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) April 30, 2019

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 April 30, 2019, Ecolab Inc. (“Ecolab”) announced earnings for the first quarter ended March 31, 2019.  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.

Exhibit No.	Description	Method Of Filing
(99.1)	Ecolab Inc. News Release dated April 30, 2019.	Filed herewith electronically.
(99.2)	Supplemental Data for First Quarter dated April 30, 2019.	Filed herewith electronically.
(99.3)	Supplemental Discussion for First Quarter dated April 30, 2019.	Filed herewith electronically.

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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: April 30, 2019	By:	/s/ David F. Duvick
		David F. Duvick
		Assistant Secretary

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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 $1.01 

ADJUSTED DILUTED EPS $1.03, +13% 

2019 ADJUSTED DILUTED EPS FORECAST REMAINS $5.80 TO $6.00, +10% to 14%

FIRST QUARTER HIGHLIGHTS:

· Reported diluted EPS $1.01, +20%.

· Adjusted diluted EPS $1.03, +13%, excluding special gains and charges and discrete tax items. Currency translation was an unfavorable $0.04 per share. 

· Reported sales +1%. Acquisition adjusted fixed currency sales +3% as strong growth in the Industrial and Other segments more than offset a modest decline in Energy sales.

· Strong adjusted fixed currency operating margin expansion, +80 bps, led by double-digit Industrial, Energy and Other segment income growth.

· Sales gains, pricing, new product innovation, cost savings and a lower tax rate and interest expense more than offset higher delivered product costs, investments in the business and unfavorable foreign exchange, resulting in double-digit income growth.  

2019 FORECAST:

· 2019 adjusted diluted EPS forecast remains $5.80 to $6.00, +10% to 14%, as strong pricing, volume growth and cost efficiencies are expected to more than offset moderating delivered product cost increases and unfavorable foreign exchange impacts.

	First Quarter Ended March 31
	Reported				Adjusted *
(unaudited)	Public Currency Rates		%		Public Currency Rates		%
(millions, except per share)	2019	2018	Change		2019	2018	Change
Net sales	$ 3,505.4	$ 3,470.9	1	%	$ 3,505.4	$ 3,470.9	1	%
Operating income	367.2	354.3	4	%	411.1	380.3	8	%
Net income attributable to Ecolab	296.5	247.3	20	%	300.3	266.9	13	%
Diluted earnings per share	$ 1.01	$ 0.84	20	%	$ 1.03	$ 0.91	13	%
					Adjusted *
	Fixed Currency Rates *		%		Fixed Currency Rates		%
	2019	2018	Change		2019	2018	Change
Net sales	$ 3,523.0	$ 3,396.1	4	%	$ 3,523.0	$ 3,396.1	4	%
Operating income	368.3	345.1	7	%	412.2	371.1	11	%

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

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ST. PAUL, Minn., April 30, 2019: New business gains, better pricing, product innovation and cost efficiencies more than offset higher delivered product costs and investments in the business, and along with a lower adjusted tax rate and interest expense, yielded a 13% increase in first quarter 2019 adjusted diluted earnings per share. 

CEO comment

Commenting on the quarter, Douglas M. Baker, Jr., Ecolab’s chairman and chief executive officer said, “First quarter earnings were in line with our expectations as solid fixed currency sales gains and operating margin expansion helped drive double-digit adjusted diluted earnings per share growth.  Sales and earnings momentum continued to be strong in our Industrial and Other segments.  Energy performed well with softer sales reflecting a tough market, but it delivered excellent margin improvement and double-digit earnings growth due to their focus on pricing and costs.  Institutional was modestly softer than expected as the faster exit from low margin business and an inventory reduction by our distributors impacted the segment’s first quarter sales growth.  We expect Institutional results to strengthen through the year. 

“In total, the first quarter represents a very good start for us and positions us to deliver double-digit adjusted earnings per share growth in 2019 while continuing to make critical investments in the business.  Our new business growth,  product and service innovation, digital strategy, pricing and cost savings initiatives remain on track. We are confident in our actions and prospects for this year, as well as our capacity to continue to show superior growth and shareholder returns for the future.”

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First Quarter and Full Year 2019 Consolidated Results

Ecolab's first quarter reported sales increased 1% and fixed currency sales increased 4%. Acquisition and divestiture adjusted fixed currency sales increased 3% when compared to the prior year. 

First quarter 2019 reported operating income increased 4% and fixed currency operating income increased 7%; both include the impact of special charges, which primarily relate to the previously announced efficiency initiative. Adjusted fixed currency operating income increased 11%.  Pricing, volume growth and cost savings initiatives more than offset the impact of higher delivered product costs and investments in the business during the quarter.

Reported interest expense decreased in the quarter primarily reflecting lower outstanding debt and higher interest income.

The reported income tax rate for the first quarter of 2019 was 11.4% compared with the reported rate of 21.8% in the first quarter of 2018.  Excluding special gains and charges and discrete tax items, the adjusted tax rate was 20.6% in the first quarter of 2019 compared with 22.0% for the same period last year. The decrease in the adjusted tax rate was primarily driven by global tax planning strategies and the geographic mix of income.

First quarter 2019 reported net income attributable to Ecolab increased 20%. Excluding the impact of special gains and charges and discrete tax items, adjusted net income attributable to Ecolab increased 13%.

Reported diluted earnings per share increased 20%. Adjusted diluted earnings per share rose 13% when compared against first quarter 2018. Currency translation had a $0.04 unfavorable impact on first quarter 2019 adjusted diluted earnings per share. 

Ecolab reacquired 0.8 million shares of its common stock during the first quarter of 2019.

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First Quarter 2019 Segment Review

Global Industrial
(unaudited)	First Quarter Ended March 31						Acq. Adj.
(millions)	2019		2018		% Change		% Change
Fixed currency
Sales	$ 1,289.2		$ 1,190.2		8	%	7	%
Operating income	147.5		122.0		21	%	23	%
Operating income margin	11.4	%	10.3	%
Acq. adj. operating income margin	11.7	%	10.3	%
Public currency
Sales	$ 1,281.3		$ 1,226.0		5	%
Operating income	147.1		127.3		16	%

Global Industrial acquisition adjusted fixed currency sales rose 7% with strong growth in Water, Food & Beverage and Life Sciences. All regions showed good sales growth.  Acquisition adjusted fixed currency operating income increased 23% as improved pricing, sales volume gains and cost savings more than offset continued higher delivered product costs and investments in the business.

Global Institutional
(unaudited)	First Quarter Ended March 31						Acq. Adj.
(millions)	2019		2018		% Change		% Change
Fixed currency
Sales	$ 1,215.3		$ 1,187.0		2	%	2	%
Operating income	195.9		195.7		0	%	1	%
Operating income margin	16.1	%	16.5	%
Acq. adj. operating income margin	16.3	%	16.5	%
Public currency
Sales	$ 1,208.5		$ 1,206.2		0	%
Operating income	195.4		197.8		(1)	%

Global Institutional acquisition adjusted fixed currency sales grew 2% led by Specialty. Sales for the segment showed good growth in Latin America and Asia Pacific but were impacted by low margin business exits and lower distributor shipments in the North America Institutional division that softened first quarter growth. Acquisition adjusted fixed currency operating income rose 1% as pricing and cost savings more than offset investments in the business, higher delivered product costs and reduced leverage on the segment’s volume gain.  

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Global Energy
(unaudited)	First Quarter Ended March 31						Acq. Adj.
(millions)	2019		2018		% Change		% Change
Fixed currency
Sales	$ 811.7		$ 826.5		(2)	%	(2)	%
Operating income	78.4		68.6		14	%	12	%
Operating income margin	9.7	%	8.3	%
Acq. adj. operating income margin	9.7	%	8.5	%
Public currency
Sales	$ 809.5		$ 842.9		(4)	%
Operating income	78.1		70.6		11	%

Global Energy acquisition adjusted fixed currency sales declined 2% as the segment compared against strong North American energy market activity in the first quarter last year. Upstream sales were modestly lower in the quarter with declines in the well stimulation business and production sales reflecting the reduced North American industry activity that began late in 2018. Downstream sales also declined slightly due to lower equipment sales. Acquisition adjusted fixed currency operating income increased 12% as pricing and cost savings more than offset higher delivered product costs. 

Other
(unaudited)	First Quarter Ended March 31						Acq. Adj.
(millions)	2019		2018		% Change		% Change
Fixed currency
Sales	$ 206.8		$ 192.4		7	%	7	%
Operating income	30.2		27.0		12	%	12	%
Operating income margin	14.6	%	14.0	%
Acq. adj. operating income margin	14.6	%	14.0	%
Public currency
Sales	$ 206.1		$ 195.8		5	%
Operating income	30.1		27.4		10	%

Other segment acquisition adjusted fixed currency sales increased 7% with strong gains in both Pest Elimination and Colloidal Technologies, led by North America. Acquisition adjusted fixed currency operating income increased 12% as pricing and sales volume gains more than offset increased field costs.

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Corporate

Corporate expense includes amortization expense of $40 million in the first quarter of 2019 and $43 million in the first quarter of 2018 related to the Nalco merger intangible assets. Corporate expense also includes net special charges of $44 million ($32 million after tax) primarily related to the previously announced efficiency initiative. 

Special gains and charges for the first quarter of 2018 were a net charge of $26 million ($20 million after tax) primarily related to a funding commitment to the Ecolab Foundation.

