Ecolab Inc. posted strong third-quarter earnings Tuesday, beating Wall Street’s expectations by a penny a share largely because of a surge in the company’s new energy services businesses.
The St. Paul-based maker of sanitizers and chemicals that treat water, food plants and oil refineries reported a 15 percent jump in total sales and a 23 percent increase in adjusted earnings for the quarter amid strong energy and international sales.
Ecolab’s April acquisition of Houston-based Champion Technologies and its 2011 purchase of Illinois-based Nalco helped drive the quarter. Ecolab’s energy sales soared 68 percent to $991 million during the quarter, the largest growth of any segment during the quarter.
While adjusted earnings exceeded expectations at $1.04 a share, sales reached $3.48 billion for the quarter, which was below the $3.54 billion analysts expected.
Investors remained upbeat, pushing Ecolab’s stock up by $4.22 to close at $107.48.
Analysts also reacted positively to Ecolab’s performance.
“Great quarter,” said Rosemarie Morbelli with Gabelli & Co., while on a conference call with CEO Douglas Baker Tuesday. She noted the company’s progress in Europe, where costs have been slashed and sales have moved from the negative range to a zero or 1 percent growth expectation.
Overall, Ecolab had “a very respectable organic growth number,” said Canaccord Genuity analyst John Quealy. “The guidance gets tweaked [upward] a little bit from the bottom .”
Officials said fourth-quarter earnings should rise 13 to 18 percent from a year ago to $1.01 to $1.05 a share. Earnings for the full year are now expected to reach $3.51 to $3.55 a share, compared with the previous guidance of $3.48 to $3.56 a share.
Company officials were pleased with overall results. “We continued to see solid sales progress in the third quarter as our new products, customer service execution and our focus on delivering total cost solutions for customers again led to further account gains and continued growth in spite of sluggish economies,” Baker said in a statement. He also credited price increases, cost cuts and improvements in Europe for some of the gains.
Ecolab’s industrial division, which includes sanitizing and treating dairies, breweries, food and paper factories, saw sales rise 3 percent to $1.26 billion, amid “good growth” in Asia and Latin America and “modest growth” in North America.
Ecolab’s global institutional division, which includes pest control, hospital products and food safety and cleaning chemicals for hotels, restaurants and hospitals, grew 5 percent during the quarter to $1.1 billion. Officials credited those results to gains in health care and pest control sales and growth in North America and Latin America.
Baker also noted that the company expects more small acquisitions in the future, which compares to its two massive deals in energy. It bought Nalco for $8.3 billion in December 2011 and bought Champion in April of this year for about $2.2 billion.