Ecolab Inc. (NYSE: ECL):
FOURTH QUARTER
HIGHLIGHTS
- Reported sales $3.9 billion, +7% versus last year. Organic
sales +6%, led by double-digit growth in the Institutional &
Specialty segment and Pest Elimination, and solid Industrial
segment growth. As expected, Healthcare & Life Sciences segment
sales were stable versus last year but continued to show good
sequential sales growth.
- Reported operating income +48%. Organic operating income
+21%, driven by continued strong pricing, volume growth and
moderately lower delivered product costs.
- Reported operating income margin 15.0%. Organic operating
income margin 16.0%, +200 bps reflecting continued robust gross
margin expansion led by value-based pricing.
- Reported diluted EPS $1.41, +52%. Adjusted diluted EPS,
excluding special gains and charges and discrete tax items were
$1.55, +22%.
- Full-year 2023 cash flow from operating activities $2.4
billion. Full-year 2023 free cash flow $1.6 billion, resulting in
free cash flow conversion of 118%.
OUTLOOK
- 1Q 2024: Expect first quarter 2024 adjusted diluted earnings
per share in the $1.27 to $1.37 range, +44% to 56% versus last year
reflecting short-term benefits from lower delivered product
costs.
- 2024: Expect full year 2024 adjusted diluted earnings per
share in the $6.10 to $6.50 range, +17% to 25% versus last
year.
Fourth Quarter Ended December
31
Reported
Adjusted
(unaudited)
Public Currency Rates
%
Public Currency Rates
%
(millions, except per share)
2023
2022
Change
2023
2022
Change
Net sales
$3,938.4
$3,671.2
7
%
$3,938.4
$3,671.2
7
%
Operating income
590.0
399.2
48
%
624.5
502.4
24
%
Net income attributable to Ecolab
405.2
264.4
53
%
444.7
363.6
22
%
Diluted earnings per share attributable to
Ecolab
$1.41
$0.93
52
%
$1.55
$1.27
22
%
Organic
%
2023
2022
Change
Net sales
$3,921.1
$3,703.6
6
%
Operating income
628.0
517.2
21
%
CEO Comment
Christophe Beck, Ecolab’s chairman and chief executive officer,
said, “2023 was a phenomenal year for Ecolab, with our team
delivering robust sales growth, significant operating margin
expansion and very strong growth in adjusted diluted earnings per
share. Our team won a significant amount of new business that
helped to offset continued soft macro demand, launched a strong
pipeline of new breakthrough technologies, drove pricing backed by
strong customer value, and further improved our underlying
productivity by leveraging our leading digital capabilities. All of
this is the result of the work we have done over the last few years
to further strengthen Ecolab’s key long-term growth drivers.
“We are confident 2024 will be another strong year for Ecolab,
continuing our long-term 12-15% earnings growth trajectory that is
amplified by shorter-term benefits from moderately lower delivered
product costs. While macroeconomic conditions remain unpredictable,
we are well positioned to drive growth through our ‘circle the
customer, circle the globe’ enterprise selling model and proven
value proposition, that helps customers improve their operational
performance, while reducing their water and energy consumption. We
expect another very strong year of operating margin expansion,
building upon our success in 2023, and remain confident in our path
to deliver on our 20% margin objective over the next few years to
drive superior earnings growth and long-term returns for
shareholders.”
Fourth Quarter 2023 Consolidated
Results
Ecolab’s fourth quarter reported sales increased 7% and organic
sales increased 6% when compared to the prior year.
Fourth quarter 2023 reported operating income increased 48%
including the impact of special gains and charges, which were a net
charge primarily related to restructuring costs. Organic operating
income increased 21%, as robust pricing and moderately lower
delivered product costs more than offset investments in the
business including incentive compensation.
Reported other income increased in the fourth quarter of 2023 as
modestly higher pension costs were more than offset by the
comparison to last year’s $26 million settlement expense related to
U.S. pension plan lump-sum payments to retirees.
Reported interest expense increased 1% reflecting the impact
from higher average interest rates on outstanding debt.
The reported income tax rate for the fourth quarter of 2023 was
23.6% compared with the reported rate of 16.2% in the fourth
quarter of 2022. Excluding special gains and charges and discrete
tax items, the adjusted tax rate for the fourth quarter of 2023 was
21.3% compared with the adjusted tax rate of 18.2% in the fourth
quarter of 2022. The increase in the fourth quarter tax rate was
due to changes in the geographic mix of income and timing of tax
planning.
