LEHIGH VALLEY, Pa.,
Jan. 24, 2020 /PRNewswire/ --
Q1 FY20 (comparisons versus prior year):
- GAAP EPS of $2.14, up 36 percent;
GAAP net income of $489 million, up
37 percent; and GAAP net income margin of 21.7 percent, up 570
basis points
- Adjusted EPS* of $2.14, up 15
percent; adjusted EBITDA margin* of 40.3 percent, up 460 basis
points
Q1 FY20 Highlights
- Announced 18-cent, or more than
15 percent, dividend increase, marking 38 consecutive years of
dividend increases
- Announced largest-ever U.S. investment of $500 million and long-term contract to supply
Gulf Coast Ammonia's world-scale Texas facility and extend Air Products' U.S.
Gulf Coast hydrogen pipeline network
Guidance
- Maintaining fiscal 2020 full-year adjusted EPS guidance* of
$9.35 to $9.60 per share, up 14 to 17 percent over prior
year adjusted EPS*; fiscal 2020 second quarter adjusted EPS
guidance* of $2.10 to $2.20 per share, up nine to 15 percent over
fiscal 2019 second quarter adjusted EPS*
- Continue to expect fiscal year 2020 capital expenditures* of
approximately $4 billion to
$4.5 billion
#Earnings per share is from continuing
operations and attributable to Air Products.
*The identified results and guidance in this release,
including in the highlights above, include references to non-GAAP
financial measures on both a consolidated and a segment basis.
Additional information regarding these measures and a
reconciliation of GAAP to non-GAAP historical results can be found
below. In addition, as discussed below, it is not possible, without
unreasonable efforts, to identify the timing or occurrence of
events and transactions that could significantly impact future GAAP
EPS or cash flow used for investing activities if they were to
occur.
Air Products (NYSE: APD) today reported first quarter fiscal
2020 results, including GAAP diluted EPS from continuing operations
of $2.14, up 36 percent; GAAP net
income of $489 million, up 37
percent, primarily driven by higher pricing and volumes in all
three regions as well as prior year costs related to tax reform
adjustments and a facility closure; and GAAP net income margin of
21.7 percent, up 570 basis points, each versus prior year.
For the quarter, on a non-GAAP basis, adjusted diluted EPS from
continuing operations of $2.14 was up
15 percent; adjusted EBITDA of $908
million was up 14 percent, primarily driven by higher
pricing and volumes in all three regions; and adjusted EBITDA
margin of 40.3 percent was up 460 basis points, each versus prior
year.
First quarter sales of $2.3
billion increased one percent versus prior year on six
percent volume growth and three percent higher pricing, partially
offset by five percent lower energy pass-through; one percent
unfavorable currency; and two percent from a contract modification
to a tolling agreement in India,
which impacts sales but not profits. Volume growth was
primarily driven by base business growth, new plants, acquisitions
and a short-term contract in Asia.
Commenting on the results, Seifi
Ghasemi, chairman, president and chief executive officer,
said, "I want to thank our talented Air Products team for
delivering another set of strong results for the quarter. Our
excellent financial position allows us to invest capital
strategically, and this quarter we announced our largest-ever U.S.
investment to supply Gulf Coast Ammonia in Texas. Meanwhile, we continue to return cash
to our shareholders, announcing an 18-cent, or more than 15 percent, dividend
increase that marks our 38th consecutive year of
dividend increases."
Fiscal First Quarter Results by Business
Segment (comparisons versus prior year)
- Industrial Gases - Americas sales of $936 million decreased five percent, as three
percent higher pricing and one percent higher volumes were more
than offset by eight percent lower energy pass-through and one
percent unfavorable currency. Operating income of $257 million increased 17 percent, primarily
driven by higher pricing, and operating margin of 27.5 percent
increased 530 basis points. Adjusted EBITDA of $410 million increased 11 percent, primarily
driven by higher pricing, and adjusted EBITDA margin of 43.8
percent increased 670 basis points.
- Industrial Gases - EMEA sales of $499 million decreased five percent. Volumes
increased six percent and higher pricing contributed three percent.
These results were more than offset by four percent lower energy
pass-through, two percent unfavorable currency, and an eight
percent decrease from the India
contract modification. Operating income of $121 million increased 14 percent, primarily
driven by higher pricing, and operating margin of 24.2 percent
increased 410 basis points. Adjusted EBITDA of $188 million increased 14 percent, primarily
driven by higher pricing, and adjusted EBITDA margin of 37.7
percent increased 610 basis points.
- Industrial Gases - Asia
sales of $693 million increased 11
percent. Volumes increased nine percent, driven by new plants, base
business growth and a short-term contract. Pricing increased four
percent, while currency had a negative two percent impact.
Operating income of $229 million
increased 13 percent on improved volumes and pricing, and operating
margin of 33.0 percent increased 80 basis points. Adjusted EBITDA
of $347 million increased 16 percent
on improved volumes and pricing, and adjusted EBITDA margin of 50.1
percent increased 260 basis points.
