Airgas Reports Continued Momentum and Record First Quarter EPS of $0.48.RADNOR Radnor may refer to:
See: New York Stock Exchange :ARG See argument. arg - argument ), the largest U.S. distributor of industrial, medical and specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. 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, today reported strong growth in sales and earnings for its first quarter ended June June: see month. 30, 2006. Quarterly net earnings grew 30% to $39 million, or $0.48 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 $30 million, or $0.38 per diluted share, in the same period a year ago. First quarter sales grew to $773 million, up 14% over the prior 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. were up 9%, with hardgoods up 10% and gas and rent up 9%. Industrial production, energy, and non-residential construction continued to exhibit strong demand. "Our solid same-store sales results show the sustained momentum we are generating through our core business and strategic product initiatives," said Airgas Chairman and Chief Executive Officer Peter McCausland. "Acquisitions contributed nicely to our sales growth this quarter, and we expect to complete some significant acquisitions in the near future as well." McCausland continued, "We improved operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by 90 basis points year over year to 10.2%. Our results reflect not only sales growth, but also improvements in operational efficiency. We are executing well with expense and price discipline to stay ahead of the cost curve and to deliver the products and services our customers need." He noted that the pricing actions in the first quarter took effect on June 26 in the final days of the quarter. "Given the continued momentum in sales and earnings growth, we expect to earn $0.45 to $0.47 per diluted share in the second quarter, and we are increasing our full-year EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. guidance to $1.85 to $1.92. Our associates continue to create value in many different ways, and we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the future." The current quarter marks the Company's prospective adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R, Share-Based Payment. The accounting change increased expense by $0.02 per share in the first quarter. Also included in the first quarter is a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. $0.02 per share benefit related to a recent change in state tax law. The Company will conduct an earnings teleconference at 11:00 a.m. Eastern Time on Thursday Thursday: see week. , July July: see month. 27. The teleconference will be available by calling (877) 704-5385. 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 On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front webcast of the teleconference) are available in the "Investor Information" section under the "Company Information" heading 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 at www.airgas.com. A webcast of the teleconference will be available live and on demand through August 25 at http://www.shareholder.com/arg/medialist.cfm. A replay of the teleconference will be available through August 4. To listen, call (888) 203-1112 and enter passcode 4789001. 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 the third-largest U.S. distributor of safety products, the largest U.S. producer of nitrous oxide nitrous oxide or nitrogen (I) oxide, chemical compound, N2O, a colorless gas with a sweetish taste and odor. Its density is 1.977 grams per liter at STP. It is soluble in water, alcohol, ether, and other solvents. and dry ice, the largest liquid carbon dioxide carbon dioxide, chemical compound, CO2, a colorless, odorless, tasteless gas that is about one and one-half times as dense as air under ordinary conditions of temperature and pressure. producer in the Southeast Southeast or south east is the ordinal direction halfway between south and east. It the opposite of northwest. Southeast or South East can refer to: Noun the selling of a commodity or service by telephone telesales npl → televentas fpl telesales npl → 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, 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: expectations for completing significant acquisitions in the near future; our expense and price discipline to stay ahead of the cost curve and to deliver the products and services that customers need; our continued momentum in sales and earnings growth; our expectation of earnings per diluted share of $1.85 to $1.92 in fiscal 2007 and $0.45 to $0.47 in the second quarter; and our optimism Optimism See also Hope. Bontemps, Roger personification of cheery contentment. [Fr. Lit.: “Roger Bontemps” in Walsh Modern, 66] Candide beset by inconceivable misfortunes, hero indifferently shrugs them off. [Fr. about the future. We intend 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 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: our ability to successfully 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. and integrate the significant pending acquisitions; a disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. to our business from integration problems associated with acquisitions; customer acceptance of the implemented and future price increases; supply cost pressures; increased industry competition; 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. ; adverse changes in customer buying patterns; significant fluctuations in interest rates; the impact of unexpected stock-based compensation expense; increases in energy costs and other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. ; the inability to obtain alternative supply sources to adequately meet customer demand; our ability to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. certain of our debt obligations as they mature; the effect of hurricanes and other catastrophic events; 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, 2006, filed by the Company with the Securities and Exchange Commission. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of earnings, 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 and consolidated statements of cash flows follow.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
