LEHIGH VALLEY, Pa.,
April 27, 2017 /PRNewswire/ --
Q2 FY17 (all from continuing operations):
- On a GAAP basis, EPS of $1.39, up
nine percent versus the prior year; operating margin of 19.8
percent, down 110 basis points versus the prior year
- Adjusted EPS of $1.43*, up four
percent versus prior year; adjusted operating margin of 20.5
percent and adjusted EBITDA margin of 32.9 percent, down 150 and
300 basis points, respectively, versus the prior year
- Maintaining fiscal 2017 adjusted EPS guidance of $6.00 to $6.25, which at the midpoint, represents
a nine percent increase over the prior year; fiscal 2017 third
quarter adjusted EPS guidance of $1.55 to
$1.60, which at the midpoint, also represents a nine percent
increase over the prior year
- Completed the sale of the Performance Materials Division for
$3.8 billion, resulting in a
$1.8 billion after-tax book gain in
discontinued operations
- Awarded expanded supply to Marathon Petroleum in Garyville, Louisiana; started-up first phase
of hydrogen/ASU project in India;
brought onstream first phase of new facilities serving South Korea fab; brought two China plants onstream
*The results and guidance in this release, including in the
highlights above, include references to non-GAAP continuing
operations measures. These exclude the discontinued operations of
the former Materials Technologies (MT) segment and
Energy-from-Waste and are identified by the word "adjusted"
preceding the measure. A reconciliation of GAAP to non-GAAP results
can be found at the end of this release.
Air Products (NYSE: APD) today reported GAAP net income from
continuing operations of $304 million
and diluted earnings per share (EPS) from continuing operations of
$1.39, both up nine percent versus
the prior year, for its fiscal second quarter ended March 31, 2017.
For the quarter, on a non-GAAP basis, adjusted net income from
continuing operations of $314 million
was up five percent versus prior year, and adjusted diluted
earnings per share from continuing operations of $1.43 was up four percent versus prior year.
Second quarter sales of $1,980
million increased eleven percent from the prior year, as
seven percent higher volumes and five percent favorable energy
pass-through were partially offset by one percent unfavorable
currency. Volumes were positive in Asia, North
America and Europe, while
continued progress on the Jazan project was partially offset by
lower LNG activity. Taken together, the Industrial Gas regions
increased overall volumes by two percent. Pricing was flat with the
prior year.
For the quarter, on a GAAP basis, operating income of
$391 million increased five percent.
Operating margin of 19.8 percent decreased 110 basis points versus
prior year.
Adjusted operating income of $406
million increased four percent, and adjusted EBITDA of
$652 million increased two percent
over the prior year. Adjusted operating margin of 20.5 percent and
adjusted EBITDA margin of 32.9 percent decreased 150 and 300 basis
points, respectively, from the prior year, as productivity actions
were more than offset by higher energy pass-through, increased
maintenance costs, and higher power costs. Adjusted EBITDA margin
was negatively impacted 140 basis points by higher energy pass
through and by 120 basis points due to sale of equipment business
mix; excluding these impacts, underlying adjusted margin decreased
by only 40 basis points from the prior year. GAAP ROCE of 10.7
percent increased 10 basis points over the prior year. Adjusted
ROCE increased 70 basis points to 12.3 percent.
Commenting on the results for the quarter, Seifi Ghasemi,
chairman, president and chief executive officer, said, "For the
twelfth consecutive quarter, Air Products reported higher adjusted
EPS growth versus prior year. This performance is entirely due to
the commitment and dedication of our people around the world as
they continue implementing our strategic Five-Point Plan. We had
excellent safety performance, and despite the margin decline, our
adjusted EPS increased four percent versus prior year and adjusted
ROCE increased 70 basis points to 12.3 percent," he said.
Second Quarter Results by Business Segment
- Industrial Gases – Americas sales of $890 million increased twelve percent versus
prior year on nine percent higher energy pass-through. Higher
volumes, higher pricing and favorable currency each contributed one
percent. Segment operating income of $225
million was flat, while adjusted EBITDA of $354 million increased four percent, as
productivity actions were offset by higher maintenance costs
supporting planned customer outages. Segment operating margin of
25.2 percent decreased 280 basis points, and adjusted EBITDA margin
of 39.7 percent decreased 300 basis points from the prior year,
primarily due to higher energy pass-through; excluding energy
pass-through, operating margin decreased 90 basis points.
- Industrial Gases – EMEA sales of $414 million decreased two percent versus last
year, as three percent higher energy pass-through and one percent
higher volumes were more than offset by six percent unfavorable
currency. Pricing was flat. Segment operating income of
$87 million decreased four percent
and adjusted EBITDA of $136 million
decreased six percent from the prior year; on a constant currency
basis, both operating income and adjusted EBITDA increased, as
productivity actions and positive volumes more than offset the
impact from higher power costs and planned maintenance outages.
Segment operating margin of 20.9 percent decreased 40 basis points
and adjusted EBITDA margin of 32.9 percent decreased 160 basis
points from the prior year, primarily due to higher energy
pass-through.
- Industrial Gases – Asia
sales of $436 million increased seven
percent versus prior year, as volume growth of eight percent was
partially offset by one percent unfavorable currency. Pricing was
flat. Segment operating income of $112
million increased seven percent and adjusted EBITDA of
$174 million increased two percent,
driven by higher volumes. Segment operating margin of 25.7 was
flat, and adjusted EBITDA margin of 40 percent declined 200 basis
points from the prior year, primarily due to the ramp-up of utility
pass-through volumes.
Non-GAAP results for the Company in the fiscal second quarter of
2017 exclude expenses of $10.3
million, or $0.03 per share,
for cost reduction actions, and $4.1
million, or $0.01 per share,
for pension settlement costs. See reconciliation of non-GAAP
measures starting on page four.
Outlook
Ghasemi said, "Air Products continues to operate from a position
of strength. Cash generation and disciplined capital allocation
drive long-term value, and Air Products has a significant amount of
cash to invest in our core industrial gases business. In fact, over
the next three years, we expect to have approximately $8 billion to deploy in strategic, high-return
opportunities to create shareholder value.
"However, we maintain our cautious outlook for economic activity
around the world, since we have not seen any concrete evidence to
allow us to make a different prediction. At the same time, we are
driving productivity and cost actions in our business to deliver on
our commitments," he said.
Air Products continues to expect fiscal 2017 adjusted EPS of
$6.00 to $6.25, which at midpoint,
represents an increase of nine percent over last year. For the
fiscal 2017 third quarter, Air Products expects adjusted EPS from
continuing operations of $1.55 to
$1.60 per share, which at midpoint, also represents an
increase of nine percent over last year.
The capital expenditure forecast for fiscal year 2017 is
approximately $1 billion on a GAAP
and non-GAAP basis.
Management has provided adjusted EPS guidance on a continuing
operations basis. While it is likely that we will incur additional
costs for items such as cost reduction actions and pension
settlements in future periods, it is not possible, without
unreasonable efforts, to identify the amount or significance of
these events or the potential for other transactions that may
impact future GAAP EPS. Management does not believe these items to
be representative of underlying business performance. Accordingly,
management is unable to reconcile, without unreasonable effort, the
Company's forecasted range of adjusted EPS to a comparable GAAP
range.
Access the Q2 earnings teleconference scheduled for
10:00 a.m. Eastern Time on
April 27 by calling (719) 325-2216
and entering passcode 5845902, or access the Event Details page on
Air Products' Investor Relations web site.
About Air Products
Air Products (NYSE:APD) is a world-leading Industrial Gases
company in operation for over 75 years. The Company's core
industrial gases business provides atmospheric and process gases
and related equipment to manufacturing markets, including refining
and petrochemical, metals, electronics, and food and beverage. Air
Products is also the world's leading supplier of liquefied natural
gas process technology and equipment.
