ECL 10-K & 10-Q changes, risk factors and insider trading

We may also refer to this disclosure to identify factors that may cause results to differ materially from those expressed in other forward-looking statementsstatements, including those made in oral presentations, includingsuch as telephone conferences and/or webcasts open to the public.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K, including "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operation" and our consolidated financial statements and the related notes, before making an investment decision. The risks described below are not the only risks or uncertainties we face. The occurrence of any of the following risks orrisks, additional risks and uncertainties not presently known to us, or risks that we currently believe to be immaterial, could materially and adversely affect our business, reputation, financial condition, prospects, or results of operations. In such case, the trading price of our common stock could decline, and you may lose all or part of your original investment. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks and uncertainties described below. The disclosures in this section reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past.

Additionally, macroeconomic and geopolitical developments, including public health crises, escalating global conflicts, supply chain disruptions, labor market constraints, rising rates of inflation and high interest ratesrates, may amplify many of the risks discussed below to which we are subject. The extent of the impact of macroeconomic and geopolitical developments, including public health crises,developments on our financial and operating performance depends significantly on the duration and severity of such macroeconomic and geopolitical developments, the actions taken to contain or mitigate its impact and any changes in consumer behaviors as a result thereof.

Over the past year, changes in global interesttrade ratespolicies, aimedincluding atthe curbingimposition inflation,of tariffs, import and export restrictions, and retaliatory trade actions, as well as implications of geopolitical situations in Europe, the Middle EastEast, China, and China,Russia, have resulted in economic and demand uncertainty. Previously, the COVID pandemic, geopolitical instability and other global events have resulted in supply chain challenges, inflation, high interest rates, foreign currency exchange volatility, and volatility in global capital markets, which have affected our business and could have a material adverse impact on our business in the future. Countries such as Argentina and Turkey have experienced economic upheaval and similar upheaval in other countries with Ecolab operations could have a material adverse impact on our consolidated results of operations, financial position and cash flows by negatively impacting economic activity, including in our key end-markets, and by further weakening the local currency versus the U.S. dollar, resulting in reduced sales and earnings from our foreign operations, which are generated in the local currency, and then translated to U.S. dollars.

Economic downturns, and in particular downturns in our larger marketsmarkets, including the foodservice, hospitality, travel, health care, food processing, refining, pulp and paper, mining and steel industries, can adversely impact our customers, and we may find it difficult to restore margins by maintaining pricing due to easing inflation from slowing economic growth. Recently, the war and energy crisis in Europe have resulted in a more challenging macroeconomic environment with significantly impacted costs and demand. Previously, the COVID-19 pandemic negatively impacted the demand for our products and services provided to customers in the full-service restaurant, hospitality, lodging and entertainment industries. In prior years, a weaker global economic environment has also negatively impacted certain of our other end-markets. During these periods of weaker economic activity, our customers and potential customers may reduce or discontinue their volume of purchases of cleaning and sanitizing products and water treatment and process chemicals, which has had, and may continue to have, a material adverse effect on our business, financial condition, results of operation or cash flows.

We have significant operations outside the United States, including joint ventures and other alliances. We conduct business in more than 170 countries and, in 2024,2025, approximately 47% of our net sales originatedwere generated from customers outside the United States. There are inherent risks in our international operations, including:

Additionally, changes in international trade policies by governments around the world, including the imposition or continuation of tariffs, could materially and adversely affect our business. InDuring 2018,2025, new tariffs were imposed in the U.S. imposed tariffs on certainfor imports from Chinaa broad range of countries and othermaterials. countries,Several resultingcountries inalso implemented or proposed retaliatory tariffs by China and other countries. In February 2025, the U.S. proposed a 25% additional tariff on imports from Canadathe andU.S., Mexicoas andwell as other barriers to trade. Ongoing changes in U.S. trade policy through administrative action or litigation create a 10%heightened additionallevel tariffof onuncertainty importsfor fromour China.business. These tariffs, any new tariffs or policies imposed by governments around the world, or any resulting retaliatory measures, to the extent implemented, could increase our costs, reduce our sales and earnings or otherwise have an adverse effect on our operations.

We continue to execute key business initiatives as part of our ongoing efforts to improve our efficiency and returns. In particular, we are making supply chain investments to secure supply and add new capacity in our Life Sciences business. Additionally, we are continuing implementation of our ERP system upgrades, which are expected to continue in phases over the next several years. These upgrades, which include sales, supply chain and certain finance functions, are expected to improve the efficiency of certain financial and related transactional processes. These upgrades involve complex business process design and a failure of certain of these processes could result in business disruption. We are also undertaking restructuring programs including the One Ecolab initiative leveraging our digital technologies to realign the functional work done in many countries into global centers of excellence. This program is discussed along with other restructuring activities under Note 33, “Special (Gains) and Charges,” of the Notes of this Form 10-K. If the projects in which we are investing or the initiatives which we are pursuing are not successfully executed, our consolidated results of operations, financial position or cash flows could materially and adversely be affected.

