- Sales of $2.7 billion; EPS of
$1.39
- Operating and EBITDA margins of
22.1% and 33.0%, respectively
- Strong operating cash flow of $0.7
billion, 26% of sales
- Completed European carbon dioxide
acquisition primarily serving food and beverage end-market and
purchased remaining interest in Scandinavian joint venture
- Return on capital 12.2%; return on
equity 34.0%
Praxair, Inc. (NYSE:PX) reported second-quarter net income and
diluted earnings per share of $399 million and $1.39,
respectively.
Sales in the second quarter were $2,665 million, 3% below the
prior-year quarter, primarily due to the impact of negative
currency translation of 4% and lower cost pass-through of 1%.
Excluding these impacts, sales were 2% higher than the prior-year
quarter due to growth from acquisitions and higher pricing. Overall
volumes were comparable to the prior-year quarter. Volume growth
from new on-site projects, largely in Asia, Europe and South
America, was offset by lower base business volumes in the Americas,
due primarily to weaker industrial manufacturing activity in the
United States and Brazil, and weaker demand in the upstream energy
end-market in North America.
Operating profit in the second quarter of $588 million was 23%
above the prior-year quarter of $480 million. Excluding the
prior-year quarter impact of a charge relating to a cost reduction
program, operating profit was 6% lower, and 2% lower excluding
currency effects. The operating profit margin as a percentage of
sales was 22.1% and the EBITDA margin was 33.0%.
Second-quarter cash flow from operations of $706 million funded
$357 million of capital expenditures. Acquisition expenditures in
the quarter of $262 million were primarily related to the
acquisition of a carbon dioxide business in Europe. In addition,
noncontrolling interest expenditures of $107 million were largely
attributed to the acquisition of the remaining 34% interest in the
company’s Scandinavian industrial gas joint venture. The company
paid $214 million of dividends. After-tax return on capital and
return on equity for the quarter were 12.2% and 34.0%,
respectively.
Commenting on the financial results and business outlook,
Chairman and Chief Executive Officer Steve Angel said, “Praxair’s
industrial gas businesses in Asia, Europe and South America grew
volumes while benefiting from new on-site project start-ups.
However, North America volumes experienced further declines due to
weaker upstream energy and U.S. manufacturing activity. Globally,
consumer-related end-markets remained healthy and we completed a
synergistic European carbon dioxide acquisition that will further
expand our food and beverage end-market exposure.
“Praxair’s strategy of optimizing the base business, growing
resilient end-markets, executing the project backlog and
capitalizing on acquisition and project opportunities continues to
drive strong value creation. During the second quarter, these
efforts by Praxair employees resulted in robust operating cash flow
generation at 26% of sales, and in a mixed macro-economic
environment, delivered solid operating and EBITDA margins of 22.1%
and 33.0%, respectively.
“As we look to the remainder of the year, while currency
translation appears to be less of a headwind at current foreign
exchange rates, we do not anticipate significant underlying
economic improvement in the second half. Project activity remains
strong along the U.S. Gulf Coast, and we continue to expect to grow
capital investments with new long-term customer supply contracts to
further secure future growth. Praxair’s relentless focus on
operational excellence and financial discipline will consistently
deliver strong cash flow and earnings per share for our
shareholders.”
For the third quarter of 2016, Praxair expects adjusted diluted
earnings per share in the range of $1.35 to $1.42, which excludes
the impact of pension settlement charges of approximately $0.01 per
share expected to be recorded. As a result, GAAP diluted earnings
per share is expected to be in the range of $1.34 to $1.41.
For full-year 2016, Praxair expects adjusted diluted earnings
per share to be in the range of $5.45 to $5.60. This guidance
assumes a negative currency translation impact of approximately 3%
year over year. This full-year guidance excludes a $0.05 per share
impact of a bond redemption charge taken in the first quarter and a
pension settlement expected to be recorded in the third quarter. As
a result, GAAP diluted earnings per share is expected to be in the
range of $5.40 to $5.55. Full-year capital expenditures are
expected to be approximately $1.4 billion.
