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Airgas, Inc. (ARG)

December 06, 2011 3:15 pm ET

Executives

Michael L. Molinini - Chief Operating officer and Executive Vice President

Analysts

Unknown Analyst

Kevin W. McCarthy - BofA Merrill Lynch, Research Division

Kevin W. McCarthy - BofA Merrill Lynch, Research Division

Everybody, I appreciate your attendance at Bank of America Merrill Lynch's Global Industrial Conference. My name is Kevin McCarthy. I cover U.S. chemical stocks for the firm, and very pleased to introduce our next presenting company, which is Airgas.

Airgas is a $4.25 billion sales company that's a leader in the U.S. market for package gases. Oxygen, nitrogen, other gases and smaller cylinders. The company also has a meaningful business in merchant gases as well as hardgoods, such as welding supplies.

Representing the company today, we have Jay Worley, who directs Investor Relations among other responsibilities; and also our speaker, Mike Molinini. Mike is Executive Vice President and Chief Operating Officer of the company. He's been in that role about 6 or 7 years now, Mike, since January of 2005. We appreciate your attendance at the conference, Mike, and look forward to an update from Airgas.

Michael L. Molinini

Thanks, Kevin, and good to be with everyone today. I'm going to take the next probably 30 minutes and give you an update on Airgas, and then be happy to take any questions.

Airgas is the premier U.S. package gas company in the U.S. We've got about 25% share. The market is still very fragmented, with about 50% of the market still in the hands of about 900 independents. The 25 -- the 100 largest independents in the U.S. account for about 25% of the market. Praxair would be the #2 largest company followed by MATHESON Tri-Gas owned by Taiyo Nippon Sanso.

Unparalleled distribution platform, and we're also significant producer of gases. The leader in the U.S. package gas market, which is the industrial medical and specialty gas markets, significant position in bulk and the leading platform in the U.S. for refrigerants, ammonia and process chemical markets.

We're the fifth largest U.S. producer of atmospheric gases, with about 10% share with 15 air separation plants, with the 16th under construction. Leading supplier of liquid carbon dioxide and dry ice and a large producer of nitrous oxide.

The hardgoods business is made up of welding and safety and related MRO supplies. We have a business called Red-D-Arc, which is a 50,000 unit rental welder, an equipment rental company. And we go to market in a whole number of different ways through branch-based field sales, retail sales, stores, strategic accounts, distributors, telesales, catalogs and e-business.

We're known locally nationwide. We like to portray ourselves this way because the core of our business is the industrial gas cylinder, which really does not travel very far. As a result, the markets -- the U.S. for us is made up of many, many small markets with about 50- to 75-mile radius circles around each of our locations.

We've got over 1,100 locations. 875, of which are branch stores, and I'll give you a little more info on what our branch store is in a minute. 300 high-pressure cylinder fill plants; 15 ASUs, like I said with one more under construction; 16 acetylene manufacturing plants; 6 liquid carbon dioxide production plants. We produce specialty gases both regionally and nationally and have 6 large regional hardgoods distribution centers.

Over 14,000 associates, of which 1,500 are sales -- field salespeople, and seeing it's how industrial gases or hazardous materials, we do virtually all of our gas distribution ourselves, and run the 15th largest private fleet in the U.S. with about 5,000 drivers. And we own 10 million cylinders, 14,000 bulk tanks and have over 5,000 delivery vehicles.

It's all about gases for us. We're really a gas company first. And our full range of our gas supply modes allows us to grow with the customer, to optimize their production and processes and reduce their costs. About 55% of our total Airgas sales is related to package gases, which are the cylinder gases and the portable dewars. About 10% of our total Airgas sales are related to bulk gas sales, which would include micro-bulk merchant liquid, 2 trailers, as well as some on-site and pipeline business.

We have 2 basic businesses. We have the gas business and the hardgoods business. They both have 2 completely different supply chains that eventually come together typically at the branch.

For the gases, the atmospheric gases, production starts in an air separation plant, where we take air -- atmospheric air, and we refrigerate it until it liquefies into its components of oxygen, nitrogen and argon. In many of our air separation plants, a portion of our capacity immediately goes into a pipeline to an adjacent customer.

