Ecolab Inc. (NYSE: ECL):
SECOND QUARTER
HIGHLIGHTS
- Reported sales $4.0 billion, +3% versus last year, including
a 1% headwind from unfavorable foreign currency exchange. Organic
sales +4% as Institutional & Specialty segment sales growth
normalized to a strong +7% as expected. The segment lapped last
year’s very strong pricing delivery. Performance across the Pest
Elimination, Industrial and Healthcare & Life Sciences segments
all improved.
- Reported operating income margin 16.5%. Organic operating
income margin 17.0%, +360 bps as lower supply chain costs, value
pricing, and volume growth more than offset growth-oriented
investments in the business.
- Reported diluted EPS $1.71, +49%. Adjusted diluted EPS,
excluding special gains and charges and discrete tax items were
$1.68, +35%.
- Second quarter cash flow from operating activities $611
million; free cash flow increased to $414 million.
OUTLOOK
- 2024: Increased full year 2024 adjusted diluted earnings per
share range to $6.50 - $6.70, +25% - 29%, from prior $6.40 - $6.70
range.
- 3Q 2024: Expect third quarter 2024 adjusted diluted earnings
per share in the $1.75 - $1.85 range, +14% - 20%.
Second Quarter Ended June 30
Reported
Adjusted
(unaudited)
Public Currency Rates
%
Public Currency Rates
%
(millions, except per share)
2024
2023
Change
2024
2023
Change
Net sales
$3,985.8
$3,852.1
3
%
$3,985.8
$3,852.1
3
%
Operating income
656.9
484.7
36
%
669.8
513.8
30
%
Net income attributable to Ecolab
490.9
329.7
49
%
481.5
355.8
35
%
Diluted earnings per share attributable to
Ecolab
$1.71
$1.15
49
%
$1.68
$1.24
35
%
Organic
%
2024
2023
Change
Net sales
$3,983.7
$3,839.0
4
%
Operating income
677.0
512.8
32
%
CEO Comment
Christophe Beck, Ecolab’s chairman and chief executive officer,
said, “We delivered another quarter of strong performance
consistent with our expectations. Our global team executed very
well to drive continued good sales growth and exceptional organic
operating income margin expansion. Organic sales growth remained in
its expected 4-5% range as growth within our Institutional &
Specialty segment normalized to a strong 7% as we lapped last
year’s robust pricing delivery. Performance across the rest of our
segments progressed further. Good new business wins were enabled by
our breakthrough innovations and continued investments in sales
firepower, digital technologies and service capabilities. Our
strong value pricing was driven by continued total value delivery
to customers. This great fundamental performance, along with
moderately favorable delivered product costs, helped to deliver
very strong operating income margin expansion and earnings per
share growth.
“Going forward, we expect to continue to outperform soft
macroeconomic trends around the world as we focus on capturing
additional market share by enhancing our customers’ business
outcomes and operational performance while reducing their water and
energy consumption. To further fuel our growth, we are excited to
launch our One Ecolab initiative, which will further harness our
leading digital technologies and global service capabilities to
deliver best-in-class total customer value, unlock significant
enterprise selling opportunities, and drive improved operational
performance. With very strong first half results and great momentum
heading into the second half, we are confident in delivering strong
performance in 2024.”
Second Quarter 2024 Consolidated
Results
Ecolab’s second quarter reported sales increased 3% and organic
sales increased 4% when compared to the prior year.
Second quarter 2024 reported operating income increased 36%
including the impact of special gains and charges, which were a net
charge primarily related to restructuring and professional service
fees associated with the sale of our global surgical solutions
business. Organic operating income increased 32%, as lower supply
chain costs, value pricing, and volume growth more than offset
growth-oriented investments in the business.
Reported other income in the second quarter of 2024 decreased
slightly while reported interest expense was stable versus the
prior year.
The reported income tax rate for the second quarter of 2024 was
16.2% compared with the reported rate of 20.6% in the second
quarter of 2023. Excluding special gains and charges and discrete
tax items, the adjusted tax rate for the second quarter of 2024 was
19.5% compared with the adjusted tax rate of 19.9% in the second
quarter of 2023.
Reported net income increased 49% versus the prior year.
Excluding the impact of special gains and charges and discrete tax
items, adjusted net income increased 35% versus the prior year.
Reported diluted earnings per share increased 49% versus the
prior year. Adjusted diluted earnings per share increased 35% when
compared against the second quarter of 2023.
Currency translation had a $0.04 unfavorable impact on earnings
per share in the second quarter of 2024.
Ecolab repurchased approximately 1.4 million shares of its
common stock during the second quarter of 2024.
Second Quarter 2024 Segment
Review
Global Industrial
(unaudited)
Second Quarter Ended June 30
Organic
(millions)
2024
2023
% Change
% Change
Fixed currency
Sales
$1,956.0
$1,906.4
3
%
2
%
Operating income
311.9
264.9
18
%
18
%
Operating income margin
15.9
%
13.9
%
Organic operating income margin
16.1
%
13.9
%
Public currency
Sales
$1,936.5
$1,909.5
1
%
Operating income
306.7
266.6
15
%
The Industrial segment includes Water,
Food & Beverage, and Paper
Organic sales growth improved further to 2%, driven by
accelerating Water sales growth. Water’s performance was led by
strong growth in downstream and light water, where global high-tech
continues to grow double-digits. As expected, stable Food &
Beverage sales reflected good new business wins, which offset
comparisons to last year’s very strong double-digit growth. While
Paper sales were also stable versus last year, performance
continued to improve sequentially as good new business offset soft
but stable customer demand. Organic operating income increased 18%
as lower delivered product costs and value pricing were partially
offset by continued investments in the business.
