S&P ups Airgas outlook to positive

Standard & Poor's said it revised its outlook on Airgas Inc. to positive from stable.

Airgas' BB+ corporate credit and BB- subordinated debt ratings are affirmed, the agency said, adding that the outlook revision reflects the potential that cash flow protection measures and other key ratios will be sustained at or near current levels, which exceed expectations for the existing ratings.

Although periodic spikes in debt to fund acquisitions remain a meaningful risk factor, the company's respectable track record of integrating acquisitions, favorable earnings prospects and good business fundamentals bolster prospects for credit quality metrics, S&P said.

According to the agency, the ratings on Airgas incorporate ongoing, meaningful acquisition-related outlays, the moderate cyclicality of the manufacturing and industrial markets the company serves and management's financial policies that favor the use of debt to help fund acquisitions.

These negatives are tempered by Airgas' strong business risk profile, reflecting in part its position as the leading North American distributor of industrial gases and related equipment, generating sales of $3.2 billion, good operating margins and stable cash flows, the agency added.

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