Core Insights - Air Products and Chemicals, Inc. (APD) has secured contracts exceeding $140 million from NASA to supply liquid hydrogen, reinforcing its long-standing role in the space program [1][8] Group 1: Contract Details - The agreements involve the delivery of approximately 36.5 million pounds of liquid hydrogen to NASA facilities including Kennedy Space Center, Cape Canaveral Space Force Station, Marshall Space Flight Center, and Stennis Space Center [2][8] - Liquid hydrogen is a crucial cryogenic fuel used alongside liquid oxygen for powering launch vehicles and conducting ground tests [2] Group 2: Historical Context and Business Impact - Air Products has been collaborating with NASA since 1957, providing hydrogen and related services for various missions, including the current Artemis II exploration efforts [3][8] - The new contracts extend the existing partnership without significantly altering the company's overall business mix [3] Group 3: Market Performance - APD's shares have declined by 19.4% over the past year, compared to a 20.8% decline in the industry [5]

Company Overview - Air Products and Chemicals Inc. is based in Pennsylvania and specializes in industrial gases, polymer, and performance chemicals, as well as processing equipment [11]. Zacks Rank and Style Scores - Air Products has a Zacks Rank of 3 (Hold) and a VGM Score of B, indicating a moderate investment outlook [11]. - The company has a Growth Style Score of B, forecasting a year-over-year earnings growth of 7.8% for the current fiscal year [12]. - Two analysts have revised their earnings estimates upwards in the last 60 days for fiscal 2026, with the Zacks Consensus Estimate increasing to $12.97 per share [12]. Investment Potential - Air Products boasts an average earnings surprise of +0.4%, suggesting a potential for positive performance [12]. - With a solid Zacks Rank and top-tier Growth and VGM Style Scores, Air Products is recommended for investors' consideration [12].

Core Insights - Air Products and Chemicals (APD) reported revenue of $3.1 billion for the quarter ended December 2025, reflecting a year-over-year increase of 5.8% and surpassing the Zacks Consensus Estimate by 1.9% [1] - The company's earnings per share (EPS) for the quarter was $3.16, up from $2.86 in the same quarter last year, resulting in an EPS surprise of 3.91% compared to the consensus estimate of $3.04 [1] Revenue Performance by Region - Revenue from the Middle East and India was $30.3 million, which was below the average estimate of $34.29 million, representing a year-over-year decline of 7.6% [4] - Revenue from the Americas reached $1.34 billion, slightly above the average estimate of $1.33 billion, marking a year-over-year increase of 4.2% [4] - Revenue from Europe was reported at $782 million, exceeding the average estimate of $745.62 million, with a year-over-year growth of 12.2% [4] - Revenue from Asia amounted to $831.5 million, surpassing the average estimate of $811.06 million, reflecting a year-over-year increase of 1.8% [4] - Revenue from Corporate and other segments was $117 million, exceeding the average estimate of $96.8 million, with a significant year-over-year increase of 20.9% [4] Stock Performance - Shares of Air Products and Chemicals have returned 8.8% over the past month, outperforming the Zacks S&P 500 composite, which saw a change of 0.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Group 1 - iREIT+HOYA Capital focuses on income-producing asset classes that provide sustainable portfolio income, diversification, and inflation hedging [1] - The investment group targets high-yield, dividend growth opportunities, offering portfolios with dividend yields up to 10% [2] - The service provides research on various investment vehicles including REITs, ETFs, closed-end funds, preferred stocks, and dividend champions [2]

Financial Performance - Sales for the three months ended December 31, 2025, increased to $3,102.5 million, up from $2,931.5 million in the same period of 2024, representing a growth of 5.8%[16] - Operating income rose to $734.5 million, compared to $643.6 million in the prior year, reflecting an increase of 14.1%[16] - Net income attributable to Air Products for the quarter was $678.2 million, up from $617.4 million, marking a year-over-year increase of 9.8%[16] - Basic and diluted earnings per share attributable to Air Products were both $3.04, compared to $2.77 in the previous year, indicating a 9.8% increase[16] - The company reported a comprehensive income of $826.3 million for the quarter, significantly higher