01—Abstract
Summary
Summary of the 10-K filed March 1, 2019. Cited figures are marked; the original filing is the authoritative source.
Ecolab Inc. reported strong financial performance for the fiscal year ending December 31, 2018, with net sales increasing by 6% to $14.7 billiona, 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 $5.25b. 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%c 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.
02—Key points
Key Highlights
- Net sales grew by 6% to $14.7 billion in 2018, with positive contributions from volume and pricing.
- Adjusted operating income (fixed currency) increased by 5%, reflecting improved operational efficiency.
- Adjusted diluted earnings per share (EPS) rose to $5.25 from $4.68 in the prior year.
- Cash flow from operating activities remained strong at $2.3 billion, supporting investments and shareholder returns.
- The company increased its quarterly cash dividend by 12%, continuing its track record of consistent dividend growth.
- Ecolab is executing the 'Accelerate 2020' restructuring plan, expected to yield $325 million in annual cost savings by 2021.
- The Global Industrial segment saw robust sales growth driven by strong performance in Water and Life Sciences.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Ecolab Inc. kept $0.12.
- Revenue$12.22B100.0%
- Cost of revenue−$6.88B56.3%
- Gross profit$5.35B43.7%
- Operating costs−$3.62B29.6%
- Operating income$1.73B14.1%
- Interest, other & tax−$299.2M2.4%
- Net income$1.43B11.7%
Where FY2018 revenue went
$12.22B- Cost of revenue: $6.88B, 56% of revenue
- SG&A: $3.51B, 29% of revenue
- Net income: $1.43B, 12% of revenue
- R&D: $193.0M, 1.6% of revenue
- Interest, other & tax: $299.2M, 2.4% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed March 1, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $12.22B$13.84B | −11.7% |
| Cost of Revenue | $6.88B$8.06B | −14.7% |
| Gross Profit | $5.35B$5.77B | −7.4% |
| R&D Expenses | $193.00M$201.00M | −4.0% |
| SG&A Expenses | $3.51B$3.83B | −8.4% |
| Operating Income | $1.73B$1.95B | −11.4% |
| Interest Expense | $235.50M$274.60M | −14.2% |
| Net Income | $1.43B$1.50B | −5.0% |
| EPS (Basic) | $4.95$5.20 | −4.8% |
| EPS (Diluted) | $4.88$5.12 | −4.7% |
| Shares Outstanding (Basic) | 288.60M289.60M | −0.3% |
| Shares Outstanding (Diluted) | 292.80M294.00M | −0.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of Ecolab's sales growth in 2018?
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.
How did the company manage its costs and profitability?
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.
What is the company's strategy regarding its Global Energy segment?
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.
How did Ecolab return capital to shareholders in 2018?
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.
06—Continue