Air Products has reported fiscal 2019 results which highlight GAAP net income of $1,809m, up 18% from the prior year, primarily driven by higher pricing, volumes and tax reform impacts.
For the year, on a non-GAAP basis, adjusted diluted EPS from continuing operations totalled $8.21, up 10% compared to the previous year. Adjusted EBITDA of $3.5bn was up 11%, primarily due to higher pricing and volumes.
Full year sales of $8.9bn were flat versus last year on 2% volume growth and 3% higher pricing, offset 3% by unfavourable currency and 2% from a contract modification to a tolling agreement in India, which impacted sales but not profits.
The US industrial gas company reported sales of $2.3bn, for its fourth quarter (Q4) ended 30th September (2019).
GAAP diluted EPS from continuing operations of $2.27 was up 11%. GAAP net income of $519m was up 13%, primarily driven by higher pricing volumes, and prior-year tax reform and pension settlement impacts.
For Q4, on a non-GAAP basis, adjusted diluted EPS from continuing operations of $2.27, up 14%, adjusted EBITDA of $957m, up 16% primarily driven by positive volume and pricing.
Commenting on the results, Seifi Ghasemi, Chairman, President and CEO of Air Products, said, “Our people have stayed focused on serving our customers and creating value for our shareholders, every day, and I want to thank them for their hard work, commitment and dedication.”
“We are pursuing our strategic Five-Point Plan, including a focus on sustainability that is driving significant global growth opportunities in gasification, carbon capture, and hydrogen for mobility.”
“We are generating significant cash, and also have the technical and operational strength, to execute on our base business while continuing to deploy capital into industrial gas megaprojects around the world.”
Q4 results by business segment
Industrial Gases – Americas sales of $937m decreased 5%, as 3% higher pricing was more than offset by 5% lower energy pass-through, 2% lower volumes, and 1% unfavourable currency. Operating income of $261m increased 4%, primarily driven by higher pricing, and operating margin of 27.8% increased 230 basis points. Adjusted EBITDA of $412m increased 3%, primarily driven by higher pricing, and adjusted EBITDA margin of 43.9% increased 250 basis points.
Industrial Gases – EMA sales of $489m decreased 12%. Volumes increased 5% and higher pricing contributed 4%. These results were more than offset by 5% lower energy pass-through, 4% unfavourable currency, and a 12% decrease from the India contract medication. Operating income of $121m increased 14%, primarily driven by high pricing, and operating margin of 24.7% increased 560 basis points; the India contact medication and lower energy pass-through improved operation margin by approximately 350 basis points. Adjusted EBITDA of $193m increased 11%, primarily driven by higher pricing. Adjusted EBITDA margin of 39.5% increased 810 basis points; the India contract modification and lower energy pass-through adjusted EBITDA margin by approximately 600 basis points.
Industrial Gases – Asia sales of $732m increased 16%. Volumes increased 16% driven primarily by new plants, including the Lu’An gasification project, a short-term contract and base business growth. Pricing increased 3%, while currency had a negative 3% impact. Operating income of $231m increased 28% on improved volumes, pricing and productivity, and operating margin on 31.6% increased 310 basis points. Adjusted EBITDA of $354m increased 31% on improved volumes, pricing and productivity, and adjusted EBITDA margin of 48.3% increased 550 basis points.
Commenting on the results, Ghasemi said, “Air Products cannot control the economic and geopolitical uncertainty in the world. But we do have control over the actions we take to remain profitable and adapt to the constantly changing world.”
“Our strong, capable and flexible team is focused on delivering productivity and creating our own growth opportunities through gasification, carbon capture, hydrogen for mobility and other projects driven by the world’s need for cleaner energy and high-value products.”
“A great example is the broader-scope joint venture at Jazan, a world-class project with world-class partners. We remain committed to continue growing adjusted earnings per share by more than 10% per year over the long term.”
Air Products’ full-year fiscal 2020 adjusted EPS guidance is $9.35 to $9.60 per share, up 14% to 17% over prior year.
For fiscal 2020 first quarter, Air Products expected adjusted EPS of $2.05 to $2.10 per share, up 10% to 13% over the fiscal 2019 first quarter adjusted EPS.
Air Products expects capital expenditures of approximately $4 billion to $4.5 billion for full-year fiscal 2020, including the expected spending for the Jazan gas and power project.