Air Products Reports Fiscal Q1 EPS of $1.16
January 22 2010 - 6:00AM
PR Newswire (US)
LEHIGH VALLEY, Pa., Jan. 22 /PRNewswire-FirstCall/ -- Access the Q1
earnings teleconference scheduled for 10:00 a.m. Eastern Time on
January 22 by calling (719) 325-2320 and entering passcode 8295894,
or listen on the Web at:
http://www.airproducts.com/Invest/financialnews/Earnings_Releases/Teleconference.htm.
Highlights -- Sales declined one percent versus prior year, up two
percent sequentially -- Operating margins improved to 15.9% --
Earnings per share up 20%* -- Raising Full Year Guidance to $4.75
to $4.95 Air Products (NYSE:APD) today reported net income of $252
million, or diluted earnings per share (EPS) of $1.16, for its
fiscal first quarter ended December 31, 2009 versus $69 million and
$0.32 for the fiscal first quarter of 2009. The discussion of first
quarter results in this release is based on non-GAAP comparisons
due to last year's restructuring charge. A reconciliation can be
found at the end of this release.* First quarter revenues of $2,174
million declined one percent as lower energy and raw material cost
pass-throughs offset higher volumes and favorable currency.
Operating income of $345 million was up 20 percent from the prior
year on improved volumes in Tonnage Gases, and Electronics and
Performance Materials; broad productivity gains across the company;
and favorable currency impacts. Sequentially, sales improved two
percent while operating income gained five percent. John McGlade,
chairman, president and chief executive officer, said, "We are off
to a good start in fiscal 2010. Our earnings per share grew 20% and
we continued our margin improvement putting us on track to meet our
17% goal in 2011. Both our sequential and year-over-year results
benefited from an improving global economy and our efforts to move
Air Products to a sustainable, lower cost structure." First Quarter
Segment Performance -- Merchant Gases sales of $934 million
increased one percent as favorable currency was mostly offset by
lower volumes. Operating income of $190 million increased 11
percent from the prior year, as significantly improved cost
performance and favorable currency more than offset weaker volumes.
Operating margin exceeded 20%. Underlying trends continue to
improve globally, as volumes were higher in Asia. Comparisons in
the U.S. and Europe continued to be difficult due to the weak
manufacturing environment in both regions. -- Tonnage Gases sales
of $698 million were down six percent as significantly lower energy
and raw material cost pass-throughs more than offset higher
volumes. Sales volumes were up due to rebounding chemical and steel
production and new plant onstreams. Operating income of $100
million decreased eight percent from the prior year primarily on
higher planned maintenance costs. -- Electronics and Performance
Materials sales of $433 million increased 7 percent as higher
volumes and favorable currency more than offset price declines.
Operating income of $48 million increased 97 percent from the prior
year on improved volumes and productivity. -- Equipment and Energy
sales of $109 million were down 9 percent on lower sales activity.
Operating income of $8 million increased 11 percent from the prior
year on lower development spending. Outlook Looking ahead, McGlade
said, "We believe we will see continued earnings growth throughout
2010 as the global economy, led by Asia, continues its gradual
recovery, and as we drive further cost reductions. We also had a
significant number of new business signings in the first quarter
and are very excited by the opportunities we see for growth beyond
2010." Air Products is raising its guidance for fiscal 2010 to
$4.75 to $4.95 per share. The company also expects second quarter
EPS from continuing operations to be between $1.15 and $1.20 per
share. Annual Meeting of Shareholders Air Products will host its
Annual Meeting of Shareholders on Thursday, January 28, 2010 at
2:00 p.m. ET. Access the audio Webcast at:
http://www.airproducts.com/Invest/shareholdersvcs/annualmeeting_materials.htm.
