UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended 31 March ~~2023~~2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-04534

AIR PRODUCTS AND CHEMICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware

23-1274455

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

1940 Air Products Boulevard

Allentown, Pennsylvania 18106-5500

(Address of principal executive offices and Zip Code)

610-481-4911

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	APD	New York Stock Exchange
1.000% Euro Notes due 2025	APD25	New York Stock Exchange
0.500% Euro Notes due 2028	APD28	New York Stock Exchange
0.800% Euro Notes due 2032	APD32	New York Stock Exchange
4.000% Euro Notes due 2035	APD35	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock, par value $1 per share, outstanding at 31 March ~~2023~~2024 was ~~222,122,719.~~222,305,907.

Table of Contents

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended 31 March ~~2023~~2024

TABLE OF CONTENTS



Forward-Looking Statements			3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
Consolidated Income Statements – Three and Six Months Ended 31 March ~~2023~~2024 and ~~2022~~2023			5
Consolidated Comprehensive Income Statements – Three and Six Months Ended 31 March ~~2023~~2024 and ~~2022~~2023			6
Consolidated Balance Sheets – 31 March ~~202~~3 2024 and 30 September ~~2022~~2023			7
Consolidated Statements of Cash Flows – Six Months Ended 31 March ~~2023~~2024 and ~~2022~~2023			8
Consolidated Statements of Equity – Three and Six Months Ended 31 March ~~2023~~2024 and ~~2022~~2023			9
Notes to Consolidated Financial Statements			11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			3536
Item 3. Quantitative and Qualitative Disclosures About Market Risk			6162
Item 4. Controls and Procedures			6263

PART II—OTHER INFORMATION

Item 1. Legal Proceedings			63

Item 5. Other Information			63
Item 6. Exhibits			6364
Signature			6465

Table of Contents

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts and can generally be identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” "future," “goal,” “intend,” “may,” “outlook,” “plan,” “positioned,” “possible,” “potential,” “project,” “should,” “target,” “will,” “would,” and similar expressions or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements. Forward-looking statements are based on management’s expectations and assumptions as of the date of this report and are not guarantees of future performance. You are cautioned not to place undue reliance on our forward-looking statements.

Forward-looking statements may relate to a number of matters, including expectations regarding revenue, margins, expenses, earnings, tax provisions, cash flows, pension obligations, share repurchases or other statements regarding economic conditions or our business outlook; statements regarding capital expenditures and plans, projects, strategies and objectives for our future operations, including our ability to win new projects and execute the projects in our backlog; and statements regarding our expectations with respect to pending legal claims or disputes. While forward-looking statements are made in good faith and based on assumptions, expectations and projections that management believes are reasonable based on currently available information, actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation:

•the duration and impacts of the ongoing COVID-19 global pandemic and efforts to contain its transmission, including the effect of these factors on our business, our customers, economic conditions and markets generally;

•changes in global or regional economic conditions, inflation, and supply and demand dynamics in the market segments we serve, including demand for technologies and projects to limit the impact of global climate change;

•changes in the financial markets that may affect the availability and terms on which we may obtain financing;

•the ability to implement price increases to offset cost increases;

•disruptions to our supply chain and related distribution delays and cost increases;

•risks associated with having extensive international operations, including political risks, risks associated with unanticipated government actions and risks of investing in developing markets;

•project delays, scope changes, cost escalations, contract terminations, customer cancellations, or postponement of projects and sales;

•our ability to safely develop, operate, and manage costs of large-scale and technically complex projects;

•the future financial and operating performance of major customers, joint ventures, and equity affiliates;

•our ability to develop, implement, and operate new technologies and to market products produced utilizing new technologies;

•our ability to execute the projects in our backlog and refresh our pipeline of new projects;

•tariffs, economic sanctions and regulatory activities in jurisdictions in which we and our affiliates and joint ventures operate;

•the impact of environmental, tax, safety, or other legislation, as well as regulations and other public policy initiatives affecting our business and the business of our affiliates and related compliance requirements, including legislation, regulations, or policies intended to address global climate change;

•changes in tax rates and other changes in tax law;

•safety incidents relating to our operations;

•the timing, impact, and other uncertainties relating to acquisitions and divestitures, including our ability to integrate acquisitions and separate divested businesses, respectively;

•risks relating to cybersecurity incidents, including risks from the interruption, failure or compromise of our information systems or those of our business partners or service providers;

Table of Contents

FORWARD-LOOKING STATEMENTS (CONTINUED)

•~~risks relating to cybersecurity incidents, including risks from the interruption, failure or compromise of our information systems;~~

•catastrophic events, such as natural disasters and extreme weather events, pandemics and other public health crises, acts of war, including Russia’s invasion of Ukraine and new and ongoing conflicts in the ~~ongoing civil war in Yemen,~~Middle East, or terrorism;

•the impact on our business and customers of price fluctuations in oil and natural gas and disruptions in markets and the economy due to oil and natural gas price volatility;

•costs and outcomes of legal or regulatory proceedings and investigations;

•asset impairments due to economic conditions or specific events;

•significant fluctuations in inflation, interest rates, and foreign currency exchange rates from those currently anticipated;

•damage to facilities, pipelines or delivery systems, including those we are constructing or that we own or operate for third parties;

•availability and cost of electric power, natural gas, and other raw materials; and

•the success of productivity and operational improvement programs.

In addition to the foregoing factors, forward-looking statements contained herein are qualified with respect to the risks disclosed elsewhere in this document, including in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 3, Quantitative and Qualitative Disclosures About Market Risk, as well as with respect to the risks described in Item 1A, Risk Factors, to our Annual Report on Form 10-K for the fiscal year ended 30 September ~~2022.~~2023. Any of these factors, as well as those not currently anticipated by management, could cause our results of operations, financial condition or liquidity to differ materially from what is expressed or implied by any forward-looking statement. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED INCOME STATEMENTS

(Unaudited)


		Three Months Ended			Six Months Ended
		31 March
				Three Months Ended
				Three Months Ended
				Three Months Ended					Six Months Ended
			31 March									31 March	31 March
(Millions of U.S. Dollars, except for share and per share data)	(Millions of U.S. Dollars, except for share and per share data)	2023		2022	2023	2022	(Millions of U.S. Dollars, except for share and per share data)	2024	2023	2024	2023
Sales	Sales	$3,200.1		$2,945.1	$6,374.8	$5,939.3
Cost of sales	Cost of sales	2,282.8		2,151.6	4,555.1	4,375.2

Selling and administrative expense
Selling and administrative expense
Selling and administrative expense	Selling and administrative expense	251.2		227.0	485.6	459.8
Research and development expense	Research and development expense	27.2		23.7	51.6	47.0
Business and asset actions	Business and asset actions	185.6		—	185.6	—

Other income (expense), net

Other income (expense), net

Other income (expense), net	Other income (expense), net	6.5		19.1	14.9	27.6
Operating Income	Operating Income	459.8		561.9	1,111.8	1,084.9
Equity affiliates' income	Equity affiliates' income	165.9		120.8	275.9	268.6
Interest expense	Interest expense	40.9		32.3	82.1	62.8
Other non-operating income (expense), net	Other non-operating income (expense), net	(13.9)		9.1	(14.5)	31.7

Income Before Taxes	Income Before Taxes	570.9		659.5	1,291.1	1,322.4
Income Before Taxes
Income Before Taxes
Income tax provision	Income tax provision	121.0		122.7	257.4	236.0

Net Income	Net Income	449.9		536.8	1,033.7	1,086.4
Net income (loss) attributable to noncontrolling interests		10.1		6.3	21.7	(4.5)

Net Income

Net Income
Net income attributable to noncontrolling interests

Net Income Attributable to Air Products

Net Income Attributable to Air Products

Net Income Attributable to Air Products	Net Income Attributable to Air Products	$439.8		$530.5	$1,012.0	$1,090.9

Per Share Data (U.S. Dollars per share)	Per Share Data (U.S. Dollars per share)

Per Share Data (U.S. Dollars per share)

Per Share Data (U.S. Dollars per share)

Basic earnings per share attributable to Air Products

Basic earnings per share attributable to Air Products

Basic earnings per share attributable to Air Products	Basic earnings per share attributable to Air Products	$1.98		$2.39	$4.55	$4.91

Diluted earnings per share attributable to Air Products	Diluted earnings per share attributable to Air Products	$1.97		$2.38	$4.54	$4.90

Diluted earnings per share attributable to Air Products

Diluted earnings per share attributable to Air Products

Weighted Average Common Shares (in millions)
Weighted Average Common Shares (in millions)
Weighted Average Common Shares (in millions)	Weighted Average Common Shares (in millions)
Basic	Basic	222.3		222.0	222.3	222.0
Basic
Basic
Diluted	Diluted	222.7		222.5	222.7	222.5

The accompanying notes are an integral part of these statements.

Table of Contents

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

(Unaudited)

Three Months Ended

31 March

Three Months Ended

31 March

(Millions of U.S. Dollars)

2023

2022

(Millions of U.S. Dollars)

2024

2023

Net Income

$449.9

$536.8

Other Comprehensive Income (Loss), net of tax:

Translation adjustments, net of tax of ($10.6) and $9.2

51.0

(58.8)

Net loss on derivatives, net of tax of ($0.6) and ($15.3)

(14.6)

(39.4)

Other Comprehensive (Loss) Income, net of tax:

Translation adjustments, net of tax of $16.7 and ($10.6)

Net gain (loss) on derivatives, net of tax of $0.2 and ($0.6)

Reclassification adjustments:

Currency translation adjustment

(0.3)

—

Derivatives, net of tax of $1.9 and $8.6

5.8

26.0

Pension and postretirement benefits, net of tax of $4.7 and $5.5

14.4

15.9

Total Other Comprehensive Income (Loss)

56.3

(56.3)

Currency translation adjustment

Derivatives, net of tax of $10.6 and $1.9

Pension and postretirement benefits, net of tax of $4.5 and $4.7

Total Other Comprehensive (Loss) Income

Comprehensive Income

506.2

480.5

Net Income Attributable to Noncontrolling Interests

10.1

6.3

Other Comprehensive Income (Loss) Attributable to Noncontrolling Interests

1.3

(3.0)

Net Income Attributable to Noncontrolling Interests

Other Comprehensive Income Attributable to Noncontrolling Interests

Comprehensive Income Attributable to Air Products

$494.8

$477.2

Six Months Ended

31 March

Six Months Ended

31 March

(Millions of U.S. Dollars)

2023

2022

(Millions of U.S. Dollars)

2024

2023

Net Income

$1,033.7

$1,086.4

Other Comprehensive Income, net of tax:

Translation adjustments, net of tax of ($48.6) and $16.8

560.6

(18.2)

Net gain (loss) on derivatives, net of tax of $37.6 and ($26.4)

106.4

(39.9)

Pension and postretirement benefits, net of tax of $2.4 and $—

6.7

—

Translation adjustments, net of tax of ($13.1) and ($48.6)

Net (loss) gain on derivatives, net of tax of $5.7 and $37.6

Pension and postretirement benefits, net of tax of $— and $2.4

Reclassification adjustments:

Currency translation adjustment

(0.3)

—

Derivatives, net of tax of ($19.8) and $14.7

(62.9)

44.7

Pension and postretirement benefits, net of tax of $8.4 and $10.9

26.3

31.9

Currency translation adjustment

Derivatives, net of tax of ($2.2) and ($19.8)

Pension and postretirement benefits, net of tax of $8.7 and $8.4

Total Other Comprehensive Income

636.8

18.5

Comprehensive Income

1,670.5

1,104.9

Net Income (Loss) Attributable to Noncontrolling Interests

21.7

(4.5)

Other Comprehensive Income Attributable to Noncontrolling Interests

14.0

8.2

Net Income Attributable to Noncontrolling Interests

Other Comprehensive (Loss) Income Attributable to Noncontrolling Interests

Comprehensive Income Attributable to Air Products

$1,634.8

$1,101.2

The accompanying notes are an integral part of these statements.

Table of Contents

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)


		31 March		30 September
			31 March
			31 March
			31 March				30 September
(Millions of U.S. Dollars, except for share and per share data)	(Millions of U.S. Dollars, except for share and per share data)	2023		2022	(Millions of U.S. Dollars, except for share and per share data)	2024		2023
Assets	Assets
Current Assets	Current Assets
Current Assets
Current Assets
Cash and cash items
Cash and cash items
Cash and cash items	Cash and cash items	$2,242.4		$2,711.0
Short-term investments	Short-term investments	271.3		590.7
Trade receivables, net	Trade receivables, net	1,714.7		1,794.4
Inventories	Inventories	645.6		514.2

Prepaid expenses	Prepaid expenses	224.7		156.8
Other receivables and current assets	Other receivables and current assets	622.9		515.8

Total Current Assets
Total Current Assets
Total Current Assets	Total Current Assets	5,721.6		6,282.9
Investment in net assets of and advances to equity affiliates	Investment in net assets of and advances to equity affiliates	4,420.2		3,353.8
Plant and equipment, at cost	Plant and equipment, at cost	30,751.8		28,160.1
Less: accumulated depreciation	Less: accumulated depreciation	15,053.4		13,999.6
Plant and equipment, net	Plant and equipment, net	15,698.4		14,160.5
Goodwill, net	Goodwill, net	883.9		823.0
Intangible assets, net	Intangible assets, net	367.2		347.5
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	766.9		694.8
Noncurrent lease receivables	Noncurrent lease receivables	561.7		583.1
Financing receivables
Other noncurrent assets	Other noncurrent assets	1,015.5		947.0

Total Noncurrent Assets	Total Noncurrent Assets	23,713.8		20,909.7
Total Assets		$29,435.4		$27,192.6
Total Noncurrent Assets
Total Noncurrent Assets
Total Assets(A)
Liabilities and Equity	Liabilities and Equity				Liabilities and Equity
Current Liabilities	Current Liabilities
Payables and accrued liabilities
Payables and accrued liabilities
Payables and accrued liabilities	Payables and accrued liabilities	$2,489.3		$2,771.6
Accrued income taxes	Accrued income taxes	128.2		135.2
Short-term borrowings	Short-term borrowings	7.0		10.7
Current portion of long-term debt	Current portion of long-term debt	173.4		548.3

Total Current Liabilities
Total Current Liabilities
Total Current Liabilities	Total Current Liabilities	2,797.9		3,465.8
Long-term debt	Long-term debt	8,271.9		6,433.8
Long-term debt – related party	Long-term debt – related party	688.6		652.0
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	632.3		592.1
Other noncurrent liabilities	Other noncurrent liabilities	1,096.3		1,099.1
Deferred income taxes	Deferred income taxes	1,258.2		1,247.4

Total Noncurrent Liabilities	Total Noncurrent Liabilities	11,947.3		10,024.4
Total Liabilities		14,745.2		13,490.2
Commitments and Contingencies - See Note 13
Total Noncurrent Liabilities
Total Noncurrent Liabilities
Total Liabilities(A)
Commitments and Contingencies - See Note 12					Commitments and Contingencies - See Note 12
Air Products Shareholders’ Equity	Air Products Shareholders’ Equity
Common stock (par value $1 per share; issued 2023 and 2022 - 249,455,584 shares)		249.4		249.4
Common stock (par value $1 per share; issued 2024 and 2023 - 249,455,584 shares)
Common stock (par value $1 per share; issued 2024 and 2023 - 249,455,584 shares)
Common stock (par value $1 per share; issued 2024 and 2023 - 249,455,584 shares)
Capital in excess of par value	Capital in excess of par value	1,163.4		1,141.4
Retained earnings	Retained earnings	16,781.3		16,520.3
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(2,163.3)		(2,786.1)
Treasury stock, at cost (2023 - 27,332,865 shares; 2022 - 27,616,888 shares)		(1,972.5)		(1,981.0)
Treasury stock, at cost (2024 - 27,149,677 shares; 2023 - 27,255,739 shares)
Total Air Products Shareholders’ Equity	Total Air Products Shareholders’ Equity	14,058.3		13,144.0
Noncontrolling Interests		631.9		558.4
Noncontrolling Interests(A)
Total Equity	Total Equity	14,690.2		13,702.4
Total Liabilities and Equity	Total Liabilities and Equity	$29,435.4		$27,192.6

(A)Includes balances associated with a consolidated variable interest entity ("VIE"), including amounts reflected in "Total Assets" that can only be used to settle obligations of the VIE of $3,178.7 and $2,256.8 as of 31 March 2024 and 30 September 2023, respectively, as well as liabilities of the VIE reflected within "Total Liabilities" for which creditors do not have recourse to the general credit of Air Products of $2,499.0 and $1,461.1 as of 31 March 2024 and 30 September 2023, respectively. Refer to Note 3, Variable Interest Entities, for additional information regarding the NEOM Green Hydrogen Company joint venture.

The accompanying notes are an integral part of these statements.

Table of Contents

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended

31 March

(Millions of U.S. Dollars)

2023

2022

(Millions of U.S. Dollars)

2024

2023

Operating Activities

Net income

$1,033.7

$1,086.4

Less: Net income (loss) attributable to noncontrolling interests

21.7

(4.5)

Net income

Less: Net income attributable to noncontrolling interests

Net income attributable to Air Products

1,012.0

1,090.9

Adjustments to reconcile income to cash provided by operating activities:

Depreciation and amortization

661.1

668.2

Deferred income taxes

29.0

51.3

Business and asset actions

185.6

—

Undistributed earnings of equity method investments

(78.1)

(200.8)

Gain on sale of assets and investments

(3.9)

(11.8)

Share-based compensation

31.2

26.5

Noncurrent lease receivables

39.5

43.9

Other adjustments

70.9

(101.0)

Working capital changes that provided (used) cash, excluding effects of acquisitions:

Trade receivables

162.0

(203.1)

Inventories

(112.3)

(57.3)

Other receivables

(63.0)

13.8

Payables and accrued liabilities

(451.3)

123.1

Other working capital

(124.7)

(138.7)

Cash Provided by Operating Activities

1,358.0

1,305.0

Investing Activities

Additions to plant and equipment, including long-term deposits

(1,841.1)

(1,433.6)

Acquisitions, less cash acquired

—

(65.1)

Additions to plant and equipment, including long-term deposits

Investment in and advances to unconsolidated affiliates

(912.0)

(1,650.9)

Investment in and advances to unconsolidated affiliates

Investment in financing receivables

Proceeds from sale of assets and investments

7.2

25.3

Purchases of investments

(290.5)

(909.4)

Proceeds from investments

611.6

1,391.4

Other investing activities

(51.2)

6.5

Other investing activities

Cash Used for Investing Activities

(2,476.0)

(2,635.8)

Financing Activities

Long-term debt proceeds

1,891.6

87.5

Long-term debt proceeds

Payments on long-term debt

(596.0)

(400.0)

Net (decrease) increase in commercial paper and short-term borrowings

(16.3)

210.9

Decrease in commercial paper and short-term borrowings

Dividends paid to shareholders

(719.2)

(664.7)

Proceeds from stock option exercises

17.1

14.4

Proceeds from stock option exercises

Investments by noncontrolling interests

72.8

3.6

Other financing activities

(46.6)

(37.3)

Cash Provided by (Used for) Financing Activities

603.4

(785.6)

Other financing activities

Cash Provided by Financing Activities

Effect of Exchange Rate Changes on Cash

46.0

(3.8)

Decrease in cash and cash items

(468.6)

(2,120.2)

Cash and Cash items – Beginning of year

2,711.0

4,468.9

Effect of Exchange Rate Changes on Cash

Increase (Decrease) in cash and cash items

Cash and cash items – Beginning of year

Cash and Cash Items – End of Period

$2,242.4

$2,348.7

The accompanying notes are an integral part of these statements.

Table of Contents

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

Six Months Ended 31 March 2023
(Millions of U.S. Dollars, except for per share data) Common
Stock Capital in
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock Air
Products
Shareholders'
Equity Non-
controlling
Interests Total
Equity
Balance at 30 September 2022 $249.4 $1,141.4 $16,520.3 ($2,786.1) ($1,981.0) $13,144.0 $558.4 $13,702.4
Net income — — 1,012.0 — — 1,012.0 21.7 1,033.7
Other comprehensive income — — — 622.8 — 622.8 14.0 636.8
Dividends on common stock (per share $3.37) — — (748.5) — — (748.5) — (748.5)
Dividends to noncontrolling interests — — — — — — (5.6) (5.6)
Share-based compensation — 29.0 — — — 29.0 — 29.0
Issuance of treasury shares for stock option and award plans — (7.3) — — 8.5 1.2 — 1.2
Investments by noncontrolling interests — — — — — — 72.8 72.8
Other equity transactions(A)
— 0.3 (2.5) — — (2.2) (29.4) (31.6)
Balance at 31 March 2023 $249.4 $1,163.4 $16,781.3 ($2,163.3) ($1,972.5) $14,058.3 $631.9 $14,690.2


	Six Months Ended 31 March 2024
(Millions of U.S. Dollars, except for per share data)	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Air Products Shareholders' Equity	Non- controlling Interests	Total Equity
Balance as of 30 September 2023	$249.4	$1,190.5	$17,289.7	($2,449.4)	($1,967.3)	$14,312.9	$1,347.4	$15,660.3
Net income	—	—	1,181.7	—	—	1,181.7	20.8	1,202.5
Other comprehensive income (loss)	—	—	—	173.5	—	173.5	(75.6)	97.9
Dividends on common stock ($3.52 per share)	—	—	(782.5)	—	—	(782.5)	—	(782.5)
Distributions to noncontrolling interests	—	—	—	—	—	—	(13.7)	(13.7)
Share-based compensation	—	29.5	—	—	—	29.5	—	29.5
Issuance of treasury shares for stock option and award plans	—	(4.5)	—	—	1.5	(3.0)	—	(3.0)
Investments by noncontrolling interests	—	—	—	—	—	—	142.6	142.6


Other equity transactions	—	0.2	1.1	—	—	1.3	—	1.3
Balance as of 31 March 2024	$249.4	$1,215.7	$17,690.0	($2,275.9)	($1,965.8)	$14,913.4	$1,421.5	$16,334.9


		Six Months Ended 31 March 2022
			Six Months Ended 31 March 2023
			Six Months Ended 31 March 2023
			Six Months Ended 31 March 2023
(Millions of U.S. Dollars, except for per share data)	(Millions of U.S. Dollars, except for per share data)	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Air Products Shareholders' Equity	Non- controlling Interests	Total Equity	(Millions of U.S. Dollars, except for per share data)	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Air Products Shareholders' Equity	Non- controlling Interests(A)	Total Equity
Balance at 30 September 2021		$249.4	$1,115.8	$15,678.3	($1,515.9)	($1,987.9)	$13,539.7	$548.3	$14,088.0
Balance as of 30 September 2022
Net income	Net income	—	—	1,090.9	—	—	1,090.9	(4.5)	1,086.4
Other comprehensive income	Other comprehensive income	—	—	—	10.3	—	10.3	8.2	18.5
Dividends on common stock (per share $3.12)		—	—	(691.8)	—	—	(691.8)	—	(691.8)

Dividends to noncontrolling interests		—	—	—	—	—	—	(1.0)	(1.0)
Dividends on common stock ($3.37 per share)
Distributions to noncontrolling interests
Share-based compensation	Share-based compensation	—	25.7	—	—	—	25.7	—	25.7
Issuance of treasury shares for stock option and award plans	Issuance of treasury shares for stock option and award plans	—	(21.0)	—	—	2.5	(18.5)	—	(18.5)
Investments by noncontrolling interests	Investments by noncontrolling interests	—	—	—	—	—	—	3.6	3.6
Purchase of noncontrolling interests		—	—	—	—	—	—	(1.9)	(1.9)
Other equity transactions		—	0.3	(1.5)	—	—	(1.2)	2.9	1.7
Balance at 31 March 2022		$249.4	$1,120.8	$16,075.9	($1,505.6)	($1,985.4)	$13,955.1	$555.6	$14,510.7

Other equity transactions(A)

Other equity transactions(A)

Other equity transactions(A)
Balance as of 31 March 2023

(A)~~Reflects~~"Other equity transactions" reflects a noncash ~~activity related~~adjustment recorded during the second quarter of fiscal year 2023 to convert investments attributable to the noncontrolling partner of the NEOM Green Hydrogen Company joint ~~venture. Refer~~venture to ~~Note 3,~~ shareholder loans.

~~Variable Interest Entities, for additional information.~~

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY (cont.)

(Unaudited)

Three Months Ended 31 March 2023
(Millions of U.S. Dollars, except for per share data) Common
Stock Capital in
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock Air
Products
Shareholders'
Equity Non-
controlling
Interests Total
Equity
Balance at 31 December 2022 $249.4 $1,148.4 $16,731.4 ($2,218.3) ($1,975.2) $13,935.7 $581.7 $14,517.4
Net income — — 439.8 — — 439.8 10.1 449.9
Other comprehensive loss — — — 55.0 — 55.0 1.3 56.3
Dividends on common stock (per share $1.75) — — (388.7) — — (388.7) — (388.7)
Dividends to noncontrolling interests — — — — — — (4.8) (4.8)
Share-based compensation — 14.8 — — — 14.8 — 14.8
Issuance of treasury shares for stock option and award plans — 0.1 — — 2.7 2.8 — 2.8
Investments by noncontrolling interests — — — — — — 72.8 72.8
Purchase of noncontrolling interests — — — — — — — —
Other equity transactions(A)
— 0.1 (1.2) — — (1.1) (29.2) (30.3)
Balance at 31 March 2023 $249.4 $1,163.4 $16,781.3 ($2,163.3) ($1,972.5) $14,058.3 $631.9 $14,690.2


	Three Months Ended 31 March 2024
(Millions of U.S. Dollars, except for per share data)	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Air Products Shareholders' Equity	Non- controlling Interests	Total Equity
Balance as of 31 December 2023	$249.4	$1,200.0	$17,510.0	($2,120.3)	($1,966.1)	$14,873.0	$1,256.1	$16,129.1
Net income	—	—	572.4	—	—	572.4	8.5	580.9
Other comprehensive income	—	—	—	(155.6)	—	(155.6)	62.5	(93.1)
Dividends on common stock ($1.77 per share)	—	—	(393.5)	—	—	(393.5)	—	(393.5)
Distributions to noncontrolling interests	—	—	—	—	—	—	(13.7)	(13.7)
Share-based compensation	—	15.7	—	—	—	15.7	—	15.7
Issuance of treasury shares for stock option and award plans	—	(0.1)	—	—	0.3	0.2	—	0.2
Investments by noncontrolling interests	—	—	—	—	—	—	108.1	108.1


Other equity transactions	—	0.1	1.1	—	—	1.2	—	1.2
Balance as of 31 March 2024	$249.4	$1,215.7	$17,690.0	($2,275.9)	($1,965.8)	$14,913.4	$1,421.5	$16,334.9

Three Months Ended 31 March 2022
(Millions of U.S. Dollars, except for per share data) Common
Stock Capital in
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Treasury
Stock Air
Products
Shareholders'
Equity Non-
controlling
Interests Total
Equity
Balance at 31 December 2021 $249.4 $1,112.0 $15,905.2 ($1,452.3) ($1,989.2) $13,825.1 $550.5 $14,375.6
Net income — — 530.5 — — 530.5 6.3 536.8
Other comprehensive income — — — (53.3) — (53.3) (3.0) (56.3)
Dividends on common stock (per share $1.62) — — (359.3) — — (359.3) — (359.3)
Dividends to noncontrolling interests — — — — — — (1.0) (1.0)
Share-based compensation — 11.6 — — — 11.6 — 11.6
Issuance of treasury shares for stock option and award plans — (2.9) — — 3.8 0.9 — 0.9
Other equity transactions — 0.1 (0.5) — — (0.4) 2.8 2.4
Balance at 31 March 2022 $249.4 $1,120.8 $16,075.9 ($1,505.6) ($1,985.4) $13,955.1 $555.6 $14,510.7



	Three Months Ended 31 March 2023
(Millions of U.S. Dollars, except for per share data)	Common Stock	Capital in Excess of Par Value	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Air Products Shareholders' Equity	Non- controlling Interests(A)	Total Equity
Balance as of 31 December 2022	$249.4	$1,148.4	$16,731.4	($2,218.3)	($1,975.2)	$13,935.7	$581.7	$14,517.4
Net income	—	—	439.8	—	—	439.8	10.1	449.9
Other comprehensive income	—	—	—	55.0	—	55.0	1.3	56.3
Dividends on common stock ($1.75 per share)	—	—	(388.7)	—	—	(388.7)	—	(388.7)
Distributions to noncontrolling interests	—	—	—	—	—	—	(4.8)	(4.8)
Share-based compensation	—	14.8	—	—	—	14.8	—	14.8
Issuance of treasury shares for stock option and award plans	—	0.1	—	—	2.7	2.8	—	2.8
Investments by noncontrolling interests	—	—	—	—	—	—	72.8	72.8


Other equity transactions(A)	—	0.1	(1.2)	—	—	(1.1)	(29.2)	(30.3)
Balance as of 31 March 2023	$249.4	$1,163.4	$16,781.3	($2,163.3)	($1,972.5)	$14,058.3	$631.9	$14,690.2

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Millions of U.S. Dollars, unless otherwise indicated


1.	1.	Basis of Presentation and Major Accounting Policies	12	1.	Basis of Presentation and Major Accounting Policies		12
2.	2.	New Accounting Guidance	12	2.	New Accounting Guidance		12
3.	3.	Variable Interest Entities.	13	3.	Variable Interest Entities.		13
4.	4.	Business and Asset Actions	14	4.	Business and Asset Actions		15

5.	5.	Revenue Recognition	14
5.
5.					Revenue Recognition		16

6.	6.	Inventories	15
6.
6.					Inventories		17

7.	7.	Equity Affiliates	16
7.
7.					Goodwill		18

8.	8.	Goodwill	17

8.

8.					Financial Instruments		18
9.	9.	Financial Instruments	17	9.	Fair Value Measurements		25
10.	10.	Fair Value Measurements	24	10.	Debt		27
11.	11.	Debt	26	11.	Retirement Benefits		28
12.	12.	Retirement Benefits	27	12.	Commitments and Contingencies		29
13.	13.	Commitments and Contingencies	28	13.	Share-Based Compensation		31
14.	14.	Share-Based Compensation	30	14.	Accumulated Other Comprehensive Loss		32
15.	15.	Accumulated Other Comprehensive Loss	31	15.	Earnings per Share		33

16.
16.
16.	16.	Earnings per Share	32	Supplemental Information		33
17.	17.	Income Taxes	32	17.	Business Segment Information		34
18.		Supplemental Information	32
19.		Business Segment Information	33

Table of Contents

1. BASIS OF PRESENTATION AND MAJOR ACCOUNTING POLICIES

As used in this report, unless the context indicates otherwise, the terms “we”, “our”, “us”, the “Company”, "Air Products", or “registrant” include our controlled subsidiaries and affiliates.

