Packaged gas is a mature industry with few new entrants, creating ongoing opportunities for Airgas to acquire independent distributors and boost its 25% market share.
Airgas maintains more than 1,100 wholly owned locations to serve national accounts, roughly the size of the next four largest distributors combined.
Each of Airgas' roughly 11 million packaged gas cylinders costs roughly $150 and generates rental fees of $6 per month. Achieving 80% utilization leads to a 2.5-year payback period, compared with a 30-year accounting life and a 50-year service life. Read more
Industrial gases remain highly competitive, and most gases are in ample supply. Price increases above cost inflation remain difficult to achieve on a timely basis.
More than half of Airgas' sales are tied to cyclical industrial manufacturing and construction markets. Volatile crude oil prices highlight its earnings sensitivity to a downturn.
The highly fragmented structure of the U.S. packaged gas sector is a global anomaly. Without a major acquisition, Airgas has limited international growth opportunities. Read more
We think Airgas has done a good job allocating shareholder capital while pursuing its growth-by-acquisition strategy. The firm has acquired more than 450 mostly small companies during the three decades since its founding. A well-honed strategy for identifying, Read more
After completing more than 450 acquisitions in its 30-year-plus history, Airgas is the largest U.S. distributor of industrial, medical, and specialty gases and hardgoods. Read more