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News ReleaseAir Products Reports Fiscal Q4 EPS from Continuing Operations

October 21, 2009 Lehigh Valley, Pa.

Highlights:

  • Sales grew eight percent sequentially on volume growth in all businesses
  • Signed three significant Tonnage contracts in the quarter
  • Completed U.S. Healthcare business divestiture
  • Fiscal 2010 outlook: 15 to 21 percent earnings growth on a continuing operations basis

Air Products today reported income from continuing operations of $246 million, or diluted earnings per share (EPS) of $1.14, for its fiscal 2009 fourth quarter versus $273 million and $1.26, respectively, for the fourth quarter of fiscal 2008.

Fourth quarter revenues of $2,129 million declined 22 percent versus prior year. Lower energy and raw material cost pass-throughs and unfavorable currency impacted sales by 12 percent and three percent, respectively. Underlying sales declined seven percent on lower volumes in the Merchant Gases and Electronic and Performance Materials segments, and lower pricing in Electronics and Performance Materials. Sequentially, sales were up eight percent, seven percent on an underlying basis. Operating income of $328 million declined 12 percent on lower volumes and unfavorable currency, partially offset by cost reduction actions. Sequentially, operating income increased seven percent, primarily on improved volumes.

The following discussion of full year results and guidance in this release is based on non-GAAP comparisons. A reconciliation can be found at the end of this release.

For fiscal 2009, sales of $8,256 million declined 21 percent on lower volumes, lower energy and raw material cost pass-throughs and unfavorable currency. Underlying sales declined eight percent. Operating income of $1,185 million was down 22 percent, and diluted EPS of $4.06 declined 20 percent from the prior year.

John McGlade, chairman, president and chief executive officer, said, “The beginning of our fiscal 2009 coincided with the start of the global financial crisis, driving the recession that resulted in unprecedented declines in demand for our products worldwide. While this affected our fiscal year results, we were able to offset some of the decline with aggressive cost controls. Sequentially, we are seeing volume improvement in all our businesses, and our actions to move to a sustainable, low-cost structure have positioned us to capitalize on growth as our markets recover.”

Fourth Quarter Segment Performance

  • Merchant Gases sales of $932 million declined 15 percent from the prior year on weaker volumes across manufacturing end-markets globally and unfavorable currency, partially offset by favorable pricing. Sequentially, sales increased six percent on three percent higher volumes from improved demand in most geographies. Operating income of $166 million declined 16 percent from the prior year on lower volumes and unfavorable currency, partially offset by favorable pricing.
  • Tonnage Gases sales of $640 million were down 32 percent from the prior year on lower energy and raw material cost pass-throughs. Sales and volumes were up 13 percent sequentially on stronger demand from chemical, refinery and steel customers. Operating income of $105 million decreased 22 percent from the prior year on lower operating efficiencies, and unfavorable currency.
  • Electronics and Performance Materials sales of $434 million declined 22 percent, primarily on lower volumes and Electronics pricing. Operating income of $49 million increased 17 percent from the prior year as favorable cost performance offset volume declines and lower Electronics pricing. While year-on-year Electronics sales were down 27 percent, sales increased three percent sequentially due to improved customer operating rates. Performance Materials volumes improved nine percent sequentially, reflecting seasonal improvement and stronger Asia sales, but declined 10 percent from the prior year on weaker demand from coatings, autos, housing and other end markets.
  • Equipment and Energy sales of $123 million declined three percent from the prior year. Operating income of $6 million decreased from the prior year on lower sales and higher Energy development costs.

Outlook

Looking forward, McGlade said, “We have implemented the difficult but necessary actions to take advantage of our strong global market positions. Additionally, we see significant future opportunities in the evolving energy, environment, and emerging market sectors. We also continue to drive to a low-cost structure to enable us to grow faster than our competition. While the pace of the recovery is unknown, our people remain committed to achieving our margin, return and growth goals. ”

The company today announced initial guidance for fiscal year 2010 EPS in the range of $4.65 to $4.90 per share, representing year-over-year earnings growth on a continuing operations basis of 15 to 21 percent. For the first quarter of fiscal 2010 ending December 31, 2009, EPS is expected to be between $1.07 and $1.15 per share.

