APD - Earnings call transcript Q4 2021 | Air Products and Chemicals, Inc.

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Operator

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

Simon Moore

Christina. you, Thank everyone. Good morning, Air Products' earnings to quarter fourth teleconference. results Welcome XXXX of Moore, Corporate Simon is Investor Vice This President Relations, Sustainability. Relations and I today joined President, to Ghasemi, pleased Chairman, Dr. and by our CEO; am Seifi be our and Financial Vice President President, Serhan, Senior our and Counsel, Sean Chief Chief Schaeffer, Officer; Melissa Samir our Officer; Secretary. Vice General Major, and Executive Operating After questions. our comments, we'll be pleased to take your

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

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

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

Seifi Ghasemi

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

for together, for that to and I XXXX, discuss want continue resilience of the we Products talented, people to Before motivated of say working global addition, and hard and despite and our to Air our challenges our resolve, results. results, shareholders. like customers strategy. one would delivering And XXXX growth committed I well-known in and excellent in the delivered demonstrated and thank every standing employees execute

year dividend since Now XX% highlights there EPS organizations the annual fifth this growth year, XXth some to year. We've increased key this one achieving consecutive raters this number And Slide gain compounded row. our we year and delivered outstanding XXXX. for you We had please the fiscal X, for see performance, of EcoVadis announced can a for year. strong turn in including a procedures for the just the sustainability week recognized by we

will complex net which own and stream energy built, Our $XX ago, produce and end, we a production venture asset complex we blue hydrogen for to million Products strategy is begin just joint sustainability global for ACWA over this on in announced billion strategy energy growth same. billion transaction acquisition mega And in with local Jazan the one Power And completed expected the Louisiana. project project world-class are probably and day of cubic a financing with that X XXX standard few Air XXXX. and Aramco, should markets the net world-scale In of and Air province Products of week. Qudra, in and hydrogen Alberta, Canada. Edmonton, zero This hydrogen Government new complex billion operate the $X.X Canada we liquefaction as clean conjunction the XXXX. Alberta, weeks and transformative the last announced energy by the the feet announced with and zero per we

competencies, largest combining our our carbon tons permanently as capture By company. of strengths higher world. we for needs metric dioxide, also and the X the carbon in address projects large per it environmental making and million capture facility successfully and purpose year will carbon We sequestration the This significant is fully to and aligned hydrogen operate core scale with a sequester and develop, the energy world. gasification, capture execute of these

this condition our our to is our focus achieve Air COVID-XX following Products. communities. and focus will at year, the as And goal employees, and number Slide for Now, all please be always, our to help our us X, own safety of always important to continues most zero Despite protect customers accidents working the to strict our team challenging safely, protocols on incidents. turn

the every fiscal include The that Slides our philosophy, focus future. continue have year team many safety goals, improved they last the We X which performance year. times in before, the guide that our our shared in five you versus are pleased ’XX strategic we number will are management principles X, plan. the to our and point and with us with These by and follow we day, X,

talented climate the closing energy challenges committed team. X, please this global our focus to speak, done. actively require and of and with one we environmental projects with We of variety the Now parts gathered to gap that and of can in dialogue, people our skills united Products and our execution climate for of world customers. The the large This all energy provide is a our on between transition. these aspirations period together deliver critical solutions ensuring of requires Air action. turn overcome sustainability higher work We number scope company. as We're scale best that evolving real are from the on is working as complexity Slide engaged to of stakeholders purpose Glasgow and projects. together diverse to work leaders significant world backgrounds, in rapidly be successful mega job to a believe people cannot behalf successful and different Without of energy to and this transition of development through positioned

with said Slide turn have one electricity. of to hydrogen before, that please I is Now of we future, sources as believe the energy X, number the along

to and production fuel sustainable of We Hydrogen sustainable a adoption the infrastructure be the an successful future. are hydrogen will fuel. scaling ensure as developing this

efficient in in as as deliver Saudi of produce manner. continue execute Arabia. us free hydrogen hydrogen produced in Alberta carbon be are significant projects to Meanwhile, to new the highly and from Louisiana, we Our hydrogen a the our count in this By carbon customers as low hydrogen executing to blue facilities Kingdom leader on hydrocarbons. investments green projects made we making on clean hydrogen, innovative new and will we green hydrogen in new well

Serhan, call to projects. turn talk Serhan? to that our the background, Dr. major Samir Officer Dr. Now, I'm over our about Operating to happy Chief with

Samir Serhan

Thank you, Seifi.

Now, please which $slide growth highlights our projects. XX, turn key to

zero are pursue committed net the project to hydrogen which growth of Canadian, the exciting projects our natural We zero continue we make execute zero roadmap billion and project use has the federal be to will remaining Alberta, net hydrogen In permanently be around with produced the Canada, to governments. project coX the the by $X the exporting gas offset and and hydrogen, June, to This world. will a strong support strategy and announced X% coX the world-scale zero footprint local energy. clean in economies from clean green of resulting reduce sequestered, by hydrocarbon-based XX% made will provides renewable same emissions. for as carbon significantly our a The their net a from electricity hydrogen. project

Just also a a our coX $X.X permanent of weeks heavy mile largest Coast around Gulf targeting sequestration project. provide few blue along This honor officials will system, also of hydrogen to Governor will world's had announce the pipeline project hydrogen the U.S. ago, clean transport our blue and ammonia produce customers, operation. be XXX joining we our This world-scale will using in Both the while the growth state billion sustainable also Louisiana three gasification, way. to and clean feedstock and in hydrogen hydrogen, pillars produce available advanced projects to The These combined two intensity be gasification Products will to our world. hydrocarbon carbon carbon one of projects technologies capture, carry gray blue. a able the to Air hydrogen, pipeline of project, use strategy, the variety and hydrogen. including

Jiutai our facility project, the have to in progress ‘XX. fiscal and We good year we on on stream be made expect

We XX-mile to of planned due network. first-half field Gulf as hydrogen related largest to ammonia for construction on year pipeline network hydrogen, stream also facility good and forging methane well world's nitrogen, We're single progress challenges on making fiscal Air continues utilities. XXX standard of the COVID. with standard and on schedule feet the Construction expect despite remained feet of progressing project in our stream ‘XX. is per ASU in hydrogen fiscal Successful related XX Indonesia, the expansion originally largest as million well ahead on steam project per The the pipeline some as ‘XX. Debang execution reformer, cubic also train million Coast day project day cubic the year Products’

We expect to complete this project in ‘XX.

