The Rising Influence of Rising Affluence

[DewDiligence]

APD Reports FY3Q10 Results

[APD has been putting up some good numbers, but investors have remained focused on the company’s hostile offer for ARG, which shows no signs of being resolved anytime soon (#msg-52106025). The Tonnage Gasses segment, which is the part of APD’s business most directly tied to The Global Demographic Tailwind (see #msg-46518659 and, e.g., #msg-51061356), logged 28% YoY growth in sales and 37% YoY growth in operating income during FY3Q10 (against a weak comparison in FY3Q09). Overall sales were up 14% YoY, and non-GAAP EPS was 1.28. Non-GAAP EPS guidance for the FY ending 9/30/10 is 4.94-5.00; at the midpoint of this range, the current share price represents a P/E of 15x, which is not dirt cheap but is not unduly expensive, IMO. Please see actual PR for financial tables.]

http://finance.yahoo.com/news/Air-Products-Reports-Fiscal-prnews-1308088378.html?x=0&.v=1

›July 22, 2010, 6:00 am EDT

LEHIGH VALLEY, Pa., July 22 /PRNewswire-FirstCall/ --

Highlights

* Sales increased 14% versus prior year, underlying sales up 12%
* Operating margin improved to 16.6%*
* Earnings per share of $1.28, up 22% [non-Gaap]
* Fiscal 2010 EPS guidance of $4.94 to $5.00 [non-GAAP]
* Recent project awards strengthen backlog

Air Products (NYSE:APD) today reported net income of $277 million, or diluted earnings per share (EPS) of $1.28, for its fiscal third quarter ended June 30, 2010. This result excludes an after-tax charge of $24 million, or $0.11 per share, for costs associated with the tender offer for the outstanding shares of Airgas, Inc.

The discussion of third quarter results and guidance in this release is based on non-GAAP comparisons. A reconciliation can be found at the end of this release.

Third quarter revenues of $2,252 million increased 14 percent from the prior year, and operating income of $374 million rose 22 percent from the prior year on significantly improved volumes.

John McGlade, chairman, president and chief executive officer, said, "Our Tonnage, Merchant, and Electronics and Performance Materials businesses had significant increases in volume this quarter. Our continued improvements in margin, earnings growth and return on capital show that we remain focused on delivering the value our shareholders expect."

Third Quarter Segment Performance

* Merchant Gases sales of $915 million increased 4 percent versus prior year on improved volumes across all regions. Operating income of $176 million improved 5 percent versus prior year on better volumes. Volumes were particularly strong in Asia and are improving in both the US and Europe liquid bulk businesses.

* Tonnage Gases sales of $725 million were up 28 percent from the prior year, principally due to new projects coming onstream and improved volumes from existing steel and chemicals customers. Higher energy and raw material cost pass-through also contributed. Operating income of $120 million increased 37 percent on higher volumes.

* Electronics and Performance Materials sales of $497 million improved 21 percent, and operating income of $62 million increased 60 percent over the prior year mainly on higher volumes, which have recovered to pre-recession levels. Electronics sales increased 18 percent versus prior year and 11 percent sequentially on improved volumes driven by higher customer utilization. The recent restructuring efforts in Electronics have been completed. Performance Materials volumes grew 26 percent versus prior year and improved 10 percent sequentially on strength in the underlying business supported by new product sales.

* Equipment and Energy sales of $116 million were down slightly versus the prior year. Operating income of $21 million increased from the prior year on higher LNG activity.

Outlook

McGlade said, "As the global economy recovers, we are well positioned to serve our broad customer base. As seen by the recent announcements from our Tonnage and Electronics businesses, we continue to win new business and our project backlog remains strong. Successes in applications development have generated substantial new business signings in our Merchant segment. Our operating leverage across the company will continue to drive margin improvement. We expect earnings growth to exceed 20 percent for fiscal 2010 and are on track to hit our margin goal of 17 percent in 2011."

Air Products now expects fourth quarter EPS from continuing operations to be between $1.27 and $1.33 per share and full-year EPS from continuing operations [i.e. non-GAP] to be between $4.94 and $5.00 per share.

Air Products serves customers in industrial, energy, technology and healthcare markets worldwide with a unique portfolio of atmospheric gases, process and specialty gases, performance materials, and equipment and services. Founded in 1940, Air Products has built leading positions in key growth markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives. The company is recognized for its innovative culture, operational excellence and commitment to safety and the environment. In fiscal 2009, Air Products had revenues of $8.3 billion, operations in over 40 countries, and 18,900 employees around the globe. For more information, visit www.airproducts.com.‹