News Column

Praxair Reports Second-Quarter 2014 Results

July 23, 2014

  • Sales of $3.1 billion, 3% above prior-year quarter
  • EPS of $1.58, up 6% versus prior-year quarter
  • Strong operating and EBITDA* margins of 22.4% and 32.1%, respectively
  • Cash flow from operations strong at $847 million, 27% of sales
  • $1.9 billion project backlog; bid activity strongest in North America and Asia
  • EPS guidance: 2014 full-year $6.30 to $6.45, up 6% to 9% year-over-year,* and 3Q14 $1.58 to $1.65

    DANBURY, Conn.--(BUSINESS WIRE)-- Praxair, Inc. (NYSE:PX) reported second-quarter net income of $467 million and diluted earnings per share of $1.58, 5% and 6% above the prior-year quarter, respectively.

    Sales in the second quarter were $3,113 million, 3% above the prior-year quarter, and up 5% excluding foreign currency. Organic sales grew 4% driven by new project start-ups, primarily in North America and Asia, and price across all operating segments. By end-market, sales growth was strongest for metals, energy and food & beverage customers. Acquisitions contributed 1% growth in the quarter.

    Operating profit in the second quarter was $697 million, 5% above the prior-year quarter. Excluding negative currency translation impacts, operating profit rose 7% primarily driven by higher pricing and productivity gains. Operating profit as a percentage of sales was a strong 22.4% and EBITDA margin grew to 32.1%.*

    Second-quarter cash flow from operations was $847 million and funded capital expenditures of $384 million, primarily for new production plants under long-term contracts with customers. Acquisition expenditures in the quarter were $46 million, primarily related to U.S. packaged gas businesses. The company paid dividends of $190 million and repurchased $140 million of stock, net of issuances. The after-tax return on capital and return on equity for the quarter were 12.6% and 28.3%, respectively.*

    Commenting on the financial results and business outlook, Chairman and Chief Executive Officer Steve Angel said, “Praxair delivered another solid quarter with operating profit growth of 7%, outpacing sales growth of 5%, excluding currency headwinds, despite moderating growth in emerging markets. We achieved superior operating cash flow as a percentage of sales of 27% as a result of our consistent focus on high-quality growth and strong return on capital.

    “Sales growth was driven by new projects in North America and Asia, as well as disciplined price execution across all of our operating segments. We grew the base business modestly in North America, Europe and Asia, but this growth was mitigated by weaker South American volumes as a result of negative industrial production in Brazil.

    “As we look to the remainder of the year, we don’t anticipate significant economic improvement in the second half. However, Praxair’s relentless focus on operational excellence, project execution and financial discipline will continue to deliver increasing cash flow and earnings per share for our shareholders.”

    For the third quarter of 2014, Praxair expects diluted earnings per share in the range of $1.58 to $1.65.

    For the full year of 2014, Praxair expects sales in the range of $12.4 billion to $12.7 billion. The company expects diluted earnings per share to be in the range of $6.30 to $6.45, 6% to 9%* above the prior year. This year-over-year growth rate was reduced by approximately 2% negative foreign currency translation impact. Full-year capital expenditures are expected to be about $1.8 billion, and the effective tax rate is forecasted to remain at about 28%.

    Following is additional detail on second-quarter 2014 results by segment.

    In North America, second-quarter sales were $1,628 million, 5% above the prior-year quarter and up 7% excluding negative currency translation impacts. Organic sales growth was 5% driven primarily by higher pricing and increased sales to the energy end-market as on-site volumes increased from new project start-ups for hydrogen supply to refinery customers. Acquisitions contributed 1% growth. Operating profit of $398 million grew 4% from the prior year due to higher pricing, higher volumes and ongoing productivity initiatives.

    In Europe, second-quarter sales were $408 million, up 7% versus the second quarter of 2013. Acquisitions, primarily Dominion Technology Gases, contributed 3% growth. Organic sales growth of 1% came from higher pricing. Operating profit of $78 million increased 13% versus the prior-year quarter, and was driven by positive currency translation, acquisitions and higher price.

