Ecolab Reports Q1 2025 Results: Earnings in Line, Revenue Misses

Ecolab Inc. (ECL) released its first-quarter 2025 adjusted earnings per share (EPS) of $1.50, reflecting an increase of 11.9% year over year. This figure met the Zacks Consensus Estimate. Meanwhile, the GAAP EPS for the quarter was $1.41, representing a decline of 1.4% compared to the previous year.

Revenue Performance Overview

Ecolab reported revenues totaling $3.69 billion in the quarter, a decrease of 1.5% year over year. This revenue figure fell short of the Zacks Consensus Estimate by 0.3%. Organic sales reached $3.63 billion, marking a 3.1% increase from the same period last year.

The rise in organic sales was primarily fueled by strong growth in the Industrial and Healthcare & Life Sciences segments, alongside notable performance in the Pest Elimination and Institutional & Specialty segments.

Ecolab’s shares increased by approximately 3.8% in pre-market trading following the announcement.

Segment Analysis

Starting in the first quarter of 2025, Ecolab revised its segment reporting. The Global Industrial segment has been rebranded as Global Water, encompassing Light & Heavy (previously Water), Food & Beverage, and Paper. The healthcare division has transitioned into Institutional, while Global Life Sciences now stands as a separate segment. The Global Pest Elimination segment remains unchanged.

Within Global Water, fixed currency sales reached $1.80 billion, reflecting a year-over-year growth of 2.6%. Organic sales in this segment rose to $1.78 billion, an increase of 2.1%, driven by strong performance across Water, Food & Beverage, and Paper components.

In the Global Institutional & Specialty segment, fixed currency sales and organic sales were both $1.41 billion, showing a 2.8% decline year over year on a reported basis, while organic sales grew by 3.7%. Management noted strong underlying growth in Specialty, offset by the planned exit from low-margin, non-strategic businesses. Both Institutional and Specialty segments achieved substantial new business wins and strong pricing strategies.

The Global Pest Elimination segment recorded fixed currency sales of $278.1 million, up 6.8% year over year. Organic sales reached $273.7 million, an increase of 5.1%, driven by strong performance in food & beverage, restaurants, and hospitality, despite weaker results in food retail.

Finally, the Global Life Sciences segment achieved fixed currency sales of $167 million, up 4.8% compared to the previous year.

Price, Consensus, and EPS Surprise

Ecolab Inc. price-consensus-eps-surprise-chart | Ecolab Inc. Quote

Margin Analysis

In the first quarter, Ecolab’s gross profit grew by 0.7% year over year, totaling $1.63 billion. However, the gross margin contracted by 90 basis points to 44.2%. Selling, general, and administrative expenses decreased by 2.6% to $1.05 billion year over year.

Adjusted operating profit rose to $589.6 million, a 7.7% increase from the previous year’s quarter. The adjusted operating margin expanded 160 basis points to 15.9%.

Financial Position

At the end of the first quarter of 2025, Ecolab reported cash and cash equivalents of $1.16 billion, down from $1.26 billion at the end of 2024. The company’s total debt increased slightly to $7.61 billion from $7.56 billion at the end of 2024.

Ecolab maintains a strong track record of dividend payments, with a five-year annualized dividend growth rate of 5.67%.

Guidance for Future Periods

Ecolab has outlined its adjusted EPS expectations for the second quarter of 2025 and reaffirmed its outlook for the entire year. The company anticipates adjusted EPS for the second quarter to be between $1.84 and $1.94, reflecting a year-over-year increase of 10-15%. The current Zacks Consensus Estimate stands at $1.90.

For the full year of 2025, Ecolab expects adjusted EPS in the range of $7.42 to $7.62, indicating a growth of 12-15% from 2024. The current Zacks Consensus Estimate is $7.51 per share.

Summary Assessment

Ecolab’s first-quarter results for 2025 present a mix of outcomes. While earnings aligned with expectations, revenues fell below the consensus. Nonetheless, the company reported solid year-over-year growth in organic sales and demonstrated positive performance across most segments. The enhanced operating margin is a favorable indicator for the company’s future.

Management highlighted sustained growth in the United States—Ecolab’s most profitable area—while also indicating strong growth in international markets, compensating for uneven global economic pressures.

However, the decline in reported revenues from Ecolab’s Global Institutional & Specialty segment raised concerns.

Zacks Rank and Stock Recommendations

Currently, Ecolab holds a Zacks Rank #3 (Hold).

Prominent stocks in the medical industry that are ranked higher include Fresenius Medical Care (FMS), Masimo (MASI), and Glaukos (GKOS).

Fresenius Medical, with a Zacks Rank #2 (Buy), is projected to achieve a growth rate of 28.9% for 2025. The company has beat estimates in three of its last four quarters, with an average surprise of 15.67%. FMS is set to announce first-quarter results next month.

FMS shares have gained 6% year to date.