LEHIGH VALLEY, Pa.,
April 26, 2018 /PRNewswire/ --
Q2 FY18 (all from continuing operations):
- GAAP EPS of $1.89, up 36 percent
from the prior year; GAAP net income of $416
million
- Adjusted EPS of $1.71*, up 20
percent versus prior year
- Adjusted EBITDA margin of 34.3 percent*, up 140 basis points
versus prior year
Highlights
- Expect to close on $1.3 billion
Lu'An syngas supply joint venture in fiscal 2018 third quarter,
onstream in phases
- Awarded industrial gases supply to Samsung Electronics' second
3D V-NAND Fab in Western
China
- Signed agreement to purchase largest carbon dioxide business in
Continental Europe, ACP Europe SA
Guidance
- Increased fiscal 2018 adjusted EPS guidance to $7.25 to $7.40 per
share, now up 15 to 17 percent over prior year. This increase is
due in part to the expected contribution from the Lu'An project.
Fiscal 2018 third quarter adjusted EPS guidance of $1.80 to $1.85 per
share, up nine to 12 percent over fiscal 2017 third quarter.
- Including the Lu'An project, expected fiscal year 2018 capital
spending of $1.8 to $2.0 billion
*The results and guidance in this release, including in the
highlights above, include references to non-GAAP continuing
operations measures. These exclude discontinued operations 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) today reported GAAP net income from
continuing operations of $416 million
and GAAP diluted earnings per share (EPS) from continuing
operations of $1.89, up 37 and 36
percent, respectively from the prior year, for its fiscal second
quarter ended March 31, 2018. These
results include an income tax benefit of $0.18 EPS due to the restructuring of select
foreign subsidiaries.
For the quarter, on a non-GAAP basis, adjusted net income from
continuing operations of $378 million
and diluted adjusted EPS from continuing operations of $1.71 both increased 20 percent over prior
year.
Second quarter sales of $2.2
billion increased nine percent from the prior year on four
percent higher volumes and five percent favorable currency. Volumes
were higher in all three Industrial Gas regions, partially offset
by lower activity from the Jazan project in Saudi Arabia. Pricing increased one percent,
driven primarily by the China
merchant business.
For the quarter, adjusted EBITDA of $739
million increased 13 percent over the prior year, driven by
the higher volumes, positive pricing and favorable currency.
Adjusted EBITDA margin of 34.3 percent increased 140 basis points
over the prior year, primarily on the higher volumes.
Commenting on the results, Seifi
Ghasemi, chairman, president and chief executive officer,
said, "Our talented and committed Air Products team delivered
another strong quarter, further improving safety performance and
financial results. Adjusted EPS of $1.71 increased 20 percent over prior year, our
16th consecutive quarter of year-on-year adjusted EPS growth. We
also continued to generate a significant amount of investable cash.
Adjusted EBITDA margin of 34.3 percent shows our people are
continuing to focus on delivering strong operating performance
while successfully winning new growth opportunities," he said.
Second Quarter Results by Business Segment
- Industrial Gases – Americas sales of $913 million increased three percent over prior
year, driven by higher hydrogen and merchant gases volumes.
Adjusted EBITDA of $362 million
increased three percent over the prior year, primarily driven by
the higher volumes.
- Industrial Gases – EMEA sales of $562 million increased 36 percent over prior
year, driven by 20 percent higher volumes, 15 percent favorable
currency and one percent favorable pricing. The higher volumes were
primarily from the new hydrogen plant in India; merchant volumes also contributed
positively. Adjusted EBITDA of $179
million increased 29 percent over the prior year on the
higher volumes, pricing and currency. Adjusted EBITDA margin of
31.8 percent decreased 160 basis points from the prior year;
excluding the India plant, which
has comparatively high natural gas costs, adjusted EBITDA margin
was up slightly compared to prior year.
- Industrial Gases – Asia
sales of $558 million increased 28
percent over prior year, driven by 17 percent higher volumes from
new plants and base business growth, eight percent favorable
currency, and three percent higher pricing. Adjusted EBITDA of
$227 million increased 30 percent on
the strong volumes, favorable currency and higher pricing.
Outlook
Ghasemi said, "Our team's performance continues to have us
operating from a position of great strength. Air Products people
around the world are working hard, every day, to drive our safety,
productivity and operational performance higher. In addition, our
very strong balance sheet and cash flow position mean we have the
capability to invest at least $13
billion over the next five years in many growth
opportunities we see, including acquisitions, asset buybacks and
large projects. Our absolute focus on these two areas -- delivering
operational excellence and strategically deploying capital for
growth -- are our playbook for continuing to create value for our
customers and shareholders."
Increasing guidance for fiscal 2018, Air Products now expects
full-year adjusted EPS of $7.25 to
$7.40 per share, up 15 to 17 percent
over prior year. For the fiscal 2018 third quarter, Air Products
expects adjusted EPS of $1.80 to
$1.85 per share, up nine to 12
percent over the fiscal 2017 third quarter.
Including the Lu'An project, the capital expenditure forecast
for fiscal year 2018 now is expected to be in the range of
$1.8 to $2.0
billion on a GAAP and non-GAAP basis.
Management has provided adjusted EPS and adjusted tax rate
guidance 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. Accordingly, management is
unable to reconcile, without unreasonable effort, the Company's
forecasted range of adjusted EPS or the impact of the adjusted tax
rate to a comparable GAAP range.
Earnings Teleconference
Access the Q2 earnings teleconference scheduled for
10:00 a.m. Eastern Time on
April 26 by calling (323) 794-2551
and entering passcode 6702758, 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's core
industrial gases business provides atmospheric and process gases
and related equipment to manufacturing markets, including refining
and petrochemical, metals, electronics, 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 2017 sales of $8.2
billion from continuing operations in 50 countries and has a
current market capitalization of about $35
billion. Approximately 15,000 passionate, talented and
committed employees from a diversity of 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 reasonable
expectations and assumptions as of the date this release is
furnished. 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, global or regional
economic conditions and supply and demand dynamics in market
segments into which the Company sells; political risks, including
the risks of unanticipated government actions; acts of war or
terrorism; significant fluctuations in interest rates and foreign
currencies from that currently anticipated; future financial and
operating performance of major customers; unanticipated contract
terminations or customer cancellations or postponement of projects
and sales; our ability to execute the projects in our backlog;
asset impairments due to economic conditions or specific events;
the impact of price fluctuations in natural gas and disruptions in
markets and the economy due to oil price volatility; costs and
outcomes of litigation or regulatory investigations; the success of
productivity and operational improvement programs; the timing,
impact, and other uncertainties of future acquisitions or
divestitures, including reputational impacts; the Company's ability
to implement and operate with new technologies; the impact of
changes in environmental, tax or other legislation, economic
sanctions and regulatory activities in jurisdictions in which the
Company and its affiliates operate; and other risk factors
described in the Company's Form 10-K for its fiscal year ended
September 30, 2017. The Company
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements contained in this
release 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.
