Ecolab Reports Strong Third Quarter 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)--Oct. 21, 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 THIRD QUARTER HIGHLIGHTS: -- 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 +18% to $0.33 -- 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% from ongoing operations to $0.32 -- Record sales +10% to $983 million -- Strong International profit growth and continued domestic sales gains lead the quarter -- 2003 full year diluted net income per share expected to rise double-digits; ongoing operations EPS expected to rise 10% to 12% to $1.01-$1.03 range
Third Quarter and Nine
Months Ended September 30
----------------------------
Third Quarter Nine Months
------------- -------------
2003 2002 2003 2002
------ ------ ------ ------
(Diluted earnings per share)
Pro forma income from ongoing operations $0.32 $0.28 $0.78 $0.70
Pro forma adjustments
Gain from sale of equity investment 0.02 - 0.02 -
One-time gain from benefit plan changes - - - 0.01
Special charges (0.01) (0.01) - (0.09)
Adoption of SFAS No. 142 - transition
impairment charge - - - (0.02)
Discontinued operations - - - 0.01
Net income, as reported $0.33 $0.28 $0.80 $0.61
Per share amounts have been retroactively adjusted for the two-for-one
stock split paid June 6, 2003. Per share amounts do not necessarily
sum due to changes in shares outstanding and rounding. The non-GAAP
financial measures in the table above are provided to assist in the
reader's understanding of the comparability of the company's
operations for 2002 and 2003. Income for the third quarter and nine
months ended September 30, 2003 included a gain on the sale of an
equity investment and special charges.
Income for 2002 was reduced by several unusual items. See the attached
schedule of "Supplemental 2002 Diluted Earnings per Share
Information."
Strong international profit growth and continued domestic sales gains, along with favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. currency trends and a lower effective tax rate, propelled results in Ecolab's third quarter ended September September: see month. 30, 2003 as diluted net income per share rose 18% to $0.33 per share. (All share and per share results discussed in this release are adjusted to reflect the company's two-for-one stock split paid June June: see month. 6, 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 10% to a record $983 million in 2003's third quarter. Net income rose 21% to a record $87 million. Third quarter net income included an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain of $6.2 million on the previously announced sale of an equity interest in Comac (a floor machine manufacturer based in Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. ) and special charges. The special charges include approximately $1.7 million of after-tax expense related to a change in the amount of goodwill allocated to the Darenas business (a janitorial distribution business based in the United Kingdom) which was sold earlier this year and $0.3 million of after-tax reductions in restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). expense. 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 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 , adjusted for the gain and special charges, was $0.32 for the third quarter and increased 14 percent over last year's $0.28 per share. (See the schedule of "Supplemental 2002 Diluted Earnings per Share Information" located at the end of this news release.) Currency translation had a favorable impact on net income of approximately $4 million for the third quarter of 2003. 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, "Third quarter earnings from ongoing operations came in at the top end of our $0.30-$0.32 forecast. We worked hard in the quarter against continued tough market conditions to produce improved sales and a healthy earnings performance, led by our 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. . Our focus on leveraging our broad market opportunities while improving operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in these challenging times demonstrates again the strength and balance of our business and strategy, and the commitment of our people to get the job done. "We are confident in our outlook for solid earnings gains in the fourth quarter, which would yield another year of double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. sales and earnings growth in 2003. We are determined to do what it takes to ensure our strong growth trends will continue for years to come, as we invest and drive results in our established businesses while at the same time continue to invest and build our developing businesses' long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth and profit potential. We remain dedicated in our efforts to build on and improve the levels of performance that made us the global leader, and you can be assured this commitment will continue in 2004 -- and beyond." Third 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 4% to $445 million, as good gains in Kay KAY Kick Ass Year KAY Kansas Association of Youth and Professional Products led growth. 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 3% to $82 million as the benefits of new products and cost efficiencies were partially offset by higher operating costs operating costs npl → gastos mpl operacionales and sales force investments and training. United States Other Services sales increased 2% to $83 million in the third quarter. Operating income declined 19% to $9 million. Continued good growth 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 the transition to a new centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. administration center adversely affected results. Sales of Ecolab's International Cleaning & Sanitizing operations rose 5% to $400 million in the third quarter when measured at fixed currency rates. Excluding acquisitions and divestitures, sales rose 2%. 