Global Institutional &
Specialty
(unaudited)
Second Quarter Ended June 30
Organic
(millions)
2024
2023
% Change
% Change
Fixed currency
Sales
$1,372.7
$1,273.7
8
%
7
%
Operating income
320.7
213.4
50
%
50
%
Operating income margin
23.4
%
16.8
%
Organic operating income margin
23.5
%
16.8
%
Public currency
Sales
$1,363.9
$1,272.2
7
%
Operating income
318.3
213.0
49
%
As expected, organic sales growth normalized to a strong 7%, as
the segment lapped last year’s double-digit growth. Both the
Institutional and Specialty divisions drove robust sales gains,
continuing to outperform market trends. Organic operating income
increased 50% as strong sales growth and lower supply chain costs
were partially offset by continued investments in the business.
Global Healthcare & Life
Sciences
(unaudited)
Second Quarter Ended June 30
Organic
(millions)
2024
2023
% Change
% Change
Fixed currency
Sales
$395.0
$395.3
0
%
0
%
Operating income
33.7
33.2
2
%
2
%
Operating income margin
8.5
%
8.4
%
Organic operating income margin
8.5
%
8.4
%
Public currency
Sales
$389.7
$390.8
0
%
Operating income
32.5
32.0
2
%
Organic sales were stable as better growth in Life Sciences
offset modestly lower Healthcare sales. Life Sciences’ improved
performance was driven by good new business wins, which continued
to overcome soft short-term industry trends. Modestly lower sales
in Healthcare reflected strategic low margin business exits as we
continue to execute Healthcare’s business transformation. Organic
operating income increased 2% as value pricing overcame continued
targeted investments in the business.
Global Pest Elimination
(unaudited)
Second Quarter Ended June 30
Organic
(millions)
2024
2023
% Change
% Change
Fixed currency
Sales
$297.1
$269.7
10
%
9
%
Operating income
62.2
52.4
19
%
20
%
Operating income margin
20.9
%
19.4
%
Organic operating income margin
21.3
%
19.4
%
Public currency
Sales
$295.7
$269.0
10
%
Operating income
61.9
52.4
18
%
Organic sales increased 9%, led by double-digit growth in food
& beverage, restaurants, and food retail. Organic operating
income increased 20% as strong sales growth more than offset
continued investments in the business.
Corporate
(unaudited)
Second Quarter Ended June 30
(millions)
2024
2023
Public currency
Sales
$ -
$10.6
Corporate operating expense
Nalco and Purolite amortization
49.6
50.6
Special (gains) and charges
12.9
29.1
Other
-
(0.4
)
Total Corporate operating expense
$62.5
$79.3
Second quarter of 2024 corporate segment includes:
- amortization expense of $28 million related to the Nalco merger
intangible assets and $22 million related to Purolite acquisition
intangible assets
- special gains and charges were a net charge of $13 million,
primarily related to restructuring and professional service fees
associated with the sale of our global surgical solutions
business
Special gains and charges for the second quarter of 2023
impacting operating expense were a net charge of $29 million
primarily related to restructuring costs.
One Ecolab Initiative Ecolab
is adding more fuel to its growth and margin expansion journey by
launching One Ecolab. This initiative will leverage our vast and
existing portfolio of digital technologies as well as new
artificial intelligence solutions by harnessing the value of over
100,000 system connections and billions of proprietary data
points.
As we help millions of customers in 40 industries and more than
170 countries to deliver the best outcomes at the best possible
operating performance by reducing water and energy usage, we know
what best-in-class performance is and how to deliver it. This will
help us deliver attractive growth by continuing to capture more
share of our existing $55 billion cross-sell opportunity.
At the same time, these new digital technologies will allow us
to enhance the way we operate and serve our customers by realigning
the functional work done in many countries into global centers of
excellence. The resulting total annualized savings of approximately
$140 million are expected to be realized by 2027.
As part of this program, Ecolab expects to incur pre-tax charges
of approximately $225 million by the end of 2027.
Business Outlook 2024
Ecolab expects full year 2024 adjusted diluted earnings per share
to improve further to the $6.50 to $6.70 range, rising 25% to 29%
compared with adjusted diluted earnings per share of $5.21 in 2023.
As previously discussed, this range includes an unfavorable impact
in the second half of 2024 from the sale of Ecolab’s global
surgical solutions business. The transaction is expected to close
very soon, and the unfavorable impact to 2024 adjusted diluted
earnings per share is now estimated to be $0.08 per share. This
forecast assumes soft but stable macroeconomic demand and
favorability from delivered product costs that eases through the
third quarter of 2024, though the impact of global inflation
remains hard to predict.
