10-KPeriod: FY2020

Air Products & Chemicals, Inc. Annual Report, Year Ended Sep 30, 2020

Filed November 19, 2020For Securities:APD

Summary

Air Products & Chemicals, Inc. (APD) reported stable financial performance in fiscal year 2020, despite the global COVID-19 pandemic which is estimated to have negatively impacted sales by approximately 4%. The company achieved a 7% increase in net income to $1.93 billion and an 8% increase in diluted EPS to $8.55. This resilience was supported by positive pricing, particularly in the merchant business, and stable performance in its onsite business model. APD also demonstrated a strong commitment to shareholder returns by increasing its quarterly dividend by over 15%, marking its 38th consecutive annual dividend increase. The company strategically managed its capital structure by issuing approximately $5 billion in debt, strengthening its financial position to fund growth opportunities and repay existing debt. Looking ahead, APD anticipates continued focus on safety, operational continuity, and a commitment to winning new projects, while navigating the ongoing uncertainties of the pandemic.

Financial Highlights

58 data points
Beta

Revenue

$8.86B

33.9% Gross Margin

Net Income

$1.89B

21.3% Net Margin

EPS (Diluted)

$8.49

Total Assets

$25.17B

Cash & Equivalents

$5.25B

Free Cash Flow

$755.70M

Financial Statements
Beta
Revenue$8.86B
Cost of Revenue$5.86B
Gross Profit$3.00B
R&D Expenses$83.90M
SG&A Expenses$775.90M
Operating Income$2.24B
Interest Expense$109.30M
Net Income$1.89B
EPS (Basic)$8.53
EPS (Diluted)$8.49
Shares Outstanding (Basic)221.20M
Shares Outstanding (Diluted)222.30M

Key Highlights

  • 1Net income increased by 7% to $1.93 billion in fiscal year 2020, demonstrating resilience amidst the COVID-19 pandemic.
  • 2Diluted EPS rose by 8% to $8.55, with an estimated negative impact of $0.60-$0.65 per share from COVID-19.
  • 3The company announced its largest quarterly dividend increase in 80 years, a 15% hike, marking 38 consecutive years of dividend increases.
  • 4APD raised approximately $5 billion in debt, enhancing its financial flexibility to fund growth projects and manage maturities.
  • 5Sales saw a slight decrease of 1% to $8.86 billion, impacted by lower energy cost pass-throughs and an estimated 4% negative impact from COVID-19 volumes.
  • 6Operating income and operating margin increased by 4% and 130 basis points, respectively, to $2.24 billion and 25.3%.
  • 7The company continues to invest in strategic growth areas such as gasification, carbon capture, and hydrogen projects.

Frequently Asked Questions

Air Products estimated that COVID-19 negatively impacted its overall sales by approximately 4%, primarily driven by lower volumes in its merchant business across the regional industrial gas segments. However, the company's onsite business remained stable. Despite these impacts, net income increased by 7% and diluted EPS by 8%, demonstrating resilience.

Air Products is committed to returning value to shareholders, as evidenced by its 38th consecutive annual dividend increase, with a significant 15% hike in the quarterly dividend during fiscal year 2020. The company also raised approximately $5 billion in debt to support strategic investments in high-return industrial gas projects and to repay debt maturities, indicating a balanced approach to growth and financial management.

The company's operations are organized into five segments: Industrial Gases – Americas, Industrial Gases – EMEA, Industrial Gases – Asia, Industrial Gases – Global, and Corporate and other. The regional industrial gas segments (Americas, EMEA, Asia) are the primary revenue drivers. In fiscal year 2020, sales in the Americas decreased by 6%, EMEA decreased by 4%, while Asia saw a 2% increase. The Industrial Gases – Global segment, focused on equipment sales, experienced a significant 40% increase in sales.

Air Products faces various risks, including the ongoing impacts of the COVID-19 pandemic on global economic conditions and demand for its products. Other significant risks highlighted include changes in global and regional economic conditions, operational and project execution risks, extensive international operations, government regulations, and competition. Specifically, the company mentions risks related to large-scale projects, cybersecurity, and commodity price fluctuations.