Praxair Reports Full-Year and Fourth-Quarter 2017 Results
Thursday, January 25, 2018 6:01:01 AM ET --Sales of $11.4 billion, 9% above prior year
--Record $3.0 billion of operating cash flow, 10% above prior year
--Record free cash flow of $1.7 billion, 32% above prior year
--EPS of $4.32; adjusted EPS of $5.85
--Fourth-Quarter 2017 Highlights
--Sales of $3.0 billion, 12% above prior-year quarter
--Record $0.5 billion of free cash flow, 57% above prior-year quarter
--Backlog $1.5 billion; includes project wins in the U.S. and Asia
--EPS of $0.11; adjusted EPS of $1.52
--Continued Progress on Merger with Linde AG
--Regulatory filings progressing
--Tax Reform Impact
--Fourth-quarter tax charge of $394 million
--Estimated future tax rate 23% - 25%
Praxair, Inc. (PX ) today reported fourth-quarter net income of $33
million and diluted earnings per share of $0.11. These results include
transaction costs of $14 million after-tax related to the proposed
merger with Linde AG and a net income tax charge of $394 million related
to the U.S. Tax Cuts and Jobs Act of 2017 ("Tax Reform"). The net tax
charge reflects the company’s best estimate of Tax Reform and may be
adjusted in future periods as required. The impact of these charges was
$1.41 of diluted earnings per share. Excluding these two items, adjusted
net income was $441 million and diluted earnings per share was $1.52, up
9% and 8%, respectively versus prior year.
Praxair’s sales in the fourth quarter were $2,953 million, 12% above the
prior-year quarter. After adjusting for positive currency translation
and cost pass-through, sales grew 8%, driven by price attainment and
higher volumes across all geographic segments and end-markets.
Reported operating profit in the fourth quarter was $636 million, 6%
above the prior-year quarter. Excluding transaction costs, adjusted
operating profit was $653 million, 9% above prior-year quarter. Reported
and adjusted operating profit margins were 21.5% and 22.1%,
respectively. EBITDA margin was 32.3% and adjusted EBITDA margin was
32.9%.
The company generated strong fourth-quarter operating cash flow of $836
million, 28% of sales. After capital expenditures of $339 million, free
cash flow was $497 million, up 57% over the prior-year quarter. The
company paid $226 million in dividends and decreased net debt by $247
million, sequentially.
For full-year 2017, sales of $11,437 million were up 9% above prior
year. Diluted earnings per share were $4.32 and on an adjusted basis,
diluted earnings per share were $5.85, up 7% versus prior year.
Full-year operating cash flow was $3,041 million, or 27% of sales. Free
cash flow, defined as operating cash flow less capital expenditures, was
$1,730 million. The company paid dividends of $901 million and reduced
net debt by $608 million.
Commenting on the financial results, Chairman and Chief Executive
Officer Steve Angel said, "We had a strong finish to 2017 with 8% EPS
growth and record free cash flow in the fourth quarter. The Praxair team
delivered on our strategy by successfully executing the project backlog,
winning several new onsite projects, and operating safely and
efficiently. We have enhanced our business portfolio by increasing
exposure to more resilient end-markets while remaining well positioned
for the industrial recovery. All of this was accomplished while making
significant progress toward our merger with Linde.
"Looking ahead to 2018, we will maintain our focus and leverage the
cyclical recovery occurring across several core geographies and
end-markets," continued Angel. "I remain confident in our ability to
grow our project backlog with new contract wins, especially in Asia and
the U.S. Gulf Coast. And recent tax reform should help stimulate new
capital investment in the United States and thus provide additional
growth opportunities in our largest market.
"In the second half of 2018, I look forward to the completion of the
merger between Praxair and Linde, which will bring together our
complementary strengths and highly talented people."
For first-quarter 2018, Praxair expects diluted earnings per share in
the range of $1.53 to $1.58, excluding transaction costs related to the
proposed merger. The company’s effective tax rate is estimated to be in
the range of 23% to 25%.
Following is additional detail on fourth-quarter 2017 results by segment.
In North America, fourth-quarter sales were $1,542 million, 9% above the
prior-year quarter, excluding currency translation. Sales growth was
driven primarily by stronger volumes to the downstream energy,
manufacturing and electronics end-markets and higher price. Operating
profit was $396 million, 10% above the prior-year quarter.
In Europe, fourth-quarter sales were $412 million, 17% above the
prior-year quarter. Excluding currency and cost pass-through, sales grew
5% from the prior year due to higher volumes, mainly led by the metals,
manufacturing and chemicals end-markets. Operating profit was $80
million, 13% above the prior-year quarter.
