APD - Earnings call transcript Q1 2019 | Air Products and Chemicals, Inc.

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Operator

Good day, everyone. And welcome to Air Products and Chemicals First Quarter Earnings Release Conference. 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 is Mr. of President Vice Moore, Investor Relations. Simon ahead. go Please

Simon Moore

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

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

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

Seifi Ghasemi

to committed and Air Thank Products of on appreciate Simon, joining us we morning and call in delivered your financial quarter interest strong, you, motivated for team good our talented, safety you and and do of results. Air another The everyone. Products. Thank

Our represents that then share quarterly year-over-year XXth of growth. EPS $X.XX quarterly have reported quarter we consecutive per adjusted earnings

Excluding the our last sale up was impact of EPS plant X%. year,

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

profitably dividend our financial cash consecutive XXth increase. the We to return flow. to we This business company value of continue into to position are allows Yesterday, while continuing to to very grow in generates announced a strong year projects creating us our also and significant cash shareholders. invest our capital

our At will about we $X.XX over and and to customers means stress everyday. the great, serving creating of who like of $X stayed quarterly next in of talented We billion per $X.XX a return shareholders focus for our our shareholders value we Air are on Products and our to year. dividend committed turn team have cash quarterly in that share would proud dividend new I

Slide to X. please Now turn

to and to are On gas rate recordable world see X, our X, a providing on customers. diverse improved a world, focused most XXXX. injury and Slide industrial you since around goal we you that have before. XX% our lost best of be the our is injury with result, as by most safety. can which XX% All the overall employees in service our can company XX,XXX we you On And by Slide excellent philosophy the many management have shared safest, times see profitable rate

We the way a have years. four over last long come

an continued focused we and However, decentralized and value, allocation be organization. to capital empowered on shareholder

Slide We five to to X sustaining financial strategic performance. and our turn see point on plan. our please in Now remained lead focus safety

a about deploy and you $X rating. billion we Scott opportunities XXXX, have business. $XX new spent to maintain we targeted We to provide to will numbers to billion in to over projects. but of managing quick Primarily committed start the fiscal debt progress. Both current our capital let At our overview see balance committed continue Since the Scott growth we me believe and have our remained projects. A/AX take value creating invest. rating, tremendous I this our remaining through on still you of onsite in year exciting

over new fiscal year already half projects to We the XXXX committed Algeria of China. have and of $XX year announced India, available or we Minnesota, So in spent period year California, over billion five fiscal XXXX. the recently

our simplicity, value deploy of our to fourth for The our so continue ability progress very speed remained to confident improve and where on shareholders. and far. have sign great this environment environment the an of made high our and We motivated plan. to inclusive and plan very like have culture, attitudes committed to higher innovate, will meaning We create for XS that confidence return we self work a finally industrial their confident generate is executive remained team points do to open into communities. and a projects to positive point challenges enjoyable people, capital contribute solve safety, stress everyday. purpose these our brings to gas our I feels proud create minds all I And and that word to And our cant to five everybody so of focused

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

can you history. please to see our Slide turn Now X, where dividend

of we Products of to via return growth we end enables can high to billion that of another will dividend. This that our a just proud shareholders years XXXX Air Slide And to hydrogen use is it for the and/or of products our increasing diesel investment chemicals, dividend friendly see driver cash lower our said, a to that power. the XX in gasification benefit to continues strategy way in come. a are that On way year key be olefins, variety Gasification cash. A opportunities. is our focus environmentally record tremendous can X, fuel, investment many be complements including shareholders you into giving our excited I turned $X direct As feedstocks. are over key polymers, wide of about gasification to syngas opportunities value

to don't great product business or project air and that The model few projects is their risk. syngas chemical Lu'An the Arabia. and/or provide separation Lu'An consistent related We've are thanks own with for Saudi customers in price volume our the we gasifiers supported is before The raw syngas this with will four last our clean Air providing have gasifiers very operate and products in operating where market units the to announced fully production. the and successfully China customers. to oxygen on syngas have any and stream continues that or material Products to successfully these have China up large announced onsite effort of we supply We and to where projects continued years over our large key team

XXXX. and make of we Asia and the continue our fiscal share And we impact progress over the other company on in good $X.XX Lu'An we've per quarter this earnings confident results projects announced. to see year of remain gasification will deliver Lu'An in You positive

turn please the committed gas our world to the Slide Now profitable of We we these measured being to of industrial as metrics, each by company are. goal most in remained X. three and

Now margin. please our favorite over is the which points improvement XX go Slide to showing in always slide, X,XXX my EBITDA basis

our guidance. turn share to fiscal our strategy the growth Based successful XX. years. execution deliver Finally, midpoint allow last earnings the please of compounded will on per Slide annual five of XX% to us a The year XXXX over

and believe we our an deliver strategy least on We by will years. XX% at the earnings year per increase over our will execute we average continue coming share to per

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

Scott Crocco

very much, you Seifi. Thank

summary to results. QX turn please a XX of Slide our Now for

our volumes said, quarter with As another regions. across Seifi delivered up and team strong pricing three underlying all

results, Before we I China last get in quarter as the sale a in of first a plant reminder, year. the had into

as has on this supply So India impact segment. for we our this into will does customers excluding gas quarter, change pass and profits arrangement. turn help but agreed reduce our you EMEA through as well restructure this our our natural understand our in it we to no sales tolling a exclude This agreement hydrogen during company event. to sales, results with Also

change. the So other equipment, have Jazan This December, Overall next the of so only X% we but larger prior showing excluding plant language and contract were flat, beginning $X.X in are the line. reported of the sale impact impact sale change quarter. sales sales impacted the up billion we were year India

