Air Products Reports Second Quarter Fiscal 2014 Financial Results

LEHIGH VALLEY, Pa., April 23, 2014 /PRNewswire/ --

Second Quarter Highlights

• EPS of $1.32 within guidance despite adverse weather impacts
• Latest world-scale hydrogen plant onstream in U.S. Gulf Coast
• World-class high purity nitrogen plant onstream in Tainan Science Industrial Park, Taiwan
• 32^nd consecutive year of dividend increases – up 8.5 percent

Air Products (NYSE: APD) today reported results for the quarter ended March 31, 2014. Net income of $284 million and diluted earnings per share (EPS) of $1.32, were down two percent and four percent, respectively, compared with results for the second quarter of 2013.

Second quarter sales of $2,582 million increased four percent versus prior year driven by higher energy pass-through and stronger underlying volumes in Merchant Gases, and Electronics and Performance Materials. Excluding the exit from the Polyurethane Intermediates Business (PUI), underlying sales improved two percent versus prior year and were down one percent sequentially.

Operating income of $385 million decreased one percent versus prior year. Strong results in Electronics and Performance Materials, and Equipment and Energy, were more than offset by Merchant Gases and Tonnage Gases, which were impacted by adverse weather and planned outages, respectively. Operating margin of 14.9 percent was down 80 basis points, with the positive impact from higher volumes more than offset by higher costs, including weather impacts, and the dilutive effect of higher energy pass-through.

Commenting on the quarter, John McGlade, chairman, president and chief executive officer, said, "In the second quarter, Air Products delivered higher underlying volumes. We also executed well on our planned maintenance outages, and managed the additional challenge of adverse weather, the costs of which we are committed to recover in the second half of the year. We remain confident in the prospects for the business and, accordingly, we raised our quarterly dividend for the 32^nd consecutive year."

Second Quarter Results by Business Segment: 

• Merchant Gases sales of $1,040 million increased four percent versus prior year, primarily on higher volumes in U.S./Canada, Asia and Latin America, partially offset by lower helium volumes due to continued global supply constraints. Operating income of $143 million was down 15 percent versus prior year and operating margin of 13.8% was down 300 basis points, primarily due to higher costs, including weather-related impacts in U.S./Canada.
  
• Tonnage Gases sales of $840 million increased four percent versus prior year, as higher energy pass-through more than offset lower volumes due to planned customer outages, and the impact of the PUI business exit. Operating income of $112 million was down nine percent versus prior year primarily due to planned higher maintenance costs and the PUI exit.
  
• Electronics and Performance Materials sales of $592 million increased eight percent versus prior year driven by nine percent higher volumes. Electronics sales improved six percent primarily due to higher sales of delivery systems. Performance Materials sales increased 10 percent versus prior year with growth across all product lines and all major regions. Operating income of $107 million increased 38 percent and operating margin improved by 400 basis points versus prior year on cost actions and the strong volumes.
  
• Equipment and Energy sales of $110 million decreased 11 percent versus prior year, while operating income of $23 million increased 11 percent versus prior year driven largely by strong LNG project activity. The sales backlog of $338 million increased three percent.

Outlook

Air Products expects third quarter EPS from continuing operations to be between $1.42 and $1.47 per share. The company's guidance for continuing operations for fiscal 2014 is a range of $5.70 to $5.85 per share, from $5.70 to $5.90 previously. Capital expenditure forecast for the current fiscal year is unchanged at approximately $2.0 billion*.

Looking ahead, McGlade said, "Air Products' momentum will continue to increase as we load assets, win new business and bring projects on-stream. Going forward, we remain focused on continuing to increase productivity and generate benefits from further price and cost actions. We are confident in our ability to deliver strong earnings growth in the second half of this year."

*Reported on a non-GAAP basis. Reconciliation to the GAAP measure can be found at the end of this release.

Access the Q2 earnings teleconference scheduled for 10:00 a.m. Eastern Daylight Time on April 23 by calling 719-325-4756 and entering passcode 5636921, 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. Recognized as one of the world's most innovative companies by both Thomson Reuters and Forbes magazine, more than 21,000 employees in over 50 countries supply effective 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 2013, Air Products had sales of $10.2 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 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, weakening or reversal of global or regional economic recovery; future financial and operating performance of major customers; unanticipated contract terminations or customer cancellations or postponement of projects and sales; the impact of competitive products and pricing; unexpected changes in raw material supply and markets including helium; the impact of price fluctuations in natural gas; unanticipated asset impairments or losses; the ability to recover increased energy and raw material costs, including weather related costs, from customers; costs and outcomes of litigation or regulatory investigations; the impact of management and organizational changes, including pension settlement and other associated costs; the success of productivity programs; the timing, impact, and other uncertainties of future acquisitions or divestitures; significant fluctuations in interest rates and foreign currencies from that currently anticipated; political risks, including the risks of unanticipated government actions that may result in project delays, cancellations or expropriations; the impact of changes in environmental, tax or other legislation and regulatory activities in jurisdictions in which the Company and its affiliates operate; 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, 2013. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this release 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.

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 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.

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.  

SOURCE Air Products

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED