10-KPeriod: FY2011

Air Products & Chemicals, Inc. Annual Report, Year Ended Sep 30, 2011

Filed November 22, 2011For Securities:APD

Summary

In fiscal year 2011, Air Products & Chemicals, Inc. (APD) demonstrated robust sales growth, driven by volume increases across its key segments, particularly Electronics and Performance Materials, and Tonnage Gases, with notable expansion in Asia for Merchant Gases. The company reported a 12% increase in sales to $10.1 billion, accompanied by a 17% rise in operating income. Management highlighted strong operational performance in the first half of the year, though economic slowdown in the latter half presented challenges. APD also returned capital to shareholders through share repurchases and increased its quarterly dividend, marking the 29th consecutive year of dividend increases. The company's outlook for 2012 anticipated varied economic growth across regions but expected earnings improvement from new plant startups and productivity initiatives, offset by increased pension expenses and a higher tax rate.

Financial Highlights

56 data points
Beta

Revenue

$9.67B

26.6% Gross Margin

Net Income

$1.22B

12.7% Net Margin

EPS (Diluted)

$5.63

Total Assets

$14.29B

Cash & Equivalents

$421.40M

Free Cash Flow

$443.90M

Financial Statements
Beta
Revenue$9.67B
Cost of Revenue$7.10B
Gross Profit$2.58B
R&D Expenses$118.80M
SG&A Expenses$941.70M
Operating Income$1.51B
Interest Expense$115.50M
Net Income$1.22B
EPS (Basic)$5.75
EPS (Diluted)$5.63
Shares Outstanding (Basic)213.00M
Shares Outstanding (Diluted)217.60M

Key Highlights

  • 1Sales increased by 12% to $10.1 billion in FY2011, driven by volume growth across key segments.
  • 2Operating income saw a 17% increase, with non-GAAP operating income up 13%, reflecting improved performance in Electronics and Performance Materials, and Tonnage Gases.
  • 3Diluted earnings per share from continuing operations increased by 18% to $5.59.
  • 4Capital expenditures rose by 24% to $1.4 billion, primarily for new customer contracts.
  • 5The company completed its prior $1 billion share repurchase program and authorized a new $1 billion program.
  • 6Quarterly dividends were increased by 18% to $0.58 per share, continuing a 29-year streak of annual dividend increases.
  • 7Merchant Gases segment showed strong growth in Asia, contributing to a 10% sales increase for the segment.

Frequently Asked Questions

Sales growth in fiscal year 2011 was primarily driven by strong volume increases across the Electronics and Performance Materials, Tonnage Gases, and Merchant Gases segments. Growth in Asia was particularly strong for the Merchant Gases segment. Currency exchange rates also had a favorable impact on sales.

Air Products stated that it mitigates energy and natural gas price increases through pricing formulas, surcharges, and long-term cost pass-through contracts with customers. The company reported no significant difficulties in obtaining adequate supplies of energy or raw materials during fiscal year 2011.

For fiscal year 2012, Air Products anticipated global economic growth to range from 2% to 5%, with Asia expected to be the strongest region. The company projected earnings improvement from new plant onstreams, productivity efforts, and cost controls, which would be partially offset by higher pension expenses, lower Equipment and Energy results, and an anticipated higher tax rate.

Air Products withdrew its tender offer to acquire Airgas in February 2011. For the year ended September 30, 2011, the company recognized a net loss of $48.5 million related to this transaction, which included amortization of financing fees, the gain on the sale of Airgas stock, and other acquisition-related costs. In the prior year (2010), $96.0 million in expense was recognized related to this transaction.