Air Products and Chemicals (APD) 2 Feb 232023 Q1 Earnings call transcript

Good morning, and welcome to Air Products' First 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. Sidd Manjeshwar. ahead. go Please

Simon am Good quarter Katie. Manjeshwar, Welcome Air Chairman, Treasurer. to President by joined Thank Ghasemi, Seifi earnings morning, results first our Chief President Chief I General Major, Sean our Corporate Investor and XXXX Vice Investor and President, Serhan, CEO; Sidd Melissa Relations to our Officer; Dr. teleconference. Products’ our and Samir Vice Senior be of Financial Schaeffer, and today you, President Relations Moore, Secretary; Relations, Corporate and Counsel Officer; of Operating everyone. Vice our pleased This Vice President and Sustainability. is Executive

retiring our previously he be take will As end of to at comments, will we March. After be pleased announced, questions. the your

the our for available slides are and Website airproducts.com. call on this earnings Our at release

discussion Please forward-looking can #X. found to in statement on forward-looking earnings statements. be the Slide disclosure release and that our contains This refer

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

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

that of talented, very despite headwinds. our work. everyone. good day motivated Thank thank proud delivered each quarter your like time employees for I for to the I dedicated am hard be call the our on people you, at say significant Products to this would great from schedule Air to you Thank results and busy taking and their today. to Sidd, very, macroeconomic

Now please turn to Slide #X.

always highest is safety our priority. which Our performance,

can always do have significant you since see, hard to But progress we As better. made we XXXX. work

achieve incidents is and zero zero goal Our to accidents.

to turn #X. please Slide Now

year per For fiscal an was The or the underlying year. of consider $X.XX gain year X.XX items from But $X.XX, our that. of you improvement X% make impact one-time earnings first of performance a share last was the versus comparison are per a versus first year than currency, need share XXXX, to much our fair in ASU versus last quarter of year a that joint Jazan our better finalization $X.XX from and the of last venture. the to quarter negative last

I X.XX. out quarter also would first share like to of point per the our earnings guidance deliver X.XX was that to to for

lower which is European is the and at EPS weaker Our our $X.XX, The actual guidance were in economies expectation principal that November, forecast. within [indiscernible] end. reason early is (XXX) our but Chinese the than

turn to #X. please Now, Slide

quarterly dividend record our our to of consecutive am our annual while say of increase. more that on [ph] share this are again have time per X% I an share We than we basis, by long-term or to $X.XX pleased per $X pursuing years growth our XX extending to committed recording quarter, shareholders, a raised strategy. dividend

return shareholders We cash XXXX, in our more $X.X to to expect pay out our our to billion shareholders. than reflecting to commitment

margin #X, EBITDA Slide Now, shows to [technical which difficulty] trend. go our please

improved While high, energy this margin our costs quarter. remain

not that in is business, the business, peak does in impact higher which increases sales around our of three the to like due costs worked margin a XX% on our our of prices upside the to Our pass-through increasing productivity. but quarters continue energy we to point energy our offset team since work on declined higher profit. also and merchant I margin has cost hard to would out

Now to Slide #X. please turn

quarter. during project in to milestones December in announcement strong States. cash hydrogen XXXX, in this are project available we be -- This since significant project the largest mega-scale the be on project information for is means about revolutionary States. of this in In United hydrogen several very website. carbon, announce far the Texas, hydrogen hydrogen it delivering project of the NEOM addition will our achieved our recording project And United also results, project In the by The we Northern and December located $X green which will to paid green our net is project our were green our zero the billion excited latest XXXX. and green

please to phase second it XX, is maturity pleased power We Jazan million the the completion by #X. project, announce Slide were of Air financed. of which January XX% to and and Now project is turn $XX owned gasification Products, XX% the in

with contributed around quarter, first of $X.X completed of purchase for the first project, assets Saudi Air XXXX, Products from the billion billion During $X.X Aramco. this which October in of phase the of was

In the completed, for was Products of purchase $X.X $XXX an additional of the which additional million Air second billion assets. phase, just contributed

$X.X contribution total Our cash for this billion. project is

results the the the $X.XX end in expected, fiscal to of project As was annual on which contributed share $X.XX at significantly phase to year basis, an per first our XXXX.

$X.XX expect investors annual line per [technical ago. in on This we of the a years the now than of basis. total an more second share fully is earning X contribution completion the of difficulty] With about phase, announced

#X, agreements to definitive project, on Slide the wanted hydrogen to our we you very NEOM to you read signing give next before And provide an great to we turn update, is give an for an the about this that green few weeks. [indiscernible] in which milestone, project since is update you appropriate to you update, which close please completing project. therefore, Now financing are major a

[indiscernible] Land And completed this engineering construction power venture major the executing to We including energy is XX% The now the awarded has project have in been [technical world. excellent the started. team have project. been and place large-scale difficulty]. project subcontracts joint about is bringing complete. on and to progress the the making is plant green All for preparation

Now, please Slide turn to #XX.

joint ownership this remain at of [indiscernible] is hydrogen the sole Air green ammonia of of ventures. green form As facility produced and Products produced the We production and XXX% NEOM position the a the exclusive in contract. offtaker important. very this of importantly, you has XX-year But an know,

distributor see are to this continue [indiscernible] we I significant to sole consumers bring product. of as to use offtaker hydrogen this We opportunities around world. said green And the the and to

on to Then the a project. that summer the is original for we the this price remains than are when project result, negotiated has XXXX when ammonia, This and announced we the financing in it offtake all the point we we I now fact green charges key this the that financing as absorbing price. very offtake project, the changed and so same are project the want not emphasize as of that of a

partners Power, own turn Initially the three we Air the difficulty] use NEOM, the and intended Slide to to owned now are Then, cash total #XX. to Products, fund our please is project, [technical which PIF; which ACWA by project.

