Ecolab Third Quarter Reported Diluted EPS $1.34; Adjusted Diluted EPS $1.37, +7%; Includes $0.04 Hurricane Impact; Full Year 2017 Adjusted Diluted EPS Forecast Revised to $4.65 to $4.75
Ecolab Inc. (NYSE:ECL):
THIRD QUARTER HIGHLIGHTS:
-
Reported diluted EPS $1.34, +6%.
-
Adjusted diluted EPS $1.37, +7%, excluding special gains and
charges and discrete tax items. Hurricane impacts are estimated to
have been a negative $0.04 (-3 pp) per share in the quarter.
-
Reported sales +5%. Acquisition adjusted fixed currency sales + 3%
with all segments growing. Hurricane impacts estimated to have reduced
sales growth by 1%.
-
Pricing, improved sales gains, new product innovation and cost
savings offset higher delivered product costs and hurricane impacts.
Interest/taxes/shares benefited the EPS gain.
2017 FORECAST:
-
Fourth quarter adjusted diluted EPS expected to rise 8% to 16%;
includes an estimated negative $0.05, or 4 pp impact from both
hurricanes (-$0.04, primarily from raw materials) and the divestiture
of Equipment Care (-$0.01).
-
2017 adjusted diluted EPS forecast revised to $4.65 to $4.75, +6%
to 9%, as improving volume growth and pricing across all segments
overcome an estimated $0.09 per share headwind from hurricane and
divestiture impacts. Ecolab previously forecasted $4.70 to 4.90.
|
|
|
|
Third Quarter Ended September 30
|
|
|
|
Reported
|
|
|
|
|
|
Adjusted *
|
|
|
|
(unaudited)
|
|
|
Public Currency Rates
|
|
|
%
|
|
|
Public Currency Rates
|
|
|
%
|
(millions, except per share)
|
|
|
2017
|
|
|
2016
|
|
|
Change
|
|
|
2017
|
|
|
|
2016
|
|
|
Change
|
Net sales
|
|
|
$3,563.3
|
|
|
|
$3,386.1
|
|
|
|
5
|
%
|
|
|
$3,563.3
|
|
|
|
$3,386.1
|
|
|
|
5
|
%
|
Operating income
|
|
|
579.8
|
|
|
|
574.1
|
|
|
|
1
|
%
|
|
|
585.0
|
|
|
|
577.3
|
|
|
|
1
|
%
|
Net income attributable to Ecolab
|
|
|
392.4
|
|
|
|
374.1
|
|
|
|
5
|
%
|
|
|
403.1
|
|
|
|
378.0
|
|
|
|
7
|
%
|
Diluted earnings per share
|
|
|
$1.34
|
|
|
|
$1.27
|
|
|
|
6
|
%
|
|
|
$1.37
|
|
|
|
$1.28
|
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted *
|
|
|
|
|
|
|
|
Fixed Currency Rates *
|
|
|
%
|
|
|
Fixed Currency Rates
|
|
|
%
|
|
|
|
2017
|
|
|
2016
|
|
|
Change
|
|
|
2017
|
|
|
|
2016
|
|
|
Change
|
Net sales
|
|
|
$3,491.6
|
|
|
|
$3,331.7
|
|
|
|
5
|
%
|
|
|
$3,491.6
|
|
|
|
$3,331.7
|
|
|
|
5
|
%
|
Operating income
|
|
|
568.4
|
|
|
|
564.2
|
|
|
|
1
|
%
|
|
|
573.6
|
|
|
|
567.4
|
|
|
|
1
|
%
|
* See “Non-GAAP Financial Information” section of this release for
further discussion
Better pricing, new business gains, product innovation and cost
efficiencies offset higher delivered product costs and hurricane
impacts, and along with an expected lower tax rate, lower interest
expense and fewer shares, yielded a 7% increase in third quarter 2017
adjusted diluted earnings per share.
CEO comment
Commenting on the quarter, Douglas M. Baker, Jr., Ecolab’s Chairman and
Chief Executive Officer said, “Our business continues to strengthen, and
we expect to leave the year with strong top and bottom line momentum.
“Our third quarter showed continued progress in pricing, new business
gains and underlying consumption trends. Hurricanes caused, in
particular, large energy, water and paper customers to temporarily close
operations in affected areas. We estimate the impact from the hurricanes
to have been a negative $0.04 per share in both the third and fourth
quarters due to the loss of consumption by customers and higher
delivered product costs.
“Still, we foresee our business continuing to accelerate in the fourth
quarter, and forecast a 5% to 6% fixed currency sales increase and
double-digit net income growth in the fourth quarter as pricing
surpasses raw material cost increases.
“Importantly, this positions us well and will enable us to enter 2018
with strong momentum that will no longer be masked by the 2017 hurricane
impacts, which we do not see having a meaningful effect on 2018 results.”
Third Quarter 2017 Consolidated Results
Ecolab's third quarter reported sales increased 5% and fixed currency
sales increased 5%. Acquisition adjusted fixed currency sales increased
3% when compared to the prior year. Absent the impact of hurricanes,
estimated acquisition adjusted fixed currency sales increased 4%.
Third quarter 2017 reported, fixed currency and adjusted fixed currency
operating income increased 1%. Acquisition adjusted operating income was
flat. Absent the impact of hurricanes, acquisition adjusted fixed
currency operating income is estimated to have increased 3%. Pricing,
volume growth, and cost savings initiatives offset the impact of higher
delivered product costs, hurricane impacts and investments in the
business during the quarter.
Net interest expense declined in the quarter primarily reflecting an
increased mix of lower cost Euro interest and lower interest rates on
refinanced debt.
The reported income tax rate for the third quarter of 2017 was 24.6%
compared with the reported rate of 25.5% in the third quarter of 2016.
Excluding the tax rate impact of the special gains and charges and
discrete tax items, the adjusted tax rate was 23.3% in the third quarter
of 2017 compared with 25.2% for the same period last year. The decrease
in our adjusted tax rate was primarily driven by global tax planning
strategies and geographic mix.
Third quarter 2017 reported net income attributable to Ecolab increased
5%. Excluding special gains and charges and discrete tax items, adjusted
net income attributable to Ecolab increased 7%.
Diluted earnings per share increased 6% reflecting fewer shares
outstanding. Adjusted diluted earnings per share rose 7% when compared
against third quarter 2016. Hurricane impacts are estimated to have been
a negative $0.04 per share, or three percentage points of growth, in the
quarter. Currency translation had a minimal impact on third quarter 2017
adjusted diluted earnings per share.
Ecolab reacquired 0.6 million shares of its common stock during the
third quarter of 2017.
