Ecolab Reports Double-Digit First Quarter 2003 EPS Gain; Continues to expect full year 2003 EPS to increase double-digits.Business Editors ST. PAUL St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery , Minn.--(BUSINESS WIRE)--April 22, 2003 Ecolab Ecolab, Inc., is a St. Paul, Minnesota based sanitation supply company founded in 1923. It was named "Economics Laboratory" before its name was changed to Ecolab in 1986. , Inc.(NYSE NYSE See: New York Stock Exchange :ECL (Emitter-Coupled Logic) A digital circuit composed of bipolar transistors in which the emitter ends are wired together. ECL gates switch faster than TTL gates, but consume more power. See TTL, I2L and bipolar. 1. ): 2003 FIRST QUARTER HIGHLIGHTS: ------------------------------ -- Record sales +11% to $876 million -- Record diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income per share $0.42, +56% -- Diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. +14% when compared to 2002 pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma EPS from ongoing operations -- Growth from foodservice The foodservice (or food service) industry (US English; catering industry in British English) encompasses those places, institutions, and companies responsible for any meal eaten away from home. markets leads global growth
First Quarter Ended March 31
-------------------------------
(Millions, except per share)
2003 2002 % Increase
------- ------- ----------
Net Sales $875.9 $786.1 11%
Operating Income $101.5 $ 72.9 39%
Pretax Income $ 90.8 $ 62.4 46%
Taxes 35.5 25.4 40
------- ------- ----------
Income from Continuing Operations
before Change in Accounting for
Goodwill $ 55.3 $ 37.0 49%
Change in Accounting for Goodwill (4.0)
Gain from Discontinued Operations 1.9
------- ------- ---------
Net Income $ 55.3 $ 34.9 58%
======= ======= =========
Diluted Income Per Common Share
Income from Continuing Operations
before Change In Accounting for
Goodwill $ 0.42 $ 0.28 50%
Change in Accounting for Goodwill - (0.03) -
Gain from Discontinued Operations - 0.01 -
Net Income $ 0.42 $ 0.27 56%
Diluted Average Shares Outstanding 131.8 130.2 1%
Per share amounts do not necessarily sum due to rounding.
Income for the first quarter of last year was reduced by several
unusual items. See the schedule of "Supplemental 2002 Diluted
Earnings Per Share Information."
Leveraging the continuing growth trends of global foodservice customers, Ecolab's first quarter more than offset slowing economic activity as diluted net income per share increased 56% to $0.42 for the quarter ended March 31, 2003. Ecolab's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: sales increased 11% to a record $876 million in 2003's first quarter. Net income rose 58% to a record $55 million. Diluted net income per share of $0.42 for the first quarter of 2003 increased 14 percent over last year's $0.37 pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share from ongoing operations. (Details are in the schedule "Supplemental 2002 Diluted Earnings Per Share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of Information" located at the end of this news release.) The increase in net income reflected higher sales volume and good cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. . Currency translation had a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact on net income of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2 million. Commenting on the quarter, Allan L. Schuman Allan L. Schuman, age 71, is the former CEO of Ecolab, Inc. He resigned as chairman of the board in May 2006 and was named chairman emeritus, an honorary position. He worked at Ecolab for 49 years. Mr. , Ecolab's Chairman and Chief Executive Officer said, "We are very pleased with the first quarter's results. We posted good growth in our core businesses, offsetting the effects of the soft global economies. This was accomplished through the very committed and aggressive efforts of our associates, who relentlessly pursued new accounts, utilizing an array of new products and services, focusing on new solutions for customer problems, and leveraging the diversity of our customer base to outperform Outperform An analyst recommendation meaning a stock is expected to do slightly better than the market return. Notes: Exact definitions vary by brokerage, but in general this rating is better than neutral and worse than buy or strong buy. economic uncertainty to achieve their targeted results. "While 2003 may hold economic challenges, we are committed to achieving our goals and continuing our history of outperformance. We have substantial opportunities to grow share in our core operations, we have introduced a series of new businesses which we are developing and which have solid growth