APD - Earnings call transcript Q4 2018 | Air Products and Chemicals, Inc.

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Operator

Good morning and welcome to the Air Products & Chemicals Fourth Quarter Earnings Release Conference Call. Today's call is being recorded at the request of Air Products. Please note that this presentation and the comments made on behalf of Air Products are subject to copyright by Air Products and all rights are reserved. Beginning today's call, Mr. Simon Moore, Vice President of Investor Relations. ahead. go Please

Simon R. Moore

joined Good quarter April. Moore, Welcome Air to to President Chairman, Ghasemi, Sean Scott and and Secretary. Thank earnings morning, pleased comments, will our and After Financial CEO; results President to fourth Chief be pleased President, be I'm questions. XXXX our our Investor Crocco, President Executive take Simon by Vice teleconference. Vice Executive and Products Seifi of our you, Relations. everyone. today Officer; This Vice Major, Counsel your General is we

and are our disclosure in release Please that website earnings refer the on airproducts.com. X. found be earnings Our slides release for call at statement can available and this to on forward-looking the number our slide

the call turn Seifi. to to over pleased I'm Now,

Seifollah Ghasemi

everyone. your Air interest call for morning Simon, us joining you, our in appreciate good and today. Thank do Thank you We to Products. on

For of the at year, delivered team the Products another talented, and motivated and safety the committed, quarter and excellent financial set Air results.

adjusted year of EPS XX%. is history earnings share full year double-digit Our up growth. and annual Air Products' of the in fourth $X.XX This consecutive highest is our per

everybody XXth last reported adjusted Our up this versus of to earnings per per year. quarterly year-on-year consecutive the that remind I'd $X earnings $X.XX is quarter that like have is share record quarterly we growth. share

about industrial in the company XX%. gas world be profitable EBITDA We most to an margin and continue of safest the with

about to $XX $XXX that position investors of in the grow a of cash into financial per almost industry. Air strongest commit to over our significant or million and this to year distributable We the have via capital to generated share future. dividend. returned flow allows of XX% We our This us amount continue Products

committed India, complex team in in history continues completing the value and and And the day Products stay our dedicated, projects most a the ability and mega customers team shareholders. to industry, who hard projects have our Arabia, United execute most importantly, people States. great focused create Saudi at on for of China successfully Our talented of to our largest and their we every serve working Air to prove

to turn number please slide X. Now,

company We continue in our when employees reduction XX% These recordable providing to most the happen to around for injury of time XX,XXX a world in a and goal be lost with and results continuous safety number of excellent can On you reduction to injury most rate our the are our our safety all improve improvement. diverse, to slide results XX% safest, X, can the our service rate. of world see in company the industrial gas customers. and committed profitable our only

Now, number X. please turn slide to

have to You But allocation, continue and worth un-empowered four we can and is management decentralized to the you our on see value, it overall talked over years. times focused be last that many we because repeating shareholder about philosophy organization. capital

see fiscal including core numbers, on of let billion just M&A. but tremendous $X.X industrial I sustaining to our spent projects onsite gas business business. Now, deploy our please about provide operational X. in you growth performance. focused our take a progress. Scott quick value-creating primarily opportunities This that number you in quarter. to last through me lead our safety turn We will in in In remain We the our Five-Point shared have Plan with have updated the on is projects you and capital XXXX, overview we slide year

future our billion already addition, we to investment committed remaining have on more In spend than opportunity. $X

next and we have rating. available investible our that billion debt current capacity invest, the targeted I At to our heard four many to almost rating, Scott we believe including have remaining over You committed and years. times that debt balance we today managing emphasized are to AaX cash maintain flow $XX

is year our we about already year spent is progress five-year committed to over period of have fiscal our minds feels and available $XX our fiscal This every attitude the XXXX I next everyone far of So, purpose and confident projects and create further And that work environment do meaning ability total we speed, is are our the point and committed finally, XXXX. XS for deploy they brings our so to to half And to high-return and working plan confident, billion positive simplicity, to an repeat, day. into or continue to people great motivated of industrial contribution of value create fourth have so that belong culture, and gas their improve this our higher we the to very capital a open environment remain of of all generate that rest for that The open I self-confidence. diverse very valued. an safety, significant shareholders. team and that

on Let of Products' me regardless in we executing focused be this do Plan industry. others may This clear. strategy is and and what our remain Five-Point remained Air

is not to the best to company. industrial be goal Our the biggest be but gas

complex mechanical steam The the fuels. as to enables With oxygen, of BPCL of successfully Now, critical was have accomplishments. a unit and history some this of of executed hydrogen, history Arabia X teams projects our number successfully our summary please I a to very want in who nitrogen, year turn the hardworking to climate The particularly location produce fiscal local build of tremendous industry. Saudi hours XX project for facility unit milestone industry in slide thank India. BPCL operation the the the largest air cleaner separation largest work, than the this remote given in XX without of industrial to air did We any has we incidents. that supplied attained and Kochi, large project and completion. hours first the accomplishment gas our more completed in by million injuries This for safety completed time refinery the man lost team, the year took challenges. Jazan, man with zero million of separation complex

to over XX working people over is no that years in Just lost to you, with injury. put context X,XXX for time that equivalent

We The a Lu'An, venture, unit units plant a our done. well China the operational, June, held great to chemical come and with air accomplishment which service. their gasifier separation four fully supplying cutting has started joint we expect I ribbon This job for all the six up is been team syngas gasifiers event and successfully XXXX. for stream in air in them is We for and closed China separation to on Lu'An production. congratulate it thank reformer our can starting to importantly, to successfully In up the our operating to employees demonstrates safely our to that It's along But on deliver projects our most new customers. methane these on Air to complicated large and Products our that counted and hydrogen in for Baytown, and our world-class critical Gulf see building other growth. successfully projects commitments, provide that contributing gas Covestro customers pipeline CO our to network. and customers great and supply steam be provides Texas Coast and

projects reliability projects China, Our markets. the us Texas proven these manufacturing Korea, in chemical additional win execution India, successful in to helped electronics, and and of and for Louisiana customers