For we form year. about We're engineering. of detail laying export the slide, NEOM, groundwork the the to for since are announcement carbon in picture doing now project, preparing can hydrogen our on in as more zero forecasting you XXXX. the the see the in last this project excited land and We're ammonia the even

being of investment ‘XX typically and continued oxygen on-site record category. values mid-sized In fiscal from and addition to to Air million industrial mid-sized gases with from year $X.X a business, our significant Adsorption has Products in project These which mega make for million this small Swing range year a in PRISM investments VSA, $XX technologies and generators, and Vacuum small plans also ASUs. present to regional a our have cover on-site projects investments a

for glass fuel several investments our South operational North technology, and Air manufacturers oxy with around predominantly, saving, helps PRISM year Specifically, provide Products’ productivity, China integrated world. record oxygen in frequently year product improve new with reduce and in savings burner are The emissions, the VSAs customer. fuel India, which supplying oxygen deliver line, the Europe, major fiscal ‘XX America, a Korea, was for VSA the projects

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

Seifi Ghasemi

financing Dr. week, unit, ACWA venture and power milestone Serhan. than hard the gasification customers making project expected Qudra people, Arabia, Aramco, with significant billion with return you, well is XX, after partners. in Power last air to as asset we project The our number and we Please separation originally our we be partners, as with Thank our as the Saudi completed work shared along Products you turn the venture envisioned. to and $XX joint better acquisition by Jazan, of transaction Slide and joint Air a

project last $X.XX $XXX we contribute share, Phase Phase week. the The contribute of to XX-years said $X.XX closes. last annual per we to earnings of project week, for as X of expect $X.XX rate after X is run an the starting to of As first about to expected

Now XX, consistent our growth. financial which We with EPS strategy. turn and deliver please excellent Slide our results, to shows number vigilant motivated to remain

hydrogen growth. The beginning world. have can I the our year a very about on we annual meaningful gasification, for EPS carbon excellent the energy since our just key have participating results our milestones transition. a in of foundation prospects, to optimistic company's average the you very future see, delivering while this capture XX% journey, achieved are XXXX, and laying As we and in strong growth am delivered solutions way

number Slide to turn please XX. Now,

investors. double our have XXXX. dividends and growth we EPS our by share As a reminder, grown earnings since Both with directly our digits

opportunities. growth to increased We deliver continue we committed to our while are dividends, execute

that as X,XXX slide flow our cash significant our EBITDA supports for have XXth and are margins that number XX, up consecutive the year. shows substantial basis have now we my know, Slide increased We that since as finally, points XXXX. dividends, you favorite And always

Our energy the to I margin our of margin back margins want doesn't higher by in improving impact we pass-through. focused to to by our prices energy are down the decline due that stress from determined higher by margin But, significant recent energy costs, increasing quarters, do impacted around increases and and in sales, is impact to XX%, pass-through but cover which on productivity. improving peak of Two-thirds increases profits. is our

Melissa? our Now, results Senior Vice and Chief over our Schaeffer, in call I'm the turn detail. discuss Officer to Financial to President more Melissa to happy

Melissa Schaeffer

Thank you, Seifi.

overcoming We absorbing great business new projects. and grew various to multiple strides year. excellent strategy At quarter We additional we winning this have growth strategy. exciting and projects same results of external delivered to continue and resources completing this the our the focus base year, EPS time, the and needed made our executing challenges our the for cost X% growth our support year,

Air at $X.X This currently best them Products. of large Our And, to earnings, will is billion. once on a want hard I yet projects commitment come. work scale too, people our Products, thank them. stream. development is to we testament of and to the strong the share indeed Seifi’s distributable conviction the substantially cash that the Furthermore, to flow under bring remain Air add for I

results. and year billion. Now to X% to segments. growth X%. was full grew than driven and more please $XX more volume Slide EMEA together our XX% our Gases by The gained primarily turn XX for Global on details Volume price Sales

had still adverse sales points, of price, impacts The X%, on partially up declined higher EBITDA has the costs. lines. $X was the offset major to and debt across basis Overall, the negatively currency, XXX impact merchant higher which denominator billion, cash a through price was favorable about increased due raise EBITDA was it by ROCE quarter X% Although, improved and in Price pass-through, XXX to equity margin. of pandemic in price three energy eased from approaching income, was up by attributed sheet, XXX for XX.X%. every basis from our points our all $X last X%. the affiliate year, points ROCE regions margin lower. FY on be impact our negative XXX and product the ‘XX. billion additional basis which balance points. reduced increases basis but increase year, our which are Adjusting ROCE most would

stream. bring ROCE cash expect the improve to as projects on and We we deploy

Now for please turn to Slide of year full EPS. XX discussion

year strong, was new equipment by a on from activity double volume operations Volume was profits. consecutive $X.XX, up contribution EPS was X%. continuing EPS caused Different positive flat as improvement. lower fourth digit sale offset impact adjusted minimum higher price net were acquisitions, but again from year and cost net business or of $X.XX, to recovery of the impact full Price, variable Lu’An. plan, of on mix favorable Our sales, merchant have

favorable $X.XX were Korean the future growth to was the RMB, our and resources addition unfavorable, South about of Won. British costs and cost. Euro, maintenance by higher Our Pound support driven to Chinese planned $X.XX, due primarily primarily Currency

pension affiliate equity $X to joint to projects. Interest our was also business strong results, ventures favorable of Non-operating favorable billion growth oxygen $X.XX stronger was due reporting medical expense underlying sales. $X.XX with support debt $X.XX Our several to the primarily lower income due had future adding expense.

