Air Products Reports Fiscal Q1 Financial Results

               Air Products Reports Fiscal Q1 Financial Results

PR Newswire

LEHIGH VALLEY, Pa., Jan. 23, 2013

LEHIGH VALLEY, Pa., Jan. 23, 2013 /PRNewswire/ --

First Quarter Summary

  oSales of $2.6 billion up 10 percent versus prior year
  oEPS up three* percent to $1.30 versus prior year
  oGood volumes in Tonnage Gases and new wins from Gulf Coast Connection
    Pipeline
  o$462 million share repurchase

Air Products (NYSE: APD) today reported net income of $277 million and diluted
earnings per share (EPS) of $1.30, on a continuing operations basis, for its
fiscal first quarter ended December 31, 2012, both up three* percent versus
the prior year.

The discussion of first quarter results and guidance in this release is based
on non-GAAP continuing operations. A reconciliation to GAAP results can be
found on the Consolidated Results table.*

First quarter revenues of $2,562 million increased 10 percent versus prior
year, with underlying sales up four percent on improved volumes in Tonnage
Gases. Acquisitions contributed six percent. Operating income of $372 million
was up five percent versus prior year. Operating margin of 14.5 percent was
down 70 basis points versus prior year, driven by an inventory accounting
revaluation and the Indura acquisition.

Sequential sales declined two percent, with underlying sales down four percent
and seasonally lower volumes in the Merchant Gases, and Electronics and
Performance Materials segments. Operating income decreased nine percent
sequentially.

Commenting on the first quarter, John McGlade, chairman, president and chief
executive officer, said, "Globally, economic growth underperformed our
expectations for the quarter. We delivered higher volumes in Tonnage Gases,
and Equipment and Energy. However, both Merchant Gases and Electronics volumes
declined. Our operating performance was encouraging and we are seeing
improvements from our cost and restructuring actions. It's a positive start
that we expect to improve upon through the year. We also repurchased 5.7
million shares during the quarter."

  oMerchant Gases sales of $1,009 million increased 14 percent versus the
    prior year due to the Indura acquisition. Underlying sales declined one
    percent, with positive pricing in all regions more than offset by lower
    volumes in Europe. Operating income of $171 million increased three
    percent versus prior year due largely to Indura and positive pricing,
    partially offset by lower volumes. Sequential sales decreased one percent,
    with positive pricing and a weaker dollar offset by seasonally lower
    volumes. Sequential operating income increased six percent due to improved
    productivity and prior quarter Indura acquisition costs.
  oTonnage Gases sales of $898 million increased 11 percent versus the prior
    year, on strong base loading and new plant volumes. Operating income of
    $138 million was up 24 percent versus prior year, driven by the volume
    growth and lower maintenance spending. Sequential sales increased six
    percent driven primarily by new plant volumes and higher energy pass-thru.
    Sequential operating income was down two percent, primarily from the
    previously announced decision to exit the PUI business.
  oElectronics and Performance Materials sales of $549 million were up three
    percent versus prior year primarily due to the DA NanoMaterials
    acquisition. Underlying sales were down one percent, as volume growth in
    Performance Materials was more than offset by lower Electronics volumes.
    Operating income of $61 million was down 22 percent versus prior year due
    largely to inventory accounting revaluation. Sequential sales declined 11
    percent and sequential operating income declined 28 percent respectively
    on lower volumes and higher costs.
  oEquipment and Energy sales of $106 million increased 19 percent versus
    prior year, due to higher large ASU and LNG equipment sales. Operating
    income of eight million dollars increased 15 percent versus prior year due
    to the higher equipment sales. Sequentially, sales decreased 16 percent
    and operating income decreased 53 percent due mostly to reduced ASU
    project activity. The sales backlog is up 25 percent versus prior year on
    LNG sales.

Outlook

Looking ahead, McGlade said, "Global economic growth is expected to be modest
at best so we will continue to take actions to improve our performance. Solid
execution, cost control, price improvement and volume growth are our
priorities. Our strong project backlog and our significant leverage in
existing assets position us well for the future."

Air Products is updating its guidance for fiscal 2013 of EPS in the range of 
$5.70 to $5.90 per share. For the second quarter of fiscal 2013 ending March
31, 2013, EPS is expected to be between $1.34 and $1.39  per share.

