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What changed in Ecolab's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Ecolab's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+286 added−326 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in Ecolab's 2023 10-K

286 paragraphs added · 326 removed · 251 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

71 edited+16 added−19 removed123 unchanged
Biggest changeName Age Office Positions Held Since Jan. 1, 2018 ​ ​ ​ ​ ​ ​ ​ Christophe Beck ​ 55 ​ Chairman and Chief Executive Officer ​ Oct. 2022 – Present ​ ​ ​ ​ Chairman, Chief Executive Officer and President ​ May 2022 – Oct. 2022 ​ ​ ​ ​ President and Chief Executive Officer ​ Jan. 2021 – May 2022 ​ ​ ​ ​ President and Chief Operating Officer ​ Apr. 2019 – Dec. 2020 ​ ​ ​ ​ Executive Vice President and President – Industrial ​ May 2018 – Mar. 2019 ​ ​ ​ ​ Executive Vice President and President – Global Nalco Water ​ Jan. 2018 – May 2018 ​ ​ ​ ​ ​ ​ ​ Larry L.
Biggest changeAlfano ​ 62 ​ Executive Vice President and President – Global Industrial Group ​ Apr. 2023 – Present ​ ​ ​ ​ Executive Vice President and General Manager – Global Light Sector ​ Jan. 2021 – Mar. 2023 ​ ​ ​ ​ Executive Vice President and General Manager – Global Food & Beverage ​ Jan. 2019 – Dec. 2020 ​ ​ ​ ​ ​ ​ ​ Christophe Beck ​ 56 ​ Chairman and Chief Executive Officer ​ Oct. 2022 – Present ​ ​ ​ ​ Chairman, Chief Executive Officer and President ​ May 2022 – Oct. 2022 ​ ​ ​ ​ President and Chief Executive Officer ​ Jan. 2021 – May 2022 ​ ​ ​ ​ President and Chief Operating Officer ​ Apr. 2019 – Dec. 2020 ​ ​ ​ ​ Executive Vice President and President – Industrial ​ Jan. 2019 – Mar. 2019 ​ ​ ​ ​ ​ ​ ​ Larry L.
For a discussion of the factors that may cause our sustainability initiatives, goals and targets to differ from those expressed above, see Item 1A of this Form 10-K, entitled “Risk Factors.” ​ Environmental Remediation and Proceedings : Along with numerous other potentially responsible parties (“PRP”), we are currently involved with waste disposal site clean-up activities imposed by the federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) or state equivalents at 17 sites in the United States.
For a discussion of the factors that may cause our sustainability initiatives, goals and targets to differ from those expressed above, see Item 1A of this Form 10-K, entitled “Risk Factors.” ​ Environmental Remediation and Proceedings : Along with numerous other potentially responsible parties (“PRP”), we are currently involved with waste disposal site clean-up activities imposed by the federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) or state equivalents at 16 sites in the United States.
Additionally, although we have a diverse customer base and no customer or distributor constituted 10 percent or more of our consolidated revenues in 2022, 2021 or 2020, we do have customers and independent third-party distributors, the loss of which could have a material adverse effect on results of operations for the affected earnings periods; however, we consider it unlikely that such an event would have a material adverse impact on our financial position.
Additionally, although we have a diverse customer base and no customer or distributor constituted 10 percent or more of our consolidated revenues in 2023, 2022 or 2021, we do have customers and independent third-party distributors, the loss of which could have a material adverse effect on results of operations for the affected earnings periods; however, we consider it unlikely that such an event would have a material adverse impact on our financial position.
Countries in the European Union require that certain products being sold within their jurisdictions obtain a “CE mark,” an international symbol of adherence to quality assurance standards, and be manufactured in compliance with certain requirements (e.g., Medical Device Directive 93/42/EE, Medical Device Regulation (EU) 2017/745 (“MDR”), and ISO 13485).
Countries in the European Union require that certain products being sold within their jurisdictions obtain a “CE mark,” an international symbol of adherence to quality assurance standards, and be manufactured in compliance with certain requirements (e.g., Medical Device Directive 93/42/EEC, Medical Device Regulation (EU) 2017/745 (“MDR”), and ISO 13485).
In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future and performance against our goals and targets may differ from such forward-looking statements in such event. ​ ​ 16 Table of Contents
In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future and performance against our goals and targets may differ from such forward-looking statements in such event. ​ ​ 15 Table of Contents
Additionally, we have similar liability at five sites outside the United States. In general, under CERCLA, we and each other PRP that actually contributed hazardous substances to a Superfund site are jointly and severally liable for the costs associated with cleaning up the site.
Additionally, we have similar liability at six sites outside the United States. In general, under CERCLA, we and each other PRP that actually contributed hazardous substances to a Superfund site are jointly and severally liable for the costs associated with cleaning up the site.
Proportionately larger investments in sales and technical support are also necessary in certain geographies in order to facilitate the growth of our international operations. ​ 7 Table of Contents Competition ​ In general, the markets in which the businesses in our Global Industrial reportable segment compete are led by a few large companies, with the rest of the market served by smaller entities focusing on more limited geographic regions or a smaller subset of products and services.
Proportionately larger investments in sales and technical support are also necessary in certain geographies in order to facilitate the growth of our international operations. ​ Competition ​ In general, the markets in which the businesses in our Global Industrial reportable segment compete are led by a few large companies, with the rest of the market served by smaller entities focusing on more limited geographic regions or a smaller subset of products and services.
In support of these overall objectives, key areas of focus include: ​ Diversity, Equity, and Inclusion: We have a long-standing belief that a diverse, equitable, and inclusive workforce is a critical foundation for the shared success of our employees, our company, our customers, and our communities.
In support of these overall objectives, key areas of focus include: ​ Diversity, Equity, and Inclusion: We have a long-standing belief that a diverse, equitable, and inclusive workforce is a strong foundation for the shared success of our employees, our company, our customers, and our communities.
Our offerings are sold primarily by our corporate account and field sales employees. ​ We believe we are one of the leading global suppliers of water treatment products and process aids to the pulp and papermaking industry. ​ ​ Global Institutional & Specialty ​ This reportable segment consists of the Institutional and Specialty operating segments, which provide specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, government, education and retail industries.
Our offerings are sold primarily by our corporate account and field sales employees. ​ We believe we are one of the leading global suppliers of water treatment products and process aids to the pulp and papermaking industry. 4 Table of Contents Global Institutional & Specialty ​ This reportable segment consists of the Institutional and Specialty operating segments, which provide specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, government, education and retail industries.
The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics. Descriptions of the four operating segments which comprise our Global Industrial reportable segment follow below. ​ Water ​ Water serves customers across industrial and institutional markets.
The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics. Descriptions of the three operating segments which comprise our Global Industrial reportable segment follow below. ​ Water ​ Water serves customers across industrial and institutional markets.
Through our field sales personnel, we generally provide the same customer support to end-use customers supplied by these distributors as we do to direct customers. ​ We believe we are one of the leading global suppliers of warewashing and laundry products and programs to the food service, hospitality and lodging markets. ​ 5 Table of Contents Specialty ​ Specialty supplies cleaning and sanitizing chemical products and related items primarily to regional, national and international quick service restaurant (“QSR”) chains and food retailers (i.e., supermarkets and grocery stores).
Through our field sales personnel, we generally provide the same customer support to end-use customers supplied by these distributors as we do to direct customers. ​ We believe we are one of the leading global suppliers of warewashing and laundry products and programs to the food service, hospitality and lodging markets. ​ Specialty ​ Specialty supplies cleaning and sanitizing products and related items primarily to regional, national and international quick service restaurant (“QSR”) chains and food retailers (i.e., supermarkets and grocery stores).
We provide similar information for Other as compared to our three reportable segments as we consider the information regarding its underlying operating segments useful in understanding our consolidated results. ​ ​ Global Industrial ​ This reportable segment consists of the Water, Food & Beverage, Downstream and Paper operating segments, which provide water treatment and process applications, and cleaning and sanitizing solutions, primarily to large industrial customers within the manufacturing, food and beverage processing, transportation, chemical, primary metals and mining, power generation, global refining, petrochemical, pulp and paper industries.
We provide similar information for Other as compared to our three reportable segments as we consider the information regarding its underlying operating segments useful in understanding our consolidated results. ​ ​ ​ 3 Table of Contents Global Industrial ​ This reportable segment consists of the Water, Food & Beverage and Paper operating segments, which provide water treatment and process applications, and cleaning and sanitizing solutions, primarily to large industrial customers within the manufacturing, food and beverage processing, transportation, chemical, primary metals and mining, power generation, global refining, petrochemical, pulp and paper industries.
We have CE mark approval to sell various medical device and medicinal products in Europe. Implementation of the MDR will require additional certifications and investments, including system, product and process upgrades. Our other international non-European operations also are subject to government regulation and country-specific rules and regulations.
We have CE mark approval to sell various medical device and medicinal products in Europe. Implementation of the MDR will require additional certifications and investments, including system, product and process upgrades. Our other international non- 11 Table of Contents European operations also are subject to government regulation and country-specific rules and regulations.
Chemical management initiatives that promote pollution prevention through research and development of safer chemicals and safer chemical processes are being advanced by several states. ​ 10 Table of Contents Environmentally preferable purchasing programs for cleaning products have been enacted in a number of states to date, and in recent years have been considered by several other state legislatures.
Chemical management initiatives that promote pollution prevention through research and development of safer chemicals and safer chemical processes are being advanced by several states. ​ Environmentally preferable purchasing programs for cleaning products have been enacted in a number of states to date, and in recent years have been considered by several other state legislatures.
The same is true for emerging biocide regulations in Asia. ​ 11 Table of Contents In addition, Pest Elimination applies restricted-use pesticides that it generally purchases from third parties. That business must comply with certain standards pertaining to the use of such pesticides and to the licensing of employees who apply such pesticides.
The same is true for emerging biocide regulations in Asia. ​ In addition, Pest Elimination applies restricted-use pesticides that it generally purchases from third parties. That business must comply with certain standards pertaining to the use of such pesticides and to the licensing of employees who apply such pesticides.
Independent, third-party distributors and, to a lesser extent, sales agents, are utilized in several markets, as described in the segment descriptions found above. ​ Customers and Classes of Products ​ We believe our business is not materially dependent upon a single customer.
Independent, third-party distributors and, to a lesser extent, sales agents, are utilized in several markets, as described in the segment descriptions found above. ​ 7 Table of Contents Customers and Classes of Products ​ We believe our business is not materially dependent upon a single customer.
We believe we are one of the leading suppliers of process purification solutions in Europe and North America and of contamination control solutions in Europe, with a growing presence in North America and other regions. ​ ​ 6 Table of Contents Other ​ Other consists of the Pest Elimination, Textile Care and Colloidal Technologies Group operating segments.
We believe we are one of the leading suppliers of process purification solutions in Europe and North America and of contamination control solutions in Europe, with a growing presence in North America and other regions. ​ ​ Other ​ Other consists of the Pest Elimination, Textile Care and Colloidal Technologies Group operating segments.
Environmental and regulatory matters most significant to us are discussed below. ​ Ingredient Legislation : Various laws and regulations have been enacted by state, local and foreign jurisdictions pertaining to the sale of products which contain phosphorous, volatile organic compounds, or other ingredients that may impact human health or the environment.
Environmental and regulatory matters most significant to us are discussed below. ​ Ingredient Legislation : Various laws and regulations have been enacted by state, local and foreign jurisdictions pertaining to the sale of products which contain phosphorous, volatile organic compounds, per- and polyfluoroalkyl substances (“PFAS”) or other ingredients that may impact human health or the environment.
In addition, the European Green Deal will include the revision of chemical management regulation to achieve a circular economy and toxic-free environment (Chemical Strategy for Sustainability) which may impact sales in Ecolab’s raw material portfolio.
In addition, the European Green Deal will include the revision of chemical 10 Table of Contents management regulation to achieve a circular economy and toxic-free environment (Chemical Strategy for Sustainability) which may impact sales in Ecolab’s raw material portfolio.
Our offerings are sold primarily by our corporate account and field sales employees. ​ We believe we are one of the leading global suppliers of products and programs for chemical applications within the industrial water treatment industry. ​ Food & Beverage ​ Food & Beverage provides cleaning and sanitation products and programs to facilitate the processing of products for human consumption.
Our offerings are sold primarily by our corporate account and field sales employees. ​ We believe we are one of the leading global suppliers of products and programs for chemical applications within the industrial water treatment and petroleum refining industries. ​ Food & Beverage ​ Food & Beverage provides cleaning and sanitation products and programs to facilitate the processing of products for human consumption.
We believe in providing comprehensive training and career development opportunities and in compensating and rewarding our employees equitably. Our commitment to the safety of our employees, contractors and customers is evident in all we do, from the way we operate, to the products we develop and to the customers we serve.
We believe in providing training and career development opportunities to all employees and in compensating and rewarding our employees equitably. ​ Our commitment to the safety of our employees, contractors, and customers is evident in the way we operate, the products we develop, and the customers we serve.
These statements include expectations concerning items such as: ​ ● amount, funding and timing of cash expenditures relating to our restructuring and other initiatives, as well as savings from such initiatives ● future cash flows, access to capital, targeted credit rating metrics and impact of credit rating downgrade ● adequacy of cash reserves ● uses for cash, including dividends, share repurchases, debt repayments, capital investments and strategic business acquisitions ● global market risk ● long-term potential of our business ● impact of changes in exchange rates and interest rates ● customer retention rate ● bad debt experience, non-performance of counterparties and losses due to concentration of credit risk ● disputes, claims and litigation ● environmental contingencies ● impact and cost of complying with laws and regulations ● sustainability and human capital targets ● returns on pension plan assets ● contributions to pension and postretirement healthcare plans ● amortization expense ● impact of new accounting pronouncements ● income taxes, including tax attributes, valuation allowances, uncertain tax positions, permanent reinvestment assertions and goodwill deductibility ● recognition of share-based compensation expense ● payments under operating leases ● future benefit plan payments ● market position ● the impact of the Covid-19 pandemic, including global economic recovery, supply shortages, inflation and delivered product costs ​ Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will be,” “will continue,” “is anticipated,” “we believe,” “we expect,” “estimate,” “project” (including the negative or variations thereof), “intends,” “could,” or similar terminology, generally identify forward-looking statements.
These statements include expectations concerning items such as: ​ ● amount, funding and timing of cash expenditures relating to our restructuring and other initiatives, as well as savings from such initiatives ● future cash flows, access to capital, targeted credit rating metrics and impact of credit rating downgrade ● adequacy of cash reserves ● uses for cash, including dividends, share repurchases, debt repayments, capital investments and strategic business acquisitions ● global economic and political environment ● long-term potential of our business ● impact of changes in exchange rates and interest rates ● customer retention rate ● bad debt experience, non-performance of counterparties and losses due to concentration of credit risk ● disputes, claims and litigation ● environmental contingencies ● impact and cost of complying with laws and regulations ● sustainability targets ● returns on pension plan assets ● contributions to pension and postretirement healthcare plans ● amortization expense ● impact of new accounting pronouncements ● income taxes, including tax attributes, valuation allowances, unrecognized tax benefits, permanent reinvestment assertions and goodwill deductibility ● recognition of share-based compensation expense ● payments under operating leases ● future benefit plan payments ● market position ​ Without limiting the foregoing, words or phrases such as “will likely result,” “are expected to,” “will be,” “will continue,” “is anticipated,” “we believe,” “we expect,” “estimate,” “project” (including the negative or variations thereof), “intends,” “could,” or similar terminology, generally identify forward-looking statements.
The information contained on our websites, including the corporate responsibility, EEO-1, and climate reports identified in this report, is not incorporated by reference into this report. ​ ​ 14 Table of Contents Information about our Executive Officers. ​ The persons listed in the following table are our current executive officers. Officers are elected annually.
The information contained on our websites, including the corporate responsibility, and climate reports identified in this report, is not incorporated by reference into this report. ​ ​ 13 Table of Contents Information about our Executive Officers. ​ The persons listed in the following table are our current executive officers. Officers are elected annually.
During 2022, the impact on our consolidated net income of our joint ventures, in the aggregate, was approximately three percent.
During 2023, the impact on our consolidated net income of our joint ventures, in the aggregate, was approximately three percent.
In each of these chemical exposure cases, our insurance carriers have accepted the claims on our behalf (with or without reservation) and our financial exposure should be limited to the amount of our deductible; however, we cannot predict the number of claims that we may have to defend in the future and we may not be able to continue to maintain such insurance. 13 Table of Contents Our worldwide net expenditures for contamination remediation were approximately $1.4 million in 2022, $0.5 million in 2021 and $0.6 million in 2020.
In each of these chemical exposure cases, our insurance carriers have accepted the claims on our behalf (with or without reservation) and our financial exposure should be limited to the amount of our deductible; however, we cannot predict the number of claims that we may have to defend in the future and we may not be able to continue to maintain such insurance. ​ Our worldwide net expenditures for contamination remediation were approximately $0.3 million in 2023, $1.4 million in 2022 and $0.5 million in 2021.
Kirkland ​ 49 ​ Chief Financial Officer ​ Jan. 2022 – Present ​ ​ ​ ​ Senior Vice President and Corporate Controller ​ June 2019 – Dec. 2021 ​ ​ ​ ​ Senior Vice President – Finance, Global Energy Services ​ Jan. 2018 – May 2019 ​ ​ ​ ​ ​ ​ ​ Laurie M.
Kirkland ​ 50 ​ Chief Financial Officer ​ Jan. 2022 – Present ​ ​ ​ ​ Senior Vice President and Corporate Controller ​ June 2019 – Dec. 2021 ​ ​ ​ ​ Senior Vice President – Finance, Global Energy Services ​ Jan. 2019 – May 2019 ​ ​ ​ ​ ​ ​ ​ Laurie M.
Our worldwide accruals at December 31, 2022 for probable future remediation expenditures, excluding potential insurance reimbursements, totaled approximately $9.6 million. We review our exposure for contamination remediation costs periodically and our accruals are adjusted as considered appropriate.
Our worldwide accruals at December 31, 2023 for probable future remediation expenditures, excluding potential insurance reimbursements, totaled approximately $9.3 million. We review our exposure for contamination remediation costs periodically and our accruals are adjusted as considered appropriate.
In 2021, we helped our customers conserve more than 215 billion gallons of water and avoid more than 3.5 million metric tons of greenhouse gas emissions. ​ 3 Table of Contents The following description of our business is based upon our reportable segments as reported in our consolidated financial statements for the year ended December 31, 2022, which are located in Item 8 of Part II of this Form 10-K.
In 2022, we helped our customers conserve more than 219 billion gallons of water and avoid more than 3.6 million metric tons of greenhouse gas emissions. ​ The following description of our business is based upon our reportable segments as reported in our consolidated financial statements for the year ended December 31, 2023, which are located in Item 8 of Part II of this Form 10-K.
Building on a century of innovation, we have annual sales of $14 billion, employ more than 47,000 associates and operate in more than 170 countries around the world. We deliver comprehensive science-based solutions, data-driven insights and world-class service to advance food safety, maintain clean and safe environments, and optimize water and energy use.
Building on a century of innovation, we have annual sales of $15 billion, employ more than 48,000 associates and sell to customers in more than 170 countries around the world. We deliver comprehensive science-based solutions, data-driven insights and world-class service to advance food safety, maintain clean and safe environments, and optimize water and energy use.
Sales of warewashing products were approximately 12%, 10%, and 11% of consolidated net sales in 2022, 2021 and 2020, respectively. ​ Human Capital ​ As of December 31, 2022, Ecolab employed approximately 47,000 employees, including approximately 26,000 sales and service and 1,100 research, development, and engineering employees.
Sales of warewashing products were approximately 12%, 12%, and 10% of consolidated net sales in 2023, 2022 and 2021, respectively. ​ Human Capital ​ As of December 31, 2023, Ecolab employed approximately 48,000 employees, including approximately 26,000 sales and service and 1,100 research, development, and engineering employees.
Key disciplines include analytical and formulation chemistry, microbiology, data science and predictive analytics, process and packaging engineering, digital and remote monitoring engineering and product dispensing technology.
Key disciplines include analytical and formulation chemistry, microbiology, 9 Table of Contents data science and predictive analytics, process and packaging engineering, digital and remote monitoring engineering and product dispensing technology.
Brown ​ 59 ​ President and Chief Operating Officer ​ Oct. 2022 – Present ​ ​ ​ ​ Executive Vice President and President – Global Industrial ​ Apr. 2019 – Oct. 2022 ​ ​ ​ ​ Executive Vice President and President – Energy Services ​ Jan. 2018 – Mar. 2019 ​ ​ ​ ​ ​ ​ ​ Angela M.
Brown ​ 60 ​ President and Chief Operating Officer ​ Oct. 2022 – Present ​ ​ ​ ​ Executive Vice President and President – Global Industrial ​ Apr. 2019 – Sept. 2022 ​ ​ ​ ​ Executive Vice President and President – Energy Services ​ Jan. 2019 – Mar. 2019 ​ ​ ​ ​ ​ ​ ​ Angela M.