Business Outlook

The outlook provided below is for consolidated Ecolab operations and continues to include the Upstream Energy business.    The planned separation of the Upstream Energy business is expected to occur in the first half of 2020.

2019

Ecolab continues to expect full year 2019 adjusted diluted earnings per share in the $5.80 to $6.00 range, rising 10% to 14% over 2018. 

When compared with our 2018 performance, we expect continued good acquisition adjusted fixed currency sales growth in all of our segments. We look for improving adjusted gross margin as volume gains, pricing and cost efficiency actions more than offset moderating higher delivered product cost increases, with a lower SG&A ratio to sales, similar other income and interest expense, and a slightly higher adjusted tax rate versus 2018.

We expect special charges in 2019 to be $0.40 to $0.50 per share principally related to the previously announced efficiency initiative, planned Upstream Energy spin-off and integration of previously announced acquisitions.  In addition, the discrete tax item related to excess tax benefits on share-based compensation is expected to be favorable. Other than this discrete tax item and special gains and charges noted above, other such amounts are not currently quantifiable.

At current rates of exchange, we expect foreign currency translation to have a $0.11 unfavorable impact on diluted earnings per share.

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Our detailed outlook for the full year of 2019 is as follows:

Adjusted Gross Margin, excluding special gains and charges	41% to 42%
SG&A % of Sales	26% to 27%
Other income and expense	approx. $80 million
Interest expense, net	approx. $220 million
Adjusted tax rate	20% to 21%
Noncontrolling interest	approx. $0.06
Adjusted EPS, excluding special gains and charges	$5.80 to $6.00
Diluted shares	approx. 291 million

Reported 2018 diluted earnings per share of $4.88 included special gains and charges and discrete tax items. Excluding these items, 2018 adjusted diluted earnings per share were $5.25.

2019 — Second Quarter

Ecolab expects second  quarter 2019 adjusted diluted earnings per share in the $1.36 to $1.46 range, rising 7% to 15% compared with adjusted diluted earnings per share of $1.27 a year ago.

We expect solid acquisition adjusted fixed currency sales growth in all our segments. Volume gains and higher pricing are expected to more than offset higher delivered product costs in the quarter.  We expect a similar consolidated gross margin and lower SG&A ratio to sales than last year, with similar other income and interest expense and a slightly higher adjusted tax rate.  

We expect special charges in the second quarter of 2019 to be $0.15 to $0.20 per share principally related to the aforementioned efficiency initiative, planned Upstream Energy spin-off and integration of previously announced acquisitions.  In addition, the discrete tax item related to excess tax benefits on share-based compensation is expected to be favorable. Other than this discrete tax item and special gains and charges noted above, other such amounts are not currently quantifiable.

At current rates of exchange, we expect foreign currency to be unfavorable $0.05 per share in the second quarter.

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Our detailed outlook for the second quarter of 2019 is as follows:

Adjusted Gross Margin, excluding special gains and charges	approx. 42%
SG&A % of Sales	27% to 28%
Other income and expense	approx. $20 million
Interest expense, net	approx. $55 million
Adjusted tax rate	20% to 21%
Noncontrolling interest	approx. $0.01
Adjusted EPS, excluding special gains and charges	$1.36 to $1.46
Diluted shares	approx. 292 million

Reported second quarter 2018 diluted earnings per share of $1.20 included special gains and charges and discrete tax items. Excluding these items, second quarter 2018 adjusted diluted earnings per share were $1.27.

About Ecolab

A trusted partner at nearly three million customer locations, Ecolab (ECL) is the global leader in water, hygiene and energy technologies and services that protect people and vital resources. With annual sales of $15 billion and 49,000 associates, Ecolab delivers comprehensive solutions, data-driven insights 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.

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

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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, the anticipated spin-off of our Upstream Energy business into a new stand-alone company and the expected timing for completing the transaction, statements regarding our financial and business performance and prospects, including forecasted 2019 second quarter and full-year financial and business results, 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, volume, pricing, delivered product costs, foreign currency, special gains and charges and quantifiable discrete tax items, and amount and type of restructuring or efficiency initiative costs and savings from restructuring or efficiency initiative activities. 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 proposed spin-off of the Upstream Energy business may not be consummated within the anticipated period or at all and the ultimate results of any restructuring or efficiency initiative, integration and business improvement actions, including cost synergies, depend on a number of factors, including the development of final plans, the impact of local regulatory requirements regarding employee terminations, the time necessary to develop and implement the restructuring or efficiency initiative and other business improvement initiatives and the level of success achieved through such actions in improving competitiveness, efficiency and effectiveness.

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 execute key business initiatives, including upgrades to our information technology systems; potential information technology infrastructure failures and cybersecurity attacks; the possibility that the proposed spin-off of our Upstream Energy business will not be consummated within the anticipated time period or at all and the potential that the Upstream Energy business and Ecolab will not realize all of the expected benefits of the spin-off; our ability to attract and retain high caliber management talent to lead our

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business; our ability to develop competitive advantages through innovation and to commercialize digital solutions; exposure to global economic, political and legal risks related to our international operations including trade sanctions; difficulty in procuring raw materials or fluctuations in raw material costs; 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; pressure on operations from consolidation of customers, vendors or competitors; the occurrence of litigation or claims, including related to the Deepwater Horizon oil spill; restraints on pricing flexibility due to contractual obligations; our ability to acquire complementary businesses and to effectively integrate such businesses; changes in tax law and unanticipated tax liabilities; potential loss of deferred tax assets or increase in deferred tax liabilities; our substantial indebtedness; public health epidemics; potential losses arising from the impairment of goodwill or other assets; 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

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· adjusted fixed currency operating income margin

· acquisition adjusted fixed currency operating income

· acquisition adjusted fixed currency operating income margin

· adjusted interest expense

· 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 adjusted financial measures for cost of sales, gross margin, operating income and interest expense 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 2019. We also provide our segment results based on public currency rates for informational purposes.

Our reportable segments do not include the impact of intangible asset amortization from the Nalco merger or the impact of special (gains) and charges as these are not allocated to the Company’s reportable segments.

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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 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.

We do not provide reconciliations for non-GAAP estimates on a forward-looking basis (including those contained in this report) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of various items that have not yet occurred, are out of our control and/or cannot be reasonably predicted, and that would impact reported earnings per share and the reported tax rate, the most directly comparable forward-looking GAAP financial measures to adjusted earnings per share and the adjusted tax rate. For the same reasons, we are unable to address the probable significance of the unavailable information.

###

(ECL-E)

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ECOLAB INC.

CONSOLIDATED STATEMENT OF INCOME

(unaudited)

	First Quarter Ended
	March 31		%
(millions, except per share)	2019	2018	Change
Product and equipment sales	$ 2,886.3	$ 2,859.6
Service and lease sales	619.1	611.3
Net sales	3,505.4	3,470.9	1	%
Product and equipment cost of sales	1,717.1	1,696.2
Service and lease cost of sales	379.6	376.1
Cost of sales (1)	2,096.7	2,072.3	1	%
Selling, general and administrative expenses	1,001.2	1,018.3	(2)	%
Special (gains) and charges (1)	40.3	26.0
Operating income	367.2	354.3	4	%
Other (income) expense	(21.2)	(19.4)	9	%
Interest expense, net	49.4	56.4	(12)	%
Income before income taxes	339.0	317.3	7	%
Provision for income taxes	38.6	69.1	(44)	%
Net income including noncontrolling interest	300.4	248.2	21	%
Net income attributable to noncontrolling interest	3.9	0.9
Net income attributable to Ecolab	$ 296.5	$ 247.3	20	%
Earnings attributable to Ecolab per common share
Basic	$ 1.03	$ 0.86	20	%
Diluted	$ 1.01	$ 0.84	20	%
Weighted-average common shares outstanding
Basic	288.2	288.6	0	%
Diluted	292.3	292.7	0	%
(1) Special (gains) and charges in the Consolidated Statement of Income above include the following:
	First Quarter Ended
	March 31
(millions)	2019	2018
Cost of sales
Restructuring activities	3.4	-
Acquisition and integration activities	0.2	-
Subtotal (a)	3.6	-
Special (gains) and charges
Restructuring activities	37.1	0.3
Upstream energy spin-off	4.3	-
Acquisition and integration activities	2.5	0.5
Other	(3.6)	25.2
Subtotal	40.3	26.0
Interest expense, net	0.2	-
Total special (gains) and charges	$44.1	$26.0
(a) Special (gains) and charges of $3.6 million were recorded in product and equipment cost of sales in
the first quarter of 2019.

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ECOLAB INC.

