Ecolab Inc. (NYSE:ECL)

The financial leverage and debt-related ratios reveal notable trends over the examined periods.

Debt to Equity

The debt to equity ratio generally declined from early 2018 through the end of 2019, dropping from 0.98 to 0.73, indicating a reduction in reliance on debt relative to equity. However, starting in 2020, the ratio increased significantly, peaking at 1.24 in mid-2020, before somewhat stabilizing around one in 2021, ending at 1.21. Including operating lease liabilities shows a similar pattern but with slightly higher values, indicating leases contribute meaningfully to total leverage.

Debt to Capital

This ratio exhibited a downward movement from 0.49 at the beginning of 2018 to 0.42 by late 2019, reflecting a decrease in debt’s share of the total capital. In 2020, the ratio reversed course, rising to 0.55 mid-year, then moderating to around 0.46-0.50 in 2021. Inclusion of operating lease liabilities leads to consistently higher debt to capital ratios, illustrating the effect of leases on the capital structure.

Debt to Assets

Debt to assets decreased steadily from 0.37 in early 2018 to 0.30 by the end of 2019. From 2020 onwards, the ratio increased again, peaking around 0.41 by early 2021. The version including operating lease liabilities is consistently higher, with a peak of 0.43. This suggests that liabilities related to leases comprise a non-negligible part of the total assets financed by debt.

Financial Leverage

The financial leverage ratio decreased gradually from 2.66 in early 2018 to 2.40 by late 2019, implying a moderate reduction in asset financing through debt. A sharp increase is evident in 2020, with a peak of 3.09 mid-year, followed by a slight decline but remaining elevated above pre-2020 levels through 2021 at around 2.59 to 2.94.

Overall, the data reflect a period of deleveraging from 2018 through 2019, followed by a marked increase in debt usage beginning in 2020. The inclusion of operating lease liabilities consistently increases debt ratio metrics, highlighting the importance of leasing obligations in the company’s capital and asset structure. The spike in leverage and debt ratios around 2020 coincides with a broader trend of increased borrowing, potentially in response to external factors affecting liquidity and capital needs during that time.

Total Debt

The total debt demonstrated a generally declining trend from March 2018 through December 2019, decreasing from approximately 7.42 billion USD to about 6.35 billion USD. However, from March 2020 onward, the total debt values show increased volatility and an overall rising pattern, peaking in December 2021 at around 8.76 billion USD. This suggests an increased reliance on borrowing during the latter periods, particularly notable during 2020 and 2021.

Total Ecolab Shareholders’ Equity

Shareholders' equity rose steadily from March 2018 to December 2019, increasing from roughly 7.6 billion USD to about 8.69 billion USD. A significant decline occurred in the first half of 2020, dropping to approximately 5.86 billion USD, likely reflecting adverse conditions impacting equity values. Following this, shareholders’ equity showed a gradual recovery trend through 2021, reaching around 7.22 billion USD by December 2021.

Debt to Equity Ratio

The debt to equity ratio decreased steadily from 0.98 in March 2018 to a low of 0.73 in December 2019, indicating an improving financial leverage position with relatively lower debt compared to equity. Starting in March 2020, this ratio reversed course sharply, rising to a peak of 1.24 in June 2020, implying a significant increase in leverage. Despite some fluctuations, the ratio remained elevated above pre-2020 levels throughout 2021, with a temporary improvement to 0.86 in September 2021 before rising again to 1.21 by December 2021. This pattern points to increased financial risk and a shift toward higher debt relative to equity in recent periods.

Overall Analysis

The observed data indicate that the company experienced a period of deleveraging and equity growth up until the end of 2019. However, starting in early 2020, there was a marked increase in debt coupled with a reduction in equity, which significantly altered the capital structure, elevating the debt to equity ratio. This shift suggests potentially increased financial risk or strategic borrowing, possibly in response to external challenges. Although shareholders’ equity partially recovered through 2021, the company maintained higher leverage levels compared to the pre-2020 period, warranting attention to balance sheet management and debt servicing capacity.

Total Debt (including operating lease liability)

The total debt experienced a fluctuating trend over the analyzed periods. Initially, there was a gradual decline from approximately 7.4 billion USD in the first quarter of 2018 to about 6.8 billion USD by the end of 2019. However, starting in early 2020, total debt increased sharply, peaking at over 9 billion USD in the last quarter of 2021. Notably, this represents a substantial rise in total debt compared to previous years, indicating increased leverage or financing activities during this period.

Total Ecolab Shareholders’ Equity

The shareholders’ equity showed a generally upward movement from 7.6 billion USD at the beginning of 2018 to a peak near 8.8 billion USD at the first quarter of 2020. Subsequently, a significant decline occurred in mid-2020, where equity dropped sharply to approximately 5.9 billion USD. Following this drop, equity gradually recovered through 2021, reaching about 7.2 billion USD by the end of the period under review. This pattern indicates a period of financial stress or adjustments in 2020, followed by gradual improvement.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio exhibited a generally stable downward trend from nearly 1.0 at the start of 2018 to a low of 0.78 by the end of 2019, reflecting improved capital structure and lower relative leverage. However, starting in 2020, the ratio increased significantly, peaking at 1.3 in the second quarter of 2020, reflecting an increased reliance on debt relative to equity. Following the peak, the ratio declined again below 1.0 in the third quarter of 2021, but rose once more to 1.25 by the end of 2021. These fluctuations suggest volatility in leverage, with notable increases in financial risk during the early phases of the pandemic and some attempts at deleveraging afterward, though with renewed pressure by the last quarter.