than $194.4 million in the same period last year[19] - Total consolidated income for the three months ended December 31, 2025, was $3,102.5 million, compared to $2,931.5 million in 2024, reflecting an increase of 5.8%[92] - Cost of sales for the same period was $2,107.5 million in 2025, up from $2,016.5 million in 2024, representing a 4.5% increase[92] - Interest expense for the three months ended December 31, 2025, was $54.5 million, compared to $42.6 million in 2024, indicating a rise of 28.3%[92] Cash Flow and Assets - Cash provided by operating activities was $900.7 million, an increase from $811.7 million in the same quarter of the previous year[24] - Total assets as of December 31, 2025, were $41,240.7 million, slightly up from $41,059.5 million at the end of September 2025[21] - The company’s cash and cash items at the end of the period were $1,026.4 million, down from $1,856.0 million at the beginning of the year[24] - Total current liabilities decreased to $3,497.9 million as of December 31, 2025, from $4,218.6 million as of September 30, 2025, a reduction of 17.0%[22] - Long-term debt increased to $17,114.6 million as of December 31, 2025, compared to $16,769.9 million on September 30, 2025, marking a rise of 2.1%[22] - Total liabilities decreased to $23,403.6 million from $23,709.7 million, showing a reduction of 1.3%[21] - Total equity as of December 31, 2025, was $17,837.1 million, up from $18,738.7 million as of December 31, 2024, indicating a decrease of 4.8%[26] Research and Development - Research and development expenses were $20.4 million, down from $22.0 million, reflecting a decrease of 7.3%[16] - The company reported segment operating income of $756.5 million for the three months ended December 31, 2025, compared to $673.5 million in 2024, indicating a year-over-year increase of about 12.3%[146] Environmental and Project Costs - The company has environmental accruals of $85.1 million, primarily as part of other noncurrent liabilities, with an estimated exposure for environmental loss contingencies ranging from $85 million to a possible upper exposure of $98 million[112] - The environmental accrual related to the Pace facility in Florida is $53.4 million, with ongoing remediation efforts required by the Florida Department of Environmental Protection and the United States Environmental Protection Agency[114][115] - Cumulative project exit charges related to business and asset actions totaled approximately $3.6 billion through 31 December 2025, primarily recognized in the second quarter of fiscal year 2025[66] - The company recorded business and asset action charges of $28.3 million ($24.6 million after tax) in the first quarter of fiscal year 2026, primarily related to project exits announced in fiscal year 2025[64] Dividends and Shareholder Returns - Dividends on common stock for the quarter were $398.6 million, with a dividend per share of $1.79, compared to $393.8 million and $1.77 per share in the same quarter of 2024[26] - The company paid dividends of $398.4 million during the quarter, with a dividend per share of $1.79[26] Joint Ventures and Projects - The NEOM Green Hydrogen Project, a joint venture, has secured project financing of approximately $6.1 billion, which is expected to fund about 73% of the project costs[51] - The company has an equity interest of $3.1 billion in the Jazan Integrated Gasification and Power Company joint venture as of December 31, 2025[58] - Total principal borrowings for the NEOM Green Hydrogen Company were $5.3 billion as of December 31, 2025, compared to $4.9 billion as of September 30, 2025[51] Accounting and Compliance - The company is evaluating the impact of new accounting guidance on its disclosures, including updates related to climate-related disclosures and income tax disclosures[39][40] - The FASB issued ASU 2023-09 to expand income tax disclosures, effective for the fiscal year ending September 30, 2026[39] Other Financial Metrics - The effective tax rate for the company was 18.7% for the three months ended December 31, 2025, compared to 17.8% for the same period in 2024[138] - Cash paid for taxes, net of refunds, was $109.1 million for the three months ended December 31, 2025, down from $123.6 million in 2024[139] - Related party sales totaled approximately $85 million for the three months ended December 31, 2025, compared to $80 million in 2024[135]