War (including acts of terrorism or hostilities), natural or manmade disasters, water shortages or severe weather conditions, including the effects of climate change, affecting the energy, foodservice, hospitality, travel, health care, food processing, pulp and paper, mining, steel and other industries can cause a downturn in the business of our customers, which in turn can have a material adverse effect on our consolidated results of operations, financial position or cash flows. In particular, the U.S. Gulf Coast is a region with significant refining, petrochemicals and chemicals operations which provide us raw materials, as well as being an important customer base for our WaterLight & Heavy operating segment. Hurricanes or other severe weather events impacting the Gulf Coast, such as the winter freeze in Texas and the Gulf Coast in February 2021, can materially and adversely affect our ability to obtain raw materials at reasonable cost, or at all, and could adversely affect our business with our customers in the region.

Our business may face increased scrutiny from the investment community, other stakeholders, regulators, and the media related to our sustainability activities, including our commitments, goals, targets, and objectives, and our methodologies and timelines for pursuing them. If our sustainability practices do not meet the rapidly evolving, varied and often times conflicting investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees, and our attractiveness as an investment, business partner, or as an acquiror could be negatively impacted. Similarly, our failure or perceived failure to pursue or fulfill our commitments, goals, targets, and objectives, to comply with ethical, environmental, or other standards, regulations, or expectations, or to satisfy reporting standards with respect to these matters, within the timelines we announce, or at all, could have operational, reputational, financial and legal impacts.

We are subject to income and other taxes in the United States and foreign jurisdictions, and our operations, plans and results are affected by tax and other initiatives around the world. We are also impacted by actions taken to tax-related matters by associations such as the Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, and the European Commission which influence tax policies in countries where we operate. In particular, the OECD has coordinated negotiations among more than 140 jurisdictions with the goal of achieving consensus on various substantial changes to the international tax framework, including a 15% global minimum taxation regime (“Pillar Two”). Pillar Two took effect in several jurisdictions in which we operate starting in 2024 and will increase the burden and costs of our tax compliance. The enactment of the One Big Beautiful Bill Act (“OBBBA”) in the U.S. introduced changes to U.S. international tax provisions. These changes may interact with Pillar Two in complex ways. Statements by the Group of Seven Nations (“G7”) suggest a potential “side-by-side” framework that could exempt certain U.S. parented groups from all or certain aspects of Pillar Two rules but the final outcome remains uncertain. The evolving nature of these reforms may impact our tax profile, increase compliance costs, and create additional risks of double taxation or inconsistent treatment across jurisdictions. We continue to monitor thesePillar Two legislative developments, whichwhich, based on information available, have not had material impacts toon the 20242025 financial statements. In addition, we are impacted by settlements of pending or any future adjustments proposed by the IRS or other taxing authorities in connection with our tax audits, all of which will depend on their timing, nature and scope. Increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters could have a material adverse impact on our financial results.

We incur significant expenses related to the amortization of intangible assets and may be required to report losses resulting from the impairment of goodwill or other assets recorded in connection with the NalcoNalco, Purolite and PuroliteOvivo Electronics transactions and other acquisitions.

We expect to continue to complete selected acquisitions and joint venture transactions in the future. In connection with acquisition and joint venture transactions, applicable accounting rules generally require the tangible and intangible assets of the acquired business to be recorded on the balance sheet of the acquiring company at their fair values. Intangible assets other than goodwill are required to be amortized over their estimated useful lives and this expense may be significant. Any excess in the purchase price paid by the acquiring company over the fair value of tangible and intangible assets of the acquired business is recorded as goodwill. If it is later determined that the anticipated future cash flows from the acquired business may be less than the carrying values of the assets and goodwill of the acquired business, the assets or goodwill may be deemed to be impaired. In this case, the acquiring company may be required under applicable accounting rules to write down the value of the assets or goodwill on its balance sheet to reflect the extent of the impairment. This write-down of assets or goodwill is generally recognized as a non-cash expense in the statement of operations of the acquiring company for the accounting period during which the write down occurs. As of December 31, 2024,2025, we had goodwill of $7.9$9.2 billion which is maintained in various reporting units, including goodwill from the NalcoNalco, Purolite and PuroliteOvivo Electronics transactions. If we determine that any of the assets or goodwill recorded in connection with the NalcoNalco, Purolite, and PuroliteOvivo Electronics transactions or any other prior or future acquisitions or joint venture transactions have become impaired, we will be required to record a loss resulting from the impairment. Impairment losses could be significant and could have a material adverse effect on our consolidated results of operations and financial position.