Outlook
Ghasemi said, "The Air Products team remains focused on
productivity, creating our own growth opportunities and delivering
shareholder value. As we look ahead, we see significant
opportunities to provide sustainable solutions for the world to
meet its energy and productivity needs, and we are working
hard to be at the heart of those opportunities."
Air Products is maintaining full-year fiscal 2020 adjusted
EPS guidance of $9.35 to $9.60 per share, up 14 to 17 percent over prior
year. For the fiscal 2020 second quarter, Air Products' adjusted
EPS guidance is $2.10 to $2.20 per share, up nine to 15 percent over
fiscal 2019 second quarter adjusted EPS.
Air Products continues to expect capital expenditures of
approximately $4 billion to
$4.5 billion for full-year fiscal
2020.
Management has provided adjusted EPS guidance on a continuing
operations basis, which excludes the impact of certain items that
we believe are not representative of our underlying business
performance, such as the incurrence of additional costs for cost
reduction actions and impairment charges, or the recognition of
gains or losses on disclosed items. It is not possible, without
unreasonable efforts, to predict the timing or occurrence of these
events or the potential for other transactions that may impact
future GAAP EPS or the effective tax rate. Furthermore, it is not
possible to identify the potential significance of these events in
advance, but any of these events, if they were to occur, could have
a significant effect on our future GAAP EPS. Management therefore
is unable to reconcile, without unreasonable effort, the Company's
forecasted range of adjusted EPS and effective tax rate to a
comparable GAAP range.
New Accounting Guidance
Effective October 1, 2019, Air
Products adopted accounting standards pertaining to leases and
hedging activities. In accordance with the new lease guidance, we
recorded lease liabilities and right-of-use assets on our
consolidated balance sheets for operating leases where we are the
lessee. In adopting the new hedging guidance, we presented the
impacts of excluded components from our cash flow hedges on
intercompany loans in other non-operating income (expense),
net. In the prior year, these impacts were included in
interest expense. The adoption of these accounting standards did
not have a significant impact on the Company's net income.
Earnings Teleconference
Access the Q1 earnings teleconference scheduled for 10:00 a.m. Eastern Time on January 24, 2020 by calling 323-994-2093 and
entering passcode 5494582, 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 nearly 80 years. Focused on serving
energy, environment and emerging markets, the Company provides
essential industrial gases, related equipment and applications
expertise to customers in dozens of industries, including refining,
chemical, metals, electronics, manufacturing, and food and
beverage. Air Products is also the global leader in the supply of
liquefied natural gas process technology and equipment. The Company
develops, engineers, builds, owns and operates some of the world's
largest industrial gas projects, including gasification projects
that sustainably convert abundant natural resources into syngas for
the production of high-value power, fuels and chemicals.
The Company had fiscal 2019 sales of $8.9
billion from operations in 50 countries and has a current
market capitalization of about $50
billion. More than 17,000 passionate, talented and committed
employees from diverse backgrounds are driven by Air Products'
higher purpose to create innovative solutions that benefit the
environment, enhance sustainability and address the challenges
facing customers, communities, and the world. For more information,
visit www.airproducts.com.
NOTE: This release contains "forward-looking statements"
within the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, including statements about earnings
guidance, business outlook and investment opportunities. These
forward-looking statements are based on management's expectations
and assumptions as of the date of this release and are not
guarantees of future performance. While forward-looking statements
are made in good faith and based on assumptions, expectations and
projections that management believes are reasonable based on
currently available information, actual performance and financial
results may differ materially from projections and estimates
expressed in the forward-looking statements because of many
factors, including, without limitation: changes in global or
regional economic conditions, supply and demand dynamics in market
segments we serve, or in the financial markets; risks associated
with having extensive international operations, including political
risks, risks associated with unanticipated government actions and
risks of investing in developing markets; project delays, contract
terminations or customer cancellations or postponement of projects
and sales; future financial and operating performance of major
customers and joint venture partners; our ability to develop,
implement, and operate new technologies, or to execute the projects
in our backlog; our ability to develop and operate large scale and
technically complex projects, including gasification projects;
tariffs, economic sanctions and regulatory activities in
jurisdictions in which we and our affiliates and joint ventures
operate; the impact of environmental, tax or other legislation, as
well as regulations affecting our business and related compliance
requirements, including regulations related to global climate
change; changes in tax rates and other changes in tax law; the
timing, impact and other uncertainties relating to acquisitions and
divestitures, including our ability to integrate acquisitions and
separate divested businesses, respectively; risks relating to
cybersecurity incidents, including risks from the interruption,
failure or compromise of our information systems; catastrophic
events, such as natural disasters, acts of war, or terrorism; the
impact of price fluctuations in oil and natural gas and disruptions
in markets and the economy due to oil and natural gas price
volatility; costs and outcomes of legal or regulatory proceedings
and investigations; asset impairments due to economic conditions or
specific events; significant fluctuations in interest rates and
foreign currency exchange rates from those currently anticipated;
damage to facilities, pipelines or delivery systems, including
those we own or operate for third parties; availability and cost of
raw materials; the success of productivity and operational
improvement programs; and other risk factors described in the
Company's Form 10-K for its fiscal year ended September 30, 2019. Except as required by law,
the Company disclaims any obligation or undertaking to update or
revise any forward-looking statements contained herein to reflect
any change in the assumptions, beliefs, or expectations or any
change in events, conditions, or circumstances upon which any such
forward-looking statements are based.