Air Products (NYSE:APD) serves customers in industrial, energy,
technology and healthcare markets worldwide with a unique portfolio
of atmospheric gases, process and specialty gases, performance
materials, and equipment and services. Founded in 1940, Air
Products has built leading positions in key growth markets such as
semiconductor materials, refinery hydrogen, home healthcare
services, natural gas liquefaction, and advanced coatings and
adhesives. The company is recognized for its innovative culture,
operational excellence and commitment to safety and the
environment. In fiscal 2009, Air Products had revenues of $8.3
billion, operations in over 40 countries, and 18,900 employees
around the globe. For more information, visit
http://www.airproducts.com/. Note: This contains "forward-looking
statements" within the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, including earnings
guidance. These forward-looking statements are based on
management's reasonable expectations and assumptions as of the date
this Report is filed regarding important risk factors. Actual
performance and financial results may differ materially from
projections and estimates expressed in the forward-looking
statements because of many factors not anticipated by management,
including, without limitation, longer than anticipated delay in
global economic recovery; renewed deterioration in economic and
business conditions; weakening demand for the Company's products;
future financial and operating performance of major customers and
industries served by the Company; inability to collect receivables
from or recovery of payments made by customers in bankruptcy
proceedings; unanticipated contract terminations or customer
cancellations or postponement of projects and sales; asset
impairments due to economic conditions or specific product or
customer events; costs associated with future restructuring actions
which are not currently planned or anticipated; the impact of
competitive products and pricing; interruption in ordinary sources
of supply of raw materials; the ability to recover unanticipated
increased energy and raw material costs from customers; costs and
outcomes of litigation or regulatory activities; consequences of
acts of war or terrorism impacting the United States and other
markets; the effects of a pandemic or epidemic or a natural
disaster; charges related to current portfolio management and cost
reduction actions; the success of implementing cost reduction
programs and achieving anticipated acquisition synergies; the
timing, impact, and other uncertainties of future acquisitions or
divestitures; significant fluctuations in interest rates and
foreign currencies from that currently anticipated; the continued
availability of capital funding sources in all of the Company's
foreign operations; the impact of new or changed environmental,
healthcare, tax or other legislation and regulations in
jurisdictions in which the Company and its affiliates operate; the
impact of new or changed financial accounting guidance; the timing
and rate at which tax credits can be utilized and other risk
factors described in the Company's Form 10K for its fiscal year
ended September 30, 2009. The Company disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statements contained in this document to reflect
any change in the Company's assumptions, beliefs or expectations or
any change in events, conditions, or circumstances upon which any
such forward-looking statements are based. *The presentation of
non-GAAP measures is intended to enhance the usefulness of
financial information by providing measures which the Company's
management uses internally to evaluate the Company's baseline
performance. Presented below are reconciliations of reported GAAP
results to non-GAAP measures. CONSOLIDATED RESULTS Q1 ---
Continuing Operating Operations Income Diluted EPS ---------
----------- Millions of Dollars ------------------- 2010 GAAP
$345.0 $1.16 2009 GAAP 114.1 .42 --------- ----- --- % Change GAAP
202% 176% ============= === === 2009 GAAP $114.1 $.42 Global cost
reduction plan 174.2 .55 -------------------------- ----- --- 2009
Non-GAAP Measure $288.3 $.97 ===================== ====== ==== %
Change Non-GAAP Measure 20% 20% ========================= === ===
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries CONSOLIDATED
INCOME STATEMENTS Three Months Ended 31 December (Millions of
dollars, except for share data) 2009 2008
-------------------------------------------- ---- ---- Sales
$2,173.5 $2,195.3 Cost of sales 1,568.6 1,629.7 Selling and
administrative 244.1 247.0 Research and development 27.2 33.2
Global cost reduction plan - 174.2 Other income, net (a) 11.4 2.9
--------------------- ---- --- Operating Income 345.0 114.1 Equity
affiliates' income 26.9 24.5 Interest expense 31.6 36.5
---------------- ---- ---- Income from Continuing Operations before
Taxes 340.3 102.1 Income tax provision 83.5 7.1
-------------------- ---- --- Income from Continuing Operations
256.8 95.0 Loss from Discontinued Operations, net of tax - (21.4)