To date, such expenditures have not had a significant adverse effect on our consolidated results of operations, financial position or cash flows. Our capital expenditures for environmental, health and safety projects worldwide were approximately $35 million in 2022, $28 million in 2021 and $18 million in 2020. Approximately $41 million has been budgeted globally for projects in 2023.
To date, such expenditures have not had a significant adverse effect on our consolidated results of operations, financial position or cash flows. Our capital expenditures for environmental, health and safety projects worldwide were approximately $46 million in 2023, $35 million in 2022 and $28 million in 2021.
Our programs assist in more effectively managing water use for plant processes by optimizing the performance of treatment chemicals and equipment in order to minimize costs and maximize returns on investment. ​ Our offerings include specialty products such as scale and corrosion inhibitors, antifoulants, pre-treatment solutions, membrane treatments, coagulants and flocculants, and anti-foamers, as well as our 3D TRASAR TM technologies, which combines chemistry, remote services and monitoring and control.
Our programs assist in more effectively managing water use for plant processes by optimizing the performance of treatment chemicals and equipment in order to minimize costs and maximize returns on investment. ​ Our offerings include specialty products such as scale and corrosion inhibitors, antifoulants, pre-treatment solutions, membrane treatments, coagulants and flocculants, anti-foamers, hydrogen sulfide removal, cold flow improvers, lubricity inhibitors, crude desalting and reactive monomer inhibitors, as well as our 3D TRASAR TM technologies, which combine chemistry, remote services and monitoring and control.
Some products are also produced for us by third-party contract manufacturers. Other products and equipment are purchased from third-party suppliers. Additional information on product/equipment sourcing is found in the segment discussions above and additional information on our manufacturing facilities is located under Part I, Item 2.
Other products and equipment are purchased from third-party suppliers. Additional information on product/equipment sourcing is found in the segment discussions above and additional information on our manufacturing facilities is located under Part I, Item 2.
The primary cost of compliance revolves around reclassifying products and revising SDSs and product labels. We have met applicable deadlines and are working toward a phased-in approach to mitigate the costs of GHS implementation in remaining countries (e.g., Peru, Chile, India).
As of 2023, most countries in which we operate have adopted or are expected to adopt GHS-related legislation. The primary cost of compliance revolves around reclassifying products and revising SDSs and product labels. We have met applicable deadlines and are working toward a phased-in approach to mitigate the costs of GHS implementation in remaining countries (e.g., Peru, Chile, India).
Berger ​ 62 ​ Executive Vice President and Chief Technical Officer ​ Jan. 2018 – Present ​ ​ ​ ​ ​ ​ ​ Jennifer J.
Berger ​ 63 ​ Executive Vice President and Chief Technical Officer ​ Jan. 2019 – Present ​ ​ ​ ​ ​ ​ ​ Jennifer J.
Bradway ​ 46 ​ Senior Vice President and Corporate Controller ​ Jan. 2022 – Present ​ ​ ​ ​ Senior Vice President and Controller, Global Institutional ​ Jan. 2020 – Dec. 2021 ​ ​ ​ ​ Vice President Finance, Institutional North America ​ May 2018 – Dec. 2019 ​ ​ ​ ​ Vice President and Controller, Institutional U.S. ​ Jan. 2018 – Apr. 2018 ​ ​ ​ ​ ​ ​ ​ Darrell R.
Bradway ​ 47 ​ Senior Vice President and Corporate Controller ​ Jan. 2022 – Present ​ ​ ​ ​ Senior Vice President Finance - Global Institutional ​ Jan. 2020 – Dec. 2021 ​ ​ ​ ​ Vice President Finance - Institutional North America ​ Jan. 2019 – Dec. 2019 ​ ​ ​ ​ ​ ​ ​ Darrell R.
Minnix (2) ​ 47 ​ Executive Vice President, General Counsel and Secretary ​ June 2022 – Present ​ ​ ​ ​ ​ ​ ​ Gail Peterson ​ 44 ​ Senior Vice President – Global Marketing & Communications ​ Jan. 2021 – Present ​ ​ ​ ​ Vice President – Marketing Global Healthcare ​ Jan. 2018 – Dec. 2020 ​ ​ ​ ​ ​ ​ ​ Gergely Sved (3) ​ 49 ​ Executive Vice President and President – Global Healthcare and Life Sciences ​ Apr. 2022 – Present ​ ​ ​ ​ SVP and General Manager - Global Healthcare ​ Jan. 2019 – Mar. 2022 ​ ​ ​ ​ ​ ​ ​ ​ (1) Prior to joining Ecolab in February 2020, Mr.
Minnix (2) ​ 48 ​ Executive Vice President, General Counsel and Secretary ​ June 2022 – Present ​ ​ ​ ​ ​ ​ ​ Gail Peterson ​ 45 ​ Executive Vice President – Global Marketing & Communications ​ Apr. 2022 – Present ​ ​ ​ ​ Senior Vice President – Global Marketing & Communications ​ Jan. 2021 – Mar. 2022 ​ ​ ​ ​ Vice President – Marketing Global Healthcare ​ Jan. 2019 – Dec. 2020 ​ ​ ​ ​ ​ ​ ​ Gergely Sved ​ 50 ​ Executive Vice President and President – Global Healthcare and Life Sciences ​ Apr. 2022 – Present ​ ​ ​ ​ Senior Vice President and General Manager - Global Healthcare ​ Jan. 2019 – Mar. 2022 ​ ​ ​ ​ ​ ​ ​ 14 Table of Contents (1) Prior to joining Ecolab in February 2020, Mr.
These employee-led ERGs create community and focus across several dimensions of diversity, including gender, race/ethnicity, gender identity, sexual orientation, ability/disability, military service and more.
These employee-led ERGs create community and focus on several dimensions of diversity, including gender, race/ethnicity, gender identity, sexual orientation, ability/disability, military service, generational, global, and career skill development.
There is no family relationship among any of the directors or executive officers and no executive officer has been involved during the past ten years in any legal proceedings described in applicable Securities and Exchange Commission regulations.
There is no family relationship among any of the directors or executive officers and no executive officer has been involved during the past ten years in any legal proceedings described in applicable Securities and Exchange Commission regulations. Name Age Office Positions Held Since Jan. 1, 2019 ​ ​ ​ ​ ​ ​ ​ Nicholas J.
CTG serves customers across various industries, including semiconductor manufacturing, catalyst manufacturing, chemicals and aerospace component manufacturing. ​ CTG incorporates strong collaboration with customers to develop customized solutions that meet the technical demands of their operations.
These products and associated programs are used primarily for binding and polishing applications. CTG serves customers across various industries, including semiconductor manufacturing, catalyst manufacturing, chemicals and aerospace component manufacturing. ​ CTG incorporates strong collaboration with customers to develop customized solutions that meet the technical demands of their operations.
To build that strong foundation, we have worked to embed diversity and inclusion throughout all people processes, including recruitment, promotional practices, training and development, and total rewards. To help guide our work and ensure a broad commitment to progress, Ecolab utilizes a Diversity Council made up of senior leaders throughout our company and chaired by our CEO.
To build that strong foundation, we have worked to embed diversity and inclusion throughout our people processes, including in the areas of recruitment, retention, and development. To help guide our work and support our broad commitment to progress, Ecolab has a Diversity Council made up of senior leaders throughout our company and chaired by our CEO.
The investment in such equipment is discussed under the heading "Investing Activities" in Management's Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K. ​ 9 Table of Contents Manufacturing and Distribution ​ We manufacture most of our products and related equipment in Company-operated manufacturing facilities.
The investment in such equipment is discussed under the heading "Investing Activities" in Management's Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K. ​ Manufacturing and Distribution ​ We manufacture most of our products and related equipment in Company-operated manufacturing facilities. Some products are also produced for us by third-party contract manufacturers.
Marsh ​ 59 ​ Executive Vice President – Human Resources ​ Jan. 2018 – Present ​ ​ ​ ​ ​ ​ ​ Lanesha T.
Marsh ​ 60 ​ Executive Vice President – Human Resources ​ Jan. 2019 – Present ​ ​ ​ ​ ​ ​ ​ Lanesha T.
GHS is designed to facilitate international trade and increase safe handling and use of hazardous chemicals through a worldwide system that classifies chemicals based on their intrinsic hazards and communicates information about those hazards through standardized product labels and safety data sheets (“SDSs”). Most countries in which we operate have adopted or are expected to adopt GHS-related legislation by 2023.
GHS is designed to facilitate international trade and increase safe handling and use of hazardous chemicals through a worldwide system that classifies chemicals based on their intrinsic hazards and communicates information about those hazards through standardized product labels and safety data sheets (“SDSs”).
We believe we are one of the leading global suppliers in the laundry markets in which we compete. ​ Colloidal Technologies Group ​ The Colloidal Technologies Group (“CTG”) produces and sells colloidal silica, which is comprised of nano-sized particles of silica in water. These products and associated programs are used primarily for binding and polishing applications.
We believe we are one of the leading global suppliers in the laundry markets in which we compete. ​ ​ 6 Table of Contents Colloidal Technologies Group ​ The Colloidal Technologies Group (“CTG”) produces and sells colloidal silica, which is comprised of nano-sized particles of silica in water.
In 2020, we further committed to attempt to move to 100% renewable energy by 2030 and set a science-based target (SBT) addressing our Scope 1, 2 and 3 GHG emissions.
In 2020, we further committed to attempt to move to 100% renewable energy by 2030 and set a science-based target (“SBT”) addressing our Scope 1, 2 and 3 GHG emissions, and in 2022 we committed to submitting our net zero target to the Science Based Targets initiative (“SBTi”) for formal validation.
De Boo ​ 55 ​ Executive Vice President and President – Global Markets ​ Feb. 2021 – Present ​ ​ ​ ​ Executive Vice President and President – Western Europe ​ Apr. 2020 – Jan. 2021 ​ ​ ​ ​ Senior Vice President and General Manager – Industrial, Europe ​ Oct. 2018 – Apr. 2020 ​ ​ ​ ​ Senior Vice President and General Manager – Food & Beverage, Europe ​ Jan. 2018 – Oct. 2018 ​ ​ ​ ​ ​ ​ ​ Machiel Duijser (1) ​ 51 ​ Executive Vice President and Chief Supply Chain Officer ​ Feb. 2020 – Present ​ ​ ​ ​ ​ ​ ​ Scott D.
De Boo ​ 56 ​ Executive Vice President and President – Global Markets ​ Feb. 2021 – Present ​ ​ ​ ​ Executive Vice President and President – Western Europe ​ Apr. 2020 – Jan. 2021 ​ ​ ​ ​ Senior Vice President and General Manager – Industrial, Europe ​ Jan. 2019 – Apr. 2020 ​ ​ ​ ​ ​ ​ ​ Machiel Duijser (1) ​ 52 ​ Executive Vice President and Chief Supply Chain Officer ​ Feb. 2020 – Present ​ ​ ​ ​ ​ ​ ​ Nicolas A.
Over the last few years, we’ve expanded our offerings to include comprehensive child and elder caregiver resources to help employees balance the demands of work and personal responsibilities. To ensure the safety of our employees amidst an ongoing COVID-19 pandemic environment, we follow CDC and local guidance.
Over the last few years, we’ve expanded our offerings to include comprehensive child and elder caregiver resources to help employees balance the demands of work and personal responsibilities.
We review key metrics and practices, including diverse representation, hiring practices, and retention with the Council and with senior executives and business leads monthly.
We review with the Council, senior executives and business leads key metrics and practices, including diverse representation of backgrounds and experiences, along with many aspects of our recruiting and retention practices.
Subsequently, Ecolab plans to review the results of our analysis and consider adaptation and management plans for any relevant climate change risks and to further benefit from identified opportunities for customer impact. ​ To further our climate commitment, in 2019 we announced new goals to reduce our GHG emissions by half by 2030 and achieve net zero by 2050, in alignment with the United Nations Global Compact’s Business Ambition for 1.5⁰C.
To further our climate commitment, in 2019 we announced new goals to reduce our operational GHG emissions by half by 2030 and achieve net zero by 2050, in alignment with the United Nations Global Compact’s Business Ambition for 1.5⁰C.
The services of Pest Elimination are sold and performed by our field sales and service personnel. ​ In addition to the United States, which constitutes our largest operation, we operate in various countries in Asia Pacific, Greater China, Western Europe, Latin America and South Africa. ​ We believe Pest Elimination is a leading supplier of high-quality outcome pest elimination programs to the commercial, hospitality and institutional markets in the geographies it serves. ​ Textile Care ​ Textile Care provides products and services that manage the entire wash process through custom designed programs, premium products, dispensing equipment, water and energy management and reduction, and real time data management for large scale, complex commercial laundry operations including uniform rental, hospitality, linen rental and healthcare laundries.
We disclose these operating segments within Other as we consider the information useful in understanding our consolidated results. ​ Pest Elimination ​ Pest Elimination provides services designed to detect, prevent, and eliminate pests such as rodents and insects in full-service and quick-service restaurants, food and beverage processors, hotels, grocery operations and other commercial segments including education, life sciences and healthcare. ​ In addition to the United States, which constitutes our largest operation, we operate in various countries in Asia Pacific, Greater China, Western Europe, Latin America, and Africa. ​ We believe Pest Elimination is a leading service provider of effective, high-quality pest elimination programs that deliver high quality outcomes to commercial segments in the geographies it serves. ​ Textile Care ​ Textile Care provides products and services that manage the entire wash process through custom designed programs, premium products, dispensing equipment, water and energy management and reduction, and real time data management for large scale, complex commercial laundry operations including uniform rental, hospitality, linen rental and healthcare laundries.
These include proposed regulations introduced by the SEC in March 2022 relating to climate change disclosure and the European Commission’s Corporate Sustainability Reporting Directive, which came into force in December 2022 and will apply to both EU and certain non-EU companies with a phased introduction. These laws may directly impact the Company.
These include regulations passed by the State of California in 2023 relating to GHG emissions, climate-related risk, and emissions reduction claims, proposed regulations introduced by the SEC in March 2022 relating to climate change disclosure, and the European Commission’s Corporate Sustainability Reporting Directive, which came into force on January 2024 and applies to both EU and certain non-EU companies with a phased introduction.
Duijser was employed by Reckitt Benckiser Group plc (RB), a global provider of health, hygiene and home products, as Chief Supply Officer since November 2018. Mr.
Duijser was employed by Reckitt Benckiser Group plc (RB), a global provider of health, hygiene and home products, as Chief Supply Officer from 2018 until 2020. ​ (2) Prior to joining Ecolab in June 2022, Ms.
Its products include specialty and general purpose hard surface cleaners, degreasers, sanitizers, polishes, hand care products and assorted cleaning tools and equipment which are primarily sold under the “Ecolab” and “Kay” brand names.
Its products include specialty and general purpose hard surface cleaners, degreasers, sanitizers, polishes, hand care products and assorted cleaning tools and equipment which are primarily sold under the “Ecolab” and “Kay” brand names. QSR’s program also includes a lease program comprised of energy-efficient dishwashing machines, detergents, rinse additives and sanitizers, including full machine maintenance.
Food Safety Solutions also offers digital applications that automate kitchen procedures for efficiency and compliance. ​ We believe we are one of the leading suppliers of cleaning and sanitizing products to the global QSR market and a leading supplier of cleaning and sanitizing products to the global food retail market. ​ ​ Global Healthcare & Life Sciences ​ This reportable segment consists of the Healthcare and Life Sciences operating segments, which provide specialized cleaning and sanitizing products to the healthcare, personal care and pharmaceutical industries.
It also offers a unique variety of products, tools and equipment for food preparation, food rotation labeling, temperature management, cleaning and employee safety across all food service customers. ​ We believe we are one of the leading suppliers of cleaning and sanitizing products to the global QSR market and a leading supplier of cleaning and sanitizing products to the global food retail market. ​ ​ ​ 5 Table of Contents Global Healthcare & Life Sciences ​ This reportable segment consists of the Healthcare and Life Sciences operating segments, which provide specialized cleaning and sanitizing products to the healthcare, personal care and pharmaceutical industries.
The increase in the projected spend reflects a return to historical annual expenditure levels prior to the COVID-19 pandemic. ​ Climate Change : Various laws and regulations pertaining to climate change have been implemented or are being considered for implementation at the international, national, regional and state levels, particularly as they relate to the reduction of greenhouse gas (GHG) emissions.
Approximately $51 million has been budgeted globally for projects in 2024. ​ Climate Change : Various laws and regulations pertaining to climate change have been implemented or are being considered for implementation at the international, national, regional and state levels, particularly as they relate to the reduction of greenhouse gas (“GHG”) emissions.
Heavy industries served include power, chemicals and primary metals and mining. ​ Water provides water treatment products and technology programs for cooling water, wastewater, boiler water and process water applications.
Heavy industries served include power, chemicals and primary metals, mining and petroleum refining and fuels industry. ​ Water provides water treatment products and technology programs for cooling water, wastewater, boiler water and process water applications. In addition to these solutions, we offer specialty programs to the petroleum and fuels industry – refining process applications, fuels and feedstocks additives.
Products for use in processing facilities are sold primarily by our corporate account and field sales employees, while products for use on farms are sold through dealers and independent, third-party distributors. ​ We believe we are one of the leading global suppliers of cleaning and sanitizing products to the dairy plant, dairy, swine and poultry farm, beverage/brewery, food, meat and poultry, and beverage/brewery processing industries. ​ 4 Table of Contents Downstream ​ Downstream provides products and programs for process and water treatment applications specific to the petroleum refining and fuels industry, enabling our customers to profitably refine and upgrade hydrocarbons.
Products for use in processing facilities are sold primarily by our corporate account and field sales employees, while products for use on farms are sold through dealers and independent, third-party distributors. ​ We believe we are one of the leading global suppliers of cleaning and sanitizing products to the dairy plant, dairy, swine and poultry farm, beverage/brewery, food, meat and poultry, and beverage/brewery processing industries. ​ Paper ​ Paper provides water and process applications for the pulp and paper industries, offering a comprehensive portfolio of programs that are used in all principal steps of the papermaking process and across all grades of paper, including graphic grades, board and packaging, and tissue and towel.
While Specialty’s customer base has broadened significantly over the years, Specialty’s business remains largely dependent upon a limited number of major QSR chains and franchisees and large food retail customers. ​ Food Safety Solutions supplies a variety of products, tools and equipment for food preparation, food rotation, temperature management, cleaning and employee safety across all food service customers.
While Specialty’s customer base has broadened significantly over the years, Specialty’s business remains largely dependent upon a limited number of major QSR chains and franchisees and large food retail customers. ​ Food Safety Solutions supplies a digital platform that combines software, hardware and multiple services to automate kitchen procedures for efficiency and compliance.
Water reduction is calculated using the water meters and utilities data that measure the savings since our base year of calculations which was 2018. ​ In addition to managing our operational and supply chain sustainability performance, we partner with customers at more than three million customer locations around the world to reduce energy and GHG emissions through our high-efficiency solutions in cleaning and sanitation, water, paper, and energy services.
Water data from meter readings and utilities reports is used to quantify the water savings with 2018 as our baseline year. ​ 12 Table of Contents In addition to managing our operational and supply chain sustainability performance, we help our customers in more than 170 countries to reduce their energy and GHG emissions through our high-efficiency solutions in cleaning and sanitation, water, paper, and energy services.
We set diversity goals at or above market availability and utilize diverse slates for all hiring activity. ​ ​ ​ 8 Table of Contents We have a vibrant and growing community of Employee Resource Groups (ERGs) to help employees connect with colleagues, take part in career and leadership development experiences, and provide important insights in support of advancing our work in diversity, equity, and inclusion.
These programs are designed to facilitate equitable employment opportunities, while promoting an inclusive workforce. ​ We also have a vibrant and growing community of 11 Employee Resource Groups (“ERGs”) that are open to all, to help employees connect with colleagues, take part in career and leadership development experiences, and provide important insights in support of advancing our work in diversity, equity, and inclusion.
Busch ​ 56 ​ Executive Vice President – Corporate Strategy & Business Development ​ Aug. 2018 – Present ​ ​ ​ ​ Senior Vice President – Corporate Development ​ Jan. 2018 – Aug. 2018 ​ ​ ​ ​ ​ ​ ​ Alexander A.
Busch ​ 57 ​ Executive Vice President – Corporate Strategy & Business Development ​ Jan. 2019 – Present ​ ​ ​ ​ ​ ​ ​ Gregory B.
Minnix was employed by Flowserve Corporation, a global industrial manufacturer of engineered flow control systems, as Senior Vice President, Chief Legal Officer and Corporate Secretary from 2018 until 2022. Ms.
