SECOND QUARTER HIGHLIGHTS:
- Strong second quarter results leveraged recovering markets with new business wins and new products to deliver double-digit sales and earnings growth.
- Reported sales from continuing operations +18% versus last year. Acquisition adjusted fixed currency sales +12% as strong growth in the Institutional & Specialty and Other segments along with good Industrial segment growth more than offset the Healthcare & Life Sciences segment’s modest decline versus a very strong gain last year.
- Reported operating margins from continuing operations +710 bps. Acquisition adjusted fixed currency operating margin also showed strong expansion, +420 bps, led by the Institutional & Specialty segment.
- Reported diluted EPS from continuing operations
$1.08 , +145% versus last year. - Adjusted diluted EPS from continuing operations, excluding special gains and charges and discrete tax items, were
$1.22 , +88% versus last year; the strong increase reflects volume increases, accelerating pricing in excess of higher delivered product costs and lower bad debt expense which more than offset increased variable compensation andTexas freeze impacts. As expected, theTexas freeze is estimated to have had an unfavorable$0.05 per share impact. - Cash flow from operating activities remained strong in the quarter at
$503 million ; free cash flow was$360 million ,+$130 million versus last year.
Second Quarter Ended | ||||||||||||||||||||||
Reported | Adjusted | |||||||||||||||||||||
(unaudited) | Public Currency Rates | % | Public Currency Rates | % | ||||||||||||||||||
(millions, except per share) | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||
Net sales | $3,162.7 | 18 | % | $3,162.7 | 18 | % | ||||||||||||||||
Operating income | 447.8 | 192.0 | 133 | % | 469.1 | 288.4 | 63 | % | ||||||||||||||
Net income from continuing operations attributable to Ecolab | 310.8 | 128.9 | 141 | % | 352.6 | 189.7 | 86 | % | ||||||||||||||
Diluted earnings per share from continuing operations attributable to Ecolab | $1.08 | 145 | % | $1.22 | 88 | % | ||||||||||||||||
Adjusted | ||||||||||||||||||||||
Fixed Currency Rates | % | Fixed Currency Rates | % | |||||||||||||||||||
2021 | 2020 | Change | 2021 | 2020 | Change | |||||||||||||||||
Net sales | $3,179.4 | 13 | % | $3,179.4 | 13 | % | ||||||||||||||||
Operating income | 450.1 | 211.5 | 113 | % | 471.4 | 307.9 | 53 | % |
CEO comment
Commenting on the quarter,
“We continue to expect a strong performance in 2021. We expect the
“Building on the investments we made in new products and programs, our strong sales and services teams and digital technology throughout 2020’s complex environment, we continue to believe we are very well-positioned for the global recovery as we leverage the world’s rising sustainability, food safety and hygiene standards. We remain confident in our long-term outlook and continue to invest in the fundamental drivers for our business, and through these ongoing investments, expect to deliver better customer outcomes and improved value for our shareholders.”
Second Quarter 2021 Consolidated Results
Ecolab's second quarter reported sales increased 18%, fixed currency sales increased 13% and acquisition adjusted fixed currency sales increased 12% when compared to the prior year.
Second quarter 2021 reported operating income increased 133% and includes the impact of special charges, which primarily reflected COVID-19 employee-related costs (net of government subsidies) and restructuring. Adjusted operating income increased 63% and adjusted fixed currency operating income increased 53%. Strong operating leverage reflects volume increases, accelerating pricing in excess of higher delivered product costs and lower bad debt expense which more than offset increased variable compensation and
Reported other expense increased
Reported interest expense decreased 22%, primarily due to the reduction in the average interest rate and average debt levels.
The reported income tax rate for the second quarter of 2021 was 21.5% compared with the reported rate of 9.5% in the second quarter of 2020. Excluding special gains and charges and discrete tax items, the adjusted tax rate for the second quarter of 2021 was 19.3% compared with the adjusted tax rate of 20.5% in the second quarter of 2020.
Second quarter 2021 reported net income from continuing operations attributable to Ecolab increased 141%. Excluding the impact of special gains and charges and discrete tax items, adjusted net income from continuing operations attributable to Ecolab increased 86% versus the prior year.
