APD - Earnings call transcript Q3 2020 | Air Products and Chemicals, Inc.

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Operator

Good morning, and welcome to Air Products & Chemicals’ Third Quarter Earnings Release Call. Today's call is being recorded at the request of Air Products. Please note that the 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

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

Please forward-looking Products.com. for on our Our disclosure available This contains be earnings our are discussion release found the X. this earnings on and call refer Forward-Looking that can release Statements. the statement Slide at Air to slides in website number and

ROCE In we on segment and will specifically addition, adjusted refer a to referring we when Adjusted basis, non-GAAP Unless otherwise, website and measures. to refer adjusted be we found financial adjusted per EBITDA, both on share, Earnings throughout employed. section. state can share, in discussion, earnings EBITDA companywide to Relevant our today's and are per Reconciliations various financial margin margin our earnings Release we measures. the return capital on EBITDA, EBITDA

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

Seifi Ghasemi

Thank morning everyone. you Simon, and good

today. As always, you time call taking your schedule we to our on for busiest be from thank

to Before result quarter, we Slide this talk number please about turn X. our

different quarter, at and levels during and companies in times As phases the are true I continues leadership different said the revealed this unfortunately of last character of world. crisis individuals crisis around and

to will been has continue Our safety and priority people. the of number and one be wellbeing our

to employees following working serve conditions. health protocols under on all our We and the necessary instituted our hard safety the and for want our I customers have of focused procedures to challenging protective and equipment these people. provided thank

have during last the reduced quarter, not salaries. with as this the we to COVID-XX addition, mind ensure In nor of anybody's staff highest time cut stress of we peace mentioned

keeping job doing are people great world. XXX a around running our the all in of Our plants

functions corporate are or of running business our All smoothly.

world the and projects despite mega crisis good gain results significant to and around the deliver customers serve continue We world. our our facing

is globally. proving model Our its robust resilience business

Our onsite stable. remains business

our In see, delivered our have despite discipline, all the regions. our as maintained businesses addition, pricing improved we focus lower pricing of you and volumes in can merchant on

strong successfully debt supports April ready and model for and access ensure position exciting wish plenty financial the we we to markets there enables of. business our our in growth opportunities are Our are

and execute to for our $X our continue projects to billion we opportunities, balance projects methanol coal create optimistic that billion remain on ongoing the can and Indonesia. our hydrogen in flow We successfully July, deploy and very carbon significant confident including the growth announced we earlier to strong value fee $X in We cash shareholders. sheet

a growth explain end As Scott later, for by to ourselves seeing in commit projects we goal to in XXXX billion more detail of XXXX. of will set

X to number ourselves capacity and turn two half exceeding in on and growth goal the are or is Air the Please proud focused committed these schedule and Look job have Products We $XX I’m billion. projects around stay of And almost are job teams say we a throughout most world. by years that continue the substantial number ahead challenging to I'm already still additional of great goal Slide today the gas safely the in at Slide to . set for business are development and operating our our X. safest that we number The our working we industrial pleased Slide our conditions. which our succeeding profitable team XXXX. company X, proud is actually now now, while projects world. for we A path.

most prudent capital important before, philosophy jobs have king strategy of We purpose the that cash is believe five forward X a CEO. our and is you times emphasis point with we our an in any management moving lays and on of highest showed Slide that number many one as to company. out continue allocation a

expect Now to it green see This to innovative footprint green exciting, investments take the infrastructures previous overall we in Air free about X.X number a Air the and we This our solar true free bus invest to few is please changer to returns projects, carbon Therefore, deliver the of world. hydrogen truck and market. hydrogen wind ammonia our the carbon carbon Saudi the Arabia. and a ammonia around hydrogen in weeks for hydrogen billion Air and - additional world-class ago. billion be zero exceed Where NEOM convert and Power to to an to the and turn Products develop invest the the all the $X markets. $X carbon we announced billion power X. free global Aqua Products carbon total Products, you commitments. game a project financial NEOM, to project hydrogen will is project can peoples Slide will unique from produce can free ammonia produce

always are to to be to the continue significantly Air decade in leader in positioning said, grow space. next we hydrogen Products As we have the the expect and to we

Indonesia. national the offer complete the are again, feedstock Slide like are bonus gasification our drivers solution, business independence more as to expect products to enabling gasification expansion you $X they coal this and energy government in and need projects to to in coal take to energy On in is to utilize Indonesia Please from gasification. our potential number on customers of Air that and the you continue the they And forward. of a chemicals another start policies gasify and this business Ithaca Indonesia. drivers Once have. the fundamental growth manner. long-term All move turn will fundamental focus X, the Strategy. us do see our this under XX, investment projects creating great have can they demonstrates significant to we see and here methanol sustainable Slide project There and methanol. Products of Countries resources a opportunities around onsite world the abundant fuels the companies onsite natural Bakrie security the The model. a in providing to produce of large billion provide continue from project number in model,

continue thing a in expect $X XXXX. financing have very make Scott, launched we to close the required now progress today the on We Despite that Saudi more our billion this transaction this his to $XX project important for I’m portion. we some October gasification project. billion And about to to report have challenging in say Aramco. times, Jazan of current happy will for

and remove had our from gasification project the project As investors will a analysts in China. our backlog. I'm was we notice, project coal sure This large YK and list

the investments past coal reserves dedicated entirely we told this years if two already only four this have will project. project specific that do we can to We allocations of over more get

is come happen not now this near might in We future. conclusion And as are happen future. the backlog, we it project have If the to we on but then it. removing can result, now this near right it a in to that is the might allocation count happening from not later, It our our we appropriate to not it the ever but backlog. add get

XXXX EBITDA hard to early model, which of number margins XX. is our over up points the to XXXX. of basis XX% our and team work remain strength the Thanks please from Slide our Now business

the like to Chief call the Now, our Financial overview. I to Mr. Vice would Officer Executive provide over Scott. President Crocco, turn Scott to and financial

