Q3 2021 Air Products and Chemicals Inc Earnings Call

August 9, 2021

Yeah.

[music].

Please standby we're about to begin.

Good morning, and welcome to air products, and chemicals third quarter earnings release Conference call.

Today's conference is being recorded at the request of Air products. Please note that this presentation and the comments made on behalf of 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. Please go ahead Sir.

Thank you Rochelle good morning, everyone.

Welcome to air products third quarter, 2020.1 earnings results teleconference. This is Simon Moore, Vice President of Investor Relations corporate relations and sustainability.

I am pleased to be joined today by safely get semi our chairman president and CEO.

And Scott Crocco, our executive Vice President and current Chief Financial Officer Melissa.

Melissa Schaefer, who we announced the succeeding Scott as our senior Vice President and Chief Financial Officer, and Sean Major of our Executive Vice President General Counsel and Secretary.

After our comments, we'll be 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 2.

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, the effective tax rate and our oce, both on the company wide and segment basis, we are referring to our adjusted non-GAAP financial measures.

Adjusted earnings per share adjusted EBITDA, adjusted EBITDA margin adjusted effective tax rate and adjusted turn on capital employed.

Reconciliations of these measures to our most directly comparable GAAP financial measures can be found on our website and the relevant earnings release section.

Now I'm pleased to turn the call over to safety.

Thank you Simon.

And good day to everyone.

Thank you for taking time from your very busy schedule.

It will be on our call today.

Good day in addition to announcing all of the results.

And you do have significant announcements.

Which is updating our future plans for growth and.

Capital deployment.

But before we get into the details.

I'd like to say a few of awards and about our CFO transition.

Which we announced last month.

Please turn to slide number 3.

Following this call.

Melissa Schaefer.

Succeed Mr. Scott Crocco, as our Chief Financial Officer.

And assume leadership responsibility.

For our worldwide Finance organization.

Scott is the retired from the air products on.

September 30th ASP.

As part of the smooth transition.

Good day, Hy Bon to recognize and tank Scott.

Who has had a distinguished.

31 year of Korea of at Air products.

Scott started and our career development program.

And ultimately progress to the highest ROA and finance.

Serving as our executive Vice President and Chief Financial Officer.

Quiddity that achievement is a testament to the Scott.

Particularly is the strong work ethic.

And is drive to deliver.

And he is focused on creating shareholder value.

Scott.

I would like to say publicly what I have told you of private.

That it has been the privilege working with you for these past 7 years.

Particularly as we have executed our grow the strategy.

And 1 world class projects and gasification carbon capture on the hydrogen.

These projects continue to differentiate the comp.

And position of air products for significant growth and.

Through the future.

Particularly I want to thank you for leading our effort.

Position us towards the successful closing of the dress and casual vacation and part of the project.

And for you our efforts related to the project financing of this significant investment.

I appreciate all you have done to help us move forward.

And I wish you, great health and happiness in the future.

Thank you again for all of you have done for air products.

Scott at this point would you like to say a few awards.

Yes.

Thank you very much safety and.

Really appreciate the tiny words and the support and the leadership he provided over these past 7 years.

It's been and honored to work alongside you and the rest of the leadership team.

Eric products on the path, where the sky truly is the limit.

With strong cash flows significant capital deployment of capacity and continued dividend increases.

Air products operates from a position of strength.

And I have no doubt there will be many more profitable growth opportunities ahead.

I remain excited about the future of this amazing company.

Melissa and I worked closely together over the past few years and there is no doubt she will continue to excel and help others to do the same.

I look forward to continuing the transition with the over the coming weeks and again, thank you very much.

Thank you and Scott I do appreciate your comments.

Let me now introduce and the lesser Shafer.

1 of the teams that you land on right of way about Melissa.

Is that she is the passionate and.

And driven individuals.

Or Melissa it's all about excellence.

Is driven to win.

And along with that the spirit.

She brings deep leadership and financial experience from inside and outside of air products too.

The new role.

And is a great example of the culture of your of building here and I have no doubt she'd be the continue to create an environment, where people the long and matter and contribute to their foolish.

And that's a hell of financial roles of increasing responsibility the Siemens and.

And then it's then young.

And <unk> before coming to the air products.

She joined Us as Vice President and Chief audit Executive in 2016.

She then became our vice President finance and financial responsibility for our Mega projects as well as air products largest reporting segment.

And this show has been a key part of our growth and success over the past 5 years and I'm delighted to be our chief financial Officer.

And if so would you like to say a few words.

Thank you for the kind of introduction of safety and I want to thanks, Scott for the tremendous example, he has said and our CFO and I appreciate the aperture and join the earnings call today, and say Hello to all of you and I look forward and meeting more of the investment community and King Air products Q4, and full year results with everyone on our next.

Air products is truly at the heart of providing energy and environment installations, which makes this company a truly special place to be and I'm looking forward to our finance organization and the broad of air products team worked together to bring the sustainable growth solutions forward to serve our customers and support our communities and of course.

Reward our shareholders. Thank you.

Alright, thank you above the SCADA and the yourself on your comments and now let's turn to our business results.

The stability of our business and the dedication of our people.

And have been on full display as the talented and committed people of air products.

Deliberate good results again this quarter.

Our people working together.

Our 750 facilities around the world operating and.

And our customers supplied.

The COVID-19 pandemic.

In support of the hard work and dedication of.

Demonstrated by our employees.

We have not reduced our staff.

The cut salaries during this difficult period.

I am proud to say that air products is emerging from this crisis and even stronger company than before.

We have continued to acquire new assets and businesses.

Successfully raised prices and brought new plants on the stream.

We have also strengthened our organization by.

And adding resources and various functions, mostly in engineering and project development.

To help of successfully pursue and execute the many exciting future projects, we have in front of us.

At the same time, we also delivered earnings per share of $2 on 31 cents this quarter.

And is 15% higher than last year.

Despite absorbing costs.

And to our growth driven development efforts.

I am extremely proud of the accomplishments that the have achieved as a team and I.

I'd like to tank all of our employees are the air products for their dedication and hard work.

The continued to execute projects and deliver strong financial results volume maintaining.

And they bring focus on safety.

As slide number 4 shows this.

Despite the challenging COVID-19 conditions.

Our team continues to focus on working safely.

And got a strict protocols.

Help protect themselves.

Customers and our communities.

As always safety is the most important focus for all of us at air products and our goal is always the zero accidents and zero incidents.

The slides number 5.

6 and 7.

And crude our goal.

Our management philosophy.

And our 5 point of the strategic plan.

These are the you have seen this before and these are the principles that'd be the follow every day and David continue to guide us in the future.

Now please turn to slide number 8.

We believe the environmental sustainability challenges.

And the board are significant.

The scope and complexity of the Mega projects necessity to address these challenges the core.

Wives talented people with a variety of the skills and backgrounds from different parts of the world.

The works together as 1 team.

As I mentioned earlier, we can solve these problems.

And how the challenging as long as the all of the stay focused and United.

Working towards a common goal on a global basis.

We believe this is the calling of our company and the higher purpose on all of us at air products.

Now please turn to slide number 9.

The recently published and annual sustainability report.

Which highlights our sustainability driven growth opportunities and.

And our many accomplishments in this area.

For instance.

Our products help our customers avoid.

The voids 72 million tonnes of Cotwo equivalent emissions.

It means the food for every ton of C. O 2 that V and net and making our products, we have our customers and boy 3 tonnes of C O true emissions.

In addition.

More than half of our offerings.

Sustainable.

Thanks.

Close to 1 quarter of on electricity purchases are from renewable sources.

We have also set new sustainability goals the trial.

And much aligned with our growth strategy.

Our third by 30 goal.

And to reduce our carbon intensity by the.

1 peers by 2030.

Our growth opportunities and enable progress towards this goal.

And therefore, we expect to see significant progress.

Nathan and they and the decade as our major projects come on stream and start to positively benefit our results.

At Air products.

Let's say nobility is our growth strategy.

And sustainability and our growth go hand in hand.

As we strive to solve the world's environmental sustainability problems.

We are also creating growth opportunities for the company.

And Prime example of such an opportunity is our innovative world class and that's it.

Total hydrogen project and Edmonton, Alberta, and the announced last June and I did talk about the little more later on.

Now please turn to slide number 10.

The highlights our key gasification projects.

We are committed to our gasification and the strategy.

And are pursuing exciting projects around the world.

So you do expect to announce additional gasification projects in the future.

Now specifically I would like to give you an update on the true large gasification projects the trial.

Try and discussed on previous earning calls.

Cash at $12 billion of acquisition of <unk>, and Gasifier and power plant from Saudi Aramco.

And continuing to make significant progress.

And with our partners and the lenders.

The team has worked hard.

To bring the project.

With the final stages.

All of project financing.

And we did expect this project to reach final financial close by the end of our fiscal year that is September 30 of 2021.

Second regarding the Wuhan the plant is operating at full capacity.

As I mentioned last quarter ex.

Back to recognize and reduce fees through fiscal year 'twenty 2 before any change of the full fee in 2020.3.

Now I would like to provide an overview of 2 new and very exciting developments.

Before I discuss the major in the House and then you are making today.

And she's our capital deployment plans for the next 6 years.

First on the slide 11.

You can see the overview of all of the better project that we announced last month.

This innovative project includes gasification carbon capture and hydrogen.

The 3 pillars of our go the strategy coming together in 1 project the <unk>.

And what the energy transition.

This project is fully aligned with Canada's clean energy diversification of strategy and.

And any of those Canada to advance is competitive low carbon economy.

It uses low quality available of hydrocarbons.

To make net zero of hydrogen.

As summarized on the slide 12, the heart.

And it would be produced.

Using <unk> 10 of them on reforming technology.

Enabling 95 per cent of the fuel produced by the project to be captured in the store.

To achieve net zero debt.

The remaining 5 per cent carbon footprint and there'll be upset.

The exporting the electricity.

General and debt by this net zero hydrogen.

The output will be supply the out.

And that's zero of hydrogen that'd be supply to our customers on our existing pipeline and Alberta.

And as used to produce liquid hydrogen for the mobility and mixture and markets.

The project.

Represents a 1.3 billion Canadian dollar of investment and is expected to come and the stream in 2020.4.

We also.

And as you can see on slide number 13.

We continue to focus on the very exciting hydrogen for mobility market.

And we are pleased to announce the project with colleagues.

And as the integration of hydrogen fuel cell trucks the trucks globally.

Cummins will provide how did you get most of the like.

Electric powertrain and integrated into heavy duty trucks for air products.

As we begin the process of conducting our global fleet of 2000 and distribution vehicles, so of hydrogen fuel cell vehicles.

We expect the fish you on it.

To be on line in 2020 true and the full conversion.

Before 2000 and Terry.

Now, let me give you the highlights of our significant and announcement today.

3 and a half years ago.

And 2018.

The announced publicly that air products go to the strategy.

Guided by the global energy transition.

And based on the cheap clearance of gasification carbon capture and hydrogen.

The potential to create significant growth for our company.