Some of the product that is liquefied or the product that is liquefied is stored in large refrigerated vacuum insulated storage tanks on the property, which are then used to fill a bulk trailer, and which is the merchant gas trailers. That is delivered -- could be delivered directly to a customer in what we would call a merchant bulk. However, some of that product is also delivered to our own plants, which is our 300 cylinder fill plants where we package. We convert cryogenic bulk gases to atmospheric pressure and temperature, and then we compress them into high-pressure cylinders in a packaging plant. From that standpoint, it can either go directly to a large cylinder customer or it would go from the fill plant onto either a delivery truck for making local deliveries or it would go to a retail branch.

And from the retail branch, we would load it then on a delivery truck to make a local delivery or about 15% of our business is customers that actually come in to our stores and pick the product up.

Welding and safety products and services are another important complement. We use welding and safety products as an enabler to help us gain the gas business. It's an important complement to our customers gas needs, and it's typically those products and supplies that a customer needs in order to use the gases properly and safely.

The full-service offering, we believe, is a significant competitive advantage for Airgas. It's comprised of welding hardgoods, and welding hardgoods, includes welding machines or power supplies and automated welding equipment; as well as filler metals, which are metal alloys, which are actually used in the metal joining process; a gas apparatus, which is typically pressure reduction devices or pressure control devices to measure, monitor pressure and flow into the customer's application; and other MRO and consumable supplies like abrasives and other welding torches and tips and things like that.

I mentioned we have a business that goes under the name Red-D-Arc welder rentals. It's a welder rental business. We've got a fleet of about 50,000 units. They also do rentals of power generators, and we also use Red-D-Arc to manage our fleet of equipment used for dry ice blasting.

We're pretty big in the safety and PPE industry, offering head-to-toe protection for safety, from hardhats down to safety shoes and everything in between; respiratory protection; fall protection; and gas monitoring equipment.

We have another business, which goes under the name Oilind Safety Services, in which we provide breathing air, confined space equipment, equipment rental and repair, as well as on-site safety coordination.

The hardgoods supply chain is a little different than gases. The hardgoods start with the original equipment manufacturers, which there are several hundred significant, original equipment manufacturers that Airgas trades with. Large volume shipments might be drop shipped directly from the OEM to the large end user. Certain products go from the OEM into our regional distribution centers.

Other products, the heavier products like filler metal typically go from the OEM on scheduled shipments to the Airgas branches. And once at the Airgas branches, now we have both the hardgoods and the gases married up in the same location for those customers that require combined delivery at the same time. Our about 50% of what we shipped out of our Airgas distribution centers and replenishes the small parts items that we stock and sell through our stores. And about 50% of the shipments we make are direct shipments to satisfy the needs of our end users.

We believe we have the right expertise with over 14,000 Airgas associates ranging from engineers, chemists, welding process specialists, safety specialists, specialty gas and bulk specialists and construction specialists.

And with the expertise to create real value for customers, safety and compliance solutions, process and product optimization and supply chain solutions, our business continues to morph and develop from one of being a product business into one of being much more of a service business.

We're stronger than ever. We continue to leverage our infrastructure to drive organic sales growth. Cross-selling core and strategic products to our over 1 million plus customers. Strategic accounts program targets large multi-location customers. And our sales and marketing programs are now aligned with customer segments.

We have acquisition growth in both core and adjacent product lines, which adds density and expands our cross-sell opportunities. We're currently in the middle of a conversion to an SAP, a uniform information system, which is further going to unlock the power of the Airgas platform, which is resulting in enhanced profitability and expanding returns.

Many of you have known of us for a while as the acquisition guys. Now we've made well over 400 acquisitions. This is a history chart of our history since 1988. We have an in-house corporate development team that continually scours, looking for these opportunities, and we're very focused on the 900 remaining independent distributors. But the activity level from year-to-year is very choppy and a lot of it is very choppy as it relates to the quality of the numbers of the independent distributors and their profitability, which determines when they go ahead and want to -- decide they want to sell the business.

You can see in the periods when a non-tech IP is declining, that the number of acquisitions really tends to dry up. And now that we're coming out of that, the activity level and the amount of communication between us and the independent distributors is continuing to increase.

And we talked about core acquisitions. And core acquisitions for us are those independently owned distributors that do the same kinds of things we do. They supply package gases. In many cases, they supply the same welding hardgoods and safety supplies that we do. Their synergies are very, very strong. They overlap with us in many cases, and it's a very, very accretive acquisition when we can make them.

