Greetings, and welcome to the Ecolab Second Quarter 2021 Earnings Release Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce to you your host, Mr.
Mike Monahan, Senior Vice President, External Relations. Thank you, sir. You may begin.
Thank you. Hello, everyone, and welcome to Ecolab's 2nd Along with our earnings release and the slides referencing the quarter's results are available on Ecolab's website at ecolab.com/investor. Please take a moment to read the cautionary statements in these materials, which state that this teleconference and the associated supplemental materials Include estimates of future performance. These are forward looking statements and actual results could differ materially from those projected. Factors that could cause actual results to differ are described under the Risk Factors section in our most recent Form 10 ks and in our posted materials.
We also refer you to the which more than offset increased delivered product costs and the slower pace of reopenings outside the U. S. We have implemented aggressive Pricing actions to offset increased overproduct costs, leveraging the strong product and service value we deliver to customers. When combined with our strong new business wins, we expect to once again successfully manage the current inflation challenges And uneven global economic recovery to deliver a very strong sales and earnings growth in 2021. Our position as leader in food safety, clean water and healthy environments has become even more important in the last 18 months.
We believe this position along with our strong long term growth opportunities remain robust, driven by our huge remaining market opportunity, Our leading global market positions are focused on providing our strong customer base with improved results while lowering their water, energy and other operating costs And through that, our ability to help them meet their growing ESG ambitions. We believe that these sustainable long term business will continue to yield superior long term performance for Ecolab and our investors. And now here's Christophe Beck with his comments.
Thank you so much, Mike, and thanks to all of you for joining us today. As expected, Q2 was indeed a very strong Quarter for our company. Acquisition adjusted sales rose 12% driven by the U. S. And China with the reopening of Europe and the rest The world expected to follow progressively.
Adjusted earnings per share ended up a strong 88% over last U. S. Institutional sales more than doubled in the Q2 versus the same quarter in 2020, clearly outperforming the industry. The number of restaurants we serve as well as the number of solutions they buy from us ended up almost back to 2019 levels and are growing fast. Both are strong signs of how much business we've gained during the pandemic and the growth potential we have as markets reopen.
Industrial accelerated to 3% in Q2 driven by strong business strong new business generated during the pandemic and accelerated pricing. Water sales were up 7% with slight industries up 12%, driven by strong momentum in new segments like data centers, Which by the way grew 53% in the quarter. Paper was up 10%, driven by strong demand for our innovative solutions in board and packaging, Well, food and beverage kept improving. Downstream remained a big challenge in the quarter as it repositioned itself from a focus on operational efficiency Toward new promising sustainability offerings. Healthcare and Life Sciences also had very strong and consistent underlying sales growth in Q2 With mid single and double digit growth respectively.
Reported sales were only down as they respectively compared to exceptional growth of 13% And 53% in 2020, largely driven by unusual high demand and one timers during the pandemic. And finally, The other segments grew 23%, driven by continued strength of test elimination, which was up 21% in the quarter, benefiting from further market reopening and very strong new business. On the margin front, things progressed very well too With overall margins improving 4 20 basis points. Beyond the U. S.
Institutional recovery, our continued progress benefited from accelerated investment made in digital technology during the pandemic, as well as overall pricing that accelerated to 2% in the Q2. With this backdrop and for the full year, we remain confident of our ability to deliver adjusted earnings that are better than 2019, Excluding the Texas race. How much better is the only question considering the delta variant, the timing of your opening in Europe and in the rest of the world, As well as the speed and amplitude of the rise of inflation. More broadly, our longer term outlook has never been stronger. Our new business and innovation pipelines are at record levels.
Our new growth engines like life sciences, healthcare, High-tech and data centers are all very well positioned to drive incremental growth. And our digital capabilities continue to increase customer value, Field productivity and customer experience. Our main focus right now will be to leverage this positive pricing environment to protect And strengthen our margins and do so while further enhancing value for our customers. This is something we've accomplished many times in the past and expect to We accomplished once again. Therefore, we've now embarked on a 3rd round of price increases, which will progressively cover the new rapid rise of input costs We've seen in Q2 with the biggest impact to be seen in Q4 when we expect pricing to reach 4%.
