Summary
Air Products & Chemicals, Inc. (APD) reported its first quarter 2012 results, showing a slight increase in sales driven by pricing across its Merchant Gases and Electronics and Performance Materials segments. However, overall volumes remained flat due to offsetting trends in different business units. While GAAP operating income saw a modest increase, non-GAAP operating income declined due to lower volumes and unfavorable currency impacts. Net income and diluted EPS both decreased on a GAAP basis, although non-GAAP diluted EPS saw a slight increase, reflecting the exclusion of the Spanish tax settlement in the current year and the Airgas transaction loss in the prior year. Investors should note the company's ongoing efforts to manage costs and productivity, which partially offset inflationary pressures. The company also announced a significant subsequent event: the agreement to sell approximately 80% of its Homecare business to The Linde Group, expected to close in Q2 2012, which will be accounted for as discontinued operations. This sale is anticipated to generate a gain in the second quarter. APD's liquidity position remains strong, supported by cash flow from operations and access to commercial paper markets, with no immediate need to repatriate foreign cash.
Financial Highlights
54 data points| Revenue | $2.32B |
| Cost of Revenue | $1.72B |
| Gross Profit | $599.20M |
| R&D Expenses | $28.10M |
| SG&A Expenses | $231.00M |
| Operating Income | $353.80M |
| Interest Expense | $29.40M |
| Net Income | $248.10M |
| EPS (Basic) | $1.18 |
| EPS (Diluted) | $1.16 |
| Shares Outstanding (Basic) | 210.30M |
| Shares Outstanding (Diluted) | 213.90M |
Key Highlights
- 1Sales increased by 1% to $2,423.1 million, driven by higher pricing in Merchant Gases and Electronics and Performance Materials segments, while overall volumes were flat.
- 2GAAP operating income rose 7% to $384.7 million, but non-GAAP operating income decreased 5% to $384.7 million due to lower volumes and currency impacts.
- 3GAAP net income decreased 8% to $248.1 million, and diluted EPS fell 6% to $1.16. Non-GAAP diluted EPS increased 1% to $1.36.
- 4The company is selling approximately 80% of its Homecare business to The Linde Group for €590 million (approximately $767 million), with the transaction expected to close in Q2 2012 and be treated as discontinued operations.
- 5Operating income for the Tonnage Gases segment decreased 4% to $111.4 million, despite a 6% sales increase driven by higher volumes from new plants.
- 6The Electronics and Performance Materials segment saw a 2% sales increase and a 13% operating income increase, with improved operating margins.
- 7APD's liquidity remains strong, with cash flow from operations expected to meet foreseeable needs. Capital expenditures increased by $63.5 million year-over-year to $405.4 million on a non-GAAP basis.