Air Products and Chemicals(APD) - 2024 Q4 - Annual Results

Air Products Fiscal 2024 Fourth Quarter Results Financial Highlights 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][11] Business & Strategic Highlights 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][15] - Signed a 15-year agreement to supply 70,000 tons of green hydrogen annually to TotalEnergies' Northern European refineries starting in 2030[3][15] - 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] - Increased dividend to $1.77 per share, resulting in approximately $1.6 billion in dividend payments to shareholders in 2024[2][15] - Received an 'A' rating from MSCI for environmental, social, and governance (ESG) and was listed on Barron's 100 Most Sustainable Companies[4] Fiscal 2025 Outlook 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][17][57] Q4 2024 Segment Performance 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 Consolidated Income Statements 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 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 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 Key Non-GAAP Adjustments 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 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][34] Business and Asset Actions 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] Adjusted Diluted EPS Reconciliation 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 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 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][53] - The capital expenditure calculation adjusts for NGHC expenditures not funded by Air Products' equity, which amounted to $2.05 billion in FY2024[52][53]