The Company had fiscal 2016 sales of $7.5
billion from continuing operations in 50 countries and has a
current market capitalization of approximately $30 billion. Approximately 16,000 employees are
making Air Products the world's safest and best performing
industrial gases company, providing sustainable offerings and
excellent service to all customers. 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 this release is furnished. 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, global or regional economic conditions (including, as
to the United Kingdom and
Europe, the impact of "Brexit")
and supply and demand dynamics in market segments into which the
Company sells; political risks, including the risks of
unanticipated government actions; acts of war or terrorism; the
inability to eliminate stranded costs previously allocated to the
Company's Electronic Materials and Performance Materials divisions
which have been divested and other unexpected impacts of the
divestitures including tax impacts; significant fluctuations in
interest rates and foreign currencies from that currently
anticipated; future financial and operating performance of major
customers; unanticipated contract terminations or customer
cancellations or postponement of projects and sales; our ability to
execute the projects in our backlog; asset impairments due to
economic conditions or specific events; the impact of price
fluctuations in natural gas and disruptions in markets and the
economy due to oil price volatility; costs and outcomes of
litigation or regulatory investigations; the success of
productivity and operational improvement programs; the timing,
impact, and other uncertainties of future acquisitions or
divestitures, including reputational impacts; the impact of changes
in environmental, tax or other legislation and regulatory
activities in jurisdictions in which the Company and its affiliates
operate; and other risk factors described in the Company's Form
10-K for its fiscal year ended September 30,
2016. 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.
* Presented below are reconciliations of the reported GAAP
results to the non-GAAP measures.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Millions of dollars unless otherwise indicated, except for share
data)
The Company has presented certain financial measures on a
non-GAAP ("adjusted") basis and has provided a reconciliation to
the most directly comparable financial measure calculated in
accordance with GAAP. These financial measures are not meant to be
considered in isolation or as a substitute for the most directly
comparable financial measure calculated in accordance with GAAP.
The Company believes these non-GAAP measures provide investors,
potential investors, securities analysts, and others with useful
information to evaluate the performance of the business because
such measures, when viewed together with our financial results
computed in accordance with GAAP, provide a more complete
understanding of the factors and trends affecting our historical
financial performance and projected future results.
In many cases, our non-GAAP measures are determined by adjusting
the most directly comparable GAAP financial measure to exclude
certain disclosed items ("non-GAAP adjustments") that we believe
are not representative of the underlying business performance. For
example, Air Products has executed its strategic plan to
restructure the Company and, as part of this plan, is now focusing
on the Company's core Industrial Gases businesses, which will
continue to result in significant cost reduction and asset actions
that we believe are important for investors to understand
separately from the performance of the underlying business. The tax
impact of our non-GAAP adjustments reflects the expected current
and deferred income tax expense impact of the transactions and is
impacted primarily by the statutory tax rate of the various
relevant jurisdictions and the taxability of the adjustments in
those jurisdictions. In evaluating these financial measures, the
reader should be aware that we may incur expenses similar to those
eliminated in this presentation in the future. Investors should
also consider the limitations associated with these non-GAAP
measures, including the potential lack of comparability of these
measures from one company to another.
CONSOLIDATED
RESULTS
|
|
|
Continuing
Operations
|
|
Three Months Ended
31 March
|
2017 vs.
2016
|
Operating
Income
|
|
Operating
Margin(A)
|
|
Income Tax
Provision(B)
|
|
Net
Income
|
|
Diluted
EPS
|
2017 GAAP
|
$
|
391.2
|
|
|
19.8
|
%
|
|
$
|
94.5
|
|
|
$
|
304.4
|
|
|
$
|
1.39
|
|
2016 GAAP
|
371.6
|
|
|
20.9
|
%
|
|
93.5
|
|
|
278.9
|
|
|
1.28
|
|
Change
GAAP
|
$
|
19.6
|
|
|
(110)
|
bp
|
|
$
|
1.0
|
|
|
$
|
25.5
|
|
|
$
|
.11
|
|
% Change
GAAP
|
5
|
%
|
|
|
|
|
|
9
|
%
|
|
9
|
%
|
2017 GAAP
|
$
|
391.2
|
|
|
19.8
|
%
|
|
$
|
94.5
|
|
|
$
|
304.4
|
|
|
$
|
1.39
|
|
Cost reduction and
asset actions
|
10.3
|
|
|
.5
|
%
|
|
3.1
|
|
|
7.2
|
|
|
.03
|
|
Pension settlement
loss
|
4.1
|
|
|
.2
|
%
|
|
1.5
|
|
|
2.6
|
|
|
.01
|
|
2017 Non-GAAP
Measure
|
$
|
405.6
|
|
|
20.5
|
%
|
|
$
|
99.1
|
|
|
$
|
314.2
|
|
|
$
|
1.43
|
|
2016 GAAP
|
$
|
371.6
|
|
|
20.9
|
%
|
|
$
|
93.5
|
|
|
$
|
278.9
|
|
|
$
|
1.28
|
|
Business separation
costs
|
7.4
|
|
|
.4
|
%
|
|
(1.5)
|
|
|
8.9
|
|
|
.04
|
|
Cost reduction and
asset actions
|
10.7
|
|
|
.6
|
%
|
|
1.9
|
|
|
8.8
|
|
|
.04
|
|
Pension settlement
loss
|
2.0
|
|
|
.1
|
%
|
|
.7
|
|
|
1.3
|
|
|
.01
|
|
2016 Non-GAAP
Measure
|
$
|
391.7
|
|
|
22.0
|
%
|
|
$
|
94.6
|
|
|
$
|
297.9
|
|
|
$
|
1.37
|
|
Change Non-GAAP
Measure
|
$
|
13.9
|
|
|
(150)
|
bp
|
|
$
|
4.5
|
|
|
$
|
16.3
|
|
|
$
|
.06
|
|
% Change Non-GAAP
Measure
|
4
|
%
|
|
|
|
|
|
5
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
Six Months Ended
31 March
|
2017 vs.
2016
|
Operating
Income
|
|
Operating
Margin(A)
|
|
Income Tax
Provision(B)
|
|
Net
Income
|
|
Diluted
EPS
|
2017 GAAP
|
$
|
719.3
|
|
|
18.6
|
%
|
|
$
|
172.9
|
|
|
$
|
556.0
|
|
|
$
|
2.53
|
|
2016 GAAP
|
744.1
|
|
|
20.4
|
%
|
|
189.9
|
|
|
559.8
|
|
|
2.57
|
|
Change
GAAP
|
$
|
(24.8)
|
|
|
(180)
|
bp
|
|
$
|
(17.0)
|
|
|
$
|
(3.8)
|
|
|
$
|
(.04)
|
|
% Change
GAAP
|
(3)
|
%
|
|
|
|
|
|
(1)
|
%
|
|
(2)
|
%
|
2017 GAAP
|
$
|
719.3
|
|
|
18.6
|
%
|
|
$
|
172.9
|
|
|
$
|
556.0
|
|
|
$
|
2.53
|
|
Business separation
costs
|
30.2
|
|
|
.8
|
%
|
|
3.7
|
|
|
26.5
|
|
|
.12
|
|
Tax costs associated
with business separation
|
—
|
|
|
—
|
%
|
|
(2.7)
|
|
|
2.7
|
|
|
.01
|
|
Cost reduction and
asset actions
|
60.3
|
|
|
1.6
|
%
|
|
11.9
|
|
|
48.4
|
|
|
.23
|
|
Pension settlement
loss
|
4.1
|
|
|
.1
|
%
|
|
1.5
|
|
|
2.6
|
|
|
.01
|
|
2017 Non-GAAP
Measure
|
$
|
813.9
|
|
|
21.1
|
%
|
|
$
|
187.3
|
|
|
$
|
636.2
|
|
|
$
|
2.90
|
|
2016 GAAP
|
$
|
744.1
|
|
|
20.4
|
%
|
|
$
|
189.9
|
|
|
$
|
559.8
|
|
|
$
|
2.57
|
|
Business separation
costs
|
19.4
|
|
|
.5
|
%
|
|
(1.5)
|
|
|
20.9
|
|
|
.09
|
|
Cost reduction and
asset actions
|
10.7
|
|
|
.3
|
%
|
|
1.9
|
|
|
8.8
|
|
|
.04
|
|
Pension settlement
loss
|
2.0
|
|
|
.1
|
%
|
|
.7
|
|
|
1.3
|
|
|
.01
|
|
2016 Non-GAAP
Measure
|
$
|
776.2
|
|
|
21.3
|
%
|
|
$
|
191.0
|
|
|
$
|
590.8
|
|
|
$
|
2.71
|
|
Change Non-GAAP
Measure
|
$
|
37.7
|
|
|
(20)
|
bp
|
|
$
|
(3.7)
|
|
|
$
|
45.4
|
|
|
$
|
.19
|
|
% Change Non-GAAP
Measure
|
5
|
%
|
|
|
|
|
|
8
|
%
|
|
7
|
%
|
|
(A)
Operating margin is calculated by dividing operating income by
sales.
|
(B)
The tax impact of our non-GAAP adjustments reflects the expected
current and deferred income tax expense impact of the transactions
and is impacted primarily by the
statutory
tax rate of the various relevant jurisdictions and the taxability
of the adjustments in those jurisdictions.
|
ADJUSTED EBITDA
We define Adjusted EBITDA as income from continuing operations
(including noncontrolling interests) excluding certain disclosed
items, which the Company does not believe to be indicative of
underlying business trends, before interest expense, other
non-operating income (expense), net, income tax provision, and
depreciation and amortization expense. Adjusted EBITDA provides a
useful metric for management to assess operating performance.
