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8-K - PRAXAIR, INC. 8-K - PRAXAIR INC | a50043412.htm |
Exhibit 99.1
Praxair Reports Third-Quarter 2011 Results
- Sales of $2.9 billion, 14% above prior-year quarter
- Diluted EPS of $1.40, up 16%
- Strong pipeline of growth projects in energy and emerging economies
- Full-year 2011 diluted EPS guidance of $5.40 – $5.45. Fourth-quarter diluted EPS guidance of $1.33 – $1.38
DANBURY, Conn.--(BUSINESS WIRE)--October 26, 2011--Praxair, Inc. (NYSE: PX) reported third-quarter net income and diluted earnings per share of $429 million and $1.40, 14% and 16% above the prior-year quarter, respectively.
Third-quarter sales were $2,896 million, 14% above the previous-year quarter. Sales increased across all geographic regions with strong growth from manufacturing, metals, energy and chemicals markets. Sales rose 1% sequentially from the second quarter due primarily to higher volumes.
Operating profit in the third quarter was $632 million, up 15% from the prior-year quarter, reflecting higher volumes and prices combined with cost savings from productivity programs.
The company generated strong cash flow from operations in the quarter of $732 million. Operating cash flow funded $458 million of capital expenditures, primarily for new production plants under long-term contracts with customers. The company paid dividends of $150 million and purchased $251 million of stock, net of issuances. The after-tax return-on-capital ratio and return on equity for the quarter both increased, to 14.8% and 28.3%, respectively.*
Commenting on the business outlook, Chairman and Chief Executive Officer Steve Angel said, “We are continuing to see solid growth in all geographies with the exception of Europe. Proposal activity remains at healthy levels and our backlog of large customer projects under construction is at a record $2.7 billion, 25% above 2010 levels. Most importantly, we remain confident in our ability to bring growth to the bottom line through our commitment to productivity and flawless execution.”
For the fourth quarter of 2011, Praxair expects diluted earnings per share in the range of $1.33 to $1.38. This guidance anticipates a headwind from weaker overseas currencies of about 5 cents relative to the third quarter of 2011.
For the full year of 2011, Praxair expects sales in the area of $11.2 billion and diluted earnings per share in the range of $5.40 to $5.45. Excluding the fourth-quarter currency headwinds, this guidance remains at the upper end of prior guidance. Full-year capital expenditures are expected to be approximately $1.8 billion, and the effective tax rate is forecasted to be about 28%.
Following is additional detail on third-quarter 2011 results by segment.
In North America, third-quarter sales were $1,427 million, up 11% from the prior-year quarter, primarily due to organic growth. Sales growth was strongest to manufacturing, energy, chemicals and metals markets. Operating profit of $350 million grew 11% from the prior year due primarily to higher volumes, price and productivity.
In Europe, third-quarter sales were $358 million, up 11% from the prior year, primarily due to positive currency effects. Operating profit increased 10% from the prior-year quarter to $65 million due to positive currency effects slightly offset by continued margin pressures.
In South America, third-quarter sales of $607 million grew 20% versus the prior-year quarter. Excluding currency effects, sales grew 14% due primarily to higher on-site, merchant and packaged-gas sales to manufacturing, metals and food and beverage markets. Operating profit was $140 million, 20% above the prior-year quarter, due to higher volumes, price, productivity and currency effects.
Sales in Asia were $341 million in the quarter, up 19% from the prior year driven by strong growth in China, India, Korea and Thailand. Sales growth came from metals, electronics and chemical customers. Operating profit was $51 million, 34% above the prior-year quarter, due primarily to higher volumes, price and productivity.
Praxair Surface Technologies had third-quarter sales of $163 million, up 16% from the prior-year quarter. Sales growth came primarily from higher volumes of coatings to energy markets. Operating profit of $26 million in the quarter was 13% above the prior-year period due primarily to higher volumes.
Praxair is the largest industrial gases company in North and South America, and one of the largest worldwide. The company produces, sells and distributes atmospheric and process gases, and high-performance surface coatings. Praxair products, services and technologies are making our planet more productive by bringing efficiency and environmental benefits to a wide variety of industries, including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing, metals and others. More information on Praxair is available at www.praxair.com.
*See the attachments for calculations of non-GAAP measures
Attachments: Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary, and Appendix: Non-GAAP Measures.
A teleconference on Praxair’s third-quarter results is being held this morning, October 26, 2011, at 11:00 am Eastern Time. The number is (617) 801-9713 -- Passcode: 82506832. The call also is available as a web cast at www.praxair.com/investors. Materials to be used in the teleconference are also available.