Following is additional detail on second-quarter 2016 results by
segment.
In North America, second-quarter sales were $1,411 million, 5%
below the prior-year quarter. Excluding cost pass-through and
negative currency translation, sales were 1% lower than the
prior-year quarter. Price attainment and volume growth to food and
beverage, healthcare and refining customers were more than offset
by weaker sales to upstream energy and manufacturing end-markets.
Operating profit was $359 million.
In Europe, second-quarter sales were $355 million, 7% above the
prior-year quarter. Organic sales grew 4% from the prior year due
to higher volumes, including new project start-ups, and higher
price. Acquisitions contributed 3% growth, primarily related to a
carbon dioxide business largely serving the food and beverage
end-market. Operating profit of $68 million grew 8% from the prior
year, and 6%, excluding currency translation, from higher price and
volumes.
In South America, second-quarter sales were $358 million, 8%
below the prior-year quarter. Organic sales, excluding negative
currency translation, grew 5% primarily from higher price and new
on-site projects. Operating profit was $70 million.
Sales in Asia were $393 million in the quarter, 2% above the
prior-year quarter, and 6% higher excluding negative currency
impact. Volume growth included new plant start-ups in China and
India. Operating profit was $67 million.
Praxair Surface Technologies had second-quarter sales of $148
million as compared to $150 million in the prior-year quarter.
Organic sales were 2% lower as favorable price and higher aerospace
volumes were more than offset by weaker energy end-market sales.
Operating profit was $24 million.
Praxair, Inc., a Fortune 300 company with 2015 sales of $11
billion, is a leading industrial gas 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, primary metals and
many others. More information about Praxair, Inc. is available at
www.praxair.com.
Adjusted amounts are non-GAAP measures. Additionally, measures
such as EBITDA, free cash flow, after-tax return on capital, return
on equity and debt-to-capital are also non-GAAP measures. See the
attachments for a summary of non-GAAP Reconciliations and
calculations of non-GAAP measures.
Attachments: Statements of Income, Balance Sheets, Statements of
Cash Flows, Segment Information, Quarterly Financial Summary,
Summary Non-GAAP Reconciliations and Appendix: Non-GAAP
Measures.
A teleconference about Praxair’s second-quarter results is being
held this morning, July 28, at 11:00 am Eastern Daylight Time. The
number is (631) 485-4849 – Conference ID: 45788403. The call is
also 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; the impact of potential unusual or non-recurring
items; 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 GAAP or adjusted 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 latest Annual Report on Form 10-K 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 June 30, June 30,
2016 2015 2016 2015 SALES
$ 2,665 $ 2,738 $ 5,174 $ 5,495 Cost of sales 1,468 1,516 2,849
3,046 Selling, general and administrative 308 297 582 596
Depreciation and amortization 281 278 553 555 Research and
development 24 23 47 47 Cost reduction program and other charges -
146 - 146 Other income (expense) - net 4 2 (1)
(2)
OPERATING PROFIT 588 480 1,142 1,103 Interest
expense - net 44 40 109 84
INCOME
BEFORE INCOME TAXES AND EQUITY INVESTMENTS 544 440 1,033 1,019
Income taxes 146 131 279 293
INCOME
BEFORE EQUITY INVESTMENTS 398 309 754 726 Income from equity
investments 11 10 21 21
NET INCOME
(INCLUDING NONCONTROLLING INTERESTS) 409 319 775 747 Less:
noncontrolling interests (10) (11) (20)
(23)
NET INCOME - PRAXAIR, INC. $ 399 $ 308 $ 755 $ 724
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
Basic earnings per share $ 1.40 $ 1.07 $ 2.64 $ 2.51 Diluted
earnings per share $ 1.39 $ 1.06 $ 2.63 $ 2.49 Cash
dividends $ 0.75 $ 0.715 $ 1.50 $ 1.43
WEIGHTED AVERAGE
SHARES OUTSTANDING Basic shares outstanding (000's) 285,702
287,939 285,566 288,541 Diluted shares outstanding (000's) 287,727
290,102 287,426 290,940 Note: See page 9 for a
reconciliation to 2016 adjusted amounts which are non-GAAP.
