Ecolab (ECL -3.93%), a global leader in water, hygiene, and infection prevention solutions, reported its financial results for the second quarter of fiscal 2025 on July 29, 2025. The company delivered GAAP revenue of $4.03 billion, while adjusted diluted earnings per share increased 13% to $1.89, just below the $1.90 consensus. Operating income and operating margin also moved higher. Although overall growth was moderate, the quarter showed solid progress in key business areas, with margin expansion and improved profitability driven by value pricing and productivity improvements.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.89 | $1.90 | $1.68 | 13% |
| Revenue (GAAP) | $4.03 billion | $4.02 billion | $3.99 billion | 1% |
| Operating Income | $710 million | $657 million | 8% | |
| Net Income attributable to Ecolab | $524 million | $491 million | 7% | |
| Operating Margin | 17.6% | 16.5% | 1.1 pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Ecolab and its Strategic Focus
Ecolab provides technologies and services aimed at improving water efficiency, hygiene, and infection prevention. Its customers include food service providers, hospitals, manufacturers, and hotels around the world. The business is structured across major segments: Global Water, Global Institutional & Specialty, Global Life Sciences, and Global Pest Elimination.
The company's recent focus centers on sustainability, digital innovation, and operating leverage. Key success factors include value-based pricing, investments in new technologies like digital monitoring and advanced chemical solutions, and a strong global supply network. Diversification across industries helps the company weather slower demand in any one area. With an eye on helping customers reduce water and energy use, Ecolab leverages both its science-driven products and a global footprint to drive growth and fulfill regulatory and environmental requirements.
Quarter in Review: Segment Performance and Notable Developments
During the quarter, GAAP revenue came in modestly higher compared to the previous year and slightly exceeded expectations. Operating income increased 8%, supported by improved margins and productivity gains. The reported operating income margin of 17.6% reflected an improvement of 1.1 percentage points from Q2 2024, driven largely by a combination of higher pricing and cost efficiencies. According to the company, "value pricing and improved productivity more than offset growth-oriented investments in the business."
Looking at the segment results, Global Water saw sales of $1.91 billion and operating income of $306 million, up 2% and 6% from the same period last year. Growth was fueled by strength in Food & Beverage and High-Tech Water solutions, including proprietary technologies used in microelectronics and data center cooling. However, slower demand in paper and basic industries remains a headwind for this segment. Global Institutional & Specialty reported sales of $1.51 billion (GAAP), a decrease mainly due to prior-year divestitures, but achieved a 9% increase in operating income to $359 million. Organic sales, which adjust for currency swings and divestitures, grew 3%, reflecting solid performance in hospitality products and services.
In the Pest Elimination segment, sales increased 7% to $311 million, while operating income edged up 2% to $61 million (GAAP). The segment benefited from targeted acquisitions and ongoing investment in Pest Intelligence, a digital pest monitoring solution. Management sees the digital shift as key to future growth. Life Sciences posted a standout result, with sales up 4% to $176.7 million and operating income more than doubling to $34.8 million. This surge came as double-digit gains in bioprocessing and pharmaceutical products offset softness in water purification equipment, reflecting increased investment in innovation and efficiency.
The period also saw strong results in digital products. Ecolab Digital, which comprises cloud software and industrial monitoring hardware such as 3D TRASAR systems for water quality, reported 29% sales growth to $95 million. This product family adds recurring subscription revenue and supports customers’ operational performance and sustainability goals. Management highlighted digital as a multi-billion dollar opportunity in the years ahead, with over 100,000 connected devices already deployed.
On the expense side, supply chain costs and selective growth investments rose but were outweighed by productivity initiatives and pricing actions. The tax rate also moved up, with the adjusted effective rate reaching 20.8%, up from 19.5% last year, on a non-GAAP basis.
However, the company continues to expect special charges in the range of $0.25–$0.30 per share for the full year 2025.
Looking Ahead: Guidance and Investor Watchpoints
Management reaffirmed guidance for adjusted diluted earnings per share of $7.42–$7.62 in 2025, representing projected adjusted growth of 12–15% for the year. For the third quarter, the company forecasts adjusted diluted EPS of $2.02–$2.12, targeting an increase of 10–16% in adjusted diluted EPS from the prior year period. This guidance signals continued confidence in the company’s ability to drive margin expansion, new business wins, and pricing power, even in what it describes as an "unpredictable" operating environment.
Investors should continue to monitor several key trends. These include the ability to sustain margin growth, new wins in high-value digital and life sciences offerings, and the pace of organic sales growth. Cost headwinds from tariffs, inflation, and supply chain dynamics remain important risk factors. The company’s outlook for 2025 suggests further margin expansion, but as profitability gains currently outpace revenue growth, the focus will be on converting pricing actions into ongoing volume growth.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
