News Release
Air Products Reports Fiscal Q4 EPS from Continuing Operations of $1.14
Access the Q4 earnings teleconference scheduled for
Highlights:
-- Sales grew eight percent sequentially on volume growth in all businesses
-- Signed three significant Tonnage contracts in the quarter
-- Completed U.S. Healthcare business divestiture
-- Fiscal 2010 outlook: 15 to 21 percent earnings growth on a continuing
operations basis
Fourth quarter revenues of
The following discussion of full year results and guidance in this release is based on non-GAAP comparisons. A reconciliation can be found at the end of this release.
For fiscal 2009, sales of
Fourth Quarter Segment Performance
-- Merchant Gases sales of $932 million declined 15 percent from the prior
year on weaker volumes across manufacturing end-markets globally and
unfavorable currency, partially offset by favorable pricing.
Sequentially, sales increased six percent on three percent higher
volumes from improved demand in most geographies. Operating income of
$166 million declined 16 percent from the prior year on lower volumes
and unfavorable currency, partially offset by favorable pricing.
-- Tonnage Gases sales of $640 million were down 32 percent from the prior
year on lower energy and raw material cost pass-throughs. Sales and
volumes were up 13 percent sequentially on stronger demand from
chemical, refinery and steel customers. Operating income of $105 million
decreased 22 percent from the prior year on lower operating efficiencies
and unfavorable currency.
-- Electronics and Performance Materials sales of $434 million declined 22
percent, primarily on lower volumes and Electronics pricing. Operating
income of $49 million increased 17 percent from the prior year as
favorable cost performance offset volume declines and lower Electronics
pricing. While year-on-year Electronics sales were down 27 percent,
sales increased three percent sequentially due to improved customer
operating rates. Performance Materials volumes improved nine percent
sequentially, reflecting seasonal improvement and stronger Asia sales,
but declined 10 percent from the prior year on weaker demand from
coatings, autos, housing and other end markets.
-- Equipment and Energy sales of $123 million declined three percent from
the prior year. Operating income of $6 million decreased from the prior
year on lower sales and higher Energy development costs.
Outlook
Looking forward, McGlade said, "We have implemented the difficult but necessary actions to take advantage of our strong global market positions. Additionally, we see significant future opportunities in the evolving energy, environment and emerging market sectors. We also continue to drive to a low-cost structure to enable us to grow faster than our competition. While the pace of the recovery is unknown, our people remain committed to achieving our margin, return and growth goals."
The company today announced initial guidance for fiscal year 2010 EPS in the range of
The company also announced that it expects capital spending in fiscal 2010 to be between
NOTE: The information above contains "forward-looking statements," within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including earnings guidance. These forward-looking statements are based on management's reasonable expectations and assumptions as of the date of this press release. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation, longer than anticipated delay in global economic recovery; renewed deterioration in economic and business conditions; weakening demand for the Company's products, future financial and operating performance of major customers and industries served by the Company; unanticipated contract terminations or customer cancellations or postponement of projects and sales; asset impairments due to economic conditions 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; consequences of acts of war or terrorism impacting
The presentation of non-GAAP measures is intended to enhance the
usefulness of financial information by providing measures which the
Company's management uses internally to evaluate the Company's baseline
performance. Presented below is a reconciliation of reported GAAP
results to non-GAAP measures.