PRAXAIR, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (Millions of dollars)
(UNAUDITED) June 30, December
31, 2016 2015 ASSETS Cash and cash
equivalents $ 567 $ 147 Accounts receivable - net 1,741 1,601
Inventories 559 531 Prepaid and other current assets 396
347
TOTAL CURRENT ASSETS 3,263 2,626 Property, plant
and equipment - net 11,578 10,998 Goodwill 3,149 2,986 Other
intangibles - net 612 568 Other long-term assets 1,209
1,141
TOTAL ASSETS $ 19,811 $ 18,319
LIABILITIES AND EQUITY Accounts payable $ 870 $ 791
Short-term debt 757 250 Current portion of long-term debt 9 6 Other
current liabilities 822 846
TOTAL CURRENT
LIABILITIES 2,458 1,893 Long-term debt 9,190 8,975 Other
long-term liabilities 2,604 2,545
TOTAL
LIABILITIES 14,252 13,413
REDEEMABLE NONCONTROLLING
INTERESTS 12 113
PRAXAIR, INC. SHAREHOLDERS'
EQUITY: Common stock 4 4 Additional paid-in capital 4,005 4,005
Retained earnings 12,559 12,229 Accumulated other comprehensive
income (loss) (4,174) (4,596) Less: Treasury stock, at cost
(7,254) (7,253) Total Praxair, Inc. Shareholders' Equity
5,140 4,389 Noncontrolling interests 407 404
TOTAL
EQUITY 5,547 4,793
TOTAL LIABILITIES AND
EQUITY $ 19,811 $ 18,319
PRAXAIR, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Millions of dollars)
(UNAUDITED) Quarter Ended Year to Date
June 30, June 30, 2016 2015 2016
2015 OPERATIONS Net income - Praxair, Inc. $ 399 $
308 $ 755 $ 724 Noncontrolling interests 10 11
20 23 Net income (including noncontrolling interests) 409
319 775 747 Adjustments to reconcile net income to net cash
provided by operating activities: Cost reduction program and other
charges, net of payments - 135 - 135 Depreciation and amortization
281 278 553 555 Accounts receivable (41) 6 (61) (44) Inventory (1)
(9) (8) (15) Payables and accruals 14 3 (63) (63) Pension
contributions (4) (1) (6) (12) Deferred income taxes and other
48 (21) 69 (75) Net cash provided by
operating activities 706 710 1,259
1,228
INVESTING Capital expenditures (357) (352)
(680) (749) Acquisitions, net of cash acquired (262) (38) (325)
(43) Divestitures and asset sales 6 238 8
240 Net cash used for investing activities (613)
(152) (997) (552)
FINANCING Debt
increase (decrease) - net 595 (89) 690 201 Issuances of common
stock 26 17 60 61 Purchases of common stock (51) (234) (83) (469)
Cash dividends - Praxair, Inc. shareholders (214) (205) (428) (412)
Excess tax benefit on stock option exercises - 3 - 17
Noncontrolling interest transactions and other (107)
(22) (109) (38) Net cash provided by (used for)
financing activities 249 (530) 130 (640) Effect of exchange
rate changes on cash and cash equivalents 4 (9)
28 (26) Change in cash and cash equivalents
346 19 420 10 Cash and cash equivalents, beginning-of-period
221 117 147 126 Cash and cash
equivalents, end-of-period $ 567 $ 136 $ 567 $ 136
PRAXAIR, INC. AND SUBSIDIARIES SEGMENT INFORMATION
(Millions of dollars) (UNAUDITED)
Quarter Ended Year to Date June
30, June 30, 2016 2015 2016
2015 SALES North America $ 1,411 $ 1,482 $ 2,764 $
2,981 Europe 355 331 675 657 South America 358 388 669 789 Asia 393
387 769 758 Surface Technologies 148 150 297
310 Consolidated sales $ 2,665 $ 2,738 $ 5,174 $ 5,495
OPERATING PROFIT North America $ 359 $ 388 $ 708 $