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
INCOME STATEMENTS
|
(Unaudited)
|
|
|
Three Months Ended
|
|
31
December
|
(Millions of dollars,
except for share and per share data)
|
2019
|
|
2018
|
Sales
|
$2,254.7
|
|
$2,224.0
|
Cost of
sales
|
1,486.6
|
|
1,544.0
|
Facility
closure
|
—
|
|
29.0
|
Selling and
administrative
|
201.7
|
|
189.6
|
Research and
development
|
17.7
|
|
15.0
|
Other income
(expense), net
|
12.3
|
|
8.6
|
Operating
Income
|
561.0
|
|
455.0
|
Equity affiliates'
income
|
58.2
|
|
52.9
|
Interest
expense
|
18.7
|
|
37.3
|
Other non-operating
income (expense), net
|
9.1
|
|
18.5
|
Income Before
Taxes
|
609.6
|
|
489.1
|
Income tax
provision
|
120.7
|
|
132.1
|
Net
Income
|
488.9
|
|
357.0
|
Net income
attributable to noncontrolling interests
|
13.3
|
|
9.5
|
Net Income
Attributable to Air Products
|
$475.6
|
|
$347.5
|
Basic Earnings Per
Common Share Attributable to Air Products
|
$2.15
|
|
$1.58
|
Diluted Earnings
Per Common Share Attributable to Air Products
|
$2.14
|
|
$1.57
|
Weighted Average
Common Shares – Basic (in millions)
|
220.9
|
|
219.9
|
Weighted Average
Common Shares – Diluted (in millions)
|
222.2
|
|
221.0
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
|
|
31
December
|
|
30
September
|
(Millions of
dollars)
|
2019
|
|
2019
|
Assets
|
|
|
Current
Assets
|
|
|
Cash and cash
items
|
$2,406.1
|
|
$2,248.7
|
Short-term
investments
|
—
|
|
166.0
|
Trade receivables,
net
|
1,288.6
|
|
1,260.2
|
Inventories
|
400.6
|
|
388.3
|
Prepaid
expenses
|
98.3
|
|
77.4
|
Other receivables and
current assets
|
526.1
|
|
477.7
|
Total Current
Assets
|
4,719.7
|
|
4,618.3
|
Investment in net
assets of and advances to equity affiliates
|
1,339.9
|
|
1,276.2
|
Plant and equipment,
at cost
|
23,099.8
|
|
22,333.7
|
Less: accumulated
depreciation
|
12,407.6
|
|
11,996.1
|
Plant and equipment,
net
|
10,692.2
|
|
10,337.6
|
Goodwill,
net
|
816.1
|
|
797.1
|
Intangible assets,
net
|
415.9
|
|
419.5
|
Noncurrent lease
receivables
|
883.2
|
|
890.0
|
Other noncurrent
assets
|
784.6
|
|
604.1
|
Total Noncurrent
Assets
|
14,931.9
|
|
14,324.5
|
Total
Assets
|
$19,651.6
|
|
$18,942.8
|
Liabilities and
Equity
|
|
|
Current
Liabilities
|
|
|
Payables and accrued
liabilities
|
$1,630.0
|
|
$1,635.7
|
Accrued income
taxes
|
113.4
|
|
86.6
|
Short-term
borrowings
|
36.5
|
|
58.2
|
Current portion of
long-term debt
|
39.1
|
|
40.4
|
Total Current
Liabilities
|
1,819.0
|
|
1,820.9
|
Long-term
debt
|
2,937.0
|
|
2,907.3
|
Long-term debt –
related party
|
328.6
|
|
320.1
|
Other noncurrent
liabilities
|
1,826.7
|
|
1,712.4
|
Deferred income
taxes
|
810.5
|
|
793.8
|
Total Noncurrent
Liabilities
|
5,902.8
|
|
5,733.6
|
Total
Liabilities
|
7,721.8
|
|
7,554.5
|
Air Products
Shareholders' Equity
|
11,556.0
|
|
11,053.6
|
Noncontrolling
Interests
|
373.8
|
|
334.7
|
Total
Equity
|
11,929.8
|
|
11,388.3
|
Total Liabilities
and Equity
|
$19,651.6
|
|
$18,942.8
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
31
December
|
(Millions of
dollars)
|
2019
|
|
2018
|
Operating
Activities
|
|
|
Net income
|
$488.9
|
|
$357.0
|
Less: Net income
attributable to noncontrolling interests
|
13.3
|
|
9.5
|
Net income
attributable to Air Products
|
475.6
|
|
347.5
|
Adjustments to
reconcile income to cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