REPORTABLE SEGMENT INFORMATION

(unaudited)

	First Quarter Ended March 31
	Fixed Currency Rates				Public Currency Rates
			%				%
(millions)	2019	2018	Change		2019	2018	Change
Net Sales
Global Industrial	$ 1,289.2	$ 1,190.2	8	%	$ 1,281.3	$ 1,226.0	5	%
Global Institutional	1,215.3	1,187.0	2	%	1,208.5	1,206.2	0	%
Global Energy	811.7	826.5	(2)	%	809.5	842.9	(4)	%
Other	206.8	192.4	7	%	206.1	195.8	5	%
Subtotal at fixed currency rates	3,523.0	3,396.1	4	%	3,505.4	3,470.9	1	%
Currency impact	(17.6)	74.8	*		-	-	*
Consolidated reported GAAP net sales	$ 3,505.4	$ 3,470.9	1	%	$ 3,505.4	$ 3,470.9	1	%
Operating Income
Global Industrial	$ 147.5	$ 122.0	21	%	$ 147.1	$ 127.3	16	%
Global Institutional	195.9	195.7	0	%	195.4	197.8	(1)	%
Global Energy	78.4	68.6	14	%	78.1	70.6	11	%
Other	30.2	27.0	12	%	30.1	27.4	10	%
Corporate	(83.7)	(68.2)	*		(83.5)	(68.8)	*
Subtotal at fixed currency rates	368.3	345.1	7	%	367.2	354.3	4	%
Currency impact	(1.1)	9.2	*		-	-	*
Consolidated reported GAAP operating income	$ 367.2	$ 354.3	4	%	$ 367.2	$ 354.3	4	%

* 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)	2019	2018	2018
Assets
Current assets
Cash and cash equivalents	$ 79.0	$ 114.7	$ 175.5
Accounts receivable, net	2,691.6	2,662.5	2,574.3
Inventories	1,645.6	1,546.4	1,541.8
Other current assets	334.8	354.1	305.2
Total current assets	4,751.0	4,677.7	4,596.8
Property, plant and equipment, net	3,878.6	3,836.0	3,779.9
Goodwill	7,324.2	7,078.0	7,303.0
Other intangible assets, net	3,877.3	3,797.7	4,012.2
Operating lease assets	570.9	-	-
Other assets	525.6	685.1	492.4
Total assets	$ 20,927.6	$ 20,074.5	$ 20,184.3
Liabilities and Equity
Current liabilities
Short-term debt	$ 1,132.3	$ 743.6	$ 1,017.8
Accounts payable	1,237.7	1,255.6	1,229.1
Compensation and benefits	478.2	579.7	497.0
Income taxes	89.6	100.6	170.0
Other current liabilities	1,218.2	1,006.1	1,068.9
Total current liabilities	4,156.0	3,685.6	3,982.8
Long-term debt	6,008.2	6,301.6	6,397.7
Postretirement health care and pension benefits	942.3	944.3	1,027.7
Deferred income taxes	792.3	764.6	652.8
Operating lease liabilities	412.2	-	-
Other liabilities	349.7	324.8	453.4
Total liabilities	12,660.7	12,020.9	12,514.4
Equity
Common stock	358.2	357.0	355.5
Additional paid-in capital	5,731.0	5,633.2	5,496.5
Retained earnings	9,131.8	8,909.5	8,097.0
Accumulated other comprehensive loss	(1,734.9)	(1,761.7)	(1,558.3)
Treasury stock	(5,265.4)	(5,134.8)	(4,789.7)
Total Ecolab shareholders’ equity	8,220.7	8,003.2	7,601.0
Noncontrolling interest	46.2	50.4	68.9
Total equity	8,266.9	8,053.6	7,669.9
Total liabilities and equity	$ 20,927.6	$ 20,074.5	$ 20,184.3

15

ECOLAB INC.

SUPPLEMENTAL NON-GAAP RECONCILIATIONS

(unaudited)

	First Quarter Ended
	March 31
(millions, except percent and per share)	2019		2018
Net sales
Reported GAAP net sales	$ 3,505.4		$ 3,470.9
Effect of foreign currency translation	17.6		(74.8)
Non-GAAP fixed currency sales	3,523.0		3,396.1
Effect of acquisitions and divestitures	(25.1)		(10.1)
Non-GAAP acquisition adjusted fixed currency sales	$ 3,497.9		$ 3,386.0
Cost of sales
Reported GAAP cost of sales	$ 2,096.7		$ 2,072.3
Special (gains) and charges	3.6		0.0
Non-GAAP adjusted cost of sales	$ 2,093.1		$ 2,072.3
Gross margin
Reported GAAP gross margin	40.2	%	40.3	%
Non-GAAP adjusted gross margin	40.3	%	40.3	%
Operating income
Reported GAAP operating income	$ 367.2		$ 354.3
Effect of foreign currency translation	1.1		(9.2)
Non-GAAP fixed currency operating income	368.3		345.1
Special (gains) and charges	43.9		26.0
Non-GAAP adjusted fixed currency operating income	412.2		371.1
Effect of acquisitions and divestitures	3.3		0.4
Non-GAAP acquisition adjusted fixed currency operating income	$ 415.5		$ 371.5
Operating income margin
Reported GAAP operating income margin	10.5	%	10.2	%
Non-GAAP adjusted fixed currency operating income margin	11.7	%	10.9	%
Interest expense, net
Reported GAAP interest expense, net	$ 49.4		$ 56.4
Special (gains) and charges, after tax	0.2		-
Non-GAAP adjusted interest expense, net	$ 49.2		$ 56.4

16

ECOLAB INC.

SUPPLEMENTAL NON-GAAP RECONCILIATIONS

(unaudited)

	First Quarter Ended
	March 31
(millions, except percent and per share)	2019		2018
Net Income Attributable to Ecolab
Reported GAAP net income attributable to Ecolab	$ 296.5		$ 247.3
Special (gains) and charges, after tax	31.5		19.7
Discrete tax net expense (benefit)	(27.7)		(0.1)
Non-GAAP adjusted net income attributable to Ecolab	$ 300.3		$ 266.9
Diluted Earnings per Share Attributable to Ecolab ("EPS")
Reported GAAP diluted EPS	$ 1.01		$ 0.84
Special (gains) and charges, after tax	0.11		0.07
Discrete tax net expense (benefit)	(0.09)		0.00
Non-GAAP adjusted diluted EPS	$ 1.03		$ 0.91
Provision for Income Taxes
Reported GAAP tax rate	11.4	%	21.8	%
Special gains and charges	2.0		0.2
Discrete tax items	7.2		0.0
Non-GAAP adjusted tax rate	20.6	%	22.0	%

17

ECOLAB INC.

SUPPLEMENTAL NON-GAAP RECONCILIATIONS

(unaudited)

	First Quarter Ended March 31
	2019			2018
(millions)	Fixed Currency	Impact of Acquisitions and Divestitures	Acquisition Adjusted	Fixed Currency	Impact of Acquisitions and Divestitures	Acquisition Adjusted
Net Sales
Global Industrial	$ 1,289.2	($21.9)	$ 1,267.3	$ 1,190.2	($7.8)	$ 1,182.4
Global Institutional	1,215.3	(3.1)	1,212.2	1,187.0	-	1,187.0
Global Energy	811.7	(0.1)	811.6	826.5	(2.3)	824.2
Other	206.8	-	206.8	192.4	-	192.4
Subtotal at fixed currency rates	3,523.0	(25.1)	3,497.9	3,396.1	(10.1)	3,386.0
Currency impact	(17.6)			74.8
Consolidated reported GAAP net sales	$ 3,505.4			$ 3,470.9
Operating Income
Global Industrial	$ 147.5	$ 1.4	$ 148.9	$ 122.0	($0.8)	$ 121.2
Global Institutional	195.9	1.9	197.8	195.7	-	195.7
Global Energy	78.4	-	78.4	68.6	1.2	69.8
Other	30.2	-	30.2	27.0	-	27.0
Corporate	(39.8)	-	(39.8)	(42.2)	-	(42.2)
Adjusted at fixed currency rates	412.2	3.3	415.5	371.1	0.4	371.5
Special (gains) and charges	43.9			26.0
Reported OI at fixed currency rates	368.3			345.1
Currency impact	(1.1)			9.2
Consolidated reported GAAP operating income	$ 367.2			$ 354.3

18

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
	2018	2018	2018	2018	2018	2018	2018
Diluted earnings per share, as reported (U.S. GAAP)	$ 0.84	$ 1.20	$ 2.04	$ 1.48	$ 3.53	$ 1.35	$ 4.88
Adjustments:
Special (gains) and charges (1)	0.07	0.03	0.10	0.20	0.30	0.05	0.35
Discrete tax expense (benefits) (2)	0.00	0.04	0.04	(0.16)	(0.12)	0.14	0.02
Adjusted diluted earnings per share (Non-GAAP)	$ 0.91	$ 1.27	$ 2.18	$ 1.53	$ 3.71	$ 1.54	$ 5.25

	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
	2019	2019	2019	2019	2019	2019	2019
Diluted earnings per share, as reported (U.S. GAAP)	$ 1.01
Adjustments:
Special (gains) and charges (3)	0.11
Discrete tax expense (benefits) (4)	(0.09)
Adjusted diluted earnings per share (Non-GAAP)	$ 1.03

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

(1) Special (gains) and charges for 2018 included a commitment to the Ecolab Foundation in first quarter of $18.9 million, net of tax. Special (gains) and charges also include restructuring activities of $0.3 million, $7.0 million, $60.2 million and $9.7 million, net of tax, in the first, second, third and fourth quarters, respectively, acquisition and integration costs of $0.4 million, $0.9 million, $1.5 million and $3.0 million, net of tax, in the first, second, third and fourth quarters, respectively, and litigation and other charges and (gains) of $0.1 million, $1.0 million, ($1.6 million) and $1.4 million, net of tax, in the first, second, third and fourth quarters, respectively.

(2) Discrete tax expense (benefits) for 2018 included $6.8 million, $6.0 million, $10.7 million and $4.6 million of tax benefits associated with stock compensation excess tax benefits in the first, second, third and fourth quarters, respectively. Discrete tax expense (benefits) also includes adjustments to the estimate for the U.S. tax reform one-time repatriation tax expense of $11.3 million, $18.2 million, $4.8 million and $31.7 million in the first, second, third and fourth quarters, respectively. Additionally, discrete tax expense (benefits) also includes ($4.6) million, ($0.1) million and $12.8 million of other tax (benefits) expense in the first, second and fourth quarters, respectively. In the third quarter of 2018, the Company filed U.S. federal tax returns which resulted in favorable adjustments of $39.9 million related to changes in estimates and an IRS approved method change.

