The Road Ahead T h e R o a d A h e a d AI2R0GA14S AANNNNUUAAL LR ERPEOPROT R20T14 TOTAL RETURN TO SHAREHOLDERS SINCE 1986 INITIAL PUBLIC OFFERING Airgas 11 ,011% S&P 500 1,291% Russell 2000 1,007% Total Return to Shareholders calculated as share price (split-adjusted) plus dividends reinvested, measured from December 19, 1986 through March 31, 2014. Contribution to 11,011% (19% CAGR) Total Return to Shareholders Since 1986 IPO: Stock Price Appreciation Reinvested Dividends 12000% 11000% 1374% 10000% n 9000% r u et 8000% R od 7000% ri e P 6000% g din 5000% 9637% ol H 4000% al t 3000% o T 2000% 1000% ’87’88’89’90’91 ’92’93’94’95’96’97 ’98’99’00’01 ’02’03’04’05’06’07’08’09’10 ’11 ’12 ’13 ’14 Fiscal Year 10 Letters to Shareholders 17 Financial Highlights 13 Airgas at a Glance 18 Selected Financial Data 16 Management Committee and 19 Management’s Discussion and Analysis Corporate Officers 38 Statement of Management’s Financial Responsibility 39 Management’s Report on Internal Control Over Financial Reporting 40 Report of Independent Registered Public Accounting Firm 41 Consolidated Financial Statements 45 Notes to Consolidated Financial Statements 70 Reconciliation of Non-GAAP Financial Measures 74 Corporate Information IBC Board of Directors 2014 AIRGAS ANNUAL REPORT The Road Ahead Right now at Airgas, we are ready to shift into high gear. We’re an established leader in the industrial, medical and specialty gases market in the United States, very well positioned to capitalize on the numerous opportunities ahead resulting from what many believe will be a sustained industrial resurgence. The sluggish economy in the past year may have kept us from stepping on the gas pedal, but that doesn’t mean we stopped moving forward. At Airgas, we make things happen. This past year, we enhanced our operating structure, strengthened our sales channels, invested in technology, and renewed our focus on the development of our greatest assets — our people — all with an eye toward better serving our more than 1 million customers. We stayed the course with our strategic growth initiatives to create value for our shareholders in a difficult environment and further position Airgas for long-term success. Now, when the road ahead opens up, and the economy improves, we’ll be moving at full speed to deliver greater growth, value and returns. PAGE 1 DESTINATION: Continued Industry Leadership Airgas has come a long way in our relatively short history. From a $3 million regional gas distributor in 1982, we have grown quickly and taken our place today as one of the leading suppliers of industrial, medical and specialty gases and hardgoods in the United States with more than $5 billion in annual revenues. As we grow in size, we never stop investing in business platforms that help make us a fully integrated company—with local, regional and national capabilities—and driving ourselves to further solidify our position as the premier gas company in the U.S. PPAAGGEE 42 2014 AIRGAS ANNUAL REPORT END MARKETS POISED FOR RESURGENCE The key industrial growth markets for Airgas—construction, manufacturing and energy—account for more than 50 percent of our revenues. Many believe, as we do, that those markets are primed to rebound as the U.S. economy expands. The number of non-residential construction projects is already picking up, and with the U.S. working to achieve energy independence by 2020 and long-deferred infrastructure spending on the way, Airgas is well positioned for growth in all of these areas. GASES ARE OUR PRINCIPAL PRODUCTS Airgas is the leader in U.S. packaged gases. In addition, we support our customers’ use of gases with a comprehensive suite of solutions—including welding hardgoods and safety products. In fiscal 2014, we announced our plans to build two new air separation units that will bolster gas production. We also expanded our beverage carbon dioxide ( CO ) gas business with the creation 2 of a new Airgas National Carbonation business unit, and enhanced our specialty gas capabilities to better serve the growing number of oil and gas customers participating in non-conventional natural gas production. EXPERTISE AND SERVICE OFFERINGS THAT CREATE CUSTOMER VALUE Airgas’ unrivaled product and service offering is enhanced by our 375-plus product and industry specialists who use their expertise to help solve our customers’ operational challenges. Engineers and chemists, weld process experts, bulk gas and specialty gas specialists, safety and construction specialists, and industry specialists in all of our key market segments offer solutions ranging from weld process optimization to safety and compliance to supply chain management. We create real value for our customers, helping to make them more competitive. A NATIONAL PRESENCE THAT TOUCHES EVERY KEY CUSTOMER SEGMENT Acquisitions, in addition to organic initiatives, have helped propel Airgas’ growth. We have completed nearly 450 acquisitions to date, including the addition of 11 businesses with more than $80 million in annual sales in fiscal 2014. Today, the Airgas footprint is comprised of more than 1,100 locations nationwide, including 16 air separation units, 11 acetylene plants, 8 liquid CO plants, and 6 2 national hardgoods distribution centers—all complemented by a fleet of 5,000 delivery vehicles and more than 16,000 of the best associates in the business. Our unmatched geographic coverage enables us to provide superior service to larger, multi- location customers through our Strategic Accounts program— a significant competitive advantage for Airgas. PPAAGGEE 53 DESTINATION: Unrivaled Customer Satisfaction At Airgas, we strive to create customers for life. Through our Core Strategy training, the small actions that contribute to outstanding customer service are now embedded in our culture. We have more than 1 million customers, and the performance of our people and products—plus the number of customer touch points available and the ease of doing business with Airgas today—help ensure that their next call for gases, hardgoods, and expertise