Air Products and Chemicals(APD) - 2025 Q3 - Quarterly Results

Fiscal 2025 Third Quarter Performance Overview Consolidated Financial Results Air Products reported $3.0 billion sales (+1%), GAAP EPS up 4% to $3.24, and Adjusted EPS down 3% to $3.09 in Q3 FY25 Consolidated Financial Performance | Metric | Q3 FY25 | Q3 FY24 | Change | | :--- | :--- | :--- | :--- | | Sales | $3.0B | $2.99B | +1% | | GAAP EPS | $3.24 | $3.13 | +4% | | Adjusted EPS | $3.09 | $3.20 | -3% | | GAAP Operating Income | $791M | $738M | +7% | | Adjusted Operating Income | $741M | $741M | Flat | - Sales growth was primarily driven by 3% higher energy cost pass-through, 1% higher pricing, and 1% favorable currency, partially offset by 4% lower volumes due to the September 2024 LNG sale, lower global helium demand, and project exits[5] - GAAP results included $99 million pre-tax gains from asset sales, partially offset by $25 million shareholder activism-related costs and a $24 million charge for project exit cost updates[3] - CEO Eduardo Menezes highlighted that results exceeded guidance and were higher than the previous year on a comparable basis, excluding the LNG sale impact, with a focus on cost productivity, pricing, operational excellence, and capital discipline[7] Business Segment Performance Americas operating income declined 4% despite a 2% sales increase, while Asia and Europe segments reported sales and operating income growth Q3 FY25 Business Segment Performance Overview | Region | Sales Change (YoY) | Operating Income Change (YoY) | Key Drivers | | :--- | :--- | :--- | :--- | | Americas | +2% | -4% | Higher energy pass-through offset by lower volumes and higher maintenance costs | | Asia | +3% | +8% | Higher on-site volumes and favorable costs from productivity | | Europe | +11% | +10% | Favorable currency, higher volumes, and higher pricing | | Corporate & Other | -39% | +46% (Loss) | Primarily due to the September 2024 LNG sale | Company Outlook and Guidance Air Products revised its full-year FY25 Adjusted EPS guidance to $11.90-$12.10 and forecasts approximately $5 billion in capital expenditures Fiscal 2025 Company Guidance | Guidance Metric | Period | Range/Amount | | :--- | :--- | :--- | | Adjusted EPS | Q4 FY25 | $3.27 - $3.47 | | Adjusted EPS | Full-Year FY25 | $11.90 - $12.10 (Revised) | | Capital Expenditures | Full-Year FY25 | ~$5 billion | Financial Statements Consolidated Income Statements Q3 FY25 sales reached $3.02 billion, with net income attributable to Air Products at $713.8 million and diluted EPS of $3.24 Consolidated Income Statement Highlights | (In Millions USD, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Sales | $3,022.7 | $2,985.5 | | Operating Income | $790.6 | $737.6 | | Net Income Attributable to Air Products | $713.8 | $696.6 | | Diluted EPS from Continuing Operations | $3.24 | $3.13 | Consolidated Balance Sheets As of June 30, 2025, total assets increased to $41.7 billion, total liabilities rose to $23.9 billion, and cash decreased to $2.3 billion Consolidated Balance Sheet Highlights | (In Millions USD) | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Cash and cash items | $2,324.3 | $2,979.7 | | Total Assets | $41,659.1 | $39,574.6 | | Total Liabilities | $23,891.1 | $20,900.9 | | Total Equity | $17,768.0 | $18,673.7 | Consolidated Statements of Cash Flows For the nine months ended June 30, 2025, operating cash flow was $2.0 billion, investing activities used $5.7 billion, and financing activities provided $3.0 billion Consolidated Cash Flow Highlights | (In Millions USD) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash Provided by Operating Activities | $1,995.6 | $2,689.7 | | Cash Used for Investing Activities | ($5,681.0) | ($4,773.8) | | Cash Provided by Financing Activities | $3,034.3 | $2,847.7 | | (Decrease) Increase in cash | ($655.4) | $758.7 | Non-GAAP Financial Measures and Reconciliations