Air Products Reports Fiscal Q2 Financial Results

               Air Products Reports Fiscal Q2 Financial Results

PR Newswire

LEHIGH VALLEY, Pa., April 23, 2013

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

Second Quarter Summary

  oSales of $2.5 billion up 6 percent versus prior year
  oEPS of $1.37 on a continuing operations basis
  oQuarterly dividend increased by 11% - over 30 years of consecutive
    increases
  oAnnounced major new wins in Asia for oxygen for coal gasification and LNG

Air Products (NYSE: APD) today reported net income of $289 million and diluted
earnings per share (EPS) of $1.37, on a continuing operations basis, for its
fiscal second quarter ended March 31, 2013, up three* percent and five*
percent respectively versus prior year.

The discussion of second 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.*

Second quarter revenues of $2,484 million increased six percent versus prior
year, with underlying sales down two percent due to the previously announced
decision to exit the Polyurethane Intermediates business (PUI). Acquisitions
contributed six percent. Operating income of $390 million was up four percent
versus prior year. Operating margin of 15.7 percent was down 30 basis points
versus prior year, primarily on acquisitions and higher pension expense,
partially offset by better cost performance.

Sequential sales declined three percent, with underlying sales down three
percent on lower Tonnage Gases volumes due to planned customer maintenance.
Operating income increased five percent sequentially, primarily from the
inventory accounting revaluation last quarter and better cost performance.

Commenting on the second quarter, John McGlade, chairman, president and chief
executive officer, said, "Good cost performance helped offset weaker than
expected volumes in the second quarter. Global economic growth continued to be
a challenge, with a slower U.S., contraction in Europe, softness in China, and
an electronics market much weaker than we expected. Despite these difficult
conditions, we were able to deliver bottom-line earnings growth in the first
half of the year by focusing on superior execution and cost discipline. With a
project backlog totaling over $3 billion and significant leverage to an
economic recovery, Air Products remains well positioned for growth over the
long-term."

  oMerchant Gases sales of $1,003 million increased 14 percent versus the
    prior year due largely to the Indura acquisition. Underlying sales
    declined one percent, with positive pricing more than offset by lower
    volumes in Europe and in helium globally. Operating income of $168 million
    increased ten percent versus prior year due to Indura and improved
    productivity, including the benefits from our cost reductions in Europe.
    This was partially offset by lower volumes and higher energy and
    distribution costs. Sequentially, sales decreased one percent and
    operating income decreased two percent, primarily on lower seasonal
    volumes in Asia.
  oTonnage Gases sales of $809 million increased three percent versus the
    prior year on new plant volumes and higher energy pass-through, partially
    offset by lower PUI volumes. Operating income of $123 million decreased
    two percent versus prior year including PUI, but was up three percent
    excluding PUI on new plant volumes and better operating efficiencies.
    Sequential sales decreased ten percent driven by lower Tonnage and PUI
    volumes. Sequential operating income was down eleven percent on lower
    volumes and higher maintenance costs due to planned customer outages.
  oElectronics and Performance Materials sales of $549 million declined three
    percent versus prior year, with lower electronics materials and equipment
    sales partially offset by the DA NanoMaterials acquisition. Operating
    income of $78 million decreased nine percent versus prior year on lower
    volumes and price pressure. Sequential sales were flat while operating
    income increased 26 percent largely on the inventory accounting
    revaluation last quarter.
  oEquipment and Energy sales of $124 million increased 12 percent versus
    prior year, due to higher LNG project activity. Operating income of $21
    million more than doubled versus prior year due to the higher equipment
    sales and reduced development spending. Sequentially, sales increased 17
    percent and operating income improved significantly due to higher
    equipment sales and lower development spending. The sales backlog of $326
    million is up five percent versus prior year.

Outlook

Looking ahead, McGlade said, "Given the weakness we saw coming out of Q2, we
are tempering our expectations for economic growth in the second half of our
fiscal year. We remain focused on those things within our control, including
reliable plant operations, disciplined project execution, capital allocation,
and further productivity improvements. In light of our view of continuing slow
growth, we are actively assessing whether there are additional actions we can
take that would result in increased value to our shareholders."

Air Products expects third quarter adjusted EPS from continuing operations to
be between $1.33 and $1.38 per share. The company's adjusted guidance for
continuing operations for fiscal 2013 is a range of $5.45 to $5.60 per share.