FY tax effective of rate and rate year, of roughly XXXX. to XX.X% last Our was in effective an to expect equal tax we XX% XX%

This were $X.X assets merchant demand XX offset year, a turn again pass-through contributions. for higher regions. merchant to with quarter extremely significantly to a high business. total, discussion energy on the and than particularly experienced up. increased quarter in for challenging is up reduced price Lu’An X% consecutive energy Overall, price, and in last billion. and to fourth three more EMEA gas Volume which electricity the gains. and in XX% our Prices situation than sales Volume, costs. costs please up this were business all as new Slide improved all currencies merchant is natural the equaled XXth of We prices Now results. strong brief X% to our X% improvement were quarter. year-over-year The increase due in Compared hydrogen more

sales about protection business, costs on-site contractual Our has half of our total company from fluctuations. energy

executing volume, as costs. recover X% than and Sequentially, price pass-through, and X% actively energy by XXX EBITDA stronger XX% by offset additional points, across up margin offset higher energy negatively basis actions sales our lines XXX to declined EBITDA more volume are due entry income a more billion better grew higher product X% We cost. affiliate favorable X%, exceeding price, sequentially than supported $X price. affiliate business. declined higher equity mark, merchant primarily which income impacted points. basis EBITDA higher about and price currency were volume, margin the to higher equity impacting costs

turn quarter to Now costs adjusted plans to net EPS XX% growth Like $X.XX inflation, was year. costs. driven our favorable $X.XX, XX, add our prior quarters, was $X.XX, last strengthen to as few our Slide which fourth price our have variable cost or and is variable and by costs. Volume $X.XX, our contributed higher above support of price, the exceeded organization power increases resources increased please

added rate was points last share lower The the with basis of on and $X.XX benefit the a non-operating last expense. higher income three The supply Equity and to higher disruptions was by We also year, than effective driven Chinese pension in and business contributed primarily tax acquisition. underlying British the XX.X% exchange years due PBF to compensation all benefits, associated based Pound. of $X.XX XXX regions. tax the higher RMB $X.XX, results. affiliate strong Currency due to costs foreign saw income chain primarily across due

to Now of our to generate please cash business the XX, stability allows flow. continue Slide strong turn to us

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

quarter, $XX As potential additional we this approximately the XXXX. tremendous to cash potential billion capacity. $XX borrowing therefore cash, $XX of XXXX. is beyond capacity our opportunities of we believe on We capacity see deployment five And $XX additional for another far this available still flow billion today, $XX $X investment and spent. billion XXXX, be reaching exceeding additional horizon about project updated additional almost available conservative, growth, years includes last original billion. we've see and potential already discussed billion to expect billion, EBITDA and extended the fiscal given by the which We we debt figure roughly through The time fiscal XXXX. our capital view, Based generates

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

of this the so XX% the September you of have is does we Jazan XXth, of not but PhaseX, XX% show spent that include reflect closing project. note, I capacity see the the here. can Louisiana updated should as does committed So have we and already already

Before we back the of ‘XX. I would I to FY that to turn segments, reporting in starting with plan you to like Seifi, QX call our reorganize share

will segment, East EMEA and to Our addition reflect segment project and of East the regions. provide be Europe, Middle in significant Jazan for a a separated Middle and more geographic India segment into to visibility our the

Global combined. segment will In be addition, and our Gases corporate

financial the before year-end. We historical resegmented will provide information

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

Seifi Ghasemi

Thank you very Melissa. much,

price currencies Now region. number plans offsetting this were in last quarter Asia X% for outside favorable XX to X% improvement year, year-on-year Sales please positive Volumes our of Slide increased with contribution. China, turn Lu’An the on to price X% flat XXth results. and compared consecutive of mostly increase, the lower new

Lu’An, full Regarding at The from change no continues the there is we you. capacity, coal updates shortage plant previous have despite the that China. operate in to given

I there's the return fees agreement year year we As are fiscal fee ‘XX full and before XXXX. supply we interim an said to last to quarter, recognizing reduced in

a had This quarter, usage dual and in intensity, effect on called China's caused effort reduce control adverse some results. our modest merchant demand customers operations. to It so reduced disruptions and energy isolated

startups, Sequentially, up, is the were to continue EBITDA costs intensity. carbon long-term, higher focus In do year, zero. costs, energy favorable currencies variable we Costs consumption. on incentives China see price. and projects and to situation primarily though, the volumes. to for its resources monitor opportunities, We needed region to unfavorably more positive dual and and but EBITDA closely. lower rounded reducing disruption and than China continues favorable as control to as due by supported grew compared higher margins timing to X%, Price growth energy its this very government reduce policy last by caused the developing support of this offset

over Serhan? Serhan, I'd Dr. our talk the Dr. to call Now about results. to to Americas like turn

