Ecolab sells consumable chemistry and the service that keeps it working: detergents, sanitizers, water-treatment and process chemicals, pest elimination visits and contamination-control programmes. The customer is a site that runs every day — a hotel kitchen, a quick-service restaurant chain, a dairy plant, a refinery cooling tower, a paper mill, a pharmaceutical clean room. Of US$16,081.2 million of sales, 78.5% is product recognised on delivery and 21.5% service and leased equipment recognised over time, a share that has risen from 19.6% in 2023. Four segments report, built from seven operating segments that are also the goodwill reporting units. About 48,000 people work there, more than 25,000 of them in sales and service.
The business in one page
Follow one sale. A restaurant chain negotiates a multi-year programme for its dish machines at corporate level; Ecolab installs a dispensing system it owns, or leases the machine itself, and its field force advises on how the products are used. Each delivery of warewashing chemistry is recognised on arrival, often through a third-party distributor. Of each dollar, about 55.5 cents leave as cost of sales — blended raw materials from more than 10,000 inputs, the largest about five percent of purchases — and about 26.5 cents as selling and administrative expense, the line that carries the service force. Rebates owed back to customers are accrued as a liability, US$528.4 million at year end. What remains is an operating margin of 17.0%.
The year’s story is margin, not volume. Reported sales grew 2.2% and organic sales 3%, of which two points were price and one volume. Gross profit rose US$308.7 million on sales up US$339.8 million, so nine tenths of the added revenue reached gross profit, and the gross margin went from 40.2% in 2023 to 43.5% and then 44.5%. Institutional & Specialty did most of the work: its operating margin went from 14.8% to 20.1% to 22.8% on fixed-currency sales that were flat, and it now earns 45.6% of segment operating income on 38.3% of sales.
Three things qualify it. The consolidated text credits the margin gain to pricing alone, while the segment bridges name “lower supply chain costs” and “lower delivered product costs” next to price — and the filing never separates the two. Reported operating income fell 2.3%, because special charges of US$162.6 million replaced a net special gain of US$183.6 million, and restructuring has been reported as “special” in every year from 2022 to 2025 with the One Ecolab estimate nearly doubled. And the US$1,595.7 million paid for Ovivo Electronics is 69.3% goodwill with no revenue disclosed, while receivables grew 13.4% against sales at 2.2%.
Figures for 3 fiscal years, taken from the Key Metrics tables of each annual report. When a later filing restates a figure, we use the figure reported for that year's own filing.
Key metrics
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Revenue | $15.3B | $15.7B | $16.1B |
| Gross margin | 40.2% | 43.5% | 44.5% |
| Operating margin | 13.0% | 17.8% | 17.0% |
| Net margin (GAAP) | 9.0% | 13.4% | 12.9% |
| Operating cash flow | $2.41B | $2.81B | $2.95B |
| Capex | $0.77B | $0.99B | $1.05B |
| Free cash flow | $1.64B | $1.82B | $1.90B |
| Stock-based compensation | $0.10B | $0.13B | $0.14B |
| Dividends + buybacks | $0.63B | $1.65B | $1.54B |
| Net cash | -$7.26B | -$6.31B | -$7.59B |
| Total debt | $8.18B | $7.56B | $8.24B |
| Shareholders’ equity | $8.04B | $8.76B | $9.77B |
| Effective tax rate | 20.7% | 17.1% | 17.8% |
| Our construction: operating income after tax on average invested capital (14.7% on adjusted operating income) | – | 15.3% | 13.8% |
How Ecolab makes money
Competitive advantage
The evidence sits in what the customer pays: price added two points to three points of organic growth, and the gross margin moved from 40.2% to 44.5% in two years.
No customer or distributor reached 10% of sales in any of the three years.
The company describes its markets as led by a few large companies in water and by two large competitors in North American life sciences; those are its own statements.
Two facts point the other way: multi-year contracts are named as a constraint on pricing flexibility, and Specialty remains largely dependent on a limited number of major quick-service restaurant chains. Research spending was 1.26% of sales, slightly below 2024, and customer retention is said to be aligned with acquisition assumptions but is not quantified — so whether the advantage is widening cannot be established.
