Air Products has today reported fiscal third quarter (2018) sales of $2.3bn that rose 6% over the prior year, as well as net income from continuing operations of $431m.
There were no non-GAAP adjustments in the quarter, ended 30th June 2018.
Third quarter (Q3) sales of $2.3bn increased 6% from the prior year on a combination of 3% higher volumes, 3% favourable currency, and 1% higher pricing – partially offset by 1% lower energy pass-through.
Volumes were higher in all three industrial gas regions, partially offset by lower activity from the Jazan project, Saudi Arabia. Excluding Jazan, volumes were up 7%, demonstrating solid underlying activity.
Pricing increased 1%, driven primarily by the China and Europe merchant businesses.
Chairman, President and CEO Seifi Ghasemi described the company as working together and winning together, commenting, “The people of Air Products have delivered another excellent set of safety and financial results, including record adjusted EPS and record adjusted EBITDA margin. We continued to generate significant cash, which supports our robust dividend and future investment opportunities.”
“Meanwhile, we are executing on our overall growth strategy, acquiring the Shell gasification technology and closing on the Lu’An project this past quarter. This is a team committed to working together, winning together and being best-in-class in everything we do.”
For the quarter, adjusted EBITDA of $820m increased 13% over the prior year, driven by the higher volumes, positive pricing, favourable currency and equity affiliate income.
Record adjusted EBITDA margin of 36.3% increased 220 basis points over the prior year.
On a GAAP continuing operations basis, net income and diluted EPS increased 313% and 315%, respectively, over the prior year. On a non-GAAP continuing operations basis, net income and diluted EPS increased 19% and 18%, respectively, over the prior year.
Results by region
Industrial Gases – Americas sales of $949m increased 2% over the prior year, with 6% higher volumes partially offset by 4% lower energy cost pass-through.
Hydrogen demand remained strong, and underlying merchant gases volumes were positive. Adjusted EBITDA of $382m increased 4% over the prior year, primarily driven by the higher volumes and a contract termination, partially offset by higher planned maintenance costs.
Industrial Gases – EMEA sales of $561m increased 24% over prior year, with volumes increasing 12% – approximately 10% of this was from a new hydrogen plant in India and 2% was from merchant volume improvement.
Pricing improved 3%, primarily driven by packaged gases. Currency and energy pass-through increased sales by 7% and 2%, respectively. Adjusted EBITDA of $186m increased 19% over the prior year, primarily from the new plant in India and higher merchant volume, pricing and favourable currency.
Industrial Gases – Asia sales of $624m increased 16% over prior year. Volumes increased 6% but if excluding the impact of a one-time equipment sale last year, volumes were actually up 16%. Favourable currency increased sales by 6% versus the prior year, while pricing was up 4% versus the prior year, largely driven by the China merchant market.
Adjusted EBITDA of $270m increased 28% on strong volumes, favourable currency and higher pricing.
Again increasing guidance for fiscal 2018, Air Products now expects full-year adjusted EPS of $7.40 to $7.45 per share, up 17-18% over the prior year.
Reflecting on the wider outlook for the company, Ghasemi added, “Over the past four years, we have successfully executed against our Five-Point Plan by focusing on our industrial gas business, decentralising the company, changing the culture, controlling capital and costs, and aligning the rewards system.”
“As we evolve that Plan to shape our success for the coming years, we will put all our energy into sustaining leading safety and financial performance, investing $15bn in high-quality industrial gas projects, driving an accountable and inclusive culture, and fulfilling our higher purpose as a company. We remain very optimistic about the future growth of Air Products.”