Air Products & Chemicals Action Forum

Air products Chemicals Q3 2024 $APD (+2,16 %)

Financial results

• Sales: Sales for the financial year 2024 amounted to USD 12.1 billion, a decrease of 4% compared to the previous year. This was mainly due to a 5% lower pass-through of energy costs, partially offset by a 1% price increase.
• Net income: GAAP net income increased 65% to $3.9 billion in FY2024, primarily due to an after-tax gain of $1.2 billion from the sale of the LNG business.
• Adjusted EBITDA: Adjusted EBITDA for the 2024 financial year amounted to USD 5.0 billion, an increase of 7% compared to the previous year. This increase was supported by positive price developments, a favorable business mix and improved productivity.

Balance sheet overview

• Total assets: As of September 30, 2024, total assets were $39.6 billion, an increase from $32.0 billion in the prior year.
• Total liabilities: Total liabilities amounted to USD 20.9 billion, an increase from USD 16.3 billion in the previous year.
• Shareholders' equity: Equity increased to $18.7 billion, up from $15.7 billion in the prior year.

Details of the income statement

• GAAP EPS: GAAP EPS from continuing operations for FY2024 was $17.24, an increase of 67% compared to the prior year.
• Adjusted EPS: Adjusted EPS for the 2024 financial year amounted to USD 12.43, an increase of 8% compared to the previous year.

Cash flow overview

• Operating cash flow: Cash flow from operating activities amounted to USD 3.6 billion, compared to USD 3.2 billion in the previous year.
• Investing activities: USD 4.9 billion was spent on investing activities, mainly for plant and equipment purchases.
• Financing activities: Financing activities generated USD 2.6 billion, mainly from cash inflows from long-term debt.

Key figures and profitability metrics

• Adjusted EBITDA margin: This improved to 41.7% for the 2024 financial year, an increase of 440 basis points compared to the previous year.
• Operating margin: The operating margin increased to 31.9%, an increase of 1,330 basis points, mainly due to the sale of the LNG business.

Segment information

• Americas: Sales amounted to USD 1.3 billion, a decrease of 3% compared to the previous year, with an operating margin of 34.2%.
• Asia: Sales increased by 7% to USD 861 million, with an operating margin of 28.4%.
• Europe: Sales increased by 3% to USD 731 million, with an operating margin of 28.3%.

Competitive position

Air Products is a leading global supplier of hydrogen and industrial gases, with a strong focus on clean hydrogen projects.

Forecasts and management comments

• Forecast for the financial year 2025: Adjusted EPS is forecast to be between $12.70 and $13.00; capital expenditures are expected to be between $4.5 billion and $5.0 billion.

Risks and opportunities

• Opportunities: Strong cash flow supports capital allocation and returns to shareholders; strategic divestment of LNG business fits with company's core focus.
• Risks: Potential impact of global economic conditions, inflation and supply chain disruptions.

Summary of results

Positives:

• Significant increase in GAAP net income and EPS due to the sale of the LNG business.
• Improved adjusted EBITDA and margins indicating strong operating performance.
• Successful strategic divestment of the LNG business in line with the company's core focus.
• Strong cash flow supports capital allocation and returns to shareholders.
• Positive price developments and favorable business mix contributed to financial growth.

Negative aspects:

• Decline in overall sales due to lower pass through of energy costs.
• Decline in sales in the Americas due to lower pass-through of energy costs and currency factors.
• Higher costs in the Middle East and India impacted EBITDA.
• Increased liabilities, especially long-term debt.
• Cash flow from investing activities exceeded cash flow from operating activities.

The stock fits my dividend strategy quite well, which is why I placed my second order after the latest figures.

Now my largest single position in the portfolio, before $KO (+1,1 %) & $APD (+2,16 %)

⚡ Gas giants of the future: who will lead the energy race? 🏁

For the development (company figures), a better view and more, check out the free blog: https://topicswithhead.beehiiv.com/p/gasriesen-der-zukunft-wer-wird-das-energie-rennen-anf-hren

Company presentation

The four leading players in the global industrial gases market are Linde, Air Liquide, Air Products and Chemicals and Nippon Sanso Holding. Each of these companies has a long history and has developed into a major player over time:

- Linde was founded in Germany in 1879 and is today an undisputed market leader.

- Air Liquide was founded in France in 1902 and ranks second on the world market.

- Air Products and Chemicals was founded in the USA in 1940 and is number three in the market.

- Nippon Sanso Holding has its origins in a company founded in Japan in 1910 and is currently number four in the industry.

Historical development

The industrial gases sector is characterized by remarkable stability. The same companies have dominated the market for over a century, indicating high barriers to market entry and a particularly robust business model. In recent decades, there has been increasing consolidation:

- 2018 saw the merger of $LIN (-0,49 %) and Praxair, creating the new industry leader.

- 2016 $AI (-0,98 %) Liquide acquired its US competitor Airgas to strengthen its market position

$4091 (-0,81 %) Sanso benefited from the mergers of its competitors and was able to expand through strategic acquisitions in Europe and the US.

Business model

The four companies produce and distribute industrial gases such as oxygen, nitrogen and hydrogen, which are indispensable in numerous sectors, from the steel industry to medical technology. The business model is based on long-term customer relationships, technological expertise and highly efficient logistics that enable the gases to be transported and delivered safely and economically.

Core competencies and future prospects

The companies' core competencies lie in the efficient production and distribution of industrial gases and in their in-depth technical expertise. All four companies are increasingly focusing on growth markets such as hydrogen technology and electronic gases, which are seen as key areas for the future. In particular, the growing demand for clean energy sources and the development of new technologies create potential for further growth.

