APD - Earnings call transcript Q3 2021 | Air Products and Chemicals, Inc.

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Operator

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

Simon Moore

Corporate Welcome Thank and Crocco, results ' our Products be we Good and Financial President joined Investor our Financial who Teleconference. After pleased Secretary. succeeding Chief Seifi I be questions. everyone. President, you, morning, Sean to your and Relations, of President, And Xrd President our is today Moore, Air and General to our Simon Sustainability. Chief to we'll pleased Schaeffer, current Vice am announced Executive Rochel. This Senior Scott Major, Vice Relations as Ghasemi, Vice Melissa Officer, Quarter Chairman, as our by President, comments, take XXXX Earnings Vice and Officer. Scott Executive CEO, Counsel,

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

Earnings measures throughout both segment addition, employed. website referring section. financial of GAAP Release the Reconciliations Unless these refer non-GAAP found Adjusted we our to when EBITDA otherwise, our Adjusted on per we Capital directly the and be adjusted Share, comparable in today's Company-wide a and financial to Margin, will measures, Earnings Rate, on are measures. EBITDA, measures per Return Adjusted Effective relevant earnings Adjusted state specifically Tax rate, ROCE, tax can EBITDA, refer EBITDA most we our to effective share, basis, various margin, we on and financial discussion, to In adjusted

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

Seifi Ghasemi

busy awards announcing And X. about growth last your to turn on results, into would taking is we time which to to we our get few Simon. today. have addition for Today, announced for slide very the deployment. you CFO But month. everyone. our announcement you, and significant that Thank like to day call plans number say our be our do a I details, from in good a transition, updating capital schedule Please before we to Thank

I done Officer. call, for what our to highest publicly Scott creating drive assume finance role this all his succeed move the you to Scott, Vice like is privately, to growth I investment. our Products want forward. that Scott, past Scott successful worldwide to Chief recognize your significant for Mr. class help has Power organization. told efforts again Air working thank shareholder like and few hydrogen. to particularly Air and Schaeffer for responsibility transition. Project into you development carbon you program, President retired and point, and and words? for the as future. and health Executive Thank to started us going strong leadership position his in had strategy Products. wish position as a our distinguished significant and a you as career value. you Financial projects say career been say smooth a future. all focus his growth Company would to our related testament on of Products. of Ms. Gasification deliver, this to project and Officer serving in our have the from part Scott Chief capture, Jazan the Following Particularly, the continue Scott is progressed executed thank with and our you us Products Crocco projects we XXth for it these gasification, happiness years, efforts at have in differentiate to a And this appreciate and ethic, with great the Melissa Today, I September finance, for in financing work have would of Air the who I done closing leading has you ultimately to you Financial will That I I'm and particularly Scott, X on achievement onboard XX-year Air have These to privilege the as for

Scott Crocco

rest operates Thank honor Yes. leadership over been on of the of words I the Products sky where cash the to With Seifi. path dividend and very deployment and the you a work and It's increases, kind limit. past significant leadership much, appreciate alongside continued the years. an support Products these team to strong position a capacity, set truly provided and X flows, you look from be Air over no the you've the I years, Air her with have is again, together and continuing excited will is Company. the I there many weeks. few forward no remain there I to And and and amazing profitable ahead. opportunities transition doubt I've help of doubt about this continue the very closely more do over past the you the same. growth excel others Melissa thank And future you to to much. will the worked strength. capital coming

Seifi Ghasemi

Scott. your comments. do appreciate I you, Thank

me introduce Schaeffer. Let now Melissa

One of and Melissa will individual. learn the away things is passionate she right driven that is you that about a

I'm to Vice She she to a increasing here, Vice President inside before this roles responsibility Products. people She joined financial Products' Zemin's, Audit brings would like years. continue she and say that we're in Young, new be to to Melissa part this experience, and doubt help our outside a an and no as Finance, Along responsibility Financial Melissa, five megaprojects, it's our segment. of their Ernst words? deep coming our is us & create have the reporting building Air a that well contribute of She will the few she Trinseo President environment And I to largest And excellence. and delighted for been will over as matter, to to became success you and example Chief fullest. Melissa, and belong financial and past that as XXXX, she our great of has culture from key win. Products shall with Chief Air For of financial leadership all role. Executive growth and Air about then Officer. spirit, driven is

Melissa Schaeffer

and Products And Air And environmental and results heart and the investment to to hello today, for of CFO. team a say Company our to set I energy opportunity to and Thank our meeting to truly Scott call makes with time and looking customers, he as full-year course, you is special introduction thank this more look growth working of Products appreciate of earnings forward want communities, providing tremendous forward. of reward Seifi. the our Thank QX solutions the all those community to sharing Air which support on bring Products forward and the for Air call. you. I to and has the example join our next the To solutions our I our truly place together organization sustainable I'm at you. our serve finance everyone broad be. shareholders.

