1
Minnesota Chamber
of Commerce
Annual Meeting
DOUG BAKER,
CHAIRMAN AND CEO
October 3, 2013
What I’d Like to do Today
Introduce you to Ecolab
Share how we look at our business
Look at Minnesota through our lens
2
Ecolab By the Numbers
3
ASSOCIATES
SERVING CUSTOMERS IN
171 COUNTRIES
$30 Billion
Market Cap
6,300 Patents
$13 BILLION ANN...
90 Years Young
4
Ecolab Timeline
5
1923:
Ecolab Founded
1935:
Service Tradition Begins
1957:
Ecolab Goes Public
1987:
Ecolab Leaves
Consume...
Macro Trends
Aging Population
Water Shortage
Energy Demand
Nature
Increasing middle
class globally
Technology
 Aging popu...
Ecolab: Uniquely Positioned To Deliver
What Matters Most…
CLEAN
WATER
SAFE
FOOD
ABUNDANT
ENERGY
HEALTHY
ENVIRONMENTS
Ecolab Model Drives Value
8
Shared Operating Principles
Shared Model
Shared Technology
Foodservice/
Hospitality
Food & Bev...
Ecolab Business Model
INDUSTRY LEADER IN PRODUCT INNOVATION AND
SERVICE EXPERTISE
Ecolab’s core capabilities that drive va...
Innovation Leader
 Major R&D investment
 Anchor Technologies
Drive Customer Decisions
 Food Safety
 Infection Preventi...
 Leverage 3DTRASAR
Technology
 Extend Solids Franchise
 New Antimicrobial Solutions
Innovation Drives Margin &
Competit...
12
Ultimate Competitive Advantage
12,000
15,000
18,000
21,000
24,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201...
Balanced Business,
Big Opportunity
13
34%
17%22%
27%
48%
26%
13%
8%
5%
31%
27%
6%
36%
14
Balanced Business
Sales by Region Sales by Segment
Asia Pacific
Canada
...
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Strong Competitive Position
ECOLAB SHARE $13 BILLION
Ecolab Others
$100 BIL...
16
Major Opportunities in Existing Markets
ESTIMATES BY MARKET
Ecolab Sales Remaining Market
$ MILLIONS
SEGMENT
$0 $5,000 ...
Proven Strategy
17
18
Outstanding Global Customer Relationships
Customers % of Sales
Largest <2%
Top 10 <10%
1,000,000+ CUSTOMERS
Proven Effective Strategy
CIRCLE THE CUSTOMER - CIRCLE THE GLOBE
19
Provide
customers
improved control
over results, costs...
Strong Culture
20
Culture
 Service
We win when customers win
We get things done
 Caring
Ida C. Koran Foundation
Community: internal, e...
$0
$500
$1,000
$1,500
$2,000
$2,500
2008 2009 2010 2011 2012
Financial Objectives
Growth
 15% EPS growth
Returns
 Improv...
History of Performance
23
2424
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Strong, Consistent Growth
...
Delivering on Expectations
Forecast Actual
PREDICTABLE QUARTERLY EPS
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80...
Performance that Outperforms the S&P 500
ECOLAB COMMON STOCK VS. S&P 500 SINCE
52 Years: Total Return Through 12/31/2012, ...
27
Financial Formula
Ecolab Success Formula
28
29
Minnesota by the Numbers
30
5.1%
$38.4 Billion
Biennial Budget
(2014-2015)$253Billion
GDP
3.5%
GDP Growth (2012)
Unemploym...
Minnesota by the Numbers
Education
#2 high school graduates
#1 ACT Scores
#11 bachelor’s degree or
higher
Health
#1 Least ...
Minnesota by the Numbers
Generosity
#1 Philanthropy per capita
#1 Volunteering (Twin Cities)
#1 Most civically engaged
met...
Minnesota by the Numbers
#1 Business-to-Business Tax on warehouse
and storage services
#3 Corporate Tax Rate
#4 Personal I...
Minnesota by the Numbers
#46 for new business startups
#45 for business tax climate
#42 in highway rankings
#39 in attract...
Growing Spending Imbalance
35
24
29
$10
$15
$20
$25
$30
2010 2015 2020 2025
Revenue Growth @ 3% Spending Growth @ 4.7% 5%
...
Minnesota by the Numbers
36
#50 Hispanic students graduation rate (51%)
#49 Black students graduation rate (49%)
#49 Asian...
Minnesota Success Formula
37
Minnesota Success Formula
38
Minnesota Strategies
39
World-class talent
Great infrastructure/ amenities
Sustainable growth culture
Minnesota Priorities
1. Tackle educational challenges – must remain #1
2. Invest in infrastructure for the future
3. Restr...
“The future destiny of
Minnesota is to be
a glorious one.”
Girart Hewitt, St. Paul Attorney
and Author, Minnesota:
Its Adv...
4242
Cleaner Safer Healthier
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Minnesota Chamber Business Conference & Annual Meeting, keynote speaker, Doug Baker, chairman and CEO of Ecolab

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Doug Baker, prominent chairman and CEO of Ecolab, shares the story of Ecolab and a provides a formula for Minnesota to achieve a successful environment for Businesses to thrive.

