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Airgas Release date: July 23, 2009
o Sales down 12%, same-store sales down 17% o Effective expense reductions mitigate impact of sales decline; operating margin of 11.0% o Diluted EPS of $0.66, down 19%, consistent with Company guidance o Adjusted cash from operations* of $183 million up 31%, free cash flow* of $119 million up 106% o Second quarter diluted EPS guidance of $0.64 to $0.69; full-year $2.65 to $2.85
RADNOR, PA - July 23, 2009 -- Airgas, Inc. (NYSE: ARG), the largest U.S. distributor of industrial, medical, and specialty gases, and welding, safety, and related products, today reported earnings of $0.66 per diluted share for its first quarter ended June 30, 2009, consistent with the Company's guidance.
Quarterly EPS results represent a 19% decline from prior year earnings of $0.81 per diluted share. First quarter sales were $1.0 billion, a decline of 12% from the prior year. Total same-store sales declined 17%, with hardgoods down 27% and gas and rent down 10%. Acquisitions contributed 5% sales growth in the quarter.
"Sales were consistently at the low end of our expectations throughout the quarter, and demand continues to be weak across most customer segments," said Airgas Chairman and Chief Executive Officer Peter McCausland. "Manufacturing has shown the deepest declines, analytical and utilities have shown some resilience, and our medical sales posted positive growth."
Between December and March, as previously announced, the Company fully implemented $45 million of annual expense reductions, which were in addition to $10 million of expected annual savings in fiscal 2010 from ongoing efficiency initiatives. "We have reacted quickly and effectively," McCausland continued, "reducing expenses to mitigate the impact of declining sales. As a result, we have experienced only a modest decline in operating margin, to 11.0% from 11.5% last quarter and 12.1% in the first quarter last year."
In light of the continued weak business climate and few signs of near-term recovery, the Company has identified an additional $12 million of annual expense reductions that will be fully implemented by the end of the second quarter.
"In addition to our focus on cost management, we continue to enhance and expand our offerings and capabilities to best serve our customers," continued McCausland. "I am pleased with our ability to win new business, such as the supply contract we recently announced with NIST, the National Institute of Standards and Technology, which is the standard-setting body for EPA protocol gases."
Free cash flow* in the first quarter was $119 million compared to $58 million last year, driven by adjusted cash from operations* of $183 million, up from $140 million last year, and by a 21% reduction in capital expenditures to $67 million this year. Return on capital* was 11.8% compared to 13.3% in the prior year.
"We continue to generate strong free cash flow, which we used to reduce debt and increase our dividend this quarter," added McCausland. "We remain cautious in our near-term outlook and focused on forward progress for the long run."
The Company expects earnings per diluted share of $0.64 to $0.69 for the second quarter. For fiscal 2010, the Company is updating its expectations to $2.65 to $2.85 per diluted share. The previously announced range was $2.60 to $2.90.
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 at 11:00 a.m. Eastern Time on Friday, July 24. The teleconference will be available by calling (877) 857-6149. 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 August 25 at http://investor.shareholder.com/arg/events.cfm. A replay of the teleconference will be available through August 5. To listen, call (888) 203-1112 and enter passcode 7164549. * See attached reconciliations and calculations of the non-GAAP 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 equipment and supplies. Airgas is also one of the largest U.S. distributors 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 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, 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.
Media Contact: Jay Worley (610) 902-6206 jay.worley@airgas.com
Investor Contact: Barry Strzelec (610) 902-6256 barry.strzelec@airgas.com
Company Information:
Name: Airgas
Address: 259 No. Radnor-Chester Rd.
City: Radnor
State: PA
ZIP: 19087
Country: USA
Phone: 610-687-5253
FAX: 610-687-1052
http:///www.airgas.com
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