Exhibit 99:
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AIRGAS News Release Airgas, Inc.
259 N. Radnor-Chester Road
Suite 100
Radnor, PA 19087-5283
www.airgas.com
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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 THIRD QUARTER EPS INCREASES 35% TO 23 CENTS
RADNOR, PA - January 29, 2003 -- Airgas, Inc., (NYSE: ARG) today
reported earnings for its third quarter ended December 31, 2002. Net
earnings for the quarter were $16.7 million, or $0.23 per diluted share,
compared to $11.8 million, or $.17 per diluted share, in the same period
a year ago.
The reported net earnings per diluted share for the nine months ended
December 31, 2002 were $0.69 versus a net loss of $0.28 for the prior
year period, which included the cumulative effect of a change in
accounting principle related to the accounting for goodwill.
Excluding the change in accounting and certain restructuring and
divestiture charges (see note (d) to the attached financial statements),
net earnings per diluted share for the nine months ended December 31,
2002, were $0.72 compared to the prior year's results of $0.57, on a pro
forma basis. Free cash flow per diluted share for the nine-month period
was $0.99 versus $0.82 in the prior year, driving debt reduction of $69
million. Year-to-date capital spending was $52 million versus $41
million last year. Fiscal 2003 capital spending includes $8 million for
the construction of the liquid carbon dioxide and dry ice manufacturing
plant in Hopewell, VA.
"Airgas delivered solid third quarter results reflecting outstanding
execution in a weak economic environment," said Airgas Chairman and
Chief Executive Officer Peter McCausland. "Our strategic initiatives
focused on market share growth and operating cost management
contributed to the performance. We also paid down $30 million of
debt in the quarter, which reflects the company's tremendous free
cash flow."
McCausland continued, "We expect our operating momentum to continue
through our fourth quarter, bolstering performance in soft market
conditions. Therefore, we estimate our fourth quarter earnings per
diluted share to be in the range of $0.24 to $0.26. The outlook for
fiscal 2004 remains cloudy, as some positive economic indicators are
still shadowed by a very weak industrial economy. However, we believe
that, barring further deterioration of the U.S. economy, our acquisition
synergies and strategic initiatives will enable earnings per share
growth of at least 10%."
While third quarter sales increased 11% to $435 million, total same-
store sales declined 1% 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 1%, reflecting growth of 2% for gases and rent and a 5% decline in
hardgoods. Same-store sales for the Gas Operations segment increased by
1%.
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 (adjusted for the impact of certain gains and charges),
excluding the impact of the trade receivables securitization.
The Company will conduct an earnings teleconference on Thursday, January
30, 2003, beginning at 8:30 a.m. Eastern Time. Access the
teleconference by calling (800) 967-7135. 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 January
30th at approximately 11:00 a.m. Eastern Time by calling (888) 203-1112
and entering passcode 480670.
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: continued operating momentum
bolstering performance in soft market conditions; earnings per share
for the fourth quarter and following fiscal year; acquisition
synergies and strategic initiatives enabling earnings per share
growth. 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; increased
industry competition; adverse changes in customer buying patterns;
significant fluctuations in interest rates; 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 reports dated June 30, 2002 and September 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 Nine Months Ended
December 31, December 31,
2002 2001 2002 2001
Net sales:
Distribution $399,659 $357,769 $1,232,043 $1,108,428
Gas Operations 35,680 34,664 112,017 111,662
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Total net sales 435,339 392,433 1,344,060 1,220,090
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Costs and expenses:
Cost of products sold (excl. deprec.)
