Q4 2020 Air Products and Chemicals Inc Earnings Call
Good morning, and welcome to air products and chemicals 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., Simon Moore, Vice President of Investor Relations.
Thank you Leah good morning, everyone welcome to air products fourth quarter 2020 earnings results teleconference.
This is Simon Moore, Vice President of Investor Relations. Please.
Pleased to be joined today by sales you'd get sent me are chairman President and CEO.
Scott Crocco, our executive Vice President and Chief Financial Officer.
Sean Major our executive Vice President General Counsel and Secretary.
After our comments, we'll we pleased to take your questions.
Our earnings release and the slides for this call are available on our website at air products Dot com.
This discussion contains forward looking statements. Please refer to the forward looking statement disclosure that can be found in our earnings release and on slide number two.
In addition throughout today's discussion we will refer to various financial measures unless we specifically state otherwise when we refer to earnings per share EBITDA EBITDA margin or a C. E books on a company wide and segment basis, we're referring to our adjusted non-GAAP financial measures.
Adjusted earnings per share adjusted EBITDA, adjusted EBITDA margin and return on capital employed.
Reconciliations of these measures to our most directly comparable GAAP financial measures can be found on our web site and the relevant earnings release section.
Now I'm pleased to turn the call over to safety.
Thank you Simon.
Good day to everyone.
As always thank you for taking time from your very busy schedule.
We'll be on our call today.
Before.
So this quarter.
I would like to change we're talking about 2020.
Please turn to slide number three.
I continue to believe.
That's true tractor.
Leadership individuals.
During times of crisis.
Unfortunately, yes.
<unk> continues to be challenged.
<unk> 19 crisis.
Oh no.
Hi, it's always been.
Safety.
Yes.
Hi, Pete.
It continues to provide them and that's just a.
Quick.
And they're right protocols.
Oh, <unk> safety and helped.
Hi box your tank car employees for fall doing these procedures.
Watching hot.
Sam or customers.
Secure significant projects.
Plunging conditions.
Well its coal.
Crisis.
We have not reduced staff.
No they do use.
Salaries about.
Hi.
Hi metric.
Course of action.
Oh people.
You know, what you're doing a great job.
She brings all of our 750 plants running around the war.
Mean bought.
Our corporate <unk>.
This functions continued to run smoothly.
Typically.
That's great.
Great just needs.
This time crisis.
Also increase our commitment to our local communities.
Our voluntary.
Financial support.
Oh gosh, there's the small.
Oh, yes.
Yes, well.
I'm sorry.
Hey, Steve.
As we have mentioned before.
In addition.
We have maintained our focus on.
Hi, Shane Glenn.
Slide <unk> volume.
Yes.
And as you can see.
Our midstream business improved pricing.
Oh good agents.
The bad Daddys trials.
No. So the $7 billion NIE, all carbon free hydrogen project.
They should be in naval air products.
Like <unk> carbon free hydrogen.
<unk> buses and trucks are on the board.
When it comes on stream in 2025.
Yes that solution ready for about looking project.
[laughter] demonstrate mastery.
<unk> scale.
Possibility.
Transportation system of the future.
Based on a totally caught one screen source of energy.
He's a clean harbors.
We also signed a long term contract.
Oldest scale coal, that's an old synergy in Indonesia.
Yes significant project supports and give me just focus on energy independence.
I didn't produce.
Tell instead, you Mitch on all that on the screen in Twentytwenty four.
We are very excited about the potential.
Additional opportunities in Indonesia.
Now please turn to slide number four.
He continued to create.
They got project should all the war.
That's helped our customers need most.
Pressing needs for clean energy and environmental solutions.
And do you expect these projects to drive our growth.
Decades to come.
Yes, you.
These projects include that <unk> investment.
In the United States for the.
The Gulf Coast ammonia project in Texas.
The acquisition of <unk> operating hydrogen plants, and the log jam hydrogen supply agreement.
PBF Energy Inc.
California data there.
I'd Love to go onsite projects for electronics manufacturers in China.
That leaves you.
We also began construction upstream <unk> plants in the Netherlands.
I brought on stream.
As Steve indicated before <unk>.
Cold box, Louisiana to supply products to all U.S. Gulf Coast pipeline system.
The delay do you like it to be selected for these large projects.
Stretching our customers confidence in our complete solution.
And the best safety on time.
<unk>.
Now please turn to slide number five.
Our industry, leading and Angie Tech knowledge.
Selected for major projects in Mozambique, such that Jerry.
Our business model supports.
Nato's our strong financial position.
I'd be successful these days about $5 billion up.
Yes.
Sure you noted that you put out exciting growth opportunities.
The significant balance sheet capacity remaining.
And are continuing to build strong positions in global markets.
Well its focus on clean energy.
We see gadget vacation time.
I don't capture.
Creating profitable growth opportunities for <unk> <unk> <unk>.
For many years to come.
Strong cash flow.
Continue to.
Complements our growth investments.
Chad I think cash directly to shareholders through our <unk>.
I'd be made new commitments to sustainability.
They bought a bit.
Hi, Scott.
Speaking about in a moment.
No sense slide number six.
I'd say very pleased that our team stayed focus I'd worked safely throughout this challenging years.
We obviously always want to see no actually that's or incidents.
But I'm pleased to see improvement there since Dr., Scott Jean safety performance.
They bought it didn't get slide number seven eight and nine.
You can see our goal.
Management philosophy.
Five point plan.
I'd be I shared with you many times before.
Well I'm not going to go to the beach heads up each of these are sites. Since you have seen that many times before I have included them as a continuing reminder.
AD products and they bidding focus on cash generation and implementation of our that'd be fine strategy.
No we said to slide number 10.
Which is our high expenses.
They are obviously committed to delivering superior financial performance.
I don't people also know they are supporting the Hyatt <unk>.
The boy they do every day.
Oh, Hi expenses.
Products.
<unk> people.
Got it all.
All over the board.
So that they can collaborate.
That'll innovative.
You know they do have certain actions to sum up the most significant energy and environmental challenges the all states.
That is our highest papers in.
Spies out cheap.
Drives us every day.
In support of our highest surplus.
Consistent with our focus on sustainability and in Parliament.
On slide 11.
You can see our new diversity goals also.
Like 2025.
And product aims to achieve at least 28% female presentation in the professional and managerial population globally.
And at least 20% I noticed you didn't present patient in that same population in the United States.
Our growth projects give us a unique opportunity.
<unk> diverse talent into the company.
And as we measure our progress.
Continuing on the stretch and drive for <unk>.
Got it cool.
He also since the launch and he got I've missed.
Legal advocacy program.
<unk> and identity discrimination matters.
Sure. This is another program.
AD products support employees and their dependence.
Well I think its subject.
