Air Products & Chemicals Inc. (NYSE:APD)

The analysis of the financial data reveals notable fluctuations in the value of intangible assets and goodwill over the six-year period ending September 30, 2020. There is an overall decline in both goodwill and intangible assets around the fiscal year 2017, followed by a recovery in subsequent years.

Goodwill

Goodwill showed a slight increase from 1,131,300 thousand USD in 2015 to 1,150,200 thousand USD in 2016, then experienced a sharp decline to 721,500 thousand USD in 2017. From that point, goodwill steadily increased each year, reaching 891,500 thousand USD in 2020, indicating possible asset write-offs or impairments in 2017, with gradual asset additions thereafter.

Customer Relationships

Customer relationships followed a similar pattern with a decline from 517,400 thousand USD in 2016 to 424,100 thousand USD in 2017. The value rebounded consistently through 2020, ending at 538,000 thousand USD, which suggests sustained investments or revaluations in this segment after 2017.

Patents and Technology

Patents and technology asset values remained relatively stable but at significantly lower levels after 2016, dropping from around 76,600 thousand USD down to approximately 13,400 thousand USD in 2017. A moderate increase occurred afterward, with values rising to roughly 39,100 thousand USD by 2020, indicating possible acquisition or development activities.

Other Intangible Assets

The 'Other' intangible assets category exhibited minor fluctuations, decreasing slightly from 81,700 thousand USD in 2016 to 73,400 thousand USD in 2017, then showing small incremental growth reaching 77,600 thousand USD in 2020. This stability suggests a relatively consistent asset base in other intangible components.

Finite-lived Intangible Assets, Gross

The gross finite-lived intangible assets showed a notable decrease in 2017, falling from 675,700 thousand USD in 2016 to 510,900 thousand USD. A recovery phase is observed in the following years, with the total increasing to 654,700 thousand USD in 2020, aligning with the trend observed in customer relationships and patents.

Accumulated Amortization/Impairment

The accumulated amortization and impairment losses increased in magnitude throughout the period, moving from -217,900 thousand USD in 2015 to -259,900 thousand USD in 2020. The larger negative values indicate growing amortization or impairment charges against finite-lived intangible assets, consistent with the declining asset gross values in earlier years.

Finite-lived Intangible Assets, Net

Net finite-lived intangible assets decreased sharply in 2017 from 425,300 thousand USD in 2016 to 321,400 thousand USD, reflecting the combined effects of declining gross assets and increased amortization. Subsequently, net values increased gradually over the next three years, reaching 394,800 thousand USD in 2020, demonstrating gradual asset replenishment or reduced amortization rates.

Trade Names and Trademarks

This category, representing indefinite-lived intangible assets, showed a slight decrease from 62,700 thousand USD in 2016 to 41,000 thousand USD in 2020, indicating some diminished valuations or disposals in this asset class over time.

Intangible Assets (Total)

The total intangible assets value decreased substantially in 2017 to 368,300 thousand USD from 488,000 thousand USD in 2016, followed by a recovery trend that brought the figure to 435,800 thousand USD by 2020. This fluctuation mirrors the changes observed in the individual intangible asset components.

Goodwill and Intangible Assets (Combined)

The combined goodwill and intangible assets showed a marked drop in 2017 to 1,089,800 thousand USD from approximately 1,638,200 thousand USD in 2016. A steady recovery ensued in the subsequent years, culminating in a total of 1,327,300 thousand USD in 2020. This overall pattern reflects impairments or disposals around 2017 with asset rebuilding or acquisitions during the later years.

In summary, the data reveals a significant impairment or disposal event impacting goodwill and intangible assets around the 2017 period, characterized by sharp decreases in asset values. Afterward, a steady recovery indicates new acquisitions, asset revaluations, or organic growth in intangible assets. Accumulated amortization increased consistently, reflecting the aging and utilization of finite-lived intangible assets. Indefinite-lived assets such as trade names and trademarks exhibited a gradual decline over time. These trends suggest a strategic reassessment of intangible asset portfolios during the mid-period, followed by reinvestment and stabilization.

The analysis of the financial data over the six-year period reveals several notable trends in the key financial metrics.

