01—Abstract
Summary
Summary of the 10-K filed November 22, 2022. Cited figures are marked; the original filing is the authoritative source.
Air Products & Chemicals, Inc. (APD) reported a solid fiscal year 2022, demonstrating growth in sales and net income despite facing global economic headwinds.
The company's strategy, focused on expanding its core industrial gases business and executing clean hydrogen projects, appears to be yielding positive results. Sales increased significantly due to higher energy cost pass-throughs to customers and improved volumes, driven by recovery in hydrogen demand, new assets, and increased equipment project activity. The company's on-site business, protected by contractual energy cost pass-throughs, provided stable cash flow.
Management successfully implemented pricing actions to offset rising energy and fuel costs, particularly in Europe. APD continued to invest in its growth strategy, notably with its investment in the Jazan Integrated Gasification and Power Company (JIGPC) joint venture.
The company also demonstrated a commitment to returning capital to shareholders by increasing its quarterly dividend for the 40th consecutive year. Looking ahead, Air Products anticipates continued growth, with several new projects expected to contribute in fiscal year 2023 and a focus on sustainability-driven opportunities, including clean hydrogen and carbon capture technologies, further supported by recent legislative initiatives like the U.S. Inflation Reduction Act.
02—Key points
Key Highlights
- Sales increased by 23% to $12,698.6 million, driven by higher energy cost pass-throughs (13%), volumes (8%), and pricing (6%), partially offset by currency headwinds.
- Net income increased by 7% to $2,266.5 million, supported by higher pricing, improved volumes, and increased equity affiliates' income, primarily from the JIGPC joint venture.
- Diluted Earnings Per Share (EPS) grew by 11% to $10.08 from continuing operations, with adjusted diluted EPS increasing by 15% to $10.41.
- Operating income saw a modest 3% increase to $2,338.8 million, though operating margin declined by 370 basis points to 18.4% due to higher energy cost pass-throughs and unfavorable costs.
- Equity affiliates' income significantly increased by 64% to $481.5 million, largely due to the JIGPC joint venture's contribution.
- The company announced new sustainability goals, including a commitment to $15 billion in energy transition projects through 2027.
- APD demonstrated continued commitment to shareholders by increasing its quarterly dividend by 8% to $1.62 per share, marking the 40th consecutive annual increase.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Air Products & Chemicals, Inc. kept $0.18.
- Revenue$12.70B100.0%
- Cost of revenue−$9.34B73.5%
- Gross profit$3.36B26.5%
- Operating costs−$1.02B8.0%
- Operating income$2.34B18.4%
- Interest, other & tax−$82.7M0.7%
- Net income$2.26B17.8%
Where FY2022 revenue went
$12.70B- Cost of revenue: $9.34B, 74% of revenue
- Net income: $2.26B, 18% of revenue
- R&D: $102.9M, 0.8% of revenue
- SG&A: $900.6M, 7.1% of revenue
- Interest, other & tax: $82.7M, 0.7% of revenue
Kept 18% as net incomeR&D $102.9M · 0.8%Interest, other & tax $82.7M · 0.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed November 22, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $12.70B$10.32B | +23.0% |
| Cost of Revenue | $9.34B$7.19B | +30.0% |
| Gross Profit | $3.36B$3.14B | +7.1% |
| R&D Expenses | $102.90M$93.50M | +10.1% |
| SG&A Expenses | $900.60M$828.40M | +8.7% |
| Operating Income | $2.34B$2.28B | +2.5% |
| Interest Expense | $128.00M$141.80M | −9.7% |
| Net Income | $2.26B$2.10B | +7.5% |
| EPS (Basic) | $10.16$9.47 | +7.3% |
| EPS (Diluted) | $10.14$9.43 | +7.5% |
| Shares Outstanding (Basic) | 222.00M221.60M | +0.2% |
| Shares Outstanding (Diluted) | 222.50M222.50M | 0.0% |
05—Questions
Frequently Asked Questions
How did Air Products perform financially in fiscal year 2022?
Air Products & Chemicals, Inc. (APD) reported a strong fiscal year 2022 with a 23% increase in sales to $12,698.6 million and a 7% increase in net income to $2,266.5 million. This growth was driven by higher energy cost pass-throughs to customers, improved volumes, and successful pricing actions, despite facing economic challenges and unfavorable currency movements.
What are the key growth drivers for Air Products?
APD's growth is driven by its two-pillar strategy: expansion of its core industrial gases business and execution of world-scale clean hydrogen projects. The company is investing in energy transition projects, with a commitment of $15 billion through 2027, and sees significant opportunities in hydrogen for mobility, carbon capture technologies, and gasification.
How is Air Products managing rising energy costs?
The company is actively managing rising energy and fuel costs through several mechanisms. For its on-site business, contracts typically include pass-through provisions for energy costs. In its merchant business, APD has successfully implemented pricing actions to recover higher costs. These strategies have helped offset significant energy price increases, particularly in regions like Europe.
What is the outlook for Air Products in fiscal year 2023?
Looking ahead to fiscal year 2023, Air Products anticipates continued growth, with several new projects expected to contribute to results, including the second phase of the JIGPC project. The company remains focused on pricing actions to recover energy costs, pursuing additional volume opportunities, and controlling costs. Legislative support from initiatives like the U.S. Inflation Reduction Act is also expected to provide benefits for future clean hydrogen and carbon capture projects.
06—Continue