Q3 FY24 (comparisons versus prior year):
- GAAP EPS# of $3.13, up
17 percent; GAAP net income of $709
million, up 16 percent; and GAAP net income margin of 23.7
percent, up 360 basis points
- Adjusted EPS* of $3.20, up seven
percent; adjusted EBITDA* of $1.3
billion, up five percent; and adjusted EBITDA margin* of
42.4 percent, up 260 basis points
Recent Highlights
Clean hydrogen / energy transition
- Signed a 15-year agreement to supply 70,000 tons of green
hydrogen annually starting in 2030, helping to decarbonize
TotalEnergies' Northern European refineries and avoid approximately
700,000 tons of CO₂ each year
- Announced agreement to divest Air Products' liquefied natural
gas (LNG) process technology and equipment business to Honeywell
for $1.81 billion in an all-cash
transaction; closing is expected before the end of the calendar
year, subject to customary closing conditions, including receipt of
certain regulatory approvals
- Announced plans to build networks of permanent,
commercial-scale, multi-modal hydrogen refueling stations from
Northern California to
Southern California, and along
major transportation corridors near the Trans-European Transport
Network
- Announced trial of a Daimler Mercedes-Benz GenH2 truck, aligned
with Air Products' goal to convert its distribution fleet to
hydrogen powered vehicles
Core industrial gas business
- Announced plans to construct two new air separation units at
the Company's existing Conyers,
Georgia, and Reidsville, North
Carolina, locations to replace older units and serve further
merchant market growth
- Announced $70 million investment
to expand gas separation and purification membranes at Company's
Missouri manufacturing and
logistics center, driven by growing product demand in biogas and
hydrogen recovery applications, as well as customer needs for the
use of nitrogen for the aerospace industry and cleaner fuels for
the marine industry
Sustainability
- Awarded 'A' rating on MSCI's environmental, social and
governance ratings
Guidance
- Confirmed previous fiscal 2024 full-year adjusted EPS guidance*
of $12.20 to $12.50, up six to nine percent over prior year
adjusted EPS*; fiscal 2024 fourth quarter adjusted EPS guidance* of
$3.33 to $3.63
- Continue to expect fiscal year 2024 capital expenditures* in
the range of $5.0 billion to
$5.5 billion
#Earnings per share is calculated and
presented on a diluted basis from continuing operations
attributable to Air Products.
*Certain results in this release, including in the highlights
above, include references to non-GAAP financial measures on a
consolidated, continuing operations basis and a segment basis.
Additional information regarding these measures and reconciliations
of GAAP to non-GAAP historical results can be found below. In
addition, as discussed below, it is not possible, without
unreasonable efforts, to identify the timing or occurrence of
future events, transactions, and/or investment activity that could
have a significant effect on the Company's future GAAP EPS or cash
flow used for investing activities if any of these events were to
occur.
Fiscal 2024 Third Quarter Consolidated Results
LEHIGH
VALLEY, Pa., Aug. 1, 2024
/PRNewswire/ -- Air Products (NYSE: APD) today reported third
quarter fiscal 2024 results, including GAAP EPS from continuing
operations of $3.13, up 17 percent
from the prior year. GAAP net income of $709
million was up 16 percent over the prior year primarily due
to a prior year charge for business and asset actions, favorable
pricing, and favorable business mix. Higher costs driven by planned
maintenance and inflation were partially offset by improved
productivity. GAAP net income margin of 23.7 percent increased 360
basis points over the prior year primarily due to the lower
business and asset actions and favorable pricing. Air Products'
third quarter GAAP results for the current and prior year include
items that are adjusted in the non-GAAP measures discussed below.
Fiscal 2024 adjustments include a net cost of $0.07 per share, primarily for the non-service
related components of the Company's defined benefit pension plans.
Adjustments for the prior year quarter included a charge of
$0.23 per share from business and
asset actions as well as non-service pension costs of $0.07 per share.
For the quarter, on a non-GAAP basis, adjusted EPS from
continuing operations of $3.20
increased seven percent over the prior year. Adjusted EBITDA of
$1.3 billion was up five percent over
the prior year due to positive pricing, favorable business mix, and
improved productivity, which were partially offset by higher
planned maintenance and inflation. Adjusted EBITDA margin of 42.4
percent increased 260 basis points over the prior year.
Third quarter sales of $3.0
billion decreased two percent from the prior year due to two
percent unfavorable currency and one percent lower energy cost
pass-through, partially offset by one percent higher pricing.
Commenting on the results, Air Products' Chairman, President and
Chief Executive Officer Seifi
Ghasemi said, "Our third quarter adjusted EPS of
$3.20 exceeded our previous guidance
and increased seven percent over the prior year, driven by Americas
and Europe operating performance
as well as pricing and productivity actions. The results
demonstrate our focus on running our core industrial gas business,
and our adjusted EBITDA margin is the best in the industry. We
announced significant milestones during the quarter, including the
long-term renewable hydrogen supply agreement with TotalEnergies,
which validates our strategy and the expected growth in the clean
hydrogen market. As always, our results reflect the hard work of
our dedicated and talented employees, and I want to thank them for
their contributions."
Fiscal 2024 Third Quarter Results by Business Segment
- Americas sales of $1.2
billion were down two percent versus the prior year due to
three percent lower energy cost pass-through, one percent lower
volumes, and one percent unfavorable currency, which were partially
offset by three percent higher pricing. Operating income of
$391 million increased four percent
and adjusted EBITDA of $604 million
increased six percent, in each case primarily due to higher
pricing. Operating margin of 31.7 percent increased 200 basis
points and adjusted EBITDA margin of 48.9 percent increased 390
basis points, each of which included positive impacts of
approximately 100 basis points from lower energy cost
pass-through.