Third Quarter 2017 Segment Review
|
Global Industrial
|
|
|
|
|
Third Quarter Ended
|
|
|
|
|
|
|
(unaudited)
|
|
|
September 30
|
|
|
|
|
|
Acq. Adj.
|
(millions)
|
|
|
2017
|
|
|
2016
|
|
|
% Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$1,248.1
|
|
|
|
$1,202.1
|
|
|
|
4
|
%
|
|
|
3
|
%
|
Operating income
|
|
|
207.4
|
|
|
|
204.1
|
|
|
|
2
|
%
|
|
|
2
|
%
|
Operating income margin
|
|
|
16.6
|
%
|
|
|
17.0
|
%
|
|
|
|
|
|
|
|
|
Acq. adj. operating income margin
|
|
|
16.7
|
%
|
|
|
17.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$1,284.3
|
|
|
|
$1,230.2
|
|
|
|
4
|
%
|
|
|
|
|
Operating income
|
|
|
214.1
|
|
|
|
209.7
|
|
|
|
2
|
%
|
|
|
|
|
Global Industrial acquisition adjusted fixed currency sales rose 3% led
by Food & Beverage, Water and Life Sciences. Latin America, Europe and
North America led the Global Industrial regional sales growth.
Acquisition adjusted fixed currency operating income increased 2% as
improved pricing and sales volume gains more than offset higher
delivered product costs. The hurricanes are estimated to have reduced
third quarter sales growth by approximately one percentage point and
operating income growth by approximately two percentage points.
|
Global Institutional
|
|
|
|
|
Third Quarter Ended
|
|
|
|
|
|
|
(unaudited)
|
|
|
September 30
|
|
|
|
|
|
Acq. Adj.
|
(millions)
|
|
|
2017
|
|
|
2016
|
|
|
% Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$1,225.1
|
|
|
|
$1,149.2
|
|
|
|
7
|
%
|
|
|
2
|
%
|
Operating income
|
|
|
274.2
|
|
|
|
262.1
|
|
|
|
5
|
%
|
|
|
2
|
%
|
Operating income margin
|
|
|
22.4
|
%
|
|
|
22.8
|
%
|
|
|
|
|
|
|
|
|
Acq. adj. operating income margin
|
|
|
22.9
|
%
|
|
|
23.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$1,248.0
|
|
|
|
$1,164.1
|
|
|
|
7
|
%
|
|
|
|
|
Operating income
|
|
|
277.4
|
|
|
|
264.6
|
|
|
|
5
|
%
|
|
|
|
|
Global Institutional acquisition adjusted fixed currency sales grew 2%
led by Specialty. Sales for the segment showed good growth in Latin
America and Asia Pacific. Acquisition adjusted fixed currency operating
income rose 2% as pricing and sales volume gains more than offset
innovation and customer investments and higher delivered product costs.
The hurricanes are estimated to have reduced third quarter sales growth
by less than one percentage point and operating income growth by
approximately one percentage point.
|
Global Energy
|
|
|
|
|
Third Quarter Ended
|
|
|
|
|
|
|
(unaudited)
|
|
|
September 30
|
|
|
|
|
|
Acq. Adj.
|
(millions)
|
|
|
2017
|
|
|
2016
|
|
|
% Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$796.7
|
|
|
|
$771.2
|
|
|
|
3
|
%
|
|
|
4
|
%
|
Operating income
|
|
|
89.7
|
|
|
|
102.6
|
|
|
|
(13)
|
%
|
|
|
(11)
|
%
|
Operating income margin
|
|
|
11.3
|
%
|
|
|
13.3
|
%
|
|
|
|
|
|
|
|
|
Acq. adj. operating income margin
|
|
|
11.2
|
%
|
|
|
13.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$806.5
|
|
|
|
$780.2
|
|
|
|
3
|
%
|
|
|
|
|
Operating income
|
|
|
91.3
|
|
|
|
104.3
|
|
|
|
(12)
|
%
|
|
|
|
|
Global Energy acquisition adjusted fixed currency sales increased 4% as
strong growth in the well stimulation business and a moderate increase
in downstream more than offset a modest decline in our production
business. Acquisition adjusted fixed currency operating income decreased
11% as volume gains, the benefits from cost reduction actions and a
favorable legal cost recovery were more than offset by higher delivered
product costs, a rebuild of compensation reductions made in 2016 and
modestly lower pricing. The hurricanes are estimated to have reduced
third quarter sales growth by approximately one percentage point and
worsened the operating income decline by approximately six percentage
points.
|
Other
|
|
|
|
|
Third Quarter Ended
|
|
|
|
|
|
|
(unaudited)
|
|
|
September 30
|
|
|
|
|
|
Acq. Adj.
|
(millions)
|
|
|
2017
|
|
|
2016
|
|
|
% Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$221.7
|
|
|
|
$209.2
|
|
|
|
6
|
%
|
|
|
6
|
%
|
Operating income
|
|
|
44.0
|
|
|
|
40.4
|
|
|
|
9
|
%
|
|
|
9
|
%
|
Operating income margin
|
|
|
19.8
|
%
|
|
|
19.3
|
%
|
|
|
|
|
|
|
|
|
Acq. adj. operating income margin
|
|
|
19.8
|
%
|
|
|
19.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public currency
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
$224.5
|
|
|
|
$211.6
|
|
|
|
6
|
%
|
|
|
|
|
Operating income
|
|
|
44.5
|
|
|
|
40.9
|
|
|
|
9
|
%
|
|
|
|
|
The Other segment sales increased 6% as Pest Elimination enjoyed strong
growth, led by North America. Fixed currency operating income increased
9% as pricing and sales volume gains more than offset increased
field-related costs.
Corporate
The corporate segment expense includes amortization expense of $42
million in both the third quarter of 2017 and 2016 related to the Nalco
merger intangible assets. Corporate segment also includes net special
charges of $5 million ($2 million after tax), including special charges
primarily related to restructuring, acquisition and integration costs,
and other charges. These charges were partially offset by the U.S.
dollar cash recovery of intercompany receivables written off during the
2015 deconsolidation of our Venezuelan subsidiaries.
Total special gains and charges for the third quarter of 2016 were
immaterial on a net basis.
Divestiture
Ecolab announced an agreement to sell the Equipment Care business. The
transaction is expected to close by year end.
Adoption of New Accounting Standards
Beginning in 2018, Ecolab will adopt the new FASB revenue recognition
standard. We have reviewed our product and service offerings under the
new standard and the SEC requirement for separation of them in our
income statement. As such, we anticipate disclosing product and service
offerings separately in our income statement starting in 2018. We also
anticipate certain costs will be reclassified from Selling, General, and
Administrative (SG&A) expenses to Cost of Sales (COS), to align with the
costs of providing newly classified service revenue. We anticipate
restating the 2016 and 2017 financial statements to align with the
revised presentation.
