Praxair Inc. (PX - Free Report) reported adjusted earnings of $1.72 per share in second-quarter 2018, surpassing the Zacks Consensus Estimate of $1.70. Also, the bottom line improved 18% year over year, on the back of healthy sales growth across all business segments, except one.
On a reported basis, Praxair posted earnings per share of $1.65 in the second quarter, which increased around 17% year over year. Notably, the quarter’s adjusted earnings excluded transaction costs and other charges of 7 cents per share related to the proposed merger with Linde.
In the reported quarter, Praxair’s sales totaled $3.1 billion, reflecting year-over-year growth of 8%. This improvement was driven by 5% gain from volume growth, 2% from favorable pricing. The topline also surpassed the Zacks Consensus Estimate of $3.0 billion by 1%.
Costs and Margins
Praxair’s costs of sales in the quarter increased 7.8% year over year to $1.7 billion. Gross profit grew 8% year over year to $1.3 billion. Gross margin expanded 10 basis points (bps) to 43.7%. Selling, general and administrative expenses rose 0.7% to $307 million. Research and development expenses were $24 million, slightly higher than $23 million recorded in the year-ago quarter.
Adjusted operating profit increased 14.8% year over year to $713 million, while adjusted operating margin advanced 140 bps, year over year, to 23.3%.
Segmental Performance
Revenues generated in North America increased 6% year over year to $1,594 million. The segment’s revenues represented 52% of the second quarter’s sales. The segment’s income climbed around 14% year over year to $432 million.
Revenues in Europe, representing 14.5% of the quarter’s sales, jumped 16% year over year to $444 million. The segment’s income rose 17.6% year over year to $87 million.
In Asia, revenues were up 19% year over year to $502 million and represented 16.4% of the second quarter’s sales. The segment reported an operating income of $107 million, up from $80 million witnessed in the year-ago quarter.
Surface Technologies revenues were $172 million, up 14% year over year. The segment’s revenues represented 5.6% of sales in the quarter under review. The segment’s income increased around 24% year over year to $31 million.
Revenues from South America decreased 6.4% to $349 million. The figure represented 11.4% of the reported quarter’s sales. The segment’s income fell 12.5% year over year to $56 million.
Balance Sheet & Cash Flow
As of Jun 30, 2018, Praxair’s cash and cash equivalents were $479 million, down from $617 million as of Dec 31, 2017. Its long-term debt decreased 7% to $7,229 million as of Jun 30, 2018, from $7,783 million as of Dec 31, 2017.
In the second quarter, the company generated cash from operating activities of $790 million, up 12.7% year over year. Capital spent on the purchase of property, plant and equipment totaled $351 million in the second quarter, higher than the $325 million spent in the year-ago quarter.
Praxair posted backlog of $1.7 billion in the second quarter, up around 13% year over year. The company won three new onsite projects and started work on China National Offshore Oil Corporation (CNOOC) project during the reported quarter. It has also made substantial progress on the merger with Linde and achieved additional regulatory approvals. The company has also agreed to sell the majority of its European business in order to gain EC approval for the merger.
During the second quarter, Praxair paid dividends of $237 million but did not repurchase any shares.
Share Price Performance
Over the past year, Praxair has underperformed the industry with respect to price performance. The stock has gained around 23%, while the industry recorded growth of around 5% during the same time frame.
Zacks Rank & Key Picks
Praxair currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the same sector include Celanese Corporation (CE - Free Report) , Methanex Corporation (MEOH - Free Report) and Eastman Chemical Company (EMN - Free Report) . While Celanese and Methanex sport a Zacks Rank #1 (Strong Buy), Eastman Chemical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Celanese has a long-term earnings growth rate of 9.3%. The stock has rallied 20% in a year’s time.
Methanex has a long-term earnings growth rate of 15%. Its shares have appreciated 52% in the past year.