    In South America, second-quarter sales were $509 million. Sales grew 3% from the prior-year quarter, excluding an 8% negative currency impact, primarily due to higher overall pricing. Operating profit was $113 million, up 1% excluding currency effects, due to higher pricing partially offset by lower volumes in Brazil and cost inflation.

    Sales in Asia were $394 million in the quarter, up 4% from the prior year driven by higher pricing and volume growth in India, China, Korea and Thailand. Sales growth came primarily from metals, energy and electronics customers. Operating profit was $76 million, 25% above the prior-year quarter due primarily to higher volumes, price and productivity initiatives.

    Praxair Surface Technologies had second-quarter sales of $174 million, 5% above the prior year. Organic sales increased 4% primarily from higher price. Operating profit was $32 million, as compared to $31 million in the prior year, due primarily to higher price.

    About Praxair

    Praxair, Inc., a Fortune 250 company with 2013 sales of $12 billion, is the largest industrial gases company in North and South America and one of the largest worldwide. The company produces, sells and distributes atmospheric, process and specialty 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 many others. More information about Praxair, Inc. is available at www.praxair.com.

    *See attachments for calculations of non-GAAP measures.

    Attachments: Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information, Quarterly Financial Summary, Non-GAAP Reconciliations and Appendix: Non-GAAP Measures.

    A teleconference about Praxair’s second-quarter results is being held this morning, July 23, at 11:00 am Eastern Daylight Time. The number is (617) 399-5137 -- Passcode: 64992155. The call also is available as a webcast live and on-demand at www.praxair.com/investors. Materials to be used in the teleconference are also available on the website.

    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; the impact of information technology system failures, network disruptions and breaches in data security; 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. Additionally, financial projections or estimates exclude the impact of special items which the company believes are not indicative of ongoing business performance. 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 EndedYear to Date
    June 30,June 30,
      2014     2013     2014     2013  
     
    SALES $ 3,113 $ 3,014 $ 6,139 $ 5,902
    Cost of sales 1,767 1,710 3,493 3,348
    Selling, general and administrative 335 344 661 681
    Depreciation and amortization 293 275 578 541
    Research and development 24 24 47 48
    Venezuela currency devaluation - - - 23
    Other income (expense) - net   3     4     12     4  
    OPERATING PROFIT 697 665 1,372 1,265
    Interest expense - net   43     41     89     81  
    INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS 654 624 1,283 1,184
    Income taxes   183     174     359     338  
    INCOME BEFORE EQUITY INVESTMENTS 471 450 924 846
    Income from equity investments   10     11     19     21  
    NET INCOME (INCLUDING NONCONTROLLING INTERESTS) 481 461 943 867
    Less: noncontrolling interests   (14 )   (16 )   (28 )   (31 )
    NET INCOME - PRAXAIR, INC. $ 467   $ 445   $ 915   $ 836  
     
    PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
     
    Basic earnings per share $ 1.59 $ 1.50 $ 3.12 $ 2.82
     
    Diluted earnings per share $ 1.58 $ 1.49 $ 3.08 $ 2.79
     
    Cash dividends $ 0.65 $ 0.60 $ 1.30 $ 1.20
     
    WEIGHTED AVERAGE SHARES OUTSTANDING
    Basic shares outstanding (000's) 292,945 295,668 293,570 296,136
    Diluted shares outstanding (000's) 295,976 298,654 296,679 299,290
     

    Note: See page 9 for a reconciliation to 2013 adjusted amounts which are non-GAAP.

     



           
    PRAXAIR, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (Millions of dollars)
    (UNAUDITED)
     
    June 30,December 31,
    20142013
    ASSETS
    Cash and cash equivalents $ 173 $ 138
    Accounts receivable - net 2,075 1,892
    Inventories 542 506
    Prepaid and other current assets   369   380
    TOTAL CURRENT ASSETS 3,159 2,916
     
