Summary
Air Products & Chemicals, Inc. (APD) reported solid financial results for the third quarter of fiscal year 2012, demonstrating resilience despite a 5% decrease in reported sales year-over-year to $2,340.1 million. This top-line decline was primarily attributed to lower natural gas prices leading to reduced cost pass-through and unfavorable currency movements, which together accounted for a 7% reduction. However, underlying sales saw a modest 1% increase, driven by higher pricing in the Merchant Gases segment. Despite the sales dip, operating income surged by 25% to $482.8 million, and operating margin expanded significantly to 20.6% (GAAP basis), largely due to improved cost performance, operational efficiencies, and the positive impact of a cost reduction plan in Europe. Net income from continuing operations rose 20% to $357.2 million, with diluted EPS climbing 21% to $1.66. The company also successfully completed the acquisition of DuPont's stake in their joint venture, DA NanoMaterials, in April 2012. This transaction, while contributing to sales, also resulted in a significant one-time gain of $85.9 million ($0.25 per share) in the quarter due to the revaluation of the previously held equity interest. Furthermore, APD realized a substantial gain of $207.4 million ($0.70 per share) from the sale of the majority of its Homecare business to The Linde Group. These significant one-time items, while boosting reported GAAP figures, highlight the importance of analyzing non-GAAP performance for a clearer view of operational trends. On a non-GAAP basis, which excludes these items, operating income grew 2% and diluted EPS from continuing operations increased 3%, indicating underlying business strength.
Financial Highlights
55 data points| Revenue | $2.34B |
| Cost of Revenue | $1.69B |
| Gross Profit | $649.30M |
| R&D Expenses | $32.50M |
| SG&A Expenses | $230.40M |
| Operating Income | $482.80M |
| Interest Expense | $26.00M |
| Net Income | $484.50M |
| EPS (Basic) | $2.29 |
| EPS (Diluted) | $2.26 |
| Shares Outstanding (Basic) | 211.50M |
| Shares Outstanding (Diluted) | 214.70M |
Key Highlights
- 1Reported a 25% increase in operating income to $482.8 million and a significant expansion in operating margin to 20.6% (GAAP) for Q3 2012 compared to Q3 2011, driven by improved cost performance and operational efficiencies.
- 2Achieved a 20% increase in income from continuing operations to $357.2 million and a 21% rise in diluted EPS to $1.66 (GAAP) for Q3 2012, demonstrating strong profitability despite a 5% decrease in reported sales.
- 3Completed the acquisition of DuPont's 50% interest in DA NanoMaterials, consolidating the joint venture into the Electronics and Performance Materials segment and recognizing a $85.9 million gain on the revaluation of the previously held equity interest.
- 4Successfully divested the majority of its Homecare business to The Linde Group, realizing a gain of $207.4 million ($0.70 per share) in Q3 2012.
- 5Underlying sales increased by 1% in Q3 2012, driven by higher pricing in Merchant Gases, even as reported sales declined 5% due to lower natural gas cost pass-through and unfavorable currency impacts.
- 6The Tonnage Gases segment showed strength with a 17% increase in operating income, primarily due to higher volumes and lower operating costs.
- 7APD increased its quarterly dividend to $0.64 per share, marking the 30th consecutive year of dividend increases, and continued its share repurchase program with $946.9 million authorization remaining.