Q1 2025 Air Products and Chemicals Inc Earnings Call
Good morning, and welcome to the Air Products' first quarter earnings release Conference call. Today's call is being recorded at the request of Air products. Please note that the presentation and the comments made on behalf of air products are subject to copyright by air products and all rights are reserved.
Eric: Beginning today's call is Mr. Eric <unk>. Please go ahead Sir.
Speaker Change: Thank you Lisa good morning, everyone.
Speaker Change: The air products first quarter 2025 earnings results teleconference. This is Eric <unk>, Vice President of industrial relations.
Speaker Change: I am pleased to be joined today by Melissa Schafer, our Chief Financial Officer, and Sean Major our executive Vice President General Counsel and Secretary.
Speaker Change: On today's call I'm also pleased to welcome Air Products' Chairman of the Board Wayne Smith.
Speaker Change: Eduardo Melinda Air products, New CEO effective Tomorrow February seven 2025.
Speaker Change: Please turn to slide number two and let me now turn the call over to Wayne for a few brief remarks.
Wayne Smith: Thank you Eric good morning, and welcome everyone.
Wayne Smith: Our next annual meeting of shareholders was held exactly two weeks ago and five new directors were elected to our board.
Wayne Smith: The reconstituted board met immediately quickly coalesced worked intensively and made several key leadership decisions.
Speaker Change: First I'm honored to have been elected as chairman of the board of Air Products', where I served as a director since 2021. Following my career in the chemicals industry, which included 11 years in industrial gases.
Speaker Change: Second I'm honored to be working with our new Vice Chairman Dennis Reilly Denis had a tremendous career in the industrial gas industry, leading cracks there as CEO prior to that Dennis held executive roles at Dupont, and Conoco and industries, which are significant consumers of industrial gases.
Speaker Change: Finally, and most significantly I'm very pleased to introduce our new CEO Eduardo Manassas who's on the call today.
Speaker Change: He brings more than three and a half decades of international experience in all key sectors of industrial gases.
Speaker Change: Last position he was EVP of Lindy for Europe, Middle East and Africa with responsibility for operations in more than 40 countries over $8 billion in sales and more than 18000 employees. He's lived and worked around the world.
Eduardo: We all look forward to working with him taking air products' forward maximizing value for shareholders. Let me now turn over the call to Eduardo to briefly introduce himself.
Eduardo: Thank you Wayne and product is a fantastic company for a bright future and I'm honored to have the opportunity to work with the team to build on our company's strong positions.
Eduardo: Several largest shareholders during the last few weeks to understand their perspectives and requests and starting tomorrow I will begin meeting with employees customers and business partners to move our products forward.
Speaker Change: Barbara is my first day as our products and our employee so I apologize if I'm not gonna be able to take questions on this call, but I look forward to sharing my priorities as the new CEO of air products and to presenting the second fiscal quarter results on the next call.
Eduardo: Now I'll turn the call back to me.
Eduardo: Eduardo before turning the call back over to the management team I would like to take a moment to thank the outstanding employees of air products will remain dedicated energized and focused throughout this process I'd also like to thank safety because semi for his countless contributions and leadership of air products over the past decade, we have a great foundation to build upon.
Eduardo: Now as you can appreciate given the changes underway.
Eduardo: The scope of today's call will be limited to a discussion of the quarterly results of the company and their outlook. We appreciate you may have a variety of questions, which extend beyond the results of the quarter, which will be addressed in due course, but for today, we kindly ask that questions be limited to and focused on the financial results that we disclosed this morning, and our outlook for the remainder of the.
Eduardo: Sure.
Eric: With that let me turn it back over to Eric.
Eric: Thank you Wayne our earnings release and the slides for this call are available on the earnings page of our website at investors that air products Dot com.
Eric: Today's discussion contains forward looking statements, including those about earnings and capital expenditure guidance business outlook and investment opportunities. Please refer to the cautionary note regarding forward looking statements that is provided in our earnings release and on slide number three.
Eric: Additionally throughout today's discussion, we will refer to various financial measures, including earnings per share operating income operating margin EBITDA EBITDA margin the effective tax rate and R. O C E either on a total company or segment basis.
Eric: Unless we specifically state otherwise statements regarding these measures refer to our adjusted non-GAAP financial measures break.
Eric: A reconciliation of these measures to our most directly comparable GAAP financial measures can be found on our investor website in the relevant earnings release section.
Melissa Schafer: Now I'm pleased to turn the call over to Melissa.
Eric: Yeah.
Melissa Schafer: Thank you Eric.
Speaker Change: And good day to everyone. Please turn to slide number four of the materials, we have posted on the website for this call.
Speaker Change: Safety is our number one priority without exception we are proud of the continuous improvement we were able to achieve in this area, but our calling efforts are always towards zero accidents and zero incidents.
