01—Abstract
Summary
Summary of the 10-K filed November 22, 2011. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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.
02—Key points
Key Highlights
- Sales increased by 12% to $10.1 billion in FY2011, driven by volume growth across key segments.
- Operating income saw a 17% increase, with non-GAAP operating income up 13%, reflecting improved performance in Electronics and Performance Materials, and Tonnage Gases.
- Diluted earnings per share from continuing operations increased by 18% to $5.59.
- Capital expenditures rose by 24% to $1.4 billion, primarily for new customer contracts.
- The company completed its prior $1 billion share repurchase program and authorized a new $1 billion program.
- Quarterly dividends were increased by 18% to $0.58 per share, continuing a 29-year streak of annual dividend increases.
- Merchant Gases segment showed strong growth in Asia, contributing to a 10% sales increase for the segment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, Air Products & Chemicals, Inc. kept $0.13.
- Revenue$9.67B100.0%
- Cost of revenue−$7.10B73.4%
- Gross profit$2.58B26.6%
- Operating costs−$1.07B11.0%
- Operating income$1.51B15.6%
- Interest, other & tax−$283.9M2.9%
- Net income$1.22B12.7%
Where FY2011 revenue went
$9.67B- Cost of revenue: $7.10B, 73% of revenue
- Net income: $1.22B, 13% of revenue
- R&D: $118.8M, 1.2% of revenue
- SG&A: $941.7M, 9.7% of revenue
- Interest, other & tax: $283.9M, 2.9% of revenue
Kept 13% as net incomeR&D $118.8M · 1.2%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed November 22, 2011Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $9.67B$8.62B | +12.3% |
| Cost of Revenue | $7.10B$6.29B | +12.9% |
| Gross Profit | $2.58B$2.52B | +2.1% |
| R&D Expenses | $118.80M$114.70M | +3.6% |
| SG&A Expenses | $941.70M$886.60M | +6.2% |
| Operating Income | $1.51B$1.27B | +19.0% |
| Interest Expense | $115.50M$121.90M | −5.3% |
| Net Income | $1.22B$1.03B | +19.0% |
| EPS (Basic) | $5.75$4.85 | +18.6% |
| EPS (Diluted) | $5.63$4.74 | +18.8% |
| Shares Outstanding (Basic) | 213.00M212.20M | +0.4% |
| Shares Outstanding (Diluted) | 217.60M217.10M | +0.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of Air Products' sales growth in fiscal year 2011?
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.
How did the company manage energy and raw material costs?
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.
What is the company's outlook for fiscal year 2012, considering the economic climate?
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.
What was the impact of the Airgas transaction on the company's financial results?
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.
06—Continue