ROHSTOFF INTERNATIONAL

11:02 | 30.10.2013
Praxair Reports Third-Quarter 2013 Results

Praxair, Inc. (NYSE:PX) reported third-quarter net income and diluted
earnings per share of $445 million and $1.49, respectively. These
results include the impact of a pension settlement charge of $9 million
pre-tax, or 2 cents of diluted earnings per share. Excluding this item,
adjusted net income and diluted earnings per share were $451 million and
$1.51, 8% and 9% above the prior-year quarter, respectively.*

Sales in the third quarter were $3,013 million, 9% above the prior-year
quarter. Organic sales increased 7% with growth across all geographic
segments. On-site sales in North America and Asia had strong growth,
driven by new project start-ups, including refinery hydrogen supply.
South American organic sales reflect higher price and growth including
the metals, manufacturing and healthcare end markets. Acquisitions in
North America and Europe contributed 3% growth in the quarter. Sales
were steady sequentially from the second quarter due primarily to higher
volumes from new project start-ups offset by weaker currency translation.

Reported operating profit in the third quarter was $670 million.
Adjusted operating profit was $679 million, up 9% compared to the
prior-year quarter. The increase was driven by higher overall volumes,
higher pricing and acquisitions, partially offset by negative currency
translation effects. Adjusted operating profit as a percentage of sales
was 22.5%.*

The company generated record cash flow from operations in the quarter of
$904 million. Operating cash flow funded $516 million of capital
expenditures, primarily for new production plants under long-term
contracts with customers. The company paid dividends of $176 million and
repurchased $81 million of stock, net of issuances. The debt-to-capital
ratio was 56.4% and debt-to-adjusted EBITDA was 2.2x. The after-tax
return on capital and return on equity for the quarter were 12.8% and
28.4%, respectively.*

Commenting on the financial results and business outlook, Chairman,
President and Chief Executive Officer Steve Angel said, “On-site project
start-ups in Asia and North America, including refinery hydrogen supply,
drove solid volume growth in the quarter. We are beginning to reap the
benefits of capital projects contracted after the recession, but just
coming on stream now. In addition, the results of our relentless
approach to operational excellence and contract management are reflected
in the quarter’s record operating cash flow and continued strong
industry-leading operating margin.

We are cautious about volume growth in our base business in the fourth
quarter as we do not expect much growth, if any, in industrial
production in North America and Europe. Brazil is stabilizing and growth
in China and the rest of Asia continues to be solid.”

For the fourth quarter of 2013, Praxair expects diluted earnings per
share in the range of $1.52 to $1.57. For the full year of 2013, the
company expects diluted earnings per share to be in the range of $5.80
to $5.85 and adjusted diluted earnings per share to be in the range of
$5.90 to $5.95. Praxair expects full-year sales in the area of $12
billion. Full-year capital expenditures are expected to be about $1.9
billion, and the adjusted effective tax rate is forecasted to remain at
about 28%.*

Following is additional detail on third-quarter 2013 results by segment.

In North America, third-quarter sales were $1,588 million up 14% from
the prior-year quarter. Organic sales growth of 7% was driven by strong
growth to the energy end market, primarily driven by hydrogen project
start-ups for refinery customers. The acquisitions of NuCO2
and packaged gas distributors contributed 6% growth. Operating profit of
$406 million grew 9% from the prior year primarily due to higher volumes
from project start-ups, acquisitions and higher price.

In Europe, third-quarter sales were $386 million, 10% above the
prior-year quarter. Acquisitions of Dominion Technology Gases and
Volgograd Oxygen Factory contributed 5% growth. Underlying sales,
excluding currency translation and cost pass-through, were up 1% versus
the prior-year quarter due to higher pricing and project start-ups
offset by lower base volumes, primarily in Southern Europe. Operating
profit of $64 million, increased 7%, compared to the prior-year quarter,
due to price attainment, acquisitions, currency and productivity savings.

In South America, third-quarter sales were $494 million, 4% below the
prior-year quarter. Underlying sales, excluding negative currency
translation, grew 6% with solid growth in the metals, manufacturing and
healthcare end markets. Operating profit was $115 million, up 3% versus
the prior-year period, due to higher price and higher volumes.

