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Air Products (APD) Beats Q3 Earnings, Lags Revenue Estimates

Zacks Equity Research

Air Products and Chemicals, Inc. APD recorded profit from continuing operations of $488 million or $2.20 per share in third-quarter fiscal 2019 (ended Jun 30, 2019). Also, the figure rose around 13% from $430.7 million or $1.95 in the year-ago quarter.

Barring one-time items, adjusted earnings per share (EPS) in the reported quarter were $2.17, up 11% from the year-ago quarter’s earnings of $1.95. The figure surpassed the Zacks Consensus Estimate of $2.14.

The industrial gases giant delivered fiscal third-quarter revenues of $2,224 million, down 1.5% year over year. Volumes and pricing rose 2% and 4%, respectively, which were roughly offset by 4% unfavorable currency, 3% from a contract modification in India and 1% lower energy cost pass-through. Revenues missed the Zacks Consensus Estimate of $2,292.5 million.

Air Products and Chemicals, Inc. Price, Consensus and EPS Surprise

 

Air Products and Chemicals, Inc. Price, Consensus and EPS Surprise

Air Products and Chemicals, Inc. price-consensus-eps-surprise-chart | Air Products and Chemicals, Inc. Quote

 

Segment Highlights

Revenues in the Industrial Gases — America segment inched up 1% year over year to $955 million. Higher pricing was partly offset by lower energy pass-through and unfavorable currency.

Sales in the Industrial Gases — Europe, Middle East, and Africa (EMEA) segment fell 12% year over year to $495 million. Strong pricing and higher volumes were offset by unfavorable currency, decline from the India contract modification and lower energy pass-through.

Sales in the Industrial Gases — Asia segment rose 9% year over year to $679 million. Sales were mainly driven by higher volumes (supported by new projects, including the Lu'An gasification project) and pricing. These gains were partly offset by unfavorable currency.

Financial Position

Air Products ended the quarter with cash and cash equivalents of $2,696.8 million, down 9.7% year over year. Long-term debt was down roughly 12.6% year over year to $2,951.7 million.

Net cash from operating activities were $2,003.4 million for the first nine months of 2019, up 7.9% year over year.

Outlook

Air Products has revised its adjusted EPS guidance for fiscal 2019 to the range of $8.20-$8.25 from the previous expectation of $8.15-$8.30. This suggests more than 10% rise year over year at the midpoint.

The company expects adjusted EPS for fourth-quarter fiscal 2019 in the band of $2.26-$2.31, which indicates 13-16% rise year over year.

Also, Air Products continues to expect capital expenditure for fiscal 2019 in the range of $2.4-$2.5 billion for fiscal 2019.

Price Performance

Air Products’ shares have rallied 39.2% in the past year against the industry’s 35.4% decline.



Zacks Rank & Other Key Picks

Air Products currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are SSR Mining Inc SSRM, Kinross Gold Corporation KGC and Arconic Inc ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SSR Mining has an expected earnings growth rate of 69.6% for 2019. The company’s shares have rallied 50.8% in the past year.

Kinross has projected earnings growth rate of 80% for the current year. The company’s shares have gained 15.7% in a year’s time.

Arconic has an estimated earnings growth rate of 38.2% for the current year. Its shares have moved up 33.2% in the past year.

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