(3) Special (gains) and charges for 2019 includes $30.4 million, net of tax, of restructuring costs in the first quarter relating to the efficiency initiative. Special (gains) and charges also include charges relating to the Upstream energy spin-off of $3.3 million, net of tax, in the first quarter, acquisition and integration costs of $2.1 million, net of tax, in the first quarter, and net gains for litigation and other charges of $4.3 million, net of tax, in the first quarter.

(4) Discrete tax expense (benefits) for 2019 includes $18.7 million of tax benefits associated with stock compensation excess tax benefits in the first quarter. Discrete tax expense (benefits) also includes adjustments to the estimate for the U.S. tax reform one-time repatriation tax expense of $5.1 million of expense in the first quarter and other discrete tax expenses of $3.9 million in the first quarter.

19

EX-99.2

Exhibit 99.2

First Quarter 2019
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, the anticipated spin-off of our Upstream Energy business into a new stand-alone company, statements regarding our future financial and business performance and prospects, including forecasted 2019 second quarter and full year business and financial results, margins, pricing, delivered product costs, investments, M&A activity, and restructuring or efficiency initiative activities. 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 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 execute key business initiatives, including upgrades to our information technology systems; potential information technology infrastructure failures and cybersecurity attacks; the proposed spin-off of our Upstream Energy business may be delayed or not completed at all and may not achieve the intended benefits; our ability to attract and retain high caliber management talent to lead our business; our ability to develop competitive advantages through innovation and to commercialize digital solutions; exposure to global economic, political and legal risks related to our international operations including trade sanctions; difficulty in procuring raw materials or fluctuations in raw material costs; 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.

1Q 2019 Overview

◢Sales:

§ Reported sales +1%; fixed currency sales +4% with acquisition adjusted fixed currency sales +3%.

§ Strong growth in the Industrial and Other segments more than offset a modest decline in Energy sales.  

◢Operating Income:

§ Reported operating margin +30 bps; adjusted operating margin +70 bps; adjusted fixed currency operating margin    +80 bps. 

§ Reported operating income +4% with adjusted operating income +8%; adjusted fixed currency operating income +11%.

§ Pricing, volume growth and cost saving initiatives more than offset higher delivered product costs and investments in the business during the quarter.    

◢Earnings:

§ Reported diluted  EPS $1.01,  +20%.  

§ Adjusted diluted EPS $1.03, +13%  as strengthening operating income growth, driven by pricing, volume growth and cost savings initiatives, along with a lower tax rate and interest expense, drove the gain. 

◢Outlook:

§ 2019: Adjusted diluted EPS forecast of $5.80 to $6.00, +10% to 14%.

§ 2Q 2019: Adjusted diluted EPS forecast of $1.36 to $1.46, +7% to 15%.

The outlook provided above is for consolidated Ecolab operations and continues to include the Upstream Energy business.

1Q 2019 Results

	First Quarter Ended March 31
	Reported				Adjusted *
(unaudited)	Public Currency Rates		%		Public Currency Rates		%
(millions, except per share)	2019	2018	Change		2019	2018	Change
Net sales	$ 3,505.4	$ 3,470.9	1	%	$ 3,505.4	$ 3,470.9	1	%
Operating income	367.2	354.3	4	%	411.1	380.3	8	%
Net income attributable to Ecolab	296.5	247.3	20	%	300.3	266.9	13	%
Diluted earnings per share	$ 1.01	$ 0.84	20	%	$ 1.03	$ 0.91	13	%
					Adjusted *
	Fixed Currency Rates *		%		Fixed Currency Rates		%
	2019	2018	Change		2019	2018	Change
Net sales	$ 3,523.0	$ 3,396.1	4	%	$ 3,523.0	$ 3,396.1	4	%
Operating income	368.3	345.1	7	%	412.2	371.1	11	%

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

1Q 2019 Sales Growth Detail

	Fixed Rate	Acq./Div. Adj.
Global Industrial	% Change	% Change	Consolidated	% Change
Food & Beverage	11%	7%	Volume & mix	1%
Water	7%	8%	Pricing	3%
Paper	6%	6%	Subtotal	3%
Life Sciences	27%	14%	Acq./Div.	1%
Textile Care	3%	3%	Fixed currency growth	4%
Total Global Industrial	8%	7%	Currency impact	-3%
			Total	1%
Global Institutional			Amounts in the table reflect rounding
Institutional	1%	1%
Specialty	7%	7%
Healthcare	2%	2%
Total Global Institutional	2%	2%
Global Energy	-2%	-2%
Other
Pest Elimination	7%	7%
Colloidal Technologies	11%	11%
Total Other	7%	7%
Total	4%	3%

1Q 2019 Income Statement / Margins

($millions, unaudited)	2019	%sales	2018	%sales	%change		Comments*
Gross Profit	$ 1,408.7	40.2%	$ 1,398.6	40.3%	1	%	Adjusted gross margins were 40.3% in both 2019 and 2018. Increased pricing and cost savings offset higher delivered product costs.
SG&A	1,001.2	28.6%	1,018.3	29.3%	(2)	%	The ratio decreased 70 bps as sales volume leverage and cost savings actions more than offset investments in the business.
Operating Income (fixed FX)
Global Industrial	147.5	11.4%	122.0	10.3%	21	%	Acquisition adjusted margins were 11.7% in 2019 and 10.3% in 2018.  Margins increased 140 bps as pricing, sales volume gains and cost savings more than offset higher delivered product costs and investments in the business.
Global Institutional	195.9	16.1%	195.7	16.5%	0	%	Acquisition adjusted margins were 16.3% in 2019 and 16.5% in 2018.  Margins declined 20 bps as pricing and cost savings were more than offset by investments in the business, higher delivered product costs and reduced leverage on the segment's volume gain.
Global Energy	78.4	9.7%	68.6	8.3%	14	%	Acquisition adjusted margins were 9.7% in 2019 and 8.5% in 2018.  Margins increased 120 bps as pricing and cost savings more than offset higher delivered product costs.
Other	30.2	14.6%	27.0	14.0%	12	%	Acquisition adjusted fixed currency margins were 14.6% in 2019 vs. 14.0% in 2018. The 60 bps increase reflected pricing and sales volume gains that more than offset field costs.
Subtotal at fixed FX	452.0	12.8%	413.3	12.2%	9	%
FX	(1.3)		9.8
Corporate
Corp. Expense	(39.6)		(42.8)				Nalco intangible amortization
Special Gains/(Ch.)	(43.9)		(26.0)				2019: Primarily restructuring charges. 2018: Primarily the $25M Ecolab Foundation funding commitment.
Total Corporate Exp.	(83.5)		(68.8)
Consolidated Op. Inc.	$ 367.2	10.5%	$ 354.3	10.2%	4	%	2019 acquisition adjusted fixed currency operating margins were 11.9%, a 90 bps increase vs. the equivalent 2018 margin of 11.0%.  Pricing, volume growth and cost savings initiatives offset the impact of higher delivered product costs and investments in the business during the quarter.

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

1Q 2019 Balance Sheet / Cash Flow

SummaryBalanceSheet
	March 31			March 31
(millions, unaudited)	2019	2018	(millions, unaudited)	2019	2018
Cash and cash eq.	$ 79.0	$ 175.5	Short-term debt	$ 1,132.3	$ 1,017.8
Accounts receivable, net	2,691.6	2,574.3	Accounts payable	1,237.7	1,229.1
Inventories	1,645.6	1,541.8	Other current liabilities	1,786.0	1,735.9
Other current assets	334.8	305.2	Long-term debt	6,008.2	6,397.7
PP&E, net	3,878.6	3,779.9	Pension/Postretirement	942.3	1,027.7
Goodwill and intangibles	11,201.5	11,315.2	Other liabilities	1,554.2	1,106.2
Other assets	1,096.5	492.4	Total equity	8,266.9	7,669.9
Total assets	$ 20,927.6	$ 20,184.3	Total liab. and equity	$ 20,927.6	$ 20,184.3
SelectedCashFlowitems			SelectedBalanceSheetmeasures
	Three Months Ended
	March 31			March 31
(millions, unaudited)	2019	2018	(unaudited)	2019	2018
Cash from op. activities	$ 378.1	$ 487.2	Total Debt/Total Capital	46.3%	49.2%
Depreciation	159.0	150.9	Net Debt/Total Capital	46.1%	48.6%
Amortization	79.8	80.2	Net Debt/EBITDA(*)	2.4	2.5
Capital expenditures	187.0	203.3	Net Debt/Adjusted EBITDA(*)	2.2	2.4

(*) EBITDA and Adjusted EBITDA are non-GAAP measures.  EBITDA is defined as the sum of earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as the sum of EBITDA and special (gains) and charges impacting EBITDA. 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. 