Samir Serhan

Thank Seifi. you,

versus posted grew of to merchant for more year, Volume XX, increase our than demand. double to primarily review Sales results. and XX% last due Now EBITDA another hydrogen X% gain. please better Americas turn digit Slide and a

worked Although, our the interrupted to very U.S. limit team our operations Hurricane Coast Gulf quarter, impact Ida business. this our to hard

to products industry light for increased, Demand requires has have lagging. continued hydrogen to consumes unit recovered. pre-COVID returned While compared fuel, still a yet our hydrogen. volume more more hydrogen fully most basis is of to which levels, gasoline sweet but merchant jet not use which the on Also, crude, less has our

equivalent across Price are again XX% volume, growth quarter merchant long-term major inflation. We all pass-through year-on-year basis the positive higher drove EBITDA the year, in quarter gas in region strong, price is XX% the better than ahead for margin the business, last Price U.S. hydrogen higher the points Gulf costs confident of of was was Energy consecutive particularly equity cost XXX sales with products. was the the the to XX% much a improvement. gain affiliate was more This X% XXth for on natural was Coast. lower increase, prices. better maintenance offset and income price, of EBITDA lower. as demand,

by However, been EBITDA basis lower. energy approximately points impacted energy basis up energy In costs drove XXX points. pass-through margin have pass-through. XXX excluding other negatively margin words, significantly pass-through would EBITDA Sequentially, margin

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

Simon Moore

Serhan. you, Dr. Thank

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

of set quarter. up was EBITDA and another last and delivered increasing and primarily team EMEA hydrogen year Sales jumped strong, XX% versus outstanding improved by new demand driven Volume merchant XX% results assets. was Our XX%. this

cost corresponds region still European this higher for for X% the Consistent further lines and energy liquid and pre-COVID a but what quarter was increase gases sub-regions. to the recovered consecutive situation. levels. faced gain below most X% interruptions quarter. the and improvement Our the Supply merchant largely escalation consumers across Price business pandemic, business. XXth from our unprecedented price experiencing, major with hydrogen product bulk packaged chain-related are The for the difficult are exacerbated businesses most

supplied. challenges, actions Our keeping team our with job an pricing has done excellent coping these and executing customers

allow to contracts on-site energy pass-through our costs. the us higher said, Melissa As

was unfavorable primarily pass-through, by pass-through work the sales climbed primarily income actions to the positive Currencies quarter, favorable affiliate to already For up currencies pricing were versus XXX and Pound to offset was energy points. to down the X% offset income. income the about income through higher due and point Compared primarily current Middle for to were recent was volume price better basis offset points, Operating EMEA increase. to attributable segments, partially were than quarter about as inclusion XX% while recover India, due offset equity due two segment And the responsible and million, basis was continue by to volume, we more strong currencies. while the British remaining costs. as Europe EBITDA East with X% better business, increases prior higher mainly the X%, higher cost Meanwhile, costs, due basis the by price Melissa below The most favorable dollar. equity volume. was volume EBITDA will favorable XXX of and X% price, energy our last roughly affiliate underway. cost XXX of positive separate U.S. margin hard to strong merchant EBITDA unfavorable positive $XXX affiliate quarter. equity we and to starting additional into mentioned, reduction next and

as equipment to profit Global sales turn as central on Now, Gases, project businesses please XX, Slide our includes up activities. and which well were higher Sales non-LNG costs.

Melissa we said, Slide project and But LNG segment profit starting by profits our combine sales other than sales resources global to will quarter. We Again, execute on and as costs. driven corporate costs. lower and projects. includes last businesses multiple higher Please activities, increased large higher corporate this as turn next we to to add to was were quarter. Sequentially, corporate continue continue better and LNG well as were corporate, which development. as other Corporate project support quarter XX,

Now turn to comments, call back Seifi. over provide I'll the closing to

Seifi Ghasemi

continues Thank results, to world. you the significant deliver consistent Air much, very ongoing Simon. Products challenges despite in

globally, in chain earnings and the have grew price our XXXX. storms, on truly the and pandemic, deliver and supply an that we around believe fully company stream. disruptions recover, as to rising become come even economies the costs projects the all the growth and world volumes, stronger Overcoming profit Our I expect significant

year. to Now, XX% XXXX, please for over to up per number is $XX.XX, XX%, Slide fiscal earnings $XX.XX turn last share guidance to year our XX,

include project. fiscal ’XX, share XX% billion of $X.XX quarter Phase year one at For of our our Jazan the see to And X $X ‘XX, of earning year. including is $X.X CapEx approximately $X.X over about months billion Jazan $X.XX, for project. per year around Phase to guidance the of the two this last of fiscal X XX%, up billion to We

that this well Now, Slide confident please during that turn security devious times provided difficult the to our compensation employment that of positions in to we we and are pandemic very We them for future. period, employees strongly difficulty. people to and very demonstrated our of us number support XX, the

to of committed commitment degree achieved company any significant the sustainable, the of enterprise. year part competitive are long-term only advantage this motivation strong approach results are the We since we just of is and our the and continued The of this people in growth. milestones

on said sustainability. I As before, by focus world’s supported Air Products is the and supportive of

to that develop have is carbon focused sustainability these and challenges specifically Rising they on partner diverse resources need having growth workforce, expertise, through of hydrogen And our the a consistently is face meet environmental position issues we meet gasification, designed the growth that sustainability execution committed the the to their our strategy, we and uniquely invested. continued we already Products project we have totally energy for undertaken. and and so be needs. cleaner world, Air in Products goals, world continue customers because believe are properly is expertise, projects can We and know huge mega a the and depends journey spirit dedication, know we them to we around order to applications and Our are to the better demand that ourselves today, within adding challenges a address to to been critical companies. world’s commitment of and of our help The we our are and the their collaborative can development in, world. believe the talented on future. choose we And future. a I transition future that be sustainability which, immense, significant which world addressed. that to innovate better Air capture to people in It's our on positioned success around help

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

Operator

Instructions] [Operator David Bank. question our Deutsche from take We’ll first Begleiter with

David Begleiter

you Good Seifi, you. a Thank – morning. couple had of

Seifi Ghasemi

Good David. morning,

David Begleiter

you. morning. Thank Good

delays projects year? You about had just by why most year. projects, couple of in your a you out roughly are pushed notably by and a Can NEOM Indonesia those being talk