prospects, and we are actively pursuing new opportunities to add to our portfolio. Further, we are continuing to aggressively seek out new accounts in all of our areas, and develop new products and services to meet our existing customer needs. We continue to develop and expand Ecolab's range of premium service solutions, as well as enhance our growth prospects for 2003 and the future. We are a company that is clearly focused on superior performance, both for our customers and our shareholders, and are working very aggressively to deliver the results." First quarter sales for Ecolab's United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Cleaning & Sanitizing operations rose 6% over the first quarter of 2002 to $417 million, led by solid gains in Institutional, Kay KAY Kick Ass Year KAY Kansas Association of Youth and Professional Products operations. Ecolab's United States Cleaning & Sanitizing operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. rose 8% to $70 million, reflecting the higher sales, new products, aggressive sales efforts and close attention to costs. United States Other Services sales increased 4% to $73 million in the first quarter. Operating income in the first quarter of 2003 declined 31% to $4 million. An improved performance by Pest Elimination was offset by GCS GCS Glasgow Coma Scale GCS Guilford County Schools (North Carolina) GCS Ground Control Station GCS Grand Central Station GCS Ground Control System GCS Ground Combat Systems GCS Group Communication Systems , where soft sales and the focus on infrastructure development for future growth impacted results. Sales of Ecolab's International Cleaning & Sanitizing operations rose 6% in the first quarter when measured at fixed currency rates. Excluding acquisitions and divestitures, sales rose 3%. Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. sales showed strong growth, though much of that was offset by the impact of turmoil in Venezuela Venezuela (vĕnəzwā`lə, Span. vānāswā`lä), officially the Bolivarian Republic of Venezuela, republic (2005 est. pop. 25,375,000), 352,143 sq mi (912,050 sq km), N South America. . Fixed currency operating income rose a strong 20% to $26 million. The income improvement was due to cost controls and the higher sales volumes. Excluding acquisitions and divestitures, fixed currency International operating income increased 33%. Ecolab reacquired 180,000 shares of its common stock during the first quarter. Business Outlook The following statements are based on current expectations. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , and actual results may differ materially. These statements do not include the potential impact of business acquisitions or other material corporate transactions, which may be completed after the date of this release. This Business Outlook section should be read in conjunction with the information on "Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " at the end of this release. Ecolab expects sales for both domestic and international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. (in fixed currencies) to increase in the second quarter 2003 over the second quarter 2002. Gross margins are expected to remain steady when compared with last year's second quarter in the 51% range, and selling, general and administrative expenses are expected to be similar to last year's 38% of sales. Interest expense is likely to be in the $11-$12 million area. The effective tax rate should be around 39%. Overall, currency translation is expected to contribute to second quarter earnings. Earnings per share are expected to be in the $0.48-$0.52 range in the second quarter. Full year earnings per share continue to be expected to rise 10% - 13% to the $2.05 area. With sales of $3.4 billion, Ecolab is a global developer and marketer of premium cleaning, sanitizing, pest elimination, maintenance and repair products for the hospitality, foodservice, institutional and industrial markets. Ecolab shares are traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. and the Pacific Exchange under the symbol ECL. Ecolab news releases and other investor information are available on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.ecolab.com. Ecolab will host a live webcast to review the first quarter earnings announcement today at 1:00 p.m. Eastern Daylight For other uses, see Daylight (disambiguation). Daylight or the light of day is the combination of all direct and indirect sunlight outdoors during the daytime (and perhaps twilight). Time. The webcast will be available to the public on Ecolab's website at http://www.ecolab.com/investor. A replay of the webcast will be available at that site through May 2, 2003. Listening to the webcast requires Internet access