Yet Another Value Podcast - KNA Capital Management's Todd Wenning on making sense of the upside with Ecolab $ECL

Episode Date: November 8, 2024

Todd Wenning, CFA, President and CIO at KNA Capital Management, joins the podcast to discuss his thesis on Ecolab Inc. (NYSE: ECL), a global sustainability leader offering water, hygiene and infection prevention solutions and services. For more information about KNA Capital Management, please visit: https://www.kna-capital.com/ To subscribe to Todd's newsletter, Flyover Stocks, on Substack, please visit: https://www.flyoverstocks.com/ You can Follow Todd Wenning on Twitter/X @ToddWenning: https://x.com/ToddWenning Chapters: [0:00] Introduction + Episode sponsor: Daloopa [1:24] What is Ecolab $ECL and why is it interesting to Todd [3:38] What is Todd seeing that the market is missing with $ECL [6:30] $ECL achilles heel and how they are addressing that / understanding the upside [12:33] $ECL business and major drivers for growth [20:11] Water vertical / why Ecolab's products and services are critical to data centers, hospitals [26:29] Does it make sense for $ECL to have all these businesses under one roof? [29:22] Cintas comparison: market penetration / has $ECL ever lost a QSR? [36:18] Insider ownership and incentives / Bill Gates investment, starting to sell through Cascade [45:47] Debate on AI and automation with Ecolab [51:37] Difference between Ecolab and Cintas or Costco [57:16] What would cause $ECL to regress to the mean [1:00:57] $ECL Final thoughts Today's sponsor: Daloopa Hey there, fundamental analysts - Are you tired of the endless grind of updating financial models, scrubbing documents, and hard coding? Let’s talk about something that could transform your workflow—Daloopa. Daloopa delivers perfect historicals for thousands of public companies. That means every KPI, operating data, financial metric, adjustment, and guidance—all at your fingertips. And here’s the best part: Daloopa updates your models in near real-time, which is especially important during earnings season, tailored to your modeling format and style. Imagine never having to update your models again. With Daloopa, you can reclaim your time and focus on what really matters—analysis and research. Want to learn more? Create a FREE account at Daloopa.com/YAV

Are you tired of the endless grind of updating financial models, scrubbing documents, and hard coding? Let's talk about something that could transform your workflow, Delupa. Delupa delivers perfect historicals for thousands of public companies. That means every KPI, operating data, financial metric, adjustment, and guidance, all at your fingertips. And here's the best part. Delupa updates your models in near real time, which is especially important during earnings season, and it's tailored to your modeling format and style. Imagine never having to update your models again.

With DeLUPA, you can briefly lean your time and focus on what really matters, analysis and research. Want to learn more? Create a free account at dilupa.com slash YAV. That's Delupa, D-A-L-O-O-O-P-A dot com slash YAV. All right, hello, and welcome to the yet another value podcast. I'm your host, Andrew Walker. If you like this podcast, it would mean a lot if you could rate, subscribe, review wherever you're watching or listening to it. With me today, I'm happy to have on for the first time.

Todd Wenning. Todd is the founder of K&A Capital. Todd, how's it going? Great. How are you? It's great to be here. I'm excited to do this. I've been a long-time follower of flyover stocks. The stock we're talking about today, it's a lot bigger than I would think of flyover, but it kind of qualifies. But before we get there, quick reminder, remind everyone on this podcast, I guess is a disclaimer. Nothing on this podcast is investing advice.

Please consults financial advisor, do your own work, all that type of stuff. Todd, the stock we want to talk about today is eco-lab. The ticker is ECL. I've got a ton of notes, a lot to talk about, but I guess I'll just toss it over to you. Most people probably heard of it, but what is Eco-Lab and why are they so interesting? Yeah, so again, thanks for having me. Eco-Lab is not your traditional value investment. I'm certainly, if you look at the PE ratios, you'll think, but no way this is a value investment. it. So the backstory here, this is a company I followed since 2011. I've joined Morningstar as a cell site analyst. I was on the basic materials team. The person who sat next to me covered

EcoLab and I always envied that coverage because it was such a great razor and blade business model to cover. I actually ended up covering their number two competitor in the hygiene and sanitation space called Diversity for a while. And I really wanted to get EcoLab, my list because that would have been a great sales pitch to do for both of those names. But anyway, Ecolab goes back to 101-year-old company. And in fact, it was the name has been short. It started out as economics laboratory. And it was this traveling salesman who went and noticed that the hotel rooms he was staying in

were shut down for a couple days, maybe even a week as they cleaned the carpets. And it took way too long to turn over the room. they didn't have a good way of doing this in the 1920s. So he developed a chemical solution to help hotel companies turn the rooms faster to vacuum and clean the carpets and turn the room back within a couple of hours and save him a lot of money. And I tell that story because that's essentially what EcoLab does today is it saves customers money and it solves problems for them.

And that's essentially what they do. And that's something, that's one of the reasons why they can command such a premium on their pricing. Their average products cost about 20% higher than their competitor. So it is a premium product and it's, you know, a premium company. And so the multiples do reflect that. Perfect. Well, I have two questions that were like right at the top of my list and both of them are more kind of valuation related than the business related and they're completely divergent questions. So let me start with the first one, the more critical one, right?

The question I'd like to start every podcast with. The market is a really competitive place. You know, EcoLab, I'm looking at them. They're covered by almost 40 analysts, right? This is a much bigger company than I normally talk about, $70 billion market cap. So I guess my first question to you would be, hey, market's a really competitive place. This is a really well-covered company. Most people have probably kind of know a little bit about EcoLab.

What are you seeing that you think the market is a lot? missing that makes Ecolab right now, you know, as we're talking, it's trading at almost $250 per share, makes it a risk-adjusted alpha opportunity. So I think there's a certain class of companies in my mind that are worth paying up for. And it's the ones who can beat the fade, right? So when you think about companies as value investors, and I do consider myself a value investor, even though I'm looking at 30-P stock here, right? So I'm thinking, when we think about value investing we're thinking about regression to a mean right we're thinking about you know what's get what's going to happen when the stock goes from 30 p e to 15 p e and i do think there's a class of

companies um that value investors often miss because they keep the companies keep beating the fade the expected regression of the rc closer to the mean and companies jump off to jump off in my head or companies like fast and all right where they just continue to beat expectations develop new products, develop new services, get more entrenched with their customers. Similarly with Costco, you know, I don't know if people have watched the movie Major League, but there's a, there's a great scene in the beginning of the movie where, you know, there's a home run hit well out of the stadium and the fans are going, no, it's too high, it's too high. What do you mean? It's gone, right? Like, it's just sometimes value investors act like that. We just, we watch this

company just keep improving and improving and improving, and then we focus on the PE, but we're not focused on the trends at the company and why it's worth paying up. for him. No, look, I love that line from you that beat the fade line. You know, in a prior life, I was at McKinsey and my boss published a book and that one of the things it saw was companies with high returns and capital and low invested capital like over time, there was this big quadrant and over time they had outperformed the market, right? And I asked him like I kind of had the value investor bug already. I was like, why? Like what is driving this? Why isn't this getting compete away? It was like, look, if I could answer that, I'd be really rich.