Scott Crocco

Thank you Seifi.

stated very is earlier our strong. Seifi As Company's financial position

$X complete business, leading stable, is generation which enthusiasm by very flow XX, sales. you on-site and our turn projects. highly a April billion billion can see total. our of into was half high of industry us of billion able in $X fixed cash of investors supported and Slide cash rate significant to debt €X to which issuance where received of a to were deploy our by raising capital debt, successful billion $X.X more return than Our Please represents summary enables offering, We about

manage strategy. growth $X cash continuing exciting the pursue A/AX the to about and as use to balance of project to rating plan other well capital the our to this XXXX as Jazan target committed opportunities. project our between debt billion now maturing of and are deployment repay We end maintain our while debt to our fund We

in backs. We have quarter. we believe investing And that by will firmly this projects return create shared strategic high investments now several than value shareholder more

our rewarding to committed dividend and Company by by are increasing the growing capital. investors We the deploying

Air since As Slide periods delivered shown challenging Products increase many through XX of dividend in conditions. economic of XX, years consecutive

XX a quarter Slide third of for summary turn please our to results. Now,

Our teams around world very this through crisis. hard have worked managing the

the and project year-over-year Overall regions. increased well very was and EBITDA quarter like our supported taken actions management, caused Despite safety their increases, million businesses of I all X% during three cost see encouraged price to acquisitions. by the under customers of X% focus thank conditions. are including challenging XXth price $XXX in LNG We matched quarter, price time last stability our by health, also that We businesses, price consecutive to and have sequentially. adjusted these serving been unprecedented the execution delivered and year the would prior improvement A closely our COVID-XX, our this positive reliably. up team job for resilient on disruption our increase of and done.

the about negatively improvement to EPS higher About points in higher despite including up volume to Europe. Chinese years through, and points X%as acquired ROCE result offset lower XX.X% higher debt XXX partially lowered issuance of EPS overall with the in is the interest basis XX the XXX the points XX% lower the the X% the than costs. by down mainly unfavorable year year margin driven from debt. either higher additional was about higher For by up depreciation and COVID-XX the in new the activities consecutive offset by energy volume. assets due from the merchant and negative from primarily LNG only prior new energy exceeding basis lower increased reduced the price by negatively from about from primarily additional $X.XX. plants, maintenance Peso, PBF of impact Volume price and and nearly and to RMB, consistent XX hydrogen Won, due lower quarter, basis plants, the primarily the points unfavorable COVID-XX on last billion reached prior tax points Korean Chilean XX.X%, X% expense XX% the of pass plants, $X The step impacted fifth planned and about volume currencies pass through, rates. versus decline quarter. basis denominator to impacts from Americas COVID-XX and X% prior was quarter, is compared rest sales basis X% sales EBITDA X% outages. impacted down of Euro. new and XXX $X.XX was and

turn XX. please Slide the Now

$X.XX despite Our third travel of the share $X.XX down per Volume, by price to negative costs were minus Costs $X.XX, to $X.XX COVID-XX quarter EPS despite or adjusted due COVID-XX. X% maintenance down was $X.XX, a the impact. lower together negative and reduced activities. from $X.XX and contributed primarily impact

Euro. had affiliate the year impact. $X.XX a as over due with even the resources and up and was to invest and Chinese was future XX We RMB, for quarter, positive overall the XX.X% Equity primarily Won was exchange unfavorable, The we this to the tax continue foreign down are $X.XX basis Peso, due to effective Currency income COVID-XX. pleased points quarter, negative rate cost growth. in $X.XX for Korean Chilean last

The to is pension XX% XXXX. billion continue to the in costs. We expect XX% associated the partially by fiscal in effective interest with to expense of due $X.XX higher other offset of year an $X additional rate debt, primarily additional lower tax reduction

Now Slide please to XX. turn

We continue to strong flow. cash generate operational

global business held COVID-XX EBITDA despite our of quality our has mentioned, demonstrating I pandemic, As firm the again model.

in continue available times, return to to through have still strong cash shareholder Over about distributable about or capital almost XX cash as gas paid and dividends XX% enables [investments] over to $X.X high increasing share months, create and dividends cash distributable industrial uncertain From flow, billion $X.X this per last $X even for deployment. generated value we us shareholders flow, billion about (Ph). This $XX or billion our flow. we the of

to turn Slide please Now, XX.

As will you for in remember, I'm said, high we saw significant capital deployment. XXXX, value sure, all we potential creating

more our of the target this the year years of five less made capital Saudi to certainly deployment a that already investments today, nearly two commit three significant than despite new pleased of say took exceeding up on after by ahead schedule. we been I’m on We progress XXXX. XX number our provides by the than quarter, removing Arabia years, a step Indonesia of Yankuang details project. communicated $XX driven we goal this billion and we have Slide fact, billion to additional large significant quarter. $XX committing able end original In

billion capacity see, year period available almost As over through of FYXXXX. $XX expect we from five you can the investments FYXXXX

we $X billion billion flow total expected between $XX billion over is already to The to of continue the capacity debt Our $X additional includes today. And billion Almost spent. and increase of cash capacity of $X grow and end as now almost investable cash available FYXXXX. EBITDA.

