01—Abstract
Summary
Summary of the 10-K filed February 28, 2020. Cited figures are marked; the original filing is the authoritative source.
Ecolab Inc.'s 2019 10-K filing demonstrates a year of solid performance, marked by a 2% increase in net sales to $14.9 billiona and a 9% rise in diluted Earnings Per Share (EPS) to $5.33.
The company highlighted strong growth driven by pricing strategies, new product introductions, and improved operating efficiencies across its Global Industrial and Global Institutional segments, while the Global Energy segment experienced a slight sales decline due to market conditions. Key strategic initiatives included ongoing investments in technology and process simplification under the Accelerate 2020 plan, which is expected to deliver significant cost savings.
Ecolab also announced a significant move to separate its Upstream Energy business through a reverse Morris Trust transaction with Apergy Corporation, positioning both entities for more focused growth. The company maintained a strong balance sheet, with a commitment to 'A' range credit ratings and a continued focus on returning capital to shareholders through dividends and share repurchases, underscoring its financial discipline and confidence in future prospects.
02—Key points
Key Highlights
- Reported net sales increased by 2% to $14.9 billion in 2019, with fixed currency sales up 4%.
- Diluted EPS rose by 9% to $5.33, and adjusted diluted EPS (excluding special items and discrete tax items) increased by 11% to $5.82.
- Gross margin improved to 41.5% from 41.2% in the prior year, with adjusted gross margin at 41.7%.
- Operating income increased by 3% to $2.01 billion, with adjusted operating income (fixed currency) up 11%.
- The Global Industrial segment showed robust fixed currency sales growth of 7%, driven by pricing and volume.
- The company announced a plan to separate its Upstream Energy business by combining it with Apergy Corporation.
- Ecolab continued its commitment to shareholder returns with a 2% increase in its quarterly cash dividend and ongoing share repurchases.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Ecolab Inc. kept $0.12.
- Revenue$12.56B100.0%
- Cost of revenue−$7.05B56.1%
- Gross profit$5.52B43.9%
- Operating costs−$3.67B29.2%
- Operating income$1.85B14.7%
- Interest, other & tax−$286.3M2.3%
- Net income$1.56B12.4%
Where FY2019 revenue went
$12.56B- Cost of revenue: $7.05B, 56% of revenue
- SG&A: $3.55B, 28% of revenue
- Net income: $1.56B, 12% of revenue
- R&D: $190.0M, 1.5% of revenue
- Interest, other & tax: $286.3M, 2.3% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 28, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $12.56B$12.22B | +2.8% |
| Cost of Revenue | $7.05B$6.88B | +2.5% |
| Gross Profit | $5.52B$5.35B | +3.2% |
| R&D Expenses | $190.00M$193.00M | −1.6% |
| SG&A Expenses | $3.55B$3.51B | +1.3% |
| Operating Income | $1.85B$1.73B | +6.8% |
| Interest Expense | $214.40M$235.50M | −9.0% |
| Net Income | $1.56B$1.43B | +9.1% |
| EPS (Basic) | $5.41$4.95 | +9.3% |
| EPS (Diluted) | $5.33$4.88 | +9.2% |
| Shares Outstanding (Basic) | 288.10M288.60M | −0.2% |
| Shares Outstanding (Diluted) | 292.50M292.80M | −0.1% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Ecolab's sales growth in 2019?
Ecolab's sales growth in 2019 was primarily driven by pricing strategies, which more than offset unfavorable sales mix. Volume also contributed positively, particularly in the Global Industrial and Global Institutional segments.
What is the significance of the announced separation of the Upstream Energy business?
The planned separation of the Upstream Energy business, combining it with Apergy Corporation in a reverse Morris Trust transaction, is intended to create two more focused and agile companies. This strategic move aims to unlock greater value for shareholders by allowing each business to pursue its own growth strategies more effectively.
How did Ecolab manage its costs and margins in 2019?
Ecolab improved its gross margin to 41.5% and its adjusted gross margin to 41.7%. This was achieved through effective pricing strategies and ongoing cost-saving initiatives, including those under the Accelerate 2020 restructuring plan, which are expected to deliver significant future cost reductions.
What is Ecolab's financial outlook and commitment to shareholders?
Ecolab demonstrated strong financial health with increased sales and EPS, healthy operating income, and robust cash flow generation. The company remains committed to maintaining its 'A' range credit ratings and to returning capital to shareholders through consistent dividend increases and share repurchases, reflecting confidence in its business model and future growth prospects.
06—Continue