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from the projections or estimates contained in the forward-looking statements. The company assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in Item 1A (Risk Factors) in the company’s Form 10-K and 10-Q reports filed with the SEC which should be reviewed carefully. Please consider the company’s forward-looking statements in light of those risks.
PRAXAIR, INC. AND SUBSIDIARIES | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
(Millions of dollars, except per share data) | ||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||
Quarter Ended | Year to Date | |||||||||||||||||
September 30, | September 30, | |||||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||||
SALES (a) | $ | 2,896 | $ | 2,538 | $ | 8,456 | $ | 7,493 | ||||||||||
Cost of sales | 1,684 | 1,444 | 4,860 | 4,262 | ||||||||||||||
Selling, general and administrative | 307 | 299 | 924 | 895 | ||||||||||||||
Depreciation and amortization | 256 | 227 | 754 | 685 | ||||||||||||||
Research and development | 22 | 19 | 67 | 56 | ||||||||||||||
Venezuela currency devaluation (b) | - | - | - | 27 | ||||||||||||||
Other income (expense) - net | 5 | 2 | (1 | ) | 9 | |||||||||||||
OPERATING PROFIT | 632 | 551 | 1,850 | 1,577 | ||||||||||||||
Interest expense - net | 36 | 29 | 107 | 90 | ||||||||||||||
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS | 596 | 522 | 1,743 | 1,487 | ||||||||||||||
Income taxes (b) | 166 | 146 | 485 | 422 | ||||||||||||||
INCOME BEFORE EQUITY INVESTMENTS | 430 | 376 | 1,258 | 1,065 | ||||||||||||||
Income from equity investments | 13 | 12 | 33 | 27 | ||||||||||||||
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) | 443 | 388 | 1,291 | 1,092 | ||||||||||||||
Less: noncontrolling interests | (14 | ) | (11 | ) | (39 | ) | (30 | ) | ||||||||||
NET INCOME - PRAXAIR, INC. (b) | $ | 429 | $ | 377 | $ | 1,252 | $ | 1,062 | ||||||||||
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS | ||||||||||||||||||
Basic earnings per share | $ | 1.42 | $ | 1.22 | $ | 4.13 | $ | 3.46 | ||||||||||
Diluted earnings per share (b) | $ | 1.40 | $ | 1.21 | $ | 4.07 | $ | 3.41 | ||||||||||
Cash dividends | $ | 0.50 | $ | 0.45 | $ | 1.50 | $ | 1.35 | ||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||||
Basic shares outstanding (000's) | 301,594 | 307,127 | 303,125 | 306,915 | ||||||||||||||
Diluted shares outstanding (000's) | 305,623 | 311,608 | 307,581 | 311,424 | ||||||||||||||
(a) | Sales for the 2011 quarter and year-to-date periods increased $38 million and $91 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $119 million and $294 million, respectively, due to currency effects versus 2010. | |
(b) | The 2010 year-to-date period includes a first quarter charge of $27 million ($26 million after-tax, or $0.08 per diluted share), related to the Venezuela currency devaluation. See appendix for non-GAAP measures which exclude the impact of this charge. |
PRAXAIR, INC. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Millions of dollars) | ||||||||
(UNAUDITED) | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 125 | $ | 39 | ||||
Accounts receivable - net | 1,860 | 1,664 | ||||||
Inventories | 445 | 399 | ||||||
Prepaid and other current assets | 274 | 276 | ||||||
TOTAL CURRENT ASSETS | 2,704 | 2,378 | ||||||
Property, plant and equipment - net | 9,754 | 9,532 | ||||||
Goodwill | 2,043 | 2,066 | ||||||
Other intangibles - net | 132 | 132 | ||||||
Other long-term assets | 1,269 | 1,166 | ||||||
TOTAL ASSETS | $ | 15,902 | $ | 15,274 | ||||
LIABILITIES AND EQUITY | ||||||||
Accounts payable | $ | 855 | $ | 830 | ||||
Short-term debt | 477 | 370 | ||||||
Current portion of long-term debt | 24 | 32 | ||||||
Other current liabilities | 813 | 878 | ||||||
TOTAL CURRENT LIABILITIES | 2,169 | 2,110 | ||||||
Long-term debt | 5,809 | 5,155 | ||||||
Other long-term liabilities | 1,803 | 1,864 | ||||||
TOTAL LIABILITIES | 9,781 | 9,129 | ||||||
