Air Products & Chemicals (APD)·Q1 2026 Earnings Summary

Air Products Beats Top of Guidance as Base Business Shows Resilience

January 30, 2026 · by Fintool AI Agent

Air Products (NYSE: APD) delivered a solid start to fiscal 2026, beating the top of its guidance range with adjusted EPS of $3.16, up 10% year-over-year. The industrial gases company demonstrated base business strength despite helium headwinds, with adjusted operating income up 12% to $757 million and margins expanding 140 basis points to 24.4%. Shares rose ~1.7% in after-hours trading to $260.38.

Did Air Products Beat Earnings?

Yes — EPS beat guidance and consensus.

Air Products exceeded the top end of its $2.95-$3.10 Q1 guidance range with adjusted EPS of $3.16, representing a 3.9% beat versus the $3.04 consensus estimate. Revenue of $3.10 billion rose 6% year-over-year, beating estimates of approximately $3.05 billion.

CEO Eduardo Menezes noted: "We had strong results from the base business, with a 10 percent increase in adjusted EPS compared to the prior year period and also posted a 12 percent improvement in adjusted operating income despite helium headwinds in the quarter. This is a solid start as the Air Products team continues to focus on unlocking earnings growth, optimizing large projects and maintaining capital discipline."

What Did Management Guide?

Guidance maintained — no change to full-year outlook.

Management affirmed its FY2026 adjusted EPS guidance of $12.85 to $13.15, implying 7-9% growth versus FY2025. Q2 FY26 guidance of $2.95-$3.10 represents 10-15% year-over-year growth.

Key guidance assumptions include:

• Minimal market growth given macroeconomic headwinds
• ~1% favorable currency impact vs. prior year
• ~4% helium headwind similar to FY25
• Benefits from portfolio actions

How Did the Stock React?

APD shares rose approximately 1.7% in after-hours trading to $260.38, up from the regular session close of $256.02. The stock has traded between $229.11 and $341.14 over the past 52 weeks and currently sits below both its 50-day ($254.08) and 200-day ($271.23) moving averages.

The positive reaction reflects:

• Beat versus guidance top-end and consensus expectations
• Progress on Yara negotiations for clean energy projects
• Capital discipline with capex down ~$1B year-over-year
• 44th consecutive year of dividend increases announced

What Changed From Last Quarter?

Segment performance improved across all regions.

Segment Performance

Key segment highlights:

• Europe led with 20% operating income growth driven by volume recovery (including prior-year turnaround impact), non-helium pricing gains, and favorable currency. Margin expanded 190bp to 28.6%.

• Asia delivered 7% operating income growth on productivity improvements and reduced depreciation from gasification assets classified as held for sale, partially offset by lower helium. Margin expanded 140bp to 27.9%.

• Americas grew operating income 4% on non-helium pricing and favorable business mix, despite a tough comparison to a prior-year non-recurring helium sale. Margin held flat at 30.1%.

• Middle East & India equity affiliates' income was flat at $85 million as NEOM project progresses.

What Are the Key Catalysts?

Clean Energy Project Updates

Air Products announced advanced negotiations with Yara International for two major low-emission ammonia projects:

NEOM Green Hydrogen Complex (Saudi Arabia):

• Marketing and distribution agreement with Yara to distribute up to 1.2 mtpa green ammonia on a commission basis
• Solar and wind power is 95%+ complete
• Agreement expected in first half of 2026

Louisiana Clean Energy Complex (LCEC):

• 25-year offtake agreement expected with Yara for ~80% of hydrogen production
• Remaining ~20% goes to Air Products' U.S. Gulf Coast hydrogen pipeline
• ~90% completion of detailed design with major equipment purchased
• Final go/no-go FID targeted by mid-2026
• Targeting double-digit returns on go-forward capex with meaningful EPS uplift at onstream

CEO Menezes framed the project as a "free option" for shareholders: "We have only two possibilities here — we're not gonna go forward, or we're gonna go forward with a good project. I hope our shareholders are looking at this as a free option for a good project on top of the current base case, which is not going forward."

Other Developments

• Dividend increase: 44th consecutive year of dividend increases, with quarterly dividend raised to $1.81 per share
• NASA contracts: Awarded supply contracts totaling >$140 million to provide liquid hydrogen for NASA facilities
• Capital discipline: On track to reduce capex from ~$5B to ~$4B while maintaining A/A2 rating

What Did Analysts Ask?

On Darrow/Louisiana project economics: Management confirmed that 45Q tax credits are included in their double-digit return target on go-forward capital. If the project doesn't proceed, approximately half of the ~$2B already spent could be recovered through equipment sales, though this varies by asset type — ammonia equipment has broader market value, while specialized high-pressure air separation equipment has limited resale potential.

On helium headwinds: Despite the tough comparison to last year's non-recurring sale, aerospace volume was "very strong" this quarter. However, the full-year 4% EPS headwind guidance remains unchanged. Management is actively pursuing new electronics and other accounts.

On space market opportunity: Air Products estimates it holds 40-50% of the U.S. space market, with projected 6-7% annual growth. The segment represents over 2% of total sales across hydrogen, helium, oxygen, and nitrogen. Recent NASA contracts totaling $140M+ highlight ongoing activity.

On electronics and AI: Management sees an "acceleration of investment decisions" by chip manufacturers driven by AI demand. Air Products is executing projects with capex up to ~$1B per site and sees similar-sized opportunities being decided in the next 12 months. New asset contributions will ramp in the back half of FY26.

On NEOM deconsolidation: The joint venture will deconsolidate from Air Products' balance sheet once operational in mid-2027, removing the debt and showing only 33% equity affiliate income. Operating costs will increase as they staff up pre-launch, then reset post-deconsolidation.

On European volumes: Management remains "cautious" despite 5% volume growth. The increase was partly driven by prior-year turnaround comparisons. Large on-site customers face more pressure than the retail/packaged gas business.

On regional utilization: Utilization rates across Americas, Europe, and Asia are "pretty similar in the mid- to high 70s," unchanged from FY25. Take-or-pay pressure is case-by-case, with steel and chemicals in Europe most affected.

On CBAM regulatory risk: Management views changes to EU CBAM rules as "very, very low probability" since it would require changing the entire CO2 ETS scheme in place for 15 years. Any impact would be indirect — Yara bears the ammonia regulatory risk, not Air Products.

What Are the Risks?

Helium headwinds continue. Management expects ~4% helium headwind in FY26, similar to FY25. Lower helium prices and volumes remain a drag, with the prior year benefiting from a significant non-recurring helium sale. Asia is the most impacted region — without helium, Asia pricing would have been up slightly.

Macroeconomic uncertainty. Guidance assumes minimal market growth given macroeconomic headwinds. Any further slowdown could pressure volumes.

Project execution risk. LCEC FID remains contingent on finalizing agreements with Yara, carbon sequestration partners, and construction contracts by mid-2026. Management emphasized that "99% of the decision is related to the construction cost more than anything else."

Energy cost pass-through. Higher energy pass-through continues to pressure margins (~50bp headwind in Q1), though this is revenue-neutral. Data centers are also creating "demand and distortions" in power markets, driving higher contract costs for new business.

5-Year Roadmap Targets

Management reiterated its long-term targets:

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Data sources: Air Products Q1 FY2026 earnings release, presentation, and earnings call transcript, S&P Global.