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Airgas Management Discusses Q1 2013 Results - Earnings Call Transcript

Same-store sales growth in our core distribution business decelerated this quarter to 7%, but very strong performances by our all other operations businesses provided a nice boost to earnings in a moderating environment.

SAP implementation costs were higher than expected this quarter and will likely be higher than expected for the remainder of the year. However, the most important thing we can do to position ourselves to derive long-term value from this investment is to get the implementation right and to support our hardworking associates in doing so. The good news is that SAP and the total implementation overall is going very, very well. At this point, nearly 70% of our distribution business is running on SAP, and we think the full year expense, net of benefits, will be in the $0.12 to $0.16 net expense range that we projected earlier.

Strong cash flow continues to be a hallmark of our business model. Adjusted cash flow from operations increased 12% year-over-year to $155 million in the quarter, and free cash flow increased 7% year-over-year to $76 million in the quarter.

With regard to the current landscape, most of our customer segments appear to be stable or growing slowly. In fact, our metal fabrication customer segment remained a bright spot even through June when daily sales in most of our other segments slowed from May levels. Daily sales in July typically starts slowly due to the holiday then rebound as the month progresses. However, during -- however, after the normal slow start, daily sales have been somewhat sluggish to this point, so it's tough to predict how the end of the month will play out. Coupled with the deceleration in GDP growth, we believe the economic recovery has indeed hit a soft patch.

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