LEHIGH VALLEY, Pa.,
Jan. 24, 2012 /PRNewswire/ --
Access the Q1 earnings teleconference scheduled for
10:00 a.m. Eastern Time on
January 24 by calling 719-325-4826 and entering pass
code 4309648, or listen on the Web at:
http://www.airproducts.com/en/investors/earnings-releases/teleconference-information.aspx
Quarter Summary
- Underlying sales increased 1%
- Tonnage gases sales up on new projects
- New China project is the
largest on-site ASU order
- Announced intention to divest Continental Europe Homecare
business
Air Products (NYSE:APD) today reported net income of
$292 million*, or diluted earnings
per share (EPS) of $1.36*, for its
fiscal first quarter ended December 31,
2011, versus $296 million* and
$1.35* for the first quarter of
fiscal 2011.
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 $2,423
million increased one percent versus the prior year on
higher prices in Merchant Gases and Performance Materials. Higher
volumes from new plants in Tonnage Gases were offset by lower
Equipment sales and lower volumes in Performance Materials and
Merchant Gases.
Sequentially, sales declined seven percent due to seasonality in
Electronics and Performance Materials and Merchant Gases, plus
currency effects. Operating income of $385 million was down
five percent and margin of 15.9% was down 100 basis points from
last year driven by lower Equipment sales and weaker Merchant Gases
volumes.
John McGlade, chairman, president
and chief executive officer, said, "As we expected, economic growth
continued to slow this quarter, depressing volumes and limiting
earnings growth. In spite of these economic headwinds, we did
improve our operating performance, while lowering costs and winning
significant new tonnage contracts."
First Quarter Segment Performance
- Merchant Gases sales of $989
million were unchanged versus prior year as lower volumes
were offset by higher pricing in U.S./Canada and Europe Liquid Bulk and Packaged
Gases. Operating income of $192
million decreased four percent from the prior year, due
principally to weaker volumes. Sequentially, sales decreased five
percent, driven by lower volumes and currency effects. Operating
income was flat and margin was up 100 basis points sequentially on
improved operating performance and productivity.
- Tonnage Gases sales of $810
million were up six percent on improved volumes from new
plants. Operating income of $111
million decreased four percent from the prior year due to
higher maintenance costs from outages. Sequentially, sales were
down eight percent due to lower volumes and lower energy
pass-through. Sequential operating income decreased 27% on
higher maintenance costs, favorable gases contract modifications in
the prior quarter and an unfavorable polyurethane intermediates
contract modification in the current quarter.
- Electronics and Performance Materials sales of
$535 million increased two percent on
higher volumes and pricing. Electronics sales were up four percent
while Performance Materials sales decreased one percent versus last
year. Operating income of $78 million
increased 13 percent from the prior year primarily due to improved
cost performance. Sequential sales were down nine percent due to
seasonal volume declines in both Electronics and Performance
Materials. Operating income was down 15 percent sequentially on the
lower volumes.
- Equipment and Energy sales of $89
million and operating income of $7
million were down 21 percent and 64 percent respectively
versus prior year, driven by lower ASU and LNG project activity.
Sequential sales decreased seven percent. The sales backlog versus
prior year is up 48 percent.
Outlook
Looking ahead, McGlade said, "We expect second quarter economic
activity to remain slow. We are forecasting Asia and North
America growth to accelerate in the second half of our
fiscal year. Coupled with our improved operating performance and
new plant on-streams, this should lead to stronger sales and
earnings growth in the last half of our year. Our recent orders,
strong project backlog and robust bidding activity position us well
to achieve our 2015 goals for growth, margin and returns."
Air Products is maintaining its guidance for fiscal 2012 of
$5.90 to $6.30 per share. The company
expects second quarter EPS to be between $1.37 and $1.43 per share.
Annual Meeting of Shareholders
Air Products will host its Annual Meeting of Shareholders on
Thursday, January 26, 2012, at
2:00 p.m. ET. Access the audio
Webcast at:
http://www.airproducts.com/en/investors/shareholder-services/annual-meeting-materials.aspx
Air Products (NYSE:APD) serves customers in industrial, energy
and technology 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 2011, Air Products had revenues of
$10.1 billion, operations in over 40
countries, and 18,900 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, targets and business outlook. These forward-looking
statements are based on management's reasonable expectations and
assumptions as of the date of this release. 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 global or regional 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; the success of productivity programs; the success
and impact of restructuring and cost reduction initiatives;
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 impact on the effective tax rate of
changes in the mix of earnings among our U.S. and international
operations; and other risk factors described in the Company's Form
10K for its fiscal year ended September 30,
2011. 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 our management uses internally to evaluate our baseline
performance on a comparable basis. Presented below are
reconciliations of the reported GAAP results to non-GAAP
measures. Net income and diluted EPS data are attributable to
Air Products.