- Asia sales of
$790 million decreased four percent
from the prior year primarily due to four percent unfavorable
currency and one percent lower volumes, as lower demand for
merchant products and planned maintenance outages were partially
offset by new assets. These impacts were partially offset by one
percent higher energy cost pass-through. Operating income of
$200 million decreased 17 percent and
adjusted EBITDA of $324 million
decreased nine percent, in each case primarily due to the planned
maintenance outages. Operating margin of 25.3 percent decreased 400
basis points and adjusted EBITDA margin of 41.1 percent decreased
220 basis points.
- Europe sales of
$693 million decreased two percent
from the prior year as two percent lower energy cost pass-through
and one percent unfavorable currency were partially offset by one
percent higher volumes. Operating income of $205 million increased 16 percent and adjusted
EBITDA of $283 million increased 12
percent, in each case primarily due to increased volume, primarily
from new assets, and pricing, net of variable costs. Operating
margin of 29.5 percent increased 460 basis points and adjusted
EBITDA margin of 40.8 percent increased 490 basis points.
- Middle East and
India equity affiliates'
income of $89 million decreased seven
percent compared to the prior year, primarily due to higher
costs.
- Corporate and other sales of $235
million increased 15 percent compared to the prior year,
primarily due to higher LNG and other sale of equipment
activity.
Outlook
Air Products confirms its previous fiscal 2024
full-year adjusted EPS guidance* of $12.20 to $12.50,
up six to nine percent over prior year adjusted EPS. For the fourth
quarter of fiscal 2024, Air Products' adjusted EPS guidance* is
$3.33 to $3.63.
Air Products continues to expect capital expenditures* in the
range of $5.0 billion to $5.5 billion for full-year fiscal 2024.
|
*Management is unable
to reconcile, without unreasonable effort, the Company's forecasted
range of adjusted EPS or capital expenditures to a comparable GAAP
range. Air Products provides adjusted EPS guidance on a continuing
operations basis, excluding the impact of certain items that
management believes are not representative of the Company's
underlying business performance, such as the incurrence of costs
for cost reduction actions and impairment charges, or the
recognition of gains or losses on certain disclosed items. It is
not possible, without unreasonable efforts, to predict the timing
or occurrence of these events or the potential for other
transactions that may impact future GAAP EPS. Similarly, it is not
possible, without unreasonable efforts, to reconcile forecasted
capital expenditures to future cash used for investing activities
because management is not able to identify the timing or occurrence
of future investment activity, which is driven by management's
assessment of competing opportunities at the time the Company
enters into transactions. Furthermore, it is not possible to
identify the potential significance of these events in advance, but
any of these events, if they were to occur, could have a
significant effect on the Company's future GAAP results.
|
|
Earnings Teleconference
Access the fiscal 2024 third
quarter earnings teleconference scheduled for 8:30 a.m. Eastern Time on August 1, 2024 by
calling 773-305-6867 and entering passcode 2796775 or by accessing
the Event Details page on Air Products' Investor Relations
website.
About Air Products
Air Products (NYSE: APD) is a
world-leading industrial gases company in operation for over 80
years focused on serving energy, environmental, and emerging
markets. The Company has two growth pillars driven by
sustainability. Air Products' base business provides essential
industrial gases, related equipment and applications expertise to
customers in dozens of industries, including refining, chemicals,
metals, electronics, manufacturing, and food. The Company also
develops, engineers, builds, owns and operates some of the world's
largest clean hydrogen projects supporting the transition to low-
and zero-carbon energy in the heavy-duty transportation and
industrial sectors. Additionally, Air Products is the world leader
in the supply of liquefied natural gas process technology and
equipment, and provides turbomachinery, membrane systems and
cryogenic containers globally.
The Company had fiscal 2023 sales of $12.6 billion from operations in approximately 50
countries and has a current market capitalization of approximately
$60 billion. Approximately 23,000
passionate, talented and committed employees from diverse
backgrounds are driven by Air Products' higher purpose to create
innovative solutions that benefit the environment, enhance
sustainability and reimagine what's possible to address the
challenges facing customers, communities, and the world. For more
information, visit www.airproducts.com or follow us on
LinkedIn, X, Facebook or Instagram.
