Ecolab Inc. (ECL) shares took a dip in trading on Tuesday after the company reported third-quarter sales growth that fell short of analyst expectations. While revenue increased by 1% year-over-year to $3.999 billion, it missed the consensus estimate of $4.04 billion.
Despite the revenue miss, Ecolab showcased strong underlying business performance. Organic sales grew by 4%, driven by success in new business wins and innovative product offerings. This growth was reflected across the company’s segments: Global Industrial sales climbed 3% to $1.993 billion, Global Institutional & Specialty increased 7% to $1.404 billion, while Global Healthcare & Life Sciences saw a decline of 18% to $334.1 million, and Global Pet Elimination rose by 9% to $308.7 million.
The company also demonstrated operational strength. Selling, general, and administrative expenses remained flat year-over-year at $1.0 billion. Adjusted operating income for the quarter saw a significant 17% increase to $713.1 million, resulting in an improved adjusted operating margin of 17.9% compared to 15.4% a year ago. Adjusted earnings per share (EPS) of $1.83 surpassed the analyst consensus estimate of $1.82.
Ecolab continued its share buyback program, repurchasing approximately 1.9 million shares during the quarter. The company held a healthy cash balance of $1.26 billion as of September 30.
Looking ahead, Ecolab revised its full-year 2024 adjusted EPS outlook from $6.50 – $6.70 to $6.60 – $6.70, slightly lower than the consensus estimate of $6.64. However, the company anticipates strong fourth-quarter performance with an adjusted EPS forecast of $1.75 – $1.85, compared to an analyst estimate of $1.82.
Investors seeking exposure to Ecolab can consider investing in the VanEck Environmental Services ETF (EVX) and Invesco Global Water ETF (PIO).
At the time of writing, ECL shares were trading down 1.06% at $253.73.
Despite the revenue miss and revised EPS outlook, Ecolab continues to demonstrate strong operational performance and a commitment to growth through innovation. The company’s healthy cash position and focus on key areas like water and hygiene position it for continued success in the long term.
