Tuesday, Airgas Inc. (ARG), a distributor of industrial, medical, and specialty gases, posted a decline in its fourth-quarter earnings, yet topping the estimates, as sales dipped year-on-year. Going forward, the company provided an earnings outlook for 2010 and said it expects lower first-quarter earnings.
The Radnor, Pennsylvania-based company's fourth-quarter net income declined to $56.5 million or $0.68 per share from $64.2 million or $0.76 per share in the same quarter last year. On average, 13 analysts polled by Thomson Reuters expected the company to earn $0.65 per share for the quarter. Analysts' estimates typically exclude special items.
Quarterly sales slipped 9% to $992.1 million from $1.087 billion in the comparable quarter last year. The consensus revenue estimate for the period was $1.02 billion.
Airgas chairman and chief executive officer, Peter McCausland, said, "Most of our customer segments were under significant pressure this quarter, with manufacturing suffering the deepest declines."
"Given the difficult sales environment, we moved quickly to curtail costs and capital spending. As a result, our operating margin in the quarter held up relatively well, declining modestly to 11.5% from 12.1% last year," McCausland added.
Total same-store sales dipped 13% in the quarter, with hardgoods declining 20% and gas and rent down 8%. Acquisitions contributed 4% sales growth in the quarter.
Gas and rennet revenue decreased to $631.84 million in the quarter from $645.33 million a year ago, while hardgoods revenue fell sharply to $360.26 million from $441.27 million last year.
For fiscal 2009, the company reported increased net earnings of $261.09 million or $3.12 per share, compared to $223.35 million or $2.66 per share in the last year. Analysts estimated earnings of $3.08 per share.
Airgas said the strong performance was driven by good sales growth in the first half of the year and effective management of costs in response to the slowing economy in the second half of the year.
The prior-year net income included $0.06 of integration expense, a one-time non-cash charge of $0.03 related to the conversion of National Welders Supply Company from a joint venture to a wholly owned subsidiary, and a $0.01 tax benefit related to a change in state tax law.
Full-year sales grew 8% to $4.349 billion from $4.017 billion in the previous year.
Acquisitions contributed 7% sales growth in the year, while total same-store sales grew 1%, with hardgoods down 4% and gas and rent up 4%.
Looking ahead, McCausland said that the fourth-quarter trend of low sales volumes continued in April, and with few signs of recovery in the near term, the company is cautious in its outlook for fiscal 2010.
For the first quarter, Airgas expects earnings per share in the range of $0.62 to $0.67, a decline of 23% to 17% from the year-ago quarter. Analysts currently anticipate the company to earn $0.70 per share for the first quarter.
For fiscal 2010, the company expects earnings in the range of $2.60 - $2.90 per share, while analysts anticipate $2.85 per share.
ARG closed Tuesday's trading at $66.24, down $0.96 or 1.43%, on a volume of about 1.89 million shares.
For comments and feedback: editorial@rttnews.com