Air Products Reports Fiscal 2021 Fourth Quarter GAAP EPS# and Adjusted EPS* of $2.51

Fiscal 2021 (comparisons versus prior year):

• GAAP EPS of $9.12, up seven percent; GAAP net income of $2,115 million, up 10 percent; and GAAP net income margin of 20.5 percent, down 130 basis points.

• Adjusted EPS* of $9.02, up eight percent; adjusted EBITDA* of $3,883 million, up seven percent; and adjusted EBITDA margin* of 37.6 percent, down 330 basis points.

Q4 FY21 (comparisons versus prior year):

• GAAP EPS of $2.51, up 15 percent; GAAP net income of $619 million, up 25 percent; and GAAP net income margin of 21.8 percent, up 50 basis points. 

• Adjusted EPS* of $2.51, up 15 percent; adjusted EBITDA* of $1,041 million, up 11 percent; and adjusted EBITDA margin* of 36.6 percent, down 380 basis points. 

Fiscal 2021 and Recent Highlights 

• Increased quarterly dividend 12 percent to $1.50 per share, the 39th consecutive year of increases.

• Recognized for sustainability performance by EcoVadis, Barron’s 100 Most Sustainable Companies, 100 Best Corporate Citizens, Human Rights Campaign Foundation’s 2021 Corporate Equality Index, and Dow Jones Sustainability Index North America, among others. As a signatory to the CEO Action for Diversity & Inclusion™ and in keeping with Air Products’ goal to be the most diverse industrial gas company in the world, hosted Day of Understanding/Week of Inclusion, underpinning company’s announced diversity, inclusion and belonging goals. 

• Completed asset acquisition and project financing transactions for the ~$12 billion air separation unit/gasification/power joint venture with Aramco, ACWA Power and Air Products Qudra in Jazan Economic City, Saudi Arabia. 

• Announced landmark net-zero hydrogen energy complex in Edmonton, Alberta, Canada, setting the stage for Air Products to operate the most competitive and lowest-carbon-intensity hydrogen network in the world.  The facility’s combination of advanced hydrogen reforming technology, carbon capture and storage, and hydrogen-fueled electricity generation makes net-zero possible. 

• Announced $4.5 billion world-scale clean energy complex in Louisiana, helping to advance the U.S. clean energy transition. Air Products will build, own and operate the megaproject, which will produce over 750 million standard cubic feet per day of blue hydrogen for local and global markets when operational in 2026. This megaproject will also capture and permanently sequester over five million metric tons per year of carbon dioxide, making it the largest carbon capture for sequestration facility in the world. 

Guidance

• 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 first quarter adjusted EPS guidance* of $2.45 to $2.55, up 16 to 20 percent over prior year first 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 fiscal year 2021 results, including GAAP EPS from continuing operations of $9.12, up seven percent over prior year, and GAAP net income of $2,115 million, up 10 percent over prior year due to favorable pricing, currencies, equity affiliate income, and a discontinued operations related tax reserve release, partially offset by higher costs to support growth. GAAP net income margin of 20.5 percent was down 130 basis points, including higher energy cost pass-through, which negatively impacted margin by about 100 basis points.

For the year, on a non-GAAP basis, adjusted EPS from continuing operations of $9.02 increased eight percent over the prior year, and adjusted EBITDA of $3,883 million was up seven percent over the prior year, as favorable pricing, currencies, and equity affiliate income more than offset higher costs to support growth. Adjusted EBITDA margin of 37.6 percent decreased 330 basis points, primarily due to higher energy cost pass-through, which negatively impacted margin by about 200 basis points.

Full-year sales of $10.3 billion increased 17 percent over the prior year, on six percent higher energy pass-through, five percent higher volumes, four percent favorable currency, and two percent higher pricing. Volume growth was primarily driven by the EMEA and Global Gases segments, and pricing improved in all three regions and across most major product lines. 

Fiscal Fourth Quarter Results (Q4FY21)

For its fiscal fourth quarter 2021, Air Products reported GAAP EPS from continuing operations of $2.51, up 15 percent over prior year, and GAAP net income of $619 million, up 25 percent over prior year, as favorable volume, pricing, currencies, equity affiliate income, and a discontinued operations related tax reserve release more than offset higher costs. GAAP net income margin of 21.8 percent was up 50 basis points over prior year, primarily due to higher energy cost pass-through, which negatively impacted margin by about 150 basis points.