    Property, plant and equipment - net 12,552 12,278
    Goodwill 3,270 3,194
    Other intangibles - net 619 596
    Other long-term assets   1,325   1,271
    TOTAL ASSETS $ 20,925 $ 20,255
    LIABILITIES AND EQUITY
    Accounts payable $ 914 $ 921
    Short-term debt 595 782
    Current portion of long-term debt 5 3
    Other current liabilities   1,032   958
    TOTAL CURRENT LIABILITIES 2,546 2,664
    Long-term debt 8,565 8,026
    Other long-term liabilities   2,314   2,255
    TOTAL LIABILITIES 13,425 12,945
     
    REDEEMABLE NONCONTROLLING INTERESTS 194 307
     
    EQUITY
    Praxair, Inc. shareholders' equity 6,911 6,609
    Noncontrolling interests   395   394
    TOTAL EQUITY   7,306   7,003
    TOTAL LIABILITIES AND EQUITY $ 20,925 $ 20,255
     


                   
    PRAXAIR, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Millions of dollars)
    (UNAUDITED)
     
    Quarter EndedYear to Date
    June 30,June 30,
      2014     2013     2014     2013  
    OPERATIONS
    Net income - Praxair, Inc. $ 467 $ 445 $ 915 $ 836
    Noncontrolling interests   14     16     28     31  
    Net income (including noncontrolling interests) 481 461 943 867
     
    Adjustments to reconcile net income to net cash provided
    by operating activities:
    Venezuela currency devaluation - - - 23
    Depreciation and amortization 293 275 578 541
    Accounts receivable (33 ) (3 ) (169 ) (164 )
    Inventory (17 ) (11 ) (33 ) (27 )
    Payables and accruals 84 (6 ) (32 ) (6 )
    Pension contributions (4 ) (38 ) (13 ) (43 )
    Deferred income taxes and other   43     (101 )   109     (142 )
    Net cash provided by operating activities   847     577     1,383     1,049  
     
    INVESTING
    Capital expenditures (384 ) (522 ) (777 ) (988 )
    Acquisitions, net of cash acquired (46 ) (171 ) (170 ) (1,269 )
    Divestitures and asset sales   5     7     71     38  
    Net cash used for investing activities   (425 )   (686 )   (876 )   (2,219 )
     
    FINANCING
    Debt increase (decrease) - net (100 ) 439 364 1,755
    Issuances of common stock 20 43 69 76
    Purchases of common stock (160 ) (195 ) (446 ) (345 )
    Cash dividends - Praxair, Inc. shareholders (190 ) (177 ) (381 ) (355 )
    Excess tax benefit on stock option exercises 4 10 24 24
    Noncontrolling interest transactions and other   29     (12 )   (111 )   (17 )
    Net cash provided by (used for) financing activities (397 ) 108 (481 ) 1,138
     
    Effect of exchange rate changes on cash and
    cash equivalents   4     (10 )   9     (23 )
     
    Change in cash and cash equivalents 29 (11 ) 35 (55 )
    Cash and cash equivalents, beginning-of-period   144     113     138     157  
     
    Cash and cash equivalents, end-of-period $ 173   $ 102   $ 173   $ 102  
     


                   
    PRAXAIR, INC. AND SUBSIDIARIES
    SEGMENT INFORMATION
    (Millions of dollars)
    (UNAUDITED)
     
    Quarter EndedYear to Date
    June 30,June 30,
    2014201320142013
    SALES
    North America $ 1,628 $ 1,552 $ 3,208 $ 3,009
    Europe 408 382 805 752
    South America 509 536 997 1,067
    Asia 394 379 786 746
    Surface Technologies   174   165   343   328  
    Total sales $ 3,113 $ 3,014 $ 6,139 $ 5,902  
     
    OPERATING PROFIT
    North America $ 398 $ 381 $ 776 $ 739
    Europe 78 69 157 131
    South America 113 123 226 237
    Asia 76 61 151 124
    Surface Technologies   32   31   62   57  
    Segment operating profit 697 665 1,372 1,288
    Venezuela currency devaluation   -   -   -   (23 )
    Total operating profit $ 697 $ 665 $ 1,372 $ 1,265  
     
     


                           
    PRAXAIR, INC. AND SUBSIDIARIES
    QUARTERLY FINANCIAL SUMMARY
    (Millions of dollars, except per share data)
    (UNAUDITED)
     