* 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 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, Air Products restructured the Company to focus on its core
Industrial Gases business. This had resulted in significant cost
reduction and asset actions that we believe were important for
investors to understand separately from the performance of the
underlying business. The reader should be aware that we may incur
similar expenses in the future. 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. Investors 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.
During the first quarter of fiscal year 2018, we adopted
accounting guidance on the presentation of net periodic pension and
postretirement benefit cost. Certain prior year information has
been reclassified to conform to the fiscal year 2018 presentation.
Refer to Note 2, New Accounting Guidance, to the consolidated
financial statements for additional information.
CONSOLIDATED
RESULTS
|
|
|
Continuing
Operations
|
|
Three Months Ended 31
March
|
Q2 2018 vs. Q2
2017
|
Operating
Income
|
Operating
Margin(A)
|
Equity
Affiliates'
Income
|
Income Tax
Provision
|
Net
Income
|
Diluted
EPS
|
2018 GAAP
|
$455.4
|
|
21.1
|
%
|
$43.7
|
|
$56.2
|
|
$416.4
|
|
$1.89
|
|
2017 GAAP
|
395.6
|
|
20.0
|
%
|
34.2
|
|
94.5
|
|
304.4
|
|
1.39
|
|
Change
GAAP
|
$59.8
|
|
110
|
bp
|
$9.5
|
|
($38.3)
|
|
$112.0
|
|
$.50
|
|
% Change
GAAP
|
15
|
%
|
|
28
|
%
|
(41)
|
%
|
37
|
%
|
36
|
%
|
2018 GAAP
|
$455.4
|
|
21.1
|
%
|
$43.7
|
|
$56.2
|
|
$416.4
|
|
$1.89
|
|
Tax restructuring
benefit
|
—
|
|
—
|
%
|
—
|
|
38.8
|
|
(38.8)
|
|
(.18)
|
|
2018 Non-GAAP
Measure
|
$455.4
|
|
21.1
|
%
|
$43.7
|
|
$95.0
|
|
$377.6
|
|
$1.71
|
|
2017 GAAP
|
$395.6
|
|
20.0
|
%
|
$34.2
|
|
$94.5
|
|
$304.4
|
|
$1.39
|
|
Cost reduction and
asset actions
|
10.3
|
|
.5
|
%
|
—
|
|
3.1
|
|
7.2
|
|
.03
|
|
Pension settlement
loss
|
—
|
|
—
|
%
|
—
|
|
1.5
|
|
2.6
|
|
.01
|
|
2017 Non-GAAP
Measure
|
$405.9
|
|
20.5
|
%
|
$34.2
|
|
$99.1
|
|
$314.2
|
|
$1.43
|
|
Change Non-GAAP
Measure
|
$49.5
|
|
60
|
bp
|
$9.5
|
|
($4.1)
|
|
$63.4
|
|
$.28
|
|
% Change Non-GAAP
Measure
|
12
|
%
|
|
28
|
%
|
(4)
|
%
|
20
|
%
|
20
|
%
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
Six Months Ended 31
March
|
2018 vs.
2017
|
Operating
Income
|
Operating
Margin(A)
|
Equity
Affiliates'
Income
|
Income Tax
Provision
|
Net
Income
|
Diluted
EPS
|
2018 GAAP
|
$916.1
|
|
21.0
|
%
|
$57.5
|
|
$348.0
|
|
$572.0
|
|
$2.59
|
|
2017 GAAP
|
723.9
|
|
18.7
|
%
|
72.2
|
|
172.9
|
|
556.0
|
|
2.53
|
|
Change
GAAP
|
$192.2
|
|
230
|
bp
|
($14.7)
|
|
$175.1
|
|
$16.0
|
|
$.06
|
|
% Change
GAAP
|
27
|
%
|
|
(20)
|
%
|
101
|
%
|
3
|
%
|
2
|
%
|
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
benefit
|
—
|
|
—
|
%
|
—
|
|
38.8
|
|
(38.8)
|
|
(.18)
|
|
2018 Non-GAAP
Measure
|
$916.1
|
|
21.0
|
%
|
$90.0
|
|
$180.3
|
|
$772.2
|
|
$3.50
|
|
2017 GAAP
|
$723.9
|
|
18.7
|
%
|
$72.2
|
|
$172.9
|
|
$556.0
|
|
$2.53
|
|
Business separation
costs
|
32.5
|
|
.8
|
%
|
—
|
|
3.7
|
|
26.5
|
|
.12
|
|
Tax costs associated
with business separation
|
—
|
|
—
|
%
|
—
|
|
(2.7)
|
|
2.7
|
|
.01
|
|
Cost reduction and
asset actions
|
60.3
|
|
1.6
|
%
|
—
|
|
11.9
|
|
48.4
|
|
.23
|
|
Pension settlement
loss
|
—
|
|
—
|
%
|
—
|
|
1.5
|
|
2.6
|
|
.01
|
|
2017 Non-GAAP
Measure
|
$816.7
|
|
21.1
|
%
|
$72.2
|
|
$187.3
|
|
$636.2
|
|
$2.90
|
|
Change Non-GAAP
Measure
|
$99.4
|
|
(10
|
)bp
|
$17.8
|
|
($7.0)
|
|
$136.0
|
|
$.60
|
|
% Change Non-GAAP
Measure
|
12
|
%
|
|
25
|
%
|
(4)
|
%
|
21
|
%
|
21
|
%
|
|
|
(A)
|
Operating margin is
calculated by dividing operating income by sales.
