Air Products reported net income of USD358 million* and diluted earnings per share (EPS) of USD1.66* on a non-GAAP continuing operations basis for its fiscal fourth quarter ended September 30, 2014.

On a GAAP basis, net income and diluted EPS from continuing operations were USD103 million and USD0.47, respectively, for the quarter.

*The results and guidance in this release, unless otherwise indicated, are based on non-GAAP continuing operations. These results exclude an after-tax charge of 256 million dollars, or USD1.19 per share, primarily due to impairment of our Latin American reporting unit, driven by Indura. A reconciliation of GAAP to non-GAAP results can be found at the end of this release.

Fourth quarter revenues of USD2,677 million increased three percent versus prior year. Excluding the impact from our exit of the Polyurethane Intermediates (PUI) business, underlying sales were up four percent on 1% stronger pricing and three percent higher volumes, primarily in Merchant Gases, and Electronics and Performance Materials. Sequential sales increased two percent, driven by 3% higher volumes.

Operating income of USD472 million increased 12 % versus prior year, and 14 % sequentially, largely on cost actions across the company, higher volumes, and stronger pricing. Operating margin of 17.6 % improved 130 basis points versus prior year and 190 basis points sequentially. Adjusted EBITDA for the fourth quarter was USD767 million, up 10 % versus prior year and sequentially.

For fiscal 2014, sales of USD10.4 billion increased three percent versus prior year, largely on higher volumes in Merchant Gases, and Electronics and Performance Materials. Operating income of USD1.7 billion increased 6% on higher volumes, and operating margin of nearly 16 % improved 50 basis points. Adjusted EBITDA of 2.8 billion dollars improved 5%.

Commenting on the quarter, Seifi Ghasemi, chairman, president and chief executive officer, said, “Thanks to the outstanding efforts of our employees, we controlled costs in the fourth quarter. As a result, EPS improved by 13 % over the same quarter last year and 14% sequentially. In September, we announced a major restructuring of our company and presented a road map for our journey to become the safest and most profitable industrial gases company in the world. We are making progress towards that goal.”

Fourth Quarter Results by Business Segment:

Merchant Gases sales of 1,086 million dollars increased 3% versus prior year on 2% higher volumes and 2% stronger pricing. Volumes grew in all major regions, while pricing was positive in US/Canada, Europe, and Latin America. Operating income of USD186 million increased 5% versus prior year on improved costs and the higher volumes. Operating margin of 17 % represents the highest level in over two years.

Tonnage Gases sales of USD806 million decreased 4% versus prior year, primarily due to exiting the PUI business. Excluding the impact of the PUI exit, volumes were down one percent on lower Europe sales, while operating income of USD138 million was up 10 % primarily on lower costs. Sequential operating income increased 17 % due mainly to lower maintenance costs.

Electronics and Performance Materials sales of USD660 million were up 14 % versus prior year on 13 % higher volumes. Electronics sales were up 16 %, with particular strength in both Advanced and Process Materials, and Delivery Systems. Performance Materials sales grew 11 %, with all product lines showing positive growth in all regions. Operating income of USD128 million increased 33 %, and operating margin of over 19 % improved 280 basis points, largely on volume growth and strong cost performance.

Equipment and Energy sales of USD125 million were up 6%, operating income of USD27 million was up 34 %, and the sales backlog of USD520 million increased 29 % versus prior year, driven by higher LNG activities. The company announced during the quarter that it will supply liquefaction process technology and equipment for Freeport’s LNG export terminal in Texas.


Outlook
The capital expenditure forecast for the fiscal year 2015 is between USD1.7 billion and USD1.9 billion.

Looking ahead, Ghasemi said, “The outlook for the global economy is unclear, and as a result, we will focus on implementing our plan to restructure the company, reduce costs, and improve cash flow. At this time, we expect first quarter EPS from continuing operations to be between USD1.45 and USD1.50 per share, and guidance for continuing operations for fiscal 2015 of USD6.30 to USD6.55 per share.”


For more information, visit www.airproducts.com.