The following management discussion and analysis (“MD&A”) provides information that we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative or qualitative information about the material sales drivers including the impact of changes in volume and pricing and the effect of acquisitions and changes in foreign currency at the corporate and reportable segment level. We also provide quantitative information regarding special (gains) and charges, discrete tax items and other significant factors we believe are useful for understanding our results. Such quantitative drivers are supported by comments meant to be qualitative in nature. Qualitative factors are generally ordered based on estimated significance.

Our non-GAAP financial measures for organic sales, organic operating income and organic operating income margin are at fixed currency and exclude the impact of special (gains) and charges, the results of our acquired businesses from the first twelve months post acquisition and the results of divested businesses from the twelve months prior to divestiture. AsIn addition, as part of the separation of ChampionX in 2020, we entered into an agreement with ChampionXcontinue to provide, receive or transferprovide certain products for a transitionary period. Transitionary period sales of product to ChampionX under this agreement are recorded in product and equipment sales in the Corporate segment along with the related cost of sales. The remaining sales to ChampionXwhich are recorded in product and equipment sales in the Global IndustrialWater segment along with the related cost of sales. Further, due to the sale of the global surgical solutions business on August 1, 2024, we have excluded the results of thethat business for AugustJanuary through DecemberJuly 20232024 from these organic measures for the year ended December 31, 20232024 to remain comparable to the corresponding period in 2024.2025. These transactions are removed from the consolidated results as part of the calculation of the impact of acquisitions and divestitures.

In 2024,2025, we delivered record sales, operating income margin, free cash flow, and adjusted diluted earnings per share.share, and free cash flows. Our team generated highstrong single digitorganic sales growth in Global Pest Elimination and Global Life Sciences, and good organic sales growth in Global Institutional & Specialty and PestGlobal EliminationWater. whileOrganic Industrial and Healthcare and Life Sciences generated good sales growth. Operatingoperating income grew by strong double digits, as strong value pricing, lower delivered product costs,pricing and higherimproved volumesproductivity overcamewere partially offset by investments in the business.

Our reported gross margin was 43.5%44.5% of sales for 2024,2025, compared to our 20232024 reported gross margin of 40.2%.43.5%. Excluding the impact of special (gains) and charges and the Ovivo Electronics acquisition included in cost of sales, our adjusted gross margin was 44.5% in 2025 and 43.5% in 2024 and 40.4% in 2023.2024. Our gross profitmargin increase reflected strong value pricing and lower delivered product costs.pricing.

Reported operating income increaseddecreased 41%2% to $2.7 billion in 2025, compared to $2.8 billion in 2024, compared to $2.0 billion in 2023.2024. Adjusted operating income, excluding the impact of special (gains) and charges and the Ovivo Electronics acquisition increased 23%11% in 20242025 as strong value pricing, lower delivered product costs,pricing and higherimproved volumesproductivity were partially offset by investments in the business. Organic operating income increased 26%13% in 2024.2025.

Earnings from Continuing Operations Attributable to Ecolab Per Common Share (“EPS”)

Reported diluted EPS increaseddecreased 54%1% to $7.28 in 2025, compared to $7.37 in 2024 compared to $4.79 in 2023.2024. Special (gains) and charges had an impact on both years. Special (gains) and charges in 2025 were primarily related to One Ecolab, while in 2024 they were driven primarily by the gain on sale of the global surgical solutions business and restructuring expense and 2023 were driven primarily by restructuring expense. Adjusted diluted EPS, which excludes the impact of special (gains) and charges andcharges, discrete tax items and the Ovivo Electronics acquisition increased 28%13% to $7.53 in 2025 compared to $6.65 in 2024 compared to $5.21 in 2023 which reflected solidgood organic sales growth, lower delivered product costsgrowth and continuedrobust investmentsoperating inincome themargin business.expansion.

Dividends declared per common share in 20242025 waswere $2.36$2.68 per share. In December 20242025 we increased our quarterly cash dividend by 14%12% to $0.65$0.73 per share, representing our 33rd34th consecutive annual dividend rate increase. We have paid cash dividends on our common shares for 8889 consecutive years. Our outstanding dividend history reflects our long-term growth and development, strong cash flows, solid financial position and confidence in our business prospects for the years ahead.

Our consolidated financial statements are prepared in accordance with U.S. GAAP. We have adopted various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. Our significant accounting policies are disclosed in Note 22, “Significant Accounting Policies,” of the Notes to the Consolidated Financial Statements (“Notes”).

