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DATE
Thursday, Nov. 5, 2026
CALL PARTICIPANTS
- Investor Relations – Megan Britt
- Chief Executive Officer – Eduardo Menezes
- Chief Financial Officer – Melissa Schaeffer
TAKEAWAYS
- Adjusted EPS — $13.45 for fiscal 2026, representing a 12% increase driven by 11% operating income growth and 14% equity affiliate income growth.
- Sales — $13.0 billion for the full fiscal year, an 8% increase resulting from higher volumes, energy cost pass-through, and favorable currency.
- Industrial Gas Backlog — $3.3 billion as of the fourth quarter, supported by over $2 billion in new electronics project wins during the last 12 months.
- Fiscal 2027 Adjusted EPS Guidance — $14.15 to $14.50, representing projected growth of 5% to 8% compared to fiscal 2026 results.
- Fiscal 2027 CapEx Guidance — $3.0 billion to $3.5 billion, with over $1 billion allocated to traditional industrial gas growth projects.
- Operating Margin — 24.4% for fiscal 2026, a 70 basis point improvement due to pricing actions and productivity gains.
- Cost Reduction Savings — $95 million achieved in fiscal 2026 through a workforce reduction plan that is currently 93% complete.
- Return on Capital — 11.9% for fiscal 2026, reflecting a 100 basis point improvement driven by core business performance and project optimization.
- Equity Affiliates Income — $745.9 million in fiscal 2026, a 14% increase led by higher volumes in Mexico and Italy joint ventures.
- Americas Segment Operating Income — $1.6 billion for fiscal 2026, an 8% increase primarily driven by higher on-site volumes and refinery asset production.
- Asia Segment Operating Income — $978.9 million for fiscal 2026, growing 15% behind new electronics assets and lower costs from productivity.
- Europe Segment Operating Income — $906.9 million for the full year, a 7% increase reflecting favorable currency and higher pricing actions.
- Dividends — $1.6 billion paid to shareholders during fiscal 2026, maintaining the company’s track record of dividend increases.
- Helium Impact — 3% headwind to fiscal 2026 earnings, which management expects to stabilize across the full fiscal 2027 year.
- China Asset Sales — over $250 million in proceeds collected from the sale of the Jiutai gasification facility at the beginning of fiscal 2027.
- HyCO Volumes — mid-single-digit percentage growth in fiscal 2026, with the company currently operating at full capacity in the United States.
- Headcount Reduction — 15% decrease in total personnel since the fiscal 2024 peak to align with a lower level of capital expenditure.
- Net Cash Flow — neutrality achieved in fiscal 2026, with a shift to positive net cash flow anticipated for fiscal 2027.
- Energy Transition CapEx — $1.5 billion remaining for completion of legacy projects in fiscal 2027, with total energy transition spending expected to reach zero by fiscal 2029.
- Corporate SG&A — 10% reduction in fiscal 2026 costs driven by functional productivity and a $70 million decrease in project-related expenses.
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RISKS
- Melissa Schaeffer warned that a higher tax rate of 19% and increased interest expense from canceled projects will create a 2% headwind to earnings in fiscal 2027.
- Eduardo Menezes noted that several underperforming legacy projects are expected to lack material contribution to future operating income despite ongoing improvement efforts.
- Melissa Schaeffer stated, “We anticipate a headwind in the first quarter due to lower pricing from a contract renewal with the strategic customers,” referring to the helium market.
SUMMARY
Air Products and Chemicals, Inc. (APD -2.94%) reported fiscal 2026 results centered on a transition toward core industrial gas operations and a disciplined reduction in capital spending. Management reported a 12% increase in adjusted earnings per share and a $1.8 billion reduction in total capital expenditure compared to fiscal 2025. The company reached net cash flow neutrality while expanding its industrial gas project backlog to $3.3 billion, primarily driven by wins in the electronics sector. For fiscal 2027, management provided guidance for continued earnings growth and anticipated positive net cash flow supported by asset sale proceeds and improved operating cash flow.
- The electronics sector remains a primary growth driver, with management identifying a project pipeline of approximately 4 billion for electronics and space customers.
- Management indicated that the NEOM green hydrogen project is nearing completion, with the plant expected to be fully operational by the second half of 2027.
- Air Products is changing its helium inventory accounting to an average cost method in fiscal 2027, which CFO Schaeffer noted would create a modest non-cash headwind.
- The company is evaluating an initial public offering for its subsidiary in India, considering a sale of 10% to 15% of the entity during the first calendar quarter of 2027.
- CEO Menezes stated, “our goal is the most reliable supplier in this market,” regarding the company’s strategy to secure long-term 15-year helium contracts.
- The company achieved 93% of its planned workforce reductions, contributing to its goal of achieving best-in-class margins among industrial gas peers.
INDUSTRY GLOSSARY
- HyCO: Hydrogen and Carbon Monoxide.
- On-site: Industrial gas supply delivered via pipeline from a plant located on or adjacent to a customer’s facility.
- Merchant: Industrial gas supply delivered in liquid or gaseous form via tanker trucks or cylinders.
- Gasification: A process that converts carbonaceous materials into syngas.
- Syngas: A mixture of hydrogen and carbon monoxide used for chemical production or power generation.
- RFNBO: Renewable Fuels of Non-Biological Origin.
- ROC: Return on Capital.
Full Conference Call Transcript
Operator: Good morning, and welcome to Air Products’ Fourth Quarter Earnings Release Conference Call. Today’s call is being recorded at the request of Air Products. Please note that this presentation and the comments made on behalf of Air Products are subject to copyright by Air Products and all rights are reserved. Beginning today’s call is Megan Britt. Please go ahead.
Megan Britt: Hello, and welcome to the Fourth Quarter and Full Year Fiscal 2026 Earnings Conference Call for Air Products. Our prepared remarks today will be led by Eduardo Menezes, Chief Executive Officer; and Melissa Schaeffer, Chief Financial Officer. We have prepared presentation slides to supplement our remarks during the call, which are posted on the Investor Relations section of the Air Products website. During this call, we will make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties.
Our
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