Airgas Reports Fiscal 2010 Second Quarter Earnings.* Adjusted 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. 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. * down 21% to $0.68, which excludes previously announced debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. and pension charges of $0.03 per diluted share; diluted EPS down 24% to $0.65 * Previously issued second quarter guidance of $0.64 to $0.69 did not include the above $0.03 charges * Sales down 17%; 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. down 19% * Effective expense reductions mitigate impact of sales decline; operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 11.4% * Issued $400 million 4.5% senior notes; retired $58 million 7.125% notes (extinguishment charge $0.02) * Strong year-to-date free cash flow* of $223 million, up 99% RADNOR, Pa. -- Airgas, Inc. (NYSE NYSE See: New York Stock Exchange :ARG See argument. arg - argument ), the largest U.S. distributor of industrial, medical, and specialty gases, and related supplies, today reported net earnings of $54.5 million, or $0.65 per diluted share, for its second quarter ended September 30, 2009. Excluding a $0.02 per diluted share debt extinguishment charge and a $0.01 per diluted share multi-employer pension plan withdrawal charge, adjusted earnings per diluted share* were $0.68, compared to $0.86 per diluted share in the prior-year quarter. Cost reductions and operating efficiencies continued to support the Company's operating margin, which posted only a modest decline year-over-year to 11.4% from 12.5% and improved sequentially from 11.0% in the face of a challenging sales environment. Second quarter sales were $962 million, a decline of 17% from the prior year. Total same-store sales declined 19%, with hardgoods down 27% and gas and rent down 14%. Acquisitions contributed 2% sales growth in the quarter. "While sales finished stronger than they started, we are still in a very challenging economy," said Airgas Chairman and Chief Executive Officer Peter McCausland. "Difficult conditions were broad-based across our geographies and customer segments. Consistent with recent quarters, our manufacturing customers suffered the deepest declines while our medical business showed the most resilience." As previously announced, the Company fully implemented $45 million of annual expense reductions between December 2008 and March 2009, the benefit of which is fully reflected in first and second quarter results. An additional $12 million of annual expense reductions were completed during the second quarter and are expected to yield full run-rate benefits starting in the third quarter. These $57 million of expense reductions were in addition to $10 million of expected annual savings in fiscal 2010 from ongoing efficiency initiatives. "We have managed our cost structure effectively during this downturn," McCausland continued, "reducing expenses to mitigate the impact of declining sales on our earnings. Our efforts have yielded better operating margin and earnings than the declining sales might otherwise imply, and we are still in a good position to benefit when the economy starts to recover." Year-to-date free cash flow* through the second quarter was $223 million compared to $112 million last year, driven by adjusted cash from operations* of $349 million, up from $287 million last year, and by a 29% reduction in capital expenditures to $131 million this year. Return on capital* was 10.8% compared to 13.6% in the prior year. "In spite of the challenging business climate, some notable highlights in the quarter included credit rating upgrades by both rating agencies, our $400 million 4.5% senior notes offering that was significantly oversubscribed Refers to connecting more users to a system than can be fully supported if all of them were using it at the same time. Networks and servers are almost always designed with some amount of oversubscription, counting on the fact that everybody does not need the service simultaneously. and which was used to reduce revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to borrowings, and our addition to the S&P 500 index," added McCausland. "We continue to generate strong free cash flow, which we used to reduce debt this quarter. Although we believe the worst same-store sales declines are now behind us, we remain cautious in our near-term outlook and focused on forward progress for the long run." The Company expects adjusted earnings per diluted share of $0.67 to $0.70 for the third quarter, which excludes the previously announced $0.05 per diluted share loss on the early extinguishment of debt related to the October redemption of its $150 million 6.25% notes. Including this charge, the Company expects earnings per diluted share of $0.62 to $0.65. For fiscal 2010, the Company expects adjusted earnings of $2.70 to $2.80 per diluted share, which excludes $0.03 per diluted share of charges in the second quarter and the $0.05 per diluted share charge in the third quarter. Including these charges, the Company expects earnings per diluted share of $2.62 to $2.72. The previously announced range of $2.65 to $2.85 per diluted share also excluded the aforementioned second and third quarter charges. The third quarter and fiscal 2010 guidance above does not incorporate the impact of future multi-employer pension plan withdrawal charges. The Company will continue its efforts to withdraw from such plans. Charges for withdrawal from plans under contracts that expire during the remainder of fiscal 2010 could be up to $0.04 per diluted share. 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 today at 2:00 p.m. Eastern Time. The teleconference will be available by calling (877) 718-5092. 