And that the code foresee deploying of committing to.

<unk> billion dollars of capital.

And the 5 year period from 2018 to end of 'twenty to 'twenty 2.

At that time, I remember clearly.

That's about announcement, but did you see really the degree of the skepticism.

And today I'm happy to show you.

And you can see on the slide number 14.

That would be developed.

We have deployed or committed all of them.

Was $18 billion of capital.

1 of the half views ahead of our plan.

And I bought into a state that on the aggregate debt.

The return on this capital.

And is in line with the guidance you have given all the investors.

Before.

This validates our long term strategy.

But now that the head of the plan.

Question raised by AME.

That's true.

What about the future.

I had promised the investors that we would address this question sometimes during the summer of 2021.

So he had to be at today summer of 2020 Bun.

Announcing.

As you can see on the slide 15.

And based on what the C ahead.

Implementing our 4 focused strategy.

And based on a conservative estimate of our financial and kept the capacity air.

Air products expects to deploy or commit more than $30 billion of capital.

For the 10 year period from 2018 to the end of 2020 Seth.

Later in this call the Scott will go through the details.

But today I wanted to make the point.

And as before the Oct pursuing a growth strategy.

And you do have the right strategy.

And for what.

We are aided by the Mega trend of energy transition.

The half the people and the core competencies.

And I'd be happy of financial strength.

To make our dream a reality.

And the liver on but the problem is our investors.

Now please stand.

Slide 16.

It shows our EPS growth.

As you can see Yep go live deliver greater than 10% annual EPS growth since 2014.

And I know I was appointed chairman President and CEO of the company.

These results are the testament to the hard work and commitment of the people of air products and.

And on a bunch of tanked and the game for the continued hard work and commitment.

Now please turn to slide number 17.

And as the mine data that we share our earnings growth without investors.

Both of our EPS and dividend.

Grown double digits since 2014.

They are committed to delivering increased dividend.

We continue to develop on it.

Exciting growth opportunities.

Yeah of significant cash flow.

That supports all of our substantial dividend.

And our growth strategy.

And finally.

The slide 18 shows our EBITDA and margins as always my favorite slide.

They chose that the margins.

And is up 1200 basis points.

Since 2014.

No I'm happy to turn the call over to Scott <unk>.

Provide a financial overview.

Scott.

Thank you Cynthia.

And thank you mentioned earlier, the stability of our business and the dedication of our people have been on full display.

We continued to execute projects and deliver strong financial results. Despite the unprecedented challenges posed by the pandemic.

If we compare of volumes this quarter to Q3 of the fiscal year 2019.

Or in other words before the pandemic our volumes are up 8%.

Our trailing 4 quarter distributable cash flow has held steady at approximately $2.6 billion for the past 2 years.

Air products is emerging from this pandemic and even stronger company.

Our sales EBITDA and EPS grew double digits and this quarter.

All 3 regions reported higher sales and EBITDA.

And our price and volume continued to be the strong despite lower earnings from the 1 and the ongoing COVID-19 impact.

Now please turn to slide 19 for a brief discussion of our third quarter results.

Sales increased 26% compared to prior year, reaching $2.6 billion driven by very strong volume.

Better pricing higher energy pass through and favorable currencies.

Volume improved 12% as COVID-19 recovery, new plants and acquisitions more than offset reduced low on contributions.

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

We continue to experience the negative impact of COVID-19, although the impact this quarter was more modest than last year.

Prices were again with improvement in all 3 regions.

This is the 16th consecutive quarter of year over year price gains.

Overall prices were up 2% and total which represents a 4% increase for the merchant business.

EBITDA declined 11% approaching the $1 billion, Mark as favorable volume and price currencies and equity affiliate income more than offset higher costs, which were impacted by inflation and higher maintenance.

EBITDA margin declined 520 basis points, primarily due to higher costs and higher energy pass through which increase of sales, but not profit.

Higher energy pass through and negatively impacted margin by about 200 basis points.

Higher costs included higher maintenance spending compared to last year, due mainly to low spending and the prior year, resulting from less access to sites due to COVID-19.

Our oce was 240 basis points lower.

The increase and the denominator from the additional $5 billion of debt reduced our oce by about 300 basis points.

Sequentially sales were up 4% supported by 5% seasonally stronger volume and 1% higher price.

Energy pass through was lower by 2% as energy prices returned to a more normal range following and the effects of the winter storm and the previous quarter.

Now please turn to slide 20.

Our third quarter GAAP EPS was $2.36 and.

And included a 5 cent tax benefit primarily resulting from reserve adjustments related to of 2017 tax election on the non U S subsidiary.

Excluding the non-GAAP items, our third quarter adjusted EPS was $2.31 <unk>.

Despite the ongoing impacts of the pandemic and was 30 above last year.

Volume was favorable 26.

Covid recovery, new plants, and acquisitions more than offset reduced and the warm and contributions.

As a reminder, it's important to recognize that as the 60% majority owner of the law and joint venture 100% of the negative impact from the 1 is included and the volume line because we consolidate the operating results.

However, this was partially offset by the positive impact reflected in the Noncontrolling interest line is the net income chaired by our partner is also reduced.

Price net of variable costs contributed <unk> <unk> as our price increases more than covered variable cost inflation.

We continue to execute pricing actions in response to rising variable costs, such as power and fuel.

Like the prior few quarters, our plans to add resources and strength in our organization to support growth and increased our costs.

Americas maintenance costs were lower last year due to COVID-19 limitations and there were temporary COVID-19 related government incentives and Asia last year.

Currency and foreign exchange contributed 12.

With the Chinese RMB and euro accounting for roughly half of the impact.

Equity affiliate income added <unk> on strong underlying business results, while non controlling interests was also favorably the 5 cents on lower profit from our consolidated joint ventures, primarily the 1.

Okay.

The effective tax rate of 18, 2% was 110 basis points lower than last year due to a change in the U K tax law.

We expect our effective tax rate to be slightly below the 20% and fiscal year 'twenty 1.

The remaining 4 includes a favorable 5 cents and non operating income primarily driven by lower pension expense and an unfavorable interest expense of 1 thing.

Now please turn to slide 21.

The stability of our business allows us to continue to generate strong cash flow.

Over the last 12 months, we generated about $2.6 billion of distributable cash flow.

We're almost $12 per share.

From our EBITDA of about $3.8 billion, we paid interest taxes and maintenance capital.

Note that our maintenance Capex is a little higher than usual driven in part by spending on our new global headquarters.

From the distributable cash flow, we paid over 45% or over $1.2 billion as dividends to our shareholders and we still have about $1.4 billion available for high return industrial gas investments.

The strong cash flow.

Even in uncertain times and enables us to continue to create shareholder value through increasing dividends and capital deployment.

Slide number 22 provides an update on our capital deployment.

And since you've mentioned, we've extended our time horizon another 5 years to 2027.

Since we see tremendous project opportunities beyond the original capacity of $15 billion.

We think it's appropriate to extend the timeframe for at least another 5 years.

This updated view of our capital deployment potential shows over $30 billion available through fiscal 2027.

The $30 billion includes over $9 billion of cash and additional debt capacity available today on.

Most 15 billion, we expect to be available by 2027.

And almost $7 billion already spent.

We believe this figure is conservative given the potential for additional EBITDA growth, which generates additional cash flow and therefore additional borrowing capacity.

We will continue to focus on managing our debt balance to maintain our current targeted <unk> rating.

So you can see we've already spent 22% and have already committed 57% of the updated capacity we show here.

In short we exceeded the commitment we made to you in 2018 and has substantial capacity available to deploy to support our growth strategy.

Now to begin the review of our business the great thoughts I'll turn the call back over the safety.

Thank you very much Scott now please turn to slide number 23.

For all of Asia our results.

Sales increased 15%.

Compared to last year.

Supported by strong volume.

Net debt of price and favorite of of currencies.

1 of the loans, they're up 6%.

The reversing the negative trend of the previous 4 quarters.

Base volumes, driven by Covid recovery and the addition of numerous of small new plants more than offset the reduced flow and contribution.

Asia of pricing overall was positive 1%.

Primarily divide it.

Given our good performance in China and across most product lines.

This was the 17th consecutive quarter of the year on year price improvement and Asia.

Sequentially.

This was also positive by month per cent.

EBITDA increased 9%.

Driven primarily by say the price volume currencies and the equity affiliate income.

Cost compared and.

The partially due to inflation and COVID-19 related.

The incentives last year.

I should say of Covid related government incentives and cost last year.

EBITDA margin of 47, 4% was 270 basis points of lower.

As the reduced the land contribution.

And increased costs more than offset the benefits of highest price.

And here and equity affiliate income.

Operating income and margin compares Unfavourably COVID-19.

EBITDA and EBITDA margin due to a higher quality affiliate income and additional depreciation from new clients.

Sequentially sales and profit improved.

And as economic activities rebounded following the lunar new year on.

On the base.

Now I would like to turn the call back to Scott you talked about the Americas results.

Thank you Stacy please turn to slide 24 for a review of our Americas results.

Sales surged, 25% over last year.

Volume price energy pass through and currency were all positive.

<unk> grew 9%, primarily due to COVID-19 recovery higher medical gases, and South America, and 1 time items.

Most of merchant products have returned to the pre COVID-19 levels, but hydrogen volume has not yet fully caught up.

While the demand for transportation fuels has improved as people resumed travel the increases are not even across different types of fuel.

Gasoline and diesel volumes have rebounded however, the demand for jet fuel, which consumes more hydrogen on a per unit basis compared to gasoline still lags.

Furthermore of the industry has shifted to use more light sweet crude which requires less hydrogen.

In addition, the industry inventory levels remain high.

Price was again strong the.

The 4% increase for the region was equivalent to 8% on the merchant business.

Price was better across all major product lines and this is the 12th consecutive quarter of the year on year price improvement.

Energy cost pass through was again higher as natural gas prices remained elevated versus last year and drove a 10% sales increase.

EBITDA reached $465 million, a 13% increase over the last year is better volume and price as well as 1 time items more than offset power and other cost inflation and higher maintenance.

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

Following the successful completion of the turnaround this quarter, we expect our maintenance activities to moderate next quarter.

Higher energy cost pass through of negatively impacted the EBITDA margin by over 400 basis points or almost 90% of the reported decline.

Compared to last quarter Americas volumes increased 6% driven by stronger hydrogen and volume.

Partly helped by recovery following the winter storm and onetime items.

Price also improved 1% up across all major product lines.

Energy pass through was lower sequentially as the natural gas price came back down after the spike caused by the winter storm.

EBITDA increased 4% sequentially supported by improved volume and price as well as onetime items, while cost was unfavorable.

EBITDA margin was 120 basis points, better primarily driven by about 350 basis points of favorable energy pass through while strong price, partially offset higher costs.

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

Yes.

Thank you Scott now please turn to slide 25 for a review of our Europe Middle East and Africa region results.

Our EMEA team delivered another set of outstanding results this quarter sales jumped, 45% and volume and EBITDA were both up about 25% versus last year.