Sales in Asia were $385 million in the quarter, up 8% from the
prior-year quarter, driven by higher on-site sales in China, Korea and
India, including new plant start-ups. Sales growth came primarily from
metals, chemicals and energy customers. Operating profit was $67 million.

Praxair Surface Technologies had third-quarter sales of $160 million, 2%
above the prior-year quarter. Sales grew 1%, excluding positive currency
impact, as favorable pricing offset weaker volumes of military aviation
coatings. Operating profit of $27 million grew 8% from the prior-year
period due to productivity savings, lower costs from previous
restructuring actions, and higher pricing.
About Praxair
Praxair, Inc., a Fortune 250 company with 2012 sales of $11 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 the attachments for calculations of non-GAAP measures. Non-GAAP
adjustments for 2013 relate to the impact of the first-quarter Venezuela
currency devaluation charge and third-quarter pension settlement charge.
Non-GAAP adjustments for 2012 relate to third-quarter cost reduction
charges, a pension settlement charge and an income tax benefit.
Attachments: Non-GAAP Reconciliations, 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 30, at 11:00 am Eastern Time. The number is (617)
399-3481 — Passcode: 67079324. The call also is available as a web-cast
at www.praxair.com/investors.
Materials to be used in the teleconference are also available at www.praxair.com/investors.

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

NON-GAAP RECONCILIATIONS

(UNAUDITED)

 

The following Non-GAAP measures 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)

 

 

 

 

 

 

 

 

 

Operating Profit

Income Taxes

Net Income -Praxair, Inc.

Diluted EPS

2013
 
2012

2013
 
2012

2013
 
2012

2013
2012

 

Quarter Ended September 30,

Reported GAAP amounts

$

670

$

558

$

175

$

90

$

445

$

430

$

1.49

$

1.43

Non-GAAP adjustments:

Pension settlement charge (a)

9

9

3

3

6

6

0.02

0.02

Cost reduction program (b)

56

16

38

0.12

Income tax benefit (d)

 

 

 

 

 

 

55

 

 

 

(55

)

 

 

 

(0.18

)

Total adjustments

 

9

 

 

65

 

3

 

 

74

 

6

 

 

(11

)

 

0.02

 

 

(0.04

)

Adjusted amounts

$

679

 

$

623

$

178

 

$

164

$

451

 

$

419

 

$

1.51

 

$

1.39

 

 

 

Year To Date September 30,

Reported GAAP amounts

$

1,935

$

1,821

$

513

$

424

$

1,281

$

1,278

$

4.28

$

4.23

Non-GAAP adjustments:

Pension settlement charge (a)

9

9

3

3

6

6

0.02

0.02

Cost reduction programs (b)

56

16

38

0.12

Venezuela currency devaluation (c)

23

23

0.08

Income tax benefit (d)

 

 

 

 

 

 

55

 

 

 

(55

)

 

 

 

(0.18

)

Total adjustments

 

32

 

 

65

 

3

 

 

74

 

29

 

 

(11

)

 

0.10

 

 

(0.04

)

Adjusted amounts

$

1,967

 

$

1,886

$

516

 

$

498

$

1,310

 

$

1,267

 

$

4.38

 

$

4.19

 

 

(a) Pension settlement charges were recorded in the 2013 and 2012
third quarters related to lump sum benefit payments made from the
U.S. supplemental pension plan to a number of recently retired
senior managers.

(b) Charges in 2012 third quarter related to severance and business
restructuring actions primarily in Europe within the industrial
gases and surface technologies businesses.

(c) Charge in the first quarter of 2013 related to the Venezuela
currency devaluation.

(d) Income tax benefit in 2012 third quarter related to a loss on a
liquidated subsidiary as a result of the divestiture of the U.S.
Homecare business.

