Fiscal 2020 (comparisons versus prior year):
- GAAP EPS of $8.55, up eight percent, including an estimated $0.60-$0.65 negative impact from COVID-19; GAAP net income of $1,931 million, up seven percent; and GAAP net income margin of 21.8 percent, up 150 basis points
- Adjusted EPS* of $8.38, up two percent, including an estimated $0.60-$0.65 negative impact from COVID-19; adjusted EBITDA margin* of 40.9 percent, up 200 basis points
Q4 FY20 (comparisons versus prior year):
- GAAP EPS of $2.19, down four percent, including an estimated $0.15-$0.20 negative impact from COVID-19; GAAP net income of $495 million, down five percent; and GAAP net income margin of 21.3 percent, down 140 basis points
- Adjusted EPS* of $2.19, down four percent, including an estimated $0.15-$0.20 negative impact from COVID-19; adjusted EBITDA margin* of 40.4 percent, down 150 basis points
Fiscal 2020 Highlights
- Demonstrated strength, character and compassion during COVID-19: supported the talented, dedicated Air Products workforce; kept global plants running and supplied critical products; won significant new growth projects worldwide; supported local communities
- Announced $7 billion NEOM project, which will enable Air Products to supply carbon-free hydrogen to power buses and trucks around the world by 2025 and eliminate three million tons per year ("TPY") of carbon dioxide ("CO₂") emissions and eliminate smog-forming emissions and other pollutants from the equivalent of over 700,000 cars
- Signed long-term on-site contract for world-scale coal-to-methanol production facility in Indonesia, supporting energy independence and enabling the production of nearly two million TPY of methanol
- Announced additional large-scale projects and acquisitions: largest-ever U.S. investment in Gulf Coast Ammonia project (Texas City, Texas); completed acquisition of five operating U.S. hydrogen plants from and supplied hydrogen to PBF Energy (California and Delaware); brought steam methane reformer and cold box onstream (Geismar, Louisiana) supplying products to the Gulf Coast pipeline network; began construction of three nitrogen plants to condition imported natural gas for Gasunie national energy project (Groningen, Netherlands); won on-site supply contracts with next-generation electronics manufacturers in China and Malaysia
- Selected to supply world-leading LNG process technology and equipment for Mozambique’s first onshore LNG project; Qatargas’ massive LNG production expansion project in Ras Laffan, State of Qatar; and Sonatrach’s GL1Z LNG facility in Arzew, Algeria
- Executed successful debt offering of about US$5 billion (US$3.8 billion and €1.0 billion), supporting significant opportunities to invest in high-return industrial gas projects
- Raised dividend more than 15 percent to $1.34 per share per quarter, the largest per share dividend increase in the company's history
- Set new sustainability goals aligned with Air Products' business strategy and higher purpose to reduce CO2 emissions intensity (kg CO2/MM BTU) by one-third by the year 2030 from a 2015 baseline; achieve at least 28 percent female representation in the professional and managerial population globally, and at least 20 percent minority representation in that same population in the United States by 2025 from a 2020 baseline
#Earnings per share is calculated and presented on a diluted basis from continuing operations and 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 a reconciliation of GAAP to non-GAAP historical results can be found below.
Air Products (NYSE:APD) today reported fiscal year 2020 results, including GAAP EPS from continuing operations of $8.55, up eight percent over the prior year, as higher pricing helped to overcome an estimated $0.60-$0.65 per share negative impact from COVID-19. GAAP net income of $1,931 million was up seven percent on higher pricing. GAAP net income margin of 21.8 percent was up 150 basis points.
For the year, on a non-GAAP basis, adjusted EPS from continuing operations of $8.38 increased two percent over the prior year, as higher pricing helped to overcome an estimated $0.60-$0.65 per share negative impact from COVID-19. Adjusted EBITDA of $3.6 billion was up four percent on higher pricing, and adjusted EBITDA margin of 40.9 percent was up 200 basis points.
Full-year sales of $8.9 billion decreased one percent from the prior year, as three percent higher pricing and two percent higher volumes were more than offset by four percent unfavorable energy pass-through, one percent unfavorable currency and one percent from a contract modification to a tolling agreement in India. The volume growth was primarily driven by acquisitions and higher sale-of-equipment activities, which more than offset the negative impact from COVID-19.
Fiscal Fourth Quarter Results (Q4FY20)
For its fiscal fourth quarter ended September 30, 2020, Air Products reported GAAP EPS from continuing operations of $2.19, down four percent; GAAP net income of $495 million, down five percent, primarily driven by lower volumes; and GAAP net income margin of 21.3 percent, down 140 basis points, each versus prior year.
