Summary
Air Products & Chemicals, Inc. (APD) reported its first quarter fiscal year 2017 results, ending December 30, 2016. The company experienced a slight increase in sales, up 1% to $1.88 billion, driven by higher volumes and energy cost pass-throughs, though partially offset by unfavorable currency impacts. However, operating income saw a notable decline of 12% to $328.1 million, and the operating margin compressed by 260 basis points. This decrease was largely attributed to significant business separation costs and cost reduction/asset actions, which collectively amounted to $80.2 million. On a non-GAAP basis, which excludes these items, operating income actually increased by 6% to $408.3 million, and operating margin improved, indicating underlying operational strength. The company's strategic divestitures continued, with the spin-off of Electronic Materials Division (EMD) completed on October 1, 2016, and the subsequent sale of Performance Materials Division (PMD) to Evonik Industries AG for $3.8 billion on January 3, 2017. These businesses are now presented as discontinued operations. The report also highlighted a $50 million charge related to cost reduction and asset actions, including the write-down of an air separation unit. Despite the GAAP operating income decline, management's focus on operational improvements and productivity actions, as reflected in the adjusted EBITDA growth, suggests a positive outlook for core industrial gas businesses.
Financial Highlights
54 data points| Revenue | $1.88B |
| Cost of Revenue | $1.32B |
| Gross Profit | $565.80M |
| R&D Expenses | $15.00M |
| SG&A Expenses | $164.70M |
| Operating Income | $328.30M |
| Interest Expense | $29.50M |
| Net Income | $299.80M |
| EPS (Basic) | $1.38 |
| EPS (Diluted) | $1.37 |
| Shares Outstanding (Basic) | 217.70M |
| Shares Outstanding (Diluted) | 219.70M |
Key Highlights
- 1Sales increased 1% to $1.88 billion, driven by volume and energy cost pass-through, partially offset by currency headwinds.
- 2GAAP operating income decreased 12% to $328.1 million due to significant business separation costs ($30.2M) and cost reduction/asset actions ($50.0M).
- 3Non-GAAP operating income increased 6% to $408.3 million, indicating underlying operational improvements and productivity gains.
- 4Net income attributable to Air Products was $299.8 million, or $1.37 per diluted share, down from $363.6 million, or $1.67 per diluted share, in the prior year.
- 5The company completed the spin-off of its Electronic Materials Division (Versum) and the sale of its Performance Materials Division for $3.8 billion (subsequent event).
- 6Cash provided by operating activities increased significantly to $574.3 million compared to $397.2 million in the prior year.
- 7The company declared a cash dividend of $0.86 per share for the quarter.