EQUITY | ||||||||
Praxair, Inc. shareholders' equity | 5,753 | 5,792 | ||||||
Noncontrolling interests | 368 | 353 | ||||||
TOTAL EQUITY | 6,121 | 6,145 | ||||||
TOTAL LIABILITIES AND EQUITY | $ | 15,902 | $ | 15,274 | ||||
PRAXAIR, INC. AND SUBSIDIARIES | |||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||
(Millions of dollars) | |||||||||||||||||
(UNAUDITED) | |||||||||||||||||
Quarter Ended | Year to Date | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||||
OPERATIONS | |||||||||||||||||
Net income - Praxair, Inc. | $ | 429 | $ | 377 | $ | 1,252 | $ | 1,062 | |||||||||
Noncontrolling interests | 14 | 11 | 39 | 30 | |||||||||||||
Net income (including noncontrolling interests) | 443 | 388 | 1,291 | 1,092 | |||||||||||||
Adjustments to reconcile net income to net cash provided | |||||||||||||||||
by operating activities: | |||||||||||||||||
Venezuela currency devaluation, net of payments - pre-tax | - | (1 | ) | - | 23 | ||||||||||||
Deferred income taxes | (49 | ) | 11 | 33 | 111 | ||||||||||||
Depreciation and amortization | 256 | 227 | 754 | 685 | |||||||||||||
Accounts receivable | 65 | (91 | ) | (202 | ) | (139 | ) | ||||||||||
Inventory | 7 | (30 | ) | (43 | ) | (27 | ) | ||||||||||
Payables and accruals | 105 | 89 | (48 | ) | 61 | ||||||||||||
Pension contributions | (2 | ) | (3 | ) | (87 | ) | (117 | ) | |||||||||
Other | (93 | ) | 6 | (34 | ) | (74 | ) | ||||||||||
Net cash provided by operating activities | 732 | 596 | 1,664 | 1,615 | |||||||||||||
INVESTING | |||||||||||||||||
Capital expenditures | (458 | ) | (324 | ) | (1,225 | ) | (937 | ) | |||||||||
Acquisitions, net of cash acquired | (19 | ) | (114 | ) | (99 | ) | (134 | ) | |||||||||
Divestitures and asset sales | 3 | 23 | 40 | 44 | |||||||||||||
Net cash used for investing activities | (474 | ) | (415 | ) | (1,284 | ) | (1,027 | ) | |||||||||
FINANCING | |||||||||||||||||
Debt increase (decrease) - net | 204 | 8 | 725 | (19 | ) | ||||||||||||
Issuances of common stock | 22 | 79 | 164 | 134 | |||||||||||||
Purchases of common stock | (273 | ) | (133 | ) | (758 | ) | (273 | ) | |||||||||
Cash dividends - Praxair, Inc. shareholders | (150 | ) | (139 | ) | (453 | ) | (414 | ) | |||||||||
Excess tax benefit on stock option exercises | 6 | 25 | 47 | 38 | |||||||||||||
Noncontrolling interest transactions and other | (3 | ) | (6 | ) | (4 | ) | (17 | ) | |||||||||
Net cash provided by (used for) financing activities | (194 | ) | (166 | ) | (279 | ) | (551 | ) | |||||||||
Effect of exchange rate changes on cash and | |||||||||||||||||
cash equivalents | (19 | ) | 8 | (15 | ) | (11 | ) | ||||||||||
Change in cash and cash equivalents | 45 | 23 | 86 | 26 | |||||||||||||
Cash and cash equivalents, beginning-of-period | 80 | 48 | 39 | 45 | |||||||||||||
Cash and cash equivalents, end-of-period | $ | 125 | $ | 71 | $ | 125 | $ | 71 | |||||||||
PRAXAIR, INC. AND SUBSIDIARIES | ||||||||||||||||
SEGMENT INFORMATION | ||||||||||||||||
(Millions of dollars) | ||||||||||||||||
(UNAUDITED) | ||||||||||||||||
Quarter Ended | Year to Date | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
SALES | ||||||||||||||||
North America (a) | $ | 1,427 | $ | 1,282 | $ | 4,132 | $ | 3,801 | ||||||||
Europe (b) | 358 | 322 | 1,068 | 995 | ||||||||||||
South America (c) | 607 | 506 | 1,776 | 1,454 | ||||||||||||
Asia (d) | 341 | 287 | 992 | 825 | ||||||||||||
Surface Technologies (e) | 163 | 141 | 488 | 418 | ||||||||||||
Total sales | $ | 2,896 | $ | 2,538 | $ | 8,456 | $ | 7,493 | ||||||||
OPERATING PROFIT | ||||||||||||||||
North America (a) | $ | 350 | $ | 314 | 1,008 | 885 | ||||||||||
Europe (b) | 65 | 59 | 199 | 199 | ||||||||||||
South America (c) | 140 | 117 | 412 | 340 | ||||||||||||
Asia (d) | 51 | 38 | 153 | 116 | ||||||||||||
Surface Technologies (e) | 26 | 23 | 78 | 64 | ||||||||||||
Segment operating profit | 632 | 551 | 1,850 | 1,604 | ||||||||||||
Venezuela currency devaluation | - | - | - | (27 | ) | |||||||||||
