Air Products Chemicals Inc
For the period ended Dec 31, 2024. Filed Feb 6, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2024 · Filed Feb 6, 2025
APD$304.84-1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0000002969-24-000043
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThird Quarter 2024 in SummaryThird Quarter 2024 Results of OperationsFirst Nine Months 2024 in SummaryFirst Nine Months 2024 Results of OperationsReconciliations of Non-GAAP Financial MeasuresLiquidity and Capital ResourcesPension BenefitsCritical Accounting Policies and EstimatesCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-06.
0000002969-25-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsFirst Quarter 2025 in SummaryFirst Quarter 2025 Results of OperationsReconciliations of Non-GAAP Financial MeasuresLiquidity and Capital ResourcesPension BenefitsCritical Accounting Policies and EstimatesThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 196 previous paragraphs and 138 current paragraphs.
57 unchanged; 40 reworded; 41 added; 86 removed; 13 previous and 0 current paragraphs rearranged.
Tables are not compared: 42 previous and 28 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (41)
Current report
FIRST QUARTER 2025 VS. FIRST QUARTER 2024
Current report
•Sales of $2,931.5 decreased 2%, or $65.9, due to lower volumes of 2% and an unfavorable impact from currency of 1%, which were partially offset by favorable pricing of 1%. Lower volumes driven by the LNG business divestiture in September 2024, which resulted in a headwind of approximately 2%, and a lower contribution from on-sites and merchant in the Europe segment were partially offset by a significant, non-recurring sale of helium to an existing merchant customer in the Americas segment. Energy cost pass-through to customers was flat versus the prior year.
Current report
•Operating income of $643.6 decreased 3%, or $23.3, as higher costs and lower volumes were partially offset by higher pricing, net of power and fuel costs, and favorable currency. The recently divested LNG business contributed operating income of approximately $25 in the prior year. Operating margin of 22.0% decreased 20 basis points ("bp").
Current report
•Net income of $649.8 increased 5%, or $28.2, as higher pricing, net of power and fuel costs, lower non-service pension costs, and a gain on de-designated cash flow hedges were partially offset by higher costs. Net income margin of 22.2% increased 150 bp.
Current report
•Adjusted EBITDA of $1,190.9 increased 1%, or $16.4, as higher pricing, net of power and fuel costs, was partially offset by higher costs and lower equity affiliates' income. Adjusted EBITDA margin of 40.6% increased 140 bp.
Current report
(A)EPS impact reflected within "Gain on de-designation of cash flow hedges" was calculated based on an after-tax gain attributable to Air Products of $10.3. The gain attributable to our noncontrolling partners was $25.2.
Current report
Discussion of First Quarter Consolidated Results
Current report
Sales of $2,931.5 decreased 2%, or $65.9, due to lower volumes of 2% and an unfavorable impact from currency of 1%, partially offset by favorable pricing of 1%. Unfavorable volumes were driven by the divestiture of the LNG business in September 2024 and a lower contribution from on-sites and merchant in the Europe segment, which were partially offset by a significant, non-recurring sale of helium to an existing merchant customer in the Americas segment. The impact attributable to the LNG divestiture was approximately 2%. The modest 1% total company price improvement, which equates to a 2% improvement for the merchant business, was driven by pricing in the Americas and Europe segments. The unfavorable currency impact was primarily attributable to the strengthening of the U.S. Dollar against currencies in South America and Asia. Energy cost pass-through to customers was flat versus the prior year.
Current report
Cost of sales of $2,016.5 decreased 2%, or $50.7, primarily due to lower costs of $61 attributable to sales volumes and a favorable currency impact of $13, partially offset by higher costs of $26 that were driven by inflation and incentive compensation. Gross margin of 31.2% increased 20 bp from 31.0% in the prior year as pricing and favorable business mix more than offset the impact of higher costs.
Current report
During the first quarter of fiscal year 2025, we incurred costs of $29.9 ($21.9 after tax, or $0.10 per share) in connection with our response to a proxy contest. These costs, which are reflected on our consolidated income statements as “Shareholder activism costs”, include legal and other professional service fees as well as incremental proxy solicitation costs related to the 2025 Annual Meeting of Shareholders.
Current report
Other income of $22.9 increased $22.1 primarily due to the sale of a U.S. equity method investment and a prior year unfavorable foreign exchange impact from the devaluation of the Argentine peso.
Current report
Operating income of $643.6 decreased 3%, or $23.3, as shareholder activism costs of $30, higher costs of $20, and lower volumes of $2 were partially offset by positive pricing, net of power and fuel costs, of $26 and favorable currency of $3. Higher costs related to incentive compensation and inflation were partially offset by productivity improvements as well as the sale of a U.S. equity method investment. The recently divested LNG business contributed operating income of approximately $25 in the prior year. Operating margin of 22.0% decreased 20 bp from 22.2% in the prior year primarily due to the impact of higher costs, which was partially offset by higher pricing and business mix.
Current report
Equity affiliates' income of $150.6 decreased 5%, or $7.8, driven by lower income from JIGPC in the Middle East & India segment.
Current report
Net income of $649.8 increased 5%, or $28.2. Higher pricing, net of power and fuel costs, was partially offset by higher costs related to shareholder activism, incentive compensation, and inflation. These costs were partially mitigated by productivity improvements. We also recognized lower non-service pension costs as well as a gain on de-designated cash flow hedges during the first quarter of fiscal year 2025. Net income margin of 22.2% increased 150 bp from 20.7% in the prior year due to these factors as well as favorable business mix.
Current report
In December 2024, the Internal Revenue Service and U.S. Department of the Treasury published final regulations that clarified certain investment tax credit eligibility requirements for Section 48 energy investment tax credits that were enacted as part of the U.S. Inflation Reduction Act of 2022. We are in the process of evaluating the impact of these regulations and expect to realize significant benefits from the tax incentives once qualifying projects come onstream in the U.S. We have not included any forecasted benefits in the calculation of our annual effective tax rate for the period ending 31 December 2024 due to uncertainty in the timing and amount of such benefits.
Current report
Adjusted EBITDA of $1,190.9 increased 1%, or $16.4, as higher pricing, net of power and fuel costs, was partially offset by higher costs and lower equity affiliates' income. Adjusted EBITDA margin of 40.6% increased 140 bp from 39.2% in the prior year primarily due to favorable business mix and higher pricing.