767 Europe 68 63 130 125 South America 70 81 125 166 Asia 67 69 130
138 Surface Technologies 24 25 49 53
Segment operating profit $ 588 $ 626 $ 1,142 $ 1,249 Cost reduction
program and other charges - (146) -
(146) Total operating profit $ 588 $ 480 $ 1,142 $ 1,103
PRAXAIR, INC. AND
SUBSIDIARIES QUARTERLY FINANCIAL SUMMARY (Millions of
dollars, except per share data) (UNAUDITED)
2016 (c) 2015 (d) Q2 Q1 Q4
Q3 Q2 Q1 FROM THE INCOME STATEMENT
Sales $ 2,665 $ 2,509 $ 2,595 $ 2,686 $ 2,738 $ 2,757 Cost of sales
1,468 1,381 1,426 1,488 1,516 1,530 Selling, general and
administrative 308 274 275 281 297 299 Depreciation and
amortization 281 272 275 276 278 277 Research and development 24 23
23 23 23 24 Cost reduction program and other charges - - - 26 146 -
Other income (expense) - net 4 (5) 28 2
2 (4) Operating profit 588 554
624 594 480 623 Interest expense - net 44 65 42 35 40 44 Income
taxes (b) 146 133 163 156 131 162 Income from equity investments
11 10 12 10 10 11 Net
income (including noncontrolling interests) 409 366
431 413 319 428 Less: noncontrolling interests (10)
(10) (9) (12) (11) (12) Net income -
Praxair, Inc. $ 399 $ 356 $ 422 $ 401 $ 308 $ 416 PER SHARE
DATA - PRAXAIR, INC. SHAREHOLDERS Diluted earnings per share $ 1.39
$ 1.24 $ 1.47 $ 1.40 $ 1.06 $ 1.43 Cash dividends per share $ 0.75
$ 0.75 $ 0.715 $ 0.715 $ 0.715 $ 0.715 Diluted weighted average
shares outstanding (000's) 287,727 286,665 286,856 287,311 290,102
291,652
ADJUSTED AMOUNTS (a) Operating profit $ 588 $
554 $ 624 $ 620 $ 626 $ 623 Operating margin 22.1% 22.1% 24.0%
23.1% 22.9% 22.6% Net Income $ 399 $ 366 $ 422 $ 419 $ 420 $ 416
Diluted earnings per share $ 1.39 $ 1.28 $ 1.47 $ 1.46 $ 1.45 $
1.43
FROM THE BALANCE SHEET Net debt (a) $ 9,389 $
9,183 $ 9,084 $ 9,344 $ 9,177 $ 9,243 Capital (a) $ 14,948 $ 14,607
$ 13,990 $ 14,157 $ 14,696 $ 14,806 Debt-to-capital ratio (a) 62.8%
62.9% 64.9% 66.0% 62.4% 62.4%
FROM THE STATEMENT OF CASH
FLOWS Cash flow from operations (b) $ 706 $ 553 $ 791 $ 676 $
710 $ 518 Cash flow used for investing activities 613 384 351 400
152 400 Cash flow (provided by) used for financing activities (b)
(249) 119 410 260 530 110 Capital expenditures 357 323 387 405 352
397 Acquisitions 262 63 39 - 38 5 Cash dividends 214 214 204 203
205 207
OTHER INFORMATION After-tax return on capital
(ROC) (a) 12.2% 12.4% 12.6% 12.5% 12.6% 12.7% Return on Praxair,
Inc. shareholders' equity (ROE) (a) 34.0% 34.6% 34.6% 32.5% 30.5%
29.6% Adjusted EBITDA (a) $ 880 $ 836 $ 911 $ 906 $ 914 $ 911
Adjusted EBITDA margin (a) 33.0% 33.3% 35.1% 33.7% 33.4% 33.0%
Debt-to-adjusted EBITDA ratio (a) 2.6 2.6 2.5 2.5 2.4 2.3 Number of
employees 26,896 26,558 26,657 26,989 27,302 27,680
SEGMENT DATA SALES North America $ 1,411 $ 1,353 $ 1,421 $
1,463 $ 1,482 $ 1,499 Europe 355 320 325 338 331 326 South America
358 311 299 343 388 401 Asia 393 376 398 395 387 371 Surface
Technologies 148 149 152 147 150
160 Total sales $ 2,665 $ 2,509 $ 2,595 $ 2,686 $ 2,738 $
2,757 OPERATING PROFIT North America $ 359 $ 349 $ 406 $ 385 $ 388
$ 379 Europe 68 62 62 63 63 62 South America 70 55 55 70 81 85 Asia
67 63 74 77 69 69 Surface Technologies 24 25
27 25 25 28 Segment operating profit 588 554
624 620 626 623 Cost reduction program and other charges -
- - (26) (146) - Total operating
