Air Products (APD) Q2 Earnings Miss, Sales Beat Estimates
Air Products and Chemicals, Inc. APD logged earnings from continuing operations of $2.21 per share in second-quarter fiscal 2020 (ended Mar 31, 2020), up 16% from $1.90 recorded in the year-ago quarter. The bottom line in the reported quarter was driven by higher volumes and pricing across all regions.
Barring one-time items, earnings were $2.04 per share for the quarter, missing the Zacks Consensus Estimate of $2.05.
The industrial gases giant delivered fiscal second-quarter revenues of $2,216.3 million, up 1.3% year over year. It also beat the Zacks Consensus Estimate of $2,142.6 million.
Volumes rose 6%, while pricing increased 2%. These were offset by 2% unfavorable currency, 1% unfavorable impact from the coronavirus pandemic 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-eps-surprise-chart | Air Products and Chemicals, Inc. Quote
Segment Highlights
Revenues in the Industrial Gases — America segment fell 6% year over year to $932 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 totaled $493 million, in line with the year-ago quarter figure. Higher pricing and volumes were offset by unfavorable currency and lower energy pass-through.
Sales in the Industrial Gases — Asia segment rose 5% year over year to $658 million. The upside was driven by higher volumes (supported by new plants) and pricing. These were partly offset by unfavorable currency and impact from coronavirus.
Financials
Air Products ended the quarter with cash and cash equivalents of $2,220.1 million, down 18.9% year over year. Long-term debt was down 0.4% year over year to $2,922.1 million.
Net cash from operating activities was $1,238.5 million, down 3.7% year over year.
Outlook
Air Products has withdrawn its earnings guidance for 2020 due to the unknown duration and impacts of the coronavirus pandemic. The company also has not provided earnings guidance for the fiscal third quarter due to uncertainties.
Air Products expects declines in the Americas and EMEA merchant volumes to sustain. Further, in the fiscal third quarter, it expects it to be more pronounced and potentially longer, depending on the duration and impacts of the coronavirus pandemic.
Price Performance
The company’s shares have gained 9% in the past year against the industry’s 41.4% decline.
Zacks Rank & Stocks to Consider
Air Products currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, Franco-Nevada Corporation FNV and Barrick Gold Corporation GOLD.
Kinross has a projected earnings growth rate of 44.1% for 2020. The company’s shares have surged 106.8% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Franco-Nevada has a projected earnings growth rate of 18.1% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 87.9% in a year.
Barrick Gold currently has a Zacks Rank #2 and a projected earnings growth rate of 52.9% for 2020. The company’s shares have gained 106.4% in a year.
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