Total operating profit | $ | 632 | $ | 551 | $ | 1,850 | $ | 1,577 | ||||||||
(a) | North American 2011 sales for the quarter and year-to-date periods increased $22 million and $40 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $26 million and $71 million, respectively, due to currency effects versus 2010. | |
(b) | European 2011 sales for the quarter and year-to-date periods increased $4 million and $5 million, respectively, due to cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $41 million and $63 million, respectively, due to currency effects versus 2010. | |
(c) | South American 2011 sales for the quarter and year-to-date periods increased $6 million and $19 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $30 million and $113 million, respectively, due to currency effects versus 2010. | |
(d) | Asian 2011 sales for the quarter and year-to-date periods increased $3 million and $21 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $14 million and $31 million, respectively, due to currency effects versus 2010. | |
(e) |
Surface Technologies 2011 sales for the quarter and year-to-date periods increased $3 million and $6 million, respectively, due to higher cost pass-through, with minimal impact on operating profit compared to 2010. Sales for the quarter and year-to-date periods increased $8 million and $16 million, respectively due to currency effects versus 2010. |
PRAXAIR, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||
QUARTERLY FINANCIAL SUMMARY | ||||||||||||||||||||||||||||||
(Millions of dollars, except per share data) | ||||||||||||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||||||||||||
2011 |
2010 | |||||||||||||||||||||||||||||
Q3 | Q2 | Q1 | Q4 (b) | Q3 | Q2 | Q1 (b) | ||||||||||||||||||||||||
FROM THE INCOME STATEMENT | ||||||||||||||||||||||||||||||
Sales | $ | 2,896 | $ | 2,858 | $ | 2,702 | $ | 2,623 | $ | 2,538 | $ | 2,527 | $ | 2,428 | ||||||||||||||||
Cost of sales | 1,684 | 1,640 | 1,536 | 1,492 | 1,444 | 1,437 | 1,381 | |||||||||||||||||||||||
Selling, general and administrative | 307 | 309 | 308 | 301 | 299 | 302 | 294 | |||||||||||||||||||||||
Depreciation and amortization | 256 | 254 | 244 | 240 | 227 | 230 | 228 | |||||||||||||||||||||||
Research and development | 22 | 23 | 22 | 23 | 19 | 19 | 18 | |||||||||||||||||||||||
U.S. Homecare divestiture and Venezuela devaluation | - | - | - | 58 | - | - | 27 | |||||||||||||||||||||||
Other income (expenses) – net | 5 | (5 | ) | (1 | ) | (4 | ) | 2 | 8 | (1 | ) | |||||||||||||||||||
Operating profit | 632 | 627 | 591 | 505 | 551 | 547 | 479 | |||||||||||||||||||||||
Interest expense - net | 36 | 36 | 35 | 28 | 29 | 29 | 32 | |||||||||||||||||||||||
Income taxes | 166 | 163 | 156 | 346 | 146 | 145 | 131 | |||||||||||||||||||||||
Income from equity investments | 13 | 11 | 9 | 11 | 12 | 8 | 7 | |||||||||||||||||||||||
Net income (including noncontrolling interests) | 443 | 439 | 409 | 142 | 388 | 381 | 323 | |||||||||||||||||||||||
Less: noncontrolling interests | (14 | ) | (14 | ) | (11 | ) | (9 | ) | (11 | ) | (10 | ) | (9 | ) | ||||||||||||||||
Net income - Praxair, Inc. | $ | 429 | $ | 425 | $ | 398 | $ | 133 | $ | 377 | $ | 371 | $ | 314 | ||||||||||||||||
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS | ||||||||||||||||||||||||||||||
Diluted earnings per share | $ | 1.40 | $ | 1.38 | $ | 1.29 | $ | 0.43 | $ | 1.21 | $ | 1.19 | $ | 1.01 | ||||||||||||||||
Cash dividends per share | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.45 | $ | 0.45 | $ | 0.45 | $ | 0.45 | ||||||||||||||||
Diluted weighted average shares outstanding (000's) | 305,623 | 308,253 | 308,595 | 310,733 | 311,608 | 311,109 | 311,159 | |||||||||||||||||||||||
FROM THE BALANCE SHEET | ||||||||||||||||||||||||||||||
Total debt | $ | 6,310 | $ | 6,119 | $ | 5,838 | $ | 5,557 | $ | 5,077 | $ | 5,026 | $ | 5,404 | ||||||||||||||||
Total capital (a) | 12,431 | 12,889 | 12,375 | 11,702 | 11,407 | 10,793 | 11,134 | |||||||||||||||||||||||