Minnix was employed by Flowserve Corporation, a global industrial manufacturer of engineered flow control systems, as Senior Vice President, Chief Legal Officer and Corporate Secretary from 2018 until 2022. ​ ​ Forward-Looking Statements ​ This Form 10-K, including Part I, Item 1, entitled “Business,” and the MD&A within Part II, Item 7, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
In all, these projects reduced annual energy consumption by almost 5.4 billion BTUs, reduced GHG emissions by 324 MT CO2e and saved 27 million gallons (~103,000 cubic meters) of water across our global supply chain manufacturing facilities. The scope of energy consumption reductions is calculated using a combination of direct measurements and estimations using best-practice methodologies.
In 2022, we completed process improvement projects that reduced total energy consumption by almost 21.4 billion BTUs, emissions by 11,000 metric tons CO2e and 12.7 million gallons (~48,000 cubic meters) of water savings. The reduction in energy consumption is calculated using a combination of direct measurements and estimations using best-practice methodologies.
We continue to monitor the development and implementation of such laws and regulations; however, as a matter of corporate policy, we support a balanced approach to reducing GHG emissions while sustaining economic growth. ​ ​ 12 Table of Contents Furthermore, climate-related risks are assessed within our Enterprise Risk Management process and Annual Business Significance Risks Assessment, which is aligned with recommendations of the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD).
Climate-related risks are assessed within our Enterprise Risk Management process and Annual Business Significance Risks Assessment, which is aligned with recommendations of the Financial Stability Board (“FSB”) Task Force on Climate-related Financial Disclosures (“TCFD”). We report TCFD disclosures in our annual CDP Climate report located on our website.
Beyond rigorous technical, functional, and business-specific training courses, our Global Corporate Flagship Development Programs are designed to deepen leadership capability and prepare successors for key leadership roles. ​ Safety, Health and Wellness: At Ecolab, the safety of our employees and contractors is a top priority and is embedded into our company values.
Beyond rigorous technical, functional, and business-specific training courses, our Global Corporate Flagship Development Programs for supervisors, managers and leaders are designed to deepen leadership capability and prepare potential successors for key leadership roles. ​ Compensation and Benefits: Ecolab has a market-competitive and performance-based pay philosophy, and we believe in compensating our employees fairly and equitably.
GAAP (accounting principles generally accepted in the United States of America) November 30 fiscal year ends to facilitate the timely inclusion of such entities in our consolidated financial reporting. ​ In June 2020, we completed the separation of our Upstream Energy business (the “ChampionX business”) in a Reverse Morris Trust transaction (the “Transaction”) through the split-off of ChampionX Holding Inc.
GAAP (accounting principles generally accepted in the United States of America) November 30 fiscal year ends to facilitate the timely inclusion of such entities in our consolidated financial reporting. ​ On December 1, 2021, we acquired Purolite for total consideration of $3.7 billion in cash, net of cash acquired.
Approximately 41% of the employees are employed in North America, 21% in Europe, 7% in Asia Pacific, 17% in Latin America, 6% in India, Middle East and Africa, and 8% in Greater China. ​ We are committed to developing a culture that is diverse, equitable, inclusive, and fully leverages our employees’ talents as we work together to serve the needs of our customers.
Approximately 42% of the employees are employed in North America, 20% in Europe, 7% in Asia Pacific, 17% in Latin America, 7% in India, Middle East and Africa, and 7% in Greater China. ​ We believe that doing the right thing, the right way, is good for business.
All employees are welcome and encouraged to join, participate or become leaders within any of our 12 ERGs. ​ Employee Training and Development: At our core, Ecolab’s growth is rooted in decades of science, learning and innovation. We have ambitious solution-oriented teams and we continually look for ways to help our employees learn and grow.
All employees are welcome and encouraged to join, participate, or become leaders and allies within any of our ERGs. ​ Employee Training and Development: Ecolab’s growth has been characterized by a century of supporting customers by combining science, technology and innovation with the expertise of our associates.
Removed
(“ChampionX”), formed by Ecolab as a wholly owned subsidiary to hold the ChampionX business, followed immediately by the merger (the “Merger”) of ChampionX with a wholly owned subsidiary of ChampionX Corporation (f/k/a Apergy Corporation, “Apergy”). ​ As discussed in Note 5 Discontinued Operations, the ChampionX business met the criteria to be reported as discontinued operations in 2020 because the separation of ChampionX was a strategic shift in business that had a major effect on our operations and financial results.
Added
We believe that driving performance and growing fast, we can deliver a net positive impact in our own operations and what we deliver for our customers. We are committed to developing a culture that is diverse, equitable, inclusive, and leverages our employees’ talents as we work together to serve the needs of our customers.
Removed
Therefore, we reported the historical results of ChampionX, including the results of operations and cash flows as discontinued operations, and related assets and liabilities were retrospectively reclassified for all periods presented herein.
Added
We believe that our culture is more creative and helps deliver the innovation needed to grow our business.
Removed
Unless otherwise noted, the accompanying financial information has been revised to reflect the effect of the separation of ChampionX and prior year balances have been revised accordingly to reflect continuing operations only. ​ On December 1, 2021, we acquired Purolite for total consideration of $3.7 billion in cash, net of cash acquired.
Added
We are committed to rewarding and recognizing employees for their contributions to the success of the organization. This includes our global merit increase program and our short- and long-term variable pay programs, which include goals and targets that are tied to the success of the business.
Removed
We solve our customers’ toughest process and water challenges so they can reliably, sustainably and profitably refine fuels and process petrochemicals. Our proven chemistry and digital technologies combined with service increase refinery and petrochemical plant reliability and the useful life of customer assets while improving product quality and yields.
Added
We test our pay and wage data against compensation surveys to align our pay with the competitive external market. In the U.S., we conduct pay equity studies, and we are in the process of expanding pay equity studies outside the U.S. ​ Ecolab also provides market-competitive benefits based on country-specific needs and government requirements.
Removed
Our product portfolio includes corrosion inhibitors, antifoulants, hydrogen sulfide removal, cold flow improvers, lubricity inhibitors, crude desalting, reactive monomer inhibitors, olefins, anti-polymerants, anti-oxidants and water treatment. ​ Our customers include many of the largest publicly traded oil, refining and petrochemical companies, as well as national refining and petrochemical companies, and large independent refining companies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

29 edited+6 added−14 removed51 unchanged
Biggest changeIn addition, volatility and disruption in economic activity and conditions could disrupt or delay the performance of our suppliers and thus impact our ability to obtain raw materials at favorable prices or on favorable terms, which may materially and adversely affect our business. ​ We depend on key personnel to lead our business; the labor market is very dynamic. ​ Our continued success will largely depend on our ability to attract, retain and develop a high caliber of talent and on the efforts and abilities of our executive officers and certain other key employees, particularly those with sales and sales management responsibilities to drive business growth, development and profitability.
Biggest changeIn addition, volatility and disruption in economic activity and conditions could disrupt or delay the performance of our suppliers and thus impact our ability to obtain raw materials at favorable prices or on favorable terms, which may materially and adversely affect our business. ​ 17 Table of Contents Severe public health outbreaks not limited to COVID-19 may adversely impact our business. ​ The COVID-19 pandemic had a rapid and significant negative impact on the global economy, including a significant downturn in the foodservice, hospitality and travel industries.
For example, a one percentage point increase in the average interest rate on our floating rate debt at December 31, 2022 would increase future interest expense by approximately $15 million per year; and ​ ● increasing our cost of funds and materially and adversely affecting our liquidity and access to the capital markets should we fail to maintain the credit ratings assigned to us by independent rating agencies. ​ If we add new debt, the risks described above could increase. ​ 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 Nalco and Purolite transactions and other acquisitions. ​ We expect to continue to complete selected acquisitions and joint venture transactions in the future.
For example, a one percentage point increase in the average interest rate on our floating rate debt at December 31, 2023 would increase future interest expense by approximately $15 million per year; and ​ ● increasing our cost of funds and materially and adversely affecting our liquidity and access to the capital markets should we fail to maintain the credit ratings assigned to us by independent rating agencies. ​ If we add new debt, the risks described above could increase. ​ 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 Nalco and Purolite transactions and other acquisitions. ​ We expect to continue to complete selected acquisitions and joint venture transactions in the future.
Each of these risks could negatively affect our business and our consolidated results of operations, financial position or cash flows could be materially and adversely affected. ​ 20 Table of Contents Extraordinary events may significantly impact our business. ​ The occurrence of (a) litigation or claims, (b) the loss or insolvency of a major customer or distributor, (c) repeated or prolonged federal government shutdowns or similar events, (d) war (including acts of terrorism or hostilities which impact our markets), (e) natural or manmade disasters, (f) water shortages or (g) severe weather conditions affecting our operations or the energy, foodservice, hospitality and travel industries may have a material adverse effect on our business. ​ While we have a diverse customer base and no customer or distributor constitutes 10 percent or more of our consolidated revenues, we do have customers and independent, third-party distributors, the loss of which could have a material adverse effect on our consolidated results of operations or cash flows for the affected earnings periods. ​ Government shutdowns can have a material adverse effect on our consolidated results of operations or cash flows by disrupting or delaying new product launches, renewals of registrations for existing products and receipt of import or export licenses for raw materials or products. ​ 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.
Each of these risks could negatively affect our business and our consolidated results of operations, financial position or cash flows could be materially and adversely affected. ​ Extraordinary events may significantly impact our business. ​ The occurrence of (a) litigation or claims, (b) the loss or insolvency of a major customer or distributor, (c) repeated or prolonged federal government shutdowns or similar events, (d) war (including acts of terrorism or hostilities which impact our markets), (e) natural or manmade disasters, (f) water shortages or (g) severe weather conditions affecting our operations or the energy, foodservice, hospitality and travel industries may have a material adverse effect on our business. ​ While we have a diverse customer base and no customer or distributor constitutes 10 percent or more of our consolidated revenues, we do have customers and independent, third-party distributors, the loss of which could have a material adverse effect on our consolidated results of operations or cash flows for the affected earnings periods. ​ Government shutdowns can have a material adverse effect on our consolidated results of operations or cash flows by disrupting or delaying new product launches, renewals of registrations for existing products and receipt of import or export licenses for raw materials or products. ​ 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.
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 commitments, goals, targets, objectives and initiatives related to sustainability, and our public statements and disclosures regarding them, expose us to numerous risks. ​ We have developed, and will continue to establish, goals, targets, and other objectives related to sustainability matters, including our sustainability goals in alignment with the United Nations Global Compact’s Business Ambition for 1.5⁰C and our commitments to science-based targets addressing Scope 1, 2 and 3 GHG emissions, discussed in Item 1 of Part I of this Form 10-K, entitled “Business.” Achieving these goals and commitments will require evolving our business, capital investment and the development of technology that might not currently exist.
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 commitments, goals, targets, objectives and initiatives related to sustainability, and our public statements and disclosures regarding them, expose us to numerous risks. ​ We have developed, and will continue to establish, goals, targets, and other objectives related to sustainability matters, including our sustainability goals in alignment with the United Nations Global Compact’s Business Ambition for 1.5⁰C and our commitments to science-based targets addressing Scope 1, 2 and 3 GHG emissions, discussed in Item 1 of Part I of this Form 10-K, entitled “Business.” 19 Table of Contents Achieving these goals and commitments will require evolving our business, capital investment and the development of technology that might not currently exist.
We have not sought or obtained a ruling from the Internal Revenue Service (IRS) on the tax consequences of these transactions. An opinion of counsel is not binding on the IRS or the courts, which may disagree with the opinion.
We have not sought or obtained a ruling from the Internal Revenue Service (“IRS”) on the tax consequences of these transactions. An opinion of counsel is not binding on the IRS or the courts, which may disagree with the opinion.
Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including increased inflation, constraints on the availability of commodities, supply chain disruption and decreased business spending; disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion; adverse changes in international trade policies and relations; claims, litigation and regulatory enforcement; our ability to implement and execute our business strategy; terrorist activities; our exposure to foreign currency fluctuations; reputational risk; and constraints, volatility, or disruption in the capital markets. ​ Additionally, changes in U.S. or foreign government policy on international trade, including the imposition or continuation of tariffs, could materially and adversely affect our business.
Such risks include, but are not limited to, adverse effects on macroeconomic conditions, including increased inflation, constraints on the availability of commodities, supply chain disruption and decreased business spending; disruptions to our or our business partners’ global technology infrastructure, including through cyber-attack or cyber-intrusion; adverse changes in international trade policies and relations; claims, litigation and regulatory enforcement; our ability to implement and execute 16 Table of Contents our business strategy; terrorist activities; our exposure to foreign currency fluctuations; reputational risk; and constraints, volatility, or disruption in the capital markets. ​ Additionally, changes in U.S. or foreign government policy on international trade, including the imposition or continuation of tariffs, could materially and adversely affect our business.
There can be no assurance that these restraints will not have a material adverse impact on our margins and consolidated results of operations. ​ Legal, Regulatory & Compliance Risks ​ Our business depends on our ability to comply with laws and governmental regulations and meet our contractual commitments and failure to do so could materially and adversely impact our business; and we may be materially and adversely affected by changes in laws and regulations . ​ Our business is subject to numerous laws and regulations relating to the environment, including evolving climate change standards, and to the manufacture, storage, distribution, sale and use of our products as well as to the conduct of our business generally, including employment and labor laws and anti-corruption laws.
There can be no assurance that these restraints will not have a material adverse impact on our margins and consolidated results of operations. ​ Legal, Regulatory & Compliance Risks ​ Our business depends on our ability to comply with laws and governmental regulations and meet our contractual commitments and failure to do so could materially and adversely impact our business; and we may be materially and adversely affected by changes in laws and regulations . ​ Our business is subject to numerous laws and regulations relating to the environment, including evolving climate change standards, and to the manufacture, storage, distribution, sale and use of our products as well as to the conduct of our business generally, including 18 Table of Contents employment and labor laws and anti-corruption laws.
If the merger or exchange offer were determined to be taxable, we could be subject to a substantial tax liability, and each U.S. holder of our common stock who participated in the exchange offer could be treated as exchanging the Ecolab shares surrendered for ChampionX Corporation shares in a taxable transaction. ​ 21 Table of Contents Changes in tax laws and unanticipated tax liabilities could materially and adversely affect the taxes we pay and our profitability. ​ 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.
If the merger or exchange offer were determined to be taxable, we could be subject to a substantial tax liability, and each U.S. holder of our common stock who participated in the exchange offer could be treated as exchanging the Ecolab shares surrendered for ChampionX Corporation shares in a taxable transaction. ​ Changes in tax laws and unanticipated tax liabilities could materially and adversely affect the taxes we pay and our profitability. ​ 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.
If we determine that any of the assets or goodwill recorded in connection with the Nalco transaction 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.
If we determine that any of the assets or goodwill recorded in connection with the Nalco and Purolite 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.
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 Downstream and Water operating segments.
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 Water operating segment.
We conduct business in more than 170 countries and, in 2022, approximately 47% of our net sales originated outside the United States.
We conduct business in more than 170 countries and, in 2023, approximately 47% of our net sales originated outside the United States.
Further, should we change our assertion regarding the permanent reinvestment of the undistributed earnings of international affiliates, a deferred tax liability may need to be established. ​ Our indebtedness may limit our operations and our use of our cash flow, and any failure to comply with the covenants that apply to our indebtedness could materially and adversely affect our liquidity and financial statements. ​ As of December 31, 2022, we had approximately $8.6 billion in outstanding indebtedness, with approximately $1.5 billion in the form of floating rate debt.
Further, should we change our assertion regarding the permanent reinvestment of the undistributed earnings of international affiliates, a deferred tax liability may need to be established. ​ ​ 20 Table of Contents Our indebtedness may limit our operations and our use of our cash flow, and any failure to comply with the covenants that apply to our indebtedness could materially and adversely affect our liquidity and financial statements. ​ As of December 31, 2023, we had approximately $8.2 billion in outstanding indebtedness, with approximately $1.5 billion in the form of floating rate debt.
There are inherent risks in our international operations, including: ​ ● exchange controls and currency restrictions; ● currency fluctuations and devaluations; ● tariffs and trade barriers; ● export duties and quotas; ● changes in the availability and pricing of raw materials, energy and utilities; ● changes in local economic conditions; ● changes in laws and regulations, including the imposition of economic or trade sanctions affecting international commercial transactions; ● difficulties in managing international operations and the burden of complying with international and foreign laws; ● requirements to include local ownership or management in our business; ● economic and business objectives that differ from those of our joint venture partners; ● exposure to possible expropriation, nationalization or other government actions; ● restrictions on our ability to repatriate dividends from our subsidiaries; ● unsettled political conditions, military action, civil unrest, acts of terrorism, force majeure, war or other armed conflict; and ● countries whose governments have been hostile to U.S.-based businesses. ​ In light of Russia’s invasion of Ukraine and the United States’ and other countries’ sanctions against Russia, we announced in April 2022 that we will focus our Russian business on operations that are essential to life, providing minimal support for our healthcare, life sciences, food and beverage and certain water businesses.
There are inherent risks in our international operations, including: ​ ● exchange controls and currency restrictions; ● currency fluctuations and devaluations; ● tariffs and trade barriers; ● export duties and quotas; ● changes in the availability and pricing of raw materials, energy and utilities; ● changes in local economic conditions; ● changes in laws and regulations, including the imposition of economic or trade sanctions affecting international commercial transactions; ● difficulties in managing international operations and the burden of complying with international and foreign laws; ● requirements to include local ownership or management in our business; ● economic and business objectives that differ from those of our joint venture partners; ● exposure to possible expropriation, nationalization or other government actions; ● restrictions on our ability to repatriate dividends from our subsidiaries; ● unsettled political conditions, military action, civil unrest, acts of terrorism, force majeure, war or other armed conflict, including the Russian invasion of Ukraine, the Israel-Hamas conflict and other hostilities in the Middle East; and ● countries whose governments have been hostile to U.S.-based businesses. ​ Following Russia’s invasion of Ukraine and the United States’ and other countries’ sanctions against Russia, we have limited our Russian business to operations that are essential to life, providing minimal support for our healthcare, life sciences, food and beverage and certain water businesses, and we may further narrow our presence in Russia depending on developments in the conflict or otherwise.
Countries such as Russia, Turkey and Argentina have recently 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. ​ Our results depend upon the continued vitality of the markets we serve. ​ Economic downturns, and in particular downturns in our larger markets including the foodservice, hospitality, travel, health care, food processing, refining, pulp and paper, mining and steel industries, can adversely impact our customers.
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. ​ Our results depend upon the continued vitality of the markets we serve. ​ Economic downturns, and in particular downturns in our larger markets 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.
If the underlying business performance of such acquired businesses deteriorates, the expected synergies from such transactions do not materialize or we fail to successfully integrate new businesses into our existing businesses, our consolidated results of operations, financial position or cash flows could be materially and adversely affected. ​ If we are unsuccessful in executing on key business initiatives, including restructurings and our Enterprise Resource Planning (“ERP”) system upgrades, our business could be materially and adversely affected . ​ We continue to execute key business initiatives, including restructurings and investments to develop business systems, as part of our ongoing efforts to improve our efficiency and returns.
If the underlying business performance of such acquired businesses deteriorates, the expected synergies from such transactions do not materialize or we fail to successfully integrate new businesses into our existing businesses, our consolidated results of operations, financial position or cash flows could be materially and adversely affected. ​ If we are unsuccessful in executing on key business initiatives, our business could be materially and adversely affected . ​ We continue to execute key business initiatives as part of our ongoing efforts to improve our efficiency and returns.
There can be no assurance that we will 19 Table of Contents be able to accomplish our technology development goals or that technological developments by our competitors will not place certain of our products, technology or services at a competitive disadvantage in the future.
There can be no assurance that we will be able to accomplish our technology development goals or that technological developments by our competitors, including in the area of artificial intelligence, will not place certain of our products, technology or services at a competitive disadvantage in the future.
We are also subject to changes in tax law outside the United States and actions taken with respect 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.
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.
See the section entitled “Forward-Looking Statements” set forth above. ​ We may also refer to this disclosure to identify factors that may cause results to differ materially from those expressed in other forward-looking statements including those made in oral presentations, including telephone conferences and/or webcasts open to the public. ​ Economic & Operational Risks ​ Our results are impacted by general worldwide economic factors. ​ The COVID pandemic, geopolitical instability, including the conflict between Russia and Ukraine, and other global events have significantly increased economic and demand uncertainty.
See the section entitled “Forward-Looking Statements” set forth above. ​ We may also refer to this disclosure to identify factors that may cause results to differ materially from those expressed in other forward-looking statements including those made in oral presentations, including telephone conferences and/or webcasts open to the public. ​ Economic & Operational Risks ​ Our results are impacted by general worldwide economic factors. ​ Over the past year, global interest rates aimed at curbing inflation, as well as implications of geopolitical situations in Europe, the Middle East and China, have resulted in economic and demand uncertainty.
The Russia and Ukraine conflict may also heighten many other risks disclosed in our report on Form 10-K, any of which could 17 Table of Contents materially and adversely affect our business and financial results.
