AIQUY L Air Liquide (PK)

Airgas Inc. (ARG) has expanded its dry ice and liquid carbon dioxide business throughout the Midwest with the acquisition of the maker and distributor of dry ice and carbon dioxide, Pain Enterprises Inc. The terms of the transaction were, however, not disclosed.

Bloomington, Indiana-based Pain Enterprises Inc. serves a wide range of customers, including the food and beverage industry, hospitals, and industrial and chemical manufacturers. Pain generated annual revenues of about $33 million in 2010. The company has 20 locations and more than 140 employees.

Airgas has integrated the Pain business into its Airgas Carbonic and Airgas Dry Ice operations. Included in the integration are bulk liquid carbon dioxide and dry ice manufacturing plants in Hopkinsville, Kentucky, and Riga, Michigan; a dry ice manufacturing plant in Muscatine, Iowa; and 17 bulk liquid carbon dioxide and dry ice distribution depots in Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Nebraska, Ohio, and Wisconsin.

The acquisition brings Airgas increased opportunities for expanding its Penguin Dry Ice brand into new geographies and more retail locations. Furthermore, it brings additional growth avenues for liquid CO2 and dry ice within Airgas’ national accounts business, increased support with more reliable sourcing of CO2 for its Airgas National Carbonation and Airgas regional company beverage carbonation business, and the immediate expansion of Airgas Carbonic production capabilities.

Airgas reported an EPS of 74 cents in the fourth quarter of fiscal 2011 versus 47 cents in the year-earlier quarter. For fiscal 2011 the company reported an EPS of $2.93 versus $2.34 in the prior year. Net sales stood at $1.10 billion in the fourth quarter, up from $983.3 million in the year-earlier quarter, outperforming the Zacks Consensus Estimate of $1.07 billion. For the full year, the company reported net sales of $4.25 billion, up from $3.9 billion during the prior year, above the Zacks Consensus Estimate of $4.22 billion.

The company expects fiscal 2012 first quarter adjusted earnings to increase in the range of 11%–17% from 83 cents in the prior year to come in between 92 cents and 97 cents. The guided figures include 8 cents of SAP implementation costs and depreciation expense, compared with a 3 cent charge in the prior year. For the full year the company expects adjusted earnings growth in the range of 12%–17% from $3.34 in fiscal 2011 to $3.75–$3.90.

We believe Airgas’ strong market position, growth opportunities, well-known brand identity, size and scale advantage, extensive U.S. distribution network, and product/service offering, diverse customer base and a multifaceted growth formula will favor the company in the years ahead.

Based in Randor, Pennsylvania, Airgas, through its subsidiaries, distributes industrial, medical, and specialty gases, as well as hard goods in the United States. Airgas competes with Air Products (APD) and L'Air Liquide SA (AIQUY). Currently, the company has a Zacks #3 Rank (Hold) for the short term.

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