Ecolab Inc. (NYSE: ECL):
FIRST QUARTER
HIGHLIGHTS:
- Very strong first quarter sales growth, driven by strong
volume gains and accelerating pricing that overcame surging
delivered product cost inflation in a rapidly changing global
operating environment.
- Reported sales +13% versus last year. Acquisition adjusted
fixed currency sales +12%.
- Reported diluted EPS $0.60, -10% versus last year.
- Adjusted diluted EPS, excluding special gains and charges
and discrete tax items were $0.82, +1% versus last year. Adjusted
diluted EPS includes $0.06 per share of Purolite
amortization.
- The earnings increase reflects accelerating pricing and
strong volume growth which overcame substantial incremental
increases in delivered product costs following the start of the war
in Eastern Europe and further headwinds from unfavorable currency
translation.
First Quarter Ended March 31
Reported
Adjusted
(unaudited)
Public Currency Rates
%
Public Currency Rates
%
(millions, except per share)
2022
2021
Change
2022
2021
Change
Net sales
$
3,266.7
$
2,885.0
13
%
$
3,266.7
$
2,885.0
13
%
Operating income
254.5
297.3
(14
)
%
331.5
329.7
1
%
Net income attributable to Ecolab
171.9
193.6
(11
)
%
236.5
233.9
1
%
Diluted earnings per share attributable to
Ecolab
$
0.60
$
0.67
(10
)
%
$
0.82
$
0.81
1
%
Adjusted
Fixed Currency Rates
%
Fixed Currency Rates
%
2022
2021
Change
2022
2021
Change
Net sales
$
3,255.4
$
2,808.3
16
%
$
3,255.4
$
2,808.3
16
%
Operating income
251.7
284.1
(11
)
%
328.7
316.5
4
%
First quarter adjusted earnings reflected double-digit sales
growth, driven by very strong Institutional & Specialty,
Industrial and Other segment sales, accelerating pricing and
further strong new business wins, that overcame continued
substantial delivered product cost inflation and unfavorable
currency translation in a rapidly changing global operating
environment.
CEO Comment
Commenting on the quarter, Christophe Beck, Ecolab’s president
and chief executive officer, said, “First quarter earnings were
consistent with our expectations, even though the operating
environment was not. Our very strong sales growth, driven by
improved volume gains and rapidly increasing pricing, overcame
surging delivered product cost inflation. Sales growth accelerated
further from the fourth quarter, led by double-digit gains in our
Institutional & Specialty, Industrial and Other segments, while
the Healthcare & Life Sciences segment declined versus a strong
increase last year. Raw material and freight costs increased an
estimated 25% versus last year, exacerbated by the start of the war
in Eastern Europe during the last month of the quarter, and added
an estimated $0.55 per share of year-on-year incremental costs to
the first quarter alone. Importantly, our team reacted aggressively
and continued to accelerate our pricing, which reached 5% in the
quarter, up from 3% in the fourth quarter. This strong pricing
momentum, along with robust new business gains, and benefits from
innovation and digital automation and services, helped us to fully
overcome these unprecedented headwinds.
“Looking ahead, we remain focused on continuously strengthening
our long-term business fundamentals by driving strong new business,
accelerating pricing and leveraging margin improvement through
innovation and productivity. While we expect the impact of
substantial raw material and cost inflation to increase further in
the second quarter and remain high for the balance of the year, we
are also very pleased with our progress on pricing, and now expect
it to be in the 6% to 7% range for the balance of the year. In
addition, to offset the rapid rise in energy costs following the
start of the war in Eastern Europe thus impacting the full second
quarter, we have begun to roll out a global temporary energy
surcharge of up to 12%, which is expected to develop progressively
through the year. Despite the substantial cost headwinds, we expect
our combined pricing actions (which include our ongoing structural
pricing and the energy surcharge), along with strong volume growth
and long-term productivity improvements, to yield second quarter
adjusted diluted earnings per share approaching last year’s $1.22.
Further, as our current pricing actions roll out through this year,
we believe they will result in accelerating earnings growth through
the second half and deliver low-teens growth in adjusted diluted
earnings per share for the full year 2022, understanding there is
uncertainty in the timing of the realization of the surcharge which
will become more clear as we exit the second quarter.
“With our continued strong long-term macro drivers, strengthened
value proposition and improved competitive advantages, we remain
confident we are taking the right steps to deliver superior
long-term growth and shareholder returns.”
First Quarter 2022 Consolidated
Results
Ecolab’s first quarter reported sales increased 13%, fixed
currency sales increased 16% and acquisition adjusted fixed
currency sales increased 12% when compared to the prior year.
First quarter 2022 reported operating income decreased 14% and
includes the impact of special charges, which were primarily
related to Purolite acquisition costs, COVID-related charges and
charges related to our operations in Russia. Adjusted operating
income increased 1% while adjusted fixed currency operating income
increased 4%. The adjusted operating income gain reflects
accelerating structural pricing and strong volume growth which
overcame substantially higher delivered product costs and
unfavorable mix.
Reported interest expense increased 3% as interest on new debt
issued to fund the Purolite acquisition was partially offset by
benefits from debt refinancing transactions completed last
year.
The reported income tax rate for the first quarter of 2022 was
20.7% compared with the reported rate of 25.2% in the first quarter
of 2021. Excluding special gains and charges and discrete tax
items, the adjusted tax rate for the first quarter of 2022 was
19.5% compared with the adjusted tax rate of 19.7% in the first
quarter of 2021.
First quarter 2022 reported net income decreased 11% versus the
prior year. Excluding the impact of special gains and charges and
discrete tax items, adjusted net income increased 1% versus the
prior year.
Reported diluted earnings per share decreased 10% versus the
prior year. Adjusted diluted earnings per share increased 1% when
compared against the first quarter 2021. Adjusted diluted earnings
per share includes $0.06 of Purolite amortization. Currency
translation had a $0.03 unfavorable impact on first quarter 2022
earnings per share.
Ecolab reacquired approximately 1.5 million shares of its common
stock during the first quarter of 2022.
First Quarter 2022 Segment
Review
Global Industrial
(unaudited)
First Quarter Ended March 31
Acq. Adj.
(millions)
2022
2021
% Change
% Change
Fixed currency
Sales
$
1,557.0
$
1,384.9
12
%
12
%
Operating income
189.2
209.8
(10
)
%
(10
)
%
Operating income margin
12.2
%
15.1
%
Acq. adj. operating income margin
12.1
%
15.1
%
Public currency
Sales
$
1,565.7
$
1,431.0
9
%
Operating income
191.4
220.3
(13
)
%
The Industrial segment includes Water,
Food & Beverage, Downstream and Paper
Acquisition adjusted fixed currency sales increased 12%. Strong
double-digit growth across all divisions was driven by accelerating
structural pricing and new business wins. Acquisition adjusted
fixed currency operating income decreased 10% as accelerating
structural pricing and increased volume were more than offset by
significantly higher delivered product costs and unfavorable
mix.
Global Institutional &
Specialty
(unaudited)
First Quarter Ended March 31
Acq. Adj.
(millions)
2022
2021
% Change
% Change
Fixed currency
Sales
$
1,005.1
$
844.1
19
%
19
%
Operating income
110.8
61.9
79
%
79
%
Operating income margin
11.0
%
7.3
%
Acq. adj. operating income margin
11.0
%
7.3
%
Public currency
Sales
$
1,007.0
$
857.4
17
%
Operating income
111.1
62.0
79
%
The Institutional & Specialty segment
includes Institutional and Specialty
Acquisition adjusted fixed currency sales increased 19%. Strong
growth in the Institutional division reflected improved volume
gains, good new business wins, new innovation and structural
pricing despite a stalled recovery in restaurant and lodging
activity due to extended COVID-related impacts and customer
staffing shortages. Specialty sales showed good growth as strong
quickservice sales were partially offset by lower food retail
sales, in part due to customer staffing shortages impacting
cleaning intensity. Acquisition adjusted fixed currency operating
income increased 79% as very strong volume growth and accelerating
structural pricing overcame higher delivered product costs and
sales force investments.
Global Healthcare & Life
Sciences
(unaudited)
First Quarter Ended March 31
Acq. Adj.