See how to access the Internet. , a soundcard soundcard Noun a printed circuit board inserted into a computer, enabling the output and manipulation of sound and the Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. or other compatible streaming media player See digital media hub. . If you do not have the Media Player client installed on your PC, you may download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. a free version of Media Player at http://www.microsoft.com/windows/windowsmedia/players.asp. This news release contains various "Forward-Looking Statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These include statements concerning our 2003 second quarter and full year financial and business prospects. These statements, which represent Ecolab's expectations or beliefs concerning various future events, are based on current expectations that involve a number of risks and uncertainties that could cause actual results to differ materially from those of such Forward-Looking Statements. These risks and uncertainties include: the vitality vi·tal·i·ty n. 1. The capacity to live, grow, or develop. 2. Physical or intellectual vigor; energy. of the foodservice, hospitality, and travel industries; restraints on pricing flexibility due to competitive factors and customer and vendor consolidations; changes in oil or raw material prices or unavailability un·a·vail·a·ble adj. Not available, accessible, or at hand. un  a·vail of adequate and reasonably priced raw materials; the occurrence of
capacity constraints CONSTRAINTS - A language for solving constraints using value inference.["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. or the loss of a key supplier; the effect of future acquisitions or divestitures or other corporate transactions; the company's ability to achieve plans for past acquisitions; the costs and effects of complying with: (i) laws and regulations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the environment and to the manufacture, storage, distribution, efficacy efficacy /ef·fi·ca·cy/ (ef´i-kah-se) 1. the ability of an intervention to produce the desired beneficial effect in expert hands and under ideal circumstances. 2. and labeling of the company's products and (ii) changes in tax, fiscal, governmental and other regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. policies; economic factors such as the worldwide economy, interest rates and currency movements, including, in particular, the company's exposure to foreign currency risk; the occurrence of (a) litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. or claims, (b) the loss or insolvency insolvency Condition in which liabilities exceed assets so that creditors cannot be paid. It is a financial condition that often precedes bankruptcy. In the context of equity, insolvency is the inability to pay debts as they become due; insolvency under the balance-sheet of a major customer or distributor, (c) war, (d) natural or manmade disasters (including material acts of terrorism or other hostilities hos·til·i·ty n. pl. hos·til·i·ties 1. The state of being hostile; antagonism or enmity. See Synonyms at enmity. 2. a. A hostile act. b. hostilities Acts of war; overt warfare. which impact the company's markets) and, (e) severe weather conditions or public health epidemics This article is a list of major epidemics. Worldwide Pandemics
ECOLAB INC.
CONSOLIDATED STATEMENT OF INCOME
FIRST QUARTER ENDED MARCH 31, 2003
(unaudited)
First Quarter
-------------------
(thousands, except per share) 2003 2002
--------- ---------
Net Sales $875,852 $786,109
Cost of Sales (a) 430,482 395,945
Selling, General and Administrative Expenses 344,033 304,945
Special Charges (Income) (197) 12,296
--------- ---------
Operating Income 101,534 72,923
Interest Expense, Net 10,703 10,512
--------- ---------
Income from Continuing Operations before Income
Taxes 90,831 62,411
Provision for Income Taxes 35,513 25,370
--------- ---------
Income from Continuing Operations before
Cumulative Effect of Change in Accounting 55,318 37,041
Change in Accounting for Goodwill and Other
Intangible Assets - (4,002)
Gain from Discontinued Operations - 1,882
--------- ---------
Net Income $55,318 $34,921
========= =========
Diluted Income per Common Share
Income from Continuing Operations $0.42 $0.28
Change in Accounting for Goodwill - (0.03)
Gain from Discontinued Operations - 0.01
Net Income $0.42 $0.27
Weighted-Average Common Shares Outstanding
Basic 130,224 128,406
Diluted 131,818 130,180
(a) Cost of sales includes special charges or (income) of ($45) and
$5,184 for the first quarter ended March 31, 2003 and 2002,
respectively.
Per share amounts do not necessarily sum due to changes in shares
outstanding and rounding.
ECOLAB INC.