Preparation of our consolidated financial statements, in conformity with U.S. GAAP, requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are considered to be critical if they meetinvolve botha significant level of theestimation following criteria: (1) the estimate requires assumptions to be made about matters that are highly uncertain at the time the accounting estimate is made,uncertainty and (2) different estimates that we reasonably could have used for the accounting estimate in the current period,had or changes in the accounting estimate that are reasonably likely to occur from period to period, have a material impact on the presentation of our financial condition or results of operations.

The significant assumptions used in developing the required estimates are the discount rates, expected returns on assets,assets and projected salary and health care cost increases and mortality tables.increases.

The effects of actual results differing from our assumptions, as well as changes in assumptions, are reflected in the unrecognized gains or losses and amortized into earnings in the future. Significant differences in actual experience or significant changes in assumptions may materially affect future pension and other postretirement obligations and income or expense. The unrecognized net losses on our U.S. qualified and non-qualified pension plans increaseddecreased to $486 million as of December 31, 2025, from $526 million as of December 31, 2024, from $495 million as of December 31, 20232024 (both before tax), primarily due to lowerhigher actual return on assets partially offset by current year net actuarial gains.assets.

Refer to Note 1616, “Retirement Plans,” of the Notes for further discussion concerning our accounting policies, estimates, funded status, contributions and overall financial positions of our pension and postretirement plan obligations.

Tax regulations require items to be included in our tax returns at different times than the items are reflected in our financial statements. As a result, the effective income tax rate reflected in our financial statements differs from that reported in ourstatutory tax returns.rates. Some of these differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as depreciation expense.

The tax positions we take are based on our interpretations of tax laws and regulations in the applicable federal, state and international jurisdictions. We believe our tax returns properly reflect the tax consequences of our operations, and our liabilities for unrecognized tax benefits are appropriate and sufficient for the positions taken. Because of the uncertainty of the final outcome of these examinations, we have established a liability for potential reductions of tax benefits (including related interest and penalties) for amounts that do not meet the more-likely-than-not thresholds for recognition and measurement as required by authoritative guidance. The liability for unrecognized tax benefits is reviewed throughout the year, taking into account new legislation, regulations, case law and audit results. Settlement of any particular issue could result in offsets to other balance sheet accounts, cash payments or receipts and/or adjustments to tax expense. Liabilities for unrecognized tax benefits are presented in the Consolidated Balance Sheets within other non-current liabilities. Our gross liability for unrecognized tax benefits was $34.1$53.9 million and $24.2$34.1 million as of December 31, 20242025 and 2023,2024, respectively. For additional information on income taxes refer to Note 12.12, “Income Taxes,” of the Notes.

Globally, we have a broad customer base. Our retention rate of significant customers has aligned with our acquisition assumptions, including the customer bases acquired from our Nalco, Laboratoires Anios (“Anios”), Copal Invest NV, including its primary operating entity CID Lines (collectively, “CID Lines”), Purolite and PuroliteOvivo Electronics transactions, which make up the majority of our unamortized customer relationships. Our historical retention rates, coupled with our consistent track record of keeping long-term relationships with our customers, supportssupport our expectation of consistent sales generation for the foreseeable future from the acquired customer bases. If our customer retention rates or other post-acquisition operational activities change materially, we would evaluate the financial impacts and significance of the events given rise to the change which could result in impairment of our customer relationship intangible assets, or absent an impairment, an acceleration of amortization expense.

Goodwill arises from our acquisitions and represents the excess of the fair value of the purchase consideration exchanged over the fair value of net assets acquired. We had total goodwill of $7.9$9.2 billion and $8.1$7.9 billion as of December 31, 20242025 and 2023,2024, respectively. We test our goodwill for impairment at the reporting unit level. Our reporting units are our eightseven operating segments. We assess goodwill for impairment on an annual basis during the second quarter. If circumstances change or events occur that demonstrate it is more likely than not that the carrying amount of a reporting unit exceeds its fair value, we complete an interim goodwill impairment assessment of that reporting unit prior to the next annual assessment. If the results of an annual or interim goodwill impairment assessment demonstrate the carrying amount of a reporting unit is greater than its fair value, we will recognize an impairment loss for the amount by which the reporting unit’s carrying amount exceeds its fair value, but not to exceed the carrying amount of goodwill assigned to that reporting unit.

For our annual 20242025 goodwill impairment assessment, we completed our impairment assessment for our eightseven reporting units using discounted cash flow analyses that incorporated assumptions regarding future growth rates, terminal values and discount rates. Our goodwill impairment assessments for 20242025 indicated the estimated fair values of each of these eightseven reporting units exceeded the carrying amounts of the respective reporting units by a significant margin. No events were noted during the second half of 20242025 that required completion of an interim goodwill impairment assessment in the second half of 20242025 for any of our eightseven reporting units. There has been no impairment of goodwill in any of the periods presented.

