In a bid to capitalize on the increased demand for merchant gases in Chicago, Airgas, Inc. will build a new air separation unit (ASU) in the area. The unit will produce more than 400 tons of oxygen, nitrogen and argon daily starting in the fall of 2014.
The market for atmospheric gases in the Midwest has shown signs of strong growth and is expected to sustain the momentum going forward. This has prompted the company to increase production capacity in the area. The new plant will be a part of Airgas Merchant Gases business unit. Airgas Merchant Gases recently commissioned Airgas’ newest ASU in Clarksville, Tennessee, which began production in May this year.
Airgas has been investing significantly on nfrastructure as well as technologies to meet the demand of its customers. It has also taken steps to diversify its businesses and reorganize its operations. Recently, the company announced a reorganization plan, under which, it intends to split its East region into two separate regions namely, the Northeast region and the East region.
The company has also acquired assets and operations of six businesses engaged in industrial gas and equipment supplies to complement and expand its operations. The acquisitions are expected to augment the packaged gas and hardgoods distributor portfolio and extend its geographical reach.
During the first quarter of fiscal 2013, Airgas posted adjusted earnings of $1.13 a share compared with $1.00 a share in the year-ago quarter. The results missed the Zacks Consensus Estimate of $1.15. Revenues rose 8% year over year to $1,257.3 million, but missed the Zacks Consensus Estimate of $1,272 million.
Management expects adjusted earnings per share (excluding one-time items) 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.
For fiscal 2013, the company expects adjusted earnings per share (excluding one-time items) 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. The Zacks Consensus Estimates for the second quarter and fiscal 2013 currently stands at $1.07 and $4.66, respectively.
Pennsylvania-based Airgas is the largest supplier of industrial, specialty, and medical gases and provides bulk gas supply of oxygen, nitrogen and argon through its 16 air separation units throughout the nation. Airgas is the fifth largest producer of atmospheric gases in North America.
Airgas is also a leading supplier of a wide range of hardgoods, including welding equipment and related products, safety products, and tools and supplies for construction and maintenance, repair, and operations. Airgas competes with Air Products & Chemicals Inc. (APD - Analyst Report) .
Airgas currently retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on the stock.