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Ecolab Quietly Delivers With Second-Quarter 2017 Earnings

Water, hygiene, and energy technology and services leader Ecolab (NYSE: ECL) announced second-quarter 2017 earnings that didn't disappoint. Then again, judging by the immediate reaction of Mr. Market, they didn't necessarily impress, either. Shares were down 3.5% soon after market open.

While there wasn't anything that stood out during the most recent quarter, Ecolab quietly delivered against its stated goals -- and even the expectations of analysts. Revenue, operating income, and earnings per share (EPS) all achieved growth compared to the year-ago period.

The company is still on track to hit its full-year financial guidance. And its beleaguered global-energy business segment even grew sales for the first time in what may feel like forever for shareholders.

Here's what you need to know about Ecolab's second-quarter 2017 performance.

Image source: Getty Images.

By the numbers

The numbers in the tables below are GAAP metrics, meaning they're unadjusted and account for real-world fluctuation in global currencies. However, management also reports performance on a non-GAAP basis, meaning the numbers are adjusted and reported as if currency rates between periods was fixed. The latter is useful for comparison purposes, especially for a global company, but at the end of the day, investors only need to be concerned with GAAP metrics.

Why is that important? Ecolab performed slightly worse on a GAAP basis than on a non-GAAP basis, but the difference wasn't significant. With that in mind, I've included the highlights below and stacked them up side by side with the year-ago period. Investors can review the press release for complete financial details.

Here's how the company performed within each of its three business segments.


Q2 2017

Q2 2016

Year-Over-Year Percentage Change

Global energy revenue

$797 million

$771 million


Global industrial revenue

$1.22 billion

$1.19 billion


Global institutional revenue

$1.22 billion

$1.14 billion


Global energy operating income

$74.4 million

$80.3 million


Global industrial operating income

$170.1 million

$178.5 million


Global institutional operating income

$260.1 million

$245.2 million


Corporate operating income

($102.7 million)

($130.4 million)


Note: All numbers are reported in public-currency rates and are not adjusted. Source. Ecolab.

Each segment reported solid new business and pricing momentum. That wasn't fully exploited during the quarter due to higher delivered-product costs and currency-hedging attempts that missed the mark, but management is expecting a strong second-half performance. Here are some highlights from each business segment:

  • Energy: Strong growth in the well-stimulation business drove revenue growth, aided by smaller gains in the downstream business. The production business is still declining.
  • Industrial: The water business led the segment in the most recent quarter, with a strong performance from customers in Asia Pacific and North America. The second quarter of 2016 was unusually strong.
  • Institutional: The specialty and healthcare businesses led the segment with growth in North America and Latin America.
  • Corporate: Several restructuring and cost-saving measures have begun to pay off, as this segment turned in the biggest year-over-year net improvement in operating income.

Zooming out, here's how Ecolab performed as a whole.


Q2 2017

Q2 2016

Year-Over-Year Percentage Change

Total revenue

$3.46 billion

$3.32 billion


Operating income

$439 million

$412 million


Net income

$296 million

$258 million


EPS, diluted




Note: All numbers are reported in public currency rates and are not adjusted. Source: Ecolab.

Looking ahead

The company quietly delivered in the first half of 2017, which gave management confidence in its full-year 2017 guidance. That includes adjusted EPS in the range of $4.70 to $4.90 per share, or growth of 8% to 12% compared to last year. Where does the company stand relative to that goal?

Ecolab reported adjusted EPS of $1.87 in the first half of the year, which means it needs to report adjusted EPS of $2.83 in the second half to hit the low end of guidance. That may seem like a tall task, but the company usually reports more profitable third and fourth quarters. Besides, the company has a long history of delivering for shareholders.

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Maxx Chatsko has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Ecolab. The Motley Fool has a disclosure policy.