Christophe Beck: So, bottom-line, Shlomo, with all the elements that Scott just mentioned, I feel even better with what I said and shared with you at the Investor Day in 2023 of saying we will get to this 20% OI margin so within the next few years and it’s not going to take us five years to get there. So, our confidence level has just risen with the delivery of the last three quarters.
Operator: Thank you. The next question is from the line of Steve Byrne with Bank of America. Please proceed with your question.
Rob Hoffman: Hi, Rob Hoffman on for Steve Byrne. And my question was if you guys could share any update on the water for climate and science certified initiatives?
Christophe Beck: Yes, those are two platform innovations as we call them Ecolab Science Certified. So, it’s keeping — progressing very nicely with a few big customers as well jumping on that journey, McDonald’s being the latest big one obviously out there. So, we like how Ecolab Science Certified is not only providing benefits to our customers by protecting their guests by providing a safe and clean and welcoming environment, but also safe foods at the right cost with the total operating cost manage as well as we can. So, Ecolab Science Certified is an overall promise by our customers, which encompasses all our services as well. So, it’s a penetration play which is good for us, driving good results for our customers. Ecolab Water for Climate is a bit the same in a very different set up, obviously, because it’s helping our customers get to their ambition of the net zero.
Some customers are much further down the road and some are very early on that journey. So, to give you some highlights without going too much in detail since we don’t share our customers’ details publicly. We have a dozen of flagship customers, as we call them, who have committed to getting to net zero. One has been very public that’s Microsoft, and progressing very well on that journey as well. It’s really helping them get to net zero, but in a way that makes financial sense for them and for us by driving a lot of innovation and services in their own operations, in order to deliver their objective. So, two growth platforms, driving penetration, improving impact from our customers, which helps us ultimately drive growth and value pricing.
Operator: Thank you. The next question is from the line of Kevin McCarthy with Vertical Research Partners. Please proceed with your question.
Kevin McCarthy: Yes. Thank you and good afternoon. Christophe, back at your Investor Day in September last fall, I think it was. You talked a little bit about cross-selling initiatives. And I was wondering if you could provide an update on those efforts. In other words, if I look at the volume improvement from the first half of 2023 to the back half basically going negative to positive. Do you think that those cross-selling efforts have borne fruit? Or is that on the come in 2024?
Christophe Beck: There’s no doubt that it’s proving right. It’s been true for a very long time by the way. I’d like just to indicate what we’ve built with pest elimination, for instance, which is 90% circle the globe type of business, which is ultimately all our businesses from Institutional, Healthcare and Industrial bringing our team from pest elimination in order to offer the world-class service to all those different segments, while we’ve managed to build $1 billion business with great margins, and highest returns by doing so. So that’s something that we have proven for a very long time in our company. It’s also keeping in mind that half of the $152 billion market we have out there well is an opportunity of penetration. Ultimately, customers we already have that should be or could be buying everything from what Ecolab does.
And the two main drivers for it is what I just shared before with Ecolab Science Certified and Ecolab Water for Climate that ultimately drives bigger gains for our customers by driving the overall end-to-end proposition that we have in the company. And last point, I’ll make is that, we have further focused as well our execution work towards out top 35 customers in the company to make absolutely sure that we were not only providing them with all the resources of the company, but that we could capture as well as much of the opportunity that those customers can offer to us, which is a number that counts in the billions.
Operator: Thank you. Our next question comes from Patrick Cunningham with Citi. Please proceed with your question.
Patrick Cunningham : Hi. Good afternoon. I have kind of a specific follow-up on the last question. So you’ve had the solid share gains in institutional with volumes up maybe mid single digits where end markets are stable to slightly down, how much of this was a share of wallet versus new customers? And are there any sort of representatives products or technologies, which have driven a lot of the share gain this year? And then how should we think about new business wins for institutional and specialty into 2024?
