) posted a 23.3% rise in adjusted earnings per share (excluding
special gains and charges) to 74 cents for the first quarter of
2014 from 60 cents in the same quarter of 2013. However, earnings
were flat compared with the Zacks Consensus Estimate.
The rise in adjusted earnings was attributable to strong sales
growth and operating margin gains owing to cost efficiency
programs and synergies. Adjusted net earnings rose 26.4% to
$228.2 million from $180.5 million in the first quarter of 2013.
Revenues and Margins
Revenues grew 16.2% year over year to $3,336.6 million. Adjusted
fixed currency revenues increased 18.2% to $3,309.1 million.
Revenues were slightly above the Zacks Consensus Estimate of
Adjusted operating earnings rose 23.3% to $386.5 million while
adjusted operating margin went up 70 basis points (bps) to 11.6%
from 10.9% in the 2013-first quarter. In fixed currency,
operating earnings escalated 26.7% to $383.6 million in the
ECOLAB INC (ECL): Free Stock Analysis Report
GLOBE SPECIALTY (GSM): Free Stock Analysis
INTL F & F (IFF): Free Stock Analysis
SENSIENT TECH (SXT): Free Stock Analysis
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At constant exchange rate (CER), revenues from
segment grew 3.1% to $1,138 million, driven by Food &
Beverage and Water. Operating earnings in fixed currency
increased 7.0% to $119.5 million compared with the year ago
period. Regionally, Asia Pacific and Latin America performed
well, with mediocre gains in North America and a modest decline
AT CER, revenues from the
segment increased 3.1% to $993.3 million, led by strong sales
growth in Specialty business. In fixed currency, operating
earnings increased 6.6% to $155.5 million. Sales were strong in
Latin America, with good gains in North America and Asia Pacific,
and a modest rise in EMEA.
AT CER, the
segment posted solid revenue growth of 77.7% to $1,005.1 million
in the first quarter 2014, mainly driven by the Champion
acquisition. Operating earnings at fixed currency increased 82.7%
to $131.7 million. Acquisition adjusted fixed currency revenues
grew 8% reflecting strong growth in the upstream and downstream
markets, while acquisition adjusted fixed currency operating
earnings rose 36% in the quarter.
At CER, revenues from the
segment inched up 4.1% to $172.7 million in the first quarter.
Fixed currency operating income increased 1.8% to $22.1 million.
ECL exited the year with cash and cash equivalents of $300.3
million, significantly down by 63.6% from $824.3 million as of
Mar 31, 2013. Total debt increased 15.6% to $7,204.0 million from
$6,234.2 million as of Mar 31, 2013.
For the second quarter of 2014, ECL expects adjusted gross margin
of 46% and adjusted earnings per share of $1.00 to $1.04. The
Zacks Consensus Estimate of $1.03 lies within the guided range.
For full year 2014, ECL anticipates adjusted gross margin of 47%
and reiterated its higher adjusted earnings per share between
$4.10 and $4.20 compared with 2013. The Zacks Consensus Estimate
of $4.18 for the year lies within the guided range.
We are impressed with Ecolab's first quarter results. We take
note of the solid earnings growth in the reported quarter along
with the growth-oriented outlook for the year.
However, we remain cautious about aggressive competition.
Challenging economic and market trends along with unfavorable
internal issues will likely be near-term headwinds for the
ECL currently carries a Zacks Rank #3 (Hold). Some better-ranked
stocks in the industry include
Globe Specialty Metals, Inc.
International Flavors & Fragrances Inc.
Sensient Technologies Corp.
). All of them carry a Zacks Rank #2 (Buy).