Pricing power
It is the central claim of the year and the filing supports it only in part. Two of the three points of organic growth were price, and nine tenths of the added sales reached gross profit.
But the segment bridges credit “lower supply chain costs” and “lower delivered product costs” alongside price, and for 2024 the company had itself said the gain came from value pricing and lower delivered product costs.
The 2024 components of the sales bridge are marked not meaningful after the segment recast, so the split can be computed for 2025 alone, in whole percentage points that the company notes do not necessarily sum.
Transparency of growth
Segment sales are published at fixed 2025 currency, US$514.0 million below reported sales — the gap between the company’s budget rates and actual rates.
The organic calculation removes US$217.5 million of 2024 Institutional & Specialty sales for acquisitions and divestitures, including the surgical business sold in August 2024.
Ovivo Electronics, acquired in 2025, has no revenue disclosed, so its contribution to Global Water cannot be isolated.
Scalability
Cost of sales was nearly flat, up 0.3% against sales up 2.2%, and selling and administrative expense grew 0.7%.
The mechanism the filing describes is a programme rather than a product: dispensing and monitoring systems the company owns, lease programmes that bundle machines with detergents and maintenance, and contracts negotiated with chains at corporate level.
Capital intensity rose: capex was 1.56 times depreciation against 1.26 in 2023, and construction in progress rose 26.3%.
The company describes its growth investments mainly as operating expenses: selling and administrative expense is 26.5% of sales against capex at 6.5%.
Catalysts identified in the filing
- One Ecolab completing
US$253.4 million incurred against a US$425 million estimate, with charges planned through 2027. Whether the savings reach the operating margin is the test.
- Ovivo inside Global Water
The purchase allocation is preliminary, with US$1,105.4 million of goodwill. Global Water’s growth and margin will have to absorb its amortisation and interest.
- Life Sciences capacity
Construction in progress rose 26.3% to US$858.1 million, and the risk factors tie part of it to new capacity in Life Sciences, whose sales grew 5.3%.
- Pest Elimination
The fastest-growing segment at +6.9% on fixed currency, and 10.2% of the year’s rise in segment operating income.
- Leadership change
From April 1, 2026 the CEO adds the title of President and two executives become Co-Chief Operating Officers, per the proxy.
Financial analysis
Click any line to chart it.
| Income statement · $ millions | FY2023 | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|---|
| Product and equipment sales | 12,317 | 12,474 | 12,619 | |
| Service and lease sales | 3,003 | 3,268 | 3,463 | |
| Net sales | 15,320 | 15,741 | 16,081 | |
| % change year on year | – | 2.7% | 2.2% | computed |
| Product and equipment cost of sales | 7,389 | 6,990 | 6,956 | |
| Service and lease cost of sales | 1,766 | 1,910 | 1,975 | |
| Cost of sales (incl. special charges of 7.7 / 5.3 / 22.5) | 9,155 | 8,900 | 8,931 | |
| Gross profit (derived) | 6,165 | 6,842 | 7,150 | |
| % gross margin | 40.2% | 43.5% | 44.5% | computed |
| Selling, general and administrative expenses | 4,062 | 4,228 | 4,258 | |
| Special (gains) and charges (operating line) | 111 | (189) | 155 | |
| Operating income | 1,992 | 2,802 | 2,738 | |
| % operating margin | 13.0% | 17.8% | 17.0% | computed |
| Other (income) expense | (60) | (51) | (51) | |
