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Ecolab Delivers Strong Fourth Quarter

Stocks in this article: ECL

Global Energy sales, when measured at fixed currency rates, grew 18% to $596 million in the fourth quarter when compared with fourth quarter 2011 pro forma fixed currency sales, with strong growth in all business segments. Fixed currency operating income increased 49% to $103 million in the fourth quarter when compared with fourth quarter 2011 pro forma fixed currency operating income. Comparisons also benefited from a sharp run-up in raw material costs last year. When measured at public currency rates, Global Energy sales were $596 million and operating income was $103 million.

The Corporate segment includes amortization from the Nalco merger intangible assets, merger integration costs, investments in the development of business systems and other corporate investments made as part of Ecolab’s ongoing efforts to improve our efficiency and returns. The Corporate segment also includes special gains and charges. Special gains and charges for the fourth quarter 2012 were a net charge of $47 million ($42 million after-tax). Special gains and charges for the fourth quarter 2011 were a net charge of $98 million ($64 million after-tax).

The reported income tax rate for the fourth quarter 2012 was 29.6% and compared with the reported rate of 31.6% in the fourth quarter 2011. Excluding the tax rate impact of special gains and charges and discrete tax items, the adjusted effective income tax rate was 29.3% in the fourth quarter for both 2012 and 2011.

Business Outlook With the exception of certain Champion acquisition costs included in special gains and charges, the following forecasts exclude the impact of the pending Champion acquisition.

2013Ecolab continues to expect 2013 full-year adjusted earnings per share – excluding expected accretion from the Champion acquisition – in a $3.38 to $3.48 range, representing a 13% to 17% increase over the prior year. When compared with the 2012 performance, we look for further solid fixed currency sales growth, improved adjusted gross margin and SG&A ratios to sales, and a lower adjusted effective tax rate to drive a double-digit adjusted earnings per share performance.

Special gains and charges for the full year 2013 are expected to be approximately a $0.35 per share net charge, primarily driven by restructuring charges, Nalco integration costs and Champion acquisition related costs. Future amounts related to discrete tax items for 2013, if any, are not currently quantifiable. This forecast does not include Champion acquisition-related costs that are contingent on the transaction closing.

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