Airgas today (Wednesday) reported strong performance in sales, operating income, and earnings for its first quarter ended June 30, 2012 - despite moderating business trends and the impact of disruption within its helium supply chain during the quarter.
First quarter adjusted earnings per diluted share were a record $1.13, an increase of 13% from $1.00 in the prior year. Results included SAP implementation costs and depreciation expense of $0.10 and $0.08 per diluted share for the current and prior year quarters, respectively.
In addition, lower helium sales volumes driven by the inability of suppliers to meet their helium supply commitments to the company during the quarter reduced earnings by $0.04 per diluted share, some of which was anticipated.
“Our earnings were strong, notwithstanding the significant incremental challenges we faced in our helium supply chain during the quarter,” said Airgas Chief Executive Officer Peter McCausland.
“The slow and steady growth we had been seeing across our customer base through May moderated in June. We are paying close attention to our business trends and tightening controls on our operating expenses. Though we are appropriately cautious about near-term conditions, we remain optimistic about the long-term prospects for the U.S. manufacturing and energy industries and our ability to leverage our unique value proposition and unrivaled platform to drive growth in these and other key customer segments.”
First quarter sales were $1.26 billion, an increase of 8% over the prior year. Same-store sales grew 7% in the quarter, with hardgoods up 9% and gas and rent up 5%. Acquisitions, net of a divestiture, contributed sales growth of 1% in the quarter. Sequentially, sales increased 1% from the fourth quarter.
“While SAP implementation costs were higher than anticipated this quarter and are expected to be so for the remainder of the year, the number one priority in an undertaking of this magnitude is getting it right,” said Airgas Chief Operating Officer Michael L. Molinini.
“In the past five months, we have successfully converted four regional companies and trained more than 2,000 users, which is a significant accomplishment for which our associates are to be commended. The implementation is on-schedule, with nearly seventy percent of the distribution business running on SAP, and we remain confident that we will realize the economic benefits as planned and that this investment will further enhance the value of our full-service offering to customers.”
The company generated strong free cash flow of $76 million for the quarter, compared to $71 million in the prior year, and adjusted cash from operations was $155 million for the quarter, compared to $139 million in the prior year.
For fiscal 2013, the company expects adjusted earnings per diluted share to increase 13% to 16% from $4.11 in fiscal 2012 to $4.65 to $4.75, which reflects the impact of two less selling days in fiscal 2013, an estimated year-over-year decline of $0.10 from the impact of lost sales due to helium supply constraints, as well as approximately $0.12 to $0.16 of SAP implementation costs and depreciation expense, net of expected benefits.
Fiscal 2012 adjusted earnings per diluted share included $0.34 of SAP implementation costs and depreciation expense.