Overview of Non-GAAP Measures Non-GAAP measures like adjusted operating income and EPS are used to provide insights into underlying business performance by excluding non-recurring items - Management provides non-GAAP financial measures to allow for a more complete understanding of factors and trends affecting historical and future performance, consistent with their own evaluation methods[28] - Non-GAAP measures are typically determined by adjusting the comparable GAAP measure to exclude gains or losses not believed to be representative of underlying business performance, such as non-service pension costs[29] Detailed Non-GAAP Adjustments Q3 FY25 non-GAAP adjustments included charges for project exits and shareholder activism, offset by gains from asset and business sales Business and Asset Actions An additional $24.1 million pre-tax charge ($0.07 per share) was recorded in Q3 for updated project exit cost estimates - An additional charge of $24.1 million ($0.07 per share) was recorded in Q3 based on updated cost estimates for previously announced project exits[32] Shareholder Activism-Related Costs $25.0 million ($0.08 per share) in costs were incurred in Q3 due to a proxy contest, primarily reimbursing Mantle Ridge LP - Recorded $25.0 million ($0.08 per share) in Q3 for costs connected to a proxy contest, mainly for reimbursing Mantle Ridge LP[34] Gain on Sale of Business and Other Assets Pre-tax gains of $67.3 million ($0.23 per share) from a Singapore subsidiary sale and $31.3 million ($0.11 per share) from an England office sale were recognized - Completed the sale of a subsidiary in Singapore, recognizing a gain of $67.3 million ($0.23 per share)[35] - Sold a regional office in England, resulting in a gain of $31.3 million ($0.11 per share)[36] Other Adjustments (Hedges, Pension, Discontinued Ops) Other adjustments included $10.9 million ($0.04 per share) in non-service pension costs and a $10.6 million ($0.04 per share) loss from discontinued operations - Non-service related pension items resulted in a net cost of $10.9 million ($0.04 per share) for the quarter[38] - A loss from discontinued operations of $10.6 million ($0.04 per share) was recorded, primarily for environmental liabilities from a business sold in 2008[39] Reconciliation of Adjusted Operating Income and Adjusted EPS Q3 FY25 GAAP EPS of $3.24 was reconciled to an Adjusted EPS of $3.09, representing a 3% decrease from the prior year Adjusted EPS Reconciliation | Reconciliation Item (per share) | Q3 FY25 Impact | | :--- | :--- | | GAAP EPS | $3.24 | | Business and asset actions | +$0.07 | | Shareholder activism-related costs | +$0.08 | | Gain on sale of business | -$0.23 | | Gain on sale of other assets | -$0.11 | | Non-service pension cost, net | +$0.04 | | Adjusted EPS | $3.09 | | Q3 FY24 Adjusted EPS | $3.20 | | % Adjusted Change | (3%) | Reconciliation of Adjusted EBITDA Consolidated Adjusted EBITDA increased 3% to $1,309.7 million in Q3 FY25, with Asia and Europe segments showing significant growth Adjusted EBITDA by Segment | (In Millions USD) | Q3 FY25 | Q3 FY24 | % Change | | :--- | :--- | :--- | :--- | | Consolidated Adjusted EBITDA | $1,309.7 | $1,266.8 | +3% | | Americas Adjusted EBITDA | $604.3 | $604.2 | —% | | Asia Adjusted EBITDA | $353.0 | $324.3 | +9% | | Europe Adjusted EBITDA | $319.8 | $283.2 | +13% | Reconciliation of Capital Expenditures Capital expenditures for the nine months ended June 30, 2025, totaled $4.0 billion, with a full-year FY25 forecast of approximately $5 billion Capital Expenditures Reconciliation | (In Millions USD) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash used for investing activities | $5,681.0 | $4,773.8 | | Adjustments | ($1,678.2) | ($898.1) | | Capital expenditures (Non-GAAP) | $4,002.8 | $3,875.7 | - The company expects capital expenditures of approximately $5 billion for fiscal year 2025[49]