Skip to main content

(Archived) Praxair Reports Third Quarter 2014 Results

  • Sales of $3.1 billion, 4% above prior-year quarter
  • Record EPS of $1.62, up 7% versus prior-year quarter*
  • Operating and EBITDA* margins grew to 22.6% and 32.5%, respectively
  • Cash flow from operations strong at 23% of sales
  • $1.9 billion project backlog
  • EPS guidance: 2014 full-year $6.23 to $6.30 and 4Q14 $1.53 to $1.60*

DANBURY, Conn., October 29, 2014 -- Praxair, Inc. (NYSE: PX) reported third-quarter net income of $477 million and diluted earnings per share of $1.62, 6% and 7% above the prior year, respectively.*

Sales in the third quarter were $3,144 million, 4% above the prior year. Organic sales grew 5% from higher volumes, including new project start-ups, in North America, South America and Asia, and higher price across all operating segments. By end-market, sales growth was strongest for manufacturing, food and beverage, healthcare and metals customers.

Operating profit in the third quarter was $711 million, 5% above the prior year. Excluding negative currency translation impacts, operating profit rose 6%, primarily driven by higher pricing and productivity gains. Operating profit as a percentage of sales grew to 22.6% and the EBITDA margin grew to 32.5%.*

Third-quarter cash flow from operations was $713 million and funded capital expenditures of $430 million, primarily for new production plants under long-term contracts with customers. The company paid dividends of $189 million and repurchased $100 million of stock, net of issuances. The after-tax return on capital and return on equity for the quarter were 12.6% and 28.2%, respectively.*

Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Praxair achieved record earnings per share and again delivered a solid quarter with operating profit growth outpacing sales growth, despite continued slower growth in most emerging markets. Operating margin grew to 22.6%, due to our employees’ relentless focus on margin expansion through productivity and price improvements greater than cost inflation. Cash flow generation remained strong with operating cash flow at 23% of sales.

“Volume growth was mixed. In North America, our U.S. and Canadian businesses grew quite well, while sales to energy-related customers in Mexico remained weak. European volumes grew modestly across most countries. Asia experienced slowing volume growth in China, while India volumes were strong. Praxair Brazil delivered growth in a negative industrial production environment driven by new applications and growth in healthcare and food and beverage end-markets.

“During the fourth quarter, we are expecting similar underlying business trends and currency headwinds from the recent devaluation of many of our major currencies. Despite these challenges, we will remain focused on operational excellence to ensure we grow free cash flow and earnings per share for our shareholders.”

For the fourth quarter of 2014, Praxair expects diluted earnings per share in the range of $1.53 to $1.60.*

For the full year of 2014, Praxair expects sales in the range of $12.3 billion to $12.4 billion. The company expects diluted earnings per share to be in the range of $6.23 to $6.30, 5% to 6%* above the prior year. This year-over-year growth rate reflects approximately 3% negative foreign currency translation impact. Full-year capital expenditures are expected to be about $1.7 billion, and the effective tax rate is forecasted to remain at about 28%.

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

In North America, third-quarter sales were $1,639 million, 3% above the prior-year quarter and up 4% excluding negative currency translation impacts. Organic sales growth of 2% was driven primarily by higher pricing and increased sales to the manufacturing, metals, food and beverage and healthcare end-markets. Higher sales to energy customers in the U.S. and Canada were mostly offset by weaker energy sales in Mexico. Acquisitions contributed 1% growth, primarily U.S. packaged gas distributors. Operating profit of $416 million grew 2% from the prior year due to higher pricing and ongoing productivity initiatives.

In Europe, third-quarter sales were $385 million, consistent with the third quarter of 2013. Organic sales growth of 2% came from higher volumes in most major countries and higher pricing. Operating profit of $71 million increased 11% versus the prior-year quarter, and was driven by higher volumes, pricing and net density and efficiency gains from the divestiture of France and acquisition in Italy.

In South America, third-quarter sales were $523 million. Sales grew 8% from the prior-year quarter excluding a 2% negative currency impact, due to higher overall pricing and modestly higher volumes primarily driven by food and beverage, healthcare and manufacturing end-markets. Operating profit was $118 million, up 5% excluding currency effects, due primarily to higher pricing which more than offset cost inflation.

Sales in Asia were $426 million in the quarter, up 11% from the prior year driven by higher pricing and volume growth. Sales growth came primarily from manufacturing and metals customers, including new plant start-ups. Operating profit was $75 million, 12% above the prior-year quarter due primarily to higher price, higher volumes and productivity initiatives.

Praxair Surface Technologies had third-quarter sales of $171 million, as compared to $160 million in the prior-year period. Organic sales increased 3% primarily from higher sales to energy and aerospace customers and higher price. Operating profit was $31 million, as compared to $27 million in the prior year, due primarily to higher volumes and price.

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 attachments for calculations of non-GAAP measures. Fourth-quarter guidance excludes a potential pension settlement charge.

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

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 3Q14 results

A teleconference about Praxair’s third-quarter results is being held this morning, October 29, at 11:00 am Eastern Daylight Time. The number is (857) 244-7554 -- Passcode: 71496597. 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.


Media Relations
Nigel Muir

Investor Relations
Elizabeth Hirsch