While our operations in Russia and areas experiencing conflict are not material to our business and financial results, the escalation of these conflicts may also heighten many other risks disclosed in our report on Form 10-K, any of which could materially and adversely affect our business and financial results.
Some of the results of these events, including supply chain challenges, inflation, high interest rates, foreign currency exchange volatility, and volatility in global capital markets, have affected our business in the past and could continue to have a material adverse impact on our business in the future.
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.
While we have invested in protection of data and information technology, we have experienced immaterial cybersecurity attacks and incidents, and there can be no assurance that our efforts will prevent failures, cybersecurity attacks or breaches in our systems or in the systems of strategic vendors that could cause reputational damage, business 18 Table of Contents disruption or legal and regulatory costs; could result in third-party claims; could result in compromise or misappropriation of our intellectual property, trade secrets or sensitive information; or could otherwise adversely affect our business.
While we have continually matured our security program and capabilities and have had no material incidents to date, cyber threats continue to evolve and there can be no assurance that our efforts will prevent cybersecurity attacks or breaches in our systems or in the systems of strategic vendors, including cloud providers, that could cause reputational damage, business disruption or legal and regulatory costs; could result in third-party claims; could result in compromise or misappropriation of our intellectual property, trade secrets or sensitive information; or could otherwise materially adversely affect our business, including our business strategy, results of operations, or financial condition.
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.
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, 2023, we had goodwill of $8.1 billion which is maintained in various reporting units, including goodwill from the Nalco and Purolite transactions.
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.
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 involve complex business process design and a failure of certain of these processes could result in business disruption.
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 may not continue to succeed in developing and implementing policies and strategies that are effective in each location where we do business, which could have a material adverse effect on our consolidated results of operations, financial position or cash flows. ​ Our results could be materially and adversely affected by difficulties in securing the supply of certain raw materials or by fluctuations in the cost of raw materials. ​ The prices of raw materials used in our business fluctuate, and in recent years we have experienced periods of significant increased raw material costs.
There may be other related challenges and risks as we complete implementation of our ERP system upgrade. ​ Our results could be materially and adversely affected by difficulties in securing the supply of certain raw materials or by fluctuations in the cost of raw materials. ​ The prices of raw materials used in our business fluctuate, and in recent years we have experienced periods of significant increased raw material costs.
Any of these events could result in a significant drop in demand for some of our products and services and materially and adversely affect our business. ​ Strategic Risks ​ If we are unsuccessful in integrating acquisitions, including Purolite, our business could be materially and adversely affected. ​ In December 2021 we acquired Purolite, which operates in the highly regulated life sciences, pharma and biopharma industries and has extensive international operations which complicate integration execution.
Any of these events could result in a significant drop in demand for some of our products and services and materially and adversely affect our business. ​ Strategic Risks ​ If we are unsuccessful in integrating acquisitions our business could be materially and adversely affected. ​ We seek to acquire complementary businesses as part of our long-term strategy.
In light of this, if we are unable to attract and retain employees on terms and conditions that are consistent with our historical operating model, our business could be disrupted or our costs could increase, which may materially and adversely affect our business ​ We are subject to information technology system failures, network disruptions and breaches in data security. ​ We rely to a large extent upon information technology systems and infrastructure to operate our business.
Our operations could be materially and adversely affected if for any reason we are unable to successfully execute organizational change and management transitions at leadership levels. ​ We are subject to information technology system failures, network disruptions and breaches in data security. ​ We rely to a large extent upon information technology systems and infrastructure to operate our business.
Additionally, the last three years we have experienced the negative impact of the COVID-19 pandemic on the demand for our products and services provided to customers in the full-service restaurant, hospitality, lodging and entertainment industries. In prior years, the weaker global economic environment has also negatively impacted certain of our end-markets.
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.
If we have difficulty integrating Purolite operations or lose key employees or customers, our business could be materially and adversely affected. Additionally, as part of our long-term strategy, we seek to acquire complementary businesses. There can be no assurance that we will find attractive acquisition candidates or succeed at effectively managing the integration of acquired businesses into existing businesses.
There can be no assurance that we will find attractive acquisition candidates or succeed at effectively managing the integration of acquired businesses, including Purolite, which operates in the highly regulated life sciences, pharma and biopharma industries and has extensive international operations which complicate integration execution.
Removed
In particular, we expect a more challenging macroeconomic environment, especially in Europe, as the war and the energy crisis are having a significant impact on costs and demand.
Added
In prior years, a weaker global economic environment has also negatively impacted certain of our other end-markets.
Removed
We may further narrow our presence in Russia depending on developments in the conflict or otherwise. Our Russian operations represented approximately 1% for both our 2022 and 2021 annual sales. During 2022 we recorded pre-tax charges of $13.1 million related to recoverability risk of certain assets in both Russia and Ukraine.
Added
We may not continue to succeed in developing and implementing policies and strategies that are effective in each location where we do business, which could have a material adverse effect on our consolidated results of operations, financial position or cash flows. ​ We may experience business disruption if we fail to execute organizational change and management transitions. ​ Our continued success will depend on the efforts and abilities of our executive officers and certain other key employees, particularly those with sales and sales management responsibilities, to drive business growth, development and profitability.
Removed
Depending on developments, we may incur further charges relating to our Russia and Ukraine businesses.
Added
Besides the COVID-19 pandemic, the United States and other countries have experienced, and may experience in the future, public health outbreaks such as Zika virus, Avian Flu, SARS and H1N1 influenza.
Removed
The conflict in Ukraine may escalate and/or expand in scope and the broader consequences of this conflict, which have included and/or may in the future include sanctions, embargoes, regional instability and geopolitical shifts; potential retaliatory action by the Russian government against companies, including us, such as nationalization of foreign businesses in Russia; and increased tensions between the United States and countries in which we operate cannot be predicted, nor can we predict the conflict’s impact on the global economy and on our business and financial results.
Added
We are also undertaking the Combined Program focused on optimizing the cost structure of our business in Europe and our Institutional and Healthcare businesses, which is discussed along with other restructuring activities under Note 3 of this Form 10-K.
Removed
As we continue to grow our business, make acquisitions, expand our geographic scope and offer new products and services, we need the organizational talent necessary to ensure effective succession for executive officer and key employee roles in order to meet the growth, development and profitability goals of our business.
Added
In particular, the OECD is coordinating 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”).
Removed
Our operations could be materially and adversely affected if for any reason we were unable to attract, retain or develop such officers or key employees and successfully execute organizational change and management transitions at leadership levels. More generally, in the wake of the COVID-19 pandemic, expectations from qualified talent in many areas of the labor market have evolved.
Added
Pillar Two takes effect in several jurisdictions in which we operate starting in 2024 and will increase the burden and costs of our tax compliance. The company continues to monitor these legislative developments, but based on information available does not anticipate material impacts to the 2024 financial statements.
Removed
There may be other related challenges and risks as we complete implementation of our ERP system upgrade. ​ The COVID-19 pandemic and measures taken in response thereto have materially and adversely impacted, and we expect may continue to materially and adversely impact, our business and results of operations, and the full impact of the pandemic will depend on future developments, which are highly uncertain and cannot be predicted. ​ Beginning in March 2020, the COVID-19 pandemic had a rapid and significant negative impact on the global economy, including a significant downturn in the foodservice, hospitality and travel industries.
Removed
There is continued uncertainty regarding the duration, scope and severity of the pandemic, particularly with the emergence of new variants of COVID-19 and periodic spikes in COVID-19 cases in various geographic regions, and the impacts on our business and the global economy from the effects of the pandemic and response measures.
Removed
Travel and logistics restrictions, lockdowns, vaccine requirements and other measures from time to time implemented by foreign and domestic authorities have resulted in, and may continue to result in, supply chain and transportation disruptions, production delays and capacity limitations at Ecolab and some of its customers and suppliers, as well as reduced workforce availability or productivity at Ecolab and customer sites, and additional data, information and cyber security risks associated with an extensive workforce working remotely. ​ The degree to which the pandemic ultimately impacts our business, financial condition and results of operations and the global economy will depend on future developments beyond our control, which are highly uncertain and difficult to predict, including the severity, duration and any resurgence of the pandemic, the extent, duration and effectiveness of periodic lockdowns and other containment actions, the availability, public adoption and efficacy of COVID vaccines, how quickly and to what extent normal economic and operating activity can resume, and the severity and duration of resulting global economic volatility. ​ Besides the COVID-19 pandemic, the United States and other countries have experienced, and may experience in the future, public health outbreaks such as Zika virus, Avian Flu, SARS and H1N1 influenza.
Removed
In particular, we are undertaking the three restructuring plans, i.e. the Europe Program, the Institutional Advancement Program and Accelerate 2020 plan to simplify and automate processes and tasks, reduce complexity and management layers, consolidate facilities and focus on key long term growth areas by leveraging technology and structural improvements as discussed under Note 3 entitled “Special (Gains) and Charges” of this Form 10-K.
Removed
In particular, we are affected by the impact of changes to tax laws or related authoritative interpretations in the United States, such as the Inflation Reduction Act (IRA) signed into law on August 16, 2022, which includes a corporate alternative minimum tax on certain large corporations, incentives to address climate change mitigation and other non-income tax provisions, including an excise tax on the repurchase of corporate stock.
Removed
For example, approximately 140 countries have agreed to the OECD’s two-pillar base erosion and profit shifting project (“BEPS”). This framework, which could be implemented in some countries as early as 2023, is focused on a number of issues, including shifting taxing rights on income from residence countries to source countries and establishing a minimum 15% global tax rate.
Removed
Some of the BEPS and related proposals, if enacted into law in the United States and in the foreign countries where we do business, could increase the burden and costs of our tax compliance, the amount of taxes we incur in those jurisdictions and our global effective tax rate.
Removed
As of December 31, 2022, we had goodwill of $8.0 billion which 22 Table of Contents is maintained in various reporting units, including goodwill from the Nalco and Purolite transactions.

Item 2. Properties

Properties — owned and leased real estate

7 edited+0 added−3 removed4 unchanged
Biggest changeIn general, manufacturing facilities located in the United States serve our U.S. markets and facilities located outside of the United States serve our international markets. However, most of the United States facilities do manufacture products for export. ​ PLANT PROFILES Location Approximate Size (Sq.
Biggest changeCurrently, most products that we sell are manufactured at our facilities. We position our manufacturing locations and warehouses in a manner to permit ready access to our customers. In general, manufacturing facilities located in the United States serve our U.S. markets and facilities located outside of the United States serve our international markets.
We also own a 115-acre campus in Eagan, Minnesota that houses a significant research and development center, a data center and training facilities as well as several of our administrative functions.
We also own a 115-acre campus in Eagan, Minnesota that houses a significant research and development center and training facilities as well as several of our administrative functions.
We also have a significant business presence in Naperville, Illinois, where our Water and Paper operating segments maintain their principal administrative offices and research center, as well as in Greensboro, North Carolina, where our Specialty operating segment maintains its principal administrative offices and a research center.
We also have a significant business presence in Naperville, Illinois, where our Water and Paper operating segments maintain their principal administrative offices and research center, as well as in Greensboro, North Carolina, where our Specialty operating segment maintains its principal administrative offices and a research center. Our Water operating segment leases administrative and research facilities in Houston, Texas.
Item 2. Propertie s. ​ Our manufacturing philosophy is to manufacture products wherever an economic, process or quality assurance advantage exists or where proprietary manufacturing techniques dictate in-house production. Currently, most products that we sell are manufactured at our facilities.
Item 2. Propertie s. ​ We operate 32 manufacturing facilities in 14 states in the U.S. Internationally, we operate 68 manufacturing facilities in 38 countries. We own most of our manufacturing locations. Our manufacturing philosophy is to manufacture products wherever an economic, process or quality assurance advantage exists or where proprietary manufacturing techniques dictate in-house production.
Our Downstream operating segment leases administrative and research facilities in Sugar Land, Texas and maintains additional Company-owned research facilities in Fresno, Texas. ​ Significant regional administrative and/or research facilities are located in Campinas, Brazil; Leiden, Netherlands; and Pune, India, which we own, and in Dubai, UAE; Monheim, Germany; Singapore; Shanghai, China; and Zurich, Switzerland, which we lease.
Our Purolite business maintains leased and owned facilities in the greater King of Prussia, PA area for administrative functions, and research and development. ​ Significant regional administrative and/or research facilities are located in Campinas, Brazil; Leiden, Netherlands, which we own; and in Bangalore, India; Dubai, UAE; Monheim, Germany; Pune, India; Singapore; Shanghai, China; and Zurich, Switzerland, which we lease.
We position our manufacturing locations and warehouses in a manner to permit ready access to our customers. ​ Our manufacturing facilities produce chemical products as well as medical devices and equipment for all of our operating segments, although Pest Elimination purchases the majority of their products and equipment from outside suppliers.
However, most of the United States facilities do manufacture products for export. Many of our properties are used by multiple segments. ​ Our manufacturing facilities produce chemical products as well as medical devices and equipment for all our operating segments, although Pest Elimination purchases the majority of their products and equipment from outside suppliers.
Our devices and equipment manufacturing operations consist of producing chemical product dispensers and injectors and other mechanical equipment, medical devices, dishwasher racks, related sundries, dish machine refurbishment and water monitoring and maintenance equipment system from purchased components and subassemblies. ​ The following table profiles our more significant physical properties with approximately 70,000 square feet or more with ongoing production activities, as well as certain other facilities important in terms of specialization and sources of supply.
Our devices and equipment manufacturing operations consist of producing chemical product dispensers and injectors and other mechanical equipment, medical devices, dishwasher racks, related sundries, dish machine refurbishment and water monitoring and maintenance equipment system from purchased components and subassemblies. ​ Generally, our manufacturing facilities are adequate to meet our existing in-house production needs.
Removed
Ft.) Segment Majority Owned or Leased Joliet, IL USA 610,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned Asheville, NC USA ​ 478,000 ​ Global Industrial, Global Healthcare & Life Sciences ​ Leased Tai Cang, CHINA 468,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned Hongzhou, CHINA ​ 430,125 ​ Global Healthcare & Life Sciences ​ Owned Sainghin, FRANCE 360,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned Mandras, GREECE ​ 355,435 ​ Global Industrial, Global Healthcare & Life Sciences ​ Owned Victoria, ROMANIA ​ 343,605 ​ Global Healthcare & Life Sciences ​ Owned South Beloit, IL USA 313,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences, Other Owned Jianghai, CHINA 296,000 Global Industrial Owned Chalons, FRANCE 280,000 Global Institutional & Specialty, Global Industrial Owned Clearing, IL USA 270,000 Global Industrial, Global Healthcare & Life Sciences, Other (Colloidal) Owned Nanjing, CHINA 240,000 Global Industrial Owned Garland, TX USA 239,000 Global Institutional & Specialty, Global Industrial Owned Philadelphia, PA USA ​ 232,000 ​ Global Healthcare & Life Sciences ​ Owned Martinsburg, WV USA 228,000 Global Institutional & Specialty, Global Industrial Owned Elwood City, PA USA 222,000 Global Industrial Owned Weavergate, UNITED KINGDOM 222,000 Global Institutional & Specialty, Global Industrial Owned Celra, SPAIN 218,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned Greensboro, NC USA 193,000 Global Institutional & Specialty, Global Healthcare & Life Sciences Owned 23 Table of Contents Location Approximate Size (Sq.
Removed
Ft.) Segment Majority Owned or Leased Fresno, TX USA 192,000 Global Industrial Owned Santiago, CHILE ​ 188,000 ​ Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences ​ Owned Las Americas, DOMINICAN REPUBLIC 182,000 Global Institutional & Specialty, Global Healthcare & Life Sciences Owned Jacksonville, FL USA 181,000 Global Institutional & Specialty, Global Healthcare & Life Sciences Leased Garyville, LA USA 178,000 Global Industrial Owned Gul Lane, SINGAPORE ​ 169,000 ​ Global Industrial Owned Nieuwegein, NETHERLANDS 168,000 Global Institutional & Specialty, Global Industrial Owned La Romana, DOMINICAN REPUBLIC 160,000 Global Institutional & Specialty, Global Healthcare & Life Sciences Leased Middleton, UNITED KINGDOM ​ 157,575 ​ Global Industrial, Global Healthcare & Life Sciences ​ Owned Tessenderlo, BELGIUM 153,000 Global Institutional & Specialty, Global Industrial Owned Cheltenham, AUSTRALIA 145,000 Global Institutional & Specialty, Global Industrial Owned Suzano, BRAZIL 142,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned McDonough, GA USA 141,000 Global Institutional & Specialty, Global Industrial Owned Darra, AUSTRALIA 138,000 Global Institutional & Specialty, Global Industrial Owned Burlington, ON CANADA 136,000 Global Industrial Owned Eagan, MN USA 133,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences, Other Owned Huntington, IN USA 127,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned Rozzano, ITALY 126,000 Global Institutional & Specialty, Global Industrial Owned City of Industry, CA USA 125,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned Mississauga, ON CANADA 120,000 Global Institutional & Specialty, Global Industrial Leased Elk Grove Village, IL USA 115,000 Global Institutional & Specialty Leased Biebesheim, GERMANY 109,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned Fort Worth, TX USA 101,000 Global Institutional & Specialty Leased Johannesburg, SOUTH AFRICA 100,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned Andover, UNITED KINGDOM ​ 99,762 ​ Global Industrial, Global Healthcare & Life Sciences ​ Owned Pilar, ARGENTINA ​ 96,000 ​ Global Institutional & Specialty, Global Industrial ​ Owned Hamilton, NEW ZEALAND 96,000 Global Institutional & Specialty, Global Industrial Owned Konnagar, INDIA ​ 88,000 ​ Global Industrial Owned Kwinana, AUSTRALIA 87,000 Global Institutional & Specialty, Global Industrial Owned Yangsan, KOREA 85,000 Global Industrial Owned Cuautitlan, MEXICO 76,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned Barueri, BRAZIL 75,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Leased Citereup, INDONESIA ​ 74,000 ​ Global Industrial ​ Owned King of Prussia, PA ​ 74,000 ​ Global Healthcare & Life Sciences ​ Owned Mullingar, IRELAND 74,000 Global Institutional & Specialty, Global Industrial Leased Mosta, MALTA 73,000 Global Institutional & Specialty, Global Healthcare & Life Sciences Leased Aubagne, FRANCE 65,000 Global Institutional & Specialty, Global Healthcare & Life Sciences Leased Siegsdorf, GERMANY 56,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned 24 Table of Contents Location Approximate Size (Sq.
Removed
Ft.) Segment Majority Owned or Leased Verona, ITALY 55,000 Global Institutional & Specialty, Global Healthcare & Life Sciences Owned Guangzhou, CHINA 55,000 Global Institutional & Specialty, Global Industrial Owned Navanakorn, THAILAND 53,000 Global Institutional & Specialty, Global Industrial Leased Lerma, MEXICO 49,000 Global Industrial Owned Maribor, SLOVENIA 46,400 Global Institutional & Specialty, Global Industrial Owned Leeds, UNITED KINGDOM 25,000 Global Institutional & Specialty Owned Baglan, UNITED KINGDOM 24,400 Global Institutional & Specialty, Global Healthcare & Life Sciences Leased Noda, JAPAN 22,000 Global Institutional & Specialty, Global Industrial, Global Healthcare & Life Sciences Owned ​ Generally, our manufacturing facilities are adequate to meet our existing in-house production needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed0 unchanged
Biggest changeMine Safety Disclosures. ​ Not applicable. ​ 25 Table of Contents ​ PART II ​
Biggest changeMine Safety Disclosures. ​ Not applicable. ​ 23 Table of Contents PART II ​
Lega l Proceedings. ​ Discussion of legal proceedings is incorporated by reference from Part II, Item 8, Note 16, “Commitments and Contingencies,” of this Form 10-K and should be considered an integral part of Part I, Item 3, “Legal Proceedings.” ​ Discussion of other environmental-related legal proceedings is incorporated by reference from Part I, Item 1 above, under the heading “Environmental and Regulatory Considerations.” ​ ​ Item 4.
