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Ecolab’s first quarter operating results were very strong; diluted earnings per share of $0.82; adjusted diluted earnings per share of $0.88, +7%; further improvement is still expected in 2023.

        Recorded sales of $3.6 billion are up 9 percent from last year. Organic sales rose 13 percent, driven by double-digit growth in the institutional and professional, industrial and other sectors, as well as accelerating growth in healthcare and life sciences.
        Reported operating income +38%. Organic operating profit growth accelerated to +19% as continued price and productivity gains offset accommodative but resilient cost-of-delivery inflation and challenging macroeconomic conditions.
        The reported operating margin was 9.8%. The organic operating margin was 10.6%, up 50 basis points year-over-year, reflecting modest gross margin growth and improved productivity.
        Diluted earnings per share were reported to be $0.82, +37%. Adjusted diluted earnings per share (excluding special income and fees and discrete taxes) was $0.88, +7%. Currency translation and higher interest expenses negatively impacted first-quarter earnings per share by $0.11.
       2023: Ecolab continues to expect quarterly adjusted earnings-per-share growth to accelerate its low-double-digit historical performance.
       Second Quarter 2023 Adjusted diluted earnings per share are expected to be in the range of $1.15 to $1.25 in the second quarter of 2023, up 5-14% year-over-year.
        Ecolab Chairman and CEO Christophe Beck said: “We are gearing up for a very strong start to 2023 and our team is delivering solid double-digit organic sales growth in line with our expectations. We continue to take steps to further strengthen our growth foundations. such as investing in our life sciences business to capitalize on its long-term growth opportunities. Overall, our efforts resulted in a organic increase in operating margins, continued high prices and further productivity improvements, as well as moderate but sustained headwinds of inflation. This superiority resulted in 19% organic growth in operating profit and accelerated growth in adjusted earnings per share, despite significant headwinds from currency translation and interest expenses in a challenging macro environment.
        “Looking to the future, we are well positioned to develop our operational momentum and look forward to further improvement in 2023. While macroeconomic headwinds and inflationary pressures are expected to persist, we remain focused on the offensive – attracting our key customers. Ensuring strong sales growth. offering and our portfolio of innovations, and leveraging our significant opportunities to increase operating margins. As a result, we continue to expect strong organic sales growth, double-digit growth in organic operating income and adjusted earnings per share growth. historical performance.
       Compared to the same period last year, Ecolab’s first-quarter sales were up 9%, while organic sales were up 13%.
        Reported operating income for the first quarter of 2023 increased by 38%, including the impact of special gains and expenses, which were net expenses primarily related to restructuring costs. Organic operating income growth accelerated to 19% as strong prices outpaced business investment, higher shipping costs and weak volumes.
       Reported interest expenses rose by 40%, reflecting the impact of higher average rates on floating rate debt and bond issuance in the fourth quarter of last year.
        The reported income tax rate for the first quarter of 2023 is 18.0% compared to 20.7% for the first quarter of 2022. Excluding special income and fees and certain taxes, the adjusted tax rate for the first quarter of 2023 was 19.8% compared to the adjusted tax rate of 19.5% for the first quarter of 2022.
        Reported net income increased by 36% compared to the previous year. Excluding the impact of special profits and fees and discrete taxes, adjusted net income rose 6 percent year-over-year.
        Reported diluted earnings per share increased by 37% year-on-year. Adjusted diluted earnings per share increased by 7% compared to the first quarter of 2022. Currency translation had an adverse effect on earnings per share of $0.05 in the first quarter of 2023.
        Effective January 1, 2023, the former Downstream business unit became part of the Water business unit. This change will not affect the Global Industry reportable segment.
        Organic sales growth accelerated to 14%. Continued double-digit growth in the institutional segment reflects high prices and new business successes. Growth in professional sales accelerated with strong growth in Quick Service sales. Organic operating profit growth accelerated to 16% as strong pricing factors outperformed business investment, higher shipping costs and a negative mix.