Current report
Sales of $1,287.6 increased 3%, or $35.5, as higher volumes of 3% and higher pricing of 2% were partially offset by lower energy cost pass-through to customers of 1% and an unfavorable currency impact of 1%. The volume improvement was primarily due to a significant, non-recurring sale of helium to an existing merchant customer. The total segment pricing increase of 2% equates to a 4% improvement in our merchant business, where pricing was favorable across most product lines.
Current report
Operating income of $388.2 increased 10%, or $33.8, as higher volumes of $35 and positive pricing, net of power and fuel costs, of $18 were partially offset by higher costs of $15 and unfavorable currency of $4. Higher costs for inflation, planned maintenance expense, depreciation expense, and incentive compensation were partially offset by income recognized on the sale of an equity method investment. Operating margin of 30.1% increased 180 bp from 28.3% in the prior year.
Current report
Equity affiliates’ income of $35.1 decreased 5%, or $2.0.
Current report
Sales of $817.1 increased 3%, or $23.3, as higher volumes of 2% driven by new on-site assets and higher energy cost pass-through to customers of 2% were partially offset by an unfavorable currency impact of 1%. Pricing was flat versus the prior year.
Current report
Operating income of $216.4 increased 2%, or $5.2, due to lower costs of $6 and favorable volumes of $3, partially offset by lower pricing, net of power and fuel costs, of $2 and unfavorable currency of $2. The cost improvement was primarily attributable to productivity improvements, which were partially offset by higher costs related to incentive compensation and inflation. Operating margin of 26.5% decreased 10 bp from 26.6% in the prior year.
Current report
Equity affiliates’ income of $10.3 increased 145%, or $6.1, driven by prior year maintenance expense at an affiliate in China.
Current report
Sales of $697.2 decreased 5%, or $34.0, due to lower volumes of 5% and lower energy cost pass-through to customers of 1%, partially offset by higher pricing of 1%. The unfavorable volumes were driven by a lower contribution from our on-site business and lower helium in our merchant business. Currency remained flat versus the prior year.
Current report
Operating income of $186.5 decreased 6%, or $11.1, due to lower volumes of $23, partially offset by higher pricing, net of power and fuel costs, of $10 and favorable costs of $2. The lower costs were driven by productivity improvements and lower costs for planned maintenance outages, which were partially offset by inflation and higher depreciation expense. Operating margin of 26.7% decreased 30 bp from 27.0% in the prior year.
Current report
Equity affiliates’ income of $18.2 decreased 12%, or $2.5.
Current report
Sales of $32.8 decreased 7%, or $2.6, primarily due to lower demand for merchant products. Operating loss was $0.6 compared to income of $3.9 in the prior year, which also reflects the impact of higher costs.
Current report
Equity affiliates' income of $85.0 decreased 9%, or $7.9, as a higher portion of income from the JIGPC joint venture was allocated to shareholders entitled to preferred distributions. Refer to Note 3, Variable Interest Entities, to the consolidated financial statements for additional information.
Current report
Sales of $96.8 decreased 48%, or $88.1, primarily due to the divestiture of the LNG business in September 2024.
Current report
Operating loss of $117.0 increased 17%, or $16.8. The increase was driven by the divestiture of the LNG business, which generated operating income of approximately $25 for the first quarter of fiscal year 2024, as well as higher costs for incentive compensation.
Current report
Equity affiliates' income of $2.0 decreased 43%, or $1.5.
Current report
(A) Unrealized gain attributable to noncontrolling partners was $25.2.
Current report
In January 2025, we made U.S. Federal and State income tax payments of approximately $395 that primarily related to the gain on the sale of the LNG business in September 2024.
Current report
Capital Expenditures (Non-GAAP Financial Measure)
Showing the first 40 of 41 passages. Open the source sections for the rest.
Removed paragraphs (86)
Previous report
THIRD QUARTER 2024 VS. THIRD QUARTER 2023
Previous report
•Sales of $2,985.5 decreased 2%, or $48.4, due to an unfavorable impact from currency of 2% and lower energy cost pass-through to customers of 1%, which were partially offset by higher pricing of 1%. Volumes were flat versus the prior year.
Previous report
•Operating income of $737.6 increased 14%, or $93.4, as a prior year charge for business and asset actions, positive pricing, net of power and fuel costs, and favorable business mix were partially offset by unfavorable currency and higher costs. Operating margin of 24.7% increased 350 basis points ("bp").
Previous report
•Equity affiliates' income of $168.9 increased 2%, or $3.9, primarily due to higher income from an affiliate in the Americas, which was partially offset by lower contributions from affiliates in the Middle East.
Previous report
•Net income of $708.9 increased 16%, or $98.4, primarily due to a prior year charge for business and asset actions, favorable pricing, net of power and fuel costs, and favorable business mix. Higher costs driven by planned maintenance and inflation were partially offset by improved productivity. Net income margin of 23.7% increased 360 bp.
Previous report
•Adjusted EBITDA of $1,266.8 increased 5%, or $58.7, and adjusted EBITDA margin of 42.4% increased 260 bp.
Previous report
•In July 2024, we entered into an agreement to divest our liquefied natural gas ("LNG") process technology and equipment business for approximately $1.8 billion in an all-cash transaction. We expect to close the sale before the end of calendar year 2024, subject to the satisfaction or waiver of customary closing conditions, including the receipt of certain regulatory approvals.
Previous report
Changes in Diluted EPS Attributable to Air Products
Previous report
Discussion of Third Quarter Consolidated Results
Previous report
Sales of $2,985.5 decreased 2%, or $48.4, due to an unfavorable impact from currency of 2% and lower energy cost pass-through to customers of 1%, which were partially offset by higher pricing of 1% driven by our Americas segment. Volume was flat versus the prior year as higher demand for hydrogen in the Americas as well as contributions from new on-site assets in Europe and Asia were offset by weaker merchant demand.
Previous report
Cost of sales of $2,005.6 decreased 3%, or $65.1, primarily due to lower energy cost pass-through to customers of $42 and favorable currency of $31, partially offset by higher costs of $11. Higher costs resulting from inflation and planned maintenance activities were partially offset by lower power costs in our merchant business as well as improvements from strategic productivity actions. Gross margin of 32.8% increased 110 bp from 31.7% in the prior year primarily due to favorable pricing.