In South America, fourth-quarter sales were $370 million, 4% above the
prior-year quarter, excluding currency translation. Sales growth was
driven mainly by higher volumes to metals and chemicals end-markets and
price attainment. Operating profit was $60 million.
Sales in Asia were $470 million in the quarter, up 19% from the prior
year. Excluding currency and cost pass-through, sales grew 14% from the
prior year, driven by higher volumes in China, Korea and India, project
start-ups and 3% price attainment. Operating profit was $90 million, 15%
above prior-year quarter.
Praxair Surface Technologies had fourth-quarter sales of $159 million,
up 7% above prior-year quarter. Sales growth was driven primarily by
aerospace coatings. Operating profit was $27 million.
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(R) 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.
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 fourth-quarter results is being held
this morning, January 25, 2018 at 11:00 am Eastern Time. The number is
(631) 485-4849 - Conference ID: 4575769. 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 and the exchange offer, 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
--------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------
2017 2016 2017 2016 2017 2016 2017 2016
---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- ---------------------------------- ----------------------------------
Quarter Ended December 31
-------------------------------------------------
Reported GAAP Amounts $ 2,953 $ 2,644 $ 636 $ 599 $ 33 $ 406 $ 0.11 $ 1.41
Transaction costs (a) -- -- 17 -- 14 -- 0.05 --
Tax reform (b) -- -- -- -- 394 -- 1.36 --
Pension settlement charges (c) -- -- -- -- -- -- -- --
Cost reduction program and other charges, net (d) -- -- -- -- -- -- -- --
Bond redemption (e) -- -- -- -- -- -- -- --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Total adjustments -- -- 17 -- 408 -- 1.41 --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Adjusted amounts $ 2,953 $ 2,644 $ 653 $ 599 $ 441 $ 406 $ 1.52 $ 1.41
==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ==============
Year To Date December 31
-------------------------------------------------
Reported GAAP Amounts $ 11,437 $ 10,534 $ 2,448 $ 2,238 $ 1,247 $ 1,500 $ 4.32 $ 5.21
Transaction costs (a) -- -- 52 -- 48 -- 0.17 --
Tax reform (b) -- -- -- -- 394 -- 1.36 --
Pension settlement charges (c) -- -- 2 4 1 3 -- 0.01
Cost reduction program and other charges, net (d) -- -- -- 96 -- 63 -- 0.22
Bond redemption (e) -- -- -- -- -- 10 -- 0.04
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Total adjustments -- -- 54 100 443 76 1.53 0.27
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- --------------
Adjusted amounts $ 11,437 $ 10,534 $ 2,502 $ 2,338 $ 1,690 $ 1,576 $ 5.85 $ 5.48
==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ==============
(a) Charges in 2017 for transaction costs primarily related to the
potential Linde merger.
(b) On December 22, 2017 the U.S. government enacted the Tax Cuts
and Jobs Act (Tax Reform). This comprehensive tax legislation
significantly revises the U.S. corporate income tax by, among other
things, lowering corporate income tax rates, implementing a
territorial tax system and imposing a repatriation tax on deemed
repatriated earnings of foreign subsidiaries. As a result, Praxair’s
fourth-quarter net income includes a net income tax charge of $394
million comprised of the following: $467 million charge for deemed
repatriation of accumulated foreign earnings, $260 million charge
for foreign withholding taxes related to anticipated repatriation of
foreign earnings and $333 million benefit for the revaluation of
deferred tax liabilities from 35 percent to the 21 percent tax rate.
This represents the Company’s current best estimate of the tax
reform. As new information becomes available, the Company may update
this estimate.
(c) Pension settlement charges were recorded in the third quarter of
2017 related to lump sum benefit payments made from an international
pension plan and in the third quarter of 2016 related to lump sum
benefit payments made from the U.S. supplemental pension plan.
(d) Charges in the 2016 third quarter related to the cost reduction
program and other charges.
(e) Charge to interest expense in the 2016 first quarter related to
a bond redemption.