Basis of Presentation

The interim consolidated financial statements of Air Products and Chemicals, Inc. and its subsidiaries ~~(“we,” “our,” “us,” the “Company,” “Air Products,” or “registrant”)~~ included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In our opinion, the accompanying statements reflect adjustments necessary to fairly present the financial position, results of operations, and cash flows for those periods indicated and contain adequate disclosures to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the notes to the interim consolidated financial statements.

To fully understand the basis of presentation, the interim consolidated financial statements and related notes included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended 30 September ~~2022~~2023 (the "~~2022~~2023 Form 10-K"), which was filed with the SEC on 2216 November ~~2022.~~2023. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

Major Accounting Policies

Refer to our ~~2022~~2023 Form 10-K for a description of major accounting policies. There have been no significant changes to these accounting policies during the first six months of fiscal year ~~2023.~~

~~Risks and Uncertainties~~

We are subject to various risks and uncertainties, including, but not limited to, those resulting from the COVID-19 pandemic and increased inflationary pressures. Our results of operations for the periods covered by this report were not materially impacted by these events; however, there is uncertainty regarding how these events and others may affect our business, results of operations, and overall financial performance.

~~Reclassifications~~

Beginning in the first quarter of fiscal year 2023, we present "Operating lease right-of-use assets, net" and "Noncurrent operating lease liabilities" in separate captions on our consolidated balance sheets. These balances were previously presented within "Other noncurrent assets" and "Other noncurrent liabilities," respectively. Our balance sheet as of 30 September 2022 has been reclassified to conform to the fiscal year 2023 presentation.2024.

2. NEW ACCOUNTING GUIDANCE

New Accounting Guidance to be Implemented

~~Government Assistance~~Climate-Related Disclosures

In March 2024, the SEC issued Release No. 33-11275, “The Enhancement and Standardization of Climate-Related Disclosures for Investors", which includes final rules for providing qualitative and quantitative disclosures regarding certain climate-related topics on an annual basis. As a result of ongoing litigation in the U.S., the SEC issued an order in April 2024 to stay the effectiveness of the rules while judicial review is pending. If the rules are not overturned and take effect on schedule, prospective adoption will be permitted with phased-in compliance beginning with our Annual Report on Form 10-K for the fiscal year ending 30 September 2026. We are evaluating the impact these rules will have on our disclosures.

Reportable Segment Disclosures

In November ~~2021,~~2023, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued ~~disclosure guidance~~Accounting Standard Update (“ASU”) No. 2023-07, "Segment Reporting (Topic 280): Improvements to ~~increase~~Reportable Segment Disclosures". The update includes enhanced disclosures about significant segment expenses and identification of the ~~transparency of transactions an entity has with a government that are accounted~~chief operating decision maker. The update will be effective in our Annual Report on Form 10-K for ~~by applying a grant or contribution accounting model.~~the fiscal year ending 30 September 2025 as well as interim periods thereafter, although early adoption is permitted. The amendments must be applied retrospectively to all prior periods presented. We are evaluating the impact this ~~guidance~~update will have on our ~~annual~~disclosures.

Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740)—Improvements to Income Tax Disclosures” to expand income tax disclosures, ~~to our consolidated financial statements. We~~primarily through disaggregation requirements for the rate reconciliation and income taxes paid. The update will ~~adopt this guidance prospectively~~be effective in our Annual Report on Form 10-K for the fiscal year ~~2023.~~

~~Reference Rate Reform~~

In March 2020, the FASB issued an update to provide practical expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. This updateending 30 September 2026, although early adoption is ~~primarily applicable to our contracts and hedging relationships that reference the London Inter-Bank Offered Rate ("LIBOR"). In December 2022, the FASB extended the date through which the~~permitted. The amendments ~~may~~should be applied ~~to impacted contracts and hedges to 31 December 2024. We have had no reference rate reform modifications to date. We will adopt this update~~ on a prospective basis inwith a retrospective option. We are evaluating the ~~event of any such modifications.~~impact this update will have on our disclosures.

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3. VARIABLE INTEREST ENTITIES

We are the primary beneficiary of the NEOM Green Hydrogen Company joint venture ("NGHC"), which is a variable interest entity ("VIE") that is consolidated in our Middle East and India segment. We are not the primary beneficiary of any other material VIEs. We account for a VIE for which we have an equity interest and exercise significant influence but are not the primary beneficiary, such as the Jazan Integrated Gasification and Power Company joint venture ("JIGPC"), as an equity method investment. ~~For additional information on this joint venture, refer to Note 7,~~ ~~Equity Affiliates~~.

The table below summarizes balances associated with NGHC as reflected on our consolidated balance sheets. For additional information on this joint venture, refer to the "NEOM Green Hydrogen Project" section that follows.

31 March 30 September
2023 2022
Assets
Cash and cash items $129.2 $274.7
Trade receivables, net — 1.3
Prepaid expenses 3.3 0.1
Other receivables and current assets 52.3 23.3
Plant and equipment, net 613.3 218.8
Other noncurrent assets 11.1 1.5
Total Assets $809.2 $519.7
Liabilities
Payables and accrued liabilities 73.6 58.1
Accrued income taxes 0.4 —
Long-term debt – related party(A)
476.7 447.3
Other noncurrent liabilities 3.0 1.4
Total Liabilities $553.7 $506.8
Noncontrolling interests(A)
$2.6 $30.0

~~(A)~~During the ~~second~~first quarter of fiscal year ~~2023, approximately $29 of investments attributable to~~2024, we determined that World Energy, LLC ("World Energy") is a VIE for which we have no equity interest and are not the ~~noncontrolling partner of~~primary beneficiary. Our variable interests in NGHC, were converted to shareholder loans. This noncash activity is presented within “Other equity transactions” related to noncontrolling interests on our consolidated statements of equity for the threeJIGPC, and ~~six months ended 31 March 2023.~~World Energy are further discussed below.

~~NEOM Green Hydrogen Project~~NGHC Joint Venture

~~In the fourth quarter of fiscal year 2020, we announced the~~The NEOM Green Hydrogen Project (the "NEOM project”), is a multi-billion dollar green hydrogen-based ammonia production facility that is being constructed in NEOM City, Saudi Arabia. Owned and operated by NGHC, the facility will be powered by renewable energy located in the NEOM city of the Kingdom of Saudi Arabia. We, along with our joint venture partners, ACWA Power and NEOM Company, are equal owners in NGHC, which will develop, construct, own, operate, and finance the NEOM project. The NEOM project is expected to ~~be financed through non-recourse project financing and the partners’ investments.~~

During the third quarter of fiscal year 2022, we entered into an agreement with NGHC under which we commenced construction of the NEOM project. In addition, we executed an agreement with NGHC under which we will beproduce green ammonia for Air Products as the exclusive offtaker ~~of green ammonia produced by the NEOM project~~ under a long-term take-if-tendered agreement. ~~The NEOM project is expected to be on-stream in 2026.~~ We intend to transport the green ammonia around the world to be dissociated to produce green hydrogen for transportation and industrial markets.

In May 2023, NGHC finalized the $6.7 billion engineering, procurement, and construction ("EPC") agreement with Air Products named as the main contractor and system integrator for the facility. NGHC secured non-recourse project financing of approximately $6.1 billion, which is expected to fund about 73% of the project and will be drawn over the construction period. At the same time, NGHC secured additional non-recourse credit facilities totaling approximately $500 primarily for working capital needs. Under the ~~transportation market.~~financing, the assets of NGHC can only be used to settle obligations of the joint venture, and creditors of NGHC do not have recourse to the general credit of Air Products. Borrowings under the financing are reflected net of unamortized discounts and debt issuance costs primarily within "Long-term debt" on our consolidated balance sheets. Total principal borrowings were $2,482.4 and $1,364.8 as of 31 March 2024 and 30 September 2023, respectively. The amount borrowed as of 31 March 2024 includes additional draws from the facilities that were outstanding as of 30 September 2023 as well as approximately $620 drawn from a 2.00% fixed-rate Saudi Riyal loan facility that matures in November 2040.

Air Products ~~has~~is an equal owner in NGHC with our joint venture partners, ACWA Power and NEOM Company. While we only hold one-third of the voting interests in the ~~NGHC~~ joint ~~venture; however,~~venture, substantially all the activities of the joint venture involve or are conducted on behalf of Air Products. Since we have disproportionately few voting rights relative to our economic interests in the joint venture, we determined that NGHC is a ~~variable interest entity.~~VIE. In addition, we determined that we are the primary beneficiary of NGHC since we have the power to unilaterally direct certain significant activities, including key design and construction decisions, and we share power with our joint venture partners related to other activities that are significant to the economic performance of NGHC. Therefore, we ~~consolidated~~consolidate NGHC within the Middle East and India ~~segment beginning in the third quarter of fiscal year 2022.~~segment.

Table of Contents

The table below summarizes balances associated with NGHC as reflected on our consolidated balance sheets:


	31 March	30 September
	2024	2023
Assets
Cash and cash items	$174.9	$78.2

Trade receivables, net	4.6	—

Prepaid expenses	30.6	21.4
Other receivables and current assets	203.1	181.6
Total current assets	$413.2	$281.2



Plant and equipment, net	2,358.5	1,396.1


Operating lease right-of-use assets, net	228.8	228.9


Other noncurrent assets	178.2	350.6
Total noncurrent assets	$2,765.5	$1,975.6
Total assets	$3,178.7	$2,256.8
Liabilities
Payables and accrued liabilities	$174.3	$141.0
Accrued income taxes	2.7	0.6
Short-term borrowings	162.7	—

Total current liabilities	$339.7	$141.6
Long-term debt	2,114.3	1,274.4

Noncurrent operating lease liabilities	19.5	18.9
Other noncurrent liabilities	11.8	2.1
Deferred income taxes	13.7	24.1
Total noncurrent liabilities	$2,159.3	$1,319.5
Total liabilities	$2,499.0	$1,461.1
Equity
Accumulated other comprehensive income	$46.1	$77.7
Noncontrolling interests	748.1	723.6

JIGPC Joint Venture

JIGPC is a joint venture with Saudi Aramco Power Company (a subsidiary of Aramco), ACWA Power, and Air Products Qudra (“APQ”). JIGPC entered into project financing to purchase power blocks, gasifiers, air separation units, syngas cleanup assets, and utilities to supply electricity, steam, hydrogen, and utilities to Aramco’s refinery and terminal complex under a 25-year agreement, which commenced in the first quarter of fiscal year 2022. JIGPC recorded financing receivables upon acquisition of the assets and recognizes financing income over the supply term.

We determined JIGPC is a VIE for which we exercise significant influence but are not the primary beneficiary as we do not have the power to direct the activities that are most significant to its economic performance. Instead, these activities, including plant dispatch, operating and maintenance decisions, budgeting, capital expenditures, and financing, require unanimous approval of the owners or are controlled by the customer. Accordingly, we account for our 55% investment, which includes 4% that is attributable to the noncontrolling partner of APQ, under the equity method within the Middle East and India segment. The carrying value of our investment, including amounts attributable to noncontrolling interests, totaled $2,876.2 and $2,862.2 as of 31 March 2024 and 30 September 2023, respectively. Our loss exposure is limited to our investment in the joint venture.

Our investment primarily consists of shareholder loans that qualify as in-substance common stock in the joint venture. Certain shareholders receive a preferred cash distribution pursuant to the joint venture agreement, which specifies each shareholder’s share of income after considering the amount of cash available for distribution. As such, the earnings attributable to Air Products may not be proportionate to our ownership interest in the venture.

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World Energy

In November 2023, we finalized an agreement to purchase a sustainable aviation fuel (“SAF”) facility in Paramount, California from World Energy. We determined the acquisition contains an embedded sales-type lease. As a result, we are accounting for the transaction as a financing arrangement and recorded a financing receivable of approximately $300 as of 31 March 2024.

At the time of acquisition, we entered into a Master Project Agreement (“MPA”) containing terms for operation of the acquired facility as well as amended terms for the construction and operation of an SAF expansion project subject to construction at the same location. The MPA includes a tolling arrangement whereby we will receive feedstock from and produce renewable fuels for World Energy over a term that will conclude 15 years after onstream of the expansion project with the option to renew for two five-year terms.

During the first quarter of fiscal year 2024, we determined that World Energy is a VIE and our financing receivable represents a variable interest in World Energy. We are not the primary beneficiary as we do not have control over their key operating decisions, including feedstock supply, production of renewable fuels, and negotiating and executing supply agreements with customers. As of 31 March 2024, our maximum exposure to loss is approximately $2.0 billion. This includes project-related spending of $1.4 billion that is primarily capitalized within “Plant and equipment, net” and approximately $285 for open purchase commitments, both of which relate to the SAF expansion project, as well as approximately $300 for our investment in the financing receivables discussed above.

4. BUSINESS AND ASSET ACTIONS

Our consolidated income statements for the three and six months ended 31 March 2024 and 2023 ~~reflect "Business~~include charges of $57.0 ($43.8 after tax) and ~~asset actions" of~~ $185.6 ($153.7 attributable to Air Products after tax) ~~that~~, respectively, for strategic business and asset actions intended to optimize costs and focus resources on our growth projects. Charges for business and asset actions are not recorded in segment results.

Global Cost Reduction Plan

During the second quarter of fiscal year 2024, we recognized an expense of $57.0 for severance and other postemployment benefits payable to employees identified under a global cost reduction plan. We originated this plan during the third quarter of fiscal year 2023, which resulted ~~from~~in an initial charge of $27.0. In total, approximately 1,100 employees globally are eligible to receive benefits under the plan. We estimated benefits payable according to our ongoing benefit arrangements.

The table below reconciles these charges to the carrying amount of the remaining accrual for unpaid benefits as of 31 March 2024. This balance primarily relates to the additional actions identified during the second quarter of fiscal year 2024. We expect to pay the majority of the remaining benefits over the next twelve months:


Third quarter fiscal year 2023 charge			$27.0
Cash payments			(6.8)
Currency translation adjustment			(0.4)
Amount accrued as of 30 September 2023(A)			$19.8
Second quarter fiscal year 2024 charge			57.0
Cash payments			(16.9)

Amount accrued as of 31 March 2024(A)			$59.9

(A)Reflected within "Payables and accrued liabilities" on our consolidated balance sheets.

Asset Actions

During the second quarter of fiscal year 2023, we recorded a noncash ~~write-off~~charge of $185.6 to write off assets associated with exited projects that were previously under construction in our Asia and Europe segments. ~~In March 2023, we confirmed~~The assets written off included those related to our ~~decision to withdraw~~withdrawal from coal gasification in Indonesia as well as a project in ~~order to focus our resources on other opportunities. Additionally, we~~Ukraine that was permanently suspended ~~construction of a plant in Ukraine~~ due ~~to ongoing uncertainty related~~ to Russia's invasion of the country. ~~The charge for these actions was not recorded in segment results.~~

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5. REVENUE RECOGNITION

The majority of our revenue is generated from our sale of gas customers within the regional industrial gases segments. We distribute gases through either our on-site or merchant supply mode depending on various factors, including the customer's volume requirements and location. We also design and manufacture equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. The Corporate and other segment serves our sale of equipment customers.

Disaggregation of Revenue

The tables below present our consolidated sales disaggregated by supply mode for each of our reportable segments for the second quarter and first six months of fiscal years ~~2023~~2024 and ~~2022.~~2023. We believe this presentation best depicts the nature, timing, type of customer, and contract terms for our sales.


	Three Months Ended 31 March 2024																															Three Months Ended 31 March 2024
	Americas															Americas			Asia			Europe			Middle East and India			Corporate and other			Total	%
		Three Months Ended 31 March
		Americas	Asia	Europe	Middle East and India	Corporate and other	Total	%
2023
On-site
On-site
On-site	On-site	$801.9	$490.3	$259.4	$22.8	$—	$1,574.4	49	%	$695.5		$495.9	$495.9		$194.5	$194.5		$18.5	$18.5		$—	$—		$1,404.4	$1,404.4		48	48	%
Merchant	Merchant	571.2	323.6	493.5	22.0	—	1,410.3	44	%	Merchant	550.3			283.8	283.8		473.4	473.4		17.2	17.2		—	—		1,324.7	1,324.7		45	45	%
Sale of equipment	Sale of equipment	—	—	—	—	215.4	215.4	7	%	Sale of equipment	—			—	—		—	—		—	—		201.1	201.1		201.1	201.1		7	7	%
Total	Total	$1,373.1	$813.9	$752.9	$44.8	$215.4	$3,200.1	100	%	Total	$1,245.8			$779.7	$779.7		$667.9	$667.9		$35.7	$35.7		$201.1	$201.1		$2,930.2	$2,930.2		100	100	%

		Three Months Ended 31 March 2023

2022
		Three Months Ended 31 March 2023

		Three Months Ended 31 March 2023

		Americas
		Americas
		Americas												Asia			Europe			Middle East and India			Corporate and other			Total			%

On-site
On-site
On-site	On-site	$716.5	$460.4	$292.0	$17.3	$—	$1,486.2	51	%	$801.9		$490.3	$490.3		$259.4	$259.4		$22.8	$22.8		$—	$—		$1,574.4	$1,574.4		49	49	%
Merchant	Merchant	470.1	290.8	446.6	11.6	—	1,219.1	41	%	Merchant	571.2			323.6	323.6		493.5	493.5		22.0	22.0		—	—		1,410.3	1,410.3		44	44	%
Sale of equipment	Sale of equipment	—	—	—	—	239.8	239.8	8	%	Sale of equipment	—			—	—		—	—		—	—		215.4	215.4		215.4	215.4		7	7	%
Total	Total	$1,186.6	$751.2	$738.6	$28.9	$239.8	$2,945.1	100	%	Total	$1,373.1			$813.9	$813.9		$752.9	$752.9		$44.8	$44.8		$215.4	$215.4		$3,200.1	$3,200.1		100	100	%




	Six Months Ended 31 March 2024
	Americas	Asia	Europe	Middle East and India	Corporate and other	Total	%
On-site	$1,409.6	$999.1	$453.7	$36.0	$—	$2,898.4	48	%
Merchant	1,088.3	574.4	945.4	35.1	—	2,643.2	45	%
Sale of Equipment	—	—	—	—	386.0	386.0	7	%
Total	$2,497.9	$1,573.5	$1,399.1	$71.1	$386.0	$5,927.6	100	%


	Six Months Ended 31 March 2023

	Americas	Asia	Europe	Middle East and India	Corporate and other	Total	%
On-site	$1,647.7	$948.0	$587.5	$41.6	$—	$3,224.8	51	%
Merchant	1,109.6	643.7	957.3	44.6	—	2,755.2	43	%
Sale of Equipment	—	—	—	—	394.8	394.8	6	%
Total	$2,757.3	$1,591.7	$1,544.8	$86.2	$394.8	$6,374.8	100	%

Six Months Ended 31 March
Americas Asia Europe Middle East
and India Corporate
and other Total %
2023
On-site $1,647.7 $948.0 $587.5 $41.6 $— $3,224.8 51 %
Merchant 1,109.6 643.7 957.3 44.6 — 2,755.2 43 %
Sale of Equipment — — — — 394.8 394.8 6 %
Total $2,757.3 $1,591.7 $1,544.8 $86.2 $394.8 $6,374.8 100 %
2022
On-site $1,514.1 $912.0 $617.6 $33.6 $— $3,077.3 52 %
Merchant 896.6 619.6 865.2 19.0 — 2,400.4 40 %
Sale of Equipment — — — — 461.6 461.6 8 %
Total $2,410.7 $1,531.6 $1,482.8 $52.6 $461.6 $5,939.3 100 %
Interest income associated with financing and lease arrangements accounted for approximately 1% of our total consolidated sales during the three and six months ended 31 March 2024.

1416

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Remaining Performance Obligations

As of 31 March ~~2023,~~2024, the transaction price allocated to remaining performance obligations is estimated to be approximately ~~$24~~$27 billion. This amount includes fixed-charge contract provisions associated with our on-site and sale of equipment supply modes. We estimate that approximately half of this revenue will be recognized over the next five years and the balance thereafter.

Our remaining performance obligations do not include (1) expected revenue associated with new on-site plants that are not yet on-stream; (2) consideration associated with contracts that have an expected duration of less than one year; and (3) variable consideration for which we recognize revenue at the amount to which we have the right to invoice, including energy cost pass-through to customers.

In the future, actual amounts will differ due to events outside of our control, including, but not limited to, inflationary price escalations; currency exchange rates; and amended, terminated, or renewed contracts.

Contract Balances

The table below details balances arising from contracts with customers:

31 March

30 September

Balance Sheet Location

2023

2022

31 March

30 September

Balance Sheet Location

2024

2023

Assets

Contract assets – current

Other receivables and current assets

$74.2

$69.0

Contract fulfillment costs – current

Other receivables and current assets

105.6

84.1

Liabilities

Contract liabilities – current

Payables and accrued liabilities

$396.0

$439.1

Contract liabilities – current

Contract liabilities – noncurrent

Other noncurrent liabilities

97.7

67.2

~~Changes to our contract balances primarily relate to our sale of equipment contracts.~~ During the first ~~half~~six months of fiscal year ~~2023,~~2024, we recognized sales of approximately ~~$165~~$195 associated with sale of equipment contracts that were included within our current contract liabilities as of 30 September ~~2022.~~2023.

6. INVENTORIES

The components of inventories are as follows:


			31 March	30 September
			2023	2022
		31 March			31 March	30 September
		2024			2024	2023
Finished goods	Finished goods		$239.1	$162.0
Work in process	Work in process		27.2	22.0
Raw materials, supplies, and other	Raw materials, supplies, and other		379.3	330.2
Inventories	Inventories		$645.6	$514.2

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7. ~~EQUITY AFFILIATES~~

~~Equity Affiliate Investment in Jazan Integrated Gasification and Power Company (“JIGPC”)~~

On 27 October 2021, we made an initial investment of $1.6 billion to acquire a 55% ownership interest in the Jazan Integrated Gasification and Power Company ("JIGPC") joint venture, of which 4% is attributable to the noncontrolling partner of Air Products Qudra (“APQ”). We completed a second investment of $908 on 19 January 2023, which did not change our ownership interest. As of 31 March 2023, the carrying value of our investment totaled $2,724.0 and is presented as “Investments in net assets of and advances to equity affiliates” on our consolidated balance sheet. Our loss exposure is limited to our investment in the joint venture.

Our investments were made primarily in the form of shareholder loans that qualify as in-substance common stock in the joint venture and were executed according to the timing of the joint venture's purchase of project assets, which is being completed in phases. The amounts invested included approximately $130 and $73 received from the noncontrolling partner of APQ for the first and second investment, respectively. We expect to complete a remaining investment of approximately $115 for additional assets to be purchased by the joint venture later this calendar year.

We determined JIGPC is a variable interest entity for which we are not the primary beneficiary as we do not have the power to direct the activities that are most significant to the economic performance of the joint venture. Instead, these activities, including plant dispatch, operating and maintenance decisions, budgeting, capital expenditures, and financing, require unanimous approval of the owners or are controlled by the customer. Since we have the ability to exercise significant influence in the joint venture, we accounted for our investment in JIGPC under the equity method within the Middle East and India segment beginning in the first quarter of fiscal year 2022.

Certain shareholders receive a preferred cash distribution pursuant to the joint venture agreement, which specifies each shareholder’s share of income after considering the amount of cash available for distribution. As such, the earnings attributable to Air Products may not be proportionate to our ownership interest in the venture.

~~Additional information on the JIGPC joint venture is provided below.~~

~~JIGPC Joint Venture~~

JIGPC is a joint venture with Saudi Aramco Power Company (a subsidiary of Aramco), ACWA Power, and APQ in the Jazan Economic City, Saudi Arabia. On 27 September 2021, JIGPC signed definitive agreements for the acquisition of project assets from Aramco for $12 billion and entered into related project financing for the purchase of the project assets, which include power blocks, gasifiers, air separation units, syngas cleanup assets, and utilities, in multiple phases. The first phase was completed on 27 October 2021 for $7.39 billion, and the second phase was completed for $4.15 billion on 19 January 2023. We expect JIGPC to acquire additional assets totaling approximately $525 later this calendar year. JIGPC will commission, operate, and maintain the project assets to supply electricity, steam, hydrogen, and utilities to Aramco’s refinery and terminal complex under a 25-year agreement, which commenced in the first quarter of fiscal year 2022. JIGPC recorded financing receivables upon acquisition of the assets and is recognizing financing income over the supply term.

~~Jazan Gas Project Company~~

Jazan Gas Project Company (“JGPC”), a joint venture between Air Products and ACWA Holding, entered into a 20-year oxygen and nitrogen supply agreement in 2015 to supply Aramco’s oil refinery and power plant in Jazan, Saudi Arabia.

In October 2021, the supply agreement between JGPC and Aramco was terminated, and JGPC sold its air separation units to Aramco. We initially sold these assets to JGPC and deferred profit proportionate to our ownership in the joint venture. With the termination of the supply agreement and sale of the air separation units complete, we recognized the remaining deferred profit, net of other project finalization costs, in equity affiliates’ income in the first quarter of fiscal year 2022.

~~Table of Contents~~

8. GOODWILL

Changes to the carrying amount of consolidated goodwill by segment for the six months ended 31 March ~~2023~~2024 are as follows:

Americas Asia Europe Middle East
and India Corporate
and other Total
Goodwill, net at 30 September 2022 $143.2 $172.7 $457.5 $15.8 $33.8 $823.0
Currency translation and other 8.7 4.2 47.9 — 0.1 60.9
Goodwill, net at 31 March 2023 $151.9 $176.9 $505.4 $15.8 $33.9 $883.9


	Americas	Asia	Europe	Middle East and India	Corporate and other	Total
Goodwill, net as of 30 September 2023	$146.6	$171.9	$493.5	$15.8	$33.9	$861.7


Currency translation	(3.9)	0.7	24.7	—	—	21.5
Goodwill, net as of 31 March 2024	$142.7	$172.6	$518.2	$15.8	$33.9	$883.2


			31 March	30 September
			2023	2022
		31 March			31 March	30 September
		2024			2024	2023
Goodwill, gross	Goodwill, gross		$1,218.0	$1,096.0
Accumulated impairment losses(A)	Accumulated impairment losses(A)		(334.1)	(273.0)
Goodwill, net	Goodwill, net		$883.9	$823.0

(A)~~Accumulated~~We recorded impairment ~~losses are attributable~~charges related to ~~our~~the Latin America reporting unit ("LASA") ~~within~~in the Americas segment in fiscal years 2017 and ~~include the impact~~2014. The balance of accumulated impairment losses fluctuates over time due to currency translation.

We review goodwill for impairment annually in the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate that the carrying value of goodwill might not be recoverable.

9.8. FINANCIAL INSTRUMENTS

Currency Price Risk Management

Our earnings, cash flows, and financial position are exposed to foreign currency risk from foreign currency-denominated transactions and net investments in foreign operations. It is our policy to seek to minimize our cash flow volatility from changes in currency exchange rates. This is accomplished by identifying and evaluating the risk that our cash flows will change in value due to changes in exchange rates and by executing strategies necessary to manage such exposures. Our objective is to maintain economically balanced currency risk management strategies that provide adequate downside protection.

Forward Exchange Contracts

We enter into forward exchange contracts to reduce the cash flow exposure to foreign currency fluctuations associated with highly anticipated cash flows and certain firm commitments, such as the purchase of plant and equipment. We also enter into forward exchange contracts to hedge the cash flow exposure on intercompany loans and third-party debt. This portfolio of forward exchange contracts consists primarily of Euros and U.S. Dollars. The maximum remaining term of any forward exchange contract currently outstanding and designated as a cash flow hedge at 31 March ~~2023~~2024 is ~~3.2~~2.6 years.

Table of Contents

Forward exchange contracts are also used to hedge the value of investments in certain foreign subsidiaries and affiliates by creating a liability in a currency in which we have a net equity position. The primary currency pair in this portfolio of forward exchange contracts is Euros and U.S. Dollars.

~~Table of Contents~~

We also utilize forward exchange contracts that are not designated as hedges. These contracts are used to economically hedge foreign currency-denominated monetary assets and liabilities, primarily working capital. The primary objective of these forward exchange contracts is to protect the value of foreign currency-denominated monetary assets and liabilities from the effects of volatility in foreign exchange rates that might occur prior to their receipt or settlement. This portfolio of forward exchange contracts consists of ~~many different~~multiple foreign currency pairs, with a profile that changes from time to time depending on our business activity and sourcing decisions.

The table below summarizes our outstanding currency price risk management instruments:


			31 March 2023		30 September 2022
			US$ Notional	Years Average Maturity	US$ Notional	Years Average Maturity
		31 March 2024													31 March 2024							30 September 2023
		US$ Notional										US$ Notional				Years Average Maturity					US$ Notional				Years Average Maturity
Forward Exchange Contracts:	Forward Exchange Contracts:
Cash flow hedges
Cash flow hedges
Cash flow hedges	Cash flow hedges		$4,628.7	0.6	$4,525.0	0.7		$4,576.1		0.6			0.6				$4,463.2		0.7				0.7
Net investment hedges	Net investment hedges		860.4	2.9	542.2	2.2	Net investment hedges		884.4		2.0			2.0				864.0		2.5				2.5
Not designated	Not designated		842.2	0.3	534.3	0.3	Not designated		777.9		0.3			0.3				709.4		0.3				0.3
Total Forward Exchange Contracts	Total Forward Exchange Contracts		$6,331.3	0.9	$5,601.5	0.8	Total Forward Exchange Contracts		$6,238.4		0.8			0.8				$6,036.6		0.9				0.9

We also use foreign currency-denominated debt to hedge the foreign currency exposures of our net investment in certain foreign subsidiaries. The designated foreign currency-denominated debt and related accrued interest was ~~€1,979.9~~€1,939.5 million ($~~2,146.1)~~2,092.7) at 31 March ~~2023~~2024 and ~~€1,265.4~~€1,938.6 million ($~~1,240.4)~~2,049.7) at 30 September ~~2022.~~2023. The designated foreign currency-denominated debt is presented within "Long-term debt" and "Current portion of long-term debt" on the consolidated balance sheets.

Debt Portfolio Management

It is our policy to identify, on a continuing basis, the need for debt capital and to evaluate the financial risks inherent in funding the Company with debt capital. Reflecting the result of this ongoing review, we manage our debt portfolio and hedging program with the intent to (1) reduce funding risk with respect to borrowings made by us to preserve our access to debt capital and provide debt capital as required for funding and liquidity purposes, and (2) manage the aggregate interest rate risk and the debt portfolio in accordance with certain debt management parameters.