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 double-digit growth. Europe's sales results strengthened moderately, while Asia Pacific sales were flat. Fixed currency operating income rose 17% to $49 million as margins increased through improved business mix as well as careful management of costs. At public currency rates, International Cleaning and Sanitizing sales increased 17% and operating income grew 31%. Ecolab reacquired 2.7 million shares of its common stock during the third 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, divestitures 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" at the end of this release. Ecolab expects sales for both domestic and international operations (in fixed currencies) to increase in the fourth quarter 2003 over the fourth quarter 2002. Gross margins are expected to be in the 51% range, and selling, general and administrative expenses are expected to be around 38% of sales. Interest expense is expected to be approximately $11 million. The effective tax rate should be approximately 39%. Overall, currency translation is expected to contribute to fourth quarter earnings. Earnings per share from ongoing operations are expected to be in the $0.23-$0.25 range in the fourth quarter. With 2002 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 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. , 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 third quarter earnings announcement today at 1:00 p.m. Eastern 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 October October: see month. 31, 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/download/default.asp. This news release contains various "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. " 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 fourth quarter and full year financial and business prospects, including estimated gross margins, S, G & A expenses, interest expense, tax rates and currency translation for the fourth quarter 2003. 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 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
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2003
(unaudited)
Third Quarter Nine Months
------------------- -----------------------
(thousands, except per
share) 2003 2002 2003 2002
--------- --------- ----------- -----------
Net Sales $982,766 $894,866 $2,805,353 $2,520,205
Cost of Sales (a) 478,163 434,195 1,375,379 1,243,565
Selling, General and
Administrative Expenses 357,923 327,666 1,060,739 947,974
Special Items (b) 1,224 2,109 880 26,223
--------- --------- ----------- -----------
Operating Income 145,456 130,896 368,355 302,443
Gain on Sale of Equity
Investment 10,877 - 10,877 -
Interest Expense, Net 12,051 10,988 34,506 33,455
--------- --------- ----------- -----------
Income from Continuing
Operations before Income
Taxes 144,282 119,908 344,726 268,988
Provision for Income Taxes 56,843 47,826 134,814 108,204
--------- --------- ----------- -----------
Income from Continuing
Operations before
Cumulative Effect of
Change in Accounting 87,439 72,082 209,912 160,784
Change in Accounting for
Goodwill and Other
Intangible Assets - - - (4,002)
Gain from Discontinued
Operations - - - 1,882
--------- --------- ----------- -----------
Net Income $87,439 $72,082 $209,912 $158,664
========= ========= =========== ===========
Diluted Income per Common
Share
Income from Continuing
Operations $0.33 $0.28 $0.80 $0.62
Change in Accounting
for Goodwill - - - (0.02)
Gain from Discontinued
Operations - - - 0.01
Net Income $0.33 $0.28 $0.80 $0.61
Weighted-Average Common
Shares Outstanding
Basic 258,694 258,575 260,129 257,732
Diluted 261,609 261,223 263,378 261,126
(a) Cost of sales includes special charges (income) of $301 for the
third quarter ended September 30, 2002 and $(45) and $7,393 for the
nine months ended September 30, 2003 and 2002, respectively.
(b) Special items includes revisions to reduce prior restructuring
expenses of $448 for the third quarter ended September 30, 2003 and
$792 for the nine months ended September 30, 2003. It also includes
expense of $1,672 related to a change in the amount of goodwill
allocated to a business sold earlier in the year.
All per share and number of share data has been retroactively adjusted
for the company's two- for-one stock split paid June 6, 2003, except
for the Consolidated Statement of Shareholders' Equity.
ECOLAB INC.
OPERATING SEGMENT INFORMATION
THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2003
(unaudited)
Third Quarter Nine Months
------------------- -----------------------
(thousands) 2003 2002 2003 2002
--------- --------- ----------- -----------
Net Sales
United States
Cleaning & Sanitizing $444,791 $426,339 $1,292,991 $1,220,801
Other Services 83,497 81,629 239,789 230,943
--------- --------- ----------- -----------
Total 528,288 507,968 1,532,780 1,451,744
International Cleaning &
Sanitizing 399,967 380,328 1,150,121 1,094,412
Effect of Foreign
Currency Translation 54,511 6,570 122,452 (25,951)
--------- --------- ----------- -----------
Consolidated $982,766 $894,866 $2,805,353 $2,520,205
========= ========= =========== ===========
Operating Income
United States
Cleaning & Sanitizing $82,472 $80,361 $224,321 $214,280
Other Services 8,755 10,761 19,187 25,247
--------- --------- ----------- -----------
Total 91,227 91,122 243,508 239,527
International Cleaning &
Sanitizing 48,694 41,711 112,558 98,473
Corporate Expense (a) (1,184) (2,411) (836) (33,617)
Effect of Foreign
Currency Translation 6,719 474 13,125 (1,940)
--------- --------- ----------- -----------
Consolidated $145,456 $130,896 $368,355 $302,443
========= ========= =========== ===========
(a) Consistent with the company's internal management reporting,
corporate expense includes special items to reduce prior restructuring
expenses of $448 for the third quarter ended September 30, 2003 and
$837 for the nine months ended September 30, 2003. It also includes
expense of $1,672 related to a change in the amount of goodwill
allocated to a business sold earlier this year. In 2002, corporate
expense included special items of $2,411 for the third quarter ended
September 30, 2002 and $39,407 for the nine months ended September 30,
2002. Corporate expense also includes a curtailment gain of $5,791 for
the nine months ended September 30, 2002.
