Air Products and Chemicals, Inc. (NYSE:APD) Q4 2024 Earnings Conference Call November 7, 2024 8:30 AM ET Company Participants Eric Guter - IR Seifi Ghasemi - Chairman, President and CEO Melissa Schaeffer - CFO Sean Major - EVP, General Counsel and Secretary Conference Call Participants John McNulty - BMO Capital Markets Jeff Zekauskas - JPMorgan Patrick Cunningham - Citi Steve Byrne - Bank of America David Begleiter - Deutsche Bank John Roberts - Mizuho Chris Parkinson - Wolfe Research Mike Sison - Wells Fa ...

For the quarter ended September 2024, Air Products and Chemicals (APD) reported revenue of $3.19 billion, down 0.1% over the same period last year. EPS came in at $3.56, compared to $3.15 in the year-ago quarter.The reported revenue represents a surprise of -0.16% over the Zacks Consensus Estimate of $3.19 billion. With the consensus EPS estimate being $3.44, the EPS surprise was +3.49%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations ...

Air Products and Chemicals, Inc. (APD) logged fourth-quarter fiscal 2024 (ended Sept. 30, 2024) earnings from continuing operations of $8.81 per share, up from $3.08 recorded in the year-ago quarter. Barring one-time items, earnings per share were $3.56, up 13% year over year. It beat the Zacks Consensus Estimate of $3.44. The bottom line was driven by higher volumes and favorable pricing.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The industrial gases giant generated revenues of ...

Creating Shareholder Value Fourth Quarter 2024 Earnings Results Teleconference November 7, 2024 GENERATING A CLEANER FUTURE Forward-Looking Statements This presentation contains "forward-looking statements" within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about earnings guidance, business outlook and investment opportunities. These forward-looking statements are based on management's expectations and assumptions as of the date of this presentati ...

Core Viewpoint - Air Products and Chemicals (APD) reported quarterly earnings of $3.56 per share, exceeding the Zacks Consensus Estimate of $3.44 per share, and showing an increase from $3.15 per share a year ago [1][2]. Financial Performance - The earnings surprise for the quarter was 3.49%, with the company previously expected to post earnings of $3.04 per share but actually reporting $3.20, resulting in a surprise of 5.26% [2]. - The company posted revenues of $3.19 billion for the quarter ended September 2024, which was a slight miss against the Zacks Consensus Estimate by 0.16%, and remained unchanged compared to the previous year's revenues of $3.19 billion [3]. Stock Performance and Outlook - Air Products and Chemicals shares have increased approximately 12% since the beginning of the year, while the S&P 500 has gained 24.3% [4]. - The current consensus EPS estimate for the upcoming quarter is $3.26 on revenues of $3.15 billion, and for the current fiscal year, it is $13.44 on revenues of $12.76 billion [8]. Industry Context - The Chemical - Diversified industry, to which Air Products and Chemicals belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, indicating potential challenges ahead [9].

