DANBURY, Conn., April 27, 2005 — Praxair, Inc. (NYSE: PX) reported record first-quarter net income of $195 million, versus $164 million earned in the first quarter of 2004. Diluted earnings per share grew 20% to 59 cents, compared to 49 cents in last year’s quarter. Net income grew due to strong growth in sales and operating profit, partially offset by a slightly higher effective tax rate compared to the year-ago quarter.
Sales in the quarter were $1,827 million, 19% above $1,531 million in the 2004 period. Operating profit grew 19% to $309 million from $260 million in 2004. Sales and operating profit were sharply higher in every geographic region, with the highest sales growth coming from global energy, metals and industrial manufacturing markets.
“Sales were up significantly from last year and remained strong throughout the quarter despite a significant impact from refinery turnarounds,” said Dennis H. Reilley, chairman and chief executive officer. “Most importantly, the level of new business activity and project awards is robust.”
In North America, sales in the first quarter of $1,115 million were up 16% from $960 million in the year-ago quarter. Operating profit grew to $166 million, from $149 million in the prior-year period. Growth was driven by higher sales to energy markets, including hydrogen for refining, and sales of products and services for oil and gas production.
In Europe, sales grew 38% to $287 million in the quarter. Excluding the effect of a stronger euro, sales grew 32% due primarily to the purchase of an industrial gas business in Germany. Results from the German acquisition exceeded expectations, while growth in Spain and Italy began to slow. Operating profit grew 29% to $67 million, from $52 million in the year-ago quarter.
In South America, sales of $245 million grew 23%, and 15% excluding currency effects. Underlying sales growth reflected higher volumes and higher pricing as compared to 2004, supported by growth in export and domestic industrial markets. Operating profit rose 34% to $43 million from $32 million in last year’s quarter.
Sales in Asia grew 12% to $122 million, from higher sales in China, India and Korea, driven by electronics and metals markets. Operating profit rose 29% to $22 million.
Praxair Surface Technologies’ sales in the quarter were $118 million, 6% above the prior year. Operating profit grew 10% to $11 million, reflecting higher volumes and strong cost control. Aviation repair markets continued to be difficult, but coatings for OEM aircraft engine parts and other industrial coatings have improved.
Cash flow from operations in the quarter was $289 million, and capital expenditures were $165 million. The company made $31 million of net common stock repurchases, and the after-tax return-on-capital* ratio was 12.7% at the end of the quarter.
For the second quarter of 2005, Praxair expects diluted earnings per share in the range of 60 cents to 62 cents, 13% to 17% above the prior year.
For the full year of 2005, Praxair expects sales growth of 12% to 15%, and operating profit growth of 13% to 17%, versus 2004. Diluted earnings per share are expected to be in the range of $2.40 to $2.48. The average effective tax rate is expected to be about 26%. Full-year capital expenditures are expected to be in the range of $750 million to $800 million.
Commenting on the business outlook, Reilley said, “We expect sales growth to continue throughout the year in most of our major end markets, and in all geographic regions. Our growing hydrogen and energy business, the contribution of our acquired business in Germany, and a strong pipeline of new contracts and projects under construction will add to earnings and cash-flow growth in 2006 and beyond,” continued Reilley.
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2004 sales of $6.6 billion. The company produces, sells and distributes atmospheric and process gases, and high-performance surface coatings. Praxair products, services and technologies bring productivity and environmental benefits to a wide variety of industries, including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, metals and others. More information on Praxair is available on the Internet at www.praxair.com.
*Non- GAAP measure: See Quarterly Financial Summary and Appendix: Non-GAAP Measures
|Praxair 1Q05 Earnings Release Tables (50 KB)||Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures|
|Praxair 1Q05 Teleconference Presentation (211 KB)||Teleconference presentation on Praxair's 1Q05 results.|
A teleconference on Praxair's first-quarter results is being held this morning, April 27, at 9:00 am Eastern Time. The number is (617) 614 -3670 — Passcode: 78063695. The call also is available as a web cast at www.praxair.com/investors. Materials to be used in the teleconference are also available.
The forward-looking statements contained in this announcement concerning demand for products and services, the expected macroeconomic environment, sales, margins, earnings growth rates, and other financial goals involve risks and uncertainties, and are subject to change based on various factors. These include the impact of changes in worldwide and national economies, the cost and availability of electric power, natural gas and other materials, development of operational efficiencies, changes in foreign currencies, changes in interest rates, the continued timely development and acceptance of new products and processes, the impact of competitive products and pricing, the impact of tax, accounting and other legislation, litigation, government regulation and the effectiveness and speed of integrating new acquisitions into the business.