    20142013  
    Q2Q1Q4 (b)Q3 (b)Q2Q1 (b)
    FROM THE INCOME STATEMENT
    Sales $ 3,113 $ 3,026 $ 3,010 $ 3,013 $ 3,014 $ 2,888
    Cost of sales 1,767 1,726 1,699 1,697 1,710 1,638
    Selling, general and administrative 335 326 332 336 344 337
    Depreciation and amortization 293 285 287 281 275 266
    Research and development 24 23 26 24 24 24
    Venezuela currency devaluation and other charges - - - 9 - 23
    Other income (expenses) - net   3         9     24         4         4         -  
    Operating profit 697 675 690 670 665 600
    Interest expense - net 43 46 56 41 41 40
    Income taxes 183 176 136 175 174 164
    Income from equity investments   10         9     9         8         11         10  
    Net income (including noncontrolling interests) 481 462 507 462 461 406
    Less: noncontrolling interests   (14 )       (14 )   (33 )       (17 )       (16 )       (15 )
    Net income - Praxair, Inc. $ 467       $ 448   $ 474       $ 445       $ 445       $ 391  
     
    PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
    Diluted earnings per share $ 1.58 $ 1.51 $ 1.59 $ 1.49 $ 1.49 $ 1.30
    Cash dividends per share $ 0.65 $ 0.65 $ 0.60 $ 0.60 $ 0.60 $ 0.60
    Diluted weighted average shares outstanding (000's) 295,976 297,253 298,225 298,357 298,654 299,700
     
    FROM THE BALANCE SHEET
    Net debt (a) $ 8,992 $ 9,126 $ 8,673 $ 8,892 $ 9,004 $ 8,563
    Capital (a) $ 16,492 $ 16,319 $ 15,983 $ 15,757 $ 15,548 $ 15,344
    Debt-to-capital ratio (a) 54.5 % 55.9 % 54.3 % 56.4 % 57.9 % 55.8 %
     
    FROM THE STATEMENT OF CASH FLOWS
    Cash flow from operations $ 847 $ 536 $ 964 $ 904 $ 577 $ 472
    Capital expenditures 384 393 516 516 522 466
    Acquisitions 46 124 12 42 171 1,098
    Cash dividends 190 191 177 176 177 178
     
    OTHER INFORMATION
    After-tax return on capital (ROC) (a) 12.6 % 12.6 % 12.8 % 12.8 % 13.0 % 13.3 %
    Return on Praxair, Inc. shareholders' equity (ROE) (a) 28.3 % 28.7 % 28.6 % 28.4 % 28.4 % 28.1 %
    Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) (a) $ 1,000 $ 969 $ 986 $ 968 $ 951 $ 899
    Debt-to-adjusted EBITDA ratio (a) 2.3 2.3 2.2 2.2 2.1 2.1
    Number of employees 27,735 27,578 27,560 27,794 28,878 27,380
     
    SEGMENT DATA
    SALES
    North America $ 1,628 $ 1,580 $ 1,567 $ 1,588 $ 1,552 $ 1,457
    Europe 408 397 404 386 382 370
    South America 509 488 481 494 536 531
    Asia 394 392 394 385 379 367
    Surface Technologies   174         169     164         160         165         163  
    Total sales $ 3,113       $ 3,026   $ 3,010       $ 3,013       $ 3,014       $ 2,888  
    OPERATING PROFIT
    North America $ 398 $ 378 $ 393 $ 406 $ 381 $ 358
    Europe 78 79 75 64 69 62
    South America 113 113 115 115 123 114
    Asia 76 75 80 67 61 63
    Surface Technologies   32         30     27         27         31         26  
    Segment operating profit 697 675 690 679 665 623
    Venezuela currency devaluation and other charges   -         -     -         (9 )       -         (23 )
    Total operating profit $ 697       $ 675   $ 690       $ 670       $ 665       $ 600  

     

    (a)

     

    Non-GAAP measure, see Appendix.