Reported net income increased 53% versus the prior year.
Excluding the impact of special gains and charges and discrete tax
items, adjusted net income increased 22% versus the prior year.
Reported diluted earnings per share increased 52% versus the
prior year. Adjusted diluted earnings per share increased 22% when
compared against the fourth quarter of 2022.
Currency translation had a $0.02 favorable impact on earnings
per share in the fourth quarter of 2023.
Fourth Quarter 2023 Segment
Review
Global Industrial
(unaudited)
Fourth Quarter Ended December
31
Organic
(millions)
2023
2022
% Change
% Change
Fixed currency
Sales
$1,871.3
$1,808.2
3
%
3
%
Operating income
322.2
272.5
18
%
18
%
Operating income margin
17.2
%
15.1
%
Organic operating income margin
17.3
%
15.1
%
Public currency
Sales
$1,862.1
$1,779.8
5
%
Operating income
319.6
265.8
20
%
The Industrial segment includes Water,
Food & Beverage, and Paper
Organic sales increased 3% as good growth in Water and Food
& Beverage more than offset the expected short-term decline in
Paper sales, which continues to be impacted by soft industry
demand. Organic operating income increased 18% as continued pricing
and lower delivered product costs overcame investments in the
business and softer volume.
Global Institutional &
Specialty
(unaudited)
Fourth Quarter Ended December
31
Organic
(millions)
2023
2022
% Change
% Change
Fixed currency
Sales
$1,290.1
$1,139.1
13
%
12
%
Operating income
238.7
169.3
41
%
41
%
Operating income margin
18.5
%
14.9
%
Organic operating income margin
18.8
%
14.9
%
Public currency
Sales
$1,285.2
$1,127.4
14
%
Operating income
237.5
166.7
42
%
The Institutional & Specialty segment
includes Institutional and Specialty
Organic sales increased 12%, with both the Institutional and
Specialty divisions growing double-digits, driven by robust pricing
and new business gains. Very strong organic operating income growth
of 41% reflected strong pricing, good volume growth and lower
delivered product costs that more than offset investments in the
business including incentive compensation.
Global Healthcare & Life
Sciences
(unaudited)
Fourth Quarter Ended December
31
Organic
(millions)
2023
2022
% Change
% Change
Fixed currency
Sales
$410.1
$413.1
(1)
%
(1)
%
Operating income
48.3
64.2
(25)
%
(25)
%
Operating income margin
11.8
%
15.5
%
Organic operating income margin
11.8
%
15.5
%
Public currency
Sales
$409.3
$400.2
2
%
Operating income
47.8
61.3
(22)
%
The Healthcare & Life Sciences segment
includes Healthcare and Life Sciences
Sequentially, Healthcare and Life Sciences segment organic sales
and operating income continued to improve. Compared to last year,
organic sales were stable as continued solid growth in Healthcare
largely offset the expected decline in Life Sciences. Healthcare’s
performance continued to improve reflecting early benefits from the
separation of our North America operations into two focused
businesses, infection prevention and surgical. Life Sciences’
underlying performance remained stable as new business wins and
pricing were more than offset by comparisons to last year’s very
strong 18% growth. Organic operating income decreased 25% versus
last year as further pricing was more than offset by targeted
investments in the business and higher supply chain costs.
Other
(unaudited)
Fourth Quarter Ended December
31
Organic
(millions)
2023
2022
% Change
% Change
Fixed currency
Sales
$370.1
$343.2
8
%
8
%
Operating income
68.6
57.9
18
%
18
%
Operating income margin
18.5
%
16.9
%
Organic operating income margin
18.5
%
16.9
%
Public currency
Sales
$368.2
$336.4
9
%
Operating income
67.8
56.3
20
%
The Other segment includes Pest
Elimination, Textile Care and Colloidal Technologies
Organic sales increased 8%, led by double-digit growth in Pest
Elimination. Organic operating income increased 18% as continued
pricing and lower delivered product costs more than offset
investments in the business.
