Ecolab surpasses $15B sales milestone, buoyed by strong launch of new products

Rebounding hotel and restaurant business helped Ecolab to exceed $15 billion in revenue last year for the first time. The company’s profit margin also improved significantly to 16%, said CEO Christophe Beck said on Tuesday.

But the St. Paul-based maker of hygiene, water and infection protection solutions and products will need to continue to create innovative offerings to reach its goal of a 20% operating margin, Beck said in an interview.

While growing the customer base and volumes, value pricing and easing of inflation will all help, Beck said, but new products will be needed to tip the scale.

“Our innovative products, like life science, like data centers, like semiconductors, are all higher margin than the average of the company,” Beck said in an interview.

The company on Tuesday reported a strong fourth quarter, with earnings increasing 53% year over year to $405.2 million, or $1.41 a share. Revenue grew 7% to $3.9 billion.

“We think Ecolab had a strong finish to 2023, and the company’s initial outlook for the year ahead is encouraging,” wrote Matt Arnold, a materials analyst for Edward Jones. “With pricing actions now outpacing raw-material cost inflation, and with the benefits from the company’s cost savings program materializing, the company appears on track to resume its historical track record of generating solid growth in earnings per share.”

The company expects adjusted earnings to grow 17% to 25% in fiscal year 2024, to $6.10 to $6.50 a share.

The record results for the company’s centennial year and bullish earnings guidance for 2024 helped the stock to increase 9% Tuesday, closing at a 52-week high of $221.18.

The strongest quarterly results were in Ecolab’s Institutional & Specialty segment that serves hotel and restaurant customers. Sales increased 13% to $1.3 billion and operating income for the segment grew 41% to $238.7 million. The pest elimination business also posted a double-digit sales increase.

The sales growth, though, is “very broad based, which allows us to absorb shocks that might happen in some businesses,” Beck said. “New business generation is at record levels, which is really a good indication that what we do for our customers — to help them produce safer products, more products while reducing impact on the environment, and reducing operational costs by reducing water and energy — all that resonates with them.”

Ecolab last week was again recognized by the global environmental nonprofit group CDP with an “A list” rating for the company’s efforts to address climate change and water security. It’s the fifth consecutive year Ecolab has been recognized for its water security disclosures and the third consecutive year it has been on the A List for both water and climate disclosures.

CDP ranks 21,000 companies on their environmental disclosures. Only 1% of the organizations make CDP’s A List: 346 companies made the CDP’s A List for climate disclosures and 101 made their A List for water disclosure. The CDP was formed in 2000 as the “Carbon Disclosure Project” to ask companies to disclose data on their climate impacts.

“It is only by laying the groundwork of disclosure that companies can show they are serious about the vital part they play in securing a net-zero, nature-positive future,” said CDP chief executive Sherry Madera.

In December, Ecolab was included again in the Dow Jones Sustainability Indices including the Dow Jones Sustainability World Index and the Dow Jones Sustainability North America Index.