Ecolab Inc. (NYSE:ECL)

Debt to Equity

The debt to equity ratio showed a gradual decline from 1.11 in March 2017 to 0.73 in December 2019, indicating a reduction in leverage over this period. However, starting in March 2020, the ratio increased sharply, peaking at 1.24 in June 2020. It then decreased moderately with some fluctuations, finishing at 1.21 in December 2021. Including operating lease liabilities, the pattern followed a similar trajectory, with ratios slightly higher but consistent with the reported debt to equity figures.

Debt to Capital

The debt to capital ratio decreased steadily from 0.53 in March 2017 to a low of 0.42 in December 2019, reflecting a strengthening capital structure. Post-December 2019, there was a notable increase reaching 0.55 in June 2020, indicating a rise in leverage. The ratio then stabilized around 0.50 to 0.55 through December 2021. Including operating lease liabilities, the ratios were marginally higher but exhibited the same overall trend.

Debt to Assets

Debt to assets decreased consistently from 0.39 in March 2017 to 0.30 in December 2019, suggesting an improved asset financing profile. Starting in 2020, the ratio increased to 0.40 by September 2020 and fluctuated thereafter, ending at 0.41 in December 2021. When including operating lease liabilities, the debt to assets ratios were slightly elevated but followed the same pattern.

Financial Leverage

Financial leverage, defined as the ratio of total assets to equity, declined from 2.82 in early 2017 to 2.40 at the end of 2019, indicating reduced reliance on debt financing. From early 2020, this ratio rose sharply to 3.09 by June 2020. It then decreased gradually to 2.59 by late 2021, though it remained elevated compared to pre-2020 levels. This shift reflects an increased use of debt relative to equity during the pandemic period, followed by a partial deleveraging trend.

Overall Observations

Between 2017 and 2019, the company consistently improved its leverage ratios across all measures, reducing debt relative to equity, capital, and assets while also lowering financial leverage. This trend suggests a strengthening balance sheet and reduced financial risk. The onset of 2020 marked a clear reversal, with a pronounced increase in leverage ratios likely related to external factors impacting debt levels. Despite some retrenchment after mid-2020, leverage remained higher than pre-2020 levels through the end of 2021, indicating a more leveraged financial position. Including operating lease liabilities modestly increased leverage ratios but did not materially change the overall trend analysis.

The analysis of the quarterly financial data reveals several notable trends in total debt, shareholders’ equity, and the debt to equity ratio over the examined periods.

Total Debt

The total debt exhibits a fluctuating yet overall moderate downward trend from March 31, 2017, through December 31, 2021. Starting at approximately 7.54 billion USD in early 2017, it initially increased slightly by mid-2017 and then gradually decreased until the end of 2019, reaching about 6.35 billion USD. However, there was an increase at the beginning of 2020 to over 7.78 billion USD, followed by a general decline through 2020 and early 2021, dropping to around 5.95 billion USD by September 2021. A sharp rise occurred again in the last quarter reported, December 31, 2021, where total debt increased significantly to approximately 8.76 billion USD.

Total Shareholders’ Equity

The shareholders’ equity shows a steady and consistent upward trend over most of the period except for a pronounced dip in 2020. From around 6.81 billion USD in early 2017, equity progressively increased each quarter through 2019, surpassing 8.68 billion USD. However, in the first half of 2020, equity dropped sharply to approximately 5.86 billion USD, likely reflecting adverse market or operational conditions during that time. After this decline, the equity recovered gradually throughout 2020 and 2021, reaching roughly 7.22 billion USD by the end of 2021.

Debt to Equity Ratio

The debt to equity ratio generally declined from 1.11 in March 2017 to a low of 0.73 by December 2019, indicating reduced financial leverage and potentially improved financial stability heading into 2020. This period coincides with the observed increase in equity and decrease in debt. Beginning in early 2020, the ratio reversed course and rose sharply to 1.24 by June 2020. This increase aligns with the surge in total debt and the simultaneous drop in equity, reflecting increased leverage and heightened financial risk. Subsequently, the ratio decreased steadily through 2021, reaching 0.86 in September, before again increasing to 1.21 at the end of 2021, mirroring the fluctuations in debt and equity levels.