comes to us. CUSTOMER SEGMENTATION The Airgas sales force is closely aligned with the diverse customer segments we serve, including Manufacturing & Metal Fabrication; Non- Residential Construction; Life Sciences & Healthcare; Food, Beverage & Retail; Energy & Chemical Production & Distribution; Basic Materials & Services; and Government & Other. Customers get the benefit of working with sales associates who know their industry inside and out. As a result, we deliver the right solutions that help our customers become more competitive and create stronger relationships with our customers for the long run. GETTING CLOSER TO CUSTOMERS Airgas is taking proactive steps to ensure that as we’re growing in size, we’re not growing in distance from our customers. In fiscal 2014, we reduced the size of some of our regions and rolled out a new district manager position nationally—both moves designed to enhance our operating model in which customer engagement decisions are made as close to the customer as possible. We also continued to build out our sales channels so that we’re connecting with customers in the ways that work best for them. AIRGAS TOTAL ACCESS In our industry, there are hundreds of thousands of small customers that have historically not been sought after by dedicated account reps of any gas supplier due to their level of annual spend. In most cases, they find what they need on their own terms, driving to the nearest store for welding products or calling in a cylinder refill order. With Airgas Total Access, we’re seeking out these customers and expanding our proven safety telesales channel across all of the products and services Airgas has to offer. Trained Airgas Total Access telesales associates provide personalized service over the phone through a cost-effective platform that is unrivaled in our industry. PAGE 4 2014 AIRGAS ANNUAL REPORT DOING BUSINESS VIA E-COMMERCE In fiscal 2014, we laid the groundwork to transform our website, www.airgas.com, into a robust, interactive, world-class e-commerce tool that will facilitate communications with customers and reduce transaction costs. The new site will provide extensive information on Airgas’ products and services, as well as offer customers a more efficient way to manage their accounts, track shipping and delivery, check product availability and conduct online transactions. Our goal is to enhance the Airgas customer experience and attract new customers looking for a productive, user-friendly, and convenient e-business interface. PAGE 5 RUNNING ON SAP In fiscal 2014, SAP went from being a project to being a tool that we are now using to run our business better. For the first time in our company history, our entire distribution business is on the same, shared information platform. With SAP, associates have increased access to real-time product and customer data, and we have significantly improved our order tracking, reporting, data mining and transactional processing capabilities. BUSINESS SUPPORT CENTERS Airgas now has four SAP-enabled Business Support Centers—located in our North, South, Central and West divisions—that handle most of the back office functions for the regions in each division. With SAP now in place, these support centers are streamlining the accounts receivable, accounts payable, and other administrative processes that we expect will make us much more efficient and free up our field associates to focus more energy on serving customers. PAGE 6 2014 AIRGAS ANNUAL REPORT DESTINATION: Increased Operational Efficiency Airgas is always moving fast to anticipate customer needs and stay ahead of the competition. At every level, we’re working smarter and making intelligent investments to achieve greater efficiencies and realize a seamless flow of products and information through our company and to our customers. VERTICAL INTEGRATION One of the keys to Airgas’ operational efficiency is our ability to internally produce a significant portion of our gas needs, complemented by our external supply sources. Today, we have 16 air separation units— and a few more on the way—where we produce oxygen, nitrogen and argon, as well as 8 liquid CO plants. On the road ahead, 2 we’ll continue to focus on the long-term security of gas supply and make investments in production that best position Airgas for growth in key customers segments and geographies. ENHANCED DISTRIBUTION In the past year, we continued to increase the number of products stocked at our six national distribution centers to support our expanding telesales channel, Airgas Total Access, and to enable increased direct shipping to customers. This eliminates the extra step of shipping to our branches for forwarding to the end customers. We are also increasing the use of dynamic routing and telemetry systems to optimize our delivery routes and scheduling. PAGE 7 THE BEST PEOPLE There is an amazing amount of talent already in place at Airgas, and our associates bring deep industry expertise to their roles. Now, our job is to find the next generation of associates who will carry our company forward in the 21st century. We’re increasing emphasis on a new talent management program that strengthens our capabilities in the areas of talent acquisition and development, as well as diversity management. And our new district manager position provides a great opportunity—complete with profit and loss responsibilities—that appeals to the best industry recruits and Airgas associates looking to advance their careers. DESTINATION: An Even Stronger Company Culture A lot of companies achieve initial success, but to sustain it year-in and year-out, you need a strong company culture. At Airgas, we’ve been on a three-decade-long climb to the heights of our industry because our company understands how to get the best people into our branches, offices and trucks—and how to position them for success once they are here. There’s an Airgas spirit that unites and motivates all of our 16,000-plus associates, and we intend to nurture and strengthen this unique culture on the road ahead. PAGE 8