Air Products Reports Fiscal Q1 Financial Results

Wed Jan 23, 2013 6:00am EST

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LEHIGH VALLEY, Pa.,  Jan. 23, 2013  /PRNewswire/ --  

First Quarter Summary

* Sales of  $2.6 billion  up 10 percent versus prior year  
* EPS up three* percent to  $1.30  versus prior year  
* Good volumes in Tonnage Gases and new wins from Gulf Coast Connection Pipeline
 
* $462 million  share repurchase

Air Products (NYSE: APD) today reported net income of  $277 million  and diluted
earnings per share (EPS) of  $1.30, on a continuing operations basis, for its
fiscal first quarter ended  December 31, 2012, both up three* percent versus the
prior year.

The discussion of first quarter results and guidance in this release is based on
non-GAAP continuing operations. A reconciliation to GAAP results can be found on
the Consolidated Results table.*

First quarter revenues of  $2,562 million  increased 10 percent versus prior
year, with underlying sales up four percent on improved volumes in Tonnage
Gases. Acquisitions contributed six percent. Operating income of  $372 million 
was up five percent versus prior year. Operating margin of 14.5 percent was down
70 basis points versus prior year, driven by an inventory accounting revaluation
and the Indura acquisition.

Sequential sales declined two percent, with underlying sales down four percent
and seasonally lower volumes in the Merchant Gases, and Electronics and
Performance Materials segments. Operating income decreased nine percent
sequentially.

Commenting on the first quarter,  John McGlade, chairman, president and chief
executive officer, said, "Globally, economic growth underperformed our
expectations for the quarter. We delivered higher volumes in Tonnage Gases, and
Equipment and Energy. However, both Merchant Gases and Electronics volumes
declined. Our operating performance was encouraging and we are seeing
improvements from our cost and restructuring actions. It's a positive start that
we expect to improve upon through the year. We also repurchased 5.7 million
shares during the quarter."

* Merchant Gases  sales of  $1,009 million  increased 14 percent versus the
prior year due to the Indura acquisition. Underlying sales declined one percent,
with positive pricing in all regions more than offset by lower volumes in 
Europe. Operating income of  $171 million  increased three percent versus prior
year due largely to Indura and positive pricing, partially offset by lower
volumes. Sequential sales decreased one percent, with positive pricing and a
weaker dollar offset by seasonally lower volumes. Sequential operating income
increased six percent due to improved productivity and prior quarter Indura
acquisition costs.  
* Tonnage Gases  sales of  $898 million  increased 11 percent versus the prior
year, on strong base loading and new plant volumes. Operating income of  $138
million  was up 24 percent versus prior year, driven by the volume growth and
lower maintenance spending. Sequential sales increased six percent driven
primarily by new plant volumes and higher energy pass-thru. Sequential operating
income was down two percent, primarily from the previously announced decision to
exit the PUI business.  
* Electronics and Performance Materials  sales of  $549 million  were up three
percent versus prior year primarily due to the DA NanoMaterials acquisition.
Underlying sales were down one percent, as volume growth in Performance
Materials was more than offset by lower Electronics volumes. Operating income of
 $61 million  was down 22 percent versus prior year due largely to inventory
accounting revaluation. Sequential sales declined 11 percent and sequential
operating income declined 28 percent respectively on lower volumes and higher
costs.  
* Equipment and Energy  sales of  $106 million  increased 19 percent versus
prior year, due to higher large ASU and LNG equipment sales. Operating income of
 eight million dollars  increased 15 percent versus prior year due to the higher
equipment sales. Sequentially, sales decreased 16 percent and operating income
decreased 53 percent due mostly to reduced ASU project activity. The sales
backlog is up 25 percent versus prior year on LNG sales.

Outlook

Looking ahead, McGlade said, "Global economic growth is expected to be modest at
best so we will continue to take actions to improve our performance. Solid
execution, cost control, price improvement and volume growth are our priorities.
Our strong project backlog and our significant leverage in existing assets
position us well for the future."

Air Products is updating its guidance for fiscal 2013 of EPS in the range
of$5.70 to $5.90  per share. For the second quarter of fiscal 2013 ending  March
31, 2013, EPS is expected to be between  $1.34 and $1.39per share.

Access the Q1 earnings teleconference scheduled for  10:00 a.m. Eastern Time  on
 January 23  by calling  719-325-4787 and entering pass code  3708364,  or
access  event details  on our website.  



