LEHIGH VALLEY, Pa.,
April 24, 2019 /PRNewswire/ --
Q2 FY19 (all from continuing operations; comparisons
versus prior year):
- GAAP EPS of $1.90, up
one percent; GAAP net income of $421
million
- Adjusted EPS of $1.92*, up 12
percent; adjusted EPS up 17 percent on a constant currency
basis
- Record adjusted EBITDA margin of 37.7 percent*, up 340 basis
points
Guidance
- Increasing fiscal 2019 full-year adjusted EPS guidance to a
range of $8.15 to $8.30* per share, up 10 percent* over prior year
at midpoint; fiscal 2019 third quarter adjusted EPS guidance of
$2.10 to $2.15 per share*, up eight to 10 percent* over
fiscal 2018 third quarter
- Increasing expected fiscal year 2019 capital spending to a
range of $2.4 to $2.5 billion
*The results and guidance in this release, including in the
highlights above, include references to non-GAAP continuing
operations measures and are identified by the word "adjusted"
preceding the measure. A reconciliation of GAAP to non-GAAP results
can be found below.
Air Products (NYSE:APD) reported GAAP net income from continuing
operations of $421 million and GAAP
diluted EPS from continuing operations of $1.90 for its fiscal second quarter ended
March 31, 2019. These results include
a $0.02 EPS charge from a pension
settlement.
On a non-GAAP basis, quarterly adjusted net income from
continuing operations of $425 million
and adjusted diluted EPS from continuing operations of $1.92 increased 13 and 12 percent respectively
over the prior year. On a constant currency basis, diluted adjusted
EPS from continuing operations increased 17 percent.
Second quarter sales of $2.2
billion increased one percent over the prior year. Volumes
and pricing both increased three percent; this strong performance
was roughly offset by four percent unfavorable currency and two
percent from a contract modification to a tolling agreement in
India, which impacts sales but not
profits. Excluding the Jazan project, volumes grew five percent due
to positive base business volumes and additional new plant
onstreams, including the Lu'An gasification facility in
Asia. Pricing improved in all
three regions and across merchant product lines.
Adjusted EBITDA of $825 million
increased 12 percent over the prior year, driven by the higher
volumes and positive pricing, partially offset by unfavorable
currency and higher costs. Record adjusted EBITDA margin of
37.7 percent increased 340 basis points over the prior year.
Commenting on the results, Seifi
Ghasemi, chairman, president and chief executive officer,
said, "The committed and motivated team at Air Products continues
to generate superior performance, delivering our 20th consecutive
quarter of adjusted EPS growth despite unfavorable currency. The
team also drove us to a new record adjusted quarterly EBITDA
margin, which is up more than 1,200 basis points from five years
ago when we first began our journey to be the safest, most diverse
and most profitable industrial gas company it the world. We have a
differentiated position of financial strength and technology that
enables us to continue deploying capital into strategic,
high-return, value-creating projects while also continuing to
return cash to shareholders through our dividend."
Second Quarter Results by Business Segment
- Industrial Gases – Americas sales of $992 million increased nine percent over the
prior year. Volumes increased five percent and pricing and higher
energy pass-through each contributed three percent, partially
offset by two percent unfavorable currency. Adjusted EBITDA of
$398 million increased 10 percent
over the prior year, primarily driven by higher volumes and
pricing. Adjusted EBITDA margin of 40.2 percent increased 60
basis points from the prior year; excluding the impact of higher
energy pass-through, adjusted EBITDA margin increased 150 basis
points.
- Industrial Gases – EMEA sales of $494 million decreased 12 percent from prior
year. Strong pricing contributed three percent, volumes were
stable, and higher energy pass-through added one percent. These
results were offset by seven percent unfavorable currency and a
nine percent decrease from the India contract modification. Adjusted
EBITDA of $182 million increased two
percent over the prior year; on a constant currency basis, adjusted
EBITDA increased nine percent. Adjusted EBITDA margin of 36.8
percent increased 500 basis points over the prior year; excluding
the impact of the India contract
modification, adjusted EBITDA margin was up approximately 200 basis
points.
- Industrial Gases – Asia
sales of $625 million increased 12
percent over the prior year. Volumes increased 12 percent, driven
primarily by new projects including the Lu'An project; pricing
increased five percent; and currency was negative five percent.
Adjusted EBITDA of $298 million
increased 32 percent, and record adjusted EBITDA margin of 47.7
percent was up 700 basis points over the prior year on strong
volumes and pricing.
Outlook
Ghasemi said, "Our results this quarter show how focused our
people are on the day-to-day operational performance of our
business. Additionally, we are forging a new path for growth
through successful execution of world-scale projects. As a result,
we remain confident that we will continue to deliver on our
commitments."
Air Products is increasing full-year fiscal 2019 adjusted EPS
guidance from a previous range of $8.05 to $8.30 to a
new range of $8.15 to $8.30 per share, which is up 10 percent over
prior year at midpoint. For the fiscal 2019 third quarter, Air
Products expects adjusted EPS of $2.10 to $2.15 per
share, up eight to 10 percent over the fiscal 2018 third
quarter.
Air Products is increasing its expected capital expenditures to
a range of $2.4 to $2.5 billion for full-year fiscal 2019.
Effective October 1, 2018, Air
Products adopted the new revenue recognition standard, which had no
material impact on the company's financial statements. Management
has provided adjusted EPS on a continuing operations basis. While
Air Products might have additional impacts from the U.S. Tax Cuts
and Jobs Act adopted in late 2017, or incur additional costs for
items such as cost reduction actions and pension settlements in
future periods, it is not possible, without unreasonable efforts,
to identify the amount or significance of these events or the
potential for other transactions that may impact future GAAP EPS or
the effective tax rate. Management does not believe these items to
be representative of underlying business performance. Management is
unable to reconcile, without unreasonable effort, the Company's
forecasted range of adjusted EPS to a comparable GAAP range.
Earnings Teleconference
Access the Q2 earnings teleconference scheduled for
10:00 a.m. Eastern Time on
April 24, 2019 by calling
323-794-2094 and entering passcode 3807821, or access the Event
Details page on Air Products' Investor Relations web site.
About Air Products
Air Products (NYSE:APD) is a world-leading Industrial Gases
company in operation for over 75 years. The Company provides
industrial gases and related equipment to dozens of industries,
including refining, chemical, metals, electronics, manufacturing,
and food and beverage. Air Products is also the world's leading
supplier of liquefied natural gas process technology and
equipment.
The Company had fiscal 2018 sales of $8.9 billion from
operations in 50 countries and has a current market capitalization
of about $40 billion. Approximately
16,000 passionate, talented and committed employees from
diverse backgrounds are driven by Air Products' higher purpose to
create innovative solutions that benefit the environment, enhance
sustainability and address the challenges facing customers,
communities, and the world. For more information, visit
www.airproducts.com.