Corporate
(unaudited)
Fourth Quarter Ended December
31
(millions)
2023
2022
Public currency
Sales
$13.6
$27.4
Corporate operating expense
Nalco and Purolite amortization
49.8
47.7
Special (gains) and charges
34.5
103.2
Other
(1.6
)
-
Total Corporate operating expense
$82.7
$150.9
Fourth quarter of 2023 corporate segment includes:
- sales of $14 million to ChampionX under the Master Cross Supply
and Product Transfer agreements Ecolab entered into as part of the
ChampionX separation
- amortization expense of $29 million related to the Nalco merger
intangible assets and $21 million related to Purolite acquisition
intangible assets
- special gains and charges were a net charge of $35 million,
primarily related to restructuring costs
Special gains and charges for the fourth quarter of 2022
impacting operating expense were a net charge of $103 million and
primarily related restructuring costs.
Business Outlook
2024
Ecolab expects full year 2024 adjusted diluted earnings per
share in the $6.10 to $6.50 range, rising 17% to 25% compared with
adjusted diluted earnings per share of $5.21 in 2023. This forecast
assumes soft but stable macroeconomic demand and lower delivered
product costs in the first half of the year as global inflation
eases. Higher interest expense, pension expense and foreign
currency translation are estimated to have a combined $0.05 per
share unfavorable impact in 2024.
Against this backdrop, Ecolab expects sales growth, driven by
new business gains and continued value-based pricing, SG&A
productivity through the year, and attractive operating income
margin expansion. This strong performance is expected to result in
quarterly adjusted diluted earnings per share growth that
progressively normalizes towards the upper-end of Ecolab’s
long-term 12-15% target as favorability from lower delivered
product costs is only assumed in the first half of the year.
The company currently expects quantifiable special charges in
2024 to be approximately $0.10 to $0.15 per share, principally
related to restructuring charges. Other than the special gains and
charges noted above, other such amounts are not currently
quantifiable.
2024 – First Quarter
Ecolab expects first quarter 2024 adjusted diluted earnings per
share in the $1.27 to $1.37 range, rising 44% to 56% compared with
adjusted diluted earnings per share of $0.88 a year ago.
The company currently expects quantifiable special charges in
the first quarter of 2024 to be approximately $0.08 per share,
principally related to restructuring charges. 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 fourth 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, demand, inflation, and our financial and
business performance and prospects, including sales, earnings,
special charges, margins, pricing, productivity and new business.
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, formerly known as acquisition adjusted fixed
currency 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, formerly known as acquisition
adjusted fixed currency operating income
- organic operating income margin, formerly known as acquisition
adjusted fixed currency operating income margin
- adjusted tax rate
- adjusted net income attributable to Ecolab
- adjusted diluted earnings per share
- free cash flow
- free cash flow conversion
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 2023. 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 a Master Cross Supply and Product
Transfer agreement with ChampionX to provide, receive or transfer
certain products for a period up to 36 months and for a small set
of products with limited suppliers over the next few years. 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.
