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Air Products Reports Fiscal 2022 Fourth Quarter GAAP EPS of $2.56 and Adjusted EPS of $2.89

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Fiscal Year 2022 (comparisons versus prior year):

Q4 FY22 (comparisons versus prior year):

Fiscal 2022 and Recent Highlights

Guidance

#Earnings per share is calculated and presented on a diluted basis from continuing operations attributable to Air Products. 

*Certain results in this release, including in the highlights above, include references to non-GAAP financial measures on a consolidated, continuing operations basis and a segment basis. Additional information regarding these measures and reconciliations of GAAP to non-GAAP historical results can be found below. In addition, as discussed below, it is not possible, without unreasonable efforts, to identify the timing or occurrence of events and transactions that could significantly impact future GAAP EPS or cash flow used for investing activities if they were to occur.

Air Products (NYSE:APD) today reported fiscal year 2022 results, including GAAP EPS from continuing operations of $10.08, up 11 percent over prior year, which includes a negative impact of $0.32 in the fourth quarter for the loss on the divestiture of the Russia business and the impairment of two equity affiliates in the Asia segment. GAAP net income of $2,267 million was up seven percent over prior year, as higher pricing and volumes, as well as equity affiliates' income driven by the Jazan project, more than offset higher costs, including the loss on the Russia business divestiture and the equity affiliate impairment, and unfavorable currency due to the strengthening of the U.S. dollar. GAAP net income margin of 17.8 percent was down 270 basis points, which included a negative impact of about 200 basis points from higher energy cost pass-through.

For the year, on a non-GAAP basis, adjusted EPS from continuing operations of $10.41 increased 15 percent over the prior year. Adjusted EBITDA of $4,247 million was up nine percent over the prior year, as higher pricing and volumes, as well as equity affiliates' income driven by the Jazan project, more than offset higher costs and unfavorable currency. Adjusted EBITDA margin of 33.4 percent decreased 420 basis points, which included a negative impact of about 400 basis points from higher energy cost pass-through.

Full-year sales of $12.7 billion increased 23 percent over the prior year on 13 percent higher energy cost pass-through, eight percent higher volumes, and six percent higher pricing, partially offset by four percent unfavorable currency. Volume growth was primarily driven by hydrogen, new plants, merchant and sale of equipment activities. Pricing improved in the Americas, Asia and Europe — the Company's three largest segments — and across most major product lines.

Air Products' fiscal year 2022 results at a glance.

Fiscal Fourth Quarter Results

For its fiscal fourth quarter 2022 results, Air Products reported GAAP EPS from continuing operations of $2.56, up two percent over prior year, which includes a negative impact of $0.32 for the loss on the Russia business divestiture and the impairment of two equity affiliates in the Asia segment. GAAP net income of $593 million was down four percent over prior year as higher volumes, pricing, and equity affiliates' income were more than offset by higher costs, including the loss on the Russia business divestiture and the equity affiliate impairment, and unfavorable currency due to the strengthening of the U.S. dollar. GAAP net income margin of 16.6 percent decreased 520 basis points, which included a negative impact of about 250 basis points from higher energy cost pass-through.  

For the quarter, on a non-GAAP basis, adjusted EPS from continuing operations of $2.89 increased 15 percent over the prior year. Adjusted EBITDA of $1,145 million was up 10 percent over the prior year, as higher volumes, pricing and equity affiliates' income more than offset higher costs as well as unfavorable currency due to the strengthening of the U.S. dollar. Adjusted EBITDA margin of 32.1 percent decreased 450 basis points, which included a negative impact of about 450 basis points from higher energy cost pass-through. 

Fourth quarter sales of $3.6 billion increased 26 percent over the prior year on 15 percent higher energy cost pass-through, nine percent higher volumes, and eight percent higher pricing, partially offset by six percent unfavorable currency. Volume growth, primarily in Asia and the Americas, was driven by new plants, recovery in hydrogen and better merchant demand. Pricing improved in the three largest regional segments. 

