Ecolab 2Q17 Earnings Call Notes

Douglas M. Baker, Jr. – Ecolab, Inc.

Economies are okay to good. Raw material costs creating margin pressure

“If we look at the macro environment, the economies around the world we’d say are mixed but in aggregate, are okay to good. FX headwinds have subsided. Energy markets have recovered some and certainly stabilized. Raw materials, though, are rising and creating some short-term margin pressure but we believe are manageable over the year.”

If you cut through the noise US growth is a little softer

“If you cut through the noise, U.S. growth is a little softer. It’s around 4%. Globally, I’d say Global Institutional is around 3%, same factors as last quarter which is what we had forecast. Same-store sales are a bit soft in U.S.”

We do expect mining to be positive in the second half

“Yeah, we do expect mining to be positive in the second half. I will also say we expected mining to be positive in the second quarter. I mean, it was about flat (12:06). So, it’s always a little hard to predict. But clearly, it’s been healing, if you will, if you look at the sequential growth rates. And we do expect it to pop into positive in the second half for sure in probably the third quarter.”

Oil price hasn’t really changed

“I think the Energy business and how we see oil price hasn’t really changed from what we expected going in the year. So, we didn’t have a particularly bullish outlook. So, we don’t need to bring it down, I guess, is the easiest way to put it.”

I don’t think there’s been any huge fundamental change in food service

“Well, I would say the softness in the first quarter in particular was also timed identically to the retail softness broadly. There’s all kinds of assumptions or guesses about what was driving it and timing of tax refunds, et cetera. I don’t think you’ve got any huge fundamental change you’re currently seeing in U.S. food service, i.e., takeout order or some other magical thing. Those things move year-on-year but at a fairly slower rate, so I don’t believe those are the trends that we’re seeing. I think what we’re seeing is some softness broadly in a certain segment of the foodservice industry. We’ve chased it before over time. We’ll probably chase it again. So, that’s really I think the issue. I don’t believe there’s been any fundamental secular change that we’re dealing with at this moment. That’s not what the industry sees. It’s not what the stats suggest.”

raw materials biting us in Europe. Getting some pricing power

“In terms of raw materials, they’re biting us in Europe. No doubt about it. We have the same story there. It takes us a while to recover via pricing, but we’re starting to get pricing in Europe as well. And we expect a kind of tried-and-true formula we’ve talked which is absolute raw material cost coverage, year one and margin recovery, year two. Sometimes we do it in a little more accelerated basis, but it’s not a bad way to think about it.”

Example of the cloud in use

“We’ve got, I don’t know, some 2 million customer sites nearly if you add up all the restaurants, probably collecting data 90%. But we only have a small fraction of it currently connected to the cloud. So, in most instances, our people have to walk into the unit, download via an RF port, and then they have the data to start analyzing how they can further improve the customer’s operation. We know that if we take that and send it to the cloud, do the analytics, send it to our person in advance of them arriving at the front door that we’re going to improve their productivity significantly and improve the amount of time they have for up-selling and for doing other things, even handling more accounts. So, technology, I would say in all industries, we have not yet pushed boundaries in these areas we are going to”

Ecolab 4Q16 Earnings Call Notes

Douglas M. Baker, Jr.

Energy definitely more positive

“I mean I think there’re two energy markets right now. North America is clearly turning and the rest of the world has not yet turned and probably we won’t expect to see a turn there until the second half of this year. But with that said, I think our view on the Energy business is clearly more favorable than the last couple of years. ”

Going to see price increases, but they lag

“We would expect that you’re going to see a change. We already started to see it in the fourth quarter in some of the businesses. The price lag usually is several quarters for us. And we say within the first 12 months we typically recover the absolute dollar of the inflation in raw materials through pricing, but we don’t recover the margin usually for another year. It just takes a while. We tend to try to go through and do this on a more smooth basis…So I think what you would expect to see this year is we’re going to have some margin pressure from inflation in the first couple of quarters. That’s both raw material increases and the FX hedges unwinding, but it’s going to be offset by pricing as you move into quarters three and four, and that’s pretty much across the board.”

