The fiscal first quarter was a bit slower than anticipated for Airgas – on the earnings front and on the acquisitions front. Sales met the low end of the company's guidance, with the lackluster results due in large part to volatility in refrigerant pricing during the quarter, which ended June 30.
But perhaps the bigger news is that Airgas, widely known for its aggressive acquisition strategy, only completed one small acquisition. But it's not from lack of interest of the part of Airgas.
"I would say that most independents are still optimistic about the U.S. economy and still aren't back to even in terms of the volume they enjoyed pre-recession," CFO Robert McLaughlin said during the investor call to discuss the first-quarter results. "So there is a reluctance there."
"However, there are some very good distributors that are considering sale for reasons other than the economy.” Looming retirement and a desire to do something different in life were just a couple of examples.
As a result, the company remains positive about its goal of $150 million in acquired sales for 2014. "I'm optimistic, but I can't guarantee it," McLaughlin said. "We've got a pretty good pipeline, and it's early in the year. And as I said, we've decided to focus on the very best distributors out there, and I think we'll get our share."
While uncertainty around refrigerants had a negative impact on Airgas' first-quarter results, the company says it is seeing positive signs from many other areas going forward. The construction market is beginning to pick up, even though "it's nowhere near lift-off yet," said Peter McCausland, executive chairman. "…Our customers are telling us that the big surge is going to come in a couple of quarters."
Other positive signs are coming from energy markets and from growth in chemical and fertilizer production in the U.S.