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Actionable news in ECL: ECOLAB Inc,

Ecolab: 370 Wabasha Street North

The following excerpt is from the company's SEC filing.

St. Paul, Minnesota 55102

FOR IMMEDIATE RELEASE

(651) 250-2809

Lisa L. Curran

(651) 250-2185

ECOLAB REPORTS THIRD QUARTER DILUTED EPS $0.86

ADJUSTED DILUTED EPS +6% TO $1.28

2015 full-year adjusted EPS forecast range revised to $4.35 to $4.45, +4% to 6%, from

prior $4.45 to $4.60 range

HIGHLIGHTS

Diluted EPS $0.86; includes a charge for the devaluation of the remaining Venezuelan bolivar business

Adjusted EPS $1.28, +6%, excluding special gains and charges and discrete tax items, as growth, raw material and other cost savings, synergies, and lower tax rate and shares more than offset $0.11 per share in currency translation and pension headwinds

Reported sales -7%; acquisition adjusted fixed currency sales flat, with mid-single digit growth from the Global Institutional, Global Industrial and Other segments, and regional growth led by Latin America and Europe

Strong cash from operations +22% YTD vs. last year

Full year adjusted diluted EPS forecast revised, primarily reflecting unfavorable currency including the Venezuela devaluation, short term M&A dilution and lower Energy

Third Quarter Ended Sept 30

(unaudited)

Adjusted*

(Millions, except per share)

change

Net Sales

3,446.4

3,694.9

Operating Income

Net Income Attributable to Ecolab

Diluted Net Income Per Share

* Operating income is adjusted for special gains and charges; net income and diluted net income per share are adjusted for special gains and charges and discrete tax items.

ST. PAUL, Minn., Nov 2, 2015: Ecolab Inc. delivered strong Global Institutional, Global Industrial and Other segment results in the third quarter, which more than offset lower Global Energy results and substantial currency and pension headwinds to yield 6% adjusted earnings per share growth versus the year-ago period.

Ecolab also revised its adjusted EPS forecast for the full year 2015 to $4.35 to $4.45 from the prior $4.45 to $4.60 range primarily due to worsening currency impacts. This represents a 4% to 6% increase over the adjusted $4.18 earned last year.

CEO comment

Douglas M. Baker, Jr., Ecolab chairman and chief executive officer, commented on the outlook, saying, Our businesses continue to perform well, and our Global Institutional, Global Industrial and Other segments are expected to more than offset Global Energys fourth quarter results, which are improving but still behind last year. We expect our fourth quarter will represent our strongest business results in 2015 despite the continued decline in energy and emerging markets over the recent months. However, worsening currency headwinds, including the devaluation of our Venezuelan Energy bolivar business and a short term unfavorable impact from acquisitions, cause us to lower our full year outlook. We now expect full year adjusted EPS in the $4.35 to $4.45 range, up 4% to 6%.

In spite of the current currency noise, our business continues to deliver and our opportunities remain abundant. We are a leader in the huge and essential global markets for food, water, energy and healthcare, all of which offer compelling long term growth potential. We have great technology and a great culture that emphasizes growth and customer service. We continue to aggressively drive our business, making the right investments for long term growth, and remain committed to our long term financial goals of 15% adjusted EPS growth, 20% operating margins and 20% ROIC. This year has held many external challenges, but our focus on the fundamentals enabled us to deliver very strong underlying results again in 2015. As we move towards 2016 we will continue to refine our plans to deliver even better results next year.

Quarter overview

Adjusted Fixed Currency*

(Millions)

Change

3,535.9

3,517.3

Ecolabs reported sales declined 7% to $3.4 billion in the third quarter of 2015. Fixed currency sales rose 1% and acquisition adjusted fixed currency sales were flat.

Third quarter 2015 reported operating income decreased 28% to $413 million. Both reported third quarter 2015 and 2014 results include special gains and charges. Excluding special gains and charges, third quarter 2015 adjusted operating income of $580 million was flat when compared with third quarter 2014 adjusted operating income. Excluding special gains and charges and at fixed currency rates, third quarter 2015 adjusted fixed currency operating income of $591 million increased 7% when compared with third quarter 2014 adjusted fixed currency operating income.