X% X% affiliate up pricing This volumes, was $XXX to year, turn and of and up improved by plant XX.X% primarily cost sale, prior translated year. stream due down with improved Rupee basis and Jazan prior higher year. of margin rose outages EBITDA in all XX. XX% sale. in Peso. prior quarter. up currency million seasonal maintenance for up to Adjusted higher Slide to base Indian improvement up points compared and to the And profit. of the the improved plant equity three volumes Sequential an the Lu'An volumes Asia. of and Chinese regions of versus offset pricing EBITDA XXX driven Price for last positive Negative by positive excluding was nearly Please three year the X% full the X% which XX.X% total higher consecutive earnings partially was second the excluding on customer X%, RMB, company. into regions increase year currency. volumes. were the and points Merchant weaker $X.XX grew income Chilean was the Euro, per Excluding versus unfavorable primarily in prior due and X% ROCE share sale. volumes driven were XX by the plant the all planned X% of basis

$X.XX This write-off quarter We items non-GAAP have included enforced government for share. that an $X.XX this asset for plant totaled shutdown. customer a per

continue the but do not anticipate to charges. We additional situation negotiate

negative Act had also revised a $X.XX of We estimate the impact. from Tax

$X.XX Overall, of plant EPS $X.XX operation sale. prior Our EPS the adjusted by $X.XX continuing up and share quarter was excluding first per $X.XX. up increased higher year volumes

taken contributed higher together volume productivity Net in prior $X.XX cost materials by unfavorable was Americas. offset and cost $X.XX. performance Excluding in with plant by raw increased year the Asia EPS Price sale, as $X.XX.

plant project unfavorable, overall EURO. versus continue and with to added capabilities The our $X.XX new consistent to we've with growth as expectations. associated RMB past, development, Chinese our in and engineering, year, exchange due areas the and to Additionally, in rate primarily was investment income affiliate foreign execution and the due strength $X.XX operational Currency $X.XX was and headwind Equity technology the we Mexico. primarily last tax the and future. business said drive to in in see our cost

expect to rate XX%. of range We XX% be tax to the in FYXXXX the

for interest operating other higher we by $X.XX a expense. including have combined income higher items Finally, that offset negative non

to Slide Now turn please XX.

generate We cash continue to strong flow.

quarter. cash per have gas maintenance to capital of Since last $XXX our we still cash $X.X on in billion pay for billion over generated our we distributable billion of XXXX. nearly M&A increasing months, XX we've progress introduced XX% capital the The strong or growth the flow shows almost of dividends dividends information deployment. XX core excluding shareholder available million and to $XXX billion capital. last $X.X $XX FYXXXX, business. value than Slide deployment and flow is $X.X This $X.X share us over million spent as allowed and flow, about start and return year the of higher investments us fiscal distributable about update projects, higher cash industrial or enables through an During create

M&A. yet In addition, in we've not committed billion $X.X spend on almost but projects

have over we've debt and we to maintain Xx $XX our $XX managing billion of investable spent available the months If total the rating. of total and targeted in $X our Therefore $X.X last last of we almost based have available years. continue today. capacity remaining billion to available XX rating far focus We billion almost about to And XX to $XX flow, over three for invest. us FYXXXX to billion this three on $X.X remaining we our level we The A/AX EBITDA, expect quarter balance through current on maintain about almost debt and the months gives billion cash total so billion invest FYXXXX.

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

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

Seifi Ghasemi

and just Scott. in to opportunities. deliver sales and to XX, Slide very Asia where Asia, we continue our week was growth. Thank profit turn strong excited last about growth you, I remained Please

business very pricing this quarter. prospects Sales higher than and year by and focused pass running impacts We or United on States interesting, issues growth and long-term how projects as and energy not X% impact business positive offset trade At were unfavorable our to in with holiday currency, remained our Year better committed meaningful our any be team have a the We partially between last China. and New lower will X% our have on It see point, result Asia. any we the an coming business in X% on lower the China. this -through. Lunar economy China excellent seen however, in of volume

margins. favorable year, year, last profits impact were acquisitions last accounted of XX% The business XX%. up regions productivity price up versus rest. the EBITDA year-over-year the Overall primarily plus for Again, up XX% the The EBITDA last pricing both and increased sale was increased XX% the across the small about basis consecutive points. improved volumes were and Excluding sale while with quarter base Merchant Lu'An mentioned, X% increase, was of the year X% that strong up excluding of pricing pricing all pricing with seventh positive for in plant XXX and business improvement. and the new Scott driving impact sales over sub plant volumes of Asia. region margin projects by

than full running EBITDA Excluding were Sequentially, basis year sale, margins profits plant due to prior points. XXX increased was and the margins up and XX% up rate more from Lu'An. productivity and

turn to like to back our to Americas I'd the Now discuss over results. Scott call

Scott Crocco

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

also impact up was up quarter years. increased affiliate volume sales as price due better X% energy hydrogen America new and America equity the volumes based volume partially X%. offset EBITDA both pass-through as improved up planned results region. For as result Volumes gaining both is and Americas overcame the X% well offsetting positive Higher of volume consecutive the this pricing X% for X%, plants, increased grew with momentum in best the actions more volumes. Overall, effect. by in was a customer of negative North three quarter, our and income was pricing higher negatively Mexico weaker is added maintenance price price as were merchant and cost. currency X%, impacting Merchant Latin X%. eight from outages improvement and The than to

the focused of EBITDA maintenance margin and Sequentially, impacted team costs. basis maintenance maintenance we driving continue both customer outages transportation and to on impact planned negatively see While the cost. energy excluding volumes XX productivity, was hydrogen pass-through points. higher remains

basis EBITDA points. Excluding of XXX margin down sequential pass-through, impact energy was the

