Airgas Reports 13% EPS Growth for Fiscal Third Quarter; Exceeds EPS Consensus.Business Editors RADNOR Radnor may refer to:
Airgas Airgas, Inc. (NYSE: ARG), headquartered in Radnor Township, Pennsylvania, through its subsidiaries, is the largest U.S. distributor of industrial, medical and specialty gases (delivered in packaged or cylinder form), and hardgoods (welding, safety and related products). , Inc., (NYSE NYSE See: New York Stock Exchange :ARG See argument. arg - argument ) today reported increased earnings for its third quarter ended December December: see month. 31, 2001. Net earnings were $11.8 million or $0.17 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to $9.9 million or $0.15 per diluted share in the same period a year ago, on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis. Net earnings for the nine months ended December 31, 2001, excluding the cumulative effect of a change in accounting principle, were $39.8 million or $0.57 per diluted share versus $37.2 million or $0.56 per diluted share in the prior year period, on a pro forma basis. Pro forma results reflect prior year periods adjusted to exclude goodwill amortization. Free cash flow per diluted share for the nine-month period increased 55% to $0.82 from $0.53 in the prior year, contributing $55 million to debt reduction. The reported net earnings per diluted share for the quarter ended December 31, 2000 were $0.10 versus pro forma results of $0.15 stated above. Reported results for the nine-month period ended December 31, 2001 reflect a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $0.85 per diluted share resulting from a cumulative effect of a change in accounting principle. The reported results per diluted share for the nine-month periods ended December 31, 2001 and 2000 were a net loss of $0.28 and net earnings of $0.40, respectively. While fiscal third quarter sales of $392 million were down slightly compared to last year, total same-store sales Same-store sales is a business term which refers to the revenue generated by one of a retail chain's specific outlets during a certain period of time (often a fiscal quarter or a particular shopping season), compared to an identical period in the past, usually in the previous year. increased 0.3% compared to the same quarter a year ago. Same-store sales in the Distribution segment were down slightly overall, but up 1% excluding tools, reflecting an increase of 9% for gases and rent and an 8% decline in hardgoods. Same-store sales for the Gas Operations segment increased 7%. For the nine-month period, sales increased slightly to $1.22 billion from $1.21 billion last year. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. was $41 million versus $48 million last year. "By achieving 13% earnings per share growth in a very difficult economic environment, we are delivering on our commitment to increase the earnings power of our business," commented Airgas Chairman and Chief Executive Officer Peter McCausland. "We are growing market share and managing our costs. We also are delivering on our commitment to reduce total debt through the continued growth in free cash flow." McCausland added, "The Airgas team remained focused on our key strategic initiatives, like increasing market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" , improving supply chain efficiencies and implementing improved business processes. As a result, Airgas is well positioned for growth, especially when the economy begins to strengthen." On January January: see month. 3, 2002, Airgas announced it had reached an agreement with Air Products and Chemicals, Inc. to purchase the majority of Air Products' U.S. packaged gas business excluding its electronic gases and magnetic resonance imaging magnetic resonance imaging (MRI), noninvasive diagnostic technique that uses nuclear magnetic resonance to produce cross-sectional images of organs and other internal body structures. related helium helium (hē`lēəm), gaseous chemical element; symbol He; at. no. 2; at. wt. 4.0026; m.p. below −272°C; at 26 atmospheres pressure; b.p. −268.934°C; at 1 atmosphere pressure; density 0. operations. Closing is expected to follow regulatory approvals. The Company will conduct an earnings teleconference on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , January 25, 2002, beginning at 8:30 a.m. Eastern Time. Access the teleconference in a listen-only mode by calling 212-547-0138 and entering passcode "Earth". Slides to be presented during the Company's teleconference, information about how to access a live webcast of the teleconference, and replay instructions are available in the 'Investor Info' section on the Company's Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the site www.airgas.com. The replay will be accessible for one week starting at approximately 11:00 a.m. Eastern Time. Free cash flow is defined as net earnings, excluding certain gains and charges, plus depreciation, amortization and deferred income taxes, minus capital spending, plus/minus