Eastman where to their XX successfully Kingsport, for nitrogen oxygen is gasifiers these years. Tennessee, been of coal for have and we One in supplying

dividend. distributed the our existing around announced we marks Saudi increased to flow opportunities, commit U.K. them the own cash $X.XX increase shared world-class strategy. of the $XXX we history. with engineering with our And to are largest Products on about Air technology growth XX% India including year company's fiscal our focus technology to XXth January, about the and successfully on year need world our U.S., Arabia, where million increase, And creating XX% we via continue in XXXX, in consecutive continue and our This the execute engineering resources has and we to dividend. in These investors the in We China. In capabilities gasification and our China. a or our addition dividend

hydrogen slide slide, of So to use many gas an basically been that Air monoxide or please turn plus way a combination many lower for Products hydrogen. feedstocks. involved use gas diesel existence benefits produce to that in used olefins, friendly chemicals, This significant polymers, is and produce power. has market enables liquids been synthetic process syngas Gasification carbon in The to fuel, in has to this value natural and/or number high-end then oxygen can years. is and which environmentally X. process be the coal, it years for a has next Gasification

Over few oxygen very provide Products in last building to customers successful in China the Air gasifiers units years, separation Arabia. was large to their and Saudi operating air

or material and projects with Air volume related model, year, where four own clean-up, will syngas our price the our don't Products any syngas is take Over then are that business or and the these gasifiers we key or operate customers. projects The provide products and risk. large raw to we consistent onsite last announced product

syngas that chemical to is I for Lu'An Lu'An the mentioned supplying First, project their production. successfully

power the unit This Jazan, in August, we we expect air calendar continue in Saudi the we project XXXX. where $X separation Second, late announced to billion onstream gasifier project to same in largest continues Arabia, year finished forward, complex. and world's just building move site the

on billion Shaanxi to project to Yankuang syngas to Province. Third, continue we in provide separation the make great $X.X progress air gasifier unit

technology. aspect gasification to venture we ownership strategy an an We provide to the to for for Air turn two Products XXXX. onstream is syngas XXXX. the project technologies. finally, first slide X to Air overview in of agreement Please key project the gasifier XX% critical to Juitai in in China XXX% expected the our joint be announced gasification expected of onstream expect A our XX% also with And number Products of

venture well-proven and already technology hundreds is in the technology. few have the very last decades. joint solid used We gasifiers. gasifiers technology is This Jazan for the and the acquisition Shell seen gasification Lu'An our with and a being of the of benefits liquid over same built This

complementary. announcement originally view over by gasifier business hundreds accompaniment GE The also a our Another in of built technology and put other very the units technology the large recent There situation feedstock last acquire few the technology these are the future. better better to was in We and and position technologies that years. These GE one Texaco yesterday the onsite are to acquisitions is which technology. gasification for win as suited. product is developed projects gasification or specific us

most to the profitable slide the three the each of our results metrics of number key by quarter. goal these XX please to measured the to company shows Now, which three committed world key industrial turn in We gas as metrics. be remain our for

slide X,XXX our which my approximately four has please years. always in the XX, favorite last slide, showing number in Now, been that basis improvement margin points go to EBITDA

to XX. turn Finally, slide number please

last committed long-term. the least the fact are year four years, the Over per to EPS have we deliver XX% over our at growth that I stressed in

growth. XX% we that four delivered last compounded actually delivered see years. the XX% can And over You have year, this growth annual we

to believe will we our over EPS XX% per years. at by We execute strategy on drive continue least coming that year our average will the

Crocco, discuss like I Chief call and President Vice to Officer, turn in results Now, would our detail. Mr. the Scott? our to Scott Financial Executive to over

Michael Scott Crocco

Thank you Seifi. much, very

Now, versus by lower last please X% our to increases continuing from activity XX price. all the $X Jazan almost higher year, operations. and Gases. project higher saw primarily Sales of across for Global in three increased volumes strong regions, turn X% year slide results We X% volume offset billion full from on partially

volumes, moderated XX%, by offset positive XX of XX.X% earnings per income, EBITDA improved merchant primarily costs. RMB. the and has Excluding the British currency the denominator margin the The PMD with about share PMD and adjusted last our of prior by plants. billion turn improved gain. Record is driven ROCE up with driven slide euro, points XX% pricing, was from Record pound Please quarters, year, from denominator a only three Europe China X% of Positive Jazan, higher EBITDA PMD currency, by while $X.XX higher affiliate in XX. improvement year. XXXX was by by of result The XXXX partially gain in the basis larger early on and five volumes up gain up was increased FY new pricing basis our $X.X points. profit ROCE as which still Chinese of the versus by XX.X% impact driven year. XXXX. versus up XX%, quarters were the sale FY has XX to Versus half the of equity was last all businesses. over

EPS EPS capture was Arthur as again COX EPS $X.XX taken cost increased share. year factors, end Net by by cost Price unfavorable offset full volumes operations maintenance costs, performance Port our inflation, a including per few $X.XX was increased reimbursement and for adjusted $X.XX record increased share. per raw of higher Our by Overall, project. and planned by $X.XX of materials $X.XX. together continuing productivity the the

on due and in We Chinese focused due exciting also exchange primarily continue to opportunities. in year to the benefit pound, new to about $X.XX a operational Act. see higher Tax Equity British The growth favorable affiliate was primarily the RMB. income rate Italy. and strength areas euro, the underlying was foreign Currency tax pursuing added $X.XX with Mexico costs versus overall $X.XX $X.XX strategic and last from

For we a tax about XXXX expect both of QX year XX%. FY fiscal XXXX, and rate

had and combined by that from outstanding. a other a $X.XX. for higher interest from includes income. $X.XX $X.XX we non-operating was somewhat items income higher higher interest higher positive This impact $X.XX This primarily Finally, shares offset from

billion or million $X.X XX% $X.X our prior number Even flow $X.X distributable for of over we high-return on very Now, as distributable please a million dividends. turn an of XX billion is per available we previously mentioned. this over provides as still from $XXX Slide industrial year over which gas capital almost investments $XXX in had XX. strong cash deployment, We with From Seifi about flow have update flow, to year. dividend, billion paid business. share robust slide cash a core our with or cash $XX up

for We of have to how remained deployment are it investors understand and much spent, we much how capital have capacity. we much easier making our how committed,

are FY deployment over FY five-year The is period XXXX. we first of capital tracking XXXX that point the through

we growth M&A spent excluding billion see, including projects maintenance can $X.X you As about on capital. but

billion yet In spent $X.X M&A. have in addition, committed projects we but not almost on

have we in maintain this $X.X $XX over importance at FY months I XX billion many and based gives AaX to Therefore, billion next $X.X billion four current total of have spent remaining FY level times total, debt we rating to targeted billion Seifi last of $XX the $X.X times our months have managing available the balance last capacity the available we and debt we the available emphasized EBITDA, we expect If our invest both billion XXXX. $XX investable to at to The have cash on maintain the flow, years. X almost billion this heard about least through a rating. today. invest. about You've over XX us from year XXXX And of

can the you have So, we of XX% available about and committed about see total spent half capacity.

year in saw Sales of few billion strong versus in X% activity XX, comments on from contributed quarterly our We Turning as up I'll Gases. the price increased to a volume slide X% make and $X.X Asia, results. Americas increases last Jazan partially volumes are Global lower project X%. and offset by

volumes of we basis was was Please X%, Excluding and positive volumes affiliate offset overall merchant the by per the up margin where improved Pricing X% of year, X% by Record last driven driven by Lu'An Versus versus XX.X% about X% prior from are EBITDA XX up driven China. of impacted the Jazan, higher up our a million partially project. operations EPS sales volume. driven to increase. business our by primarily adjusted were by with $X new saw by pricing costs. continuing a EBITDA changes higher plants primarily driven XX. points share quarterly XX% higher turn year. by slide X% equity income, by $XXX

offset Our factors. by $X.XX adjusted unfavorable again $X.XX, share. was increased $X $X.XX. by a cost per Net higher as of productivity volumes increased Overall, EPS performance was by EPS few

my The a underlying in the primarily saw full chain $X.XX to higher tax rate In year. year had Mexico affiliate added in comments, the Americas that due addition Equity to last and income Asia. operating overall was costs versus mentioned benefit supply also ones strength I and the Italy. during we $X.XX

that reform for a quarter. several accounting had inventory to change non-GAAP the items tax valuation You included items. settlement, can These also we policy, a to and benefit $X.XX pension change totaled due a see a related in few

the the Now, Seifi. of back results, turn begin I'll segment to to business review our call over

Seifollah Ghasemi

with the very deliver profit Volumes from was team last to margins total pricing year. our where Strong XXX Thank roughly in prices. rest. while for also excellent and prior higher. about and merchant the the prior contributor in points significant This a responsible higher in the you, X% increased and addition over XX% EBITDA up favorable this margin number a of business drove of Gases the Scott. Pricing region's contributed growth, sales thanks sales Lu'An driven were of efforts compared EBITDA this increase year-on-year slide quarter versus X% we increase, sixth Asia XX primarily by was and projects Please acquisitions half Sales showing XX% Asia. strong turn Lu'An our basis to growth. year improved sequential versus to XX% growth continue committed consecutive for quarter market Lu'An and this China. driving continuing the there improvement. base volume base Consistent are the XX%, region to and new quarter. up about prior of of profits last equal volumes, the EPS quarter year, the about marked of to guidance, increased $X.XX and with strength strong

I in pleased than that to As earnings more we four all expect Lu'An gasifier XXXX. come stream contribute are trains said, year and have fiscal share per $X.XX on

the to continue coming in imposed as China year, that not business and we tariffs. any improve believe seen have in a will negative the our impact result We of

Scott? to would I Now, call the back discuss to our turn like to results. Americas Scott

Michael Scott Crocco

Americas XX results. Thank you, Gases review turn slide to for a Seifi. Please of our

the volumes both price. grew Volumes volumes improved merchant strong. X% onsite quarter, and X% sales higher were as For on and

as QX of was which hydrogen higher in and six roughly costs. wholesale price, last affiliate in as higher improved on our year the supported by Gulf equity also FY of income the volume volumes first despite increased XXXX. Merchant EBITDA increased is due as in Texas Baytown, grew in results plant X% price to were equal quarters. the new Overall Coast. Our Americas result contract to better demand well pricing prior Mexico offset a was termination positive

did productivity, Arthur transportation driver longer this we no have more for have project. positive to we reimbursement saw our the Port in power shortages. due by than COX and higher While was costs part We higher costs, offset cost capture

negatively in to ability difficult collect environment impacted America customers. from Finally, the South certain business our

further XXX improved supported sales As lower a as down cost EBITDA points. was higher lower quarter. margin was and EBITDA and this both Sequentially, volumes by sales EBITDA result, activities maintenance X%. Strong were basis grew

like Simon to back Now, turn discuss call segments. over to other our the to I Simon? would

Simon R. Moore

Scott. you, in due both India. positive our slide review acquisitions. and pass-through bulk XX a Improved of up Volumes contributed significant were X% prices EMEA another as X% increase recent by to Thank Please gases primarily driven Sales for businesses. a due price mostly liquid as turn results. growth markets merchant our higher and a pricing a gas merchant X%. merchant X% in natural well Gases lifted to volume added to packaged Higher in energy

was in working XX.X%, to EBITDA drop pricing during our was costs Europe actions. there in negated cost and As a currency no in year. reminder, XXX on the and team declined was sharply risen hard year fully positive is a benefit the QX unfavorable effect equity QX as these recover the year-over-year higher affiliate in so costs India plant margin stream higher better and X% performance have points. EBITDA this of Italy. basis Power last quarter pricing through

the EBITDA impact costs. points would down pass-through, the Sequentially, been energy the EBITDA XXX was was margin nearly pass-through. higher to Excluding excluding margin higher primarily down due power but energy higher have flat of basis

comment business our which sale on separation of sale flat of well due down as sales as for were business Now, please Jazan project EBITDA costs. includes the as industrial a our brief central slide was gas approach turn conclusion equipment to project. unit XX segment, equipment although air lower the Gases we activity of Global to ASU