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

Simon Moore

to X% and higher modification higher EMEA results. primarily X% offset currency Slide X% Thank for contract pass-through you, were turn by Sales price. the X% energy by XX India. review Please volumes Scott. a our unfavorable up was in driven and The better

did we profit a Price merchant demand XX.X%, to a positive Merchant as was see to volumes volume change actions. results agreement We and offset this and not and Brexit market price pricing this impact impact. XX both the as mentioned, continue sales Scott during any price uncertainty no up see grew reduces negative nearly points. primarily X% EBITDA currency. for for negative solid flat quarter. positive but were and by As were tolling with EBITDA was has quarter the down the our volume quarter. from associated in basis margin

Sequentially, venture. due primarily flat. up energy due our was EBITDA impact fourth the plant India was Excluding Price a Italy on were down higher currency income in in but margin equity slightly of volumes pass-through, seasonally EBITDA to strong following The the XX basis joint seasonality. change. and a primarily positive quarter contract to reduction points affiliate was to rounded decrease

conclusion approached on to as the sale separation of of industrial project. EBITDA comment Now, equipment Slide to business and equipment of air costs. a please segment activity our lower includes ASU central our the turn Sales declined which well project and global business brief XX sale unit, we as due as gases for gas Jazan

and FYXXXX project ASU Jazan be in previously overall phases We on fiscal in to the FYXXXX. continue XXXX expect stream versus we communicated, Jazan as ASU expect headwind a to for the

in Slide compared the to Sales on year XX turn no flat our which were LNG our with please for helium and corporate significant brief container, change our our a Now, segment to about cost. business. business, business includes corporate and prior profits comment LNG

LNG be seen business optimism the continue but prospects into have firm orders. optimistic We about translate for industry yet to future the not

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

Seifi Ghasemi

Simon. Thank you,

control worldwide to events. confident over very know or in made And operational investment. on do Air our can't world very growth all Products control we've But a continue we economic we and are or will political today. living have developments. we our we commitments performance despite predict are you well, world As the uncertain deliver the

We quarter. these the on demonstrated impact point first have by from at seen not uncertainties Air this material in any global Products results our as

to be continuous the excited Products' around Air team about Our world very future.

strategic our growth. forward. continue safety, and to framework foundation to drive point the the operating our our provide provides five success performance Our going And for plan continue productivity

the capacity, financial the the opportunities key have to successfully growth projects. win We and team

to please Slide Now turn XX.

remains everyday all the economic safest, Despite in for the in divest our uncertainty, customers. represents working strong gas $X.XX unchanged over and political is are XXXX to increased despite XXXX midpoint, and currency be our fiscal industrial fiscal year very $X.XX hard range a performance. world, our year headwinds to to share. growth the company And most providing at excellent guidance XX% of We profitable guidance and service most per our

$X.XX year X% our to guidance up For midpoint $X.XX quarter of XXXX, earnings over year. per at fiscal share is two last

to expect of XXXX. billion range the We continue $X.X billion expenditure to be And for in $X.X finally turn please XX. to to capital our year Slide fiscal

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

delighted your Now to are questions. we answer

Operator

Carson will Susquehanna. we hear And of Instructions] from [Operator Don first

DonCarson

Thank morning, you. Good Seifi.

obviously what walk regions sort many that world that you that business? of a we you're commented slowing. your control can't base terms could around economic in production but hearing do You of you seeing just industrial the are Given events in is in

SeifiGhasemi

from Asia. start I'll Sure.

of in see New that the how out countries. people that With That of because yet. Korea, is shutdowns is or going The means the we China, of -- weekend continue is is situated us only play that that concerns keeping the take to kind calendar take would wise. Taiwan, any eye Lunar not way longer only thing it longer to the countries Year an are people Chinese seen That Malaysia, longer India, And are Year for contrary quite New out. those this quarter. good frankly on thing you China we we've reasons those that to rather that and very we've a spread slowdown respect given watching. like a Indonesia, We in than are of $X.XX of guidance is of one out to that growth usual our the practice, countries, $X.XX

New that the business why any concern would conservative the So say Year plays not I the have come the the it effect the can our seen United be in and big is doing China. how Europe is turmoil -- its all slowdown in Europe, we said. I is Asia what you business -- didn't, respect said the that flat. in months What Again, you in business and of for effect we've As rest Lunar and our that to we exchange When next is as that Kingdom? few a business know, as significant can we've have guidance is in there. pound But on Brexit. quarter. we our the well you of also The with very in rate are

projects stronger expect we for actions another are are time. We why second year. of our see is production not States, we a our that taken guidance the material is not that on of some we that do but the for changed In very why conservative is reason a do that not and quarter. the were that because any and than we remain There So last given again half the estimate the have things estimate about overall changing talked United in we've pricing second we've results confident the impact slowdown the of since and our for why we've industrial first half year.

remain but very have In big that things of addition, America add Latin part also very, that's negative a not our business. I in to

DonCarson

then a cost I $X.XX And delta quick your narrow Okay. only XX, quarter. negative Slide up. $X.XX last gap considerably follow noticed on price was versus

on to drag $X.XX the was you quarter? cost where side are $X.XX it narrow last only delta that how specifically this So versus quarter able

SeifiGhasemi

in recall transparent performance. cost call my the very you our as about Well, was with last I dissatisfaction

our heart to that we've on see we to So, very and took obviously, hard cost go hope as worked position. to we improve that And improving number everybody forward. productivity

So Don. we've action, taken

Operator

question next Suisse. Parkinson And from Christopher of Credit

ChristopherParkinson

Thank you.

as you helpful? market out the cetera outside pretty circumstances the result on Asia the and the your would Lu'An, Thank was expectations use your parse post that in quick New et Can key of well as solid. merchant just volume intermediate be you. Year, operate drivers Given term just

