Summary
Ecolab Inc. reported its second-quarter and first-half financial results for the period ending June 30, 2009. The company experienced a decline in net sales, down 8% for both the quarter and the year-to-date period, primarily due to unfavorable foreign currency exchange rates. When measured at fixed currency rates, sales were relatively flat year-over-year for the quarter. Operating income and net income attributable to Ecolab also saw significant decreases, largely impacted by substantial restructuring charges initiated in the first quarter of 2009 aimed at streamlining operations and improving efficiency. These restructuring efforts involved workforce reductions and facility consolidations, with anticipated annualized pretax savings of $70-80 million. Despite the challenging global economic environment and increased product costs, Ecolab demonstrated resilience through strong new account gains and pricing strategies, particularly in its U.S. Kay and Healthcare businesses, and Canadian operations, which reported double-digit growth. The company is actively managing its costs and optimizing its business structure to mitigate the effects of the recession and improve profitability. Ecolab's financial position remains solid, with a decrease in its debt-to-capitalization ratio and sufficient liquidity through operating cash flow and credit facilities.
Financial Highlights
53 data points| Revenue | $1.44B |
| Cost of Revenue | $725.10M |
| Gross Profit | $716.40M |
| SG&A Expenses | $526.40M |
| Operating Income | $165.00M |
| Interest Expense | $16.90M |
| Net Income | $99.50M |
| EPS (Basic) | $0.42 |
| EPS (Diluted) | $0.41 |
| Shares Outstanding (Basic) | 236.50M |
| Shares Outstanding (Diluted) | 239.50M |
Key Highlights
- 1Consolidated net sales decreased by 8% to $1.4 billion for the second quarter and $2.8 billion for the first six months of 2009, primarily due to unfavorable foreign currency impacts.
- 2Operating income for the second quarter declined by 22% to $165 million, and for the first six months by 29% to $262.5 million, significantly impacted by restructuring charges.
- 3Net income attributable to Ecolab decreased by 29% to $99.1 million for the second quarter and by 35% to $156.5 million for the first six months of 2009.
- 4The company incurred significant restructuring charges of $24 million in Q2 2009 and $57 million year-to-date as part of a plan to reduce its global workforce and consolidate locations, expecting annualized pretax savings of $70-80 million.
- 5U.S. Cleaning & Sanitizing sales saw a modest increase of 1% in the second quarter, driven by strong performance in Kay and Healthcare segments, while International sales, at fixed currency rates, declined 1%.
- 6The debt-to-capitalization ratio improved to 37% at June 30, 2009, down from 42% at December 31, 2008, indicating a stronger balance sheet.
- 7Cash provided by operating activities was $299.4 million for the first six months of 2009, slightly down from $310.7 million in the prior year, impacted by a voluntary pension contribution and lower earnings.