Covid recovery and acquisitions, primarily drove the 24% volume increase of our liquid bulk business has returned to its pre COVID-19 level, but the packaged gas business still lagged.

Price increase for the 14th consecutive quarter and was higher across most major product lines and all of the sub regions. The.

The 1% price gain for the region corresponds to a 2% improvement for the merchant business.

Real price increases were partially offset by unfavorable mix since the demand across the product lines was not even.

We are also executing additional pricing actions to recover the recent power cost increases.

Currencies were of favorable 12%, primarily due to the strong euro and British pound versus the U S dollar.

EBITDA was up 25% to over $210 million driven primarily by the strong volume.

EBIT margin was down 540 basis points with higher energy pass through of responsible for about 200 basis points.

The remaining roughly 300 basis point reduction was mainly attributable to unfavorable costs, mostly power and other cost inflation.

Compared to prior quarter sales rose, 7%, primarily supported by positive 5% volume, but EBITDA was down 2% and margin was about 300 basis points lower as this volume gain was more than offset by higher costs, including power and other cost inflation and lower equity affiliate income.

Now please turn to slide 26, global gases, which includes our non LNG sales of equipment businesses as well as central costs.

Sales increased due to higher sales of the equivalent and project activity. The profit was lower due to business mix and higher product development spending.

Sales and profits were roughly equal to last quarter.

Please turn to slide 27, corporate which includes LNG and other businesses as well as our corporate costs.

We were pleased to be selected for Nigeria, LNG train 7 project building on the success of the air products LNG equipment and technology for the first 6 trains.

Segment sales were higher this quarter driven by increased project activities as we continued to execute multiple large LNG and other projects. The profit was lower on higher corporate costs and sales and profits were roughly equal to last quarter.

Now to provide some additional thoughts I'll turn the call back over to safety.

Thank you very much Simon now please turn to slide number 28.

Air products continues to deliver consistent earnings and cash flow.

Our onsite business, which is roughly half of Alco sales remains stable.

We have seen signs of improvement and merchant volumes.

The crowd is relative to the very challenging quarter 3 last year.

As I mentioned earlier, who and facility is operating at full capacity and we expect the jazz and transaction.

To achieve financial close by the end of September.

1021.

For quarter 4 of fiscal year 2021.

Our earnings per share guidance is $2 and 44 to $2.64.

11% to 16% over the last year.

This makes our guidance for our fiscal year.

To be 95 to 905 of.

Of the approximately 8% over the last year.

And within the range of B shares did you last quarter.

We continue to see our capex of approximately $2.5 billion.

For the year of 2021.

Our fiscal year 'twenty on EPS and Capex guidance, obviously exclude any contribution from <unk>.

Main bot and the continued to execute our other projects.

And getting them on the screen and finalizing agreements with other customers.

We are committed to our capital deployment and strategy.

And 2 growing our pipeline of projects.

We continue to be very optimistic about our focus long term growth strategy.

The.

Yeah.

The capital deployment projections that we shared with you today for the next 6 years.

Clearly demonstrate our significant growth potential in the years to come.

Now please turn to slide number 29.

Yeah.

The only sustainable long term competitive advantage of <unk>.

And any company is the degree of commitment.

And motivation of the people and the enterprise.

We are fortunate to have that commitment.

Our people.

By working together against the hardships of the pandemic.

Supporting our customers and each other.

I'm proud to say that we have made our company even stronger and the process.

Not only have the continue to strengthen our base business.

And also further extend our core competencies of showing our growth strategy.

Our gasification carbon capture and hydrogen growth platforms.

All support the drive for the cleaner environment.

And we are executing megawatt scale projects in all 3 areas.

And we all know that the board's desire for clean energy.

On the accelerated.

Our differentiated go the strategy and unmatched expertise and.

Position Air products and continued strong shift to the house.

And growth well into the future.

As always I want to again, thank our customers around the world.

And innovating alongside you.

The dedicated and committed people of air products.

Are doing their part 2 of.

Cheap or.

Comment the highest purpose of creating and get better award for everyone.

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

Thank you if you would like to ask a question. Please press star followed by the day..1 if you are using the speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment once again star 1.

We'll pause for just the moment.

And our first question, we'll hear from Vincent Andrews with Morgan Stanley.

Thank you good morning, everyone and congratulations to Scott.

Very well done and distinguished career.

Clearly.

Save me can I ask you on the new sort of outlook for capital allocation, maybe 2 pieces about it.

1 how and how are you thinking about how much of it will be sort of and that Mega project category that we've seen.

With me on and so forth versus sort of the more traditional industrial gas projects and second to that.

As I think back over the last 3 and a half years of the of the first capex outlook on the menu of of things you're interested and expanded.

And the gasification and then we got into Green and Blue hydrogen and carbon capture.

I would assume that we're going to see the future capex skew more towards those latter categories, but I'm also curious whether there was anything else.

That's on the horizon, that's not currently on the Capex menu that we should start thinking about.

Hello, Good morning, and Vincent and thank you very much about of your comment that lot of the Scotts ease of Great Guide you all know debt.

Yeah. Thanks.

With respect to your specific question Vincent and other bear.

Yeah.

Additional 12, and a half to a billion dollars that Vietnam and the next 6 years.

We expect about $5 billion.

And in support of all of the existing business and the balance of it being the large projects.

And in terms of the focus.

We are going to the stay very focused and debt.

And spend our money on gasification.

Hydrogen excuse blue and green.

And sort of to capture.

And just trying not to venture too much outside of those 2 specific areas and there is significant opportunity not that you asked the question. It gives me the came up with the $30 billion not because of lack of projects.

Yes.

Because of the wanted to demonstrate what is our financial capacity to maintain out a day.

As the go for award of the.

See the they'll get the they cannot project you EBITDA for 2030, so that's fine.

The strength.

There are and a lot of projects in the areas of gasification hydrogen and see what the 2 as you can see and the future and we're going to stay focused on debt because I believe by being focus you get the results rather than being all of it the place.

Thanks very much.

And <unk>.

And next we'll move to Jeff Zekauskas with J P. Morgan.

Thanks, very much so the.

The 2 part question.

If you look at your European operations, and your Asian operations over.

Over the last 3 quarters, there sequentially flat.

And the Asian, EBITDA flow a bit better of the European EBITDA is not.

Why is that the case given that the global economy has been improving.

And secondly, and your reconciliation tables and your return on capital return on capital has gone from.

12, 4% of year ago the Tam.

Of move down sequentially.

Why is that what what are the factors that you're encountering.

Lowering your capital returns.

Good morning, Jeff 2 very good questions.

Yes, 2 very good question number 1.

When you look at it and they say that it is flat the global economy is improving please.

Please take note that the global economy is improving and people going to restaurants and flying around.

The in the major economies that we are operating on any day and industrial economy has not improved debt much. That's number 1 the second thing are the results are significantly affected by the way you know that very well because you and had an EBITDA contribution every year at full capacity.

The under normal circumstances of almost ended at 50 and $60 million a year the venue and that number comes down then if the stores out of the numbers, but please look at our volumes and.

Another thing is that all of the results are affected by another significant items the Tri Ed mentioned many times before the.

We are investing and increase inks organization significantly.

To develop these new projects than on certain projects like Canada, we have been working on for other projects. Each 1 of these project cost 4 of $5.10 billion $10 billion to develop the are spending that money because you are investing for the future. So that is taking on.

Also hitting all of the results, but look at our volume.

And you look at our volumes and our volumes are better than all of our competitors.

During that period.

And we have grown.

And our base volume if you would take all of the mumbo jumbo.

The peoples resolves and all resolved our volume growth has.

The improved better than anybody else is.

It's 12% so therefore I do on.

Keeping with the market.

On.

Maybe healy.

And I.

Yes.

And I wouldn't mind pizza box.

That's number 1 the second thing with respect to the return on capital employed.

It depends on how you calculate it because if he can calculate our return on capital employed there other people calculate the that they don't consider the cash the yard.

Of that 15% and another 10% the sector.

And Tim is that the octane on capital employed has gone down because the bar of $5 billion that is the still sitting on our balance sheet and the haven't deployed that philosophy deployed that once the pay for the just and 2 on that building.

And we can on catheter and employee jump up.

Okay got it okay and Jeff Yes. Thank you.

Thank you Sir.

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

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

On.

First just on behalf of the team here at UBS. That's 1 of the say congrats to Scott on retirement and welcome Melissa to the team happy to have you here.

On.

And going to the.

Thanks, so much.

Just sticking on the volume point within the regions with the projects starting up and it's become a little bit tougher to tell where the merchant Brooklyn levels are versus 2019 could you walk through the different regions and and help us understand how much volume you might be lower in aggregate.

Relative to 2019 or in other words, how much recovery is left to get there and then second would just be and some of the onetime items you called out in the Americas can you quantify what that is or give us some insight on on what that is that's benefiting you guys and the quarter. Thanks.

Sure. Thank you very much I think that Theyre doing.

During the course of his comments as Scott mentioned debt if you take our volume.

And compared to pre Covid.

We got 8% ahead.

In terms of our mix and volume. So these are actually volume buys ahead of the view that before the Covid the Scott.

That's fine and the previous point that I was making.

That'd be the respect your second question about the onetime items.

I don't want to give too much detail about those because it involves customers and so on and some of the people don't want to exactly for us to disclose exactly what we set out for them if they close the refinery or something like that so apologies for not answering that question.

Okay, Thanks, and if I could just try again on the volume side. So on a like for like basis. You would say volumes are 8% ahead that doesn't include contribution from new projects or are we mixing of things there.

And then the.

There are new projects, but it is not substantial hit and if you exclude the new projects to be able to hit.

Okay. Thank you.

Thank you.

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

Yes, Thank you and our best for you Scott.

For a variety of comments made about the year over year comparison, some of those you would've had visibility on like Blue 1 and.

Some of your corporate cost, perhaps but what would you say was was most surprising to you on the cost side or the that impacted your results and the quarter of that were different from your expectations of few months ago.

But the expectation that we had was that the U S economy on the industrial side, especially.

And what would be.

Stronger than it is.

And especially also of HEICO I mean the high.

Okay.

Those things didn't develop to our expectation.

The rest of it we did have visibility you're right.

Those are the that's the surprise was and the performance and Americas.

Okay. Thank you. Thank you and 1 quick 1 for you on your heels and business any comments on the outlook for you.

And particularly given the the large Russian project and development and it concerns there.

But Steve on that 1 I mean, you're very.

And knowledge of the only about what's going on on the details there is the stick price high helium project debt.

The Russians are working on the so called and more of a project.

And that project has a significant amount of capacity.

And when and if the.

And I shouldn't say, if and when it comes on the stream they know that it is.

And it obviously has changed the supply demand.

Basis, and the helium board volume and it did have an effect on prices.

We don't know when debt is going to be and debt project has been delayed many times so.

And when that happens it will obviously have and in fact, it hasnt happened and so you don't expect it dropping next Florida, but it might happen and the future.

There is a lot of volume of helium debt can come on stream.

And okay.

