2	%

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

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ST. PAUL, Minn., May 2, 2017: First quarter Global Institutional, Global Industrial and Other segment sales growth was offset by higher delivered product costs, while higher Global Energy segment profits and an expected lower tax rate, lower interest expense and fewer shares outstanding yielded a 4% increase in first quarter 2017 adjusted diluted earnings per share. 

CEO comment

Commenting on the quarter, Douglas M. Baker, Jr., Ecolab’s Chairman and Chief Executive Officer said, “The first quarter was a mixed start to what will be a good year. Earnings were in line with our expectations and Energy saw much better results. Sales improved in our Institutional, Industrial and Other segments, though not as much as expected, particularly in Institutional.  Profits benefited from new product innovation and cost savings, but were partially offset by higher than forecast delivered product costs (which included a previously discussed $0.04 per share unfavorable currency hedge year-on-year comparison, representing a 5percentage point negative impact to EPS growth).

“We expect steady growth improvement over the balance of 2017.  We look for our Institutional, Industrial and Other segments to show improving sales and profit results for the full year versus 2016, with the second half outperforming the first half, as new business, pricing, cost savings and product innovation more than offset higher delivered product costs. The Energy segment’s drilling and completion business is expected to see continued strong growth in 2017 following the first quarter’s double-digit increase as it benefits from the recovery in the North American energy industry, and we look for an improving Energy production business performance in the second half.  In addition, our currency hedge headwind is not expected to be significant in the second half. 

“We remain confident in our full year outlook and expect better top and bottom line growth over the balance of the year.  Our growth investments are driving business wins, we are implementing appropriate pricing to offset the higher delivered product costs and we are driving better cost efficiencies.  We look for improving sales momentum and margin improvement to enable us to deliver strong earnings growth in 2017 and good returns to shareholders this year and for the years ahead.”

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First Quarter 2017 Consolidated Results

Ecolab's first quarter reported and fixed currency sales both increased 2%. Acquisition adjusted fixed currency sales increased 2% when compared to the prior year. 

First quarter 2017 reported operating income was flat, while fixed currency operating income increased 1%. Both reported first quarter 2017 and 2016 results include special gains and charges. Excluding special gains and charges, first quarter 2017 adjusted operating income increased 1%. Excluding special gains and charges and at fixed currency rates, adjusted fixed currency operating income increased 2%. The increase in adjusted fixed currency operating income was driven by growth in Global Energy income as well as pricing, volume growth and cost savings initiatives in our Global Institutional, Global Industrial and Other segments, which more than offset higher delivered product costs (which included a $0.04 per share unfavorable currency hedge year-on-year comparison, representing a 5 percentage point negative impact to EPS growth) and investments in the business during the quarter.

First quarter 2017 reported net income attributable to Ecolab increased 10% and reported diluted earnings per share increased 12%. Excluding special gains and charges and discrete tax items, adjusted net income attributable to Ecolab increased 2% and adjusted diluted earnings per share rose 4% when compared against first quarter 2016. Currency translation had an insignificant impact on first quarter 2017 adjusted diluted earnings per share.

The reported income tax rate for the first quarter of 2017 was 17.4% and compared with the reported rate of 24.0% in the first quarter of 2016. The decrease in our reported tax rate is driven primarily by discrete tax items, which included a $16 million ($0.05 per share) tax benefit resulting from the adoption of accounting changes regarding the treatment of excess tax benefits on share-based compensation. Excluding the tax rate impact of the special gains and charges and discrete tax items, the adjusted tax rate was 24.9% in the first quarter of 2017 and compared with 25.7% for the same period last year. The decrease in our adjusted tax rate was primarily driven by global tax planning strategies.  

Ecolab reacquired 2.6 million shares of its common stock during the first quarter of 2017. The reacquired shares included 2.1 million shares acquired as part of an accelerated share repurchase undertaken during the quarter.

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First Quarter 2017 Segment Review

Global Industrial
(unaudited)	First Quarter Ended March 31						Acq. Adj.
(millions)	2017		2016		% Change		% Change
Fixed currency
Sales	$ 1,128.6		$ 1,095.5		3	%	3	%
Operating income	127.0		131.5		(3)	%	(3)	%
Operating income margin	11.3	%	12.0	%
Acq. adj. operating income margin	11.3	%	12.0	%
Public currency
Sales	$ 1,129.5		$ 1,100.7		3	%
Operating income	127.4		133.4		(4)	%

Global Industrial fixed currency sales rose 3% led by Paper and improving growth in Food & Beverage. North America and Latin America led the Global Industrial regional sales growth. Acquisition adjusted fixed currency operating income declined 3% as improved pricing and sales volume gains were more than offset by higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison); results also reflect the comparison to a strong quarter last year.

Global Institutional
(unaudited)	First Quarter Ended March 31						Acq. Adj.
(millions)	2017		2016		% Change		% Change
Fixed currency
Sales	$ 1,078.1		$ 1,037.4		4	%	3	%
Operating income	192.1		192.7		0	%	(2)	%
Operating income margin	17.8	%	18.6	%
Acq. adj. operating income margin	17.9	%	18.8	%
Public currency
Sales	$ 1,077.3		$ 1,041.0		3	%
Operating income	192.1		193.4		(1)	%

Global Institutional acquisition adjusted fixed currency sales grew 3%, led by Specialty and Healthcare. Sales for the segment showed good growth in Latin America and North America. Acquisition adjusted fixed currency operating income decreased 2% as pricing and sales volume gains were more than offset by innovation and customer investments and higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison); results also reflect the comparison to a strong quarter last year.   

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Global Energy
(unaudited)	First Quarter Ended March 31						Acq. Adj.
(millions)	2017		2016		% Change		% Change
Fixed currency
Sales	$ 757.0		$ 771.6		(2)	%	(2)	%
Operating income	73.0		62.6		17	%	21	%
Operating income margin	9.6	%	8.1	%
Acq. adj. operating income margin	9.5	%	7.7	%
Public currency
Sales	$ 757.9		$ 767.3		(1)	%
Operating income	73.2		62.8		17	%

Global Energy fixed currency sales declined 2%, as double digit growth in the drilling and completion business and modest gains in the downstream business were more than offset by a modest decline in our production business. Acquisition adjusted fixed currency operating income increased 21%, benefiting from cost reduction actions and the comparison to a weak quarter last year (which included the impact from the devaluation of the Angolan Kwanza) that more than offset lower pricing and higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison).

Other
(unaudited)	First Quarter Ended March 31						Acq. Adj.
(millions)	2017		2016		% Change		% Change
Fixed currency
Sales	$ 196.8		$ 186.7		5	%	5	%
Operating income	29.9		29.6		1	%	1	%
Operating income margin	15.2	%	15.9	%
Acq. adj. operating income margin	15.2	%	15.9	%
Public currency
Sales	$ 196.9		$ 188.4		5	%
Operating income	30.0		30.1		0	%

The Other segment fixed currency sales increased 5% led by Pest Elimination. Sales for the segment showed good growth in North America. Fixed currency operating income increased 1% as pricing and sales volume gains were offset by field investments. 

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Corporate

Corporate segment expense includes amortization expense of $42 million in both the first quarter of 2017 and 2016 related to the Nalco merger intangible assets. Corporate expense also includes special gains and charges. Total special gains and charges for the first quarter of 2017 were a net charge of $8 million ($5 million after tax) associated with Anios and Swisher acquisition and integration costs. Special gains and charges for the first quarter of 2016 were $6 million ($4 million after tax).

Business Outlook

2017

Ecolab expects full year 2017 adjusted diluted earnings per share in the $4.70 to $4.90 range, rising 8% to 12%. We expect the second half of the year to show better earnings growth comparisons than the first half.

When compared with our 2016 performance, we expect improved acquisition adjusted fixed currency sales growth in our Global Institutional, Global Industrial and Other segments with stabilizing Global Energy segment sales. We anticipate a comparable adjusted gross margin as pricing and cost efficiency actions offset higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison in the first half), with a similar selling, general and administrative (“SG&A”) ratio to sales, lower interest expense and a slightly improved adjusted tax rate versus 2016.

