November 1, 2013 – Member News

Mercer Abrasives Moves into New Corporate Headquarters

Mercer Abrasives moved its corporate headquarters to Ronkonkoma, NY, to a building that has twice the capacity of its previous Deer Park, NY, facility. Greater efficiencies abound with increased space for all aspects of the operation. The new state-of-the-art facility will accommodate Mercer’s rapid growth, the ability to handle future demands and offer the exceptional service its customers demand.

Located at 1860 Smithtown Avenue in Ronkonkoma, the new facility was designed for an environment that promotes creativity and collaboration with teamwork as its main focus. Office areas include numerous collaboration spaces for open discussion and brainstorming with several meeting and break rooms.

President Jim Wallick says, “Our growth reflects not only our continued dedication to provide quality products and services, but also a testament to our hard work. We are extremely excited to now be in our new facility with even greater efficiencies.”

This consolidation does not impact the Mercer West distribution facility in Fullerton, CA.

Mercer Abrasives new headquarters in Ronkonkoma, NY

Mercer Abrasives new headquarters in Ronkonkoma, NY.

Ron Weldon Named AIWD Executive Director

The Board of Directors of the AIWD Buying Group is pleased to announce the appointment of Ron Weldon as its new executive director to replace outgoing director, Brent Kortus. Weldon will be operating out of his home office in Overland Park, KS.

Weldon has worked for and with distributors his entire career, bringing a wealth of experience to the position of AIWD executive director. He began with his family’s Airco distributorship in 1979, and since then has worked with Linde, Aeriform, Puritan Bennett, Praxair, Praxair Distribution, and most recently as the Carolinas Region Manager for Roberts Oxygen Company.

AIWD Board members Daniel Hagan (president), Don Rosenthal and Jeff Williams III made the decision after several months of scouting and interviewing. “We feel Ron brings the experience, vision and enthusiasm to the executive director position,” Hagan says. “Ron, along with our new marketing and event director, Diane Calhoun, will make a great team as the AIWD positions itself for the future. We feel they are an outstanding team to work to help our members grow their businesses. ”

Air Products Wins Canada Hydrogen Supply Contract

Air Products and its subsidiary Air Products Canada have signed a long-term agreement to supply North West Redwater Partnership with approximately 25 million standard cubic feet per day (MMSCFD) of hydrogen for North West’s Sturgeon Refinery near Edmonton, AB, Canada. The hydrogen supply to North West will come both from the recently announced new world-scale hydrogen production plant Air Products Canada will build in Scotford, Canada, and from Air Products Canada’s existing Heartland Hydrogen Pipeline. The hydrogen supply to North West is expected to begin in 2016, soon after commercialization of the new Scotford plant.

Air Products plans to build, own and operate a new hydrogen production plant adjacent to the Shell Scotford refinery and upgrader complex in Scotford. The new facility will produce over 150 MMSCFD of hydrogen and will be connected to Air Products Canada’s Heartland Hydrogen Pipeline system, which is also fed by two existing hydrogen production plants in Edmonton. The two Edmonton plants produce a combined 180 MMSCFD of hydrogen and supply refiners, upgraders, chemical processors and other industries in the Alberta Industrial Heartland region.

Besides the Heartland Hydrogen Pipeline, Air Products also has a hydrogen pipeline in Sarnia, ON, Canada, and operates the world’s largest hydrogen pipeline network in the United States Gulf Coast, as well as pipeline systems in California in the U.S. and Rotterdam, the Netherlands.

Eva Martin

Eva Martin

ArcOne Adds Manager

Eva Martin was named communications manager for ArcOne. She will be responsible for developing web-based sales and training tools, as well as all marketing communications. Martin previously worked at Lionbridge and IT Pro.

‘Destination Welding Program’ Opens at New Hampshire Community College

White Mountains Community College in Berlin, New Hampshire, opened its new $1.7 million advanced welding lab. “We’re training welders for tomorrow, not today,” says John Holt, grant coordinator for the project. The new lab and equipment at WMCC as well as a mobile teaching lab were made possible by a $20 million grant for advance manufacturing to the Community College System of New Hampshire through the Trade Adjustment Assistance Community College and Career Training grant program. From that total, $1.7 million was used for the advanced welding program at Berlin.

WMCC President Katharine Eneguess noted the existing program at the college has a strong reputation for providing hands-on welding skills. Nearly every graduate has at least one job offer, and many land jobs in the $20 an hour pay range. WMCC is building a “destination program” that the college feels can be the best in New England. They are using the most up-to-date technology and plan to stay on the cutting edge.

