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Ecolab (ECL) Q4 Earnings In Line With Estimates, Revenues Lag

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Ecolab Inc. (ECL - Free Report) reported fourth-quarter 2020 adjusted earnings per share (EPS) of $1.23, which were in line with the Zacks Consensus Estimate. However, the bottom line declined 15.2% on a year-over-year basis.

The year-over-year decline in the bottom line was due to COVID-associated volume declines, unfavorable business mix and investments in the business, which more than offset favorable pricing, lower variable compensation and cost-saving initiatives.

For 2020, the company reported adjusted EPS of $4.02, down 21.5% from that reported in 2019. The figure also missed the consensus mark by 0.2%.

Revenue Details

This Zacks Rank #2 (Buy) company’s quarterly net sales were 3.07 billion, down 5.5% from the year-ago figure. Also, the top line missed the Zacks Consensus Estimate by 1%.

For 2020, the company reported net sales of $11.79 billion, down 6% from the previous year. The figure also missed the consensus mark by 0.9%.

Segmental Analysis

With effect from the first quarter of 2020, the company has made modifications to the way it reports through its segments, as discussed below.

Global Industrial

Sales at the segment fell 1.9% year over year to $1.55 billion. Substantial decrease in Downstream sales and a decline in Water more than offset modest sales growth in Food & Beverage and Paper.

Global Institutional & Specialty

Sales plunged 21.9% year over year to $881.4 million owing to a steep decline in the Institutional business and a modest decrease in Specialty sales.

Ecolab Inc. Price, Consensus and EPS Surprise

 

Ecolab Inc. Price, Consensus and EPS Surprise

Ecolab Inc. price-consensus-eps-surprise-chart | Ecolab Inc. Quote

Global Healthcare and Life Sciences

Sales at the segment improved 23% year over year to $314.1 million, courtesy of higher sales owing to the coronavirus-related demand in both the Healthcare and Life Sciences business lines.

Other

Sales declined 8.1% year over year to $282.9 million.

Margin Analysis

Ecolab reported adjusted gross profit of $1.29 billion, down 12.6% year over year. As a percentage of revenues, adjusted gross margin in the fourth quarter was 42%, down 270 basis points (bps).

Adjusted operating income in the quarter was $479.1 million, down 16% year over year. Adjusted operating margin in the quarter was 15.6%, which contracted 180 bps year over year.

Guidance

The company has not issued either quarterly or 2021 outlook due to the continued uncertainty surrounding the COVID-19 pandemic and the full scope of its impact on the global economy and duration of the same.

Full-year 2021 sales at the Healthcare & Life Sciences segment are anticipated to exhibit moderate improvement compared with the previous year’s solid growth. Both Industrial segment business and Institutional and Other segment sales are projected to show substantial growth on a year-over-year basis in 2021.

Per management, the pandemic will continue to remain a key economic factor throughout 2021, especially in the early part of the year.

Wrapping Up

Ecolab exited the fourth quarter on a mixed note. The company witnessed weak performance across Global Industrial and Global Institutional business segments in the quarter under review. Contraction in both gross and operating margins raises concern.

Nonetheless, the company displayed substantial sequential improvement despite the COVID-19 impact on its business segments. Moreover, Ecolab’s Global Healthcare and Life Sciences segment exhibited solid performance.

Earnings of Other MedTech Majors at a Glance

A few top-ranked stocks in the broader medical space that have already announced their quarterly results are Hologic, Inc. (HOLX - Free Report) , Abbott Laboratories (ABT - Free Report) and AngioDynamics, Inc. (ANGO - Free Report) . While Hologic sports a Zacks Rank of 1 (Strong Buy), both Abbott and AngioDynamics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, which surpassed the Zacks Consensus Estimate by 33.6%.    

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.

AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.

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