10-QPeriod: Q2 FY2021

ECOLAB INC. Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 5, 2021For Securities:ECL

Summary

Ecolab Inc. reported strong financial results for the second quarter and first six months ended June 30, 2021. Net sales increased significantly year-over-year, driven by recovering market conditions, new business wins, and pricing actions across its segments, particularly in Global Industrial and Global Institutional & Specialty. The company demonstrated robust operating income growth, more than doubling in the second quarter compared to the prior year, benefiting from increased sales volume and improved gross margins. Net income and diluted EPS from continuing operations also saw substantial year-over-year increases. Ecolab continues to focus on strategic growth initiatives and operational efficiencies, as evidenced by ongoing restructuring programs aimed at simplifying processes and leveraging technology. The company maintained a strong liquidity position and remained compliant with its debt covenants, reinforcing its financial stability.

Financial Highlights

53 data points
Beta

Revenue

$3.16B

41.7% Gross Margin

Net Income

$313.60M

9.9% Net Margin

EPS (Diluted)

$1.08

Total Assets

$18.53B

Cash & Equivalents

$1.40B

Free Cash Flow

$359.50M

Financial Statements
Beta
Revenue$3.16B
Cost of Revenue$1.84B
Gross Profit$1.32B
SG&A Expenses$853.30M
Operating Income$447.80M
Interest Expense$51.70M
Net Income$313.60M
EPS (Basic)$1.09
EPS (Diluted)$1.08
Shares Outstanding (Basic)286.00M
Shares Outstanding (Diluted)288.80M

Key Highlights

  • 1Reported net sales increased 18% to $3.16 billion in Q2 2021 and 6% to $6.05 billion for the first six months, compared to the prior year periods.
  • 2Operating income significantly improved, rising 133% to $448 million in Q2 2021, driven by sales volume leverage, pricing actions, and improved gross margins.
  • 3Net income from continuing operations attributable to Ecolab grew substantially, up 141% to $311 million in Q2 2021.
  • 4Diluted EPS from continuing operations was $1.08 in Q2 2021, a 145% increase year-over-year.
  • 5The company's Global Industrial segment saw a 4% increase in fixed currency sales, while Global Institutional & Specialty experienced a strong 34% increase, reflecting recovering markets and new business wins.
  • 6Ecolab maintained a strong liquidity position with $1.4 billion in cash and cash equivalents as of June 30, 2021.
  • 7The company is progressing with its restructuring programs (Institutional Advancement Program and Accelerate 2020) aimed at enhancing efficiency and long-term growth.

Frequently Asked Questions

Ecolab's net sales increased by 18% to $3.16 billion in the second quarter of 2021 compared to the same period in 2020. This growth was primarily driven by recovering market conditions across its key segments, successful new business wins, and the implementation of pricing actions. The Global Industrial and Global Institutional & Specialty segments, in particular, showed strong performance.

Profitability saw substantial improvement. Operating income more than doubled, increasing by 133% to $448 million in the second quarter of 2021, compared to $192 million in the second quarter of 2020. This was driven by increased sales volume, improved gross margins (41.7% in Q2 2021 vs. 39.1% in Q2 2020), and effective SG&A expense management. Net income from continuing operations attributable to Ecolab increased by 141% to $311 million.

The separation of the ChampionX business, completed in June 2020, is reported as discontinued operations. Therefore, the historical results of ChampionX are excluded from the 'continuing operations' figures presented for the current period. The financial statements reflect only the results of Ecolab's ongoing businesses.

Ecolab expects continued strong year-on-year performance in the second half of 2021, anticipating a U.S. recovery and reopening in Europe. They have implemented pricing actions to manage inflation and rising product costs. The company remains confident in its long-term outlook and its positioning for continued growth, despite ongoing uncertainties related to the COVID-19 pandemic and global economic conditions.