“We are using new technology to improve what we do best: ‘hands-on welding’ and creating professionals who are ready to enter the workforce,” Holt said. Next year, the college plans to introduce an associate degree focused on the advanced processes.

Eneguess says the college has put together a very strong advisory board and a group of business partners for the welding program who were instrumental in providing curriculum and even equipment when the program was getting started and continue to provide guidance and resources. The advisory board includes Bancroft Contracting, Bremco, Canam Structal-Bridges, Cianbro, Cross Machine, Nordic Construction, Westinghouse Electric, Berlin High School, and Steamfitters Local 131. Business partners include Airgas, Hypertherm, Lincoln Electric, Miller Electric and Victor Technologies.

Airgas Announces Earnings and 2014 Expectations

Airgas, Inc. (NYSE: ARG), reported sales and earnings results for its second quarter ended September 30, 2013, which reflected the realization of SAP-related benefits as planned, despite sluggish business conditions and continued economic uncertainty. Results for the quarter also reflected the favorable impact of one additional selling day compared to the prior year and the benefit from a change in a state income tax law.

“Our earnings results for the quarter were solidly at the midpoint of our guidance range; however, sales volumes were challenged to a greater degree than expected. Customer activity levels softened during the back half of September, which is normally a time when activity picks up meaningfully,” says Airgas President and Chief Executive Officer Michael L. Molinini. “The degree to which the federal government shutdown may have affected our customers is difficult to gauge, but it can only have had a negative impact on business confidence and spending, particularly for our smaller customers. Although we are frustrated by the current economic environment and near-term uncertainty, we will continue to focus on the growth drivers that we can control and are ready to capitalize when sustained growth in the industrial economy resumes.”

Second quarter earnings per diluted share were $1.27, up 23% over prior year, and adjusted earnings per diluted share were $1.25, up 19% over prior year. Results included SAP-related benefits, net of implementation costs and depreciation expense, of $0.11 per diluted share in the current year quarter compared to $0.09 of expense in the prior year quarter.

Second quarter sales were $1.28 billion, an increase of 4% over the prior year. Organic sales in the quarter were up 2% over the prior year, with gas and rent up 4% and hardgoods down 2%. Both total and organic sales growth in the quarter included approximately 1% from the benefit of one additional selling day compared to the prior year. Acquisitions contributed sales growth of 2% in the quarter.

“Selling, distribution and administrative expenses increased by about 4% over the prior year, with operating costs associated with acquired businesses and rising health insurance costs together representing more than 2% of the increase,” says Molinini. “The favorable impact of the reduction in SAP implementation costs compared to prior year was substantially offset by expenses associated with the expansion of our telesales business through Airgas Total Access, our strategic pricing initiative, and other strategic growth initiatives.”

Operating margin was 13.2%, up 140 basis points over prior year operating margin of 11.8% and up 120 basis points compared to prior year adjusted operating margin of 12.0%, which excluded prior year restructuring and other special charges.

“There were a number of factors that contributed to the increase in our operating margin this quarter, including the combination of a reduction in SAP implementation costs compared to the prior year and the achievement of SAP-related benefits as planned during the quarter. The impact of one additional selling day compared to the prior year, the sales mix shift toward gas and rent, and steps taken to help alleviate the impact of rising costs in the quarter also contributed to the expansion of our operating margin,” Molinini added. “Refrigerants again challenged margins this quarter as R-22 prices continued to be pressured following the EPA’s unexpected ruling in late March to allow for an increase in the production of R-22 this year.”

Year-to-date free cash flow was $238 million, up 96% over the prior year, and adjusted cash from operations was $397 million, up 43% over the prior year. The increase in cash flows was primarily driven by the lower required investment in working capital in the current year compared to the prior year.

Return on capital was 12.4% for the twelve months ended September 30, 2013, a decrease of 10 basis points from the prior year and an increase of 30 basis points from the twelve months ended June 30, 2013.

Since the beginning of its fiscal year, the Company has acquired five businesses with aggregate annual sales of approximately $12 million. Additionally, on October 7, 2013, the Company announced that it had reached a definitive agreement to acquire the assets and operations of The Encompass Gas Group, Inc., headquartered in Rockford, IL. With eleven locations and more than 130 employees in Illinois, Wisconsin, and Iowa, Encompass is one of the largest privately-owned suppliers of industrial, medical, and specialty gases and related hardgoods in the U.S., generating approximately $55 million in annual sales in 2012. The transaction is expected to close on November 1, 2013, subject to regulatory approval and satisfaction of other customary closing conditions.

Gases and Welding Distributors Association