--------------------------------------------- --- ----- Net Income
256.8 73.6 Less: Net Income Attributable to Noncontrolling
Interests 5.0 5.0 -----------------------------------------------
--- --- Net Income Attributable to Air Products $251.8 $68.6
======================================= ====== ===== Net Income
Attributable to Air Products
--------------------------------------- Income from continuing
operations $251.8 $90.0 Loss from discontinued operations - (21.4)
--------------------------------- --- ----- Net Income Attributable
to Air Products $251.8 $68.6
======================================= ====== ===== Basic Earnings
per Common Share Attributable to Air Products Income from
continuing operations $1.19 $.43 Loss from discontinued operations
- (.10) --------------------------------- --- ---- Net Income
Attributable to Air Products $1.19 $.33
--------------------------------------- ----- ---- Diluted Earnings
per Common Share Attributable to Air Products Income from
continuing operations $1.16 $.42 Loss from discontinued operations
- (.10) --------------------------------- --- ---- Net Income
Attributable to Air Products $1.16 $.32
--------------------------------------- ----- ---- Weighted Average
of Common Shares Outstanding (in millions) 211.7 209.4
------------------------------------------------- ----- -----
Weighted Average of Common Shares Outstanding 212.1 Assuming
Dilution (in millions) 217.0 ----- -------------------------------
----- Dividends Declared per Common Share - Cash $.45 $.44
------------------------------------------ ---- ---- Other Data
from Continuing Operations: Depreciation and amortization $217.1
$200.6 Capital expenditures on a non-GAAP Basis 345.2 332.9 (see
page 11 for reconciliation) (a) Other income includes foreign
exchange losses in the amount of $.5 and $6.5 for the three months
ended 31 December 2009 and 2008, respectively. AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited) 31 30 December September -------- ---------
(Millions of dollars) 2009 2009 --------------------- ---- ----
Assets ------ Current Assets Cash and cash items $323.0 $488.2
Trade receivables, less allowances for doubtful accounts 1,377.8
1,363.2 Inventories 522.6 509.6 Contracts in progress, less
progress billings 132.2 132.3 Prepaid expenses 136.8 99.7 Other
receivables and current assets 286.6 399.8 Current assets of
discontinued operations 4.2 5.0
----------------------------------------- --- --- Total Current
Assets 2,783.2 2,997.8 -------------------- ------- -------
Investment in Net Assets of and Advances to Equity Affiliates 878.2
868.1 Plant and Equipment, at cost 15,957.2 15,751.3 Less:
Accumulated depreciation 9,012.0 8,891.7
------------------------------ ------- ------- Plant and Equipment,
net 6,945.2 6,859.6 ------------------------ ------- -------
Goodwill 912.2 916.0 Intangible Assets, net 259.5 262.6 Noncurrent
Capital Lease Receivables 717.7 687.0 Other Noncurrent Assets 418.5
438.0 ----------------------- ----- ----- Total Assets $12,914.5
$13,029.1 ============ ========= ========= Liabilities and Equity
---------------------- Current Liabilities Payables and accrued
liabilities $1,378.5 $1,660.4 Accrued income taxes 43.9 42.9
Short-term borrowings 269.1 333.8 Current portion of long-term debt
444.5 452.1 Current liabilities of discontinued operations 8.9 14.4
---------------------------------------------- --- ---- Total
Current Liabilities 2,144.9 2,503.6 -------------------------
------- ------- Long-Term Debt 3,705.1 3,715.6 Deferred Income and
Other Noncurrent Liabilities 1,509.4 1,522.0 Deferred Income Taxes
371.0 357.9 --------------------- ----- ----- Total Liabilities
7,730.4 8,099.1 ----------------- ------- ------- Total Air
Products Shareholders' Equity 5,033.9 4,791.9 Noncontrolling
Interests 150.2 138.1 ------------------------ ----- ----- Total
Equity 5,184.1 4,930.0 ------------ ------- ------- Total
Liabilities and Equity $12,914.5 $13,029.1
============================ ========= ========= AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited) Three Months Ended 31 December (Millions of
dollars) 2009 2008 --------------------- ---- ---- Operating
Activities Net Income $256.8 $73.6 Less: Net income attributable to
noncontrolling interests 5.0 5.0
----------------------------------------------- --- --- Net income
attributable to Air Products $251.8 $68.6 Adjustments to reconcile
income to cash provided by operating activities: Depreciation and
amortization 217.1 200.6 Impairment of assets of continuing
operations .6 32.1 Impairment of assets of discontinued operations
- 48.7 Deferred income taxes 115.3 (.6) Undistributed earnings of
unconsolidated affiliates (8.4) (10.9) Loss on sale of assets and
investments .4 1.9 Share-based compensation 7.7 17.5 Noncurrent
capital lease receivables (30.7) (37.0) Other adjustments 30.1
(5.6) Working capital changes that provided (used) cash, excluding
effects of acquisitions and divestitures: Trade receivables (27.0)
101.7 Inventories (18.1) (53.7) Contracts in progress 9.3 (6.6)
Other receivables 11.8 (74.2) Payables and accrued liabilities
