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Air Products' (APD) Q1 Earnings, Sales Trail Estimates

Air Products and Chemicals, Inc.APD missed earnings expectations in first-quarter fiscal 2017 (ended Dec 31, 2016).

The industrial gases giant logged first-quarter adjusted earnings of $1.47 per share, up 9% from the year-ago quarter. However, earnings missed the Zacks Consensus Estimate of $1.48. Adjusted earnings exclude one-time items including charges associated with business separation.

Net income from continuing operations, as reported, was down 10% year over year to $252 million or $1.15 per share. Cost of sales for the reported quarter rose roughly 1.8% year over year to around $1.3 billion. However, selling and administrative expenses decreased 4.6% year over year to $165.7 million.

Revenues inched up 1% year over year to $1.88 billion in the reported quarter but missed the Zacks Consensus Estimate of $1.96 billion. A 2% increase in volumes and 2% favorable energy pass-through more than offset the currency headwinds of 3% in the quarter.

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

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

Segmental Highlights

Revenues from the Industrial Gases - America segment grew 3% year over year to $864 million in the reported quarter, supported by a 5% rise in energy pass-through, partly offset by 2% lower volumes in Latin America. Pricing and currency were relatively flat year over year.

Sales from the Industrial Gases - Europe, Middle East, and Africa ("EMEA") segment fell 9% year over year to $400 million due to lower volumes adversely affecting sales by 2%, unfavorable currency impact of 6% and lower energy pass-through reducing sales by 1%. Pricing remained relatively flat year over year.

Sales from the Industrial Gases - Asia segment improved 6% year over year to $438 million on the back of a 10% increase in volumes. Unfavorable currency translation hurt sales by 3% and pricing by 1%.

Financial Position

Air Products ended the first quarter of fiscal 2017 with cash and cash equivalents of $655.5 million, up roughly 134.9% year over year. Total long-term debt fell around 15% year over year to $3,289 million. Operating cash flow for first quarter of fiscal 2017 increased 0.2% year over year to $574.3 million.

Business Developments

Air Products successfully completed the spin-off of its Electronic Materials Division as Versum Materials on Oct 1, 2016. In the first quarter of 2017, the company incurred separation costs of 12 cents per share.

Outlook

For the second quarter of fiscal 2017, Air Products expects adjusted earnings from continuing operations of $1.30 to $1.40 per share. Air Products expects adjusted earnings for fiscal 2017 to be in the range of $6.00 to $6.25 per share, up 9% year over year at the midpoint.

The company expects capital expenditures of roughly $1 billion in fiscal 2017.

Air Products has underperformed the Zacks categorized Chemicals-Diversified industry over the past three months. While the company's shares gained 11.3% over this period, the industry recorded a gain of 13.2%.

Zacks Rank & Key Picks

Air Products currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the basic materials space include IAMGOLD Corp. IAG , Vale S.A. VALE and Cliffs Natural Resources Inc. CLF .

IAMGOLD has an expected long-term growth rate of 3% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Vale posted a positive earnings surprise of 35.71% in the last reported quarter and carries a Zacks Rank #2 (Buy).

Cliffs has an average positive surprise of 55.40% over the trailing four quarters and also carries a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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