Christophe Beck: So a few different questions here, Patrick, so all related to the same topic obviously. So, new business generation is our number one focus in the company where sales organization says that heart our mantra in the company for the 47,000 people is we’re all in sales just to describe how we think about it as well. So it’s really a teamwork. And new business generation, our pipelines are at record levels right now really like how much we have gained. Obviously we now we need to install all that in the next few months, next few quarters. That’s always true and it’s different by businesses. It goes faster in Institutional, which is why you see as well a very good growth in Institutional. They have a great new business generation.
They can install pretty quickly as well, good for the customers, good for us and leading to great results because margins are so good, obviously, in that business. So to your question on how much is cross-selling versus totally new. The best way to think about it in our company is generally two-third is cross-selling, which is really selling to customers that other businesses already have and one-third is brand new and that’s an average number. It’s not obviously always the same across businesses and geographies, but that’s a good way to think about it and to keep in mind that we are primarily focused on cross-selling, which is the best way and easiest way to sell and the cheapest way driving the highest margins.
Operator: Thank you. Our next question comes from Mike Harrison with Seaport Research Partners. Please proceed with your question.
Mike Harrison: Hi. Good afternoon. I wanted to ask another question around the Institutional business, but I wanted to dig in more on the specialty side of that business. You just had within specialty probably the best year of growth in a decade or more. Can you talk about what is driving the improvement on both the QSR and the food retail side? And then you also — it also looks like you acquired this Chemlink business back in May. Can you talk about what Chemlink is bringing into the portfolio within that specialty business?
Christophe Beck: Okay. So a few questions in there. So Mike you’re right, the specialty, which is QSR as a quick serve restaurants and food retail had a great year in 2023. It’s been true for pretty long time by the way. So great businesses based in the same place in North Carolina as you probably know as well the — the key reasons why those businesses are going so well. On one hand, especially QSR is an industry that’s doing well at all times especially in more difficult times because people have a tendency to trade down. And when they move from full service restaurants to quick serve, obviously, we can capture them in a good way at high margin as well at the same time. That’s a little bit the beauty of our portfolio since we serve all the various segments.
So serving an industry that is very successful. It’s the first element. The second one is it’s an industry that by definition is very standardized as we know across the country or across the world. When you think about our promise, well, it’s probably the industry where it resonates the most, because what we’re helping our customers achieve is to understand what’s the best-performing unit in their enterprise and to help them get all the units from the enterprise at the level of performance of the best-performing one in terms of cost, in terms of quality of delivery, and in terms of environmental impact as well. So the combination of a very strong business that’s been built over decades, with an industry that is especially successful right now 2023 was a great year for that industry, and a value proposition that resonates exactly with them, because their objective is to reach the best-in-class performance across the universe as well.
Well, those are three key reasons why this business is doing well. And I believe in the future of that business as well going forward.
Operator: Thank you. Our next question is from the line of Scott Schneeberger with Oppenheimer & Company. Please proceed with your question.
Scott Schneeberger: Thanks very much. Sort a little bit regarding the cost savings program. It’s now been a full year in place and very sizable. Scott touched a bit earlier on some of the key focus areas geographies and segments and that was very helpful. But just curious is this on track as far as timing-wise? Is it something that maybe you’ve had the opportunity where you haven’t had to be as aggressive because you’ve had a really nice growth 2023? Just curious, how close to on plan timing-wise and size-wise this is? And any incremental thoughts you’d like to share? Thanks.
Christophe Beck: Yeah. Thank you, Scott. So let me have the other Scott answer part of that question and I’ll make a few comments.
Scott Kirkland: Yeah, thank Scott. No, we are exactly where we expected to be. If we think about the combined program, which is really what we have left. We had some older restructuring programs which are complete the institutional advancement 2020, or complete through the end of the year. The combined program, we delivered through the end of 2023, 75% of those expected savings cumulatively through the end of the year, and expect to realize the lion’s share of that through 2024. And as you know, when we initially launched this at the end of 2022. It was initially focused on Europe and early in 2023. We expanded it to Institutional and Healthcare. And if you think about the performance of those businesses Christophe talked about Europe, talked about the great margins there the great growth, and you’ve seen the great OI in Institutional specialty up over 40% in the quarter and as well as the Healthcare continuing to get better.