 

 

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,

2013
2012
2013
2012

 

SALES

$

3,013

$

2,774

$

8,915

$

8,425

Cost of sales

1,697

1,595

5,045

4,813

Selling, general and administrative

336

306

1,017

951

Depreciation and amortization

281

248

822

747

Research and development

24

24

72

73

Venezuela currency devaluation and other charges (a)

9

65

32

65

Other income (expense) – net

 

4

 

 

22

 

 

8

 

 

45

 

OPERATING PROFIT

670

558

1,935

1,821

Interest expense – net

 

41

 

 

36

 

 

122

 

 

106

 

INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS

629

522

1,813

1,715

Income taxes (a)

 

175

 

 

90

 

 

513

 

 

424

 

INCOME BEFORE EQUITY INVESTMENTS

454

432

1,300

1,291

Income from equity investments

 

8

 

 

8

 

 

29

 

 

25

 

NET INCOME (INCLUDING NONCONTROLLING INTERESTS)

462

440

1,329

1,316

Less: noncontrolling interests

 

(17

)

 

(10

)

 

(48

)

 

(38

)

NET INCOME – PRAXAIR, INC.

$

445

 

$

430

 

$

1,281

 

$

1,278

 

 

PER SHARE DATA – PRAXAIR, INC. SHAREHOLDERS

 

Basic earnings per share

$

1.51

$

1.44

$

4.33

$

4.28

 

Diluted earnings per share

$

1.49

$

1.43

$

4.28

$

4.23

 

Cash dividends

$

0.60

$

0.55

$

1.80

$

1.65

 

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic shares outstanding (000’s)

295,124

298,416

295,799

298,793

Diluted shares outstanding (000’s)

298,357

301,731

299,077

302,352

 

 

(a)

The 2013 year to date period includes: (i) a charge of $23 million
($23 million after-tax, or $0.08 per diluted share) related to the
Venezuela currency devaluation recorded in the first quarter; and
(ii) a charge of $9 million ($6 million after-tax, or $0.02 per
diluted share) related to pension settlement recorded in the third
quarter. The 2012 year to date and quarter to date periods includes:
(i) a pre-tax charge of $56 million ($38 million after-tax and
non-controlling interests, or $0.12 per diluted share) related to
the 2012 cost reduction program; (ii) a pre-tax charge of $9 million
($6 million after-tax, or $0.02 per diluted share) related to
pension settlement; and (iii) an income tax benefit of $55 million,
or $0.18 per diluted share related to a loss on a liquidated
subsidiary as a result of the divestiture of the U.S. Homecare
business. 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,

2013

2012

ASSETS

Cash and cash equivalents

$

134

$

157

Accounts receivable – net

1,957

1,834

Inventories

519

476

Prepaid and other current assets

 

367

 

325

TOTAL CURRENT ASSETS

2,977

2,792

 

Property, plant and equipment – net

12,099

11,453

Goodwill

3,189

2,507

Other intangibles – net

613

173

Other long-term assets

 

1,184

 

1,165

TOTAL ASSETS

$

20,062

$

18,090

LIABILITIES AND EQUITY

Accounts payable

$

900

$

928

Short-term debt

1,135

638

Current portion of long-term debt

8

39

Other current liabilities

 

886

 

874

TOTAL CURRENT LIABILITIES

2,929

2,479

Long-term debt

7,883

6,685

Other long-term liabilities

 

2,385

 

2,253

TOTAL LIABILITIES

13,197

11,417

 

REDEEMABLE NONCONTROLLING INTERESTS

290

252

 

EQUITY

Praxair, Inc. shareholders’ equity

6,210

6,064

Noncontrolling interests

 

365

 

357

TOTAL EQUITY

 

6,575

 

6,421

TOTAL LIABILITIES AND EQUITY

$

20,062

$

18,090

 

 

PRAXAIR, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of dollars)

(UNAUDITED)

 

 

 

 

 

 

 

Quarter Ended

Year to Date

September 30,

September 30,

2013
2012

2013
2012

OPERATIONS

Net income – Praxair, Inc.