Overall, we feel good about our ability to deliver the second half of twenty twenty one, even if the pacing between the next two quarters will be Slightly different than initially anticipated. We now expect attractive sequential improvement in the 3rd quarter and a more significant one in the 4th as pricing actions will hit the P and L. And finally, global trends in people health like infection prevention and food safety, As well as Planet Health like water and carbon emissions are becoming front and center for every business leader. And there's no one position to help customers on both fronts Better than Ecolab, while helping them ensure strong and long term business sales. In other words, we're strengthening our global Position as the natural sustainability partner for our customers.
All this combined with a strengthened highly innovative portfolio, Strong business momentum, terrific new wins, accelerated pricing and unique digital capabilities should position us with great momentum for 2022
Thanks, Christophe. That concludes our formal remarks. As a final note before we begin Q and A, we
Thank you. We will now be conducting a question and answer session. We ask that you please limit yourself to one question and one brief follow-up question per caller, so that others will have a chance to participate. Your first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.
Good afternoon, Christophe. Thank you for taking my questions.
Thank you, Tim. Good afternoon.
Okay. So I want to focus on Raw materials and price, which probably doesn't surprise you. But in the face of raw material cost pressure, I think your typical formula is to increase price, to make up for the dollar amount in year 1 and then the margin in year 2. But in your So I was hoping you could clarify this language a little bit. If your price minus cost dynamic is currently positive, it sounds like you've already moved past Phase 1 and you're essentially already on Phase 2, which is working to rebuild the margin.
Am I reading into that statement incorrectly or is that how you would characterize it?
The general direction team is right. Actually, when I look at the first half of 2021, so I like a lot where pricing was compared to the input costs. We're usually good at that as well as to begin with. Now what has changed is that the indices as we've all seen, you've seen that as well. So during the Q2, so have changed for the much Higher for the second half.
And that has indicated we had to change our pricing plans quite significantly. It's been the 3rd time we've done it. So over the last 12 months, we've engaged those new plants as well with the whole team. We've indicated that as well to customers and progress is good. So we were ahead, market has Changed a little bit, which forced us to change our plans as well.
And I feel good Right now that we will be in a good place for the second half, both in terms of dollar and progressively improving the margin. And now to that point, It's going to impact mostly Q4, obviously, because it takes some time, obviously, to agree with customers to get to that new pricing. So we will see a better improvement in Q4 than what we have expected and a lower improvement in Q3 than what we had expected. But Overall, so for the second half, basically at the same place as what we had planned initially.
Okay, very clear. Thank you. And the announcement that you guys gave publicly in a press release, I think that was specifically related to the industrial segment. But presumably, you're also seeing cost pressures in institutional and healthcare as well. Are you implementing price increases across Those divisions as well or is this really a conversation about industrial primarily?
We are implementing price increases in Every business, every year, Tim, this is really a practice that we have Coached our teams and our customers for the many past years as well, really making sure it's not an event, but it's really Something that's happening every single year really driven by the value we create for our customers and not directly driven by the input cost, Which is one of the elements obviously of the discussion. So you're right, industrial itself takes the heaviest or biggest part Because of their cost structure, this is nothing new and they're really good at it. So the majority of the price increases is in industrial, but the other businesses Are moving up as well at the same time.
Understood. Thanks, Christophe.
Thank you, Tim.
Your next question comes from the line of Manav Patnaik with Barclays. Please proceed with your question.
Yes, thank you. I just had a broad question, which is, what do you need to see happen in Delta variant, I suppose.
Yes. Hi, Manav. Good question. So it's all related To the variant delta or D as it's called out there, as you know, if you look at the past 20 years, We've always delivered so within our guidance with the exception of 9.11, unfortunately, so 20 years ago. So for us, the level of assurance Uncertainty is very high.
And we focus on everything we can control, including questions of Price and inflation as we just discussed, the delta variant is something that is really unusual, hard to predict as well. So that's the only question mark that we have out there. The clearer things are going to become with vaccination rates, with how Government and countries are reacting as well out there. Well, it will bring us closer to us providing as well guidance. We will get back to that.