X best return from non-recourse reconsidered cash proposition tremendous this our Over minimize years, value seen see and the project financing got project. project. the global course [ph] institutions we and this contribution financial to that we who and do the past the the on decided maximize of significant action on tendered Therefore, of cash interest to we’ve is

cash non-recourse little XX% financing. the non-recourse financing, will contribute amount more real bit will partners forward we you to lot are ongoing get obviously, And of project and you to the you cost if project and chart. a present would of remaining can maximize be your borrow it and money that Therefore, bring put to you XX% this I want detailed you against doing a the that. explain the value The borrow. when

is that $X.X point this of finance. cash project we expected. that significantly $XXX us that than this the now that $XXX is Products to ballpark project expect less you project Air million, means will -- less This the than is what originally would means million, do, financing billion to That be contribution our which

underway to than financing Now Slide want borrow. and please Xx I’m the non-recourse we from more are over-subscribed that we to say turn to what is pleased well #XX.

have to financing month, completed this Later institutions, close, close of We call to dry signing the XX over months project. demonstrating their full we expect commitments be expect the a agreements, we this financial and definitive later. the what received global is from we financial complete which few confidence in the

obviously will you let make finance. on the project We know progress as we

capital Now needs. you overview please project I turn can that so the to Slide of total with provide #XX, an

mentioned $X original we build billion capital to required the have before, for the that facility. First, the

it that about We increased inflationary -- to has that expects. have pressure due billion $X.X by everybody increased

it but not those decreases provide people doing lines service be is the the was and infrastructure [technical self-contained whole to cost transmission [indiscernible] addition, $X.X needed the people But that services the in dependent people, that we we control decided and that to billion increases wouldn't project. but on order now we by in These we have Then others. want increased project was the be we power to that for include include further This from other dependent the ourselves totally and other have better difficulty] the project point key we thing so other the over need make was to operating make investment the that a cost, that trade-off. operated. [technical everything project capital sure have on for difficulty] to

is people sure $X.X will is. is as subject a for explaining the you if costs. much I'm is that why project that item as want you other and financing, really That billion number, the have to I said, a you money borrow questions can. from as project put be financing of but it big Now Again,

of about of is construction. billion First interest the $X.X all, that billion during $X

borrowing. borrow are There interest spending them. $X [indiscernible] up want We of is project we to about against borrow to adds Therefore, to an finance money. that money. the that want to We and billion. the that for that So

that we difficulty] hundred you finance a land dollars. we forward, sales decided to we we the Then That Spares the to and reduces for is finance leasing Usually are years, [technical decided you for pay as upfront for the ongoing XX can that. instead go spares and upfront land all few buy cost, the the million buy of our using project. it.

[technical the makes sense, that and beauty is those kind of can costs a that you It that billion. the the lot finance of So $X.X are of difficulty]. comprise

your of costs bringing operating flexibility costs lot the a that have You of your in the save future. will forward

for So all $X.X together, project is needed funding billion. total the the

XX, the the of please overview funding. turn Now Slide to is which

the less billion is which $X.X as than wanted contributions partners. before, $XXX $X.X compared difficulty], As [technical from I Air expected. of $X.X and made billion which originally we of cash we described Therefore, cash to three this non-recourse billion than is Products the and debt, billion up maximize is the the billion obviously, to $X.X

are. we overall, where So very are we pleased with

the [indiscernible], the with it pleased very that was fact very are that financing XXXX. in as paying for the pleased prices same our flow, are cash has our are and We we the we project minimizing stayed that [indiscernible]

about are chain projects We for and the optimistic as a prospects supply very forward. we go total good for the return

please thoughts I sharing by would the discussion to strategy. Now XX. like our turn to summarize Slide some about

mentioned efficiency our the core industrial growth As the and of before, Products emissions and I lower dozens critical with is two there in of that foundation and pillars for gas sustainability services business, increase strategy customers for Through are and supply both of have productivity. industries products Air them.

scale move for difficulty] Air heart that and the Air of and the a energy $XX say helping success sustainable drive in solutions. Products for by needs billion [Audio pillars, of results energy Board's will more transition Products the hydrogen XXXX support the us excellent in drive -- [technical environmental moving for These project [indiscernible] to the our near-term than future, as executing growth Blue [indiscernible]. I'm commit we Green put project have make of to deliver hydrogen and Gap] progress to continued which two proud clean our the we people at and to needs in forward. Through

critical principles Slide continue and #XX Air Products' summarizes our are will future. us every success in These guide the quarter. to I to management reiterate principles, which

over call Officer. to I'm our Melissa? Chief pleased Financial Now Melissa, the turn to

Thank you, Seifi.

of the in with results As delivered earlier, macroeconomic headwinds. Seifi another even set significant incredible mentioned we've quarter

Air droves XXX across Our significant region last and points their the like continued thank income operating the Price off. despite improvement commercial at margin to continue a year. was and actions the currency would execute XX% also to impact, to for press their efforts. basis higher also negative operating teams outstanding compared I efforts team paid Products

activities. for XX%. the results. price The improvement Now please gain price to X% year, year, first nearly better XX in double-digit row merchants, merchant X% the but in driven nearly quarter in to offset XX% review for weaker of in total turn were Slide by a equipment our sales, but In compared by quarter of strong fifth higher, Volumes increase. up partially a Asia, comparison up a were and America volume Europe. company lower last and equaled Volumes last were to onsite price sales in in

the this margin region higher, from strengthening sales Europe. income headwind, and America operating XX% by dollar in was and XXX primarily and driven lower jumped X%. Despite basis at about translation across income pricing. Operating Currency operating X% reduced strong higher points by U.S. operating strong the was and particularly income

quarters, has and primarily X due last steadily the points in higher operating EBITDA related XX.X%, as Improvements margins year joint is finalization. basis the the were ASU ROCE EBITDA over operating margins income to Jazan reaching last not XXX and as items one-time than which year. significant climbed to prior venture