Speaker Change: Now please turn to slide number five for our first quarter results.
Speaker Change: As we announced in January 1st quarter adjusted earnings per share of <unk>.
Speaker Change: <unk> 86 exceeded the upper end of our guidance range of 275 to 285.
Speaker Change: 1% over last year.
Speaker Change: And by adults in America.
Speaker Change: Our earnings per share improved.
Speaker Change: The divestment of the LNG process technology and equipment business, which closed at the end of fiscal 2024.
Speaker Change: The LNG business contributed roughly eight cents to our first quarter earnings and 2024.
Speaker Change: Alright, Justin EBITDA margin was up 140 basis points and our adjusted operating margin increased 80 basis points versus prior year.
Speaker Change: Please turn to slide number six for fiscal 'twenty, 'twenty, five second quarter and full year outlook.
Speaker Change: We are maintaining our fiscal 'twenty 25 full year guidance.
Speaker Change: We continue to monitor the strengthening U S dollar tariffs and the global helium market for potential impact the remainder of the year.
Consistent with our focus on driving productivity, we continue to evaluate actions to reduce our cost and improve our services to our customers.
Speaker Change: We expect our second quarter adjusted earnings per share to be in the range of $2 75 to $2.85, which is up one 4% reflective of the LNG divestiture.
Speaker Change: We are proud of the results this quarter I'm, particularly grateful that our people stayed focused on the work at hand, demonstrating their unwavering commitment to our customers shareholders and awesome and Lisa I.
Speaker Change: I would like to thank them for their support and continued efforts to position the company for long term success.
Speaker Change: Now please turn to slide number seven for a detailed review of our first quarter results.
Speaker Change: Compared to last year.
Speaker Change: Overall volume was down 2%, primarily due to the LNG business divestment.
Speaker Change: And America is improved this quarter, but was offset by the weakness in Europe.
Speaker Change: Total company price was up 1%, which equates to a 2% improvement for the merchant business.
Speaker Change: Driven by continued pricing strength in the Americas and Europe.
Speaker Change: Adjusted EBITDA improved 1%, primarily due to better price, partially offset by higher costs and lower equity affiliate income.
Speaker Change: Adjusted EBITDA margin was up 140 basis points due to favorable business mix and price.
Speaker Change: Sequentially volume was down following a strong finish to fiscal 'twenty 'twenty four and the C.
Speaker Change: All of the LNG business in September.
Speaker Change: Now please turn to slide number eight for a discussion of our first quarter adjusted earnings per share.
Speaker Change: Adjusted earnings per share of 286 increased forced that.
Speaker Change: Despite the 8% contribution from LNG in the prior year, which is reflected in our volume there.
Speaker Change: Right.
Speaker Change: Well cost was favorable 10 sets demonstrating continued strength in the Americas and Europe.
Speaker Change: The pricing improvement more than offset unfavorable other costs of seven cents.
Speaker Change: Lower prior year incentive compensation and inflation drove increased costs, which are partially offset by productivity improvements.
Speaker Change: Now please turn to slide number nine for a brief discussion of our business segment results.
Speaker Change: You can find individuals by covering each of the business segments in the appendix.
Speaker Change: Looking at each business segment.
Speaker Change: Americas overall pricing was 2% higher with improved met across most product lines.
Speaker Change: This translates to a 4% merchant pricing gain for the region.
Speaker Change: 3% volume improvement was driven by a significant nonrecurring sale of helium to an existing merchant customer.
Speaker Change: These factors drove adjusted EBITDA up 6% higher and improved adjusted EBITDA margin by 150 basis points.
Speaker Change: For our Asia segment, the 2% volume improvement was driven by contributions from new assets.
Speaker Change: Adjusted EBITDA increased 7%, primarily due to favorable volumes.
Speaker Change: Equity affiliate income.
Speaker Change: Adjusted EBITDA margin was at 160 basis points.
Speaker Change: Looking at Europe results.
Speaker Change: Rod based pricing improved 1% volume was down 5% driven by lower onsite and continued weakness in merchant demand primarily helium.
Speaker Change: Adjusted EBITDA was 3% lower as weaker volume was partially offset by higher pricing and favorable cost you.
Speaker Change: He was Pakistan project is undergoing planned facility upgrades during the first half of fiscal 2025, we expect the facility to return to normal operation and contribute near its full run rate at the start of the third quarter.
Speaker Change: Moving to our Middle East and India segment.
Speaker Change: Lower merchant volume was a headwind for sales and adjusted EBITDA.
Speaker Change: Adjusted EBITDA was also negatively impacted by unfavorable equity affiliate income and costs.
