These results included a net $0.29 EPS charge from non-GAAP items.
For the quarter, on a non-GAAP basis, adjusted net income from continuing operation of $410m and diluted adjusted EPS from continuing operations of $1.86 both increased 4% over the prior year. Excluding the impact of a plant sale in the prior year, diluted adjusted EPS from continuing operations increase 9%.
First quarter sales of $2.2bn were flat with the prior year, as 1% higher pricing and 5% higher energy pass-through were offset by 3% lower volumes and 2% unfavourable currency.
A modification to an existing contract in India reduced sales by 1% but had no impact on profits. Excluding the prior-year plant sale, the India contract modification, and the Jazan project, sales were up 9%. Excluding Jazan and the plant sale, volumes grew 5%, driven by positive base volumes in all three regions and the full onstream of the Lu’An gasification facility in Asia. Pricing improved in all three regions.
For the quarter, adjusted EBITDA of $795m increased 8% from the prior year, driven by the higher volumes, positive pricing and high equity affiliate income, partially offset by high costs and unfavourable currency. Excluding the prior year plant sale, adjusted EBITDA increased 12%. Adjusted EDITDA margin of 35.7% increased 250 basis points over the prior year.
Commenting on the results, Seifi Ghasemi, Air Products’ Chairman, President and CEO, said, “Delivering our 19th consecutive quarter of adjusted EPS growth, Air Products colleagues are executing again our Five-Point Plan to sustain the lead and be the best performing industrial gas company in the world. On an underlying bases, we delivered nearly 10% adjusted EPS growth, despite a headwind from currency.”
“I am very proud of the team’s efforts to safely execute very large and complex projects while at the same time, continuing to serve and innovate for customers across dozens of industries.”
“Meanwhile, with our very strong financial position and significant cash flow, we can continue to invest in value-creating projects to profitably grow the company while also continuing to return cash to our shareholders. With the dividend increase we announced yesterday, we expect to return about $4.64 per share, or about $1bn in cash, to our shareholders over the next year,” Ghasemi said.
Results by business segment
Industrial Gases – Americas sales of $989m increased 9% over prior year. Volumes and pricing each contributed 2% and higher energy pass-through added 7% partially offset by 2% unfavourable currency. New plants and merchant volumes were positive, partially offset by refinery customer planned maintenance outages. Adjusted EBITA of $367m increased 4% over the prior year, as the improved volumes and pricing, as well as high equity affiliate income, were partially offset by increased costs. Adjusted EBITA margin of 37.1% declined 180 basis points from the prior year; excluding the impact of higher energy pass-through, adjusted EBITDA margin was up 50 basis points.
Industrial Gases – EMEA sales of $524m increased 2% over prior year. Positive 2%, higher volumes contributed 1%, and higher energy pass-through added 6%, partially offset by 4% unfavourable currency and 3% from the India contract modification. Adjusted EBITDA of $166m decreased 1% from prior year, as good business performance was offset by unfavourable currency. Adjusted EBITDA margin of 31.6% decreased 70 basis points; excluding the impact of higher energy pass-through, adjusted EBITDA margin was up 80 basis points.
Industrial Gases – Asia sales of $627m decreased 3% from prior year. Excluding the impact of the prior year plant sale, sales increased 16%, with volumes up 17%, largely from the Lu’An gasification project. Pricing increased 1%, representing the seventh consecutive quart of year-over-year improvement, and currency was -3%. Adjusted EBITDA of $298m increased 21%, and adjusted EBITDA margin of 47.5% was up 920 basis points over prior year. Excluding the prior-year plant sale, adjusted EBITDA increased 33% and adjusted EBITDA margin was up 470 basis points on strong volumes and higher pricing, as well as productivity.
Ghasemi concluded, “We do not control event that impact economies around the world, but we do control the operation performance of Air Products. Therefore, we continue to feel confident that we will deliver on our previous adjected EPS guidance for the fiscal year 2019.”