CONSOLIDATED RESULTS
|
|
|
|
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|
|
|
|
|
|
|
Operating
|
|
Operating
|
|
|
Net
|
|
|
Diluted
|
|
|
|
Income
|
|
Margin
|
|
|
Income
|
|
|
EPS
|
|
|
2012 GAAP
|
$
|
384.7
|
|
15.9%
|
|
$
|
248.1
|
|
$
|
1.16
|
|
|
2011 GAAP
|
|
360.6
|
|
15.1%
|
|
|
268.6
|
|
|
1.23
|
|
|
Change
GAAP
|
$
|
24.1
|
|
80bp
|
|
$
|
(20.5)
|
|
$
|
(.07)
|
|
|
% Change
GAAP
|
|
7%
|
|
|
|
|
(8)%
|
|
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 GAAP
|
$
|
384.7
|
|
15.9%
|
|
$
|
248.1
|
|
$
|
1.16
|
|
|
Spanish
tax settlement
|
|
-
|
|
-
|
|
|
43.8
|
|
|
.20
|
|
|
2012
Non-GAAP Measure
|
$
|
384.7
|
|
15.9%
|
|
$
|
291.9
|
|
$
|
1.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 GAAP
|
$
|
360.6
|
|
15.1%
|
|
$
|
268.6
|
|
$
|
1.23
|
|
|
Net loss
on Airgas transaction (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
|
$
|
(19.4)
|
|
(100bp)
|
|
$
|
(3.9)
|
|
$
|
.01
|
|
|
% Change
Non-GAAP Measure
|
|
(5)%
|
|
|
|
|
(1)%
|
|
|
1%
|
|
|
|
|
|
|
|
|
|
|
|
|
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YTD
2012
|
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|
2012
Guidance(b)
|
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|
$5.90-$6.30
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(a) Based
on average statutory tax rate of 37.44%
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(b)
Guidance excludes the impact of the Spanish tax
settlement
|
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|
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
|
|
Three
Months Ended
31
December
|
(Millions
of dollars, except for share data)
|
2011
|
2010
|
Sales
|
$2,423.1
|
$2,391.7
|
Cost of
sales
|
1,774.3
|
1,720.5
|
Selling
and administrative
|
248.9
|
244.6
|
Research
and development
|
28.1
|
29.2
|
Net loss
on Airgas transaction
|
—
|
43.5
|
Other
income, net
|
12.9
|
6.7
|
Operating Income
|
384.7
|
360.6
|
Equity
affiliates' income
|
37.1
|
27.8
|
Interest
expense
|
29.4
|
31.0
|
Income
before Taxes
|
392.4
|
357.4
|
Income tax
provision
|
136.1
|
81.5
|
Net
Income
|
256.3
|
275.9
|
Less:
Net Income Attributable to Noncontrolling Interests
|
8.2
|
7.3
|
Net
Income Attributable to Air Products
|
$248.1
|
$268.6
|
|
|
|
Basic
Earnings Per Common Share Attributable to Air
Products
|
$1.18
|
$1.25
|
Diluted
Earnings Per Common Share Attributable to Air
Products
|
$1.16
|
$1.23
|
Weighted Average of Common Shares Outstanding
(in millions)
|
210.3
|
214.2
|
Weighted Average of Common Shares Outstanding
Assuming Dilution (in millions)
|
213.9
|
219.2
|
Dividends Declared Per Common Share –
Cash
|
$.58
|
$.49
|
|
|
|
Other Data
from Operations:
|
|
|
Depreciation and amortization
|
$212.5
|
$217.6
|
Capital
expenditures on a Non-GAAP basis
(see page 11 for reconciliation)
|
405.4
|
369.0
|
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
(Millions
of dollars)
|
31
December
2011
|
30
September
2011
|
Assets
|
|
|
Current
Assets
|
|
|
Cash and
cash items
|
$407.3
|
$422.5
|
Trade
receivables, net
|
1,529.5
|
1,575.0
|
Inventories
|
704.1
|
681.4
|
Contracts
in progress, less progress billings
|
155.9
|
146.7
|
Prepaid
expenses
|
85.0
|
77.9
|
Other
receivables and current assets
|
294.4
|
286.3
|
Total
Current Assets
|
3,176.2
|
3,189.8
|
Investment
in net assets of and advances to equity affiliates
|
1,007.2
|
1,011.6
|
Plant and
equipment, at cost
|
17,439.2
|
17,227.1
|
Less:
Accumulated depreciation
|
9,913.3
|
9,815.1
|
Plant and
equipment, net
|
7,525.9
|
7,412.0
|
Goodwill
|
877.5
|
892.4
|
Intangible
assets, net
|
249.8
|
260.7
|
Noncurrent
capital lease receivables
|
1,106.7
|
1,042.8
|
Other
noncurrent assets
|
448.0
|
481.4
|
Total
Noncurrent Assets
|
11,215.1
|
