Financial Highlights
- Sales $3.1 billion, 8% above
prior-year quarter
- Operating profit $0.7 billion, 14%
above prior-year quarter, adjusted operating profit 15%
higher
- EPS $1.65, up 17% versus prior-year
quarter, adjusted EPS $1.72, 18% above prior-year quarter
- Operating cash flow of $0.8 billion,
26% of sales
- Backlog $1.7 billion, up $200
million versus prior quarter
- Won three new onsite projects: two
in Asia, one in North America
- Started up China National Offshore
Oil Corporation (CNOOC) project
Continued Progress on Merger with Linde AG
- Executed European divestiture
agreement
- Regulatory filings
progressing
Praxair, Inc. (NYSE: PX) today reported second-quarter net
income of $480 million and diluted earnings per share of $1.65.
These results include transaction costs and other charges of $21
million after-tax, or 7 cents of diluted earnings per share,
related to the proposed merger with Linde AG. Excluding these
costs, adjusted net income was $501 million and diluted earnings
per share was $1.72, up 19% and 18% respectively versus the prior
year.
Praxair’s sales in the second quarter were $3,061 million, 8%
above the prior-year quarter, driven by 2% higher pricing and 5%
volume growth across all segments.
Second quarter reported operating profit was $689 million, 14%
above the prior-year quarter. Excluding transaction costs and other
charges, adjusted operating profit was $713 million, 15% above last
year. Reported and adjusted operating profit margins were 22.5% and
23.3%, respectively, improving from 21.4% and 21.9% in the
prior-year quarter. For the second quarter, EBITDA margin was 33.1%
and adjusted EBITDA margin was 33.9%.
The company generated second-quarter operating cash flow of $790
million, 26% of sales. Capital expenditures were $351 million,
dividends paid were $237 million and the company decreased net debt
by $318 million.
Commenting on the financial results, Chairman and Chief
Executive Officer Steve Angel said, “We continue to see positive
economic activity, primarily in Asia and North America where
overall business sentiment remains high. This led to strong sales
growth across all geographic segments and supported a project
backlog increase to $1.7 billion from new on-site wins in
electronic and chemical end-markets.
“In the second quarter, we delivered record earnings per share
of $1.72 which was 18% above prior year. Operating and EBITDA
margins expanded to 23.3% and 33.9% respectively, as incremental
volumes and price actions outpaced cost inflation. This profit
growth coupled with prudent capital management improved return on
capital 150 basis points to 13.6%.
“In addition to the strong performance, we made substantial
progress on the merger with Linde. We achieved additional
regulatory approvals and earlier this month, we announced an
agreement to sell the majority of our European business in support
of our efforts to gain EC approval.
“I am proud of the accomplishments and focus from Praxair
employees worldwide and look forward to integrating our
organization with Linde to create an even more valuable,
high-performing company.”
Following is additional detail on second-quarter 2018 results by
segment.
In North America, second-quarter sales were $1,594 million, 6%
above the prior-year quarter, driven primarily by higher price
attainment and strong volumes in the manufacturing, chemicals and
food and beverage end-markets. Operating profit of $432 million
grew 14% above the prior year due to higher volumes and price.
Europe sales grew 16% in the second quarter to $444 million or
5% excluding currency effects and higher cost pass-through.
Underlying sales growth reflects increased business activity and
higher pricing in Italy, Spain and Germany. Second-quarter
operating profit of $87 million rose 18% from the prior-year period
driven by higher volumes to all major end-markets and price.
In South America, second-quarter sales were $349 million, 4%
above the prior-year quarter, excluding currency translation. Sales
growth was driven by higher volumes to metals and healthcare
end-markets. Operating profit was $56 million.
Sales in Asia were $502 million in the quarter, up 19% from the
prior year. Excluding currency and higher cost pass-through, sales
grew 14% from the prior year, driven by 3% price, project start-ups
and higher organic volumes in China, Korea and India. Operating
profit was $107 million, 34% above prior year, reflecting continued
strong operating leverage from incremental volume, price and
ongoing productivity initiatives.
Praxair Surface Technologies had second-quarter sales of $172
million, up 14% from prior-year quarter. Overall strong pricing and
demand, including further ramping of EBPVD coating capacity serving
the aviation market, drove higher sales and margin expansion.