We further contract benefited sheet stream also our on [indiscernible]. cash, weaker we bring Adjusting to expect volume soft improve quarter. prior ROCE Sequentially, a XX.X% a following from work. and quarter, balance which and on sales our have as the favorable put was been to this projects strong new for continue to ROCE cash would

Price versus more weaker cost to gain margin improved strength positive as continues up Merchant while X% due [indiscernible] pass-through lower volumes, was the across volume. points EBITDA price region. the X%, offset down quarter. was EBITDA to price than basis XXX primarily last

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

unfavorable up was $X.XX $X.XX net to was increase more higher to share inflation offset as due $X.XX over Price, Price, Cost year. and volume the costs this price actions added XX% than of $X.XX a last compared drove price Our results. or contributed together and X% compared quarter to per year, variable Strong adjusted or the $X.XX increases. higher cost EPS cost year. last first improved quarter variable primarily maintenance. our this

and year The associated Jazan Jazan results. from in currency affiliates' equity the However, of a accounted roughly $X.XX finalization prior unfavorable and with the $X.XX a moderates of $X.XX in of non-controlling venture underlying joint negative $X.XX the income one-time item the benefit ASU interest. an much for decline strong

rate to tax XX.X% The basis of due year. XXX benefit effective tax was unfavorable less this points

We expect rate in tax FY to effective of XXXX. XX% XX% an

year benefit and $X.XX plans the were our $X.XX For of quarter, this a favorable non-service year. component defined unfavorable last

we results. from last adjusted quarter, I now As component shared with you exclude the our

please to turn Now XX. Slide

continued flow Our to by distributable driven EBITDA. improving climb, cash

last While remains maintenance cash included interest, X expenses cash tax and years. CapEx relatively stable over the

$X.X to had flow the for generated share. last over an to of $XX still billion as distributable distributable over almost dividends Over $X.X shareholders XX our we paid flow, we invest our cash XX% or growth. while $X.X close cash or months, to per billion almost billion From

high capital to projects. stability return distributable and cash conditions, increasing continue us business. challenging to especially strength of the grow to ability for dividend shareholder It deploying enabled by value Our flow, in and demonstrates create our

Slide deployment. XX provides an update of our capital

to $XX cash XXXX through $X be available see, already XXXX. billion over capacity. billion, would We $XX is additional the for expect billion of additional by flow includes $XX additional cash, this almost EBITDA spent. billion today, given still $XX available capacity additional borrowing believe growth, potential conservative generate and which can and have potential The you capital deployment debt billion over about fiscal capacity we of As we

targeted As balance AAX always, our we our debt continue rating. to to focus on maintain managing current

nearly So you amount the growth will can provide substantial see future. $XX in a our of backlog of billion

of financing. was green as $X required the through please higher final project capital its Jazan NEOM decision. figure project includes phase investment the will we as well completed the finalization this as original project note hydrogen of January include at Moreover, we for billion second in project work Texas value when still that However, the the reaches

of We show the have over slide. on capacity spent already XX% XX% committed and we updated this

in believe these great for have that to shareholder We way investment long projects. create invest We value investing run. high projects still to capacity and the have made is progress the substantial return return remaining high best in

cash our our to us determine to and trusted to capital use deployment the continue best way available and We evaluate shareholders. by options

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

Melissa. you, Thank

Asia turn results. Now to our quarter please first Slide #XX for

to new able in COVID certain supported parts impact price were of improvedX% the deliver volume businesses negative assets. China. Volume Our positive and despite by

more XX benefited industrial we quarter, This the on the from than years. region mid-sized small new came traditional to plants which stream gas across over last

merchant X% is to business. our Price -- up X% in X% which in translates total, was which

grew Although X%, operating versus EBITDA XX%. by currency each underlying weaker reduced Negative translation. about income XX% offset and currency, was a X% is overall last also by energy which a year sales obviously [indiscernible] and pass-through positive

EBITDA volume and versus impact. improved offset and price improvement. COVID income volume drove price better also both the margin as prior and than negative Operating year Higher more

COVID, relaxed rules business has infection impacted government subsequent rates China's related Although high the its to have activity.

take mitigate We to expect across We some to Sequentially which pricing continue unfavorably from and sales. the I action, impact. rise, specific China time. region spot economic anticipate which are recovery quarter, mean in power compared results taking to we last action, to benefited to the

At I European like to point, our turn over Sidd results. this discuss would to to call Sidd? the

Seifi. you, Thank

please Now Slide to XX. turn

sequentially power quarter, shows, historically for chart at are this elevated the level. Europe still a but As moderated costs

significant actions hard has costs compensate our commercial work these to to their executed merchant Our off. in price has business team paid and

are in Although close for this a recovered costs the on market we dynamic region. keeping eye have the power quarter, fully the we power higher

when merchant a in costs business energy managing As is in focus costs our primary the Europe. reminder, escalating power the

on-site hydrogen enables business usage pass-through, energy customers production. which national all almost our to us for on-site and to contractual pass cost has is Our gas our

for drove Europe's to a improvement results. the to price the please conditions price quarters, improvement as continued increased review in significant worked operations. regions Successful our XX% results. to Compared last implement XX% customers we prior actions, to challenging have XX pricing. hard in our Europe for was Now for turn hydrogen declinedX%, year, in reflecting of few own the the a weaker Slide merchant to corresponding hydrogen their Demand region. Volume optimize

partly no XX%, Our it the divestment profit. jumped almost up higher Russia. X% costs in strong was price. business merchant up was while to to due natural due nearly to Operating XX%, pass-through lower, income had business of although was gas our due cost in EBITDA primarily impact Energy

each XX%. EBITDA, operating Although and than more unfavorable currencies reduced income by

than more This the the drove the to primarily favorable prior prior which by higher points. margin vehicle Price unfavorable basis the contract in Compared cost XXX amendment the pass-through, lowered energy margin net due increase. of merchant EBITDA was XXX was point quarter, about and to this quarter. a quarter volume basis

Now segments. of like Serhan, other discussion to the call turn I to Dr. our would over a for