SeifiGhasemi

of Good what morning, the slowdown the the says reporting Chris. are Obviously, we growing said, a growth. as rest but of The growth rest everybody or X.X%. Lu'An about XX% was China. is I slowdown of Asia from results. coming Sure. But Despite the they are at growth

very benefit said, and positive merchant the of see Malaysia, as well results. I Korea, addition But business. we the our are in Taiwan, that like in So Indonesia, countries they contributed to doing

ScottCrocco

add mentioned If this good cost too. performance also that an cost area just I is Nice earlier. saw Seifi also could improvement quarter that we as the in

ChristopherParkinson

last refinery you, Thank also results helpful. affecting or --you plant in And that's just mentioned then seen but North was this also Perfect. outages year. America

So planned et intermediate just comp, line was hydrogen of expectation. then what updated the regarding to initial in can on the Thank with US, views And cetera? the comment just long your in you. demand also year-over-year are term global, your downtime you

SeifiGhasemi

Sure.

in with more There gasoline and But line; as drive in With for has US is many expectation. unexpected our and hydrogen obviously, all the significant nothing they is is are line to driver miles grow accordance we the more people our our demand. that are all, there to demand, -- with in of remain has turnaround demand stable. -- respect But continues the totally obviously, happened. how outages hydrogen there with. hydrogen deal the turnarounds out These to are expectations. and plant of more we've plants, First business nothing

of that future, we are the called liquid the We plants hydrogen that of growth and see for opportunities going in amount gases liquid announced hydrogen that. to on plants. so of we other projects As hydrogen have areas we per require hydrogen are you there in and and terms chemicals would as obviously United the significant new hydrogen build, know, in production participate the for States, Course discussed will significant Gulf being two

we positive. So, remain overall, very

Operator

Robert Next Koort Goldman hear we from of will Sachs.

RobertKoort

Thanks the good enhancing and then de-risking It organization some over you last of go and gasification divestures couple strikes towards by and continues you me improving made some these yet much, stability your that of the years the to maybe very moved the large morning. wrong on that of projects, of the direction. multiple

means wondering I frame significant your a it can means of So am have what it volatility and to help of competitive to you advantage do your what how you such developing through onsite and business. presence and sort that the see

SeifiGhasemi

thank stable And have syngas of a changed of on significant the of get into first opportunity. business Bob, production because We we more a we model stabilizing We cash focused that and where much have the business. presence have is see hand. the the our to do company on right business, into all, onsite significantly our you enhancing comments. getting your definitely business for moved direction lot

the have We in and gasification. technologies in of many, leader balance very many very positive Shell be opportunities. to a strong there sheet. from strong GE are And a the the with And acquisition we many, are others, and

will As tell doing, decide then they what selling my job our stock. and product are articulate is a the multiple, am mean our the not multiples. why our I and to for strategy I investors we

our when area. is of Do and investors was will which lot we market concern the lot about these of as a under to to we that a I run deploy of ability I us new It's in forward, give concern we understand a go think can strengthen we all gasification. am announced large the know facilities will the that cash. and time. estimating demonstrate There I you sign hoping run more, that how as there that our that Lu'An this. gasifiers deals consideration that? significantly portfolio due about is And we also

my we is explain our the job think as multiple. see are investors argue our I where compared to is As about will time the in articulate said strategy My and job to and I competitors. to not

RobertKoort

as applying And the guys is opportunity that like out? XXXX standards. is that that. business? you the briefly -- to technology? pretty appreciate of something periphery on residue it have for help some that adhere IMOXXXX this are getting close, the or I Can maybe pushed that looks I just to streams there You ask mentioned or development Is some sulfur Shell try a something to there solve is maybe on meaningful high very companies

SeifiGhasemi

a it an upgrading The wouldn't billion in Saudi get fueling to that sell refinery $X we That of the and gasifying are market of taking because doing about is Bob, bottom the able best meaningful opportunity. for the the example all project is that the is Arabia. they be it to that ships.

IMOXXXX good they opportunity. going you best a sure to know to So the There the that great that in some that. is is yes. And going term delayed. -- am action there States industry of is But of will on lot I in the the issue of opportunity as is the people long hoping opportunity, that is a a significant lobbying great. example. by United be because is implementation The are be This that lot of are taking not

Operator

And of Jeff we hear Zekauskas JPMorgan. will next from

JeffZekauskas

having a describes price segment is and or are Is about or much, spoke the in faster something the price the Thanks Europe. seems X% X% Americas, But for accounts to it slides there than the different real benefit slide the geographic level? in each Asia the that in costs very in actual that is merchant price X% good overall internal down What X% for costs being pricing morning. X% that that? that the pushing you comparison? Americas, price. the It's more in difference? of the in And up going Or lower. price in are and do What's like In slides turnarounds X% Asia, the EMEA. in right

SeifiGhasemi

you question But Scott. that first answer had asked. cost Go answer like But Scott capabilities. have on cost side, to related I'll question. the Scott is your the the side I'd ahead, increasing our to

ScottCrocco

for Sure. Good question. morning, Thanks Jeff. the

or so quarter things to is as the price the merchant-on-merchant increase of last one we price change. what So we refer introduced and in

know, percentage Products So, Air portfolio, XX% a our in as has large onsite. of you

go the we which US when So third two through price will so over we the or the in entire do business of slides tonnage. is

So That's we X% a on EMEA. Americas, case X%, of with businesses. is Products, merchant-on-merchant increase helpful for increase at provide What and The the X%, this X% additionally be you the and looks to for those also total so the change X% merchant the price felt we Asia and price thought that that's Air portfolio would Asia over and for Americas EMEA. AP, X% in business. X%

So we portion as more insight was company. business on of to provide little a going what's Hopefully, entire clear spread to I on as bit the that. opposed across the that