<unk> two such discrimination outside the book place.
He's got a few specific steps you're taking to.
Continue building our culture.
Inclusion.
I'd be longer.
Now please turn to slide number 12.
Then you can see our their 30 goal.
Which means that dean tend to reduce our carbon emissions intensity by one did like 20 parity.
As I discuss the topic <unk> tender.
This school focus is on reducing emissions then it gets to the amount of energy that youre delivering to the board.
Yes, what do your line business its strategy.
Yes, Chad and measurable.
Oh just accountable.
Delivering.
Now please go to slide number 13.
Then do show you the key opportunities we have achieved that they're like there you go.
One very important point is that this school is enabled by <unk> consistent without profit if the business growth opportunities.
Carbon capture.
The hydrogen no carbon projects operational excellence and renewable energy.
All support our third like there you go.
Now please turn to slide number 14.
Which highlights our key gadget vacation projects.
[laughter] fundamental drivers for gadgets occasion <unk> Valley.
Daddy's I live in today.
Countries large companies around the world continue.
Junior to focus on gadget vacation.
There had been done.
Not sure these sources like coal and Coke cans, Dick laundry volumes.
All of these no bad you raw materials.
Hi, dad chemicals transportation fuels and energy in a sustainable manner using gadgets he cage.
This morning, I think it's appropriate to a specific they give you an update on our largest gasification project the acquisition of gadget buyers and power plants from Saudi Aramco, Inkjets and Saudi Arabia.
We continue to book debt agent they come.
To complete the financing.
Closed all the open contractual terms.
What I did is all of that COVID-19 situation.
These activities are taking much longer than we anticipated.
Therefore, I would like to repeat on this call.
What I said on another public call in June of two without Twentytwenty.
That is my strong advice investors.
Please do not count your chickens until doubt hedged.
Related to this acquisition.
We've had already close on this acquisition if that Tencent conditions of the final contract.
They expect that fund and sharply Terence Audi line beat our expectations.
Now please turn to slide number 15.
You can see that you have grown audit E. D. S. These ethnic their share all that 10% on average.
The last six years.
And then slide number 16 is that in mind there.
That bought continuing to develop.
These exciting growth opportunities.
Also grow our dividends.
10% on average.
Over the last six years.
Yes. It continues on exactly how they didn't get dividend every year for the past two years I'd be co by about $1.2 billion in dividends to our shareholders. This year.
I find out the slide number 17 shows on TV dot margin.
And she's obviously my favorite slide that it shows that the margin is up over 1500 basis points since 2014.
And more than 40% EBITDA margin for the sixth consecutive quarter.
Despite the COVID-19 challengers this year.
I would like to tank auto bought dedicated and hard working people around the board.
Well it is staying focused on sales the operating more than 700 that you can sell it. These are on the board I said being got customers. Thank you again.
Now I would like to turn the call an older Im instead as Scott Crocco our.
Senior Vice President and Executive Vice President and Chief Financial Officer.
Like the financial overview Scott.
Thank you Sandy.
Well since you stated earlier, our company continues to demonstrate our strengths.
The challenges presented by the pandemic.
We have made significant progress in committing capital.
Nelson Mega projects in gasification and the hydrogen for mobility.
And completing a highly successful $5 billion debt offering.
Both of these will support our long term growth.
We also won several world scale, LNG heat exchanger projects, which will add to our profit over the next few years.
Meanwhile, our business, which is more than half onsite.
You need to deliver profit growth and stable cash flow in a difficult year.
Now please turn to slide 18 for more details on our full year results.
Oh profits and margins grew.
Despite the adverse effects of cold that Nike.
EBITDA was up 4%.
<unk> EBITDA margin increased 200 basis points.
Sales were roughly flat at almost $9 billion as the combined 5% gain in volume and price were offset by non operational factors.
Specifically, the lower energy pass through and the India contract modification together decreased sales by 5%.
But had no real profit impact.
The volume growth was primarily driven by acquisitions.
New plants and higher sales of equipment activities, including LNG.
Which overall more than offset the negative COVID-19 and back.
We estimate COVID-19 reduced our sales by about 4% and.
And our E. P. S by about 60 to 65 cents for the year.
Price improved in all three regions and across most major product lines.
Price was also the largest contributor to the 200 basis point increase in EBITDA margin.
Our as he was 140 basis points lower negative.
Negatively impacted by the step up in the denominator from the additional $5 billion of debt.
Now please turn to slide 19.
Our full year adjusted EPS from continuing operations was up 17 cents or 2%.
Driven by the strong 77 cents per share increase in price.
The third consecutive year of price improvement.
Volume declined 19 cents as the nakedness COVID-19 impact was partially offset by acquisitions, new plants and higher sales of equipment activity.
Different business mix caused volume to be positive on sales, but negative on profit.
Again, we estimate cold at night team reduced full year EPS by about 60 to 65 cents.
Against this challenging backdrop, we continue to add resources to support our future growth.
Maintaining our facilities.
This is one reason why our other costs were negative 38 cents.
Currency was unfavorable seven cents, primarily due to the weaker Chinese RMB.
So in peso and South Korean won.
Our joint Ventures also had strong underlying business results.
Equity affiliate income and non controlling interests together added eight cents.
Interest expense was 10 cents favorable.
We adopted new accounting guidance this year that moves about $9 million from interest expense the non operating expense each quarter.
The impact of this reclass lower underlying debt balance and the lower interest rates were partially offset by the cost of our $5 billion debt issuance.
Non operating expense was 15 cents unfavorable due to the accounting change I just mentioned.
And a reduction in interest income.
Our effective tax rate of 19.1% roughly equal with last year, and we expect an effective tax rate of 20% to 21% in F y 21.
Now please turn to slide 20 for a brief discussion of our fourth quarter results.
I'll start by commenting on our results versus Q3.
Volumes grew 8% sequentially some.
Supported by increased sales of equipment project activities and improved merchant volume as economies across the regions gradually began to improve.
Price also continued to improve up 1%.
EBITDA rose, 6% sequentially, primarily due to the higher volume better equity affiliate income and favorable currencies.
However, these benefits were partially offset by higher costs, mainly due to additional growth resource investments and increased planned maintenance, particularly in Americas.
As we mentioned last quarter. Some of these customers planned maintenance outages were delayed from earlier you know why 20.
And he EPS was up 9% with.
The lower tax rate, partially offset by higher interest expense.
Now turning to our results versus last year sales of $2.3 billion were up 2% driven by price with improvement in all three regions.
This is the 13th consecutive quarter of year over year pricing.
Volume was stable as the additions of new plants acquisitions and increased sales of equipment activities compensated for the shortfalls attributable to cope with 19 custom.
Customer plant outages at the end of the short term contract in Asia, which contributed last year.
