4 EXHIBIT 99.1 For More Information: Jim Rapp (610) 902-6224 AIRGAS, INC. REPORTS THIRD QUARTER RESULTS SAME-STORE SALES AND OPERATING EARNINGS DECLINE AFTER-TAX CASH FLOW $.44 PER SHARE VS. $.48 PER SHARE $14 MILLION AFTER-TAX GAIN ON DIVESTITURE OF CALCIUM CARBIDE AND CARBON PRODUCTS OPERATIONS RADNOR, Pennsylvania, January 28, l999 -- Airgas, Inc. (NYSE-ARG) today reported sales of $380 million for the quarter ended December 31, 1998, an increase of 3% from $368 million in the third quarter last year. After-tax cash flow (net earnings plus depreciation, amortization and deferred income taxes) was $31.7 million (excluding non-recurring gains), or $.44 per diluted share, compared to $34.4 million, or $.48 per diluted share, for the same quarter last year. Net earnings (excluding non-recurring gains) were $6.1 million, or $.09 per diluted share, compared to $11.8 million, or $.17 per diluted share, a year ago. Including non-recurring gains, net earnings for the three months ended December 31, 1998, were $22.1 million, or $.31 per diluted share. Non-recurring gains in the third quarter included the previously announced divestiture of the calcium carbide and carbon products manufacturing operations. The sale resulted in an after-tax gain of $14.1 million, or $.20 per diluted share. In addition, a non-recurring gain from insurance proceeds of $.02 per diluted share was recognized in equity earnings of unconsolidated affiliates. For the nine months ended December 31, 1998, sales increased 11% to $1.18 billion compared to sales of $1.06 billion in the same period last year. After-tax cash flow (excluding non-recurring gains) increased to $101.6 million, or $1.42 per diluted share, compared to $99.2 million, or $1.41 per diluted share, in the same period last year. Net earnings (excluding non- recurring gains) were $27.3 million, or $.38 per diluted share, compared to net earnings of $35.3 million, or $.50 per diluted share, in the prior year. Including non-recurring gains, net earnings were $43.8 million, or $.61 per diluted share, compared to $45.7 million, or $.65 per diluted share last year. Peter McCausland, Airgas' chairman and chief executive officer, said, "I am disappointed with our performance. Many markets weakened, resulting in same-store sales declines in both the Distribution Group (0.4%) and Airgas Direct Industrial (5%). The combined impact of lower revenues and a high level of expenses, including expenses associated with our Repositioning program, resulted in a significant decrease in earnings. It is noteworthy that after-tax cash flow from operations, which is the performance measurement we use to manage the business, is slightly up year-to-date. 1 5 "In response to the weaker market environment, we are taking actions to reduce the investment in, and accelerate the benefits from, the ADI infrastructure-build. We are implementing a company-wide cost improvement program. We accelerated our search for a chief operating officer and selected Bill Rice, who brings enormous talents and energy to this role. We are aggressively managing cash and capital expenditures. We continue to monetize non-core assets and we are restricting acquisitions to reasonably priced, gas distribution businesses. While we do not expect these actions to show immediate results, we do expect cost reductions in excess of $15 million in the coming fiscal year. "My disappointment with our results is partially offset by my pride in the response of our more than 8,000 Airgas associates to our call to action. We are fortunate to have dedicated employees who share my confidence in our strategy to build a world-class distribution infrastructure which will result in Airgas becoming a more valuable supplier to our customers and a more valuable investment for our shareholders." Airgas, Inc. is the largest distributor of industrial, medical and specialty gases and related equipment, and the third largest distributor of safety supplies, in the United States. Airgas' integrated distributor network consists of more than 700 locations, including branch locations, distribution centers, catalog and inbound and outbound telemarketing operations. Airgas can be visited on the internet at http://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. 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 the making of such statements 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 underlying market conditions, growth in same-store sales, costs and potential disruptive effects of the "Repositioning for Growth" initiative, the Company's ability to reduce costs, implementation of information technology projects, any potential problems relating to Year 2000 matters, the success and timing of intended divestitures and other factors described in the Company's reports, including Form 10-Q dated September 30, 1998, filed by the Company with the Securities and Exchange Commission. Consolidated statements of earnings and consolidated condensed balance sheets follow on pages 3, 4 and 5. 