To Our Shareholders,

Airgas has always been a company driving forward with a sense of purpose. From our very first days as a $3 million regional gas distributor way back in 1982, we saw the amazing possibilities for growth in the packaged gas industry and drove ahead to capitalize on them. We've been on a great ride since then, chalking up more than three decades of almost uninterrupted growth, and today, as the clear U.S. leader in packaged gases with over $5 billion in annual sales, we're still striving to realize the many growth opportunities we see in front of us. We're always eager and working hard to get to the next mile marker on the road ahead.

We set the bar high and challenge ourselves constantly. Sometimes we get a little ahead of ourselves. That's exactly what happened in fiscal year 2014. At the beginning of the year, we believed that the U.S. industrial economy was going to start its long-awaited comeback and we would see sales volumes pick up during the year.

We were early on that call, but I don't believe we were wrong directionally. There is good reason to believe that the industrial and energy renaissance is around the corner, though the exact timing is difficult to pinpoint. Our timing hasn't always been perfect, but in the long term, we've done extremely well.

Though not as strong as we had hoped it would be, this past year was a solid step forward on our growth journey. For the year, adjusted earnings per share* increased 9 percent to a record $4.72. Full-year sales were $5.1 billion, up 2 percent year-over-year, and we delivered record free cash flow* of $441 million. Strong cash flow continues to be a hallmark of our business model, enabling us to increase our quarterly dividend by an average of 28 percent each year since its inception in 2004, including a 15 percent increase for the first quarter of fiscal 2015.

Our strong cash flow enabled us to continue making acquisitions to strengthen our core business. In fiscal 2014, we made 11 acquisitions, including The Encompass Gas Group, one of the largest privately owned U.S. suppliers of industrial, medical and specialty gases and related hardgoods. Building density through acquisitions as a complement to our organic growth initiatives will continue to be a great way for us to create shareholder value in the future.

Creating value for shareholders has always been a focal point for Airgas. In fiscal 2014, we delivered a total return to shareholders of 9 percent, and over the past three fiscal years we delivered a total compounded annual return of 19 percent—consistent with our 27-year average. Airgas' stock price ended the year above $106 per share. Just over three years ago, the Airgas Board stood strong in the face of tremendous pressure to accept a $70 per share unsolicited takeover bid. In rejecting that offer, our Board ultimately created nearly $2 billion in incremental market value of Airgas.

In each of the past two years, our shareholders have been presented with a precatory proposal to declassify the Airgas Board of Directors. Last year the proposal received less support from shareholders than it did a year earlier—barely a majority of our outstanding shares and well short of the two-thirds required to enact such a change to our by-laws. There is a growing recognition by many of our shareholders that a one-size-fits-all approach to corporate governance is not necessarily in their best interests— especially when it comes to Airgas. Our shareholders will once again face this proposal at the 2014 annual meeting, along with another precatory proposal regarding majority voting for director elections—a two-pronged attack on Airgas' staggered board. I urge our shareholders to consider our strong governance track record and to reject both of these proposals.

I believe, as does the entire Airgas Board, that our transparency, our conservative approach to risk management, our shareholder-aligned compensation practices, our consistent strategic planning, and our focus on delivering value to shareholders over the long term are key differentiators that have proven Airgas to be a responsible and trustworthy steward of its shareholders' capital.

We know the inherent value of the Airgas business model and are always working to maximize our potential. Even if external factors—like a sluggish economy or choppy business conditions in some of our key markets—aren't cooperating quite yet, our company is very good at self-help. As Mike notes in his letter, the moves we made this past year will serve us well going forward.

Although non-residential construction is showing signs of life, overall we're not finding much tailwind in the economy. But we continue to move forward, doing the heavy lifting and implementing the many projects and strategies outlined in this annual report to keep us on a strong growth track.

But the best reason to believe in Airgas is our associates. We've got the most talented and knowledgeable people in the business, and they believe the road ahead is full of opportunities.

Recently, I read a retirement letter from one of our original employees, Paula Gorney, that I think captures the Airgas growth journey in a nutshell. "I have loved working at Airgas for almost 34 years and am proud to have played a small but integral role in helping it achieve the success it enjoys today," she wrote. "From helping to set up our very first specialty gas lab right here in Bay City, Michigan, to helping Airgas become the market leader in specialty gases nationwide, I am filled with gratitude for all the opportunities Airgas has afforded my career. I look forward to retirement, confident Airgas will continue to excel in its goal of becoming a world-class industrial, medical and specialty gas organization intent on helping our customers achieve their goals. Airgas has the resources, the tools, and the drive to outperform all competitors, and it has been a privilege to be a part of the wonderful people who make up the Airgas team, our greatest resource."

I'm confident too, and can't wait to see where our outstanding company goes on the road ahead.

Peter McCausland
Executive Chairman
July 2014