Delaware | 001-04534 | 23-1274455 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
7201 Hamilton Boulevard, Allentown, Pennsylvania | 18195-1501 | |
(Address of Principal Executive Offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $1.00 per share | APD | New York Stock Exchange |
2.0% Euro Notes due 2020 | APD20 | New York Stock Exchange |
0.375% Euro Notes due 2021 | APD21B | New York Stock Exchange |
1.0% Euro Notes due 2025 | APD25 | New York Stock Exchange |
Emerging growth company | ¨ |
Exhibit No. | Description | |
99.1 |
Air Products and Chemicals, Inc. | ||
(Registrant) | ||
Date: 25 July 2019 | By: | /s/ M. Scott Crocco |
M. Scott Crocco | ||
Executive Vice President and Chief Financial Officer |
News Release | |
• | GAAP EPS of $2.20 and GAAP net income of $488 million, both up 13 percent |
• | Record adjusted EPS of $2.17*, up 11 percent; adjusted EPS up 14 percent on a constant currency basis |
• | Record adjusted EBITDA margin of 40.1 percent*, up 380 basis points |
• | Completed asset buyback: two air separation units from Jinmei Huayu in Shanxi Province, China |
• | Korea wins: awarded contracts to supply MEMC Korea's new 300mm silicon wafer fab in Cheonan and POSCO Chemical’s new cathode material manufacturing complex in Gwangyang |
• | Fiscal 2019 full-year adjusted EPS guidance in the range of $8.20 to $8.25* per share, up more than 10 percent* over prior year at midpoint; fiscal 2019 fourth quarter adjusted EPS guidance of $2.26 to $2.31 per share*, up 13 to 16 percent* over fiscal 2018 fourth quarter |
• | Expected fiscal year 2019 capital spending in the range of $2.4 to $2.5 billion |
• | Industrial Gases – Americas sales of $955 million increased one percent over the prior year, as four percent higher pricing was partially offset by two percent unfavorable currency and one percent lower energy pass-through. Underlying volumes grew one percent, but were offset by a contact termination that occurred in the third quarter of the prior year. Record adjusted EBITDA of $410 million increased seven percent and adjusted EBITDA margin of 42.9 percent increased 270 basis points from the prior year, primarily driven by higher pricing. |
• | Industrial Gases – EMEA sales of $495 million decreased 12 percent from prior year. Strong pricing contributed four percent, and volumes increased two percent over the prior year. These results were offset by five percent unfavorable currency, two percent lower energy pass-through, and an 11 percent decrease from the India contract modification. Adjusted EBITDA of $190 million increased two percent over the prior year; on a constant currency basis, adjusted EBITDA increased seven percent. Adjusted EBITDA margin of 38.4 percent increased 520 basis points over the prior year; excluding the impact of the India contract modification, adjusted EBITDA margin was up approximately 100 basis points. |
• | Industrial Gases – Asia sales of $679 million increased nine percent over the prior year. Volumes increased 10 percent, driven primarily by new projects, mainly the Lu'An gasification project. Pricing increased five percent, with strength across all major product lines and countries. Unfavorable currency had a negative six percent impact. Record adjusted EBITDA of $334 million increased 24 percent, and record adjusted EBITDA margin of 49.2 percent increased 590 basis points over the prior year on strong volumes, pricing and productivity. Sequentially, volumes and adjusted EBITDA improved eight and 12 percent, respectively, on the strong Lunar New Year recovery and new plant start-ups. |
Continuing Operations | |||||||||||||||||
Three Months Ended 30 June | |||||||||||||||||
Q3 2019 vs. Q3 2018 | Operating Income | Operating Margin(A) | Equity Affiliates' Income | Income Tax Provision | Net Income | Diluted EPS | |||||||||||
2019 GAAP | $569.7 | 25.6 | % | $56.4 | $109.3 | $488.0 | $2.20 | ||||||||||
2018 GAAP | 515.8 | 22.8 | % | 58.1 | 107.1 | 430.7 | 1.95 | ||||||||||
Change GAAP | $53.9 | 280 | bp | ($1.7 | ) | $2.2 | $57.3 | $.25 | |||||||||
