Ecolab Q3 Organic Sales Rise 7% as High-Tech and Life Sciences Drive Growth

Ecolab Inc. (NYSE: ECL) reported faster organic sales growth and double-digit operating income gains for the third quarter of 2026, supported by strong pricing, new customer wins and rapid expansion in its High-Tech and Life Sciences businesses. Adjusted earnings growth was more modest, however, as amortization and financing costs related to the CoolIT Systems acquisition created a significant near-term headwind.

Third-quarter net sales increased 13% to $4.69 billion. Organic sales, which exclude currency effects and the initial impact of acquisitions and divestitures, rose 7%, with volume growth of 2% and pricing gains of 5%. Ecolab said stronger new business helped offset continued customer disruptions in the Middle East.

Reported operating income increased 7% to $810.5 million, while the reported operating margin declined 100 basis points to 17.3%. Adjusted operating income rose 14% to $893.4 million, with the adjusted margin edging up 10 basis points to 19.0%. Organic operating income grew 11% to $872.1 million, and the organic operating margin expanded 70 basis points to 19.6% as pricing, sales growth and productivity more than offset higher commodity costs and growth investments.

Reported diluted earnings per share were $1.95, compared with $2.05 a year earlier. Adjusted diluted EPS increased 5% to $2.18. The company said CoolIT-related amortization and financing costs reduced third-quarter adjusted EPS growth by approximately 10 percentage points.

Gross margin fell 70 basis points to 44.1%, reflecting the impact of recent acquisitions. Organic gross margin was broadly stable at 44.9% as stronger pricing offset higher commodity expenses. Selling, general and administrative costs declined as a percentage of sales to 25.1% from 25.9%, helped by productivity and the effect of acquisitions.

High-Tech and Life Sciences lead growth

Global Water organic sales rose 9%, led by a 63% increase in High-Tech. High-Tech fixed-currency sales climbed 293% after including the Ovivo Electronics and CoolIT acquisitions. Organic growth was driven by new business across data centers and microelectronics, including demand for liquid-cooling infrastructure and water-management systems used in semiconductor production.

Food & Beverage organic sales increased 8% on broad-based new business and improved pricing. Paper sales rose 6%, supported by wins in board, packaging and pulp, while Light Water advanced 5%. Heavy Water returned to 4% growth as downstream gains and stable basic-industry sales offset weaker conditions in primary metals and softer performance in the Middle East.

Global Water operating income increased 24% to $445.2 million, partly reflecting acquired operations. On an organic basis, operating income rose 9%, and the organic margin increased 10 basis points to 17.5%.

Global Life Sciences delivered 17% organic sales growth, reflecting strong new business and share gains in bioprocessing, personal care and purification, as well as a favorable comparison with prior-year plant maintenance. Organic operating income jumped 49% to $50.2 million, lifting the segment’s margin by 500 basis points to 23.3%. Supply-chain efficiencies and higher sales more than offset commodity inflation and continued investment in innovation, capacity and global capabilities.

Pest Elimination organic sales increased 8%, led by customer wins in food and beverage, food retail and restaurants. Organic operating income rose 7%, though its margin slipped 10 basis points to 20.8% as Ecolab invested in deploying its Pest Intelligence platform. Management expects the segment’s margin to remain in the high-teens to 20% range over the next few quarters while those investments continue.

Global Institutional & Specialty posted 3% organic sales growth. Institutional sales rose 2% as pricing and new business offset softer industry conditions, including a mid-single-digit decline in North American restaurant traffic. Specialty sales increased 5%, driven by new business and pricing in quick-service restaurants and food retail. Segment operating income rose 8% to $404.9 million, while its margin expanded 110 basis points to 24.7%.

Fourth-quarter and full-year outlook

For the fourth quarter, Ecolab expects reported sales growth of 12% to 14%, including contributions from Ovivo Electronics and CoolIT, and organic sales growth of 6% to 7%. The company anticipates an adjusted operating income margin of approximately 19% and an organic operating income margin of about 20%.

Fourth-quarter adjusted diluted EPS is expected to range from $2.13 to $2.23, representing growth of 2% to 7%. That forecast includes an estimated 12-percentage-point headwind from CoolIT-related amortization and financing costs.

Ecolab expects full-year 2026 adjusted diluted EPS of $8.10 to $8.20, up 8% to 9%. The range incorporates an approximately six-percentage-point CoolIT-related headwind. Management also maintained its expectation that the adjusted operating income margin will reach 20% in 2027. Its longer-term targets call for organic sales growth of 5% to 7%, annual operating-margin expansion of 100 to 150 basis points and adjusted EPS growth of 12% to 15%.

The company identified geopolitical volatility, changing international trade policies, rising commodity costs and Middle East customer disruptions as near-term operating challenges. Its balance sheet also reflects increased acquisition-related leverage: net debt to adjusted EBITDA was 2.9 times at Sept. 30, 2026, compared with 1.6 times a year earlier. Long-term debt rose to $11.92 billion from $8.05 billion, while cash declined to $722.3 million from $1.96 billion.

Cash from operating activities totaled $1.94 billion for the first nine months of 2026, compared with $1.86 billion a year earlier, while capital expenditures increased to $902 million from $716.2 million.