Airgas, Inc. (ARG), a supplier of industrial, medical, and specialty gases, said Thursday that it may miss the low end of its fourth-quarter adjusted earnings outlook by about 4 percent due to weaker than expected sales.
The company noted that organic sales growth in its distribution segment was "disappointing" in the fourth quarter. Shares of the company are currently down almost 4 percent in pre-market trades.
According to Radnor, Pennsylvania-based Airgas, while organic sales growth in January was in-line with the low-single digit growth forecast in its fourth-quarter guidance, organic sales growth for February was negative 2 percent. The company also noted that sales to-date in the month of March did not improve appreciably over February.
Peter McCausland, Executive Chairman of Airgas said, "As a result, quarter-to-date organic sales growth through February was flat compared to the prior year and roughly 2% to 3% behind our guidance assumptions, with the shortfalls being volume-related and in both gases and hardgoods."
Airgas said that accordingly, it may miss the low end of its fourth-quarter adjusted earnings outlook of $1.18 per share by about 4 percent due to the weaker than expected sales.
While reporting its financial results for the third quarter in late January, Airgas forecast fourth-quarter reported earnings in a range of $1.17 to $1.23 per share and adjusted earnings of $1.18 to $1.24 per share. This compares to adjusted earnings of $1.11 per share in the prior-year quarter.
On average, fifteen analysts polled by Thomson Reuters currently expect the company to report earnings of $1.22 per share for the quarter. Analysts estimates typically exclude special items.
McCausland added, "We hope to make up some ground before the end of the month. However, given the daily sales nature of our business and the limited visibility in the economy, we cannot accurately predict at this time where we will land for the quarter. If there are any material changes in our viewpoint, we will make an announcement at that time."
However, Airgas said that it continued to realize SAP benefits as expected during the fourth quarter and substantially completed its share repurchases under its previously announced $600 million share repurchase program. The company added that the impact of the share repurchases in the fourth quarter will be immaterial due to the timing of the purchases and the pre-funding of the financing to take advantage of the attractive debt markets.
Airgas said that despite the challenges it has been facing over the past few quarters in the current economic environment, it continues to be optimistic about the long-term prospects for the U.S. manufacturing and energy industries as well as non-residential construction.
ARG closed Wednesday's trading at $103.35. In Thursday's pre-market, the stock is down $4.04 or 3.91 percent to $99.30.
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