SeifiGhasemi

Jeff? clear, that Is

JeffZekauskas

quite Lu'An Yes. are clear. the I I in it been on will the million up, looked non stream at number? was think that case the And have about Is year larger when $XX million last $X.X non now drop from versus interest income so then or what $XX your cost controlling statement, $XX this controlling number I -- there million given $X.X your non my the so? That's follow profitable. million year. and interest pension controlling has have to million is And would And interest is And eccentric thought would something

SeifiGhasemi

We things? just those about address already He can Scott talked that. Jeff, have has

ScottCrocco

Sure.

pension. on first So

pension We expect year the to pension for a maybe year last year of drop total have this versus a little bit on expense.

cash it's by pension $XX the like so flow it put an million interested or you've same way. for the expense Jeff, me the know, I statement. contribution On let way be that in the should always And from perspective. so Maybe line. in And

million it non be non-controlling about Then call pensions and versus terms cash change. and think we expense in wash contribution on the of interest. $XX So to

that way have, we part because that the had biggest You it last cancelled. it, that an think year, are recognizing the Lu'An of was a of right third that little adjustment air in a the was was quarter arrangement pure of was that bit I anomaly we

way in other, over we would to going expect have minority of venture the I we position as forward think a in Asia well. the by see, the also

be to the there to So non-controlling in going that's biggest the Lu'An forward. item but going around going move is interest,

JeffZekauskas

million expense pension year? Was $XX last

ScottCrocco

that order. comments bunch think, something to a that kind lower ongoing be, in was all I a of Including that that than there, that, the little about of the level. it but it and up was in was around we underlying non-GAAP here had bit with My stuff

Operator

we'll Next Andrews from Morgan Stanley. Vincent of hear

VincentAndrews

Thank If I you good morning, the on and just ask could everyone. price-cost equation.

kind was you're the is cost mentioned Should or before we of things exceed the first that move the to stay is? way it year balance $X.XX anticipate as As fiscal to quarter. in to inflation down a it price going the negative sort of is of to going we

SeifiGhasemi

our is Vincent. That goal,

VincentAndrews

you you're achieve going think to Do it?

SeifiGhasemi

see to is We always and goal, price increase want cost That our increase. yes.

VincentAndrews

you're but by and a aristocrat, that year you and dividend your I than this of less the have the lot you ask it's and that almost could years. anticipating. EPS on I'll preface Okay noting couple the growth X% dividend, than if a And this sort less a increase yield the was of last

any particular there's if larger. I'm just reason wondering wasn't the dividend So increase

SeifiGhasemi

our promised the dividend right to price. that the we to had will our the stock at And X.X% now keep of we X%. around increase be dividends We be investors Yes. X% and promise

will the stock So then so which hope if the obviously we up next increase the significantly, guiding is principle. quarter dividend. we That price goes

Operator

of Bank of Steve America. Byrne

SteveByrne

to above been gasifier you. the if thank is it Is XX% Yes, margin built that than had buying and have would Lu'An EBITDA well even it? rather it reasonable the incremental you better assume on

SeifiGhasemi

the lot yes. want XX%. right how business XX%, answer information that of are to necessary? a do to lot more Actually a competitors that Steve, giving which Obviously, is Well, you not our you that EBITDA on over than me very margin without question is

SteveByrne

have the property intellectual you the an you drives of attractiveness gives edge? gasifier that the what that Seifi, And,

SeifiGhasemi

owned the Yes, fact we The absolutely. technology. that

Yes, have. Because are We our very as we seeing have Shell take is competitive GE efficiently over good is inherited doing technology, that a advantage from that efficiently, us, for the result those they project otherwise we to biggest us technologies and plant it thinking or and everybody before them the before request than are technology owning even owning if the Number select for And putting the to by profitability the we study the they run is now, number is very are technology. a know that a people XX years announce giving it value one, is doing. have the also talk And what and and the they the owning who first us obviously are higher running knows two, able run they creating to partners. somebody technology results. And a they issue advantages. far these the because in efficiently visibility are gasifiers the were they because thing we that run. is or two projects why were and they more we of do as what they FEED you we that, project project know know Therefore, all way quotation. hell in the about about

So our on we five year head a end four, up three, having competitors. start

SteveByrne

that forced a we by plant pay China contract? Should older assume take the or government. an this shutdown didn't that And that was plant was in have a

SeifiGhasemi

as nothing That that gasification XXXX city. that to plant, supplying since know. a have of plant steel you has plant. it plant do been with to middle It's was a was It's in they oxygen and shutdown

has is that a city plant the to time it in not therefore and grows move So get that either shutdown. or surprise

the majeure, So be did right the shutdown part that force has on future of cities plant smaller the contract take to that's that. But plant that. that pay we or now as middle take the do can not you might business. a too. happen material in We shutdown. But that or have have pay the shutdown, deal plants of obviously, plant have are the is day end of other in our at with and contract, who And been

surprise So nothing all. at

Operator

of Next Kevin Research will Vertical from we Partners. hear McCarthy

KevinMcCarthy

that you that return timing high to got environment Can project? such indicated got deploy cooperate it Yes, gasification give that elaborate menu? the Yankuang from like the projects. us these Is macroeconomics rich Seifi, if choose that And don't morning. your plenty on you into good update even what target And ability looks that? on you to you you you days. on confident then of the the an can very second, are capital a case in