| Interest expense, net | 297 | 283 | 241 | |
| — of which interest expense (Note 6) | 349 | 340 | 306 | |
| — of which interest income (Note 6) | (52) | (58) | (65) | |
| Income before income taxes | 1,756 | 2,571 | 2,548 | |
| Provision for income taxes | 363 | 439 | 455 | |
| Net income including noncontrolling interest | 1,393 | 2,132 | 2,093 | |
| Net income attributable to noncontrolling interest | 21 | 20 | 18 | |
| Net income attributable to Ecolab | 1,372 | 2,112 | 2,076 | |
| % net margin | 9.0% | 13.4% | 12.9% | computed |
| EPS basic (US$) | 5 | 7 | 7 | |
| EPS diluted (US$) | 5 | 7 | 7 | |
| Weighted-average shares, basic (mn) | 285 | 284 | 283 | |
| Weighted-average shares, diluted (mn) | 287 | 287 | 285 | |
| Anti-dilutive securities excluded (mn) | 4 | 1 | 1 | |
| Shares outstanding at cover date (Jan 30, 2026) | – | – | 281,969,448 | |
| Shares outstanding at year end (mn, balance sheet) | 285.4 [K24] | 283 | 282 |
| Balance sheet · $ millions | FY2023 | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|---|
| Cash and cash equivalents | 920 | 1,257 | 646 | |
| — held outside the U.S. (MD&A) | not available | 382 | 476 | |
| Accounts receivable, net | 2,834 | 2,865 | 3,249 | |
| Inventories | 1,497 | 1,465 | 1,490 | |
| Other current assets | 393 | 439 | 570 | |
| Total current assets | 5,644 | 6,026 | 5,956 | |
| Property, plant and equipment, net | 3,475 | 3,752 | 4,277 | |
| Goodwill | 8,148 | 7,907 | 9,227 | |
| Other intangible assets, net | 3,494 | 3,309 | 3,689 | |
| Operating lease assets | 554 | 723 | 766 | |
| Other assets | 533 | 670 | 783 | |
| Total assets | 21,847 | 22,388 | 24,696 | |
| Short-term debt | 630 | 616 | 870 | |
| Accounts payable | 1,566 | 1,810 | 2,071 | |
| Compensation and benefits | 656 | 727 | 722 | |
| Income taxes | 159 | 127 | 134 | |
| Other current liabilities | 1,335 | 1,513 | 1,738 | |
| Total current liabilities | 4,346 | 4,793 | 5,535 | |
| Long-term debt | 7,551 | 6,949 | 7,366 | |
| Pension and postretirement benefits | 652 | 635 | 546 | |
| Deferred income taxes | 418 | 280 | 330 | |
| Operating lease liabilities | 426 | 576 | 597 | |
| Other liabilities | 382 | 366 | 519 | |
| Total liabilities | 13,774 | 13,599 | 14,892 | |
| Common stock | 366 | 368 | 369 | |
| Additional paid-in capital | 6,767 | 7,160 | 7,521 | |
| Retained earnings | 10,075 | 11,517 | 12,834 | |
| Accumulated other comprehensive loss | (1,850) | (1,982) | (1,874) | |
| Treasury stock | (7,313) | (8,305) | (9,080) | |
| Total Ecolab shareholders' equity | 8,045 | 8,757 | 9,771 | |
| Noncontrolling interest | 28 | 32 | 34 | |
| Total equity | 8,072 | 8,789 | 9,805 | |
| Total debt (short-term + long-term) | 8,182 | 7,565 | 8,236 |
| Cash flow statement · $ millions | FY2023 | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|---|
| Net income including NCI | 1,393 | 2,132 | 2,093 | |
| Depreciation | 617 | 635 | 673 | |
| Amortization | 307 | 301 | 304 | |
| Deferred income taxes | (56) | (191) | (33) | |
| Share-based compensation expense | 95 | 135 | 137 | |
| Pension and postretirement contributions | (109) | (54) | (78) | |
| Pension and postretirement expense (income), net | 3 | 14 | 15 | |
| Restructuring charges, net of cash paid | (33) | 24 | 19 | |
| Sale of global surgical solutions business | – | (382) | 1 | |
| Other, net | 32 | 24 | 29 | |
| Change in accounts receivable | (84) | (147) | (186) | |
| Change in inventories | 320 | (116) | 36 | |
| Change in other assets | 72 | (24) | 84 | |
| Change in accounts payable | (232) | 300 | 68 | |
| Change in other liabilities | 87 | 163 | (208) | |
