Ecolab Inc. (NYSE: ECL):
FIRST QUARTER HIGHLIGHTS
- Reported sales $3.8 billion, +5% versus last year. Organic
sales +5%, led by strong growth in the Institutional &
Specialty and Pest Elimination segments, and modest Industrial
segment growth.
- Reported operating income margin 13.8%. Organic operating
income margin 14.7%, +400 bps as lower delivered product costs,
value-based pricing, and volume growth more than offset
growth-oriented investments in the business.
- Reported diluted EPS $1.43, +74%. Adjusted diluted EPS,
excluding special gains and charges and discrete tax items were
$1.34, +52%.
- First quarter cash flow from operating activities $649
million; free cash flow increased to $448 million, +$423 million
versus last year.
SALE OF GLOBAL SURGICAL SOLUTIONS
BUSINESS
- Ecolab has entered into a definitive agreement for the sale
of its global surgical solutions business to Medline for $950
million in cash.
OUTLOOK
- 2024: Increased full year 2024 adjusted diluted earnings per
share range to $6.40 - $6.70, +23% - 29%, from prior $6.10 - $6.50
range.
- 2Q 2024: Expect second quarter 2024 adjusted diluted
earnings per share in the $1.62 - $1.72 range, +31% - 39%.
First Quarter Ended March 31
Reported
Adjusted
(unaudited)
Public Currency Rates
%
Public Currency Rates
%
(millions, except per share)
2024
2023
Change
2024
2023
Change
Net sales
$3,751.9
$3,571.6
5
%
$3,751.9
$3,571.6
5
%
Operating income
517.9
351.6
47
%
547.7
379.3
44
%
Net income attributable to Ecolab
412.1
233.4
77
%
387.0
250.5
54
%
Diluted earnings per share attributable to
Ecolab
$1.43
$0.82
74
%
$1.34
$0.88
52
%
Organic
%
2024
2023
Change
Net sales
$3,717.6
$3,556.8
5
%
Operating income
548.0
379.6
44
%
CEO Comment
Christophe Beck, Ecolab’s chairman and chief executive officer,
said, “As expected, we kicked off the year with very strong
performance as our team continued to execute very well. Good
organic sales growth was driven by new business wins and
value-based pricing, demonstrating the increased value we create
for our customers. We leveraged this growth with 400 basis points
of organic operating income margin expansion to deliver very strong
growth in earnings per share. We remain firmly on our long-term
12-15% earnings growth trajectory, with our exceptional growth in
the first quarter the result of strong fundamentals and the
additional benefit of lower delivered product costs.
“We are also pleased to announce the sale of our global surgical
solutions business. This transaction builds on the deliberate
actions we’ve taken to lay the foundation to transform our global
healthcare business into a high-quality Ecolab business. It enables
us to both deliver for our shareholders and provide more dedicated
service to our important hospital customers, leveraging our leading
environmental hygiene, instrument reprocessing offering, and water
technologies.
“Looking ahead, our confidence in delivering superior
performance in 2024 continues to strengthen despite unpredictable
macroeconomic conditions. We remain focused on capturing additional
market share by enhancing our customers’ business outcomes and
operational performance while reducing their water and energy
consumption. Additionally, we expect further robust organic
operating income margin expansion, driven by value-based pricing
and volume growth, as we continue to make smart investments to fuel
our long-term performance. Our business momentum is strong, and we
are committed to delivering excellent results for our customers and
shareholders in 2024 and beyond.”
First Quarter 2024 Consolidated
Results
Ecolab’s first quarter reported sales and organic sales both
increased 5% when compared to the prior year.
First quarter 2024 reported operating income increased 47%
including the impact of special gains and charges, which were a net
charge primarily related to restructuring costs. Organic operating
income increased 44%, as lower delivered product costs, value-based
pricing, and volume growth more than offset growth-oriented
investments in the business.
Reported other income in the first quarter of 2024 was rather
stable while reported interest expense decreased 4% versus the
prior year.
The reported income tax rate for the first quarter of 2024 was
9.2% compared with the reported rate of 18.0% in the first quarter
of 2023. The reported tax expense for the first quarter of 2024
includes a non-recurring, non-cash deferred tax benefit of $42
million associated with transferring certain intangibles between
affiliates. Excluding special gains and charges and discrete tax
items, the adjusted tax rate for the first quarter of 2024 was
19.9% compared with the adjusted tax rate of 19.8% in the first
quarter of 2023.
Reported net income increased 77% versus the prior year.