ASU We headwind to FY in we expect expect on XXXX. be a FY overall XXXX XXXX. versus continue to But for stream the the fiscal ASU Jazan do in Jazan project phases

compared for and additional Overall XX brief our Sales helium began to sales due to segment interest turn container equipment lower prior Corporate year a costs. our to business profit our we business, and to slide please corporate renewed up includes on as comment see LNG was which in Now, modestly costs. increased projects. LNG our segment

business about improvement We only XXXX. but continue for future LNG anticipate prospects earnings to optimistic be the in modest a the FY

the back call to Now, discussion I'm over outlook. our of for pleased to Seifi a turn

Seifollah Ghasemi

Simon. Thank you,

to Our world, around of the all future. very continued be Air Products us, excited team about

foundation for And Our to performance forward. safety, growth. continue our our going framework Plan drive Five-Point the productivity operating our and to continued success the provides provide

the said growth before, while understatement. capacity, world. the to is the doubt guess we political have have commitments we uncertainty an cannot over successfully there win growth in There and developments, to key will I team that's Products projects. control we confident I of opportunities have predict financial we we on is are operational the no and performance worldwide that As that or the do control and continue the or deliver Air economic we made. And

we Let and material Very on have not stress, I any seen are me simply, global and address this Products tariffs. Air at relative impact what point. we not, trade to seeing relationships

so impact projects us different business world. or on the not attitude is have have exposure not to or seen interaction our have with Our import/export we we their parts Also, seen any major the and any we of behavior changing tariffs. in toward direct customers customers don't local

to number Now, slide XX. please turn

service We diverse, are our excellent most day hard all working world, the customers. and in to to profitable gas be most providing safest, the every company industrial

XXXX for Our represents for guidance fiscal year midpoint, a over XX% $X.XX guidance to $X.XX. is growth very year performance. At our fiscal XXXX of range our strong

year per remain confident future. said, average our EPS I As grow more ability to commitment than in by deliver the on in on to we XX% our

one that not an last of earnings benefit will to our $X.XX quarter in plant X% would remind repeat. up like But $X.XX a guidance in XXXX, you quarter sale $X.XX. per that there year For was year. is XXXX, Asia share midpoint, fiscal to from I one over fiscal of At year

guidance prior up Excluding XX% this is one item, year. quarter versus our

capital billion to billion our the $X.X expenditure year fiscal be $X.X in range expect in to XXXX. of We

close calendar XXXX, we fiscal power We expect included the in to CapEx so this forecast. XXXX Jazan in venture gasification our not joint late have

You Jazan, slide can as significantly also to gasification Yankuang, please billion turn XX. M&A. including commitments we is Juitai about number it and includes now projects. up then, see This of have $X projects the And

people is around our the working and want what work all proud real team competitive with of world always, advantage the That I'm for continue the generate And and our to us in performance. safety of and commitment spirit to this we say, as of commitment for of Air their and be As and winning superior part front motivation always I energy thank team. great total at a opportunities allows together. hard very us is operational the to embracing of Products. to have our XX,XXX I

execution know, strategy our you As execution is is and without without aimless worthless. strategy

is Five-Point our strategy. Our

the people's continued will our execution success Our against value this strategy and years ensure in creation. to come

questions. your delighted answer are to we Now,

Operator

from take we'll ahead. go Juvekar from Citi. our question Please first P.J. And

P.J. Juvekar

Yes. Hi. Good Seifi. morning,

Seifollah Ghasemi

morning? this Good morning, you P.J. How are

P.J. Juvekar

Europe, Good. In maintenance cost. coming sales Americas down leverage from and be was to it seem EBITDA Last the to the quarter, line. growth doesn't

mentioned This the EBITDA quarter, think leverage see flowing begin you can When line? I we power to high the cost. to

Seifollah Ghasemi

absolutely of you been are are marginal first down. correct Well, the that – of contribution margins the all, has kind coming

that can for power significant recover. delineate Europe, combination Americas things, with have and And is shortages, of in of you. a that very reasons accurately cost I issue which a we a haven't driver hydrogen other the of turnarounds, had in mentioned a things been to able lot we You lot

in We we that very are XXXX. and are trends hard working we these would reverse hoping

P.J. Juvekar

the in region, in in of Okay. And on that each seeing can getting region? utilization you Now are are them pricing what we you quickly then utilization, each merchant terms world? around compare

Seifollah Ghasemi

prices our parts the China. utilization is utilization is is almost from around China approximately the Overall, In are obviously part what still differs the XX%, China, of drive There XX%. of it In where our and Europe in different to helping that same. is us is up. XX% U.S., it

P.J. Juvekar

Thank you.

Seifollah Ghasemi

P.J. you, Thank

Operator

from Please Robert next our question Sachs. Goldman Koort take ahead. we'll And from go

Robert Koort

in (XX:XX-XX:XX) variance EPS you year-over-year how your growth. drove

a As much. quarter Jazan be we headwind. fourth look I tailwind a into mentioned will Americas the of were maybe and U.S. you that as suspect growing don't the be tax XXXX, of think and not big EMEA so would exiting and the I

of see us can sense So, you pretty significant that in what give that buckets you drive XXXX? look those EPS a would like growth

Seifollah Ghasemi

good India, EBITDA we reasons Bob. for as mean more actually our morning, next say, increasing year, significantly The you the that What, the drivers in are our main the if all, about main that projects you take suggesting the XX%. China, coming of – effect are and growth fundamentally, I But first that tax onstream is away thing. than are drivers the of in U.S. in But

utilization announced So there – materialize. and U.S. how it projects in months haven't six the then, would down. that in as China. actually in we know we has will in work in slightly some that, will And maybe are other know, the that the last about gone because, out manufacturing hoping you rates are that then I addition to we hoping improve are the don't U.S.

and I'm have on addition, say that last cost additional performance are that factors. those the deliver I and hoping not in year, we productivity our excited about And cost improvement programs I'm the have that will results. so then And to would Bob, that help

Robert Koort

us in I fiscal give this you Seifi, And X% sense follow see XXXX? might about improvement what year. of guys had Can if price you a some you might up,

Seifollah Ghasemi

over total Well, know the the sure Bob, I'm first our you is that all, portfolio. X%, X% of

hesitate as comment increase, don't I industry, where portfolio because as to half is our since would get onsites of But price X%. that. our future, our of the increase on price any the So therefore, on merchant nature the we side far really make of any is

Robert Koort

right. Seifi. All Thanks,

Seifollah Ghasemi

Bob. much, very you Thank

Operator

our JPMorgan. And Jeff Please ahead. question take next Zekauskas go we'll from with

Jeffrey J. Zekauskas

Hi. Good morning.