Interest Rate Management Contracts

We enter into interest rate swaps to change the fixed/variable interest rate mix of our debt portfolio in order to maintain the percentage of fixed- and variable-rate debt within the parameters set by management. In accordance with these parameters, the agreements are used to manage interest rate risks and costs inherent in our debt portfolio. Our interest rate management portfolio generally consists of fixed-to-floating interest rate swaps (which are designated as fair value hedges), pre-issuance interest rate swaps and treasury locks (which hedge the interest rate risk associated with anticipated fixed-rate debt issuances and are designated as cash flow hedges), and floating-to-fixed interest rate swaps (which are designated as cash flow hedges). As of 31 March ~~2023,~~2024, the outstanding interest rate swaps were denominated in U.S. Dollars. The notional amount of the interest rate swap agreements is equal to or less than the designated debt being hedged. When interest rate swaps are used to hedge variable-rate debt, the indices of the swaps and the debt to which they are designated are the same. It is our policy not to enter into any interest rate management contracts which lever a move in interest rates on a greater than one-to-one basis.

Cross Currency Interest Rate Swap Contracts

We enter into cross currency interest rate swap contracts when our risk management function deems necessary. These contracts may entail both the exchange of fixed- and floating-rate interest payments periodically over the life of the agreement and the exchange of one currency for another currency at inception and at a specified future date. The contracts are used to hedge either certain net investments in foreign operations or non-functional currency cash flows related to intercompany loans. The current cross currency interest rate swap portfolio consists of fixed-to-fixed swaps primarily between the U.S. Dollar and each of the Chinese Renminbi, Indian Rupee, and Chilean Peso.

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The table below summarizes our outstanding interest rate management contracts and cross currency interest rate swaps:


			31 March 2023						30 September 2022
			US$ Notional	Average Pay %		Average Receive %		Years Average Maturity	US$ Notional	Average Pay %		Average Receive %		Years Average Maturity
		31 March 2024																											31 March 2024														30 September 2023
		US$ Notional																US$ Notional					Average Pay %						Average Receive %				Years Average Maturity						US$ Notional				Average Pay %					Average Receive %				Years Average Maturity
Interest rate swaps (fair value hedge)	Interest rate swaps (fair value hedge)		$800.0	Various		1.64	%	4.5	$800.0	Various		1.64	%	5.0	Interest rate swaps (fair value hedge)	$800.0	SOFR				SOFR					1.64		%				3.5				$800.0		SOFR				SOFR				1.64	%				4.0
Interest rate swaps (cash flow hedge)															Interest rate swaps (cash flow hedge)	$1,740.3			2.82		%			SOFR						21.6				$1,182.5						2.82	%			SOFR					22.1
Cross currency interest rate swaps (net investment hedge)	Cross currency interest rate swaps (net investment hedge)		$150.1	3.89	%	3.01	%	1.0	$176.7	4.12	%	3.07	%	1.2	Cross currency interest rate swaps (net investment hedge)	$29.0	5.39			5.39		%			3.64		%				0.7				$80.8		4.60				4.60	%			3.65	%				0.9
Cross currency interest rate swaps (cash flow hedge)	Cross currency interest rate swaps (cash flow hedge)		$630.3	4.75	%	3.05	%	2.4	$785.7	4.78	%	3.05	%	2.3	Cross currency interest rate swaps (cash flow hedge)	$449.3	5.02			5.02		%			2.82		%				2.3				$598.2		4.89				4.89	%			3.22	%				2.2
Cross currency interest rate swaps (not designated)	Cross currency interest rate swaps (not designated)		$20.3	5.39	%	3.54	%	0.7	$37.7	5.39	%	3.54	%	1.2	Cross currency interest rate swaps (not designated)	$22.4	5.39			5.39		%			3.64		%				0.7				$44.5		5.39				5.39	%			3.54	%				0.2

The table below provides the amounts recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:

Carrying amounts of hedged item

Cumulative hedging adjustment, included in carrying amount

31 March

30 September

31 March

30 September

Carrying amounts of hedged item

Cumulative hedging adjustment, included in carrying amount

31 March

30 September

31 March

30 September

Balance Sheet Location

2023

2022

2023

2022

Balance Sheet Location

2024

2023

2024

2023

Long-term debt

$2,031.0

$2,012.9

($59.9)

($77.1)

Long-term debt

1920

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The table below summarizes the fair value and balance sheet location of our outstanding derivatives:


		Balance Sheet	31 March	30 September	Balance Sheet	31 March	30 September
		Location	2023	2022	Location	2023	2022
	Balance Sheet							Balance Sheet	31 March	30 September	Balance Sheet	31 March	30 September
	Location							Location	2024	2023	Location	2024	2023
Derivatives Designated as Hedging Instruments:	Derivatives Designated as Hedging Instruments:
Forward exchange contracts
Forward exchange contracts
Forward exchange contracts	Forward exchange contracts	Other receivables and current assets	$82.1	$71.6	Payables and accrued liabilities	$67.2	$226.2
Interest rate management contracts	Interest rate management contracts	Other receivables and current assets	8.5	36.7	Payables and accrued liabilities	2.5	—
Forward exchange contracts	Forward exchange contracts	Other noncurrent assets	23.5	60.8	Other noncurrent liabilities	12.9	46.9
Interest rate management contracts	Interest rate management contracts	Other noncurrent assets	6.9	12.5	Other noncurrent liabilities	82.5	91.2
Total Derivatives Designated as Hedging Instruments	Total Derivatives Designated as Hedging Instruments		$121.0	$181.6		$165.1	$364.3
Derivatives Not Designated as Hedging Instruments:	Derivatives Not Designated as Hedging Instruments:
Forward exchange contracts	Forward exchange contracts	Other receivables and current assets	4.4	6.1	Payables and accrued liabilities	4.6	2.1
Forward exchange contracts
Forward exchange contracts
Interest rate management contracts	Interest rate management contracts	Other receivables and current assets	0.2	—	Payables and accrued liabilities	—	—
Forward exchange contracts	Forward exchange contracts	Other noncurrent assets	0.2	0.1	Other noncurrent liabilities	0.1	0.1
Interest rate management contracts		Other noncurrent assets	—	1.3	Other noncurrent liabilities	—	—

Total Derivatives Not Designated as Hedging Instruments
Total Derivatives Not Designated as Hedging Instruments
Total Derivatives Not Designated as Hedging Instruments	Total Derivatives Not Designated as Hedging Instruments		$4.8	$7.5		$4.7	$2.2
Total Derivatives	Total Derivatives		$125.8	$189.1		$169.8	$366.5

Refer to Note ~~10,~~9, Fair Value Measurements, which defines fair value, describes the method for measuring fair value, and provides additional disclosures regarding fair value measurements.

2021

Table of Contents

The tables below summarize gains (losses) recognized in other comprehensive income during the period related to our net investment and cash flow hedging relationships:


		Three Months Ended		Six Months Ended
		31 March		31 March
		2023	2022	2023	2022
	Three Months Ended						Three Months Ended			Six Months Ended
	31 March							31 March
	2024					2024	2023		2024	2023
Net Investment Hedging Relationships	Net Investment Hedging Relationships
Forward exchange contracts
Forward exchange contracts
Forward exchange contracts	Forward exchange contracts	($15.3)	($4.2)	($62.4)	$10.3
Foreign currency debt	Foreign currency debt	(35.6)	39.4	(150.9)	67.0
Cross currency interest rate swaps	Cross currency interest rate swaps	(3.2)	(7.4)	(13.8)	(9.7)
Total Amount Recognized in OCI	Total Amount Recognized in OCI	(54.1)	27.8	(227.1)	67.6
Tax effects	Tax effects	13.3	(6.9)	55.8	(16.7)
Net Amount Recognized in OCI	Net Amount Recognized in OCI	($40.8)	$20.9	($171.3)	$50.9


		Three Months Ended		Six Months Ended
		31 March		31 March
		2023	2022	2023	2022
	Three Months Ended						Three Months Ended			Six Months Ended
	31 March							31 March
	2024					2024	2023		2024	2023
Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships
Forward exchange contracts
Forward exchange contracts
Forward exchange contracts	Forward exchange contracts	$5.3	($40.1)	$194.1	($63.5)
Forward exchange contracts, excluded components	Forward exchange contracts, excluded components	(5.9)	2.0	(11.5)	(0.7)
Other(A)	Other(A)	(14.6)	(16.6)	(38.6)	(2.1)
Total Amount Recognized in OCI	Total Amount Recognized in OCI	(15.2)	(54.7)	144.0	(66.3)
Tax effects	Tax effects	0.6	15.3	(37.6)	26.4
Net Amount Recognized in OCI	Net Amount Recognized in OCI	($14.6)	($39.4)	$106.4	($39.9)

(A)Other primarily includes interest rate and cross currency interest rate swaps for which excluded components are recognized in “Payables and accrued liabilities” and “Other receivables and current assets” as a component of accrued interest payable and accrued interest receivable, respectively. These excluded components are recorded in “Other non-operating income (expense), net” over the life of the cross currency interest rate swap. Other also includes the recognition of our share of gains and losses, net of tax, related to interest rate swaps held by our equity affiliates.

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The table below summarizes the location and amounts recognized in income related to our cash flow and fair value hedging relationships by contract type:


		Three Months Ended 31 March
		Sales		Cost of Sales		Interest Expense			Other Non-Operating Income (Expense), Net
		2023	2022	2023	2022		2023	2022		2023	2022
		Three Months Ended 31 March
		Three Months Ended 31 March
		Three Months Ended 31 March
	Sales												Sales		Cost of Sales	Interest Expense			Other Non-Operating Income (Expense), Net
	2024											2024	2023	2024	2023		2024	2023		2024	2023
Total presented in consolidated income statements that includes effects of hedging below	Total presented in consolidated income statements that includes effects of hedging below	$3,200.1	$2,945.1	$2,282.8	$2,151.6		$40.9	$32.3		($13.9)	$9.1

(Gain) Loss Effects of Cash Flow Hedging:	(Gain) Loss Effects of Cash Flow Hedging:
(Gain) Loss Effects of Cash Flow Hedging:
(Gain) Loss Effects of Cash Flow Hedging:

Forward Exchange Contracts:

Forward Exchange Contracts:

Forward Exchange Contracts:	Forward Exchange Contracts:
Amount reclassified from OCI into income	Amount reclassified from OCI into income	$0.1	$0.3	$2.4	$0.4		$—	$—		($6.1)	$26.4
Amount reclassified from OCI into income
Amount reclassified from OCI into income

Amount excluded from effectiveness testing recognized in earnings based on amortization approach
Amount excluded from effectiveness testing recognized in earnings based on amortization approach
Amount excluded from effectiveness testing recognized in earnings based on amortization approach	Amount excluded from effectiveness testing recognized in earnings based on amortization approach	—	—	—	—		—	—		3.3	1.1
Other:	Other:
Amount reclassified from OCI into income	Amount reclassified from OCI into income	—	—	—	—		1.3	1.5		6.7	4.9
Amount reclassified from OCI into income
Amount reclassified from OCI into income

Total (Gain) Loss Reclassified from OCI to Income
Total (Gain) Loss Reclassified from OCI to Income
Total (Gain) Loss Reclassified from OCI to Income	Total (Gain) Loss Reclassified from OCI to Income	0.1	0.3	2.4	0.4		1.3	1.5		3.9	32.4
Tax effects	Tax effects	—	(0.1)	(0.6)	(0.1)		(0.6)	(0.6)		(0.7)	(7.8)
Net (Gain) Loss Reclassified from OCI to Income	Net (Gain) Loss Reclassified from OCI to Income	$0.1	$0.2	$1.8	$0.3		$0.7	$0.9		$3.2	$24.6

(Gain) Loss Effects of Fair Value Hedging:	(Gain) Loss Effects of Fair Value Hedging:
(Gain) Loss Effects of Fair Value Hedging:
(Gain) Loss Effects of Fair Value Hedging:

Other:

Other:

Other:	Other:
Hedged items	Hedged items	$—	$—	$—	$—		$12.8	($22.0)		$—	$—
Hedged items
Hedged items
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments	—	—	—	—		(12.8)	22.0		—	—
Total (Gain) Loss Recognized in Income	Total (Gain) Loss Recognized in Income	$—	$—	$—	$—		$—	$—		$—	$—

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		Six Months Ended 31 March
		Six Months Ended 31 March
		Six Months Ended 31 March
		Sales		Cost of Sales		Interest Expense			Other Non-Operating Income (Expense), Net
		2023	2022	2023	2022		2023	2022		2023	2022
		Six Months Ended 31 March
	Sales												Sales		Cost of Sales	Interest Expense			Other Non-Operating Income (Expense), Net
	2024											2024	2023	2024	2023		2024	2023		2024	2023
Total presented in consolidated income statements that includes effects of hedging below	Total presented in consolidated income statements that includes effects of hedging below	$6,374.8	$5,939.3	$4,555.1	$4,375.2		$82.1	$62.8		($14.5)	$31.7

(Gain) Loss Effects of Cash Flow Hedging:	(Gain) Loss Effects of Cash Flow Hedging:
(Gain) Loss Effects of Cash Flow Hedging:
(Gain) Loss Effects of Cash Flow Hedging:
Forward Exchange Contracts:	Forward Exchange Contracts:
Forward Exchange Contracts:
Forward Exchange Contracts:
Amount reclassified from OCI into income
Amount reclassified from OCI into income
Amount reclassified from OCI into income	Amount reclassified from OCI into income	$0.1	$0.7	$3.6	$0.3		$—	$—		($123.9)	$40.9

Amount excluded from effectiveness testing recognized in earnings based on amortization approach	Amount excluded from effectiveness testing recognized in earnings based on amortization approach	—	—	—	—		—	—		5.3	2.4
Amount excluded from effectiveness testing recognized in earnings based on amortization approach
Amount excluded from effectiveness testing recognized in earnings based on amortization approach
Other:	Other:
Amount reclassified from OCI into income	Amount reclassified from OCI into income	—	—	—	—		2.8	2.9		29.4	12.2
Amount reclassified from OCI into income
Amount reclassified from OCI into income

Total (Gain) Loss Reclassified from OCI to Income
Total (Gain) Loss Reclassified from OCI to Income
Total (Gain) Loss Reclassified from OCI to Income	Total (Gain) Loss Reclassified from OCI to Income	0.1	0.7	3.6	0.3		2.8	2.9		(89.2)	55.5
Tax effects	Tax effects	—	(0.2)	(0.8)	(0.1)		(1.1)	(1.1)		21.7	(13.3)
Net (Gain) Loss Reclassified from OCI to Income	Net (Gain) Loss Reclassified from OCI to Income	$0.1	$0.5	$2.8	$0.2		$1.7	$1.8		($67.5)	$42.2

(Gain) Loss Effects of Fair Value Hedging:	(Gain) Loss Effects of Fair Value Hedging:
(Gain) Loss Effects of Fair Value Hedging:
(Gain) Loss Effects of Fair Value Hedging:
Other:	Other:
Other:
Other:
Hedged items
Hedged items
Hedged items	Hedged items	$—	$—	$—	$—		$17.2	($24.5)		$—	$—
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments	—	—	—	—		(17.2)	24.5		—	—
Total (Gain) Loss Recognized in Income	Total (Gain) Loss Recognized in Income	$—	$—	$—	$—		$—	$—		$—	$—

The ~~table~~tables below ~~summarizes~~summarize the location and amounts recognized in income related to our derivatives not designated as hedging instruments by contract type:


		Three Months Ended 31 March
		Other Income (Expense), Net		Other Non-Operating Income (Expense), Net
		2023	2022	2023	2022
	Three Months Ended 31 March								Three Months Ended 31 March
	Other Income (Expense), Net						Other Income (Expense), Net			Other Non-Operating Income (Expense), Net
	2024					2024		2023	2024		2023
The Effects of Derivatives Not Designated as Hedging Instruments:	The Effects of Derivatives Not Designated as Hedging Instruments:
Forward Exchange Contracts
Forward Exchange Contracts
Forward Exchange Contracts	Forward Exchange Contracts	$0.7	$0.3	($1.1)	($0.7)
Other	Other	—	—	0.8	0.1
Total (Gain) Loss Recognized in Income	Total (Gain) Loss Recognized in Income	$0.7	$0.3	($0.3)	($0.6)


		Six Months Ended 31 March
		Other Income (Expense), Net		Other Non-Operating Income (Expense), Net
		2023	2022	2023	2022
		Six Months Ended 31 March
		Six Months Ended 31 March
		Six Months Ended 31 March
	Other Income (Expense), Net						Other Income (Expense), Net			Other Non-Operating Income (Expense), Net
	2024					2024		2023	2024		2023
The Effects of Derivatives Not Designated as Hedging Instruments:	The Effects of Derivatives Not Designated as Hedging Instruments:
Forward Exchange Contracts
Forward Exchange Contracts
Forward Exchange Contracts	Forward Exchange Contracts	$1.3	$1.4	($2.7)	($1.3)
Other	Other	—	—	1.9	0.2
Total (Gain) Loss Recognized in Income	Total (Gain) Loss Recognized in Income	$1.3	$1.4	($0.8)	($1.1)

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The amount of unrealized gains and losses related to cash flow hedges as of 31 March ~~2023~~2024 that are expected to be reclassified to earnings in the next twelve months is not material.

The cash flows related to derivative contracts are generally reported in the operating activities section of the consolidated statements of cash flows.

Credit Risk-Related Contingent Features

Certain derivative instruments are executed under agreements that require us to maintain a minimum credit rating with both Standard & Poor’s and Moody’s. If our credit rating falls below this threshold, the counterparty to the derivative instruments has the right to request full collateralization on the derivatives’ net liability position. The net liability position of derivatives with credit risk-related contingent features was ~~$111.5~~$72.2 and ~~$114.8~~$94.2 as of 31 March ~~2023~~2024 and 30 September ~~2022,~~2023, respectively. Because our current credit rating is above the various pre-established thresholds, no collateral has been posted on these liability positions.

Counterparty Credit Risk Management

We execute financial derivative transactions with counterparties that are highly rated financial institutions, all of which are investment grade at this time. Some of our underlying derivative agreements give us the right to require the institution to post collateral if its credit rating falls below the pre-established thresholds with Standard & Poor’s, Moody’s, or ~~Moody’s.~~Fitch. The collateral that the counterparties would be required to post was ~~$37.3~~$225.5 and ~~$62.8~~$345.0 as of 31 March ~~2023~~2024 and 30 September ~~2022,~~2023, respectively. No financial institution is required to post collateral at this time, as all have credit ratings at or above threshold.

~~10.~~9. FAIR VALUE MEASUREMENTS

Fair value is defined as an exit price, or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 — Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability.

Level 3 — Inputs that are unobservable for the asset or liability based on our own assumptions about the assumptions market participants would use in pricing the asset or liability.

The methods and assumptions used to measure the fair value of financial instruments are as follows:

Short-term Investments

Short-term investments primarily include time deposits with original maturities greater than three months and less than one year. We estimated the fair value of our short-term investments, which approximates carrying value as of the balance sheet date, using Level 2 inputs within the fair value hierarchy. Level 2 measurements were based on current interest rates for similar investments with comparable credit risk and time to maturity.

Derivatives

The fair value of our interest rate management contracts and forward exchange contracts are quantified using the income approach and are based on estimates using standard pricing models. These models consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard pricing models utilize inputs that are derived from or corroborated by observable market data such as interest rate yield curves as well as currency spot and forward rates; therefore, the fair value of our derivatives is classified as a Level 2 measurement. On an ongoing basis, we randomly test a subset of our valuations against valuations received from the transaction’s counterparty to validate the accuracy of our standard pricing models. Counterparties to these derivative contracts are highly rated financial institutions.

Refer to Note 9,8, Financial Instruments, for a description of derivative instruments, including details related to the balance sheet line classifications.

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Long-term Debt, Including Related Party

The fair value of our debt is based on estimates using standard pricing models that consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard valuation models utilize observable market data such as interest rate yield curves and currency spot rates; therefore, the fair value of our debt is classified as a Level 2 measurement. ~~We generally perform the computation of the fair value of these instruments.~~

The carrying values and fair values of financial instruments were as follows:

31 March 2023

30 September 2022

Carrying Value

Fair Value

Carrying Value

Fair Value

31 March 2024

30 September 2023

Carrying Value

Fair Value

Carrying Value

Fair Value

Assets

Derivatives

Forward exchange contracts

$110.2

$138.6

Interest rate management contracts

15.6

50.5

Liabilities

Derivatives

Forward exchange contracts

$84.8

$275.3

Interest rate management contracts

85.0

91.2

Long-term debt, including current portion and related party

9,133.9

8,409.1

7,634.1

6,721.2

The carrying amounts reported on the consolidated balance sheets for cash and cash items, short-term investments, trade receivables, payables and accrued liabilities, accrued income taxes, and short-term borrowings approximate fair value due to the short-term nature of these instruments. Accordingly, these items have been excluded from the above table.

The table below summarizes assets and liabilities on the consolidated balance sheets that are measured at fair value on a recurring basis:


		31 March 2023				30 September 2022
		Total	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3
	31 March 2024												31 March 2024				30 September 2023
	Total									Total	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3
Assets at Fair Value	Assets at Fair Value

Derivatives	Derivatives

Derivatives

Derivatives
Forward exchange contracts
Forward exchange contracts
Forward exchange contracts	Forward exchange contracts	$110.2	$—	$110.2	$—	$138.6	$—	$138.6	$—
Interest rate management contracts	Interest rate management contracts	15.6	—	15.6	—	50.5	—	50.5	—
Total Assets at Fair Value	Total Assets at Fair Value	$125.8	$—	$125.8	$—	$189.1	$—	$189.1	$—
Liabilities at Fair Value	Liabilities at Fair Value
Derivatives	Derivatives
Derivatives
Derivatives
Forward exchange contracts
Forward exchange contracts
Forward exchange contracts	Forward exchange contracts	$84.8	$—	$84.8	$—	$275.3	$—	$275.3	$—
Interest rate management contracts	Interest rate management contracts	85.0	—	85.0	—	91.2	—	91.2	—
Total Liabilities at Fair Value	Total Liabilities at Fair Value	$169.8	$—	$169.8	$—	$366.5	$—	$366.5	$—

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~~11.~~10. DEBT

Issuance of Green ~~Financing~~Senior Notes

~~On 3 March 2023,~~In February 2024, we issued ~~our inaugural multi-currency~~ green ~~bonds under our new Green Finance Framework, which was established to further align our financings with our sustainability strategy. The offering included U.S. Dollar- and Euro-denominated fixed-rate~~senior notes with an aggregate principal ~~amounts~~amount of ~~$600 and €700 million, respectively.~~$2.5 billion in a registered public offering. The proceeds from ~~these~~the notes were reduced by deferred financing charges and discounts of approximately ~~$15 as of 31 March 2023,~~$20, which ~~will be~~are being amortized through interest expense over the life of the underlying bonds.

We intend to use the net proceeds to finance or refinance ~~in whole or in part,~~ existing or future projects that are expected to have environmental benefits including those related to pollution prevention and control, renewable energy generation and procurement, and sustainable aviation fuel. Pending full allocation of the net proceeds to such eligible projects, we may temporarily invest the balance of the net proceeds in cash, cash equivalents, or short-term investments, or repay a portion of outstanding indebtedness in line withas defined under our ~~treasury management policies.~~Green Finance Framework.

The interest rate, maturity, and carrying amount as of 31 March ~~2023~~2024 for each of ~~the~~these notes ~~issued under our Green Finance Framework~~ are summarized in the table below:


	Fiscal Year Maturities	31 March 2024
Senior Note 4.600%	2029	$750.0
Senior Note 4.750%	2031	600.0
Senior Note 4.850%	2034	1,150.0
Total		$2,500.0

Fiscal Year
Maturities 31 March 2023
Payable in U.S. Dollars
Note 4.800% 2033 $600.0
Payable in Euros
Eurobonds 4.000% 2035 758.8
Total $1,358.8
Credit Facilities

In March 2024, we entered into a five-year $3.0 billion revolving credit agreement maturing 31 March 2029 (the “2024 Credit Agreement”) as well as a 364-day $500 revolving credit agreement maturing 27 March 2025 that we have the ability to convert into a term loan maturing 27 March 2026. Both agreements are syndicated facilities that provide a source of liquidity and support our commercial paper program through availability of senior unsecured debt to us and certain of our subsidiaries. As of 31 March 2024, no borrowings were outstanding under either agreement.

Borrowings under both agreements bear interest at quoted market rates plus varying spreads based on our public debt ratings. Each agreement also requires a commitment fee on unused commitments based on our public debt ratings. Pricing terms under the 2024 Credit Agreement are also subject to sustainability-driven adjustments. There are no financial maintenance covenants in either agreement.

The 2024 Credit Agreement replaced our previous $2.75 billion revolving credit agreement (the “2021 Credit Agreement”), which was terminated upon execution of the 2024 Credit Agreement. No borrowings were outstanding under the 2021 Credit Agreement at the time of its termination, and no early termination penalties were incurred.

Related Party Debt

Total debt owed to related parties was ~~$822.1~~$289.8 and ~~$781.0~~$328.3 as of 31 March ~~2023~~2024 and 30 September ~~2022,~~2023, respectively, of which ~~$133.6~~$134.6 and ~~$129.0,~~$177.6, respectively, was reflected within "Current portion of long-term debt" on our consolidated balance sheets. Our related party debt primarily includes ~~loans~~a loan with our joint venture ~~partners, including~~partner, Lu’An Clean Energy ~~Company, as well as shareholder loans associated with the NEOM project. Refer to Note 3,~~ ~~Variable Interest Entities, for additional information.~~

~~Other~~

We have credit facilities available to certain of our foreign subsidiaries totaling $1,324.4, of which $823.5 was borrowed and outstanding as of 31 March 2023. The amount borrowed and outstanding as of 30 September 2022 was $457.5. The increase from 30 September 2022 was driven by borrowings on a new variable-rate Saudi Riyal loan facility that matures in October 2026. The interest rate on the facility is based on the Saudi Arabian Interbank Offered Rate ("SAIBOR") plus an annual margin of 1.35%. We entered into this facility in October 2022 and utilized a portion of the proceeds to repay a variable-rate 4.10% Saudi Riyal Loan Facility of $195.6, which was presented within long-term debt on our consolidated balance sheet as of 30 September 2022.Company.

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~~12.~~11. RETIREMENT BENEFITS

The components of net periodic cost ~~(benefit)~~ for our defined benefit pension plans for the three and six months ended 31 March ~~2023~~2024 and ~~2022~~2023 were as follows:


		Pension Benefits
		2023			2022
		Pension Benefits
		Pension Benefits
		Pension Benefits
		2024
		2024
		2024
Three Months Ended 31 March
Three Months Ended 31 March
Three Months Ended 31 March	Three Months Ended 31 March	U.S.	Inter-national	Total	U.S.	Inter-national	Total
Service cost	Service cost	$2.8	$3.0	$5.8	$4.6	$5.6	$10.2
Non-service cost (benefit):
Service cost
Service cost
Non-service cost:
Non-service cost:
Non-service cost:
Interest cost
Interest cost
Interest cost	Interest cost	32.5	14.9	47.4	18.4	7.6	26.0
Expected return on plan assets	Expected return on plan assets	(31.8)	(12.2)	(44.0)	(42.1)	(17.6)	(59.7)
Expected return on plan assets
Expected return on plan assets
Prior service cost amortization
Prior service cost amortization
Prior service cost amortization	Prior service cost amortization	0.3	0.1	0.4	0.3	—	0.3
Actuarial loss amortization	Actuarial loss amortization	15.0	3.0	18.0	16.6	3.8	20.4
Actuarial loss amortization
Actuarial loss amortization

Settlements

Settlements

Settlements	Settlements	0.9	0.2	1.1	0.9	0.2	1.1

Other	Other	—	0.2	0.2	—	0.2	0.2
Net Periodic Cost (Benefit)		$19.7	$9.2	$28.9	($1.3)	($0.2)	($1.5)

Other

Other
Net Periodic Cost
Net Periodic Cost
Net Periodic Cost


	Pension Benefits

	Pension Benefits

	Pension Benefits
	2024
	2024
	2024
Six Months Ended 31 March
Six Months Ended 31 March
Six Months Ended 31 March
Service cost
Service cost
Service cost
Non-service cost:
Non-service cost:
Non-service cost:
Interest cost
Interest cost
Interest cost
Expected return on plan assets
Expected return on plan assets
Expected return on plan assets
Prior service cost amortization
Prior service cost amortization
Prior service cost amortization
Actuarial loss amortization
Actuarial loss amortization
Actuarial loss amortization

Settlements

Settlements

Settlements
Curtailments
Curtailments
Curtailments

Other

Other

Other
Net Periodic Cost
Net Periodic Cost
Net Periodic Cost

	Pension Benefits
	2023			2022
Six Months Ended 31 March	U.S.	Inter-national	Total	U.S.	Inter-national	Total
Service cost	$5.5	$6.3	$11.8	$9.2	$11.2	$20.4
Non-service cost (benefit):
Interest cost	65.0	29.3	94.3	36.8	15.2	52.0
Expected return on plan assets	(63.6)	(24.0)	(87.6)	(84.2)	(35.3)	(119.5)
Prior service cost amortization	0.6	0.1	0.7	0.6	—	0.6
Actuarial loss amortization	29.8	6.0	35.8	33.3	7.7	41.0

Settlements	0.9	0.2	1.1	1.8	0.2	2.0
Curtailments	—	(1.9)	(1.9)	—	—	—

Other	—	0.5	0.5	—	1.0	1.0
Net Periodic Cost (Benefit)	$38.2	$16.5	$54.7	($2.5)	$—	($2.5)

Our service costs are primarily included within "Cost of sales" and "Selling and administrative expense" on our consolidated income statements. The amount of service costs capitalized in the first six months of fiscal years ~~2023~~2024 and ~~2022~~2023 were not material. The non-service related impacts ~~including pension settlement losses and curtailment gains,~~ are presented outside operating income within "Other non-operating income (expense), net."

For the six months ended 31 March ~~2023~~2024 and ~~2022,~~2023, our cash contributions to funded pension plans and benefit payments under unfunded pension plans were ~~$15.4~~$19.2 and ~~$16.1,~~$15.4, respectively. Total contributions for fiscal year ~~2023~~2024 are expected to be approximately ~~$25~~$35 to ~~$35.~~$45. During fiscal year ~~2022,~~2023, total contributions were ~~$44.7.~~$32.6.

~~In December 2022, we amended an international defined benefit pension plan to move its participants to a defined contribution plan for future benefit accumulation. As a result of this amendment,~~During the three and six months ended 31 March 2024, we recognized ~~a $1.9 curtailment~~actuarial gain amortization of $0.2 and $0.3, respectively, for ~~the write-off of prior service credits and remeasured the projected benefit obligations of the~~our other postretirement benefits plan. This resulted in a net decrease to our projected benefit obligation and accumulated other comprehensive loss of $9.1 in the first quarter of fiscal year 2023. The impact of the remeasurement on fiscal year 2023 expense is not material.

