With record customer gains, Ecolab plans to use tech to grow even more

Ecolab has a new growth plan, one that is counting on AI and other tech tools to use data to help customers and sell more of its products.

With new business wins at record highs and improved operating margins, the St. Paul-based company launched what it is calling the “One Ecolab” initiative.

“When we talk about One Ecolab, we talk about one customer, one field sales and one company,” said Chief Executive Christophe Beck. “It’s really to help customers understand that … we serve millions of customers in 170 countries and in 40 industries.”

Ecolab provides water, hygiene and infection prevention products and services in places from manufacturing plants to colleges and arenas. Under the new plan, the company will expand use of its current digital technologies and add solutions using AI and other tools.

Goals include 5% to 7% organic sales growth and progress toward 20% operating margins.

The plan also means Ecolab needs to work differently in the future. Previously, the company was organized along business lines. Now, it will be more focused on customers.

Ecolab has identified $55 billion in potential cross-selling opportunities among its customers — $3 billion worth among its top 35 customers. The idea is to become a better partner for customers.

Take large restaurant chains. Ecolab’s experts in the field can help identify the best performing unit in a chain or its best practices, company officials said. The One Ecolab initiative will connect the expertise of Ecolab’s field workers with the millions of data points gathered across the chain to help the company improve performance at other locations.

The company already has the data to know what best-in-class performance looks like at hotels, restaurants and data centers, Beck said. And for 30 years, the company has been working with manufacturing customers to improve water conservation and other measures.

“By leveraging cloud technology and AI, ultimately we can spread all that knowledge across our team” and into other business units, Beck said.

Best-in-class status many times means savings for the companies, so the new initiative will help customers achieve better business outcomes, operational performance and environmental impact, Beck said during the company’s second quarter earnings call.

The new structure, he said, should help Ecolab workers operate more efficiently. And hopefully the results will help the company continue to expand its footprint. It employs 48,000 workers worldwide, including 3,000 in Minnesota.

For the period ended June 30, Ecolab reported income of $490.9 million, up 49% year over year. Sales were nearly $4 billion, up 3%.

“I’m really proud of what the team has accomplished around the world and across the board — all markets, all businesses,” Beck said in an interview. “It’s been seldom as clean and healthy.”

The increased business activity and strong second quarter results led Ecolab to raise its guidance for the remainder of the fiscal year. The company now expects to report full year adjusted earnings in the range of $6.50 to $6.70 a share, up from the prior range of $6.40 to $6.70 a share.

Ecolab’s earnings per share had met analyst expectations, but revenue just missed the consensus expectations. While Ecolab’s outlook for the rest of the year increased, analysts’ consensus expectation is $6.60 a share for the full year, at the midpoint of Ecolab’s revised range.

“Ecolab’s results and outlook were solid and broadly in line with our expectations,” said Faisal Hersi, a materials analyst with Edward Jones, in an investors note after the earnings were released Tuesday. “However, given the stock’s recent relative performance, we think investor expectations were high, and this could weigh on shares.”

On Thursday, Ecolab said it closed on the previously announced sale of its Medline surgical supplies business for about $950 million. Proceeds of the sale will be used for additional growth as well as a $500 million share repurchase program.