Q2 FY22 (comparisons versus prior year):
- GAAP EPS of $2.38, up 12 percent; GAAP net income of $537 million, up 13 percent; and GAAP net income margin of 18.2 percent, down 90 basis points
- Adjusted EPS* of $2.38, up 14 percent; adjusted EBITDA* of $1,019 million, up nine percent; and adjusted EBITDA margin* of 34.6 percent, down 270 basis points
- Announced $2 billion hydrogen, pipeline and Sustainable Aviation Fuel expansion project at World Energy’s production and distribution hub in Paramount, California
- Announced $1.3 billion of on-site awards demonstrating continued leadership serving the growing semiconductor industry
- Announced new facility to produce green liquid hydrogen in Casa Grande, Arizona to serve the hydrogen for mobility market in California and other locations requiring zero-carbon hydrogen
- Listed among Barron’s 100 Most Sustainable Companies for the fourth consecutive year
- Maintaining fiscal 2022 full-year adjusted EPS guidance* of $10.20 to $10.40, up 13 to 15 percent over prior year adjusted EPS*; fiscal 2022 third quarter adjusted EPS guidance* of $2.55 to $2.65, up 10 to 15 percent over prior year third quarter adjusted EPS*
- Expect fiscal year 2022 capital expenditures* of $4.5 to $5.0 billion
#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 second quarter fiscal 2022 results, including GAAP EPS from continuing operations of $2.38, up 12 percent over prior year, and GAAP net income of $537 million, up 13 percent over prior year as higher volumes, pricing and equity affiliates' income more than offset higher costs. GAAP net income margin of 18.2 percent decreased 90 basis points, which included a decrease from higher energy cost pass through of about 100 basis points.
For the quarter, on a non-GAAP basis, adjusted EPS from continuing operations of $2.38 increased 14 percent over the prior year, and adjusted EBITDA of $1,019 million was up nine percent over the prior year as higher volumes, pricing and equity affiliates' income more than offset higher costs. Adjusted EBITDA margin of 34.6 percent decreased 270 basis points, which included a decrease from higher energy cost pass through of about 200 basis points.
Second quarter sales of $2.9 billion increased 18 percent over the prior year on eight percent higher volumes, six percent higher pricing and six percent higher energy cost pass-through, partially offset by two percent unfavorable currency. Volume growth was driven by new assets, hydrogen recovery, strong merchant and higher equipment sales. Pricing improved in the Americas, Asia and Europe—the Company's three largest segments.
Air Products closed on Phase I of the $12 billion Jazan joint venture in late October 2021, which favorably contributed its first full quarter of results with the benefit reflected entirely within equity affiliates' income, based on an updated accounting interpretation.
Commenting on the results, Air Products' Chairman, President and Chief Executive Officer Seifi Ghasemi said, "Despite the global economic environment and significant energy, environmental and geopolitical challenges facing our world, the Air Products team continues to deliver on our commitments and our higher purpose as a company. Our people are driving progress in our existing megaprojects while also developing and winning new ones, including the new, $2 billion investment for the Sustainable Aviation Fuel expansion project at World Energy's facility in California. At the same time, the team is focused on the strength of our base business, signing new contracts and bringing facilities onstream across key markets. This includes electronics, where we announced $1.3 billion of on-site awards demonstrating our continued leadership position serving the growing semiconductor industry. I want to thank our dedicated people for contributing the technology, skills and expertise that benefit our customers and countries around the world, every day."
Fiscal Second Quarter Results by Business Segment
- Americas sales of $1,187 million were up 12 percent over the prior year on six percent higher volumes, primarily hydrogen recovery and improved merchant demand, five percent higher pricing, and two percent higher energy cost pass-through, partially offset by one percent unfavorable currency. Operating income of $276 million increased five percent, as higher volumes and pricing more than offset higher energy, maintenance and other costs. Adjusted EBITDA of $449 million was flat on these same factors as well as lower equity affiliates' income. Operating margin of 23.2 percent decreased 170 basis points, as higher costs and negative volume mix were only partially offset by higher pricing. Adjusted EBITDA margin of 37.9 percent decreased 460 basis points on these same factors as well as lower equity affiliates' income.
- Asia sales of $751 million increased eight percent over the prior year on six percent higher volumes, particularly on-site volume from new, traditional industrial gas plants; one percent higher pricing; and one percent higher energy cost pass-through. Operating income of $204 million increased three percent and adjusted EBITDA of $322 million increased two percent, as favorable volumes and pricing more than offset higher costs. Operating margin of 27.1 percent decreased 140 basis points and adjusted EBITDA margin of 42.8 percent decreased 240 basis points.
- Europe sales of $739 million increased 32 percent over the prior year on 24 percent higher energy cost pass-through; 14 percent higher pricing across all sub-regions; and two percent higher volumes, driven primarily by merchant demand, partially offset by eight percent unfavorable currency. Operating income of $116 million decreased 12 percent, primarily driven by higher energy and other costs and unfavorable currency, partially offset by higher pricing. Adjusted EBITDA of $190 million decreased three percent on these same factors, partially offset by favorable equity affiliates' income. Operating margin of 15.8 percent decreased 800 basis points and adjusted EBITDA margin of 25.7 percent decreased 950 basis points, predominantly on the higher energy costs. Higher energy cost pass-through negatively impacted operating margin and adjusted EBITDA margin by about 450 and 700 basis points, respectively.
- Middle East and India equity affiliates' income of $71 million was up $55 million over the prior year, primarily from the Jazan joint venture.
- Corporate and other sales of $240 million increased 46 percent over the prior year, driven by higher sale of equipment activity. This activity drove improvements in both operating income and adjusted EBITDA.
Air Products continues to expect full-year fiscal 2022 adjusted EPS guidance of $10.20 to $10.40, up 13 to 15 percent over prior year adjusted EPS. For the fiscal 2022 third quarter, Air Products' adjusted EPS guidance is $2.55 to $2.65, up 10 to 15 percent over fiscal 2021 third quarter adjusted EPS.
Air Products expects capital expenditures of $4.5 to $5.0 billion for full-year fiscal 2022.
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.
Access the fiscal 2022 second quarter earnings teleconference scheduled for 8:30 a.m. Eastern Time on May 5, 2022 by calling 323-994-2131 and entering passcode 3339077 or by accessing the Event Details page on Air Products’ Investor Relations website.