But, you know, there's just something about the sustainability of these returns. So I like what you said, but let me push back a little bit more. And you mentioned Costco, and I do have some questions on them on the upside. But let me push back a little more. Like, when I look at the last five years, right, EcoLab, the stock has returned. I'm just looking, last five years, 35% in total, way underperform the S&P 500. S&P 500 is about double over the process. past five years, right? So I look at this and I say, hey, this seems like it should have been a

great environment for them, right? Yes, I do know hotel rooms are a major customer and they were shut down and there were some turmoil with restaurants or in COVID, but ecolab environment, like, you know, selling all this stuff to disinfect and COVID and having to restart and reopen, like every company that I would kind of put in eco lab quality has done really well over this period. They've way outperformed. So I guess it as you, Todd, why, you know, when I look at that period in stock prices and everything, but why isn't the company starting to lose that beat the fade? Why aren't they kind of fading at this point?

Is the market telling us that? Yeah, so I think they did struggle certainly, and this is their Achilles heel is really inflation. And that's what happened in 2022, right? And coming out of COVID. So they had a lot of demand from your hospitals and hospitality for their hand sanitation and cleaning and hygiene services, but that's not all of their business anymore.

I mean, that used to, that was their old business or legacy businesses, is cleaning and hygiene. About 45% of their revenue today is industrial. And so that was an impact, certainly, coming during COVID and coming out. But with the inflation on the, on the chemical side, you know, they have multi-year contracts. And when the chemicals and the inputs costs go up faster and they can recoup it, that's when you saw some of that pressure on the margins. and the industrial side too. It's just there's not as much activity so the margins have declined.

But that has begun to improve and I think that the moat trend here is quite positive. I think their advantages are getting deeper and they're getting harder and harder to compete against. And I think what the reason why I think this is, what I would call maybe a single, right, rather than trying to hit a home run. You know, this is not a, hey, the stock is 80% undervalued and it's going to be a 25% IRA over the next 10 years. It's not going to be that. I don't think. I mean, I hope it is, but I don't think it's going to be. But I think it's a very high probability 10 to 11% Kegger. And the reason I think that is they're going to be growing the top line about 6% to 7% per year,

I think. And then they're going to expand their margins as well. So one of the things they've learned coming out of this inflationary period is we might have been not raising prices enough. They were raising prices 1 to 2% prior to COVID. Now they're doing 2 to 3, and they're not getting any pushback on it. And so now they have an opportunity to expand their margins a little bit. And now they're being much more specific about the timing of their goal to hit the 20% operating margin. So they introduced this goal back in 2015. COVID threw things off quite a bit.

I think they were on their way to getting there. And now they're finally getting there. And I think 27 is the year they're kind of earmarking for 20% margins, which puts that EPS, my estimate, about $10 a share. So if you think the company can maintain that premium, it could be a $300 stock just without doing a lot of work. And I think there's some considerable tailwinds here that could actually help them move, get EPS even higher than $10 in the next couple of years. So that's where I'm thinking, even if you have, say, a 3% drag on the price or earnings multiple, it comes down. to say 25 instead of 30 something it is today. That's still about a 3% headwind. If they're growing their top line or their bottom line about 12% a year in the top line, I think that you

can probably get, you know, 9, 10, 11% pretty without taking a large leap of faith in the company. Well, let me just push back on that slightly. And again, we haven't like really drove into the businesses, but you know, you just said $10 per share in 2027. And obviously you think there could be upside there. But $10 per share, 30p, that gets you to a $300 stock. And, you know, it kind of be the end of 2006, right? It's at $250 today. So we're talking about a 20% return kind of a little over two years out, 20% gross. Like, that's 8-ish percent annualized. Like, yeah, it's not bad. And I guess that your pushback would be, hey, you said risk adjusted. And what I'm saying is this is really low risk. But I'd say, hey, it's not a lot of upside for.

investing in a stock. And like, if there's one thing I've learned in the stock market, it's like anything can go to zero. You know, I think about some of the things that pre-COVID people thought were not risky at all. And then during COVID, they realized it's a zero. So I guess just just like, are you really getting the return needed for putting, you know, capital out there? Yeah, I think it's probably a good time to talk about what, you know, deeper into the business. And hopefully that will explain why I'm thinking this. But this is, this is a mission critical company to all of their customers and increasingly so and you know I've seen banks go to zero in a couple of weeks I've seen companies that look great go to a couple weeks couple hours a couple hours right

so I'm well aware of all those things but I think this is a very exceptional company and they have the ability to not only continue to win business but you win more business and command good pricing so I don't you know of all the companies out there and their things is, you know, their P.E. versus the market at a 10-year low. So, you know, granted, you can make the case just as easily that the market's overvalued, but Ecolab hasn't kind of gone lockstep here with the market. And so one way to think about it is, hey, if you do think that the S&P is going to decline over the next three to five years, on a risk-adjusted basis, eco-lab looks a lot more attractive. It might not outperform in an up market, but it should

hold up better in a down market. Let's go to do some of the business real quick. And I actually have some stuff I want to talk to you on the upside as well. But when I think of EcoLab, and again, this might be just me being a dumb done, but I think I go into a hospital, maybe a QSR or something. And, you know, I look over and I see an EcoLab hand sanitizer or something, if I remember quickly. That's what I really think of.

That obviously is a big business. I think that's in their specialty food and beverage side. But why don't you just walk me through like, what's the major drivers here? Yeah, so they made a couple acquisitions back in the early 2010s that when I wrote an article about why I didn't want to buy EECOLAB a couple of years ago and I since changed my mind, obviously. And what happened was so EcoLab had this really simple razor and blade business model where it was selling equipment to food and beverage companies to hospitals and selling hygienic chemicals and cleaning. And it was, you know, razor and blade, high consumable. So they still have about 90% of the revenues is consumable or usable. And so it's still a razor and blade business.