We define free cash flow as net cash provided by operating
activities less cash outlays for capital expenditures and free cash
flow conversion as free cash flow divided by net income including
noncontrolling interest. It should not be inferred that the entire
free cash flow amount is available for discretionary expenditures.
These measures 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 these measures are meaningful to investors as they function
as a useful measure of performance and we use them 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)
Fourth Quarter Ended
Twelve Months Ended
December 31
%
December 31
%
(millions, except per share)
2023
2022
Change
2023
2022
Change
Product and equipment sales
$3,164.8
$2,972.3
$12,316.8
$11,446.2
Service and lease sales
773.6
698.9
3,003.4
2,741.6
Net sales
3,938.4
3,671.2
7
%
15,320.2
14,187.8
8
%
Product and equipment cost of sales
1,827.5
1,841.1
7,389.2
7,212.8
Service and lease cost of sales
456.9
413.8
1,765.7
1,618.2
Cost of sales (1)
2,284.4
2,254.9
1
%
9,154.9
8,831.0
4
%
Selling, general and administrative
expenses
1,034.8
922.1
12
%
4,061.6
3,653.8
11
%
Special (gains) and charges (1)
29.2
95.0
111.4
140.5
Operating income
590.0
399.2
48
%
1,992.3
1,562.5
28
%
Other (income) expense (1)
(17.9
)
8.1
(321
)%
(59.9
)
(24.5
)
144
%
Interest expense, net
70.4
69.5
1
%
296.7
243.6
22
%
Income before income taxes
537.5
321.6
67
%
1,755.5
1,343.4
31
%
Provision for income taxes
126.7
52.1
143
%
362.5
234.5
55
%
Net income including noncontrolling
interest
410.8
269.5
52
%
1,393.0
1,108.9
26
%
Net income attributable to noncontrolling
interest
5.6
5.1
20.7
17.2
Net income attributable to Ecolab
$405.2
$264.4
53
%
$1,372.3
$1,091.7
26
%
Earnings attributable to Ecolab per common
share
Basic
$1.42
$0.93
53
%
$4.82
$3.83
26
%
Diluted
$1.41
$0.93
52
%
$4.79
$3.81
26
%
Weighted-average common shares
outstanding
Basic
285.3
284.6
0
%
285.0
285.2
0
%
Diluted
287.1
285.8
0
%
286.5
286.6
0
%
(1) Cost of sales, Special (gains) and
charges and Other (income) expense in the Consolidated Statement of
Income above include the following:
Fourth Quarter Ended
Twelve Months Ended
December 31
December 31
(millions)
2023
2022
2023
2022
Cost of sales
Restructuring activities
$5.3
$15.9
$22.5
$21.4
Acquisition and integration activities
-
(7.7
)
-
25.0
COVID-19 activities, net
-
-
-
16.3
Russia/Ukraine activities
-
-
-
7.2
Subtotal (a)
5.3
8.2
22.5
69.9
Special (gains) and charges
Restructuring activities
16.9
85.0
63.2
85.8
Acquisition and integration activities
4.6
(0.5
)
16.1
14.5
COVID-19 activities, net
-
3.1
-
10.2
Russia/Ukraine activities
0.3
-
1.4
5.9
Other
7.4
7.4
30.7
24.1
Subtotal
29.2
95.0
111.4
140.5
Other (income) expense
Pension Settlements/Curtailments
-
25.8
-
50.6
Total special (gains) and charges
$34.5
$129.0
$133.9
$261.0
(a) Special charges of $3.5 million and
$6.2 million in the fourth quarter of 2023 and 2022, respectively,
and $14.5 million and $65.0 million for the twelve months of 2023
and 2022, respectively, were recorded in product and equipment cost
of sales. Special charges of $1.8 million and $2.0 million in the
fourth quarter of 2023 and 2022, respectively, and $8.0 million and
$4.9 million for the twelve months of 2023 and 2022, respectively,
were recorded in service and lease cost of sales.
ECOLAB INC.
REPORTABLE SEGMENT
INFORMATION
(unaudited)
Fourth Quarter Ended December
31
Fixed Currency Rates
Public Currency Rates
%
%
(millions)
2023
2022
Change
2023
2022
Change
Net Sales
Global Industrial
$1,871.3
$1,808.2
3
%
$1,862.1
$1,779.8
5
%
Global Institutional & Specialty
1,290.1
1,139.1