Mining should trip into positive territory

“I’ll address mining first. I think mining improved dramatically throughout the year, but it was still down mid-single digits in the fourth quarter. We would expect mining to probably trip into positive territory, either Q1 or Q2 latest, as we go through this year.”

Border adjustability is a positive for us but we don’t like it because it’s a big bet

“One, I think none of us know ultimately what a tax proposal will look like, and there’s a lot of work being done obviously in DC. Let’s say the Brady Plan with the border adjustability provision was passed. It would be favorable for us. We don’t take any solace in that because fundamentally we don’t think that’s ultimately what’s going to probably get through, but who knows? I think the bigger question is what’s its impact on the overall economy and many of our customers which is also a big concern for us and maybe even a bigger concern. And so we’re also quite hopeful that we’re able to get something done on corporate tax. We’d like a lot of the provisions in what I’ll call the Brady proposal. I’m not totally comfortable with the border adjustability just as a big, big bet on a big piece of our economy and nobody knows exactly how it plays out and that seems to us unwarranted because the other parts of the proposal, we think, are almost guaranteed wins.”

Dairy and agri no longer declining

“Clearly, the dairy and agri businesses, if nothing else, are annualizing and they’re no longer declining. So we think the environment in 2017 is just more favorable than 2016 period for that business. So we would expect the innovation and new business work to shine through in a more effective way. So we see F&B accelerating in 2017 versus 2016.”

Ya clearly seen wage inflation

“I’d say it’s very specific geographically, but certainly, I mean, if you take U.S., yeah, there are certain markets where we’ve clearly seen wage inflation driven by the low unemployment, I mean, including our headquarter market. So we’re in a market here that’s been perennially around a little north of 3% unemployment, but we’ve lived through this for many years in a sense and certainly we’ve seen wage inflation driven the old-fashioned way via the market, and how do we deal with it? Like we deal with all other inflationary items. I mean we’ve got to go price forward.”

Competitors’ M&A is an advantage

” I would say over the years in a number of instances we’ve had situations where competitors go through the distraction of either a large acquisition and/or being sold or bought or whatever you want to call it. In all cases, we do view that as an opportunity, and we try not to miss those opportunities as we move forward. We think the stability that we’ve had as a business in terms of ownership, management focus, and the rest has been a real advantage for us. And we try to make that known how that advantage plays out for customers’ benefit, and certainly we’ll continue to do that”

Opportunity to collect data from customers is huge

“I think the opportunity to use the information that we already capture within customers much more effectively to drive value, merchandise the value we create, develop new opportunities and ways to help customers obviously with their full partnership represents a huge opportunity for the company. Whether it’s specifically monetizing the information, i.e. charging for it or it’s instead used as a means of us better helping customers and being more valuable, I think it’s probably the latter. It’s my guess as we move forward. We’re in early innings. We certainly do it in many instances today, but I think our ability to up our game there is fairly dramatic. ”

The hard part is capturing the data

“So the hard part is capturing the data. Connecting to the cloud isn’t technically very complicated, and that’s the work that we’re doing. And then synthesizing it, rationalizing it, making it valuable for customers is, like, real work, and we’re partnering with some great partners to learn how to do this and improve our capabilities there, which I think we’ve talked about. I mean Microsoft is a company that we’ve been leveraging there in many ways, sales force and other parts of our business, and we’ll continue to do that as we move forward. So I think it’s going to be huge for the company. It will not impact material 2017. I’m not even sure it will materially impact 2018, but in the not too distant future it’s going to be a core way of us doing business.”

Ecolab 3Q16 Earnings Call Notes

Ecolab (ECL) Q3 2016 Results
Douglas M. Baker

Headwinds are easing

Look, my headline would be solid quarter, headwinds are easing, and we believe we’re in a good position as we close out the year. So let me go through each of these briefly.

