Ecolab Reports 26% Fourth Quarter EPS Increase to $0.34
biz.yahoo.com
Monday February 12, 8:48 am ET
Full year EPS +16% to $1.43;
2007 full year outlook calls for double-digit EPS growth to $1.62-$1.65
ST. PAUL, Minn.--(BUSINESS WIRE)--Ecolab Inc. (NYSE:ECL):
2006 FOURTH QUARTER HIGHLIGHTS:
* Record diluted net income per share, +26% to $0.34; +21% excluding AJCA charge in 2005
* Record sales, +11% to $1.3 billion
* Double-digit U.S. and Latin America sales propel growth, led by Institutional, Kay, Food & Beverage, Pest Elimination
2006 FULL YEAR HIGHLIGHTS
* Record diluted net income per share, +16% to $1.43
* Record sales, +8% to $4.9 billion
Double-digit growth from its U.S. and Latin America operations led Ecolab's fourth quarter results to record levels for the period ended December 31, 2006.
Ecolab's consolidated sales increased 11% to a record $1.3 billion in the fourth quarter of 2006. Net income increased 23% to a record $87 million. Diluted earnings per share were up 26% to a record $0.34. Fourth quarter 2005 results included a tax charge of $0.01 per share related to the repatriation of foreign earnings under the American Jobs Creation Act (AJCA); excluding that charge, diluted earnings per share rose 21% in the fourth quarter.
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 and restated prior history.
Commenting on the quarter, Douglas M. Baker, Jr., Ecolab's Chairman, President and Chief Executive Officer said, "We achieved an absolutely outstanding year in 2006. We produced strong sales and margin growth, improved on our product and service differentiation and industry leadership, realized major competitive gains, made significant investments in our people and growth drivers, and strengthened our position for future superior growth. We are extremely proud of our progress in 2006 and of the outstanding people that made it happen.
"Our outlook remains strong. We are engaged in the right markets, which offer lucrative opportunities for us. We have the right premium product and service solutions that offer demonstrable value for customers - large and small, global and local. We have the right plans to grow our business, as developed through our Circle the Customer - Circle the Globe strategy, and are making the right investments to ensure we take full advantage of the opportunities it presents. And we have the right team of people to go after them. While we like our position, we are not satisfied. We are determined to continue to further strengthen the company and fully develop our outstanding market prospects. We remain committed to developing superior shareholder value, and will ensure we make the necessary investments to deliver our returns for the long term."
Fourth quarter 2006 sales for Ecolab's United States Cleaning & Sanitizing operations rose 11% to $533 million, led by double-digit gains by Institutional, Kay and Textile Care and strong growth from Food & Beverage. Ecolab's United States Cleaning & Sanitizing operating income rose 30% to $65 million.
United States Other Services sales increased 10% to $104 million in the fourth quarter benefiting from continued double-digit gains by Pest Elimination. Operating income increased 11% to $8 million.
Sales of Ecolab's International operations, when measured at fixed currency rates, rose 7% to $605 million in the fourth quarter. Latin America reported a double-digit sales increase, Canada and Europe recorded good sales growth and Asia Pacific showed a modest increase. Fixed currency operating income rose 5% to $69 million. When measured at public currency rates, International sales increased 11% and operating income grew 10%. Currency translation had a favorable impact on net income growth of approximately $2 million for the fourth quarter of 2006.
Ecolab reacquired 0.6 million shares of its common stock during the fourth quarter. For the full year, Ecolab reacquired 6.9 million shares.
Ecolab adopted the provisions of Statement of Financial Accounting Standard No. 158, "Employers Accounting for Defined Benefit Pension and Other Postretirement Plans" effective as of our 2006 year end. The impact of adopting SFAS 158 is reflected as a reduction in net assets on our balance sheet of $168 million, net of tax, with no impact to the statements of net income and cash flows.
Business Outlook
Ecolab expects sales for both domestic and international operations (in fixed currencies) to increase in the first quarter 2007 over the first quarter 2006. Gross margins are expected to rise above 51% and compare favorably with 50.7% last year. Selling, general and administrative expenses are expected to approximate the 39% recorded a year ago. Interest expense is expected to be approximately $12 million. The effective tax rate in the quarter is expected to be approximately 35%. Overall, currency translation is expected to benefit first quarter earnings. Diluted earnings per share are expected to be in the $0.33-$0.35 range in the first quarter of 2007. Diluted earnings per share were $0.30 for the first quarter of 2006. For the full year ending December 31, 2007, Ecolab expects diluted earnings per share in the $1.62 -$1.65 range, an increase of 13%-15%. |