Operating profit of $31 million was up 24% versus prior-year
quarter.
Praxair, Inc. is a leading industrial gas company in North and
South America and one of the largest worldwide. With market
capitalization of approximately $40 billion and 2017 sales of $11
billion, the company employs over 26,000 people globally and has
been named to the Dow Jones® World Sustainability Index for 15
consecutive years. Praxair produces, sells and distributes
atmospheric, process and specialty gases, and
high-performance surface coatings. Our
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. For more
information about the company, please visit our website at
www.praxair.com.
Adjusted amounts, EBITDA, free cash flow and after-tax return on
capital are non-GAAP measures. See the attachments for a summary of
non-GAAP reconciliations and calculations of non-GAAP measures.
Effective January 1, 2018, Accounting Standards Update 2017-07
requires that pension costs, excluding service cost, be reported
below the operating profit line in the income statement.
Previously, these pension accounting impacts were included in the
income statement primarily in selling, general and administrative
expenses. Accordingly, such costs have been reclassified to “Net
pension and OPEB cost (benefit), excluding service cost” in the
income statement. Also, prior period full-year and quarterly
results, including the income statement and segment operating
profit, have been reclassified to conform to the current year
presentation. There was no impact on previously reported net income
or earnings per share.
Attachments: Summary Non-GAAP Reconciliations, Statements of
Income, Balance Sheets, Statements of Cash Flows, Segment
Information, Quarterly Financial Summary and Appendix: Non-GAAP
Measures.
A teleconference about Praxair’s second-quarter results is being
held this morning, July 26, 2018 at 11:00 am Eastern Time. The
number is (631) 485-4849 – Conference ID: 6768465. 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.
Forward-looking Statements
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 expected timing and likelihood of the
completion of the contemplated business combination with Linde AG,
including the timing, receipt and terms and conditions of any
required governmental and regulatory approvals that could reduce
anticipated benefits or cause the parties to abandon the
transaction; the occurrence of any event, change or other
circumstances that could give rise to the termination of the
business combination agreement; the ability to successfully
complete the proposed business combination, regulatory or other
limitations imposed as a result of the proposed business
combination; the success of the business following the proposed
business combination; the ability to successfully integrate the
Praxair and Linde businesses; the risk that the combined company
may be unable to achieve expected synergies or that it may take
longer or be more costly than expected to achieve those synergies;
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, including the impact of the U.S. Tax
Cuts and Jobs Act of 2017; 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 and in the proxy
statement/prospectus included in the Registration Statement on Form
S-4 (which Registration Statement was declared effective on August
14, 2017) filed by Linde plc 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 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
2018
2017
2018
2017
(b)
2018
2017
2018
2017
Quarter Ended
June 30
Reported GAAP Amounts $ 3,061 $ 2,834 $ 689 $ 606 $ 480 $ 406 $
1.65 $ 1.41 Transaction costs and other charges (a) —
— 24 15 21
15 0.07 0.05 Adjusted amounts $
3,061 $ 2,834 $ 713 $ 621 $ 501
$ 421 $ 1.72 $ 1.46
Year To Date June
30
Reported GAAP Amounts $ 6,060 $ 5,562 $ 1,342 $ 1,173 $ 942 $ 795 $
3.24 $ 2.76 Transaction costs (a) — —
43 21 39 21
0.13 0.07 Adjusted amounts $ 6,060 $
5,562 $ 1,385 $ 1,194 $ 981 $ 816
$ 3.37 $ 2.83 (a) Charges primarily for transaction
costs related to the potential Linde merger. (b) During the
first quarter 2018, Praxair adopted accounting guidance on the
presentation of net periodic pension and postretirement benefit
costs which requires non-service related costs be presented outside
of operating profit. As a result, non-service related pension and
postretirement benefit costs are now presented in the consolidated
statements of income in "Net pension and OPEB cost (benefit),
excluding service cost." Prior period information, including
segment operating profit, has been reclassified to conform with
current year presentation. The adoption of this guidance did not
impact "Net Income - Praxair, Inc."
