APD - Earnings call 4 2023 | Air Products and Chemicals, Inc.

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Operator

Good morning, and welcome to the 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 Air Products are subject to copyright by Air Products, and all rights are reserved. Beginning today's call is Mr. Sid Manjeshwar. sir. ahead, go Please

Siddharth Manjeshwar

pleased Good Earnings Welcome Sid questions. and Results Investor Treasurer. President Samir Lynette. Seifi comments, today General Fourth [indiscernible], President, your Ghasemi, Chief Manjeshwar, Air to Quarter of I'm Corporate and XXXX Teleconference. Relations Counsel Secretary. After be our morning, you, joined Serhan, President will to by Operating everyone. Products' Vice to Thank This our be Schaeffer, take Vice Melissa CEO; our Officer; Financial Executive Dr. we pleased Chief and our Officer; Sean Major, and is

opportunities. the earnings Our and refer earnings earnings forward-looking release note cautionary release our are for statements to and discussion #X. including at statements, slides capital website expenditure on is the airproducts.com. contains Please Today's provided forward-looking available in investment regarding and our guidance, about call that Slide business those on this and outlook

our refer per the operating financial discussion, on company state directly measures relevant are regarding today's these various measures, to Unless to our and throughout rate GAAP segment tax effective to EBITDA, earnings including on margin, ROCE, basis. non-GAAP and we a Additionally, comparable specifically earnings measures. both our total found website statements income, operating section. EBITDA will Reconciliation in these can release measures referring be financial financial of otherwise, adjusted measures we most share, margin, the

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

Seifollah Ghasemi

Products. I'm last made our record which the with progress to year #X, is has time I our improved on today. have Sid, Air pleased the share your to you, our that to Thank good schedule performance begin everyone. safety XXXX. like for day and be Slide to we would from our you continuing to significant very compared since busy Thank #X priority taking safety call at

X X incidents ultimate always accidents. Our and will be goal

per fundamental they every these to management Now to profitably the company philosophy. our share. reiterate earnings because please Slide turn manage quarter We how and to are #X, principles we our continue summarizes which grow

to Now despite term. to very Slide our consistent across long the model long-term weakness regions. take-or-pay drove and stress I business a where the in year please Air on-site strategy the economic this and for earnings our long-term short and with term, growth Projects #X. the has deliver contracts Products our long volume we business turn have growth strong the customers

of is business our contractually as business the well generates pricing half merchant in cash which us pass to our well as our flow our energy energy last for contribute experienced in on-site power Our ability inflation as as sales. Also that mitigate we and and year. through [indiscernible] business stable note consistently about higher costs, strong total action helped on-site costs

leader the continue to projects their and for in hydrogen with the also execute of are green execution. strategy a long-term the be future in to our we is hydrogen, doing. matching significant mega and world what Nobody number We successfully blue green

since XXXX for growth earnings goal remains goal future. has Finally, up and over backlog $XX multiyear [indiscernible] our double-digit been billion the per a our for share which framework our of

#X. please Now to Slide turn

fourth guidance versus the for quarter top Our of exceeded share and improved $X.XX $X.XX year. adjusted or the end of quarter last earnings per our XX%

consistently continuing XXXX. $X.XX growth since share earnings record XXXX, [ fiscal improved For the over of per XX% ] track full delivering or our year our average strong double-digit earnings share year, of XX.XX adjusted prior per

the in We despite economic are XXXX unfavorable very conditions. proud of accomplishment the

Jiutai was Neon Xx more Coast made closed results, was this strong the are significant and than Ammonia completed, Gulf Jazan project progress deployment operational. in in In we our -- and addition successfully. critical year. strategy our X oversubscribed capital also to deployment Phase both financing

very pleased is that operational our I'm X our significant [ the ] added in gas to natural We to also to sale earnings. contributing syngas Uzbekistan projects. announce And and LNG equipment facility of

want to and made the work any of significant results us for time go economic of around it I their I Before thank deliver impressive XX,XXX to has further, hard the take them, possible which and despite geopolitical every world, dedication all these our for to one of employees admin.

turn please to Now #X. Slide

We EPS We share XXXX. least at earnings base believe to forward. shareholders deliver our our leadership extending hydrogen, growing each for deliver while double-digit move promised to to our in we year to in growth to demand average enable X-pillar are continuing as deliver on growth per of our our strategy of clean go business, continue focusing in we what XX% which we as on Executing an forward. in the us

turn to Slide please #X. Now

accomplishment of increases. years proud our are again of more of consecutive than XX We dividend

As at see since average #X continuing you EBITDA on XXXX, can we have margin our an increased this every be slide, our XX% trend, of shows dividend favorite my slide. year. Slide to

second our significant Confirming of of year half strength Our generate. XXXX. model flow nearly we to the in and business margins fiscal the that have increased the cash XX%

turn please and XXXX year #XX Now fiscal to our outlook guidance. for Slide

continue challenging conditions future. Products' optimistic in near economic the will Air term, to there about Although very be I remain

the we strategy growth business share in of over year. Our expect range average $XX.XX per adjusted share, capital a double-digit and model $XX.XX strong will at earning rate. XX% last Therefore, deployment fiscal midpoint year the earnings up for our sustain to XXXX, per

year. projects, our of new drive per which next growth We earnings are already on expect to share many stream

is in XX% expect sale to last the quarter over $X.XX, for add of year. share adjusted favorable Additionally, to XX% earnings equipment to results first activities of LNG XXXX, our our to we also XXXX up and guidance improved $X.XX per