We to maintain managing debt our balance our will targeted continue to on rating. focus A/AX current

said, Seifi to projects. As we new continue sign

So our total $XX significantly them. has project on M&A billion increased billion spend $XX.X about about remaining commitments and to to with

projects. you But plenty be already already and spent capacity have to can we of return we total see, have of committed available in still capacity. XX% So our XX% almost available high about deploy to clear,

will occur increases. increase commitment spending of continue capacity some And to our after XXXX. EBITDA And if this will

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

Seifi Ghasemi

Thank an proactively teams very current All quarter. to pleased you the margins our higher EBITDA regions results have job to three crisis. strong that this exceptional pricing and I’m much, say Scott. very responding done delivered

the our results. brought addition, and new acquired projects from have In to we are costs assets stream under which our added and control also

Now to number Slide please XX. turn

Our results. Asia

down Our large of quarter in mainly maintenance planned to our volumes facilities China. COVID-XX were the and in negative in shutdown some impacts two from third due

Asia on stayed the pricing, focused of in has team Our and regions. a rest like discipline totally

consecutive like quarter year. X% emphasize price is Our quarter improvement this XXth up region. and the I year-on-year was pricing the would this versus merchant of decision that in prior in to

driven for EBITDA margin year unfavorable down pricing Adjusted favorable and the due year Our by prior up versus primary was EBITDA region trends. XXX basis X% XX% was over to costs. of points prior

Now results. like to America's would I back the turn Scott to discuss call to

Scott Crocco

COVID-XX up review year-on-year by improvement. versus strong you, negatively impacted COVID-XX unfavorable respectively. of acquisition. effect plant and year. while America's another turn offset Price last pricing X% sales to was reduced X% was other X% is across of better up Overall lower the volumes including growth, were of partially consecutive America's results. for of price major Seifi. continued rounded by which X%, as the pass the XX Xth zero. approximately and by but a X% This sales Please asset reduced down volumes through product Sequentially, lines. Thank Slide most our XX% by currency PBF trend energy quarter hydrogen was merchant to

improvement. the onsite was about expected, for of million business, sales some remain of impact in which as volumes two to thirds June As region's did accounts flat $XXX year of the modest stable. which points The increase. the was and some compared about last volumes better up fourth by were activities, merchant EBITDA show the quarter. offset through delayed EBITDA pass plant energy productivity approached basis margin XXX lower lower price, of with maintenance this of XX%, into half contributing

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

Simon Moore

Scott. you, Thank

review for XX our region and Slide Africa to of East results. turn please Now Europe, Middle

with despite challenging major was improvement weaker region. conditions of also effect COVID-XX This XXth to improvement. the packaged Volume down sub-regions. related continue COVID-XX demand site than volumes on with on maintenance X% are products across rounded down business. Price increased consecutive the deliver about gas up in the but Our price all was X% Price positive sequentially outages customers. offset zero. price year economic XX% and and EMEA year business strong quarter the Merchant adverse more as to from is of

unfavorable nearly margin over see points recovery XXX the the contributed end was X% by pass unfavorable weaker did COVID-XX toward was EBITDA strong Americas from $XXX negatively XX% to volumes as EBITDA energy the currency about were price. Similar volumes offset points. partially pass improved through basis XXX of some about and through from and sales XX% million impacted Europe of merchant quarter, also energy in of only as currency. Sales lower the basis down modest For by lowered the XX%. X% quarter. we results,

businesses, of projects. to Slide continue due project LNG higher were other businesses this which as turn LNG increased to Global please to and as to including profits turn Pass Please which Slide activities, and sale LNG Golden the costs industrial our as future XX includes invest support due profit costs. sale our Sales to Sales is projects. to development higher corporate higher non-LNG central by corporate, gases, but gas quarter Now we as of Mozambique lower includes driven project XX equipment well as well activity, project equipment costs. and

provide additional future, call to on the back some the turn to Seifi. Now I will over thoughts

Seifi Ghasemi

The any do We of on world day. significant every not current to Simon. and about and spread it activity, crisis need and to the normal I about COVID-XX change implement you very see recovery some the is with economy. and the tell read world or impact Thank areas to back global some some you, the slowly around and unfortunately, recovering restrictions. reinstate mixed communities significant having

very and living makes projections seeing fourth performance. for the not clearly far, guidance quarter about are the any difficult of make and you to providing month in we what we any so for are July. uncertain times tell Therefore, it I our But We that are reasonable in can future.

July in on so recovery in so where the volumes been uncertainty year. are merchant As merchant well Asia, are improving versus far onsite see XX% our last expect sales business that down July our last doing of of year. is In now we July In have saw and three. XX% in greatest level economic about merchant versus about far quarter as our is this the are Americas, our and XXth, our volumes down we in we to XX% at future October volumes the today, continue. similar Europe, the In

the do States. gadget business we package in not As a United have reminder,

growth higher quarter in planned of for our growth - economy. all to gasification, delayed Products. capture I any about number expect its by three. the goal have we not mobility, maintenance on would demand future optimistic prospects our like also add to from outages do We on continue projects the we about short-term the our opportunities, that. see the very impact costs as Therefore, and of of around carving for do that Air However, the COVID-XX on for world quarter hydrogen for mega remain customers effects concerned fourth slowdown a world, I aren’t the

Now please Slide the XX. number to turn

real motivation of the Now, team great Products. more than at the is commitment advantage and our have competitive Air ever, we

will Our position business execute the strong create our long-term to shareholder to ongoing growth priority dividend top model financial strategy and allow of our also. us is continue value. to A

We safety our and long-term we to projects to we their our health value. continue significant protect to and are families. win as and expected care their welfare backlog dividends create of shareholder and will people's as forward. importantly, take The projects to Most our committed increasing go in continue continue we

world today employees Let me XX,XXX us their The drive end work dedication forward. thanking have by will and around commitment. for the

We and during time world to are make the into this surface to higher at challenging role difference is a the Air and critical Products. proud play a future. our That

we make All Products, of their difference. all to Air at us together stand

your are pleased to Now, we questions. answer

Operator

our Andrews we Instructions]. [Operator take today Vincent first And will from Morgan with Stanley. question

Vincent Andrews

good good or and morning everyone afternoon guess I almost. you Thank

other bit issue that color in Is Just sort other there any on a of that more than understand incremental two lower the the can or decline the that? want region in margins versus the was EBITDA just mix regions. the math you in little maybe provide starting percentage or a was of Europe, to

Seifi Ghasemi

ask, have comments lower -. is Vincent. that than parts like on the it Scott, do it you world. the the of additional morning would I any but fact No, is that other Good to just a margin