Ecolab expects continued solid sales growth, driven by value
pricing and new business gains. The company also expects to
leverage this growth with attractive organic operating income
margin expansion, driven by robust increases in gross margin. Good
underlying productivity is expected to be offset in the short-term
by growth-oriented investments in the business to fuel Ecolab’s
long-term performance. With these investments, SG&A expense in
the second half of the year is anticipated to be similar to first
half levels. Ecolab expects quarterly adjusted diluted earnings per
share growth to progressively normalize towards the company’s
long-term 12-15% target as solid growth continues and impacts from
delivered product costs are anticipated to normalize exiting
2024.
The company currently expects quantifiable special charges in
2024 to be approximately $0.25 per share, principally related to
restructuring charges. This does not include the expected gain on
the sale of the company’s global surgical solutions business. Other
than the special gains and charges noted above, other such amounts
are not currently quantifiable.
2024 – Third Quarter Ecolab expects third quarter 2024
adjusted diluted earnings per share in the $1.75 to $1.85 range,
rising 14% to 20% compared with adjusted diluted earnings per share
of $1.54 a year ago.
The company currently expects quantifiable special charges in
the third quarter of 2024 to be approximately $0.08 per share,
principally related to restructuring charges. This does not include
the expected gain on the sale of the company’s global surgical
solutions business. Other than the special gains and charges noted
above, other such amounts are not currently quantifiable.
About Ecolab A trusted
partner for millions of customers, Ecolab (NYSE:ECL) is a global
sustainability leader offering water, hygiene and infection
prevention solutions and services that protect people and the
resources vital to life. Building on a century of innovation,
Ecolab has annual sales of $15 billion, employs more than 48,000
associates and operates in more than 170 countries around the
world. The company delivers comprehensive science-based solutions,
data-driven insights and world-class service to advance food
safety, maintain clean and safe environments, and optimize water
and energy use. Ecolab’s innovative solutions improve operational
efficiencies and sustainability for customers in the food,
healthcare, life sciences, hospitality and industrial markets.
www.ecolab.com
Ecolab will host a live webcast to review the second quarter
earnings announcement today at 1:00 p.m. Eastern Time. The webcast,
along with related materials, will be available to the public on
Ecolab's website at www.ecolab.com/investor. A replay of the
webcast and related materials will be available at that site.
Cautionary Statements Regarding
Forward-Looking Information This news release contains
certain statements relating to future events and our intentions,
beliefs, expectations and predictions for the future which are
forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. Words or phrases such as
“will likely result,” “are expected to,” “will continue,” “is
anticipated,” “we believe,” “we expect,” “estimate,” “project,”
“may,” “will,” “intend,” “plan,” “believe,” “target,” “forecast”
(including the negative or variations thereof) or similar
terminology used in connection with any discussion of future plans,
actions or events generally identify forward-looking statements.
These forward-looking statements include, but are not limited to,
statements regarding macroeconomic conditions, delivered product
costs, and demand; our financial and business performance and
prospects, including sales, earnings, special charges, margins,
pricing, productivity, investments and new business; the
opportunities, savings and charges associated with the One Ecolab
Initiative; and the expected timing, likelihood of completion and
impact of the sale of the global surgical solutions business,
including the timing, receipt and terms and conditions of any
required governmental and regulatory clearance of the proposed
transaction, the occurrence of any event, change or other
circumstances that could give rise to the termination of the
definitive agreement, the inability to consummate the proposed
transaction due to the failure to satisfy other closing conditions,
risks that the proposed transaction disrupts current operations and
the amount of the costs, fees, expenses and charges related to the
proposed transaction. These statements are based on the current
expectations of management of the company. There are a number of
risks and uncertainties that could cause actual results to differ
materially from the forward-looking statements included in this
news release. In particular, the ultimate results of any
restructuring initiative depend on a number of factors, including
the development of final plans, the impact of local regulatory
requirements regarding employee terminations, the time necessary to
develop and implement the restructuring initiatives and the level
of success achieved through such actions in improving
competitiveness, efficiency and effectiveness.
Additional risks and uncertainties that may affect operating
results and business performance are set forth under Item 1A of our
most recent Form 10-K, and our other public filings with the
Securities and Exchange Commission (the "SEC"), and include the
impact of economic factors such as the worldwide economy, interest
rates, foreign currency risk, reduced sales and earnings in our
international operations resulting from the weakening of local
currencies versus the U.S. dollar, demand uncertainty, supply chain
challenges and inflation; the vitality of the markets we serve;
exposure to global economic, political and legal risks related to
our international operations, including geopolitical instability
and the escalation of armed conflicts; our ability to successfully
execute organizational change and management transitions;
information technology infrastructure failures or breaches in data
security; difficulty in procuring raw materials or fluctuations in
raw material costs; the occurrence of severe public health
outbreaks not limited to COVID-19; our ability to acquire
complementary businesses and to effectively integrate such
businesses; our ability to execute key business initiatives; our
ability to successfully compete with respect to value, innovation
and customer support; pressure on operations from consolidation of
customers or vendors; restraints on pricing flexibility due to
contractual obligations and our ability to meet our contractual
commitments; the costs and effects of complying with laws and
regulations, including those relating to the environment, climate
change standards, and to the manufacture, storage, distribution,
sale and use of our products, as well as to the conduct of our
business generally, including labor and employment and
anti-corruption; potential chemical spill or release; our
commitments, goals, targets, objectives and initiatives related to
sustainability; potential to incur significant tax liabilities or
indemnification liabilities relating to the separation and
split-off of our ChampionX business; the occurrence of litigation
or claims, including class action lawsuits; the loss or insolvency
of a major customer or distributor; repeated or prolonged
government and/or business shutdowns or similar events; acts of war
or terrorism; natural or man-made disasters; water shortages;
severe weather conditions; changes in tax laws and unanticipated
tax liabilities; potential loss of deferred tax assets; our
indebtedness, and any failure to comply with covenants that apply
to our indebtedness; potential losses arising from the impairment
of goodwill or other assets; and other uncertainties or risks
reported from time to time in our reports to the SEC. In light of
these risks, uncertainties, assumptions and factors, the
forward-looking events discussed in this news release may not
occur. We caution that undue reliance should not be placed on
forward-looking statements, which speak only as of the date made.