(millions)
2022
2021
% Change
% Change
Fixed currency
Sales
$
362.6
$
281.1
29
%
(7
)
%
Operating income
44.1
42.6
4
%
(42
)
%
Operating income margin
12.2
%
15.2
%
Acq. adj. operating income margin
9.4
%
15.2
%
Public currency
Sales
$
362.8
$
292.7
24
%
Operating income
44.2
45.0
(2
)
%
The Healthcare & Life Sciences segment
includes Healthcare and Life Sciences
Acquisition adjusted fixed currency sales decreased 7% compared
to a 14% increase last year when sales benefited from strong
COVID-related demand. Acquisition adjusted fixed currency operating
income decreased 42%, primarily reflecting the comparison to the
very strong sales volume gain last year (when operating income grew
90%) and higher delivered product costs; these were partially
offset by accelerating structural pricing.
Other
(unaudited)
First Quarter Ended March 31
Acq. Adj.
(millions)
2022
2021
% Change
% Change
Fixed currency
Sales
$
296.0
$
265.4
12
%
12
%
Operating income
37.2
32.3
15
%
15
%
Operating income margin
12.6
%
12.2
%
Acq. adj. operating income margin
12.6
%
12.2
%
Public currency
Sales
$
296.4
$
270.7
9
%
Operating income
37.5
32.9
14
%
The Other segment includes Pest
Elimination, Textile Care and Colloidal Technologies
Acquisition adjusted fixed currency sales increased 12%. Growth
was led by double-digit gains in Pest Elimination and Textile Care.
Acquisition adjusted fixed currency operating income increased 15%
as accelerating structural pricing overcame higher delivered
product costs.
Corporate
(unaudited)
First Quarter Ended March 31
(millions)
2022
2021
Public currency
Sales
$
34.8
$
33.2
Corporate operating expense
Nalco and Purolite amortization
52.7
30.5
Special (gains) and charges
77.0
32.4
Total Corporate operating expense
$
129.7
$
62.9
First quarter of 2022 corporate segment includes:
- sales of $35 million to ChampionX under the Master Cross Supply
and Product Transfer agreements we entered into as part of the
ChampionX separation
- amortization expense of $30 million related to the Nalco merger
intangible assets and $23 million related to Purolite acquisition
intangible assets
- net special charges of $77 million that primarily reflected
Purolite acquisition costs, COVID-related charges and charges
related to our operations in Russia as discussed below
Special gains and charges for the first quarter of 2021 were a
net charge of $32 million and primarily included restructuring
charges and COVID-related charges.
Comment on Russia
Operations
In light of Russia’s invasion of Ukraine and the sanctions
against Russia by the United States and other countries, Ecolab has
made the determination that it will limit its Russian business to
operations that are essential to life, providing minimal support
for its healthcare, pharma, food and beverage and certain water
businesses. Ecolab may further narrow its presence in Russia
depending on future developments. Ecolab’s Russian operations
represented approximately 1% of Ecolab’s 2021 annual sales.
2022 Business Outlook
We assume continued, if uneven, global economic growth in 2022
as global COVID impacts generally move behind us. In this rapidly
changing environment, we remain focused on continuing to drive
strong new business gains, pricing, and margin improvement. While
we expect the impact of substantial raw material and cost inflation
to increase further in the second quarter and remain high for the
balance of the year, we are also very pleased with our progress on
structural pricing, and now expect it to be in the 6% to 7% range
for the balance of the year. In addition, to offset the rapid rise
in energy costs following the start of the war in Eastern Europe
thus impacting the full second quarter, we have begun to roll out a
global temporary energy surcharge of up to 12%, which is expected
to develop progressively through the year. Despite the substantial
cost headwinds, we expect our combined pricing actions (which
include our ongoing structural pricing and the energy surcharge),
along with strong volume growth and long-term productivity
improvements, to yield second quarter adjusted diluted earnings per
share approaching last year’s $1.22. Further, as our current
pricing actions roll out through this year, we believe they will
result in accelerating earnings growth through the second half and
deliver low-teens growth in adjusted diluted earnings per share for
the full year 2022, understanding there is uncertainty in the
timing of the realization of the surcharge which will become more
clear as we exit the second quarter.
We remain confident in our long-term outlook as our value
proposition to help solve the world’s people and planet health
needs while improving business health is more important than ever.
With our firm pricing execution focus and an inflationary
environment that will ultimately ease and lead to higher margins,
we expect to continue to leverage our robust growth opportunities
to drive superior results for our customers and shareholders.
