Praxair, Inc. reported first-quarter net income and diluted earnings per share of $448m and $1.51, 8% and 9% above the prior-year quarter, respectively.
Sales in the first quarter were $3,026m, 5% above the prior-year quarter, and up 9%, excluding foreign currency. Organic sales grew 6% driven by higher on-site volumes from new project start-ups primarily in North America and Asia. By end-market, sales growth was strongest for energy, chemicals, and food and beverage customers, as compared to the prior-year quarter. Acquisitions contributed 2% growth in the quarter.
Operating profit in the first quarter was $675m, 8% above the prior-year quarter. Excluding negative currency translation impacts, operating profit rose 12% driven by higher volumes, higher pricing, acquisitions and productivity gains. Operating profit as a percentage of sales was a strong 22.3% and the EBITDA margin grew to 32.0%.
First-quarter cash flow from operations was $536m and capital expenditures were $393m, primarily for new production plants under long-term contracts with customers. Acquisition expenditures were $124m, related primarily to Italian industrial gas and US packaged gas businesses. The company paid dividends of $191m and repurchased $237m of stock, net of issuances. During the quarter, the company issued €600m of 6-year notes with a 1.5% coupon. The after-tax return-on-capital and return on equity for the quarter were 12.6% and 28.7%, respectively.
Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Praxair delivered solid results in the first quarter with sales growth of 9% and operating profit growth of 12%, excluding the impact of currency headwinds. Organic growth of 6% reflected contributions from new projects in North America and Asia, as well as modest volume growth in our South America, Europe and Surface Technologies operating segments. Praxair’s relentless focus on achieving productivity benefits and higher price to offset cost inflation produced strong operating leverage and an operating margin of 22.3%.”
“We expect base volumes for the remainder of 2014 to continue to reflect modest growth in-line with the current macro-economic environment. Through continued operational excellence, project execution and financial discipline, we expect to continue to deliver increasing cash flow and earnings per share. We expect contribution from new projects and acquisitions to increase return on capital in the second half of the year.”
For the second quarter of 2014, Praxair expects diluted earnings per share in the range of $1.55 to $1.60.
For the full year of 2014, Praxair expects sales in the range of $12.4bn to $12.8bn. The company expects diluted earnings per share to be in the range of $6.30 to $6.50, 6% to 10% above the prior year. Full-year capital expenditures are expected to be about $1.8bn, and the effective tax rate is forecasted to remain at about 28%.