(Millions of dollars, YTD
except for share data) ------------------------------------------
Continuing Operations
---------------------
Operating Income Income Diluted EPS
------------------------------------------
2009 GAAP $846.3 $639.9 $3.00
2008 GAAP 1,495.8 1,090.5 4.97
--------- ------- ------- ----
% Change GAAP (43)% (41)% (40)%
============= === === ===
2009 GAAP $846.3 $639.9 $3.00
Global cost reduction plan 298.2 200.3 .94
Customer bankruptcy and asset
actions 32.1 21.0 .10
Pension settlement 8.0 5.0 .02
------------------ --- --- ---
2009 Non-GAAP Measure $1,184.6 $866.2 $4.06
===================== ======== ====== =====
2008 GAAP $1,495.8 $1,090.5 $4.97
Pension settlement 26.3 16.5 .08
------------------ ---- ---- ---
2008 Non-GAAP Measure $1,522.1 $1,107.0 $5.05
===================== ======== ======== =====
------------------------- --- --- ---
% Change Non-GAAP Measure (22)% (22)% (20)%
========================= === === ===
2010 Forecast $4.65-$4.90
2009 GAAP $3.00
--------- -----
% Change GAAP 55% - 63%
============= ========
2010 Forecast $4.65-$4.90
2009 Non-GAAP Measure $4.06
--------------------- -----
% Change Non-GAAP Measure 15% - 21%
========================== ========
QTR
Operating Income
----------------
2009 Q4 GAAP $328.0
2009 Q3 GAAP 143.8
------------ -----
% Change GAAP 128%
============= ===
2009 Q3 GAAP $143.8
Global cost reduction plan 124.0
Customer bankruptcy and asset
actions 32.1
Pension settlement 8.0
------------------ ---
2009 Q3 Non-GAAP Measure $307.9
======================== ======
------------------------- ---
% Change Non-GAAP Measure 7%
------------------------- ---
The Company utilizes a non-GAAP measure in the computation of capital
expenditures and includes spending associated with facilities accounted
for as capital leases. Certain facilities that are built to service 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.
YTD 2009 Actual YTD 2010 Forecast
--------------- -----------------
Capital expenditures - GAAP basis $1,236 $1,000 to $1,200
Capital lease expenditures 239 300
-------------------------- --- ---
Capital Expenditures - Non-GAAP
basis $1,475 $1,300 to $1,500
=============================== ====== ================
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three Months Twelve Months
Ended Ended
(Millions of dollars, 30 September 30 September
except for share data) 2009 2008 2009 2008
---------------------- ---- ---- ---- ----
SALES $2,129.3 $2,714.7 $8,256.2 $10,414.5
Cost of sales 1,545.0 2,026.8 6,042.1 7,693.1
Selling and administrative 233.5 275.4 943.4 1,090.4
Research and development 29.4 33.0 116.3 130.7
Global cost reduction plan - - 298.2
Customer bankruptcy - - 22.2 -
Pension settlement 2.7 1.6 10.7 30.3
Other (income) expense, net (9.3) 4.8 (23.0) (25.8)
--------------------------- ---- --- ----- -----
OPERATING INCOME 328.0 373.1 846.3 1,495.8
Equity affiliates' income 32.2 30.8 112.2 145.0
Interest expense 27.9 42.8 121.9 162.0
---------------- ---- ---- ----- -----
INCOME FROM CONTINUING
OPERATIONS BEFORE TAXES
AND MINORITY INTEREST 332.3 361.1 836.6 1,478.8
Income tax provision 86.3 82.9 185.3 365.3
Minority interest in earnings
of subsidiary companies - 4.8 11.4 23.0
----------------------------- --- --- ---- ----
INCOME FROM CONTINUING
OPERATIONS 246.0 273.4 639.9 1,090.5
LOSS FROM DISCONTINUED
OPERATIONS, net of tax (2.1) (11.8) (8.6) (180.8)
NET INCOME $243.9 $261.6 $631.3 $909.7
========== ====== ====== ====== ======
BASIC EARNINGS PER COMMON
SHARE
Income from continuing
operations $1.17 $1.30 $3.05 $5.14
Loss from discontinued
operations (.01) (.06) (.04) (.85)
---------------------- ---- ---- ---- ----
Net Income $1.16 $1.24 $3.01 $4.29
---------- ----- ----- ----- -----
DILUTED EARNINGS PER COMMON
SHARE
Income from continuing
operations $1.14 $1.26 $3.00 $4.97
Loss from discontinued
operations (.01) (.05) (.04) (.82)
---------------------- ---- ---- ---- ----
Net Income $1.13 $1.21 $2.96 $4.15
---------- ----- ----- ----- -----