profit $ 588 $ 554
$ 624 $ 594 $ 480 $ 623 (a) Non-GAAP measure, see
Appendix. (b) During the second quarter 2016, Praxair
adopted the FASB's Accounting Standards Update ("ASU") 2016-09
relating to the accounting for stock compensation. Accordingly,
effective with the 2016 second quarter, income taxes and operating
cash flows include excess tax benefits related to stock
compensation. Additionally, withholding tax payments related to
stock compensation are required to be presented as financing versus
operating cash flows on a retrospective basis. (c) 2016
includes a $16 million charge to interest expense ($10 million
after-tax, or $0.04 per diluted share) in the first quarter related
to the redemption of the $325 million 5.20% notes due 2017.
(d) 2015 includes (i) a pre-tax pension settlement charge of $7
million ($5 million after-tax, or $0.02 per diluted share) in the
third quarter related to lump sum benefit payments made from the
U.S. supplemental pension plan, and (ii) pre-tax charges of $19
million ($13 million after-tax, or $0.04 per diluted share) in the
third quarter and $146 million ($112 million after-tax and
non-controlling interests, or $0.39 per diluted share) in the
second quarter, primarily related to cost reduction actions taken
in response to lower volumes resulting from economic slowdown in
emerging markets and energy related end-markets. The cost reduction
charges by segment are as follows: $67 million in South America;
$34 million in North America; $25 million in Asia; $20 million in
Europe; and $19 million in Surface Technologies.
PRAXAIR, INC. AND SUBSIDIARIES
SUMMARY NON-GAAP
RECONCILIATIONS
(UNAUDITED)
The following adjusted amounts 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. See the Non-GAAP
reconciliations starting on page 10 for additional details relating
to the Non-GAAP adjustments.
(Millions
of dollars, except per share amounts)
Sales
Operating Profit
Net Income - Praxair, Inc.
Diluted EPS
2016
2015
2016
2015
2016
2015
2016
2015
Quarter Ended
June 30
Reported GAAP Amounts $ 2,665 $ 2,738 $ 588 $ 480 $ 399 $ 308 $
1.39 $ 1.06 Cost reduction program and other charges (b) -
- - 146 -
112 - 0.39 Total adjustments
- - - 146
- 112 - 0.39 Adjusted
amounts $ 2,665 $ 2,738 $ 588 $ 626 $
399 $ 420 $ 1.39 $ 1.45
Year To Date June
30
Reported GAAP Amounts $ 5,174 $ 5,495 $ 1,142 $ 1,103 $ 755 $ 724 $
2.63 $ 2.49 Cost reduction program and other charges (b) - - - 146
- 112 - 0.39 Bond redemption (a) - -
- - 10 -
0.04 - Total adjustments - -
- 146 10
112 0.04 0.39 Adjusted amounts $ 5,174
$ 5,495 $ 1,142 $ 1,249 $ 765 $ 836 $
2.67 $ 2.88
(a) $16 million charge to interest expense ($10 million
after-tax or $0.04 per diluted share) in the 2016 first quarter
related to a bond redemption.
(b) Charges in the 2015 second quarter related to the cost
reduction program and other charges.
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 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 impacts of the 2016 first quarter bond
redemption, 2015 third quarter cost reduction program and pension
settlement, 2015 second quarter cost reduction program and other
charges, and 2014 fourth quarter pension settlement, bond
redemption and loss on Venezuela currency devaluation.