We like it. It's something that has been good for us and for investors as well at the same time. So we'll get back when time is right. But so far, I'd say if things do not change materially, our directional guidance remains true. And we will firm it up Soon as variant T becomes more clear.
Got it. And just maybe on the margin front, I mean, If pricing is ahead of cost and you've obviously learned a lot, I think, in terms of efficiency From the past 15 months or so, just curious if the incremental margins in the business, should we think of that as getting better and more of the same or any
Overall for the second half, it's going to be the same, but obviously so the input cost has changed Quite dramatically and the pricing has changed as well, so quite a bit. We had initially thought so for the full year that our input cost We'd increase kind of mid single digit. That was the initial plan. The way we look at it for the full year now, so it's closer to double digit Numbers, so quite a change. And we've changed pricing as well for that.
We're good at it as well. But let's keep in mind as well that in order to get The margins back to where they used to be, we need to double the pricing versus the input costs since we have a gross margin of 50%. So Easy math as such. So overall, good situation in terms of pricing versus input costs. 2nd half is going to deliver Similar improvement than what we had expected.
But as mentioned earlier, the pacing between Q3 and Q4 will be different just because we need Some time in order to get agreement with customers.
All right.
Thank you.
Thank you, Manav.
Your next question comes from the line of David Begleiter with Deutsche Bank. Please proceed with your question.
Thank you. Christophe, just again on price versus raws. In Q3, do you expect pricing to again exceed Input costs in this quarter?
Yes. The price will be ahead of the input cost. And as mentioned before, so our objective is not just to get there, but it's to get back to the margins in percent that We used to have and that takes a little bit more time, but so far things are going really well.
You mentioned again Q3 being below your Initial expectations with that catch up in Q4, how much lower is Q3 going to be below versus
This is hard to tell because it depends on agreement with customers And it's a question of weeks1 or 2 months. We do that very thoughtfully with our customers. So we're not a Commodity driven company, as you know, we are all driven by the value we create for our customers with whom we've had relationships for Decades. So we are very careful in how we do that, really in order to make sure that the year from now, Well, they still believe that we did it the right way, that it was good for them, while it was good for us as well. So it's all Timing depending for Q3.
That's why I'm directionally saying it's going to be a little bit pressured in Q3 and it's going to be better in Q4.
Very good. Thank you very much.
Thank you, David.
Your next question comes from the line of Ryan Connors with Boenning and Scattergood.
Hey, thanks for taking my question. My first one is just on you noted that the institutional results were actually not only up nicely year over year, but actually outpaced The end market, at least as you saw that, can you kind of give us some color around what metrics or quantitative metrics you have around making that Assertion and then talk about how sustainable that is going forward. Is that just a snapback in some specific markets you're in? Or do you think you can continue to outperform As institutional recovers.
I like where we are in the U. S, especially since it's where the recovery has Happened 1st or second after China, obviously, but the size is completely different. Maybe just to give you a few numbers as well in here, you look at The restaurant sales, so we're 9% down. So for us or 91% back to where they used which is a better way to look at it, 15% of the end units so have closed as well out there, so in the market. And the dining traffic, which means so in the dining room, so was down 37% as well in the second quarter.
So With us being 91% of where we were before, so it's much better than where the market is. And a second perspective is also We measure how many restaurants or hotels for that matter. So we serve and how many solutions they buy as well. And we are Back to the levels that we were in 2019, knowing that the traffic is not as high as it used to be. So when traffic is coming back As well, our growth is going to pick up further as well.
So I see that as a sustained development.
Okay. And then on the flip side, there was a lot to like in the report, but healthcare was a drag, which I mean, I guess we know that last year was the apex of the pandemic, but I was a little bit surprised to see that. Can you give us some dynamics around that? Is that sort of more virtual medicine that's driving that? And What's the outlook for that healthcare as we move into the recovery?