Scott Crocco

business more. one but that, just outage of We there systemic it No, did of overall. lower nothing have or margin facility, you is mentioned, nothing issues an as like anything is

Vincent Andrews

financial plate opportunities. if three still have maybe is Difficulty] all I'm thought of a markets Okay, come of opportunities that just And wondering as the the or ago just [Technical about we And have gone very recovered? months is de-captivation good. were something big conversation lot front that - with

Seifi Ghasemi

those them some slowdown see still time is are No, Vincent. any on there I that long those. just opportunities but happen, think we It take don't a to for of it

some COVID divestment other some not get or And by their issues. driven of or flow I doesn't non-core are strategic do of of flow customers decisions but de-captivations assets Saudi have cash is non-core of our any of issue, want some companies. to mean, so those It business. Aramco their of fundamental cash much by they rid

we So would at and if look we obviously those you. to happens, tell anything continue

Vincent Andrews

Thanks Okay, very good. much. very

Seifi Ghasemi

a day. Have Vincent. nice you Thank

Operator

will from take Sheehan next from our we SunTrust. And Jim question

James Sheehan

Thank you.

the you you we for capital So have that should your you And think when exceeded that more aggressive prior with means Do might goal be target? see deployment. next that?

Seifi Ghasemi

comment. the for positive I comment. of will kind take Well it a thanks as

$XX EBITDA if up we We have and goes invest total. then projects the take you can so if announced, said can that billion that, and up do always them come the on, have and math in that for capacity other the with you the calculate our fact obviously

that said, The So achieved use running just XX it doing done our what sure have as And so math, doing last yes is out are done next and period, current he we possible. will to Scott our significant but you they the another EBITDA. that they we to continue you in there, the allowed doing and lot of investors $XX very appropriate and math we we I is billion. And you a math terms months time, only going of five is for and are have going are to will capacity say, on. now I another very are plan is the spend last opportunities the I'm you to going of have we year summer, year five goal. are are what give not do promised we are But

continue optimistic. you. we very So Thank be to

James Sheehan

you what election, tax what U.S. the changing corporate the any maybe say policy? earnings your impact possible if Now your on see or after might can from have rate is presidential impacts rate tax about you effective XX% tax raised that to

Seifi Ghasemi

results, the so to just you XX% United impact And had familiar you are You of is you significant reference the outside business than XXX% it can with see it tax was the of But is I more in that. a as but benefited And States. when the U.S. as the almost us. you that very not number our in therefore mean, were our went our saw XX% reduced, that know U.S. that our you much reverse it realize point. how very down, We so. does of business have the it affect clear when rate also business you very open need about

James Sheehan

Thanks, Seifi.

Seifi Ghasemi

Thank you.

Operator

our question Vertical next from Research with And comes Partners. Kevin McCarthy

Kevin McCarthy

Good morning.

to on that you you seeing of customer size the And a elaborate which that made activity earnings the fiscal your you that have quarter. of an think I in regions Can likely is impact? in plant activity? maintenance fourth on terms impact comment the are

Seifi Ghasemi

Good morning, Kevin.

U.S. there all, In the a Americas. made plant. which of some is is we that about comment First

plant in maintenance determined our our know, you down by As are can't state. shutdowns the We customers. take

Some of third to going the in the were they customers U.S. the that do fiscal quarter. year in decided that

next Now to do quarter. decided they it have

to So they are of is is it We material always that but some very effect. that, And transparent. the do Americas comment not a only. - that effect is related

Kevin McCarthy

taken very interested on the question. for two? are U.S. YK between new are seem out relates it year next you it or the At new level, the of and official I Thank a macro for hear then that second region in China. tensions And the budget would outlook that you as for the rising on projects over ground? the you would meaningful how would projects. potential What assess as seeing you China be have to to Obviously now. your Seifi. And potential

Seifi Ghasemi

don't see any significant change. We

We a are as look at us The a global Chinese company. global company.

invested we XXXX have China XX more the last since than been that have in years $XX there. We in billion

we is at are so now, tensions very And out. that fact pursuing business of therefore, affected there. least we us last took all. coal. a about coal the investors YK hasn’t do And it countries matter opportunities have are allocation. we been plenty we there the to called talking the I local. big sure the in to Our for the a supply that And project between just years was that that two the at And of to are up of want not of a two China if don't

or that anything into as like that. read opportunities in reduced don't our if has So China

as Now we in anybody China, on world? working working else are in projects are

Kevin McCarthy

very Good Thank you hear. much. to

Seifi Ghasemi

you. Thank

Operator

we And next Bank question our sir, open. will Steve from take your line And of Byrne with is America.

have may You us un-mute.

Stephen Byrne

Sorry about that.

hydrogen So have you know in in Could had recharging reduce to feedstock versus dissociation cell a fuel that to feasibility ammonia the of hydrogen know see the stations. feasibility requirement NOx? gas. you in production. to opposed natural power utilities And end if view some into your been testing blend sell And want the for actually for ammonia concept, blend a do say just ammonia you delivering this market Japanese on as from technical of Saudi the as project with

Seifi Ghasemi

not these but clear in selling is Thank carbon we technically one, the when are are free selling feasible, us are you Number the that for announced we with of it questions. your ammonia, respect business we very, to project very hydrogen.

can not, just that looking hydrogen is and are not is for to feasible Ammonia those that So that transport for us think and something gas it Arabia Saudi added they mobility. the at, transported. as convert it as value a technically medium the take from applications we highly or are be because to don't are we others

green selling whether ammonia business hydrogen, that. the is of in or business. it anything are we not or like That blue So is our not

Stephen Byrne

There with and into hear that downstream synthetic your the like on that is Indonesia level the you here chemistry moving a or Saudi a what Just wanted follow-up project. component is to project, just expecting you new investment? that that And higher would are you mitigate into that so, be of to maybe operations risk a to there. on moving it assume do due unit reasonable return a because comfort

Seifi Ghasemi

operating Well, variations is our very of plans well. that added people. methanol and first responsibility the that plan. going The as into all, we is and we be not thing people you product the the to getting building other by scope have only on to sold is The other business the are know the or

over operation alignment In But that terms plants unit all not methanol, with methanol the they without so, realize strategic technology of us of And of their that using are we part are is world. ammonia of are unit is that methanol and any leader running all experience in the And in the obviously have directly. of the and operations how their why top made we risk. help we people that we production did and enabling to therefore, who that. did

Stephen Byrne

you. Thank

Seifi Ghasemi

Thank you.