| Cash provided by operating activities | 2,412 | 2,814 | 2,953 | |
| Capital expenditures | (775) | (995) | (1,048) | |
| Property and other assets sold | 10 | 11 | 52 | |
| Acquisitions and investments in affiliates, net of cash acquired | (180) | (313) | (1,621) | |
| Divestiture of businesses, net of cash divested | – | 890 | (15) | |
| Other, net (investing) | (45) | (27) | (75) | |
| Cash used for investing activities | (991) | (434) | (2,707) | |
| Net issuances (repayments) of commercial paper and notes payable | (2) | 2 | 98 | |
| Long-term debt borrowings | – | – | 1,046 | |
| Long-term debt repayments | (500) | (630) | (674) | |
| Reacquired shares | (14) | (987) | (784) | |
| Dividends paid | (617) | (664) | (754) | |
| Exercise of employee stock options | 97 | 259 | 228 | |
| Hedge settlements / other, net | (19) | (4) | (14) | |
| Cash used for financing activities | (1,055) | (2,024) | (853) | |
| Effect of exchange rates on cash | (46) | (19) | (3) | |
| Change in cash | 321 | 337 | (611) | |
| Income taxes paid (supplemental) | 469 | 647 | 548 | |
| Net interest paid (supplemental) | 325 | 343 | 303 | |
| Free cash flow (company definition: CFO − capex) | 1,637 | 1,819 | 1,904 |
| Per share · $ per diluted share | FY2023 | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|---|
| Revenue | 53.47 | 54.92 | 56.39 | computed |
| Net income | 4.79 | 7.37 | 7.28 | computed |
| Free cash flow | 5.71 | 6.35 | 6.68 | computed |
| Shareholders' equity | 28.08 | 30.56 | 34.26 | computed |
Computed on the weighted average diluted share count the filing reports (285.2 million in FY2025, 286.6 in FY2024, 286.5 in FY2023), checked against the diluted earnings per share printed in the filing (US$7.28, US$7.37, US$4.79). Free cash flow is the company’s own definition, operating cash flow less capital expenditure. Equity is Ecolab shareholders’ equity, excluding the noncontrolling interest.
| Ratios · percent | FY2023 | FY2024 | FY2025 | Where in the filing |
|---|---|---|---|---|
| Returns and margins | ||||
| Revenue growth | – | 2.7% | 2.2% | computed |
| Gross margin | 40.2% | 43.5% | 44.5% | from the statements |
| Operating margin | 13.0% | 17.8% | 17.0% | from the statements |
| Net margin | 9.0% | 13.4% | 12.9% | from the statements |
| Our construction: operating income after tax on average invested capital (14.7% on adjusted operating income) | – | 15.3% | 13.8% | our construction |
| Effective tax rate | 20.7% | 17.1% | 17.8% | from the statements |
| Cash | ||||
| Operating cash flow / revenue | 15.7% | 17.9% | 18.4% | computed |
| Capital expenditure / revenue | 5.1% | 6.3% | 6.5% | computed |
| Free cash flow / revenue | 10.7% | 11.6% | 11.8% | computed |
| Stock-based compensation / revenue | 0.6% | 0.9% | 0.8% | computed |
| Dividends and buybacks / free cash flow | 38.5% | 90.7% | 80.7% | computed |
| Balance sheet | ||||
| Total debt / equity | 101.7% | 86.4% | 84.3% | computed |
| Net cash / equity | -90.3% | -72.0% | -77.7% | computed |
Every ratio is computed from the figures in the statements on the left; none is a target or a benchmark.
The three statements as the Form 10-K presents them. Gross profit is derived: the company presents cost of sales but no gross profit line, and cost of sales carries special charges of US$7.7 million in FY2025. The operating line also carries special (gains) and charges, which swung US$346.2 million between FY2024 and FY2025 and are the difference between reported operating income down 2.3% and the adjusted figure up 11%. Amounts in US$ million.