No, it's just a comparison. So versus Exceptional results last year driven by the pandemic. So we comparing saw 12% or 13% growth in healthcare in Q2 Of 2020, 53% growth in life science as well, so in Q2 driven as well, so by pharma demand And as well, infection prevention solutions as well in the pharma sector. What's important to me is really to look at the underlying growth. So when we strip out, So the unusual demand of 2020 and one timers, you see a healthcare, so in mid single digit, Which is better than where we used to be.
So this 2%, 3% in the past has moved, so closer to the 5% ish And Life Science as well, underlying is in the double digit territory, which is a very good, so kind of sustained growth as well going forward. So when you Creep out the noise basically, you get to this mid single and double digit growth for healthcare and life science respectively.
Got it. Thanks for your time.
Thank you.
Your next question comes
First question on margins, I wanted to ask a little differently. Obviously, institutional down from pre pandemic levels quite a bit along with the revenue and the volumes, but the other three segments all had 2nd quarter margins ahead of The Q2 of 2019. And I know you've had ongoing cost reduction efforts and there's a lot of Obviously with the input costs and the short term and everything else. But outside of institutional, which presumably will continue to see the margin recover with revenue, For the other three businesses, is the margin this quarter a reasonable number to use To think about moving forward other than maybe a little bit of raw material hit in Q3 and maybe you get that back In Q4 or are some of these that are still way above the 2019 margin, is there risk of some further give back to get A more normal go forward margin base for each of
the segments. Thank you.
All three segments are a bit in different places, But the headline is that the margin trends are a good indication overall of where we are and where we're heading. The most by the input costs, at least always the case of nothing unusual in here. They have also the biggest share in pricing and they're really good at it As well at the same time, so the different elements of cost and price are different, but ultimately so industrial is going Keep its development in gross margin and we expect the overall year to stay fairly close to where it used to be As well so last year. Healthcare and Life Science, it's as mentioned before, so we comparing to Very unusual, so growth numbers in Q2 as well last year. And if you strip that out, ultimately, so our margins have improved very nicely In 2020, and we expect as well in Healthcare Life Science, so to get quite close to where we were In terms of record margins in 2021.
And as you mentioned, so institutional is on its Fast to recover, as such, so it's maybe so the business where the margin we had in Q2, the improvement in Q2, So it was a bit overstated as such because we compare in 2020 as well with 2 special events. The first one was the bad Debt that we recorded for obvious reasons in Q2 during the beginning of the pandemic. And second, we foregone As well, so the lease payments for Dish Machine, so you compare to something that was lower as such. So it's going to change a little In Q3 and Q4, but overall for the company, good situation in margin and assuming that our assumption of this lease of Roles and pricing happen as planned, which I do ultimately, so margins should keep evolving as expected.
Great, thanks. And then a quick follow-up. You mentioned in the prepared remarks that you put out there refocus Mining away from coal and alumina, I think you've alluded to that in the past, but also I saw in downstream Some low margin refinery exits. Are these material or is this more just sort of coming out of pandemic trying To refocus the portfolio on the best opportunities, any color on those, if there's any other TJ sort of
Yes, Gary, it's mostly the latter. So it's really so refocusing the portfolio Towards the better opportunities, the mining point moving away from coal and refocusing towards Fertilizers, for instance, which are related to ag and to food is something that we started obviously, so way before The pandemic and it's working really well. So our exposure to coal has become minimal over the past few years and our exposure to the growth Segments has become much better as well. So risks are lower and growth potential are higher, Which is good. On the downstream side, it's a bit different.
Downstream, It's a bit of a tale of 2 stories in here. So you have Petrochem, kind of plastics, Which is an end market that's doing well. We've been growing for a long time. We are still growing right Now when we were growing during the pandemic, so this is an end market that we like and an end market that we want to further focus on And we're bringing new solutions as well, so to recycle better plastic, for instance, which is very traditional with our sustainable Solutions approach for this business. And then the last point is refining, which is an industry that is In a complete transformation, as we all know, they have to reduce their footprint in terms of carbon footprint as well in here.
And that's going to take a few years. So for us to get it right in the way that we had refineries 1st, so produce with a lower carbon footprint and very good pilot projects in there and help those companies as well We focus on renewable as well. So I like where we're going here, but that's going to take quite some time in order to get To a place where it sustained high level growth as well in refining. So that's the way I would express it.