Total Assets

Reported total assets show a generally upward trend from US$17,438,100 thousand in 2015 to US$25,168,500 thousand in 2020, with a slight decline in 2019 compared to 2018. Adjusted total assets, which exclude goodwill, follow a similar pattern, increasing steadily from US$16,306,800 thousand in 2015 to US$24,277,000 thousand in 2020, again with a mild dip in 2019. The difference between reported and adjusted assets grows over time, indicating an increasing amount of goodwill or intangible assets on the balance sheet.

Shareholders’ Equity

Reported total Air Products shareholders’ equity fluctuates over the period but generally increases from US$7,249,000 thousand in 2015 to US$12,079,800 thousand in 2020. Notably, equity was relatively stable and slightly declined in the early years before rising markedly in 2017 and continuing to grow through 2020. Adjusted shareholders’ equity, excluding goodwill, shows a similar trend with a lower base, increasing from US$6,117,700 thousand in 2015 to US$11,188,300 thousand in 2020. The gap between reported and adjusted equity also widens, consistent with the pattern observed in total assets.

Net Income Attributable to Air Products

Reported net income attributable to the company exhibits considerable volatility. After starting at US$1,277,900 thousand in 2015, net income declines sharply to US$631,100 thousand in 2016, before recovering strongly to US$3,000,400 thousand in 2017. It then declines to approximately US$1,497,800 thousand in 2018 and shows a moderate increasing trend up to US$1,886,700 thousand in 2020. Adjusted net income values largely mirror reported net income, with a notable difference in 2017 where adjusted net income is higher by approximately US$145,700 thousand, which may reflect adjustments related to goodwill impairments or other non-recurring items.

Overall, the financial data indicates growth in the asset base and shareholders’ equity over the period, with increasing intangible asset or goodwill components. Net income shows significant year-to-year variability, with a peak in 2017 followed by a decline and partial recovery. The adjustments for goodwill provide a clearer picture of underlying tangible asset growth and operational profitability.

The analysis of the financial metrics from 2015 to 2020 reveals several noteworthy trends in profitability, efficiency, and leverage.

Net Profit Margin

The reported net profit margin exhibits significant volatility, with a low of 6.63% in 2016 and a peak of 36.65% in 2017, followed by a decline to 16.77% in 2018. It then gradually rises to 21.3% by 2020. The adjusted net profit margin closely follows the reported figures, with a notable adjustment in 2017 where it reaches 38.42%, indicating the exclusion of goodwill effects enhances the profitability measure for that year.

Total Asset Turnover

There is a consistent decline in total asset turnover over the years, from 0.57 in 2015 to 0.35 in 2020 for reported values. The adjusted total asset turnover shows slightly higher values but follows the same downward trend, decreasing from 0.61 in 2015 to 0.36 in 2020. This suggests a decreasing efficiency in using assets to generate sales over the period.

Financial Leverage

Financial leverage displays a decreasing trend from 2015 to 2019, moving from 2.41 to 1.71 reported and from 2.67 to 1.77 adjusted, indicating reduced reliance on debt or other liabilities relative to equity. However, in 2020, there is a reversal, with leverage rising again to 2.08 reported and 2.17 adjusted, signaling an increase in leverage during the last year observed.

Return on Equity (ROE)

Both reported and adjusted ROE show considerable fluctuation, largely mirroring trends in net profit margin and leverage. Reported ROE peaks in 2017 at 29.75%, with adjusted ROE higher at 33.59% the same year, before declining to around 15-17% in subsequent years. The adjusted ROE is consistently higher than the reported ROE, implying that removing goodwill positively influences equity returns.

Return on Assets (ROA)

ROA follows a pattern similar to ROE and net profit margin, with a peak in 2017 (reported 16.25%, adjusted 17.73%) followed by a decline in the following years, reaching lows around 7.5% (reported) and 7.77% (adjusted) by 2020. The adjusted ROA values are uniformly higher, indicating that goodwill adjustments have a positive effect on asset profitability measures.

Overall, the data reflect peak profitability and efficiency in 2017, with subsequent years showing a reduction in asset utilization efficiency and profitability metrics. The adjustments for goodwill consistently enhance profitability ratios. The increase in financial leverage in 2020 warrants attention as it may affect risk profiles going forward.

The financial data over the six-year period exhibits notable variability in both reported and adjusted net income, along with corresponding net profit margins. The trends reveal fluctuations that may suggest underlying operational or market shifts affecting profitability.