Debt-to-capital ratio (a) | 50.8 | % | 47.5 | % | 47.2 | % | 47.5 | % | 44.5 | % | 46.6 | % | 48.5 | % | ||||||||||||||||
FROM THE STATEMENT OF CASH FLOWS | ||||||||||||||||||||||||||||||
Cash flow from operations | $ | 732 | $ | 573 | $ | 359 | $ | 290 | $ | 596 | $ | 536 | $ | 483 | ||||||||||||||||
Capital expenditures | 458 | 433 | 334 | 451 | 324 | 325 | 288 | |||||||||||||||||||||||
Acquisitions | 19 | 80 | - | 14 | 114 | 16 | 4 | |||||||||||||||||||||||
Cash dividends | 150 | 151 | 152 | 137 | 139 | 137 | 138 | |||||||||||||||||||||||
OTHER INFORMATION | ||||||||||||||||||||||||||||||
After-tax return on capital (ROC) (a) | 14.8 | % | 14.7 | % | 14.4 | % | 14.4 | % | 14.7 | % | 14.7 | % | 13.6 | % | ||||||||||||||||
Return on Praxair, Inc. shareholders' equity (ROE) (a) | 28.3 | % | 27.1 | % | 26.6 | % | 26.4 | % | 26.4 | % | 27.4 | % | 25.4 | % | ||||||||||||||||
Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) (a) | $ | 901 | $ | 892 | $ | 844 | $ | 814 | $ | 790 | $ | 785 | $ | 741 | ||||||||||||||||
Debt-to-adjusted EBITDA ratio (a) | 1.7 | 1.7 | 1.7 | 1.6 | 1.6 | 1.7 | 1.8 | |||||||||||||||||||||||
Number of employees | 25,793 | 25,678 | 25,482 | 26,261 | 26,025 | 25,877 | 26,010 | |||||||||||||||||||||||
SEGMENT DATA | ||||||||||||||||||||||||||||||
SALES | ||||||||||||||||||||||||||||||
North America | $ | 1,427 | $ | 1,371 | $ | 1,334 | $ | 1,310 | $ | 1,282 | $ | 1,281 | $ | 1,238 | ||||||||||||||||
Europe | 358 | 367 | 343 | 339 | 322 | 335 | 338 | |||||||||||||||||||||||
South America | 607 | 611 | 558 | 516 | 506 | 490 | 458 | |||||||||||||||||||||||
Asia | 341 | 341 | 310 | 308 | 287 | 280 | 258 | |||||||||||||||||||||||
Surface Technologies | 163 | 168 | 157 | 150 | 141 | 141 | 136 | |||||||||||||||||||||||
Total sales | $ | 2,896 | $ | 2,858 | $ | 2,702 | $ | 2,623 | $ | 2,538 | $ | 2,527 | $ | 2,428 | ||||||||||||||||
OPERATING PROFIT | ||||||||||||||||||||||||||||||
North America | $ | 350 | $ | 336 | $ | 322 | $ | 311 | $ | 314 | $ | 294 | $ | 277 | ||||||||||||||||
Europe | 65 | 69 | 65 | 68 | 59 | 73 | 67 | |||||||||||||||||||||||
South America | 140 | 139 | 133 | 114 | 117 | 114 | 109 | |||||||||||||||||||||||
Asia | 51 | 56 | 46 | 50 | 38 | 44 | 34 | |||||||||||||||||||||||
Surface Technologies | 26 | 27 | 25 | 20 | 23 | 22 | 19 | |||||||||||||||||||||||
Segment operating profit | 632 | 627 | 591 | 563 | 551 | 547 | 506 | |||||||||||||||||||||||
U.S. Homecare divestiture and Venezuela devaluation | - | (58 | ) | - | (27 | ) | ||||||||||||||||||||||||
Total operating profit | $ | 632 | $ | 627 | $ | 591 | $ | 505 | $ | 551 | $ | 547 | $ | 479 | ||||||||||||||||
(a) | Non-GAAP measure, see Appendix. | |
(b) | The fourth quarter 2010 includes: (i) a net tax charge of $250 million, or $0.80 per diluted share, related to a Spanish income tax settlement; (ii) a pre-tax charge of $58 million ($40 million after-tax, or $0.13 per diluted share) related to the U.S. Homecare divestiture; and (iii) a net repatriation tax benefit of $35 million, or $0.11 per diluted share. The first quarter 2010 includes a charge of $27 million ($26 million after-tax, or $0.08 per diluted share), related to the Venezuela currency devaluation. Also, see the appendix for non-GAAP measures which exclude the impact of these items. |
PRAXAIR, INC. AND SUBSIDIARIES | |
APPENDIX | |
NON-GAAP MEASURES | |
(Millions of dollars, except per share data) | |
(UNAUDITED) |
The following non-GAAP measures are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management use to help evaluate the company’s financing leverage, return on net assets employed and operating performance. Items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures. Adjusted amounts exclude the impact of the 2010 fourth quarter Spanish income tax settlement, business divestiture and repatriation tax benefit which helps investors understand underlying performance on a comparable basis.