        Organic sales rose 9 percent, driven by double-digit growth in life sciences and stronger sales growth in healthcare. Organic operating income declined 16% as higher prices were more than offset by lower volumes, focused business investment and higher shipping costs.
        Organic sales growth accelerated to 15%, reflecting double-digit growth across all divisions, while maintaining strong performance in pest control. Organic operating income rose 35% as high prices outperformed business investment, higher shipping costs and an unfavorable mix.
       $24 million sale to ChampionX pursuant to a master cross-supply and product transfer agreement entered into by Ecolab under the ChampionX division.
       Depreciation charge of $29 million related to the merger of Nalco’s intangible assets and depreciation charge of $21 million related to the acquisition of Purolite’s intangible assets.
       Special income and expenses for the first quarter of 2022 amounted to a net expense of $77 million, primarily reflecting Purolite acquisition costs, COVID-related expenses and expenses related to our operations in Russia.
        Ecolab continues to expect productivity gains despite a challenging macro environment characterized by high shipping costs and weak demand. In addition, higher interest expenses and currency translation are expected to negatively impact earnings per share by $0.30 in 2023, or 7% on a year-over-year earnings growth.
        The company expects organic operating income to grow in double digits on the back of continued strong sales growth, declining cost of goods inflation and improved productivity. This strong performance is expected to help navigate a challenging environment and deliver quarterly adjusted earnings-per-share growth, accelerating our historical low double-digit performance.
        Ecolab expects adjusted diluted earnings per share to be between $1.15 and $1.25 in the second quarter of 2023, compared to an adjusted diluted EPS of $1.10 a year ago. The forecast includes an adverse impact of $0.12 per share due to higher interest costs and currency translation, or an 11 percent negative impact on earnings growth year-on-year.
        The company currently expects to pay a quantifiable special expense of approximately $0.08 per share in the second quarter of 2023, primarily related to restructuring costs. In addition to the special benefits and fees described above, other such amounts cannot be quantified at this time.
        A trusted partner for millions of customers, Ecolab (NYSE:ECL) is a global leader in sustainability, providing water, sanitation and infection prevention solutions and services that protect people and vital resources. Built on centuries of innovation, Ecolab has $14 billion in annual sales, over 47,000 employees and a global presence in over 170 countries. The company provides end-to-end science-based solutions, data-driven insights and world-class services to ensure food safety, maintain a clean and safe environment, and optimize water and energy use. Ecolab’s innovative solutions improve operational efficiency and sustainability for customers in the food, medical, life sciences, hospitality and industrial sectors. www.ecolab.com
        Today at 1 pm ET, Ecolab will be hosting a webcast of its first quarter earnings report. The webcast, along with related materials, will be available to the public on the Ecolab website…www.ecolab.com/investor. The website will include replays of the webcast and related materials.
        This press release contains certain forward-looking statements and our intentions, beliefs, expectations and projections regarding the future, which are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. Words such as “likely to lead”, “expect”, “will continue”, “expect”, “we believe”, “we expect”, “evaluate”, “project”, “probably”, “will”, “ intention “Plans”, “believes”, “objectives”, “forecasts” (including negative or variations thereof) or similar terms in connection with any discussion of future plans, actions or events are generally considered forward-looking statements. These forward-looking statements include, but are not limited to, statements about macroeconomic conditions, cost of deliveries, demand, inflation, currency translation, and our financial and business results and prospects, including sales, earnings, special expenses, profits, interest. costs and productivity. These statements are based on current management expectations. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements contained in this press release. In particular, the final outcome of any restructuring plan will depend on a number of factors, including the development of the final plan, the impact of local regulatory requirements on employee layoffs, the time required to develop and implement the restructuring plan, and the degree of success achieved through such improvements in competitiveness, efficiency and the effectiveness of actions.