Excluding the impact of special gains and charges and discrete tax
items, adjusted net income increased 54% versus the prior year.
Reported diluted earnings per share increased 74% versus the
prior year. Adjusted diluted earnings per share increased 52% when
compared against the first quarter of 2023.
Currency translation had a $0.01 unfavorable impact on earnings
per share in the first quarter of 2024.
Ecolab reacquired approximately 0.8 million shares of its common
stock during the first quarter of 2024.
New segment alignment
Effective in the first quarter of 2024, Ecolab modified its
segment reporting. Global Pest Elimination is now a standalone
reportable segment, providing improved transparency on this
attractive high-growth and high-margin business. Please see our
Form 8-K filed March 15, 2024 for further details, including 2023
and 2022 sales and operating income shown in the new segment format
and translated at 2024 fixed currency exchange rates established at
the beginning of 2024.
First Quarter 2024 Segment
Review
Global Industrial
(unaudited)
First Quarter Ended March 31
Organic
(millions)
2024
2023
% Change
% Change
Fixed currency
Sales
$1,841.7
$1,808.2
2
%
1
%
Operating income
265.0
219.8
21
%
21
%
Operating income margin
14.4
%
12.2
%
Organic operating income margin
14.6
%
12.2
%
Public currency
Sales
$1,839.2
$1,809.1
2
%
Operating income
265.4
221.3
20
%
The Industrial segment includes Water,
Food & Beverage, and Paper
Organic sales increased 1% as modest growth in Food &
Beverage and Water (despite unfavorable year-over-year comparisons
in mining) more than offset the expected short-term decline in
Paper sales. Organic operating income increased 21% as lower
delivered product costs were partially offset by continued
investments in the business.
Global Institutional &
Specialty
(unaudited)
First Quarter Ended March 31
Organic
(millions)
2024
2023
% Change
% Change
Fixed currency
Sales
$1,270.3
$1,131.2
12
%
11
%
Operating income
248.0
130.1
91
%
90
%
Operating income margin
19.5
%
11.5
%
Organic operating income margin
19.7
%
11.5
%
Public currency
Sales
$1,266.7
$1,128.8
12
%
Operating income
247.0
129.8
90
%
The Institutional & Specialty segment
includes Institutional and Specialty
Organic sales increased 11%, with double-digit growth in both
the Institutional and Specialty divisions. Organic operating income
increased 90% as strong sales growth and lower delivered product
costs were partially offset by continued investments in the
business.
Global Healthcare & Life
Sciences
(unaudited)
First Quarter Ended March 31
Organic
(millions)
2024
2023
% Change
% Change
Fixed currency
Sales
$382.9
$386.1
(1)
%
(1)
%
Operating income
37.0
35.4
5
%
5
%
Operating income margin
9.7
%
9.2
%
Organic operating income margin
9.7
%
9.2
%
Public currency
Sales
$379.9
$379.7
0
%
Operating income
36.3
33.7
8
%
The Healthcare & Life Sciences segment
includes Healthcare and Life Sciences
Organic sales decreased 1% as lower Healthcare sales were
partially offset by growth in Life Sciences. We continue to take
deliberate action to transform our Healthcare business. The
announced sale of our global surgical solutions business will
create a sharper strategic focus on our infection prevention and
instrument reprocessing businesses to drive profitable long-term
growth. Life Sciences’ performance improved and more than offset
continued soft short-term industry trends. Organic operating income
increased 5% versus last year as pricing and lower delivered
product costs overcame continued targeted investments in the
business and softer volume.
Global Pest Elimination
(unaudited)
First Quarter Ended March 31
Organic
(millions)
2024
2023
% Change
% Change
Fixed currency
Sales
$266.8
$244.6
9
%
9
%
Operating income
48.8
44.5
10
%
10
%
Operating income margin
18.3
%
18.2
%
Organic operating income margin
18.3
%
18.2
%
Public currency
Sales
$266.1
$243.4
9
%
Operating income
48.7
44.3
10
%
The Global Pest Elimination segment
includes Pest Elimination
Organic sales increased 9%, led by robust growth in food &
beverage, restaurants, and food retail. Organic operating income
increased 10% as strong sales growth more than offset continued
investments in the business.