13
%
1,285.2
1,127.4
14
%
Global Healthcare & Life Sciences
410.1
413.1
(1
)%
409.3
400.2
2
%
Other
370.1
343.2
8
%
368.2
336.4
9
%
Corporate
13.8
27.6
(50
)%
13.6
27.4
(50
)%
Subtotal at fixed currency rates
3,955.4
3,731.2
6
%
3,938.4
3,671.2
7
%
Currency impact
(17.0
)
(60.0
)
*
-
-
*
Consolidated reported GAAP net sales
$3,938.4
$3,671.2
7
%
$3,938.4
$3,671.2
7
%
Operating Income (loss)
Global Industrial
$322.2
$272.5
18
%
$319.6
$265.8
20
%
Global Institutional & Specialty
238.7
169.3
41
%
237.5
166.7
42
%
Global Healthcare & Life Sciences
48.3
64.2
(25
)%
47.8
61.3
(22
)%
Other
68.6
57.9
18
%
67.8
56.3
20
%
Corporate
(83.3
)
(151.4
)
*
(82.7
)
(150.9
)
*
Subtotal at fixed currency rates
594.5
412.5
44
%
590.0
399.2
48
%
Currency impact
(4.5
)
(13.3
)
*
-
-
*
Consolidated reported GAAP operating
income
$590.0
$399.2
48
%
$590.0
$399.2
48
%
Year Ended December 31
Fixed Currency Rates
Public Currency Rates
%
%
(millions)
2023
2022
Change
2023
2022
Change
Net Sales
Global Industrial
$7,193.1
$6,736.3
7
%
$7,221.8
$6,805.0
6
%
Global Institutional & Specialty
4,994.0
4,414.3
13
%
4,999.2
4,432.1
13
%
Global Healthcare & Life Sciences
1,576.9
1,505.8
5
%
1,586.0
1,510.5
5
%
Other
1,442.3
1,313.3
10
%
1,444.2
1,316.4
10
%
Corporate
69.1
123.7
(44
)%
69.0
123.8
(44
)%
Subtotal at fixed currency rates
15,275.4
14,093.4
8
%
15,320.2
14,187.8
8
%
Currency impact
44.8
94.4
*
-
-
*
Consolidated reported GAAP net sales
$15,320.2
$14,187.8
8
%
$15,320.2
$14,187.8
8
%
Operating Income
Global Industrial
$1,080.7
$935.8
15
%
$1,084.7
$950.0
14
%
Global Institutional & Specialty
823.0
621.7
32
%
823.4
624.3
32
%
Global Healthcare & Life Sciences
160.0
193.3
(17
)%
161.5
193.5
(17
)%
Other
255.0
209.9
21
%
254.4
209.5
21
%
Corporate
(331.7
)
(414.4
)
*
(331.7
)
(414.8
)
*
Subtotal at fixed currency rates
1,987.0
1,546.3
29
%
1,992.3
1,562.5
28
%
Currency impact
5.3
16.2
*
-
-
*
Consolidated reported GAAP operating
income
$1,992.3
$1,562.5
28
%
$1,992.3
$1,562.5
28
%
* 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)
December 31
December 31
(millions)
2023
2022
Assets
Current assets
Cash and cash equivalents
$919.5
$598.6
Accounts receivable, net
2,834.2
2,698.1
Inventories
1,497.2
1,792.8
Other current assets
393.2
404.7
Total current assets
5,644.1
5,494.2
Property, plant and equipment, net
3,474.6
3,293.4
Goodwill
8,148.2
8,012.7
Other intangible assets, net
3,493.5
3,680.7
Operating lease assets
553.5
448.2
Other assets
532.7
535.1
Total assets
$21,846.6
$21,464.3
Liabilities and Equity
Current liabilities
Short-term debt
$630.4
$505.1
Accounts payable
1,566.3
1,728.2
Compensation and benefits
655.5
493.6
Income taxes
158.7
197.6
Other current liabilities
1,334.9
1,285.9
Total current liabilities
4,345.8
4,210.4
Long-term debt
7,551.4
8,075.3
Pension and postretirement benefits
651.7
670.3
Deferred income taxes
418.2
505.6
Operating lease liabilities
425.5
337.8
Other liabilities
381.8
406.3
Total liabilities
13,774.4
14,205.7
Equity
Common stock
365.7
364.7
Additional paid-in capital
6,766.7
6,580.2
Retained earnings
10,075.4
9,318.8
Accumulated other comprehensive loss
(1,850.4
)
(1,726.6
)
Treasury stock
(7,312.7
)
(7,301.0
)
Total Ecolab shareholders’ equity
8,044.7
7,236.1
Noncontrolling interest
27.5
22.5
Total equity
8,072.2
7,258.6
Total liabilities and equity
$21,846.6
$21,464.3
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
Fourth Quarter Ended
Twelve Months Ended
December 31
December 31
(millions, except percent and per
share)
2023
2022
2023
2022
Net sales
Reported GAAP net sales
$3,938.4
$3,671.2
$15,320.2
$14,187.8
Effect of foreign currency translation
17.0
60.0
(44.8
)
(94.4
)
