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Air Products (APD) Q2 Earnings Top, Revenues Trail Estimates

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Air Products and Chemicals, Inc. (APD - Free Report) generated profit from continuing operations of $421.3 million or $1.90 per share in second-quarter fiscal 2019 (ended Mar 31, 2019). Also, the figure improved from $416.4 million or $1.89 in the year-ago quarter.

Barring one-time items, adjusted earnings per share (EPS) in the reported quarter were $1.92, up 12% from the year-ago quarter’s earnings of $1.71. The figure surpassed the Zacks Consensus Estimate of $1.88.

The industrial gases giant delivered fiscal second-quarter revenues of $2,187.7 million, up 1.5% year over year. Volumes and pricing rose 3% percent, which was roughly offset by 4% unfavorable currency and 2% from a contract modification in India. However, revenues missed the Zacks Consensus Estimate of $2,199.4 million.

Air Products and Chemicals, Inc. Price, Consensus and EPS Surprise

 

Air Products and Chemicals, Inc. Price, Consensus and EPS Surprise | Air Products and Chemicals, Inc. Quote

 

Segment Highlights

Revenues in the Industrial Gases — America segment improved 9% year over year to $992 million. The upside can be attributed to higher volumes, pricing and higher energy pass-through, partly offset by unfavorable currency. 

Sales in the Industrial Gases — Europe, Middle East, and Africa (EMEA) segment fell 12% year over year to $494 million. Strong pricing, stable volumes and higher energy pass-through were offset by unfavorable currency and decline from the India contract modification.

Sales in the Industrial Gases — Asia segment rose 12% year over year to $625 million. The figures were mainly driven by higher volumes (supported by new projects, including the Lu'An gasification project) and pricing. These gains were partly offset by unfavorable currency. 

Financial Position

Air Products ended the quarter with cash and cash equivalents of $2,735.9 million, down 10.8% year over year. Long-term debt was down roughly 14.8% year over year to $2,933 million.

Net cash from operating activities were $1,285.8 million, up 16.3% year over year.

Outlook

Air Products has raised adjusted EPS guidance for fiscal 2019 to the range of $8.15-$8.30 from the previous expectation of $8.05-$8.30. This suggests 10% rise year over year at the midpoint.

The company expects adjusted EPS for third-quarter fiscal 2019 in the band of $2.10-$2.15, which indicates 8-10% rise year over year. Also, it increased capital expenditure expectations for fiscal 2019 to the range of $2.4-$2.5 billion, from the previous range of $2.3-$2.5 billion.

Price Performance

Air Products’ shares have gained 18.8% in the past year, against the industry’s 19.8% decline.



Zacks Rank & Key Picks

Air Products currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Sandstorm Gold Ltd (SAND - Free Report) , Innospec Inc (IOSP - Free Report) and Fortescue Metals Group Ltd (FSUGY - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sandstorm Gold has an expected earnings growth rate of 200% for 2019. The company’s shares have gained 12.9% in the past year.

Innospec has an expected earnings growth rate of 3.5% for the current year. The company’s shares have appreciated 13.1% in a year’s time.

Fortescue Metals has an expected earnings growth rate of 101.5% for 2019. Its shares have surged 58.3% in a year’s time.

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