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Minnesota Chamber Business Conference & Annual Meeting, keynote speaker, Doug Baker, chairman and CEO of Ecolab

  1. 1. 1 Minnesota Chamber of Commerce Annual Meeting DOUG BAKER, CHAIRMAN AND CEO October 3, 2013
  2. 2. What I’d Like to do Today Introduce you to Ecolab Share how we look at our business Look at Minnesota through our lens 2
  3. 3. Ecolab By the Numbers 3 ASSOCIATES SERVING CUSTOMERS IN 171 COUNTRIES $30 Billion Market Cap 6,300 Patents $13 BILLION ANNUAL SALES 44,000 1.3 MILLION CUSTOMERS
  4. 4. 90 Years Young 4
  5. 5. Ecolab Timeline 5 1923: Ecolab Founded 1935: Service Tradition Begins 1957: Ecolab Goes Public 1987: Ecolab Leaves Consumer Market 1991: Ecolab forms Strategic Alliance with Henkel KGaA 2011-2013: Ecolab Acquires Nalco and Champion
  6. 6. Macro Trends Aging Population Water Shortage Energy Demand Nature Increasing middle class globally Technology  Aging population in EMEA, Japan, and China will drive healthcare  Meal prep away from home continues in emerging markets driving foodservice growth  Food production accounts for nearly 75% of water consumption  Demand for energy requires more geographically and technically challenging sources, which are more difficult to reach and treat as well as more water intensive  Water scarcity is expected to be a dominant issue, particularly in high growth emerging market economies  Evolution presents new food safety and infection challenges  Science & technology enables broader set of product and process improvements Population Growth Diet Shifts  More people: +50% by 2050. Most growth in emerging markets  Diets move from grains to proteins in emerging markets  Population growth plus diet shift means 75-100% more calories needed to feed the world
  7. 7. Ecolab: Uniquely Positioned To Deliver What Matters Most… CLEAN WATER SAFE FOOD ABUNDANT ENERGY HEALTHY ENVIRONMENTS
  8. 8. Ecolab Model Drives Value 8 Shared Operating Principles Shared Model Shared Technology Foodservice/ Hospitality Food & Beverage Processing Healthcare/ Infection Prevention Industrial Water Services Energy Services >90% Product Sales, >90% Recurring Revenue
  9. 9. Ecolab Business Model INDUSTRY LEADER IN PRODUCT INNOVATION AND SERVICE EXPERTISE Ecolab’s core capabilities that drive value: ServiceTechnology Training Information 9
  10. 10. Innovation Leader  Major R&D investment  Anchor Technologies Drive Customer Decisions  Food Safety  Infection Prevention  Energy  Water Sustainability  Cost Savings and Sustainability BEST IN CLASS SOLUTIONS FOR CUSTOMER NEEDS 10 $0 $200 $400 $600 $800 $1,000 2008 2009 2010 2011 2012 2013 New/Modified Products As % Of Total Sales >30% Each Year Innovation Pipeline (Estimated 5th year new product sales) * *excludes Champion ($mlns) Apex 2 Low Temperature Corrosion Inhibitors Encor for Operating Room
  11. 11.  Leverage 3DTRASAR Technology  Extend Solids Franchise  New Antimicrobial Solutions Innovation Drives Margin & Competitive Advantage 11 enVision 2013: CROSS-FERTILIZE ECOLAB, NALCO AND CHAMPION TECHNOLOGIES 3D TRASAR Apex 2 Solids for Cooling Water Aquanomic
  12. 12. 12 Ultimate Competitive Advantage 12,000 15,000 18,000 21,000 24,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 “Ecolab is among the top ten best U.S. manufacturing companies to sell for.” Selling Power Magazine INDUSTRY-LEADING SALES AND SERVICE FORCE 25,000 Field Associates Experience That Matters  30% > 10 years  40% > 8 years SALES AND SERVICE FORCE Combined Ecolab and Nalco
  13. 13. Balanced Business, Big Opportunity 13
  14. 14. 34% 17%22% 27% 48% 26% 13% 8% 5% 31% 27% 6% 36% 14 Balanced Business Sales by Region Sales by Segment Asia Pacific Canada US EMEA Latin America Abundant Energy Safe Food Healthier Environments Clean Water Institutional Industrial Energy Other Sales by Strategy Ecolab Pro Forma 2012 Sales $13B
  15. 15. $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Strong Competitive Position ECOLAB SHARE $13 BILLION Ecolab Others $100 BILLION MARKET 13% 15 ($ mlns.)