But they went out and they bought Champion, which was an energy cleaning company. So going upstream. And then they also bought a company called Nalko Water. And both of those comparatively to EcoLab were lower ROIC, like mid-high single-digit ROIC. And I really questioned the capital allocation decision. I thought that's, you know, that's just kind of a classic mistake where you've got this razor and blade business miles. It's just, you know, it's just not growing fast enough. So we've got to make these transformational acquisitions. And in fact, around the same time, I was covering sealed air

on the base material side, and they acquired diversity. And that was a complete boondoggle for for sealed air. And they ended up spinning it off. It became a giant mess. And so that was kind of in my back of my mind as the pattern that, hey, you know, similar thing, Razor and Blade business model, very predictive business, growing dividend, what did they done? Why did they go out and make this transformational acquisition? And, you know, my mistake was that I'm not doing enough work on trying to understand the synergies between this business.

So, for example, Champion, I would say, was the worst of the two. That was one of the, it was timed improperly. They went out and bought an energy company, kind of oil prices were high, kind of joined the fray. But they still turned that business from a $2 billion purchase to a $4 billion purchase when they sold it. So even though it was terribly time, they put a lot of value into that business by the time they spun it back out and sold it. But the real crown jewel there was the Nalko Water transition. And what Nalko Water did is they service mostly at the time, they were doing only heavy industrial companies. So that's like paper and pulp, mining, oil and gas, anything that's using water in large quantities and then having to treat it so it can be put back into the system, they were handling that.

And Ecolad came in and the real opportunity there was they had such great existing relationships with major multinational food and beverage, hospitality companies, that they could say, hey, we can start applying some of our learning. from the Nalko water to your business. You know, hey, you have a hospital, or you have a hospital, you have a hotel, you have boilers. If your water's not being treated properly, those boilers can corrode, the pipes corrode, the HVAC systems break. We start applying that. And now today, that's sort of light industrial business that's in their industrial

segment is 40% of their business. So that's 40% that wasn't even there when they acquired Nalko water. So it's been just, it was very much a textbook successful acquisition. There's a new book out that they, an employee and an outsider wrote about EcoLeb's first hundred years and they talk about the champion or the Alco acquisition and how it was just sort of a textbook on how to integrate two cultures that, you know, they considered themselves long lost brothers and they attached and came together and created all this value. So today, you know, the business where it was sort of a cleaning and hygiene focus, you know, that was the common theme prior to the Nalko acquisition today is very much water.

Water is the constant theme that runs through the company. And so I think what investors might be missing about Ecolab is this trend towards water and the sustainability efforts and the requirements in some parts of the world that require companies. to not only improve their water usage, but also that also includes their energy impact, right? And so it's not just, you know, the top-down mandate, hey, you have to reduce your carbon emissions or whatever. It's also a really smart business. So I'll give a quick example. So in the data centers, right? So a lot of these data centers are being placed in dry areas, like Arizona, New Mexico, deserts of California and so on and so forth.

water is extremely scarce. And so there's a lot of regulations on how water is used and disposed of. And so, for example, one of the things that they acquired when they bought Nalko was this patented technology called 3D Trasar, which analyzes the water usage going through the pipes. And so what they're able to do with, I think it was digital realty as the company. So they have these giant AI data centers. They need to keep those things cool. So they have these massive HVAC systems. And the water, I think about 60% of the water evaporates before it gets put back into the wastewater.

So that's just how hot these things are running. And so the California government offers companies a credit for this evaporation. And with 3D trace our technology, they were able to determine how much evaporation they were actually collecting. And then they were using that as a credit. So I think it's saved at least six figures, right? So that's sort of how EcoLab sells itself to these customers is they can, they track everything, the water, they can help them deliver on their sustainability metrics, they can help them improve not just their sustainability efforts, but their bottom lines as well.

And so that's why they're able to charge a higher higher price than most of their competitors. I'm glad you mentioned the Data Center one, because if you go on the EcoLab website, they've got a lot of great examples of how exactly what you're saying right like there's one with a hotel chain where they're like hey we went and worked with them it's marriott we went and worked with them and you know they hired us and the the return on hiring us was you know it's almost like a consultant but except it's actual products they like they hired us and we're saving them $600,000 per year in water savings not to mention you know the environmental good and all that but I guess they're just sticking with the data center right like the data center these things are

huge, multi-billion dollar investments. And there's not a lot of people who are building them, right? Like there's five to ten companies that are going to build the real hyperscalers or like really going to own these. So I guess my question to you is like, it sounds great, right? And obviously if you can say anything there, the returns, ignoring even the environment, the returns could be huge. But I guess my question is like, why is EcoLab the company to do it? Because these, these companies, they hire the best electrical engineers, the best everything engineers. Like, why Why haven't they figured out a way to do this themselves? Because they're doing 20 of these things.

It seems like they're the ones who should be incentivized to do it. Like, what does EcoLab have that's so special? So I think there's a couple of things. First, as Christoph Beck, the CEO mentioned in the latest call, EcoLab systems are being prefabricated built into these new data centers. So the switching costs just increased dramatically once they're in. So that's a big thing. What would the system getting built?

Could you just, for my own, what is the system getting? I know what that means, but like, how is it built into the system? Like, are you clear on like what actually, where it's going and like how they kind of build it in? So it's things like, like we talked about earlier with, you know, track, like the 3D trace are, which is analyzing the water that's going through the pipes. You know, that's a patented technology that they have. Some of the older patents are expired, but they're about five to ten generations beyond what they have. if I'm hearing you and thinking about it correctly, they're licensing this technology,

but the reason it's so sticky is it's the sensors, right? Like you're probably building the sensors into your pipes. And then it's like, hey, if you want to replace EcoLabs 3D, you're going to have to go stop everything because this, I mean, the water is boiling hot, right? You're going to have to stop everything, open up your metal pipes most likely, open them up, physically remove the sensor, put a new sensor in, close them up, like that's about as sticky as it can get. Tell me if I'm wrong or if I'm putting words in your mouth or anything. And these guys have, these companies have zero appetite for downtime, right? They cannot shut down.

