Praxair Inc PX
Q3 2010 Earnings Call Transcript

Transcript Call Date 10/27/2010

Operator: Good day, ladies and gentlemen and welcome to the Third Quarter 2010 Praxair Earnings Conference Call. My name is Katie and I'll be your operator for today. At this time, all participants will be in a listen-only mode. We will be conducting a question-and-answer session towards the end of the conference.

I would like to now hand the call over to your host for today, Mr. Jim Sawyer, Executive Vice President and CFO. Mr. Sawyer over to you.

James S. Sawyer - EVP and CFO: Good morning and thank you all for attending our third quarter earnings call and webcast. Liz Hirsch, Director of Investor Relations and Mark Murphy, Vice President and Controller are with me this morning. Liz and I will review our third quarter results. Afterwards, I'll discuss our earnings guidance for the fourth quarter and our business outlook. We will then be available to answer questions.

Today's presentation materials are available on our website at Please read the forward-looking disclosure on page two and note that it applies to all statements made during this teleconference and website.

Praxair had a strong third quarter, with overall business trends in line with our expectations. Our results showed strong volume growth in all geographies as compared to last year. Volume growth was particularly strong in South America and Asia. As we anticipated, sequential growth from the second quarter was at a more modest pace from what we were seeing in the first half of this year. We grew operating profit and net income faster than sales from productivity and cost reductions and operating leverage from higher volumes.

We reported record net income and earnings per share despite the fact that in developed market like the U.S., Canada and Europe, our volumes are still below pre-recession levels. We generated very strong operating cash flow, started up four new plants, signed in number of new customer contracts, and acquired an investment in a leading industrial gas business in the Middle East, the region which we believe offers significant opportunity, all of which positions us well for continued future profitable growth.

Liz is going to review our quarterly results in more detail.

Elizabeth T. Hirsch - Director, IR: Thank you, Jim, and good morning. Please turn to slide three in our presentation for a summary of our third quarter results. Please note that the results for the prior year quarter and the year-over-year comparisons have been adjusted to exclude the impact of Brazil tax amnesty program and other charges last year.

Sales in the quarter were $2.5 billion, 11% above the prior year, primarily due to 9% volume growth. Sales were higher in all our major end markets. Chemicals, metals, electronics, and manufacturing had the strongest growth versus prior year.

New plant start-ups in Asia and in the U.S. contributed to overall growth. Sequentially sales were similar to the second quarter as organic volume growth was somewhat offset by summer vacation seasonality in Europe, combined with a number of customer plant outages in Europe, the U.S. and China.

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