Airgas Second Quarter EPS Increases 29% to 27 Cents.Business Editors RADNOR, Pa.--(BUSINESS WIRE)--Oct. 23, 2002 Airgas, Inc., (NYSE NYSE See: New York Stock Exchange :ARG See argument. arg - argument ) today reported earnings for its second quarter ended September 30, 2002. Net earnings for the quarter were $19.2 million, or $0.27 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 $14.6 million, or $0.21 per diluted share, in the same period a year ago. Net earnings for the six months ended September 30, 2002, excluding certain restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). charges, were $0.49 per diluted share compared to prior year results of $0.41 per diluted share, 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. Results for the six months ended September 30, 2001 exclude a charge for the cumulative effect of a change in accounting principle related to the accounting for goodwill. Free cash flow per diluted share for the six-month period was $0.62 versus $0.40 in the prior year, driving debt reduction of $40 million. Including the charges related to the restructuring and divestitures, the reported net earnings per diluted share for the six months ended September 30, 2002 were $0.46 versus $0.41 for the comparable prior year period, on a pro-forma basis. For the six months ended September 30, 2001, including the cumulative effect of a change in accounting principle, the Company reported a net loss of $0.45 per diluted share. "Our ability to grow earnings per share by 29% and generate strong cash flow in the quarter demonstrates the resiliency The ability to recover from a failure. The term may be applied to hardware, software or data. of our gas business, even during difficult economic times," said Airgas Chairman and Chief Executive Officer Peter McCausland. "Our underlying business, reinforced by the Air Products packaged gas acquisition, remains on track. We also benefited from much lower than projected financing costs for the acquisition. We are improving gross margins, in part, due to a stronger gas and rent sales mix sales mix See product mix. , and we remain diligent dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d about controlling costs. I am also pleased to report that we continue executing well against our financial goals, increasing operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: by almost 100 basis points to 9.4%." McCausland continued, "We believe that we are still on track to achieve earnings per share of $0.92 to $0.94 for the full year, although the environment is tougher than expected. We remain focused on our strategic initiatives designed to improve our low-cost position and grow market share, as these will help drive shareholder value until we see sustained signs of improvement in the industrial economy." While the acquisition helped increase second quarter sales 9% to $451 million, 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. declined 3% 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 3%, reflecting slight growth for gases and rent and a 7% decline in hardgoods. Same-store sales for the Gas Operations segment increased 2%. Year-to-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 $34 million versus $28 million last year. 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 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. and certain gains and charges. The Company will conduct an earnings teleconference on Thursday, October 24, 2002, beginning at 8:30 a.m. Eastern Time. Access the teleconference by calling (877) 272-3821 and entering passcode 5907373. 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 October 24th at approximately 11:00 a.m. Eastern Time by calling (800) 642-1687 and entering passcode 5907373. 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 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 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 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: the resiliency of the gas business; the business remaining on track; improving gross margins through a stronger gas and rent sales mix; controlling costs; executing well against financial goals; expected earnings per share for the full year; the Company's focus on strategic initiatives to improve its low-cost position, grow its market share and increase shareholder value. 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 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 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, 2002 and Form 10-Q Form 10-Q See 10-Q. dated June 30, 2002, 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 Six Months Ended
September 30, September 30,
2002 2001 2002 2001
---- ---- ---- ----
Net sales:
Distribution $410,329 $372,345 $832,384 $750,659
Gas Operations 40,724 39,637 76,337 76,998
--------- --------- --------- ---------
Total net sales 451,053 411,982 908,721 827,657
--------- --------- --------- ---------
Costs and expenses:
Cost of products
sold (excl. deprec.)
Distribution 200,750 193,850 412,199 392,753
Gas Operations 13,337 14,210 24,154 27,530
Selling,
distribution and
administrative
expenses 174,737 151,235 351,036 303,954
Depreciation 18,169 15,774 36,628 31,446
Amortization 1,636 2,074 3,376 4,351
Special charges (a) -- -- 2,694 --
--------- --------- --------- ---------
Total costs and
expenses 408,629 377,143 830,087 760,034
--------- --------- --------- ---------
Operating income:
Distribution 33,079 27,787 65,779 54,358
Gas Operations 9,345 7,052 15,549 13,265
Special charges (a) -- -- (2,694) --
--------- --------- --------- ---------
Total operating
income 42,424 34,839 78,634 67,623
Interest expense, net (12,040) (11,850) (25,161) (22,763)
Discount on
securitization of
trade receivables (899) (1,492) (1,750) (2,984)
Other income (expense),
net (b) (129) 15 (252) (178)
Equity in earnings of
unconsolidated
affiliates 1,364 1,317 2,296 2,230
--------- --------- --------- ---------
Earnings before income
taxes and the
cumulative effect of a
change in accounting
principle 30,720 22,829 53,767 43,928
Income tax expense 11,520 8,276 20,523 15,924
--------- --------- --------- ---------
Earnings before the
cumulative effect of
a change in accounting
principle 19,200 14,553 33,244 28,004
Cumulative effect of a
change in accounting
principle (c) -- -- -- (59,000)
--------- --------- --------- ---------
Net earnings (loss) $19,200 $14,553 $33,244 $(30,996)
========= ========= ========= =========
Per share data:
Basic earnings (loss)
per share $.27 $.21 $.47 $(.46)
Diluted earnings
(loss) per share $.27 $.21 $.46 $(.45)
Net earnings (excluding
certain charges and the
cumulative effect of a
change in accounting
principle) (d) $19,200 $14,553 $35,439 $28,004
========= ========= ========= =========
Per share data
(excluding certain
charges and the
cumulative effect of a
change in accounting
principle) (d):
Basic earnings per
share $.27 $.21 $.51 $.41
Diluted earnings per
share $.27 $.21 $.49 $.41
Weighted average shares
outstanding:
Basic 70,400 67,900 70,100 67,600
Diluted 71,900 69,500 72,000 68,900
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
September 30, March 31,
2002 2002
---- ----
ASSETS
Trade accounts receivable, net (e) $ 85,777 $ 88,634
Inventories, net 145,580 154,045
Deferred income tax asset, net 13,583 13,210
Prepaids and other current assets 28,891 47,654
---------- ----------
TOTAL CURRENT ASSETS 273,831 303,543
Property, plant and equipment, net 871,889 893,015
Goodwill 421,331 406,548
Other non-current assets, net 128,223 113,951
---------- ----------
TOTAL ASSETS $1,695,274 $1,717,057
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 83,449 $ 82,485
Accrued expenses and other current
liabilities 116,804 136,390
Current portion of long-term debt 2,671 2,456
---------- ---------
TOTAL CURRENT LIABILITIES 202,924 221,331
Long-term debt (e) 719,337 764,124
Deferred income taxes 195,678 198,173
Other non-current liabilities 26,955 30,343
Stockholders' equity 550,380 503,086
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,695,274 $1,717,057
========== ==========
See attached notes.
Notes: (a) Special charges of $2.7 million ($1.7 million after-tax) for the six months ended September 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 The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. functions. The special charges include facility exit costs associated with the closure of certain Airgas facilities and severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when for approximately 130 employees. (b) Other income (expense), net, for the six months ended September 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 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 142, the six months ended September 30, 2001 includes a $59 million 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. recorded 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 That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). 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 Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from the securitization were used to reduce borrowings under the Company's revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facilities. The amount of outstanding receivables under the agreement was $154.5 million and $134 million at September 30, 2002 and March 31, 2002, respectively. www.airgas.com |
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