11,100.9
|
Total
Assets
|
$14,391.3
|
$14,290.7
|
|
|
|
Liabilities and Equity
|
|
|
Current
Liabilities
|
|
|
Payables
and accrued liabilities
|
$1,482.1
|
$1,641.8
|
Accrued
income taxes
|
123.3
|
65.5
|
Short-term
borrowings
|
267.9
|
562.5
|
Current
portion of long-term debt
|
463.9
|
72.2
|
Total
Current Liabilities
|
2,337.2
|
2,342.0
|
Long-term
debt
|
3,884.2
|
3,927.5
|
Other
noncurrent liabilities
|
1,513.3
|
1,512.4
|
Deferred
income taxes
|
599.5
|
570.1
|
Total
Noncurrent Liabilities
|
5,997.0
|
6,010.0
|
Total
Liabilities
|
8,334.2
|
8,352.0
|
Total
Air Products Shareholders' Equity
|
5,909.0
|
5,795.8
|
Noncontrolling Interests
|
148.1
|
142.9
|
Total
Equity
|
6,057.1
|
5,938.7
|
Total
Liabilities and Equity
|
$14,391.3
|
$14,290.7
|
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Three
Months Ended
31 December
|
(Millions
of dollars)
|
2011
|
2010
|
Operating Activities
|
|
|
Net Income
|
$256.3
|
$275.9
|
Less: Net income attributable to noncontrolling
interests
|
8.2
|
7.3
|
Net income attributable to Air Products
|
$248.1
|
$268.6
|
Adjustments to reconcile net income to cash provided
by operating activities:
|
|
|
Depreciation and amortization
|
212.5
|
217.6
|
Deferred income taxes
|
26.3
|
(2.3)
|
Undistributed earnings of unconsolidated
affiliates
|
(10.4)
|
14.9
|
Gain on sale of assets and investments
|
(4.9)
|
(.8)
|
Share-based compensation
|
11.8
|
10.2
|
Noncurrent capital lease receivables
|
(61.2)
|
(37.7)
|
Net loss on Airgas transaction
|
—
|
43.5
|
Payment of acquisition-related costs
|
—
|
(12.0)
|
Other adjustments
|
17.9
|
30.2
|
Working capital changes that provided (used) cash,
excluding effects of acquisitions and divestitures:
|
|
|
Trade receivables
|
27.8
|
(11.5)
|
Inventories
|
(23.3)
|
(10.2)
|
Contracts in progress, less progress
billings
|
(9.6)
|
9.8
|
Other receivables
|
8.2
|
11.6
|
Payables and accrued liabilities
|
(58.2)
|
(229.3)
|
Other working capital
|
45.7
|
34.0
|
Cash
Provided by Operating Activities (a)
|
430.7
|
336.6
|
Investing Activities
|
|
|
Additions to plant and equipment
|
(349.7)
|
(306.9)
|
Investment in and advances to unconsolidated
affiliates
|
(21.2)
|
—
|
Proceeds from sale of assets and
investments
|
11.9
|
33.2
|
Change in restricted cash
|
2.0
|
(3.1)
|
Cash
Used for Investing Activities
|
(357.0)
|
(276.8)
|
Financing Activities
|
|
|
Long-term debt proceeds
|
400.1
|
38.5
|
Payments on long-term debt
|
(3.3)
|
(137.6)
|
Net decrease in commercial paper and short-term
borrowings
|
(315.4)
|
(33.3)
|
Dividends paid to shareholders
|
(121.9)
|
(104.8)
|
Proceeds from stock option exercises
|
7.9
|
36.8
|
Excess tax benefit from share-based
compensation
|
2.8
|
8.5
|
Payment for subsidiary shares from noncontrolling
interests
|
(58.4)
|
—
|
Other financing activities
|
(.1)
|
1.3
|
Cash
Used for Financing Activities
|
(88.3)
|
(190.6)
|
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
|
|
Three
Months Ended
31 December
|
(Millions
of dollars)
|
2011
|
2010
|
Effect
of Exchange Rate Changes on Cash
|
(.6)
|
3.7
|
Decrease in Cash and Cash Items
|
(15.2)
|
(127.1)
|
Cash
and Cash Items – Beginning of Year
|
422.5
|
374.3
|
Cash
and Cash Items – End of Period
|
$407.3
|
$247.2
|
|
|
|
(a) Pension plan
contributions
|
$8.1
|
$208.7
|
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
(Unaudited)
|
|
Three
Months Ended
31 December
|
(Millions
of dollars)
|
2011
|
2010
|
Sales
to External Customers
|
|
|
Merchant Gases
|
$989.3
|
$987.8
|
Tonnage Gases
|
809.8
|
766.0
|
Electronics and Performance Materials
|
535.2
|
526.0
|
Equipment and Energy
|
88.8
|
111.9
|
Segment
and Consolidated Totals
|
$2,423.1
|
$2,391.7
|
|
|
|
Operating Income
|
|
|
Merchant Gases
|