Reported diluted earnings per share from continuing operations increased 145%. Adjusted diluted earnings per share from continuing operations increased 88% when compared against the second quarter 2020. Currency translation had a
Second Quarter 2021 Segment Review
Global Industrial | ||||||||||||||||
(unaudited) | Second Quarter Ended | Acq. Adj. | ||||||||||||||
(millions) | 2021 | 2020 | % Change | % Change | ||||||||||||
Fixed currency | ||||||||||||||||
Sales | $1,555.4 | 4 % | 3 % | |||||||||||||
Operating income | 263.3 | 287.8 | (9)% | (8)% | ||||||||||||
Operating income margin | 16.9 | % | 19.2 | % | ||||||||||||
Acq. adj. operating income margin | 17.1 | % | 19.3 | % | ||||||||||||
Public currency | ||||||||||||||||
Sales | $1,544.5 | 8 % | ||||||||||||||
Operating income | 260.8 | 272.5 | (4)% |
The Industrial segment includes Water, Food & Beverage, Downstream and Paper
Acquisition adjusted fixed currency sales increased 3% as strong growth in Water and Paper, led by recovering market conditions and new business wins, as well as improving trends in Food & Beverage, more than offset lower Downstream sales that reflected low-margin refinery business exits. Acquisition adjusted fixed currency operating income margins remain well above 2019 levels, though acquisition adjusted fixed currency operating income decreased 8% compared to a very strong 28% increase last year, as accelerating pricing offset increased delivered product costs in the quarter while volume growth was more than offset by higher variable compensation and
Global Institutional & Specialty | |||||||||||||||
(unaudited) | Second Quarter Ended | Acq. Adj. | |||||||||||||
(millions) | 2021 | 2020 | % Change | % Change | |||||||||||
Fixed currency | |||||||||||||||
Sales | $978.9 | 34% | 33% | ||||||||||||
Operating income (loss) | 138.6 | (38.0 | ) | * | * | ||||||||||
Operating income margin | 14.2 | % | (5.2 | )% | |||||||||||
Acq. adj. operating income margin | 14.3 | % | (5.2 | )% | |||||||||||
Public currency | |||||||||||||||
Sales | $976.0 | 37% | |||||||||||||
Operating income (loss) | 138.8 | (38.0 | ) | * |
The Institutional & Specialty segment includes Institutional and Specialty
* Not meaningful.
Acquisition adjusted fixed currency sales increased 33%. Strong growth in the Institutional division reflected recovering markets in the
(unaudited) | Second Quarter Ended | Acq. Adj. | ||||||||||||||
(millions) | 2021 | 2020 | % Change | % Change | ||||||||||||
Fixed currency | ||||||||||||||||
Sales | $303.5 | (6)% | (8)% | |||||||||||||
Operating income | 48.3 | 69.0 | (30)% | (30)% | ||||||||||||
Operating income margin | 15.9 | % | 21.5 | % | ||||||||||||
Acq. adj. operating income margin | 16.3 | % | 21.5 | % | ||||||||||||
Public currency | ||||||||||||||||
Sales | $301.8 | 1 % | ||||||||||||||
Operating income | 48.2 | 63.0 | (23)% |
The Healthcare & Life Sciences segment includes Healthcare and Life Sciences
Acquisition adjusted fixed currency sales decreased 8% compared to a 20% increase last year when sales benefited from strong COVID-19 related demand. The underlying Healthcare and Life Sciences growth remained strong and consistent with past quarters’ trends, driven by new business wins and increased hygiene awareness. Acquisition adjusted fixed currency operating income decreased 30%, primarily reflecting the comparison to the very strong sales volume last year when operating income grew 110%.
Other | ||||||||||||||
(unaudited) | Second Quarter Ended | Acq. Adj. | ||||||||||||
(millions) | 2021 | 2020 | % Change | % Change | ||||||||||
Fixed currency | ||||||||||||||
Sales | $306.6 | 23% | 23% | |||||||||||
Operating income | 51.3 | 20.8 | 147% | 147% | ||||||||||
Operating income margin | 16.7 | % | 8.4 | % | ||||||||||
Acq. adj. operating income margin | 16.7 | % | 8.4 | % | ||||||||||
Public currency | ||||||||||||||
Sales | $305.5 | 28% | ||||||||||||
Operating income | 51.2 | 20.9 | 145% |
The Other segment includes Pest Elimination, Textile Care and Colloidal Technologies
Acquisition adjusted fixed currency sales increased 23% led by strong growth in Pest Elimination that was driven by recovering markets and new business wins. Acquisition adjusted fixed currency operating income increased 147% due to the strong volume growth.
Corporate
Second quarter of 2021 corporate segment includes:
- sales of
$35 million to ChampionX under the Master Cross Supply and Product Transfer agreements we entered into as part of the ChampionX separation - amortization expense of
$30 million related to the Nalco merger intangible assets - net special charges of
$21 million that primarily reflected COVID-19 employee-related costs (net of government subsidies) and restructuring
Special gains and charges for the second quarter of 2020 were a net charge of
2021 Business Outlook
We expect the
We expect continued strong year-on-year performance in the second half of 2021, with attractive sequential earnings improvement in the third quarter and more significant comparative gains in the fourth quarter as pricing actions have an increasing benefit. We continue to look for full year 2021 diluted earnings per share to exceed 2019 diluted earnings per share from continuing operations, excluding the
Our strong business momentum, along with our leading world-class solutions that help customers solve their operating problems and achieve their ESG ambitions, provide us with the confidence that Ecolab will continue delivering strong, consistent growth for many years to come.