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, 2018 2017
2018 2017 SALES $ 3,061 $ 2,834 $ 6,060
$ 5,562 Cost of sales 1,723 1,599 3,400 3,148 Selling, general and
administrative 307 305 617 595 Depreciation and amortization 311
292 622 579 Research and development 24 23 48 46 Transaction costs
and other charges 24 15 43 21 Other income (expense) - net
17 6 12 —
OPERATING PROFIT 689 606
1,342 1,173 Interest expense - net 44 38 90 79 Net pension and OPEB
cost (benefit), excluding service cost 2 2 4
(13)
INCOME BEFORE INCOME TAXES AND EQUITY
INVESTMENTS 643 566 1,248 1,107 Income taxes 158
157 306 306
INCOME BEFORE EQUITY INVESTMENTS
485 409 942 801 Income from equity investments 14 11
29 23
NET INCOME (INCLUDING NONCONTROLLING
INTERESTS) 499 420 971 824 Less: noncontrolling interests
(19) (14) (29) (29)
NET INCOME -
PRAXAIR, INC. $ 480 $ 406 $ 942 $ 795
PER SHARE DATA
- PRAXAIR, INC. SHAREHOLDERS Basic earnings per share $
1.67 $ 1.42 $ 3.27 $ 2.78 Diluted earnings per share $ 1.65
$ 1.41 $ 3.24 $ 2.76 Cash dividends $ 0.825 $ 0.7875 $ 1.65
$ 1.575
WEIGHTED AVERAGE SHARES OUTSTANDING Basic
shares outstanding (000's) 287,803 286,090 287,654 285,799 Diluted
shares outstanding (000's) 290,908 288,535 290,926 288,067
Note: See page 4 for a reconciliation to adjusted amounts which are
Non-GAAP.
PRAXAIR, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (Millions of dollars)
(UNAUDITED) June 30, December
31, 2018 2017 ASSETS Cash and cash
equivalents $ 479 $ 617 Accounts receivable - net 1,877 1,804
Inventories 606 614 Prepaid and other current assets 202
250
TOTAL CURRENT ASSETS 3,164 3,285 Property, plant
and equipment - net 11,701 12,057 Goodwill 3,200 3,233 Other
intangibles - net 525 553 Other long-term assets 1,246
1,308
TOTAL ASSETS $ 19,836 $ 20,436
LIABILITIES AND EQUITY Accounts payable $ 967 $ 972
Short-term debt 250 238 Current portion of long-term debt 979 979
Other current liabilities 1,083 1,118
TOTAL
CURRENT LIABILITIES 3,279 3,307 Long-term debt 7,229 7,783
Other long-term liabilities 2,786 2,824
TOTAL
LIABILITIES 13,294 13,914
REDEEMABLE NONCONTROLLING
INTERESTS 14 11
PRAXAIR, INC. SHAREHOLDERS'
EQUITY: Common stock 4 4 Additional paid-in capital 4,066 4,084
Retained earnings 13,690 13,224 Accumulated other comprehensive
income (loss) (4,596) (4,098) Less: Treasury stock, at cost
(7,137) (7,196) Total Praxair, Inc. Shareholders' Equity
6,027 6,018 Noncontrolling interests 501 493
TOTAL
EQUITY 6,528 6,511
TOTAL LIABILITIES AND
EQUITY $ 19,836 $ 20,436
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Millions
of dollars) (UNAUDITED)
Quarter Ended Year to Date June 30, June
30, 2018 2017 2018 2017
OPERATIONS Net income - Praxair, Inc. $ 480 $ 406 $ 942 $
795 Noncontrolling interests 19 14
29 29 Net income (including
noncontrolling interests) 499 420 971 824 Adjustments to
reconcile net income to net cash provided by operating activities:
Transaction costs and other charges, net of payments 1 11 15 17
Depreciation and amortization 311 292 622 579 Accounts Receivable
(65 ) (46 ) (147 ) (95 ) Inventory (8 ) (3 ) (10 ) (5 ) Payables
and accruals 61 18 (6 ) (24 ) Pension contributions (6 ) (3 ) (10 )
