Airgas Reports 2Q Resultsby Basili Alukos, CPA | 10-29-09 | 1:52PM |
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Print Article On Thursday, packaged gas supplier Airgas ARG reported mixed second-quarter results that were dragged down by the pervasive recession. Although we think highly of the industrial gas industry, our views on Airgas remain damped because of the firm's inability to create the strong customer-switching costs that rivals Air Products APD and Praxair PX can. The firm's results mostly tracked our expectations, and we are maintaining our fair value estimate. Revenue declined 17% from the same period last year, as same-store sales fell 19%--hardgoods collapsed 27% and gas and rent dropped 14%--but acquisition-related sales increased 2%. Furthermore, the firm's strategic products (about 40% of sales), which tend to hold up better during recessionary periods because they cater to countercyclical end markets such as medical, food and beverage, and education, also decreased from last year, but at a more modest pace (9%) than overall sales. Despite these broad declines, Airgas was able to control costs impressively, firm delivering an operating margin above 11%, which was relatively unchanged from last year. Nevertheless, until a sustained recovery in nonresidential construction spending occurs, we expect that Airgas will face revenue head winds over the coming quarters, since this end market represents a considerable portion of the firm's sales.
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Analyst Notes
07-24-09 | 3:11PM Airgas Reports 1Q Results
05-06-09 | 2:51PM Airgas Reports 4Q Results
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