Airgas' Quarter Results More than Hot Air

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On Jan.28, 2009, Airgas (ARG Quote) reported that its Q3 FY09 earnings increased 10.7% helped by higher revenue. Net income for the quarter increased to $62.90 million or $0.76 per share from $56.81 million or $0.67 per share in Q3 FY08. The latest quarterly earnings exceeded the consensus estimate of $0.75 per share.

Total revenue advanced 7.0% to $1.08 billion from $1.01 billion gaining from a 6.0% contribution from acquisitions and 1.0% growth in same-store sales. Looking at the company's business segments, revenue from Gas and Rent ascended 13.1% to $672.46 million from $594.64 million. On the flip side, revenue from Hard Goods dipped 1.7% to $406.27 million from $413.40 million in the prior year's quarter.

During the quarter under review, operating margin widened 36 basis points to 12.10% from 11.74% a year ago, owing to higher revenue. Moreover, cost of products sold increased 4.2% to $500.81 million from $480.47 million, while selling, distribution, and administrative expenses augmented 8.7% to $392.67 million from $361.17 million in the year-ago quarter.

During Q3 FY09, Airgas announced an increase in the quarterly cash dividend by 33.3% to $0.16 per share from $0.12 per share. In addition, the company acquired Gordon Woods Industrial Welding Supply and TexAir Welding Supply Also, the company received a two-year extension of its contract with Boeing (BA Quote), representing a $16.50 million of revenue in the first year. Recently, Airgas completed the acquisition of Great Lakes Oxygen.

Looking forward to Q4 FY09, the company expects its earnings per share to be in the range of $0.73 per share to $0.76 per share. For FY09, the company anticipates earnings per share in the range of $3.16 to $3.19, representing a 19.0% to 20.0% growth over FY08. Furthermore, the company is also looking to curtail its capital expenditure.

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