Adjusted diluted earnings per share do not reflect the net impact of future special gains and charges or discrete tax items. We expect full year special charges, including acquisition and integration costs associated with Anios and Swisher, to be approximately $0.06 per share. Discrete tax items are expected to be favorable, resulting from adoption of accounting changes with regards to tax benefits on share-based compensation. The benefit from stock compensation (which is subject to variations in the stock price and the timing of stock option exercises) is estimated to be $0.12 to $0.16 per share for the full year 2017.  Other than the discrete tax items and special gains and charges previously noted, we are not forecasting other such amounts as they are not currently quantifiable. 

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At current rates of exchange, we expect foreign currency translation to have an unfavorable impact of approximately 1 percentage point on full year sales and an estimated 1 percentage point (approximately $0.05 per share) unfavorable impact on diluted earnings per share.

Our detailed outlook for the full year of 2017 is as follows:

Adjusted Gross Margin, excluding special gains and charges	approx. 48%
SG&A % of Sales	approx. 32% - 33%
Interest expense, net	approx. $250 million
Adjusted tax rate	approx. 24% - 25%
Noncontrolling interest	approx. $0.05
Adjusted EPS, excluding special gains and charges	$4.70 - $4.90
Diluted shares	approx. 294 million

Reported 2016 diluted earnings per share of $4.14 included special gains and charges and discrete tax items. Excluding these items, 2016 adjusted diluted earnings per share were $4.37.

2017 — Second Quarter

Ecolab expects second quarter 2017 adjusted diluted earnings per share in the $1.08 to $1.15 range, compared with adjusted diluted earnings per share of $1.08 a year ago.

We expect improved acquisition adjusted fixed currency sales growth in our Global Institutional, Global Industrial and Other segments with comparable Global Energy segment sales. Higher delivered product costs (which will include an unfavorable $0.04 per share currency hedge year-on-year comparison, representing a 4% negative impact to EPS growth) are expected to have an increased impact in the quarter, particularly in the Global Industrial and Global Energy segments. Global Energy will also reflect the rebuilding of compensation reduced in 2016’s cost reduction actions which, when combined with the higher delivered product costs, is expected to yield lower Global Energy operating income than last year’s second quarter.  We expect consolidated gross margins to be slightly lower than last year, with similar selling, general and administrative (“SG&A”) ratio to sales, lower interest expense and a slightly improved adjusted tax rate versus 2016. 

We expect second quarter special charges, including acquisition and integration costs associated with Anios and Swisher, to be approximately $0.02 per share. Discrete tax items are expected to be favorable resulting from the adoption of accounting standards with regards to tax benefits on share-based compensation. The benefit from stock compensation (which is subject to variations in the stock price and the timing of stock option exercises) is estimated to be $0.03 to $0.05 per share in

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the second quarter. Other than the discrete tax items and special gains and charges previously noted, we are not forecasting other such amounts as they are not currently quantifiable.   

At current rates of exchange, we expect foreign currency to have an unfavorable 2 percentage point (approximately $0.02) impact on diluted earnings per share.

Our detailed outlook for the second quarter of 2017 is as follows:

Adjusted Gross Margin, excluding special gains and charges	47% to 48%
SG&A % of Sales	approx. 33%
Interest expense, net	approx. $60 million
Adjusted tax rate	approx. 24% - 25%
Noncontrolling interest	approx. $0.01
Adjusted EPS, excluding special gains and charges	$1.08 - $1.15
Diluted shares	approx. 294 million

Reported second quarter 2016 diluted earnings per share of $0.87 included special gains and charges and discrete tax items. Excluding these items, second quarter 2016 adjusted diluted earnings per share were $1.08.

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 2016 sales of $13 billion and 48,000 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.  

Ecolab will host a live webcast to review the first 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 another compatible streaming media player.

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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 2017 second 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, pricing, delivered product costs, energy market conditions, foreign currency, 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; 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

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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

· adjusted gross margin

· fixed currency operating income

· fixed currency operating income margin

· adjusted operating income

· adjusted fixed currency operating income

· adjusted fixed currency operating income margin

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· acquisition adjusted fixed currency operating income

· acquisition 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 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, which eliminate the translation impact of exchange rate fluctuations on our international results. 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 2017. We also provide our segment results based on public currency rates for informational purposes.

Acquisition adjusted growth rates 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 sales to our Venezuelan deconsolidated subsidiaries from both the current period and comparable period of the prior year.

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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)

	First Quarter Ended
	March 31		%
(millions, except per share)	2017	2016	Change
Net sales	$ 3,161.6	$ 3,097.4	2	%
Cost of sales (1)	1,691.5	1,631.4	4	%
Selling, general and administrative expenses	1,090.6	1,088.2	0	%
Special (gains) and charges (1)	6.2	6.3
Operating income	373.3	371.5	0	%
Interest expense, net	62.5	66.1	(5)	%
Income before income taxes	310.8	305.4	2	%
Provision for income taxes	54.0	73.4	(26)	%
Net income including noncontrolling interest	256.8	232.0	11	%
Net income attributable to noncontrolling interest (1)	3.3	1.2
Net income attributable to Ecolab	$ 253.5	$ 230.8	10	%
Earnings attributable to Ecolab per common share
Basic	$ 0.87	$ 0.78	12	%
Diluted	$ 0.86	$ 0.77	12	%
Weighted-average common shares outstanding
Basic	290.6	294.4	(1)	%
Diluted	295.0	298.3	(1)	%
(1) Special (gains) and charges in the Consolidated Statement of Income above include the following:
(millions)	2017	2016
Cost of sales
Inventory fair value step-up	$ 1.5	$ -
Special (gains) and charges
Restructuring related activities	(0.3)	3.0
Acquisition and integration costs	6.3	2.3
Other	0.2	1.0
Subtotal	6.2	6.3
Total special (gains) and charges	$ 7.7	$ 6.3

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ECOLAB INC.

REPORTABLE SEGMENT INFORMATION

 (unaudited)

	First Quarter Ended March 31
	Fixed Currency Rates				Public Currency Rates
			%				%
(millions)	2017	2016	Change		2017	2016	Change
Net Sales
Global Industrial	$ 1,128.6	$ 1,095.5	3	%	$ 1,129.5	$ 1,100.7	3	%
Global Institutional	1,078.1	1,037.4	4	%	1,077.3	1,041.0	3	%
Global Energy	757.0	771.6	(2)	%	757.9	767.3	(1)	%
Other	196.8	186.7	5	%	196.9	188.4	5	%
Subtotal at fixed currency rates	3,160.5	3,091.2	2	%	3,161.6	3,097.4	2	%
Currency impact	1.1	6.2	*		-	-	*
Consolidated reported GAAP net sales	$ 3,161.6	$ 3,097.4	2	%	$ 3,161.6	$ 3,097.4	2	%
Operating Income
Global Industrial	$ 127.0	$ 131.5	(3)	%	$ 127.4	$ 133.4	(4)	%
Global Institutional	192.1	192.7	0	%	192.1	193.4	(1)	%
Global Energy	73.0	62.6	17	%	73.2	62.8	17	%
Other	29.9	29.6	1	%	30.0	30.1	0	%
Corporate	(49.4)	(48.1)	*		(49.4)	(48.2)	*
Subtotal at fixed currency rates	372.6	368.3	1	%	373.3	371.5	0	%
Currency impact	0.7	3.2	*		-	-	*
Consolidated reported GAAP operating income	$ 373.3	$ 371.5	0	%	$ 373.3	$ 371.5	0	%

* 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. 

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ECOLAB INC.