Non-GAAP fixed currency sales
3,955.4
3,731.2
15,275.4
14,093.4
Effect of acquisitions and
divestitures
(34.3
)
(27.6
)
(113.4
)
(123.7
)
Non-GAAP organic sales
$3,921.1
$3,703.6
$15,162.0
$13,969.7
Cost of sales
Reported GAAP cost of sales
$2,284.4
$2,254.9
$9,154.9
$8,831.0
Special (gains) and charges
5.3
8.2
22.5
69.9
Non-GAAP adjusted cost of sales
$2,279.1
$2,246.7
$9,132.4
$8,761.1
Gross profit
Reported GAAP gross profit
$1,654.0
$1,416.3
$6,165.3
$5,356.8
Special (gains) and charges
5.3
8.2
22.5
69.9
Non-GAAP adjusted gross profit
$1,659.3
$1,424.5
$6,187.8
$5,426.7
Gross margin
Reported GAAP gross margin
42.0
%
38.6
%
40.2
%
37.8
%
Non-GAAP adjusted gross margin
42.1
%
38.8
%
40.4
%
38.2
%
Operating income
Reported GAAP operating income
$590.0
$399.2
$1,992.3
$1,562.5
Special (gains) and charges at public
currency rates
34.5
103.2
133.9
210.4
Non-GAAP adjusted operating income
624.5
502.4
2,126.2
1,772.9
Effect of foreign currency translation
4.6
14.8
(5.8
)
(13.1
)
Non-GAAP adjusted fixed currency operating
income
629.1
517.2
2,120.4
1,759.8
Effect of acquisitions and
divestitures
(1.1
)
-
(2.9
)
(0.4
)
Non-GAAP organic operating income
$628.0
$517.2
$2,117.5
$1,759.4
Operating income margin
Reported GAAP operating income margin
15.0
%
10.9
%
13.0
%
11.0
%
Non-GAAP adjusted fixed currency operating
income margin
15.9
%
13.9
%
13.9
%
12.5
%
Non-GAAP organic operating income
margin
16.0
%
14.0
%
14.0
%
12.6
%
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
Fourth Quarter Ended
Twelve Months Ended
December 31
December 31
(millions, except percent and per
share)
2023
2022
2023
2022
Other (income) expense
Reported GAAP other (income) expense
($17.9
)
$8.1
($59.9
)
($24.5
)
Special (gains) and charges
-
25.8
-
50.6
Non-GAAP adjusted other (income)
expense
($17.9
)
($17.7
)
($59.9
)
($75.1
)
Net Income attributable to Ecolab
Reported GAAP net income attributable to
Ecolab
$405.2
$264.4
$1,372.3
$1,091.7
Special (gains) and charges, after tax
30.6
101.5
109.2
207.3
Discrete tax net expense (benefit)
8.9
(2.3
)
11.2
(11.8
)
Non-GAAP adjusted net income attributable
to Ecolab
$444.7
$363.6
$1,492.7
$1,287.2
Diluted EPS attributable to Ecolab
Reported GAAP diluted EPS
$1.41
$0.93
$4.79
$3.81
Special (gains) and charges, after tax
0.11
0.35
0.38
0.72
Discrete tax net expense (benefit)
0.03
(0.01
)
0.04
(0.04
)
Non-GAAP adjusted diluted EPS
$1.55
$1.27
$5.21
$4.49
Provision for Income Taxes
Reported GAAP tax rate
23.6
%
16.2
%
20.6
%
17.5
%
Special gains and charges
(0.8
)
1.5
(0.1
)
0.5
Discrete tax items
(1.5
)
0.5
(0.6
)
0.7
Non-GAAP adjusted tax rate
21.3
%
18.2
%
19.9
%
18.7
%
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
Fourth Quarter Ended December
31
2023
2022
(millions)
Fixed Currency
Impact of Acquisitions and
Divestitures
Organic
Fixed Currency
Impact of Acquisitions and
Divestitures
Organic
Net Sales
Global Industrial
$1,871.3
($4.5
)
$1,866.8
$1,808.2
$ -
$1,808.2
Global Institutional & Specialty
1,290.1
(16.0
)
1,274.1
1,139.1
-
1,139.1
Global Healthcare & Life Sciences
410.1
-
410.1
413.1
-
413.1
Other
370.1
-
370.1
343.2
-
343.2
Corporate
13.8
(13.8
)
-
27.6
(27.6
)
-
Subtotal at fixed currency rates
3,955.4
(34.3
)
3,921.1
3,731.2
(27.6
)
3,703.6
Currency impact
(17.0
)
(60.0
)
Consolidated reported GAAP net sales
$3,938.4
$3,671.2
Operating Income (loss)
Global Industrial
$322.2
$0.2
$322.4
$272.5
$ -
$272.5
Global Institutional & Specialty
238.7
0.3
239.0
169.3
-
169.3
Global Healthcare & Life Sciences
48.3
-
48.3
64.2
-
64.2
Other
68.6
-
68.6
57.9
-
57.9
Corporate
(48.7
)
(1.6
)
(50.3
)
(46.7
)
-
(46.7
)
Subtotal at fixed currency rates
629.1
(1.1
)
628.0
517.2
-
517.2