% Change GAAP | 10 | % | (3 | )% | 2 | % | 13 | % | 13 | % | |||||||
2019 GAAP | $569.7 | 25.6 | % | $56.4 | $109.3 | $488.0 | $2.20 | ||||||||||
Cost reduction actions | 25.5 | 1.2 | % | — | 6.7 | 18.8 | .08 | ||||||||||
Gain on exchange of equity affiliate investments | (29.1 | ) | (1.3 | )% | — | — | (29.1 | ) | (.13 | ) | |||||||
Tax reform repatriation | — | — | % | — | (3.2 | ) | 3.2 | .02 | |||||||||
2019 Non-GAAP Measure | $566.1 | 25.5 | % | $56.4 | $112.8 | $480.9 | $2.17 | ||||||||||
2018 GAAP | $515.8 | 22.8 | % | $58.1 | $107.1 | $430.7 | $1.95 | ||||||||||
2018 Non-GAAP Measure | $515.8 | 22.8 | % | $58.1 | $107.1 | $430.7 | $1.95 | ||||||||||
Change Non-GAAP Measure | $50.3 | 270 | bp | ($1.7 | ) | $5.7 | $50.2 | $.22 | |||||||||
% Change Non-GAAP Measure | 10 | % | (3 | )% | 5 | % | 12 | % | 11 | % |
Three Months Ended | |||||||||||
30 June | |||||||||||
2019 | 2018 | Change | % Change | ||||||||
GAAP Diluted EPS | $2.20 | $1.95 | |||||||||
Cost reduction actions | .08 | — | |||||||||
Gain on exchange of equity affiliate investments | (.13 | ) | |||||||||
Tax reform repatriation | .02 | — | |||||||||
Adjusted Diluted EPS | $2.17 | $1.95 | $.22 | 11 | % | ||||||
Currency adjustment | .05 | ||||||||||
Adjusted Diluted EPS – Constant Currency Basis | $2.22 | $1.95 | $.27 | 14 | % |
Continuing Operations | |||||||||||||||||
Nine Months Ended 30 June | |||||||||||||||||
2019 vs. 2018 | Operating Income | Operating Margin(A) | Equity Affiliates' Income | Income Tax Provision | Net Income | Diluted EPS | |||||||||||
2019 GAAP | $1,541.2 | 23.2 | % | $155.5 | $348.9 | $1,256.8 | $5.68 | ||||||||||
2018 GAAP | 1,431.9 | 21.6 | % | 115.6 | 455.1 | 1,002.7 | 4.54 | ||||||||||
Change GAAP | $109.3 | 160 | bp | $39.9 | ($106.2 | ) | $254.1 | $1.14 | |||||||||
% Change GAAP | 8 | % | 35 | % | (23 | )% | 25 | % | 25 | % | |||||||
2019 GAAP | $1,541.2 | 23.2 | % | $155.5 | $348.9 | $1,256.8 | $5.68 | ||||||||||
Facility closure | 29.0 | .4 | % | — | 6.9 | 22.1 | .10 | ||||||||||
Cost reduction actions | 25.5 | .4 | % | — | 6.7 | 18.8 | .08 | ||||||||||
Gain on exchange of equity affiliate investments | (29.1 | ) | (.4 | )% | — | — | (29.1 | ) | (.13 | ) | |||||||
Pension settlement loss(B) | — | — | % | — | 1.2 | 3.8 | .02 | ||||||||||
Tax reform repatriation | — | — | % | — | 12.4 | (12.4 | ) | (.06 | ) | ||||||||
Tax reform adjustment related to deemed foreign dividends | — | — | % | — | (56.2 | ) | 56.2 | .25 | |||||||||
2019 Non-GAAP Measure | $1,566.6 | 23.6 | % | $155.5 | $319.9 | $1,316.2 | $5.94 | ||||||||||
2018 GAAP | $1,431.9 | 21.6 | % | $115.6 | $455.1 | $1,002.7 | $4.54 | ||||||||||
Tax reform repatriation | — | — | % | 32.5 | (420.5 | ) | 453.0 | 2.06 | |||||||||
Tax reform rate change and other | — | — | % | — | 214.0 | (214.0 | ) | (.97 | ) | ||||||||
Tax restructuring | — | — | % | — | 38.8 | (38.8 | ) | (.18 | ) | ||||||||
2018 Non-GAAP Measure | $1,431.9 | 21.6 | % | $148.1 | $287.4 | $1,202.9 | $5.45 | ||||||||||
Change Non-GAAP Measure | $134.7 | 200 | bp | $7.4 | $32.5 | $113.3 | $.49 | ||||||||||
% Change Non-GAAP Measure | 9 | % | 5 | % | 11 | % | 9 | % | 9 | % |
(A) | Operating margin is calculated by dividing operating income by sales. |
(B) | Reflected on the consolidated income statements within "Other non-operating income (expense), net." Fiscal year 2019 includes a before-tax impact of $5.0 for the nine months ended 30 June 2019. Refer to Note 3, Pension Settlement Loss, to the consolidated financial statements for additional information. |
Three Months Ended | Nine Months Ended | |||||||||||
30 June | 30 June | |||||||||||
Operating Income | 2019 | 2018 | 2019 | 2018 | ||||||||
Consolidated total | $569.7 | $515.8 | $1,541.2 | $1,431.9 | ||||||||
Facility closure | — | — | 29.0 | — | ||||||||
Cost reduction actions | 25.5 | — | 25.5 | — | ||||||||
Gain on exchange of equity affiliate investments | (29.1 | ) | — | (29.1 | ) | — | ||||||
Segment total | $566.1 | $515.8 | $1,566.6 | $1,431.9 |
