01—Abstract
Summary
Summary of the 10-K filed November 19, 2020. Cited figures are marked; the original filing is the authoritative source.
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%a.
The company achieved a 7% increase in net income to $1.93 billionb 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 billionc 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.
02—Key points
Key Highlights
- Net income increased by 7% to $1.93 billion in fiscal year 2020, demonstrating resilience amidst the COVID-19 pandemic.
- Diluted EPS rose by 8% to $8.55, with an estimated negative impact of $0.60-$0.65 per share from COVID-19.
- The company announced its largest quarterly dividend increase in 80 years, a 15% hike, marking 38 consecutive years of dividend increases.
- APD raised approximately $5 billion in debt, enhancing its financial flexibility to fund growth projects and manage maturities.
- Sales 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.
- Operating income and operating margin increased by 4% and 130 basis points, respectively, to $2.24 billion and 25.3%.
- The company continues to invest in strategic growth areas such as gasification, carbon capture, and hydrogen projects.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Air Products & Chemicals, Inc. kept $0.21.
- Revenue$8.86B100.0%
- Cost of revenue−$5.86B66.1%
- Gross profit$3.00B33.9%
- Operating costs−$760.6M8.6%
- Operating income$2.24B25.3%
- Interest, other & tax−$350.9M4.0%
- Net income$1.89B21.3%
Where FY2020 revenue went
$8.86B- Cost of revenue: $5.86B, 66% of revenue
- Net income: $1.89B, 21% of revenue
- R&D: $83.9M, 0.9% of revenue
- SG&A: $775.9M, 8.8% of revenue
- Interest, other & tax: $350.9M, 4.0% of revenue
Kept 21% as net incomeR&D $83.9M · 0.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed November 19, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $8.86B$8.92B | −0.7% |
| Cost of Revenue | $5.86B$5.98B | −2.0% |
| Gross Profit | $3.00B$2.91B | +2.9% |
| R&D Expenses | $83.90M$72.90M | +15.1% |
| SG&A Expenses | $775.90M$750.00M | +3.5% |
| Operating Income | $2.24B$2.14B | +4.3% |
| Interest Expense | $109.30M$137.00M | −20.2% |
| Net Income | $1.89B$1.76B | +7.2% |
| EPS (Basic) | $8.53$7.99 | +6.8% |
| EPS (Diluted) | $8.49$7.94 | +6.9% |
| Shares Outstanding (Basic) | 221.20M220.30M | +0.4% |
| Shares Outstanding (Diluted) | 222.30M221.60M | +0.3% |
05—Questions
Frequently Asked Questions
How did the COVID-19 pandemic impact Air Products' financial performance in fiscal year 2020?
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.
What is the company's approach to shareholder returns and capital allocation?
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.
What are the key business segments and their performance in fiscal year 2020?
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.
What are the main risks and uncertainties facing Air Products?
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.
06—Continue