EXHIBIT 99.1
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Airgas, Inc.
259 N. Radnor-Chester Rd.
Suite 100
Radnor, PA 19087-5283
AIRGAS News Release www.airgas.com
_____________________________________________________________________
Investor Contact: Media Contact:
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Melissa Nigro (610) 902-6206 James Ely (610) 902-6010
melissa.nigro@airgas.com jim.ely@airgas.com
For release: IMMEDIATELY
AIRGAS SECOND QUARTER EPS INCREASES 29% TO 27 CENTS
RADNOR, PA - October 23, 2002 -- Airgas, Inc., (NYSE: ARG) today
reported earnings for its second quarter ended September 30, 2002. Net
earnings for the quarter were $19.2 million, or $0.27 per diluted share,
compared to $14.6 million, or $0.21 per diluted share, in the same
period a year ago.
Net earnings for the six months ended September 30, 2002, excluding
certain restructuring and divestiture charges, were $0.49 per diluted
share compared to prior year results of $0.41 per diluted share, on a
pro forma basis. Results for the six months ended September 30, 2001
exclude a charge for the cumulative effect of a change in accounting
principle related to the accounting for goodwill. Free cash flow per
diluted share for the six-month period was $0.62 versus $0.40 in the
prior year, driving debt reduction of $40 million.
Including the charges related to the restructuring and divestitures, the
reported net earnings per diluted share for the six months ended
September 30, 2002 were $0.46 versus $0.41 for the comparable prior year
period, on a pro-forma basis. For the six months ended September 30,
2001, including the cumulative effect of a change in accounting
principle, the Company reported a net loss of $0.45 per diluted share.
"Our ability to grow earnings per share by 29% and generate strong
cash flow in the quarter demonstrates the resiliency of our gas
business, even during difficult economic times," said Airgas Chairman
and Chief Executive Officer Peter McCausland. "Our underlying
business, reinforced by the Air Products packaged gas acquisition,
remains on track. We also benefited from much lower than projected
financing costs for the acquisition. We are improving gross margins,
in part, due to a stronger gas and rent sales mix, and we remain
diligent about controlling costs. I am also pleased to report that
we continue executing well against our financial goals, increasing
operating margin by almost 100 basis points to 9.4%."
McCausland continued, "We believe that we are still on track to achieve
earnings per share of $0.92 to $0.94 for the full year, although the
environment is tougher than expected. We remain focused on our
strategic initiatives designed to improve our low-cost position and grow
market share, as these will help drive shareholder value until we see
sustained signs of improvement in the industrial economy."
While the acquisition helped increase second quarter sales 9% to $451
million, total same-store sales declined 3% compared to the same quarter
a year ago, reflecting continued weakness in manufacturing and other
industrial customer segments. Same-store sales in the Distribution
segment were down 3%, reflecting slight growth for gases and rent and a
7% decline in hardgoods. Same-store sales for the Gas Operations
segment increased 2%. Year-to-date capital spending was $34 million
versus $28 million last year.
Free cash flow is defined as after-tax cash flow (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 and certain gains and charges.
The Company will conduct an earnings teleconference on Thursday, October
24, 2002, beginning at 8:30 a.m. Eastern Time. Access the
teleconference by calling (877) 272-3821 and entering passcode 5907373.
Slides to be presented during the Company's teleconference and
information about how to access a live and on-demand webcast of the
teleconference are available in the `Investor Info' section on the
Company's Internet site www.airgas.com. The telephone replay will be
accessible for one week starting October 24th at approximately 11:00
a.m. Eastern Time by calling (800) 642-1687 and entering passcode
5907373.
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 nearly 800 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 telesales 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: the resiliency of the gas
business; the business remaining on track; improving gross margins
through a stronger gas and rent sales mix; controlling costs;
executing well against financial goals; expected earnings per share
for the full year; and the Company's focus on strategic initiatives
to improve its low-cost position, grow its market share and increase
shareholder 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 the Company's
integration of the acquired Air Products packaged gas business; the
success of the Company's strategic initiatives in improving
operational efficiency and growing sales and market share; 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, 2002 and Form 10-Q dated June 30, 2002, 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 Six Months Ended
September 30, September 30,
2002 2001 2002 2001
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Net sales:
Distribution $410,329 $372,345 $832,384 $750,659
Gas Operations 40,724 39,637 76,337 76,998
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Total net sales 451,053 411,982 908,721 827,657
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Costs and expenses:
Cost of products sold
(excl. deprec.)
