Airgas Inc. (ARG - Analyst Report) announced the acquisition of two core industrial gas and welding supply distributors - Metroplex Service Welding Supply, Inc and Excel Welding & Industrial Supplies, Inc - for an undisclosed amount.
Following the acquisition, Metroplex Service Welding Supply’s locations in Fort Worth, Decatur, Gainesville, Burleson, and Mineral Wells, Texas and 47 associates will be integrated into Airgas’ Southwest region operations. On the other hand, Excel Welding & Industrial Supplies’ Philadelphia and Pennsylvania locations along with 10 associates will become a part of Airgas’ East region.
The two businesses with annual sales of more than $35 million complement Airgas’ portfolio of products and services. The acquisition will strengthen the company’s competitive position in each of these regions.
The company has grown historically through a combination of organic growth initiatives and acquisitions in both its core and adjacent lines of business. The company continues to acquire businesses in order to expand its geographic coverage and strengthen its national network of branch-store locations.
Since its inception, Airgas has made over 400 acquisitions. In fiscal 2012, the company acquired 8 businesses with aggregate annual sales of approximately $106 million. Since the beginning of the current fiscal year, Airgas has completed 15 acquisitions with aggregate annual revenues of more than $94 million.
Airgas posted adjusted earnings of $1.05 a share in the second quarter of fiscal 2013 (ended September 30, 2012), which came in at the lower end of the management guidance of $1.05 -$1.09 and compared favorably with $1.03 earned in the year-ago quarter. The result, however, missed the Zacks Consensus Estimate of $1.06.
Revenues in the reported quarter rose 4% year over year to $1,229.6 million, missing the Zacks Consensus Estimate of $1,253 million. Same-stores sales were up 3%, with hardgoods gaining 1% and gases and rent growing 4%.
Management expects adjusted earnings per share (excluding one-time items) for the third quarter of fiscal 2013 to increase 8% to 14% to a range of $1.05 to $1.11. For fiscal 2013, the company expects adjusted earnings per share (excluding one-time items) to increase 8% to 12% to the range of $4.45 to $4.60 from $4.11 in fiscal 2012.
The company is focusing on implementing SAP across its distribution channel with nearly 70% of the business already running on SAP. Airgas remains confident that SAP implementation will enable it to realize its full economic benefits and help it to serve its customers better. Airgas currently retains a short-term Zacks #2 Rank (Buy).
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