  16. 16. 16 Major Opportunities in Existing Markets ESTIMATES BY MARKET Ecolab Sales Remaining Market $ MILLIONS SEGMENT $0 $5,000 $10,000 $15,000 $20,000 Janitorial Food Retail Ed./Government Other Lodging Light Industry Health Care Paper Heavy Industry/Mining Food & Beverage Energy Food Service
  17. 17. Proven Strategy 17
  18. 18. 18 Outstanding Global Customer Relationships Customers % of Sales Largest <2% Top 10 <10% 1,000,000+ CUSTOMERS
  19. 19. Proven Effective Strategy CIRCLE THE CUSTOMER - CIRCLE THE GLOBE 19 Provide customers improved control over results, costs and quality Leverage strong Ecolab relationships to drive improved growth Increasing the solutions and services to better meet our customers’ global needs
  20. 20. Strong Culture 20
  21. 21. Culture  Service We win when customers win We get things done  Caring Ida C. Koran Foundation Community: internal, external  Performance Strive to be the best Aggressive objectives
  22. 22. $0 $500 $1,000 $1,500 $2,000 $2,500 2008 2009 2010 2011 2012 Financial Objectives Growth  15% EPS growth Returns  Improve ROIC 100 bp per year Leverage  Return to A range metrics by year-end 2015  Total debt-to-capital ratio in the 35% - 40% range  < 2.0x total debt/EBITDA 22 $1.50 $2.00 $2.50 $3.00 2008 2009 2010 2011 2012 STRONG GROWTH, PRUDENT FINANCIAL MANAGEMENT EPS (adjusted) EBITDA (adjusted, $ - mlns) 2012 EPS and adjusted EBITDA data reflect Nalco merger
  23. 23. History of Performance 23
  24. 24. 2424 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Strong, Consistent Growth $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012 Sales and EPS data include Nalco merger EPS CAGR Adjusted EPS Ecolab S&P 500 (Operating Earnings) 13% 12% 8% 4% 0% 5% 10% 15% 10year 5year SALES ($ mlns.) EPS (adjusted)
  25. 25. Delivering on Expectations Forecast Actual PREDICTABLE QUARTERLY EPS $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 ACTUAL > ECOLAB FORECAST 85 OF 86 QUARTERS (EXCEPTION = 3Q 2001) 25 Adjusted EPS.
  26. 26. Performance that Outperforms the S&P 500 ECOLAB COMMON STOCK VS. S&P 500 SINCE 52 Years: Total Return Through 12/31/2012, Including Dividends Cumulative Return: 201,484% vs. S&P 500: 189,142% - 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 ECL S&P 500
  27. 27. 27 Financial Formula
  28. 28. Ecolab Success Formula 28
  29. 29. 29
  30. 30. Minnesota by the Numbers 30 5.1% $38.4 Billion Biennial Budget (2014-2015)$253Billion GDP 3.5% GDP Growth (2012) Unemployment
  31. 31. Minnesota by the Numbers Education #2 high school graduates #1 ACT Scores #11 bachelor’s degree or higher Health #1 Least stressful metro #1 Health care system #3 Most people with health insurance #5 Healthiest state Economics #3 Labor force participation #9 Invention patents (2008- 2012) #2 Fortune 500 per capita #13 GDP per capita 31
  32. 32. Minnesota by the Numbers Generosity #1 Philanthropy per capita #1 Volunteering (Twin Cities) #1 Most civically engaged metro #3 United Way campaign (Twin Cities) Quality of Life #3 Quality of Life #5 Standard of living Lifestyle #1 Most “playful” metro #1 Golfers per capita #1 Bike-friendly metro #1 Metro for health and fitness #2 Theater seats per capita #7 “Most happening” rock scene 32
  33. 33. Minnesota by the Numbers #1 Business-to-Business Tax on warehouse and storage services #3 Corporate Tax Rate #4 Personal Income tax top rate #5 Business property tax rate (commercial business property in Minneapolis over $1 million) 33
  34. 34. Minnesota by the Numbers #46 for new business startups #45 for business tax climate #42 in highway rankings #39 in attracting young talent to the metro 34
  35. 35. Growing Spending Imbalance 35 24 29 $10 $15 $20 $25 $30 2010 2015 2020 2025 Revenue Growth @ 3% Spending Growth @ 4.7% 5% 3%
  36. 36. Minnesota by the Numbers 36 #50 Hispanic students graduation rate (51%) #49 Black students graduation rate (49%) #49 Asian/Pacific students graduation rate (72%) #48 Low-income students graduation rate (58%) #29 White students graduation rate (84%)
  37. 37. Minnesota Success Formula 37
  38. 38. Minnesota Success Formula 38
  39. 39. Minnesota Strategies 39 World-class talent Great infrastructure/ amenities Sustainable growth culture
  40. 40. Minnesota Priorities 1. Tackle educational challenges – must remain #1 2. Invest in infrastructure for the future 3. Restructure Health & Human Services, bend the curve 4. Rebalance the tax code: Broaden consumer sales tax Reduce income tax Clean up business taxes – don’t punish those who HQ here 5. Change the conversation…growth, responsibility and unity 40
  41. 41. “The future destiny of Minnesota is to be a glorious one.” Girart Hewitt, St. Paul Attorney and Author, Minnesota: Its Advantages to Settlers,1868 41
  42. 42. 4242 Cleaner Safer Healthier
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