NOTE: This release contains "forward-looking statements"
within the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including statements about earnings
guidance, business outlook and investment opportunities. These
forward-looking statements are based on management's expectations
and assumptions as of the date of this release and are not
guarantees of future performance. While forward-looking statements
are made in good faith and based on assumptions, expectations and
projections that management believes are reasonable based on
currently available information, actual performance and financial
results may differ materially from projections and estimates
expressed in the forward-looking statements because of many
factors, including, without limitation: changes in global or
regional economic conditions, supply and demand dynamics in market
segments we serve, or in the financial markets; risks associated
with having extensive international operations, including political
risks, risks associated with unanticipated government actions and
risks of investing in developing markets; project delays, contract
terminations or customer cancellations or postponement of projects
and sales; future financial and operating performance of major
customers and joint venture partners; our ability to develop,
implement, and operate new technologies, or to execute the projects
in our backlog; tariffs, economic sanctions and regulatory
activities in jurisdictions in which we and our affiliates and
joint ventures operate; the impact of environmental, tax or other
legislation, as well as regulations affecting our business and
related compliance requirements, including regulations related to
global climate change; changes in tax rates and other changes
in tax law; the timing, impact and other uncertainties relating to
acquisitions and divestitures, including our ability to integrate
acquisitions and separate divested businesses, respectively; risks
relating to cybersecurity incidents, including risks from the
interruption, failure or compromise of our information systems;
catastrophic events, such as natural disasters, acts of war, or
terrorism; the impact of price fluctuations in natural gas and
disruptions in markets and the economy due to oil price volatility;
costs and outcomes of legal or regulatory proceedings and
investigations; asset impairments due to economic conditions or
specific events; significant fluctuations in interest rates and
foreign currency exchange rates from those currently anticipated;
damage to facilities, pipelines or delivery systems, including
those we own or operate for third parties; availability and cost of
raw materials; the success of productivity and operational
improvement programs; and other risk factors described in the
Company's Form 10-K for its fiscal year ended September 30, 2018. Except as required by law,
the Company disclaims any obligation or undertaking to update or
revise any forward-looking statements contained herein to reflect
any change in the assumptions, beliefs, or expectations or any
change in events, conditions, or circumstances upon which any such
forward-looking statements are based.
* Presented below are reconciliations of the reported GAAP
results to the non-GAAP measures.
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Millions of dollars unless otherwise indicated,
except for per share data)
The Company has presented certain financial measures on a
non-GAAP ("adjusted") basis and has provided a reconciliation to
the most directly comparable financial measure calculated in
accordance with U.S. Generally Accepted Accounting Principles
(GAAP). These financial measures are not meant to be considered in
isolation or as a substitute for the most directly comparable
financial measure calculated in accordance with GAAP. The Company
believes these non-GAAP measures provide investors, potential
investors, securities analysts, and others with useful information
to evaluate the performance of the business because such measures,
when viewed together with our financial results computed in
accordance with GAAP, provide a more complete understanding of the
factors and trends affecting our historical financial performance
and projected future results.
In many cases, our non-GAAP measures are determined by adjusting
the most directly comparable GAAP financial measure to exclude
certain disclosed items ("non-GAAP adjustments") that we believe
are not representative of the underlying business performance. For
example, in fiscal years 2017 and 2016, we restructured the Company
to focus on its core Industrial Gases business. This resulted in
significant cost reduction and asset actions that we believe were
important for readers to understand separately from the performance
of the underlying business. Additionally, we have recorded discrete
impacts associated with the Tax Act since its enactment in
December 2017. The reader should be
aware that we may incur similar expenses in the future. Readers
should also consider the limitations associated with these non-GAAP
measures, including the potential lack of comparability of these
measures from one company to another.
The tax impact on our pre-tax non-GAAP adjustments reflects the
expected current and deferred income tax expense impact of the
transactions and is impacted primarily by the statutory tax rate of
the various relevant jurisdictions and the taxability of the
adjustments in those jurisdictions.
CONSOLIDATED
RESULTS
|
|
Continuing
Operations
|
|
Three Months Ended 31
March
|
Q2 2019 vs. Q2
2018
|
Operating
Income
|
Operating
Margin(A)
|
Equity
Affiliates'
Income
|
Income Tax
Provision
|
Net
Income
|
Diluted
EPS
|
2019 GAAP
|
$516.5
|
|
23.6
|
%
|
$46.2
|
|
$107.5
|
|
$421.3
|
|
$1.90
|
|
2018 GAAP
|
455.4
|
|
21.1
|
%
|
43.7
|
|
56.2
|
|
416.4
|
|
1.89
|
|
Change
GAAP
|
$61.1
|
|
250
|
bp
|
$2.5
|
|
$51.3
|
|
$4.9
|
|
$.01
|
|
% Change
GAAP
|
13
|
%
|
|
6
|
%
|
91
|
%
|
1
|
%
|
1
|
%
|
2019 GAAP
|
$516.5
|
|
23.6
|
%
|
$46.2
|
|
$107.5
|
|
$421.3
|
|
$1.90
|
|
Pension settlement
loss(B)
|
—
|
|
—
|
%
|
—
|
|
1.2
|
|
3.8
|
|
.02
|
|
2019 Non-GAAP
Measure
|
$516.5
|
|
23.6
|
%
|
$46.2
|
|
$108.7
|
|
$425.1
|
|
$1.92
|
|
2018 GAAP
|
$455.4
|
|
21.1
|
%
|
$43.7
|
|
$56.2
|
|
$416.4
|
|
$1.89
|
|
Tax
restructuring
|
—
|
|
—
|
%
|
—
|
|
38.8
|
|
(38.8)
|
|
(.18)
|
|
2018 Non-GAAP
Measure
|
$455.4
|
|
21.1
|
%
|
$43.7
|
|
$95.0
|
|
$377.6
|
|
$1.71
|
|
Change Non-GAAP
Measure
|
$61.1
|
|
250
|
bp
|
$2.5
|
|
$13.7
|
|
$47.5
|
|
$.21
|
|
% Change Non-GAAP
Measure
|
13
|
%
|
|
6
|
%
|
14
|
%
|
13
|
%
|
12
|
%
|
The table below reflects what our second quarter adjusted
diluted EPS would have been on a constant currency basis. We
calculate this non-GAAP measure by adjusting our GAAP diluted EPS
for our non-GAAP adjustments and further adjusting the current year
result for prior period average exchange rates. We believe this
measure reflects the underlying adjusted EPS growth rate versus the
prior year.
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
31 March
|
|
|
|
2019
|
2018
|
Change
|
% Change
|
GAAP Diluted
EPS
|
$1.90
|
|
$1.89
|
|
|
|
Pension settlement
loss
|
.02
|
|
—
|
|
|
|
Tax
restructuring
|
—
|
|
(.18)
|
|
|
|
Adjusted Diluted
EPS
|
$1.92
|
|
$1.71
|
|
$.21
|
|
12
|
%
|
Currency
adjustment
|
.08
|
|
|
|
|
Adjusted Diluted EPS
– constant currency basis
|
$2.00
|
|
$1.71
|
|
$.29
|
|
17
|
%
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
Six Months Ended 31
March
|
2019 vs.