|
ADJUSTED EBITDA
We define Adjusted EBITDA as income from continuing operations
(including noncontrolling interests) excluding certain disclosed
items, 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
(benefit), 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:
2018
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q2 YTD
Total
|
Income from
Continuing Operations(A)
|
|
$162.7
|
|
|
$423.6
|
|
|
|
|
|
|
$586.3
|
|
Add: Interest
expense
|
|
29.8
|
|
|
30.4
|
|
|
|
|
|
|
60.2
|
|
Less: Other
non-operating income (expense), net
|
|
9.8
|
|
|
11.1
|
|
|
|
|
|
|
20.9
|
|
Add: Income tax
provision
|
|
291.8
|
|
|
56.2
|
|
|
|
|
|
|
348.0
|
|
Add: Depreciation and
amortization
|
|
227.9
|
|
|
240.0
|
|
|
|
|
|
|
467.9
|
|
Add: Tax reform
repatriation - equity method investment
|
|
32.5
|
|
|
—
|
|
|
|
|
|
|
32.5
|
|
Adjusted
EBITDA
|
|
$734.9
|
|
|
$739.1
|
|
|
|
|
|
|
$1,474.0
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q2 YTD
Total
|
Income from
Continuing Operations(A)
|
|
$258.2
|
|
|
$310.1
|
|
|
$106.4
|
|
|
$480.5
|
|
|
$568.3
|
|
Add: Interest
expense
|
|
29.5
|
|
|
30.5
|
|
|
29.8
|
|
|
30.8
|
|
|
60.0
|
|
Less: Other
non-operating income (expense), net
|
|
(.2)
|
|
|
5.3
|
|
|
3.7
|
|
|
7.8
|
|
|
5.1
|
|
Add: Income tax
provision (benefit)
|
|
78.4
|
|
|
94.5
|
|
|
89.3
|
|
|
(1.3)
|
|
|
172.9
|
|
Add: Depreciation and
amortization
|
|
206.1
|
|
|
211.8
|
|
|
216.9
|
|
|
231.0
|
|
|
417.9
|
|
Add: Business
separation costs
|
|
32.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32.5
|
|
Add: Cost reduction
and asset actions
|
|
50.0
|
|
|
10.3
|
|
|
42.7
|
|
|
48.4
|
|
|
60.3
|
|
Add: Goodwill and
intangible asset impairment charge
|
|
—
|
|
|
—
|
|
|
162.1
|
|
|
—
|
|
|
—
|
|
Less: Gain on land
sale
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12.2
|
|
|
—
|
|
Add: Equity method
investment impairment charge
|
|
—
|
|
|
—
|
|
|
79.5
|
|
|
—
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$654.9
|
|
|
$651.9
|
|
|
$723.0
|
|
|
$769.4
|
|
|
$1,306.8
|
|
|
|
(A)
|
Includes net income
attributable to noncontrolling interests.
|
2018 vs.
2017
|
|
Q1
|
|
Q2
|
|
|
|
|
|
Q2 YTD
Total
|
Change
GAAP
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations change
|
|
($95.5)
|
|
|
$113.5
|
|
|
|
|
|
|
$18.0
|
|
Income from
continuing operations % change
|
|
(37)
|
%
|
|
37
|
%
|
|
|
|
|
|
3
|
%
|
Change
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
change
|
|
$80.0
|
|
|
$87.2
|
|
|
|
|
|
|
$167.2
|
|
Adjusted EBITDA %
change
|
|
12
|
%
|
|
13
|
%
|
|
|
|
|
|
13
|
%
|
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 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
|
%
|
Three Months Ended
31 March 2017
|
|
|
|
|
|
|
Operating income
(loss)
|
$223.2
|
|
$88.6
|
|
$112.3
|
|
$22.7
|
|
($40.9)
|
|
$405.9
|
|
Operating
margin
|
25.1
|
%
|
21.4
|
%
|
25.8
|
%
|
|
|
20.5
|
%
|
Operating income
(loss) change
|
($.9)
|
|
$28.1
|
|
$36.4
|
|
($10.6)
|
|
($3.5)
|
|
$49.5
|
|
Operating income
(loss) % change
|
—
|
%
|
32
|
%
|
32
|
%
|
(47)
|
%
|
(9)
|
%
|
12
|
%
|
Operating margin
change
|
(80)
|
bp
|
(60)
|
bp
|
90
|
bp
|
|
|
60
|
bp
|
|
|
|
|
|
|
|
NON-GAAP
MEASURE
|
|
|
|
|
|
|
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
|
%
|
Three Months Ended
31 March 2017
|
|
|
|
|
|
|
Operating income
(loss)
|
$223.2
|
|
$88.6
|
|
$112.3
|
|
$22.7
|
|
($40.9)
|
|
$405.9
|
|
Add: Depreciation and
amortization
|
116.0
|
|
41.6
|
|
49.3
|
|
1.7
|
|
3.2
|
|
211.8
|
|
Add: Equity
affiliates' income
|
13.0
|
|
8.3
|
|
12.9
|
|
—
|
|
—
|
|
34.2
|
|
Adjusted
EBITDA
|
$352.2
|
|
$138.5
|
|
$174.5
|
|
$24.4
|
|
($37.7)
|
|
$651.9
|
|
Adjusted EBITDA
margin
|
39.6
|
%
|
33.4
|
%
|
40.0
|
%
|
|
|
32.9
|
%
|
Adjusted EBITDA
change
|
$9.3
|
|
$40.0
|
|
$52.2
|
|
($10.1)
|
|
($4.2)
|
|
$87.2
|
|
Adjusted EBITDA %
change
|
3
|
%
|
29
|
%
|
30
|
%
|
(41)
|
%
|
(11)
|
%
|
13
|
%
|
Adjusted EBITDA
margin change
|
—
|
bp
|
(160)
|
bp
|
70
|
bp
|
|
|
140
|
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 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
|
%
|
Six Months Ended
31 March 2017
|
|
|
|
|
|
|
Operating income
(loss)
|
$446.5
|
|
$178.6
|
|
$230.7
|
|
$30.9
|
|
($70.0)
|
|
$816.7
|
|
Operating
margin
|
25.5
|
%
|
21.9
|
%
|
26.4
|
%
|
|
|
21.1
|
%
|