Ecolab does not undertake, and expressly disclaims, any duty to
update any forward-looking statement whether as a result of new
information, future events or changes in expectations, except as
required by law.
Non-GAAP Financial
Information
This news release and certain of the accompanying tables include
financial measures that have not been calculated in accordance with
accounting principles generally accepted in the U.S. (“GAAP”).
These non-GAAP financial measures include:
- fixed currency sales
- organic sales
- adjusted cost of sales
- adjusted gross profit
- adjusted gross margin
- fixed currency operating income
- adjusted operating income
- adjusted fixed currency operating income
- adjusted fixed currency operating income margin
- organic operating income
- organic operating income margin
- adjusted tax rate
- adjusted net income attributable to Ecolab
- adjusted diluted earnings per share
- free cash flow
We provide these measures as additional information regarding
our operating results. We use these non-GAAP measures internally to
evaluate our performance and in making financial and operational
decisions, including with respect to incentive compensation. We
believe that our presentation of these measures provides investors
with greater transparency with respect to our results of operations
and that these measures are useful for period-to-period comparison
of results.
Our non-GAAP financial measures for adjusted cost of sales,
adjusted gross margin, adjusted gross profit and adjusted operating
income exclude the impact of special (gains) and charges and our
non-GAAP financial measures for adjusted tax rate, adjusted net
income attributable to Ecolab and adjusted diluted earnings per
share further exclude the impact of discrete tax items. We include
items within special (gains) and charges and discrete tax items
that we believe can significantly affect the period-over-period
assessment of operating results and not necessarily reflect costs
and/or income associated with historical trends and future results.
After tax special (gains) and charges are derived by applying the
applicable local jurisdictional tax rate to the corresponding
pre-tax special (gains) and charges.
We evaluate the performance of our international operations
based on fixed currency rates of foreign exchange, which eliminate
the translation impact of exchange rate fluctuations on our
international results. Fixed currency amounts included in this
release are based on translation into U.S. dollars at the fixed
foreign currency exchange rates established by management at the
beginning of 2024. We also provide our segment results based on
public currency rates for informational purposes.
Our reportable segments do not include the impact of intangible
asset amortization from the Nalco and Purolite transactions or the
impact of special (gains) and charges as these are not allocated to
the Company’s reportable segments.
Our non-GAAP financial measures for organic sales, organic
operating income and organic operating income margin are at fixed
currency and exclude the impact of special (gains) and charges, the
results of our acquired businesses from the first twelve months
post acquisition and the results of divested businesses from the
twelve months prior to divestiture. In addition, as part of the
separation, we also entered into an agreement with ChampionX to
provide, receive or transfer certain products for a transitionary
period. Transitionary period sales of product to ChampionX under
this agreement are recorded in product and equipment sales in the
Corporate segment along with the related cost of sales. The
remaining sales to ChampionX are recorded in product and equipment
sales in the Global Industrial segment along with the related cost
of sales. These transactions are removed from the consolidated
results as part of the calculation of the impact of acquisitions
and divestitures.
We define free cash flow as net cash provided by operating
activities less cash outlays for capital expenditures. It should
not be inferred that the entire free cash flow amount is available
for discretionary expenditures. It should not be considered a
substitute for income or cash flow data prepared in accordance with
U.S. GAAP and may not be comparable to similarly titled measures
used by other companies. We believe free cash flow is meaningful to
investors as it functions as a useful measure of performance and we
use this measure as an indication of the strength of the Company
and its ability to generate cash.
These non-GAAP financial measures are not in accordance with, or
an alternative to, GAAP and may be different from non-GAAP measures
used by other companies. Investors should not rely on any single
financial measure when evaluating our business. We recommend that
investors view these measures in conjunction with the GAAP measures
included in this news release. Reconciliations of our non-GAAP
measures are included in the following "Supplemental Non-GAAP
Reconciliations" and “Supplemental Diluted Earnings per Share
Information” tables included in this news release.
We do not provide reconciliations for non-GAAP estimates on a
forward-looking basis (including those contained in this news
release) when we are unable to provide a meaningful or accurate
calculation or estimation of reconciling items and the information
is not available without unreasonable effort. This is due to the
inherent difficulty of forecasting the timing and amount of various
items that have not yet occurred, are out of our control and/or
cannot be reasonably predicted, and that would impact reported
earnings per share and the reported tax rate, the most directly
comparable forward-looking GAAP financial measures to adjusted
earnings per share and the adjusted tax rate. For the same reasons,
we are unable to address the probable significance of the
unavailable information.