About Ecolab
A trusted partner at nearly three million commercial customer locations, Ecolab (ECL) is the global leader in water, hygiene and infection prevention solutions and services. With annual sales of
Ecolab will host a live webcast to review the second quarter earnings announcement today at
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 COVID-19 pandemic trends, the
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
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
These non-GAAP financial measures (including with respect to continuing operations) 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 other (income) expense
- adjusted interest expense
- adjusted tax rate
- adjusted net income attributable to Ecolab
- adjusted diluted earnings per share
- free cash flow
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 adjusted financial measures for cost of sales, gross margin, operating income, other (income) expense and interest expense 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, discrete tax items and certain external factors 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
Our reportable segments do not include the impact of intangible asset amortization from the Nalco merger or the impact of special (gains) and charges as these are not allocated to the Company’s reportable segments.
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.
We define free cash flow as net cash provided by operating activities less cash outlays for capital expenditures. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures. It should not be considered a substitute for income or cash flow data prepared in accordance with
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.
We do not provide reconciliations for non-GAAP estimates on a forward-looking basis (including those contained in this report) when we are unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and amount of various items that have not yet occurred, are out of our control and/or cannot be reasonably predicted, and that would impact reported earnings per share and the reported tax rate, the most directly comparable forward-looking GAAP financial measures to adjusted earnings per share and the adjusted tax rate. For the same reasons, we are unable to address the probable significance of the unavailable information.
(ECL-E)
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Second Quarter Ended | Six Months Ended | ||||||||||||||||||||||
% | % | ||||||||||||||||||||||
(millions, except per share) | 2021 | 2020 | Change | 2021 | 2020 | Change | |||||||||||||||||
Product and equipment sales | $2,514.4 | $4,807.8 | |||||||||||||||||||||
Service and lease sales | 648.3 | 518.6 | 1,239.9 | 1,115.2 | |||||||||||||||||||
Net sales | 3,162.7 | 2,685.7 | 18 | % | 6,047.7 | 5,706.3 | 6 | % | |||||||||||||||
Product and equipment cost of sales | 1,464.9 | 1,301.5 | 2,827.8 | 2,666.2 | |||||||||||||||||||
Service and lease cost of sales | 379.1 | 334.2 | 728.2 | 689.7 | |||||||||||||||||||
Cost of sales (2) | 1,844.0 | 1,635.7 | 13 | % | 3,556.0 | 3,355.9 | 6 | % | |||||||||||||||
Selling, general and administrative expenses | 853.3 | 788.6 | 8 | % | 1,716.2 | 1,696.9 | 1 | % | |||||||||||||||
Special (gains) and charges (2) | 17.6 | 69.4 | 30.4 | 85.3 | |||||||||||||||||||
Operating income | 447.8 | 192.0 | 133 | % | 745.1 | 568.2 | 31 | % | |||||||||||||||
Other (income) expense | 2.5 | (15.1 | ) | (117 | ) | % | (14.5 | ) | (30.5 | ) | (52 | ) | % | ||||||||||
Interest expense, net (2) | 45.6 | 58.7 | (22 | ) | % | 97.3 | 107.0 | (9 | ) | % | |||||||||||||
Income before income taxes | 399.7 | 148.4 | 169 | % | 662.3 | 491.7 | 35 | % | |||||||||||||||