SeifiGhasemi

they driven are places these by to very the they Thank strategic decision by project, want all countries respect economy. chemicals. you independent the resources Good opportunities. working like for to oil. other of that China, your The the become and much have good to They India, Indonesia, questions. and with morning, convert on, coal of are opportunities They Uzbekistan these to by Number gasification Kevin. driven are not that we one,

result, I confident than working are as reason So is a projects. the currently these more am very XX we of because on

investments. billion So require if they all materialize, of it would $XX

ourselves properly. we -- We've we've So positioned technology. the chosen are

to I that have will people And we positioned become what whatever countries makes we think therefore, from cash invest. to have well And confident. and me do the the need to happens these order We are strategically these and the oil. is in to independent projects economy,

update that. And trying that all develop that to XXXX. That Yankuang obviously to and go give on And with you we of a will as with million respect investment environmental It's that. project. around $XX working about huge and -- project. on There project project So expect to issues, we we we issues forward. the a Yankuang is stream that project. somewhere an are be in are And

KevinMcCarthy

imagined are should moving if tolling the to to we may, a your talk Okay. margins of modification you in decline expect contract secondly, your and you I And sales about can to if your India? I rise. arrangement

in is your no that comment correct? net of And b; magnitude? segment. a; is to facts I if So possible, impact some of guess, on those there maybe you EMEA terms profit that can

SeifiGhasemi

natural into you And Well, sales And absolutely but bottom they and therefore has terms our sales. will price our point their that of correctly decreases the BFC, had it reason our change. margin the beneficial that with improve it sales first the a tax effect it same that are way the The our no are change tolling put of margins. of gas all, still founded is our do of if increases get partner when them India then But that optics on analyzing of reduce happened results, becomes Is that the to is line. it not from view. doesn't It is point you that okay? view from right. in we it obviously in for

Operator

our of next J. P. Juvekar Citi question. has

P.J.Juvekar

Yes, hi, good morning.

XX%. able Is prices which you that last review markets Can raise got merchant-on-merchant year think this Seifi, you I pricing had mention China was to end that rate the saw, you utilization you So, still that merchant which you case? around utilization or pricing. world? good to? were industries just good to the And close

SeifiGhasemi

there is power. But what is are in all, their local. United in around our the is is But the I go the China, about and pricing XX%-XX% only There XX%-XX% take all world. again gases, industrial business thing in Utilization China know, in merchant of if XX%-XX%. utilization are there same very, the about or in China that that just is around and first at the US, are pockets big of giving you still Europe very the Europe J, rates -- P States. country. pockets, us may there is a rate even is you if as utilization are very China,

but in another can in California we be having no So Pennsylvania. capacity capacity

these this. With geography in are is action analyze plant driving the obviously the market, you to things It just is specific that appropriate. respect we there is specific and of that end no utilization as So, in take located. end detail market the

P.J.Juvekar

thank you not to which buying flexibility stock. stock you gives to in the buyback Okay, back of some then invest preference advantage market you. why Seifi, projects. high And haven't take I return secondly, any know And is dislocation? been But

SeifiGhasemi

the because do giving we don't we cash do a and a on lot I than better higher stock buy buying to of and away go to are going invest, is you stock plan return not people do, bunch a the can think, projects that you if to are investors you Lu'An math, to that shareholder. for if We and like than money longer-term going be not the wasting will us who have

way only are the shareholders it announce out they terms of is If economic that can people very people in buy happy run is therefore growth. have And I of buyback think So a to steam who decision. who stock make program. stock

stock. I that have afternoon in have And, as more in invest I money lot make our our and cash generate not value -- about projects a I want money the you back money shareholders opportunity get or the long long know, shareholder We term and this term, am this a big buying to the very am to passionate will disappear. to for more then than in because

Operator

we Next Barclays. Duffy Fischer hear from will of

DuffyFischer

morning, good Question Yes, on Lu'An. just guys.

for learned? and is the Have GE three Number And have up is from how second just one. running? that you months, that? closed yet? deal had one lessons Now it running you then What is it

SeifiGhasemi

question So ourselves. don't to your jinx and want first I

running So it am the little operation capacity. going to is be All with on knocking bit. gasifiers very four are I project, at going The Lu'An well.

Our customer They very has making converting money. need all for doing well. is and Their the and the and of into are business it product. syngas selling the taking chemicals

team our I positive. very, So am up has very very, now to there. it proud been very of down

on gasifier know XXX as plants. process something run people to this have we And investors running like and have, telling we been We how working I've always everyday. it

able you a plant, be significantly run to have technology But that able the acquisition the having those should to gasifier. Shell be I and to team say people of our helped If to you on do to run a us hydrogen that. has

in well. much. that from have you very we process is the yes, GE, view very we doing With the the yes. are respect closed it are And GE, of -- -- point So we of to thank

Operator

Next from Sheehan Jim we'll SunTrust. hear of

JimSheehan

good What in of LNG for the the you, outlook please? morning. business Thank is the year, second half your

SeifiGhasemi

don't know, contract. either a you you that contract business the big or you our is big of get LNG as Jim, kind a -- business get these

But That a board don't maybe positive. of was say today as these lot happens have we I I make one announcement. to on And the want that are if our There I reasons the months that And results. drawing are obviously things of know. we prediction will means signs that of that are done. the make bit not some I is additional optimistic than confirming here six it we much projects to appropriate would done they are little too you possible until awarded anything a that ago. optimistic So more But am is be are about more but contracts.

JimSheehan

Great. year corporate assuming guidance please? your are guys full what And for segment, the in you

SeifiGhasemi

Jim? what of terms In

JimSheehan

In change to your incremental fiscal XXXX from XXXX. terms of

trying some Just the to corporate segment. color on to model get how

SeifiGhasemi

think companies corporate to the of in a finance department, that. the cost legal day of I IT terms all on Well, segment basis and the day are of running department, department

we how know operate. You

mean that is much expect shouldn't going You with there. a of increases. significant be I change to no steady

As that, might show plant that far business we think anything flat up of all as in your then and be I that have would sale LNG model any of happens that sector assume that and for kind or good would our news.

