APD Air Products and Chemicals Inc

To return more value to shareholders, the board of directors of Airgas, Inc. (ARG) has authorized an increase of 10.3% in its quarterly dividend. The increased dividend of 32 cents per share is expected to be paid on September 30 to shareholders of record as on September 15. The company has hiked the dividend from 29 cents.

Previously, Airgas increased its quarterly dividend by 16% in January 2011. The company’s dividend yield is 2.00%, much higher than the industry yield of 1.26%.

Airgas has strong liquidity to support the dividend increase. The company ended the second quarter with cash and cash equivalents of $60.5 million, up from $57.2 million as of March 31, 2011. Cash from operations was an inflow of $110.3 million at the end of the fiscal first quarter 2012 versus an outflow of $130.2 million at the end of the prior-year period.

Apart from raising the dividend, the company also adds value to its shareholders through share buybacks. The board of directors of Airgas, till date in 2011, has authorized a share buyback program twice. In May, the company was permitted to repurchase up to $300 million of its outstanding shares. Earlier in February, the board had authorized a $300 million repurchase program.

Airgas reported first-quarter adjusted income of 99 cents per share, pushing ahead of the Zacks Consensus Estimate of 83 cents.

In its earnings conference call, Airgas, for the fiscal second quarter guided its adjusted EPS to a range of $0.99 to $1.03, growing at a brisk rate of 19% to 24%. For full year 2012, adjusted EPS is expected in a band of $3.90 to $4.05, growing at a 17% to 21% clip.

The Zacks Consensus Estimate for second-quarter of fiscal 2012 is $1.01 per share. For full years 2012 and 2013, the Zacks Consensus Estimates are, respectively, $4.00 per share and $4.65 per share.

The company recently realigned its operations, aimed at facilitating communication and control over each business unit. The ABCO acquisition, completed lately, also complements Airgas’ businesses with its benefits extended to the customers and employees of both Airgas and ABCO. The acquisition of Pain Enterprises gives Airgas increased opportunities for expanding its Penguin Dry Ice brand into new geographies and more retail locations.

Moreover, the company is expected to continue reaping benefits from the SAP implementation.

The quantitative Zacks #3 Rank (short-term Hold rating) for Airgas indicates no clear directional pressure on the shares over the near term.

Based in Radnor, Pennsylvania, Airgas, Inc., through its subsidiaries, distributes industrial, medical, and specialty gases, as well as hard goods in the United States. The company competes with Air Products & Chemicals Inc. (APD).

 
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