Corporate
(unaudited)
First Quarter Ended March 31
(millions)
2024
2023
Public currency
Sales
$ -
$10.6
Corporate operating expense
Nalco and Purolite amortization
49.7
50.2
Special (gains) and charges
29.8
27.7
Other
-
(0.4)
Total Corporate operating expense
$79.5
$77.5
First quarter of 2024 corporate segment includes:
- amortization expense of $28 million related to the Nalco merger
intangible assets and $22 million related to Purolite acquisition
intangible assets
- special gains and charges were a net charge of $30 million,
primarily related to restructuring costs
Special gains and charges for the first quarter of 2023
impacting operating expense were a net charge of $28 million and
primarily related to restructuring costs.
Sale of Global Surgical Solutions
Business
Ecolab has reached a definitive agreement to sell its global
surgical solutions business to Medline for a total consideration of
$950 million in cash, with an anticipated gain being recorded in
special gains and charges at closing. This business delivered more
than $400 million in sales in 2023 and is a leading supplier of
innovative sterile drape solutions for surgeons, patients, and
operating room equipment. Ecolab will continue to serve hospitals
through its infection prevention and instrument reprocessing
businesses. Infection prevention provides environmental hygiene
programs to reduce hospital acquired infections. Instrument
reprocessing provides cleaning and sterilization solutions for
instruments, which fits well with Ecolab’s growth model as it
combines a technological anchor with proprietary consumables and
service.
The sale is expected to close in the second half of 2024,
subject to regulatory clearances and other customary closing
conditions.
Business Outlook
2024
Ecolab expects full year 2024 adjusted diluted earnings per
share in the $6.40 - $6.70 range, rising 23% to 29% compared with
adjusted diluted earnings per share of $5.21 in 2023. This forecast
assumes soft but stable macroeconomic demand and favorability from
delivered product costs that eases through the third quarter of
2024, though the impact of global inflation remains hard to
predict.
Against this backdrop, Ecolab expects sales growth, driven by
continued value-based pricing and new business gains. The company
expects to leverage this growth with attractive organic operating
income margin expansion, driven by robust increases in gross
margin. Good underlying productivity is expected to be offset in
the short-term by growth-oriented investments in the business to
fuel Ecolab’s long-term performance. As a result, second quarter
SG&A expense is anticipated to increase by a couple of
percentage points sequentially and stabilize at that level in the
second half of the year. Quarterly adjusted diluted earnings per
share growth in the second half of 2024 is expected to
progressively normalize towards the upper-end of Ecolab’s long-term
12-15% target as favorability from lower delivered product costs
eases.
The company currently expects quantifiable special charges in
2024 to be approximately $0.15 per share, principally related to
restructuring charges. This does not include the expected gain on
the sale of the company’s global surgical solutions business. Other
than the special gains and charges noted above, other such amounts
are not currently quantifiable.
2024 – Second Quarter
Ecolab expects second quarter 2024 adjusted diluted earnings per
share in the $1.62 to $1.72 range, rising 31% to 39% compared with
adjusted diluted earnings per share of $1.24 a year ago.
The company currently expects quantifiable special charges in
the second quarter of 2024 to be approximately $0.02 per share,
principally related to restructuring charges. Other than the
special gains and charges noted above, other such amounts are not
currently quantifiable.
About Ecolab
A trusted partner for millions of customers, Ecolab (NYSE:ECL)
is a global sustainability leader offering water, hygiene and
infection prevention solutions and services that protect people and
the resources vital to life. Building on a century of innovation,
Ecolab has annual sales of $15 billion, employs more than 48,000
associates and operates in more than 170 countries around the
world. The company delivers comprehensive science-based solutions,
data-driven insights and world-class service to advance food
safety, maintain clean and safe environments, and optimize water
and energy use. Ecolab’s innovative solutions improve operational
efficiencies and sustainability for customers in the food,
healthcare, life sciences, hospitality and industrial markets.
www.ecolab.com
Ecolab will host a live webcast to review the first quarter
earnings announcement today at 1:00 p.m. Eastern Time. The webcast,
along with related materials, will be available to the public on
Ecolab's website at www.ecolab.com/investor. A replay of the
webcast and related materials will be available at that site.
Cautionary Statements Regarding
Forward-Looking Information
This news release contains certain statements relating to future
events and our intentions, beliefs, expectations and predictions
for the future which are forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995.