Provision for income taxes | 86.1 | 14.1 | 511 | % | 152.2 | 61.1 | 149 | % | |||||||||||||||
Net income including noncontrolling interest | 313.6 | 134.3 | 134 | % | 510.1 | 430.6 | 18 | % | |||||||||||||||
Net income attributable to noncontrolling interest | 2.8 | 5.4 | 5.7 | 9.7 | |||||||||||||||||||
Net income from continuing operations attributable to Ecolab | 310.8 | 128.9 | 141 | % | 504.4 | 420.9 | 20 | % | |||||||||||||||
Net income (loss) from discontinued operations, net of tax (1) | - | (2,163.9 | ) | - | (2,172.5 | ) | |||||||||||||||||
Net income (loss) attributable to Ecolab | $310.8 | ( | ) | $504.4 | ( | ) | |||||||||||||||||
Earnings attributable to Ecolab per common share | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Continuing operations | $1.09 | 142 | % | $1.76 | 21 | % | |||||||||||||||||
Discontinued operations | - | ( | ) | - | ( | ) | |||||||||||||||||
Earnings attributable to Ecolab | $1.09 | ( | ) | $1.76 | ( | ) | |||||||||||||||||
Diluted | |||||||||||||||||||||||
Continuing operations | $1.08 | 145 | % | $1.75 | 22 | % | |||||||||||||||||
Discontinued operations | - | ( | ) | - | ( | ) | |||||||||||||||||
Earnings attributable to Ecolab | $1.08 | ( | ) | $1.75 | ( | ) | |||||||||||||||||
Weighted-average common shares outstanding | |||||||||||||||||||||||
Basic | 286.0 | 288.2 | (1 | ) | % | 286.0 | 288.5 | (1 | ) | % | |||||||||||||
Diluted | 288.8 | 291.5 | (1 | ) | % | 288.9 | 292.0 | (1 | ) | % | |||||||||||||
(1) Net Income (loss) attributable to discontinued operations, net of tax, relates to the separation of ChampionX. | |||||||||||||||||||||||
(2) Cost of sales, Special (gains) and charges and Interest expense, net in the Consolidated Statement of Income above include the following: | |||||||||||||||||||||||
Second Quarter Ended | Six Months Ended | ||||||||||||||||||||||
(millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Restructuring activities | $3.7 | $21.9 | |||||||||||||||||||||
Acquisition and integration activities | - | 2.2 | - | 2.6 | |||||||||||||||||||
COVID-19 activities, net | - | 6.9 | 1.1 | 6.9 | |||||||||||||||||||
Other | - | 15.3 | 0.3 | 21.0 | |||||||||||||||||||
Subtotal (a) | 3.7 | 27.0 | 23.3 | 36.1 | |||||||||||||||||||
Special (gains) and charges | |||||||||||||||||||||||
Restructuring activities | 2.5 | 0.3 | 6.1 | 4.5 | |||||||||||||||||||
Acquisition and integration activities | 1.3 | (2.6 | ) | 2.5 | 2.8 | ||||||||||||||||||
Disposal and impairment charges | - | 44.7 | - | 45.9 | |||||||||||||||||||
COVID-19 activities, net | 8.3 | 10.2 | 14.7 | 10.2 | |||||||||||||||||||
Other | 5.5 | 16.8 | 7.1 | 21.9 | |||||||||||||||||||
Subtotal | 17.6 | 69.4 | 30.4 | 85.3 | |||||||||||||||||||
Interest expense, net | - | 0.7 | - | 0.7 | |||||||||||||||||||
Pension Settlements/Curtailments | 19.6 | - | 19.6 | - | |||||||||||||||||||
Total special (gains) and charges | $40.9 | $73.3 | |||||||||||||||||||||
(a) Special charges of
REPORTABLE SEGMENT INFORMATION
(unaudited)
Second Quarter Ended | ||||||||||||||||||||||||
Fixed Currency Rates | Public Currency Rates | |||||||||||||||||||||||
% | % | |||||||||||||||||||||||
(millions) | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||
Global Industrial | $1,555.4 | 4 | % | $1,544.5 | 8 | % | ||||||||||||||||||
Global Institutional & Specialty | 978.9 | 733.0 | 34 | % | 976.0 | 710.1 | 37 | % | ||||||||||||||||
303.5 | 321.4 | (6 | ) | % | 301.8 | 299.4 | 1 | % | ||||||||||||||||
Other | 306.6 | 249.1 | 23 | % | 305.5 | 239.6 | 28 | % | ||||||||||||||||
Corporate | 35.0 | 12.3 | * | 34.9 | 12.3 | * | ||||||||||||||||||
Subtotal at fixed currency rates | 3,179.4 | 2,814.3 | 13 | % | 3,162.7 | 2,685.7 | 18 | % | ||||||||||||||||
