Praxair Outperforms Estimate - Analyst Blog

Praxair Inc. (PX) reported its fourth quarter and full year 2010 earnings result before the opening bell today. The company came with adjusted earnings per share of $1.25 for the quarter, above the Zacks Consensus Estimate of $1.23 and up 15% year over year.

For full year 2010, adjusted earnings per share were $4.74, above the Zacks Consensus Estimate of $4.72 and up 19% year over year.

Revenue

Total revenue in the quarter was 2,623 million, up 9% year over year. Increased revenue was driven by an increased volume of 8%, as sales boosted in all geographical operating areas mainly in electronics, manufacturing, energy and metals markets. Besides, positive currency effects also benefited the company sequentially.

For the full year, revenue increased by 13% year over year to $1,195 million.

Segment revenue

In the quarter, North American revenue increased 11% year over year to $1,310 million. Revenue in Europewas up 6% on a constant currency basis to $339 million and that in South Americawas $516 million, up 12% year over year. Sales in Asiawere up 12% to $308 million. Surface Technologies revenue was $150 million in the quarter compared with $141 million in the prior-year period.   

Margins

An increased sales volume and reduced cost increased adjusted operating profit by 10% year over year to $563 million. SG&A expense in the quarter was $1,492 million compared with $1,370 million and R&D expense was $240 million compared with $223 million.

Balance Sheet

Exiting the fourth quarter, Praxairhad cash and cash equivalents of approximately $39 million compared with $45 million at the end of 2009. Long-term debt increased roughly to $5,155 million from $4,757 million at the end of 2009.

Cash Flow

In 2010, cash flow from operating activities was approximately $1,905 million and capital expenditure amounted to $1,388 million.

Outlook

For the first quarter of fiscal 2011, management provided its EPS guidance range of roughly $1.23-$1.28.  The company expects full year 2011 EPS to be in the range of $5.25-$5.40. Full year, sales are expected to be approximately $11 billion and capital expenditure is expected to be in the range of $1.5 to $1.8 billion. Effective tax rate for 2011 is likely to be about 28%.

The company remains focused on maintaining a strong cash flow, which would help it to make new investments worldwide, pay dividend to shareholders and repurchase shares.

Praxair operates within a highly-competitive environment worldwide. The company's major competitors in the Industrial Gas segment include Air Products and Chemicals Inc. (APD), Airgas Inc. (ARG), and Linde AG (LNAGF.PK). For the Surface Technologies segment, competitors are Chromalloy Gas Turbine Corporation, a subsidiary of Sequa Corporation, and Bodycote (BOY.L).

Danbury, Connecticut based Praxair Inc. engages in the production and distribution of industrial gases, primarily in North America, South America, Europe, and Asia. Praxair's principal products for its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene). The company also designs, engineers, and builds equipment that produces industrial gases for internal use and external sale.

Praxair currently has a Zacks #3 Rank (short-term Hold recommendation).

 
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