Market Overview

Praxair Reports Second-Quarter 2018 Results

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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 aerospacechemicalsfood
and beverage
electronicsenergyhealthcare,
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.

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