Air Products and Chemicals (APD) 7 Nov 192019 Q4 Earnings call transcript

Company Profile

Participants

Simon Moore	Vice President of Investor Relations
Seifi Ghasemi	Chairman, President, Chief Executive Officer
Scott Crocco	Executive Vice President, Chief Financial Officer
Sean Major	Executive Vice President, General Counsel and Secretary
Jeff Zekauskas	JPMorgan
Christopher Parkinson	Credit Suisse
P.J. Juvekar	Citigroup
David Begleiter	Deutsche Bank
John McNulty	BMO Capital Markets
Vincent Andrews	Morgan Stanley
Stephen Byrne	Bank of America
Don Carson	Susquehanna
Kevin McCarthy	Vertical Research Partners
Jim Sheehan	SunTrust
John Roberts	UBS
Jonas Oxgaard	Bernstein
Mike Harrison	Seaport Global Securities
Laurence Alexander	Jefferies
Mike Leithead	Barclays

Call transcript

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Operator

Good morning, and welcome to the Air Products and 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 is Mr. Simon Moore, Vice President of Investor Relations.

Simon Moore

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

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

per In Unless, adjusted EBITDA adjusted on discussion, we our we referring can EBITDA today's both addition, otherwise, margin and the segment on found the state Reconciliations refer website earnings we earnings ROCE. are throughout in measures, to basis, relevant share, measures. specifically section. be non-GAAP and to and various financial adjusted company-wide will adjusted release including

turn to pleased I call Seifi. the Now, am to over

Seifi Ghasemi

Thank call you, busy on Thank be you schedule to and from our everyone. taking time for your good today. Simon, morning,

We for $X.XX our per and consecutive are year of record our our year and earnings the financial $X.XX XXnd our record, represents XX% quarter double-digit on growth, also share of fifth year's share stress per another consecutive growth. and to of will over very strong last comment earnings quarter that results, the more earnings pleased of fiscal XXnd, year-over-year up in like and is details. I’d the Scott results earnings represents

that large issued press as focus acquisition on yesterday. week, and we a very the the higher they to our last comments purpose going I'm my announced So in Saudi Arabia release company, safety,

without our has incidents. to one turn is zero of And been us Now Slide number Safety at always goal zero please and Products. Air accidents job #X. for all question

versus XXXX. progress as see did can improvement our good not acceptable safety versus we XXXX not in our was show you XXXX, Although performance

are we accident-free people area, our certainly so that of Our in environment. an efforts work toward this move goal can redoubling their ultimate

Now, comment higher addition five Slide our public through what our the we which view. in our a creating We please strong in that Plan. value the Five-Point number side, we purpose define right point describes for do want hand a to send shareholders, believe on to #X, higher financial responsibility company to I have results, to purpose. on as

that from Our as part and where belong world's world are work. are at of company a and a they is company proud that where to communities absolutely it. they challenges, the and of company is Products and committed for recognized of equal sustainability That people local to a rewarded, that is feel purpose the to team, committed the is a the society environmental higher solve that purpose people higher are an supportive energy we to innovative appropriately be company treated all all and to our the want to process the and contributions part Air around live create diverse that to work and company sections from the we environments, are people's and of a

large Slide very to Arabia. go our please acquisition in please $XX.X billion Saudi #X Now, discuss to

is but This IMO a in Therefore, will due this refinery The used XXXX synthetic power. Saudi it drive updated utilities same joint close to XXX,XXX resid almost the produce gas turbines few venture will The to the assets, refinery related same gasified traditional to this power monthly megawatt day Jazan, barrel the with natural joint venture the of resid Aramco new liquid information. be to model including operative deliver be and seen from it air all mixed course, billion. to this have longer an regulation. latest to oxygen gasifiers, no This, gas. vacuum units, can used be gas hydrogen onsite of separation is $XX.X ships generation is produce almost reflect will and acquiring the Saudi facility before, highest You Arabia. and sulfur is equivalent picture has completing of been to per fee. to for our own the business to The of business. as Aramco Saudi the and power for a and X,XXX construction

Aramco, be Power, East, in Saudi This owned call just by Jazan be APQ, Products, #XX. by The Products’ independent joint will we new by Air Energy, XX% Products Products please the company venture Gasification venture Air very joint directly which owns Air and X% by large and which XX%, Now largest be Integrated over products Company. Qudra Qudra, Aqua there go Air Air XX% the called will will Middle total venture a Products of so owned ownership is by XX%. Slide producer XX% joint to acquisition The power

please acquisition and Slide to Now be shareholders debt. equity the XX% turn from The funded will by #XX. XX%

to be In that end transaction the extensive quarter the in to financing, expected been to closed had XXXX. due closing to terms the of calendar timing, we calendar first launch informed the of the have XXXX. by of here year now the be we But documentation recently expected required

in percentage will the at full billion. to to the Air consolidate equity this ownership and this project be results we debt in so this split, Based point, on Products, reflected In income. cash be affiliated contribution terms Products’ entity to not $X.X equity of that accounting, expecting the Air of financial are results will

return we I’d and profitability. details But We this confirm of investors the in to have to past. the terms stress, investment our in I this to to better the investment plan want the that you given on for do be for that do – general project of not do we guidance disclose will like not than

release our which in gas that nitrogen and an in the Jubail, pipeline system chemical confirms for part build doing. world. Arabia, As press you given that sell Saudi Arabia Golf night, plants of our to release addition project, the hydrogen, to Coast that to in we the proceed update is last a oxygen industrial this in will the to pipeline the system for are permission The we all of Saudi with of to refineries plan similar be what Commission the project U.S. issued related Royal step to terms and us has is could in about us every and The we This press quarter major forward in acquisition.