289.2
|
|
258.0
|
Deferred income
taxes
|
24.4
|
|
(1.0)
|
Tax reform
repatriation
|
—
|
|
46.2
|
Facility
closure
|
—
|
|
29.0
|
Undistributed
(earnings) losses of unconsolidated affiliates
|
(26.2)
|
|
1.0
|
Gain on sale of
assets and investments
|
(1.1)
|
|
(0.7)
|
Share-based
compensation
|
13.9
|
|
9.3
|
Noncurrent lease
receivables
|
23.5
|
|
24.8
|
Other
adjustments
|
30.8
|
|
12.7
|
Working capital
changes that provided (used) cash, excluding effects of
acquisitions:
|
|
|
Trade
receivables
|
0.9
|
|
(73.6)
|
Inventories
|
(8.4)
|
|
(10.4)
|
Other
receivables
|
1.4
|
|
10.3
|
Payables and accrued
liabilities
|
(115.4)
|
|
(55.4)
|
Other working
capital
|
(41.6)
|
|
57.5
|
Cash Provided by
Operating Activities
|
667.0
|
|
655.2
|
Investing
Activities
|
|
|
Additions to plant
and equipment
|
(447.7)
|
|
(403.4)
|
Investment in and
advances to unconsolidated affiliates
|
(7.1)
|
|
—
|
Proceeds from sale of
assets and investments
|
15.2
|
|
1.1
|
Purchases of
investments
|
—
|
|
(5.3)
|
Proceeds from
investments
|
177.0
|
|
178.0
|
Other investing
activities
|
1.9
|
|
3.1
|
Cash Used for
Investing Activities
|
(260.7)
|
|
(226.5)
|
Financing
Activities
|
|
|
Payments on long-term
debt
|
(2.8)
|
|
(2.6)
|
Net decrease in
commercial paper and short-term borrowings
|
(10.4)
|
|
(38.0)
|
Dividends paid to
shareholders
|
(255.7)
|
|
(241.5)
|
Proceeds from stock
option exercises
|
5.5
|
|
4.7
|
Other financing
activities
|
(6.9)
|
|
(12.4)
|
Cash Used for
Financing Activities
|
(270.3)
|
|
(289.8)
|
Effect of Exchange
Rate Changes on Cash
|
21.4
|
|
(6.9)
|
Increase in Cash and
Cash Items
|
157.4
|
|
132.0
|
Cash and Cash items -
Beginning of Year
|
2,248.7
|
|
2,791.3
|
Cash and Cash
items - End of Period
|
$2,406.1
|
|
$2,923.3
|
Supplemental Cash
Flow Information
|
|
|
Cash paid for taxes
(net of refunds)
|
$66.2
|
|
$28.7
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
SUMMARY BY
BUSINESS SEGMENTS
|
(Unaudited)
|
|
(Millions of
dollars)
|
Industrial
Gases –
Americas
|
|
Industrial
Gases –
EMEA
|
|
Industrial
Gases –
Asia
|
|
Industrial
Gases –
Global
|
|
Corporate
and other
|
|
Total
|
|
Three Months Ended
31 December 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$936.2
|
|
$498.7
|
|
$692.8
|
|
$92.6
|
|
$34.4
|
|
$2,254.7
|
|
|
Operating income
(loss)
|
257.2
|
|
120.5
|
|
228.5
|
|
3.6
|
|
(48.8)
|
|
561.0
|
|
(A)
|
Depreciation and
amortization
|
131.8
|
|
48.4
|
|
101.6
|
|
2.4
|
|
5.0
|
|
289.2
|
|
|
Equity affiliates'
income
|
20.6
|
|
19.3
|
|
16.9
|
|
1.4
|
|
—
|
|
58.2
|
|
|
Three Months Ended
31 December 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
$989.2
|
|
$524.2
|
|
$626.8
|
|
$68.2
|
|
$15.6
|
|
$2,224.0
|
|
|
Operating income
(loss)
|
219.2
|
|
105.6
|
|
201.8
|
|
3.9
|
|
(46.5)
|
|
484.0
|
|
(A)
|
Depreciation and
amortization
|
125.6
|
|
46.3
|
|
79.9
|
|
2.1
|
|
4.1
|
|
258.0
|
|
|
Equity affiliates'
income
|
22.6
|
|
13.7
|
|
16.2
|
|
0.4
|
|
—
|
|
52.9
|
|
|
Total
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December
2019
|
$5,971.3
|
|
$3,509.3
|
|
$6,478.7
|
|
$365.0
|
|
$3,327.3
|
|
$19,651.6
|
|
|
30 September
2019
|
5,832.2
|
|
3,250.8
|
|
6,240.6
|
|
325.7
|
|
3,293.5
|
|
18,942.8
|
|
|
|
|
(A)
|
Refer to the
Reconciliation to Consolidated Results section
below.