Ecolab will also adopt the new pension accounting standard beginning in
2018, recording the employee compensation cost of pension expense (the
service component) in COS and SG&A, while all other non-service
components of pension expense (income) will be recorded below operating
income. We will apply the new standard retrospectively, and will restate
the 2016 and 2017 financial statements to reflect the adoption of the
pension accounting standard. Adoption and restatement of the pension
accounting standard will not impact net income.
Business Outlook
2017
Ecolab revised full year 2017 adjusted diluted earnings per share to
reflect the impact of the hurricanes and the sale of a business to the
$4.65 to $4.75 range, rising 6% to 9%. Ecolab previously forecast
adjusted diluted earnings per share in the $4.70 to $4.90 range.
When compared with our 2016 performance, we expect improved acquisition
adjusted fixed currency sales growth in our Global Institutional, Global
Industrial and Other segments with increased Global Energy segment
sales. We anticipate a slightly lower adjusted gross margin as pricing
and cost efficiency actions are offset by higher delivered product costs
(which included an unfavorable currency hedge year-on-year comparison in
the first half), with a slightly lower selling, general and
administrative (“SG&A”) ratio to sales, lower interest expense and an
improved adjusted tax rate versus 2016. We expect the impact of the
hurricanes on full year sales and costs will be approximately $0.08 per
share, and to forgo approximately $0.01 per share of income due to the
anticipated sale of Equipment Care.
Adjusted diluted earnings per share do not reflect the net impact of
future special gains and charges or discrete tax items, which are
expected to be a net charge of $0.08 per share for the full year. We
expect special charges to be partially offset by discrete tax benefits.
At current rates of exchange, we expect foreign currency translation to
have a neutral impact on diluted earnings per share.
Our detailed outlook for the full year of 2017 is as follows:
|
|
|
|
Adjusted Gross Margin, excluding special gains and charges
|
|
|
approx. 47%
|
SG&A % of Sales
|
|
|
approx. 32%
|
Interest expense, net
|
|
|
approx. $235 million
|
Adjusted tax rate
|
|
|
approx. 24%
|
Noncontrolling interest
|
|
|
approx. $0.05
|
Adjusted EPS, excluding special gains and charges
|
|
|
$4.65 to $4.75
|
Diluted shares
|
|
|
approx. 294 million
|
|
|
|
|
Reported 2016 diluted earnings per share of $4.14 included special gains
and charges and discrete tax items. Excluding these items, 2016 adjusted
diluted earnings per share were $4.37.
2017 — Fourth Quarter
Ecolab expects fourth quarter 2017 adjusted diluted earnings per share
in the $1.35 to $1.45 range, rising 8% to 16% compared with adjusted
diluted earnings per share of $1.25 a year ago.
We expect improved acquisition adjusted fixed currency sales growth in
all our segments. Higher delivered product costs are expected to have a
continued unfavorable impact in the quarter in part reflecting the
hurricane impacts on delivered product costs, particularly in the Global
Industrial and Global Energy segments. Global Energy will also reflect
the rebuilding of compensation reduced in 2016’s cost reduction actions
which, when combined with the higher delivered product costs, is
expected to yield lower Global Energy operating income than last year’s
fourth quarter. We expect consolidated gross margins to be slightly
lower than last year, with a lower SG&A ratio to sales, reduced interest
expense and a slightly improved adjusted tax rate versus 2016. We expect
the impact of the hurricanes on fourth quarter sales and costs will be
approximately $0.04 per share.
We expect net fourth quarter special charges to be minimal.
At current rates of exchange, we expect foreign currency to be favorable
$0.02 per share in the fourth quarter.
Our detailed outlook for the fourth quarter of 2017 is as follows:
|
|
|
|
Adjusted Gross Margin, excluding special gains and charges
|
|
|
approx. 48%
|
SG&A % of Sales
|
|
|
31% to 32%
|
Interest expense, net
|
|
|
approx. $60 million
|
Adjusted tax rate
|
|
|
23% to 24%
|
Noncontrolling interest
|
|
|
approx. $0.01
|
Adjusted EPS, excluding special gains and charges
|
|
|
$1.35 to $1.45
|
Diluted shares
|
|
|
approx. 294 million
|
|
|
|
|
Reported fourth quarter 2016 diluted earnings per share of $1.24
included special gains and charges and discrete tax items. Excluding
these items, fourth quarter 2016 adjusted diluted earnings per share
were $1.25.
About Ecolab
A trusted partner at more than one million customer locations, Ecolab
(ECL) is the global leader in water, hygiene and energy technologies and
services that protect people and vital resources. With 2016 sales of $13
billion and 48,000 associates, Ecolab delivers comprehensive solutions
and on-site service to promote safe food, maintain clean environments,
optimize water and energy use and improve operational efficiencies for
customers in the food, healthcare, energy, hospitality and industrial
markets in more than 170 countries around the world. For more Ecolab
news and information, visit www.ecolab.com.
Ecolab will host a live webcast to review the third quarter earnings
announcement and earnings guidance today at 1:00 p.m. Eastern Time. The
webcast, along with related materials, will be available to the public
on Ecolab's website at www.ecolab.com/investor.
A replay of the webcast and related materials will be available at that
site. Listening to the webcast requires Internet access, the Windows
Media Player or another compatible streaming media player.
Cautionary Statements Regarding Forward-Looking
Information
This communication contains certain statements relating to future events
and our intentions, beliefs, expectations and predictions for the future
which are forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Words or phrases such
as “will likely result,” “are expected to,” “will continue,” “is
anticipated,” “we believe,” “we expect,” “estimate,” “project,” “may,”
“will,” “intend,” “plan,” “believe,” “target,” “forecast” (including the
negative or variations thereof) or similar terminology used in
connection with any discussion of future plans, actions or events
generally identify forward-looking statements. These forward-looking
statements include, but are not limited to, statements regarding our
financial and business performance and prospects, including forecasted
2017 fourth quarter and full-year financial and business results,
including sales growth, adjusted gross margin, SG&A ratios to sales,
interest expense, adjusted tax rate, noncontrolling interest, adjusted
diluted earnings per share and diluted shares outstanding, pricing,
delivered product costs, energy market conditions, foreign currency,
special gains and charges and quantifiable discrete tax items, the
impact of hurricanes, closing of Equipment Care divestiture, and actions
and impact associated with adoption of new accounting standards. These
statements are based on the current expectations of management of the
company. There are a number of risks and uncertainties that could cause
actual results to differ materially from the forward-looking statements
included in this communication. In particular, the ultimate results of
any restructuring, integration and business improvement actions,
including cost synergies, depend on a number of factors, including the
development of final plans, the impact of local regulatory requirements
regarding employee terminations, the time necessary to develop and
implement the restructuring and other business improvement initiatives
and the level of success achieved through such actions in improving
competitiveness, efficiency and effectiveness.