Commenting on the results, Air Products' Chairman, President and Chief Executive Officer Seifi Ghasemi said, "Working together, the Air Products team delivered higher volume and pricing in our base industrial gas business while investing in and executing world-class projects to drive the energy transition forward. Despite significant macroeconomic challenges, our people stayed focused and agile, serving our customers and demonstrating a bold commitment to make a cleaner, better future a reality. These results demonstrate the ability of Air Products to deliver strong near-term results while pursuing our longer-term growth strategy. "

Fiscal Fourth Quarter Results by Business Segment

  • Americas sales of $1,542 million were up 38 percent over the prior year on 19 percent higher energy cost pass-through, 12 percent higher volumes, and eight percent higher pricing, partially offset by one percent unfavorable currency. Operating income of $333 million increased 15 percent and adjusted EBITDA of $515 million increased eight percent, in each case due to the higher pricing and higher volumes, partially offset by higher costs. Adjusted EBITDA also reflects lower equity affiliates' income. Operating margin of 21.6 percent decreased 440 basis points and adjusted EBITDA margin of 33.4 percent decreased 930 basis points, each of which included a negative impact from energy cost pass-through of about 400 basis points and about 650 basis points, respectively.
  • Asia sales of $860 million increased 14 percent over the prior year on 16 percent higher volumes, three percent higher pricing, and two percent higher energy cost pass-through, partially offset by seven percent unfavorable currency. Operating income of $263 million increased 28 percent and adjusted EBITDA of $373 million increased 13 percent, in each case due to the favorable volumes and pricing, which were partially offset by higher costs and unfavorable currency. Operating margin of 30.6 percent increased 330 basis points while adjusted EBITDA margin of 43.3 percent decreased 50 basis points.
  • Europe sales of $864 million increased 34 percent over the prior year on 30 percent higher energy cost pass-through and 19 percent higher pricing across all product lines and sub-regions, partially offset by 15 percent unfavorable currency. Volumes were stable despite the challenging economic environment. Operating income of $150 million increased 20 percent and adjusted EBITDA of $217 million increased eight percent, in each case primarily driven by higher pricing, which was partially offset by unfavorable currency and higher costs. Operating margin of 17.4 percent decreased 200 basis points and adjusted EBITDA margin of 25.1 percent decreased 600 basis points, each of which included a negative impact from energy cost pass-through of about 450 basis points and about 750 basis points, respectively.
  • Middle East and India equity affiliates' income of $63 million was up $41 million over the prior year, primarily from the Jazan joint venture.
  • Corporate and other sales of $263 million decreased 12 percent compared to the prior year, driven by lower sale of equipment activity. 

Outlook

Effective beginning in the first quarter of fiscal year 2023, management will review adjusted earnings per share excluding the impact of non-service related components of the net periodic benefit/cost for our defined benefit pension plans. Air Products expects full-year fiscal 2023 adjusted EPS guidance of $11.20 to $11.50, up nine to 12 percent over prior year adjusted EPS. For the fiscal 2023 first quarter, Air Products' adjusted EPS guidance is $2.60 to $2.80, up five to 13 percent over fiscal 2022 first quarter adjusted EPS. The projected percentage increase in adjusted EPS for full year fiscal 2023 and fiscal 2023 first quarter is calculated using adjusted fiscal 2022 results in order to present this information on a consistent basis using the calculation of adjusted EPS that will be applied in fiscal year 2023. Refer to the reconciliations of GAAP to non-GAAP historical results below for additional information.

Air Products expects capital expenditures of $5.0 - $5.5 billion for full-year fiscal 2023.

Management has provided adjusted EPS guidance on a continuing operations basis, which excludes the impact of certain items that we believe are not representative of our underlying business performance, such as the incurrence of additional costs for cost reduction actions and impairment charges, or the recognition of gains or losses on disclosed items. It is not possible, without unreasonable efforts, to predict the timing or occurrence of these events or the potential for other transactions that may impact future GAAP EPS or the effective tax rate. Similarly, it is not possible, without unreasonable efforts, to reconcile our forecasted capital expenditures to future cash used for investing activities because we are unable to identify the timing or occurrence of our future investment activity, which is driven by our assessment of competing opportunities at the time we enter into transactions. Furthermore, it is not possible to identify the potential significance of these events in advance, but any of these events, if they were to occur, could have a significant effect on our future GAAP results. Management therefore is unable to reconcile, without unreasonable effort, the Company’s forecasted range of adjusted EPS, the effective tax rate and our capital expenditures to a comparable GAAP range.

