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Air Products (APD) Q4 Earnings Meet, Sales Lag Estimates

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Air Products and Chemicals, Inc. (APD - Free Report) reported fourth-quarter fiscal 2018 (ended Sep 30, 2018) adjusted earnings of $2.00 per share, up 14% from the year-ago quarter. The bottom line also matched the Zacks Consensus Estimate.

Net income (attributable to Air Products) for the fiscal fourth quarter was down around 3.4% year over year to $452.9 million or $2.05 per share.

The industrial gases giant reported fiscal fourth-quarter revenues of $2,298.9 million, up around 4.4% year over year, driven by 3% higher volumes, 1% favorable energy pass-through and 1% higher pricing, partly offset by 1% unfavorable currency. However, sales missed the Zacks Consensus Estimate of $2,308 million.

FY18 Results
 
The company reported net income from continuing operations of $1.5 billion or $6.59 per share for fiscal 2018, up 28.3% year over year. For fiscal 2018, adjusted earnings came in at $7.45 per share, up 18% from the previous year.
 
Sales rose 9% year over year to $8.9 billion for fiscal 2018 on higher volumes, higher pricing and favorable currency.

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

 

Segment Highlights

Revenues from the Industrial Gases — America segment went up 4% year over year to $987 million in the reported quarter, supported by higher volumes and pricing, partly offset by unfavorable currency. Hydrogen demand remained strong while merchant gases volumes were positive.

Sales from the Industrial Gases — Europe, Middle East, and Africa (EMEA) segment climbed 8% year over year to $555 million driven by favorable energy pass-through, positive volumes and pricing, partly negated by unfavorable currency.

Sales from the Industrial Gases — Asia segment increased 15% year over year to $633 million on the back of strong volumes and higher pricing.

Financial Position

Air Products ended fiscal 2018 with cash and cash equivalents of $2,791.3 million, reflecting a year-over-year decrease of 14.7%. Long-term debt was down by 12.7% year over year to $2,967.4 million.

Outlook
        
Air Products anticipates adjusted earnings for fiscal 2019 to be in the range of $8.05 to $8.30 per share, reflecting a 10% increase at the midpoint year over year. The company expects adjusted earnings to be in the band of $1.85 to $1.90 per share for first-quarter fiscal 2019, up 5% at the midpoint year over year. The company also anticipates capital expenditure of $2.3-$2.5 billion for fiscal 2019.

Price Performance

Air Products’ shares have lost 1.5% over a year, compared with the industry’s decline of 15.9%.



Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are CF Industries Holdings, Inc. (CF - Free Report) , KMG Chemicals, Inc. and The Mosaic Company (MOS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have gained 34.1% in the past year.
 
KMG Chemicals has an expected long-term earnings growth rate of 28.5%. Its shares have risen 46% in a year’s time.

Mosaic has an expected long-term earnings growth rate of 7%. The company’s shares have rallied 42.8% in the past year.

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