Your next question comes from the line of John McNulty with BMO Capital Markets, please proceed with your question.
Yes, thanks for taking my question. So I guess maybe 2 quick ones. Just With regard to Europe and how you see the reopening or gradual reopening impacting businesses, can you give us a little bit of color or thoughts How to think about things sequentially from 2Q to 3Q and the pace of that reopening for both the institutional and the industrial segment?
Yes. So hi, John. The Europe reopening Happens up early Q3, let's put it that way as you've read as well in the newspaper, I had chance as well to spend a few weeks As well in Europe, so towards the end of June. And Europe was clearly closed until June, Then suddenly, we opened everything. So we've really seen a pickup in our institutional business.
So first and foremost, because Kind of went from 0 to kind of open. Obviously, that's quite a dramatic change and we've seen that in our numbers. So very encouraging trends In Institutions Europe and we see industrial, which was in a very different place. They were not closed, obviously, like restaurants and hotels, improving As well, so overall Europe doing okay so far And international overall as well, it's an interesting perspective as well to keep in mind, where last year international was kind of Flat, which means outside North America. So it was kind of flat for the whole company and we see it coming back to growth not only in Q2,
Or has it really just been a function of inflation and just getting that through in terms of pricing?
It's a great question. The market is tight out there. The Texas freeze made it harder, Obviously, so in February, for everyone out there, we're lucky enough to have a great procurement team, a Great supply chain team as well that could find alternative sourcing, that could reformulate product. So overall, it's been heavy lifting within the organization, but we've been able to supply our customers In a fairly continued manner during the Q2 and we see that's all improving as well in the quarters to come. So Bottom line, a lot of work, but a great team saw helping customers being supplied as they should.
Great. Thanks very much for the color.
Thank you, John.
Your next question comes from the line of John Roberts With UBS, please proceed with your question.
Thank you.
Labor is an issue for your institutional customers right now. Is your Lobster software or any of your other digital offerings enabling you to help your customers with their labor issues?
It does. Actually, we're expecting to have close to a 1000000 users with Lobster Inc. By the end of the year, which is driven by exactly what Saying those labor shortages in hotels and restaurants are creating new challenges for that industry. They need to train a lot of people coming into restaurants and hotels And that kind of solutions are definitely helpful. So that's the good side of the story.
And then could you talk about some of your other new Product offering, so many of the new products like fast acting hard surface cleaners had
a surge last year, but are you still penetrating new customers? Maybe talk about it in terms of Market penetration or customers that you're adding?
We are actually. When you think about it, Fact that we have as many restaurants buying as many solutions as pre pandemic today in a market which has seen Units are declining by 15% during that time is a direct outcome of 1st and foremost, Ecolab Sign certified, which is the circle the customer program since the customers had to buy all the solutions In order to be certified as such. So that's been a great story that's progressing very well. You've maybe seen that Mc Arnolds as well, for instance, has endorsed as well that program as well as the corporate companies. So great story here, Which has driven penetration of units and solutions are really good.
And you're right. So when we think about sanitizing products, We've refocused quite a bit over the last 18 months, partly driven by the pandemic as well. All the surface sanitizers that we brought on the market are doing really well, by the way, and we still see so double digit growth versus What we had so pre pandemic, which is a good sign and we will keep innovating as well in that field like with disinfecting wipes, For instance as well, so we've acquired 2 companies, 1 in the U. S, 1 in the U. K.
In order to Flying as well that market. So, so far, so good on the innovation front and especially on the disinfecting side.
Okay. Thank you. Nice quarter.
Thank you, John.
Your next question comes from the line of Kevin McVeigh with Credit Suisse. Please proceed with your question. Great.
Thanks so much. Hey, I wonder, Just a point of clarification, the 4% price increasing, is that across all of Ecolab or just the industrial business? And if it's across all, is it 75% industrial or just any way to frame out that 4% increase overall that you talked to?
Yeah. Hi, Kevin. So 4% for the whole company. And you will have more in industrial because That's where we bear the brunt of the cost increases as well. So you're going to have higher than 4 in industrial And in the other businesses, you're going to have lower than 4, ultimately.