PRAXAIR, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED)
Quarter Ended Year to Date
December 31, December 31,
-------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------
2017 2016 2017 2016
-------------------------------------------------- --------------------------------------------------------- -------------------------------------------------- --------------------------------------------------
SALES $ 2,953 $ 2,644 $ 11,437 $ 10,534
Cost of sales 1,660 1,478 6,455 5,860
Selling, general and administrative 316 272 1,207 1,145
Depreciation and amortization 307 285 1,184 1,122
Research and development 24 23 93 92
Transaction costs and other charges 17 -- 54 100
Other income (expense) - net 7 13 4 23
-------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
OPERATING PROFIT 636 599 2,448 2,238
Interest expense - net 41 38 161 190
-------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
INCOME BEFORE INCOME TAXES AND EQUITY INVESTMENTS 595 561 2,287 2,048
Income taxes 558 152 1,026 551
-------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
INCOME BEFORE EQUITY INVESTMENTS 37 409 1,261 1,497
Income from equity investments 12 10 47 41
-------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) 49 419 1,308 1,538
Less: noncontrolling interests (16 ) (13 ) (61 ) (38 )
-------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- ------- -------------------- -------------------- ------- --------------------
NET INCOME - PRAXAIR, INC. $ 33 $ 406 $ 1,247 $ 1,500
==================== ======= ==================== ==================== ============== ==================== ==================== ======= ==================== ==================== ======= ====================
PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
Basic earnings per share $ 0.11 $ 1.42 $ 4.36 $ 5.25
Diluted earnings per share $ 0.11 $ 1.41 $ 4.32 $ 5.21
Cash dividends $ 0.7875 $ 0.75 $ 3.15 $ 3.00
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic shares outstanding (000’s) 286,976 285,720 286,261 285,677
Diluted shares outstanding (000’s) 290,456 287,956 289,114 287,757
Note: See page 4 for a reconciliation to 2017 adjusted amounts which
are Non-GAAP.
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of dollars)
(UNAUDITED)
December 31, December 31,
2017 2016
------------------------------------------------- -------------------------------------------------
ASSETS
Cash and cash equivalents $ 617 $ 524
Accounts receivable - net 1,804 1,641
Inventories 614 550
Prepaid and other current assets 250 165
-------------------- ------ -------------------- -------------------- ------ --------------------
TOTAL CURRENT ASSETS 3,285 2,880
Property, plant and equipment - net 12,057 11,477
Goodwill 3,233 3,117
Other intangibles - net 553 583
Other long-term assets 1,308 1,275
-------------------- ------ -------------------- -------------------- ------ --------------------
TOTAL ASSETS $ 20,436 $ 19,332
==================== ====== ==================== ==================== ====== ====================
LIABILITIES AND EQUITY
Accounts payable $ 972 $ 906
Short-term debt 238 434
Current portion of long-term debt 979 164
Other current liabilities 1,118 974
-------------------- ------ -------------------- -------------------- ------ --------------------
TOTAL CURRENT LIABILITIES 3,307 2,478
Long-term debt 7,783 8,917
Other long-term liabilities 2,824 2,485
-------------------- ------ -------------------- -------------------- ------ --------------------
TOTAL LIABILITIES 13,914 13,880
REDEEMABLE NONCONTROLLING INTERESTS 11 11
PRAXAIR, INC. SHAREHOLDERS’ EQUITY:
Common stock 4 4
Additional paid-in capital 4,084 4,074
Retained earnings 13,224 12,879
Accumulated other comprehensive income (loss) (4,098 ) (4,600 )
Less: Treasury stock, at cost (7,196 ) (7,336 )
-------------------- ------ -------------------- -------------------- ------ --------------------
Total Praxair, Inc. Shareholders’ Equity 6,018 5,021
Noncontrolling interests 493 420
-------------------- ------ -------------------- -------------------- ------ --------------------
TOTAL EQUITY 6,511 5,441
-------------------- ------ -------------------- -------------------- ------ --------------------
TOTAL LIABILITIES AND EQUITY $ 20,436 $ 19,332
==================== ====== ==================== ==================== ====== ====================
PRAXAIR, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
(UNAUDITED)
Quarter Ended Year to Date
December 31, December 31,
----------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------
2017 2016 2017 2016
----------------------------------------------- --------------------------------------------------------- ------------------------------------------------- ---------------------------------------------------------
OPERATIONS
Net income - Praxair, Inc. $ 33 $ 406 $ 1,247 $ 1,500
Noncontrolling interests 16 13 61 38