Previous report
Selling and administrative expense of $235.4 decreased 1%, or $3.3, primarily due to our productivity improvements, which were partially offset by labor inflation. Selling and administrative expense as a percentage of sales of 7.9% was flat versus the prior year.
Previous report
Our consolidated income statement for the three months ended 30 June 2023 reflected a charge of $59.0 ($51.2 after tax, or $0.23 per share) for strategic business and asset actions intended to optimize costs and focus resources on our growth projects. This charge, which was not recorded in segment results, included a noncash charge of $32.0 to write off assets related to our exit from certain projects previously under construction in our Asia segment as well as an expense of $27.0 for severance and other benefits payable to employees identified under a global cost reduction plan that originated during the third quarter of fiscal year 2023.
Previous report
Other income of $20.1 increased $12.1 primarily due to the favorable settlement of a legal dispute regarding energy management charges related to an extreme weather event in 2021 in our Americas segment. Refer to Note 12, Commitments and Contingencies, to the consolidated financial statements for additional information.
Previous report
Operating income of $737.6 increased 14%, or $93.4, as a prior year charge for business and asset actions of $59, positive pricing, net of power and fuel costs, of $44, and favorable business mix of $12 were partially offset by an unfavorable impact from currency of $11 and higher costs of $10. Higher costs were driven by labor inflation and planned maintenance activities, which were partially offset by productivity improvements as well as the favorable settlement of a legal dispute in the Americas segment. Operating margin of 24.7% increased 350 bp from 21.2% in the prior year primarily due to the business and asset actions and favorable pricing.
Previous report
Equity affiliates' income of $168.9 increased 2%, or $3.9, primarily due to higher income from an affiliate in the Americas, which was partially offset by lower contributions from affiliates in the Middle East.
Previous report
Other non-operating expense of $1.3 decreased 89%, or $10.4, primarily due to an unrealized gain of $11.2 ($3.0 attributable to Air Products after tax, or $0.01 per share) that was recorded upon de-designation of certain interest rate swaps associated with the financing for the NEOM Green Hydrogen Project. Refer to Note 3, Variable Interest Entities, and Note 8, Financial Instruments, to the consolidated financial statements for additional information.
Previous report
Net income of $708.9 increased 16%, or $98.4, due to higher pricing, net of power and fuel costs, and favorable business mix. Additionally, the prior year included a charge of $59.0 for business and asset actions intended to optimize costs and focus resources on our growth projects. These strategic actions resulted in productivity improvements across our organization, which partially offset higher costs driven by planned maintenance and inflation. Net income margin of 23.7% increased 360 bp from 20.1% in the prior year, primarily due to the prior year charge for business and asset actions and higher pricing.
Previous report
Adjusted EBITDA of $1,266.8 increased 5%, or $58.7, as higher pricing, net of power and fuel costs, favorable business mix, and improvements from our strategic productivity actions were partially offset by higher maintenance costs and inflation. Adjusted EBITDA margin of 42.4% increased 260 bp from 39.8% in the prior year.
Previous report
Additionally, during the third quarter of fiscal year 2023, we recognized a charge of $59.0 ($51.2 attributable to Air Products after tax) related to various business and asset actions that are described in Note 4, Business and Asset Actions, to the consolidated financial statements. This charge included certain losses for which we could not recognize an income tax benefit.
Previous report
Sales of $1,234.7 decreased 2%, or $26.0, as lower energy cost pass-through to customers of 3%, lower volumes of 1%, and an unfavorable impact from currency of 1% were partially offset by higher pricing of 3%. Pricing was favorable across all merchant product lines. Volumes declined modestly primarily due to weaker merchant volume, which was partially offset by higher demand for hydrogen in our on-site business.
Previous report
Operating income of $391.1 increased 4%, or $16.3, as positive pricing, net of power and fuel costs, of $32 was partially offset by higher costs of $9, unfavorable currency of $4, and lower volumes of $3. Higher costs for planned maintenance and labor inflation were partially offset by productivity improvements as well as other income recognized for the favorable settlement of a legal dispute. Operating margin of 31.7% increased 200 bp from 29.7% in the prior year primarily due to favorable pricing and lower energy cost pass-through to customers, partially offset by the impact of higher costs. Of the 200 bp improvement, lower energy cost pass-through to customers contributed approximately 100 bp.
Previous report
Equity affiliates’ income of $37.5 increased 25%, or $7.6, driven by higher income from an affiliate in Mexico.
Previous report
Sales of $789.6 decreased 4%, or $33.3, as an unfavorable impact from currency of 4% driven by strengthening of the U.S. Dollar against most major currencies and lower volumes of 1% were partially offset by higher energy cost pass-through to customers of 1%. Volumes declined modestly overall primarily due to lower demand for merchant products and planned maintenance outages, which were partially offset by contributions from new industrial gas on-site plants across the region. Pricing was flat versus the prior year.
Previous report
Operating income of $200.1 decreased 17%, or $40.7, due to lower volumes of $26, unfavorable currency of $8, lower pricing, net of power and fuel costs, of $4, and higher costs of $3. Volume and costs were unfavorable primarily due to planned maintenance outages. Operating margin of 25.3% decreased 400 bp from 29.3% in the prior year primarily due to the planned maintenance outages.
Previous report
Equity affiliates’ income of $8.7 increased 16%, or $1.2, driven by higher income from an affiliate in Thailand.
Previous report
Sales of $693.4 decreased 2%, or $13.2, due to lower energy cost pass-through to customers of 2% and an unfavorable impact from currency of 1%, partially offset by higher volumes of 1%. Volumes improved modestly as contributions from a new facility in Uzbekistan were partially offset by weaker merchant demand. Pricing was flat versus the prior year.
Previous report
Operating income of $204.7 increased 16%, or $28.6, primarily due to higher volumes of $19 and pricing, net of lower power and fuel costs, of $17, partially offset by higher costs of $7. Higher costs driven by labor inflation were partially offset by productivity improvements. Operating margin of 29.5% increased 460 bp from 24.9% in the prior year.
Previous report
Sales of $32.8 decreased 17%, or $6.9, and operating loss of $1.4 decreased $7.2 from income of $5.8 in the prior year, in each case primarily due to lower merchant volumes and pricing.
