AIQUY L Air Liquide (PK)

Industrial gas producer and supplier, Praxair Inc. (PX) reported adjusted earnings per share of $1.51 for first-quarter 2014. The bottom-line result was an improvement over $1.38 recorded in the year-ago quarter and in line with the Zacks Consensus Estimate.

Revenue

Praxair generated total sales of $3,026.0 million in first-quarter 2014, an increase of 4.8% year over year. The improvement was attributable to a 6% contribution from volume growth and 2% from acquisitions, partially offset by a 4% negative impact from foreign currency translation.

However, the top-line result was below the Zacks Consensus Estimate of $3,060 million.

In first-quarter 2014, revenues generated from North America were up 8.4%, while revenues in Europe grew 7.3% year over year. Weak South American operations resulted in a revenue decline of 8.1%. In Asia, revenues increased 6.8% while revenues from the Surface Technologies business were up 3.7%.

Margins

Cost of sales grew 5.4% year over year and represented 57.0% of total revenues in first-quarter 2014. Selling, general and administrative expenses were $326 million, down 3.3% year over year. Research and development expenses were $23 million versus $24 million in the year-ago quarter.

Adjusted operating profit in the quarter was $675 million, up 8.3% year over year while adjusted margin grew 70 basis points to 22.3%.
    
Balance Sheet

Exiting first-quarter 2014, Praxair’s cash and cash equivalent balance was $144 million versus $138 million in the previous quarter. Long-term debt increased 6.7% sequentially to $8,564 million.
    
Cash Flow

Praxair’s net cash flow from operating activities was $536 million in first-quarter 2014, an increase of 13.6% year over year. Capital spent on purchase of property, plant and equipment was $393 million, lower than $466 million invested in the year-ago quarter.

Share Repurchases/Dividends

Pursuant to the policy of rewarding shareholders handsomely, Praxair paid dividends of $191 million in first-quarter 2014. Shares worth $286 million were repurchased in the quarter.  

Concurrent with the earnings release, Praxair announced that its board of directors has approved a quarterly dividend payment for second-quarter 2014. The dividend of 65 cents per share will be paid on Jun 16, 2014 to shareholders of record as on Jun 6, 2014.

Outlook

For second-quarter 2014, Praxair anticipates adjusted earnings per share to be in the $1.55−$1.60 range.

For 2014, adjusted earnings per share are expected in the band of $6.30−$6.50 versus the prior forecast of $6.25–$6.55. The new guidance reflects an increase of 6−10% year over year.

Sales are anticipated to be within the $12.4−$12.8 billion range as against $12.3−$12.8 billion expected earlier. Capital spending is expected to be roughly $1.8 billion versus the prior expectation of $1.8−$2.0 billion and the adjusted effective tax rate is projected at 28%.

Praxair currently has a market capitalization of $38.8 billion and carries a Zacks Rank #4 (Sell). However, better-ranked stocks in the industry include L'Air Liquide SA (AIQUY), Huntsman Corporation (HUN) and Methanex Corporation (MEOH), all of which hold a Zacks Rank #2 (Buy).

 

 
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