Airgas Reports Fiscal Fourth Quarter and Full Year 2011 Earnings
o Record fourth quarter adjusted diluted EPS* of $0.88, which includes $0.04 of SAP costs and excludes $0.14 of special items, up 28% over prior year
o Fourth quarter same-store sales up 11% over prior year
o Record full-year adjusted diluted EPS* of $3.34, which includes $0.14 of SAP costs and excludes $0.41 of special items, up 25% over prior year
o Full-year free cash flow* of $387 million; adjusted cash from operations* of $617 million
o Fiscal year 2012 adjusted diluted EPS* guidance of $3.75 to $3.90, which includes $0.32 of SAP costs
RADNOR, PA - May 5, 2011 -- Airgas, Inc. (NYSE: ARG), the largest U.S. distributor of industrial, medical, and specialty gases, and related supplies, today reported net earnings of $63 million, or $0.74 per diluted share, for its fourth quarter ended March 31, 2011. Excluding legal and professional fees and other costs of $0.14 per diluted share** related to an unsolicited takeover attempt, adjusted earnings per diluted share* were $0.88, an increase of 28% from adjusted earnings per diluted share* of $0.69 in the prior year. Prior year GAAP earnings per diluted share of $0.47 included legal and professional fees of $0.18 related to an unsolicited takeover attempt, debt extinguishment charges of $0.07 and a $0.03 income tax benefit. Adjusted earnings per diluted share include SAP implementation costs and depreciation expense of $0.04 and $0.01 for the current and prior year quarters, respectively.
Fourth quarter sales were $1.1 billion, an increase of 12% over the prior year. Total same-store sales increased 11% in the quarter, with hardgoods up 14% and gas and rent up 9%. Sequentially, total sales increased 7% from the third quarter, and sales per day increased 3%.
"The manufacturing recovery that began in the central regions of the U.S. among larger customers is now evident more broadly throughout the country and in smaller manufacturers. Our medical business began to accelerate this quarter, and utilities and petrochemical customers, as well as customers using our products and services for repair and maintenance operations, continued to show strength," said Airgas Chief Executive Officer Peter McCausland. "We continue to leverage our national footprint and industry-leading platform as sales volumes recover, improving our adjusted operating margin* for the quarter by 140 basis points year-over-year to 12.1% and posting record earnings on sales that are still below pre-recession levels."
For the full year, sales increased 10% from the prior year to $4.3 billion. Total same-store sales increased 8%, with hardgoods up 11% and gas and rent up 7%, while acquisitions contributed 2% sales growth for the year.
Net earnings for the year were $250 million, or $2.93 per diluted share. Excluding $0.41 of special items primarily related to an unsolicited takeover attempt, adjusted earnings per diluted share* were a record $3.34, up 25% over prior year, and the related adjusted operating margin* was 12.2%. Adjusted earnings per diluted share include SAP implementation costs and depreciation expense of $0.14 and $0.06 for the current and prior years, respectively. Return on capital* improved by 190 basis points over the prior year to 11.9%, driven by stronger operating performance and leveraging the significant capital investments made in recent years.
Free cash flow* for the year was $387 million, compared to $412 million in the prior year, driven by adjusted cash from operations* of $617 million. The modest decrease in free cash flow from the prior year primarily reflects an increase in working capital to support sales growth. As of March 31, 2011, the Company had completed the $300 million share repurchase authorization announced on February 16, 2011, repurchasing 4.78 million shares on the open market at an average price of $62.76. The Company increased its dividend payout by 33% in fiscal 2011.
Guidance
The Company expects adjusted earnings per diluted share* for the first quarter of fiscal 2012 to increase 11% to 17% from $0.83 in the prior year to $0.92 to $0.97, which includes $0.08 of SAP implementation costs and depreciation expense, compared to $0.03 in the prior year.
For fiscal 2012, the Company expects adjusted earnings per diluted share* to increase 12% to 17% from $3.34 in fiscal 2011 to $3.75 to $3.90, which includes $0.32 of SAP implementation costs and depreciation expense, compared to $0.14 in fiscal 2011.
All fiscal 2012 adjusted diluted EPS* guidance excludes the impact of restructuring charges, expected to be $0.10 in the first quarter and $0.17 for the full year. The charges arise from the consolidation of the accounting and certain administrative functions of twelve regional distribution companies into four Business Support Centers.
"The rollout of SAP at our first regional distribution company, Airgas South, which went live at the beginning of April, has been very successful and reinforces our confidence in the benefits we expect to achieve. SAP implementation costs will be heaviest in fiscal 2012, and we expect to complete the implementation in fiscal 2013 as the benefits begin to ramp up," said McCausland. "Even with considerable SAP implementation costs still to be incurred, we remain on track to beat our calendar 2012 earnings goal of at least $4.20 per diluted share."
The Company will conduct an earnings teleconference at 10:00 a.m. Eastern Time on Thursday, May 5. The teleconference will be available by calling (800) 616-9004. 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 of the Company's website at www.airgas.com. A webcast of the teleconference will be available live and on demand through June 3 at investor.shareholder.com/arg/events.cfm. A replay of the teleconference will be available through May 13. To listen, call (888) 203-1112 and enter passcode 9682617.
* See attached reconciliations and calculations of the non-GAAP adjusted earnings per diluted share, adjusted operating margin, adjusted cash from operations, free cash flow, and return on capital.
** The legal and professional fees and other costs incurred are in response to Air Products' unsolicited takeover attempt.
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 approximately 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.
