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| Lehigh Valley, PA

Air Products Reports Fiscal 2023 Fourth Quarter GAAP EPS of $3.08 and Adjusted EPS of $3.15

Media Contacts:

Katie McDonald | +1 610 481 3673

Investor Contacts:

Sidd Manjeshwar | +1 610 481 1872
Mun Shieh | +1 610 481 2951

Fiscal Year 2023 (comparisons versus prior year):

Q4 FY23 (comparisons versus prior year):

Fiscal 2023 and Recent Highlights

Guidance

#Earnings per share is calculated and presented on a diluted basis from continuing operations 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 reconciliations 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 future events, transactions, and/or investment activity that could have a significant effect on the Company's future GAAP EPS or cash flow used for investing activities if any of these events were to occur.

Fiscal 2023 Consolidated Results

Air Products (NYSE:APD) today reported fiscal year 2023 results, including GAAP EPS from continuing operations of $10.30, up two percent over prior year. The current year includes an unfavorable $1.21 per share cost for business and asset actions as well as costs for the non-service related components of the Company's defined benefit pension plans, both of which are reflected as adjustments in the non-GAAP measures discussed below. GAAP net income of $2.3 billion increased three percent over prior year, primarily on favorable pricing, which was partially offset by business and asset actions and higher other costs. GAAP net income margin of 18.6 percent increased 80 basis points, which included a positive impact of about 100 basis points from lower energy cost pass-through.

For the year, on a non-GAAP basis, adjusted EPS from continuing operations of $11.51 increased 12 percent over the prior year. Adjusted EBITDA of $4.7 billion increased 11 percent over the prior year as higher pricing more than offset higher costs. Adjusted EBITDA margin of 37.3 percent increased 390 basis points, which included a positive impact of about 200 basis points from lower energy cost pass-through.

Full-year sales of $12.6 billion decreased one percent from the prior year, as five percent higher pricing and three percent higher volumes were more than offset by a six percent reduction in energy cost pass-through and a three percent reduction due to unfavorable currency. Pricing improved in the Company's largest segments and volume growth was primarily driven by the on-site business.

Fiscal 2023 Fourth Quarter Consolidated Results

For its fiscal fourth quarter 2023, Air Products reported GAAP EPS from continuing operations of $3.08, up 20 percent from prior year. The current year includes an unfavorable $0.08 per share cost for the non-service related components of the Company's defined benefit pension plans, which is reflected as an adjustment in the non-GAAP measures discussed below. GAAP net income of $694 million was up 17 percent due to higher pricing and higher equity affiliates' income, partially offset by higher costs. GAAP net income margin of 21.8 percent increased 520 basis points over the prior year, which included a positive impact of about 250 basis points from lower energy cost pass-through. 

For the quarter, on a non-GAAP basis, adjusted EPS from continuing operations of $3.15 increased 11 percent over the prior year. Adjusted EBITDA of $1.3 billion was up 10 percent due to higher pricing and higher equity affiliates' income, partially offset by higher costs. Adjusted EBITDA margin of 39.5 percent increased 740 basis points over the prior year, which included a positive impact of about 450 basis points from lower energy cost pass-through. 

Fourth quarter sales of $3.2 billion decreased 11 percent from the prior year, as two percent higher pricing and one percent favorable currency were more than offset by 14 percent lower energy cost pass-through which negatively affected sales but not profits.

Q4 FY2023 Results InfoGraphic: $3.15 Adjusted EPS* up 11% vs. Q4FY22 | $1.3B Adjusted EBITDA up 10% vs. Q4FY22 | 39.5% Adjusted EBITDA Margin* up >1,400 bp vs. Q2FY14 | ~$3.2B Distributable Cash Flow* over last 12 months | ~$1.5B paid as dividends | *Non-GAAP financial measure; see Reconciliation Tables for reconciliation

Air Products' fiscal year 2023 fourth quarter results at a glance

Commenting on the results, Air Products' Chairman, President and Chief Executive Officer Seifi Ghasemi said, "Our growth strategy is evident in the results that our hard working and committed team again delivered. Our people around the world provided excellent service to our core industrial gas customers across dozens of industries while continuing to execute our first-mover clean hydrogen megaprojects to decarbonize the heavy-duty transportation and industrial sectors of our global economy. Working together, we continue to demonstrate the stability and resilience of our business despite challenging economic conditions. As we invest strategically for growth, we have also continued to increase the dividend, paying out approximately $1.5 billion to our shareholders during the year."