EBITDA of almost $940 million was 2% lower than prior years level, driven by business mix and higher costs, partially offset by favorable price closely and equity affiliate income.
Volume was flat in sales, but unfavorable in EBITDA due to product mix.
EBITDA margin remained above 40%.
This is the sixth consecutive quarter EBITDA margin exceeded 40%.
Operating income was down 7% greater than the decline in EBITDA due to higher depreciation on new plants, including the PBF hydrogen plants that we acquired earlier this year.
COVID-19 reduced overall sales by about 5% and.
And he P.S. by about 15 to 20 cents.
Now please turn to slide 21.
Our fourth quarter adjusted EPS of $2, a 19 cents was down eight cents per share were 4%.
With the unfavorable volume and cost, partially offset by favorable price and tax rate.
Volume was unfavorable 22 cents, primarily due to cold at 19.
Cost was unfavorable 13 cents as we added new resources for future growth and increased planned maintenance.
Currency and foreign exchange contributed three cents, primarily due to the euro Chinese RMB and British pound.
The effective tax rate of 16.8% was down 340 basis points and has a positive nine cents impact.
This was driven by higher share based compensation benefits and a tax benefit associated with the PBF acquisition.
As stated previously we expect our effective tax rate to be around 20% to 21% in fiscal year 21.
Equity affiliate income and non controlling interest together were up six cents due to strong underlying business results.
Interest expense was three cents unfavorable as the cost associated with the additional $5 billion a bed was partially offset by the previously mentioned accounting reclass.
This reclass also primarily drove the unfavorable four cents in non operating expense.
Now please turn to slide 22.
We continue to generate strong cash flow underscoring the stability of our business.
Our higher EBITDA supported higher cash taxes, driven by timing and higher maintenance capex driven in part by spending on our new corporate headquarters.
For the full fiscal year 2020, our distributable cash flow of $2.6 billion or about $12 per share is comparable to prior year.
From a distributable cash flow, we paid over 40% or $1.1 billion as dividends to our shareholders and still have nearly one and a half billion dollars available for high return industrial gas investments.
The strong cash flow even in uncertain times enables us to continue to create shareholder value.
<unk>, increasing dividends and capital deployment.
Slide number 23 provides additional details on our capital deployment.
We have substantial investment capacity to me.
Some of the spending in our backlog extends beyond up like 22.
And we will generate more cash and borrowing capacity as projects come on stream.
We expect to rephrase this potential for you in 2021.
As you can see we expect almost $18 billion of investment capacity available over the five year period from F Y 18 through F y 22.
The $18 billion includes over $9 billion of cash and additional debt capacity available today.
About $3 billion of investable cash flow between now and the end up like 22.
And over $5 billion already spent.
We will continue to focus on managing our debt balance to maintain our current targeted a two rating.
With a few new project side and some coming on stream, our total project and M&A commitments remain around 12, and a half billion dollars with about $11 billion, we may need to spend on them.
So you can see we've already spent 30% and already committed over 90% of the capacity we show here.
Now to begin the review of our business segment results I'll turn the call back over to safety.
Okay.
Thank you Scott.
Before I talk about Asia, I would like to make a few comments about.
Overall performance.
I'm very proud to say that our teams have performed exceptionally busy responding.
Responding to the current crisis.
All three regions continued to deliver strong pricing and.
No for your EBITDA margins increased in each geographic segment, despite significant COVID-19 impact.
I have full confidence that our teams execute.
Our business strategy and run our business says very efficiently in the coming months now.
Now please turn to slide 24 features our results in Asia.
Compared to last year, our fourth quarter volumes, there are down 5%.
Mainly due to the continuing at this effect of COVID-19, the impact of a customer outage and a short term contract that contributed to last years.
Pricing was positive for the fourth change now.
Back to the 14th consecutive quarter and EBITDA margin for the quarter was 46.3%.
No I think it's appropriate if I give you more information about the customer outreach that I just mentioned.
In Asia.
Our largest customer user when coal to the quick facility in China.
I stared successfully operating.
For over two years.
Customer schedule planned shutdown and I liked your steps planned shutdown updates instead of Jeep <unk> I expect that maintenance tentative out.
Editor, yet 2020 actually in June Twentytwenty.
We successfully completed this major maintenance activity.
At the end of September.
So that.
That is the negative impact for our results that I just mentioned.
In the last quarter and the plant was basically down or for schedule maintenance.
I also would like to add that as of today that I'm speaking of course.
Justin that has not yet for muddy asked us to do that.
He a stock that plant.
Two COVID-19 and market conditions.
And he said that your day in that she has stuck up this facility will obviously have an impact on our sales to this customer in fiscal June 20, Twond coupon.
I'd be are in the process of working with the customer on this issue.
Get updates you on the status of the situation in India announced our first quarter results in January 2021.
Now I would like to turn the call back over to Scott.
Talk to you about our Americas results Scott.
Thank you safety please.
Please turn to slide 25 for a review of our American results.
Sequentially merchant recovery and the full quarter impact of the PBF hydrogen plants acquisition more than offset the planned maintenance outages and drove volume <unk> percent higher.
Price was also up 1% with improvements across key product lines.
EBITDA was flat.
Increased plan maintenance activities offset the positive volume and pricing.
Compared to prior year volumes were down 3%, primarily driven by the effect of COVID-19, while planned maintenance outages of our hydrogen facilities were largely offset by the TDR acquisition.
Maintenance outages postponed by our customers from earlier in the year and some modest repairs due to damage caused by hurricane Laura increased our maintenance activities this quarter.
Americas strong pricing trend continue up.
Up 2% versus last year for the segment were five per cent for merchant.
This is the ninth consecutive quarter of year on year price improvement.
Prices better across all major product lines.
As expected the onsite business, which accounts for about two thirds of the region's sales remain stable.
EBITDA of $411 million remained unchanged from last year as better plates and the P.D.F. acquisition compensated for lower merchant volumes and higher planned maintenance activities.
EBITDA margin was up 110 basis points versus last year, primarily driven by price.
While sequentially margin was down 340 basis points, mainly on increased maintenance.
Now I would like to turn the call back over to Simon to discuss or other savings Simon.
Thank you Scott.
Now please turn to slide 26 for a review of our Europe Middle East and Africa region results.
Sales increased 18% sequentially, driven by an 11% increase in volume and 6% favorable currency.
Merchant recovery and acquisitions, both supported the double digit volume improvement, while currencies were due to the favorable euro and British pound.
EBITDA also climbed 18% sequentially driven by the volume uplift together with favorable currency and seasonally better equity affiliate results.
It's run favorable primarily due to planned maintenance outages in our hydro facilities and a higher power costs, which we expect to recover in the future.
Compared to last year volumes remained flat as acquisitions and other growth offset the adverse impact of COVID-19, and the planned maintenance outages.