2018
|
Operating
Income
|
Operating
Margin(A)
|
Equity
Affiliates'
Income
|
Income Tax
Provision
|
Net
Income
|
Diluted
EPS
|
2019 GAAP
|
$971.5
|
|
22.0
|
%
|
$99.1
|
|
$239.6
|
|
$768.8
|
|
$3.48
|
|
2018 GAAP
|
916.1
|
|
21.0
|
%
|
57.5
|
|
348.0
|
|
572.0
|
|
2.59
|
|
Change
GAAP
|
$55.4
|
|
100
|
bp
|
$41.6
|
|
($108.4)
|
|
$196.8
|
|
$.89
|
|
% Change
GAAP
|
6
|
%
|
|
72
|
%
|
(31)
|
%
|
34
|
%
|
34
|
%
|
2019 GAAP
|
$971.5
|
|
22.0
|
%
|
$99.1
|
|
$239.6
|
|
$768.8
|
|
$3.48
|
|
Facility
closure
|
29.0
|
|
.7
|
%
|
—
|
|
6.9
|
|
22.1
|
|
.10
|
|
Pension settlement
loss(B)
|
—
|
|
—
|
%
|
—
|
|
1.2
|
|
3.8
|
|
.02
|
|
Tax reform
repatriation
|
—
|
|
—
|
%
|
—
|
|
15.6
|
|
(15.6)
|
|
(.07)
|
|
Tax reform adjustment
related to deemed
foreign dividends
|
—
|
|
—
|
%
|
—
|
|
(56.2)
|
|
56.2
|
|
.25
|
|
2019 Non-GAAP
Measure
|
$1,000.5
|
|
22.7
|
%
|
$99.1
|
|
$207.1
|
|
$835.3
|
|
$3.78
|
|
2018 GAAP
|
$916.1
|
|
21.0
|
%
|
$57.5
|
|
$348.0
|
|
$572.0
|
|
$2.59
|
|
Tax reform
repatriation
|
—
|
|
—
|
%
|
32.5
|
|
(420.5)
|
|
453.0
|
|
2.06
|
|
Tax reform rate
change and other
|
—
|
|
—
|
%
|
—
|
|
214.0
|
|
(214.0)
|
|
(.97)
|
|
Tax
restructuring
|
—
|
|
—
|
%
|
—
|
|
38.8
|
|
(38.8)
|
|
(.18)
|
|
2018 Non-GAAP
Measure
|
$916.1
|
|
21.0
|
%
|
$90.0
|
|
$180.3
|
|
$772.2
|
|
$3.50
|
|
Change Non-GAAP
Measure
|
$84.4
|
|
170
|
bp
|
$9.1
|
|
$26.8
|
|
$63.1
|
|
$.28
|
|
% Change Non-GAAP
Measure
|
9
|
%
|
|
10
|
%
|
15
|
%
|
8
|
%
|
8
|
%
|
|
(A)
Operating margin is calculated by dividing operating income by
sales.
|
(B)
Reflected on the consolidated income statements within "Other
non-operating income (expense), net." Fiscal year 2019
includes a before-tax impact of $5.0 for the three and six months
ended 31 March 2019. Refer to Note 1, Pension Settlement Loss, to
the consolidated financial statements for additional
information.
|
Below is a reconciliation of consolidated operating income to
segment total operating income:
|
Three Months
Ended
|
Six Months
Ended
|
|
31 March
|
31 March
|
Operating
Income
|
2019
|
2018
|
2019
|
2018
|
Consolidated
total
|
$516.5
|
|
$455.4
|
|
$971.5
|
|
$916.1
|
|
Facility
closure
|
—
|
|
—
|
|
29.0
|
|
—
|
|
Segment
total
|
$516.5
|
|
$455.4
|
|
$1,000.5
|
|
$916.1
|
|
Below is a reconciliation of consolidated equity affiliates'
income to segment total equity affiliates' income:
|
Three Months
Ended
|
Six Months
Ended
|
|
31 March
|
31 March
|
Equity Affiliates'
Income
|
2019
|
2018
|
2019
|
2018
|
Consolidated
total
|
$46.2
|
|
$43.7
|
|
$99.1
|
|
$57.5
|
|
Tax reform
repatriation - equity method investment
|
—
|
|
—
|
|
—
|
|
32.5
|
|
Segment
total
|
$46.2
|
|
$43.7
|
|
$99.1
|
|
$90.0
|
|
ADJUSTED EBITDA
We define Adjusted EBITDA as income from continuing operations
(including noncontrolling interests) excluding certain non‑GAAP
adjustments, which the Company does not believe to be indicative of
underlying business trends, before interest expense, other
non‑operating income (expense), net, income tax provision, and
depreciation and amortization expense. Adjusted EBITDA provides a
useful metric for management to assess operating performance.
Below is a reconciliation of income from continuing operations
on a GAAP basis to adjusted EBITDA:
2019
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q2 YTD
Total
|
Income From
Continuing Operations(A)
|
|
$357.0
|
|
|
$433.5
|
|
|
|
|
|
|
$790.5
|
|
Add: Facility
closure
|
|
29.0
|
|
|
—
|
|
|
|
|
|
|
29.0
|
|
Add: Interest
expense
|
|
37.3
|
|
|
35.4
|
|
|
|
|
|
|
72.7
|
|
Less: Other
non-operating income (expense), net
|
|
18.5
|
|
|
13.7
|
|
|
|
|
|
|
32.2
|
|
Add: Income tax
provision
|
|
132.1
|
|
|
107.5
|
|
|
|
|
|
|
239.6
|
|
Add: Depreciation and
amortization
|
|
258.0
|
|
|
262.1
|
|
|
|
|
|
|
520.1
|
|
Adjusted
EBITDA
|
|
$794.9
|
|
|
$824.8
|
|
|
|
|
|
|
$1,619.7
|
|
2018
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q2 YTD
Total
|
Income From
Continuing Operations(A)
|
|
$162.7
|
|
|
$423.6
|
|
|
$444.7
|
|
|
$459.7
|
|
|
$586.3
|
|
Less: Change in
inventory valuation method
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24.1
|
|
|
—
|
|
Add: Interest
expense
|
|
29.8
|
|
|
30.4
|
|
|
34.9
|
|
|
35.4
|
|
|
60.2
|
|
Less: Other
non-operating income (expense), net
|
|
9.8
|
|
|
11.1
|
|
|
12.8
|
|
|
(28.6)
|
|
|
20.9
|
|
Add: Income tax
provision
|
|
291.8
|
|
|
56.2
|
|
|
107.1
|
|
|
69.2
|
|
|
348.0
|
|
Add: Depreciation and
amortization
|
|
227.9
|
|
|
240.0
|
|
|
245.6
|
|
|
257.2
|
|
|
467.9
|
|
Add: Tax reform
repatriation - equity method investment
|
|
32.5
|
|
|
—
|
|
|
—
|
|
|
(4.0)
|
|
|
32.5
|
|
Adjusted
EBITDA
|
|
$734.9
|
|
|
$739.1
|
|
|
$819.5
|
|
|
$822.0
|
|
|
$1,474.0
|
|
|
(A)
Includes net income attributable to noncontrolling
interests.
|
|
2019 vs.
