10-QPeriod: Q2 FY2021

Air Products & Chemicals, Inc. Quarterly Report for Q2 Ended Mar 31, 2021

Filed May 10, 2021For Securities:APD

Summary

Air Products & Chemicals, Inc. (APD) reported its results for the second quarter and first six months of fiscal year 2021, ending March 31, 2021. The company demonstrated sales growth driven by price increases and favorable currency movements, with consolidated sales increasing by 13% year-over-year for the quarter and 9% for the six-month period. However, operating income and net income saw a slight decline compared to the prior year, primarily impacted by unfavorable volume mix, increased energy costs due to Winter Storm Uri, and a facility closure charge. Despite these headwinds, APD highlighted a 12% increase in its quarterly dividend, marking the 39th consecutive year of dividend increases, underscoring a commitment to returning value to shareholders.

Financial Highlights

57 data points
Beta

Revenue

$2.50B

30.2% Gross Margin

Net Income

$473.10M

18.9% Net Margin

EPS (Diluted)

$2.13

Total Assets

$26.16B

Cash & Equivalents

$5.79B

Free Cash Flow

$242.00M

Financial Statements
Beta
Revenue$2.50B
Cost of Revenue$1.75B
Gross Profit$756.50M
R&D Expenses$21.10M
SG&A Expenses$210.30M
Operating Income$548.50M
Interest Expense$36.10M
Net Income$473.10M
EPS (Basic)$2.13
EPS (Diluted)$2.13
Shares Outstanding (Basic)221.60M
Shares Outstanding (Diluted)222.50M

Key Highlights

  • 1Sales increased by 13% to $2,502.0 million for the second quarter and by 9% to $4,877.2 million for the first six months, driven by energy cost pass-through, favorable currency, and pricing actions.
  • 2Operating income decreased by 5% to $548.5 million for the quarter and by 4% to $1,087.6 million for the six months, impacted by lower volumes and higher energy costs.
  • 3Net income attributable to Air Products was $473.1 million for the quarter and $955.1 million for the six months, representing a decrease of 3% and 2% respectively, compared to the prior year.
  • 4The company declared a quarterly dividend of $1.50 per share, a 12% increase, continuing its streak of 39 consecutive annual dividend increases.
  • 5A gain of $36.8 million was recognized from an exchange with a joint venture partner in the EMEA segment.
  • 6A facility closure charge of $23.2 million was recorded in the Industrial Gases – Americas segment.
  • 7The company continues to manage its financial risks through hedging strategies, with a notable decrease in the notional value of certain forward exchange contracts.

Frequently Asked Questions

Sales increased primarily due to higher energy and natural gas cost pass-through to customers (especially in the Americas due to Winter Storm Uri), favorable currency movements (e.g., Chinese Renminbi, Euro), and positive pricing actions across merchant businesses. Volumes remained flat for the quarter and were slightly down for the six-month period.

The decrease in operating income and net income was mainly due to an unfavorable volume mix, higher energy and natural gas costs that contributed to sales but not gross profit (especially from Winter Storm Uri's impact in the U.S. Gulf Coast), and a $23.2 million facility closure charge. COVID-19 also had an estimated negative impact on sales and costs.

Air Products entered into a new $2,500 million revolving credit agreement and maintains a strong balance sheet with total debt as a percentage of total capitalization at 37.9% as of March 31, 2021. The company also continues its commitment to returning capital to shareholders through consistent dividend increases.

The company recognized a $36.8 million gain from an exchange with a joint venture partner in Germany. This transaction involved separating a joint venture into two businesses, with Air Products acquiring one part on a 100% basis. The gain is reflected in the current period's results but is not included in segment results.