Sanitizing and chemical additives firm Ecolab Inc. reported solid growth Monday for the first quarter, mainly driven by sales gains from its recently acquired Champion Technologies business.
Ecolab’s energy business benefited directly from the purchase, helping the unit grow sales 78 percent to $1.005 billion during the quarter. Champion provides thinning and anti-corrosive chemicals and water filtration services to refineries, oil rigs and other energy-related businesses.
Analysts noted that it’s been more than two years since St. Paul-based Ecolab entered the energy business by paying $8.3 billion for Nalco, the Illinois-based water filtration entity that makes up the other portion of Ecolab’s burgeoning energy division. And it closed on the Champion deal just a year ago. Analysts said the energy sector will provide significant post-merger synergies and robust growth for Ecolab.
That appeared to be the case Monday. Not only did energy sales jump 78 percent for the first quarter, but Ecolab investor relations Vice President Mike Monahan told analysts during a call that energy sales should also jump 78 percent in the second quarter.
But Ecolab’s largest business, industrial, rose just 3 percent to $1.1 billion during the first quarter. That growth was mainly due to sanitizing chemicals and services provided to food and beverage and water processing customers, particularly in Asia, Latin America and North America.
Ecolab’s institutional sales rose 3 percent to $993 million during the quarter, as orders grew slightly from restaurants, hotels, hospitals, schools and military customers who use Ecolab’s chemicals to sanitize dishes, food prep areas, barracks and surgical centers.
Ecolab saw slight dips in health care during the quarter. In addition, the protein industry remained weak, Monahan said. However, those declines were more than offset by strong sales from food, beverage and dairy customers using Ecolab’s equipment sanitation services. Officials also saw slight improvement in Europe, amid the introduction of new washing products that reduce energy and water demands.
CEO Doug Baker told analysts that “global economies remain choppy,” but added that Ecolab still continues to expect “a strong year in 2014. We continue to focus on driving sales growth through our value proposition,” which relies on product sales and service to save customers energy and money in the long run.
Total first-quarter sales grew 16 percent to $3.3 billion for the quarter, while adjusted earnings rose 26 percent to $228 million, or 74 cents a share. Results were in line with consensus estimates by Wall Street analysts. When acquisition, restructuring and other one-time items were included, net income rose 20 percent to $191 million, or 62 cents a share.
Ecolab reiterated its full-year guidance, saying that 2014 earnings should grow 16 to 19 percent to $4.10 to $4.20 per share. For the second quarter, officials forecast adjusted earnings that grow 16 to 21 percent to $1 to $1.04 per share.
Ecolab’s stock fell 40 cents to close at $104.83.