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February 2, 2012
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The leading industrial gas supplier, Praxair Inc. (PX) recently executed a deal with California-based FM Industries, Inc, whereby the former sold its advanced components business to the latter for an undisclosed amount.
The business, in question, generated roughly $28 million in fiscal year 2011 and employs approximately 70 people. It designs, engineers, manufactures and supplies electrostatic chucks (ESCs) and critical chamber components for semiconductor processing equipment. As per the terms of the deal, the FM Industries also acquired operating facilities in Poughkeepsie, N.Y. and Phoenix, Ariz.
FM Industries is a wholly-owned subsidiary of NGK Insulators of Japan.
Recently, Praxair announced pricing of $600 million of 2.45% notes due February 15, 2022. The offering will close on February 6, 2012. The funds raised will be used for repayment of short-term debts, share buybacks and general corporate purposes.
Of late, Praxair reported its fourth quarter and fiscal year 2011 results with earnings per share of $1.36, up 9% year over year. Top line gained strength due to increased volumes and prices but was impacted by negative currency translation impacts. The main attraction constituted the company’s announcement of a new $1.5 billion share buyback program and a cent increase in the quarterly dividend rate of 50 cents.
With promising long-term prospects, Praxair covers increasing application areas for industrial gases. Extensive use of these gases is found in chemical processing, petroleum refining, metal production, fabricating, electronics and health care industries. By 2015, the company targets to achieve annual organic sales growth of 8%-12%; operating profit growth of 10%-15%, and earnings growth of 12%-18%.
The current Zacks Consensus Estimate for the first quarter of fiscal year 2012 is $1.36, representing a year-over-year increase of 5.61%. Estimates for the fiscal years 2012 and 2013 are $5.86 and $6.68, reflecting annual growth of 7.92% and 14.03%, respectively.
We currently maintain a Neutral recommendation on Praxair.
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