Previous report
Equity affiliates' income of $89.2 decreased 7%, or $6.3, driven by higher costs across our affiliates.
Previous report
Sales of $235.0 increased 15%, or $31.0, and operating loss of $56.9 decreased 40%, or $37.4, primarily due to higher LNG and other equipment sales. Our operating results also benefited from lower costs driven by productivity improvements.
Previous report
FIRST NINE MONTHS 2024 VS. FIRST NINE MONTHS 2023
Previous report
•Sales of $8,913.1 decreased 5%, or $495.6, due to lower energy cost pass-through to customers of 6%, which was partially offset by higher pricing of 1%. Volume and currency were both flat versus the prior year.
Previous report
•Operating income of $2,041.7 increased 16%, or $285.7, as lower charges for business and asset actions, positive pricing, net of power and fuel costs, and favorable business mix were partially offset by higher costs and unfavorable currency. Operating margin of 22.9% increased 420 bp from 18.7% in the prior year and included a positive impact from lower energy cost pass-through to customers.
Previous report
•Equity affiliates' income of $470.6 increased 7%, or $29.7, as higher income from affiliates in the Americas segment was partially offset by lower contributions from affiliates in Europe.
Previous report
•Net income of $1,911.4 increased 16%, or $267.2, due to lower charges for business and asset actions, favorable pricing, and favorable business mix. Higher costs driven by inflation and planned maintenance were partially offset by lower incentive compensation, favorable non-recurring items, and improved productivity. Net income margin of 21.4% increased 390 bp and included a positive impact from lower energy cost pass-through to customers.
Previous report
•Adjusted EBITDA of $3,639.6 increased 6%, or $197.1, and adjusted EBITDA margin of 40.8% increased 420 bp.
Showing the first 40 of 86 passages. Open the source sections for the rest.
Reworded paragraphs (40)
Previous wording
This discussion should be read in conjunction with the interim consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q. Unless otherwise stated, financial information is presented in millions of U.S. Dollars, except for per share data. Financial information is presented on a continuing operations basis.
Current wording
This discussion should be read in conjunction with the interim consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q. Financial information is presented on a continuing operations basis. Unless otherwise stated, amounts discussed are in millions of U.S. Dollars, except for per share data, which is calculated and presented on a diluted basis in U.S. Dollars per weighted average common share.
Previous wording
The financial measures discussed below are presented in accordance with U.S. generally accepted accounting principles ("GAAP"), except as noted. We present certain financial measures on an "adjusted", or "non-GAAP", basis because we believe such 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. For each non-GAAP financial measure, including adjusted diluted earnings per share ("EPS"), adjusted EBITDA, adjusted EBITDA margin, adjusted effective tax rate, and capital expenditures, we present a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP. These reconciliations and explanations regarding the use of non-GAAP financial measures are presented under the “Reconciliations of Non-GAAP Financial Measures” section beginning on page 52.
Current wording
The financial measures discussed below are presented in accordance with U.S. generally accepted accounting principles ("GAAP"), except as noted. We present certain financial measures on an "adjusted", or "non-GAAP", basis because we believe such 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. For each non-GAAP financial measure, including adjusted earnings per share ("EPS"), adjusted EBITDA, adjusted EBITDA margin, adjusted effective tax rate, and capital expenditures, we present a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP. These reconciliations and explanations regarding the use of non-GAAP financial measures are presented under the “Reconciliations of Non-GAAP Financial Measures” section beginning on page 41.
Previous wording
Comparisons included in the discussion that follows are for the third quarter and first nine months of fiscal year 2024 versus ("vs.") the third quarter and first nine months of fiscal year 2023. The disclosures provided in this Quarterly Report on Form 10-Q are complementary to those made in our 2023 Form 10-K.
Current wording
Comparisons included in the discussion that follows are for the first quarter of fiscal year 2025 versus ("vs.") the first quarter of fiscal year 2024. The disclosures provided in this Quarterly Report on Form 10-Q are complementary to those made in our 2024 Form 10-K.
Previous wording
Equity affiliates’ income of $26.3 decreased 9%, or $2.5, driven by lower income from our affiliate in Italy.
Current wording
•Equity affiliates' income of $150.6 decreased 5%, or $7.8, driven by lower income from JIGPC in the Middle East & India segment.
Previous wording
•Diluted EPS of $3.13 increased 17%, or $0.46 per share. On a non-GAAP basis, adjusted diluted EPS of $3.20 increased 7%, or $0.22 per share. A summary table of changes in diluted EPS is presented below.
Current wording
•EPS of $2.77 increased 1%, or $0.04 per share. On a non-GAAP basis, adjusted EPS of $2.86 increased 1%, or $0.04 per share. A summary table of changes to EPS is presented below.
Previous wording
The per share impacts presented in the tables below were calculated independently and do not sum to the total change in diluted EPS due to rounding.
Current wording
The diluted per share impacts presented in the tables below were calculated independently and do not sum to the total change in EPS due to rounding.
Previous wording
The table below summarizes the diluted per share impact of our non-GAAP adjustments for the third quarter of fiscal years 2024 and 2023:
Current wording
The table below summarizes the diluted per share impact of our non-GAAP adjustments for the first quarter of fiscal years 2025 and 2024:
Previous wording
THIRD QUARTER 2024 RESULTS OF OPERATIONS
Current wording
FIRST QUARTER 2025 RESULTS OF OPERATIONS
Previous wording
Selling and administrative expense of $714.4 decreased 1%, or $9.9, primarily due to lower incentive compensation and productivity improvements, partially offset by labor inflation. Selling and administrative expense as a percentage of sales increased to 8.0% from 7.7% in the prior year.
Current wording
Selling and administrative expense of $242.4 increased 2%, or $4.0, primarily due to incentive compensation and inflation, partially offset by productivity improvements. Selling and administrative expense as a percentage of sales increased to 8.3% from 8.0% in the prior year.
Previous wording
Research and development expense of $27.0 decreased 8%, or $2.3. Research and development expense as a percentage of sales decreased to 0.9% from 1.0% in the prior year.
Current wording
Research and development expense of $22.0 decreased 14%, or $3.7. Research and development expense as a percentage of sales decreased to 0.8% from 0.9% in the prior year.