to Slide Now, favorite please turn my #XX.

almost our XXXX. from points EBITDA see margin almost X,XXX record can XX%, basis is early up which You of

Mr. like Vice Officer, Executive our turn give would I Scott? Scott over President Chief you Financial our and to Now, the Crocco, details to of the to performance. call financial

Scott Crocco

you Thank Seifi. much very

strong last to Now profit Sales of almost non X% X% versus growth $X year year underlying Slide flat and offset our very We strong volume factors. delivered of results. full please despite were turn another sales the growth operational billion modest economic year, growth XX by and activity world. for were around as price

base another particularly, year. was the foreign by euro primarily no by to and contract new driven Chinese weaker plants, sales Lu'An, X%, had The impact, sales currencies, and RMB, Specifically, lowered pound profit positive volume volume. British compared reduced primarily India growth supported prior modification, by X% by and the which

were earnings successful major led all price X%. three double-digit price the Strong improved volumes by project better Jazan improvement points, and We across from EBITDA product margin the volume. as in year. project This price another versus and headwinds. profit year impacted sales primarily the contract contributed equipment regions nears very and share billion. per of saw of was currency to India prior $X.X up growth Sales XXX lines. lower despite negatively completion. volume $X.XX, nearly due XX% XX modification up to points. basis of to Record EBITDA XX.X% basis was XX% The

CapEx basis Our timing, ROCE we than FY lower and of $X.X 'XX forecasted to project on points had XX was and improved billion M&A XX.X%.

XX. Slide to turn please Now

increased per in year our excluding EPS reduced tax rate volume interest, compared by items $X contributed share, of full from Lu'An by XX.X% negative by project. $X.XX. a $X.XX and continuing total $X.XX, was the share, $X prior EPS due performance. year, to impact together XX% $X.XX of non-controlling per combined currency, up higher driven and includes slightly or the to nearly and EPS This Price, primarily higher over added other of operations costs operating strong Our

We expect fiscal to of in year effective XX% XX% tax an XXXX rate

Now please turn to Slide XX.

We continue cash to generate strong flow.

we flow through $X distributable $X.X cash $X.X and $X or billion high-return have still strong to XX% industrial dividends This investments. continue nearly or almost to billion enables fiscal per available generated almost distributable over create cash as and billion from the From capital or deployment. us to increase increasing For our of value shareholders year close XXXX. gas paid for cash shareholder is This of almost we dividends XXXX, an this per share flow, share $XX full flow. XX% to

an update our on provides capital progress. #XX deployment Slide

you we investment now FY XXXX available over As through see, XXXX. can five-year capacity of almost billion show the period $XX FY from

expected, almost continues grow debt over total capacity available and today, of now end investable about we billion between billion as $X cash spent. of flow increased billion our already The additional and $X EBITDA. $XX As to capacity $X.X the billion FY includes of 'XX,

spend continue $X.X to project have we our total M&A $X.X debt commitments maintain to with current a managing and targeted to remaining balance about about on will Today AAX of focus rating. them. We billion of our billion on

total and XX% available well over we've see of can you already capacity. So half our spent committed already

in turn due currency growth sales India Asia. as please acquisitions growth, added were sales all to flat pass-through, performance Lower new X%. was on Volume by Slide prior our Sales quarters. and strong reduced quarter Price the roughly impact. fourth volume by XX of X% with and Now a X% equipment positive three was negative from X% offset comments few trend to contract Jazan $X.X a regions, short-term up energy lower for plants, modification base in the billion and contract results. price continuing activity

energy basis XX%. $X currency and persisted, EBITDA EPS points. unfavorable Sequentially, improved, is modification was performance. improved driven a by $X.XX, all almost EBITDA XXX of the up higher as primarily of and segments volumes. increased strong EBITDA XXX and Lower about up strong price Asia, XX%, billion of India volume margin contract pass-through driven particularly the basis over X%, almost XX% points, by Although contributed

to Please XX. Slide turn

the strong of the EPS $X.XX was costs the unfavorable, $X.XX up almost quarter per due RMB, operating prior performance and euro share. $X.XX, quarters. the contributed XX%, extending and fourth Our exchange price foreign to Volume, and British Pound. from primarily was Chinese Currency together or $X.XX

rate tax Our higher Non-controlling XXX EPS reduced than effective $X.XX. basis by $X.XX. XX.X% by interest, Lu'An, of than EPS lower to reduced points primarily year's due rate, which typical was last

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

Seifi Ghasemi

Scott. you, Thank

margins EBITDA for into #XX, this year. there results get the can I the segment for the Slide Before to turn you regional please see quarter,

hard growth teams very modest globally. Our especially economic with significant have worked improvements, to make

please that excited #XX, strong is its Now Air to They to materially Asia. can results are you and affected generated about performance not business turn goals. Government customers China be Products Chinese Slide business our trade there very This Furthermore, reinforces by tensions. the been may by our our how helping has in continue impressive meet supportive. see

very the about of region are and We remain this term executing our optimistic successfully long ward. projects prospect in