$

445

$

430

$

1,281

$

1,278

Noncontrolling interests

 

17

 

 

10

 

 

48

 

 

38

 

Net income (including noncontrolling interests)

462

440

1,329

1,316

 

Adjustments to reconcile net income to net cash provided

by operating activities:

Venezuela currency devaluation and other charges

52

23

52

Depreciation and amortization

281

248

822

747

Accounts receivable

25

(60

)

(139

)

(107

)

Inventory

(36

)

(16

)

(63

)

(30

)

Payables and accruals

24

43

18

(75

)

Pension contributions

(5

)

(3

)

(48

)

(112

)

Deferred income taxes and other

 

153

 

 

42

 

 

11

 

 

82

 

Net cash provided by operating activities

 

904

 

 

746

 

 

1,953

 

 

1,873

 

 

INVESTING

Capital expenditures

(516

)

(547

)

(1,504

)

(1,594

)

Acquisitions, net of cash acquired

(42

)

(58

)

(1,311

)

(109

)

Divestitures and asset sales

 

27

 

 

6

 

 

65

 

 

77

 

Net cash used for investing activities

 

(531

)

 

(599

)

 

(2,750

)

 

(1,626

)

 

FINANCING

Debt increase (decrease) – net

(85

)

131

1,670

583

Issuances of common stock

32

19

108

126

Purchases of common stock

(113

)

(125

)

(458

)

(438

)

Cash dividends – Praxair, Inc. shareholders

(176

)

(164

)

(531

)

(492

)

Excess tax benefit on stock option exercises

7

6

31

50

Noncontrolling interest transactions and other

 

(7

)

 

(14

)

 

(24

)

 

(55

)

Net cash provided by (used for) financing activities

(342

)

(147

)

796

(226

)

 

Effect of exchange rate changes on cash and cash equivalents

 

1

 

 

4

 

 

(22

)

 

(3

)

 

Change in cash and cash equivalents

32

4

(23

)

18

Cash and cash equivalents, beginning-of-period

 

102

 

 

104

 

 

157

 

 

90

 

 

Cash and cash equivalents, end-of-period

$

134

 

$

108

 

$

134

 

$

108

 

 

 

PRAXAIR, INC. AND SUBSIDIARIES

SEGMENT INFORMATION

(Millions of dollars)

(UNAUDITED)

 

 

 

 

 

 

 

Quarter Ended

Year to Date

September 30,

September 30,

2013
2012

2013
2012

SALES

North America

$

1,588

$

1,391

$

4,597

$

4,182

Europe

386

352

1,138

1,111

South America

494

516

1,561

1,598

Asia

385

358

1,131

1,040

Surface Technologies

 

160

 

 

157

 

 

488

 

 

494

 

Total sales

$

3,013

 

$

2,774

 

$

8,915

 

$

8,425

 

 

OPERATING PROFIT

North America

$

406

$

374

$

1,145

$

1,098

Europe

64

60

195

196

South America

115

112

352

337

Asia

67

52

191

177

Surface Technologies

 

27

 

 

25

 

 

84

 

 

78

 

Segment operating profit

679

623

1,967

1,886

Venezuela currency devaluation and other charges

 

(9

)

 

(65

)

 

(32

)

 

(65

)

Total operating profit

$

670

 

$

558

 

$

1,935

 

$

1,821

 

 

 

 

 

PRAXAIR, INC. AND SUBSIDIARIES

QUARTERLY FINANCIAL SUMMARY

(Millions of dollars, except per share data)

(UNAUDITED)

 

 

 

 

 

 

 

2013

2012

Q3 (b)
Q2
Q1 (b)

Q4
Q3 (b)
Q2
Q1

FROM THE INCOME STATEMENT

Sales

$

3,013

$

3,014

$

2,888

$

2,799

$

2,774

$

2,811

$

2,840

Cost of sales

1,697

1,710

1,638

1,583

1,595

1,602

1,616

Selling, general and administrative

336

344

337

319

306

310

335

Depreciation and amortization

281

275

266

254

248

247

252

Research and development

24

24

24

25

24

25

24

Venezuela currency devaluation and other charges

9

23

65

Other income (expenses) – net

 

4

 

 

 

4

 

 

 

 

 

(2

)

 

 

22

 

 

 

9

 

 

 

14

 

Operating profit

670

665

600

616

558

636

627

Interest expense – net

41

41

40

35

36

33

37

Income taxes

175

174

164

162

90

169

165

Income from equity investments

 

8

 

 

 

11

 

 

 

10

 

 

9

 

 

 

8

 

 

 

10

 

 

 

7

 

Net income (including noncontrolling interests)

462

461

406

428

440

444

432

Less: noncontrolling interests

 

(17

)

 

 

(16

)

 

 

(15

)

 

(14

)

 

 

(10

)

 

 

(15

)

 

 

(13

)

Net income – Praxair, Inc.