Three Months Ended | Nine Months Ended | |||||||||||
30 June | 30 June | |||||||||||
Equity Affiliates' Income | 2019 | 2018 | 2019 | 2018 | ||||||||
Consolidated total | $56.4 | $58.1 | $155.5 | $115.6 | ||||||||
Tax reform repatriation - equity method investment | — | — | — | 32.5 | ||||||||
Segment total | $56.4 | $58.1 | $155.5 | $148.1 |
2019 | Q1 | Q2 | Q3 | Q4 | Q3 YTD Total | |||||||||||||||
Income From Continuing Operations(A) | $357.0 | $433.5 | $500.2 | $1,290.7 | ||||||||||||||||
Add: Interest expense | 37.3 | 35.4 | 34.2 | 106.9 | ||||||||||||||||
Less: Other non-operating income (expense), net | 18.5 | 13.7 | 17.6 | 49.8 | ||||||||||||||||
Add: Income tax provision | 132.1 | 107.5 | 109.3 | 348.9 | ||||||||||||||||
Add: Depreciation and amortization | 258.0 | 262.1 | 269.1 | 789.2 | ||||||||||||||||
Add: Facility closure | 29.0 | — | — | 29.0 | ||||||||||||||||
Add: Cost reduction actions | — | — | 25.5 | 25.5 | ||||||||||||||||
Less: Gain on exchange of equity affiliate investments | — | — | 29.1 | 29.1 | ||||||||||||||||
Adjusted EBITDA | $794.9 | $824.8 | $891.6 | $2,511.3 | ||||||||||||||||
Adjusted EBITDA margin | 35.7 | % | 37.7 | % | 40.1 | % | 37.8 | % | ||||||||||||
2018 | Q1 | Q2 | Q3 | Q4 | Q3 YTD Total | |||||||||||||||
Income From Continuing Operations(A) | $162.7 | $423.6 | $444.7 | $459.7 | $1,031.0 | |||||||||||||||
Add: Interest expense | 29.8 | 30.4 | 34.9 | 35.4 | 95.1 | |||||||||||||||
Less: Other non-operating income (expense), net | 9.8 | 11.1 | 12.8 | (28.6 | ) | 33.7 | ||||||||||||||
Add: Income tax provision | 291.8 | 56.2 | 107.1 | 69.2 | 455.1 | |||||||||||||||
Add: Depreciation and amortization | 227.9 | 240.0 | 245.6 | 257.2 | 713.5 | |||||||||||||||
Less: Change in inventory valuation method | — | — | — | 24.1 | — | |||||||||||||||
Add: Tax reform repatriation - equity method investment | 32.5 | — | — | (4.0 | ) | 32.5 | ||||||||||||||
Adjusted EBITDA | $734.9 | $739.1 | $819.5 | $822.0 | $2,293.5 | |||||||||||||||
Adjusted EBITDA margin | 33.2 | % | 34.3 | % | 36.3 | % | 35.8 | % | 34.6 | % |
(A) | Includes net income attributable to noncontrolling interests. |
2019 vs. 2018 | Q1 | Q2 | Q3 | Q3 YTD Total | ||||||||||||||
Change GAAP | ||||||||||||||||||
Income from continuing operations change | $194.3 | $9.9 | $55.5 | $259.7 | ||||||||||||||
Income from continuing operations % change | 119 | % | 2 | % | 12 | % | 25 | % | ||||||||||
Change Non-GAAP | ||||||||||||||||||
Adjusted EBITDA change | $60.0 | $85.7 | $72.1 | $217.8 | ||||||||||||||
Adjusted EBITDA % change | 8 | % | 12 | % | 9 | % | 9 | % | ||||||||||
Adjusted EBITDA margin change | 250 | bp | 340 | bp | 380 | bp | 320 | bp |
Industrial Gases– Americas | Industrial Gases– EMEA | Industrial Gases– Asia | Industrial Gases– Global | Corporate and other | Segment Total | |||||||||||||
GAAP MEASURE | ||||||||||||||||||
Three Months Ended 30 June 2019 | ||||||||||||||||||
Operating income (loss) | $262.2 | $123.4 | $231.4 | ($9.6 | ) | ($41.3 | ) | $566.1 | ||||||||||
Operating margin | 27.4 | % | 24.9 | % | 34.1 | % | 25.5 | % | ||||||||||
Three Months Ended 30 June 2018 | ||||||||||||||||||
Operating income (loss) | $237.1 | $118.8 | $185.5 | $19.8 | ($45.4 | ) | $515.8 | |||||||||||
Operating margin | 25.0 | % | 21.2 | % | 29.7 | % | 22.8 | % | ||||||||||
Operating income (loss) change | $25.1 | $4.6 | $45.9 | ($29.4 | ) | $4.1 | $50.3 | |||||||||||
Operating income (loss) % change | 11 | % | 4 | % | 25 | % | (148 | )% | 9 | % | 10 | % | ||||||
Operating margin change | 240 | bp | 370 | bp | 440 | bp | 270 | bp | ||||||||||
NON-GAAP MEASURE | ||||||||||||||||||
Three Months Ended 30 June 2019 | ||||||||||||||||||
Operating income (loss) | $262.2 | $123.4 | $231.4 | ($9.6 | ) | ($41.3 | ) | $566.1 | ||||||||||
Add: Depreciation and amortization | 126.3 | 47.8 | 87.9 | 2.2 | 4.9 | 269.1 | ||||||||||||
Add: Equity affiliates' income | 21.7 | 18.8 | 14.9 | 1.0 | — | 56.4 | ||||||||||||
Adjusted EBITDA | $410.2 | $190.0 | $334.2 | ($6.4 | ) | ($36.4 | ) | $891.6 | ||||||||||