|
Reconciliation to Consolidated Results
The table below reconciles total operating income in the table
above to consolidated operating income as reflected on our
consolidated income statements:
|
Three Months
Ended
|
|
|
31
December
|
|
Operating
Income
|
2019
|
|
2018
|
|
Total
|
$561.0
|
|
$484.0
|
|
Facility
closure
|
—
|
|
(29.0)
|
|
Consolidated
Operating Income
|
$561.0
|
|
$455.0
|
|
RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES
(Millions of dollars unless otherwise indicated,
except for per share data)
The Company presents certain financial measures, other than in
accordance with U.S. generally accepted accounting principles
("GAAP"), on an "adjusted" or "non-GAAP" basis. On a consolidated
basis, these measures include adjusted diluted earnings per share
("EPS"), adjusted EBITDA, adjusted EBITDA margin, and adjusted
effective tax rate. On a segment basis, these measures include
adjusted EBITDA and adjusted EBITDA margin. In addition to these
measures, which are presented above, we also include certain
supplemental non-GAAP financial measures that are presented below
to help the reader understand the impact that our non-GAAP
adjustments have on the calculation of our adjusted diluted EPS.
For each non-GAAP financial measure, we present below a
reconciliation to the most directly comparable financial measure
calculated in accordance with GAAP.
The Company's non-GAAP measures are not meant to be considered
in isolation or as a substitute for the most directly comparable
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 financial results computed in accordance with GAAP,
provide a more complete understanding of the factors and trends
affecting the Company's historical financial performance and
projected future results.
In many cases, non-GAAP measures are determined by adjusting the
most directly comparable GAAP measure to exclude certain disclosed
items, or "non-GAAP adjustments," that the Company believes are not
representative of underlying business performance. For example, the
Company previously excluded certain expenses associated with cost
reduction actions, impairment charges, and gains on disclosed
transactions. The reader should be aware that the Company may
recognize similar losses or gains in the future. Readers should
also consider the limitations associated with these non-GAAP
measures, including the potential lack of comparability of these
measures from one company to another.
The tax impact on our pre-tax non-GAAP adjustments reflects the
expected current and deferred income tax impact of our non-GAAP
adjustments. These tax impacts are primarily driven by the
statutory tax rate of the various relevant jurisdictions and the
taxability of the adjustments in those jurisdictions.
ADJUSTED DILUTED EPS
The table below provides a reconciliation to the most directly
comparable GAAP measure for each of the major components used to
calculate adjusted diluted EPS, which the Company views as a key
performance metric. We believe it is important for the reader to
understand the per share impact of our non-GAAP adjustments as
management does not consider these impacts when evaluating
underlying business performance.
There were no non-GAAP adjustments to arrive at the adjusted
diluted EPS in the first quarter of fiscal year 2020. For
information related to non-GAAP adjustments in the first quarter of
fiscal year 2019, refer to Exhibit 99.1 to the Company's Current
Report on Form 8-K dated 25 January
2019.
|
Three Months Ended 31
December
|
Q1 2020 vs. Q1
2019
|
Operating
Income
|
Equity
Affiliates'
Income
|
Income Tax
Provision
|
Net
Income
Attributable
to Air
Products
|
Diluted
EPS
|
2020 GAAP
|
$561.0
|
|
$58.2
|
|
$120.7
|
|
$475.6
|
|
$2.14
|
|
2019 GAAP
|
455.0
|
|
52.9
|
|
132.1
|
|
347.5
|
|
1.57
|
|
Change
GAAP
|
|
|
|
$128.1
|
|
$0.57
|
|
% Change
GAAP
|
|
|
|
37
|
%
|
36
|
%
|
2020 GAAP
|
$561.0
|
|
$58.2
|
|
$120.7
|
|
$475.6
|
|
$2.14
|
|
2020 Non-GAAP Measure
("Adjusted")
|
$561.0
|
|
$58.2
|
|
$120.7
|
|
$475.6
|
|
$2.14
|
|
2019 GAAP
|
$455.0
|
|
$52.9
|
|
$132.1
|
|
$347.5
|
|
$1.57
|
|
Facility
closure
|
29.0
|
|
—
|
|
6.9
|
|
22.1
|
|
0.10
|
|
Tax reform
repatriation
|
—
|
|
—
|
|
15.6
|
|
(15.6)
|
|
(0.07)
|
|
Tax reform adjustment
related to deemed foreign dividends
|
—
|
|
—
|
|
(56.2)
|
|
56.2
|
|
0.26
|
|
2019 Non-GAAP Measure
("Adjusted")
|
$484.0
|
|
$52.9
|
|
$98.4
|
|
$410.2
|
|
$1.86
|
|
Change Non-GAAP
Measure ("Adjusted")
|
|
|
|
$65.4
|
|
$0.28
|
|
% Change Non-GAAP
Measure ("Adjusted")
|
|
|
|
16
|
%
|
15
|
%
|
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
We define adjusted EBITDA as net income less income (loss) from
discontinued operations, net of tax (when applicable), and
excluding certain non‑GAAP adjustments, which the Company does not
believe to be indicative of underlying business trends, before
interest expense, other non‑operating income (expense), net, income
tax provision, and depreciation and amortization expense. Adjusted
EBITDA and adjusted EBITDA margin provide useful metrics for
management to assess operating performance. Margin is calculated
for each period by dividing each line item by consolidated sales
for the respective period.