(ECL-E)
ECOLAB INC. CONSOLIDATED
STATEMENTS OF INCOME (unaudited)
Second Quarter Ended
Six Months Ended
June 30
%
June 30
%
(millions, except per share)
2024
2023
Change
2024
2023
Change
Product and equipment sales
$3,173.1
$3,104.8
$6,159.6
$5,981.1
Service and lease sales
812.7
747.3
1,578.1
1,442.6
Net sales
3,985.8
3,852.1
3
%
7,737.7
7,423.7
4
%
Product and equipment cost of sales
1,770.6
1,895.3
3,449.8
3,693.6
Service and lease cost of sales
470.4
439.5
919.3
846.4
Cost of sales (1)
2,241.0
2,334.8
(4
)%
4,369.1
4,540.0
(4
)%
Selling, general and administrative
expenses
1,075.7
1,011.6
6
%
2,153.4
2,001.9
8
%
Special (gains) and charges (1)
12.2
21.0
40.4
45.5
Operating income
656.9
484.7
36
%
1,174.8
836.3
40
%
Other (income) expense
(12.6
)
(14.4
)
(13
)%
(25.2
)
(27.5
)
(8
)%
Interest expense, net
78.8
77.8
1
%
150.4
152.0
(1
)%
Income before income taxes
590.7
421.3
40
%
1,049.6
711.8
47
%
Provision for income taxes
95.7
86.6
11
%
138.0
139.0
(1
)%
Net income including noncontrolling
interest
495.0
334.7
48
%
911.6
572.8
59
%
Net income attributable to noncontrolling
interest
4.1
5.0
8.6
9.7
Net income attributable to Ecolab
$490.9
$329.7
49
%
$903.0
$563.1
60
%
Earnings attributable to Ecolab per common
share
Basic
$1.72
$1.16
48
%
$3.17
$1.98
60
%
Diluted
$1.71
$1.15
49
%
$3.14
$1.97
59
%
Weighted-average common shares
outstanding
Basic
284.6
284.9
0
%
285.2
284.8
0
%
Diluted
287.0
286.3
0
%
287.4
286.1
0
%
(1) Cost of sales and Special (gains) and
charges in the Consolidated Statement of Income above include the
following:
Second Quarter Ended
Six Months Ended
June 30
June 30
(millions)
2024
2023
2024
2023
Cost of sales
Restructuring activities
$0.7
$8.1
$2.3
$11.3
Subtotal (a)
0.7
8.1
2.3
11.3
Special (gains) and charges
Restructuring activities
6.9
13.7
25.0
26.3
Sale of global surgical solutions
business
7.3
-
13.3
-
Acquisition and integration activities
2.3
3.5
4.8
8.5
Other
(4.3
)
3.8
(2.7
)
10.7
Subtotal
12.2
21.0
40.4
45.5
Total special (gains) and charges
$12.9
$29.1
$42.7
$56.8
(a)
Special charges of $0.7 million and $6.0
million in the second quarter of 2024 and 2023, respectively, and
$2.3 million and $6.8 million for the first six months of 2024 and
2023, respectively, were recorded in product and equipment cost of
sales. Special charges of $2.1 million and $4.5 million for the
second quarter and first six months of 2023, respectively, were
recorded in service and lease cost of sales.
ECOLAB INC. REPORTABLE SEGMENT
INFORMATION (unaudited)
Second Quarter Ended June 30
Fixed Currency Rates
Public Currency Rates
%
%
(millions)
2024
2023
Change
2024
2023
Change
Net Sales
Global Industrial
$1,956.0
$1,906.4
3
%
$1,936.5
$1,909.5
1
%
Global Institutional & Specialty
1,372.7
1,273.7
8
%
1,363.9
1,272.2
7
%
Global Healthcare & Life Sciences
395.0
395.3
0
%
389.7
390.8
0
%
Global Pest Elimination
297.1
269.7
10
%
295.7
269.0
10
%
Corporate
-
10.6
(100
)%
-
10.6
(100
)%
Subtotal at fixed currency rates
4,020.8
3,855.7
4
%
3,985.8
3,852.1
3
%
Currency impact
(35.0
)
(3.6
)
*
-
*
Consolidated reported GAAP net sales
$3,985.8
$3,852.1
3
%
$3,985.8
$3,852.1
3
%
Operating Income (loss)
Global Industrial
$311.9
$264.9
18
%
$306.7
$266.6
15
%
Global Institutional & Specialty
320.7
213.4
50
%
318.3
213.0
49
%
Global Healthcare & Life Sciences
33.7
33.2
2
%
32.5
32.0
2
%
Global Pest Elimination
62.2
52.4
19
%
61.9
52.4
18
%
Corporate
(62.8
)
(79.3
)
*
(62.5
)
(79.3
)
*
Subtotal at fixed currency rates
665.7
484.6
37
%
656.9
484.7
36
%
Currency impact
(8.8
)
0.1
*
-
-
*
Consolidated reported GAAP operating
income
$656.9
$484.7
36
%
$656.9
$484.7
36
%
Six Months Ended June 30
Fixed Currency Rates
Public Currency Rates
%
%
(millions)
2024
2023
Change
2024
2023
Change
Net Sales
Global Industrial
$3,797.7
$3,714.6
2
%
$3,775.7
$3,718.6
2
%
Global Institutional & Specialty
2,643.0
2,404.9
10
%
2,630.6
2,401.0
10
%
Global Healthcare & Life Sciences
777.9
781.4
0
%
769.6
770.5
0
%
Other
563.9
514.3
10
%
561.8
512.4
10
%
Corporate
-
21.3
(100
)%
-
21.2
(100
)%
Subtotal at fixed currency rates
7,782.5
7,436.5
5
%
7,737.7
7,423.7
4
%
Currency impact
(44.8
)
(12.8
)
*
-
*
Consolidated reported GAAP net sales
$7,737.7
$7,423.7
4
%
$7,737.7
$7,423.7
4
%
Operating Income (loss)
Global Industrial
$576.9
$484.7
19
%
$572.1
$487.9
17
%
Global Institutional & Specialty
568.7
343.5
66
%
565.3
342.8
65
%
Global Healthcare & Life Sciences
70.7
68.6
3
%
68.8
65.7
5
%
Other
111.0
96.9
15
%
110.6
96.7
14
%
Corporate
(142.6
)
(156.7
)
*
(142.0
)
(156.8
)
*
Subtotal at fixed currency rates
1,184.7
837.0
42
%
1,174.8
836.3
40
%
Currency impact
(9.9
)
(0.7
)
*
-
*
Consolidated reported GAAP operating
income
$1,174.8
$836.3
40
%
$1,174.8
$836.3
40
%
* Not meaningful.
