2 weeks Ago
Bjoern Wylezich Shares of Air Products and Chemicals ( NYSE: APD ) have been a disappointing performer over the past year, over concerns about the capital intensity of its growth projects, alongside mixed results, though we did see an improvement in operating performance last quarter. I last covered Air Products in November , rating shares a buy, and unfortunately since that recommendation, APD has missed out on the market’s 21% rally, rising just 3%. This company has turned into a “show me” story given large project execution risk, but I believe investors are being paid to wait and believe shares can continue to rebound from February lows.
Seeking Alpha In the company’s fiscal second quarter reported on April 30 th , APD earned $2.85, which beat consensus by $0.15 even as revenue fell by 8% from last year to $2.
9 billion. EPS did rise 4% from last year, though. It is important to note that revenue was largely impacted by lower natural gas prices.
Natural gas is a critical input cost for its facilities, but APD does not take energy cost risking, passing that on to customers at no margin. Lower prices reduced energy pass-through revenue, leading to a 6% headwind. This moves expenses down in lockstep, not impacting the bottom-line.
APD’s “core” revenue that actually drives results for shareholders was down by 2%, still not strong but better than the 8% decline, given macro headwinds and maintenance work. Volume fell 2% from last year with prices up 1% with weaknes.