Sidd. you, Thank

X%. Now please a our improved turn a the the despite to effect Slide This by increasedXX% in region review results. of weather merchant business. the XX December. is in Underlying sales Americas equivalent of Price adverse for severe XX% increase to for

Our has prices team from agreement, which the cover results due a X% will primarily benefited grew cost. in short-term to the and next Volume the better new for the Americas quarters. higher also volume on-site, to successfully merchant energy raised few benefit Americas

equity the Mexico unfavorable as COVID basis were contributed to over Volume margin unfavorable. less was one-time items improved strong XX% subsided. of income due improved impact operating our almost than costs XXX and operating driven affiliate last by primarily also up lower volume points, the medical to but profits, oxygen because income lower income in Operating EBITDA to And year. price.

by due but previous Sequentially, Merchant a margin up strength. which [indiscernible]. X%, down improved strong was accounted lower the price quarters continued basis energy X%, three EBITDA following for pass-through primarily price around to points, to quarter. XXX was cost gain volume

with customers' next our planned expect our maintenance activity increase parallel to plan quarter turnaround. and We

This XX turn to our segment sorry. segment. I'm includes for our Please now Corporate Slide --

to need you [multiple Samir speakers].

before I'm that. the India Middle sorry, review East going and results to

this So smaller are are our income Sales please review Middle Slide India our wholly segment XX go segment. since East operating of let's and operations for modest to and owned first and in India East in a size. Middle

Jazan venture, However, gasification related includes joint ventures. INOX income is venture, Air to Products the our EBITDA other and significant, equity power joint India and joint the it segment's the affiliates'

and but For maintenance was sales an the income activities. acquisition quarter, last benefited operating year, by partially land versus offset

associated ongoing last finalization net the first due the to power declined the to by gasification Although profit quarter year. equity our ASU region's and income venture venture $XX share with the the the joint primarily joint one-time of results, Jazan of million in affiliates' Jazan added benefit

power As of Seifi successfully the begun mentioned project, before, and the income have in additional second completed the have we second quarter. we receive to phase Jazan and gasification

of XX our our segment. sales segment businesses our Now well managed as This as to equipment corporate Corporate centrally please Slide functions turn and for costs. includes

to equipment non-LNG major segment. historically sale For of grown but become our activities anchor, been has activities, contributors business recent the have our project LNG our also related in to this years

timing cadence of and results. of can and the activities sales segment vary recognition The profit project

ongoing also to Our support effort the has managed centrally increased costs. our corporate strategy growth functions and

quarter, to the year, of segment and profits activities. due the than were primarily project last For lower equipment lower sales sale

growth strategy. We add resources also support to our continue to

As LNG mentioned recently. for up picked projects before, inquiries have potential

to projects comments. develop. back to Seifi? I signed return in However, to the provide additional however, excited, that would have new and call this quarter to over projects. Seifi sign hard We're these his like new we At point, working closing time one to the agreement take

you, Serhan. Thank Dr.

please global for remains the Now economy turn #XX. to outlook uncertain. Slide The

Air the by strategy the we have stability prospects remain and despite as our confident Products is for in the we capital business seen. fiscal that deployment you that the year unchanged we our of have uncertainties exists world. guidance in XXXX, robust and our the future supported Therefore, have in However, significant left which

is weakest For 'XX, the fiscal our of second quarter year which quarter. usually

that the to of up year, the $X.XX, $X billion Jazan our including billion $X.X completion approximately per the to year. CapEx earnings last for XX% project is We X% share see about. to $X guidance at billion still over the Our $X.XX just we for talked

Air that It when successful the my We company collaborate bring that the the At only so our emission. view be to committed and include significant to enterprise people to long-term in are describes and Products, solutions together [indiscernible], enterprise #XX. our our earnings energy, very mission as this turn an sustainability environmental in Now call innovate for Slide presentations. most the please is people and motivated slide a world's can they to clearly challenges. all can

diverse XX,XXX more Air We they inclusive people help belong to culture is goals. than and and motivated are toward better Board feel every I that and and and uniquely and continue that transition the day. a our a to Products to future, efforts build matter our are cleaner to believe positioned achieve we are putting each

are pleased Operator, very your are for answer we we Now ready to questions. questions.

first will We with Instructions] [Operator go Parkinson to Christopher Mizuho.

prevailing Great. you macro just uncertainty you the current where regional assessments the the can businesses? Seifi, globe, operating Thank for just well as given rates merchant Thank the you. so give as think of across you stand much. all your you us that's

comes look saw world, and we a in the my out it how the the -- obviously after Chinese in customers. wait much, own the we few the Thank Year. our And to Right to now, very circumstances feel you keep happen Chris. predict very we about our running But Right is very now, difficult next our about we Chinese what to plants service bit to New and view have than Chinese our operations expected. as first it's quarters. little see economy is I the economy weaker obviously, going quarter and confident around ability on current under the

but We rate question expect bad very would of well-positioned disaster the just We or are any of any improvement news, a don't that there. it's of be? kind how

standard action they are announce, said, contributing. projects, have increase smaller We projects and have on they are coming benefiting we that are to most usually XX, but XX are from that important, we we as I the gas taken don't and prices they industrial stream, fact

So we feel deliver that to we in will on general. be able Asia

okay first should economy the we gas now, you expected got translates pricing Europe. in prices that the have think very we we've Power weaker have for price which energy was seem to actions the XX% big, stabilized, the to to got almost about we overall, too increase natural merchant have But in we right Europe, got in the XX% always than U.S., company, prices side. in is increase, we prices Latin XX% almost quarter, yet. we stabilized. saw it overall a respect But so be not last quarter. our But -- U.S., overall,X% in And again, much. the X%. price on don't America talk whole -- In

confident we So be we feel you deliver pretty we that able overall, for the should year. have to forecast that given

to? believe investors materialization HEICO the something in that facility else on attention just that Is next there there Is there That's are anything as you. just IRA. opportunity And missing? has helpful. of your several and digest over just paying that's, specific follow-up, we Thank a the Is opportunity to had given the key quick now you say, terms retrofits? team an years that to all that investors be Products any should let's Air

for read our number have on very reduced want That's can we IRA Air capture two There But everybody carbon that gives much existing don't at Hi, we on that: prices. Number COX benefits question. our sell that and put the will a too higher to one, Chris. good an we we benefits us follow-through that I that. because comment two, is hydrogen one, number very, the did law lower can a facilities. opportunity emissions; carbon definitely to opportunities is, is that Products about the

definitely will do We that.