Adjusted EBITDA margin | 42.9 | % | 38.4 | % | 49.2 | % | 40.1 | % | ||||||||||
Three Months Ended 30 June 2018 | ||||||||||||||||||
Operating income (loss) | $237.1 | $118.8 | $185.5 | $19.8 | ($45.4 | ) | $515.8 | |||||||||||
Add: Depreciation and amortization | 120.5 | 49.8 | 69.5 | 2.3 | 3.5 | 245.6 | ||||||||||||
Add: Equity affiliates' income | 24.1 | 17.5 | 15.1 | 1.4 | — | 58.1 | ||||||||||||
Adjusted EBITDA | $381.7 | $186.1 | $270.1 | $23.5 | ($41.9 | ) | $819.5 | |||||||||||
Adjusted EBITDA margin | 40.2 | % | 33.2 | % | 43.3 | % | 36.3 | % | ||||||||||
Adjusted EBITDA change | $28.5 | $3.9 | $64.1 | ($29.9 | ) | $5.5 | $72.1 | |||||||||||
Adjusted EBITDA % change | 7 | % | 2 | % | 24 | % | (127 | )% | 13 | % | 9 | % | ||||||
Adjusted EBITDA margin change | 270 | bp | 520 | bp | 590 | bp | 380 | bp |
Industrial Gases– Americas | Industrial Gases– EMEA | Industrial Gases– Asia | Industrial Gases– Global | Corporate and other | Segment Total | |||||||||||||
GAAP MEASURE | ||||||||||||||||||
Nine Months Ended 30 June 2019 | ||||||||||||||||||
Operating income (loss) | $737.0 | $351.5 | $632.9 | ($17.9 | ) | ($136.9 | ) | $1,566.6 | ||||||||||
Operating margin | 25.1 | % | 23.2 | % | 32.8 | % | 23.6 | % | ||||||||||
Nine Months Ended 30 June 2018 | ||||||||||||||||||
Operating income (loss) | $676.6 | $340.0 | $509.7 | $41.4 | ($135.8 | ) | $1,431.9 | |||||||||||
Operating margin | 24.4 | % | 20.7 | % | 27.9 | % | 21.6 | % | ||||||||||
Operating income (loss) change | $60.4 | $11.5 | $123.2 | ($59.3 | ) | ($1.1 | ) | $134.7 | ||||||||||
Operating income (loss) % change | 9 | % | 3 | % | 24 | % | (143 | )% | (1 | )% | 9 | % | ||||||
Operating margin change | 70 | bp | 250 | bp | 490 | bp | 200 | bp | ||||||||||
NON-GAAP MEASURE | ||||||||||||||||||
Nine Months Ended 30 June 2019 | ||||||||||||||||||
Operating income (loss) | $737.0 | $351.5 | $632.9 | ($17.9 | ) | ($136.9 | ) | $1,566.6 | ||||||||||
Add: Depreciation and amortization | 376.8 | 140.4 | 252.7 | 6.3 | 13.0 | 789.2 | ||||||||||||
Add: Equity affiliates' income | 62.1 | 45.8 | 44.9 | 2.7 | — | 155.5 | ||||||||||||
Adjusted EBITDA | $1,175.9 | $537.7 | $930.5 | ($8.9 | ) | ($123.9 | ) | $2,511.3 | ||||||||||
Adjusted EBITDA margin | 40.0 | % | 35.5 | % | 48.2 | % | 37.8 | % | ||||||||||
Nine Months Ended 30 June 2018 | ||||||||||||||||||
Operating income (loss) | $676.6 | $340.0 | $509.7 | $41.4 | ($135.8 | ) | $1,431.9 | |||||||||||
Add: Depreciation and amortization | 360.6 | 149.6 | 188.9 | 5.8 | 8.6 | 713.5 | ||||||||||||
Add: Equity affiliates' income | 59.6 | 41.7 | 44.7 | 2.1 | — | 148.1 | ||||||||||||
Adjusted EBITDA | $1,096.8 | $531.3 | $743.3 | $49.3 | ($127.2 | ) | $2,293.5 | |||||||||||
Adjusted EBITDA margin | 39.6 | % | 32.4 | % | 40.7 | % | 34.6 | % | ||||||||||
Adjusted EBITDA change | $79.1 | $6.4 | $187.2 | ($58.2 | ) | $3.3 | $217.8 | |||||||||||
Adjusted EBITDA % change | 7 | % | 1 | % | 25 | % | (118 | )% | 3 | % | 9 | % | ||||||
Adjusted EBITDA margin change | 40 | bp | 310 | bp | 750 | bp | 320 | bp |
Effective Tax Rate | |||||||||||||
Three Months Ended 30 June | Nine Months Ended 30 June | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Income Tax Provision—GAAP | $109.3 | $107.1 | $348.9 | $455.1 | |||||||||
Income From Continuing Operations Before Taxes—GAAP | $609.5 | $551.8 | $1,639.6 | $1,486.1 | |||||||||
Effective Tax Rate—GAAP | 17.9 | % | 19.4 | % | 21.3 | % | 30.6 | % | |||||
Income Tax Provision—GAAP | $109.3 | $107.1 | $348.9 | $455.1 | |||||||||
Facility closure | — | — | 6.9 | — | |||||||||
Cost reduction actions | 6.7 | — | 6.7 | — | |||||||||
Pension settlement loss | — | — | 1.2 | — | |||||||||
Tax reform repatriation | (3.2 | ) | — | 12.4 | (420.5 | ) | |||||||
Tax reform adjustment related to deemed foreign dividends | — | — | (56.2 | ) | — | ||||||||
Tax reform rate change and other | — | — | — | 214.0 | |||||||||
Tax restructuring | — | — | — | 38.8 | |||||||||
Income Tax Provision—Non-GAAP Measure | $112.8 | $107.1 | $319.9 | $287.4 | |||||||||
