01—Abstract
Summary
Summary of the 10-Q filed October 29, 2021. Cited figures are marked; the original filing is the authoritative source.
Ecolab Inc. (ECL) reported strong financial results for the third quarter and first nine months of 2021, demonstrating robust recovery and growth.
Net sales increased by 10% to $3.32 billiona for the quarter and 7% to $9.37 billion for the nine-month period compared to the prior year. This growth was driven by volume increases, pricing adjustments, and a recovery in market conditions across key segments, particularly Global Industrial and Global Institutional & Specialty. Profitability also saw significant improvement, with operating income rising 13% to $466 million for the quarter and 24% to $1.21 billion for the nine months.
Net income from continuing operations attributable to Ecolab surged by 32% to $324 millionb in the third quarter, and by 24% to $829 million for the nine-month period. Diluted EPS from continuing operations also showed strong growth, reaching $1.12 for the quarter and $2.87 for the nine months.
The company managed inflationary pressures on product costs through effective pricing strategies and operational efficiencies. Looking ahead, Ecolab announced a significant subsequent event: an agreement to acquire Purolite Corporation for $3.7 billionc, which is expected to further enhance its offerings in life sciences and critical industrial markets.
02—Key points
Key Highlights
- Net sales increased by 10% to $3.32 billion in Q3 2021 and by 7% to $9.37 billion for the first nine months of 2021, compared to the prior year.
- Operating income grew by 13% to $465.8 million in Q3 2021 and by 24% to $1.21 billion for the nine-month period.
- Net income from continuing operations attributable to Ecolab increased by 32% to $324.5 million in Q3 2021 and by 24% to $828.9 million for the nine-month period.
- Diluted EPS from continuing operations was $1.12 in Q3 2021, a 32% increase, and $2.87 for the nine-month period, a 25% increase.
- The company experienced strong recovery in its Global Industrial (up 7% fixed currency sales) and Global Institutional & Specialty (up 18% fixed currency sales) segments.
- Despite inflationary pressures on delivered product costs, adjusted gross margin remained robust, supported by pricing and volume leverage.
- Ecolab announced a subsequent event: an agreement to acquire Purolite Corporation for $3.7 billion, enhancing its life sciences and industrial purification solutions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2021, Ecolab Inc. kept $0.10.
- Revenue$3.32B100.0%
- Cost of revenue−$2.02B60.7%
- Gross profit$1.30B39.3%
- Operating costs−$838.3M25.2%
- Operating income$465.8M14.0%
- Interest, other & tax−$137.2M4.1%
- Net income$328.6M9.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2021filed October 29, 2021Financial Statements
Q3 FY2021 against Q3 FY2020
| Line item | Q3 FY2021Q3 FY2020 | Change |
|---|---|---|
| Revenue | $3.32B$3.02B | +10.0% |
| Cost of Revenue | $2.02B$1.77B | +14.0% |
| Gross Profit | $1.30B$1.25B | +4.4% |
| SG&A Expenses | $832.00M$802.60M | +3.7% |
| Operating Income | $465.80M$411.40M | +13.2% |
| Interest Expense | $78.30M$139.00M | −43.7% |
| Net Income | $328.60M$246.20M | +33.5% |
| EPS (Basic) | $1.13$0.86 | +31.4% |
| EPS (Diluted) | $1.12$0.85 | +31.8% |
| Shares Outstanding (Basic) | 286.40M285.40M | +0.4% |
| Shares Outstanding (Diluted) | 289.20M288.40M | +0.3% |
05—Questions
Frequently Asked Questions
How did Ecolab's revenue perform in the third quarter and the first nine months of 2021 compared to the prior year?
In the third quarter of 2021, Ecolab's net sales increased by 10% to $3.32 billion. For the first nine months of 2021, net sales grew by 7% to $9.37 billion compared to the same periods in 2020. This growth was driven by a combination of volume increases, pricing adjustments, and recovery in market conditions.
What was the profitability performance for Ecolab during this period?
Profitability improved significantly. Operating income rose by 13% to $465.8 million in the third quarter and by 24% to $1.21 billion for the nine-month period. Net income from continuing operations attributable to Ecolab saw a substantial increase of 32% to $324.5 million in the quarter and 24% to $828.9 million for the nine months. Diluted EPS from continuing operations was $1.12 in the third quarter and $2.87 for the nine months, reflecting strong year-over-year growth.
What are the key drivers behind the sales growth, and how did the company manage cost pressures?
Sales growth was primarily driven by recovering market conditions, new business wins, and pricing initiatives across key segments, notably Global Industrial and Global Institutional & Specialty. The company managed higher delivered product costs and inflationary pressures through effective pricing strategies and operational efficiencies, maintaining a strong adjusted gross margin.
What is the significance of the announced acquisition of Purolite Corporation?
Ecolab announced an agreement to acquire Purolite Corporation for $3.7 billion. This strategic acquisition is expected to enhance Ecolab's capabilities in high-end ion exchange resins for separation and purification solutions, particularly strengthening its position in life sciences (drug production and biopharma purification) and critical industrial markets (microelectronics, nuclear power, food and beverage).
06—Continue