IRA, was had capture. for we we which the We that project announced $XX. the on Then Louisiana. IRA, COX benefit did [indiscernible] benefiting the the We've before IRA which that the been the economic project IRA $XX was accounting with in are before about project from on no space,

returns the $XX of projects will we green amount on So do additional then in enhances States. the significant United project. that that And

Northern green We and IRA The produce definitely the Texas are United hydrogen green on project hydrogen to did announce other in mega for $X for States. credits we projects in the working production.

that investments make fact it makes also attractive renewable generate facility, power credit the you First, if you you for an these U.S. in very that make to get the the integrated

Coast because who something to you advantage Gulf the our the and hydrogen. already do and take in people the things pipeline our do know-how with well-positioned with extremely can other that with capabilities can cannot are with credit if anybody We do distribution our of

very hydrogen, the of the knows I companies the then around hydrogen. run of to produce and hydrogen. green I'm plant advantage produce to mean in do position people electricity hydrogen do who registration. the to other what what can you take we a build Therefore, to few with with say, very company. are IRA Air unique Products one going okay, the is But and do full a

That very We good has news forward that the And a to take pleased States. United is that, very the with countries was for other us then are step significant that. prompted action. in very

think you because announcement to they of a European that an things And of day obviously, are going be have €XXX or that, promote yesterday which we billion global from about are would, I program us Union the kind to good very before saw the for the same a company.

Okay, so very Seifi. much. Chris. Thank It's helpful, you

you. Thank

take Bank. from Begleiter We Deutsche next with question will our David

project to this the you what the is slides, expecting Anthony David. morning. for changes capital the your you of new NEOM, [indiscernible] announced structure your in when the mentioned on costs Seifi, return first and July on Good you capital project is versus contributions you. Thank were what on This in XXXX? and

take and and project going because investment. you on and that thing the to the sell at take that thing the money the don't at I that, we the to at that is look don't return look return are and Well, three how on a return the want the offtake have project. is we to speak the partners, we look disclose and that that take for is I on a on make But total them have the

what be return So you expect we to $X.XX every going that front, which in is of that income. should on the have operating a on that about given is you accordance with dollar guidance, they invest, for

at from have point to supply So chain of Air Products' view. you look total

total don't anything. product, partners on doesn't the whether the In specific supply to that to chain. not. decide because terms my I the that mean is disclose that want of for to us, return or they want disclose that It's to up

that the price negotiated thing on important focus it same ammonia XXXX. at that the to are need The fact that in we off-taking the was you is

Okay?

Yes. price the would be you Understood. purchase, how did think versus do not on much project if ammonia, as the follow-up in stream? comes today this you on lock a when to And it green higher

it I the on being expect mean, would you depends partners. is but what because lot said, to capitalized. as a about our But negotiated it you -- with have Well, have been I different. capital cost, operating of significantly additional I don't costs talked

want just on So I have chain. supply don't two view, there. necessarily look respect I total said, the But I from disclose of the them. -- and point need But the that you product I partners, I to affect [indiscernible] again, doesn't a other project. at don't return as financials their to

okay. [Indiscernible],

much. very you thank Yes,

you, Thank sir.

take John will Capital next McNulty We from our question with Markets. BMO

excited flat. Yes, the the taking good Seifi, of for seem morning. remaining Thanks questions, you for my basically Seifi price so. about offtake NEOM

that thought now thinking should this right interest they about you be Are seeing So buyers that? would at why is that I from you we signed than time how be are what you guess, I contract? higher into originally the guess, that?

billion. that, -- price $X.X reason Therefore, the a anything can said I I'm that But that that product. this significant Well, in we not. at must keep $X that's it. I that The It as they because mentioning get. I putting up. guys favorable sure And want the that think gone obviously, thing the interested is in these have the make like one did to would just offtake see of of well, interest most it's businessman, way billion, people we buy don't ammonia to price we particularly think now

you at do better They financing look project our this some and have John, see they have thing, with thing us of the, project, I than are other it it. -- just in know And giving [indiscernible] biggest this the finance this at the bidding money. they world, looked one of banks looked to

a and they they back. this So and project going to a money good prospect, good their were get all guess, I think is

You what I know mean?

it different Yes. angle. from looking a guess, maybe sure. No, for at I slightly

total as when originally actual when EPS of that. the project little now I think take capital you overall, being you financing the less that's changed distribution about some that about production does put guess, place? the with economics the project the the like think on more, I thought side the is the to to well relative has of equity of -- involved. around and out bit equity what project guess as returns when side how but think the you in about to financing, tend juice it work it So there's to benefit the I that tied the a because

because has cash obviously I'm production improved less side. it on putting the John,

long price So off. is same. the And we as are the as ammonia of bit

So an improvement. we have made

billion We that going another $X other do invest have were we things. to to

much, Got it. Seifi. Thanks very enough. Fair

you. Thank

recently large well. thank Roberts ambitions hydrogen will looks the includes might for Since project that your you Or how We announced help it in well? John has Products, Credit play that would have the as Coast as us in blue think to and And understand, with a about a customer refiners hydrogen ExxonMobil there? next are and bid like customers merchant we how project market? Suisse you. potentially Air for Gulf ammonia ammonia go it do

reduce significant used project that emissions. carbon amount into is be that Board. to Well, will are to they their purpose understand and Exxon that of If of do. ammonia is strategy business they I But to this replace competitive going a is and produce we to whole gas then want I natural Hydrogen I that can't to their a to competitor. of they're an going to additional are merchant what they an the make Exxon comment on going because using get have their mean, from ammonia blue the -- decides the what extra sell,

they do that, if merchant. much to So have make hydrogen do extra now to so amount they are going