$

445

 

 

$

445

 

 

$

391

 

$

414

 

 

$

430

 

 

$

429

 

 

$

419

 

 

PER SHARE DATA – PRAXAIR, INC. SHAREHOLDERS

Diluted earnings per share

$

1.49

$

1.49

$

1.30

$

1.38

$

1.43

$

1.42

$

1.38

Cash dividends per share

$

0.60

$

0.60

$

0.60

$

0.55

$

0.55

$

0.55

$

0.55

Diluted weighted average shares outstanding (000’s)

298,357

298,654

299,700

300,224

301,731

302,492

302,876

 

FROM THE BALANCE SHEET

Net debt (a)

$

8,892

$

9,004

$

8,563

$

7,205

$

7,028

$

6,891

$

6,749

Capital (a)

$

15,757

$

15,548

$

15,344

$

13,878

$

13,617

$

13,017

$

13,248

Debt-to-capital ratio (a)

56.4

%

57.9

%

55.8

%

51.9

%

51.6

%

52.9

%

50.9

%

 

FROM THE STATEMENT OF CASH FLOWS

Cash flow from operations

$

904

$

577

$

472

$

879

$

746

$

725

$

402

Capital expenditures

516

522

466

586

547

564

483

Acquisitions

42

171

1,098

171

58

39

12

Cash dividends

176

177

178

163

164

164

164

 

OTHER INFORMATION

After-tax return on capital (ROC) (a)

12.8

%

13.0

%

13.3

%

13.9

%

14.2

%

14.5

%

14.6

%

Return on Praxair, Inc. shareholders’ equity (ROE) (a)

28.4

%

28.4

%

28.1

%

28.9

%

29.2

%

29.0

%

28.4

%

Adjusted earnings before interest, taxes, depreciation andamortization
(adjusted EBITDA) (a)

$

968

$

951

$

899

$

879

$

879

$

893

$

886

Debt-to-adjusted EBITDA ratio (a)

2.2

2.1

2.1

1.9

1.9

1.8

1.8

Number of employees

27,794

27,878

27,380

26,539

26,215

26,353

26,259

 

SEGMENT DATA

SALES

North America

$

1,588

$

1,552

$

1,457

$

1,416

$

1,391

$

1,393

$

1,398

Europe

386

382

370

363

352

382

377

South America

494

536

531

484

516

520

562

Asia

385

379

367

374

358

348

334

Surface Technologies

 

160

 

 

 

165

 

 

 

163

 

 

162

 

 

 

157

 

 

 

168

 

 

 

169

 

Total sales

$

3,013

 

 

$

3,014

 

 

$

2,888

 

$

2,799

 

 

$

2,774

 

 

$

2,811

 

 

$

2,840

 

OPERATING PROFIT

North America

$

406

$

381

$

358

$

367

$

374

$

363

$

361

Europe

64

69

62

60

60

68

68

South America

115

123

114

92

112

110

115

Asia

67

61

63

69

52

68

57

Surface Technologies

 

27

 

 

 

31

 

 

 

26

 

 

28

 

 

 

25

 

 

 

27

 

 

 

26

 

Segment operating profit

679

665

623

616

623

636

627

Venezuela currency devaluation and other charges

 

(9

)

 

 

 

 

 

(23

)

 

 

 

 

(65

)

 

 

 

 

 

 

Total operating profit

$

670

 

 

$

665

 

 

$

600

 

$

616

 

 

$

558

 

 

$

636

 

 

$

627

 

 

 

(a)

Non-GAAP measure, see Appendix.