Appendix

Non-GAAP Financial Measures

	First Quarter Ended
(unaudited)	March 31
(millions, except percent)	2019		2018
Net sales
Reported GAAP net sales	$ 3,505.4		$ 3,470.9
Effect of foreign currency translation	17.6		(74.8)
Non-GAAP fixed currency sales	3,523.0		3,396.1
Effect of acquisitions and divestitures	(25.1)		(10.1)
Non-GAAP acquisition adjusted fixed currency sales	$ 3,497.9		$ 3,386.0
Cost of Sales
Reported GAAP cost of sales	$ 2,096.7		$ 2,072.3
Special (gains) and charges	3.6		0.0
Non-GAAP adjusted cost of sales	$ 2,093.1		$ 2,072.3
Gross Margin
Reported GAAP gross margin	40.2	%	40.3	%
Non-GAAP adjusted gross margin	40.3	%	40.3	%
Operating income
Reported GAAP operating income	$ 367.2		$ 354.3
Effect of foreign currency translation	1.1		(9.2)
Non-GAAP fixed currency operating income	368.3		345.1
Special (gains) and charges	43.9		26.0
Non-GAAP adjusted fixed currency operating income	412.2		371.1
Effect of acquisitions and divestitures	3.3		0.4
Non-GAAP acquisition adjusted fixed currency operating income	$ 415.5		$ 371.5
Operating Income Margin
Reported GAAP operating income margin	10.5	%	10.2	%
Non-GAAP adjusted fixed currency operating income margin	11.7	%	10.9	%

Non-GAAP Financial Measures

	First Quarter Ended
(unaudited)	March 31
(millions, except percent and per share)	2019		2018
Interest expense, net
Reported GAAP interest expense, net	$ 49.4		$ 56.4
Special (gains) and charges, after tax	0.2		0.0
Non-GAAP adjusted interest expense, net	$ 49.2		$ 56.4
Net Income Attributable to Ecolab
Reported GAAP net income attributable to Ecolab	$ 296.5		$ 247.3
Special (gains) and charges, after tax	31.5		19.7
Discrete tax net expense (benefit)	(27.7)		(0.1)
Non-GAAP adjusted net income attributable to Ecolab	$ 300.3		$ 266.9
Diluted Earnings per Share Attributable to Ecolab ("EPS")
Reported GAAP diluted EPS	$ 1.01		$ 0.84
Special (gains) and charges, after tax	0.11		0.07
Discrete tax net expense (benefit)	(0.09)		0.00
Non-GAAP adjusted diluted EPS	$ 1.03		$ 0.91
Provision for Income Taxes
Reported GAAP tax rate	11.4	%	21.8	%
Special gains and charges	2.0		0.2
Discrete tax items	7.2		0.0
Non-GAAP adjusted tax rate	20.6	%	22.0	%
EBITDA (trailing twelve months ended)
Net income including non-controlling interest	$ 1,529.5		$ 1,509.5
Provision for income taxes	296.8		258.7
Interest expense, net	215.3		248.9
Depreciation	629.4		594.4
Amortization	316.6		314.0
EBITDA	$ 2,987.6		$ 2,925.5
Special (gains) and charges impacting EBITDA	153.9		58.6
Adjusted EBITDA	$ 3,141.5		$ 2,984.1

Non-GAAP Financial Measures

	First Quarter Ended March 31
	2019			2018
(millions)	Fixed Currency	Impact of Acquisitions and Divestitures	Acquisition Adjusted	Fixed Currency	Impact of Acquisitions and Divestitures	Acquisition Adjusted
Net Sales
Global Industrial	$ 1,289.2	($21.9)	$ 1,267.3	$ 1,190.2	($7.8)	$ 1,182.4
Global Institutional	1,215.3	(3.1)	1,212.2	1,187.0	-	1,187.0
Global Energy	811.7	(0.1)	811.6	826.5	(2.3)	824.2
Other	206.8	-	206.8	192.4	-	192.4
Subtotal at fixed currency rates	3,523.0	(25.1)	3,497.9	3,396.1	(10.1)	3,386.0
Currency impact	(17.6)			74.8
Consolidated reported GAAP net sales	$ 3,505.4			$ 3,470.9
Operating Income
Global Industrial	$ 147.5	$ 1.4	$ 148.9	$ 122.0	($0.8)	$ 121.2
Global Institutional	195.9	1.9	197.8	195.7	-	195.7
Global Energy	78.4	-	78.4	68.6	1.2	69.8
Other	30.2	-	30.2	27.0	-	27.0
Corporate	(39.8)	-	(39.8)	(42.2)	-	(42.2)
Adjusted at fixed currency rates	412.2	3.3	415.5	371.1	0.4	371.5
Special (gains) and charges	43.9			26.0
Reported OI at fixed currency rates	368.3			345.1
Currency impact	(1.1)			9.2
Consolidated reported GAAP operating income	$ 367.2			$ 354.3

Please see Ecolab’s news release dated April 30, 2019 for additional information, including additional discussion on use of Non-GAAP financial measures.  2

EX-99.3

Exhibit 99.3

ECOLAB FIRST QUARTER 2019

1Q 2019 Overview

◢Sales:

§ Reported sales +1%;  fixed currency sales +4%, with acquisition adjusted fixed currency sales +3%.    

§ Strong growth in the Industrial and Other segments more than offset a modest decline in Energy sales.

◢Operating Income:

§ Reported operating margin +30 bps; adjusted operating margin +70 bps; adjusted fixed currency operating margin +80 bps.

§ Reported operating income +4% with adjusted operating income +8%; adjusted fixed currency operating income +11%.

§ Pricing, volume growth and cost saving initiatives more than offset higher delivered product costs and investments in the business during the quarter.

◢Earnings:

§ Reported diluted EPS $1.01,  +20%.

§ Adjusted diluted EPS $1.03, +13% as strengthening operating income growth, driven by pricing, volume growth and cost savings initiatives, along with a lower tax rate and interest expense, drove the gain.  

◢Outlook:

§ 2019: Adjusted diluted EPS forecast of $5.80 to $6.00, +10% to 14%. 

§ 2Q 2019: Adjusted diluted EPS  forecast of $1.36 to $1.46, +7% to 15%.

The outlook is provided for consolidated Ecolab operations and continues to include the Upstream Energy business.

SUMMARY

Continued sales growth and margin expansion drove Ecolab’s double-digit adjusted earnings per share growth in the first quarter.  Pricing, new business gains and product innovation led first quarter acquisition adjusted fixed currency sales and operating income growth, which along with cost efficiency actions, a reduced adjusted tax rate and lower interest expense, yielded the

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first quarter’s 13% adjusted diluted earnings per share increase. 

We look for improving acquisition adjusted fixed currency sales and earnings growth over the balance of 2019 as we once again work aggressively to outpace our markets, benefiting from the product innovation, accelerating pricing, new business gains and investments we have made to further improve our customer value as well as our sales and service force effectiveness and productivity.  We are taking the right actions to drive profitable growth while continuing our key investments in product innovation and technology to expand our differentiation in the marketplace.  We continue to expect consolidated 2019 full year adjusted diluted earnings per share in the $5.80 to $6.00 per share range, up 10% to 14%, reflecting improving top line growth, moderated delivered product cost increases and rising benefits from cost efficiency programs.  At current rates of exchange, we expect foreign currency translation to have a $0.11 unfavorable impact on diluted earnings per share. 

We look for second quarter adjusted diluted earnings per share to be in a $1.36 to $1.46 per share range, increasing 7% to 15% over the prior year.  Currency translation is expected to have an unfavorable impact of approximately $0.05 per share in the second quarter.   

With our focus on large end markets that serve fundamental and increasing global needs, our compelling value proposition, strong competitive position and our ongoing investments in critical growth drivers, we believe we are well-positioned to continue to drive superior sales growth and margin expansion. 

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We will continue to maximize our major market opportunities and work to deliver further superior results for our customers, and superior returns for our shareholders.

HIGHLIGHTS

· First quarter reported diluted earnings per share were $1.01.

· On an adjusted basis, excluding special gains and charges and discrete tax items from both years, first quarter 2019 adjusted diluted earnings per share increased 13% to $1.03. This compared with adjusted diluted earnings per share of $0.91 a year ago.  Currency translation was an unfavorable $0.04 per share. 

· Reported consolidated sales rose 1%.  Acquisition adjusted fixed currency sales increased 3%, as the Industrial and Other segments both showed strong sales gains, and along with modest growth from the Institutional segment, more than offset a slight sales decline in the Energy segment.  

· Reported operating margins increased 30 basis points.  Adjusted operating income margins increased 70 basis points and adjusted fixed currency operating margins increased 80 basis points as volume, price and efficiency gains more than offset higher delivered product costs in the quarter.  Adjusted operating income rose 8%.  Adjusted fixed currency operating income rose 11%, continuing the good acceleration shown throughout 2018, led by double-digit income growth in the Industrial, Energy and Other segments.

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· The adjusted operating income gain, along with a lower tax rate and interest expense, yielded the 13% increase in first quarter 2019 adjusted diluted earnings per share to $1.03, representing another quarter of double-digit adjusted earnings per share growth. 

· We continue to make progress on our recently announced intention to spin off our Upstream Energy business as a standalone publicly-traded company.  Ecolab currently expects the spin-off transaction will be completed by mid-2020.

· We continue to work aggressively to drive growth, winning new business through our innovative new products and sales and service expertise, as well as driving pricing, productivity and cost efficiencies to grow our top and bottom lines at improved rates across all of our segments. Our digital investments are developing well and we look for them to add an expanding range of new actionable insights for customers to improve their operations, enhance their experience working with us and increase our sales force effectiveness. 