About Air Products

Air Products (NYSE: APD) provides atmospheric, process and specialty gases;
performance materials; equipment; and technology. For over 70 years, the company
has enabled customers to become more productive, energy efficient and
sustainable. More than 20,000 employees in over 50 countries supply innovative
solutions to the energy, environment and emerging markets. These include
semiconductor materials, refinery hydrogen, coal gasification, natural gas
liquefaction, and advanced coatings and adhesives. In fiscal 2012, Air Products
had sales approaching  $10 billion. For more information, visit 
www.airproducts.com.  



Note:  This release contains "forward-looking statements" within the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, including
statements about earnings guidance, projections, targets and business outlook.
These forward-looking statements are based on management's reasonable
expectations and assumptions as of the date of this release. Actual performance
and financial results may differ materially from projections and estimates
expressed in the forward-looking statements because of many factors not
anticipated by management, including, without limitation, deterioration in
global or regional economic and business conditions; weakening demand for the
Company's products and services; future financial and operating performance of
major customers; unanticipated contract terminations or customer cancellations
or postponement of projects and sales; the success of commercial negotiations;
asset impairments or losses due to a decline in profitability of or demand for
certain of the Company's products or businesses, or specific product or customer
events; the impact of competitive products and pricing; interruption in ordinary
sources of supply of raw materials; the ability to recover unanticipated
increased energy and raw material costs from customers; costs and outcomes of
litigation or regulatory activities; successful development and market
acceptance of new products and applications; the ability to attract, hire and
retain qualified personnel in all regions of the world where the Company
operates; the success of productivity programs; the success and impact of
restructuring and cost reduction initiatives; achieving anticipated acquisition
synergies; the timing, impact, and other uncertainties of future acquisitions or
divestitures; significant fluctuations in interest rates and foreign currencies
from that currently anticipated; the continued availability of capital funding
sources for all of the Company's foreign operations; the impact of
environmental, tax or other legislation and regulations in jurisdictions in
which the Company and its affiliates operate; the impact of new or changed
financial accounting guidance; the impact on the effective tax rate of changes
in the mix of earnings among our U.S. and international operations; and other
risk factors described in the Company's Form 10K for its fiscal year ended 
September 30, 2012. The Company disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statements contained
in this document to reflect any change in the Company's assumptions, beliefs or
expectations or any change in events, conditions, or circumstances upon which
any such forward-looking statements are based.

* The presentation of non-GAAP measures is intended to enhance the usefulness of
financial information by providing measures which our management uses internally
to evaluate our baseline performance on a comparable basis. Presented below are
reconciliations of the reported GAAP results to the non-GAAP measures.

 CONSOLIDATED RESULTS                                                                               
                                            Continuing Operations                             
                                                   Net                   Diluted          
 2013 Q1 vs 2012 Q1                                 Income                EPS              
             2013 GAAP                      $      276.9          $      1.30             
             2012 GAAP                             225.9                 1.06             
             Change GAAP                    $      51.0           $      .24              
             % Change GAAP                         23%                   23%              
                                                                                          
             2013 GAAP                      $      276.9          $      1.30             
             2013 Non-GAAP Measure          $      276.9          $      1.30             
                                                                                          
             2012 GAAP                      $      225.9          $      1.06             
             Spanish tax settlement                43.8                  .20              
             2012 Non-GAAP Measure          $      269.7          $      1.26             
                                                                                          
             Change Non-GAAP Measure        $      7.2            $      .04              
             % Change Non-GAAP Measure             3%                    3%               
                                                                                          
                                                                         Operating        
 2013 Q1 vs 2012 Q4                                                       Income           
             2013 Q1 GAAP                                         $      372.4            
             2012 Q4 GAAP                                                157.9            
             Change GAAP                                          $      214.5            
             % Change GAAP                                               136%             
                                                                                          
             2013 Q1 GAAP                                         $      372.4            
             2013 Q1 Non-GAAP Measure                             $      372.4            
                                                                                          
             2012 Q4 GAAP                                         $      157.9            
             PV market actions                                           186.0            
             PUI business actions                                        54.6             
             Customer bankruptcy                                         9.8              
             2012 Q4 Non-GAAP Measure                             $      408.3            
                                                                                          
             Change Non-GAAP Measure                              $      (35.9)           
             % Change Non-GAAP Measure                                   (9)%             
                                                                                          
                                                                         FY 2013          
             2013 Guidance                                               $5.70-$5.90      


Capital Expenditures  

We utilize a non-GAAP measure in the computation of capital expenditures and
include spending associated with facilities accounted for as capital leases.
Certain facilities that are built to provide product to a specific customer are
required to be accounted for as capital leases and such spending is reflected as
a use of cash within cash provided by operating activities.