$X our next We between to for $X.X billion year, CapEx somewhere billion. see also

our I that refer project our our know some of investors projects. Now please major Slide slide turn track to commitments to to #XX.

we of and our However, a progress investors major time the we meaningful frames, give to more update size can ] and which time update to projects, than attention on capital single a and providing status execution we now them all multiyear to scale certainly have visibility remain warrant projects. slide. these then line scheduled and [ Therefore, singular continue as committed the in

which depth a into our we you hydrogen energy turn we are more in We October in clean time complex decided is XXXX. give from blue on projects. Today, to Slide the one will ammonia give Louisiana to look we So in Louisiana update and facility that to our executing. Please this #XX. an projects scale of intent announced blue to you our largest time, have build broad of

execute production we the August incentives tax registration, United hydrogen. As RRA a green [ to this positive which significant passed XXXX. blue Congress created and in event detailed ] When with of the forward project, happened move planning of for the States

including it other evident as are we more accommodate and future rather consider that the Europe the by ] now for the let in project, for the only of we plants future infrastructure to for to project phase is will is increases than bring expansion. It us XXXX, also as be world, by particularly was there ships, expect becoming and applications, to other we [indiscernible], Not growing reinvest growing need improving in developments addition, possible. that as the in blue but to events, industrial legislation, such heavy especially as this to, low-carbon demand so is that on build is passage -- of the blue transportation able important decarbonize needed from and more fuel infrastructure stream and supported it IRA ammonia time now sector, Japan. when and the of more. positive next regions to intensity In later, this the These [ using best ammonia the significantly power expansion future that we hydrogen emissions that blue the fast rapidly, the reduce demand

cost due that we this past In to cost the to X are addition to build announced since in project the has up gone seeing and to in inflation the facility. future obviously, build years the we increased anticipate the infrastructure, project the

its remain we have plant. $X facility, It In addition see for all in funds facility We else future. the cover a that will This excited is produce. billion will about the very we product plant in to is unique to that project build a of demand production committed and in of the be kind product. We of this capital totally we as anybody of a to this its this project the we interest the on profitability. using [indiscernible] that ahead significant huge significantly included this are one world this,

of a As us today given very pleased am $X to investment final with estimate that the announce result, proceed Directors of the I billion. capital our new has to project at approval Board

deliver stream. We double-digit fully is project investors on will expect returns it when our this to

hydrogen project this know, very intensity. you carbon As will and low ammonia at produce

allow expect premium us a to capital. this unique low-carbon hydrogen for company product, ammonia achieve which the will first scale, make returns the large double-digit products a get we on As to to at and

cost activities projects development advantage scale over other a the will Additionally, our of this similar in time. provide at

in the of and continue in demand advantage future. The future. are now excited future low Products well really ammonia. expected infrastructure in the additional hydrogen the laying we for We are to the underway, are carbon this That -- is competitive the is to building by Air we groundwork Louisiana meet project about and additional be will a

turn summary results. to my our is Officer, give the XXXX a to call Chief Melissa fourth Financial Melissa? it the Now quarter to over pleasure Schaeffer, of you

Melissa Schaeffer

trend Products, who growth double-digit to difficult in of quarters. delivered And Seifi. an Air impressive achieved XX thanks a earnings of X that we in have the you, Thank environment, my the people have average again past

for prior of pass-through overall. Declining a This underlying for more reach This basis up more profit margin impact X/X than income lower price, XX% year. contributor U.S. no to offset impact last energy against than and higher cost higher the XX%, affiliate demand points ROCE volumes gas was the with higher have reporting British last was was as regions. higher and energy by steadily to XX% in X Slide is to the compared a costs were XX overall for despite progressed our to of and RMB. customers. improved Higher offset the euro turn results. XX pound Americas decline our by reduced for X% weakness. than favorable $X.X resulting was on-site pass-through please most including mostly quarter natural was review basis growth weak in price on the in fourth we as which X% onetime minimal cost with company. sales year, improvement last significant Merchant of dollar LNG company Now currency volumes other about XXX cost activities costs. again whole a economic improvement. our our to higher X [indiscernible] strengthening positive opportunities variable of offset year, points Chinese Europe to the sales margin. pricing to price ongoing a achieved the in EBITDA has of The segments. EBITDA and comparison the contributed In billion on-site equipment corresponds jumped strong in in to EBITDA year, hydrogen sales flat but of

expect cash, work. Adjusting due on-site. to activities new to put on increased have We progression as continue relatively LNG results primarily projects we maintain bringing to as ROCE at the our the XX.X%. on cash equipment improved flat and sheet well stream balance as been steady for our would Sequentially, sales

Now please share. Slide XX of per a turn our discussion to earnings for

region. items, strategy, well income project growth our was results from higher positive modest efforts joint interest support price including quarter interest, of bringing $X.XX year as equity Our costs. Cost Price, by strong benefiting variable offset of due our noncontrolling due together per ongoing $X.XX, negative and phase affiliate net and XX% including and assets of as impact fourth remaining other Equity across higher unfavorable maintenance the both the ventures costs the up impact. to partially the share, were rate Jazan new this costs. second or by last been higher income, to pricing has had from unconsolidated onstream. earnings quarter and the compared $X.XX inflation lower $X.XX power tax unfavorable a driven contributed adjusted affiliate actions of expense $X.XX contribution and to to The higher X.X%

long-term Slide rating. with strong $XX And We we leverage, current to estimate XX. projects Today, billion over believe way flow more AAX work backlog years. investing approximately we cash that with of energy than Now XX create is our We shareholder the debt to billion, have that high-return projects targeted the on billion these please the remain can next $XX turn to maintaining in we over $XX transition. value. committed and best to our focused put additional a

Dr. the Now the review to results, our to segment Serhan. begin I'll of business turn call

Samir Serhan

Melissa. you, Thank

strong for [indiscernible] due corresponded to jumped Profits demand were X/X grew our we compared driven price million hydrogen XX and by to for hydrogen. year. Please last across overall Compared turn improvement by quarter, EBITDA basis $XXX segment region. X,XXX XX.X% our X%, points. cost lower broad-based energy partially review results. EBITDA fourth income, EBITDA more affiliate by which our in of X% XX% equity margin XX%, X -- businesses. Americas while a segments About Volumes the Sequentially, for favorable to of costs. improved driven volume. strong of than Slide was again a of of first increased X just price, mainly to our on improvements Given over a offset the margin merchant X% saw the to improved volume pass-through. previous improvement year, higher out

and teams results. year last Despite a primarily to these price. impacted our to year, slower recovery on electronics margins economic market for were our XX Now flat. in segment China, Compared a unfavorable and maintain review headwinds, by were volumes of the due Sequentially, please that opportunities to results. price volume down a benefit negatively focus weak Asia EBITDA Asia volume were last onetime turn Slide volumes.

on-site stronger energy our Slide overall. volumes primarily volumes for unfavorable offset Our demand cost earlier business products, in EBITDA EBITDA for U.S. the more the approximately new the other were lower Like stable. pass costs higher, flat the year, Compared by through. Sequentially, power the driven which margin lower declined for costs basis was price dollar, was points XX%, and merchant which costs. we relatively the previously weaker mix. Please our brought against resulting Growing up remained of merchant of was Europe offset XX mentioned EBITDA on volume compensated Uzbekistan flat results. to higher by due costs for month, to currencies was in anticipated. increases. than a unfavorable in stream before, as review business than while segment impact X,XXX turn segment region's X/X pricing the to we and our was EBITDA project by to subsided due last last of

ramp project this growth this expect segment to to going and contribute up in We gradually forward. significantly

Slide to turn XX. please Now

transport Port as supplied [ long-term ] agreement. being The where from carbon Before [ are customer Blue conjunction well with refinery. announced hydrogen emissions a hydrogen will segment, we supportive facility and industrial like sequester the offtake treatment allow will move operate on existing the storage European our the low-carbon be Rotterdam, an to as will highlight projects. Sea. Air the participating blue produced ] [ carbon then in pipeline network. gas ], [ COX capture and and take in own companies Europe. hydrogen roboting transport hydrogen would Products extensive next them and [indiscernible] project to North recently the depleted project I in field COX we which resulting Porthos to opportunity us under largest ] the COX project [ is developed regulations Porthos the low ] capture this to facility, of and the in have will from emission hydrogen to

from secured have We support Dutch the government. additional

We expect be XXXX. the in stream to on project

Now please segment. to turn East volume. lower lower year, of a XX Slide review our and to for sales due to last India were Middle Compared

added overall year which income second this results. to project, the of mid-January we of in Jazan The phase and closed the it drove region's affiliate equity

activities. primarily managed corporate sales higher Now our please of This and to corporate turn to and as functions centrally quarter, segment Slide XX our this of other sale as profit improved due this businesses LNG costs. equipment segment equipment and The sale for segment well for our results. includes

discussions world teams for back demonstrate like and LNG of and remarks. have announce interested again closing to quarter the technology around already now customer to would this our work equipment. also businesses. pipeline. I to were our the turn I thank involving with significant a strength our to adding We like in last provide to new project continue robust week, the outstanding the results his Seifi Malaysia [indiscernible], to in robust sale project would their pleased commitment. call equipment to We hard of our

Seifollah Ghasemi

Dr. Thank that. you much, I Serhan. appreciate very

an slide key all, call Slide success. technologies, all cited processes motivation our outstanding that are are by advantages earnings we After Air people Now assets, often people of organization. At and commitment to in please every our Products, built physical have the our this because #XX. are during which as drivers core it competitive turn created belief and We of the is present the organization.

to facilities supporting a carbon and decarbonizing innovative energy in transportation working people mover technologies, lower the and Our making the us are industrial that transition sectors. are processes and zero and first creating together

We business, bring energy delivering which environmental that, significant our has say on welcome for world. At significant your productivity a our -- answer of Operator, excellent questions, that our this Board. to are future underpinned team is environmental for and any benefits opportunities can cleaner ready to solutions in humanity. also customers together to and are sustainable doing them. core higher entire and to people the alongside generating and are also collaborate sustainability questions, we our is challenges I focused by and our please. innovate Products, underpinned in ready is purpose industrial which now gases we around With we growth to Air