Access the Q1 earnings teleconference scheduled for 10:00 a.m. Eastern Time on
January 23 by calling 719-325-4787 and entering pass code 3708364, or access
event details on our website.

About Air Products

Air Products (NYSE: APD) provides atmospheric, process and specialty gases;
performance materials; equipment; and technology. For over 70 years, the
company has enabled customers to become more productive, energy efficient and
sustainable. More than 20,000 employees in over 50 countries supply innovative
solutions to the energy, environment and emerging markets. These include
semiconductor materials, refinery hydrogen, coal gasification, natural gas
liquefaction, and advanced coatings and adhesives. In fiscal 2012, Air
Products had sales approaching $10 billion. 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, 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, deterioration in
global or regional economic and business conditions; weakening demand for the
Company's products and services; future financial and operating performance of
major customers; unanticipated contract terminations or customer cancellations
or postponement of projects and sales; the success of commercial negotiations;
asset impairments or losses due to a decline in profitability of or demand for
certain of the Company's products or businesses, 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 for all of the Company's foreign operations; the
impact of environmental, 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, 2012. 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 the
non-GAAP measures.



CONSOLIDATED RESULTS
                             Continuing Operations
                               Net       Diluted
2013 Q1 vs 2012 Q1             Income    EPS
 2013 GAAP                   $ 276.9   $ 1.30
 2012 GAAP                     225.9     1.06
 Change GAAP                 $ 51.0    $ .24
 % Change GAAP                 23%      23%
 2013 GAAP                   $ 276.9   $ 1.30
 2013 Non-GAAP Measure       $ 276.9   $ 1.30
 2012 GAAP                   $ 225.9   $ 1.06
 Spanish tax settlement        43.8      .20
 2012 Non-GAAP Measure       $ 269.7   $ 1.26
 Change Non-GAAP Measure     $ 7.2     $ .04
 % Change Non-GAAP Measure     3%       3%
                                         Operating
2013 Q1 vs 2012 Q4                       Income
 2013 Q1 GAAP                          $ 372.4
 2012 Q4 GAAP                            157.9
 Change GAAP                           $ 214.5
 % Change GAAP                           136%
 2013 Q1 GAAP                          $ 372.4
 2013 Q1 Non-GAAP Measure              $ 372.4
 2012 Q4 GAAP                          $ 157.9
 PV market actions                       186.0
 PUI business actions                    54.6
 Customer bankruptcy                     9.8
 2012 Q4 Non-GAAP Measure              $ 408.3
 Change Non-GAAP Measure               $ (35.9)
 % Change Non-GAAP Measure               (9)%
                                         FY 2013
 2013 Guidance                           $5.70-$5.90



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 facilities that are built to provide product to a specific customer
are required to be accounted for as capital leases and such spending is
reflected as a use of cash within cash provided by operating activities.



                                      FY 2013 2013 Forecast
Capital expenditures - GAAP basis     $ 357.0 $ 1,650-1,750
Capital lease expenditures              71.4    250-350
Capital expenditures - Non-GAAP basis $ 428.4 $ 1,900-2,100



AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
                                                        Three Months Ended
                                                        31 December
 (Millions of dollars, except for share data)           2012        2011
 Sales                                                  $ 2,562.4   $ 2,321.5
 Cost of sales                                            1,900.1     1,722.3
 Selling and administrative                               268.2       231.0
 Research and development                                 33.3        28.1
 Other income, net                                        11.6        13.7
 Operating Income                                         372.4       353.8
 Equity affiliates' income                                41.4        37.1
 Interest expense                                         35.8        29.4
 Income from Continuing Operations before Taxes           378.0       361.5
 Income tax provision                                     92.2        127.4
 Income from Continuing Operations                        285.8       234.1
 Income from Discontinued Operations, net of tax          1.4         22.2
 Net Income                                               287.2       256.3
 Less: Net Income Attributable to Noncontrolling          8.9         8.2
 Interests
 Net Income Attributable to Air Products                $ 278.3     $ 248.1
 Net Income Attributable to Air Products
 Income from continuing operations                      $ 276.9     $ 225.9
 Income from discontinued operations                      1.4         22.2
 Net Income Attributable to Air Products                $ 278.3     $ 248.1
 Basic Earnings Per Common Share Attributable to Air
 Products
 Income from continuing operations                      $ 1.32      $ 1.07
 Income from discontinued operations                      .01         .11
 Net Income Attributable to Air Products                $ 1.33      $ 1.18
 Diluted Earnings Per Common Share Attributable to Air
 Products
 Income from continuing operations                      $ 1.30      $ 1.06
 Income from discontinued operations                      .01         .10
 Net Income Attributable to Air Products                $ 1.31      $ 1.16
 Weighted Average of Common Shares Outstanding (in        210.0       210.3
 millions)
 Weighted Average of Common Shares Outstanding
        Assuming Dilution (in millions)                   212.6       213.9
 Dividends Declared Per Common Share – Cash             $ .64       $ .58
 Other Data from Continuing Operations
        Depreciation and amortization                   $ 218.5     $ 203.0
        Capital expenditures on a Non-GAAP basis          428.4       398.0
                    (see reconciliation table)





AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                     31 December  30 September
 (Millions of dollars)                                2012         2012
 Assets
 Current Assets
 Cash and cash items                                  $ 545.6      $ 454.4
 Trade receivables, net                                 1,508.0      1,544.7
 Inventories                                            746.5        786.6
 Contracts in progress, less progress billings          214.3        190.8
 Prepaid expenses                                       125.5        81.7
 Other receivables and current assets                   409.7        342.0
 Current assets of discontinued operations              13.5         15.6
 Total Current Assets                                   3,563.1      3,415.8
 Investment in net assets of and advances to equity     1,185.2      1,175.7
 affiliates
 Plant and equipment, at cost                           18,558.1     18,046.2
 Less: accumulated depreciation                         10,075.8     9,805.6
 Plant and equipment, net                               8,482.3      8,240.6
 Goodwill                                               1,610.7      1,598.4
 Intangible assets, net                                 754.8        761.6
 Noncurrent capital lease receivables                   1,411.9      1,328.9
 Other noncurrent assets                                360.1        393.6
 Noncurrent assets of discontinued operations           25.0         27.2
 Total Noncurrent Assets                                13,830.0     13,526.0
 Total Assets                                         $ 17,393.1   $ 16,941.8
 Liabilities and Equity
 Current Liabilities
 Payables and accrued liabilities                     $ 1,963.9    $ 1,927.7
 Accrued income taxes                                   70.0         48.5
 Short-term borrowings                                  835.9        633.4
 Current portion of long-term debt                      92.5         74.3
 Current liabilities of discontinued operations         4.6          6.0
 Total Current Liabilities                              2,966.9      2,689.9
 Long-term debt                                         5,107.3      4,584.2
 Other noncurrent liabilities                           1,752.8      1,980.9
 Deferred income taxes                                  723.9        670.8
 Noncurrent liabilities of discontinued operations      .3           .2
 Total Noncurrent Liabilities                           7,584.3      7,236.1
 Total Liabilities                                      10,551.2     9,926.0
 Redeemable Noncontrolling Interest                     390.7        392.5
 Total Air Products Shareholders' Equity                6,299.3      6,477.2
 Noncontrolling Interests                               151.9        146.1
 Total Equity                                           6,451.2      6,623.3
 Total Liabilities and Equity                         $ 17,393.1   $ 16,941.8





AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                       Three Months Ended
                                                       31 December
 (Millions of dollars)                                 2012        2011
 Operating Activities
 Net Income                                            $ 287.2      $ 256.3
 Less: Net income attributable to noncontrolling         8.9        8.2
 interests
 Net income attributable to Air Products               $ 278.3      $ 248.1
 Income from discontinued operations                     (1.4)       (22.2)
 Income from continuing operations attributable to Air $ 276.9      $ 225.9
 Products
 Adjustments to reconcile income to cash provided by
 operating activities:
          Depreciation and amortization                  218.5      203.0
          Deferred income taxes                          37.4       26.1
          Share-based compensation                       10.1       11.8
          Noncurrent capital lease receivables           (93.4)      (61.2)
          Other adjustments                              60.8       11.3
 Working capital changes that provided (used) cash,
 excluding effects of acquisitions and divestitures:
          Trade receivables                              51.0       57.6
          Inventories                                    42.5       (24.2)
          Contracts in progress, less progress           (22.3)      (9.6)
          billings
          Other receivables                              (64.4)      4.5
          Payables and accrued liabilities               7.3        (54.8)
          Other working capital                          (16.0)      42.0
 Pension plan contributions                              (230.0)     (8.1)
 Cash Provided by Operating Activities                   278.4      424.3
 Investing Activities
 Additions to plant and equipment                        (357.0)     (342.3)
 Investment in and advances to unconsolidated            -          (21.2)
 affiliates
 Proceeds from sale of assets and investments            2.8        11.9
 Change in restricted cash                               -          2.0
 Other investing activities                              (1.6)       -
 Cash Used for Investing Activities                      (355.8)     (349.6)
 Financing Activities
 Long-term debt proceeds                                 77.3       400.1
 Payments on long-term debt                              (65.0)      (3.3)
 Net increase (decrease) in commercial paper and         709.1      (316.4)
 short-term borrowings
 Dividends paid to shareholders                          (136.0)     (121.9)
 Purchase of treasury shares                             (461.6)     -
 Proceeds from stock option exercises                    27.0       7.9
 Excess tax benefit from share-based compensation        8.1        2.8
 Payment for subsidiary shares from noncontrolling       -          (58.4)
 interests
 Other financing activities                              (1.8)       (.1)
 Cash Provided by (Used for) Financing Activities        157.1      (89.3)
 Discontinued Operations
 Cash provided by operating activities                   5.2        6.4
 Cash used for investing activities                      (.8)        (7.4)
 Cash provided by financing activities                   -          1.0
 Cash Provided by Discontinued Operations                4.4        -
 Effect of Exchange Rate Changes on Cash                 7.1        (.6)
 Increase (Decrease) in Cash and Cash Items              91.2       (15.2)
 Cash and Cash Items – Beginning of Year                 454.4      422.5
 Cash and Cash Items – End of Period                     545.6      407.3
 Less: Cash and Cash Items – Discontinued Operations     -          1.1
 Cash and Cash Items – Continuing Operations           $ 545.6      $ 406.2





AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
(Unaudited)
                                         Three Months Ended
                                         31 December
 (Millions of dollars)                   2012       2011
 Sales to External Customers
  Merchant Gases                         $ 1,009.1   $ 887.7
  Tonnage Gases                            898.4     809.8
  Electronics and Performance Materials    549.0     535.2
  Equipment and Energy                     105.9     88.8
 Segment and Consolidated Totals         $ 2,562.4   $ 2,321.5
 Operating Income
  Merchant Gases                         $ 171.0     $ 166.3
  Tonnage Gases                            138.1     111.4
  Electronics and Performance Materials    61.3      78.1
  Equipment and Energy                     8.4       7.3
 Segment Total                           $ 378.8     $ 363.1
  Other                                    (6.4)      (9.3)
 Consolidated Total                      $ 372.4     $ 353.8



                                   31 December            30 September
 (Millions of dollars)                 2012                 2012
 Identifiable Assets ^(A)
         Merchant Gases                $   6,500.6           $   6,428.5
         Tonnage Gases                     5,225.3             5,059.8
         Electronics and                   2,908.5             2,930.3
         Performance Materials
         Equipment and Energy              425.8               379.3
 Segment Total                         $   15,060.2          $   14,797.9
         Other                             1,109.2             925.4
         Discontinued operations           38.5                42.8
 Consolidated Total                    $   16,207.9          $   15,766.1
 ^(A) Identifiable assets are equal to total assets less investment in net
 assets of and advances to equity affiliates.



RECONCILIATION
NON-GAAP MEASURE
(Unaudited)

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, if the arrangement
qualifies as a capital lease. 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)                  2012       2011
 Capital expenditures - GAAP basis      $  357.0   $ 363.5
 Capital lease expenditures                71.4      28.2
 Purchase of noncontrolling interests      -         6.3
 Capital expenditures - Non-GAAP basis  $  428.4   $ 398.0



SOURCE Air Products

Website: http://www.airproducts.com
Contact: Media Inquiries, George Noon, +1-610-481-1990, noong@airproducts.com
or Investor Inquiries, Simon Moore, +1-610-481-7461, mooresr@airproducts.com
 
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