Ecolab Inc. (NYSE:ECL) Q2 2023 Earnings Call Transcript

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On the other hand, leveraging the huge sales force that we have in Institutional in North America, well, they get immediately a much broader reach on the market because institutionally serving hospitals on the food service and hospitality side today already and at the same time, get a huge boost in terms of cost productivity. So, improving Infection Prevention business performance, kind of almost overnight, it’s going to take, obviously, so a few months to get there, but it’s kind of a sure thing. It’s in our hands, while the Surgical business, which is doing quite well and with good margins, is going to remain a focused business. So, we have those two businesses in a better place, and that’s the next step that we want to execute towards our ambition to have a good Healthcare business ultimately.

Operator: The next question comes from the line of Shlomo Rosenbaum with Stifel.

Shlomo Rosenbaum: I actually want to piggyback on Manav’s question. Is the Infection Protection business going to be kind of folded into Institutional? If you’re going to be leveraging their sales and service organization, what is going to be kind of standalone on its own? And by separating these businesses, does it also make it easier, if you can’t get them to the place you want to be to kind of sell them off in bite-sized pieces?

Christophe Beck: So a lot to unpack in your question, Shlomo. So, I’m not going to comment about the future. It gives us more options, let’s put it that way. But we’ll have those two businesses. One, our Surgical business, our Drape business is going to be standalone with its own divisional structure, supply chain. So very verticalized, if I may say. The Infection Prevention business, we’re going to have the best of both worlds, because we’re going to have a division that’s focused on corporate accounts, on marketing, on innovation, R&D, really so driving that business strategically, while commercial execution is going to be done by Institutional, where you get much more reach and a much better cost structure as well at the same time. So, two focused businesses. Surgical, totally verticalized; Infection Prevention, a separate division, but leveraging Institutional as their commercial arm.

Operator: Our next question is from the line of Andy Wittmann with Robert W. Baird.

Andy Wittmann: I wanted to dig into the Life Sciences performance in the quarter and your comments, Christophe, about how there’s some short-term disruption in that marketplace. I was hoping you could elaborate on this, perhaps address what’s the cause of the short-term disruption? Or perhaps maybe that’s related to the prior few years, with all the vaccines and COVID and other things like that, maybe we just need to come off of that period, I don’t know. And if you could just talk to the confidence that you have in the recovery. It sounded like it’s not going to be necessarily right here in the third quarter, and you said, I think maybe the comment was a few quarters. But any detail that you can give to support the return to that growth in Life Sciences, including whether that’s the legacy Life Sciences business or the newer filtration business that you’d acquired a year or so ago?

Christophe Beck: Thank you, Andy. So, Life Sciences is a great business. It’s been a great business, since we started in 2017, when we rolled the various pieces together. And the future is even better, because — while it’s going to be the golden age of pharma, and biopharma is going to be the new way of producing drugs and vaccines going forward as it’s been demonstrated with COVID over the past few years. So, a great business that has delivered very well with a very good future. Purolite is a new element to that business, which adds drug filtration to it as well as new capabilities to filtrate any other liquid, especially saltwater in other industries, as we’ve mentioned. So the industry is a bit under pressure today.

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