Seifollah Ghasemi

are How Jeff. you morning? morning, Good this

Jeffrey J. Zekauskas

gas or year? do for opportunities industrial Very Praxair-Linde you the coming landscape perhaps How the the will fine. will Products in the change Air change think merger

Seifollah Ghasemi

Well, Jeff, expect I'm as not strategy. any we any comments in But during obviously people's change very business. said our comments, I hesitant my to do make about other

memo to the a do that see had little the our any result I bit a a We merger quite we put strategy, merger change any on a are the publicly out have moving and the hasn't as that change pieces chessboard. or not and just strategy frankly, own It's said for people. anything. because We changed I executing reason of recently really

do in we one therefore, usually, that is enhance business three, now, terms share. four, divide to not of other for get more customer might of we – opportunities, XX%, their each it share and that going and will opportunities by think and us will by a because we giving who was actually, guys the divide us less So they get there will

that So, I overall, as change anything, think we in it's what no positive. do terms we and of if slightly said, actually

Jeffrey J. Zekauskas

you Can business annual technology business? the revenues of what to what Shell the revenues And annual Shell you've what and GE you've for business? are that the the paid what Okay. for of paid the business GE were compare

Seifollah Ghasemi

agreement approximately they both do Well, on both Shell a but don't And not and just have paid terms to with an to those what disclosing things, want for in not say similar. of we those we have let's would that's general I thing, minded that. GE numbers. of disclose them, them,

Jeffrey J. Zekauskas

great. Okay, you. Thank

Simon R. Moore

than to is ability the technology projects value licensing be of better associated for onsite Seifi said more much before, the a acquisitions the specifics big the those position in revenues. creation about the with

Seifollah Ghasemi

projects acquisition knowing has advantage significant business that of Because bought the happen. future us Shell – the for Absolutely. might that business, given the and we in the

to happy an thing, with to was very to very in XXXXs we've able in Foster So, I'm that long I'm get to the business, with GE. very excellent agreement try BOC I that happen. it's It an a Wheeler that reach very successful technology. took they that been have familiar didn't former time. that. But promote but that technology, has been Texaco a trying and the with

So, we pleased I'm that Thank Jeff. to very you, were that. able acquire

Jeffrey J. Zekauskas

Okay. Good. so Thank you much.

Seifollah Ghasemi

Sure.

Operator

go will question Capital Markets. from next from John We take BMO our McNulty ahead. Please

John P. McNulty

for Thanks taking question. Yeah. my

the that of expands way much Shell help gasification it much it. that potentially how is, right addressable when GE if I does is that think And about as the business, when you platform how think your bundle with guess about it you kind well? On the to in market,

Seifollah Ghasemi

equal and First and because literally to it morning, exposure for that gasifier, of therefore, doubles almost all, used. good terms technology. our is that what have doubles of increases. of And technologies the being ability Shell approximately in technology GE it And John. building weight are promote if our And and and chances obviously, significantly owning that a we gasifier operating the have we secondly,

John P. McNulty

I Thanks. helpful. new the And guess couple believe, a and quarter, platform facilities was announced had can of it the couple I Kingsport the a us you us just think as I about you be would help the to power help so ones of to to projects also to question, project, you guess can to I Great. understand if a of earnings during that that those? tied how sounds think quantify liquid they're well. helium the, – on guess then kind about replacement like more how Eastman

Seifollah Ghasemi

that is will now first they on all, once other project, of about the John, earnings that coal more it announced million about stream – also Eastman And we our which Juitai, from years going contribute need. will is And on XXXX. some volumes John. replacement. come project after things, that gasification additional the It to $XXX Sure, in there two to of actually But built is is a is have terms and we plant. big investment – than

John P. McNulty

very much. Thanks Great.

Seifollah Ghasemi

you. Thank

Operator

Vincent next with Stanley. Please Morgan go our ahead. question from take we'll Andrews And

Vincent Stephen Andrews

Good morning, everyone.

Seifollah Ghasemi

Vincent. How are Good morning, you?

Vincent Stephen Andrews

very Thank Seifi. I'm well. you,

help and what adaptable in gasification us just feedstocks. understand Another GE question palate? the on of that the the sort could range slide Maybe feedstocks expands how wide to technology, maybe your wide a of range again there of is about talks principal you

Seifollah Ghasemi

you to we situation were keen system use can all GE tailor because an technology both make related ash specific applications it the a principal the then why of in and is have. that. that coal, for And to They the technology that. on the coal content gas excellent slurry quality And to that have have the customers we Shell that The gasification. and and is coal natural is the whether of the

Vincent Stephen Andrews

a referencing that Okay. take function inability on America Is separate And of just that issue? an as below payments. minimum pay being a of to or or customers you're type a follow-up, South collect is

Seifollah Ghasemi

issue bankrupt... the of some just It's going customers

Vincent Stephen Andrews

okay. Ah,

Seifollah Ghasemi

plenty ...which have them. been of

Michael Scott Crocco

(XX:XX) merchant our business And

Seifollah Ghasemi

Yeah.

Michael Scott Crocco

little America. have onsite very South down We

Seifollah Ghasemi

Right.

Vincent Stephen Andrews

very you Thank much. Okay.

Seifollah Ghasemi

you. Thank

Operator

S. - next Christopher question from Parkinson Securities take go Christopher we'll And (USA) Credit Parkinson from ahead. Please Credit our Suisse. Great. Suisse LLC

positive there for U.S. were still to other you're projects just and $X.X But anything processes and acquire? billion So, in always need would acquisitions, are these complementary you've of the Middle potential been over given left and the India and both or recent projects, more geographies, you triangulate intentional. these there for plus the mean you in these East they and the bidding obvious ongoing very are next I deploy the projects recently minus remaining technologies years that seeing attempting or feel to reasons. the is to in GE Are Shell obviously few

Seifollah Ghasemi

to want don't Christopher part first I Parkinson Chris. Credit on Suisse the LLC of good morning, comment Good all, morning. - second but (USA) Securities Well, S.