Income From Continuing Operations Before Taxes—GAAP | $609.5 | $551.8 | $1,639.6 | $1,486.1 | |||||||||
Facility closure | — | — | 29.0 | — | |||||||||
Cost reduction actions | 25.5 | — | 25.5 | — | |||||||||
Gain on exchange of equity affiliate investments | (29.1 | ) | — | (29.1 | ) | — | |||||||
Pension settlement loss | — | — | 5.0 | — | |||||||||
Tax reform repatriation - equity method investment | — | — | — | 32.5 | |||||||||
Income From Continuing Operations Before Taxes—Non-GAAP Measure | $605.9 | $551.8 | $1,670.0 | $1,518.6 | |||||||||
Effective Tax Rate—Non-GAAP Measure | 18.6 | % | 19.4 | % | 19.2 | % | 18.9 | % |
Three Months Ended | Nine Months Ended | |||||||||||
30 June | 30 June | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Additions to plant and equipment | $544.1 | $585.6 | $1,507.6 | $1,158.1 | ||||||||
Acquisitions, less cash acquired | .7 | 48.8 | 107.0 | 320.2 | ||||||||
Investment in and advances to unconsolidated affiliates | 14.3 | — | 15.7 | — | ||||||||
Capital expenditures | $559.1 | $634.4 | $1,630.3 | $1,478.3 |
2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |||||||||||||||||||||
Net income from continuing operations attributable to Air Products | $ | 488.0 | $ | 421.3 | $ | 347.5 | $ | 452.9 | $ | 430.7 | $ | 416.4 | $ | 155.6 | $ | 474.2 | |||||||||||||
Interest expense | 34.2 | 35.4 | 37.3 | 35.4 | 34.9 | 30.4 | 29.8 | 30.8 | |||||||||||||||||||||
Interest expense tax impact | (6.1 | ) | (7.0 | ) | (10.1 | ) | (4.6 | ) | (6.8 | ) | (3.6 | ) | (19.1 | ) | .1 | ||||||||||||||
Interest expense, after-tax | 28.1 | 28.4 | 27.2 | 30.8 | 28.1 | 26.8 | 10.7 | 30.9 | |||||||||||||||||||||
Net income attributable to noncontrolling interests of continuing operations | 12.2 | 12.2 | 9.5 | 6.8 | 14.0 | 7.2 | 7.1 | 6.3 | |||||||||||||||||||||
Earnings After-Tax—GAAP | $ | 528.3 | $ | 461.9 | $ | 384.2 | $ | 490.5 | $ | 472.8 | $ | 450.4 | $ | 173.4 | $ | 511.4 | |||||||||||||
Non-GAAP adjustments, after-tax | |||||||||||||||||||||||||||||
Change in inventory valuation method | $ | — | $ | — | $ | — | $ | (17.5 | ) | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Facility closure | — | — | 22.1 | — | — | — | — | — | |||||||||||||||||||||
Cost reduction actions | 18.8 | — | — | — | — | — | — | 30.9 | |||||||||||||||||||||
Gain on exchange of equity affiliate investments | (29.1 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||
Gain on land sale | — | — | — | — | — | — | — | (7.6 | ) | ||||||||||||||||||||
Pension settlement loss | — | 3.8 | — | 33.2 | — | — | — | .6 | |||||||||||||||||||||
Tax reform repatriation | 3.2 | — | (15.6 | ) | 24.1 | — | — | 453.0 | — | ||||||||||||||||||||
Tax reform adjustment related to deemed foreign dividends | — | — | 56.2 | (56.2 | ) | — | — | — | — | ||||||||||||||||||||
Tax reform rate change and other | — | — | — | 2.2 | — | — | (214.0 | ) | — | ||||||||||||||||||||
Tax restructuring | — | — | — | 3.1 | — | (38.8 | ) | — | — | ||||||||||||||||||||
Tax election benefit | — | — | — | — | — | — | — | (111.4 | ) | ||||||||||||||||||||
Earnings After-Tax—Non‑GAAP | $ | 521.2 | $ | 465.7 | $ | 446.9 | $ | 479.4 | $ | 472.8 | $ | 411.6 | $ | 412.4 | $ | 423.9 | |||||||||||||
Total Capital | |||||||||||||||||||||||||||||
Short-term borrowings | $ | 79.9 | $ | 54.1 | $ | 23.0 | $ | 54.3 | $ | 90.4 | $ | 112.5 | $ | 87.1 | $ | 144.0 | $ | 143.4 | |||||||||||
Current portion of long-term debt | 466.5 | 434.5 | 430.3 | 406.6 | 5.0 | 11.6 | 11.3 | 416.4 | 416.0 | ||||||||||||||||||||
Long-term debt | 2,951.7 | 2,933.0 | 2,954.4 | 2,967.4 | 3,377.1 | 3,442.4 | 3,414.9 | 3,402.4 | 3,366.6 | ||||||||||||||||||||
Long-term debt – related party | 321.6 | 369.2 | 360.2 | 384.3 | 398.7 | — | — | — | — | ||||||||||||||||||||
Total Debt | 3,819.7 | 3,790.8 | 3,767.9 | 3,812.6 | 3,871.2 | 3,566.5 | 3,513.3 | 3,962.8 | 3,926.0 | ||||||||||||||||||||
Total Equity | 11,726.6 | 11,503.4 | 11,203.4 | 11,176.3 | 10,810.0 | 10,693.2 | 10,321.2 | 10,185.5 | 9,509.9 | ||||||||||||||||||||
