LEHIGH VALLEY, Pa.,
Jan. 21, 2011 /PRNewswire/ --
Access the Q1 earnings teleconference scheduled for
10:00 a.m. Eastern Time on
January 21 by calling (719) 325-2341 and entering
passcode 4791604, or listen on the Web at:
www.airproducts.com/Invest/financialnews/Earnings_Releases/Teleconference.htm.
First Quarter Highlights Versus Prior Year
- Sales increased 10% on volume growth—Record Asia Merchant sales
up 35%
- Operating margin of 16.9% up 100 basis points*
- EPS of $1.35 up 16%*
Air Products (NYSE: APD) today reported net income of
$296 million, or diluted earnings per
share (EPS) of $1.35, for its fiscal
first quarter ended December 31, 2010
versus $252 million and $1.16 for the first quarter of fiscal 2010. This
result excludes an after-tax charge of $27
million, or $0.12 per share, for costs associated with
the tender offer for the outstanding shares of
Airgas, Inc.
The discussion of first quarter results and guidance in this
release is based on non-GAAP comparisons. A reconciliation can be
found at the end of this release.*
First quarter revenues of $2,392
million increased 10 percent versus the prior year driven by
higher sales across all segments. This was led by volume growth
across our Electronics and Performance Materials, Tonnage Gases and
Merchant Gases segments. Sequentially, sales increased two percent.
Operating income of $404 million was up 17 percent from the
prior year on improved volumes and one percent sequentially.
John McGlade, chairman, president
and chief executive officer, said, "We're off to a very good start
for our new fiscal year. In the quarter, we produced double-digit
volume growth and improved margins and returns. The Air Products
team continues to deliver on its commitments."
First Quarter Segment Performance
- Merchant Gases sales of $988
million increased six percent versus prior year, primarily
driven by Asia, which saw its
highest increase in sales and volumes in recent history. Operating
income of $201 million increased six
percent from the prior year on higher volumes and pricing.
Sequentially, sales rose four percent driven primarily by favorable
currency.
- Tonnage Gases sales of $766
million were up 10 percent on improved volumes from loading
at existing plants and new plant onstreams. Operating income of
$116 million increased 15 percent
from the prior year primarily on higher volumes, lower maintenance
costs and improved plant efficiencies. Sequentially, sales were up
two percent with volumes up five percent and energy and raw
material cost pass-throughs lowering sales by four percent.
- Electronics and Performance Materials sales of
$526 million increased
21 percent on higher volumes and flat pricing. Electronics
sales were up 30 percent, and Performance Materials sales rose 11
percent versus last year. Operating income of $69 million increased 42 percent from the prior
year on improved volumes and productivity. Sequential sales were up
one percent due to favorable pricing and currency offset by
seasonal volume declines. Operating income was down 18%
sequentially due to volume seasonality and inventory
revaluation.
- Equipment and Energy sales of $112 million were up three percent. Operating
income of $20 million increased
significantly from the prior year on higher LNG activity.
Outlook
Looking ahead, McGlade said, "Building on our solid performance
and a gradually recovering global economy, we are focused on
winning customer orders, bringing new plants onstream and
delivering productivity. We are well on our way to achieving double
digit earnings growth, improved return on capital and 17 percent
operating margins in 2011."
Air Products is raising its guidance for fiscal 2011 to
$5.55 to $5.70 per share. The company
also expects second quarter EPS to be between $1.36 and $1.40 per share.
Annual Meeting of Shareholders
Air Products will host its Annual Meeting of Shareholders on
Thursday, January 27, 2011, at
2:00 p.m. ET. Access the audio
Webcast at:
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 2010, Air Products had revenues of
$9 billion, operations in over 40
countries, and 18,300 employees around the globe. 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 earnings guidance,
projections and targets. These forward-looking statements are based
on management's reasonable expectations and assumptions as of the
date this release is issued 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, slowing of 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; unanticipated contract terminations or customer
cancellations or postponement of projects and sales; the success of
commercial negotiations; asset impairments due to economic
conditions or specific product or customer events; 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; successful
development and market acceptance of new products and applications,
the ability to attract, hire and retain qualified personnel in all
regions of the world where the Company operates; consequences of
acts of war or terrorism impacting the
United States and other markets; the effects of a natural
disaster; the success of cost reduction and productivity 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 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, 2010. 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.
ADDITIONAL INFORMATION
On February 11, 2010, Air Products
Distribution, Inc. ("Purchaser"), a wholly owned subsidiary of Air
Products and Chemicals, Inc. ("Air Products"), commenced a cash
tender offer for all the outstanding shares of common stock of
Airgas, Inc. ("Airgas") not already owned by Air Products, subject
to the terms and conditions set forth in the Offer to Purchase
dated as of February 11, 2010, as
amended (the "Offer to Purchase"). The purchase price to be paid
upon the successful closing of the tender offer is $70 per share in cash, without interest and less
any required withholding tax, subject to the terms and conditions
set forth in the Offer to Purchase, as amended. The tender offer is
scheduled to expire at midnight, New York
City time, on Friday, February 4,
2011, unless further amended in the manner set forth in the
Schedule TO.
