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AIRGAS NEWS RELEASE
EXHIBIT 99:
Investor Contact: Media Contact:
Melissa Nigro (610) 902-6206 James Ely (610) 902-6010
melissa.nigro@airgas.com jim.ely@airgas.com
For release: Immediately
AIRGAS REPORTS STRONG FIRST QUARTER RESULTS
RADNOR, PA - July 24, 2001 -- Airgas, Inc., (NYSE: ARG) today reported
results for its first quarter ended June 30, 2001. Net earnings for the
quarter were $10.1 million, or $0.15 per diluted share, compared to $9.8
million, or $0.15 per diluted share in the same period a year ago. Free
cash flow for the quarter was $0.23 per diluted share versus zero last
year. Results for the current quarter include Project One costs of
$0.03 per diluted share. Fiscal first quarter sales increased 2% to
$416 million, up from $409 million last year.
Total same-store sales increased 2% compared to the same quarter a year
ago. Same-store sales in the Distribution segment were up 1%,
reflecting an increase of 9% for gases and rent and a 5% decline in
hardgoods. Same-store sales for the Gas Operations segment increased
13%. Capital spending in the first quarter was $17 million versus $15
million in the first quarter last year.
"It is great to see the momentum in both earnings and sales, especially
given some challenging market conditions," commented Peter McCausland,
chairman and chief executive officer. "We are pleased with the overall
same-store sales growth despite the hardgoods decline, which is
attributable to the depressed manufacturing environment. Our market
leading position in the packaged gas business provides stability during
down economic cycles like we are experiencing now. This has always been
a strong characteristic of our business.
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"Our focused profitability improvement effort, Project One, which we
announced at our analyst meeting this past May, is successfully moving
forward," continued McCausland. "We are beginning to see the results
from some of our short-term `value' projects while we begin the work on
longer-term `infrastructure' programs that will support both organic and
acquisition growth going forward. Although spending for Project One
lowered our results, as planned, by $0.03 per share this quarter, we
believe that the investment will help create significant value in the
future."
The Company will conduct an earnings teleconference on Wednesday, July
25, 2001, beginning at 8:30 a.m. Eastern Time. Slides to be presented
during the Company's teleconference, information about how to access a
live webcast of the teleconference, and replay instructions are
available in the `Investor Info' section on the Company's Internet site
www.airgas.com. The replay will be accessible for one week starting at
approximately 11:00 a.m. Eastern Time on Wednesday, July 25, 2001.
On July 20, 2001, the Financial Accounting Standards Board issued Statement
No. 142, Goodwill and Other Intangible Assets ("SFAS 142"). The Company is
considering the early adoption of SFAS 142 retroactive to April 1, 2001, as
permitted. For a description of SFAS 142, see the notes to the attached
consolidated statements of earnings and consolidated condensed balance sheets.
ABOUT AIRGAS, INC.
Airgas, Inc. is the largest U.S. distributor of industrial, medical and
specialty gases, welding, safety and related products. Its integrated
network of 700 locations includes branches, retail stores, gas fill
plants, specialty gas labs, production facilities and distribution
centers. Airgas also distributes its products and services through
eBusiness, catalog and telemarketing channels. Its national scale and
strong local presence offer a competitive edge to its diversified
customer base. For more information, please visit www.airgas.com.
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FORWARD-LOOKING STATEMENTS
This press release may contain statements that are forward-looking, as
that term is defined by the Private Securities Litigation Reform Act of
1995 or by the Securities and Exchange Commission in its rules,
regulations and releases. These statements include, but are not limited
to, statements regarding: earnings and sales trends; the Company's
packaged gas business providing stability during down economic cycles;
the success of Project One short-term value programs and longer term
infrastructure programs to support organic and acquisition growth; the
earnings impact of Project One for fiscal year 2002; and the ability of
Project One to create significant future value. Airgas intends that
such forward-looking statements be subject to the safe harbors created
thereby. All forward-looking statements are based on current
expectations regarding important risk factors and should not be regarded
as a representation by the Company or any other person that the results
expressed therein will be achieved. Important factors that could cause
actual results to differ materially from those contained in any forward-
looking statement include the success of marketing initiatives, cross-
selling and strategic product sales in growing sales and market share;
increased cost pressures and the inability to control costs; an economic
downturn (including adverse changes in the specific markets for our
products); the inability of the Company to successfully execute its
operating strategy, including the Project One initiative; increased
competition; customer acceptance of the Company's products; adverse
changes in customer buying patterns; the inability to identify
attractive acquisition candidates and consummate acquisitions and other
factors described in the Company's reports, including Form 10-K dated
March 31, 2001 filed by the Company with the Securities and Exchange
Commission.
