The acquisition also comes at a great time for Airgas as the core markets in which we compete — industrial manufacturing, non-residential construction, and energy — continue to run strong, which means greater demand for our gases and welding supplies.

One of the strongest sectors in our core business is non-residential construction. Because of the actions we have taken in the past two years, we now have a national sales team working with the largest engineering and construction firms, regional specialists in top construction markets, and 15 construction-focused branches to meet the needs of construction jobsites. We also have 40 Red-D-Arc welder rental locations in North America to meet the equipment needs of contractors. Most of Red-D-Arc’s phenomenal growth last year was due in large part to increased demand for rental equipment at construction projects. More construction branches and Red-D-Arc locations are planned in the next few years to take advantage of this long-term secular trend as America rebuilds its infrastructure.

While the industrial economy and construction markets fuel growth in our core business, our key strategic growth areas of bulk, medical, and specialty gases, safety products, and carbon dioxide all continue to perform well.

Last year’s acquisition of eight air separation units (ASUs) and related business from Linde has more than doubled the size of our bulk gas sales. Airgas Merchant Gases, headed by Tom Thoman as senior vice president, now manages production and gas sourcing of bulk gas for all our regional companies. Airgas Merchant Gases is currently supervising the construction of two more ASUs in Carrollton, KY and New Carlisle, IN. These ASUs, when added to the 14 others we now operate, give us a strong presence in the U.S. bulk market. We believe that Airgas Merchant Gases will accelerate the growth of our bulk gas business.

In specialty gases, we have named the former president of Airgas East, Jim Muller, to a new role of senior vice president for specialty gases and life sciences. He will help our regions tap the full potential of the industry’s largest network of specialty gas facilities. Through acquisition, innovation, and internal growth, we have created an unrivaled network with eight national laboratories, almost 60 regional specialty gas labs, an R&D center and a specialty gas equipment center. Our patented AcuGrav™ specialty gas mixing stations automate the production of specialty gas mixes, especially EPA Protocols. We also now have proprietary technology that automates the analysis of these mixes, which has dramatically improved our ability to deliver accurate, consistent product to customers. As a result of the improvements we have made in our specialty gas capabilities over the last several years, this part of our business is growing nicely.

With Airgas Puritan Medical operations in each of our regional companies, we are the leading U.S. distributor of medical gases and related products. The convenient Walk-O2-Bout® portable oxygen systems and strong relationships with the leading group purchasing organizations have helped us expand our hospital business. We expect continued growth in medical gases.

Letter Continued…