Net Income Attributable to Air Products

The reported net income shows significant oscillations. It begins at approximately 1.28 billion USD in 2015, then declines sharply to around 631 million USD in 2016. In 2017, there is a pronounced increase reaching over 3 billion USD, the highest in the period. Subsequently, net income decreases markedly in 2018 to about 1.5 billion USD, followed by a steady rise in 2019 and 2020, reaching close to 1.89 billion USD by the end of the period.

The adjusted net income pattern closely mirrors the reported figures, with the exception of 2017 where the adjusted figure is slightly higher than the reported one, at approximately 3.15 billion USD. This suggests that goodwill-related adjustments or other non-operational items had a modest positive impact on profitability for that year.

Net Profit Margin

Reported net profit margin follows a similar trajectory to net income. Starting at 12.91% in 2015, it drops to 6.63% in 2016, indicating reduced profitability relative to revenue. The margin then rises sharply in 2017 to 36.65%, reflecting a particularly profitable year. After this peak, it declines to 16.77% in 2018 and then increases gradually to 21.3% by 2020.

Adjusted net profit margin aligns closely with the reported margin throughout the period, except in 2017 where the adjusted margin is higher at 38.42%, consistent with the adjusted net income figure. This again implies that certain adjustments enhanced reported profitability metrics for that year.

Overall, the data suggests substantial volatility in net income and profitability, with a peak occurring in 2017 before settling into moderate growth. The consistency between reported and adjusted figures, apart from 2017, indicates that goodwill adjustments had limited impact on reported profitability in most years. The rebound in profitability margins after 2016 implies improved operational efficiency or favorable market conditions in the latter years.

The analysis of the data reveals a clear pattern in the company's total assets and asset turnover ratios over the six-year period ending in 2020.

Total Assets

The reported total assets show a general upward trend from 17.44 billion US dollars in 2015 to 25.17 billion US dollars in 2020. Similarly, the goodwill adjusted total assets also increase consistently throughout the period, rising from 16.31 billion to 24.28 billion US dollars. The noticeable jump in 2020 suggests significant asset growth during that year. Despite a slight decline in 2019, the overall asset base expanded substantially.

Total Asset Turnover Ratios

Both the reported and adjusted total asset turnover ratios exhibit a declining trend. The reported turnover decreased from 0.57 in 2015 to 0.35 in 2020. The adjusted turnover shows a parallel pattern, falling from 0.61 to 0.36 over the same timeframe. This decline indicates that, over the years, the company generated less revenue per unit of asset employed, with a pronounced reduction in 2020.

In summary, while the company expanded its asset base significantly, particularly in 2020, this was accompanied by a consistent decrease in the efficiency of asset utilization as measured by turnover ratios. This could imply that the company invested heavily in assets that have yet to generate proportional revenue, or that operational efficiency in utilizing assets declined. The divergence between the growth in assets and the shrinking asset turnover signals a potential area for further investigation regarding asset deployment and revenue generation effectiveness.

The analysis of the annual financial data reveals several noteworthy trends in the company's asset base, shareholders' equity, and financial leverage over the six-year period.

Total Assets

Reported total assets increased steadily from approximately 17.44 billion USD in 2015 to about 25.17 billion USD in 2020. The adjusted total assets show a similar upward trajectory, rising from around 16.31 billion USD in 2015 to roughly 24.28 billion USD in 2020. This consistent asset growth suggests expansion or acquisition activities contributing to the company's asset base.

Shareholders’ Equity

Reported total Air Products shareholders’ equity experienced moderate fluctuations and growth, beginning at approximately 7.25 billion USD in 2015, dipping slightly in 2016, then rising more significantly to about 12.08 billion USD by 2020. Adjusted shareholders’ equity shows a comparable pattern, starting at around 6.12 billion USD in 2015, decreasing slightly in 2016, then increasing steadily to roughly 11.19 billion USD in 2020. The rise in equity, especially in the latter years, indicates increasing net asset value attributable to shareholders after goodwill adjustments.

Financial Leverage

The reported financial leverage ratio declined from 2.41 in 2015 to a low of 1.71 in 2019, indicating a reduction in the use of debt relative to equity during this period, before rising again to 2.08 in 2020. Adjusted financial leverage shows a similar trend, starting higher at 2.67 in 2015, decreasing to 1.77 by 2019, then increasing again to 2.17 in 2020. The initial downward trend suggests deleveraging, possibly improving the company’s risk profile, while the resurgence in 2020 may reflect increased borrowing or changes in equity levels.