Plus/minus is an ice hockey statistic that measures the team goal differential when a specific player is on the ice. the change in working capital, excluding the impact of the accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. . About Airgas, Inc. Airgas, Inc. is the largest U.S. distributor of industrial, medical and specialty gases, welding welding, process for joining separate pieces of metal in a continuous metallic bond. Cold-pressure welding is accomplished by the application of high pressure at room temperature; forge welding (forging) is done by means of hammering, with the addition of heat. , safety and related products. Its integrated network A network that supports both data and voice and/or different networking protocols. See converged network and new public network. of 700 locations includes branches, retail stores, gas fill plants, specialty gas labs, production facilities and distribution centers. Airgas also distributes its products and services through eBusiness See e-business. , catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. and telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. channels. Its national scale and strong local presence offer a competitive edge to its diversified diversified (di·verˑ·s customer base. For more information, please visit www.airgas.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release may contain statements that are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , as that term is defined by the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 or by the Securities and Exchange Commission in its rules, regulations and releases. These statements include, but are not limited to, statements regarding: increased earnings power, free cash flow, debt reduction; growth of market share; management of costs; the Company's focus on its key strategic initiatives to position the Company for growth, especially when the economy strengthens; and, the expected closing of the purchase of the majority of Air Products' U.S. packaged gas business following applicable regulatory approvals. Airgas intends that such forward-looking statements be subject to the safe harbors Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. created thereby. All forward-looking statements are based on current expectations regarding important risk factors and should not be regarded as a representation by the Company 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 the success of the Company's strategic initiatives in growing sales and market share and establishing the Company as the low-cost supplier; increased cost pressures and the inability to control costs; the inability to consummate To carry into completion; to fulfill; to accomplish. A Common-Law Marriage is consummated when the parties live in a manner intended to bring about public recognition of their relationship as Husband and Wife. the transaction with Air Products; an economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. (including adverse changes in the specific markets for our products); increased competition; customer acceptance of the Company's products; adverse changes in customer buying patterns; adverse changes in general economic conditions; political and economic uncertainties associated with current world events; and other factors described in the Company's reports, including Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. dated March 31, 2001 and Forms 10-Q dated June June: see month. 30, 2001 and September September: see month. 30, 2001 filed by the Company with the Securities and Exchange Commission. Consolidated statements of earnings and consolidated condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. balance sheets follow.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2001 2000 (a) 2001 2000 (a)
---- ---- ---- ----
Net sales: (Pro forma) (Pro forma)
Distribution $ 357,769 $ 359,721 $1,108,428 $1,105,519
Gas Operations 34,664 35,249 111,662 108,546
---------- ---------- ---------- ----------
Total net
sales 392,433 394,970 1,220,090 1,214,065
---------- ---------- ---------- ----------
Costs and
expenses:
Cost of
products sold
(excl. deprec.)
Distribution 181,824 190,319 574,577 591,718
Gas Operations 11,966 12,458 39,496 39,342
Selling,
distribution
and
administrative
expenses 149,529 145,112 453,483 426,780
Depreciation 16,051 15,686 47,497 48,000
Amortization 1,869 1,505 6,220 7,062
---------- ---------- ---------- ----------
Total costs
and expenses 361,239 365,080 1,121,273 1,112,902
---------- ---------- ---------- ----------
Operating income:
Distribution 25,711 25,148 80,069 83,988
Gas Operations 5,483 4,742 18,748 17,175
---------- ---------- ---------- ----------
Total
operating
income 31,194 29,890 98,817 101,163
Interest expense,
net (12,448) (15,597) (35,211) (47,668)
Discount on
securitization
of trade
receivables (1,063) (137) (4,047) (137)
Other income, net
(b) 1,971 352 1,793 809
Equity in
earnings of
unconsolidated
affiliates 645 881 2,875 3,584
---------- ---------- ---------- ----------
Earnings before
income taxes
and the
cumulative
effect of a
change in
accounting
principle 20,299 15,389 64,227 57,751
Income tax
expense 8,454 5,463 24,378 20,502
---------- ---------- ---------- ----------
Earnings before
the cumulative
effect of a
change in
accounting
principle 11,845 9,926 39,849 37,249
Cumulative effect
of a change in
accounting
principle (c) -- -- (59,000) --
---------- ---------- ---------- ----------
Net earnings
(loss) $ 11,845 $ 9,926 $ (19,151) $ 37,249
========== ========== ========== ==========
Per share data:
Basic earnings
(loss) per
share $ .17 $ .15 $ (.28) $ .57
Diluted
earnings (loss)
per share $ .17 $ .15 $ (.28) $ .56
Net earnings
(excluding the
cumulative
effect of a
change in
accounting
principle) (d) $ 11,845 $ 9,926 $ 39,849 $ 37,249
========== ========== ========== ==========
Per share data
(excluding the
cumulative
effect of a
change in
accounting
principle) (d):
Basic earnings
per share $ .17 $ .15 $ .59 $ .57
Diluted
earnings per
share $ .17 $ .15 $ .57 $ .56
Weighted average
shares
outstanding:
Basic 68,300 66,500 67,900 65,700
Diluted 70,300 67,200 69,400 67,000
-- Pro forma amounts reflect prior year periods adjusted to
exclude goodwill amortization of $4 million and $12 million
for the three and nine months ended December 31, 2000,
respectively. See note (a) for further description.