Excluding the impact of special (gains) and charges,charges and the Ovivo Electronics acquisition, our 2025 adjusted gross margin was 44.5% compared against a 2024 adjusted gross margin was 43.5% compared against a 2023 adjusted gross margin of 40.4%.43.5%. Our adjusted gross margin increased when comparing 20242025 against 20232024 reflecting strong value pricing and lower delivered product costs.pricing.

Excluding the impact of special (gains) and charges, our adjusted gross margin was 40.4%43.5% and 38.2%40.4% for 20232024 and 2022,2023, respectively. The increase primarily reflected acceleratingstrong value pricing thatand overcamelower higherdelivered supply chainproduct costs.

For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with our internal management reporting. Per share amounts do not necessarily sum due to rounding.

On July 30, 2024, we announced the One Ecolab initiative, which will enhance our growth and margin expansion journey. As a program within this initiative, we also announced that we commenced a restructuring plan to leverage our digital technologies to realign the functional work done in many countries into global centers of excellence. WeIn February 2026, we expanded the One Ecolab initiative and anticipate total restructuring costs of $175$334 million ($136$261 million after tax) or $0.47$0.91 per diluted share and special charges of $50$91 million ($39$71 million after tax) or $0.14$0.25 per diluted share by the end of 2027. We anticipate that the restructuring costs will primarily be cash expenditures for severance costs relating to team reorganization.realignment. We also expanded the estimated annualized cost savings to $325 million in continuing operations by 2027. One Ecolab has delivered $119 million of cumulative cost savings.

In anticipation of thisthe One Ecolab initiative, a limited number of actions were taken in the first and second quarter of 2024. As a result, we reclassified $5.3 million ($4.0 million after tax) or $0.01 per diluted share from other restructuring to One Ecolab in the third quarter of 2024.

In 2024 weWe recorded restructuring charges of $117.0 million ($90.5 million after tax), or $0.32 per diluted share and $76.5 million ($59.0 million after tax), or $0.21 per diluted share in 2025 and 2024, respectively, primarily related to severance and professional services. In addition, we recorded non-restructuring special charges of $30.9 million ($23.4 million after tax), or $0.08 per diluted share and $23.7 million ($17.9 million after tax), or $0.06 per diluted share in 20242025 and 2024, respectively, primarily related to professional services. We have recorded $81.8$198.8 million ($63.0$153.5 million after tax), or $0.22$0.54 per diluted share of cumulative restructuring charges and $23.7$54.6 million ($17.9$41.3 million after tax), or $0.06$0.14 per diluted share of cumulative special charges under the One Ecolab initiative. Net cash payments were $26.9$75.8 million during 2025 and $26.9 million in 2024.

The net restructuring liability related to the One Ecolab initiative was $96.1 million and $54.9 million as of December 31, 2024.2025 and 2024, respectively. The remaining liability is expected to be paid over a period of a few months to several quarters and will continue to be funded from operating activities.

Other restructuring activities areis primarily related to the Combined Program which is described below. These activities have been included as a component of cost of sales and special (gains) and charges on the Consolidated Statements of Income. Restructuring liabilities have been classified as a component of other current and other noncurrent liabilities on the Consolidated Balance Sheets.

Further details related to our restructuring charges are included in Note 3.3, “Special (Gains) and Charges,” of the Notes.

In 2024, 20232024 and 20222023, we recorded restructuring (gains) charges of $25.2 million ($18.6 million after tax) or $0.06 per diluted share, and $77.7 million ($66.4 million after tax), or $0.23 per diluted share and $67.2 million ($56.0 million after tax) or $0.20 per diluted share, respectively, primarily related to severance and professional services.services Restructuring activities were completed atin the endCombined of 2024, with total costs $184.1 million ($151.5 million after tax), or $0.53 per diluted share.Program.

We reclassified $5.3 million ($4.0 million after tax), or $0.01 per diluted share from the combined restructuring program to other restructuring activities in the second quarter of 2024.

During 2024, we recorded restructuring charges of $10.6 million ($8.0 million after tax), or $0.03 per diluted share related to an immaterial restructuring plan approved in the second quarter.quarter of 2024. This plan became part of the One Ecolab initiative in the third quarter.quarter of 2024.

During 2023 and 2022,2023, we recorded restructuring charges of $8.0 million ($6.0 million after tax), or $0.03 per diluted share and $40.0 million ($31.1 million after tax), or $0.11 per diluted share, respectively, related to immaterial or subsequently concluded restructuring programs. The charges were primarily related to severance and asset write-offs.