During the three and six months ended 31 March 2023, we recognized actuarial gain amortization of $0.4 and $1.0, respectively, for our other postretirement benefits plan. ~~During the three and six months ended 31 March 2022, we recognized actuarial gain amortization of $0.4 and $0.8, respectively, for our other postretirement benefits plan.~~

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~~13.~~12. COMMITMENTS AND CONTINGENCIES

Litigation

We are involved in various legal proceedings, including commercial, competition, environmental, intellectual property, regulatory, product liability, and insurance matters. We do not currently believe there are any legal proceedings for which it is reasonably possible, individually or in the aggregate, ~~that are reasonably possible~~ to have a material impact on our financial condition, results of operations, or cash flows.

In September 2010, the Brazilian Administrative Council for Economic Defense ("CADE") issued a decision against our Brazilian subsidiary, Air Products Brasil Ltda., and several other Brazilian industrial gas companies for alleged anticompetitive activities. CADE imposed a civil fine of R$179.2 million (approximately ~~$35~~$36 at 31 March ~~2023)~~2024) on Air Products Brasil Ltda. This fine was based on a recommendation by a unit of the Brazilian Ministry of Justice, following an investigation beginning in 2003, which alleged violation of competition laws with respect to the sale of industrial and medical gases. The fines are based on a percentage of our total revenue in Brazil in 2003.

We have denied the allegations made by the authorities and filed an appeal in October 2010 with the Brazilian courts. On 6 May 2014, our appeal was granted and the fine against Air Products Brasil Ltda. was dismissed. CADE has appealed that ruling and the matter remains pending. We, with advice of our outside legal counsel, have assessed the status of this matter and have concluded that, although an adverse final judgment after exhausting all appeals is possible, such a judgment is not probable. As a result, no provision has been made in the consolidated financial statements. In the event of an adverse final judgment, we estimate the maximum possible loss to be the full amount of the fine of R$179.2 million (approximately ~~$35~~$36 at 31 March ~~2023)~~2024) plus interest accrued thereon until final disposition of the proceedings.

Additionally, ~~in April 2023, we received a favorable ruling from~~ a Texas state court entered final judgment in our favor on 27 March 2024 for litigation involving disputed energy management ~~services~~charges related to Winter Storm Uri, a severe winter weather storm that impacted the U.S. Gulf Coast in February 2021. The ~~ruling~~judgement is subject to appeal and had no impact on our consolidated financial statements ~~for~~during the ~~three~~second quarter and first six months ~~ended 31 March 2023.~~of fiscal year 2024.

Environmental

In the normal course of business, we are involved in legal proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA," the federal Superfund law), Resource Conservation and Recovery Act ("RCRA"), and similar state ~~and foreign~~ environmental laws relating to the designation of certain sites for investigation or remediation. Presently, there are 2827 sites on which a final settlement or remediation has not been achieved where we, usually along with others, have been designated a potentially responsible party by environmental authorities or are otherwise engaged in investigation or remediation, including cleanup activity at certain of our ~~current and~~ former manufacturing sites. We continually monitor these sites for which we have environmental exposure.

Accruals for environmental loss contingencies are recorded when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The consolidated balance sheets at 31 March ~~2023~~2024 and 30 September ~~2022~~2023 included an accrual of ~~$68.9~~$62.2 and ~~$71.3,~~$64.5, respectively, primarily as part of other noncurrent liabilities. The environmental liabilities will be paid over a period of up to 3026 years. We estimate the exposure for environmental loss contingencies to range from ~~$68~~$62 to a reasonably possible upper exposure of ~~$82~~$75 as of 31 March ~~2023.~~2024.

Actual costs to be incurred at identified sites in future periods may vary from the estimates, given inherent uncertainties in evaluating environmental exposures. Using reasonably possible alternative assumptions of the exposure level could result in an increase to the environmental accrual. Due to the inherent uncertainties related to environmental exposures, a significant increase to the reasonably possible upper exposure level could occur if a new site is designated, the scope of remediation is increased, a different remediation alternative is identified, or a significant increase in our proportionate share occurs. We do not expect that any sum we may have to pay in connection with environmental matters in excess of the amounts recorded or disclosed above would have a material adverse impact on our financial position or results of operations in any one year.

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Pace

At 31 March ~~2023, $37.7~~2024, $36.3 of the environmental accrual was related to ~~the~~our facility in Pace, ~~facility.~~Florida.

In 2006, we sold our Amines business, which included operations at the Pace ~~Florida,~~facility and recognized a liability for retained environmental obligations associated with remediation activities at ~~Pace.~~the facility. We are required by the Florida Department of Environmental Protection ("FDEP") and the United States Environmental Protection Agency ("USEPA") to continue our remediation efforts. We recognized a before-tax expense of $42 in fiscal year 2006 in results from discontinued operations and recorded an environmental accrual of $42 in continuing operations on the consolidated balance sheets.

~~During~~In the ~~second~~first quarter of 2015, we entered into a consent order with the FDEP requiring us to continue our remediation efforts at the Pace facility and complete a cost review every five years. In fiscal year 2020, we completed an updated cost review of the environmental remediation status at the Pace facility. The review was completed in conjunction with requirements to maintain financial assurance per the ~~Consent Order~~consent order issued by the FDEP discussed below. Based on our review, we expect ongoing activities to continue for 3026 years. Additionally, we will require near-term spending to install new groundwater recovery wells and ancillary equipment, in addition to future capital to consider the extended time horizon for remediation at the site. As a result of these changes, we increased our environmental accrual for this site by $19 in continuing operations on the consolidated balance sheets and recognized a before-tax expense of $19 in results from discontinued operations in ~~the second quarter of~~ fiscal year 2020. There have been no significant changes to the estimated exposure range related to the Pace facility since ~~the second quarter of~~ fiscal year 2020.

We have implemented many of the remedial corrective measures at the Pace facility required under the 1995 ~~Consent Orders~~consent orders issued by the FDEP and the USEPA. Contaminated soils have been bioremediated, and the treated soils have been secured in a lined on-site corrective action management unit. Several groundwater recovery systems have been installed to contain and remove contamination from groundwater. We completed an extensive assessment of the site to determine the efficacy of existing measures, what additional corrective measures may be needed, and whether newer remediation technologies that were not available in the 1990s might be ~~suitable to more quickly and effectively remediate groundwater.~~better suited for groundwater remediation. Based on assessment results, we completed a focused feasibility study that has identified alternative approaches that may more effectively remove contaminants. We continue to review alternative remedial approaches with the FDEP, and ~~have~~we completed additional field work during 2021 to support the design of an improved groundwater recovery network. This network ~~with the objective of targeting~~targets areas of higher contaminant concentration and ~~avoiding~~avoids areas of high groundwater iron which has proven to be a significant operability issue for the project. The design of the optimized recovery system ~~has been~~was initiated in fiscal year 2023, with construction expected to begin ~~thereafter.~~in fiscal year 2025. In fiscal year 2025, we expect to connect groundwater recovery wells and ancillary equipment to the ~~first quarter of 2015,~~existing groundwater recovery system. Further, we ~~entered into a new Consent Order with~~expect additional future capital expenditures to consider the ~~FDEP requiring us to continue our~~extended time horizon for remediation ~~efforts~~ at the ~~Pace facility, along with the completion of a cost review every 5 years.~~site.

~~Piedmont~~Pasadena

At 31 March ~~2023, $6.9~~2024, $10.4 of the environmental accrual was related to ~~the Piedmont site.~~

~~On 30 June 2008, we sold our Elkton, Maryland, and Piedmont, South Carolina,~~a production facilities and the related North American atmospheric emulsions and global pressure sensitive adhesives businesses. In connection with the sale, we recognized a liability for retained environmental obligations associated with remediation activities at the Piedmont site. Thisfacility site ~~is under active remediation for contamination caused by an insolvent prior owner.~~

We are required by the South Carolina Department of Health and Environmental Control ("SCDHEC") to address both contaminated soil and groundwater. Numerous areas of soil contamination have been addressed, and contaminated groundwater is being recovered and treated. The SCDHEC issued its final approval to the site-wide feasibility study on 13 June 2017 and the Record of Decision for the site on 27 June 2018, after which we signed a Consent Agreement Amendment memorializing our obligations to complete the cleanup of the site. Remediation has started in accordance with the design, which includes in-situ chemical oxidation treatment, as well as soil vapor extraction to remove volatile organic compounds from the unsaturated soils beneath the impacted areas of the plant. We estimate that source area remediation and groundwater recovery and treatment will continue through 2029. Thereafter, we expect this site to go into a state of monitored natural attenuation through 2047.

We recognized a before-tax expense of $24 in 2008 as a component of income from discontinued operations and recorded an environmental liability of $24 in continuing operations on the consolidated balance sheets. There have been no significant changes to the estimated exposure.

~~Table of Contents~~

~~Pasadena~~

~~At 31 March 2023, $10.7 of the environmental accrual was related to the~~ Pasadena, ~~site.~~Texas.

During ~~the fourth quarter of~~fiscal year 2012, management committed to permanently shutting down our polyurethane intermediates ("PUI") production facility in Pasadena, Texas. In shutting down and dismantling the facility, we have undertaken certain obligations related to soil and groundwater contaminants. We have been pumping and treating groundwater to control off-site contaminant migration in compliance with regulatory requirements and under the approval of the Texas Commission on Environmental Quality ("TCEQ"). We estimate that the pump and treat system will continue to operate until 2042.

We continue to perform additional work to address other environmental obligations at the site. This additional work includes remediating, as required, impacted soils, investigating groundwater west of the former PUI facility, continuing post closure care for two closed RCRA surface impoundment units, and maintaining engineering controls. Additionally, we have conducted an interim corrective action to treat impacted soils as recommended in the TCEQ 2019 Annual Report. In 2012, we estimated the total exposure at this site to be $13. There have been no significant changes to the estimated exposure.

~~14.~~

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13. SHARE-BASED COMPENSATION

Our outstanding share-based compensation programs include deferred stock units and stock options. During the six months ended 31 March ~~2023,~~2024, we granted market-based and time-based deferred stock units. Under all programs, the terms of the awards are fixed at the grant date. We issue shares from treasury stock upon the payout of deferred stock units and the exercise of stock options. As of 31 March ~~2023,~~2024, there were ~~1.2~~1.0 million shares available for future grant under our Long-Term Incentive Plan ("LTIP")., which is shareholder approved.

Share-based compensation cost recognized on the consolidated income statements is summarized below:


			Three Months Ended		Six Months Ended
			31 March		31 March
			2023	2022	2023	2022
		Three Months Ended						Three Months Ended			Six Months Ended
		31 March						31 March			31 March
		2024					2024		2023	2024		2023
Before-tax share-based compensation cost	Before-tax share-based compensation cost		$15.5	$10.5	$32.4	$27.3
Income tax benefit	Income tax benefit		(3.9)	(2.6)	(7.9)	(6.7)
After-tax share-based compensation cost	After-tax share-based compensation cost		$11.6	$7.9	$24.5	$20.6

Before-tax share-based compensation cost is primarily included in "Selling and administrative expense" on our consolidated income statements. The amount of share-based compensation cost capitalized in the first six months of fiscal years ~~2023~~2024 and ~~2022~~2023 was not material.

Deferred Stock Units

During the six months ended 31 March ~~2023,~~2024, we granted ~~85,612~~102,120 market-based deferred stock units. The market-based deferred stock units are earned over the performance period beginning 1 October ~~2022~~2023 and ending 30 September ~~2025,~~2026, conditioned on the level of our total shareholder return in relation to ~~a defined peer group~~the S&P 500 Index over the ~~three-year~~three-year performance period.

The market-based deferred stock units had an estimated grant-date fair value of ~~$502.03~~$302.10 per unit, which was estimated using a Monte Carlo simulation model. The model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the grant and calculates the fair value of the awards. We generally expense the grant-date fair value of these awards on a straight-line basis over the vesting period. The calculation of the fair value of market-based deferred stock units used the following assumptions:


Expected volatility	~~32.5~~25.0	%
Risk-free interest rate	~~4.0~~4.3	%
Expected dividend yield	~~2.4~~2.6	%

In addition, during the six months ended 31 March ~~2023,~~2024, we granted ~~113,134~~139,425 time-based deferred stock units at a weighted average grant-date fair value of ~~$309.75.~~$272.05.

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~~15.~~14. ACCUMULATED OTHER COMPREHENSIVE LOSS

The tables below summarize changes in accumulated other comprehensive loss ("AOCL"), net of tax, attributable to Air Products for the three and six months ended 31 March ~~2023:~~2024:

Derivatives
qualifying
as hedges Foreign
currency
translation
adjustments Pension and
postretirement
benefits Total
Balance at 31 December 2022 ($19.0) ($1,576.0) ($623.3) ($2,218.3)
Other comprehensive (loss) income before reclassifications (14.6) 51.0 — 36.4
Amounts reclassified from AOCL 5.8 (0.3) 14.4 19.9
Net current period other comprehensive (loss) income (8.8) 50.7 14.4 56.3
Amount attributable to noncontrolling interests (1.3) 2.6 — 1.3
Balance at 31 March 2023 ($26.5) ($1,527.9) ($608.9) ($2,163.3)



	Derivatives qualifying as hedges	Foreign currency translation adjustments	Pension and postretirement benefits	Total
Balance at 31 December 2023	$11.9	($1,548.7)	($583.5)	($2,120.3)
Other comprehensive income (loss) before reclassifications	82.3	(223.8)	—	(141.5)
Amounts reclassified from AOCL	34.8	—	13.6	48.4
Net current period other comprehensive income (loss)	117.1	(223.8)	13.6	(93.1)
Amount attributable to noncontrolling interests	75.6	(13.2)	0.1	62.5
Balance at 31 March 2024	$53.4	($1,759.3)	($570.0)	($2,275.9)

Derivatives
qualifying
as hedges Foreign
currency
translation
adjustments Pension and
postretirement
benefits Total
Balance at 30 September 2022 ($71.9) ($2,072.4) ($641.8) ($2,786.1)
Other comprehensive income before reclassifications 106.4 560.6 6.7 673.7
Amounts reclassified from AOCL (62.9) (0.3) 26.3 (36.9)
Net current period other comprehensive income 43.5 560.3 33.0 636.8
Amount attributable to noncontrolling interests (1.9) 15.8 0.1 14.0
Balance at 31 March 2023 ($26.5) ($1,527.9) ($608.9) ($2,163.3)



	Derivatives qualifying as hedges	Foreign currency translation adjustments	Pension and postretirement benefits	Total
Balance at 30 September 2023	$61.1	($1,913.3)	($597.2)	($2,449.4)
Other comprehensive (loss) income before reclassifications	(78.8)	156.8	—	78.0
Amounts reclassified from AOCL	(7.4)	—	27.3	19.9
Net current period other comprehensive (loss) income	(86.2)	156.8	27.3	97.9
Amount attributable to noncontrolling interests	(78.5)	2.8	0.1	(75.6)
Balance at 31 March 2024	$53.4	($1,759.3)	($570.0)	($2,275.9)

The table below summarizes the reclassifications out of AOCL and the affected line item on the consolidated income statements:


		Three Months Ended		Six Months Ended
		31 March
		2023	2022	2023	2022
	Three Months Ended						Three Months Ended		Six Months Ended
	31 March						31 March		31 March
	2024					2024	2023	2024	2023
Loss (Gain) on Cash Flow Hedges, net of tax	Loss (Gain) on Cash Flow Hedges, net of tax
Sales
Sales
Sales	Sales	$0.1	$0.2	$0.1	$0.5
Cost of sales	Cost of sales	1.8	0.3	2.8	0.2

Interest expense
Interest expense
Interest expense	Interest expense	0.7	0.9	1.7	1.8
Other non-operating income (expense), net	Other non-operating income (expense), net	3.2	24.6	(67.5)	42.2
Total Loss (Gain) on Cash Flow Hedges, net of tax	Total Loss (Gain) on Cash Flow Hedges, net of tax	$5.8	$26.0	($62.9)	$44.7

Currency Translation Adjustment	Currency Translation Adjustment

Currency Translation Adjustment
Currency Translation Adjustment
Business and asset actions
Business and asset actions
Business and asset actions	Business and asset actions	($0.3)	$—	($0.3)	$—

Pension and Postretirement Benefits, net of tax(A)

Pension and Postretirement Benefits, net of tax(A)	Pension and Postretirement Benefits, net of tax(A)	$14.4	$15.9	$26.3	$31.9

Pension and Postretirement Benefits, net of tax(A)

(A)The components of net periodic ~~benefit~~ benefit/cost reclassified out of AOCL include items such as prior service cost amortization, actuarial loss amortization, settlements, and curtailments and are included in “Other non-operating income (expense), net” on the consolidated income statements. Refer to Note ~~12,~~11, Retirement Benefits, for additional information.

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~~16.~~15. EARNINGS PER SHARE

The table below details the computation of basic and diluted earnings per share ("EPS"):


		Three Months Ended		Six Months Ended
		31 March		31 March
		2023	2022	2023	2022
	Three Months Ended						Three Months Ended				Six Months Ended
	31 March								31 March
	2024					2024		2023		2024		2023
Numerator	Numerator

Net income attributable to Air Products	Net income attributable to Air Products	$439.8	$530.5	$1,012.0	$1,090.9

Net income attributable to Air Products

Net income attributable to Air Products
Denominator (in millions)	Denominator (in millions)
Weighted average common shares — Basic	Weighted average common shares — Basic	222.3	222.0	222.3	222.0
Weighted average common shares — Basic
Weighted average common shares — Basic
Effect of dilutive securities	Effect of dilutive securities
Employee stock option and other award plans
Employee stock option and other award plans
Employee stock option and other award plans	Employee stock option and other award plans	0.4	0.5	0.4	0.5
Weighted average common shares — Diluted	Weighted average common shares — Diluted	222.7	222.5	222.7	222.5

Per Share Data (U.S. Dollars per share)	Per Share Data (U.S. Dollars per share)
Per Share Data (U.S. Dollars per share)
Per Share Data (U.S. Dollars per share)

Basic EPS attributable to Air Products

Basic EPS attributable to Air Products

Basic EPS attributable to Air Products	Basic EPS attributable to Air Products	$1.98	$2.39	$4.55	$4.91

Diluted EPS attributable to Air Products	Diluted EPS attributable to Air Products	$1.97	$2.38	$4.54	$4.90

Diluted EPS attributable to Air Products

Diluted EPS attributable to Air Products

~~For~~Outstanding share-based awards of 0.1 million shares were antidilutive and therefore excluded from the ~~three and six months ended 31 March 2023 and 2022, there were no antidilutive outstanding share-based awards.~~

~~17. INCOME TAXES~~

~~Effective Tax Rate~~

~~Our effective tax rate was 21.2% and 19.9%~~computation of diluted earnings per share for the three and six months ended 31 March 2024. For 2023, ~~respectively, and 18.6% and 17.8% for the three and six months ended 31 March 2022, respectively.~~

~~During the second quarter of 2023, we recognized a charge of $185.6 ($153.7 attributable to Air Products after tax) related to various business and asset actions. Refer to Note 4,~~ ~~Business and Asset Actions~~, for additional information. This charge included certain losses for which we could not recognize an income tax benefit. Therefore, we recorded a valuation allowance of $31.7 against deferred tax assets resulting from the charge. Partially offsetting the valuation allowance cost was a $15.9 income tax benefit from a tax election related to a non-U.S. subsidiary.

~~Cash Paid for Taxes (Net of Cash Refunds)~~

~~Income tax payments, net of refunds,~~there were ~~$327.0 and $236.9 for the six months ended 31 March 2023 and 2022, respectively.~~no antidilutive outstanding share-based awards.

~~18.~~16. SUPPLEMENTAL INFORMATION

Related Party Transactions

We have related party sales to some of our equity affiliates and joint venture partners as well as other income primarily from fees charged for use of Air Products' patents and technology. Sales to and other income from related parties totaled approximately $75 and $170 for the three and six months ended 31 March 2024, respectively, and $105 and $185 for the three and six months ended 31 March 2023, ~~respectively, and approximately $60 and $125 for the three and six months ended 31 March 2022,~~ respectively. Sales agreements with related parties include terms that are consistent with those that we believe would have been negotiated at an arm’s length with an independent party. As of 31 March ~~2023~~2024 and 30 September ~~2022,~~2023, our consolidated balance sheets included related party trade receivables of approximately ~~$170~~$125 and ~~$55,~~$80, respectively.

~~Refer~~Uzbekistan Asset Purchase

On 25 May 2023, we entered into an investment agreement with the Government of the Republic of Uzbekistan and Uzbekneftegaz JSC (“UNG”) to ~~Note 11,~~ ~~Debt~~,purchase a natural gas-to-syngas processing facility in Qashqadaryo Province, Uzbekistan, for ~~information concerning debt owed~~$1 billion. Under the agreement, Air Products will acquire, own, and operate the facility and supply all offtake products to ~~related parties.~~UNG under a 15-year on-site contract, with UNG supplying the feedstock natural gas and utilities. Throughout this term, we receive a fixed monthly fee (regardless of whether UNG requires the output) comprised of two components: a plant capacity fee and an operating and maintenance fee.

~~Table~~We are accounting for the transaction as a financing arrangement as we did not obtain accounting control of ~~Contents~~

the facility due to UNG having the unilateral right to reacquire the facility at the end of the contract term. The repurchase price on a discounted basis, which consists of the total monthly plant capacity fees received over the term of the arrangement plus the repurchase option price, exceeds our purchase price. Accordingly, our progress payments of approximately $910, of which $100 was paid during the first quarter of fiscal year 2024, are reflected within "Financing receivables" on our consolidated balance sheet as of 31 March 2024.

Changes in Estimates

Changes in estimates on sale of equipment projects accounted for under the cost incurred input method are recognized as a cumulative adjustment for the inception-to-date effect of such change. We recorded changes to project cost estimates that unfavorably impacted operating income by approximately $35 and $65 for the three and six months ended 31 March 2024, respectively, and approximately $35 and $60 for the three and six months ended 31 March ~~2023. The impact~~2023, respectively.

Table of ~~changes in estimates~~Contents

Income Taxes

Our effective tax rate was 18.3% and 18.1% for the ~~first half~~three and six months ended 31 March 2024, respectively, and 21.2% and 19.9% for the three and six months ended 31 March 2023, respectively.

Income tax payments, net of ~~fiscal year 2022 was not material.~~

~~Lessee Accounting~~

~~During~~refunds, were $321.8and $327.0 for the six months ended 31 March 2024 and 2023, ~~we recorded noncash right-of-use asset additions of approximately $79, primarily for operating leases that had not yet commenced as of 30 September 2022.~~respectively.

~~19.~~17. BUSINESS SEGMENT INFORMATION

Our reportable segments reflect the manner in which our chief operating decision maker ~~assesses performance~~reviews results and allocates resources. Our reportable segments are as follows:

•Americas;

•Asia;

•Europe;

•Middle East and India; and

•Corporate and other

Except for the Corporate and other segment, each reportable segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments. Our Corporate and other segment includes the aggregation of three operating segments that meet the aggregation criteria under GAAP.

Summary by Business Segment


		Americas	Asia	Europe	Middle East and India	Corporate and other	Total
Three Months Ended 31 March 2023
	Americas
Three Months Ended 31 March 2024
Three Months Ended 31 March 2024
Three Months Ended 31 March 2024
Sales
Sales
Sales	Sales	$1,373.1	$813.9	$752.9	$44.8	$215.4	$3,200.1	(A)	$1,245.8		$779.7	$779.7		$667.9	$667.9		$35.7	$35.7		$201.1	$201.1		$2,930.2	$2,930.2		(A)	(A)
Operating income (loss)	Operating income (loss)	324.2	233.0	173.2	1.3	(86.3)	645.4	(B)	Operating income (loss)	371.9			203.6	203.6		201.0	201.0		5.6	5.6		(87.9)	(87.9)		694.2	694.2		(B)	(B)
Depreciation and amortization	Depreciation and amortization	161.7	110.0	48.3	6.6	13.0	339.6
Equity affiliates' income	Equity affiliates' income	28.1	7.3	29.5	98.9	2.1	165.9
Three Months Ended 31 March 2022
Equity affiliates' income
Equity affiliates' income
Three Months Ended 31 March 2023
Three Months Ended 31 March 2023
Three Months Ended 31 March 2023
Sales
Sales
Sales	Sales	$1,186.6	$751.2	$738.6	$28.9	$239.8	$2,945.1	(A)	$1,373.1		$813.9	$813.9		$752.9	$752.9		$44.8	$44.8		$215.4	$215.4		$3,200.1	$3,200.1		(A)	(A)
Operating income (loss)	Operating income (loss)	275.5	203.6	116.4	4.8	(38.4)	561.9	(B)	Operating income (loss)	324.2			233.0	233.0		173.2	173.2		1.3	1.3		(86.3)	(86.3)		645.4	645.4		(B)	(B)
Depreciation and amortization	Depreciation and amortization	153.7	111.8	50.3	6.9	13.2	335.9
Equity affiliates' income	Equity affiliates' income	20.1	6.2	23.3	71.1	0.1	120.8
Equity affiliates' income
Equity affiliates' income

(A)Sales relate to external customers only. All intersegment sales are eliminated in consolidation.

(B)Refer to the ~~Reconciliation~~"Reconciliation to Consolidated ~~Results~~Results" section below.

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		Americas	Asia	Europe	Middle East and India	Corporate and other	Total
Six Months Ended 31 March 2023
		Americas
		Americas
		Americas
Six Months Ended 31 March 2024
Six Months Ended 31 March 2024
Six Months Ended 31 March 2024
Sales
Sales
Sales	Sales	$2,757.3	$1,591.7	$1,544.8	$86.2	$394.8	$6,374.8	(A)	$2,497.9		$1,573.5	$1,573.5		$1,399.1	$1,399.1		$71.1	$71.1		$386.0	$386.0		$5,927.6	$5,927.6		(A)	(A)
Operating income (loss)	Operating income (loss)	667.2	468.9	319.0	8.0	(165.7)	1,297.4	(B)	Operating income (loss)	726.3			414.8	414.8		398.6	398.6		9.5	9.5		(188.1)	(188.1)		1,361.1	1,361.1		(B)	(B)
Depreciation and amortization	Depreciation and amortization	317.7	211.9	92.6	13.2	25.7	661.1
Equity affiliates' income	Equity affiliates' income	44.5	14.7	47.2	163.0	6.5	275.9
Six Months Ended 31 March 2022
Equity affiliates' income
Equity affiliates' income
Six Months Ended 31 March 2023
Six Months Ended 31 March 2023
Six Months Ended 31 March 2023
Sales
Sales
Sales	Sales	$2,410.7	$1,531.6	$1,482.8	$52.6	$461.6	$5,939.3	(A)	$2,757.3		$1,591.7	$1,591.7		$1,544.8	$1,544.8		$86.2	$86.2		$394.8	$394.8		$6,374.8	$6,374.8		(A)	(A)
Operating income (loss)	Operating income (loss)	542.7	424.7	215.6	9.6	(107.7)	1,084.9	(B)	Operating income (loss)	667.2			468.9	468.9		319.0	319.0		8.0	8.0		(165.7)	(165.7)		1,297.4	1,297.4		(B)	(B)
Depreciation and amortization	Depreciation and amortization	309.0	222.6	100.1	13.0	23.5	668.2
Equity affiliates' income	Equity affiliates' income	54.3	12.8	37.2	163.4	0.9	268.6
Equity affiliates' income
Equity affiliates' income

Total Assets	Total Assets
31 March 2023		$8,859.0	$7,422.7	$3,914.4	$4,451.8	$4,787.5	$29,435.4
30 September 2022		8,237.7	6,968.7	3,645.1	2,980.7	5,360.4	27,192.6

Total Assets

Total Assets
31 March 2024
31 March 2024
31 March 2024
30 September 2023
30 September 2023
30 September 2023

(A)Sales relate to external customers only. All intersegment sales are eliminated in consolidation.

(B)Refer to the ~~Reconciliation~~"Reconciliation to Consolidated Results" section below.

Reconciliation to Consolidated Results

The table below reconciles total operating income disclosed in the ~~tables~~table above to consolidated operating income as reflected on our consolidated income statements:


		Three Months Ended
		Three Months Ended
		Three Months Ended							Six Months Ended
	31 March									31 March		31 March
Operating Income						Operating Income	2024	2023	2024		2023
Total

		Three Months Ended		Six Months Ended
		31 March
Operating Income		2023	2022	2023	2022
Total		$645.4	$561.9	$1,297.4	$1,084.9
Business and asset actions

Business and asset actions

Business and asset actions	Business and asset actions	(185.6)	—	(185.6)	—

Consolidated Operating Income

Consolidated Operating Income	Consolidated Operating Income	$459.8	$561.9	$1,111.8	$1,084.9

Consolidated Operating Income

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Second Quarter ~~2023~~2024 in Summary			3637
Second Quarter ~~2023~~2024 Results of Operations			3839
First Six Months ~~2023~~2024 in Summary			4345
First Six Months ~~2023~~2024 Results of Operations			4547
Reconciliations of Non-GAAP Financial Measures			5052
Liquidity and Capital Resources			5758
Pension Benefits			6061
Critical Accounting Policies and Estimates			6162

~~As used~~This Management’s Discussion and Analysis contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about business outlook. These forward-looking statements are based on management’s expectations and assumptions as of the date of this Quarterly Report on Form 10-Q and are not guarantees of future performance. Actual performance and financial results may differ materially from projections and estimates expressed in the ~~discussion that follows, unless~~forward-looking statements because of many factors not anticipated by management, including, without limitation, those described in "Forward-Looking Statements" and Item 1A, Risk Factors, of our Annual Report on Form 10-K for the ~~context indicates otherwise,~~fiscal year ended 30 September 2023 (the "2023 Form 10-K"), which was filed with the ~~terms “we,” “our,” “us,” the “Company,” "Air Products," or “registrant” include controlled subsidiaries and affiliates of Air Products.~~ SEC on 16 November 2023.

This discussion should be read in conjunction with the interim consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q. Unless otherwise stated, financial information is presented in millions of U.S. Dollars, except for per share data. ~~Except for net income, which includes the results of discontinued operations, when applicable, financial~~Financial information is presented on a continuing operations basis.

Comparisons of our results of operations and liquidity and capital resources are for the second quarter and first six months of fiscal year 2023 versus ("vs.") the second quarter and first six months of fiscal year 2022, respectively. The disclosures provided in this Quarterly Report on Form 10-Q are complementary to those made in our Annual Report on Form 10-K for the fiscal year ended 30 September 2022 (the "~~2022 Form 10-K"), which was filed with the SEC on 22 November 2022.~~

The financial measures discussed below are presented in accordance with U.S. generally accepted accounting principles ("GAAP"), except as noted. We present certain financial measures on an "adjusted", or "non-GAAP", basis because we believe such measures, when viewed together with financial results computed in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our historical financial performance. For each non-GAAP financial measure, including adjusted diluted earnings per share ("EPS"), adjusted EBITDA, adjusted EBITDA margin, adjusted effective tax rate, and capital expenditures, we present a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP. These reconciliations and explanations regarding the use of non-GAAP financial measures are presented under the ~~“Reconciliations~~“Reconciliations of Non-GAAP Financial ~~Measures”~~Measures” section beginning on page 5052.