For the fiscal fourth quarter, on a non-GAAP basis, adjusted EPS from continuing operations of $2.19 was down four percent; adjusted EBITDA of $938 million was down two percent, primarily driven by lower volumes; and adjusted EBITDA margin of 40.4 percent was down 150 basis points, each versus prior year.
Fourth quarter sales of $2.3 billion increased two percent, as two percent higher pricing and one percent favorable currency more than offset one percent lower energy pass-through.
Commenting on the results, Air Products' Chairman, President and Chief Executive Officer Seifi Ghasemi said, "Despite the challenging COVID-19 environment, the Air Products team around the world demonstrated its commitment by keeping our plants running, supplying customers with essential products, and improving our profitability. Meanwhile, our existing on-site business—which represents more than half of our sales—continued to deliver stable cash flow. I would like to thank all of our more than 19,000 employees for their unwavering commitment to keep Air Products operating successfully during these difficult times, which we expect to continue during 2021. We were proud to announce landmark gasification and hydrogen for mobility megaprojects to meet the world’s increasing energy needs and move us all towards a better future. With our continued focus on creating shareholder value, we also increased our dividend for the 38th consecutive year, representing the largest per-share dividend increase in Air Products’ 80-year history.”
Fiscal Fourth Quarter Results by Business Segment
- Industrial Gases - Americas sales of $912 million decreased three percent from the prior year. Three percent lower volumes, primarily due to lower merchant demand impacts from COVID-19, one percent unfavorable currency and one percent lower energy pass-through were partially offset by two percent higher pricing. Operating income of $239 million decreased eight percent, as higher pricing was more than offset by lower volumes and higher planned maintenance. Operating margin of 26.2 percent decreased 160 basis points. Adjusted EBITDA of $411 million was flat, as higher pricing and a hydrogen acquisition were offset by lower volumes and higher planned maintenance activities. Adjusted EBITDA margin of 45.0 percent increased 110 basis points.
Sequentially, sales increased seven percent on four percent higher volumes, two percent favorable energy pass-through and one percent higher pricing.
- Industrial Gases - EMEA sales of $505 million increased three percent over the prior year. Volumes were flat despite lower merchant demand from COVID-19. Two percent higher pricing and four percent favorable currency more than offset three percent lower energy pass-through. Operating income of $123 million increased two percent, primarily due to higher pricing and favorable currency but partially offset by lower volumes and increased costs, and operating margin of 24.4 percent decreased 30 basis points. Adjusted EBITDA of $200 million increased four percent, primarily due to higher pricing and favorable currency, partially offset by lower volumes and increased costs. Adjusted EBITDA margin of 39.6 percent increased 10 basis points.
Sequentially, sales increased 18 percent on 11 percent higher volumes, driven by COVID-19-related recovery in the merchant business and acquisitions, six percent favorable currency, and one percent higher energy pass-through.
- Industrial Gases - Asia sales of $714 million decreased two percent from the prior year. Volumes decreased five percent, primarily due to continuing adverse effects of COVID-19, the impact of a customer outage, and the end of a short-term contract that contributed to the prior year. Pricing increased two percent, with higher pricing across most major product lines. Operating income of $211 million decreased nine percent, primarily due to the lower volume, and operating margin of 29.5 percent decreased 210 basis points. Adjusted EBITDA of $330 million decreased seven percent, primarily due to lower volume, and adjusted EBITDA margin of 46.3 percent decreased 200 basis points.
Sequentially, sales increased nine percent on seven percent higher volumes from new plants and base business recovery, and two percent favorable currency.
Ghasemi added, “Despite significant uncertainty in the global economy and ongoing challenges from COVID-19, we continue to deliver value through our stable business model, financial position, exciting growth opportunities, and the unwavering commitment and discipline of our people. Around the world, the energy transition is a focus for economic recovery, and our expertise, technology and people put Air Products at the heart of providing sustainable energy and environmental solutions. As we put our higher purpose into action, including our focus on sustainability and diversity, we continue to stand together and work together to make a difference.”
New Accounting Guidance
Effective October 1, 2019, Air Products adopted accounting standards pertaining to leases and hedging activities. In accordance with the new lease guidance, we recorded lease liabilities and right-of-use assets on our consolidated balance sheets for operating leases where we are the lessee. In adopting the new hedging guidance, we presented the impacts of excluded components from our cash flow hedges on intercompany loans in other non-operating income (expense), net. In the prior year, these impacts were included in interest expense. The adoption of these accounting standards did not have a significant impact on the Company’s net income in fiscal 2020 or the fourth quarter of fiscal 2020.
Access the Q4 earnings teleconference scheduled for 10:00 a.m. Eastern Time on November 11, 2020 by calling 323-794-2093 and entering passcode 5106187 or access the Event Details page on Air Products’ Investor Relations website.