Operating income
(loss) change
|
($7.0)
|
|
$42.6
|
|
$93.5
|
|
($9.3)
|
|
($20.4)
|
|
$99.4
|
|
Operating income
(loss) % change
|
(2)
|
%
|
24
|
%
|
41
|
%
|
(30)
|
%
|
(29)
|
%
|
12
|
%
|
Operating margin
change
|
(140)
|
bp
|
(140)
|
bp
|
60
|
bp
|
|
|
(10)
|
bp
|
|
|
|
|
|
|
|
NON-GAAP
MEASURE
|
|
|
|
|
|
|
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
|
%
|
Six Months Ended
31 March 2017
|
|
|
|
|
|
|
Operating income
(loss)
|
$446.5
|
|
$178.6
|
|
$230.7
|
|
$30.9
|
|
($70.0)
|
|
$816.7
|
|
Add: Depreciation and
amortization
|
227.8
|
|
83.8
|
|
96.0
|
|
3.7
|
|
6.6
|
|
417.9
|
|
Add: Equity
affiliates' income
|
27.7
|
|
17.8
|
|
26.4
|
|
.3
|
|
—
|
|
72.2
|
|
Adjusted
EBITDA
|
$702.0
|
|
$280.2
|
|
$353.1
|
|
$34.9
|
|
($63.4)
|
|
$1,306.8
|
|
Adjusted EBITDA
margin
|
40.0
|
%
|
34.4
|
%
|
40.4
|
%
|
|
|
33.8
|
%
|
Adjusted EBITDA
change
|
$13.1
|
|
$65.0
|
|
$120.1
|
|
($9.1)
|
|
($21.9)
|
|
$167.2
|
|
Adjusted EBITDA %
change
|
2
|
%
|
23
|
%
|
34
|
%
|
(26)
|
%
|
(35)
|
%
|
13
|
%
|
Adjusted EBITDA
margin change
|
(80)
|
bp
|
(240)
|
bp
|
(100)
|
bp
|
|
|
(10)
|
bp
|
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
|
2018
|
2017
|
2018
|
2017
|
Segment
total
|
$455.4
|
|
$405.9
|
|
$916.1
|
|
$816.7
|
|
Business separation
costs
|
—
|
|
—
|
|
—
|
|
(32.5)
|
|
Cost reduction and
asset actions
|
—
|
|
(10.3)
|
|
—
|
|
(60.3)
|
|
Consolidated
Total
|
$455.4
|
|
$395.6
|
|
$916.1
|
|
$723.9
|
|
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
|
2018
|
2017
|
2018
|
2017
|
Segment
total
|
$43.7
|
|
$34.2
|
|
$90.0
|
|
$72.2
|
|
Tax reform
repatriation - equity method investment
|
—
|
|
—
|
|
(32.5)
|
|
—
|
|
Consolidated
Total
|
$43.7
|
|
$34.2
|
|
$57.5
|
|
$72.2
|
|
INCOME TAXES
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. For additional discussion on
the fiscal year 2018 non-GAAP tax adjustments, including the impact
of the U.S. Tax Cuts and Jobs Act, refer to Note 1, Income Taxes,
to the consolidated financial statements.
|
Effective Tax
Rate
|
|
Three Months
Ended
31 March
|
|
Six Months Ended
31 March
|
|
2018
|
2017
|
|
2018
|
2017
|
Income Tax
Provision—GAAP
|
$56.2
|
|
$94.5
|
|
|
$348.0
|
|
$172.9
|
|
Income From
Continuing Operations Before Taxes—GAAP
|
$479.8
|
|
$404.6
|
|
|
$934.3
|
|
$741.2
|
|
Effective Tax
Rate—GAAP
|
11.7
|
%
|
23.4
|
%
|
|
37.2
|
%
|
23.3
|
%
|
Income Tax
Provision—GAAP
|
$56.2
|
|
$94.5
|
|
|
$348.0
|
|
$172.9
|
|
Business separation
costs
|
—
|
|
—
|
|
|
—
|
|
3.7
|
|
Tax costs associated
with business separation
|
—
|
|
—
|
|
|
—
|
|
(2.7)
|
|
Cost reduction and
asset actions
|
—
|
|
3.1
|
|
|
—
|
|
11.9
|
|
Pension settlement
loss
|
—
|
|
1.5
|
|
|
—
|
|
1.5
|
|
Tax reform
repatriation
|
—
|
|
—
|
|
|
(420.5)
|
|
—
|
|
Tax reform rate
change and other
|
—
|
|
—
|
|
|
214.0
|
|
—
|
|
Tax restructuring
benefit
|
38.8
|
|
—
|
|
|
38.8
|
|
—
|
|
Income Tax
Provision—Non-GAAP Measure
|
$95.0
|
|
$99.1
|
|
|
$180.3
|
|
$187.3
|
|
Income From
Continuing Operations Before Taxes—GAAP
|
$479.8
|
|
$404.6
|
|
|
$934.3
|
|
$741.2
|
|
Business separation
costs
|
—
|
|
—
|
|
|
—
|
|
30.2
|
|
Cost reduction and
asset actions
|
—
|
|
10.3
|
|
|
—
|
|
60.3
|
|
Pension settlement
loss
|
—
|
|
4.1
|
|
|
—
|
|
4.1
|
|
Tax reform
repatriation - equity method investment
|
—
|
|
—
|
|
|
32.5
|
|
—
|
|
Income From
Continuing Operations Before Taxes—Non-GAAP Measure
|
$479.8
|
|
$419.0
|
|
|
$966.8
|
|
$835.8
|
|
Effective Tax
Rate—Non-GAAP Measure
|
19.8
|
%
|
23.7
|
%
|
|
18.6
|
%
|
22.4
|
%
|
CAPITAL EXPENDITURES
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 in the consolidated statements of cash
flows within "Cash Provided by Operating Activities" if the
arrangement qualifies as a capital lease.
Below is a reconciliation of capital expenditures on a GAAP
basis to a non-GAAP measure:
|
Three Months
Ended
31 March
|
Six Months Ended
31 March
|
|
2018
|
2017
|
2018
|
2017
|
Capital expenditures
for continuing operations—GAAP basis
|
$350.2
|
|
$293.1
|
|
$843.9
|
|
$541.1
|
|
Capital lease
expenditures
|
5.9
|
|
1.8
|
|
12.3
|
|
5.8
|
|
Capital
expenditures—Non-GAAP basis
|
$356.1
|
|
$294.9
|
|
$856.2
|
|
$546.9
|
|
We expect capital expenditures for fiscal year 2018 to be
approximately $1,800 to $2,000 on a GAAP and non-GAAP basis.