Cautionary Note Regarding Forward-Looking
Statements
This release contains "forward-looking
statements" within the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, including statements
about earnings and capital expenditure guidance, business outlook
and investment opportunities. Forward-looking statements are based
on management's expectations and assumptions as of the date of this
release and are not guarantees of future performance. While
forward-looking statements are made in good faith and based on
assumptions, expectations and projections that management believes
are reasonable based on currently available information, 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:
changes in global or regional economic conditions, inflation, and
supply and demand dynamics in the market segments we serve,
including demand for technologies and projects to limit the impact
of global climate change; changes in the financial markets that may
affect the availability and terms on which we may obtain financing;
the ability to implement price increases to offset cost increases;
disruptions to our supply chain and related distribution delays and
cost increases; risks associated with having extensive
international operations, including political risks, risks
associated with unanticipated government actions and risks of
investing in developing markets; project delays, scope changes,
cost escalations, contract terminations, customer cancellations, or
postponement of projects and sales; our ability to safely develop,
operate, and manage costs of large-scale and technically complex
projects; the future financial and operating performance of major
customers, joint ventures, and equity affiliates; our ability to
develop, implement, and operate new technologies and to market
products produced utilizing new technologies; our ability to
execute the projects in our backlog and refresh our pipeline of new
projects; tariffs, economic sanctions and regulatory activities in
jurisdictions in which we and our affiliates and joint ventures
operate; the impact of environmental, tax, safety, or other
legislation, as well as regulations and other public policy
initiatives affecting our business and the business of our
affiliates and related compliance requirements, including
legislation, regulations, or policies intended to address global
climate change; changes in tax rates and other changes in tax law;
safety incidents relating to our operations; the timing, impact,
and other uncertainties relating to acquisitions and divestitures,
including statements related to the pending sale of our LNG process
technology and equipment business and its expected impact and
timing as well as our ability to integrate acquisitions and
separate divested businesses, respectively; risks relating to
cybersecurity incidents, including risks from the interruption,
failure or compromise of our information systems or those of our
business partners or service providers; catastrophic events, such
as natural disasters and extreme weather events, pandemics and
other public health crises, acts of war, including Russia's invasion of Ukraine and new and ongoing conflicts in the
Middle East, or terrorism; the
impact on our business and customers of price fluctuations in oil
and natural gas and disruptions in markets and the economy due to
oil and natural gas price volatility; costs and outcomes of legal
or regulatory proceedings and investigations; asset impairments due
to economic conditions or specific events; significant fluctuations
in inflation, interest rates, and foreign currency exchange rates
from those currently anticipated; damage to facilities, pipelines
or delivery systems, including those we are constructing or that we
own or operate for third parties; availability and cost of electric
power, natural gas, and other raw materials; the success of
productivity and operational improvement programs; and other risks
described in our Annual Report on Form 10-K for the fiscal year
ended September 30, 2023 and
subsequent filings we have made with the U.S. Securities and
Exchange Commission. You are cautioned not to place undue reliance
on our forward-looking statements. Except as required by law, we
disclaim any obligation or undertaking to update or revise any
forward-looking statements contained herein to reflect any change
in assumptions, beliefs, or expectations or any change in events,
conditions, or circumstances upon which any such forward-looking
statements are based.
# # #
Air Products and
Chemicals, Inc. and Subsidiaries
|
CONSOLIDATED INCOME
STATEMENTS
|
(Unaudited)
|
|
|
Three Months Ended
|
Nine Months
Ended
|
|
30 June
|
30 June
|
(Millions of U.S.
Dollars, except for share and per share data)
|
2024
|
2023
|
2024
|
2023
|
Sales
|
$2,985.5
|
$3,033.9
|
$8,913.1
|
$9,408.7
|
Cost of
sales
|
2,005.6
|
2,070.7
|
6,064.3
|
6,625.8
|
Selling and
administrative expense
|
235.4
|
238.7
|
714.4
|
724.3
|
Research and
development expense
|
27.0
|
29.3
|
78.1
|
80.9
|
Business and asset
actions
|
—
|
59.0
|
57.0
|
244.6
|
Other income (expense),
net
|
20.1
|
8.0
|
42.4
|
22.9
|
Operating
Income
|
737.6
|
644.2
|
2,041.7
|
1,756.0
|
Equity affiliates'
income
|
168.9
|
165.0
|
470.6
|
440.9
|
Interest
expense
|
55.7
|
47.4
|
169.1
|
129.5
|
Other non-operating
income (expense), net
|
(1.3)
|
(11.7)
|
(25.3)
|
(26.2)
|
Income Before
Taxes
|
849.5
|
750.1
|
2,317.9
|
2,041.2
|
Income tax
provision
|
140.6
|
139.6
|
406.5
|
397.0
|
Net
Income
|
708.9
|
610.5
|
1,911.4
|
1,644.2
|
Net income attributable
to noncontrolling interests
|
12.3
|
14.9
|
33.1
|
36.6
|
Net Income
Attributable to Air Products
|
$696.6
|
$595.6
|
$1,878.3
|
$1,607.6
|
|
|
|
|
|
Per Share Data
(U.S. Dollars per share)
|
|
|
|
|
Basic earnings per
share attributable to Air Products
|
$3.13
|
$2.68
|
$8.44
|
$7.23
|
Diluted earnings per
share attributable to Air Products
|
$3.13
|
$2.67
|
$8.43
|
$7.22
|
|
|
|
|
|
Weighted Average
Common Shares (in millions)
|
|
|
|
|
Basic
|
222.5
|
222.4
|
222.5
|
222.3
|
Diluted
|
222.8
|
222.8
|
222.8
|
222.7
|
Air Products and
Chemicals, Inc. and Subsidiaries
|
CONSOLIDATED BALANCE
SHEETS
|
(Unaudited)
|
|
|
30 June
|
|
30 September
|
(Millions of U.S.