2006 2005
--------- ---------
Net sales $773,036 $678,125
Costs and expenses:
Cost of products sold (excl. deprec.) 383,219 334,863
Selling, distribution and
administrative expenses 275,977 249,849
Depreciation 33,162 29,110
Amortization 1,772 1,299
--------- ---------
Total costs and expenses 694,130 615,121
--------- ---------
Operating income 78,906 63,004
Interest expense, net (13,676) (13,944)
Discount on securitization of
trade receivables (3,336) (1,848)
Other income, net 213 912
--------- ---------
Earnings before income tax expense and
minority interest 62,107 48,124
Income tax expense (22,744) (18,135)
Minority interest in earnings of
consolidated affiliate (711) (522)
--------- ---------
Income from continuing operations 38,652 29,467
Income from discontinued
operations, net of tax - 180
--------- ---------
Net earnings $ 38,652 $ 29,647
========= =========
NET EARNINGS PER COMMON SHARE
BASIC
Earnings from continuing operations $ 0.50 $ 0.39
Earnings from discontinued operations - -
--------- ---------
Net earnings per share $ 0.50 $ 0.39
========= =========
DILUTED
Earnings from continuing operations $ 0.48 $ 0.38
Earnings from discontinued operations - -
--------- ---------
Net earnings per share $ 0.48 $ 0.38
========= =========
Weighted average shares outstanding:
Basic 77,557 76,252
Diluted 82,436 77,951
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
June 30, March 31,
2006 2006
----------- -----------
ASSETS
Cash $ 33,118 $ 34,985
Trade accounts receivable, net 159,696 132,245
Inventories, net 234,603 229,523
Deferred income tax asset, net 24,411 30,141
Prepaid expenses and other current assets 29,125 31,622
----------- -----------
TOTAL CURRENT ASSETS 480,953 458,516
Plant and equipment, net 1,428,337 1,398,757
Goodwill 570,625 566,074
Other intangible assets, net 27,721 26,248
Other non-current assets 24,404 24,817
----------- -----------
TOTAL ASSETS $2,532,040 $2,474,412
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade 128,669 143,752
Accrued expenses and other current liabilities 198,484 200,001
Current portion of long-term debt 106,010 131,901
----------- -----------
TOTAL CURRENT LIABILITIES 433,163 475,654
Long-term debt 675,825 635,726
Deferred income tax liability, net 338,150 327,818
Other non-current liabilities 35,394 30,864
Minority interest in affiliate 57,191 57,191
Stockholders' equity 992,317 947,159
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,532,040 $2,474,412
=========== ===========
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three Months Three Months
Ended Ended
June 30, 2006 June 30, 2005
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 38,652 $ 29,647
Adjustments to reconcile net earnings to
net cash provided by operating
activities:
Depreciation 33,162 29,110
Amortization 1,772 1,299
Deferred income taxes 14,574 11,082
Loss on sales of plant and equipment 128 122
Minority interest in earnings 711 522
Stock-based compensation expense 2,752 -
Stock issued for employee stock
purchase plan 2,822 2,514
Changes in assets and liabilities,
excluding effects of business
acquisitions and divestitures:
Securitization of trade receivables (9,700) 24,700
Trade receivables, net (16,222) (12,938)
Inventories, net (3,529) (3,555)
Prepaid expenses and other current
assets 2,174 8,954
Accounts payable, trade (12,444) (13,883)
Accrued expenses and other current
liabilities (14,177) (3,944)
Other long-term assets (1,314) 3,141
Other long-term liabilities 3,643 (272)
------------- -------------
Net cash provided by operating
activities 43,004 76,499
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (62,704) (47,265)
Proceeds from sales of plant and
equipment 1,263 735
Business acquisitions and holdback
settlements (3,814) (72,850)
Other, net 492 398
------------- -------------
Net cash used in investing activities (64,763) (118,982)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 166,219 187,008
Repayment of debt (152,010) (176,525)
Minority interest in earnings (711) (522)
Exercise of stock options 4,799 5,387
Minority stockholder note prepayment - 21,000
Dividends paid to stockholders (5,433) (4,631)
Cash overdraft 7,028 13,425
------------- -------------
Net cash provided by financing
activities 19,892 45,142
------------- -------------
Change in cash $ (1,867) $ 2,659
Cash - Beginning of period 34,985 32,640
------------- -------------
Cash - End of period $ 33,118 $ 35,299
============= =============
See attached notes.
Notes:
(a) The Company divested its subsidiary, Rutland Tool & Supply Co.
("Rutland Tool"), in December 2005. The results of Rutland Tool
for the three months ended June 30, 2005 have been reclassified in
the Consolidated Statement of Earnings as "discontinued
operations." The Consolidated Statements of Cash Flows were not
reclassified to reflect discontinued operations because the cash
flows of Rutland Tool were not significant.
(b) Effective April 1, 2006, the Company adopted Statement of
Financial Accounting Standards No. 123R, Share-Based Payment,
("SFAS 123R") using the modified prospective method. The new
standard requires the Company to estimate the value of stock
options, including options to purchase shares under its Employee
Stock Purchase Plan, issued to employees and recognize the
estimated cost in earnings over the period in which the options
vest. Prior to the adoption of SFAS 123R, the Company used the
intrinsic value method outlined in Accounting Principles Board
Opinion No. 25 to account for stock-based compensation. For the
three months ended June 30, 2006, the Company recognized
stock-based compensation expense of $2.7 million, or $0.02 per
diluted share. Since the Company adopted SFAS 123R prospectively,
no stock-based compensation expense was reflected in earnings
prior to April 1, 2006.
