Strong sales and price increases nudged Ecolab's third-quarter results above Wall Street expectations, despite hits from hurricanes and rising raw-material costs that contributed to officials narrowing their guidance for the full 2017 year.
The St. Paul-based cleaning, sanitizing and filtration chemicals giant on Tuesday reported sales rose 5 percent to $3.56 billion. Profits also rose 5 percent to $392 million, or $1.34 per share.
Excluding one-time charges, tax items and costs from hurricanes that shut down paper, energy and water customers' operations for days and slowed demand, adjusted third-quarter earnings were $1.37 per share, one penny higher than analysts had forecast.
"Our third quarter showed continued progress in pricing, new business gains and underlying consumption trends," CEO Douglas Baker told analysts during a conference call Tuesday afternoon. He noted that hurricanes caused many customers to temporarily close operations in affected areas.
As a result, "we estimate the impact from the hurricanes to have been a negative-4 cents per share in both the third and fourth quarters due to the loss of consumption by customers and higher delivered product costs," he said. "Still, we foresee our business continuing to accelerate in the fourth quarter."
Company officials narrowed their guidance for 2017, saying that full-year earnings are now expected to rise 6 to 9 percent to $4.65 to $4.75 per share. That's down from the prior guidance of $4.70 to $4.90.
The quarterly results included a $5.2 million special charge during the quarter related to restructuring, acquisition and integration costs. Ecolab announced in September that it plans to buy the paper chemicals business of Georgia-Pacific for an undisclosed price before the end of the year end.
Baker told analysts that Ecolab's institutional restaurant business is stable, but that the company continues to see a slowdown in the restaurant sector, especially in the U.S., which happens periodically, he said. "We have seen this movie before" and is not anything that is expected to hurt Ecolab in 2018.
During the quarter, institutional division sales rose 7 percent to $1.22 billion, while profits grew 5 percent, mostly from growth in Latin America and Asia.
Ecolab's larger industrial business increased sales 4 percent to $1.25 billion, while profits grew 2 percent during the quarter ended Sept. 30. Industrial enjoyed global gains from food and beverage factory customers and higher demand from water filtration, mining and life science clients.
The energy division grew third-quarter sales 3 percent to $797 million. However, profits sank 13 percent due to lower pricing, the reinstalling of past compensation cuts and higher costs for delivered products, officials said.
Ecolab's stock price fell slightly Tuesday to $130.66.
Dee DePass • 612-673-7725