Additional risks and uncertainties that may affect operating results and
business performance are set forth under Item 1A of our most recent Form
10-K, and our other public filings with the Securities and Exchange
Commission (the "SEC") and include the vitality of the markets we serve,
including the impact of oil price fluctuations on the markets served by
our Global Energy segment; the impact of economic factors such as the
worldwide economy, capital flows, interest rates and foreign currency
risk, including reduced sales and earnings in other countries resulting
from the weakening of local currencies versus the U.S. dollar; our
ability to attract and retain high caliber management talent to lead our
business; our ability to execute key business initiatives, including
upgrades to our information technology systems; potential information
technology infrastructure failures and cybersecurity attacks; exposure
to global economic, political and legal risks related to our
international operations including with respect to our operations in
Russia; the costs and effects of complying with laws and regulations,
including those relating to the environment and to the manufacture,
storage, distribution, sale and use of our products; the occurrence of
litigation or claims, including related to the Deepwater Horizon oil
spill; our ability to develop competitive advantages through innovation;
difficulty in procuring raw materials or fluctuations in raw material
costs; our substantial indebtedness; our ability to acquire
complementary businesses and to effectively integrate such businesses;
restraints on pricing flexibility due to contractual obligations;
pressure on operations from consolidation of customers, vendors or
competitors; public health epidemics; potential losses arising from the
impairment of goodwill or other assets; potential loss of deferred tax
assets; changes in tax law and unanticipated tax liabilities; potential
chemical spill or release; potential class action lawsuits; the loss or
insolvency of a major customer or distributor; acts of war or terrorism;
natural or man-made disasters; water shortages; severe weather
conditions; and other uncertainties or risks reported from time to time
in our reports to the SEC. In light of these risks, uncertainties,
assumptions and factors, the forward-looking events discussed in this
communication may not occur. We caution that undue reliance should not
be placed on forward-looking statements, which speak only as of the date
made. Ecolab does not undertake, and expressly disclaims, any duty to
update any forward-looking statement whether as a result of new
information, future events or changes in expectations, except as
required by law.
Non-GAAP Financial Information
This news release and certain of the accompanying tables include
financial measures that have not been calculated in accordance with
accounting principles generally accepted in the U.S. (“GAAP”). These
non-GAAP financial measures include:
-
fixed currency sales
-
acquisition adjusted fixed currency sales
-
adjusted cost of sales
-
adjusted gross margin
-
fixed currency operating income
-
fixed currency operating income margin
-
adjusted operating income
-
adjusted fixed currency operating income
-
adjusted fixed currency operating income margin
-
acquisition adjusted fixed currency operating income
-
acquisition adjusted fixed currency operating income margin
-
adjusted tax rate
-
adjusted net income attributable to Ecolab
-
adjusted diluted earnings per share
We provide these measures as additional information regarding our
operating results. We use these non-GAAP measures internally to evaluate
our performance and in making financial and operational decisions,
including with respect to incentive compensation. We believe that our
presentation of these measures provides investors with greater
transparency with respect to our results of operations and that these
measures are useful for period-to-period comparison of results.
Our non-GAAP financial measures for cost of sales, gross margin and
operating income exclude the impact of special (gains) and charges, and
our non-GAAP measures for tax rate, net income attributable to Ecolab
and diluted earnings per share further exclude the impact of discrete
tax items. We include items within special (gains) and charges and
discrete tax items that we believe can significantly affect the
period-over-period assessment of operating results and not necessarily
reflect costs associated with historical trends and future results.
After tax special (gains) and charges are derived by applying the
applicable local jurisdictional tax rate to the corresponding pre-tax
special (gains) and charges.
We evaluate the performance of our international operations based on
fixed currency rates of foreign exchange, which eliminate the
translation impact of exchange rate fluctuations on our international
results. Fixed currency amounts included in this release are based on
translation into U.S. dollars at the fixed foreign currency exchange
rates established by management at the beginning of 2017. We also
provide our segment results based on public currency rates for
informational purposes.
Acquisition adjusted growth rates exclude the results of any acquired
business from the first twelve months post acquisition and exclude the
results of divested businesses from the previous twelve months prior to
divestiture. Acquisition adjusted growth rates also exclude sales to our
Venezuelan deconsolidated subsidiaries from both the current period and
comparable period of the prior year.
These non-GAAP financial measures are not in accordance with, or an
alternative to, GAAP and may be different from non-GAAP measures used by
other companies. Investors should not rely on any single financial
measure when evaluating our business. We recommend that investors view
these measures in conjunction with the GAAP measures included in this
news release. Reconciliations of our non-GAAP measures are included in
the following "Supplemental Non-GAAP Reconciliations" and “Supplemental
Diluted Earnings per Share Information” tables included in this news
release.
(ECL-E)
|
ECOLAB INC.