Fiscal 2023 Fourth Quarter Results by Business Segment 

  • Americas sales of $1.4 billion were down 12 percent versus the prior year, as four percent higher pricing and three percent higher volumes were more than offset by 19 percent lower energy cost pass-through. Operating income of $398 million increased 20 percent and adjusted EBITDA of $601 million increased 17 percent, in each case due to higher pricing and higher volumes, partially offset by higher costs. Operating margin of 29.4 percent increased 780 basis points and adjusted EBITDA margin of 44.5 percent increased 1,110 basis points. The operating margin and adjusted EBITDA margin improvements included positive impacts from lower energy cost pass-through of approximately 450 basis points and 750 basis points, respectively.
  • Asia sales of $802 million decreased seven percent over the prior year, as two percent higher pricing and two percent higher energy cost pass-through were more than offset by seven percent lower volumes and four percent unfavorable currency. Operating income of $197 million decreased 25 percent and adjusted EBITDA of $318 million decreased 15 percent, primarily due to unfavorable volume. Operating margin of 24.6 percent decreased 600 basis points and adjusted EBITDA margin of 39.6 percent decreased 370 basis points.
  • Europe sales of $712 million decreased 18 percent from the prior year, as seven percent favorable currency and flat volumes were more than offset by 24 percent lower energy cost pass-through and one percent lower pricing. Operating income of $168 million increased 12 percent and adjusted EBITDA of $250 million increased 15 percent, primarily driven by lower variable costs. Operating margin of 23.6 percent increased 620 basis points and adjusted EBITDA margin of 35.1 percent increased 1,000 basis points. The operating margin and adjusted EBITDA margin improvements included positive impacts from lower energy cost pass-through of approximately 400 basis points and 600 basis points, respectively.
  • Middle East and India equity affiliates' income of $91 million increased 44 percent compared to the prior year, primarily due to the completion of the second phase of the Jazan project in January 2023.
  • Corporate and other sales of $290 million increased 11 percent compared to the prior year, driven by higher LNG sale of equipment activity.

Outlook

Air Products expects full-year fiscal 2024 adjusted EPS guidance* of $12.80 to $13.10, up 13 percent at the midpoint over prior year adjusted EPS. For the fiscal 2024 first quarter, Air Products' adjusted EPS guidance* is $2.90 to $3.05, up 13 percent at the midpoint over fiscal 2023 first quarter adjusted EPS.

Air Products expects capital expenditures* of $5.0 billion to $5.5 billion for full-year fiscal 2024.

*Management is unable to reconcile, without unreasonable effort, the Company’s forecasted range of adjusted EPS or capital expenditures to a comparable GAAP range. Air Products provides adjusted EPS guidance on a continuing operations basis, excluding the impact of certain items that management believes are not representative of the Company's underlying business performance, such as the incurrence of costs for cost reduction actions and impairment charges, or the recognition of gains or losses on certain 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. Similarly, it is not possible, without unreasonable efforts, to reconcile forecasted capital expenditures to future cash used for investing activities because management is not able to identify the timing or occurrence of future investment activity, which is driven by management's assessment of competing opportunities at the time the Company enters into transactions. 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 the Company's future GAAP results.

Earnings Teleconference
Access the fiscal 2023 fourth quarter earnings teleconference scheduled for 8:30 a.m. Eastern Time on November 7, 2023 by calling 323-794-2551 and entering passcode 2770249 or by accessing the Event Details page on Air Products’ Investor Relations website.


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About Air Products
Air Products (NYSE:APD) is a world-leading industrial gases company in operation for over 80 years focused on serving energy, environmental, and emerging markets. The Company has two growth pillars driven by sustainability. Air Products’ base business provides essential industrial gases, related equipment and applications expertise to customers in dozens of industries, including refining, chemicals, metals, electronics, manufacturing, and food. The Company also develops, engineers, builds, owns and operates some of the world's largest clean hydrogen projects supporting the transition to low- and zero-carbon energy in the heavy-duty transportation and industrial sectors. Additionally, Air Products is the world leader in the supply of liquefied natural gas process technology and equipment, and provides turbomachinery, membrane systems and cryogenic containers globally.

The Company had fiscal 2023 sales of $12.6 billion from operations in approximately 50 countries and has a current market capitalization of about $65 billion. Approximately 23,000 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 reimagine what's possible to address the challenges facing customers, communities, and the world. For more information, visit airproducts.com or follow us on LinkedIn, X, Facebook or Instagram.

Cautionary Note Regarding Forward-Looking Statements
This release contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about earnings and capital expenditure guidance, business outlook and investment opportunities. 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, inflation, and supply and demand dynamics in the market segments we serve, including demand for technologies and projects to limit the impact of global climate change; changes in the financial markets that may affect the availability and terms on which we may obtain financing; the ability to implement price increases to offset cost increases; disruptions to our supply chain and related distribution delays and cost increases; 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, scope changes, cost escalations, contract terminations, customer cancellations, or postponement of projects and sales; our ability to safely develop, operate, and manage costs of large-scale and technically complex projects; the future financial and operating performance of major customers, joint ventures, and equity affiliates; our ability to develop, implement, and operate new technologies and to market products produced utilizing new technologies; our ability to execute the projects in our backlog and refresh our pipeline of new projects; tariffs, economic sanctions and regulatory activities in jurisdictions in which we and our affiliates and joint ventures operate; the impact of environmental, tax, safety, or other legislation, as well as regulations and other public policy initiatives affecting our business and the business of our affiliates and related compliance requirements, including legislation, regulations, or policies intended to address global climate change; changes in tax rates and other changes in tax law; safety incidents relating to our operations; 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 or those of our business partners or service providers; catastrophic events, such as natural disasters and extreme weather events, pandemics and other public health crises, acts of war, including Russia’s invasion of Ukraine and new and ongoing conflicts in the Middle East, or terrorism; the impact on our business and customers 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 inflation, interest rates, and foreign currency exchange rates from those currently anticipated; damage to facilities, pipelines or delivery systems, including those we are constructing or that we own or operate for third parties; availability and cost of electric power, natural gas, and other raw materials; the success of productivity and operational improvement programs; and other risks described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 and subsequent filings we have made with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on our forward-looking statements. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.