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 disclosed items
detailed below. Total capital consists of total debt and total
equity less noncontrolling interests and total assets of
discontinued operations.
|
2018
|
|
2017
|
|
2016
|
|
Q2
|
Q1
|
|
Q4
|
Q3
|
Q2
|
Q1
|
|
Q4
|
Q3
|
Q2
|
Net income from
continuing
operations attributable to Air
Products
|
$
|
416.4
|
|
$
|
155.6
|
|
|
$
|
474.2
|
|
$
|
104.2
|
|
$
|
304.4
|
|
$
|
251.6
|
|
|
$
|
289.4
|
|
$
|
250.3
|
|
|
Interest
expense
|
30.4
|
|
29.8
|
|
|
30.8
|
|
29.8
|
|
30.5
|
|
29.5
|
|
|
32.2
|
|
35.1
|
|
|
Interest expense tax
impact
|
(3.6)
|
|
(19.1)
|
|
|
.1
|
|
(13.6)
|
|
(7.1)
|
|
(6.9)
|
|
|
(8.0)
|
|
(12.7)
|
|
|
Interest expense,
after-tax
|
26.8
|
|
10.7
|
|
|
30.9
|
|
16.2
|
|
23.4
|
|
22.6
|
|
|
24.2
|
|
22.4
|
|
|
Net income
attributable to
noncontrolling interests of
continuing operations
|
7.2
|
|
7.1
|
|
|
6.3
|
|
2.2
|
|
5.7
|
|
6.6
|
|
|
5.0
|
|
5.4
|
|
|
Earnings
After-Tax—GAAP
|
$
|
450.4
|
|
$
|
173.4
|
|
|
$
|
511.4
|
|
$
|
122.6
|
|
$
|
333.5
|
|
$
|
280.8
|
|
|
$
|
318.6
|
|
$
|
278.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclosed items,
after-tax
|
|
|
|
|
|
|
|
|
|
|
|
Business separation
costs
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
26.5
|
|
|
$
|
19.3
|
|
$
|
6.5
|
|
|
Tax (benefit) costs
associated with
business separation
|
—
|
|
—
|
|
|
—
|
|
(8.2)
|
|
—
|
|
2.7
|
|
|
4.1
|
|
47.7
|
|
|
Cost reduction and
asset actions
|
—
|
|
—
|
|
|
30.9
|
|
30.0
|
|
7.2
|
|
41.2
|
|
|
7.2
|
|
8.7
|
|
|
Pension settlement
loss
|
—
|
|
—
|
|
|
.6
|
|
3.4
|
|
2.6
|
|
—
|
|
|
1.4
|
|
.6
|
|
|
Goodwill and
intangible asset
impairment charge
|
—
|
|
—
|
|
|
—
|
|
154.1
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Gain on land
sale
|
—
|
|
—
|
|
|
(7.6)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Equity method
investment
impairment charge
|
—
|
|
—
|
|
|
—
|
|
79.5
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Loss on
extinguishment of debt
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
4.3
|
|
—
|
|
|
Tax election
benefit
|
—
|
|
—
|
|
|
(111.4)
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Tax reform
repatriation
|
—
|
|
453.0
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Tax reform rate
change and other
|
—
|
|
(214.0)
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Tax restructuring
benefit
|
(38.8)
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Earnings
After-Tax—Non‑GAAP
|
$
|
411.6
|
|
$
|
412.4
|
|
|
$
|
423.9
|
|
$
|
381.4
|
|
$
|
343.3
|
|
$
|
351.2
|
|
|
$
|
354.9
|
|
$
|
341.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Capital
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
112.5
|
|
$
|
87.1
|
|
|
$
|
144.0
|
|
$
|
143.4
|
|
$
|
122.3
|
|
$
|
156.1
|
|
|
$
|
935.8
|
|
$
|
1,043.0
|
|
$
|
1,478.5
|
|
Current portion of
long-term debt
|
11.6
|
|
11.3
|
|
|
416.4
|
|
416.0
|
|
420.5
|
|
873.3
|
|
|
365.4
|
|
714.9
|
|
763.6
|
|
Long-term
debt
|
3,442.4
|
|
3,414.9
|
|
|
3,402.4
|
|
3,366.6
|
|
3,300.4
|
|
3,289.0
|
|
|
3,909.7
|
|
3,908.1
|
|
3,556.9
|
|
Total Debt
|
3,566.5
|
|
3,513.3
|
|
|
3,962.8
|
|
3,926.0
|
|
3,843.2
|
|
4,318.4
|
|
|
5,210.9
|
|
5,666.0
|
|
5,799.0
|
|
Total
Equity
|
10,693.2
|
|
10,321.2
|
|
|
10,185.5
|
|
9,509.9
|
|
9,420.2
|
|
7,261.1
|
|
|
7,213.4
|
|
7,180.2
|
|
7,053.1
|
|
Noncontrolling
interests of
discontinued operations
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(33.9)
|
|
(32.9)
|
|
(33.0)
|
|
Assets of
discontinued operations
|
—
|
|
(10.2)
|
|
|
(10.2)
|
|
(9.8)
|
|
(9.8)
|
|
(860.2)
|
|
|
(1,968.5)
|
|
(1,762.0)
|
|
(1,707.1)
|
|
Total
Capital
|
$
|
14,259.7
|
|
$
|
13,824.3
|
|
|
$
|
14,138.1
|
|
$
|
13,426.1
|
|
$
|
13,253.6
|
|
$
|
10,719.3
|
|
|
$
|
10,421.9
|
|
$
|
11,051.3
|
|
$
|
11,112.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings After
Tax—GAAP
|
$
|
1,257.8
|
|
|
|
|
|
$
|
1,211.0
|
|
|
|
|
|
|
Five-quarter average
total capital
|
13,780.4
|
|
|
|
|
|
11,311.6
|
|
|
|
|
|
|
ROCE—GAAP
items
|
9.1
|
%
|
|
|
|
|
10.7
|
%
|
|
|
|
|
|
Change GAAP-based
Measure
|
(160)
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings After
Tax—Non-GAAP
|
$
|
1,629.3
|
|
|
|
|
|
$
|
1,391.0
|
|
|
|
|
|
|
Five-quarter average
total capital
|
13,780.4
|
|
|
|
|
|
11,311.6
|
|
|
|
|
|
|
ROCE—Non-GAAP
items
|
11.8
|
%
|
|
|
|
|
12.3
|
%
|
|
|
|
|
|
Change Non-GAAP-based
Measure
|
(50)
|
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 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
|
2017 GAAP
|
|
$.47
|
|
$5.16
|
Business separation
costs
|
|
—
|
|