OPERATING SEGMENT INFORMATION
FIRST QUARTER ENDED MARCH 31, 2003
(unaudited)
First Quarter
-------------------
(thousands) 2003 2002
--------- ---------
Net Sales
United States
Cleaning & Sanitizing $417,299 $392,349
Other Services 73,329 70,490
--------- ---------
Total 490,628 462,839
International Cleaning
& Sanitizing 360,558 340,933
Effect of Foreign
Currency Translation 24,666 (17,663)
--------- ---------
Consolidated $875,852 $786,109
========= =========
Operating Income
United States
Cleaning & Sanitizing $69,906 $64,940
Other Services 3,647 5,262
--------- ---------
Total 73,553 70,202
International Cleaning
& Sanitizing 25,717 21,402
Corporate Expense(a) 242 (17,480)
Effect of Foreign
Currency Translation 2,022 (1,201)
--------- ---------
Consolidated $101,534 $72,923
========= =========
(a)Consistent with the company's internal management reporting,
corporate expense includes special charges or (income) of ($242)
and $23,271 for the first quarter ended March 31, 2003 and 2002,
respectively.
Corporate expense also includes a curtailment gain of $5,791 for
the first quarter ended March 31, 2002.
ECOLAB INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 2003
March 31 December 31 March 31
(thousands) 2003 2002 2002
----------- ----------- -----------
(unaudited) (unaudited)
Assets
Current assets
Cash and cash equivalents $56,554 $49,205 $30,232
Accounts receivable, net 594,433 553,154 539,350
Inventories 311,077 291,506 278,298
Deferred income taxes 75,276 71,147 54,687
Other current assets 62,296 50,925 44,682
----------- ----------- -----------
Total current assets 1,099,636 1,015,937 947,249
Property, plant and equipment, net 694,729 680,265 636,058
Goodwill, net 734,671 695,700 598,327
Other intangible assets, net 204,438 188,670 167,155
Other assets, net 291,698 297,857 192,587
----------- ----------- -----------
Total assets $3,025,172 $2,878,429 $2,541,376
=========== =========== ===========
Liabilities and Shareholders'
Equity
Current liabilities
Short-term debt $164,234 $160,099 $211,009
Accounts payable 207,303 205,665 194,698
Compensation and benefits 149,340 184,239 121,369
Income taxes 40,266 12,632 17,323
Other current liabilities 323,524 303,715 286,426
----------- ----------- -----------
Total current liabilities 884,667 866,350 830,825
Long-term debt 569,296 539,743 505,916
Postretirement health care
and pension benefits 213,133 207,596 182,572
Other liabilities 160,144 164,989 115,525
Shareholders' equity 1,197,932 1,099,751 906,538
----------- ----------- -----------
Total liabilities and
shareholders' equity $3,025,172 $2,878,429 $2,541,376
=========== =========== ===========
ECOLAB INC.
SUPPLEMENTAL 2002 DILUTED EARNINGS PER SHARE INFORMATION
(unaudited)
Quarter Quarter Quarter Quarter Year
Ended Ended Ended Ended Ended
March 31 June 30 Sept. 30 Dec. 30 Dec. 31
2002 2002 2002 2002 2002
-------- ------- -------- ------- -------
Pro forma income from ongoing
operations $0.37 $0.46 $0.56 $0.45 $1.84
Pro forma adjustments:
One-time gain from benefit
plan changes 0.03 0.03
Special restructuring and
merger integration charges (0.11) (0.07) (0.01) (0.06) (0.25)
Adoption of SFAS No. 142 -
transitional impairment
charge (0.03) (0.03)
Discontinued operations 0.01 0.01
-------- ------- -------- ------- -------
Net income, as reported $0.27 $0.40 $0.55 $0.39 $1.60
======== ======= ======== ======= =======
Per share amounts do not necessarily sum due to changes in shares
outstanding and rounding.
The non-GAAP financial measures in the foregoing table are provided to
assist in the reader's understanding of the comparability of the
company's operations for 2003 and 2002. The company believes that
2002 pro forma income from ongoing operations, a non-GAAP financial
measure, is a useful basis to compare the company's 2003 results
against, because certain unusual items during 2002 impacted the
company's reported net income. The following presentation reconciles
as reported net income (U.S. GAAP amounts) to pro forma income from
ongoing operations for the full year and quarters ended March 31,
June 30, September 30 and December 31, 2002.
The information was originally presented in the company's 2002
quarterly earnings releases.
The pro forma information should not be construed as an alternative to
reported results under U.S. GAAP.
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