Below is a presentation of consolidated sales and a
reconciliation of net income on a GAAP basis to adjusted EBITDA and
net income margin on a GAAP basis to adjusted EBITDA margin:
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Total
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
$2,254.7
|
|
|
|
|
|
|
|
|
|
|
|
$2,254.7
|
2019
|
|
2,224.0
|
|
|
$2,187.7
|
|
|
$2,224.0
|
|
|
$2,283.2
|
|
|
8,918.9
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
FY2020
|
2020
|
$
|
|
Margin
|
|
$
|
Margin
|
|
$
|
Margin
|
|
$
|
Margin
|
|
$
|
|
Margin
|
Net income and net
income margin
|
$488.9
|
|
21.7
|
%
|
|
|
|
|
|
|
|
|
|
|
$488.9
|
|
21.7
|
%
|
Add: Interest
expense
|
18.7
|
|
0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
18.7
|
|
0.8
|
%
|
Less: Other
non-operating income (expense), net
|
9.1
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
9.1
|
|
0.4
|
%
|
Add: Income tax
provision
|
120.7
|
|
5.4
|
%
|
|
|
|
|
|
|
|
|
|
|
120.7
|
|
5.4
|
%
|
Add: Depreciation and
amortization
|
289.2
|
|
12.8
|
%
|
|
|
|
|
|
|
|
|
|
|
289.2
|
|
12.8
|
%
|
Adjusted EBITDA
and adjusted EBITDA margin
|
$908.4
|
|
40.3
|
%
|
|
|
|
|
|
|
|
|
|
|
$908.4
|
|
40.3
|
%
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
FY2019
|
2019
|
$
|
|
Margin
|
|
$
|
|
Margin
|
|
$
|
|
Margin
|
|
$
|
|
Margin
|
|
$
|
|
Margin
|
Net income and net
income margin
|
$357.0
|
|
16.0
|
%
|
|
$433.5
|
|
19.8
|
%
|
|
$500.2
|
|
22.5
|
%
|
|
$518.7
|
|
22.7
|
%
|
|
$1,809.4
|
|
20.3
|
%
|
Add: Interest
expense
|
37.3
|
|
1.7
|
%
|
|
35.4
|
|
1.6
|
%
|
|
34.2
|
|
1.5
|
%
|
|
30.1
|
|
1.3
|
%
|
|
137.0
|
|
1.5
|
%
|
Less: Other
non-operating income (expense), net
|
18.5
|
|
0.8
|
%
|
|
13.7
|
|
0.6
|
%
|
|
17.6
|
|
0.8
|
%
|
|
16.9
|
|
0.7
|
%
|
|
66.7
|
|
0.7
|
%
|
Add: Income tax
provision
|
132.1
|
|
5.9
|
%
|
|
107.5
|
|
4.9
|
%
|
|
109.3
|
|
4.9
|
%
|
|
131.2
|
|
5.7
|
%
|
|
480.1
|
|
5.4
|
%
|
Add: Depreciation and
amortization
|
258.0
|
|
11.6
|
%
|
|
262.1
|
|
12.0
|
%
|
|
269.1
|
|
12.1
|
%
|
|
293.6
|
|
12.9
|
%
|
|
1,082.8
|
|
12.1
|
%
|
Add: Facility
closure
|
29.0
|
|
1.3
|
%
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|
29.0
|
|
0.3
|
%
|
Add: Cost reduction
actions
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|
25.5
|
|
1.2
|
%
|
|
—
|
|
—
|
%
|
|
25.5
|
|
0.3
|
%
|
Less: Gain on
exchange of equity affiliate investments
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|
29.1
|
|
1.3
|
%
|
|
—
|
|
—
|
%
|
|
29.1
|
|
0.3
|
%
|
Adjusted EBITDA
and adjusted EBITDA margin
|
$794.9
|
|
35.7
|
%
|
|
$824.8
|
|
37.7
|
%
|
|
$891.6
|
|
40.1
|
%
|
|
$956.7
|
|
41.9
|
%
|
|
$3,468.0
|
|
38.9
|
%
|
Q1 2020 vs. Q1
2019
|
Q1
|
|
|
|
|
|
|
|
|
Change
GAAP
|
|
|
|
|
|
|
|
|
|
Net income $
change
|
$131.9
|
|
|
|
|
|
|
|
|
|
Net income %
change
|
37
|
%
|
|
|
|
|
|
|
|
|
Net income margin
change
|
570
|
bp
|
|
|
|
|
|
|
|
|
Change
Non-GAAP
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA $
change
|
$113.5