Third quarter 2015 reported net income attributable to Ecolab decreased 29% to $258 million, representing $0.86 per diluted share. Excluding special gains and charges and discrete tax items, third quarter 2015 adjusted net income attributable to Ecolab increased 4% to $384 million, and adjusted diluted earnings per share increased 6% to $1.28, when compared with third quarter 2014 adjusted diluted earnings per share of $1.21. Currency translation had a negative impact of $0.09 per share on reported and adjusted diluted earnings per share in the third quarter of 2015. Initial dilution from acquisitions was $0.01 per share in the quarter.

Venezuela devaluation and special charge

Our third quarter 2015 Consolidated Balance Sheet reflects the remeasurement of our Venezuelan Food & Beverage and Institutional net assets and the bolivar portion of our Venezuelan Energy net assets at the floating Marginal Currency System (SIMADI)

exchange rate. As of the end of the third quarter of 2015, we believe that the SIMADI rate better represents the economics of our bolivar operations in Venezuela. The remeasurement of the corresponding net assets resulted in a third quarter special charge of approximately $125 million, reflected in the Corporate segment.

The impact of reflecting the third quarter 2015 bolivar income earned at SIMADI was not material to our Food & Beverage, Institutional and Energy operating units. We expect a $0.02 unfavorable impact to fourth quarter adjusted earnings per share from Energys bolivar income being reflected at SIMADI, and $0.03 when all division impacts are included.

Segment review

Third quarter 2015 sales for the Global Industrial segment, when measured at fixed currency rates, rose 7% to $1,268 million and fixed currency operating income increased 21% to $201 million. Acquisition adjusted fixed currency sales rose 4%, led by Food & Beverage; acquisition adjusted fixed currency operating income increased 20%. Regionally, Latin America and Asia Pacific enjoyed strong sales growth, with good gains in North America, Europe and Middle East & Africa (MEA). When measured at public currency rates, Global Industrial sales were $1,226 million and operating income was $194 million.

Third quarter 2015 sales for the Global Institutional segment, when measured at fixed currency rates, rose 5% to $1,139 million, led by good Institutional and Specialty sales growth. Fixed currency operating income increased 14% to $264 million compared with last year. Sales for the segment showed good growth in Asia Pacific, MEA, Latin America, and North America, with moderate gains in Europe. When measured at public currency rates, Global Institutional sales were $1,116 million and operating income was $261 million.

Global Energy segment sales, when measured at fixed currency rates, decreased 12% to $927 million in the third quarter 2015 as growth in the downstream business was more than offset by a decline in the upstream business. Fixed currency operating income decreased 21% to $133 million. When measured at public currency rates,

Global Energy sales were $905 million and operating income was $130 million.

Other segment sales, when measured at fixed currency rates, increased 5% to $202 million in the third quarter. Fixed currency operating income increased 16% to $38 million. Acquisition adjusted fixed currency sales and acquisition adjusted fixed currency operating income increased 6% and 17%, respectively. When measured at public currency rates, Other segment sales were $199 million and operating income was $38 million.

The Corporate segment includes amortization expense of $44 million in the third quarter of both 2015 and 2014 related to the Nalco merger intangible assets. The Corporate segment also includes special gains and charges. Total special gains and charges for the third quarter of 2015, including the non-controlling interest impact of $11 million, were a net charge of $155 million ($145 million after-tax) and primarily consisted of an approximate $125 million charge related to the devaluation of a portion of our Venezuelan net assets. The remainder of the special gains and charges consisted primarily of restructuring costs, wage-hour litigation-related charges and Champion integration costs. Special gains and charges for the third quarter of 2014 were a net charge of $8 million ($6 million after-tax).

The reported income tax rate for the third quarter 2015 was 29.6%, compared with the reported rate of 27.3% in the third quarter 2014. Excluding the tax rate impact of special gains and charges and discrete tax items, the adjusted tax rate was 25.8% in the third quarter 2015, compared with 27.7% for the same period last year. The improved adjusted tax rate was the result of global tax planning strategies and favorable geographic income mix.

Business Outlook

Ecolab now expects its 2015 full-year adjusted earnings per share to be in the $4.35 to $4.45 range, representing a 4% to 6% increase over the prior year. Previously, the 2015 full-year adjusted earnings per share forecast range was $4.45 to $4.60.

When compared with our 2014 performance, we expect mid-single digit fixed currency sales growth with improved growth in our Global Institutional, Global Industrial and Other segments and a high-single digit decline in our Global Energy segment. We look for improved adjusted gross margin, with a comparable selling, general and administrative (SG&A) ratio to sales, slightly lower interest expense and a favorable adjusted tax rate versus 2014. Pension expense is...


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