Got it. And then just within kind of the downstream business overall as you're clearly repositioning that. Any thoughts as to what percentage of the revenues refining today? And then where that ultimately bottoms and ultimately you're going into kind of higher growth areas as well. Just out of 100%, should we think about those end markets just within the downstream business itself?
It's hard to tell, but I would say that we've reached a button in the refining part of down So Petrochem has been doing well all along. So that's a bit of a different story, obviously as such. So I think it's going to improve progressively as of now in downstream refining, but That business, it's an industry that is in total transformation as well. The good news is that we are uniquely positioned To work with those companies to help them get to the better place, I've had great discussions with some of the CEOs of those companies lately as well. They need us More than ever, that's especially true with European companies, but also in the U.
S. So longer term, I think it's going to be a very opportunity for us.
Thank you so much.
Thank you, Kevin. Your next question comes from the line of Vincent Andrews with Morgan Stanley. Please proceed with your question.
Thank you and good afternoon. You mentioned in the prepared comments in specialty and the food retail business that you were seeing Sales reversion as expected, some of it I think coming just from those consumer demand, but also there were labor issues From a customer perspective, one of those things seems temporal and the other one seems sort of a little bit more structural. So could you help us understand how to think about Those trends on a go forward basis?
Yes. Hi, Vincent. So it's really because we comparing to strong Q2 In specialty, last year, it's a business that's doing well actually. So it's a comparison question Underlying, so I like a lot of where QuickServe and Food Retail are heading, It's very profitable and serving successful industries right now as well. So it's the comparison that's kind of a little bit Skewing the numbers, otherwise, underlying very good.
And I see a future that's going to keep Steady on what you've seen pre pandemic as well with those 2 businesses.
Okay.
And then just as a follow-up, I assume you're on track for the 120,000,000 you targeted for this year and I think the total number overall, eventually it was going to be 365, those are still the right numbers?
Yes, let me give that question to Dan, who was looking forward to a question as well there. So that's a perfect opportunity.
Such a great question. So thank you. Yes, we remain very much on track to deliver our incremental $120,000,000 year on year. And more broadly, maybe the A2020 program, which has gone through a couple of iterations, we feel very good about the progress that we've made sequentially And we'll continue to. Okay.
Thanks so much.
Your next question comes from the line of Scott Schneeberger with Oppenheimer. Please proceed with your question.
Thanks very much. So my first, I want to inquire about new business wins. A lot of the description today has been recovering markets, but we in the press release, a lot of highlighted new business wins And that's across water, paper, signed certified, you talked about and even Pest. Can you just elaborate a little bit on maybe where you're the most strength and what type of wins you're getting? Thanks.
Great question. Thank you, Scott. So new business, interestingly enough, It's gaining traction in every end market. We thought that in Some markets like the institutional markets over the past 18 months, it would have been way harder. Actually, it's one of the areas where we've made The most progress, which is really good news.
Industrial is doing really well and healthcare as well. And life science has always been great at it, Which we see in the numbers as such. So really good story. I would say, one of the new emerging Stories in your business is what many call this net zero, with many customers are trying to get Closer to their sustainability ambitions, so water neutral or water positive or carbon neutral, carbon positive and those discussions with those Forward looking companies, interestingly enough, are strengthening our relationships with them because they need our help even more than before and that's Growing as well as our new business opportunities because they need our help in all the units around the world and need much more solutions as well from us
Great. Thanks. And then I think a good follow-up to that would be just to ask specifically on data centers and animal Some of your other emerging growth opportunities, just a progress report there and any quantification on
I think 53% in the second quarter. It's been a terrific story. It used to be part of our Light Water Industries business. In the past, we've created a dedicated unit 12 or 18 months ago, Which is really a division that's focused on data centers and microelectronics, by the way, the Intel of that world as well. And Interestingly enough, it's new expertise that we could build, it's new offering that we could provide to those companies that are really interested in Close to 100 percent uptime for all the reasons that we understand our secure solutions as well from a digital That business in a great way.