                                        FY 2013       2013 Forecast            
 Capital expenditures - GAAP basis      $     357.0  $        1,650-1,750    
 Capital lease expenditures                   71.4            250-350        
 Capital expenditures - Non-GAAP basis  $     428.4  $        1,900-2,100    


 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries                                                                                    
 CONSOLIDATED INCOME STATEMENTS                                                                                                       
 (Unaudited)                                                                                                                          
                                                                                                                           
                                                                               Three Months Ended                               
                                                                               31 December                                      
   (Millions of dollars, except for share data)                                  2012                        2011              
   Sales                                                                         $     2,562.4              $     2,321.5    
   Cost of sales                                                                       1,900.1                    1,722.3    
   Selling and administrative                                                          268.2                      231.0      
   Research and development                                                            33.3                       28.1       
   Other income, net                                                                   11.6                       13.7       
   Operating Income                                                                    372.4                      353.8      
   Equity affiliates' income                                                           41.4                       37.1       
   Interest expense                                                                    35.8                       29.4       
   Income from Continuing Operations before Taxes                                      378.0                      361.5      
   Income tax provision                                                                92.2                       127.4      
   Income from Continuing Operations                                                   285.8                      234.1      
   Income from Discontinued Operations, net of tax                                     1.4                        22.2       
   Net Income                                                                          287.2                      256.3      
   Less: Net Income Attributable to Noncontrolling Interests                           8.9                        8.2        
   Net Income Attributable to Air Products                                       $     278.3                $     248.1      
                                                                                                                           
   Net Income Attributable to Air Products                                                                                   
   Income from continuing operations                                             $     276.9                $     225.9      
   Income from discontinued operations                                                 1.4                        22.2       
   Net Income Attributable to Air Products                                       $     278.3                $     248.1      
                                                                                                                           
   Basic Earnings Per Common Share Attributable to Air Products                                                              
   Income from continuing operations                                             $     1.32                 $     1.07       
   Income from discontinued operations                                                 .01                        .11        
   Net Income Attributable to Air Products                                       $     1.33                 $     1.18       
                                                                                                                           
   Diluted Earnings Per Common Share Attributable to Air Products                                                            
   Income from continuing operations                                             $     1.30                 $     1.06       
   Income from discontinued operations                                                 .01                        .10        
   Net Income Attributable to Air Products                                       $     1.31                 $     1.16       
                                                                                                                           
   Weighted Average of Common Shares Outstanding  (in millions)                        210.0                      210.3      
   Weighted Average of Common Shares Outstanding                                                                             
                          Assuming Dilution  (in millions)                            212.6                      213.9      
   Dividends Declared Per Common Share  - Cash                                   $     .64                  $     .58        
                                                                                                                           
   Other Data from Continuing Operations                                                                                     
                          Depreciation and amortization                         $     218.5                $     203.0      
                          Capital expenditures on a Non-GAAP basis                    428.4                      398.0      
                                                 (see reconciliation table)                                                


 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries                                                                              
 CONSOLIDATED BALANCE SHEETS                                                                                                    
 (Unaudited)                                                                                                                    
                                                                                                                       
                                                                  31 December                 30 September                   
   (Millions of dollars)                                               2012                       2012                   
   Assets                                                                                                              
   Current Assets                                                                                                      
   Cash and cash items                                                 $    545.6                $     454.4           
   Trade receivables, net                                                   1,508.0                    1,544.7         
   Inventories                                                              746.5                      786.6           
   Contracts in progress, less progress billings                            214.3                      190.8           
   Prepaid expenses                                                         125.5                      81.7            
   Other receivables and current assets                                     409.7                      342.0           
   Current assets of discontinued operations                                13.5                       15.6            
   Total Current Assets                                                     3,563.1                    3,415.8         
   Investment in net assets of and advances to equity affiliates            1,185.2                    1,175.7         
   Plant and equipment, at cost                                             18,558.1                   18,046.2        
   Less: accumulated depreciation                                           10,075.8                   9,805.6         
   Plant and equipment, net                                                 8,482.3                    8,240.6         
   Goodwill                                                                 1,610.7                    1,598.4         
   Intangible assets, net                                                   754.8                      761.6           
   Noncurrent capital lease receivables                                     1,411.9                    1,328.9         
   Other noncurrent assets                                                  360.1                      393.6           
   Noncurrent assets of discontinued operations                             25.0                       27.2            
   Total Noncurrent Assets                                                  13,830.0                   13,526.0        
   Total Assets                                                        $    17,393.1             $     16,941.8        
                                                                                                                       
