Ecolab Inc. (ECL) filed Quarterly Report for the period ended 2009-09-30.
Ecolab Inc. is the global leader in cleaning sanitizing food safety and infection control products and services. Ecolab delivers comprehensive programs and services to the foodservice food and beverage processing healthcare and hospitality markets. Ecolab Inc. has a market cap of $10.69 billion; its shares were traded at around $45.14 with a P/E ratio of 23.9 and P/S ratio of 1.7. The dividend yield of Ecolab Inc. stocks is 1.3%. Ecolab Inc. had an annual average earning growth of 12.3% over the past 10 years. GuruFocus rated Ecolab Inc. the business predictability rank of 5-star.
Highlight of Business Operations:
· Diluted net income attributable to Ecolab per share increased 20% to $0.60 for the third quarter of 2009 compared to $0.50 in the third quarter of 2008. Third quarter 2009 results were reduced by $0.01 per share of special gains and charges and discrete tax items. Third quarter 2008 results were reduced by $0.05 per share of special gains and charges and discrete tax items.
In the first quarter of 2009, we announced plans to undertake restructuring and other cost-saving actions during 2009 in order to streamline operations and improve efficiency and effectiveness. As a result of these actions, we recorded restructuring expense of $5 million ($4 million after tax) or $0.02 per diluted share and $62 million ($44 million after tax) or $0.18 per diluted share, during the third quarter and nine months ended September 30, 2009, respectively. Restructuring expense on the Consolidated Statement of Income has been included both as a component of cost of sales and as a component of special gains and charges, as shown in the table above.
We anticipate additional restructuring expenses during the remainder of 2009, which are expected to result in total pretax charges of approximately $70 million ($50 million after tax) for the full year 2009. These actions are expected to provide annualized pretax savings of approximately $75 million ($50 million after tax), with pretax savings of $50 million to be realized in 2009. We anticipate that approximately $65 million of the total restructuring charges represent cash expenditures, of which $33 million has been paid as of September 30, 2009 and the majority of the remainder is expected to be paid within the next twelve months. Further details related to these restructuring expenses are included in Note 2.
Net interest expense totaled $15.1 million in the third quarter of 2009, compared with $16.0 million in the third quarter of 2008. The decrease in our third quarter net interest expense was primarily due to lower average interest rates and lower borrowing on our U.S. commercial paper program during the period. Net interest expense was $46.1 million for both the first nine months of 2009 and 2008.
Net income attributable to Ecolab increased 15% to $145 million in the third quarter of 2009. On a per share basis, reported diluted net income attributable to Ecolab per share increased 20% to $0.60 per share compared to $0.50 per share in 2008. The third quarter of 2009 includes $5.5 million, net of tax, of special gains and charges, and discrete tax benefits of $4.8 million, which together reduced the reported per share amount by $0.01. Currency translation had an unfavorable impact of approximately $7 million, net of tax, or $0.03 per share for the third quarter of 2009 compared to 2008. The third quarter of 2008 included $9.2 million, net of tax, of net charges reported in special gains and charges, and $2.1 million of discrete tax charges, which together decreased the reported per share amount by $0.05.
Net income attributable to Ecolab for the first nine months of 2009 decreased 18% to $302 million. On a per share basis, diluted net income attributable to Ecolab per share decreased 14% to $1.26, compared to $1.46 per share in 2008. Amounts for the first nine months of 2009 include $47.6 million, net of tax, of special gains and charges and net discrete tax benefits of $4.1 million. These items together reduced the reported per share amount by $0.18. Currency translation had an unfavorable impact of approximately $27 million, net of tax, or $0.11 per share for the first nine months of 2009 compared to 2008. The first nine months of 2008 included $10.5 million, net of tax, of net gains reported in special gains and charges and $2.7 million of discrete tax benefits. These items increased reported diluted net income attributable to Ecolab per share by $0.05.
ECL is in the portfolios of Steve Mandel of Lone Pine Capital, Ron Baron of Baron Funds.
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