     

    (b)

    2013 includes: (i) a charge of $18 million ($12 million after-tax, or $0.04 per diluted share) related to a bond redemption and an income tax benefit of $40 million ($24 million after non-controlling interests, or $0.08 per diluted share) related to the realignment of Praxair's Italian legal structure, both recorded during the fourth quarter; (ii) a charge of $9 million ($6 million after-tax, or $0.02 per diluted share) related to pension settlement in the third quarter; and (iii) a charge of $23 million ($23 million after-tax, or $0.08 per diluted share), related to the Venezuela currency devaluation in the first quarter.

     



    PRAXAIR, INC. AND SUBSIDIARIES

    NON-GAAP RECONCILIATIONS

    (UNAUDITED)

    The following adjusted amounts in 2013 are non-GAAP measures and are intended to supplement investors' understanding of the company's financial statements by providing measures which investors, financial analysts and management use to help evaluate the company's 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.

    (Millions of dollars, except per share amounts)
                     
    Net Income -
    Operating ProfitIncome TaxesPraxair, Inc.Diluted EPS
    2014     20132014     20132014     20132014     2013
     

    Year to Date June 30,

    Reported GAAP amounts $ 1,372 $ 1,265 $ 359 $ 338 $ 915 $ 836 $ 3.08 $ 2.79
    Non-GAAP adjustment:
    Venezuela currency devaluation (a)   -       23   -       -   -       23   -       0.08
    Adjusted amounts $ 1,372     $ 1,288 $ 359     $ 338 $ 915     $ 859 $ 3.08     $ 2.87
     
    (a) There were no non-GAAP adjustments for the quarters ended June 30, 2014 and 2013.
     



    PRAXAIR, INC. AND SUBSIDIARIES

    APPENDIX

    NON-GAAP MEASURES

    (Millions of dollars, except per share data)

    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 financial leverage, return on capital 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 2013 fourth quarter bond redemption and the income tax benefit related to the realignment of Praxair's Italian legal structure, the 2013 third quarter pension settlement, and the 2013 first quarter loss on Venezuela currency devaluation; the 2012 third quarter cost reduction program, pension settlement charge, and an income tax benefit.

                                             

     

    2014

    20132012
    Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1
     

    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.

     
    Debt $ 9,165 $ 9,270 $ 8,811 $ 9,026 $ 9,106 $ 8,676 $ 7,362 $ 7,136 $ 6,995 $ 6,856
    Less: cash and cash equivalents   (173 )   (144 )   (138 )       (134 )       (102 )       (113 )   (157 )       (108 )       (104 )       (107 )

    Net debt

    8,992 9,126 8,673 8,892 9,004 8,563 7,205 7,028 6,891 6,749
    Equity and redeemable noncontrolling interests:
    Redeemable noncontrolling interests 194 195 307 290 259 255 252 243 232 232
    Praxair, Inc. shareholders' equity 6,911 6,600 6,609 6,210 5,928 6,169 6,064 6,015 5,615 5,940
    Noncontrolling interests   395     398     394         365         357         357     357         331         279         327  
    Total equity and redeemable noncontrolling interests   7,500     7,193     7,310         6,865         6,544         6,781     6,673         6,589         6,126         6,499  
    Capital $ 16,492 $ 16,319 $ 15,983 $ 15,757 $ 15,548 $ 15,344 $ 13,878 $ 13,617 $ 13,017 $ 13,248
     
    Debt-to-capital   54.5%       55.9%   54.3%       56.4%       57.9%       55.8%   51.9%       51.6%       52.9%       50.9%

     

    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).

     
    Adjusted operating profit (a) $ 697 $ 675 $ 690 $ 679 $ 665 $ 623 $ 616 $ 623 $ 636 $ 627
    Less: adjusted income taxes (a) (183 ) (176 ) (182 ) (178 ) (174 ) (164 ) (162 ) (164 ) (169 ) (165 )
    Less: tax benefit on adjusted interest expense (a) (12 ) (13 ) (11 ) (11 ) (11 ) (11 ) (10 ) (10 ) (9 ) (10 )
    Add: income from equity investments   10     9     9         8         11         10     9         8         10         7  
    Adjusted net operating profit after-tax (NOPAT) $ 512 $ 495 $ 506 $ 498 $ 491 $ 458 $ 453 $ 457 $ 468 $ 459
    4-quarter trailing adjusted NOPAT $ 2,011 $ 1,990 $ 1,953 $ 1,900 $ 1,859 $ 1,836
     