The restructuring liability balance for all other restructuring plans excluding the One Ecolab andProgram Combinedwas Program, were $6.5$8.8 million and $8.2$19.3 million as of December 31, 20242025 and 2023,2024, respectively. The remaining liability is expected to be paid over a period of a few months to several quarters and will continue to be funded from operating activities. Cash payments during 20242025 related to all other restructuring plans excluding the One Ecolab andProgram Combinedwas Programs were $2.2$10.4 million.

On April 27, 2024, we reached a definitive agreement to sell our global surgical solutions business, which closed on August 1, 2024. During 20242024, we recorded a gain on sale of $355.9 million ($257.7 million after tax) or ($0.90) per diluted share, as described in Note 4.4, “Acquisitions and Dispositions,” of the Notes. During 2025, we recorded charges of $3.0 million ($2.3 million after tax) or $0.01 per diluted share, which are primarily related to professional fees to support the sale. Excluding the gain on sale, we recorded charges of $15.6 million ($12.0 million after tax), or $0.05 per diluted share in 2024, which are primarily related to professional fees to support the sale. During 20232023, we recorded charges of $10.3 million ($7.7 million after tax) or $0.03 per diluted share, primarily related to professional fees to support the sale.

Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income in 20242025 include $12.6$36.1 million ($9.6$31.2 million after tax), or $0.03$0.11 per diluted share, primarily related to the Ovivo Electronics and Purolite transaction.transactions.

Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income in 2024 and 2023 include $12.6 million ($9.6 million after tax) or $0.03 per diluted share and $16.1 million ($12.0 million after tax), or $0.04 per diluted share.share, Charges are integration related costsrespectively, primarily related to the Purolite transaction.

During 2022,2025, we recorded other operating activities to costspecial of(gains) salesand charges on the Consolidated Statements of Income of $23.5($12.4 million) ($10.8 million ($19.6 milliongain after tax), or $0.06($0.04) per diluted shareshare, relating primarily to COVID-19the activities.sale of an equity method investment.

During 2024, we recorded other operating activities to special (gains) and charges on the Consolidated Statements of Income of $18.7 million ($13.9 million after tax), or $0.05 per diluted share, relating primarily to a liability relating to a prior divestiture, COVID-19 activities, and certain legal charges. During 2023 and 2022,2023, we recorded other operating activities to special (gains) and charges on the Consolidated Statements of Income of $21.8 million ($16.7 million after tax), or $0.05 per diluted share, and $40.2 million ($31.4 million after tax), or $0.11 per diluted share, respectively, relating primarily to certain legal charges.

OVERVIEW OF THE FIRSTSECOND QUARTER ENDED MARCHJUNE 31,30, 2026

When comparing firstsecond quarter 2026 against firstsecond quarter 2025, sales performance was as follows:

When comparing firstsecond quarter 2026 against firstsecond quarter 2025, our financial performance was as follows:

Our reported gross margin was 43.6%44.1% and 44.2%44.8% for the second quarter of 2026 and 2025, respectively. Our reported gross margin was 43.8% and 44.5% for the first quartersix months of 2026 and 2025, respectively. Special (gains) and charges included in items impacting cost of sales are shown within the “Special (Gains) and Charges” table below.

Excluding the impactimpacts of special (gains) and chargescharges, foreign currency translation and acquisitions and divestitures within COS, firstsecond quarter 2026 and 2025 adjustedorganic gross margin was 43.8%44.9% and 44.4%,44.8%, respectively, and for the first six months of 2026 and 2025 was 44.5% and 44.6%, respectively. Our adjustedorganic gross margin decreasedincreased when comparing the firstsecond quarter of 2026 against the firstsecond quarter of 2025 due to the impact of recent acquisitions. Underlying gross margin was stable as strong valueaccelerating pricing was offset by higher commodity costs.

Selling, general and administrative (“SG&A”) expenses as a percentage of sales were 27.1%25.9% and 26.5% for the second quarter and first quartersix months of 2026, respectively, compared to 28.4%26.5% and 27.4% for the second quarter and first quartersix months of 2025, respectively. The SG&A ratio to sales in the firstsecond quarter of 2026 improveddecreased as good productivity gains and the favorable impact of recent acquisitions more than offset growth-oriented investments in the business.

Our reported operating income increased 12%7% and 9% in the firstsecond quarter and first six months of 20262026, respectively, versus the comparable periodperiods of 2025. Our reported operating income for 2026 and 2025 was impacted by special (gains) and charges; excluding the impact of special (gains) and charges from 2026 and 2025 reported results, our adjusted operating income increased 15%10% and 12% in the firstsecond quarter and first six months of 2026.2026, respectively.

As shown in the previous table, foreign currency had a 52 and 3 percentage point positive impact on adjusted operating income growth for the firstsecond quarter and first six months of 2026.2026, respectively. Foreign currency had a neutral and 2 percentage point negative impact on adjusted operating income growth for the second quarter and first six months of 2025, respectively.

