10-QPeriod: Q3 FY2015

Air Products & Chemicals, Inc. Quarterly Report for Q3 Ended Jun 30, 2015

Filed July 30, 2015For Securities:APD

Summary

Air Products & Chemicals, Inc. (APD) reported its financial results for the third quarter and the first nine months of fiscal year 2015, ending June 29, 2015. For the quarter, sales decreased by 6% to $2,470.2 million compared to the prior year, impacted by unfavorable currency movements and lower energy cost pass-throughs, though underlying sales showed a 4% increase driven by volume and pricing. Operating income saw a modest 2% increase to $422.5 million, with a notable improvement in operating margin. Net income attributable to Air Products rose slightly to $318.8 million, resulting in diluted EPS of $1.47. For the nine-month period, sales declined by 4% to $7,445.5 million. Despite this, operating income grew by 4% to $1,226.9 million, and net income attributable to Air Products increased by 6% to $933.4 million, with diluted EPS reaching $4.30. The company highlighted strong performance in its Industrial Gases – Asia and Materials Technologies segments, contributing to underlying sales growth. APD also continued its commitment to shareholder returns by increasing its quarterly dividend for the 33rd consecutive year.

Financial Highlights

53 data points
Beta

Revenue

$2.47B

30.6% Gross Margin

Net Income

$318.80M

12.9% Net Margin

EPS (Diluted)

$1.47

Total Assets

$17.67B

Cash & Equivalents

$215.30M

Free Cash Flow

$367.30M

Financial Statements
Beta
Revenue$2.47B
Cost of Revenue$1.72B
Gross Profit$755.00M
R&D Expenses$33.40M
SG&A Expenses$241.50M
Operating Income$424.80M
Interest Expense$28.20M
Net Income$318.80M
EPS (Basic)$1.48
EPS (Diluted)$1.47
Shares Outstanding (Basic)215.20M
Shares Outstanding (Diluted)217.40M

Key Highlights

  • 1For Q3 2015, sales were $2,470.2 million, a 6% decrease year-over-year, primarily due to unfavorable currency impacts and lower energy cost pass-throughs, although underlying sales grew 4%.
  • 2Operating income for Q3 2015 increased by 2% to $422.5 million, with a 140 basis point improvement in operating margin to 17.1%.
  • 3Net income attributable to Air Products for Q3 2015 was $318.8 million, up slightly from $314.0 million in the prior year, leading to diluted EPS of $1.47.
  • 4For the nine months ended June 30, 2015, sales were $7,445.5 million, a 4% decrease year-over-year, with underlying sales up 4%.
  • 5Nine-month operating income grew 4% to $1,226.9 million, and net income attributable to Air Products rose 6% to $933.4 million, with diluted EPS of $4.30.
  • 6The company announced a 5% increase in its quarterly dividend to $0.81 per share, marking the 33rd consecutive year of dividend increases.
  • 7Restructuring and cost reduction actions resulted in charges of $58.2 million in Q3 2015 and $146.0 million for the nine-month period.

Frequently Asked Questions

The primary driver of the sales decrease in the third quarter was an unfavorable currency impact of 6% and lower energy contractual pass-through to customers of 4%, which more than offset an increase in underlying sales growth of 4%.

Operating income increased despite lower sales due to favorable cost performance and higher volumes. The company incurred charges of $58.2 million for business restructuring and cost reduction actions in the third quarter, which impacted operating income but were viewed as separate from underlying operational trends. Cost reduction actions and lower maintenance expense contributed to lower operating costs.

Air Products demonstrated a strong commitment to shareholder returns by announcing a 5% increase in its quarterly dividend to $0.81 per share. This marks the 33rd consecutive year the company has increased its dividend payment, indicating a consistent focus on returning value to shareholders.

The Industrial Gases – Asia and Materials Technologies segments were highlighted for their strong performance, contributing to underlying sales growth. The Industrial Gases – Americas segment also showed an increase in operating income and margin. Conversely, Industrial Gases – EMEA saw a decrease in sales, and Industrial Gases – Global reported an operating loss.