Praxair Reports Q2 2014 Results

Praxair, Inc. reported second-quarter net income of $467 million and diluted earnings per share of $1.58, 5 percent and 6 percent above the prior-year quarter, respectively.

DANBURY, Conn. -- Praxair, Inc. (NYSE: PX) reported second-quarter net income of $467 million and diluted earnings per share of $1.58, 5 percent and 6 percent above the prior-year quarter, respectively. 

Sales in the second quarter were $3,113 million, 3 percent above the prior-year quarter, and up 5 percent excluding foreign currency. Organic sales grew 4 percent driven by new project start-ups, primarily in North America and Asia, and price across all operating segments. By end-market, sales growth was strongest for metals, energy and food & beverage customers. Acquisitions contributed 1 percent growth in the quarter.

Operating profit in the second quarter was $697 million, 5 percent above the prior-year quarter. Excluding negative currency translation impacts, operating profit rose 7 percent primarily driven by higher pricing and productivity gains. Operating profit as a percentage of sales was a strong 22.4 percent and EBITDA margin grew to 32.1 percent.

Second-quarter cash flow from operations was $847 million and funded capital expenditures of $384 million, primarily for new production plants under long-term contracts with customers. Acquisition expenditures in the quarter were $46 million, primarily related to U.S. packaged gas businesses. The company paid dividends of $190 million and repurchased $140 million of stock, net of issuances. The after-tax return on capital and return on equity for the quarter were 12.6 percent and 28.3 percent, respectively.

Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Praxair delivered another solid quarter with operating profit growth of 7 percent, outpacing sales growth of 5 percent, excluding currency headwinds, despite moderating growth in emerging markets. We achieved superior operating cash flow as a percentage of sales of 27 percent as a result of our consistent focus on high-quality growth and strong return on capital.

“Sales growth was driven by new projects in North America and Asia, as well as disciplined price execution across all of our operating segments. We grew the base business modestly in North America, Europe and Asia, but this growth was mitigated by weaker South American volumes as a result of negative industrial production in Brazil. 

“As we look to the remainder of the year, we don’t anticipate significant economic improvement in the second half. However, Praxair’s relentless focus on operational excellence, project execution and financial discipline will continue to deliver increasing cash flow and earnings per share for our shareholders.”

For the third quarter of 2014, Praxair expects diluted earnings per share in the range of $1.58 to $1.65. 

For the full year of 2014, Praxair expects sales in the range of $12.4 billion to $12.7 billion. The company expects diluted earnings per share to be in the range of $6.30 to $6.45, 6 percent to 9 percent above the prior year. This year-over-year growth rate was reduced by approximately 2 percent negative foreign currency translation impact. Full-year capital expenditures are expected to be about $1.8 billion, and the effective tax rate is forecasted to remain at about 28 percent.

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