As shown in the “Fixed Currency Rates”
tables above, we evaluate the performance of our international
operations based on fixed currency exchange rates, which eliminate
the impact of exchange rate fluctuations on our international
operations. Amounts shown in the “Public Currency Rates” tables
above reflect amounts translated at actual public average rates of
exchange prevailing during the corresponding period and are
provided for informational purposes. The difference between the
fixed currency exchange rates and the public currency exchange
rates is reported as “Currency impact” in the “Fixed Currency
Rates” tables above.
The Corporate segment includes
amortization from the Nalco and Purolite transactions intangible
assets. The Corporate segment also includes special (gains) and
charges reported on the Consolidated Statement of Income.
ECOLAB INC. CONSOLIDATED
BALANCE SHEETS (unaudited)
June 30
December 31
June 30
(millions)
2024
2023
2023
Assets
Current assets
Cash and cash equivalents
$384.0
$919.5
$554.2
Accounts receivable, net
2,876.3
2,834.2
2,780.1
Inventories
1,505.9
1,497.2
1,646.2
Assets held for sale
565.6
-
-
Other current assets
420.5
393.2
456.0
Total current assets
5,752.3
5,644.1
5,436.5
Property, plant and equipment, net
3,416.9
3,474.6
3,326.5
Goodwill
7,821.9
8,148.2
8,101.3
Other intangible assets, net
3,334.0
3,493.5
3,603.6
Operating lease assets
573.0
553.5
446.8
Other assets
563.7
532.7
541.5
Total assets
$21,461.8
$21,846.6
$21,456.2
Liabilities and Equity
Current liabilities
Short-term debt
$5.9
$630.4
$1,121.9
Accounts payable
1,690.7
1,566.3
1,476.8
Compensation and benefits
540.5
655.5
469.1
Income taxes
137.2
158.7
117.3
Liabilities held for sale
62.5
-
-
Other current liabilities
1,410.8
1,334.9
1,282.4
Total current liabilities
3,847.6
4,345.8
4,467.5
Long-term debt
7,538.8
7,551.4
7,499.6
Pension and postretirement benefits
627.1
651.7
660.8
Deferred income taxes
290.7
418.2
474.1
Operating lease liabilities
438.6
425.5
335.4
Other liabilities
411.1
381.8
438.3
Total liabilities
13,153.9
13,774.4
13,875.7
Equity
Common stock
367.1
365.7
365.3
Additional paid-in capital
7,002.1
6,766.7
6,684.1
Retained earnings
10,653.3
10,075.4
9,580.0
Accumulated other comprehensive loss
(1,899.4
)
(1,850.4
)
(1,761.8
)
Treasury stock
(7,835.7
)
(7,312.7
)
(7,310.9
)
Total Ecolab shareholders’ equity
8,287.4
8,044.7
7,556.7
Noncontrolling interest
20.5
27.5
23.8
Total equity
8,307.9
8,072.2
7,580.5
Total liabilities and equity
$21,461.8
$21,846.6
$21,456.2
ECOLAB INC. SUPPLEMENTAL
NON-GAAP RECONCILIATIONS (unaudited)
Second Quarter Ended
Six Months Ended
June 30
June 30
(millions, except percent and per
share)
2024
2023
2024
2023
Net sales
Reported GAAP net sales
$3,985.8
$3,852.1
$7,737.7
$7,423.7
Effect of foreign currency translation
35.0
3.6
44.8
12.8
Non-GAAP fixed currency sales
4,020.8
3,855.7
7,782.5
7,436.5
Effect of acquisitions and
divestitures
(37.1
)
(16.7
)
(81.2
)
(40.7
)
Non-GAAP organic sales
$3,983.7
$3,839.0
$7,701.3
$7,395.8
Cost of sales
Reported GAAP cost of sales
$2,241.0
$2,334.8
$4,369.1
$4,540.0
Special (gains) and charges
0.7
8.1
2.3
11.3
Non-GAAP adjusted cost of sales
$2,240.3
$2,326.7
$4,366.8
$4,528.7
Gross profit
Reported GAAP gross profit
$1,744.8
$1,517.3
$3,368.6
$2,883.7
Special (gains) and charges
0.7
8.1
2.3
11.3
Non-GAAP adjusted gross profit
$1,745.5
$1,525.4
$3,370.9
$2,895.0
Gross margin
Reported GAAP gross margin
43.8
%
39.4
%
43.5
%
38.8
%
Non-GAAP adjusted gross margin
43.8
%
39.6
%
43.6
%
39.0
%
Operating income
Reported GAAP operating income
$656.9
$484.7
$1,174.8
$836.3
Special (gains) and charges at public
currency rates
