AIRGAS News Release Airgas, Inc.
259 N. Radnor-Chester Road
Suite 100
Radnor, PA 19087-5283
www.airgas.com
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EXHIBIT 99.1
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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 REPORTS FIRST QUARTER EPS OF $0.25
RADNOR, PA - July 24, 2003 -- Airgas, Inc., (NYSE: ARG) today reported
earnings for its first quarter ended June 30, 2003. Net earnings for
the quarter were $18.5 million, or $0.25 per diluted share, compared to
$14 million, or $0.20 per diluted share, in the same period a year ago.
As disclosed in the notes to the financial statements, the quarter ended
June 30, 2002 included a special charge of $2.7 million ($1.7 million
after tax) or $0.03 per diluted share related to the integration of the
Air Products acquisition.
First quarter sales increased 1% to $461 million, while total same-store
sales declined 1% compared to the same quarter a year ago, reflecting
continued weakness in manufacturing and other industrial segments. Same-
store sales in the Distribution segment were down 2%, driven by a 4%
decline in hardgoods. Same-store sales for the Gas Operations segment
increased 9%, attributed to strong sales at the new Hopewell, Virginia
CO2 plant, which began operations in January 2003.
"We delivered a solid first quarter performance. The prolonged weakness
in the industrial sector continues to temper top-line results, but
strength in our growth platforms, such as medical and bulk gas, and a
focus on cost control contributed to the EPS growth," said Airgas
Chairman and Chief Executive Officer Peter McCausland.
Free Cash Flow for the quarter ended June 30, 2003 was a negative $3
million contributing to a $5 million increase in adjusted debt. Free
Cash Flow for the comparative quarter ended June 30, 2002 was a negative
$5 million. Negative free cash flow is typical in the first quarter due
to the timing of payments for interest and annual bonuses; however, the
recently completed quarter also included $7 million of incremental
capital spending versus the prior year as the Company invested in
cylinders, tanks and other revenue generating assets to meet customer
needs. The definition of free cash flow and a reconciliation to the
attached Consolidated Statement of Cash Flows, as well as the definition
of adjusted debt and a reconciliation to the balance sheet are attached.
McCausland continued, "Recent economic data on the industrial sector
seems to indicate a slight firming, but it appears we are still bouncing
along the bottom. We remain confident of our full year earnings per
share guidance of $1.05 to $1.12; however, we expect same-store sales
for the first half to be flat. We continue to focus on enhancing our
market-leading customer offerings and service. Airgas has the financial
capacity and the culture to succeed and grow, both organically and
through acquisition."
The Company will conduct an earnings teleconference on Friday, July 25,
2003, beginning at 8:30 a.m. Eastern Time. Access the teleconference by
calling (800) 500-0177. 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 July 25th at
approximately 11:00 a.m. Eastern Time by calling (888) 203-1112 and
entering passcode 195416.
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: a firming in the industrial
sector; the range of expected earnings per share for fiscal 2004; the
expected same-store sales for the first half of fiscal 2004; and the
Company's financial capacity and culture to succeed and grow, both
organically and through acquisition. The Company 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 ability to execute on its strategic initiatives of
improving operational efficiency and growing sales and market share;
an economic downturn; increased industry competition; a lack of
acquisition opportunities; adverse changes in customer buying
patterns; significant fluctuations in interest rates; 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, 2003, filed by the Company with the Securities and
Exchange Commission.
Consolidated statements of earnings, consolidated condensed balance
sheets and consolidated statements of cash flows follow.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
2003 2002
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Net sales $461,056 $457,668
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Costs and expenses:
Cost of products sold (excl. deprec.) 221,133 222,266
Selling, distribution and
administrative expenses 178,461 176,299
Depreciation 19,291 18,459
Amortization 1,511 1,740
Special charges (a) -- 2,694
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Total costs and expenses 420,396 421,458
Operating income 40,660 36,210
Interest expense, net (10,435) (13,121)
Discount on securitization of
trade receivables (868) (851)
Other income (expense), net (b) (173) (123)
Equity in earnings of unconsolidated
affiliates 700 932
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Earnings before income tax expense 29,884 23,047
Income tax expense 11,356 9,003
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Net earnings $18,528 $14,044
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Basic earnings per share $ .26 $ .20
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Diluted earnings per share $ .25 $ .20
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Weighted average shares
outstanding:
Basic 71,900 69,900
Diluted 73,900 72,000
See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
June 30, March 31,
2003 2003
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ASSETS
Trade accounts receivable, net (c) $ 78,787 $ 71,346
Inventories, net 157,968 151,405
Deferred income tax asset, net 18,058 17,688
Prepaids and other current assets 29,406 30,143
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TOTAL CURRENT ASSETS 284,219 270,582
Property, plant and equipment, net 871,935 869,492
Goodwill 439,977 437,709
Other intangible assets, net 21,142 19,832
Other non-current assets 107,247 102,628
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TOTAL ASSETS $1,724,520 $1,700,243
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, trade $ 77,321 $ 85,375
Accrued expenses and
other current liabilities 107,909 121,292
Current portion of long-term debt 609 2,229
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TOTAL CURRENT LIABILITIES 185,839 208,896
Long-term debt (c) 669,214 658,031
Deferred income taxes 215,213 209,140
Other non-current liabilities 30,210 27,243
Stockholders' equity 624,044 596,933
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,724,520 $1,700,243
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See attached notes.
