DANBURY, Conn., October 24, 2007 — Praxair, Inc. (NYSE: PX) announced record third-quarter sales and earnings. Net income grew 23% to $305 million, and diluted earnings per share grew 25% to 94 cents.
Sales in the third quarter were $2,372 million, 13% above the prior year. Sales grew in all geographies, led by strong growth in Asia and South America from new business and project start-ups, and continued stable growth in North America.
Third-quarter operating profit grew to $460 million from $392 million in the prior-year quarter as a result of new business, improved pricing and operational efficiencies. This represented underlying growth of 22%, excluding the gains from business divestitures in the 2006 quarter.
In North America, third-quarter sales reached $1,306 million, 10% above the prior year. Growth came primarily from higher sales to energy and general manufacturing markets. Operating profit of $244 million rose 20% from the third quarter of 2006, reflecting strong operating leverage from new business development.
In Europe, third-quarter sales of $325 million increased 11%, and 4% excluding currency effects, versus the prior year. Underlying sales growth came from all major regions and end-markets. Operating profit rose to $78 million, representing 22% growth from the prior year, excluding a gain from a business divestiture in the 2006 quarter.
In South America, third-quarter sales of $419 million grew 23% from the prior-year quarter, and 13% excluding currency effects, from new business in manufacturing, metals, energy and healthcare markets. Operating profit of $84 million grew 22% as compared to the prior year.
Sales in Asia grew 15% to $190 million from $165 million in the year-ago quarter. Higher on-site and merchant gases sales in China, India and Korea drove the increase. Operating profit in the quarter rose to $30 million from $27 million in the prior year.
Praxair Surface Technologies’ sales in the quarter increased to $132 million, up 16% as compared to the prior-year quarter. Increasing demand for coatings sales to the aerospace and energy markets drove the sales growth. Operating profit rose to $24 million, reflecting significantly improved product mix.
Cash flow from operations in the quarter was a record $592 million. Capital expenditures were $360 million. During the quarter, the company purchased $385 million of common stock, net of issuances. The after-tax return-on-capital ratio* improved to 15.5% for the quarter and return on equity* increased to 25.1%.
Commenting on the results, Chairman and Chief Executive Officer Steve Angel said, “The pace of new business activity continues to be robust around the globe, reflecting infrastructure development in Asia and South America, and an abundance of projects in energy markets in the Americas. Our pipeline of future projects continues to grow, which provides visibility for double-digit sales growth over the next two to three years. We expect to achieve strong earnings leverage due to our focus on productivity, and to continue our share repurchase program using our strong and growing cash flow.”
For the fourth quarter of 2007, Praxair expects diluted earnings per share in the range of 95 cents to 97 cents, 16% to 18% above the fourth quarter of 2006.
For the full year of 2007, Praxair expects year-over-year sales growth of about 12%. The company expects diluted earnings per share to be in the area of $3.60, representing about 20% growth from 2006. Full-year capital expenditures are expected to be in the area of $1.3 billion.
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.
|Praxair 3Q07 Earnings Release Tables (45 KB)||Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures|
|Praxair 3Q07 Teleconference Slides (121 KB)||Teleconference presentation on Praxair's 3Q07 results.|
A teleconference on Praxair's third-quarter 2007 results is being held this morning, October 24, at 11:00 am Eastern Time. The number is (617) 847-8712 —Passcode: 98313534. 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 investigations, litigation and regulatory proceedings; 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