 

(b)

The third quarter 2013 includes a charge of $9 million ($6 million
after-tax, or $0.02 per diluted share) related to pension
settlement. The first quarter 2013 includes a charge of $23 million
($23 million after-tax, or $0.08 per diluted share), related to the
Venezuela currency devaluation. The third quarter 2012 includes: (i)
a pre-tax charge of $56 million ($38 million after-tax and
non-controlling interests, or $0.12 per diluted share) related to
the 2012 cost reduction program; (ii) a pre-tax charge of $9 million
($6 million after-tax, or $0.02 per diluted share) related to
pension settlement; and (iii) an income tax benefit of $55 million,
or $0.18 per diluted share related to a loss on a liquidated
subsidiary as a result of the divestiture of the U.S. Homecare
business.

 

 

 

 

 

 

 

 

 

 

 

 

 

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 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 2013 third quarter pension settlement, and the
2013 first quarter loss on Venezuela currency devaluation; and the
2012 third quarter cost reduction program, pension settlement
charge, and an income tax benefit; and the 2011 fourth quarter gain
on acquisition and cost reduction program which helps investors
understand underlying performance on a comparable basis.

 

2013
2012
2011

Q3
Q2
Q1
Q4
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.

 

Debt

$

9,026

$

9,106

$

8,676

$

7,362

$

7,136

$

6,995

$

6,856

$

6,562

$

6,310

$

6,119

$

5,838

Less: cash and cash equivalents

 

(134

)

 

 

(102

)

 

 

(113

)

 

(157

)

 

 

(108

)

 

 

(104

)

 

 

(107

)

 

(90

)

 

 

(125

)

 

 

(80

)

 

 

(86

)

Net debt

8,892

9,004

8,563

7,205

7,028

6,891

6,749

6,472

6,185

6,039

5,752

Equity and redeemable noncontrolling interests:

Redeemable noncontrolling interests

290

259

255

252

243

232

232

220

Praxair, Inc. shareholders’ equity

6,210

5,928

6,169

6,064

6,015

5,615

5,940

5,488

5,753

6,400

6,165

Noncontrolling interests

 

365

 

 

 

357

 

 

 

357

 

 

357

 

 

 

331

 

 

 

279

 

 

 

327

 

 

309

 

 

 

368

 

 

 

370

 

 

 

372

 

Total equity and redeemable noncontrolling interests

 

6,865

 

 

 

6,544

 

 

 

6,781

 

 

6,673

 

 

 

6,589

 

 

 

6,126

 

 

 

6,499

 

 

6,017

 

 

 

6,121

 

 

 

6,770

 

 

 

6,537

 

Capital

$

15,757

$

15,548

$

15,344

$

13,878

$

13,617

$

13,017

$

13,248

$

12,489

$

12,306

$

12,809

$

12,289

 

Debt-to-capital

 
56.4%
 

 
57.9%
 

 
55.8%

 
51.9%
 

 
51.6%
 

 
52.9%
 

 
50.9%

 
51.8%
 

 
50.3%
 

 
47.1%
 

 
46.8%

 

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)

$

679

$

665

$

623

$

616

$

623

$

636

$

627

$

619

$

632

$

627

$

591

Less: adjusted income taxes (a)

(178

)

(174

)

(164

)

(162

)

(164

)

(169

)

(165

)

(162

)

(166

)

(163

)

(156

)

Less: tax benefit on interest expense

(11

)

(11

)

(11

)

(10

)

(10

)

(9

)

(10

)

(11

)

(10

)

(10

)

(10

)

Add: income from equity investments

 

8

 

 

 

11

 

 

 

10

 

 

9

 

 

 

8

 

 

 

10

 

 

 

7

 

 

7

 

 

 

13

 

 

 

11

 

 

 

9

 

Adjusted net operating profit after-tax (NOPAT)

$

498

$

491

$

458

$

453

$

457

$

468

$

459

$

453

$

469

$

465

$

434

4-quarter trailing adjusted NOPAT

$

1,900

$

1,859

$

1,836

$

1,837

$

1,837

$

1,849

$

1,846

 

Ending capital (see above)

$

15,757

$

15,548

$

15,344

$

13,878

$

13,617

$

13,017

$

13,248

$

12,489

$

12,306

$

12,809

$

12,289

5-quarter average ending capital

$

14,829

$

14,281

$

13,821

$

13,250

$

12,935

$

12,774

$

12,628

 

After-tax ROC (4-quarter trailing NOPAT / 5-quarter average
capital)

 
12.8%
 

 
13.0%
 

 
13.3%

 
13.9%
 

 
14.2%
 

 
14.5%
 

 
14.6%

 

 

 

 

 

 

 

 

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.

 

Adjusted net income – Praxair, Inc. (a)

$

451

$

445

$

414

$

414

$

419

$

429

$

419

$

414

$

429

$

425

$

398

4-quarter trailing adjusted net income – Praxair, Inc.

$

1,724

$

1,692

$

1,676

$

1,681

$

1,681

$

1,691

$

1,687

 

Ending Praxair, Inc. shareholders’ equity

$

6,210

$

5,928

$

6,169

$

6,064

$

6,015

$

5,615

$

5,940

$

5,488

$

5,753

$

6,400

$

6,165

5-quarter average Praxair shareholders’ equity

$

6,077

$

5,958

$

5,961

$

5,824

$

5,762

$

5,839

$

5,949

 

ROE (4-quarter trailing adjusted net income – Praxair, Inc. /
5-quarter average Praxair shareholders’ equity)

 
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)

$

451

$

445

$

414

$

414

$

419

$

429

$

419

$

414

$

429

$

425

$

398

 

Add: adjusted noncontrolling interests (a)

17

16

15

14

12

15

13

12

14

14

11

Add: interest expense – net

41

41

40

35

36

33

37

38

36

36

35

Add: adjusted income taxes (a)

178

174

164

162

164

169

165

162

166

163

156

Add: depreciation and amortization

 

281

 

 

 

275

 

 

 

266

 

 

254

 

 

 

248

 

 

 

247

 

 

 

252

 

 

249

 

 

 

256

 

 

 

254

 

 

 

244

 

Adjusted EBITDA

$

968

$

951

$

899

$

879

$

879

$

893

$

886

$

875

$

901

$

892

$

844

4-quarter trailing adjusted EBITDA

$

3,697

$

3,608

$

3,550

$

3,537

$

3,533

$

3,555

$

3,554

 

Ending net debt (see above)

$

8,892

$

9,004

$

8,563

$

7,205

$

7,028

$

6,891

$

6,749

$

6,472

$

6,185

$

6,039

$

5,752

5-quarter average net debt

$

8,138

$

7,738

$

7,287

$

6,869

$

6,665

$

6,467

$

6,239

 

Debt-to-adjusted EBITDA ratio (5-quarter average net debt /
4-quarter trailing adjusted EBITDA)

 
2.2
 

 

 
2.1
 

 

 
2.1
 

 
1.9
 

 

 
1.9
 

 

 
1.8
 

 

 
1.8
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

The following table presents adjusted amounts for Operating Profit
and Operating Profit Margin, 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 2013.

 

Year-to-dateSeptember 30,
ThirdQuarter
First Quarter
Year
Year-to-dateSeptember 30,
ThirdQuarter
FourthQuarter

2013
2013
2013
2012
2012
2012
2011

Adjusted Operating Profit and Operating
Profit Margin

Reported operating profit

$

1,935

$

670

$

600

$

2,437

$

1,821

$

558

$

618

Add: Venezuela currency devaluation

23

23

Add: Pension settlement charge

9

9

9

9

9

Add: Cost reduction program

56

56

56

40

Less: Gain on acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

(39

)

Total adjustments

 

32

 

 

9

 

 

23

 

 

65

 

 

65

 

 

65

 

 

1

 

Adjusted operating profit

$

1,967

 

$

679

 

$

623

 

$

2,502

 

$

1,886

 

$

623

 

$

619

 

 

Reported sales

$

8,915

$

3,013

$

2,888

$

11,224

$

8,425

$

2,774

$

2,796

Adjusted operating profit margin

22.1

%

22.5

%

21.6

%

22.3

%

22.4

%

22.5

%

22.1

%

 