Yes. Thank you.

Thank you.

And next and move to John Mcnulty with BMO capital markets.

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

So a question on the on the global business and the corporate lines because the revenue is keep going up pretty meaningfully you've got some of the big new LNG business coming in and yet the profits year over year of definitely definitely fade and so I guess can you give us a little bit more color as to the drivers behind that and when we.

Might be true that whether it's incremental cost or expenses on the corporate line and maybe some of the business mix changes on the on the global side just because of it.

It is a little bit surprising and it seems to be holding back the revenue is as much as it has been.

John first of all good morning Hope all is that the deal yes.

Second thing is that of John.

They are talking about deploying $30 billion of capital.

That means those projects need to get the engineered and built before they contribute to the bottom line.

We have added.

Without the exaggeration.

Most of 2000 people.

So our engineering and project management and business development staff and the last 2 years.

2000 people.

If you take Canada, and then and $20000 per person and becomes a lot of money.

And you have absorbed the amount of cost because of pricing and all of that but still the.

We are spending a significant amount of dollars.

In order.

True.

Position ourselves and not only we develop these projects but the.

And the also execute them and built them.

But then when the do that.

I mean people know how to deal with them at better than anybody else the feed.

Deploy the $30 billion.

<unk> 27, which.

Which we save the bill.

And we say that the return on that day is expect 10 cents of operating profit for every dollar.

That is true.

The billions of dollars of operating profit in addition to what Youre doing.

And you do that after the attacks.

And then you come up with that.

You know on a significant number with respect to of more than 10 and 11.

And dollars per share.

So the need to make that the reality that is not going to happen by itself.

And therefore, the are going into the absorbing a lot of additional costs and.

In the meantime.

Now a year from now 2 years from now depending on how many projects yet.

Now if the next year the come on and say that look the spend day trip.

The and I'll be happy to increases of 40 of them give you the add more people.

So that debt is a sequence of this thing we need to spend the money to develop the project to get the project and as you know the new rules of such that you cannot.

And you cannot put the projects on the balance sheet and and the Wyndham and those that you've been you asked the eat the cost.

And that's the accounting rules.

So that that is that I think the investors need to happen a little bit of patients free to us because these costs are going to beat us and quite honestly.

It is amazing debt the effect is not as much as it could be.

Because as I've said true.

1000 people its costing us 242, and in that $50 million of years to support those people.

Okay got it fair, yes, and no fair enough debt very helpful color on it and thanks. Thank you.

Thank you.

Yeah.

And we'll move to Kevin Mccarthy with vertical research partners.

Yes, good morning.

The safety over the last several quarters, we've seen in <unk>.

Place and accelerate pretty broadly and a lot of specialty chemical companies are feeling the effects of that in today's market air.

And the products of course is blessed and that you pass through of lot of course, but.

As you've been discussing I think there are other costs that arent pass through and so my question would be do you think theres any need or opportunity to accelerate the pace of pricing given that backdrop of industry inflation and how might your answer the differ by region of the world.

That is of very good question, Ken and first of all the believe I mean, the baby upgrades is that.

Our base business.

People increase prices to cover inflation that is the minimum they expect them to do.

The other cost increases obviously as I mentioned before is that adding additional resources.

But our philosophy is that the power cost go up prices need to go up.

And as compared to other chemical companies at the half of that.

And other benefit is that our raw material price doesn't go up because of our raw materials and see the air for them.

Most of our products.

And if it is a natural gas btu of passion true.

So all of the wrong as I've said, many times before the <unk> 43 of the of experiencing the industrial gases.

Inflation at the times are in general of our positive for industrial gases because it gives you the license to increase prices.

And if the I mean and our.

The call.

The mention price increases on an overall basis, but if you take just are mentioned merchant price.

Increases.

We have had price increases this last quarter.

<unk>, 7% and Americas, 2%, and Europe, 2% and Asia total company 5 percentage price increase.

The 4.

The 4 dimensions on.

So that is significant and it's keeping us up to date would be the inflation.

No.

Okay.

Thank you for that.

Thank you Sir.

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

Good morning, Stacy and of course, and my congrats to Scott as well, it's been a pleasure.

And <unk>.

If you just send us and if you do if you do assume and France will close by fiscal year and should we still presume a full year of earnings contribution of forgers and next fiscal year.

Yup.

It is going to depend on the details of the structure. The final structure of the financing and all of that but yes. The I've said that March the dual financial close.

And the pay a certain amount of money of youre going to get the.

Yeah.

The F C on the basic facility in accordance with how much money do you put in.

So very true and expect the good contribution in 2000 of 22, yes.

Very good and do you have and update on the the neon and the ALM and the Indonesian projects. Thank you.

And then the on project. The obviously are working on at the half the.

I think at least that on 400 people working on that project project is moving forward the yard.

Clear and preparing the ground and the engineering is of that going forward. So we are making progress on that project.

And with respect to Indonesia, I don't have any object.

And then Israel has a lot of issues that'd be the COVID-19 and all of that so.

I don't really have any update.

Thank you.

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

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

In terms of the.

Americas business, you mentioned that were up sequentially on stronger hydrogen demand I think thats a real.

Related to the Texas freeze and some improvement and refinery utilization, but you also mentioned that some of these refineries are using more light and sweet crude feedstocks, which require of less hydrogen can you talk a little bit more about the longer term effect of of that trend.

But for the longest term the.

And actually very bullish about our hydrogen pipeline and in the Gulf Coast.

And we expect that the hydrogen network.

So be it and he sold out and about 2 years' time.

The fundamental drivers for growth out of there.

And refineries will come back and it is of significant trend.

You know that very well.

What converting the refineries into making the renewable diesel and the as the I've said the intensity of hydrogen for the and you about visa and it's higher than other things show a busy man and very optimistic about that it's just the quarter by quarter of the numbers more move up move but for the longer term the are very optimistic about.

And the hydrogen pipeline and that hold and trust structure of it.

Alright, and then in the EMEA business, you mentioned, the higher power costs and the need to go after additional pricing. There can you just talk about those diner.

Dynamics, a little bit more I guess and is there some seasonal improvement in the in the power of situations such that if you. If you weighted out maybe the costs will come a little bit lower.

Well I don't I don't think so I think that in Europe. There is the structure issue debt. When you decide that you don't want to use nuclear and and you don't want to decide that use coal than the other alternative sources of energy are more expenses, I mean, and some parts of Europe and energy costs last quarter about almost 100 per cent.

More than the last year.

So I think that power cost increases and Europe are going to be of think of the future.

And.

In order to and that's why a lot of these staying the CFO talked about making green hydrogen and using the grid and Europe is kind of the little bit of a pie and the sky, but overall.

I think that the odd job is to.

And to increase our prices to compensate for the power costs.

And our contracts are structured that day, sometimes we might get a little bit of a lag and implementing that.

Ah, but our people and know exactly what they need to do and in times of use of catch up.

But I don't alright, Thanks for Asia, and Europe are going to ease.

Thank you very much Stacy.

Thank you very much thank you.

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

Thanks very much.

And just and safety are the Gasifier is running now so it's just a function of the.

Paper shuffling to start accruing the benefits.

And Bob Good morning, how are you this morning.

Right.

You just asked me a question that I cannot answer because we have been prohibited.

Bye.

Saudi Aramco.

The talk about the state of operation of the refinery and the stage it is and how it is operating and so on for security reasons.

So I cannot tell you what is operating what he's not the operating on all of that.

I mean, if you're wondering Ken asked the question from Saudi Aramco, and what I can day would say probably the same thing to Russia.

So I apologize you asked the question and I cannot answer sorry about that.

On the debt facility that was launched back in May is that the final piece of it has to be concluded.

That is and the final piece that needs to be concluded and that is underway and view of very coach Gotcha.

Got you. Okay. Thank you say think of any course of Scott really enjoyed working with you over the years.

Thanks, Bob for that question.

And we'll move on can you share.

With Barclays.

Yes, good morning, Thanks for.

First question just around the win safety I think you mentioned that you thought it was going to get back to a run rate of $150 million to $160 million of EBITDA.

But I didn't understand was that in the fiscal 2022 for you guys or is that calendar 2022 for the customer.

It is interest go up 2020.3.

That's the true.

True I mentioned and the call debt it will be low okay. 'twenty 2 as low as 23 gets the okay fair enough and then.

Second 1 on your Alberta project.

I believe 1 of your big customers up there is suncor and they had announced about a month earlier than you guys kind of a similar project does your project supersede what they were going to do or is there enough space up there. The both of you can do a large green hydrogen project.

Well I don't want and I, obviously don't want to speak for Suncor pay on a customer of ours.

But we are not the only supplier they have their own S. M ox.

So what they intend to do our contract with them last 1 and 2028.

And I don't know, but.

But is there any intention of about 2.

Moving the project to replace debt owners homeowners doing of projects when you place the ownership models and what they buy from US that's something that you'll have to talk to them I don't want to the of speaking for them.

But the project day announced and come on stream in 2028, and our project would come on stream in 2024.

Okay. Thank you.

Thank you.

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

And thank you.

Our fuel cell company, which is was the hydrogen customer and noted on their earnings call that they transitioned away from air products, because they were unhappy with the supply and pricing are the same company is also building out their own green hydrogen and supply chain, maybe you want to respond to that situation. Since it was mentioned on and Investor call recently, but.

The question really is more broadly what do you say to investors that might be concerned about competition for hydrogen distribution and mobility applications.

The first of all of it with respect to that specific customer who made those comments at.

And I wish them very good luck until our day are doing via stopped supplying them for a very simple reason because when you think the product at the half is worth a lot more and be kind of set it for the higher price of 2 other people. Therefore.

We are and the business of making money and there was no sense for us to continue to sell of hydrogen at low price. That's 5 years stopped beating the dead.

In terms of building their own plans as I said I wish them good luck and on both their successful.

And as far as other people out upon the wanting to get into the business.

Perfect and refine the have been and the business of making hydrogen for the last 60 years.

And the other people are waking up in the morning, and I want to get into the hydrogen business I wish them. Good luck, there is plenty of opportunity plenty of that.

Demand for niche products and you save on to get into it.

They are more than welcome and I don't think of you are concerned about that the.

Welcome competition, and you have competition and everything else, we do and.

And therefore, I have no concerned about debt and I wish everybody a good luck, who wants to get into the business the judge.

<unk> have and minor 60 years of the head start on them.

But that people might consider debt is not that significant but they'll find out what it takes.

Thank you Stacey.

Thank you.

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

Hey, Good morning, Hey, Scott Congratulations hope you find the fun place to retire like Cleveland, but just.

Just 1 question on the.

2027 golf safety.

And you've talked about demand being really good 4.4.

For hydrogen and and other areas.

Is it possible that.

And you can maybe deploy that capital sooner than 'twenty 7 or is it maybe you have to spend.

Spend more potentially if if demand is going to be that strong.

And we believe that the demand is very strong and the D V and we do believe that day will come with more than that.

No.

That's our view.

Great. Thank you.

Thank you.