CONSOLIDATED BALANCE SHEET

(unaudited)

	March 31	December 31	March 31
(millions)	2017	2016	2016
Assets
Current assets
Cash and cash equivalents	$ 212.1	$ 327.4	$ 268.5
Accounts receivable, net	2,358.0	2,341.2	2,248.8
Inventories	1,428.3	1,319.4	1,386.1
Other current assets	308.9	291.4	291.5
Total current assets	4,307.3	4,279.4	4,194.9
Property, plant and equipment, net	3,424.9	3,365.0	3,227.0
Goodwill	6,947.8	6,383.0	6,474.9
Other intangible assets, net	4,086.0	3,817.8	4,031.1
Other assets	457.0	485.0	413.9
Total assets	$ 19,223.0	$ 18,330.2	$ 18,341.8
Liabilities and Equity
Current liabilities
Short-term debt	$ 1,699.4	$ 541.3	$ 1,756.6
Accounts payable	1,039.3	983.2	986.1
Compensation and benefits	463.4	516.3	435.5
Income taxes	95.2	87.4	58.5
Other current liabilities	908.0	891.2	922.8
Total current liabilities	4,205.3	3,019.4	4,159.5
Long-term debt	5,841.6	6,145.7	5,082.8
Postretirement health care and pension benefits	1,014.4	1,019.2	1,112.4
Deferred income taxes	1,076.2	970.2	1,106.4
Other liabilities	207.0	204.8	228.6
Total liabilities	12,344.5	11,359.3	11,689.7
Equity
Common stock	353.5	352.6	351.0
Additional paid-in capital	5,284.3	5,270.8	5,088.0
Retained earnings	7,123.1	6,975.0	6,288.3
Accumulated other comprehensive loss	(1,636.1)	(1,712.9)	(1,536.1)
Treasury stock	(4,315.4)	(3,984.4)	(3,609.8)
Total Ecolab shareholders’ equity	6,809.4	6,901.1	6,581.4
Noncontrolling interest	69.1	69.8	70.7
Total equity	6,878.5	6,970.9	6,652.1
Total liabilities and equity	$ 19,223.0	$ 18,330.2	$ 18,341.8

15

ECOLAB INC.

SUPPLEMENTAL NON-GAAP RECONCILIATIONS

(unaudited)

	First Quarter Ended
	March 31
(millions, except percent and per share)	2017		2016
Net sales
Reported GAAP net sales	$ 3,161.6		$ 3,097.4
Effect of foreign currency translation	(1.1)		(6.2)
Non-GAAP fixed currency sales	$ 3,160.5		$ 3,091.2
Cost of sales
Reported GAAP cost of sales	$ 1,691.5		$ 1,631.4
Special (gains) and charges	1.5		0.0
Non-GAAP cost of sales	$ 1,690.0		$ 1,631.4
Gross margin
Reported GAAP gross margin	46.5	%	47.3	%
Non-GAAP adjusted gross margin	46.5	%	47.3	%
Operating income
Reported GAAP operating income	$ 373.3		$ 371.5
Effect of foreign currency translation	(0.7)		(3.2)
Non-GAAP fixed currency operating income	$ 372.6		$ 368.3
Reported GAAP operating income	$ 373.3		$ 371.5
Special (gains) and charges	7.7		6.3
Non-GAAP adjusted operating income	381.0		377.8
Effect of foreign currency translation	(0.7)		(3.2)
Non-GAAP adjusted fixed currency operating income	$ 380.3		$ 374.6
Operating income margin
Reported GAAP operating income margin	11.8	%	12.0	%
Non-GAAP adjusted fixed currency operating income margin	12.0	%	12.1	%
Net Income Attributable to Ecolab
Reported GAAP net income attributable to Ecolab	$ 253.5		$ 230.8
Special (gains) and charges, after tax	5.2		4.4
Discrete tax net expense (benefit)	(22.8)		(4.8)
Non-GAAP adjusted net income attributable to Ecolab	$ 235.9		$ 230.4
Diluted Earnings per Share Attributable to Ecolab ("EPS")
Reported GAAP diluted EPS	$ 0.86		$ 0.77
Special (gains) and charges, after tax	0.02		0.01
Discrete tax net expense (benefit)	(0.08)		(0.02)
Non-GAAP adjusted diluted EPS	$ 0.80		$ 0.77
Provision for Income Taxes
Reported GAAP tax rate	17.4	%	24.0	%
Special gains and charges	0.3		0.2
Discrete tax items	7.2		1.5
Non-GAAP adjusted tax rate	24.9	%	25.7	%

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
	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	$ 1.24	$ 4.14
Adjustments:
Special (gains) and charges (1)	0.01	0.19	0.21	0.00	0.20	0.01	0.21
Discrete tax expense (benefits) (2)	(0.02)	0.01	(0.00)	0.02	0.01	0.00	0.01
Adjusted diluted earnings per share (Non-GAAP)	$ 0.77	$ 1.08	$ 1.85	$ 1.28	$ 3.12	$ 1.25	$ 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
	2017	2017	2017	2017	2017	2017	2017
Diluted earnings per share, as reported (U.S. GAAP)	$ 0.86
Adjustments:
Special (gains) and charges (3)	0.02
Discrete tax expense (benefits) (4)	(0.08)
Adjusted diluted earnings per share (Non-GAAP)	$ 0.80

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

(1) 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, $7.2 million, $3.5 million net of tax, in the second, third and fourth quarters, respectively. Special (gains) and charges for 2016 also included a charge of $42.9 million and $7.1 million net of tax, during the second and fourth quarters, respectively, 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 $4.6 million, net of tax, during the fourth quarter of 2016, related to inventory cost policy harmonization efforts, initiated in 2015. 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, $6.6 million and $2.6 million, net of tax, in the first, second, third and fourth quarters, respectively, related to other charges, including litigation related charges.  

(2) The first quarter 2016 discrete tax items net benefits of $4.8 million were 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 expenses of $3.9 million were driven by individually insignificant items, including adjustments to deferred tax asset and liability positions. The third quarter 2016 discrete tax items net expenses of $4.5 million were 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. The fourth quarter discrete tax items net expenses of $0.3 million were driven by individually insignificant items, including tax charges related to optimizing our business structure and settlement of international tax matters, partially offset by valuation allowance releases and other adjustments.  

(3) Special (gains) and charges for 2017 primarily include Anios and Swisher acquisition and integration costs. 

(4) The first quarter 2017 discrete tax items net benefits of $22.8 million were driven primarily by a $16.0 million tax benefit associated with the accounting change for stock compensation for excess tax benefits. The remaining $6.8 million discrete tax benefits were driven primarily by the release of reserves for uncertain tax positions due to the expiration of statute of limitations in non-U.S. jurisdictions.

17

EX-99.2

Exhibit 99.2

First Quarter 2017
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 2017 second quarter and full year business and financial results, foreign currency impact, energy market conditions, pricing, capital investments and business acquisitions. These statements are based on the current expectations of management of Ecolab Inc (“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 May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 2

1Q 2017 Overview

◢Earnings:

§ Reported diluted EPS $0.86, +12% versus last year; adjusted diluted EPS $0.80, +4% versus last year

§ Discrete tax items included a $16 million ($0.05 per share) tax benefit resulting from the adoption of accounting changes regarding the treatment of excess tax benefits on share-based compensation (these are not included in our adjusted results)

◢Sales:

§ Reported sales +2%; fixed currency and acquisition adjusted fixed currency sales +2%

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

§ New business growth and new product introductions drove share gains

◢Operating Margin:

§ Reported operating margin -20 bps; adjusted fixed currency operating margin -10 bps 

§ Growth in Global Energy income as well as pricing, volume growth and cost savings initiatives in our Global Institutional, Global Industrial and Other segments were more than offset by higher delivered product costs (which included a $0.04 per share unfavorable currency hedge year-on-year comparison, representing a 5 percentage point negative impact to EPS growth) and investments in the business during the quarter    

◢Outlook:

§ 2017: Adjusted diluted EPS of $4.70 to $4.90, +8% to 12%

§  2Q: Adjusted diluted EPS of $1.08 to $1.15, +0% to 6%

Please see Ecolab’s news release dated May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 3