And that's the other thing, right? It's, you know, going back to what we talked about at the very beginning, what Ecolab is doing is they're solving problems for companies. And they're also giving them cover, too. So it's like, you know, you don't get fired for buying IBM, right? It's kind of the same idea where, you know, if you are, whether it's a data center using ecolab nalco water or it's a hospital using ecolab you don't want to be the person on the staff who gets rid of eco lab and something happens in your hospital right

that's a quick way of getting fired so on the data center side but again maybe it's just because i know eco lab from hey you go and you get the foam on your hands right what's something that a hospital get would get rid of from ecolab that would cause that type of you are getting fired because you didn't hire ibn yeah i think you know i was just at the doctor today and i went to the hospital and they had um uh you know eco lab hand sanitizers and ecolab just things everywhere ecolab and so it's one of those things where they're also bundling services right so that's one of their key things is that they have a point person it's it's that that business the the um institution business, legacy business is very similar to a route-based operation like Sintas, right,

where you can just, you have a salesperson who's coming in pretty regularly, helping you solve your problems, adding things in. So it's not like, hey, we're going to get rid of your hand sanitizer, right? If you're getting rid of the hand sanitizer, everything else is probably up for grabs too. And so that's not what the salesperson wants. And so you have that personal contact. It's like, hey, you know, we've talked with Jim or Betty or whoever a salesperson is for a decade.

And so if we get rid of EgoLab, we got a great of Betty or Jim. And so that's part of it. But I think the key thing is that they have the brand reputation that you can use as cover. So if I go to Costco, right, and I buy a bunch of cleaning products for my restaurants and I say, hey, I'm saving money.

You know, we go to Ego Lab and buy bulk cleaning supplies. That's, you can't do that. it is for a consistent in a consistent way, right? So if something were to happen, the blame shifts to you and not to Ecolab. Right. And so that's a way for you to provide yourself with some cover. Like, hey, we hired the industry leader in hygiene and cleaning. Their chemicals failed, whatever might be, it's on them. It's not on us. And so if you make that decision to save a couple of dollars or whatever it is and things don't work out, it's not good. You know, so like, I don't know if you're aware, but in the U.S. with McDonald's,

McDonald's has two brands that all their franchisees and company-owned stores must have. One is Coca-Cola, of course. The other is EgoLab, right? You have to use EgoLab in the U.S. If you are a McDonald's franchisee or company owner. And they do everything from, you know, cleaning the kitchens, and they do food audit. So that's one of their big services is they'll go in and they'll do food audits and score you against your peers in the area. So they are multiple touch points.

And so when you think about hygiene and cleaning, if you're a food and beverage company or your restaurant, EcoLab is the gold standard. And it's not affordable for, say, mom and pop shops. But if you're a multi-chain operation, regional, citywide, they're the group that you want to use because they provide you with the consistent product, the cost savings, and the reputation protection. Are you tired of the endless grind of updating financial models, scrubbing documents, and hard coding? Let's talk about something that could transform your workflow, Delupa. Delupa delivers perfect historicals for thousands of public companies. That means every KPI, operating data,

financial metric, adjustment, and guidance, all at your fingertips. And here's the best part. Delupa updates your models in near real time, which is especially important during earnings season. and it's tailored to your modeling format and style. Imagine never having to update your models again. With DeLupa, you can re-fling your time and focus on what really matters, analysis and research. Want to learn more? Create a free account at dilupa.com slash y-A-V. That's DeL-O-O-O-P-A-D-A-O-P-A-V.

One of the tough things with EcoLab is there are so many different businesses here that when I try to like pin down one different one, it's hard, right? because we just talked about water monitoring at data centers, and then the paragraph ends with food auditing of quick service restaurants, right? So I'm going to come to that in a second, but let me just quickly. Those are very different businesses. Does it make sense to have all these businesses under one roof, or, you know, obviously there's always a little bit of synergies up, hey, one public company cause versus call it for

public company costs, but would it maybe make more sense to like split this up and have, hey, industrial water go over here, food and specialty go over here, what would you kind of think about that? So the company has done a lot of the vestitures over the years, and I think it's a really good mark of their stewardship. When things don't work out, they get rid of them. If they're no longer part of the core business, they get rid of them. What you're actually seeing now is a move towards what they're calling Eco Lab 1 or One Eco Lab, I think. And that's where their top 35 customers of which McDonald's is one, and Marriott is another. They used to have different people serving, so they would have the Nalko Waterperson serving group,

and then they would have the Eco Lab, the institutional legacy business on the Cleveland Hygiene side. Now they're streamlining it, so they're organizing themselves to serve individual companies, the 35 largest companies, so that everything is integrated into the system. And that's part of their concept. They call it Circle the Customer. And it's gone, they've been saying that for decades. That's been their motto. And it's get to know your customer as much as possible and help them solve problems.

And as those discussions happen, that's when things start to appear, new products. They go out and make acquisitions. We haven't even talked about their pest business, right? They have a pest business that is excellent. It's I think it's about 7% of revenue. But this is exactly what the sort of cross-selling that they're able to do. So if you are a restaurant, I think they have just about every casino hotel on the Las Vegas strip, right? And so they do all the cleaning, all the hygiene, all the pest services.

You can imagine a lot of food, a lot of people. There's going to be rodents. There's going to be bugs. They provide pest services as well. So they don't do residential, but it's all business. And so, like, again, similar to like a Sintas where it's like, hey, we're going to clean your uniforms, turns into, hey, we're going to wash your rubs. Hey, it turns into, you know, we're also. going to service your emergency services kits and things like that. That's exactly the model.

And so, you know, these route-based business models are just so, so sticky. I'm so mad because I was going to bring up the Sintas similarities there. So I'm so mad. So let's just go into Sintosh, right? Like that is kind of the dream. Right. Like they started uniforms. They expand into, I think, emergency services and first aid kids. Actually, where my daughter goes and take swim lessons, I looked up and I saw the Sintas first aid kid. But I guess my first question here, where do I want to start? Let's start with market penetration, right? One of the things Sintas, I think people underestimated over the past 20 years is people

look at Sintas market share and they would say, oh, yeah, there's mom and pops that they could roll up, but they've already got a big market share. And Sintas would always argue, hey, for uniforms, like, we're not generally competing, and tell me if I'm wrong on any of this. I'm no expert, but we're not generally competing with mom and pops. What we're actually competing with is people who don't get service right now, right? People who, they have their employees take it in or they don't have uniforms. And we're trying to compete with people and say, hey, by taking us in, like, we'll lower your

costs or we'll keep your cost the same and will really improve your brand standards. I guess with EcoLab, where I'm trying to strive with, this is they've already got McDonald's. They've already got burglaring. They've already got every big QSR you're thinking about. So I think some people look at this and say, hey, you know, if you look at the share of QSRs, there's so much room for them to expand. But I'm going to wondering, look, you've got McDonald's, Burger King, you've got all the big guys. There's a very long tail of restaurants out there is, you know, are all the one unit mom