12.9
29.1
42.7
56.8
Non-GAAP adjusted operating income
669.8
513.8
1,217.5
893.1
Effect of foreign currency translation
8.7
(0.1
)
9.9
0.7
Non-GAAP adjusted fixed currency operating
income
678.5
513.7
1,227.4
893.8
Effect of acquisitions and
divestitures
(1.5
)
(0.9
)
(2.4
)
(1.4
)
Non-GAAP organic operating income
$677.0
$512.8
$1,225.0
$892.4
Operating income margin
Reported GAAP operating income margin
16.5
%
12.6
%
15.2
%
11.3
%
Non-GAAP adjusted fixed currency operating
income margin
16.9
%
13.3
%
15.8
%
12.0
%
Non-GAAP organic operating income
margin
17.0
%
13.4
%
15.9
%
12.1
%
ECOLAB INC. SUPPLEMENTAL
NON-GAAP RECONCILIATIONS (unaudited)
Second Quarter Ended
Six Months Ended
June 30
June 30
(millions, except percent and per
share)
2024
2023
2024
2023
Net Income attributable to Ecolab
Reported GAAP net income attributable to
Ecolab
$490.9
$329.7
$903.0
$563.1
Special (gains) and charges, after tax
0.9
23.3
24.0
44.4
Discrete tax net expense (benefit)
(10.3
)
2.8
(58.5
)
(1.2
)
Non-GAAP adjusted net income attributable
to Ecolab
$481.5
$355.8
$868.5
$606.3
Diluted EPS attributable to Ecolab
Reported GAAP diluted EPS
$1.71
$1.15
$3.14
$1.97
Special (gains) and charges, after tax
-
0.08
0.08
0.15
Discrete tax net expense (benefit)
(0.03
)
0.01
(0.20
)
-
Non-GAAP adjusted diluted EPS
$1.68
$1.24
$3.02
$2.12
Provision for Income Taxes
Reported GAAP tax rate
16.2
%
20.6
%
13.1
%
19.5
%
Special gains and charges
1.6
(0.1
)
1.2
0.2
Discrete tax items
1.7
(0.6
)
5.4
0.2
Non-GAAP adjusted tax rate
19.5
%
19.9
%
19.7
%
19.9
%
ECOLAB INC. SUPPLEMENTAL
NON-GAAP RECONCILIATIONS (unaudited)
Second Quarter Ended June 30
2024
2023
(millions)
Fixed Currency
Impact of
Acquisitions
and
Divestitures
Organic
Fixed
Currency
Impact of
Acquisitions
and
Divestitures
Organic
Net Sales
Global Industrial
$1,956.0
($21.1
)
$1,934.9
$1,906.4
($6.1
)
$1,900.3
Global Institutional & Specialty
1,372.7
(13.9
)
1,358.8
1,273.7
-
1,273.7
Global Healthcare & Life Sciences
395.0
-
395.0
395.3
-
395.3
Global Pest Elimination
297.1
(2.1
)
295.0
269.7
-
269.7
Corporate
-
-
10.6
(10.6
)
-
Subtotal at fixed currency rates
4,020.8
(37.1
)
3,983.7
3,855.7
(16.7
)
3,839.0
Currency impact
(35.0
)
(3.6
)
Consolidated reported GAAP net sales
$3,985.8
$3,852.1
Operating Income (loss)
Global Industrial
$311.9
($1.1
)
$310.8
$264.9
($0.5
)
$264.4
Global Institutional & Specialty
320.7
(1.0
)
319.7
213.4
-
213.4
Global Healthcare & Life Sciences
33.7
-
33.7
33.2
-
33.2
Global Pest Elimination
62.2
0.6
62.8
52.4
-
52.4
Corporate
(50.0
)
-
(50.0
)
(50.2
)
(0.4
)
(50.6
)
Subtotal at fixed currency rates
678.5
(1.5
)
677.0
513.7
(0.9
)
512.8
Special (gains) and charges at fixed
currency rates
12.8
29.1
Reported OI at fixed currency rates
665.7
484.6
Currency impact
(8.8
)
0.1
Consolidated reported GAAP operating
income
$656.9
$484.7
Six Months Ended June 30
2024
2023
(millions)
Fixed Currency
Impact of
Acquisitions
and
Divestitures
Organic
Fixed Currency
Impact of
Acquisitions
and
Divestitures
Organic
Net Sales
Global Industrial
$3,797.7
($47.2
)
$3,750.5
$3,714.6
($19.4
)
$3,695.2
Global Institutional & Specialty
2,643.0
(31.9
)
2,611.1
2,404.9
-
2,404.9
Global Healthcare & Life Sciences
777.9
-
777.9
781.4
-
781.4
Global Pest Elimination
563.9
(2.1
)
561.8
514.3
-
514.3
Corporate
-
-
-
21.3
(21.3
)
-
Subtotal at fixed currency rates
7,782.5
(81.2
)
7,701.3
7,436.5
(40.7
)
7,395.8
Currency impact
(44.8
)
(12.8
)
Consolidated reported GAAP net sales
$7,737.7
$7,423.7
Operating Income (loss)
Global Industrial
$576.9
($1.1
)
$575.8
$484.7
($0.7
)
$484.0
Global Institutional & Specialty
568.7
(1.9
)
566.8
343.5
-
343.5
