10-QPeriod: Q2 FY2010

Air Products & Chemicals, Inc. Quarterly Report for Q2 Ended Mar 31, 2010

Filed April 26, 2010For Securities:APD

Summary

Air Products & Chemicals, Inc. (APD) reported strong financial results for the quarter ended March 31, 2010, showing significant year-over-year growth in sales and operating income. Sales increased by 15% to $2.25 billion, driven by volume increases in key segments like Electronics and Performance Materials and Tonnage Gases, alongside a favorable currency translation effect. Operating income saw a substantial 31% increase to $340.6 million, with non-GAAP operating income rising even more significantly by 40% due to strong volume performance and cost efficiencies. For the first six months of fiscal year 2010, the company also demonstrated robust growth, with sales up 7% to $4.42 billion and operating income up 83% to $685.6 million (or 29% on a non-GAAP basis). Diluted earnings per share (EPS) from continuing operations were $1.16 for the quarter and $2.32 for the year-to-date period, representing substantial increases over the prior year. The company also demonstrated its commitment to shareholders by increasing its quarterly dividend for the 28th consecutive year, signaling confidence in its financial health and future prospects.

Financial Highlights

52 data points
Beta

Revenue

$2.25B

27.6% Gross Margin

Net Income

$252.00M

11.2% Net Margin

EPS (Diluted)

$1.16

Total Assets

$13.15B

Cash & Equivalents

$230.90M

Free Cash Flow

$120.70M

Financial Statements
Beta
Revenue$2.25B
Cost of Revenue$1.63B
Gross Profit$620.30M
R&D Expenses$26.30M
SG&A Expenses$240.40M
Operating Income$340.60M
Interest Expense$29.50M
Net Income$252.00M
EPS (Basic)$1.19
EPS (Diluted)$1.16
Shares Outstanding (Basic)212.10M
Shares Outstanding (Diluted)216.90M

Key Highlights

  • 1Sales increased 15% year-over-year to $2.25 billion for the quarter ended March 31, 2010, driven by strong volume growth in Electronics and Performance Materials and Tonnage Gases segments, and a favorable currency impact.
  • 2Operating income surged 31% to $340.6 million, with non-GAAP operating income up 40% to $364.0 million, reflecting improved volumes, cost efficiencies, and currency tailwinds.
  • 3Diluted EPS from continuing operations reached $1.16 for the quarter, a 30% increase compared to the prior year's $0.89.
  • 4The company announced a 28th consecutive annual dividend increase, raising the quarterly dividend to $0.49 per share, underscoring shareholder returns.
  • 5Acquisition-related costs of $23.4 million were recognized for the pending acquisition of Airgas, Inc., which is valued at approximately $7 billion.
  • 6The Electronics and Performance Materials segment showed particularly strong growth with sales up 36% and operating income turning positive, indicating a significant market recovery in this area.
  • 7The company's balance sheet remains solid, with total assets at $13.15 billion and a manageable debt-to-equity ratio of approximately 44.5% as of March 31, 2010.

Frequently Asked Questions

For the quarter ended March 31, 2010, Air Products & Chemicals, Inc. reported sales of $2.25 billion, a 15% increase compared to $1.96 billion in the same period last year. This growth was driven by a 9% increase in underlying business sales (primarily volume increases), a 4% favorable currency translation impact, and a 2% increase from energy and raw material cost pass-through.

Profitability showed significant improvement. GAAP operating income increased 31% to $340.6 million. On a non-GAAP basis, which excludes acquisition-related costs, operating income rose 40% to $364.0 million. Net income attributable to Air Products increased by 33% to $252.0 million, and diluted EPS from continuing operations grew 30% to $1.16.

Air Products commenced a tender offer to acquire all outstanding shares of Airgas, Inc. for $60.00 per share in cash, with a total transaction value of approximately $7 billion. The offer was ongoing as of the filing date. The company incurred $23.4 million in acquisition-related costs during the quarter for this transaction.

The company maintained a strong financial position. As of March 31, 2010, total debt was $4.34 billion, and the debt-to-equity ratio was approximately 44.5%. The company had access to a $1.45 billion multicurrency revolving facility and secured an additional $6.7 billion term loan credit facility for the Airgas acquisition. Cash flow from operations was sufficient to fund capital expenditures and dividend payments.