10-KPeriod: FY2018

ECOLAB INC. Annual Report, Year Ended Dec 31, 2018

Filed March 1, 2019For Securities:ECL

Summary

Ecolab Inc. reported strong financial performance for the fiscal year ending December 31, 2018, with net sales increasing by 6% to $14.7 billion, driven by both volume and pricing initiatives. The company demonstrated robust operational efficiency, leading to a 5% increase in adjusted operating income (fixed currency). Despite a slight decrease in reported diluted EPS due to special charges, adjusted diluted EPS saw a significant increase to $5.25. Ecolab maintained a strong balance sheet and a healthy net debt to EBITDA ratio, supported by consistent operating cash flow generation of $2.3 billion. The company continued its commitment to shareholder returns with a 12% increase in its quarterly dividend, marking its 27th consecutive annual increase. The company's diversified business segments, including Global Industrial, Global Institutional, and Global Energy, all contributed to growth. Key drivers included new product introductions, successful business wins, and effective pricing strategies to offset rising product costs. Ecolab's ongoing investment in technology and operational improvements, such as the Accelerate 2020 restructuring plan, is expected to further enhance efficiency and competitiveness.

Financial Highlights

55 data points
Beta

Revenue

$12.22B

43.7% Gross Margin

Net Income

$1.43B

11.7% Net Margin

EPS (Diluted)

$4.88

Total Assets

$20.07B

Cash & Equivalents

$114.70M

Free Cash Flow

$1.50B

Financial Statements
Beta
Revenue$12.22B
Cost of Revenue$6.88B
Gross Profit$5.35B
R&D Expenses$193.00M
SG&A Expenses$3.51B
Operating Income$1.73B
Interest Expense$235.50M
Net Income$1.43B
EPS (Basic)$4.95
EPS (Diluted)$4.88
Shares Outstanding (Basic)288.60M
Shares Outstanding (Diluted)292.80M

Key Highlights

  • 1Net sales grew by 6% to $14.7 billion in 2018, with positive contributions from volume and pricing.
  • 2Adjusted operating income (fixed currency) increased by 5%, reflecting improved operational efficiency.
  • 3Adjusted diluted earnings per share (EPS) rose to $5.25 from $4.68 in the prior year.
  • 4Cash flow from operating activities remained strong at $2.3 billion, supporting investments and shareholder returns.
  • 5The company increased its quarterly cash dividend by 12%, continuing its track record of consistent dividend growth.
  • 6Ecolab is executing the 'Accelerate 2020' restructuring plan, expected to yield $325 million in annual cost savings by 2021.
  • 7The Global Industrial segment saw robust sales growth driven by strong performance in Water and Life Sciences.

Frequently Asked Questions

Ecolab's net sales grew by 6% to $14.7 billion in 2018. This growth was primarily driven by an increase in sales volume across its key segments and successful pricing initiatives implemented to offset higher delivered product costs. Acquisitions also contributed to the overall sales increase.

Ecolab focused on improving operational efficiency and implementing cost-saving measures. While reported gross margin saw a slight decrease due to higher delivered product costs, adjusted gross margin remained strong. The company's 'Accelerate 2020' restructuring plan is a key initiative aimed at further optimizing costs through technology, process automation, and structural improvements, with expected annual savings of $325 million by 2021.

Ecolab has announced plans to spin off its Upstream Energy business into an independent publicly traded company, expected to be completed in 2020. This strategic move aims to allow both Ecolab and the separated entity to focus on their respective core businesses and unlock greater value.

Ecolab demonstrated a strong commitment to shareholder returns by increasing its quarterly cash dividend by 12% in December 2018, marking its 27th consecutive annual dividend increase. The company also continued its share repurchase programs, repurchasing $562 million of its common stock during 2018.