Airgas Inc. (ARG) filed Quarterly Report for the period ended 2008-12-31.
Airgas Inc. 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 eleven thousand employees work in about nine hundred 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. Airgas Inc. has a market cap of $2.86 billion; its shares were traded at around $39.51 with a P/E ratio of 11.2 and P/S ratio of 0.71. The dividend yield of Airgas Inc. stocks is 1.81%. Airgas Inc. had an annual average earning growth of 10.7% over the past 10 years. GuruFocus rated Airgas Inc. the business predictability rank of 2-star.
Highlight of Business Operations:
The Company had net sales for the quarter ended December 31, 2008 of $1.1 billion compared to $1.0 billion for the quarter ended December 31, 2007 (“prior year quarter”). Net sales increased 7% in the current quarter compared to the prior year quarter, driven by acquisition growth of 6% and same-store sales growth of 1%. Same-store sales growth was driven by pricing gains of about 6%, largely offset by volume declines of 5%. Selling, distribution and administrative expenses as a percentage of sales increased by 60 basis points driven by a significant decline in quarter end sales and an increase in bad debt expense. Cost reduction efforts, targeted to achieve $35 million in annual savings, were initiated in the current quarter in response to slowing sales. The Company’s operating income increased 10% in the current quarter versus the prior year quarter driven by the net sales increase and margin expansion. The operating income margin increased 40 basis points to 12.1% compared to 11.7% in the prior year quarter. The operating income margin improvement was primarily due to an increase in the gross profit margin (excluding depreciation), as well as the positive impact of acquisition synergies and operating efficiency programs. Net earnings per diluted share grew 13% to $0.76 in the current quarter versus $0.67 in the prior year quarter. The prior year quarter included $0.01 per diluted share of integration expenses primarily associated with the acquisition of Linde AG’s (“Linde”) U.S. packaged gas business (the “Linde Packaged Gas acquisition”) and a one-time benefit of $0.01 per diluted share related to a change in state tax law.
For the nine months ended December 31, 2008 (“current period”), net sales increased 15% to $3.4 billion as compared to $2.9 billion for the nine months ended December 31, 2007 (“prior year period”). For the current period, net earnings were $2.43 per diluted share as compared to $1.90 per diluted share in the prior year period. The prior year period included a one-time, non-cash charge of $0.03 per diluted share related to the conversion of National Welders from a joint venture to a 100% owned subsidiary, $0.06 per diluted share of integration expense primarily related to the June 30, 2007 Linde Packaged Gas acquisition and the $0.01 per diluted share tax benefit related to a change in state tax law.
Looking forward, the Company expects net earnings for the fourth quarter ending March 31, 2009 to range from $0.73 to $0.76 per diluted share. Accordingly, the Company expects fiscal 2009 full year earnings to be $3.16 to $3.19 per diluted share. Previously, the Company had announced full year earnings guidance of $3.30 to $3.40 per fully diluted share.
Depreciation expense of $50 million increased $7 million, or 15%, compared to the prior year quarter. Acquired businesses contributed approximately $2 million of the increase. The balance of the increase primarily reflects current and prior years’ capital investments in revenue generating assets to support customer demand, primarily cylinders, bulk tanks and rental welders, as well as the addition of new fill plants and branch stores. Amortization expense of $5 million was consistent with the prior year quarter.
Net earnings were $62.9 million, or $0.76 per diluted share, compared to $56.8 million, or $0.67 per diluted share, in the prior year quarter. The prior year quarter included $0.01 per diluted share of integration expense primarily associated with the Linde Packaged Gas acquisition and a one-time $0.01 per diluted share tax benefit related to a change in state tax law.
Depreciation expense of $147 million increased $17 million (13%) compared to the prior year period. Acquired businesses contributed approximately $8 million of the increase. The balance of the increase primarily reflects current and prior years’ capital investments in revenue generating assets to support customer demand, primarily cylinders, bulk tanks and rental welders, as well as the addition of new fill plants and branch stores. Amortization expense of $16 million was $5 million higher than the prior year period driven by the amortization of customer relationships and non-compete agreements associated with acquisitions.
Gurus who own ARG
ARG is in the portfolios of Richard Aster Jr.Rate This Article: |
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