|
CONSOLIDATED STATEMENT OF INCOME
|
(unaudited)
|
|
|
|
|
Third Quarter Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30
|
|
|
%
|
|
|
September 30
|
|
|
%
|
(millions, except per share)
|
|
|
2017
|
|
|
2016
|
|
|
Change
|
|
|
2017
|
|
|
2016
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$3,563.3
|
|
|
$3,386.1
|
|
|
5
|
%
|
|
|
$10,187.6
|
|
|
$9,800.7
|
|
|
4
|
%
|
Cost of sales (1)
|
|
|
1,891.3
|
|
|
1,737.2
|
|
|
9
|
%
|
|
|
5,454.4
|
|
|
5,153.8
|
|
|
6
|
%
|
Selling, general and administrative expenses
|
|
|
1,087.3
|
|
|
1,071.6
|
|
|
1
|
%
|
|
|
3,293.2
|
|
|
3,253.1
|
|
|
1
|
%
|
Special (gains) and charges (1)
|
|
|
4.9
|
|
|
3.2
|
|
|
|
|
|
|
47.9
|
|
|
35.7
|
|
|
|
|
Operating income
|
|
|
579.8
|
|
|
574.1
|
|
|
1
|
%
|
|
|
1,392.1
|
|
|
1,358.1
|
|
|
3
|
%
|
Interest expense, net
|
|
|
55.1
|
|
|
64.9
|
|
|
(15)
|
%
|
|
|
177.2
|
|
|
196.3
|
|
|
(10)
|
%
|
Income before income taxes
|
|
|
524.7
|
|
|
509.2
|
|
|
3
|
%
|
|
|
1,214.9
|
|
|
1,161.8
|
|
|
5
|
%
|
Provision for income taxes
|
|
|
128.9
|
|
|
129.7
|
|
|
(1)
|
%
|
|
|
264.2
|
|
|
286.7
|
|
|
(8)
|
%
|
Net income including noncontrolling interest
|
|
|
395.8
|
|
|
379.5
|
|
|
4
|
%
|
|
|
950.7
|
|
|
875.1
|
|
|
9
|
%
|
Net income attributable to noncontrolling interest
|
|
|
3.4
|
|
|
5.4
|
|
|
|
|
|
|
8.2
|
|
|
11.8
|
|
|
|
|
Net income attributable to Ecolab
|
|
|
$392.4
|
|
|
$374.1
|
|
|
5
|
%
|
|
|
$942.5
|
|
|
$863.3
|
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings attributable to Ecolab per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$1.36
|
|
|
$1.28
|
|
|
6
|
%
|
|
|
$3.25
|
|
|
$2.95
|
|
|
10
|
%
|
Diluted
|
|
|
$1.34
|
|
|
$1.27
|
|
|
6
|
%
|
|
|
$3.20
|
|
|
$2.91
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
289.0
|
|
|
291.6
|
|
|
(1)
|
%
|
|
|
289.8
|
|
|
292.8
|
|
|
(1)
|
%
|
Diluted
|
|
|
293.4
|
|
|
295.7
|
|
|
(1)
|
%
|
|
|
294.2
|
|
|
297.1
|
|
|
(1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Special (gains) and charges in the Consolidated Statement of
Income above include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30
|
|
|
|
|
|
|
September 30
|
|
|
|
|
(millions)
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring activities
|
|
|
$-
|
|
|
$-
|
|
|
|
|
|
|
$2.2
|
|
|
$0.9
|
|
|
|
|
Acquisition and integration costs
|
|
|
0.3
|
|
|
-
|
|
|
|
|
|
|
12.9
|
|
|
-
|
|
|
|
|
Energy related charges
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
51.0
|
|
|
|
|
Other
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
11.1
|
|
|
10.0
|
|
|
|
|
Subtotal
|
|
|
0.3
|
|
|
-
|
|
|
|
|
|
|
26.2
|
|
|
61.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special (gains) and charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring activities
|
|
|
4.1
|
|
|
(7.7)
|
|
|
|
|
|
|
34.6
|
|
|
(6.8)
|
|
|
|
|
Acquisition and integration costs
|
|
|
1.8
|
|
|
1.7
|
|
|
|
|
|
|
12.7
|
|
|
5.0
|
|
|
|
|
Energy related charges
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
-
|
|
|
12.6
|
|
|
|
|
Venezuela related gain
|
|
|
(3.2)
|
|
|
-
|
|
|
|
|
|
|
(8.5)
|
|
|
(7.8)
|
|
|
|
|
Other
|
|
|
2.2
|
|
|
9.2
|
|
|
|
|
|
|
9.1
|
|
|
32.7
|
|
|
|
|
Subtotal
|
|
|
4.9
|
|
|
3.2
|
|
|
|
|
|
|
47.9
|
|
|
35.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total special (gains) and charges
|
|
|
$5.2
|
|
|
$3.2
|
|
|
|
|
|
|
$74.1
|
|
|
$97.6
|
|
|
|
|
|
ECOLAB INC.
|
REPORTABLE SEGMENT INFORMATION
|
(unaudited)
|
|
|
|
|
Third Quarter Ended September 30
|
|
|
|
Fixed Currency Rates
|
|
|
Public Currency Rates
|
|
|
|
|
|
|
|
|
|
%
|
|
|
|
|
|
|
|
|
%
|
(millions)
|
|
|
2017
|
|
|
2016
|
|
|
Change
|
|
|
2017
|
|
|
2016
|
|
|
Change
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Industrial
|
|
|
$1,248.1
|
|
|
$1,202.1
|
|
|
4
|
%
|
|
|
$1,284.3
|
|
|
$1,230.2
|
|
|
4
|
%
|
Global Institutional
|
|
|
1,225.1
|
|
|
1,149.2
|
|
|
7
|
%
|
|
|
1,248.0
|
|
|
1,164.1
|
|
|
7
|
%
|
Global Energy
|
|
|
796.7
|
|
|
771.2
|
|
|
3
|
%
|
|
|
806.5
|
|
|
780.2
|
|
|
3
|
%
|
Other
|
|
|
221.7
|
|
|
209.2
|
|
|
6
|
%
|
|
|
224.5
|
|
|
211.6
|
|
|
6
|
%
|
Subtotal at fixed currency rates
|
|
|
3,491.6
|
|
|
3,331.7
|
|
|
5
|
%
|
|
|
3,563.3
|
|
|
3,386.1
|
|
|
5
|
%
|
Currency impact
|
|
|
71.7
|
|
|
54.4
|
|
|
*
|
|
|
|
-
|
|
|
-
|
|
|
*
|
|
Consolidated reported GAAP net sales
|
|
|
$3,563.3
|
|
|
$3,386.1
|
|
|
5
|
%
|
|
|
$3,563.3
|
|
|
$3,386.1
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Industrial
|
|
|
$207.4
|
|
|
$204.1
|
|
|
2
|
%
|
|
|
$214.1
|
|
|
$209.7
|
|
|
2
|
%
|
Global Institutional
|
|
|
274.2
|
|
|
262.1
|
|
|
5
|
%
|
|
|
277.4
|
|
|
264.6
|
|
|
5
|
%
|
Global Energy
|
|
|
89.7
|
|
|
102.6
|
|
|
(13)
|
%
|
|
|
91.3
|
|
|
104.3
|
|
|
(12)
|
%
|
Other
|
|
|
44.0
|
|
|
40.4
|
|
|
9
|
%
|
|
|
44.5
|
|
|
40.9
|
|
|
9
|
%
|
Corporate
|
|
|
(46.9)
|
|
|
(45.0)
|
|
|
*
|
|
|
|
(47.5)
|
|
|
(45.4)
|
|
|
*
|
|
Subtotal at fixed currency rates
|
|
|
568.4
|
|
|
564.2
|
|
|
1
|
%
|
|
|
579.8
|
|
|
574.1
|
|
|
1
|
%
|
Currency impact
|
|
|
11.4
|
|
|
9.9
|
|
|
*
|
|
|
|
-
|
|
|
-
|
|
|
*
|
|
Consolidated reported GAAP operating income
|
|
|
$579.8
|