I don't But they do people other fine. you want get have about said, things these do. thing will doing sure as know, it's what to that. I'm I [technical do attracted don't would to what and and have them to difficulty] all of one are on any visibility I We we announced to projects. they know that talking That then total details to cost out to and is them. actually have that. it fee. add which the and But doing They a all themselves, their fee, until it's they what is just then costs the they're they doing the do wait find to They is up decided a they target of these

the get the you since going then premium hydrogen hydrogen on hydrogen Alberta you'll plant the do all be of project existing that some Or think plant? And out up of is sold the be of Okay. the you first big will think a to gray online, do really blue hydrogen with market.

the our What mentioned [indiscernible] customer project is in is project the interesting Canada, that you thing Exxon. for that

premium out are us us We subsidiary, that ancillary, not of premium, going to they Chemical significant Canada. we they are now, giving diesel prices. they hydrogen give California Exxon are, almost sell in inferior a renewable significant in have blue are they're result, produce I'm that premium a their use buying for blue at a publicly, the from putting because going which through as the them is to sold and so to hydrogen that are getting the new right And their they announced to anything which we yes, Limited, project, this

Bank our Thank with next Steve America. from Byrne you. of We'll take question

Yes.

it in Could pretty sequential costs and have question for both decline pricing is you that those Americas. some of Europe had how You had a gas in in regions. in My you much price hefty merchant regions? dropped given increases some see surcharge in

power question prices in some very on expect that as some increased listen we that time, situation decrease is to do. us recover always we make the the prices. We would obviously the And you're What will based those cost. and go Steve, supply-demand of order in power down, point if to have the then Obviously, relevant. we costs customers to asking, a the at decision

So of it future, price result bottom on there a is therefore, an impact possible. the declines then the in theoretically, be declining, that shouldn't But price our run. as would if power be

on still could like couple it this you It Is more NEOM. unchanged just from Could you And seems a design produce tons Okay. capacity also of changed, the lead of changed? -- of X.X gigawatts electrolyzer an follow-up price battery a this enabling ammonia. to or million backup. the to is project? of ammonia has you Has that than have it

Steve, general you're which a subjective cloud discussion good very event. asking is in question,

that first We -- is doing are this significant we for the project are green.

a to do capacity. wind of the significant giving we want electrolyzers the of that We an could don't and but significant more $X.Xbillion. are might there a these than but and on installing you capacity up I the an But don't side. ahead you. be lot actually right wind upside and want I end amount of Thank electrolyzer are obviously are understand to that, that solar upside, of ourselves. we the get there track a might be What us I And and promise see. installing in have we amount making personally solar wait to capability and

you. Thank

We take Barclays. next our from Mike will with Leithead question

Great. Good guys. morning, Thanks.

the that still walked there engineering us works give left. of around just XX% on on new in, $X.X is some the -- question CapEx is how the number billion comfort or is about First kind you obviously, Can of number. oven framework so,

going what the again, that move to not Just sure doing in number years. three to any make next comfort around now is you’re say,

At that pretty that’s about just I an can work I enough this contingency stage. I number there. at that nothing we done but pretty had But point feel good say And off XXX%, a think that have this we good number.

it. Got sense. And then Makes …

we time don't the project a on sure number. We doing is good but lot we -- comfortable we think [Indiscernible] I engineering to charge about underlying, page that pretty have the who engineering, [indiscernible] haven't for project. and the feel when that all the add additional financing, is pretty this we that that, of are the But good go a orders in all Besides number that. major financing back stage. making of at of spend our our made of

for the that's basically, that's like element even then green much and So for also also for being replaced. construction

Great. come you. obviously or covenants sometimes just with as quick of new can structure, distribution. restrictions around Yes. the a follow-on with that level some Thank And capital

they get the match about from there their cash are can cash the around think Or or to dividends back we project? restrictions products. income? should how constraints just the So some generally Should you

go cash is, debt will servicing from to the the to a the hope which have and the that the come itself, [ph]. cash we'll project that extra there major that, there shareholders. That's I For project if flow income will any the back obviously is of structure

Got you.

you. Thank

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

had a volume large growth Yes, remarks, year, new But good the like region prepared you that past sounds a over I healthy to comment made With you morning. in you number. fairly in of Asia, think the regard XX the X%. which started assets

might you context hoping that us. was put be able into to I for So

expect amount? elevated contributions would profile you or those ahead, would from Asia? that Looking in startups remain How to regressed shape the by describe of you some the

is Products, that's think Kevin, question, times, only a to did Should our this people the opportunity for is Air quite thing think project. comment. very honestly, we other I a that morning. make do at -- good me good At good [indiscernible], a make

we business, We have good our our base are in making and base business. progress

million fact our generator, [indiscernible] We do these time getting share every had that X%, Asia. X% the from about deliver have on What activity you them but things don't is it We economic up. announce a to these of X%. back about China was are it XX almost stream the of add in -- nitrogen they that helping despite has the they in we know X%, doing products. are $XX small of We are all us increases to that gone volume

for getting or benefit flat that despite continue to us us for deliver up the China might and be slowing we are to these the the any things future help So good region results to help weakness that. fact that make therefore, will And down. of in

very are going things. They So it. the we excited good to about and are contribute, these are

made benefited new short-term did a from I have? might Hey, that that? thank comment you for long persist? Can on you then America, impact it secondly, a you that volume how agreement. in What that. And if North And may, elaborate

to serve, serve on, we Melissa? don't so opportunity on But Melissa people other would the benefit. couldn't to of the an that because did over get to disclose name we but did it I want to could I and expand customers that, so like customer we Well, that turn get

Yes.

