10-KPeriod: FY2018

Air Products & Chemicals, Inc. Annual Report, Year Ended Sep 30, 2018

Filed November 20, 2018For Securities:APD

Summary

Air Products & Chemicals, Inc. (APD) reported strong financial performance for the fiscal year ended September 29, 2018. The company saw a significant increase in sales, driven by higher volumes and new large industrial gas projects coming online. This growth was complemented by strategic advancements, including the completion of a syngas supply joint venture in China and new gasification projects announced in China and Saudi Arabia. The company also demonstrated a commitment to shareholder returns by increasing its quarterly dividend by 16%, marking the 36th consecutive year of dividend increases. Operationally, APD highlighted improvements in operating income and adjusted EBITDA, alongside a robust growth in diluted earnings per share. The company's diversified industrial gases business, with operations across the Americas, EMEA, and Asia, remains the core driver of its performance. While the company faces various risks including economic conditions, international operations, and regulatory changes, its strong execution and strategic investments position it for continued growth. The outlook for fiscal year 2019 remains positive, with continued focus on base business improvements and the integration of new large-scale projects.

Financial Highlights

58 data points
Beta

Revenue

$8.93B

30.7% Gross Margin

Net Income

$1.50B

16.8% Net Margin

EPS (Diluted)

$6.78

Total Assets

$19.18B

Cash & Equivalents

$2.79B

Free Cash Flow

$978.80M

Financial Statements
Beta
Revenue$8.93B
Cost of Revenue$6.19B
Gross Profit$2.74B
R&D Expenses$64.50M
SG&A Expenses$760.80M
Operating Income$1.97B
Interest Expense$130.50M
Net Income$1.50B
EPS (Basic)$6.83
EPS (Diluted)$6.78
Shares Outstanding (Basic)219.30M
Shares Outstanding (Diluted)220.80M

Key Highlights

  • 1Sales increased by 9% to $8.93 billion, driven by underlying volume growth and favorable currency impacts.
  • 2Operating income surged by 37% to $1.97 billion, with an operating margin of 22.0%.
  • 3Diluted EPS from continuing operations increased by 28% to $6.59.
  • 4Adjusted EBITDA grew by 11% to $3.12 billion, with an improved margin of 34.9%.
  • 5The company increased its quarterly dividend by 16% to $1.10 per share, continuing its track record of 36 consecutive annual dividend increases.
  • 6Significant strategic progress was made with the completion of a syngas supply joint venture in China and announcements of new large gasification projects.
  • 7International operations continue to be a substantial contributor, with over 60% of sales derived from outside the United States.

Frequently Asked Questions

Sales grew by 9% to $8.93 billion, primarily due to a 7% increase in underlying sales driven by higher volumes across all regional Industrial Gases segments and a 1% price increase. Favorable currency impacts contributed an additional 2% to sales growth.

Air Products reported a 37% increase in operating income to $1.97 billion, with an improved operating margin of 22.0%. This was driven by higher volumes, favorable currency impacts, and prior-year charges related to goodwill impairment and cost reduction actions. On a non-GAAP basis, adjusted operating income increased by 9% and the adjusted operating margin remained flat at 21.7%.

The company is actively executing its gasification strategy with recent project completions and announcements, including the Lu'An syngas joint venture and new gasifier/power projects. The outlook for fiscal year 2019 anticipates continued earnings growth through base business improvements and the contribution of new, large projects. The company intends to continue winning and investing in key growth projects, particularly large gasification projects.

Air Products increased its quarterly dividend by 16% to $1.10 per share, demonstrating its commitment to shareholder returns. This marks the 36th consecutive year of dividend increases. The company also has an ongoing share repurchase program, with $485.3 million remaining authorization as of September 30, 2018.