U. MACUNGIE TWP., Pa. - In 2014, Air Products senior management enacted a five-part strategic plan. As part of the five goals, the company promised to become the safest and most profitable industrial gas company in the world. The company also promised to divest non-core assets and deliver 10 percent earnings per share growth. Finally, the company promised to achieve the best balance sheet in the industry.
Reporting on its fiscal fourth quarter 2017 and full-year results, the company proudly proclaimed, "Mission Accomplished."
”The talented, committed and dedicated team at Air Products delivered an excellent set of results," said Seifi Ghasemi, chairman, president and chief executive officer. "For the fourth quarter of fiscal 2017, our adjusted EPS (earnings per share) was up 18 percent versus the fourth quarter of fiscal 2016, and for fiscal 2017, adjusted EPS is 12 percent higher than last year. This is also the third consecutive year that we have delivered adjusted EPS growth of more than 10 percent."
We generated strong cash flow and returned about $800 million of that to our shareholders through dividends," Ghasemi said. "We continue to be the safest and most profitable industrial gas company in the world, with adjusted EBITDA (earnings before interest taxes depreciation and amortization) margin of over 34 percent. We have a great team that is totally focused on delivering strong performance, day in and day out.”
Ghasemi began his presentation to analysts by highlighting Air Products improvements in employee safety.
Employee lost time injury rate went from 0.24 in fiscal 2014 to 0.06 in fiscal 2017, a 75 percent improvement. Employee recordable injury rate was 0.34 in fiscal 2017, a 41 percent improvement over 0.58 in fiscal 2014.
Fiscal 2017 saw the completed spin-off of Versum Materials and sale of the Performance Material business. Major projects were brought on-line, including a large hydrogen plant for BCPL in India, a large air separation unit in Pyeongtaek City, South Korea and a large air separation unit for Yitai in China.
The company made significant progress on the world’s largest industrial gas complex in Jazan, Kingdom of Saudi Arabia, and an agreement was signed to form a $1.3 billion joint venture for Lu’An coal-to-syngas project in China. In addition, Air Products achieved new project wins around the world for key customers in the electronics, manufacturing and chemical markets.
Financial results for fiscal 2017 were uniformly positive when compared to fiscal 2016. Sales were $8.188 billion in fiscal 2017, compared to $7.504 billion, a 6 percent increase. EBITDA reached $2.795 million in fiscal 2017, compared to $2.622 billion in fiscal 2016, a 7 percent increase.
In fiscal 2017, operating income was $1.770 billion, versus $1.620 billion in fiscal 2016. Net income was $1.386 billion in fiscal 2017, a 13 percent increase above net income of $1.230 million in fiscal 2016. Adjusted EPS in fiscal 2017 was $6.31 compared to $5.64 in fiscal 2016.
“We continue to be optimistic about the future performance of Air Products and the opportunities we see in front of us," Ghasemi said of fiscal 2018. "We have the strongest balance sheet in the industry, with over $8 billion available to invest over the next three years."
We remain confident in our ability to create shareholder value by deploying this capital through acquisitions, asset buybacks and very large industrial gas projects around the world, driven by demand for more energy, cleaner energy and emerging market growth," he said. "We are committed to delivering excellent short-term and long-term performance by improving our adjusted EPS by 10 percent every year, as we have done in the past three years.”
Air Products expects fiscal 2018 adjusted EPS of $6.85 to $7.05 per share. For the fiscal 2018 first quarter, Air Products expects adjusted EPS from continuing operations of $1.60 to $1.70 per share. The guidance excludes the Lu’An project and any other significant acquisitions. The capital expenditure forecast for fiscal 2018 is expected to be in the range of $1 billion to $1.2 billion and also excludes the Lu’An project and significant acquisitions.
Air Products (NYSE: APD) is a world-leading industrial gases company in operation for over 75 years. The company’s core industrial gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. Air Products is also the world’s leading supplier of liquefied natural gas process technology and equipment.
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