Previous wording
Interest incurred increased 72%, or $55.9, primarily due to a higher debt balance from senior notes issued in February 2024 to fund projects under our Green Finance Framework as well as borrowings on financing available for the NEOM Green Hydrogen Project. Capitalized interest increased $47.6 due to a higher carrying value of projects under construction, including the NEOM Green Hydrogen Project.
Current wording
Interest incurred increased 29%, or $31.3, primarily due to a higher debt balance from senior notes issued in February 2024 as well as borrowings on financing available for the NEOM Green Hydrogen Project. Capitalized interest increased 77%, or $42.2, due to a higher carrying value of projects under construction, including the NEOM Green Hydrogen Project.
Previous wording
Other non-operating expense of $25.3 decreased 3%, or $0.9. During the third quarter of fiscal year 2024, we recorded an unrealized gain of $11.2 ($3.0 attributable to Air Products after tax, or $0.01 per share) upon de-designation of certain interest rate swaps associated with the financing for the NEOM Green Hydrogen Project. Refer to Note 3, Variable Interest Entities, and Note 8, Financial Instruments, to the consolidated financial statements for additional information. Additionally, we recognized higher interest income on cash and cash items and short-term investments during the first nine months of fiscal year 2024. These favorable items were partially offset by higher non-service pension costs.
Current wording
Other non-operating income of $38.9 increased $53.7 from an expense of $14.8 in the prior year. The increase was driven by an unrealized gain of $38.8 ($10.3 attributable to Air Products after tax, or $0.05 per share) that was recorded for certain de-designated interest rate swaps associated with the financing for the NEOM Green Hydrogen Project. Refer to Note 3, Variable Interest Entities, and Note 7, Financial Instruments, to the consolidated financial statements for additional information. Additionally, non-service pension costs were $10.5 ($7.9 after tax, or $0.04 per share) for the first quarter of fiscal year 2025 compared to $24.9 ($18.7 after tax, or $0.08 per share) in the prior year. This decrease was driven by a higher expected return on plan assets, lower interest cost, and a decrease in actuarial loss amortization.
Previous wording
Our effective tax rate was 16.6% and 18.6% for the three months ended 30 June 2024 and 2023, respectively. Our current quarter effective tax rate was lower due to earning a greater share of income in jurisdictions with lower tax rates, higher equity affiliates' income, the tax benefit from a tax election related to a non-U.S. subsidiary, higher excess tax benefits on share-based compensation, and the release of certain unrecognized tax benefits upon expiration of the statute of limitations for uncertain tax positions taken in prior years.
Current wording
Our effective tax rate was 17.8% and 17.9% for the three months ended 31 December 2024 and 2023, respectively. The current quarter effective tax rate was lower due to earning a greater share of income in jurisdictions with lower tax rates and a benefit from a U.S. state tax law change in the current period, which were mostly offset by higher net costs on foreign-related income taxed in the U.S., lower U.S. tax benefits for foreign-derived income, and the release of certain previously unrecognized tax benefits in the prior year.
Previous wording
Our adjusted effective tax rate, which excludes the impact of the business and asset actions discussed above as well as other adjustments described in the "Reconciliations of Non-GAAP Financial Measures" section, was 16.9% and 18.4% for the three months ended 30 June 2024 and 2023, respectively.
Current wording
Our adjusted effective tax rate, which excludes the impact of adjustments presented in the "Reconciliations of Non-GAAP Financial Measures" section beginning on page 41, was 18.7% and 18.1% for the three months ended 31 December 2024 and 2023, respectively.
Previous wording
Discussion of Third Quarter Results by Business Segment
Current wording
Discussion of First Quarter Results by Business Segment
Previous wording
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, the adjusted effective tax rate, 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.
Current wording
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 earnings per share ("EPS"), adjusted EBITDA, adjusted EBITDA margin, the adjusted effective tax rate, 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 EPS. For each non-GAAP financial measure, we present a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP.
Previous wording
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, all of which are not indicative of our defined benefit plans’ future contribution needs due to the funded status of the plans. Additionally, we exclude the impact of fair value adjustments for certain of our derivative instruments for which we discontinued cash flow hedge accounting during the third quarter of fiscal year 2024. We will continue to adjust for these unrealized gains or losses until the related hedges re-qualify for cash flow hedge accounting, which we expect to occur once the hedged transaction is consistent with the terms of the related long-term hedges. The net impact of adjustments for non-service related components as well as fair value adjustments for the de-designated cash flow hedges is reflected within “Other non-operating income (expense), net” on our consolidated income statements. Adjusting for these impacts provides management and users of our financial statements with a more accurate representation of our underlying business performance because they are driven by factors that are unrelated to our operations, such as volatility in equity and debt markets. 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.
Current wording
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. Additionally, during the first quarter of fiscal year 2025, we excluded costs associated with our response to actions of activist shareholders, which are not associated with the ongoing operation of our business and are difficult to predict in future periods. We may also exclude certain expenses associated with cost reduction actions and impairment charges as well as gains on disclosed transactions. The reader should be aware that we may recognize similar losses or gains in the future.
Previous wording
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.
Current wording
The table below provides a reconciliation to the most directly comparable GAAP measure for each of the major components used to calculate adjusted EPS, 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 GAAP EPS and total adjusted EPS due to rounding.
Previous wording
The tables below present sales and a reconciliation of operating income and operating margin by segment to adjusted EBITDA and adjusted EBITDA margin by segment for the three and nine months ended 30 June 2024 and 2023:
Current wording
The tables below present sales and a reconciliation of operating income and operating margin by segment to adjusted EBITDA and adjusted EBITDA margin by segment for the three months ended 31 December 2024 and 2023:
Previous wording
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.
Current wording
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 project financing, which is non-recourse to Air Products, 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 its capital expenditures.
Previous wording
As of 30 June 2024, we had $1,442.5 of foreign cash and cash items compared to total cash and cash items of $2,375.7. We do not expect that a significant portion of the earnings of our foreign subsidiaries and affiliates will be subject to U.S. income tax upon repatriation to the U.S. Depending on the country in which the subsidiaries and affiliates reside, the repatriation of these earnings may be subject to foreign withholding and other taxes. However, since we have significant current investment plans outside the U.S., it is our intent to permanently reinvest the majority of our foreign cash and cash items that would be subject to additional taxes outside the U.S.