~~For information concerning activity with our related parties, refer~~Comparisons included in the discussion that follows are for the second quarter and first six months of fiscal year 2024 versus ("vs.") the second quarter and first six months of fiscal year 2023. The disclosures provided in this Quarterly Report on Form 10-Q are complementary to ~~Note 18,~~ ~~Supplemental Information, to the consolidated financial statements.~~

~~About Air Products~~

~~Air Products and Chemicals, Inc., a Delaware corporation originally founded~~those made in 1940, has built a reputation for its innovative culture, operational excellence, and commitment to safety and the environment. Our passionate, talented, and committed employees are from diverse backgrounds and together are driven by our higher purpose to create innovative solutions that benefit the environment, enhance sustainability, and address the challenges facing customers, communities, and the world. As of 30 September 2022, we had approximately 21,900 employees, of which over 90% were working full-time and 75% were located outside the United States. For information on our product, service, and solution offerings, refer to our ~~2022~~2023 Form 10-K.

We manage our operations, assess performance, and report earnings under five reportable segments: Americas, Asia, Europe, Middle East and India, and Corporate and other. ~~This Management’s Discussion and Analysis discusses our results~~The discussion that follows is based on these operations. Refer to Note 17, Business Segment Information, to the consolidated financial statements for additional information.

For information concerning activity with our related parties, refer to Note 16, Supplemental Information, to the consolidated financial statements.

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SECOND QUARTER ~~2023~~2024 VS. SECOND QUARTER ~~2022~~2023

SECOND QUARTER ~~2023~~2024 IN SUMMARY

•Sales of ~~$3,200.1 increased 9%~~$2,930.2 decreased 8%, or ~~$255.0,~~$269.9, as ~~higher pricing~~lower energy cost pass-through to customers of ~~8% and higher~~6%, lower volumes of ~~6% were partially offset by~~2%, and an unfavorable impact from currency of ~~4% and lower energy cost pass-through to customers~~1% were partially offset by higher pricing of 1%.

•Operating income of ~~$459.8 decreased 18%~~$637.2 increased 39%, or ~~$102.1,~~$177.4, as ~~our~~lower costs and positive pricing ~~actions and higher volumes~~ were ~~more than~~partially offset by ~~a charge for business and asset actions related to our withdrawal from projects in Indonesia and Ukraine of $185.6, higher other costs,~~lower volumes and unfavorable ~~currency.~~currency impacts. Operating margin of ~~14.4% decreased 470~~21.7% increased 730 basis points ("bp") due to these factors as ~~the unfavorable costs were only partially offset by the~~well as a positive impact ~~of our pricing actions.~~from lower energy cost pass-through to customers.

•Equity affiliates' income of ~~$165.9 increased 37%~~$143.3 decreased 14%, or ~~$45.1, primarily due to a~~$22.6, as lower contributions from affiliates in our Europe and Middle East and India segments were partially offset by higher ~~contribution~~income from affiliates in the ~~Jazan Integrated Gasification and Power Company ("JIGPC") joint venture, which completed the second phase of the Jazan gasification and power project in January 2023.~~Americas segment.

•Net income of ~~$449.9 decreased 16%~~$580.9 increased 29%, or ~~$86.9,~~$131.0, primarily due to ~~the charge for business~~lower costs and ~~asset actions and higher other costs,~~positive pricing, partially offset by ~~the impact of our pricing actions and higher volumes as well as higher~~lower equity affiliates' income, ~~from JIGPC.~~lower volumes, and higher interest expense. Net income margin of ~~14.1% decreased 410 bp.~~19.8% increased 570 bp due to these factors as well as a positive impact from lower energy cost pass-through to customers.

•Adjusted EBITDA of ~~$1,150.9~~$1,198.3 increased ~~13%~~4%, or ~~$132.3,~~$47.4, and adjusted EBITDA margin of ~~36.0%~~40.9% increased ~~140~~490 bp.

•Diluted EPS of ~~$1.97 decreased 17%~~$2.57 increased 30%, or ~~$0.41~~$0.60 per ~~share,~~share. Diluted EPS for the second quarter of fiscal years 2024 and 2023 included ~~a $0.69~~ unfavorable ~~impact~~impacts from business and asset actions as well as ~~an unfavorable $0.08 impact from~~ non-service related pension costs. ~~Adjusted~~On a non-GAAP basis, adjusted diluted EPS of ~~$2.74~~$2.85 increased ~~17%~~4%, or ~~$0.40~~$0.11 per share. A summary table of changes in diluted EPS is presented below.

•In January ~~2023,~~2024, the Board of Directors ~~declared a~~increased the quarterly dividend ~~of $1.75~~to $1.77 per share, representing ~~an 8% increase, or $0.13 per share, from the prior quarterly dividend of $1.62 per share. This is the 41~~our 42stnd consecutive year ~~that we have increased our quarterly dividend.~~of dividend increases.

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Changes in Diluted EPS Attributable to Air Products

The per share impacts presented in the tables below were calculated independently and may not sum to the total change in diluted EPS due to rounding.

Three Months Ended

31 March

Increase

2023

2022

(Decrease)

Three Months Ended

31 March

Increase

2024

2023

(Decrease)

Diluted EPS

$1.97

$2.38

($0.41)

Operating Impacts

Underlying business

Volume

$0.12

Price, net of variable costs

0.72

Other costs

(0.44)

Currency

(0.09)

Business and asset actions

(0.69)

Business and asset actions

Total operating impacts

($0.38)

Business and asset actions

Total Operating Impacts

Other Impacts

Equity affiliates' income

$0.16

Interest expense

(0.03)

Other non-operating income/expense, net, excluding discrete item below

0.04

Non-service pension cost/benefit, net

(0.12)

Interest expense

Other non-operating income/expense, net

Change in effective tax rate

(0.04)

Noncontrolling interests

(0.04)

Total other impacts

($0.03)

Total change in diluted EPS

($0.41)

Noncontrolling interests

Total Other Impacts

Total Change in Diluted EPS

% Change from prior year

(17

% Change from prior year

The table below summarizes the diluted per share impact of our non-GAAP adjustments for the second quarter of fiscal years ~~2023~~2024 and ~~2022:~~2023:


		Three Months Ended
		31 March		Increase
		2023	2022	(Decrease)
	Three Months Ended
		31 March
		31 March
		31 March						Increase
	2024						2024		2023	(Decrease)
Diluted EPS	Diluted EPS	$1.97	$2.38	($0.41)

Business and asset actions

Business and asset actions

Business and asset actions	Business and asset actions	0.69	—	0.69

Non-service pension cost (benefit), net		0.08	(0.04)	0.12

Non-service pension cost, net

Non-service pension cost, net

Non-service pension cost, net

Adjusted Diluted EPS

Adjusted Diluted EPS

Adjusted Diluted EPS	Adjusted Diluted EPS	$2.74	$2.34	$0.40
% Change from prior year	% Change from prior year			17	%	% Change from prior year					4	%

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SECOND QUARTER ~~2023~~2024 RESULTS OF OPERATIONS

Discussion of Second Quarter Consolidated Results


			Three Months Ended
			31 March				Changes
			2023		2022		$	%/bp
		Three Months Ended
			31 March
			31 March
			31 March																	Change vs. Prior Year
		2024													2024							2023					$						%/bp
GAAP Measures	GAAP Measures
Sales
Sales
Sales	Sales		$3,200.1		$2,945.1		$255.0	9	%		$2,930.2		$3,200.1			$3,200.1				($269.9)			($269.9)		(8				(8		%)
Operating income	Operating income		459.8		561.9		(102.1)	(18	%)	Operating income		637.2		459.8				459.8			177.4			177.4		39					39	%
Operating margin	Operating margin		14.4	%	19.1	%		(470)	bp	Operating margin		21.7	%				14.4		%												730	bp
Equity affiliates’ income	Equity affiliates’ income		$165.9		$120.8		$45.1	37	%	Equity affiliates’ income		$143.3		$165.9				$165.9			($22.6)			($22.6)		(14					(14	%)
Net income	Net income		449.9		536.8		(86.9)	(16	%)	Net income		580.9		449.9				449.9			131.0			131.0		29					29	%
Net income margin	Net income margin		14.1	%	18.2	%		(410)	bp	Net income margin		19.8	%				14.1		%												570	bp
Non-GAAP Measures	Non-GAAP Measures
Adjusted EBITDA	Adjusted EBITDA		$1,150.9		$1,018.6		$132.3	13	%
Adjusted EBITDA
Adjusted EBITDA												$1,198.3					$1,150.9						$47.4					4		%
Adjusted EBITDA margin	Adjusted EBITDA margin		36.0	%	34.6	%		140	bp	Adjusted EBITDA margin		40.9	%				36.0		%												490	bp

Sales

The table below summarizes the major factors that impacted consolidated sales for the periods presented:



Volume	6(2	%)
Price	81	%

Energy cost pass-through to customers	(16	%)
Currency	(41	%)

Total ~~consolidated sales change~~Consolidated Sales Change	9(8	%)

Sales of ~~$3,200.1 increased 9%~~$2,930.2 decreased 8%, or ~~$255.0, due to higher pricing of 8% and higher volumes of 6%, partially offset by an unfavorable impact from currency of 4% and~~$269.9, as lower energy cost pass-through to customers of 6% driven by lower natural gas prices in the Americas and Europe segments, lower volumes of 2%, and an unfavorable impact from currency of 1% were partially offset by higher pricing of 1%. ~~Pricing improved across each of our regional segments. The volume improvement~~Volume was down overall primarily ~~attributable~~due to ~~our~~weaker merchant demand, which was partially offset by higher demand for hydrogen as well as contributions from new on-site ~~businesses. Currency was unfavorable as the U.S. Dollar strengthened against most major currencies.~~assets.

Cost of Sales and Gross Margin

Cost of sales of ~~$2,282.8 increased 6%~~$1,991.5 decreased 13%, or ~~$131.2,~~$291.3, due to higher costs associated with sales volumes of $149 and unfavorable costs of $102 driven by inflation, higher planned maintenance, power for our merchant business, and project development, partially offset by a favorable impact from currency of $85 and lower energy cost pass-through to customers of ~~$35.~~$201, lower costs associated with sales volumes of $43, lower other costs of $28 driven by lower power costs in our merchant business, and a favorable impact from currency of $19. Gross margin of ~~28.7%~~32.0% increased ~~180~~330 bp from ~~26.9%~~28.7% in the prior year primarily due to ~~the positive impact of our pricing actions, partially offset~~lower energy cost pass-through to customers, which favorably impacted margin by ~~the unfavorable costs.~~approximately 200 bp.

Selling and Administrative Expense

Selling and administrative expense of ~~$251.2 increased 11%~~$240.6 decreased 4%, or ~~$24.2,~~$10.6, primarily due to ~~higher~~lower incentive ~~compensation, additional costs to support growth, and inflation, partially offset by a favorable currency impact.~~compensation. Selling and administrative expense as a percentage of sales increased to ~~7.8%~~8.2% from ~~7.7%~~7.8% in the prior year.

Research and Development Expense

Research and development expense of ~~$27.2 increased 15%~~$25.4 decreased 7%, or ~~$3.5.~~$1.8. Research and development expense as a percentage of sales ofincreased to 0.9% from 0.8% ~~was flat versus~~in the prior year.

Table of Contents

Business and Asset Actions

~~During~~Our consolidated income statements for the ~~second quarter~~three months ended 31 March 2024 and 2023 include charges of ~~fiscal year 2023, we recognized a noncash charge of~~$57.0 ($43.8 after tax, or $0.20 per share) and $185.6 ($153.7 attributable to Air Products after tax, or $0.69 per share) ~~to write off assets that were previously under construction in our Asia and Europe segments. The charge is reflected within “Business~~, respectively, for strategic business and asset ~~actions”~~actions intended to optimize costs and focus resources on our ~~consolidated income statements~~growth projects. Charges for business and ~~was~~asset actions are not recorded in segment results. ~~Refer~~

The current year charge of $57.0 was for severance and other postemployment benefits payable to ~~Note 4,~~ ~~Business~~employees identified under a global cost reduction plan that was initiated in June 2023. The prior year charge of $185.6 resulted from the noncash write-off of assets related to our withdrawal from projects in Indonesia and ~~Asset Actions, to the consolidated financial statements for additional information.~~

~~Table of Contents~~

Ukraine.

Other Income (Expense), Net

Other income of ~~$6.5 decreased 66%, or $12.6,~~$21.5 increased $15.0 primarily due to ~~lower~~higher income from the sale of ~~assets and an unfavorable foreign exchange impact.~~assets.

Operating Income and Operating Margin

Operating income of ~~$459.8 decreased 18%~~$637.2 increased 39%, or ~~$102.1,~~$177.4, as ~~a charge~~lower charges for business and asset actions of ~~$186 to write off assets previously under construction in our Asia and Europe segments, higher other costs of $120, and an unfavorable currency impact of $26 were partially offset by~~$129, positive pricing, net of power and fuel costs, of ~~$197~~$45, and ~~higher~~lower other costs of $32 were partially offset by lower volumes of ~~$33. Higher~~$20 and an unfavorable impact from currency of $8. The lower costs ~~were driven by inflation,~~included favorable non-recurring items such as sales of assets as well as lower incentive compensation and ~~planned maintenance as well as project development and other~~distribution costs, ~~related to the execution of our growth strategy. Operating margin of 14.4% decreased 470 bp from 19.1% in the prior year, as the unfavorable costs were only~~ partially offset by the impact of ~~our pricing actions.~~labor inflation. Operating margin of 21.7% increased 730 bp from 14.4% in the prior year due to the factors above as well as lower energy cost pass-through to customers, which positively impacted margin by approximately 150 basis points.

Equity Affiliates' Income

Equity affiliates' income of ~~$165.9 increased 37%~~$143.3 decreased 14%, or ~~$45.1,~~$22.6, as lower contributions from affiliates in our Europe and Middle East and India segments were partially offset by higher income from affiliates in the Americas segment.

Interest Expense


	Three Months Ended
	31 March
	2024	2023
Interest incurred	$125.5	$64.1
Less: Capitalized interest	65.6	23.2
Interest expense	$59.9	$40.9

Interest incurred increased 96%, or $61.4, primarily due to a higher ~~contribution~~debt balance from ~~the JIGPC joint venture, which completed the second phase of the asset purchase associated with the Jazan gasification~~senior notes that were issued in March 2023 and ~~power project in January 2023,~~February 2024 to fund projects under our Green Finance Framework as well as ~~higher income from affiliates in Mexico and Italy.~~

~~Interest Expense~~

Three Months Ended
31 March
2023 2022
Interest incurred $64.1 $40.4
Less: Capitalized interest 23.2 8.1
Interest expense $40.9 $32.3

~~Interest incurred increased 59%, or $23.7, driven by a higher average interest rate~~borrowings on ~~variable-rate instruments in our debt portfolio.~~financing available for the NEOM Green Hydrogen Project. Capitalized interest increased ~~$15.1~~$42.4 due to a higher carrying value of projects under ~~construction.~~

~~We expect interest expense to be higher in future periods due to U.S. Dollar- and Euro-denominated fixed-rate notes issued in March 2023 under our new~~construction, including the NEOM Green ~~Finance Framework.~~Hydrogen Project.

Other Non-Operating Income (Expense), Net

Other non-operating expense ~~was $13.9 versus income~~ of $9.1 in the prior year. The decrease of $23.0 was primarily attributable to higher non-service pension costs, which were driven by higher interest cost and lower expected returns on plan assets for the U.S. salaried pension plan and the U.K. pension plan. This impact was partially offset by$9.2 decreased 34%, or $4.7, as higher interest income on cash and cash items ~~due to~~and short-term investments was partially offset by higher ~~interest rates.~~non-service pension costs.

Net Income and Net Income Margin

Net income of ~~$449.9 decreased 16%~~$580.9 increased 29%, or ~~$86.9,~~$131.0, primarily due to ~~higher costs, including a charge~~lower charges for business and asset actions, ~~as well as higher non-service pension~~favorable pricing, and lower other costs, partially offset by ~~higher pricing, net of power and fuel costs, and higher volumes as well as higher~~lower equity affiliates' income, ~~driven by JIGPC.~~lower volumes, and higher interest expense. Net income margin of ~~14.1% decreased 410~~19.8% increased 570 bp from ~~18.2%~~14.1% in the prior ~~year.~~year due to the factors noted above as well as lower energy cost pass-through to customers, which positively impacted margin by approximately 150 bp.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA of ~~$1,150.9~~$1,198.3 increased ~~13%~~4%, or ~~$132.3, primarily due to~~$47.4, as higher pricing ~~net of power~~ and ~~fuel~~lower costs ~~and higher volumes as well as higher equity affiliates' income driven by JIGPC,~~were partially offset by ~~higher costs.~~lower equity affiliates' income. Adjusted EBITDA margin of ~~36.0%~~40.9% increased ~~140~~490 bp from ~~34.6%~~36.0% in the prior ~~year.~~year due to the factors noted above as well as lower energy cost pass-through to customers, which positively impacted margin by about 250 bp.

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Effective Tax Rate

The effective tax rate equals the income tax provision divided by income before taxes. Equity affiliates' income is primarily included net of income taxes within ~~"Income Before Taxes"~~income before taxes on our consolidated income statements.

Our effective tax rate was ~~21.2%~~18.3% and ~~18.6%~~21.2% for the three months ended 31 March 2024 and 2023, respectively. Our current quarter rate was lower primarily due to a discrete tax impact recorded in the prior year from business and ~~2022, respectively.~~asset actions further discussed below as well as earning a greater share of income in jurisdictions with lower tax rates and the impact from equity affiliates' income.

~~During~~In the ~~second quarter of fiscal~~prior year, ~~2023,~~ we recognized a charge of $185.6 ($153.7 attributable to Air Products after tax) related to various business and asset actions. Refer to Note 4, Business and Asset Actions, ~~to the consolidated financial statements~~ for additional information. ~~The~~This charge included certain losses for which we could not recognize an income tax ~~benefit and were subject to~~benefit. Therefore, we recorded a valuation allowance of ~~$31.7.~~$31.7 against deferred tax assets resulting from the charge. Partially offsetting the valuation allowance cost was a $15.9 income tax benefit from a tax election related to a non-U.S. subsidiary.

Our current quarter effective tax rate was higher primarily due to the discrete tax impact of our business and asset actions. In addition, certain recurring income tax benefits had a lower impact on our effective tax rate in the current year as they did not increase in proportion to the increase to our annual forecast of income before taxes, which includes higher equity affiliates' income, the expiration of an income tax incentive, and earning a greater share of income in jurisdictions with higher tax rates in fiscal year 2023.

~~Our~~ adjusted effective tax rate, which ~~does not include~~excludes the impact of ~~our~~the business and asset actions discussed above as well as the non-service components of net periodic cost for our defined benefit pension plans, was ~~19.7%~~18.9% and ~~18.5%~~19.7% for the three months ended 31 March 2024 and 2023, ~~and 2022,~~ respectively. The current quarter rate was lower due to the higher income in jurisdictions with lower tax rates as well as the impact from equity affiliates' income.

Discussion of Second Quarter Results by Business Segment

Americas


			Three Months Ended
			31 March				Changes
			2023		2022		$	%/bp
		Three Months Ended
			31 March
			31 March
			31 March															Change vs. Prior Year
		2024												2024						2023			$			%/bp
Sales	Sales		$1,373.1		$1,186.6		$186.5	16	%	Sales	$1,245.8		$1,373.1			$1,373.1			($127.3)		($127.3)	(9		(9	%)
Operating income	Operating income		324.2		275.5		48.7	18	%	Operating income	371.9		324.2			324.2			47.7		47.7	15		15	%
Operating margin	Operating margin		23.6	%	23.2	%		40 bp		Operating margin	29.9	%			23.6		%							630	bp
Equity affiliates’ income	Equity affiliates’ income		$28.1		$20.1		$8.0	40	%	Equity affiliates’ income	$44.2		$28.1			$28.1			$16.1		$16.1	57		57	%
Adjusted EBITDA	Adjusted EBITDA		514.0		449.3		64.7	14	%	Adjusted EBITDA	590.2		514.0			514.0			76.2		76.2	15		15	%
Adjusted EBITDA margin	Adjusted EBITDA margin		37.4	%	37.9	%		(50) bp		Adjusted EBITDA margin	47.4	%			37.4		%							1,000	bp

The table below summarizes the major factors that impacted sales in the Americas segment for the periods presented:



Volume	91	%
Price	83	%
Energy cost pass-through to customers	—(12	%)
Currency	(1	%)
Total Americas ~~sales change~~Sales Change	16(9	%)

Sales of ~~$1,373.1 increased 16%~~$1,245.8 decreased 9%, or ~~$186.5,~~$127.3, due to higher volumes of 9% and higher pricing of 8%, partially offset by an unfavorable currency impact of 1%. The volume improvement was primarily attributable to our on-site business due to better demand for hydrogen. Additionally, we successfully recovered higher costs in our merchant business through continued focus on pricing actions. Energylower energy cost pass-through to customers of 12% driven by lower natural gas prices in North America and an unfavorable impact from currency of 1%, partially offset higher pricing of 3% and higher volumes of 1%. Volumes improved modestly as higher demand for hydrogen in our on-site business was ~~flat versus the prior year.~~partially offset by weaker merchant volume.

Operating income of ~~$324.2~~$371.9 increased ~~18%~~15%, or ~~$48.7,~~$47.7, primarily ~~from~~due to positive pricing, net of power and fuel costs, of ~~$85~~$37 and favorable volumes of ~~$15,~~$19, partially offset by higher costs of ~~$50.~~$7. Higher costs for labor inflation were ~~driven~~partially offset by ~~higher~~lower incentive ~~compensation, inflation, planned maintenance, and distribution and sourcing costs.~~compensation. Operating margin of ~~23.6%~~ 29.9%increased 40630 bp from ~~23.2%~~23.6% in the prior year ~~primarily~~ due to ~~the pricing improvement,~~these factors as well as lower energy cost pass-through to customers, which ~~was partially offset~~positively impacted margin by ~~the impact of higher costs.~~approximately 300 basis points.

Equity affiliates’ income of ~~$28.1~~ $44.2increased ~~40%~~57%, or ~~$8.0,~~$16.1, driven by higher income from an affiliate in Mexico as well as recognition of our ~~Mexico affiliate.~~share of income from an asset sale.

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Table of Contents

Asia


			Three Months Ended
			31 March				Changes
			2023		2022		$	%/bp
		Three Months Ended
			31 March
			31 March
			31 March															Change vs. Prior Year
		2024												2024						2023			$			%/bp
Sales	Sales		$813.9		$751.2		$62.7	8	%	Sales	$779.7		$813.9			$813.9			($34.2)		($34.2)	(4		(4	%)
Operating income	Operating income		233.0		203.6		29.4	14	%	Operating income	203.6		233.0			233.0			(29.4)		(29.4)	(13		(13	%)
Operating margin	Operating margin		28.6	%	27.1	%		150 bp		Operating margin	26.1	%			28.6		%							(250	bp)
Equity affiliates’ income	Equity affiliates’ income		$7.3		$6.2		$1.1	18	%	Equity affiliates’ income	$8.3		$7.3			$7.3			$1.0		$1.0	14		14	%
Adjusted EBITDA	Adjusted EBITDA		350.3		321.6		28.7	9	%	Adjusted EBITDA	328.3		350.3			350.3			(22.0)		(22.0)	(6		(6	%)
Adjusted EBITDA margin	Adjusted EBITDA margin		43.0	%	42.8	%		20 bp		Adjusted EBITDA margin	42.1	%			43.0		%							(90	bp)

The table below summarizes the major factors that impacted sales in the Asia segment for the periods presented:



Volume	7(1	%)
Price	—	%
~~Price~~	5		%

Energy cost pass-through to customers	31	%
Currency	(74	%)
Total Asia ~~sales change~~Sales Change	8(4	%)

Sales of ~~$813.9 increased 8%~~$779.7 decreased 4%, or ~~$62.7,~~$34.2, due to ~~higher volumes of 7%, higher pricing of 5%, and higher energy cost pass-through to customers of 3%, partially offset by~~ an unfavorable impact from currency of ~~7%. The volume improvement was primarily~~4% driven by our on-site business, including new plants brought onstream. Higher power costs across the region were recovered by our merchant pricing actions. In our on-site business, the higher power costs increased contractual energy cost pass-through to our customers. The unfavorable currency impact was primarily attributable to the strengthening of the U.S. Dollar against the Chinese Renminbi and lower volumes of 1%, partially offset by higher energy cost pass-through to customers of 1%. Volumes declined as weak economic growth in China and lower demand for merchant products more than offset higher on-site volumes, which included contributions from several new industrial gas plants. Pricing was flat versus the ~~South Korean Won.~~prior year.

Operating income of ~~$233.0 increased 14%~~$203.6 decreased 13%, or $29.4, primarily due to ~~positive pricing, net~~lower volumes, including unfavorable business mix, of ~~power~~$21 and ~~fuel costs, of $31 and higher volumes of $30, partially offset by higher costs of $17 driven by project development, higher planned maintenance, and inflation as well as~~ an unfavorable currency impact of ~~$15.~~$10, partially offset by lower costs of $5. Lower distribution costs were partially offset by labor inflation. Operating margin of ~~28.6% increased 150~~26.1% decreased 250 bp from ~~27.1%~~28.6% in the prior ~~year due to positive pricing and the volume improvement, partially offset by higher costs.~~year.

Equity affiliates’ income of ~~$7.3~~$8.3 increased ~~18%~~14%, or ~~$1.1.~~$1.0, driven by higher income from an affiliate in Thailand.

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Table of Contents

Europe


			Three Months Ended
			31 March				Changes
			2023		2022		$	%/bp
		Three Months Ended
			31 March
			31 March
			31 March															Change vs. Prior Year
		2024												2024						2023			$			%/bp
Sales	Sales		$752.9		$738.6		$14.3	2	%	Sales	$667.9		$752.9			$752.9			($85.0)		($85.0)	(11		(11	%)
Operating income	Operating income		173.2		116.4		56.8	49	%	Operating income	201.0		173.2			173.2			27.8		27.8	16		16	%
Operating margin	Operating margin		23.0	%	15.8	%		720 bp		Operating margin	30.1	%			23.0		%							710	bp
Equity affiliates’ income	Equity affiliates’ income		$29.5		$23.3		$6.2	27	%	Equity affiliates’ income	$11.7		$29.5			$29.5			($17.8)		($17.8)	(60		(60	%)
Adjusted EBITDA	Adjusted EBITDA		251.0		190.0		61.0	32	%	Adjusted EBITDA	263.5		251.0			251.0			12.5		12.5	5		5	%
Adjusted EBITDA margin	Adjusted EBITDA margin		33.3	%	25.7	%		760 bp		Adjusted EBITDA margin	39.5	%			33.3		%							620	bp

The table below summarizes the major factors that impacted sales in the Europe segment for the periods presented:



Volume	3(6	%)
Price	11(1	%)

Energy cost pass-through to customers	(6	%)
Currency	(62	%)

Total Europe ~~sales change~~Sales Change	2(11	%)

Sales of ~~$752.9 increased 2%~~$667.9 decreased 11%, or ~~$14.3,~~$85.0, due to ~~higher pricing of 11% and higher volumes of 3%, partially offset by~~ lower energy cost pass-through to customers of 6% and an unfavorable impact from currency of 6%. We successfully recovered higher costs in our merchant business through continued focus on pricing actions. The volume improvement was primarily attributable to our on-site business due to recovery in hydrogen. Energy cost pass-through to our on-site customers was lower, reflectingdriven by lower natural gas prices across the ~~region. Additionally,~~region, lower volumes of 6%, and lower pricing of 1%, partially offset by a favorable impact from currency ~~negatively~~of 2%. Volumes were lower due to weak merchant demand as well as a planned maintenance outage, which were partially offset by contributions from an on-site facility in Uzbekistan that we acquired in the third quarter of fiscal year 2023. Currency positively impacted sales primarily due to the ~~strengthening~~weakening of the U.S. Dollar against the Euro and the British Pound Sterling.

Operating income of ~~$173.2~~$201.0 increased ~~49%~~16%, or ~~$56.8, as higher~~$27.8, primarily due to pricing, net of lower power and fuel costs, of ~~$78~~$11, lower other costs of $10, and a favorable currency impact of $4. Other costs were favorable primarily due to higher ~~volumes~~income from the sale of ~~$5 were~~assets as well as lower distribution costs, partially offset by higher costs ~~of $19 driven by inflation and higher planned maintenance as well as an unfavorable currency impact of $7.~~for labor inflation. Operating margin of ~~23.0%~~30.1% increased ~~720~~710 bp from ~~15.8%~~23.0% in the prior year ~~primarily~~ due to the ~~pricing improvement, partially offset~~factors noted above as well as lower energy cost pass-through to customers, which positively impacted margin by ~~the impact of higher costs.~~approximately 200 bp, and favorable business mix.

Equity affiliates’ income of ~~$29.5 increased 27%~~$11.7 decreased 60%, or ~~$6.2,~~$17.8, driven by anprior year non-recurring items for our affiliate in Italy.

~~Middle East and India~~

Three Months Ended
31 March Changes
2023 2022 $ %
Sales $44.8 $28.9 $15.9 55 %
Operating income 1.3 4.8 (3.5) (73 %)
Equity affiliates' income 98.9 71.1 27.8 39 %
Adjusted EBITDA 106.8 82.8 24.0 29 %

~~Sales of $44.8 increased 55%, or $15.9, due to higher merchant volumes. Despite higher sales, operating income of $1.3 decreased 73%, or $3.5, primarily due to higher costs for planned maintenance.~~Equity affiliates' income of $98.9 increased 39%, or $27.8, due to a higher contribution from the JIGPC joint venture, which completed the second phase of the asset purchase associated with the Jazan gasification and power project in January 2023.

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~~Corporate~~Middle East and ~~other~~India

Three Months Ended
31 March Changes
2023 2022 $ %
Sales $215.4 $239.8 ($24.4) (10 %)
Operating loss (86.3) (38.4) (47.9) (125 %)
Adjusted EBITDA (71.2) (25.1) (46.1) (184 %)


	Three Months Ended
	31 March		Change vs. Prior Year
	2024	2023	$	%
Sales	$35.7	$44.8	($9.1)	(20	%)
Operating income	5.6	1.3	4.3	331	%
Equity affiliates' income	73.9	98.9	(25.0)	(25	%)
Adjusted EBITDA	86.2	106.8	(20.6)	(19	%)

Sales of ~~$215.4~~$35.7 decreased ~~10%~~20%, or ~~$24.4,~~$9.1, primarily due to lower volumes. Operating income of $5.6 increased $4.3 as lower costs, including planned maintenance, more than offset the lower volumes.

