Praxair, Inc. has reported Q1 net income of $462m and diluted earnings per share of $1.59. Adjusted net income was $480m and diluted earnings per share was $1.65, up 22% and 20% respectively versus prior year.
Praxair’s sales in the first quarter were $2,999m, 10% above the prior-year quarter. After adjusting for positive currency translation, sales grew 7%, driven by price attainment and higher volumes across all segments and end-markets.
First quarter reported operating profit was $653m, 15% above the prior-year quarter. Excluding transaction and other costs, adjusted operating profit was $672m, 17% above prior-year quarter. For the first quarter, EBITDA margin was 32.6% and adjusted EBITDA margin was 33.3%.
The company generated Q1 operating cash flow of $688m which included $65m of foreign withholding tax payments. Capital expenditures were $325m, dividends paid were $237m and the company decreased net debt by $86m.
Commenting on the financial results, Chairman and CEO Steve Angel said, “In the first quarter, Praxair employees delivered strong top-line and bottom-line growth resulting in a record $1.65 EPS (Earnings Per Share). The 10% sales growth reflects solid recovery across all major end-markets and geographies, led by Asia and North America. As global industrial production rates continue to rise, we are well positioned to capture that growth and leverage it into higher operating margins.”
“In addition to organic growth, we started up several large projects and added significant new wins to our backlog. The strength of our backlog and potential for new opportunities should continue to deliver approximately 3% EPS growth per year over the next three to four years.”
“We continue to make progress on our merger with Linde and expect to close in the second half of the year. I look forward to bringing together two world-class, complementary organisations to create an even more valuable, high-performing industrial gas company,” Angel enthused.
For Q2 2018, Praxair expects diluted earnings per share in the range of $1.67 to $1.72, excluding transaction costs related to the proposed merger. The company’s effective tax rate is estimated to be in the range of 23% to 25%.
“I look forward to bringing together two world-class, complementary organisations to create an even more valuable, high-performing industrial gas company.”
Steve Angel, Praxair Chairman and CEO
Results by segment
In North America, Q1 sales were $1,563m, 7% above the prior-year quarter, driven primarily by higher price attainment and strong volumes in the manufacturing, chemicals and food and beverage end-markets. Operating profit of $406m was 14% above the prior-year quarter.
Europe sales grew 20% in the first quarter to $428m or 3% excluding currency effects and higher cost pass-through. Underlying sales growth reflects increased business activity and higher pricing in Spain, Italy and Germany. First-quarter operating profit of $80m rose 19% from the prior-year period.
In South America, Q1 sales were $365m, 2% above the prior-year quarter, excluding currency translation. Sales growth was driven mainly by price attainment and higher volumes to metals and healthcare end-markets. Operating profit was $54m.
Sales in Asia were $476m in the quarter, up 21% from the prior year. Excluding currency, sales grew 14% from the prior year, driven by 3% price, project start-ups and higher organic volumes in China, Korea and India. Operating profit was $104m, 39% above prior-year quarter, reflecting strong operating leverage.
Praxair Surface Technologies had first-quarter sales of $167m, up 11% from prior-year quarter. Strong coatings demand from aerospace and price drove higher sales. Operating profit of $28m, up 8% versus prior-year quarter, was impacted by new project ramp-up costs.
Adjusted amounts, EBITDA, free cash flow and after-tax return on capital are non-GAAP measures. See the attachments for a summary of non-GAAP reconciliations and calculations of non-GAAP measures.