Seifi Ghasemi

Thank and again as our Air of at people full people results. your been you Quarter. our business Melissa, results dedication the And business the delivered Products display to let's now, turn comments. on have both, of our good The and stability this for talented Scott committed and

reduced and the operating In pandemic. Our through demonstrated work supplied world and the before. support our people not crisis difficult COVID-XX I stronger to proud than or the that customers working even Company by is cut our together emerging period. salaries facilities this XXX have Air this hard staff we and am during Products our have say from of around dedication kept our employees,

and new on raised and acquire stream. to new brought We have prices, businesses, continued assets successfully plans

is Air last delivered achieved We pursue project and accomplishments future all to have functions, at efforts. mostly their projects employees that $X.XX proud to have execute various this Quarter, hard us have front higher year Earnings which and for per of same we despite Share successfully am like time, us. organization our growth-driven would in team, also resources At extremely our and of I of the by many costs we a strengthened to engineering help we in in as and absorbing Products the the of related development work. development adding thank XX% our exciting I dedication than also

execute results our maintaining while focus on continue unwavering and to safety. financial projects deliver strong We

X number strict our the following despite challenging to protect safely, protocols our working on slide focus COVID-XX our shows, As to customers, conditions, themselves, team communities. help continues our and

most and X management As important and be the philosophy, for Slides always, Air safety our X is strategic plans. X, number our our and accidents include at X us our and will X, of X-point goal Products, goal, incidents. focus always all

will us every continue these are the principles in seen future. we the this and and have day will guide to they We before, follow that

of scope talented with to address We X. believe are number of please team. necessary the the mega challenges to to projects together backgrounds the people The variety environmental Now, work and complexity board require significant. challenges facing as parts world slide turn from skills different the of sustainability one and a these

in focused the I the a these opportunities how this annual challenging goal sustainability-driven many purpose highlights number all slide can of believe sustainability working We an as We our which higher solve turn matter Air common recently calling problems long we Company area. no report all basis. growth this of Products. united, our and please we global all As earlier, published We and mentioned can on for as is to stay accomplishments at towards X. us our and a

equivalent our tons emissions. avoid For of XX million X in ton customers that every products, our COX products means emit help that emissions. customers we instance, we of for our our avoid of making help COX This tons COX

our In our than are and of from sustainable, purchases of to sources. close renewable are addition, offerings more electricity X/X X/X

very new much which with sustainability also growth goals have We strategy. are our set aligned

XXXX. to XX by Our by X/X by reduce goal aims intensity carbon Xrd

significant progress results. and Our see growth projects and hand-in-hand. later to Hence, major enabled this come stream growth our we sustainability strategy. in on And to go positively decade At opportunities is our our Air our benefit growth have progress as expect start towards therefore, sustainability goal. Products, the

growth an A about are little environmental talk net-zero the is I later June, opportunity strive the project the Edmonton, hydrogen of Company. will we to opportunities solve on. a As innovative, in announced example more and world's also such prime that last problems, for world-class, we sustainability we Alberta creating

highlights Now, projects. please turn our gasification which slide to key XX, number

are and do We projects to pursuing committed to in projects strategy are gasification around our gasification future. expect world. the announce the exciting additional We

on update the X Now, gasification which you would like specifically, give I discussed on projects I to an have previous calls. earning large

acquisition First, and Power billion from Saudi our Aramco. $XX of Plant Jazan Gasifier

year fiscal progress working still expect we with make this final is bring of by to close team and We that stages final hard through lenders. project to financing our partners project the to the and financial end worked the our continue The has project XX/XX/XXXX. significant the of reach

the Lu'An, regarding full operating Second, at capacity. plant is

we fiscal As fees to mentioned before reduced the to last I expect we in quarter, full recognize return through XXXX. year fee 'XX

to X is like discuss provide making announcement plans I of next exciting would years. today, very deployment capital before I and new developments we overview Now, X the which the for are an major our

economy. to hydrocarbons X Hydrogen. energy competitive, you slide coming Hydrogen. of locally see we Just advance announced project energy available fully can This clean low-carbon aligned overview net-zero This make Capture, includes support to Carbon XX, The innovative and with growth It on strategy enables X month. pillars project, project project strategy and Beta the Canada diversification the together is to last in Canada's Gasification, our transition. our its that of uses

the mobility supply the customers hydrogen project be well as expected in electricity and markets. X.X produced liquid slide supplied just used captured Alberta be will using project technology, net-zero by on be achieve thermal XX, net-zero the to the pipeline will then to X% dollar will in and output net carbon our be output, XX% The summarized footprint merchant hydrogen XXXX. investment To enabling to the COX our to generated stream zero, represents stored. by will remaining the a produce in upset the existing As produced other the hydrogen the as by of is The on Canadian hydrogen. exporting billion for reforming come

on the a slide heavy-duty the trucks and focus mobility we fuel to hydrogen on see accelerate Air can Products. exciting sales provide announce And we hydrogen project powertrain very electric to trucks pleased a to Cummins the you into fuel with will for market. are number of Hydrogen integrated it integration As continue globally. XX, for Cummins,

vehicles As converting to we process X,XXX fuel vehicles. fleet begin distribution cell global of our the of hydrogen

online to expect in We the conversion first unit before XXXX, the and be XXXX. full

the potential Air you years XXXX, carbon publicly based global committing let today. that Company, hydrogen within XXXX that $XX deploying guided of energy announcement the I on in to clearly capture, Now, we degree me remember the our significant capital billion and highlights to At foresee had end significant X give growth of and strategy could announcement from time, of the ago, that of X about our transition, create years, announced for the by of the growth Products we in or X.X skepticism. gasification, XXXX. pillars and [Indiscernable]

had Now can billion or have XX, with of "What would investors before. on the we I deployed the see as of have we years state This today, you now summer are almost this XXXX. I'm this that our plan, return the want the promised sometime question in to the ahead future?" by you given slide we was, I aggregate, is $XX of the our question we to our happy show plan. address capital, that ahead guidance that of investors line the the But our capital validates And strategy. number committed about that on investors X.X on long-term raised during

expects So based have are from are summer right billion ahead, here Xth strategy. or through you capacity, this and the before, estimate the end the will XXXX. $XX conservative strategy implementing wanted our make strategy a of that do the we Air deploy on growth of years, we move We more that see Later I to But on Products XX XXXX, slide of our to go can based capital today, announcing the commit see what financial on forward. in point today, than to a XXXX focused as call, details. we for as pursuing XX of Scott to

transition. We are energy aided by the the megatrends of

competencies. investors. and we the our deliver the And a what promised to on make and our have people We financial core reality have the we dream strength

our Now please turn shows growth. slide which EPS XX, to

Company. since greater a XX% thank EPS their Air of again are the and of delivered hard As and to testament work commitment annual you have can I These when commitment. and President, see, of CEO than people them to was hard the Products Chairman, continued we I growth XXXX want appointed and for work results the