Distribution 193,248 181,824 605,447 574,577
Gas Operations 10,959 11,966 35,113 39,496
Selling, distribution and
administrative expenses 172,403 149,529 523,439 453,483
Depreciation 19,080 16,051 55,708 47,497
Amortization 1,559 1,869 4,935 6,220
Special charges (a) -- -- 2,694 --
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Total costs and expenses 397,249 361,239 1,227,336 1,121,273
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Operating income:
Distribution 31,781 25,711 97,560 80,069
Gas Operations 6,309 5,483 21,858 18,748
Special charges (a) -- -- (2,694) --
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Total operating income 38,090 31,194 116,724 98,817
Interest expense, net (10,965) (12,448) (36,126) (35,211)
Discount on securitization of
trade receivables (804) (1,063) (2,554) (4,047)
Other income (expense), net (b) (339) 1,971 (591) 1,793
Equity in earnings of unconsolidated
affiliates 731 645 3,027 2,875
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Earnings before income taxes and the
cumulative effect of a change in
accounting principle 26,713 20,299 80,480 64,227
Income tax expense 10,017 8,454 30,540 24,378
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Earnings before the cumulative effect of
a change in accounting principle 16,696 11,845 49,940 39,849
Cumulative effect of a change in accounting
principle (c) -- -- -- (59,000)
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Net earnings (loss) $ 16,696 $ 11,845 $ 49,940 $(19,151)
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Per share data:
Basic earnings (loss) per share $ .24 $ .17 $ .71 $ (.28)
Diluted earnings (loss) per share $ .23 $ .17 $ .69 $ (.28)
Weighted average shares outstanding:
Basic 70,600 68,300 70,300 67,900
Diluted 72,300 70,300 72,100 69,400
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Non-GAAP disclosure of earnings excluding certain charges:
Net earnings (excluding certain charges
and the cumulative effect of a change in
accounting principle) (d) $ 52,135 $ 39,849
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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 $ .74 $ .59
Diluted earnings per share $ .72 $ .57
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
December 31, March 31,
2002 2002
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ASSETS
Trade accounts receivable, net (e) $ 72,738 $ 88,634
Inventories, net 146,133 154,045
Deferred income tax asset, net 13,583 13,210
Prepaids and other current assets 30,799 47,654
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TOTAL CURRENT ASSETS 263,253 303,543
Property, plant and equipment, net 865,899 893,015
Goodwill 427,738 406,548
Other non-current assets, net 126,899 113,951
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TOTAL ASSETS $1,683,789 $1,717,057
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 77,745 $ 82,485
Accrued expenses and other current liabilities 110,406 136,390
Current portion of long-term debt 2,377 2,456
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TOTAL CURRENT LIABILITIES 190,528 221,331
Long-term debt (e)(f) 693,809 764,124
Deferred income taxes 199,043 198,173
Other non-current liabilities 30,176 30,343
Stockholders' equity 570,233 503,086
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,683,789 $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 nine
months ended December 31, 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 nine months ended December 31, 2002
includes a net non-recurring loss of approximately $200 thousand ($500
thousand after-tax) related to divestitures.
Other income (expense), 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 nine months ended
December 31, 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).
Nine Months Ended
December 31,
(Amounts in millions) 2002 2001
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Net earnings (loss) as reported $ 49.9 $(19.2)
Certain charges (after-tax):
Special charge (restructuring) (a) 1.7 --
Divestiture charge (b) 0.5 --
Change in accounting principle (c) -- 59.0
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Net earnings (excluding certain charges
and the change in accounting principle) $ 52.1 $ 39.8
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(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 $151 million and $134 million at
December 31, 2002 and March 31, 2002, respectively.
(f) Debt Reduction
Reconciliation of the change in debt per the Balance Sheet to debt
reduction adjusted for off-balance sheet and non-cash items:
Nine Months Ended Three Months Ended
(Amounts in millions) December 31, 2002 December 31, 2002
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Reduction in debt per the Balance Sheet $ (70.4) $ (25.8)
Increase (decrease) in funding under the
trade receivables securitization program 17.1 (3.4)
Change in fair value of debt related to
interest rate swap agreements (non-cash) (14.7) (.9)
Other (.8) (.3)
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Adjusted debt reduction $ (68.8) $ (30.4)
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