10-QPeriod: Q1 FY2003

Air Products & Chemicals, Inc. Quarterly Report for Q1 Ended Dec 31, 2002

Filed February 13, 2003For Securities:APD

Summary

Air Products & Chemicals, Inc. reported a solid first quarter for fiscal year 2003, with sales increasing 10% to $1.45 billion, driven by a 13% jump in its Gases segment. This growth was primarily attributed to higher worldwide volumes, particularly in the electronics sector, and the positive impact of acquisitions and a strengthening Euro. Net income rose to $125.8 million, or $0.56 per diluted share, up from $113.7 million, or $0.52 per diluted share, in the prior year. The company also adopted new accounting standards, SFAS No. 143, which resulted in a one-time after-tax charge. While the company navigates a slower-than-expected economic growth environment, it remains focused on controllable elements and strategic growth markets, with an outlook for continued volume recovery in the second quarter.

Key Highlights

  • 1Sales increased by 10% to $1.45 billion for the three months ended December 31, 2002, compared to $1.32 billion in the prior year.
  • 2Net income grew to $125.8 million ($0.56 per diluted share) from $113.7 million ($0.52 per diluted share) year-over-year.
  • 3The Gases segment showed strong performance with a 13% increase in sales, driven by higher volumes and acquisitions.
  • 4The company completed acquisitions, including American Homecare Supply, LLC, expanding its presence in the homecare market.
  • 5Cash flow from operations was $263.2 million, a slight decrease from the prior year, while cash used in investing activities increased significantly due to acquisitions.
  • 6The company adopted SFAS No. 143, "Accounting for Asset Retirement Obligations," resulting in a $2.9 million after-tax charge as a cumulative effect of an accounting change.
  • 7The outlook for the second quarter indicates continued volume recovery, although tempered by higher raw material and energy costs.

Frequently Asked Questions

The primary driver of revenue growth was a 10% increase in sales, largely due to a 13% surge in the Gases segment, which benefited from higher worldwide volumes, acquisitions, and favorable currency impacts.

Air Products adopted SFAS No. 143, "Accounting for Asset Retirement Obligations," which resulted in a one-time after-tax charge of $2.9 million, recorded as a cumulative effect of an accounting change. This reduced the reported net income for the period.

The company anticipates continued volume recovery in the second quarter of fiscal 2003, driven by seasonality and manufacturing growth, particularly in Performance Materials and higher amines. However, this recovery is expected to be partially offset by higher raw material and energy costs.

Total debt slightly increased to $2.40 billion at December 31, 2002, from $2.38 billion at September 30, 2002. The company's debt-to-capital ratio remained stable at around 39-40%, and it had no commercial paper outstanding, with significant revolving credit commitments available.