In This Article:
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Adjusted Earnings Per Share (EPS): $2.69, below previous guidance of $2.75 to $2.85.
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Sales Volume: Down 3%, with 2% driven by LNG business divestment.
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Total Company Price Increase: Up 1%, equating to a 3% improvement for the merchant business.
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Adjusted Operating Income: Decreased 9%, mainly due to LNG divestiture and unfavorable helium impact.
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Operating Margin: Down 210 basis points, with approximately 100 basis points driven by higher energy pass-through.
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Second Quarter Adjusted EPS Decrease: $0.16 decrease from prior year.
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FY25 Full-Year Adjusted EPS Guidance: Range of $11.85 to $12.15.
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Third Quarter Adjusted EPS Guidance: Range of $2.90 to $3.00.
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Full-Year Capital Expenditures: Approximately $5 billion.
Release Date: May 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Air Products & Chemicals Inc (NYSE:APD) has a strong core industrial gas business with $12 billion in sales and a 24% operating margin.
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The company is the leading supplier of hydrogen, with extensive pipeline networks, including the world's largest at the U.S. Gulf Coast.
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APD is progressing well with its green hydrogen project in Saudi Arabia, expecting product availability by 2027.
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The company plans to focus on its core business, aiming for a $1.5 billion annual investment in industrial gas projects with high return thresholds.
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APD anticipates achieving high single-digit adjusted EPS growth and improved operating margins from 2026 to 2029, with significant potential unlocked by 2030.
Negative Points
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APD has faced significant project delays and cost overruns, particularly in its underperforming projects totaling about $5 billion in CapEx.
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The company has increased its financial leverage and headcount significantly, with plans to reduce headcount by 2,500 to 3,000 positions by 2028.
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APD's second quarter adjusted earnings per share of $2.69 fell below previous guidance, impacted by lower helium contributions and higher costs.
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The Alberta project has experienced substantial cost increases and delays, with costs ballooning to almost three times the original plan.
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APD's gasification projects in China have contributed close to zero EPS, with performance issues in two out of three projects.
Q & A Highlights
Q: Can you provide insights on the underperforming projects and their financial impact? A: Eduardo Menezes, CEO, explained that the underperforming projects are expected to recover capital on an undiscounted basis, meaning they will cover depreciation costs. The Alberta project faced self-inflicted issues, leading to cost overruns and delays. The company has taken corrective actions, including replacing project management teams and contractors, to address these challenges.