For contract XX% the growth. short-term and projects, XX% last and nearly supply from price sales XX%, together with driven year increased business by Volumes increased volume new up based quarter, a

came Lu'An fourth during quarter a stream its last reminder, As year. the fully on

production economic positive more country's year-on-year improvement. anniversary for Overall, year-on-year consecutive growth moderating Merchant So XXth increased in was pricing modest quarter. preparation curtailments volume this was the for benefit price Price industrial the X%, the all XXth China's in impacted countries. was and celebrations. of region some key the quarter by

and volume we margin as XX%, EBITDA driven the price highest, maintenance growth volume, and negative including annual saw costs, and lack composition. by profit offset expanded currency. were XXX points margins XX% sequentially, to more of higher plant and EBITDA productivity basis strong value than Profit that increased over growth

we being do our syngas is projects, terms to the we In a the expected told very to project and project, continuing of not coal are before XXXX. proceed, expect with the stream for on discussions still that are large but YK Group

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

Scott Crocco

$XXX price was Americas Seifi. across is X%, and strong turn than results. you, economic offset of customer in X% year-on-year improvement. continued, continued Americas Price Slide trend lower higher difficult XX strong all major million This in conditions Thank points. XXX planned basis higher XX% to was EBITDA increased for weaker sub-regions. quarter price up lines volume up due Overall, X%. of points. pass-through, costs. currency. weaker sales maintenance and energy lower the review product more contributed South this Please volume, and lower a America. X% Volume fifth EBITDA was about were pricing pass-through consecutive X% the quarter margin basis overcame better of by all as down impact Gulf to XXX outages and Coast Energy X% of our of was negative as

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

Simon Moore

Thank review our to of you, EMEA XX Scott. turn for Please a Slide results.

EMEA merchant the region results. improvement. the conditions volume price Our economic This strong and all with by Price and business System, announced our base previously Rotterdam Pipeline driven for products in business increased remained primarily was to challenging overcame X%, hydrogen year-on-year sub-regions. stable. increased major in the across while business X% Volume up of acquisition, quarter COX demand is and continued improvement seventh consecutive deliver our

and basis, almost the basis pass-through about The strong XX% X% reached $XXX pass-through, was energy lower XX%, margin India by and a India supported contributed an impacted of from was lower on EBITDA by over and the basis EBITDA up points. negatively energy were change points. XX%, improvement up volume million and constant X% pricing. currency XXX contract currency, change. contract unfavorable Sales XX% XXX of

please unit, gas industrial to which XX, Gases, Global costs. includes central separation business air Slide well of as turn business equipment Now our as sale

activity due Our of our lower to as project conclusion equipment project. approach the declined successful Jazan results sale ASU we of

by Please the businesses this corporate contributions Corporate which and turn segment, Golden supported project includes were to other from Sales well lower LNG Pass higher as Slide costs. our and quarter and LNG profits as costs. corporate XX,

investment in technology the orders are has expect the to LNG several around shown segment modest, that selected with quarter Although of performance major We since customers. agreements world final remained been profit is final or the this about still we projects this for awaiting improve. additional our our decisions optimistic

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

Seifi Ghasemi

to Please turn Thank #XX. Slide you, Simon.

the to continue As uncertain you that do world. world over But know, all Air can control. we Products succeed actions Products dynamic changing we an we Air at live to in control in cannot take and have

opportunities, continue and a with growth on on annual average creating achieve our have strong, productivity own organization which focused and to an to remains $X.XX investors. we the XX%, year our allow deliver our fiscal Consistent We rate flexible our capable project. to our EPS over pleased to will that XX% fiscal of promises us XXXX growth to or extremely expected for up includes $X.XX, to performance. least year Jazan strong XX% provide at are guidance our XXXX of This goal from contribution

We expect fiscal Jazan range billion for project. expected includes of be capital the the billion, XXXX to $X.X the spending which our $X year to in expenditure

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

earnings Now Air represents ago EPS six please a years turn and of team to grow we double this growth would commitments guidance of on midpoint, per growth At share great years our X.X shareholders the Slide average that fiscal Products, Products deliver digit year #XX. our Air we XX% to XX% our cumulative earnings years XXXX consecutive over at to least Thanks timeframe. continue year. to six

team in to about of Our optimistic very continues Air the be underworld future Products.

five-point plan will strategic drive going us Our success differentiate forward. our and

Our performance operating foundation safety, for and provide our growth. continued productivity the

full take exciting and people the capacity, financial the have position, knowhow of to us. advantage challenge and the ahead opportunities very the technical and We of

to please turn finally, And Slide #XX.

with great to us strong competitive to at we commitment all our proud I of As of their work the Products. embracing commitment always Air winning generate motivation working advantage opportunities for of to spirit have world for front part continue our our of performance. thank and This am XX,XXX and a be us and I in allows the together. to is the want around real what certainly and energy hard is people the team team. this

delighted questions. Now, your answer we are to

Operator

Thank you. we first our [Operator And instructions] with from JPMorgan. Zekauskas Jeff take will question

Jeff Zekauskas

much. very Thanks

there in were kind it a China market dynamics are in in some out prices China? What price Is the of pause? is of or sequential Your flat. that flattening price

Seifi Ghasemi

Good Jeff. morning,

Jeff Zekauskas

morning. Good

Seifi Ghasemi

price the characterize the would around there lot quarter, down In slowing was interesting a as in that dynamic industries fourth of the I very a of because increases. a not China, Beijing, will down be if Xst. there down. goes goes happens, so shutdown clean that air ordered leverage they’re October Obviously, that pricing celebrations for on and be on to demand their the

think I back to we we is that once where are, will get normal, that trend which continue.

Jeff Zekauskas

And States industry and has, not or -- United deter the think on prices could for that XXXX you comment trends think is is underlying generally, you industry that or Europe the and on that you in in put the enough that there also slowdown. been obviously, do do an there price Is -- something industrial you to think trend? would pressure significant for bonus

Seifi Ghasemi

depends tell supply Jeff, have the interesting the we everything of obviously, activity then a demand that that and the guidance is level can you. that. of all you it, because given question, Well, very that's activity, I in What on economic and

Jeff Zekauskas

Yes.