Below is a reconciliation of Income from Continuing Operations
on a GAAP basis to Adjusted EBITDA:
2017
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q2 YTD
Total
|
|
Income from
Continuing Operations (A)
|
|
$
|
258.2
|
|
|
$
|
310.1
|
|
|
|
|
|
|
$
|
568.3
|
|
|
Add: Interest
expense
|
|
29.5
|
|
|
30.5
|
|
|
|
|
|
|
60.0
|
|
|
Less: Other
non-operating income (expense), net
|
|
—
|
|
|
9.7
|
|
|
|
|
|
|
9.7
|
|
|
Add: Income tax
provision
|
|
78.4
|
|
|
94.5
|
|
|
|
|
|
|
172.9
|
|
|
Add: Depreciation and
amortization
|
|
206.1
|
|
|
211.8
|
|
|
|
|
|
|
417.9
|
|
|
Add: Business
separation costs
|
|
30.2
|
|
|
—
|
|
|
|
|
|
|
30.2
|
|
|
Add: Cost reduction
and asset actions
|
|
50.0
|
|
|
10.3
|
|
|
|
|
|
|
60.3
|
|
|
Add: Pension
settlement loss
|
|
—
|
|
|
4.1
|
|
|
|
|
|
|
4.1
|
|
|
Adjusted
EBITDA
|
|
$
|
652.4
|
|
|
$
|
651.6
|
|
|
|
|
|
|
$
|
1,304.0
|
|
|
2016
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q2 YTD
Total
|
|
Income from
Continuing Operations (A)
|
|
$
|
287.2
|
|
|
$
|
284.7
|
|
|
$
|
255.7
|
|
|
$
|
294.4
|
|
|
$
|
571.9
|
|
|
Add: Interest
expense
|
|
22.2
|
|
|
25.7
|
|
|
35.1
|
|
|
32.2
|
|
|
47.9
|
|
|
Add: Income tax
provision
|
|
96.4
|
|
|
93.5
|
|
|
145.9
|
|
|
96.8
|
|
|
189.9
|
|
|
Add: Depreciation and
amortization
|
|
214.7
|
|
|
213.9
|
|
|
213.5
|
|
|
212.5
|
|
|
428.6
|
|
|
Add: Business
separation costs
|
|
12.0
|
|
|
7.4
|
|
|
9.5
|
|
|
21.7
|
|
|
19.4
|
|
|
Add: Cost reduction
and asset actions
|
|
—
|
|
|
10.7
|
|
|
13.2
|
|
|
10.6
|
|
|
10.7
|
|
|
Add: Pension
settlement loss
|
|
—
|
|
|
2.0
|
|
|
1.0
|
|
|
2.1
|
|
|
2.0
|
|
|
Add: Loss on
extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.9
|
|
|
—
|
|
|
Adjusted
EBITDA
|
|
$
|
632.5
|
|
|
$
|
637.9
|
|
|
$
|
673.9
|
|
|
$
|
677.2
|
|
|
$
|
1,270.4
|
|
|
|
(A) Includes
net income attributable to noncontrolling interests.
|
2017 vs.
2016
|
|
Q1
|
|
Q2
|
|
|
|
|
|
Q2 YTD
Total
|
|
Change
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
Income from
continuing operations change
|
|
$
|
(29.0)
|
|
|
$
|
25.4
|
|
|
|
|
|
|
$
|
(3.6)
|
|
|
Income from
continuing operations % change
|
|
(10)
|
%
|
|
9
|
%
|
|
|
|
|
|
(1)
|
%
|
|
Change
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
change
|
|
$
|
19.9
|
|
|
$
|
13.7
|
|
|
|
|
|
|
$
|
33.6
|
|
|
Adjusted EBITDA %
change
|
|
3
|
%
|
|
2
|
%
|
|
|
|
|
|
3
|
%
|
|
Below is a reconciliation of segment operating income to
Adjusted EBITDA:
|
|
Industrial
Gases–
Americas
|
|
Industrial
Gases–
EMEA
|
|
Industrial
Gases–
Asia
|
|
Industrial
Gases–
Global
|
|
Corporate
and other
|
|
Segment
Total
|
GAAP
MEASURE
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
31 March 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
$
|
224.5
|
|
|
$
|
86.5
|
|
|
$
|
112.0
|
|
|
$
|
22.8
|
|
|
$
|
(40.2)
|
|
|
$
|
405.6
|
|
Operating
margin
|
|
25.2
|
%
|
|
20.9
|
%
|
|
25.7
|
%
|
|
|
|
|
|
20.5
|
%
|
Three Months Ended
31 March 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
$
|
223.5
|
|
|
$
|
90.0
|
|
|
$
|
105.0
|
|
|
$
|
(10.8)
|
|
|
$
|
(16.0)
|
|
|
$
|
391.7
|
|
Operating
margin
|
|
28.0
|
%
|
|
21.3
|
%
|
|
25.7
|
%
|
|
|
|
|
|
22.0
|
%
|
Operating income
(loss) change
|
|
$
|
1.0
|
|
|
$
|
(3.5)
|
|
|
$
|
7.0
|
|
|
$
|
33.6
|
|
|
$
|
(24.2)
|
|
|
$
|
13.9
|
|
Operating income
(loss) % change
|
|
—
|
%
|
|
(4)
|
%
|
|
7
|
%
|
|
311
|
%
|
|
(151)
|
%
|
|
4
|
%
|
Operating margin
change
|
|
(280)
|
bp
|
|
(40)
|
bp
|
|
—
|
bp
|
|
|
|
|
|
(150)
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP
MEASURE
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
31 March 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
$
|
224.5
|
|
|
$
|
86.5
|
|
|
$
|
112.0
|
|
|
$
|
22.8
|
|
|
$
|
(40.2)
|
|
|
$
|
405.6
|
|
Add: Depreciation and
amortization
|
|
116.0
|
|
|
41.6
|
|
|
49.3
|
|
|
1.7
|
|
|
3.2
|
|
|
211.8
|
|
Add: Equity
affiliates' income
|
|
13.0
|
|
|
8.3
|
|
|
12.9
|
|
|
—
|
|
|
—
|
|
|
34.2
|
|
Adjusted
EBITDA
|
|
$
|
353.5
|
|
|
$
|
136.4
|
|
|
$
|
174.2
|
|
|
$
|
24.5
|
|
|
$
|
(37.0)
|
|
|
$
|
651.6
|
|
Adjusted EBITDA
margin
|
|
39.7
|
%
|
|
32.9
|
%
|
|
40.0
|
%
|
|
|
|
|
|
32.9
|
%
|
Three Months Ended
31 March 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
$
|
223.5
|
|
|
$
|
90.0
|
|
|
$
|
105.0
|
|
|
$
|
(10.8)
|
|
|
$
|
(16.0)
|
|
|
$
|
391.7
|
|
Add: Depreciation and
amortization
|
|
109.8
|
|
|
48.2
|
|
|
48.8
|
|
|
1.8
|
|
|
5.3
|
|
|
213.9
|
|
Add: Equity
affiliates' income
|
|
7.7
|
|
|
7.2
|
|
|
17.4
|
|
|
—
|
|
|
—
|
|
|
32.3
|
|
Adjusted
EBITDA
|
|
$
|
341.0
|
|
|
$
|
145.4
|
|
|
$
|
171.2
|
|
|
$
|
(9.0)
|
|
|
$
|
(10.7)
|
|
|
$
|
637.9
|
|
Adjusted EBITDA
margin
|
|
42.7
|
%
|
|
34.5
|
%
|
|
42.0
|
%
|
|
|
|
|
|
35.9
|
%
|
Adjusted EBITDA
change
|
|
$
|
12.5
|
|
|
$
|
(9.0)
|
|
|
$
|
3.0
|
|
|
$
|
33.5
|
|
|
$
|
(26.3)
|
|
|
$
|
13.7
|
|
Adjusted EBITDA %
change
|
|
4
|
%
|
|
(6)
|
%
|
|
2
|
%
|
|
372
|
%
|
|
(246)
|
%
|
|
2
|
%
|
Adjusted EBITDA
margin change