Animal Health is a complete different story. Obviously, as such, this is something that takes We've created a dedicated unit. We've made acquisitions as well in that field. Underlying, I like where we're going. Q2 has been a bit subpar because we compared to a very high Q2 in 2020.
But that's a business that's Going forward for at least one important reason that most of the farmers Won't be honored allowed to use antibiotics, to protect the animals and they need way more solutions in order to make sure that they are in a healthy environment in order not to get sick. And this is exactly what Animal Health is doing in our business.
Your next question comes from
the line of Rosemarie Morbelli with Gabelli and Company. Please proceed with your question.
Thank you. Good morning, Christophe, and everyone else. I was wondering if you could talk a little bit about M and A, you have been making small acquisitions. Do you have an appetite for larger ones? And are there targets
In M and A and larger ones, we've done smaller ones over the past few months as mentioned earlier in the wipes area, which is a perfect complement to our offering in institutional, in healthcare and in industrial, And we couldn't produce that ourselves. We were told manufacturing with other companies and we've seen during this pandemic That could be a great business for us today and especially going forward. So we've done that as well. We've done Animal Health as well last year, as just mentioned, as well as to the previous question. And we've been Extremely active on the M and A front over the last 6 months.
We have a very rich pipeline. We have Very serious discussions with many as well out there. But at the end of the day, we have this very disciplined line on what we do and what we don't do. And when I look at all the discussions that we've had so far, We didn't find the exact opportunity so right now, but I feel confident that in the future, so we will get to a bigger opportunity At the right time.
Can you share with us any particular area where you are more likely to make a larger acquisition?
So I can't go too much in details, Rosemary, for obvious reasons. But the core areas of Water is interesting. So for us, life science, which is a very successful business Serving a very large and high growth as well end market. And 3rd, so related to digital technology As well. So those are kind of 3 areas that are very interesting for us.
All right. And then if I may, what is the size of Pure animal health business currently?
I'm not sure we Close that so far.
But you can do it now?
$200,000,000 let's put it that way, Rosemarie.
I'm sorry, did you say $200,000,000
A few 100.
A few hundred. All right. Thank you and good luck.
Thank you so much, Jose.
Your next question comes from the line of P. J. Juvekar with Citi. Please proceed with your question.
Hey, Christophe, it's Eric Petrie on for PJ. Hi. You noted you were gaining share in U. S. Restaurants.
I was wondering if you had a similar data point on lodging. And then in both restaurants and lodging, how does that compare in Europe and Asia?
So my comment was mostly focused on restaurants because it was a highly impacted I like the progress we're making in hotels a lot as well. And mostly Because of the offering that we provide them in terms of automation, Ease of application of our solutions. You've heard about the staff shortages that they all have. I've had the chance to talk to a few CEOs as well, so lately from large hotel chains in the U. S.
And abroad. And this is Top of mind, so for them. So the solutions that we have, which are not new, those are things that we've been doing so for many, many years, ultimately helping them Clean quicker, which is something they're really so challenged with right now or in the dish room as well. So to clean dishes in an easier way passed away with less labor as well, the same on water, the same on housekeeping And so on. And those are solutions that are ultimately helping us sell new business in lodging.
So good progress in lodging as we've seen as well in foodservice.
And just a follow-up then to clarify, would you say you're gaining share in restaurants in Europe and Asia as well? Or is that not settled out.
We have less numbers over there and to be honest, so those markets Are reopening right now. So we've gained new business. We have to see how it looks In practice, then afterwards. So I think that in the month and quarter to come, I will be in a better position. So to really share Whether we gain, which I believe we will, but I want to have the facts first or not.
Okay. And second, my follow-up How much were your sanitizer and hard surface cleaners sales down in the quarter? And what do you expect in terms of moderation for second half?
So sanitizing sales were just to put in perspective, it's 10% of our Overall sales for the company, we had significant growth last year and we expect To be lower than last year overall. So we don't disclose all the detailed numbers, But quite a bit higher than 2019. And that's probably the way you need to think about that. So lower than the peak of the pandemic, thank God, But higher than 2019 because practices have changed in most end markets and countries.
Thank you.
