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(Archived) Praxair Reports First Quarter 2014 Results

  • Sales of $3.0 billion, 5% above prior-year quarter
  • EPS of $1.51, up 9% versus prior year*
  • Strong operating margin of 22.3% and EBITDA* margin of 32.0%
  • Completed U.S. packaged gas acquisitions in Texas, Oklahoma and Michigan. 
  • Acquired full ownership of mid-Atlantic joint venture
  • Density and efficiency improvements with acquisition of industrial gas business in Italy and divestiture in France
  • EPS guidance: 2014 full-year $6.30 to $6.50, up 6% to 10% year-over-year,* and 2Q14 $1.55 to $1.60

DANBURY, Conn., April 23, 2014 -- Praxair, Inc. (NYSE: PX) reported first-quarter net income and diluted earnings per share of $448 million and $1.51, 8% and 9% above the prior-year quarter, respectively.*

Sales in the first quarter were $3,026 million, 5% above the prior-year quarter, and up 9%, excluding foreign currency.  Organic sales grew 6% driven by higher on-site volumes from new project start-ups primarily in North America and Asia.  By end-market, sales growth was strongest for energy, chemicals, and food and beverage customers, as compared to the prior-year quarter.  Acquisitions contributed 2% growth in the quarter.

Operating profit in the first quarter was $675 million, 8% above the prior-year quarter.  Excluding negative currency translation impacts, operating profit rose 12% driven by higher volumes, higher pricing, acquisitions and productivity gains. Operating profit as a percentage of sales was a strong 22.3% and the EBITDA margin grew to 32.0%.*

First-quarter cash flow from operations was $536 million and capital expenditures were $393 million, primarily for new production plants under long-term contracts with customers.  Acquisition expenditures were $124 million, related primarily to Italian industrial gas and U.S. packaged gas businesses.  The company paid dividends of $191 million and repurchased $237 million of stock, net of issuances.  During the quarter, the company issued €600 million of 6-year notes with a 1.5% coupon.  The after-tax return-on-capital and return on equity for the quarter were 12.6% and 28.7%, respectively.*

Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Praxair delivered solid results in the first quarter with sales growth of 9% and operating profit growth of 12%, excluding the impact of currency headwinds.  Organic growth of 6% reflected  contributions from new projects in North America and Asia, as well as modest volume growth in our South America, Europe and Surface Technologies operating segments.  Praxair’s relentless focus on achieving productivity benefits and higher price to offset cost inflation produced strong operating leverage and an operating margin of 22.3%.   

We expect base volumes for the remainder of 2014 to continue to reflect modest growth in-line with the current macro-economic environment.  Through continued operational excellence, project execution and financial discipline, we expect to continue to deliver increasing cash flow and earnings per share.  We expect contribution from new projects and acquisitions to increase return on capital in the second half of the year.”

For the second quarter of 2014, Praxair expects diluted earnings per share in the range of $1.55 to $1.60. 

For the full year of 2014, Praxair expects sales in the range of $12.4 billion to $12.8 billion.  The company expects diluted earnings per share to be in the range of $6.30 to $6.50, 6% to 10% above the prior year.*   Full-year capital expenditures are expected to be about $1.8 billion, and the effective tax rate is forecasted to remain at about 28%.

Following is additional detail on first-quarter 2014 results by segment.

In North America, first-quarter sales were $1,580 million, 8% above the prior-year quarter, and up 10% excluding negative currency translation impacts.  Organic sales growth was 5%, driven primarily by higher sales to the energy end-market as on-site volumes increased from new project start-ups for hydrogen supply to refinery customers and higher pricing.  Acquisitions contributed 3% growth.  Operating profit was $378 million, 6% above prior-year.

In Europe, first-quarter sales were $397 million, up 7% versus the first quarter of 2013.  Acquisitions, primarily Dominion Technology Gases, contributed 5% growth.  Organic sales growth of 2% came from higher pricing and higher volumes.  Operating profit was $79 million, an increase of 27% versus the prior-year quarter, including positive currency translation and acquisitions.  Underlying operating profit growth was driven by higher volumes, higher price and lower costs. 

In South America, first-quarter sales were $488 million. Sales grew 7% from the prior-year quarter, excluding a 15% negative currency impact, primarily due to volume growth and higher overall pricing. Operating profit was $113 million, up 16% excluding negative currency translation, due to higher volumes and higher pricing partially offset by cost inflation.

Sales in Asia were $392 million in the quarter, up 7% from the prior year driven by volume growth in India, China, and Korea and higher pricing for helium and rare gases.  Sales growth came primarily from metals, energy and electronics customers. Operating profit was $75 million, an increase of 19% versus the prior-year period due primarily to volume growth and higher pricing.

Praxair Surface Technologies had first-quarter sales of $169 million, 4% above prior year.  Organic sales increased 3% from higher volumes of aviation coatings and higher price.  Operating profit was $30 million as compared to $26 million in the prior year, due primarily to higher volumes, price and productivity gains.

About Praxair
Praxair, Inc., a Fortune 250 company with 2013 sales of $12 billion, is the largest industrial gases company in North and South America and one of the largest worldwide. The company produces, sells and distributes atmospheric, process and specialty 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 many others. More information about Praxair, Inc. is available at

*See the attachments for calculations of non-GAAP measures. Non-GAAP adjustments in 2013 relate to the first-quarter Venezuela currency devaluation charge, a third-quarter pension settlement charge and fourth-quarter income tax benefit and bond redemption charge.

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

 Teleconference presentation on Praxair's 1Q14 results

A teleconference on Praxair’s first-quarter results is being held this morning, April 23, at 11:00 am Eastern Daylight Time.  The number is (617) 399-3482 -- Passcode: 91636623.  The call also is available as a webcast live and on demand at  Materials to be used in the teleconference are also available on the website.

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; the impact of information technology system failures, network disruptions and breaches in data security; 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. Additionally, financial projections or estimates exclude the impact of special items which the company believes are not indicative of ongoing business performance. 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.


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