Now, Both to our slide double-digits number investors. that Earnings via XX, have share we and reminder XXXX. EPS turn grown since a growth our please dividends our

exciting delivering opportunities. We to to growth while develop are committed dividends increased our we continue

our finally, growth supports dividends margins. number our slide and We cash have that significant flow substantial our strategy. And shows XX EBITDA

favorite my are margins There XXXX XXXX. it up slide. points the always, since shows that basis As

overview. Now Scott over I'm happy Scott. to turn the call to to provide a financial

Scott Crocco

Thank you, Seifi.

the have mentioned our earlier, and Seifi our full on of As the of people been business stability display. dedication

the to deliver by the posed pandemic. X%. Quarter to Year volumes XXXX, this financial in unprecedented If continue words, are strong We challenges results our execute Fiscal we or of volumes despite other projects our and compare before pandemic, the QX up

past held Our trailing X cash for the steady billion fourth quarter years. has distributable approximately flow at $X.X

Now, from Air even stronger pandemic Products Company. is an emerging this

regions loan EBITDA. lower And price higher Quarter. EPS reported from and ongoing despite and double-digits sales EBITDA, impact. All be COVID volume earnings continued our to and X strong the this Sales, Our the grew in

offset to reduced Sales and XX billion XX% to please currencies. pass-through, XX% brief COVID discussion driven plants, Slide Now, year, acquisitions than by of recovery, Lu'An our increased reaching very results. strong better for more $X.X compared improved favorable a new Volume volume, the as pricing, prior contributions. higher and energy turn third-quarter

been Although consistent eased, across recovery our the has the has lines. pandemic volume not product

EBITDA X% the but higher merchant by energy which higher currencies, equity improvement price the due total, XXth up experience XXX regions. which prior negatively higher of inclined points in X% from year, impacted previous the mark the with again represents the XXX The the higher $X basis gains. pass-through billion than billion year low in denominator as Sequentially, of Quarter debt by of X% price. is declined was COVID-XX. favorable more of XXX X% quarter to lower approaching prices access less Overall profit. more pass-through, to points. sales increase costs offset prices were impacted compared as stronger income, supported more margin up although all reduced impact volume, $X ROCE price, by impact increase sales the spending energy included mainly normal due to costs by and business. year. XX% last to ROCE range spending the and points due modest inflation X about for pass-through a resulting following energy higher sites continue XXX were EBITDA primarily was winter points. X% were This storm returned consecutive margin Higher to the X% maintenance. increases than higher year-over-year and basis affiliate in Prices maintenance last costs volume basis additional in We Quarter. to the not to effects COVID-XX, a Higher this up about the by seasonally basis from and negative the was lower. in were Energy an which

slide to Now please XX. turn

third GAAP $X.XX a tax adjustments election included Our to a resulting benefit tax related was XXXX EPS on reserve subsidiary. non-U.S. quarter, $X.XX a and from primarily

Volume Excluding of adjusted item, was $X.XX the $X.XX. pandemic, offset last more was Lu'An ongoing the than at year. contributions. new above plants, acquisitions, and recovery, impacts non-GAAP COVID our and $X.XX, reduced was EPS favorable the despite the third-quarter

volume recognize operating to Lu'An that the As a from line results. included venture, we owner the because XXX% of XX% reminder, impact negative as the joint the it's of the majority consolidate is important the Lu'An in

our price interest the is as Price the shared variable partner $X.XX costs increases this of covered income as reduced. more also the partially than offset in cost by positive by net net our inflation. However, is impact line contributed reflected non-controlling variable

prior law. COVID-XX and resources add growth power rising such Asia execute to to roughly Quarters, on our $X.XX our favorable accounting for with America's while actions of plans have was XX.X% to as our COVID and in Currency effective on RMB than income due Euro points rate impact. from underlying fuel. Like contributed non-controlling response strengthen ventures and affiliate to variable year lower of results, XXX year. costs, strong and a incentives due UK last X/X basis were Foreign continue joint tax change The the $X.XX organization lower Chinese costs. $X.XX maintenance also the primarily interest business last pricing the Exchange costs consolidated our to in profits were added increased temporary support tax Lu'An. few We -related lower was government limitations, last year the to Equity there in and

expect includes our an $X.XX We in and primarily effective driven non-operating 'XX. of expense rate $X.XX. year be unfavorable tax a slightly in fiscal lower to XX% favorable pension $X.XX interest remaining The expense below income, by

Now of our slide turn allows to us generate The to XX. flow. strong stability please business to cash continue

of update billion create spending last dividends $XX or $X.X a little the and strong XX% interest, increasing return we dividends our Over Capex in over cash in $X.X and our capital part even we for high that billion, share. to cash generated through to EBITDA than times, about continue our And of uncertain Note an This still higher deployment. our months, driven on capital have about shareholder cash flow global our or maintenance From shareholders. on as billion Slide provides is From deployment. distributable capital. over paid number we investments. XX us taxes, by to value XX $X.X enables usual almost flow, gas industrial headquarters. flow, distributable about billion available paid a per maintenance we new $X.X

fiscal horizon flow see another deployment years extended additional already for capacity to potential Seifi capacity. XXXX. extend additional potential by view least we to $XX The EBITDA billion, beyond updated over growth, years. our Since is $XX capacity conservative generates appropriate and billion, our billion opportunities timeframe at billion we another original it's XXXX. tremendous therefore, of we've think which of billion additional This for this project the $XX X additional $XX mentioned, through cash cash available Almost believe spent. X As available available billion time we figure be includes shows of almost the to XXXX, borrowing expect over given the debt and $X $X We today. and capital

to maintain continue on focus target debt will We rating. balance our current our AAX to managing

see commitment growth we here. committed already show at have can XXXX made already and exceeded In available our and substantial have strategy. you to the we've short, As capacity you to XX% to the spent capacity we XX% deploy we in over updated support