Seifi Ghasemi

not We modest have increases. price increases, significant price assumed

have we So on been conservative pricing.

Jeff Zekauskas

you. Okay. Thank

Seifi Ghasemi

turns Now better. do to then we the situation will be better

Operator

And Credit from Christopher question Suisse. Parkinson we next our with will take

Christopher Parkinson

you you. the night? color both There last Thank and constructive a moving talk is color parts. few and Can that some Saudi little still you the a more last be to MOUs seemed announced week additional on

understanding opportunities love on of share a sitting like that you'd at anything just, Thank as appreciated. just potentially So exclusively Jazan come well some you and least quantify as be to the you. timing the would can't regarding the

Seifi Ghasemi

you, Thank Chris.

comment just Jazan. on I can all, of First

to not absolute all closing. an only required of and The done advisors It's to than that, at cannot rate, take going to are optimistic. that documentation actually money us time Seifi. is get raise overnight have to the the raise debt. but fixed more $X look, then too told this interest We trying billion our to of banks It's

are have significant we estimate last an Commission made thing amount Then has night, in that because you the we -- appropriate first of pretty assumed calendar have with the and us XXXX, have the we announcement that in this we our close that quarter that that approved is the most included area, is So Royal oxygen very given by guidance. and in will we respect Commission. of a to to allows Jubail that the -- Royal requirements connect and lay build without hydrogen, the plants a go The all the of then permission The chemical refineries pipeline of Products optimize Air there are. them of you're can can sure nobody and in and I'm pipeline nitrogen of that which serve facilities the familiar, profit and

world. permission this in of opportunities and So hydrogen but The Royal gasification give a the the that convey is announcement. can the world, reformer, that going methane the the for the create the part consumption to from that capability the was It steam and significant us build part then pipeline. of we’ve in coal why new to the lay Commission optimize key to investment, and having The made key, is hydrogen,

this going to quickly. on very thing move are We

of that The We in it the increases this people other connect that world in facility gives a the these ability it production pipeline, reliability if Coast, suffer. are we you connecting facilities goes pipeline, part Gulf one down that you very to customers have U.S. to can production this several number don't hydrogen identified operation, the a have pipelines done. do build the because of significantly plants be of day hydrogen significant because, the different the projects and same the excited, and if

and Because interesting. methane us petcoke, and steam a it built of but ability a had had or actually development it projects. of to a that, wouldn't gives we do we we unit lot go gasify all if these reformer a have connect very, to them, gasification us, as an So if positive this for couldn't if and is very built been

a do are So project allow Saudi which this to very we this, is we the and is separate pretty are proud totally very significant, Jazan. from Government us it of and to to thankful

Okay, Chris?

Christopher Parkinson

think press few tons your you of sustainability Also and that's capture, of like one in Yes, so. XX your ‘XX recently the highlights front or release it’s very called within also in million there's in explicitly helpful. I report, carbon

U.S, hit on hit water Thank front, financial energy, opportunity anything factors also help again, some these Europe, Can regarding of longer sustainability the on profitability? lot of should opportunity in the GST appreciated? understandably carbon just how the Products you. term You ultimately Just rhetoric et of XXXX California, longer-term the just us help cetera. of et for would factors capture the a conceptualize and these to goals Air on on you some conservation, some cetera, be

Seifi Ghasemi

the thanks for Chris, question.

coal, said is of and you we Products opportunity are at We is Air resid you when is ready. all gasification there the vacuum COX that. But which focused examples are it have huge and on always petcoke, gasification, amount of and doing see gasification, energy, captured of of that

a there and capture coal and significant atmosphere you into stuff, COX, opportunity gasification, clean where totally put is that. to the therefore, to you the really try So capture don't that the to gasify get COX, you anything

use it technologies the to capture this and have for enhance old recovery. and We

We COX, are have back and doing reforming, Arthur. We are back technologies CO into on work the at a that and do have in Texas trying and hydrogen. we called dry to developed sequestration into to capture do we what of this it means enhancing technologies injected and ground, do that and and capture Port this lot which done the break we and good recycle is it on have means already

the that we are these So have. projects

opportunities the longer-term on that We mobility, are the going it’s the do XXXX, unique are carbon gasification their We, carbon are are are is developing future it’s an world but They leader very significant, their is the I world hydrogen capture than XXXX in technology. totally about Chris. projects, GE believe already or Some for a the talked we future. gasification. Shell even more that or as for whole technology, projects even I hydrogen last that are capture. what of EPS and mobility us see, the The we this. and these The amount and to make they buying in quarter strongly and on focused have position we not quarter of by before. provide definitely

people So put years, that. these urgent things will the the is have be starting right environmental all gasification, that now. but 'XX, And we excited be think properly 'XX, company environmental, But give ago, we a this Products will get it I and have catch about projects. you going to the be start Jazan day solving we up to we as transform me, into in to I said, five that doing we the 'XX, now five issues I much But of can’t you. when in are these same it’s project point we Air and will going this for present to and of EPS together And to years believe these the doing a time. fact when is the project need and after rewarded will that started lot we are to world, XXXX, I a

we in be projects and are able to investors. for starting things, We these on exciting time, very our will present

Operator

Citigroup. we And P.J. take with question our will Juvekar next

P.J. Juvekar

are to clinically, three – industrial same-store So, new volume Can slowdown, your if in I was from trying organic growth the you project volume you start volume out exclude sales, regions? talk about the given figure the what start-ups? your