|
|
$574.1
|
|
|
1
|
%
|
|
|
$579.8
|
|
|
$574.1
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30
|
|
|
|
Fixed Currency Rates
|
|
|
Public Currency Rates
|
|
|
|
|
|
|
|
|
|
%
|
|
|
|
|
|
|
|
|
%
|
(millions)
|
|
|
2017
|
|
|
2016
|
|
|
Change
|
|
|
2017
|
|
|
2016
|
|
|
Change
|
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Industrial
|
|
|
$3,586.5
|
|
|
$3,468.4
|
|
|
3
|
%
|
|
|
$3,636.8
|
|
|
$3,527.6
|
|
|
3
|
%
|
Global Institutional
|
|
|
3,524.3
|
|
|
3,315.0
|
|
|
6
|
%
|
|
|
3,551.4
|
|
|
3,349.4
|
|
|
6
|
%
|
Global Energy
|
|
|
2,346.1
|
|
|
2,305.6
|
|
|
2
|
%
|
|
|
2,361.8
|
|
|
2,318.6
|
|
|
2
|
%
|
Other
|
|
|
633.8
|
|
|
598.1
|
|
|
6
|
%
|
|
|
637.6
|
|
|
605.1
|
|
|
5
|
%
|
Subtotal at fixed currency rates
|
|
|
10,090.7
|
|
|
9,687.1
|
|
|
4
|
%
|
|
|
10,187.6
|
|
|
9,800.7
|
|
|
4
|
%
|
Currency impact
|
|
|
96.9
|
|
|
113.6
|
|
|
*
|
|
|
|
-
|
|
|
-
|
|
|
*
|
|
Consolidated
|
|
|
$10,187.6
|
|
|
$9,800.7
|
|
|
4
|
%
|
|
|
$10,187.6
|
|
|
$9,800.7
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Industrial
|
|
|
$501.9
|
|
|
$510.1
|
|
|
(2)
|
%
|
|
|
$511.6
|
|
|
$521.6
|
|
|
(2)
|
%
|
Global Institutional
|
|
|
726.1
|
|
|
697.8
|
|
|
4
|
%
|
|
|
729.6
|
|
|
703.2
|
|
|
4
|
%
|
Global Energy
|
|
|
236.1
|
|
|
244.9
|
|
|
(4)
|
%
|
|
|
238.9
|
|
|
247.4
|
|
|
(3)
|
%
|
Other
|
|
|
110.9
|
|
|
108.2
|
|
|
2
|
%
|
|
|
111.6
|
|
|
109.9
|
|
|
2
|
%
|
Corporate
|
|
|
(198.9)
|
|
|
(222.9)
|
|
|
*
|
|
|
|
(199.6)
|
|
|
(224.0)
|
|
|
*
|
|
Subtotal at fixed currency rates
|
|
|
1,376.1
|
|
|
1,338.1
|
|
|
3
|
%
|
|
|
1,392.1
|
|
|
1,358.1
|
|
|
3
|
%
|
Currency impact
|
|
|
16.0
|
|
|
20.0
|
|
|
*
|
|
|
|
-
|
|
|
-
|
|
|
*
|
|
Consolidated
|
|
|
$1,392.1
|
|
|
$1,358.1
|
|
|
3
|
%
|
|
|
$1,392.1
|
|
|
$1,358.1
|
|
|
3
|
%
|
* Not meaningful.
As shown in the “Fixed Currency Rates” tables above, we evaluate the
performance of our international operations based on fixed currency
exchange rates, which eliminate the impact of exchange rate fluctuations
on our international operations. Amounts shown in the “Public Currency
Rates” tables above reflect amounts translated at actual public average
rates of exchange prevailing during the corresponding period, and are
provided for informational purposes. The difference between the fixed
currency exchange rates and the public currency exchange rates is
reported as “Currency impact” in the “Fixed Currency Rates” tables above.
The Corporate segment includes amortization from the Nalco merger
intangible assets. The Corporate segment also includes special (gains)
and charges reported on the Consolidated Statement of Income.
|
|
ECOLAB INC.
|
CONSOLIDATED BALANCE SHEET
|
(unaudited)
|
|
|
|
|
|
September 30
|
|
|
December 31
|
|
|
September 30
|
(millions)
|
|
|
2017
|
|
|
2016
|
|
|
2016
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$209.1
|
|
|
|
$327.4
|
|
|
|
$180.6
|
|
Accounts receivable, net
|
|
|
2,533.2
|
|
|
|
2,341.2
|
|
|
|
2,349.6
|
|
Inventories
|
|
|
1,509.0
|
|
|
|
1,319.4
|
|
|
|
1,342.4
|
|
Other current assets
|
|
|
363.2
|
|
|
|
291.4
|
|
|
|
299.4
|
|
Total current assets
|
|
|
4,614.5
|
|
|
|
4,279.4
|
|
|
|
4,172.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
3,617.2
|
|
|
|
3,365.0
|
|
|
|
3,292.9
|
|
Goodwill
|
|
|
7,154.4
|
|
|
|
6,383.0
|
|
|
|
6,515.5
|
|
Other intangible assets, net
|
|
|
4,039.6
|
|
|
|
3,817.8
|
|
|
|
3,914.3
|
|
Other assets
|
|
|
431.0
|
|
|
|
485.0
|
|
|
|
484.1
|
|
Total assets
|
|
|
$19,856.7
|
|
|
|
$18,330.2
|
|
|
|
$18,378.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
|
$1,073.0
|
|
|
|
$541.3
|
|
|
|
$1,571.2
|
|
Accounts payable
|
|
|
1,115.9
|
|
|
|
983.2
|
|
|
|
1,022.7
|
|
Compensation and benefits
|
|
|
509.8
|
|
|
|
516.3
|
|
|
|
505.8
|
|
Income taxes
|
|
|
51.7
|
|
|
|
87.4
|
|
|
|
83.3
|
|
Other current liabilities
|
|
|
1,006.2
|
|
|
|
891.2
|
|
|
|
991.0
|
|
Total current liabilities
|
|
|
3,756.6
|
|
|
|
3,019.4
|
|
|
|
4,174.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
6,484.5
|
|
|
|
6,145.7
|
|
|
|
5,091.4
|
|
Postretirement health care and pension benefits
|
|
|
983.7
|
|
|
|
1,019.2
|
|
|
|
914.5
|
|
Deferred income taxes
|
|
|
1,030.2
|
|
|
|
970.2
|
|
|
|
1,030.7
|
|
Other liabilities
|
|
|
302.5
|
|
|
|
204.8
|
|
|
|
226.4
|
|
Total liabilities
|
|
|
12,557.5
|
|
|
|
11,359.3
|
|
|
|
11,437.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
354.2
|
|
|
|
352.6
|
|
|
|
352.3
|
|
Additional paid-in capital
|
|
|
5,397.5
|
|
|
|
5,270.8
|
|
|
|
5,236.1
|
|
Retained earnings
|
|
|
7,598.0
|
|
|
|
6,975.0
|
|
|
|
6,716.7
|
|
Accumulated other comprehensive loss
|
|
|
(1,564.3)
|
|
|
|
(1,712.9)
|
|
|
|
(1,452.3)
|
|
Treasury stock
|
|
|
(4,563.1)
|
|
|
|
(3,984.4)
|
|
|
|
(3,983.2)
|
|
Total Ecolab shareholders’ equity
|
|
|
7,222.3
|
|
|
|
6,901.1
|
|
|
|
6,869.6
|
|
Noncontrolling interest
|
|
|
76.9
|
|
|
|
69.8
|
|
|
|
72.2
|
|
Total equity
|
|
|
7,299.2
|
|
|
|
6,970.9
|
|
|
|
6,941.8
|
|
Total liabilities and equity
|
|
|
$19,856.7
|
|
|
|
$18,330.2
|
|
|
|
$18,378.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ECOLAB INC.
