Industrial gas producer, Praxair Inc. (PX) reported its second quarter 2012 financial results with adjusted earnings per share of $1.42, up roughly 3.0% from adjusted earnings per share of $1.38 in the year-ago quarter.
Earnings were roughly at the mid-point of management’s guidance range of $1.40-$1.45 and in line with the Zacks Consensus Estimate of $1.42.
Revenue: Total revenue in the second quarter was $2,811 million, down 2% year over year. The year-over-year decline can be attributed to a 2% volume increase, 2% positive price/mix impact and 2% positive acquisition impact. These were partially offset by a 2% negative cost pass through impact and 6% negative currency translation impact.
Excluding negative currency translation and cost pass-through impacts, revenue in the quarter grew 6% year over year, driven by a solid volume growth and favorable pricing actions in most end markets in North America. Project backlog at the end of the quarter was roughly $2.5 billion.
During the quarter, North American revenue increased 2% year over year to $1,393 million. Revenue in Europe was up 3% to $382 million; while the same in South America decreased 15% year over year to $520 million. Sales in Asia were flat year over year to $348 million. Surface Technologies revenue was $168 million in the quarter, flat compared with prior year quarter.
Margins: Cost of sales in the quarter plummeted 2.3% year over year and represented 57% of the total revenue. With increased sales volume and prices, operating profit shot up by 1.4% year over year. Operating margin stood at 22.6% versus 21.9% in the year-ago quarter.
Balance Sheet: Exiting the second quarter, Praxair’s cash and cash equivalents decreased 2.8% sequentially to $10.0 million while long-term debt balance also dropped 7.1% to $5,961.0 million.
Cash Flow: In the second quarter, cash flow from operating activities increased by 26.5% year over year to $725 million. Capital spending increased to $564 million as compared with $433 million in the year-ago quarter.
Share Repurchases/Dividends: Praxair pursues a consistent strategy of returning cash to shareholders through dividend payments and share repurchases. During the second quarter 2012, the company paid $164 million in dividends and repurchased shares worth $138 million, net of issuances.
Along with the quarterly results, the company’s Board of Directors declared a quarterly dividend of 55 cents to be paid on September 17 to shareholders of record on September 7.
Outlook: For the third quarter of fiscal 2012, management expects EPS in the $1.35-$1.40 range. The guidance was largely impacted by negative foreign currency translation. For 2012, the company revised its guidance range from $5.75-$5.90 to $5.60-$5.70, up 9%-11% from 2011 excluding the impact of foreign currency translation.
Sales expectation was also revised to $11.2-$11.5 billion range from $11.6-$11.9 billion range expected earlier. Capital spending guidance was kept intact at $2.1-$2.4 billion range along with effective tax rate forecast of 28%.
PRAXAIR INC (PX): Free Stock Analysis Report
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