Operator

Our P.J. next with from question will come Citi. Juvekar

P.J. Juvekar

question had Arabia. I your hydrogen project on a in green Saudi

opportunity the you then the is the of on you why I have Gulf you gray capital gas. question call project. have Coast is that this my more you guess gasification? and Then the that mentioned hydrogen can opportunity big, gray also what is, from huge type hydrogen natural keep You polluting coal in repeating if the gasification. more And so polluting coal hydrogen, then

Seifi Ghasemi

much to people but I don't but an you buy a oversimplify when want asking it very it question, is go P.J., - are it, is excellent like car.

the we some and Toyota some Rolls are to Bentley and like people there buy to serve Some market. Camry. people people buy like to like to Therefore, buy Royce

me I it about own going care say just emissions. people specific I hydrogen don't Some made. therefore COX about in and give is care to a worried hydrogen, I'm city, my going are don't I want to because how pollution

I no, obligated we the sell I carbon say, options Therefore, blue three world it hydrogen. producer of the the to free might market. people all in are and say people want and some we largest feel and therefore some want have to hydrogen hydrogen And available no,

thing wants no and we from to it the of therefore everybody right. is walk only away business Not by just things. same hydrogen, sell carbon not result kind as said, of I that, free don't the a want As other we saying why

are hydrogen shouldn't now for if is We hydrogen and doing that Why that. in continue the profitable. selling demand it customers you California right gray mobility, very

of Little to be to philosophy able - I know you what our bit mean. is that yes So spectrum a sell customers. like

P.J. Juvekar

the in the over different I of That is color. that in had Thank pricing Scott. you quarter for you. go question Scott, Thanks for helpful. can sort regions? a merchant

Seifi Ghasemi

answer Scott, do you want that? to

Scott Crocco

Sure. Absolutely.

segment they merchant-on-merchant. terms it as as of called merchant so well the Let as both answer your to in me refer what on

merchants X% So up for pricing onsite there pricing in all because really that and the know is is company, not any business. you overall

you give then company was was is perspective X% price. Asia That was and total from And me Europe let X%. So X%. total X%, a Americas the

was X% merchant-on-merchant X% me it Asia. Let now answers merchant-on-merchant and is The for company, it X% way X% a put - for your company you to for versus. twice, on for Americas, the roughly question. Hopefully that both EMEA basis.

P.J. Juvekar

much. very you Thank

Seifi Ghasemi

P.J. you Thank

Operator

will question Wells Sison Mike next our from with come Fargo. And

Michael Sison

just get quarter. what year impact get that Can Hey maybe it some you insight COVID that to frame on Is to happen guys next the year? cost, of that nice of on EPS, possible just back appreciate guess of all is earnings that of that how volume. to needs in rebuild back thinking through I I the is next some power? some of kind to some

Seifi Ghasemi

week, business next under well becomes it onsite of our will going that you is it with continue then and our control, going know going Then is costs. any have costs are the midterm we that we Well all volumes. issue thing to issues so not the have well,

is in to been principle pricing, we that every that about are know call. I committed talking You that have a

We the basically and that are increases world time committed delivering see price is the that that during shutdown. are to we you X%

said related to industrial always So, is merchant and directly we in merchant volumes the only are that. volumes volumes to the where thing different that is production as have and regions. committed activity And the is we

back now, right So is normal. to China almost

actually level that talking last year, a very had because about person was year, now predicting team I X% they China. growth about X%, conversation high a than will this are with China be about So night growing next in better our

picture will are in So be I that would to to Americas fact EPS. Europe come mean, able growth vaccine of we and how there very thing? this? be a year. in a the to we be to rosy addition come if the great if back you would close the And think the at hope I there. in that which you that would we of XXXX. much sometime Then case, that. of And terms October. forget Jazan, then out, of would how this are mercy normal, is announced kind that of out out be a to of So EPS everything Please give market fact of will I terms the figure have in want need for to which the we financing next Plus and that we that, in will significant in then don't us our are boost doing that the

Okay.

Michael Sison

then And just quick a follow-up. it. Got

for us merchant gave and European July. You Americas

do. better August have in you go we it on where could guys You visibility Any September? think or than thoughts

Seifi Ghasemi

I it last on bit be just was a a it will where is our we any who right should that. like have but because seems to It worse. don't predict reason other of the question honestly can't where results. time know don't go, demand, Americas knows? we to why way. I little had been it now, don't predict But get that, But see want now the but I I

Michael Sison

you. Thank

Seifi Ghasemi

Thank you.

Operator

next from Barclays. our question Fischer with comes And Duffy

Duffy Fischer

billion now. plus is question three, just year $XX on of your couple, journey. a First commitment been four It

What back kind If thought did original? different of would end a it, out notion markets different? then how look split know of be that it like. billion originally to what beginning you $XX employed that preconceived returns versus about probably was geographic you and versus obviously, go turn how you what had may versus of the You original

Seifi Ghasemi

than a at thing project. bigger able buyback hydrogen project than we we do the $XX that put have thought. I excellent the didn’t called asking we to are been hydrogen The Then mobility for us to Because, you Aramco but together will I for it. I other up Jazan XXXX, announced question. Saudi that differently, one, thing the sooner is asset to and mobility time announced turned an expect more change the out from ended be be like Number fortunately asset thought. it, buyback that so the XXXX, billion thought

we of things to ahead be what years those different that bit a than us schedule. main two little was and are So the thought, a which half has two allowed

Duffy Fischer

to one to do, time two, follow-up that able what put before that to country, on you lead And first thank before two put then the streets? order in? electric start to And ground whether needs your is to in there you you or Great, what to ports you What your you it. know place doing or power, are capital happen One, project? infrastructure see start NEOM need need do need we long on maybe equipment project, do when to for parts you. by just the be

Seifi Ghasemi

of give people. piece needs lead all, to of just in items to terms are Saudi First need is in terms to in we a us long That land. already they And secondly, it. what talking happen of of Arabia,

self-sufficient We build are going we to to be there, everything. going are

build to We roads, larger thing. emission the going inside build to build the to the and plant, port we going we are build are are plant, the are going power we whole going to

So we specific are dependent anything happening not on there.