|
SUPPLEMENTAL NON-GAAP RECONCILIATIONS
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended
|
|
Nine Months Ended
|
|
|
September 30
|
|
September 30
|
(millions, except percent and per share)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP net sales
|
|
$3,563.3
|
|
|
$3,386.1
|
|
|
$10,187.6
|
|
|
$9,800.7
|
|
Effect of foreign currency translation
|
|
(71.7)
|
|
|
(54.4)
|
|
|
(96.9)
|
|
|
(113.6)
|
|
Non-GAAP fixed currency sales
|
|
$3,491.6
|
|
|
$3,331.7
|
|
|
$10,090.7
|
|
|
$9,687.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP cost of sales
|
|
$1,891.3
|
|
|
$1,737.2
|
|
|
$5,454.4
|
|
|
$5,153.8
|
|
Special (gains) and charges
|
|
0.3
|
|
|
0.0
|
|
|
26.2
|
|
|
61.9
|
|
Non-GAAP cost of sales
|
|
$1,891.0
|
|
|
$1,737.2
|
|
|
$5,428.2
|
|
|
$5,091.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP gross margin
|
|
46.9
|
%
|
|
48.7
|
%
|
|
46.5
|
%
|
|
47.4
|
%
|
Non-GAAP adjusted gross margin
|
|
46.9
|
%
|
|
48.7
|
%
|
|
46.7
|
%
|
|
48.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP operating income
|
|
$579.8
|
|
|
$574.1
|
|
|
$1,392.1
|
|
|
$1,358.1
|
|
Effect of foreign currency translation
|
|
(11.4)
|
|
|
(9.9)
|
|
|
(16.0)
|
|
|
(20.0)
|
|
Non-GAAP fixed currency operating income
|
|
$568.4
|
|
|
$564.2
|
|
|
$1,376.1
|
|
|
$1,338.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP operating income
|
|
$579.8
|
|
|
$574.1
|
|
|
$1,392.1
|
|
|
$1,358.1
|
|
Special (gains) and charges
|
|
5.2
|
|
|
3.2
|
|
|
74.1
|
|
|
97.6
|
|
Non-GAAP adjusted operating income
|
|
585.0
|
|
|
577.3
|
|
|
1,466.2
|
|
|
1,455.7
|
|
Effect of foreign currency translation
|
|
(11.4)
|
|
|
(9.9)
|
|
|
(16.0)
|
|
|
(20.0)
|
|
Non-GAAP adjusted fixed currency operating income
|
|
$573.6
|
|
|
$567.4
|
|
|
$1,450.2
|
|
|
$1,435.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income margin
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP operating income margin
|
|
16.3
|
%
|
|
17.0
|
%
|
|
13.7
|
%
|
|
13.9
|
%
|
Non-GAAP adjusted fixed currency operating income margin
|
|
16.4
|
%
|
|
17.0
|
%
|
|
14.4
|
%
|
|
14.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Attributable to Ecolab
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP net income attributable to Ecolab
|
|
$392.4
|
|
|
$374.1
|
|
|
$942.5
|
|
|
$863.3
|
|
Special (gains) and charges, after tax
|
|
2.4
|
|
|
(0.6)
|
|
|
53.2
|
|
|
60.8
|
|
Discrete tax net expense (benefit)
|
|
8.3
|
|
|
4.5
|
|
|
(24.2)
|
|
|
3.6
|
|
Non-GAAP adjusted net income attributable to Ecolab
|
|
$403.1
|
|
|
$378.0
|
|
|
$971.5
|
|
|
$927.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Share Attributable to Ecolab ("EPS")
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP diluted EPS
|
|
$1.34
|
|
|
$1.27
|
|
|
$3.20
|
|
|
$2.91
|
|
Special (gains) and charges, after tax
|
|
0.01
|
|
|
0.00
|
|
|
0.18
|
|
|
0.20
|
|
Discrete tax net expense (benefit)
|
|
0.03
|
|
|
0.02
|
|
|
(0.08)
|
|
|
0.01
|
|
Non-GAAP adjusted diluted EPS
|
|
$1.37
|
|
|
$1.28
|
|
|
$3.30
|
|
|
$3.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported GAAP tax rate
|
|
24.6
|
%
|
|
25.5
|
%
|
|
21.7
|
%
|
|
24.7
|
%
|
Special gains and charges
|
|
0.3
|
|
|
0.6
|
|
|
0.4
|
|
|
1.0
|
|
Discrete tax items
|
|
(1.6)
|
|
|
(0.9)
|
|
|
1.9
|
|
|
(0.3)
|
|
Non-GAAP adjusted tax rate
|
|
23.3
|
%
|
|
25.2
|
%
|
|
24.0
|
%
|
|
25.4
|
%
|
|
ECOLAB INC.
|
SUPPLEMENTAL DILUTED EARNINGS PER SHARE INFORMATION
|
(unaudited)
|
|
The table below provides a reconciliation of diluted earnings per
share, as reported, to the non-GAAP measure of adjusted diluted
earnings per share.