Seifi Ghasemi

United China, is are of yeah, States economy in real going down. but excited rise year-over-year same in nowhere. looks and, to everybody is they volume P.J. the is are growing. but -- business, production is home America, the growing performing, in in thing the good, drives pretty the it our X.X%, what year-over-year stock at then looks economies not Europe. market, And I because That are Industrial the is not organic world at they nothing mean we about growth and had Our

our for So our business, growth. base We XX% have be not to in the if EPS been that, fact and no probably our forecast negative. means, is transform reflect of going the growth state so the of the is we Europe, although relatively but there nowhere, sit people growth. costs -- growth, which hadn't and U.S., to would at That is no year X.X% If the have done it definitely growth have a generating own The have. gone company flat have you most we in would why is that position flat. into look you and out would today tried that our volumes down issue That give no it’s is been and in swapped China would is next underlying a we economy, growth.

So right, going base sad business a is our on be dependent not get now. if right would you're shape you absolutely we that, in And anywhere.

P.J. Juvekar

JV, to the on for the how assets, to that's for Thank that maybe capital China? you explanation. And about think then we Jazan but you Should deal decided what needed this in intensive, as makes buy it the which happen. was make model the projects future

Seifi Ghasemi

enhance by on itself significantly unit separation because the thing, will return the our unit the new return, less including than whole it of separation was of the it air part as buying by acquisition. part P.J., as air

returns So enhance on to we that. something our did actually

wherever are there is That time definitely the opportunities terms gasifier, we business we a are appropriately for and in of In doing our to in gasifiers. supplying and model we the we will of model, oxygen that interested announce plenty projects in buying that yes, are regard.

P.J. Juvekar

sorry, just plant other I power ancillary and about talking about Thank you. I’m the was units? know gasifier, the I'm

Seifi Ghasemi

would with to they unique to case somebody in part in only one wouldn't is They that go Aramco something would power want if struggle, the plants. their that and was they agree gasifiers them. buy separate the had person Jazan, they didn't be want it we to, assets would else the to But Saudi that power day buy Jazan. in buying plant usually P.J., to

forces might that, for unique of best to stay So but we but do for the model we that they that there what do a in we thing, to and word. what's But situations definitely want whole shareholders. They is want gasifiers. do is is why to bought that best have be the the around not with combined business the the where terms return, and

Operator

Deutsche with we’ll our Bank. And take from Begleiter David next question

David Begleiter

contribute we are XXXX, much year? year EPS will growth if projects how versus So looking this next just new at to

Seifi Ghasemi

because think give P.J’s don't of almost projects, that year hard detail to growth terms business, productivity to respect of people obviously new increases. growth, to we with we figure our not because work considering next projects. that then economic saying can Well, cost pay out anywhere I any we is But basic get for that and have a was of related then a pricing what you of question that then all in world to is in and going very the productivity the kind

David Begleiter

can And through in was just pricing much how quarter, you go up? merchant helpful. by region the Very

Seifi Ghasemi

pricing Americas merchant approximately and was of by Asia Europe in the for X%, by total X%, X%. in about about about in by a Yeah, X%, up

Operator

come question next McNulty our from John BMO Markets. with And Capital will

John McNulty

With the we us the some heard is billion we thinking you opportunities the deployment, kind be last the guess, talking $X update other about to about at should how Saudi this that's still gasification? of -- have time some pipeline that $X coal maybe of the coal spend new since to in billion terms how an that to capital of I regard with gasification looking around that? to you’re giving And of how towards allocated guess, MOU opportunities I for the on project point

Seifi Ghasemi

pipeline doing. I And some and opportunities significant opportunities in India, and in want the hope because pursuing that, or we Chinese $X independent investments terms $X the U.S. giving project the to in keep should that looking a significant Saudi. really to spend, we in fact opportunities definitely we do ourselves on we finally on difficult up are what investments There it India gasification additional in own. be in honestly, China, get you Coal or scarily. breakdown significant is opportunities all have which billion with it. billion of can depends projects possibly it us But then U.S. first broken and are the billion billion because in to opportunities quote actually that we hey, invest come But more will I of that. John, because has Use up see there. of probably obviously, are to $X gasify Indonesia, coal $XX or still of the do can

for is to in going exact like hopefully be Saudi give India, difficult but it China, Arabia, Indonesia, to me and an areas – going the is to breakdown, U.S. it’s there So you be

John McNulty

just bit a And it. of maybe for color. the housekeeping. Got Thanks little then

how business, weakness volume versus that kind just tied much the of weakness? macro one-offs to of Americas was the the On of around outages general

Seifi Ghasemi

macro Not obviously, and a general of the it. business, lot America. it’s But Latin

Operator

next Morgan comes our from Andrews Vincent Stanley. And from question

Vincent Andrews

the thank If I well just up – follow can on you. and,

anticipated, volume the some referenced it that's and Was certain unrest to some the regions On South the of place with than actually that worse you’ve due there? taking of press in you -- American issue release. down in civil

Seifi Ghasemi

so has part we civilian fiscal year, but it's in not unfortunately, Vincent. had, the world. negative that are just the has a the quarter, first in the after effect general that Well, Things unrest that have of closed that started will a exciting slowdown,

Vincent Andrews

given and obviously Okay. for then amortization And what's could, next I be on up should year CapEx, yeah, in using then number if understand. around step we big for just that? I depreciation And now

