01—Abstract
Summary
Summary of the 8-K filed January 14, 2025. Cited figures are marked; the original filing is the authoritative source.
Air Products & Chemicals (APD) filed an 8-K on January 14, 2025 to furnish a press release announcing preliminary first-quarter fiscal 2025 results (quarter ended December 31, 2024).
Preliminary GAAP diluted EPS from continuing operations attributable to Air Products was $2.77a, up about 1% from $2.73 in Q1 FY2024. Preliminary adjusted (non-GAAP) EPS was $2.86, up about 1% from $2.82 a year earlier, and above the top end of the company's prior Q1 adjusted EPS guidance range of $2.75 to $2.85. The company stated that full interim financial statements were not yet complete, so these figures are unaudited, preliminary, and subject to change during the close process.
The gap between GAAP and adjusted EPS (about $0.09b) reflects three items: $0.10 per share of shareholder activism costs tied to the proxy contest led by Mantle Ridge L.P., a $0.05 per share unrealized gain from de-designating cash flow hedges on NEOM Green Hydrogen Project interest rate swaps, and $0.04 per share of non-service pension cost. Investors should note that the hedge gain is non-recurring in nature and could reverse into earnings volatility in future periods as fair value changes flow through earnings until the swaps re-qualify for hedge accounting. The headline is a modest beat versus the top end of the adjusted EPS guidance range and flat-to-slightly-higher year-over-year earnings.
The filing contains no new guidance, balance sheet, or cash flow data. The full Q1 FY2025 results and teleconference are scheduled for February 6, 2025, which will be the more informative event for assessing underlying operating trends, project execution, and the outlook.
02—Key points
Key Highlights
- Preliminary Q1 FY2025 GAAP diluted EPS of $2.77, up 1% from $2.73 in Q1 FY2024.
- Preliminary Q1 FY2025 adjusted EPS of $2.86, up 1% from $2.82, and above the top end of prior guidance of $2.75 to $2.85.
- Shareholder activism costs of $29.9 million pre-tax ($0.10 per share) related to the proxy contest with Mantle Ridge L.P. were excluded from adjusted EPS.
- A $38.8 million pre-tax unrealized gain ($0.05 per share attributable to Air Products) from de-designating cash flow hedges on NEOM Green Hydrogen Project swaps was excluded from adjusted EPS; this gain may reverse or fluctuate in future periods.
- Non-service pension cost reduced Q1 FY2025 GAAP EPS by $0.04 per share, versus $0.08 per share in Q1 FY2024.
- The figures are preliminary and unaudited; full interim financial statements for the quarter ended December 31, 2024 were not yet complete.
- Full Q1 FY2025 results and an investor teleconference are scheduled for February 6, 2025.
03—Questions
Frequently Asked Questions
Did Air Products beat its earnings guidance for the quarter?
Yes, on an adjusted basis. Preliminary adjusted EPS of $2.86 exceeded the top end of the prior guidance range of $2.75 to $2.85. GAAP EPS of $2.77 is not directly comparable to that guidance range, since guidance is provided on an adjusted, continuing operations basis.
What caused the difference between GAAP and adjusted EPS?
The difference of about $0.09 per share reflects $0.10 of shareholder activism costs (proxy contest with Mantle Ridge L.P.) and $0.04 of non-service pension cost, offset by a $0.05 unrealized gain from de-designating cash flow hedges on NEOM Green Hydrogen Project interest rate swaps. Adjusted EPS excludes all three.
Are these results final?
No. The company stated that the quarter-end close is not complete and that the preliminary figures are unaudited and subject to change, including for any interim events before the full financial statements are issued. Investors should wait for the full Q1 FY2025 results, scheduled for February 6, 2025.
Will the NEOM hedge gain recur?
Not necessarily. The swaps remain de-designated until project borrowings are commensurate with their notional value, and until then fair value changes will run through earnings. The company says it cannot predict the size of future adjustments, so these could be gains or losses depending on interest rate movements.
What does the proxy contest cost mean for investors?
The company incurred $29.9 million pre-tax ($21.9 million after tax, or $0.10 per share) of legal, professional, and proxy solicitation costs in Q1 FY2025 related to its response to Mantle Ridge L.P. and the 2025 Annual Meeting. Management excludes these costs from adjusted EPS, but they are a real cash expense and reduce GAAP EPS in the quarter.
04—Continue