Praxair Earnings Call Nuggets: Rebound Activity in China and Risk Assessment
Praxair, Inc. (NYSE:PX) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Rebound Activity in China
Robert Walker – Jefferies: This is Rob Walker in for Laurence. Jim, can you go into a bit more detail on the rebound you are seeing in activity in China?
James S. Sawyer – EVP and CFO: I think that you can see that in several areas. I admit the most important one in my mind is really the pace of decision making and the pace of moving forward on projects. We saw generally during the segment third quarter of 2012, kind of lot of pause in decision-making as people were waiting for the (party) members to get chosen and so forth. That in turn slowed down capital spending and now we have seen that improve. So we are seeing much quicker decision-making in terms of new project proposals and we are also seeing additional strengthening demand in merchant gases and onsite gases particularly in December and first couple of weeks of January.
Robert Walker – Jefferies: Then can you update us on where merchant utilization rates are by region and kind of how those – whether they are up or not sequentially?
James S. Sawyer – EVP and CFO: We don’t really go through them all by region, but I would tell you that utilization rates generally speaking are sequentially off in Europe. They were lower in the U.S. They were lower – in Asia actually they are up slightly, but generally they are not as strong as we would like them to be.
Mark Gulley – BGC Partners: If I take a look at the backlog guys about $1 billion of the $2.6 billion is in Asia, does it concern you Jim that backlog is little unbalanced in terms of the risk assessment?
James S. Sawyer – EVP and CFO: No, that’s a big number. I would be concerned if it was all in one country, but it’s pretty evenly split between Korea, India, and China. There is also some projects in the Middle East and Thailand, but we have large backlog in Korea, mostly related to three projects that will go in for Samsung right now in your core Korean operations, which incidentally continue to operate very well because Samsung doesn’t mix there in house manufacturing as well as outsource manufacturing. When their volumes go down, they fully outsource manufacturing back in house and that actually improved our business, that’s why our electronics business held up quite well during the quarter. India, we’ve got couple of steel projects, refinery projects and a bunch of variety of manufacturing and mining metals and so forth, so it’s pretty well balanced there. Then in China, we’ve got couple of large gasification projects underway. We don’t have anything new in steel underway, and so it’s pretty well balanced. But it’s a large amount of backlog for Asia, but that’s really where the growth is.
Mark Gulley – BGC Partners: Then secondly one of your competitors talked about refinery hydrogen outage that they benefited from in the quarter. Was it you or another competitor that had some operating problems on the U.S. Gulf Coast?
James S. Sawyer – EVP and CFO: It certainly wasn’t us. It might have been in (indiscernible). I am not sure what you are talking about.