Earnings Teleconference
Access the fiscal 2022 fourth quarter earnings teleconference scheduled for 8:30 a.m. Eastern Time on November 3, 2022 by calling 323-794-2093 and entering passcode 7733307 or by accessing the Event Details page on Air Products’ Investor Relations website.

 

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About Air Products
Air Products (NYSE:APD) is a world-leading industrial gases company in operation for over 80 years focused on serving energy, environmental, and emerging markets. The Company has two growth pillars driven by sustainability. Air Products’ base business provides essential industrial gases, related equipment and applications expertise to customers in dozens of industries, including refining, chemicals, metals, electronics, manufacturing, and food. The Company also develops, engineers, builds, owns and operates some of the world's largest industrial gas and carbon-capture projects, supplying world-scale clean hydrogen for global transportation, industrial markets, and the broader energy transition. Additionally, Air Products is the world leader in the supply of liquefied natural gas process technology and equipment, and globally provides turbomachinery, membrane systems and cryogenic containers.

The Company had fiscal 2022 sales of $12.7 billion from operations in over 50 countries and has a current market capitalization of about $55 billion. More than 21,000 passionate, talented and committed employees from diverse backgrounds are driven by Air Products’ higher purpose to create innovative solutions that benefit the environment, enhance sustainability and reimagine what's possible to address the challenges facing customers, communities, and the world. For more information, visit airproducts.com or follow us on LinkedIn, Twitter, Facebook or Instagram.

Cautionary Note Regarding Forward-Looking Statements
This release contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about earnings and capital expenditure guidance, business outlook and investment opportunities. Forward-looking statements are based on management’s expectations and assumptions as of the date of this release and are not guarantees of future performance. While forward-looking statements are made in good faith and based on assumptions, expectations and projections that management believes are reasonable based on currently available information, actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation: the duration and impacts of the ongoing COVID-19 global pandemic and efforts to contain its transmission, including the effect of these factors on our business, our customers, economic conditions and markets generally; changes in global or regional economic conditions, inflation and supply and demand dynamics in the market segments we serve, including demand for technologies and projects to limit the impact of global climate change,; changes in the financial markets that may affect the availability and terms on which we may obtain financing; the ability to implement price increases to offset cost increases; disruptions to our supply chain and related distribution delays and cost increases; risks associated with having extensive international operations, including political risks, risks associated with unanticipated government actions and risks of investing in developing markets; project delays, contract terminations, customer cancellations, or postponement of projects and sales; our ability to safely develop, operate, and manage costs of large-scale and technically complex projects; the future financial and operating performance of major customers, joint ventures, and equity affiliates; our ability to develop, implement, and operate new technologies and to market products produced utilizing new technologies; our ability to execute the projects in our backlog and refresh our pipeline of new projects; tariffs, economic sanctions and regulatory activities in jurisdictions in which we and our affiliates and joint ventures operate; the impact of environmental, tax, safety, or other legislation, as well as regulations and other public policy initiatives affecting our business and the business of our affiliates and related compliance requirements, including legislation, regulations, or policies intended to address global climate change; changes in tax rates and other changes in tax law; safety incidents relating to our operations; the timing, impact, and other uncertainties relating to acquisitions and divestitures, including our ability to integrate acquisitions and separate divested businesses, respectively; risks relating to cybersecurity incidents, including risks from the interruption, failure or compromise of our information systems; catastrophic events, such as natural disasters and extreme weather events, public health crises, acts of war, including Russia’s invasion of Ukraine and the ongoing civil war in Yemen, or terrorism; the impact on our business and customers of price fluctuations in oil and natural gas and disruptions in markets and the economy due to oil and natural gas price volatility; costs and outcomes of legal or regulatory proceedings and investigations; asset impairments due to economic conditions or specific events; significant fluctuations in inflation, interest rates, and foreign currency exchange rates from those currently anticipated; damage to facilities, pipelines or delivery systems, including those we own or operate for third parties; availability and cost of electric power, natural gas, and other raw materials; the success of productivity and operational improvement programs; and other risks described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2021 and subsequent filings we have made with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on our forward-looking statements. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.