Air Products and Chemicals Inc. (APD) shares climbed Thursday after the industrial gases company delivered fiscal third-quarter results that beat profit expectations and lifted its outlook, even as revenue came in a bit light.
Adjusted earnings per share came in at $3.47, topping the $3.34 analysts were looking for. Revenue rose 4.6% from a year ago to $3.161 billion, but that was just shy of the $3.202 billion estimate. The top-line growth was driven by higher volumes, better pricing, and a favorable currency tailwind.
On a GAAP basis, things looked ugly — a loss of $6.47 per share, compared with a profit of $3.24 a year earlier. That's because the company took $2.91 billion in pre-tax charges tied to exiting some clean-energy projects, including the Louisiana Clean Energy Complex and the Casa Grande green hydrogen facility. After tax, those charges amounted to $2.21 billion, or $9.92 per share.
But strip those out, and the underlying business is humming. Adjusted operating income rose 9% to $810.3 million, and the adjusted operating margin expanded by 110 basis points to 25.6%.
Regional Performance
Across the globe, Air Products saw solid growth. In the Americas, sales increased 5% to $1.32 billion, with operating income up 6% and a margin of 29.9%. Asia was the standout: sales jumped 9% to $886 million, while operating income surged 18% to $256.4 million, pushing margins to 28.9%. Europe grew sales 6% to $815.7 million, though operating income rose just 2% to $230.7 million, and margins slipped 90 basis points to 28.3%. Meanwhile, income from Middle East and India equity affiliates rose 18% to $101.1 million.
Backlog and Cash Flow
Air Products is sitting on a $3 billion backlog of traditional industrial-gas projects, with $2.4 billion of that coming from electronics. One big piece: Air Products San Fu will build and operate four air-separation units and related infrastructure for a semiconductor manufacturer's expansion in Taiwan.
Cash flow is healthy. Nine-month operating cash flow totaled $3.31 billion, while capital expenditures ran at $2.65 billion. The company had $980.5 million in cash on hand, with long-term debt of $16.59 billion and another $769.5 million due within a year.
Guidance Raised
Management raised its full-year adjusted EPS guidance to $13.39-$13.49, up from $13.00-$13.25 and above the $13.16 consensus. For the fourth quarter, they see adjusted EPS of $3.55-$3.65, versus the $3.51 estimate. Capital spending for fiscal 2026 is expected to be about $3.5 billion.
Investors liked what they heard. Air Products shares were up 1.49% at $298.79 at the time of publication on Thursday.