Seifi Ghasemi

don't I it that, be mean, … but we will disclose

Scott Crocco

general, deploy we that's would We we as capital, but it’s things as to move expect for currency up the to U.S. in more go give up. like dollars. capital, speaking Vincent, going also and I we in just generally recognizing continue we around go to G&A as translated deploy don't to back the going would say, guidance, the

Operator

And America. we'll our Stephen question from Byrne take with of next Bank

Stephen Byrne

your is deck development fuel what is limiting you just cell you And hydrogen one you press the program a such of ask Another to projects vehicle Saudi in slide see the in of listed in really the there. program Saudi. your that -- wanted

you're to and program. enabling pipeline having want work just pipeline this on for also hydrogen such a development and a to such any mentioned starting that you with IP infrastructure is associated a whether You ask had

Seifi Ghasemi

hydrogen I in that of – that do path lot this significant connect right in terms ahead want going part honestly, of is They the have to and are gases -- of we opportunity is I on, get certainly a the cars. want right, is sort do to create Saudi happen. corridor about so supportive we IP, can opportunity of driving the there but that hydrogen of is Well, developing in and ourselves that gases world pipeline, very in world. the a And going and quite the equivalent because of people get that Government way pipeline we you're think a of and numbers to lot of don't that the in are this The see to stations in this. basically the world, parts other them excited one be and to a of opportunities. of you reasons build in be that the and such to want

Stephen Byrne

And the I a with you? from billion ago. additional any is a debt the challenges the months $X any raising for of that of raising Aramco that of Is fallout mentioned of just you Seifi, of couple Saudi wondered attacks associated hurdles if Jazan,

Seifi Ghasemi

explained. and time, optimistic terms what get we of legally are you're and very going and they the closed. a going get I like closing, don't to any I It attractive the of there to how debt, you But think money, an is after mentioned. said demand interest obviously to one I That's very documentation take. was just get that the of of issues have the raising raising I'd the to have time see in after thing until with you I go in going sure a it's the that to to issue to actually raise come will We commitment banks. debt. with amount it's is that the you to and any make But order the you that significant up rates. that, not banks get market and fees then much actually is take

Operator

our next with take Duffy question Fischer And will Barclays. from

Mike Leithead

Duffy Slide past leveled Leithead material is XX two taken it first, margin. and or leg got morning. This for year if another first that seems you I when Seifi, Mike I off big on at so, Products the a guess years look and Air on years improvement, actually for now up things jump two was there this margin the on up in

and this So normal margin or plus going forward. lay some benefits I products reduction just new cost maybe a recent it's of can whether pass-through, XX% drivers fair out was the you is energy move the up from the hoping of

Seifi Ghasemi

$XXX to The is running, profitable fruition, took Lu'An productivity had working million And the the projects. first have all have about And we're of obviously these of of to of Jazan on happened. the we reflecting up projects talking that system, that on is that now, the actually that now because are out projects. running million, pretty is then, a are lot these the running, now And results. of going we we so constant were signed actually you happening all what jump projects costs that growth obviously, saw was things those we we and have $XXX it coming and other that was are

productivity, the jumped the the then that. we were had took we because it we upon are focused us to benefit that, up, So now lined get growth opportunities we and on of seeing

think, XX%, they high projects, I Now I rather XX%, whether in are around and will the or our than be XX%, the XX% feel XX%, XX% or or but on margins will XX% they XX%. long-term the good at that or pretty stay depends XXs, being for EBITDA XX%

Mike Leithead

the I in the you on financial the not when JV would you But maybe that details. better than helpful. it. the appreciate today And following project, are back Jazan when at roughly up to look detailed earnings today economics, then project last the project you the That's Got expect internally IRR, or same? originally really you contribution provide announced you the going or announced they is when versus looked August, that

Seifi Ghasemi

any time, don't get that operating percent us we mean, giving always get of are you I'm to look, guidance do told going the you But, because put I not better. detailed that. same They're profit. have for we that to obviously we numbers, every dollars our I that, And to out we give you say customers want at cash, the some

So is it's figure than not too that. out, better difficult we’re saying this and to activity

get do us. what estimate about to So you can this good for a thing pretty will

Operator

And will from take question Susquehanna. next Don Carson our with we

Don Carson

this industrial these economy talked you growth your Want creating much own going – days. I is to the talk on in about know obviously not because

was think business And now? 'XX? I year, sales, going last commitments onsite by by of the new pipeline XX% projects all come onsite the in make additional where capital mix did versus 'XX, out you where So, do these in you where in of see time you is

Seifi Ghasemi

now, obviously, where we better than time XX% other in that the and goal my to sales. right once comes is our Jazan to will be get of Well, stream, XX%, all for on of But projects. are, these it

our increase stability significantly in business lot earnings. because to brings more that our of is goal our So terms a onsite

Scott Crocco

as Yeah, Don, the if our in and Seifi over I could absolutely, run, -- long reality, are think business. we onsite I increasing said

the new of doesn't remember India for Just that is one will will that launch our we fundamental that reduce revenue, 'XX business because concept increasing. the contract be really change change but onsite

Don Carson

in they by the And to do with other for similar has backend else as need refining sector? something Obviously, on residuals. gasification. the Jazan follow-up opportunities pipeline the driven IMO, just What's a and

Seifi Ghasemi

Significant.