Current wording
As of 31 December 2024, we had $1,474.2 of foreign cash and cash items compared to total cash and cash items of $1,845.5. We do not expect that a significant portion of the earnings of our foreign subsidiaries and affiliates will be subject to U.S. income tax upon repatriation to the U.S. Depending on the country in which the subsidiaries and affiliates reside, the repatriation of these earnings may be subject to foreign withholding and other taxes. However, since we have significant current investment plans outside the U.S., it is our intent to permanently reinvest the majority of our foreign cash and cash items that would be subject to additional taxes outside the U.S.
Previous wording
For the first nine months of fiscal year 2023, cash provided by operating activities was $2,203.4. Business and asset actions of $244.6 includes noncash charges to write off assets related to our exit from certain projects previously under construction as well as an expense for severance and other benefits. Refer to Note 4, Business and Asset Actions, to the consolidated financial statements for additional information. Other adjustments of $152.3 primarily included adjustments for noncash currency impacts of intercompany balances. The working capital accounts were a use of cash of $759.4, primarily driven by $375.4 from payables and accrued liabilities, $133.5 from inventories, $98.5 from other receivables, $102.8 from other working capital, and $49.2 from trade receivables, less allowances. The use of cash within payables and accrued liabilities primarily resulted from the impact of lower prices for the purchase of natural gas, a decrease in value of derivatives that hedge intercompany loans, and payments for incentive compensation under the fiscal year 2022 plan. The use of cash within inventories primarily relates to purchases of helium. The use of cash within other working capital primarily relates to the timing of income tax payments. The use of cash within trade receivables primarily relates to the timing of milestone invoices on sale of equipment projects.
Current wording
For the first three months of fiscal year 2025, cash provided by operating activities was $811.7. Other adjustments of $122.6 primarily included adjustments for noncash currency impacts of intercompany balances. The working capital accounts were a use of cash of $16.5. A use of cash of $47.8 within "Trade receivables" due to the timing of cash collections was partially offset by a source of cash of $30.5 within "Payables and accrued liabilities". The source of cash within "Payables and accrued liabilities" primarily resulted from an increase in accrued utilities and changes in the fair value of derivative contracts that hedge intercompany loans, partially offset by payments for incentive compensation under the fiscal year 2024 plan.
Previous wording
For the first nine months of fiscal year 2024, cash provided by operating activities was $2,689.7. We recorded a charge of $57.0 for the accrual of severance and other postemployment benefits. Refer to Note 4, Business and Asset Actions, to the consolidated financial statements for additional information. The working capital accounts were a use of cash of $236.0. A use of cash of $175.1 within "Payables and accrued liabilities" primarily resulted from payments for incentive compensation under the fiscal year 2023 plan, a reduction of customer advances for sale of equipment projects as we recognized revenue, and a reduction of liabilities associated with accrued utilities. The use of cash of $111.0 within "Inventories" primarily related to purchases of helium. The use of cash of $21.9 within "Other working capital" primarily related to the timing of tax payments. The source of cash of $82.4 within "Other receivables" primarily related to the refunds of value added taxes paid during the construction of the NEOM Green Hydrogen Project.
Current wording
For the first three months of fiscal year 2024, cash provided by operating activities was $626.6. The working capital accounts were a use of cash of $369.6, primarily driven by $268.5 from payables and accrued liabilities, $64.5 from other receivables, and $48.6 from inventories. The use of cash within "Payables and Accrued Liabilities" primarily resulted from payments for incentive compensation, a reduction of customer advances for sale of equipment projects as we recognized revenue, and a reduction of liabilities associated with accrued utilities. The use of cash within "Other receivables" primarily related to the payment of value added taxes incurred in the construction of our larger projects, for which we claimed a refund. The use of cash within "Inventories" primarily related to purchases of helium.
Previous wording
For the first nine months of fiscal year 2023, cash used for investing activities was $4,399.8. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $3,163.5, investment in and advances to unconsolidated affiliates of $912.0, and an investment in financing receivables of $665.0. Refer to the Capital Expenditures section below for further detail. Proceeds from investments of $766.0 resulted from maturities of time deposits and treasury securities with terms greater than three months but less than one year and exceeded purchases of investments of $443.4.
Current wording
For the first three months of fiscal year 2025, cash used for investing activities was $2,182.1. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $2,117.6. Refer to the "Capital Expenditures" section below for further detail. Purchases of investments of $117.6 included purchases of time deposits, which have terms greater than three months but less than one year, and exceeded proceeds from investments of $5.0.
Previous wording
For the first nine months of fiscal year 2024, cash used for investing activities was $4,773.8. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $4,721.5 and an investment in financing receivables of $396.2. Refer to the "Capital Expenditures" section below for further detail. Proceeds from investments of $413.1 resulted from maturities of time deposits with terms greater than three months but less than one year and exceeded purchases of investments of $141.4.
Current wording
For the first three months of fiscal year 2024, cash used for investing activities was $1,665.6. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $1,445.5 and an investment in financing receivables of $301.8. Refer to the Capital Expenditures section below for further detail. Proceeds from investments of $120.1 resulted from maturities of time deposits and treasury securities with terms greater than three months but less than one year and exceeded purchases of investments of $55.5.
Previous wording
Capital expenditures for the first nine months of fiscal year 2024 totaled $3,875.7 compared to $4,084.5 for the first nine months of fiscal year 2023. The investment in financing receivables of $396.2 primarily reflects payments associated with the purchase of renewable fuel assets from World Energy as well as the purchase of a natural gas-to-syngas processing facility in Uzbekistan. Refer to Note 3, Variable Interest Entities, and Note 16, Supplemental Information, to the consolidated financial statements, respectively, for additional information.
Current wording
Capital expenditures for the first three months of fiscal year 2025 totaled $1,209.8 compared to $1,385.7 for the first three months of fiscal year 2024. Spending for plant and equipment primarily included project spending for our clean energy projects such as the NEOM Green Hydrogen Project in NEOM City, Saudi Arabia, as well as our clean energy complexes in Louisiana, United States, and Alberta, Canada. Additionally, we continue to invest capital in our core industrial gas business for new industrial gas plants as well as maintaining and replacing existing facilities. The investment in financing receivables of $15.3 during the first quarter of fiscal year 2025 relates to remaining payments associated with the purchase of a natural gas-to-syngas processing facility in Uzbekistan. The prior year investment in financing receivables of $301.8 included a payment of $100 related to this facility as well as payments associated with the purchase of renewable fuel assets from World Energy. Refer to Note 14, Supplemental Information, and Note 3, Variable Interest Entities, to the consolidated financial statements, respectively, for additional information.