About Ecolab
A trusted partner at nearly three million customer locations,
Ecolab (ECL) is a global leader in water, hygiene and infection
prevention solutions and services that protect people, planet and
business health. With annual sales of $13 billion and more than
47,000 associates, Ecolab delivers comprehensive science-based
solutions, data-driven insights and world-class service to advance
food safety, maintain clean and safe environments, optimize water
and energy use, and improve operational efficiencies and
sustainability for customers in the food, healthcare, hospitality
and industrial markets in more than 170 countries around the world.
www.ecolab.com
Ecolab will host a live webcast to review the first 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 communication 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
COVID-19 pandemic trends, global economic conditions, raw material
and cost inflation, pricing actions, our Russian operations, and
our financial and business performance and prospects, including
sales, earnings, and productivity improvements. 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 communication. With respect to the
COVID-19 pandemic, numerous factors will determine the extent of
the impact on our business, including the severity of the disease,
the duration of the outbreak, the distribution, acceptance and
efficacy of vaccines, the likelihood of a resurgence of the
outbreak, including as a result of emerging variants, actions that
may be taken by governmental authorities intended to minimize the
spread of the pandemic, including vaccination mandates, or to
stimulate the economy and other unintended consequences.
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
effects and duration of the COVID-19 pandemic, including the impact
of vaccination mandates; difficulty in procuring raw materials or
fluctuations in raw material costs; the vitality of the markets we
serve; the impact of economic factors such as the worldwide
economy, capital flows, interest rates, foreign currency risk, and
reduced sales and earnings in our international operations
resulting from the weakening of local currencies versus the U.S.
dollar; information technology infrastructure failures or breaches
in data security; our ability to attract, retain and develop high
caliber management talent to lead our business and successfully
execute organizational change and changing labor market dynamics in
the wake of the COVID-19 pandemic; exposure to global economic,
political and legal risks related to our international operations,
including the impact of sanctions or other actions taken by the
U.S. or other countries, and retaliatory measures taken by Russia
in response, in connection with the conflict in Ukraine; public
health outbreaks, epidemics or pandemics, such as the current
outbreak of COVID-19; our ability to execute key business
initiatives, including restructurings and our Enterprise Resource
Planning system upgrades; 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; realization of
anticipated benefits of the Purolite acquisition; our ability to
acquire complementary businesses and to effectively integrate such
businesses; the costs and effects of complying with laws and
regulations, including those relating to the environment 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; 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 communication 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
- acquisition adjusted fixed currency sales
- adjusted cost of sales
- adjusted gross margin
- fixed currency operating income
- adjusted operating income
- adjusted fixed currency operating income
- adjusted fixed currency operating income margin
- acquisition adjusted fixed currency operating income
- acquisition adjusted fixed currency operating income
margin
- adjusted tax rate
- adjusted net income attributable to Ecolab
- adjusted diluted earnings per share
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 adjusted financial measures for cost of sales,
gross margin, operating income, other (income) expense and interest
expense exclude the impact of special (gains) and charges, and our
non-GAAP measures for tax rate, net income attributable to Ecolab
and 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 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 2022. 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 mergers or the
impact of special (gains) and charges as these are not allocated to
the Company’s reportable segments.
Acquisition adjusted growth rates exclude the results of any
acquired business from the first twelve months post acquisition and
exclude the results of divested businesses from the previous twelve
months prior to divestiture. Acquisition adjusted growth rates also
exclude sales to our Venezuelan deconsolidated subsidiaries from
both the current period and comparable period of the prior year. In
addition, as part of the separation, we also entered into a Master
Cross Supply and Product Transfer agreement with ChampionX to
provide, receive or transfer certain products for a period up to 36
months. 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. These transactions are
removed from the consolidated results as part of the calculation of
the impact of acquisitions and divestitures.