2 6 AIRGAS, INC. CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended December 31, December 31, 1998 1997 1998 1997 Net sales: Distribution $279,669 $272,958 $860,628 $812,395 Direct Industrial 59,954 61,372 193,756 159,433 Manufacturing 40,700 33,480 123,304 87,750 Total net sales 380,323 367,810 1,177,688 1,059,578 Costs and expenses: Cost of products sold (excluding depreciation, depletion and amortization) Distribution 140,085 136,309 431,487 408,783 Direct Industrial 43,837 43,795 142,575 114,766 Manufacturing 15,755 15,847 49,963 41,537 Selling, distribution and administrative expenses 132,969 118,939 398,421 338,481 Depreciation, depletion and amortization 22,504 20,218 65,849 56,809 Special items (a),(b) - - (1,000) (14,500) Total costs and expenses 355,150 335,108 1,087,295 945,876 Operating income: Distribution 20,282 26,902 73,081 82,778 Direct Industrial 352 2,463 2,165 4,911 Manufacturing 4,539 3,337 14,147 11,513 Special items (a),(b) - - 1,000 14,500 Total operating income 25,173 32,702 90,393 113,702 Interest expense, net (15,701) (13,456) (46,227) (39,234) Other income, net (c) 24,370 442 25,240 2,488 Equity in earnings of unconsolidated affiliates (d) 2,862 943 4,838 1,262 Minority interest (12) (219) (51) (837) Earnings before income taxes 36,692 20,412 74,193 77,381 Income tax expense 14,604 8,586 30,350 31,654 Net earnings $ 22,088 $ 11,826 $ 43,843 $ 45,727 Net earnings (excluding non-recurring gains)(e) $ 6,143 $ 11,826 $ 27,323 $ 35,320 Per share data: Basic earnings per share $ .32 $ .17 $ .63 $ .67 Diluted earnings per share $ .31 $ .17 $ .61 $ .65 Per share data: (excluding non-recurring gains)(e) Basic earnings per share $ .09 $ .17 $ .39 $ .52 Diluted earnings per share $ .09 $ .17 $ .38 $ .50 Weighted average shares outstanding: Basic 69,700 69,600 70,000 68,200 Diluted 71,600 71,500 71,700 70,500 3 7 (a)The results for the nine months ended December 31, 1997 include a $14.5 million ($9.4 million after-tax) gain from a partial recovery of refrigerant losses. (b)The results for the nine months ended December 31, 1998 include the reversal of $1 million of accruals that were established at March 31, 1998 in connection with the divestiture of two non-core businesses. (c)The results for the three and nine months ended December 31, 1998 include a $24 million ($14.1 million after-tax) non-recurring gain from the divestiture of the Company's calcium carbide and carbon products manufacturing operations. The results for the nine months ended December 31, 1997 include a $1.5 million ($980 thousand after-tax) non-recurring gain related to the divestiture of a non-core business. (d)The results for the three and nine months ended December 31, 1998 include a $1.8 million non-recurring gain from insurance proceeds received by an equity affiliate. (e)The results for the three and nine months ended December 31, 1998 exclude the effect of the $24 million ($14.1 million after-tax) non-recurring gain from the divestiture of the Company's calcium carbide and carbon products manufacturing operations, and a $1.8 million non-recurring gain from insurance proceeds received by an equity affiliate. The results for the nine months ended December 31, 1998 also exclude the effect of the $1 million ($570 thousand after-tax) reversal of accruals no longer required related to the first quarter divestiture of two non-core businesses. The results for the nine months ended December 31, 1997, exclude the after-tax effect of the gain from partial recovery of refrigerant losses of $9.4 million and the after-tax gain of $980 thousand related to the divestiture of a non-core business (see footnotes (a) and (c)). 4 8 AIRGAS, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Amounts in thousands) (Unaudited) December 31, March 31, 1998 1998 ASSETS Trade accounts receivable, net $ 192,129 $ 186,342 Inventories 164,471 154,937 Prepaids and other current assets 31,185 25,555 TOTAL CURRENT ASSETS 387,785 366,834 Property, plant and equipment, net 716,562 687,304 Goodwill, net 431,849 410,753 Other non-current assets, net 174,676 176,583 TOTAL ASSETS $1,710,872 $1,641,474 LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $ 16,138 $ 12,150 Accounts payable, trade 74,395 84,602 Accrued expenses and other current liabilities 133,608 128,806 TOTAL CURRENT LIABILITIES 224,141 225,558 Long-term debt 861,554 830,845 Deferred income taxes 132,452 121,356 Other non-current liabilities 29,640 36,842 Stockholders' equity 463,085 426,873 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,710,872 $1,641,474 5