Summary
Air Products & Chemicals, Inc. (APD) reported strong sales growth in the first quarter of fiscal year 2018, driven by a 15% increase in underlying sales driven by higher volumes across its regional industrial gases businesses and favorable currency impacts. Operating income saw a significant jump of 40%, indicating improved operational leverage and the lapping of prior-year business separation and cost reduction charges. However, net income attributable to Air Products declined by 48% year-over-year, primarily due to a substantial tax expense stemming from the U.S. Tax Cuts and Jobs Act, which included a deemed repatriation tax. Despite this one-time tax impact, the company's core industrial gases operations demonstrated robust performance, with growth in key segments like Asia and EMEA. Looking ahead, APD is navigating the effects of the new tax legislation, which has provisionally impacted its effective tax rate. The company continues to focus on underlying business growth, supported by new project onstreams and base business expansion. Investors should monitor the ongoing integration and implications of the tax reform, as well as the company's capital allocation strategy, including ongoing share repurchases and dividends, which remain a priority.
Financial Highlights
56 data points| Revenue | $2.22B |
| Cost of Revenue | $1.57B |
| Gross Profit | $644.80M |
| R&D Expenses | $14.60M |
| SG&A Expenses | $191.60M |
| Operating Income | $460.70M |
| Interest Expense | $29.80M |
| Net Income | $154.60M |
| EPS (Basic) | $0.71 |
| EPS (Diluted) | $0.70 |
| Shares Outstanding (Basic) | 218.90M |
| Shares Outstanding (Diluted) | 220.40M |
Key Highlights
- 1Sales increased by 18% to $2,216.6 million, driven by a 15% underlying sales growth primarily from higher volumes and a 3% favorable currency impact.
- 2Operating income surged by 40% to $460.7 million, largely due to the absence of significant business separation and cost reduction charges incurred in the prior year.
- 3Net income attributable to Air Products decreased by 48% to $154.6 million ($0.70 per diluted share) compared to $299.8 million ($1.37 per diluted share) in the prior year, significantly impacted by a $239.0 million net expense related to the U.S. Tax Cuts and Jobs Act.
- 4The Industrial Gases – Asia segment showed exceptional growth with sales up 47% and operating income up 48%, boosted by an equipment sale from a contract termination and new projects.
- 5The company completed three acquisitions in the quarter for an aggregate purchase price of $237.1 million, strengthening its position, particularly in China.
- 6Cash provided by operating activities was $564.1 million, reflecting strong operational cash generation.
- 7Dividends paid to shareholders increased to $207.5 million, demonstrating a continued commitment to returning capital to investors.