Also compared to last year price was <unk> was again up increasing 2% for the region or 4% from merchants with improvement across all sub regions. This is the 11th consecutive quarter of year on year price improvement.
EBITDA of $200 million it was up 4% supported by strong pricing and favorable currency, partially offset by product mix and increased maintenance cost.
Now please turn to slide 27, global gases, which includes our non LNG sales equivalent business as well as central costs.
Sales increased due to higher sales of equipment project activities, but profit is lower due to business mix and higher project development investments.
Please turn to slide 28, corporate which includes LNG and other businesses as well as our corporate costs.
Sales and profits were higher this quarter, driven by LNG project activities, including the Golden pass and Mozambique LNG projects.
During the fourth quarter. We were also awarded the massive Qatar gas projects and the replacement project for Sonatrach, which will both further add to our results in the near future.
Now to provide some additional thoughts on the future I'll turn the call back over to safety.
Thank you Simon.
As you look forward.
Unfortunately, it continue to see COVID-19 crisis, deepening and effect and adversely affecting people and economies of most self divorce.
Then I spoke to you in late eight Trued up Twentytwenty.
Daily cases of COVID-19 into U.S. that about 55000 and.
And that number gord aboard bought cases per day.
It's about 80000.
Today, the situation is a lot worse than number of cases into you actually that did that 20000.
For divorce, it's almost 600000 cases a day.
Therefore, it is very difficult.
It's not just painting possible.
Who make any reasonable projection about the course of economic activity around award as we move forward.
Therefore, we are not providing earnings per share guidance for capex guidance for our fiscal year 2020 Bucks.
The hope the outlook is less and sets and in January.
And if that is the case.
To provide guidance, you're not shying away from guidance, but we are being very open to you that we just don't know as we sit here today contains a bunch of course of economic activity will be.
How is that.
I want to share with you.
What they are seeing so far this quarter.
That is the multiple <unk> October and as of today November.
Yes, 52% of our sales that use our onsite business.
Just doing bell I'd expect this to continue.
Oh, that's 48% is our midstream business are onboard.
I guess is that would be our two day in each area.
In Asia.
Mitch and body on spot approximately that day there.
Yes time that last year.
So Asia as they covet and be see good results there.
In Europe.
See the impact of disease and cold 19 search.
Nick Chen volumes down 5% to 10% as of today.
That's just last year, mainly due to our packaged gases business in Europe.
And then because unfortunately it you took a significant increase in corporate banking cases that shouldn't volumes are down about 5%.
And I would like to remind you that you do not have that packaged gases business in North America.
And now please turn to slide number 29.
Every day, but said Kennedy in these challenging times.
Oh, yes competitive advantage is the commitment and motivation of the great team be habit at Providence.
Our business model and strong financial position.
Oh gosh, they continue to execute our strategy and.
<unk> long term value for all shareholders.
Quoting a growth of all debt.
Commit to the growth of our dividend every year.
The projects in our backlog and moving forward as expected.
I'd be continue to create and then some of divorce most significant projects.
And actually do you get a continue to protect our Picos health and safety and take care of that.
That's an added benefit of their families. The are hundred percent committed that today.
In closing.
I don't want to say thank you.
First to all of our employees around divorce.
Dedication and commitment.
Our employees are playing a critical role and making a difference to the war during these challenging times.
I also want to express my thanks to our customers.
You know baking along side you are customers he said our hyatt surface.
Fine products that benefit the environment and.
How do you want to be more efficient and sustainable.
Thank you for your continued confidence and trust in us.
I'm sorry.
Our local communities and on divorce.
A bunch it you know that you're going to continue to support you.
I understand to get that would get you, especially during these difficult times.
Now.
Pleased to answer any questions that you might have.
Thank you if you would like to ask a question. He said nobody pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your skill to retire Clinton will again. Please press star one to ask a question.
We will take our first question from Jeff.
That's right.
Hi, Thanks very much.
If you have a question about the GSM project.
C is the sole issue.
Financing up the project or are there unclarity is in the financial terms with Perenco.
That need to be settled.
Good morning, Jeff.
Parties that'd be cool, yes, that's an excellent question you know this is a very big acquisition $12 billion. So.
Supporting documentation for this thing is that I'm.
I'm not exaggerating too much about four or 5000 pages.
I cannot be presents you would that be have fat.
Agreed to every single time and docket every T I crossed they'd be on that artistic <unk> that go lives are going back and forth on this project.
That is by I felt that very strongly that I should be very upfront bid out investors as we always are to tell you exactly that'd be are we are not done this thing.
Yeah financing is still going on as you know he launched the permanent financing back in July.
He is proceeding.
But that that the whole thing, it's not time that percent done and I just wanted to be very clear they investors exactly that'd be our that's our job at these calls so tell you exactly that the Ot and how we see things now the situation can change two weeks from now and you can always have yet signed this thing, but I just want you to know that adds up.
Right now yes.
He is going to be up.
And with that with the land project.
Since there is a uh huh.
I didn't know there is some volatility and air products as financial return does that mean that the little land project isn't structured as a conventional onsite contract in that if you were receiving you know a fixed fee or something like that there wouldn't be that volatility can you explain the difference.
Between the new and contract at a standard onsite contract.
Hi, Jeff again, that's an excellent question you know different contracts you had their own toward are not exactly the same yeah Pete.
The Blue line.
That's one of the differences.
Is that.
We have agreed with the customer that you didn't get times of planned shutdown.
Got you know this is a fairly complex facility I'm sure you know better than I do that I'd be two or three years, you have to shut it down and do it complete maintenance you had been running that's just the facility at 99% capacity about two and a half years, yeah, Yeah, what give us time to shut it down you shut it down in June and it took.
Yes about three months to do a maintenance, which is the largest maintenance of the gasification. They said that you had on divorce. It very successfully completed that my daughter agreement with their customer, but you didn't get plant shutdown be within charged them at.
Pete.
Gearing plant shutdown.
Yes.
Okay.
Thank you.
Yes. Thank you. Thank you.
And we'll take our next question from Duffy Fischer with Barclays.
Yes, good morning [noise].
Just to go how are you.
Thanks, just a follow up on the wing and [noise].
If they decide not to restart it because of economics would that nonpayment continue forward as part of this or would that take or pay start to kick in and I guess the the color to that is if you just put all the capital into kinda refurbish it.
How far out of the money or are they on economics with that plant today and what needs to happen for that you know to move to a better economic situation.
Again, Duffy I said <unk>.
We feel obligated to tell you exactly that'd be odd right now you are.
Not indicating that you guys that there is any significant issue could this facility.
They they had to shut down and.
They at that date as of right now they haven't asked us to start to adopt.