|
|
|
|
|
First
|
|
|
Second
|
|
|
Six
|
|
|
Third
|
|
|
Nine
|
|
|
Fourth
|
|
|
|
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Months
|
|
|
Quarter
|
|
|
Months
|
|
|
Quarter
|
|
|
Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Mar. 31
|
|
|
June 30
|
|
|
June 30
|
|
|
Sept. 30
|
|
|
Sept. 30
|
|
|
Dec. 31
|
|
|
Dec. 31
|
|
|
|
2016
|
|
|
2016
|
|
|
2016
|
|
|
2016
|
|
|
2016
|
|
|
2016
|
|
|
2016
|
Diluted earnings per share, as reported (U.S. GAAP)
|
|
|
$0.77
|
|
|
|
$0.87
|
|
|
|
$1.64
|
|
|
|
$1.27
|
|
|
|
$2.91
|
|
|
|
$
|
1.24
|
|
|
|
$
|
4.14
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special (gains) and charges (1)
|
|
|
0.01
|
|
|
|
0.19
|
|
|
|
0.21
|
|
|
|
0.00
|
|
|
|
0.20
|
|
|
|
|
0.01
|
|
|
|
|
0.21
|
|
Discrete tax expense (benefits) (2)
|
|
|
(0.02
|
)
|
|
|
0.01
|
|
|
|
(0.00
|
)
|
|
|
0.02
|
|
|
|
0.01
|
|
|
|
|
0.00
|
|
|
|
|
0.01
|
|
Adjusted diluted earnings per share (Non-GAAP)
|
|
|
$0.77
|
|
|
|
$1.08
|
|
|
|
$1.85
|
|
|
|
$1.28
|
|
|
|
$3.12
|
|
|
|
$
|
1.25
|
|
|
|
$
|
4.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Six
|
|
|
Third
|
|
|
Nine
|
|
|
Fourth
|
|
|
|
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Months
|
|
|
Quarter
|
|
|
Months
|
|
|
Quarter
|
|
|
Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
Mar. 31
|
|
|
June 30
|
|
|
June 30
|
|
|
Sept. 30
|
|
|
Sept. 30
|
|
|
Dec. 31
|
|
|
Dec. 31
|
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
|
|
2017
|
Diluted earnings per share, as reported (U.S. GAAP)
|
|
|
$0.86
|
|
|
|
$1.01
|
|
|
|
$1.87
|
|
|
|
$1.34
|
|
|
|
$3.20
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special (gains) and charges (3)
|
|
|
0.02
|
|
|
|
0.16
|
|
|
|
0.17
|
|
|
|
0.01
|
|
|
|
0.18
|
|
|
|
|
|
|
|
|
|
Discrete tax expense (benefits) (4)
|
|
|
(0.08
|
)
|
|
|
(0.03
|
)
|
|
|
(0.11
|
)
|
|
|
0.03
|
|
|
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share (Non-GAAP)
|
|
|
$0.80
|
|
|
|
$1.13
|
|
|
|
$1.93
|
|
|
|
$1.37
|
|
|
|
$3.30
|
|
|
|
|
|
|
|
|
|
Per share amounts do not necessarily sum due to changes in shares
outstanding and rounding.
(1) Special (gains) and charges for 2016 included restructuring charges
of $1.8 million, net of tax in the first quarter, and gains related to
restructuring of $1.9 million, $7.2 million, $3.5 million net of tax, in
the second, third and fourth quarters, respectively. Special (gains) and
charges for 2016 also included a charge of $42.9 million and $7.1
million net of tax, during the second and fourth quarters, respectively,
associated with the downturn in the global energy market. Special
(gains) and charges for 2016 also included a charge of $6.3 million, net
of tax, during the second quarter related to other fixed asset
impairments and inventory charges. Special (gains) and charges for 2016
also included a gain of $4.6 million, net of tax, during the fourth
quarter of 2016, related to inventory cost policy harmonization efforts,
initiated in 2015. Special (gains) and charges for 2016 also included a
gain of $4.9 million, net of tax, during the second quarter related to
the recovery of previously written off Venezuelan intercompany
receivables. Special (gains) and charges for 2016 also included $2.6
million, $14.6 million, $6.6 million and $2.6 million, net of tax, in
the first, second, third and fourth quarters, respectively, related to
other charges, including litigation related charges.
(2) The first quarter 2016 discrete tax items net benefits of $4.8
million were driven primarily by the release of reserves for uncertain
tax positions due to expiration of statute of limitations in non-U.S.
jurisdictions. The second quarter 2016 discrete tax items net expenses
of $3.9 million were driven by individually insignificant items,
including adjustments to deferred tax asset and liability positions. The
third quarter 2016 discrete tax items net expenses of $4.5 million were
driven primarily by recognizing adjustments from filing our 2015 U.S.
federal income tax return, partially offset by settlement of
international tax matters and remeasurement of certain deferred tax
assets and liabilities resulting from the application of an updated tax
rate in an international jurisdiction. The fourth quarter discrete tax
items net expenses of $0.3 million were driven by individually
insignificant items, including tax charges related to optimizing our
business structure and settlement of international tax matters,
partially offset by valuation allowance releases and other adjustments.
(3) Special (gains) and charges for 2017 included acquisition and
integration costs of $5.3 million, $10.0 million and $1.4 million, net
of tax, in the first, second and third quarters, respectively. Special
(gains) and charges for 2017 also included restructuring gains of $0.2
million, and charges of $24.5 million and $1.7 million, net of tax, in
the first, second and third quarters, respectively. Special (gains) and
charges for 2017 also included a gain of $3.3 million and $2.0 million,
net of tax, during the second and third quarter, respectively, related
to the recovery of previously written off Venezuelan intercompany
receivables. Special (gains) and charges for 2017 also included charges
of $14.4 million, net of tax, related to a Global Energy vendor contract
termination and litigation charges in the second quarter, and litigation
charges of $1.4 million, net of tax, in the third quarter.
(4) Discrete tax expense (benefits) were driven by $16.0 million, $10.8
million, and $2.4 million of tax benefits associated with stock
compensation excess tax benefits in the first, second, and third
quarters, respectively. The remaining $6.8 million discrete tax benefits
in the first quarter were driven primarily by the release of reserves
for uncertain tax positions due to the expiration of statute of
limitations in non-U.S. jurisdictions. The second quarter 2017 discrete
tax expense of $1.1 million was driven primarily by the release of
reserves for uncertain tax positions due to the expiration of statute of
limitations in non-U.S. jurisdictions. The third quarter 2017 discrete
tax expense of $10.7M was driven primarily by recognizing adjustments
from filing our 2016 U.S. federal income tax return.
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