Ecolab Inc. (ECL) reported first quarter fiscal 2010 earnings of 41 cents (excluding special items), beating the Zacks Consensus Estimate of 39 cents. Earnings in the quarter also surpassed the forecasted range of 36 – 40 cents per share (excluding special items).
The company earned 33 cents (excluding special items) in the year-ago quarter. On a reported basis, the company earned 40 cents in the quarter as against 24 cents in the first quarter of 2009.
The improved showing was driven by strong performances in Asia-Pacific, Canada and Latin America. The Kay business of the company that provides expertise regarding food safety to quick service restaurants also performed well in the quarter. Results were also helped by the lower delivered product costs coupled with cost savings initiatives in the quarter.
Net sales for the reported quarter climbed 5.9% year-over-year to $1.43 billion.
Ecolab conducts its business through three segments: United States Cleaning and Sanitizing; International; and United States Other Services.
Sales at Ecolab’s U.S. Cleaning & Sanitizing operations rose 2% year-over-year to $632 million. The operating income in the segment climbed 11% year-over-year to $113 million. Sales at the U.S. Other Services segment declined 2% year-over-year to $105 million.
Sales from the company’s International operations in the reported quarter, when measured at fixed currency rates, climbed 2% year-over-year to $700 million. Operating income for the segment in the reported quarter in terms of fixed currency increased 46% year-over-year to $37 million. International sales climbed 12% and operating income increased 81% when measured at public currency rates.
Ecolab’s quarterly operating income came in at $153.8 million as against $97.5 million in the year-ago quarter, up 58%. The selling, general and administrative expenses in the reported quarter climbed 8% year-over-year to $558.1 million.
At the end of the quarter, Ecolab had cash and cash equivalents of $85.3 million and long-term debt of $677.9 million, compared with $73.6 million of cash and $868.8 million of long-term debt at the end of 2009. During the quarter, the company also bought back 3.3 million shares under its existing share repurchase program.
Outlook
Ecolab projects earnings in the range of 54 – 57 cents (excluding special items) in the second quarter of 2010. The Zacks Consensus Estimate for the second quarter is 56 cents per share.
Ecolab raised its forecast for 2010. The company expects to earn in the range of $2.21 to $2.26 per share (excluding special items) for the full-year 2010. Previously the company expected to earn in the range of $2.17 to $2.25 per share. The Zacks Consensus Estimate for the full-year 2010 is $2.22 per share.
Ecolab, founded in 1923 and headquartered in St. Paul, Minnesota, is a leading provider of cleaning, sanitizing, food safety and infection prevention products and services. The company serves the foodservice, food and beverage processing, health care and hospitality markets both within the US as well as beyond.
Currently we are Neutral on Ecolab. Our long-term Neutral recommendation on the stock indicates that it would perform in line with the market.
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