-------------------- ---- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- -------------- --------------------
Net income (including noncontrolling interests) 49 419 1,308 1,538
Adjustments to reconcile net income to net cash provided by
operating activities:
Transaction costs and other charges, net of payments (1 ) (10 ) 26 83
Tax reform income tax charge, net 394 -- 394 --
Depreciation and amortization 307 285 1,184 1,122
Accounts Receivable (9 ) 11 (92 ) (33 )
Inventory (11 ) (24 ) (22 ) (13 )
Payables and accruals 11 86 22 92
Pension contributions (5 ) (3 ) (19 ) (11 )
Deferred income taxes and other, excluding tax reform 101 (38 ) 240 (5 )
-------------------- ---- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- -------------- --------------------
Net cash provided by operating activities 836 726 3,041 2,773
-------------------- ---- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- -------------- --------------------
INVESTING
Capital expenditures (339 ) (409 ) (1,311 ) (1,465 )
Acquisitions, net of cash acquired (15 ) (18 ) (33 ) (363 )
Divestitures and asset sales 8 17 30 58
-------------------- ---- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- -------------- --------------------
Net cash used for investing activities (346 ) (410 ) (1,314 ) (1,770 )
-------------------- ---- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- -------------- --------------------
FINANCING
Debt increase (decrease) - net (268 ) (199 ) (771 ) 357
Issuances of common stock 29 30 120 139
Purchases of common stock (1 ) (95 ) (12 ) (228 )
Cash dividends - Praxair, Inc. shareholders (226 ) (214 ) (901 ) (856 )
Noncontrolling interest transactions and other (7 ) 67 (92 ) (55 )
-------------------- ---- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- -------------- --------------------
Net cash provided by (used for) financing activities (473 ) (411 ) (1,656 ) (643 )
Effect of exchange rate changes on cash and cash equivalents (7 ) (8 ) 22 17
-------------------- ---- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- -------------- --------------------
Change in cash and cash equivalents 10 (103 ) 93 377
Cash and cash equivalents, beginning-of-period 607 627 524 147
-------------------- ---- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- -------------- --------------------
Cash and cash equivalents, end-of-period $ 617 $ 524 $ 617 $ 524
==================== ==== ==================== ==================== ============== ==================== ==================== ====== ==================== ==================== ============== ====================
PRAXAIR, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Millions of dollars)
(UNAUDITED)
Quarter Ended Year to Date
December 31, December 31,
------------------------------------------------------------------------------------------------------------------------------ -----------------------------------------------------------------------------------------------------------------------
2017 2016 2017 2016
--------------------------------------------- ------------------------------------------------------ ---------------------------------------------- ----------------------------------------------
SALES
North America $ 1,542 $ 1,397 $ 6,023 $ 5,592
Europe 412 351 1,558 1,392
South America 370 352 1,501 1,399
Asia 470 395 1,738 1,555
Surface Technologies 159 149 617 596
-------------------- ----- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- ------ --------------------
Consolidated sales $ 2,953 $ 2,644 $ 11,437 $ 10,534
==================== ===== ==================== ==================== ============== ==================== ==================== ====== ==================== ==================== ====== ====================
OPERATING PROFIT
North America $ 396 $ 359 $ 1,517 $ 1,430
Europe 80 71 297 273
South America 60 64 250 257
Asia 90 78 333 276
Surface Technologies 27 27 105 102
-------------------- ----- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- ------ --------------------
Segment operating profit $ 653 $ 599 $ 2,502 $ 2,338
Transaction costs and other charges (17 ) -- (54 ) (100 )
-------------------- ----- -------------------- -------------------- -------------- -------------------- -------------------- ------ -------------------- -------------------- ------ --------------------
Total operating profit $ 636 $ 599 $ 2,448 $ 2,238
==================== ===== ==================== ==================== ============== ==================== ==================== ====== ==================== ==================== ====== ====================
PRAXAIR, INC. AND SUBSIDIARIES
QUARTERLY FINANCIAL SUMMARY
(Millions of dollars, except per share data)
(UNAUDITED)
2017 (b) 2016 (c)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
FROM THE INCOME STATEMENT
Sales $ 2,953 $ 2,922 $ 2,834 $ 2,728 $ 2,644 $ 2,716 $ 2,665 $ 2,509
Cost of sales 1,660 1,652 1,598 1,545 1,478 1,533 1,468 1,381
