January 22, 2010 Lehigh Valley, Pa.
Air Products (NYSE:APD) today reported net income of $252 million, or diluted earnings per share (EPS) of $1.16, for its fiscal first quarter ended December 31, 2009 versus $69 million and $0.32 for the fiscal first quarter of 2009.
- Sales declined one percent versus prior year, up two percent sequentially
- Operating margins improved to 15.9%
- Earnings per share up 20%*
- Raising Full Year Guidance to $4.75 to $4.95
The discussion of first quarter results in this release is based on non-GAAP comparisons due to last year’s restructuring charge. A reconciliation can be found at the end of this release.*
First quarter revenues of $2,174 million declined one percent as lower energy and raw material cost pass-throughs offset higher volumes and favorable currency. Operating income of $345 million was up 20 percent from the prior year on improved volumes in Tonnage Gases, and Electronics and Performance Materials; broad productivity gains across the company; and favorable currency impacts. Sequentially, sales improved two percent while operating income gained five percent.
John McGlade, chairman, president and chief executive officer, said, “We are off to a good start in fiscal 2010. Our earnings per share grew 20% and we continued our margin improvement putting us on track to meet our 17% goal in 2011. Both our sequential and year-over-year results benefited from an improving global economy and our efforts to move Air Products to a sustainable, lower cost structure.”
First Quarter Segment Performance
- Merchant Gases sales of $934 million increased one percent as favorable currency was mostly offset by lower volumes. Operating income of $190 million increased 11 percent from the prior year, as significantly improved cost performance and favorable currency more than offset weaker volumes. Operating margin exceeded 20%. Underlying trends continue to improve globally, as volumes were higher in Asia. Comparisons in the U.S. and Europe continued to be difficult due to the weak manufacturing environment in both regions.
- Tonnage Gases sales of $698 million were down six percent as significantly lower energy and raw material cost pass-throughs more than offset higher volumes. Sales volumes were up due to rebounding chemical and steel production and new plant onstreams. Operating income of $100 million decreased eight percent from the prior year primarily on higher planned maintenance costs.
- Electronics and Performance Materials sales of $433 million increased 7 percent as higher volumes and favorable currency more than offset price declines. Operating income of $48 million increased 97 percent from the prior year on improved volumes and productivity.
- Equipment and Energy sales of $109 million were down 9 percent on lower sales activity. Operating income of $8 million increased 11 percent from the prior year on lower development spending.
Looking ahead, McGlade said, “We believe we will see continued earnings growth throughout 2010 as the global economy, led by Asia, continues its gradual recovery, and as we drive further cost reductions. We also had a significant number of new business signings in the first quarter and are very excited by the opportunities we see for growth beyond 2010.”
Air Products is raising its guidance for fiscal 2010 to $4.75 to $4.95 per share. The company also expects second quarter EPS from continuing operations to be between $1.15 and $1.20 per share.
Annual Meeting of Shareholders
Air Products will host its Annual Meeting of Shareholders on Thursday, January 28, 2010 at 2:00 p.m. ET.
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: This 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 this Report is filed regarding important risk factors. 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, 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; inability to collect receivables from or recovery of payments made by customers in bankruptcy proceedings; unanticipated contract terminations or customer cancellations or postponement of projects and sales; asset impairments due to economic conditions or specific product or customer events; costs associated with future restructuring actions which are not currently planned or anticipated; 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 guidance; 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, 2009. 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 are reconciliations of reported GAAP results to non-GAAP measures.
|Millions of Dollars
|% Change GAAP
|Global cost reduction plan
|2009 Non-GAAP Measure
|% Change Non-GAAP Measure
View entire earnings release with all financial tables (48 KB)