Assets of discontinued operations | — | — | — | — | — | — | (10.2 | ) | (10.2 | ) | (9.8 | ) | |||||||||||||||||
Total Capital | $ | 15,546.3 | $ | 15,294.2 | $ | 14,971.3 | $ | 14,988.9 | $ | 14,681.2 | $ | 14,259.7 | $ | 13,824.3 | $ | 14,138.1 | $ | 13,426.1 | |||||||||||
Earnings After-Tax—GAAP | $ | 1,864.9 | $ | 1,608.0 | |||||||||||||||||||||||||
Five-quarter average total capital | 15,096.4 | 14,065.9 | |||||||||||||||||||||||||||
ROCE—GAAP items | 12.4 | % | 11.4 | % | |||||||||||||||||||||||||
Change GAAP-based Measure | 100 | bp | |||||||||||||||||||||||||||
Earnings After-Tax—Non-GAAP | $ | 1,913.2 | $ | 1,720.7 | |||||||||||||||||||||||||
Five-quarter average total capital | 15,096.4 | 14,065.9 | |||||||||||||||||||||||||||
ROCE—Non-GAAP items | 12.7 | % | 12.2 | % | |||||||||||||||||||||||||
Change Non-GAAP-based Measure | 50 | bp |
Diluted EPS | ||||||||
Q4 | Full Year | |||||||
2018 GAAP | $2.05 | $6.59 | ||||||
Change in inventory valuation method | (.08 | ) | (.08 | ) | ||||
Pension settlement loss | .15 | .15 | ||||||
Tax reform repatriation | .11 | 2.16 | ||||||
Tax reform adjustment related to deemed foreign dividends | (.25 | ) | (.25 | ) | ||||
Tax reform rate change and other | .01 | (.96 | ) | |||||
Tax restructuring | .01 | (.16 | ) | |||||
2018 Non-GAAP Measure | $2.00 | $7.45 | ||||||
2019 Non-GAAP Outlook | 2.26–2.31 | 8.20–8.25 | ||||||
Change Non-GAAP | .26–.31 | .75–.80 | ||||||
% Change Non-GAAP | 13%–16% | 10%–11% |
Three Months Ended | Nine Months Ended | |||||||||||
30 June | 30 June | |||||||||||
(Millions of dollars, except for share and per share data) | 2019 | 2018 | 2019 | 2018 | ||||||||
Sales | $2,224.0 | $2,259.0 | $6,635.7 | $6,631.3 | ||||||||
Cost of sales | 1,466.0 | 1,545.4 | 4,484.7 | 4,623.7 | ||||||||
Facility closure | — | — | 29.0 | — | ||||||||
Selling and administrative | 188.5 | 188.6 | 568.1 | 574.8 | ||||||||
Research and development | 18.1 | 15.0 | 50.0 | 44.1 | ||||||||
Cost reduction actions | 25.5 | — | 25.5 | — | ||||||||
Gain on exchange of equity affiliate investments | 29.1 | — | 29.1 | — | ||||||||
Other income (expense), net | 14.7 | 5.8 | 33.7 | 43.2 | ||||||||
Operating Income | 569.7 | 515.8 | 1,541.2 | 1,431.9 | ||||||||
Equity affiliates' income | 56.4 | 58.1 | 155.5 | 115.6 | ||||||||
Interest expense | 34.2 | 34.9 | 106.9 | 95.1 | ||||||||
Other non-operating income (expense), net | 17.6 | 12.8 | 49.8 | 33.7 | ||||||||
Income From Continuing Operations Before Taxes | 609.5 | 551.8 | 1,639.6 | 1,486.1 | ||||||||
Income tax provision | 109.3 | 107.1 | 348.9 | 455.1 | ||||||||
Income From Continuing Operations | 500.2 | 444.7 | 1,290.7 | 1,031.0 | ||||||||
Income From Discontinued Operations, net of tax | — | 43.2 | — | 42.2 | ||||||||
Net Income | 500.2 | 487.9 | 1,290.7 | 1,073.2 | ||||||||
Net Income Attributable to Noncontrolling Interests of Continuing Operations | 12.2 | 14.0 | 33.9 | 28.3 | ||||||||
Net Income Attributable to Air Products | $488.0 | $473.9 | $1,256.8 | $1,044.9 | ||||||||
Net Income Attributable to Air Products | ||||||||||||
Income from continuing operations | $488.0 | $430.7 | $1,256.8 | $1,002.7 | ||||||||
Income from discontinued operations | — | 43.2 | — | 42.2 | ||||||||
Net Income Attributable to Air Products | $488.0 | $473.9 | $1,256.8 | $1,044.9 | ||||||||
Basic Earnings Per Common Share Attributable to Air Products | ||||||||||||
Income from continuing operations | $2.21 | $1.96 | $5.71 | $4.57 | ||||||||
Income from discontinued operations | — | .20 | — | .19 | ||||||||
Net Income Attributable to Air Products | $2.21 | $2.16 | $5.71 | $4.76 | ||||||||
Diluted Earnings Per Common Share Attributable to Air Products | ||||||||||||
Income from continuing operations | $2.20 | $1.95 | $5.68 | $4.54 | ||||||||
Income from discontinued operations | — | .20 | — | .19 | ||||||||
Net Income Attributable to Air Products | $2.20 | $2.15 | $5.68 | $4.73 | ||||||||
Weighted Average Common Shares – Basic (in millions) | 220.6 | 219.5 | 220.2 | 219.3 | ||||||||