Overall, the financial data point to a company expanding its asset base and equity, with an initial phase of deleveraging followed by a moderate increase in leverage in the most recent year. The adjustments for goodwill consistently reduce asset and equity values but preserve the overall trends seen in the reported figures. The increase in total assets and shareholders’ equity indicates growth and strengthening capitalization, while the leverage changes demonstrate dynamic financial strategy adjustments over the analyzed period.

The data reveals notable fluctuations and overall improvements in the company's financial performance and equity position across the six-year period ending September 30, 2020.

Net Income

Reported net income attributable to the company experienced significant variability. It began at approximately $1.28 billion in 2015, dropped substantially to $631.1 million in 2016, surged to $3.0 billion in 2017, and then moderated to steady values around $1.5 billion to $1.9 billion between 2018 and 2020. Adjusted net income closely follows the reported figures, with a minor difference in 2017 where the adjusted figure was slightly higher, indicating some positive adjustments in that year.

Shareholders' Equity

Reported total shareholders' equity exhibited a general upward trend from about $7.25 billion in 2015 to nearly $12.08 billion by 2020. This growth was punctuated by a slight decrease in 2016, but equity then increased consistently through subsequent years. The adjusted equity values reflect a similar trend but sit consistently below the reported figures by roughly 15-17%, suggesting substantial goodwill or intangible asset adjustments impacting reported equity levels.

Return on Equity (ROE)

Reported ROE mirrored the net income trends, starting at 17.63% in 2015, dipping to 8.91% in 2016, peaking sharply at 29.75% in 2017, and then stabilizing in the range of 13.8% to 15.92% through 2019, ending slightly lower at 15.62% in 2020. Adjusted ROE values were consistently higher than their reported counterparts, reflecting the impact of goodwill adjustments. The adjusted ROE ranged from 20.89% in 2015, down to 10.64% in 2016, peaked at 33.59% in 2017, and remained relatively stable around 14.88% to 17.16% after 2017, finishing at 16.86% in 2020.

In summary, the company displayed a period of earnings volatility, particularly between 2015 and 2017, before attaining more stable profitability and returns in subsequent years. Shareholders' equity augmented steadily, reflective of capital growth or retained earnings accumulation, albeit adjusted downward when considering goodwill and intangible asset effects. The adjusted profitability measures suggest enhanced returns relative to equity once intangible assets are excluded, highlighting the importance of these adjustments in evaluating true economic performance.

Analysis of the financial data over the six-year period reveals notable fluctuations and trends in net income, total assets, and return on assets (ROA) for the company.

Net Income

The reported net income attributable to the company exhibited considerable volatility. Starting at approximately 1.28 billion USD in 2015, it sharply declined to around 631 million USD in 2016. A pronounced recovery occurred in 2017 with net income reaching over 3 billion USD, followed by decreases to 1.5 billion USD in 2018 and gradual increases in subsequent years, stabilizing near 1.88 billion USD by 2020. The adjusted net income values mirror this trend closely, indicating that goodwill adjustments had minimal impact on reported profitability figures.

Total Assets

Total assets, both reported and adjusted, showed a general upward trend. Reported total assets increased from approximately 17.4 billion USD in 2015 to nearly 25.2 billion USD by 2020. Adjusted total assets, excluding goodwill impact, followed a similar trajectory though consistently lower than reported figures, starting at about 16.3 billion USD in 2015 and reaching 24.3 billion USD by 2020. The widening gap between reported and adjusted assets over time suggests an increasing contribution from goodwill or intangible assets in the company's asset base.

Return on Assets (ROA)

The reported ROA percentages indicate fluctuating asset efficiency in generating profits. The ROA started at 7.33% in 2015, dropped to just 3.5% in 2016, then peaked sharply at 16.25% in 2017 before gradually declining to 7.5% by 2020. Adjusted ROA values exhibit a similar pattern but slightly higher percentages compared to reported ROA throughout the period, implying that the exclusion of goodwill effects results in a modestly better portrayal of asset profitability. The peak in 2017 aligns with the spike in net income during the same period, reflecting a year of exceptional operational performance or possibly one-time gains.

Overall, the data suggests cyclical variations in profitability and asset utilization with a significant increase in asset base driven partially by goodwill or intangible assets. The company’s adjusted figures provide a clearer picture of operational results by negating goodwill impacts, indicating consistent trends albeit with slightly improved profit margins and asset efficiency metrics when adjusted.