The company also announced that it expects capital spending in fiscal 2010 to be between $1.3 and $1.5 billion, approximately equal to fiscal 2009.

Air Products (NYSE:APD) serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. 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. In fiscal 2009, Air Products had revenues of $8.3 billion, operations in over 40 countries, and 18,900 employees around the globe. For more information, visit www.airproducts.com.

NOTE: The information above contains “forward-looking statements,” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including earnings guidance. These forward-looking statements are based on management’s reasonable expectations and assumptions as of the date of this press release. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, longer than anticipated delay in global economic recovery; renewed deterioration in economic and business conditions; weakening demand for the Company's products, future financial and operating performance of major customers and industries served by the Company; unanticipated contract terminations or customer cancellations or postponement of projects and sales; asset impairments due to economic conditions 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; consequences of acts of war or terrorism impacting the United States’ and other markets; the effects of a pandemic or epidemic or a natural disaster; charges related to current portfolio management and cost reduction actions; the success of implementing cost reduction programs and 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 in all of the Company's foreign operations; the impact of new or changed environmental, healthcare, tax or other legislation and regulations in jurisdictions in which the Company and its affiliates operate; the impact of new or changed financial accounting standards; and the timing and rate at which tax credits can be utilized and other risk factors described in the Company’s Form 10K for its fiscal year ended September 30, 2008 and Form 10-Q for the quarter ended December 31, 2008. 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 the Company’s management uses internally to evaluate the Company’s baseline performance. Presented below is a reconciliation of reported GAAP results to non-GAAP measures.

(Millions of dollars, except for share data) YTD
    Continuing Operations
  Operating Income Income Diluted EPS
2009 GAAP $ 846.3 $ 639.9 $3.00
2008 GAAP 1,495.8 1,090.5 4.97
% Change GAAP (43)% (41)% (40)%
2009 GAAP $ 846.3 $ 639.9 $3.00
Global cost reduction plan 298.2 200.3 .94
Customer bankruptcy and asset actions 32.1 21.0 .10
Pension settlement 8.0 5.0 .02
2009 Non-GAAP Measure $1,184.6 $866.2 $4.06
2008 GAAP $1,495.8 $1,090.5 $4.97
Pension settlement 26.3 16.5 .08
2008 Non-GAAP Measure $1,522.1 $1,107.0 $5.05
% Change Non-GAAP Measure (22)% (22)% (20)%
2010 Forecast     $4.65-$4.90
2009 GAAP     $3.00
% Change GAAP     55% - 63%
2010 Forecast     $4.65-$4.90
2009 Non-GAAP Measure     $4.06
% Change Non-GAAP Measure     15% - 21%
  QTR
Operating Income
   
2009 Q4 GAAP $ 328.0    
2009 Q3 GAAP 143.8    
% Change GAAP 128%    
2009 Q3 GAAP $ 143.8    
Global cost reduction plan 124.0    
Customer bankruptcy and asset actions 32.1    
Pension settlement 8.0    
2009 Q3 Non-GAAP Measure $ 307.9    
% Change Non-GAAP Measure 7%    

The Company utilizes a non-GAAP measure in the computation of capital expenditures and includes spending associated with facilities accounted for as capital leases. Certain facilities that are built to service 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.

  YTD 2009
Actual
YTD 2010
Forecast
Capital expenditures - GAAP basis $1,236 $1,000 to $1,200
Capital lease expenditures 239 300
Capital Expenditures – Non-GAAP basis $1,475 $1,300 to $1,500

View the entire earnings release with all financial tables.

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  • Press Contact
    Renee Giello
    (610) 481-4876
    Air Products and Chemicals, Inc.
    7201 Hamilton Boulevard
    Allentown, PA 18195-1501
    USA
  • Investor Contact
    Simon Moore
    (610) 481-7461
    Air Products and Chemicals, Inc.
    7201 Hamilton Boulevard
    Allentown, PA 18195-1501
    USA
    (610) 481-2729
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