Airgas Reports Fiscal First Quarter Earnings.Business Editors RADNOR, Pa.--(BUSINESS WIRE)--July 29, 2002 Airgas, Inc., (NYSE:ARG) today reported earnings for its first quarter ended June 30, 2002. Net earnings for the quarter, excluding certain charges, were $16.2 million or $0.23 per diluted share compared to $13.5 million or $0.20 per diluted share in the same period a year ago. Free cash flow per diluted share for the quarter was negative $0.03 versus $0.23 in the prior year. As disclosed in the notes to the attached financial statements, the results reported above for the quarter ended June 30, 2002 exclude restructuring and divestiture charges. Results reported above for the quarter ended June 30, 2001 exclude a charge for the cumulative effect of a change in accounting principle related to the accounting for goodwill. Including the charges related to the restructuring, divestitures and change in accounting principle, the reported net earnings per diluted share for the quarter ended June 30, 2002 were $0.20 versus a net loss of $0.67 for the comparable prior year quarter. "We continue to deliver strong earnings performance in the face of difficult market conditions," commented Airgas Chairman and Chief Executive Officer Peter McCausland. "EPS increased 15%, excluding certain charges. Improved gross margins reflecting an expanded gas and rent sales mix, as well as effective expense management and favorable interest rates, primarily contributed to this performance. After-tax cash flow also remained strong, but the timing of payments for certain accrued expenses resulted in an increase in net working capital, which negatively impacted free cash flow." McCausland continued, "The first quarter performance was bolstered by the business acquired from Air Products, which surpassed our earnings projections and was slightly accretive this quarter because of the low interest rate environment. Integration of the acquired assets is going well and we are on track to realize projected synergies." While fiscal first quarter sales of $458 million increased 10%, total same-store sales declined 2% compared to the same quarter a year ago, reflecting continued weakness in manufacturing and other industrial customer segments. Same-store sales in the Distribution segment were down 2%, reflecting an increase of 1% for gases and rent and a 5% decline in hardgoods. Same-store sales for the Gas Operations segment decreased 3%. Year-to-date capital spending was $14 million versus $17 million last year. "Although operating conditions have been difficult, we have not sacrificed long-term value for short-term gains and we continue to invest in our infrastructure initiatives as planned," added McCausland. "While we wait for sustained signs of an economic recovery, we remain focused on growing market share, cost management and driving efficiency through our integrated distribution system. We believe that leveraging the capabilities of our infrastructure will not only improve our cost position in the near term, but position us for greater growth when the economy strengthens." Free cash flow is defined as after-tax cash flow (net earnings, excluding certain gains and charges, plus depreciation, amortization and deferred income taxes), minus capital spending, plus/minus the change in working capital, excluding the impact of the accounts receivable securitization and certain gains and charges. The Company will conduct an earnings teleconference on Tuesday, July 30, 2002, beginning at 8:30 a.m. Eastern Time. Access the teleconference by calling 877/272-3821 and entering passcode 4875971. 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 Info' section on the Company's Internet site www.airgas.com. The telephone replay will be accessible for one week starting July 30 at approximately 11:00 a.m. Eastern Time by calling 800/642-1687 and entering passcode 4875971. About Airgas, Inc. Airgas, Inc. is the largest U.S. distributor of industrial, medical and specialty gases, welding, safety and related products. Its integrated network of nearly 800 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, catalog and telemarketing 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, statements regarding: favorable interest rates; the successful integration of acquired assets and being on track to realize projected synergies; an uncertain near-term economic outlook; focusing on growing market share, cost management and driving efficiency through our integrated distribution system; and leveraging the capabilities of our infrastructure to improve our cost position in the near term and position us for greater growth when the economy strengthens. Airgas intends 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 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 integration of the acquired Air Products packaged gas business; the success of the Company's strategic initiatives in improving operational efficiency, and growing sales and market share; an economic downturn (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 dated March 31, 2002, filed by the Company with the Securities and Exchange Commission. Consolidated statements of earnings and consolidated condensed balance sheets follow.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
2002 2001
---- ----
Net sales:
Distribution $ 422,055 $ 378,314
Gas Operations 35,613 37,361
--------- ---------
Total net sales 457,668 415,675
--------- ---------
Costs and expenses:
Cost of products sold (excl. deprec.)