|
|
(300)
|
bp
|
|
(160)
|
bp
|
|
(200)
|
bp
|
|
|
|
|
|
(300)
|
bp
|
|
|
Industrial
Gases–
Americas
|
|
Industrial
Gases–
EMEA
|
|
Industrial
Gases–
Asia
|
|
Industrial
Gases–
Global
|
|
Corporate
and other
|
|
Segment
Total
|
GAAP
MEASURE
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
31 March 2017
|
Operating income
(loss)
|
|
$
|
448.3
|
|
|
$
|
174.5
|
|
|
$
|
230.1
|
|
|
$
|
31.0
|
|
|
$
|
(70.0)
|
|
|
$
|
813.9
|
|
Operating
margin
|
|
25.6
|
%
|
|
21.4
|
%
|
|
26.3
|
%
|
|
|
|
|
|
21.1
|
%
|
Six Months Ended
31 March 2016
|
Operating income
(loss)
|
|
$
|
435.1
|
|
|
$
|
182.3
|
|
|
$
|
222.3
|
|
|
$
|
(30.1)
|
|
|
$
|
(33.4)
|
|
|
$
|
776.2
|
|
Operating
margin
|
|
26.6
|
%
|
|
21.2
|
%
|
|
27.0
|
%
|
|
|
|
|
|
21.3
|
%
|
Operating income
(loss) change
|
|
$
|
13.2
|
|
|
$
|
(7.8)
|
|
|
$
|
7.8
|
|
|
$
|
61.1
|
|
|
$
|
(36.6)
|
|
|
$
|
37.7
|
|
Operating income
(loss) % change
|
|
3
|
%
|
|
(4)
|
%
|
|
4
|
%
|
|
203
|
%
|
|
(110)
|
%
|
|
5
|
%
|
Operating margin
change
|
|
(100)
|
bp
|
|
20
|
bp
|
|
(70)
|
bp
|
|
|
|
|
|
(20)
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP
MEASURE
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
31 March 2017
|
Operating income
(loss)
|
|
$
|
448.3
|
|
|
$
|
174.5
|
|
|
$
|
230.1
|
|
|
$
|
31.0
|
|
|
$
|
(70.0)
|
|
|
$
|
813.9
|
|
Add: Depreciation and
amortization
|
|
227.8
|
|
|
83.8
|
|
|
96.0
|
|
|
3.7
|
|
|
6.6
|
|
|
417.9
|
|
Add: Equity
affiliates' income
|
|
27.7
|
|
|
17.8
|
|
|
26.4
|
|
|
.3
|
|
|
—
|
|
|
72.2
|
|
Adjusted
EBITDA
|
|
$
|
703.8
|
|
|
$
|
276.1
|
|
|
$
|
352.5
|
|
|
$
|
35.0
|
|
|
$
|
(63.4)
|
|
|
$
|
1,304.0
|
|
Adjusted EBITDA
margin
|
|
40.1
|
%
|
|
33.9
|
%
|
|
40.3
|
%
|
|
|
|
|
|
33.8
|
%
|
Six Months Ended
31 March 2016
|
Operating income
(loss)
|
|
$
|
435.1
|
|
|
$
|
182.3
|
|
|
$
|
222.3
|
|
|
$
|
(30.1)
|
|
|
$
|
(33.4)
|
|
|
$
|
776.2
|
|
Add: Depreciation and
amortization
|
|
218.8
|
|
|
95.0
|
|
|
100.7
|
|
|
3.9
|
|
|
10.2
|
|
|
428.6
|
|
Add: Equity
affiliates' income (loss)
|
|
22.2
|
|
|
14.8
|
|
|
29.1
|
|
|
(.5)
|
|
|
—
|
|
|
65.6
|
|
Adjusted
EBITDA
|
|
$
|
676.1
|
|
|
$
|
292.1
|
|
|
$
|
352.1
|
|
|
$
|
(26.7)
|
|
|
$
|
(23.2)
|
|
|
$
|
1,270.4
|
|
Adjusted EBITDA
margin
|
|
41.4
|
%
|
|
33.9
|
%
|
|
42.8
|
%
|
|
|
|
|
|
34.9
|
%
|
Adjusted EBITDA
change
|
|
$
|
27.7
|
|
|
$
|
(16.0)
|
|
|
$
|
.4
|
|
|
$
|
61.7
|
|
|
$
|
(40.2)
|
|
|
$
|
33.6
|
|
Adjusted EBITDA %
change
|
|
4
|
%
|
|
(5)
|
%
|
|
—
|
%
|
|
231
|
%
|
|
(173)
|
%
|
|
3
|
%
|
Adjusted EBITDA
margin change
|
|
(130)
|
bp
|
|
—
|
bp
|
|
(250)
|
bp
|
|
|
|
|
|
(110)
|
bp
|
Below is a reconciliation of segment total operating income to
consolidated operating income:
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
31 March
|
|
31 March
|
Operating
Income
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Segment
total
|
|
$
|
405.6
|
|
|
$
|
391.7
|
|
|
$
|
813.9
|
|
|
$
|
776.2
|
|
Business separation
costs
|
|
—
|
|
|
(7.4)
|
|
|
(30.2)
|
|
|
(19.4)
|
|
Cost reduction and
asset actions
|
|
(10.3)
|
|
|
(10.7)
|
|
|
(60.3)
|
|
|
(10.7)
|
|
Pension settlement
loss
|
|
(4.1)
|
|
|
(2.0)
|
|
|
(4.1)
|
|
|
(2.0)
|
|
Consolidated
Total
|
|
$
|
391.2
|
|
|
$
|
371.6
|
|
|
$
|
719.3
|
|
|
$
|
744.1
|
|
INCOME TAXES
The tax impact of our non-GAAP adjustments reflects the expected
current and deferred income tax expense impact of the transactions
and is impacted primarily by the statutory tax rate of the various
relevant jurisdictions and the taxability of the adjustments in
those jurisdictions.
|
Effective Tax
Rate
|
|
Three Months
Ended
31 March
|
|
Six Months
Ended
31 March
|
|
2017
|
2016
|
|
2017
|
2016
|
Income Tax Provision
— GAAP
|
$
|
94.5
|
|
$
|
93.5
|
|
|
$
|
172.9
|
|
$
|
189.9
|
|
Income From
Continuing Operations Before Taxes — GAAP
|
$
|
404.6
|
|
$
|
378.2
|
|
|
$
|
741.2
|
|
$
|
761.8
|
|
Effective Tax Rate —
GAAP
|
23.4
|
%
|
24.7
|
%
|
|
23.3
|
%
|
24.9
|
%
|
Income Tax Provision
— GAAP
|
$
|
94.5
|
|
$
|
93.5
|
|
|
$
|
172.9
|
|
$
|
189.9
|
|
Business separation
costs
|
—
|
|
(1.5)
|
|
|
3.7
|
|
(1.5)
|
|
Tax costs associated
with business separation
|
—
|
|
—
|
|
|
(2.7)
|
|
—
|
|
Cost reduction and
asset actions
|
3.1
|
|
1.9
|
|
|
11.9
|
|
1.9
|
|
Pension settlement
loss
|
1.5
|
|
.7
|
|
|
1.5
|
|
.7
|
|
Income Tax Provision
— Non-GAAP Measure
|
$
|
99.1
|
|
$
|
94.6
|
|
|
$
|
187.3
|
|
$
|
191.0
|
|
Income From
Continuing Operations Before Taxes — GAAP
|
$
|
404.6
|
|
$
|
378.2
|
|
|
$
|
741.2
|
|
$
|
761.8
|
|
Business separation
costs
|
—
|
|
7.4
|
|
|
30.2
|
|
19.4
|
|
Cost reduction and
asset actions
|
10.3
|
|
10.7
|
|
|
60.3
|
|
10.7
|
|
Pension settlement
loss
|
4.1
|
|
2.0
|
|
|
4.1
|
|
2.0
|
|
Income From
Continuing Operations Before Taxes — Non-GAAP Measure
|
$
|
419.0
|
|
$
|
398.3
|
|
|
$
|
835.8
|
|
$
|
793.9
|
|
Effective Tax Rate —
Non-GAAP Measure
|
23.7
|
%
|
23.8
|
%
|
|
22.4
|
%
|
24.1
|
%
|
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.