.12
|
Tax benefit
associated with business separation
|
|
(.04)
|
|
(.02)
|
Cost reduction and
asset actions
|
|
.14
|
|
.49
|
Pension settlement
loss
|
|
.02
|
|
.03
|
Goodwill and
intangible asset impairment charge
|
|
.70
|
|
.70
|
Gain on land
sale
|
|
—
|
|
(.03)
|
Equity method
investment impairment charge
|
|
.36
|
|
.36
|
Tax election
benefit
|
|
—
|
|
(.50)
|
2017 Non-GAAP
Measure
|
|
$1.65
|
|
$6.31
|
2018 Non-GAAP
Outlook
|
|
1.80–1.85
|
|
7.25–7.40
|
Change
Non-GAAP
|
|
.15–.20
|
|
.94–1.09
|
% Change
Non-GAAP
|
|
9%–12%
|
|
15%–17%
|
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)
|
2018
|
2017
|
2018
|
2017
|
Sales
|
$2,155.7
|
|
$1,980.1
|
|
$4,372.3
|
|
$3,862.6
|
|
Cost of
sales
|
1,506.5
|
|
1,403.8
|
|
3,078.3
|
|
2,720.5
|
|
Selling and
administrative
|
194.6
|
|
177.6
|
|
386.2
|
|
342.3
|
|
Research and
development
|
14.5
|
|
14.8
|
|
29.1
|
|
29.8
|
|
Business separation
costs
|
—
|
|
—
|
|
—
|
|
32.5
|
|
Cost reduction and
asset actions
|
—
|
|
10.3
|
|
—
|
|
60.3
|
|
Other income
(expense), net
|
15.3
|
|
22.0
|
|
37.4
|
|
46.7
|
|
Operating
Income
|
455.4
|
|
395.6
|
|
916.1
|
|
723.9
|
|
Equity affiliates'
income
|
43.7
|
|
34.2
|
|
57.5
|
|
72.2
|
|
Interest
expense
|
30.4
|
|
30.5
|
|
60.2
|
|
60.0
|
|
Other non-operating
income (expense), net
|
11.1
|
|
5.3
|
|
20.9
|
|
5.1
|
|
Income From
Continuing Operations Before Taxes
|
479.8
|
|
404.6
|
|
934.3
|
|
741.2
|
|
Income tax
provision
|
56.2
|
|
94.5
|
|
348.0
|
|
172.9
|
|
Income From
Continuing Operations
|
423.6
|
|
310.1
|
|
586.3
|
|
568.3
|
|
Income (Loss) From
Discontinued Operations, net of tax
|
—
|
|
1,825.6
|
|
(1.0)
|
|
1,873.8
|
|
Net
Income
|
423.6
|
|
2,135.7
|
|
585.3
|
|
2,442.1
|
|
Net Income
Attributable to Noncontrolling Interests of Continuing
Operations
|
7.2
|
|
5.7
|
|
14.3
|
|
12.3
|
|
Net Income
Attributable to Air Products
|
$416.4
|
|
$2,130.0
|
|
$571.0
|
|
$2,429.8
|
|
Net Income
Attributable to Air Products
|
|
|
|
|
Income from
continuing operations
|
$416.4
|
|
$304.4
|
|
$572.0
|
|
$556.0
|
|
Income (Loss) from
discontinued operations
|
—
|
|
1,825.6
|
|
(1.0)
|
|
1,873.8
|
|
Net Income
Attributable to Air Products
|
$416.4
|
|
$2,130.0
|
|
$571.0
|
|
$2,429.8
|
|
Basic Earnings Per
Common Share Attributable to Air Products
|
|
|
|
|
Income from
continuing operations
|
$1.90
|
|
$1.40
|
|
$2.61
|
|
$2.55
|
|
Income from
discontinued operations
|
—
|
|
8.38
|
|
—
|
|
8.61
|
|
Net Income
Attributable to Air Products
|
$1.90
|
|
$9.78
|
|
$2.61
|
|
$11.16
|
|
Diluted Earnings
Per Common Share Attributable to Air Products
|
|
|
|
|
Income from
continuing operations
|
$1.89
|
|
$1.39
|
|
$2.59
|
|
$2.53
|
|
Income from
discontinued operations
|
—
|
|
8.31
|
|
—
|
|
8.53
|
|
Net Income
Attributable to Air Products
|
$1.89
|
|
$9.70
|
|
$2.59
|
|
$11.06
|
|
Weighted Average
Common Shares – Basic (in millions)
|
219.4
|
|
217.9
|
|
219.2
|
|
217.8
|
|
Weighted Average
Common Shares – Diluted (in millions)
|
220.8
|
|
219.7
|
|
220.7
|
|
219.6
|
|
Dividends Declared
Per Common Share – Cash
|
$1.10
|
|
$.95
|
|
$2.05
|
|
$1.81
|
|
Other Data from
Continuing Operations
|
|
|
|
|
Depreciation and
amortization
|
$240.0
|
|
$211.8
|
|
$467.9
|
|
$417.9
|
|
Capital expenditures
– Refer to page 10
|
$356.1
|
|
$294.9
|
|
$856.2
|
|
$546.9
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
|
|
31 March
|
30
September
|
(Millions of
dollars)
|
2018
|
2017
|
Assets
|
|
|
Current
Assets
|
|
|
Cash and cash
items
|
$3,066.9
|
|
$3,273.6
|
|
Short-term
investments
|
137.0
|
|
404.0
|
|
Trade receivables,
net
|
1,252.3
|
|
1,174.0
|
|
Inventories
|
339.9
|
|
335.4
|
|
Contracts in
progress, less progress billings
|
98.5
|
|
84.8
|
|
Prepaid
expenses
|
131.2
|
|
191.4
|
|
Other receivables and
current assets
|
370.5
|
|
403.3
|
|
Current assets of
discontinued operations
|
—
|
|
10.2
|
|
Total Current
Assets
|
5,396.3
|
|
5,876.7
|
|
Investment in net
assets of and advances to equity affiliates
|
1,305.6
|
|
1,286.9
|
|
Plant and equipment,
at cost
|
20,522.5
|
|
19,547.8
|
|
Less: accumulated
depreciation
|
11,704.8
|
|
11,107.6
|
|
Plant and equipment,
net
|
8,817.7
|
|
8,440.2
|
|
Goodwill,
net
|
815.0
|
|
721.5
|
|
Intangible assets,
net
|
444.4
|
|
368.3
|
|
Noncurrent capital
lease receivables
|
1,128.5
|
|
1,131.8
|
|
Other noncurrent
assets
|
603.6
|
|
641.8
|
|
Total Noncurrent
Assets
|
13,114.8
|
|
12,590.5
|
|
Total
Assets
|
$18,511.1
|
|
$18,467.2
|
|
Liabilities and
Equity
|
|
|
Current
Liabilities
|
|
|
Payables and accrued
liabilities
|
$1,551.6
|
|
$1,814.3
|
|
Accrued income
