Air Products' (APD) Earnings And Sales Miss Estimates In Q4

Air Products and Chemicals, Inc. (NYSE:APD) recorded profit from continuing operations of $503.2 million or $2.27 per share in fourth-quarter fiscal 2019 (ended Sep 30, 2019), up from $452.9 million or $2.05 in the year-ago quarter. Earnings per share (EPS) missed the Zacks Consensus Estimate of $2.29.

The industrial gases company delivered fiscal fourth-quarter revenues of $2,283.2 million, down 0.7% year over year. Volumes and pricing rose 5% and 3%, respectively, which were offset by 2% unfavorable currency, 3% from a contract modification in India and 4% lower energy cost pass-through. Revenues missed the Zacks Consensus Estimate of $2,321.9 million.

FY19 Results

For fiscal 2019, adjusted earnings rose 10.2% year over year to $8.21 per share, while consolidated sales were essentially flat at $8,918.9 million on a year-over-year basis.

Air Products and Chemicals, Inc. Price, Consensus and EPS Surprise

Air Products and Chemicals, Inc. price-consensus-eps-surprise-chart | Air Products and Chemicals, Inc. Quote

Segment Highlights

Revenues in the Industrial Gases — America segment fell around 5% year over year to $937 million. Higher pricing was more than offset by lower energy pass-through, lower volumes and unfavorable currency.

Sales in the Industrial Gases — Europe, Middle East, and Africa (EMEA) segment rose 11.8% year over year to $489.3 million. Strong pricing and higher volumes were offset by unfavorable currency, decline from the India contract modification and lower energy pass-through.

Sales in the Industrial Gases — Asia segment rose 15.6% year over year to $732 million. The upside was primarily driven by higher volumes (supported by new projects, including the Lu'An gasification project) and pricing. These were partly offset by unfavorable currency.

Financial Position

Air Products ended fiscal 2019 with cash and cash equivalents of $2,248.7 million, down 19.4% year over year. Long-term debt was down roughly 2% year over year to $2,907.3 million.

Net cash from operating activities were $2,969.9 million during fiscal 2019, up 16.6% year over year.

Outlook

Air Products expects adjusted EPS for fiscal 2020 in the range $9.35-$9.60, which calls for a 14-17% rise year over year. The projection includes the expected contribution from the Jazan gas and power project.

The company expects adjusted EPS for first-quarter fiscal 2020 in the band of $2.05-$2.10, which indicates 10-13% rise year over year.

Air Products expects capital expenditure for fiscal 2020 in the range of $4-$4.5 billion, which includes expected spending for the Jazan gas and power project.

Price Performance

Air Products’ shares have rallied 35.7% in the past year against the industry’s 25.2% decline.

Zacks Rank & Stocks to Consider

Air Products currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation (NYSE:KGC) , Franco-Nevada Corporation (TSX:FNV) and Agnico Eagle Mines Limited (NYSE:AEM) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 210% for 2019. The company’s shares have surged 80.8% in the past year.

Franco-Nevada has a projected earnings growth rate of 39.3% for 2019. The company’s shares have rallied 48.3% in a year.

Agnico Eagle has an estimated earnings growth rate of 168.6% for the current year. Its shares have moved up 67.6% in the past year.

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