Below is a reconciliation of capital expenditures on a GAAP
basis to a non-GAAP measure:
|
|
Three Months
Ended
31 March
|
|
Six Months
Ended
31 March
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Capital expenditures
for continuing operations – GAAP basis
|
|
$
|
293.1
|
|
|
$
|
226.4
|
|
|
$
|
541.1
|
|
|
$
|
473.5
|
|
Capital lease
expenditures
|
|
1.8
|
|
|
11.3
|
|
|
5.8
|
|
|
18.6
|
|
Capital expenditures
– Non-GAAP basis
|
|
$
|
294.9
|
|
|
$
|
237.7
|
|
|
$
|
546.9
|
|
|
$
|
492.1
|
|
We expect capital expenditures for fiscal year 2017 to be
approximately $1,000 on a GAAP and
non-GAAP basis.
RETURN ON CAPITAL EMPLOYED (ROCE)
Return on capital employed (ROCE) is calculated on a continuing
operations basis as earnings after-tax divided by five-quarter
average total capital. Earnings after-tax is calculated based on
trailing four quarters and is defined as the sum of net income from
continuing operations attributable to Air Products, interest
expense, after-tax, at our effective quarterly tax rate, and net
income attributable to noncontrolling interests. On a non-GAAP
basis, the GAAP measure has been adjusted for the impact of the
disclosed items detailed below. Total capital consists of total
debt, total equity, and redeemable noncontrolling interest less
noncontrolling interests and total assets of discontinued
operations.
|
2017
|
|
2016
|
|
2015
|
|
Q2
|
Q1
|
|
Q4
|
Q3
|
Q2
|
Q1
|
|
Q4
|
Q3
|
Q2
|
Net income from
continuing
operations attributable to Air
Products
|
$
|
304.4
|
|
$
|
251.6
|
|
|
$
|
289.4
|
|
$
|
250.3
|
|
$
|
278.9
|
|
$
|
280.9
|
|
|
$
|
273.7
|
|
$
|
221.5
|
|
|
Interest
expense
|
30.5
|
|
29.5
|
|
|
32.2
|
|
35.1
|
|
25.7
|
|
22.2
|
|
|
22.7
|
|
28.1
|
|
|
Interest expense tax
impact
|
(7.1)
|
|
(6.9)
|
|
|
(8.0)
|
|
(12.7)
|
|
(6.3)
|
|
(5.6)
|
|
|
(5.4)
|
|
(6.8)
|
|
|
Interest expense,
after-tax
|
23.4
|
|
22.6
|
|
|
24.2
|
|
22.4
|
|
19.4
|
|
16.6
|
|
|
17.3
|
|
21.3
|
|
|
Net income
attributable to
noncontrolling interests of
continuing operations
|
5.7
|
|
6.6
|
|
|
5.0
|
|
5.4
|
|
5.8
|
|
6.3
|
|
|
4.1
|
|
12.3
|
|
|
Earnings
After-Tax—GAAP
|
$
|
333.5
|
|
$
|
280.8
|
|
|
$
|
318.6
|
|
$
|
278.1
|
|
$
|
304.1
|
|
$
|
303.8
|
|
|
$
|
295.1
|
|
$
|
255.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclosed items,
after-tax
|
|
|
|
|
|
|
|
|
|
|
|
Business separation
costs
|
$
|
—
|
|
$
|
26.5
|
|
|
$
|
19.3
|
|
$
|
6.5
|
|
$
|
8.9
|
|
$
|
12.0
|
|
|
$
|
7.5
|
|
$
|
—
|
|
|
Tax costs associated
with
business separation
|
—
|
|
2.7
|
|
|
4.1
|
|
47.7
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
Cost reduction and
asset actions
|
7.2
|
|
41.2
|
|
|
7.2
|
|
8.7
|
|
8.8
|
|
—
|
|
|
47.2
|
|
33.0
|
|
|
Pension settlement
loss
|
2.6
|
|
—
|
|
|
1.4
|
|
.6
|
|
1.3
|
|
—
|
|
|
4.2
|
|
.8
|
|
|
Gain on land
sales
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
(28.3)
|
|
—
|
|
|
Loss on
extinguishment of debt
|
—
|
|
—
|
|
|
4.3
|
|
—
|
|
—
|
|
—
|
|
|
14.2
|
|
—
|
|
|
Earnings
After-Tax—Non-
GAAP
|
$
|
343.3
|
|
$
|
351.2
|
|
|
$
|
354.9
|
|
$
|
341.6
|
|
$
|
323.1
|
|
$
|
315.8
|
|
|
$
|
339.9
|
|
$
|
288.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Capital
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
$
|
122.3
|
|
$
|
156.1
|
|
|
$
|
935.8
|
|
$
|
1,043.0
|
|
$
|
1,478.5
|
|
$
|
1,539.4
|
|
|
$
|
1,494.3
|
|
$
|
1,082.9
|
|
$
|
1,259.4
|
|
Current portion of
long-term
debt
|
420.5
|
|
873.3
|
|
|
365.4
|
|
714.9
|
|
763.6
|
|
403.1
|
|
|
430.6
|
|
80.1
|
|
151.2
|
|
Long-term
debt
|
3,300.4
|
|
3,289.0
|
|
|
3,909.7
|
|
3,908.1
|
|
3,556.9
|
|
3,853.0
|
|
|
3,931.0
|
|
4,669.1
|
|
4,488.7
|
|
Total Debt
|
3,843.2
|
|
4,318.4
|
|
|
5,210.9
|
|
5,666.0
|
|
5,799.0
|
|
5,795.5
|
|
|
5,855.9
|
|
5,832.1
|
|
5,899.3
|
|
Total
Equity
|
9,420.2
|
|
7,261.1
|
|
|
7,213.4
|
|
7,180.2
|
|
7,053.1
|
|
7,499.0
|
|
|
7,381.1
|
|
7,731.3
|
|
7,476.3
|
|
Redeemable
noncontrolling
interest
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
277.9
|
|
280.0
|
|
Noncontrolling
interests of
discontinued operations
|
—
|
|
—
|
|
|
(33.9)
|
|
(32.9)
|
|
(33.0)
|
|
(32.1)
|
|
|
(32.0)
|
|
(35.7)
|
|
(34.6)
|
|
Assets of
discontinued
operations
|
(9.8)
|
|
(860.2)
|
|
|
(1,968.5)
|
|
(1,762.0)
|
|
(1,707.1)
|
|
(2,599.2)
|
|
|
(2,556.6)
|
|
(2,572.6)
|
|
(2,410.1)
|
|
Total
Capital
|
$
|
13,253.6
|
|
$
|
10,719.3
|
|
|
$
|
10,421.9
|
|
$
|
11,051.3
|
|
$
|
11,112.0
|
|
$
|
10,663.2
|
|
|
$
|
10,648.4
|
|
$
|
11,233.0
|
|
$
|
11,210.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings After
Tax—GAAP
|
$
|
1,211.0
|
|
|
|
|
|
$
|
1,158.1
|
|
|
|
|
|
|
Five-quarter average
total
capital
|
11,311.6
|
|
|
|
|
|
10,973.5
|
|
|
|
|
|
|
ROCE—GAAP
|
10.7
|
%
|
|
|
|
|
10.6
|
%
|
|
|
|
|
|
Change GAAP
Measure
|
10bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings After
Tax—Non-
GAAP
|
$
|
1,391.0
|
|
|
|
|
|
$
|
1,267.7
|
|
|
|
|
|
|
Five-quarter average
total
capital
|
11,311.6
|
|
|
|
|
|
10,973.5
|
|
|
|
|
|
|
ROCE—Non-GAAP
|
12.3
|
%
|
|
|
|
|
11.6
|
%
|
|
|
|
|
|
Change Non-GAAP
Measure
|
70bp
|
|
|
|
|
|
|
|
|
|
|
|
OUTLOOK
Guidance provided is on a non-GAAP continuing operations basis,
which excludes the impact of certain items that we believe are not
representative of our underlying business performance. It is likely
that we will incur additional costs for items such as cost
reduction and asset actions and pension settlements in future
periods. However, it is not possible, without unreasonable efforts,
to identify the amount or significance of these events or the
potential for other transactions that may impact future GAAP EPS.
