Margin Outlook
Q: When will you achieve the 20% EBIT margin target?
A: We expect to reach the 20% EBIT margin within the next few years—less than five—and we're feeling more confident with progress in gross margins near 44% and SG&A improvements. This will mathematically lead us to the 20% fairly soon.

EPS Guidance
Q: Why doesn't normal EPS seasonality apply this year?
A: Due to the $0.08 headwind from the surgical divestiture and additional FX impacts, as well as easing DPC tailwinds, our EPS growth won't follow typical patterns. However, we're still driving strong earnings growth at the high end of our 12%–15% long-term range.

One Ecolab Initiative
Q: How does One Ecolab impact growth and margins?
A: One Ecolab is a growth-focused initiative aiming to fuel 5%–7% top-line growth by leveraging a $55 billion cross-sell opportunity, especially with our top 35 customers worth $3 billion. It will enhance productivity and support reaching the 20% OI margin target. Investments are planned and included in our numbers.

Raw Material Costs
Q: What are raw material tailwinds in the second half?
A: We saw high single-digit favorability in Q2 but expect it to taper to low to mid-single digits in Q3, with raws stabilizing by Q4 and returning to normal inflationary levels next year.

Volume Growth
Q: How should we think about volume growth going forward?
A: Volume growth slowed to 1% due to tough comps in Institutional, which had 13% growth last year. We anticipate overall growth in the 1%–2% range in the second half, moving naturally from 4%–5% this year toward 5%–7%.

Industrial Segment Outlook
Q: What's the outlook for the Industrial segment and margins?
A: Industrial is improving with margins at 16%, up 200 basis points from 2019. We aim to reach 18% margins en route to the 20% company target, driven by Water at 4% growth (stronger when adjusted for mining impacts) and strong performance in Global High-Tech.

Institutional Growth Drivers
Q: What's driving outperformance in Institutional and Specialty?
A: We're gaining market share by providing automation solutions that address labor shortages, enabling customers to serve more with less labor. This unique offering drives growth at higher margins and is something competitors can't match.

Pest Elimination Outlook
Q: When will Pest Elimination show meaningful sales leverage?
A: Pest Elimination is steadily growing at high single to low double digits. By investing in connected devices and cross-selling, we aim to surpass 20% margins, driving top-line and earnings growth with the highest return on invested capital in the company.

M&A Outlook
Q: How are you evaluating the acquisition pipeline?
A: Our M&A pipeline is rich and focused on Water, Digital, and Life Sciences. With a strong balance sheet and after integrating Purolite and reducing leverage, we're well-positioned to pursue opportunities that align with our key priorities.

Divestitures
Q: Are further divestitures planned after selling Healthcare Surgical?
A: No further divestitures are planned. We regularly review our portfolio, but no other businesses currently stand out as candidates. We value the broad-based performance across our businesses and markets.

Interest Expense Details
Q: Why did interest expense rise despite stable debt levels?
A: Interest expense increased due to reduced cash balances, from over $900 million at year-end 2023 to about $380 million by end of Q2, which we used to pay down debt earlier in the year. We expect second-half interest expense to be in the $60–$70 million range.

Water Business Opportunities
Q: What are the long-term opportunities in the Water business?
A: We're focusing on 150 companies that consume one-third of global freshwater, aligning with our top 35 customers. This approach drives our Water business acceleration. Additionally, PFAS regulations present a future business opportunity, especially with Food & Beverage customers, though meaningful impact will take time.

High-Tech Water Growth
Q: Can you elaborate on growth in the high-tech Water segment?
A: Our high-tech Water business, a few hundred million dollars in size, grew roughly 30% last year. Serving semiconductor manufacturers and data center operators, this highly profitable segment continues to improve due to customers prioritizing uptime and reduced water and energy usage over cost.

One Ecolab vs. Past Initiatives
Q: How is One Ecolab different from previous programs?
A: Unlike prior initiatives focused on individual businesses or back-office efficiencies, One Ecolab connects all businesses to present a unified value to customers. It leverages company-wide expertise to enhance customer performance and drives growth across all segments.

No Further Divestitures
Q: Are more business exits expected after Healthcare Surgical?
A: Currently, there are no plans for additional divestitures. We continually assess our portfolio but see no obvious candidates that don't align with our strategy or performance expectations.