Lega l Proceedings. ​ Discussion of legal proceedings is incorporated by reference from Part II, Item 8, Note 15, “Commitments and Contingencies,” of this Form 10-K and should be considered an integral part of Part I, Item 3, “Legal Proceedings.” ​ Discussion of other environmental-related legal proceedings is incorporated by reference from Part I, Item 1 above, under the heading “Environmental and Regulatory Considerations.” ​ ​ Item 4.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−1 removed0 unchanged
Biggest changeSubject to market conditions, we expect to repurchase all shares under these authorizations, for which no expiration date has been established, in open market or privately negotiated transactions, including pursuant to Rule 10b5-1 and accelerated share repurchase program. ​ ​ Item 6. [Reserved]. ​ ​
Biggest changeAs announced on November 3, 2022, our Board of Directors authorized the repurchase of up to an additional 10,000,000 shares. Subject to market conditions, we expect to repurchase all shares under these authorizations, for which no expiration date has been established, in open market or privately negotiated transactions, including pursuant to Rule 10b5-1 and accelerated share repurchase program. ​ ​
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. ​ Market Information ​ Our common stock is listed on the New York Stock Exchange under the symbol “ECL.” Our common stock is also traded on an unlisted basis on certain other United States exchanges. ​ Holders ​ On January 31, 2023, we had 5,031 holders of record of our Common Stock. ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total number of shares ​ Maximum number of ​ ​ ​ ​ ​ ​ purchased as part of ​ shares that may yet be ​ ​ Total number of ​ Average price paid ​ publicly announced ​ purchased under the Period ​ shares purchased (1) ​ per share (2) ​ plans or programs (3) ​ plans or programs (3) October 1-31, 2022 1,362 ​ ​ $157.0872 ​ - 3,404,297 ​ November 1-30, 2022 487,200 ​ ​ 147.8301 ​ 487,200 12,917,097 ​ December 1-31, 2022 3,723 ​ ​ 149.8621 ​ - 12,917,097 ​ Total 492,285 ​ ​ $147.8711 487,200 12,917,097 ​ ​ (1) Includes 5,085 shares reacquired from employees and/or directors to satisfy the exercise price of stock options or shares surrendered to satisfy statutory tax obligations under our stock incentive plans. ​ (2) The average price paid per share includes brokerage commissions associated with publicly announced plan purchases plus the value of such other reacquired shares. ​ (3) As announced on February 24, 2015, our Board of Directors authorized the repurchase of up to 20,000,000 common shares.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. ​ Market Information ​ Our common stock is listed on the New York Stock Exchange under the symbol “ECL.” Our common stock is also traded on an unlisted basis on certain other United States exchanges. ​ Holders ​ On January 31, 2024, we had 4,797 holders of record of our Common Stock. ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total number of shares ​ Maximum number of ​ ​ ​ ​ ​ ​ purchased as part of ​ shares that may yet be ​ ​ Total number of ​ Average price paid ​ publicly announced ​ purchased under the Period ​ shares purchased (1) ​ per share (2) ​ plans or programs (3) ​ plans or programs (3) October 1-31, 2023 1,352 ​ ​ ($158.0400) ​ - 12,917,097 ​ November 1-30, 2023 1,601 ​ ​ (174.2750) ​ - 12,917,097 ​ December 1-31, 2023 7,821 ​ ​ (192.1285) ​ - 12,917,097 ​ Total 10,774 ​ ​ ($185.1978) - 12,917,097 ​ ​ (1) Includes 10,774 shares reacquired from employees and/or directors to satisfy the exercise price of stock options or shares surrendered to satisfy statutory tax obligations under our stock incentive plans. ​ (2) The average price paid per share includes brokerage commissions associated with publicly announced plan purchases plus the value of such other reacquired shares. ​ (3) As announced on February 24, 2015, our Board of Directors authorized the repurchase of up to 20,000,000 common shares.
Removed
As announced on November 3, 2022, our Board of Directors authorized the repurchase of up to an additional 10,000,000 shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

140 edited+13 added−38 removed68 unchanged
Biggest changeAdditional information about our reportable segments is included in Note 19. ​ Fixed currency net sales and operating income for 2022, 2021 and 2020 for our reportable segments are shown in the following tables. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2022 2021 2020 2022 ​ 2021 Global Industrial ​ ​ $6,944.0 ​ ​ $6,086.8 ​ $5,845.7 ​ 14 % ​ 4 % Global Institutional & Specialty ​ 4,480.0 ​ ​ 3,908.8 ​ 3,559.8 15 ​ ​ 10 ​ Global Healthcare & Life Sciences ​ ​ 1,570.0 ​ ​ ​ 1,149.6 ​ ​ 1,190.1 ​ 37 ​ ​ (3) ​ Other ​ 1,355.0 ​ ​ 1,201.0 ​ 1,079.8 13 ​ ​ 11 ​ Corporate ​ ​ 124.1 ​ ​ ​ 137.4 ​ ​ 99.4 ​ (10) ​ ​ 38 ​ Subtotal at fixed currency ​ 14,473.1 ​ ​ 12,483.6 ​ 11,774.8 16 ​ ​ 6 ​ Effect of foreign currency translation ​ (285.3) ​ ​ 249.5 ​ 15.4 ​ ​ ​ ​ ​ Total reported net sales ​ $14,187.8 ​ ​ ​ $12,733.1 ​ ​ $11,790.2 11 % ​ 8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2022 2021 2020 2022 ​ 2021 Global Industrial ​ ​ $977.0 ​ ​ $985.7 ​ $1,079.1 ​ (1) % ​ (9) % Global Institutional & Specialty ​ 634.5 ​ ​ 545.7 ​ 316.3 16 ​ ​ 73 ​ Global Healthcare & Life Sciences ​ ​ 205.0 ​ ​ ​ 152.3 ​ ​ 207.6 ​ 35 ​ ​ (27) ​ Other ​ 212.8 ​ ​ 184.0 ​ 130.6 16 ​ ​ 41 ​ Corporate ​ (416.7) ​ ​ (316.6) ​ (347.7) 32 ​ ​ (9) ​ Subtotal at fixed currency ​ 1,612.6 ​ ​ 1,551.1 ​ 1,385.9 4 ​ ​ 12 ​ Effect of foreign currency translation ​ (50.1) ​ ​ 47.5 ​ 9.8 ​ ​ ​ ​ ​ Total reported operating income ​ $1,562.5 ​ ​ ​ $1,598.6 ​ ​ $1,395.7 (2) % ​ 15 % ​ The following tables reconcile the impact of acquisitions and divestitures within our reportable segments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31 Net Sales ​ 2022 ​ 2021 (millions) Fixed Currency ​ Impact of Acquisitions and Divestitures ​ Acquisition Adjusted ​ Fixed Currency ​ Impact of Acquisitions and Divestitures ​ Acquisition Adjusted Global Industrial ​ $6,944.0 ​ (21.0) ​ $6,923.0 ​ $6,086.8 ​ - ​ $6,086.8 Global Institutional & Specialty 4,480.0 ​ - ​ 4,480.0 ​ 3,908.8 ​ - ​ 3,908.8 Global Healthcare & Life Sciences ​ 1,570.0 ​ (434.9) ​ 1,135.1 ​ 1,149.6 ​ (12.0) ​ 1,137.6 Other 1,355.0 ​ - ​ 1,355.0 ​ 1,201.0 ​ - ​ 1,201.0 Corporate ​ 124.1 ​ (124.1) ​ - ​ 137.4 ​ (137.4) ​ - Subtotal at fixed currency 14,473.1 ​ (580.0) ​ 13,893.1 ​ 12,483.6 ​ (149.4) ​ 12,334.2 Effect of foreign currency translation (285.3) ​ ​ ​ ​ ​ 249.5 ​ ​ ​ ​ Total reported net sales $14,187.8 ​ ​ ​ ​ ​ $12,733.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ 2022 ​ 2021 (millions) Fixed Currency ​ Impact of Acquisitions and Divestitures ​ Acquisition Adjusted ​ Fixed Currency ​ Impact of Acquisitions and Divestitures ​ Acquisition Adjusted Global Industrial ​ $977.0 ​ (3.4) ​ $973.6 ​ $985.7 ​ - ​ $985.7 Global Institutional & Specialty 634.5 ​ - ​ 634.5 ​ 545.7 ​ - ​ 545.7 Global Healthcare & Life Sciences 205.0 ​ (106.3) ​ 98.7 ​ 152.3 ​ 3.8 ​ 156.1 Other ​ 212.8 ​ - ​ 212.8 ​ 184.0 ​ - ​ 184.0 Corporate (206.3) ​ 86.6 ​ (119.7) ​ (120.1) ​ - ​ (120.1) Non-GAAP adjusted fixed currency operating income 1,823.0 ​ (23.1) ​ 1,799.9 ​ 1,747.6 ​ 3.8 ​ 1,751.4 Special (gains) and charges 210.4 ​ ​ ​ ​ ​ 196.5 ​ ​ ​ ​ Subtotal at fixed currency 1,612.6 ​ ​ ​ ​ ​ 1,551.1 ​ ​ ​ ​ Effect of foreign currency translation (50.1) ​ ​ ​ ​ ​ 47.5 ​ ​ ​ ​ Total reported operating income $1,562.5 ​ ​ ​ ​ ​ $1,598.6 ​ ​ ​ ​ 40 Table of Contents Global Industrial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ 2020 Sales at fixed currency (millions) ​ ​ $6,944.0 ​ ​ ​ $6,086.8 ​ ​ ​ $5,845.7 ​ Sales at public currency (millions) ​ ​ 6,805.0 ​ ​ ​ 6,237.8 ​ ​ ​ 5,867.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Volume ​ 1 % ​ ​ 2 % ​ ​ ​ ​ Price changes ​ 13 % ​ ​ 2 % ​ ​ ​ ​ Acquisition adjusted fixed currency sales change ​ ​ 14 % ​ ​ 4 % ​ ​ ​ ​ Acquisitions and divestitures ​ - % ​ ​ - % ​ ​ ​ ​ Fixed currency sales change ​ 14 % ​ ​ 4 % ​ ​ ​ ​ Foreign currency translation ​ ​ (5) % ​ ​ 2 % ​ ​ ​ ​ Public currency sales change ​ 9 % ​ ​ 6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income at fixed currency (millions) ​ ​ $977.0 ​ ​ ​ $985.7 ​ ​ ​ $1,079.1 ​ Operating income at public currency (millions) ​ ​ 951.8 ​ ​ ​ 1,020.3 ​ ​ ​ 1,086.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed currency operating income change ​ ​ (1) % ​ ​ (9) % ​ ​ ​ ​ Fixed currency operating income margin ​ 14.1 % ​ 16.2 % ​ 18.5 % Acquisition adjusted fixed currency operating income change ​ (1) % ​ (8) % ​ ​ ​ ​ Acquisition adjusted fixed currency operating income margin ​ 14.1 % ​ 16.2 % ​ ​ * ​ Public currency operating income change ​ ​ (7) % ​ ​ (6) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ * Not meaningful Percentages in the above table do not necessarily sum due to rounding. ​ Net Sales ​ Fixed currency sales for Global Industrial increased in 2022 as strong double-digit growth across all divisions was driven by accelerating pricing and new business wins.
Biggest changeAdditional information about our reportable segments is included in Note 18. ​ Fixed currency net sales and operating income for 2023, 2022 and 2021 for our reportable segments are shown in the following tables. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2023 2022 2021 2023 ​ 2022 Global Industrial ​ ​ $7,193.1 ​ ​ $6,736.3 ​ $5,908.5 ​ 7 % ​ 14 % Global Institutional & Specialty ​ 4,994.0 ​ ​ 4,414.3 ​ 3,856.7 13 ​ ​ 14 ​ Global Healthcare & Life Sciences ​ ​ 1,576.9 ​ ​ ​ 1,505.8 ​ ​ 1,101.1 ​ 5 ​ ​ 37 ​ Other ​ 1,442.3 ​ ​ 1,313.3 ​ 1,162.5 10 ​ ​ 13 ​ Corporate ​ ​ 69.1 ​ ​ ​ 123.7 ​ ​ 137.4 ​ (44) ​ ​ (10) ​ Subtotal at fixed currency ​ 15,275.4 ​ ​ 14,093.4 ​ 12,166.2 8 ​ ​ 16 ​ Effect of foreign currency translation ​ 44.8 ​ ​ 94.4 ​ 566.9 ​ ​ ​ ​ ​ Consolidated reported GAAP net sales ​ $15,320.2 ​ ​ ​ $14,187.8 ​ ​ $12,733.1 8 % ​ 11 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2023 2022 2021 2023 ​ 2022 Global Industrial ​ ​ $1,080.7 ​ ​ $935.8 ​ $943.4 ​ 15 % ​ (1) % Global Institutional & Specialty ​ 823.0 ​ ​ 621.7 ​ 536.7 32 ​ ​ 16 ​ Global Healthcare & Life Sciences ​ ​ 160.0 ​ ​ ​ 193.3 ​ ​ 141.0 ​ (17) ​ ​ 37 ​ Other ​ 255.0 ​ ​ 209.9 ​ 181.3 21 ​ ​ 16 ​ Corporate ​ (331.7) ​ ​ (414.4) ​ (314.3) (20) ​ ​ 32 ​ Subtotal at fixed currency ​ 1,987.0 ​ ​ 1,546.3 ​ 1,488.1 29 ​ ​ 4 ​ Effect of foreign currency translation ​ 5.3 ​ ​ 16.2 ​ 110.5 ​ ​ ​ ​ ​ Consolidated reported GAAP operating income ​ $1,992.3 ​ ​ ​ $1,562.5 ​ ​ $1,598.6 28 % ​ (2) % ​ The following tables reconcile the impact of acquisitions and divestitures within our reportable segments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31 Net Sales ​ 2023 ​ 2022 (millions) Fixed Currency ​ Impact of Acquisitions and Divestitures ​ Organic ​ Fixed Currency ​ Impact of Acquisitions and Divestitures ​ Organic Global Industrial ​ $7,193.1 ​ ($4.5) ​ $7,188.6 ​ $6,736.3 ​ $- ​ $6,736.3 Global Institutional & Specialty 4,994.0 ​ (39.8) ​ 4,954.2 ​ 4,414.3 ​ - ​ 4,414.3 Global Healthcare & Life Sciences ​ 1,576.9 ​ - ​ 1,576.9 ​ 1,505.8 ​ - ​ 1,505.8 Other 1,442.3 ​ - ​ 1,442.3 ​ 1,313.3 ​ - ​ 1,313.3 Corporate ​ 69.1 ​ (69.1) ​ - ​ 123.7 ​ (123.7) ​ - Subtotal at fixed currency 15,275.4 ​ (113.4) ​ 15,162.0 ​ 14,093.4 ​ (123.7) ​ 13,969.7 Effect of foreign currency translation 44.8 ​ ​ ​ ​ ​ 94.4 ​ ​ ​ ​ Consolidated reported GAAP net sales $15,320.2 ​ ​ ​ ​ ​ $14,187.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Income ​ 2023 ​ 2022 (millions) Fixed Currency ​ Impact of Acquisitions and Divestitures ​ Organic ​ Fixed Currency ​ Impact of Acquisitions and Divestitures ​ Organic Global Industrial ​ $1,080.7 ​ $0.2 ​ $1,080.9 ​ $935.8 ​ $- ​ $935.8 Global Institutional & Specialty 823.0 ​ (0.5) ​ 822.5 ​ 621.7 ​ - ​ 621.7 Global Healthcare & Life Sciences 160.0 ​ - ​ 160.0 ​ 193.3 ​ - ​ 193.3 Other ​ 255.0 ​ - ​ 255.0 ​ 209.9 ​ - ​ 209.9 Corporate (198.3) ​ (2.6) ​ (200.9) ​ (200.9) ​ (0.4) ​ (201.3) Non-GAAP adjusted fixed currency operating income 2,120.4 ​ (2.9) ​ 2,117.5 ​ 1,759.8 ​ (0.4) ​ 1,759.4 Special (gains) and charges 133.4 ​ ​ ​ ​ ​ 213.5 ​ ​ ​ ​ Subtotal at fixed currency 1,987.0 ​ ​ ​ ​ ​ 1,546.3 ​ ​ ​ ​ Effect of foreign currency translation 5.3 ​ ​ ​ ​ ​ 16.2 ​ ​ ​ ​ Consolidated reported GAAP operating income $1,992.3 ​ ​ ​ ​ ​ $1,562.5 ​ ​ ​ ​ 37 Table of Contents Global Industrial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 Sales at fixed currency (millions) ​ ​ $7,193.1 ​ ​ ​ $6,736.3 ​ ​ ​ $5,908.5 ​ Sales at public currency (millions) ​ ​ 7,221.8 ​ ​ ​ 6,805.0 ​ ​ ​ 6,237.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Volume ​ (2) % ​ ​ 1 % ​ ​ ​ ​ Price changes ​ 9 % ​ ​ 13 % ​ ​ ​ ​ Organic sales change ​ ​ 7 % ​ ​ 14 % ​ ​ ​ ​ Acquisitions and divestitures ​ - % ​ ​ - % ​ ​ ​ ​ Fixed currency sales change ​ 7 % ​ ​ 14 % ​ ​ ​ ​ Foreign currency translation ​ ​ (1) % ​ ​ (5) % ​ ​ ​ ​ Public currency sales change ​ 6 % ​ ​ 9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income at fixed currency (millions) ​ ​ $1,080.7 ​ ​ ​ $935.8 ​ ​ ​ $943.4 ​ Operating income at public currency (millions) ​ ​ 1,084.7 ​ ​ ​ 950.0 ​ ​ ​ 1,019.5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed currency operating income change ​ ​ 15 % ​ ​ (1) % ​ ​ ​ ​ Fixed currency operating income margin ​ 15.0 % ​ 13.9 % ​ 16.0 % Organic operating income change ​ 16 % ​ * ​ ​ ​ ​ ​ Organic operating income margin ​ 15.0 % ​ 13.9 % ​ ​ * ​ Public currency operating income change ​ ​ 14 % ​ ​ (7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ * Not meaningful Percentages in the above table do not necessarily sum due to rounding. ​ Net Sales ​ Organic sales for Global Industrial increased in 2023 driven by strong pricing and new business wins partially offset by weaker markets.
We use assumptions similar to our U.S. plan assumptions to measure our international pension obligations, however, the assumptions used vary by country based on specific local country requirements and information. ​ Refer to Note 17 for further discussion concerning our accounting policies, estimates, funded status, contributions and overall financial positions of our pension and postretirement plan obligations. ​ Self-Insurance ​ Globally we have insurance policies with varying deductible levels for property and casualty losses.
We use assumptions similar to our U.S. plan assumptions to measure our international pension obligations, however, the assumptions used vary by country based on specific local country requirements and information. ​ Refer to Note 16 for further discussion concerning our accounting policies, estimates, funded status, contributions and overall financial positions of our pension and postretirement plan obligations. ​ Self-Insurance ​ Globally we have insurance policies with varying deductible levels for property and casualty losses.
As of December 31, 2022, both programs were rated A-2 by Standard & Poor’s, P-2 by Moody’s and F-1 by Fitch. ​ Additionally, we have uncommitted credit lines with major international banks and financial institutions. These credit lines support our daily global funding needs, primarily our global cash pooling structures.
As of December 31, 2023, both programs were rated A-2 by Standard & Poor’s, P-2 by Moody’s and F-1 by Fitch. ​ Additionally, we have uncommitted credit lines with major international banks and financial institutions. These credit lines support our daily global funding needs, primarily our global cash pooling structures.
Charges are related primarily to the Purolite Corporation (“Purolite”) acquisition and consist of integration related costs and advisory and legal fees. Acquisition and integration related costs reported in product and equipment cost of sales on the Consolidated Statements of Income in 2022 include $25.0 million ($19.6 million after tax) or $0.07 per diluted share.
Charges are related primarily to the Purolite acquisition and consist of integration related costs, advisory and legal fees. Acquisition and integration related costs reported in product and equipment cost of sales on the Consolidated Statements of Income in 2022 include $25.0 million ($19.6 million after tax) or $0.07 per diluted share.
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. ​ ​ ​ ​ 28 Table of Contents CRITICAL ACCOUNTING ESTIMATES ​ Our consolidated financial statements are prepared in accordance with U.S. GAAP.
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. ​ ​ 26 Table of Contents CRITICAL ACCOUNTING ESTIMATES ​ Our consolidated financial statements are prepared in accordance with U.S. GAAP.
Because of the uncertainty of the final outcome of these examinations, we have estabilished 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.
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.
Our Nalco tradename impairment assessment for 2022 indicated the estimated fair value of the Nalco trade name exceeded its $1.2 billion carrying amount by a significant margin. No events were noted during the second half of 2022 that required completion of an interim impairment assessment of our Nalco trade name in the second half of 2022.
Our Nalco tradename impairment assessment for 2023 indicated the estimated fair value of the Nalco trade name exceeded its $1.2 billion carrying amount by a significant margin. No events were noted during the second half of 2023 that required completion of an interim impairment assessment of our Nalco trade name in the second half of 2023.
Assets held in Turkey at the end of 2022 represented less than 1% of our consolidated assets. ​ In light of Russia’s invasion of Ukraine and the sanctions against Russia by the United States and other countries, we have made the determination that we will limit our Russian business to operations that are essential to life, providing minimal support for our healthcare, life sciences, food and beverage and certain water businesses.
Assets held in Argentina and Turkey at the end of 2023 represented less than 1% of our consolidated assets. ​ In light of Russia’s invasion of Ukraine and the sanctions against Russia by the United States and other countries, we have made the determination that we will limit our Russian business to operations that are essential to life, providing minimal support for our healthcare, life sciences, food and beverage and certain water businesses.