· We continue to expect consolidated 2019 adjusted diluted earnings per share to rise 10% to 14% to the $5.80 to $6.00 range, excluding special gains and charges and discrete tax items, as volume and price gains and cost efficiency benefits more than offset the impact of moderating delivered product cost increases and business investments. Currency translation is expected to be an unfavorable $0.11 per share in 2019. 

· Second quarter adjusted diluted earnings per share are expected to be in the $1.36 to $1.46 range, up 7% to 15%. Currency translation is expected to be an unfavorable $0.05 per share in that quarter. 

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· In summary, we expect improving top line momentum in our business in 2019, more than offsetting moderating delivered product cost increases and unfavorable currency exchange, and along with further cost efficiency actions, to yield 10% to 14% adjusted diluted earnings per share growth.  We continue to make the right investments in key areas of differentiation, including product innovation and digital investments, to develop superior growth this year and for the future.

SALES DISCUSSION

Consolidated sales	% Change
Volume & mix	1%
Pricing	3%
Subtotal	3%
Acq./Div.	1%
Fixed currency growth	4%
Currency impact	-3%
Total	1%

Amounts in the table above reflect rounding

Ecolab’s first quarter reported sales increased 1% when compared to the year ago period.  Fixed currency sales rose 4% and acquisition adjusted fixed currency sales increased 3%.  Looking at the growth components, volume and mix rose 1% and pricing increased 3%.  Acquisitions and divestitures were 1% and currency was a negative 3% to sales growth.

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GLOBAL INDUSTRIAL SEGMENT

	Fixed Rate	Acq./Div. Adj.
Global Industrial	% Change	% Change
Food & Beverage	11%	7%
Water	7%	8%
Paper	6%	6%
Life Sciences	27%	14%
Textile Care	3%	3%
Total Global Industrial	8%	7%

FOOD & BEVERAGE

First quarter fixed currency Food & Beverage sales rose 11%.  Adjusted for acquisitions, fixed currency sales rose 7% as corporate account wins, share gains and pricing more than offset generally flat industry trends. Globally, we saw strong growth in our dairy, beverage and brewing, protein and food businesses.  Fixed currency sales growth was strong across the major regions.

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.  New business wins are more than offsetting continued challenging industry conditions in the food and beverage industry, and we are realizing further customer penetration, new business capture and leverage from our strong innovation portfolio.  We expect to show solid, though somewhat moderated, organic growth in the second quarter of 2019 primarily as the business

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compares against a large customer roll-out last year; we continue to expect strong gains for the full year.

WATER

Water sales showed strong momentum in the first quarter as fixed currency sales increased 7% and divestiture adjusted fixed currency sales rose 8%.  All major businesses showed good growth.  Light industry water treatment growth was led by its innovative technology and service offerings. Heavy industry sales benefited from sales force investments and improved market conditions.  Mining gains were led by new business wins.  Sales increased in all major regions.

We remain focused on strengthening our corporate account and enterprise sales teams, further development of innovative new products, growing our new accounts pipeline as we benefit from circle the customer opportunities with our Food & Beverage business and continuing to invest in growth areas for the light, heavy and mining industries.  We expect continued strong growth in the second quarter from further share gains in light, heavy and mining.  

PAPER

First quarter fixed currency Paper sales increased 6%. Growth momentum continued across North America, Europe and Latin America, while Asia Pacific declined modestly.

We continue to focus on maximizing results for our customers through minimizing water requirements and optimizing their total cost of operation in

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the growth segments of board & packaging, tissue & towel, and pulp. Paper expects to show further solid gains in the second quarter through new business wins, continued globalization of best practices, price increases and a focus on delivering value through innovative solutions. 

LIFE SCIENCES

Life Sciences first quarter fixed currency sales increased 27%. Adjusted for acquisitions and divestitures, Life Sciences first quarter fixed currency sales growth was 14% as we saw good growth from recent business wins and pricing. Growth was led by strong sales in cleaning and disinfection programs in both the pharmaceutical and personal care markets, with gains in all regions.

We continue to see strong momentum in our Life Sciences business as we build out our product and services portfolio of comprehensive solutions for pharmaceutical and personal care manufacturers.  We also continue to invest in our sales and service team and remain focused on winning corporate accounts. We expect further strong growth from Life Sciences in the second quarter and full year 2019.

GLOBAL INSTITUTIONAL SEGMENT

	Fixed Rate	Acq./Div. Adj.
Global Institutional	% Change	% Change
Institutional	1%	1%
Specialty	7%	7%
Healthcare	2%	2%
Total Global Institutional	2%	2%

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INSTITUTIONAL

Fixed currency sales for the Institutional business were up 1% in the first quarter, reflecting the previously mentioned exit of low margin business as well as lower shipments to distributors in the quarter. Adjusted for the low margin business exits and the lower distributor shipments, fixed currency Institutional sales are estimated to have grown 3%. Global lodging demand continued to show moderate growth, while full-service restaurant industry foot traffic remained soft during the quarter.  Looking at Institutional’s regional fixed currency sales, Latin America showed strong growth, North America and Asia Pacific sales rose modestly, while Europe sales were flat. 

We continue to use our strong value proposition to aggressively drive sales and net win new business, increase our share in existing units, develop emerging chain relationships, improve pricing and enhance our service delivery to customers across all regions and end markets.  These actions leverage our strong line of innovation across core platforms that improve customer results and reduce their water, energy and labor costs, as well as our developing digital solutions to improve customer results and business insights. We also continue to focus on business with appropriate margin, and as reflected above, this has resulted in the exit of certain low margin business that is impacting Institutional’s 2019 results.  We expect to show continued solid underlying Institutional sales growth in the second quarter, with the modest increase in reported sales reflecting the business exits, and we look for improving growth in the second half.

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SPECIALTY

First quarter Specialty sales grew 7% in fixed currencies, benefiting from strong ongoing business and the rollout of new account and program wins, and doing so despite comparing against a strong period last year.  We continue to drive growth in our global quickservice accounts, leveraging generally modest industry trends.  New business and program gains remain robust, driven by improved service coverage, new product innovations, additional customer solutions and a continued focus among our customers on food safety as fresh products become more prevalent and require more cleaning. The food retail business posted a solid quarter, with good underlying growth reflecting continued new customer additions and product introductions.

Momentum remains solid in the Specialty business.  While second quarter Specialty sales growth will likely moderate from the first quarter pace reflecting the timing of new customer rollouts, our strong new business pipeline, ongoing investments in new products and digital offerings, increased solutions for customers and an expanded sales and service force are expected to deliver another year of strong growth for Specialty in 2019. 

HEALTHCARE

Fixed currency Healthcare sales grew 2% in the first quarter as Europe grew moderately and North America sales were flat. Sales growth in our environmental hygiene programs was offset by soft non-program volume and lower sales of deemphasized non-core products.

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We expect Healthcare sales to show modest growth in the second quarter as integrated environmental hygiene program growth – along with our innovative products, premium on-site service programs and digital solutions – increase to offset continued difficult industry conditions.  Through this combination of premium products and expert on-site service, we can help hospitals reduce healthcare acquired infections and increase operational efficiencies. Customer results from our program approach have proven successful, and given the industry needs for better hygiene results and lower operating costs, the long-term growth outlook for our business remains very attractive. We continue to drive our program approach and expect it to yield improving future sales results for Healthcare.

GLOBAL ENERGY SEGMENT

	Fixed Rate	Acq./Div. Adj.
Global Energy	% Change	% Change
Energy	-2%	-2%

First quarter acquisition adjusted fixed currency Energy segment sales declined 2% as the segment compared against strong North American energy market activity in the first quarter last year.  Upstream sales were modestly lower in the quarter with declines in the well stimulation business and production sales reflecting the reduced North American industry activity that began late in 2018. Downstream sales decreased slightly due to lower equipment sales versus last year.

We expect modest second quarter 2019 Energy segment sales growthas new account growth offsets the slower recent energy market activity. We continue

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expect sales growth for the Energy segment in 2019 to be in the mid-single digit range, showing improving growth through the second half as new business wins are driven by our innovative products, continued pricing and improved second half North America and international energy market activity.  

OTHER SEGMENT

	Fixed Rate	Acq./Div. Adj.
Other	% Change	% Change
Pest Elimination	7%	7%
Colloidal Technologies	11%	11%
Total Other	7%	7%

PEST ELIMINATION

Fixed currency Pest Elimination sales increased 7% in the first quarter.We saw strong growth across all regions.

We continue to drive market penetration through innovative service offerings and new technologies to address key customer 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 continued strong growth in the second quarter led by gains in all major markets. 

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CONSOLIDATED MARGIN PERFORMANCE

($ millions, unaudited)	2019	% sales	2018	% sales	% change
Gross Profit	$ 1,408.7	40.2%	$ 1,398.6	40.3%	1%
Gross Profit (adj.)	$ 1,412.3	40.3%	$ 1,398.6	40.3%	1%

First quarter gross margins adjusted for special charges were 40.3%, equal to last year’s adjusted margin. Increased pricing and cost savings offset higher delivered product costs.

($ millions, unaudited)	2019	% sales	2018	% sales	% change
SG&A	$ 1,001.2	28.6%	$ 1,018.3	29.3%	-2%

SG&A expenses decreased 70 basis points from last year as sales leverage and cost savings actions more than offset investments in the business.