Core Viewpoint - Air Products and Chemicals, Inc. reported strong financial results for its fiscal first quarter, demonstrating resilience in challenging market conditions and maintaining a positive outlook for the fiscal year 2026 [2][3][4]. Financial Performance - The company achieved an EPS of $3.16, exceeding the estimated $3.04, and revenue reached approximately $3.1 billion, surpassing the estimated $3.05 billion [2][6]. - The GAAP EPS was reported at $3.04, marking a 10% increase year-over-year, while GAAP operating income rose to $735 million, a 14% increase from the previous year [3]. - Adjusted EPS of $3.16 and adjusted operating income of $757 million reflect a 12% rise, indicating robust financial health [3]. Guidance and Projections - Air Products is maintaining its full-year adjusted EPS guidance for fiscal 2026, projected to be between $12.85 and $13.15 [4][6]. - For the second quarter, the adjusted EPS is expected to range from $2.95 to $3.10 [4]. Strategic Initiatives - The company is engaged in advanced negotiations with Yara International for low-emission ammonia projects and has secured a $140 million contract with NASA for liquid hydrogen supply [5]. - Air Products increased its quarterly dividend to $1.81 per share, marking the 44th consecutive year of dividend increases [5]. - The company has a strong liquidity position, with a current ratio of 1.38, supporting its strategic initiatives for future growth [5].

Core Insights - Air Products and Chemicals, Inc. (APD) reported first-quarter fiscal 2026 earnings of $3.04 per share, an increase from $2.77 in the same quarter last year, driven by a favorable mix and lower costs related to productivity improvements and reduced maintenance [1] - Adjusted earnings per share were $3.16, surpassing the Zacks Consensus Estimate of $3.04 [1][9] Revenue Performance - The company generated revenues of $3,102.5 million, reflecting a year-over-year increase of approximately 5.8%, exceeding the Zacks Consensus Estimate of $3,044.8 million [2] - Revenue growth was attributed to higher prices, favorable currency impacts, and energy cost pass-through, although volumes remained flat [2] Segment Analysis - Revenues in the Americas segment rose 4.2% year over year to $1,341.7 million, beating the Zacks Consensus Estimate of $1,332 million, driven by higher energy cost pass-through and favorable pricing [3] - The Europe segment saw a 12.2% year-over-year increase in revenues to $782 million, attributed to higher pricing, volumes, and favorable currency, surpassing the Zacks Consensus Estimate of $746 million [4] - Revenues in the Asia segment increased by 1.8% year over year to $831.5 million, driven by higher energy cost pass-through and favorable currency impacts, outperforming the Zacks Consensus Estimate of $811 million [5] Financial Position - At the end of the fiscal first quarter, the company had cash and cash equivalents of approximately $1,026.4 million, a decrease of around 44% year over year [6] - Long-term debt stood at $17,114.6 million, reflecting an increase of roughly 30% year over year [6] Future Outlook - The company anticipates adjusted earnings per share for fiscal 2026 to be in the range of $12.85 to $13.15, with second-quarter adjusted earnings projected between $2.95 and $3.10 [7] - Capital expenditures for the full fiscal year are expected to be around $4 billion [7] Stock Performance - Over the past year, the company's shares have declined by 23.6%, compared to a 22.2% decline in the Zacks Chemicals Diversified industry [8]

Core Insights - Air Products and Chemicals reported a solid start to fiscal 2026, with a 12% year-over-year increase in adjusted operating income and a 10% rise in adjusted earnings per share to $3.16, alongside an adjusted operating margin of 24.4% [8] Group 1: Regional Performance - In Europe, sales and operating income increased due to higher volumes and favorable currency effects, although higher depreciation and fixed cost inflation were noted as offsets [1] - In Asia, sales rose by 2% and operating income increased by 7%, aided by productivity improvements and reduced depreciation from certain gasification assets, despite lower helium volumes [2] - In the Americas, sales increased by 4% driven by higher energy pass-through, with operating income improving due to price increases and lower maintenance costs, although prior-year non-recurring items impacted year-over-year comparisons [3] Group 2: Financial Metrics - The return on capital was reported at 11%, lower than the previous year but stable sequentially, with EPS exceeding the top end of the company's guidance range for the quarter [4] - Adjusted operating income rose by 12%, with a margin expansion of 140 basis points attributed to