    Ending capital (see above) $ 16,492 $ 16,319 $ 15,983 $ 15,757 $ 15,548 $ 15,344 $ 13,878 $ 13,617 $ 13,017 $ 13,248
    5-quarter average ending capital $ 16,020 $ 15,790 $ 15,302 $ 14,829 $ 14,281 $ 13,821
     
    After-tax ROC (4-quarter trailing NOPAT / 5-quarter average capital)   12.6%       12.6%   12.8%       12.8%       13.0%       13.3%                    
     

    Return on Praxair, Inc. Shareholders' 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.

     
    Adjusted net income - Praxair, Inc. (a) $ 467 $ 448 $ 462 $ 451 $ 445 $ 414 $ 414 $ 419 $ 429 $ 419
    4-quarter trailing adjusted net income - Praxair, Inc. $ 1,828 $ 1,806 $ 1,772 $ 1,724 $ 1,692 $ 1,676
     
    Ending Praxair, Inc. shareholders' equity $ 6,911 $ 6,600 $ 6,609 $ 6,210 $ 5,928 $ 6,169 $ 6,064 $ 6,015 $ 5,615 $ 5,940
    5-quarter average Praxair shareholders' equity $ 6,452 $ 6,303 $ 6,196 $ 6,077 $ 5,958 $ 5,961
     
    ROE (4-quarter trailing adjusted net income - Praxair, Inc. / 5-quarter average Praxair shareholders' equity)   28.3%       28.7%   28.6%     28.4%       28.4%       28.1%   28.9%       29.2%       29.0%       28.4%
     

    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.

     
     
    Adjusted net income - Praxair, Inc. (a) $ 467 $ 448 $ 462 $ 451 $ 445 $ 414 $ 414 $ 419 $ 429 $ 419
     
    Add: adjusted noncontrolling interests (a) 14 14 17 17 16 15 14 12 15 13
    Add: adjusted interest expense - net (a) 43 46 38 41 41 40 35 36 33 37
    Add: adjusted income taxes (a) 183 176 182 178 174 164 162 164 169 165
    Add: depreciation and amortization   293         285     287         281         275         266     254         248         247         252  
    Adjusted EBITDA $ 1,000 $ 969 $ 986 $ 968 $ 951 $ 899 $ 879 $ 879 $ 893 $ 886
    4-quarter trailing adjusted EBITDA $ 3,923 $ 3,874 $ 3,804 $ 3,697 $ 3,608 $ 3,550
     
    Ending net debt (see above) $ 8,992 $ 9,126 $ 8,673 $ 8,892 $ 9,004 $ 8,563 $ 7,205 $ 7,028 $ 6,891 $ 6,749
    5-quarter average net debt $ 8,937 $ 8,852 $ 8,467 $ 8,138 $ 7,738 $ 7,287
     
    Debt-to-adjusted EBITDA ratio (5-quarter average net debt / 4-quarter trailing adjusted EBITDA)   2.3         2.3       2.2         2.2         2.1         2.1                      
     


     
    (a) The following table presents adjusted amounts for Operating Profit and Operating Profit Margin, Interest Expense - net, Income Taxes, Effective Tax Rate, Noncontrolling Interests, Net income - Praxair, Inc., and Diluted EPS for the periods presented. Additionally, this table presents the percentage change in Diluted EPS Guidance for the full year 2014 as compared to 2013 Adjusted Diluted EPS.
     
