- Sales of $2.8 billion, 5% above prior-year quarter
- Net income of $419 million and diluted EPS of $1.38, up 7% versus prior year
- Strong growth in North America
- Project development activity remains robust
- Diluted EPS guidance: 2012 full-year $5.75 to $5.90 and 2Q12 $1.40 - $1.45
DANBURY, Conn., April 25, 2012 — Praxair, Inc. (NYSE: PX) reported first-quarter net income and diluted earnings per share of $419 million and $1.38, 5% and 7% above the prior-year quarter, respectively.
Sales in the first quarter were $2,840 million, an increase of 5% compared to $2,702 million in the previous year. Sales grew 8% from the prior-year quarter, excluding negative foreign currency and cost pass-through effects. Sales growth was strongest in North America and Asia in the manufacturing, metals and energy markets. Growth was slower in Europe and South America due to weaker economic conditions in those geographies.
Operating profit in the first quarter was $627 million, up 6% from $591 million in the prior-year quarter. The improvement was driven by higher volumes and prices, partially offset by weaker currencies and cost inflation.
First-quarter cash flow from operations was $402 million and capital spending was $483 million, primarily for new production plants under long-term contracts with customers. The company paid dividends of $164 million and repurchased $102 million of stock, net of issuances. The debt-to-capital ratio was 51.3% and debt to EBITDA was 1.9x.* During the quarter, the company issued $600 million of 10-year notes at 2.45% to refund maturing debt and extend the maturity of its debt profile. The after-tax return-on-capital and return on equity for the quarter were 14.2% and 29.4%, respectively.*
Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Our first-quarter results demonstrated continued strong growth in North America, where we are well-positioned to continue to grow from greater sales to customers in the chemical, energy and manufacturing industries who are benefitting from low natural gas costs. We expect the South America and Asia businesses to continue to grow as we start up new projects driven by increasing consumer demand and infrastructure investment.
New large-project proposal activity continues to be robust and we remain focused on growing the business at continued high levels of profitability and return on capital.”
For the second quarter of 2012, Praxair expects diluted earnings per share in the range of $1.40 to $1.45.
For the full year of 2012, Praxair expects sales in the range of $11.6 to $11.9 billion. The company expects diluted earnings per share to be in the range of $5.75 to $5.90. Full-year capital expenditures are expected to be in the range of $2.1 to 2.4 billion and the effective tax rate is forecasted to remain at about 28%.
Following is additional detail on first-quarter 2012 results by segment.
In North America, first-quarter sales were $1,398 million up 6% from the prior-year quarter. Underlying sales, excluding the effects of lower natural gas prices and foreign currency translation, grew 10% from higher volumes and higher price, largely attributable to growth in the manufacturing, metals and energy markets. Operating profit of $361 million grew 16% from the prior year due primarily to higher volumes, price and ongoing productivity initiatives.
In Europe, first-quarter sales were $377 million. Sales were 9% above the prior year quarter due primarily to the acquisition of increased ownership of Yara Praxair in Scandinavia, partially offset by negative currency translation and lower packaged gas sales. Operating profit was steady at $68 million, compared to the prior-year quarter, primarily due to negative currency translation, lower volumes and cost increases not fully recovered through price.
In South America, first-quarter sales were $562 million. Sales grew 6% from the prior-year quarter, excluding a 5% negative currency impact, primarily due to higher price and on-site volumes. Operating profit was $115 million as compared to $133 million in the prior-year period due to negative currency translation and higher power and distribution costs.
Sales in Asia were $334 million in the quarter, up 5% from the prior year driven by volume growth in India, China, Korea and Thailand. Sales growth came primarily from metals and chemicals customers. Operating profit was $57 million, as compared to $53 million in the prior-year.
Praxair Surface Technologies had first-quarter sales of $169 million, up 8%, compared to $157 million in the prior-year quarter. Sales growth was driven by higher coating applications on jet engines as well as increased coating of oil and gas drilling equipment. Operating profit increased to $26 million from $25 million in the prior-year quarter due to volume growth.
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 are making our planet more productive by bringing efficiency 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, Appendix: Non-GAAP Measures.
|Praxair 1Q12 Earnings Release -Tables (116KB)||Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary, and Appendix: Non-GAAP Measures.|
|Praxair 1Q12 Teleconference Slides (PDF=321KB)||Teleconference presentation on Praxair's 1Q12 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 (857) 350-1589 — Passcode: 29262187. 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.