business mix and non-helium pricing, despite a headwind from higher energy costs [5] - The company maintained full-year EPS guidance of $12.85 to $13.15, with expectations for the second quarter EPS to be between $2.95 and $3.10, reflecting a year-over-year growth of 10% to 15% [21] Group 3: Strategic Initiatives - CEO Eduardo Menezes emphasized three strategic priorities for fiscal 2026: unlocking earnings growth, optimizing large projects, and maintaining capital discipline [10] - The company plans to reduce capital expenditures by approximately $1 billion in fiscal 2026, with a projected capital expenditure outlook of around $4 billion [11] - Air Products is in advanced negotiations with Yara International regarding low-emission ammonia projects in Saudi Arabia and the U.S., with expectations to finalize agreements in the first half of 2026 [14][15] Group 4: Cash Flow and Debt Management - The company reported strong cash flows from its base business, with a net debt to EBITDA ratio of 2.2 times, and plans to deconsolidate the NEOM green hydrogen joint venture once operational [20] - Additional operating costs are anticipated as the NEOM venture adds resources ahead of start-up, with the project expected to be operational by mid-2027 [20]

Financial Data and Key Metrics Changes - The company reported a 12% improvement in adjusted operating income and a 10% increase in earnings per share (EPS) to $3.16 compared to the prior year, driven by stronger productivity despite weak economic conditions [5][15] - The operating margin increased to 24.4%, while return on capital (ROC) was 11%, slightly lower than last year but stable sequentially [5][15] Business Line Data and Key Metrics Changes - Sales in the Americas increased by 4%, driven by higher energy pass-through, while operating income improved due to price, on-site volume, and lower maintenance costs [17] - Asia segment sales rose by 2%, with operating income up 7%, attributed to productivity improvements and reduced depreciation from certain gasification assets [17] - Europe saw increases in both sales and operating income due to volume and price improvements, although higher costs from depreciation and fixed cost inflation impacted margins [17] - The Middle East and India segment experienced improved operating income due to lower costs, while the corporate segment also saw improvements from lower costs [18] Market Data and Key Metrics Changes - The company noted resilience in key sectors such as refining, electronics, and aerospace, with new supply contracts announced with NASA for liquid hydrogen [7][8] - The company expects continued headwinds from helium, projecting a 4% decline in EPS effect for the year [25] Company Strategy and Development Direction - The company is focused on three key priorities for 2026: unlocking earnings growth, optimizing large projects, and maintaining capital discipline [7] - Capital expenditures are expected to be reduced by approximately $1 billion in fiscal 2026, with a commitment to disciplined capital allocation and returning cash to shareholders [9][18] - The company is in advanced negotiations with Yara International for low-emission ammonia projects in Saudi Arabia and the U.S., which aligns with its clean energy strategy [10][11] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the macroeconomic environment, affirming full-year earnings guidance with an expected improvement of 7%-9% at the midpoint [7][19] - The company anticipates challenges from helium headwinds but remains focused on pricing actions and productivity improvements to drive results [20][64] Other Important Information - The company returned nearly $400 million to shareholders and increased its dividend for the 44th consecutive year [18] - The net debt to EBITDA ratio stands at 2.2 times, reflecting a strong balance sheet position [18] Q&A Session Summary Question: How should we think about the returns on the $2 billion of capital already invested in the project? - The 45Q credit is included in the return, and the overall return for the project will be disclosed later [22][23] Question: How much of the continuing business is still down regarding helium? - The company expects a 4% decline in EPS effect for the year, with strong volume from the aerospace segment in the Americas [25] Question: What was the benefit from moving gasification plants in China to for sale? - The impact was about 1% on overall results for the quarter, with ongoing negotiations for asset sales [26] Question: Is Air Products receiving full income from Gulf Coast Ammonia? - The plant is running at 80-90% capacity, and the company owns the hydrogen production and air separation assets [30][31] Question: What is the expected timing for the deconsolidation of NEOM? - The deconsolidation is expected to occur in mid-2027 when the joint venture becomes operational [73][74] Question: How is the company addressing the impact of CBAM on ammonia? - The company believes the impact of CBAM is indirect and is closely monitoring the situation [14][99] Question: What portion of customers are running below take-or-pay minimums? - Utilization across regions is in the mid- to high 70s, with some cases in Europe but not significantly impacting overall business [84][89]