                Fourth   Third   First   Third
    YearQuarterQuarterQuarterQuarter
      2013     2013     2013     2013     2012  

    Adjusted Operating Profit and Operating Profit Margin

    Reported operating profit $ 2,625 $ 690 $ 670 $ 600 $ 558
    Add: Pension settlement charge 9 - 9 - 9
    Add: Venezuela currency devaluation 23 - - 23 -
    Add: Cost reduction program   -     -     -     -     56  
    Total adjustments   32     -     9     23     65  
    Adjusted operating profit $ 2,657   $ 690   $ 679   $ 623   $ 623  
     
    Reported sales $ 11,925 $ 3,010 $ 3,013 $ 2,888 $ 2,774
    Adjusted operating profit margin 22.3 % 22.9 % 22.5 % 21.6 % 22.5 %
     

    Adjusted Interest Expense - net

    Reported interest expense - net $ 178 $ 56 $ 41 $ 40 $ 36
    Less: Bond redemption   (18 )   (18 )   -     -     -  
    Adjusted interest expense - net $ 160   $ 38   $ 41   $ 40   $ 36  
     

    Adjusted Income Taxes

    Reported income taxes $ 649 $ 136 $ 175 $ 164 $ 90
    Add: Bond redemption 6 6 - - -
    Add: Income tax benefit 40 40 - - 55
    Add: Pension settlement charge 3 - 3 - 3
    Add: Cost reduction program   -     -     -     -     16  
    Total adjustments   49     46     3     -     74  
    Adjusted income taxes $ 698   $ 182   $ 178   $ 164   $ 164  
     

    Adjusted Effective Tax Rate

    Reported income before income taxes and equity investments $ 2,447 $ 634 $ 629 $ 560 $ 522
    Add: Bond redemption 18 18 - - -
    Add: Pension settlement charge 9 - 9 - 9
    Add: Venezuela currency devaluation 23 - - 23 -
    Add: Cost reduction program   -     -     -     -     56  
    Total adjustments   50     18     9     23     65  
    Adjusted income before income taxes and equity investments $ 2,497   $ 652   $ 638   $ 583   $ 587  
     
    Adjusted income taxes (above) $ 698 $ 182 $ 178 $ 164 $ 164
    Adjusted effective tax rate 28 % 28 % 28 % 28 % 28 %
     

    Adjusted Noncontrolling interests

    Reported noncontrolling interests $ 81 $ 33 $ 17 $ 15 $ 10
    Less: Income tax benefit (16 ) (16 ) - - -
    Add: Cost reduction program   -     -     -     -     2  
    Total adjustments   (16 )   (16 )   -     -     2  
    Adjusted noncontrolling interests $ 65   $ 17   $ 17   $ 15   $ 12  
     

    Adjusted Net Income - Praxair, Inc.

    Reported net income - Praxair, Inc. $ 1,755 $ 474 $ 445 $ 391 $ 430
    Add: Bond redemption 12 12 - - -
    Less: Income tax benefit (24 ) (24 ) - - (55 )
    Add: Pension settlement charge 6 - 6 - 6
    Add: Venezuela currency devaluation 23 - - 23 -
    Add: Cost reduction program   -     -     -     -     38  
    Total adjustments   17     (12 )   6     23     (11 )
    Adjusted net income - Praxair, Inc. $ 1,772   $ 462   $ 451   $ 414   $ 419  
     

    Adjusted Diluted EPS

    Reported diluted EPS $ 5.87 $ 1.59 $ 1.49 $ 1.30 $ 1.43
    Add: Bond redemption 0.04 0.04 - - -
    Less: Income tax benefit (0.08 ) (0.08 ) - - (0.18 )
    Add: Pension settlement charge 0.02 - 0.02 - 0.02
    Add: Venezuela currency devaluation 0.08 - - 0.08 -
    Add: Cost reduction program   -     -     -     -     0.12  
    Total adjustments   0.06     (0.04 )   0.02     0.08     (0.04 )
    Adjusted diluted EPS $ 5.93   $ 1.55   $ 1.51   $ 1.38   $ 1.39  
     

    Full-Year 2014 Diluted EPS Guidance

    Full Year 2014
    Low End     High End
     
    Diluted EPS guidance $ 6.30 $ 6.45
     
    2013 adjusted diluted EPS (see above) $ 5.93 $ 5.93
     
    Percentage change 6 % 9 %





    Praxair, Inc.

    Investors:

    Kelcey Hoyt, 203-837-2118

    kelcey_hoyt@praxair.com

    or

    Media

    Jason Stewart, 203-837-2448

    jason_stewart@praxair.com



    Source: Praxair, Inc.


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    Source: Business Wire


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