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 report)
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)
First Quarter Ended
March 31
%
(millions, except per share)
2022
2021
Change
Product and equipment sales
$2,624.1
$2,293.4
Service and lease sales
642.6
591.6
Net sales
3,266.7
2,885.0
13
%
Product and equipment cost of sales
1,695.6
1,362.9
Service and lease cost of sales
377.8
349.1
Cost of sales (1)
2,073.4
1,712.0
21
%
Selling, general and administrative
expenses
914.7
862.9
6
%
Special (gains) and charges (1)
24.1
12.8
Operating income
254.5
297.3
(14
)
%
Other (income) expense (1)
(18.8
)
(17.0
)
11
%
Interest expense, net (1)
53.0
51.7
3
%
Income before income taxes
220.3
262.6
(16
)
%
Provision for income taxes
45.6
66.1
(31
)
%
Net income including noncontrolling
interest
174.7
196.5
(11
)
%
Net income attributable to noncontrolling
interest
2.8
2.9
Net income attributable to Ecolab
$171.9
$193.6
(11
)
%
Earnings attributable to Ecolab per common
share
Basic
$0.60
$0.68
(12
)
%
Diluted
$0.60
$0.67
(10
)
%
Weighted-average common shares
outstanding
Basic
286.2
286.0
0
%
Diluted
288.1
288.8
0
%
(1) Cost of sales, Special (gains) and
charges, Other (income) expense and Interest expense, net in the
Consolidated Statement of Income above include the following:
First Quarter Ended
March 31
(millions)
2022
2021
Cost of sales
Restructuring activities
$2.6
$18.2
Acquisition and integration activities
27.6
-
COVID-19 activities, net
16.3
1.1
Russia/Ukraine charges
6.4
-
Other
-
0.3
Subtotal (a)
52.9
19.6
Special (gains) and charges
Restructuring activities
0.8
3.6
Acquisition and integration activities
7.5
1.2
COVID-19 activities, net
1.5
6.4
Russia/Ukraine charges
11.6
-
Other
2.7
1.6
Subtotal
24.1
12.8
Total special (gains) and charges
$77.0
$32.4
(a) Special charges of $52.0 million and
$19.6 million in the first quarter of 2022 and 2021 were recorded
in product and equipment cost of sales. Special charges of $0.9
million in the first quarter of 2022 were recorded in service and
lease cost of sales.
ECOLAB INC.
REPORTABLE SEGMENT
INFORMATION
(unaudited)
First Quarter Ended March 31
Fixed Currency Rates
Public Currency Rates
%
%
(millions)
2022
2021
Change
2022
2021
Change
Net Sales
Global Industrial
$1,557.0
$1,384.9
12
%
$1,565.7
$1,431.0
9
%
Global Institutional & Specialty
1,005.1
844.1
19
%
1,007.0
857.4
17
%
Global Healthcare & Life Sciences
362.6
281.1
29
%
362.8
292.7
24
%
Other
296.0
265.4
12
%
296.4
270.7
9
%
Corporate
34.7
32.8
6
%
34.8
33.2
5
%
Subtotal at fixed currency rates
3,255.4
2,808.3
16
%
3,266.7
2,885.0
13
%
Currency impact
11.3
76.7
*
-
-
*
Consolidated reported GAAP net sales
$3,266.7
$2,885.0
13
%
$3,266.7
$2,885.0
13
%
Operating Income (loss)
Global Industrial
$189.2
$209.8
(10
)
%
$191.4
$220.3
(13
)
%
Global Institutional & Specialty
110.8
61.9
79
%
111.1
62.0
79
%
Global Healthcare & Life Sciences
44.1
42.6
4
%
44.2
45.0
(2
)
%
Other
37.2
32.3
15
%
37.5
32.9
14
%
Corporate
(129.6
)
(62.5
)
*
(129.7
)
(62.9
)
*
Subtotal at fixed currency rates
251.7
284.1
(11
)
%
254.5
297.3
(14
)
%
Currency impact
2.8
13.2
*
-
-
*
Consolidated reported GAAP operating
income
$254.5
$297.3
(14
)
%
$254.5
$297.3
(14
)
%
* 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 merger intangible assets. The Corporate segment also
includes special (gains) and charges reported on the Consolidated
Statement of Income.
ECOLAB INC.