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

Well I just want to.

And I, thank everybody for being on our call and listening to and our presentation and we appreciate your interest.

And we obviously look forward the discussing our results with you again next quarter as I said the area for ease of stay safe and healthy and all of the best.

Thank you very much for being on our call.

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

[music].

And.

[music].

Yeah.

[music].

Good morning, and welcome to air products, and chemicals third quarter earnings release Conference call.

Thank you Rochelle good morning, everyone.

Welcome to air products third quarter 2021 earnings results teleconference of <unk>.

Simon Moore, Vice President of Investor Relations, corporate relations and sustainability and.

I'm pleased to be joined today by say if he gets semi our chairman President and C E O.

Scott Crocco, our executive Vice President and current Chief Financial Officer, well, that's of Shaffer, who we announced the succeeding Scott as our senior Vice President and Chief Financial Officer and.

And Sean major of our executive Vice President General Counsel and Secretary.

After our comments, we'll be 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 2 and.

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, the effective tax rate and our O C E. Both on the company wide and segment basis, we are referring to our adjusted non-GAAP financial measures.

Adjusted earnings per share adjusted EBITDA, adjusted EBITDA margin adjusted effective tax rate and adjusted turn on capital employed.

Reconciliations of these measures to our most directly comparable GAAP financial measures can be found on our website and the relevant earnings release section.

Now I'm pleased to turn the call over to safety.

Thank you Simon.

And good day to everyone.

Thank you for taking time from your very busy schedule.

We'll be on our call today.

Good day in addition to announcing all of the results.

And you do have significant announcements.

And she is updating our future plans for growth and the.

Kathy talked the exploring them.

But before we get into the details.

I'd like to say a few of awards about all of our CFO transition.

Which we announced last month.

Please turn to slide number 3.

Following this call.

Melissa Schaefer.

Succeeds Mr. Scott Crocco, as our Chief Financial Officer.

And assume leadership responsibility for our worldwide Finance organization.

Scott is the types on the air products.

September 30th ASP.

As part of the smooth transition.

Good day, I'd want to recognize and tank Scott.

Who has had a distinguished.

31 year of Korea of at Air products.

And Scott stopped it and our career development program.

And ultimately progress to the highest ROI and findings.

Serving as our executive Vice President and Chief Financial Officer.

Clearly that achievement is a testament to of Scott.

Particularly is the strong work ethic is drive the live there and he is focused on creating shareholder value.

Scott.

I'd like to say publicly what I have told you of private fleet.

And it has been the privilege working with you for these past 7 years.

Particularly as we have executed our grow the strategy.

And 1 world class projects and gasification carbon capture and the hydrogen.

These projects continue to differentiate the comp.

And position net of products for significant growth and.

And to the future.

Particularly I want to thank you for leading our effort to position us for the successful closing of the dress and casual vacation and part of the project.

And for your efforts related to the project financing of this significant investment.

I appreciate all you have done to help us move forward.

And I wish you, a great health and happiness in the future.

Thank you again for all of you have done for air products.

Scott at this point would you like to say a few awards.

Yes.

Thank you very much safety and.

Really appreciate the time and words and the support and the leadership he provided over these past 7 years.

It's been and honored to work alongside you and the rest of the leadership team.

Air products on the path, where the sky truly is the 11th.

With strong cash flows and significant capital deployment capacity and continued dividend increases.

Air products operates from a position of strength.

And I have no doubt there will be many more profitable growth opportunities ahead.

I remain excited about the future of this amazing company.

Well listen I have worked closely together over the past few years and there is no doubt and she will continue to excel and help others to do the same.

I look forward to continuing the transition with her over the coming weeks and again, thank you very much.

Thank you and Scott I do appreciate your comments.

Let me now introduce and the lesser of Shafer.

1 of the teams that you land on right of way about the lesser.

She is the passionate and driven individuals.

Melissa it's all about excellence.

And is driven to win.

And along with that the spirit.

She brings deep leadership and financial experience from inside and outside and products to this and.

The rope.

He is a great example of the culture of your of building here and I have no doubt she will continue to.

Create an environment, where people elong and matter and contribute to their foolish.

And that's a hell of a financial roles of increasing responsibility the Siemens and that's the.

And young.

And <unk> before coming to air products.

She joined Us as Vice President and Chief audit Executive and 2016.

She then became our vice President finance and financial responsibility for our Mega projects.

Well as air products largest reporting segment.

And then Michele has been a key part of our growth and success over the past 5 years and I'm delighted she maybe our chief financial Officer.

And if so would you like to say a few words.

Okay.

Thank you for the kind of protection and safety and I want to thank Scott for the tremendous example, I can use that as our CFO and I appreciate that the chain joined the earnings call today, and say Hello to all of you and I.

It looks park and meeting more of the investment community and King Air products Q4, and full year results with everyone on our next call Air products is truly at the heart of providing energy and environment installations, which makes this company a truly special place to be.

And I'm looking forward to our finance organization and the broad of air products team worked together to bring the sustainable growth solutions forward to serve our customers support our communities and of course reward our shareholders. Thank you.

Alright, Thank you about the SCADA and the yourself on your comments and now let's turn to our business results.

It's the ability of our business and the dedication of our people.

And have been on full display as the talented and committed people of air products.

The live with good results and again this quarter.

Our people working together.

Our 750 facilities around the world operating and.

And our customers supplied.

On the COVID-19 pandemic.

In support of the hard work and dedication.

Demonstrated by our employees.

We have not reduced our SKU.

Of that.

Or cut salaries during this difficult period.

I am proud to say that air products is emerging from this crisis and even stronger company than before.

We have continued to acquire new assets and businesses.

Successful day raised prices and.

And brought new plants on the stream.

We have also has strengthened the organization.

On adding resources and various functions, mostly in the engineering and project development.

To help us successfully pursue and execute the many exciting future projects, we have in front of us.

At the same time, we also deliberate and earnings per share of $2.31. This quarter.

Is 15% higher than last year.

Despite absorbing costs.

The 2 hour growth driven development efforts.

I am extremely proud of the accomplishments that we have achieved as a team and I would like to tank all of our employees of air products for the.

Dedication and hard work.

The continued to execute projects and deliver strong financial results volume maintaining.

And they bring focus on safety.

And slide number 4 shows.

Despite the challenging COVID-19 conditions.

Our team continues to focus on working safely.

Following and got a strict protocols to help protect themselves on our customers and I'll come.

Yeah.

As always safety is the most important focus for all of us at air products and our goal is always the zero accidents and zero incidents.

The slide number 5.

6 and 7.

And crude our goal.

Our management philosophy.

And on a 5 point the strategic plan.

These are the you have seen these before.

And these are the principles that'd be the follow every day and David continue to guide us in the future.

Now please turn to slide number 8.

We believe the environmental sustainability challenges.

Facing the board are significant.

The scope and complexity of the makeup of projects necessity to address these challenges the.

Wise talented people with a variety of the skills and backgrounds from.

On different parts of the world.

The works together as 1 team.

As I mentioned and yeah, we can solve these problems no matter how the challenging.

As long as the all the stay focused and United.

Working towards a common goal on a global basis.

We believe this is the calling of our company and the high of papers.

All of us at air products.

Now please turn to slide number 9.

The recently published and analog sustainability report.

Which highlights our sustainability driven growth opportunities.

And our many accomplishments in this area.

For instance.

Our products help our customers and.

72 million tonnes of Cotwo equivalent emissions.

Which means that for every ton of C. O 2 debt V and net and making all the products, we have a customized and boy 3 tons of C O true emissions.

In addition, more than half of our offerings and are sustainable.

Close to 1 quarter of on electricity purchases are from renewable sources.

They have also set new sustainability goals.

Very much aligned with outgrow the strategy.

Our third by 30 goal and.

Aims to reduce our carbon intensity by.

1 peers by 2030.

Our growth opportunities and they their progress throughout the skull.

And therefore, we expect to see significant progress later in the in the decade as our major projects come on stream and start to positively benefit our results.

At Air products.

Let's say nobility is our growth strategy.

And sustainability and our growth go hand in hand.

As we strive to solve the world's environmental sustainability problems.

We are also creating growth opportunities for the company.

And Prime example of such an opportunity is in the base.

And what class.

And you know of hydrogen project, and Edmonton, Alberta, and the announced last June and I did talk about the little more later on.

Now please turn to slide number 10.

The highlights our key gasification projects.

We are committed to our gads of vacation and strategy.

And are pursuing exciting projects around the world.

So you do expect to announce additional gasification projects in the future.

Now specifically.

Like the give you an update on the true large gasification projects.

I have discussed on previous earning calls.

Cash.

And our truck doesn't go into our acquisition of jazz and Gasifier and power plant from Saudi Aramco.

And continuing to make significant progress.

Working with our partners and the lenders.

The team has worked hard.

The bringing the project.

With the final stages.

All of project financing and.

And expect this project to reach find out the financial close by the end of our fiscal year that is September 30 of 2021.

Second regarding who I had the pleasure.

And is operating at full capacity.

As I mentioned last quarter.

<unk> recognized the use sees through fiscal year 'twenty 2.

And for being the 10 to the 4 feet in 2020.3.

Now I would like to provide an overview of 2 of new and very exciting developments.

Before I discuss the major announcements we are making today.

She was on capital deployment plans for the next 6 years.

First on the <unk>.

<unk> 11.

You can see the overview of all of the better project that we announced last month.

As you know they get project includes scads of vacation CASM capture and hydrogen.

The 3 pillars of our go the strategy coming together in 1 project the support the energy transition.

This project is fully aligned with Canada's Queen and energy diversification of strategy.

And in Nabors, Canada to advance is competitive low carbon economy.

It uses low quality available of hydrocarbons.

Who make net zero of hydrogen.

As summarized on the slide 12 the.

The hydrogen will be produced.

Using all the time on reforming technology and.

And they've been in 95 per cent of the fuel produced by the geology to be captured in the store.

To achieve net zero debt.

And 5% carbon footprint and there'll be upset by exporting the electricity generated by this net zero of hydrogen.

The output will be supply of the output.

And net zero of hydrogen.

The supply to our customers on our existing pipeline and all the better.

And as used to produce liquid hydrogen.

And the mobility and mature and markets.

The project.

The presents a 1.3 billion Canadian dollar of investment and.

And is expected to come and the stream in 2020.4.

We also.

And as you can see on the slide number 13.

We continue to focus on the very exciting hydrogen for mobility market.

And we are pleased to announce the project with Cummins and.

The accelerated the integration of hydrogen fuel cell trucks.

Globally.

Cummins will provide how do you get most of the likely powertrain and <unk>.

The integrated into of heavy duty trucks for air products as the begin the process of conducting our global fleet of 2000 and distribution vehicles.

And fuel cell vehicles.

We expect the first you'll need to.

To be on line in 2022, and the full conversion.

Before 'twenty Terry.

Now, let me give you the highlights of our significant and announcement today.

3 and a half years ago.

And 2018.

The announced publicly that air products go to the strategy.

Guided by the global energy transition.