Selling, general and administrative 316 304 308 279 272 291 308 274
Depreciation and amortization 307 298 292 287 285 284 281 272
Research and development 24 23 23 23 23 22 24 23
Transaction costs and other charges 17 16 15 6 -- 100 -- --
Other income (expense) - net 7 (3 ) 6 (6 ) 13 11 4 (5 )
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Operating profit 636 626 604 582 599 497 588 554
Interest expense - net 41 41 38 41 38 43 44 65
Income taxes 558 162 157 149 152 120 146 133
Income from equity investments 12 12 11 12 10 10 11 10
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Net income (including noncontrolling interests) 49 435 420 404 419 344 409 366
Less: noncontrolling interests (16 ) (16 ) (14 ) (15 ) (13 ) (5 ) (10 ) (10 )
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Net income - Praxair, Inc. $ 33 $ 419 $ 406 $ 389 $ 406 $ 339 $ 399 $ 356
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PER SHARE DATA - PRAXAIR, INC. SHAREHOLDERS
Diluted earnings per share $ 0.11 $ 1.45 $ 1.41 $ 1.35 $ 1.41 $ 1.18 $ 1.39 $ 1.24
Cash dividends per share $ 0.7875 $ 0.7875 $ 0.7875 $ 0.7875 $ 0.75 $ 0.75 $ 0.75 $ 0.75
Diluted weighted average shares outstanding (000’s) 290,456 289,216 288,535 287,384 287,956 288,195 287,727 286,665
ADJUSTED AMOUNTS (a)
Operating profit $ 653 $ 642 $ 619 $ 588 $ 599 $ 597 $ 588 $ 554
Operating margin 22.1 % 22.0 % 21.8 % 21.6 % 22.7 % 22.0 % 22.1 % 22.1 %
Net Income $ 441 $ 433 $ 421 $ 395 $ 406 $ 405 $ 399 $ 366
Diluted earnings per share $ 1.52 $ 1.50 $ 1.46 $ 1.37 $ 1.41 $ 1.41 $ 1.39 $ 1.28
FROM THE BALANCE SHEET
Net debt (a) $ 8,383 $ 8,630 $ 8,832 $ 8,849 $ 8,991 $ 9,215 $ 9,389 $ 9,183
Capital (a) $ 14,905 $ 15,372 $ 15,102 $ 14,824 $ 14,443 $ 14,864 $ 14,948 $ 14,607
FROM THE STATEMENT OF CASH FLOWS
Cash flow from operations $ 836 $ 794 $ 701 $ 710 $ 726 $ 788 $ 706 $ 553
Cash flow provided by (used for) investing activities (346 ) (331 ) (313 ) (324 ) (410 ) (363 ) (613 ) (384 )
Cash flow provided by (used for) financing activities (473 ) (403 ) (384 ) (396 ) (411 ) (362 ) 249 (119 )
Capital expenditures 339 320 325 327 409 376 357 323
Acquisitions 15 16 1 1 18 20 262 63
Cash dividends 226 225 225 225 214 214 214 214
OTHER INFORMATION
After-tax return on capital (ROC) (a) 9.5 % 12.0 % 11.5 % 11.5 % 11.5 % 11.6 % 12.1 % 11.5 %
Adjusted after-tax ROC (a) 12.5 % 12.3 % 12.1 % 12.0 % 12.0 % 12.1 % 12.2 % 12.4 %
EBITDA (a) $ 955 $ 936 $ 907 $ 881 $ 894 $ 791 $ 880 $ 836
EBITDA margin (a) 32.3 % 32.0 % 32.0 % 32.3 % 33.8 % 29.1 % 33.0 % 33.3 %
Adjusted EBITDA (a) $ 972 $ 952 $ 922 $ 887 $ 894 $ 891 $ 880 $ 836
Adjusted EBITDA margin (a) 32.9 % 32.6 % 32.5 % 32.5 % 33.8 % 32.8 % 33.0 % 33.3 %
Number of employees 26,461 26,531 26,487 26,420 26,498 26,680 26,896 26,558
SEGMENT DATA
SALES
North America $ 1,542 $ 1,518 $ 1,505 $ 1,458 $ 1,397 $ 1,431 $ 1,411 $ 1,353
Europe 412 407 383 356 351 366 355 320
South America 370 389 373 369 352 378 358 311
Asia 470 451 422 395 395 391 393 376
Surface Technologies 159 157 151 150 149 150 148 149
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Total sales $ 2,953 $ 2,922 $ 2,834 $ 2,728 $ 2,644 $ 2,716 $ 2,665 $ 2,509
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OPERATING PROFIT
North America $ 396 $ 386 $ 378 $ 357 $ 359 $ 363 $ 359 $ 349
Europe 80 78 73 66 71 72 68 62
South America 60 63 63 64 64 68 70 55
Asia 90 88 80 75 78 68 67 63
Surface Technologies 27 27 25 26 27 26 24 25
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Segment operating profit 653 642 619 588 599 597 588 554
Transaction costs and other charges (17 ) (16 ) (15 ) (6 ) -- (100 ) -- --
-------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Total operating profit $ 636 $ 626 $ 604 $ 582 $ 599 $ 497 $ 588 $ 554
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(a) Non-GAAP measure, see Appendix.
(b) 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.
(c) 2016 includes (i) a $16 million charge to interest expense ($10
million after-tax, or $0.04 per diluted share) in the first quarter
related to the redemption of the $325 million 5.20% notes due 2017,
(ii) a pre-tax pension settlement charge of $4 million ($3 million
after-tax, or $0.01 per diluted share) in the third quarter related
to lump sum benefit payments made from the U.S. supplemental pension
plan, and (iii) pre-tax charges of $96 million ($63 million
after-tax and non-controlling interests, or $0.22 per diluted share)
in the third quarter, primarily related to cost reduction actions.
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 2017 transaction
costs, 2017 third quarter pension settlement, 2017 fourth quarter U.S.
tax reform, 2016 third quarter cost reduction program and pension
settlement, 2016 first quarter bond redemption, 2015 third quarter cost
reduction program and pension settlement, and 2015 second quarter cost
reduction program and other charges.
