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(Archived) Praxair Reports Second Quarter 2015 Results

  • Sales of $2.7 billion, adjusted EPS of $1.45, up 2% ex-FX*
  • Adjusted EBITDA and operating margins grew to 33.4% and 22.9%, respectively*
  • Strong operating cash flow of $0.7 billion; $0.4 billion returned to shareholders through dividends and net share repurchases
  • Diluted shares 2% below prior-year quarter; new $1.5 billion share repurchase program authorized
  • Return on capital 12.6%; return on equity 30.5%*
  • Adjusted EPS guidance: 2015 full year $5.80 to $5.95, up 3% to 6% year-over-year, ex-FX and 3Q15 $1.42 to $1.49*

DANBURY, Conn., July 29, 2015 -- Praxair, Inc. (NYSE: PX) reported second-quarter net income and diluted earnings per share of $308 million and $1.06, respectively. These results include the impact of a $146 million pre-tax charge, or 39 cents of diluted earnings per share. This charge was related to cost reduction actions taken in response to lower volumes resulting from economic slowdown in emerging markets and energy related end-markets. Excluding the charge, adjusted net income and diluted earnings per share were $420 million and $1.45, respectively.*

Praxair’s results in the second quarter, as compared to the prior year, were challenged by negative impacts from foreign currency translation, as the U.S. dollar remained strong against most foreign currencies. Sales in the second quarter were $2,738 million, 12% below the prior-year quarter, primarily due to the impact of negative currency translation of 9% and lower cost pass-through of 2%. Organic sales were 1% lower than the prior-year quarter as positive price and new project contribution were offset by weaker underlying industrial activity in Brazil and China and from weaker metals, energy and manufacturing in the United States.

Reported operating profit in the second quarter was $480 million. Adjusted operating profit of $626 million was 1% below the prior-year quarter, excluding currency effects. Adjusted operating profit as a percentage of sales grew to 22.9% and the adjusted EBITDA margin grew to 33.4% primarily due to price, strong cost control and productivity gains.*

Second-quarter cash flow from operations of $707 million funded $352 million of capital expenditures. Acquisition expenditures in the quarter were $38 million, primarily related to packaged gas businesses in North and South America. The company paid $205 million of dividends and repurchased $217 million of stock, net of issuances. After-tax return on capital and return on equity for the quarter were 12.6% and 30.5%, respectively.*

Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “The second quarter continued to reflect broad-based demand in chemicals, refining and less cyclical end-markets such as healthcare and food and beverage, but revealed further weakening in macro-economic driven demand in South America, China and certain end-markets in the U.S, such as manufacturing and energy. As such, we took actions to better align our organization with these trends.”

“During the second quarter, our employees’ commitment to managing the things within our control enabled Praxair to grow the operating margin to a healthy 23%. Our resilient business model again generated strong operating cash flow of more than $700 million to support our disciplined capital allocation strategy.”

“When the markets recover, and ultimately they will, we expect to be in a strong position to realize highly accretive growth.”

For the third quarter of 2015, Praxair expects diluted earnings per share in the range of $1.42 to $1.49.* This EPS guidance assumes a negative currency translation impact of approximately 12% year-over-year. It also excludes the impact of pension settlement charges expected to be recorded in the third quarter.

For full-year 2015, Praxair expects adjusted diluted earnings per share to be in the range of $5.80 to $5.95, up 3% to 6% ex-currency from 2014.* This EPS guidance assumes a negative currency translation impact of approximately 11% year-over-year. Full-year capital expenditures are expected to be approximately $1.6 billion and the effective tax rate is forecasted to remain at approximately 28%.

Following is additional detail on second-quarter 2015 results by segment.

In North America, second-quarter sales were $1,482 million, down 1% from the prior-year quarter excluding cost-pass through and negative currency translation. Volume growth to food and beverage and refinery customers was more than offset by weaker metals, upstream energy and manufacturing end-markets. Operating profit of $388 million was comparable to the prior-year quarter, excluding currency translation, as price, productivity and cost actions were offset by lower volumes.

In Europe, second-quarter sales were $331 million, 19% below the prior-year quarter. Organic sales were 1% below the prior year as growth in manufacturing, food and beverage and healthcare was offset by lower energy end-market sales in Northern Europe. Operating profit of $63 million was steady with the prior-year quarter, excluding currency translation, as price and productivity offset the impact of lower volumes.

In South America, second-quarter sales were $388 million, 24% below the prior-year quarter. Organic sales, excluding negative currency translation and cost pass-through, grew 3% primarily from higher price which offset lower volumes. Operating profit was $81 million.

Sales in Asia were $387 million in the quarter, 2% above the prior year excluding currency and cost pass-through. Volume growth from new plant start-ups was offset primarily by slowing industrial activity in China. Operating profit was $69 million.

Praxair Surface Technologies had second-quarter sales of $150 million as compared to $174 million in the prior-year quarter. Excluding negative currency translation impact, organic sales were 6% lower. Favorable price and higher aerospace volumes were more than offset by weaker energy end-market sales. Operating profit was $25 million.

*See the attachments for calculations of non-GAAP measures. Second-quarter 2015 results are adjusted to exclude the cost reduction program and other charges.

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

Praxair 2Q15 Earnings Release - Tables (232KB) Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures.
Praxair 2Q15 Teleconference Slides (984KB) Teleconference presentation on Praxair's 2Q15 results

A teleconference about Praxair’s second-quarter results is being held this morning, July 29, at 11:00 am Eastern Daylight Time. The number is (631) 485-4849 – Conference ID: 72624899. The call is also 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.

About Praxair

Praxair, Inc., a Fortune 250 company with 2014 sales of $12.3 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, primary metals and many others. More information about Praxair, Inc. is available at


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