) posted adjusted earnings of $1.14 a share in fourth-quarter
2013 (ended Mar 31, 2013), up 3% from $1.11 earned in the
year-ago quarter and a penny ahead of the Zacks Consensus
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The results came in below management's guidance of $1.18 - $1.24
a share. This did not come as a surprise as Airgas had hinted at
a fourth quarter guidance miss in March due to disappointing
organic sales growth in the Distribution segment arising from
weak volume in both gases and hardgoods, such as welding gear.
Including restructuring charges and other one-time items,
earnings per share in the quarter stood at $1.14 compared with
$1.11 in the year-ago quarter.
Revenues in the reported quarter edged up 1.8% year over year to
$1,262 million, falling short of the Zacks Consensus Estimate of
$1,267 million. Acquisitions aided sales growth by 2% while
organic growth was flat. Gas and rent increased 4%, offset by a
5% decline in hardgoods.
Cost and Margins
Costs of goods sold remained flat at $572 million in the quarter.
Selling, distribution and administrative expenses amounted to
$462 million, up 3% year over year. Adjusted operating income was
$154 million in the quarter versus $152 million in the year-ago
quarter. Adjusted operating margin in the reported quarter was
12.2%, flat year over year.
Fiscal 2013 Performance
Airgas posted adjusted earnings of $4.35 a share, up 6% from
$4.11 earned in fiscal 2012 and in line with the Zacks Consensus
Estimate. Adjusted earnings fell shy of the company's guidance of
earnings in the range of $4.40 to $4.46 per share. Including
restructuring charges and other one-time items, earnings per
share in fiscal 2013 were $4.35 compared with $4.00 in the prior
year. Revenues increased 4.5% to $4.96 billion, in line with the
Zacks Consensus Estimate.
Cash, as of Mar 31, 2013, increased to $86.4 million from $44.7
million as of Mar 31, 2012. Free cash flow during fiscal 2013
went up to $298 million from $262 million in fiscal 2012. Cash
flow from operations for fiscal 2013 was $550 million versus $506
million in the prior year.
During the quarter, Airgas repurchased 3.82 million shares for a
total amount of $378 million at an average price of $98.89 per
share. In fiscal 2013, Airgas acquired 18 businesses with
aggregate annual revenues of more than $95 million.
Management expects adjusted earnings per share (excluding
one-time items) for the first quarter of fiscal 2014 to increase
1% to 6% to $1.14 to $1.20. For fiscal 2014, Airgas projects
earnings in the range of $5.00 to $5.35, reflecting 15% to 23%
Airgas apprehends that results will bear the brunt of the current
slow business conditions in the first half of fiscal 2014 and
then improve in the latter half. This will lead to low-to-mid
single-digit organic sales growth for the full year, with gas and
rent outpacing hardgoods.
Airgas' refrigerants business is going to face challenges in 2014
as the Environmental Protection Agency recently issued a ruling
allowing for an increase in the production of R-22 in calendar
year 2013. However, compliance with the Montreal Protocol
necessitates a significant step-down in R-22 production in
calendar year 2015, reinforcing Airgas' position as an industry
leader in the reclamation and distribution of recycled
refrigerant products. Due to this one-year hurdle, Airgas's
earnings will be affected in 2014 by the negative impact from
refrigerants, as prices and sales volumes of R-22 have both come
under pressure following the EPA's ruling.
Pa.-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 #3
(Hold). Stocks worth considering in the same industry are
), which hold a Zacks Rank #2 (Buy), and are favorable options