Words or phrases such as “will likely result,” “are expected to,”
“will continue,” “is anticipated,” “we believe,” “we expect,”
“estimate,” “project,” “may,” “will,” “intend,” “plan,” “believe,”
“target,” “forecast” (including the negative or variations thereof)
or similar terminology used in connection with any discussion of
future plans, actions or events generally identify forward-looking
statements. These forward-looking statements include, but are not
limited to, statements regarding macroeconomic conditions,
delivered product costs, and demand; our financial and business
performance and prospects, including sales, earnings, special
charges, margins, pricing, volume, productivity and new business;
and the expected timing and likelihood of completion of the sale of
the global surgical solutions business, including the timing,
receipt and terms and conditions of any required governmental and
regulatory clearance of the proposed transaction, the occurrence of
any event, change or other circumstances that could give rise to
the termination of the definitive agreement, the inability to
consummate the proposed transaction due to the failure to satisfy
other closing conditions, risks that the proposed transaction
disrupts current operations, and the amount of the costs, fees,
expenses and charges related to the proposed transaction. These
statements are based on the current expectations of management of
the company. There are a number of risks and uncertainties that
could cause actual results to differ materially from the
forward-looking statements included in this news release. In
particular, the ultimate results of any restructuring initiative
depend on a number of factors, including the development of final
plans, the impact of local regulatory requirements regarding
employee terminations, the time necessary to develop and implement
the restructuring initiatives and the level of success achieved
through such actions in improving competitiveness, efficiency and
effectiveness.
Additional risks and uncertainties that may affect operating
results and business performance are set forth under Item 1A of our
most recent Form 10-K, and our other public filings with the
Securities and Exchange Commission (the "SEC"), and include the
impact of economic factors such as the worldwide economy, interest
rates, foreign currency risk, reduced sales and earnings in our
international operations resulting from the weakening of local
currencies versus the U.S. dollar, demand uncertainty, supply chain
challenges and inflation; the vitality of the markets we serve;
exposure to global economic, political and legal risks related to
our international operations, including geopolitical instability
and the escalation of armed conflicts; our ability to successfully
execute organizational change and management transitions;
information technology infrastructure failures or breaches in data
security; difficulty in procuring raw materials or fluctuations in
raw material costs; the occurrence of severe public health
outbreaks not limited to COVID-19; our ability to acquire
complementary businesses and to effectively integrate such
businesses; our ability to execute key business initiatives; our
ability to successfully compete with respect to value, innovation
and customer support; pressure on operations from consolidation of
customers or vendors; restraints on pricing flexibility due to
contractual obligations and our ability to meet our contractual
commitments; the costs and effects of complying with laws and
regulations, including those relating to the environment, climate
change standards, and to the manufacture, storage, distribution,
sale and use of our products, as well as to the conduct of our
business generally, including labor and employment and
anti-corruption; potential chemical spill or release; our
commitments, goals, targets, objectives and initiatives related to
sustainability; potential to incur significant tax liabilities or
indemnification liabilities relating to the separation and
split-off of our ChampionX business; the occurrence of litigation
or claims, including class action lawsuits; the loss or insolvency
of a major customer or distributor; repeated or prolonged
government and/or business shutdowns or similar events; acts of war
or terrorism; natural or man-made disasters; water shortages;
severe weather conditions; changes in tax laws and unanticipated
tax liabilities; potential loss of deferred tax assets; our
indebtedness, and any failure to comply with covenants that apply
to our indebtedness; potential losses arising from the impairment
of goodwill or other assets; and other uncertainties or risks
reported from time to time in our reports to the SEC. In light of
these risks, uncertainties, assumptions and factors, the
forward-looking events discussed in this news release may not
occur. We caution that undue reliance should not be placed on
forward-looking statements, which speak only as of the date made.
Ecolab does not undertake, and expressly disclaims, any duty to
update any forward-looking statement whether as a result of new
information, future events or changes in expectations, except as
required by law.
Non-GAAP Financial
Information
This news release and certain of the accompanying tables include
financial measures that have not been calculated in accordance with
accounting principles generally accepted in the U.S. (“GAAP”).
These non-GAAP financial measures include:
- fixed currency sales
- organic sales
- adjusted cost of sales
- adjusted gross profit
- adjusted gross margin
- fixed currency operating income
- adjusted operating income
- adjusted fixed currency operating income
- adjusted fixed currency operating income margin
- organic operating income
- organic operating income margin
- adjusted tax rate
- adjusted net income attributable to Ecolab
- adjusted diluted earnings per share
- free cash flow
We provide these measures as additional information regarding
our operating results. We use these non-GAAP measures internally to
evaluate our performance and in making financial and operational
decisions, including with respect to incentive compensation. We
believe that our presentation of these measures provides investors
with greater transparency with respect to our results of operations
and that these measures are useful for period-to-period comparison
of results.
