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News ReleaseAir Products Reports Fiscal 2016 Second Quarter Adjusted EPS Up 17* Percent

April 28, 2016 Lehigh Valley, Pa.

  • Quarterly adjusted EPS from continuing operations of $1.82 up 17 percent driven by restructuring and self-help measures, up 20 percent at constant exchange rates
  • Quarterly adjusted EBITDA margin of 35.1 percent up 560 basis points, and adjusted Return on Capital Employed (ROCE) of 13.0 percent up 200 basis points versus prior year
  • Quarterly GAAP EPS from continuing operations of $1.74 versus prior year of $1.34 
  • Announced decision to exit Energy-from-Waste (EfW) business; segment presented as a discontinued operation 
  • Fiscal 2016 third quarter adjusted EPS from continuing operations guidance of $1.87 to $1.92, up 13 to 16 percent versus prior year 
  • Increasing fiscal full-year 2016 adjusted EPS from continuing operations guidance of $7.40 to $7.55, up 12 to 14 percent 

*The results and guidance in this release, including in the highlights above, unless otherwise indicated, are based on “adjusted” non-GAAP continuing operations. A reconciliation of GAAP to non-GAAP results can be found at the end of this release.

Air Products (NYSE: APD) today reported adjusted net income from continuing operations of $397 million, up 18 percent versus prior year, and adjusted earnings per share (EPS) from continuing operations of $1.82, up 17 percent versus prior year, for its fiscal second quarter ended March 31, 2016.

On a GAAP basis, net income from continuing operations was $380 million and EPS from continuing operations was $1.74 for the quarter.

Second quarter sales of $2,271 million decreased six percent from the prior year on unfavorable currency and lower energy pass-through of three percent each. Volumes were unchanged, as Industrial Gases – Asia growth continued while most other segment volumes were lower. Pricing overall was flat despite higher pricing in Industrial Gases – Americas and Industrial Gases – Europe, Middle East and Africa (EMEA).

Adjusted operating income of $532 million increased 20 percent versus prior year, and record adjusted operating margin of 23.4 percent improved 500 basis points. Adjusted EBITDA of $797 million increased 12 percent over prior year, and record adjusted EBITDA margin of 35.1 percent improved 560 basis points. Adjusted ROCE increased 200 basis points to 13 percent. Restructuring and self-help measures drove this improvement.

Commenting on the results, Seifi Ghasemi, chairman, president and chief executive officer, said, “With their sharp focus on executing our strategic Five-Point plan by controlling what they can control, the committed and motivated team at Air Products delivered excellent results again this quarter. In the face of challenging economic conditions and a weak manufacturing environment, Air Products again posted significant profit improvement, with EPS up 17 percent and record EBITDA margin of 35.1 percent, up 560 basis points. We have now delivered seven consecutive quarters of double-digit EPS growth.”

Air Products Q2FY16 Earnings Release – Tables
Reconciliation of Non-GAAP Measures, Consolidated Income Statements, Consolidated Balance Sheets, Consolidated Statements of Cash Flows, Summary by Business Segments, Notes to Consolidated Financial Statements
Download PDF (850 KB)

Second Quarter Results by Business Segment:

  • Industrial Gases – Americas sales of $798 million decreased 10 percent versus prior year, as lower energy pass-through reduced sales by six percent and unfavorable currency reduced sales by three percent. Volumes decreased two percent, primarily on lower demand in Latin America, as well as weakness in the oilfield services and North American steel markets. Pricing increased one percent. Operating income of $224 million increased 23 percent over prior year, and adjusted EBITDA of $341 million increased 14 percent, driven by the benefits from restructuring actions and lower maintenance costs. Record operating margin of 28.1 percent improved 770 basis points, and record adjusted EBITDA margin of 42.8 percent improved 910 basis points over prior year. 

  • Industrial Gases – EMEA sales of $420 million declined six percent versus last year, with lower energy pass-through reducing sales by four percent and unfavorable currency reducing sales by three percent. Underlying sales were up one percent, as two percent higher pricing was partially offset by one percent lower volumes. Operating income of $89 million increased 26 percent from the prior year, and adjusted EBITDA of $145 million increased 14 percent versus prior year on the benefits from restructuring and pricing actions. Record operating margin of 21.3 percent increased 550 basis points, and record adjusted EBITDA margin of 34.5 percent increased 630 basis points over the prior year.
  • Industrial Gases – Asia sales of $406 million increased three percent versus prior year, as volume growth of 10 percent, driven by both strong underlying business and new plants, was partially offset by six percent unfavorable currency and one percent lower pricing. Operating income of $104 million increased 23 percent and adjusted EBITDA of $170 million increased 18 percent on the benefits from restructuring actions and higher volumes. Operating margin of 25.7 percent improved 410 basis points over prior year, and adjusted EBITDA margin of 41.9 percent increased 520 basis points. Profits declined sequentially, primarily on lower merchant volumes due to the Lunar New Year holiday.

