U.S. Markets closed

In-Line Earnings for Praxair Yet Again

Zacks Equity Research

Industrial gas producer and supplier, Praxair Inc. (PX) reported in line results, being it’s second in a row, for the first quarter of 2013. Adjusted earnings per share came in at $1.38, no change from the year-ago quarter’s earnings and in line with the Zacks Consensus Estimate.

Including a loss from the Venezuela currency devaluation, GAAP earnings for the quarter were $1.30 per share, down from $1.38 in the year-ago quarter.

Earnings for both the quarters were within management’s predicted range of $1.35-$1.40 per share.    

Revenue: Praxair reported total revenue of $2,888 million in the first quarter, up 2.0% year over year. The results were adversely impacted by lower working days, negative foreign currency translation, and cost pass-through; excluding which total revenue grew by 4%.

During the quarter, healthy performance at manufacturing, energy, and food & beverages markets helped push North American revenue by 4% to $1,457 million. Revenue in Europe was down 2% to $370 million due to lower industrial activities in Spain and Italy resulting in lower packaged-gases.

Revenue in South America grew 3%, excluding a negative foreign currency translation, to $531 million while that in Asia was up 10% to $367 million, driven by a volume growth in India, China, Korea and Thailand. Surface Technologies revenue was $163 million in the quarter versus $169 million in the year-ago quarter, due primarily to weak business industrial and military aviation coatings businesses.

Margins: Cost of sales in the quarter increased 1.4% year over year and represented 56.7% of the total revenue. Adjusted operating profit for Praxair in the quarter was $623 million, down 1% year over year while adjusted margin stood at 21.6%.
Balance Sheet: Exiting the first quarter 2013, Praxair had cash and cash equivalent balance of $113 million, down 28% compared with $157 million in the previous quarter. Long-term debt balance was $7,772 million, up 16.3% sequentially as the company issued notes worth $1,400 million during the quarter.

Cash Flow: Praxair generated net cash of $472 million from operating activities in the first quarter, up from $402 million in the year-ago quarter. Capital spending went down 3.5% to $466 million, with a major portion being invested for a new production plant setting.

Share Repurchases/Dividends: Praxair pursues a consistent strategy of returning cash to shareholders through dividend payments and share repurchases. During the first quarter 2013, the company paid $178 million in dividends and repurchased shares worth $150 million.

Alongside the quarterly results, Board of Directors of Praxair declared a quarterly dividend of 60 cents to be paid on June 17, 2013 to its shareholders of record as on June 7, 2013.

Outlook: For the second quarter of 2013, management projects earnings per share to be within the $1.45-$1.50 per share range.

For 2013, adjusted earnings per share are expected to be within the $5.90-$6.05 range while GAAP earnings are expected to be within $5.82-$5.97. Sales are expected to be roughly $12 billion.

Capital spending is expected to be in the range of $1.8-$2.0 billion and effective tax rate guidance is projected to be 28%.

Praxair Inc. is the largest industrial gas producer and supplier in the Americas and one of the leading gas producing companies worldwide. The stock currently carries a Zacks Rank #3 (Hold).

Other stocks to watch out for in the industry are Olin Corp. (OLN), Compass Minerals International Inc. (CMP) and Eastman Chemical Co. (EMN); each holds a Zacks Rank #2 (Buy).

Read the Full Research Report on EMN

Read the Full Research Report on PX

Read the Full Research Report on OLN

Read the Full Research Report on CMP

Zacks Investment Research

More From Zacks.com