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities. The tender offer
is being made pursuant to a tender offer statement on Schedule TO
(including the Offer to Purchase, a related letter of transmittal
and other tender offer materials) filed by Air Products with the
U.S. Securities and Exchange Commission ("SEC") on February 11, 2010. INVESTORS AND SECURITY
HOLDERS OF AIRGAS ARE URGED TO READ THESE AND OTHER DOCUMENTS FILED
WITH THE SEC CAREFULLY IN THEIR ENTIRETY BECAUSE THEY CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors
and security holders can obtain free copies of these documents and
other documents filed with the SEC by Air Products through the web
site maintained by the SEC at http://www.sec.gov. The Offer to
Purchase and related materials may also be obtained for free by
contacting the Information Agent for the tender offer, MacKenzie
Partners, Inc., at 212-929-5500 or toll-free at 800-322-2885.
* The presentation of non-GAAP measures is intended to enhance
the usefulness of financial information by providing measures which
our management uses internally to evaluate our baseline performance
on a comparable basis. Presented below are reconciliations of
the reported GAAP results to the non-GAAP measures.
CONSOLIDATED
RESULTS
|
|
|
Q1
|
|
|
|
|
Operating
Income
|
Operating
Margin
|
Net
Income
|
Diluted
EPS
|
|
2011 GAAP
|
$360.6
|
15.1%
|
$268.6
|
$1.23
|
|
2010 GAAP
|
345.0
|
15.9%
|
251.8
|
1.16
|
|
Change GAAP
|
5%
|
(80bp)
|
7%
|
6%
|
|
|
|
|
|
|
|
2011 GAAP
|
$360.6
|
15.1%
|
$268.6
|
$1.23
|
|
Acquisition-related costs (Tax
impact $16.3) (a)
|
43.5
|
1.8%
|
27.2
|
.12
|
|
2011 Non-GAAP Measure
|
$404.1
|
16.9%
|
$295.8
|
$1.35
|
|
|
|
|
|
|
|
Change Non-GAAP
Measure
|
17%
|
100bp
|
17%
|
16%
|
|
|
|
|
|
|
|
|
|
Q2
2011
|
YTD
2011
|
|
2011 Guidance (b)
|
|
|
$1.36-$1.40
|
$5.55-$5.70
|
|
(a) Based on statutory tax
rate of 37.4%
(b) Guidance excludes the
impact of acquisition-related costs
|
|
|
|
|
|
|
AIR PRODUCTS
AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED
INCOME STATEMENTS
(Unaudited)
|
|
|
Three Months
Ended
31 December
|
|
(Millions of dollars, except for
share data)
|
2010
|
2009
|
|
Sales
|
$2,391.7
|
$2,173.5
|
|
Cost of sales
|
1,720.5
|
1,568.6
|
|
Selling and
administrative
|
244.6
|
244.1
|
|
Research and
development
|
29.2
|
27.2
|
|
Acquisition-related
costs
|
43.5
|
—
|
|
Other income, net
|
6.7
|
11.4
|
|
Operating Income
|
360.6
|
345.0
|
|
Equity affiliates'
income
|
27.8
|
26.9
|
|
Interest expense
|
31.0
|
31.6
|
|
Income before
Taxes
|
357.4
|
340.3
|
|
Income tax
provision
|
81.5
|
83.5
|
|
Net Income
|
275.9
|
256.8
|
|
Less: Net Income Attributable to
Noncontrolling Interests
|
7.3
|
5.0
|
|
Net Income Attributable to Air
Products
|
$268.6
|
$251.8
|
|
|
|
|
|
Basic Earnings per Common Share
Attributable to Air Products
|
$1.25
|
$1.19
|
|
Diluted Earnings per Common
Share Attributable to Air Products
|
$1.23
|
$1.16
|
|
Weighted
Average of Common Shares Outstanding (in
millions)
|
214.2
|
211.7
|
|
Weighted Average of Common
Shares Outstanding Assuming Dilution (in
millions)
|
219.2
|
217.0
|
|
Dividends Declared per Common
Share – Cash
|
$.49
|
$.45
|
|
|
|
|
|
Other Data from
Operations:
|
|
|
|
Depreciation and
amortization
|
$217.6
|
$217.1
|
|
Capital expenditures on a
non-GAAP Basis (see
reconciliation at end of announcement)
|
369.0
|
345.2
|
|
|
|
|
|
|
|
|
|
|
AIR PRODUCTS
AND CHEMICALS, INC. and Subsidiaries
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
(Millions of dollars)
|
31
December
2010
|
30
September
2010
|
|
Assets
|
|
|
|
Current Assets
|
|
|
|
Cash and cash items
|
$247.2
|
$374.3
|
|