Weighted Average Common Shares – Diluted (in millions) | 221.9 | 220.9 | 221.4 | 220.7 | ||||||||
Other Data from Continuing Operations | ||||||||||||
Depreciation and amortization | $269.1 | $245.6 | $789.2 | $713.5 | ||||||||
Capital expenditures – Refer to page 10 | $559.1 | $634.4 | $1,630.3 | $1,478.3 |
30 June | 30 September | |||||
(Millions of dollars) | 2019 | 2018 | ||||
Assets | ||||||
Current Assets | ||||||
Cash and cash items | $2,696.8 | $2,791.3 | ||||
Short-term investments | — | 184.7 | ||||
Trade receivables, net | 1,340.7 | 1,207.2 | ||||
Inventories | 408.3 | 396.1 | ||||
Prepaid expenses | 97.2 | 129.6 | ||||
Other receivables and current assets | 372.2 | 373.3 | ||||
Total Current Assets | 4,915.2 | 5,082.2 | ||||
Investment in net assets of and advances to equity affiliates | 1,290.4 | 1,277.2 | ||||
Plant and equipment, at cost | 22,425.6 | 21,490.2 | ||||
Less: accumulated depreciation | 11,998.0 | 11,566.5 | ||||
Plant and equipment, net | 10,427.6 | 9,923.7 | ||||
Goodwill, net | 820.4 | 788.9 | ||||
Intangible assets, net | 441.1 | 438.5 | ||||
Noncurrent capital lease receivables | 938.4 | 1,013.3 | ||||
Other noncurrent assets | 698.8 | 654.5 | ||||
Total Noncurrent Assets | 14,616.7 | 14,096.1 | ||||
Total Assets | $19,531.9 | $19,178.3 | ||||
Liabilities and Equity | ||||||
Current Liabilities | ||||||
Payables and accrued liabilities | $1,543.2 | $1,817.8 | ||||
Accrued income taxes | 65.6 | 59.6 | ||||
Short-term borrowings | 79.9 | 54.3 | ||||
Current portion of long-term debt | 466.5 | 406.6 | ||||
Total Current Liabilities | 2,155.2 | 2,338.3 | ||||
Long-term debt | 2,951.7 | 2,967.4 | ||||
Long-term debt – related party | 321.6 | 384.3 | ||||
Other noncurrent liabilities | 1,553.6 | 1,536.9 | ||||
Deferred income taxes | 823.2 | 775.1 | ||||
Total Noncurrent Liabilities | 5,650.1 | 5,663.7 | ||||
Total Liabilities | 7,805.3 | 8,002.0 | ||||
Air Products Shareholders’ Equity | 11,386.1 | 10,857.5 | ||||
Noncontrolling Interests | 340.5 | 318.8 | ||||
Total Equity | 11,726.6 | 11,176.3 | ||||
Total Liabilities and Equity | $19,531.9 | $19,178.3 |
Nine Months Ended | ||||||
30 June | ||||||
(Millions of dollars) | 2019 | 2018 | ||||
Operating Activities | ||||||
Net income | $1,290.7 | $1,073.2 | ||||
Less: Net income attributable to noncontrolling interests of continuing operations | 33.9 | 28.3 | ||||
Net income attributable to Air Products | 1,256.8 | 1,044.9 | ||||
Income from discontinued operations | — | (42.2 | ) | |||
Income from continuing operations attributable to Air Products | 1,256.8 | 1,002.7 | ||||
Adjustments to reconcile income to cash provided by operating activities: | ||||||
Depreciation and amortization | 789.2 | 713.5 | ||||
Deferred income taxes | 37.8 | (86.9 | ) | |||
Tax reform repatriation | 49.4 | 310.3 | ||||
Facility closure | 29.0 | — | ||||
Undistributed earnings of unconsolidated affiliates | (56.9 | ) | (34.8 | ) | ||
Gain on sale of assets and investments | (17.5 | ) | (5.2 | ) | ||
Share-based compensation | 31.0 | 30.4 | ||||
Noncurrent capital lease receivables | 71.7 | 73.7 | ||||
Other adjustments | (.7 | ) | (23.2 | ) | ||
Working capital changes that provided (used) cash, excluding effects of acquisitions: | ||||||
Trade receivables | (139.5 | ) | (50.5 | ) | ||
Inventories | (13.5 | ) | 16.0 | |||
Other receivables | 70.6 | 85.5 | ||||
Payables and accrued liabilities | (94.8 | ) | (164.9 | ) | ||
Other working capital | (9.2 | ) | (10.4 | ) | ||
Cash Provided by Operating Activities | 2,003.4 | 1,856.2 | ||||
Investing Activities | ||||||
Additions to plant and equipment | (1,507.6 | ) | (1,158.1 | ) | ||
Acquisitions, less cash acquired | (107.0 | ) | (320.2 | ) | ||
Investment in and advances to unconsolidated affiliates | (15.7 | ) | — | |||
Proceeds from sale of assets and investments | 8.8 | 45.8 | ||||
Purchases of investments | (5.3 | ) | (349.8 | ) | ||
Proceeds from investments | 190.5 | 745.2 | ||||
Other investing activities | .8 | 5.3 | ||||
Cash Used for Investing Activities | (1,435.5 | ) | (1,031.8 | ) | ||