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

Seifi Ghasemi

much, very (ph). you Scott Thank

Asia Sales increased Lu'An to of negative please were COVID XX for contribution. and by of Volumes X%, than volume, driven the new to small the plants, favorable the Now, more addition price, Base currencies. volumes, by X last year slide XX% reversing our offset supported the up number results. a turn strong recovering and previous compared reduced numerous better quarters. trend

positive offset benefits income of additional depreciation XXX and EBITDA new margin due to XX.X% compared higher improved of Sequentially, Lu'An margin and equity contribution activities to EBITDA Year following affiliate volume, by and was primarily Costs government [Indiscernable] points inflation -related driven sales price, Lunar increased costs costs income. I overall and currencies, more by positive income. margin the the New -related and pricing lines. holidays. by income quarter EBITDA Asia Sequentially, most basis unfavorably equity Asia. should economic product was Operating compared also than increased X% last was in affiliate the year. was across plants. X%, COVID and incentives as -- as year-on-year This China volume, year. profit primarily and say using last price lower in partly incentives good improvement driven of price, price XXth COVID and affiliate quality higher rebounded reduced favorable divided the performance from and consecutive X%. EBITDA

turn call (ph) America's to about Scott to the back like talk would results. to I Now,

Scott Crocco

XX% Slide higher grew items. levels over America, currency merchant Most positive. gases pre-COVID Thank XX Seifi to last X% results. energy due to one-time their a were turn in has Sales Volume not and up. year. price, primarily yet medical recovery, returned (ph). products review Please the but you, volume all for surged pass-through, caught have of and Volume, fully COVID South hydrogen to America's

While diesel the of increases different rebounded. volumes types across for as resumed not have travel, fuels demand Gasoline fuel. are improved people transportation has the even and

However, basis to for lags. a unit gasoline, which compared Furthermore, light on per hydrogen use the demand still the has consumes more jet crude, which shifted industry less to sweet requires hydrogen. fuel, more

EBITDA addition, region Quarter was all increase In the lines. high. The inventory was is again the cost on remained product across XXth level was for Price price consecutive to And industry's X% was equivalent $XXX than strong. X% this improvement. as Price maintenance. the prices the volume drove of merchant price, better pass-through year, better business. year-over-year again major Energy versus XX% cost last and remained last offset power and inflation increase higher XX% as increase. well other one-time as natural and over a elevated sales year the more million, items gas reached as higher

by protocols. year last because last maintenance work were due to restrictions COVID versus possible was imposed year costs unfavorable limited the maintenance Our

volume X%, X% Price one-time recovery after winter cost winter the X% Following completion impacted the our sequentially by negatively margin energy pass-through increased the back as turnaround XX% while caused points, of higher points the of were major pass-through, as America's and Quarter. following gas or by spike Energy while Quarter, basis by natural EBITDA successful last EBITDA one-time volumes items. across Quarter, storm. activities stronger primarily driven better, storm the improved almost price to basis costs driven margin also partially to price, volume, partly favorable costs. we by all energy the of by next and over strong lower was sequentially was EBITDA points hydrogen supported XXX price reported Higher came XXX well lines. as by basis expect Compared maintenance product moderate pass-through down about increased helped items, this up offset decline. the unfavorable. XXX improved

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

Simon Moore

Scott. you, Thank

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

Our the were another about outstanding EMEA last recovery delivered up increase. primarily versus volume Sales year. results EBITDA and and this drove team volume set XX%, jumped acquisitions COVID quarter. of both and XX% XX%

returned region an higher lines the merchant bulk to business Quarter Real level, price The the has by pre-COVID corresponds Our X% most the the unfavorable consecutive was across price for its business. XXth gain the lagged. and for sub-regions. packaged the to all increase partially product gas business increases liquid Price and mix across offset not still major but since was X% improvement lines a were demand for the product even.

were the XXX X% affiliate point reduction volume. XX% points, XXX mostly unfavorable XXX cost sales EBITDA responsible and as EBITDA was due positive the roughly higher central non Gases, attributable are project of lower $XXX executing to power other and We quarter, Sales over and other last to inflation. as were margin costs, mix includes by profit well basis sale LNG mainly our XX%, favorable Quarter. which as LNG our to rose a was basis to Please which But increased profits but includes X% turn higher equal costs. million, activity, basis sales and more We spending. roughly additional Compared and offset volume equipment and to equivalent costs. lower and Sales to a primarily due pleased businesses, including XX, XX, was development costs Global to driven - Currencies cost was by to to down business supported as the energy product lower, about Corporate, XXX higher and strong well Air X as up Slide with businesses, Project dollar. primarily increases. to and X% ' Quarter. on power Now, were Products inflation as remaining volume. down Corporate lower the LNG actions by profit higher pass-through first margin the sales and equity roughly Quarter was pound other turn corporate and for driven equal the other equipment LNG cost last of LNG's large activities project recover to Train the were projects, by we costs, prior execute due U.S. to this the be but building recent was also income EBITDA the higher strong selected Slide Nigeria on to was multiple The for pricing trains. than Euro technology gain for about and and increased sales was were continued power primarily profits higher success basis British versus this points. points X segment corporate please

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

Seifi Ghasemi

Simon. much, very you Thank

consistent please turn to number earnings Now, flow. to cash and Slide Products deliver XX. continues Air

which business, awfully total is on-site remains our X/X stable. sales, Our of

have seen challenging year. in merchant last the Quarter We of signs to relative particularly volumes, improvement X very

As I capacity, facility Lu'An Jazan operating earlier, of September at by full we mentioned and financial transaction expect achieve XXXX. the the the close end to is

X up XX% XXXX, Quarter shared our up is Quarter. our last the year, to fiscal fiscal X% year XX% guidance with Earnings to we within you to guidance for approximately share makes For our $X.XX year. over $X.XX per of last range, the year XXX, be XXX last This and over

approximately the see Capex our to of X.X year XXXX. billion for continue We

our on guidance our Our to continue projects, just excludes any a from fiscal customers. other year finalizing 'XX EPS bringing contribution execute them and we agreements stream with and Capex [Indiscernable] Meanwhile,

deployment and to We capital pipeline are strategy our committed projects. growing of to our

long-term We our come. growth to be about continue the that in capital for X next potential The deployment you we the growth our focused, significant today very years demonstrate with to projections years optimistic strategy. shared

XX. Slide and Company the number commitment only of people in of degree to advantage enterprise. motivation long-term of Now, The please the competitive is the sustainable turn any

supporting proud to also each to made even base fortunate people. we are only our in business, that our the the have that say with we together the against hardships have We continued competencies, pandemic, other, strategy. Not strengthen and our extend growth stronger of am our process. working By commitment customers to further core our I have our but pursuing

and escape Products Our gasification, We Hydrogen drive executing unmatched clean the energy environment. strategy support growth the in a that our well platforms mega future. we for and Carbon desire know continued success all the only growth capture, in cleaner and differentiated positioned will all growth which to projects accelerate for have three areas. Air all expertise, most are strong And

dedicated In thank part our As the always, better around of I their want higher our Products creating everyone. people Air of innovating achieve are a alongside the purpose doing world committed world. to for common customers and to you, again,

questions answer any you have. very we pleased are Now, to that

Operator

instructions]. you. Operator Thank [

are please using speakerphone, function our turned you sure hear Stanley. reach your first Vincent your allow from is question, to we'll off make mute And to If a equipment. with our Morgan Andrew [Operator Instructions] signal

Vincent Andrews

CapEx capital And on be carbon allocation, done thinking category projects? now, currently on that's and to the to last in the hydrogen horizon much Thank X blue versus that capture. start X.X clearly. there's that's ask got the years morning, curious ladder gas the future about. How should about outlook on the in of whether mega-project forth traditional more towards interested are more very of A congratulations it. you're pieces could I menu and going of the that see green the and to But that seen things you. expanding you distinguished about Good maybe assume I we're Scott. how not will for Seifi, well CapEx Capex menu then I'm gasification, everyone, and career, over would you those into outlook, back NEOM second it anything we the into that industrial with that categories. and also so else I and think skew we've we first is thinking new

Seifi Ghasemi

great that. very comment Good We and guy. a thank your all morning, He's for Vincent, Scott. know much you about

Scott Croccoi

thank you. appreciate Yes, I it. really

Seifi Ghasemi

$XX are respect and the years, next With specific we support in business, in of to Vincent billion question of your we our of which X existing be announced being And in expect the balance is focus, projects. about additional X billion of COX capture. that the to and green, the we out terms Yeah. focused, to (ph), it and large and very spend gasification, hydrogen, going our money on the stay blue Vincent,

its to significant We opportunity. much areas. three And outside are venture of going try not too to specific those

projects. the with wanted to it gives is billion, maintain we asked A our lack It capacity question, to we demonstrate not is what me our because rating. you that because -- $XX came of the financial up of Now

we obviously, XXXX. EBITDA forward, for go cannot your we As project

of the hydrogen, There a we projects gasification, So are in constrained. of are COX. lot that's and why areas

than stay get place. going to on over because all rather being focused you As believe results and the we're being future, focused, in I can see the that you by

Vincent Andrews

Thanks very much.

Seifi Ghasemi

you, Thank Vincent.

Operator

to Zekauskas move we'll next, with And JPMorgan. Jeff (ph)

Jeff Zekauskas

question. A much. very two-part Thanks

case, If moved been that sequentially. tables, you in global XX.X% look the X over What last the your that? capital, secondly, to The EBITDA your the Why your return economy are your on gone returns? flat. has sequentially at your And operations capital Asian The Asian is from your year European bit factors a is lowering not. that ago that better. and It's operations improving? quarters, XX%. are is has capital given down encountering a on that are Why they're return EBITDA is the little in you European reconciliation

Seifi Ghasemi

morning, Jeff. Good

Jeff Zekauskas

Good morning.

Seifi Ghasemi

good questions. X very

Jeff Zekauskas

Thank you.

Seifi Ghasemi

you economies economy global very at and note much. improving. economy and people economy industrial improving not X X. number major the that flat, take the to restaurants that is That's Yes. is In we flying the it, it when Number has in, is that good Please look the global say questions. improved around. are X, operating that going

The second affected are Lu'An. our thing, by results significantly

when that Lu'An $XXX please almost year because circumstances know down, under normal you an $XXX, capacity When distorts of But numbers. a full volumes. of then at all had at number well year. every very million -- look contribution it that comes EBITDA You our the

item another are thing that significant which many our have affected by before. times Another results I mentioned is

Each X develop. or projects. we -- to one $X organizations [Indiscernible] million billion are in a enhance working like cost We been increased these other When in projects. significantly we $X $XX develop of these projects to investing million $XX project on million, new have Canada,

at We we our spending look that also the investing That taking for because our is result. But are future. are hitting money volumes.