WEIGHTED AVERAGE OF COMMON
SHARES OUTSTANDING
(in millions) 210.6 210.6 209.9 212.2
-------------------------- ----- ----- ----- -----
WEIGHTED AVERAGE OF COMMON
SHARES OUTSTANDING ASSUMING
DILUTION (in millions) 215.7 216.9 213.5 219.2
---------------------------- ----- ----- ----- -----
DIVIDENDS DECLARED PER
COMMON SHARE - Cash $.45 $.44 $1.79 $1.70
---------------------- ---- ---- ----- -----
Other Data from Continuing
Operations:
Depreciation and amortization $225.5 $221.2 $840.3 $869.0
Capital expenditures on a
non-GAAP Basis (a) 433.1 406.7 1,474.9 1,355.0
(a) See page 14 for reconciliation
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
30 September 30 September
(Millions of dollars) 2009 2008
-------------------- ---- ----
ASSETS
------
CURRENT ASSETS
Cash and cash items $488.2 $103.5
Trade receivables, less allowances for
doubtful accounts 1,363.2 1,575.2
Inventories 509.6 503.7
Contracts in progress, less progress
billings 132.3 152.0
Prepaid expenses 115.1 107.7
Other receivables and current assets 422.8 349.4
Current assets of discontinued operations 5.0 56.6
----------------------------------------- --- ----
TOTAL CURRENT ASSETS 3,036.2 2,848.1
-------------------- ------- -------
INVESTMENT IN NET ASSETS OF AND ADVANCES TO
EQUITY AFFILIATES 868.1 822.6
PLANT AND EQUIPMENT, at cost 15,751.3 14,988.6
Less accumulated depreciation 8,891.7 8,373.8
----------------------------- ------- -------
PLANT AND EQUIPMENT, net 6,859.6 6,614.8
------------------------ ------- -------
GOODWILL 916.0 928.1
INTANGIBLE ASSETS, net 262.6 289.6
NONCURRENT CAPITAL LEASE RECEIVABLES 687.0 505.3
OTHER NONCURRENT ASSETS 450.0 504.1
NONCURRENT ASSETS OF DISCONTINUED OPERATIONS - 58.7
-------------------------------------------- --- ----
TOTAL ASSETS $13,079.5 $12,571.3
============ ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Payables and accrued liabilities $1,608.2 $1,665.6
Accrued income taxes 42.9 87.0
Short-term borrowings 333.8 419.3
Current portion of long-term debt 452.1 32.1
Current liabilities of discontinued
operations 14.4 8.0
----------------------------------- ---- ---
TOTAL CURRENT LIABILITIES 2,451.4 2,212.0
------------------------- ------- -------
LONG-TERM DEBT 3,715.6 3,515.4
DEFERRED INCOME & OTHER NONCURRENT
LIABILITIES 1,574.2 1,049.2
DEFERRED INCOME TAXES 408.3 626.6
NONCURRENT LIABILITIES OF DISCONTINUED
OPERATIONS - 1.2
-------------------------------------- --- ---
TOTAL LIABILITIES 8,149.5 7,404.4
----------------- ------- -------
MINORITY INTEREST IN SUBSIDIARY COMPANIES 138.1 136.2
----------------------------------------- ----- -----
TOTAL SHAREHOLDERS' EQUITY 4,791.9 5,030.7
-------------------------- ------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,079.5 $12,571.3
========================================== ========= =========
AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Twelve Months Ended
30 September
(Millions of dollars) 2009 2008
-------------------- ---- ----
OPERATING ACTIVITIES
Net income $631.3 $909.7
Adjustments to reconcile income to cash
provided by operating activities:
Depreciation and amortization 840.3 869.0
Impairment of assets of continuing operations 69.2 -
Impairment of assets of discontinued
operations 49.5 314.8
Gain on sale of discontinued operations (2.1) (105.9)
Deferred income taxes (37.0) 36.9
Customer bankruptcy 22.2 -
Undistributed earnings of unconsolidated
affiliates (58.0) (77.8)
Loss on sale of assets and investments 3.6 .3
Share-based compensation 60.4 61.4
Noncurrent capital lease receivables (186.7) (192.6)
Other adjustments (7.8) 2.9
Working capital changes that provided (used)
cash, excluding effects of acquisitions and
divestitures:
Trade receivables 159.0 (97.4)
Inventories (17.7) (34.9)
Contracts in progress 12.5 95.2
Other receivables (11.9) (120.6)
Payables and accrued liabilities (282.8) 36.2
Other working capital 78.9 (17.6)
--------------------- ---- -----
CASH PROVIDED BY OPERATING ACTIVITIES (a) 1,322.9 1,679.6