We do not have any other significant unconditional purchase obligations or commercial commitments. ​ As of December 31, 2022, Standard & Poor’s, Fitch and Moody’s rated our long-term credit at A- (negative outlook), A- (stable outlook) and A3 (negative outlook), respectively.
We do not have any other significant unconditional purchase obligations or commercial commitments. ​ As of December 31, 2023, Standard & Poor’s, Fitch and Moody’s rated our long-term credit at A- (negative outlook), A- (stable outlook) and A3 (negative outlook), respectively.
There has been no impairment of goodwill in any of the periods presented. ​ The Nalco trade name is our only indefinite-lived intangible asset, which is tested for impairment on an annual basis during the second quarter.
There has been no impairment of goodwill in any of the periods presented. ​ The Nalco trade name is our only indefinite life intangible asset, which is tested for impairment on an annual basis during the second quarter.
The discount rates are calculated by matching each plans’ projected cash flows to the bond yield curve. For 2022 and 2021, we measured service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows.
The discount rates are calculated by matching each plans’ projected cash flows to the bond yield curve. For 2023 and 2022, we measured service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows.
This requires us to make significant estimates and assumptions relating to the present value of its future cash flows, such as growth rates, royalty rates or discount rates. ​ We review our long-lived and amortizable intangible assets, the net value of which was $6.3 billion and $6.8 billion as of December 31, 2022 and 2021, respectively, for impairment when significant events or changes in business circumstances indicate that the carrying amount of the assets may not be recoverable.
This requires us to make significant estimates and assumptions relating to the present value of its future cash flows, such as growth rates, royalty rates or discount rates. ​ We review our long-lived and amortizable intangible assets, the net value of which was $6.3 billion as of December 31, 2023 and 2022, for impairment when significant events or changes in business circumstances indicate that the carrying amount of the assets may not be recoverable.
Fixed currency amounts included in this Form 10-K are based on translation into U.S. dollars at the fixed foreign currency exchange rates established by management at the beginning of 2022.
Fixed currency amounts included in this Form 10-K are based on translation into U.S. dollars at the fixed foreign currency exchange rates established by management at the beginning of 2023.
Our non-GAAP adjusted financial measures for cost of sales, gross margin, operating income, other (income) expense and interest expense exclude the impact of special (gains) and charges and (with the exception of other (income) expense) the 2021 impact of the Purolite transaction, and our non-GAAP measures for tax rate, net income from continuing operations attributable to Ecolab and diluted EPS from continuing operations further exclude the impact of discrete tax items.
Our non-GAAP adjusted financial measures for cost of sales, gross margin, operating income, other (income) expense and interest expense exclude the impact of special (gains) and charges and (with the exception of other (income) expense) the 2021 impact of the Purolite transaction, and our non-GAAP measures for tax rate, net income attributable to Ecolab and diluted EPS further exclude the impact of discrete tax items.
We also refer readers to the tables within the section entitled “Results of Operations” of this MD&A for reconciliation information of Non-GAAP measures to U.S. GAAP. ​ ​ 26 Table of Contents Comparability of Results ​ Purolite acquisition ​ In December 2021, we acquired Purolite for total consideration of $3.7 billion in cash, net of cash acquired.
We also refer readers to the tables within the section entitled “Results of Operations” of this MD&A for reconciliation information of Non-GAAP measures to U.S. GAAP. ​ Comparability of Results ​ Purolite acquisition ​ In December 2021, we acquired Purolite for total consideration of $3.7 billion in cash, net of cash acquired.
We may further narrow our presence in Russia depending on future developments. Our Russian and Ukraine operations represented approximately 1% of our 2022 consolidated net sales.
We may further narrow our presence in Russia depending on future developments. Our Russian and Ukraine operations represented approximately 1% of our 2023 consolidated net sales.
We do not have required minimum cash contribution obligations for our qualified pension plans in 2022. We are required to fund certain international pension benefit plans in accordance with local legal requirements. We estimate contributions to be made to our international plans will approximate $41 million in 2023. These amounts have been excluded from the schedule of contractual obligations.
We do not have required minimum cash contribution obligations for our qualified pension plans in 2023. We are required to fund certain international pension benefit plans in accordance with local legal requirements. We estimate contributions to be made to our international plans will approximate $47 million in 2024. These amounts have been excluded from the schedule of contractual obligations.
Cash dividends declared per share of common stock, by quarter, for each of the last three years were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First ​ Second ​ Third ​ Fourth ​ ​ ​ ​ Quarter ​ Quarter ​ Quarter ​ Quarter ​ Year 2022 ​ ​ $0.51 ​ ​ ​ $0.51 ​ ​ ​ $0.51 ​ ​ ​ $0.53 ​ ​ ​ $2.06 ​ 2021 ​ $0.48 ​ ​ ​ $0.48 ​ ​ ​ $0.48 ​ ​ ​ $0.51 ​ ​ ​ $1.95 ​ 2020 ​ $0.47 ​ ​ ​ $0.47 ​ ​ ​ $0.47 ​ ​ ​ $0.48 ​ ​ ​ $1.89 ​ ​ ​ 46 Table of Contents Liquidity and Capital Resources ​ We currently expect to fund all of our cash requirements which are reasonably foreseeable for the next twelve months, including scheduled debt repayments, new investments in the business, share repurchases, dividend payments, possible business acquisitions and pension and postretirement contributions with cash from operating activities, and as needed, additional short-term and/or long-term borrowings.
Cash dividends declared per share of common stock, by quarter, for each of the last three years were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First ​ Second ​ Third ​ Fourth ​ ​ ​ ​ Quarter ​ Quarter ​ Quarter ​ Quarter ​ Year 2023 ​ ​ $0.53 ​ ​ ​ $0.53 ​ ​ ​ $0.53 ​ ​ ​ $0.57 ​ ​ ​ $2.16 ​ 2022 ​ $0.51 ​ ​ ​ $0.51 ​ ​ ​ $0.51 ​ ​ ​ $0.53 ​ ​ ​ $2.06 ​ 2021 ​ $0.48 ​ ​ ​ $0.48 ​ ​ ​ $0.48 ​ ​ ​ $0.51 ​ ​ ​ $1.95 ​ ​ ​ 43 Table of Contents Liquidity and Capital Resources ​ We currently expect to fund all of our cash requirements which are reasonably foreseeable for the next twelve months, including scheduled debt repayments, new investments in the business, share repurchases, dividend payments, possible business acquisitions and pension and postretirement contributions with cash from operating activities, and as needed, additional short-term and/or long-term borrowings.
We determine our liabilities for claims on an actuarial basis. ​ Income Taxes ​ Judgment is required to determine the annual effective income tax rate, deferred tax assets and liabilities, valuation allowances recorded against net deferred tax assets and uncertain tax positions. ​ Effective Income Tax Rate ​ Our effective income tax rate is based on annual income, statutory tax rates and tax planning available in the various jurisdictions in which we operate.
We determine our liabilities for claims on an actuarial basis. ​ Income Taxes ​ Judgment is required to determine the annual effective income tax rate, deferred tax assets and liabilities, valuation allowances recorded against net deferred tax assets and unrecognized tax benefits. ​ Effective Income Tax Rate ​ Our effective income tax rate is based on annual income, statutory tax rates and tax planning available in the various jurisdictions in which we operate.
The liability for uncertain tax positions 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.
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.
We recorded charges of $13.1 million in 2022 primarily related to recoverability risk of certain assets in both Russia and Ukraine. ​ ​ NEW ACCOUNTING PRONOUNCEMENTS ​ Information regarding new accounting pronouncements is included in Note 2. ​ ​ 48 Table of Contents NON-GAAP FINANCIAL MEASURES ​ This MD&A includes financial measures that have not been calculated in accordance with U.S.
We recorded charges of $1.4 million and $13.1 million in 2023 and 2022, respectively, primarily related to recoverability risk of certain assets in both Russia and Ukraine. ​ ​ NEW ACCOUNTING PRONOUNCEMENTS ​ Information regarding new accounting pronouncements is included in Note 2. ​ ​ 45 Table of Contents NON-GAAP FINANCIAL MEASURES ​ This MD&A includes financial measures that have not been calculated in accordance with U.S.
Our weighted-average expected returns on U.S. plan assets used in determining the U.S. pension and U.S. postretirement health care expenses was 7.00% for 2022, 7.00% for 2021 and 7.25% for 2020. ​ ● Projected salary is based on our long-term actual experience, the near-term outlook and assumed inflation.
Our weighted-average expected returns on U.S. plan assets used in determining the U.S. pension and U.S. postretirement health care expenses was 7.75% for 2023 and 7.00% for 2022 and 2021. ​ ● Projected salary is based on our long-term actual experience, the near-term outlook and assumed inflation.
We continued to generate strong cash flow from operations, allowing us to fund our ongoing operations, investments in our business, acquisitions, debt repayments, pension obligations and return cash to our shareholders through share repurchases and dividend payments. ​ Dividends ​ Dividends declared per common share in 2022 was $2.06 per share.
We continued to generate strong cash flow from operations, allowing us to fund our ongoing operations, investments in our business, acquisitions, debt repayments, pension obligations and return cash to our shareholders through share repurchases and dividend payments. ​ Dividends ​ Dividends declared per common share in 2023 was $2.16 per share.
As of December 31, 2022, we were in compliance with our debt covenants and other requirements of our credit agreements and indentures.
As of December 31, 2023, we were in compliance with our debt covenants and other requirements of our credit agreements and indentures.
At year end, we had no commercial paper outstanding under our U.S. program or our Euro program. There were no borrowings under our credit facility as of December 31, 2022 or 2021.
At year end, we had no commercial paper outstanding under our U.S. program nor our Euro program. There were no borrowings under our credit facility as of December 31, 2023 or 2022.
For additional information on income taxes refer to Note 13. ​ Long-Lived Assets, Intangible Assets and Goodwill ​ Long-Lived and Amortizable Intangible Assets ​ Purchased long-lived and amortizable intangible assets not acquired as part of a business combination are recorded as of their acquisition date at cost, whereas long-lived and amortizable assets acquired as part of a business combination are recorded as of their acquisition date at their fair values based on the fair value requirements defined in U.S.
For additional information on income taxes refer to Note 12. ​ 29 Table of Contents Long-Lived Assets, Intangible Assets and Goodwill ​ Long-Lived and Amortizable Intangible Assets ​ Purchased long-lived and amortizable intangible assets not acquired as part of a business combination are recorded as of their acquisition date at cost, whereas long-lived and amortizable assets acquired as part of a business combination are recorded as of their acquisition date at their fair values based on the fair value requirements defined in U.S.
The unrecognized net losses on our U.S. qualified and non-qualified pension plans increased to $412 million as of December 31, 2022 from $397 million as of December 31, 2021 (both before tax), primarily due to lower actual return on assets partially offset by current year net actuarial gains. 30 Table of Contents The effect of a decrease in the discount rate or decrease in the expected return on assets assumption as of December 31, 2022, on the December 31, 2022 defined benefit obligation and 2023 expense is shown below, assuming no changes in benefit levels.
The unrecognized net losses on our U.S. qualified and non-qualified pension plans increased to $495 million as of December 31, 2023 from $412 million as of December 31, 2022 (both before tax), primarily due to lower actual return on assets partially offset by current year net actuarial gains. ​ The effect of a decrease in the discount rate or decrease in the expected return on assets assumption as of December 31, 2023, on the December 31, 2023 defined benefit obligation and 2024 expense is shown below, assuming no changes in benefit levels.
For additional information on revenue recognition, refer to Note 18. ​ 29 Table of Contents Litigation and Environmental Liabilities ​ Our business and operations are subject to extensive environmental laws and regulations governing, among other things, air emissions, wastewater discharges, the use and handling of hazardous substances, waste disposal and the investigation and remediation of soil and groundwater contamination.
For additional information on revenue recognition, refer to Note 17. ​ Litigation and Environmental Liabilities ​ Our business and operations are subject to extensive environmental laws and regulations governing, among other things, air emissions, wastewater discharges, the use and handling of hazardous substances, waste disposal and the investigation and remediation of soil and groundwater contamination.
For our annual 2022 indefinite-lived intangible asset impairment assessment, we completed our impairment assessment of the Nalco trade name using the relief from royalty discounted cash flow method, which incorporates assumptions regarding future sales projections, royalty rates and discount rates.
For our annual 2023 indefinite life intangible asset impairment assessment, we completed our impairment assessment of the Nalco trade name using the relief from royalty discounted cash flow method, which incorporates assumptions regarding future sales projections, royalty rates and discount rates.
Our weighted-average projected salary increase used in determining the U.S. pension expenses was 4.03% for 2022, 2021 and 2020. ​ ● For postretirement benefit measurement purposes as of December 31, 2022, the annual rates of increase in the per capita cost of covered health care were assumed to be 6.75% for pre-65 costs. Post-65 costs are no longer used.
Our weighted-average projected salary increase used in determining the U.S. pension expenses was 4.03% for 2023, 2022 and 2021. ​ ● For postretirement benefit measurement purposes as of December 31, 2023, the annual rates of increase in the per capita cost of covered health care were assumed to be 7.46% for pre-65 costs. Post-65 costs are no longer used.
Total liabilities were $14.2 billion as of December 31, 2022, compared to total liabilities of $14.0 billion as of December 31, 2021. Total debt was $8.6 billion as of December 31, 2022 and $8.8 billion as of December 31, 2021. See further discussion of our debt activity within the “Liquidity and Capital Resources” section of this MD&A.
Total liabilities were $13.8 billion as of December 31, 2023, compared to total liabilities of $14.2 billion as of December 31, 2022. Total debt was $8.2 billion as of December 31, 2023 and $8.6 billion as of December 31, 2022. See further discussion of our debt activity within the “Liquidity and Capital Resources” section of this MD&A.
We adjust these reserves in light of changing facts and circumstances. ​ 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 our tax returns.
We adjust these liabilities for unrecognized tax benefits in light of changing facts and circumstances. ​ 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 our tax returns.
Our annual effective income tax rate includes the impact of reserve provisions. We recognize the amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority.
Our annual effective income tax rate includes the impact of unrecognized tax benefits. We recognize the amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority.
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. ​ 32 Table of Contents For our annual 2022 goodwill impairment assessment, we completed our impairment assessment for eleven of our twelve reporting units using discounted cash flow analyses that incorporated assumptions regarding future growth rates, terminal values and discount rates.
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 2023 goodwill impairment assessment, we completed our impairment assessment for our ten reporting units using discounted cash flow analyses that incorporated assumptions regarding future growth rates, terminal values and discount rates.
As of December 31, 2022, we had a total of €1,150 million senior notes designated as net investment hedges. ​ We enter into cross-currency swap derivative contracts to hedge certain Euro denominated exposures from our investments in certain of its Euro denominated functional currency subsidiaries.
As of December 31, 2023, we had a total of €834 million senior notes designated as net investment hedges. ​ We enter into cross-currency swap derivative contracts to hedge certain Euro denominated exposures from our investments in certain of its Euro denominated functional currency subsidiaries.
Postretirement ​ ​ Health Care Benefits Plans ​ ​ ​ ​ Increase in ​ Higher ​ ​ Assumption ​ Recorded ​ 2023 (millions) ​ Change ​ Obligation ​ Expense Discount rate -.25 pts ​ $2.7 ​ ​ $- ​ Expected return on assets -.25 pts ​ N/A ​ ​ ​ - ​ ​ Our international pension obligations and underlying plan assets represent approximately one third of our global pension plans, with the majority of the amounts held in the U.K. and Eurozone countries.
Postretirement ​ ​ Health Care Benefits Plans ​ ​ ​ ​ Increase in ​ Higher ​ ​ Assumption ​ Recorded ​ 2024 (millions) ​ Change ​ Obligation ​ Expense Discount rate -.25 pts ​ $2.3 ​ ​ $- ​ Expected return on assets -.25 pts ​ N/A ​ ​ ​ - ​ ​ ​ 28 Table of Contents Our international pension obligations and underlying plan assets represent approximately one third of our global pension plans, with the majority of the amounts held in the U.K. and Eurozone countries.
We believe our tax returns properly reflect the tax consequences of our operations, and our liabilities for uncertain tax positions are appropriate and sufficient for the positions taken.
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.
We believe this approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. In determining our U.S. pension obligations for 2022, our weighted-average discount rate increased to 5.17% from 2.86% at year-end 2021.
We believe this approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. In determining our U.S. pension obligations for 2023, our weighted-average discount rate decreased to 4.95% from 5.17% at year-end 2022.
The rates are assumed to decrease each year until they reach 4.5% in 2032 and remain at those levels thereafter. ​ ● The Company uses mortality tables appropriate in the circumstances, which generally are the recently available mortality tables as of the respective U.S. and international measurement dates.
The rates are assumed to decrease each year until they reach 4.5% in 2034 and remain at those levels thereafter. ​ ● We use mortality tables appropriate in the circumstances, which generally are the recently available mortality tables as of the respective U.S. and international measurement dates.
GAAP amounts to the non-GAAP amounts in this MD&A. ​ ​ ​ ​ 49 Table of Contents
GAAP amounts to the non-GAAP amounts in this MD&A. ​ ​ ​ ​ 46 Table of Contents
Relevant factors in determining the realizability of deferred tax assets include historical results, sources of future taxable income, the expected timing of the reversal of temporary differences, tax planning strategies and the expiration dates of the various tax attributes. ​ 31 Table of Contents Uncertain Tax Positions ​ A number of years may elapse before a particular tax matter, for which we have established a liability for uncertain tax position, is audited and finally resolved.
Relevant factors in determining the realizability of deferred tax assets include historical results, sources of future taxable income, the expected timing of the reversal of temporary differences, tax planning strategies and the expiration dates of the various tax attributes. ​ Unrecognized Tax Benefits ​ A number of years may elapse before a particular tax matter, for which we have established a liability for unrecognized tax benefits, is audited and finally resolved.
Our goodwill impairment assessments for 2022 indicated the estimated fair values of each of these eleven reporting units exceeded the carrying amounts of the respective reporting units by a significant margin.
Our goodwill impairment assessments for 2023 indicated the estimated fair values of each of these ten reporting units exceeded the carrying amounts of the respective reporting units by a significant margin.
No events were noted during the second half of 2022 that required completion of an interim goodwill impairment assessment in the second half of 2022 for any of our twelve reporting units.
No events were noted during the second half of 2023 that required completion of an interim goodwill impairment assessment in the second half of 2023 for any of our ten reporting units.
In connection with the expanded program, we now expect to incur pre-tax charges of $195 million ($150 million after tax) or $0.52 per diluted share. We expect that these restructuring actions will be completed by 2024. Program actions include headcount reductions from terminations, not filing certain positions and facility closures.
In connection with the expanded program (“Combined Program”), we expect to incur total pre-tax charges of $195 million ($150 million after tax) or $0.52 per diluted share. We expect that these restructuring charges will be completed by the end of 2024. Program actions include headcount reductions from terminations, not filling certain open positions, and facility closures.
Total capital expenditures were $713 million, $643 million and $489 million in 2022, 2021 and 2020, respectively. ​ Total cash paid for acquisitions, net of cash acquired and net of cash received from dispositions, in 2022, 2021 and 2020 was $7 million, $3,924 million and $487 million, respectively. Our acquisitions and divestitures are discussed further in Note 4.
Total capital expenditures were $775 million, $713 million and $643 million in 2023, 2022 and 2021, respectively. ​ Total cash paid for acquisitions, net of cash acquired and net of cash received from dispositions, in 2023, 2022 and 2021 was $180 million, $7 million and $3,924 million, respectively. Our acquisitions and divestitures are discussed further in Note 4.
As of December 31, 2022 we had $144 million of bank supported letters of credit, surety bonds and guarantees outstanding in support of our commercial business transactions.
As of December 31, 2023 we had $155 million of bank supported letters of credit, surety bonds and guarantees outstanding in support of our commercial business transactions.
Our strong balance sheet has allowed us continued access to capital at attractive rates. ​ Cash Flow ​ Cash flow from continuing operations operating activities was $1.8 billion in 2022 compared to $2.1 billion in 2021.
Our strong balance sheet has allowed us continued access to capital at attractive rates. ​ Cash Flow ​ Cash flow from operating activities was $2.4 billion in 2023 compared to $1.8 billion in 2022.
These non-GAAP measures include: ● Fixed currency sales ● Adjusted net sales ● Adjusted fixed currency sales ● Acquisition adjusted fixed currency sales or organic sales ● Adjusted cost of sales ● Adjusted gross margin ● Fixed currency operating income ● Fixed currency operating income margin ● Adjusted operating income ● Adjusted operating income margin ● Adjusted fixed currency operating income ● Adjusted fixed currency operating income margin ● Acquisition adjusted fixed currency operating income or organic income ● Acquisition adjusted fixed currency operating income margin or organic margin ● Adjusted other (income) expense ● Adjusted interest expense, net ● EBITDA ● Adjusted tax rate ● Adjusted net income from discontinued operations, net of tax ● Adjusted net income from continuing operations attributable to Ecolab ● Adjusted diluted EPS from continuing operations ​ We provide these measures as additional information regarding our operating results.