Distribution 211,449 198,903
Gas Operations 10,817 13,320
Selling, distribution and
administrative expenses 176,299 152,719
Depreciation 18,459 15,672
Amortization 1,740 2,277
Special charges (a) 2,694 --
--------- ---------
Total costs and expenses 421,458 382,891
--------- ---------
Operating income:
Distribution 32,700 26,571
Gas Operations 6,204 6,213
Special charges (a) (2,694) --
--------- ---------
Total operating income 36,210 32,784
Interest expense, net (13,121) (10,913)
Discount on securitization of
trade receivables (851) (1,492)
Other income (expense), net (b) (123) (193)
Equity in earnings of
unconsolidated affiliates 932 913
--------- ---------
Earnings before income taxes and the
cumulative effect of a change in
accounting principle 23,047 21,099
Income tax expense 9,003 7,648
--------- ---------
Earnings before the cumulative effect of
a change in accounting principle 14,044 13,451
Cumulative effect of a change in accounting
principle (c) -- (59,000)
--------- ---------
Net earnings (loss) $ 14,044 $ (45,549)
========= =========
Per share data:
Basic earnings (loss) per share $ .20 $ (.68)
Diluted earnings (loss) per share $ .20 $ (.67)
Net earnings (excluding certain charges
and the cumulative effect of a change in
accounting principle) (d) $ 16,239 $ 13,451
========= =========
Per share data (excluding certain charges
and the cumulative effect of
a change in accounting principle) (d):
Basic earnings per share $ .23 $ .20
Diluted earnings per share $ .23 $ .20
Weighted average shares outstanding:
Basic 69,900 67,400
Diluted 72,000 68,400
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
June 30, March 31,
2002 2002
---- ----
ASSETS
Trade accounts receivable, net (e) $ 92,060 $ 88,634
Inventories, net 151,972 154,045
Deferred income tax asset, net 13,210 13,210
Prepaids and other current assets 28,060 47,654
---------- ----------
TOTAL CURRENT ASSETS 285,302 303,543
Property, plant and equipment, net 885,240 893,015
Goodwill 409,741 406,548
Other non-current assets, net 119,192 113,951
---------- ----------
TOTAL ASSETS $1,699,475 $1,717,057
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 74,995 $ 82,485
Accrued expenses and other current
liabilities 108,394 136,390
Current portion of long-term debt 1,327 2,456
---------- ----------
TOTAL CURRENT LIABILITIES 184,716 221,331
Long-term debt (e) 767,647 764,124
Deferred income taxes 187,275 198,173
Other non-current liabilities 31,890 30,343
Stockholders' equity 527,947 503,086
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,699,475 $1,717,057
========== ==========
See attached notes.
Notes: (a) Special charges of $2.7 million ($1.7 million after-tax) for the three months ended June 30, 2002 consist of a restructuring charge related to the integration of the business acquired from Air Products in the fourth quarter of fiscal 2002 and costs related to the consolidation of certain of the Company's procurement functions. The special charges include facility exit costs associated with the closure of certain Airgas facilities and severance for approximately 130 employees. (b) Other income (expense), net, for the three months ended June 30, 2002 includes a net non-recurring loss of approximately $200 thousand ($500 thousand after-tax) related to divestitures. (c) In connection with the adoption of SFAS 142 on April 1, 2001, the Company performed an evaluation of goodwill, which indicated that goodwill of one reporting unit, its 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 charge. (d) Net earnings, adjusted to exclude the items described in notes (a), (b) and (c). (e) The Company participates in a securitization agreement with two commercial banks to sell up to $175 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 $140 million and $134 million at June 30, 2002 and March 31, 2002, respectively. www.airgas.com |
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