[Air Products Fiscal 2024 Fourth Quarter Results](index=1&type=section&id=Air%20Products%20Fiscal%202024%20Fourth%20Quarter%20Results) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported significant GAAP growth driven by the LNG business divestiture, with adjusted EPS and EBITDA also showing strong increases Fiscal Year 2024 vs. Prior Year | Metric | FY 2024 | Change vs. FY 2023 | | :--- | :--- | :--- | | GAAP EPS | $17.24 | +67% | | GAAP Net Income | $3.9 billion | +65% | | GAAP Net Income Margin | 31.9% | +1,330 bps | | Adjusted EPS* | $12.43 | +8% | | Adjusted EBITDA* | $5.0 billion | +7% | | Adjusted EBITDA Margin* | 41.7% | +440 bps | Q4 Fiscal 2024 vs. Prior Year | Metric | Q4 2024 | Change vs. Q4 2023 | | :--- | :--- | :--- | | GAAP EPS | $8.81 | +186% | | GAAP Net Income | $2.0 billion | +181% | | GAAP Net Income Margin | 61.2% | +3,940 bps | | Adjusted EPS* | $3.56 | +13% | | Adjusted EBITDA* | $1.4 billion | +12% | | Adjusted EBITDA Margin* | 44.1% | +460 bps | - The significant increase in GAAP results for both the fourth quarter and the full fiscal year was primarily due to a **$1.2 billion after-tax gain** recognized from the sale of the company's LNG business[8](index=8&type=chunk)[11](index=11&type=chunk) [Business & Strategic Highlights](index=1&type=section&id=Business%20%26%20Strategic%20Highlights) The company divested its LNG business to focus on industrial gas and clean hydrogen, making key investments and increasing dividends - Completed the divestiture of the non-core liquefied natural gas (LNG) business to Honeywell for **$1.81 billion** in an all-cash transaction, reinforcing focus on the core industrial gas business[2](index=2&type=chunk)[15](index=15&type=chunk) - Signed a 15-year agreement to supply **70,000 tons of green hydrogen annually** to TotalEnergies' Northern European refineries starting in 2030[3](index=3&type=chunk)[15](index=15&type=chunk) - Announced plans to build new air separation units in Georgia and North Carolina and a **$70 million investment** to expand membrane manufacturing in Missouri to meet growing demand[2](index=2&type=chunk) - Increased dividend to **$1.77 per share**, resulting in approximately $1.6 billion in dividend payments to shareholders in 2024[2](index=2&type=chunk)[15](index=15&type=chunk) - Received an **'A' rating from MSCI** for environmental, social, and governance (ESG) and was listed on Barron's 100 Most Sustainable Companies[4](index=4&type=chunk) [Fiscal 2025 Outlook](index=2&type=section&id=Fiscal%202025%20Outlook) The company projects 2% to 5% growth in adjusted EPS for fiscal 2025, with capital expenditures of $4.5 to $5.0 billion Fiscal 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Full-Year Adjusted EPS | $12.70 - $13.00 | | Q1 Adjusted EPS | $2.75 - $2.85 | | Full-Year Capital Expenditures | $4.5 billion - $5.0 billion | - The guidance for fiscal 2025 does not include contributions from the LNG business, which was divested on September 30, 2024[5](index=5&type=chunk)[17](index=17&type=chunk)[57](index=57&type=chunk) [Q4 2024 Segment Performance](index=3&type=section&id=Q4%202024%20Segment%20Performance) Segment performance was strong across regions, with higher pricing and volumes driving adjusted EBITDA growth in the Americas, Asia, and Europe Q4 2024 Segment Results vs. Prior Year | Segment | Sales Change | Adjusted EBITDA Change | Key Drivers | | :--- | :--- | :--- | :--- | | **Americas** | -3% | +11% | Higher pricing, favorable mix, lower energy cost pass-through | | **Asia** | +7% | +21% | Higher volumes, lower costs | | **Europe** | +3% | +17% | Higher pricing, favorable currency | | **Middle East & India** | N/A | Flat Equity Income | N/A | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Income Statements](index=5&type=section&id=Consolidated%20Income%20Statements) Fiscal 2024 net income and EPS surged due to a $1.58 billion gain on a business sale, despite a 4% decrease in sales Fiscal Year Ended September 30 (in millions) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Sales | $12,100.6 | $12,600.0 | | Gain on sale of business | $1,575.6 | $— | | Operating Income | $4,466.1 | $2,494.6 | | Net Income Attributable to Air Products | $3,828.2 | $2,300.2 | | Diluted EPS from continuing operations | $17.24 | $10.30 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets, liabilities, and equity all increased significantly, driven by plant and equipment growth and higher long-term debt Balance Sheet as of September 30 (in millions) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Total Current Assets | $6,363.0 | $5,200.5 | | Plant and equipment, net | $23,370.9 | $17,472.1 | | **Total Assets** | **$39,574.6** | **$32,002.5** | | Total Current Liabilities | $4,179.6 | $3,895.8 | | Long-term debt | $13,428.6 | $9,280.6 | | **Total Liabilities** | **$20,900.9** | **$16,342.2** | | **Total Equity** | **$18,673.7** | **$15,660.3** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased, and proceeds from the LNG sale offset high capital investment, resulting in a higher year-end cash balance Cash Flow for Twelve Months Ended September 30 (in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $3,646.7 | $3,205.7 | | Cash Used for Investing Activities | ($4,919.2) | ($5,916.4) | | Cash Provided by Financing Activities | $2,615.4 | $1,609.6 | | **Increase (Decrease) in cash** | **$1,362.7** | **($1,094.0)** | | **Cash and cash items – End of Period** | **$2,979.7** | **$1,617.0** | [Reconciliation of Non-GAAP Financial Measures](index=10&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) [Key Non-GAAP Adjustments](index=10&type=section&id=Key%20Non-GAAP%20Adjustments) Non-GAAP results primarily exclude a $1.58 billion gain from the LNG business sale and charges for business and asset actions [LNG Business Divestiture](index=9&type=section&id=LNG%20Business%20Divestiture) The sale of the LNG business to Honeywell for ~$1.8 billion resulted in a significant pre-tax gain excluded from non-GAAP results - Completed the sale of the LNG business for **~$1.8 billion**, recording a pre-tax gain of **$1,575.6 million** ($5.38 per share after-tax)[31](index=31&type=chunk)[34](index=34&type=chunk) [Business and Asset Actions](index=10&type=section&id=Business%20and%20Asset%20Actions) The company recorded a $57.0 million charge in fiscal 2024 related to a global cost reduction plan - Recorded charges of **$57.0 million** ($0.20 per share after-tax) in FY2024 for strategic business and asset actions, primarily for a global cost reduction plan[35](index=35&type=chunk) [Adjusted Diluted EPS Reconciliation](index=11&type=section&id=Adjusted%20Diluted%20EPS%20Reconciliation) GAAP EPS was adjusted to non-GAAP EPS by excluding the LNG sale gain, resulting in an 8% full-year and 13% Q4 increase FY 2024 GAAP to Non-GAAP EPS Reconciliation | Description | Per Share Impact | | :--- | :--- | | **2024 GAAP Diluted EPS** | **$17.24** | | Gain on sale of business | ($5.38) | | Business and asset actions | $0.20 | | Loss on de-designation of cash flow hedges | $0.02 | | Non-service pension cost, net | $0.34 | | **2024 Non-GAAP ("Adjusted") Diluted EPS** | **$12.43** | Q4 2024 GAAP to Non-GAAP EPS Reconciliation | Description | Per Share Impact | | :--- | :--- | | **Q4 2024 GAAP Diluted EPS** | **$8.81** | | Gain on sale of business | ($5.38) | | Loss on de-designation of cash flow hedges | $0.03 | | Non-service pension cost, net | $0.09 | | **Q4 2024 Non-GAAP ("Adjusted") Diluted EPS** | **$3.56** | [Adjusted EBITDA and Adjusted EBITDA Margin Reconciliation](index=13&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin%20Reconciliation) Adjusted EBITDA and margins grew significantly in FY2024 and Q4, reflecting strong underlying operational performance Adjusted EBITDA Performance vs. Prior Year | Period | Adjusted EBITDA | % Change (YoY) | Adjusted EBITDA Margin | Margin Change (YoY) | | :--- | :--- | :--- | :--- | :--- | | **Full Year 2024** | $5,046.3 M | 7% | 41.7% | +440 bps | | **Q4 2024** | $1,406.7 M | 12% | 44.1% | +460 bps | [Capital Expenditures Reconciliation](index=15&type=section&id=Capital%20Expenditures%20Reconciliation) Non-GAAP capital expenditures for FY2024 totaled $5.15 billion, adjusted for specific non-equity funded project costs - Reported non-GAAP capital expenditures of **$5.15 billion** for fiscal year 2024, compared to $5.22 billion in fiscal year 2023[52](index=52&type=chunk)[53](index=53&type=chunk) - The capital expenditure calculation adjusts for NGHC expenditures not funded by Air Products' equity, which amounted to **$2.05 billion** in FY2024[52](index=52&type=chunk)[53](index=53&type=chunk)