Currency impact | (16.7 | ) | (128.6 | ) | * | - | - | * | ||||||||||||||||
Consolidated reported GAAP net sales | $3,162.7 | 18 | % | $3,162.7 | 18 | % | ||||||||||||||||||
Operating Income (loss) | ||||||||||||||||||||||||
Global Industrial | $263.3 | (9 | ) | % | $260.8 | (4 | ) | % | ||||||||||||||||
Global Institutional & Specialty | 138.6 | (38.0 | ) | * | 138.8 | (38.0 | ) | * | ||||||||||||||||
48.3 | 69.0 | (30 | ) | % | 48.2 | 63.0 | (23 | ) | % | |||||||||||||||
Other | 51.3 | 20.8 | 147 | % | 51.2 | 20.9 | 145 | % | ||||||||||||||||
Corporate | (51.4 | ) | (128.1 | ) | * | (51.2 | ) | (126.4 | ) | * | ||||||||||||||
Subtotal at fixed currency rates | 450.1 | 211.5 | 113 | % | 447.8 | 192.0 | 133 | % | ||||||||||||||||
Currency impact | (2.3 | ) | (19.5 | ) | * | - | - | * | ||||||||||||||||
Consolidated reported GAAP operating income | $447.8 | 133 | % | $447.8 | 133 | % | ||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
Fixed Currency Rates | Public Currency Rates | |||||||||||||||||||||||
% | % | |||||||||||||||||||||||
(millions) | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||
Global Industrial | $2,989.3 | 1 | % | $2,975.5 | 4 | % | ||||||||||||||||||
Global Institutional & Specialty | 1,837.4 | 1,820.2 | 1 | % | 1,833.4 | 1,780.2 | 3 | % | ||||||||||||||||
597.2 | 578.2 | 3 | % | 594.5 | 544.1 | 9 | % | |||||||||||||||||
Other | 577.9 | 528.7 | 9 | % | 576.2 | 512.3 | 12 | % | ||||||||||||||||
Corporate | 68.2 | 12.3 | * | 68.1 | 12.3 | * | ||||||||||||||||||
Subtotal at fixed currency rates | 6,070.0 | 5,902.9 | 3 | % | 6,047.7 | 5,706.3 | 6 | % | ||||||||||||||||
Currency impact | (22.3 | ) | (196.6 | ) | * | - | - | * | ||||||||||||||||
Consolidated reported GAAP net sales | $6,047.7 | 6 | % | $6,047.7 | 6 | % | ||||||||||||||||||
Operating Income | ||||||||||||||||||||||||
Global Industrial | $482.5 | (3 | ) | % | $479.6 | 0 | % | |||||||||||||||||
Global Institutional & Specialty | 201.7 | 145.7 | 38 | % | 202.0 | 144.0 | 40 | % | ||||||||||||||||
93.9 | 93.0 | 1 | % | 93.6 | 85.5 | 9 | % | |||||||||||||||||
Other | 84.2 | 42.6 | 98 | % | 84.0 | 42.2 | 99 | % | ||||||||||||||||
Corporate | (114.4 | ) | (183.2 | ) | * | (114.1 | ) | (180.8 | ) | * | ||||||||||||||
Subtotal at fixed currency rates | 747.9 | 595.5 | 26 | % | 745.1 | 568.2 | 31 | % | ||||||||||||||||
Currency impact | (2.8 | ) | (27.3 | ) | * | - | - | * | ||||||||||||||||
Consolidated reported GAAP operating income | $745.1 | 31 | % | $745.1 | 31 | % |
* 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.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(millions) | 2021 | 2020 | 2020 | |||||||||||
Assets | ||||||||||||||
Current assets | ||||||||||||||
Cash and cash equivalents | $1,402.4 | |||||||||||||
Accounts receivable, net | 2,331.0 | 2,273.8 | 2,255.5 | |||||||||||
Inventories | 1,418.5 | 1,285.2 | 1,228.7 | |||||||||||
Other current assets | 335.5 | 298.2 | 313.0 | |||||||||||
Total current assets | 5,487.4 | 5,117.4 | 5,166.2 | |||||||||||
Property, plant and equipment, net | 3,077.9 | 3,124.9 | 3,138.9 | |||||||||||
6,172.4 | 6,006.9 | 5,759.9 | ||||||||||||
Other intangible assets, net | 2,925.4 | 2,977.0 | 3,019.2 | |||||||||||
Operating lease assets | 391.5 | 423.8 | 439.9 | |||||||||||
Other assets | 479.1 | 476.0 | 558.3 | |||||||||||
Total assets | $18,533.7 | |||||||||||||
Liabilities and Equity | ||||||||||||||
Current liabilities | ||||||||||||||
Short-term debt | $17.3 | |||||||||||||
Accounts payable | 1,213.3 | 1,160.6 | 1,087.7 | |||||||||||
Compensation and benefits | 430.3 | 469.3 | 408.0 | |||||||||||
Income taxes | 48.9 | 96.1 | 109.9 | |||||||||||
Other current liabilities | 1,170.5 | 1,188.9 | 1,087.2 | |||||||||||