If you all period. than during look that at better volumes, our volumes our are competitors our of

have volumes. grown our base We

and better XX%. you the else. It's than of of our out volume people's jumbos our all If results results, improved has anybody other mumbo growth take

[Indiscernible] number I that's X. don't So, therefore,

with thing second they XX% way our consider XX%. at where The depends not it. respect calculate employed, if don't we people to return how you it at on cash, the their X, the return Because can it calculate employed, other on on are number calculate we capital capital

is thing we because billion, gone deploy and having is balance second Jazan our $X we down deployed Once your will The the capital capital still up. that, X.X return employed sitting has that. for return jump that sheet billion on once on employed our borrowed we pay

Jeff Zekauskas

Okay, good. Thank you.

Seifi Ghasemi

okay, That Jeff?

Jeff Zekauskas

you so much. Thank Yes.

Seifi Ghasemi

Absolutely.

Jeff Zekauskas

Yeah.

Seifi Ghasemi

sir. you, Thank

Operator

UBS. on with Roberts And to we'll move John

Josh Spector

Hey, morning. this for John guys. is Spector on This Josh

want here behalf to Scott welcome, team. you the on at First, here. have just And team congrats of just say to to on UBS, the to Melissa, retirement. his Happy

Scott Croccoi

Thank you, Josh.

Josh Spector

Going to the -- thanks.

Just point. sticking on the volume

what or the word, how you you called or a much left starting are quantify with in Within the one-time items tougher little guys And some to you XXXX, that that's Americas, insight the give would versus Could the can then merchant quarter? out projects us regions on to is second some be tell in through it's be, in that in Thanks. get regions might recovery much understand is how and the just there? us benefiting lower help levels of the you what become is up, -- the where walk another bit relative XXXX. volume aggregate in to different you

Seifi Ghasemi

Sure. Thank much. you very

comments, if that it during compare volumes. in of to his mentioned, X% that course Scott I and think terms of take ahead volumes are mentioned the we our pre-COVID, you our

something some much want for those the it like so and detail close That's we of points about volume-wise, question don't because don't to to for about and your disclose the I making. before that. to was on, exactly started. So exactly people one-time ahead it's what of where were one the items, out actually, that the if them to we too with customers second the involves we us give Then of set want previous we are refinery respect COVID or

I So question. not apologies -- that answering for

Josh Spector

thanks. Okay, volume try If the again side. just on could I

ahead, So like-for-like contribution we on would things basis, X% volumes include a a new mixing say are are up there? from you projects, that doesn't or

Seifi Ghasemi

not projects, There you we're if but ahead. are exclude is it new substantial. the new projects, Even

Josh Spector

you. Thank Okay.

Seifi Ghasemi

Thank you.

Operator

And move with on Byrne Steve Bank of to America. we'll

Steve Byrne

made you, were variety Scott. Thank our year-over-year a comparison. best Yes. about There you. And to comments the of

of some Lu'An perhaps. ago? visibility side was Some to costs on what like few had expectations on most results surprising of would months and cost corporate those your you were quarter a in that you from the you different your that impacted would have But or your the say

Seifi Ghasemi

also, Those the our expectations. it economy the stronger mean hydrogen. Well, U.S. the side especially, I didn't that industrial was we expectation develop to would had on be especially that the and things than is

the it, the of Americas. we visibility on did rest that the in surprise performance the have For was

Steve Byrne

your Okay. Russian given Helium large one there? Thank you development, business, one And you, concerns outlook on particularly comments any quick in the on Seifi. the you, any for for project

Seifi Ghasemi

But have And knowledgeable significant When When be, so-called are it is when one, that and is will what that happens, project we high project don't prices. obviously on Project. about helium Amur been on effect. an big on details. stream, know Steve, There will are it that that delayed effect is Russians it the in the on It have you will very to say times. an helium project of come the has a happen and obviously shouldn't that going amount quarter, it And has is is, going it this that basis lot don't It working a okay and if. next in to worldwide. whenever I of with on, comes it happen the hasn't the stream. happened. of supply-demand if, capacity. when change it They future. might Is expect but on that you? a can many helium volume that And

Steve Byrne

thank Yes, you.

Seifi Ghasemi

Thank you.

Operator

John move McNulty BMO to Capital we'll next, with Markets. And

John McNulty

you. question Scott, congratulations Thanks Good with and been it's pleasure my for taking a Yeah. again morning. working

the keep corporate the and So because global revenues business going on the a up meaningfully. pretty lines question

new coming in, some and got the of faded. big yet year-over-year the business You've LNG, profits definitely

when color little to might little mixes and been? bit the can we much of changes expenses whether holding on more costs guess business just maybe revenues us And it back the it it's global is because that that, as side the as seems the bit corporate the to on it through be has some surprised a as give be you I a line or behind that? drivers So incremental

