Air Products & Chemicals : 07 November 2019 Air Products Reports Fiscal 2019 GAAP EPS** of $7.94, Up 20 Percent, and Adjusted EPS* of $8.21, Up 10 Percent View News Release →

November 07, 2019 Lehigh Valley, Pa.

Fiscal 2019 (comparisons versus prior year):

• GAAP EPS** of $7.94, up 20 percent; GAAP net income of $1,809 million, up 18 percent; and GAAP net income margin of 20.3 percent, up 310 basis points
• Adjusted EPS* of $8.21, up 10 percent; adjusted EBITDA margin* of 38.9 percent, up 400 basis points

Q4 FY19 (comparisons versus prior year):

• GAAP EPS** of $2.27, up 11 percent; GAAP net income of $519 million, up 13 percent; and GAAP net income margin of 22.7 percent, up 270 basis points
• Adjusted EPS* of $2.27, up 14 percent; adjusted EBITDA margin* of 41.9 percent, up 610 basis points

Fiscal 2019 Highlights

• 37th consecutive year of dividend increase
• Continued to execute gasification strategy:
• • Confirmed final negotiations to form $11.5 billion joint venture to acquire the gasification/power/industrial gas assets at Jazan Economic City, Saudi Arabia
  • Closed on GE gasification technology acquisition
  • Announced new China gasification project with Debang
• Continued to win and successfully execute base business projects around the world

Guidance

• Fiscal 2020 full-year adjusted EPS guidance of $9.35 to $9.60 per share*, up 14 to 17 percent over prior year adjusted EPS*, including the expected contribution from the Jazan gas and power project; fiscal 2020 first quarter adjusted EPS guidance of $2.05 to $2.10 per share*, up 10 to 13 percent over fiscal 2019 first quarter adjusted EPS*
• Expected fiscal year 2020 capital expenditures* of approximately $4 billion to $4.5 billion, including the expected spending for the Jazan gas and power project

*The identified results and guidance in this release, including in the highlights above, include references to non-GAAP financial measures. Additional information regarding these measures and a reconciliation of GAAP to non-GAAP historical results can be found below. In addition, as discussed below, it is not possible, without unreasonable efforts, to identify the timing or occurrence of events and transactions that could significantly impact future GAAP EPS or cash flow from investing activities if they were to occur.

**Earnings per share is from continuing operations and attributable to Air Products.

Air Products (NYSE:APD) today reported fiscal year 2019 results, including GAAP diluted EPS from continuing operations of $7.94, up 20 percent; GAAP net income of $1,809 million, up 18 percent, primarily driven by higher pricing, volumes and tax reform impacts; and GAAP net income margin of 20.3 percent, up 310 basis points, each versus prior year.

For the year, on a non-GAAP basis, adjusted diluted EPS from continuing operations of $8.21, up 10 percent; adjusted EBITDA of $3.5 billion, up 11 percent, primarily driven by the higher pricing and volumes; and adjusted EBITDA margin of 38.9 percent, up 400 basis points, each versus prior year.

Full-year sales of $8.9 billion were flat versus last year on two percent volume growth and three percent higher pricing, offset three percent by unfavorable currency and two percent from a contract modification to a tolling agreement in India, which impacts sales but not profits. Volume growth was primarily driven by new plants and supported by positive base volume, partially offset by lower activity from the Jazan ASU sale of equipment project as it nears completion, which reduced overall volume growth by two percent.

Fiscal Fourth Quarter Results (Q4FY19)

Air Products reported, for its fiscal fourth quarter ended September 30, 2019, GAAP diluted EPS from continuing operations of $2.27, up 11 percent; GAAP net income of $519 million, up 13 percent, primarily driven by higher pricing, volumes, and prior-year tax reform and pension settlement impacts; and GAAP net income margin of 22.7 percent, up 270 basis points, each versus prior year.