and pop's going to take them? So the question I'm asking is, how much room is there to grow versus how much have they kind of already saturated the market in some of their core businesses? And that was one of my, again, one of my concerns a couple years ago when I looked at them because they would roll out this, you know, hey, we only have 10% share of our adjustable market. We've got this huge runway. And I thought, you know, the problem is that if you eliminate all the mom and pop and independence, you're probably closer to 30, 40%, right? You're not 12%. You've carved out a decent niche. And that's true to some degree. Like, there is a limit to

what they can roll out. But they are making efforts to become more well-known, lower down the chain as well. So they have, they've now, they're now selling cleaning products at Home Depot, for example. so it's a consumer facing so that's where you get that touch point with the small business owner who may have never heard of eco lab and now all of a sudden hey this eco lab product you know I'm buying it to clean my my office or whatever it is next time the salesperson comes around I'm going to know who they are versus saying you know your prices are crazy but I think it's it really comes down to to the price you know what how big are the problem that you're trying to solve and what are the costs associated with those those those those problems so things like hey

what's the cost if all of my um if my customers get foodborne illness right that's that's expensive um and certainly the more restaurants you have um the bigger that that penalty is and in fact you know McDonald's just had you know the the outbreak of foodborne illness and it did nothing to do with the eco lab it was an onion producer that they had and so McDonald's McDonald's swore them off. And one of the lessons, I think, from that is it can happen to anybody, right? It can be solved with Chipotle too. And Chipotle was, you know, at least certainly more recently, is much more focused on those elements prior to the foodborne illness outbreak in 2014 or 15. But, you know, so McDonald's has really held up as the gold standard. And so for McDonald's to go through this on a hygienic basis tells you that anything, nothing to anybody. And I think that's probably a good lead-in for EcoLab, you know, when it's selling to maybe more regional or city-focused restaurants saying, hey, happen to McDonald's. You know, food board illness can happen. It's a foot, you really need to spend the extra money to ensure that doesn't happen to you because the cost

can be substantial. Have they ever lost a major QSR, you know, a McDonald's, a Burger King or anything? I ask, I'm a bad lawyer because I do not know the answer, but if they've ever lost one, you know, that's a sign of some competition. If they've never lost one, that's just so great for the moat. So I ask in a very non-lawyer way. Not, I haven't come across it. I'm not to say it hasn't happened, but I don't remember seeing any headlines. So, you know, their number two in that space is a company called Diversity.

And diversity has been, so Diversity has been the number two. competitor against EcoLab for years. And they've been passed around like a hot potato on an ownership basis. They think they've been bought and sold six or seven times in the past 25 years. And they just, you know, so from a cultural standpoint, it just can't think that diversity is going to be organized enough from a, from a cultural standpoint. And that's another thing we ever only talked about is, you know,

the culture at EcoLab and how important it is. because they have 50,000 employees, half of which are salespeople, and only about 3,000 or 4,000 employees are located in the headquarters of St. Paul, Minneapolis. So how do you maintain this culture across the globe, across 50,000 people who not all of whom are in the mothership, right? And they just have this tremendous culture that comes back to the founder, what I call the founder's pedigree. The founder created this, you know, this value system. He and his son were the CEOs for the first 50 years. And they've only had, I think, six CEOs in their history

over the past 100 years. So they have long tenures, a consistent value system. It's a very, as you might imagine, sales-driven type of business culture when you have half of your staff is sales. So they have a very, you know, a sense of almost healthy paranoia where, you know, we've gone to the mountaintop and, you know, we don't really see many competitors, but we can't lose that edge. We've got to stay, you know, adding, keeping, creating value. And, you know, that's really why one of the reasons I think that they will continue to be successful is because they're so customer focused, so problem solving focused, that as new problems come up, So think about, like, new regulations, you know, new environmental standards, whatever might be,

you know, they're going to be the first call from their companies. And they're going to be the ones creating the new products and the new services. So that's one of the reasons why I really doubt that the fade is anywhere near just around the corner for them. I think that they can continue to generate excess returns for at least a decade and beyond. Now, you mentioned the acquisitions earlier, right? And correct me if wrong, you said one of them you thought was poor, one of them you were skeptical, but you think it's kind of been a home run. It's, you know, just looking at this, I look at the, my favorite place to start whenever I look

at a company that I'm kind of thinking about for any reason is the beneficial ownership table, right? And ownership here is not high. Now, I say that, you know, this is, the founders have been dead for 75 years, right? like Christopher Beck, the CEO, he owns 400,000 shares, that's $100,000 worth like that. And that's quite a good deal of money. That's quite a good deal of money. But all the directors, all the officers own less than 1%. I think it's 0.5%.

Almost all of Beck's ownership, the CEO, is from stock options, right? Which fine, but, you know, he's not a founder. And I guess the thing I was thinking about is Sintas. And again, this is just because I've been interested in them recently. they're, I think they're executive chairman who's been the real driving force there. He owns like 15% of the company. And I guess, hey Todd, now since Tust trades for a bigger multiple, different though, kind of rhymes with each other businesses, say, hey, if you're talking about a company that's

going to be doing M&A, a route-based business, all this, like, is the drive really there? Or is this a company where I'm going to look up in 10 years from now, hey, we made a bunch of acquisitions. And our IRA on the acquisitions was 4%, which is 10%. terrible, right? But hey, we're a much bigger company and everybody around here is getting paid a lot more money. You know, like, I kind of worry about that with one of these bigger companies. So I guess I just love for you to talk a little bit about that. Like, you've talked about the culture and the competitiveness, but I know a lot of companies that win and the stock price doesn't win. So I kind of wanted to talk

about incentives there. Yeah, and that's a great question. And, you know, that's something I look at as well. And not every company can be perfect. So, you know, I would love to have an insider ownership here and family involvement and all that. That would be just icing on the cake. But I do think that there is more, there's a lot of intrinsic motivation at this company. So I think that goes back to the culture. So I think there's two parts of motivation. So, you know, if we look at, you know, the classic outsider CEO, it's, you know, large ownership. stakes, buying back stock, kind of this passionately, and, you know, thinking about, you know, the extrinsic motivations of kind of getting rich, kind of closing that value gap. And I think

at EcoLab, it's, there is certainly extrinsic motivation, but it's mostly intrinsic motivation. So they've all kind of, you know, they've long 10 years. I think the average employees there for about 10 years. You know, they, once you're kind of in the Eco Lab system, this is for one, I heard from former employees is, you know, their culture is just so vibrant that, you know, it's kind of one of those things where, you know, you don't want to let down the person next to you to, you know, by, by slacking off or doing. And it just doesn't, it doesn't, it doesn't, it wouldn't add up, you know, from a cultural standpoint for, let's say Christoph Beck retires and the next person comes in and just starts buying aggressively. And it just, I, my, my intuition,