Seifollah Ghasemi

that GE been you in some technology projects at Second thing the technology, has for actually when is chosen very India. look GE big

publicly been announced. has it of Some

an looking some there? hearing puts obviously, are projects you're of absolutely. volatility you. that, in of and deploying can team the and U.S., forward So not give Got next just about Thank just how I us merchant - think, the And but And year Christopher to of Securities Parkinson us only next you rates what and Europe kind the the LLC and Suisse the is quarter the thinking market broadly, electricity from the given these then your over opportunity. Credit over S. just in giving we takes it. you're (USA) that for of

Seifollah Ghasemi

or in U.S. no tonight to to optimistic Brexit position Well, the are but happens elections teams what predict to they in the are happens that thing the what obviously our is

really of mercy mean going the business much people at industrial financial our very are it and we production. activity dinner. to includes So GDP because doesn't out to

We see that on they of We we a conservative. are the improvements. the have guidance bit focused production on basis given been significant industrial don't you little – and have

that some we'll now, on we Seifi. - been Suisse benefit if from Thanks, improve, but S. significantly magic Parkinson Securities (USA) LLC for have reason Credit things So the Christopher cautious side.

Seifollah Ghasemi

Thank you, Chris.

Operator

from Duffy And next ahead. we'll Please our from Fischer go Barclays. take question

Michael Leithead

Good Mike for This Duffy morning, on is morning. this guys. Leithead

Seifollah Ghasemi

Mike. Hi,

Michael Leithead

expand with the about how does having that technology a of I mean the advantage we and on what and your in one-plus-one-equals-three-type you both these? Just or versus should Shell's sort by both synergies is saying think so, Hi. meaningful one having other complementary having the gasification Seifi, mind, GE equation? maybe you of nature technologies provide bidding could a of

Seifollah Ghasemi

of using them. situation, of and are the in by just GE if them and there rather opportunity GE, projects them we of are using owning of all XX are think XX half X now Shell an half participate Well, have a technology, to than

and scope. complementary, does is positive very It's a it our Mike. So, expand thing, actually it

Michael Leithead

then Got up you for on it. complete Scott, that we one P&L helpful. could us ASUs remind project the impact and the And maybe just is That's shifts as Jazan to XXXX? how start ramp in for the

Michael Scott Crocco

So, yes. Thanks question. the for

next that's there's last So, terms think of doing mentioned here SOE been year. I in Seifi wrapping as prepared in two up the That's the remarks, years. couple Jazan, in – that we've parts, over the of the

an long-term Then, again, be contract very And that think the that is going so, small and affiliate, you'll going I own we it's contribution. to supply addressed headwind very, see XX% a to be that earlier. our a equity and as Seifi for

So, not Jazan opportunity. much forward in portion that the of from there going

Seifollah Ghasemi

is part we a a gasifier XXXX. XXXX. you going headwind going that actually, significant Can one part the to are in big see not a saying But the separation we for see part I XXXX But and add? you're just lot air going the from after contribution to unit part. the are that air in – that be is in That is of it close separation basically, means to

Michael Leithead

you. Great. Thank

Seifollah Ghasemi

Sure.

Operator

Please with our Deutsche ahead. take we'll And next Begleiter go Bank. question from David

David I. Begleiter

Seifi. morning, you? are How Good

Seifollah Ghasemi

a you is I David. haven't How fine, everything? for I'm while. seen

David I. Begleiter

Seifi, your project large work and you. you're regions; China, just at pace looking Thank and of today? key talk the India, cadence could seeing the around that East, you good. U.S., Middle activity, your the Very about activity

Seifollah Ghasemi

significant the see in opportunities We U.S. Okay. still

of projects whether are projects these projects other are there Some that. of in all ammonia whether methanol were they projects, are they and delayed the but U.S.,

opportunities in obviously the if we is I materialize hope all our we where the would to We and is of mean and of home all the place this this without saying, I goes billion involved our are preference, – $XX because in want that them know, you invest. that US. base exist, as invest they our

because there's now. – There are So to quite China. in had right than Then the we that about the projects we change opportunities U.S. and more in law starting of see can there is still I significant the significant opportunities significant, in – have in are they ownership. mean They India honestly opportunities handle coal

people and gasification project lot of big a a there fertilizer in that participating in So announcement India of the about are and which is was all that.

there have a remain but Arabia, technologies pretty what top are but on competitive being used, and of will Saudi have want results pipeline we up technologies back and the the which seen robust opportunities don't specific with that optimistic. we In us we both claiming, will is are very the will and that. key should other seeing think be we're So the I the advantage. being in parts of we Obviously, tell that opportunities I you to believe be world. time

David I. Begleiter

XXXX you a XXXX bridge Bob's bridge, following possible? between And XXXX, on broadly Could good. increase. about the earnings up $X.XX earlier forecast just, $X.XX break of Scott, Very you out and if question speaking, have that

Michael Scott Crocco

Well, we don't specifics. all give out the

full talked though so Seifi well coming streams, forth. pricing, and on think things impact, as stream, his about I volume new and on in growth new comments as hopefully the the year favorable

Tax currency. Let things. as as of me add couple well a

next this into in which mentioned year. driven remarks, prepared some audit headwind. So the translate I for settlements And in favorable had would really tax it's we favorable effective XX% of $X.XX by rate I see, think things, tax as about year, a my we some absence book

So, that's XXXX. bridge part of the into

to see as rates last just recall we go. somewhere currency. a through And then just and order are of $X.XX on look data headwind the opposed that currency that to on project where at we going points take way The sideways other the this, about is the just $X.XX to we on and try move currency the to year

going to their go have view view can our $X.XX it's where in everybody again this own $X.XX. so currency point and you, give at me time Let is to is about

me apply you the that thumb can your own assumptions are. of whatever Let give rules you to

always, in and So as by just to no translation. if we there. right? is folks want RMB this transaction There's I remind move XX% just mathematics, the It's

are then $X.XX the move you if the $X.XX and in and be about includes Taiwanese swing there's a for that change other which year. Canadian won, the same $X.XX. euro translates by dollar. exchange the to would Korean pound So, about that dollar And each and XX% handful a of of into that about ones XX% RMB The the $X.XX

on I've individually if be each the XX% U.S. just $X.XX basis to what those about the exchange to moves given and is our of sales. an XX% of annual $X.XX plus So, there sales about

helpful. that's hopefully So,

put you So, models. your in it can

David I. Begleiter

Very you. helpful. Thank

Seifollah Ghasemi

Thank you, David.

