Air Products — Fiscal 2026 Earnings Summary

Financial Performance

• Fiscal 2026 full-year sales reached $13.0 billion, an 8% increase (or $954 million) versus the prior year, driven by 4% higher volumes, 2% higher energy cost pass-through, and 2% favorable currency.
• Fiscal 2026 fourth-quarter sales were $3.6 billion, a 12% increase, driven by 9% higher volumes, 1% higher pricing, 1% higher energy cost pass-through, and 1% favorable currency.
• GAAP operating income for fiscal 2026 was $23 million (0.2% margin) compared to an operating loss of $877 million (-7.3% margin) in the prior year; Q4 GAAP operating income was $633 million (17.8% margin) versus $17 million (0.5% margin) in the prior year.
• Adjusted operating income for fiscal 2026 was $3.2 billion, an 11% increase, with an adjusted operating margin of 24.4% (up 70 basis points); Q4 adjusted operating income was $856 million (up 5%), with an adjusted operating margin of 24.1% (down 150 basis points).
• Adjusted EPS for fiscal 2026 was $13.45, a 12% increase; Q4 adjusted EPS was $3.61, a 6% increase.
• GAAP EPS for fiscal 2026 was $2.39 compared to a loss of $1.74 per share in the prior year; Q4 GAAP EPS was $2.62 compared to $0.02 in the prior year.
• Cash used for investing activities was $4.1 billion in fiscal 2026, down $3.0 billion from the prior year.
• Capital expenditures were $3.3 billion in fiscal 2026, down $1.8 billion from the prior year.
• Cash provided by operating activities was $4.68 billion for the twelve months ended September 30, 2026, compared to $3.26 billion in the prior year.
• Total assets were $41.21 billion as of September 30, 2026, compared to $41.06 billion in the prior year.
• Long-term debt was $16.61 billion as of September 30, 2026, compared to $16.77 billion in the prior year.

Guidance and Future Outlook

• Fiscal 2027 full-year adjusted EPS guidance is set at $14.15 to $14.50.
• Fiscal 2027 first-quarter adjusted EPS guidance is $3.35 to $3.45.
• Fiscal 2027 capital expenditures are expected to range from $3.0 billion to $3.5 billion.
• Management expects to maintain a disciplined approach to capital allocation while focusing on expanding the industrial gas project backlog and delivering continued operating income growth.

Business Segments and Product Lines

• Americas segment sales increased 27% to $1.6 billion in Q4, driven by 26% higher volumes; operating income rose 20% to $469 million.
• Asia segment sales increased 4% to $909 million in Q4, driven by 3% higher volumes and 2% favorable currency; operating income rose 10% to $250 million.
• Europe segment sales increased 8% to $856 million in Q4, driven by 6% higher energy cost pass-through, 2% higher pricing, and 1% higher volumes; operating income rose 2% to $241 million.
• Middle East and India equity affiliates' income increased 6% to $97 million, primarily from an affiliate in Saudi Arabia.
• Corporate and other sales decreased 34% to $122 million in Q4; operating loss widened to $108 million from $49 million in the prior year.
• The company expanded its backlog, including over $2.0 billion in new electronics wins.
• Significant asset sales occurred in the Americas, including an early contract termination.
• One of two China coal gasification plants was sold in October 2026.

Market and Competitive Landscape

• Air Products is the leading global supplier of hydrogen and operates in approximately 50 countries.
• The company serves energy, environmental, and emerging markets, providing industrial gases and equipment to industries including energy, chemicals, electronics, metals, manufacturing, food, medical, and space.
• Management highlighted progress in improving core industrial gas business performance and execution.

Risks and Challenges

• Fiscal 2026 results included significant charges related to project exits, primarily associated with the exit of clean energy projects in Louisiana and Arizona, and the impairment of two China coal gasification plants.
• Q4 2026 charges reflected updated estimates on the sale process for the China plants, including a full impairment of one plant due to limited buyer interest.
• Adjusted operating margin in Q4 decreased 150 basis points primarily due to higher costs, including fixed-cost inflation and higher incentive compensation.
• Forward-looking statements are subject to risks including global economic conditions, inflation, supply chain disruptions, political risks, project delays, cost escalations, and regulatory changes.

Management Commentary and Tone

• CEO Eduardo Menezes stated that fiscal 2026 results demonstrate progress in improving the core industrial gas business, strengthening execution, and allocating capital with discipline.
• Management highlighted the delivery of 12% adjusted EPS growth, a $1.8 billion reduction in capital expenditures, and an expanded industrial gas project backlog.
• The tone emphasized a continued focus on safety, serving customers with excellence, and maintaining a disciplined approach to capital allocation in fiscal 2027.

Other Key Points

• Fiscal 2026 GAAP operating income and EPS were significantly impacted by $3.2 billion in pre-tax business and asset action charges, primarily related to project exits.
• Fiscal 2025 GAAP results were impacted by $3.7 billion in pre-tax charges, including project exits, impairment of China coal gasification plants, and shareholder activism-related costs.
• Dividends paid to shareholders were $1.6 billion in fiscal 2026, compared to $1.58 billion in the prior year.
• The company reported a gain on sale of business in fiscal 2025 ($67.3 million) and a gain on sale of other assets ($31.3 million), which were excluded from adjusted measures.
• Non-service related pension costs were adjusted out of non-GAAP measures, resulting in net non-operating costs of $15.7 million pre-tax for fiscal 2026 versus $45.0 million in fiscal 2025.
• A tax reform adjustment related to deemed foreign dividends resulted in a $14.2 million expense in Q4 2026 and a $34.9 million benefit in Q2 2025.