Reported other (income) expense decreased to ($8.8) million from ($13.0) million in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025.2025, respectively, and decreased to ($17.6) million from ($26.0) million in the first six months of 2026 compared to the first six months of 2025, respectively.

Reported net interest expense was $72.7$73.1 million and $58.3$63.2 million in the firstsecond quarter of 2026 and 2025, respectively.respectively, Theand increase$145.8 million and $121.5 million in netthe first six months of 2026 and 2025, respectively. In the second quarter of 2026, we incurred $6.6 million of interest expense reflectsspecial thecharges impactassociated of lower cash balances and newwith debt used to fund the CoolIT Systems acquisition. The increase in adjusted net interest expense when comparing 2026 against 2025 reflects the impact from higher interest expense from the Ovivo Electronics acquisition.acquisition partially offset by lower interest rates.

Our reported tax rate was 21.8%22.3% and 20.3%19.9% for the second quarter of 2026 and 2025, respectively, and 22.1% and 20.1% for the first quartersix months of 2026 and 2025, respectively. The change in our tax rate for the second quarter and first quartersix months versus the comparable periods of 2025 was driven primarily by discrete tax items and special (gains) and charges. The change in our tax rate includes the tax impact of special (gains) and charges and discrete tax items, which have impacted the comparability of our historical reported tax rates, as amounts included in our special (gains) and charges are derived from tax jurisdictions with rates that vary from our tax rate, and discrete tax items are not necessarily consistent across periods. The tax impact of special (gains) and charges and discrete tax items will likely continue to impact comparability of our reported tax rate in the future.

We recognized net tax expense related to discrete tax items of $4.4$4.2 million and $8.6 million in the firstsecond quarter and first six months of 2026.2026, respectively. This included a tax benefit of $12.0$2.3 million and $14.3 million in the second quarter and first six months of 2026, respectively, associated with share-based compensation excess tax benefits. The remaining net tax expense of $16.4$6.5 million wasand primarily$22.9 duemillion toin the second quarter and first six months of 2026, respectively, is from prior year return adjustments, audit settlements, unrecognized tax benefits, and other changes in estimates.

We recognized net tax benefits related to discrete tax items of $0.5$5.0 million and $5.5 million in the firstsecond quarter and first six months of 2025.2025, respectively. This included $7.3a tax benefit of $2.6 million and $9.9 million in the second quarter and first six months of 2025, respectively, associated with share-based compensation excess tax benefits. The remaining net tax benefit of $2.4 million and net tax expense of $6.8$4.4 million in the second quarter and first six months of 2025, respectively, is from otherthe incomefiling of foreign tax adjustments includingreturns, audit settlements, unrecognized tax benefits, and other changes in estimates.

Currency translation had a favorable impact of approximately $0.08$0.04 and $0.12 per share on diluted EPS for the firstsecond quarter and first six months of 20262026, respectively, when compared to the comparable periodperiods of 2025.

Fixed currency net sales and operating income for the firstsecond quarter ofand six months ended June 30, 2026 for our reportable segments are shown in the following tables:

Unless otherwise noted, the following segment performance commentary compares the second quarter and first quartersix months of 2026 against the second quarter and first quartersix months of 2025.

Fixed currency sales increased 7%10% inand 9% for the second quarter and first quartersix months of 2026, drivenrespectively, byincluding a 5% benefit from the acquisition of Ovivo Electronics acquisition.Electronics. Organic sales for Global Water increased 2%4% and 3% in the second quarter and first quartersix months of 2026, respectively, driven by double-digitaccelerating growth in High-Tech, strong growth in Food & Beverage and steady growth in Light Water.

Food & Beverage organic sales increased 5%7% and 6% in the firstsecond quarter and first six months of 20262026, respectively, driven by new business wins and value pricing. Heavy Water organic sales decreased 1% and 2% in the second quarter and first quartersix months of 2026, respectively, as growth in downstream was offset by softer sales in basic industries. High-Tech organic sales increased 25%29% and 27% in the second quarter and first quartersix months of 2026, respectively, reflecting new business wins across microelectronics and data centers. Light Water organic sales increased 2%3% in both the second quarter and first quartersix months of 2026,2026 driven by acceleratingnew performancebusiness in transportation and green energy, and continued strong performance in pharmaceuticals.wins. Paper organic sales were flat and decreased 2%1% in the second quarter and first quartersix months of 2026, asrespectively, continueddriven by new business wins werethat offsetovercame bysoft but stabilizing customer production rates.

