Air Products Reports Fiscal Q3 Financial Results

               Air Products Reports Fiscal Q3 Financial Results

Third Quarter Summary

- Sales of $2.5 billion up nine percent versus prior year

- EPS of $1.36 on a continuing operations basis

- Announced two new LNG heat exchanger orders including first in U.S.

- EPCO acquisition enhances North America Merchant Gases

PR Newswire

LEHIGH VALLEY, Pa., July 23, 2013

LEHIGH VALLEY, Pa., July 23, 2013 /PRNewswire/ --Air Products (NYSE: APD)
today reported net income of $288 million and diluted earnings per share (EPS)
of $1.36, on a continuing operations basis, for its fiscal third quarter ended
June 30, 2013, down five* percent and four* percent respectively versus prior
year.

The discussion of third quarter results and guidance in this release is based
on non-GAAP continuing operations. A reconciliation to GAAP results can be
found on pages four and five of this release.*

Third quarter revenues of $2,547 million increased nine percent versus prior
year, with underlying sales down two percent due to the previously announced
decision to exit the Polyurethane Intermediates (PUI) business. Acquisitions
contributed six percent, and higher energy cost pass-through increased sales
five percent. Operating income of $383 million decreased three percent versus
prior year. Operating margin of 15 percent was down 200 basis points versus
prior year, primarily on higher pension costs, higher energy pass-through,
acquisitions and under-recovery of higher power costs in Merchant Gases.

Sequential sales increased three percent, primarily due to seasonally stronger
volumes in Merchant Gases and Performance Materials. Operating income declined
two percent sequentially on higher Merchant costs and pension costs.

Commenting on the third quarter, John McGlade, chairman, president and chief
executive officer, said, "Productivity and solid execution offset continued
economic weakness, enabling us to deliver earnings within guidance. We remain
focused on delivering on our commitments and executing on our $3 billion
backlog―and we expect these projects to be immediately accretive to earnings
and cash flow as they come online. As stated previously, we are actively
assessing additional actions that we can take that would result in increased
value to our shareholders. While our review continues, we have already
identified further actions we expect to take to improve margins and returns."

  oMerchant Gases sales of $1,033 million increased 18 percent versus the
    prior year on stronger volumes and the Indura acquisition. Underlying
    sales increased two percent, primarily in the U.S. and Canada. Operating
    income of $165 million was flat versus prior year, with Indura profits and
    the higher volumes offset by higher pension costs and under-recovery of
    higher power costs. Sequentially, sales increased three percent as
    stronger volumes more than offset the effect of unfavorable currency.
    Operating income was down two percent sequentially, primarily on higher
    costs.
  oTonnage Gases sales of $846 million increased ten percent versus the prior
    year on higher energy pass-through, partially offset by lower PUI volumes.
    Operating income of $120 million decreased 11 percent versus prior year
    and was down two percent, excluding PUI, mainly due to planned maintenance
    costs due to scheduled customer outages. Sequential sales increased five
    percent due to higher energy pass-through. Sequential operating income was
    flat, excluding PUI, with bonus reliability payment timing offset by lower
    overhead costs.
  oElectronics and Performance Materials sales of $566 million declined six
    percent versus prior year, primarily due to lower Electronics process
    materials volumes and equipment sales. Operating income of $87 million
    decreased four percent versus prior year on lower Electronics volumes and
    Performance Materials price and product mix. Sequential sales increased
    three percent primarily on higher volumes. Sequential operating income
    increased 12 percent, largely on higher volumes in Electronics materials
    and Performance Materials.
  oEquipment and Energy sales of $104 million increased nine percent versus
    prior year, primarily due to higher LNG project activity. Operating income
    of $16 million was up 63 percent versus prior year on the higher LNG
    project activity and lower development spending. Sequentially, sales
    decreased 16 percent and operating income declined 22 percent due to lower
    project activity. The sales backlog of $327 million is unchanged versus
    prior quarter.

Outlook

Looking ahead, McGlade said, "While our outlook for the remainder of our
fiscal year continues to be tempered by the modest economic growth, our focus
on increasing shareholder value remains unwavering. Our emphasis on cost
reduction, productivity improvement and disciplined project execution remain
key priorities. Our future prospects are solid given our record project
backlog and the significant leverage in our existing assets."

Air Products expects fourth quarter adjusted EPS from continuing operations to
be between $1.44 and $1.50 per share. The company's adjusted guidance for
continuing operations for fiscal 2013 is a range of $5.47 to $5.53 per share.

