$2B Acquisition Fuels Strong Earnings At Ecolab

$2B Acquisition Fuels Strong Earnings At Ecolab

Ecolab increased its full-year earnings outlook as it announced a 16 percent increase in quarterly profits.

Ecolab, Inc., on Tuesday reported a double-digit increase in second-quarter earnings and revenue—results that benefitted from the St. Paul-based company’s recent acquisition of Champion Technologies.

Earnings for the quarter that ended June 30 totaled $213.1 million, or $0.69 per share, up 16 percent from the same period a year ago.

Adjusted earnings—which exclude restructuring, acquisition, and other special charges and gains—totaled $0.86 per share, marking a 19 percent increase over the prior-year period. Analysts polled by Thomson Reuters had expected the company’s adjusted earnings to total $0.84 per share.

Champion, a chemical business that Ecolab acquired earlier this year in a $2 billion deal following delays from the U.S. Department of Justice, “performed above our expectations, which added to an already strong performance,” Chairman and CEO Douglas M. Baker, Jr., said in a statement.

Meanwhile, Ecolab’s revenue climbed 13 percent during the quarter to total $3.34 billion, falling just short of analysts’ expectations of $3.39 billion.

“We successfully strengthened our underlying business momentum through good new business gains; effective deployment of new program launches, which enabled us to further help our customers meet their operating and sustainability goals; and continued delivery of committed synergies,” Baker said.

Ecolab manufactures and distributes cleaning and maintenance products for the hospitality, institutional, and industrial markets. It is one of Minnesota’s 15 largest public companies based on revenue.

Shares of Ecolab’s stock were trading up about 2.5 percent at $94.39 late Tuesday morning.

Looking ahead, Ecolab is “well-positioned for the future,” but “the global economic backdrop remains challenging,” Baker said.

On the heels of its strong second-quarter results, Ecolab increased its full-year adjusted earnings outlook to be between $3.48 and $3.56 per share, up from the previous guidance of $3.45 to $3.55 per share. The new outlook represents an increase of 17 percent to 19 percent over the prior fiscal year.

“In order to grow, we know we must continue to generate new business with both new and existing customers,” Baker said. “The only way to reliably do that is to continue to increase our capabilities as a supplier in ways that make a difference for our customers. This means continuing our focus on developing and deploying technology that matters, continuing to develop our ability to meet our customer’s service needs around the world, continuing to build our team, and continuing to streamline our operations to be more effective, efficient, and responsive.”