If they know they're shutting it down the habit and enforce the contract can be ready to go and they have to.
Yeah.
Live up to their contract terms and conditions that'd be have like any other facilities as you know the other day shell announced that they're going to shutdown did they find that he in that.
Covenant in Louisiana, so over that be supplied Dan do you have a contract in dealing with that.
So did it about deal trying to tell you is that no. It's just a situation that this customer because it is a very big customer that I felt obligated to being that's off to the attention of the investors.
Very fair and then maybe just on the actual results for the quarter.
If you look at a margin step down from Q3 to Q4, even though the coal did hit was bigger in Q3 than it was in Q4. So as we think about going forward in modeling for 2021 is the margin structure of Q4 more indicative of a baseline we should use or was it Q3.
The more indicative.
Well, obviously it depends on Colgate and all of that I think you are trees more indicative than <unk> or Q4.
But that fundamentally they'll see there is one other thing that is going on they turn sure you appreciate it.
He is that we are Ed products. He is not in a cost cutting mode that de there in 2014 and 2015.
We are in a growth mode.
That means that you are hiring people and all of that in order to support our growth.
Airport in the short term our costs are going to be higher.
And then once all of these big plants come on stream, then that the cost relative to the margins that's all come down.
So we are.
You know be another company that'd be ought intermodal cutting cost and all that you also made a conscious decision.
Which is different from an older people, but I feel very strongly about that.
That.
They're the cold conditions, then all of our people.
A lot of stress voting about the health and safety off their families.
He didn't want to cut their salaries are laid them off that was a cost conscious decision or office.
Queued up cut their saturday's like a lot of other people did they click update a lot of people off but decided not to do that.
Yes see the consequence of that is that our marching slowed down but the sales that you do spend yet to take it down on margins.
St. John's demonstrates our people that they ought to be them for the long term.
Operating the company based on trying to be heroes. An analysis result, this quarter. We are building the company for the next 30 years, our people have sacrifice they have to get got up every morning, and they develop cobi going to running our facilities and I just want to get to be absolutely support the bucket that means that if you take it.
Hit as you have seen but I think that is justified and that is our policy and that is what you've been doing as they go forward.
Terrific. Thank you guys.
Thank you very much stuff.
And we'll take our next question from Steve Byrne with Bank of America.
Yes, good morning.
So you don't even see when you look good.
Good morning safety when you look back at this last fiscal year relative to what your expectations were a year ago.
Obviously, you had the cobot Empire. So 60 to 65 cents or just Dan has been delayed and therefore not contributed to the fiscal year.
I'm curious what else would you highlight is as being meaningfully different than what youre expecting for the fiscal year.
See you are asking an excellent question you.
You know be I'd, given a guidance of about 935 for the year.
If you take.
<unk> says and contribution out.
Yeah, Yeah, and you know that was about 50 cents. If you take the Cobi contribution out which is about 60 cents delivered 88, Sophie basically deliberate but he had yeah.
Kind of committed to so other than those two there was no surprises.
No nothing unusual that that'd be I want to highlight.
I think we got the pricing.
Got it okay.
Since kept running they didn't shut down any facility and there wasn't anything unusual that is volume speed, you know I'm, not giving guidance, but I don't want that to be interrupted that that'd be ought to any they ship of consent triple <unk> concerned about the appointments of their products.
Obviously, COVID-19 get happy same pack, we might have to go into another locked down and all of that but fundamentally it products is doing great. We have great bunch of people. They are mostly they said that Daimler stay that please remember to be checked all about 750 plants operating during the cold it even at the height.
The crisis, even today and said the customer so I feel very good about the company and I feel very confident about the future.
Thank you for that and follow your announcement moves me on the news flow on on the Green hard you're hearing a certain way surged in particular quite a bit recently or in green ammonia.
Either out of Australia, or or CF industries, but I would tell you they're kind of targeting different end markets. Then then you have higher highlighted for New York Woman I was just curious whether any of that might have led to any change in your dialogue with potential customers.
With respect to the degree pneumonia coming out of me on a longer term.
Any expectations on your part on when when you might.
Be able to line up some contracts for that project.
Well.
Thank you for the question.
They are getting more and more optimistic on more and more excited about.
All the green hydrogen.
Green ammonia project, but at the same time.
There is a lot of emphasize on hydrogen in general.
Where do I vision and green hydrogen.
They are the largest producer of ordinary hydrogen <unk> hydrocarbons.
I called that gray hydrogen.
We are the largest reduce it and as people need that you can provide there.
There is significant interest in so called blue hydrogen or Blue I mean.
Tony on hydrogen go together because ammonia ammonia is that they often spoken god you're getting around the world.
Lou Anne ammonia is becoming very popular.
Countries and places that they only get about Seo to admission.
They said that look you can make me at ammonia in Indonesia.
Very cool do whatever you want.
But if you captured this year too.
I can set the pie that get ammonia that I'm using doesn't have it.
They see what two has been could collect that gets at blue ammonia, then I can use it and get the credit for nothing. So you know 200, they should be out right. So that is what is called <unk> and then the okay. I mean that is the middle <unk> and then the ultimate bodies, obviously green ammonia that you're going to producing right. So to me.
Slide Yeah and.
Let that gasoline, but she's great ideas and let you know.
Oh definitely gasoline at victory is that boom O'neil, and then premium bitches clean going into green hydrogen.
We play in all of these sectors new arm is focused on green hydrogen.
But you do have projects that you're working on blue ammonium on Blue Eyed region, and obviously, great hockey team. So that they maintain that I think is significant the encouraging is the board is beginning to see but the EPS, saying for four or five years that hikvision and been for another is going.
Turning to play be that energy future everybody's not talking about it I'm very happy about that but the important thing is that the I think the habit lead because you have actual drilling projects doing these things.
But they are very excited about all of those opportunities that you mentioned.
Thank you.
Thank you Sir.
And we'll take our next question from [laughter] Andrews with Morgan Stanley.
Hi, Thank you for taking my question. This is James Christie on for Vincent I'm, sorry, sorry, sorry to belabor the point, but just wanted to ask on does and so you went from an uncertain timeline to you know hoping to finish and close everything in October.
We live today it looks like we're a little bit more of a kind of back to uncertainty. So just curious if <unk> you know you talked about the terms and conditions.
Did something change between you know when you guys talked about this and now.
That makes it more uncertain beyond just kind of you know I'm going to call that or you know as you think about the risk profile as opposed to project going forward.
The risk profile change.
But I think the board is changing every single day I mean, the oil prices go up and down.
Financing markets change as people change in different companies and all of that I.
Oh, no im saying about Japan.
Is that I, just do not want.
<unk> investors to have in their models for Twentytwenty bond.
I think that it is that they have already shared or something like that I count on that all I'm, saying is please.