Seifi Ghasemi

David, give on government projects I best them but they be need them, mega are announced And we stream, wouldn't and I of call mean, projects. come to that. permitted. all about to these them of these They need judgment delays. all our approvals

give of call time a what to latest we our come we think each stream. can on these you had projects So, estimate

So, these days for can will are the as we If best them I these cannot for that you. we lot our you forecast dependent of now, have projects. on we If delays, forward, a will permits move we because because we everything, let getting said, given you. we projects further there's right are know, significant estimate tell

David Begleiter

ex- is much And can just to you maybe Louisiana, much just the Understood. how increase out the increase? CapEx Alberta, Jazan, about build cetera? of on $X you. et talk is that million pieces Thank How

Seifi Ghasemi

a Actually, many small Serhan to record talk Serhan forget, a all delighted mentioned, about and focus people year resilient, it. capital huge projects. are was year I'll on on mentioned. going next not is our business, mega base we last we I’m are Louisiana doing amount don't obviously, is bet projects for projects. Well, mean, Dr. and projects, it to year. we have mid-sized the and to But very a that many, our related as Dr. still of But many, consume I which

to are require We of executed, market are they the they our share on those going going and getting fair be capital. away projects,

David Begleiter

very you much. Thank

Seifi Ghasemi

Thank much, very David. you

Operator

BMO. John from McNulty question next with Our

John McNulty

my question. taking for Thanks

I Seifi, prices, look, the little is with be over it bit imagine Europe, has ease of So kind to you speak saw in that? how huge a I something we all quickly I and should the to how Asia that prices where energy you you well. thinking you it something regard quarters? about put maybe over with next Or, in? in that guess, automatically immediately few spike it even in guess, in offset as to can can

Seifi Ghasemi

well, that's very they growing, parts know morning, Good pass-through. just to two because our immediately we on as you have business, John. the John, on-site,

clauses, gases have prices And business, we increase it and need that Our And there and go competitive environment. merchant of a lot to but and gone therefore, convince prices customers some invoice don't is have then it up. them of and a packaged side as energy the clauses.

tried to an excuse people Some all have to use market this that. as share get and

in August that of Europe, these what But So mean, that would do of we energy recover was it what was terms the is compounded our September, to has enough in I work of month being the them rate up something energy if in forecast do. to we impossible and to happened of forecast able to things fast increases. that need things. increases, issue But go XXX%.

So in be team merchant our as a there increases terms job in price is business, result, Europe, we’re September a in especially They lagging but but a October, in done. more to fantastic job. the work of and doing did is great

quarter about delayed a we So maybe. be will

John McNulty

it. Got

catch of kind to that. So a up quarter on

we order it that of some take that back type that? are Is level approaching type I see or the thinking those about can you kind of can your energy get what when reflection of the the give something the margins And XXXX? that business. more guess there? enact when to kind timing a isn't expect that of range, speak going of have admitting I to really to of is you it and back to the get level? than Okay. you a where to the to guess, you take, can where of you of margin kind measures rest think XX% then, margins in it get target the end to XX% really longer by guess, really up I Is of pass-through and

Seifi Ghasemi

are far as pricing. unit in put I margin all mean, because are the those concerned, Therefore, see about place The I'm volumes the see our margins then, of that John, as we next that margins it's lot I is like don't a to like made the you profit pricing time go all we has with to to actions much per down. January. volume. in do we how volumes. The that, -- talk back about margins

catch our as is up it need the we soon goal energy as up And costs. So to with catch possible. with to

report are on we but over that. our for depend And are quarter of we So, then book us to quarter able increasing all absolutely. gone going here, we is the after get say you there also efforts as of best that to up that doing be margins our soon spirit, achieved to can. XX% to as is obviously or by How be back much it the next my target have of to

John McNulty

Thanks for it. color. very Appreciate it. much Got the

Seifi Ghasemi

Thank you, John.

Operator

Vertical Kevin our to from question next go with We'll Research Partners. McCarthy

Kevin McCarthy

good morning, Seifi. Yes,

can inflation? in about the regions to differ of increases talk realization Just today think could up history? energy keep seeking follow-up question, pace you do previous And you're price of you level that versus the that this to with on various

Seifi Ghasemi

What the are that, consecutive business, X% done it's the have XXth, that different we seen price getting in pace morning, have quarters the our for increases past, means -- Good increases merchant Kevin. around regions we're about world. of XXth obviously, getting it you X%, is we price what in X%,

quarter. And do by going there have that, to see to up. we that with And I people do go are, to activities our and need before that, to increasing can involved. we they because forecast all that. is now time, So And on we on don't margins. prices if want work increase our to our that, to deal And margins urgency down. also a now, lot of need prices the goals. energy and we on to our that therefore, of know that we same to that. that, lot the continue there report you global margins, to very maintain people sense prices. inflation. improve significant are have is And successful Kevin. Everybody that at we a But recover how increasing productivity we we begin is needs And are are prices And is going fact gone next a there their focused to to

Kevin McCarthy

And this ask recognize question at related cetera. potential gases at quite lithium And et look look other or I that. growth to requirements, Seifi, different you clean got level business producers businesses, it's for, say and to wanted different high today. multiples assets, vastly could for than, capital One growth technology, hydrogen. you and Thank high your opinion on can a high discrete say, and atmospheric they're let's different

And the might at for point some business so, separating that argue in time.