2011 |
2010 |
|||||||||||||||||||||||||||||||||
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||||||
Debt to Capital Ratio - The debt-to-capital ratio is a measure used by investors, financial analysts and management to provide a measure of financial leverage and insights into how the company is financing its operations. |
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Total debt | $ | 6,310 | $ | 6,119 | $ | 5,838 | $ | 5,557 | $ | 5,077 | $ | 5,026 | $ | 5,404 | ||||||||||||||||||||
Equity: | ||||||||||||||||||||||||||||||||||
Praxair, Inc. shareholders' equity | 5,753 | 6,400 | 6,165 | 5,792 | 5,991 | 5,452 | 5,398 | |||||||||||||||||||||||||||
Noncontrolling interests | 368 | 370 | 372 | 353 | 339 | 315 | 332 | |||||||||||||||||||||||||||
Total equity | 6,121 | 6,770 | 6,537 | 6,145 | 6,330 | 5,767 | 5,730 | |||||||||||||||||||||||||||
Total Capital | $ | 12,431 | $ | 12,889 | $ | 12,375 | $ | 11,702 | $ | 11,407 | $ | 10,793 | $ | 11,134 | ||||||||||||||||||||
Debt-to-capital ratio | 50.8 | % | 47.5 | % | 47.2 | % | 47.5 | % | 44.5 | % | 46.6 | % | 48.5 | % | ||||||||||||||||||||
After -tax return on Capital (ROC) - After-tax return on capital is a measure used by investors, financial analysts and management to evaluate the return on net assets employed in the business. ROC measures the after-tax operating profit that the company was able to generate with the investments made by all parties in the business (debt, noncontrolling interests and Praxair, Inc. shareholders’ equity). |
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Operating profit (a) | $ | 632 | $ | 627 | $ | 591 | $ | 563 | $ | 551 | $ | 547 | $ | 506 | ||||||||||||||||||||
Less: income taxes (a) | (166 | ) | (163 | ) | (156 | ) | (149 | ) | (146 | ) | (145 | ) | (132 | ) | ||||||||||||||||||||
Less: tax benefit on interest expense | (10 | ) | (10 | ) | (10 | ) | (8 | ) | (8 | ) | (8 | ) | (9 | ) | ||||||||||||||||||||
Add: income from equity investments | 13 | 11 | 9 | 11 | 12 | 8 | 7 | |||||||||||||||||||||||||||
Net operating profit after-tax (NOPAT) | $ | 469 | $ | 465 | $ | 434 | $ | 417 | $ | 409 | $ | 402 | $ | 372 | ||||||||||||||||||||
Beginning capital | $ | 12,889 | $ | 12,375 | $ | 11,702 | $ | 11,407 | $ | 10,793 | $ | 11,134 | $ | 10,703 | ||||||||||||||||||||
Ending capital | $ | 12,431 | $ | 12,889 | $ | 12,375 | $ | 11,702 | $ | 11,407 | $ | 10,793 | $ | 11,134 | ||||||||||||||||||||
Average capital | $ | 12,660 | $ | 12,632 | $ | 12,039 | $ | 11,555 | $ | 11,100 | $ | 10,964 | $ | 10,919 | ||||||||||||||||||||
Average capital - 5 quarter average | ||||||||||||||||||||||||||||||||||
ROC % | 3.7 | % | 3.7 | % | 3.6 | % | 3.6 | % | 3.7 | % | 3.7 | % | 3.4 | % | ||||||||||||||||||||
ROC % (annualized) | 14.8 | % | 14.7 | % | 14.4 | % | 14.4 | % | 14.7 | % | 14.7 | % | 13.6 | % | ||||||||||||||||||||
Return on Praxair, Inc. Shareholder's equity (ROE) - Return on Praxair, Inc. shareholders' equity is a measure used by investors, financial analysts and management to evaluate operating performance from a Praxair shareholder perspective. ROE measures the net income attributable to Praxair, Inc. that the company was able to generate with the money shareholders have invested. |
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Net income - Praxair, Inc. (a) | $ | 429 | $ | 425 | $ | 398 | $ | 388 | $ | 377 | $ | 371 | $ | 340 | ||||||||||||||||||||