Seifi Ghasemi

Hope all well morning. with good is you. all, of first John,

and John, before talking billion of contribute built the Second to thing line. projects is means about bottom get are those $XX to deploying That need that engineered capital. we they

and development in have X years. business are who We people the people. staff close and management project to added, exaggeration, X,XXX without last engineering X,XXX

a we have take money. of ourselves that, what billion else. we They because a of when that and of that these expected deploy the on that significant that in say do $X.XX we the dollars. that billion spending to we lot say a $XXX,XXX also them. position you then If becomes but will, do absorbed operating we we all we XXXX, build addition lot anybody better how is to amount pricing and we're that But projects, of the per execute to not of only that by than still, return $XX dollar, which of order know If people $X profit they costs doing. math is develop person operating and In are profit but for every them thing

happen therefore, be are And costs not additional a we now, then that reality; have. order a up after-tax, make to X from that we to you by absorbing need year respect in we with the per itself. In years come many from share. going $XX, do depending and than how meantime, significant now, going not to on is projects a You number -- to more $XX $XX, with that

say have XX, next people. now spending are to to increase year, XX, that they if to Now, add we look, come they it have we and really more

sequence the And bit to to bend is said, I have because going such are the That's Because then costs put these cannot it X,XXX $XXX is and there the the you've the with get and costing as develop you the a spend is patience that for not eat that is a could as it's us where those That us. accounting you million, to We a of little be. this those know, us quite the that support you year be thing. them, the people, you much think And as with So I rules cost. rules. sheet it amazing have bend, projects on to to $XXX to to effect million project, balance honestly, need are new as to need the the investors money projects. people.

John? Okay,

John McNulty

helpful Sounds fair. on Thanks a enough. Very No, it. fair Seifi. color Yes. million,

Seifi Ghasemi

you. Thank

Operator

Partners. we'll Research with And Vertical Kevin McCarthy to move

Kevin McCarthy

been Air morning. last of of Seifi, pretty pass-through. the course, lot other you've chemical but you a inflation in that lot the Products, market. blessed broadly, of as think in several seen costs, we've discussing, companies quarters, over specialty is a Good Yes. feeling effects are through today's aren't accelerate there and that passed that of are I costs

you question differ so by backdrop would might how And the is or pace think any given region and do accelerate of pricing be, there industry that my need opportunity of inflation, of world? answer your to the

Seifi Ghasemi

That is a very good question, Kevin.

That business, to that the prices expect of do. we increase minimum inflation. we to all, believe operate we them our way base is the cover First people is

obviously prices. I it if up industrial year basis, our general, license we natural doesn't material a are, gas, that an mentioned most my is increases, you costs need air, mean, is if in we our too. for cost companies, benefit XX experience I've our Overall, other before, compared because price raw nation's times mentioned many EBITDA price chemical do just prices in to gives with other we on take for to said in And up. But that of Industrial if And another go it go it increases pass our products. as price I times gases, raw inflationary but the because is our positive is increases. have via you go resources. call, gases overall The up, philosophy to increase as material adding our before, our as is additional

X% have Asia. We in price Europe, increases price the X% had in of this X% X% Americas, side. mentioned last Company the in for quarter Total increase

date that So and significant with it's to inflation. up keeping is us

Okay?

Kevin McCarthy

for you Thank that. Yeah.

Seifi Ghasemi

you, Thank sir.

Operator

Begleiter on we'll David move with Bank. Deutsche And to

David Begleiter

on been Jazan. a And of just Scott well. course, congrats morning, to Good It's Seifi, Seifi. pleasure. as my

a in by contribution presume should do next we a Jazan if If still year-end, assume we you for financial close -- fiscal the Fiscal do full-year earnings Year? of

Seifi Ghasemi

on details that, the depend all of going It Yeah. structure and of yes. final is the but financing the to of

and have we how going have We close facility in pay amount certain put said are money we basic do with in. we money, of once a that the we the much accordance financial get VFCO, to

XXXX, You a contribution yes. expect should good in

David Begleiter

an Very NEOM on good. the you. Indonesian do And and have you update projects? Thank

Seifi Ghasemi

project, working we NEOM it. are on The obviously

is We working think people around that XXX The I moving have, project project. on at least forward.

has the all With we I I don't ground. that, any engineering updates. And are Indonesia, the lot COVID going any with so preparing project. forward, have on and that clear of making have the Indonesia a issues don't is are to and of there really progress updates. We respect so

David Begleiter

you. Thank

Seifi Ghasemi

Thank you.

Operator

on Harrison Research we'll Mike Partners. move Seaport with And to

Mike Harrison

role. and best morning congratulations Scott, to the Good new Hi. Melissa and wishes to on

of on America's business, were sequentially stronger up you demand. mentioned terms hydrogen In they

think the related in to I Texas utilization. freeze that's refinery improvement some and

You swift a that some these and also mentioned that of more refineries effect longer-term about which you crude bit of more light are Can require feedstocks using less talk hydrogen. trend? little the

Seifi Ghasemi

Right.

term, For Coast. about Gulf in hydrogen the the bullish longest our very pipeline we actually are

term, just remain but is that very very by have as about We hydrogen optimistic other infrastructure things. said, the pipeline whole for It's that quarter of into there, for quarter, Mike (ph), numbers than in will renewable hydrogen trend. growth intensity We about we optimistic you diesel. expect making work the are the out that drivers back, X know, for fundamental the hydrogen and it is nearly And that to years' significant we diesel the renewable there. are And To the, about time. the very that. higher refineries come be refineries and a Because well. network the converting sold longer move,

Mike Harrison

the the In power after little Can the more will come out, in EMEA pricing I guess? go those bit bit additional improvements situation waited and costs there. there just such that the business, power you the a Are little you mentioned some costs maybe higher you to about a talk dynamics seasonal need if lower?