$191.6
|
$200.5
|
Tonnage Gases
|
111.4
|
115.6
|
Electronics and Performance Materials
|
78.1
|
68.9
|
Equipment and Energy
|
7.3
|
20.2
|
Segment
total
|
$388.4
|
$405.2
|
Net loss on Airgas transaction
|
—
|
(43.5)
|
Other
|
(3.7)
|
(1.1)
|
Consolidated Total
|
$384.7
|
$360.6
|
|
|
|
|
31
December
|
30
September
|
(Millions
of dollars)
|
2011
|
2011
|
Identifiable Assets (a)
|
|
|
Merchant Gases
|
$5,082.3
|
$5,091.7
|
Tonnage Gases
|
4,593.8
|
4,464.3
|
Electronics and Performance Materials
|
2,548.0
|
2,488.9
|
Equipment and Energy
|
313.2
|
335.6
|
Segment
total
|
$12,537.3
|
$12,380.5
|
Other
|
846.8
|
898.6
|
Consolidated Total
|
$13,384.1
|
$13,279.1
|
|
(a)
Identifiable assets are equal to total assets less investment in
net assets of and advances to equity affiliates.
|
AIR
PRODUCTS AND CHEMICALS, INC. and Subsidiaries
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
(Unaudited)
|
(Millions of dollars, unless otherwise indicated)
1. INCOME TAXES
We have been challenged by the Spanish tax authorities
predominantly over income tax deductions taken by certain of our
Spanish subsidiaries during fiscal years 2005-2011. Although we
continue to believe that all positions taken were compliant
with applicable laws, in November
2011 we reached a settlement with the Spanish tax
authorities for euro 41.3 million
(approximately $56) in resolution of
all tax issues under examination. Of this settlement, $43.8 ($.20 per
share) increased our income tax expense and had an 11.2% impact in
our effective tax rate for the three months ended 31 December 2011. The cash payment for the
settlement was principally paid in January
2012.
2. SUBSEQUENT EVENT – DISCONTINUED OPERATIONS
Homecare
In January 2012, the Board of
Directors authorized the sale of our Homecare business.
On 8 January 2012, we reached
agreements for The Linde Group to purchase our Homecare business in
Belgium, Germany, France, Portugal and Spain. This business represents approximately
80% of our total Homecare business revenues.
The transactions are subject to regulatory approvals and
employee consultation requirements and are expected to close in the
second quarter of fiscal year 2012. Total sale proceeds of
euro 590 million (approximately
$767) will be received in cash at
closing. This amount includes contingent proceeds of euro 110 million (approximately $143)
related to future business activity in Spain and Portugal. The gain related to the contingent
proceeds will be deferred until the contingency period ends and the
final proceeds are realized per the terms of the agreement. We will
also be entitled to receive additional cash proceeds based on a
percentage of the collection of the accounts receivable recorded
between 30 September 2011 and the
sale closing date.
We expect to sell the remaining portion of our Homecare
business, which is primarily in the United Kingdom, within the next year.
The Homecare business is currently reported in the Merchant
Gases segment and will be accounted for as discontinued operations
in the second quarter of fiscal year 2012.
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 and purchases of noncontrolling
interests. 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. Additionally, the purchase of noncontrolling
interests in a subsidiary is accounted for as an equity transaction
and
will be reflected as a financing activity in the statement of cash
flows.
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)
|
2011
|
2010
|
Capital
expenditures – GAAP basis
|
$370.9
|
$306.9
|
Capital
lease expenditures
|
28.2
|
62.1
|
Purchase
of noncontrolling interests
|
6.3
|
—
|
Capital
expenditures – Non-GAAP basis
|
$405.4
|
$369.0
|
SOURCE Air Products