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
Dec. 31, March 31,
2001 2001
ASSETS
Trade accounts receivable, net (e) $ 62,818 $ 143,129
Inventories, net 154,534 155,024
Deferred income tax asset, net 10,394 10,143
Prepaids and other current assets 23,572 25,549
---------- ----------
TOTAL CURRENT ASSETS 251,318 333,845
Property, plant and equipment, net 697,387 704,646
Goodwill 384,099 440,057
Other non-current assets, net 113,220 102,742
---------- ----------
TOTAL ASSETS $1,446,024 $1,581,290
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 60,560 $ 76,337
Accrued expenses and other
current liabilities 122,558 130,873
Current portion of long-term debt 7,793 72,945
---------- ----------
TOTAL CURRENT LIABILITIES 190,911 280,155
Long-term debt (e) 572,116 620,664
Deferred income taxes 169,029 161,176
Other non-current liabilities 30,210 22,446
Stockholders' equity 483,758 496,849
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,446,024 $1,581,290
========== ==========
See attached notes.
Notes:
(a) In July 2001, the Financial Accounting Standards Board issued
Statement No. 142, "Goodwill and Other Intangible Assets" ("SFAS
142"). SFAS 142 requires that goodwill and other intangible assets
with indefinite useful lives no longer be amortized, but instead
be tested for impairment at least annually. In August 2001, the
Company announced that it adopted SFAS 142 retroactive to April 1,
2001, as permitted under the Statement. Accordingly, results for
the three and nine month periods ended December 31, 2001 do not
include goodwill amortization. For comparability to the current
fiscal year, pro forma results reflect the three and nine months
ended December 31, 2000 adjusted to exclude the amortization of
goodwill. The following represents the results as reported for the
three and nine months ended December 31, 2000:
Three Months Ended Nine Months Ended
Dec. 31, 2000 Dec. 31, 2000
----------------- -----------------
Operating income:
Distribution $22,038 $74,761
Gas Operations 4,204 15,570
------ ------
Total Operating income 26,242 90,331
------ ------
Equity in earnings of
unconsolidated affiliates 455 2,306
------ -----
Net earnings $ 6,676 $26,895
====== ======
Basic earnings per share $ .10 $ .41
Diluted earnings per share $ .10 $ .40
(b) Other income, net, for the three and nine months ended December
31, 2001 includes a net non-recurring gain of approximately $1.9
million ($120 thousand after-tax). The net non-recurring gain
consisted of a $7.4 million gain on the divestiture of two nitrous
oxide plants partially offset by a $1.9 million loss resulting
from an indemnity claim against a prior period divestiture and a
$3.6 million charge to write down a business unit held for sale to
its net realizable value.
(c) In connection with the adoption of SFAS 142, the Company performed
an evaluation of goodwill, which indicated that goodwill of one
reporting unit, our tool business, was impaired. Accordingly, the
Company recognized a $59 million non-cash charge recorded
retroactive to April 1, 2001 as the cumulative effect of a change
in accounting principle for the write-down of goodwill to its fair
value. The impaired goodwill was not deductible for taxes, and
consequently, no tax benefit was recorded in relation to the $59
million charge.
(d) Net earnings and per share amounts, adjusted to exclude the item
described in note (c) above.
(e) The Company participates in a securitization agreement with two
commercial banks to sell up to $150 million of qualified trade
receivables. Net proceeds from the securitization were used to
reduce borrowings under the Company's revolving credit facilities.
The amount of outstanding receivables under the agreement was $139
million and $73 million at December 31, 2001 and March 31, 2001,
respectively.
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