On the other including integration, lot inexpensive of hand, and balance benefits capital sheet. you've costs a quality a of high of got

do not how So, for develop about whether remain the an over think within might as things, all time, how on basis of long-term? or and the you portfolio will those the consider business you integrated

Seifi Ghasemi

Kevin, significant create what our is would asking shareholder to and my we question. consider I intelligent And the time, we some that. the in tomorrow. want that But you shareholders. are suggesting to me give a for the for a besides want If, of need demonstrate success of impression that at you hydrogen significantly all obviously we kind increasing to point value, that. that, to And value do answer are our don't to anything very of is that is opportunity commitment business

always as is those asking a a you're that And company, question the at So a as look board, options. question. we, good very

business, depends of on on market, the depends the Now, when circumstances, the it depends and or of it, we on all development hydrogen act the if the on act would that.

to sure I'm sorry I'm but answer, you Kevin, appreciate a general So, what saying. you give

Kevin McCarthy

there. thoughts. those and Much appreciated. welcome do, putting I But, certainly you for sorry on the spot

Seifi Ghasemi

you. Thank

Operator

Steve our Byrne with to Bank from go We’ll next of question America.

Steve Byrne

you. thank Yes,

you drill being the you to year? the anything in in headwind here? you XX-months' just expecting a little are there out Is mid-single correctly, of wanted Jazan a worth, back is understood I and conservative bit. guidance XXXX guide, your is that into If it a that guide. if seems like Just kind EPS that digit it particular Or, are

Seifi Ghasemi

your that it it down thanks happy all, you're very way the morning, Steve, I'm first down. you good are breaking for of that question. breaking and

business, going Jazan. okay, is Kevin, We because we're XX%. looks the know the you are end this base first the I saying, for credit that done day, is of EPS want the baby asset I and as X%. that, showing if is than of think have company seat growing base get of that, we at business all, you about growth now COVID should look now, that's the like the to in grew happening. world too quarter know the production. growth the At award anywhere. right sitting increasing mean, GDP But the the you that by I much the over anywhere. but dependent better the do, Well, China, that part Latin I'm of excited last had And or And likes Europe, engine U.S., anywhere only growth. that is GDP is of production industrial prospects industrial GDP production not X%. America and not In here is everything world. on getting or going say industrial biggest I everybody growth not not is to

to all then think related the and -- of that chain, I issues considering need the So circumstances, the between to costs, which supply real of mentioned, that I our that energy are issue. real around we all the is and recover all is these overall the affecting issues to about helium and And chain world, issues. activity, a the then supply move that's ability containers fundamental economic all of then

that fact a right is our to at guidance year things, of you job we which fiscal guidance It's things look reasonable. Our base put time is average the X% the We the either. XXXX, was giving you to it we forecast, hurricanes, despite power our grow rather business XXX, outages job right, away you at that is judgment is We we we best or the and delivered a and And and that. X%. And everything have that the well. balance. to know responsible have gone the about growth best are our does COVID other fine. It's for that together give overall forecast, be a responsible give to all to despite you're for business our to a you will all that I of very give gave it better. judgment didn't it hope daydreaming about job the that now, hasn't the XXX.X, yeah, look at and going than you. But

helps. hope give to But, you answer. a sorry long So, I that

Steve Byrne

the driven When It and you, question seems Louisiana produce assumption, drill a supply if And key incremental view for us Seifi. that that's And by carbon driver or in than hydrogen the blue it Alberta really more so did is I the to fair sequestration of we projects, capital that does. to your in these you renewable ask fuel? outlook. about needing incremental Thank is is majority capture. supply want a regions? into your to a what for it is And hydrogen for hydrogen it outlook

Seifi Ghasemi

two dynamics. fundamental Kevin, is there

here and we stream. projects to come need do XXXX, need on the hydrogen have that these sold on going ourselves out the we one, additional on. demand – foresee that are We Number hydrogen that talking are pipeline, therefore increase new on when are the because XXXX and time yes, about pipeline. customers coming we And

you they you converted given is, is details, the a convert of shallow their don't exported. that's and be The waters second liquid, hydrogen Then kind Louisiana, have get Japan, them basically hydrogen of details significant is that haven't there out blue other they a significant have and of have export to of program which fundamentally, will we where wind that see they all we nuclear. Japan their But don't have the to where have. of And in how to a don't of or massive amount of but can people the do mobility Canada amount be which think the destination making, They have will give any don't oil, significant for But customers thing no figured choice. offshore. they until going they And to they significant will for decarbonize? are in the we converting production, part know then to especially that you mobility is we part the is ammonia, be in that part mills that additional go if hydrogen, where will to going and going benefits. we blue be gas,

then has captured, in to to their import that form they the of can coX power all. the their import cars that import best plants that need energy to they blue so and it generate is And and been So electricity to ammonia, energy. drive use burn their electricity, to

have that that blue terms the outlet the we thinking hydrogen. of So, the in is for

Steve Byrne

Yeah. Thank you. Very good.

Seifi Ghasemi

Thank you.

Operator

question next Duffy Barclays. our to Fischer go from with We’ll

Duffy Fischer

morning. Yes, good

Seifi Ghasemi

morning, Good Duffy.

Duffy Fischer

Serhan talked being investment that in Dr. XXXX of kind record a for for the about mid-size CapEx you year guys.

roughly to our So when should model? that we normal? look we forward? Is and ‘XX ‘XX accretive into that how Or that, is a going how than that at figure jump significantly bigger

Seifi Ghasemi

two Well, talking it seems to be accretive go mean, all projects about that three or he's as take those years we I forward. to of build.

