ECL
#Hello, everyone, and welcome to Ecolab's second quarter conference call
With me today is Doug <UNK>, Ecolab's Chairman and CEO; and <UNK> Schmechel, our CFO
A discussion of our results along with our earnings release and the slides referencing the quarter's results and our outlook are available on Ecolab's website at ecolab
com/investor
Please take a moment to read the cautionary statements on these materials stating that this teleconference, the discussion, and the slides include estimates of future performance
These are forward-looking statements, and actual results could differ materially from those projected
Factors that could cause actual results to differ are described in the section of our most recent Form 10-K under Item 1A, Risk Factors, and in our posted materials
We also refer you to the supplemental diluted earnings per share information in the release
Starting with a brief overview of the quarter, continued new business gains and pricing drove acquisition adjusted fixed currency sales growth in our Institutional, Industrial, and Other segments as well as increased Energy segment sales during the second quarter
These sales gains along with product innovation and ongoing cost efficiency work offset the impact of higher delivered product costs, which included a previously discussed $0.04 per share unfavorable currency hedge and challenging end markets
These, along with our work to lower interest expense and our tax rate as well as fewer shares outstanding, yielded the second quarter's 5% adjusted earnings per share increase
Moving to some highlights from the quarter and as discussed in our press release, on an adjusted basis, excluding special gains and charges and discrete tax items from both years, second quarter 2017 adjusted earnings per share were $1.13. Consolidated acquisition adjusted fixed currency sales for our Institutional, Industrial, and Other segments rose 3%, while Energy sales rose 5%
Regionally, sales growth was led by North America and Latin America
Reported operating margins increased 30 basis points
Adjusted fixed currency operating margins decreased 70 basis points as volume and price increases were partially offset by the impact of higher delivered product costs in the quarter
Adjusted fixed currency operating income rose 1%
The operating income gain, along with our work to lower interest expense and our tax rate as well as the fewer shares outstanding, yielded a 5% increase in the second quarter 2017 adjusted diluted earnings per share
We continue to aggressively drive our growth, winning new business through our innovative new products and sales and service expertise as well as driving pricing and cost efficiencies to grow our top and bottom lines and improve rates
We expect improving volume growth and pricing across all of our business segments in the second half and look for that to more than offset delivered product cost headwinds, which should ease sequentially through the second half, and yield strengthening operating income growth
We expect full-year adjusted diluted earnings per share in the $4.70 to $4.90 range in 2017, rising 8% to 12% with the second half results outpacing the first half
We expect third quarter adjusted diluted earnings per share to be in the $1.36 to $1.44 range, up 6% to 13%
In summary, despite a challenging market environment, we expect to deliver strong adjusted diluted earnings per share growth in 2017. And now, here is Doug <UNK> with some comments
Thanks
That concludes our formal remarks
As a final note, before we begin Q&A, we plan to hold our 2017 Investor Day in St
Paul on Thursday, September 7th
If you have any questions, please contact us
Operator, would you please begin the question-and-answer period? Question-and-Answer Session
That wraps up our second quarter conference call
This conference call and the associated discussion slides will be available for replay in our website
Thank you for your time and participation and our best wishes for the rest of the day
