July 28, 2004 Lehigh Valley, Pa.
Air Products (NYSE:APD) today reported net income of $163 million or diluted earnings per share (EPS) of $.71 for its third fiscal quarter ended June 30, 2004. Results were up significantly from last year's net income of $27 million or $.12 per share, which included an after-tax charge of $96.6 million or $.43 per share for a global cost reduction plan. Excluding this charge, net income was up 32 percent* and EPS was up 29 percent.* Sequentially, net income and EPS increased 15 percent.
Quarter revenues of $1,893 million were up 16 percent from the prior year on strong Gases volumes including acquisitions in the company's Electronics and Healthcare businesses. Sequentially, revenues increased two percent, as improved Gases volumes were partially offset by lower Chemicals volumes. Operating income of $234 million was up 23 percent* excluding the prior year charge and up 11 percent sequentially, principally driven by volume gains.
John P. Jones, Air Products' chairman and chief executive officer, said, "Our excellent results this quarter demonstrate that our people are executing our strategies. We are very pleased with our Gases performance, which posted strong volume gains delivering operating leverage to our bottom line. Also, for the second quarter in a row, our return on capital improved."
Gases segment sales of $1,338 million increased 18 percent over the prior year on higher volumes across the businesses. Record operating income of $213 million increased 26 percent* excluding the prior year charge. These results were generated by higher volumes in the company's Energy and Process Industries, Electronics, and Asian gas businesses. Volumes in both the North American and European merchant gas businesses also benefited from a pickup in manufacturing activity in these regions.
Chemicals segment sales of $453 million were up eight percent versus the prior year, primarily on volume growth in the company's Performance Materials business. Operating income of $30 million increased three percent excluding the prior year charge*, as positive volumes were largely offset by higher manufacturing costs.
Equipment segment revenues of $102 million increased over the prior year on higher air separation plant sales. Operating income of $5 million increased on higher air separation and liquefied natural gas (LNG) heat exchanger activity. Within the quarter, the company received its third LNG heat exchanger order for the fiscal year.
Looking forward, Mr. Jones said, "Our outlook for the year is now $2.60 to $2.65—the top end of our original guidance for the year. We are encouraged by our strong performance this quarter and the positive trends we are seeing in our markets. For example, within the last month, we announced new contracts supplying hydrogen to four major North American refineries and a doubling of our liquid capacity in southern China to support our leadership position there."
He continued, "Our highest priority is improving our return on capital. Our strong cash flow, growth platforms, operating leverage and productivity investments will deliver for our shareholders."
Air Products will continue to drive portfolio management and cost reduction actions similar to prior years. Upfront costs associated with such actions could reduce Air Products' projected earnings for the current fiscal year.
Air Products (NYSE:APD) serves customers in technology, energy, healthcare and industrial markets worldwide with a unique portfolio of products, services and solutions, providing atmospheric gases, process and specialty gases, performance materials and chemical intermediates. Founded in 1940, Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives. The company is recognized for its innovative culture, operational excellence and commitment to safety and the environment. With annual revenues of $6.3 billion and operations in over 30 countries, the company's 18,500 employees build lasting relationships with their customers and communities based on understanding, integrity and passion. For more information, visit www.airproducts.com.
NOTE: The forward-looking statements contained in this presentation are based on current expectations regarding important risk factors. Actual results may differ materially from those expressed. Factors that might cause forward-looking statements to differ materially from actual results include, among other things, overall economic and business conditions different than those currently anticipated and demand for Air Products' goods and services; competitive factors in the industries in which it competes; interruption in ordinary sources of supply; the ability to recover unanticipated increased energy and raw material costs from customers; uninsured litigation judgments or settlements; spikes in the pricing of natural gas; changes in government regulations; consequences of acts of war or terrorism impacting the United States' and other markets; charges related to currently unplanned portfolio management and cost reduction actions; the success of implementing cost reduction 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 tax and other legislation and regulations in jurisdictions in which Air Products and its affiliates operate; and the timing and rate at which tax credits can be utilized.
*This press release contains non-GAAP measures, which exclude the impact of the 2003 global cost reduction plan charge. The presentation of these non-GAAP measures is intended to enhance the usefulness of financial information by providing measures which are indicators of the company's baseline performance. The company's management uses these non-GAAP measures internally to evaluate its business and as a basis for forecasting future periods.
The table below presents a reconciliation of GAAP measures to non-GAAP measures:
|(Millions of dollars, except per share)|
||2003 Global Cost Reduction Plan Charge
||Q3FY'04 vs. Q3FY'03 Non-GAAP
||Q3FY'04 vs. Q3FY'03 GAAP|
View entire earnings release with all financial tables. (40 KB)