Dollars)
|
2024
|
|
2023
|
Assets
|
|
|
|
Current
Assets
|
|
|
|
Cash and cash
items
|
$2,375.7
|
|
$1,617.0
|
Short-term
investments
|
61.8
|
|
332.2
|
Trade receivables,
net
|
1,712.2
|
|
1,700.4
|
Inventories
|
755.6
|
|
651.8
|
Prepaid
expenses
|
170.7
|
|
177.0
|
Other receivables and
current assets
|
601.4
|
|
722.1
|
Total Current
Assets
|
$5,677.4
|
|
$5,200.5
|
Investment in net
assets of and advances to equity affiliates
|
4,714.6
|
|
4,617.8
|
Plant and equipment, at
cost
|
37,597.5
|
|
32,746.3
|
Less: accumulated
depreciation
|
16,115.4
|
|
15,274.2
|
Plant and equipment,
net
|
$21,482.1
|
|
$17,472.1
|
Goodwill,
net
|
879.0
|
|
861.7
|
Intangible assets,
net
|
310.5
|
|
334.6
|
Operating lease
right-of-use assets, net
|
982.1
|
|
974.0
|
Noncurrent lease
receivables
|
437.2
|
|
494.7
|
Financing
receivables
|
1,213.4
|
|
817.2
|
Other noncurrent
assets
|
1,278.0
|
|
1,229.9
|
Total Noncurrent
Assets
|
$31,296.9
|
|
$26,802.0
|
Total
Assets
|
$36,974.3
|
|
$32,002.5
|
Liabilities and
Equity
|
|
|
|
Current
Liabilities
|
|
|
|
Payables and accrued
liabilities
|
$3,168.6
|
|
$2,890.1
|
Accrued income
taxes
|
155.9
|
|
131.2
|
Short-term
borrowings
|
159.1
|
|
259.5
|
Current portion of
long-term debt
|
990.9
|
|
615.0
|
Total Current
Liabilities
|
$4,474.5
|
|
$3,895.8
|
Long-term
debt
|
12,786.4
|
|
9,280.6
|
Long-term debt –
related party
|
96.3
|
|
150.7
|
Noncurrent operating
lease liabilities
|
639.3
|
|
631.1
|
Other noncurrent
liabilities
|
1,108.7
|
|
1,118.0
|
Deferred income
taxes
|
1,182.1
|
|
1,266.0
|
Total Noncurrent
Liabilities
|
$15,812.8
|
|
$12,446.4
|
Total
Liabilities
|
$20,287.3
|
|
$16,342.2
|
Air Products
Shareholders' Equity
|
15,101.3
|
|
14,312.9
|
Noncontrolling
Interests
|
1,585.7
|
|
1,347.4
|
Total
Equity
|
$16,687.0
|
|
$15,660.3
|
Total Liabilities
and Equity
|
$36,974.3
|
|
$32,002.5
|
Air Products and
Chemicals, Inc. and Subsidiaries
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
Nine Months
Ended
|
|
30 June
|
(Millions of U.S.
Dollars)
|
2024
|
2023
|
Operating
Activities
|
|
|
Net income
|
$1,911.4
|
$1,644.2
|
Less: Net income
attributable to noncontrolling interests
|
33.1
|
36.6
|
Net income attributable
to Air Products
|
$1,878.3
|
$1,607.6
|
Adjustments to
reconcile income to cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
1,070.3
|
1,001.0
|
Deferred income
taxes
|
(74.3)
|
(14.1)
|
Business and asset
actions
|
57.0
|
244.6
|
Undistributed earnings
of equity method investments
|
(124.1)
|
(130.1)
|
Gain on sale of assets
and investments
|
(23.3)
|
(5.2)
|
Share-based
compensation
|
46.2
|
45.8
|
Noncurrent lease
receivables
|
59.2
|
60.9
|
Other
adjustments
|
36.4
|
152.3
|
Working capital changes
that provided (used) cash, excluding effects of
acquisitions:
|
|
|
Trade
receivables
|
(10.4)
|
(49.2)
|
Inventories
|
(111.0)
|
(133.5)
|
Other
receivables
|
82.4
|
(98.5)
|
Payables and accrued
liabilities
|
(175.1)
|
(375.4)
|
Other working
capital
|
(21.9)
|
(102.8)
|
Cash Provided by
Operating Activities
|
$2,689.7
|
$2,203.4
|
Investing
Activities
|
|
|
Additions to plant and
equipment, including long-term deposits
|
(4,721.5)
|
(3,163.5)
|
Investment in and
advances to unconsolidated affiliates
|
—
|
(912.0)
|
Investment in financing
receivables
|
(396.2)
|
(665.0)
|
Proceeds from sale of
assets and investments
|
26.3
|
13.3
|
Purchases of
investments
|
(141.4)
|
(443.4)
|
Proceeds from
investments
|
413.1
|
766.0
|
Other investing
activities
|
45.9
|
4.8
|
Cash Used for
Investing Activities
|
($4,773.8)
|
($4,399.8)
|
Financing
Activities
|
|
|
Long-term debt
proceeds
|
4,119.9
|
2,116.3
|
Payments on long-term
debt
|
(76.7)
|
(605.8)
|
(Decrease) Increase in
commercial paper and short-term borrowings
|
(183.3)
|
567.3
|
Dividends paid to
shareholders
|
(1,171.4)
|
(1,107.9)
|
Proceeds from stock
option exercises
|
6.2
|
19.5
|
Investments by
noncontrolling interests
|
278.7
|
188.8
|
Other financing
activities
|
(125.7)
|
(79.3)
|
Cash Provided by
Financing Activities
|
$2,847.7
|
$1,098.9
|
Effect of Exchange
Rate Changes on Cash
|
(4.9)
|
24.2
|
Increase (Decrease) in
cash and cash items
|
758.7
|
(1,073.3)
|
Cash and cash items –
Beginning of year
|
1,617.0
|
2,711.0
|
Cash and Cash Items
– End of Period
|
$2,375.7
|
$1,637.7
|
Supplemental Cash
Flow Information
|
|
|
Cash paid for taxes,
net of refunds
|
$502.2
|
$487.6
|
Air Products and
Chemicals, Inc. and Subsidiaries
|
BUSINESS SEGMENT
INFORMATION
|
(Unaudited)
|
|
(Millions of U.S.