‘XX, usually starts So But having in results correct don't if about things Those year still engineered and had project, absolutely will that ’XX, it on impact our mid-size to turn talk very be ’XX, it a so those We we right an good away. be They projects. it but built. that, on on got we that are ’XX, we the need that ‘XX. more than them. projects not on something you are executing the decided just getting because thing is that to our people about committed projects. under it a they we this smaller our fair the share impression we talk are people size. was I mega And to only the existing in our that the getting doing of and existing business. business are concerned No, job those getting quarter, like And great are he's

Duffy Fischer

to there China enough. your in Okay. disruption out particular. And were that Can comment a your operations in to business cut shut being Fair in run? there? little you Was break you off to how Was a more, they made you had where impacted your Seifi you cut customers being off that some down couldn't plants? your down power bit was that where had power then,

Seifi Ghasemi

felt in incidents, disruptions obligated -- not were material. them material. were mention characterize First the few just of but let me much. They all to because was and a it, that those We there weren't they not quarter fourth

know. thing have quarter other as kinds and business, or of have going they you be are the the in quarter? Now, two material well see. very wait next And this then to to We we is that

on-site the we is plant down. only business, shut forced business did if the our have We shut down the customer on-site to

plant, a our say plant, shut merchant shut down we we shut and power down steel merchant we Let's the oxygen, rarely merchant doesn't to dirty plant. it’s customer have our the down they business. because the business, are say, our the a every not steel they business, have Then need business,

they which specifically shut So the down, customers say It's down don't mainly affects ASU. the shut they us. that

Duffy Fischer

you, Thank Great. guys.

Seifi Ghasemi

Duffy. you, Thank

Operator

Bianchi go our to Marc Cowen. next with We'll question from

Marc Bianchi

using that blue was to earlier competitive I that hydrogen think I about gasification ATR And wanted there's I the even you. Thank you could heard if POCs. little there. they too we've with projects play after start that commented of SMR? the bit and more, advantage that's technologies announced and a and you have of technologies Hi. first a can offer XX% you capture through from the that talk saying both coX of at peers hoping especially

Seifi Ghasemi

natural Because, I'm me hydrogen what we blue of in Louisiana, have XX% in another steam gas, comes and When happy that the a technology when take methane capture Marc, very have to asking using that the in announced, reformer. and you technology happens are sequestrating. we Canada it you're the SMR, can When coX question. the SMR? you projects we the new

it CO you on catalyst, COX, process, over CHX have CO down the gas You and at then break shift, goes you up take directly and into natural some of and you hydrogen becomes the it and the atmosphere. goes a to hydrogen,

true. capture of to a furnace, up and combustion like a you to the plant. to contain can the XX% but you leg catalyst, cost natural in that. that which will then it gas that that, COX, a in arm capture tubes, a a capture an power can burn use heat combustion, the of you But lot You is or Theoretically,

effective I not. capture the the can issue XX% So, COX statement is making sure, from But of that COX the that is capture or is too. air SMR, can a you it cost

I of yeah, we the equipment SMR makes to yeah, can put saying can on I a capture in capture from lot say, of that are have we SMRs, in it. boxes put everybody take that to So to done, our and put COX what way. go say, the our the to plant say, operate it's you carbon a actually when business. and effective Theoretically, have biggest as special cost what that. comment really competitors from want point defend But But, at on possible is can don't we view, they capture we Port combustion. on what they technology look a have COX and have the to a you Arthur, their it And do the we

the on spot, helps, the use sure, don't recovery. Marc. be cost on becomes the because process But combustion do can the at prohibitive. natural hope we that it done that, capture it done? cost. and economical, have we We the for that can that because anything Yeah, be part, is capture COX that Can I

Marc Bianchi

statement? that Is to some there mentioned, that up? NEOM versus about helpful. last signed That's Earlier Or statement? driving I'm on anything I Dr. perhaps Thank you, confidence say curious Seifi. customers that think, behind Serhan what's increased year. being what's

Seifi Ghasemi

the I'll but to tell project answer about about have why that, Serhan? customers. before. Serhan compared as to better Dr. going he's you comments any not he Dr. will feels he But make

Samir Serhan

Thanks, Seifi.

in production our really is this stream. parallel cost. producing very, that it maybe XXXX for we first before, I in have means on you, world-scale additional very confidence can competitive. communicated we And a that solution, streams have XX project mover we is products, good coming we tell developing, hydrogen. this And really green feel for As going targeting in optimizing, around we of work that's where the improving very different this really that are to have And

very world. the the being imposed the And really in We will be different countries specifications intensity. carbon competitive, low in that are it meets

Seifi Ghasemi

you, Thank thank you. Serhan. Yeah, Dr.

your I Okay, answer, you've Marc. got hope

Okay.

Marc Bianchi

thank you. Yes,

Seifi Ghasemi

Thank you. Thank you very much.

Operator

We'll question go from Bob Sachs. Goldman with next to Koort our

Unidentified Analyst

in Bob. Yes, Mike for good is actually morning. sitting This here,

is hand, Lu’An Just could scenario fees likelihood guess permitted? that before is production full to curious, then, other ‘XX? what return the on I that could a become where And the there

Seifi Ghasemi

agreement versus of have question, of thing running of the now. right improve improve that It with that at full in the what part first have the agreement is to have is your going terms fees structure -- plant we will that XXXX The that them I on and and capacity. understood the we in not in is so we XXXX.

wasn't you sure a you it, part? just your because of there The said. on part I got this what second question, disruption I Can the was second you -- heard repeat

Unidentified Analyst

the there is become Yeah, that or could reduction part that sorry. I’m Oh, second was, possibility a permanent? likelihood

Seifi Ghasemi

that. says that. anticipate what doing That's Oh, comes mean to our you were in Well, you we Lu’An charging Well, not now, would don't not and and fee, our right agreement. want will I do that. anticipate case. in agreement. XXXX, me do that that that's we we expect don't reduced what don't Lu’An But continue

Unidentified Analyst

Thank you. Okay.

Seifi Ghasemi

Thank you.

Operator

We'll Vincent please Stanley. Andrews question from John, response, we'll to UBS. with line next take question Morgan mute with from go check Due your our to your is next open, no our button. Roberts John

Vincent Andrews

Thank you, morning, and good everyone.

