Airgas, Inc.
259 N. Radnor-Chester Road
Suite 100
Radnor, PA 19087-5283
www.airgas.com
AIRGAS LOGO 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 13% EPS GROWTH FOR FISCAL THIRD QUARTER
Exceeds EPS Consensus
RADNOR, PA - January 24, 2002 -- Airgas, Inc., (NYSE: ARG) today
reported increased earnings for its third quarter ended December 31,
2001. Net earnings were $11.8 million or $0.17 per diluted share
compared to $9.9 million or $0.15 per diluted share in the same period a
year ago, on a pro forma basis. Net earnings for the nine months ended
December 31, 2001, excluding the cumulative effect of a change in
accounting principle, were $39.8 million or $0.57 per diluted share
versus $37.2 million or $0.56 per diluted share in the prior year
period, on a pro forma basis. Pro forma results reflect prior year
periods adjusted to exclude goodwill amortization. Free cash flow per
diluted share for the nine-month period increased 55% to $0.82 from
$0.53 in the prior year, contributing $55 million to debt reduction.
The reported net earnings per diluted share for the quarter ended
December 31, 2000 were $0.10 versus pro forma results of $0.15 stated
above. Reported results for the nine-month period ended December 31,
2001 reflect a non-cash charge of $0.85 per diluted share resulting from
a cumulative effect of a change in accounting principle. The reported
results per diluted share for the nine-month periods ended December 31,
2001 and 2000 were a net loss of $0.28 and net earnings of $0.40,
respectively.
While fiscal third quarter sales of $392 million were down slightly
compared to last year, total same-store sales increased 0.3% compared to
the same quarter a year ago. Same-store sales in the Distribution
segment were down slightly overall, but up 1% excluding tools,
reflecting an increase of 9% for gases and rent and an 8% decline in
hardgoods. Same-store sales for the Gas Operations segment increased
7%. For the nine-month period, sales increased slightly to $1.22
billion from $1.21 billion last year. Year-to-date capital spending was
$41 million versus $48 million last year.
"By achieving 13% earnings per share growth in a very difficult
economic environment, we are delivering on our commitment to increase
the earnings power of our business," commented Airgas Chairman and
Chief Executive Officer Peter McCausland. "We are growing market
share and managing our costs. We also are delivering on our
commitment to reduce total debt through the continued growth in free
cash flow."
McCausland added, "The Airgas team remained focused on our key
strategic initiatives, like increasing market penetration, improving
supply chain efficiencies and implementing improved business
processes. As a result, Airgas is well positioned for growth,
especially when the economy begins to strengthen."
On January 3, 2002, Airgas announced it had reached an agreement with
Air Products and Chemicals, Inc. to purchase the majority of Air
Products' U.S. packaged gas business excluding its electronic gases
and magnetic resonance imaging related helium operations. Closing is
expected to follow regulatory approvals.
The Company will conduct an earnings teleconference on Friday, January
25, 2002, beginning at 8:30 a.m. Eastern Time. Access the
teleconference in a listen-only mode by calling 212-547-0138 and
entering passcode "Earth". 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.
Free cash flow is defined as net earnings, excluding certain gains and
charges, plus depreciation, amortization and deferred income taxes,
minus capital spending, plus/minus the change in working capital,
excluding the impact of the accounts receivable securitization.
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.
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: increased earnings power, free cash flow, debt
reduction; growth of market share; management of costs; the Company's
focus on its key strategic initiatives to position the Company for
growth, especially when the economy strengthens; and, the expected
closing of the purchase of the majority of Air Products' U.S. packaged
gas business following applicable regulatory approvals. 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 the Company's strategic
initiatives in growing sales and market share and establishing the
Company as the low-cost supplier; increased cost pressures and the
inability to control costs; the inability to consummate the transaction
with Air Products; an economic downturn (including adverse changes in
the specific markets for our products); increased competition; customer
acceptance of the Company's products; adverse changes in customer buying
patterns; adverse changes in general economic conditions; political and
economic uncertainties associated with current world events; and other
factors described in the Company's reports, including Form 10-K dated
March 31, 2001 and Forms 10-Q dated June 30, 2001 and September 30, 2001
filed by the Company with the Securities and Exchange Commission.
Consolidated statements of earnings and consolidated condensed
balance sheets follow.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2001 2000 (a) 2001 2000 (a)
(*Pro forma) (*Pro forma)
------------------- -----------------------
Net sales:
Distribution $357,769 $359,721 $1,108,428 $1,105,519
Gas Operations 34,664 35,249 111,662 108,546
------- ------- --------- ---------
Total net sales 392,433 394,970 1,220,090 1,214,065
------- ------- --------- ---------
Costs and expenses:
Cost of products sold (excl. deprec.)