Duffy Fischer

Thank guys. Great. you

Seifi Ghasemi

will Thank in there be We you. like sufficient. self

Operator

And question we Morgan. from J.P. with will take our Zekauskas Jeff next

Jeffrey Zekauskas

power point need ammonia supply the gigawatts power. or you you four will have a Seifi, power very about think plant gigawatts you Do much. that I can amount million four of tons that project NEOM of of of generation? to Thanks X.X talk said

Seifi Ghasemi

all asking you so first me, Jeff, are far review. reserve of

that me are our with of you into partners. gets confidentiality question me Secondly, that a asking and all

outage. very every we and easy do you requires save to to that calculate, of tons need that XXX obviously produce a approximately day kilogram megawatts calculated XX kilowatts is not You power hydrogen four can That then of of spend it XX%. difficult means, needs to be sure not to multiply that much to you as the run about power to two plan calculate is then and how needs. ammonia your And by power make you that just have need or enough you facilities know

the other about. I you that for excess the cannot megawatts. plans Therefore, need do that four talk not So, you obviously our

Jeffrey Zekauskas

of economics to there than other the other dimensions So may project hydrogen complicated, production? it, because are the be

Seifi Ghasemi

would the Anything subtract. what additive rather Which to it than be is. accretive else is

Jeffrey Zekauskas

Okay. Thank you hope well. you so I are much.

Seifi Ghasemi

you much. Thank very

Operator

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

Jonas Oxgaard

mentioned Question CapEx you so going of to into on your CapEx, that in be the backlog is future. pretty spent the far some

next of over to spend little cash three the give you years? a can more bit how of cadence do us So to you available two have a much

Seifi Ghasemi

As dividends not cash, of now, right these a $X billion cash little you after and a even are Scott, of slides. that. generate saw more lot than of on we you do And bit sitting paying

about. increase of And to we talked all to have do cash So dividends plenty still of continue have we the pay dividend. projects and the

Jonas Oxgaard

for outlays. up to years? room, how about the now there cash wondering I Or what be what projects is guess - next near-term more couple you is have debt much sign should more with

Seifi Ghasemi

of plenty No, no, is room, no. additional and always bonds. can go There we no, because issue

right of now, debt is company our the EBITDA. plenty have We about X.X room, this net

a have we So of lot room.

a us projects forward. not is that and additional that point growth for very think are as announce I there expect important to go make mega to you constraint to we continue we should

We are down. not just slowing

Jonas Oxgaard

target. context you update of Okay. up timeframe the going in it? take And to Are your curious, backlog seriously you the change to of the I'm target put your

Seifi Ghasemi

that. do will we summer next Yes,

will give we summer Next another you five new plans.

Jonas Oxgaard

you thank Okay, much. very

Seifi Ghasemi

you. or like So XXXX Thank something that. have visibility through that you

Jonas Oxgaard

Perfect.

Seifi Ghasemi

Okay. other Any questions?

Operator

Chris Parkinson Suisse. will with And Credit to we go next

Christopher Parkinson

will strategy, varies for proposing with about progressively proposal can and your Thank positioning you. others now technological just how cases but to what than proposal in smaller the versus know you chain obviously you Seifi, a your other speak and it? much anybody's projects, the just integral be your clear It own HRS are your is makes some perspective, scale. it fully ultimately further their fairly also green strategy, from distribution in of then that aspects just what value different

Seifi Ghasemi

power in it the Frankfurt are makes sufficient. lot transported up execute. can whether mean, we but to lot going to up pressure clean we Tokyo you practical require about talking the innovation that not put actually is power. hydrogen of into a grid means need the which grid us and the we is theories, stations not be about what from that pounds is first I the have compressors, the have per come are from it and mean, the connect I to to is because of says that with from is thing are I'm of or or and a truck, station because with grid, different unique grid. we green that compressors that And in to use that power grid converting people something fact a square actually power going solution the hydrogen we those that power. raise require a fact are a come The all to self requires taking order on can that around based hydrogen In a That is way to the and different refueling delivered And Shanghai. compression, to that produced to a not if lot voltage - that so of electricity. the of XX,XXX inch of secondly, lot how lot going of somebody a

carbon, is So what we in have the related unique come up somebody's a put we with truck. that anything to thing produce don't and it hydrogen touch just

another that. put Some value people on

to that of I a to theory, make up As four then the I getting city, with it a problem. the somebody is that you the but free way make say, might another no just said we convert people of is pollution it some else's years want is how city fact that warmer carbon buses truck practical It answer But in somewhere is uniqueness something have hydrogen. And question, the it in is. the project to my before, my from want doing. you come that there deliver not word then no, to to don't wherever I care new actually I because hydrogen practical is you the now the is can hydrogen, else.