1Q 2017 Results

	First Quarter Ended March 31
	Reported				Adjusted *
(unaudited)	Public Currency Rates		%		Public Currency Rates		%
(millions, except per share)	2017	2016	Change		2017	2016	Change
Net sales	$ 3,161.6	$ 3,097.4	2	%	$ 3,161.6	$ 3,097.4	2	%
Operating income	373.3	371.5	0	%	381.0	377.8	1	%
Net income attributable to Ecolab	253.5	230.8	10	%	235.9	230.4	2	%
Diluted earnings per share	$ 0.86	$ 0.77	12	%	$ 0.80	$ 0.77	4	%
					Adjusted *
	Fixed Currency Rates *		%		Fixed Currency Rates		%
	2016	2016	Change		2017	2016	Change
Net sales	$ 3,160.5	$ 3,091.2	2	%	$ 3,160.5	$ 3,091.2	2	%
Operating income	372.6	368.3	1	%	380.3	374.6	2	%

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

Please see Ecolab’s news release dated May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 4

1Q 2017 Sales Growth Detail

	FixedRate	Acq./Div.Adj.
GlobalIndustrial	%Change	%Change	Consolidated	%Change
Water	2%	1%	Volume & mix	1%
Food & Beverage	3%	3%	Pricing	1%
Paper	4%	4%	Subtotal	2%
Textile Care	4%	4%	Acq./Div.	0%
Life Sciences	8%	8%	Fixed currency growth	2%
Total Global Industrial	3%	3%	Currency impact	0%
			Total	2%
Global Institutional
Institutional	1%	2%
Specialty	5%	5%
Healthcare	22%	5%
Total Global Institutional	4%	3%
Global Energy	-2%	-2%
Other
Pest Elimination	6%	6%
Equipment Care	4%	4%
Total Other	5%	5%

Amounts in the tables above may reflect rounding.  Acq./Div. Adj. excludes the impact of acquisitions and divestitures and sales to our deconsolidated Venezuelan subsidiaries.

Please see Ecolab’s news release dated May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 5

1Q 2017 Income Statement / Margins

($millions, unaudited)	2017	%sales	2016	%sales	%change		Comments*
Gross Profit	$ 1,470.1	46.5%	$ 1,466.0	47.3%	0	%	The 80 bps decline was the result of higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison), which more than offset pricing and cost savings.
SG&A	1,090.6	34.5%	1,088.2	35.1%	0	%	The 60 bps improvement was driven by sales volume leverage and cost savings, which more than offset investments in the business.
Operating Income (fixed FX)
Global Industrial	127.0	11.3%	131.5	12.0%	(3)	%	2017 acquisition adjusted fixed currency margins were 11.3% vs. 12.0% in 2016. Margins decreased 70 bps as improved pricing and sales volume gains were more than offset by higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison); results also reflect the comparison to a strong quarter last year.
Global Institutional	192.1	17.8%	192.7	18.6%	0	%	2017 acquisition adjusted fixed currency margins were 17.9% vs. 18.8% in 2016. Margins decreased 90 bps as pricing and sales volume gains were more than offset by innovation and customer investments and higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison); results also reflect the comparison to a strong quarter last year.
Global Energy	73.0	9.6%	62.6	8.1%	17	%	2017 acquisition adjusted fixed currency margins were 9.5% vs. 7.7% in 2016 reflecting cost reduction actions and the comparison to a weak quarter last year (which included the impact from the devaluation of the Angolan Kwanza) that more than offset lower pricing and higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison).
Other	29.9	15.2%	29.6	15.9%	1	%	The 70 bps reduction reflected pricing and sales volume gains that were more than offset by field investments.
Subtotal at fixed FX	422.0	13.4%	416.4	13.5%	1	%
Corporate
Special Gains/(Ch.)	(7.7)		(6.3)				2017: Primarily Anios and Swisher acquisition and integration charges 2016: Primarily restructuring and Swisher acquisition and integration charges
Corp. Expense	(41.7)		(41.8)				Includes Nalco intangible amortization of $42 million in 2017 and 2016.
Total Corporate Exp.	(49.4)		(48.1)
FX	0.7		3.2
Consolidated Op. Inc.	$ 373.3	11.8%	$ 371.5	12.0%	0	%	2017 adjusted fixed operating currency margin was 12.0%, a 10 bps decrease vs. the equivalent 2016 margin of 12.1%. The margin decline reflected growth in Global Energy income as well as pricing, volume growth and cost savings initiatives in our Global Institutional, Global Industrial and Other segments, which were more than offset by higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison) and investments in the business during the quarter.

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

Please see Ecolab’s news release dated May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 6

1Q 2017 Balance Sheet / Cash Flow

SummaryBalanceSheet
	March 31			March 31
(millions, unaudited)	2017	2016	(millions, unaudited)	2017	2016
Cash and cash eq.	$ 212.1	$ 268.5	Short-term debt	$ 1,699.4	$ 1,756.6
Accounts receivable, net	2,358.0	2,248.8	Accounts payable	1,039.3	986.1
Inventories	1,428.3	1,386.1	Other current liabilities	1,466.6	1,416.8
Other current assets	308.9	291.5	Long-term debt	5,841.6	5,082.8
PP&E, net	3,424.9	3,227.0	Pension/Postretirement	1,014.4	1,112.4
Goodwill and intangibles	11,033.8	10,506.0	Other liabilities	1,283.2	1,335.0
Other assets	457.0	413.9	Total equity	6,878.5	6,652.1
Total assets	$ 19,223.0	$ 18,341.8	Total liab. and equity	$ 19,223.0	$ 18,341.8
SelectedCashFlowitems			SelectedBalanceSheetmeasures
	Three Months Ended
	March 31			March 31
(millions, unaudited)	2017	2016	(unaudited)	2017	2016
Cash from op. activities (*)	$ 425.7	$ 472.5	Total Debt/Total Capital	52.3%	50.7%
Depreciation	142.2	139.6	Net Debt/Total Capital	51.6%	49.7%
Amortization	73.8	72.6	Net Debt/EBITDA(**)	2.6	2.7
Capital expenditures	152.0	140.1	Net Debt/Adjusted EBITDA(**)	2.5	2.3

(*) The decrease in cash from operating activities in the first quarter of 2017 reflects the timing of prior year tax payments.

(**) 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 May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 7

2017 Outlook

Focus

◢Drive strong execution

§ Maintain aggressive new business efforts

§ Continue strong innovation emphasis

§ Offset raw material inflation through pricing

◢  Fully capitalize on energy market improvement

◢Continue to drive supply chain efficiency programs to help drive ongoing margin improvement

◢Continue to fully fund innovation, digital and enterprise system investments

◢Capitalize on the right M&A opportunities

Please see Ecolab’s news release dated May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 8

Appendix

Please see Ecolab’s news release dated May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 9

Non-GAAP Financial Measures

	First Quarter Ended
(unaudited)	March 31
(millions, except percent)	2017		2016
Net Sales
Reported GAAP net sales	$ 3,161.6		$ 3,097.4
Effect of foreign currency translation	(1.1)		(6.2)
Non-GAAP fixed currency sales	$ 3,160.5		$ 3,091.2
Cost of Sales
Reported GAAP cost of sales	$ 1,691.5		$ 1,631.4
Special (gains) and charges	1.5		0.0
Non-GAAP adjusted cost of sales	$ 1,690.0		$ 1,631.4
Gross Margin
Reported gross margin	46.5	%	47.3	%
Non-GAAP adjusted gross margin	46.5	%	47.3	%
Operating Income
Reported GAAP operating income	$ 373.3		$ 371.5
Effect of foreign currency translation	(0.7)		(3.2)
Non-GAAP fixed currency operating income	$ 372.6		$ 368.3
Reported GAAP operating income	$ 373.3		$ 371.5
Special (gains) and charges	7.7		6.3
Non-GAAP adjusted operating income	381.0		377.8
Effect of foreign currency translation	(0.7)		(3.2)
Non-GAAP adjusted fixed currency operating income	$ 380.3		$ 374.6
Operating Income Margin
Reported GAAP operating income margin	11.8	%	12.0	%
Non-GAAP adjusted fixed currency operating income margin	12.0	%	12.1	%

