Air Products and Chemicals, Inc.

What they do

Air Products produces and sells atmospheric gases (oxygen, nitrogen, argon), process gases (hydrogen, helium, carbon dioxide, carbon monoxide, syngas), and specialty gases, organized regionally across four industrial gas segments plus Corporate and other. It also engineers and operates large clean hydrogen projects and sells equipment such as turbomachinery, membrane systems, and cryogenic containers. The company operates in approximately 50 countries and serves refining, chemicals, metals, electronics, manufacturing, medical, and food end markets.

Revenue drivers

• Regional industrial gases (Americas, Asia, Europe, Middle East and India) — Over 90% of consolidated sales in fiscal 2025, 2024 and 2023, roughly half from atmospheric gases; sold largely through on-site contracts (about half of total revenue) and merchant supply.
• On-site supply contracts — Approximately half of total revenue, governed by generally long-term contracts that pass through changes in energy costs to customers, with pipeline networks providing supply reliability to larger customers.
• Clean hydrogen projects — Development, engineering, ownership and operation of large hydrogen projects for industrial and heavy-duty transport use; the company primarily produces gray hydrogen and is advancing blue and green hydrogen.
• Corporate and other / sale of equipment — Includes turbomachinery, membrane systems and cryogenic containers, plus corporate support costs and foreign exchange; in fiscal 2024 it also included the former LNG process technology and equipment business sold to Honeywell on 30 September 2024.

Recent performance

Q3 fiscal 2026 sales were $3.2 billion, up 5% on 3% higher volumes, 1% higher pricing and 1% favorable currency. GAAP operating loss was $2.1 billion with negative 66.3% margin, reflecting about $2.9 billion pre-tax ($2.2 billion after-tax, $9.92 per share) of charges from project exit decisions announced 30 June 2026, versus prior-year operating income of $790.6M. Adjusted operating income rose 9% to $810.3M and adjusted operating margin improved 110 bp to 25.6%. Adjusted EPS of $3.47 rose 12%, while GAAP loss per share was $6.47 versus $3.24 EPS a year earlier. Equity affiliates' income of $205.2M rose 22%, led by Americas and Middle East and India.

Strategy

Management is refocusing on the core industrial gas business under CEO Eduardo Menezes, including decisions to not proceed with the Louisiana Clean Energy Complex and to discontinue the Arizona (Casa Grande) zero-carbon liquid hydrogen facility and other smaller clean-energy distribution projects. The company cites a pathway to lower capital expenditures while pursuing traditional industrial gas projects, and now expects fiscal 2026 capital expenditures of approximately $3.5 billion. In Taiwan, Air Products San Fu announced a long-term agreement to build, own and operate four large air separation units, bulk gas systems and new underground pipelines for a semiconductor manufacturer's expansion. The NEOM Green Hydrogen Project is being advanced with a finalized marketing and distribution agreement with Yara for renewable ammonia.

Risks

• Clean-energy project execution and write-downs — The June 2026 project exits produced about $2.9 billion of pre-tax charges and a $2.1 billion quarterly operating loss, showing the risk of large capital commitments.
• Demand tied to carbon-reduction focus — The 10-K states green and blue hydrogen projects depend largely on expected demand for climate-related solutions and could suffer if public and private sectors reduce their focus on carbon emissions.
• Economic and market cyclicality — The 10-K states weak economic conditions and changing supply and demand balances in served markets have negatively impacted demand and may do so again.
• Competition in industrial gases — Each regional segment competes against Air Liquide S.A., Linde plc and Messer Group GmbH as well as regional players, with competition based on price, reliability of supply and application development.

Outlook

Management raised fiscal 2026 full-year adjusted EPS guidance to $13.39 to $13.49 and set fiscal 2026 fourth quarter adjusted EPS guidance of $3.55 to $3.65. It now expects fiscal 2026 capital expenditures of approximately $3.5 billion, citing a clear pathway to reduce capital expenditures and drive profitable growth through traditional industrial gas projects. The company cannot reconcile forward-looking adjusted EPS and capital expenditure guidance to GAAP without unreasonable efforts.