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Air Products' (APD) Earnings and Sales Top Estimates in Q1

Zacks Equity Research

Air Products and Chemicals, Inc. APD logged earnings from continuing operations of $2.14 per share in first-quarter fiscal 2020 (ended Dec 31, 2019), up 36% from $1.57 recorded in the year-ago quarter. Earnings topped the Zacks Consensus Estimate of $2.08.

The bottom line in the reported quarter was driven by higher volumes and pricing across all regions.

The industrial gases giant delivered fiscal first-quarter revenues of $2,254.7 million, up 1% year over year. It also beat the Zacks Consensus Estimate of $2,240.7 million.

Volumes rose 6% while pricing increased 3%. These were offset by 1% unfavorable currency, 2% from a contract modification in India and 5% lower energy pass-through.

Volume gains were supported by base business growth, new plants, acquisitions and a short-term contract in Asia.

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 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 fell 5% year over year to $936 million. Higher pricing and volumes were more than offset by lower energy pass-through and unfavorable currency.

Sales in the Industrial Gases — Europe, Middle East, and Africa (EMEA) segment dropped 5% year over year to $499 million. Higher pricing and 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 11% year over year to $693 million. The upside was driven by higher volumes (supported by new plants) and pricing. These were partly offset by unfavorable currency.

Financials

Air Products ended the quarter with cash and cash equivalents of $2,406.1 million, down around 18% year over year. Long-term debt was down roughly 1% year over year to $2,937 million.

Net cash from operating activities were $667 million for the quarter, up around 2% year over year.

Air Products’ board also increased its quarterly dividend by more than 15% to $1.34 per share from $1.16 per share, marking the largest dividend hike in the company’s history. This also marks the 38th straight year of dividend increase.

Outlook

Air Products continues to expect adjusted earnings for fiscal 2020 in the range $9.35-$9.60 per share, which calls for a 14-17% rise year over year.

The company expects adjusted earnings to be in the band of $2.10 to $2.20 per share for second-quarter fiscal 2020, up 9%-15% year over year.

Air Products also expects capital expenditure for fiscal 2020 in the range of $4-$4.5 billion.

Price Performance

Air Products’ shares have rallied 51.6% in the past year against the industry’s 23.7% decline.



 

 

Zacks Rank & Stocks to Consider

Air Products currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space include Daqo New Energy Corp. DQ, Royal Gold, Inc. RGLD and Bunge Ltd. BG, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied roughly 58% in a year’s time.

Royal Gold has estimated earnings growth rate of 83.5% for fiscal 2020. The company’s shares have shot up roughly 39% in a year’s time.

Bunge has projected earnings growth rate of 30.7% for 2020. The company’s shares are up around 5% over a year.

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