Financing Activities | ||||||
Long-term debt proceeds | — | .5 | ||||
Payments on long-term debt | (5.4 | ) | (418.2 | ) | ||
Net increase (decrease) in commercial paper and short-term borrowings | 37.7 | (46.1 | ) | |||
Dividends paid to shareholders | (738.4 | ) | (656.6 | ) | ||
Proceeds from stock option exercises | 63.3 | 58.2 | ||||
Other financing activities | (18.0 | ) | (35.6 | ) | ||
Cash Used for Financing Activities | (660.8 | ) | (1,097.8 | ) | ||
Discontinued Operations | ||||||
Cash used for operating activities | — | (12.8 | ) | |||
Cash provided by investing activities | — | 18.6 | ||||
Cash provided by financing activities | — | — | ||||
Cash Provided by Discontinued Operations | — | 5.8 | ||||
Effect of Exchange Rate Changes on Cash | (1.6 | ) | (19.5 | ) | ||
Decrease in Cash and Cash Items | (94.5 | ) | (287.1 | ) | ||
Cash and Cash items - Beginning of Year | 2,791.3 | 3,273.6 | ||||
Cash and Cash items - End of Period | $2,696.8 | $2,986.5 | ||||
Supplemental Cash Flow Information | ||||||
Cash paid for taxes (net of refunds) - Continuing operations | $250.8 | $311.6 |
(Millions of dollars) | Industrial Gases – Americas | Industrial Gases – EMEA | Industrial Gases – Asia | Industrial Gases – Global | Corporate and other | Segment Total | ||||||||||||
Three Months Ended 30 June 2019 | ||||||||||||||||||
Sales | $955.3 | $494.6 | $679.4 | $57.9 | $36.8 | $2,224.0 | ||||||||||||
Operating income (loss) | 262.2 | 123.4 | 231.4 | (9.6 | ) | (41.3 | ) | 566.1 | ||||||||||
Depreciation and amortization | 126.3 | 47.8 | 87.9 | 2.2 | 4.9 | 269.1 | ||||||||||||
Equity affiliates' income | 21.7 | 18.8 | 14.9 | 1.0 | — | 56.4 | ||||||||||||
Three Months Ended 30 June 2018 | ||||||||||||||||||
Sales | $948.7 | $561.1 | $623.8 | $101.1 | $24.3 | $2,259.0 | ||||||||||||
Operating income (loss) | 237.1 | 118.8 | 185.5 | 19.8 | (45.4 | ) | 515.8 | |||||||||||
Depreciation and amortization | 120.5 | 49.8 | 69.5 | 2.3 | 3.5 | 245.6 | ||||||||||||
Equity affiliates' income | 24.1 | 17.5 | 15.1 | 1.4 | — | 58.1 |
Industrial Gases – Americas | Industrial Gases – EMEA | Industrial Gases – Asia | Industrial Gases – Global | Corporate and other | Segment Total | |||||||||||||
Nine Months Ended 30 June 2019 | ||||||||||||||||||
Sales | $2,936.2 | $1,513.2 | $1,931.6 | $179.9 | $74.8 | $6,635.7 | ||||||||||||
Operating income (loss) | 737.0 | 351.5 | 632.9 | (17.9 | ) | (136.9 | ) | 1,566.6 | ||||||||||
Depreciation and amortization | 376.8 | 140.4 | 252.7 | 6.3 | 13.0 | 789.2 | ||||||||||||
Equity affiliates' income | 62.1 | 45.8 | 44.9 | 2.7 | — | 155.5 | ||||||||||||
Nine Months Ended 30 June 2018 | ||||||||||||||||||
Sales | $2,771.7 | $1,638.6 | $1,825.0 | $335.8 | $60.2 | $6,631.3 | ||||||||||||
Operating income (loss) | 676.6 | 340.0 | 509.7 | 41.4 | (135.8 | ) | 1,431.9 | |||||||||||
Depreciation and amortization | 360.6 | 149.6 | 188.9 | 5.8 | 8.6 | 713.5 | ||||||||||||
Equity affiliates' income | 59.6 | 41.7 | 44.7 | 2.1 | — | 148.1 | ||||||||||||
Total Assets | ||||||||||||||||||
30 June 2019 | $5,896.6 | $3,399.7 | $6,357.6 | $284.3 | $3,593.7 | $19,531.9 | ||||||||||||
30 September 2018 | 5,904.0 | 3,280.4 | 5,899.5 | 240.1 | 3,854.3 | 19,178.3 |
Three Months Ended | Nine Months Ended | |||||||||||
30 June | 30 June | |||||||||||
Operating Income | 2019 | 2018 | 2019 | 2018 | ||||||||
Segment total | $566.1 | $515.8 | $1,566.6 | $1,431.9 | ||||||||
Facility closure | — | — | (29.0 | ) | — | |||||||
Cost reduction actions | (25.5 | ) | — | (25.5 | ) | — | ||||||
Gain on exchange of equity affiliate investments | 29.1 | — | 29.1 | — | ||||||||
Consolidated Total | $569.7 | $515.8 | $1,541.2 | $1,431.9 |
Three Months Ended | Nine Months Ended | |||||||||||
30 June | 30 June | |||||||||||
Equity Affiliates' Income | 2019 | 2018 | 2019 | 2018 | ||||||||
Segment total | $56.4 | $58.1 | $155.5 | $148.1 | ||||||||
Tax reform repatriation - equity method investment | — | — | — | (32.5 | ) | |||||||
Consolidated Total | $56.4 | $58.1 | $155.5 | $115.6 |