Air Products Beats On Q3 Earnings, But Revenue Misses On Lower Energy Cost Pass-Through, Unfavorable Currency

Air Products & Chemicals Inc APD reported a Q3 FY23 adjusted EPS increase of 16% Y/Y to $2.98, beating the consensus of $2.91.

Sales fell 5% Y/Y to $3.03 billion, missing the consensus of $3.27 billion, due to lower energy cost pass-through (-11% Y/Y) and unfavorable currency (-1% Y/Y), offset the positive impact of higher pricing (+4% Y/Y) and volumes (+3% Y/Y). 

By segments, sales declined in the Americas by 11% Y/Y to $1.3 billion and Europe by 4% Y/Y to $707 million. Meanwhile, Asia sales rose by 10% Y/Y to $823 million. 

Adjusted EBITDA rose 112% Y/Y to $1.2 billion, with margins expanding 590 basis points to 39.8%. 

Recently, APD inked a $1 billion investment deal with the Republic of Uzbekistan and Uzbekneftegaz JSC to acquire and operate a natural gas-to-syngas processing facility in Uzbekneftegaz JSC's gas-to-liquids facility.

FY23 Outlook: APD raised the lower end of the adjusted EPS guidance to $11.40-11.50 (up 11%-12% Y/Y) from $11.30 to $11.50 earlier vs. consensus of $11.39.

The company reiterated its 2023 capital expenditures outlook of $5.0 billion-$5.5 billion.

Q4 2023 Outlook: The company projects adjusted EPS of $3.04 - $3.14 (+7% to 10% Y/Y) vs. consensus of $3.14.

Price Action: APD shares closed are trading lower by 1.11% at $296.00 premarket on the last check Thursday.