Please see Ecolab’s news release dated May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 10

Non-GAAP Financial Measures

	First Quarter Ended
(unaudited)	March 31
(millions, except percent and per share)	2017		2016
Net Income Attributable to Ecolab
Reported GAAP net income attributable to Ecolab	$ 253.5		$ 230.8
Special (gains) and charges, after tax	5.2		4.4
Discrete tax net expense (benefit)	(22.8)		(4.8)
Non-GAAP adjusted net income attributable to Ecolab	$ 235.9		$ 230.4
Diluted Earnings per Share Attributable to Ecolab ("EPS")
Reported GAAP diluted EPS	$ 0.86		$ 0.77
Special (gains) and charges, after tax	0.02		0.01
Discrete tax net expense (benefit)	(0.08)		(0.02)
Non-GAAP adjusted diluted EPS	$ 0.80		$ 0.77
Provision for Income Taxes
Reported GAAP tax rate	17.4	%	24.0	%
Special gains and charges	0.3		0.2
Discrete tax items	7.2		1.5
Non-GAAP adjusted tax rate	24.9	%	25.7	%
EBITDA (trailing twelve months ended)
Net income including non-controlling interest	$ 1,271.9		$ 1,013.8
Provision for income taxes	383.9		284.1
Interest expense, net	261.0		247.2
Depreciation	571.7		557.0
Amortization	287.2		297.5
EBITDA	$ 2,775.7		$ 2,399.6
Special (gains) and charges impacting EBITDA	106.9		493.3
Adjusted EBITDA	$ 2,882.6		$ 2,892.9

Please see Ecolab’s news release dated May 2, 2017 for additional information, including additional discussion on use of Non-GAAP financial measures. 11

EX-99.3

Exhibit 99.3

ECOLAB FIRST QUARTER 2017

1Q 2017 Overview

◢Earnings:

§ Reported diluted EPS $0.86, +12% versus last year; adjusted diluted EPS $0.80, +4% versus last year

§ Discrete tax items included a $16 million ($0.05 per share) tax benefit resulting from the adoption of accounting changes regarding the treatment of excess tax benefits on share-based compensation (these are not included in our adjusted results)

◢Sales:

§ Reported sales +2%; fixed currency and acquisition adjusted fixed currency sales +2%

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

§ New business growth and new product introductions drove share gains

◢Operating Margin:

§ Reported operating margin -20 bps; adjusted fixed currency operating margin -10 bps 

§ Growth in Global Energy income as well as pricing, volume growth and cost savings initiatives in our Global Institutional, Global Industrial and Other segments were more than offset by higher delivered product costs (which included a $0.04 per share unfavorable currency hedge year-on-year comparison, representing a 5 percentage point negative impact on EPS growth) and investments in the business during the quarter

◢Outlook:

§ 2017: Adjusted diluted EPS of $4.70 to $4.90, +8% to 12%

§ 2Q: Adjusted diluted EPS of $1.08 to $1.15, +0% to 6%

2

SUMMARY

Continued new business gains and product introductions drove acquisition adjusted fixed currency growth in our Global Institutional, Global Industrial and Other segments during the first quarter.  These were partially offset by a narrowing sales decline in the Global Energy segment.  Product innovation and ongoing cost efficiency work more than offset the impact of higher than forecast delivered product costs (which included a previously discussed $0.04 per share unfavorable currency hedge year-on-year comparison, representing a 5 percentage point negative impact to EPS growth), soft economies and challenging end markets. These, along with lower interest expense, a lower tax rate and fewer shares outstanding yielded the first quarter’s 4% adjusted earnings per share increase. 

We continue to expect strong earnings growth for the full year 2017, significantly outperforming an environment that includes higher delivered product costs and sluggish global economies.  We look for improving year-on-year acquisition adjusted fixed currency growth in our Global Institutional, Global Industrial and Other segments as they once again work aggressively to outpace their markets, leveraging investments we have made to further improve sales and service force effectiveness and profitability. We expect Global Energy to be comparable to last year as it benefits from a more stable market.  We expect the improving volume growth and pricing across all of our business segments to overcome delivered product cost headwinds (which slow as the year progresses) and yield stronger operating income growth. This income growth, along with lower interest expense, a lower tax rate and fewer shares outstanding, is expected to lead to stronger comparisons in the

3

second half of the year versus the first half for Ecolab in 2017, with full year forecasted adjusted diluted earnings per share in the $4.70 to $4.90 range this year, increasing 8% to 12%, including an unfavorable $0.05 per share (1 percentage point) of currency translation impact to earnings.  

We look for second quarter adjusted diluted earnings per share to be in the $1.08 to $1.15 range, increasing 0% to 6%.    

HIGHLIGHTS

· First quarter diluted earnings per share were $0.86. 

· Discrete tax items included a $16 million ($0.05 per share) tax benefit resulting from the adoption of accounting changes regarding the treatment of excess tax benefits on share-based compensation (these are not included in our adjusted results).

· On an adjusted basis, excluding special gains and charges and discrete tax items from both years, first quarter 2017 adjusted diluted earnings per share were $0.80. This compared with adjusted diluted earnings per share of $0.77 a year ago.

· Consolidated acquisition adjusted fixed currency sales for our Global Institutional, Global Industrial and Other segments grew 3% but were partially offset by a narrowing Global Energy sales decline. Regional fixed currency sales growth was led by Latin America and North America.

· Reported operating margins decreased 20 basis points. Adjusted fixed currency operating margins decreased 10 basis points as higher Energy segment profits and the price and volume increase were more than

4

offset by the impact of higher delivered product costs (which included a $0.04 per share unfavorable currency hedge year-on-year comparison, representing a 5 percentage point negative impact to EPS growth) in the quarter.  Adjusted fixed currency operating income rose 2%. 

· The operating income gain, along with a lower tax rate, lower interest expense and fewer shares outstanding, yielded a 4% increase in first quarter 2017 adjusted diluted earnings per share. 

· We continue to see sluggish economic growth, higher delivered product costs and gradually improving fundamentals in the energy markets, and we expect these to generally continue through the balance of the year.  We are again working aggressively to drive our growth, winning new business using our innovative new products and a sharp focus on sales execution, as well as driving pricing and cost efficiencies to grow our top and bottom lines at improved rates.

· We expect improving volume growth and pricing across all of our business segments, and look for that to overcome delivered product cost headwinds (which slow as the year progresses) and yield stronger operating income growth.

· We expect this focus on top line growth and margin expansion will yield full year adjusted diluted earnings per share forecast in the $4.70 to $4.90 per share range in 2017, rising 8% to 12%, with the second half results outpacing the first half.  We expect second quarter adjusted diluted earnings per share to be in the $1.08 to $1.15 range, up 0% to 6%.

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· In summary, despite a challenging global economic and market environment outlook, we expect to deliver strong adjusted diluted EPS growth in 2017.  

SALES DISCUSSION

Consolidated sales	% Change
Volume & mix	1%
Pricing	1%
Subtotal	2%
Acq./Div.	0%
Fixed currency growth	2%
Currency impact	0%
Total	2%

Amounts in the table may reflect rounding.

Ecolab’s first quarter consolidated reported, fixed currency and acquisition adjusted fixed currency sales all increased 2% when compared to the year ago period. Looking at the growth components, volume and mix rose 1%, as did pricing. Acquisitions and divestitures were insignificant and the impact from currency was nominal. 

