Core Portfolio Insight: Air Products

Core Portfolio Insight: Air Products

August 11, 2021
Share |

Air Products (Ticker: APD) is an industrial gas supplier for the chemicals, electronics, healthcare, and refining industries. Businesses require a steady supply of gases, such as oxygen and nitrogen, in order for their operations to run smoothly. Air Products, which has been in business for 80 years, is a dependable partner for these customers, which sign long-term contracts at premium prices for gas supply from APD. While a small portion to the overall cost structure of its customers, the continuous supply is mission critical to uninterrupted production, justifying the premium price paid and long-term contracts. Air Products' pricing power and steady cash flows make it a GPM Grade Company. 

Most recently, on APD's Q3 earnings call, CEO Seifi Ghasemi unveiled the company's capital deployment goals through 2027:

As seen in the slide above, Air Products has a goal of deploying more than $30B during the ten year period of 2018 to 2027. The company has already spent or committed $18B. This capital deployment in high return projects should lead to tremendous growth ahead. Here is a quote from the CEO on the Q3 earnings call describing how APD is investing for the growth:

While many companies were laying off employees as business slowed during the pandemic, APD delivered consistent results and even added close to 2,000 employees in highly technical positions. Along with its more traditional gas projects, APD has growth opportunities in new fields like carbon capture and gasification. As an APD shareholder, we benefit from the defensive on-site business model, good dividend payout, and very exciting growth opportunities to come over the next few decades. 

Related Links