Operator

UBS. Our next comes of from John Roberts question

JohnRoberts

remind cash billion $X.X on XX door you Could one page or Thank billion the at will commitment? go the commitments in which of XX out for want. $X of the and the roughly you the approximate you. page gets whichever pace the us Scott, on

ScottCrocco

good speak, It's to going so John, morning. method, in right. coming to Hi, to going come, be It's different

If big in check. particularly are it with an or by it projects going that if it driven to So the is project, buyback organic. gasification it four -- a organic three, the and in so is an the is spending so asset big curve an can it's nature years large speak is to come purchase if be will Whether and itself. of lumpy project asset these

SeifiGhasemi

assume, I we rule year a should this $X.X we will billion. as of saying about you are spend think on thumb, But

in the will $X.X number next billion should that year. every about assume go to think few years that you I

JohnRoberts

on And global that Scott primarily engineering, about talked like helpful. segment of $X.XX Is the well? That's or that part gases XX, and you. the Slide business is cost, unfavorable development. Thank technology, in significant lot then gases Americas as things over

SeifiGhasemi

we when the cost get GE; a technology when of we to is increases related we technology, people. lot buy It -- Shell buy

told I gasification you than as XX pursuing-- Our projects. more

terms you is, in in people XXX these to to -- another that projects. cost the that's the there of Those have order see put you in almost develop Scott a are So that section where

ScottCrocco

building costs that's maintenance. on an depending capability. the is the the That The hike comments customer item Americas that these as on returns. spread largely in that's in and But then the that we are outages, around will of planned be corporate and planned our so nature with well other number

Operator

hear BMO we Next from will McNulty of Capital Markets. John

JohnMcNulty

Yes, potential question. know targeted on at you taking good you've And in a gasification or Seifi, capital. returns morning. past for I highlight backlog Thanks my big backlog the on least projects. XX%

this. kind partner you of experience more evidently As greater become the doing got choice of you've

risk should think capital You've be upside terms the you projects returns thinking and of the see about about? in to for built up the to future how we technology. how on Do

SeifiGhasemi

XX%, our project XX% Well, get John, that. we minimum at we a if we have said requirement is that will do can but

that assume correct then our as if be we would obviously announcing which the So able to they put us we is And of I is share become there command choice, to competitors partner project in don't higher a think money the that your analysis exactly in are price. other have dynamic position. compete a should is $X this billion buyback better I

Operator

David Begleiter Bank. with Deutsche

DavidBegleiter

are the Linde on impact the support plus merger just industry? and with Seifi, for morning. a on the competitor good seeing the has there from pricing you, you any the the X% dynamics pricing Americas merchant been in Thank pricing,

SeifiGhasemi

know. there, as close merger Well, first is not Linde of all, the David, you

the I so in me is certainly my nature But, saying at that. industry. know, general as don't anything of considering pricing on, from and impact no the So looking you say have and competitors lawyer there

being on apologize shouldn't to I comment not for on that. comment that. So I able

DavidBegleiter

to need just for the you or to what Understood. this you, do see the upper year? of half to range do Seifi, get guidance And for guidance on happen the

SeifiGhasemi

in I think our stabilization Year is that hopefully orders that few Brexit China which a normal making in better suffer. doesn't the a being help And what sure the shutdown and business UK than would discussions LNG New of for would on longer. A rather Lunar a help too. is us

Operator

of from hear Mike Sison we'll KeyBanc. Next

MikeSison

quarter. nice guys, Hey,

understand Is You that what XX% mentioned way the growth to talked couple of next help much you've Products support us over to XX% can years? for you grow how can about gasification of positive terms had time. that gasification. feel Air in Then continue a confident annually there at some

SeifiGhasemi

gas are of Well, that about projects business we can't we if we that lot all growth the the GDP much capital every to and are X% at business than therefore about, that If X% actually will worldwide, consider materialized, industrial will expect the XX%. the worldwide than year. we grow look talking that a deploy grow gasification talking with you conventional we and better more

XX at say said, we larger least the a deploy we from better than implement projects projects. when we as So expect more XX%, X% and capital we gasification XX%. will and lot have But like if grow then can Lu'An and I actually

MikeSison

and forward? gasification which it as on quick do talk capital preferable your you think about all probably Got to it that if a deployment, is spend choice had follow-up, historical and capital you you the and concept versus then maybe ASUs the about going

SeifiGhasemi

asked Well, remain to committed totally business. the I'm our glad We you question. core

business, in in can generators, possibly as We gas are we our merchant standard and all going invest business much our our of to as hydrogen that.

taking the So is gasification that. away from anything not

is as We you on not know in gasification on enthusiastic of investing our our away going to focus take the from aggressive as top will be normal and Gasification in is that but business. business. our core

will GDP. concede as invest we to be to of very helium our much that is another world need our are ambitious We those business, therefore that XX%. than we LAR found projects. businesses business, fundamentally goal And share not And to delivering our order saying anywhere vehicle meet going to going LOX/LIN, All the in And businesses are grow better not any market appropriate. in and in gasification you have we hydrogen business. those our in have to than are more large vehicle

Operator

of from Global hear Securities. Harrison Seaport Next Mike we'll

MikeHarrison

the you bit Seifi, about Hi, need New good rates some your wondering talked get ASUs merchant about would on customer expect a or are Any driving seen plants talk of they North was you what we've which Ohio, And on about little can markets for and approach the to capacity? little those morning. America. merchant bit utilization. utilization more you merchant in a you capacity end announce once running? dynamics talked We've business details up I if York, kind Minnesota. and in