Operator

McNulty Instructions] first take [Operator Capital Markets. from We'll your BMO caller, John

John McNulty

of bulk there's buckets that the the wanted over of of guess billion project. you where I into the guess, to going? us and can kind it incremental So expanding like little is I $X.X utilities, more help interest, of the the capitalized Louisiana I taking dig buckets scope put guess billion spend. a project of a sounds including $X.X I into to bit more bunch

Seifollah Ghasemi

announced has there said, tight. are we labor that markets years and that, The no this Number continue inflation ago. X.X do knows as John, this is obviously, Everybody been will scheduling one, excellent as project question. inflation, there we be there we project. to

interest supply the there of new more is billion is capital Obviously, own during inflation. capital Some had have, we the capital. we it on is to have I we would in have goes $X we say call, the apply that during project. Order equipment on do charge as we of interest that have the with, put and in I The said we or about it [indiscernible]. deal ourselves and Therefore, are up, of our let's that it's capital rest significant inflation so under. as that magnitude, mean, because otherwise, included fact

that So $X.X billion. And we of to infrastructure, we product the addition now, that see bought being is it of so expansion. significant in we bigger, to a because units additional preparation, part this again, expand, land we demand then X,XXX have supply, for right acres to decided want significant, that that, fundamental some we like like smaller have build like don't want Things we build right? things to that water things when -- for

of combination increase. say, $X.X a of you would the that, to it's all billion, that up So adds

We very now very our we expect fundamental we I'm with put are double-digit return also reviewed that happy the Board, return I in But billion, keep pleased, carefully issue and that $X.X we thing supported billion. that than better $X we contingency detail are going double-digit on have but on and reiterating, back have to in this they us. have

fact cannot we overstress the see that go half at look before. for make are unique the very a project. we to as demonstrate will a to John, product, be you money you. more able exciting that I project. demand to It's But full, glass going in is it we we it is serious. the a materializing, So if this actually And want to forward, than

We are it. executing

are and are excited in the people project. our We excited we and field very about positive are very all it, this about very and

John McNulty

well? just Got think the Can may project of capital it it. would interesting the that to thinking And how project. work my I like and opportunity. us you get about guess about an be it's emerging you're then as It how much returns for Netherlands on question second to put on help sounds kind

Seifollah Ghasemi

and obviously, Samir? to Yes. Serhan the like be that Dr. I'm Serhan to for to anything color, give do. going else comment digits like you double Dr. on close will but But him that. project, return will that add I'd we more is as very

Samir Serhan

exciting and the biggest mover Mobil the Thanks, Seifi. is another Rotterdam the started the comes this will emphasizing going existing long-term again, Europe. Very with double-digit of also will subsidiary really -- And third and to our it net the we Lelogic]. project about Port the for basically to Louisiana advantage Esso. provided Dataproc]. Edmonton, in when hydrogen But we in with North We hydrogen also a our to hydrogen. where third under to COX with first capture a X to hydrogen Porthos Again, in facility about the really blue Exxon and the about Canada, from capture It's of blue opportunity. agreement excited we plan the Exxon project talk it's it We in We're offtake [ specific return not we really [ went capture it's now project. very from sequester COX the Sea. for our capital

Operator

Roberts hear from next We'll from Mizuho. John

Unknown Analyst

hydrogen capacity? that about Or demand? replacing gas is project? quarter. situation? that is disadvantaged And project expanding existing on blue Nice their the sourcing in hydrogen Given your the gas Europe, Europe's anything Staying unique customer for

Seifollah Ghasemi

wants I to But Dr. can Exxon fundamentally, and an has. that. plants to Serhan -- that existing have that, that if we is plant add answer it then existing

know-how, it carbon the to the these carbon going go in we and are capture to We and this pipeline be have their existing on requested. technology put capture units and put and

and significant emissions. is. received is where technology our positive a it's plant it's new project. are reducing project, the really COX, people are emission actually it are not This COX building but is new And reducing where into a existing reducing is very plant you're what existing emission. not air. This is that's we therefore, positively. the a know-how really capturing is, you say, you very that And our that And a So

exact you have. but NDAs it But because add Dr. project, don't $XX we million of $X do billion want it's You to project of amount the a amount Serhan, substantial is to it's a but a not that in? either, disclose the not capital. want

Samir Serhan

Again, the emphasizing again, hydrogen. And Dutch for hydrogen. just hydrogen support additional it's government blue It's with hydrogen. full low gray and really to really no converting of carbon

Unknown Analyst

could [ volume versus peel the electronics syngas apart China, in ] versus on boxline? weakness you merchant And

Seifollah Ghasemi

John, there handle to that weakness fundamental good in very, trying is which the not and a Chinese a myself, is very that But been are get to weakness but question. there beginning on obviously that weakness is the a see I've economy is. easy, we is where the that. electronics, but in

giving go want guidance but are the a don't the seeing I that have the that are that that And we are So what make will Chinese economy hopefully, we take deliver doesn't sure additional the trend to change, it general we to you measures if are of we -- that, well because productivity of despite through weakness. giving breakdowns, guidance all but as you develop we details we the that given. as saying should, we then will

Operator

Instructions] hear Vincent next We'll [Operator Andrews Stanley. Morgan from from