        Other risks and uncertainties that may affect our results of operations and business performance are set out in paragraph 1A of our most recent Form 10-K and our other public filings with the Securities and Exchange Commission (“SEC”), including such economic factors, such as the global economy, capital flows, interest rates, foreign exchange risk, decline in sales and revenues from our international business due to the weakening of the local currency against the US dollar, demand uncertainty, supply chain issues and inflation, the dynamics of the markets we serve; exposure to global economic, political and legal risks associated with our international business, including geopolitical instability, the impact of sanctions or other actions by the United States or other countries, Russia’s response to the conflict in Ukraine; difficulties in finding sources of raw materials or fluctuations in the cost of raw materials; our ability to attract, retain and develop a highly skilled management team to run our business and successfully navigate organizational change and changing labor market dynamics; information technology infrastructure failures or data security breaches; COVID-19 pandemic The impact and duration of epidemics or other public health outbreaks, epidemics or epidemics, our ability to acquire additional businesses and effectively integrate such businesses, including Purlight, our ability to execute key business plans, including restructuring and upgrading our corporate planning system resources; our ability to compete successfully on value, innovation and customer support; pressure on operations due to consolidation of customers or suppliers; limitations on pricing flexibility due to contractual obligations and our ability to meet contractual obligations; the cost of complying with laws and regulations and the consequences, including laws and regulations relating to the environment, climate change standards, and the production, storage, distribution, sale and use of our products and our general business practices, including employment and anti-corruption; potential spills or releases of chemicals; we are committed to sustainability, goals, objectives, objectives and initiatives, the possibility of significant tax liabilities or liabilities arising from the split and spin-off of our ChampionX business, the emergence of litigation or claims, including class actions, large customers, or the loss or insolvency of distributors ; repeated or extended government and/or business shutdowns or similar events, acts of war or terrorist attacks, natural or man-made disasters, water shortages, severe weather, changes in tax laws and unforeseen tax liabilities, potential losses on tax deferred assets; our obligations and any failure to comply with the covenants applicable to our obligations, losses that may arise from impairment of goodwill or other assets, and from time to time in our reports to the Securities and Exchange Commission, other uncertainties or risks, about which are reported. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. We caution you not to place undue reliance on forward-looking statements, which only speak for the date they were published. Ecolab disclaims and expressly disclaims any obligation to update any forward-looking statement as a result of new information, future events or changes in expectations, except as required by law.
       This press release and certain accompanying appendices include financial measures that are not calculated in accordance with US Generally Accepted Accounting Principles (“GAAP”).
       Organic operating profit margin, previously acquisition-adjusted constant currency operating profit margin
        We provide these figures as additional information about our operations. We use these non-GAAP measures to internally evaluate our performance and make financial and operational decisions, including those relating to incentives. We believe that our presentation of these metrics provides investors with greater transparency about our performance and that these metrics are useful for comparing performance over different periods.
        Our non-GAAP adjusted cost of sales, adjusted gross margin, adjusted gross margin and adjusted operating income financials exclude the effects of special (income) and fees, and our non-GAAP adjusted tax rate, adjusted net income financials Ecolab and adjusted diluted earnings per share further excludes the impact of discrete taxes. We include items in special (allowances) and expenses, as well as certain taxes, which, in our opinion, can significantly affect the results of operations for the same period and do not necessarily reflect costs and/or revenues associated with historical trends and future results. Special (reliefs) and after-tax levies are calculated by applying the tax rate applicable in the local jurisdiction to the relevant special (benefits) and pre-tax levies.
        We evaluate the performance of our international operations on the basis of fixed exchange rates, which excludes the impact of currency fluctuations on our international results. Constant currency amounts included in this report have been translated into US dollars based on fixed foreign exchange rates set by management in early 2023. We also provide segment results based on generally accepted currency exchange rates for reference.