which could be wrong, my intuition, is that they are culture focused first. And that's what I've heard about the acquisitions is they focus on the culture first and then the financials. So even with Champion, it wasn't a great fit for their business, but it wasn't disastrous either. I mean, they didn't write down 90% of the value, right? They actually increased the value of the business over time, even though it wasn't a great fit. But culturally, I think that's why they stick primarily to the,

bolt on acquisitions because they don't want to sacrifice the culture. They don't want, you know, they really bet the business in a literal way on the Nowco acquisition and it worked out for them, partly because they had such a strong cultural connection. I think Nowco's based in Chicago, Ecoab's based in Minneapolis, St. Paul. So there's this kind of Midwestern. And that's one of the reasons I consider it to be sort of a fly out because even though it's not, you know, under the radar in the sense that it's got two analysts covering it, I don't hear about it a lot from, you know, the quality-minded investor circles that I'm in. And it could be because the price never looks super cheap. But it's, it's just, it's never brought to my attention from

the outside. I mean, once in a while, but not as commonly as, say, a Sintas, which gets, you know, talked about quite a bit in circles, or Costco, for example. And so, I think that there is, to answer your question, the best way I can answer it is that there is an intrinsic motivation, a cultural motivation to continue to execute on the blueprint. The blueprint has been established, the blueprint for success, right? Circle the customer, add value, solve problems, rinse, wash, and repeat, right? It's like, you know, to use the analogy that's appropriate for EcoLab. And so I think the playbook for success is there. it's like why would you try to disrupt it there's nothing there's no extrinsic benefit to

disrupting that that system you can have a very successful lucrative career at eco lab by sticking to the playbook and executing um but i i will note you know i don't have you noticed on the proxy that uh bill gates is the that was my next question so bill gates owns 13% of this through cascade uh he started buying it i think in the early 2010s and the reason it was my next question is Cascade has a 13D file here, which I think is rare for Cascade, but I haven't followed them so closely down now. But the two reasons that one asks is, A, they've got a 13 date. They have a board member, but B, they've owned this for, you know, 15 years plus, I believe. I mean, the 13G was from 2011. They probably owned it before. I'm not sure. But the reason I ask is you and I are talking

November 5th. They just filed a 4 and 4 on November 4th that shows on Halloween, 10,000, 31, 24. The first time I can ever see, they've started selling down shares. Now, they're not selling, you know, the whole position as far as I know, but I wanted to ask you two things. A, Bill Gates and Baldwin is 13D, what do you think the angle is there? And then B, you know, you've got, Bill Gates is not Warren Buffett. They are best friends. He's not Warren Buffett, but he's owned this stock for, let's call it 15 years, maybe longer. And this is the first time I'm aware that he's starting to sell. So I guess, you know, what are your thoughts on that? Not that we need to, you know, Buffet's buying. Let's buy. Buffet's selling. Let's sell. But it is

kind of interesting somebody with that deep of a history selling for the first time. Through a lot out there. Just toss it over to you. Yeah. And they were, they were buying and during the dip in 2022 as well. They were. And so if you look at the history, anytime it's in like the mid hundreds, it looks like they've been buying. They bought, as you said, 170-ish in August is 2022. So now they're selling two years later at 250. That ain't a bad IRA, but it is, you know, 15 years first time he's selling and I don't know, I doubt he really needs the cash. Yeah, I mean, it's one of those, what was the Pierre Lynch, the kind of thing where, you know, they only buy for one reason, but they can sell for a million reasons. And so I'm not exactly

sure. You know, if you were thinking, you know, what could I trim to buy something else with a higher IRR. Ecolab might be a source of that. But that's how they're managing their portfolio. It's not how I manage my portfolio. And so, you know, the way I think about my portfolios at KNA is I want my singles and my doubles to be near the top of the portfolio. And if I'm going to take any bigger swings, I want to be towards the lower end of the portfolio. That's just, I'm a risk-averse investor. I'm not swinging for the fences. I'm not trying to, you know, generate tremendous returns and get, you know, notoriety on from that. I'm trying to look out for my clients and I'm trying to look out 10, 20 years and look back and say, did we generate great risk-adjusted

returns? And I think the key, the anchor for me to do that is to have these high-quality companies with low uncertainty, relatively speaking, near the top of my portfolio. And And that's also one of the reasons why companies like this trade for PEs of high 20s, even in low 30s, is, you know, their discount rates are relatively low. Just because it's uncertainty. Just Gates had the 13D filed. So ignoring the sales, did he do anything with the 13D or do you think there was anything there or was just, hey, he might have just gone over 10% and had to file a 13-day?

You know, I was just, you know, I was deflecting because I don't know. I don't know the rationale. And, you know, it could be for any reason. You know, like if they're managing their portfolio in a certain way, like, hey, maybe they found, you know, some cheap Japanese or Korean stocks they wanted to buy. You know, something like that, maybe Buffett gave him a call and gave him some tips or something. I don't know. But, you know, the source of those funds could be part of the reason.

You know, I was just wondering if he had like, because the 13 years old, if he had ever, like, push the company to do something, let me ask a different angle. I saw what I, you know, read the, to prep for this, I read some earning calls, I read some conference appearances, all that, I saw a lot of debate over automation, right? And I'll just use one example. There were a lot of people, this would be more sentence, but there were a lot of people that say restaurant automation, right? We're going to move employees out for XYZ reason and go with automation, AI, all that sort of stuff. And I saw a lot of debates on two angles. Bull case was automation is bullish for EcoLab, right? They serve as a consultant,

for a lot of this. If you're taking people out, you might need some of these EcoLab people's coming in to, you know, install the hand sanitizer because the McDonald's employee can no longer do this, or just put visual eyes on stuff, or the automation. A lot of people are saying this is bullish for EcoLab. And then I would also see a lot of people who say, this is terrible for EcoLab. You know, a lot of this consulting type stuff, the terrible case for it is AI takes over, right? And your human person just completely gets replaced. So it could go any which way. I was curious, you know, AI, IOT, all that.

Do you view that as opportunity, risk, maybe a little bit of both? But how do you think about that for you go out? Yeah, no, it's a great question. It's a question I asked, you know, some of the former employees that used to work there and, you know, the company itself. And the consensus that I've heard is that automation will and be more, be more bullish. I mean, certainly there is a risk, right? There's certainly a risk that some program figures it out and, you know, the need for chemistry drops by 70% and, you know, EcoLab still may be doing the business, but, you know, the volume of the chemistry being used diminishes substantially and that impacts revenue.

