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(Archived) Praxair Reports Full-Year and Fourth-Quarter 2015 Results

  • Full-year sales of $10.8 billion and adjusted EPS of $5.80
  • Full-year adjusted EBITDA and operating margins grew to record levels of 33.8% and 23.1%, respectively
  • Strong full-year operating cash flow of $2.7 billion, 25% of sales; free cash flow of $1.1 billion
  • Announced 5% dividend increase; 23rd consecutive annual increase
  • $1.5 billion returned to shareholders in 2015 through dividends and net share repurchases
  • Return on capital 12.6%; return on equity 34.6%
  • Fourth-quarter sales of $2.6 billion; EPS $1.47
  • Full-year 2016 EPS guidance of $5.30 to $5.70, -2% to +5%, ex-FX

DANBURY, Conn., January 29, 2016 -- Praxair, Inc. (NYSE: PX) reported fourth-quarter net income and diluted earnings per share of $422 million and $1.47, respectively.

Sales in the fourth quarter were $2,595 million, 13% below the prior-year quarter, primarily due to the impacts of negative currency translation and lower cost pass-through, which reduced sales by 10% and 2%, respectively.  Underlying sales were 1% below the prior-year quarter as growth from higher price, new project start-ups and acquisitions was offset by lower volumes due to weaker industrial activity in Brazil and China and in the metals and manufacturing end-markets in North America.

Operating profit in the fourth quarter was $624 million and, excluding currency translation effects, grew 5% above the prior-year quarter.  Operating profit as a percentage of sales grew to 24.0% and the EBITDA margin grew to 35.1%.

Fourth-quarter operating cash flow of $791 million funded $387 million of capital expenditures and $204 million of dividends.

For the full year of 2015, reported net income was $1,547 million and diluted earnings per share was $5.35.  On an adjusted basis, full-year net income was $1,677 million and diluted earnings per share was $5.80.

Full-year sales were $10,776, 12% below 2014 due to the impacts of negative currency translation and lower cost pass-through, primarily natural gas.  Underlying sales were comparable to the prior year as growth from positive price, new project start-ups and acquisitions was offset by lower base volumes in Brazil and China due to weaker underlying industrial activity and in the North American metals, upstream energy and manufacturing end-markets.  Reported operating profit was $2,321 million.  Adjusted operating profit of $2,493 million was 1% above 2014, excluding negative currency translation.

For full year 2015, the company generated strong operating cash flow of $2,682 million, 25% of sales. After capital expenditures of $1,541 million, free cash flow was $1,141 million.  The company invested $82 million in acquisitions, primarily several U.S. packaged gas distributors.  The company paid dividends of $819 million and repurchased $637 million of stock, net of issuances, while holding net debt steady.   After-tax return on capital and return on equity for the year were 12.6% and 34.6%, respectively.

Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “2015 was a challenging year from a macro-economic perspective, but Praxair employees again delivered high-quality results.  Full-year operating margin of 23.1% and EBITDA margin of 33.8% grew to record levels. Operating cash flow of $2.7 billion was strong and represented 25% of sales, and free cash flow was $1.1 billion.  As a result, we increased our dividend for the 23rd consecutive year.

“The macro-economic headwinds faced in 2015 from negative currency translation and the slowdown in global industrial activity have not yet abated, and we expect a continuation of current trends into 2016.   However, we remain confident in our business strategy.   We continue to grow the business in more resilient end-markets including food, beverage, healthcare and aerospace, and deliver productivity, cost control and higher pricing.  We have new on-site projects starting-up that will contribute growth.  And with our strong cash flow, we will continue to reinvest in the future growth of the company through synergistic and accretive tuck-in acquisitions in attractive end-markets as well as new project opportunities where we bring a competitive advantage.

“Praxair’s focus on building network supply density in targeted geographies will continue to deliver solid cash flow generation and position us for highly accretive growth once these cyclical headwinds turn.”

For full-year 2016, Praxair expects diluted earnings per share to be in the range of $5.30 to $5.70, -2% to +5% ex-currency from 2015.  This guidance assumes a negative currency impact of approximately 7% versus 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%.

For the first quarter of 2016, Praxair expects diluted earnings per share in the range of $1.20 to $1.28.  This EPS guidance assumes a negative currency impact of approximately 9% year-over-year and 3% sequentially.

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

In North America, fourth-quarter sales were $1,421 million, down 3% from the prior-year quarter excluding currency translation and cost pass-through. Organic sales growth from higher pricing and stronger volumes to refinery, food & beverage and healthcare customers was more than offset by weaker volumes in upstream energy, manufacturing and metals end-markets.   Operating profit of $406 million grew 9% from the prior year, excluding negative currency translation, primarily due to higher price, productivity and cost control and a gain on asset sale, which more than offset lower volumes.

In Europe, fourth-quarter sales were $325 million, 9% below the prior-year quarter. Organic sales were 4% above the prior year primarily driven by new project contribution, volume growth in Southern Europe and higher price. Operating profit of $62 million grew 13% from the prior year, excluding currency translation, due to volume growth, higher price and lower costs.

In South America, fourth-quarter sales were $299 million, 37% below the prior-year quarter. Sales, excluding negative currency translation, were 1% below prior year as growth from price and acquisitions was offset by lower volumes across most major end-markets due to the recessionary environment.  Operating profit was $55 million.

Sales in Asia were $398 million in the quarter, 2% below the prior year quarter.  Excluding negative currency translation, cost pass-through and a prior-quarter sale of equipment to a joint venture, sales grew 6%.  Organic growth included new project start-ups in China and India.  Operating profit of $74 million grew 2% as compared to $77 million in the prior year, excluding currency translation.

Praxair Surface Technologies had fourth-quarter sales of $152 million as compared to $165 million in the prior-year quarter. Excluding negative currency translation and cost pass-through, organic sales were 2% below the prior-year period.  Favorable price and aviation customer volume growth was more than offset by weaker sales primarily to the industrial and energy end-markets.  Operating profit was $27 million.

Adjusted amounts are non-GAAP measures.  Full-year 2015 results are adjusted to exclude the impacts of cost reduction program and other charges recorded in the second and third quarters.  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: Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary, Summary Non-GAAP Reconciliations and Appendix: Non-GAAP Measures.

Praxair 4Q15 Earnings Release - Tables (132KB) Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary, Summary Non-GAAP Reconciliations and Appendix: Non-GAAP Measures.
Praxair 4Q15 Teleconference Slides (1.2MB) Teleconference presentation on Praxair's 4Q15 results

A teleconference about Praxair’s fourth-quarter results is being held this morning, January 29, 2016 at 11:00am Eastern Time.  The number is (631) 485-4849 – Conference ID: 15532199.  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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