Christopher Parkinson

of look And also just talked as lot well. chatter have then question you know about as long If we at a and technology. carbon thought been way second you. a just just, everybody we proven off, but Thank there then again, about Alright. hydrogen people - capture has

and apply also is in a demand arguably which Europe. know already state spectrum is PBS different in few there So then explored could evolving northwest a the are which been of to we areas California, that

Just how there is about even months your or down competitive technology in few terms should up just a these positioning and we ago. opportunities of enthusiasm own versus think

there appears well. is Just here as clearly something

Seifi Ghasemi

about enthusiastic capture. very are very, We carbon

announce lot time comes, a have will of We projects in And the when them. we development.

solution. significant can editing. We that create, capture are kind about very you and if can excited is you blue create because Because that, carbon of another

is make carbon, essential can urea. very methanol, many we make carbon very, world a can how around. no everything. part capture you Because cars do. mean capture I running The you You blue of NEOMs billion blue can has it matter X.X

going business. and that capture hydrocarbons can used. carbon of of And find are So huge be COX, to still be can if a capturing a way you

always said have that project out We that. the we And about to And in continue next and us will that. work you for I hear that. on two real coming on think the commercial or develop proposals with three years,

Christopher Parkinson

well. you. Thank are Hope you

Seifi Ghasemi

sir. you, Thank

Operator

our David question And next Deutsche will come from Begleiter with Bank.

David Begleiter

in Thank the XXXX closes How think you. we from up October. earnings assuming should Jazan? to Jazan, about on in Seifi ramp it just fiscal

Seifi Ghasemi

much investments? per capital rule know operating of the the of what of you - I will effect Jazan we then you we be. of dollar thumb our going calculate can when given we know some you income have is you of it closed VFC. kind employing, are comes And then if And on we mean and $X.XX get close it how Well guidance, it

David Begleiter

Very good.

hydrogen is competitors couple be it players in to is multiple has whether your in of China respect of going week One What China there announced hydrogen or your and a strategy? so. the MoUs last forward? with and And should for

Seifi Ghasemi

projects. to any make and Well mean want and is on in many, that. in But our I terms projects about are don't working comments real But up opportunities hydrogen. China and of have we is many them. prospects, many, many, terms supplying in that of thing I a they our answer competitors what aspirational don't signed about what to are an doing. the should about difference contracts is, any is MoU the between that comments what I

happy. They that about yet We are them hydrogen. be more are have hydrogen In China what we a there. stations in to working. They China. called so on are activity building seem gray lot said, actually focused the enthusiastic he too terms hydrogen But we called Most the are want. We hydrogen. carbon in they spectrum. not green are there and hydrogen. so of to they fueling is want are capture But I fueling of supply of whole blue And stations as

I projects. are put on think something are out if you we anytime we But XXX probably don't the placements. counting we working do

David Begleiter

you Thank much. very

Seifi Ghasemi

Thank you, sir.

Operator

next question come And with our Roberts UBS. from John will

John Roberts

I are you. here. only ask going we Thank And will on one since

XX% here in down think as in July. merchant volumes Were the you week volumes? the and in plateau of terms June, Americas merchant well I improvement EMEA XX% about in in said down in in they were

Seifi Ghasemi

is that statement. a Approximately correct

John Roberts

Thank you.

Seifi Ghasemi

John by How the are Doing okay? way. doing you

John Roberts

and Very also. sound well good, thank you. you

you thank very much. So

Seifi Ghasemi

appreciate there? Thank other you. questions Any thank out I you sir, that.

Operator

Yes.

Sachs. Bob Our next Koort question will come with Goldman from

Robert Koort

I appreciate your Seifi. patience,

Seifi Ghasemi

difficult have a conference question for sure, myself we I'm ready one, but Absolutely. the you. got I'm We until it call a wouldn't getting is it. ended from

Robert Koort

I good on ask to job did you assembling of the know coal guys technology. a want you gasification,

to it. I electrolyzers you we long of that And advantage. that like is is others to to also want But suspect, You into this an list a advantage. break market. have availability the willingness suppose it. green capital technology the some capital is your do I available, sounds you a you also look do get When an there effort. have at certainly willingness this mean, That that I shown would hydrogen

give your the the advantage is What your relationships, a it the sauce? is is Is that it win capital, So here? what secret here? your see do fit us you product to why sense is competitive is technology,

Seifi Ghasemi

order The and one, need bring need What about to the has partner, (Ph). willing to a who is a you to a make to means to excellent access you you thing access the That have need government. is Bob sun [rind] question. give you you have in like number which NEOM. project that, going the to location,

and vast be something property quantities You and the there things buy This that do you like government. is convince need in going and and doing that, areas you area you all something piece sensitive of to you of that. need a to to very not go try are

to able with might in any is come difficult state, NEOM it with of those have that, that do that up capabilities. with were part our to very the I So in kind is faces think the board and first we

need be You to have to that convince a able the to and relationship government support first. is

do of second is how this to obviously, the thing. The thing idea

up build will ship real in we other now. the to largest because have third there then electrolyzers. to of most you to yes it, sold I convert a and and tied guess knew the can project. can ammonia, it NEOM but the have we I project, but practical because thing announced this which that That that the you in growth about everybody think solution talking daydreaming about I says, the that really and the government, make there in is demonstrated to then Now match problem, are market, look we with and fact it hydrogen take the world the NEOM, are we is just was it not no of in this is Arabian you Saudi all a stuff. talking if right gas we There about producer company capacity okay is are making credible that Then it somebody someday liquefy about

As arrangement them. an with you know, we exclusive have

hydrogen are And we XX that thing put is have what is that respect is yourself that curing So that But the hydrogen obviously, stations fueling we actually we the is being in competitive starter and doing advantages the trunk with third somebody’s more how then those done. have. second important most we been the and And have the to thing. than fact first thing have PSI. at therefore, you and XX,XXX the patents

by call same giant, it bit for a respect and a the anybody phone right is products. you only hydration the thinking the this, over And get is because any other of people or is chemical is and the now, wanted their any company, lot who gives world examples country country, advantage. a of whether a there don't a have [indiscernible] NEOM, we with anywhere underestimate whether I little the gasification have And it So, to ultimately about it it mobility. believe anybody thing me, extremely a And we to, do took in to gasification, be is a giant and the or same this- think one. world, in country, refinery that significant hope thing they whether