SeifiGhasemi

a good have as sure been Well, we remain customers has We committed Mike, access that's make to that to always product. very question. our competitive

we there at our that, order make we market we is see is this market and approach And supply build I we area see the thing way the very mean, everyday. plant in operating we business us XX% in sure it an is for we look is we go merchant area is to that appropriate are to in growing, this the competitors the where is on can build that plant. in and then when So market. When obviously really competing few there, and like go a growing Minnesota and the a then at

the to making they on of product. So our have access meeting approach and demands customers focused is our sure

MikeHarrison

agreement on the All right. Algeria. the hoping market. comments an an you're announced on update in recently dynamics seeing in know pricing you with then or helium growth also get I Any I helium. And was that to Sonatrach

SeifiGhasemi

helium Helium largest where are world. the producer in There many And produce is commodity. you it. obviously a that not places the we can very rare are

meet And So anywhere the we our opportunities committed we very can to therefore again possibly are develop we helium world customers. do. the that of demands in

in to there to our make years. helium on And able customers. many opportunity for to been expand operation We have we available our an operating and to saw Algeria be

we world the are the only in has helium We who are producer as right force now declared very proud speak majeure. that not we

our committed I have think we that. always on that we are customers. for sure supply make We very

helium. our that the product machines So helium have use rocket sure of for medical we MRI leader of customers. launches the amount of growing. And of for committed is growth significant is as Air that. in to business helium the all business amount make require worldwide Products There that A significant is and

Operator

of Lauren question. our has Jefferies Alexander next

LaurenAlexander

Good morning.

a the you announcements give entering Just your of up Given quick excluding the backlog how made gone that projects? gasification sense number much quarter. a were Can for has one. the

SeifiGhasemi

standard hasn't of it billion, announced and the that backlog up about in much overall haven't but changed order projects, quarter many a that hasn't During significantly. the $X.X business is too gone because somewhere our for we

LaurenAlexander

have some or the on project and side, wiggle this you stakes? Okay point to gasification capital will outlay financing those and your basically maybe capital in reduce terms of fixed the the are the for at other room products by ways investment for commitments the or

SeifiGhasemi

is We of look where basis in project-by-project and issue all that. on a terms those of at --that it

announced we equity front to be order Jazan, Arabia, finance. the are and we Saudi that that know, the more on going project you that in when project as big of we and use $X So, going said is XX% project billion magnitude XX% to than

of driven corporate capital there So specific the project. by in China, finance. It's it's is and We a when project that very the $XXX much requirement project million. like But it XXX% nature the very comes project Jiutai the to specific do driven.

time We question. for have another

have We significantly time. over run

question, So can we one other please.

Operator

Absolutely.

Our final question for today will come from Jonas Oxgaard of Bernstein.

JonasOxgaard

guys. morning, Good

SeifiGhasemi

you? are Hi. How

JonasOxgaard

the everyday. living dream, Oh,

SeifiGhasemi

That's positive attitude. a great. That's That's great. good

JonasOxgaard

you. Thank

question less positive attitude positive So perhaps. from to that to go

take In down. plant risks China of plants protect of And the are force The that by answer about If or us. China has you closing can talked down that been whether or past usage. coal in a the was turn the gasification voided you potential closed you and to the majeure. the gasification when pays because to there always take pay

there unique should particular in the something grander think I one? was So this context? about this about how Or

SeifiGhasemi

comparable. the an do of latest the money didn't And plant the reason because are of was the I that shutdown it -- was the obviously was mean shouldn't that middle you not plant, is city. think it and is equipped older not the in that. I all the two the and steel steel plant Gufang growing it is technology. with city to have plant The

environmentally The shut things And them because building are which production. related friendly. billion in we through they the those significant government areas. are $XX down. are not are for are investment chemical the they gasification being built being $XX projects -- that populated So of They shutdown plants are billion, significant actually possibility

no there So the really of comparison between is kind two.

JonasOxgaard

to be would take voided? be were the shutdown they if pays But Okay. or then

SeifiGhasemi

like and war it's Venezuela they has take is Well, just it that come saying plants in Exxon over if happened my there before. your friend like to

to in which don't the run to that, supplying run not goes the oxygen supplying because so protected we the them blows majeure be case So plant you our when have want force majeure for majeure both to force with like compressor operate. the -- in customers plant them kind situations had their, customer and situation. hydrogen those because are supply ways say, air wrong plant that are to we declare liable a force works of refineries. come oxygen and things We Or of we plant or a something that government, up steel that have we get kind and they we sued can't by can under we be to their

So ways. both that work

kind So standard contract. the that's in of

JonasOxgaard

Okay, thank Q&A you. End of

Seifi Ghasemi

With thank on Okay. to your allow for you you our in we hopefully Thanks everybody very look to our good the next like busy And Thank appreciate being for to we very that kind with of results. questions to talking Thank from And very interest better that, you I'd schedule. your much. results. articulate the quarter in company. call. forward time for taking us

Operator

today's Thank That for does conference. your participation. all you conclude

now may You disconnect.

Simon Moore	Vice President, Investor Relations
Seifi Ghasemi	Chairman, President and Chief Executive Officer
Scott Crocco	Executive Vice President and Chief Financial Officer
Don Carson	Susquehanna Financial
Christopher Parkinson	Credit Suisse
Robert Koort	Goldman Sachs
Jeff Zekauskas	JPMorgan
Vincent Andrews	Morgan Stanley
Steve Byrne	Bank of America Merrill Lynch
Kevin McCarthy	Vertical Research Partners
P. J. Juvekar	Citi
Duffy Fischer	Barclays
Jim Sheehan	SunTrust
John Roberts	UBS
John McNulty	BMO Capital Markets
David Begleiter	Deutsche Bank
Mike Sison	KeyBanc
Mike Harrison	Seaport Global Securities
Lauren Alexander	Jefferies
Jonas Oxgaard	Bernstein

Air Products and Chemicals (APD) 25 Jan 192019 Q1 Earnings call transcript