Airgas Reports Second Quarter EPS of $0.49 on 33% Growth in Net Earnings.

RADNOR, Pa. -- Airgas, Inc., (NYSE:ARG), the largest U.S. distributor of industrial, medical, and specialty gases, welding, safety, and related products, today reported strong growth in sales, operating income, and earnings for its second quarter ended September 30, 2006.

Quarterly net earnings grew 33% to $40 million, or $0.49 per diluted share, compared to $30 million, or $0.38 per diluted share, in the same period a year ago. The current quarter includes stock-based compensation expense of $0.03 per diluted share related to the adoption of SFAS 123R, Share-Based Payment. The prior year second quarter included charges of $0.02 per diluted share for asset losses related to hurricanes Katrina and Rita.

Second quarter sales grew to $791 million, up 13% over the prior year. Total same-store sales were up 11%, with hardgoods up 10% and gas and rent up 11%, reflecting a supportive pricing environment and solid demand in the industrial production, energy, and non-residential construction segments.

"Our core and growth strategies are yielding outstanding results for shareholders," said Airgas Chairman and Chief Executive Officer Peter McCausland. "Sales growth remains strong across our core markets and strategic products."

McCausland continued, "We expanded our operating margins by 170 basis points over last year, to 10.7%, and Return on Capital* was up 230 basis points, to 12.8%, reflecting revenue gains and operating efficiencies, as well as disciplined capital spending and asset management."

As previously announced, the company will redeem its 9.125% Senior Subordinated Notes on October 27, 2006. The redemption will result in a charge of $0.10 per diluted share in October, with estimated future interest savings of $500 thousand per month.

Including the impact of the debt retirement and related interest savings, the company expects EPS from continuing operations for the third quarter of $0.37 to $0.39 per diluted share, and $0.49 to $0.52 per diluted share for the fourth quarter.

"We are experiencing strong business conditions across the board. Excluding a $0.10 third quarter charge for early extinguishment of debt*, we expect to earn $0.47 to $0.49 per diluted share in the third quarter, and we are increasing our full-year continuing operations EPS guidance to $1.93 to $1.98," said McCausland.

The Company will conduct an earnings teleconference at 11:00 a.m. Eastern Time on Thursday, October 26. The teleconference will be available by calling [phone]. 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 under the "Company Information" heading on the Company's Internet site at www.airgas.com. A webcast of the teleconference will be available live and on demand through November 24 at http://www.shareholder.com/arg/medialist.cfm. A replay of the teleconference will be available through November 3. To listen, call [phone] and enter passcode 9423627.

* See the attached reconciliations of non-GAAP financial measures associated with Return on Capital calculation and EPS guidance excluding charge for early extinguishment of debt.

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 and dry ice, the largest liquid carbon dioxide producer in the Southeast, and a leading distributor of process chemicals, refrigerants, and ammonia products. More than 10,000 employees work in about 900 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 and telesales 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: our core and growth strategies; the redemption of the company's 9.125% Notes in October, 2006, and the resulting charge of $0.10 per share and subsequent interest savings of $500 thousand per month; our EPS expectation of $0.37 to $0.39 per diluted share for the third quarter, and $0.49 to $0.52 per diluted share for the fourth quarter; and our expectation of earnings per diluted share, excluding the $0.10 charge for early extinguishment of debt, of $1.93 to $1.98 in fiscal 2007 and $0.47 to $0.49 in the third quarter. We intend 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 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: customer acceptance of the implemented and future price increases; supply cost pressures; increased industry competition; our ability to successfully consummate and integrate acquisitions; our ability to refinance the 9.125% notes; a disruption to our business from integration problems associated with acquisitions; an economic downturn; 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; the inability to obtain alternative supply sources to adequately meet customer demand; our ability to refinance 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 dated March 31, 2006 and Form 10-Q dated June 30, 2006, filed by the Company with the Securities and Exchange Commission.

Consolidated statements of earnings, consolidated condensed balance sheets, consolidated statements of cash flows, and a reconciliation of non-GAAP financial measures follow.

[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]

Notes:

(a) The Company divested its subsidiary, Rutland Tool & Supply Co. ("Rutland Tool"), in December 2005. The results of Rutland Tool for the three and six month periods ended September 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 September 30, 2006, the Company recognized stock-based compensation expense of $3.8 million. For the six months ended September 30, 2006, the Company recognized stock-based compensation expense of $6.5 million. Since the Company adopted SFAS 123R prospectively, no stock-based compensation expense was reflected in earnings prior to April 1, 2006.

(c) Selling, distribution and administrative expenses in the three and six months ended September 30, 2005 include an estimated loss related to hurricanes Katrina and Rita of $2.8 million, or $0.02 per diluted share.

(d) 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 $247.1 million and $244.2 million at September 30, 2006 and March 31, 2006, respectively.

(e) The tables below present the computation of basic and diluted earnings per share:

[TABLE OMITTED]

(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 each of the periods presented above was in excess of $24.45 per share, conversion of the preferred stock was assumed.

(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.

(f) Business segment information for the Company's Distribution and All Other Operations segments is shown below:

[TABLE OMITTED]
[TABLE OMITTED]

Reconciliation of Non-GAAP Financial Measures (Unaudited)

Return on Capital:

Reconciliation and computation of return on capital:

[TABLE OMITTED]

The company believes this return on capital computation helps investors access how effectively the Company uses the capital invested in its operations.

EPS Guidance:

Reconciliation of non-GAAP EPS guidance to GAAP EPS:

[TABLE OMITTED]

The company believes its earnings guidance excluding the anticipated 3rd quarter charge for the early extinguishment of debt provides financial statement users with meaningful insight into operating trends.