2016
2015 2014 Q2 Q1 Q4 Q3
Q2 Q1 Q4 Q3 Q2 Q1
Free Cash Flow
(FCF) - Free cash flow is a measure used by
investors, financial analysts and management to evaluate the
ability of a company to pursue opportunities that enhance
shareholder value. FCF equals cash flow from operations less
capital expenditures.
Operating cash flow $ 706 $ 553 $ 791 $ 676 $ 710 $ 518 $
772 $ 713 $ 847 $ 555 Less: capital expenditures (357)
(323) (387) (405)
(352) (397) (482) (430)
(384) (393)
Free Cash Flow $
349 $ 230 $ 404 $
271 $ 358 $ 121 $
290 $ 283 $ 463 $
162
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 $ 9,956 $ 9,404 $ 9,231 $ 9,480 $ 9,313 $ 9,360 $ 9,225
$ 9,090 $ 9,132 $ 9,236 Less: cash and cash equivalents
(567) (221) (147) (136)
(136) (117) (126) (168)
(173) (144) Net debt 9,389 9,183 9,084
9,344 9,177 9,243 9,099 8,922 8,959 9,092 Equity and redeemable
noncontrolling interests: Redeemable noncontrolling interests 12
119 113 169 175 170 176 190 194 195 Praxair, Inc. shareholders'
equity 5,140 4,888 4,389 4,264 4,964 5,018 5,623 6,552 6,911 6,600
Noncontrolling interests 407 417 404
380 380 375 387
388 395 398 Total equity
and redeemable noncontrolling interests 5,559
5,424 4,906 4,813 5,519
5,563 6,186 7,130 7,500
7,193 Capital $ 14,948 $ 14,607 $ 13,990 $ 14,157 $
14,696 $ 14,806 $ 15,285 $ 16,052 $ 16,459 $ 16,285
Debt-to-capital 62.8%
62.9% 64.9% 66.0%
62.4% 62.4% 59.5%
55.6% 54.4%
55.8%
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) $ 588 $ 554 $ 624 $ 620 $ 626
$ 623 $ 663 $ 711 $ 697 $ 675 Less: adjusted income taxes (a) (146)
(139) (163) (164) (164) (162) (161) (187) (183) (176) Less: tax
benefit on adjusted interest expense (a) (12) (14) (12) (10) (11)
(12) (12) (13) (12) (13) Add: income from equity investments
11 10 12 10 10
11 12 11 10
9 Adjusted net operating profit after-tax (NOPAT) $ 441 $
411 $ 461 $ 456 $ 461 $ 460 $ 502 $ 522 $ 512 $ 495 4-quarter
trailing adjusted NOPAT $ 1,769 $ 1,789 $ 1,838 $ 1,879 $ 1,945 $
1,996 $ 2,031 $ 2,035 $ 2,011 $ 1,990 Ending capital (see
above) $ 14,948 $ 14,607 $ 13,990 $ 14,157 $ 14,696 $ 14,806 $
15,285 $ 16,052 $ 16,459 $ 16,285 5-quarter average ending capital
$ 14,480 $ 14,451 $ 14,587 $ 14,999 $ 15,460 $ 15,777 $ 16,007 $
16,094 $ 15,987 $ 15,757
After-tax ROC (4-quarter
trailing NOPAT / 5-quarter average capital) 12.2%
12.4% 12.6%
12.5% 12.6% 12.7%
12.7% 12.6%
12.6% 12.6%
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) $ 399 $ 366 $ 422 $
419 $ 420 $ 416 $ 460 $ 477 $ 467 $ 448 4-quarter trailing adjusted
net income - Praxair, Inc. $ 1,606 $ 1,627 $ 1,677 $ 1,715 $ 1,773
$ 1,820 $ 1,852 $ 1,854 $ 1,828 $ 1,806 Ending Praxair, Inc.