2018
|
|
Q1
|
|
Q2
|
|
|
|
|
|
|
|
Q2 YTD
Total
|
Change
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations change
|
|
$194.3
|
|
|
$9.9
|
|
|
|
|
|
|
|
|
$204.2
|
|
Income from
continuing operations % change
|
|
119
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
35
|
%
|
Change
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
change
|
|
$60.0
|
|
|
$85.7
|
|
|
|
|
|
|
|
|
$145.7
|
|
Adjusted EBITDA %
change
|
|
8
|
%
|
|
12
|
%
|
|
|
|
|
|
|
|
10
|
%
|
Below is a reconciliation of segment operating income to
adjusted EBITDA:
|
Industrial
Gases–
Americas
|
Industrial
Gases–
EMEA
|
Industrial
Gases–
Asia
|
Industrial
Gases–
Global
|
Corporate
and other
|
Segment
Total
|
GAAP
MEASURE
|
|
|
|
|
|
|
Three Months Ended
31 March 2019
|
|
|
|
|
|
|
Operating income
(loss)
|
$255.6
|
|
$122.5
|
|
$199.7
|
|
($12.2)
|
|
($49.1)
|
|
$516.5
|
|
Operating
margin
|
25.8
|
%
|
24.8
|
%
|
31.9
|
%
|
|
|
23.6
|
%
|
Three Months Ended
31 March 2018
|
|
|
|
|
|
|
Operating income
(loss)
|
$222.3
|
|
$116.7
|
|
$148.7
|
|
$12.1
|
|
($44.4)
|
|
$455.4
|
|
Operating
margin
|
24.3
|
%
|
20.8
|
%
|
26.7
|
%
|
|
|
21.1
|
%
|
Operating income
(loss) change
|
$33.3
|
|
$5.8
|
|
$51.0
|
|
($24.3)
|
|
($4.7)
|
|
$61.1
|
|
Operating income
(loss) % change
|
15
|
%
|
5
|
%
|
34
|
%
|
(201)
|
%
|
(11)
|
%
|
13
|
%
|
Operating margin
change
|
150
|
bp
|
400
|
bp
|
520
|
bp
|
|
|
250
|
bp
|
NON-GAAP
MEASURE
|
|
|
|
|
|
|
Three Months Ended
31 March 2019
|
|
|
|
|
|
|
Operating income
(loss)
|
$255.6
|
|
$122.5
|
|
$199.7
|
|
($12.2)
|
|
($49.1)
|
|
$516.5
|
|
Add: Depreciation and
amortization
|
124.9
|
|
46.3
|
|
84.9
|
|
2.0
|
|
4.0
|
|
262.1
|
|
Add: Equity
affiliates' income
|
17.8
|
|
13.3
|
|
13.8
|
|
1.3
|
|
—
|
|
46.2
|
|
Adjusted
EBITDA
|
$398.3
|
|
$182.1
|
|
$298.4
|
|
($8.9)
|
|
($45.1)
|
|
$824.8
|
|
Adjusted EBITDA
margin
|
40.2
|
%
|
36.8
|
%
|
47.7
|
%
|
|
|
37.7
|
%
|
Three Months Ended
31 March 2018
|
|
|
|
|
|
|
Operating income
(loss)
|
$222.3
|
|
$116.7
|
|
$148.7
|
|
$12.1
|
|
($44.4)
|
|
$455.4
|
|
Add: Depreciation and
amortization
|
122.3
|
|
50.7
|
|
62.6
|
|
1.9
|
|
2.5
|
|
240.0
|
|
Add: Equity
affiliates' income
|
16.9
|
|
11.1
|
|
15.4
|
|
.3
|
|
—
|
|
43.7
|
|
Adjusted
EBITDA
|
$361.5
|
|
$178.5
|
|
$226.7
|
|
$14.3
|
|
($41.9)
|
|
$739.1
|
|
Adjusted EBITDA
margin
|
39.6
|
%
|
31.8
|
%
|
40.7
|
%
|
|
|
34.3
|
%
|
Adjusted EBITDA
change
|
$36.8
|
|
$3.6
|
|
$71.7
|
|
($23.2)
|
|
($3.2)
|
|
$85.7
|
|
Adjusted EBITDA %
change
|
10
|
%
|
2
|
%
|
32
|
%
|
(162)
|
%
|
(8)
|
%
|
12
|
%
|
Adjusted EBITDA
margin change
|
60
|
bp
|
500
|
bp
|
700
|
bp
|
|
|
340
|
bp
|
|
|
|
|
|
|
|
|
Industrial
Gases–
Americas
|
Industrial
Gases–
EMEA
|
Industrial
Gases–
Asia
|
Industrial
Gases–
Global
|
Corporate
and other
|
Segment
Total
|
GAAP
MEASURE
|
|
|
|
|
|
|
Six Months Ended
31 March 2019
|
|
|
|
|
|
|
Operating income
(loss)
|
$474.8
|
|
$228.1
|
|
$401.5
|
|
($8.3)
|
|
($95.6)
|
|
$1,000.5
|
|
Operating
margin
|
24.0
|
%
|
22.4
|
%
|
32.1
|
%
|
|
|
22.7
|
%
|
Six Months Ended
31 March 2018
|
|
|
|
|
|
|
Operating income
(loss)
|
$439.5
|
|
$221.2
|
|
$324.2
|
|
$21.6
|
|
($90.4)
|
|
$916.1
|
|
Operating
margin
|
24.1
|
%
|
20.5
|
%
|
27.0
|
%
|
|
|
21.0
|
%
|
Operating income
(loss) change
|
$35.3
|
|
$6.9
|
|
$77.3
|
|
($29.9)
|
|
($5.2)
|
|
$84.4
|
|
Operating income
(loss) % change
|
8
|
%
|
3
|
%
|
24
|
%
|
(138)
|
%
|
(6)
|
%
|
9
|
%
|
Operating margin
change
|
(10)
|
bp
|
190
|
bp
|
510
|
bp
|
|
|
170
|
bp
|
NON-GAAP
MEASURE
|
|
|
|
|
|
|
Six Months Ended
31 March 2019
|
|
|
|
|
|
|
Operating income
(loss)
|
$474.8
|
|
$228.1
|
|
$401.5
|
|
($8.3)
|
|
($95.6)
|
|
$1,000.5
|
|
Add: Depreciation and
amortization
|
250.5
|
|
92.6
|
|
164.8
|
|
4.1
|
|
8.1
|
|
520.1
|
|
Add: Equity
affiliates' income
|
40.4
|
|
27.0
|
|
30.0
|
|
1.7
|
|
—
|
|
99.1
|
|
Adjusted
EBITDA
|
$765.7
|
|
$347.7
|
|
$596.3
|
|
($2.5)
|
|
($87.5)
|
|
$1,619.7
|
|
Adjusted EBITDA
margin
|
38.7
|
%
|
34.1
|
%
|
47.6
|
%
|
|
|
36.7
|
%
|
Six Months Ended
31 March 2018
|
|
|
|
|
|
|
Operating income
(loss)
|
$439.5
|
|
$221.2
|
|
$324.2
|
|
$21.6
|
|
($90.4)
|
|
$916.1
|
|
Add: Depreciation and
amortization
|
240.1
|
|
99.8
|
|
119.4
|
|
3.5
|
|
5.1
|
|
467.9
|
|
Add: Equity
affiliates' income
|
35.5
|
|
24.2
|
|
29.6
|
|
.7
|
|
—
|
|
90.0
|
|
Adjusted
EBITDA
|
$715.1
|
|
$345.2
|
|
$473.2
|
|
$25.8
|
|
($85.3)
|
|
$1,474.0
|
|
Adjusted EBITDA
margin
|
39.2
|
%
|
32.0
|
%
|
39.4
|
%
|
|
|
33.7
|
%
|
Adjusted EBITDA
change
|
$50.6
|
|
$2.5
|
|
$123.1
|
|
($28.3)
|
|
($2.2)
|
|
$145.7
|
|
Adjusted EBITDA %
change
|
7
|
%
|
1
|
%
|
26
|
%
|
(110)
|
%
|
(3)
|
%
|
10
|
%
|
Adjusted EBITDA
margin change
|
(50)
|
bp
|
210
|
bp
|
820
|
bp
|
|
|
300
|
bp
|
INCOME TAXES
The tax impact of our pre-tax non-GAAP adjustments reflects the
expected current and deferred income tax expense associated with
each adjustment and is primarily dependent upon the statutory tax
rate of the various relevant jurisdictions and the taxability of
the adjustments in those jurisdictions. For additional discussion
on the impacts of our non-GAAP tax adjustments, including those
resulting from the U.S. Tax Cuts and Jobs Act, refer to Note 2,
Income Taxes, to the consolidated financial statements.
