Airgas today reported results for its fourth quarter and full year ended March 31, 2014, which reflected the favourable impacts of the realisation of SAP-related benefits as planned and share repurchases completed in the second half of fiscal 2013.
But results also reflected sluggish business conditions and the negative impact on the company’s refrigerants business from the EPA’s March 2013 ruling. Results for the fourth quarter also reflected the negative impact of severe weather across much of the US on both sales and expenses.
“We delivered record free cash flow* of $441m and 9% growth in adjusted EPS for fiscal 2014 in a sluggish economic environment,” said Airgas President and Chief Executive Officer Michael L. Molinini.
“We remained focused on outstanding customer service, expense management, and execution of strategic initiatives, which included the achievement of our long-standing target of reaching a run-rate of more than $75m in SAP-enabled operating income benefits by the end of calendar year 2013.”
“We estimate that in our fourth quarter the net impact of severe weather conditions across much of the US cost us at least $0.02 per diluted share more than expected, and the negative year-over-year impact on earnings related to our refrigerants business was $0.03 greater than anticipated,” Molinini added.
“Absent those particular issues, our earnings for the quarter were within our guidance range.” The company’s fourth quarter guidance had assumed year-over-year negative impacts of approximately $0.03 per diluted share due to severe weather conditions in January and $0.05 per diluted share related to refrigerants.”
Fourth quarter earnings per diluted share were $1.17, up 4% over prior year earnings per diluted share of $1.13. Excluding a $0.02 state income tax benefit, adjusted earnings per diluted share* were $1.15, up 1% over prior year. Results included SAP-related benefits, net of implementation costs and depreciation expense, of $0.16 per diluted share in the current year quarter compared to $0.04 of net benefits in the prior year quarter.
“Though there were bright spots within certain sectors, on balance, underlying business conditions remained choppy throughout the quarter, weather-related challenges notwithstanding,” said Molinini. “We remain focused on the things we can control, including leveraging the SAP system, managing expenses, expanding our telesales business, and enhancing our e-Business platform, and are ready to capitalize when sustained growth in the industrial economy resumes.”
Fourth quarter sales were $1.27bn, flat compared to prior year. Organic sales in the quarter were down 1% compared to prior year, with gas and rent down 1% and hardgoods down 2%. Distribution segment organic sales in the quarter were up 1% compared to prior year, with gas and rent up 2% and hardgoods down 2%. Acquisitions contributed sales growth of 1% in the quarter on a consolidated basis and in the Distribution segment.
Full year sales were $5.07bn, an increase of 2% over the prior year. Organic sales were flat compared to the prior year, with gas and rent up 1% and hardgoods down 2%, while acquisitions contributed sales growth of 2% for the year.
Full year free cash flow was a record $441m, up 48% over the prior year, and adjusted cash from operations was a record $776m, up 29% over the prior year. The increase in cash flows was primarily driven by lower required investment in working capital in the current year compared to the prior year.
During fiscal year 2014, the company acquired 11 businesses with aggregate annual sales of approximately $82m, including The Encompass Gas Group, Inc., one of the largest privately-owned suppliers of industrial, medical, and specialty gases and related hardgoods in the US.