So thank you.

a the So from agreement in X% perspective the was increase in the volume. Americas, of volume about that

be Now next we will quarters, see consistent. that pretty over four the

we what attributed see to would So XXXX. that's

very Thank helpful. you That’s much.

will take question We next Jeffrey from with JPMorgan. our Zekauskas

the your much. that different production project, In it it ownership Or net same now? Is stake, you ammonia in or present is change present very had the Thanks value is one-third mind did NEOM assessment? the lower your net of value or a higher?

which are and or We're lower, of that of is financing all now years because even net expect project Good the with same morning, or doing the the I financing, Jeff. saying the value present a few better discounting was project had should we cash in we flows that about think higher the we that Jeff. be it

that's more in. you're or whole capital the -- capital Right. there's using Because more going

second is, project be in project The you project? question -- it for that have of amount a is And to Louisiana how there substantial make does to necessary ammonia for you're your that to go-forward. going much ammonia determined

that's good Jeff, a very question.

That of partnership. literally project have approximately to will produce next X,XXX publicly about our that We ton that, disclosed a day pipeline. is project

our is our registration huge that. of I is and more just it So hydrogen Then and is that over can tons possible all we blue the decide much scenario into on of that compared not put than that X,XXX hydrogen so them hey all out would can of that customers regulations the the the [indiscernible] hydrogen. want of not develops or to we on environmental pipeline the convert. one pipeline. Then Therefore, due sell do can pipeline pipeline more of than on because that pipeline that, are significantly how to of the assessing we we have significantly hydrogen there to because the total sale

to actual in excess doing what of them okay, that the means the with make will it to I can building and gray the to ammonia. Some terms we we in ammonia plant, are capacity make facility are the we would the to ultimate have And much you ammonia. hydrogen. was we then Then plants. use whatever use, into pipeline we building hydrogen and we that ultimate plant into have Therefore, is of did flexibility still of have build of an the put ammonia say, can hydrogen as no,

context ammonia The million $XXX There cause are you Jeff, ammonia of the much. million. Don't putting themselves, itself in have the once overall. is plant plant, X.X the by only infrastructure, ammonia plants that a ton

developed spare how lose basically the ammonia other cycle anything significant capacity. years. as next So going for is, demand the we then to having And forward few thing blue go obviously, we not are in the by

that, flexibility, nobody is make a So us beauty that situation we better the of can or send we hydrogen has. Because it sell we the it than but we can. And and can the pipeline. as flexibility, we can Is ammonia. through of have and has of the situation to give because we are that hydrogen, anybody as building we Products result that this that the as plan I of the can else total else have then Air possibly unique think a maximize profitability that

much how So yet? determined going make ammonia you haven't to you're

much Yes, to we're ammonia haven't determined going sell. how I said we

plants to [Indiscernible] ammonia how build? you're going many

Great. much. you Thank so

Thank Jeff. you. very you Thank much,

with PJ Juvekar our next from question Citi. will We take

Yes, good morning.

morning, Good How are you? PJ.

transmission I'm -- $X.X that lines say, et --additional for Or delayed? and is of mean Good. you sort XXXX? the that of on costs, not the Seifi, financing do cetera. cost yourself, also cetera. time to that you is What there's that on still the additional What that et scope cost scope, had inflation project, -- the you does had project NEOM going you're increased then sorry, get Does additional financing it's could billion mean? should and that I build think and

time the [Indiscernible] -- okay, over have go and you beginning, on on progress and for the build that the thinking been then additional plant. is project planning we on say, I'm is something you scope to it at this XXXX. there and The that going

the of it's be therefore, going can is there, All on infrastructure already or that. to there we and draw

do to little need. teams mentioned build that Therefore, costs, the with operating forward, of people finance, ability about the goes us that before. concerned increases going capital, as project project you start we that saves the to are other but a we you decided that As getting all will of I the bit it

But $X the Thank goal customers, benefit price. green kilogram the think you. per they gives about and industry And much you it earlier how of get you that's lower hydrogen I will to there pass the discussion hydrogen was price. ultimate to lower think of IRA to The to And that price. on hydrogen government so have the hydrogen. is

time? or So have do price on you any the evolves how the thoughts industry over hydrogen

are Obviously, P.J. and plant going I of are will the hydrogen. means you you And $X facility be that build actually we as and the said, more solar that the once integrated if you. case if to $X an get building that wind the doing, the we is is are for because because Thank green part a project. that

for get benefit a wind the also solar. You and

is hydrogen of per than more kilogram So $X. I the total translated think to

when projects, we -- we obviously are you the the getting do expect improves we So we that subsidy that returns. if turn

is of some will is of hydrogen customer achieve price exactly the the and That which can will that so P.J. what we that is people the convert. the to So have the we goal, government, pass-through that of fundamentally goal and we the goal exactly

very much. you Thank

sir. you, Thank

We with Mike our next Fargo. Sison will from take question Wells

Hey, good morning.

downstream that of the in And hydrogen XX, you new $X to about $X as up terms billion billion supply ? new XX projects number opportunities is you could supply or between Slide look between timing that chain? go XX talk about chain and on the in XX. for So Is a XX any thoughts

that are that be customers, possible is let our you Well, be have estimate was It mobility look infrastructure it need depends about number -- the you at But the to could some it. customers, like me the the just serve where on because explain. that there can could best, are more, lot a $X of you before that billion. and customers when

trucks to bring sell the You it have it, That crack have a the way stations selling today. the an hydrogen to is tank, go deliver one and and the ammonia of liquefied port, hydrogen. have gas to to

green the put they've no cost. And that Another there it because can ammonia ammonia. is somebody use that ship that develops can dock infraction and way NEOM, is as ammonia ships in case, on in then fuel then use and in no is it infrastructure there

use you you that or of Another bring build crack infrastructure trucks ammonia so and a you then somebody have put plant, and liquefy, don't chemical don't it to goes in you to that a plant customer that, you the other could a they all a then be into port, to it the and pipeline kind some for on. have and of

needed is hydrogen that the didn't much fund the So could because the infrastructure exact be than best our new. at that if a price means more qualified. billion, is very it customers. But that of trucking which significantly of of price with to more able than of kind the that infrastructure. But on infrastructure the the infrastructure more Right it be we could now, capacity the dependent is exact is estimate will depending higher or on lot the office be use $X to is selling be expensive, an to of for if build have we that less that means obviously

will okay? all itself. for it that So Is adjust

it. Got Thank you.