Operating measures
| Measure | FY2025 | FY2024 | Change / detail | Where in the filing |
|---|---|---|---|---|
| Organic sales growth: price | +2 points | not meaningful | two thirds of the three points of organic growth | MD&A sales bridge |
| Organic sales growth: volume | +1 point | not meaningful | components in whole points; they do not necessarily sum | MD&A sales bridge |
| Gross margin | 44.5% | 43.5% | nine tenths of added sales reached gross profit | IS (derived) |
| Institutional & Specialty: operating margin | 22.8% | 20.1% | +4.3 points from pricing, supply chain and productivity, less 1.0 of investment | Note 16 |
| Institutional & Specialty: operating income | $1,357.8M | not comparable | 45.6% of segment operating income on 38.3% of sales | Note 16 |
| Global Water: operating margin | 16.5% | not comparable | sales +2.6% at fixed currency | Note 16 |
| Service and lease share of sales | 21.5% | 20.8% | recognised over time; the rest on delivery | Note 2 |
| Special (gains) and charges | $162.6M | ($183.6M) | a $346.2M swing; $439.9M of charges over three years | Note 3 |
| One Ecolab cumulative charges | $253.4M of $425M | not comparable | estimate nearly doubled; charges planned through 2027 | Note 3 |
| Accrued customer rebates | $528.4M | not comparable | grew faster than sales | Note 2 |
| Receivables / allowance | $3,249.4M / $116.8M | $2,865.0M / not comparable | +13.4% against sales +2.2%; allowance ratio down to 3.47% | BS; Note 5 |
| Construction in progress | $858.1M | not comparable | +26.3%; partly new Life Sciences capacity | Note 7 |
| Research and development | $202M | $207M | 1.26% of sales, slightly below the prior year | Item 1 |
| Employees | about 48,000 | about 48,000 | more than 25,000 in sales and service | Item 1 |
Documents behind these figures: Form 10-K for the fiscal year ended December 31, 2025 — FY2023-FY2025 · Form 10-K for the fiscal year ended December 31, 2024 — comparison of stated expectations and prior-year segment figures · Definitive proxy statement for the May 7, 2026 annual meeting — governance, ownership, compensation
Key risks
The main weaknesses and risks identified in the latest annual report, in the order the report presents them.
- The filing never splits price from cost
The consolidated paragraph credits the gross-margin gain to pricing alone, while the Institutional & Specialty and Life Sciences bridges name lower supply chain and delivered product costs next to price. No raw-material cost index is published, and the segment bridges give effects on margin, not on sales.
- Special charges that recur
US$439.9 million over three years, reported as “special” in every year from 2022 to 2025 and planned to continue through 2027. The One Ecolab estimate nearly doubled, to US$425 million with US$253.4 million incurred. The bonus is paid on the measure that excludes them: year by year the adjustments turned a 1.2% fall in reported diluted EPS into 13% growth in the adjusted figure.
- Ovivo: US$1,595.7 million, 69.3% goodwill, revenue undisclosed
Funded partly with debt at 4.30-5.00%, with a preliminary goodwill allocation of US$1,105.4 million and no revenue, margin or contract-asset detail given. The incremental return from 2024 to 2025 was 9.2% on adjusted figures because this capital had produced nothing yet.
- Receivables growing six times as fast as sales
Up 13.4% to US$3,249.4 million against sales up 2.2%, with the allowance ratio down to 3.47%. Accrued rebates grew faster than sales, and a US$208.0 million outflow in other liabilities is not explained in the MD&A.
- The price paid, and what the balance sheet carries
38.9 times free cash flow for a 2.57% cash yield, with buybacks executed at the same multiple. Tangible equity is negative US$3,144.7 million, 52.3% of assets rest on acquisition estimates, and Life Sciences goodwill is 20.6 times that segment’s operating income.
Open questions the filing does not answer
- How much of the 2025 margin gain is price and how much is lower input cost, by segment? The filing bundles the two in two of the four segments and publishes no raw-material index.
- What does Ovivo Electronics earn — revenue, margin, and the contract assets behind its US$117.4 million? None is disclosed.
- What does the US$208.0 million outflow in other liabilities consist of, and why did receivables grow faster than sales once Ovivo is removed? Neither is explained.
- What is the goodwill headroom of each reporting unit, Life Sciences in particular? The filing gives the tests but not the margin by which they passed.
- What was the amount of the July 2025 TPC settlement and how much was recovered from insurers? Any charge would sit in special items, which is where the second decisive question lives.
