Air Products and Chemicals’ (APD: 71.60 0.00 0.00%) third quarter 2010 net earnings more than doubled to $253.2 million or $1.17 a share, versus last year’s $114.6 million or 53 cents. Excluding non-recurring charges, the specialty chemical producer earned $277 million or $1.28 per share, in line with the Zacks Consensus Estimate. Results, however, overtook the company’s own guidance of $1.25 to $1.29 per share. Solid earnings growth came from higher revenues.
Third quarter revenues leaped 14% year over year to about $2.2 million on higher volumes across all business segments due to new contract wins. However, revenues fell short of the Zacks Consensus Estimate of $2.3 billion. Cost of sales increased 13% year over year to $1.6 billion. Operating income increased 22% to $374 million, leading to operating margins of 17% in the second quarter.
Segment Performance
Merchant Gas sales improved 4% to $915 million on strong volumes in the Asian markets and an improving U.S. and European liquid bulk business. Higher revenues translated into operating income of $176 million, which reflected a 5% increase from the prior year.
In the Tonnage Gas segment, revenues soared 28% to $725 million. Rebounding chemical and steel production and new plants going on stream led to a robust revenue growth. This coupled with higher energy and raw material cost pass-through, by way of increase in selling prices, helped a 37% increase in operating income to $120 million. Operating margins came in at 16.6%.
Electronics and Performance Materials sales of $497 million were up 21% on higher volumes. Electronic sales improved 18% year over year and 11% sequentially. Volumes in the performance material business improved 26% year over year and 10% sequentially. Higher revenues and lower costs culminated to an operating income of $57 million, up 60% year over year.
Equipment and Energy sales of $116 million were down 3% on lower volumes. Operating income of $21 million increased 61% from the prior year on higher LNG activity.
Balance Sheet
Air Products ended the quarter with cash and cash equivalent of $405 million. Debt totaled $3.71 billion as June 30, 2010.
Air Products expects fiscal 2010 earnings to grow over 20% as the global economy, led by Asia, experiences gradual recovery, coupled with the leverage in its existing capacity, new projects being commissioned and improving productivity. As a result, Air Products lifted its guidance for fiscal 2010 again to $4.94-$5.00 per share from its previous guidance of $4.90 to $5.00.
Air Products expects fourth quarter EPS from continuing operations to be between $1.27 and $1.33. Air Products has consistently boosted margins and is on track to meet the 17% goal in 2011.| Analysts' Targets | |
| Argus Research | $94 |
| Buy | |
| Monday, April 26, 2010 | |
| Robert W. Baird & Co. | $89 |
| Neutral | |
| Wednesday, February 10, 2010 | |
| Credit Suisse | $85 |
| Outperformer | |
| Monday, February 08, 2010 | |
| Deutsche Bank Securities | $92 |
| Accumulate | |
| Friday, February 05, 2010 | |
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