Cleaning and pest-control service provider Ecolab, Inc. (ECL) on Tuesday reported a 15% year-over-year increase in profit for the third quarter, as new account sales, pricing and cost saving actions offset the effects of global recession and unfavorable foreign exchange.
Pro forma earnings per share for the quarter grew 11%, and topped analysts' expectations by a penny. The company also provided earnings guidance for the third quarter, in line with consensus estimate, and narrowed its earnings forecast for the full year 2009.
In a statement, chairman, president and chief executive officer, Douglas Baker, Jr. said, "We continue to make solid progress. The quarter was on track, reflecting our focus on new business growth, appropriate pricing and structural cost improvement to offset soft market conditions and yield the strong earnings gain."
Ecolab added that it's balanced business mix has provided stability during 2009's difficult economy, as steady demand from our food and beverage, food retail and healthcare markets, as well as increased sanitizer demand due to H1N1, has balanced soft trends in lodging and foodservice.
Third Quarter Results
The St. Paul, Minnesota-based company reported net income of $145.0 million or $0.60 per share for the third quarter, up from $126.2 million or $0.50 per share in the prior-year quarter.
Excluding discrete tax items as well as special gains and charges, pro forma earnings per share from ongoing operations for the quarter increased to $0.61 from $0.55 in the year-ago quarter. On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.60 per share for the third quarter. Analysts' estimate typically excludes special items.
Ecolab was anticipating pro forma earnings in a range of $0.58 to $0.61 per share, excluding special gains and charges that include restructuring charges of about $0.02 to $0.04 per share.
Ecolab noted that currency translation had a negative impact of about $0.03 per share on pro forma earnings per share for the latest quarter.
Net sales for the quarter decreased 5% to $1.55 billion from $1.63 billion in the same quarter last year, and narrowly missed fourteen Wall Street analysts' consensus estimate of $1.56 billion. When measured in fixed currencies, sales remained flat with last year.
Segmental Details
Ecolab's U.S. cleaning & sanitizing sales for the third quarter edged down to $693.2 million from the year-ago quarter's $$695.5 million. However, segment operating income increased 17% to $141.1 million from last year. U.S. other services sales for the quarter declined 6% to $117.6 million from last year. However, segment operating income grew 3% to $18.4 million from a year ago.
Sales for Ecolab's international operations, measured at fixed currency rates, edged up 1% to $692.0 million from the year-ago quarter $684.1 million. Fixed currency segment operating income grew 6% to $71 million from last year. Measured at public currency rates, International sales declined 9% and segment operating income declined 8%.
Other Metrics
Operating income for the third quarter rose 11% to $223.0 million from $201.4 million in the prior-year quarter. Selling, general and administrative expenses was $554.1 million, down 4% from $578.8 million in the year-ago quarter.
Nine Month Highlights
For the nine month period, Ecolab reported net income of $301.5 million or $1.26 per share, lower than $368.1 million or $1.46 per share in the prior-year period. Excluding discrete tax items as well as special gains and charges, pro forma earnings for the period grew to $1.44 per share from $1.41 per share last year.
Net sales for the year-to-date period decreased 7% to $4.34 billion from $4.65 billion in the same period last year.
Looking Ahead.........
"Based on the current outlook, we are not counting on meaningful change in our end markets over the next several quarters. As a result, our focus remains the same - driving new account gains and increasing efficiency to deliver strong earnings growth, while at the same time continuing to make the right investments in our sales team, R&D and business infrastructure to support our future growth," Baker, Jr. added.
For the fourth quarter, Ecolab anticipates pro forma earnings in a range of $0.54 to $0.57 per share, excluding special gains and charges that include restructuring charges of about $0.01 to $0.03 per share. Analysts expect the company to report earnings of $0.57 per share for the fourth quarter.
For fiscal 2009, the company narrowed its pro forma earnings forecast to a range of $1.98 to $2.01 per share from its prior guidance of $1.96 to $2.02 per share. The forecast excludes special gains and charges that include restructuring charges of about $0.21 to $0.23 per share. The Street is currently looking for full year 2009 earnings of $1.99 per share.
Stock Quote
In Tuesday's regular trading session, ECL is currently trading at $45.65, down $0.28 or 0.61% on a volume of 0.44 million shares. In the past 52-week period, the stock has been trading in a broad range of $29.27 to $47.88.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.