Beginning Praxair, Inc. shareholders' equity | $ | 6,400 | $ | 6,165 | $ | 5,792 | $ | 5,991 | $ | 5,452 | $ | 5,398 | $ | 5,315 | ||||||||||||||||||||
Ending Praxair, Inc. shareholders' equity | $ | 5,753 | $ | 6,400 | $ | 6,165 | $ | 5,792 | $ | 5,991 | $ | 5,452 | $ | 5,398 | ||||||||||||||||||||
Average Praxair, Inc. shareholders' equity | $ | 6,077 | $ | 6,283 | $ | 5,979 | $ | 5,892 | $ | 5,722 | $ | 5,425 | $ | 5,357 | ||||||||||||||||||||
ROE % | 7.1 | % | 6.8 | % | 6.7 | % | 6.6 | % | 6.6 | % | 6.8 | % | 6.3 | % | ||||||||||||||||||||
ROE % (annualized) | 28.3 | % | 27.1 | % | 26.6 | % | 26.4 | % | 26.4 | % | 27.4 | % | 25.4 | % | ||||||||||||||||||||
Adjusted EBITDA and Debt-to-Adjusted EBITDA Ratio- These measures are used by investors, financial analysts and management to assess a company's ability to meet it's financial obligations. |
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Net income - Praxair, Inc. (a) | $ | 429 | $ | 425 | $ | 398 | $ | 388 | $ | 377 | $ | 371 | $ | 340 | ||||||||||||||||||||
Add: noncontrolling interests | 14 | 14 | 11 | 9 | 11 | 10 | 9 | |||||||||||||||||||||||||||
Add: interest expense - net | 36 | 36 | 35 | 28 | 29 | 29 | 32 | |||||||||||||||||||||||||||
Add: income taxes (a) | 166 | 163 | 156 | 149 | 146 | 145 | 132 | |||||||||||||||||||||||||||
Add: depreciation and amortization | 256 | 254 | 244 | 240 | 227 | 230 | 228 | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 901 | $ | 892 | $ | 844 | $ | 814 | $ | 790 | $ | 785 | $ | 741 | ||||||||||||||||||||
Beginning total debt | $ | 6,119 | $ | 5,838 | $ | 5,557 | $ | 5,077 | $ | 5,026 | $ | 5,404 | $ | 5,055 | ||||||||||||||||||||
Ending total debt | $ | 6,310 | $ | 6,119 | $ | 5,838 | $ | 5,557 | $ | 5,077 | $ | 5,026 | $ | 5,404 | ||||||||||||||||||||
Average total debt | $ | 6,215 | $ | 5,979 | $ | 5,698 | $ | 5,317 | $ | 5,052 | $ | 5,215 | $ | 5,230 | ||||||||||||||||||||
Debt-to-adjusted EBITDA ratio | 6.9 | 6.7 | 6.8 | 6.5 | 6.4 | 6.6 | 7.1 | |||||||||||||||||||||||||||
Debt-to-adjusted EBITDA ratio (annualized) | 1.7 | 1.7 | 1.7 | 1.6 | 1.6 | 1.7 | 1.8 | |||||||||||||||||||||||||||
(a) |
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The following table presents adjusted amounts for Operating Profit and Operating Profit Margin, Income Taxes, Effective Tax Rate, Net income - Praxair, Inc., and Diluted EPS for the First and Fourth Quarter of 2010 and percentage change in Diluted EPS Guidance for the full year 2011. Certain 2011 amounts are included for reference purposes. |
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4th Qrt. | 1st Qrt. | |||||||||||
2010 | 2010 | |||||||||||
Adjusted Operating Profit and Operating Profit Margin * |
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Reported operating profit | $ | 505 | $ | 479 | ||||||||
Add: U.S. Homecare divestiture | 58 | - | ||||||||||
Add: Venezuela currency devaluation | - | 27 | ||||||||||
Adjusted operating profit | $ | 563 | $ | 506 | ||||||||
Reported sales | $ | 2,623 | $ | 2,428 | ||||||||
Adjusted operating profit margin | 21 | % | 21 | % | ||||||||
Adjusted Income Taxes * |
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Reported income taxes | $ | 346 | $ | 131 | ||||||||
Less: Spanish income tax settlement | (250 | ) | - | |||||||||