That's all possible. But I think the key here is those relationships that EcoLeb has with the McDonald's and Marriots of the world. You know, they spend, EcoLeb spends a lot on research and their research is extremely productive. So in the book, they talk about how in the 2010s, EcoLab had one new patent for every million dollar invested, whereas Procter & Gamble, it was $3.5 million. for every patent that they got. So that doesn't tell you. Is that a fair comparison? Is that a fair comparison?

If I said, hey, Pfizer has one new patent for every billion dollars invested versus, I'd be like, well, yeah, but Pfizer's making big drugs. Or Procter and Gamble, a lot of what they're doing is just, hey, we've got this swipper. Let's throw, we've got a razor blade. Let's throw an extra razor on that. Like, that's not really tangible. Is that even fair? I don't know that it's, I think it's an interesting observation.

that they're able to generate good, and it's not just the patents number, it's also, you know, they're what they call the Vitality Index, their new products that are being used by their, by their customers. So they want at least 30% of their products coming out last three years to be part of the revenue.

And so it just kind of ties it all together. That's just a data point. And I was about to say, you know, that may not be apples to apples, that, you know, Procter & Gamble has different products. It may be more complex. You know, these might be consumer facing, which requires additional work, whatever it might be.

So it's just a reference point that, you know, they're able to generate, they're able to, over 2010's about one patent for every million dollars invested in R&D, which I think is pretty good when you think about the cost of the labs and the individuals doing that work. So all that's a roundabout way of saying that I fully expect EcoLab to be on the front foot, rather, on the innovation and tech. technology side. So whatever comes down the pike, I think EcoLab is ready. And as you were saying, you know, the bull case, automation is going to require a lot more help from, you know, from sanitation. There's fewer eyes in the kitchen. So this all has to be kind of integrated into the process of the kitchen. And so when that happens, EcoLad becomes even more entrenched in that operation. So, you know, if now it's being automated and you bring in somebody else, it's like, hey, now I've got to shut down my systems.

Like we're talking about the data centers, that downtime costs money. It's not worth it. So the switching costs are increasing. And so that, to me, that's why I believe that EcoLab's moat trend is widening. And it's getting the switching costs are getting tougher, they're getting higher for their customers. And I don't think Eagle Lab has any interest in pushing price. And I think if they really wanted to, they could show much, much better margins than they currently do.

And so that's one of the reasons why, you know, when you look at 30 times, you know, if they cut back on some of that R&D and some of their growth investments and increase their prices because they can, you know, maybe it's $10 to this year, not $10 in two years. And so that to me is one of the reasons I take a little bit of comfort in the valuation. You know, like we were talking about earlier, there's certain companies that, you know, investors, value investors in particular are always kicking themselves. Like, why haven't I just buy that when it was, you know, was trading for this and it just kept going higher and going higher? And I, you know, those are exceptional companies. And I don't think that should be the rule that we just buy 30, 40 times earnings companies and just, you know, wait it out. But you really do have to have an ability to recognize when you do have an exceptional company and just, let them drive the vehicle.

So I'm actually glad you went there because that was going to be, I've got two questions left, that was going to be my second to last question. Look, I've been, you know, I'm not a deep value investor I tend to lead to more towards.

So I'm like, oh, you know, 30 times earnings. I want like three times earnings or something. But, you know, so I've been pushing back a little bit on the balls on how you generate. Let me push on the other side, right? Look, if I look at,

Sintosh is the company we've mentioned the most on this podcast and Costco. And it's funny because those are two companies I have in my note where I say, hey, look, Sintos and Costco kind of grow organically six percent-ish. Now, Sintos has a lot of inorganic growth and they roll up and stuff, but, you know, EcoLab, if I look, I'm just looking at, I think this from their Q3 call, they said, our target is five to seven percent organic growth and M&A comes on top of that, but that's a lumpy

proposition. But, you know, right down the middle of what Costco and Sintos are talking about, right? So, and the eco-lab business really rhymes with Sintas. So I guess my question would be, hey, I've been pushing back, like, is there enough upside? Maybe I should be pushing the other way. Like, Sintos, as you and I are talking, trades for more than 50 times P.E. Right. Why isn't this, why isn't this two years for now, three years from, four years from now? You know, you get that growth, but you also get, it goes from 30 to 50 times as people start

saying, hey, let's trade this at a Sintz site multiple. and then, you know, people start posting the chart of, oh, my God, it was so easy. But it's a long-widge's way of say, what is the difference between Ecolab and a Sintas or Costco that keeps it from trading that, like, really reverential or multiple? Is there anything there? Yeah, I mean, it's a question that gives me some comfort as well, right? And I'm glad you brought that up because I think that's an important point that I think a lot of value investors. And I, again, I'm not, it's not, I'm not disintegrating value investing. I'm just saying that value investors always expect.

a regression to the mean. And so when we see these high PEs, we go, it's just a matter of time before it's back into, you know, middling 15, 20 times earnings. But sometimes you've got to wait 15, 20 years. And, you know, those companies you may not even want to buy if they were trading for 15, something really seriously went wrong there. But it's important to ask yourself, like you are, why is this company trading for 30 times? If it seems ridiculous, explain why. Try to figure out why it's so ridiculous and why it couldn't even go higher. And, um, I'm not banking on EcoLab trade for 50 times, but I do think that it has a lot of rhyming with Sintas and Costco, and it potentially could. To me, there's really no reason why it couldn't.

Again, that's not my thesis, but it's one of those things where you have to think about the durability of the cash flows as well. And I think that gets underestimated as well, going back to that they're fighting the fade. They're not like the average company where they're going to regress towards the industry average because they don't have the type of competition in their core markets that the average company does. You know, they dominate the hygiene space. They have some decent competitors in Suez and Veolia on the Nauka water side, but neither of those companies have those relationships with the food and beverage companies that they can integrate.

So that's one of the things. So the chemistry, the spending, the ticket spending on the chemistry is so high that Ecolab has those relationships with the upper level management teams at these companies, which Suez and Beulia don't have. And so, again, those relationships can lead to more and more business. And so, you know, to answer your question, it's certainly possible. You know, if Ecolab is able to show that they are clearly on the path to 20%, operating margins after this inflation scare and their organics growth is 6 to 7% a year.

