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Ecolab's Most Profitable Segment Is Now a Drag on Its Business


Shares of cleaning and sanitizing giant Ecolab (NYSE: ECL) lost nearly 9% of their value on Tuesday following its release of second-quarter 2020 earnings. While COVID-19-related demand boosted Ecolab's healthcare and life sciences segment revenue, the momentum wasn't enough to offset weakness in other major business lines. Let's review the quarter, beginning with an outsized one-time item that skewed reported results.

Ecolab's revenue declined 15% against the prior-year period to $2.7 billion, while net income plunged from a profit of $369 million to a loss of $2 billion. The red ink resulted from a $2.1 billion non-cash charge as Ecolab disposed of its "upstream," or oilfield chemicals business, in June. 

The organization characterized the upstream business as "discontinued operations" in its income statement and attributed a per-share loss to these operations of $7.42. Separately, Ecolab earned $0.44 in diluted earnings per share (EPS) from continuing operations. On an adjusted basis, diluted EPS from continuing operations of $0.65 marked a substantial decrease from the unadjusted diluted EPS of $1.18 booked in the second quarter of 2019.

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Source Fool.com

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