Operator

Bank And we'll Byrne with go question Steve from America. ahead. of next our take Please

Stephen Byrne

more or in Yes. number including neighborhood the dozen? Would a refurbishment Thank projects consideration you in China being you. the old of characterize of coal gasification few gasifiers as a under of few likely

Seifollah Ghasemi

XX? like about How

Stephen Byrne

Are government financing the or Chinese support path? regulatory wise than providing role And extent any are any of what's Okay. the of the that they to more new streamlined plants the these? the in efficient ones, old much

Seifollah Ghasemi

of companies state-owned are doing anyway. these that are this Most

are they owned have government. as invest, they Therefore, support So, they of the by XXX% obviously government. the the

Stephen Byrne

demand incremental the XXXX? for U.S. lastly, IMO hydrogen outlook growth And Gulf your just from for on

Seifollah Ghasemi

Yes, we expect that.

in are implementing industry world. of now. or the does we people said, of will, about time, that have the thing. the and the is the it It would another I know not here that take are before are wait hasn't but – the Europe, three okay, some in years the thing hoping plan it but, comes this last significant I this like And terms has say, delay really what in will about industry we I rest that go. where right the help that at we happened get they emission no in the the five nobody end serious of House But years. onstream. what in administration do. most then four They of that I the from day, in minute, any U.S. see insight auto pretty kind new they hoping and thinking That's will as And demand of acted the delay think anything until will I think But implementation. become people White because the will don't

Stephen Byrne

Thank you.

Seifollah Ghasemi

you. Thank

Operator

And Carson with question we'll Please go our next Don from ahead. Susquehanna take Financial.

Donald David Carson

Good morning, Seifi.

Seifollah Ghasemi

you Hey. Good morning, Don. are doing? How

Donald David Carson

X% XXXX One, And fiscal global ex-Jazan you ex-Jazan, Very talked what's due guidance? slowdown about full was business in a your outlook. in Couple it slowed to your industrial Thanks. base to XX% year questions. forecast the production? slowing that good. I the for noticed QX. for your all specific growth production Was industrial

Seifollah Ghasemi

the question had a quick think for Well, first – I Simon that. answer

Simon R. Moore

Yeah.

we that did. quarter course, have of quarters the prior volume plant remember, this Just didn't year-over-year four we and in any from benefit India the big

So that down. comparator slows the

Seifollah Ghasemi

Exactly.

of India onstream. in effect coming the it's So the plant

haven't respect. really in that any we slowdown seen So

mean of I I can't Don, we are production, this what's happen of us mean, more one predict industrial tomorrow. of terms to going any an here. than on you In expert

there me, same we that no guidance, significant So can at guidance of ask the have I no is will terms up way come that assumed be the uptick, with I is you downtick. our that we but what answer the can mean, have time, in significant

that giving about fact things So are or our on stay the are based we expecting we will guidance you same. the

that. be we'll obviously up significant So any then or if there is change down, affected by

Donald David Carson

to supply both XXXX? not, fiscal surcharge expect chain, costs to the and with in those address how you cost on And ability in for two items? those you the Europe North specific do have America with side, do And power if

Seifollah Ghasemi

Well, we and day we obviously XXXX. those overcome ability in to But that prices. ability But that I we our people have have those the increase to the ability use have depends and what will we that way the the that are face to guidance is it do. every challenges the challenges. And you the given we always challenge have theoretically competitors our assumed on contractual

Donald David Carson

Thank Okay. you.

Seifollah Ghasemi

Don. you, Thank

Operator

Please next question with Roberts our John And from ahead. we'll take go UBS.

John Roberts

you. Thank

oxygen are GE locations? you to if a mentioned supplier it, Forget you gasification major but many these of

Seifollah Ghasemi

of terms future by I ones, haven't obviously of existing projects I'm in we been The sale built. are they yes. But... talking in the a lot But gas, supplier major far the of about these that most think

John Roberts

But Right. gasifiers existing many how oxygen supply do you to?

Seifollah Ghasemi

supply of We least at about them. to eight

John Roberts

Eight?

Seifollah Ghasemi

or them of some units, five have four so... But

John Roberts

Okay.

So, eight.

Seifollah Ghasemi

a to more supply of than people. day these ton We XXX,XXX oxygen

John Roberts

Praxair-Linde but I wanted post Okay. allowed the check. still to I be some divestments those Thanks. in for to And bid would in coming Korea assets assume closing just then, have you not and neon U.S..

Seifollah Ghasemi

on We all. are not at That's correct. counting it

John Roberts

Okay. Thank you.

Seifollah Ghasemi

Thank you.

Operator

Oxgaard next go with ahead. from question Please Jonas take We'll our Bernstein.

Jonas I. Oxgaard

morning. Good Hi.

Seifollah Ghasemi

are How you? Hey.

Jonas I. Oxgaard

R&D And second another the with here great. more was on same result. spend in plans research fit means the the from if the coal a developing venture licensed here. I understanding my was am two if GE Two-part if this cetera. as guys you Shenhua I will. And that the GE is you we also in question an your provider the topic into going cleaner, of that wondering better, On the push uptick in gasification all China. was efficient, of et then practically see a gasification yet on JV into could does on gasifiers China? How question,

Seifollah Ghasemi

questions. Great

these true the committed it for we one that reasons your question. we to going we first mean to of sure the technologies are First in is and provide XXXX spend are Yes, make That's forward. that negative R&D. of more very a to that support That improve see does costing performance. on you all,

way Shenhua. we Energy ours. XXX% which thing, GE bought means it's is China, now, a are we we China gasifiers are now partner in thing this we And with called, partner all Shenhua to that other the outside in rights The all That the that China, the bought Corporation. China, with is

partners. we their are So,

Jonas I. Oxgaard

with becoming Okay. that strategy partnership builder/operator of your interact of these How gasification units? does the

Seifollah Ghasemi

have help about, future. and at and companies China, are world. is will think, we new that technology, of in now, They in bond I Corporation the to the and do all largest It gasifiers mean for of the I significantly they hopefully, are GE those one use gasifiers because them Energy – does of least plans they China operating XX most

and the with former partner China to a happy honored very, are we Energy Shenhua. very be Corporation, So,

Jonas I. Oxgaard

Thank Okay. Very good. you.