Seifi Ghasemi

Good morning, doing? are Vincent. How you

Vincent Andrews

think you you could helpful be too? that you on you not talk thoughts the what maybe be discuss And new Thank I'm today. of extent if things basis, at long-term, the very the you in cost to medium long-term, your And be? think are Seifi. what in regional think to it. to might to on when about obviously, where curious assuming I'd you're But, looking about you, a project going carbon a to well. get want is the

Seifi Ghasemi

about a the Canada question. I we of somewhere put mean, an $XX, California, world $XXX, is if exposure $XX number place. of that for different all $XXX between asking the put ton. ton numbers very have of to you the $XXX, incentive place. talking you're insightful I Vincent, get that, COX, to the have right mean, per it's world over parts have is $XXX per parts different that. $XX, they Other in very, in now,

sources. the therefore, order in in becomes to you to those using customers promises being requirements meet these credits to based diesel, look incentive trains, and to something. from fascination, order is the incentives steelmaking of time look way and people we these profitability, the every add going low a fundamentally, of gigantic. therefore, bit the going want don't think things, much see for clean to all real And is of and have to too don't made. and if do rely have that made amount that to convert are we have what at try and these Vincent, to numbers on at of that, of subsidies the kinds And that And all on to are happen, -- going those at And of of people for of kind all that we that. But Glasgow. develop on to that you to things, I deal generate all that these if to the because these get projects, to overall, need commitments I carbon of carbon up not all do we that, a one, need of people you shift to little energy energy. of basis But great ships start planes, things, going governments really

goals, do think to the to to in serious incentivize have if those I people that. So, governments to actually put are achieving steep they incentives

So, very see of our it have we to how we forward. encouraging the that develops, for prospect but is as go business, Vincent,

Vincent Andrews

I I'll thank it time, appreciate much. pass that And, very yes, along. you of answer. the In interest

Seifi Ghasemi

Thank you very I much, Vincent. really that. appreciate

question? Next

Operator

go Morgan. Jeff with our Zekauskas question next to JP We'll from

Jeff Zekauskas

commitments, is from you're big going other in what for you that was very year, CapEx about commitments Is the Products any favor where your can area when the chunks opportunities? billion the Seifi, your $X.X that at something XXXX. and so spend? project Thanks in Air in looking at through moving see electronics electronics of strategic I And didn't you much. or next I away area to talk look

Seifi Ghasemi

these first morning, all. one of fact like people all the very like some are we the good was Samsung, and that and talk share that we wanted fair of that all asked, projects electronic of just of for about in that. big all like my business doing we are Jeff, like because Serhan reasons concern TSMC, facilities question winning to of electronics, that, manufacturers, Intel, about Jeff, big Dr. smaller of our you the

those. our You we fair share don't getting not projects, are of they it, highlight don't you but are mega see them, because

are not we So, -- are that very focused is on. actually of we the one sectors

we where We these of that. Pacific, are projects are top are most of very definitely strong happening. in Asia And on

Now, and in because Air those our that continues Products been electronics extremely can I hesitant customers. definitely terms sector. projects winning has projects all of those big focused to people be claim for we exactly we we me, And on the to fair the breakdown, share been believe then of have I've involved, of know But give that. projects you and the breakdown, which are

Jeff Zekauskas

Yes. Thank very much. you

Seifi Ghasemi

you. Thank Sure.

Operator

our go from next with Juvekar Citi. PJ. to We'll question

PJ. Juvekar

prices? if COPXX the quick in how projects less and Seifi, an Yes. world the at and where ask one you a about see globally, in investments narrative result, parts what Do happening Europe? of look has question. scenario your decarburization, you. going up fossil a similar environment higher a China Thank in towards And keep What's I’ll in hypothetically, energy move just fossil do happen, as we that in of fare other does fuels. Thank happened you. prices to fuel

Seifi Ghasemi

coal a the that for reasons mean, what and projects because full I that operating is fuel that -- is taking in prices of coal, the you thank diesel no prices, oil are question are the question. if are making the PJ, up, right diesel. that that gone having one excellent very price in a price because at Lu’An doing, there barrel. have at very the we of help capacity, the hydrocarbon now, is thing are selling And $XX they like asking they higher China does existing of very The go Well, some is they oil despite high is much up, price they China.

of it costs a then the then hydrocarbon attractive. in hydrocarbons up, interesting hydrocarbon up, is becomes helps So go But other kind the cost more way, if compared that those energy roundabout part go costs even if of to projects. renewable

is from to convert the because So to more. now you would driver that hydrogen, easier a it's truck diesel costing say diesel

go funny sense, focusing our actually renewables. if help in of on prices in it So will way, make up, Does terms a that hydrocarbon strategy PJ?

PJ. Juvekar

Yes, your coal plants? that does. it But impact gasification does

Seifi Ghasemi

lot I use use But foreign gasification coal Indonesia to currency from it the chemicals, coal competing that to have the the India that producing coal wants that is is helps a mean, lot coal, are use China import. oil or of to a because so are they or of they want which whole because coal to reason chemicals, using oil. pay plants produce production them, wants the don't for they

the would prices up, in go So, prices if ground, therefore energy that coal help. are

PJ. Juvekar

along. Thank you. it pass I'll

Seifi Ghasemi

or I Any -- very really that’s you much. appreciate Thank questions that. other

Operator

appears further no It there this are at questions time.

Seifi Ghasemi

like I insightful then everybody sometimes We that, was it the the appreciate call. good to With and thank is. your Okay. would much on and difficult way but questions, very who that's very February. January nice you appreciate very do to And that. We results, look in day. we Thank quarter or to first forward a and talking again, we announce early our when you sometime have

Operator

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

may You disconnect. now

Air Products and Chemicals (APD) 4 Nov 212021 Q4 Earnings call transcript