Dollars)
|
Americas
|
Asia
|
Europe
|
Middle East
and
India
|
Corporate
and other
|
Total
|
|
Three Months Ended
30 June 2024
|
Sales
|
$1,234.7
|
$789.6
|
$693.4
|
$32.8
|
$235.0
|
$2,985.5
|
|
Operating income
(loss)
|
391.1
|
200.1
|
204.7
|
(1.4)
|
(56.9)
|
737.6
|
(A)
|
Depreciation and
amortization
|
175.6
|
115.5
|
52.2
|
6.8
|
10.2
|
360.3
|
|
Equity affiliates'
income
|
37.5
|
8.7
|
26.3
|
89.2
|
7.2
|
168.9
|
|
Three Months Ended
30 June 2023
|
Sales
|
$1,260.7
|
$822.9
|
$706.6
|
$39.7
|
$204.0
|
$3,033.9
|
|
Operating income
(loss)
|
374.8
|
240.8
|
176.1
|
5.8
|
(94.3)
|
703.2
|
(A)
|
Depreciation and
amortization
|
163.1
|
108.3
|
48.6
|
7.0
|
12.9
|
339.9
|
|
Equity affiliates'
income
|
29.9
|
7.5
|
28.8
|
95.5
|
3.3
|
165.0
|
|
|
|
|
|
|
|
|
|
Nine Months Ended 30
June 2024
|
Sales
|
$3,732.6
|
$2,363.1
|
$2,092.5
|
$103.9
|
$621.0
|
$8,913.1
|
|
Operating income
(loss)
|
1,117.4
|
614.9
|
603.3
|
8.1
|
(245.0)
|
2,098.7
|
(A)
|
Depreciation and
amortization
|
519.4
|
343.7
|
151.2
|
20.1
|
35.9
|
1,070.3
|
|
Equity affiliates'
income
|
118.8
|
21.2
|
58.7
|
256.0
|
15.9
|
470.6
|
|
Nine Months Ended 30
June 2023
|
Sales
|
$4,018.0
|
$2,414.6
|
$2,251.4
|
$125.9
|
$598.8
|
$9,408.7
|
|
Operating income
(loss)
|
1,042.0
|
709.7
|
495.1
|
13.8
|
(260.0)
|
2,000.6
|
(A)
|
Depreciation and
amortization
|
480.8
|
320.2
|
141.2
|
20.2
|
38.6
|
1,001.0
|
|
Equity affiliates'
income
|
74.4
|
22.2
|
76.0
|
258.5
|
9.8
|
440.9
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
|
|
|
|
|
30 June 2024
|
$11,889.9
|
$7,147.9
|
$5,334.3
|
$7,629.9
|
$4,972.3
|
$36,974.3
|
|
30 September
2023
|
9,927.5
|
7,009.6
|
4,649.8
|
5,708.4
|
4,707.2
|
32,002.5
|
|
|
|
(A)
|
Refer to the
"Reconciliation to Consolidated Results" section below.
|
Reconciliation to Consolidated Results
The table below reconciles total operating income disclosed in
the table above to consolidated operating income as reflected on
our consolidated income statements:
|
Three Months
Ended
|
Nine Months
Ended
|
|
30 June
|
30 June
|
Operating
Income
|
2024
|
2023
|
2024
|
2023
|
Total
|
$737.6
|
$703.2
|
$2,098.7
|
$2,000.6
|
Business and asset
actions
|
—
|
(59.0)
|
(57.0)
|
(244.6)
|
Consolidated
Operating Income
|
$737.6
|
$644.2
|
$2,041.7
|
$1,756.0
|
RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES
(Millions of U.S. Dollars unless otherwise
indicated, except for per share data)
We present certain financial measures, other than in accordance
with U.S. generally accepted accounting principles ("GAAP"), on an
"adjusted" or "non-GAAP" basis. On a consolidated basis, these
measures include adjusted diluted earnings per share ("EPS"),
adjusted EBITDA, adjusted EBITDA margin, and capital expenditures.
On a segment basis, these measures include adjusted EBITDA and
adjusted EBITDA margin. In addition to these measures, we also
present certain supplemental non-GAAP financial measures to help
the reader understand the impact that certain disclosed items, or
"non-GAAP adjustments," have on the calculation of our adjusted
diluted EPS. For each non-GAAP financial measure, we present a
reconciliation to the most directly comparable financial measure
calculated in accordance with GAAP.
In many cases, non-GAAP financial measures are determined by
adjusting the most directly comparable GAAP measure to exclude
non-GAAP adjustments that we believe are not representative of our
underlying business performance. For example, we exclude the impact
of the non-service components of net periodic benefit/cost for our
defined benefit pension plans. Non-service related components are
recurring, non-operating items that include interest cost, expected
returns on plan assets, prior service cost amortization, actuarial
loss amortization, as well as special termination benefits,
curtailments, and settlements. The net impact of non-service
related components is reflected within "Other non-operating income
(expense), net" on our consolidated income statements. Adjusting
for the impact of non-service pension components provides
management and users of our financial statements with a more
accurate representation of our underlying business performance
because these components are driven by factors that are unrelated
to our operations, such as volatility in equity and debt markets.
Further, non-service related components are not indicative of our
defined benefit plans' future contribution needs due to the funded
status of the plans. We may also exclude certain expenses
associated with cost reduction actions, impairment charges, and
gains on disclosed transactions. The reader should be aware that we
may recognize similar losses or gains in the future.
When applicable, the tax impact of our pre-tax non-GAAP
adjustments reflects the expected current and deferred income tax
impact of our non-GAAP adjustments. These tax impacts are primarily
driven by the statutory tax rate of the various relevant
jurisdictions and the taxability of the adjustments in those
jurisdictions.
We provide these non-GAAP financial measures to allow investors,
potential investors, securities analysts, and others to evaluate
the performance of our business in the same manner as our
management. We believe these measures, when viewed together with
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.
However, we caution readers not to consider these measures in
isolation or as a substitute for the most directly comparable
measures calculated in accordance with GAAP. Readers should also
consider the limitations associated with these non-GAAP financial
measures, including the potential lack of comparability of these
measures from one company to another.
NON-GAAP ADJUSTMENTS
In addition to the recurring impact of non-service related
components of our defined benefit pension plan, our fiscal year
2024 third quarter results are adjusted for the item below. For
detail regarding the prior year adjustment for business and asset
actions, please refer to Exhibit 99.1 to our Current Report on
Form 8-K dated 3 August 2023.
