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Praxair (PX) Beats on Q2 Earnings & Revenues; Revises View
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Industrial gas producer and supplier Praxair Inc. (PX - Free Report) reported better-than-expected results for second-quarter 2016. The company’s adjusted earnings of $1.39 per share came in above the Zacks Consensus Estimate of $1.35. However, the bottom line declined 4.1% from the year-ago tally of $1.45.
Talking of Praxair’s top-line results, revenues totaled $2.66 billion, surpassing the Zacks Consensus Estimate of $2.61 billion. However, the top line declined 2.7% from the year-ago tally due to negative impact of 4% from unfavorable foreign currency movements and 1% from lower cost pass-through, partially offset by 2% gain from acquired assets and higher pricing.
Segmental Details
Praxair operates through five business segments, with their second-quarter 2016 top-line results briefed below:
On a segmental basis, revenues generated in North America decreased 4.8% year over year to $1,411 million, while that from Europe grew 7.3% to $355 million. In Asia, revenues increased 1.6% to $393 million. Surface Technologies revenues were $148 million, down from $150 million in the year-ago quarter. Revenues from South America decreased 7.7% to $358 million.
Margins
In the quarter, Praxair’s cost of sales decreased 3.2% year over year, representing 55.1% net sales compared with 55.4% recorded in the year-ago quarter. Gross margin improved 30 basis points (bps) to 44.9%. Selling, general and administrative expenses grew 3.7% year over year to $308 million. Research and development expenses were $24 million, slightly above the year-ago tally of $23 million.
Adjusted operating profit came in at $588 million, down 6.1% year over year. Adjusted margin was 22.1%.
Balance Sheet & Cash Flow
Exiting second-quarter 2016, Praxair’s cash and cash equivalents were $567 million, up from $221 million at the previous quarter-end. Long-term debt decreased 0.3% sequentially to $9,190 million.
In this quarter, Praxair generated net cash of $706 million from its operating activities, down from $710 million in the year-ago quarter. Capital spent on purchase of property, plant and equipment was $357 million, up 1.4% year over year.
During the quarter, Praxair repurchased shares worth $51 million and paid dividends of $214 million.
Concurrent with the earnings release, Praxair announced that its Board of Directors has approved the payment of a quarterly dividend of 75 cents per share, on Sep 15, 2016 to the shareholders on record as of Sep 8, 2016.
Outlook
For 2016, Praxair expects earnings in the range of $5.45–$5.60 per share versus $5.35–$5.70 expected earlier. The revised guidance includes negative impact of 3% from adverse foreign currency movements. Capital spending is expected to be nearly $1.4 billion versus $1.5 billion predicted earlier.
For third-quarter 2016, Praxair expects earnings to range between $1.35 per share and $1.42 per share.
With a market capitalization of $33.8 billion, Praxair currently carries a Zacks Rank #4 (Sell). Some companies in the chemical industry are performing well and hence carry high investment values. Better-ranked stocks include Axiall Corporation , Shin-Etsu Chemical Co., Ltd. (SHECY - Free Report) and Stepan Company (SCL - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
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Praxair (PX) Beats on Q2 Earnings & Revenues; Revises View
Industrial gas producer and supplier Praxair Inc. (PX - Free Report) reported better-than-expected results for second-quarter 2016. The company’s adjusted earnings of $1.39 per share came in above the Zacks Consensus Estimate of $1.35. However, the bottom line declined 4.1% from the year-ago tally of $1.45.
Talking of Praxair’s top-line results, revenues totaled $2.66 billion, surpassing the Zacks Consensus Estimate of $2.61 billion. However, the top line declined 2.7% from the year-ago tally due to negative impact of 4% from unfavorable foreign currency movements and 1% from lower cost pass-through, partially offset by 2% gain from acquired assets and higher pricing.
Segmental Details
Praxair operates through five business segments, with their second-quarter 2016 top-line results briefed below:
On a segmental basis, revenues generated in North America decreased 4.8% year over year to $1,411 million, while that from Europe grew 7.3% to $355 million. In Asia, revenues increased 1.6% to $393 million. Surface Technologies revenues were $148 million, down from $150 million in the year-ago quarter. Revenues from South America decreased 7.7% to $358 million.
Margins
In the quarter, Praxair’s cost of sales decreased 3.2% year over year, representing 55.1% net sales compared with 55.4% recorded in the year-ago quarter. Gross margin improved 30 basis points (bps) to 44.9%. Selling, general and administrative expenses grew 3.7% year over year to $308 million. Research and development expenses were $24 million, slightly above the year-ago tally of $23 million.
Adjusted operating profit came in at $588 million, down 6.1% year over year. Adjusted margin was 22.1%.
Balance Sheet & Cash Flow
Exiting second-quarter 2016, Praxair’s cash and cash equivalents were $567 million, up from $221 million at the previous quarter-end. Long-term debt decreased 0.3% sequentially to $9,190 million.
In this quarter, Praxair generated net cash of $706 million from its operating activities, down from $710 million in the year-ago quarter. Capital spent on purchase of property, plant and equipment was $357 million, up 1.4% year over year.
During the quarter, Praxair repurchased shares worth $51 million and paid dividends of $214 million.
Concurrent with the earnings release, Praxair announced that its Board of Directors has approved the payment of a quarterly dividend of 75 cents per share, on Sep 15, 2016 to the shareholders on record as of Sep 8, 2016.
Outlook
For 2016, Praxair expects earnings in the range of $5.45–$5.60 per share versus $5.35–$5.70 expected earlier. The revised guidance includes negative impact of 3% from adverse foreign currency movements. Capital spending is expected to be nearly $1.4 billion versus $1.5 billion predicted earlier.
For third-quarter 2016, Praxair expects earnings to range between $1.35 per share and $1.42 per share.
PRAXAIR INC Price, Consensus and EPS Surprise
PRAXAIR INC Price, Consensus and EPS Surprise | PRAXAIR INC Quote
Zacks Rank & Stocks to Consider
With a market capitalization of $33.8 billion, Praxair currently carries a Zacks Rank #4 (Sell). Some companies in the chemical industry are performing well and hence carry high investment values. Better-ranked stocks include Axiall Corporation , Shin-Etsu Chemical Co., Ltd. (SHECY - Free Report) and Stepan Company (SCL - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>