10-QPeriod: Q3 FY2006

ECOLAB INC. Quarterly Report for Q3 Ended Sep 30, 2006

Filed November 3, 2006For Securities:ECL

Summary

Ecolab Inc. (ECL) reported strong performance for the third quarter and the first nine months of fiscal year 2006. The company demonstrated consistent growth in net sales, driven by robust performance in its United States operations, particularly in Cleaning & Sanitizing and Other Services segments. International operations also contributed positively, showing growth when measured in fixed currency rates. Financially, Ecolab saw an increase in both net income and diluted net income per share compared to the prior year. Gross profit margins remained stable, indicating effective cost management despite rising raw material costs. The company actively engaged in share repurchases and demonstrated a commitment to returning value to shareholders through dividends. Ecolab also made strategic acquisitions to expand its market reach and product offerings, though these were noted as not material to the overall consolidated financial statements. Overall, the report indicates a healthy financial trajectory with continued operational strength.

Key Highlights

  • 1Consolidated net sales increased by 10% to $1.279 billion in Q3 2006 compared to Q3 2005.
  • 2Diluted net income per share rose by 13% to $0.43 in Q3 2006 compared to Q3 2005.
  • 3US Cleaning & Sanitizing operations saw a 10% sales increase in Q3 2006, driven by double-digit Institutional sales growth.
  • 4International operations sales increased by 6% in Q3 2006 when measured in fixed currency rates.
  • 5The company repurchased 1.4 million shares of common stock during the third quarter.
  • 6Gross profit margin remained strong at 51.1% in Q3 2006, reflecting effective pricing and cost-saving initiatives.
  • 7Ecolab completed two strategic acquisitions in June and September 2006 to enhance its product offerings and market presence.

Frequently Asked Questions

The main driver of Ecolab's sales growth in the third quarter of 2006 was strong performance in its United States operations, particularly the Cleaning & Sanitizing and Other Services segments, which experienced double-digit growth in several areas. International operations also contributed positively.

Ecolab maintained stable gross profit margins by benefiting from pricing and cost-saving initiatives that offset higher delivered product costs. Selling, general, and administrative expenses as a percentage of net sales remained consistent or decreased, managed through pricing, cost savings, and sales leverage, despite investments in business growth areas.

Ecolab returned capital to shareholders through both dividends and share repurchases. They declared a dividend of $0.1000 per common share in Q3 2006 and actively repurchased shares, acquiring 1.4 million shares during the third quarter under their share repurchase program.

Yes, Ecolab made two acquisitions in the third quarter of 2006: Shield Medicare Ltd. in the UK and DuChem Industries, Inc. in Georgia. While these acquisitions were intended to expand their market reach and product offerings, the company stated that they were not material to its consolidated financial statements.