|
Effective Tax
Rate
|
|
Three Months
Ended
31 March
|
|
Six Months Ended
31 March
|
|
2019
|
2018
|
|
2019
|
2018
|
Income Tax
Provision—GAAP
|
$107.5
|
|
$56.2
|
|
|
$239.6
|
|
$348.0
|
|
Income From
Continuing Operations Before Taxes—GAAP
|
$541.0
|
|
$479.8
|
|
|
$1,030.1
|
|
$934.3
|
|
Effective Tax
Rate—GAAP
|
19.9
|
%
|
11.7
|
%
|
|
23.3
|
%
|
37.2
|
%
|
Income Tax
Provision—GAAP
|
$107.5
|
|
$56.2
|
|
|
$239.6
|
|
$348.0
|
|
Facility
closure
|
—
|
|
—
|
|
|
6.9
|
|
—
|
|
Pension settlement
loss
|
1.2
|
|
—
|
|
|
1.2
|
|
—
|
|
Tax reform
repatriation
|
—
|
|
—
|
|
|
15.6
|
|
(420.5)
|
|
Tax reform adjustment
related to deemed foreign dividends
|
—
|
|
—
|
|
|
(56.2)
|
|
—
|
|
Tax reform rate
change and other
|
—
|
|
—
|
|
|
—
|
|
214.0
|
|
Tax
restructuring
|
—
|
|
38.8
|
|
|
—
|
|
38.8
|
|
Income Tax
Provision—Non-GAAP Measure
|
$108.7
|
|
$95.0
|
|
|
$207.1
|
|
$180.3
|
|
Income From
Continuing Operations Before Taxes—GAAP
|
$541.0
|
|
$479.8
|
|
|
$1,030.1
|
|
$934.3
|
|
Facility
closure
|
—
|
|
—
|
|
|
29.0
|
|
—
|
|
Pension settlement
loss
|
5.0
|
|
—
|
|
|
5.0
|
|
—
|
|
Tax reform
repatriation - equity method investment
|
—
|
|
—
|
|
|
—
|
|
32.5
|
|
Income From
Continuing Operations Before Taxes—Non-GAAP Measure
|
$546.0
|
|
$479.8
|
|
|
$1,064.1
|
|
$966.8
|
|
Effective Tax
Rate—Non-GAAP Measure
|
19.9
|
%
|
19.8
|
%
|
|
19.5
|
%
|
18.6
|
%
|
CAPITAL EXPENDITURES
We define capital expenditures as cash flows for additions to
plant and equipment, acquisitions (less cash acquired), and
investment in and advances to unconsolidated affiliates. The
components of our capital expenditures are detailed in the table
below:
|
Three Months
Ended
|
Six Months
Ended
|
|
31 March
|
31 March
|
|
2019
|
2018
|
2019
|
2018
|
Additions to plant
and equipment
|
$560.1
|
|
$315.9
|
|
$963.5
|
|
$572.5
|
|
Acquisitions, less
cash acquired
|
106.3
|
|
34.3
|
|
106.3
|
|
271.4
|
|
Investment in and
advances to unconsolidated affiliates
|
1.4
|
|
—
|
|
1.4
|
|
—
|
|
Capital
expenditures
|
$667.8
|
|
$350.2
|
|
$1,071.2
|
|
$843.9
|
|
We expect capital expenditures for fiscal year 2019 to be
approximately $2,400 to $2,500.
RETURN ON CAPITAL EMPLOYED (ROCE)
Return on capital employed (ROCE) is calculated on a continuing
operations basis as earnings after-tax divided by five-quarter
average total capital. Earnings after-tax is calculated based on
trailing four quarters and is defined as the sum of net income from
continuing operations attributable to Air Products, interest
expense, after-tax, at our effective quarterly tax rate, and net
income attributable to noncontrolling interests. This non-GAAP
measure has been adjusted for the impact of the non-GAAP
adjustments detailed below. Total capital consists of total debt
and total equity less total assets of discontinued operations.
|
2019
|
|
2018
|
|
2017
|
|
Q2
|
Q1
|
|
Q4
|
Q3
|
Q2
|
Q1
|
|
Q4
|
Q3
|
Q2
|
Net income from
continuing
operations attributable to Air Products
|
$
|
421.3
|
|
$
|
347.5
|
|
|
$
|
452.9
|
|
$
|
430.7
|
|
$
|
416.4
|
|
$
|
155.6
|
|
|
$
|
474.2
|
|
$
|
104.2
|
|
|
Interest
expense
|
35.4
|
|
37.3
|
|
|
35.4
|
|
34.9
|
|
30.4
|
|
29.8
|
|
|
30.8
|
|
29.8
|
|
|
Interest expense tax
impact
|
(7.0)
|
|
(10.1)
|
|
|
(4.6)
|
|
(6.8)
|
|
(3.6)
|
|
(19.1)
|
|
|
.1
|
|
(13.6)
|
|
|
Interest expense,
after-tax
|
28.4
|
|
27.2
|
|
|
30.8
|
|
28.1
|
|
26.8
|
|
10.7
|
|
|
30.9
|
|
16.2
|
|
|
Net income
attributable to
noncontrolling interests of
continuing operations
|
12.2
|
|
9.5
|
|
|
6.8
|
|
14.0
|
|
7.2
|
|
7.1
|
|
|
6.3
|
|
2.2
|
|
|
Earnings
After-Tax—GAAP
|
$
|
461.9
|
|
$
|
384.2
|
|
|
$
|
490.5
|
|
$
|
472.8
|
|
$
|
450.4
|
|
$
|
173.4
|
|
|
$
|
511.4
|
|
$
|
122.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments, after-tax
|
Change in inventory
valuation
method
|
$
|
—
|
|
$
|
—
|
|
|
$
|
(17.5)
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
Facility
closure
|
—
|
|
22.1
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Tax benefit
associated with
business separation
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(8.2)
|
|
|
Cost reduction and
asset actions
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
30.9
|
|
30.0
|
|
|
Goodwill and
intangible asset
impairment charge
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
154.1
|
|
|
Gain on land
sale
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(7.6)
|
|
—
|
|
|
Equity method
investment
impairment charge
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
79.5
|
|
|
Pension settlement
loss
|
3.8
|
|
—
|
|
|
33.2
|
|
—
|
|
—
|
|
—
|
|
|
.6
|
|
3.4
|
|
|
Tax reform
repatriation
|
—
|
|
(15.6)
|
|
|
24.1
|
|
—
|
|
—
|
|
453.0
|
|
|
—
|
|
—
|
|
|
Tax reform adjustment
related to
deemed foreign dividends
|
|
56.2
|
|
|
(56.2)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Tax reform rate
change and other
|
—
|
|
—
|
|
|
2.2
|
|
—
|
|
—
|
|
(214.0)
|
|
|
—
|
|
—
|
|
|
Tax
restructuring
|
—
|
|
—
|
|
|
3.1
|
|
—
|
|
(38.8)
|
|
—
|
|
|
—
|
|
—
|
|
|
Tax election
benefit
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(111.4)
|
|
—
|
|
|
Earnings
After-Tax—Non‑GAAP
|
$
|
465.7
|
|
$
|
446.9
|
|
|
$
|
479.4
|
|
$
|
472.8
|
|
$
|
411.6
|
|
$
|
412.4
|
|
|
$
|
423.9
|
|
$
|
381.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Capital
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
54.1
|
|
$
|
23.0
|
|