He was my exact Gord don't count your chickens before.
They tend to be announced that you have done this before you put that in your eyes.
Absolutely.
That's that's all I'm, saying you said because.
And making changes every day I mean, they look at that.
Don't be habit presidential election, there's a possibility of you have a new president there is a possibility the habit new foreign policy. There is a possibility of a lot of different things nothing is 100% my.
My obligation is that every quarter, but not in front of you want to tell you exactly but you know and but we know right. Now is that you haven't closed on this acquisition and I just wanted to make sure you know that.
Understood and.
And then maybe just back to the quarter out of the business as we think about.
For Q3 can you just give us a sense for what merchant volumes were up versus kind of your broader business by region and then as we look at the trends that you mentioned highlighted a thus far and in one case could you talk about that different end markets as well and what you're seeing there.
Well that's on in my prepared remarks, I mentioned, something I'd repeat that's where you that as of today the 11th of November.
It may be see our business is that our ace your volumes are.
Back to the day that in 2019.
Asia, especially China. There is no cobi issue. It has recovered and our business is doing fine there. So that's what I'd be set.
In Europe.
Fortunately there is a significant surge as you know very best COVID-19 that is creating a situation been governments are putting restrictions some of them might actually be going that doing lockdowns on all of that therefore, our volumes as of today that is 5% to 10% lower than.
And last year.
Especially significant though in our packaged gases business, which is very logic on an understandable because that is the most susceptible to economic activity in the United States again as you know koby cases have gone up any color you can give there had been more conservative about that that business activity and our mission Bay.
Volumes are down 5%.
Not down 10% about Europe, mainly because we don't have that packaged gas business in the United States. So that's the idea.
Thank you.
Thank you Sir.
And we'll take our next question from Kevin Mccarthy with vertical research partners.
Yes, good morning.
SIFI. It seems like you have a lot going on in the LNG Arena you referenced.
You used the word massive to describe the cutter project and then Mozambique culture in U.S. can you give us a sense for two things the capital required for these projects and what the what the earnings tailwind could be from them in fiscal 2021.
Well. Thank you very much good morning, Kevin. Thanks for the question Kevin be are they optimistic about out energy business, obviously that got picked up in other quarters and do you think that the outlook for this business is very positive that.
You, obviously know better than I do that feeds business is cyclical.
Right now between the on the up cycle, obviously for the last two four usually that on the downside.
In terms of that Kathee talked the great thing about these projects is that they tend on capabilities into that because we don't put any of our capital we get paid for by B are doing its sales of equipment.
So by then that the money that CMH, he's really 10 on.
Happy to an employee of the plant and the facilities that we have that bad you don't sell the new plan then you get a new order. So every 10 on capital on these projects are very very very aren't.
Thank you for that and then as a second question I wanted to ask about the sequential margin pattern or EBITDA margin pattern in the Americas in the fourth quarter versus the third.
That was down 340 basis points I think in prepared remarks.
You indicated there was increased maintenance maintenance activity does that explain you know all of the change there were there other factors and in particular I'm wondering if the hydrogen business affected the percentage margin.
[laughter], Kevin we are very excited about that.
The main effect being done maintenance cooks that maintenance cost is driven.
Don't have control of that how many of you have control over the cost of the maintenance. So if you don't have the control other event that happens, but that can only happen during the time that the customer decides to shut down their refineries, obviously it ought to be defined at least considering but that was going on but the market. They decided to take their shut down during the summer and there was not a lot of <unk> I mean <unk>.
You know the situation in the money in the marketplace for the funds. So that is what we got to hit but I did I did it hits. These don't forget that been did you put in there because it includes South America, Obviously, South America is not doing that either so it was a combination of other factors, but the main factor bugs the maintenance costs as you mentioned.
Okay. Thank you so much.
Thank you Sir.
And we'll take our next question from Bob Koort with Goldman Sachs.
Thank you Stacy I think you highlighted there's still plugging away an Indonesian opportunities I guess, there was a news blip that maybe you get some pertamina, we're going to sign a deal with you. This month can you give us some insight into that.
Bob Good morning.
Okay. You are obviously very up to date about the latest thing that comes out from any part of the board, Bob but that you.
You know one lesson that we have learned from Kazakhstan is that it is better not to say anything until you have a final contracts that have been announced something I didn't have to you explained by these delays.
As a result of that they're getting from that I have no comment about bodies coming out of Indonesia. Once they have it did you get that you know there is a lot of rumors going gone, but I don't want to comment on that Monday or another I feel the actually they have anything to announce any do you have anything to announce dividend home stuff.
Fair enough I'm wondering on Niamh.
When do you think you might be able to formally announce some offtake agreements for the green hydrogen with truck or bus depot customers.
Now that.
[laughter] they don't intend to make any I know since [laughter], Saudi Arabia cabinet going into <unk>, but I'm, just making a point you do not intend to start and I'm, saying couldn't be signed that contract for its own because sales.
He just obviously don't want to.
Kept people there to market some in <unk>.
Yes, the only thing.
They showed a thought that thank you, though [laughter].
Okay.
And we'll take our next question from PJ Juvekar with Citi.
Good morning Savy.
Hey, good morning, Jay how are you my friend.
Good good can you talk a little bit about the health of the refinery customers.
Yeah, I mean on the Gulf coast or given that low to one one margins. The light heavy spreads have come in what is the outlook for hydrogen volumes into their finding.
Well TJ you know you and your people and a lot of other people I know a lot more about that than me. So I'm not an expert to be able to comment on that the only thing that I know is that you.
You know when you look at the U.S.
Are they finding capacity or some data between a demo 18 19000 barrels a day that you have already I had announcements about shutdown of about 800000 sales, which is about 4%.
No.
Has there been enough of that demand destruction to justify bad or is that going to come back and create shortages or is more need that I really don't know I don't know how to comment on that but the main thing is that you have seen up to now hasn't had any material effect on our business and.
As they go forward.
I do not expect any material effect on our business. They stumbled we know today.
Okay Fair enough and then on the Ccs type projects carbon capture projects.
You know is that like a stepping stone before we really get into green hydrogen.
And do you expect to see more of this carbon capture projects coming on and what's your experience there I should say expertise there and can you just talk about your position there.
But before they became that things are moving pair. It I think people had been continue to need create hydrogen.
Just to clean up the transportation system in the city's no matter, how the eye disease produce.
Then they didnt need blue eye vision.
Which means that it'd be <unk> <unk> dr. Lu I, just kind of blew ammonia, which will drive a lot of carbon capture opportunities.
And obviously, a green hydrogen so I think all three of them did go in Paris.
At the art Craig in all three of them. They obviously as I said they are the great their largest producer of gray hydrogen into what.
