Praxair Beats Zacks Estimate

Praxair Inc. (PX - Snapshot Report) reported decent third-quarter results before the opening bell today.
 
Net income and earnings per share were $325 million and $1.04, respectively. These results include a net after-tax benefit of $7 million, or 2 cents of earnings per share, resulting from a $306 million pre-tax charge, and $313 million of income tax benefits, related primarily to a Brazilian government tax amnesty program.
 
Excluding these items, net income was $318 million and earnings per share were $1.02, as compared to $355 million and $1.11 in the prior-year quarter. It was also above the Zacks Consensus Estimate of $1 per share.
 
Sales in the quarter were $2,288 million, 20% below $2,852 million in the third quarter. Excluding the negative effects of foreign currency and cost pass-through, underlying sales were 9% lower due to 11% lower volumes partially offset by 2% higher overall pricing. Sequentially, sales rose 7%.
 
Operating margin (excluding one-time item) was 21%, up from 19.1% in the prior year as cost reductions and pricing more than offset volume declines. The company continues to hold a tight rein on costs, which is expected to give significant operating leverage in future as volumes improve.
 
For the fourth quarter, Praxair expects earnings per share in the range of $1.05 to $1.10. For the full year, Praxair expects sales to be about $9 billion and adjusted earnings per share to be in the range of $3.96 to $4.01. Full-year capital expenditures are expected to be about $1.4 billion.
 
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide. However, low natural gas prices have hurt the company’s top-and bottom-line results in the third quarter of 2009, which is likely to continue for the next couple of quarters.
 
Nevertheless, the auto, steel and chemical industries have announced a significant number of plant start-ups in the second half. Moreover, going forward management expects its pipeline of new business to remain strong. Thus, the company will be in a better position in the medium-term.