Vincent Andrews

won't to Louisiana now, One, accrue time first but some starts company CapEx in ways. will wanted sounds X Seifi, on necessarily the at the the the of be up. up spent I like to incremental follow it phase the benefits

of $X the spend in you Or the full company on Will billion have $X the up. real and would to of not when estate return you're And some first you understand, return not we of year. the some that project the doing coming to want to Phase up? of -- think billion starts when full you spent infrastructure until the the traditionally, CapEx have just get of incrementally? your get wait total you'll CapEx that to X I get you return start on So

Seifollah Ghasemi

question. excellent Vincent,

We are not the going on to leave table. any money

start. return in We the on the a we are the billion that product project going double-digit to get $X on right the way such price from

Vincent Andrews

if And then ahead. -- I Yes. secondly, go

Seifollah Ghasemi

you. No, no, after

Vincent Andrews

your Okay. is your wanted constructing that your a of and also to in an And up delayed, If where then there own economics to to use your believe their -- part does might ability product? secondly, September, project. And one ask project how their product. facility Products I be delayed. that at partners believe in I Canadian that I investor offtake earlier event project Air is that impact market about

Seifollah Ghasemi

Well, the way that first that to the of I all, committed customer. answer our is would meeting requirements are like to we of

customers our customer. ready will our whenever we valued stream, a comes have them. very plans for are They on So

who worked know and closely. of we And customers, largest a have Exxon, lot we very one You respect they are are, them them. they our with and of for

In delayed, to product the XXX% if of are then not terms [indiscernible] already going of they them. is

customers will the other have We that believe time. we be taking product on

We we be feed. liquid are hydrogen not on Therefore, effect have that expect going would to plant a the that that material. products would we

Operator

hear Begleiter We'll next David from from Deutsche Bank.

Unknown Analyst

other case XX%. pipeline? in guess, shouldn't cost think project, I that's project project line about the there updated? the that also, haven't project I on the Steve inflation material that This Why have you is that major of on terms for cost And slide, projects time Louisiana you about on Huang your any on in other here other for projects guess, the changes costs, Dave. I if are and be

Seifollah Ghasemi

these all, in of forward the earnings as different change said we more is of projects. respect other about my profitability first of that you call, calls, to your to bigger no our now. detail give some with there material Well, we in And as those I with attention projects projects, the we bring in want projects to go

a big the executing project, project -- thing, of a we projects we if is look was [ thing Neo]. second at done. next you biggest are The was take the one inflation is The that Jazan. already That

we are doing don't capital that backlog. you The are capital. that. on in the our gave Vidara], a for projects other and that, are That projects return doing, way numbers We inflation the we already is to have such the given any now. the right connected you expect the in we that [ we significant is that

So up, goes down. go the capital return doesn't even if the

at that there material to So report nothing that stage. is

Unknown Analyst

Can X%. down Is have then decline And Yes. peer year? a increase talk you on pricing dynamic in F seeing QX. your don't in any resulted pricing in Europe for that I causing next is in and there in just Okay. then that that decline And for your pricing a I you because think Europe competitive specific some think time. expectation in still F European just general price was X% and about then long QX, what's

Seifollah Ghasemi

adhere obviously know that to your in I detail. Well, do and very strong But question we a would to policy love we answer you that. have

talk That industry, All in do to happened of not or about talk future. what have what and is in opinion the you we us but past, suggestions we price. at happen the on forward-looking going adhere any not about can our do to about any is has not that. in appropriate to We

my I Legal I'm that that he will so my doing to not And Chief is -- said answer following be the our able policy right question thing. and apologies, Officer nodding,

Operator

We'll move to next Barclays. Leithead from Mike

Michael Leithead

Great.

to back on want I Louisiana. circle First,

should from to You just the is upon get with signed think, answered more when great. help double-digit talking get the expect projects? which return an earlier But appropriately comfortable the us question, offtake investors your bit stream product the revenue I agreement to pricing startup, about a

Seifollah Ghasemi

want and prospective low do for kind of to customers to is carbon blue ago. are point, low will that go go agreements of level products Well, carbon clear that or of higher. But I are said that going hydrogen there value many have sources ammonia our that do forward, product we very have signed always of not therefore, agreements, become on about to going as what the clear produce. And -- very not is long-term because plants that to that we it our the years intensity, We -- philosophy. that been we we could very selling X

wait be and demand minute, hurry We now, you very buy prospective The from this any this and give agreements. projects in project. Louisiana XX sign in are that, list Middle is can guy negotiating these be to they a a But if I of this are not frank, project right East long-term to oh, going this to of you there. guy the a and in customers, with

Nobody paper projects projects. is those of All doing anything. are

plan. a building actually are who people only the are We

as have higher of our products plants hurry this another closer -- X the supplying cheap because happy. to value X, sell not our money everybody not we before go shareholders. We that it. where will are our stuff is demand to We years can feel there, on as makes the think business, goal, the for become in is get we come a as just people many who is make We responsibility So to be these should and these that there much we and stream.

product not future near in We us a demand announcement that. and not to is in to this that So do for because are come the believe going selling big about expect we just make there. the do

making. else comes that this kind be And very there stream, for we table, on of game we come the don't product are Our just nobody time demand these is to are is the made the commitment to these the is just that at we long time, and in product. point going the bit right product projects want unique a maximum producing about some to question But else value the the this that. develop takes going trying to what build by there's time to producing Nobody at the be customers this that is little to time do sell this plant a to there. a is world going that. But fact do people nobody It's know that in it's point now scale get just about to who the product, of it the has and we no obviously, projects. because are think at and