Our non-GAAP financial measures for adjusted cost of sales,
adjusted gross margin, adjusted gross profit and adjusted operating
income exclude the impact of special (gains) and charges and our
non-GAAP financial measures for adjusted tax rate, adjusted net
income attributable to Ecolab and adjusted diluted earnings per
share further exclude the impact of discrete tax items. We include
items within special (gains) and charges and discrete tax items
that we believe can significantly affect the period-over-period
assessment of operating results and not necessarily reflect costs
and/or income associated with historical trends and future results.
After tax special (gains) and charges are derived by applying the
applicable local jurisdictional tax rate to the corresponding
pre-tax special (gains) and charges.
We evaluate the performance of our international operations
based on fixed currency rates of foreign exchange, which eliminate
the translation impact of exchange rate fluctuations on our
international results. Fixed currency amounts included in this
release are based on translation into U.S. dollars at the fixed
foreign currency exchange rates established by management at the
beginning of 2023. We also provide our segment results based on
public currency rates for informational purposes.
Our reportable segments do not include the impact of intangible
asset amortization from the Nalco and Purolite transactions or the
impact of special (gains) and charges as these are not allocated to
the Company’s reportable segments.
Our non-GAAP financial measures for organic sales, organic
operating income and organic operating income margin are at fixed
currency and exclude the impact of special (gains) and charges, the
results of our acquired businesses from the first twelve months
post acquisition and the results of divested businesses from the
twelve months prior to divestiture. In addition, as part of the
separation, we also entered into an agreement with ChampionX to
provide, receive or transfer certain products for a transitionary
period. Transitionary period sales of product to ChampionX under
this agreement are recorded in product and equipment sales in the
Corporate segment along with the related cost of sales. The
remaining sales to ChampionX are recorded in product and equipment
sales in the Global Industrial segment along with the related cost
of sales. These transactions are removed from the consolidated
results as part of the calculation of the impact of acquisitions
and divestitures.
We define free cash flow as net cash provided by operating
activities less cash outlays for capital expenditures. It should
not be inferred that the entire free cash flow amount is available
for discretionary expenditures. It should not be considered a
substitute for income or cash flow data prepared in accordance with
U.S. GAAP and may not be comparable to similarly titled measures
used by other companies. We believe free cash flow is meaningful to
investors as it functions as a useful measure of performance and we
use this measure as an indication of the strength of the Company
and its ability to generate cash.
These non-GAAP financial measures are not in accordance with, or
an alternative to, GAAP and may be different from non-GAAP measures
used by other companies. Investors should not rely on any single
financial measure when evaluating our business. We recommend that
investors view these measures in conjunction with the GAAP measures
included in this news release. Reconciliations of our non-GAAP
measures are included in the following "Supplemental Non-GAAP
Reconciliations" and “Supplemental Diluted Earnings per Share
Information” tables included in this news release.
We do not provide reconciliations for non-GAAP estimates on a
forward-looking basis (including those contained in this news
release) when we are unable to provide a meaningful or accurate
calculation or estimation of reconciling items and the information
is not available without unreasonable effort. This is due to the
inherent difficulty of forecasting the timing and amount of various
items that have not yet occurred, are out of our control and/or
cannot be reasonably predicted, and that would impact reported
earnings per share and the reported tax rate, the most directly
comparable forward-looking GAAP financial measures to adjusted
earnings per share and the adjusted tax rate. For the same reasons,
we are unable to address the probable significance of the
unavailable information.
(ECL-E)
ECOLAB INC.
