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Air Products Reports Fiscal 2018 Third Quarter GAAP EPS Up 315 Percent and Record Adjusted EPS Up 18 Percent over Prior Year

Q3 FY18 (all from continuing operations):

  • GAAP EPS of $1.95, up 315 percent from the prior year; GAAP net income of $431 million
  • Record adjusted EPS of $1.95, up 18* percent versus prior year
  • Record adjusted EBITDA margin of 36.3* percent, up 220 basis points versus prior year


  • Closed on Lu'An gasification project in China; acquired Shell’s coal gasification technology/patents
  • Brought $350 million steam methane reformer onstream, supplying Covestro (Baytown, Texas), other customers linked to Air Products’ Gulf Coast hydrogen and CO pipeline networks
  • Opened world-class India engineering center at Pune and inaugurated industrial gas complex within the Integrated Refinery Expansion Project (IREP) of BPCL's Refinery in Kochi


  • Increased fiscal 2018 adjusted EPS guidance to $7.40 to $7.45 per share, now up 17 to 18 percent over prior year. Fiscal 2018 fourth quarter adjusted EPS guidance of $1.95 to $2.00 per share, up 11 to 14 percent over fiscal 2017 fourth quarter.
  • Expected fiscal year 2018 capital spending of $1.8 to $2.0 billion 

*The results and guidance in this release, including in the highlights above, include references to non-GAAP continuing operations measures. These exclude discontinued operations and are identified by the word “adjusted” preceding the measure. A reconciliation of GAAP to non-GAAP results can be found below.

Air Products (NYSE: APD) today reported net income from continuing operations of $431 million and diluted earnings per share (EPS) from continuing operations of $1.95 for its fiscal third quarter ended June 30, 2018. There were no non-GAAP adjustments in the quarter.

On a GAAP continuing operations basis, net income and diluted EPS increased 313 percent and 315 percent, respectively, over the prior year. On a non-GAAP continuing operations basis, net income and diluted EPS increased 19 percent and 18 percent, respectively, over the prior year.

Third quarter sales of $2.3 billion increased six percent from the prior year on three percent higher volumes, three percent favorable currency, and one percent higher pricing, partially offset by one percent lower energy pass-through. Volumes were higher in all three Industrial Gas regions, partially offset by lower activity from the Jazan project. Excluding Jazan, volumes were up seven percent. Pricing increased one percent, driven primarily by the China and Europe merchant businesses.

For the quarter, adjusted EBITDA of $820 million increased 13 percent over the prior year, driven by the higher volumes, positive pricing, favorable currency and equity affiliate income. Record adjusted EBITDA margin of 36.3 percent increased 220 basis points over the prior year.

Commenting on the results, Seifi Ghasemi, chairman, president and chief executive officer, said, “The people of Air Products have delivered another excellent set of safety and financial results, including record adjusted EPS and record adjusted EBITDA margin. We continued to generate significant cash, which supports our robust dividend and future investment opportunities. Meanwhile, we are executing on our overall growth strategy, acquiring the Shell gasification technology and closing on the Lu’An project this past quarter. This is a team committed to working together, winning together and being best-in-class in everything we do."

Air Products Q3FY18 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 (924 KB)

Third Quarter Results by Business Segment

  • Industrial Gases – Americas sales of $949 million increased two percent over prior year, with six percent higher volumes partially offset by four percent lower energy cost pass-through. Hydrogen demand remained strong, and underlying merchant gases volumes were positive. Adjusted EBITDA of $382 million increased four percent over the prior year, primarily driven by the higher volumes and a contract termination, partially offset by higher planned maintenance costs.

  • Industrial Gases – EMEA sales of $561 million increased 24 percent over prior year. Volumes increased 12 percent, with approximately 10 percent from the new hydrogen plant in India and two percent from merchant volume improvement. Pricing improved three percent, primarily driven by packaged gases. Currency and energy pass-through increased sales by seven and two percent, respectively. Adjusted EBITDA of $186 million increased 19 percent over the prior year, primarily from the new plant in India and higher merchant volume, pricing and favorable currency. Adjusted EBITDA margin of 33.2 percent decreased 160 basis points; excluding energy pass-through and the India plant, which has comparatively high natural gas costs, adjusted EBITDA margin was up more than 100 basis points.

  • Industrial Gases – Asia sales of $624 million increased 16 percent over prior year. Volumes increased six percent; excluding the impact of a one-time equipment sale last year, volumes were up 16 percent. Favorable currency increased sales by six percent versus prior year. Pricing was up four percent versus prior year, largely driven by the China merchant market. Adjusted EBITDA of $270 million increased 28 percent on the strong volumes, favorable currency and higher pricing. Adjusted EBITDA margin of 43.3 percent was up 400 basis points over prior year.


Ghasemi said, “Over the past four years, we have successfully executed against our Five-Point Plan by focusing on our industrial gas business, decentralizing the company, changing the culture, controlling capital and costs, and aligning the rewards system. As we evolve that Plan to shape our success for the coming years, we will put all our energy into sustaining leading safety and financial performance, investing $15 billion in high-quality industrial gas projects, driving an accountable and inclusive culture, and fulfilling our higher purpose as a company. We remain very optimistic about the future growth of Air Products."

Again increasing guidance for fiscal 2018, Air Products now expects full-year adjusted EPS of $7.40 to $7.45 per share, up 17 to 18 percent over prior year. For the fiscal 2018 fourth quarter, Air Products expects adjusted EPS of $1.95 to $2.00 per share, up 11 to 14 percent over the fiscal 2017 fourth quarter.

The capital expenditure forecast for fiscal year 2018 now is expected to be in the range of $1.8 to $2.0 billion on a GAAP and non-GAAP basis.

Management has provided adjusted EPS and adjusted tax rate guidance on a continuing operations basis. While Air Products might have additional impacts from the U.S. Tax Cuts and Jobs Act adopted in late 2017, or incur additional costs for items such as cost reduction actions and pension settlements in future periods, it is not possible, without unreasonable efforts, to identify the amount or significance of these events or the potential for other transactions that may impact future GAAP EPS or the effective tax rate. Management does not believe these items to be representative of underlying business performance. Accordingly, management is unable to reconcile, without unreasonable effort, the Company’s forecasted range of adjusted EPS or the impact of the adjusted tax rate to a comparable GAAP range.

Earnings Teleconference
Access the Q3 earnings teleconference scheduled for 10:00 a.m. Eastern Time on July 26 by calling 323-794-2588 and entering passcode 7745198, or access the Event Details page on Air Products’ Investor Relations web site.

View entire earnings release with all financial tables.