Adjusted Income Taxes

Reported income taxes

$

513

$

175

$

164

$

586

$

424

$

90

$

156

Add: Venezuela currency devaluation

Add: Pension settlement charge

3

3

3

3

3

Add: Income tax benefit

55

55

55

Add: Cost reduction program

16

16

16

9

Less: Gain on acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

Total adjustments

 

3

 

 

3

 

 

 

 

74

 

 

74

 

 

74

 

 

6

 

Adjusted income taxes

$

516

 

$

178

 

$

164

 

$

660

 

$

498

 

$

164

 

$

162

 

 

Adjusted Effective Tax Rate

Reported income before income taxes and equity investments

$

1,813

$

629

$

560

$

2,296

$

1,715

$

522

$

580

Add: Venezuela currency devaluation

23

23

Add: Pension settlement charge

9

9

9

9

9

Add: Cost reduction program

56

56

56

40

Less: Gain on acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

(39

)

Total adjustments

 

32

 

 

9

 

 

23

 

 

65

 

 

65

 

 

65

 

 

1

 

Adjusted income before income taxes and equity investments

$

1,845

 

$

638

 

$

583

 

$

2,361

 

$

1,780

 

$

587

 

$

581

 

 

Adjusted income taxes (above)

$

516

$

178

$

164

$

660

$

498

$

164

$

162

Adjusted effective tax rate

28

%

28

%

28

%

28

%

28

%

28

%

28

%

 

Adjusted Noncontrolling interest

Reported noncontrolling interest

$

48

$

17

$

15

$

52

$

38

$

10

$

11

Add: Cost reduction program

2

2

2

Add: Gain on acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Total adjustments

 

 

 

 

 

 

 

2

 

 

2

 

 

2

 

 

1

 

Adjusted noncontrolling interest

$

48

 

$

17

 

$

15

 

$

54

 

$

40

 

$

12

 

$

12

 

 

Adjusted Net Income – Praxair, Inc.

Reported net income – Praxair, Inc.

$

1,281

$

445

$

391

$

1,692

$

1,278

$

430

$

420

Add: Venezuela currency devaluation

23

23

Add: Pension settlement charge

6

6

6

6

6

Less: Income tax benefit

(55

)

(55

)

(55

)

Add: Cost reduction program

38

38

38

31

Less: Gain on acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

(37

)

Total adjustments

 

29

 

 

6

 

 

23

 

 

(11

)

 

(11

)

 

(11

)

 

(6

)

Adjusted net income – Praxair, Inc.

$

1,310

 

$

451

 

$

414

 

$

1,681

 

$

1,267

 

$

419

 

$

414

 

 

Adjusted Diluted EPS

Reported diluted EPS

$

4.28

$

1.49

$

1.30

$

5.61

$

4.23

$

1.43

$

1.38

Add: Venezuela currency devaluation

0.08

0.08

Add: Pension settlement charge

0.02

0.02

0.02

0.02

0.02

Less: Income tax benefit

(0.18

)

(0.18

)

(0.18

)

Add: Cost reduction program

0.12

0.12

0.12

0.10

Less: Gain on acquisition

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.12

)

Total adjustments

 

0.10

 

 

0.02

 

 

0.08

 

 

(0.04

)

 

(0.04

)

 

(0.04

)

 

(0.02

)

Adjusted diluted EPS

$

4.38

 

$

1.51

 

$

1.38

 

$

5.57

 

$

4.19

 

$

1.39

 

$

1.36

 

 

 

Percentage Change in Adjusted Full Year
2013 Diluted EPS Guidance

Full Year 2013

Low End
 
High End

 

Diluted EPS guidance – GAAP

$

5.80

$

5.85

Non-GAAP adjustments:

Add: Venezuela currency devaluation

0.08

0.08

Add: Pension settlement

 

0.02

 

 

0.02

 

2013 adjusted diluted EPS – Non-GAAP

$

5.90

$

5.95

 

2012 adjusted diluted EPS (see above) – Non-GAAP

$

5.57

$

5.57

 

Percentage change from 2012 adjusted amounts

6

%

7

%

 


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