Ecolab Q3 2023 Earnings Report
Key Takeaways
Ecolab reported an 8% increase in sales, reaching $4.0 billion, with organic sales up by 7%. The company's operating income rose by 17%, and adjusted diluted EPS increased by 18% to $1.54. Ecolab anticipates continued strength in the fourth quarter of 2023 and into 2024.
Reported sales reached $4.0 billion, an 8% increase compared to the previous year, with organic sales growing by 7% due to double-digit growth in Institutional & Specialty and Pest Elimination.
Reported operating income increased by 17%, while organic operating income grew by 20%, driven by strong pricing, improved volume trends, and slightly lower delivered product costs.
Reported operating income margin was 14.3%, with the organic operating income margin at 15.5%, a 160 bps increase due to robust gross margin expansion.
Cash flow from operating activities for the third quarter was $788 million, and free cash flow increased to $621 million, a $377 million increase compared to the previous year.
Ecolab
Ecolab
Ecolab Revenue by Segment
Forward Guidance
Ecolab anticipates fourth quarter 2023 adjusted diluted earnings per share to be in the range of $1.48 to $1.58, a 17% to 24% increase year-over-year. The company continues to expect mid-teens or better growth in adjusted diluted earnings per share for 2024, as discussed during Ecolab's September 2023 investor day.
Positive Outlook
- Continued pricing actions
- Volume growth
- Year-over-year gross margin expansion of 250 to 300 basis points
- SG&A expense remains consistent with 2023 second and third quarter levels
- Targeted investments in growth capabilities
Challenges Ahead
- Quantifiable special charges in the fourth quarter of 2023 to be approximately $0.09 per share
- The company expects soft macroeconomic demand
- The company expects slightly lower delivered product costs.
- Inherent difficulty of forecasting the timing and amount of various items that have not yet occurred
- The company is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort
Revenue & Expenses
Visualization of income flow from segment revenue to net income