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Industrial gas producer and supplier Praxair Inc. (PX - Free Report) reported impressive results for third-quarter 2016. The company’s adjusted earnings came in at $1.41 per share, above the Zacks Consensus Estimate of $1.40 by 0.7%. However, the bottom line lagged the year-ago tally of $1.46 by 3.4%.
Praxair’s revenues totaled $2.716 billion, surpassing the Zacks Consensus Estimate of $2.66 billion. Also, the top line increased 1.2% from the year-ago tally on the back of 2% gains from acquired assets and favorable pricing. The positives were partially offset by 1% negative impact from unfavorable foreign currency movements.
Praxair operates through five business segments, with their third quarter top-line results briefed below:
On a segmental basis, revenues generated in North America decreased 2.2% year over year to $1,431 million, while that from Europe grew 8.3% to $366 million. In Asia, revenues slipped 1% to $391 million. Surface Technologies revenues were $150 million, up from $147 million in the year-ago quarter. Revenues from South America increased 10.2% to $378 million.
Margins
In the quarter, Praxair’s cost of sales increased 3% year over year, representing 56.4% net sales compared with 55.4% recorded in the year-ago quarter. Gross margin decreased 100 basis points (bps) to 43.6%. Selling, general and administrative expenses grew 3.6% year over year to $291 million. Research and development expenses were $22 million, slightly below the year-ago tally of $23 million.
Adjusted operating profit came in at $597 million, down 3.7% year over year. Adjusted margin was 22%.
Balance Sheet & Cash Flow
Exiting the third quarter, Praxair’s cash and cash equivalents were $627 million, up from $567 million at the previous quarter-end. Long-term debt inched up 0.4% sequentially to $9,225 million.
In this quarter, Praxair generated net cash of $788 million from its operating activities, up from $676 million in the year-ago quarter. Capital spent on purchase of property, plant and equipment was $376 million, down 7.2% year over year.
During the quarter, Praxair repurchased shares worth $50 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 Dec 15, 2016 to the shareholders on record as of Dec 5.
Outlook
For 2016, Praxair expects earnings in the range of $5.44–$5.51 per share versus $5.45–$5.60 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.
For the fourth quarter, Praxair expects earnings to range between $1.36 per share and $1.43 per share.
With a market capitalization of $33.8 billion, Praxair currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the industry include The Chemours Company (CC - Free Report) , Koppers Holdings Inc. (KOP - Free Report) and Cabot Corporation (CBT - Free Report) . While both The Chemours Company and Koppers Holdings sport a Zacks Rank #1 (Strong Buy), Cabot Corporation carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chemours Company’s average earnings surprise for the last four quarters is a positive 144.74%. Also, the company’s earnings estimates have improved for 2016 and 2017.
Koppers Holdings reported better-than-expected results in three of four trailing quarters, with a positive earnings surprise of 61.26%. Also, bottom-line expectations for 2016 and 2017 have improved over the past 60 days.
Cabot Corporation’s average earnings surprise is a positive 2.07% for the last four quarters. Also, earnings estimates for fiscal 2016 and fiscal 2017 have been revised upward over the last 60 days.
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Praxair (PX) Posts Upbeat Q3 Earnings; Lowers '16 View
Industrial gas producer and supplier Praxair Inc. (PX - Free Report) reported impressive results for third-quarter 2016. The company’s adjusted earnings came in at $1.41 per share, above the Zacks Consensus Estimate of $1.40 by 0.7%. However, the bottom line lagged the year-ago tally of $1.46 by 3.4%.
Praxair’s revenues totaled $2.716 billion, surpassing the Zacks Consensus Estimate of $2.66 billion. Also, the top line increased 1.2% from the year-ago tally on the back of 2% gains from acquired assets and favorable pricing. The positives were partially offset by 1% negative impact from unfavorable foreign currency movements.
Segmental Details
Praxair operates through five business segments, with their third quarter top-line results briefed below:
On a segmental basis, revenues generated in North America decreased 2.2% year over year to $1,431 million, while that from Europe grew 8.3% to $366 million. In Asia, revenues slipped 1% to $391 million. Surface Technologies revenues were $150 million, up from $147 million in the year-ago quarter. Revenues from South America increased 10.2% to $378 million.
Margins
In the quarter, Praxair’s cost of sales increased 3% year over year, representing 56.4% net sales compared with 55.4% recorded in the year-ago quarter. Gross margin decreased 100 basis points (bps) to 43.6%. Selling, general and administrative expenses grew 3.6% year over year to $291 million. Research and development expenses were $22 million, slightly below the year-ago tally of $23 million.
Adjusted operating profit came in at $597 million, down 3.7% year over year. Adjusted margin was 22%.
Balance Sheet & Cash Flow
Exiting the third quarter, Praxair’s cash and cash equivalents were $627 million, up from $567 million at the previous quarter-end. Long-term debt inched up 0.4% sequentially to $9,225 million.
In this quarter, Praxair generated net cash of $788 million from its operating activities, up from $676 million in the year-ago quarter. Capital spent on purchase of property, plant and equipment was $376 million, down 7.2% year over year.
During the quarter, Praxair repurchased shares worth $50 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 Dec 15, 2016 to the shareholders on record as of Dec 5.
Outlook
For 2016, Praxair expects earnings in the range of $5.44–$5.51 per share versus $5.45–$5.60 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.
For the fourth quarter, Praxair expects earnings to range between $1.36 per share and $1.43 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). Better-ranked stocks in the industry include The Chemours Company (CC - Free Report) , Koppers Holdings Inc. (KOP - Free Report) and Cabot Corporation (CBT - Free Report) . While both The Chemours Company and Koppers Holdings sport a Zacks Rank #1 (Strong Buy), Cabot Corporation carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chemours Company’s average earnings surprise for the last four quarters is a positive 144.74%. Also, the company’s earnings estimates have improved for 2016 and 2017.
Koppers Holdings reported better-than-expected results in three of four trailing quarters, with a positive earnings surprise of 61.26%. Also, bottom-line expectations for 2016 and 2017 have improved over the past 60 days.
Cabot Corporation’s average earnings surprise is a positive 2.07% for the last four quarters. Also, earnings estimates for fiscal 2016 and fiscal 2017 have been revised upward over the last 60 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>