(289.9) (42.9) Other working capital (76.1) (40.4)
--------------------- ----- ----- Cash Provided by Operating
Activities (a) 193.9 199.2
----------------------------------------- ----- ----- Investing
Activities Additions to plant and equipment (288.8) (291.7)
Acquisitions, less cash acquired (9.9) (1.6) Investment in and
advances to unconsolidated affiliates (3.0) (.1) Proceeds from sale
of assets and investments 13.1 18.9 Proceeds from sale of
discontinued operations - .9 Change in restricted cash 13.2 (31.7)
------------------------- ---- ----- Cash Used for Investing
Activities (275.4) (305.3) ----------------------------------
------ ------ Financing Activities Long-term debt proceeds 53.1
109.0 Payments on long-term debt (26.0) (41.4) Net (decrease)
increase in commercial paper and short-term borrowings (51.6) 145.7
Dividends paid to shareholders (95.1) (92.1) Proceeds from stock
option exercises 27.7 1.1 Excess tax benefit from share-based
compensation 8.2 .6 ----------------------------------- --- ---
Cash (Used for) Provided by Financing Activities (83.7) 122.9
------------------------------------------------ ----- ----- Three
Months Ended 31 December (Millions of dollars) 2009 2008
--------------------- ---- ---- Effect of Exchange Rate Changes on
Cash - (1.8) --------------------------------------- --- ----
(Decrease) Increase in Cash and Cash Items (165.2) 15.0 Cash and
Cash Items - Beginning of Year 488.2 103.5
--------------------------------------- ----- ----- Cash and Cash
Items - End of Period $323.0 $118.5
=================================== ====== ====== (a) Pension plan
contributions $255.7 $42.6 AIR PRODUCTS AND CHEMICALS, INC. and
Subsidiaries SUMMARY BY BUSINESS SEGMENTS (Unaudited) Three Months
Ended 31 December 2009 2008 ---- ---- Revenues from External
Customers Merchant Gases $933.6 $925.2 Tonnage Gases 697.9 744.0
Electronics and Performance Materials 433.4 406.6 Equipment and
Energy 108.6 119.5 -------------------- ----- ----- Segment and
Consolidated Totals $2,173.5 $2,195.3
------------------------------- -------- -------- Operating Income
Merchant Gases $189.6 $170.5 Tonnage Gases 100.2 108.8 Electronics
and Performance Materials 48.4 24.6 Equipment and Energy 7.8 7.0
-------------------- --- --- Segment Totals $346.0 $310.9 Global
cost reduction plan - (174.2) Other (1.0) (22.6) ----- ---- -----
Consolidated Total $345.0 $114.1 ------------------ ------ ------
31 30 December September -------- --------- 2009 2009 ---- ----
Identifiable Assets (a) Merchant Gases $4,916.5 $4,917.0 Tonnage
Gases 3,752.3 3,597.8 Electronics and Performance Materials 2,234.6
2,249.5 Equipment and Energy 307.1 303.3 -------------------- -----
----- Segment Totals $11,210.5 $11,067.6 Other 821.6 1,088.4
Discontinued Operations 4.2 5.0 ----------------------- --- ---
Consolidated Total $12,036.3 $12,161.0 ------------------ ---------
--------- (a) Identifiable assets are equal to total assets less
investments in and advances to equity affiliates. AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited) Noncontrolling Interests Effective 1 October
2009, the Company adopted the accounting guidance that established
the accounting and reporting standard for the noncontrolling
interests in a subsidiary and for the deconsolidation of a
subsidiary. This guidance requires entities to report
noncontrolling interests in subsidiaries separately within equity
in the consolidated balance sheets. It also requires disclosure, on
the face of the consolidated statement of income, of the amounts of
consolidated net income attributable to the parent and
noncontrolling interests. The Company's financial statements have
been updated to reflect the new presentation. Prior year amounts
have been reclassified to conform to the current year presentation.
RECONCILIATION NON-GAAP MEASURE The Company utilizes a non-GAAP
measure in the computation of capital expenditures and includes
spending associated with facilities accounted for as capital
leases. Certain contracts associated with facilities that are built
to provide product to a specific customer are required to be
accounted for as leases, and such spending is reflected as a use of
cash within cash provided by operating activities. The presentation
of this non-GAAP measure is intended to enhance the usefulness of
information by providing a measure which the Company's management
uses internally to evaluate and manage the Company's expenditures.
Below is a reconciliation of capital expenditures on a GAAP basis
to a non-GAAP measure. Three Months Ended 31 December (Millions of
dollars) 2009 2008 --------------------- ---- ---- Capital
expenditures - GAAP basis $301.7 $293.4 Capital lease expenditures
43.5 39.5 -------------------------- ---- ---- Capital expenditures
- non-GAAP basis $345.2 $332.9
------------------------------------- ------ ------ DATASOURCE: Air
Products CONTACT: Media Inquiries, Robert Brown, +1-610-481-1192, ;
Investor Inquiries, Nelson Squires, +1-610-481-7461, Web Site:
http://www.airproducts.com/
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