Airgas Inks Deal With BAE Systems – Analyst Blog

Airgas Inc. (ARG) inked a five-year deal with British defense and aerospace company, BAE Systems to provide bulk and packaged industrial gas, welding hardgoods and related products along with personal protective equipment (PPE) products. The company will supply the material across the manufacturing facilities of BAE Systems in the United States.

 

The agreement will be a part of the Airgas Strategic Accounts program that serves multi-location customers benefiting from sole-source supply and supply chain management services.

 

For a number of years, Airgas has been providing BAE Systems with packaged gases, welding hardgoods and PPE safety products. This five-year deal further entrenches the tie between the two companies as three principal operating segments of BAE Systems –

Electronic Intelligence and Support, Land & Armaments, Programs and Support – will be using the products.

 

The agreement will also aid Airgas to deliver strong top-line results. Revenues of the company, comprising gas & rent sales and hardgoods sales, increased 7.2% year over year in the first quarter of 2011.

 

In a separate development, Airgas also broached a deal with the University of Missouri to provide specialty gases, equipment, safety products and services. The deal is expected to add an estimated $1 million to the company’s annual sales.

 

During the first quarter conference call, Airgas guided the second quarter earnings in a range of 78 cents to 82 cents per share and fiscal full year 2011 earnings in a range of $3.15 to $3.30 per share.

 

The Zacks Consensus Estimate for second-quarter 2011 earnings is 81 cents per share. For full year 2011 and 2012, the Zacks Consensus Estimates are, respectively, $3.26 per share and $3.72 per share.

 

The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the shares over the near term.

 

Based in Randor, Pennsylvania, Airgas, through its subsidiaries, distributes industrial, medical, and specialty gases, as well as hardgoods in the United States.