In summary, the company experienced a period of deleveraging and strengthening equity from 2017 through 2019. The year 2020 brought significant financial stress, characterized by increased leverage and a substantial decline in equity, possibly due to extraordinary circumstances during that time. The recovery phase in 2021 shows a gradual restoration of equity and a reduction in leverage, though the final quarter’s data suggest renewed borrowing or capital structure changes resulting in elevated debt and leverage ratios once again.

The financial data reveals notable trends in the total debt, shareholders' equity, and debt to equity ratio over the analyzed quarterly periods.

Total Debt (Including Operating Lease Liability)

The total debt levels fluctuated over the period under review. Initially, total debt experienced a slight increase from 7,541,000 thousand USD at the end of Q1 2017 to 7,679,900 thousand USD in Q2 2017. Subsequently, it generally declined through 2017 and most of 2018, reaching a low of approximately 7,045,200 thousand USD in Q4 2018. However, in 2019, debt figures showed some volatility with a mild increase followed by a decrease, bottoming at 6,779,300 thousand USD in Q4 2019. The year 2020 saw an uptick in total debt, peaking at 8,189,200 thousand USD in Q1 2020, which represents the highest point in the dataset, followed by a gradual decrease through the end of 2020. In 2021, debt levels varied, with a significant increase recorded in Q4 2021 to 9,040,800 thousand USD, marking a new peak in the period.

Total Shareholders’ Equity

Shareholders' equity demonstrated a generally upward trajectory over the analyzed quarters. Starting at 6,809,400 thousand USD in Q1 2017, equity steadily increased through 2017 and 2018, reaching 8,003,200 thousand USD by Q4 2018. This upward trend continued gradually through 2019, culminating at 8,685,300 thousand USD in Q4 2019. However, there is a noticeable dip in 2020, particularly in Q2, when equity dropped significantly to 5,855,200 thousand USD, followed by a slow recovery through the remainder of 2020. From 2021 onward, equity consistently improved, rising to 7,224,200 thousand USD by Q4 2021.

Debt to Equity Ratio (Including Operating Lease Liability)

The debt to equity ratio mirrored the movements observed in debt and equity figures, exhibiting some volatility. Initially, the ratio was stable near 1.1 in early 2017 but began a downward trend during 2017 and 2018, reaching a low around 0.78 in Q4 2019, indicative of a reduction in leverage relative to equity growth. The ratio sharply increased in Q1 2020 to 0.93 and surged further to 1.3 in Q2 2020, coinciding with the decrease in equity and increase in debt during the same timeframe. After this peak, the ratio showed a declining pattern throughout late 2020 and into 2021, reaching approximately 0.9 in Q3 2021, before an abrupt rise back to 1.25 in Q4 2021, reflecting elevated debt levels relative to equity at that point.

Overall, the data indicates periods of strategic debt reduction and equity growth from 2017 through 2019, followed by increased leverage and volatility in 2020, likely reflecting adjustments to external conditions. The recovery in equity during 2021 appeared to support lower leverage ratios for most of the year, yet the notable rise in debt at the end of 2021 resulted in an increased debt to equity ratio, signaling higher financial leverage entering the last quarter.

The analysis of the quarterly financial data reveals several notable trends regarding the company's debt and capital structure over the period from March 2017 to December 2021.

Total Debt

The total debt showed a relatively stable pattern with slight fluctuations between March 2017 and December 2019, generally ranging around 7,000,000 US$ in thousands. However, there was a pronounced increase from December 2019 to March 2020, where debt rose significantly to approximately 7,782,300 US$ in thousands. Subsequent quarters display volatility, with both decreases and increases, culminating in a peak of 8,758,200 US$ in thousands by December 2021. This suggests periods of increased borrowing or refinancing during the later years, especially toward the end of 2021.