Add: U.S. Homecare divestiture | 18 | - | ||||||||||
Add: Repatriation tax benefit | 35 | - | ||||||||||
Add: Venezuela currency devaluation | - | 1 | ||||||||||
Total adjustments | (197 | ) | 1 | |||||||||
Adjusted income taxes | $ | 149 | $ | 132 | ||||||||
Adjusted Effective Tax Rate * |
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Reported income before income taxes and equity investments | $ | 477 | $ | 447 | ||||||||
Add: U.S. Homecare divestiture | 58 | - | ||||||||||
Add: Venezuela currency devaluation | - | 27 | ||||||||||
Adjusted income before income taxes and equity investments | $ | 535 | $ | 474 | ||||||||
Adjusted income taxes (above) | $ | 149 | $ | 132 | ||||||||
Adjusted effective tax rate | 28 | % | 28 | % | ||||||||
Adjusted Net Income - Praxair, Inc. * |
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Reported net income - Praxair, Inc. | $ | 133 | $ | 314 | ||||||||
Add: Spanish income tax settlement | 250 | - | ||||||||||
Add: U.S. Homecare divestiture | 40 | - | ||||||||||
Less: Repatriation tax benefit | (35 | ) | - | |||||||||
Add: Venezuela currency devaluation and other charges (b) | - | 26 | ||||||||||
Total adjustments | 255 | 26 | ||||||||||
Adjusted net income - Praxair, Inc. | $ | 388 | $ | 340 | ||||||||
Adjusted Diluted EPS * |
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Diluted weighted average shares | 310,733 | 311,159 | ||||||||||
Reported diluted EPS | $ | 0.43 | $ | 1.01 | ||||||||
Add: Spanish income tax settlement | 0.80 | - | ||||||||||
Add: U.S. Homecare divestiture | 0.13 | - | ||||||||||
Less: Repatriation tax benefit | (0.11 | ) | - | |||||||||
Add: Venezuela currency devaluation | - | 0.08 | ||||||||||
Total adjustments | 0.82 | 0.08 | ||||||||||
Adjusted diluted EPS | $ | 1.25 | $ | 1.09 | ||||||||
Percentage Change in Adjusted Fourth Quarter and Full Year 2011 Diluted EPS Guidance * | ||||||||||||||||||
Fourth Quarter 2011 | Full Year 2011 | |||||||||||||||||
Low End | High End | Low End | High End | |||||||||||||||
2011 diluted EPS guidance ** | $ | 1.33 | $ | 1.38 | $ | 5.40 | $ | 5.45 | ||||||||||
Reported 2010 diluted EPS | 0.43 | 0.43 | 3.84 | 3.84 | ||||||||||||||
Add: Spanish income tax settlement | 0.80 | 0.80 | 0.80 | 0.80 | ||||||||||||||
Add: Business divestiture | 0.13 | 0.13 | 0.13 | 0.13 | ||||||||||||||
Less: Repatriation tax benefit | (0.11 | ) | (0.11 | ) | (0.11 | ) | (0.11 | ) | ||||||||||
Add: Venezuela currency devaluation | 0.08 | 0.08 | ||||||||||||||||
Total adjustments | 0.82 | 0.82 | 0.90 | 0.90 | ||||||||||||||
2010 Adjusted diluted EPS * | $ | 1.25 | $ | 1.25 | $ | 4.74 | $ | 4.74 | ||||||||||
Percentage change from 2010 | 6 | % | 10 | % | 14 | % | 15 | % | ||||||||||
* | Adjusted for non-GAAP adjustments to eliminate the impact of (i) 2010 fourth quarter U.S. Homecare divestiture charge; (ii) 2010 fourth quarter Spanish income tax settlement; (iii) 2010 fourth quarter repatriation tax benefit and (iv) 2010 first quarter Venezuela currency devaluation. See Praxair’s 2010 Annual Report on Form 10-K for additional information. | |
** | Excludes gain on Yara Praxair acquisition and any potential restructuring costs. |
CONTACT:
Praxair, Inc.
Media
Susan Szita Gore, 203-837-2311
susan_szita-gore@praxair.com
or
Investors
Kelcey
Hoyt, 203-837-2118
kelcey_hoyt@praxair.com