(6 ) Deferred income taxes and other (3 ) 12
43 121 Net cash provided by operating
activities 790 701 1,478
1,411
INVESTING Capital expenditures
(351 ) (325 ) (676 ) (652 ) Acquisitions, net of cash acquired — (1
) — (2 ) Divestitures and asset sales 62 13
69 17 Net cash used for
investing activities (289 ) (313 ) (607 )
(637 )
FINANCING Debt increase (decrease) -
net (277 ) (132 ) (492 ) (305 ) Issuances of common stock 15 44 44
70 Purchases of common stock (1 ) — (1 ) (11 ) Cash dividends -
Praxair, Inc. shareholders (237 ) (225 ) (474 ) (450 )
Noncontrolling interest transactions and other (16 )
(71 ) (22 ) (84 ) Net cash provided by (used for)
financing activities (516 ) (384 ) (945 ) (780 ) Effect of
exchange rate changes on cash and cash equivalents (51 )
12 (64 ) 17 Change in
cash and cash equivalents (66 ) 16 (138 ) 11 Cash and cash
equivalents, beginning-of-period 545 519
617 524 Cash and cash
equivalents, end-of-period $ 479 $ 535 $ 479 $
535
PRAXAIR, INC. AND SUBSIDIARIES SEGMENT
INFORMATION (Millions of dollars) (UNAUDITED)
Quarter Ended Year to
Date June 30, June 30, 2018 2017
2018 2017 SALES North America $ 1,594 $ 1,505
$ 3,157 $ 2,963 Europe 444 383 872 739 South America 349 373 714
742 Asia 502 422 978 817 Surface Technologies 172
151 339 301 Consolidated
sales $ 3,061 $ 2,834 $ 6,060 $ 5,562
OPERATING PROFIT North America $ 432 $ 378 $ 838 $
735 Europe 87 74 167 141 South America 56 64 110 112 Asia 107 80
211 155 Surface Technologies 31 25
59 51 Segment operating profit $ 713 $
621 $ 1,385 $ 1,194 Transaction costs and other charges (24
) (15 ) (43 ) (21 ) Total operating profit $
689 $ 606 $ 1,342 $ 1,173
PRAXAIR,
INC. AND SUBSIDIARIES QUARTERLY FINANCIAL SUMMARY
(Millions of dollars, except per share data)
(UNAUDITED)
2018 (b) 2017 (c, d) Q2 Q1 Q4
Q3 Q2 Q1 FROM THE INCOME STATEMENT
Sales $ 3,061 $ 2,999 $ 2,953 $ 2,922 $ 2,834 $ 2,728 Cost of sales
1,723 1,677 1,661 1,652 1,599 1,549 Selling, general and
administrative 307 310 312 300 305 290 Depreciation and
amortization 311 311 307 298 292 287 Research and development 24 24
24 23 23 23 Transaction costs and other charges 24 19 17 14 15 6
Other income (expense) - net 17 (5 ) 7
(3 ) 6 (6 ) Operating profit 689
653 639 632 606 567 Interest expense - net 44 46 41 41 38 41 Net
pension and OPEB cost (benefit), excluding service cost 2 2 3 6 2
(15 ) Income taxes 158 148 558 162 157 149 Income from equity
investments 14 15 12
12 11 12 Net income
(including noncontrolling interests) 499 472 49 435 420 404 Less:
noncontrolling interests (19 ) (10 ) (16 )
(16 ) (14 ) (15 ) Net income - Praxair, Inc. $
480 $ 462 $ 33 $ 419 $ 406 $ 389
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS Diluted
earnings per share $ 1.65 $ 1.59 $ 0.11 $ 1.45 $ 1.41 $ 1.35 Cash
dividends per share $ 0.8250 $ 0.8250 $ 0.7875 $ 0.7875 $ 0.7875 $
0.7875 Diluted weighted average shares outstanding (000's) 290,908
290,809 290,456 289,216 288,535 287,384
ADJUSTED AMOUNTS
(a) Operating profit $ 713 $ 672 $ 656 $ 646 $ 621 $ 573
Operating margin 23.3 % 22.4 % 22.2 % 22.1 % 21.9 % 21.0 % Net
Income $ 501 $ 480 $ 441 $ 433 $ 421 $ 395 Diluted earnings per
share $ 1.72 $ 1.65 $ 1.52 $ 1.50 $ 1.46 $ 1.37
FROM THE