Global Healthcare & Life Sciences
70.7
-
70.7
68.6
-
68.6
Global Pest Elimination
111.0
0.6
111.6
96.9
-
96.9
Corporate
(99.9
)
-
(99.9
)
(99.9
)
(0.7
)
(100.6
)
Subtotal at fixed currency rates
1,227.4
(2.4
)
1,225.0
893.8
(1.4
)
892.4
Special (gains) and charges at fixed
currency rates
42.7
56.8
Reported OI at fixed currency rates
1,184.7
837.0
Currency impact
(9.9
)
(0.7
)
Consolidated reported GAAP operating
income
$1,174.8
$836.3
ECOLAB INC. SUPPLEMENTAL
NON-GAAP RECONCILIATIONS (unaudited)
Selected Cash Flow items
Second Quarter Ended
Six Months Ended
June 30
June 30
(millions)
2024
2023
2024
2023
Cash provided by operating activities
$611.1
$573.4
$1,260.5
$771.6
Less: Capital expenditures
(196.9
)
(172.0
)
(398.4
)
(345.7
)
Free cash flow
$414.2
$401.4
$862.1
$425.9
ECOLAB INC. SUPPLEMENTAL
DILUTED EARNINGS PER SHARE INFORMATION (unaudited)
The table below provides a reconciliation
of diluted earnings per share, as reported, to the non-GAAP measure
of adjusted diluted earnings per share.
First
Second
Six
Third
Nine
Fourth
Quarter
Quarter
Months
Quarter
Months
Quarter
Year
Ended
Ended
Ended
Ended
Ended
Ended
Ended
Mar. 31
June 30
June 30
Sept. 30
Sept. 30
Dec. 31
Dec. 31
2023
2023
2023
2023
2023
2023
2023
Diluted earnings per share, as reported
(U.S. GAAP)
$0.82
$1.15
$1.97
$1.41
$3.38
$1.41
$4.79
Adjustments:
Special (gains) and charges (1)
0.07
0.08
0.15
0.12
0.27
0.11
0.38
Discrete tax expense (benefits) (2)
(0.01
)
0.01
0.00
0.01
0.01
0.03
0.04
Adjusted diluted earnings per share
(Non-GAAP)
$0.88
$1.24
$2.12
$1.54
$3.66
$1.55
$5.21
First
Second
Six
Third
Nine
Fourth
Quarter
Quarter
Months
Quarter
Months
Quarter
Year
Ended
Ended
Ended
Ended
Ended
Ended
Ended
Mar. 31
June 30
June 30
Sept. 30
Sept. 30
Dec. 31
Dec. 31
2024
2024
2024
2024
2024
2024
2024
Diluted earnings per share, as reported
(U.S. GAAP)
$1.43
$1.71
$3.14
Adjustments:
Special (gains) and charges (3)
0.08
0.00
0.08
Discrete tax expense (benefits) (4)
(0.17
)
(0.03
)
(0.20
)
Adjusted diluted earnings per share
(Non-GAAP)
$1.34
$1.68
$3.02
$0.00
$0.00
$0.00
$0.00
Per share amounts do not necessarily sum
due to changes in shares outstanding and rounding.
(1)
Special (gains) and charges for 2023
includes charges of $21.1 million, $23.3 million, $34.2 million and
$30.6 million, net of tax, in the first, second, third and fourth
quarters, respectively. These charges were primarily related to
restructuring charges, acquisition and integration charges and
litigation and other charges.
(2)
Discrete tax expenses (benefits) for 2023
includes ($4.0) million, $2.8 million, $3.5 million and $8.9
million in the first, second, third and fourth quarters,
respectively. These expenses (benefits) are primarily associated
with stock compensation excess tax benefits and other discrete tax
benefits.
(3)
Special (gains) and charges for 2024
includes charges of $23.1 million and $0.9 million, net of tax, in
the first and second quarters, respectively. These charges were
primarily related to restructuring and professional service fees
associated with the sale of our global surgical solutions
business.
(4)
Discrete tax (benefits) for 2024 includes
($48.2) million and ($10.3) million in the first and second
quarters, respectively. These expenses (benefits) are primarily
associated with transferring certain intangibles between
affiliates, stock compensation excess tax benefits and other
discrete tax benefits.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240729182245/en/
Investor Contact: Andrew Hedberg
(651) 250-2185 Cairn Clark (651) 250-2291
Media Contact: Nigel Glennie (651)
250-2576
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