Air Products Reports Fourth Quarter FY’24 with a Slight Revenue Miss
In the fiscal fourth quarter of 2024, Air Products (NYSE: APD) reported robust financial results. The company’s GAAP earnings per share (EPS) soared to $8.81, marking a remarkable 186% increase from the previous year. This impressive growth was primarily driven by a $1.2 billion after-tax gain from the divestiture of its liquefied natural gas (LNG) business. The company’s GAAP net income also surged by 181% to $2.0 billion, with a net income margin of 61.2%, up 3,940 basis points.
Adjusted EPS for the quarter stood at $3.56, reflecting a 13% increase compared to the prior year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $1.4 billion, a 12% rise, driven by higher volumes and favorable pricing. The adjusted EBITDA margin improved by 460 basis points to 44.1%, with lower energy cost pass-through contributing approximately 100 basis points. Sales for the quarter remained flat at $3.2 billion, as higher volumes and pricing were offset by lower energy cost pass-through.
Commenting on the results, Air Products’ CEO, Seifi Ghasemi, praised the team for delivering industry-leading adjusted EBITDA margins and completing the strategic divestiture of the LNG business. Ghasemi highlighted the company’s commitment to its core industrial gas business and its ability to secure significant green hydrogen supply agreements, such as the 15-year deal with TotalEnergies to provide 70,000 tons of green hydrogen annually starting in 2030.
Air Product Beats EPS Expectations in Fourth Quarter, Falls Slightly on Revenue
Air Products’ fourth-quarter performance exceeded market expectations, delivering an adjusted EPS of $3.56, surpassing the anticipated $3.48. This 13% year-over-year increase in adjusted EPS reflects the company’s ability to navigate a challenging economic environment while optimizing its operations. The company’s revenue for the quarter came in at $3.2 billion, slightly below the expected $3.22 billion, yet the flat sales compared to the prior year indicate resilience amidst fluctuating energy cost pass-through.
The company’s strategic divestiture of its LNG business played a pivotal role in boosting its financial results. The $1.2 billion after-tax gain from this divestiture significantly contributed to the 186% increase in GAAP EPS and the 181% rise in GAAP net income. This strategic move aligns with Air Products’ focus on its core industrial gas business and its commitment to providing clean hydrogen solutions at scale.
Despite the slight miss in revenue expectations, Air Products’ ability to exceed EPS projections demonstrates its operational efficiency and effective cost management. The company’s strong performance in the Americas, Asia, and Europe segments, driven by higher pricing and favorable business mix, further underscores its capacity to adapt to market dynamics and capitalize on growth opportunities.
Air Products Guidance and Future Outlook
Looking ahead to fiscal 2025, Air Products has provided a positive outlook, with full-year adjusted EPS guidance ranging from $12.70 to $13.00. For the first quarter of fiscal 2025, the company anticipates adjusted EPS between $2.75 and $2.85. These projections reflect Air Products’ confidence in its ability to sustain growth and deliver value to shareholders despite the absence of contributions from the divested LNG business.
The company expects capital expenditures for fiscal 2025 to be in the range of $4.5 billion to $5.0 billion, highlighting its commitment to investing in growth opportunities and expanding its core industrial gas business. Air Products’ strategic focus on clean hydrogen and energy transition initiatives positions it well to capitalize on the increasing demand for sustainable solutions in the transportation and industrial sectors.
Air Products’ CEO, Seifi Ghasemi, emphasized the company’s strong cash flow generation and disciplined capital allocation, which support its long history of returning cash to shareholders. In fiscal 2024, Air Products expects to pay approximately $1.6 billion in dividends, underscoring its commitment to creating shareholder value while pursuing growth opportunities in emerging markets.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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