Adjusted Amounts
Fourth Third Second First Third First Third Second
Year Quarter Quarter Quarter Quarter Year Quarter Quarter Year Quarter Quarter
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------
2017 2017 2017 2017 2017 2016 2016 2016 2015 2015 2015
--------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- --------------------------------------------------------- ---------------------------------------------------------
Adjusted Operating Profit and Operating Profit Margin
Reported operating profit $ 2,448 $ 636 $ 626 $ 604 $ 582 $ 2,238 $ 497 $ 554 $ 2,321 $ 594 $ 480
Add: Cost reduction program and other charges, net -- -- -- -- -- 96 96 -- 165 19 146
Add: Pension settlement charge 2 -- 2 -- -- 4 4 -- 7 7 --
Add: Transaction costs 52 17 14 15 6 -- -- -- -- -- --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total adjustments 54 17 16 15 6 100 100 -- 172 26 146
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Adjusted operating profit $ 2,502 $ 653 $ 642 $ 619 $ 588 $ 2,338 $ 597 $ 554 $ 2,493 $ 620 $ 626
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Reported percentage change 9 % 6 %
Adjusted percentage change 7 % 9 %
Reported sales $ 11,437 $ 2,953 $ 2,922 $ 2,834 $ 2,728 $ 10,534 $ 2,716 $ 2,509 $ 10,776 $ 2,686 $ 2,738
Adjusted operating profit margin 21.9 % 22.1 % 22.0 % 21.8 % 21.6 % 22.2 % 22.0 % 22.1 % 23.1 % 23.1 % 22.9 %
Adjusted Interest Expense - net
Reported interest expense - net $ 161 $ 41 $ 41 $ 38 $ 41 $ 190 $ 43 $ 65 $ 161 $ 35 $ 40
Less: Bond redemption -- -- -- -- -- (16 ) -- (16 ) -- -- --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Adjusted interest expense - net $ 161 $ 41 $ 41 $ 38 $ 41 $ 174 $ 43 $ 49 $ 161 $ 35 $ 40
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Adjusted Income Taxes
Reported income taxes $ 1,026 $ 558 $ 162 $ 157 $ 149 $ 551 $ 120 $ 133 $ 612 $ 156 $ 131
Add: Cost reduction program and other charges, net -- -- -- -- -- 28 28 -- 39 6 33
Add: Bond redemption -- -- -- -- -- 6 -- 6 -- -- --
Add: Pension settlement charge 1 -- 1 -- -- 1 1 -- 2 2 --
Add: Tax reform (394 ) (394 ) -- -- -- -- -- -- -- -- --
Add: Transaction costs 4 3 1 -- -- -- -- -- -- -- --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total adjustments (389 ) (391 ) 2 -- -- 35 29 6 41 8 33
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Adjusted income taxes $ 637 $ 167 $ 164 $ 157 $ 149 $ 586 $ 149 $ 139 $ 653 $ 164 $ 164
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Adjusted Effective Tax Rate
Reported income before income taxes and equity investments $ 2,287 $ 595 $ 585 $ 566 $ 541 $ 2,048 $ 454 $ 489 $ 2,160 $ 559 $ 440
Add: Cost reduction program and other charges, net -- -- -- -- -- 96 96 -- 165 19 146
Add: Bond redemption -- -- -- -- -- 16 -- 16 -- -- --
Add: Pension settlement charge 2 -- 2 -- -- 4 4 -- 7 7 --
Add: Transaction costs 52 17 14 15 6 -- -- -- -- -- --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total adjustments 54 17 16 15 6 116 100 16 172 26 146
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Adjusted income before income taxes and equity investments $ 2,341 $ 612 $ 601 $ 581 $ 547 $ 2,164 $ 554 $ 505 $ 2,332 $ 585 $ 586
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Reported effective tax rate 44.9 % 93.8 % 27.7 % 27.7 % 27.5 % 26.9 % 26.4 % 27.2 % 28.3 % 27.9 % 29.8 %
Adjusted effective tax rate 27.2 % 27.3 % 27.3 % 27.0 % 27.2 % 27.1 % 26.9 % 27.5 % 28.0 % 28.0 % 28.0 %
Adjusted Noncontrolling Interests
Reported noncontrolling interests $ 61 $ 16 $ 16 $ 14 $ 15 $ 38 $ 5 $ 10 $ 44 $ 12 $ 11
Add: Cost reduction program and other charges, net -- -- -- -- -- 5 5 -- 1 -- 1
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total adjustments -- -- -- -- -- 5 5 -- 1 -- 1
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Adjusted noncontrolling interests $ 61 $ 16 $ 16 $ 14 $ 15 $ 43 $ 10 $ 10 $ 45 $ 12 $ 12
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Adjusted Net Income - Praxair, Inc.