Currency has stabilized, but modelling another 7% full year challenge next year

“FX is easing. So in our first quarter, FX was a 14% headwind, and it’s roughly a 1% headwind in Q4. We assume we’re highly unlikely to see another 7% full-year challenge in 2017. Energy is stabilized. The market only stands still here, it will likely or should be an accretive year even in those conditions for us in 2017.”

Do believe that raw materials will move up next year

“I’m really not that nervous about what we believe is going to happen in the raw material markets which we believe raws are going to move up next year, but we do believe we’re going to move up in a fairly orderly fashion as we go. But we have that fully forecasted in our business.”

Raw materials increases wont be a theme for next year though

” So raw materials, we’re forecasting we’ll start moving kind of enterprise-wide in 2017. They’re going to remain favorable in Q4 year-on-year. They’re just less favorable than Q3. And there’s a minor step up if you will, sequential, from Q3 to Q4. So we’re starting to see these. At this point in time, I think we’re going to be able to keep our nose above water certainly for the year in 2017. I can’t tell you if there’s not going to be an issue in one quarter, but I don’t think this is going to be, by any means, a theme for next year.”

Heavy side of China is hurting

“The other market you mentioned is China, and that’s really, pain we feel on the heavy side of that business. And that’s a reflection of steel, overcapacity, some being taken offline, mining, also in China. And also somewhat paper. Our paper results globally were positive, but they were much more positive than that if you took out the mining or the China results. And ultimately we look at that we’re going to start lapping those comps starting a little bit in the first quarter next year and really fully after the second quarter next year. And so we look at that as an improving situation as we move through 2017 as well.”

Europe is clearly not robust

“Yeah. I guess what I would comment is on Q3. And what we’re – I mean, Europe is clearly not robust. I would say, I would have described it in the first half as probably stronger than I expected. I think in Q3 it was as strong as I expected or as weak as I expected going in. So I’d say there’s been some downtick in the economy there. It hasn’t fallen off a cliff. And I would still say the environment is, if we do our job and continue to drive new business and keep our existing customers, drive mix in the other things that we have in our toolbox, we should be able to continue to show growth in that market, which is what we anticipate being able to do.”

QSR struggling but we help save cost

“Currently, it’s not a perfect top-line environment for those businesses, and they’re having real cost pressures underneath, particularly from both wage and also benefit pressure, i.e., ACA. And so we’re doing a lot of work there trying to help them take labor out of those businesses because they have to given this environment. And so that will offer us new technology for us, but it’s a huge financial benefit for them. And that’s how we’re looking at that market and why I still am quite bullish on our ability to continue to grow in QSR going forward.”

Energy is going to start moving from a headwind to a tailwind

” I think the story on Energy is it’s been a dramatic headwind for us over the last, if you will, six quarters, seven quarters. We’re now starting to enter a period where we’re going to start lapping, and it’s going to quickly move from a headwind to a tailwind, almost under any normal scenario. If you don’t believe oil is going to decline further from here, all it does is stabilize. I think it’s accretive. If it happens to start picking up, it’s going to be more accretive as we go forward”

Ecolab 2Q16 Earnings Call Notes

Ecolab (ECL) Douglas M. Baker on Q2 2016 Results

Not too much has changed. Bigger hit to Europe is terrorism rather than Brexit

“U.S., I would say isn’t much different than we expected this year. We never have high expectations. We always go into these years thinking that growth is going be more similar in the past couple years – and there’s no magic second-half inflection point – seems to be regularly forecast but rarely realized. So U.S., we haven’t seen a huge change. I think there is a bit of a consumer spend hiccup in April, May but that seems to have evened out a bit. In terms of Europe, I don’t know that – I would say the more – the bigger impact in the near-term has been around – from terrorism, not British exit. And I think British exit may well indeed have significant impact on Europe in total. I guess it’s too early to recognize that at this point in time.”