CONSOLIDATED BALANCE
SHEETS
(unaudited)
March 31
December 31
March 31
(millions)
2022
2021
2021
Assets
Current assets
Cash and cash equivalents
$99.4
$359.9
$1,189.5
Accounts receivable, net
2,508.2
2,478.4
2,272.0
Inventories
1,589.9
1,491.8
1,347.0
Other current assets
407.0
357.0
341.5
Total current assets
4,604.5
4,687.1
5,150.0
Property, plant and equipment, net
3,285.7
3,288.5
3,078.7
Goodwill
8,081.0
8,063.9
6,119.5
Other intangible assets, net
4,138.3
4,224.1
2,966.8
Operating lease assets
385.8
396.8
412.5
Other assets
571.9
546.0
480.6
Total assets
$21,067.2
$21,206.4
$18,208.1
Liabilities and Equity
Current liabilities
Short-term debt
$493.1
$411.0
$24.3
Accounts payable
1,423.9
1,384.2
1,128.2
Compensation and benefits
469.6
509.5
457.6
Income taxes
108.6
104.3
52.4
Other current liabilities
1,136.1
1,144.2
1,189.7
Total current liabilities
3,631.3
3,553.2
2,852.2
Long-term debt
8,267.2
8,347.2
6,685.8
Postretirement health care and pension
benefits
874.5
894.2
1,207.8
Deferred income taxes
619.2
622.0
526.8
Operating lease liabilities
275.2
282.6
291.2
Other liabilities
294.7
254.1
324.2
Total liabilities
13,962.1
13,953.3
11,888.0
Equity
Common stock
364.5
364.1
363.0
Additional paid-in capital
6,501.5
6,464.6
6,285.7
Retained earnings
8,840.4
8,814.5
8,299.3
Accumulated other comprehensive loss
(1,563.6
)
(1,634.8
)
(1,914.5
)
Treasury stock
(7,061.2
)
(6,784.2
)
(6,741.2
)
Total Ecolab shareholders’ equity
7,081.6
7,224.2
6,292.3
Noncontrolling interest
23.5
28.9
27.8
Total equity
7,105.1
7,253.1
6,320.1
Total liabilities and equity
$21,067.2
$21,206.4
$18,208.1
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
First Quarter Ended
March 31
(millions, except percent and per
share)
2022
2021
Net sales
Reported GAAP net sales
$3,266.7
$2,885.0
Effect of foreign currency translation
(11.3
)
(76.7
)
Non-GAAP fixed currency sales
3,255.4
2,808.3
Effect of acquisitions and
divestitures
(142.5
)
(32.8
)
Non-GAAP acquisition adjusted fixed
currency sales
$3,112.9
$2,775.5
Cost of sales
Reported GAAP cost of sales
$2,073.4
$1,712.0
Special (gains) and charges
52.9
19.6
Non-GAAP adjusted cost of sales
$2,020.5
$1,692.4
Gross margin
Reported GAAP gross margin
36.5
%
40.7
%
Non-GAAP adjusted gross margin
38.1
%
41.3
%
Operating income
Reported GAAP operating income
$254.5
$297.3
Effect of foreign currency translation
(2.8
)
(13.2
)
Non-GAAP fixed currency operating
income
251.7
284.1
Special (gains) and charges
77.0
32.4
Non-GAAP adjusted fixed currency operating
income
328.7
316.5
Effect of acquisitions and
divestitures
2.5
0.0
Non-GAAP acquisition adjusted fixed
currency operating income
$331.2
$316.5
Operating income margin
Reported GAAP operating income margin
7.8
%
10.3
%
Non-GAAP adjusted fixed currency operating
income margin
10.1
%
11.3
%
Non-GAAP acquisition adjusted fixed
currency operating income margin
10.6
%
11.4
%
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
First Quarter Ended
March 31
(millions, except percent and per
share)
2022
2021
Net Income attributable to Ecolab
Reported GAAP net income attributable to
Ecolab
$171.9
$193.6
Special (gains) and charges, after tax
63.6
24.2
Discrete tax net expense (benefit)
1.0
16.1
Non-GAAP adjusted net income attributable
to Ecolab
$236.5
$233.9
Diluted EPS attributable to Ecolab
Reported GAAP diluted EPS
$0.60
$0.67
Special (gains) and charges, after tax
0.22
0.08
Discrete tax net expense (benefit)
0.00
0.06
Non-GAAP adjusted diluted EPS
$0.82
$0.81
Provision for Income Taxes
Reported GAAP tax rate
20.7
%
25.2
%
Special gains and charges
(0.9
)
-
Discrete tax items
(0.3
)
(5.5
)
Non-GAAP adjusted tax rate
