DANBURY, Conn., October 25, 2006 — Praxair, Inc. (NYSE: PX) announced third-quarter diluted earnings per share of 75 cents, up 27% on a comparable basis.* Net income rose to $247 million in the quarter.
Sales in the third quarter rose 11% to $2,099 million, compared to $1,890 million in the 2005 quarter. Operating profit grew 28% to $392 million from $307 million in the prior-year quarter on a comparable basis. Higher operating profit was due to strong volume growth across most end markets and geographic regions, higher prices, productivity improvements, and a gain from divestitures.
"Activity in the industrial economy has continued to be strong, and we have not seen any meaningful decline in demand from our customers," said Dennis H. Reilley, chairman and chief executive officer.
In North America, third-quarter sales of $1,187 million rose 9% from the year-ago quarter, and 11% excluding the effects of lower natural gas prices, due to higher volumes and higher prices. Sales grew in all major end-market segments. Operating profit grew to $204 million, up 28% from $159 million in the prior-year period on a comparable basis.
In Europe, sales in the quarter of $293 million were 14% above the prior period, and increased 10% excluding currency effects. Underlying sales growth was primarily attributed to volume growth in Spain and Italy. On a comparable basis, operating profit rose 11% to $69 million.
In South America, third-quarter sales of $340 million grew 16% versus the prior year, and 10% excluding currency effects, primarily due to strong volume growth in the energy sector. Operating profit rose to $69 million, an increase of 35% versus last year's quarter on a comparable basis, due to higher volumes and productivity programs.
Sales in Asia grew 21% to $165 million in the quarter, from $136 million in the year-ago period, led by robust electronics sales. Operating profit increased to $27 million, from $23 million in the prior-year period on a comparable basis.
Praxair Surface Technologies' sales in the quarter were $114 million, 3% below the prior year. Excluding the effects of a divestiture and currency, organic sales growth was 9%, due primarily to strong coatings demand in aerospace and higher pricing. Operating profit increased to $23 million, a result of higher volumes, productivity, and a gain on sale.
Cash flow from operations rose to a record $554 million in the third quarter from higher earnings and effective working capital management. Capital expenditures were $274 million. The company's after-tax return-on-capital ratio* was 14.3% for the quarter.
For the fourth quarter of 2006, Praxair expects diluted earnings per share in the range of 75 cents to 78 cents, 15% to 20% above the fourth quarter of 2005, on a comparable basis.
For the full year of 2006, Praxair expects year-over-year sales growth of about 10%. Raising its earnings guidance, Praxair expects diluted earnings per share to be in the range of $2.93 to $2.96, representing 21% to 22% growth versus the prior year on a comparable basis. Full-year capital expenditures are expected to be $1.05 billion to $1.10 billion, supporting a growing backlog of new projects across all geographic regions, which will come on-stream in 2007 and 2008.
Commenting on Praxair's business outlook, Reilley said, "Looking forward, we expect U.S. macro-economic growth to moderate. However, we expect growth in our business to outpace the economy, due to a steadily increasing backlog of projects related to energy production, infrastructure building in emerging markets, and new applications technologies."
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 before accounting change adjusted to include stock option expense, and exclude the $92 million income tax charge in the third quarter.
|Praxair 3Q06 Earnings Release Tables (73 KB)||Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures|
|Praxair 3Q06 Teleconference Presentation (173 KB)||Teleconference presentation on Praxair's 3Q06 results.|
A teleconference on Praxair's third-quarter results is being held this morning, October 25, at 11:00 am Eastern Time. The number is (617) 786-2901 – Passcode: 35923480. 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.