BALANCE SHEET Net debt (a) $ 7,979 $ 8,297 $ 8,383 $ 8,630 $
8,832 $ 8,849 Capital (a)
$
14,521 $ 15,194 $ 14,905 $ 15,372 $ 15,102 $ 14,824
FROM
THE STATEMENT OF CASH FLOWS Cash flow from operations
$
790
$
688
$
836
$
794
$
701
$
710 Cash flow provided by (used for) investing activities (289 )
(318 ) (346 ) (331 ) (313 ) (324 ) Cash flow provided by (used for)
financing activities (516 ) (429 ) (473 ) (403 ) (384 ) (396 )
Capital expenditures 351 325 339 320 325 327 Acquisitions — — 15 16
1 1 Cash dividends 237 237 226 225 225 225
OTHER
INFORMATION After-tax return on capital (ROC) (a) 10.5 % 9.9 %
9.5 % 12.0 % 11.5 % 11.5 % Adjusted after-tax ROC (a) 13.6 % 13.0 %
12.5 % 12.3 % 12.1 % 12.0 % EBITDA (a) $ 1,014 $ 979 $ 958 $ 942 $
909 $ 866 EBITDA margin (a) 33.1 % 32.6 % 32.4 % 32.2 % 32.1 % 31.7
% Adjusted EBITDA (a) $ 1,038 $ 998 $ 975 $ 956 $ 924 $ 872
Adjusted EBITDA margin (a) 33.9 % 33.3 % 33.0 % 32.7 % 32.6 % 32.0
% Number of employees 26,658 26,550 26,461 26,531 26,487 26,420
SEGMENT DATA SALES North America $ 1,594 $ 1,563 $
1,542 $ 1,518 $ 1,505 $ 1,458 Europe 444 428 412 407 383 356 South
America 349 365 370 389 373 369 Asia 502 476 470 451 422 395
Surface Technologies 172 167 159
157 151 150 Total
sales $ 3,061 $ 2,999 $ 2,953 $ 2,922 $
2,834 $ 2,728 OPERATING PROFIT North America
432
406 396 386 378 357 Europe 87 80 81 79 74 67 South America 56 54 61
66 64 48 Asia 107 104 90 88 80 75 Surface Technologies 31
28 28 27 25
26 Segment operating profit 713 672 656 646
621 573 Transaction costs and other charges (24 ) (19
) (17 ) (14 ) (15 ) (6 ) Total
operating profit $ 689 $ 653 $ 639 $ 632
$ 606 $ 567 (a) Non-GAAP measure, see
Appendix. (b) 2018 includes (i) after-tax charges of $21
million ($0.07 per diluted share) in the second quarter primarily
for transaction costs related to the potential Linde merger, and
(ii) a charge of $18 million after-tax and noncontrolling interests
($0.06 per diluted share) in the first quarter primarily for
transaction costs related to the potential Linde merger. (c)
2017 includes (i) after-tax charges of $6 million ($0.02 per
diluted share), $15 million ($0.05 per diluted share), $13 million
($0.05 per diluted share), and $14 million ($0.05 per diluted
share) in the first, second, third, and fourth quarters,
respectively for transaction costs related to the potential Linde
merger, (ii) a pension settlement charge of $2 million ($1 million
after-tax) in the third quarter related to lump sum benefit
payments made from an international pension plan, and (iii) income
tax charges, net of $394 million ($1.36 per diluted share) in the
fourth quarter due to U.S. tax reform. (d) As a result of
the adoption of new accounting guidance on the presentation of net
periodic pension and postretirement benefit costs, prior period
information has been reclassified to conform with current year
presentation.
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 2018 transaction costs and other charges, 2017
transaction costs and other charges, 2017 third quarter pension
settlement, 2017 fourth quarter U.S. tax reform, 2016 third quarter
cost reduction program and pension settlement, and 2016 first
quarter bond redemption.
