Air Products (APD) Q1 Earnings Miss as Americas Unit Sales Slump
Air Products and Chemicals, Inc. APD logged first-quarter fiscal 2024 (ended Dec 31, 2023) earnings from continuing operations of $2.73 per share, up from $2.57 recorded in the year-ago quarter. The bottom line was driven by higher pricing and volumes as well as increased equity affiliates' income that more than offset higher costs.
Barring one-time items, adjusted earnings per share (EPS) were $2.82. It missed the Zacks Consensus Estimate of $2.99.
The industrial gases giant recorded revenues of $2,997.4 million, down around 6% year over year. The figure missed the Zacks Consensus Estimate of $3,306.4 million. Higher prices (up 1%), higher volumes (up 3%) and favorable currency swings of 1% were more than offset by 11% lower energy cost pass-through.
The company faced headwinds from a slowdown in manufacturing in China, lower helium demand, higher costs from a sale of equipment project and the currency devaluation in Argentina.
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 Americas segment were down 10% year over year to $1,252.1 million. The figure was below our estimate of $1,493.6 million. Sales declined as higher volumes and pricing were more than offset by lower energy cost pass-through.
Revenues in the Europe segment declined 8% year over year to $731.2 million. It was lower than our estimate of $795.9 million. Higher volumes and favorable currency were more than offset by lower energy cost pass-through and lower pricing.
Revenues in the Asia segment rose 2% year over year to $793.8 million. It was lower than our estimate of $799.2 million. Increased pricing and higher energy cost pass through were more than offset by unfavorable currency swings. Volumes were flat in the quarter as increased on-site volumes were masked by weak economic growth in China and reduced activity in helium.
Financials
Air Products ended the quarter with cash and cash items of $1,962.6 million, up about 21% sequentially. Long-term debt was up around 26% sequentially to $11,715.4 million.
Outlook
Air Products now expects fiscal 2024 adjusted EPS of $12.20-$12.50 (down from $12.80-$13.10 expected earlier), indicating 6-9% growth from the prior year’s adjusted EPS. For the second quarter of fiscal 2024, the company expects adjusted earnings per share in the range of $2.60-$2.75.
Air Products expects capital expenditures in the range of $5 billion to $5.5 billion for fiscal 2024.
Price Performance
The company’s shares have lost 8.8% in the past year compared with an 18.4% decline of the industry.
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Zacks Rank & Key Picks
APD currently has a Zacks Rank #2 (Buy).
Other top-ranked stocks worth a look in the basic materials space include, Cameco Corporation CCJ, Carpenter Technology Corporation CRS and Alpha Metallurgical Resources Inc. AMR.
Cameco has a projected earnings growth rate of 188% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised upward by 12.5% over the past 60 days. The stock has shot up around 80% in a year. CCJ currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $3.97, indicating a year-over-year surge of 248.3%. CRS, carrying a Zacks Rank #1, beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained 23% in the past year.
The Zacks Consensus Estimate for Alpha Metallurgical Resources’ current-year earnings has been revised upward by 8.8% in the past 60 days. It currently carries a Zacks Rank #1. AMR delivered a trailing four-quarter earnings surprise of roughly 9.6%, on average. AMR shares are up around 152% in a year.
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