01—Abstract
Summary
Summary of the 10-Q filed January 30, 2026. Cited figures are marked; the original filing is the authoritative source.
Air Products & Chemicals, Inc. (APD) reported a strong first quarter for fiscal year 2026, with net income attributable to Air Products increasing by 10% to $678.2 milliona, or $3.04 per diluted share, compared to $617.4 million, or $2.77 per diluted share, in the prior year.
This growth was driven by a 6% increase in sales, reaching $3.1 billionb, attributed to higher energy cost pass-throughs, favorable currency movements, and improved pricing for non-helium products. The company demonstrated effective cost management, with cost of sales increasing at a slightly lower rate than sales and a reduction in selling and administrative expenses as a percentage of sales. The company continued to make progress on its strategic initiatives, including investments in clean energy.
The NEOM Green Hydrogen Project remains a significant undertaking, with ongoing project financing draws. Management also highlighted ongoing cost reduction efforts and a continued commitment to returning capital to shareholders through dividends, with a recent increase approved. While the company faced some headwinds such as lower helium demand and the impact of a prior year non-recurring helium sale, overall performance indicates a positive start to the fiscal year.
02—Key points
Key Highlights
- Net income attributable to Air Products increased by 10% to $678.2 million ($3.04 per diluted share) in Q1 FY2026.
- Sales grew by 6% to $3.1 billion, driven by energy cost pass-throughs, favorable currency, and improved pricing.
- Operating income rose 14% to $734.5 million, with operating margin expanding by 170 basis points to 23.7%.
- The company recorded $22.0 million in charges related to updated cost estimates for prior-year business and asset actions, impacting operating income.
- Cash provided by operating activities increased to $900.7 million, reflecting strong operational performance.
- Capital expenditures were $910.7 million, down from $1.2 billion in the prior year, primarily due to nearing completion of the NEOM Green Hydrogen Project.
- The company declared a quarterly dividend of $1.79 per share, with a subsequent increase to $1.81 per share approved.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Air Products & Chemicals, Inc. kept $0.22.
- Revenue$3.10B100.0%
- Cost of revenue−$2.11B67.9%
- Gross profit$995.0M32.1%
- Operating costs−$260.5M8.4%
- Operating income$734.5M23.7%
- Interest, other & tax−$56.3M1.8%
- Net income$678.2M21.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed January 30, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $3.10B$2.93B | +5.8% |
| Cost of Revenue | $2.11B$2.02B | +4.5% |
| Gross Profit | $995.00M$915.00M | +8.7% |
| R&D Expenses | $20.40M$22.00M | −7.3% |
| SG&A Expenses | $228.70M$242.40M | −5.7% |
| Operating Income | $734.50M$643.60M | +14.1% |
| Net Income | $678.20M$617.40M | +9.8% |
| EPS (Basic) | $3.04$2.77 | +9.7% |
| EPS (Diluted) | $3.04$2.77 | +9.7% |
| Shares Outstanding (Basic) | 222.80M222.70M | 0.0% |
| Shares Outstanding (Diluted) | 222.90M222.90M | 0.0% |
05—Questions
Frequently Asked Questions
What were the main drivers of the revenue increase in the first quarter?
The 6% increase in sales to $3.1 billion was primarily driven by higher energy cost pass-throughs to customers (3%), favorable currency movements (2%), and higher pricing for non-helium products (1%). Volumes remained flat, as increased on-site demand was offset by lower helium demand and a significant prior-year helium sale.
How did the company manage its costs in the quarter?
Cost of sales increased by 5%, which was less than the sales growth, indicating effective cost management. Selling and administrative expenses decreased by 6% and represented a lower percentage of sales (7.4% vs. 8.3%). Productivity improvements and lower maintenance costs contributed to favorable cost dynamics, partially offsetting fixed-cost inflation and higher energy costs.
What is the current status and financial impact of the NEOM Green Hydrogen Project?
The NEOM Green Hydrogen Project remains a significant investment. In Q1 FY2026, capital expenditures for the project were lower as it nears completion. The project is funded through significant non-recourse project financing, with total borrowings for the joint venture standing at $5.3 billion as of December 31, 2025. Air Products continues to draw on project financing for its equity contributions.
Are there any significant one-time charges impacting the reported results?
Yes, Air Products recorded $22.0 million in charges within operating income related to updated cost estimates for prior-year business and asset actions. Additionally, $6.3 million related to losses on cross-currency interest rate swaps terminated in connection with these actions were recorded in 'Other non-operating income (expense), net'. These charges are not reflected in the company's reportable segments and are excluded from non-GAAP adjusted results.
06—Continue