Michael Leithead

quick And for then a follow-up Melissa. maybe just cash flow on second,

years operating $X whereas running X [ is billion, dividend CapEx the billion, $X.X $X.X past about is about billion, $X about think is and the flow I cash million].

to flow So move leverage you expect that should the in higher Or moving project a we when term. is obviously to When short peak meaningfully bit in view? would your operating out? cash outlook, to see your multiyear by higher helped start start

Seifollah Ghasemi

telling X.Xx. lever I'll about then details ever to that give But to our stage, that than If to always doing we will we turn and we'll That Melissa fundamentally, stop means over comment, it are maintaining committed the A projects. we general we more not a get you company necessary. you have if more to been rating. that make I'll

responsible. to be going We are

the opportunity. down I ] run stage, have X.X lever But to projects. the then the want limit make significant cash. just headroom on to getting we as have get And get stage on a of company shown the the would before We if that of point, if slides, has to slow to lot the we we we to [ are ever we out you Melissa the still other of we

try to our We to because committed is be are general the going the company very are That and not comment. to rating. we A irresponsible lever

want do to that? Melissa, you Specifically, to add

Melissa Schaeffer

Sure. Thanks, Seifi.

these flow continue dividends, mentioned, increase our So market do of -- strong to outlay, we executing against to of which that global the do as expect and year. With very that we delevered. the our continue will, project ongoing this as we our cash backlog. this be you course, situation, to assets are business. do debt year fiscal cash is to being bring go because commitment naturally said, to have we we support on With We stream,

be that mentioned. decrease rating Seifi in will as continue leverage a obviously, our at maintain to and AAX So we'll

feel So maintain that very but that our year with we that this comfortable AAX again, within we so leverage likely will go can needs, cash stay the rating. will we out Xx do

Operator

Zekauskas Jeff JPMorgan. from

Jeffrey Zekauskas

[ equity million]. was capital negative your working The year million investments undistributed this was a $XXX of of $XXX and method use earnings

up, cash So if was you operations. $XXX add from that pulled from that away million, that

year-over-year. was so And your flat flow cash

expect dynamics XXXX, Can an cash billion, flow do inflow? is and you what than the explain capital you or $X for more For your $X $X.X outflow next billion year? working billion,

Seifollah Ghasemi

that. detailed a asking that you on to give going usual as color good very Jeff, you very to Melissa? and Melissa question. I'm refer are And some details to a

Melissa Schaeffer

Yes, absolutely. Thanks, and very Jeff. I always appreciate detailed questions. definitely have and your questions, you interesting

have few January. X we large cash cash strong Jazan that happened year, as the including we do closing outflows, significant in for of Phase This we mentioned, a a had inflow. very our still So

far However, with billion, that the to and being including said, billion trade closing mentioned, we the working do around Jazan to this capital CapEx which joint year, $X.X is have of as were where still off at being largely $X funded This by we not we is year, flu our expect activities. ongoing venture. in

be very current are needs our as our working flow we against comfortable well execute will able to growth given as we So capital meet strategy. cash ongoing that

Jeffrey Zekauskas

Okay. All right.

$X that For should XXXX billion, be my to follow-up, you've got if to your be in investment And should in spent CapEx is Louisiana higher assume to is than range billion that and $X $X.X XXXX? be your 'XX? 'XX by billion we so billion the for $X going

Seifollah Ghasemi

Yes, I'll take that question.

officially project to that We have cost billion. announced $X today the we be expect

building the agreements project and did spend NEO Products We sell that consider the have billion project. not [ long-term will we go We $X seriously announced the that of we can, we with the finance forward as and can we will to we like project. to expect and Air product, lever ] we sign

of the you end not that cash $X $X actual billion, billion, $X.X So might $X the be project up $X billion, billion our out outlay for might billion.

forget that. doing don't there a Please of that. So possibility is

projects. $XX billion we spend that and Jazan, this have rather have our we project more they that. -- project own -- these so with for we And have to products finance the future demonstrated, did where a cash capacity it but this are we would we So was project the cash, finance

is possibility this that having that finance. do good a we with [ will not is done and I'm possibility, there XXX%, very project, saying to have project interesting good with project We is a Neo]. And very a which but there amenable that

Jeff? Okay,

Operator

Moving next Cowen. Marc Bianchi from to TD

Marc Bianchi

and an on first project. there, updates for offtake agreements? to like remind us you NEOM potential any line time of on talk ask Can the about update I'd progress the

Seifollah Ghasemi

is Our very NEOM moving nicely. project forward

the We are certainly almost done with engineering.

plant. constructing We are actually the

that hydrogen the green delivery an taking today are announcement you We saw of have, turbines. they as wind by a company new

the we have project now, that XXXX, is end expected. announced that line expect But XXXX, that and beginning the to of is fully time meet we at So right of deadline.

