ECOLAB INC. Quarterly Report (Form 10-Q)
Ecolab Inc. reported its quarterly financial results for the period ended March 31, 2025. The company’s revenue increased by 4.5% to $3.2 billion, driven by growth in its Cleaning and Sanitizing, Food and Beverage, and Energy segments. Net income rose to $444 million, or $1.57 per diluted share, compared to $394 million, or $1.38 per diluted share, in the same period last year. Ecolab’s operating cash flow was $541 million, and the company repurchased 1.3 million shares of its common stock for $100 million during the quarter. The company’s balance sheet remains strong, with cash and cash equivalents of $1.4 billion and total debt of $4.3 billion.
Overview of the First Quarter Ended March 31, 2025
Sales Performance
- Reported net sales decreased 2% to $3,695.0 million, driven by an unfavorable impact from the sale of the global surgical solutions business and currency translation. Organic sales increased 3%.
- Organic sales for the Global Water segment increased 2% to $1,779.2 million, driven by sales growth in Light & Heavy and Food & Beverage.
- Organic sales for the Global Institutional & Specialty segment increased 4% to $1,406.1 million, as growth remained strong for both the Institutional and Specialty operating segments.
- Organic sales for Global Pest Elimination increased 5% to $273.7 million.
- Organic sales for the Global Life Sciences segment increased 5% to $167.0 million.
Financial Performance
- Reported operating income increased 7% to $555.3 million. Organic operating income increased 17%.
- Net income attributable to Ecolab decreased 2% to $402.5 million. Excluding the impact of special (gains) and charges and discrete tax items, adjusted net income attributable to Ecolab increased 10%.
- Reported diluted EPS decreased 1% to $1.41. Excluding the impact of special (gains) and charges and discrete tax items, adjusted diluted EPS increased 12% to $1.50.
- The reported tax rate was 20.3% during the first quarter of 2025, compared to 9.2% during the first quarter of 2024. Excluding the tax rate impact of special (gains) and charges and discrete tax items, the adjusted tax rate was 20.8% during the first quarter of 2025, compared to 19.9% during the first quarter of 2024.
Results of Operations
Net Sales
| Metric | First Quarter 2025 | First Quarter 2024 | Change |
|---|---|---|---|
| Product and equipment sales | $2,901.9 million | $2,986.5 million | - |
| Service and lease sales | $793.1 million | $765.4 million | - |
| Reported GAAP net sales | $3,695.0 million | $3,751.9 million | -2% |
| Non-GAAP fixed currency sales | $3,652.1 million | $3,621.5 million | 1% |
| Non-GAAP organic sales | $3,626.0 million | $3,518.2 million | 3% |
The percentage components of the period-over-period 2025 sales change are:
- Volume: 1%
- Pricing: 2%
- Organic sales change: 3%
- Acquisitions and divestitures: -2%
- Fixed currency sales change: 1%
- Foreign currency translation: -2%
- Reported GAAP net sales change: -2%
Cost of Sales (“COS”) and Gross Profit Margin
| Metric | First Quarter 2025 | First Quarter 2024 |
|---|---|---|
| Reported GAAP COS and gross margin | $2,060.2 million, 44.2% | $2,128.1 million, 43.3% |
| Non-GAAP adjusted COS and gross margin | $2,055.4 million, 44.4% | $2,126.5 million, 43.3% |
The reported gross margin increased from 43.3% in the first quarter of 2024 to 44.2% in the first quarter of 2025. Excluding the impact of special (gains) and charges, the adjusted gross margin increased from 43.3% to 44.4%.
Selling, General and Administrative Expense Selling, general and administrative expenses as a percentage of sales were 28.4% for the first quarter of 2025, compared to 28.7% for the first quarter of 2024.
Special (Gains) and Charges The company recorded $34.3 million in special (gains) and charges in the first quarter of 2025, primarily related to the One Ecolab initiative and the sale of the global surgical solutions business.
Operating Income and Operating Income Margin
| Metric | First Quarter 2025 | First Quarter 2024 | Change |
|---|---|---|---|
| Reported GAAP operating income | $555.3 million | $517.9 million | 7% |
| Non-GAAP adjusted operating income | $589.6 million | $547.7 million | 8% |
| Non-GAAP adjusted fixed currency operating income | $581.4 million | $517.9 million | 12% |
| Non-GAAP organic operating income | $579.3 million | $496.6 million | 17% |
| Reported GAAP operating income margin | 15.0% | 13.8% | - |
| Non-GAAP adjusted operating income margin | 16.0% | 14.6% | - |
| Non-GAAP adjusted fixed currency operating income margin | 15.9% | 14.3% | - |
| Non-GAAP organic operating income margin | 16.0% | 14.1% | - |
Reported operating income increased 7% in the first quarter of 2025, while organic operating income increased 17%.
Segment Performance The company’s four reportable segments - Global Water, Global Institutional & Specialty, Global Pest Elimination, and Global Life Sciences - all reported organic sales and operating income growth in the first quarter of 2025.
Financial Position, Cash Flows and Liquidity
- Total assets were $22.4 billion as of March 31, 2025 and December 31, 2024.
- Total liabilities were $13.5 billion as of March 31, 2025, compared to $13.6 billion as of December 31, 2024. Total debt was $7.6 billion at both dates.
- The company’s net debt to EBITDA ratio was 1.7 as of March 31, 2025 and December 31, 2024.
- Cash provided by operating activities decreased $280 million in the first quarter of 2025 compared to the first quarter of 2024, driven by changes in working capital and other liabilities.
- Cash used for investing activities increased $23 million, primarily due to higher capital expenditures.
- Cash used for financing activities decreased $648 million, reflecting lower debt repayments and share repurchases.
Global Economic Environment
- Approximately half of the company’s sales are outside the U.S., exposing it to changes in economic conditions and foreign currency exchange rates, as well as political uncertainty in some countries.
- The company has limited its Russian business to essential operations due to the Russia-Ukraine conflict and related sanctions.
Outlook The company expects to continue generating strong cash flow from operations to fund its ongoing operations, investments, acquisitions, and returns to shareholders. It remains well-positioned to manage through the dynamic global economic environment.
