“The stability of our business and the dedication of our people have been on full display, as we continue to deliver strong financial results despite the challenges of the pandemic.”
Those were the words of SeifiGhasemi, Air Products’ Chairman, President and CEO, when he today (9th August) reflected on the company’s third quarter (Q3) fiscal 2021 results.
For the quarter, the industrial gas giant highlighted impressive sales of $2.6bn, a 26% increase on 12% high volumes, 6% higher energy cost pass-through, 6% favourable currency and 2% higher pricing.
Air Products also reported GAAP EPS from continuing operations of $2.36, up 17%; GAAP net income of $532m, up 16%; and GAAP net income margin of 20.4%, down 170 basis points, each versus prior year.
On a non-GAAP basis, adjusted EPS from continuing operations of $2.31 was up 15%; adjusted EBITDA* of $976m was up 11%; and adjusted EBITDA margin of 37.5% was down 520 basis points, each versus prior year.
Ghasemi, continued, “Our sales, adjusted EBITDA and adjusted EPS grew double digits this quarter versus prior-year quarter, and our price and volume continue to be strong.”
“We continue to build on what we do best, driving the energy transition by developing, owning and operating world-scale, sustainability-driven projects and forming strategic partnerships that enhance our leadership positions.”
Results by business segment
Americas sales of $1,063m were up 25% over the prior year on 10% higher energy cost pass-through; 9% higher volumes, driven by merchant Covid-19 recovery, higher medical oxygen sales in South America, and one-time items; 4% higher pricing; and 2% favourable currency.
Operating income of $286m increased 15% and adjusted EBITDA of $465m increased 13%, as higher volumes, pricing and one-time items more than offset power and other cost inflation and higher maintenance costs.
Operating margin of 26.9% decreased 230 basis points, with higher energy cost pass-through accounting for approximately 250 basis points of the decline. Adjusted EBITDA margin of 43.7% decreased 470 basis points, with higher energy cost pass-through accounting for approximately 400 basis points of the decline.
EMEA sales of $623m increased 45% over the prior year on 24% higher volumes, driven primarily by Covid-19 recovery and acquisitions; 12% favourable currency; 8% higher energy cost pass-through; and 1% higher pricing.
Operating income of $140m increased 33%and adjusted EBITDA of $212m increased 25%, primarily driven by the higher volumes. Operating margin of 22.5% decreased 200 basis points, with higher energy cost pass-through accounting for approximately 100 basis points of the decline and the remainder mainly due to power and other cost inflation.
Adjusted EBITDA margin of 34.1% decreased 540 basis points, with higher energy cost pass-through accounting for approximately 200 basis points of the decline and the remainder mainly due to power and other cost inflation.
Asia sales of $752m increased 15% from the prior year on 8% favourable currency, 6% higher volumes, and 1% higher pricing. Higher merchant volumes and new plants were partially offset by reduced contributions from Lu’An.
Operating income of $219m decreased 1%, as reduced contributions from Lu’An and higher costs were mostly offset by favourable currency and higher volumes from merchant and new plants. Operating margin of 29.1% decreased 490 basis points.
Adjusted EBITDA of $356m increased 9%, as higher volumes, equity affiliate income, and favourable currency more than offset the reduced contributions from Lu’An and higher costs. Adjusted EBITDA margin of 47.4% decreased 270 basis points.
Outlook
Air Products expects full-year fiscal 2021 adjusted EPS guidance of $8.95 to $9.05, up approximately 8% over prior year adjusted EPS.
For the fiscal 2021 fourth quarter, Air Products’ adjusted EPS guidance is $2.44 to $2.54, up 11% to 16% over fiscal 2020 fourth quarter adjusted EPS. This guidance does not include the Jazan transaction.
Air Products expects capital expenditures of approximately $2.5bn for full-year fiscal 2021.
