- Adjusted diluted EPS of 99 cents up 22% versus prior year excluding 3 cent pension settlement charge*
- Sales growth of 22% versus 2007
- Operating cash flow of $379 million; return on capital of 14.8%*
DANBURY, Conn., April 23, 2008 — Praxair, Inc. (NYSE: PX) reported first quarter net income of $307 million and diluted earnings per share of 96 cents, including the impact of a $17 million or 3 cent pension settlement charge. Excluding the pension charge, net income was $318 million and diluted earnings per share was 99 cents, compared to $265 million and 81 cents, respectively, in the prior-year quarter. This represents net income and earnings per share growth of 20% and 22%, respectively, versus the prior-year quarter.*
Sales in the first quarter were a record $2,663 million, up 22% versus $2,175 in the first quarter of 2007. Praxair achieved strong sales growth in every geographic region. Growth came primarily from new business, plant start-ups, and strong pricing trends.
Operating profit, excluding the pension settlement charge, was $499 million, 24% above $403 million in the prior-year quarter.* Improved pricing and cost savings from productivity programs contributed to the strong operating leverage.
Cash flow from operations was $379 million. Capital expenditures were $344 million, which funded primarily new, contracted on-site supply systems for customers. The company invested $40 million in acquisitions, primarily industrial packaged gas businesses in North America, and spent $227 million repurchasing stock, net of issuances. $838 million of stock repurchases have been completed under the $1 billion repurchase program which the company announced in July 2007. Praxair's debt-to-capital ratio was 45.2% at the end of the quarter. After-tax return-on-capital ratio was 14.8%, and return-on-equity was 24.6%*.
In North America, first-quarter sales reached $1,454 million, 21% above the prior year. Sales grew in all major end markets, led by energy and general manufacturing. Operating profit grew 21% to $262 million.
In Europe, sales in the first quarter of $390 million grew 18%. Currency effects contributed 13% to sales growth. Underlying sales growth came primarily from growth in merchant and packaged gases volumes in Spain, Italy, and Germany. First-quarter operating profit of $87 million rose 21% from the prior-year period.
In South America, first-quarter sales of $466 million grew 34% versus the prior year quarter due to higher prices and volumes, and favorable currency effects of 19%. Sales growth came primarily from higher sales to metals and manufacturing markets, and new plant start-ups. Operating profit rose 35% to $89 million in the quarter.
Sales in Asia grew 26% to $211 million in the quarter primarily attributable to strong volume growth. Sales in China, India, and Korea increased to electronics, chemicals and manufacturing markets. Operating profit in the quarter grew 37% to $37 million from the prior-year period, and the operating margin increased to 17.5%.
Praxair Surface Technologies had first-quarter sales of $142 million, 14% above the prior-year quarter. Higher sales to energy markets primarily drove sales growth. Operating profit grew 14% to $24 million from the 2007 quarter.
For the second quarter of 2008, Praxair expects diluted earnings per share in the range of $1.02 to $1.06. This represents earnings growth of 15% to 19% above the second quarter of 2007.
For the full year of 2008, Praxair expects year-over-year sales growth in the range of 13% to 16%. The company expects diluted earnings per share to be in the range of $4.10 to $4.25, excluding the effect of the first-quarter pension settlement charge. This represents 13% to 17% growth from 2007*. Full-year capital expenditures are expected to be about $1.5 billion, supporting an increasing number of contracts for on-site production plants globally which will come on-stream over the next three years and generate strong revenue and earnings growth.
Commenting on the results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “We had a very strong first quarter. Our results show solid organic sales growth in all our major end markets and geographic regions, led by South America and Asia. We are continuing to see strength in energy markets and emerging economies. Demand for industrial gases for environmental applications is growing. As a result, the size of our project backlog is unprecedented. Therefore, we have a positive outlook in a mixed global economy, and expect that our results will continue to reflect strong year-over-year growth in sales and earnings.”
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide, with 2007 sales of $9.4 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 2008 operating profit, net income, and diluted earnings per share adjusted to exclude a $17 million pension settlement charge, $11 million after-tax, 3 cents EPS. All year-over-year comparisons, including percentage changes, are based on adjusted amounts for 2008 which exclude the pension settlement charge. The attachments also include calculations of non-GAAP measures related to after-tax return-on-capital; return-on-equity; and debt-to-capital ratios.
|Praxair 1Q 2008 Earnings Release Table (56KB)||Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures|
|Praxair 1Q 2008 Teleconference Slides (132KB)||Teleconference presentation on Praxair's 1Q08 results.|
A teleconference on Praxair's first-quarter results is being held this morning, April 23, at 11:00 am Eastern Time. The number is (617) 224-4324 — Passcode: 88781456. 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