01—Abstract
Summary
Summary of the 10-K filed February 24, 2017. Cited figures are marked; the original filing is the authoritative source.
Ecolab Inc. reported total sales of $13.2 billiona for the fiscal year ended December 30, 2016.
The company experienced a 3%b decline in reported sales compared to the prior year, primarily due to unfavorable foreign currency exchange rates. However, on a fixed currency basis, sales were flat, indicating underlying resilience in its core businesses. The company saw growth in its Global Institutional and Global Industrial segments, which were partially offset by a decline in the Global Energy segment, reflecting challenging conditions in the energy market.
Ecolab continued to invest in technology and talent, focusing on its "Circle the Customer – Circle the Globe" strategy to deliver value and optimize operational efficiencies for its diverse customer base across more than 170 countries. Despite the headwinds, Ecolab demonstrated solid operational performance, with an increase in reported operating income of 23% to $1.9 billionc. Adjusted operating income, excluding special items, saw a slight decrease of 2% but an increase of 3% on a fixed currency basis.
Diluted Earnings Per Share (EPS) on a reported basis increased by 25% to $4.14d, while adjusted diluted EPS remained flat at $4.37 for both 2016 and 2015, reflecting the company's ability to manage profitability amidst market fluctuations. Ecolab maintained its commitment to shareholder returns, increasing its quarterly cash dividend for the 25th consecutive year.
02—Key points
Key Highlights
- Reported sales of $13.2 billion, a 3% decrease from 2015, impacted by foreign currency translation; fixed currency sales were flat.
- Global Institutional and Global Industrial segments showed strong fixed currency sales growth, while Global Energy segment experienced a decline due to depressed energy market conditions.
- Reported operating income increased by 23% to $1.9 billion, reflecting successful management of costs and operational efficiencies.
- Adjusted diluted EPS remained stable at $4.37 for both 2016 and 2015, demonstrating consistent earnings power.
- The company increased its quarterly cash dividend by 6%, marking its 25th consecutive annual dividend rate increase and 80th consecutive year of dividend payments.
- Ecolab made strategic investments in its business, including a 33% minority investment in Aquatech International LLC, and planned acquisitions to expand its offerings and geographic reach.
- The company maintained an investment-grade balance sheet with credit ratings of A-/Baa1.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Ecolab Inc. kept $0.09.
- Revenue$13.15B100.0%
- Cost of revenue−$7.53B57.3%
- Gross profit$5.62B42.7%
- Operating costs−$3.75B28.5%
- Operating income$1.87B14.2%
- Interest, other & tax−$641.2M4.9%
- Net income$1.23B9.3%
Where FY2016 revenue went
$13.15B- Cost of revenue: $7.53B, 57% of revenue
- SG&A: $3.71B, 28% of revenue
- Net income: $1.23B, 9.3% of revenue
- R&D: $189.0M, 1.4% of revenue
- Interest, other & tax: $641.2M, 4.9% of revenue
Kept 9.3% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 24, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $13.15B$13.55B | −2.9% |
| Cost of Revenue | $7.53B$7.22B | +4.3% |
| Gross Profit | $5.62B$6.32B | −11.1% |
| R&D Expenses | $189.00M$191.00M | −1.0% |
| SG&A Expenses | $3.71B$4.35B | −14.7% |
| Operating Income | $1.87B$1.56B | +19.8% |
| Interest Expense | $285.40M$253.70M | +12.5% |
| Net Income | $1.23B$1.00B | +22.6% |
| EPS (Basic) | $4.20$3.38 | +24.3% |
| EPS (Diluted) | $4.14$3.32 | +24.7% |
| Shares Outstanding (Basic) | 292.50M296.40M | −1.3% |
| Shares Outstanding (Diluted) | 296.70M301.40M | −1.6% |
05—Questions
Frequently Asked Questions
What was Ecolab's overall financial performance in 2016?
Ecolab reported total sales of $13.2 billion in 2016, a 3% decrease from 2015 primarily due to unfavorable foreign currency exchange rates. However, sales on a fixed currency basis were flat. The company's operating income increased 23% to $1.9 billion, and reported diluted EPS rose 25% to $4.14, showing resilience and effective cost management.
How did the different business segments perform?
The Global Institutional and Global Industrial segments demonstrated solid growth in fixed currency sales. The Global Energy segment experienced a decline in sales, reflecting challenging conditions in the oil and gas market. The 'Other' segment also showed growth.
What strategic initiatives did Ecolab undertake in 2016?
Ecolab continued to invest in its business through strategic acquisitions and investments, including a 33% minority investment in Aquatech International LLC. The company also focused on its 'Circle the Customer – Circle the Globe' strategy, emphasizing technology and talent development to drive long-term success.
How did Ecolab manage its capital and return value to shareholders?
Ecolab maintained a strong balance sheet and generated significant cash flow from operations. The company increased its quarterly cash dividend by 6%, continuing its long history of dividend growth, and continued its share repurchase program.
06—Continue