Access the Q2 earnings teleconference scheduled for 10:00 a.m. Eastern Time on
April 23 by calling 719-325-4919 and entering pass code 5327454, 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 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, further
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; the success of productivity programs; the timing, impact, and
other uncertainties of future acquisitions or divestitures; significant
fluctuations in interest rates and foreign currencies from that currently
anticipated; the impact of environmental, tax or other legislation and
regulations in jurisdictions in which the Company and its affiliates operate;
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.



RECONCILIATION
NON-GAAP MEASURE
(Unaudited)
                                    Continuing Operations
                                    Operating  Operating               Diluted
                                    Income     Margin ^(a)  Income     EPS
 2013 GAAP                          $ 389.7    15.7%        $ 289.3    $ 1.37
 2012 GAAP                            287.9  12.3%          279.0    1.30
 Change GAAP                        $ 101.8    340bp       $ 10.3     $ .07
 % Change GAAP                        35%                    4%        5%
 2013 GAAP                          $ 389.7    15.7%        $ 289.3    $ 1.37
 2013 Non-GAAP Measure              $ 389.7    15.7%        $ 289.3    $ 1.37
 2012 GAAP                          $ 287.9    12.3%        $ 279.0    $ 1.30
 Cost reduction plan (tax impact      86.8     3.7%           60.6     .28
 $26.2)
 Spanish tax ruling                   -      -              (58.3)    (.27)
 2012 Non-GAAP Measure              $ 374.7    16.0%        $ 281.3    $ 1.31
 Change Non-GAAP Measure            $ 15.0     (30bp)      $ 8.0      $ .06
 % Change Non-GAAP Measure            4%                     3%        5%
 ^(a) Operating margin is calculated by dividing operating income by sales.
                                                              FY 2013
 2013 Guidance                                                $5.45-$5.60



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
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  Six Months Ended
                                       31 March            31 March
 (Millions of dollars)                 2013       2012     2013     2012
 Capital expenditures - GAAP basis     $  350.1   $ 419.0  $ 707.1  $ 782.5
 Capital lease expenditures               55.3      47.8     126.7    76.0
 Purchase of noncontrolling interests     .3        -        .3       6.3
 Capital expenditures - Non-GAAP basis $  405.7   $ 466.8  $ 834.1  $ 864.8



                                       FY2013 Forecast FY2012
 Capital expenditures - GAAP basis     $ 1,650-1,750   $ 2,559.8
 Capital lease expenditures               250-350   212.2
 Purchase of noncontrolling interest     -               6.3
 Capital expenditures - Non-GAAP basis $ 1,900-2,100   $ 2,778.3



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    2013        2012        2013        2012
 for share data)
 Sales                           $ 2,484.2   $ 2,344.3   $ 5,046.6   $ 4,665.8
 Cost of sales                     1,813.6     1,715.8     3,713.7     3,438.1
 Selling and administrative        266.6       237.3       534.8       468.4
 Research and development          32.3        29.8        65.6        57.8
 Business restructuring and cost   -           86.8        -           86.8
 reduction plans
 Other income, net                 18.0        13.3        29.6        27.0
 Operating Income                  389.7       287.9       762.1       641.7
 Equity affiliates' income         39.8        35.5        81.2        72.6
 Interest expense                  35.2        29.4        71.0        58.8
 Income from Continuing            394.3       294.0       772.3       655.5
 Operations before Taxes
 Income tax provision              95.8        8.8         188.0       136.2
 Income from Continuing            298.5       285.2       584.3       519.3
 Operations
 Income from Discontinued          1.1         17.0        2.5         39.2
 Operations, net of tax
 Net Income                        299.6       302.2       586.8       558.5
 Less: Net Income Attributable     9.2         6.2         18.1        14.4
 to Noncontrolling Interests
 Net Income Attributable to Air  $ 290.4     $ 296.0     $ 568.7     $ 544.1
 Products
 Net Income Attributable to Air
 Products
 Income from continuing          $ 289.3     $ 279.0     $ 566.2     $ 504.9
 operations
 Income from discontinued          1.1         17.0        2.5         39.2
 operations
 Net Income Attributable to Air  $ 290.4     $ 296.0     $ 568.7     $ 544.1
 Products
 Basic Earnings Per Common Share
 Attributable to Air Products
 Income from continuing          $ 1.38      $ 1.32      $ 2.71      $ 2.39
 operations
 Income from discontinued          .01         .08         .01         .19
 operations
 Net Income Attributable to Air  $ 1.39      $ 1.40      $ 2.72      $ 2.58
 Products
 Diluted Earnings Per Common
 Share Attributable to Air
 Products
 Income from continuing          $ 1.37      $ 1.30      $ 2.67      $ 2.36
 operations
 Income from discontinued          .01         .08         .01         .18
 operations
 Net Income Attributable to Air  $ 1.38      $ 1.38      $ 2.68      $ 2.54
 Products
 Weighted Average Common Shares-   208.4       211.1       209.2       210.7
 Basic (in millions)
 Weighted Average Common Shares-   211.0       215.0       211.8       214.5
 Diluted (in millions)
 Dividends Declared Per Common   $ .71       $ .64       $ 1.35      $ 1.22
 Share – Cash
 Other Data from Continuing
 Operations
    Depreciation and             $ 226.2     $ 205.3     $ 444.7     $ 408.3
    amortization
    Capital expenditures on a      405.7       466.8       834.1       864.8
    Non-GAAP basis
          (see reconciliation
          table)



AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                     31 March     30 September
 (Millions of dollars)                                2013          2012
 Assets
 Current Assets
 Cash and cash items                                  $ 401.6       $ 454.4
 Trade receivables, net                                 1,519.4       1,544.7
 Inventories                                            728.1         786.6
 Contracts in progress, less progress billings          229.3         190.8
 Prepaid expenses                                       100.1         81.7
 Other receivables and current assets                   387.6         342.0
 Current assets of discontinued operations              13.1          15.6
 Total Current Assets                                   3,379.2       3,415.8
 Investment in net assets of and advances to equity     1,198.2       1,175.7
 affiliates
 Plant and equipment, at cost                           18,549.6      18,046.2
 Less: accumulated depreciation                         10,060.8      9,805.6
 Plant and equipment, net                               8,488.8       8,240.6
 Goodwill                                               1,595.7       1,598.4
 Intangible assets, net                                 734.3         761.6
 Noncurrent capital lease receivables                   1,429.4       1,328.9
 Other noncurrent assets                                373.3         393.6
 Noncurrent assets of discontinued operations           22.3          27.2
 Total Noncurrent Assets                                13,842.0      13,526.0
 Total Assets                                         $ 17,221.2    $ 16,941.8
 Liabilities and Equity
 Current Liabilities
 Payables and accrued liabilities                     $ 1,823.0     $ 1,927.7
 Accrued income taxes                                   56.9          48.5
 Short-term borrowings                                  1,239.8       633.4
 Current portion of long-term debt                      96.7          74.3
 Current liabilities of discontinued operations         5.2           6.0
 Total Current Liabilities                              3,221.6       2,689.9
 Long-term debt                                         4,644.7       4,584.2
 Other noncurrent liabilities                           1,723.5       1,980.9
 Deferred income taxes                                  715.3         670.8
 Noncurrent liabilities of discontinued operations      -             .2
 Total Noncurrent Liabilities                           7,083.5       7,236.1
 Total Liabilities                                      10,305.1      9,926.0
 Redeemable Noncontrolling Interest                     398.7         392.5
 Air Products Shareholders' Equity                      6,365.5       6,477.2
 Noncontrolling Interests                               151.9         146.1
 Total Equity                                           6,517.4       6,623.3
 Total Liabilities and Equity                         $ 17,221.2    $ 16,941.8



AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                        Six Months Ended
                                                        31 March
 (Millions of dollars)                                  2013        2012
 Operating Activities
 Net Income                                             $ 586.8      $ 558.5
 Less: Net income attributable to noncontrolling          18.1       14.4
 interests
 Net income attributable to Air Products                $ 568.7      $ 544.1
 Income from discontinued operations                      (2.5)       (39.2)
 Income from continuing operations attributable to Air  $ 566.2      $ 504.9
 Products
 Adjustments to reconcile income to cash provided by
 operating activities:
          Depreciation and amortization                   444.7      408.3
          Deferred income taxes                           32.8       53.1
          Benefit from Spanish tax ruling                 -          (58.3)
          Undistributed earnings of unconsolidated        (26.3)      (25.0)
          affiliates
          Share-based compensation                        22.4       27.4
          Noncurrent capital lease receivables            (123.2)     (109.9)
          Other adjustments                               92.9       66.4
 Working capital changes that provided (used) cash,
 excluding effects of acquisitions and divestitures:
          Trade receivables                               17.8       (13.9)
          Inventories                                     53.1       (19.9)
          Contracts in progress, less progress billings   (41.4)      (1.9)
          Other receivables                               (55.7)      14.2
          Payables and accrued liabilities                (150.3)     5.9
          Other working capital                           4.1        (96.7)
 Pension plan contributions                               (238.9)     (23.4)
 Cash Provided by Operating Activities                    598.2      731.2
 Additions to plant and equipment                         (707.3)     (734.9)
 Acquisitions, less cash acquired                         -          (26.4)
 Investment in and advances to unconsolidated             .2         (21.2)
 affiliates
 Proceeds from sale of assets and investments             6.4        12.5
 Change in restricted cash                                -          6.4
 Other investing activities                               (1.5)       -
 Cash Used for Investing Activities                       (702.2)     (763.6)
 Long-term debt proceeds                                  504.0      400.1
 Payments on long-term debt                               (392.0)     (8.6)
 Net increase (decrease) in commercial paper and          604.4      (190.2)
 short-term borrowings
 Dividends paid to shareholders                           (268.9)     (244.1)
 Purchase of treasury shares                              (461.6)     (53.1)
 Proceeds from stock option exercises                     62.7       75.9
 Excess tax benefit from share-based compensation         14.3       18.5
 Payment for subsidiary shares from noncontrolling        (.3)        (58.4)
 interests
 Other financing activities                               (19.9)      (13.2)
 Cash Provided by (Used for) Financing Activities         42.7       (73.1)
 Cash provided by operating activities                    9.8        20.0
 Cash used for investing activities                       (.9)        (7.7)
 Cash provided by financing activities                    -          -
 Cash Provided by Discontinued Operations                 8.9        12.3
 Effect of Exchange Rate Changes on Cash                  (.4)        3.7
 Increase (Decrease) in Cash and Cash Items               (52.8)      (89.5)
 Cash and Cash Items – Beginning of Year                  454.4      422.5
 Cash and Cash Items – End of Period                      401.6      333.0
 Less: Cash and Cash Items – Discontinued Operations      -          13.5
 Cash and Cash Items – Continuing Operations            $ 401.6      $ 319.5



AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
(Unaudited)
                                 Three Months Ended      Six Months Ended
                                 31 March                31 March
 (Millions of dollars)           2013       2012        2013        2012
 Sales to External Customers
   Merchant Gases                $ 1,003.2   $ 883.6     $ 2,012.3   $ 1,771.3
   Tonnage Gases                   808.5     783.5       1,706.9     1,593.3
   Electronics and Performance     548.8     567.0       1,097.8     1,102.2
   Materials
   Equipment and Energy            123.7     110.2       229.6       199.0
 Segment and Consolidated Totals $ 2,484.2   $ 2,344.3   $ 5,046.6   $ 4,665.8
 Operating Income
   Merchant Gases                $ 168.1     $ 152.5     $ 339.1     $ 318.8
   Tonnage Gases                   123.2     125.4       261.3       236.8
   Electronics and Performance     77.5      85.5        138.8       163.6
   Materials
   Equipment and Energy            20.6      9.8         29.0        17.1
 Segment Total                   $ 389.4     $ 373.2     $ 768.2     $ 736.3
   Business restructuring and      -         (86.8)      -           (86.8)
   cost reduction plans
   Other                           .3        1.5         (6.1)       (7.8)
 Consolidated Total              $ 389.7     $ 287.9     $ 762.1     $ 641.7



                                   31 March               30 September
 (Millions of dollars)                 2013                  2012
 Identifiable Assets ^(A)
       Merchant Gases                  $   6,512.2            $   6,428.5
       Tonnage Gases                       5,221.4              5,059.8
       Electronics and Performance         2,874.4              2,930.3
       Materials
       Equipment and Energy                472.0                379.3
 Segment Total                         $   15,080.0           $   14,797.9
       Other                               907.6                925.4
       Discontinued operations             35.4                 42.8
 Consolidated Total                    $   16,023.0           $   15,766.1
 ^(A) Identifiable assets are equal to total assets less investment in net
 assets of and advances to equity affiliates.





SOURCE Air Products

Website: http://www.airproducts.com
Contact: Media Inquiries, George Noon, tel: (610) 481-1990; e-mail:
noong@airproducts.com or Investor Inquiries, Simon Moore, tel: (610) 481-7461;
e-mail: mooresr@airproducts.com
 
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