---------------------------------------- ------- -------
INVESTING ACTIVITIES
Additions to plant and equipment (1,179.1) (1,085.1)
Acquisitions, less cash acquired (32.7) (72.0)
Investment in and advances to unconsolidated
affiliates (24.5) (2.2)
Proceeds from sale of assets and investments 57.9 19.6
Proceeds from sale of discontinued operations 51.0 423.0
Change in restricted cash 87.0 (183.6)
Other investing activities - (19.5)
-------------------------- --- -----
CASH USED FOR INVESTING ACTIVITIES (1,040.4) (919.8)
---------------------------------- -------- ------
FINANCING ACTIVITIES
Long-term debt proceeds 610.5 580.1
Payments on long-term debt (82.9) (95.7)
Net decrease in commercial paper and
short-term borrowings (122.7) (178.9)
Dividends paid to shareholders (373.3) (349.3)
Purchase of treasury stock -- (793.4)
Proceeds from stock option exercises 54.4 87.4
Excess tax benefit from share-based
compensation/other 15.5 51.3
----------------------------------- ---- ----
CASH PROVIDED BY (USED FOR) FINANCING
ACTIVITIES 101.5 (698.5)
------------------------------------- ----- ------
Effect of Exchange Rate Changes on Cash .7 1.7
--------------------------------------- -- ---
Increase in Cash and Cash Items 384.7 63.0
Cash and Cash Items - Beginning of Year 103.5 40.5
--------------------------------------- ----- ----
Cash and Cash Items - End of Period $488.2 $103.5
=================================== ====== ======
(a) Pension plan contributions $182.5 $234.0
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Millions of dollars)
1. GLOBAL COST REDUCTION PLAN
The 2009 results from continuing operations included a total charge of
The total 2009 charge included
The planned actions associated with the global cost reduction plan are expected to be substantially completed within one year of when the related charges were recognized.
2. DISCONTINUED OPERATIONS
For additional historical information on these discontinued operations, refer to the Company's 2008 annual report on Form 10-K.
In
In the first quarter of 2009, based on additional facts, the Company recorded an impairment charge of
As a result of events which occurred during the second quarter of 2009, which increased the Company's ability to realize tax benefits associated with the impairment charges recorded in 2008, the Company recognized a one-time tax benefit of
During the third quarter of 2009, the Company sold more than half of its remaining
During the fourth quarter of 2009, through a series of transactions with
The operating results of the
Three Months Twelve Months
Ended Ended
30 September 30 September
2009 2008 2009 2008
---- ---- ---- ----
Sales $7.9 $52.7 $125.2 $239.8
Loss before taxes $(2.3) $(5.2) $(5.5) $(350.6)
Income tax benefit (.9) (1.9) (2.1) (91.2)
------------------ --- ---- ---- -----
Loss from operations of discontinued
operations $(1.4) $(3.3) $(3.4) $(259.4)
Loss on sale of businesses and
impairment/write-down to estimated net
realizable value, net of tax
--------------------------------------- (.7) (8.7) (5.5) (8.7)
--- ---- ---- ----
Loss from discontinued operations, net
of tax $(2.1) $(12.0) $(8.9) $(268.1)
====================================== ===== ====== ===== =======
Polymer Emulsions Business
On
On
The operating results of the Polymer Emulsions business have been classified as discontinued operations and are summarized below:
Three Months Twelve Months
Ended Ended
30 September 30 September
2009 2008 2009 2008
---- ---- ---- ----
Sales $- $- $- $261.4
Income before taxes $- $.2 $- $17.7
Income tax provision -- .1 -- 6.4
-------------------- -- ---
Income from operations of
discontinued operations $- $.1 $- $11.3
Gain on sale of business, net of
tax - - .3 76.2
-------------------------------- -- -- -- ----
Income from discontinued
operations, net of tax $- $.1 $.3 $87.5
======================== == === === =====
3. CUSTOMER BANKRUPTCY AND ASSET ACTIONS
As a result of events which occurred during the third quarter of 2009, the Company recognized a
