Air Products (APD) shares fall to 4-year low after missing top and bottom line, slashing guidance
Air Products, a leading industrial gases and chemicals company, reported strong Q1 fiscal 2024 results on Monday, with non-GAAP basis, adjusted EPS from continuing operations of $2.82 increased seven percent over the prior year, but missed analyst estimates by 18 cents.
Adjusted EBITDA of $1.2 billion was up eight percent over the prior year, due to higher equity affiliates' income, higher volumes, and higher pricing, partially offset by higher costs. Adjusted EBITDA margin of 39.2 percent increased 510 basis points over the prior year, which included a positive impact of about 400 basis points from lower energy cost pass-through.
First quarter sales of $3.0 billion decreased six percent from the prior year and fell short of Street expectations of $3.2 billion, as three percent higher volumes, one percent higher pricing, and one percent favorable currency were more than offset by 11 percent lower energy cost pass-through, which negatively affected sales but had no impact on net income.
Americas sales of $1.3 billion were down 10 percent versus the prior year, as three percent higher volumes driven by strong hydrogen demand and two percent higher pricing were more than offset by 15 percent lower energy cost pass-through.
Operating income of $354 million increased three percent and adjusted EBITDA of $561 million increased nine percent, in each case primarily due to higher pricing and volumes, partially offset by higher costs. Adjusted EBITDA also benefited from higher equity affiliates' income. Operating margin of 28.3 percent increased 350 basis points and adjusted EBITDA margin of 44.8 percent increased 760 basis points. The operating margin and adjusted EBITDA margin improvements included positive impacts from lower energy cost pass-through of approximately 400 basis points and 600 basis points, respectively.
Asia sales of $794 million increased two percent over the prior year, as two percent higher energy cost pass-through and one percent higher pricing were partially offset by one percent unfavorable currency. Volumes were flat , as higher on-site volumes were offset by weak economic growth in China and lower activity in helium. Operating income in the region was $211 million, down 10 percent and adjusted EBITDA of $327 million decreased five percent, in each case primarily due to unfavorable volume mix and higher costs. Operating margin of 26.6 percent decreased 370 basis points and adjusted EBITDA margin of 41.2 percent decreased 320 basis points.
Europe sales of $731 million decreased eight percent from the prior year, as nine percent favorable volumes driven by our on-site business and five percent favorable currency were more than offset by 20 percent lower energy cost pass-through and two percent lower pricing. Operating income of $198 million increased 36 percent and adjusted EBITDA of $267 million increased 28 percent, as higher volumes, lower power costs, and favorable currency more than offset inflation and higher maintenance costs.
Middle East and India equity affiliates income of $93 million increased 45 percent compared to the prior year, primarily due to the completion of the second phase of the Jazan project in January 2023.
Air Products now expects full-year fiscal 2024 adjusted EPS guidance of $12.20 to $12.50, up six to nine percent over prior year adjusted EPS, compared to the prior outlook of $12.80-13.10. For the second quarter of fiscal 2024, Air Products' adjusted EPS guidance is $2.60 to $2.75, well below analyst expectations of $3.17.