For the fiscal fourth quarter, on a non-GAAP basis, adjusted diluted EPS from continuing operations of $2.27, up 14 percent; adjusted EBITDA of $957 million, up 16 percent, primarily driven by positive volume and pricing; and adjusted EBITDA margin of 41.9 percent, up 610 basis points, each versus prior year.

Fourth quarter sales of $2.3 billion decreased one percent, as five percent higher volumes and three percent higher pricing were more than offset by four percent lower energy cost pass-through, three percent from the India contract modification referenced above, and two percent unfavorable currency. Volume growth was driven primarily by new plants, base business growth and a short-term contract in Asia, which was partially offset by lower activity from the Jazan sale of equipment project, which reduced overall volume growth by two percent.

Commenting on the results, Seifi Ghasemi, chairman, president and chief executive officer, said, 'Our people have stayed focused on serving our customers and creating value for our shareholders, every day, and I want to thank them for their hard work, commitment and dedication. We are pursuing our strategic Five-Point Plan, including a focus on sustainability that is driving significant global growth opportunities in gasification, carbon capture, and hydrogen for mobility. We are generating significant cash, and also have the technical and operational strength, to execute on our base business while continuing to deploy capital into industrial gas megaprojects around the world.'

Fiscal Fourth Quarter Results by Business Segment

(comparisons versus prior year)

• Industrial Gases - Americas sales of $937 million decreased five percent, as three percent higher pricing was more than offset by five percent lower energy pass-through, two percent lower volumes, and one percent unfavorable currency. Operating income of $261 million increased four percent, primarily driven by higher pricing, and operating margin of 27.8 percent increased 230 basis points. Adjusted EBITDA of $412 million increased three percent, primarily driven by higher pricing, and adjusted EBITDA margin of 43.9 percent increased 350 basis points.
• Industrial Gases - EMEA sales of $489 million decreased 12 percent. Volumes increased five percent and higher pricing contributed four percent. These results were more than offset by five percent lower energy pass-through, four percent unfavorable currency, and a 12 percent decrease from the India contract modification. Operating income of $121 million increased 14 percent, primarily driven by higher pricing, and operating margin of 24.7 percent increased 560 basis points; the India contract modification and lower energy pass-through improved operating margin by approximately 350 basis points. Adjusted EBITDA of $193 million increased 11 percent, primarily driven by higher pricing. Adjusted EBITDA margin of 39.5 percent increased 810 basis points; the India contract modification and lower energy pass-through improved adjusted EBITDA margin by approximately 600 basis points.
• Industrial Gases - Asia sales of $732 million increased 16 percent. Volumes increased 16 percent, driven primarily by new plants, including the Lu'An gasification project, a short-term contract and base business growth. Pricing increased three percent, while currency had a negative three percent impact. Operating income of $231 million increased 28 percent on improved volumes, pricing and productivity, and operating margin of 31.6 percent increased 310 basis points. Adjusted EBITDA of $354 million increased 31 percent on improved volumes, pricing and productivity, and adjusted EBITDA margin of 48.3 percent increased 550 basis points.

Outlook

Ghasemi said, 'Air Products cannot control the economic and geopolitical uncertainty in the world. But we do have control over the actions we take to remain profitable and adapt to the constantly changing world. Our strong, capable and flexible team is focused on delivering productivity and creating our own growth opportunities through gasification, carbon capture, hydrogen for mobility and other projects driven by the world's need for cleaner energy and high-value products. A great example is the broader-scope joint venture at Jazan, a world-class project with world-class partners. We remain committed to continue growing adjusted earnings per share by more than 10 percent per year over the long term.'

Air Products' full-year fiscal 2020 adjusted EPS guidance is $9.35 to $9.60 per share, up 14 to 17 percent over prior year adjusted EPS, including the expected contribution from the Jazan gas and power project. For the fiscal 2020 first quarter, Air Products' adjusted EPS guidance is $2.05 to $2.10 per share, up 10 to 13 percent over the fiscal 2019 first quarter adjusted EPS.