Robert Koort

proton you is with or stage solid helpful. think on advantages that differentiation And of alkaline, something are Or crop know is technology competitive that disadvantage oxide? there bunch there meaningful for the got is a looking testing not a spending of here? the do is worth process exchange electrolyzers? That the mentioned and Or that in in? I gating to you time outside you part or is

Seifi Ghasemi

I been doing doing think information, public have the who is XX people they technology have that. this chlorine been has all this of for this for years - it making thing and

stage. decided Obviously is their this just chem. very So manufacturing is and that a talking at bigger known and that did We at look very is technology. option their for technology us (Ph) as was [Ziemens] about we their well. capacity

other technology Now not? credit. honestly with There people which that developing is are might operation professionals there doing might later is nobody research The something quite things. or chem. small it on

Robert Koort

it. Got you appreciate Thanks much in. so me Seifi. I squeezing

Seifi Ghasemi

your is Absolutely family. you and you. all hope Bob anytime well Thank with and

there any? question Next is

Operator

Yes.

Harrison Mike Global. from with Seaport come will question next Our

Michael Harrison

to more in think we rates. merchant higher about utilization double-digit margin business really performance Generally is declines here, though you Europe. saw the have and merchant being you your have Americas you profitable even in deliver seem Yet, good when

you your on declined on pronounced bit a provide little of you the actions margins? more to can detail having impact color So merchant or from were taking a prevent what

Seifi Ghasemi

Pricing friend, my on pricing. focus

to about are ago, if prices and come you increase market share. lose that focused our prices share, announced half on on haven't lose for XX-years. for the years on products, market the we we very increased And we focused time because look that know, We said volumes, we a we and prices two well. has not That is us are philosophy we

going up, lot development. a are of on we Our money costs spending are

and industrial is is places. last XX-years, the aren't I focused therefore that you pricing. X% quarter. normal operators when the very driving this times, gas And we got you cost our look the our can at of more But that the there And many all on drivers Our trucks, costs been of what more, increases the driving pricing. that. people see And price even under businesses mean, of costs every have thing. in history

Michael Harrison

maybe Alright. And Scott. a for then question

the a PBF standpoint Americas. contribution of the revenue the quarter Energy from in in Just acquisition

Seifi Ghasemi

We you we calculate you thing million. $XXX I And didn’t told keep that. take that can want question Scott don't because Mike, disclose minimum we But answer don't question saying that that. for to is that I of $X.XX think is capital. will it every because dollar the

very about calculate is you XX%. And, can our that So tax rate easily.

in conclusion So want do And corner about not the to go don't that you you month details want to then possibility the a and the with and out can project. we But that come we a to it come it number. the through exactly half. of figure talks up was for that, of about a because

Michael Harrison

Understood.

I think I was speaking more in terms of the revenue contribution.

truly driven versus what was Just acquisition. trying organic what an to out by break was

Seifi Ghasemi

there. my good go guess But friends. can you make that cannot On one, we a

a at once break in Sorry that. while. Give a about us least

Okay.

Michael Harrison

Understood. Thanks for much.

Seifi Ghasemi

Thank you, Mike.

Operator

from And question Alexander with will Laurence our come next Jefferies.

Laurence Alexander

for Thanks morning. in. Good squeezing me

then. question quick a Just

On of several projects for for the the the every That of has conversion decades. an sort $X.XX benchmark return for CapEx. capital rule dollar industry thumb been on on of

If at the access look That have addressable you the to. size of markets. now you

projects are the for technology the Products and return thumb know to anything in of position, where at is $X.XX Should and good your you next help can to we technology going value a all possible. that. everything table capital not how, process next because but the on the on wave decade? of market the projects, creation Your that higher after wave there this of the how? bringing process to When rule Or look the the we is know industry expect just make get next Air go

Seifi Ghasemi

We $X.XX. better are thank you. going do more phase going are Yes, you than the to next right, be to profitable. is

Laurence Alexander

Thanks. Okay.

Seifi Ghasemi

Sure.

Operator

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

John McNulty

Seifi. Thanks taking question. Hey, for my

of is materializing of timeframe. of looks to to going XXXX are won't a So that a past really And a into of levels. of over XXXX it be your joint - It portion couple growing at to coming business really kind you have of years. the like next actually kind lot least on projects be future tied relative EBITDA ventures is more

your a joint is we thinking when So should trying that, anything there Or Similarly, to forward, of should with be maybe guess cutting thinking maybe that cash I flows. bit. look So holds ventures. about little through should be compound how be things it about flows we those to hair some cash? that? on back EBITDA that we we start and How

Seifi Ghasemi

XXXX, Can Not I come you to XXXX. everything make very, Hi going John, during asking good are a just on very question. is comment? just

coming a going stream. stream in other and in we Jiutai the Jazan on projects to We come are several we to close XXXX, then have have lot on XXXX, that like

to be continuous So this going growth. is a

So some. don't have a we decode

a becomes But much the to haircut calculation I EBITDA, all complex them most thing too the that. very other take And the you have that too of can the consolidate. we want we them ventures of joint consolidate, have on think, because ventures, of about it. we will of that depends EBITDA ventures, it we don't and many joint The some and you don't and some obviously get issue joint a but the cannot

John McNulty

Got the Perfect. for Thanks it. clarification.

Seifi Ghasemi

appreciate you I much that. very John, Thank

Operator

no turn for or like queue currently any presenters the I would to questions in our further closing And to it we remarks. at have back additional this time.

Seifi Ghasemi

Thank you.

would results on listening our I like being for and to our your quarter. interest next everybody for again Thanks presentation. closing, to in thank to with our we So, We appreciate discussing call. forward look you

As I please forward in healthy. three safe best. you and to All stay looking said the I'm you. earlier, months. Thank talking to

Operator

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

disconnect. now may You

Air Products and Chemicals (APD) 23 Jul 202020 Q3 Earnings call transcript