CONSOLIDATED STATEMENTS OF
INCOME
(unaudited)
First Quarter Ended
March 31
%
(millions, except per share)
2024
2023
Change
Product and equipment sales
$2,986.5
$2,876.3
Service and lease sales
765.4
695.3
Net sales
3,751.9
3,571.6
5
%
Product and equipment cost of sales
1,679.2
1,798.3
Service and lease cost of sales
448.9
406.9
Cost of sales (1)
2,128.1
2,205.2
(3
)%
Selling, general and administrative
expenses
1,077.7
990.3
9
%
Special (gains) and charges (1)
28.2
24.5
Operating income
517.9
351.6
47
%
Other (income) expense
(12.6)
(13.1)
(4
)%
Interest expense, net
71.6
74.2
(4
)%
Income before income taxes
458.9
290.5
58
%
Provision for income taxes
42.3
52.4
(19
)%
Net income including noncontrolling
interest
416.6
238.1
75
%
Net income attributable to noncontrolling
interest
4.5
4.7
Net income attributable to Ecolab
$412.1
$233.4
77
%
Earnings attributable to Ecolab per common
share
Basic
$1.44
$0.82
76
%
Diluted
$1.43
$0.82
74
%
Weighted-average common shares
outstanding
Basic
285.7
284.6
0
%
Diluted
287.8
285.9
1
%
(1) Cost of sales and Special (gains) and
charges in the Consolidated Statement of Income above include the
following:
First Quarter Ended
March 31
(millions)
2024
2023
Cost of sales
Restructuring activities
$1.6
$3.2
Subtotal (a)
1.6
3.2
Special (gains) and charges
Restructuring activities
18.1
12.6
Acquisition and integration activities
2.5
5.0
Other
7.6
6.9
Subtotal
28.2
24.5
Total special (gains) and charges
$29.8
$27.7
(a) Special charges of $1.6 million and
$0.8 million in the first quarter of 2024 and 2023, respectively,
were recorded in product and equipment cost of sales. Special
charges of $2.4 million in the first quarter of 2023 were recorded
in service and lease cost of sales.
ECOLAB INC.
REPORTABLE SEGMENT
INFORMATION
(unaudited)
First Quarter Ended March 31
Fixed Currency Rates
Public Currency Rates
%
%
(millions)
2024
2023
Change
2024
2023
Change
Net Sales
Global Industrial
$1,841.7
$1,808.2
2
%
$1,839.2
$1,809.1
2
%
Global Institutional & Specialty
1,270.3
1,131.2
12
%
1,266.7
1,128.8
12
%
Global Healthcare & Life Sciences
382.9
386.1
(1
)%
379.9
379.7
0
%
Global Pest Elimination
266.8
244.6
9
%
266.1
243.4
9
%
Corporate
-
10.7
(100
)%
-
10.6
(100
)%
Subtotal at fixed currency rates
3,761.7
3,580.8
5
%
3,751.9
3,571.6
5
%
Currency impact
(9.8)
(9.2)
*
-
-
*
Consolidated reported GAAP net sales
$3,751.9
$3,571.6
5
%
$3,751.9
$3,571.6
5
%
Operating Income (loss)
Global Industrial
$265.0
$219.8
21
%
$265.4
$221.3
20
%
Global Institutional & Specialty
248.0
130.1
91
%
247.0
129.8
90
%
Global Healthcare & Life Sciences
37.0
35.4
5
%
36.3
33.7
8
%
Global Pest Elimination
48.8
44.5
10
%
48.7
44.3
10
%
Corporate
(79.8)
(77.4)
*
(79.5)
(77.5)
*
Subtotal at fixed currency rates
519.0
352.4
47
%
517.9
351.6
47
%
Currency impact
(1.1)
(0.8)
*
-
-
*
Consolidated reported GAAP operating
income
$517.9
$351.6
47
%
$517.9
$351.6
47
%
* Not meaningful.
As shown in the “Fixed Currency Rates” tables above, we evaluate
the performance of our international operations based on fixed
currency exchange rates, which eliminate the impact of exchange
rate fluctuations on our international operations. Amounts shown in
the “Public Currency Rates” tables above reflect amounts translated
at actual public average rates of exchange prevailing during the
corresponding period and are provided for informational purposes.
The difference between the fixed currency exchange rates and the
public currency exchange rates is reported as “Currency impact” in
the “Fixed Currency Rates” tables above.
The Corporate segment includes amortization from the Nalco and
Purolite transactions intangible assets. The Corporate segment also
includes special (gains) and charges reported on the Consolidated
Statement of Income.
ECOLAB INC.
