Ecolab reiterated Tuesday that it expects to save $325 million in the next few years as it makes its operations more efficient and leverages technology and automation.
The St. Paul-based company will continue to focus its resources on markets and customers that can deliver the best results, as well as the lowest operating costs and most sustainable operations, CEO Doug Baker told analysts during a conference call Tuesday.
Improved water and energy data collections from customers and price increases will continue as Ecolab combats rising raw-material costs and aims to be more relevant to customers.
“We believe these actions build a better, stronger Ecolab and bolster our ability to sustain consistent, superior growth this year and for the future,” Baker said. “We enter 2019 with strong momentum,” he told analysts during the conference call.
His statements came as Ecolab reported fourth-quarter results in line with what officials said they would be two weeks ago.
The maker of cleaning and sanitizing chemicals and water filtration products reported fourth-quarter sales grew 3 percent to $3.76 billion, just shy of the $3.77 billion expected by Wall Street analysts. Sales of paper, water, pest elimination and other industrial products and services drove much of the quarter’s growth.
Fourth-quarter profits fell 30 percent to $395 million, or $1.35 per share. However, excluding the effect of the new tax laws and other special charges, adjusted profits grew 11 percent to $449 million or $1.54 a share, in line with analysts’ revised forecasts.
Ecolab gave a partial report on its fourth quarter two weeks ago when it announced it would spin off its $2.4 billion business selling chemicals to oil-drilling operations.
For the full fiscal year, Ecolab’s sales increased 6 percent to $14.7 billion. Net income fell 5 percent to $1.44 billion, or $4.88 a share. Excluding one-time and discrete tax items, adjusted earnings rose 12 percent to $5.25 a share, which was in line with analysts’ revised estimates.
“We expect another good performance by Ecolab in 2019,” Baker said. He noted that Ecolab plans to connect more of the data it collects from institutional customers to the cloud and use other smart digital tools that can help customers maximize savings and cut waste. Technology investments and price increases in China and elsewhere will continue, he said.
Baker reiterated the guidance he gave for this year as well: adjusted earnings rising 10 to 14 percent to a range of $5.80 to $6.
Ecolab’s stock price rose to a 52-week high of $168.32 a share in afternoon trading Tuesday, before closing at $167.31 per share, up $3.83.
Ecolab’s stock has reached new 52-week highs ever since Feb. 4 when it announced it would spin off its oil-drilling chemicals business into a separate public company. In 12 months, the stock price rose from $127.23 to more than $168 a share in the last week.
Tuesday’s spike prompted CFRA research analyst Christopher Muir to alter his stock recommendation to sell from hold. But others, such as Bank of America Merrill Lynch and UBS reiterated their “buy” ratings.
Analysts noted that Ecolab entered the volatile energy business via two key acquisitions in 2011 and 2013. As a result the 2020 divesting of the oil-drilling chemicals division is largely seen as welcome news by Wall Street, which always favored Ecolab’s traditional and predictable core business.
Ecolab will retain its chemicals business that focuses on refineries, petrochemical plants and its core, traditional businesses that provide cleaning, dishwashing and laundry chemicals and services to hotels, restaurants, hospitals, schools, breweries and industrial factories.