Adjusted
Amounts
Year-to-date June 30, Second Quarter First
Quarter Year Fourth Quarter Third Quarter
Second Quarter First Quarter Year Third
Quarter First Quarter 2018 2018
2018 2017 2017 2017 2017
2017 2016 2016 2016
Adjusted
Operating Profit and Operating Profit Margin
Reported operating profit $ 1,342 $ 689 $ 653 $ 2,444 $ 639 $ 632 $
606 $ 567 $ 2,247 $ 505 $ 554 Add: Cost reduction program and other
charges, net — — — — — — — — 96 96 — Add: Transaction costs and
other charges 43 24 19
52 17 14 15
6 — — —
Total adjustments 43 24 19
52 17 14 15
6 96 96 —
Adjusted operating profit $ 1,385 $ 713 $ 672
$ 2,496 $ 656 $ 646 $ 621 $ 573
$ 2,343 $ 601 $ 554 Reported
percentage change 14 % 14 % Adjusted percentage change 16 % 15 %
Reported sales $ 6,060 $ 3,061 $ 2,999 $ 11,437 $ 2,953 $
2,922 $ 2,834 $ 2,728 $ 10,534 $ 2,716 $ 2,509 Adjusted operating
profit margin 22.9 % 23.3 % 22.4 % 21.8 % 22.2 % 22.1 % 21.9 % 21.0
% 22.2 % 22.1 % 22.1 %
Adjusted Interest
Expense - net
Reported interest expense - net $ 90 $ 44 $ 46 $ 161 $ 41 $ 41 $ 38
$ 41 $ 190 $ 43 $ 65 Less: Bond redemption — —
— — — —
— — (16 ) —
(16 ) Adjusted interest expense - net $ 90 $ 44
$ 46 $ 161 $ 41 $ 41 $ 38
$ 41 $ 174 $ 43 $ 49
Adjusted Net
Pension and OPEB cost (benefit), excluding service
cost
Reported net pension and OPEB cost
(benefit), excluding service cost
$ 4 $ 2 $ 2 $ (4 ) $ 3 $ 6 $ 2 $ (15 ) 9 8 — Less: Pension
settlement charge — — —
(2 ) — (2 ) — —
(4 ) (4 ) —
Adjusted net Pension and OPEB cost
(benefit), excluding service cost
$ 4 $ 2 $ 2 $ (6 ) $ 3 $ 4 $ 2
$ (15 ) $ 5 $ 4 $ —
Adjusted Income
Taxes
Reported income taxes $ 306 $ 158 $ 148 $ 1,026 $ 558 $ 162 $ 157 $
149 $ 551 $ 120 $ 133 Add: Cost reduction program and other
charges, net — — — — — — — — 28 28 — Add: Bond redemption — — — — —
— — — 6 — 6 Add: Pension settlement charge — — — 1 — 1 — — 1 1 —
Add: Tax reform — — — (394 ) (394 ) — — — — — — Add: Transaction
costs and other charges 5 3 2
4 3 1 —
— — — —
Total adjustments 5 3 2
(389 ) (391 ) 2 —
— 35 29 6
Adjusted income taxes $ 311 $ 161 $ 150 $ 637
$ 167 $ 164 $ 157 $ 149 $ 586
$ 149 $ 139
Adjusted
Effective Tax Rate
Reported income before income taxes and equity investments $ 1,248
$ 643 $ 605 $ 2,287 $ 595 $ 585 $ 566 $ 541 $ 2,048 $ 454 $ 489
Add: Cost reduction program and other charges, net — — — — — — — —
96 96 — Add: Bond redemption — — — — — — — — 16 — 16 Add: Pension
settlement charge — — — 2 — 2 — — 4 4 — Add: Transaction costs and
other charges 43 24 19
52 17 14 15
6 — — —
Total adjustments 43 24 19
54 17 16 15
6 116 100
16 Adjusted income before income taxes and equity
investments $ 1,291 $ 667 $ 624 $ 2,341
$ 612 $ 601 $ 581 $ 547 $ 2,164
$ 554 $ 505 Reported effective tax rate 24.5 %
24.6 % 24.5 % 44.9 % 93.8 % 27.7 % 27.7 % 27.5 % 26.9 % 26.4 % 27.2
% Adjusted effective tax rate 24.1 % 24.1 % 24.0 % 27.2 % 27.3 %
27.3 % 27.0 % 27.2 % 27.1 % 26.9 % 27.5 %
Adjusted
Noncontrolling Interests
Reported noncontrolling interests $ 29 $ 19 $ 10 $ 61 $ 16 $ 16 $
14 $ 15 $ 38 $ 5 $ 10 Add: Cost reduction program and other
charges, net (1 ) — (1 ) —
— — — —
5 5 — Total
adjustments (1 ) — (1 ) —
— — — —
5 5 — Adjusted
noncontrolling interests $ 28 $ 19 $ 9 $ 61
$ 16 $ 16 $ 14 $ 15 $ 43
$ 10 $ 10
Adjusted Net
Income - Praxair, Inc.