|
$
|
54.3
|
|
$
|
90.4
|
|
$
|
112.5
|
|
$
|
87.1
|
|
|
$
|
144.0
|
|
$
|
143.4
|
|
$
|
122.3
|
|
Current portion of
long-term debt
|
434.5
|
|
430.3
|
|
|
406.6
|
|
5.0
|
|
11.6
|
|
11.3
|
|
|
416.4
|
|
416.0
|
|
420.5
|
|
Long-term
debt
|
2,933.0
|
|
2,954.4
|
|
|
2,967.4
|
|
3,377.1
|
|
3,442.4
|
|
3,414.9
|
|
|
3,402.4
|
|
3,366.6
|
|
3,300.4
|
|
Long-term debt –
related party
|
369.2
|
|
360.2
|
|
|
384.3
|
|
398.7
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
Total Debt
|
3,790.8
|
|
3,767.9
|
|
|
3,812.6
|
|
3,871.2
|
|
3,566.5
|
|
3,513.3
|
|
|
3,962.8
|
|
3,926.0
|
|
3,843.2
|
|
Total
Equity
|
11,503.4
|
|
11,203.4
|
|
|
11,176.3
|
|
10,810.0
|
|
10,693.2
|
|
10,321.2
|
|
|
10,185.5
|
|
9,509.9
|
|
9,420.2
|
|
Assets of
discontinued operations
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(10.2)
|
|
|
(10.2)
|
|
(9.8)
|
|
(9.8)
|
|
Total
Capital
|
$
|
15,294.2
|
|
$
|
14,971.3
|
|
|
$
|
14,988.9
|
|
$
|
14,681.2
|
|
$
|
14,259.7
|
|
$
|
13,824.3
|
|
|
$
|
14,138.1
|
|
$
|
13,426.1
|
|
$
|
13,253.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
After-Tax—GAAP
|
$
|
1,809.4
|
|
|
|
|
|
$
|
1,257.8
|
|
|
|
|
|
|
Five-quarter average
total capital
|
14,839.1
|
|
|
|
|
|
13,780.4
|
|
|
|
|
|
|
ROCE—GAAP
items
|
12.2
|
%
|
|
|
|
|
9.1
|
%
|
|
|
|
|
|
Change GAAP-based
Measure
|
310
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
After-Tax—Non-GAAP
|
$
|
1,864.8
|
|
|
|
|
|
$
|
1,629.3
|
|
|
|
|
|
|
Five-quarter average
total capital
|
14,839.1
|
|
|
|
|
|
13,780.4
|
|
|
|
|
|
|
ROCE—Non-GAAP
items
|
12.6
|
%
|
|
|
|
|
11.8
|
%
|
|
|
|
|
|
Change Non-GAAP-based
Measure
|
80
|
bp
|
|
|
|
|
|
|
|
|
|
|
OUTLOOK
Guidance provided is on a non-GAAP continuing operations basis,
which excludes the impact of certain items that we believe are not
representative of our underlying business performance. While we
might have additional impacts from the Tax Act or incur additional
costs for items such as cost reduction actions and pension
settlements in future periods, it is not possible, without
unreasonable efforts, to identify the amount or significance of
these events or the potential for other transactions that may
impact future GAAP EPS. Accordingly, management is unable to
reconcile, without unreasonable effort, the Company's forecasted
range of adjusted EPS on a continuing operations basis to a
comparable GAAP range.
|
|
Diluted
EPS
|
|
|
Q3
|
|
Full Year
|
2018 GAAP
|
|
$1.95
|
|
$6.59
|
Change in inventory
valuation method
|
|
—
|
|
(.08)
|
Pension settlement
loss
|
|
—
|
|
.15
|
Tax reform
repatriation
|
|
—
|
|
2.16
|
Tax reform adjustment
related to deemed foreign dividends
|
|
—
|
|
(.25)
|
Tax reform rate
change and other
|
|
—
|
|
(.96)
|
Tax
restructuring
|
|
—
|
|
(.16)
|
2018 Non-GAAP
Measure
|
|
$1.95
|
|
$7.45
|
2019 Non-GAAP
Outlook
|
|
2.10–2.15
|
|
8.15–8.30
|
Change
Non-GAAP
|
|
.15–.20
|
|
.70–.85
|
% Change
Non-GAAP
|
|
8%–10%
|
|
9%–11%
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
|
CONSOLIDATED
INCOME STATEMENTS
|
|
(Unaudited)
|
|
|
|
|
Three Months Ended
|
Six Months
Ended
|
|
31 March
|
31 March
|
(Millions of dollars,
except for share and per share data)
|
2019
|
2018
|
2019
|
2018
|
Sales
|
$2,187.7
|
|
$2,155.7
|
|
$4,411.7
|
|
$4,372.3
|
|
Cost of
sales
|
1,474.7
|
|
1,506.5
|
|
3,018.7
|
|
3,078.3
|
|
Facility
closure
|
—
|
|
—
|
|
29.0
|
|
—
|
|
Selling and
administrative
|
190.0
|
|
194.6
|
|
379.6
|
|
386.2
|
|
Research and
development
|
16.9
|
|
14.5
|
|
31.9
|
|
29.1
|
|
Other income
(expense), net
|
10.4
|
|
15.3
|
|
19.0
|
|
37.4
|
|
Operating
Income
|
516.5
|
|
455.4
|
|
971.5
|
|
916.1
|
|
Equity affiliates'
income
|
46.2
|
|
43.7
|
|
99.1
|
|
57.5
|
|
Interest
expense
|
35.4
|
|
30.4
|
|
72.7
|
|
60.2
|
|
Other non-operating
income (expense), net
|
13.7
|
|
11.1
|
|
32.2
|
|
20.9
|
|
Income From
Continuing Operations Before Taxes
|
541.0
|
|
479.8
|
|
1,030.1
|
|
934.3
|
|
Income tax
provision
|
107.5
|
|
56.2
|
|
239.6
|
|
348.0
|
|
Income From
Continuing Operations
|
433.5
|
|
423.6
|
|
790.5
|
|
586.3
|
|
Loss From
Discontinued Operations, net of tax
|
—
|
|
—
|
|
—
|
|
(1.0)
|
|
Net
Income
|
433.5
|
|
423.6
|
|
790.5
|
|
585.3
|
|
Net Income
Attributable to Noncontrolling Interests of
Continuing Operations
|
12.2
|
|
7.2
|
|
21.7
|
|
14.3
|
|
Net Income
Attributable to Air Products
|
$421.3
|
|
$416.4
|
|
$768.8
|
|
$571.0
|
|
Net Income
Attributable to Air Products
|
|
|
|
|
Income from
continuing operations
|
$421.3
|
|
$416.4
|
|
$768.8
|
|
$572.0
|
|
Loss from
discontinued operations
|
—
|
|
—
|
|
—
|
|
(1.0)
|
|
Net Income
Attributable to Air Products
|
$421.3
|
|
$416.4
|
|
$768.8
|
|
$571.0
|
|
Basic Earnings Per
Common Share Attributable to Air Products
|
|
|
|
|
Income from
continuing operations
|
$1.91
|
|
$1.90
|
|
$3.49
|
|
$2.61
|
|
Loss from
discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Income
Attributable to Air Products
|
$1.91
|
|
$1.90
|
|
$3.49
|
|
$2.61
|
|
Diluted Earnings
Per Common Share Attributable to Air Products
|
|
|
|
|
Income from
continuing operations
|
$1.90
|
|
$1.89
|
|
$3.48
|
|
$2.59
|
|
Loss from
discontinued operations
|
—
|
|
—
|
|
—
|
|
—
|
|
Net Income
Attributable to Air Products
|
$1.90
|
|
$1.89
|
|
$3.48
|
|
$2.59
|
|
Weighted Average
Common Shares – Basic (in millions)
|
220.2
|
|
219.4
|
|
220.0
|
|
219.2
|
|
Weighted Average
