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Airgas Reports Fourth Quarter EPS of $0.68 and Fiscal 2009 EPS of $3.12 |
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Airgas Reports Fourth Quarter EPS of $0.68 and Fiscal 2009 EPS of $3.12
- Fourth quarter diluted EPS of $0.68, down 11%
- Record full year diluted EPS of $3.12, up 17%
- Fourth quarter sales down 9%, same-store sales down 13%
- Full year sales up 8%, same-store sales up 1%
- Record free cash flow: fourth quarter $157 million; full year $328 million
RADNOR, PA – May 5, 2009 -- Airgas, Inc. (NYSE: ARG), the largest U.S. distributor of industrial, medical, and specialty gases, and welding, safety, and related products, today reported solid performance in earnings and cash flow, relative to the weak sales environment, for its fourth quarter ended March 31, 2009.
Quarterly earnings declined 11% to $0.68 per diluted share, compared to $0.76 per diluted share in the prior year. Fourth quarter sales were $1.0 billion compared to $1.1 billion in the prior year, a decline of 9%. Total same-store sales declined 13% in the quarter, with hardgoods down 20% and gas and rent down 8%. Acquisitions contributed 4% sales growth in the quarter.
“Most of our customer segments were under significant pressure this quarter, with manufacturing suffering the deepest declines,” said Airgas Chairman and CEO Peter McCausland. “Given the difficult sales environment, we moved quickly to curtail costs and capital spending. As a result, our operating margin in the quarter held up relatively well, declining modestly to 11.5% from 12.1% last year.”
Free cash flow* in the fourth quarter was a strong $157 million compared to $63 million last year, with a large part of the improvement driven by reductions in working capital. Return on capital* was 12.7% compared to 13.2% in the prior year.
For the full year, sales increased 8% to $4.3 billion. Acquisitions contributed 7% sales growth in the year, while total same-store sales grew 1%, with hardgoods down 4% and gas and rent up 4%. The Company completed 14 acquisitions in fiscal 2009, adding more than $205 million in historic annual revenue. Earnings for the year grew 17% from $2.66 per diluted share in the prior year to $3.12, marking another record year of earnings. The strong performance was driven by good sales growth in the first half of the year and effective management of costs in response to the slowing economy in the second half of the year. The prior year included $0.06 of integration expense primarily associated with the June 30, 2007 acquisition of Linde’s U.S. packaged gas business, a one-time non-cash charge of $0.03 related to the conversion of National Welders Supply Company from a joint venture to a wholly owned subsidiary, and a $0.01 tax benefit related to a change in state tax law. Adjusted cash from operations* was a record $660 million, up from $482 million the previous year, helping to drive strong free cash flow* of $328 million for the year, up from $225 million the previous year.
“The current environment puts a damper on what was a record year for Airgas in earnings and cash flow, but we’re using this time to strengthen our operations so that we are well-positioned for growth when the economy begins to recover,” said McCausland. “The fourth quarter trend of low sales volumes continued in April, and with few signs of recovery in the near term, we are cautious in our outlook for fiscal 2010. The resilient nature of our business model, including our flexible cost structure and ability to generate strong free cash flow, should prove beneficial even if conditions deteriorate further.”
The Company expects earnings per diluted share of $0.62 to $0.67 for the first quarter, a decline of 23% to 17% from the strong first quarter results in the prior year. For the full year 2010, the Company expects earnings per diluted share of $2.60 to $2.90, a decline of 17% to 7%.
Prevailing economic conditions offer limited visibility into future sales and earnings, which should be taken into consideration when evaluating the Company’s guidance.
The Company will conduct an earnings teleconference at 11:00 a.m. Eastern Time on Wednesday, May 6. The teleconference will be available by calling (877) 719-9796. The presentation materials (this press release, slides to be presented during the Company’s teleconference and information about how to access a live and on-demand webcast of the teleconference) are available in the “Investor Information” section on the Company’s Internet site at www.airgas.com. A webcast of the teleconference will be available live and on demand through June 5 at http://investor.shareholder.com/arg/events.cfm. A replay of the teleconference will be available through May 15. To listen, call (888) 203-1112 and enter passcode 4293724.
* See attached reconciliations and calculations of the non-GAAP adjusted cash from operations, free cash flow, and return on capital financial measures.
About Airgas, Inc.
Airgas, Inc. (NYSE: ARG), through its subsidiaries, is the largest U.S. distributor of industrial, medical, and specialty gases, and hardgoods, such as welding equipment and supplies. Airgas is also one of the largest U.S. distributors of safety products, the largest U.S. producer of nitrous oxide and dry ice, the largest liquid carbon dioxide producer in the Southeast, and a leading distributor of process chemicals, refrigerants, and ammonia products. More than 14,000 employees work in over 1,100 locations, including branches, retail stores, gas fill plants, specialty gas labs, production facilities, and distribution centers. Airgas also distributes its products and services through eBusiness, catalog, and telesales channels. Its national scale and strong local presence offer a competitive edge to its diversified customer base. For more information, please visit www.airgas.com.
Forward-Looking Statements
This press release may contain statements that are forward looking, as that term is defined by the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases. These statements include, but are not limited to: expectations for first quarter fully diluted earnings per share to be in the range of $0.62 to $0.67 and full year earnings per share for fiscal 2010 to be in the range of $2.60 to $2.90; our seeing few signs of recovery in the near term; our cautious outlook for fiscal 2010; and the resilient nature of our business model, including our flexible cost structure and ability to generate strong free cash flow, and that these characteristics should prove beneficial if conditions deteriorate further. We intend that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectations regarding important risk factors and should not be regarded as a representation by us or any other person that the results expressed therein will be achieved. Important factors that could cause actual results to differ materially from those contained in any forward-looking statement include: adverse changes in customer buying patterns resulting from further deterioration in current economic conditions; weakening operating and financial performance of our customers, which can negatively impact our sales and our ability to collect our accounts receivables; postponement of projects due to the recession; customer acceptance of price increases; the success of implementing and continuing our cost reduction programs; our ability to achieve anticipated acquisition synergies; supply cost pressures; increased industry competition; our ability to successfully identify, consummate, and integrate acquisitions; our continued ability to access credit markets on satisfactory terms; significant fluctuations in interest rates; increases in energy costs and other operating expenses eroding the planned cost savings; higher than expected implementation costs of the SAP system; conversion problems related to the SAP system that disrupt the Company’s business and negatively impact customer relationships; the impact of tightened credit markets on our customers; the impact of changes in tax and fiscal policies and laws; the potential for increased expenditures relating to compliance with environmental regulatory initiatives; the impact of new environmental, healthcare, tax, accounting, and other regulation; potential liability under the Multiemployer Pension Plan Amendments Act of 1980 with respect to our participation in multiemployer pension plans for our union employees; the extent and duration of current recessionary trends in the U.S. economy; the effect of catastrophic events; political and economic uncertainties associated with current world events; and other factors described in the Company’s reports, including its March 31, 2008 Form 10-K, subsequent Forms 10-Q, and other forms filed by the Company with the Securities and Exchange Commission.
Consolidated statements of earnings, condensed consolidated balance sheets, consolidated statements of cash flows, and reconciliations of non-GAAP financial measures follow.
Please click here for the complete release including financials.
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For more information on Airgas, please visit .
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