These non-GAAP measures include: ● Fixed currency sales ● Adjusted net sales ● Adjusted fixed currency sales ● Organic sales, formerly known as acquisition adjusted fixed currency sales ● Adjusted cost of sales ● Adjusted gross margin ● Fixed currency operating income ● Fixed currency operating income margin ● Adjusted operating income ● Adjusted operating income margin ● Adjusted fixed currency operating income ● Adjusted fixed currency operating income margin ● Organic operating income, formerly known as acquisition adjusted fixed currency operating income ● Organic operating income margin, formerly known as acquisition adjusted fixed currency operating income margin ● Adjusted other (income) expense ● Adjusted interest expense, net ● EBITDA ● Adjusted tax rate ● Adjusted net income attributable to Ecolab ● Adjusted diluted EPS ​ We provide these measures as additional information regarding our operating results.
In determining our U.S. postretirement health care obligation for 2022, our weighted-average discount rate increased to 5.14% from 2.75% at year-end 2021. ​ ● The expected rate of return on plan assets reflects asset allocations, investment strategies and views of investment advisors, and represents our expected long-term return on plan assets.
In determining our U.S. postretirement health care obligation for 2023, our weighted-average discount rate decreased to 4.95% from 5.14% at year-end 2022. ​ ● The expected rate of return on plan assets reflects asset allocations, investment strategies and views of investment advisors, and represents our expected long-term return on plan assets.
We also provide our segment results based on public currency rates for informational purposes. ​ Our reportable segments do not include the impact of intangible asset amortization from the Nalco and Purolite transactions or the impact of special (gains) and charges as these are not allocated to our reportable segments. ​ Acquisition adjusted fixed currency growth rates, also known as organic growth rates, are at fixed currency and exclude the results of our acquired businesses from the first twelve months post acquisition and the results of our divested businesses from the twelve months prior to divestiture.
We also provide our segment results based on public currency rates for informational purposes. ​ Our reportable segments do not include the impact of intangible asset amortization from the Nalco and Purolite transactions or the impact of special (gains) and charges as these are not allocated to our reportable segments. ​ 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.
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 a net tax benefit related to discrete tax items of $11.8 million during 2022.
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 a net tax expense related to discrete tax items of $11.2 million during 2023.
We continue to expect our operating cash flow to remain strong. ​ As of December 31, 2022, we had $599 million of cash and cash equivalents on hand, of which $122 million was held outside of the U.S.
We continue to expect our operating cash flow to remain strong. ​ As of December 31, 2023, we had $920 million of cash and cash equivalents on hand, of which $880 million was held outside of the U.S.
Special (gains) and charges items impacting COS are shown within the “Special (Gains) and Charges” table below. ​ Excluding the impact of special (gains) and charges and the 2021 impacts of the Purolite transaction, our 2022 adjusted gross margin was 38.2% compared against a 2021 adjusted gross margin of 40.9%.
Special (gains) and charges items impacting COS are shown within the “Special (Gains) and Charges” table below. ​ Excluding the impact of special (gains) and charges, our 2023 adjusted gross margin was 40.4% compared against a 2022 adjusted gross margin of 38.2%.
We repurchased a total of $518 million, $107 million, and $146 million of shares in 2022, 2021 and 2020, respectively. ​ The impact on financing cash flows of commercial paper and notes payable repayments, long-term debt borrowings and long-term debt repayments, are shown in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2022 ​ 2021 2020 2022 2021 Net (repayments) issuances of commercial paper and notes payable ​ ($404.3) ​ ​ ​ $393.6 ​ ​ ($65.5) ​ ​ ($797.9) ​ ​ $459.1 ​ Long-term debt borrowings ​ 494.0 ​ ​ 2,775.0 ​ ​ 1,855.9 ​ ​ (2,281.0) ​ ​ 919.1 ​ Long-term debt repayments ​ - ​ ​ (1,017.9) ​ ​ (1,570.0) ​ ​ 1,017.9 ​ ​ 552.1 ​ In December 2022, we increased our quarterly dividend rate by 4%.
We repurchased a total of $14 million, $518 million, and $107 million of shares in 2023, 2022 and 2021, respectively. ​ The impact on financing cash flows of commercial paper and notes payable repayments, long-term debt borrowings and long-term debt repayments, are shown in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 ​ 2022 2021 2023 2022 Net (repayments) issuances of commercial paper and notes payable ​ ($1.9) ​ ​ ​ ($404.3) ​ ​ $393.6 ​ ​ $402.4 ​ ​ ($797.9) ​ Long-term debt borrowings ​ - ​ ​ 494.0 ​ ​ 2,775.0 ​ ​ (494.0) ​ ​ (2,281.0) ​ Long-term debt repayments ​ (500.0) ​ ​ - ​ ​ (1,017.9) ​ ​ (500.0) ​ ​ 1,017.9 ​ In December 2023, we increased our quarterly dividend rate by 8%.
Items included within special (gains) and charges are shown in the table on page 34. ​ ​ ​ ​ 44 Table of Contents FINANCIAL POSITION, CASH FLOW AND LIQUIDITY ​ Financial Position ​ Total assets were $21.5 billion as of December 31, 2022, compared to total assets of $21.2 billion as of December 31, 2021.
Items included within special (gains) and charges are shown in the table on page 32. ​ ​ ​ ​ 41 Table of Contents FINANCIAL POSITION, CASH FLOW AND LIQUIDITY ​ Financial Position ​ Total assets were $21.8 billion as of December 31, 2023, compared to total assets of $21.5 billion as of December 31, 2022.
Future comparability of our adjusted tax rate may be impacted by various factors, including but not limited to other changes in global tax rules, further tax planning projects and geographic income mix. ​ ​ 38 Table of Contents Net Income from Discontinued Operations, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2022 2021 2020 Reported GAAP net loss from discontinued operations, net of tax ​ ​ $- ​ ​ ​ $- ​ ​ ​ ($2,172.5) Adjustments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Special (gains) and charges ​ ​ - ​ ​ ​ - ​ ​ ​ 2,210.7 Discrete tax net expense ​ ​ - ​ ​ - ​ ​ 22.7 Non-GAAP adjusted net income from discontinued operations, net of tax ​ ​ $- ​ ​ ​ $- ​ ​ ​ $60.9 ​ Special charges reported in discontinued operations consist of ChampionX separation charges. ​ Net Income from Continuing Operations Attributable to Ecolab ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2022 2021 2020 2022 ​ 2021 Reported GAAP net income from continuing operations attributable to Ecolab ​ ​ $1,091.7 ​ ​ ​ $1,129.9 ​ ​ $967.4 ​ (3) % ​ 17 % Adjustments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Special (gains) and charges, after tax ​ 207.3 ​ ​ ​ 213.5 ​ ​ 254.1 ​ ​ ​ ​ ​ ​ Discrete tax net (benefit) expense ​ ​ (11.8) ​ ​ ​ 5.8 ​ ​ (55.8) ​ ​ ​ ​ ​ ​ 2021 impact of Purolite on net income ​ - ​ ​ ​ 5.6 ​ ​ - ​ ​ ​ ​ ​ ​ Non-GAAP adjusted net income from continuing operations attributable to Ecolab ​ ​ $1,287.2 ​ ​ ​ $1,354.8 ​ ​ $1,165.7 ​ (5) % ​ 16 % ​ Diluted EPS from Continuing Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars) 2022 2021 2020 2022 ​ 2021 Reported GAAP diluted EPS from continuing operations ​ ​ $3.81 ​ ​ ​ $3.91 ​ ​ $3.33 ​ (3) % ​ 17 % Adjustments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Special (gains) and charges, after tax ​ 0.72 ​ ​ 0.74 ​ 0.88 ​ ​ ​ ​ ​ ​ Discrete tax net (benefit) expense ​ (0.04) ​ ​ 0.02 ​ (0.19) ​ ​ ​ ​ ​ ​ 2021 impact of Purolite on diluted EPS ​ ​ - ​ ​ ​ 0.02 ​ ​ - ​ ​ ​ ​ ​ ​ Non-GAAP adjusted diluted EPS from continuing operations ​ ​ $4.49 ​ ​ ​ $4.69 ​ ​ $4.02 ​ (4) % ​ 17 % ​ Per share amounts do not necessarily sum due to rounding. ​ Currency translation had an unfavorable $(0.26) impact on reported and adjusted diluted EPS when comparing 2022 to 2021 and favorable $0.11 impact when comparing 2021 to 2020. ​ 39 Table of Contents SEGMENT PERFORMANCE ​ The non-U.S. dollar functional currency international amounts included within our reportable segments are based on translation into U.S. dollars at the fixed currency exchange rates established by management for 2022.
Future comparability of our adjusted tax rate may be impacted by various factors, including but not limited to other changes in global tax rules, further tax planning projects and geographic income mix. ​ Net Income Attributable to Ecolab ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2023 2022 2021 2023 ​ 2022 Reported GAAP net income attributable to Ecolab ​ ​ $1,372.3 ​ ​ ​ $1,091.7 ​ ​ $1,129.9 ​ 26 % ​ (3) % Adjustments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Special (gains) and charges, after tax ​ 109.2 ​ ​ ​ 207.3 ​ ​ 213.5 ​ ​ ​ ​ ​ ​ Discrete tax net (benefit) expense ​ ​ 11.2 ​ ​ ​ (11.8) ​ ​ 5.8 ​ ​ ​ ​ ​ ​ 2021 impact of Purolite on net income ​ - ​ ​ ​ - ​ ​ 5.6 ​ ​ ​ ​ ​ ​ Non-GAAP adjusted net income attributable to Ecolab ​ ​ $1,492.7 ​ ​ ​ $1,287.2 ​ ​ $1,354.8 ​ 16 % ​ (5) % ​ Diluted EPS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars) 2023 2022 2021 2023 ​ 2022 Reported GAAP diluted EPS ​ ​ $4.79 ​ ​ ​ $3.81 ​ ​ $3.91 ​ 26 % ​ (3) % Adjustments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Special (gains) and charges, after tax ​ 0.38 ​ ​ 0.72 ​ 0.74 ​ ​ ​ ​ ​ ​ Discrete tax net (benefit) expense ​ 0.04 ​ ​ (0.04) ​ 0.02 ​ ​ ​ ​ ​ ​ 2021 impact of Purolite on diluted EPS ​ ​ - ​ ​ ​ - ​ ​ 0.02 ​ ​ ​ ​ ​ ​ Non-GAAP adjusted diluted EPS ​ ​ $5.21 ​ ​ ​ $4.49 ​ ​ $4.69 ​ 16 % ​ (4) % ​ Per share amounts do not necessarily sum due to rounding. ​ Currency translation had an unfavorable $(0.05) impact on reported and adjusted diluted EPS when comparing 2023 to 2022 and unfavorable $(0.26) impact when comparing 2022 to 2021. ​ 36 Table of Contents SEGMENT PERFORMANCE ​ The non-U.S. dollar functional currency international amounts included within our reportable segments are based on translation into U.S. dollars at the fixed currency exchange rates established by management for 2023.
Pension Plans ​ ​ ​ ​ Increase in ​ Higher ​ ​ Assumption ​ Recorded ​ 2023 (millions) ​ Change ​ Obligation ​ Expense Discount rate -.25 pts ​ ​ $42.4 ​ ​ ​ $1.1 ​ Expected return on assets -.25 pts ​ ​ N/A ​ ​ ​ (4.7) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect on U.S.
Pension Plans ​ ​ ​ ​ Increase in ​ Higher ​ ​ Assumption ​ Recorded ​ 2024 (millions) ​ Change ​ Obligation ​ Expense Discount rate -.25 pts ​ ​ $37.7 ​ ​ ​ $2.9 ​ Expected return on assets -.25 pts ​ ​ N/A ​ ​ ​ (4.7) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect on U.S.
For additional information on our commitments and contingencies, refer to Note 16. ​ Actuarially Determined Liabilities ​ Pension and Postretirement Healthcare Benefit Plans ​ The measurement of our pension and postretirement benefit obligations are dependent on a variety of assumptions determined by management and used by our actuaries.
For additional information on our commitments and contingencies, refer to Note 15. ​ 27 Table of Contents Actuarially Determined Liabilities ​ Pension and Postretirement Healthcare Benefit Plans ​ The measurement of our pension and postretirement benefit obligations are dependent on a variety of assumptions determined by management and used by our actuaries in their valuations and calculations.
Our gross margin is defined as sales less cost of sales divided by sales. ​ 33 Table of Contents Our reported gross margin was 37.8%, 40.2%, and 41.4% for 2022, 2021 and 2020, respectively. Our 2022, 2021 and 2020 reported gross margins were negatively impacted by special (gains) and charges of $69.9 million, $93.9 million, and $48.2 million, respectively.
Our gross margin is defined as sales less cost of sales divided by sales. ​ Our reported gross margin was 40.2%, 37.8%, and 40.2% for 2023, 2022 and 2021, respectively. Our 2023, 2022 and 2021 reported gross margins were negatively impacted by special (gains) and charges of $22.5 million, $69.9 million, and $93.9 million, respectively.
Public currency rate data provided within the “Segment Performance” section of this MD&A reflect amounts translated at actual public average rates of exchange prevailing during the corresponding period and is provided for informational purposes only. ​ ​ ​ 27 Table of Contents EXECUTIVE SUMMARY ​ In 2022, we delivered double-digit sales growth as we accelerated our pricing and drove volume growth.
Public currency rate data provided within the “Segment Performance” section of this MD&A reflect amounts translated at actual public average rates of exchange prevailing during the corresponding period and is provided for informational purposes only. ​ ​ 25 Table of Contents EXECUTIVE SUMMARY ​ In 2023, we delivered high single digit sales growth as we continued strong pricing.
EBITDA is a non-GAAP measure discussed further in the “Non-GAAP Financial Measures” section of this MD&A. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ 2020 (ratio) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net debt to EBITDA ​ 3.2 ​ ​ 3.4 ​ ​ 2.4 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total debt ​ ​ $8,580.4 ​ ​ ​ $8,758.2 ​ ​ ​ $6,686.6 ​ Cash ​ 598.6 ​ ​ ​ 359.9 ​ ​ ​ 1,260.2 ​ Net debt ​ ​ $7,981.8 ​ ​ ​ $8,398.3 ​ ​ ​ $5,426.4 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income including noncontrolling interest ​ ​ $1,108.9 ​ ​ ​ $1,144.0 ​ ​ ​ $984.8 ​ Provision for income taxes ​ 234.5 ​ ​ ​ 270.2 ​ ​ ​ 176.6 ​ Interest expense, net ​ 243.6 ​ ​ ​ 218.3 ​ ​ ​ 290.2 ​ Depreciation ​ 618.5 ​ ​ ​ 604.4 ​ ​ ​ 594.3 ​ Amortization ​ 320.2 ​ ​ ​ 238.7 ​ ​ ​ 218.4 ​ EBITDA ​ $2,525.7 ​ ​ ​ $2,475.6 ​ ​ ​ $2,264.3 ​ ​ Cash Flows ​ Operating Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2022 ​ 2021 2020 2022 2021 Cash provided by operating activities ​ ​ $1,788.4 ​ ​ ​ $2,061.9 ​ ​ ​ $1,741.8 ​ ​ ​ ($273.5) ​ ​ ​ $320.1 ​ ​ 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 decreased $274 million in 2022 compared to 2021, driven primarily by $277 million increase in working capital excluding the impact of non-cash special charges.
EBITDA is a non-GAAP measure discussed further in the “Non-GAAP Financial Measures” section of this MD&A. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 (ratio) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net debt to EBITDA ​ 2.4 ​ ​ 3.2 ​ ​ 3.4 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total debt ​ ​ $8,181.8 ​ ​ ​ $8,580.4 ​ ​ ​ $8,758.2 ​ Cash ​ 919.5 ​ ​ ​ 598.6 ​ ​ ​ 359.9 ​ Net debt ​ ​ $7,262.3 ​ ​ ​ $7,981.8 ​ ​ ​ $8,398.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income including noncontrolling interest ​ ​ $1,393.0 ​ ​ ​ $1,108.9 ​ ​ ​ $1,144.0 ​ Provision for income taxes ​ 362.5 ​ ​ ​ 234.5 ​ ​ ​ 270.2 ​ Interest expense, net ​ 296.7 ​ ​ ​ 243.6 ​ ​ ​ 218.3 ​ Depreciation ​ 616.7 ​ ​ ​ 618.5 ​ ​ ​ 604.4 ​ Amortization ​ 306.9 ​ ​ ​ 320.2 ​ ​ ​ 238.7 ​ EBITDA ​ $2,975.8 ​ ​ ​ $2,525.7 ​ ​ ​ $2,475.6 ​ ​ Cash Flows ​ Operating Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2023 ​ 2022 2021 2023 2022 Cash provided by operating activities ​ ​ $2,411.8 ​ ​ ​ $1,788.4 ​ ​ ​ $2,061.9 ​ ​ ​ $623.4 ​ ​ ​ ($273.5) ​ ​ 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 $623 million in 2023 compared to 2022, driven primarily by a $332 million net favorable change in working capital and $284 million increase in net income.
Adjusted diluted EPS, which exclude the impact of special (gains) and charges, the 2021 impacts of the Purolite transaction and discrete tax items decreased 4% to $4.49 in 2022 compared to $4.69 in 2021, as unfavorable foreign currency translation and increases in interest expense further offset our operating income performance. ​ Balance Sheet ​ We remain committed to maintaining “A” range ratings metrics over the long-term, supported by our current credit ratings of A-/A3/A- by Standard & Poor’s, Moody’s Investor Services and Fitch, respectively.
Adjusted diluted EPS, which excludes the impact of special (gains) and charges and discrete tax items increased 16% to $5.21 in 2023 compared to $4.49 in 2022 as our strong operating income performance was partially offset by foreign currency translation and increases in interest expense. ​ Balance Sheet ​ We remain committed to maintaining “A” range ratings metrics over the long-term, supported by our current credit ratings of A-/A3/A- by Standard & Poor’s, Moody’s Investor Services and Fitch, respectively.
Liabilities for uncertain tax positions are presented in the Consolidated Balance Sheets within other non-current liabilities. Our gross liability for uncertain tax positions was $24.9 million and $25.1 million as of December 31, 2022 and 2021, respectively.
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 $24.2 million and $24.9 million as of December 31, 2023 and 2022, respectively.
Cash payments during 2022 related to all other restructuring plans excluding the Europe Program, A2020 and Institutional Plan were $5.2 million. ​ Acquisition and integration related costs ​ Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income in 2022 include $14.5 million ($11.4 million after tax) or $0.04 per diluted share.
Cash payments during 2023 related to all other restructuring plans excluding the Combined Program, A2020 and Institutional Plan were $0.6 million. ​ Acquisition and integration related costs ​ Acquisition and integration related costs reported in special (gains) and charges on the Consolidated Statements of Income in 2023 include $16.1 million ($12.0 million after tax) or $0.04 per diluted share.
Special (gains) and charges in 2022 were driven primarily by restructuring and pension settlement expense and 2021 was driven primarily by COVID-19 related charges, restructuring charges and pension settlement expense.
Special (gains) and charges in 2023 were driven primarily by restructuring expense and 2022 was driven primarily by restructuring and pension settlement expense.
Refer to Note 9 for further information on our hedging activity. Based on a sensitivity analysis (assuming a 10% change in market rates) of our foreign exchange and interest rate derivatives and other financial instruments, changes in exchange rates or interest rates would increase/decrease our financial position and liquidity by approximately $220 million.
Based on a sensitivity analysis (assuming a 10% change in market rates) of our foreign exchange and interest rate derivatives and other financial instruments, changes in exchange rates or interest rates would increase/decrease our financial position and liquidity by approximately $169 million.
