ECOLAB INC. Segments Disclosure

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18. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

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The Company’s organizational structure consists of global business units and market-based leadership teams. The Company’s seven operating segments follow its commercial and product-based activities and are based on engagement in business activities, availability of discrete financial information and review of operating results by the Chief Operating Decision Maker (“CODM”) at the identified operating segment level. The CODM is the Company’s Chief Executive Officer.

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The Company’s operating segments that share similar economic characteristics and future prospects, nature of the products and production processes, end-use markets, channels of distribution and regulatory environment have been aggregated into four reportable segments: Global Water, Global Institutional & Specialty, Global Pest Elimination and Global Life Sciences

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The Company’s operating segments are aggregated as follows:

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Global Water

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Includes the Light & Heavy, 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. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics.

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Global Institutional & Specialty

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Includes the Institutional and Specialty operating segments, which provide specialized cleaning and sanitizing products to the foodservice, healthcare, hospitality, lodging, government, education and retail industries. The underlying operating segments exhibit similar manufacturing processes, distribution methods and economic characteristics.

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Global Pest Elimination

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Includes the Pest Elimination operating segment which provides services 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. No other operating segments are aggregated into the Global Pest Elimination reportable segment.

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Global Life Sciences

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Includes the Life Sciences operating segment which provides end-to-end cleaning and contamination control solutions to pharmaceutical and personal care manufacturers. No other operating segments are aggregated into the Global Life Sciences reportable segment.

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Corporate

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Consistent with the Company’s internal management reporting, Corporate amounts in the table below include sales to ChampionX under the transitional supply agreement entered into as part of the ChampionX Separation. Corporate also includes intangible asset amortization specifically from the Nalco, Purolite and Ovivo Electronics acquisitions and special (gains) and charges, as discussed in Note 3, “Special (Gains) and Charges,” that are not allocated to the Company’s reportable segments.

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Comparability of Reportable Segments

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Effective January 1, 2025, the Company’s former Global Industrial reportable segment was renamed Global Water and includes the Light & Heavy (previously named Water), Food & Beverage, and Paper operating segments. The Global Institutional & Specialty reportable segment continues to include the Institutional and Specialty operating segments. The Company’s former healthcare operating segment moved into the Institutional operating segment. Global Life Sciences was elevated to a standalone reportable segment. The Global Pest Elimination segment remains a standalone reportable segment. The Company made other immaterial changes, including the movement of certain customers and cost allocations between reportable segments. These changes are presented in the "Other" column of the tables below. Prior period amounts have been recast to conform with current period presentation.

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The Company evaluates the performance of its non-U.S. dollar functional currency international operations based on fixed currency exchange rates, which eliminates the impact of exchange rate fluctuations on its international operations. Fixed currency amounts are updated annually at the beginning of each year based on translation into U.S. dollars at foreign currency exchange rates established by management, with all periods presented using such rates. The “Fixed Currency Rate Change” column shown in the following table reflects international operations at fixed currency exchange rates established by management at the beginning of 2025, rather than the 2024 established rates. The difference between the fixed currency exchange rates and the actual currency exchange rates is reported within the “Effect of foreign currency translation” row in the following table.

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The impact of the preceding changes on previously reported full year 2024 and 2023 reportable segment information is summarized as follows:

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Reportable Segment Information

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The Company has determined its significant segment expenses are cost of sales (“COS”) and selling, general and administrative expenses (“SG&A”), which are regularly provided to the CODM at fixed currency exchange rates. Financial information for each of the Company’s reportable segments were as follows:

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The profitability of the Company’s operating segments is evaluated by management based on operating income. On a monthly basis, the CODM primarily reviews variances in operating income compared to last year and forecast to assess segment performance, including to determine operational targets, make strategic decisions for the organization, and allocate capital and resources to the segments. Segment operating income is also used in determining the compensation of certain employees.

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Consistent with the Company’s internal management reporting, Corporate amounts in the table above include sales to ChampionX in accordance with the transitional supply agreement entered into with the Transaction, as discussed in Note 17, “Revenues.” Corporate also includes intangible asset amortization specifically from the Nalco, Purolite and Ovivo Electronics acquisitions and special (gains) and charges, as discussed in Note 3, “Special (Gains) and Charges,” that are not allocated to the Company’s reportable segments.

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The Company has an integrated supply chain function that serves all of its reportable segments. As such, asset and capital expenditure information by reportable segment has not been provided and is not available, since the Company does not produce or utilize such information internally. In addition, although depreciation and amortization expense is a component of each reportable segment’s operating results, it is not discretely identifiable.

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Geographic Information

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Long-lived assets, which includes property, plant and equipment and right of use assets, at public exchange rates by geographic region were as follows:

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Geographic data for long-lived assets is based on physical location of those assets. Refer to Note 17, “Revenues,” for net sales by geographic region.