Reported net income - Praxair, Inc. $ 942 $ 480
$
462
$
1,247
$
33
$
419
$
406
$
389
$
1,500
$
339
$
356
Add: Cost reduction program and other charges, net 1 — 1 — — — — —
63
63
— Add: Bond redemption — — — — — — — — 10 — 10 Add: Pension
settlement charge — — — 1 — 1 — — 3 3 — Add: Tax reform — — — 394
394 — — — — — — Add: Transaction costs and other charges
38 21 17 48
14 13 15 6
— — — Total adjustments
39 21 18 443
408 14 15 6
76 66 10 Adjusted net
income - Praxair, Inc. $ 981 $ 501 $ 480 $
1,690 $ 441 $ 433 $ 421 $ 395 $
1,576 $ 405 $ 366 Reported percentage
change 18 % 18 % Adjusted percentage change 20 % 19 %
Adjusted Diluted
EPS
Reported diluted EPS $ 3.24 $ 1.65
$
1.59
$
4.32
$
0.11
$
1.45
$
1.41
$
1.35
$
5.21
$
1.18
$
1.24 Add: Cost reduction program and other charges, net — — — — — —
— — 0.22 0.22 — Add: Bond redemption — — — — — — — — 0.04 — 0.04
Add: Pension settlement charge — — — — — — — — 0.01 0.01 — Add: Tax
reform — — 1.36 1.36 — — — — — — Add: Transaction costs and other
charges 0.13 0.07 0.06
0.17 0.05 0.05
0.05 0.02 — —
— Total adjustments 0.13 0.07
0.06 1.53 1.41
0.05 0.05 0.02
0.27 0.23 0.04 Adjusted diluted
EPS $ 3.37 $ 1.72 $ 1.65 $ 5.85 $ 1.52
$ 1.50 $ 1.46 $ 1.37 $ 5.48 $
1.41 $ 1.28 Reported percentage change 17 % 17
% Adjusted percentage change 19 % 18 %
2018
2017 2016 Q2 Q1 Q4
Q3 Q2 Q1 Q4
Q3 Q2 Q1 (a)
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 $ 790 $ 688 $ 836 $ 794 $ 701 $ 710 $
726 $ 788 $ 706 $ 569 Less: capital expenditures (351 )
(325 ) (339 ) (320 )
(325 ) (327 ) (409 ) (376
) (357 ) (323 )
Free Cash Flow
$ 439 $ 363 $ 497
$ 474 $ 376 $ 383
$ 317 $ 412 $ 349
$ 246
Net Debt, Capital
and 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 $ 8,458 $ 8,842 $ 9,000 $ 9,237 $ 9,367 $ 9,368 $ 9,515
$ 9,842 $ 9,956 $ 9,404 Less: cash and cash equivalents (479
) (545 ) (617 ) (607 )
(535 ) (519 ) (524 ) (627
) (567 ) (221 ) Net debt 7,979 8,297
8,383 8,630 8,832 8,849 8,991 9,215 9,389 9,183 Equity and
redeemable noncontrolling interests: Redeemable noncontrolling
interests 14 13 11 11 10 10 11 11 12 119 Praxair, Inc.
shareholders' equity 6,027 6,368 6,018 6,256 5,807 5,529 5,021
5,245 5,140 4,888 Noncontrolling interests 501
516 493 475
453 436 420
393 407 417
Total equity and redeemable noncontrolling interests 6,542
6,897 6,522
6,742 6,270 5,975
5,452 5,649 5,559
5,424 Capital $ 14,521 $ 15,194 $
14,905 $ 15,372 $ 15,102 $ 14,824 $ 14,443 $ 14,864 $ 14,948 $
14,607
Debt-to-capital 54.9 %
54.6 % 56.2 %
56.1 % 58.5
% 59.7 % 62.3
% 62.0 %
62.8 % 62.9 %
After-tax Return
on Capital and Adjusted 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).