($ millions, unaudited)	2019	% sales	2018	% sales	% change
Operating Income	$ 367.2	10.5%	$ 354.3	10.2%	4%
Fixed Currency Operating
Income (adj.)	$ 412.2	11.7%	$ 371.1	10.9%	11%

Consolidated operating income margins were 10.5%.  Adjusted for special charges, fixed currency operating income margins were 11.7%, increasing 80 basis points from last year’s comparable margin.  Adjusted fixed currency operating income increased 11% as pricing, volume growth and cost savings initiatives more than offset the impact of higher delivered product costs and investments in the business during the quarter.

SEGMENT MARGIN PERFORMANCE

($ millions - fixed currency, unaudited)	2019	% sales	2018	% sales	% change
Global Industrial Op. Inc.	$147.5	11.4%	$122.0	10.3%	21%
Acq./Div. Adj. Op. Inc.	$148.9	11.7%	$121.2	10.3%	23%

Acquisition adjusted fixed currency operating income for the Global Industrial segment increased 23%.  Acquisition adjusted margins increased 140 basis

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points as pricing, sales volume gains and cost savings more than offset higher delivered product costs and investments in the business.

($ millions - fixed currency, unaudited)	2019	% sales	2018	% sales	% change
Global Institutional Op. Inc.	$195.9	16.1%	$195.7	16.5%	0%
Acq./Div. Adj. Op. Inc.	$197.8	16.3%	$195.7	16.5%	1%

Acquisition adjusted fixed currency operating income for the Global Institutional segment increased 1%.  Acquisition adjusted margins decreased 20 basis points as pricing and cost savings were offset by investments in the business, higher delivered product costs and reduced leverage on the segment’s volume gain. 

($ millions - fixed currency, unaudited)	2019	% sales	2018	% sales	% change
Global Energy Op. Inc.	$78.4	9.7%	$68.6	8.3%	14%
Acq./Div. Adj. Op. Inc.	$78.4	9.7%	$69.8	8.5%	12%

Acquisition adjusted fixed currency Global Energy segment operating income increased 12%.  Acquisition adjusted margins improved 120 basis points as pricing and cost savings more than offset higher delivered product costs and investments in the business.  

($ millions - fixed currency, unaudited)	2019	% sales	2018	% sales	% change
Other Op. Inc.	$30.2	14.6%	$27.0	14.0%	12%
Acq./Div. Adj. Op. Inc.	$30.2	14.6%	$27.0	14.0%	12%

Acquisition adjusted fixed currency operating income for the Other segment rose 12%. Acquisition adjusted margins improved 60 basis points aspricing and sales volume gains more than offset increased field costs.

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($ millions - unaudited)	2019	2018
Corporate
Corp. Expense	($39.6)	($42.8)
Special Gains/(Charges)	(43.9)	(26.0)
Total Corporate Expense	($83.5)	($68.8)

Corporate expense includes amortization expense of $40 million in the first quarter of 2019 and $43 million in the first quarter of 2018 related to the Nalco merger intangible assets. First quarter 2019 corporate expense also includes net special charges of $44 million ($32 million after tax) primarily related to the previously announced efficiency initiative.

Special gains and charges for the first quarter of 2018 were a net charge of $26 million ($20 million after tax) primarily related to a funding commitment to the Ecolab Foundation.

TAX RATE, SHARES AND CONSOLIDATED INCOME

The reported income tax rate for the first quarter of 2019 was 11.4% compared with the reported rate of 21.8% in the first quarter of 2018.  Excluding special gains and charges and discrete tax items, the adjusted tax rate was 20.6% in the first quarter of 2019 compared with 22.0% for the same period last year. The decrease in the adjusted tax rate was primarily driven by global tax planning strategies and the geographic mix of income.

Ecolab reacquired 0.8 million of its common stock during the first quarter of 2019.

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The net of this performance is that Ecolab reported first quarter diluted earnings per share of $1.01 compared with $0.84 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 $1.03 compared with $0.91 last year.  Currency translation had a $0.04 unfavorable impact on first quarter 2019 adjusted diluted earnings per share. 

SUMMARY BALANCE SHEET AND SELECTED BALANCE SHEET MEASURES

(unaudited)	March 31
($ millions)	2019	2018
Cash and cash eq.	$ 79.0	$ 175.5
Accounts receivable, net	2,691.6	2,574.3
Inventories	1,645.6	1,541.8
Other current assets	334.8	305.2
PP&E, net	3,878.6	3,779.9
Goodwill and intangibles	11,201.5	11,315.2
Other assets	1,096.5	492.4
Total assets	$ 20,927.6	$ 20,184.3
Short-term debt	$ 1,132.3	$ 1,017.8
Accounts payable	1,237.7	1,229.1
Other current liabilities	1,786.0	1,735.9
Long-term debt	6,008.2	6,397.7
Pension/Postretirement	942.3	1,027.7
Other liabilities	1,554.2	1,106.2
Total equity	8,266.9	7,669.9
Total liab. and equity	$ 20,927.6	$ 20,184.3

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	March 31
(unaudited)	2019	2018
Total Debt/Total Capital	46.3%	49.2%
Net Debt/Total Capital	46.1%	48.6%
Net Debt/EBITDA	2.4	2.5
Net Debt/Adjusted EBITDA	2.2	2.4
The inputs to EBITDA reflect the trailing twelve months of activity for the period presented.

Net debt to total capital was 46% at March 31, 2019, with the net debt to adjusted EBITDA ratio at 2.2 times.

SELECTED CASH FLOW ITEMS

	Three Months Ended
(unaudited)	March 31
($ millions)	2019	2018
Cash from op. activities	$ 378.1	$ 487.2
Depreciation	159.0	150.9
Amortization	79.8	80.2
Capital expenditures	187.0	203.3

FORECAST

The outlook provided below is for consolidated Ecolab operations and continues to include the Upstream Energy business.  The planned separation is expected to occur in the first half of 2020.

We expect improving sales momentum in 2019.  We look for improved consolidated gross margins in 2019 versus last year, as strong volume and pricing more than offset moderating delivered product cost increases, with a lower selling, general and administrative ratio to sales, similar other income and interest expense,  and a slightly higher adjusted tax rate versus 2018.  Ecolab continues to expect 2019 adjusted diluted earnings per share to rise 10% to 14% to the $5.80 to $6.00 range, excluding special gains and charges and discrete tax items, as the expected continued volume gains, pricing and

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rising benefits from our cost efficiency actions more than offset the impact of moderating higher delivered product cost increases.  At current rates of exchange, we expect foreign currency translation to have a $0.11 unfavorable impact on diluted earnings per share. 

We look for second quarter adjusted diluted earnings per share to be in the $1.36 to $1.46 range, up 7% to 15% compared with $1.27 earned last year.  We look for solid acquisition adjusted fixed currency sales growth. Pricing should again exceed the higher delivered product costs in the quarter as we continue our work to improve margins.  We expect a similar consolidated gross margin and lower SG&A ratio to sales than last year, with similar other income and interest expense, and a slightly higher adjusted tax rate.  At current rates of exchange, we expect foreign currency to have an unfavorable $0.05 impact on second quarter diluted earnings per share. 

SUMMARY

In summary, we continue to expect improving sales trends, and along with accelerating pricing and cost efficiency, we expect to continue to more than offset delivered product costs.  Operating margins should continue to expand, and when combined with our continued product innovation and improved cost efficiency, we expect attractive earnings per share growth in 2019, rising 10% to 14%.  We will stay focused on driving fundamental growth in our businesses using new business wins, new products, pricing, productivity improvement and cost efficiency, and take the right actions to drive profitable growth. 

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CAUTIONARY STATEMENT 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, the anticipated spin-off of our Upstream Energy business into a new stand-alone company and the expected timing for completing the transaction, statements regarding our financial and business performance and prospects, including forecasted 2019 second quarter and full-year financial and business results, sales and earnings growth, SG&A ratios to sales, interest expense, adjusted tax rate, margins, delivered product costs, energy market forecast, new business, innovation, investments, volume, pricing, foreign currency translation, and costs and savings from restructuring or efficiency initiative activities. 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 proposed spin-off of the Upstream Energy business may not be consummated within the anticipated period or at all and the ultimate results of any restructuring or efficiency initiative, integration and business improvement

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actions, including cost synergies, depend on a number of factors, including the development of final plans, the impact of local regulatory requirements regarding employee terminations, the time necessary to develop and implement the restructuring or efficiency initiative and other business improvement initiatives and the level of success achieved through such actions in improving competitiveness, efficiency and effectiveness.

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 execute key business initiatives, including upgrades to our information technology systems; potential information technology infrastructure failures and cybersecurity attacks; the possibility that the proposed spin-off of our Upstream Energy business will not be consummated within the anticipated time period or at all and the potential that the Upstream Energy business and Ecolab will not realize all of the expected benefits of the spin-off; our ability to attract and retain high caliber management talent to lead our business; our ability to develop competitive advantages through innovation and to commercialize digital solutions; exposure to global economic, political and legal risks related to our international operations including trade sanctions;

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difficulty in procuring raw materials or fluctuations in raw material costs; 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; pressure on operations from consolidation of customers, vendors or competitors; the occurrence of litigation or claims, including related to the Deepwater Horizon oil spill; restraints on pricing flexibility due to contractual obligations; our ability to acquire complementary businesses and to effectively integrate such businesses; changes in tax law and unanticipated tax liabilities; potential loss of deferred tax assets or increase in deferred tax liabilities; our substantial indebtedness; public health epidemics; potential losses arising from the impairment of goodwill or other assets; 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 discussion and certain of the accompanying tables include financial measures that have not been calculated in accordance with accounting

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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

•acquisition adjusted fixed currency operating income

•acquisition adjusted fixed currency operating income margin

•EBITDA

•adjusted EBITDA

•adjusted interest expense

•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

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comparison of results.