taxes
|
76.6
|
|
98.6
|
|
Short-term
borrowings
|
112.5
|
|
144.0
|
|
Current portion of
long-term debt
|
11.6
|
|
416.4
|
|
Current liabilities
of discontinued operations
|
—
|
|
15.7
|
|
Total Current
Liabilities
|
1,752.3
|
|
2,489.0
|
|
Long-term
debt
|
3,442.4
|
|
3,402.4
|
|
Other noncurrent
liabilities
|
1,923.5
|
|
1,611.9
|
|
Deferred income
taxes
|
699.7
|
|
778.4
|
|
Total Noncurrent
Liabilities
|
6,065.6
|
|
5,792.7
|
|
Total
Liabilities
|
7,817.9
|
|
8,281.7
|
|
Air Products
Shareholders' Equity
|
10,580.8
|
|
10,086.2
|
|
Noncontrolling
Interests
|
112.4
|
|
99.3
|
|
Total
Equity
|
10,693.2
|
|
10,185.5
|
|
Total Liabilities
and Equity
|
$18,511.1
|
|
$18,467.2
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Six Months
Ended
|
|
31 March
|
(Millions of
dollars)
|
2018
|
2017
|
Operating
Activities
|
|
|
Net income
|
$585.3
|
|
$2,442.1
|
|
Less: Net income
attributable to noncontrolling interests of continuing
operations
|
14.3
|
|
12.3
|
|
Net income
attributable to Air Products
|
571.0
|
|
2,429.8
|
|
(Income) Loss from
discontinued operations
|
1.0
|
|
(1,873.8)
|
|
Income from
continuing operations attributable to Air Products
|
572.0
|
|
556.0
|
|
Adjustments to
reconcile income to cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
467.9
|
|
417.9
|
|
Deferred income
taxes
|
(94.4)
|
|
(68.6)
|
|
Tax reform
repatriation
|
310.3
|
|
—
|
|
Undistributed
earnings of unconsolidated affiliates
|
3.1
|
|
(31.5)
|
|
Gain on sale of
assets and investments
|
(2.4)
|
|
(6.5)
|
|
Share-based
compensation
|
22.5
|
|
18.5
|
|
Noncurrent capital
lease receivables
|
47.2
|
|
45.4
|
|
Write-down of
long-lived assets associated with cost reduction actions
|
—
|
|
45.7
|
|
Other
adjustments
|
44.7
|
|
34.0
|
|
Working capital
changes that provided (used) cash, excluding effects of
acquisitions and divestitures:
|
|
|
Trade
receivables
|
(30.2)
|
|
(53.8)
|
|
Inventories
|
5.5
|
|
20.7
|
|
Contracts in
progress, less progress billings
|
(12.2)
|
|
(5.0)
|
|
Other
receivables
|
23.2
|
|
118.4
|
|
Payables and accrued
liabilities
|
(260.4)
|
|
(178.6)
|
|
Other working
capital
|
13.3
|
|
(51.4)
|
|
Cash Provided by
Operating Activities
|
1,110.1
|
|
861.2
|
|
Investing
Activities
|
|
|
Additions to plant
and equipment
|
(572.5)
|
|
(532.2)
|
|
Acquisitions, less
cash acquired
|
(271.4)
|
|
—
|
|
Investment in and
advances to unconsolidated affiliates
|
—
|
|
(8.9)
|
|
Proceeds from sale of
assets and investments
|
34.4
|
|
13.5
|
|
Purchases of
investments
|
(345.7)
|
|
(1,823.2)
|
|
Proceeds from
investments
|
612.9
|
|
400.0
|
|
Other investing
activities
|
(2.6)
|
|
(1.6)
|
|
Cash Used for
Investing Activities
|
(544.9)
|
|
(1,952.4)
|
|
Financing
Activities
|
|
|
Long-term debt
proceeds
|
.5
|
|
1.3
|
|
Payments on long-term
debt
|
(409.2)
|
|
(469.7)
|
|
Net decrease in
commercial paper and short-term borrowings
|
(22.4)
|
|
(816.6)
|
|
Dividends paid to
shareholders
|
(415.5)
|
|
(374.0)
|
|
Proceeds from stock
option exercises
|
52.7
|
|
19.9
|
|
Other financing
activities
|
(21.7)
|
|
(22.7)
|
|
Cash Used for
Financing Activities
|
(815.6)
|
|
(1,661.8)
|
|
Discontinued
Operations
|
|
|
Cash used for
operating activities
|
(3.1)
|
|
(520.8)
|
|
Cash provided by
investing activities
|
18.6
|
|
3,750.6
|
|
Cash provided by
financing activities
|
—
|
|
69.5
|
|
Cash Provided by
Discontinued Operations
|
15.5
|
|
3,299.3
|
|
Effect of Exchange
Rate Changes on Cash
|
28.2
|
|
(7.8)
|
|
(Decrease) Increase
in Cash and Cash Items
|
(206.7)
|
|
538.5
|
|
Cash and Cash items -
Beginning of Year
|
3,273.6
|
|
1,330.8
|
|
Cash and Cash
items - End of Period
|
$3,066.9
|
|
$1,869.3
|
|
Supplemental Cash
Flow Information
|
|
|
Cash paid for taxes
(net of refunds) - Continuing operations
|
$153.7
|
|
$275.0
|
|
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 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
|
|
Three Months Ended
31 March 2017
|
|
|
|
|
|
|
Sales
|
$890.1
|
|
$414.2
|
|
$435.9
|
|
$216.5
|
|
$23.4
|
|
$1,980.1
|
|
Operating income
(loss)
|
223.2
|
|
88.6
|
|
112.3
|
|
22.7
|
|
(40.9)
|
|
405.9
|
|
Depreciation and
amortization
|
116.0
|
|
41.6
|
|
49.3
|
|
1.7
|
|
3.2
|
|
211.8
|
|
Equity affiliates'
income
|
13.0
|
|
8.3
|
|
12.9
|
|
—
|
|
—
|
|
34.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial
Gases –
Americas
|
Industrial
Gases –
EMEA
|
Industrial
Gases –
Asia
|
Industrial
Gases –
Global
|
Corporate
and other
|
Segment
Total
|
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
|
|
Six Months Ended
31 March 2017
|
|
|
|
|
|
|
Sales
|
$1,754.0
|