Equity affiliates' income of $73.9 decreased 25%, or $25.0, primarily due to higher interest and other operating costs related to the Jazan gasification and power project.

Corporate and other


	Three Months Ended
	31 March		Change vs. Prior Year
	2024	2023	$	%
Sales	$201.1	$215.4	($14.3)	(7	%)
Operating loss	(87.9)	(86.3)	(1.6)	(2	%)
Adjusted EBITDA	(69.9)	(71.2)	1.3	2	%

Sales of $201.1 decreased 7%, or $14.3, and operating loss of ~~$86.3~~$87.9 increased ~~125%~~2%, or ~~$47.9,~~$1.6, primarily due to lower ~~project activity in our~~non-LNG sale of equipment ~~business. Our Corporate and other segment also incurs costs~~activity. The negative impact to ~~provide~~operating loss was partially offset by lower corporate ~~support functions and global management activities that benefit all segments, which have increased in support of our growth strategy.~~costs.

Table of Contents

FIRST SIX MONTHS ~~2023~~2024 VS. FIRST SIX MONTHS ~~2022~~2023

FIRST SIX MONTHS ~~2023~~2024 IN SUMMARY

•Sales of ~~$6,374.8 increased~~$5,927.6 decreased 7%, or ~~$435.5,~~$447.2, as ~~higher pricing of 7%, higher volumes of 4%, and higher~~lower energy cost pass-through to customers of ~~1% were~~9% was partially offset by ~~an unfavorable impact from currency~~higher pricing of 5%1% and higher volumes of 1%.

•Operating income of ~~$1,111.8~~ $1,304.1increased 2%17%, or ~~$26.9,~~$192.3, as ~~our~~lower charges for business and asset actions, positive pricing, ~~actions~~ and higher volumes were partially offset by ~~a charge for business and asset actions related to our withdrawal from projects in Indonesia and Ukraine of $185.6,~~ higher other costs and unfavorable currency. Operating margin of ~~17.4% decreased 90~~22.0%increased 460 bp due to these factors as ~~the unfavorable costs were only partially offset by the~~well as a positive impact ~~of our pricing actions.~~from lower energy cost pass-through to customers.

•Equity affiliates' income of ~~$275.9~~ $301.7increased 3%9%, or ~~$7.3, as a~~$25.8, primarily due to higher ~~contribution~~income from ~~the JIGPC joint venture, which completed the second phase of the Jazan gasification and power project~~our affiliate in ~~January 2023, was largely offset by a prior year benefit associated with the sale of air separation units by the Jazan Gas Project Company joint venture.~~Mexico.

•Net income of ~~$1,033.7 decreased 5%~~$1,202.5increased 16%, or ~~$52.7,~~$168.8, primarily due to ~~the charge~~lower charges for business and asset actions, favorable pricing, and higher equity affiliates' income, partially offset by higher interest expense and higher other ~~costs, partially offset by the impact of our pricing actions and higher volumes.~~costs. Net income margin of ~~16.2% decreased 210 bp.~~20.3% increased 410 bp due to these factors as well as a positive impact from lower energy cost pass-through to customers.

•Adjusted EBITDA of ~~$2,234.4~~$2,372.8 increased ~~11%~~6%, or ~~$212.7,~~$138.4, and adjusted EBITDA margin of ~~35.1%~~40.0% increased ~~110~~490 bp.

•Diluted EPS of ~~$4.54 decreased 7%~~$5.30 increased 17%, or ~~$0.36~~$0.76 per ~~share,~~share. Diluted EPS for the first half of fiscal years 2024 and 2023 included ~~a $0.69~~ unfavorable ~~impact~~impacts from business and asset actions as well as ~~an unfavorable $0.14 impact from~~ non-service related pension costs. ~~Adjusted~~On a non-GAAP basis, adjusted diluted EPS of ~~$5.38~~$5.67 increased ~~12%~~5%, or ~~$0.56~~$0.29 per share. A summary table of changes in diluted EPS is presented below.

•In January ~~2023,~~2024, the Board of Directors ~~declared a~~increased the quarterly dividend ~~of $1.75~~to $1.77 per share, representing ~~an 8% increase, or $0.13 per share, from the prior quarterly dividend of $1.62 per share. This is the 41st~~our 42nd consecutive year ~~that we have increased our quarterly dividend.~~of dividend increases.

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Changes in Diluted EPS Attributable to Air Products

The per share impacts presented in the tables below were calculated independently and do not sum to the total change in diluted EPS due to rounding.

Six Months Ended
31 March Increase
2023 2022 (Decrease)
Diluted EPS $4.54 $4.90 ($0.36)
Operating Impacts
Underlying business
Volume $0.15
Price, net of variable costs 1.44
Other costs (0.56)
Currency (0.24)
Business and asset actions (0.69)
Total operating impacts $0.10
Other Impacts
Equity affiliates' income 0.03
Interest expense (0.07)
Other non-operating income/expense, net, excluding discrete item below 0.07
Non-service pension cost/benefit, net (0.22)
Change in effective tax rate (0.12)
Noncontrolling interests (0.14)
Total other impacts ($0.45)
Total change in diluted EPS ($0.36)
% Change from prior year (7 %)

Upon completion of the first phase of the Jazan gasification and power project in the first quarter of fiscal year 2022, we recognized a net benefit from the recognition of previously deferred profits, net of other project finalization costs, related to the Jazan Gas Project Company joint venture within "Equity affiliates' income." Our noncontrolling partner's share of the project finalization costs favorably impacted EPS within "Noncontrolling interests." Diluted earnings per share for the first six months of fiscal year 2022 reflects a total net benefit from this event of approximately $0.20 per share.


	Six Months Ended
	31 March		Increase
	2024	2023	(Decrease)
Diluted EPS	$5.30	$4.54	$0.76



Operating Impacts
Underlying business
Volume			$0.04
Price, net of variable costs			0.31
Other costs			(0.09)
Currency			(0.03)


Business and asset actions			0.49






Total Operating Impacts			$0.72
Other Impacts
Equity affiliates' income			$0.09

Interest expense			(0.11)
Other non-operating income/expense, net, excluding discrete item below			(0.01)
Non-service pension cost, net			(0.03)

Change in effective tax rate			0.06







Noncontrolling interests			0.03

Total Other Impacts			$0.03
Total Change in Diluted EPS			$0.76
% Change from prior year			17	%

The table below summarizes the diluted per share impact of our non-GAAP adjustments for the first six months of fiscal years ~~2023~~2024 and ~~2022:~~2023:


		Six Months Ended
		31 March		Increase
		2023	2022	(Decrease)
	Six Months Ended
		31 March
		31 March
		31 March						Increase
	2024						2024		2023	(Decrease)
Diluted EPS	Diluted EPS	$4.54	$4.90	($0.36)

Business and asset actions

Business and asset actions

Business and asset actions	Business and asset actions	0.69	—	0.69

Non-service pension cost (benefit), net		0.14	(0.08)	0.22

Non-service pension cost, net

Non-service pension cost, net

Non-service pension cost, net

Adjusted Diluted EPS

Adjusted Diluted EPS

Adjusted Diluted EPS	Adjusted Diluted EPS	$5.38	$4.82	$0.56
% Change from prior year	% Change from prior year			12	%	% Change from prior year					5	%

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FIRST SIX MONTHS ~~2023~~2024 RESULTS OF OPERATIONS

Discussion of First Six Months Consolidated Results


			Six Months Ended
			31 March				Changes
			2023		2022		$	%/bp
		Six Months Ended
			31 March
			31 March
			31 March																	Changes
		2024													2024							2023					$						%/bp
GAAP Measures	GAAP Measures
Sales
Sales
Sales	Sales		$6,374.8		$5,939.3		$435.5	7	%		$5,927.6		$6,374.8			$6,374.8				($447.2)			($447.2)		(7				(7		%)
Operating income	Operating income		1,111.8		1,084.9		26.9	2	%	Operating income		1,304.1		1,111.8				1,111.8			192.3			192.3		17					17	%
Operating margin	Operating margin		17.4	%	18.3	%		(90)	bp	Operating margin		22.0	%				17.4		%												460	bp
Equity affiliates’ income	Equity affiliates’ income		$275.9		$268.6		$7.3	3	%	Equity affiliates’ income		$301.7		$275.9				$275.9			$25.8			$25.8		9					9	%
Net income	Net income		1,033.7		1,086.4		(52.7)	(5	%)	Net income		1,202.5		1,033.7				1,033.7			168.8			168.8		16					16	%
Net income margin	Net income margin		16.2	%	18.3	%		(210)	bp	Net income margin		20.3	%				16.2		%												410	bp
Non-GAAP Measures	Non-GAAP Measures
Adjusted EBITDA	Adjusted EBITDA		$2,234.4		$2,021.7		$212.7	11	%
Adjusted EBITDA
Adjusted EBITDA												$2,372.8					$2,234.4						$138.4					6		%
Adjusted EBITDA margin	Adjusted EBITDA margin		35.1	%	34.0	%		110 bp		Adjusted EBITDA margin		40.0	%				35.1		%												490	bp

Sales

The table below summarizes the major factors that impacted consolidated sales for the periods presented:


~~Sales % Change from Prior Year~~
Volume	41	%
Price	71	%
Energy cost pass-through to customers	1(9	%)
Currency	(5—	%)

Total Consolidated Sales Change	(7	%)

Sales of ~~$6,374.8 increased~~$5,927.6 decreased 7%, or ~~$435.5, due to higher pricing of 7%, higher volumes of 4%, and higher~~$447.2, as lower energy cost pass-through to customers of ~~1%, partially offset~~9% driven by ~~an unfavorable impact from currency of 5%. The pricing improvement was primarily attributable to our merchant businesses~~lower natural gas prices in the Americas and Europe ~~segments. Higher~~segments was partially offset by higher volumes ~~were driven by~~of 1% and higher pricing of 1%. Volumes improved modestly as strong demand for hydrogen and contributions from new assets in our on-site business ~~and better demand for merchant products,~~were partially offset by ~~lower sale of equipment project activity.~~weaker merchant demand. Currency was ~~unfavorable as~~flat versus the ~~U.S. Dollar strengthened against most major currencies.~~prior year.

Cost of Sales and Gross Margin

Cost of sales of ~~$4,555.1 increased 4%~~$4,058.7 decreased 11%, or ~~$179.9,~~$496.4, due to lower energy cost pass-through to customers of $542, partially offset by higher costs associated with sales volumes of ~~$203,~~$35 and an unfavorable ~~costs of $159 driven by inflation, higher planned maintenance, and power for our merchant business, as well as higher energy cost pass-through to customers of $40, partially offset by a favorable~~ impact from currency of ~~$222.~~$11.Other costs were flat as lower power costs in our merchant business across most regions offset labor inflation and higher planned maintenance. Gross margin of ~~28.5%~~31.5% increased ~~220~~300 bp from ~~26.3%~~28.5% in the prior year primarily due to ~~the positive impact of our pricing actions, partially offset~~lower energy cost pass-through to customers, which favorably impacted margin by ~~the unfavorable costs.~~approximately 250 bp.

Selling and Administrative Expense

Selling and administrative expense of ~~$485.6 increased 6%~~$479.0decreased 1%, or ~~$25.8, primarily due to higher~~$6.6, as lower incentive compensation ~~additional costs to support growth, and inflation, partially~~was mostly offset by ~~a favorable currency impact.~~labor inflation. Selling and administrative expense as a percentage of sales ~~decreased~~increased to ~~7.6%~~8.1% from ~~7.7%~~7.6% in the prior year.

Research and Development Expense

Research and development expense of ~~$51.6 increased 10%~~$51.1decreased 1%, or ~~$4.6.~~ $0.5.Research and development expense as a percentage of sales ofincreased to 0.9% from 0.8% ~~was flat versus~~in the prior year.

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Business and Asset Actions

~~During~~Our consolidated income statements for the ~~second quarter~~six months ended 31 March 2024 and 2023 include charges of ~~fiscal year 2023, we recognized a noncash charge of~~$57.0 ($43.8 after tax, or $0.20 per share) and $185.6 ($153.7 attributable to Air Products after tax, or $0.69 per share) ~~to write off assets that were previously under construction in our Asia and Europe segments. The charge is reflected within “Business~~, respectively, for strategic business and asset ~~actions”~~actions intended to optimize costs and focus resources on our ~~consolidated income statements~~growth projects. Charges for business and ~~was~~asset actions are not recorded in segment results. ~~Refer~~

Other Income (Expense), Net

Other income of ~~$14.9 decreased 46%~~$22.3 increased 50%, or ~~$12.7, primarily due to lower~~$7.4, as higher income from the sale of assets ~~and~~was partially offset by an unfavorable foreign exchange ~~impact.~~impact from the devaluation of the Argentine peso during the first quarter.

Operating Income and Operating Margin

Operating income of ~~$1,111.8~~ $1,304.1increased 2%17%, or ~~$26.9,~~$192.3, as lower charges for business and asset actions of $129, positive pricing, net of power and fuel costs, of ~~$388~~$86, and higher volumes of ~~$41~~$11 were partially offset by ~~a charge of $186 to write off assets previously under construction in our Asia and Europe segments,~~ higher other costs of ~~$150,~~$25 and an unfavorable impact from currency ~~impact~~ of ~~$66. Higher~~$8. The higher other costs were driven by labor inflation and higher planned maintenance, ~~and~~partially offset by lower incentive compensation as well as ~~project development and other costs related to~~higher income from the ~~execution~~sale of ~~our growth strategy. Despite higher operating income, operating~~assets. Operating margin of ~~17.4% decreased 90~~22.0%increased 460 bp from ~~18.3%~~17.4% in the prior year due to the factors noted above as ~~the unfavorable costs were only partially offset~~well as lower energy cost pass-through to customers, which positively impacted margin by ~~the impact of our pricing actions.~~approximately 150 basis points.

Equity Affiliates' Income

Equity affiliates' income of ~~$275.9~~ $301.7increased 3%9%, or $7.3. A higher contribution from the JIGPC joint venture, which completed the second phase of the asset purchase associated with the Jazan gasification and power project in January 2023, was mostly offset by the prior year recognition of the remaining deferred profit associated with air separation units previously sold$25.8, primarily due to ~~Jazan Gas Project Company, net of other project finalization costs. Additionally,~~ higher income from our affiliate in ~~Italy was mostly offset by lower income from our affiliate in~~ Mexico.

Interest Expense


			Six Months Ended
			31 March
			2023	2022
			Six Months Ended
			Six Months Ended
			Six Months Ended
		31 March				31 March
		2024			2024	2023
Interest incurred	Interest incurred		$120.4	$81.4
Less: Capitalized interest	Less: Capitalized interest		38.3	18.6
Interest expense	Interest expense		$82.1	$62.8

Interest incurred increased ~~48%~~94%, or ~~$39.0, driven by~~$113.7, primarily due to a higher ~~average interest rate~~debt balance from senior notes that were issued in March 2023 and February 2024 to fund projects under our Green Finance Framework as well as borrowings on ~~variable-rate instruments in our debt portfolio.~~financing available for the NEOM Green Hydrogen Project. Capitalized interest increased ~~$19.7~~ $82.4due to a higher carrying value of projects under ~~construction.~~

Other Non-Operating Income (Expense), net

Other non-operating expense ~~was $14.5 versus income~~ of ~~$31.7 in the prior year. The decrease of $46.2 was primarily attributable to~~$24.0 increased 66%, or $9.5, as higher non-service pension costs ~~which~~ were ~~driven by higher interest cost and lower expected returns on plan assets for the U.S. salaried pension plan and the U.K. pension plan. This impact was~~ partially offset by higher interest income on cash and cash items ~~due to higher interest rates.~~and short-term investments.

Net Income and Net Income Margin

Net income of ~~$1,033.7 decreased 5%~~$1,202.5 increased 16%, or ~~$52.7,~~$168.8, primarily due to ~~higher costs, including a charge~~lower charges for business and asset actions, ~~as well as~~favorable pricing, and higher ~~non-service pension costs,~~equity affiliates' income, partially offset by higher ~~pricing, net of power and fuel costs,~~interest expense and higher ~~volumes.~~other costs. Net income margin of ~~16.2% decreased 210~~20.3% increased 410 bp from ~~18.3%~~16.2% in the prior ~~year.~~year due to these factors as well as lower energy cost pass-through to customers, which positively impacted margin by approximately 150 bp.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA of ~~$2,234.4~~$2,372.8 increased ~~11%~~6%, or ~~$212.7, primarily due to~~$138.4, as higher pricing, ~~net of power~~volumes, and ~~fuel costs, and higher volumes,~~equity affiliates' income were partially offset by higher costs. Adjusted EBITDA margin of ~~35.1%~~40.0% increased ~~110~~490 bp from ~~34.0%~~35.1% in the prior ~~year.~~year due tothese factors as well as lower energy cost pass-through to customers, which positively impacted margin by approximately 300 bp.

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Effective Tax Rate

Our effective tax rate was ~~19.9%~~18.1% and ~~17.8%~~19.9% for the six months ended 31 March 2024 and 2023, respectively. Our current quarter rate was lower primarily due to a discrete tax impact recorded in the prior year from business and ~~2022, respectively.~~asset actions further discussed below as well as earning a greater share of income in jurisdictions with lower tax rates and the impact from equity affiliates' income.

Our effective tax rate for the current year was higher primarily due to lower excess tax benefits on share-based compensation and the discrete tax impact of our business and asset actions. In addition, certain recurring income tax benefits had a lower impact on our effective tax rate in the current year as they did not increase in proportion to the increase to our annual forecast of income before taxes, which includes higher equity affiliates' income, the expiration of an income tax incentive, and earning a greater share of income in jurisdictions with higher tax rates in fiscal year 2023.

~~Our~~ adjusted effective tax rate, which ~~does not include~~excludes the impact of ~~our~~the business and asset actions discussed above as well as the non-service components of net periodic cost for our defined benefit pension plans, was ~~19.4%~~18.5% and ~~17.7%~~19.4% for the six months ended 31 March 2024 and 2023, ~~and 2022,~~ respectively. The current year rate was lower due to the higher income in jurisdictions with lower tax rates as well as the impact from equity affiliates' income.

Discussion of First Six Months Results by Business Segment

Americas


			Six Months Ended
			31 March				Changes
			2023		2022		$	%/bp
		Six Months Ended
			31 March
			31 March
			31 March															Changes
		2024												2024						2023			$			%/bp
Sales	Sales		$2,757.3		$2,410.7		$346.6	14	%	Sales	$2,497.9		$2,757.3			$2,757.3			($259.4)		($259.4)	(9		(9	%)
Operating income	Operating income		667.2		542.7		124.5	23	%	Operating income	726.3		667.2			667.2			59.1		59.1	9		9	%
Operating margin	Operating margin		24.2	%	22.5	%		170 bp		Operating margin	29.1	%			24.2		%							490	bp
Equity affiliates’ income	Equity affiliates’ income		$44.5		$54.3		($9.8)	(18	%)	Equity affiliates’ income	$81.3		$44.5			$44.5			$36.8		$36.8	83		83	%
Adjusted EBITDA	Adjusted EBITDA		1,029.4		906.0		123.4	14	%	Adjusted EBITDA	1,151.4		1,029.4			1,029.4			122.0		122.0	12		12	%
Adjusted EBITDA margin	Adjusted EBITDA margin		37.3	%	37.6	%		(30) bp		Adjusted EBITDA margin	46.1	%			37.3		%							880 bp

The table below summarizes the major factors that impacted sales in the Americas segment for the periods presented:



Volume	72	%
Price	92	%
Energy cost pass-through to customers	(113	%)
Currency	(1—	%)
Total Americas ~~sales change~~Sales Change	14(9	%)

Sales of ~~$2,757.3 increased 14%~~$2,497.9 decreased 9%, or ~~$346.6,due to higher pricing of 9% and higher volumes of 7%, partially offset by~~$259.4, as lower energy cost pass-through to customers of 1%13% driven by lower natural gas prices in North America was partially offset by higher volumes of 2% and ~~an unfavorable currency impact~~higher pricing of 1%2%. ~~We successfully recovered~~Volumes improved modestly as higher ~~costs~~demand for hydrogen in our on-site business was partially offset by weaker merchant ~~business through continued focus on pricing actions. Additionally, volumes improved primarily due to our on-site business.~~volume. Currency was flat versus the prior year.

Operating income of ~~$667.2~~$726.3 increased ~~23%~~9%, or ~~$124.5,~~$59.1, primarily due to positive pricing, net of power and fuel costs, of ~~$177~~$70 and favorable volumes of ~~$29,~~$31, partially offset by higher costs of ~~$75 and an unfavorable currency impact of $6. Higher~~$41. The higher costs were driven by higher ~~incentive compensation, inflation,~~ planned maintenance and ~~distribution and sourcing costs.~~labor inflation, partially offset by lower incentive compensation. Operating margin of ~~24.2%~~29.1% increased ~~170~~490 bp from ~~22.5%~~24.2% in the prior year ~~primarily~~ due to ~~the pricing improvement,~~these factors as well as lower energy cost pass-through to customers, which ~~was partially offset~~positively impacted margin by ~~the impact of higher costs.~~about 350 basis points.

Equity affiliates’ income of ~~$44.5 decreased 18%~~$81.3 increased 83%, or ~~$9.8,~~$36.8, driven by ~~our Mexico affiliate.~~higher income from an affiliate in Mexico.

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Asia


			Six Months Ended
			31 March				Changes
			2023		2022		$	%/bp
		Six Months Ended
			31 March
			31 March
			31 March															Changes
		2024												2024						2023			$			%/bp
Sales	Sales		$1,591.7		$1,531.6		$60.1	4	%	Sales	$1,573.5		$1,591.7			$1,591.7			($18.2)		($18.2)	(1		(1	%)
Operating income	Operating income		468.9		424.7		44.2	10	%	Operating income	414.8		468.9			468.9			(54.1)		(54.1)	(12		(12	%)
Operating margin	Operating margin		29.5	%	27.7	%		180 bp		Operating margin	26.4	%			29.5		%							(310	bp)
Equity affiliates’ income	Equity affiliates’ income		$14.7		$12.8		$1.9	15	%	Equity affiliates’ income	$12.5		$14.7			$14.7			($2.2)		($2.2)	(15		(15	%)
Adjusted EBITDA	Adjusted EBITDA		695.5		660.1		35.4	5	%	Adjusted EBITDA	655.5		695.5			695.5			(40.0)		(40.0)	(6		(6	%)
Adjusted EBITDA margin	Adjusted EBITDA margin		43.7	%	43.1	%		60 bp		Adjusted EBITDA margin	41.7	%			43.7		%							(200	bp)

The table below summarizes the major factors that impacted sales in the Asia segment for the periods presented:



Volume	7—	%
Price	31	%
Energy cost pass-through to customers	31	%
Currency	(93	%)
Total Asia ~~sales change~~Sales Change	4(1	%)

Sales of ~~$1,591.7 increased 4%~~$1,573.5 decreased 1%, or ~~$60.1,~~$18.2, due to ~~higher volumes of 7%, higher pricing of 3%, and higher energy cost pass-through to customers of 3%, partially offset by~~ an unfavorable currency impact of ~~9%. Higher volumes~~3% driven by our on-site business, including several traditional industrial gas plants that were brought onstream across the region, were partially offset by COVID-19 impacts in certain parts of China. Higher power costs across the region were recovered by our merchant pricing actions. In our on-site business, the higher power costs increased contractual energy cost pass-through to our customers. The unfavorable currency impact was primarily attributable to the strengthening of the U.S. Dollar against the Chinese Renminbi, partially offset by higher pricing of 1% and ~~the South Korean Won.~~higher energy cost pass-through to customers of 1%. Overall volumes were flat as higher volumes in our on-site business, including contributions from several new industrial gas plants, were offset by weak economic growth in China and lower demand for merchant products.

Operating income of ~~$468.9 increased 10%~~$414.8 decreased 12%, or ~~$44.2,~~$54.1, primarily due to ~~higher volumes~~unfavorable business mix of ~~$54~~$34, an unfavorable currency impact of $12, and ~~positive~~lower pricing, net of power and fuel costs, of ~~$40, partially~~$6. The cost impact was relatively flat as lower incentive compensation and distribution costs were mostly offset by ~~an unfavorable currency impact of $38~~labor inflation and higher ~~costs of $12 driven by project development, higher~~ planned ~~maintenance, and inflation.~~maintenance. Operating margin of ~~29.5% increased 180~~26.4% decreased 310 bp from ~~27.7%~~29.5% in the prior year primarily due to ~~positive pricing and the volume improvement,~~unfavorable business mix.

Equity affiliates’ income of $12.5 decreased 15%, or $2.2, ashigher maintenance expense for one of our affiliates in China was partially offset by higher ~~costs.~~

~~Equity affiliates’~~ income ~~of $14.7 increased 15%, or $1.9.~~from an affiliate in Thailand.

4850

Table of Contents

Europe


			Six Months Ended
			31 March				Changes
			2023		2022		$	%/bp
		Six Months Ended
			31 March
			31 March
			31 March															Changes
		2024												2024						2023			$			%/bp
Sales	Sales		$1,544.8		$1,482.8		$62.0	4	%	Sales	$1,399.1		$1,544.8			$1,544.8			($145.7)		($145.7)	(9		(9	%)
Operating income	Operating income		319.0		215.6		103.4	48	%	Operating income	398.6		319.0			319.0			79.6		79.6	25		25	%
Operating margin	Operating margin		20.6	%	14.5	%		610 bp		Operating margin	28.5	%			20.6		%							790	bp
Equity affiliates’ income	Equity affiliates’ income		$47.2		$37.2		$10.0	27	%	Equity affiliates’ income	$32.4		$47.2			$47.2			($14.8)		($14.8)	(31		(31	%)
Adjusted EBITDA	Adjusted EBITDA		458.8		352.9		105.9	30	%	Adjusted EBITDA	530.0		458.8			458.8			71.2		71.2	16		16	%
Adjusted EBITDA margin	Adjusted EBITDA margin		29.7	%	23.8	%		590 bp		Adjusted EBITDA margin	37.9	%			29.7		%							820	bp

The table below summarizes the major factors that impacted sales in the Europe segment for the periods presented:



Volume	(12	%)
Price	12(2	%)
Energy cost pass-through to customers	2(13	%)
Currency	4	%
~~Currency~~Total Europe Sales Change	(9	%)

~~Total Europe sales change~~	4	%

Sales of ~~$1,544.8 increased 4%~~$1,399.1 decreased 9%, or ~~$62.0,~~$145.7, due to ~~higher pricing of 12% and higher~~lower energy cost pass-through to customers of 13% driven by lower natural gas prices across the region and lower pricing of 2%, partially offset by ~~an unfavorable~~a favorable impact from currency of 9%4% and ~~lower~~higher volumes of 1%2%. We successfully recovered higher costs in our merchant business through continued focus on pricing actions. Despite a decline in natural gas prices during the second quarter, energy costs remained elevated versus the prior year, which increased energy cost pass-through to our on-site customers. Currency ~~negatively~~positively impacted sales primarily due to the ~~strengthening~~weakening of the U.S. Dollar against the ~~Euro and the British Pound Sterling. Additionally, volumes declined slightly due to lower demand for hydrogen and merchant products~~Euro. The volume improvement was driven by contribution from an on-site facility in Uzbekistan that we acquired in the ~~first quarter.~~third quarter of fiscal year 2023, which was partially offset by lower merchant demand.

Operating income of ~~$319.0~~$398.6 increased ~~48%~~25%, or ~~$103.4, as~~$79.6, due to higher volumes of $53, pricing, net of lower power and fuel costs, of ~~$167 was~~$24, and a favorable impact from currency of $13, partially offset by higher costs of ~~$26~~$10. The higher costs were driven by labor inflation and higher planned maintenance, ~~an unfavorable currency impact~~partially offset by income from the sale of ~~$19,~~assets and lower ~~volumes of $19.~~distribution costs. Operating margin of ~~20.6%~~28.5% increased ~~610~~790 bp from ~~14.5%~~20.6% in the prior year ~~primarily~~ due to the ~~pricing improvement, partially offset~~factors noted above as well as lower energy cost pass-through to customers, which positively impacted margin by ~~the impact of higher costs and lower volumes.~~about 300 bp.

Equity affiliates’ income of ~~$47.2 increased 27%~~$32.4 decreased 31%, or ~~$10.0,~~$14.8, driven by anprior year non-recurring items for our affiliate in Italy.

Middle East and India


			Six Months Ended
			31 March		Changes
			2023	2022	$	%
		Six Months Ended
			31 March
			31 March
			31 March										Changes
		2024									2024				2023			$			%
Sales	Sales		$86.2	$52.6	$33.6	64	%	Sales	$71.1	$86.2		$86.2		($15.1)		($15.1)	(18		(18	%)
Operating income	Operating income		8.0	9.6	(1.6)	(17	%)	Operating income	9.5	8.0		8.0		1.5		1.5	19		19	%
Equity affiliates' income	Equity affiliates' income		163.0	163.4	(0.4)	—	%	Equity affiliates' income	166.8	163.0		163.0		3.8		3.8	2		2	%
Adjusted EBITDA	Adjusted EBITDA		184.2	186.0	(1.8)	(1	%)	Adjusted EBITDA	189.6	184.2		184.2		5.4		5.4	3		3	%

Sales of ~~$86.2 increased 64%~~$71.1 decreased 18%, or ~~$33.6,driven by higher merchant volumes, including contributions from a small acquisition completed in January 2022.~~$15.1, primarily due to lower volumes. Despite ~~higher~~lower sales, operating income of ~~$8.0 decreased 17%~~$9.5 increased 19%, or ~~$1.6,~~$1.5, primarily due to ~~higher~~lower costs, ~~for~~including planned maintenance.

~~In January 2023, we made an additional investment in the JIGPC joint venture, which completed~~Equity affiliates' income of $166.8 increased 2%, or $3.8, as a higher contribution from JIGPC's completion of the second phase of the asset purchase ~~associated with~~in January 2023 was partially offset by higher interest and other operating costs related to the Jazan gasification and power project. Despite a higher contribution from JIGPC, equity affiliates' income of $163.0 decreased $0.4 primarily due to a prior year net benefit recognized for the remaining deferred profit associated with air separation units previously sold to Jazan Gas Project Company, net of other project finalization costs.