GLOBAL INDUSTRIAL SEGMENT

	Fixed Rate	Acq./Div. Adj.
Global Industrial	% Change	% Change
Water	2%	1%
Food & Beverage	3%	3%
Paper	4%	4%
Textile Care	4%	4%
Life Sciences	8%	8%
Total Global Industrial	3%	3%

FOOD & BEVERAGE

First quarter fixed currency Food & Beverage sales growth improved, rising 3% as corporate account wins, share gains and pricing more than offset

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generally flat industry trends. Globally, we enjoyed strong growth in our food, beverage and brew businesses, with flattish dairy, protein and agri results. Regional fixed currency sales growth was strong in Latin America, with moderate gains in North America and Asia Pacific, while Europe grew modestly.

We have strengthened our North America sales team and the new business pipeline has improved, providing a stronger outlook for the region in 2017.  Globally, 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. We are driving new business wins to more than offset the continued challenging industry conditions in the food and beverage industry, including further customer penetration, new business capture and leverage from our strong innovation pipeline.  We expect to show better growth in the second quarter, and improving growth comparisons as the year progresses.

WATER

Fixed currency Water sales increased 2% compared to the prior year.  Acquisition adjusted sales rose 1%.  Light industry water treatment sales showed continued good growth led by its innovative technology and service offering. Heavy industry water sales saw a modest gain as weak coal-related power market sales offset good chemical industry sales.  Mining sales declined moderately as new business sales were more than offset by the

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impact of prior mine closures. Regionally, we saw strong sales growth in Latin America and Middle East & Africa, and modest growth in North America and Europe.

We continue to leverage our innovative solutions to help customers optimize water efficiency, improve operating results and lower costs. We remain focused on strengthening our corporate account and enterprise sales teams, growing our new accounts pipeline and continuing to invest in growth areas for the heavy and mining industries.  We look for low single digit growth in the second quarter as improving sales gains in the light and heavy industries and easing comparisons in mining are expected to deliver better growth in our Water business over the balance of 2017.

PAPER

First quarter fixed currency Paper sales increased 4%.  Good growth in Latin America and North America, driven by strong sales efforts and business wins, more than offset declines in Asia Pacific and Europe.

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 further moderate growth in 2017 through continued globalization of best practices and a focus on delivering value through innovative solutions. 

LIFE SCIENCES

Life Sciences is being reported as a separate business for the first time this quarter.    Life Sciences provides comprehensive solutions to serve personal

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care and pharmaceutical manufacturers in their cleaning, sanitation and contamination control needs while also ensuring product quality, safety and improved operating efficiency. Products include sanitizers, disinfectants, clean-in-place (CIP) systems and other solutions to produce clean, safe and hygienic surfaces and processes for these highly sensitive industries. The business was created by combining approximately $40 million from our Global Food & Beverage business with approximately $60 million from our Global Healthcare business to establish a market leader in this critical manufacturing area. 

Life Sciences first quarter fixed currency sales increased 8% as we saw good growth from recent business wins and pricing execution. Growth was led by strong sales of cleaning and disinfection programs in the pharmaceutical market and better program penetration in the personal care market. With a solid group of corporate account prospects, a developing product portfolio and our premium sales and service approach, we expect continued growth from Life Sciences over the balance of 2017.  

GLOBAL INSTITUTIONAL SEGMENT

	Fixed Rate	Acq./Div. Adj.
Global Institutional	% Change	% Change
Institutional	1%	2%
Specialty	5%	5%
Healthcare	22%	5%
Total Global Institutional	4%	3%

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INSTITUTIONAL

Fixed currency sales growth for the Institutional business grew 1%. Adjusted for divestitures, fixed currency sales for Institutional grew 2%.  Global lodging demand showed modest growth while global full service restaurant industry foot traffic remained soft.  Looking at Institutional’s regional sales, North America and Latin America rose modestly, while Asia Pacific was soft and Europe declined. North America’s underlying results were strong but sales were negatively impacted by the previously discussed exit of some low margin Swisher business; Europe and Asia Pacific also reflected the exit of certain low margin business as well as slower customer activity. Adjusted for acquisitions and the exit of the lower margin business, Global Institutional sales growth was approximately 3%, with North America sales up 5%.  

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 believe this focus, along with pricing and increased efforts to drive growth, will drive Institutional sales and profit results for the full year. Second quarter sales growth will likely be similar to the first quarter’s as good underlying sales growth is impacted by the exit of low margin business, with the second half showing stronger gains against easier comparisons.

SPECIALTY

First quarter sales for Specialty grew 5% in fixed currencies. We continue to drive growth in our global accounts and foodservice businesses, leveraging generally modest industry trends.  New business gains remain robust, driven by increased service coverage, new products, additional customer solutions

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and a continued focus among our customers on food safety. The somewhat lower than historic trend first quarter sales growth reflected comparison to strong existing quickservice customer orders last year and the timing of several large new customer roll outs that will benefit the second quarter and rest of the year. The food retail business posted a solid gain, with the improved sales growth reflecting continued new customer additions and product introductions.

New account wins have been strong, and with our ongoing investments in new products, an expanded sales and service force and increased solutions for customers, we expect better sales growth in the second quarter and another year of good growth in 2017.

HEALTHCARE

Fixed currency Healthcare sales were strong, rising 22% in the first quarter. First quarter results include one month of sales from our Anios acquisition; acquisition adjusted sales increased 5%.  We achieved strong growth in North America while Europe grew modestly.  We continued our focus on executing the Ecolab value proposition offering innovative products and premium on-site service programs to reduce healthcare acquired infections and increase operational 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, and we are well positioned to capitalize on these trends. 

The improving sales traction and new business pipeline makes us confident in the long-term growth potential for our business. Further, we expect Anios to

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bolster our position in Europe and accelerate our international expansion.  We look for second quarter 2017 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	-2%	-2%

First quarter fixed currency Global Energy segment sales decreased 2%,  in line with our expectations, as the North American energy industry showed improving trends. Within our upstream businesses, the drilling and completion business (representing less than 10% of Global Energy segment sales) recorded a double-digit increase.  Our production business (which represents approximately 60% of Global Energy segment sales) declined moderately reflecting the normal lag relative to drilling activity as well as last year’s modest pricing reductions and lower customer product usage. Sales in downstream rose slightly as share gains offset lower pricing and customer turnarounds.

We expect the North American energy industry to continue to improve in 2017; international oil industry trends are expected to lag North America’s recovery. We continue to look for full year 2017 Global Energy segment sales to be similar to or modestly better than 2016 with the second half outperforming the first, led by further strong growth in the drilling and completion business, and our production and downstream businesses realizing gradually improving comparisons through 2017 as activity increases, pricing stabilizes and volumes improve. Second quarter Global Energy

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segment sales are expected to be similar to last year as strong growth in the drilling and completion business and stable downstream results offset moderately lower production sales. We continue to be aggressive, using both our industry-leading product innovation and our outstanding sales and service team to drive sales gains, as well as build our position for stronger growth this year and for the future.

OTHER SEGMENT

	Fixed Rate	Acq./Div. Adj.
Other	% Change	% Change
Pest Elimination	6%	6%
Equipment Care	4%	4%
Total Other	5%	5%

PEST ELIMINATION

Fixed currency Pest Elimination sales increased 6% in the first quarter. Sales to food retail, hospitality, restaurant and food processing customers led the growth. Regionally, we enjoyed strong growth in North America and Asia Pacific, with moderate growth in Latin America; Europe was flat due to service timing. 

We continue to drive market penetration, using innovative service offerings and new technologies to address key customer needs and global trends. Additionally, we continue to make progress in globalizing our market-focused capabilities and field technologies.  We expect Pest Elimination sales to show further good growth in the second quarter led by gains in all markets.

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EQUIPMENT CARE

Equipment Care sales grew 4% in the first quarter.  Technician hiring delays (in part reflecting the industry’s tighter employment market) impacted the quarter’s results. Productivity improvements from our technology and training investments and strong execution continue to help drive results. We also have several initiatives underway to increase technician staffing and retention.

