10-QPeriod: Q3 FY2011

Air Products & Chemicals, Inc. Quarterly Report for Q3 Ended Jun 30, 2011

Filed July 27, 2011For Securities:APD

Summary

Air Products & Chemicals, Inc. (APD) reported strong third quarter 2011 results, with net sales increasing by 14% to $2,577.8 million, driven by a 7% increase in underlying sales primarily from higher volumes in Tonnage Gases and Electronics and Performance Materials segments. This top-line growth translated into robust profit expansion, with GAAP operating income up 24% and diluted earnings per share from continuing operations rising 25% to $1.46. While the company also noted positive year-over-year performance for the first nine months of fiscal year 2011, including a 12% increase in sales and a 17% rise in operating income, a key event impacting comparability was the withdrawal of their tender offer for Airgas, Inc. The company provided non-GAAP measures to present a clearer view of underlying operational performance, excluding the net loss associated with the Airgas transaction. Investors should note the company's continued commitment to shareholder returns, highlighted by an increase in its quarterly dividend and ongoing share repurchase program.

Financial Highlights

55 data points
Beta

Revenue

$2.47B

26.1% Gross Margin

Net Income

$326.50M

13.2% Net Margin

EPS (Diluted)

$1.50

Total Assets

$14.45B

Cash & Equivalents

$428.20M

Free Cash Flow

$180.50M

Financial Statements
Beta
Revenue$2.47B
Cost of Revenue$1.83B
Gross Profit$646.30M
R&D Expenses$29.30M
SG&A Expenses$234.50M
Operating Income$387.70M
Interest Expense$26.50M
Net Income$326.50M
EPS (Basic)$1.54
EPS (Diluted)$1.50
Shares Outstanding (Basic)212.50M
Shares Outstanding (Diluted)217.30M

Key Highlights

  • 1Consolidated sales increased 14% to $2,577.8 million in Q3 2011, with underlying sales up 7% driven by volume growth in Tonnage Gases and Electronics and Performance Materials.
  • 2GAAP diluted earnings per share (EPS) from continuing operations grew 25% to $1.46 in Q3 2011.
  • 3Non-GAAP operating income increased 11% and non-GAAP diluted EPS increased 14% in Q3 2011, excluding the net loss from the Airgas transaction.
  • 4The Electronics and Performance Materials segment showed significant strength with sales up 21% and operating income up 75% in Q3 2011.
  • 5The company increased its quarterly dividend from $0.49 to $0.58 per share and has a remaining share repurchase authorization of $299.2 million.
  • 6Net cash provided by operating activities increased 9% for the first nine months of fiscal year 2011, driven by higher net income and favorable working capital changes.
  • 7Total debt increased to $4,497.7 million at June 30, 2011, from $4,128.3 million at September 30, 2010, while the total debt to equity ratio remained strong at 41.3%.

Frequently Asked Questions

Air Products & Chemicals, Inc. withdrew its tender offer for Airgas, Inc. in February 2011. The company reported a net loss related to this transaction, which impacted GAAP results. To provide a clearer view of underlying operational performance, they presented non-GAAP financial measures that exclude these transaction-related costs, allowing for a more comparable analysis against the prior year.

The Tonnage Gases and Electronics and Performance Materials segments were key drivers of sales growth. The Electronics and Performance Materials segment was particularly strong, with sales up 21% and operating income soaring 75% due to higher volumes and improved cost management. Merchant Gases also saw sales growth, driven by strong performance in Asia.

The company demonstrated a commitment to returning value to shareholders by increasing its quarterly dividend from $0.49 to $0.58 per share. Additionally, they have an ongoing share repurchase program, with approximately $299.2 million remaining authorization as of June 30, 2011, indicating continued confidence in their financial position and future prospects.

Currency movements had a favorable impact on Air Products' results. For the third quarter of 2011, currency favorably impacted sales by 5% and operating income by $25 million. For the first nine months, currency favorably impacted sales by 2% and operating income by $18 million, mitigating some of the higher operating costs.