To Our Shareholders,

From the day Airgas came into existence in 1982 through today, we have put ourselves in our customers' shoes and asked ourselves what we need to do to help them become bigger, stronger, more profitable and more competitive. Every time we make a major investment, acquire a new company or build out our capabilities, we ask ourselves how it will impact and benefit our customers. In the process, we have become a partner who our more than 1 million customers can trust to deliver quality products, provide outstanding service and go above-and-beyond to meet their needs.

By focusing on our customers and remembering who owns the company, Airgas has achieved more than three decades of nearly uninterrupted growth. We grew again in fiscal year 2015, though not as much as we anticipated. For the year, net sales increased 5 percent to $5.3 billion, earnings per diluted share rose 4 percent to a record $4.85, and while our free cash flow was down from all-time high levels the previous year, it was still strong, allowing us to pay out quarterly dividends that were 15 percent higher than the previous year.

Our strong cash flow levels also enabled us to continue making acquisitions in fiscal year 2015. We acquired 14 industrial gas and welding supply businesses, including facilities in seven states across the U.S. and a rental welding equipment business in the U.K., and began construction on two new air separation units. By expanding through acquisitions and building better geographic density, we are better able to serve local and national customers in all market sectors. Our strong cash flow also supports the $500 million stock repurchase program which we announced in late May.

We continue to invest in new capabilities that are centered on our customers. In this report, you will find examples of the investments and efforts we are making to help our customers succeed. This is hard work in a tough economic environment, but I truly believe it will pay off.

From our new SAP operating system that gives customers improved order tracking, reporting, and transactional processing capabilities … to our welding hardgoods vending machines that can be located on-site for instant product access … to a more robust eBusiness platform and an increased number of sales channels that allow customers to access Airgas in the way that works best for them, it's easier than ever to do business with Airgas.

And whichever way our customers access us, they know they will receive the unmatched range of services, solutions, products and expertise they've come to expect from Airgas. That's because our culture includes a strong drive to help our customers succeed by any means necessary. During the past year, we continued to make great progress in building our growing array of capabilities aimed at keeping in front of customers' needs and providing a tailor-fit selection of products and services to deliver exceptional value in a variety of industries and markets.

For example, we have focused on providing the wine industry with the supplies and products they need, including our newest offering of sulfur dioxide used in conjunction with wine preservation and fermentation, to produce a great vintage. To support our laboratory customers, we released our new Guide to Gas Cabinet Safety and Code Conformance in conjunction with our line of standard cabinets for hazardous gases to help our laboratory customers understand requirements and provide a safe and reliable on-site storage solution for hazardous gases. We've invested in new specialty gas plant capacity in Tulsa, OK; Tooele, UT; and Stryker, OH, to meet the growing needs in the analytical, industrial and energy marketplaces, and have focused on developing hydrogen packaged gas solutions and key relationships for fuel-cell-powered materials handling equipment. We also continued to refine and optimize our offering for our food and beverage customers, ensuring the high quality, safe and fully compliant systems, products, and certifications they demand.

Further, we continued to serve as the primary supplier of gases and hardgoods to the contractor for the Cheniere Energy liquified natural gas (LNG) project, one of the largest construction projects in the country. The logistics of servicing this project are impressive, including more than 30 on-site bulk gas tanks, hundreds of cylinders, and the supply expertise needed to manage it all. We take great pride in seamlessly providing this customer with what they need, when and where they need it, so they can focus on completing the job.

These initiatives are just a few among many examples of the great, value-added work our associates have been doing in the past year to support our customers in all markets—and this great work bolsters my confidence in the long-term future of Airgas.

Yet, overall, fiscal year 2015 was disappointing. The year was slow to start, but showed accelerating year-over-year improvement through the December quarter. However, the fourth quarter slowed considerably, due in part to disruptions caused by the strengthening of the U.S. dollar, the collapse of oil prices and, yet again, another winter of extreme conditions.

The current sluggish economy has many similarities to the period from 1998 through 2002 when the industrial economy flat-lined and the dot-com bubble burst—causing a double dip recession and a lot of caution on the part of our customers. Back then, it felt like we were pushing on a string. The past few years have been similarly frustrating, not in terms of the work we are doing to create a more customer-focused company, but in the results we are reaping from these efforts.

Still, we see many reasons to be optimistic, both on the micro and macro level. During the past few years, while the economy has struggled to gain momentum, we have performed very well compared to our peers. We still believe the American manufacturing renaissance is near and that the outlook for the U.S. economy in the next 10 years is good. The signs are there. America is on track to be energy independent by the end of the decade, and right now a lot of companies from Europe and Japan are focusing their investment dollars on the U.S.

Airgas is a very resilient business with a diverse customer base. We always come out of these down economic periods with a sustained growth burst, and I see no reason to believe it will be any different this time. For the past 28 years, our company has delivered a total compounded annual return to shareholders of 18 percent. In good economic times or bad, we move forward with the build out of capabilities that will benefit Airgas, our customers and our shareholders in the long run.

We truly understand our business and our customers. I know we are focused on the right areas, and with a little help from the economy, we are well positioned to outperform our competitors and achieve outstanding results for our customers and our shareholders going forward.

Peter McCausland
Executive Chairman
July 2015