DANBURY, Conn., January 23, 2008 — Praxair, Inc. (NYSE: PX) reported record sales and earnings in the fourth quarter and full year of 2007. Fourth-quarter and full-year diluted earnings per share grew 20% and 21% to 98 cents and $3.62, respectively.
Sales in the fourth quarter were $2,523 million, and for the year were $9,402 million, the highest in the company's history. Sales growth was 19% in the fourth quarter and 13% for the full year. Praxair achieved strong sales growth in every geographic region from new business and new plant start-ups.
Operating profit of $484 million grew 23% in the fourth quarter. Full-year operating profit of $1,786 million increased 18% from the prior year. The strong operating leverage was achieved from new business, improved pricing and cost savings from productivity initiatives.
For the full year, cash flow from operations was $1,958 million. Capital expenditures were $1,376 million, which funded a significant number of new on-site supply systems under contract with customers. The company invested $476 million in acquisitions of core industrial gas businesses in North America and Scandinavia, and spent $636 million repurchasing stock, net of issuances. $545 million of stock repurchases have been completed under the $1 billion repurchase program which the company announced in July, 2007. As a result, Praxair's debt-to-capital ratio* was 43.4% at year-end. After-tax return-on-capital ratio* was 15.3% for the year, compared to 14.6% in 2006.
In North America, fourth-quarter and full-year sales reached $1,381 million and $5,185 million, respectively. Sales grew in all major end markets, led by energy and general manufacturing. Overall sales in North America grew 17% in the fourth quarter and 10% for the full year. Operating profit grew 26% in the fourth quarter and 15% for the full year, compared to the prior-year periods.
In Europe, sales in the fourth quarter of $354 million grew 16%. Currency effects contributed 12% to sales growth. For the year, sales reached $1,345 million, up 16% including currency effects of 9%. Underlying sales growth came primarily from new business in Spain and Germany. Fourth-quarter operating profit of $86 million and full-year operating profit of $315 million both rose 18% from the prior-year period.
In South America, fourth-quarter sales of $444 million grew 26% versus the prior year quarter due to favorable currency effects of 17% and higher prices and volumes. Full-year sales were $1,604 million, up 19%, including 10% from currency appreciation. Higher sales to metals and healthcare markets, new project start-ups, and growth from new applications technologies in food and manufacturing drove the underlying sales growth. Operating profit rose 25% to $85 million in the quarter, and 23% to $311 million for the year.
Sales in Asia grew 24% to $210 million in the quarter, and grew 17% to $746 million for the year. Sales to electronics, metals and manufacturing markets continued to be strong in China, India, and Korea. Operating profit in the quarter grew to $34 million from the prior-year period. Full-year operating profit was $121 million versus $111 million in 2006.
Praxair Surface Technologies had fourth-quarter sales of $134 million and sales of $522 million for the year. Strong coatings sales to aerospace customers and growing demand for industrial gas turbine coatings primarily drove sales growth. Fourth-quarter sales rose 17%, and full-year sales grew 16%, excluding the effect of a business divestiture. Operating profit increased 50% to $24 million from the 2006 quarter, and the operating margin improved to 17.9%. For the full year, operating profit grew to $92 million, up 35% over 2006.
For the first quarter of 2008, Praxair expects diluted earnings per share in the range of 93 cents to 96 cents*, excluding the effect of a pension plan settlement charge, which is anticipated to be 3 cents. This represents underlying earnings growth of 15% to 19% above the first quarter of 2007.
For the full year of 2008, Praxair expects year-over-year sales growth in the range of 10% to 14%. The company expects diluted earnings per share to be in the range of $4.00 to $4.20*, excluding the effect of the first quarter pension settlement charge, which represents 10% to 16% growth from 2007. The high end of the guidance range assumes that the U.S. economy remains consistent with 2007. The lower end of the range assumes an economic slowdown in the U.S., which is widely anticipated. Guidance also assumes no significant changes in currency exchange rates. Full-year capital expenditures are expected to be about $1.4 billion, largely supporting on-site production plants which will start up over the next three years across all geographic segments and provide strong revenue and earnings growth through 2010.
Commenting on the year's results and business outlook, Chairman and Chief Executive Officer Steve Angel said, "We finished an outstanding year with a strong fourth quarter. Sales growth was robust globally, led by South America and Asia. We leveraged sales growth into record earnings due to our intensive focus on pricing, productivity, and capital and operational discipline. Demand for new energy supplies, tightening environmental regulations, and infrastructure development in emerging markets will continue to drive significant new business opportunities for Praxair globally. Our record project backlog and our focus on operational excellence in our base business will allow us to continue to produce sustainable earnings growth and strong cash flow. The 25% increase in our dividend which we announced this morning, demonstrates our confidence in our ability to continue to grow free cash flow throughout the economic cycle."
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide. 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 4Q 2007 Earnings Release Table (64KB)||Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures|
|Praxair 4Q 2007 Teleconference Slides (237KB)||Teleconference presentation on Praxair's 4Q07results.|
A teleconference on Praxair's fourth-quarter 2007 results is being held this morning, January 23, at 11:00 am Eastern Time. The number is (617) 614-3451 — Passcode: 2269147. 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