Total Capital

Total capital exhibited a gradual upward trajectory from March 2017 through March 2020, rising from around 14,350,400 US$ in thousands to over 16,600,400 US$ in thousands. However, from March 2020 onward, total capital experienced a notable decline, reaching a low point near 12,829,700 US$ in thousands by September 2020. Recovery is observed thereafter, with capital increasing toward the end of the period and reaching approximately 15,982,400 US$ in thousands in December 2021. This pattern may indicate capital adjustments or market impacts around early 2020, possibly related to external economic factors.

Debt to Capital Ratio

The debt to capital ratio decreased steadily from 0.53 in March 2017 to a low of 0.42 by December 2019, indicating a gradual reduction in leverage relative to capital. This trend reversed sharply in early 2020, with the ratio spiking to 0.55 in June 2020, corresponding with the increase in debt and decline in capital observed in the same period. Subsequently, the ratio fluctuated moderately, ranging between 0.46 and 0.55, with a peak again at 0.55 in December 2021. These changes imply periods of increased financial leverage and possibly higher risk profiles during 2020 and 2021 compared to prior years.

Overall, the data reflect a company managing its debt and capital levels with a historically moderate leverage ratio that declined until late 2019, followed by increased borrowing and reduced capital base around 2020. The resurgence in debt and capital figures toward the end of the analysis period may suggest efforts to stabilize or restructure the financial position.

Total Debt (including operating lease liability)

The total debt showed a generally stable trend from March 2017 through December 2019, fluctuating within a range of approximately $6.78 billion to $7.67 billion. However, a significant increase is observable starting in March 2020, peaking again at $9.04 billion in December 2021. Notably, after a peak of $8.19 billion in March 2020, debt declined somewhat over the subsequent quarters, before surging sharply to $9.04 billion by the end of 2021.

Total Capital (including operating lease liability)

Total capital exhibited a mostly steady range between $14.35 billion and $15.67 billion prior to 2020. Beginning in March 2020, there was a pronounced decline, reaching a low of approximately $13.15 billion in September 2020. After this trough, total capital demonstrated some recovery and volatility, culminating in an increased level of about $16.27 billion by December 2021, surpassing previous years' figures.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio showed a decreasing trend from 0.53 in early 2017, descending to a low of 0.44 by December 2019, indicating a relative reduction in leverage during this period. This ratio reversed direction with the onset of 2020, rising sharply to 0.57 in June 2020, then oscillated in the 0.51 to 0.56 range for the remainder of the timeframe. The increase in leverage during 2020 and 2021 corresponds with the fluctuations and increases observed in total debt relative to capital.

Overall Analysis

The period prior to 2020 reflects a trend of declining leverage accompanied by relatively stable total debt and capital levels, suggesting a cautious financial strategy. The onset of 2020 marks a shift, with a marked increase in total debt and a decrease followed by volatility in total capital, leading to increased leverage ratios. The recovery in capital towards the end of 2021 alongside elevated debt levels points to an environment of changing financial management possibly in response to external factors. The considerable fluctuations post-2019 imply a dynamic financial posture with heightened levels of debt relative to the capital base.

Total Debt

The total debt exhibited some fluctuations over the reported quarters. From March 31, 2017, to June 30, 2019, the debt displayed a generally decreasing trend, moving from approximately $7.54 billion to around $6.35 billion. However, beginning in March 31, 2020, there was a notable increase in total debt, peaking at $8.76 billion by December 31, 2021. This recent increase suggests a period of rising leverage or additional financing.

Total Assets

Total assets showed overall growth from March 31, 2017, to December 31, 2019, steadily increasing from roughly $19.22 billion to $20.87 billion. However, a sharp decline occurred between December 31, 2019, and June 30, 2020, with assets dropping from about $22.34 billion to $18.08 billion. After this trough, assets remained relatively stable, fluctuating moderately around the $18 billion mark through to September 30, 2021, before rising again to $21.21 billion by December 31, 2021.

Debt to Assets Ratio

The debt to assets ratio generally trended downward from 0.39 on March 31, 2017, to a low of 0.30 on December 31, 2019, indicating improving leverage or asset growth relative to debt. This positive trend reversed starting in early 2020, with the ratio climbing sharply to 0.41 by December 31, 2021. This inflection point aligns with the period of increased total debt and reduced total assets noted previously, signaling a higher leverage position at the end of the period.