And based on the cheap fares of gasification carbon capture and hydrogen.

The potential to create significant growth for our company.

And that he could foresee deploying of committing to.

<unk> billion dollars of capital.

And the 5 year period from 2018 to end of 2020.2.

And that Guy I remember clearly.

That's about announcement, but did you see really the degree of the skepticism.

As of today I'm happy to show you.

And you can see on the slide number 14.

That'd be developed the.

We have deployed or committed.

Almost $18 billion of capital.

1 of the half use ahead of our plan.

And I bought into a state that on the aggregate.

The return on this capital is in line with the guidance, we haven't given all the investors before.

And before.

This validates our long term strategy.

But now that the head of the plan.

Question raised by 1 of our investors.

Was what about the future.

I had thought of these day investors that the would address this question sometimes during the summer of 2021.

So she that'd be at today.

Summer of 2020 bond.

Announcing.

As you can see on the slide 15.

Debt based on what the C ahead.

Implementing our Ford focus the strategy.

And based on a conservative estimate of our financial and kept the capacity air.

Air products expects to deploy or commit more than $30 billion of capital or the.

The 10 year period from.

2018 to the end of 2020.7.

Later in this call the Scott will go through the details.

But today I wanted to make the point.

And as before the Oct pursuing a growth strategy.

And you do have the right strategy.

The move forward.

Aided by the Mega trend of energy transition.

The half the people and the core competencies.

And be happy of financial strength from.

Make all of a dream a reality.

And the liver on bugbee promise on investors.

Now please stand.

Slide 16.

It shows our EPS growth.

As you can see yeah go live they live and greater than 10% and of our EPS growth since 2000 of 14.

And I was appointed chairman President and CEO of the company.

These results are the testament to the hard work and commitment of the.

The people of air products.

And I bunch of tanked and the game for the continued hard work and commitment.

Now please turn to slide number 17.

And the main data that we share our earnings growth went out of investors.

Both of our EPS and dividend and grown double digits since 2014.

The are committed to delivering increased dividend.

And will be continue to depend on body stock and exciting growth opportunities.

The significant cash flow.

That supports all of our substantial dividend.

And our growth strategy.

And finally.

The slide 18 shows our EBITDA and margins as always my favorite slide.

They chose that the margins.

As of 1200 basis points.

Since 2014.

I'm happy to turn the call over to Scott.

Provide a financial overview.

Scott.

Thank you Cynthia.

And thank you mentioned earlier, the stability of our business and the dedication of our people have been on full display.

We continued to execute projects and deliver strong financial results. Despite the unprecedented challenges posed by the pandemic.

If we compare of volumes this quarter to Q3 of the fiscal year 2019.

Or in other words before the pandemic our volumes are up 8%.

Our trailing 4 quarter distributable cash flow has held steady at approximately $2.6 billion for the past 2 years.

Air products is emerging from this pandemic and even stronger company.

Our sales EBITDA and EPS grew double digits and this quarter.

All 3 regions reported higher sales and EBITDA.

And our price and volume continued to be the strong despite lower earnings from the 1 and the ongoing COVID-19 impact.

Now please turn to slide 19 for a brief discussion of our third quarter results.

Sales increased 26% compared to prior year, reaching $2.6 billion driven by very strong volume.

Better pricing higher energy pass through and favorable currencies.

Volume improved 12% as COVID-19 recovery, new plants and acquisitions more than offset reduced low on contributions.

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

We continue to experience the negative impact of COVID-19, although the impact this quarter was more modest than last year.

Prices were again with improvement in all 3 regions.

This is the 16th consecutive quarter of the year over year price gains.

Overall prices were up 2% and total which represents a 4% increase for the merchant business.

EBITDA declined 11% approaching the $1 billion, Mark as favorable volume and price currencies and the equity affiliate income more than offset higher costs, which were impacted by inflation and higher maintenance.

EBITDA margin declined 520 basis points, primarily due to higher costs and higher energy pass through which increase of sales, but not profit.

Higher energy pass through negatively impacted margin by about 200 basis points.

Higher costs included higher maintenance spending compared to last year, due mainly to low spending and the prior year, resulting from less access to sites due to COVID-19.

Our oce was 240 basis points lower.

The increase from the denominator from the additional $5 billion of debt reduced <unk> by about 300 basis points.

Sequentially sales were up 4% supported by 5% seasonally stronger volume and 1% higher price.

Energy pass through was lower by 2% as energy prices returned to a more normal range following and the effects of the winter storm and the previous quarter.

Now please turn to slide 20.

Our third quarter GAAP EPS was $2.36 and.

And included a 5 cent tax benefit primarily resulting from reserve adjustments related to of 2017 tax election on the non U S subsidiary.

Excluding the non-GAAP items, our third quarter adjusted EPS was $2.31 <unk>.

Despite the ongoing impacts of the pandemic and was 30 above last year.

Volume was favorable 26 cents.

Covid recovery, new plants and acquisitions more than offset reduced the war on contributions.

As a reminder, it's important to recognize that as the 60% of majority owner of the law on joint venture and 100% of the negative impact from the 1 is included and the volume line because we consolidate the operating results.

However, this was partially offset by the positive impact reflected in the Noncontrolling interest line is the net income chaired by our partner is also reduced.

Price net of variable costs contributed <unk> <unk> as our price increases more than covered variable cost inflation.

We continue to execute pricing actions in response to rising variable costs, such as power and fuel.

Like the prior few quarters, our plans to add resources and strength in our organization to support growth and the increased our costs.

Americas maintenance costs were lower last year due to COVID-19 limitations and there were temporary COVID-19 related government incentives and Asia last year.

Currency and foreign exchange contributed 12.

With the Chinese RMB and euro accounting for roughly half of the impact.

Equity affiliate income and enforcement on strong underlying business results. While noncontrolling interests was also favorably the 5 cents on lower profit from our consolidated joint ventures, primarily the 1.

Okay.

The effective tax rate of 18, 2% was 110 basis points lower than last year due to a change in the U K tax law.

We expect our effective tax rate to be slightly below the 20% and fiscal year 'twenty 1.

The remaining 4 includes a favorable 5 cents and non operating income primarily driven by lower pension expense and an unfavorable interest expense of 1 thing.

Now please turn to slide 21.

The stability of our business allows us to continue to generate strong cash flow.

Over the last 12 months, we generated about $2.6 billion of distributable cash flow or almost $12 per share.

From our EBITDA of about $3.8 billion, we paid interest taxes and maintenance capital.

Note that our maintenance Capex is a little higher than usual driven in part by spending on our new global headquarters.

From the distributable cash flow, we paid over 45% or over $1.2 billion as dividends to our shareholders and we still have about $1.4 billion available for high return industrial gas investments.

The strong cash flow.

Even in uncertain times and enables us to continue to create shareholder value through increasing dividends and capital deployment.

Slide number 22 provides an update on our capital deployment.

And so as you've mentioned, we've extended our time horizon another 5 years to 2027.

Since we see tremendous project opportunities beyond the original capacity of $15 billion, we think it's appropriate to extend the time frame for at least another 5 years.

This updated view of our capital deployment of potential shows over $30 billion available through fiscal 2027.

The $30 billion includes over $9 billion of cash and additional debt capacity available today on.

Most of $15 billion, we expect to be available by 2027.

And almost $7 billion already spent.

We believe this figure is conservative given the potential for additional EBITDA growth, which generates additional cash flow and therefore additional borrowing capacity.

We will continue to focus on managing our debt balance to maintain our current targets and a 2 rating.

So you can see we've already spent 22% and of.

The already committed 57% of the update of your capacity we show here.

In short we exceeded the commitment we made to you in 2018 and has substantial capacity available to deploy to support our growth strategy.

Now to begin the review of our business segment and thoughts I will turn the call back over the safety.

Thank you very much Scott now please turn to slide number 23.

For all of Asia results.

Sales increased 15%.

Compared to last year.

Supported by strong volume.

Net of price and.

And you've got a bit of currencies.

1 of the arms the.

And they're up 6%.

We're seeing the negative trends of the previous 4 quarters.

Base volumes.

And by Covid recovery and days and your share of numerous of small new plants more than offset that.

The Jewish through on the contribution.

Asia pricing overall was positive 1%.

Primarily divide and driven by good performance in China and Kroll.

And most product lines.

This was the 17th consecutive quarter of.

The year on year price improvement and Asia.

Sequentially on the price was also positive 5.1%.

EBITDA increased 9%.

Driven primarily by say mid of their price volume currencies and equity affiliate income.

Cost compared.

And.

And the proxy duty inflation and Covid related.

And incentives last year.

I should say of Covid related government incentives and cost last year.

EBITDA margin of 47, 4% was 270 basis points lower out.

The reduced the land contribution.

And increased costs more than offset the benefits of highest price.

Volume and equity affiliate income.

Operating income and margin compares favorably to EBITDA and EBITDA margin due to a higher quality affiliate income and additional depreciation from new plants.

Sequentially sales and profit improved as the economic activities rebounded following the lunar new year holidays.

Now I would like to turn the call back to Scott to talk to about the medical as of the results.

Thank you Stacy please turn to slide 24 for a review of our Americas results.

Sales surged, 25% over the last year.

Volume price energy pass through and currency were all positive.

Volume grew 9%, primarily due to the Covid recovery higher medical gases, and South America, and 1 time items.

Most of merchant products have returned to their pre COVID-19 levels of hydrogen volume has not yet fully caught up.

While the demand for transportation fuels has improved as people resume travel the increases are not even across different types of fuel.

Gasoline and diesel volumes have rebounded however, the demand for jet fuel, which consumes more hydrogen on a per unit basis compared to gasoline still lags.

Furthermore, the industry has shifted to use more light sweet crude which requires less hydrogen.

In addition, the industry inventory levels remain high.

Price was again strong.

The 4% increase for the region was equivalent to 8% on the merchant business.

Price was better across all major product lines and this is the 12th consecutive quarter of the year on year price improvement.

Energy cost pass through was again higher as natural gas prices remained elevated versus last year and drove a 10% sales increase.

EBITDA reached $465 million, a 13% increase over the last year is better volume and price as well as 1 time items more than offset power and the other cost inflation and higher maintenance.

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

Following the successful completion of the turnaround this quarter, we expect our maintenance activities to moderate next quarter.

Higher energy cost pass through of negatively impacted the EBITDA margin by over 400 basis points of almost 90% of the reported decline.

Compared to last quarter, Americas volume increased 6% driven by stronger hydrogen and volume.

Partly helped by recovery following the winter storm and onetime items.

Price also improved 1% up across all major product lines.

Energy pass through was lower sequentially as the natural gas price came back down after the spike caused by the winter storms.

EBITDA increased 4% sequentially supported by improved volume and price as well as 1 time items, while cost was unfavorable.

EBITDA margin was 120 basis points, better primarily driven by about 350 basis points of favorable energy pass through while strong price, partially offset higher costs.

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

Thank you Scott now please turn to slide 25 per view of our Europe Middle East and Africa region results.