CONSOLIDATED BALANCE
SHEETS
(unaudited)
March 31
December 31
March 31
(millions)
2024
2023
2023
Assets
Current assets
Cash and cash equivalents
$479.9
$919.5
$419.4
Accounts receivable, net
2,786.6
2,834.2
2,667.8
Inventories
1,565.9
1,497.2
1,727.3
Other current assets
379.3
393.2
458.3
Total current assets
5,211.7
5,644.1
5,272.8
Property, plant and equipment, net
3,451.1
3,474.6
3,312.7
Goodwill
8,111.4
8,148.2
8,062.2
Other intangible assets, net
3,413.6
3,493.5
3,616.8
Operating lease assets
566.3
553.5
430.6
Other assets
544.4
532.7
556.4
Total assets
$21,298.5
$21,846.6
$21,251.5
Liabilities and Equity
Current liabilities
Short-term debt
$11.3
$630.4
$1,118.1
Accounts payable
1,607.1
1,566.3
1,469.9
Compensation and benefits
527.0
655.5
450.2
Income taxes
201.6
158.7
171.6
Other current liabilities
1,354.1
1,334.9
1,279.8
Total current liabilities
3,701.1
4,345.8
4,489.6
Long-term debt
7,528.6
7,551.4
7,521.7
Pension and postretirement benefits
640.4
651.7
665.5
Deferred income taxes
352.0
418.2
496.1
Operating lease liabilities
434.0
425.5
323.4
Other liabilities
416.8
381.8
390.2
Total liabilities
13,072.9
13,774.4
13,886.5
Equity
Common stock
366.8
365.7
365.0
Additional paid-in capital
6,917.6
6,766.7
6,626.5
Retained earnings
10,324.5
10,075.4
9,401.3
Accumulated other comprehensive loss
(1,881.2
)
(1,850.4
)
(1,737.2
)
Treasury stock
(7,522.1
)
(7,312.7
)
(7,311.4
)
Total Ecolab shareholders’ equity
8,205.6
8,044.7
7,344.2
Noncontrolling interest
20.0
27.5
20.8
Total equity
8,225.6
8,072.2
7,365.0
Total liabilities and equity
$21,298.5
$21,846.6
$21,251.5
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
First Quarter Ended
March 31
(millions, except percent and per
share)
2024
2023
Net sales
Reported GAAP net sales
$3,751.9
$3,571.6
Effect of foreign currency translation
9.8
9.2
Non-GAAP fixed currency sales
3,761.7
3,580.8
Effect of acquisitions and
divestitures
(44.1
)
(24.0
)
Non-GAAP organic sales
$3,717.6
$3,556.8
Cost of sales
Reported GAAP cost of sales
$2,128.1
$2,205.2
Special (gains) and charges
1.6
3.2
Non-GAAP adjusted cost of sales
$2,126.5
$2,202.0
Gross profit
Reported GAAP gross profit
$1,623.8
$1,366.4
Special (gains) and charges
1.6
3.2
Non-GAAP adjusted gross profit
$1,625.4
$1,369.6
Gross margin
Reported GAAP gross margin
43.3
%
38.3
%
Non-GAAP adjusted gross margin
43.3
%
38.3
%
Operating income
Reported GAAP operating income
$517.9
$351.6
Special (gains) and charges at public
currency rates
29.8
27.7
Non-GAAP adjusted operating income
547.7
379.3
Effect of foreign currency translation
1.2
0.8
Non-GAAP adjusted fixed currency operating
income
548.9
380.1
Effect of acquisitions and
divestitures
(0.9
)
(0.5
)
Non-GAAP organic operating income
$548.0
$379.6
Operating income margin
Reported GAAP operating income margin
13.8
%
9.8
%
Non-GAAP adjusted fixed currency operating
income margin
14.6
%
10.6
%
Non-GAAP organic operating income
margin
14.7
%
10.7
%
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
First Quarter Ended
March 31
(millions, except percent and per
share)
2024
2023
Net Income attributable to Ecolab
Reported GAAP net income attributable to
Ecolab
$412.1
$233.4
Special (gains) and charges, after tax
23.1
21.1
Discrete tax net expense (benefit)
(48.2
)
(4.0
)
Non-GAAP adjusted net income attributable
to Ecolab
$387.0
$250.5
Diluted EPS attributable to Ecolab
Reported GAAP diluted EPS
$1.43
$0.82
Special (gains) and charges, after tax
0.08
0.07
Discrete tax net expense (benefit)
(0.17
)
(0.01
)
Non-GAAP adjusted diluted EPS
$1.34
$0.88
Provision for Income Taxes
Reported GAAP tax rate
9.2
%
18.0
%
Special gains and charges
0.8
0.5
Discrete tax items
9.9
1.3
Non-GAAP adjusted tax rate
19.9
%
19.8
%
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
First Quarter Ended March 31
2024
2023
(millions)
Fixed Currency
Impact of Acquisitions and
Divestitures
Organic
Fixed Currency
Impact of Acquisitions and
Divestitures
Organic