Total debt (including operating lease liability)

The total debt level demonstrated some fluctuation over the indicated periods. Initially, it hovered around 7.5 billion US dollars in early 2017, showing a slight increase toward mid-2017. Following this, a gradual decline was observed through 2018, reaching a low in the fourth quarter of 2018. Debt rose again during 2019, peaking in the first quarter of 2020 at approximately 8.19 billion US dollars. After this peak, total debt declined steadily through the end of 2020 and into early 2021, reaching a low of about 6.2 billion US dollars by the third quarter of 2021. However, in the final quarter of 2021, total debt surged significantly to over 9 billion US dollars, marking the highest value in the series.

Total assets

Total assets portrayed a generally upward trajectory from approximately 19.22 billion US dollars at the beginning of 2017 to a peak of around 22.34 billion US dollars in the first quarter of 2020. This growth was relatively steady with minor quarter-to-quarter fluctuations. Notably, there was a sharp decline in total assets in the second quarter of 2020 to around 18.08 billion US dollars, after which asset levels stabilized around 18 to 19 billion US dollars throughout the remainder of 2020 and most of 2021. A notable increase occurred again in the last quarter of 2021, with total assets rising to approximately 21.21 billion US dollars.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio exhibited a gradual decreasing trend from 0.39 in early 2017 to 0.32 by the end of 2019, indicating an improvement in the company’s leverage position over this period. This decline suggests that assets were growing at a faster rate than debt, or debt was being reduced relative to asset size. However, a reversal took place starting in early 2020, where the ratio increased sharply from 0.37 to 0.42 by mid-2020, reflecting a rising leverage ratio. This elevated leverage persisted through 2020 and 2021 but showed some fluctuations. The ratio declined slightly toward the third quarter of 2021 at around 0.35 but then spiked to 0.43 in the final quarter of 2021, the highest in the observed timeframe. This spike corresponds with the significant increase in total debt and total assets observed at that time.

Total assets

Total assets demonstrate a generally upward trend from March 31, 2017, through December 31, 2021, with intermittent fluctuations. Starting at approximately 19.2 billion USD at the beginning of 2017, assets steadily increased until reaching around 22.3 billion USD by the end of the first quarter of 2020.

A significant decline is observed in the second quarter of 2020, with assets dropping to approximately 18.1 billion USD. Following this low point, total assets remained relatively stable around 18.1 billion USD through late 2020 and early 2021.

In the final quarter of 2021, there was a notable rebound, with total assets rising sharply to over 21.2 billion USD, surpassing previous highs and marking the highest asset value recorded during the analyzed period.

Total Ecolab shareholders’ equity

Shareholders’ equity exhibited a general increasing trend from March 31, 2017, through December 31, 2019, starting at approximately 6.8 billion USD and climbing to about 8.7 billion USD. This increase indicates sustained growth in the equity base over this period.

However, the second quarter of 2020 saw a pronounced decrease in equity, dropping sharply to approximately 5.9 billion USD. This decline parallels the reduction in total assets observed during the same period.

Post this decline, equity gradually recovered over the subsequent quarters, reaching around 7.2 billion USD by the end of 2021. Although recovery is evident, equity levels at the end of 2021 remained somewhat below the peak values recorded in late 2019.

Financial leverage

The financial leverage ratio decreased gradually from 2.82 in the first quarter of 2017 to a low of 2.40 in December 2019, suggesting a reduction in reliance on debt relative to equity during this period.

Thereafter, the leverage ratio increased significantly, peaking at 3.09 in the second quarter of 2020, coinciding with the sharp declines in both assets and shareholders’ equity. This rise indicates an increased degree of financial leverage and potentially higher financial risk during that quarter.

Following that peak, leverage gradually decreased but remained above pre-2019 levels through the end of 2021, ending at 2.94. This implies the company maintained a relatively higher leverage structure in the post-2020 period compared to before the equity drop.