Radnor, PA - Airgas, Inc., one of the nation's leading suppliers of industrial, medical, and specialty gases, and related products, reported sales and earnings results for its fourth quarter and fiscal year ended March 31, 2013, which reflected the impact of continued economic uncertainty and moderation in business conditions on its diversified customer base. Results for the quarter also reflected the realization of SAP-related benefits, net of implementation costs incurred, as planned.
"In my view, fiscal 2013 was a very good year for Airgas. We achieved record adjusted EPS* of $4.35, 6% over last year and only 7% below the low end of the initial guidance we issued back in May 2012, despite the fact that economic conditions deteriorated as the year progressed, with Non-Tech Industrial Production coming in below our original expectations. In addition, our free cash flow* increased by 14% over last year," said Airgas Executive Chairman Peter McCausland. "We also completed the implementation of SAP in the rest of our regional Distribution businesses, realized the first tranche of SAP-related benefits as planned for the year, completed the $600 million share repurchase program announced in October, and acquired 18 businesses with aggregate annual sales of more than $95 million. These achievements are significant milestones in the development of our company and help position us for sustainable long-term growth."
Fourth quarter earnings per diluted share were $1.13, up 1% over prior year earnings per diluted share of $1.12. Excluding a $0.01 restructuring charge, adjusted earnings per diluted share* were $1.14, an increase of 3% over prior year adjusted earnings per diluted share* of $1.11. Results included SAP-related benefits, net of implementation costs and depreciation expense, of $0.04 per diluted share in the current year quarter compared to $0.09 of expense in the prior year quarter. "As we announced on March 21st, organic sales growth in our Distribution segment was flat through February, and absent a strong finish in March, we were likely to miss the low end of our fourth quarter adjusted EPS* guidance of $1.18 by approximately 4%, and that is essentially what happened," said McCausland.
Fourth quarter sales were $1.26 billion, an increase of 2% over the prior year. Organic sales in the quarter were flat compared to prior year, with gas and rent up 4% and hardgoods down 5%. Acquisitions contributed sales growth of 2% in the quarter.
Operating margin was 12.1% and 11.7% in the current and prior year quarters, respectively. Adjusted operating margin* was 12.2% in both the current and prior year quarters.
For the full year, earnings per diluted share were $4.35, an increase of 9% over prior year earnings per diluted share of $4.00. Adjusted earnings per diluted share* were also $4.35, an increase of 6% over prior year adjusted earnings per diluted share* of $4.11. Results included SAP implementation costs and depreciation expense, net of benefits realized, of $0.18 per diluted share in the current year compared to $0.34 of expense in the prior year.
Full year sales increased 4% over the prior year to $4.96 billion. Organic sales increased 3% over the prior year, with gas and rent up 5% and hardgoods up 1%, while acquisitions contributed 1% sales growth for the year.
"The more than 15,000 Airgas associates that make up the best team in the business are to be commended for their hard work and focus on operating safely and serving our customers day-in and day-out under difficult conditions," said Airgas President and Chief Executive Officer Michael L. Molinini. "While uncertainty is likely to persist for our customers in the near term, we remain very optimistic about the long-term prospects for the U.S. manufacturing and energy industries, as well as non-residential construction, and our ability to leverage our unique value proposition and unrivaled platform, and we will continue to invest in our industry-leading position to drive growth."
Free cash flow* for the year was $298 million, compared to $262 million in the prior year, and adjusted cash from operations* was $604 million for the year, compared to $593 million in the prior year. During the fourth quarter, the Company completed the remainder of its previously-announced $600 million share repurchase program, repurchasing 3.82 million shares on the open market for $378 million, reflecting an average price of $98.89. During the third quarter, the company had repurchased 2.47 million shares on the open market for $222 million, reflecting an average price of $89.93 per share.
Return on capital* was 12.3% for the twelve months ended March 31, 2013, a decrease of 20 basis points from the prior year.
Airgas Increases First Quarter Dividend by 20%
Airgas, Inc. announced that the Board of Directors increased the quarterly cash dividend on the company's common stock by 20%, from $0.40 per share to $0.48 per share. The dividend will be payable on June 28, 2013 to shareholders of record as of June 14, 2013.
"Despite the soft economy, we delivered record adjusted earnings per diluted share* of $4.35 in fiscal 2013, up 6% over the prior year, and we are expecting EPS growth of 15% to 23% in fiscal year 2014," said Airgas Executive Chairman Peter McCausland. "Strong cash flow continues to be a hallmark of the Airgas business model, and our confidence in Airgas' long-term prospects and financial stability enables us to increase the dividend while continuing to fund our growth strategies."
* See attached reconciliations and computations of non-GAAP adjusted earnings per diluted share.