shareholders' equity $ 5,140 $ 4,888 $ 4,389 $ 4,264 $ 4,964 $
5,018 $ 5,623 $ 6,552 $ 6,911 $ 6,600 5-quarter average Praxair
shareholders' equity $ 4,729 $ 4,705 $ 4,852 $ 5,284 $ 5,814 $
6,141 $ 6,459 $ 6,576 $ 6,452 $ 6,303
ROE (4-quarter
trailing adjusted net income - Praxair, Inc. / 5-quarter average
Praxair shareholders' equity) 34.0%
34.6% 34.6% 32.5%
30.5% 29.6% 28.7%
28.2% 28.3%
28.7%
Adjusted EBITDA,
Adjusted EBITDA Margin and Debt-to-Adjusted EBITDA Ratio
- These measures are used by investors, financial analysts and
management to assess a company's profitability.
Adjusted net income - Praxair, Inc. (a) $ 399 $ 366 $ 422 $
419 $ 420 $ 416 $ 460 $ 477 $ 467 $ 448 Add: adjusted
noncontrolling interests (a) 10 10 9 12 12 12 11 13 14 14 Add:
adjusted interest expense - net (a) 44 49 42 35 40 44 43 45 43 46
Add: adjusted income taxes (a) 146 139 163 164 164 162 161 187 183
176 Add: depreciation and amortization 281 272
275 276 278 277
291 301 293 285
Adjusted EBITDA $ 880 $ 836
$ 911 $ 906 $ 914
$ 911 $ 966 $ 1,023
$ 1,000 $ 969 Reported sales
2,665 2,509 2,595 2,686 2,738 2,757 2,990 3,144 3,113 3,026
Adjusted EBITDA margin 33.0% 33.3%
35.1% 33.7% 33.4% 33.0% 32.3%
32.5% 32.1% 32.0% Ending net debt (see above)
$ 9,389 $ 9,183 $ 9,084 $ 9,344 $ 9,177 $ 9,243 $ 9,099 $ 8,922 $
8,959 $ 9,092 5-quarter average net debt $ 9,236 $ 9,206 $ 9,189 $
9,157 $ 9,080 $ 9,063 $ 8,943 $ 8,895 $ 8,904 $ 8,819 4-quarter
trailing adjusted EBITDA $ 3,533 $ 3,567 $ 3,642 $ 3,697 $ 3,814 $
3,900 $ 3,958 $ 3,978 $ 3,923 $ 3,874
Debt-to-adjusted EBITDA ratio
(5-quarter average net debt / 4-quarter trailing adjusted
EBITDA)
2.6 2.6 2.5
2.5 2.4 2.3
2.3 2.2 2.3
2.3 (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
cash income taxes and cash interest, net of interest capitalized
and excluding the bond redemption costs for 2016 and 2014.
Year-to-date June 30,
First Quarter Year
Third Quarter
Second Quarter
Year
Fourth Quarter
2016 2016 2015 2015 2015
2014 2014
Adjusted
Operating Profit and Operating Profit Margin
Reported operating profit $ 1,142 $ 554 $ 2,321 $ 594 $ 480 $ 2,608
$ 525 Add: Cost reduction program and other charges - - 165 19 146
- - Add: Pension settlement charge - - 7 7 - 7 7 Add: Venezuela
currency devaluation - - - - -
131 131 Total adjustments - -
172 26 146 138 138 Adjusted operating
profit $ 1,142 $ 554 $ 2,493 $ 620 $ 626 $ 2,746 $ 663
Reported percentage change 4% Adjusted percentage change -9%
Reported sales $ 5,174 $ 2,509 $ 10,776 $ 2,686 $ 2,738 $ 12,273 $
2,990 Adjusted operating profit margin 22.1% 22.1% 23.1% 23.1%
22.9% 22.4% 22.2%
Adjusted Interest
Expense - net
Reported interest expense - net $ 109 $ 65 $ 161 $ 35 $ 40 $ 213 $
79 Less: Bond redemption (16) (16) - -
- (36) (36) Adjusted interest expense - net $
93 $ 49 $ 161 $ 35 $ 40 $ 177 $ 43
Adjusted Income
Taxes
Reported income taxes $ 279 $ 133 $ 612 $ 156 $ 131 $ 691 $ 145