19.5
%
19.7
%
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
First Quarter Ended March 31
(unaudited)
2022
2021
(millions)
Fixed Currency
Impact of Acquisitions and
Divestitures
Acquisition Adjusted
Fixed Currency
Impact of Acquisitions and
Divestitures
Acquisition Adjusted
Net Sales
Global Industrial
$1,557.0
($5.9
)
$1,551.1
$1,384.9
-
$1,384.9
Global Institutional & Specialty
1,005.1
-
1,005.1
844.1
-
844.1
Global Healthcare & Life Sciences
362.6
(101.9
)
260.7
281.1
-
281.1
Other
296.0
-
296.0
265.4
-
265.4
Corporate
34.7
(34.7
)
-
32.8
(32.8
)
-
Subtotal at fixed currency rates
3,255.4
(142.5
)
3,112.9
2,808.3
(32.8
)
2,775.5
Currency impact
11.3
76.7
Consolidated reported GAAP net sales
$3,266.7
$2,885.0
Operating Income (loss)
Global Industrial
$189.2
($0.8
)
$188.4
$209.8
-
$209.8
Global Institutional & Specialty
110.8
-
110.8
61.9
-
61.9
Global Healthcare & Life Sciences
44.1
(19.6
)
24.5
42.6
-
42.6
Other
37.2
-
37.2
32.3
-
32.3
Corporate
(52.6
)
22.9
(29.7
)
(30.1
)
-
(30.1
)
Subtotal at fixed currency rates
328.7
2.5
331.2
316.5
-
316.5
Special (gains) and charges
77.0
32.4
Reported OI at fixed currency rates
251.7
284.1
Currency impact
2.8
13.2
Consolidated reported GAAP operating
income
$254.5
$297.3
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
2021
2021
2021
2021
2021
2021
2021
Diluted earnings per share, as reported
(U.S. GAAP)
$0.67
$1.08
$1.75
$1.12
$2.87
$1.04
$3.91
Adjustments:
Special (gains) and charges (1)
0.08
0.12
0.20
0.28
0.48
0.26
0.74
Discrete tax expense (benefits) (2)
0.06
0.02
0.08
(0.02
)
0.06
(0.04
)
0.02
Impact of Purolite on diluted earnings per
share
0.02
0.02
Adjusted diluted earnings per share
(Non-GAAP)
$0.81
$1.22
$2.03
$1.38
$3.41
$1.28
$4.69
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
2022
2022
2022
2022
2022
2022
2022
Diluted earnings per share, as reported
(U.S. GAAP)
$0.60
Adjustments:
Special (gains) and charges (3)
0.22
Discrete tax expense (benefits) (4)
0.00
Adjusted diluted earnings per share
(Non-GAAP)
$0.82
Per share amounts do not necessarily sum due to changes in
shares outstanding and rounding.
(1) Special (gains) and charges for 2021 includes charges of
$24.2 million, $34.1 million, $80.8 million and $74.4 million, net
of tax, in the first, second, third and fourth quarters,
respectively. Charges include COVID-19 related inventory write
downs and employee-related costs (net of government subsidies),
restructuring charges, debt refinancing charges, acquisition and
integration charges, and litigation and other charges.
(2) Discrete tax expenses (benefits) for 2021 includes $16.1
million, $7.7 million, ($6.3) million and ($11.7) million in the
first, second, third and fourth quarters, respectively. These
expenses (benefits) are primarily associated with stock
compensation excess tax benefits more than offset by other discrete
tax expense.
(3) Special (gains) and charges for 2022 includes charges of
$63.6 million, net of tax, in the first quarter. Charges include
acquisition and integration charges, reserves related to our
operations in Russia, COVID-19 related inventory write downs and
employee-related costs, restructuring charges, and litigation and
other charges.
(4) Discrete tax expenses (benefits) for 2022 includes $1.0
million in the first quarter. These expenses (benefits) are
primarily associated with stock compensation excess tax benefits
more than offset by other discrete tax expense.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220425006067/en/
Michael Monahan (651) 250-2809 Andrew Hedberg (651) 250-2185
Cairn Clark (651) 250-2291
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