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Airgas Reports Third Quarter EPS of $0.76, 13% Growth over Prior Year |
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Airgas Reports Third Quarter EPS of $0.76, 13% Growth over Prior Year
RADNOR, PA – January 28, 2009 – Airgas, Inc. (NYSE: ARG), the largest U.S. distributor of industrial, medical and specialty gases, and welding, safety and related products, today reported growth in sales, operating income and earnings, as well as strong free cash flow* for its third quarter ended December 31, 2008.
Quarterly net earnings grew to $62.9 million, or $0.76 per diluted share, compared to $56.8 million, or $0.67 per diluted share, in the prior year, representing a 13% increase in earnings per share. The prior year quarter included $0.01 per diluted share of integration expense primarily associated with the acquisition of Linde's U.S. packaged gas business, and a one-time $0.01 per diluted share tax benefit related to a change in state tax law.
Third quarter sales increased 7% from the prior year to $1.1 billion. Acquisitions contributed 6% to the increase, and total same-store sales grew 1% in the quarter, with gas and rent up 6% and hardgoods down 5%.
“Our strategic products, which have favorable long-term growth profiles and represent about 40% of sales, posted 4% organic growth in the quarter,” said Airgas Chairman and Chief Executive Officer Peter McCausland. “The second half of the quarter was characterized by widespread slowing across most of our customer segments, with relative strength in the medical, analytical, and food and beverage segments.
“Our operating margins held up relatively well, demonstrating our ability to react quickly in a downturn,” McCausland added, referring to the Company’s 12.1% operating margin in the quarter. “We generated $59 million of free cash flow this quarter, marking our sixth straight quarter of free cash flow in excess of $50 million. Looking forward, we are targeting curtailment of capital expenditures as we complete significant plant projects in the next two quarters.”
Return on capital* increased 40 basis points over the prior year to 13.5%. Year-to-date free cash flow* was $171 million, compared to $162 million in the prior year.
Assuming a modest decline from third quarter sales and the realization of expected benefits from its previously announced expense reduction efforts, the Company expects earnings per diluted share of $0.73 to $0.76 in the fourth quarter, a range similar to third quarter earnings. The Company expects full-year earnings per diluted share of $3.16 to $3.19 in fiscal 2009, representing 19% to 20% growth over fiscal 2008. 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 Thursday, January 29. The teleconference will be available by calling (888) 218-8059. 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 February 25 at http://investor.shareholder.com/arg/events.cfm. A replay of the teleconference will be available through February 6. To listen, call (888) 203-1112 and enter passcode 9430654.
* See attached reconciliations and calculations of the non-GAAP return on capital and free cash flow 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: curtailment of capital expenditures; completion of significant plant projects in the next two quarters; prevailing economic conditions offering limited visibility into future sales and earnings; expectations for fourth quarter fully diluted earnings per share to be in the range of $0.73 to $0.76; expectations for full-year diluted earnings per share to be in the range of $3.16 to $3.19; and our ability to react quickly in a downturn. 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: continued weakening of the economy resulting in weakening demand for our products; 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; adverse changes in customer buying patterns; customer acceptance of current prices and of future 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; 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; 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.
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