Airgas Inc, the largest US distributor of industrial, medical, and specialty gases, yesterday reported strong growth in sales, operating income and earnings for its third quarter ended 31st December 2007 and reflected the healthy implementation of its growth strategy.
Quarterly net earnings were $56.8m, compared to $32.5m, in the previous year and the current year quarter includes $0.01 per diluted share of integration expense primarily associated with the acquisition of Linde's US packaged gas business, and a one-time $0.01 per diluted share tax benefit related to a change in state tax law.
Third quarter sales grew 28% to reach $1bn, while acquisitions contributed 21% to the sales growth and total same-store sales increased 7%, with hardgoods up 6% and gas and rent up 8% from the prior year quarter. The company's strategic product categories, including bulk, medical and specialty gases, safety products, and carbon dioxide, posted 11% organic growth in the quarter. These product categories now account for 40% of total company revenues.
Airgas Chairman and Chief Executive Officer, Peter McCausland, commented, “This was our second quarter with more than $1bn in sales, demonstrating the effectiveness of our growth strategies. We are seeing good growth in energy and infrastructure construction, which has bolstered our core business. We continue to grow our strategic product categories at above-market rates.”
Discussing the company’s productive growth strategy, McCausland continued, “We also continue to grow through acquisitions. Fiscal 2008 is our second consecutive record year of acquired revenue, with a total of 16 acquisitions and $450m in acquired annual revenue to date. The integration of the Linde packaged gas acquisition is progressing well and on schedule, positioning us well to deliver value to shareholders in the coming quarters.”
“Revenue growth and our commitment to achieving efficiencies across our national platform helped us expand third quarter operating margins by 100 basis points over last year, to 11.8%. We generated strong Free Cash Flow of $69m in the current quarter and $162m year-to-date,” he added.
Airgas expects to earn $0.71 to $0.73 per diluted share in the fourth quarter, including $0.01 per share of integration expense from the Linde packaged gas acquisition. The company is increasing its full-year guidance to $2.61 to $2.63 per diluted share, including integration expenses from the Linde packaged gas acquisition, the $0.03 per diluted share one-time non-cash charge from the National Welders transaction, and the $0.01 per diluted share one-time tax benefit related to a change in state tax law.