Summary
Ecolab Inc. reported a decrease in net sales and net income for the first quarter of 2009 compared to the same period in 2008, largely attributable to the global recession, higher product costs, and unfavorable foreign currency exchange rates. The company also incurred significant restructuring charges related to its plan to streamline operations, reduce workforce, and optimize locations. Despite these headwinds, Ecolab saw strong sales growth in certain U.S. businesses (Kay and Healthcare) and in its Latin America and Canadian operations. Management actions such as pricing and cost savings initiatives are in place to mitigate the impact of the economic downturn.
Financial Highlights
28 data pointsBeta
Financial Statements
Beta
| Revenue | $1.35B |
| Cost of Revenue | $707.90M |
| Gross Profit | $640.30M |
| SG&A Expenses | $516.30M |
| Operating Income | $97.50M |
| Net Income | $57.70M |
| EPS (Basic) | $0.24 |
| EPS (Diluted) | $0.24 |
| Shares Outstanding (Basic) | 236.10M |
| Shares Outstanding (Diluted) | 238.10M |
Key Highlights
- 1Consolidated net sales decreased by 8% to $1.3 billion, or 1% on a fixed currency basis, impacted by the global recession and a change in distributor incentive programs.
- 2Net income attributable to shareholders decreased by 44% to $57.4 million ($0.24 per diluted share), compared to $102.9 million ($0.41 per diluted share) in the prior year.
- 3The company incurred approximately $33 million in restructuring charges ($21 million after tax) in the first quarter of 2009, impacting earnings per share by $0.09.
- 4U.S. Cleaning & Sanitizing segment sales declined 5%, with specific businesses like Kay and Healthcare showing positive growth, while Institutional and Food & Beverage saw decreases.
- 5International sales, when measured in fixed currency rates, increased by 3%, driven by strong performance in Latin America and Canada.
- 6Operating income decreased by 39% to $97.5 million, with a notable 52% decline in the International segment's operating income at fixed currency rates.
- 7The company maintained a strong liquidity position with $79.5 million in cash and cash equivalents and access to a $600 million credit facility, despite a decrease in cash provided by operating activities.
Frequently Asked Questions
The primary reasons for the decline in net sales and net income were the global recession, increased delivered product costs, unfavorable foreign currency exchange rates, and significant restructuring charges related to operational streamlining efforts. A change in distributor incentive programs also impacted the timing of sales.
In the first quarter of 2009, Ecolab recorded approximately $33 million in restructuring charges ($21 million after tax), which reduced diluted earnings per share by $0.09. The company anticipates additional restructuring expenses in 2009, with total pretax charges expected to range from $65 million to $75 million. These actions are projected to yield annualized pretax savings of $70 million to $80 million.
Despite the overall downturn, Ecolab experienced strong sales growth in its U.S. Kay and Healthcare businesses. Internationally, Latin America and Canada showed robust sales performance. The company also noted positive contributions from pricing and cost-saving initiatives across various segments.
Ecolab maintained a solid financial position with $4.7 billion in total assets and $1.2 billion in total debt as of March 31, 2009. The company had $79.5 million in cash and cash equivalents and access to a $600 million credit facility, indicating sufficient liquidity to meet its foreseeable operating needs. However, cash provided by operating activities decreased year-over-year due to factors like a voluntary pension contribution and lower earnings.