Long-Term Focussed In-Depth Fundamental Analysis.Former Associate at a $10 billion hedge fund, with 15 years of professional experience in equity markets. Holds a First-Class Honours degree in Financial Economics from the University of London and is a CFA Level III candidate.An avid reader and a Berkshire Hathaway buff.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrot ...

HANOVER, GERMANY - APRIL 17: The logo of Green Hydrogen is seen at the 2023 Hannover Messe ... [+] industrial trade fair on April 17, 2023 in Hanover, Germany. Over 4,000 companies, primarily from the energy and engineering sectors, are exhibiting at the fair, with an emphasis on digitalization, connectivity and climate neutrality. (Photo by Alexander Koerner/Getty Images) Getty Images A growing controversy over the ESG-driven capital allocation strategies of industrial gas provider Air Products illustrates ...

Company Overview - Air Products and Chemicals is an industrial gases company focused on energy, environmental, and emerging markets, providing essential industrial gases and related equipment across various industries [1] - The company operates in approximately 50 countries and is involved in clean hydrogen projects to support the transition to low- and zero-carbon energy [1] Business Model and Stability - Air Products' industrial gas business is characterized as extremely stable and low risk, functioning similarly to a risk-free, inflation-protected bond [3] - The company enters into long-term "take or pay" contracts with customers, achieving renewal rates exceeding 95%, which provides a stable revenue stream [3] - The business model is immune to economic cycles, with contracts that are inflation-protected and significant barriers to entry in the oligopolistic industry [3] Recent Strategic Shifts - The company has shifted focus from its core industrial gas business to more speculative investments in clean hydrogen projects, missing out on industry consolidation [4] - Air Products plans to invest nearly $12 billion in five clean hydrogen projects, with over 80% of project capacity currently uncontracted [4][6] - This shift has led to a significant increase in capital expenditures as a percentage of sales, which has more than doubled over the past five years [6] Financial Performance - Air Products' free cash flow conversion has turned negative, contrasting with peers that average 92% since 2016 [6] - The company's return on capital employed is declining compared to peers, and it has underperformed relative to benchmarks over the past decade, trading at a 20% discount [6] Activist Engagement - D.E. Shaw has taken a $1 billion stake in Air Products and has publicly engaged with the company to propose a seven-point plan aimed at improving value [7][8] - The plan includes urging the company to secure offtake agreements for large projects, limit annual capex, and repurchase discounted shares [8] - D.E. Shaw also emphasizes the need for a clear CEO succession plan and improved corporate governance, particularly in light of CEO Seifi Ghasemi's long tenure and compensation [9] Competitive Landscape - Peers like Linde and Air Liquide have successfully executed hydrogen projects with secured offtake agreements, contrasting with Air Products' current strategy [5] - The presence of multiple activist investors, including Mantle Ridge, indicates a growing concern among shareholders regarding capital allocation and governance issues [11][12]

Have you been searching for a stock that might be well-positioned to maintain its earnings-beat streak in its upcoming report? It is worth considering Air Products and Chemicals (APD) , which belongs to the Zacks Chemical - Diversified industry.This seller of gases for industrial, medical and other uses has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. The average surprise for the last two quarters was 5.02%.For the most recent quarter, Air Products a ...