De-designation of Cash Flow Hedges
During the third
quarter of fiscal year 2024, we discontinued cash flow hedge
accounting for certain interest rate swaps designed to hedge
long-term variable rate debt facilities during the construction
period of the NEOM Green Hydrogen Project, of which Air Products is
a joint venture partner with a one-third interest. We expect these
swaps to remain de-designated until outstanding borrowings from the
available financing are commensurate with the notional value of the
instruments, at which time these instruments may re-qualify for
cash flow hedge accounting. As a result of the de-designation, we
recorded an unrealized gain of $11.2
that is reflected within "Other non-operating income (expense),
net" ($3.0 attributable to Air
Products after tax, or $0.01 per
share) on our consolidated income statements for the three and nine
months ended 30 June 2024. We expect
to recognize changes to the fair value of the impacted instruments
through earnings in future periods until they re-qualify for cash
flow hedge accounting. It is not possible to predict the
significance of adjustments in future periods given potential
interest rate volatility.
ADJUSTED DILUTED EPS
The table below provides a reconciliation to the most directly
comparable GAAP measure for each of the major components used to
calculate adjusted diluted EPS from continuing operations, which we
view as a key performance metric. In periods that we have non-GAAP
adjustments, we believe it is important for the reader to
understand the per share impact of each such adjustment because
management does not consider these impacts when evaluating
underlying business performance. Per share impacts are calculated
independently and may not sum to total diluted EPS and total
adjusted diluted EPS due to rounding.
Q3 2024 vs. Q3
2023
|
Operating
Income
|
Equity
Affiliates'
Income
|
Other
Non-
Operating
Income/
Expense,
Net
|
Income
Tax
Provision
|
Net
Income
Attributable
to Air
Products
|
Diluted
EPS
|
Q3 2024 GAAP
|
$737.6
|
$168.9
|
($1.3)
|
$140.6
|
$696.6
|
$3.13
|
Q3 2023 GAAP
|
644.2
|
165.0
|
(11.7)
|
139.6
|
595.6
|
2.67
|
$ Change
GAAP
|
|
|
|
|
|
$0.46
|
% Change
GAAP
|
|
|
|
|
|
17 %
|
|
|
|
|
|
|
|
Q3 2024 GAAP
|
$737.6
|
$168.9
|
($1.3)
|
$140.6
|
$696.6
|
$3.13
|
(Gain) Loss on
de-designation of cash flow hedges(A)
|
—
|
—
|
(11.2)
|
(0.9)
|
(3.0)
|
(0.01)
|
Non-service pension
cost, net
|
—
|
—
|
25.3
|
6.2
|
19.1
|
0.09
|
Q3 2024 Non-GAAP
("Adjusted")
|
$737.6
|
$168.9
|
$12.8
|
$145.9
|
$712.7
|
$3.20
|
|
|
|
|
|
|
|
Q3 2023 GAAP
|
$644.2
|
$165.0
|
($11.7)
|
$139.6
|
$595.6
|
$2.67
|
Business and asset
actions
|
59.0
|
—
|
—
|
7.8
|
51.2
|
0.23
|
Non-service pension
cost, net
|
—
|
—
|
22.0
|
5.4
|
16.6
|
0.07
|
Q3 2023 Non-GAAP
("Adjusted")
|
$703.2
|
$165.0
|
$10.3
|
$152.8
|
$663.4
|
$2.98
|
$ Change Non-GAAP
("Adjusted")
|
|
|
|
|
|
$0.22
|
% Change Non-GAAP
("Adjusted")
|
|
|
|
|
|
7 %
|
|
|
(A)
|
Includes $7.3
attributable to noncontrolling interests.
|
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
We define adjusted EBITDA as net income less income from
discontinued operations, net of tax, and excluding non-GAAP
adjustments, which we do 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 and adjusted EBITDA margin
provide useful metrics for management to assess operating
performance. Margins are calculated independently for each period
by dividing each line item by consolidated sales for the respective
period and may not sum to total margin due to rounding.
