Ecolab Reports 10% Sales Growth in Q2

By Hao Liu • Tuesday, July 28 13:06 • Permanent Link

Ecolab said second-quarter sales rose 10% to $4.42 billion from $4.03 billion a year earlier, with organic sales up 5% after a 4% increase in the prior year period. Volume rose 1%, despite about a 1% headwind tied to customer disruptions in the Middle East, while pricing improved to 4% from weaker levels earlier in the year.

Reported diluted earnings per share increased to $1.90 from $1.84, while adjusted diluted EPS climbed 11% to $2.09 from $1.89. Net income attributable to Ecolab rose 2% to $534.9 million from $524.2 million.

Operating income increased 7% to $757.9 million from $710.1 million on a reported basis, and adjusted operating income rose 10% to $809.0 million from $737.2 million. Reported operating margin was 17.2%, while organic operating income margin improved 40 basis points to 18.8%.

Gross margin was 44.1% on a reported basis. Ecolab said adjusted gross margin fell 60 basis points, citing the Ovivo Electronics acquisition, but organic gross margin was stable as pricing offset higher commodity costs.

By segment, Global Water sales rose 10% on an organic basis to $2.22 billion from $2.01 billion, with operating income up 5% to $347.7 million. Organic operating income margin slipped to 15.9% from 16.4%.

Global Institutional & Specialty sales increased 4% organically to $1.62 billion from $1.56 billion, while operating income grew 6% to $389.9 million. Margin improved to 24.1% from 23.6%.

Global Pest Elimination posted 9% organic sales growth to $350.5 million from $321.2 million, and operating income rose 13% to $70.5 million. Margin increased to 20.4% from 19.5%.

Global Life Sciences was the fastest-growing segment, with sales up 15% organically to $221.0 million from $191.4 million. Operating income jumped 46% to $58.5 million, and margin widened to 26.5% from 21.0%.

Ecolab also said digital sales increased 27% to $121 million.

For the full year, the company raised its adjusted diluted EPS outlook to $8.05 to $8.25 from $8.03 to $8.23, implying growth of 7% to 10% versus last year. For the third quarter, it expects adjusted diluted EPS of $2.13 to $2.23, up 3% to 8% from $2.07 a year ago. As a result of these announcements, the company's shares have moved 4.11% on the market, and are now trading at a price of $282.5332. For the full picture, make sure to review ECOLAB INC.'s 8-K report.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.