Airgas, Inc. has released its official earnings report for the fiscal 2016 third quarter ended on 31st December 2015. It finalises a tough period for the US-based company, which blames the ’challenging economical industry’ for its tumultuous year.
Third quarter sales of $1.3bn decreased 3% compared to the prior year, while organic sales, Distribution and Other Operations segments all showed decreases of between 1-10%.
The findings reported adjusted diluted earnings per share (EPS) of $1.19, down 3% compared to the year before of $1.23. Airgas also assigned a 2% increase in selling, distribution and administrative expenses to the operating costs associated with acquired several businesses throughout the term.
Operating margin for the quarter was 9.7%, including the impact of $21m in merger costs, and the adjusted operating margin – excluding merger costs – was 11.3%, down 90 basis points compared to the prior year. The Tier One company consigns this decrease primarily to the Distribution segment, which reported a 4% decline in sales, as well as a 3% decline in gross profits, flat selling, distribution, and administrative expenses – and a 5% increase in depreciation and repayment expense.
“Our results continue to reflect the challenging industrial economy with sales to customers in our energy and chemical, and manufacturing and metal fabrication end markets down year over year in the high single digits.”
Despite all of this, Airgas reported a year-to-date free cash flow of $243m – up 12% over the prior year. Plus, adjusted cash from operations was registered as $545m, an increase of 1%. This is largely due to the company acquiring 17 businesses, creating an aggregate annual sales of an estimated $84m, since the beginning of the financial year. In total, its acquisitions contributed to sales growth of 1% in the quarter.
Michael L. Molinini, Airgas President and CEO, explained, “Our results continue to reflect the challenging industrial economy with sales to customers in our energy and chemical, and manufacturing and metal fabrication end markets down year over year in the high single digits.”
“However, our diversified customer base, continued strength in non-residential construction, and tight expense management helped to mitigate the impact of the sales declines in those end markets. The quarterly results demonstrated the resilience of our gas business during difficult economic times. In addition, cash flow remains strong, with year-to-date free cash flow up 12% over the prior period.”
On 17th November 2015, it was announced that fellow Tier One company Air Liquide will acquire Airgas in an all-cash transaction and total enterprise value of approximately $13.4bn, including debt assumed.