Air Products and Chemicals, Inc.APD beat earnings expectations in first-quarter fiscal 2018 (ended Dec 31, 2017).
The industrial gases giant logged fiscal first quarter adjusted earnings of $1.79 per share, up 22% from the year-ago quarter. Earnings surpassed the Zacks Consensus Estimate of $1.66.
Net income (as reported) from continuing operations, for the reported quarter, was down 38% year over year to $156 million or 70 cents per share. The results include a $239 million (or $1.09 per share) charge associated with the U.S. Tax Cuts and Jobs Act.
Cost of sales rose roughly 19.4% year over year to around $1.6 billion. Selling and administrative expenses increased 16.3% year over year to $191.6 million.
Air Products posted fiscal first quarter revenues of $2,216.6 million, up around 18% year over year. The top line also beat the Zacks Consensus Estimate of $2,159.2 million. A 13% increase in volumes, 2% rise in price and 3% favorable currency impact contributed to revenue growth.
Air Products and Chemicals, Inc. Price, Consensus and EPS Surprise
Revenues from the Industrial Gases — America segment grew 5% year over year to $910 million in the fiscal first quarter, supported by higher volumes along with strong hydrogen demand.
Sales from the Industrial Gases — Europe, Middle East, and Africa (EMEA) segment rose 29% year over year to $516 million due to 17% higher volumes, 9% favorable currency and 3% favorable energy pass through.
Sales from the Industrial Gases — Asia segment increased 47% year over year to $644 million on the back of an 8% increase in volumes and a 7% rise in price.
Financial Position
Air Products ended first-quarter fiscal 2018 with cash and cash equivalents of $2,722.6 million, reflecting a 3.1% rise year over year. Total long-term debt decreased around 3.8% year over year to $3,414.9 million.
Outlook
For fiscal 2018, Air Products anticipates adjusted earnings in the range of $7.15-$7.35 per share, up 13-16% from the prior year. The guidance includes an expected benefit of 20-25 cents per share from the U.S. Tax Cuts and Jobs Act. The company expects adjusted earnings in the band of $1.65-$1.70 per share for the fiscal second quarter. It also sees capital expenditure of $1.2-$1.4 billion for fiscal 2018.
Price Performance
Air Products’ shares have moved up 7.8% over the last three months, outperforming the industry’s 4.8% gain.
Zacks Rank & Other Stocks to Consider
Air Products currently carries a Zacks Rank #2 (Buy). Other stocks worth considering in the basic materials space include Methanex Corporation MEOH, BASF SE BASFY and Kronos Worldwide Inc. KRO.
BASF has an expected long-term earnings growth rate of 8.7% and a Zacks Rank #2 (Buy). Shares of the company have rallied 21.8% in a year.
Kronos has an expected long-term earnings growth rate of 5% and a Zacks Rank of 1. Its shares have skyrocketed 110% over a year.
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