Airgas Earnings Come in Below Analysts’ Projections

Technology Stocks News 19

Airgas reported second-quarter results that were below analyst’s projections, and the firm subsequently lowered its 2014 earnings guidance.  Although reported revenue increased 4% (2% organic and 2% from acquisitions) compared with the year-ago period, the core business environment was more subdued.

The 2% organic sales consisted of pricing up 3% and volume down 1%. Gross margins increased 140 basis points to 56.1%, driven by a higher mix shift toward gas and rent (64% versus 63% last year) and moderate price increases. Airgas retained most of the gross margin expansion with adjusted operating margins increasing 120 basis points to 13.2%.

Like last quarter, management remained optimistic about Airgas’ long-term growth prospects owing to increased infrastructure for natural gas fracturing and a glacial improvement in nonresidential construction. Still, the near term looks less rosy. Business conditions softened suddenly in September apparently because of the government shutdown, and this sluggishness continued into October.

Interesting, and despite a highly fragmented market with nearly 900 independent competitors, management was impressed with the pricing’s resilience despite tepid growth. The firm expects that moderate price benefits will help offset potentially negative volume through the remainder of the year.

Signup for free to be the first to receive exclusive free links. Now in your mailbox!
Join over 15,000 subscribers
Send me links

Your information will not be shared to anyone