For the quarter, on a non-GAAP basis, adjusted EPS from continuing operations of $2.51 was up 15 percent over prior year, and adjusted EBITDA of $1,041 million was up 11 percent over prior year due to favorable volume, pricing, currencies, and equity affiliate income, partially offset by higher costs. Adjusted EBITDA margin of 36.6 percent was down 380 basis points versus prior year, primarily due to higher energy cost pass-through, which negatively impacted margin by about 300 basis points. 

Fourth quarter sales of $2,841 million increased 22 percent on nine percent higher volumes, eight percent higher energy cost pass-through, three percent higher pricing and two percent favorable currency. Volume growth from improved hydrogen and merchant demand and new assets more than offset reduced contributions from the Lu'An facility in China. Pricing again improved in all three regions. 

Commenting on the results, Air Products' Chairman, President and Chief Executive Officer Seifi Ghasemi said, "The committed, dedicated and motivated team at Air Products proved once again that they can deliver results now while developing and executing megaprojects for profitable growth in the future. We delivered excellent results for the year, despite significant external challenges. We announced significant projects across our core gasification, carbon capture and hydrogen growth platforms, including the net-zero hydrogen facility in Alberta, Canada and the massive blue hydrogen project in Louisiana, while also closing on the $12 billion Jazan acquisition. I remain very optimistic about the future of Air Products.”

Fiscal Fourth Quarter Results by Business Segment  

• Industrial Gases - Americas sales of $1,115 million were up 22 percent over the prior year on 15 percent higher energy cost pass-through, four percent higher pricing, and three percent higher volumes, driven primarily by hydrogen and merchant demand. Operating income of $290 million increased 22 percent on higher volumes, pricing and lower maintenance costs; adjusted EBITDA of $476 million increased 16 percent on these same factors as well as higher equity affiliate income. Operating margin of 26.0 percent decreased 20 basis points, as an approximately 300 basis point negative impact from higher energy cost pass-through was largely offset by lower costs and favorable pricing. Adjusted EBITDA margin of 42.7 percent decreased 230 basis points, as an approximately 550 basis point negative impact from higher energy cost pass-through was partially offset by lower costs and higher equity affiliate income. 

• Industrial Gases - EMEA sales of $674 million increased 33 percent over the prior year on 14 percent higher volumes, driven primarily by hydrogen and merchant demand and new assets; 12 percent higher energy cost pass-through; four percent higher pricing; and three percent favorable currency. Operating income of $136 million increased 11 percent on higher volumes, pricing and favorable currency, partially offset by energy cost escalation during the quarter; adjusted EBITDA of $229 million increased 14 percent on these same factors as well as higher equity affiliate income. Operating margin of 20.2 percent decreased 420 basis points, with higher energy cost pass-through accounting for about 200 basis points of the decline. Adjusted EBITDA margin of 34.0 percent decreased 560 basis points, with higher energy cost pass-through accounting for approximately 400 basis points of the decline. 

• Industrial Gases - Asia sales of $754 million increased six percent over the prior year on five percent favorable currency and one percent higher pricing. Volumes were flat, with new plants offsetting reduced contributions from Lu'An. Operating income of $206 million decreased two percent as favorable pricing and currency were more than offset by higher costs, and operating margin of 27.3 percent decreased 220 basis points. Adjusted EBITDA of $341 million increased three percent as favorable pricing and currency more than offset higher costs. Adjusted EBITDA margin of 45.3 percent decreased 100 basis points. 

Outlook

Air Products expects 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 first quarter, Air Products' adjusted EPS guidance is $2.45 to $2.55, up 16 to 20 percent over fiscal 2021 first 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. 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 EPS. Management therefore is unable to reconcile, without unreasonable effort, the Company’s forecasted range of adjusted EPS and effective tax rate to a comparable GAAP range.

Earnings Teleconference
Access the Q4 earnings teleconference scheduled for 11:00 a.m. Eastern Time on November 4, 2021 by calling 323-794-2588 and entering passcode 1560168 or access the Event Details page on Air Products’ Investor Relations website.