There has been no impairment of the Nalco trade name intangible since it was acquired. ​ ​ RESULTS OF OPERATIONS ​ Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2022 ​ 2021 ​ 2020 ​ 2022 ​ 2021 Product and equipment sales ​ ​ $11,446.2 ​ ​ $10,153.3 ​ ​ $9,466.6 ​ ​ ​ ​ ​ ​ Service and lease sales ​ ​ 2,741.6 ​ ​ ​ 2,579.8 ​ ​ ​ 2,323.6 ​ ​ ​ ​ ​ ​ ​ Reported GAAP net sales ​ ​ 14,187.8 ​ ​ ​ 12,733.1 ​ ​ ​ 11,790.2 ​ ​ 11 % ​ 8 % 2021 impact of Purolite on net sales ​ ​ - ​ ​ ​ 12.0 ​ ​ ​ - ​ ​ ​ ​ ​ ​ ​ Non-GAAP adjusted net sales ​ ​ 14,187.8 ​ ​ ​ 12,721.1 ​ ​ ​ 11,790.2 ​ ​ 12 % ​ 8 % Effect of foreign currency translation ​ 285.3 ​ (249.5) ​ ​ (15.4) ​ ​ ​ ​ ​ ​ ​ Non-GAAP adjusted fixed currency sales ​ ​ $14,473.1 ​ ​ ​ $12,471.6 ​ ​ ​ $11,774.8 ​ ​ 16 % ​ 6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The percentage components of the year-over-year sales change are shown below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (percent) ​ 2022 ​ 2021 Volume ​ ​ 2 % ​ 3 % Price changes ​ ​ 10 ​ ​ 2 ​ Acquisition adjusted fixed currency sales change ​ ​ 13 ​ ​ 5 ​ Acquisitions & divestitures ​ ​ 3 ​ ​ 1 ​ Fixed currency sales change ​ ​ 16 ​ ​ 6 ​ Foreign currency translation ​ ​ (4) ​ ​ 2 ​ Reported GAAP net sales change ​ ​ 11 % ​ 8 % ​ Amounts do not necessarily sum due to rounding. ​ Cost of Sales (“COS”) and Gross Profit Margin (“Gross Margin”) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ 2020 ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross (millions/percent) ​ COS ​ ​ Margin ​ ​ COS ​ ​ Margin ​ ​ COS ​ ​ Margin Product and equipment cost of sales ​ $7,212.8 ​ ​ ​ ​ ​ ​ $6,100.9 ​ ​ ​ ​ ​ ​ $5,481.3 ​ ​ ​ ​ Service and lease cost of sales ​ 1,618.2 ​ ​ ​ ​ ​ ​ 1,514.9 ​ ​ ​ ​ ​ ​ 1,424.5 ​ ​ ​ ​ Reported GAAP COS and gross margin ​ 8,831.0 ​ ​ 37.8 % ​ ​ 7,615.8 ​ ​ 40.2 % ​ ​ 6,905.8 ​ ​ 41.4 % Special (gains) and charges ​ 69.9 ​ ​ ​ ​ ​ ​ 93.9 ​ ​ ​ ​ ​ ​ 48.2 ​ ​ ​ 2021 impact of Purolite on COS ​ - ​ ​ ​ ​ ​ ​ 7.6 ​ ​ ​ ​ ​ ​ - ​ ​ ​ ​ Non-GAAP adjusted COS and gross margin ​ $8,761.1 ​ ​ 38.2 % ​ ​ $7,514.3 ​ ​ 40.9 % ​ ​ $6,857.6 ​ ​ 41.8 % ​ Our COS values and corresponding gross margin are shown above.
There has been no impairment of the Nalco trade name intangible since it was acquired. ​ ​ 30 Table of Contents RESULTS OF OPERATIONS ​ Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 ​ 2022 ​ 2021 ​ 2023 ​ 2022 Product and equipment sales ​ ​ $12,316.8 ​ ​ $11,446.2 ​ ​ $10,153.3 ​ ​ ​ ​ ​ ​ Service and lease sales ​ ​ 3,003.4 ​ ​ ​ 2,741.6 ​ ​ ​ 2,579.8 ​ ​ ​ ​ ​ ​ ​ Reported GAAP net sales ​ ​ 15,320.2 ​ ​ ​ 14,187.8 ​ ​ ​ 12,733.1 ​ ​ 8 % ​ 11 % 2021 impact of Purolite on net sales ​ ​ - ​ ​ ​ - ​ ​ ​ 12.0 ​ ​ ​ ​ ​ ​ ​ Non-GAAP adjusted net sales ​ ​ 15,320.2 ​ ​ ​ 14,187.8 ​ ​ ​ 12,721.1 ​ ​ 8 % ​ 12 % Effect of foreign currency translation ​ (44.8) ​ (94.4) ​ ​ (566.9) ​ ​ ​ ​ ​ ​ ​ Non-GAAP adjusted fixed currency sales ​ ​ 15,275.4 ​ ​ ​ 14,093.4 ​ ​ ​ 12,154.2 ​ ​ 8 % ​ 16 % Effect of acquisitions and divestitures ​ ​ (113.4) ​ ​ ​ (123.7) ​ ​ ​ * ​ ​ ​ ​ ​ ​ ​ Non-GAAP organic sales ​ ​ $15,162.0 ​ ​ ​ $13,969.7 ​ ​ ​ * ​ ​ 9 % ​ * ​ * Not meaningful ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The percentage components of the year-over-year sales change are shown below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (percent) ​ 2023 ​ 2022 Volume ​ ​ - % ​ 2 % Price changes ​ ​ 8 ​ ​ 10 ​ Organic sales change ​ ​ 9 ​ ​ 13 ​ Acquisitions and divestitures ​ ​ - ​ ​ 3 ​ Fixed currency sales change ​ ​ 8 ​ ​ 16 ​ Foreign currency translation ​ ​ - ​ ​ (4) ​ Reported GAAP net sales change ​ ​ 8 % ​ 11 % ​ Amounts do not necessarily sum due to rounding. ​ Cost of Sales (“COS”) and Gross Profit Margin (“Gross Margin”) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross (millions/percent) ​ COS ​ ​ Margin ​ ​ COS ​ ​ Margin ​ ​ COS ​ ​ Margin Product and equipment cost of sales ​ $7,389.2 ​ ​ ​ ​ ​ ​ $7,212.8 ​ ​ ​ ​ ​ ​ $6,100.9 ​ ​ ​ ​ Service and lease cost of sales ​ 1,765.7 ​ ​ ​ ​ ​ ​ 1,618.2 ​ ​ ​ ​ ​ ​ 1,514.9 ​ ​ ​ ​ Reported GAAP COS and gross margin ​ 9,154.9 ​ ​ 40.2 % ​ ​ 8,831.0 ​ ​ 37.8 % ​ ​ 7,615.8 ​ ​ 40.2 % Special (gains) and charges ​ 22.5 ​ ​ ​ ​ ​ ​ 69.9 ​ ​ ​ ​ ​ ​ 93.9 ​ ​ ​ 2021 impact of Purolite on COS ​ - ​ ​ ​ ​ ​ ​ - ​ ​ ​ ​ ​ ​ 7.6 ​ ​ ​ ​ Non-GAAP adjusted COS and gross margin ​ $9,132.4 ​ ​ 40.4 % ​ ​ $8,761.1 ​ ​ 38.2 % ​ ​ $7,514.3 ​ ​ 40.9 % ​ Our COS values and corresponding gross margin are shown above.
Excluding the impact of settlements and curtailments recorded in special (gains) and charges during 2022, 2021 and 2020, our adjusted other income was $75.1 million, $71.1 million and $56.3 million, respectively. ​ ​ 37 Table of Contents Interest Expense, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2022 2021 2020 Reported GAAP interest expense, net ​ ​ $243.6 ​ ​ ​ $218.3 ​ ​ ​ $290.2 Special (gains) and charges ​ ​ - ​ ​ 33.1 ​ ​ 83.8 2021 impact of Purolite on interest expense ​ ​ - ​ ​ ​ 3.5 ​ ​ ​ - Non-GAAP adjusted interest expense, net ​ ​ $243.6 ​ ​ ​ $181.7 ​ ​ ​ $206.4 ​ Our reported net interest expense totaled $243.6 million, $218.3 million and $290.2 million during 2022, 2021 and 2020, respectively. ​ We incurred $33.1 million ($29.0 million after tax) or $0.10 per diluted share and $83.8 million ($64.6 million after tax) or $0.22 per diluted share, of interest expense special charges in conjunction with our debt issuances and refinancing activities during 2021 and 2020, respectively. ​ Adjusted for special (gains) and charges, the increase in interest expense when comparing 2022 against 2021 was driven primarily by the interest on debt issued to fund the Purolite acquisition and the impact from higher average interest rates on floating rate debt.
Excluding the impact of settlements and curtailments recorded in special (gains) and charges during 2023, 2022 and 2021, our adjusted other income was $59.9 million, $75.1 million and $71.1 million, respectively. ​ Interest Expense, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2023 2022 2021 Reported GAAP interest expense, net ​ ​ $296.7 ​ ​ ​ $243.6 ​ ​ ​ $218.3 Special (gains) and charges ​ ​ - ​ ​ - ​ ​ 33.1 2021 impact of Purolite on interest expense ​ ​ - ​ ​ ​ - ​ ​ ​ 3.5 Non-GAAP adjusted interest expense, net ​ ​ $296.7 ​ ​ ​ $243.6 ​ ​ ​ $181.7 ​ Our reported net interest expense totaled $296.7 million, $243.6 million and $218.3 million during 2023, 2022 and 2021, respectively. ​ We incurred $33.1 million ($29.0 million after tax) or $0.10 per diluted share of interest expense special charges in conjunction with our debt issuances and refinancing activities during 2021. ​ Adjusted for special (gains) and charges, the increase in interest expense when comparing 2023 against 2022 was driven primarily by the higher average interest rates on outstanding debt.
Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions to be made about matters that are highly uncertain at the time the accounting estimate is made, and (2) different estimates that we reasonably could have used for the accounting estimate in the current period, 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. ​ In March 2020, COVID-19 was declared a pandemic by the World Health Organization.
Estimates are considered to be critical if they meet both of the following criteria: (1) the estimate requires assumptions to be made about matters that are highly uncertain at the time the accounting estimate is made, and (2) different estimates that we reasonably could have used for the accounting estimate in the current period, 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. ​ Besides estimates that meet the “critical” estimate criteria, we make many other accounting estimates in preparing our financial statements and related disclosures.
The decrease primarily reflected increased pricing and higher volumes which were more than offset by significantly higher delivered product costs and supply constraints. ​ Selling, General and Administrative Expenses (“SG&A”) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (percent) 2022 ​ 2021 ​ 2020 SG&A Ratio 25.8 % ​ 26.8 % ​ 28.1 % ​ The decreased SG&A ratio (SG&A expenses as a percentage of reported net sales) comparing 2022 against 2021 was driven primarily by strong productivity including cost savings initiatives, partially offset by higher cost of compensation compared to last year.
The decrease primarily reflected accelerating pricing that was more than offset by higher delivered product cost and unfavorable mix. ​ 31 Table of Contents Selling, General and Administrative Expenses (“SG&A”) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (percent) 2023 ​ 2022 ​ 2021 SG&A Ratio 26.5 % ​ 25.8 % ​ 26.8 % ​ The increased SG&A ratio (SG&A expenses as a percentage of reported net sales) comparing 2023 against 2022 was driven by higher incentive compensation compared to last year which was partially offset by strong productivity including cost savings initiatives.
Adjusted for special (gains) and charges and the 2021 Purolite transaction, the decrease in interest expense when comparing 2021 against 2020 was driven primarily by a reduction in average debt levels and average interest rates. ​ Provision for Income Taxes ​ The following table provides a summary of our tax rate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (percent) 2022 ​ 2021 2020 Reported GAAP tax rate ​ 17.5 % ​ 19.1 % ​ 15.2 % Tax rate impact of: ​ ​ ​ ​ ​ ​ ​ ​ ​ Special (gains) and charges 0.5 ​ ​ 0.1 0.7 Discrete tax items ​ 0.7 ​ ​ (0.3) ​ ​ 3.8 ​ Non-GAAP adjusted tax rate 18.7 % ​ 18.9 % 19.7 % ​ Our reported tax rate was 17.5%, 19.1%, and 15.2%, for 2022, 2021 and 2020, respectively.
Adjusted for special (gains) and charges, the increase in interest expense when comparing 2022 against 2021 was driven primarily by the interest on debt issued to fund the Purolite acquisition and the impact from higher average interest rates on floating rate debt. ​ Provision for Income Taxes ​ The following table provides a summary of our tax rate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (percent) 2023 ​ 2022 2021 Reported GAAP tax rate ​ 20.6 % ​ 17.5 % ​ 19.1 % Tax rate impact of: ​ ​ ​ ​ ​ ​ ​ ​ ​ Special (gains) and charges (0.1) ​ ​ 0.5 0.1 Discrete tax items ​ (0.6) ​ ​ 0.7 ​ ​ (0.3) ​ Non-GAAP adjusted tax rate 19.9 % ​ 18.7 % 18.9 % ​ Our reported tax rate was 20.6%, 17.5%, and 19.1%, for 2023, 2022 and 2021, respectively.
The decreased SG&A ratio (SG&A expenses as a percentage of reported net sales) comparing 2021 against 2020 was driven primarily by higher net sales, cost savings initiatives and reduction in bad debt, partially offset by higher variable compensation compared to last year. ​ Special (Gains) and Charges ​ Special (gains) and charges reported on the Consolidated Statements of Income included the following items: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2022 ​ 2021 ​ 2020 Cost of sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restructuring activities ​ $21.4 ​ ​ $24.7 ​ ​ ​ $7.4 ​ Acquisition and integration activities ​ ​ 25.0 ​ ​ ​ 4.2 ​ ​ ​ 3.9 ​ COVID-19 activities, net ​ ​ 16.3 ​ ​ ​ 64.7 ​ ​ ​ 12.5 ​ Russia/Ukraine ​ ​ 7.2 ​ ​ ​ - ​ ​ ​ - ​ Other ​ ​ - ​ ​ ​ 0.3 ​ ​ ​ 24.4 ​ Cost of sales subtotal ​ 69.9 ​ ​ 93.9 ​ 48.2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Special (gains) and charges ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restructuring activities ​ 85.8 ​ ​ 11.9 ​ ​ ​ 71.4 ​ Acquisition and integration activities ​ ​ 14.5 ​ ​ ​ 29.9 ​ ​ ​ 8.5 ​ Disposal and impairment activities ​ ​ - ​ ​ ​ - ​ ​ ​ 41.4 ​ COVID-19 activities, net ​ ​ 10.2 ​ ​ ​ 42.4 ​ ​ ​ 23.6 ​ Russia/Ukraine ​ ​ 5.9 ​ ​ ​ - ​ ​ ​ - ​ Other ​ 24.1 ​ ​ 18.4 ​ ​ ​ 34.7 ​ Special (gains) and charges subtotal ​ 140.5 ​ ​ 102.6 ​ 179.6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income subtotal ​ ​ 210.4 ​ ​ ​ 196.5 ​ ​ ​ 227.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income) expense ​ ​ 50.6 ​ ​ ​ 37.2 ​ ​ ​ 0.4 ​ Interest expense, net ​ ​ - ​ ​ ​ 33.1 ​ ​ ​ 83.8 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total special (gains) and charges ​ ​ $261.0 ​ ​ ​ $266.8 ​ ​ ​ $312.0 ​ ​ For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with our internal management reporting. ​ Restructuring Activities ​ Restructuring activities are primarily related to the Europe Program, Institutional Advancement Program, Accelerate 2020 and other immaterial restructuring programs which are described below.
The decreased SG&A ratio (SG&A expenses as a percentage of reported net sales) comparing 2022 against 2021 was driven primarily by strong productivity including cost savings initiatives, partially offset by higher cost of compensation compared to last year. ​ Special (Gains) and Charges ​ Special (gains) and charges reported on the Consolidated Statements of Income included the following items: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 ​ 2022 ​ 2021 Cost of sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restructuring activities ​ $22.5 ​ ​ $21.4 ​ ​ ​ $24.7 ​ Acquisition and integration activities ​ ​ - ​ ​ ​ 25.0 ​ ​ ​ 4.2 ​ Russia/Ukraine ​ ​ - ​ ​ ​ 7.2 ​ ​ ​ - ​ Other ​ ​ - ​ ​ ​ 16.3 ​ ​ ​ 65.0 ​ Cost of sales subtotal ​ 22.5 ​ ​ 69.9 ​ 93.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Special (gains) and charges ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restructuring activities ​ 63.2 ​ ​ 85.8 ​ ​ ​ 11.9 ​ Acquisition and integration activities ​ ​ 16.1 ​ ​ ​ 14.5 ​ ​ ​ 29.9 ​ Russia/Ukraine ​ ​ 1.4 ​ ​ ​ 5.9 ​ ​ ​ - ​ Other ​ 30.7 ​ ​ 34.3 ​ ​ ​ 60.8 ​ Special (gains) and charges subtotal ​ 111.4 ​ ​ 140.5 ​ 102.6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income subtotal ​ ​ 133.9 ​ ​ ​ 210.4 ​ ​ ​ 196.5 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (income) expense ​ ​ - ​ ​ ​ 50.6 ​ ​ ​ 37.2 ​ Interest expense, net ​ ​ - ​ ​ ​ - ​ ​ ​ 33.1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total special (gains) and charges ​ ​ $133.9 ​ ​ ​ $261.0 ​ ​ ​ $266.8 ​ ​ For segment reporting purposes, special (gains) and charges are not allocated to reportable segments, which is consistent with our internal management reporting. ​ Restructuring Activities ​ Restructuring activities are primarily related to the Combined Program which is described below.
Our retention rate of significant customers has aligned with our acquisition assumptions, including the customer bases acquired from our Nalco, Anios, CID Lines and Purolite transactions, which make up the majority of our unamortized customer relationships.
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”) and Purolite transactions, which make up the majority of our unamortized customer relationships.
Financing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2022 ​ 2021 2020 2022 2021 Cash provided by (used for) financing activities ​ ​ ($837.3) ​ ​ ​ $1,603.2 ​ ​ ​ ($340.2) ​ ​ ​ ($2,440.5) ​ ​ ​ $1,943.4 ​ ​ Our cash flows from financing activities primarily reflect the issuances and repayment of debt, common stock repurchases, proceeds from common stock issuances related to our equity incentive programs and dividend payments. ​ We issued $500 million par value and received $494 million in proceeds of long-term debt.
Financing Activities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) 2023 ​ 2022 2021 2023 2022 Cash provided by (used for) financing activities ​ ​ ($1,054.7) ​ ​ ​ ($837.3) ​ ​ ​ $1,603.2 ​ ​ ​ ($217.4) ​ ​ ​ ($2,440.5) ​ ​ Our cash flows from financing activities primarily reflect the issuances and repayment of debt, common stock repurchases, proceeds from common stock issuances related to our equity incentive programs and dividend payments. ​ There were no long-term debt issuances in 2023.
Our gross profit increased as our strong pricing exceeded substantial delivered product cost inflation. ​ Operating Income ​ Reported operating income remained stable at $1.6 billion in 2022, compared to $1.6 billion in 2021.
Our gross profit increased as our strong pricing exceeded delivered product cost inflation. ​ Operating Income ​ Reported operating income increased 28% to $2.0 billion in 2023, compared to $1.6 billion in 2022.
The remaining discrete tax expense of $9.8 million was primarily related to the filing of federal, state, and foreign tax returns and other income tax adjustments including the impact of changes in tax law, audit settlements and other changes in estimates. ​ We recognized a total net benefit related to discrete tax items of $55.8 million during 2020.
The net discrete tax expense was primarily related to the filing of federal, state and foreign tax returns and other income tax adjustments including the impact of changes in tax laws, audit settlements, share-based compensation excess tax benefits and other changes in estimates. ​ We recognized a net tax benefit related to discrete tax items of $11.8 million during 2022.
As part of the separation of the ChampionX business, we also entered into a Master Cross Supply and Product Transfer agreement with ChampionX to provide, receive or transfer certain products for a period up to 36 months.
As part of the separation of ChampionX in 2020, we entered into a Master Cross Supply and Product Transfer agreement with ChampionX to provide, receive or transfer certain products for a period up to 36 months and for a small set of products with limited suppliers over the next few years.
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. ​ ​ ​ ​ ​ 34 Table of Contents Europe Program ​ In November 2022 we approved a Europe Program (the “Europe Program”) targeting $80 million of annualized pre-tax savings after completion of the program.
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. ​ Combined Program ​ In November 2022, we approved a Europe cost savings program.
The majority of the pretax charges represent net cash expenditures which are expected to be paid over a period of a few months to several quarters which continue to be funded from operating activities. ​ The Accelerate 2020 Plan has delivered $315 million of cumulative cost savings. ​ Other Restructuring Activities ​ During 2022, we incurred restructuring charges of $23.8 million ($17.9 million after tax), or $0.06 per diluted share, related to other immaterial restructuring activity.
The remaining liability is expected to be paid over a period of a few months to several quarters which continue to be funded from operating activities. ​ The A2020 Plan has delivered $315 million of annual cost savings. ​ Other Restructuring Activities ​ During 2022 and 2021, we incurred restructuring charges of $23.8 million ($17.9 million after tax), or $0.06 per diluted share and $18.7 million ($17.0 million after tax), or $0.06 per diluted share, respectively, related to other immaterial restructuring activity.
In December 2022 we increased our quarterly cash dividend by 4% to $0.53 per share, representing our 31st consecutive annual dividend rate increase. We have paid cash dividends on our common shares for 86 consecutive years.
In December 2023 we increased our quarterly cash dividend by 8% to $0.57 per share, representing our 32 nd consecutive annual dividend rate increase. We have paid cash dividends on our common shares for 87 consecutive years.

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