Add: Cost reduction program and other charges - - 39 6 33 - - Add:
Bond redemption 6 6 - - - 14 14 Add: Income tax benefit - - - - - -
- Add: Pension settlement charge - - 2
2 - 2 2 Total adjustments 6 6
41 8 33 16 16 Adjusted income
taxes $ 285 $ 139 $ 653 $ 164 $ 164 $ 707 $ 161
Adjusted
Effective Tax Rate
Reported income before income taxes and equity investments $ 1,033
$ 489 $ 2,160 $ 559 $ 440 $ 2,395 $ 446 Add: Cost reduction program
and other charges - - 165 19 146 - - Add: Bond redemption 16 16 - -
- 36 36 Add: Pension settlement charge - - 7 7 - 7 7 Add: Venezuela
currency devaluation - - - - -
131 131 Total adjustments 16 16
172 26 146 174 174 Adjusted income
before income taxes and equity investments $ 1,049 $ 505 $ 2,332 $
585 $ 586 $ 2,569 $ 620 Adjusted income taxes (above) $ 285
$ 139 $ 653 $ 164 $ 164 $ 707 $ 161 Adjusted effective tax rate 27%
28% 28% 28% 28% 28% 26%
Adjusted
Noncontrolling Interests
Reported noncontrolling interests $ 20 $ 10 $ 44 $ 12 $ 11 $ 52 $
11 Add: Cost reduction program and other charges - - 1 - 1 - -
Less: Income tax benefit - - - -
- - - Total adjustments - - 1
- 1 - - Adjusted noncontrolling
interests $ 20 $ 10 $ 45 $ 12 $ 12 $ 52 $ 11
Adjusted Net
Income - Praxair, Inc.
Reported net income - Praxair, Inc. $ 755 $ 356 $ 1,547 $ 401 $ 308
$ 1,694 $ 302 Add: Cost reduction program and other charges - - 125
13 112 - - Add: Bond redemption 10 10 - - - 22 22 Add: Pension
settlement charge - - 5 5 - 5 5 Add: Venezuela currency devaluation
- - - - - 131 131
Total adjustments 10 10 130 18
112 158 158 Adjusted net income - Praxair, Inc. $ 765
$ 366 $ 1,677 $ 419 $ 420 $ 1,852 $ 460 Reported percentage
change 4% Adjusted percentage change -8%
Adjusted Diluted
EPS
Reported diluted EPS $ 2.63 $ 1.24 $ 5.35 $ 1.40 $ 1.06 $ 5.73 $
1.03 Add: Cost reduction program and other charges - - 0.43 0.04
0.39 - - Add: Bond redemption 0.04 0.04 - - - 0.07 0.07 Add:
Pension settlement charge - - 0.02 0.02 - 0.02 0.02 Add: Venezuela
currency devaluation - - - - -
0.45 0.45 Total adjustments 0.04 0.04
0.45 0.06 0.39 0.54 0.54
Adjusted diluted EPS $ 2.67 $ 1.28 $ 5.80 $ 1.46 $ 1.45 $ 6.27 $
1.57
Cash Income Taxes
and Interest
Income taxes paid $ 420 $ 606 Interest paid, net of interest
capitalized and excluding bond redemption $ 174 $ 174
Third Quarter and
Full-Year 2016 Diluted EPS Guidance
Third Quarter 2016
Full Year 2016 Low End High End Low
End High End 2016 GAAP diluted EPS
guidance $ 1.34 $ 1.41 $ 5.40 $ 5.55 Add: bond redemption charge -
Q1 - - 0.04 0.04 Add: estimated pension settlement impact - Q3
0.01 0.01 0.01 0.01 2016
adjusted diluted EPS guidance $ 1.35 $ 1.42 $ 5.45 $ 5.60
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160728005306/en/
Praxair, Inc.InvestorsKelcey Hoyt,
203-837-2118kelcey_hoyt@praxair.comorMediaJason Stewart,
203-837-2448jason_stewart@praxair.com
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