We believe recent corporate account wins will provide a solid pipeline for good growth in the second quarter and improved gains through 2017.      

CONSOLIDATED MARGIN PERFORMANCE

($ millions, unaudited)	2017	% sales	2016	% sales	% change
Gross Profit	$ 1,470.1	46.5%	$ 1,466.0	47.3%	0	%

First quarter gross margins were 46.5%, declining 80 basis points from the year-ago level. The decline was driven by higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison) that more than offset pricing and cost savings. 

($ millions, unaudited)	2017	% sales	2016	% sales	% change
SG&A	$ 1,090.6	34.5%	$ 1,088.2	35.1%	0	%

SG&A expenses represented 34.5% of first quarter sales and declined 60 basis points from last year as sales volume leverage and cost savings more than offset investments in the business. 

($ millions, unaudited)	2017	% sales	2016	% sales	% change
Consolidated Op. Inc.	$ 373.3	11.8%	$ 371.5	12.0%	0	%
Consolidated Fixed
Currency Op. Inc. (adj.)	$ 380.3	12.0%	$ 374.6	12.1%	2	%

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Consolidated operating income margins were 11.8%.  Adjusted for special charges, fixed currency operating income margins were 12.0%, declining 10 basis points from last year’s comparable margin. Adjusted fixed currency operating income rose 2%.  Growth in Global Energy income as well as pricing, volume growth and cost savings initiatives in our Global Institutional, Global Industrial and Other segments more than offset higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison) and investments in the business during the quarter.  

SEGMENT MARGIN PERFORMANCE

($ millions - fixed currency, unaudited)	2017	% sales	2016	% sales	% change
Global Industrial Op. Inc.	$ 127.0	11.3%	$ 131.5	12.0%	(3)	%

Fixed currency operating income for the Global Industrial segment decreased 3%.  Acquisition adjusted fixed currency operating income declined 3% and margins decreased 70 basis points to 11.3%.  Acquisition adjusted fixed currency operating income declined 3% as improved pricing and sales volume gains were more than offset by higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison); results also reflect the comparison to a strong quarter last year.

($ millions - fixed currency, unaudited)	2017	% sales	2016	% sales	% change
Global Institutional Op. Inc.	$ 192.1	17.8%	$ 192.7	18.6%	0	%

Fixed currency operating income for the Global Institutional segment was flat. Acquisition adjusted fixed currency operating income declined 2% and margins decreased 90 basis points to 17.9%. Pricing and sales volume gains were more than offset by innovation and customer investments and higher

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delivered product costs (which include an unfavorable currency hedge year-on-year comparison); results also reflect the comparison to a strong quarter last year.

($ millions - fixed currency, unaudited)	2017	% sales	2016	% sales	% change
Global Energy Op. Inc.	$ 73.0	9.6%	$ 62.6	8.1%	17	%

Fixed currency Global Energy segment operating income increased 17%. Acquisition adjusted fixed currency operating income increased 21% and margins grew 180 basis points to 9.5%.  Cost reduction actions and the comparison to a weak quarter last year (which included the impact from the devaluation of the Angolan Kwanza) more than offset lower pricing and higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison).

($ millions - fixed currency, unaudited)	2017	% sales	2016	% sales	% change
Other Op. Inc.	$ 29.9	15.2%	$ 29.6	15.9%	1	%

Fixed currency operating income for the Other segment increased 1% as pricing and sales volume gains were partially offset by field investments.  

($ millions, unaudited)	2017	2016
Corporate
Special Gains/(Charges)	($7.7)	($6.3)
Corp. Expense	(41.7)	(41.8)
Total Corporate Expense	($49.4)	($48.1)

Corporate segment expense includes amortization expense of $42 million in both the first quarter of 2017 and 2016 related to the Nalco merger intangible assets. Corporate expense also includes special gains and charges. Total

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special gains and charges for the first quarter of 2017 were a net charge of $8 million ($5 million after tax) associated with Anios and Swisher acquisition and integration costs. Special gains and charges for the first quarter of 2016 were $6 million ($4 million after tax).

TAX RATE, SHARES AND CONSOLIDATED INCOME

The reported income tax rate for the first quarter of 2017 was 17.4% and compared with the reported rate of 24.0% in the first quarter of 2016. The decrease in our reported tax rate is driven primarily by discrete tax items, which included a $16 million gain resulting from the adoption of accounting changes regarding the treatment of tax benefits on share-based compensation (these are not included in our adjusted results). Excluding the tax rate impact of the special gains and charges and discrete tax items, the adjusted tax rate was 24.9% in the first quarter of 2017 and compared with 25.7% for the same period last year. The decrease in our adjusted tax rate was primarily driven by global tax planning strategies.

Ecolab reacquired 2.6 million shares of its common stock during the first quarter. The reacquired shares included 2.1 million shares acquired as part of an accelerated share repurchase undertaken during the quarter. 

The net of this performance is that Ecolab reported first quarter diluted earnings per share of $0.86 compared with $0.77 reported a year ago.  When adjusted for special gains and charges and discrete tax items in both years, first quarter adjusted diluted earnings per share were $0.80 compared with $0.77 last year.

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SUMMARY BALANCE SHEET AND

SELECTED BALANCE SHEET MEASURES

(unaudited)	March 31
($ millions)	2017	2016
Cash and cash eq.	$ 212.1	$ 268.5
Accounts receivable, net	2,358.0	2,248.8
Inventories	1,428.3	1,386.1
Other current assets	308.9	291.5
PP&E, net	3,424.9	3,227.0
Goodwill and intangibles	11,033.8	10,506.0
Other assets	457.0	413.9
Total assets	$ 19,223.0	$ 18,341.8
Short-term debt	$ 1,699.4	$ 1,756.6
Accounts payable	1,039.3	986.1
Other current liabilities	1,466.6	1,416.8
Long-term debt	5,841.6	5,082.8
Pension/Postretirement	1,014.4	1,112.4
Other liabilities	1,283.2	1,335.0
Total equity	6,878.5	6,652.1
Total liab. and equity	$ 19,223.0	$ 18,341.8

	March 31
(unaudited)	2017	2016
Total Debt/Total Capital	52.3%	50.7%
Net Debt/Total Capital	51.6%	49.7%
Net Debt/EBITDA	2.6	2.7
Net Debt/Adjusted EBITDA	2.5	2.3
The inputs to EBITDA reflect the trailing twelve months of activity for the period presented.

Net debt to total capital was 52% at March 31, 2017, with the net debt to adjusted EBITDA ratio at 2.5 times. Both metrics reflect a year-on-year increase in net debt related to the Anios acquisition.

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SELECTED CASH FLOW ITEMS

	Three Months Ended
(unaudited)	March 31
($ millions)	2017	2016
Cash from op. activities	$ 425.7	$ 472.5
Depreciation	142.2	139.6
Amortization	73.8	72.6
Capital expenditures	152.0	140.1

Cash from operations remained strong. The decrease in cash from operating activities in the first quarter of 2017 reflects the timing of prior year tax payments.

FORECAST

Looking ahead, we remain focused on driving superior fixed currency organic sales and earnings growth through 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 corporate accounts and independent customer approach, to drive superior fixed currency organic growth in an environment that includes sluggish global economies and higher delivered product costs.  We expect the Global Energy segment to show a better performance in 2017 with improving comparisons developing through the year as the energy markets gradually recover.  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.  

Ecolab expects full year 2017 adjusted diluted earnings per share in the $4.70 to $4.90 range, rising 8% to 12%, with the second half of the year expected to

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show better earnings growth comparisons than the first half.  When compared with our 2016 performance, we expect improved acquisition adjusted fixed currency sales growth in our Global Institutional, Global Industrial and Other segments with similar to modestly higher Global Energy segment sales. We anticipate a comparable adjusted gross margin as pricing and cost efficiency actions offset higher delivered product costs (which include an unfavorable currency hedge year-on-year comparison in the first half), with a similar selling, general and administrative ratio to sales, lower interest expense and a slightly improved adjusted tax rate versus 2016. At current rates of exchange, we expect foreign currency translation to have an unfavorable impact of approximately 1 percentage point on full year sales and an estimated 1 percentage point (approximately $0.05 per share) unfavorable impact on diluted earnings per share.