Common Shares – Diluted (in millions)
|
221.4
|
|
220.8
|
|
221.2
|
|
220.7
|
|
Other Data from
Continuing Operations
|
|
|
|
|
Depreciation and
amortization
|
$262.1
|
|
$240.0
|
|
$520.1
|
|
$467.9
|
|
Capital expenditures
– Refer to page 10
|
$667.8
|
|
$350.2
|
|
$1,071.2
|
|
$843.9
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
|
|
31 March
|
30
September
|
(Millions of
dollars)
|
2019
|
2018
|
Assets
|
|
|
Current
Assets
|
|
|
Cash and cash
items
|
$2,735.9
|
|
$2,791.3
|
|
Short-term
investments
|
2.6
|
|
184.7
|
|
Trade receivables,
net
|
1,258.5
|
|
1,207.2
|
|
Inventories
|
408.3
|
|
396.1
|
|
Prepaid
expenses
|
102.4
|
|
129.6
|
|
Other receivables and
current assets
|
387.5
|
|
373.3
|
|
Total Current
Assets
|
4,895.2
|
|
5,082.2
|
|
Investment in net
assets of and advances to equity affiliates
|
1,279.3
|
|
1,277.2
|
|
Plant and equipment,
at cost
|
21,986.3
|
|
21,490.2
|
|
Less: accumulated
depreciation
|
11,792.5
|
|
11,566.5
|
|
Plant and equipment,
net
|
10,193.8
|
|
9,923.7
|
|
Goodwill,
net
|
811.9
|
|
788.9
|
|
Intangible assets,
net
|
418.6
|
|
438.5
|
|
Noncurrent capital
lease receivables
|
974.7
|
|
1,013.3
|
|
Other noncurrent
assets
|
671.0
|
|
654.5
|
|
Total Noncurrent
Assets
|
14,349.3
|
|
14,096.1
|
|
Total
Assets
|
$19,244.5
|
|
$19,178.3
|
|
Liabilities and
Equity
|
|
|
Current
Liabilities
|
|
|
Payables and accrued
liabilities
|
$1,513.7
|
|
$1,817.8
|
|
Accrued income
taxes
|
70.7
|
|
59.6
|
|
Short-term
borrowings
|
54.1
|
|
54.3
|
|
Current portion of
long-term debt
|
434.5
|
|
406.6
|
|
Total Current
Liabilities
|
2,073.0
|
|
2,338.3
|
|
Long-term
debt
|
2,933.0
|
|
2,967.4
|
|
Long-term debt –
related party
|
369.2
|
|
384.3
|
|
Other noncurrent
liabilities
|
1,560.5
|
|
1,536.9
|
|
Deferred income
taxes
|
805.4
|
|
775.1
|
|
Total Noncurrent
Liabilities
|
5,668.1
|
|
5,663.7
|
|
Total
Liabilities
|
7,741.1
|
|
8,002.0
|
|
Air Products
Shareholders' Equity
|
11,165.7
|
|
10,857.5
|
|
Noncontrolling
Interests
|
337.7
|
|
318.8
|
|
Total
Equity
|
11,503.4
|
|
11,176.3
|
|
Total Liabilities
and Equity
|
$19,244.5
|
|
$19,178.3
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Six Months
Ended
|
|
31 March
|
(Millions of
dollars)
|
2019
|
2018
|
Operating
Activities
|
|
|
Net income
|
$790.5
|
|
$585.3
|
|
Less: Net income
attributable to noncontrolling interests of continuing
operations
|
21.7
|
|
14.3
|
|
Net income
attributable to Air Products
|
768.8
|
|
571.0
|
|
Loss from
discontinued operations
|
—
|
|
1.0
|
|
Income from
continuing operations attributable to Air Products
|
768.8
|
|
572.0
|
|
Adjustments to
reconcile income to cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
520.1
|
|
467.9
|
|
Deferred income
taxes
|
27.5
|
|
(94.4)
|
|
Tax reform
repatriation
|
46.2
|
|
310.3
|
|
Facility
closure
|
29.0
|
|
—
|
|
Undistributed
earnings of unconsolidated affiliates
|
(27.2)
|
|
(1.0)
|
|
Gain on sale of
assets and investments
|
(2.3)
|
|
(2.4)
|
|
Share-based
compensation
|
21.2
|
|
22.5
|
|
Noncurrent capital
lease receivables
|
47.6
|
|
47.2
|
|
Other
adjustments
|
(3.5)
|
|
44.7
|
|
Working capital
changes that provided (used) cash, excluding effects of
acquisitions:
|
|
|
Trade
receivables
|
(55.4)
|
|
(30.2)
|
|
Inventories
|
(14.2)
|
|
5.5
|
|
Other
receivables
|
49.6
|
|
11.0
|
|
Payables and accrued
liabilities
|
(125.5)
|
|
(260.4)
|
|
Other working
capital
|
3.9
|
|
13.3
|
|
Cash Provided by
Operating Activities
|
1,285.8
|
|
1,106.0
|
|
Investing
Activities
|
|
|
Additions to plant
and equipment
|
(963.5)
|
|
(572.5)
|
|
Acquisitions, less
cash acquired
|
(106.3)
|
|
(271.4)
|
|
Investment in and
advances to unconsolidated affiliates
|
(1.4)
|
|
—
|
|
Proceeds from sale of
assets and investments
|
3.8
|
|
34.4
|
|
Purchases of
investments
|
(5.3)
|
|
(345.7)
|
|
Proceeds from
investments
|
187.9
|
|
612.9
|
|
Other investing
activities
|
2.7
|
|
1.5
|
|
Cash Used for
Investing Activities
|
(882.1)
|
|
(540.8)
|
|
Financing
Activities
|
|
|
Long-term debt
proceeds
|
—
|
|
.5
|
|
Payments on long-term
debt
|
(2.7)
|
|
(409.2)
|
|
Net decrease in
commercial paper and short-term borrowings
|
(6.6)
|
|
(22.4)
|
|
Dividends paid to
shareholders
|
(483.1)
|
|
(415.5)
|
|
Proceeds from stock
option exercises
|
45.4
|
|
52.7
|
|
Other financing
activities
|
(12.8)
|
|
(21.7)
|
|
Cash Used for
Financing Activities
|
(459.8)
|
|
(815.6)
|
|
Discontinued
Operations
|
|
|
Cash used for
operating activities
|
—
|
|
(3.1)
|
|
Cash provided by
investing activities
|
—
|
|
18.6
|
|
Cash provided by
financing activities
|
—
|
|
—
|
|
Cash Provided by
Discontinued Operations
|
—
|
|
15.5
|
|
Effect of Exchange
Rate Changes on Cash
|
.7
|
|
28.2
|
|
Decrease in Cash and
Cash Items
|
(55.4)
|
|
(206.7)
|
|
Cash and Cash items -
Beginning of Year
|
2,791.3
|
|
3,273.6
|
|
Cash and Cash
items - End of Period
|
$2,735.9
|
|
$3,066.9
|
|
Supplemental Cash
Flow Information
|
|
|
Cash paid for taxes
(net of refunds) - Continuing operations
|
$165.6
|
|
$153.7
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
SUMMARY BY
BUSINESS SEGMENTS
|
(Unaudited)
|
|
(Millions of
dollars)
|
Industrial
Gases –
Americas
|
Industrial
Gases –
EMEA
|
Industrial
Gases –
Asia
|
Industrial
Gases –
Global
|
Corporate
and other
|
Segment
Total
|
Three Months Ended
31 March 2019
|
|
|
|
|
|
|
Sales
|
$991.7
|
|
$494.4
|
|
$625.4
|
|
$53.8
|
|
$22.4