ECOLAB INC.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2003
September 30 December 31 September 30
(thousands) 2003 2002 2002
------------ ----------- ------------
(unaudited) (unaudited)
Assets
Current assets
Cash and cash equivalents $66,962 $49,205 $95,462
Accounts receivable, net 649,841 553,154 571,406
Inventories 313,668 291,506 296,295
Deferred income taxes 73,925 71,147 60,099
Other current assets 51,492 50,925 49,365
------------ ----------- ------------
Total current assets 1,155,888 1,015,937 1,072,627
Property, plant and equipment,
net 693,355 680,265 657,820
Goodwill, net 744,217 695,700 650,100
Other intangible assets, net 198,617 188,670 182,469
Other assets, net 272,770 285,335 202,566
------------ ----------- ------------
Total assets $3,064,847 $2,865,907 $2,765,582
============ =========== ============
Liabilities and Shareholders'
Equity
Current liabilities
Short-term debt $75,375 $160,099 $132,350
Accounts payable 209,528 205,665 205,391
Compensation and benefits 168,951 184,239 157,437
Income taxes 90,710 12,632 36,081
Other current liabilities 324,837 291,193 311,089
------------ ----------- ------------
Total current liabilities 869,401 853,828 842,348
Long-term debt 573,963 539,743 539,636
Postretirement health care
and pension benefits 219,875 207,596 206,373
Other liabilities 169,764 164,989 124,536
Shareholders' equity 1,231,844 1,099,751 1,052,689
------------ ----------- ------------
Total liabilities and
shareholders' equity $3,064,847 $2,865,907 $2,765,582
============ =========== ============
ECOLAB INC.
SUPPLEMENTAL 2002 DILUTED EARNINGS PER SHARE INFORMATION
(unaudited)
Six Nine
Quarter Quarter Months Quarter Months Quarter Year
Ended Ended Ended Ended Ended Ended Ended
March June June Sept. Sept. Dec. Dec.
31 30 30 30 30 31 31
2002 2002 2002 2002 2002 2002 2002
------- --------------- --------------- ------- ------
Pro forma
income from
ongoing
operations $0.18 $0.23 $0.42 $0.28 $0.70 $0.22 $0.92
Pro forma
adjustments:
One-time gain
from benefit
plan changes 0.01 0.01 0.01 0.01
Special
restructuring
and merger
integration
charges (0.06) (0.03) (0.09) (0.01) (0.09) (0.03) (0.12)
Adoption of
SFAS No. 142
- transitional
impairment
charge (0.02) (0.02) (0.02) (0.02)
Discontinued
operations 0.01 0.01 0.01 0.01
------- ------- ------- ------- ------- ------- ------
Net income, as
reported $0.13 $0.20 $0.33 $0.28 $0.61 $0.19 $0.80
======= ======= ======= ======= ======= ======= ======
Per share amounts do not necessarily sum due to changes in shares
outstanding and rounding.
The non-GAAP financial measures in the table above 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 four unusual items during 2002 impacted the company's
reported net income (see "pro forma adjustments" in table above). The
presentation above reconciles as reported net income (U.S. GAAP
amounts) to pro forma income from ongoing operations for the full year
and quarters and interim year-to-date periods ended March 31, June 30,
September 30 and December 31, 2002. The information was originally
presented in the company's 2002 quarterly earnings releases and
reflects the impact of the company's two-for-one stock split paid June
6, 2003.
The pro forma information should not be construed as an alternative to
reported results under U.S. GAAP.
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion