(Archived) Praxair Reports Second-Quarter 2011 Results

• Sales of $2.9 billion, 13% above prior-year quarter
• Diluted EPS of $1.38, up 16%
• Record project backlog of $2.7 billion
• Return on capital 14.7%*
• Full-year 2011 diluted EPS guidance increased to $5.40 - $5.50.  Third-quarter diluted EPS guidance of $1.35 to $1.40

DANBURY, Conn., July 27, 2011 — Praxair, Inc. (NYSE: PX) reported second-quarter net income and diluted earnings per share of $425 million and $1.38, 15% and 16% above the prior-year quarter, respectively.

Second-quarter sales were $2,858 million, 13% above the previous-year quarter. Sales increased across all geographic regions with continued strong growth from manufacturing, metals and chemicals markets. Sales rose 6% sequentially from the first quarter due primarily to higher volumes and price.

Operating profit in the second quarter was $627 million, up 15% from the prior-year quarter, reflecting higher volumes, higher price and cost savings from productivity programs.

The company generated cash flow from operations in the quarter of $573 million. Capital expenditures, primarily for new production plants under long-term contracts with customers, were $433 million. The company paid dividends of $151 million and purchased $205 million of stock, net of issuances. The after-tax return-on-capital ratio and return on equity for the quarter were 14.7% and 27.1%, respectively.”

Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Our second-quarter results reflect continued strong growth in Asia and South America and moderate growth in North America. Our backlog of new projects under contract and construction reached a record level of $2.7 billion reflecting strong growth in energy markets and emerging economies. Earnings growth continues to outpace sales growth due to our unrelenting focus on pricing and productivity.

"Based on a continued, albeit modest, recovery in the second half of the year, we are increasing our guidance to $5.40 to $5.50.”

For the full year of 2011, Praxair expects sales in the area of $11.2 billion. Full-year capital expenditures are expected to be approximately $1.8 billion, and the effective tax rate is forecasted to be about 28%.

For the third quarter of 2011, Praxair expects diluted earnings per share in the range of $1.35 to $1.40.

Following is additional detail on second-quarter 2011 results by segment.

In North America, second-quarter sales were $1,371 million, up 7% from the prior-year quarter, due primarily to organic growth. Sales growth was strongest to manufacturing, chemicals and metals markets. Operating profit of $336 million grew 14% from the prior year due primarily to productivity, price and higher volumes.

In Europe, second-quarter sales were $367 million, up 10% from the prior year, primarily due to positive currency effects. Operating profit declined 5% from the prior-year quarter to $69 million due to lower volumes in packaged gases and margin pressures.

In South America, second-quarter sales of $611 million grew 25% versus the prior-year quarter. Excluding currency effects, sales grew 14% due primarily to higher on-site, merchant and packaged gas sales to manufacturing, metals and food and beverage markets and higher pricing. Operating profit was $139 million, 22% above the prior-year quarter, due to higher volumes, price, productivity and currency effects.

Sales in Asia were $341 million in the quarter, up 22% from the prior year driven by strong growth in China, India and Korea. Sales growth came from electronics, metals and chemical customers. Operating profit was $56 million, 27% above the prior-year quarter, due primarily to higher volumes and price.

Praxair Surface Technologies had second-quarter sales of $168 million, up 19% from the prior-year quarter. Sales growth came from higher industrial and aviation coatings volumes. Operating profit of $27 million in the quarter was 23% above the prior-year period due primarily to higher volumes.

Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide with 2010 sales of $10 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

Attachments: Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary, and Appendix: Non-GAAP Measures.

A teleconference on Praxair’s second-quarter results is being held this morning, July 27, 2011, at 11:00 am Eastern Time. The number is (617) 213-8059 — Passcode: 84438158.  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 changes in pension plan liabilities; the impact of tax, environmental, 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 Form 10-K and 10-Q reports filed with the SEC which should be reviewed carefully. Please consider the company’s forward-looking statements in light of those risks.