Air Products Reports 3Q Fiscal 2014 Financial Results

Air Products reported third quarter results led by strong performance in Merchant Gases, and Electronics and Performance Materials. For the quarter ended June 30, 2014, net income was $314 million, up 9%, and diluted earnings per share (EPS) was $1.46, an increase of 7%, compared with results for the third quarter of 2013.
 
Third quarter sales of $2,635 million increased 3% versus prior year, driven by higher volumes across all business segments. Excluding the prior exit from the Polyurethane Intermediates business (PUI), underlying sales improved four% versus prior year on 3% higher volumes. Sequentially, sales increased 2% on 4% higher volumes in Electronics and Performance Materials, Tonnage Gases, and Merchant Gases.
 
Operating income of $414 million increased 8% versus prior year, largely on higher volumes in Electronics and Performance Materials, and better pricing in Merchant Gases. Operating margin of 15.7% improved 70 basis points, with positive volumes more than offsetting higher costs, primarily from maintenance outages. Adjusted EBITDA for the third quarter was $653 million, up 7% versus prior year and 6% sequentially.
 
Third Quarter Results by Business Segment:
•   Merchant Gases sales of $1,077 million increased 4% versus prior year, primarily on higher volumes in Asia and U.S./Canada. Liquid oxygen and nitrogen volumes increased in all regions, partially offset by lower global helium volumes. Operating income of $174 million increased 5% versus prior year, largely on higher volumes and better pricing. Sequential operating income improved 21%, due mainly to recovery of weather-related costs incurred in the second quarter. Operating margin of 16.1% was up 10 basis points versus last year and up 230 basis points sequentially.
 
•   Tonnage Gases sales of $835 million decreased 1% versus prior year. Excluding PUI, volumes grew 2% on continued hydrogen demand in the U.S. Gulf Coast and the contributions from new plants. Operating income of $118 million was up three% versus prior year, excluding the effect of the PUI business exit, as contributions from new plants more than offset higher maintenance costs.
 
•   Electronics and Performance Materials sales of $618 million increased 9% versus prior year on 9% higher volumes. Electronics sales were up 6% on strong growth in all segments. Performance Materials sales increased 12% on higher volumes in all regions and across all product lines. Operating income was up 23%, and operating margin improved 200 basis points versus prior year on higher volumes and better cost performance.
 
•   Equipment and Energy sales of $104 million increased 1%, and operating income of $17 million increased 9% versus prior year, driven largely by LNG project activity. The sales backlog of $584 million increased 78% versus prior year on several new large orders.