take Stanley. our Vincent will with Morgan next We Andrews question from

Hi. taking my on for Thanks Steve Vincent. This question. for Haynes is

and it of EPS about $X.XX cost of your that one thinking kind Just wanted quick line you. How in bridge, Thank a to other on was we about forward? the quarter. headwind should going be ask the

that, Well, other have the comment Melissa to Melissa? I'd like costs, on

absolutely. Yes,

play Americas line, the India both segment. cost India of or quarter as maintenance, components the number So into in this venture joint We sizable there. a we had as well a north other had

cost year. So and inflation, this be however, the fiscal throughout quarter. quarter. should driver is that added a in additional We that go XX%, see next this that Fixed consistent costs and down at will

you. Thank

Thank you.

will question with next from Spector take Josh our We UBS.

question. my taking for Thanks hi. Yes,

maybe December thinking and the quarter perspective. math, next super Just from some benefit I volumes a wasn't merchant maybe or your little energy when I guidance, close there's sequentially. at near-term, maybe $X.XX prices so your but a strong add come bit, on based was on those down look quarter demand down, to as

sequentially So why missing? earnings What up the I of wouldn't I guess given some am be tailwinds?

don't I think missing you're anything.

the sure only I is is to thing don't kind in we cautious that is to that it. deliver how The very part when sure is Chinese we we we and guidance, going make logic economy. correct. happen any visibility a and The come being Europe. of going have out we conservative, have don't very the European the to that currency what have Chinese know is Your make are to concerned going maybe And correct are, how prices be we just ourselves. don't of and don't why very New Year you to you you're about, that we are cautious, to we economy little maybe visibility are but That wanted of kind bit holiday. in are much say, energy we to is and ahead get of develop make

that. appreciate [Indiscernible],

Sure, absolutely. you. Thank

quickly, expected economics? that [indiscernible]? Does financing, was your didn't but second sorry, I to going more had your understand. go project the I if that change a I'm cash in Canada was Sorry, you ask ahead, anticipated that

Yes.

for So that. thank asking you

to So financing project, on to have no that project clear, Alberta we be project. our just associated

Exactly.

the we difficult project by because project. there's [Indiscernible] was financing, and and [indiscernible] complicated the to offtake it's pretty On so do that. and we easy so project can very calculate because finance. on, an on, price project a NEOM

have cash decision [indiscernible], that we that in options announced, probably finance that. [indiscernible] own option will of project made step, that Air look on Products have Now step we $X the we our the cash. which we is at is the because we most our by using project project But the a has, with the billion

Air and raising market bonds the as We raising Products by they have have of money going project the option the then option finance. to of and

So take come we consideration solution. everything possible into and with up the best

have new, bonds, for so finance if thing. gone going decided decision project partners. interest with that a on, but we increased was partners was So a other to project the Obviously, than with and and the we finance, higher we best are with pay joint

we in finance. the Texas, will probably for do Now project project

do -- in department trying all we probably depends treasury that decision. most It project busy all finance those is these questions. this of things, we optimum ask and the and the would. our Louisiana, For make assess department of and something keeps our we to and

Okay, thank you.

operator? more Any questions,

take from with our Favre question Laurent BNP. We next will

Okay. [technical difficulty].

My all. rest morning, Good on Hello. the is inflation of Okay. inflation the question or risk for the backlog.

less. So if there. the billion, if $XX.X was risk from the one we there's I talk that you about take $XX about billion could wondering

maintain $X.X flexibility see billion adjust returns? costs extra on whether to have billion for also or you We of prices Thank selling you. that and to

that Well, much announced our have than we are of of other obviously, stage thank projects you. a them new. rest are actually The some projects, in the advanced more

there to the we project think let's that. in But So decide all there manage a inflation. on But will of something up, we just goes some that the that capital projects, take cost I if out a struggle with of cost for is price is ammonia don't inflation of cannot feel is the they project and facility don't or Louisiana, their I that The accordingly. want because in the caused that then deny and our significantly Louisiana. inflation hydrogen we mean, the good thing pretty have will it

those projects.[indiscernible], to So to just about a for the price now most committed have additional but sales the have of we a that. not we there product that project keep is things type and are of

can manage. the why we that's thing So

thank Okay, you.

one for Thank time you. question, Operator, more please. we have

you. Thank

We from Jefferies. will final Alexander take Laurence with our question

Hi. [indiscernible] This is on taking Thank question. you my for Laurence. for

a given pricing merchant a of a we'll forecast Just just recession. recession. to wanted how the that I fared likely last and be sense during get entering volumes

[indiscernible] appreciate Thank overview that, I would you. of If you can it. give

obviously results our was that very fantastic action a results down, seen That our XXXX you last in at during costs, down can have doesn't get by because question. usually take question. andXXXX, We results up thing are picture -- quick gases [indiscernible]. one and the take can held second is therefore, and COVID. over XXXX top. go the half Industrial what business that do always well. our during affected saw on resulting And because we industry our significantly. that and go was our definitely Good I control they pretty a That’s actual the answer is during because we The you'll really and said you they of in recession last XXXX we XXXX business, And to XXXX, but volumes you look not another XXXX have and recession see have

Thank Okay. you.

[indiscernible], very again your I with for our discussing We call interest, joining forward quarter. Thank we you and like our joint to next would look everyone appreciate much you to today. results and

all you. of earlier, all the stay and you. As I best please safe and healthy said Thank to

your conclude Thank We appreciate you. today's That call. participation. will