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(Archived) Praxair Reports First-Quarter 2016 Results

  • Sales of $2.5 billion; EPS of $1.24; adjusted EPS of $1.28
  • Operating cash flow 8% above prior-year quarter
  • EBITDA and operating margins of 33.3% and 22.1%, respectively
  • Completed six packaged gas acquisitions, primarily North America; annualized sales of approximately $50 million
  • Return on capital 12.4%; return on equity 34.6%
  • Second-quarter 2016 EPS guidance of $1.32 to $1.39; adjusted full-year $5.35 to $5.70 

DANBURY, Conn., April 29, 2016 -- Praxair, Inc. (NYSE: PX) reported first-quarter net income and diluted earnings per share of $356 million and $1.24, respectively. These results include the impact of a $16 million charge to interest expense ($10 million after-tax) or 4 cents of diluted earnings per share, related to a bond redemption prior to maturity. Excluding this charge, adjusted net income and diluted earnings per share were $366 million and $1.28, respectively.

Praxair’s sales in the first quarter were $2,509 million, 9% below the prior-year quarter, primarily due to the impacts of negative currency translation and lower cost pass-through, which reduced sales by 7% and 1%, respectively. Organic sales were 1% below the prior-year quarter. Growth from higher pricing, new project start-ups, and healthcare and food and beverage end-markets, was more than offset by lower volumes to energy, metals and manufacturing end-markets, primarily in North America.

Operating profit in the first quarter was $554 million, 11% below the prior-year quarter. Excluding currency effects, operating profit was 4% below the prior-year period. The operating profit margin was 22.1% and the EBITDA margin grew to 33.3%.

First-quarter cash flow from operations was $547 million, 8% above the prior-year quarter. Capital expenditures were $323 million and the company invested $63 million in acquisitions for several packaged gas businesses, primarily in North America. The company paid $214 million of dividends. During the quarter, the company issued €550 million of 1.20% Euro-denominated notes due 2024 and $275 million of 3.20% notes due 2026. In addition, the company repaid $400 million of 0.75% notes that became due and redeemed $325 million of 5.20% notes due in 2017. After-tax return on capital and return on equity for the quarter were 12.4% and 34.6%, respectively.

Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Praxair’s strategy of optimizing the base business, growing resilient end-markets, executing the project backlog and capitalizing on acquisition and project opportunities reflected positively in our first-quarter results and continues to drive long-term value creation.

“While North America continues to face year-over-year volume headwinds primarily in the energy, metals and manufacturing end-markets, we grew sales to the healthcare, food and beverage end-markets globally, achieved higher pricing in many businesses, and grew volumes in Europe and Asia supplemented by project start-ups. In addition, we closed six packaged gas acquisitions located in North America and Europe.

“Praxair employees again delivered high-quality results with an operating margin of 22% and growth in operating cash flow of 8%, against a difficult macro-economic environment. Consistent high-quality results and strong cash flow affords us the long-term ability to invest in high-quality projects and acquisitions that align with our strategic objectives and meet our investment criteria as well as return value to our shareholders in the form of higher dividends and share repurchases.”

For the second quarter of 2016, Praxair expects diluted earnings per share in the range of $1.32 to $1.39.

For full-year 2016, Praxair expects adjusted diluted earnings per share to be in the range of $5.35 to $5.70, -2% to +4% ex-currency from 2015. Full-year capital expenditures are expected to be approximately $1.5 billion and the effective tax rate is forecasted to remain at approximately 28%.

Following is additional detail on first-quarter 2016 results by segment.

In North America, first-quarter sales were $1,353 million, down 4% from the prior-year quarter excluding lower cost-pass through, negative currency translation and net divestitures. Organic sales growth from higher pricing and food and beverage end-markets was more than offset by weaker volumes in energy, metals and manufacturing end-markets. Operating profit of $349 million was down 4% versus the prior-year quarter, excluding currency translation and net divestitures, due primarily to lower volumes partially offset by price and productivity.

In Europe, first-quarter sales were $320 million, 2% below the prior-year quarter. Excluding currency, organic sales grew 2% from the prior year due to higher volumes, including new project start-ups. Operating profit of $62 million grew 3% from the prior-year, excluding currency translation, from operating leverage on volume growth.

In South America, first-quarter sales were $311 million, 22% below the prior-year quarter. Excluding negative currency translation and cost pass-through, sales grew 2% from acquisitions, higher price, and growth to food and beverage and healthcare end-markets, partially offset by lower volumes to the manufacturing end-market. Operating profit was $55 million.

Sales in Asia were $376 million in the quarter, 6% above the prior year excluding currency and cost pass-through. Volume growth included new plant start-ups in China and India. Operating profit was $63 million.

Praxair Surface Technologies had first-quarter sales of $149 million as compared to $160 million in the prior-year quarter. Excluding negative currency translation and cost pass-through, sales were 4% below the prior-year period. Favorable price was more than offset by lower volumes. Sales were primarily lower to the energy and manufacturing end-markets. Operating profit was $25 million.

Adjusted amounts are non-GAAP measures. First-quarter 2016 results are adjusted to exclude the impact of a bond redemption charge. Additionally, measures such as EBITDA, free cash flow, after-tax return on capital, return on equity and debt-to-capital are also non-GAAP measures. See the attachments for a summary of non-GAAP Reconciliations and calculations of non-GAAP measures.

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

Praxair 1Q16 Earnings Release - Tables (117KB) Summary Non-GAAP Reconciliations, Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary and Appendix: Non-GAAP Measures.
 Praxair 1Q16 Teleconference Slides (1.02MB) Teleconference presentation on Praxair's 1Q16 results.

A teleconference about Praxair’s first-quarter results is being held this morning, April 29, at 11:00am Eastern Daylight Time. The number is (631) 485-4849 – Conference ID: 85141182. 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 2015 sales of $11 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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