Accordingly, management is unable to reconcile, without
unreasonable effort, the Company's forecasted range of adjusted EPS
on a continuing operations basis to a comparable GAAP range.
|
|
Diluted
EPS
|
|
|
Q3
|
|
Full
Year
|
2016 GAAP
|
|
$
|
1.15
|
|
|
$
|
5.04
|
|
Business separation
costs
|
|
.03
|
|
|
.21
|
|
Tax costs associated
with business separation
|
|
.22
|
|
|
.24
|
|
Cost reduction and
asset actions
|
|
.04
|
|
|
.11
|
|
Pension settlement
loss
|
|
—
|
|
|
.02
|
|
Loss on
extinguishment of debt
|
|
—
|
|
|
.02
|
|
2016 Non-GAAP
Measure
|
|
$
|
1.44
|
|
|
$
|
5.64
|
|
2017 Non-GAAP
Outlook
|
|
1.55–1.60
|
|
|
6.00–6.25
|
|
Change
Non-GAAP
|
|
.11–.16
|
|
|
.36–.61
|
|
% Change
Non-GAAP
|
|
8%–11%
|
|
|
6%–11%
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
INCOME STATEMENTS
|
(Unaudited)
|
|
|
Three Months Ended
|
Six Months
Ended
|
|
31 March
|
31 March
|
(Millions of dollars,
except for share data)
|
2017
|
2016
|
2017
|
2016
|
Sales
|
$
|
1,980.1
|
|
$
|
1,777.4
|
|
$
|
3,862.6
|
|
$
|
3,643.7
|
|
Cost of
sales
|
1,403.8
|
|
1,213.0
|
|
2,721.9
|
|
2,508.9
|
|
Selling and
administrative
|
177.9
|
|
167.8
|
|
343.6
|
|
341.7
|
|
Research and
development
|
14.8
|
|
18.2
|
|
29.9
|
|
35.1
|
|
Business separation
costs
|
—
|
|
7.4
|
|
30.2
|
|
19.4
|
|
Cost reduction and
asset actions
|
10.3
|
|
10.7
|
|
60.3
|
|
10.7
|
|
Pension settlement
loss
|
4.1
|
|
2.0
|
|
4.1
|
|
2.0
|
|
Other income
(expense), net
|
22.0
|
|
13.3
|
|
46.7
|
|
18.2
|
|
Operating
Income
|
391.2
|
|
371.6
|
|
719.3
|
|
744.1
|
|
Equity affiliates'
income
|
34.2
|
|
32.3
|
|
72.2
|
|
65.6
|
|
Interest
expense
|
30.5
|
|
25.7
|
|
60.0
|
|
47.9
|
|
Other non-operating
income (expense), net — Refer to Note 1
|
9.7
|
|
—
|
|
9.7
|
|
—
|
|
Income From
Continuing Operations Before Taxes
|
404.6
|
|
378.2
|
|
741.2
|
|
761.8
|
|
Income tax
provision
|
94.5
|
|
93.5
|
|
172.9
|
|
189.9
|
|
Income From
Continuing Operations
|
310.1
|
|
284.7
|
|
568.3
|
|
571.9
|
|
Income (Loss) From
Discontinued Operations, net of tax
|
1,825.6
|
|
(750.2)
|
|
1,873.8
|
|
(665.4)
|
|
Net Income
(Loss)
|
2,135.7
|
|
(465.5)
|
|
2,442.1
|
|
(93.5)
|
|
Net Income
Attributable to Noncontrolling Interests of Continuing
Operations
|
5.7
|
|
5.8
|
|
12.3
|
|
12.1
|
|
Net Income
Attributable to Noncontrolling Interests of Discontinued
Operations
|
—
|
|
2.0
|
|
—
|
|
4.1
|
|
Net Income (Loss)
Attributable to Air Products
|
$
|
2,130.0
|
|
$
|
(473.3)
|
|
$
|
2,429.8
|
|
$
|
(109.7)
|
|
Net Income
Attributable to Air Products
|
|
|
|
|
Income from
continuing operations
|
$
|
304.4
|
|
$
|
278.9
|
|
$
|
556.0
|
|
$
|
559.8
|
|
Income (Loss) from
discontinued operations
|
1,825.6
|
|
(752.2)
|
|
1,873.8
|
|
(669.5)
|
|
Net Income (Loss)
Attributable to Air Products
|
$
|
2,130.0
|
|
$
|
(473.3)
|
|
$
|
2,429.8
|
|
$
|
(109.7)
|
|
Basic Earnings Per
Common Share Attributable to Air Products
|
|
|
|
|
Income from
continuing operations
|
$
|
1.40
|
|
$
|
1.29
|
|
$
|
2.55
|
|
$
|
2.59
|
|
Income (Loss) from
discontinued operations
|
8.38
|
|
(3.48)
|
|
8.61
|
|
(3.10)
|
|
Net Income (Loss)
Attributable to Air Products
|
$
|
9.78
|
|
$
|
(2.19)
|
|
$
|
11.16
|
|
$
|
(.51)
|
|
Diluted Earnings
Per Common Share Attributable to Air Products
|
|
|
|
|
Income from
continuing operations
|
$
|
1.39
|
|
$
|
1.28
|
|
$
|
2.53
|
|
$
|
2.57
|
|
Income (Loss) from
discontinued operations
|
8.31
|
|
(3.45)
|
|
8.53
|
|
(3.08)
|
|
Net Income (Loss)
Attributable to Air Products
|
$
|
9.70
|
|
$
|
(2.17)
|
|
$
|
11.06
|
|
$
|
(.51)
|
|
Weighted Average
Common Shares – Basic (in millions)
|
217.9
|
|
216.1
|
|
217.8
|
|
215.9
|
|
Weighted Average
Common Shares – Diluted (in millions)
|
219.7
|
|
217.9
|
|
219.6
|
|
217.8
|
|
Dividends Declared
Per Common Share – Cash
|
$
|
.95
|
|
$
|
.86
|
|
$
|
1.81
|
|
$
|
1.67
|
|
Other Data from
Continuing Operations
|
|
|
|
|
Depreciation and
amortization
|
$
|
211.8
|
|
$
|
213.9
|
|
$
|
417.9
|
|
$
|
428.6
|
|
Capital expenditures
– Refer to page 9
|
$
|
294.9
|
|
$
|
237.7
|
|
$
|
546.9
|
|
$
|
492.1
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
|
|
31 March
|
30
September
|
(Millions of
dollars)
|
2017
|
2016
|
Assets
|
|
|
Current
Assets
|
|
|
Cash and cash
items
|
$
|
1,869.3
|
|
$
|
1,293.2
|
|
Short-term
investments
|
1,423.2
|
|
—
|
|
Trade receivables,
net
|
1,176.3
|
|
1,146.2
|
|
Inventories
|
322.8
|
|
255.0
|
|
Contracts in
progress, less progress billings
|
68.8
|
|
64.6
|
|
Prepaid
expenses
|
61.9
|
|
93.9
|
|
Other receivables and
current assets
|
362.0
|
|
538.2
|
|
Current assets of
discontinued operations
|
9.8
|
|
926.2
|
|
Total Current
Assets
|
5,294.1
|
|
4,317.3
|
|
Investment in net
assets of and advances to equity affiliates
|
1,296.3
|
|
1,283.6
|
|
Plant and equipment,
at cost
|
18,716.2
|
|
18,660.2
|
|
Less: accumulated
depreciation
|
10,518.0
|
|
10,400.5
|
|
Plant and equipment,
net
|
8,198.2
|
|
8,259.7
|
|
Goodwill,
net
|
827.2
|
|
845.1
|
|
Intangible assets,
net
|
377.6
|
|
387.9
|
|
Noncurrent capital
lease receivables
|
1,147.9
|
|
1,221.7
|
|
Other noncurrent
assets
|
730.2
|
|
671.0
|
|
Noncurrent assets of
discontinued operations
|
—
|
|
1,042.3
|
|
Total Noncurrent
Assets
|
12,577.4
|
|
13,711.3
|
|
Total
Assets
|
$
|
17,871.5
|
|
$
|
18,028.6
|
|
Liabilities and
Equity
|
|
|
Current
Liabilities
|
|
|
Payables and accrued
liabilities
|
$
|
1,490.6
|
|
$
|
1,652.2
|
|
Accrued income
taxes
|
544.8
|
|
117.9
|
|
Short-term
borrowings
|
122.3
|
|
935.8
|
|
Current portion of
long-term debt
|
420.5
|
|
365.4
|
|
Current liabilities
of discontinued operations
|
24.1
|
|
211.8
|
|
Total Current
Liabilities
|
2,602.3
|
|
3,283.1
|
|
Long-term
debt
|
3,300.4
|
|
3,909.7
|
|
Other noncurrent
liabilities
|
1,897.9
|
|
1,816.5
|
|
Deferred income
taxes
|
650.7
|
|
710.4
|
|
Noncurrent
liabilities of discontinued operations
|
—
|
|
1,095.5
|
|
Total Noncurrent
Liabilities
|
5,849.0
|
|
7,532.1
|
|
Total
Liabilities
|
8,451.3
|
|
10,815.2
|
|
Air Products
Shareholders' Equity
|
9,317.4
|
|
7,079.6
|
|
Noncontrolling
Interests
|
102.8
|
|
133.8
|
|
Total
Equity
|
9,420.2
|
|
7,213.4
|
|
Total Liabilities
and Equity
|
$
|
17,871.5
|
|
$
|
18,028.6
