Ecolab Reports 13% Third Quarter EPS Increase to $0.43
biz.yahoo.com
Friday October 20, 8:31 am ET
Full Year Outlook Calls for 15%-16% EPS Growth
ST. PAUL, Minn.--(BUSINESS WIRE)--Ecolab (NYSE:ECL - News):
2006 THIRD QUARTER HIGHLIGHTS:
Record diluted net income per share, +13% to $0.43
Record sales, +10% to $1.3 billion
Double-digit U.S. sales and income propel growth, led by the Institutional and Pest Elimination Divisions
Full year 2006 EPS range improved to $1.42 to $1.43
Third Quarter and Nine Months
Ended Sept. 30
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Third Quarter %
---------------------
2006 2005 increase
----------- --------- --------
(Millions, except per share) (unaudited)
Net Sales $1,278.9 $1,164.8 10%
Operating Income 181.4 162.4 12%
Pretax Income 170.1 150.9 13%
Taxes 59.8 53.0 13%
----------- --------- --------
Net Income $110.4 $98.0 13%
=========== ========= ========
Diluted Net Income Per Common Share $0.43 $0.38 13%
Diluted Average Shares Outstanding 256.7 259.9 -1%
Nine Months %
---------------------
2006 2005 increase
----------- --------- --------
(Millions, except per share) (unaudited)
Net Sales $3,624.8 $3,393.3 7%
Operating Income 465.9 418.7 11%
Pretax Income 433.4 383.8 13%
Taxes 152.0 135.0 13%
----------- --------- --------
Net Income $281.4 $248.8 13%
=========== ========= ========
Diluted Net Income Per Common Share $1.09 $0.96 14%
Diluted Average Shares Outstanding 257.2 260.1 -1%
Note: Results for both 2005 and 2006 reflect Ecolab's adoption of
SFAS 123 (R), which requires the expensing of stock options, and
Ecolab's restatement of prior period results as part of its transition
to this new accounting standard.
Double-digit sales and operating income growth from U.S. operations led Ecolab's third quarter results to record levels for the period ended September 30, 2006.
Ecolab's consolidated sales increased 10% to a record $1.3 billion in the third quarter of 2006. Net income increased 13% to a record $110 million, or $0.43 per diluted share.
All financial results presented in this release include the impact of expensing stock options. Ecolab adopted SFAS 123®, the accounting standard for expensing stock options, in the fourth quarter of 2005. As part of the transition to the new standard, Ecolab restated its earnings per share in line with the pro forma amounts historically disclosed in the notes to Ecolab's financial statements. These restated results were included in Ecolab's 2005 annual report and are available at Ecolab's website at www.ecolab.com/investor.
Commenting on the quarter, Douglas M. Baker, Jr., Ecolab's Chairman, President and Chief Executive Officer said, "We enjoyed a terrific quarter as we benefited from investments in our sales force, new product innovations, operating improvements and better pricing. We also continued to make further competitive gains in the quarter as we demonstrated the strength and value of our premium service offering.
"Our outlook remains excellent. We are implementing the right actions to deliver strong growth in 2006 and at the same time ensure we have the right means to continue driving strong growth for years ahead - expanding our industry-leading sales and service force; making key investments in developing our infrastructure, information technology and differentiated product research and development; and driving our successful Circle the Customer strategy. In addition, as reflected by our recent announcements, we continue to aggressively pursue acquisitions to strengthen and broaden our global customer offering. We remain focused on driving superior performance, both for our customers and our shareholders, and are working to improve our fundamentals to deliver those results. We will continue to build on our powerful business model to deliver the leading customer solutions, and through that, we expect to deliver consistent, reliable and superior growth for years to come."
Third quarter 2006 sales for Ecolab's United States Cleaning & Sanitizing operations rose 10% to $562 million, led by double-digit gains by the Institutional Division, and strong growth from the Food & Beverage, Professional Products, Textile Care and Healthcare businesses. Ecolab's United States Cleaning & Sanitizing operating income rose 15% to $99 million, as the benefits of the higher sales, cost efficiencies, competitive gains and better pricing more than offset higher delivered product costs.
United States Other Services sales increased 10% to $108 million in the third quarter benefiting from continued double-digit gains by Pest Elimination. Operating income increased 12% to $12 million as Pest Elimination growth was partially offset by accelerated investments at GCS.
Sales of Ecolab's International operations, when measured at fixed currency rates, rose 6% to $584 million in the third quarter. Latin America showed double-digit sales gains, and Asia Pacific and Canada sales also showed good increases; Europe recorded a moderate sales gain as weak economic trends in major central countries slowed results. Fixed currency operating income rose 3% to $66 million, as sales growth and pricing initiatives were partially offset by higher delivered product costs and growth and efficiency investments. When measured at public currency rates, International sales increased 10% and operating income grew 7%. Currency translation had a favorable impact on net income growth of approximately $1.5 million for the third quarter of 2006.
Ecolab reacquired 1.4 million shares of its common stock during the third quarter.
Business Outlook
Certain information presented in this news release, including the following statements, are forward-looking and based on current expectations. Actual results may differ materially. These statements do not include the potential impact of business acquisitions, divestitures, higher than anticipated raw material price increases or other material corporate events, which may be completed after the date of this release. This Business Outlook section should be read in conjunction with the information on "Forward-Looking Statements" at the end of this release.
Ecolab expects sales for both domestic and international operations (in fixed currencies) to increase in the fourth quarter 2006 over the fourth quarter 2005. Gross margins are expected to rise above 50% and compare favorably with 49.4% last year. Selling, general and administrative expenses are expected to approximate the 39% recorded a year ago. Interest expense is expected to be approximately $13 million. The effective tax rate in the quarter should be approximately 36%. Overall, currency translation is expected to benefit fourth quarter earnings. Diluted earnings per share are expected to be in the $0.33-$0.34 range in the fourth quarter of 2006. Diluted earnings per share were $0.27 for the fourth quarter of 2005. For the full year ending December 31, 2006, Ecolab continues to expect diluted earnings per share in the $1.42 -$1.43 range. In 2005, Ecolab reported net income per share of $1.23. |