Current oil price weakness is seasonal, predicted by many, supply and demand is the important factor

“We do believe that you continue to have the correction that we’ve been seeing in terms of supply and demand in the overall oil market. That continues to narrow which we believe is the metric to watch more so than price. Price has seasonal components to it too. We believe that we are likely to see softening of price as the summer ended. It was predicted by many in the industry. I know many are acting surprised, but that was a common prediction and so we still think that the key metrics are supply and demand. They are narrowing. That’s what’s going to drive correction and price over any period of time, but we don’t see any real activity recovery until 2017.”

Not expecting price improvements in Energy until 2018, 2019

” I wouldn’t expect – what I’m talking about in terms of – we think third quarter is probably our peak pain in terms of pricing year-on-year. We’re still going to have negative pricing for a few quarters after that before you start annualizing against the price concessions that we’ve made in the industry. But we don’t expect that we’re going to have price increases, and I’m talking broadly. Will there be one exception? I’m sure there will be. But broadly in the energy market in 2017, we think that’s more likely a 2018 and 2019 story as that market heals, recovers, and activity levels have to ramp up significantly in those years to fill in the hole that’s been created by the capital that’s been yanked out of this industry.”

Michael J. Monahan – Senior Vice President External Relations

Seeing a bottoming of the energy cycle

“While Energy segment results have been challenging, we believe that recent trends suggest the bottoming of our energy cycle, and we expect second half Energy segment sequential results to reflect that stabilization. We look for the market recovery to begin gradually and take hold in 2017 and improve through 2018 and 2019, and for the Energy segment to show results reflecting that market improvement.”

Ecolab 1Q16 Earnings Call Notes

Ecolab (ECL) Douglas M. Baker, Jr. on Q1 2016 Results

We continue to believe that the oil upturn is a 2017 story

“Energy is heading to the lower side of our expectation in spite of share gains and savings initiatives, and this is really driven by an even tougher market than expected. This will pass. We continue to believe, though, that the upturn is really a 2017, not a 2016 story, i.e. the oil and gas market upturn.”

Not going to get a sustained improvement in oil prices without a balance of supply and demand

“I think the recent move in oil price, I think, look, the best predictions I read forecasted that oil would move up in anticipation of increased demand for the summer. It was likely going to weaken over the summer because really what needs to drive the fundamental price of oil is a rebalancing of supply and demand. And nobody really believed that was going to happen until towards the end of this year. And until that happens, you’re not going to really, we believe, have sustained improvement in oil price or increase – maybe we shouldn’t call it improvement – increase in oil price.”

Besides oil, mining and heavy industry is under the most pressure

“I think the markets besides Energy where we’re under the most pressure would be mining and heavy industry, steel, etc., around the world. I would say mining is probably getting down towards the bottom, right. It was fairly negative in the fourth and much more negative in the first. We’re forecasting kind of flattening and then improvement in mining as we go forward, as we start running into the base, but it’s not that big of a business. And the heavy industry stuff will start running into the base as well, so I don’t think there – this is like the puts and takes we have all the time”

Ecolab 4Q15 Earnings Call Notes

Douglas M. Baker, Jr. – Chairman & Chief Executive Officer

Expecting more of the same in 2016 as 2015

“So as you look at 2016, it’s going to be much more of the same. It’s going to be continued FX headwinds, see more of the same market conditions. We expect the economies globally to be choppy, but manageable.”

We don’t believe Energy will be as negative as last year

“Energy, we do not believe will be as negative as last year, but given our forecast position of no 2016 energy market turnaround, it will likely decline modestly year-on-year, but at a slower rate than last year. The balance of the business is poised to have another very good year; a bit stronger than 2015 on top-line and continued margin expansion.”