AIRGAS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Quarter Ended Quarter Ended
June 30, 2003 June 30, 2002
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CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $18,528 $14,044
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 19,291 18,459
Amortization 1,511 1,740
Deferred income taxes 4,800 (11,396)
Equity in earnings of unconsolidated affiliates (700) (932)
Losses on divestitures -- 241
Losses on sales of plant and equipment 57 246
Stock issued for employee stock purchase plan 2,264 2,227
Changes in assets and liabilities, excluding
effects of business acquisitions and divestitures:
Securitization of trade receivables (2,300) 6,400
Trade receivables, net (4,073) (12,697)
Inventories, net (5,682) (348)
Prepaid expenses and other current assets 392 19,737
Accounts payable, trade (8,259) (6,957)
Accrued expenses and other current liabilities (12,368) (17,787)
Other assets (1,551) 882
Other liabilities 3,804 1,547
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Net cash provided by operating activities 15,714 15,406
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (21,319) (14,427)
Proceeds from sales of plant and equipment 1,342 1,102
Proceeds from divestitures -- 3,167
Business acquisitions, holdbacks and other
settlements of acquisition related liabilities (5,750) (4,342)
Dividends and fees from unconsolidated affiliates 422 684
Other, net (1,520) 1,281
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Net cash used in investing activities (26,825) (12,535)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 81,603 93,400
Repayment of debt (74,505) (96,100)
Dividends paid to stockholders (2,925) --
Exercise of stock options 5,803 4,331
Cash overdraft 1,135 (4,502)
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Net cash provided by (used in)
financing activities 11,111 (2,871)
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Change in cash
Cash - Beginning of period $ -- $ --
Cash - End of period -- --
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$ -- $ --
See attached notes ====== ======
Notes (Unaudited):
(a) Special charges of $2.7 million ($1.7 million after tax) for the
three months ended June 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 three months ended June 30,
2002 includes a net non-recurring loss of approximately $200
thousand ($500 thousand after tax) related to divestitures.
(c) 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 $156.6 million and $158.9 million at June 30, 2003
and March 31, 2003, respectively.
(d) Business segment information for the Company's Distribution and Gas
Operations segments is shown below:
Quarter Ended Quarter Ended
June 30, 2003 June 30, 2002
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(In thousands) Dist. Gas Ops. Elim Combined Dist. Gas Ops. Elim Combined
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Gas and rent $220,407 $48,072 $(9,597) $258,882 $216,957 $43,666 $(8,840) $251,783
Hardgoods 201,448 1,349 (623) 202,174 205,098 1,300 (513) 205,885
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Total net sales 421,855 49,421 (10,220) 461,056 422,055 44,966 (9,353) 457,668
Cost of products
sold, excl. deprec.
expense 209,149 22,204 (10,220) 221,133 211,449 20,170 (9,353) 222,266
Selling, distribution
and administrative
expenses 161,950 16,511 178,461 160,615 15,684 176,299
Depreciation expense 16,170 3,121 19,291 15,678 2,781 18,459
Amortization expense 1,357 154 1,511 1,613 127 1,740
Special charge -- -- -- 2,694 -- 2,694
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Operating income 33,229 7,431 40,660 30,006 6,204 36,210
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Reconciliation of Non-GAAP Financial Measures (Unaudited)
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Increase in Adjusted Debt:
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Reconciliation of the change in debt per the Balance Sheet to
the increase in debt adjusted for off-balance sheet and non-cash
items ("adjusted debt"):
Quarter Ended
(Amounts in thousands) June 30, 2003
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Increase in debt per the Balance Sheet $9,563
Reduction in funding under the trade
receivables securitization program (2,300)
Change in fair value of debt related to
interest rate swap agreements (non-cash) (2,465)
Other (266)
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Increase in adjusted debt $4,532
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The Company uses Adjusted Debt to provide investors with a more accurate and
meaningful measure of the change in the Company's obligation to repay debt
by adjusting for non-cash items and funds received (or repaid) under the
trade receivables securitization program.
Free Cash Flow:
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Reconciliation of net cash provided by operating activities per the
Consolidated Statement of Cash Flows to Free Cash Flow:
Quarter Ended Quarter Ended
(Amounts in thousands) June 30, 2003 June 30, 2002
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Net cash provided by operating activities $15,714 $15,406
PLUS:
Dividends and fees from equity affiliates 422 684
LESS:
Cash (provided) used by the securitization
of trade receivables 2,300 (6,400)
Capital expenditures (21,319) (14,427)
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Free Cash Flow ($2,883) ($4,737)
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The Company believes Free Cash Flow provides investors meaningful insight
into the Company's ability to generate cash from continuing operations,
which can be used at management's discretion for acquisitions, the
repayment of debt or to support other investing and financing activities.