The tables below present consolidated sales and a reconciliation
of net income on a GAAP basis to adjusted EBITDA and net income
margin on a GAAP basis to adjusted EBITDA margin:
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q3 YTD Total
|
2024
|
$
|
Margin
|
|
$
|
Margin
|
|
$
|
Margin
|
|
$
|
Margin
|
|
$
|
Margin
|
Sales
|
$2,997.4
|
|
|
$2,930.2
|
|
|
$2,985.5
|
|
|
|
|
|
$8,913.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income and net
income margin
|
$621.6
|
20.7 %
|
|
$580.9
|
19.8 %
|
|
$708.9
|
23.7 %
|
|
|
|
|
$1,911.4
|
21.4 %
|
Less: Income from
discontinued
operations, net of tax
|
—
|
— %
|
|
—
|
— %
|
|
—
|
— %
|
|
|
|
|
—
|
— %
|
Add: Interest
expense
|
53.5
|
1.8 %
|
|
59.9
|
2.0 %
|
|
55.7
|
1.9 %
|
|
|
|
|
169.1
|
1.9 %
|
Less: Other
non-operating income
(expense), net
|
(14.8)
|
(0.5 %)
|
|
(9.2)
|
(0.3 %)
|
|
(1.3)
|
— %
|
|
|
|
|
(25.3)
|
(0.3 %)
|
Add: Income tax
provision
|
135.4
|
4.5 %
|
|
130.5
|
4.5 %
|
|
140.6
|
4.7 %
|
|
|
|
|
406.5
|
4.6 %
|
Add: Depreciation and
amortization
|
349.2
|
11.7 %
|
|
360.8
|
12.3 %
|
|
360.3
|
12.1 %
|
|
|
|
|
1,070.3
|
12.0 %
|
Add: Business and asset
actions
|
—
|
— %
|
|
57.0
|
1.9 %
|
|
—
|
— %
|
|
|
|
|
57.0
|
0.6 %
|
Adjusted EBITDA and
adjusted
EBITDA margin
|
$1,174.5
|
39.2 %
|
|
$1,198.3
|
40.9 %
|
|
$1,266.8
|
42.4 %
|
|
|
|
|
$3,639.6
|
40.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Q3 YTD Total
|
2023
|
$
|
Margin
|
|
$
|
Margin
|
|
$
|
Margin
|
|
$
|
Margin
|
|
$
|
Margin
|
Sales
|
$3,174.7
|
|
|
$3,200.1
|
|
|
$3,033.9
|
|
|
$3,191.3
|
|
|
$9,408.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income and net
income margin
|
$583.8
|
18.4 %
|
|
$449.9
|
14.1 %
|
|
$610.5
|
20.1 %
|
|
$694.4
|
21.8 %
|
|
$1,644.2
|
17.5 %
|
Less: Income from
discontinued
operations, net of tax
|
—
|
— %
|
|
—
|
— %
|
|
—
|
— %
|
|
7.4
|
0.2 %
|
|
—
|
— %
|
Add: Interest
expense
|
41.2
|
1.3 %
|
|
40.9
|
1.3 %
|
|
47.4
|
1.6 %
|
|
48.0
|
1.5 %
|
|
129.5
|
1.4 %
|
Less: Other
non-operating income
(expense), net
|
(0.6)
|
— %
|
|
(13.9)
|
(0.4 %)
|
|
(11.7)
|
(0.4 %)
|
|
(12.8)
|
(0.4 %)
|
|
(26.2)
|
(0.3 %)
|
Add: Income tax
provision
|
136.4
|
4.3 %
|
|
121.0
|
3.8 %
|
|
139.6
|
4.6 %
|
|
154.2
|
4.8 %
|
|
397.0
|
4.2 %
|
Add: Depreciation and
amortization
|
321.5
|
10.1 %
|
|
339.6
|
10.6 %
|
|
339.9
|
11.2 %
|
|
357.3
|
11.2 %
|
|
1,001.0
|
10.6 %
|
Add: Business and asset
actions
|
—
|
— %
|
|
185.6
|
5.8 %
|
|
59.0
|
1.9 %
|
|
—
|
— %
|
|
244.6
|
2.6 %
|
Adjusted EBITDA and
adjusted
EBITDA margin
|
$1,083.5
|
34.1 %
|
|
$1,150.9
|
36.0 %
|
|
$1,208.1
|
39.8 %
|
|
$1,259.3
|
39.5 %
|
|
$3,442.5
|
36.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 vs.
2023
|
Q1
|
|
Q2
|
|
Q3
|
|
|
|
Q3 YTD Total
|
Change
GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income $
change
|
$37.8
|
|
$131.0
|
|
$98.4
|
|
|
|
$267.2
|
Net income %
change
|
6 %
|
|
29 %
|
|
16 %
|
|
|
|
16 %
|
Net income margin
change
|
230 bp
|
|
570 bp
|
|
360 bp
|
|
|
|
390 bp
|
Change
Non-GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA $
change
|
$91.0
|
|
$47.4
|
|
$58.7
|
|
|
|
$197.1
|
Adjusted EBITDA %
change
|
8 %
|
|
4 %
|
|
5 %
|
|
|
|
6 %
|
Adjusted EBITDA margin
change
|
510 bp
|
|
490 bp
|
|
260 bp
|
|
|
|
420 bp
|
The tables below present sales and a reconciliation of operating
income and operating margin to adjusted EBITDA and adjusted EBITDA
margin for the Company's three largest regional segments for
the three months ended 30 June 2024
and 2023:
Americas
|
Q3 FY24
|
Q3 FY23
|
|
$ Change
|
Change
|
Sales
|
$1,234.7
|
$1,260.7
|
|
($26.0)
|
(2 %)
|
|
|
|
|
|
|
Operating
income
|
$391.1
|
$374.8
|
|
$16.3
|
4 %
|
Operating
margin
|
31.7 %
|
29.7 %
|
|
|
200
bp
|
|
|
|
|
|
|
Reconciliation of GAAP
to Non-GAAP:
|
|
|
|
|
|
Operating
income
|
$391.1
|
$374.8
|
|
|
|
Add: Depreciation and
amortization
|
175.6
|
163.1
|
|
|
|
Add: Equity affiliates'
income
|
37.5
|
29.9
|
|
|
|
Adjusted
EBITDA
|
$604.2
|
$567.8
|
|
$36.4
|
6 %
|
Adjusted EBITDA
margin
|
48.9 %
|
45.0 %
|
|
|
390
bp
|
|
Asia
|
Q3 FY24
|
Q3 FY23
|
|
$ Change
|
Change
|
Sales
|
$789.6
|
$822.9
|
|
($33.3)
|
(4 %)
|
|
|
|
|
|
|
Operating
income
|
$200.1
|
$240.8
|
|
($40.7)
|
(17 %)
|
Operating
margin
|
25.3 %
|
29.3 %
|
|
|
(400) bp
|
|
|
|
|
|
|
Reconciliation of GAAP
to Non-GAAP:
|
|
|
|
|
|
Operating
income
|
$200.1
|
$240.8
|
|
|
|
Add: Depreciation and
amortization
|
115.5
|
108.3
|
|
|
|
Add: Equity affiliates'
income
|
8.7
|
7.5
|
|
|
|
Adjusted
EBITDA
|
$324.3
|
$356.6
|
|
($32.3)
|
(9 %)
|
Adjusted EBITDA
margin
|
41.1 %
|
43.3 %
|
|
|
(220) bp
|
|
Europe
|
Q3 FY24
|
Q3 FY23
|
|
$ Change
|
Change
|
Sales
|
$693.4
|
$706.6
|
|
($13.2)
|
(2 %)
|
|
|
|
|
|
|
Operating
income
|
$204.7
|
$176.1
|
|
$28.6
|
16 %
|
Operating
margin
|
29.5 %
|
24.9 %
|
|
|
460
bp
|
|
|
|
|
|
|
Reconciliation of GAAP
to Non-GAAP:
|
|
|
|
|
|
Operating
income
|
$204.7
