Ecolab Reports 32% Fourth Quarter EPS Increase to Record $0.45
biz.yahoo.com
Tuesday February 12, 8:54 am ET
EPS excluding discrete tax benefits and special gains and charges +18% to $0.40
ST. PAUL, Minn.--(BUSINESS WIRE)--Ecolab Inc. (NYSE: ECL):
2007 FOURTH QUARTER HIGHLIGHTS:
* Record diluted net income per share +32% to $0.45; excluding discrete tax benefits and special gains and charges, +18% to $0.40
* Record sales, +13% to $1.4 billion; excluding acquisitions and divestitures, sales +12%
* Strong U.S., Asia Pacific and Latin America sales gains drive growth
2007 FULL YEAR HIGHLIGHTS
* Record diluted net income per share, +19% to $1.70; excluding discrete tax benefits and special gains and charges, +16% to $1.66
* Record sales, +12% to $5.5 billion; excluding acquisitions and divestitures, sales +11%
Continued strong sales from its U.S., Asia Pacific and Latin America operations led Ecolab’s fourth quarter results to record levels for the period ended December 31, 2007.
Ecolab's consolidated sales increased 13% to a record $1.4 billion in the fourth quarter of 2007. When measured in fixed currencies, sales rose 8%; excluding the effects of acquisitions and divestitures, fixed currency sales rose 7%. Net income increased 30% to a record $113 million, with record diluted earnings per share up 32% to $0.45.
Fourth quarter results included discrete tax benefits and special gains and charges. Excluding those items, diluted earnings per share rose 18% to $0.40.
Commenting on the quarter, Douglas M. Baker, Jr., Ecolab’s Chairman, President and Chief Executive Officer said, “We are very pleased with our fourth quarter results. We enjoyed strong growth in our U.S. and Latin America regions, improving sales trends in Asia Pacific and we are well underway with our plans to enhance our European business performance. Our U.S. Cleaning and Sanitizing segment realized very good margin development that drove the quarter’s profit improvement and more than offset our business investments elsewhere.
“In total, 2007 was an excellent year. We introduced exciting new products and services that enhance customer results and reduce their costs, improved our operating efficiency, undertook critical investments to strengthen our business for the future, and did all that while delivering excellent earnings growth and improved shareholder value. We are proud of our accomplishments for the year and the people that made them happen.
“We expect another good year in 2008, and look to once again outperform our markets through aggressive sales, outstanding service, innovative solutions and close attention to customer needs. We will use our strength to continue to make significant investments to strengthen and reinvigorate our European business and integrate and build upon our exciting new acquisitions in healthcare and water management. These investments should lead to stronger earnings momentum as the year progresses while strengthening our growth opportunities for years to come. We have an outstanding future and an outstanding team to realize it. We look forward to making terrific progress on these goals in 2008 and delivering another year of superior shareholder returns.”
Fourth quarter 2007 sales for Ecolab's U.S. Cleaning & Sanitizing operations rose 11% to $589 million. Excluding the impact of the Microtek acquisition, which closed in November 2007, sales rose 8% as Institutional, Food & Beverage, Kay and Healthcare continued to show strong gains. Ecolab's U.S. Cleaning & Sanitizing operating income rose 29% to $83 million.
U.S. Other Services sales increased 10% to $115 million in the fourth quarter benefiting from solid gains by both Pest Elimination and GCS. U.S. Other Services operating income declined 5% to $7 million as growth by Pest Elimination was offset by systems deployment and stabilization costs and a charge to exit an unprofitable customer contract in GCS.
Sales of Ecolab's International operations, when measured at fixed currency rates, rose 5% to $665 million in the fourth quarter led by double-digit sales gains in Latin America and Asia Pacific. Europe/Middle East/Africa reported modest growth. International fixed currency operating income declined 1% to $73 million as our underlying profit gains in Latin America and Canada were offset by the impact of growth and efficiency investments in Asia Pacific. Additionally, we also saw higher delivered product costs, particularly in Europe, which were not fully offset by pricing actions. When measured at public currency rates, International sales increased 16% and operating income rose 13%. Currency translation had a favorable impact on net income growth of approximately $7 million for the fourth quarter of 2007.
The Corporate segment includes Special Gains and Charges, which are reported as a separate line item in the income statement. Special Gains and Charges for the fourth quarter included gains from a previously announced sale of a business in the U.K. of $5 million and the sale of a minority position in a U.S. business of $6 million. The Corporate segment also includes investments in the development of business systems and investments we are making to optimize our business structure as part of our ongoing efforts to improve our efficiency and returns; these investments partially offset the Special Gains and Charges, resulting in a net $0.3 million benefit in the Corporate segment for the quarter.
The reported income tax rate for the fourth quarter 2007 of 29.7% compared to a tax rate of 34.9% for the fourth quarter 2006. Excluding discrete tax benefits from audit settlements of approximately $0.02 per share and the tax impact of business divestments, the adjusted effective income tax rate for the fourth quarter 2007 was 34.3%. The decrease in the adjusted fourth quarter effective tax rate was due primarily to U.S. tax legislation, international rate reductions and tax planning efforts.
Ecolab did not reacquire shares of its common stock during the fourth quarter. The company reacquired 8.2 million shares in 2007.
Business Outlook
For the full year ending December 31, 2008, Ecolab expects pro forma diluted earnings per share, which exclude Special Gains and Charges and discrete tax benefits, in the $1.84-$1.88 range. These pro forma results are expected to include approximately $0.02 per share of dilution from acquisitions presently completed. Excluding that dilution, diluted earnings per share are expected to increase 12% to 14% to the $1.86 to $1.90 range. |