Additionally, during the third quarter of 2009, the Company recorded a charge of
4. PENSION SETTLEMENT
The Company's supplemental pension plan provides for a lump sum benefit payment option at the time of retirement, or for corporate officers six months after the participant's retirement date. The Company recognizes pension settlements when payments exceed the sum of service and interest cost components of net periodic pension cost of the plan for the fiscal year. A settlement loss is recognized when the pension obligation is settled. Based on the timing of when cash payments were made, the Company recognized
5. LOSS FROM PROPERTY DAMAGE
In the fourth quarter of 2008, a fire at the Company's Ulsan, Korea nitrogen trifluoride (NF3) production facility required the plant to be shut down. Other income (expense) for the three and twelve months ended
During fiscal 2009, the Company received the expected insurance recoveries for property damage of
6. HURRICANES
During the fourth quarter of 2008, Hurricanes Gustav and Ike reduced short-term demand from the
7. SUMMARY BY BUSINESS SEGMENT
Three Months Twelve Months
Ended Ended
30 September 30 September
2009 2008 2009 2008
---- ---- ---- ----
Revenues from External Customers
Merchant Gases $932.4 $1,095.0 $3,610.6 $4,192.7
Tonnage Gases 640.0 940.3 2,573.6 3,574.4
Electronics and Performance
Materials 434.2 553.2 1,582.2 2,209.3
Equipment and Energy 122.7 126.2 489.8 438.1
-------------------- ----- ----- ----- -----
Segment and Consolidated Totals $2,129.3 $2,714.7 $8,256.2 $10,414.5
------------------------------- -------- -------- -------- ---------
Operating Income
Merchant Gases $165.7 $196.2 $661.2 $789.5
Tonnage Gases 105.2 134.9 399.6 482.6
Electronics and Performance
Materials 49.1 41.9 101.6 245.9
Equipment and Energy 5.8 15.6 42.2 38.9
-------------------- --- ---- ---- ----
Segment Totals $325.8 $388.6 $1,204.6 $1,556.9
Global cost reduction plan - - (298.2) -
Customer bankruptcy and asset
actions - - (32.1) -
Pension settlement (2.7) (1.6) (10.7) (30.3)
Other 4.9 (13.9) (17.3) (30.8)
----- --- ----- ----- -----
Consolidated Total $328.0 $373.1 $846.3 $1,495.8
------------------ ------ ------ ------ --------
30 September 30 September
2009 2008
---- ----
Identifiable Assets (a)
Merchant Gases $4,917.0 $4,881.6
Tonnage Gases 3,597.8 3,335.4
Electronics and Performance Materials 2,249.5 2,341.0
Equipment and Energy 303.3 300.2
-------------------- ----- -----
Segment Totals $11,067.6 $10,858.2
Other 1,138.8 775.2
Discontinued Operations 5.0 115.3
----------------------- --- -----
Consolidated Total $12,211.4 $11,748.7
------------------ --------- ---------
(a) Identifiable assets are equal to total assets less investments in and
advances to equity affiliates.
RECONCILIATION
NON-GAAP MEASURE
The Company utilizes a non-GAAP measure in the computation of capital expenditures and includes spending associated with facilities accounted for as capital leases. Certain facilities that are built to service 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. The presentation of this non-GAAP measure is intended to enhance the usefulness of information by providing a measure which the Company's management uses internally to evaluate and manage the Company's capital expenditures.
Below is a reconciliation of capital expenditures on a GAAP basis to a non-GAAP measure.
Three Months Twelve Months
Ended Ended
30 September 30 September
(Millions of dollars) 2009 2008 2009 2008
-------------------- ---- ---- ---- ----
Capital expenditures - GAAP
basis $306.1 $364.1 $1,236.3 $1,159.3
Capital lease expenditures 127.0 42.6 238.6 195.7
-------------------------- ----- ---- ----- -----
Capital expenditures - non-GAAP
basis $433.1 $406.7 $1,474.9 $1,355.0
------------------------------- ------ ------ -------- --------
SOURCE Air Products
Media Inquiries, Robert Brown, +1-610-481-1192, brownrf@airproducts.com; Investors, Nelson Squires, +1-610-481-7461, squirenj@airproducts.com