We have a lot of projects booking gone on carbon capture I did it just for production of ammonia or various production a blue hydrogen and all of that and then the time comes to begin to announce them and we.
We obviously are very much involved in that and.
Production of a green light issue. So I think there's opportunities for all three of these and quite frankly, you're going to see projects announced by us enough different people for all of these activities.
Quest fundamentally I think that is in Massachusetts.
Fundamental change in the public opinion they.
They should be in Europe.
Even in the U.S.A. than in China, Korea, and Japan, and Italy that.
Fundaments are moves that the board is getting warm air.
Global broadening its not a joke. It is in fact, it is science days and they need to do something about that and as a result.
All of these projects to go forward and I think everybody would make announcements and everybody would bunch play in it because that is the future.
Okay. Thank you.
Thank you Peter.
And our next question comes from John Roberts wouldn't you be yeah.
Oh. Thank you Sophie this may not be big but you acquired a company called a CP in Europe for dry ice and carbon dioxide do you think they're going to be any spikes in that business like we had in helium are we facing some shortages with the vaccine distribution.
Well, Oh, you're asking me a very good question I I really don't want to pine on that because it depends on the market the development and all of that.
And I really don't want to make too much comments about our involved and be the vaccine because you have confidentiality agreement did the people that you're working on.
[noise] right Secondly show Yeah ship shell recently announced it's going to close eight of its refinery sites and I assume we'll see some other closures do you have any refinery hydrogen contracts coming up for renewal in the next couple of years with refineries that might be closing.
Well the only thing that we know that these closing it's that I mean, they know that day I showed Martinez is a closing be had the contract there and they know that they show in London just closing.
As those are the ones that do you know anything else that might come up much come up but these things are not going to be material.
And to add products, because quite frankly, they don't make that much money setting I dived into shell anything so even if they close it's not going to roll this out of another profit.
Thank you.
Thank you John.
And we'll take our next question from Mike Sison with Wells Fargo.
Hey, Good morning safety can you talk about some of the other drivers for earnings growth and 21, and you know you should have some pricing cost savings potentially he should have other projects I think in the hopper. So you know even if she has and then luann or delayed yeah. There there are are.
There are other things that helps keep bps on the positive trend.
Oh good morning, Mike that's an excellent question and Youre absolutely right.
A b or C very positive trends in 2020 been put products in LNG.
I don't really want to comment on pricing because we don't make forward looking statements about pricing, but you have seen our track record the bumpy I've done or Mitch and pricing get at mission pricing or you know all of the regions was up about 5% even in the last quarter, he would encoded and all of that so.
And NGL pricing and then you do have other projects are there new projects that are going to come in the steam Chet floor. As a result of that as I said I'm very positive about our results for the next year, it's unfortunate that because of this and testing the b.
I guess the time they are not able to give you at.
You know.
Some kind of the guidance, but I hope that by January if you'd be able to do that but they do have a lot of good things going for us.
Got it and then just a quick follow up on Indonesia can you maybe remind US you know why that region or area as attractive for for growth for capital growth going forward.
Indonesia has made fundamental decision at the highest level.
Had the little bit president.
That they are going to use coal and natural resource to produce chemicals, such as metro no de <unk>.
In order to reduce their dependence on imported oil and reduce their commitments to foreign currency.
Because they have to buy these things if they make them and generally they don't have to use foreign exchange. They have made that decision yet.
Before I did result of that.
I think youre going to see a lot of coal gasification projects in Indonesia, and the whole that'd be the arc technology and all of that he would be it at play a leading voting that.
Thank you.
Thank you Sir.
And we'll take our next question from David Begleiter with Deutsche Bank.
Thank you good morning.
Sales he just such as than what the timeline from here in terms of you know you're going to go to negotiations with Aramco and Aramco starting up their portion of the refinery that needs the apart from Japan.
Good morning, David Yeah, I Hope all is that did you and your family, but that Debbie yeah.
I I really.
Don't want to put a timeline on this thing because.
I don't know I mean, it can be.
A month from now it can be four months from now it can be six months from now I I don't know I I think yeah, we'd be in that it would not be appropriate for us to put a timeline on this thing.
But.
You know everybody knows exactly that'd be on them, but they are doing so I just want it to be very open about that.
And just on the win first what do you do get lets get paid by the customer and.
When well why is the customer not a run operating yet Kevin and Mark them anti appears to be doing fairly well as we speak.
But that that could be took to shut down the friendliest shutdown VR.
We are starting up said some of the different parts of the plan to keep the plan to you know candidate this theme and all of that to make sure that changed on fees and those kind of things to keep that planned at this stage that it can be they're stuck.
Hi, crush them there I.
I mean right now.
Good day supply demand situation did the price of oil and all of that.
I mean baby there they have to decide that that now they need they don't need the product and Sean I'm not into the minds of the crush the men and they don't want to force them bundle and rather than it's their decision.
But.
I don't want to the present, either she knew that they have in major structural problem or anything like that we just feel obligated on these calls you charge me feel responsible to tell you, but be know as the time that I'm speaking to you right now.
So the situation can change to lease from now she gets from now but as of right now they haven't decided to put for money is starting up the plant.
Thank you.
Thank you said <unk>.
And we'll take our next question from Jonas Oxgaard with Bernstein.
Hey, good morning, and thank you.
I was I was hoping to take one more stoppages and if you don't mind, but between which parties is the sticking point here, you and aramco or the JV partners. The banks like <unk>, who is the negotiation really held up by.
Well I wouldn't want to say held up but it is taking a long time, but at the end of the day you have that.
At three different party that's it.
Saudi Aramco for sure obviously, because they are the crossamerica, but in a funny. They is interesting because Saudi aramco. He's also a part to nobody does.
In the joint venture you have put together to do the acquisition.
So as you know the structure of the joint venture that he's going to do the acquisition is ad products.
The majority to show that awful lot power and Saudi Aramco themselves.
So that is the joint venture that is negotiating with Saudi Aramco.
About the acquisition.
The acquisition is as I said $12 billion exactly but is included but he's not included but did he tends out but teds conditions of the finance you go and so those are all off the complicated issues that need to be finalized and <unk> and then you'll have all of the banks.
Who are committing to supply $7 billion and they have their came sheets. They have that Teva conditions, then do they get paid who gets paid fish, but time do they get paid how much did they didnt go see them I'm not sure if everything comes to the joint venture what is the find of interest rate that they want to try.
How is it relate that to buy book all of these things it at all.
All of these things takes time.
Considering unfortunately that situation that nobody can really physically get together.
People and doing things in two hours that doing that video conference becomes a little bit of a more of a challenge that is what is taking time.
So at the end of the day all the parties have to agree I mean, even to be finalized everything and everything and everything gets Saudi Aramco, which is not done yet, but even if you do that then do you have to deal with the banks and finalize everything that the banks intends up days requirement.