Our EMEA team delivered another set of outstanding results this quarter.

Sales jumped 45% and volume and EBITDA were both up about 25% versus last year.

Covid recovery and acquisitions, primarily drove the 24% volume increase our liquid bulk business has returned to its pre COVID-19 level, but the packaged gas business still lagged.

Price increase for the 14th consecutive quarter and was higher across most major product lines and all of the sub regions. The.

The 1% price gain for the region corresponds to a 2% improvement for the merchant business.

Real price increases were partially offset by unfavorable mix since the demand across the product lines was not even.

We are also executing additional pricing actions to recover the recent power cost increases.

Currencies for of favorable 12%, primarily due to the strong euro and British pound versus the U S dollar.

EBITDA was up 25% to over $210 million driven primarily by the strong volume.

EBITDA margin was down 540 basis points with higher energy pass through of responsible for about 200 basis points. The.

The remaining roughly 300 basis point reduction was mainly attributable to unfavorable costs, mostly power and other cost inflation.

Now please turn to slide 26, global gases, which includes our non LNG sales of equipment businesses as well as central costs.

Sales increased due to higher sales of equivalent and project activity, but profit was lower due to business mix and higher product development spending.

Sales and profits were roughly equal to last quarter.

Please turn to slide 27, corporate which includes LNG and other businesses as well as our corporate costs.

We were pleased to be selected for Nigeria, LNG train 7 project building on the success of the air products LNG equipment and technology for the first 6 trains.

Corporate segment sales were higher this quarter driven by increased project activities as we continued to execute multiple large LNG and other projects. The profit was lower on higher corporate costs.

And sales and profits were roughly equal to last quarter.

Now to provide some additional thoughts I'll turn the call back over to safety.

Thank you very much Simon now please turn to slide number 28.

Air products continues to deliver consistent earnings and cash flow.

Our onsite business, which is roughly half of our total sales remains stable.

We have seen signs of improvement and merchant volumes.

Take care of the relative to the very challenging quarter 3 last year.

As I mentioned earlier, the 1 facility is operating at full capacity on.

And we expect it just and transaction to achieve financial close by the end of September.

2020.1.

For quarter 4 of fiscal year 'twenty 'twenty 1.

Our earnings per share guidance is $2 and 44 to $2.64.

Up 11%.

The 16% over the last year.

This makes our guidance for our fiscal year.

To be a 95 to 905.

Of the approximately 8% over the last year and within the range of B share did you last quarter.

The continued to see our capex of approximately $2.5 billion for.

For the year of 2021.

Our fiscal year 'twenty, 1 on EPS and Capex guidance, obviously exclude any contribution from <unk>.

The main board and the continued to execute on other projects.

And getting them on the screen and finalizing agreements with other customers.

We are committed to our capital deployment and strategy.

And 2 growing our pipeline of projects.

We continue to be very optimistic about our focus long term growth strategy.

The.

Right.

The capital deployment projections that we shared with you today for the next 6 years.

Clearly demonstrate our significant growth potential in the years to come.

Now please turn to slide number 29.

Reality.

The only sustainable long term competitive advantage of air.

Any company is the degree of commitment.

And motivation of the people and the enterprise.

The unfortunate.

You have the commitment at all.

And people.

By working together against the hardships of the pandemic.

Supporting our customers and each other and.

To say that we have made our company even stronger and the process.

And not only have the continue to strengthen our base business, but also further expand our core competencies of showing our growth strategy.

Our gasification carbon capture and hydrogen growth platforms.

All support the drive for the cleaner environment and the.

We are executing megawatt scale projects in all 3 areas.

And we all know that the voice desire for clean energy.

On the etc.

Our differentiated go the strategy and unmatched expertise.

Position Air products will continue the strong shift to the house.

And growth well into the future.

As always I want to of gang tank, our customers around the world.

And innovating alongside you.

The dedicated and committed people of air products.

And are doing their part to achieve are.

Comment on higher purpose of creating and get better board for everyone.

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

Thank you if you would like to ask a question. Please press star followed by the digit 1 if you are using the speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment once again star 1.

We'll pause for just a moment.

And our first question, we'll hear from Vincent Andrews with Morgan Stanley.

Thank you good morning, everyone and congratulations to Scott.

Very well done and distinguished career.

Clearly.

Save me can I ask you on the new sort.

Sort of outlook for capital allocation, maybe 2 pieces about it.

1 how and how are you thinking about how much of it will be sort of and that Mega project category.

And we've seen.

With me on and so forth versus sort of the more traditional industrial gas projects and second to that.

As I think back over the last 3 and a half years of the of of the first capex outlook the menu of of things you're interested and expanded.

And the gasification and then we got into Green and Blue hydrogen and carbon capture.

I would assume that we're going to see the future capex skew more towards those latter categories, but I'm also curious whether there was anything else.

That's on the horizon, that's not currently on the Capex menu that we should start thinking about.

Good morning, and Vincent and thank you very much about your comment about of the Scotts He's a great Guy and you all know that and.

Thanks.

With respect to your specific question Vincent and other.

Yeah.

Net.

Additional 12, and a half $2 billion that Vietnam and the next 6 years.

We expect about 5 billion.

B and support the about existing business and the balance of it being the large projects.

And in terms of the focus we are going to stay very focused in the incident and debt.

And spend our money on gasification.

I do share, which is blue and green.

And Sheila to capture.

We are going to try not to venture too much outside of those 2 specific areas and there is significant opportunity not that you asked the question and it gives me the came up with the $30 billion not because of lack of projects.

And is.

Because of the wanted to demonstrate what is our financial capacity to maintain on a lady.

As the go for award of.

Do you see the they'll get that he cannot project you EBITDA for 2000 and Ted So that's fine.

And strain.

There are and a lot of projects in the areas of gasification hydrogen and CEO of too as you can see and in the future and we are going to stay focused on debt because I believe by being focus you get the results rather than being all of it the place.

Thanks very much.

And so.

And next we'll move to Jeff Zekauskas with J P. Morgan.

Thanks very much.

Sort of a 2 part question.

If you look at your European operations, and your Asian operations.

Over the last 3 quarters, there sequentially flat.

The Asian, EBITDA fell a bit better of the European EBITDA is not.

Why is that the case given that the global economy has been improving.

And secondly, and your reconciliation tables and your return on capital return on capital has gone from.

12, 4% of year ago to 10, it's kind.

Of moves down sequentially.

Why is that what what are the factors that you're encountering.

Lowering your capital returns.

Good morning, Jeff 2 very because of my questions. Thanks to a very good question number 1.

And you look at the range say that it is flat the global economy is improving please.

Please take note that the global economy is improving and people going to restaurants and flying around.

The debt in the major economies the theater operating day any day and industrial economy has not improved debt much. That's number 1 the second thing are the results are significantly affected by the way you know that very well because you and had an EBITDA contribution every year at full capacity.

The under normal circumstances of almost kind of that 50 and $60 million a year.

And that number comes down then the stores all of the numbers, but please look at our volumes and and.

Another thing is that all of the results are affected by another significant items the Tri Ed mentioned many times before the.

We are investing and increase.

Organization significantly.

To develop these new projects, then D and on certain projects like Canada, we have been working on and for other projects. Each 1 of these project cost 4 of $5 billion to $10 billion.

$10 million to develop the on spending that money because you are investing for the future. So that is taking on.

Also on the results, but look at our volume.

And if you look at our volumes our volumes are better than all of our competitors.

During that period.

And he has grown.

Our base volume if you would take all of the mumbo jumbo.

On the peoples is also on our resolved all of volume growth has.

The improved better than anybody else.

12%, so therefore I don't.

Okay.

Keeping with the market.

And.

Or maybe healy and.

And.

Okay.

Yes.

All of mine.

And that's number 1 the second thing with respect to the return on capital unemployed.

It depends on the about how you calculate it because if he can't calculate the return on capital employed there other people calculate the there they don't consider the cash the other.

<unk> seen per se and another 10 per cent. The second thing is that package and on capital employed has gone down because the bar of $5 billion that is the still sitting on our balance sheet and the haven't deployed that philosophy deployed that once the pay for the just out of 2 and half building.

And that we can on catheter and employee jump up.

Okay and okay, yes. Thank you yep. Thank you Sir.

Yeah.

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

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

First just on behalf of the team here at UBS is 1 of the say congrats to Scott on at retirement and welcome Melissa to the team happy to have you here.

And.

And going to the.

So just sticking on the volume point within the regions with the projects starting up and it's become a little bit tougher to tell where the merchant Brooklyn levels are versus 2019 could you walk through the different regions and and help us understand how much of a volume you might be lower and aggregate relative to 2019 or and.

The other words, how much recovery is left to get there and then second would just be and some of the onetime items you called out in the Americas can you quantify what that is or give us some insight on what that is that's benefiting you guys and the quarter. Thanks.

Yes.

Sure. Thank you very much I think that the.

During the course of his comments as Scott mentioned debt if you take our volume.

And compared to pre Covid.

We got 8 per cent ahead.

In terms of our mix and volumes. So if you got actually volume buys ahead of the view that before the Covid the Scott.

That's why the previous point that I was making.

That'd be the respect your second question about the 1 time items and the.

And don't want to give too much detail about those because it involves customers and so on and some of the people don't want to exactly for us the disclosed exactly what would be set up for them. If they close the refinery or something like that so I apologies for not answering that question.

Okay, Thanks, and if I could just try again on the volume side. So on a like for like basis. You would say volumes are 8% of head that doesn't include contribution from new projects or are we mixing up things there.

And then the.

There are new projects, but it is not substantially even if you exclude the new projects the OTA hit.

Okay. Thank you.

Thank you.

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

Yes, Thank you and our best to you Scott.

There were a variety of comments made about the year over year comparison, some of those you would've had visibility on like Luann and.

Of your corporate cost, perhaps but what would you say was was most surprising to you on the cost side or the that impacted your results and the quarter of that were different from your expectations of few months ago.

But the expectation that we had was that the U S economy on the industrial side, especially.

And what would be.

Stronger than it is.

And especially also of HEICO I mean, the other.

Okay.

Those things didn't develop 2 out of expectation.

And the rest of it we did have visibility you're right.

Those were the that's the.

The surprise was and the performance in the Americas.

Okay. Thank you. Thank you and 1 quick 1 for you on your helium business any comments on the outlook for you.

And particularly given the the large Russian project and development and it concerns there.

What shape on that's 1 and I mean, you're very.

The knowledge of those about what's going on on the details there is the stick price high here on project debt.

The Russians are working on the so called on more of a project.

And that project has a significant amount of capacity and.

And when and if and when.

And I shouldn't say, if and when it comes on the stream they never and it is.

And it did obviously change the supply demand and.

And the basis and the helium board volume and it will have an effect on prices.

But we don't know when debt is going to be and debt project has been delayed many times. So when that happens. It will obviously do you have and in fact, it hasn't happened and you don't expect it drop and next Florida.

It might happen and the future.

There is a lot of volume of helium debt can come on stream.

And okay.

Thank you.