Strategic accounts is also very important. Strategic accounts for us represents about 20% of our sales or $1 billion. It's made up of 1,000 customers. 1,000 bill-tos serving 100,000 ship-tos. Significant competitive advantage for Airgas, superior service to large customers with multiple locations. If you're customer with multiple locations around the U.S. and you want to deal with one company, with one program, one set of prices, one set of metrics, et cetera, et cetera, we've got a tremendous value proposition for you.

We develop integrated solutions, tailored to customers. Many, many of these customers want a lot more than just a product. They want supply chain management solutions. They want process application improvements. They want productivity improvements. They want many other things that our specialist can help them deliver, which is more value and making their business more competitive in the markets they supply, and that's a high focus for us.

It's enabled by a value proposition unique to Airgas, which is an unmatched geographic coverage and a very broad combination of products application technology and service. The pipeline of opportunities remains very robust as customers tend to renew their interest in supply chain savings during slow growth periods. And as I mentioned, it's about $1 billion worth of our sales.

At the depth of the recession, when everyone else was cutting costs, we decided to restructure and add cost in our sales and marketing department and align it with customer segments. What we found was that we had such a broad array of products and services, it was very difficult for our own people to try to figure out what the optimum assortment of our products and services were optimum for the many different customers that we supply.

As a result, we realigned the national marketing teams and our strategic account teams along the lines of 10 customer segments, because what's really important to the medical or healthcare providers is completely different than what's different -- than what the metal fabrication customer wants. What the food and beverage customer wants is completely different than what the oil and gas and chemical's customers want.

It's a critical stage. It represented a critical stage in the evolution of the Airgas sales strategy. The product and service offering is now tailored to each segment's unique needs. And we have individual segment leaders that are experts in their respective fields. And our very, very largest accounts are managed and most sophisticated accounts are managed with experts that only work one segment. And it is definitely enhancing the power of the strategic accounts program.

This is a good example of -- we could develop an example like this. We have the time for every one of the segments. This happens to be an example of all the different kinds of products that we sell and all of the different applications that we could potentially penetrate in a refinery. And the range of products here ranges from very, very simple maintenance gases in the maintenance shop to very complex EPA protocol mixes and volatile organic compound standards, monitoring the air pollution limits that are coming out of the stacks.

So we could run range from something as simple as safety glasses to something as complex as chlorine refrigerants and other specialty gases to manage the water cooling and water effluent treatment systems. So it's a blend of high tech, low tech. This is in -- would be in normal operation. There's also lots of opportunities for the contractors, for us to sell the contractors that work these refineries that are in continual phases of some sort of turnaround or maintenance.

And what we've done now with the segment approach is now we can be very precise on what our offering looks like to each of these different segments, combining the best of what we have to offer for the most important value creators for our customers.

This is our approach to customer engagement. It's a cost-effective engagement approach based on customer needs, and it's the foundation of our strategic accounts program and the expansion of our telesales channel.

Now we have a group of what I would consider rather relatively large national, regional and local unique needs customers. These are customers that want more. They want a broad array of products and they typically would want more than just a delivery and local stocking. This is where our sales force spends most its time. This is where our strategic accounts people spend most of their time.

Underneath that, we have a block of customers, which we consider our standard needs customers. These are customers that buy relatively small amounts of product on a consistent basis. And there's hundreds of thousands of these in our million customer segment. These are customers that typically are under the radar of our field sales force and don't get much attention.

We have for -- 1996 acquired a telesales business that has done a remarkable job growing safety sales over the phone in the telesales channel. And now that we're putting the entire company on SAP, we are turning the telesales channel loose to manage in what a program that we call Total Access to manage the growth of hundreds of thousands of small customers that you cannot afford to really have a relationship with using the traditional channel of a field sales force.

In this example, a field salesman may see on average 5 to 6 customers a day. A telesales person is touching a minimum of 70 customers a day. So we expect great things from this.

And underneath that, we also have hundreds of thousands of intermittent need customers that have small customers with low order frequency.

SAP has been the big story for the last couple of years. We started articulating a schedule and benefits over 1.5 years ago about what we were going to do and what the schedule was and what the benefits we're going to be. And now it's 1.5 years later, and amazingly, it's the same schedule and the same story, and it looks really good.

The total benefits identified and quantified to date that we publicly discussed range from $75 million to $125 million and incremental annual run rate operating income upon full implementation. The 3 benefits that we've been talking about are the administrative and operating efficiencies that result from consolidating 12 regional companies into 4 -- the back-office administration for 12 regional companies into 4 business support centers, regional business support centers with the fifth to support our product line businesses. A price management, a goal of $40 million to $60 million from price management studies that have been done with our implementation consultant, Deloitte. We've done this with numerous other industrial distributors and chemical companies. And the accelerated sales growth that I talked about by using, expanding our telesales channel to further penetrate existing small sweet spot customers and to target new customers currently supplied by competitors.