David requirement and so on obviously changes you know now what is the view of the banks based on.
The recent election in the U.S., but do they see how do they see the future and these are all of the complications and I'd be like this it's just like any other major acquisition.
Well interesting thank you.
And then one question if you don't mind.
Both your big competitors are talking about bio gas seem to green hydrogen and not if if I remember correctly. You you guys built a bio gas hydro facility in Japan like five years ago three years ago.
But what did you learn something from that project and is there a reason that youre not talking about bio gas today.
My friend the off talking about de Vito no problem to be ought actually doing some projects in Europe, and they get to hydrogen in both involving biogas.
And if you don't have anything against it but it is quite honestly the ticket us for anybody to assume that bio they'd be enough bio gas.
Uhhuh power.
200000 trucks. It on that is there I mean, you already bought those projects, but those are fire guys are there specific location for it.
Making two times a day of hydrogen they have those plans. We continue to have that <unk> nope, usually bad but to put anybody to claim that they can build that plant produced 600 ton a day of hydrogen based on bio gas that is.
That would be a joke.
And I think you have to do it isn't as big as Scott. Thank you very much.
[laughter].
And we'll take our next question from Chris Parkinson with Credit Suisse.
Great. Thank you. So you mentioned a few opportunities in Indonesia, which we've seen it seems like there are also some opportunities in India that despite being into cold and world are still likely moving forward can you. Just you know kind of hone in on whether or not these would also be a prime opportunity as well. Thank you.
Thank you very much Chris hope others, though did you add Chris.
And if they see off there are opportunities in India, India is being very much on direct where did the prime minister talking about coal gasification.
Right No hagerty, India does have.
Yeah.
A question for quotation for that Betty giant a coal gasification project in India, and obviously, if you are participating on that we expect India to do at coal gasification.
Nipigon amount of coal gasification, <unk> future and BB is definitely participate on that that'd be vinod theyre not going to see but we think that India will definitely do coal gasification because they are at the same place like Indonesia. They are seeing China right now that China is converting 200 an.
80 million tons, a year of coal into chemicals and as a result that has given them significant opportunity to mass it'd be reducing dependence on oil and I think countries like <unk>.
Indonesia, and India see that leaders are very much committed to that it's just a matter of these things becoming reality and through their systems.
But yes, we do see opportunities in India and as I said it is a lie project very big project, probably about $3 billion of investment that is being publicly before and you are participating on that bidding process.
Great and just as a quick follow up just a lot of us have obviously been talking about each super mobility, and just obviously trying to identify some potential key markets in Europe, but just a quick question for you do you believe investors are also under appreciating. The you know the ammonia, it's like little money opportunities in northeast Asia, and if so why.
Well I think that you know I don't you know investors are they a smart and David catch up with everything I think that the reason is that Pete.
People haven't been.
Paying a lot of attention to some of the details are going on Japan.
He has been talking about.
Ammonia.
The source of that hydrogen for many years they had authorized said.
Trading companies to go and look for that but they specifically, Japan, specifically is very much focused on blue ammonia.
Because they bond.
They are not so much concerned about getting being feel hydrocarbons.
Hey gone to have use hydrogen.
Or ammonia there.
She ought to be cheese produced by making go ammonia is captured because they are so close to meeting gas requirement for the payers a quote for C O two reduction.
So they are focused on what is called blue ammonia and that these into a focused on ammonia is that data.
Intention at least for now I think its catch it did change, but right now they're at big.
Big plan is I'm going to buy ammonia.
It'd be blue ammonia that for this year two is captured and then I'll take that ammonia.
Injected into my power plants.
Then the ammonia in the power plants and as a result.
I'm going to be producing electricity.
Which is coghlan feet. It doesn't put any she went to work in bad because you know ammonia beach was produced it in <unk> and it seems to us capture and therefore I didn't I didn't use electricity to just put used to drive my colleagues and so I.
I did that intentions I know I can't give you come to the conclusion that that is not enough because what are you going to do about your buses and trucks because they cannot join or electricity. So at some point in time, David neat green hydrogen anyway, but I think right now that is what they are very much focused on and then the other thing that they're focused on is that okay. I can take it.
Ammonia and they generate electricity.
Electricity and then I didn't he topped all up my buildings and all of that do the electricity I know I claim that that electricity sales to threeq.
But I did that is that focus that side that is so much discussion about.
O'neil for Japan.
And B are obviously, they've been out there that maybe had been a database for four or five years and be able to looking booking projects just supplement that.
Great. Thank you very much.
Thank you Sir.
If you have gone [laughter].
When do you see happening not pass the how many more questions left.
Operator.
And we will have to question.
Okay. That's fine just take that that's okay.
Right.
And our next question will come from Mike Harrison He quite global security.
Hi, good morning, or a quick one on the impact that you saw from Hurricane can you maybe you strip out what impact you saw their separate from the maintenance outages. So just wondering if you had an impact from from power outages in that Lake Charles area.
In any any other impacts on your Gulf Coast pipeline network.
Matt Good morning by both parties they'll give you Oh, my God about that impact, but it is not mature yet I mean, it's in the order of four or $5 million of impact not 40 or 50 million. So that's why we didn't talk about but there was an impact Unfortunately that has been three of them.
He has hit the same area that's like a plant was outside of ours, but the impact on our bottom line is not that significant.
All right and then in the past during times when steel mill utilization rates have been low or when some of those mills are taking downtime.
It has impacted your ability to produce merchant Argonne.
Can you talk about what you're seeing in Oregon supply and demand and whether you're seeing elevated costs to to move some of that law around.
Nothing that tree or am I find out.
All right thanks very much.
Thank you Mike.
Okay. So next question last question Dan Yeah.
And our last question comes from Laurence Alexander with Jefferies.
Hi, Good morning, sorry, just a very quick one then on.
In the core onsite business do you have any regions or any end markets, where bidding activity is improving.
Yeah.
Let me just make sure I understand then you said bidding out the door in improving that means that there are more people asking for bids and all of that.
Exactly in the core like what people think of as the traditional industrial gas businesses.
Now I would like to point out in two areas, one is obviously and electronics.
We are seeing a lot of activity there there's a lot of people talking about building, new fabs voting, the U.S. and in China and other parts of the world.
And then the second bone is obviously a lot of that.
You know inquiries about.
Green I do Gen flu hydrogen at.
Lou ammonium and all that those are the two significant areas.
Thank you.
Well, thank you very much and with that I would like to.
Thank you everybody for being on our call today, they very much appreciate your interest.
Please stay safe stay healthy and we look forward to talking to you.
Our next report out results next quarter. Thank you for taking the time.
All the best.
And that does conclude today's conference. Thank you for your participation you may now disconnect.
[music].
Hmm.