Air Products expects capital expenditures of approximately $4 billion to $4.5 billion for full-year fiscal 2020, including the expected spending for the Jazan gas and power project.

Effective October 1, 2018, Air Products adopted the new revenue recognition standard, which had no material impact on the company's financial statements.

Management has provided adjusted EPS guidance on a continuing operations basis, which excludes the impact of certain items that we believe are not representative of our underlying business performance, such as the incurrence of additional costs for cost reduction actions and impairment charges, or the recognition of gains on disclosed items. It is not possible, without unreasonable efforts, to predict the timing or occurrence of these events or the potential for other transactions that may impact future GAAP EPS or the effective tax rate. Furthermore, it is not possible to identify the potential significance of these events in advance, but any of these events, if they were to occur, could have a significant effect on our future GAAP EPS. Management therefore is unable to reconcile, without unreasonable effort, the Company's forecasted range of adjusted EPS and effective tax rate to a comparable GAAP range.

Earnings Teleconference
Access the Q4 earnings teleconference scheduled for 10:00 a.m. Eastern Time on November 7, 2019 by calling 323-794-2598 and entering passcode 2097101, 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 in operation for nearly 80 years. Focused on serving energy, environment and emerging markets, the Company provides essential industrial gases, related equipment and applications expertise to customers in dozens of industries, including refining, chemical, metals, electronics, manufacturing, and food and beverage. Air Products is also the global leader in the supply of liquefied natural gas process technology and equipment. The Company develops, engineers, builds, owns and operates some of the world's largest industrial gas projects, including gasification projects that sustainably convert abundant natural resources into syngas for the production of high-value power, fuels and chemicals.

The Company had fiscal 2019 sales of $8.9 billion from operations in 50 countries and has a current market capitalization of about $50 billion. Approximately 16,000 passionate, talented and committed employees from diverse backgrounds are driven by Air Products' higher purpose to create innovative solutions that benefit the environment, enhance sustainability and address the challenges facing customers, communities, and the world. For more information, visit www.airproducts.com.

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, business outlook and investment opportunities. These forward-looking statements are based on management's expectations and assumptions as of the date of this release and are not guarantees of future performance. While forward-looking statements are made in good faith and based on assumptions, expectations and projections that management believes are reasonable based on currently available information, actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation: changes in global or regional economic conditions, supply and demand dynamics in market segments we serve, or in the financial markets; risks associated with having extensive international operations, including political risks, risks associated with unanticipated government actions and risks of investing in developing markets; project delays, contract terminations or customer cancellations or postponement of projects and sales; future financial and operating performance of major customers and joint venture partners; our ability to develop, implement, and operate new technologies, or to execute the projects in our backlog; our ability to develop and operate large scale and technically complex projects, including gasification projects; tariffs, economic sanctions and regulatory activities in jurisdictions in which we and our affiliates and joint ventures operate; the impact of environmental, tax or other legislation, as well as regulations affecting our business and related compliance requirements, including regulations related to global climate change; changes in tax rates and other changes in tax law; the timing, impact and other uncertainties relating to acquisitions and divestitures, including our ability to integrate acquisitions and separate divested businesses, respectively; risks relating to cybersecurity incidents, including risks from the interruption, failure or compromise of our information systems; catastrophic events, such as natural disasters, acts of war, or terrorism; the impact of price fluctuations in oil and natural gas and disruptions in markets and the economy due to oil and natural gas price volatility; costs and outcomes of legal or regulatory proceedings and investigations; asset impairments due to economic conditions or specific events; significant fluctuations in interest rates and foreign currency exchange rates from those currently anticipated; damage to facilities, pipelines or delivery systems, including those we own or operate for third parties; availability and cost of raw materials; the success of productivity and operational improvement programs; and other risk factors described in the Company's Form 10-K for its fiscal year ended September 30, 2018. Except as required by law, the Company disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in the assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.