Net Sales
Global Industrial
$1,841.7
($26.1)
$1,815.6
$1,808.2
($13.3)
$1,794.9
Global Institutional & Specialty
1,270.3
(18.0)
1,252.3
1,131.2
-
1,131.2
Global Healthcare & Life Sciences
382.9
-
382.9
386.1
-
386.1
Global Pest Elimination
266.8
-
266.8
244.6
-
244.6
Corporate
-
-
-
10.7
(10.7)
-
Subtotal at fixed currency rates
3,761.7
(44.1)
3,717.6
3,580.8
(24.0)
3,556.8
Currency impact
(9.8)
(9.2)
Consolidated reported GAAP net sales
$3,751.9
$3,571.6
Operating Income (loss)
Global Industrial
$265.0
$ -
$265.0
$219.8
($0.2)
$219.6
Global Institutional & Specialty
248.0
(0.9)
247.1
130.1
-
130.1
Global Healthcare & Life Sciences
37.0
-
37.0
35.4
-
35.4
Global Pest Elimination
48.8
-
48.8
44.5
-
44.5
Corporate
(49.9)
-
(49.9)
(49.7)
(0.3)
(50.0)
Subtotal at fixed currency rates
548.9
(0.9)
548.0
380.1
(0.5)
379.6
Special (gains) and charges at fixed
currency rates
29.9
27.7
Reported OI at fixed currency rates
519.0
352.4
Currency impact
(1.1)
(0.8)
Consolidated reported GAAP operating
income
$517.9
$351.6
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
Selected Cash Flow items
First Quarter Ended
March 31
(millions)
2024
2023
Cash provided by operating activities
$649.4
$198.2
Less: Capital expenditures
(201.5)
(173.7)
Free cash flow
$447.9
$24.5
ECOLAB INC.
SUPPLEMENTAL DILUTED EARNINGS
PER SHARE INFORMATION
(unaudited)
The table below provides a reconciliation
of diluted earnings per share, as reported, to the non-GAAP measure
of adjusted diluted earnings per share.
First
Second
Six
Third
Nine
Fourth
Quarter
Quarter
Months
Quarter
Months
Quarter
Year
Ended
Ended
Ended
Ended
Ended
Ended
Ended
Mar. 31
June 30
June 30
Sept. 30
Sept. 30
Dec. 31
Dec. 31
2023
2023
2023
2023
2023
2023
2023
Diluted earnings per share, as reported
(U.S. GAAP)
$0.82
$1.15
$1.97
$1.41
$3.38
$1.41
$4.79
Adjustments:
Special (gains) and charges (1)
0.07
0.08
0.15
0.12
0.27
0.11
0.38
Discrete tax expense (benefits) (2)
(0.01)
0.01
0.00
0.01
0.01
0.03
0.04
Adjusted diluted earnings per share
(Non-GAAP)
$0.88
$1.24
$2.12
$1.54
$3.66
$1.55
$5.21
First
Second
Six
Third
Nine
Fourth
Quarter
Quarter
Months
Quarter
Months
Quarter
Year
Ended
Ended
Ended
Ended
Ended
Ended
Ended
Mar. 31
June 30
June 30
Sept. 30
Sept. 30
Dec. 31
Dec. 31
2024
2024
2024
2024
2024
2024
2024
Diluted earnings per share, as reported
(U.S. GAAP)
$1.43
Adjustments:
Special (gains) and charges (3)
0.08
Discrete tax expense (benefits) (4)
(0.17)
Adjusted diluted earnings per share
(Non-GAAP)
$1.34
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Per share amounts do not necessarily sum due to changes in
shares outstanding and rounding.
(1) Special (gains) and charges for 2023 includes charges of
$21.1 million, $23.3 million, $34.2 million and $30.6 million, net
of tax, in the first, second, third and fourth quarters,
respectively. These charges were primarily related to restructuring
charges, acquisition and integration charges and litigation and
other charges.
(2) Discrete tax expenses (benefits) for 2023 includes ($4.0)
million, $2.8 million, $3.5 million and $8.9 million in the first,
second, third and fourth quarters, respectively. These expenses
(benefits) are primarily associated with stock compensation excess
tax benefits and other discrete tax benefits.
(3) Special (gains) and charges for 2024 includes charges of
$23.1 million, net of tax, in the first quarter. These charges were
primarily related to restructuring charges.
(4) Discrete tax (benefits) for 2024 includes ($48.2) million in
the first quarter. These expenses (benefits) are primarily
associated with transferring certain intangibles between
affiliates, stock compensation excess tax benefits and other
discrete tax benefits.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240429584742/en/
Investor Contact: Andrew Hedberg
(651) 250-2185 Cairn Clark (651) 250-2291
Media Contact: Nigel Glennie (651)
250-2576
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