01—Abstract
Summary
Summary of the 10-Q filed November 4, 2010. Cited figures are marked; the original filing is the authoritative source.
Ecolab Inc. reported solid financial results for the third quarter and nine months ended September 30, 2010.
Net sales saw a modest increase of 1% to $1.6 billiona for the quarter, and a 4% increase to $4.5 billion for the nine-month period, with growth particularly strong in constant currency terms. This growth was driven by volume increases and pricing adjustments across key segments, notably U.S. Cleaning & Sanitizing and International operations. The company demonstrated improved profitability, with operating income up 10% to $245.1 million for the quarter and 24% to $603.2 million for the nine months, benefiting from cost-saving measures and increased sales.
Net income attributable to Ecolab also saw a significant increase of 20% to $174.2 millionb for the quarter and 32% for the nine months. Diluted earnings per share rose to $0.74 for the quarter, reflecting the company's effective operational management and strategic initiatives.
02—Key points
Key Highlights
- Consolidated net sales increased 1% to $1.6 billion in Q3 2010 and 4% to $4.5 billion for the first nine months of 2010, with constant currency sales growing 3% in both periods.
- Operating income increased significantly by 10% to $245.1 million in Q3 2010 and by 24% to $603.2 million for the first nine months.
- Net income attributable to Ecolab increased by 20% to $174.2 million in Q3 2010 and by 32% to $399.0 million for the first nine months.
- Diluted EPS rose to $0.74 in Q3 2010 from $0.60 in Q3 2009, a 23% increase.
- Gross profit margin improved to 51.1% in Q3 2010 from 50.6% in Q3 2009, driven by volume and cost savings.
- The company repurchased approximately 2.9 million shares of common stock in Q3 2010 under its share repurchase program.
- Ecolab completed the acquisition of the commercial laundry division of Dober Chemical Corp. in Q3 2010, strengthening its U.S. and Canada Textile Care business.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2010, Ecolab Inc. kept $0.11.
- Revenue$1.56B100.0%
- Cost of revenue−$763.4M48.9%
- Gross profit$798.5M51.1%
- Operating costs−$553.4M35.4%
- Operating income$245.1M15.7%
- Interest, other & tax−$70.8M4.5%
- Net income$174.3M11.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2010filed November 4, 2010Financial Statements
Q3 FY2010 against Q3 FY2009
| Line item | Q3 FY2010Q3 FY2009 | Change |
|---|---|---|
| Revenue | $1.56B$1.55B | +1.0% |
| Cost of Revenue | $763.40M$763.90M | −0.1% |
| Gross Profit | $798.50M$782.50M | +2.0% |
| SG&A Expenses | $558.50M$554.10M | +0.8% |
| Operating Income | $245.10M$223.00M | +9.9% |
| Interest Expense | $16.30M$16.40M | −0.6% |
| Net Income | $174.30M$145.20M | +20.0% |
| EPS (Basic) | $0.75$0.61 | +23.0% |
| EPS (Diluted) | $0.74$0.60 | +23.3% |
| Shares Outstanding (Basic) | 232.80M237.00M | −1.8% |
| Shares Outstanding (Diluted) | 237.00M240.60M | −1.5% |
05—Questions
Frequently Asked Questions
What was the main driver of Ecolab's sales growth in this quarter?
Sales growth was primarily driven by volume increases and pricing adjustments across various segments. In fixed currency rates, sales grew by 3% for both the third quarter and the first nine months of 2010, indicating underlying operational strength despite negative foreign currency translation impacts.
How did special gains and charges affect the company's reported earnings?
Special gains and charges, particularly restructuring charges in the prior year and a gain on sale of investment in the current quarter, impacted year-over-year comparisons. Excluding these items, adjusted operating income increased by 4% for the third quarter, and adjusted net income attributable to Ecolab increased by 8%, indicating solid underlying performance.
What is Ecolab's stance on its financial liquidity and debt?
Ecolab reported strong operating cash flow of $638.2 million for the nine months ended September 30, 2010. The company stated it has sufficient borrowing capacity and expects to fund foreseeable cash requirements through operating cash flow, cash reserves, and borrowings. The debt-to-capitalization ratio slightly increased to 33% from 32%, primarily due to a higher commercial paper balance and share repurchases.
What significant events or acquisitions occurred during this reporting period?
Ecolab acquired the commercial laundry division of Dober Chemical Corp. in the third quarter of 2010, which is expected to enhance its Textile Care business. The company also sold an investment in a small U.S. business, recognizing a gain of $5.9 million.
06—Continue