Seifollah Ghasemi

you. Thank

Operator

Securities. with take from Global Mike And go question next our Seaport Harrison ahead. we'll Please

Michael Joseph Harrison

morning. Good Hi.

Seifollah Ghasemi

Good morning, you today? are Mike. How doing

Michael Joseph Harrison

Doing Seifi. well. Thanks,

Just going back the situation. cost to the EU, power European

with the fairly impact quarter you you past, You've called what with managed quantify recently you hit have another seem this to and dealt now surge. Can getting it, you saw much how through this something we're through it fact any QX is and that's pass recently, dealt increases with pretty the pricing? that get customers carrying does make cost this to these or and it you maybe to that easier additional into in

Seifollah Ghasemi

factor. they to mean, cost all that go of delay Well, easy, we of have when they not very Mike, because the you energy Obviously, that is is this costs renewable understand it's program that want clean a you that is Therefore, question. and and of going with Europe all don't good how power if energy higher. a use to pay we power plants. a you nuclear there are price up The I want issue increase a power and in cost that a which happen recover have but is to prices to

So, quarter, going the in able when quarter. a to happens not we same be instantly are that it in recover to

increased quarters and So, the usually the then later one prices we have an recover quarter we and or impact on, on have that. two we

little a is a there phasing So, bit of here.

Michael Joseph Harrison

Understood. competitive And environment. regarding question another the then

Do we You four little related some of call the competitive significant them them a on divestitures a that are next see bigger. make about but have bit to had landscape the – also merchant to three players bit you little becoming couple to smaller somewhat gas particular players change two those impact years? having competitors a talked the now the major in going over

Seifollah Ghasemi

mean, them are I say? of we consider we We have two terms Well, don't want companies. competitors, again, them competitors. to me The you rest competitors. consider do of what In

Michael Joseph Harrison

All right. Thanks very much.

Operator

And from we'll Laurence question Please go Alexander Jefferies. take our from next ahead.

Laurence Alexander

morning. Good

about for clarifications. And $XXX or pipeline bolt-ons that the pages get gasification will XX calling M&A. be The pulled XX, outlay is more secondly, that that investment. the you're two comparing or this the Jazan out the acquisitions? including gasification Just XXXX? of million future into $X of or like quick that only to Is right captivation it capital billion year related M&A Is and just looks

Seifollah Ghasemi

talk thing or When that of first me let about we that expect all, this the buying very captivation, we question we so with Well, you the are in context careful put because includes talk it company about things. respect M&A, how first had, a about to we includes these that.

of is year spending that Juitai, thing we million. in second The contract the for example, money, last $XXX terms signed

building going that they are plant obviously have to and We on capital won. spend other that some projects tomorrow

we are a is $X that So, spending have XXXX. almost which $X.X giving that year, expenditure projects billion XXXX they why is on $X our guidance of you won which than in this the billion year, capital and to for money so come next stream billion we on is more

Michael Scott Crocco

not Just in say Jazan the did included guidance. gasifier to our we project clarify one thing is capital

spend one other the that expect we that the on total more to and capital said, close point showing slides, make of one on the one XXXX.And just late amount. we're to remaining we're the too commitments Seifi is As in to our showing

difference that's think you're about that So, the I there. talking

Laurence Alexander

Thanks. Got it.

Seifollah Ghasemi

Okay. Thank you, Laurence.

for Okay. question. more Yeah. have one And time we

Operator

from our SunTrust. Jim ahead. last We'll Perfect. go question Please take from Sheehan

Peter Osterland

Osterland Pete Jim. on for is This morning. Good

Seifollah Ghasemi

Hi.

Peter Osterland

just as each quarter you Asia, merchant volume in called the margin due you growth size, estimate In from that how of the was EBITDA experienced strength the uplift Lu'An these? And out trying during pricing well to much you of to I'm market. can as

Seifollah Ghasemi

that that said that our bottom is Lu'An contributed thing have to of growth mean specifically half we said I the our Well, line. we $X.XX –

about that's So, million approximately. $XX

Peter Osterland

Okay.

Seifollah Ghasemi

XX% then projects the stream And to we some in maybe had is on merchant Lu'An. coming about growth was And basically addition increase. other of merchant then the then volume –

Peter Osterland

Thank you. Okay.

Michael Scott Crocco

you. Thank

Seifollah Ghasemi

presentation. would and We thank being to nice for nice call. all a do everybody with Thank Have from discussing like listen again Well, next taking and for interest to busy forward time we quarter. our a day. appreciate to on the results that, very you best. I with the your Have holidays our look your schedule to you. Thanks

Operator

today's for thank participation. you concludes presentation. We your This

You may now disconnect.

Simon R. Moore	Air Products & Chemicals, Inc.
Seifollah Ghasemi	Air Products & Chemicals, Inc.
Michael Scott Crocco	Air Products & Chemicals, Inc.
P.J. Juvekar	Citigroup Global Markets, Inc.
Robert Koort	Goldman Sachs & Co. LLC
Jeffrey J. Zekauskas	JPMorgan Securities LLC
John P. McNulty	BMO Capital Markets (United States)
Vincent Stephen Andrews	Morgan Stanley & Co. LLC
Christopher S. Parkinson	Credit Suisse Securities (NYSE:USA) LLC
Michael Leithead	Barclays Capital, Inc.
David I. Begleiter	Deutsche Bank Securities, Inc.
Stephen Byrne	Bank of America Merrill Lynch
Donald David Carson	Susquehanna Financial Group LLLP
John Roberts	UBS Securities LLC
Jonas I. Oxgaard	Sanford C. Bernstein & Co. LLC
Michael Joseph Harrison	Seaport Global Securities LLC
Laurence Alexander	Jefferies LLC
Peter Osterland	SunTrust Robinson Humphrey, Inc.

Air Products and Chemicals (APD) 6 Nov 182018 Q4 Earnings call transcript