) posted adjusted earnings of $1.01 a share in third-quarter 2013
(ended December 31, 2012), up 7% from 97 cents earned in the
The results missed the Zacks Consensus Estimate of $1.08 as
well as management guidance of $1.05 - $1.11 a share. Including
restructuring charges and other one-time items, earnings per
share in the quarter stood at $1.05 compared with 93 cents in the
Revenues in the reported quarter rose 5% year over year to
$1,207.7 million and were ahead of the Zacks Consensus Estimate
of $1,191 million. Organic growth in the quarter was 4%, with gas
and rent growing 6%, offset by a 1% decline in hardgoods. Organic
growth in the Distribution business segment was 2%, with gas and
rent up 5% but hardgoods down 1%.
Cost and Margins
Costs of goods sold inched up 1% to $527 million in the
quarter. Selling, distribution and administrative expenses
amounted to $462.3 million, up 7% year over year.
Adjusted operating income was $145.5 million in the quarter
versus $135.7 million in the year-ago quarter. Adjusted operating
margin in the reported quarter was 12.1% compared with 11.8% in
the prior-year quarter.
Cash, as of Dec 31, 2012, increased to $66.6 million from
$47.9 million as of Sept 30, 2012. Free cash flow during the
first nine months of fiscal 2013 went up to $219 million from
$175 million in the comparable period last year.
Adjusted cash from operations for the first nine months of
fiscal 2013 was $451 million versus $417 million in the
prior-year period. During the third quarter, Airgas repurchased
2.47 million shares for a total amount of $222 million,
reflecting an average price of $89.93 per share.
In the first three quarter of fiscal 2013, Airgas has acquired
15 businesses with aggregate annual revenues of more than $94
Management expects adjusted earnings per share (excluding
one-time items) for the fourth quarter of fiscal 2013 to increase
6% to 12% to a range of $1.18 to $1.24. The guidance takes into
account an estimated year-over-year negative impact of 4 cents
due to one less selling day in fourth quarter, a year-over-year
decline of 1 cent from the impact of lower sales due to helium
supply constraints, 2 cents impact of a higher tax rate and
benefit of 4 cent to 6 cents of SAP implementation, net of
For fiscal 2013, the company expects adjusted earnings per
share (excluding one-time items) to increase 7% to 9% to the
range of $4.40 to $4.46 from $4.11. The company had earlier
stated a guidance of $4.45 to $4.60 per share.
The revised guidance factors in an estimated year-over-year
negative impact of 7 cents from two less selling days in fiscal
2013, a negative 7 cents impact on sales due to helium supply
constraints, and an estimated year-over-year decline of 2 cents
related to higher tax rate, as well as approximately 16 to 18
cents of SAP implementation costs and depreciation expense, net
of expected benefits.
The company is focusing on implementing SAP across its
distribution channel and currently about 70% of the businesses
are running on SAP. Airgas remains confident that SAP
implementation will enable it to realize its full economic
benefits and help it to serve its customers better. The company
expects to achieve its projected $75 to $125 million in income
benefits by the end of 2013.
Pennsylvania-based Airgas, through its subsidiaries,
distributes industrial, medical and specialty gases as a well as
hardgoods in the U.S. Airgas currently retains a short-term Zacks
Rank #2 (Buy). Other stocks to consider in the same industry are
Air Products & Chemicals Inc.
Eastman Chemical Co.
), which also hold Zacks Rank #2.
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