And next and move to John Mcnulty with BMO capital markets.

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

A question on the on the global business and the corporate lines because.

And the revenues keep going up pretty meaningfully you've got some of the big new LNG business coming in and yet the profits year over year of definitely definitely fade and so I guess can you give us a little bit more color as to the drivers behind that and when we might be true that whether it's incremental costs or expenses on the corporate line and maybe some of the business.

The mix changes on the on the global side, just because it is a little bit surprising and it seems to be holding back. The revenue is as much of that has been.

John first of all good morning profile of the shell with your cash.

The second thing is that of John.

They are talking about deploying $30 billion of capital.

That means those projects need to get in junior them built before they contribute to the bottom line.

We have added.

Without the exaggeration.

Post the 2000 people.

So our engineering and project management and business development of staff in the last 2 years.

2000 people.

If you take Canada, and then the $20000 per person and that becomes a lot of money.

And you have absorbed and lot of cost because of pricing and all of that but still the.

We are spending a significant amount of dollars.

In order.

True.

Position ourselves that knocked on the develop these projects.

But the also execute them and built them.

But then when the do that.

I mean people know how to do the math better than anybody else, if we deploy the $30 billion.

By 2020.7.

Which we save the sale.

And we say that the return on that thing is expect <unk> operating profit for every dollar.

That is true.

The billions of dollars of operating profit in addition to what Youre doing.

And you do that after the attacks.

And then you come up with the.

And a significant number with respect to of more than 10 and 11.

And dollars per share.

So the need to make that the reality that is not going to happen by itself.

And therefore, the are going to the absorbing and all of those additional costs and.

In the meantime.

Now a year from now 2 years from now depending on how many projects yet.

Now if the next year, the comment and say that look the spin day.

The and I'll be happy to increases of 40 of them give you and I have to add more people.

So that is the sequence to this thing we need to spend the money to develop the project to get the project and as you know the new rules of such that you cannot.

And you cannot put the projects on the balance sheet and and the Wyndham and those that you have been you have to eat the cost.

And that's the accounting rules.

So that that is that I think the investors need to happen a little bit of patience with us because of these costs are going to beat the dos and quite honestly.

It is amazing debt the effect is not as much as it could be.

Because as I said.

1000 people its costing us 242, and on that $50 million of year to support those people.

Okay got it fair, yes, and no fair enough debt very helpful color on it and thanks. Thank you millions.

Thank you.

Yeah.

And we'll move to Kevin Mccarthy with vertical research partners.

Good morning.

The safety over the last several quarters, we've seen a and <unk>.

Place and accelerate pretty broadly and a lot of specialty chemical companies are feeling the effects of that in today's market air.

The products of course is blessed and that you pass through of lot of course, but.

As you've been discussing I think there are other costs that arent pass through and so my question would be do you.

And you think theres any need or opportunity to accelerate the pace of pricing given that backdrop of the industry inflation and how might your answer differ by region of the world.

And that is a very good question, Ken and first of all the belief I mean, the baby upgrades is that.

Our base business.

People increase prices to cover inflation that is the minimum they expect them to do.

The other cost increases obviously as I mentioned before is that adding additional resources.

But the art philosophies that the power cost go up prices need to go up.

And as compared to other chemical companies at the half of that.

And other benefit is that our raw material price doesn't go up because of our raw materials and see the air from most of our products.

And if it is and shrug ads B do pass the true.

So all of the wrong as I've said, many times before but my 43 of the year experiencing the industrial gases.

Inflation or the times are in general of are positive for the industrial gases because it gives you the license to increase prices.

And if the I mean and our.

The call.

The mentioned price increases on an overall basis, but if you take just are mentioned mixture and price.

Increases.

Had the price increases this last quarter of 7% and Americas, 2% and Europe, 2% and Asia total.

The company 5 per cent any price increase.

So.

As for dementia and Si so that is significant and it's keeping us that'd be the inflation.

And.

Okay.

Thank you for that.

Thank you Sir.

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

Good morning, Stacy and of course, and my congrats to Scott as well, it's been a pleasure.

Savi, just sunrise and if you do if you do assume and France will close by fiscal year and should we still presume a full year of earnings contribution of.

Forgers and next fiscal year.

Yup.

And it is going to depend on the and details of the structure. The finding of the structure of the financing and all of that but yes. We have said that March the do financial close.

And the pay a sense and amount of money of Youre going to get the.

Yeah.

The F C on the basic facility in accordance with how much money the effort in.

So very true and expect good contribution in 2022, yes.

And do you have and update on the the neon and the ALM and the Indonesian projects. Thank you.

And the Neon project, the obviously are working and going on at the half the.

I think at least that on 400 people working on that project. The project is moving forward the yard.

Uh huh.

Clear and preparing the ground and the engineering uses the going forward. So we are making progress on that project.

And with respect to Indonesia, I don't have any object.

And then Asia has a lot of issues that'd be the COVID-19 and all of that so.

I don't really have any update.

Thank you.

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

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

In terms of the Americas.

The Americas business, you mentioned that were up sequentially stronger hydrogen demand I think thats related to the Texas freeze and some improvement and refinery utilization.

But you also mentioned that some of these refineries are using more light and sweet crude feedstocks, which required less hydrogen can you talk a little bit more about the longer term the fact of of that trend.

But for the longest time the art.

And actually very bullish about our hydrogen pipeline and in the Gulf Coast.

At the.

We expect that the hydrogen network.

So be it and he sold out and about 2 years' time, because the the fundamental drivers for growth out of there.

Finally, and we'll come back and it is a significant trend.

And Mike you know that very well.

[noise] toward converting the refineries into making the renewable diesel and the as the I've said the intensity of hydrogen for the new about these and it's higher than other things show of busy and very optimistic about that it's just the quarter by quarter of the numbers more move up move but for the longer term the are very optimistic about.

And the hydrogen pipeline and that hold and trust structure of that.

Alright, and then in the.

The EMEA business, you mentioned, the higher power costs and the need to go after additional pricing. There can you just talk about those dine.

Dynamics, a little bit more I guess and is there some seasonal improvement in the and the power situation such that if you. If you weighted out maybe the costs will come a little bit lower.

More than the last year.

So I think that power cost increases and Europe are going to be of think of the future.

And.

In order to and that's by and lot of these things that <unk> talked about making green hydrogen and using the grid and Europe is kind of the little bit of of pie in the sky.

Overall.

I think that the odd job is to.

And to increase our prices to compensate for the power costs.

And our contract structure that day, sometimes we might get a little bit of a lag and implementing that.

But our people and know exactly what they need to do and and Tom do you view the catch up.

But I don't alright, Thanks for Asia, and Europe are going to ease.

Thank you very much Stacy.

Thank you very much thank you.

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

Thanks very much.

And just and safety are the Gasifier is running now so it's just a function of.

Paper shuffling to start accruing the benefits.

And Bob Good morning, how are you this morning doing great.

You just asked me a question that I cannot answer because we have been prohibited.

Bye.

Saudi Aramco.

The talk about the state of operation of the refinery and the stage it is and how it is operating and so on for security reasons.

So I cannot tell you what is operating what he's not the operating and all of that.

I mean, if you want and Ken asked the question from Saudi Aramco, and what I can day would say probably the same thing to Russia.

So I apologize you asked the question and I cannot answer sorry about that and.

How about on the debt facility that was launched back in May is that the final piece of it has to be concluded.

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

Got you Okay. Thank you say things very closely.

And really enjoyed working with you over the years.

Thanks, Bob on that question.

And we'll move on to the K Fisher.

With Barclays.

Yes, good morning, Thanks for.

First question just around the win safety I think you mentioned that you thought it was going to get back to a run rate of $150 million to $160 million of EBITDA.

But I didn't understand was that in the fiscal 2022 for you guys or is that calendar 2022 for the customer.

It is the interest go up 2023.

It's called a balance of true.

True I mentioned and the call that it will be low okay. 'twenty 2 as low as 23 gets the okay fair enough and then.

The second 1 on your Alberta project I.

And I believe 1 of your big customers up there of Suncor and they had announced about a month earlier than you guys kind of a similar project does your project supersede what they were going to do or is there enough space up there. The both of you can do a large green hydrogen project.

Well I'll go on volume I, obviously don't want to speak for Suncor day audit costs and that of ours.

But we are not the only supplier they have their own SM ours.

And what they intend to do our contract with them less and since 2028.

I don't know, but.

But is there any intention of about 2.

And the project to replace stayed on as some are just doing a project from the place that owners and their models and <unk>.

What day buy from US that's something that you'll have to talk to them I don't want to the of speaking for them.

But the project day announced and come on stream in 2028, and our projects come on stream of 2024.

Okay. Thank you.

Thank you.

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

And thank you.

Our fuel cell company, which is was the hydrogen customer and noted on their earnings call that they transitioned away from air products, because they were unhappy with the supply and pricing. The same company is also building out their own green hydrogen and supply chain, maybe you want to respond to that situation. Since it was mentioned on and Investor call recently, but.

The question really is more broadly what do you say to investors that might be concerned about competition for hydrogen distribution and mobility applications.

The first of all of it with respect to that specific customer who made those comments at.

And I wish them very good luck until our day are doing via stopped supplying them for a very simple reason because they take the product at the half is worth a lot more and be kind of set it for the higher price of 2 other people. Therefore.

We are in the business of making money and there was no sense for us to continue to set of hydrogen at low prices. That's 5 years stopped beating the dead.

In terms of building their own plans as I said I wish them. Good luck and I hope they are successful.

And as part of other people wanting to get into the business.

The perfectly fine the have been and the business of making hydrogen for the last 60 years.

And the other people are waking up in the morning, and I want to get into the hydrogen business I wish them. Good luck, there is plenty of opportunity plenty of that.

Demand for dish products and as Dave on to get into it.

They are more than welcome and I don't think of Youre concerned about that.

The competition and you have competition and everything else we do.

And therefore I have no concern about that and I wish everybody a good luck, who wants to get into the business the judge.

<unk> have and minor 60 use of the and just thoughts on them.

But that people might consider debt is not that significant but they'll find out what it takes.

Thank you Stacey.

Thank you.

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

Hey, Good morning, Hey, Scott Congratulations hope you find the fun place to retire like Cleveland, but.

Just 1 question on the 20.

2027 golf safety.

You've talked about demand being really good 4.4.

For hydrogen and and other areas.

Is it possible that you could maybe deploy that capital sooner than 'twenty 7 or is it maybe you have to spend.

Spend more potentially if if demand is going to be that strong.

And we believe that the demand is very strong and the b.

And we do believe that day will come with more than that.

So.

And that's our view.

Great. Thank you.

Thank you.

And at this time and I'd like to turn the call back over to Tony for any additional or closing remarks.

Well I just want to.

Thank you everybody for being on our call and listening to our presentation and we appreciate your interest.

And we obviously look forward to discussing our results with you again next quarter as I said the idea for us.

Stay safe and healthy and all of the best.

Thank you very much for being on our call.

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

Q3 2021 Air Products and Chemicals Inc Earnings Call

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