Consolidated statements of earnings and consolidated condensed
balance sheets follow.
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AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
2001 2000
---- ----
Net sales:
Distribution $378,314 $374,739
Gas Operations 37,361 34,259
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Total net sales 415,675 408,998
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Costs and expenses:
Cost of products sold (excluding
depreciation and amortization)
Distribution 198,903 202,749
Gas Operations 13,320 12,447
Selling, distribution and
administrative expenses 152,719 140,015
Depreciation 15,672 16,325
Amortization 5,869 6,419
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Total costs and expenses 386,483 377,955
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Operating income:
Distribution 23,499 26,125
Gas Operations 5,693 4,918
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Total operating income 29,192 31,043
Interest expense, net (10,913) (15,765)
Discount on securitization of
trade receivables (1,492) -
Other income (expense), net (193) 52
Equity in earnings of unconsolidated
affiliates 488 1,364
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Earnings before income taxes 17,082 16,694
Income tax expense 7,003 6,878
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Net earnings $ 10,079 $ 9,816
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Per share data:
Basic earnings per share $ .15 $ .15
Diluted earnings per share $ .15 $ .15
Weighted average shares outstanding:
Basic 67,400 65,100
Diluted 68,400 67,300
See notes to consolidated financial statements.
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AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
June 30, March 31,
2001 2001
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ASSETS
Trade accounts receivable, net $ 81,437 $ 143,129
Inventories, net 157,970 155,024
Deferred income tax asset, net 10,394 10,143
Prepaids and other current assets 18,874 25,549
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TOTAL CURRENT ASSETS 268,675 333,845
Property, plant and equipment, net 703,555 704,646
Goodwill, net 428,326 432,825
Other non-current assets, net 118,701 111,409
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TOTAL ASSETS $1,519,257 $1,582,725
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 77,569 $ 76,337
Accrued expenses and other current liabilities 125,532 132,308
Current portion of long-term debt 68,628 72,945
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TOTAL CURRENT LIABILITIES 271,729 281,590
Long-term debt 549,572 620,664
Deferred income taxes 163,941 161,176
Other non-current liabilities 29,994 22,446
Stockholders' equity 504,021 496,849
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,519,257 $1,582,725
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See notes to consolidated financial statements.
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Notes to consolidated financial statements:
(a) On July 20, 2001, the Financial Accounting Standards Board issued
Statement No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142").
The Company is considering the early adoption of SFAS 142 retroactive
to April 1, 2001, as permitted. SFAS 142 requires that goodwill and
other intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually.
SFAS 142 requires the Company to perform a transitional assessment
of whether there is an indication that the goodwill is impaired as
of the date of adoption. The Company will then have a transition
period from the date of adoption to determine the fair value of each
reporting unit and if goodwill has been impaired. Any goodwill
impairment loss will be recognized as the cumulative effect of a
change in accounting principle no later than the end of the fiscal
year of adoption. The Company will also be required to review its
other intangible assets for impairment and to reassess the useful
lives of such assets and make any necessary adjustments.
As of April 1, 2001, the Company had goodwill and other intangible
assets, net of accumulated amortization, of approximately $433 million
and $38 million, respectively, which would be subject to the
transitional assessment provisions of SFAS 142. Amortization expense
related to goodwill was $3.5 million for both three month periods ended
June 30, 2001 and 2000.
(b) In April 2001, the Company completed the second and final tranche of
its $150 million trade receivables securitization program. Proceeds from
the second tranche of approximately $64 million were used to reduce
borrowings under the Company's revolving credit facilities. As of
June 30, 2001, the Company has received approximately $137 million of
net cash proceeds since inception of the securitization program in
December 2000.