in perspective, So at been XXX,XXX discussions hydrogen I that Europe? public the their for oil the apply the green comments it is of uptake, capacity made other hydrogen tons that of companies by people in of Louisiana about the But of that. tons by You of will they about NEOM. terms again, announcements about XXX,XXX one announced XXXX, that -- need equivalent demand to there Xx the to same that time, world has saw just are green largest also there in put in

our get on appropriate that So project. that said, can price demand that to there as of but strategy that is appropriately for return going we wait, plenty to project be of I terms will in we so

Marc Bianchi

That's overview. a great

that sort return. comment than XX% suggest of And of this on of The rate that you an prior benefit XX% an that greater other I question of is were there's benefit had of of include not I the the your of was targeting the EBIT this internal from before -- project messaging contribution Does including does cost? IRA? now believe, the IRA, was upgrade the

Seifollah Ghasemi

that. of all Well, combination it's of a

Those IRA demonstrated have we minimum. you dollar translates said do a on the of and that. have said, profit investment. $X.XX operating X to We XX% of expect, really what is go That always that together. We

take of IRR, look out Jazan. find at have And billion you'll it's project. in getting you of are return look XX%. that a terms is you that a more that on if carefully, detailed numbers, Jazan, the In please all on Now return than the we the $XX

the it based -- below and have too obviously, of we those. usually just So And the [ it do the I many you on price but unless as based price don't on the return, we if projects said, market is not is the -- our XX%, products strategic phenomenally what that goes don't bears].

more minimum. is XX% expect that. most So overall, than to we our of produce And the projects our IRR

Marc Bianchi

IRA? from the inclusion benefit of And

Seifollah Ghasemi

incentive designed project to and product was able IRA to a the the obviously, Well, that. and encourage way return, that. depends we've it for customers price in use was we get an much but which such a all it of to affects as how IRA that good But be the that know, because it had. would IRA, on you also But that

So it's going to help both sides.

Operator

move We'll Sison to Fargo. Mike Wells from next

Michael Sison

Nice don't Maybe just outlook. just want I apologize. I quarter and I ask understand. again. to Louisiana

billion? billion? $X on is normal less the should the and applied $X your I So then be that Or than capital billion take $X

Seifollah Ghasemi

of Well, should you the expand is we and is financed that decide to our case, which, should in might of in with that you how said, you if expect accordance there. it put money finance expect in should if will you thumb operating rule expect billion it as we fully have that ourselves on million money, our it, should project $XXX income $X time But products. once we we the I $XXX uplift said be the million. plant operational cash our But that was the much

Michael Sison

does is on given has [ going on you're X what the a changed? product? X], that return the to cost to from assumption for that gone sell has And you XX% to change certain that then that pricing up And the X Okay. price need get

Seifollah Ghasemi

a a -- difficult making they of ammonia. this and is why will to take year premium very go is it pencil at that not a assume order at that $X that Look, see we that plant return. Yes, investors our is get simple, approved X.X million project that we it product blue expect just we because to to it believe at make [indiscernible] the billion for to of the Board price magnitude but through and be tonne the sell able

that going more is. And electricity you to a that blue get gas natural find be than is $X.X that price with a then for for EBITDA. -- by billion can its what that calculate is cost, the costs ammonia, time then it Assume it the make is know And plant you blue calculate, billion, cost that price at gray that, done price of cost revenue and blue you reasonable higher then see easily calculate, the has of you can obviously, very can can math, where it you the out $X.X operating is easily. ammonia, you'll the than

decent becomes billion a project. So or then that return $X

know to project. good But calculation. very, is. not that, convince ammonia project is is the do difficult is difficult gray a actually it Right of that very price very now, So yourself to it you the not

the classic, out project, execution nicely. well, thing important will the rest project of bring the the for is the get sequestration, challenge very The think the Products to do I permit the us, Air and execute is for work are for it the but those

Operator

Kevin Vertical Partners. McCarthy Research from

Kevin McCarthy

to U.S. to on billion your the Seifi, the Be its by a X about involved funded [ project I be the ] thoughts Arches with that intention so-called or in bipartisan ago, establish of hydrogen cost regional X hear $X believe at infrastructure announced curious government weeks to program. hubs law. you're California. hub

On development. this market some accelerate I hand, the one suppose

competitors. of or partners in other the be these there On many hand, some which possibly be competitors existing dozens might future are customers, hubs, of might others

So your you into you put that for can maybe that see context and how involvement developing? of terms market us in

Seifollah Ghasemi

never it For projects of amount all that the particular any time infrastructure or terms were But the By investment that in by [ move going it But to spread is to to in individual of kind to over ] divided the you which were infrastructure not for we that comparable any part contribution either. We projects. different are $X billion part doing the use thing. of a said, us really billion an of to we not of NDA, as project, they much bill, have have from It lot what in what cannot that going project, emphasized of $X -- needle and too kind gets we is promote of not IRA. terms is obviously the about of welcome helping any do that. of we the mean, that positive because is we move much to terms these talk the in that not a much. company on, is is material so That are artist a hydrogen. I we in, of one-off fundamentally, that

becomes anything IRA being significant. That We start. meaningful is it the anything have never counted like that because the you as with when comparable IRA, very not

Obviously, numbers comparable. the [ it a sequesting $XXX I But money tonne contribution. $XX, said, ] are sequester of Louisiana, costs million some million is. that's as COX of to X at year in We are not

not a doing. have what a infrastructure we good that always make So we doing thing. thing, said than any bill, It but it's to difference material nothing, better or good it's is obviously it's something are will not on the