Total current liabilities | 2,880.3 | 2,932.2 | 3,227.7 | |||||||||||
Long-term debt | 6,708.9 | 6,669.3 | 6,752.0 | |||||||||||
Postretirement health care and pension benefits | 1,046.6 | 1,226.2 | 1,055.6 | |||||||||||
Deferred income taxes | 567.3 | 483.9 | 577.2 | |||||||||||
Operating lease liabilities | 273.8 | 300.5 | 319.4 | |||||||||||
Other liabilities | 320.5 | 312.4 | 260.3 | |||||||||||
Total liabilities | 11,797.4 | 11,924.5 | 12,192.2 | |||||||||||
Equity | ||||||||||||||
Common stock | 363.2 | 362.6 | 362.0 | |||||||||||
Additional paid-in capital | 6,333.3 | 6,235.0 | 6,155.0 | |||||||||||
Retained earnings | 8,472.8 | 8,243.0 | 7,967.8 | |||||||||||
Accumulated other comprehensive loss | (1,710.6 | ) | (1,994.4 | ) | (1,989.7 | ) | ||||||||
(6,749.6 | ) | (6,679.7 | ) | (6,639.9 | ) | |||||||||
Total Ecolab shareholders’ equity | 6,709.1 | 6,166.5 | 5,855.2 | |||||||||||
Noncontrolling interest | 27.2 | 35.0 | 35.0 | |||||||||||
Total equity | 6,736.3 | 6,201.5 | 5,890.2 | |||||||||||
Total liabilities and equity | $18,533.7 |
SUPPLEMENTAL NON-GAAP RECONCILIATIONS
(unaudited)
Second Quarter Ended | Six Months Ended | |||||||||||||||||||
(millions, except percent and per share) | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||
Net sales | ||||||||||||||||||||
Reported GAAP net sales | $3,162.7 | $6,047.7 | ||||||||||||||||||
Effect of foreign currency translation | 16.7 | 128.6 | 22.3 | 196.6 | ||||||||||||||||
Non-GAAP fixed currency sales | 3,179.4 | 2,814.3 | 6,070.0 | 5,902.9 | ||||||||||||||||
Effect of acquisitions and divestitures | (71.0 | ) | (32.0 | ) | (142.6 | ) | (49.6 | ) | ||||||||||||
Non-GAAP acquisition adjusted fixed currency sales | 3,108.4 | 2,782.3 | 5,927.4 | 5,853.3 | ||||||||||||||||
Cost of sales | ||||||||||||||||||||
Reported GAAP cost of sales | $1,844.0 | $3,556.0 | ||||||||||||||||||
Special (gains) and charges | 3.7 | 27.0 | 23.3 | 36.1 | ||||||||||||||||
Non-GAAP adjusted cost of sales | $1,840.3 | $3,532.7 | ||||||||||||||||||
Gross margin | ||||||||||||||||||||
Reported GAAP gross margin | 41.7 | % | 39.1 | % | 41.2 | % | 41.2 | % | ||||||||||||
Non-GAAP adjusted gross margin | 41.8 | % | 40.1 | % | 41.6 | % | 41.8 | % | ||||||||||||
Operating income | ||||||||||||||||||||
Reported GAAP operating income | $447.8 | $745.1 | ||||||||||||||||||
Effect of foreign currency translation | 2.3 | 19.5 | 2.8 | 27.3 | ||||||||||||||||
Non-GAAP fixed currency operating income | 450.1 | 211.5 | 747.9 | 595.5 | ||||||||||||||||
Special (gains) and charges | 21.3 | 96.4 | 53.7 | 121.4 | ||||||||||||||||
Non-GAAP adjusted fixed currency operating income | 471.4 | 307.9 | 801.6 | 716.9 | ||||||||||||||||
Effect of acquisitions and divestitures | (0.4 | ) | (2.4 | ) | (0.6 | ) | (2.5 | ) | ||||||||||||
Non-GAAP acquisition adjusted fixed currency operating income | $471.0 | $801.0 | ||||||||||||||||||
Operating income margin | ||||||||||||||||||||
Reported GAAP operating income margin | 14.2 | % | 7.1 | % | 12.3 | % | 10.0 | % | ||||||||||||
Non-GAAP adjusted fixed currency operating income margin | 14.8 | % | 10.9 | % | 13.2 | % | 12.1 | % | ||||||||||||
Non-GAAP acquisition adjusted fixed currency operating income margin | 15.2 | % | 11.0 | % | 13.5 | % | 12.2 | % | ||||||||||||
Other (income) expense | ||||||||||||||||||||
Reported GAAP other (income) expense | $2.5 | ( | ) | ($14.5 | ) | ( | ) | |||||||||||||
Special (gains) and charges | 19.6 | - | 19.6 | - | ||||||||||||||||
Non-GAAP adjusted other (income) expense | ($17.1 | ) | ( | ) | ($34.1 | ) | ( | ) | ||||||||||||
Interest expense, net | ||||||||||||||||||||
Reported GAAP interest expense, net | $45.6 | $97.3 | ||||||||||||||||||