Access the Q3 earnings teleconference scheduled for 10:00 a.m. Eastern Time on
July 23 by calling 719-325-2332 and entering pass code 5859980, 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
investigations; 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 changes in 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)
                                   Q3
                                   Continuing Operations
                                   Operating  Operating              Diluted
                                   Income     Margin ^(a)  Income    EPS
 2013 GAAP                         $  383.1   15.0%        $ 287.8   $ 1.36
 2012 GAAP                            482.8   20.6%          357.2     1.66
 Change GAAP                       $  (99.7)  (560bp)     $ (69.4)  $ (.30)
 % Change GAAP                        (21)%                  (19)%     (18)%
 2013 GAAP                         $  383.1   15.0%        $ 287.8   $ 1.36
 2013 Non-GAAP Measure             $  383.1   15.0%        $ 287.8   $ 1.36
 2012 GAAP                         $  482.8   20.6%        $ 357.2   $ 1.66
 Gain on previously held equity       (85.9)  (3.6)%         (54.6)    (.25)
 interest (tax impact $31.3)
 2012 Non-GAAP Measure             $  396.9   17.0%        $ 302.6   $ 1.41
 Change Non-GAAP Measure           $  (13.8)  (200bp)     $ (14.8)  $ (.05)
 % Change Non-GAAP Measure            (3)%                   (5)%      (4)%
 ^(a) Operating margin is
 calculated by dividing operating
 income by sales.





 ELECTRONICS AND PERFORMANCE MATERIALS    Q3
                                          Operating
                                          Income
 2013 GAAP                                $  86.8
 2012 GAAP                                   176.7
 Change GAAP                              $  (89.9)
 % Change GAAP                               (51)%
 2013 GAAP                                $  86.8
 2013 Non-GAAP Measure                    $  86.8
 2012 GAAP                                $  176.7
 Gain on previously held equity interest     (85.9)
 2012 Non-GAAP Measure                    $  90.8
 Change Non-GAAP Measure                  $  (4.0)
 % Change Non-GAAP Measure                   (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
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  Nine Months Ended
                                     30 June             30 June
 (Millions of dollars)               2013       2012     2013       2012
 Capital expenditures - GAAP basis   $  533.7   $ 733.2  $ 1,240.8  $ 1,515.7
 Capital lease expenditures             52.4      63.9     179.1      139.9
 Purchase of noncontrolling             12.3      -        12.6       6.3
 interests
 Capital expenditures - Non-GAAP     $  598.4   $ 797.1  $ 1,432.5  $ 1,661.9
 basis



                                                    FY2013 Forecast FY2012
 Capital expenditures - GAAP basis                  $  1,650-1,750  $ 2,559.8
 Capital lease expenditures/Purchase of                250-350        218.5
 noncontrolling interests
 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      Nine Months Ended
                               30 June                 30 June
 (Millions of dollars, except  2013        2012        2013        2012
 for share data)
 Sales                         $ 2,547.3   $ 2,340.1   $ 7,593.9   $ 7,005.9
 Cost of sales                   1,875.5     1,690.8     5,589.2     5,128.9
 Selling and administrative      271.3       230.4       806.1       698.8
 Research and development        33.5        32.5        99.1        90.3
 Business restructuring and      -           -           -           86.8
 cost reduction plans
 Gain on previously held         -           85.9        -           85.9
 equity interest
 Other income, net               16.1        10.5        45.7        37.5
 Operating Income                383.1       482.8       1,145.2     1,124.5
 Equity affiliates' income       44.2        41.7        125.4       114.3
 Interest expense                35.4        26.0        106.4       84.8
 Income from Continuing          391.9       498.5       1,164.2     1,154.0
 Operations before Taxes
 Income tax provision            94.1        133.3       282.1       269.5
 Income from Continuing          297.8       365.2       882.1       884.5
 Operations
 Income from Discontinued        .6          127.3       3.1         166.5
 Operations, net of tax
 Net Income                      298.4       492.5       885.2       1,051.0
 Less: Net Income Attributable   10.0        8.0         28.1        22.4
 to Noncontrolling Interests
 Net Income Attributable to    $ 288.4     $ 484.5     $ 857.1     $ 1,028.6
 Air Products
 Net Income Attributable to
 Air Products
 Income from continuing        $ 287.8     $ 357.2     $ 854.0     $ 862.1
 operations
 Income from discontinued        .6          127.3       3.1         166.5
 operations
 Net Income Attributable to    $ 288.4     $ 484.5     $ 857.1     $ 1,028.6
 Air Products
 Basic Earnings Per Common
 Share Attributable to Air
 Products
 Income from continuing        $ 1.38      $ 1.69      $ 4.08      $ 4.08
 operations
 Income from discontinued        -           .60         .02         .79
 operations
 Net Income Attributable to    $ 1.38      $ 2.29      $ 4.10      $ 4.87
 Air Products
 Diluted Earnings Per Common
 Share Attributable to Air
 Products
 Income from continuing        $ 1.36      $ 1.66      $ 4.03      $ 4.02
 operations
 Income from discontinued        -           .60         .01         .77
 operations
 Net Income Attributable to    $ 1.36      $ 2.26      $ 4.04      $ 4.79
 Air Products
 Weighted Average Common         209.4       211.5       209.3       211.0
 Shares- Basic (in millions)
 Weighted Average Common         211.9       214.7       211.9       214.6
 Shares- Diluted (in millions)
 Dividends Declared Per Common $ .71       $ .64       $ 2.06      $ 1.86
 Share – Cash
 Other Data from Continuing
 Operations
    Depreciation and           $ 229.7     $ 212.2     $ 674.4     $ 620.5
    amortization
    Capital expenditures on a    598.4       797.1       1,432.5     1,661.9
    Non-GAAP basis
           (see page 5 for
           reconciliation)





AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                    30 June      30 September
 (Millions of dollars)                               2013         2012
 Assets
 Current Assets
 Cash and cash items                                 $ 418.8      $ 454.4
 Trade receivables, net                                1,616.0      1,544.7
 Inventories                                           705.9        786.6
 Contracts in progress, less progress billings         166.2        190.8
 Prepaid expenses                                      137.1        81.7
 Other receivables and current assets                  428.3        342.0
 Current assets of discontinued operations             8.4          15.6
 Total Current Assets                                  3,480.7      3,415.8
 Investment in net assets of and advances to equity    1,203.3      1,175.7
 affiliates
 Plant and equipment, at cost                          18,867.7     18,046.2
 Less: accumulated depreciation                        10,202.0     9,805.6
 Plant and equipment, net                              8,665.7      8,240.6
 Goodwill                                              1,615.1      1,598.4
 Intangible assets, net                                716.9        761.6
 Noncurrent capital lease receivables                  1,441.9      1,328.9
 Other noncurrent assets                               348.3        393.6
 Noncurrent assets of discontinued operations          19.4         27.2
 Total Noncurrent Assets                               14,010.6     13,526.0
 Total Assets                                        $ 17,491.3   $ 16,941.8
 Liabilities and Equity
 Current Liabilities
 Payables and accrued liabilities                    $ 1,811.0    $ 1,927.7
 Accrued income taxes                                  61.5         48.5
 Short-term borrowings                                 1,406.0      633.4
 Current portion of long-term debt                     76.1         74.3
 Current liabilities of discontinued operations        3.1          6.0
 Total Current Liabilities                             3,357.7      2,689.9
 Long-term debt                                        4,648.2      4,584.2
 Other noncurrent liabilities                          1,707.5      1,980.9
 Deferred income taxes                                 714.7        670.8
 Noncurrent liabilities of discontinued operations     -            .2
 Total Noncurrent Liabilities                          7,070.4      7,236.1
 Total Liabilities                                     10,428.1     9,926.0
 Redeemable Noncontrolling Interest                    371.8        392.5
 Air Products Shareholders' Equity                     6,540.8      6,477.2
 Noncontrolling Interests                              150.6        146.1
 Total Equity                                          6,691.4      6,623.3
 Total Liabilities and Equity                        $ 17,491.3   $ 16,941.8





AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                   Nine Months Ended
                                                   30 June
 (Millions of dollars)                             2013          2012
 Operating Activities
 Net Income                                        $ 885.2       $ 1,051.0
 Less: Net income attributable to noncontrolling     28.1          22.4
 interests
 Net income attributable to Air Products           $ 857.1       $ 1,028.6
 Income from discontinued operations                 (3.1)         (166.5)
 Income from continuing operations attributable to $ 854.0       $ 862.1
 Air Products
 Adjustments to reconcile income to cash provided
 by operating activities:
        Depreciation and amortization                674.4         620.5
        Deferred income taxes                        8.4           113.1
        Benefit from Spanish tax ruling              -             (58.3)
        Gain on previously held equity interest      -             (85.9)
        Undistributed earnings of unconsolidated     (47.6)        (42.8)
        affiliates
        Share-based compensation                     33.0          36.2
        Noncurrent capital lease receivables         (124.2)       (204.1)
        Other adjustments                            161.7         74.4
 Working capital changes that provided (used)
 cash, excluding effects of acquisitions and
 divestitures:
        Trade receivables                            (88.9)        (71.9)
        Inventories                                  68.5          (18.8)
        Contracts in progress, less progress         (3.9)         (16.7)
        billings
        Other receivables                            (65.9)        8.6
        Payables and accrued liabilities             (139.8)       30.0
        Other working capital                        (19.9)        29.8
 Pension plan contributions                          (258.6)       (31.6)
 Cash Provided by Operating Activities               1,051.2       1,244.6
 Investing Activities
 Additions to plant and equipment                    (1,115.4)     (1,166.5)
 Acquisitions, less cash acquired                    (125.6)       (173.8)
 Investment in and advances to unconsolidated        .2            (175.4)
 affiliates
 Proceeds from sale of assets and investments        25.4          13.5
 Change in restricted cash                           -             60.9
 Other investing activities                          (2.8)         -
 Cash Used for Investing Activities                  (1,218.2)     (1,441.3)
 Financing Activities
 Long-term debt proceeds                             522.1         409.6
 Payments on long-term debt                          (415.7)       (477.6)
 Net increase (decrease) in commercial paper and     780.8         (171.5)
 short-term borrowings
 Dividends paid to shareholders                      (416.8)       (379.4)
 Purchase of treasury shares                         (461.6)       (53.1)
 Proceeds from stock option exercises                133.1         88.7
 Excess tax benefit from share-based compensation    24.6          20.2
 Payment for subsidiary shares from noncontrolling   (12.6)        (58.4)
 interests
 Other financing activities                          (28.8)        (16.1)
 Cash Provided by (Used for) Financing Activities    125.1         (637.6)
 Discontinued Operations
 Cash provided by operating activities               13.3          32.1
 Cash (used for) provided by investing activities    (1.2)         766.4
 Cash provided by financing activities               -             -
 Cash Provided by Discontinued Operations            12.1          798.5
 Effect of Exchange Rate Changes on Cash             (5.8)         (25.5)
 Decrease in Cash and Cash Items                     (35.6)        (61.3)
 Cash and Cash Items – Beginning of Year             454.4         422.5
 Cash and Cash Items – End of Period               $ 418.8       $ 361.2





AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
(Unaudited)
                              Three Months Ended       Nine Months Ended
                              30 June                  30 June
 (Millions of dollars)        2013         2012        2013        2012
 Sales to External Customers
      Merchant Gases          $  1,032.5   $ 874.1     $ 3,044.8   $ 2,645.4
      Tonnage Gases              845.5       767.4       2,552.4     2,360.7
      Electronics and            565.7       603.8       1,663.5     1,706.0
      Performance Materials
      Equipment and Energy       103.6       94.8        333.2       293.8
 Segment and Consolidated     $  2,547.3   $ 2,340.1   $ 7,593.9   $ 7,005.9
 Totals
 Operating Income
      Merchant Gases          $  164.9     $ 164.6     $ 504.0     $ 483.4
      Tonnage Gases              119.9       134.3       381.2       371.1
      Electronics and
      Performance Materials      86.8        176.7       225.6       340.3
      ^(A)
      Equipment and Energy       16.0        9.8         45.0        26.9
 Segment Total                $  387.6     $ 485.4     $ 1,155.8   $ 1,221.7
      Business restructuring
      and cost reduction         -           -           -           (86.8)
      plans
      Other                      (4.5)       (2.6)       (10.6)      (10.4)
 Consolidated Total           $  383.1     $ 482.8     $ 1,145.2   $ 1,124.5
 ^(A) The gain on remeasuring our previously held equity interest in DA
      NanoMaterials is reflected in 2012.



                                   30 June                30 September
 (Millions of dollars)                 2013                  2012
 Identifiable Assets ^(B)
       Merchant Gases                  $    6,598.5          $   6,428.5
       Tonnage Gases                        5,241.7              5,059.8
       Electronics and Performance          2,874.9              2,930.3
       Materials
       Equipment and Energy                 575.6                379.3
 Segment Total                         $    15,290.7         $   14,797.9
       Other                                969.5                925.4
       Discontinued operations              27.8                 42.8
 Consolidated Total                    $    16,288.0         $   15,766.1
 ^(B) Identifiable assets are equal to total assets less investment in net
 assets of and advances to equity affiliates.



AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)

1. BUSINESS COMBINATIONS
On 31 May 2013, we acquired EPCO Carbondioxide Products, Inc., the largest
independent U.S. producer of liquid carbon dioxide (CO[2]). This acquisition
expands our North American offerings of bulk industrial process gases. In
addition, we acquired Wuxi Chem-Gas Company, Ltd. on 1 April 2013. This
acquisition provides us with additional gases presence in the Jiangsu Province
of China. The acquisitions were accounted for as business combinations, and
their results of operations were consolidated within the Merchant Gases
business segment after the acquisition dates. The aggregate purchase price,
net of cash acquired, for these acquisitions was $134.

SOURCE Air Products

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