Total Debt

The total debt exhibited a generally downward trend from March 31, 2018, through December 31, 2019, declining from approximately $7.42 billion to around $6.35 billion. This represents a reduction in debt of roughly 14.4% over this period. However, starting in the first quarter of 2020, a reversal is observed with debt increasing sharply to about $7.78 billion by March 31, 2020. Despite a slight recovery through the latter part of 2020 and into mid-2021, debt levels showed volatility, ultimately rising significantly to approximately $8.76 billion by December 31, 2021.

Total Capital

Total capital remained relatively stable between March 2018 and December 2019, fluctuating modestly around $15 billion to $15.3 billion. In early 2020, there was a notable jump to about $16.6 billion by the first quarter, followed by a sharp decrease to near $12.8 billion by the fourth quarter of 2020. This decrease represents a decline of nearly 22.8% in the span of a year. The capital base partially recovered in 2021, with values reaching approximately $15.98 billion by December 31, 2021, indicating a restoration of prior capital levels.

Debt to Capital Ratio

The debt to capital ratio trended downward from 0.49 in the first quarter of 2018 to a low of 0.42 by the end of 2019, suggesting an improvement in capital structure with less reliance on debt financing. This downward trend implies a strengthening balance sheet during this timeframe. However, beginning in 2020, the ratio increased sharply to 0.55 by March, reflecting the increase in debt and the reduction in total capital. It remained elevated throughout 2020 and into 2021, fluctuating between 0.46 and 0.55, pointing to an overall higher leverage position in recent quarters compared to the earlier period.

Summary

The financial data reveal a period of deleveraging and stable capital structure from 2018 through 2019, followed by a significant impact in 2020 characterized by increased debt levels and reduced capital, leading to higher leverage ratios. The volatility observed during and after 2020 may reflect response measures to external challenges or strategic shifts. While there was some recovery in capital by the end of 2021, total debt reached its highest recorded level, resulting in a materially increased leverage ratio compared to the pre-2020 period. Continuous monitoring of debt management and capital adequacy will be essential in assessing financial health moving forward.

Total Debt (including operating lease liability)

The total debt exhibits a fluctuating pattern over the periods analyzed. Initially, total debt decreases steadily from 7,415,500 thousand USD at the end of March 2018 to 6,779,300 thousand USD by December 2019. This indicates a period of debt reduction. However, starting from March 2020, there is a notable increase in total debt, peaking at 9,040,800 thousand USD by December 2021. The rise from early 2020 onward suggests increased leveraging or borrowing activities during that period, possibly to support operations or strategic initiatives.

Total Capital (including operating lease liability)

Total capital remains relatively stable from March 2018 to December 2019, fluctuating slightly around 15 billion USD. A significant variation occurs from March 2020 through December 2021, where total capital declines to a low of approximately 13.15 billion USD in September 2020 before recovering to around 16.27 billion USD by December 2021. This volatility may be linked to changes in equity or debt composition, reflecting adjustments in financing or asset base.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio follows a slightly downward trend from 0.49 in March 2018 to a low of 0.44 in December 2019, consistent with the reduction in total debt relative to capital. This suggests a strengthening capital structure with less reliance on debt during this interval. Beginning in March 2020, the ratio increases sharply to 0.57 in June 2020, indicating a rise in financial leverage. While there is some fluctuation afterward, the ratio remains elevated through December 2021, signaling sustained higher debt levels in the capital structure relative to the earlier period.

Overall Analysis

Over the examined timeframe, there is a clear shift from a conservative capital structure toward greater financial leverage starting in 2020. The period prior to this exhibits steady deleveraging and capital stability. The increased debt levels and higher debt to capital ratio post-2020 imply a strategic or operational response, potentially reflecting external economic conditions or internal growth funding needs. The recovery of total capital after mid-2020 suggests efforts to stabilize or strengthen the balance sheet following the leverage increase.

Total Debt

Over the examined period, total debt exhibited notable fluctuations. Initially, there was a gradual decline from March 2018 through December 2019, decreasing from approximately $7.42 billion to about $6.35 billion. However, starting in the first quarter of 2020, debt levels rose sharply, reaching a peak near $8.75 billion by the end of 2021. This increase in the latter period indicates increased leverage or additional borrowing activities.

Total Assets

Total assets showed relative stability with minor fluctuations through 2018 and 2019, hovering around the $20.0 billion mark. There was a marked decline during 2020, dropping from approximately $22.34 billion in early 2020 to about $18.13 billion by late 2020. This reduced asset base persisted into 2021, with some signs of recovery toward the end of the year, concluding near $21.21 billion. This pattern suggests asset revaluation or divestitures during 2020, followed by partial asset growth.

