DANBURY, Conn., April 25, 2007 — Praxair, Inc. (NYSE: PX) reported strong results in the first quarter of 2007. First-quarter net income of $265 million rose 18% from the first quarter of 2006, and diluted earnings per share grew 19% to 81 cents.
Sales in the first quarter increased to a record $2,175 million. Sales grew 8% from the prior year quarter, excluding the effect of lower natural gas prices passed through in hydrogen prices. Higher overall pricing and volumes across all major end markets contributed to the increase.
First-quarter operating profit grew 14% to a record $403 million, and the operating margin improved to 18.5% from 17.4% in the prior year quarter. Higher pricing and cost efficiencies from productivity programs drove this improvement.
Commenting on the results, Chief Executive Officer Steve Angel said, "We achieved solid sales growth in the first quarter, due to continued strength in our global markets, solid industrial manufacturing fundamentals, and strong demand for energy and environmental applications. We leveraged sales growth into sharply higher earnings through a strong focus on pricing, productivity and project execution."
In North America, first-quarter sales reached $1,205 million, 5% above the prior-year quarter excluding the effect of lower natural gas prices passed through in hydrogen prices. Underlying sales growth came primarily from energy and general manufacturing markets, where underlying demand continues to be strong for new gases applications. Operating profit in the quarter grew 9% from the prior year, reflecting positive pricing trends in merchant and packaged gases, and volume growth.
In Europe, sales in the quarter of $330 million grew 23%, and increased 14% excluding currency effects. Underlying sales growth reflects increased business activity in Spain, Italy, and Germany, and higher pricing levels which recouped higher power costs. First-quarter operating profit of $72 million rose 22% from the prior-year period.
In South America, first-quarter sales of $348 million grew 10% from the prior year quarter, and 7% excluding currency effects. Operating profit rose 16% to $66 million. Strong operating leverage was achieved by higher utilization of new plants, and higher pricing.
Sales in Asia grew 14% from the 2006 first quarter to $167 million. Sales to electronics and metals markets contributed to the strong sales growth. Operating profit in the quarter grew 17% to $27 million from the prior-year period.
Praxair Surface Technologies' sales in the quarter were $125 million, up 9% from the prior-year quarter, excluding the effects of a business divestiture and currency. Strong coatings demand from aerospace, energy, and power markets and higher pricing drove higher sales. Operating profit increased sharply to $21 million from $13 million in the 2006 quarter, and the operating margin improved to 16.8% from 10.4%.
Cash flow from operations in the quarter was $298 million. Capital expenditures were $285 million. The company spent $186 million in the quarter repurchasing stock, net of issuances. After-tax return-on-capital ratio* was 14.8%.
For the second quarter of 2007, Praxair expects diluted earnings per share in the range of 83 cents to 87 cents, 11% to 16% above the second quarter of 2006.
For the full year of 2007, Praxair expects year-over-year sales growth in the range of 8% to 10%. The company expects diluted earnings per share to be in the range of $3.35 to $3.50, representing 12% to 17% growth from 2006. Full-year capital expenditures are expected to be in the range of $1.1 billion to $1.2 billion. This level of investment continues to support a significant number of major new supply systems under long-term contracts which will come on-stream over the next three years.
Looking forward, Angel said, "Our business outlook is very positive due to our growing pipeline of new projects. Infrastructure development in emerging economies including China, India, and Brazil, where Praxair has a leading position, continues to create numerous business opportunities for industrial gas supply systems. We also believe that energy markets will provide strong sustainable growth for the foreseeable future."
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2006 sales of $8.3 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 after-tax return-on-capital and debt-to-capital ratios.
|Praxair 1Q07 Earnings Release Tables (46 KB)||Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures|
|Praxair 1Q07 Teleconference Slides (115 KB)||Teleconference presentation on Praxair's 1Q07 results.|
A teleconference on Praxair's first-quarter results is being held this morning, April 25, at 11:00 am Eastern Time. The number is (617) 597-5362 — Passcode: 22843939. 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 including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of tax, environmental, home healthcare 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.
Susan Szita Gore