Distribution 200,750 193,850 412,199 392,753
Gas Operations 13,337 14,210 24,154 27,530
Selling, distribution and
administrative expenses 174,737 151,235 351,036 303,954
Depreciation 18,169 15,774 36,628 31,446
Amortization 1,636 2,074 3,376 4,351
Special charges (a) -- -- 2,694 --
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Total costs and expenses 408,629 377,143 830,087 760,034
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Operating income:
Distribution 33,079 27,787 65,779 54,358
Gas Operations 9,345 7,052 15,549 13,265
Special charges (a) -- -- (2,694) --
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Total operating income 42,424 34,839 78,634 67,623
Interest expense, net (12,040) (11,850) (25,161) (22,763)
Discount on securitization of
trade receivables (899) (1,492) (1,750) (2,984)
Other income (expense), net (b) (129) 15 (252) (178)
Equity in earnings of unconsolidated
affiliates 1,364 1,317 2,296 2,230
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Earnings before income taxes and the
cumulative effect of a change in
accounting principle 30,720 22,829 53,767 43,928
Income tax expense 11,520 8,276 20,523 15,924
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Earnings before the cumulative effect
of a change in accounting principle 19,200 14,553 33,244 28,004
Cumulative effect of a change in
accounting principle (c) -- -- -- (59,000)
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Net earnings (loss) $ 19,200 $ 14,553 $ 33,244 $(30,996)
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Per share data:
Basic earnings (loss) per share $ .27 $ .21 $ .47 $ (.46)
Diluted earnings (loss) per share $ .27 $ .21 $ .46 $ (.45)
Net earnings (excluding certain charges
and the cumulative effect of a change
in accounting principle) (d) $ 19,200 $ 14,553 $ 35,439 $ 28,004
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Per share data (excluding certain
charges and the cumulative effect of
a change in accounting principle) (d):
Basic earnings per share $ .27 $ .21 $ .51 $ .41
Diluted earnings per share $ .27 $ .21 $ .49 $ .41
Weighted average shares outstanding:
Basic 70,400 67,900 70,100 67,600
Diluted 71,900 69,500 72,000 68,900
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
September 30, March 31,
2002 2002
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ASSETS
Trade accounts receivable, net (e) $ 85,777 $ 88,634
Inventories, net 145,580 154,045
Deferred income tax asset, net 13,583 13,210
Prepaids and other current assets 28,891 47,654
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TOTAL CURRENT ASSETS 273,831 303,543
Property, plant and equipment, net 871,889 893,015
Goodwill 421,331 406,548
Other non-current assets, net 128,223 113,951
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TOTAL ASSETS $1,695,274 $1,717,057
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 83,449 $ 82,485
Accrued expenses and
other current liabilities 116,804 136,390
Current portion of long-term debt 2,671 2,456
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TOTAL CURRENT LIABILITIES 202,924 221,331
Long-term debt (e) 719,337 764,124
Deferred income taxes 195,678 198,173
Other non-current liabilities 26,955 30,343
Stockholders' equity 550,380 503,086
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,695,274 $1,717,057
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See attached notes.
Notes:
(a) Special charges of $2.7 million ($1.7 million after-tax) for the six
months ended September 30, 2002 consist of a restructuring charge related
to the integration of the business acquired from Air Products in the fourth
quarter of fiscal 2002 and costs related to the consolidation of certain of
the Company's procurement functions. The special charges include facility
exit costs associated with the closure of certain Airgas facilities and
severance for approximately 130 employees.
(b) Other income (expense), net, for the six months ended September 30, 2002
includes a net non-recurring loss of approximately $200 thousand ($500
thousand after-tax) related to divestitures.
(c) In connection with the adoption of SFAS 142, the six months ended
September 30, 2001 includes a $59 million non-cash charge recorded 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
charge.
(d) Net earnings, adjusted to exclude the items described in notes (a), (b)
and (c).
(e) The Company participates in a securitization agreement with two
commercial banks to sell up to $175 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 $154.5 million and $134 million at
September 30, 2002 and March 31, 2002, respectively.