4951

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Corporate and other


			Six Months Ended
			31 March		Changes
			2023	2022	$	%
		Six Months Ended
			31 March
			31 March
			31 March										Changes
		2024									2024				2023			$			%
Sales	Sales		$394.8	$461.6	($66.8)	(14	%)	Sales	$386.0	$394.8		$394.8		($8.8)		($8.8)	(2		(2	%)
Operating loss	Operating loss		(165.7)	(107.7)	(58.0)	(54	%)	Operating loss	(188.1)	(165.7)		(165.7)		(22.4)		(22.4)	(14		(14	%)
Adjusted EBITDA	Adjusted EBITDA		(133.5)	(83.3)	(50.2)	(60	%)	Adjusted EBITDA	(153.7)	(133.5)		(133.5)		(20.2)		(20.2)	(15		(15	%)

Sales of ~~$394.8~~$386.0 decreased ~~14%~~2%, or ~~$66.8,~~$8.8, and operating loss of ~~$165.7~~$188.1 increased ~~54%~~14%, or ~~$58.0,~~$22.4, primarily due to lower ~~project activity in our~~non-LNG sale of equipment ~~business. Our Corporate and other segment also incurs costs~~activity. The negative impact to ~~provide~~operating loss was partially offset by lower corporate ~~support functions and global management activities that benefit all segments, which have increased in support of our growth strategy.~~costs.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

(Millions of U.S. Dollars unless otherwise indicated, except for per share data)

We present certain financial measures, other than in accordance with U.S. generally accepted accounting principles ("GAAP"), on an "adjusted" or "non-GAAP" basis. On a consolidated basis, these measures include adjusted diluted earnings per share ("EPS"), adjusted EBITDA, adjusted EBITDA margin, the adjusted effective tax rate, and capital expenditures. On a segment basis, these measures include adjusted EBITDA and adjusted EBITDA margin. In addition to these measures, we also present certain supplemental non-GAAP financial measures to help the reader understand the impact that certain disclosed items, or "non-GAAP adjustments," have on the calculation of our adjusted diluted EPS. For each non-GAAP financial measure, we present a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP.

In many cases, non-GAAP financial measures are determined by adjusting the most directly comparable GAAP measure to exclude non-GAAP adjustments that we believe are not representative of our underlying business performance. For example, we exclude the impact of the non-service components of net periodic benefit/cost for our defined benefit pension ~~plans~~plans. Non-service related components are recurring, non-operating items that include interest cost, expected returns on plan assets, prior service cost amortization, actuarial loss amortization, as ~~further discussed below. Additionally, we~~well as special termination benefits, curtailments, and settlements. The net impact of non-service related components is reflected within “Other non-operating income (expense), net” on our consolidated income statements. Adjusting for the impact of non-service pension components provides management and users of our financial statements with a more accurate representation of our underlying business performance because these components are driven by factors that are unrelated to our operations, such as volatility in equity and debt markets. Further, non-service related components are not indicative of our defined benefit plans’ future contribution needs due to the funded status of the plans. We may also exclude certain expenses associated with cost reduction actions, impairment charges, and gains on disclosed transactions. The reader should be aware that we may recognize similar losses or gains in the future.

When applicable, the tax impact of our pre-tax non-GAAP adjustments reflects the expected current and deferred income tax impact of our non-GAAP adjustments. These tax impacts are primarily driven by the statutory tax rate of the various relevant jurisdictions and the taxability of the adjustments in those jurisdictions.

We provide these non-GAAP financial measures to allow investors, potential investors, securities analysts, and others to evaluate the performance of our business in the same manner as our management. We believe these measures, when viewed together with financial results computed in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our historical financial performance and projected future results. However, we caution readers not to consider these measures in isolation or as a substitute for the most directly comparable measures calculated in accordance with GAAP. Readers should also consider the limitations associated with these non-GAAP financial measures, including the potential lack of comparability of these measures from one company to another.

Table of Contents

~~NON-GAAP ADJUSTMENT FOR NON-SERVICE PENSION COST (BENEFIT), NET~~

Effective beginning in the first quarter of fiscal year 2023, our adjusted EPS and the adjusted effective tax rate exclude the impact of non-service related components of net periodic benefit/cost for our defined benefit pension plans. The prior year non-GAAP financial measures presented below have been recast accordingly to conform to the fiscal year 2023 presentation. Non-service related components are recurring, non-operating items that include interest cost, expected returns on plan assets, prior service cost amortization, actuarial loss amortization, as well as special termination benefits, curtailments, and settlements. The net impact of non-service related components is reflected within “Other non-operating income (expense), net” on our consolidated income statements. Adjusting for the impact of non-service pension components provides management and users of our financial statements with a more accurate representation of our underlying business performance because these components are driven by factors that are unrelated to our operations, such as recent changes to the allocation of our pension plan assets associated with de-risking as well as volatility in equity and debt markets. Further, non-service related components are not indicative of our defined benefit plans’ future contribution needs due to the funded status of the plans.

ADJUSTED DILUTED EPS

The table below provides a reconciliation to the most directly comparable GAAP measure for each of the major components used to calculate adjusted diluted EPS from continuing operations, which we view as a key performance metric. In periods that we have non-GAAP adjustments, we believe it is important for the reader to understand the per share impact of each such adjustment because management does not consider these impacts when evaluating underlying business performance. Per share impacts are calculated independently and may not sum to total diluted EPS and total adjusted diluted EPS due to rounding.

Three Months Ended 31 March
Q2 2023 vs. Q2 2022 Operating
Income Equity
Affiliates'
Income Other Non-Operating Income/Expense, Net Income Tax
Provision Net Income
Attributable to Air Products Diluted
EPS
Q2 2023 GAAP $459.8 $165.9 ($13.9) $121.0 $439.8 $1.97
Q2 2022 GAAP 561.9 120.8 9.1 122.7 530.5 2.38
$ Change GAAP ($0.41)
% Change GAAP (17 %)
Q2 2023 GAAP $459.8 $165.9 ($13.9) $121.0 $439.8 $1.97
Business and asset actions(A)
185.6 — — 26.9 153.7 0.69
Non-service pension cost, net — — 22.9 5.7 17.2 0.08
Q2 2023 Non-GAAP ("Adjusted") $645.4 $165.9 $9.0 $153.6 $610.7 $2.74
Q2 2022 GAAP $561.9 $120.8 $9.1 $122.7 $530.5 $2.38
Non-service pension benefit, net — — (11.9) (2.9) (9.0) (0.04)
Q2 2022 Non-GAAP ("Adjusted") $561.9 $120.8 ($2.8) $119.8 $521.5 $2.34
$ Change Non-GAAP ("Adjusted") $0.40
% Change Non-GAAP ("Adjusted") 17 %
(A ) Charge includes $5.0 attributable to noncontrolling interests.


	Three Months Ended 31 March
Q2 2024 vs. Q2 2023	Operating Income	Equity Affiliates' Income	Other Non-Operating Income/Expense, Net	Income Tax Provision	Net Income Attributable to Air Products	Diluted EPS
Q2 2024 GAAP	$637.2	$143.3	($9.2)	$130.5	$572.4	$2.57
Q2 2023 GAAP	459.8	165.9	(13.9)	121.0	439.8	1.97
$ Change GAAP						$0.60
% Change GAAP						30	%

Q2 2024 GAAP	$637.2	$143.3	($9.2)	$130.5	$572.4	$2.57


Business and asset actions	57.0	—	—	13.2	43.8	0.20









Non-service pension cost, net	—	—	25.1	6.2	18.9	0.08








Q2 2024 Non-GAAP ("Adjusted")	$694.2	$143.3	$15.9	$149.9	$635.1	$2.85

Q2 2023 GAAP	$459.8	$165.9	($13.9)	$121.0	$439.8	$1.97


Business and asset actions(A)	185.6	—	—	26.9	153.7	0.69









Non-service pension cost, net	—	—	22.9	5.7	17.2	0.08








Q2 2023 Non-GAAP ("Adjusted")	$645.4	$165.9	$9.0	$153.6	$610.7	$2.74
$ Change Non-GAAP ("Adjusted")						$0.11
% Change Non-GAAP ("Adjusted")						4	%

(A)Charge includes $5.0 attributable to noncontrolling interests.



	Six Months Ended 31 March
2024 vs. 2023	Operating Income	Equity Affiliates' Income	Other Non-Operating Income/Expense, Net	Income Tax Provision	Net Income Attributable to Air Products	Diluted EPS
2024 GAAP	$1,304.1	$301.7	($24.0)	$265.9	$1,181.7	$5.30
2023 GAAP	1,111.8	275.9	(14.5)	257.4	1,012.0	4.54
$ Change GAAP						$0.76
% Change GAAP						17	%

2024 GAAP	$1,304.1	$301.7	($24.0)	$265.9	$1,181.7	$5.30


Business and asset actions	57.0	—	—	13.2	43.8	0.20









Non-service pension cost, net	—	—	50.0	12.4	37.6	0.17








2024 Non-GAAP ("Adjusted")	$1,361.1	$301.7	$26.0	$291.5	$1,263.1	$5.67

2023 GAAP	$1,111.8	$275.9	($14.5)	$257.4	$1,012.0	$4.54


Business and asset actions(A)	185.6	—	—	26.9	153.7	0.69









Non-service pension cost, net	—	—	42.4	10.6	31.8	0.14








2023 Non-GAAP ("Adjusted")	$1,297.4	$275.9	$27.9	$294.9	$1,197.5	$5.38
$ Change Non-GAAP ("Adjusted")						$0.29
% Change Non-GAAP ("Adjusted")						5	%

(A ) Charge includes $5.0 attributable to noncontrolling interests.

~~Table of Contents~~

Six Months Ended 31 March
2023 vs. 2022 Operating
Income Equity
Affiliates'
Income Other Non-Operating Income/Expense, Net Income Tax
Provision Net Income
Attributable to Air Products Diluted
EPS
2023 GAAP $1,111.8 $275.9 ($14.5) $257.4 $1,012.0 $4.54
2022 GAAP 1,084.9 268.6 31.7 236.0 1,090.9 4.90
$ Change GAAP ($0.36)
% Change GAAP (7 %)
2023 GAAP $1,111.8 $275.9 ($14.5) $257.4 $1,012.0 $4.54
Business and asset actions(A)
185.6 — — 26.9 153.7 0.69
Non-service pension cost, net — — 42.4 10.6 31.8 0.14
2023 Non-GAAP ("Adjusted") $1,297.4 $275.9 $27.9 $294.9 $1,197.5 $5.38
2022 GAAP $1,084.9 $268.6 $31.7 $236.0 $1,090.9 $4.90
Non-service pension benefit, net — — (23.9) (5.8) (18.1) (0.08)
2022 Non-GAAP ("Adjusted") $1,084.9 $268.6 $7.8 $230.2 $1,072.8 $4.82
$ Change Non-GAAP ("Adjusted") $0.56
% Change Non-GAAP ("Adjusted") 12 %
(A ) Charge includes $5.0 attributable to noncontrolling interests.

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ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

We define adjusted EBITDA as net income less income from discontinued operations, net of tax, and excluding non-GAAP adjustments, which we do not believe to be indicative of underlying business trends, before interest expense, other non-operating income (expense), net, income tax provision, and depreciation and amortization expense. Adjusted EBITDA and adjusted EBITDA margin provide useful metrics for management to assess operating performance. Margins are calculated independently for each period by dividing each line item by consolidated sales for the respective period and may not sum to total margin due to rounding.

The ~~tables~~table below ~~present~~presents consolidated sales and a reconciliation of net income on a GAAP basis to adjusted EBITDA and net income margin on a GAAP basis to adjusted EBITDA margin:


		Three Months Ended 31 March						Six Months Ended 31 March
		2023			2022			2023			2022
		$	Margin		$	Margin		$	Margin		$	Margin
	Three Months Ended 31 March																											Three Months Ended 31 March													Six Months Ended 31 March
	2024																				2024								2023								2024								2023
	$																			$	Margin							$	Margin							$	Margin							$	Margin
Sales	Sales	$3,200.1			$2,945.1			$6,374.8			$5,939.3

Net income and net income margin	Net income and net income margin	$449.9	14.1	%	$536.8	18.2	%	$1,033.7	16.2	%	$1,086.4	18.3	%

Net income and net income margin

Net income and net income margin															$580.9			19.8		%			$449.9			14.1		%			$1,202.5			20.3		%			$1,033.7			16.2		%

Add: Interest expense
Add: Interest expense
Add: Interest expense	Add: Interest expense	40.9	1.3	%	32.3	1.1	%	82.1	1.3	%	62.8	1.1	%	59.9		2.0	2.0	%				40.9		1.3	1.3	%				113.4		1.9	1.9	%				82.1		1.3	1.3	%
Less: Other non-operating income (expense), net	Less: Other non-operating income (expense), net	(13.9)	(0.4	%)	9.1	0.3	%	(14.5)	(0.2	%)	31.7	0.5	%	Less: Other non-operating income (expense), net	(9.2)			(0.3	(0.3	%)			(13.9)			(0.4	(0.4	%)			(24.0)			(0.4	(0.4	%)			(14.5)			(0.2	(0.2	%)
Add: Income tax provision	Add: Income tax provision	121.0	3.8	%	122.7	4.2	%	257.4	4.0	%	236.0	4.0	%	Add: Income tax provision	130.5			4.5	4.5	%			121.0			3.8	3.8	%			265.9			4.5	4.5	%			257.4			4.0	4.0	%
Add: Depreciation and amortization	Add: Depreciation and amortization	339.6	10.6	%	335.9	11.4	%	661.1	10.4	%	668.2	11.3	%	Add: Depreciation and amortization	360.8			12.3	12.3	%			339.6			10.6	10.6	%			710.0			12.0	12.0	%			661.1			10.4	10.4	%
Add: Business and asset actions	Add: Business and asset actions	185.6	5.8	%	—	—	%	185.6	2.9	%	—	—	%	Add: Business and asset actions	57.0			1.9	1.9	%			185.6			5.8	5.8	%			57.0			1.0	1.0	%			185.6			2.9	2.9	%

Adjusted EBITDA and adjusted EBITDA margin	Adjusted EBITDA and adjusted EBITDA margin	$1,150.9	36.0	%	$1,018.6	34.6	%	$2,234.4	35.1	%	$2,021.7	34.0	%

Adjusted EBITDA and adjusted EBITDA margin

Adjusted EBITDA and adjusted EBITDA margin															$1,198.3			40.9		%			$1,150.9			36.0		%			$2,372.8			40.0		%			$2,234.4			35.1		%

Change GAAP

Change GAAP

Change GAAP	Change GAAP
Net income $ change	Net income $ change	($86.9)						($52.7)
Net income $ change
Net income $ change
Net income % change
Net income % change
Net income % change	Net income % change	(16%)						(5%)
Net income margin change	Net income margin change	(410) bp						(210) bp
Net income margin change
Net income margin change
Change Non-GAAP
Change Non-GAAP
Change Non-GAAP	Change Non-GAAP
Adjusted EBITDA $ change	Adjusted EBITDA $ change	$132.3						$212.7
Adjusted EBITDA $ change
Adjusted EBITDA $ change
Adjusted EBITDA % change
Adjusted EBITDA % change
Adjusted EBITDA % change	Adjusted EBITDA % change	13%						11%
Adjusted EBITDA margin change	Adjusted EBITDA margin change	140 bp						110 bp
Adjusted EBITDA margin change
Adjusted EBITDA margin change

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The tables below present sales and a reconciliation of operating income and operating margin by segment to adjusted EBITDA and adjusted EBITDA margin by segment for the three and six months ended 31 March ~~2023~~2024 and ~~2022:~~2023:

Americas


		Three Months Ended							Six Months Ended
		31 March				Changes vs. Prior Year			31 March				Changes vs. Prior Year
		2023		2022		$	%/bp		2023		2022		$	%/bp
	Three Months Ended																														Three Months Ended													Six Months Ended
	31 March																							31 March									Change vs. Prior Year									31 March								Change vs. Prior Year
	2024																					2024		2023							$		%/bp							2024		2023					$			%/bp
Sales	Sales	$1,373.1		$1,186.6		$186.5	16	%	$2,757.3		$2,410.7		$346.6	14	%	Sales	$1,245.8			$1,373.1	$1,373.1		($127.3)				($127.3)			(9	(9	%)				$2,497.9			$2,757.3	$2,757.3		($259.4)		($259.4)			(9	(9	%)

Operating income
Operating income
Operating income	Operating income	$324.2		$275.5		$48.7	18	%	$667.2		$542.7		$124.5	23	%	$371.9		$324.2	$324.2			$47.7			$47.7			15	15	%				$726.3			$667.2	$667.2			$59.1		$59.1		9	9	%
Operating margin	Operating margin	23.6	%	23.2	%		40 bp		24.2	%	22.5	%		170 bp		Operating margin	29.9		%	23.6		%										630	bp					29.1		%	24.2	%									490	bp

Reconciliation of GAAP to Non-GAAP:	Reconciliation of GAAP to Non-GAAP:
Reconciliation of GAAP to Non-GAAP:
Reconciliation of GAAP to Non-GAAP:
Operating income
Operating income
Operating income	Operating income	$324.2		$275.5					$667.2		$542.7
Add: Depreciation and amortization	Add: Depreciation and amortization	161.7		153.7					317.7		309.0
Add: Depreciation and amortization
Add: Depreciation and amortization
Add: Equity affiliates' income
Add: Equity affiliates' income
Add: Equity affiliates' income	Add: Equity affiliates' income	28.1		20.1					44.5		54.3
Adjusted EBITDA	Adjusted EBITDA	$514.0		$449.3		$64.7	14	%	$1,029.4		$906.0		$123.4	14	%
Adjusted EBITDA
Adjusted EBITDA																	$590.2			$514.0						$76.2			15		%				$1,151.4			$1,029.4					$122.0		12		%
Adjusted EBITDA margin	Adjusted EBITDA margin	37.4	%	37.9	%		(50) bp		37.3	%	37.6	%		(30) bp		Adjusted EBITDA margin	47.4		%	37.4		%										1,000	bp					46.1		%	37.3	%									880	bp

Asia


		Three Months Ended							Six Months Ended
		31 March				Changes vs. Prior Year			31 March				Changes vs. Prior Year
		2023		2022		$	%/bp		2023		2022		$	%/bp
	Three Months Ended																														Three Months Ended													Six Months Ended
	31 March																							31 March									Change vs. Prior Year									31 March								Changes vs. Prior Year
	2024																					2024		2023							$		%/bp							2024		2023					$			%/bp
Sales	Sales	$813.9		$751.2		$62.7	8	%	$1,591.7		$1,531.6		$60.1	4	%	Sales	$779.7			$813.9	$813.9		($34.2)				($34.2)			(4	(4	%)				$1,573.5			$1,591.7	$1,591.7		($18.2)		($18.2)			(1	(1	%)

Operating income
Operating income
Operating income	Operating income	$233.0		$203.6		$29.4	14	%	$468.9		$424.7		$44.2	10	%	$203.6		$233.0	$233.0			($29.4)			($29.4)			(13	(13	%)				$414.8			$468.9	$468.9			($54.1)		($54.1)		(12	(12	%)
Operating margin	Operating margin	28.6	%	27.1	%		150 bp		29.5	%	27.7	%		180 bp		Operating margin	26.1		%	28.6		%										(250	bp)					26.4		%	29.5	%									(310	bp)

Reconciliation of GAAP to Non-GAAP:	Reconciliation of GAAP to Non-GAAP:
Reconciliation of GAAP to Non-GAAP:
Reconciliation of GAAP to Non-GAAP:
Operating income
Operating income
Operating income	Operating income	$233.0		$203.6					$468.9		$424.7
Add: Depreciation and amortization	Add: Depreciation and amortization	110.0		111.8					211.9		222.6
Add: Depreciation and amortization
Add: Depreciation and amortization
Add: Equity affiliates' income
Add: Equity affiliates' income
Add: Equity affiliates' income	Add: Equity affiliates' income	7.3		6.2					14.7		12.8
Adjusted EBITDA	Adjusted EBITDA	$350.3		$321.6		$28.7	9	%	$695.5		$660.1		$35.4	5	%
Adjusted EBITDA
Adjusted EBITDA																	$328.3			$350.3						($22.0)			(6		%)				$655.5			$695.5					($40.0)		(6		%)
Adjusted EBITDA margin	Adjusted EBITDA margin	43.0	%	42.8	%		20 bp		43.7	%	43.1	%		60 bp		Adjusted EBITDA margin	42.1		%	43.0		%										(90	bp)					41.7		%	43.7	%									(200	bp)

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Europe


		Three Months Ended							Six Months Ended
		31 March				Changes vs. Prior Year			31 March				Changes vs. Prior Year
		2023		2022		$	%/bp		2023		2022		$	%/bp
	Three Months Ended																														Three Months Ended													Six Months Ended
	31 March																							31 March									Change vs. Prior Year									31 March								Changes vs. Prior Year
	2024																					2024		2023							$		%/bp							2024		2023					$			%/bp
Sales	Sales	$752.9		$738.6		$14.3	2	%	$1,544.8		$1,482.8		$62.0	4	%	Sales	$667.9			$752.9	$752.9		($85.0)				($85.0)			(11	(11	%)				$1,399.1			$1,544.8	$1,544.8		($145.7)		($145.7)			(9	(9	%)

Operating income
Operating income
Operating income	Operating income	$173.2		$116.4		$56.8	49	%	$319.0		$215.6		$103.4	48	%	$201.0		$173.2	$173.2			$27.8			$27.8			16	16	%				$398.6			$319.0	$319.0			$79.6		$79.6		25	25	%
Operating margin	Operating margin	23.0	%	15.8	%		720	bp	20.6	%	14.5	%		610 bp		Operating margin	30.1		%	23.0		%										710	bp					28.5		%	20.6	%									790	bp

Reconciliation of GAAP to Non-GAAP:	Reconciliation of GAAP to Non-GAAP:
Reconciliation of GAAP to Non-GAAP:
Reconciliation of GAAP to Non-GAAP:
Operating income
Operating income
Operating income	Operating income	$173.2		$116.4					$319.0		$215.6
Add: Depreciation and amortization	Add: Depreciation and amortization	48.3		50.3					92.6		100.1
Add: Depreciation and amortization
Add: Depreciation and amortization
Add: Equity affiliates' income
Add: Equity affiliates' income
Add: Equity affiliates' income	Add: Equity affiliates' income	29.5		23.3					47.2		37.2
Adjusted EBITDA	Adjusted EBITDA	$251.0		$190.0		$61.0	32	%	$458.8		$352.9		$105.9	30	%
Adjusted EBITDA
Adjusted EBITDA																	$263.5			$251.0						$12.5			5		%				$530.0			$458.8					$71.2		16		%
Adjusted EBITDA margin	Adjusted EBITDA margin	33.3	%	25.7	%		760	bp	29.7	%	23.8	%		590 bp		Adjusted EBITDA margin	39.5		%	33.3		%										620	bp					37.9		%	29.7	%									820	bp

Middle East and India


		Three Months Ended					Six Months Ended
		31 March		Changes vs. Prior Year			31 March		Changes vs. Prior Year
		2023	2022	$	%/bp		2023	2022	$	%/bp
	Three Months Ended																						Three Months Ended										Six Months Ended
	31 March																	31 March							Change vs. Prior Year						31 March							Changes vs. Prior Year
	2024															2024		2023					$		%/bp					2024	2023				$			%/bp
Sales	Sales	$44.8	$28.9	$15.9	55	%	$86.2	$52.6	$33.6	64	%	Sales	$35.7	$44.8	$44.8		($9.1)			($9.1)		(20	(20	%)			$71.1		$86.2	$86.2	($15.1)		($15.1)		(18	(18	%)

Operating income	Operating income	$1.3	$4.8	($3.5)	(73	%)	$8.0	$9.6	($1.6)	(17	%)

Operating income
Operating income													$5.6	$1.3					$4.3		331		%			$9.5		$8.0				$1.5		19	%
Reconciliation of GAAP to Non-GAAP:	Reconciliation of GAAP to Non-GAAP:
Operating income	Operating income	$1.3	$4.8				$8.0	$9.6
Operating income
Operating income
Add: Depreciation and amortization
Add: Depreciation and amortization
Add: Depreciation and amortization	Add: Depreciation and amortization	6.6	6.9				13.2	13.0
Add: Equity affiliates' income	Add: Equity affiliates' income	98.9	71.1				163.0	163.4
Add: Equity affiliates' income
Add: Equity affiliates' income
Adjusted EBITDA	Adjusted EBITDA	$106.8	$82.8	$24.0	29	%	$184.2	$186.0	($1.8)	(1	%)
Adjusted EBITDA
Adjusted EBITDA													$86.2	$106.8					($20.6)		(19		%)			$189.6		$184.2				$5.4		3	%

Corporate and other


		Three Months Ended					Six Months Ended
		31 March		Changes vs. Prior Year			31 March		Changes vs. Prior Year
		2023	2022	$	%/bp		2023	2022	$	%/bp
	Three Months Ended																						Three Months Ended										Six Months Ended
	31 March																	31 March							Change vs. Prior Year						31 March							Changes vs. Prior Year
	2024															2024		2023					$		%/bp					2024	2023				$			%/bp
Sales	Sales	$215.4	$239.8	($24.4)	(10	%)	$394.8	$461.6	($66.8)	(14	%)	Sales	$201.1	$215.4	$215.4		($14.3)			($14.3)		(7	(7	%)			$386.0		$394.8	$394.8	($8.8)		($8.8)		(2	(2	%)

Operating loss	Operating loss	($86.3)	($38.4)	($47.9)	(125	%)	($165.7)	($107.7)	($58.0)	(54	%)

Operating loss
Operating loss													($87.9)	($86.3)					($1.6)		(2		%)			($188.1)		($165.7)				($22.4)		(14	%)
Reconciliation of GAAP to Non-GAAP:	Reconciliation of GAAP to Non-GAAP:
Operating loss	Operating loss	($86.3)	($38.4)				($165.7)	($107.7)
Operating loss
Operating loss
Add: Depreciation and amortization
Add: Depreciation and amortization
Add: Depreciation and amortization	Add: Depreciation and amortization	13.0	13.2				25.7	23.5
Add: Equity affiliates' income	Add: Equity affiliates' income	2.1	0.1				6.5	0.9
Add: Equity affiliates' income
Add: Equity affiliates' income
Adjusted EBITDA	Adjusted EBITDA	($71.2)	($25.1)	($46.1)	(184	%)	($133.5)	($83.3)	($50.2)	(60	%)
Adjusted EBITDA
Adjusted EBITDA													($69.9)	($71.2)					$1.3		2		%			($153.7)		($133.5)				($20.2)		(15	%)

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Table of Contents

ADJUSTED EFFECTIVE TAX RATE

The effective tax rate equals the income tax provision divided by income before taxes. We calculate our adjusted effective tax rate by adjusting the numerator and denominator to exclude the tax and before tax impacts of our non-GAAP adjustments, respectively. The table below presents a reconciliation of the GAAP effective tax rate to our adjusted effective tax rate:


		Three Months Ended 31 March				Six Months Ended 31 March
		Three Months Ended 31 March
		Three Months Ended 31 March
		Three Months Ended 31 March													Six Months Ended 31 March
		2023		2022		2023		2022			2024		2023		2024		2023
Income tax provision	Income tax provision	$121.0		$122.7		$257.4		$236.0
Income before taxes	Income before taxes	570.9		659.5		1,291.1		1,322.4
Effective tax rate	Effective tax rate	21.2	%	18.6	%	19.9	%	17.8	%	Effective tax rate	18.3	%	21.2	%	18.1	%	19.9	%

Income tax provision	Income tax provision	$121.0		$122.7		$257.4		$236.0

Income tax provision

Business and asset actions		26.9		—		26.9		—
Income tax provision
Business and asset actions tax impact

Non-service pension tax impact	Non-service pension tax impact	5.7		(2.9)		10.6		(5.8)

Non-service pension tax impact
Non-service pension tax impact

Adjusted income tax provision	Adjusted income tax provision	$153.6		$119.8		$294.9		$230.2

Income before taxes		$570.9		$659.5		$1,291.1		$1,322.4

Business and asset actions		185.6		—		185.6		—
Non-service pension (benefit) cost, net		22.9		(11.9)		42.4		(23.9)

Adjusted income tax provision

Adjusted income tax provision

Income before taxes
Income before taxes
Income before taxes

Business and asset actions
Business and asset actions
Business and asset actions
Non-service pension cost, net

Adjusted income before taxes

Adjusted income before taxes

Adjusted income before taxes	Adjusted income before taxes	$779.4		$647.6		$1,519.1		$1,298.5
Adjusted effective tax rate	Adjusted effective tax rate	19.7	%	18.5	%	19.4	%	17.7	%	Adjusted effective tax rate	18.9	%	19.7	%	18.5	%	19.4	%

CAPITAL EXPENDITURES

WeCapital expenditures is a non-GAAP financial measure that we define ~~capital expenditures~~ as the sum of cash flows for additions to plant and equipment, including long-term deposits, acquisitions (less cash acquired), ~~and~~ investment in and advances to unconsolidated affiliates, and investment in financing receivables on our consolidated ~~statement~~statements of cash flows. ~~Beginning in the second quarter of fiscal year 2023,~~Additionally, we ~~also~~ adjust ~~capital expenditures~~additions to plant and equipment to exclude NEOM Green Hydrogen Company (“NGHC”) ~~spending reflected in “Additions to plant and equipment, including long-term deposits” that is ultimately~~expenditures funded ~~through~~by the joint venture's non-recourse project financing as well as our ~~partners'~~partners’ equity contributions to ~~NGHC as well as non-recourse project financing incurred by NGHC. We believe adjusting for NGHC expenditures not funded by Air Products' equity to~~ arrive at ~~capital expenditures provides users~~a measure that we believe is more representative of our ~~financial statements with a better understanding of~~investment activities. Substantially all the ~~investment on which~~funding we ~~expect~~provide to ~~make a return.~~NGHC is limited for use by the venture for capital expenditures.

A reconciliation of cash used for investing activities to our reported capital expenditures is provided below:


			Six Months Ended
			31 March
			2023	2022
			Six Months Ended
			Six Months Ended
			Six Months Ended
		31 March				31 March
		2024			2024	2023
Cash used for investing activities	Cash used for investing activities		$2,476.0	$2,635.8
Proceeds from sale of assets and investments	Proceeds from sale of assets and investments		7.2	25.3
Purchases of investments	Purchases of investments		(290.5)	(909.4)
Proceeds from investments	Proceeds from investments		611.6	1,391.4
Other investing activities	Other investing activities		(51.2)	6.5
NGHC expenditures not funded by Air Products' equity			(335.3)	—
NGHC expenditures not funded by Air Products' equity(A)
Capital expenditures	Capital expenditures		$2,417.8	$3,149.6

(A)Reflects the portion of "Additions to plant and equipment, including long-term deposits" that is associated with NGHC, less our approximate cash investment in the joint venture.

