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Airgas' Optimism Continues in Spite of Sluggish Results

Sluggish business conditions during Airgas' fiscal third quarter carried over into January, according to founder and executive chairman Peter McCausland in the company's investor call to discuss the distributor’s latest financial results. Extremely cold weather slowed activity around the country, and nonresidential construction activity dipped during the quarter.

Despite the less-than-stellar results – organic sales only increased 1 percent – "there are several bright spots that reinforce our optimism about U.S. industrial activity getting back on track more broadly as we get deeper into calendar 2014," McCausland said.

While mining equipment production continued to weaken, railcar and oil and gas equipment grew. And major construction projects already underway moved forward even with the weather.

Much of Airgas’ optimism is based on "enthusiasm" from associates in the field. "It's infectious and reinforces my excitement about the future," McCausland said.

"In the construction area … there are a lot of big jobs, particularly in power, petrochemical and energy infrastructure, that we are told are going to begin momentarily," he said. Noncyclical segments, such as universities, health care and food and beverage, are displaying "slow but steady improvement."

Not everything is rosy, of course. Metal fabrication is a mixed bag as defense spending continues to decline, and the coal industry in Virginia and Eastern Kentucky, "that's not doing very well."

But overall, expectations are "that calendar year 2014 is going to be a year of rising industrial production and pretty significant growth in nonresidential construction," McCausland said.

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