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Ecolab Inc. (ECL - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.55, up 22% year over year. The bottom line exceeded the Zacks Consensus Estimate by 0.7%.
GAAP EPS for the quarter was $1.41, up 51.6% year over year.
Full-year adjusted EPS was $5.21, up 16% compared with that at the end of the comparable 2022 period. The figure surpassed the Zacks Consensus Estimate by 0.4%.
Revenue Details
Revenues grossed $3.94 billion in the reported quarter, up 7.3% year over year. The metric missed the Zacks Consensus Estimate by 0.5%.
Ecolab’s organic sales increased 6% from the prior-year period’s level.
The year-over-year uptick in the fourth-quarter organic sales was driven by double-digit growth in the Institutional & Specialty segment, Pest Elimination business and solid growth in the Industrial segment.
Full-year revenues were $15.32 billion, reflecting a 7.9% improvement from the comparable 2022 period. The figure lagged the Zacks Consensus Estimate by 0.2%.
Segmental Analysis
The Global Industrial segment’s fixed currency sales of $1.87 billion reflect 3.5% reported growth year over year. Organic sales increased 3% year over year, driven by robust growth in Water and Food & Beverage. This more than offset the expected short-term decline in Paper sales, which continued to be impacted by soft industry demand.
The Global Institutional & Specialty arm’s fixed currency sales of $1.29 billion reflect reported growth of 13.3%. Organic sales increased 12% year over year, with both the Institutional and Specialty divisions growing double digits, driven by robust pricing and new business gains.
The Global Healthcare and Life Sciences arm’s fixed currency sales of $410.1 million declined 0.7%, while organic sales were down 1%. Per management, year-over-year organic sales were stable as continued solid growth in Healthcare largely offset the expected decline in Life Sciences. Life Sciences’ underlying performance remained stable as new business wins and pricing were more than offset by comparisons to 2022’s strong growth.
The Other segment’s fixed currency sales of $370.1 million improved 7.8% on a reported basis. Organic sales growth was 8%, driven by double-digit growth in Pest Elimination.
In the quarter under review, Ecolab’s gross profit improved 16.8% to $1.65 billion. The gross margin expanded 342 basis points (bps) to 41.9%.
Selling, general and administrative expenses rose 12.2% to $1.03 billion year over year.
Adjusted operating profit totaled $619.2 million, increasing 25.3% from the prior-year quarter’s level. Adjusted operating margin in the quarter also expanded 226 bps to 15.7%.
Financial Position
Ecolab exited 2023 with cash and cash equivalents of $919.5 million compared with $598.6 million at the end of 2022. Total debt at the end of 2023 was $8.18 billion compared with $8.58 billion at 2022-end.
Cumulative net cash provided by operating activities at the end of 2023 was $2.41 billion compared with $1.79 billion a year ago.
Meanwhile, Ecolab has a consistent dividend-paying history, with a five-year annualized dividend growth of 4.08%.
Guidance
Ecolab has provided its adjusted EPS outlook for the first quarter of 2024.
The company expects its adjusted EPS in the range of $1.27-$1.37, up 44-56% from the year-ago period. The Zacks Consensus Estimate for the quarter is currently pegged at $1.13 per share.
For 2024, Ecolab expects its adjusted EPS in the range of $6.10-$6.50, up 17-25% from the comparable 2023 period. The Zacks Consensus Estimate is currently pegged at $6.08 per share.
Our Take
Ecolab exited the fourth quarter of 2023 with better-than-expected earnings. The company registered a robust year-over-year uptick in its top and bottom lines, along with solid performances across the majority of its segments. Strong pricing momentum backed by strong customer value and a strong pipeline of new breakthrough technologies were also encouraging.
The company’s innovation, digital offerings and service capabilities are expected to further solidify its footing, which is encouraging. Improvement in Ecolab’s Healthcare business, reflecting early benefits from the separation of its North America operations into two focused businesses, also looks promising. The expansion of both margins bodes well for the stock.
However, Ecolab’s lower-than-expected revenues and soft Paper sales were disappointing. The decline in Global Healthcare and Life Sciences arm’s revenues was also discouraging. The company continued to face challenging macroeconomic conditions and soft macro demand, raising our apprehension.
Zacks Rank and Key Picks
Ecolab currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cencora, Inc. (COR - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
Cencora, carrying a Zacks Rank of 2 (Buy), reported first-quarter fiscal 2024 adjusted EPS of $3.28, beating the Zacks Consensus Estimate by 14.7%. Revenues of $72.25 billion outpaced the consensus mark by 5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cencora has a long-term estimated growth rate of 8.6%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.7%.
Boston Scientific reported fourth-quarter 2023 adjusted EPS of 55 cents, beating the Zacks Consensus Estimate by 7.8%. Revenues of $3.73 billion surpassed the Zacks Consensus Estimate by 3.8%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.7%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.4%.
Cardinal Health reported second-quarter fiscal 2024 adjusted EPS of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion surpassed the Zacks Consensus Estimate by 1.1%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 15.2%. CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 15.6%.
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Ecolab (ECL) Q4 Earnings Surpass Estimates, Margins Rise
Ecolab Inc. (ECL - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.55, up 22% year over year. The bottom line exceeded the Zacks Consensus Estimate by 0.7%.
