10-QPeriod: Q2 FY2018

ECOLAB INC. Quarterly Report for Q2 Ended Jun 30, 2018

Filed August 2, 2018For Securities:ECL

Summary

Ecolab Inc. (ECL) reported solid financial results for the second quarter and first six months of 2018, demonstrating continued growth and operational efficiency. Net sales increased by 7% year-over-year for the quarter, reaching $3.7 billion, driven by volume, pricing, and acquisitions. Net income attributable to Ecolab grew by 19% to $351 million in the second quarter, and diluted Earnings Per Share (EPS) rose by 20% to $1.20, reflecting effective cost management and strategic execution. The company highlighted strong performance across its key segments, particularly in Global Industrial and Global Energy, with notable contributions from Water, Food & Beverage, and Life Sciences within the Industrial segment. The company also initiated a significant new restructuring plan expected to yield approximately $200 million in annual cost savings by 2021, demonstrating a commitment to ongoing efficiency improvements. While facing some headwinds such as increased delivered product costs, Ecolab's proactive approach to pricing and cost control, coupled with strategic acquisitions and innovation, positions it for continued success.

Financial Highlights

54 data points
Beta

Revenue

$3.69B

41.8% Gross Margin

Net Income

$351.30M

9.5% Net Margin

EPS (Diluted)

$1.20

Total Assets

$19.95B

Cash & Equivalents

$54.20M

Free Cash Flow

$89.30M

Financial Statements
Beta
Revenue$3.69B
Cost of Revenue$2.15B
Gross Profit$1.54B
SG&A Expenses$1.04B
Operating Income$494.60M
Interest Expense$60.20M
Net Income$351.30M
EPS (Basic)$1.22
EPS (Diluted)$1.20
Shares Outstanding (Basic)288.80M
Shares Outstanding (Diluted)293.30M

Key Highlights

  • 1Net sales increased by 7% to $3.7 billion in Q2 2018, with fixed currency sales up 4%.
  • 2Net income attributable to Ecolab grew 19% to $351 million, and diluted EPS increased 20% to $1.20 in Q2 2018.
  • 3The company launched a new restructuring plan aiming for $200 million in annual cost savings by 2021.
  • 4Global Industrial segment sales grew 6% on a fixed currency basis, driven by Water, Food & Beverage, and Life Sciences.
  • 5Global Energy segment sales increased 5% on a fixed currency basis, with strong performance in well stimulation.
  • 6Ecolab maintained compliance with debt covenants and had a strong liquidity position with $54.2 million in cash and cash equivalents.
  • 7The company repurchased shares totaling $216 million in the first six months of 2018, partially offsetting dilution and returning capital to shareholders.

Frequently Asked Questions

Sales growth in the second quarter of 2018 was primarily driven by a combination of volume increases, price adjustments, and contributions from acquisitions. The company saw strong performance across its Global Industrial and Global Energy segments, with specific growth areas including Water, Food & Beverage, and Life Sciences.

Ecolab initiated a new restructuring plan in Q2 2018 focused on leveraging technology, systems investments, and organizational changes. The plan is expected to be completed by the end of 2020 with anticipated costs of $170 million, and it is projected to generate approximately $200 million in annual cost savings by 2021.

In Q2 2018, Ecolab reported a 19% increase in net income attributable to Ecolab to $351 million and a 20% increase in diluted EPS to $1.20 compared to Q2 2017. This growth was achieved despite some increased delivered product costs and investments in the business, demonstrating effective operational management. Special charges and discrete tax items also influenced year-over-year comparisons, but adjusted figures showed continued underlying growth.

As of June 30, 2018, Ecolab maintained a strong financial position with total assets of $20.0 billion and total liabilities of $12.0 billion. The company had $54.2 million in cash and cash equivalents, and a $2.0 billion credit facility. Ecolab reported compliance with its debt covenants, indicating a solid liquidity and capital resources position.