DANBURY, Conn., April 26, 2006 — Praxair, Inc. (NYSE: PX) announced record first-quarter net income of $225 million, and diluted earnings per share of 68 cents. Earnings per share and net income grew 19% on a comparable basis including stock option expense in the prior year.*
Sales in the first quarter rose 11% to $2,026 million, compared to $1,827 million in the 2005 quarter. Operating profit of $352 million grew 17% on a comparable basis due to strong sales growth and significant operating leverage from price attainment and productivity.
"We delivered another quarter of record results," said Dennis H. Reilley, chairman and chief executive officer. "Our electronics business led sales higher with growth of 35%, followed by aerospace, metals and manufacturing, which showed high double-digit growth."
In North America, first-quarter sales of $1,169 million rose 10% from $1,060 million in the year-ago quarter. Higher shipments to manufacturing, chemicals, metals, and electronics markets, combined with higher overall pricing drove the year-over-year sales growth. Operating profit grew 24% on a comparable basis to a record $200 million.
In Europe, sales were 6% below the prior year due to a weaker Eurocurrency. Sales in local currency grew 4%, due to higher pricing and volume growth in gases and electronic materials. Operating profit of $59 million was comparable to the prior year period, excluding currency effects.
In South America, sales of $317 million grew 30% versus the year-ago quarter, and 12% excluding currency effects, from strong pricing comparisons and higher volumes. Sales growth was broad based across all end markets. Operating profit rose to $57 million, an increase of 36% versus last year's quarter on a comparable basis.
Sales in Asia grew 20% to $147 million, from $122 million in the year-ago quarter. Strong growth in sales of electronic gases and materials drove the sales increase. Operating profit rose to $23 million.
Praxair Surface Technologies' sales in the quarter grew to $125 million, 8% above the prior year. Excluding currency effects, quarter-over-quarter sales growth was 12%, due primarily to strong demand for OEM aviation coatings and higher pricing. Operating profit grew to $13 million, an increase of 30% on a comparable basis.
Cash flow from operations was $243 million in the first quarter. Capital expenditures were $256 million. The company's after-tax-return-on-capital ratio* was 13.7% for the quarter.
For the second quarter of 2006, Praxair expects diluted earnings per share in the range of 68 cents to 71 cents, 11% to 16% above the second quarter of 2005, adjusting the prior period for stock option expense.
For the full year of 2006, Praxair expects continued year-over-year sales growth in the area of 10%. Diluted earnings per share are expected to be in the range of $2.74 to $2.82, representing 13% to 17% growth versus the prior year on a comparable basis. Full-year capital expenditures are expected to be in the area of $900 million to $950 million, supporting a growing backlog of new projects and new business in all geographic regions.
Commenting on Praxair's business outlook Reilley said, "We expect strong growth in 2006 and 2007 as projects in our backlog come on-stream, and new applications technologies take hold. We are seeing an increasing number of diverse and profitable growth opportunities in our key geographies. We expect that these opportunities and our strong execution capability will continue to sustain strong earnings growth for the foreseeable future."
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2005 sales of $7.7 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.
*See the attachments for calculations of non-GAAP measures related to operating profit, net income, earnings per share, after-tax return-on-capital, and debt-to-capital ratios. All year-over-year comparisons use 2005 results adjusted to include stock option expense.
|Praxair 1Q06 Earnings Release Tables (65 KB)||Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures|
|Praxair 1Q06 Teleconference Presentation (152 KB)||Teleconference presentation on Praxair's 1Q06 results.|
A teleconference on Praxair's first-quarter results is being held this morning, April 26, at 11:00 am Eastern Time. The number is (617) 801-9715 – Passcode: 82767933. The call also is available as a web cast at www.praxair.com/investors. Materials to be used in the teleconference are also available.
This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of tax and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of litigation and regulatory agency actions; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the projections or estimates contained in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in the company's latest Annual Report on Form 10-K filed with the SEC which should be reviewed carefully. Please consider the company’s forward-looking statements in light of those risks.