Special (gains) and charges | - | 0.7 | - | 0.7 | ||||||||||||||||
Non-GAAP adjusted interest expense, net | $45.6 | $97.3 |
SUPPLEMENTAL NON-GAAP RECONCILIATIONS
(unaudited)
Second Quarter Ended | Six Months Ended | ||||||||||||||||||||
(millions, except percent and per share) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||
Net Income from continuing operations attributable to Ecolab | |||||||||||||||||||||
Reported GAAP net income from continuing operations attributable to Ecolab | $310.8 | $504.4 | |||||||||||||||||||
Special (gains) and charges, after tax | 34.1 | 83.3 | 58.3 | 101.8 | |||||||||||||||||
Discrete tax net expense (benefit) | 7.7 | (22.5 | ) | 23.8 | (44.4 | ) | |||||||||||||||
Non-GAAP adjusted net income from continuing operations attributable to Ecolab | $352.6 | $586.5 | |||||||||||||||||||
Diluted EPS from continuing operations attributable to Ecolab | |||||||||||||||||||||
Reported GAAP diluted EPS from continuing operations | $1.08 | $1.75 | |||||||||||||||||||
Special (gains) and charges, after tax | 0.12 | 0.29 | 0.20 | 0.35 | |||||||||||||||||
Discrete tax net expense (benefit) | 0.02 | (0.08 | ) | 0.08 | (0.15 | ) | |||||||||||||||
Non-GAAP adjusted diluted EPS from continuing operations | $1.22 | $2.03 | |||||||||||||||||||
Provision for Income Taxes | |||||||||||||||||||||
Reported GAAP tax rate | 21.5 | % | 9.5 | % | 23.0 | % | 12.4 | % | |||||||||||||
Special gains and charges | (0.4 | ) | 1.9 | (0.3 | ) | 0.9 | |||||||||||||||
Discrete tax items | (1.8 | ) | 9.1 | (3.2 | ) | 7.2 | |||||||||||||||
Non-GAAP adjusted tax rate | 19.3 | % | 20.5 | % | 19.5 | % | 20.5 | % |
SUPPLEMENTAL NON-GAAP RECONCILIATIONS
Second Quarter Ended | ||||||||||||||||||||||||
(unaudited) | 2021 | 2020 | ||||||||||||||||||||||
(millions) | Fixed Currency | Impact of Acquisitions and Divestitures | Acquisition Adjusted | Fixed Currency | Impact of Acquisitions and Divestitures | Acquisition Adjusted | ||||||||||||||||||
Global Industrial | $1,555.4 | (26.2 | ) | $1,529.2 | (19.5 | ) | ||||||||||||||||||
Global Institutional & Specialty | 978.9 | (3.2 | ) | 975.7 | 733.0 | - | 733.0 | |||||||||||||||||
303.5 | (6.6 | ) | 296.9 | 321.4 | (0.2 | ) | 321.2 | |||||||||||||||||
Other | 306.6 | - | 306.6 | 249.1 | - | 249.1 | ||||||||||||||||||
Corporate | 35.0 | (35.0 | ) | - | 12.3 | (12.3 | ) | - | ||||||||||||||||
Subtotal at fixed currency rates | 3,179.4 | (71.0 | ) | 3,108.4 | 2,814.3 | (32.0 | ) | 2,782.3 | ||||||||||||||||
Currency impact | (16.7 | ) | (128.6 | ) | ||||||||||||||||||||
Consolidated reported GAAP net sales | $3,162.7 | |||||||||||||||||||||||
Operating Income (loss) | ||||||||||||||||||||||||
Global Industrial | $263.3 | (1.2 | ) | $262.1 | (2.3 | ) | ||||||||||||||||||
Global Institutional & Specialty | 138.6 | 0.6 | 139.2 | (38.0 | ) | - | (38.0 | ) | ||||||||||||||||
48.3 | 0.2 | 48.5 | 69.0 | (0.1 | ) | 68.9 | ||||||||||||||||||
Other | 51.3 | - | 51.3 | 20.8 | - | 20.8 | ||||||||||||||||||
Corporate | (30.1 | ) | - | (30.1 | ) | (31.7 | ) | - | (31.7 | ) | ||||||||||||||
Adjusted at fixed currency rates | 471.4 | (0.4 | ) | 471.0 | 307.9 | (2.4 | ) | 305.5 | ||||||||||||||||
Special (gains) and charges | 21.3 | 96.4 | ||||||||||||||||||||||
Reported OI at fixed currency rates | 450.1 | 211.5 | ||||||||||||||||||||||
Currency impact | (2.3 | ) | (19.5 | ) | ||||||||||||||||||||
Consolidated reported GAAP operating income | $447.8 | |||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||
(millions) | Fixed Currency | Impact of Acquisitions and Divestitures | Acquisition Adjusted | Fixed Currency | Impact of Acquisitions and Divestitures | Acquisition Adjusted | ||||||||||||||||||
Global Industrial | $2,989.3 | ($59.3 | ) | $2,930.0 | ( | ) | ||||||||||||||||||