At US$262.52 the market capitalises Ecolab at US$74,022.6 million, with an enterprise value of US$81,646.4 million: 36.1 times diluted earnings, 34.9 times adjusted, 40.5 times the three-year average, 38.9 times free cash flow and 7.6 times book value. A buyer of the whole company would receive operating income equal to 3.35% of enterprise value before tax and financing; a buyer of the shares receives 2.57% of the price in current free cash flow, so the price is close to 39 years of this year’s cash flow per share.
The margin step-up is real and mostly price, but not only price. Two thirds of organic growth was price and nine tenths of added sales reached gross profit, yet the segment bridges credit supply-chain and delivered-cost relief alongside it, and Life Sciences’ 2025 gain partly reverses its 2024 cost problem. The reading holds if next year’s sales bridge still shows a positive price component with the gross margin near 44.5%; it fails if the price component falls to zero and the margin with it, or if accrued rebates keep outgrowing sales.
On capital, the return is high and collected rather than compounded: 13.8% on invested capital, 14.7% on adjusted operating income, with 74.1% of net income returned as dividends and buybacks and about a quarter of after-tax operating profit reinvested organically. The incremental return from 2024 to 2025 was 9.2% on adjusted figures, because the capital added that year is mostly Ovivo, which had produced nothing yet. Tangible equity is negative US$3,144.7 million and 52.3% of assets sit on acquisition estimates, with Life Sciences goodwill at 20.6 times its segment operating income.
Strengths
- Price realised on stable volumes
Gross margin went from 40.2% to 44.5% in two years, with price two of the three points of organic growth and volume one. Product cost of sales fell 0.5% while product sales rose 1.2%.
- Institutional & Specialty: margin from 14.8% to 22.8%
On fixed-currency sales that were flat at US$5,962.0 million, the segment now earns 45.6% of segment operating income on 38.3% of sales. The 2025 bridge gives 4.3 points from value pricing, lower supply chain costs and productivity against 1.0 point of investment.
- Cash conversion without float
Free cash flow of US$1,904.3 million, up 4.7%, while payables and other liabilities drained 7.4% of it — the cash came from the business, not from stretching suppliers or collecting in advance.
- Funding that costs little
Net interest is 8.8% of operating income, the debt is rated A- / A3 / A-, net debt is 2.0 times the company’s EBITDA, and long-term debt carries a fair value below its carrying value.
- A falling share count after covering compensation
Diluted shares fell from 286.5 million to 285.2 million, a net 0.47%, after issuance for compensation. The dividend took 39.6% of free cash flow.
Last year’s watch-list, checked against this filing
| What we flagged | What happened | Result |
|---|---|---|
| One Ecolab restructuring estimate | Nearly doubled, to US$425 million, with US$253.4 million incurred and charges planned through 2027. | RAISED |
| Restructuring reported as “special” | Reported as special in every year from 2022 to 2025, and planned to continue. | RECURRING - not a one-off |
| Ovivo Electronics acquisition, US$1,595.7 million | Completed in 2025; 69.3% of the price is goodwill, the allocation is preliminary and no revenue is disclosed. | NOT VERIFIABLE - no revenue disclosed |
| Sale of the global surgical solutions business (August 2024) | US$889.7 million of proceeds in FY2024 and a US$381.7 million gain; it removes US$217.5 million of 2024 Institutional & Specialty sales from the organic comparison. | DONE - completed |
| July 2025 TPC settlement | Named in the filing without an amount, and the insurance recovery is not stated. | NOT VERIFIABLE - amount not given |
What to watch in the next filing
- The price component of organic sales growth, today two points of three. It answers whether the margin is price that stays.
- Gross margin and the Institutional & Specialty fixed-currency margin, today 44.5% and 22.8%. They show whether the step-up survives a year without new cost relief.
- Special (gains) and charges, today US$162.6 million, and cumulative One Ecolab charges, today US$253.4 million of a US$425 million estimate. They show whether “special” restructuring ends on the stated schedule.
- Receivables and the allowance, today US$3,249.4 million and US$116.8 million, with the other-liabilities line of the cash flow statement at minus US$208.0 million. They show whether the 2025 gaps were acquisition and timing.
- Global Water sales and margin, today US$7,679.9 million and 16.5%, with Ovivo’s final purchase allocation and the goodwill tests. They show what the 2025 capital earns.
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