|
$176.1
|
|
|
|
Add: Depreciation and
amortization
|
52.2
|
48.6
|
|
|
|
Add: Equity affiliates'
income
|
26.3
|
28.8
|
|
|
|
Adjusted
EBITDA
|
$283.2
|
$253.5
|
|
$29.7
|
12 %
|
Adjusted EBITDA
margin
|
40.8 %
|
35.9 %
|
|
|
490
bp
|
CAPITAL EXPENDITURES
Capital expenditures is a non-GAAP financial measure that we
define as the sum of cash flows for additions to plant and
equipment, including long-term deposits, acquisitions (less cash
acquired), investment in and advances to unconsolidated affiliates,
and investment in financing receivables on our consolidated
statements of cash flows. Additionally, we adjust additions to
plant and equipment to exclude NEOM Green Hydrogen Company ("NGHC")
expenditures funded by the joint venture's non-recourse project
financing as well as our partners' equity contributions to arrive
at a measure that we believe is more representative of our
investment activities. Substantially all the funding we provide to
NGHC is limited for use by the venture for capital
expenditures.
A reconciliation of cash used for investing activities to our
reported capital expenditures is provided below:
|
Nine Months
Ended
|
|
30 June
|
|
2024
|
2023
|
Cash used for investing
activities
|
$4,773.8
|
$4,399.8
|
Proceeds from sale of
assets and investments
|
26.3
|
13.3
|
Purchases of
investments
|
(141.4)
|
(443.4)
|
Proceeds from
investments
|
413.1
|
766.0
|
Other investing
activities
|
45.9
|
4.8
|
NGHC expenditures not
funded by Air Products' equity(A)
|
(1,242.0)
|
(656.0)
|
Capital
expenditures
|
$3,875.7
|
$4,084.5
|
|
|
(A)
|
Reflects the portion of
"Additions to plant and equipment, including long-term deposits"
that is associated with NGHC, less our approximate cash investment
in the joint venture.
|
The components of our capital expenditures are detailed in the
table below:
|
Nine Months
Ended
|
|
30 June
|
|
2024
|
2023
|
Additions to plant and
equipment, including long-term deposits
|
$4,721.5
|
$3,163.5
|
Investment in and
advances to unconsolidated affiliates
|
—
|
912.0
|
Investment in financing
receivables
|
396.2
|
665.0
|
NGHC expenditures not
funded by Air Products' equity(A)
|
(1,242.0)
|
(656.0)
|
Capital
expenditures
|
$3,875.7
|
$4,084.5
|
|
|
(A)
|
Reflects the portion of
"Additions to plant and equipment, including long-term deposits"
that is associated with NGHC, less our approximate cash investment
in the joint venture.
|
Outlook for Investing Activities
It is not possible, without unreasonable efforts, to reconcile
our forecasted capital expenditures to future cash used for
investing activities because we are unable to identify the timing
or occurrence of our future investment activity, which is driven by
our assessment of competing opportunities at the time we enter into
transactions. These decisions, either individually or in the
aggregate, could have a significant effect on our cash used for
investing activities.
We continue to expect capital expenditures for fiscal year 2024
to be in the range of $5.0 billion to $5.5 billion.
OUTLOOK
The guidance provided below is on an adjusted continuing
operations basis and is compared to adjusted historical diluted EPS
attributable to Air Products. These adjusted measures exclude the
impact of certain items that we believe are not representative of
our underlying business performance, such as the non-service
components of net periodic benefit/cost for our defined benefit
pension plans, the incurrence of costs for business, asset, and
cost reduction actions and impairment charges, or the recognition
of gains or losses on certain disclosed items. The per share impact
for each of our non-GAAP adjustments is calculated independently
and may not sum to total adjusted diluted EPS due to rounding.
It is not possible, without unreasonable efforts, to identify
the timing or occurrence of similar future events or the potential
for other transactions that may impact future GAAP EPS.
Furthermore, it is not possible to identify the potential
significance of these events in advance; however, any of these
events, if they were to occur, could have a significant effect on
our future GAAP EPS. Accordingly, management is unable to fully
reconcile, without unreasonable efforts, our forecasted range of
adjusted EPS on a continuing operations basis to a comparable GAAP
range.
|
Diluted
EPS
|
|
Q4
|
Full Year
|
2023 Diluted
EPS
|
$3.08
|
$10.30
|
Business and asset
actions
|
—
|
0.92
|
Non-service pension
cost, net
|
0.08
|
0.29
|
2023 Adjusted Diluted
EPS
|
$3.15
|
$11.51
|
2024 Adjusted Diluted
EPS Outlook
|
$3.33 –
$3.63
|
$12.20 –
$12.50
|
$ Change
|
0.18 – 0.48
|
0.69 – 0.99
|
% Change
|
6% – 15%
|
6% – 9%
|
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content:https://www.prnewswire.com/news-releases/air-products-reports-fiscal-2024-third-quarter-gaap-eps-of-3-13-and-adjusted-eps-of-3-20--302212187.html
SOURCE Air Products