Debt to Assets Ratio

The debt to assets ratio generally decreased from 0.37 in early 2018 to a low of 0.30 by December 2019, indicating improved financial leverage and asset coverage during that period. Following this, the ratio increased significantly from 0.30 to 0.41 by the end of 2021. The elevation in this ratio aligns with the simultaneous increase in total debt and the decrease in total assets during the early to mid-2020 period, suggesting a shift toward higher leverage and greater risk exposure.

Overall Insights

The data reveal an initial phase of deleveraging and stable asset base from 2018 through 2019. The substantial changes beginning in 2020—characterized by decreased assets coupled with increased debt—indicate a shift in the company's financial position toward higher leverage. These developments may reflect strategic financing decisions or responses to external economic pressures during that timeframe. The partial recovery in assets toward the end of 2021, alongside persistently elevated debt levels, suggests ongoing adjustments in capital structure with increased financial risk compared to prior years.

Total Debt (Including Operating Lease Liability)

Over the observed periods, total debt exhibited notable fluctuations. Initially, from early 2018 through 2019, there was a general declining trend, decreasing from approximately 7.42 billion USD to around 6.78 billion USD by the end of 2019. Subsequently, the debt level increased sharply in early 2020, peaking at about 8.19 billion USD. This was followed by a steady decline through the remainder of 2020 and into mid-2021, where the debt dropped to approximately 6.21 billion USD by September 2021. However, a significant rise occurred by the end of 2021, with debt climbing to over 9 billion USD.

Total Assets

Total assets showed a relatively stable pattern with minor variations over the reported quarters. Starting near 20.18 billion USD in early 2018, assets slightly fluctuated around the 20 billion USD mark until the end of 2019, moving towards 20.87 billion USD. Entering 2020, a sharp decline became evident, reaching a low near 18.08 billion USD mid-year. In the following quarters, assets remained around the 18 billion USD range before recovering somewhat in 2021, culminating near 21.21 billion USD by the final quarter, indicating a rebound after the mid-2020 dip.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt to assets ratio generally tracked with movements in debt and asset values, ranging between 0.32 and 0.43. Initially, the ratio decreased from 0.37 in early 2018 to a low of 0.32 by the end of 2019, reflecting the reduction in debt relative to assets. A marked increase occurred during 2020, peaking at 0.42 mid-year, consistent with the rise in debt and decline in assets during that period. The ratio then decreased slightly into 2021, reaching about 0.35 in September, before rising again to 0.43 at year-end, mirroring the corresponding increase in total debt and assets.

Summary of Financial Trends

The data indicates a period of deleveraging through 2019, where total debt decreased alongside steady total asset levels, leading to a reduced debt to asset ratio. The onset of 2020 brought volatility, characterized by increased leverage due to rising debt levels and declining asset values, which may suggest economic or operational challenges during that period. Recovery signs are evident in 2021, with asset values increasing and debt levels declining for a part of the year, improving leverage ratios temporarily. Nonetheless, the significant spike in debt and the corresponding rise in debt to asset ratio at the end of 2021 suggest renewed borrowing or financial pressure going into that period. Overall, the financial data reflects cyclical fluctuations possibly driven by external economic factors and company-specific financial strategy adjustments.

Total Assets

Total assets exhibited relative stability from early 2018 through the end of 2019, fluctuating slightly around the 20 billion US$ mark. There was a notable increase to approximately 22.3 billion US$ by March 2020, followed by a sharp decline to around 18.1 billion US$ in mid-2020. The subsequent quarters through 2021 show moderate recovery, with total assets rising back close to 21.2 billion US$ by the end of 2021.

Total Shareholders’ Equity

Shareholders' equity demonstrated a gradual upward trend from about 7.6 billion US$ in early 2018 to peak near 8.8 billion US$ by March 2020. This was interrupted by a significant drop in mid-2020, declining to roughly 5.85 billion US$. However, from mid-2020 onward, equity progressively improved, reaching approximately 7.2 billion US$ by the last quarter of 2021. Despite the mid-2020 decline, the later quarters indicate a recovery trajectory.

Financial Leverage

The financial leverage ratio trended downward slightly from 2.66 at the start of 2018 to roughly 2.4 by the end of 2019, indicating a moderate decrease in leverage. In early 2020, the ratio increased sharply to just above 3.0, peaking at 3.09, corresponding with the period of decreased total equity and total assets. Post mid-2020, financial leverage gradually decreased, reaching 2.59 by September 2021, before rising again to 2.94 at the end of 2021. These fluctuations suggest varying reliance on debt or other liabilities relative to equity over the period, especially pronounced around the 2020 disruptions.

Overall Insights

The data shows relative stability and modest growth in total assets and shareholders' equity up to early 2020, followed by a significant disturbance around mid-2020, likely linked to an external adverse event. Both metrics experienced declines during this time, accompanied by an increase in financial leverage, indicating increased borrowing or reduced equity base. The recovery phase evident from mid-2020 through 2021 portrays improved financial health, with asset levels and equity progressively regaining strength and leverage ratios moderating accordingly.