Your next question comes from the line of Laurence Alexander with Jefferies.
Just a quick one to follow-up on the discussion earlier of the shifts away from some of the lower margin businesses like refining. If you look at the moves you've done over the last couple of years, can you give a rough sense for how much sales you've moved Away from sort of some of the out of favor business segments over the last couple of years, how much stronger your sales line would have been if you hadn't done that Calling up the mix.
It's a great question, Laurence, but I have no idea because it's something that we're doing all along in every business. The focus is really saw move up the chain, move up the margins. It can't be driven only by Pricing needs to be because we are focusing on the higher margin segments, higher margin offering as well. So it's a continuous work. We're in some areas, it's more extreme like the coal as mentioned before All refining in downstream that are most significant, but I couldn't put a number exactly on that because it's a continuous process.
Thank you.
The next question comes from the line of Shlomo Rosenbaum with Stifel. Please proceed with your question.
Hi, good afternoon. Thank you for taking my questions. Christophe, I want to ask you a little bit about how the company is leveraging the technology investments as it approaches the C level of an organization in terms of their sustainability. So my understanding is this is enabling Ecolab to start discussions with C suite as opposed to starting discussions more at the plant level. And I'm wondering, how are those discussions progressing?
Is there an increased pace, are you seeing a large potential for you to accelerate or an incremental potential for you to accelerate Ecolab's revenue growth by
Thank you, Shlomo. This is a great I'd like to comment one more time, so with you on that, but maybe so two quick answers, the what and the how. First on the what, we have always more customers. It's not new, but it's clearly accelerating. So Customers that are asking us or partner with us in order to find the path, in order to get to net 0 or positive Water or carbon, Microsoft being one of the obvious ones and it's not a secret since they've been expressing that On CNN, so over the past year or so.
So in order to get there, you need to have digital technology You need to understand to make it easy to recycle water, which is a physical product. We need to understand in real time the quality of the water or lack Actually, which indicates what kind of chemistry we need or what kind of technology is required in order to bring it back to the Standard level that's being used in a data center or in a food plant as such. This is a direct application of our digital technology. And second Is the how? Since we are serving thousands of locations out there in the world, we are uniquely placed To know what's the world class performance that can be achieved, take a brewery for instance, How much water per hectoliter of beer that's being produced?
Well, we can compare within a company, a brewing company, How does the performance of the individual plants compare to the best in class? We can compare across brewers as well. We can compare across Industries as well as a company as well. So we can provide customers with good benchmark of what good looks like and second, how to get there as well. That's all enabled by digital technology that we've been building, developing and implementing over the last 10, 20 years around the world.
Okay. And so is that I guess, just to keep that
going, so is that do you see a Potential for that to really incrementally improve the revenue growth of the business because you're able to sell at these higher levels? Obviously, you bring the capabilities Yes, other companies can bring to the table?
Yes, absolutely. So what you saw with data centers, so the growth of 53 Sandd is directly driven by that. And Waterlight as well, which has been growing 7% as well in the quarter is also driven by that kind of So early indications are positive and the more we can implement that across the end markets, the more it's going to help us as well as a company.
Okay, great. If you don't mind me sneaking in one more. Just the areas that are completely open now in terms of restaurants, Let's say taking the Florida or Texas, how does the chemical usage compare to what it was pre COVID? What are the levels in the restaurants that More customers before and there are still customers?
It's still lower today, Shlomo, because the dine in, So the dining rooms are as mentioned before, so in Q2, it was 37% down, so versus Pre pandemic as such, which means that the usage of cleaning and sanitizing solutions has been lower as well. But as dine in is going up, so the demand is going up as well at the same time. So the fact that we have the same number of units Buying the same number of solutions today, ultimately is a good sign as well as sort of compound growth When dining is going to pick up as well in the weeks months to come.
Thank you. Thank you, Shlomo. Ladies and gentlemen, there are no further questions at this time. And I would like to turn the floor back over to management for closing remarks.
Thanks, everyone. That wraps up our Q2 conference call. This call and the associated discussion slides will be available for replay on our website. Thanks very much for your participation today and have a great rest of the day.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.