       Our reportable segments do not include the impact of intangible assets on amortization or the impact of special (income) and expenses on transactions with Nalco and Purolite, as they are not included in the company’s reportable segments.
        Our non-GAAP financials for organic sales, organic operating income and organic operating income margin are measured in constant currency and exclude the effect of special (profits) and fees, performance of our acquired business during the first twelve months after the sale of the business. twelve months prior to expropriation. In addition, as part of the split, we entered into a master cross-shipping and product transfer agreement with ChampionX to supply, receive or transfer certain products for up to 36 months and for products from a limited number of vendors. next few years. Sales of ChampionX Products pursuant to this Agreement will be shown in the Products and Equipment Sales section of the Corporate Division, together with the corresponding cost of sales. These transactions have been excluded from the consolidated result as part of the calculation of the impact of acquisitions and sales.
        These non-GAAP financial measures do not conform to or replace GAAP and may differ from non-GAAP measures used by other companies. Investors should not rely on any one financial measure when evaluating our business. We encourage investors to consider these measures in conjunction with the GAAP measures contained in this press release. Our non-GAAP reconciliation is included in the “Additional Non-GAAP Reconciliation” and “Additional Diluted EPS” tables in this press release.
        We do not provide non-GAAP estimates (including those contained in this press release) on a prospective basis when we are unable to provide meaningful or accurate calculations or reconciliation estimates for items and information cannot be obtained without undue effort to Reconcile. This is due to the inherent difficulty in predicting the timing and amount of various elements that have not yet occurred, are beyond our control and/or cannot reasonably be predicted, which will affect reported earnings per share and reported tax rates that differ from adjusted earnings per share. The forward-looking GAAP financial measure most directly comparable to an adjusted tax rate. For the same reason, we cannot take into account the possible importance of unavailable information.
       (1) Cost of sales and special (income) and expenses in the above consolidated income statement include the following:
        a) Special expenses of $0.8 million in the first quarter of 2023 and $52 million in the first quarter of 2022 are included in cost of goods and equipment sold. Special expenses of $2.4 million in the first quarter of 2023 and $0.9 million in the first quarter of 2022 are included in the cost of services and leasing sales.
        As shown in the “Constant Exchange Rates” table above, we evaluate the performance of our international operations at constant exchange rates, which excludes the impact of fluctuations in exchange rates on our international operations. The amounts shown in the “Public Currency Exchange Rates” table above reflect conversions at the actual public average exchange rates prevailing over the relevant period and are provided for informational purposes only. The difference between the fixed exchange rate and the publicly available exchange rate is reported as “Currency Impact” in the “Fixed Exchange Rates” table above.
        The corporate segment includes amortization of intangible assets from the Nalco and Purolite transactions. The corporate segment also includes special (income) and expenses recognized in the consolidated income statement.
       The table below reconciles reported diluted earnings per share to non-GAAP adjusted diluted earnings.
        (1) Special (income) and expenses for 2022 include post-tax expenses of $63.6 million, $2.6 million, $39.6 million and $101.5 million for the first, second, third and fourth quarters, respectively. The expenses were mainly related to acquisition and integration costs, provisions related to our operations in Russia, inventory write-offs and personnel costs related to COVID-19, restructuring costs, legal and other expenses, and pension payments. .
        (2) Separate tax expenses (revenues) for 2022 include $1.0 million, $3.7 million, $14.2 million and $2.3 million for the first, second, third and fourth quarters, respectively. These expenses (benefits) are primarily related to offsetting stock-related excess tax credits and other discrete tax credits.
        (3) Special (income) and expenses for 2023 include first-quarter post-tax expenses of $27.7 million. The costs were mainly related to restructuring, acquisition and integration costs, litigation and other costs.
        (4) Discrete Tax (Relief) for the first quarter of 2023 includes ($4 million). These expenses (benefits) are primarily related to offsetting stock-related excess tax credits and other discrete tax credits.


Post time: May-04-2023