Reported net income - Praxair, Inc. $ 1,247 $ 33 $ 419 $ 406 $ 389 $ 1,500 $ 339 $ 356 $ 1,547 $ 401 $ 308
Add: Cost reduction program and other charges, net -- -- -- -- -- 63 63 -- 125 13 112
Add: Bond redemption -- -- -- -- -- 10 -- 10 -- -- --
Add: Pension settlement charge 1 -- 1 -- -- 3 3 -- 5 5 --
Add: Tax reform 394 394 -- -- -- -- -- -- -- -- --
Add: Transaction costs 48 14 13 15 6 -- -- -- -- -- --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total adjustments 443 408 14 15 6 76 66 10 130 18 112
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Adjusted net income - Praxair, Inc. $ 1,690 $ 441 $ 433 $ 421 $ 395 $ 1,576 $ 405 $ 366 $ 1,677 $ 419 $ 420
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Reported percentage change (17 )% (92 )%
Adjusted percentage change 7 % 9 %
Adjusted Diluted EPS
Reported diluted EPS $ 4.32 $ 0.11 $ 1.45 $ 1.41 $ 1.35 $ 5.21 $ 1.18 $ 1.24 $ 5.35 $ 1.40 $ 1.06
Add: Cost reduction program and other charges, net -- -- -- -- -- 0.22 0.22 -- 0.43 0.04 0.39
Add: Bond redemption -- -- -- -- -- 0.04 -- 0.04 -- -- --
Add: Pension settlement charge -- -- -- -- -- 0.01 0.01 -- 0.02 0.02 --
Add: Tax reform 1.36 1.36 -- -- -- -- -- -- -- -- --
Add: Transaction costs 0.17 0.05 0.05 0.05 0.02 -- -- -- -- -- --
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total adjustments 1.53 1.41 0.05 0.05 0.02 0.27 0.23 0.04 0.45 0.06 0.39
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Adjusted diluted EPS $ 5.85 $ 1.52 $ 1.50 $ 1.46 $ 1.37 $ 5.48 $ 1.41 $ 1.28 $ 5.80 $ 1.46 $ 1.45
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Reported percentage change (17 )% (92 )%
Adjusted percentage change 7 % 8 %
2017 2016 2015
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
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 $ 836 $ 794 $ 701 $ 710 $ 726 $ 788 $ 706 $ 553 $ 791 $ 676 $ 710 $ 518
Less: capital expenditures (339 ) (320 ) (325 ) (327 ) (409 ) (376 ) (357 ) (323 ) (387 ) (405 ) (352 ) (397 )
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Free Cash Flow $ 497 $ 474 $ 376 $ 383 $ 317 $ 412 $ 349 $ 230 $ 404 $ 271 $ 358 $ 121
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 $ 9,000 $ 9,237 $ 9,367 $ 9,368 $ 9,515 $ 9,842 $ 9,956 $ 9,404 $ 9,231 $ 9,480 $ 9,313 $ 9,360
Less: cash and cash equivalents (617 ) (607 ) (535 ) (519 ) (524 ) (627 ) (567 ) (221 ) (147 ) (136 ) (136 ) (117 )
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Net debt 8,383 8,630 8,832 8,849 8,991 9,215 9,389 9,183 9,084 9,344 9,177 9,243
Equity and redeemable noncontrolling interests:
Redeemable noncontrolling interests 11 11 10 10 11 11 12 119 113 169 175 170
Praxair, Inc. shareholders’ equity 6,018 6,256 5,807 5,529 5,021 5,245 5,140 4,888 4,389 4,264 4,964 5,018
Noncontrolling interests 493 475 453 436 420 393 407 417 404 380 380 375
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Total equity and redeemable noncontrolling interests 6,522 6,742 6,270 5,975 5,452 5,649 5,559 5,424 4,906 4,813 5,519 5,563
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Capital $ 14,905 $ 15,372 $ 15,102 $ 14,824 $ 14,443 $ 14,864 $ 14,948 $ 14,607 $ 13,990 $ 14,157 $ 14,696 $ 14,806
Debt-to-capital 56.2 % 56.1 % 58.5 % 59.7 % 62.3 % 62.0 % 62.8 % 62.9 % 64.9 % 66.0 % 62.4 % 62.4 %
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
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. $ 33 $ 419 $ 406 $ 389 $ 406 $ 339 $ 399 $ 356 $ 422 $ 401 $ 308 $ 416
