- Non-GAAP diluted EPS of $1.55*, up 16 percent* versus prior year and above guidance range
- Adjusted EBITDA up 10 percent* versus prior year
- Strong performance driven by lower costs and improvement in volumes and price
- New organizational structure in place and delivering results
- GAAP EPS of $1.50 versus prior year of $1.34
Air Products (NYSE:APD) today reported net income of $335 million*, up 17 percent* versus prior year, and diluted earnings per share (EPS) of $1.55*, up 16 percent* versus prior year, on a non-GAAP continuing operations basis for its fiscal first quarter ended December 31, 2014.
On a GAAP basis, net income and diluted EPS from continuing operations were $325 million and $1.50, respectively, for the quarter.
*The results and guidance in this release, unless otherwise indicated, are based on non-GAAP continuing operations. A reconciliation of GAAP to non-GAAP results can be found at the end of this release.
First quarter sales of $2,561 million increased one percent versus prior year, as higher volumes and pricing were largely offset by unfavorable currency impacts and the exit from the Polyurethane Intermediates Business (PUI). Excluding these impacts, underlying sales increased five percent on four percent higher volumes with strength across most of the segments. Sequentially, sales declined four percent on lower seasonal volumes and unfavorable currency impacts.
Operating income of $445 million increased 15 percent versus prior year as higher volumes, favorable cost performance, and stronger pricing more than offset unfavorable currency impacts. Operating margin of 17.4 percent improved 230 basis points. Adjusted EBITDA of $723 million increased 10 percent, and EBITDA margin of 28.2 percent improved 240 basis points over prior year. Sequentially, operating income declined six percent, mainly due to lower seasonal volumes and unfavorable currency impacts.
Commenting on the quarter, Seifi Ghasemi, chairman, president and chief executive officer, said, “We started fiscal 2015 strong, delivering double-digit EBITDA and earnings growth. These results clearly demonstrate our people’s focus on safety, cost, and serving our customers in the new organization. Despite economic uncertainty, we are greatly encouraged by these results, and the team is focused on the actions we can control to deliver on our commitments.”
First Quarter Results by Business Segment
- Industrial Gases – Americas sales of $1,003 million increased six percent versus prior year, primarily on higher North America volumes and stronger pricing. Sequentially, underlying sales declined one percent, primarily due to seasonality in North America. Operating income of $211 million increased 14 percent, and operating margin of 21.1 percent improved 160 basis points over prior year on higher North America volumes, pricing, and favorable cost performance. Adjusted EBITDA of $332 million increased eight percent, and EBITDA margin of 33.1 percent improved 70 basis points over prior year.
- Industrial Gases – Europe, Middle East, and Africa (EMEA) sales of $501 million declined nine percent versus last year, primarily on a seven percent unfavorable currency impact. Underlying sales were flat, with modest liquid bulk volume growth offset by weaker packaged gases. Operating income of $81 million and adjusted EBITDA of $143 million were both down five percent versus prior year, primarily due to the unfavorable currency impact. Operating margin of 16.2 percent improved 70 basis points, and EBITDA margin of 28.5 percent improved 130 basis points over prior year.
- Industrial Gases – Asia sales of $399 million increased one percent versus prior year. Volumes increased six percent, primarily from new plants coming onstream, partially offset by lower energy pass-through and currency. Operating income of $91 million increased nine percent, and operating margin of 22.7 percent improved 180 basis points over prior year due to higher volumes and favorable cost performance. Adjusted EBITDA of $155 million increased 12 percent, and EBITDA margin of 38.8 percent improved 370 basis points over prior year.
- Materials Technologies sales of $524 million increased nine percent versus prior year on 11 percent higher volumes. Electronics Materials sales were up 13 percent and Performance Materials sales increased six percent over prior year on volume growth in all business units. Sequentially, sales decreased seven percent on Performance Materials volume seasonality and strong prior quarter equipment sales in Electronics. Operating income of $105 million increased 63 percent, and operating margin of 20 percent improved 660 basis points versus prior year, primarily due to higher volumes and favorable cost performance. Adjusted EBITDA of $129 million increased 45 percent, and EBITDA margin of 24.7 percent improved 610 basis points over prior year.
Non-GAAP results for the company exclude a pre-tax charge of $32.4 million, or $0.10 per share, for business restructuring and cost reduction actions, and a pre-tax gain of $17.9 million, or $0.05 per share, on the revaluing of a previously held equity interest.
The capital expenditure forecast for the fiscal year 2015 remains between $1.7 billion and $1.9 billion.
Looking ahead, Air Products expects second quarter EPS from continuing operations to be between $1.50 and $1.55 per share, and guidance for continuing operations for fiscal 2015 of $6.35 to $6.55 per share.
Access the Q1 earnings teleconference scheduled for 10:00 a.m. Eastern Time on January 29 by calling 719-325-4837 and entering pass code 8508729, or access the Event Details page on Air Products’ Investor Relations web site.
View entire earnings release with all financial tables.