Christophe Beck: Yes. Maybe two questions in your question here, Steve. So first, in terms of share gain, we’re not a consumer goods company. So, it’s a bit harder to have the exact numbers, obviously here. But directionally, when I look at the big ones, so I&S up 12% in a flat market, so that’s obviously indicating very interesting share gains. Pest Elimination, up double digit when competition is either in the single digit or down for some of them as well. That’s showing as well, so share gain. Industrial, even comparing to a very strong last year in the mid-single, well, PMI in the U.S. and in the EU is negative. So that’s also showing share gain as well. And as mentioned, in Healthcare growing back again is also showing quite a healthy performance.
So overall, I like a lot of how we’re progressing versus our peers in the marketplace. Now to your question on SG&A, as I’ve shared with you in the past, I think that ultimately, the Company is going to be much bigger in the years to come. I don’t think that our team is going to be much bigger. But I’m not expecting the team to be reduced but it might be in different places. And I want to make sure that the number one place where I want to have all the firepower I can is in the front line, which means our team serving our customers, where we will leverage digital and AI technology, not only to improve productivity to help them serve more customers, sell more solutions but more importantly, spend way more time in creating value for our customers, which drives obviously value for our customers, which drives new business, which drives pricing and ultimately improves our margin.
So the way I think about SG&A in ratio, it’s going to keep going down the years to come. But ultimately, I’ll make sure as well that through digital technology, we increase the impact of our front line with our customers, which has been core to this company for the years past too.
Operator: Our next question is from the line of Patrick Cunningham with Citi.
Patrick Cunningham: On the Life Sciences business, how should we think about new business growth and investment into next year given some of the persistent near-term weakness sort of juxtapose with the long-term growth opportunity and margin expansion that you highlighted in your Investor Day?
Christophe Beck: Yes. So, Patrick, on Life Science, we’ve seen improvement, which is good in the third quarter, in a market that’s generally down. And I see that as a short-term impact in the industry, it’s an industry, pharma, biotech, that is very promising for the future, a few challenging times for a few quarters. We see how many more quarters that’s going to last for the industry out there, but I’m very bullish with where the industry as a whole is going in the years to come. Now, when it comes to our own performance, well, the fact that we have positive growth is also a sign of the new business that we’re generating, the share that we’re gaining as well versus our competition. And it’s in that time that Ecolab usually focuses the most in investing for the future.
And as I’ve shared during Investor Day, well, we’re investing in capacity making sure that we will have enough production capacity, for the years to come to deliver our growth and not just in one location, but in several locations in Asia, in Europe and in North America. And at the same time, it’s also building capabilities. It’s building our team. It’s building expertise. It’s building science and R&D as well at the same time. And if the market is a bit different short term than what we had expected a year or two ago, our investment plan hasn’t changed because for me the future totally unchanged. It’s just a short-term impact that the market is having on everyone’s performance.
Operator: The next question is from the line of Kevin McCarthy with Vertical Research Partners.
Kevin McCarthy: Christophe, I’d welcome your updated thoughts on the Healthcare business. I guess, in terms of operations, would you expect that business to grow on par with your corporate average next year or better or worse? And then, on the strategic side, I think you’ve now separated infection prevention from Surgical. And maybe you can kind of talk through what you’re seeing in terms of incremental benefits from that in the early days as it relates to customer touches and productivity and the like?
Christophe Beck: Yes. Thank you, Kevin. So, three things. First is bifurcation, infection prevention and surgical as mentioned earlier is progressing very well. It’s really providing the right focus for the surgical business that’s serving different people in a hospital than infection prevention, which is much closer to Institutional. This is helping, obviously, the surgical business. And the fact that infection prevention is now managed by the institutional team, well, we get not only the reach because they serve way more hospitals or institutional products, obviously, than healthcare, you get immediate synergies from a growth perspective, you get the synergies on the cost as well because it’s a way bigger team than what Healthcare as well used to be.
So in terms of transition, I like the progress that’s being made. Now, in terms of growth performance, if I think short term, speak ‘24, I think Healthcare is going to be below average of the Company and more longer term — well, my objective is to make sure that our Healthcare business becomes at least at the average of the Company, if not better, but that’s going to take some time and some work in order to get there.
Operator: Our next question comes from the line of Vincent Andrews with Morgan Stanley.
Vincent Andrews: Just a question from me on inventories. Just looking at it, it’s down, I don’t know, mid-high-teens year-over-year, but your volume is kind of flattish and price is up on your delivered products. So, I’m just trying to understand if raws are still sort of flattish, what’s helping the inventory come down and improve the working capital performance?
Christophe Beck: Thank you, Vincent. I’m going to pass this one to Scott.
Scott Kirkland: Thanks, Vincent. I’d be happy to answer this. So yes, as you probably saw, our Q3 working capital was about $250 million favorable versus last year and largely driven by some targeted inventory reductions. We’re down — DOH is down about 10 days, so the rate impact on that versus the end of last year. And that’s really been driven by, as the supply chain team has driven great supply chain resilience and allowed us to go after and reduce those inventory levels. And so I would expect really like the working capital trajectory and expect really strong free cash flow growth through the balance of the year and frankly, expect our free cash flow conversion to be above historical levels, which tends to be mid-90s and expect that free cash flow conversion to be above 100% this year on a full year basis.
Operator: Our next question is from the line of Rosemarie Morbelli of Gabelli Funds.
Rosemarie Morbelli: Congratulations to everyone on that great quarter. Institution did really quite well. And I was in — well, I was in several hotels recently. And the level of cleaning, changing sheets, changing towels and so on has come down substantially. I know you are adjusting your operations to reflect this different world. But I was wondering if you could give us a little more details on what you are doing because if they don’t change anything, you obviously don’t sell your products, services and so on? Details would be appreciated. Thanks.
Christophe Beck: Thank you, Rosemarie. This is a core element of focus between us and our hospitality customers. It was initially driven by shortage, obviously, of labor that they didn’t have to do all that work, which is still a challenge for that industry. At the same time, well, they like the fact that less labor meant as well less cost while pricing went up, that drove good margins for institutional customers, which ultimately is a good thing for the industry, and when the industry is doing well, it’s a good thing for us as well at the same time. That being said, quality standards need to get back to where they used to be. It’s exactly playing into what we’re doing which is having products that are delivering better quality, better standards, better cleanliness with less labor.
