Air Products and Chemicals (APD) Q3 2024 earnings summary

Executive summary

• Q3 FY24 adjusted EPS was $3.20, up 7% year-over-year, exceeding guidance, driven by strong performance in the Americas and Europe, and effective price and productivity actions.

• Sales for Q3 2024 were $2,985.5 million, down 2% year-over-year, mainly due to currency headwinds and lower energy cost pass-through, partially offset by higher pricing.

• Net income for Q3 2024 rose 16% to $708.9 million, with diluted EPS up 17% to $3.13; adjusted EBITDA increased 5% to $1.3 billion, margin up 260 bp to 42.4%.

• Major milestones include a 15-year green hydrogen supply agreement with TotalEnergies and the planned $1.8 billion sale of the LNG process technology business to Honeywell.

• Strategic focus remains on operational excellence in industrial gases, leadership in clean hydrogen projects, and long-term shareholder value.

Financial highlights

• Q3 FY24 sales were $2,986M, with adjusted EBITDA of $1,267M (up 5% year-over-year), and adjusted operating income of $738M (up 5%).

• Adjusted EBITDA margin improved to 42.4%, up 260bp year-over-year, leading the industry.

• Net income margin improved to 23.7% (+360 bp), and gross margin rose to 32.8% (+110 bp).

• ROCE stood at 11.3%, down 70bp year-over-year; adjusted ROCE about 12%.

• Dividend increased to $1.77 per share, with ~$1.6B in expected 2024 dividend payments and 42 consecutive years of increases.

Outlook and guidance

• FY2024 adjusted EPS guidance reaffirmed at $12.20–$12.50, up 6–9% year-over-year.

• Q4 FY24 adjusted EPS guidance is $3.33–$3.63, up 6–15% year-over-year.

• CapEx guidance unchanged at $5–$5.5 billion for FY2024.

• The LNG business sale is expected to close by year-end 2024, with proceeds to support core industrial gas and clean hydrogen growth.

• Targeting at least 10% annual EPS growth over the next decade.