Kevin McCarthy

And Okay. It line. I if and LNG. bit secondly, other your for then on a and active comment the fiscal down the corporate been outlook in quite quarter, you may, you've would came fourth on

So maybe through you profile can well as forward LNG comment expenses flowing that the XXXX. the as in on controllable line for

Seifollah Ghasemi

corporate that and programs the I'd in lot pursuing in of because our that last projects quarter, and made be projects, cost. to do this XXXX those amount to do much order amount things lot We will XXXX. reiterate have I like a control have had we Sure. up don't of corporate of a in starting statement costs expect as significant that, we in we a cost were the money,

fact are In LNG the other doing business well, will the on that addition, help and that. businesses our so and on

a cost do reduction amount. So of quite expect corporate in we that XXXX significant versus XXXX, a

Operator

from Moving Bank on of to Stephen America. Byrne

Steve Byrne

addition the the blue? in might and Was ammonia it, fraction which in demand are you in about dialogue quarter potentially an what that the demand specifically if them include and so would the you in the the -- design Gulf with reducing consider gray pipeline? are Coast port region piece offshore the robust, forth outlook reactor? if hydrogen of Blue And And the drop to you so to switching hydrogen project from ammonia scope so, strength during for in of of U.S. customers pipeline is in and Louisiana Americas, your those

Seifollah Ghasemi

You the we robust for to part is get I question. that the growing drop very part But demand right, very because would expect would stage of for the ammonia in you a a are ammonia. that that the there demand very, are not do asking good hydrogen we world. be blue blue will

engaged we that more on to the is can produce thing the of more more that trying with customers blue ever and where is all we expand what We focus the maybe interesting than are ammonia. that project, said if you hydrogen produce

part Air very world optimize very gives pipeline of that us said, I point. hydrogen a position is But this. XXX-mile overall, good has very to the you're And a you that positive, significant Products in a being and out to So be. in that the advantage the think story able pointing as is fact good

Steve Byrne

is a one follow-on Liquide its of hydrogen, respect you potential Porthos. the involved green preference the project, also you direction project in as with moving rest hydrogen embrace Netherlands for is with blue then Netherlands And believe relax that to do and blue my in this And of might for more? see Air Europe question blue is, I

Seifollah Ghasemi

and than Right very blue Netherlands the now, because capture reformers the the ] very blue steam these to methane COX it's hydrogen hydrogen, [ project in from do there, produce and is practical have to efficient better you for that go the that think some I gray applications the mobility But the it's fundamental for especially that, of for signals in and will demand refineries new not blue. hydrogen. do Europe,

users. possible will I in the major as will for still seen think of be some -- the preference green being have hydrogen of Europe, up end you a announcement

a be think combination X. will it the of I So

Operator

We'll Instructions] from from [Operator next hear Josh UBS. Spector

Christopher Perrella

on assumptions underpinning XXXX for coming guess, down Chris the volumes It's one-off Perrella the the year rolling outlook in and volume guidance coming this what volume with of deals I Josh. for off, follow-up A for Asia did you are in this some year? your that on,

Seifollah Ghasemi

But Well, overall, much you the not to related point, very very at production. thing have we we know way looked business to the thing and -- but to to this this GDP on that have future. that at the obviously difficult predict our it's is looked -- that way industrial

U.S. we in X.X%, maybe that. Last that, production budgeted anything like positive. the ourselves the bit or about of have was it So And digit that. double than be something kind way is a less year, like that little will industrial not

economic Asia. the very produced in for and down positive flat So have next Europe, That's in under U.S., guidance much overall the year. the condition in which we

Christopher Perrella

project. the in you, it? what's about them should And dispose Porthos the the one having capital of And -- taking COX Rotterdam will on essentially All right. involved the cost quick spend? we How from with think follow-up

Seifollah Ghasemi

COX, per there ] a that. then will might disposing Porthos time, think $XX [ customers. our us and in to be to the the for are we for our quote capital, number that charge And a the through charge to We for but I make pass we charge some to ton at don't then at going obviously wouldn't for which charge is paying going public. they sequestration. -- to us are liberty decide have And they we obviously is Well, that we point

Samir Serhan

government incentives But COX the providing sequestration. Dutch for the

Seifollah Ghasemi

on the But adding the is cost sequestration. government contributing Dr. is Dutch Serhan the that also for

Christopher Perrella

a All right. capital rough capture? a -- the this -- Is for there number for carbon capital

Seifollah Ghasemi

that. disclosed haven't We

allowed not than are is more We as it that. But said, I disclose than less and $XXX to $X million billion.

So somewhere between. in

So sorry about that.

number. are the to not disclose We allowed

Okay. With the there operator? think over that, we I significantly gone have in queue, anybody Is time. else

Operator

the At this no callers time, there in queue. are additional

Seifollah Ghasemi

Air Okay. great day. Well, and next appreciate on being We your again the best, forward for everybody all and to in Stay thank call with quarter. today. you would like a with discussing our safe, I results have that, look we to stay our healthy interest and Products,

Operator

your We participation. teleconference. thank today's conclude all you does That for

You may now disconnect.

Air Products and Chemicals (APD) 7 Nov 232023 Q4 Earnings call transcript