Seifi Ghasemi

think don't Well, so. I

decide sources in are the more of and Europe, costs a that Quarter you last use is alternative coal, to in you energy Europe I there more were then decide when energy mean, think want of almost I parts other expensive. XXX% structural you year. use don't some want that then to than issue to don't that last nuclear

I of a grid lot of hydrogen think these are talk the to order that's -- increases Europe things people going a that future. why power about the green making that be in thing using And in is are cost and I think our a in sky. to our [Indiscernable] And to little contracts structured that prices bit is the costs. increase overall, power Europe for the But of our in job way. a compensate that

what get need they Sometimes bit to our but to know don't will we But going might up. implementing a I little in catch oil think people Europe are prices time, in a And in that, we of lag ease. do. exactly

Mike Harrison

much, you Thank Seifi. very

Seifi Ghasemi

you Thank you. Thank much. very

Operator

Bob the next have with And Koort question. Goldman Sachs will

Bob Koort

function just Seifi, very a Thanks running On of shuffling Jazan, it's the paper gasifiers much. so accruing the benefits? are start to now,

Seifi Ghasemi

good (ph), you Bob morning. How are morning? this

Bob Koort

great. Doing

Seifi Ghasemi

operation the about is to of that me what answer security been talk because it asked and just we Aramco state the question refinery have by You cannot a for is, prohibited so I and of it operating reasons. Saudi how on, stage and

if probably Aramco Saudi cannot you you said. I ask all mean, operating, that tell that and So I they what operating, question that. not want, you of can can what I from is but same say the is things

apologize. I So

Bob Koort

Okay.

Seifi Ghasemi

You answer question and you. asked cannot the I

that. about Sorry

Bob Koort

May? in about final be How piece that launched the that debt on has to was back Is that concluded? the facility

Seifi Ghasemi

close. and piece very are That to is that the needs final concluded. we is That be underway,

Bob Koort

Got you.

Seifi. you, Thank Okay.

Seifi Ghasemi

-- very, very closely.

Bob Koort

working over years. really I've enjoyed Scott, you the with

Scott Crocco

Likewise. Thanks, Bob.

Operator

Then Barclays. we move on with to Duffy Fischer

Duffy Fischer

morning. Yes. Good Thanks.

$XXX But mentioned in is to for get run it was understand around or to that was Fiscal that first back rate calendar that a thought customer? you just of of guys question I think The the you you the is for EBITDA. win. XXXX XXXX to Seifi, I $XXX million didn't going

Seifi Ghasemi

call, It is in I 'XX, in Fiscal below. XXXX. been the Fiscal that mentioned had

Duffy Fischer

a-okay, they enough. Does is up can up project. there one similar there going were supersede announced that the both guys large a 'XX big you enough earlier is of your had project project, believe to they Okay, your project? customers you is I And about a fair gets and Suncor, there green on Alberta what space Or of second hydrogen 'XX is one do? low, month do than your a then

Seifi Ghasemi

own obviously They only I they of for are the a want speak Suncor. supplier. don't but customer are ours, SMRs. They their Well, to not have

with project their contract intention I I until something XXXX, project replace owns. our what don't XXXX. do, buy is to to they doing come from intend us, they don't to know that's a to what talk stream about them speaking it'll our But replace on and you projects in their own So them. their and to what lasts Doing have on project them announced, in XXXX. about. be want that would for stream come to they

Duffy Fischer

Okay. Thank you.

Seifi Ghasemi

you. Thank

Operator

And hear with Cowen. from next we'll Marc Bianchi

Marc Bianchi

earnings Thank an for want you unhappy fuel-cell mentioned were from that investors to more Company investor you Maybe chain. broadly, call was Products But is might question per hydrogen about do a really green since to you. competition -- was hydrogen out A say applications? The is concerned transitioned which what distribution the on in hydrogen supply Company own pricing. Air with they be respond call to is that mobility noted it supply recently. away its situation that because on also they building same their the customer

Seifi Ghasemi

customer of to are those all, and specific doing. them to very I luck what comments, they that respect who First good with wish made

product higher at therefore. we is we lot people, beating other more -- that We very because have a the have them for stopped simple sell can and price for worth to a a supplying reason it

we the in making prices. why hydrogen sense have continue money. business no are to to low We sell dealing was them. stopped That's There for at of us with

said, as are perfectly into their building good I they fine. as terms I the own as business, and that's to And plant, hope other wish get of I successful. far wanting people them In luck,

are it, get is of There them and into welcomed. are good have want I We competition. than the in of opportunities, business. product, and hydrogen for more been into people business get are the if think the want about years. making plenty We morning lot to the demand they waking XX of we for up last now wish plenty A of in luck. don't that. welcome hydrogen they this concerned to I

good what We takes. head start we into that. have everything they'll no else is about And have And years everybody them, the do. business. that luck a on wish minor to get competition but I it therefore, that in not XX wants out find significant, I We concern people but just of might who consider have

Marc Bianchi

Seifi. you, Thank

Seifi Ghasemi

you. Thank

Operator

Sison Mike Fargo. Wells move And on to with we'll

Mike Sison

you or other you Is retire, question potentially one maybe congratulations. hydrogen the place a being Hey, Hope to is areas. that strong? spend demand could if capital sooner more that good and that really it But have And it find going morning. to than like talked maybe possible XXXX to 'XX goals Hey, deploy for be about Scott, good demand Cleveland. fun you've is on you just Seifi.

Seifi Ghasemi

What is we that for will strong, is we the believe believe do demand very compete that. we and that more than

So that's our view.

Mike Sison

Right. Thank you.

Seifi Ghasemi

you. Thank

Operator

any Ghasemi like I over or back time, this to the additional at closing And would remarks. to Seifi turn for call

Seifi Ghasemi

listening on interest Quarter. to our and to with our to our We everybody forward appreciate you thank obviously results and your next again just want discussing for I call being Well, we presentation. look

stay and on I for our being much healthy, said safe best. earlier, the call. Thank and you all As very please

Operator

And conclude that for thank will today's We call. you your participation.

Air Products and Chemicals (APD) 9 Aug 212021 Q3 Earnings call transcript