Special (gains) and charges at fixed
currency rates
34.6
104.7
Reported OI at fixed currency rates
594.5
412.5
Currency impact
(4.5
)
(13.3
)
Consolidated reported GAAP operating
income
$590.0
$399.2
Year Ended December 31
2023
2022
(millions)
Fixed Currency
Impact of Acquisitions and
Divestitures
Organic
Fixed Currency
Impact of Acquisitions and
Divestitures
Organic
Net Sales
Global Industrial
$7,193.1
($4.5
)
$7,188.6
$6,736.3
$ -
$6,736.3
Global Institutional & Specialty
4,994.0
(39.8
)
4,954.2
4,414.3
-
4,414.3
Global Healthcare & Life Sciences
1,576.9
-
1,576.9
1,505.8
-
1,505.8
Other
1,442.3
-
1,442.3
1,313.3
-
1,313.3
Corporate
69.1
(69.1
)
-
123.7
(123.7
)
-
Subtotal at fixed currency rates
15,275.4
(113.4
)
15,162.0
14,093.4
(123.7
)
13,969.7
Currency impact
44.8
94.4
Consolidated reported GAAP net sales
$15,320.2
$14,187.8
Operating Income (loss)
Global Industrial
$1,080.7
$0.2
$1,080.9
$935.8
$ -
$935.8
Global Institutional & Specialty
823.0
(0.5
)
822.5
621.7
-
621.7
Global Healthcare & Life Sciences
160.0
-
160.0
193.3
-
193.3
Other
255.0
-
255.0
209.9
-
209.9
Corporate
(198.3
)
(2.6
)
(200.9
)
(200.9
)
(0.4
)
(201.3
)
Subtotal at fixed currency rates
2,120.4
(2.9
)
2,117.5
1,759.8
(0.4
)
1,759.4
Special (gains) and charges at fixed
currency rates
133.4
213.5
Reported OI at fixed currency rates
1,987.0
1,546.3
Currency impact
5.3
16.2
Consolidated reported GAAP operating
income
$1,992.3
$1,562.5
ECOLAB INC.
SUPPLEMENTAL NON-GAAP
RECONCILIATIONS
(unaudited)
Selected Cash Flow items
Fourth Quarter Ended
Twelve Months Ended
December 31
December 31
(millions)
2023
2022
2023
2022
Cash provided by operating activities
$852.5
$859.2
$2,411.8
$1,788.4
Less: Capital expenditures
(262.6
)
(202.8
)
(774.8
)
(712.8
)
Free cash flow
$589.9
$656.4
$1,637.0
$1,075.6
Net income (including noncontrolling
interest)
410.8
269.5
1,393.0
1,108.9
Cash flow conversion
208
%
319
%
173
%
161
%
Free cash flow conversion
144
%
244
%
118
%
97
%
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
2022
2022
2022
2022
2022
2022
2022
Diluted earnings per share, as reported
(U.S. GAAP)
$0.60
$1.08
$1.67
$1.21
$2.88
$0.93
$3.81
Adjustments:
Special (gains) and charges (1)
0.22
0.01
0.23
0.14
0.37
0.35
0.72
Discrete tax expense (benefits) (2)
0.00
0.01
0.02
(0.05
)
(0.03
)
(0.01
)
(0.04
)
Adjusted diluted earnings per share
(Non-GAAP)
$0.82
$1.10
$1.92
$1.30
$3.22
$1.27
$4.49
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 (3)
0.07
0.08
0.15
0.12
0.27
0.11
0.38
Discrete tax expense (benefits) (4)
(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
Per share amounts do not necessarily sum
due to changes in shares outstanding and rounding.
(1) Special (gains) and charges for 2022
includes charges of $63.6 million, $2.6 million, $39.6 million and
$101.5 million, net of tax, in the first, second, third and fourth
quarters, respectively. These charges were primarily related to
acquisition and integration charges, reserves related to our
operations in Russia, COVID-19 related inventory write downs and
employee-related costs, restructuring charges, litigation and other
charges and pension settlements.
(2) Discrete tax expenses (benefits) for
2022 includes $1.0 million, $3.7 million, ($14.2) million and
($2.3) 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 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.
(4) Discrete tax (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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240212927433/en/
Investor Contact: Andrew Hedberg
(651) 250-2185 Cairn Clark (651) 250-2291
Media Contact: Nigel Glennie (651)
250-2576
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