Organic operating income wasincreased stableand remained flat for Global Water in the firstsecond quarter and first six months of 2026.2026, respectively. Organic operating income marginmargins decreased for Global Water in the second quarter and first quartersix months of 2026.

Organic operating income margins decreased 0.5 percentage points during the second quarter of 2026 as the 2.4 percentage point positive impact of accelerating pricing was offset by the 3.2 percentage point impact of investments in the business and higher commodity costs. Organic operating income margins decreased 0.4 percentage points during the first quartersix months of 2026 as the 1.72.3 percentage point positive impact of value pricing and highervolume volumesgrowth werewas more than offset by the 2.32.8 percentage point impact of higher commodity costs and investments in the business.business and higher commodity costs.

Fixed currency and organic sales increased 4% in both the second quarter and first quartersix months of 2026, respectively, with improved growth in bothInstitutional operatingand segments.strong growth in Specialty.

At an operating segment level, Institutional organic sales increased 3% and 2% in the second quarter and first quartersix months of 2026, asrespectively, driven by continued growth in sales to hospitality customers, which more than offset softer sales to hospitals. Specialty organic sales increased 9%6% and 7% in the second quarter and first quartersix months of 2026, drivenrespectively, byas new business wins and continued valuepricing pricing.more than offset softer industry trends.

Organic operating income and organic operating income margin increased in the second quarter and first quartersix months of 2026 for our Global Institutional & Specialty segment.

Organic operating income margins increased 0.40.5 percentage points during the second quarter of 2026 as the 3.0 percentage point positive impact from accelerating pricing was partially offset by the 2.2 percentage point impact of higher supply chain costs, including commodity cost inflation, and investments in the business. Organic operating income margins increased 1.2 percentage points during the first quartersix months of 2026,2026 as the 5.42.9 percentage point positive impact fromof valuepricing pricing, higher volumes and improved productivity werewas partially offset by the 4.91.6 percentage point impact of higher commodity costs and investments in the business, including pest intelligence.business.

Organic operating income and organic operating income marginsmargin increased in the second quarter and first quartersix months of 2026 for our Global LifePest SciencesElimination segment.

Organic operating income margins increased 1.60.9 percentage points during the second quarter of 2026, as the 5.4 percentage point positive impact from pricing, higher volume and improved productivity was partially offset by the 4.7 percentage point impact of investments in the business, including pest intelligence. Organic operating income margins increased 0.7 percentage points during the first quartersix months of 2026, as the 4.35.3 percentage point positive impact from value pricing, higher volumesvolume and lowerimproved supplyproductivity chain costs werewas partially offset by the 2.94.8 percentage point impact of unfavorable mix and investments in the business.business, including pest intelligence.

Consistent with our internal management reporting, Corporate amounts in the tables beginning on pagespage 32 and 3337 include intangible asset amortization specifically from the Nalco, Purolite and Ovivo Electronics transactions and special (gains) and charges that are not allocated to our reportable segments. Items included within special (gains) and charges are shown in the table on page 30.34.

Total assets were $25.0$29.9 billion as of MarchJune 31,30, 2026 and $24.7 billion as of December 31, 2025.

Total liabilities were $15.0$19.8 billion as of MarchJune 31,30, 2026, compared to total liabilities of $14.9 billion as of December 31, 2025. Total debt was $8.5$13.2 billion as of MarchJune 31,30, 2026 and $8.2 billion as of December 31, 2025. See further discussion of our debt activity within the “Liquidity and Capital Resources” section of this MD&A.

We continue to generate cash flow from operations, allowing us to fund our ongoing operations, acquisitions, investments in the business and pension obligations along with returning cash to our shareholders through dividend payments and share repurchases. Cash provided by operating activities increased by $77$104 million in the first quartersix months of 2026 compared to the first quartersix months of 2025, primarily driven by a favorable change in working capital and higher net income,income excluding noncash depreciation and amortization, partially offset by $60 million of one-time, equity incentive payments to the Ovivo Electronics employees relating to the acquisition.

Cash (used for) provided by investing activities is primarily impacted by capital investments in the business. We continue to make capital investments in the business, including dispensing and monitoring equipment, manufacturing equipment and facilities. Total capital expenditures were $349$589 million and $238$455 million in the first quartersix months of 2026 and 2025, respectively.

We had net issuancesrepayments of commercial paper and notes payable of $202$98 million and $5$1 million in the first quartersix months of 2026 and 2025, respectively.

Shares are repurchased for the purpose of partially offsetting the dilutive effect of our equity compensation plans, to manage our capital structure and to efficiently return capital to shareholders. We reacquired a total of $344$669 million and $154$199 million of shares in the first quartersix months of 2026 and 2025, respectively. Cash proceeds and tax benefits from stock option exercises provide a portion of the funding for repurchase activity.