|
|
$2,187.7
|
|
Operating income
(loss)
|
255.6
|
|
122.5
|
|
199.7
|
|
(12.2)
|
|
(49.1)
|
|
516.5
|
|
Depreciation and
amortization
|
124.9
|
|
46.3
|
|
84.9
|
|
2.0
|
|
4.0
|
|
262.1
|
|
Equity affiliates'
income
|
17.8
|
|
13.3
|
|
13.8
|
|
1.3
|
|
—
|
|
46.2
|
|
Three Months Ended
31 March 2018
|
|
|
|
|
|
|
Sales
|
$913.2
|
|
$561.6
|
|
$557.6
|
|
$101.7
|
|
$21.6
|
|
$2,155.7
|
|
Operating income
(loss)
|
222.3
|
|
116.7
|
|
148.7
|
|
12.1
|
|
(44.4)
|
|
455.4
|
|
Depreciation and
amortization
|
122.3
|
|
50.7
|
|
62.6
|
|
1.9
|
|
2.5
|
|
240.0
|
|
Equity affiliates'
income
|
16.9
|
|
11.1
|
|
15.4
|
|
.3
|
|
—
|
|
43.7
|
|
|
|
|
|
|
|
|
|
Industrial
Gases –
Americas
|
Industrial
Gases –
EMEA
|
Industrial
Gases –
Asia
|
Industrial
Gases –
Global
|
Corporate
and other
|
Segment
Total
|
Six Months Ended
31 March 2019
|
|
|
|
|
|
|
Sales
|
$1,980.9
|
|
$1,018.6
|
|
$1,252.2
|
|
$122.0
|
|
$38.0
|
|
$4,411.7
|
|
Operating income
(loss)
|
474.8
|
|
228.1
|
|
401.5
|
|
(8.3)
|
|
(95.6)
|
|
1,000.5
|
|
Depreciation and
amortization
|
250.5
|
|
92.6
|
|
164.8
|
|
4.1
|
|
8.1
|
|
520.1
|
|
Equity affiliates'
income
|
40.4
|
|
27.0
|
|
30.0
|
|
1.7
|
|
—
|
|
99.1
|
|
Six Months Ended
31 March 2018
|
|
|
|
|
|
|
Sales
|
$1,823.0
|
|
$1,077.5
|
|
$1,201.2
|
|
$234.7
|
|
$35.9
|
|
$4,372.3
|
|
Operating income
(loss)
|
439.5
|
|
221.2
|
|
324.2
|
|
21.6
|
|
(90.4)
|
|
916.1
|
|
Depreciation and
amortization
|
240.1
|
|
99.8
|
|
119.4
|
|
3.5
|
|
5.1
|
|
467.9
|
|
Equity affiliates'
income
|
35.5
|
|
24.2
|
|
29.6
|
|
.7
|
|
—
|
|
90.0
|
|
Total
Assets
|
|
|
|
|
|
|
31 March
2019
|
$5,885.6
|
|
$3,333.7
|
|
$6,167.0
|
|
$257.8
|
|
$3,600.4
|
|
$19,244.5
|
|
30 September
2018
|
5,904.0
|
|
3,280.4
|
|
5,899.5
|
|
240.1
|
|
3,854.3
|
|
19,178.3
|
|
Below is a reconciliation of segment total operating income to
consolidated operating income:
|
Three Months
Ended
|
Six Months
Ended
|
|
31 March
|
31 March
|
Operating
Income
|
2019
|
2018
|
2019
|
2018
|
Segment
total
|
$516.5
|
|
$455.4
|
|
$1,000.5
|
|
$916.1
|
|
Facility
closure
|
—
|
|
—
|
|
(29.0)
|
|
—
|
|
Consolidated
Total
|
$516.5
|
|
$455.4
|
|
$971.5
|
|
$916.1
|
|
Below is a reconciliation of segment total equity affiliates'
income to consolidated equity affiliates' income:
|
Three Months
Ended
|
Six Months
Ended
|
|
31 March
|
31 March
|
Equity Affiliates'
Income
|
2019
|
2018
|
2019
|
2018
|
Segment
total
|
$46.2
|
|
$43.7
|
|
$99.1
|
|
$90.0
|
|
Tax reform
repatriation - equity method investment
|
—
|
|
—
|
|
—
|
|
(32.5)
|
|
Consolidated
Total
|
$46.2
|
|
$43.7
|
|
$99.1
|
|
$57.5
|
|
AIR PRODUCTS AND CHEMICALS, INC. and
Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(Millions of dollars, unless otherwise
indicated)
1. PENSION SETTLEMENT LOSS
During the second quarter of fiscal year 2019, we recognized a
pension settlement loss of $5.0 ($3.8 after-tax,
or $.02 per share) to accelerate recognition of
a portion of actuarial losses deferred in accumulated other
comprehensive loss associated with the U.S. Supplementary Pension
Plan. The loss is reflected on our consolidated income
statements within "Other non-operating income (expense),
net."
2. INCOME TAXES
U.S. Tax Cuts and Jobs Act
On 22 December 2017, the United States enacted the U.S. Tax Cuts
and Jobs Act (the "Tax Act") which significantly changed existing
U.S. tax laws, including a reduction in the federal corporate
income tax rate from 35% to 21%, a deemed repatriation tax on
unremitted foreign earnings, as well as other changes. Our
consolidated income statements for the six months ended
31 March 2019 reflect a discrete net
income tax expense of $40.6 recorded
during the first quarter of fiscal year 2019 to adjust our
estimates of the impacts of the Tax Act as of 31 December 2018. The net expense includes the
reversal of the $56.2 benefit
recorded in the fourth quarter of fiscal year 2018 related to the
U.S. taxation of deemed foreign dividends. We recorded this
reversal based on our intent to follow proposed regulations that
were issued during the first quarter of 2019. Additionally, we
recorded a benefit of $15.6 to reduce
the total expected costs of the deemed repatriation tax.
Effective 31 December 2018, our
accounting for the provisions of the Tax Act is no longer
considered provisional. However, further adjustments could be made
to this calculation as a result of future guidance, adjustments to
tax return filing positions, or tax examinations of the years
impacted by the calculation.
3. FACILITY CLOSURE
In December 2018, one of our
customers was subject to a government enforced shutdown due to
environmental reasons. As a result, we recognized a charge of
$29.0 ($22.1 after-tax, or $.10 per share) during the first quarter of
fiscal year 2019 primarily related to the write-off of onsite
assets. This charge is reflected as "Facility closure" on our
consolidated income statements for the six months ended
31 March 2019 and has been excluded
from segment results. Annual sales and operating income associated
with this customer prior to the facility closure were not material
to the Industrial Gases – Asia
segment. We do not expect to recognize additional charges related
to this shutdown.
View original
content:http://www.prnewswire.com/news-releases/air-products-reports-very-strong-fiscal-2019-second-quarter-results-300837237.html
SOURCE Air Products