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Six Months
Ended
|
|
31 March
|
(Millions of
dollars)
|
2017
|
2016
|
Operating
Activities
|
|
|
Net income
(loss)
|
$
|
2,442.1
|
|
$
|
(93.5)
|
|
Less: Net income
attributable to noncontrolling interests of continuing
operations
|
12.3
|
|
12.1
|
|
Less: Net income
attributable to noncontrolling interests of discontinued
operations
|
—
|
|
4.1
|
|
Net income (loss)
attributable to Air Products
|
2,429.8
|
|
(109.7)
|
|
(Income) Loss from
discontinued operations
|
(1,873.8)
|
|
669.5
|
|
Income from
continuing operations attributable to Air Products
|
556.0
|
|
559.8
|
|
Adjustments to
reconcile income to cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
417.9
|
|
428.6
|
|
Deferred income
taxes
|
(68.6)
|
|
80.0
|
|
Undistributed
earnings of unconsolidated affiliates
|
(31.5)
|
|
(7.4)
|
|
Gain on sale of
assets and investments
|
(6.5)
|
|
(2.3)
|
|
Share-based
compensation
|
18.5
|
|
16.4
|
|
Noncurrent capital
lease receivables
|
45.4
|
|
40.6
|
|
Write-down of
long-lived assets associated with restructuring
|
45.7
|
|
—
|
|
Other
adjustments
|
34.0
|
|
37.8
|
|
Working capital
changes that provided (used) cash, excluding effects of
acquisitions and divestitures:
|
|
|
Trade
receivables
|
(53.8)
|
|
46.1
|
|
Inventories
|
20.7
|
|
(1.1)
|
|
Contracts in
progress, less progress billings
|
(5.0)
|
|
(38.3)
|
|
Other
receivables
|
118.4
|
|
(54.4)
|
|
Payables and accrued
liabilities
|
(178.6)
|
|
(191.5)
|
|
Other working
capital
|
(51.4)
|
|
(24.3)
|
|
Cash Provided by
Operating Activities
|
861.2
|
|
890.0
|
|
Investing
Activities
|
|
|
Additions to plant
and equipment
|
(532.2)
|
|
(472.0)
|
|
Investment in and
advances to unconsolidated affiliates
|
(8.9)
|
|
(1.5)
|
|
Proceeds from sale of
assets and investments
|
13.5
|
|
38.1
|
|
Purchases of
investments
|
(1,823.2)
|
|
—
|
|
Proceeds from
investments
|
400.0
|
|
—
|
|
Other investing
activities
|
(1.6)
|
|
(1.0)
|
|
Cash Used for
Investing Activities
|
(1,952.4)
|
|
(436.4)
|
|
Financing
Activities
|
|
|
Long-term debt
proceeds
|
1.3
|
|
—
|
|
Payments on long-term
debt
|
(469.7)
|
|
(65.6)
|
|
Net decrease in
commercial paper and short-term borrowings
|
(816.6)
|
|
(1.6)
|
|
Dividends paid to
shareholders
|
(374.0)
|
|
(349.1)
|
|
Proceeds from stock
option exercises
|
19.9
|
|
35.5
|
|
Other financing
activities
|
(22.7)
|
|
(21.0)
|
|
Cash Used for
Financing Activities
|
(1,661.8)
|
|
(401.8)
|
|
Discontinued
Operations
|
|
|
Cash (used for)
provided by operating activities
|
(520.8)
|
|
182.1
|
|
Cash provided by
(used for) investing activities
|
3,750.6
|
|
(127.3)
|
|
Cash provided by
(used for) investing activities
|
69.5
|
|
(6.8)
|
|
Cash Provided by
Discontinued Operations
|
3,299.3
|
|
48.0
|
|
Effect of Exchange
Rate Changes on Cash
|
(7.8)
|
|
6.9
|
|
Increase in Cash and
Cash Items
|
538.5
|
|
106.7
|
|
Cash and Cash Items –
Beginning of Year
|
1,330.8
|
|
206.4
|
|
Cash and Cash
Items – End of Period
|
$
|
1,869.3
|
|
$
|
313.1
|
|
Less: Cash and
Cash Items – Discontinued Operations
|
—
|
|
26.4
|
|
Cash and Cash
Items – Continuing Operations
|
$
|
1,869.3
|
|
$
|
286.7
|
|
Supplemental Cash
Flow Information
|
|
|
Cash paid for taxes,
net of refunds (Inclusive of $509.7 and $27.8 related to
discontinued operations for 2017 and 2016,
respectively)
|
$
|
784.7
|
|
$
|
177.9
|
|
AIR PRODUCTS AND
CHEMICALS, INC. and Subsidiaries
|
SUMMARY BY
BUSINESS SEGMENTS
|
(Unaudited)
|
|
(Millions of
dollars)
|
Industrial
Gases
–
Americas
|
Industrial
Gases
–
EMEA
|
Industrial
Gases
–
Asia
|
Industrial
Gases
–
Global
|
Corporate
and
other
|
Segment
Total
|
Three Months Ended
31 March 2017
|
|
|
|
|
|
|
Sales
|
$
|
890.1
|
|
$
|
414.2
|
|
$
|
435.9
|
|
$
|
216.5
|
|
$
|
23.4
|
|
$
|
1,980.1
|
|
Operating income
(loss)
|
224.5
|
|
86.5
|
|
112.0
|
|
22.8
|
|
(40.2)
|
|
405.6
|
|
Depreciation and
amortization
|
116.0
|
|
41.6
|
|
49.3
|
|
1.7
|
|
3.2
|
|
211.8
|
|
Equity affiliates'
income
|
13.0
|
|
8.3
|
|
12.9
|
|
—
|
|
—
|
|
34.2
|
|
Three Months Ended
31 March 2016
|
|
|
|
|
|
|
Sales
|
$
|
798.1
|
|
$
|
421.8
|
|
$
|
407.9
|
|
$
|
86.6
|
|
$
|
63.0
|
|
$
|
1,777.4
|
|
Operating income
(loss)
|
223.5
|
|
90.0
|
|
105.0
|
|
(10.8)
|
|
(16.0)
|
|
391.7
|
|
Depreciation and
amortization
|
109.8
|
|
48.2
|
|
48.8
|
|
1.8
|
|
5.3
|
|
213.9
|
|
Equity affiliates'
income
|
7.7
|
|
7.2
|
|
17.4
|
|
—
|
|
—
|
|
32.3
|
|
|
|
|
|
|
|
|
Six Months Ended
31 March 2017
|
|
|
|
|
|
|
Sales
|
$
|
1,754.0
|
|
$
|
813.9
|
|
$
|
874.2
|
|
$
|
364.4
|
|
$
|
56.1
|
|
$
|
3,862.6
|
|
Operating income
(loss)
|
448.3
|
|
174.5
|
|
230.1
|
|
31.0
|
|
(70.0)
|
|
813.9
|
|
Depreciation and
amortization
|
227.8
|
|
83.8
|
|
96.0
|
|
3.7
|
|
6.6
|
|
417.9
|
|
Equity affiliates'
income
|
27.7
|
|
17.8
|
|
26.4
|
|
.3
|
|
—
|
|
72.2
|
|
Six Months Ended
31 March 2016
|
|
|
|
|
|
|
Sales
|
$
|
1,634.4
|
|
$
|
861.4
|
|
$
|
822.5
|
|
$
|
190.9
|
|
$
|
134.5
|
|
$
|
3,643.7
|
|
Operating income
(loss)
|
435.1
|
|
182.3
|
|
222.3
|
|
(30.1)
|
|
(33.4)
|
|
776.2
|
|
Depreciation and
amortization
|
218.8
|
|
95.0
|
|
100.7
|
|
3.9
|
|
10.2
|
|
428.6
|
|
Equity affiliates'
income (loss)
|
22.2
|
|
14.8
|
|
29.1
|
|
(.5)
|
|
—
|
|
65.6
|
|
Total
Assets
|
|
|
|
|
|
|
31 March
2017
|
$
|
5,898.8
|
|
$
|
3,100.8
|
|
$
|
4,248.1
|
|
$
|
328.9
|
|
$
|
4,285.1
|
|
$
|
17,861.7
|
|
30 September
2016
|
5,896.7
|
|
3,178.6
|
|
4,232.7
|
|
367.6
|
|
2,384.5
|
|
16,060.1
|
|
Below is a reconciliation of segment total operating income to
consolidated operating income:
|
Three Months
Ended
|
Six Months
Ended
|
|
31 March
|
31 March
|
Operating
Income
|
2017
|
2016
|
2017
|
2016
|
Segment
total
|
$
|
405.6
|
|
$
|
391.7
|
|
$
|
813.9
|
|
$
|
776.2
|
|
Business separation
costs
|
—
|
|
(7.4)
|
|
(30.2)
|
|
(19.4)
|
|
Cost reduction and
asset actions
|
(10.3)
|
|
(10.7)
|
|
(60.3)
|
|
(10.7)
|
|
Pension settlement
loss
|
(4.1)
|
|
(2.0)
|
|
(4.1)
|
|
(2.0)
|
|
Consolidated
Total
|
$
|
391.2
|
|
$
|
371.6
|
|
$
|
719.3
|
|
$
|
744.1
|
|
Below is a reconciliation of segment total assets to
consolidated total assets:
|
31 March
|
30
September
|
Total
Assets
|
2017
|
2016
|
Segment
total
|
$
|
17,861.7
|
|
$
|
16,060.1
|
|
Discontinued
operations