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 November 25 at http://investor.shareholder.com/arg/events.cfm. A replay of the teleconference will be available through November 6. To listen, call (888) 203-1112 and enter passcode 8939514. * See attached reconciliations and calculations of the non-GAAP adjusted earnings per diluted share and earnings guidance, 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 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. equipment and supplies. Airgas is also one of the largest U.S. distributors 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, and a leading distributor of process chemicals, refrigerants Chemical refrigerants are assigned an R number(sometimes the label replaces it with the word Freon) which is determined systematically according to molecular structure. The following is a list of refrigerants with their R numbers, IUPAC chemical name, molecular formula, and CAS number. , and ammonia ammonia, chemical compound, NH3, colorless gas that is about one half as dense as air at ordinary temperatures and pressures. It has a characteristic pungent, penetrating odor. 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 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 telesales telesales 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 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: expectations for third quarter diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of to be in the range of $0.62 to $0.65, which includes the previously announced $0.05 per diluted share loss on the early extinguishment of its 6.25% notes; expectations for full year diluted earnings per share for fiscal 2010 to be in the range of $2.62 to $2.72, which includes $0.03 per diluted share of charges in the second quarter and the $0.05 per diluted share charge in the third quarter; our expectations to yield full run-rate benefits from announced expense reductions and efficiency initiatives; our expectation regarding our ability to benefit when the economy starts to recover; our continuing efforts to withdraw from multi-employer pension plans, and our expectation that withdrawal from plans under contracts that expire during the remainder of fiscal 2010 could be up to $0.04 per diluted share; our belief that our worst same-store sales declines are now behind us; and our cautious outlook for the near-term. 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. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law. 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 de·te·ri·o·ra·tion n. The process or condition of becoming worse. in current economic conditions; continued weakening operating and financial performance of our customers, which can negatively impact our sales and our ability to collect our 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 ; 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 Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 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 or withdrawal from multi-employer 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, 2009 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. , subsequent Forms 10-Q, and other forms filed by the Company with the Securities and Exchange Commission. Consolidated statements of earnings, 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. consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. , consolidated statements of cash flows, and reconciliations of non-GAAP financial measures follow. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Reconciliations of Non-GAAP Financial Measures (Unaudited) [TABLE OMITTED] The third quarter and fiscal 2010 guidance above does not incorporate the impact of future multi-employer pension plan withdrawal charges. The Company believes that adjusted earnings per diluted share provides investors meaningful insight into the Company's earnings performance without the impact of special charges. Non-GAAP numbers should be read in conjunction with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial measures, as non-GAAP metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. are merely a supplement to, and not a replacement for, GAAP financial measures. It should be noted as well that our adjusted earnings per diluted share metric may be different from adjusted earnings per diluted share metrics provided by other companies. Return on Capital Reconciliations and computations of return on capital: [TABLE OMITTED] The Company believes this return on capital computation helps investors assess how effectively the Company uses the capital invested in its operations. Our management uses return on capital as one of the metrics for determining employee compensation. Non-GAAP numbers should be read in conjunction with GAAP financial measures, as non-GAAP metrics are merely a supplement to, and not a replacement for, GAAP financial measures. It should be noted as well that our return on capital computation information may be different from the return on capital computations provided by other companies. Free Cash Flow and Adjusted Cash from Operations Reconciliations and computations of free cash flow and adjusted cash from operations: [TABLE OMITTED] The Company believes that free cash flow and adjusted cash from operations provide investors meaningful insight into the Company's ability to generate cash from operations, which is available for servicing debt obligations and for the execution of its business strategy, including acquisitions, the prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of debt, or to support other investing and financing activities. Non-GAAP numbers should be read in conjunction with GAAP financial measures, as non-GAAP metrics are merely a supplement to, and not a replacement for, GAAP financial measures. It should be noted as well that our free cash flow and adjusted cash from operations metrics may be different from free cash flow and adjusted cash from operations metrics provided by other companies. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion