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Air Products (APD) Q3 Earnings Beat Estimates, View Raised
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Air Products and Chemicals, Inc. (APD - Free Report) surpassed earnings expectations in third-quarter fiscal 2016 (ended Jun 30, 2016), backed by its restructuring benefits and operational improvements.
The industrial gases giant logged third-quarter adjusted earnings of $1.92 per share, up 16.4% from $1.65 per share recorded in the year-ago quarter, thereby marking the eighth consecutive quarter of double-digit growth. Earnings also beat the Zacks Consensus Estimate by a penny. Adjusted earnings exclude charges associated with income tax, business separation, legal and pension settlement expenses.
Net income from continuing operations, as reported, was up 11% year over year at $355.7 million or $1.63 per share. The bottom line was also supported by lower costs. Cost of sales for the reported quarter declined roughly 4.4% year over year to around $1.6 billion. Selling and administrative expenses also fell year over year.
Revenues dropped roughly 1.4% year over year to $2,434.4 million in the reported quarter and missed the Zacks Consensus Estimate of $2,452 million. A 4% increase in volumes was more than offset by 2% currency headwinds and lower energy pass-through of 3% each in the quarter.
Revenues from the Industrial Gases – America segment went down 7% year over year to $832 million in the reported quarter, hurt by lower energy pass-through of 5% and unfavorable currency impact. Lower demand in South America more than offset strong hydrogen demand and benefits of a new hydrogen plant in North America, reducing volumes by 1%. Prices rose 1%.
Sales from the Industrial Gases – Europe, Middle East, and Africa (“EMEA”) segment fell 6% year over year to $ 427 million due to unfavorable currency impact and lower energy pass-through of 5%. Volumes dipped 1% while prices increased by 1%.
Sales from the Industrial Gases – Asia segment rose 7% year over year to $448 million on the back of a 14% increase in volumes, mainly from new plants and strong businesses. Unfavorable currency translation hurt sales by 5% and pricing dropped 2%.
Revenues from the Materials Technologies segment declined 4% year over year to $520 million, hit by 2% lower pricing, 1% lower volumes and currency headwinds. Sales of Electronics Materials fell 8% on lower volumes and unfavorable currency movement. Performance Materials’ sales were relatively flat year over year as higher volumes were offset by lower pricing resulting from lower raw material costs.
Financial Position
Air Products ended the third quarter with cash and cash equivalents of $514.8 million, up roughly 139.1% year over year. Total long-term debt fell around 16.3% year over year to $3,925.6 million. Operating cash flow for nine months period rose 9.5% year over year to $1,834.3 million.
Outlook
Air Products expects earnings from continuing operations for fourth-quarter fiscal 2016 to be in the range of $1.91–$2.01 per share. The company also raised the lower end of its fiscal 2016 earnings guidance to the band of $7.45–$7.55 per share from the earlier view of $7.40–$7.55.
Air Products reiterated its estimated capital expenditures of around $1.2 billion for fiscal 2016.
Air Products has announced plans to build a new plant to provide ultra-high purity gases to customers in Nanjing, China. As the company moves closer to the sale of its Performance Materials Division as well as the spin-off of its Electronic Materials Division, management expects opportunities to invest in the company’s core industrial gases business for further growth.
Air Products currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the chemical space include Axiall Corporation , Shin-Etsu Chemical Co., Ltd. (SHECY - Free Report) and Stepan Company (SCL - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).
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Air Products (APD) Q3 Earnings Beat Estimates, View Raised
Air Products and Chemicals, Inc. (APD - Free Report) surpassed earnings expectations in third-quarter fiscal 2016 (ended Jun 30, 2016), backed by its restructuring benefits and operational improvements.
The industrial gases giant logged third-quarter adjusted earnings of $1.92 per share, up 16.4% from $1.65 per share recorded in the year-ago quarter, thereby marking the eighth consecutive quarter of double-digit growth. Earnings also beat the Zacks Consensus Estimate by a penny. Adjusted earnings exclude charges associated with income tax, business separation, legal and pension settlement expenses.
Net income from continuing operations, as reported, was up 11% year over year at $355.7 million or $1.63 per share. The bottom line was also supported by lower costs. Cost of sales for the reported quarter declined roughly 4.4% year over year to around $1.6 billion. Selling and administrative expenses also fell year over year.
Revenues dropped roughly 1.4% year over year to $2,434.4 million in the reported quarter and missed the Zacks Consensus Estimate of $2,452 million. A 4% increase in volumes was more than offset by 2% currency headwinds and lower energy pass-through of 3% each in the quarter.
Segmental Highlights
Revenues from the Industrial Gases – America segment went down 7% year over year to $832 million in the reported quarter, hurt by lower energy pass-through of 5% and unfavorable currency impact. Lower demand in South America more than offset strong hydrogen demand and benefits of a new hydrogen plant in North America, reducing volumes by 1%. Prices rose 1%.
Sales from the Industrial Gases – Europe, Middle East, and Africa (“EMEA”) segment fell 6% year over year to $ 427 million due to unfavorable currency impact and lower energy pass-through of 5%. Volumes dipped 1% while prices increased by 1%.
Sales from the Industrial Gases – Asia segment rose 7% year over year to $448 million on the back of a 14% increase in volumes, mainly from new plants and strong businesses. Unfavorable currency translation hurt sales by 5% and pricing dropped 2%.
Revenues from the Materials Technologies segment declined 4% year over year to $520 million, hit by 2% lower pricing, 1% lower volumes and currency headwinds. Sales of Electronics Materials fell 8% on lower volumes and unfavorable currency movement. Performance Materials’ sales were relatively flat year over year as higher volumes were offset by lower pricing resulting from lower raw material costs.
Financial Position
Air Products ended the third quarter with cash and cash equivalents of $514.8 million, up roughly 139.1% year over year. Total long-term debt fell around 16.3% year over year to $3,925.6 million. Operating cash flow for nine months period rose 9.5% year over year to $1,834.3 million.
Outlook
Air Products expects earnings from continuing operations for fourth-quarter fiscal 2016 to be in the range of $1.91–$2.01 per share. The company also raised the lower end of its fiscal 2016 earnings guidance to the band of $7.45–$7.55 per share from the earlier view of $7.40–$7.55.
Air Products reiterated its estimated capital expenditures of around $1.2 billion for fiscal 2016.
Air Products has announced plans to build a new plant to provide ultra-high purity gases to customers in Nanjing, China. As the company moves closer to the sale of its Performance Materials Division as well as the spin-off of its Electronic Materials Division, management expects opportunities to invest in the company’s core industrial gases business for further growth.
AIR PRODS & CHE Price, Consensus and EPS Surprise
AIR PRODS & CHE Price, Consensus and EPS Surprise | AIR PRODS & CHE Quote
Zacks Rank
Air Products currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the chemical space include Axiall Corporation , Shin-Etsu Chemical Co., Ltd. (SHECY - Free Report) and Stepan Company (SCL - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>