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA %
change
|
14
|
%
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin change
|
460
|
bp
|
|
|
|
|
|
|
|
|
Below is a reconciliation of operating income and operating
margin by segment to adjusted EBITDA and adjusted EBITDA margin by
segment for the three months ended 31
December 2019 and 2018:
|
Industrial
Gases–
Americas
|
Industrial
Gases–
EMEA
|
Industrial
Gases–
Asia
|
Industrial
Gases–
Global
|
Corporate
and other
|
Total
|
|
GAAP
MEASURES
|
|
|
|
|
|
|
|
Three Months Ended
31 December 2019
|
|
|
|
|
|
|
Operating income
(loss)
|
$257.2
|
|
$120.5
|
|
$228.5
|
|
$3.6
|
|
($48.8)
|
|
$561.0
|
|
(A)
|
Operating
margin
|
27.5
|
%
|
24.2
|
%
|
33.0
|
%
|
|
|
|
|
Three Months Ended
31 December 2018
|
|
|
|
|
|
|
Operating income
(loss)
|
$219.2
|
|
$105.6
|
|
$201.8
|
|
$3.9
|
|
($46.5)
|
|
$484.0
|
|
(A)
|
Operating
margin
|
22.2
|
%
|
20.1
|
%
|
32.2
|
%
|
|
|
|
|
Operating income
change
|
$38.0
|
|
$14.9
|
|
$26.7
|
|
|
|
|
|
Operating income %
change
|
17
|
%
|
14
|
%
|
13
|
%
|
|
|
|
|
Operating margin
change
|
530
|
bp
|
410
|
bp
|
80
|
bp
|
|
|
|
|
NON-GAAP
MEASURES
|
|
|
|
|
|
|
|
Three Months Ended
31 December 2019
|
|
|
|
|
|
|
Operating income
(loss)
|
$257.2
|
|
$120.5
|
|
$228.5
|
|
$3.6
|
|
($48.8)
|
|
$561.0
|
|
(A)
|
Add: Depreciation and
amortization
|
131.8
|
|
48.4
|
|
101.6
|
|
2.4
|
|
5.0
|
|
289.2
|
|
|
Add: Equity
affiliates' income
|
20.6
|
|
19.3
|
|
16.9
|
|
1.4
|
|
—
|
|
58.2
|
|
|
Adjusted
EBITDA
|
$409.6
|
|
$188.2
|
|
$347.0
|
|
$7.4
|
|
($43.8)
|
|
$908.4
|
|
|
Adjusted EBITDA
margin
|
43.8
|
%
|
37.7
|
%
|
50.1
|
%
|
|
|
|
|
Three Months Ended
31 December 2018
|
|
|
|
|
|
|
Operating income
(loss)
|
$219.2
|
|
$105.6
|
|
$201.8
|
|
$3.9
|
|
($46.5)
|
|
$484.0
|
|
(A)
|
Add: Depreciation and
amortization
|
125.6
|
|
46.3
|
|
79.9
|
|
2.1
|
|
4.1
|
|
258.0
|
|
|
Add: Equity
affiliates' income
|
22.6
|
|
13.7
|
|
16.2
|
|
0.4
|
|
—
|
|
52.9
|
|
|
Adjusted
EBITDA
|
$367.4
|
|
$165.6
|
|
$297.9
|
|
$6.4
|
|
($42.4)
|
|
$794.9
|
|
|
Adjusted EBITDA
margin
|
37.1
|
%
|
31.6
|
%
|
47.5
|
%
|
|
|
|
|
Adjusted EBITDA
change
|
$42.2
|
|
$22.6
|
|
$49.1
|
|
|
|
|
|
Adjusted EBITDA %
change
|
11
|
%
|
14
|
%
|
16
|
%
|
|
|
|
|
Adjusted EBITDA
margin change
|
670
|
bp
|
610
|
bp
|
260
|
bp
|
|
|
|
|
(A) The table below reconciles operating income
as reflected on our consolidated income statements to total
operating income in the table above:
|
Three Months
Ended
|
|
31
December
|
Operating
Income
|
2019
|
|
2018
|
Consolidated
operating income
|
$561.0
|
|
$455.0
|
Facility
closure
|
—
|
|
29.0
|
Total
|
$561.0
|
|
$484.0
|
ADJUSTED EFFECTIVE TAX RATE
The tax impact of our pre-tax non-GAAP adjustments reflects the
expected current and deferred income tax expense associated with
each adjustment and is primarily dependent upon the statutory tax
rate of the various relevant jurisdictions and the taxability of
the adjustments in those jurisdictions.