GAAP EPS for the quarter was $1.41, up 51.6% year over year.
Full-year adjusted EPS was $5.21, up 16% compared with that at the end of the comparable 2022 period. The figure surpassed the Zacks Consensus Estimate by 0.4%.
Revenue Details
Revenues grossed $3.94 billion in the reported quarter, up 7.3% year over year. The metric missed the Zacks Consensus Estimate by 0.5%.
Ecolab’s organic sales increased 6% from the prior-year period’s level.
The year-over-year uptick in the fourth-quarter organic sales was driven by double-digit growth in the Institutional & Specialty segment, Pest Elimination business and solid growth in the Industrial segment.
Full-year revenues were $15.32 billion, reflecting a 7.9% improvement from the comparable 2022 period. The figure lagged the Zacks Consensus Estimate by 0.2%.
Segmental Analysis
The Global Industrial segment’s fixed currency sales of $1.87 billion reflect 3.5% reported growth year over year. Organic sales increased 3% year over year, driven by robust growth in Water and Food & Beverage. This more than offset the expected short-term decline in Paper sales, which continued to be impacted by soft industry demand.
The Global Institutional & Specialty arm’s fixed currency sales of $1.29 billion reflect reported growth of 13.3%. Organic sales increased 12% year over year, with both the Institutional and Specialty divisions growing double digits, driven by robust pricing and new business gains.
The Global Healthcare and Life Sciences arm’s fixed currency sales of $410.1 million declined 0.7%, while organic sales were down 1%. Per management, year-over-year organic sales were stable as continued solid growth in Healthcare largely offset the expected decline in Life Sciences. Life Sciences’ underlying performance remained stable as new business wins and pricing were more than offset by comparisons to 2022’s strong growth.
The Other segment’s fixed currency sales of $370.1 million improved 7.8% on a reported basis. Organic sales growth was 8%, driven by double-digit growth in Pest Elimination.
Ecolab Inc. Price, Consensus and EPS Surprise
Ecolab Inc. price-consensus-eps-surprise-chart | Ecolab Inc. Quote
Margin Analysis
In the quarter under review, Ecolab’s gross profit improved 16.8% to $1.65 billion. The gross margin expanded 342 basis points (bps) to 41.9%.
Selling, general and administrative expenses rose 12.2% to $1.03 billion year over year.
Adjusted operating profit totaled $619.2 million, increasing 25.3% from the prior-year quarter’s level. Adjusted operating margin in the quarter also expanded 226 bps to 15.7%.
Financial Position
Ecolab exited 2023 with cash and cash equivalents of $919.5 million compared with $598.6 million at the end of 2022. Total debt at the end of 2023 was $8.18 billion compared with $8.58 billion at 2022-end.
Cumulative net cash provided by operating activities at the end of 2023 was $2.41 billion compared with $1.79 billion a year ago.
Meanwhile, Ecolab has a consistent dividend-paying history, with a five-year annualized dividend growth of 4.08%.
Guidance
Ecolab has provided its adjusted EPS outlook for the first quarter of 2024.
The company expects its adjusted EPS in the range of $1.27-$1.37, up 44-56% from the year-ago period. The Zacks Consensus Estimate for the quarter is currently pegged at $1.13 per share.
For 2024, Ecolab expects its adjusted EPS in the range of $6.10-$6.50, up 17-25% from the comparable 2023 period. The Zacks Consensus Estimate is currently pegged at $6.08 per share.
Our Take
Ecolab exited the fourth quarter of 2023 with better-than-expected earnings. The company registered a robust year-over-year uptick in its top and bottom lines, along with solid performances across the majority of its segments. Strong pricing momentum backed by strong customer value and a strong pipeline of new breakthrough technologies were also encouraging.
The company’s innovation, digital offerings and service capabilities are expected to further solidify its footing, which is encouraging. Improvement in Ecolab’s Healthcare business, reflecting early benefits from the separation of its North America operations into two focused businesses, also looks promising. The expansion of both margins bodes well for the stock.
However, Ecolab’s lower-than-expected revenues and soft Paper sales were disappointing. The decline in Global Healthcare and Life Sciences arm’s revenues was also discouraging. The company continued to face challenging macroeconomic conditions and soft macro demand, raising our apprehension.
Zacks Rank and Key Picks
Ecolab currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cencora, Inc. (COR - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Cardinal Health, Inc. (CAH - Free Report) .
Cencora, carrying a Zacks Rank of 2 (Buy), reported first-quarter fiscal 2024 adjusted EPS of $3.28, beating the Zacks Consensus Estimate by 14.7%. Revenues of $72.25 billion outpaced the consensus mark by 5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cencora has a long-term estimated growth rate of 8.6%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.7%.
Boston Scientific reported fourth-quarter 2023 adjusted EPS of 55 cents, beating the Zacks Consensus Estimate by 7.8%. Revenues of $3.73 billion surpassed the Zacks Consensus Estimate by 3.8%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.7%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.4%.
Cardinal Health reported second-quarter fiscal 2024 adjusted EPS of $1.82, beating the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion surpassed the Zacks Consensus Estimate by 1.1%. It currently carries a Zacks Rank #2.
Cardinal Health has a long-term estimated growth rate of 15.2%. CAH’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 15.6%.