The economy is a little bit worse, but not a driver of performance

“I would say I think the base economy is a little worse. I don’t think it’s the driver. U.S., we expect U.S. to continue to slog along with positive GDP, but there are some positive impacts in U.S. for us, i.e. in the food service market and some of the others where frankly cheap oil price starts driving consumer behavior in our favor, at least in that part of the business. We think Western Europe’s likely to be worse in 2016 than in 2015 as they’ve just a baseline economy. It was probably our big positive surprise last year. And we would expect it to be modestly off in terms of economic growth, but still growing this year, so we’re not predicting recession”

The market is fairly richly valued right now

“I would say, the market is fairly richly valued at this point in time. And so, I think we’re working to be very smart and choiceful. Ultimately, we want to do deals that we know we can get very good returns on long term. That’s the main metric we pay attention to, not accretion, dilution, et cetera, but what is the ultimate return going to be. We’ve seen this cycle before. It does come and go, and we’re going to be very, very careful while we’re in a frothy environment.”

Lodging and food service businesses are healthier than they were a few years ago

“I would say, the food service business, traffic hasn’t really turned around, but sales in many of the food service establishments have improved, not in all. And I would say we look at both lodging and food service as healthier than they were a few years ago. Lodging has been fairly consistent, but food service in particular. In our U.S. sales, where you see the singles biggest decline in gas price because you don’t have currency neutralizing it as you do in other countries, we’ve seen pretty robust market conditions, better.”

Ecolab 3Q15 Earnings Call Notes

Ecolab (ECL) Douglas M. Baker on Q3 2015 Results

We’ve been performing well in a lousy environment

“third quarter was not a great quarter from a GDP standpoint as far as I can tell anywhere. So I don’t think we are currently performing in a good environment heading for a bad environment. I feel like we’ve been performing well in a lousy environment, which is likely to continue. ”

Europe is the only positive economic surprise

“So emerging markets turtled early this year if not late last year. U.S. economy has not been in any great shape, so I think the only positive surprise you could point to economically in the world would be Europe. And our Europe business is reflecting it. ”

Energy a little stronger in Q4 than Q3. Comps getting easier in 2H

“In terms of Energy bottoming, it seems like it’s 0 and 100 for anybody predicting the bottom of this Energy market. I would say we are seeing kind of sequentially the same business albeit a little stronger in Q4 versus Q3. What we are confident in is that the comps get easier the second half of next year than they’ve been”

FX is really what changed post investor day

“we wish Energy was stronger, not weaker, but Energy is not the reason we’re lowering our forecast, because it was nearly offset by other issues. The issue was really FX, including Venezuela, and that’s the piece of the forecast that changed dramatically, and it changed post-Investor Day.”

FX headwinds are likely to be less next year than this year

“The Energy business will be improved next year versus this. You can argue with us is it going be modest growth, modest decline? It’s not going to be – it’s going to be better than this year for a variety of reasons. And then, yeah, FX headwinds are more likely than not to be less next year than they are this year. And I think that’s fairly safe. Sooner or later, they’re going to drive the economy down in the U.S., and that will fix FX.”

It’s not hard to have an accretive deal at these interest rates

“with the low interest rates right now, it’s not that hard to have an accretive deal. I think what we’re trying to be is also very careful about what types of returns these businesses are going to generate over the medium and long-term. And we’re going be disciplined there. ”

Ecolab 4Q14 Earnings Call Notes

Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

Dollar and pension are significant headwinds, but still pretty strong eps growth

“the strong dollar and higher pension cost will provide significant headwinds for us in 2015. We expect that combined impact will be $0.35 per share. As a result we look for EPS to be in the $4.50 to $4.70 range for 2015, up 8% to 12%.”

Raw materials savings will offset impact of oil price decline

“Synergies though and raw material savings in energy services will enable us to have modest OI growth in the business, in spite of the very difficult oil market. The raw material savings though will also positively impact the rest of our businesses and roughly offset the lost energy services OI versus what we would have expected in a non-oil price distressed market. So the good news is our team has gotten on the raw materials savings opportunity release. We’ve made significant progress and we believe we’ve got clear line of sight about what we’re going to see during the year.”

We have an opportunity to capitalize on strong dollar in M&A

“Additionally M&A outside of the U.S., given the strong dollar also looks more attractive. All I know about FX is it goes up and it goes down. I can’t tell you exactly when but I have now seen FX rate or the Euro trade at 0.88 and at 1.45. So we know this stuff moves around. We have an opportunity right now to capitalize on the strong dollar. We’re going to see if we can make that happen.”

Periods of strong earnings allow inefficiencies to be built up

“I mentioned earlier we’re a company now that’s been through several years of very strong earnings results, and I always get nervous during these periods because I know there is inefficiencies being built up in the business as a consequence of having strong earnings. And so we look at this as an opportunity to go find those pockets and get after them. And the team is doing that quite successfully.”

Every business besides energy is doing well

“I would say in almost every instance you’re going to have stronger sales performance of Q1 versus Q4 with the exception of energy. And what’s driving it is the strong cooperate account growth that saw last year which was up dramatically from a very strong year in 2013, and we had a great innovation pipeline last year. Typically these things are leading indicators, and so we are expecting forecasting stronger growth nearly across the board from our other businesses.”

Thoughts on US foods Sysco merger

“two of our major customers, U.S. Foods and Sysco. So I guess I’ll share their disappointment. But I would say two things. We have had a long and healthy relationship with Sysco. We’ve also had a long and healthy relationship with U.S. Foods as well as other providers in the market which is unique to us. I think we work and partner very well with customers, and I guess the way we view this is this is clearly out of our control.”

Seeing some markets where oil production is up dramatically because people have bills to pay

“In terms of production I would say we’re seeing some markets where production is up quite dramatically because they’re trying to offset the negative impact of lower price, because they’ve got I would say some bills to pay. And in others areas, obviously ultimately we think production will get more in line with demand and I guess we forecast our belief right now is that may be well into 2016. But this is a very different energy situation than was ’08 – ’09 where really you had very dramatic demand disruption. This is much more oversupply situation.”

Ecolab Analyst Day Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“We are not going to be able to local farm our way to feeding 10 billion people around the earth. And shipping means time and time is the enemy of food safety, so food safety challenges are going to increase, not decrease, over this period of time.”

“we have 90% recurring revenue. We have an easier job than many other businesses. So it’s not because we have some magic, it’s simply because we understand the business, are rigorous in our operating discipline, understand what’s in front of us and work very hard to understand how that’s going to translate into results. ”

“we’re chasing $100 billion and we have just 13% of it.”

“The engine that drives our company is our frontline 25,000 sales and service people, that are in our customers driving better solutions. And then lastly, importantly, Innovation. We are a technology innovation company.”

Jill S. Wyant – Executive Vice President and President of Global Food & Beverage

“we innovate across those 5 anchor technologies. And we think of an anchor technology as an innovation or technology that really provokes the customer to say yes or no to Ecolab. And inside of that beverage plant, that’s that clean-in-place system”

“the clean-in-place system is really just a way of referring to a cleaning system that is completely integrated with the customer’s manufacturing process”

“our model has always been built on growing with the giants, winning with our biggest global customers around the world…looking for a partner who was financially stable and who could scale for growth, who had a broad service footprint in innovation — innovative technology and single points of contact to help them really rally and galvanize their organization around the world, and only Ecolab can deliver that kind of capability.”

“I’d say our ability to scale our customer-intimate culture is that quite remarkable and, I think, another distinct source of competitive advantage for us.”

“We have this go-to-partner really in the eyes of our customers. So 1,900 people on the frontline with deep, deep, domain expertise who are truly advisors, trusted advisors to customers.”

Timothy P. Mulhere – Executive Vice President and President of Global Water & Process Services

“We have 8 key business segments. The light water business is made up of our Food & Beverage, Institutional and manufacturing, and this is, of course, where we’re focused on driving the synergies with Jill and Mike Hickey in terms of Food & Beverage and Institutional, respectively. The heavy business or heavy water business is our power, Primary Metals, which is primarily steel manufacturing, and chemicals business, and then we have our mining and Paper business.

Four core areas of application: pretreatment; utilities, which is cooling water and boilers; process water; and wastewater. And of course, all this culminates — really, they’re built on the back of our relationships with 39,000-plus customers.”

“our customers, as they’re globalizing and they’re moving their business to meet the growing needs of the population, are moving right into the face of water scarcity issues. Water stewardship, water sustainability are quickly important.”

“Molson Coors is targeting a 20% reduction by 2020 in terms of their water intensity. Ford, 30% reduction of water use per vehicle by 2015…Marriott, 20% per — reduction per occupied room by 2020. So you could see this goes across all the industries that we serve and across all our customers”

“o let me start with the answer on newbuilds. So right now, we have some greenfield in terms of new capacity going in and really in Latin America and China and Southeast Asia. And so that’s been very beneficial for those markets. But for the most part, it is about going out and gaining share.”

Michael A. Hickey – Executive Vice President and President of Institutional

“what we do really is done in 4 principal markets: the food service market, the lodging market, the long-term care market and what we call facility care. We execute those — in those segments through essentially 5 anchor platforms: warewashing, laundry, housekeeping, floor and pool and spa…we get to do that in over 500,000 customers, end-user customers, around the world”

“So the opportunity here in this example, again, taking a hotel customer, a typical hotel, 300-room hotel, we’ll get on average $21,000 a year out of our current spend…as we expand our services and our offerings in the Institutional business, we can continue to grow that customer, say, another $26,000. Then as you add in all the other businesses for Ecolab into that customer like Equipment Care or EcoSure, our Water businesses, we can literally grow that one hotel 5x if we fully penetrate and bring all our solutions in as a company.”

Martha Goldberg Aronson, our President of our Healthcare business

“So what’s happening in the world of hospitals right now, sort of what’s going on in this environment? First of all, they are under an enormous amount of sort of reputational risk, right? A little bit of goodness for us, right, they’re having to publish now their rates, so you can Google just about any hospitals and see what their rates of infection are. The media, both traditional media and social media, are bringing much more transparency to this issue. At the same time, hospitals are under enormous cost pressure, right? Just about every other week, we read about another hospital consolidation, right? They’re merging because trying to go alone is getting tougher and tougher from a cost standpoint. ”

“take a sort of typical, if you will, hospital system, about a 1,200-bed hospital system. So we come in, we check to see how well they’re doing on their cleaning. Generally, the answer is not so well. Usually, somewhere in the 30% range. We work with the teams, we’ll help train the housekeeping staff, provide some chemistry, obviously. And then track again, and generally can see at least a 40% improvement in this cleanliness of the high-touched areas.”

“I think in the U.S., there was a great deal of anxiety and worry with ObamaCare kind of kicking in and a lot of hospitals went into shutdown mode, just really didn’t want to spend. We’ve also continued to track and see that the admission rates in hospitals have continued to decline, that — and surgical procedures are down in the hospital as well, so that obviously has a pretty direct impact on us.”

“we go around and mark surfaces before the housekeeping staff comes in, and then they come clean, and then with a special light, you shine the light and it will show if it got cleaned or not. ”

Bobby Mendez, who is our Executive Vice President and President of Global Services and Specialty.

“Yes, a lot of our innovation is internally derived. And interesting enough, not all of our innovation is chemistry. Like I mentioned earlier, in today’s world, it is — you have to be careful how you kill a bug and you have to be careful how you catch a mice and dispose of the mice because it’s really an issue. So we’d rather catch the mice before it comes into the facility and protrude the flies from coming into the facility or make sure the bird doesn’t fly into the store than to have to dispose of the invader once it’s inside the facility. So a lot of our innovation is around traps, around forms of glue catches, around flights and many other areas. We were not big into the chemical solution of disposing rats and mice and bugs.”