We expect second quarter adjusted earnings to be in the $1.08 to $1.15 range, up 0% to 6% compared with $1.08 earned last year.  We look for improved acquisition adjusted fixed currency sales growth in our Global Institutional, Global Industrial and Other segments with comparable Global Energy segment sales. Higher delivered product costs (which will include an unfavorable $0.04 per share currency hedge year-on-year comparison, representing a 4% negative impact to EPS growth) are expected to have an increased impact in the quarter, particularly in the Global Industrial and Global Energy segments.  Global Energy will also reflect the rebuilding of compensation reduced in 2016’s cost reduction actions which, when combined with the higher delivered product costs, is expected to yield lower Global Energy operating income than last year’s second quarter.  We expect

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consolidated gross margins to be slightly lower than last year, with similar selling, general and administrative ratio to sales, lower interest expense and a slightly improved adjusted tax rate versus 2016.  At current rates of exchange, we expect foreign currency to have an unfavorable 2 percentage point (approximately $0.02) impact on diluted earnings per share. 

SUMMARY

In summary, we delivered on our forecast in the first quarter, while offsetting significant market challenges and investing in our future.  We will stay focused on driving fundamental growth in our businesses using new business wins, new products, pricing and cost efficiency.  We expect improving volume growth and pricing across all our business segments to overcome delivered product cost headwinds (which slow as the year progresses) and deliver attractive earnings per share growth in 2017, while we continue to make the right investments to sustain our future growth. 

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 2017 second quarter and full-year financial and business results, sales, earnings and operating income growth, interest expense, tax rate, shares outstanding, margins, global economies, delivered product costs, energy market forecast, new business, performance against the market, innovation,

21

investments, pricing, cost savings, foreign currency, 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 most recent Annual Report on Form 10-K 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; 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

22

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.

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

•fixed currency operating income

•fixed currency operating income margin

•adjusted operating income

•adjusted fixed currency operating income

•adjusted fixed currency operating income margin

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•acquisition adjusted fixed currency operating income

•acquisition 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 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 and/or income associated with historical trends and future results. After tax special (gains) and charges are derived by applying the applicable local jurisdictional tax rate to the corresponding pre-tax special (gains) and charges.

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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, which eliminate the translation impact of exchange rate fluctuations on our international results. 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 2017.

Acquisition adjusted growth rates 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 sales to our Venezuelan deconsolidated subsidiaries 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

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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 first quarter 2017 supplemental discussion.

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SUPPLEMENTAL NON-GAAP RECONCILIATIONS

(unaudited)

	First Quarter Ended
(unaudited)	March 31
(millions, except percent)	2017		2016
Net Sales
Reported GAAP net sales	$ 3,161.6		$ 3,097.4
Effect of foreign currency translation	(1.1)		(6.2)
Non-GAAP fixed currency sales	$ 3,160.5		$ 3,091.2
Cost of Sales
Reported GAAP cost of sales	$ 1,691.5		$ 1,631.4
Special (gains) and charges	1.5		0.0
Non-GAAP adjusted cost of sales	$ 1,690.0		$ 1,631.4
Gross Margin
Reported gross margin	46.5	%	47.3	%
Non-GAAP adjusted gross margin	46.5	%	47.3	%
Operating Income
Reported GAAP operating income	$ 373.3		$ 371.5
Effect of foreign currency translation	(0.7)		(3.2)
Non-GAAP fixed currency operating income	$ 372.6		$ 368.3
Reported GAAP operating income	$ 373.3		$ 371.5
Special (gains) and charges	7.7		6.3
Non-GAAP adjusted operating income	381.0		377.8
Effect of foreign currency translation	(0.7)		(3.2)
Non-GAAP adjusted fixed currency operating income	$ 380.3		$ 374.6
Operating Income Margin
Reported GAAP operating income margin	11.8	%	12.0	%
Non-GAAP adjusted fixed currency operating income margin	12.0	%	12.1	%

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SUPPLEMENTAL NON-GAAP RECONCILIATIONS

(unaudited)

	First Quarter Ended
(unaudited)	March 31
(millions, except percent and per share)	2017		2016
Net Income Attributable to Ecolab
Reported GAAP net income attributable to Ecolab	$ 253.5		$ 230.8
Special (gains) and charges, after tax	5.2		4.4
Discrete tax net expense (benefit)	(22.8)		(4.8)
Non-GAAP adjusted net income attributable to Ecolab	$ 235.9		$ 230.4
Diluted Earnings per Share Attributable to Ecolab ("EPS")
Reported GAAP diluted EPS	$ 0.86		$ 0.77
Special (gains) and charges, after tax	0.02		0.01
Discrete tax net expense (benefit)	(0.08)		(0.02)
Non-GAAP adjusted diluted EPS	$ 0.80		$ 0.77
Provision for Income Taxes
Reported GAAP tax rate	17.4	%	24.0	%
Special gains and charges	0.3		0.2
Discrete tax items	7.2		1.5
Non-GAAP adjusted tax rate	24.9	%	25.7	%
EBITDA (trailing twelve months ended)
Net income including non-controlling interest	$ 1,271.9		$ 1,013.8
Provision for income taxes	383.9		284.1
Interest expense, net	261.0		247.2
Depreciation	571.7		557.0
Amortization	287.2		297.5
EBITDA	$ 2,775.7		$ 2,399.6
Special (gains) and charges impacting EBITDA	106.9		493.3
Adjusted EBITDA	$ 2,882.6		$ 2,892.9

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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
	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	$ 1.24	$ 4.14
Adjustments:
Special (gains) and charges (1)	0.01	0.19	0.21	0.00	0.20	0.01	0.21
Discrete tax expense (benefits) (2)	(0.02)	0.01	(0.00)	0.02	0.01	0.00	0.01
Adjusted diluted earnings per share (Non-GAAP)	$ 0.77	$ 1.08	$ 1.85	$ 1.28	$ 3.12	$ 1.25	$ 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
	2017	2017	2017	2017	2017	2017	2017
Diluted earnings per share, as reported (U.S. GAAP)	$ 0.86
Adjustments:
Special (gains) and charges (3)	0.02
Discrete tax expense (benefits) (4)	(0.08)
Adjusted diluted earnings per share (Non-GAAP)	$ 0.80

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

(1) 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, $7.2 million, $3.5 million net of tax, in the second, third and fourth quarters, respectively. Special (gains) and charges for 2016 also included a charge of $42.9 million and $7.1 million net of tax, during the second and fourth quarters, respectively, 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 $4.6 million, net of tax, during the fourth quarter of 2016, related to inventory cost policy harmonization efforts, initiated in 2015. 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, $6.6 million and $2.6 million, net of tax, in the first, second, third and fourth quarters, respectively, related to other charges, including litigation related charges.

(2) The first quarter 2016 discrete tax items net benefits of $4.8 million were 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 expenses of $3.9 million were driven by individually immaterial items, including adjustments to deferred tax asset and liability positions. The third quarter 2016 discrete tax items net expenses of $4.5 million were 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. The fourth quarter discrete tax items net expenses of $0.3 million were driven by individually immaterial items, including tax charges related to optimizing our business structure and settlement of international tax matters, partially offset by valuation allowance releases and other adjustments.

(3) Special (gains) and charges for 2017 primarily include Anios and Swisher acquisition and integration costs.

(4) The first quarter 2017 discrete tax items net benefits of $22.8 million were driven primarily by a $16.0 million tax benefit associated with the accounting change for stock compensation for excess tax benefits. The remaining $6.8 million discrete tax benefits were driven primarily by the release of reserves for uncertain tax positions due to the expiration of statute of limitations in non-U.S. jurisdictions.

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