Eastman Chemical has a long-term earnings growth rate of 9.4%. The company’s shares have been up 20% over the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Praxair Inc. (PX - Free Report) reported adjusted earnings of $1.72 per share in second-quarter 2018, surpassing the Zacks Consensus Estimate of $1.70. Also, the bottom line improved 18% year over year, on the back of healthy sales growth across all business segments, except one.
On a reported basis, Praxair posted earnings per share of $1.65 in the second quarter, which increased around 17% year over year. Notably, the quarter’s adjusted earnings excluded transaction costs and other charges of 7 cents per share related to the proposed merger with Linde.
In the reported quarter, Praxair’s sales totaled $3.1 billion, reflecting year-over-year growth of 8%. This improvement was driven by 5% gain from volume growth, 2% from favorable pricing. The topline also surpassed the Zacks Consensus Estimate of $3.0 billion by 1%.
Costs and Margins
Praxair’s costs of sales in the quarter increased 7.8% year over year to $1.7 billion. Gross profit grew 8% year over year to $1.3 billion. Gross margin expanded 10 basis points (bps) to 43.7%. Selling, general and administrative expenses rose 0.7% to $307 million. Research and development expenses were $24 million, slightly higher than $23 million recorded in the year-ago quarter.
Adjusted operating profit increased 14.8% year over year to $713 million, while adjusted operating margin advanced 140 bps, year over year, to 23.3%.
Segmental Performance
Revenues generated in North America increased 6% year over year to $1,594 million. The segment’s revenues represented 52% of the second quarter’s sales. The segment’s income climbed around 14% year over year to $432 million.
Revenues in Europe, representing 14.5% of the quarter’s sales, jumped 16% year over year to $444 million. The segment’s income rose 17.6% year over year to $87 million.
In Asia, revenues were up 19% year over year to $502 million and represented 16.4% of the second quarter’s sales. The segment reported an operating income of $107 million, up from $80 million witnessed in the year-ago quarter.
Surface Technologies revenues were $172 million, up 14% year over year. The segment’s revenues represented 5.6% of sales in the quarter under review. The segment’s income increased around 24% year over year to $31 million.
Revenues from South America decreased 6.4% to $349 million. The figure represented 11.4% of the reported quarter’s sales. The segment’s income fell 12.5% year over year to $56 million.
Balance Sheet & Cash Flow
As of Jun 30, 2018, Praxair’s cash and cash equivalents were $479 million, down from $617 million as of Dec 31, 2017. Its long-term debt decreased 7% to $7,229 million as of Jun 30, 2018, from $7,783 million as of Dec 31, 2017.
In the second quarter, the company generated cash from operating activities of $790 million, up 12.7% year over year. Capital spent on the purchase of property, plant and equipment totaled $351 million in the second quarter, higher than the $325 million spent in the year-ago quarter.
Praxair posted backlog of $1.7 billion in the second quarter, up around 13% year over year. The company won three new onsite projects and started work on China National Offshore Oil Corporation (CNOOC) project during the reported quarter. It has also made substantial progress on the merger with Linde and achieved additional regulatory approvals. The company has also agreed to sell the majority of its European business in order to gain EC approval for the merger.
During the second quarter, Praxair paid dividends of $237 million but did not repurchase any shares.
Share Price Performance
Over the past year, Praxair has underperformed the industry with respect to price performance. The stock has gained around 23%, while the industry recorded growth of around 5% during the same time frame.
Zacks Rank & Key Picks
Praxair currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the same sector include Celanese Corporation (CE - Free Report) , Methanex Corporation (MEOH - Free Report) and Eastman Chemical Company (EMN - Free Report) . While Celanese and Methanex sport a Zacks Rank #1 (Strong Buy), Eastman Chemical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Celanese has a long-term earnings growth rate of 9.3%. The stock has rallied 20% in a year’s time.
Methanex has a long-term earnings growth rate of 15%. Its shares have appreciated 52% in the past year.
Eastman Chemical has a long-term earnings growth rate of 9.4%. The company’s shares have been up 20% over the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on PX - FREE
Get the latest research report on MEOH - FREE
Get the latest research report on EMN - FREE
Get the latest research report on CE - FREE