01—Abstract
Summary
Summary of the 10-K filed November 26, 2013. Cited figures are marked; the original filing is the authoritative source.
Air Products & Chemicals, Inc. (APD) reported $10.18 billiona in sales for the fiscal year ended September 29, 2013, a 6% increase driven by acquisitions and higher energy cost pass-through.
While underlying sales saw a modest 1% increase, this was impacted by the company's strategic exit from its Polyurethane Intermediates (PUI) business. Operating income grew 3% to $1.32 billionb, and income from continuing operations attributable to Air Products rose slightly to $1.00 billion, translating to diluted earnings per share of $4.73. The company highlighted strong performance in its Tonnage Gases segment and continued growth in its Equipment and Energy division, particularly in LNG equipment.
However, the Electronics and Performance Materials segment experienced a sales decrease due to weaker demand in electronics. APD also completed several acquisitions in 2013, including EPCO Carbon Dioxide Products, Inc. and Wuxi Chem-Gas Company, Ltd., which contributed to sales growth and expanded its geographic presence. Financially, APD maintained a strong liquidity position, with capital expenditures totaling $1.75 billionc on a GAAP basis, mainly for plant and equipment additions.
The company also increased its quarterly dividend by 11%d and continued its share repurchase program, demonstrating a commitment to returning value to shareholders. Looking ahead to 2014, APD anticipates modest global economic growth and expects improved earnings from new plant operations and higher LNG activity, though partially offset by increased maintenance expenses.
02—Key points
Key Highlights
- Total sales reached $10.18 billion, a 6% increase year-over-year, primarily due to acquisitions and energy cost pass-through.
- Operating income increased by 3% to $1.32 billion, with on-site/pipeline (Tonnage Gases) and Equipment & Energy segments showing positive contributions.
- Income from continuing operations attributable to Air Products grew slightly to $1.00 billion, resulting in diluted EPS of $4.73.
- The company executed a 2013 business restructuring and cost reduction plan, recording a $231.6 million charge aimed at improving cost structure and operational efficiency, with expected annual savings of $75 million.
- APD completed three acquisitions in 2013, including EPCO Carbon Dioxide Products, Inc., expanding its presence in the North American industrial gas market.
- Capital expenditures on a GAAP basis were $1.75 billion, largely for plant and equipment, with a significant portion supporting Tonnage Gases and new projects.
- The quarterly dividend was increased by 11% to $0.71 per share, marking the 31st consecutive year of dividend increases.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Air Products & Chemicals, Inc. kept $0.10.
- Revenue$10.18B100.0%
- Cost of revenue−$7.47B73.4%
- Gross profit$2.71B26.6%
- Operating costs−$1.38B13.6%
- Operating income$1.32B13.0%
- Interest, other & tax−$330.2M3.2%
- Net income$994.2M9.8%
Where FY2013 revenue went
$10.18B- Cost of revenue: $7.47B, 73% of revenue
- Net income: $994.2M, 9.8% of revenue
- R&D: $133.7M, 1.3% of revenue
- SG&A: $1.07B, 10% of revenue
- Other operating costs: $183.9M, 1.8% of revenue
- Interest, other & tax: $330.2M, 3.2% of revenue
Kept 9.8% as net incomeNet income $994.2M · 9.8%R&D $133.7M · 1.3%Other operating costs $183.9M · 1.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed November 26, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $10.18B$9.61B | +5.9% |
| Cost of Revenue | $7.47B$7.05B | +6.0% |
| Gross Profit | $2.71B$2.56B | +5.8% |
| R&D Expenses | $133.70M$126.40M | +5.8% |
| SG&A Expenses | $1.07B$946.80M | +12.6% |
| Operating Income | $1.32B$1.28B | +3.3% |
| Interest Expense | $141.80M$123.70M | +14.6% |
| Net Income | $994.20M$1.17B | −14.8% |
| EPS (Basic) | $4.74$5.53 | −14.3% |
| EPS (Diluted) | $4.68$5.44 | −14.0% |
| Shares Outstanding (Basic) | 209.70M211.20M | −0.7% |
| Shares Outstanding (Diluted) | 212.30M214.70M | −1.1% |
05—Questions
Frequently Asked Questions
What was Air Products' overall financial performance in fiscal year 2013?
Air Products reported $10.18 billion in sales, a 6% increase from the prior year, driven by acquisitions and higher energy cost pass-through. Operating income rose 3% to $1.32 billion, and income from continuing operations was $1.00 billion, yielding diluted EPS of $4.73. The company experienced growth in Tonnage Gases and Equipment & Energy, while Electronics and Performance Materials saw a decline.
What major strategic initiatives or challenges did Air Products face in 2013?
Air Products undertook a significant business restructuring and cost reduction plan in 2013, incurring a charge of $231.6 million to align costs and improve efficiency. This was in response to weaker-than-expected business conditions in Europe and Asia. The company also continued its exit from the Polyurethane Intermediates (PUI) business. Key acquisitions, like EPCO Carbon Dioxide Products, Inc., were completed to strengthen market positions.
How did Air Products manage its capital and return value to shareholders in 2013?
The company invested $1.75 billion (GAAP basis) in capital expenditures, primarily for plant and equipment expansion. Air Products demonstrated its commitment to shareholder returns by increasing its quarterly dividend by 11% and continuing its share repurchase program, with $485.3 million remaining authorization at year-end.
What is the outlook for Air Products in fiscal year 2014?
Air Products anticipates modest global economic growth and expects improved earnings in 2014 due to new plant on-streams and higher LNG equipment activity. The company also expects a rebound in its Electronics business. These positive factors are expected to be partially offset by higher planned maintenance costs and the ongoing impact of exiting the PUI business.
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