Distribution 181,824 190,319 574,577 591,718
Gas Operations 11,966 12,458 39,496 39,342
Selling, distribution and
administrative expenses 149,529 145,112 453,483 426,780
Depreciation 16,051 15,686 47,497 48,000
Amortization 1,869 1,505 6,220 7,062
------- ------- --------- ---------
Total costs and expenses 361,239 365,080 1,121,273 1,112,902
------- ------- --------- ---------
Operating income:
Distribution 25,711 25,148 80,069 83,988
Gas Operations 5,483 4,742 18,748 17,175
------- ------- --------- ---------
Total operating income 31,194 29,890 98,817 101,163
Interest expense, net (12,448) (15,597) (35,211) (47,668)
Discount on securitization of
trade receivables (1,063) (137) (4,047) (137)
Other income, net (b) 1,971 352 1,793 809
Equity in earnings of unconsolidated
affiliates 645 881 2,875 3,584
------- ------- --------- ---------
Earnings before income taxes and the
cumulative effect of a change in
accounting principle 20,299 15,389 64,227 57,751
Income tax expense 8,454 5,463 24,378 20,502
------- ------- --------- ---------
Earnings before the cumulative effect
of a change in accounting principle 11,845 9,926 39,849 37,249
Cumulative effect of a change in
accounting principle (c) - - (59,000) -
------- ------- --------- ---------
Net earnings (loss) $ 11,845 $ 9,926 $ (19,151) $ 37,249
======= ======= ========= =========
Per share data:
Basic earnings (loss) per share $ .17 $ .15 $ (.28) $ .57
Diluted earnings (loss) per share $ .17 $ .15 $ (.28) $ .56
Net earnings (excluding the cumulative
effect of a change in accounting
principle) (d) $ 11,845 $ 9,926 $ 39,849 $ 37,249
======= ======= ========= =========
Per share data (excluding the cumulative
effect of a change in accounting
principle) (d):
Basic earnings per share $ .17 $ .15 $ .59 $ .57
Diluted earnings per share $ .17 $ .15 $ .57 $ .56
Weighted average shares outstanding:
Basic 68,300 66,500 67,900 65,700
Diluted 70,300 67,200 69,400 67,000
* Pro forma amounts reflect prior year periods adjusted to exclude goodwill amortization of
$4 million and $12 million for the three and nine months ended December 31, 2000, respectively.
See note (a) for further description.
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
December 31, March 31,
2001 2001
------------ ---------
ASSETS
Trade accounts receivable, net (e) $ 62,818 $ 143,129
Inventories, net 154,534 155,024
Deferred income tax asset, net 10,394 10,143
Prepaids and other current assets 23,572 25,549
--------- ---------
TOTAL CURRENT ASSETS 251,318 333,845
Property, plant and equipment, net 697,387 704,646
Goodwill 384,099 440,057
Other non-current assets, net 113,220 102,742
--------- ---------
TOTAL ASSETS $1,446,024 $1,581,290
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 60,560 $ 76,337
Accrued expenses and other current liabilities 122,558 130,873
Current portion of long-term debt 7,793 72,945
--------- ---------
TOTAL CURRENT LIABILITIES 190,911 280,155
Long-term debt (e) 572,116 620,664
Deferred income taxes 169,029 161,176
Other non-current liabilities 30,210 22,446
Stockholders' equity 483,758 496,849
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,446,024 $1,581,290
========= =========
See attached notes.
Notes:
(a) In July 2001, the Financial Accounting Standards Board issued Statement
No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142
requires that goodwill and other intangible assets with indefinite useful
lives no longer be amortized, but instead be tested for impairment at least
annually. In August 2001, the Company announced that it adopted SFAS 142
retroactive to April 1, 2001, as permitted under the Statement.
Accordingly, results for the three and nine month periods ended December 31,
2001 do not include goodwill amortization. For comparability to the
current fiscal year, pro forma results reflect the three and nine months
ended December 31, 2000 adjusted to exclude the amortization of goodwill.
The following represents the results as reported for the three and nine
months ended December 31, 2000:
Three Months Ended Nine Months Ended
December 31, 2000 December 31, 2000
------------------ -----------------
Operating income:
Distribution $22,038 $74,761
Gas Operations 4,204 15,570
------ ------
Total Operating income 26,242 90,331
------ ------
Equity in earnings of
unconsolidated affiliates 455 2,306
Net earnings $ 6,676 $26,895
====== ======
Basic earnings per share $ .10 $ .41
Diluted earnings per share $ .10 $ .40
(b) Other income, net, for the three and nine months ended December 31, 2001
includes a net non-recurring gain of approximately $1.9 million ($120
thousand after-tax). The net non-recurring gain consisted of a $7.4 million
gain on the divestiture of two nitrous oxide plants partially offset by a
$1.9 million loss resulting from an indemnity claim against a prior period
divestiture and a $3.6 million charge to write down a business unit held
for sale to its net realizable value.
(c) In connection with the adoption of SFAS 142, the Company performed an
evaluation of goodwill, which indicated that goodwill of one reporting
unit, our tool business, was impaired. Accordingly, the Company recognized
a $59 million non-cash charge recorded retroactive to April 1, 2001 as the
cumulative effect of a change in accounting principle for the write-down of
goodwill to its fair value. The impaired goodwill was not deductible for
taxes, and consequently, no tax benefit was recorded in relation to the $59
million charge.
(d) Net earnings and per share amounts, adjusted to exclude the item
described in note (c) above.
(e) The Company participates in a securitization agreement with two
commercial banks to sell up to $150 million of qualified trade receivables.
Net proceeds from the securitization were used to reduce borrowings under
the Company's revolving credit facilities. The amount of outstanding
receivables under the agreement was $139 million and $73 million at
December 31, 2001 and March 31, 2001, respectively.