  • Materials Technologies sales of $494 million decreased seven percent versus the prior year on six percent lower volumes. Operating income of $129 million was up four percent and adjusted EBITDA of $150 million was up one percent from prior year, with price and raw materials management, mix and restructuring actions driving the profit improvement. Record operating margin of 26.2 percent was up 290 basis points, and record adjusted EBITDA margin of 30.2 percent was up 240 basis points.
    • Electronic Materials sales of $234 million declined 10 percent from the prior year due to lower delivery systems volumes. Operating margin of 30.1 percent was up 400 basis points and adjusted EBITDA margin of 35.5 percent increased 320 basis points, driven by favorable pricing and mix and the benefits of restructuring actions. 

    • Performance Materials sales of $261 million decreased five percent from the prior year on two percent lower volumes, driven by weaker additives and epoxies demand, and two percent lower pricing. Operating margin of 22.8 percent and adjusted EBITDA margin of 25.8 percent were both up 160 basis points, driven by lower raw material costs.

In the second fiscal quarter of 2016:

  • The EfW business segment has been accounted for as a discontinued operation. A loss on disposal of $946 million pre-tax ($847 million after-tax) was recorded, primarily to write down the assets to their estimated net realizable value.

  • Non-GAAP results for the Company exclude $8.6 million, or $0.03 per share, of expenses for cost reduction actions; $7.4 million, or $0.04 per share, in legal and advisory fees related to the intended separation of the Company’s Materials Technologies business; and $2.6 million, or $0.01 per share, for pension settlement costs.


The capital expenditure forecast for fiscal year 2016 is approximately $1.2 billion.

Air Products expects fiscal 2016 third quarter adjusted EPS from continuing operations to be between $1.87 and $1.92 per share, up 13 to 16 percent versus prior year.

The Company is increasing its full-year fiscal 2016 adjusted EPS from continuing operations guidance to $7.40 to $7.55 earnings per share, up 12 to 14 percent from the prior year. The Company’s previous guidance was $7.25 to $7.50.

Access the Q2 earnings teleconference scheduled for 10:00 a.m. Eastern Time on April 28 by calling (913) 312-0726 and entering passcode 6881421, or access the Event Details page on Air Products’ Investor Relations web site.

About Air Products
Air Products (NYSE:APD) is a world-leading Industrial Gases company celebrating 75 years of operation. The Company’s core Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. Air Products is also the world’s leading supplier of liquefied natural gas process technology and equipment. The Company’s Materials Technologies business serves the semiconductor, polyurethanes, cleaning and coatings, and adhesives industries.

The Company had fiscal 2015 sales of $9.9 billion and was ranked number 284 on the Fortune 500 annual list of public companies. Approximately 20,000 employees in 50 countries strive to make Air Products the world’s safest and best performing Industrial Gases company, providing sustainable offerings and excellent service to all customers. For more information, visit

NOTE: This release contains "forward-looking statements" within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about earnings guidance and business outlook. These forward-looking statements are based on management's reasonable expectations and assumptions as of the date of this release. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors not anticipated by management, including, without limitation, global or regional economic conditions and supply and demand dynamics in market segments into which the Company sells; significant fluctuations in interest rates and foreign currencies from that currently anticipated; with regard to the previously announced separation of Materials Technologies, general economic and business conditions that may affect the separation and the execution thereof, changes in capital market conditions, or the Company’s decision not to consummate the separation due to market, economic or other events; future financial and operating performance of major customers; unanticipated contract terminations or customer cancellations or postponement of projects and sales; asset impairments due to economic conditions or specific events; the impact of competitive products and pricing; challenges of implementing new technologies; ability to protect and enforce the Company's intellectual property rights; unexpected changes in raw material supply and markets; the impact of price fluctuations in natural gas and disruptions in markets and the economy due to oil price volatility; the ability to recover increased energy and raw material costs from customers; costs and outcomes of litigation or regulatory investigations; the success of productivity and cost reduction programs; the timing, impact, and other uncertainties of future acquisitions or divestitures; political risks, including the risks of unanticipated government actions; acts of war or terrorism; the impact of changes in environmental, tax or other legislation and regulatory activities in jurisdictions in which the Company and its affiliates operate; and other risk factors described in the Company's Form 10-K for its fiscal year ended September 30, 2015. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this release to reflect any change in the Company's assumptions, beliefs or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.

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    Air Products and Chemicals, Inc.
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    Air Products and Chemicals, Inc.
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