|
$813.9
|
|
$874.2
|
|
$364.4
|
|
$56.1
|
|
$3,862.6
|
|
Operating income
(loss)
|
446.5
|
|
178.6
|
|
230.7
|
|
30.9
|
|
(70.0)
|
|
816.7
|
|
Depreciation and
amortization
|
227.8
|
|
83.8
|
|
96.0
|
|
3.7
|
|
6.6
|
|
417.9
|
|
Equity affiliates'
income
|
27.7
|
|
17.8
|
|
26.4
|
|
.3
|
|
—
|
|
72.2
|
|
Total
Assets
|
|
|
|
|
|
|
31 March
2018
|
$5,915.0
|
|
$3,475.5
|
|
$4,779.1
|
|
$252.5
|
|
$4,089.0
|
|
$18,511.1
|
|
30 September
2017
|
5,840.8
|
|
3,276.1
|
|
4,412.1
|
|
279.6
|
|
4,648.4
|
|
18,457.0
|
|
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
|
2018
|
2017
|
2018
|
2017
|
Segment
total
|
$455.4
|
|
$405.9
|
|
$916.1
|
|
$816.7
|
|
Business separation
costs
|
—
|
|
—
|
|
—
|
|
(32.5)
|
|
Cost reduction and
asset actions
|
—
|
|
(10.3)
|
|
—
|
|
(60.3)
|
|
Consolidated
Total
|
$455.4
|
|
$395.6
|
|
$916.1
|
|
$723.9
|
|
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
|
2018
|
2017
|
2018
|
2017
|
Segment
total
|
$43.7
|
|
$34.2
|
|
$90.0
|
|
$72.2
|
|
Tax reform
repatriation - equity method investment
|
—
|
|
—
|
|
(32.5)
|
|
—
|
|
Consolidated
Total
|
$43.7
|
|
$34.2
|
|
$57.5
|
|
$72.2
|
|
Below is a reconciliation of segment total assets to
consolidated total assets:
|
31 March
|
30
September
|
Total
Assets
|
2018
|
2017
|
Segment
total
|
$18,511.1
|
|
$18,457.0
|
|
Discontinued
operations
|
—
|
|
10.2
|
|
Consolidated
Total
|
$18,511.1
|
|
$18,467.2
|
|
AIR PRODUCTS AND CHEMICALS, INC. and
Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(Millions of dollars, unless otherwise indicated)
1. INCOME TAXES
Tax Restructuring Benefit
In the second quarter of 2018, we recognized a $38.8 tax benefit and a decrease in net deferred
tax liabilities resulting from the restructuring of foreign
subsidiaries.
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. As a result
of the Tax Act, our consolidated income statements for the six
months ended 31 March 2018 reflect a
net expense of $239.0 for the impacts
recorded during the first quarter of fiscal year 2018. This
includes an expense of $453.0 for the
cost of the deemed repatriation tax and adjustments to the future
cost of repatriation from foreign investments. This expense
impacted our income tax provision by $420.5 and equity affiliate income by
$32.5 for future costs of
repatriation that will be borne by an equity affiliate. In
addition, the income tax provision was benefited by $214.0 primarily from the re-measurement of our
net U.S. deferred tax liabilities at the lower corporate tax
rate.
We are reporting the impacts of the Tax Act provisionally based
upon reasonable estimates. The impacts are not yet finalized as
they are dependent on factors and analysis not yet known or fully
completed, including but not limited to, the final cash balances
for fiscal year 2018, further book to U.S. tax adjustments for the
earnings of foreign entities, the issuance of additional guidance,
as well as our ongoing analysis of the Tax Act.
As a fiscal year-end taxpayer, certain provisions of the Tax Act
become effective in our fiscal year 2018 while other provisions do
not become effective until fiscal year 2019. The corporate tax rate
reduction is effective as of 1 January
2018 and, accordingly, reduces our 2018 fiscal year U.S.
federal statutory rate to a blended rate of approximately
24.5%.
2. NEW ACCOUNTING GUIDANCE
Presentation of Net Periodic Pension and Postretirement
Benefit Cost
During the first quarter of fiscal year 2018, we adopted
accounting guidance on the presentation of net periodic pension and
postretirement benefit cost. Prior to adoption, all net periodic
benefit costs were presented within operating costs, primarily
within "Cost of sales" and "Selling and administrative." As a
result of adoption, non-service costs (e.g., interest cost,
expected return on plan assets, amortization of actuarial
gains/losses, settlements) are now presented in our consolidated
income statements outside of operating income in "Other
non-operating income (expense), net." Prior period information has
been reclassified to conform to the fiscal year 2018 presentation.
The line item classification changes required by the new guidance
did not impact the Company's pre-tax earnings or net income;
however, "Operating income" and "Other non-operating income
(expense), net" changed by immaterial offsetting amounts.
View original
content:http://www.prnewswire.com/news-releases/air-products-reports-strong-fiscal-2018-second-quarter-results-gaap-eps-up-36-percent-and-adjusted-eps-up-20-percent-over-prior-year-300637109.html
SOURCE Air Products