We there obviously world do. face because a then China have and turning this product, waste. is that what is a they gasify produces – not to in it some new do the they the do to ships this always did people away most is say now of not banned it sulfur the has said right the India. bottom this coke, [indiscernible] If But of out [indiscernible]. in have eager being there everything what have the [indiscernible] said refinery We is the figure X.X% because refineries is is is which to their that barrel. this for they refineries situation goes -- and the refinery, the

the is just able about that buy from their any making time five do the we That years were why be is has in in petcoke. with petcoke. their So think will the about do figure they very able gasify. the be that. viable for what technology GE that world hell is And refinery They out to we won't have every much excited only that they're to because sure to don't refinery going to therefore, to that, and to gasify. single so sell solution X.X% I

we And honestly are is seeing opportunity quite that. the So significant. I think

Operator

our from Vertical Research And we will Kevin question with McCarthy take Partners. next

Kevin McCarthy

On your budget for capital Slide you’re XX, essentially doubling expenditure XXXX.

the could if earmarked year relative you have anticipate? of How of projects wondering major And so and to in buckets in that was disaggregate terms other the I that you some maintenance growth Jazan? for much you

Seifi Ghasemi

close we and significant disclosed cash is maintenance Scott it I happen Well, robust. actually the of probably billion, million. $X.X our growth expect, pretty on when transaction. rest thing it's is depending then it about that, is total which $XXX with in already of CapEx, Jazan, outlay the our then what XXXX we the the CapEx, part And of but a disclose will details And is that as the to the want don't

you if we is very than our -- exclude fundamental Yeah. projects, actually yeah, around more expenditure – on pretty are it's other Our It's Jazan, and $X.X about around optimistic good that. billion.

Kevin McCarthy

pipeline? could Is deployment, sticking there of seeing pipeline interest Seifi, days capital the that these front? looks the quite that on think indicated brewing anything with you the project And are I you’ve robust. M&A subject that in What be of

Seifi Ghasemi

is anti-trusting. debt. mean Well, existing I depends terms we of an in these a because you M&A to terms I that. M&A. of gas Jazan buying pipeline But world, companies, see how so $XX industrial lot company buying buying really of are in I don't gas an categorize actually mainly of see of want around other the billion But don't another assets, it much opportunity, us industrial

Operator

be And with question SunTrust. our Jim from Sheehan next will

Jim Sheehan

rationale own for JV? not Qudra just the What's this the Why business outright?

Seifi Ghasemi

with It's just Aqua who Qudra, Jazan plan lot what because a more own APQ. part Then we okay, of the we that. – and is so project. Qudra Energy that people Power do called to ACWA call

the going projects other and build, to Jazan. just that talked pipeline competent. entity before successful lot reason we to that a a very the Arabia, going formed the hydrogen Jazan, to lot The involved -- joint had have quite with we're a the And in more do and are is have are very Saudi them. other They that to in plan venture projects be East. honestly people do about we We Middle I’ve than

get a since be relationship So the them, things just started. Jazan. than little kind a of we we bit rationale to Therefore, is lot with project that to of for for bigger a part them that have Jazan wanted

Jim Sheehan

Thank pay project, you pilot on think of comments more you. grant. you’re your demonstrated Energy are several ability the you and to customers money for ago. years it yourself? much million was you reformers, steam government And your or willing your how Department project a if refinery capture, in to expecting discuss, I Texas, majority recovered grant And methane cost the capture $XXX COX in the by carbon of COX? the a Are to could regarding federal planning ability find to give also to you capture It

Seifi Ghasemi

which they that, $XX the that XXX program On like doing at in wouldn’t capture take ton see is California for a you is there and you can a COX, of bonus. these worldwide. happening that. are right get California, up ton think is $XX know trend what things leach demonstrate a then, if that a are that or that and is, years; be as ton now, going look And it can $XXX I sequestrate to federal But for way to you the COX you something capture, you happening front, get you obviously, is every -- of that

by incentives seeing in So is we and think happening that be of we that states that same thing do are the the thing, will same will governments. trend difference the kind of terms other

order project port in involved now Europe, than your in COX in right rather actually are for there We put sequestrating pipeline to the the COX building a and in sequestrate.

carbon think, by different order substantially governments issue these pretty obviously which from a the things global. going in be big a are we to encourage incentives driven, of is all capture, So to

Operator

And from Roberts with John we will question UBS. next our take

John Roberts

and Thanks. nice Congrats a on guys. outlook quarter good

Seifi Ghasemi

you, Thank I John. appreciate that.

John Roberts

something years parallel for India waking in their having up it mentioned coal China projects? you to we are five Is away How something Seifi, far India? three opportunity. to away big or two or from your

Seifi Ghasemi

thing, we're obviously, together, going do -- to and study the think this the project decides, that opportunities, feasibility projects India you have when put with okay, identify do I to on. government these so

and get it’s think to equivalent today on. or from years you before or six a of Jazan equivalent I five it’s -- land process so of So

same with So XXXX, will ago, on around we timeframe The see the think, have time, see XXXX, But we the year XXXX. that actually XXXX, something process started see. but China. we quite before didn't that in go you about, in thing a to within decided of I scene started thing five it honestly, gasification you of and years have John the operating now the that's it five have units kind same gasification China about start if benefit be coming benefit units in India. it, until of happened I the

Okay?

Operator

next with And our will Sachs. take from question Koort Bob Goldman

Unidentified Analyst

[indiscernible] Don had say Bob. start. on is just This in I’ll jump that morning. I'd to I Good on with

there Is those to gasify guess, into, using get You dozens owned technology so to that opportunity and that operating go of assets? -- within gasifiers technology. be an GE Shell China, and trying I to

Seifi Ghasemi

That's to are exactly trying do. exactly how don't we trying what be to in is is that many you're of an but succeed, do. will I That opportunity. them what know

Unidentified Analyst

opportunities, maybe And I it. we're then, technology guess, efficiently? operate guess, I those Got more seeing sense the evolved, and has

Seifi Ghasemi

Yes.