Add: noncontrolling interests 16 16 14 15 13 5 10 10 9 12 11 12
Add: interest expense - net 41 41 38 41 38 43 44 65 42 35 40 44
Less: tax benefit on interest expense - net * (11 ) (11 ) (11 ) (12 ) (10 ) (12 ) (12 ) (20 ) (12 ) (10 ) (11 ) (12 )
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Net operating profit after-tax (NOPAT) $ 79 $ 465 $ 447 $ 433 $ 447 $ 375 $ 441 $ 411 $ 461 $ 438 $ 348 $ 460
Pre-tax Adjustments:
Add: Cost reduction program and other charges, net -- -- -- -- -- 96 -- -- -- 19 146 --
Add: Pension settlement charge -- 2 -- -- -- 4 -- -- -- 7 -- --
Add: Transaction costs 17 14 15 6 -- -- -- -- -- -- -- --
Less: income taxes on pre-tax adjustments (3 ) -- -- -- -- (29 ) -- -- -- (8 ) (33 ) --
Add: Tax reform net income tax charge 394 -- -- -- -- -- -- -- -- -- -- --
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Adjusted NOPAT $ 487 $ 481 $ 462 $ 439 $ 447 $ 446 $ 441 $ 411 $ 461 $ 456 $ 461 $ 460
4-quarter trailing NOPAT $ 1,424 $ 1,792 $ 1,702 $ 1,696 $ 1,674 $ 1,688 $ 1,751 $ 1,658 $ 1,707 $ 1,616 $ 1,700 $ 1,864
4-quarter trailing adjusted NOPAT $ 1,869 $ 1,829 $ 1,794 $ 1,773 $ 1,745 $ 1,759 $ 1,769 $ 1,789 $ 1,838 $ 1,879 $ 1,945 $ 1,996
Ending capital (see above) $ 14,905 $ 15,372 $ 15,102 $ 14,824 $ 14,443 $ 14,864 $ 14,948 $ 14,607 $ 13,990 $ 14,157 $ 14,696 $ 14,806
5-quarter average ending capital $ 14,929 $ 14,921 $ 14,836 $ 14,737 $ 14,570 $ 14,513 $ 14,480 $ 14,451 $ 14,587 $ 14,999 $ 15,460 $ 15,777
After-tax ROC (4-quarter trailing NOPAT / 5-quarter average 9.5 % 12.0 % 11.5 % 11.5 % 11.5 % 11.6 % 12.1 % 11.5 % 11.7 % 10.8 % 11.0 % 11.8 %
capital)
Adjusted after-tax ROC (4-quarter trailing adjusted NOPAT / 12.5 % 12.3 % 12.1 % 12.0 % 12.0 % 12.1 % 12.2 % 12.4 % 12.6 % 12.5 % 12.6 % 12.7 %
5-quarter average capital)
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
*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. $ 33 $ 419 $ 406 $ 389 $ 406 $ 339 $ 399 $ 356 $ 422 $ 401 $ 308 $ 416
Add: noncontrolling interests 16 16 14 15 13 5 10 10 9 12 11 12
Add: interest expense - net 41 41 38 41 38 43 44 65 42 35 40 44
Add: income taxes 558 162 157 149 152 120 146 133 163 156 131 162
Add: depreciation and amortization 307 298 292 287 285 284 281 272 275 276 278 277
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
EBITDA $ 955 $ 936 $ 907 $ 881 $ 894 $ 791 $ 880 $ 836 $ 911 $ 880 $ 768 $ 911
Adjustments:
Add: Cost reduction program and other charges, net -- -- -- -- -- 96 -- -- -- 19 146 --
Add: Pension settlement charge -- 2 -- -- -- 4 -- -- -- 7 -- --
Add: Transaction costs 17 14 15 6 -- -- -- -- -- -- -- --
-------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- --------------------
Adjusted EBITDA $ 972 $ 952 $ 922 $ 887 $ 894 $ 891 $ 880 $ 836 $ 911 $ 906 $ 914 $ 911
Reported sales 2,953 2,922 2,834 2,728 2,644 2,716 2,665 2,509 2,595 2,686 2,738 2,757
EBITDA margin 32.3 % 32.0 % 32.0 % 32.3 % 33.8 % 29.1 % 33.0 % 33.3 % 35.1 % 32.8 % 28.0 % 33.0 %
Adjusted EBITDA margin 32.9 % 32.6 % 32.5 % 32.5 % 33.8 % 32.8 % 33.0 % 33.3 % 35.1 % 33.7 % 33.4 % 33.0 %
http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180125005295r1&sid=cmtx6&distro=nx&lang=en
View source version on businesswire.com: http://www.businesswire.com/news/home/20180125005295/en/
SOURCE: Praxair, Inc.
Praxair Media
Lisa Esneault, 203-837-2448
lisa_esneault@praxair.com
or
Praxair Investors
Juan Pelaez, 203-837-2213
juan_pelaez@praxair.com