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Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

~~Our~~We believe we have sufficient cash, ~~balance and~~ cash flows from operations, ~~are our primary~~and funding sources ~~of liquidity and are generally sufficient~~ to meet our liquidity needs. ~~In addition,~~As further discussed in the "Cash Flows From Financing Activities" section below, we have the ~~flexibility~~ability to ~~access~~raise capital through a variety of financing activities, including accessing ~~the~~ capital or commercial paper markets or drawing upon our credit facility, or alternatively, accessing the commercial paper markets. During the second quarter of fiscal year 2023, we issued U.S. Dollar- and Euro-denominated fixed-rate notes with aggregate principal amounts of $600 and €700 million, respectively, under our new Green Finance Framework. We intend to use the net proceeds to finance or refinance, in whole or in part, existing or future projects that are expected to have environmental benefits, including those related to pollution prevention and control, renewable energy generation and procurement, and sustainable aviation fuel. At this time, we have not utilized, nor do we expect to access, our credit facility for additional liquidity.facilities.

As of 31 March ~~2023,~~2024, we had ~~$1,122.5~~$1,333.0 of foreign cash and cash items compared to total cash and cash items of ~~$2,242.4.~~$2,535.0. We do not expect that a significant portion of the earnings of our foreign subsidiaries and affiliates will be subject to U.S. income tax upon repatriation to the U.S. Depending on the country in which the subsidiaries and affiliates reside, the repatriation of these earnings may be subject to foreign withholding and other taxes. However, since we have significant current investment plans outside the U.S., it is our intent to permanently reinvest the majority of our foreign cash and cash items that would be subject to additional taxes outside the U.S.

Cash Flows From Operations


Six Months Ended 31 March		2023		2022

				Six Months Ended
				Six Months Ended
				Six Months Ended
			31 March			31 March
			2024		2024	2023
Net income attributable to Air Products	Net income attributable to Air Products	$1,012.0		$1,090.9

Adjustments to reconcile income to cash provided by operating activities:
Adjustments to reconcile income to cash provided by operating activities:
Adjustments to reconcile income to cash provided by operating activities:	Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	661.1		668.2
Depreciation and amortization
Depreciation and amortization
Deferred income taxes	Deferred income taxes	29.0		51.3
Business and asset actions

Business and asset actions		185.6		—
Undistributed earnings of equity method investments
Undistributed earnings of equity method investments
Undistributed earnings of equity method investments	Undistributed earnings of equity method investments	(78.1)		(200.8)
Gain on sale of assets and investments	Gain on sale of assets and investments	(3.9)		(11.8)
Share-based compensation	Share-based compensation	31.2		26.5
Noncurrent lease receivables	Noncurrent lease receivables	39.5		43.9

Other adjustments

Other adjustments	Other adjustments	70.9		(101.0)

Other adjustments
Changes in working capital accounts	Changes in working capital accounts	(589.3)		(262.2)

Cash Provided by Operating Activities	Cash Provided by Operating Activities	$1,358.0		$1,305.0

For the first six months of fiscal year 2024, cash provided by operating activities was $1,428.3. We recorded a charge of $57.0 for the accrual of severance and other postemployment benefits. Refer to Note 4, Business and Asset Actions, to the consolidated financial statements for additional information. The working capital accounts were a use of cash of $486.1. A use of cash of $301.0 within "Payables and accrued liabilities" primarily resulted from payments for incentive compensation under the fiscal year 2023 plan, a reduction of customer advances for sale of equipment projects as we recognized revenue, and a reduction of liabilities associated with accrued utilities. The use of cash of $111.7 within "Other working capital" primarily related to the timing of tax payments. The use of cash of $72.7 within "Inventories" primarily related to purchases of helium. The use of cash of $31.6 within "Other receivables" primarily related to the payment of value added taxes incurred in the construction of our larger projects for which we will claim a refund in the near term.

For the first six months of fiscal year 2023, cash provided by operating activities was $1,358.0. Business and asset actions of $185.6 included noncash charges to write-down the full carrying value of assets previously under construction in our Asia and Europe segments. ~~Refer to Note 4,~~ ~~Business and Asset Actions, to the consolidated financial statements for additional information.~~ Other adjustments of $70.9 primarily included adjustments for noncash currency impacts of intercompany balances. The working capital accounts were a use of cash of $589.3, primarily driven by $451.3 from payables and accrued liabilities, $124.7 from other working capital, and $112.3 from inventory, partially offset by a source of cash of $162.0 from trade receivables, less allowances. The use of cash within payables and accrued liabilities primarily resulted from the impact of lower prices for the purchase of natural gas, a decrease in value of derivatives that hedge intercompany loans, and payments for incentive compensation under the fiscal year 2022 plan. The use of cash within other working capital primarily relates to the timing of income tax payments. The source of cash within trade receivables includes lower natural gas costs contractually passed through to customers.

For the first six months of fiscal year 2022, cash provided by operating activities was $1,305.0. The working capital accounts were a use of cash of $262.2, primarily driven by a use of cash of $203.1 from trade receivables, less allowances, $138.7 from other working capital, and $57.3 from inventory partially offset by a source of cash of $123.1 from payables and accrued liabilities. The source of cash within payables and accrued liabilities primarily resulted from customer advances for sale of equipment projects and higher natural gas costs, which also impacted the use of cash within trade receivables as we contractually passed through these higher costs to customers. The use of cash within other working capital primarily relates to contract fulfillment costs and the timing of income tax payments.

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Table of Contents

Cash Flows From Investing Activities


Six Months Ended 31 March		2023		2022
				Six Months Ended
				Six Months Ended
				Six Months Ended
			31 March			31 March
			2024		2024	2023
Additions to plant and equipment, including long-term deposits	Additions to plant and equipment, including long-term deposits	($1,841.1)		($1,433.6)
Acquisitions, less cash acquired		—		(65.1)

Investment in and advances to unconsolidated affiliates	Investment in and advances to unconsolidated affiliates	(912.0)		(1,650.9)
Investment in and advances to unconsolidated affiliates
Investment in and advances to unconsolidated affiliates
Investment in financing receivables
Proceeds from sale of assets and investments	Proceeds from sale of assets and investments	7.2		25.3
Purchases of investments	Purchases of investments	(290.5)		(909.4)
Proceeds from investments	Proceeds from investments	611.6		1,391.4

Other investing activities
Other investing activities
Other investing activities	Other investing activities	(51.2)		6.5
Cash Used for Investing Activities	Cash Used for Investing Activities	($2,476.0)		($2,635.8)

For the first six months of fiscal year 2024, cash used for investing activities was $3,226.0. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $3,114.9 and an investment in financing receivables of $392.4. Refer to the "Capital Expenditures" section below for further detail. Proceeds from investments of $367.4 resulted from maturities of time deposits and treasury securities with terms greater than three months but less than one year and exceeded purchases of investments of $136.4.

For the first six months of fiscal year 2023, cash used for investing activities was $2,476.0. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $1,841.1 ~~and~~as well as investment in and advances to unconsolidated affiliates of ~~$912.0. Refer to~~$912.0, which primarily included our investment in the ~~Capital Expenditures~~ ~~section below for further detail.~~second phase of the Jazan gasification and power project. Proceeds from investments of $611.6 resulted from maturities of time deposits and treasury securities with terms greater than three months but less than one year and exceeded purchases of investments of $290.5.

For the first six months of fiscal year 2022, cash used for investing activities was $2,635.8. Capital expenditures primarily included $1,650.9 for investment in and advances to unconsolidated affiliates and $1,433.6 for additions to plant and equipment. Proceeds from investments of $1,391.4 resulted from maturities of time deposits and treasury securities with terms greater than three months but less than one year and exceeded purchases of investments of $909.4.

Capital Expenditures

We define capital expenditures as cash flows for additions to plant and equipment, including long-term deposits, acquisitions (less cash acquired), and investment in and advances to unconsolidated affiliates on our consolidated statement of cash flows. Beginning in the second quarter of fiscal year 2023, we also adjust capital expenditures to exclude NEOM Green Hydrogen Company (“NGHC”) spending reflected in “Additions to plant and equipment, including long-term deposits” that is ultimately funded through our partners' equity contributions to NGHC as well as non-recourse project financing incurred by NGHC. The components of our capital expenditures are detailed in the table below. ~~We also present~~Refer to page 57 for a ~~reconciliation~~definition of ~~our capital expenditures~~this non-GAAP financial measure as well as a reconciliation to cash used for investing ~~activities on page~~ 56.activities.

Six Months Ended
31 March
2023 2022
Additions to plant and equipment $1,841.1 $1,433.6
Acquisitions, less cash acquired — 65.1
Investment in and advances to unconsolidated affiliates 912.0 1,650.9
NGHC expenditures not funded by Air Products' equity (335.3) —
Capital Expenditures $2,417.8 $3,149.6


	Six Months Ended
	31 March
	2024	2023
Additions to plant and equipment, including long-term deposits	$3,114.9	$1,841.1

Investment in and advances to unconsolidated affiliates	—	912.0
Investment in financing receivables	392.4	—
NGHC expenditures not funded by Air Products' equity(A)	(836.2)	(335.3)
Capital Expenditures	$2,671.1	$2,417.8

(A)Reflects the portion of "Additions to plant and equipment, including long-term deposits" that is associated with NGHC, less our approximate cash investment in the joint venture.

Capital expenditures for the first six months of fiscal year ~~2023~~2024 totaled ~~$2,417.8~~$2,671.1 compared to ~~$3,149.6~~$2,417.8 for the first six months of fiscal year ~~2022.~~2023. The ~~prior year included our initial~~ investment in financing receivables of ~~$1.6 billion~~$392.4 primarily reflects payments associated with the purchase of renewable fuel assets from World Energy as well as the purchase of a natural gas-to-syngas processing facility in JIGPC, which included approximately $130 from a noncontrolling partner in one of our subsidiaries, in the first quarter of fiscal year 2022. In the second quarter of fiscal year 2023, we made an additional investment of $908 toward the second phase of the Jazan gasification and power project. This investment included $73 received from our noncontrolling partner. We expect to complete a remaining investment of approximately $115 later this calendar year.Uzbekistan. Refer to Note 7,3, ~~Equity Affiliates~~Variable Interest Entities, and Note 16, Supplemental Information, to the consolidated financial statements, respectively, for additional information.

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Outlook for Investing Activities

It is not possible, without unreasonable efforts, to reconcile our forecasted capital expenditures to future cash used for investing activities because we are unable to identify the timing or occurrence of our future investment activity, which is driven by our assessment of competing opportunities at the time we enter into transactions. These decisions, either individually or in the aggregate, could have a significant effect on our cash used for investing activities.

We continue to expect capital expenditures for fiscal year ~~2023~~2024 to be approximately $5$5.0 billion to $5.5 billion.

Cash Flows From Financing Activities


Six Months Ended 31 March		2023		2022
				Six Months Ended
				Six Months Ended
				Six Months Ended
			31 March			31 March
			2024		2024	2023
Long-term debt proceeds	Long-term debt proceeds	$1,891.6		$87.5
Payments on long-term debt	Payments on long-term debt	(596.0)		(400.0)
Net (decrease) increase in commercial paper and short-term borrowings		(16.3)		210.9
Decrease in commercial paper and short-term borrowings

Dividends paid to shareholders	Dividends paid to shareholders	(719.2)		(664.7)
Dividends paid to shareholders
Dividends paid to shareholders

Proceeds from stock option exercises
Proceeds from stock option exercises
Proceeds from stock option exercises	Proceeds from stock option exercises	17.1		14.4
Investments by noncontrolling interests	Investments by noncontrolling interests	72.8		3.6

Other financing activities	Other financing activities	(46.6)		(37.3)
Cash Provided by (Used for) Financing Activities		$603.4		($785.6)
Other financing activities
Other financing activities
Cash Provided by Financing Activities

For the first six months of fiscal year 2024, cash provided by financing activities was $2,712.5. The source of cash was primarily driven by long-term debt proceeds of $3,649.0, which was largely attributable to U.S. Dollar-denominated green bonds totaling $2.5 billion that were issued during the second quarter of fiscal year 2024 under our Green Finance Framework as well as borrowings from project financing associated with the NGHC joint venture, partially offset by dividend payments to shareholders of $777.9.

For the first six months of fiscal year 2023, cash provided by financing activities was $603.4. The source of cash was primarily driven by long-term debt proceeds of $1,891.6, which was largely attributable to multi-currency green bonds totaling $1.4 billion that were issued during the second quarter of fiscal year 2023 under our Green Finance Framework. These proceeds were partially offset by dividend payments to shareholders of $719.2 and payments on long-term debt of $596.0. ~~Refer to the~~ ~~Credit Facilities~~ ~~section below and Note 11,~~ ~~Debt, to the consolidated financial statements for additional information.~~

For the first six months of fiscal year 2022, cash used for financing activities was $785.6. The use of cash was primarily driven by dividend payments to shareholders of $664.7 and payments on long-term debt of $400.0 for the repayment of a 3.0% Senior Note. These uses of cash were partially offset by short-term borrowings and long-term debt proceeds of $210.9 and $87.5, respectively.

Financing and Capital Structure

Debt

~~Capital needs in the first six months of fiscal year 2023 were satisfied with our cash balance, cash from operations and long-term borrowings.~~ Total debt increased from ~~$7,644.8~~$10,305.8 as of 30 September ~~2022~~2023 to ~~$9,140.9~~$13,621.7 as of 31 March ~~2023,~~2024 primarily due to ~~U.S. Dollar- and Euro-denominated fixed-rate~~the $2.5 billion issuance of senior notes ~~that were issued~~intended for projects defined under our Green Finance Framework as well as additional borrowings under the project financing associated with the NEOM Green Hydrogen Project as discussed in Note 3, Variable Interest Entities, to the ~~second quarter of fiscal year 2023.~~consolidated financial statements. Total debt includes related party debt of ~~$822.1~~$289.8 and ~~$781.0~~$328.3 as of 31 March ~~2023~~2024 and 30 September ~~2022,~~2023, respectively.

Various debt agreements to which we are a party include financial covenants and other restrictions, including restrictions pertaining to the ability to create property liens and enter into certain sale and leaseback transactions. As of 31 March ~~2023,~~2024, we ~~are~~were in compliance with all of the financial and other covenants under our debt agreements.

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Credit Facilities

~~We have~~In March 2024, we entered into a five-year ~~$2,750~~$3.0 billion revolving credit agreement maturing 31 March ~~2026 with a syndicate of banks~~2029 (the ~~“2021~~“2024 Credit Agreement”)~~, under which~~ as well as a 364-day $500 revolving credit agreement maturing 27 March 2025 that we have the ability to convert into a term loan maturing 27 March 2026. Both agreements are syndicated facilities that provide a source of liquidity and support our commercial paper program through availability of senior unsecured debt ~~is available~~ to us and certain of our subsidiaries. The 2021 Credit Agreement provides a source of liquidity and supports our commercial paper program. The only financial covenant in the 2021 Credit Agreement is a maximum ratio of total debt to total capitalization (equal to total debt plus total equity) not to exceed 70%. Total debt asAs of 31 March ~~2023 and 30 September 2022, expressed as a percentage~~2024, no borrowings were outstanding under either agreement. The 2024 Credit Agreement replaced our previous $2.75 billion revolving credit agreement (the “2021 Credit Agreement”), which was terminated upon execution of ~~total capitalization, was 38.4% and 35.8%, respectively.~~the 2024 Credit Agreement. No borrowings were outstanding under the 2021 Credit Agreement asat the time of ~~31 March 2023.~~

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its termination, and no early termination penalties were incurred.

We also have credit facilities available to certain of our foreign subsidiaries totaling ~~$1,324.4,~~$1,241.6, of which ~~$823.5~~$1,080.7 was borrowed and outstanding as of 31 March ~~2023.~~2024. The amount borrowed and outstanding as of 30 September ~~2022~~2023 was ~~$457.5. The increase from 30 September 2022 was driven by borrowings on a new variable-rate Saudi Riyal loan facility that matures in October 2026. The interest rate on the facility~~$1,041.4.

NEOM Green Hydrogen Project Financing

In May 2023, NGHC secured non-recourse project financing of approximately $6.1 billion, which is ~~based on the Saudi Arabian Interbank Offered Rate ("SAIBOR") plus an annual margin of 1.35%. We entered into this facility in October 2022 and utilized a portion~~expected to fund approximately 73% of the ~~proceeds~~NEOM Green Hydrogen Project and will be drawn over the construction period. At the same time, NGHC secured additional non-recourse credit facilities totaling approximately $500 primarily for working capital needs. As of 31 March 2024, the joint venture had borrowed short- and long-term principal amounts totaling $2.5 billion compared to ~~repay a variable-rate 4.10% Saudi Riyal Loan Facility of $195.6, which was presented within long-term debt on our consolidated balance sheet~~$1.4 billion as of 30 September ~~2022.~~

~~Equity Securities~~

~~On 15 September 2011,~~2023. Refer to Note 3, Variable Interest Entities, to the Board of Directors authorized the repurchase of up to $1,000 of our outstanding common stock. We did not purchase any of our outstanding shares in the first six months of fiscal years 2023 or 2022. As of 31 March 2023, $485.3 in share repurchase authorization remained.consolidated financial statements for additional information.

Dividends

The Board of Directors determines whether to declare cash dividends on our common stock and the timing and amount based on financial condition and other factors it deems relevant. Dividends are paid quarterly, usually during the sixth week after the close of the fiscal quarter. ~~We expect to continue to pay cash dividends in the future at comparable or increased levels.~~

~~On 26~~In January ~~2023,~~2024, the Board of Directors ~~declared a~~increased the quarterly dividend ~~of $1.75~~to $1.77 per share, representing ~~an 8% increase, or $0.13 per share, from the prior quarterly~~our 42nd consecutive year of dividend ~~of $1.62 per share.~~increases. The new dividend was declared on 25 January 2024 and is payable on 813 May ~~2023~~2024 to shareholders of record at the close of business on 31 April ~~2023. This is the 41~~st ~~consecutive year that we have increased our quarterly dividend.~~2024.

PENSION BENEFITS

We and certain of our subsidiaries sponsor defined benefit pension plans and defined contribution plans that cover a substantial portion of our worldwide employees. The principal defined benefit pension plans are the U.S. salaried pension plan and the U.K. pension plan. These plans were closed to new participants in 2005, after which defined contribution plans were offered to new employees. The shift to defined contribution plans is expected to continue to reduce volatility of both plan expense and contributions. For additional information, refer to Note ~~12,~~11, Retirement Benefits, to the consolidated financial statements.

Net Periodic Cost ~~(Benefit)~~

The table below summarizes the components of net periodic cost ~~(benefit)~~ for our U.S. and international defined benefit pension plans:


		Three Months Ended		Six Months Ended
		31 March		31 March
		2023	2022	2023	2022
		Three Months Ended
		Three Months Ended
		Three Months Ended
		31 March
		31 March
		31 March
		2024
		2024
		2024
Service cost
Service cost
Service cost	Service cost	$5.8	$10.2	$11.8	$20.4

Non-service related cost (benefit)		22.9	(11.9)	42.4	(23.9)
Non-service cost

Non-service cost

Non-service cost
Other	Other	0.2	0.2	0.5	1.0
Net Periodic Cost (Benefit)		$28.9	($1.5)	$54.7	($2.5)
Other
Other
Net Periodic Cost
Net Periodic Cost
Net Periodic Cost

Net periodic cost was $30.4 and $60.6 for the three and six months ended 31 March 2024, respectively. Net periodic cost was $28.9 and $54.7 for the three and six months ended 31 March 2023, ~~respectively, versus a benefit of $1.5 and $2.5 for the three and six months ended 31 March 2022,~~ respectively. The increased costs ~~from~~versus the prior year were primarily attributable to ~~higher~~ non-service costs, which were driven by ~~higher interest cost and~~ lower expected returns on plan assets due to a smaller beginning balance of plan ~~assets. Fiscal year 2023 non-service items also include~~assets and higher interest cost, partially offset by a ~~$1.9 curtailment gain recorded~~decrease in ~~the first quarter for the write-off of prior service credits in an amended international defined benefit pension plan.~~actuarial loss amortization. Non-service related components of net periodic cost ~~(benefit)~~ are reflected within "Other non-operating income (expense), net" on our consolidated income statements.

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Service costs result from benefits earned by active employees and are reflected as operating expenses primarily within "Cost of sales" and "Selling and administrative expense" on our consolidated income statements. The amount of service costs capitalized in the first six months of fiscal years ~~2023~~2024 and ~~2022~~2023 was not material.

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Company Contributions

Management considers various factors when making pension funding decisions, including tax, cash flow, and regulatory implications. For the six months ended 31 March ~~2023~~2024 and ~~2022,~~2023, our cash contributions to funded pension plans and benefit payments for unfunded pension plans were ~~$15.4~~$19.2 and ~~$16.1,~~$15.4, respectively.

Total contributions for fiscal year ~~2023~~2024 are expected to be approximately ~~$25~~$35 to ~~$35.~~$45. During fiscal year ~~2022,~~2023, total contributions were ~~$44.7.~~$32.6.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A description of our major accounting policies, including those that we consider to be the most critical to understanding our financial statements, is included in our ~~2022~~2023 Form 10-K. There were no changes to our accounting policies during the first six months of fiscal year ~~2023.~~2024.

Management’s Discussion and Analysis of our financial condition and results of operations is based on the consolidated financial statements and accompanying notes that have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates reflect our best judgment about current and/or future economic and market conditions and their effect based on information available as of the date of our consolidated financial statements. If conditions change, actual results may differ materially from these estimates.

Judgments and estimates of uncertainties are required to apply our accounting policies in many areas. However, application of policies that management has identified as critical places significant importance on management’s judgment, often as the result of the need to make estimates about the effects of matters that are inherently uncertain. ~~As discussed in Note 4,~~ ~~Business and Asset Actions, to~~During the ~~consolidated financial statements, we concluded that we will not proceed with certain projects in Indonesia and Ukraine and wrote down the full carrying value~~first six months of ~~related assets. Additionally,~~fiscal year 2024, we recorded changes to project cost estimates on certain sale of equipment projects that are accounted for under the cost incurred input method. Accordingly, we recorded a cumulative effect ~~adjustment~~adjustments that unfavorably impacted operating income by approximately $35 and ~~$60~~$65 for the three and six months ended 31 March ~~2023.~~2024, respectively. There were no other changes to our estimates during the first six months of fiscal year ~~2023~~2024 that had a significant impact on our financial condition, change in financial condition, liquidity, or results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information on our utilization of financial instruments and an analysis of the sensitivity of these instruments to selected changes in market rates and prices is included in our ~~2022~~2023 Form 10-K.

Our net financial instrument position increased from a liability of ~~$6,898.6~~$8,990.8 at 30 September ~~2022~~2023 to a liability of ~~$8,453.1~~$12,823.3 at 31 March ~~2023.~~2024. The increase was primarily due to the issuance of ~~U.S. Dollar- and Euro-denominated fixed-rate~~green senior notes ~~during~~as well as additional borrowings under the ~~second quarter of fiscal year 2023.~~project financing associated with the NEOM Green Hydrogen Project as discussed in Note 3, Variable Interest Entities, to the consolidated financial statements.

Interest Rate Risk

Our debt portfolio as of 31 March 2024, including the effect of currency and interest rate swap agreements, was composed of 86% fixed-rate debt and 14% variable-rate debt. Our debt portfolio as of 30 September 2023, including the effect of currency and interest rate swap agreements, was composed of 80% fixed-rate debt and 20% variable-rate debt. The increase in fixed-rate debt was primarily driven by the issuance of green senior notes during February 2024.

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The sensitivity analysis related to the interest rate risk on the fixed portion of our debt portfolio assumes an instantaneous 100 bp parallel move in interest rates from the level at 31 March ~~2023,~~2024, with all other variables held constant. A 100 bp increase in market interest rates would result in a decrease of ~~$490~~$1,000 and ~~$364~~$728 in the net liability position of financial instruments at 31 March ~~2023~~2024 and 30 September ~~2022,~~2023, respectively. A 100 bp decrease in market interest rates would result in an increase of ~~$566~~$1,155 and ~~$425~~$845 in the net liability position of financial instruments at 31 March ~~2023~~2024 and 30 September ~~2022,~~2023, respectively. The increased principal associated with the issuance of U.S. Dollar- and Euro-denominated fixed-rate notes during the second quarter of fiscal year 2023 created a higher sensitivity to market interest rates.

There were no material changes to the sensitivity analysis related to the variable portion of our debt portfolio since 30 September ~~2022.~~

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2023.

Foreign Currency Exchange Rate Risk

The sensitivity analysis related to foreign currency exchange rates assumes an instantaneous 10% change in the foreign currency exchange rates from their levels at 31 March ~~2023,~~2024, with all other variables held constant. A 10% strengthening or weakening of the functional currency of an entity versus all other currencies would result in a decrease or increase, respectively, of ~~$255~~$331 and ~~$165~~$308 in the net liability position of financial instruments at 31 March ~~2023~~2024 and 30 September ~~2022,~~2023, respectively. ~~The increase in sensitivity is primarily due to the issuance of Euro-denominated fixed-rate notes during the second quarter of fiscal year 2023.~~

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain a comprehensive set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Under the supervision of the Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures as of 31 March ~~2023.~~2024. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of 31 March ~~2023,~~2024, our disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended 31 March ~~2023~~2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

In March 2024, a Texas state court entered final judgment in our favor in litigation involving disputed energy management charges related to Winter Storm Uri, a severe winter weather storm that impacted the U.S. Gulf Coast in February 2021. The judgment is subject to appeal and had no impact on our consolidated financial statements during the second quarter and first six months of fiscal year 2024.

Item 5. Other Information

None of the Company’s directors or Section 16 reporting officers adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K) during the second quarter of fiscal year 2024.

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~~PART II—OTHER INFORMATION~~

Item 6. ~~Exhibits.~~Exhibits

(a) Exhibits required by Item 601 of Regulation S-K


	Exhibit No.	Description

	~~(4)~~(10)	~~Instruments defining the rights of securities holders, including indentures~~Material Contracts

	10.1		5-Year Revolving Credit Agreement dated as of March 28, 2024 for $3,000,000,000.

	10.2	~~4.1~~364-Day Revolving Credit Agreement dated as of March 28, 2024 for $500,000,000.

	10.3	Indenture, dated as of April 30, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated herein by reference to Exhibit 4.1 to the ~~Company's~~Company’s Current Report on Form 8-K filed on April 30, ~~April~~ 2020).

	~~4.2~~10.4	Form of Officer’s Certificate setting forth the terms and forms of the ~~4.800% U.S.~~Company’s 4.600% Notes due ~~2033~~2029, 4.750% Notes due 2031 and 4.850% Notes due 2034 (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on ~~3 March 2023)~~February 8, 2024).

	~~4.3~~10.5	Form of ~~Officer’s Certificate setting forth the terms and forms of the 4.000% Euro~~4.600% Notes due ~~2035 (incorporated herein by reference to~~2029 (included in Exhibit ~~4.3 to the Company’s Current Report on Form 8-K, filed on 3 March 2023)~~10.4).

	~~4.4~~10.6	Form of ~~4.800% U.S.~~4.750% Notes due ~~2033~~2031 (included in Exhibit ~~4.2)~~10.4).

	~~4.5~~10.7	Form of ~~4.000% Euro~~4.850% Notes due ~~2035~~2034 (included in Exhibit ~~4.3)~~10.4).

	~~(10)~~	~~Material Contracts~~





	(31)	Rule 13a-14(a)/15d-14(a) Certifications

	31.1	Certification by the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	Certification by the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	(32)	Section 1350 Certifications

	32.1	Certification by the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. †

	(101)	Interactive Data Files

	101.INS	Inline XBRL Instance Document. The XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

	101.SCH	Inline XBRL Taxonomy Extension Schema Document.

	101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

	101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.

	101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

	101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.

	104	Cover Page Interactive Data File, formatted in Inline XBRL (included in Exhibit 101).



†	The certification attached as Exhibit 32.1 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Air Products and Chemicals, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						Air Products and Chemicals, Inc.
			(Registrant)

			By:			/s/ Melissa N. Schaeffer
						Melissa N. Schaeffer Senior Vice President and Chief Financial Officer (Principal Financial Officer)

			Date:			~~9 May 2023~~30 April 2024

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	Fiscal Year Maturities	31 March 2023
Payable in U.S. Dollars
Note 4.800%	2033	$600.0
Payable in Euros
Eurobonds 4.000%	2035	758.8
Total		$1,358.8


	Three Months Ended 31 March
Q2 2023 vs. Q2 2022	Operating Income	Equity Affiliates' Income	Other Non-Operating Income/Expense, Net	Income Tax Provision	Net Income Attributable to Air Products	Diluted EPS
Q2 2023 GAAP	$459.8	$165.9	($13.9)	$121.0	$439.8	$1.97
Q2 2022 GAAP	561.9	120.8	9.1	122.7	530.5	2.38
$ Change GAAP						($0.41)
% Change GAAP						(17	%)

Q2 2023 GAAP	$459.8	$165.9	($13.9)	$121.0	$439.8	$1.97

Business and asset actions(A)	185.6	—	—	26.9	153.7	0.69












Non-service pension cost, net	—	—	22.9	5.7	17.2	0.08







Q2 2023 Non-GAAP ("Adjusted")	$645.4	$165.9	$9.0	$153.6	$610.7	$2.74

Q2 2022 GAAP	$561.9	$120.8	$9.1	$122.7	$530.5	$2.38













Non-service pension benefit, net	—	—	(11.9)	(2.9)	(9.0)	(0.04)







Q2 2022 Non-GAAP ("Adjusted")	$561.9	$120.8	($2.8)	$119.8	$521.5	$2.34
$ Change Non-GAAP ("Adjusted")						$0.40
% Change Non-GAAP ("Adjusted")						17	%

(A ) Charge includes $5.0 attributable to noncontrolling interests.



	Six Months Ended 31 March
2023 vs. 2022	Operating Income	Equity Affiliates' Income	Other Non-Operating Income/Expense, Net	Income Tax Provision	Net Income Attributable to Air Products	Diluted EPS
2023 GAAP	$1,111.8	$275.9	($14.5)	$257.4	$1,012.0	$4.54
2022 GAAP	1,084.9	268.6	31.7	236.0	1,090.9	4.90
$ Change GAAP						($0.36)
% Change GAAP						(7	%)

2023 GAAP	$1,111.8	$275.9	($14.5)	$257.4	$1,012.0	$4.54
Business and asset actions(A)	185.6	—	—	26.9	153.7	0.69
Non-service pension cost, net	—	—	42.4	10.6	31.8	0.14


















2023 Non-GAAP ("Adjusted")	$1,297.4	$275.9	$27.9	$294.9	$1,197.5	$5.38

2022 GAAP	$1,084.9	$268.6	$31.7	$236.0	$1,090.9	$4.90


















Non-service pension benefit, net	—	—	(23.9)	(5.8)	(18.1)	(0.08)
2022 Non-GAAP ("Adjusted")	$1,084.9	$268.6	$7.8	$230.2	$1,072.8	$4.82
$ Change Non-GAAP ("Adjusted")						$0.56
% Change Non-GAAP ("Adjusted")						12	%

(A ) Charge includes $5.0 attributable to noncontrolling interests.