Industrial gas producer and supplier, Praxair Inc. (PX - Analyst Report) reported in line results, being it’s second in a row, for the first quarter of 2013. Adjusted earnings per share came in at $1.38, no change from the year-ago quarter’s earnings and in line with the Zacks Consensus Estimate.
Including a loss from the Venezuela currency devaluation, GAAP earnings for the quarter were $1.30 per share, down from $1.38 in the year-ago quarter.
Earnings for both the quarters were within management’s predicted range of $1.35-$1.40 per share.
Revenue: Praxair reported total revenue of $2,888 million in the first quarter, up 2.0% year over year. The results were adversely impacted by lower working days, negative foreign currency translation, and cost pass-through; excluding which total revenue grew by 4%.
During the quarter, healthy performance at manufacturing, energy, and food & beverages markets helped push North American revenue by 4% to $1,457 million. Revenue in Europe was down 2% to $370 million due to lower industrial activities in Spain and Italy resulting in lower packaged-gases.
Revenue in South America grew 3%, excluding a negative foreign currency translation, to $531 million while that in Asia was up 10% to $367 million, driven by a volume growth in India, China, Korea and Thailand. Surface Technologies revenue was $163 million in the quarter versus $169 million in the year-ago quarter, due primarily to weak business industrial and military aviation coatings businesses.
Margins: Cost of sales in the quarter increased 1.4% year over year and represented 56.7% of the total revenue. Adjusted operating profit for Praxair in the quarter was $623 million, down 1% year over year while adjusted margin stood at 21.6%.
Balance Sheet: Exiting the first quarter 2013, Praxair had cash and cash equivalent balance of $113 million, down 28% compared with $157 million in the previous quarter. Long-term debt balance was $7,772 million, up 16.3% sequentially as the company issued notes worth $1,400 million during the quarter.
Cash Flow: Praxair generated net cash of $472 million from operating activities in the first quarter, up from $402 million in the year-ago quarter. Capital spending went down 3.5% to $466 million, with a major portion being invested for a new production plant setting.
Share Repurchases/Dividends: Praxair pursues a consistent strategy of returning cash to shareholders through dividend payments and share repurchases. During the first quarter 2013, the company paid $178 million in dividends and repurchased shares worth $150 million.
Alongside the quarterly results, Board of Directors of Praxair declared a quarterly dividend of 60 cents to be paid on June 17, 2013 to its shareholders of record as on June 7, 2013.
Outlook: For the second quarter of 2013, management projects earnings per share to be within the $1.45-$1.50 per share range.
For 2013, adjusted earnings per share are expected to be within the $5.90-$6.05 range while GAAP earnings are expected to be within $5.82-$5.97. Sales are expected to be roughly $12 billion.
Capital spending is expected to be in the range of $1.8-$2.0 billion and effective tax rate guidance is projected to be 28%.
Praxair Inc. is the largest industrial gas producer and supplier in the Americas and one of the leading gas producing companies worldwide. The stock currently carries a Zacks Rank #3 (Hold).
Other stocks to watch out for in the industry are Olin Corp. (OLN - Snapshot Report), Compass Minerals International Inc. (CMP - Snapshot Report) and Eastman Chemical Co. (EMN - Analyst Report); each holds a Zacks Rank #2 (Buy).