There were no non-GAAP adjustments to arrive at the adjusted
effective tax rate in the first quarter of fiscal year 2020. For
information related to non-GAAP adjustments in the first quarter of
fiscal year 2019, refer to Exhibit 99.1 to the Company's Current
Report on Form 8-K dated 25 January
2019.
|
Three Months
Ended
31
December
|
|
2019
|
|
2018
|
|
Income Tax
Provision
|
$120.7
|
|
$132.1
|
|
Income Before
Taxes
|
$609.6
|
|
$489.1
|
|
Effective Tax
Rate
|
19.8
|
%
|
27.0
|
%
|
Income Tax
Provision
|
$120.7
|
|
$132.1
|
|
Facility
closure
|
—
|
|
6.9
|
|
Tax reform
repatriation
|
—
|
|
15.6
|
|
Tax reform adjustment
related to deemed foreign dividends
|
—
|
|
(56.2)
|
|
Adjusted Income Tax
Provision
|
$120.7
|
|
$98.4
|
|
Income Before
Taxes
|
$609.6
|
|
$489.1
|
|
Facility
closure
|
—
|
|
29.0
|
|
Adjusted Income
Before Taxes
|
$609.6
|
|
$518.1
|
|
Adjusted Effective
Tax Rate
|
19.8
|
%
|
19.0
|
%
|
CAPITAL EXPENDITURES
We define capital expenditures as cash flows for additions to
plant and equipment, acquisitions (less cash acquired), and
investment in and advances to unconsolidated affiliates. A
reconciliation of cash used for investing activities to our
reported capital expenditures is provided below:
|
Three Months
Ended
|
|
31
December
|
|
2019
|
|
2018
|
Cash used for
investing activities
|
$260.7
|
|
$226.5
|
Proceeds from sale of
assets and investments
|
15.2
|
|
1.1
|
Purchases of
investments
|
—
|
|
(5.3)
|
Proceeds from
investments
|
177.0
|
|
178.0
|
Other investing
activities
|
1.9
|
|
3.1
|
Capital
expenditures
|
$454.8
|
|
$403.4
|
The components of our capital expenditures are detailed in the
table below:
|
Three Months
Ended
|
|
31
December
|
|
2019
|
|
2018
|
Additions to plant
and equipment
|
$447.7
|
|
$403.4
|
Acquisitions, less
cash acquired
|
—
|
|
—
|
Investment in and
advances to unconsolidated affiliates
|
7.1
|
|
—
|
Capital
expenditures
|
$454.8
|
|
$403.4
|
We expect capital expenditures for fiscal year 2020 to be
approximately $4 billion to
$4.5 billion, including the expected
spending for the Jazan gas and power project.
It is not possible, without unreasonable efforts, to reconcile
our forecasted capital expenditures to future cash used for
investing activities because we are unable to identify the timing
or occurrence of our future investment activity, which is driven by
our assessment of competing opportunities at the time we enter into
transactions. These decisions, either individually or in the
aggregate, could have a significant effect on our cash used for
investing activities.
OUTLOOK
Guidance is provided on an adjusted continuing operations basis
and is compared to adjusted historical diluted EPS, which excludes
the impact of certain items that we believe are not representative
of our underlying business performance, such as the incurrence of
additional costs for cost reduction actions and impairment charges,
or the recognition of gains on disclosed items. It is not possible,
without unreasonable efforts, to identify the timing or occurrence
of these events or the potential for other transactions that may
impact future GAAP EPS. Furthermore, it is not possible to identify
the potential significance of these events in advance, but any of
these events, if they were to occur, could have a significant
effect on our 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
|
|
|
Q2
|
|
Full Year
|
2019 Diluted
EPS
|
|
$1.90
|
|
$7.94
|
Facility
closure
|
|
—
|
|
0.10
|
Cost reduction
actions
|
|
—
|
|
0.08
|
Gain on exchange of
equity affiliate investments
|
|
—
|
|
(0.13)
|
Pension settlement
loss
|
|
0.02
|
|
0.02
|
Tax reform
repatriation
|
|
—
|
|
(0.06)
|
Tax reform adjustment
related to deemed foreign dividends
|
|
—
|
|
0.26
|
2019 Adjusted Diluted
EPS
|
|
$1.92
|
|
$8.21
|
2020 Adjusted Diluted
EPS Outlook
|
|
2.10–2.20
|
|
9.35–9.60
|
Change
|
|
0.18–0.28
|
|
1.14–1.39
|
% Change
|
|
9%–15%
|
|
14%–17%
|
View original
content:http://www.prnewswire.com/news-releases/air-products-reports-fiscal-2020-first-quarter-gaap-eps-of-2-14--up-36-percent-and-adjusted-eps-of-2-14--up-15-percent-300992730.html
SOURCE Air Products