“With our secure business model, strong cash flows, and the continued hard work and dedication of the Air Products team around the world, we again performed in keeping with our commitments to our shareholders.”
Those were the words of Seifi Ghasemi, Chairman, President and CEO of Air Products, as he reflected on the industrial gas giant’s fiscal 2022 first quarter (Q1) results, released today (4th Feb).
Boasting impressive figures, Air Products reported Q1 sale of $3bn, a 26% increase over the prior year. The volume growth of sales has credited the growth to new assets, hydrogen and merchant recovery and higher equipment sales.
GAAP EP from continuing operations of $2.52 was up 19% over the prior year, and GAAP net income of $550m was up 13% over prior year as higher volumes, pricing and equity affiliate income more than offset higher costs.
On a non-GAAP basis, adjusted EPS from continuing operations of $2.52 increased 19% over the prior year, and adjusted EBITDA of $1.03bn was up 8% over the prior year due to high volumes, pricing and equity affiliate income more than offset higher costs.
Ghasemi further commented, “The team delivered these results despite unprecedented energy cost increases, supply chain disruptions and the continuing pandemic. At the end of October, we also closed on Phase I of the Jazan project―the largest in our company’s history―which will create value for many years to come.”
“As we continue to deploy capital into megaprojects that provide lower-carbon forms of energy and improve sustainability, we also remain committed to return cash to shareholders through our dividend, which we proudly increased for the 40th consecutive year.”
Q1 results by business segment
Americas sales of $1.2bn were up 31% over the prior year on 20% higher energy cost pass-through; 8% higher volumes, driven primarily by hydrogen and merchant demand; and 3% higher pricing.
Operating income of $267m increased 18% as higher volumes and pricing more than offset higher energy costs. Adjusted EBITDA of $457m increased 14% on these same factors as well as higher equity affiliate income.
Operating margin of 21.8% decreased 240 basis points, as higher energy cost pass-through negatively impacted margin by about 350 basis points. Adjusted EBITDA margin of 37.3% decreased 560 basis points, as higher energy cost pass-through negatively impacted margin by about 700 basis points.
Asia sales of $780m increased 9% over the prior year on 4% higher volumes, particularly on-site volume from new plants across the region; 3% higher pricing; and 2% favourable currency.
Operating income of $221m increased 3% and adjusted EBITDA of $339m increased 2%, as favourable volumes, pricing and currency more than offset higher costs.
Operating margin of 28.3% decreased 160 basis points and adjusted EBITDA margin of 43.4% decreased 280 basis points, as favourable volumes were more than offset by higher costs.
Europe sales of $744m increased 37% over the prior year on 27% higher energy cost pass-through; 9% higher pricing; and 5% higher volumes, driven primarily by hydrogen and merchant demand, partially offset by 4% unfavourable currency.
Operating income of $99m decreased 28% and adjusted EBITDA of $163m decreased 19%, primarily driven by higher energy and other costs, partially offset by higher pricing.
Operating margin of 13.3% decreased 1,200 basis points and adjusted EBITDA margin of 21.9% decreased 1,520 basis points, predominantly on the higher energy costs; about half of the decline was due to energy cost pass-through.
Middle East and India equity affiliate income of $92m was up $71m over the prior year, primarily from the Jazan joint ventures.
Air Products continues to expect full-year fiscal 2022 adjusted EPS guidance of $10.20 to $10.40, up 13%-15% over prior year adjusted EPS.
For the fiscal 2022 second quarter, Air Products’ adjusted EPS guidance is $2.30 to $2.40, up 11%-15% over fiscal 2021 second quarter adjusted EPS.
The industrial gas giant expects capital expenditures of $4.5-$5bn for full-year fiscal 2022.