Previous wording
We continue to expect capital expenditures for fiscal year 2024 to be in the range of $5.0 billion to $5.5 billion.
Current wording
We expect capital expenditures for fiscal year 2025 in the range of $4.5 billion to $5.0 billion. We anticipate capital expenditures to be funded with our current cash balance, cash generated from continuing operations, and additional financing activities.
Previous wording
For the first nine months of fiscal year 2023, cash provided by financing activities was $1,098.9. The source of cash was primarily driven by long-term debt proceeds of $2,116.3, and an increase in commercial paper and short-term borrowings of $567.3, partially offset by dividend payments to shareholders of $1,107.9 and payments on long-term debt of $605.8. Refer to the Credit Facilities section below and Note 11, Debt, to the consolidated financial statements for additional information.
Current wording
For the first three months of fiscal year 2024, cash provided by financing activities was $1,362.8. The source of cash was primarily driven by a net increase in commercial paper and short-term borrowings of $1,020.9 and long-term debt proceeds of $810.4. The long-term debt proceeds primarily related to capital spending by NGHC. These sources of cash were partially offset by dividend payments to shareholders of $388.9 and payments on long-term debt of $54.8.
Previous wording
Total debt increased from $10,305.8 as of 30 September 2023 to $14,032.7 as of 30 June 2024 primarily due to the $2.5 billion issuance of senior notes intended for projects defined under our Green Finance Framework as well as additional borrowings under the non-recourse project financing associated with the NEOM Green Hydrogen Project as discussed in Note 3, Variable Interest Entities, to the consolidated financial statements. Total debt includes related party debt of $289.5 and $328.3 as of 30 June 2024 and 30 September 2023, respectively.
Current wording
Total debt increased to $14.5 billion as of 31 December 2024 from $14.2 billion as of 30 September 2024 due to additional borrowings under project financing associated with the NEOM Green Hydrogen Project as further discussed below. Total debt includes related party debt of $292.7 and $304.4 as of 31 December 2024 and 30 September 2024, respectively.
Previous wording
In March 2024, we entered into a five-year $3.0 billion revolving credit agreement maturing 31 March 2029 (the “2024 Credit Agreement”) as well as a 364-day $500 revolving credit agreement maturing 27 March 2025 that we have the ability to convert into a term loan maturing 27 March 2026. Both agreements are syndicated facilities that provide a source of liquidity and support our commercial paper program through availability of senior unsecured debt to us and certain of our subsidiaries. As of 30 June 2024, no borrowings were outstanding under either agreement. The 2024 Credit Agreement replaced our previous $2.75 billion revolving credit agreement (the “2021 Credit Agreement”), which was terminated upon execution of the 2024 Credit Agreement. No borrowings were outstanding under the 2021 Credit Agreement at the time of its termination, and no early termination penalties were incurred.
Current wording
We have a five-year $3.0 billion revolving credit agreement maturing 31 March 2029 (the “2024 Five-Year Credit Agreement”) as well as a 364-day $500 revolving credit agreement maturing 27 March 2025 that we have the ability to convert into a term loan maturing 27 March 2026 (the "2024 364-Day Credit Agreement" and, together with the 2024 Five-Year Credit Agreement, the "2024 Credit Agreements"). Both of the 2024 Credit Agreements are syndicated facilities that provide a source of liquidity and support our commercial paper program through availability of senior unsecured debt to us and certain of our subsidiaries. No borrowings were outstanding under either of the 2024 Credit Agreements as of 31 December 2024.
Previous wording
We also have credit facilities available to certain of our foreign subsidiaries totaling $1,223.2, of which $1,091.1 was borrowed and outstanding as of 30 June 2024. The amount borrowed and outstanding as of 30 September 2023 was $1,041.4.
Current wording
We also have credit facilities available to certain of our foreign subsidiaries totaling $1,196.9, of which $1,102.0 was borrowed and outstanding as of 31 December 2024. The amount borrowed and outstanding as of 30 September 2024 was $1,129.0.
Previous wording
In May 2023, NGHC secured non-recourse project financing of approximately $6.1 billion, which is expected to fund approximately 73% of the NEOM Green Hydrogen Project and will be drawn over the construction period. At the same time, NGHC secured additional non-recourse credit facilities totaling approximately $500 primarily for working capital needs. As of 30 June 2024, the joint venture had borrowed short- and long-term principal amounts totaling $2.9 billion compared to $1.4 billion as of 30 September 2023. Refer to Note 3, Variable Interest Entities, to the consolidated financial statements for additional information.
Current wording
NGHC has access to project financing of approximately $6.1 billion, which is expected to fund approximately 73% of the NEOM Green Hydrogen Project and is being drawn over the construction period, as well as additional credit facilities totaling approximately $500 primarily for NGHC's working capital needs. Creditors of NGHC do not have recourse to the general credit of Air Products. As of 31 December 2024, the joint venture had borrowed short- and long-term principal amounts totaling $3.8 billion compared to $3.3 billion as of 30 September 2024. Refer to Note 3, Variable Interest Entities, to the consolidated financial statements for additional information.
Previous wording
The Board of Directors determines whether to declare cash dividends on our common stock and the timing and amount based on financial condition and other factors it deems relevant. Dividends are paid quarterly, usually during the sixth week after the close of the fiscal quarter. We have increased our quarterly dividend for 42 consecutive years.
Current wording
The Board of Directors determines whether to declare cash dividends on our common stock and the timing and amount based on financial condition and other factors it deems relevant. We believe providing a consistent dividend plays a critical part in the creation of shareholder value and expect to return approximately $1.6 billion to shareholders in 2025.
Previous wording
On 17 May 2024, the Board of Directors declared a quarterly dividend of $1.77 per share that is payable on 12 August 2024 to shareholders of record at the close of business on 1 July 2024.
