Industrial gas producer, Praxair Inc. (PX) reported its first quarter 2012 financial results with adjusted earnings per share of $1.38, up roughly 1.5% from adjusted earnings per share of $1.36 in the year-ago quarter.
Earnings fell at the higher-end of management’s guidance range of $1.33-$1.38 and surpassed the Zacks Consensus Estimate of $1.36 by 2 cents.
Revenue: Total revenue in the first quarter was $2,840 million, up 5% year over year and 8%, excluding negative currency translation and cost pass-through impacts. Revenue growth was driven primarily by healthy performance in North American and Asian markets.
The year-over-year growth can be attributed to a 4% volume increase, 2% positive price/mix impact and 2% positive acquisition impact. These were partially offset by a 1% negative cost pass through impact and 2% negative currency translation impact.
During the quarter, North American revenue increased 6% year over year to $1,398 million. Revenue in Europe was up 9% to $377 million; while the same in South America rose 6% year over year to $562 million. Sales in Asia were up 5% to $334 million. Surface Technologies revenue was $169 million in the quarter, up 8% year over year.
Margins: Cost of sales in the quarter grew 5.2% year over year and represented 56.9% of the total revenue. With increased sales volume and prices, operating profit shot up by 6.1% year over year. Margins stood at 22.1% versus 21.9% in the year-ago quarter. Results were, however, negatively impacted by currency translation and rising costs.
Balance Sheet: Exiting the first quarter, Praxair’s cash and cash equivalents increased 18.9% sequentially to $107.0 million. Long-term debt increased 10.0% to $6,420.0 million, due primarily to issuance of $600 million of 10-year notes during the quarter.
Cash Flow: In the first quarter, cash flow from operating activities increased by 12% year over year to $402 million. Capital spending increased by 44.6% to $483 million.
Share Repurchases/Dividends: Praxair pursues a consistent strategy of returning cash to shareholders through dividend payments and share repurchases. During the first quarter 2012, the company paid $164 million in dividends and repurchased shares worth $102 million, net of issuances.
Along with the quarterly results, the company’s Board of Directors declared a quarterly dividend of 55 cents to be paid on June 15 to shareholders of record on June 7.
Outlook: For the second quarter of fiscal 2012, management expects EPS in the $1.40-$1.45 range. For the fiscal year 2012, the company revised its guidance range from $5.70-$5.90 to $5.75-$5.90. Sales expectation was also revised to $11.6-$11.9 billion range from $11.7-$12 billion range expected earlier. Capital spending guidance was kept intact at $2.1-$2.4 billion range along with effective tax rate forecast of 28%.
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