This $75 million to $125 million really begins upon full implementation with a full run rate a year after we get the full implementation.

We've been -- we began the journey with our hardgoods supply chain infrastructure converted to SAP in July 2010. We then began a phased implementation of regional distribution companies that began in April of this year. I'm happy to report now that as of today, we've converted 4 of our larger regional distribution companies. We've now got about 40% of the Airgas sales on SAP, and things are running quite well.

We said then and we continue to say we expect full implementation by the end of calendar 2012 with full annual run rate benefits achieved by the end of calendar 2013.

If you look at how that shakes out and you look at the year we're in right now is FY '12, so our results to date for the year will have included a net EPS impact of about $0.30 to $0.34 due to the implementation costs of SAP.

As we get to FY '13, you can begin to see that the implementation costs start to decline with a net EPS impact of $0.10 to $0.15 and the very beginnings -- and that by the way, that would be heavily loaded toward the first half of our fiscal year, which would begin on April 1 with some beginnings of the net benefits towards the latter part of the year. And then FY '14 , which for us begins in April of 2013, which we really begin -- that point, the implementation expense has dropped off and at that point we expect to really begin seeing the benefits of the SAP benefits with full run rate benefit by FY '15. And the net impact by the time we get to FY '15 is very significant in the range of additional $0.65 to $0.75 a share.

And as I said earlier, as of now, the program is running well. We've got 4 businesses on. The next one converts in March. We've begun -- we have full-time people now assigned and working on each, the beginning of the execution of the 3 benefit areas. We're way down the road in the build out of the business support centers. We have facilities. We are in the process of ramping up in hiring. We have full-time people mining the Total Access telesales program and we've begun the execution of the first round of benefits at the first companies in the price management. So everything we said 1.5 years ago from our perspective as far as timing and benefits and quantification as, far as we're concerned, still stands.

We have a very resilient business model with strong leverage to the economic recovery. You can see the dotted line -- or the solid line was our revenue, how our revenue reacted during the recession. Sales declined, I think 16% -- 14%. EPS declined like 14%. You can see the recovery on our sales. You can see a very strong recovery in our earnings. Our guided range for FY '12 , which is the fiscal year we're in is $3.97 to $4.07.

I'd also mention that the results in this performance is better than 97% of the S&P 500 in total return to shareholders since our IPO in December of 1986. Next week, we celebrate our 25th anniversary as a public company, and have delivered 18% compounded annual return to shareholders since 1986, something we're very proud of.

So the key investment highlights. We become much more of an organic growth company and much -- and we don't really depend on acquisitions any longer to be the big growth engine. We still like acquisitions and we still mine them. The way I like to look at it is the organic growth is the cake and the acquisitions are the icing.

SAP is expected to enhance our earnings power pretty dramatically. We have a very customer-centric organization and culture where the customer comes first.

Our cash flow remains very, very strong, a very diversified customer base. Our performance through the last recession really demonstrated the resilience of the business model. We have a proven track record over 25 years and our value return to shareholders through dividend, growth and share repurchases continues.

So with that, I'll take questions.

Question-and-Answer Session

Kevin W. McCarthy - BofA Merrill Lynch, Research Division

If you have a question, please raise your hand, we'll bring a microphone over. So while we're waiting for the first question there. Mike, can you talk a little bit about what you're seeing terms of the leading indicators in your portfolio, particularly on the hardgoods side and what that means for point in the cycle, in your judgment?

Michael L. Molinini

We -- about 35% of our business is not gas. It's the hardgoods that are used by customers when they use the gas. Within the hardgoods segment, there are different consumable products, but about 20% of our hardgoods is what we would call capital equipment purchases by our customers. And historically, that has always been the best leading indicator of a recovery or an expanding manufacturing environment. And right now -- well, for the past 6 to 9 months and even right now, the capital equipment segment of our hardgoods business is probably stronger now than it probably has ever been. The number of inquiries and requests by customers, manufacturing customers who are looking for large, rather expensive, very complex, automated welding and cutting equipment has never been as robust as it is now. And we view that -- these are investments that you're not going to make unless you're expecting to expand production, capacity, debottleneck, improve quality and things like that in your manufacturing operation. Typically, as the cycle continues, what will happen is the capital equipment will slow down, and then the consumables and the gases will increase. So it would seem on the surface that we're still quite early in the cycle.