There's nothing stopping the market from rewarding this company in that fashion. It might be a little bit more cyclical with the industrial business, but Sintas has the same issue. But I think the common thread between each of those three companies is positive mot trend. You think about Costco, the executive memberships getting increasing the, as the percentage of number of members. If you're an executive member, you're spending at least $3,800 there every single year to justify that extra cost. Same with Sintosh. They're getting deeper into their customers and they're getting harder to switch out of. And so I think that just speaks to the justifiable premium. If this was a company where they were losing steam and

losing momentum, paying 30 times would be a very dangerous proposition. But because this company, is this moat trend is pointing higher and it's more positive, it gives you some rationale for why it's being able to trade at that level. Are you tired of the endless grind of updating financial models, scrubbing documents, and hard coding? Let's talk about something that could transform your workflow, Delupa. Delupa delivers perfect historicals for thousands of public companies. That means every KPI, operating data, financial metric, adjustment, and guidance, all at your fingertips. And here's the best part. DeLUPA updates your models in near real time, which is especially important during

earnings season, and it's tailored to your modeling format and style. Imagine never having to update your models again. With DeLupa, you can reclaim your time and focus on what really matters, analysis, and research. Want to learn more? Create a free account at dilupa.com slash Y-A-V. That's DeL-O-O-O-O-P-A-V. You've mentioned, so I want to finish this by talking about risks, and I want to do that in two ways. You've mentioned a few times, and I love the way you frame this. This is a company that fights the fade, right? They don't regress to the mean. What would cause them to regress the mean?

Yeah, it's a good question. That's one I think about all the time. So thinking about inflation, you know, we saw really what their Achilles heel was in 2022. And that's a situation of a spike in inflation. Their input costs soar, and they're not able to recoup those prices. And I pause you there. That's a very technical. temporary thing, though, right? Like, they're not the only person who we've got three-year contracts. We have a spike in inflation. We're upside down for one year. You're going to get that back on the next end. So, isn't that a little bit too short-term to think about for fighting the fade? Because unless I'm wrong, you've mentioned a few times this business sticky. It's got pricing power. Like, that is a very short-term issue. And now if inflation ranks a 7,000 percent or something, like there are some people in Europe who got really hit with it when natural gas goes up 50x or something. But, you know, unless you're talking about that,

I'm surprised you're bringing up a short-term issue like that for a medium to longer-term fight-the-fade thing. Yeah, it is a shorter term, hopefully, right? Otherwise, we're all in big trouble if we have hyperinflation or something, right? But I said that I think that is a short-term weakness, right? So if you are concerned about a two-to-three-year return on the stock, you could see a multiple contract, right, in response like it did to higher inflation. So I think it had maybe a 30% drawdown. And so that's, you know, if you're thinking about short-term risk, that's what it is. But longer-term risks could be things like just the cadence of the environmental tailwind.

So one of my thesis points is that EcoLab is helping these multinational companies meet their sustainability goals. And it's not just, you know, checking boxes for government mandates, which is obviously part. of it. But I also believe that sustainability is good business, right? Sustainability is limiting risks and trying to minimize those to the extent possible. So, you know, if you have some sort of backlash against, you know, environmental mandates could be part of it. Geopolitical risk is very real, you know, certainly if, you know, 18% of their business in Asia Pacific, so a disruption in China. you know, we saw some disruption in Russia, Ukraine, so, you know, that could be part of it. But, you know, it's really hard to think of, you know, any sort of just disastrous outcome

that is high enough probability that it would be incorporated into your thesis. So, I mean, to me, the most relevant thing is AI, but we talked about I can't even put my finger on how this would be a disaster for for you go out. I'm trying to end every podcast with that final question. Hey, if five years from now we're sitting here and this, not the stock did 2% IRA negative, you know, the stock is a disaster. Like, how do you get there? And it is hard for me to paint the eco-lav picture because as you said, this is a

over 100-year-old business that is pretty immune. The only thing I can think of is a bet the company acquisition that levers them up. But, you know, I can say that for every single company in the world, right? So it's hard for me to say, hey, is this 100-plus-year-old company that's kind of debt averse-ish? They're going to, you know, bet the farm on that position that goes zero. It's just, it's hard. So I'll let you have the final thoughts if you have anything you want to add on to there. Yeah, you know, I have a saying that moats erode from within and they start from behind the castle walls, right?

So cultural erosion, you know, a change of a succession plan that doesn't work. work out. You know, the times of my career where I've just felt kicked in the gut is when a company's made a big acquisition and just completely destroyed the thesis. I've got plenty I can share with you another time. But, you know, but those are, those are situations that do worry me. I don't get the impression from Ecolab that they have an interest in making a big deal where they don't have clear cultural alignment. Nalko was a big acquisition and they did a fantastic job with it, but it came back to that culture and really vision, right? So back in 2011, 2012, and they're looking at Alco, they were already seeing this push towards water, right? So they

changed their system from hygiene and sanitation to water, right? They changed the thread of the company in that direction. And that was a huge bet. Worked out well, but, you know, that would certainly make me plop my pencil and paper again and get to work. if something like that size came out again. You can correct me if I'm wrong, but even there, like they do the acquisition, I think they take leverage up to three times, which is starting to get high,

but for a business with this quality, this consistency, now again, this is famous last words, right? Everyone starts at three before they had 30, but they took leverage up to three times. But to me, even if they had made that acquisition and wrote it off,

that is going to be bad, but you haven't put the company at risk. So they haven't shown that appetite where, you know, I know some companies and I approve, you know, financial efficiency, they will take leverage up to five and a half or six acts in a levered cyclical industry. Like, I just, it's very hard. This is one of the hard ones. I've got a rule of thumb that everything can go to zero.

You know, you think about PG&E, California utility, right? How does a utility go to zero? Well, they start a wildfire and they're on the hook. But it's just very hard for me to like really take seriously a zero, zero risk here out short of nuclear warfare, in which case, you know, you've got a lot of other things to worry about. Todd, this has been great. We've been running over an hour, just any last thoughts on EcoLab or anything we should have hit that we kind of missed? No, these were all great questions, and I appreciate the very thoughtful questions, the pushback,

because that really starts to make me think about things. So these are great questions, and thanks for having me on. This was this great. Well, you know, if you're going to compliment me as a host like that, we're going to have you out back on for a second one. but Todd, Todd, he's got two different Twitter accounts. Do you want the 2018 write up in the show notes or just the Twitter accounts? The Twitter accounts are fine. I want to talk Ecolab or any stock that, you know, is in the middle of the country

that you have to fly over when you're going, Dodger Man. So, Todd, Wendy, thanks you so much for coming on and looking forward to having you on again. I thank you. I appreciate it. A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guests or the host may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor.

Thanks.