Our non-GAAP financial measures for cost of sales, gross margin, operating income and interest expense 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.

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

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management at the beginning of 2019. We also provide our segment results based on public currency rates for information purposes.

Our reportable segments do not include the impact of intangible asset amortization from the Nalco merger or the impact of special (gains) and charges as these are not allocated to the Company’s reportable segments.

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 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 2019 supplemental discussion.

We do not provide reconciliations for non-GAAP estimates on a forward-looking basis (including those contained in this discussion) when we are

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unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of various items that have not yet occurred, are out of our control and/or cannot be reasonably predicted, and that would impact reported earnings per share and the reported tax rate, the most directly comparable forward-looking GAAP financial measures to adjusted earnings per share and the adjusted tax rate. For the same reasons, we are unable to address the probable significance of the unavailable information.

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SUPPLEMENTAL NON-GAAP RECONCILIATIONS

	First Quarter Ended
(unaudited)	March 31
(millions, except percent)	2019		2018
Net sales
Reported GAAP net sales	$ 3,505.4		$ 3,470.9
Effect of foreign currency translation	17.6		(74.8)
Non-GAAP fixed currency sales	3,523.0		3,396.1
Effect of acquisitions and divestitures	(25.1)		(10.1)
Non-GAAP acquisition adjusted fixed currency sales	$ 3,497.9		$ 3,386.0
Cost of Sales
Reported GAAP cost of sales	$ 2,096.7		$ 2,072.3
Special (gains) and charges	3.6		0.0
Non-GAAP adjusted cost of sales	$ 2,093.1		$ 2,072.3
Gross Margin
Reported GAAP gross margin	40.2	%	40.3	%
Non-GAAP adjusted gross margin	40.3	%	40.3	%
Operating income
Reported GAAP operating income	$ 367.2		$ 354.3
Effect of foreign currency translation	1.1		(9.2)
Non-GAAP fixed currency operating income	368.3		345.1
Special (gains) and charges	43.9		26.0
Non-GAAP adjusted fixed currency operating income	412.2		371.1
Effect of acquisitions and divestitures	3.3		0.4
Non-GAAP acquisition adjusted fixed currency operating income	$ 415.5		$ 371.5
Operating Income Margin
Reported GAAP operating income margin	10.5	%	10.2	%
Non-GAAP adjusted fixed currency operating income margin	11.7	%	10.9	%

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SUPPLEMENTAL NON-GAAP RECONCILIATIONS

	First Quarter Ended
(unaudited)	March 31
(millions, except percent and per share)	2019		2018
Interest expense, net
Reported GAAP interest expense, net	$ 49.4		$ 56.4
Special (gains) and charges, after tax	0.2		0.0
Non-GAAP adjusted interest expense, net	$ 49.2		$ 56.4
Net Income Attributable to Ecolab
Reported GAAP net income attributable to Ecolab	$ 296.5		$ 247.3
Special (gains) and charges, after tax	31.5		19.7
Discrete tax net expense (benefit)	(27.7)		(0.1)
Non-GAAP adjusted net income attributable to Ecolab	$ 300.3		$ 266.9
Diluted Earnings per Share Attributable to Ecolab ("EPS")
Reported GAAP diluted EPS	$ 1.01		$ 0.84
Special (gains) and charges, after tax	0.11		0.07
Discrete tax net expense (benefit)	(0.09)		0.00
Non-GAAP adjusted diluted EPS	$ 1.03		$ 0.91
Provision for Income Taxes
Reported GAAP tax rate	11.4	%	21.8	%
Special gains and charges	2.0		0.2
Discrete tax items	7.2		0.0
Non-GAAP adjusted tax rate	20.6	%	22.0	%
EBITDA (trailing twelve months ended)
Net income including non-controlling interest	$ 1,529.5		$ 1,509.5
Provision for income taxes	296.8		258.7
Interest expense, net	215.3		248.9
Depreciation	629.4		594.4
Amortization	316.6		314.0
EBITDA	$ 2,987.6		$ 2,925.5
Special (gains) and charges impacting EBITDA	153.9		58.6
Adjusted EBITDA	$ 3,141.5		$ 2,984.1

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SUPPLEMENTAL NON-GAAP RECONCILIATIONS

	First Quarter Ended March 31
(unaudited)	2019			2018
(millions)	Fixed Currency	Impact of Acquisitions and Divestitures	Acquisition Adjusted	Fixed Currency	Impact of Acquisitions and Divestitures	Acquisition Adjusted
Net Sales
Global Industrial	$ 1,289.2	($21.9)	$ 1,267.3	$ 1,190.2	($7.8)	$ 1,182.4
Global Institutional	1,215.3	(3.1)	1,212.2	1,187.0	-	1,187.0
Global Energy	811.7	(0.1)	811.6	826.5	(2.3)	824.2
Other	206.8	-	206.8	192.4	-	192.4
Subtotal at fixed currency rates	3,523.0	(25.1)	3,497.9	3,396.1	(10.1)	3,386.0
Currency impact	(17.6)			74.8
Consolidated reported GAAP net sales	$ 3,505.4			$ 3,470.9
Operating Income
Global Industrial	$ 147.5	$ 1.4	$ 148.9	$ 122.0	($0.8)	$ 121.2
Global Institutional	195.9	1.9	197.8	195.7	-	195.7
Global Energy	78.4	-	78.4	68.6	1.2	69.8
Other	30.2	-	30.2	27.0	-	27.0
Corporate	(39.8)	-	(39.8)	(42.2)	-	(42.2)
Adjusted at fixed currency rates	412.2	3.3	415.5	371.1	0.4	371.5
Special (gains) and charges	43.9			26.0
Reported OI at fixed currency rates	368.3			345.1
Currency impact	(1.1)			9.2
Consolidated reported GAAP operating income	$ 367.2			$ 354.3

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SUPPLEMENTAL DILUTED EARNINGS PER SHARE INFORMATION

(unaudited)

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

	First	Second	Six	Third	Nine	Fourth
	Quarter	Quarter	Months	Quarter	Months	Quarter	Year
	Ended	Ended	Ended	Ended	Ended	Ended	Ended
	Mar. 31	June 30	June 30	Sept. 30	Sept. 30	Dec. 31	Dec. 31
	2018	2018	2018	2018	2018	2018	2018
Diluted earnings per share, as reported (U.S. GAAP)	$ 0.84	$ 1.20	$ 2.04	$ 1.48	$ 3.53	$ 1.35	$ 4.88
Adjustments:
Special (gains) and charges (1)	0.07	0.03	0.10	0.20	0.30	0.05	0.35
Discrete tax expense (benefits) (2)	0.00	0.04	0.04	(0.16)	(0.12)	0.14	0.02
Adjusted diluted earnings per share (Non-GAAP)	$ 0.91	$ 1.27	$ 2.18	$ 1.53	$ 3.71	$ 1.54	$ 5.25

	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
	2019	2019	2019	2019	2019	2019	2019
Diluted earnings per share, as reported (U.S. GAAP)	$ 1.01
Adjustments:
Special (gains) and charges (3)	0.11
Discrete tax expense (benefits) (4)	(0.09)
Adjusted diluted earnings per share (Non-GAAP)	$ 1.03

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

(1) Special (gains) and charges for 2018 includes a commitment to the Ecolab Foundation in first quarter of $18.9 million, net of tax. Special (gains) and charges also include restructuring activities of $0.3 million, $7.0 million, $60.2 million and $9.7 million, net of tax, in the first, second, third and fourth quarters, respectively, acquisition and integration costs of $0.4 million, $0.9 million, $1.5 million and $3.0 million, net of tax, in the first, second, third and fourth quarters, respectively, and litigation and other charges and (gains) of $0.1 million, $1.0 million, ($1.6 million) and $1.4 million, net of tax, in the first, second, third and fourth quarters, respectively.

(2) Discrete tax expense (benefits) for 2018 includes $6.8 million, $6.0 million, $10.7 million and $4.6 million of tax benefits associated with stock compensation excess tax benefits in the first, second, third and fourth quarters, respectively. Discrete tax expense (benefits) also includes adjustments to the estimate for the U.S. tax reform one-time repatriation tax expense of $11.3 million, $18.2 million, $4.8 million and $31.7 million in the first, second, third and fourth quarters, respectively. Additionally, discrete tax expense (benefits) also includes ($4.6) million, ($0.1) million and $12.8 million of other tax (benefits) expense in the first, second and fourth quarters, respectively. In the third quarter of 2018, the Company filed U.S. federal tax returns which resulted in favorable adjustments of $39.9 million related to changes in estimates and an IRS approved method change.

(3) Special (gains) and charges for 2019 includes $30.4 million, net of tax, of restructuring costs in the first quarter relating to the efficiency initiative. Special (gains) and charges also include charges relating to the Upstream energy spin-off of $3.3 million, net of tax, in the first quarter, acquisition and integration costs of $2.1 million, net of tax, in the first quarter, and net gains for litigation and other charges of $4.3 million, net of tax, in the first quarter.

(4) Discrete tax expense (benefits) for 2019 includes $18.7 million of tax benefits associated with stock compensation excess tax benefits in the first quarter. Discrete tax expense (benefits) also includes adjustments to the estimate for the U.S. tax reform one-time repatriation tax expense of $5.1 million of expense in the first quarter and other discrete tax expenses of $3.9 million in the first quarter.

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