Unknown Analyst

I guess perhaps just following on that, if you could talk about the strength within each of your end markets, where are you seeing the particular strengths and weaknesses?

Michael L. Molinini

The 2 strongest by far are metalworking manufacturing particularly metalworking -- manufacturing in general particularly metalworking manufacturing. And particularly any type of metalworking manufacturing that results in something being manufactured that has wheels: trucks, railcars, mining equipment, tankers, flatbeds, tractors, you name it, cars, all of those are very, very strong. Now the other area that continues to grow and expand very robustly is what I would consider oil, gas and chemicals. And whether it's the chemical manufacturing, whether it's the shale play in the number of places around the country, whether it's the building of pipelines to carry the natural gas, all of those are very, very strong, by far the strongest. Medical is good. Medical never went negative in the recession. Medical for us, by the way, is primarily hospitals, nursing homes, surgery centers, first responders things like that. We're not really a home care provider. So that -- and it's very heavily weighted to our respiratory oxygen. And that business remains good and it continues to grow. Our specialty gases, our university and lab business continues to grow and do nicely. But by far, the biggest piece of our recovery of our sales has been surrounded by metalworking, by manufacturing, subset of that metalworking manufacturing; and oil, gas and chemicals.

Unknown Analyst

Mike, could you comment on the M&A activity? How are -- if the smaller businesses are more willing to sell or have discussions at this point? And have you noticed any pick up in, I guess, competitive bidding on some of those smaller companies?

Michael L. Molinini

First of all, anybody -- people that know about Airgas know that because of the -- that the income stream that we get off of the rental asset that our cash flow is very, very strong. Independent -- well-run independent distributors are a microcosm of us okay? So it's very, very rare that an industrial gas, welding supply-type distributor is going to have to sell because of financial difficulties, very, very rare. If that happens, it's usually a result of mismanagement or something else is going on. So during the recession, most of the businesses that traded had some other dynamic that was going on. They had a death in the family, a falling out among partners, something was going on to drive that sale because typically, these businesses are valued as a multiple of their trailing EBITDA, okay? So if their numbers decline, the number of them that say, "Well, we're just going to ride this out," obviously, it went up. So now that things have begun to recover, there are many of them that -- many more them -- and we've had an ongoing relationship with these people for many, many years. We know many of them very well personally. And one of the things we do is a constant dialogue on helping them value what their business is worth. And there's a lot of dialogue on what's my business worth, what might it be worth in 5 years, I'm thinking of selling in 5 years but I'm worried about the tax law changes, what might it be worth now, what might the tax implications be. We do a lot of this kind of consultive help, kind of -- it's part of the relationship building. So there's been a lot of dialogue going on, but there's not a lot of people picking up the pen to sign the contracts to sell. And I think in many cases, if we were willing -- we're pretty disciplined. The fact that they had good numbers in 2007 and can show us a 2007 P&L, doesn't mean we're willing to value the business in 2011 based on what they did in 2007. So the fact that their business has improved, many cases has not improved enough to where they're going to get the kind of value that they want. So there's a lot of talking, but there hasn't been a lot of transactions. And I suspect there will be some, there continue to be some. There are some where there are family situations where they really have to do something. And we hope to win some, and we probably won't them all. That's okay. But we're going to be in the hunt, put it that way. Does that answer the -- is that okay?

Unknown Analyst

Mike, how have price realizations been trending in package gases?

Michael L. Molinini

Well we announced the price increase effective last Thursday. So it's a little early to really comment about how that went.

Unknown Analyst

So for Tuesday and Wednesday?

Michael L. Molinini

But from what we understand, we expect it to go equally as good as the last one we had, which is about 9, 10 months ago, something like that. We have had quite a few -- we've had a number of supply chain interruptions this year. In certain gases we had issues with acetylene, with calcium carbide supply, which is a manufacturing chemical for acetylene. There's still -- it's still a heavily surcharged product. Its carbide is being imported from around the world. There's currently helium shortage going on. There are surcharges and allocations going on with helium. There have been some plant interruptions with plants that produce oxygen, nitrogen, argon going down that has caused some dislocation. So it's been a choppy year as far as supply chain. We've done -- the industry has done a pretty good job of getting product to their customers. But in some cases, it hasn't been optimally -- optimal cost and in some cases, it's cost us money to do that. So we're optimistic that our price increases are going to allow us to recoup some of that and get back to where we need to be.