Trade receivables, less
allowances for doubtful accounts
|
1,485.7
|
1,481.9
|
|
Inventories
|
584.5
|
571.6
|
|
Contracts in progress, less
progress billings
|
153.7
|
163.6
|
|
Prepaid expenses
|
70.3
|
70.3
|
|
Other receivables and current
assets
|
328.8
|
372.1
|
|
Total Current
Assets
|
2,870.2
|
3,033.8
|
|
Investment
in Net Assets of and Advances to Equity Affiliates
|
912.0
|
912.8
|
|
Plant and Equipment,
at cost
|
16,572.3
|
16,309.7
|
|
Less: Accumulated
depreciation
|
9,414.8
|
9,258.4
|
|
Plant and
Equipment, net
|
7,157.5
|
7,051.3
|
|
Goodwill
|
912.2
|
914.6
|
|
Intangible Assets,
net
|
277.1
|
285.7
|
|
Noncurrent Capital Lease
Receivables
|
810.7
|
770.4
|
|
Other Noncurrent
Assets
|
520.0
|
537.3
|
|
Total Assets
|
$13,459.7
|
$13,505.9
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Payables and accrued
liabilities
|
$1,458.1
|
$1,702.0
|
|
Accrued income taxes
|
104.4
|
73.6
|
|
Short-term
borrowings
|
320.9
|
286.0
|
|
Current
portion of long-term debt
|
53.7
|
182.5
|
|
Total
Current Liabilities
|
1,937.1
|
2,244.1
|
|
Long-Term
Debt
|
3,617.4
|
3,659.8
|
|
Other
Noncurrent Liabilities
|
1,535.7
|
1,569.3
|
|
Deferred
Income Taxes
|
392.3
|
335.1
|
|
Total
Liabilities
|
7,482.5
|
7,808.3
|
|
Total Air
Products Shareholders' Equity
|
5,810.0
|
5,546.9
|
|
Noncontrolling
Interests
|
167.2
|
150.7
|
|
Total
Equity
|
5,977.2
|
5,697.6
|
|
Total
Liabilities and Equity
|
$13,459.7
|
$ 13,505.9
|
|
|
|
|
|
|
AIR PRODUCTS
AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Three Months
Ended
31 December
|
|
(Millions of dollars)
|
2010
|
2009
|
|
Operating
Activities
|
|
|
|
Net Income
|
$275.9
|
$256.8
|
|
Less: Net income
attributable to noncontrolling interests
|
7.3
|
5.0
|
|
Net income attributable to
Air Products
|
$268.6
|
$251.8
|
|
Adjustments to reconcile
income to cash provided by operating activities:
|
|
|
|
Depreciation and
amortization
|
217.6
|
217.1
|
|
Impairment of
assets
|
.6
|
.6
|
|
Deferred income
taxes
|
(2.3)
|
115.3
|
|
Undistributed earnings of
unconsolidated affiliates
|
14.9
|
(8.4)
|
|
(Gain) loss on sale of
assets and investments
|
(.8)
|
.4
|
|
Share-based
compensation
|
10.2
|
7.7
|
|
Noncurrent capital lease
receivables
|
(37.7)
|
(30.7)
|
|
Acquisition-related
costs
|
31.5
|
—
|
|
Other
adjustments
|
29.6
|
30.1
|
|
Working
capital changes that provided (used) cash, excluding effects of
acquisitions and divestitures:
|
|
|
|
Trade
receivables
|
(11.5)
|
(27.0)
|
|
Inventories
|
(10.2)
|
(18.1)
|
|
Contracts in
progress
|
9.8
|
9.3
|
|
Other
receivables
|
11.6
|
11.8
|
|
Payables and accrued
liabilities
|
(229.3)
|
(289.9)
|
|
Other working
capital
|
34.0
|
(76.1)
|
|
Cash Provided by Operating
Activities (a)
|
336.6
|
193.9
|
|
Investing
Activities
|
|
|
|
Additions to plant and
equipment
|
(306.9)
|
(288.8)
|
|
Acquisitions, less cash
acquired
|
—
|
(9.9)
|
|
Investment in and advances
to unconsolidated affiliates
|
—
|
(3.0)
|
|
Proceeds from sale of
assets and investments
|
33.2
|
13.1
|
|
Change in restricted
cash
|
(3.1)
|
13.2
|
|
Cash Used
for Investing Activities
|
(276.8)
|
(275.4)
|
|
Financing
Activities
|
|
|
|
Long-term debt
proceeds
|
38.5
|
53.1
|
|
Payments on long-term
debt
|
(137.6)
|
(26.0)
|
|
Net decrease in commercial
paper and short-term borrowings
|
(33.3)
|
(51.6)
|
|
Dividends paid to
shareholders
|
(104.8)
|
(95.1)
|
|
Proceeds from stock option
exercises
|
36.8
|
27.7
|
|
Excess tax benefit from
share-based compensation
|
8.5
|
8.2
|
|
Other financing
activities
|
1.3
|
—
|
|
Cash Used for Financing
Activities
|
(190.6)
|
(83.7)
|
|
|
|
|
|
|
AIR PRODUCTS
AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED
STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
|
|
|
Three Months
Ended
31 December
|
|
(Millions of dollars)
|
2010
|
2009
|
|
Effect of Exchange Rate Changes
on Cash
|
3.7
|
—
|
|
Decrease in Cash and Cash
Items
|
(127.1)
|
(165.2)
|
|
Cash and Cash Items – Beginning
of Year
|
374.3
|
488.2
|
|
Cash and Cash Items – End of
Period
|
$247.2
|
$323.0
|
|
|
|
|
|
(a) Pension plan
contributions
|
$208.7
|
$255.7
|
|
|
|
|
|
|
|
|
|
|
AIR PRODUCTS
AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY
BUSINESS SEGMENTS
(Unaudited)
|
|
|
Three Months
Ended
31 December
|
|
|
2010
|
2009
|
|
Revenues from External
Customers
|
|
|
|
Merchant Gases
|
$987.8
|
$933.6
|
|
Tonnage Gases
|
766.0
|
697.9
|
|
Electronics and
Performance Materials
|
526.0
|
433.4
|
|
Equipment and
Energy
|
111.9
|
108.6
|
|
Segment and Consolidated
Totals
|
$2,391.7
|
$2,173.5
|
|
|
|
|
|
Operating Income
|
|
|
|
Merchant Gases
|
$200.5
|
$189.6
|
|
Tonnage Gases
|
115.6
|
100.2
|
|
Electronics and
Performance Materials
|
68.9
|
48.4
|
|
Equipment and
Energy
|
20.2
|
7.8
|
|
Segment Totals
|
$405.2
|
$346.0
|
|
Acquisition-related
costs
|
(43.5)
|
—
|
|
Other
|
(1.1)
|
(1.0)
|
|
Consolidated
Total
|
$360.6
|
$345.0
|
|
|
|
|
|
31
December
|
30
September
|
|
|
2010
|
2010
|
|
Identifiable Assets
(a)
|
|
|
|
Merchant Gases
|
$5,061.9
|
$5,075.3
|
|
Tonnage Gases
|
3,999.7
|
3,876.4
|
|
Electronics and
Performance Materials
|
2,312.9
|
2,275.8
|
|
Equipment and
Energy
|
333.2
|
341.3
|
|
Segment Totals
|
$11,707.7
|
$11,568.8
|
|
Other
|
840.0
|
1,024.3
|
|
Consolidated
Total
|
$12,547.7
|
$12,593.1
|
|
(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)
|
|
|
|
(Millions of dollars, except for
share data)
|
|
|
AIRGAS TRANSACTION
In February 2010, we commenced a
tender offer to acquire all the outstanding common stock of Airgas,
Inc. (Airgas), including the associated preferred stock
purchase rights, for $60.00 per share
in cash, less any required withholding tax, and subject to the
terms and conditions set forth in the Offer to Purchase, dated
11 February 2010, as amended. Airgas,
a Delaware company, is the largest
U.S. distributor of industrial, medical, and specialty gases, and
hard goods. On 9 December 2010, we
increased the value of our tender offer to $70.00 per share. At this price, the total value
of the transaction would be approximately $7.8 billion, including $6.1 billion of equity and $1.7 billion of assumed debt. The offer and
withdrawal rights are scheduled to expire on
4 February 2011, unless further extended.
In connection with this tender offer, we have secured committed
financing in the form of a $6.7
billion term loan credit facility. Fees incurred to secure
this credit facility have been deferred and are being amortized
over the term of the arrangement.
For the three months ended 31 December
2010, $43.5 ($27.2 after-tax, or $.12 per share) in expense was recognized related
to this transaction and is included within acquisition-related
costs on the consolidated income statement. This includes
amortization of the fees related to the term loan credit facility
and other acquisition-related costs.
RECONCILIATION
|
|
NON-GAAP
MEASURE
|
|
|
We utilize a non-GAAP measure in the computation of capital
expenditures and include 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 our management uses internally to evaluate and manage our
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)
|
2010
|
2009
|
|
Capital expenditures – GAAP
basis
|
$306.9
|
$301.7
|
|
Capital lease
expenditures
|
62.1
|
43.5
|
|
Capital expenditures – non-GAAP
basis
|
$369.0
|
$345.2
|
|
|
|
|
|
|
SOURCE Air Products