Current wording
Dividends are paid quarterly, usually during the sixth week after the close of the fiscal quarter. On 21 November 2024, the Board of Directors declared a quarterly dividend of $1.77 per share that is payable on 10 February 2025 to shareholders of record at the close of business on 2 January 2025. Additionally, on 22 January 2025, the Board of Directors approved a $0.02 per share increase to our quarterly dividend, marking the 43 rd consecutive year of dividend increases. The dividend declared in January is payable on 12 May 2025 to shareholders of record at the close of business on 1 April 2025. We expect to continue our history of increasing our quarterly dividend.
Previous wording
Net periodic cost was $31.1 and $91.7 for the three and nine months ended 30 June 2024, respectively. Net periodic cost was $27.9 and $82.6 for the three and nine months ended 30 June 2023, respectively. The increased costs versus the prior year were primarily attributable to non-service costs, which were driven by lower expected returns on plan assets due to a smaller beginning of fiscal year balance of plan assets and higher interest cost, partially offset by a decrease in actuarial loss amortization. Non-service related components of net periodic cost are reflected within "Other non-operating income (expense), net" on our consolidated income statements.
Current wording
Net periodic cost was $15.8 and $30.2 for the three months ended 31 December 2024 and 2023, respectively. The decrease in costs versus the prior year were primarily attributable to non-service costs, which were driven by a higher expected return on plan assets due to a higher beginning balance of plan assets, lower interest cost, and a decrease in actuarial loss amortization. Non-service related components of net periodic cost are reflected within "Other non-operating income (expense), net" on our consolidated income statements.
Previous wording
Service costs result from benefits earned by active employees and are reflected as operating expenses primarily within "Cost of sales" and "Selling and administrative expense" on our consolidated income statements. The amount of service costs capitalized in the first nine months of fiscal years 2024 and 2023 was not material.
Current wording
Service costs result from benefits earned by active employees and are reflected as operating expenses primarily within "Cost of sales" and "Selling and administrative expense" on our consolidated income statements. The amount of service costs capitalized in the first three months of fiscal years 2025 and 2024 was not material.
Previous wording
Management considers various factors when making pension funding decisions, including tax, cash flow, and regulatory implications. For the nine months ended 30 June 2024 and 2023, our cash contributions to funded pension plans and benefit payments for unfunded pension plans were $25.6 and $22.0, respectively.
Current wording
Management considers various factors when making pension funding decisions, including tax, cash flow, and regulatory implications. For the three months ended 31 December 2024 and 2023, our cash contributions to funded pension plans and benefit payments for unfunded pension plans were $8.2 and $12.0, respectively.
Previous wording
Total contributions for fiscal year 2024 are expected to be approximately $35 to $45. During fiscal year 2023, total contributions were $32.6.
Current wording
Total contributions for fiscal year 2025 are expected to be approximately $30 to $40. During fiscal year 2024, total contributions were $34.7.
Previous wording
A description of our major accounting policies, including those that we consider to be the most critical to understanding our financial statements, is included in our 2023 Form 10-K. There were no changes to our accounting policies during the first nine months of fiscal year 2024.
Current wording
A description of our major accounting policies, including those that we consider to be the most critical to understanding our financial statements, is included in our 2024 Form 10-K. There were no significant changes to our accounting policies during the first three months of fiscal year 2025.
Previous wording
Judgments and estimates of uncertainties are required to apply our accounting policies in many areas. However, application of policies that management has identified as critical places significant importance on management’s judgment, often as the result of the need to make estimates about the effects of matters that are inherently uncertain. During the first nine months of fiscal year 2024, we recorded changes to project cost estimates on certain sale of equipment projects that are accounted for under the cost incurred input method. Accordingly, we recorded cumulative effect adjustments that unfavorably impacted operating income by approximately $50 and $115 for the three and nine months ended 30 June 2024, respectively. There were no other changes to our estimates during the first nine months of fiscal year 2024 that had a significant impact on our financial condition, change in financial condition, liquidity, or results of operations.
Current wording
Judgments and estimates of uncertainties are required to apply our accounting policies in many areas. However, application of policies that management has identified as critical places significant importance on management’s judgment, often as the result of the need to make estimates about the effects of matters that are inherently uncertain. During the first three months of fiscal year 2025, we recorded changes to project revenue and cost estimates on certain sale of equipment projects that are accounted for under the cost incurred input method. Accordingly, we recorded cumulative effect adjustments that unfavorably impacted operating income by approximately $28 for the three months ended 31 December 2024. There were no other changes to our estimates during the first three months of fiscal year 2025 that had a significant impact on our financial condition, change in financial condition, liquidity, or results of operations.
Rearranged previous paragraphs (13)
Previous report — wording carried elsewhere
The per share impacts presented in the tables below were calculated independently and may not sum to the total change in diluted EPS due to rounding.
Previous report — wording carried elsewhere
The table below summarizes the diluted per share impact of our non-GAAP adjustments for the first nine months of fiscal years 2024 and 2023:
Previous report — wording carried elsewhere
The table below summarizes the major factors that impacted consolidated sales for the periods presented:
Previous report — wording carried elsewhere
Cost of Sales and Gross Margin
Previous report — wording carried elsewhere
Interest incurred increased 86%, or $169.6, primarily due to a higher debt balance from senior notes issued in March 2023 and February 2024 to fund projects under our Green Finance Framework as well as borrowings on financing available for the NEOM Green Hydrogen Project. Capitalized interest increased $130.0 due to a higher carrying value of projects under construction, including the NEOM Green Hydrogen Project.
Previous report — wording carried elsewhere
Other Non-Operating Income (Expense), net
Previous report — wording carried elsewhere
Net Income and Net Income Margin
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Discussion of First Nine Months Results by Business Segment
Previous report — wording carried elsewhere
The table below summarizes the major factors that impacted sales in the Americas segment for the periods presented:
Previous report — wording carried elsewhere
The table below summarizes the major factors that impacted sales in the Asia segment for the periods presented:
Previous report — wording carried elsewhere
The table below summarizes the major factors that impacted sales in the Europe segment for the periods presented:
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ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
Previous report — wording carried elsewhere
On 18 July 2024, the Board of Directors declared a quarterly dividend of $1.77 per share that is payable on 12 November 2024 to shareholders of record at the close of business on 1 October 2024.