Unknown Analyst

Mike, when is the ASU that's currently under construction supposed to come online? Have there been any delays with that? And what percentage of your molecules do you source internally versus purchase?

Michael L. Molinini

April 1. No. And for oxygen and nitrogen and argon, I think we make 65% and we buy 35%. Helium, we make nothing. We buy 100%. Hydrogen, we make $1, and we buy the rest. So it's mostly buy.

Unknown Analyst

You've got to have seen the sub note that's callable. What's your thinking in terms of potentially accessing the capital markets and refinancing that?

Michael L. Molinini

We have no plans to do that at this time.

Kevin W. McCarthy - BofA Merrill Lynch, Research Division

Mike, you touched upon SAP in the prepared remarks, but can you give us an idea what the sequence looks like, maybe over the next 6 to 12 months, and your feeling of incremental risk? I'm imagining that you're moving up the experience curve and gaining some confidence with regard to the implementation process?

Michael L. Molinini

That's a good question, and it's probably going to take me all 4 minutes and 42 seconds to answer it because we spent a lot of time on SAP and answering SAP questions. Our first mission on SAP in our distribution business, which is really where all the benefits were -- are so far anyway was to get a business, to configure SAP and get one of our businesses effectively on it from cradle to grave, from order to cash. And at the same time, take into effect that we had to make sure that configuration, not only took care of the first company that we converted, but all of the rest. So before we converted our first company to SAP, which was Airgas South in April, we made about 400 modifications, enhancements to the SAP system to be able to handle our business, okay? We converted to our Airgas South unit and we found a couple of things that didn't work right, couple of things we needed to tweak, we needed to change training a little bit, so we -- it wasn't perfect, but it was pretty good. We also realized at that point we made another 20 enhancements between the time we did Airgas South and the time we did the next one, which is Great Lakes. We did Great Lakes, and it went off really well. The learning experience of South, the way we modified the training, getting operating people and taking them to locations that were already on SAP so they could live the new life was tremendous -- tremendously valuable. We have since done 2 more, and we've had to make no additional enhancements to SAP, the SAP configuration, which is great because now we believe we're very, very close to locking it down and we've got the configuration. The first 4 companies were critically important for us to get on, get them on SAP and get them stable as quickly as possible because those 4 are the foundation companies into which we are going to absorb all of the back-office administration of the other 8. So we not only had to get them on SAP, but we had to get bigger headquarters. And our consolidation of the back office, think of it this way, that 600 jobs in 8 companies in the field will be eliminated and 400 jobs in 4 locations will be created with a net delta of -- on the order of 200, net less 200. So we have lots of people out there but we have to hire lots of people in a couple of places. So we needed bigger facilities, and we've got very good reception to a relocation plan with our own existing employees. We probably have close to 100 employees from those 8 locations that are actually going to relocate to our centers, which is great because we can populate that with new people. We've got the new locations. We moved into the new locations -- are moving in, and we're having great success in the market with hiring of talented people in credit and collections, accounts pay, and the other skill sets that we're going to need. So we're well on our way. The next big step -- the real last big step is converting the next original company where we will convert all of the operations and leave it in the field, but we will not convert their back office. We will absorb their back office in our business support center, and we will have a reduction in force at that company for the back-office administration. So that begins the process of taking the other 8. And from an operating standpoint, they'll continue as they were, but now the back office will be supported buy 1 of our 4 centers. And so really that's March, April period of time. Once we get finished with that, assuming that goes as well as the rest is going, the risk -- there's almost -- I mean you never say no risk, but very low risk because now we're just doing what we've already done over and over and over. And we would have a cadre of probably 4,000 SAP users and hundreds of SAP branches to which we can use as buddies, trainers, sites to visit and things like that. So every month that we do something else, the risk of a major upset goes down dramatically. It's already reduced probably 80% today. So we're feeling pretty good about that.

Kevin W. McCarthy - BofA Merrill Lynch, Research Division

Right on cue with 5 seconds left. I'll use that time to thank you very much, and enjoy the presentation.

Michael L. Molinini

Great. Thank you.

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Source: Airgas Inc. Presents at BofA Merrill Lynch Global Industries Conference, Dec-06-2011 03:15 PM
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