Financial Data and Key Metrics Changes - The company reported a 12% improvement in adjusted operating income and a 10% increase in earnings per share (EPS) to $3.16 compared to the prior year, driven by stronger productivity despite weak economic conditions [5][15] - The operating margin increased to 24.4%, while return on capital was 11%, slightly lower than last year but stable sequentially [5][16] Business Line Data and Key Metrics Changes - In the Americas, sales increased by 4%, driven by higher energy pass-through, while operating income improved due to price, on-site volume, and lower maintenance costs [17] - Asia segment sales rose by 2%, with operating income up 7%, attributed to productivity improvements and reduced depreciation from certain gasification assets [17] - Europe saw increases in both sales and operating income due to volume and price improvements, although higher costs from depreciation and fixed cost inflation impacted margins [17] - The Middle East and India segment experienced improved operating income due to lower costs, while corporate and other segments also saw improvements from cost reductions [18] Market Data and Key Metrics Changes - The company noted resilience in key sectors such as refining, electronics, and aerospace, with new supply contracts announced with NASA for liquid hydrogen [7][8] - The company expects continued headwinds from helium, projecting a 4% decline in EPS effect for the year [25] Company Strategy and Development Direction - The company is focused on three key priorities for 2026: unlocking earnings growth, optimizing large projects, and maintaining capital discipline [7] - Capital expenditures are expected to be reduced by approximately $1 billion in fiscal 2026, with a commitment to disciplined capital allocation [9] - The company is in advanced negotiations with Yara International for low-emission ammonia projects in Saudi Arabia and the U.S., which aligns with its strategic focus on clean energy [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the macroeconomic environment, highlighting the importance of pricing actions and productivity improvements to achieve full-year earnings guidance of $12.85-$13.15 [19][20] - The company anticipates a 10%-15% improvement in EPS for the second quarter of 2026, despite expected lower sequential earnings due to normal seasonality and higher planned maintenance [20] Other Important Information - The company returned nearly $400 million to shareholders and increased its quarterly dividend, marking the 44th consecutive year of dividend increases [18] - The net debt-to-EBITDA ratio stands at 2.2x, with plans to deconsolidate the NEOM Green Hydrogen Project once operational [19][74] Q&A Session Summary Question: How should we think about the returns on the $2 billion of capital already invested in the project? - The 45Q credit is included in the return, and the overall return for the project will be disclosed later [22][23] Question: How much of the continuing helium business is still down, and what headwind is expected in Q2? - The company expects a 4% decline in helium volume for the year, with strong performance in the aerospace segment noted [25] Question: What was the benefit from moving gasification plants in China to for sale? - The impact was about 1% on overall results for the quarter, with ongoing negotiations for asset sales [26] Question: Is Air Products receiving full income from Gulf Coast Ammonia? - The plant is running at 80-90% capacity, with expectations to finalize commitments soon [30][31] Question: What is the expected timing for the deconsolidation of NEOM? - Deconsolidation is expected in mid-2027 when the joint venture becomes operational [74] Question: How is the company managing power costs in new contracts? - The company has a sophisticated power procurement process and works to pass costs to customers [95][96]