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Airgas Inc. (ARG - Analyst Report) posted adjusted earnings of $1.13 a share in first-quarter of fiscal 2013 (ended June 30, 2012) as against $1.00 recorded in the year-ago quarter. The results missed the Zacks Consensus Estimate of $1.15. Helium supply chain was disrupted due to improper supply by the suppliers leading to a 4 cent reduction in earnings during the first quarter.
Profit, as reported, jumped 21% year over year to $90.8 million (or $1.15 per share) in the quarter from $75 million (or 94 cents per share) a year ago.
Revenues in the reported quarter rose 8% year over year to $1,257.3 million, missing the Zacks Consensus Estimate of $1,272 million. Same-stores sales were up 7%, with hardgoods gaining 9% and gases and rent growing 5%. Acquisitions contributed 1% to the growth.
Cost and Margins
Costs of goods sold increased to $568.7 million in the quarter from $530.5 million in the year-ago period. Selling, distribution and administrative expenses amounted to $460.1 million, up 8.7% year over year.
Operating income was $151.7 million in the quarter versus $137.3 million in the year-ago quarter. Adjusted operating margin in the reported quarter was 12.5%, increasing marginally from the year ago quarter. Adjusted operating income in the quarter included an impact of 100 basis points from SAP implementation costs and depreciation expense, whereas the figure was 90 basis points last year.
Cash, as of June 30, 2012, amounted to $54.9 million, compared with $44.7 million as of March 31, 2012. Free cash flows, at the end of the quarter, went up to $76 million from $71 million last year. Adjusted cash from operations at the end of the quarter was $155 million versus $139 million in the prior-year period.
Management expects adjusted earnings per share (excluding one-time itmes) for the second quarter of fiscal 2013 to increase 2% to 6% to $1.05 to $1.09 per share from $1.03 a year ago. This includes 10 cents of SAP implementation costs and depreciation expense.
The guidance also assumes that earnings will be negatively impacted due to helium supply chain constraints. The earnings forecast also takes into account a decline of 3 cents from the impact of one less selling day relative to the first quarter of fiscal 2013 and the second quarter of fiscal 2012.
For fiscal 2013, the company expects adjusted earnings per share (excluding one-time itmes) to increase 13% to 16% to the range of $4.65 to $4.75 from $4.11 in fiscal 2012, including an anticipated impact of 12 cents to 16 cents related to SAP implementation costs and depreciation expense.
Adjusted earnings guidance also incorporates a decline of 10 cents year over year due to lost sales because of helium supply constraints. The outlook reflects two less selling days in fiscal 2013.
The company is focusing on implementing SAP across its distribution channel with nearly 70% of the business already running on it. Airgas remains confident that SAP implementation will enable it to realize its full economic benefits and help it to serve its customers better.
Pennsylvania-based Airgas, through its subsidiaries, distributes industrial, medical and specialty gases, as well as hard goods in the U.S. The company competes with Air Products & Chemicals Inc. (APD - Analyst Report) and American Air Liquide, Inc.
Airgas currently retains a Zacks #4 Rank, which translates into a short-term (1 to 3 months) Sell rating.