Reported net income - Praxair, Inc. $ 480 $ 462 $ 33 $ 419 $
406 $ 389 $ 406 $ 339 $ 399 $ 356 Add: noncontrolling interests 19
10 16 16 14 15 13 5 10 10 Add: interest expense - net 44 46 41 41
38 41 38 43 44 65 Less: tax benefit on interest expense - net *
(11 ) (11 ) (11 ) (11 )
(11 ) (12 ) (10 )
(12 ) (12 ) (20 )
Net operating
profit after-tax (NOPAT) $ 532 $
507 $ 79 $ 465 $
447 $ 433 $ 447 $
375 $ 441 $ 411 Pre-tax
Adjustments: Add: Cost reduction program and other charges, net — —
— — — — — 96 — — Add: Pension settlement charge — — — 2 — — — 4 — —
Add: Transaction costs and other charges 24 19 17 14 15 6 — — — —
Less: income taxes on pre-tax adjustments (3 ) (2 ) (3 ) — — — —
(29 ) — — Add: Tax reform net income tax charge —
— 394 —
— — —
— —
—
Adjusted NOPAT $ 553 $
524 $ 487 $ 481 $
462 $ 439 $ 447 $
446 $ 441 $ 411 4-quarter
trailing NOPAT $ 1,583 $ 1,497 $ 1,424 $ 1,792 $ 1,702 $ 1,696 $
1,674 $ 1,688 $ 1,751 $ 1,658 4-quarter trailing adjusted NOPAT $
2,045 $ 1,953 $ 1,869 $ 1,829 $ 1,794 $ 1,773 $ 1,745 $ 1,759 $
1,769 $ 1,789 Ending capital (see above) $ 14,521 $ 15,194 $
14,905 $ 15,372 $ 15,102 $ 14,824 $ 14,443 $ 14,864 $ 14,948 $
14,607 5-quarter average ending capital $ 15,019 $ 15,079 $ 14,929
$ 14,921 $ 14,836 $ 14,737 $ 14,570 $ 14,513 $ 14,480 $ 14,451
After-tax ROC (4-quarter trailing NOPAT / 5-quarter
average capital) 10.5 % 9.9 %
9.5 % 12.0 % 11.5 %
11.5 % 11.5 % 11.6 %
12.1 % 11.5 % Adjusted after-tax ROC
(4-quarter trailing adjusted NOPAT / 5-quarter average capital)
13.6 % 13.0 %
12.5 % 12.3
% 12.1 %
12.0 % 12.0 %
12.1 % 12.2 %
12.4 %
* Tax benefit on interest expense - net is
generally presented using the reported effective rate.
EBITDA, Adjusted
EBITDA, EBITDA Margin and Adjusted EBITDA Margin - These
measures are used by investors, financial analysts and management
to assess a company's profitability.
Reported net income - Praxair, Inc. $ 480 $ 462 $ 33 $ 419 $
406 $ 389 $ 406 $ 339 $ 399 $ 356 Add: noncontrolling interests 19
10 $ 16 16 14 15 13 5 10 10 Add: interest expense - net 44 46 $ 41
41 38 41 38 43 44 65 Add: net pension and OPEB cost (benefit),
excluding service cost 2 2 3 6 2 (15 ) (1 ) 8 2 — Add: income taxes
158 148 558 162 157 149 152 120 146 133 Add: depreciation and
amortization 311 311 307
298 292
287 285 284
281 272
EBITDA $
1,014 $ 979 $ 958 $
942 $ 909 $ 866 $
893 $ 799 $ 882 $
836 Adjustments: Add: Cost reduction program and
other charges, net — — — — — — — 96 — — Add: Transaction costs and
other charges 24 19 17
14 15
6 — —
— —
Adjusted EBITDA
$ 1,038 $ 998 $ 975
$ 956 $ 924 $ 872
$ 893 $ 895 $ 882
$ 836 Reported sales 3,061 2,999 2,953 2,922
2,834 2,728 2,644 2,716 2,665 2,509
EBITDA margin
33.1 % 32.6 % 32.4 %
32.2 % 32.1 % 31.7 %
33.8 % 29.4 % 33.1 %
33.3 % Adjusted EBITDA margin 33.9
% 33.3 % 33.0 % 32.7
% 32.6 % 32.0 % 33.8
% 33.0 % 33.1 % 33.3
% (a) 2016 first quarter operating cash flow was
restated for the reclassification of $16 million cash payment
related to the bond redemption from operating cash flow to
financing cash flow on the statement of cash flow pursuant to new
accounting guidance adopted in the first quarter of 2018 relating
to the classification of certain cash receipts and payments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180726005170/en/
Praxair MediaLisa Esneault,
203-837-2448lisa_esneault@praxair.comorPraxair InvestorsJuan
Pelaez, 203-837-2213juan_pelaez@praxair.com
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