“Despite ongoing challenges from Covid-19 globally and the severe winter storm in the US Gulf Coast during the quarter, our talented, committed and dedicated team continued to work tirelessly, supporting customers customers and successfully executing our megaprojects.”

Those were the words of Seifi Ghasemi, Air Products’ Chairman, President and CEO, when the industrial gas giant today (10th May) reported its second quarter (Q2) 2021 financial results.

“Adjusted EPS improved over the prior year, we continued to improve pricing, and we again generated strong cash flow. Meanwhile, Air Products continues to lead with world-scale energy transition projects in gasification, carbon capture and carbon-free hydrogen,” he said.

For the quarter, Air Products reported fiscal 2021 GAAP EPS from continuing operations of $2.13, down 4%; GAAP net income of $477m, down 3%; and GAAP net income margin of 19.1%, down 300 basis points, each versus prior year.

Air Products said that such results include an estimated $0.10 to $0.15 per share negative impact from Covid-19.

On a non-GAAP basis, adjusted EPS from continuing operations of $2.08 was up 2%; adjusted EBITDA* of $934m was up 5%; and adjusted EBITDA margin of 37.3% was down 300 basis points, each versus prior year.

The above results include an estimated $0.10 to $0.15 per share negative impact from Covid-19. Non-GAAP adjusted EPS excludes a $0.12 gain on an exchange with a joint venture partner, partially offset by an $0.08 negative impact from a facility closure.

Q2 sales of $2.5bn increased 13% due to 7% higher energy cost pass-through, 4% favourable currency, and 2% higher pricing. Volumes were flat, as new plants, acquisitions and increased sale-of-equipment activities were offset by reduced contributions from the Lu’An gasification project in Asia, lower merchant demand from Covid-19, and the severe Winter Storm Uri that affected the US Gulf Coast. 

Results by business segment 

Americas sales of $1,056m were up 13% over the prior year. 15% higher energy cost pass through, primarily driven by the winter storm3% higher pricing; and 1% favourable currency were partially offset by 6% lower volumes, primarily due to the impact of Covid-19 and the winter storm. 

Operating income of $263m decreased 2%, due to lower volumes, partially offset by higher pricing. Operating margin of 24.9% decreased 380 basis points, driven by the higher energy cost pass-through, which negatively impacted margin by about 430 basis points.

Adjusted EBITDA of $449m increased 6%, as higher pricing, the acquisition of hydrogen assets and higher equity affiliates’ income more than offset the lower volumes. Adjusted EBITDA margin of 42.5% decreased 310 basis points, driven by the higher energy cost pass-through, which negatively impacted margin by about 650 basis points.

Sequentially, sales increased 13% on 10% higher energy cost pass-through, 2% higher volumes, and one percent higher pricing. 

EMEA sales of $585m increased 19% over the prior year on 9% favourable currency; 5% higher volumes, driven primarily by acquisitions and higher onsite volumes, but partially offset by lower demand from Covid-19; 3% higher energy cost pass-through; and 2% higher pricing.

Operating income of $140m increased 12%, primarily due to higher pricing, higher volumes and favourable currency. Operating margin of 23.9% decreased 140 basis points. Adjusted EBITDA of $218m increased 17%, primarily due to higher pricing and volumes, favourable currency, and equity affiliates’ income. Adjusted EBITDA margin of 37.2% decreased 50 basis points.

Sequentially, sales increased 4%, as 2% favourable currency, 2% higher energy cost pass-through, and one percent higher pricing more than offset one percent lower volumes. 

Asia sales of $698m increased 6% from the prior year on 7% favourable currency and one percent higher pricing, partially offset by 2% lower volumes. Higher merchant volumes and new plants partially offset reduced contributions from Lu’An.

Operating income of $199m decreased 5% and operating margin of 28.5% decreased 330 basis points, both primarily due to reduced contributions from Lu’An. Adjusted EBITDA of $324m decreased 1% and adjusted EBITDA margin of 46.4% decreased 330 basis points, both primarily due to Lu’An.

Sequentially, sales decreased three percent, as 1% favourable currency was more than offset by 4% lower volumes, primarily due to the Lunar New Year impact.