Air Products Reports First Quarter Fiscal 2014 Financial Results

       Air Products Reports First Quarter Fiscal 2014 Financial Results

First Quarter Highlights

- EPS from continuing operations of $1.34 up three percent versus prior year

- Major plants onstream in China for XLX and Samsung

- Signed significant LNG project in Arctic Russia

PR Newswire

LEHIGH VALLEY, Pa., Jan. 28, 2014

LEHIGH VALLEY, Pa., Jan. 28, 2014 /PRNewswire/ --Air Products (NYSE: APD)
today reported first quarter results with strong performance in Electronics
and Performance Materials, and Equipment and Energy. For the quarter ended
December 31, 2013, net income was $287 million, up four percent, and diluted
earnings per share (EPS) was $1.34, an increase of three percent, compared
with results for the first quarter of 2013.

First quarter sales of $2,546 million decreased one percent versus prior year
on slightly lower volumes and stable pricing, partially offset by higher
energy pass-through. Volumes were higher in Merchant Gases, Electronics and
Performance Materials, and Equipment and Energy, while refinery customer
outages impacted volumes in the Tonnage Gases segment. Underlying sales,
excluding the exit from the Polyurethane Intermediates Business (PUI),
decreased one percent.

Prior quarter results are on a non-GAAP, continuing operations basis. A
reconciliation to GAAP results can be found at the end of this release.*

Sequentially, sales decreased two percent, with underlying sales down three
percent mainly due to seasonality in Merchant Gases, and Electronics and
Performance Materials, and outages. Operating income of $386 million increased
four percent versus prior year on strong results in Electronics and
Performance Materials, and Equipment and Energy, and operating margin of 15.1
percent was up 60 basis points. Sequentially, operating income was down eight
percent and margin declined 120 basis points primarily due to seasonal volumes
and higher costs driven by Tonnage Gases maintenance outages.

Commenting on the quarter, John McGlade, chairman, president and chief
executive officer, said, "We continue to execute against our 2014 priorities
to deliver even greater value for our shareholders. In the first quarter, our
cost reduction efforts contributed to higher operating income, further strong
signings improved asset loadings, and we continued to execute on our strong
backlog, bringing on major new plants in China."

First Quarter Results by Business Segment:

  oMerchant Gases sales of $1,048 million increased four percent versus prior
    year on higher volumes. Liquid oxygen, nitrogen and argon volumes were up
    in all regions, partially offset by weaker packaged gases demand in Europe
    and lower helium volumes due to global supply constraints. Operating
    income of $169 million decreased one percent versus prior year, with the
    positive impact from higher volumes more than offset by under-recovery of
    higher power and fuel costs. Sequentially, sales decreased one percent on
    lower seasonal volumes in U.S./Canada and helium availability. Operating
    income decreased four percent sequentially due to the lower volumes.

  oTonnage Gases sales of $808 million decreased ten percent versus last year
    as continued strong demand in the U.S. Gulf Coast was more than offset by
    plant outages and lower Latin America volumes. Lower PUI volumes impacted
    sales by three percent and energy pass-through and currency were positive.
    Sales decreased sequentially by three percent primarily on lower volumes
    due to the outages. Operating income of $118 million was down 15 percent
    versus prior year and 13 percent sequentially, primarily due to lower
    volumes and costs from the outages.

  oElectronics and Performance Materials sales of $579 million increased five
    percent versus prior year on six percent higher volumes. Electronics sales
    were up four percent, driven by higher equipment and onsite sales, and
    Performance Materials was up eight percent with all product lines and all
    major regions showing positive growth. Operating income of $84 million
    increased 36 percent versus prior year and operating margin improved 320
    basis points on the stronger volumes and good cost performance from our
    business restructuring and cost savings programs. Sequentially, sales were
    unchanged with currency offsetting lower volumes. Operating income
    decreased 13 percent and operating margin was down 210 basis points,
    primarily due to inventory revaluation.

  oEquipment and Energy sales of $111 million increased four percent versus
    prior year and were down six percent sequentially. Operating income of $21
    million was unchanged sequentially and up 144 percent versus prior year
    driven by LNG projects. The sales backlog of $343 million decreased 12
    percent versus prior year and 15 percent versus last quarter.
    Additionally, the company confirmed that it will supply technology and
    equipment for Russia's largest LNG production and exports facility.