   Liabilities and Equity                                                                                              
   Current Liabilities                                                                                                 
   Payables and accrued liabilities                                    $    1,963.9              $     1,927.7         
   Accrued income taxes                                                     70.0                       48.5            
   Short-term borrowings                                                    835.9                      633.4           
   Current portion of long-term debt                                        92.5                       74.3            
   Current liabilities of discontinued operations                           4.6                        6.0             
   Total Current Liabilities                                                2,966.9                    2,689.9         
   Long-term debt                                                           5,107.3                    4,584.2         
   Other noncurrent liabilities                                             1,752.8                    1,980.9         
   Deferred income taxes                                                    723.9                      670.8           
   Noncurrent liabilities of discontinued operations                        .3                         .2              
   Total Noncurrent Liabilities                                             7,584.3                    7,236.1         
   Total Liabilities                                                        10,551.2                   9,926.0         
   Redeemable Noncontrolling Interest                                       390.7                      392.5           
   Total Air Products Shareholders' Equity                                  6,299.3                    6,477.2         
   Noncontrolling Interests                                                 151.9                      146.1           
   Total Equity                                                             6,451.2                    6,623.3         
   Total Liabilities and Equity                                        $    17,393.1             $     16,941.8        
                                                                                                                       


 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries                                                                                                                  
 CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                                              
 (Unaudited)                                                                                                                                                        
                                                                                                               Three Months Ended                               
                                                                                                               31 December                                      
   (Millions of dollars)                                                                                        2012                        2011              
   Operating Activities                                                                                                                                     
   Net Income                                                                                                   $     287.2                $     256.3      
   Less: Net income attributable to noncontrolling interests                                                          8.9                        8.2        
   Net income attributable to Air Products                                                                      $     278.3                $     248.1      
   Income from discontinued operations                                                                                (1.4)                      (22.2)     
   Income from continuing operations attributable to Air Products                                               $     276.9                $     225.9      
   Adjustments to reconcile income to cash provided by operating activities:                                                                                
                                                         Depreciation and amortization                               218.5                      203.0      
                                                         Deferred income taxes                                       37.4                       26.1       
                                                         Share-based compensation                                    10.1                       11.8       
                                                         Noncurrent capital lease receivables                        (93.4)                     (61.2)     
                                                         Other adjustments                                           60.8                       11.3       
   Working capital changes that provided (used) cash, excluding effects of acquisitions and divestitures:                                                   
                                                         Trade receivables                                           51.0                       57.6       
                                                         Inventories                                                 42.5                       (24.2)     
                                                         Contracts in progress, less progress billings               (22.3)                     (9.6)      
                                                         Other receivables                                           (64.4)                     4.5        
                                                         Payables and accrued liabilities                            7.3                        (54.8)     
                                                         Other working capital                                       (16.0)                     42.0       
   Pension plan contributions                                                                                         (230.0)                    (8.1)      
   Cash Provided by Operating Activities                                                                              278.4                      424.3      
   Investing Activities                                                                                                                                     
   Additions to plant and equipment                                                                                   (357.0)                    (342.3)    
   Investment in and advances to unconsolidated affiliates                                                            -                          (21.2)     
   Proceeds from sale of assets and investments                                                                       2.8                        11.9       
   Change in restricted cash                                                                                          -                          2.0        
   Other investing activities                                                                                         (1.6)                      -          
   Cash Used for Investing Activities                                                                                 (355.8)                    (349.6)    
   Financing Activities                                                                                                                                     
   Long-term debt proceeds                                                                                            77.3                       400.1      
   Payments on long-term debt                                                                                         (65.0)                     (3.3)      
   Net increase (decrease) in commercial paper and short-term borrowings                                              709.1                      (316.4)    
   Dividends paid to shareholders                                                                                     (136.0)                    (121.9)    
   Purchase of treasury shares                                                                                        (461.6)                    -          
   Proceeds from stock option exercises                                                                               27.0                       7.9        
   Excess tax benefit from share-based compensation                                                                   8.1                        2.8        
   Payment for subsidiary shares from noncontrolling interests                                                        -                          (58.4)     
   Other financing activities                                                                                         (1.8)                      (.1)       
   Cash Provided by (Used for) Financing Activities                                                                   157.1                      (89.3)     
   Discontinued Operations                                                                                                                                  
   Cash provided by operating activities                                                                              5.2                        6.4        
   Cash used for investing activities                                                                                 (.8)                       (7.4)      
   Cash provided by financing activities                                                                              -                          1.0        
   Cash Provided by Discontinued Operations                                                                           4.4                        -          
   Effect of Exchange Rate Changes on Cash                                                                            7.1                        (.6)       
   Increase (Decrease) in Cash and Cash Items                                                                         91.2                       (15.2)     
   Cash and Cash Items - Beginning of Year                                                                            454.4                      422.5      
   Cash and Cash Items - End of Period                                                                                545.6                      407.3      
   Less: Cash and Cash Items - Discontinued Operations                                                                -                          1.1        
   Cash and Cash Items - Continuing Operations                                                                  $     545.6                $     406.2      


 AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries                                                                  
 SUMMARY BY BUSINESS SEGMENTS                                                                                       
 (Unaudited)                                                                                                        
                                                                                                                    
                                                              Three Months Ended                               
                                                              31 December                                      
   (Millions of dollars)                                       2012                        2011              
   Sales to External Customers                                                                             
                     Merchant Gases                           $     1,009.1              $     887.7      
                     Tonnage Gases                                  898.4                      809.8      
                     Electronics and Performance Materials          549.0                      535.2      
                     Equipment and Energy                           105.9                      88.8       
   Segment and Consolidated Totals                             $     2,562.4              $     2,321.5    
                                                                                                          
   Operating Income                                                                                        
                     Merchant Gases                           $     171.0                $     166.3      
                     Tonnage Gases                                  138.1                      111.4      
                     Electronics and Performance Materials          61.3                       78.1       
                     Equipment and Energy                           8.4                        7.3        
   Segment Total                                               $     378.8                $     363.1      
                     Other                                          (6.4)                      (9.3)      
   Consolidated Total                                          $     372.4                $     353.8      


                                                          31 December                                                30 September                                               
   (Millions of dollars)                                                2012                                                     2012                                       
   Identifiable Assets  (A)                                                                                                                                               
                  Merchant Gases                                       $             6,500.6                                   $             6,428.5                     
                  Tonnage Gases                                                      5,225.3                                                 5,059.8                     
                  Electronics and Performance Materials                              2,908.5                                                 2,930.3                     
                  Equipment and Energy                                               425.8                                                   379.3                       
   Segment Total                                                        $             15,060.2                                  $             14,797.9                    
                  Other                                                              1,109.2                                                 925.4                       
                  Discontinued operations                                            38.5                                                    42.8                        
   Consolidated Total                                                   $             16,207.9                                  $             15,766.1                    
                                                                                                                                                                         
   (A)  Identifiable assets are equal to total assets less investment in net assets of and advances to equity affiliates.                                                         


RECONCILIATION
NON-GAAP MEASURE
(Unaudited)

We utilize a non-GAAP measure in the computation of capital expenditures and
include spending associated with facilities accounted for as capital leases and
purchases of noncontrolling interests. Certain contracts associated with
facilities that are built to provide product to a specific customer are required
to be accounted for as leases, and such spending is reflected as a use of cash
within cash provided by operating activities, if the arrangement qualifies as a
capital lease. Additionally, the purchase of noncontrolling interests in a
subsidiary is accounted for as an equity transaction and will be reflected as a
financing activity in the statement of cash flows.

The presentation of this non-GAAP measure is intended to enhance the usefulness
of information by providing a measure which our management uses internally to
evaluate and manage our expenditures.

Below is a reconciliation of capital expenditures on a GAAP basis to a non-GAAP
measure.

                                               Three Months Ended                         
                                               31 December                                
   (Millions of dollars)                        2012                      2011          
   Capital expenditures - GAAP basis            $     357.0              $     363.5  
   Capital lease expenditures                         71.4                     28.2   
   Purchase of noncontrolling interests               -                        6.3    
   Capital expenditures - Non-GAAP basis        $     428.4              $     398.0  


SOURCE  Air Products


Media Inquiries, George Noon, +1-610-481-1990, noong@airproducts.com or Investor
Inquiries, Simon Moore, +1-610-481-7461, mooresr@airproducts.com

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