Air Products Inks Deal to Buy Five Hydrogen Plants for $530M

Air Products and Chemicals, Inc. APD has signed a deal with PBF Energy Inc. PBF through which it will acquire five steam methane reformer (SMR) hydrogen production plants for $530 million. Notably, the deal also includes the long-term supply of hydrogen from the already operating plants to refineries of PBF Energy.

The SMRs, located in Torrance and Martinez, CA, and Delaware City, DE, have an approximate combined production capacity of 300 million standard cubic feet per day. Reportedly, the SMR being purchased in Delaware City marks Air Products' first major asset operating in the state of Delaware.

The agreement is slated to close in the third quarter of fiscal 2020. The company also stated that it will discuss additional details about the deal on its second-quarter earnings call, which is scheduled for Apr 23.

Per management, Air Products' strong balance sheet places it in an excellent financial position to pursue its policy of investing in long-term onsite transactions such as the acquisition of five SMRs hydrogen production plants.

Presently, the company operates 12 industrial gas facilities in California, which includes five hydrogen production plants. Such plants use hydrogen to produce ultra-low sulfur transport fuels (gasoline, petrol, and jet). Also, the company supplies hydrogen for fueling infrastructure in California to support the increasing fleet of hydrogen fuel cell electric vehicles.

Air Products is recognized as a leading supplier of hydrogen to refineries to make cleaner burning transportation fuels. Also, the company operates one of the world’s most successful carbon capture projects in Port Arthur, TX, where it captured roughly 10 million tons of carbon dioxide that has been put to beneficial use.

Air Products’ shares have gained 4.8% in the past year against the industry’s decline of 41.8%.

 

 

For fiscal 2020, the company expects adjusted earnings of $9.35-$9.60 per share, which suggests growth of 14-17% from the year-ago reported figure.

It also expects adjusted earnings of $2.10-$2.20 per share for second-quarter fiscal 2020, implying a 9-15% year-over-year rise.

Air Products and Chemicals, Inc. Price and Consensus

 

Air Products and Chemicals, Inc. Price and Consensus

Air Products and Chemicals, Inc. price-consensus-chart | Air Products and Chemicals, Inc. Quote

Zacks Rank & Stocks to Consider

Air Products currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are NovaGold Resources Inc. NG and Franco-Nevada Corporation FNV.

NovaGold has a projected earnings growth rate of 11.1% for 2020. The company’s shares have surged 77.4% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada has a projected earnings growth rate of 24.7% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 33.9% in a year.

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