Market position and competition

The global market for industrial gases is dominated by these four companies:

- Linde is the clear market leader.

- Air Liquide follows in second place.

-$APD (+2,16 %) ranks third.

- Nippon Sanso is number four on the market.

Together, Linde and Air Liquide control around 63% of the global market share, underlining their supremacy in the industry.

Total Addressable Market (TAM)

The global market for industrial gases is growing continuously and is expected to continue to expand in the coming years. Although exact figures on the "Total Addressable Market" (TAM) are not publicly available, it is estimated that the global market for industrial gases will reach a value of USD 173.43 billion by 2030.

Share performance

The valuation and performance of the shares of these companies show considerable differences:

With a market capitalization of $221.43B, Linde is currently the most valuable of the 4 companies. Since the IPO on June 17, 1992, Linde has returned 10,041% and on a 3-year basis is at 55.72%. Air Liquide is at 44.28% on a three-year basis and at 3,248.2% since the IPO on January 2, 1992, clearly behind Linde. APC is at 5,183.8% since the IPO on January 2, 1990, ahead of Air Liquide but behind Linde. On a 3-year basis it is at 11.07%. Nippon Sanso is at 71% and has only reached 1,311.56% since the IPO on January 6, 1992, making it the worst of the four stocks.

For the development (company figures), a better view and more, check out the free blog:https://topicswithhead.beehiiv.com/p/gasriesen-der-zukunft-wer-wird-das-energie-rennen-anf-hren

Conclusion

If I were to focus on just one company, it would be a difficult decision. Therefore, I look at two stocks, but still go through the decision process thoroughly. When I bring together all the relevant information about the industry and my personal priorities, I tend to see Linde as the preferred choice. The industry requires capital and Linde is the best positioned in this respect. In addition, the larger companies clearly benefit from being able to leverage their size effectively with banks and customers. Linde is well positioned in both Europe and America, and recent developments in the US have increased its focus on shareholder return. As an established brand, Linde also offers excellent diversification.

Air Products and Chemicals is also interesting, but has weaknesses compared to Linde in its ties to "heavy industry". Although this can have advantages, it has also brought disadvantages in recent years. I therefore initially considered Air Liquide as a possible favorite. They are strongly positioned in many business areas and have a well-known brand, even if they have a "somewhat" weaker presence in the USA. However, their culture and domicile in Europe is super pronounced, which affects shareholder value a little.

If you want better diversification, which is the case with APC and Air Liquide as they cover different strengths, you should take the two, because you have to remember that Linde shares have only really gained in value in the last four years. Even though I personally would prefer Linde and Air Liquide, I actually think Air Liquide and APC are a better rational choice due to their diversified positioning and stable market position in the areas in which they operate.

And you buy shares for the future development and not the past.

Podcast episode 50 "Buy High. Sell Low."

Subscribe to the podcast to keep Bitcoin profits tax-free after one year of holding!

00:00:00 Anniversary

00:04:00 Black Monday, Iran & Israel

00:34:00 Palantir $PLTR (+5,8 %)

00:53:00 Air Products $APD (+2,16 %)

01:00:00 Crowdstrike $CRWD (+0,55 %)

01:05:00 Cloudflare $NET (+3,83 %)

01:11:00 Nu Holdings $NU (+0,57 %)

01:15:00 Coinbase & Bitcoin $COIN (+8,63 %)
$BTC (+0,32 %)

01:19:00 PayPal $PYPL (+3 %)

01:23:00 Airbnb $ABNB (-6,51 %)

01:28:00 Tesla - OS HS4PHR

01:36:00 Nvidia $NVDA (-0,03 %)

01:49:00 Dirt of the week: BSW $TSLA (+9,97 %)

Spotify

https://open.spotify.com/episode/25f8FceRaUG4CSZPE9j7ze?si=CyNZUGRVQMyGSOy0OX7KcA

YouTube

https://youtu.be/A6oZQmRewDA

Apple Podcast

https://podcasts.apple.com/us/podcast/folge-50-paypal-tesla-nvidia-coinbase-palantir-crowdstrike/id1695869891?i=1000664532096

#podcast
#spotify

Hello was too tasty the entry hshaha

Yes indeed too much noordusa always had a lot of interest in it, so I want to $NN (-0,45 %) buy and $ASRNL (-1 %)
add on and add to the euro div etf to spread something outside USA. Also $KPN (+3,15 %)
and $WKL (+1,24 %) seem interesting to me. I am indeed trying to keep under 10% by own money, but if by growth I get above that, I would be fine with that. (Let your runners run)

Growth indeed I am looking at: $SBUX (+2,49 %) and $CMI
$DE (-2,8 %)
$HSY (+1,79 %)
$TRV (+2,63 %)
$APD (+2,16 %)
$MCO (-0 %)
$ADP (+0,74 %)

But also for a little more dividend $MAA (+3,68 %)
$TD (+1,05 %)
$AFL (+1,23 %)
$AVB (+3,31 %)

Main I bought when it was very low and interest rates were also very low, so so the risk was much less. Only bought once. I may well stay away from this for a long time and use the dividend for the dividend snowball.

Otherwise quite difficult to stick with these boring and safe stocks, but this is what I like and sleep best with. (Slow but "sure")

Fantastic explanation everything was indeed correct how I think about it and this helps me tremendously to persevere, thank you Paul.

Thanks for your review: https://youtu.be/7-xomL4oDBM?si=v-JueJwSOVPHQeYZ

I'm curious what you guys think of this YouTube money tree show

First purchase Air Products

I took advantage of the correction and bought it, let's see what happens. I am convinced by the company.

What is currently on your watchlist?

What will $APD (+2,16 %)