Outlook

Air Products expects second quarter EPS from continuing operations to be
between $1.32 and $1.37 per share. The company's guidance for continuing
operations for fiscal 2014 is a range of $5.70 to $5.90 per share.

Looking ahead, McGlade said, "We still see greater momentum in the second half
of the year. Full year performance remains on track and we expect to drive
earnings growth by continuing to focus on our priorities -- improved asset
utilization, productivity and cost reduction, winning in the marketplace and
disciplined project execution."

Access the Q1 earnings teleconference scheduled for 10:00 a.m. Eastern Time on
January 28 by calling 719-325-2482 and entering pass code 6987687, 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. Recognized as one of the world's most innovative companies by
both Thomson Reuters and Forbes magazine, more than 21,000 employees in over
50 countries supply effective 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 2013, Air Products had sales of $10.2 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, weakening or
reversal of global or regional economic recovery; future financial and
operating performance of major customers; unanticipated contract terminations
or customer cancellations or postponement of projects and sales; the impact of
competitive products and pricing; unexpected changes in raw material supply
and markets including helium; the impact of price fluctuations in natural gas;
unanticipated asset impairments or losses; the ability to recover
unanticipated increased energy and raw material costs from customers; costs
and outcomes of litigation or regulatory investigations; the impact of
management and organizational changes, including the chief executive officer
search; 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;
political risks, including the risks of unanticipated government actions that
may result in project delays, cancellations or expropriations; the impact of
changes in environmental, tax or other legislation and regulatory activities
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, 2013. 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
                       Operating      Operating                      Diluted
^2014 Q1 vs. 2013     Income         Margin          Income         EPS
Q4
^2014 Q1 GAAP         $  385.6         15.1%         $  287.1       $  1.34
^2013 Q4 GAAP            179.2         6.9%             150.2          .70
^Change GAAP          $  206.4         820bp        $  136.9       $  .64
^% Change GAAP           115%                           91%            91%
^2014 Q1 GAAP         $  385.6         15.1%         $  287.1       $  1.34
^2014 Q1 Non-GAAP     $  385.6         15.1%         $  287.1       $  1.34
Measure
^2013 Q4 GAAP         $  179.2         6.9%          $  150.2       $  .70
^Business
restructuring and         231.6         9.0%             157.9          .74
cost reduction
plans
^Advisory costs          10.1          .4%              6.4            .03
^2013 Q4 Non-GAAP     $  420.9         16.3%         $  314.5       $  1.47
Measure
^Change Non-GAAP      $  (35.3)        (120bp)      $  (27.4)      $  (.13)
Measure
^% Change                (8)%                           (9)%           (9)%
Non-GAAP Measure



Capital Expenditures
We utilize a non-GAAP measure in the computation of capital expenditures and
include spending associated with facilities accounted for as capital leases.
Certain contracts associated with facilities that are built to provide product
to a specific customer are required to be accounted for as leases and such
spending is reflected as a use of cash within cash provided by operating
activities, if the arrangement qualifies as a capital lease.
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                              2013                2012
dollars)
Capital
expenditures -                            $    391.1          $      357.0
GAAP basis
Capital lease                                  48.1                  71.4
expenditures
Capital
expenditures -                            $    439.2          $      428.4
Non-GAAP basis
                                                        FY2014 Forecast
Capital
expenditures -                                          $     1,800-1,900
GAAP basis
Capital lease                                                 100-200
expenditures
Capital
expenditures -                                          $     1,900-2,100
Non-GAAP basis



AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
                                                         Three Months Ended
                                                         31 December
 (Millions of dollars, except for share data)            2013        2012
 Sales                                                   $ 2,545.5   $ 2,562.4
 Cost of sales                                             1,865.9     1,900.1
 Selling and administrative                                280.9       268.2
 Research and development                                  33.5        33.3
 Other income (expense), net                               20.4        11.6
 Operating Income                                          385.6       372.4
 Equity affiliates' income                                 38.2        41.4
 Interest expense                                          33.3        35.8
 Income from Continuing Operations before Taxes            390.5       378.0
 Income tax provision                                      94.5        92.2
 Income from Continuing Operations                         296.0       285.8
 Income from Discontinued Operations, net of tax           3.1         1.4
 Net Income                                                299.1       287.2
 Less: Net Income Attributable to Noncontrolling           8.9         8.9
 Interests
 Net Income Attributable to Air Products                 $ 290.2     $ 278.3
 Net Income Attributable to Air Products
 Income from continuing operations                       $ 287.1     $ 276.9
 Income from discontinued operations                       3.1         1.4
 Net Income Attributable to Air Products                 $ 290.2     $ 278.3
 Basic Earnings Per Common Share Attributable to Air
 Products
 Income from continuing operations                       $ 1.36      $ 1.32
 Income from discontinued operations                       .01         .01
 Net Income Attributable to Air Products                 $ 1.37      $ 1.33
 Diluted Earnings Per Common Share Attributable to Air
 Products
 Income from continuing operations                       $ 1.34      $ 1.30
 Income from discontinued operations                       .01         .01
 Net Income Attributable to Air Products                 $ 1.35      $ 1.31
 Weighted Average Common Shares- Basic (in millions)       211.8       210.0
 Weighted Average Common Shares- Diluted (in millions)     214.3       212.6
 Dividends Declared Per Common Share – Cash              $ .71       $ .64
 Other Data from Continuing Operations
        Depreciation and amortization                    $ 234.2     $ 218.5
        Capital expenditures on a Non-GAAP basis           439.2       428.4
                 (see page 4 for reconciliation)



AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                    31 December   30 September
 (Millions of dollars)                              2013          2013
 Assets
 Current Assets
 Cash and cash items                                $  387.6      $  450.4
 Trade receivables, net                                1,561.2       1,544.3
 Inventories                                           693.4         706.1
 Contracts in progress, less progress billings         152.0         182.3
 Prepaid expenses                                      119.7         121.1
 Other receivables and current assets                  416.2         432.4
 Current assets of discontinued operations             -             2.5
 Total Current Assets                                  3,330.1       3,439.1
 Investment in net assets of and advances to           1,212.7       1,195.5
 equity affiliates
 Plant and equipment, at cost                          19,864.8      19,529.9
 Less: accumulated depreciation                        10,712.8      10,555.9
 Plant and equipment, net                              9,152.0       8,974.0
 Goodwill                                              1,642.9       1,653.8
 Intangible assets, net                                700.5         717.3
 Noncurrent capital lease receivables                  1,478.1       1,476.9
 Other noncurrent assets                               398.9         393.5
 Total Noncurrent Assets                               14,585.1      14,411.0
 Total Assets                                       $  17,915.2   $  17,850.1
 Liabilities and Equity
 Current Liabilities
 Payables and accrued liabilities                   $  1,921.4    $  1,944.9
 Accrued income taxes                                  76.3          63.0
 Short-term borrowings                                 1,030.5       709.9
 Current portion of long-term debt                     117.0         507.4
 Current liabilities of discontinued operations        -             2.4
 Total Current Liabilities                             3,145.2       3,227.6
 Long-term debt                                        5,020.8       5,056.3
 Other noncurrent liabilities                          1,136.2       1,164.3
 Deferred income taxes                                 831.6         827.2
 Total Noncurrent Liabilities                          6,988.6       7,047.8
 Total Liabilities                                     10,133.8      10,275.4
 Redeemable Noncontrolling Interest                    358.7         375.8
 Air Products Shareholders' Equity                     7,264.0       7,042.1
 Noncontrolling Interests                              158.7         156.8
 Total Equity                                          7,422.7       7,198.9
 Total Liabilities and Equity                       $  17,915.2   $  17,850.1



AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
                                                          Three Months Ended
                                                          31 December
^(Millions of dollars)                                   2013       2012
^Operating Activities
^Net Income                                              $ 299.1    $ 287.2
^Less: Net income attributable to noncontrolling           8.9        8.9
interests
^Net income attributable to Air Products                   290.2      278.3
^Income from discontinued operations                       (3.1)      (1.4)
^Income from continuing operations attributable to Air     287.1      276.9
Products
^Adjustments to reconcile income to cash provided by
operating activities:
          Depreciation and amortization                     234.2      218.5
          Deferred income taxes                             33.0       37.4
          Share-based compensation                          11.8       10.1
          Noncurrent capital lease receivables              (10.0)     (93.4)
          Other adjustments                                 14.2       (169.2)
^Working capital changes that provided (used) cash,
excluding effects of acquisitions and divestitures:
          Trade receivables                                 (17.7)     51.0
          Inventories                                       11.9       42.5
          Contracts in progress, less progress billings     32.6       (22.3)
          Other receivables                                 (.9)       (64.4)
          Payables and accrued liabilities                  (65.2)     7.3
          Other working capital                             15.2       (16.0)
^Cash Provided by Operating Activities                     546.2      278.4
^Investing Activities
^Additions to plant and equipment                          (391.1)    (357.0)
^Proceeds from sale of assets and investments              5.5        2.8
^Other investing activities                                -          (1.6)
^Cash Used for Investing Activities                        (385.6)    (355.8)
^Financing Activities
^Long-term debt proceeds                                   1.4        77.3
^Payments on long-term debt                                (434.0)    (65.0)
^Net increase in commercial paper and short-term           339.1      709.1
borrowings
^Dividends paid to shareholders                            (149.9)    (136.0)
^Purchase of treasury shares                               -          (461.6)
^Proceeds from stock option exercises                      19.9       27.0
^Excess tax benefit from share-based compensation          4.1        8.1
^Other financing activities                                (18.8)     (1.8)
^Cash (Used for) Provided by Financing Activities          (238.2)    157.1
^Discontinued Operations
^Cash provided by operating activities                     .7         5.2
^Cash provided by (used for) investing activities          9.8        (.8)
^Cash provided by financing activities                     -          -
^Cash Provided by Discontinued Operations                  10.5       4.4
^Effect of Exchange Rate Changes on Cash                   4.3        7.1
^(Decrease) Increase in Cash and Cash Items                (62.8)     91.2
^Cash and Cash Items – Beginning of Year                   450.4      454.4
^Cash and Cash Items – End of Period                     $ 387.6    $ 545.6



AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
SUMMARY BY BUSINESS SEGMENTS
(Unaudited)
                                     Three Months Ended
                                     31 December
 ^(Millions of dollars)             2013                  2012
 ^Sales to External Customers
         Merchant Gases              $    1,047.7          $    1,009.1
         Tonnage Gases                    808.1                 898.4
         Electronics and                  579.1                 549.0
         Performance Materials
         Equipment and Energy             110.6                 105.9
 ^Segment and Consolidated          $    2,545.5          $    2,562.4
 Totals
 ^Operating Income
         Merchant Gases              $    169.2            $    171.0
         Tonnage Gases                    117.6                 138.1
         Electronics and                  83.5                  61.3
         Performance Materials
         Equipment and Energy             20.5                  8.4
 ^Segment Total                     $    390.8            $    378.8
         Other                            (5.2)                 (6.4)
 ^Consolidated Total                $    385.6            $    372.4
                                     31 December           30 September
 ^(Millions of dollars)             2013                  2013
 ^Identifiable Assets ^(A)
         Merchant Gases              $    6,735.1          $    6,729.9
         Tonnage Gases                    5,460.3               5,397.0
         Electronics and                  2,868.9               2,859.4
         Performance Materials
         Equipment and Energy             762.0                 675.2
 ^Segment Total                     $    15,826.3         $    15,661.5
         Other                            876.2                 990.6
         Discontinued operations          -                     2.5
 ^Consolidated Total                $    16,702.5         $    16,654.6
 ^(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; Investor Inquiries: Simon Moore, tel: (610) 481-7461;
email: mooresr@airproducts.com
 
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