Airgas, Inc. (ARG) recorded a 29.0% decline in GAAP earnings to $40.1 million for its fiscal fourth-quarter from $56.5 million in the year-ago quarter. However, excluding special items, adjusted earnings per share came in at 69 cents, which topped the Zacks Consensus Estimate of 67 cents derived from 11 covering analysts.
Net sales in the quarter declined 1.2% to $980.4 million from $992.1 million in the prior-year quarter. The decrease was primarily caused by a 3% reduction in same-store sales. However, overall sales were partially offset by a 2% growth contributed by acquisitions.
Nevertheless, Airgas witnessed improved conditions in its manufacturing customer base during the quarter and expects same-store sales to expand by mid to high single digits in fiscal 2011.
During the quarter, gross profit declined 2.5% year-over-year to $530.6 million, while gross margin dipped by 80 basis points (bps) to 54.1%. Adjusted operating margin, excluding expenses associated with defending the hostile takeover attempt by Air Products & Chemicals Inc. (APD), also declined 80 bps to 10.7% as management initiatives to control costs moderated the impact of lower gross margin.
In February this year, Air Products offered $5.1 billion (60 cents per share) to Airgas, which the latter rejected.
At the end of the quarter, Airgas had a cash balance of $47.0 million and long-term debt of $1.5 billion, compared to $47.2 million of cash and $1.75 billion of long-term debt in the year-ago period. During the fiscal year, Airgas generated $600.0 million of cash from operations and received $1.4 billion from borrowings. The company also deployed $1.7 billion towards debt repayment and $252.8 million towards capital expenditure.
Guidance and Zacks Consensus
Airgas expects fiscal 2011 first-quarter earnings to range between 70 cents and 72 cents per share, in line with the Zacks Consensus Estimate of 72 cents per share derived from 6 covering analysts. For fiscal 2011, the company anticipates earnings between $2.95 and $3.05 per share.
This guidance is also in line with the Zacks Consensus Estimate of $3.03 per share, which dropped by 2 cents over the past month as 3 of 11 covering analysts lowered projections.
Airgas is the largest U.S. distributor of industrial, medical, and specialty gases, and hardgoods, such as welding equipment and supplies. The company has more than 14,000 employees in over 1,100 locations, including branches, retail stores, gas fill plants, specialty gas labs, production facilities and distribution centers.
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