(c) The Company participates in a securitization agreement with two
commercial banks to sell up to $250 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 sold under the agreement was
$234.5 million and $244.2 million at June 30, 2006 and March 31,
2006, respectively.
(d) The tables below present the computation of basic and diluted
earnings per share:
Three Months Ended
June 30,
(In thousands, except per share amounts) 2006 2005
--------- ---------
Basic Earnings per Share Computation
Numerator
---------
Income from continuing operations $ 38,652 $ 29,467
Income from discontinued operations - 180
--------- ---------
Net earnings $ 38,652 $ 29,647
========= =========
Denominator
-----------
Basic shares outstanding 77,557 76,252
========= =========
Basic earnings per share from continuing
operations $ 0.50 $ 0.39
Basic earnings per share from discontinued
operations - -
--------- ---------
Basic net earnings per share $ 0.50 $ 0.39
========= =========
Three Months Ended
June 30,
(In thousands, except per share amounts) 2006 2005
--------- ---------
Diluted Earnings per Share Computation
Numerator
---------
Income from continuing operations $ 38,652 $ 29,467
Plus: Preferred stock dividends (1)(2) 711 -
Plus: Income taxes on earnings of National
Welders (3) 214 -
Income from continuing operations assuming the
--------- ---------
preferred stock conversion 39,577 29,467
Income from discontinued operations - 180
--------- ---------
Net earnings assuming preferred stock conversion $ 39,577 $ 29,647
========= =========
Denominator
-----------
Basic shares outstanding 77,557 76,252
Incremental shares from assumed conversions:
--------------------------------------------
Stock options and Employee Stock Purchase Plan 2,552 1,699
Preferred stock of National Welders (1) 2,327 -
--------- ---------
Diluted shares outstanding 82,436 77,951
========= =========
Diluted earnings per share from continuing
operations $ 0.48 $ 0.38
Diluted earnings per share from discontinued
operations - -
--------- ---------
Diluted net earnings per share $ 0.48 $ 0.38
========= =========
(1) Pursuant to a joint venture agreement between the Company and the
holders of the preferred stock of National Welders, until June
2009, the preferred shareholders have the option to exchange their
3.2 million preferred shares of National Welders either for cash
at a price of $17.78 per share or to tender them to the joint
venture in exchange for approximately 2.3 million shares of Airgas
common stock. If Airgas common stock has a market value of $24.45
per share, the stock and cash redemption options are equivalent.
Since the average market price of Airgas common stock for the
three months ended June 30, 2006 was in excess of $24.45 per
share, conversion of the preferred stock was assumed. The
conversion of the preferred stock was not assumed in the three
months ended June 30, 2005 because the average market price of
Airgas common stock was less than $24.45 per share.
(2) If the preferred stockholders of National Welders convert their
preferred stock to Airgas common stock, the 5% preferred stock
dividend, recognized as "Minority interest in earnings of
consolidated affiliate," would no longer be paid to the preferred
stockholders, resulting in additional net earnings for Airgas.
(3) The earnings of National Welders for tax purposes are treated as a
deemed dividend to Airgas, net of an 80% dividend exclusion. Upon
the assumed conversion of National Welders preferred stock to
Airgas common stock, National Welders would become a wholly owned
subsidiary of Airgas. As a wholly owned subsidiary, the net
earnings of National Welders would not be subject to additional
tax at the Airgas level.
(e) Business segment information for the Company's Distribution and
All Other Operations segments is shown below:
(Unaudited)
Three Months Ended
June 30, 2006
---------------------------------------
(In thousands) Dist. All Elim Combined
Other
Ops.
--------- --------- --------- ---------
Gas and rent $332,004 $117,183 $(14,486) $434,701
Hardgoods 317,249 22,602 (1,516) 338,335
--------- --------- --------- ---------
Total net sales 649,253 139,785 (16,002) 773,036
Cost of products sold,
excluding deprec. expense 331,595 67,626 (16,002) 383,219
Selling, distribution and
administrative expenses 229,883 46,094 - 275,977
Depreciation expense 25,825 7,337 - 33,162
Amortization expense 1,309 463 - 1,772
--------- --------- --------- ---------
Operating income 60,641 18,265 - 78,906
========= ========= ========= =========
(Unaudited)
Three Months Ended
June 30, 2005
---------------------------------------
(In thousands) Dist. All Elim Combined
Other
Ops.
--------- --------- --------- ---------
Gas and rent $299,857 $ 92,680 $(13,617) $378,920
Hardgoods 281,661 18,811 (1,267) 299,205
--------- --------- --------- ---------
Total net sales 581,518 111,491 (14,884) 678,125
Cost of products sold,
excluding deprec. expense 296,958 52,789 (14,884) 334,863
Selling, distribution and
administrative expenses 212,084 37,765 - 249,849
Depreciation expense 22,813 6,297 - 29,110
Amortization expense 1,161 138 - 1,299
--------- --------- --------- ---------
Operating income 48,502 14,502 - 63,004
========= ========= ========= =========
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