For Distributors Only

Airgas bullish in the long run

Sees bright prospects for U.S. manufacturing and energy industries

January 4, 2013
/ Print / Reprints /
ShareMore
/ Text Size+
Airgas, Inc. (NYSE: ARG), the largest U.S. supplier of industrial, medical, and specialty gases, and related products, reported what it called “solid” financial results for its second quarter ended September 30, 2012, in moderating macroeconomic conditions across its diversified customer base during the quarter and in light of the year-over-year impacts of incrementally higher SAP implementation costs, one less selling day, and helium supply constraints.

Second quarter sales were $1.23 billion, an increase of 4% over the prior year. Same-store sales grew 3% in the quarter, with gas and rent up 4% and hardgoods up 1%.

Operating margin was 11.8% for the second quarter and included 90 basis points of impact from SAP implementation costs and depreciation expense. Prior year operating margin was 12.0% and included 70 basis points of impact from SAP implementation costs and depreciation expense. Adjusted operating margin* was 12.0% and 12.2% in the current and prior year quarters, respectively.

Return on capital* was 12.5% for the twelve months ended September 30, 2012, an increase of 20 basis points over the prior year.

Year-to-date free cash flow* through the second quarter was $121 million, an increase of 15% over the prior year, and adjusted cash from operations* was $277 million, an increase of 8% over the prior year.

Since the beginning of its fiscal year, the Company has acquired eight businesses with aggregate annual revenues of more than $19 million.

Second quarter earnings per diluted share were $1.03, an increase of 2% over prior year earnings per diluted share of $1.01. Excluding a $0.02 restructuring charge, adjusted earnings per diluted share* were $1.05, an increase of 2% over prior year adjusted earnings per diluted share* of $1.03. Results included SAP implementation costs and depreciation expense of $0.09 per diluted share in the current year quarter compared to $0.07 in the prior year quarter, a year-over-year negative impact of approximately $0.03 due to one less selling day in the current year quarter, and a year-over-year decline of $0.02 from the impact of lower sales due to helium supply constraints.

Resilience in face of sluggishness

“Our second quarter earnings reflect the resilience of our business and our 15,000 dedicated associates in a sluggish economic environment,” said Airgas Executive Chairman Peter McCausland. “Though the relative strength of the U.S. metal fabrication and energy sectors overall has softened of late, we continue to win new business in these sectors on the strength of our strategic accounts program, technical support, breadth of our product and service offering, and outstanding customer service. The year-over-year earnings headwinds we faced this quarter from one less selling day, helium supply constraints, and incremental SAP costs reduced our year-over-year earnings growth by $0.07, further highlighting the solid performance in our underlying business.”

“Current business conditions present some near-term challenges, but we will continue to invest in our growth strategies,” said Airgas Chief Executive Officer Michael L. Molinini. “Our SAP implementation is on-schedule, with 10 of our 12 regional distribution businesses now running successfully on the new system. We remain confident that we will realize the economic benefits as planned and that this investment will further enhance the value of our full-service offering to customers and help our business operate more efficiently over the long-term.”

Short-term caution; long-term optimism

McCausland said, “We’re reducing our outlook for earnings growth for the balance of our fiscal year. Though we’re appropriately cautious about the near-term business environment, we’re very optimistic about the long-term prospects for the U.S. manufacturing and energy industries and our ability to leverage our unique value proposition and unrivaled platform to drive growth in these and other key customer segments.”

Did you enjoy this article? Click here to subscribe to ISHN.

You must login or register in order to post a comment.

STAY CONNECTED

Facebook logo Twitter YouTubeLinkedIn

Multimedia

Videos

Image Galleries

ASSE's Safety 2013 Review

A photo gallery from the Las Vegas Convention Center, where ASSE’s annual professional development conference was held June 24 to 27. All photos courtesy of the American Society of Safety Engineers.

THE MAGAZINE

ISHN Magazine

ishn april 2014 issue cover

2014 April

In this month's issue of ISHN, check out features about safety in the oil and gas industry.

Table Of Contents Subscribe

THE ISHN STORE

M:\General Shared\__AEC Store Katie Z\AEC Store\Images\ISHN\safetyfourth.jpg
Safety Engineering, 4th Edition

A practical, solutions-driven reference, Safety Engineering, 4th edition, has been completely revised and updated to reflect many of today’s issues in safety.

More Products

For Distributors Only - January 2014

ISHN0114_FDO_cov.jpgFor Distributors Only is ISHN's niche brand standard-sized magazine supplement aimed at an audience of 2,000 U.S. distributors that sell safety products. Circulation only goes to distributors. CHECK OUT THEJANUAYR 2014 ISSUE OF FDO HERE

ishn infographics

2012 US workplace deathsCheck out ISHN's new Infographic page! Learn more about worker safety through these interactive images. CLICK HERE to view the page.