Operator

with from And take next our Jonas question we Bernstein. Oxgaard will

Jonas Oxgaard

the year? next there's could as for going talked tell Is are Looking then so was be can if outages give refiner us bit IMO, for customers. at and on your volumes you has the outages side, about year. they for little of you that material And every to we've depressed a heard wondering that that you hydrogen, as how far range said no a your prepping a next flip much I yourselves. uplift

Seifi Ghasemi

a would in terms don't have be, shutdown, their good anybody. before fully that. take our difficult they that would otherwise, that it are to not we shutdowns, which an refineries is expect years have very if Obviously, in do to works and all shutdowns do will these But predict Well, – out. for of cycle will them obviously, take which it which will in if something and that operation, is of to some they materializes, of shutdown them refineries have the but is happen that be a This the I how are upside. some and allowed and deals for on shutdown, unplanned they have happen they pretty to a risk that, big plan,

Jonas Oxgaard

right? it -- if you so pushed And like looks that it why? And [indiscernible] Okay. about a the is out project year, looks

Seifi Ghasemi

that have want happen that it because coal It we investors about result, the is thought to getting called said is the we allocation was as would about going two fanfare this the we a front there fact in coal a like lot we struggle something to we to thing project, the see which of issues terms announced so in a are of before. to and project. and upfront same Presidents was allocating that. this But all of And about There done. up lot it of coal be of with about that of memorandum understanding internal signed to allocated the

we excited obviously not are the a are not. but development, too an you update So to quarter year, we we pushed you're give sure, about it thing, but about this as going every I'm

Jonas Oxgaard

just Maybe – it Scott make want to clumsy. just

Scott Crocco

situation. project, some really comments the not project problem overall is have Yeah, customers referring and, where in our we doing. obviously, to the an issue [indiscernible] the Seifi's are proceeding that's and isn't that This

Operator

Seaport will take And question Harrison Global we Mike next our with from Securities.

Mike Harrison

drove fiscal could fiscal good expect what of be 'XX? other Hi, ask what than fiscal segments. some versus in Curious here. in there better they guidance results the to to the gases for QX quarters Thanks global and And much 'XX morning. about in in wanted give squeezing you so 'XX? I for possibly me the were the corporate us we should

Seifi Ghasemi

think corporate front, drivers, that sure you yes, I why the Simon don't but, expert sector, think, I the main on Simon of these the things. on Well, is is comment?

Simon Moore

quarters order I Mike. we're there believe said obviously, business, one good we position for Thanks. and others. we the question we've as are LNG now, in great mean, we a about It's for few Sure. excited announced and

that's kind there been a sector I'd that, of items. of factor. say also key one-time So were corporate a certainly, couple But the

is equipment sale So profit lumpy. on that's a a of recognition

next might going business. certainly bit we there little improvements nice LNG over in lumpy forward, the the expect of be couple a years, but So

Mike Harrison

All region? Asia was had the a in COX the Europe the right. the was either in revenue what gases company in Europe And gases acquisition or I question other buyback. the acquisition then asset basis breakout contribution on full Jinmei to you and Can on --

Seifi Ghasemi

just Well, it’s have they just started. because small,

will we it of but next give It don't So quarter. better but the detail, for not significant not be was year, was that kind significant. it

Operator

will Jefferies. our And Laurence Alexander take we from with next question

Laurence Alexander

I ones. just two very quick have

impression does able developed? on be implementation announcements a is And the your rates set, if that opportunity on which the how a long-term there be should the related the ask long First gasification, ruling do sequestration, Q-XX, products carbon to lag the be is in describing there to make is merchant flurry continue, expect secondly, near-term the given there non-core for so sale or products? way you're becomes at a coal gasification and a the we projects their opportunity of will eyeball or point negative to multiyear IRS clear

Seifi Ghasemi

our are is business are, of second in growing will that, focused that Merchant never Let answer part and no how there all gas on opportunities non-core. is question. integral matter China become That still and the many business. we me that. an And of

all I'd to to like they turn locks merchant products. hydrogen, part question, business over are the But the first that liquid I So a of to part our would always on answer. it your -- helium, all Scott core be mean, of in

Scott Crocco

your the but situation just How question regarding COX, it. clearly, on and tax want with Laurence, to

Laurence Alexander

Correct.

several sort going IRS ruling take that's to we what rule is of clarify, it been on question So do what should the agreements? line the near-term the is announcement expect up delayed, if to is, Q-XX years they or

Scott Crocco

local of maybe state Laurence, very number that projects. about think supportive are or talked COX think, the was that talked I around world various about guess, in I I Well, provincial a – capture thing programs also places Seifi of one he

lot So about is have I excited play said, the of but out, a situations this. Seifi see as different very we’ll think that to reality there's we're

Seifi Ghasemi

I legislations happen on. a the and without we forward. It's to will But to move are as and of predict very continue in difficult are case lot think that the so which be will what programs, there place,

Okay.

taking January, all to And you some that I obviously on even maybe discussing was appreciate our we to sooner. schedule busy and Products, Air question. last time think the and And for I interest in like your Merry look to everyone would see in your Thanksgiving being and with forward to our nice Happy our Christmas. Thanks We All presentation. for that, Have with the call. results from thank again best. quarter. very day, Thank you let's a you of and next you. listen

Operator

your today's conclude does Thank for that conference. And participation. you

You may now disconnect.

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