Global Institutional & Specialty | 1,837.4 | (6.0 | ) | 1,831.4 | 1,820.2 | - | 1,820.2 | |||||||||||||||||
597.2 | (9.1 | ) | 588.1 | 578.2 | (0.6 | ) | 577.6 | |||||||||||||||||
Other | 577.9 | - | 577.9 | 528.7 | - | 528.7 | ||||||||||||||||||
Corporate | 68.2 | (68.2 | ) | - | 12.3 | (12.3 | ) | - | ||||||||||||||||
Subtotal at fixed currency rates | 6,070.0 | (142.6 | ) | 5,927.4 | 5,902.9 | (49.6 | ) | 5,853.3 | ||||||||||||||||
Currency impact | (22.3 | ) | (196.6 | ) | ||||||||||||||||||||
Consolidated reported GAAP net sales | $6,047.7 | |||||||||||||||||||||||
Operating Income | ||||||||||||||||||||||||
Global Industrial | $482.5 | ($2.4 | ) | $480.1 | ( | ) | ||||||||||||||||||
Global Institutional & Specialty | 201.7 | 1.6 | 203.3 | 145.7 | - | 145.7 | ||||||||||||||||||
93.9 | 0.2 | 94.1 | 93.0 | (0.1 | ) | 92.9 | ||||||||||||||||||
Other | 84.2 | - | 84.2 | 42.6 | - | 42.6 | ||||||||||||||||||
Corporate | (60.7 | ) | - | (60.7 | ) | (61.8 | ) | - | (61.8 | ) | ||||||||||||||
Adjusted at fixed currency rates | 801.6 | (0.6 | ) | 801.0 | 716.9 | (2.5 | ) | 714.4 | ||||||||||||||||
Special (gains) and charges | 53.7 | 121.4 | ||||||||||||||||||||||
Reported OI at fixed currency rates | 747.9 | 595.5 | ||||||||||||||||||||||
Currency impact | (2.8 | ) | (27.3 | ) | ||||||||||||||||||||
Consolidated reported GAAP operating income | $745.1 |
SUPPLEMENTAL NON-GAAP RECONCILIATIONS
Selected Cash Flow items - continuing operations | Second Quarter Ended | |||||||
(millions) | 2021 | 2020 | ||||||
Cash provided by operating activities | $503.0 | $331.9 | ||||||
Less: Capital expenditures | (143.5 | ) | (102.9 | ) | ||||
Free cash flow | $359.5 | $229.0 |
SUPPLEMENTAL DILUTED EARNINGS PER SHARE INFORMATION
(unaudited)
The table below provides a reconciliation of diluted earnings per share from continuing operations, as reported, to the non-GAAP measure of adjusted diluted earnings per share from continuing operations.
First | Second | Six | Third | Nine | Fourth | |||||||||||||||||||||||
Quarter | Quarter | Months | Quarter | Months | Quarter | Year | ||||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||||||
2020 | 2020 | 2020 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||||
Diluted earnings per share, as reported (U.S. GAAP) | ||||||||||||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||||||
Special (gains) and charges (1) | 0.06 | 0.29 | 0.35 | 0.34 | 0.69 | 0.19 | 0.88 | |||||||||||||||||||||
Discrete tax expense (benefits) (2) | (0.07 | ) | (0.08 | ) | (0.15 | ) | (0.04 | ) | (0.20 | ) | 0.00 | (0.19 | ) | |||||||||||||||
Adjusted diluted earnings per share (Non-GAAP) |
First | Second | Six | Third | Nine | Fourth | |||||||||||||
Quarter | Quarter | Months | Quarter | Months | Quarter | Year | ||||||||||||
Ended | Ended | Ended | Ended | Ended | Ended | Ended | ||||||||||||
2021 | 2021 | 2021 | 2021 | 2021 | 2021 | 2021 | ||||||||||||
Diluted earnings per share, as reported (U.S. GAAP) | $0.67 | $1.08 | $1.75 | |||||||||||||||
Adjustments: | ||||||||||||||||||
Special (gains) and charges (3) | 0.08 | 0.12 | 0.20 | |||||||||||||||
Discrete tax expense (benefits) (4) | 0.06 | 0.02 | 0.08 | |||||||||||||||
Adjusted diluted earnings per share (Non-GAAP) | $0.81 | $1.22 | $2.03 |
Per share amounts do not necessarily sum due to changes in shares outstanding and rounding.
(1) Special (gains) and charges for 2020 includes charges of
(2) Discrete tax expenses (benefits) for 2020 includes
(3) Special (gains) and charges for 2021 includes charges of
(4) Discrete tax expenses (benefits) for 2021 includes
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Source:
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