|
9.8
|
|
1,968.5
|
|
Consolidated
Total
|
$
|
17,871.5
|
|
$
|
18,028.6
|
|
AIR PRODUCTS AND CHEMICALS, INC. and
Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(Millions of dollars, unless otherwise
indicated)
1. MATERIALS TECHNOLOGIES SEPARATION
On 16 September 2015, the Company announced plans to
separate its Materials Technologies business, which contained two
divisions, the Electronic Materials Division (EMD) and Performance
Materials Division (PMD), into an independent publicly traded
company and distribute to Air Products shareholders all of the
shares of the new public company in a tax-free distribution (a
"spin-off"). Versum Materials, Inc., or Versum, was formed as the
new company to hold the Materials Technologies business subject to
the spin-off. On 6 May 2016, the Company entered into an
agreement to sell certain subsidiaries and assets comprising PMD to
Evonik Industries AG. As a result, the Company moved forward with
the planned spin-off of Versum containing only EMD. The spin-off
was completed on 1 October 2016.
On 3 January 2017, we completed
the sale of PMD to Evonik Industries AG for $3.8 billion in cash subject to customary
post-closing adjustments, including working capital. A gain of
$2,870 ($1,833 after-tax, or $8.34 per share) was recognized on the sale in
the second quarter of fiscal year 2017. A portion of the proceeds
from the sale have been included in "Short-term investments" on the
consolidated balance sheets. Associated interest income has been
reflected on the consolidated income statements as "Other
non-operating income (expense), net."
Both EMD and PMD are reflected in our consolidated financial
statements as discontinued operations for all periods
presented.
For the six months ended 31 March
2017, we incurred separation costs of $30.2 ($26.5
after-tax, or $.12 per share),
primarily related to legal and advisory costs associated with these
transactions. No business separation costs were incurred during the
second quarter of fiscal year 2017. The costs are reflected on the
consolidated income statements as "Business separation costs." A
significant portion of these costs were not tax deductible because
they were directly related to the plan for the tax-free spin-off of
Versum. In addition, our income tax provision for the six months
ended 31 March 2017 includes
additional tax expense of $2.7
($.01 per share) related to the
spin-off during the first quarter of fiscal year 2017.
The results of the Corporate and other segment include stranded
costs related to the presentation of EMD and PMD as discontinued
operations. The majority of these costs are expected to be
reimbursed to Air Products pursuant to short-term transition
services agreements under which Air Products will provide
transition services to Versum for EMD and to Evonik for PMD.
2. COST REDUCTION AND ASSET ACTIONS
For the three months ended 31 March
2017, we recognized an expense of $10.3 ($7.2
after-tax, or $.03 per share) for
severance and other benefits related to cost reduction actions. For
the six months ended 31 March 2017,
we recognized a net expense of $60.3
($48.4 after-tax, or $.23 per share). This expense included
$45.7 from the first quarter
write-down of an air separation unit in the Industrial Gases – EMEA
segment that was constructed mainly to provide oxygen to one of the
Energy-from-Waste plants and expense for severance and other
benefits.
3. PENSION SETTLEMENT
Certain of our pension plans provide for a lump sum benefit
payment option at the time of retirement, or for corporate
officers, six months after their retirement date. A participant's
vested benefit is considered settled upon cash payment of the lump
sum. We recognize pension settlement losses when cash payments
exceed the sum of the service and interest cost components of net
periodic benefit cost of the plan for the fiscal year. During the
second quarter of fiscal year 2017, we recognized a pension
settlement loss of $4.1 ($2.6 after-tax, or $.01 per share) to accelerate recognition of a
portion of actuarial losses deferred in accumulated other
comprehensive loss associated with the U.S. Supplementary Pension
Plan. We expect that additional settlement losses will be
recognized during the second half of fiscal year 2017.
4. ENERGY-FROM-WASTE
During the second quarter of fiscal year 2016, the Board of
Directors approved the Company's exit of its Energy-from-Waste
(EfW) business. As a result, efforts to start up and operate
its two EfW projects located in Tees Valley, United Kingdom, had been discontinued and a
loss on disposal of $945.7
($846.6 after-tax) was recorded to
write down plant assets to their estimated net realizable value and
record a liability for plant disposition and other costs.
During the first quarter of fiscal year 2017, we determined that
it is unlikely for a buyer to assume the remaining assets and
contract obligations, including the related land lease. As a
result, we recorded an additional loss of $59.3 ($47.1
after-tax) in results of discontinued operations, of which
$53.0 was recorded primarily for land
lease obligations and $6.3 was
recorded to update our estimate of the net realizable value of the
plant assets as of 31 December 2016.
There have been no changes to our estimates during the second
quarter of fiscal year 2017.
5. NEW ACCOUNTING GUIDANCE
In March 2016, the Financial
Accounting Standards Board (FASB) issued an update to simplify the
accounting for employee share-based payments, including the income
tax impacts, the classification on the statement of cash flows, and
forfeitures. We elected to early adopt this guidance in the first
quarter of fiscal year 2017. The new guidance requires excess tax
benefits and deficiencies to be recognized in the income statement
rather than in additional paid-in capital on the balance sheet. As
a result of applying this change prospectively, we recognized
$2.7 and $9.7 of excess tax benefits in our provision for
income taxes during the three and six months ended 31 March 2017, respectively.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/air-products-reports-strong-fiscal-2017-second-quarter-results-300447022.html
SOURCE Air Products