Air Products has reported net income of $335m, up 17% versus prior year, and diluted earnings per share (EPS) of $1.55, up 16% versus prior year, on a non-GAAP continuing operations basis for its fiscal first quarter (Q1) ended 31st December (2014).
On a GAAP basis, net income and diluted EPS from continuing operations were $325m and $1.50, respectively, for the quarter.
Air Products declared itself as ‘greatly encouraged’ by the results, considering the wider economy uncertainty and the structural changes underway at the company.
Q1 sales of $2.561bn increased 1% versus the prior year, as higher volumes and pricing were largely offset by unfavourable currency impacts and the exit from the Polyurethane Intermediates Business (PUI). Excluding these impacts, underlying sales increased 5% on 4% higher volumes with strength across most of the segments.
Sequentially, sales declined 4% on lower seasonal volumes and unfavourable currency impacts.
The Americas proved to be the best performing region for industrial gas sales, up 6% over the prior year largely due to higher North American volumes and pricing.
Operating income of $445m increased 15% versus the prior year as higher volumes, favourable cost performance, and stronger pricing more than offset unfavourable currency impacts. Operating margin of 17.4% improved 230 basis points, while adjusted EBITDA of $723m increased 10%. Sequentially, operating income declined 6%, mainly due to lower seasonal volumes and unfavourable currency impacts.
“Despite economic uncertainty, we are greatly encouraged by these results, and the team is focused on the actions we can control to deliver on our commitments…”
Seifi Ghasemi, Chairman, President and CEO, reflected, “We started fiscal 2015 strong, delivering double-digit EBITDA and earnings growth. These results clearly demonstrate our people’s focus on safety, cost, and serving our customers in the new organisation.”
“Despite economic uncertainty, we are greatly encouraged by these results, and the team is focused on the actions we can control to deliver on our commitments.”
Looking ahead, Air Products explained that the capital expenditure forecast for fiscal year 2015 remains between $1.7bn and $1.9 bn.
The company expects Q2 EPS from continuing operations to be between $1.50 and $1.55 per share, and guidance for continuing operations for fiscal 2015 of $6.35 to $6.55 per share.
Americas industrial gas sales of $1.003bn increased 6% versus the prior year, primarily on higher North America volumes and stronger pricing. Sequentially, underlying sales declined 1%, primarily due to seasonality in North America.
Operating income of $211m increased 14%, and operating margin of 21.1% improved 160 basis points over the prior year on higher North America volumes, pricing, and favourable cost performance. Adjusted EBITDA of $332m increased 8%.
In contrast in Europe, Middle East, and Africa (EMEA) sales of $501m declined 9% over the same period last year, primarily on a 7% unfavourable currency impact. Underlying sales were flat, with modest liquid bulk volume growth offset by weaker packaged gases.
Operating income of $81m and adjusted EBITDA of $143m were both down 5% versus the prior year, primarily due to the unfavourable currency impact. Operating margin of 16.2% improved 70 basis points.
Industrial gas sales in Asia of $399m increased 1% versus the prior year. Volumes increased 6%, primarily from new plants coming on-stream, but were partially offset by lower energy pass-through and currency. Operating income of $91m increased 9%, and operating margin of 22.7% improved 180 basis points over the prior year due to higher volumes and favourable cost performance.
*The results and guidance in this release, unless otherwise indicated, are based on non-GAAP continuing operations. A reconciliation of GAAP to non-GAAP results can be found at the end of this release.