RBC Capital analysts provided their views on Ecolab Inc. (NYSE:ECL) ahead of the company’s upcoming Q2 earnings results, noting they expect it to be largely a non-event given the June 7th pre-announcement of approximately $1.10 EPS.
The company expects margin pressure to peak in Q2 driven by structural pricing and the energy surcharge. Accordingly, the analysts expect a Q2 gross margin of 37.8% (4% decline year-over-year) and an operating margin of 12.6% (2% decline year-over-year).
Although H2/22 macroeconomic slowdown could potentially weigh on the volumes and the large International presence (48% of revenues) could result in further FX headwinds from the US dollar strengthening, the analysts believe the company’s revenues are likely more resilient today than in the prior financial downturn (2008/2009) where organic revenues were approximately flattish while the company grew EPS by around 7%.