Air Products and Chemicals(APD) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The first-quarter adjusted earnings per share (EPS) was $2.86, exceeding the upper end of the guidance range of$ 2.75 to $2.85, representing a 1% increase over the previous year [19][20] - Adjusted EBITDA margin increased by 140 basis points, and adjusted operating margin rose by 80 basis points compared to the prior year [20] - Overall volume decreased by 2%, primarily due to the divestment of the LNG business, which contributed approximately$ 0.08 to EPS in the prior year [20][24] Business Line Data and Key Metrics Changes - In the Americas, overall pricing increased by 2%, with a 4% gain in merchant pricing, and a 3% volume improvement driven by a significant non-recurring helium sale [27] - The Asia segment saw a 2% volume improvement due to contributions from new assets, with adjusted EBITDA increasing by 7% [29] - In Europe, broad-based pricing improved by 1%, but volume decreased by 5% due to lower onsite demand and continued weakness in merchant demand, particularly for helium [29] Market Data and Key Metrics Changes - The company is monitoring the strengthening U.S. dollar, tariffs, and the global helium market for potential impacts for the remainder of the year [21] - The helium market is currently long, with helium coming from Russian assets into Asia, affecting pricing dynamics [70] Company Strategy and Development Direction - The company is focused on driving productivity and evaluating actions to reduce costs and improve services to customers [22] - The Uzbekistan project is undergoing planned facility upgrades, expected to return to normal operation by the start of the third quarter [30][110] Management's Comments on Operating Environment and Future Outlook - Management indicated that the market in China remains challenging, with no material improvement expected in the near term [34] - The company does not anticipate significant improvement in global industrial production, projecting only about a 2% increase [115] Other Important Information - The company is maintaining its fiscal 2025 full-year guidance and expects second-quarter adjusted EPS to be in the range of $2.75 to$ 2.85 [21][22] - The company is still projecting to be net cash-flow positive by fiscal 2027 [125] Q&A Session Summary Question: How should the Street be thinking about the outlook in Asia? - Management noted that while there was support from new assets, the market remains challenging with no material improvement expected [34] Question: Can you provide a breakdown on the CapEx outlook for the fiscal year? - The majority of the $4.5 billion to$ 5 billion CapEx will be deployed to large projects, with about $750 million for ongoing maintenance [50] Question: What was the helium EBITDA contribution in the Americas in the quarter? - The one-time helium sale contributed approximately$ 0.10 to EPS for the quarter [63] Question: Can you talk about the equity affiliate income decline in the Middle East and India? - The decline was primarily due to fluctuations in the Jazan joint venture, but contributions are expected to be on par with 2024 [77] Question: What is the expected contribution from the Uzbekistan project in 2025? - The project is expected to fully ramp up in Q3, contributing approximately $0.35 to$ 0.36 to EPS on an annualized basis [145]