Speaker Change: Finally for our corporate and other segment sales and profits were lower this quarter, primarily due to the sale of the LNG business.
Speaker Change: Thank you and now we will be delighted to answer your questions.
Speaker Change: As a reminder, we request that questions be limited to our financial results and our outlook.
Speaker Change: If you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
Speaker Change: Please limit your questions to one with one follow up.
Speaker Change: Again press Star one to ask a question.
Speaker Change: Well pause just for a moment to allow everyone the opportunity to signal.
Speaker Change: And our first question comes from Chris Parkinson with Wolfe Research.
Chris Parkinson: Great. Thank you so much for taking my question just very quickly just given all the moving parts in Asia.
Chris Parkinson: Should the street be thinking about you know obviously some of the past that one's in the helium business in electronics recovery and just general macroeconomic conditions.
Chris Parkinson: In China, There just general things you can do to triangulate the.
Chris Parkinson: The forward outlook from this point in time, thank you so much.
Chris Parkinson: Hey, Chris Great to hear from you so yeah, let's talk about China.
Chris Parkinson: So China was supported this quarter by new assets and productivity actions.
Chris Parkinson: But China is still a wait and see so right now we see no material improvement are the market still remains challenging we obviously are watching tariffs as well as the China in country stimulus impact in the meantime, we remain focused on productivity and the things that we can match.
Chris Parkinson: And we're focusing on delivering to our customers.
Speaker Change: Got it and just as a quick follow up can we just get a quick update on the Alberta project. Please thank you.
Speaker Change: So thanks, Chris from from a project perspective at this point in time I don't have any new updates from what we had previously shared on calls when we have updates obviously, you'll bring that information to you.
Speaker Change: Okay. Thank you.
Speaker Change: Thanks, guys.
Speaker Change: And our next question comes from Duffy Fischer from Goldman Sachs.
Duffy Fischer: Yes, good morning, guys. So at the midpoint of both your Q2 and the full year you need the second half to be about $1 50 per share better than the first half can you give us a walk how much of that is seasonality and how much is stuff like the asbestos Dan plant coming back obviously, the helium going away.
Duffy Fischer: Some of the the one off stuff that helps us in the walk from first half to second half.
Duffy Fischer: Yeah, Hey, Duffy. Thanks for the question. So the split for the first half and second half is relatively consistent to what we've seen in the past couple of quarters about one per cent difference.
Duffy Fischer: There is definitely seasonality in Q1 and.
Duffy Fischer: Q2, because of the lunar new year in China.
Speaker Change: As you mentioned, we do have ever planned maintenance outages, obviously use Pakistan being the most significant one for.
Speaker Change: For the second half, we're gonna be focusing on pricing action you, Pakistan coming back on stream early in Q3, we're obviously going to be looking to capture volume opportunities.
Speaker Change: And we are going to be executing the remainder of our productivity initiatives.
Speaker Change: We are watching tariffs and the impact from a customer perspective, obviously, Washington, and a strengthening dollar and really just the general macro and geopolitical environment. So keeping an eye on all of those things ought to be read into the rest of the year.
Speaker Change: Okay, and then if you looked at the Americas, excluding that one time sale of helium what would price and volumes have been in Q1.
Duffy Fischer: Fantastic Duffy So let me just give you some generalizations about the Americas business, so pricing was strong across our product lines outside of helium.
And hydrogen volumes remain strong and they were very strong and our heico's business and we actually saw some improvement in our merchant.
Duffy Fischer: Okay. Thank you.
Duffy Fischer: Yep.
And we'll move to our next question from Steve Byrne with Bank of America.
Steve Byrne: Yes. Good morning can you provide a breakdown on the capex outlook for the fiscal year. The four five to 5 billion, how do you expect that capex.
Duffy Fischer: To be deployed by projects.
Duffy Fischer: Yeah. Thanks for the question. So we don't we aren't going to be breaking up that four and a half but the vast majority is going to be the deployment to our large projects. We've got about 750 million associated to ongoing maintenance and.
Duffy Fischer: There's about 1 billion that we associate to our normal let's call. It traditional industrial gas business, we're still forecasting that four and a half to $5 billion to be what we're looking for for this fiscal year.
Duffy Fischer: Okay. Thank you Melissa and any update on the permitting project.
Duffy Fischer: And the World energy.
Duffy Fischer: So at this point in time as we've talked about that project still is on hold awaiting permits well, we've got new updates for that obviously I'll bring it to you.
Duffy Fischer: Okay. Thank you.
Speaker Change: Our next question comes from Jeff Zekauskas with J P. Morgan.
Speaker Change: Thanks very much.
Speaker Change: What was the helium EBITDA contribution in the Americas in the quarter. If there was one.
Speaker Change: So Jeff as always we've not broken out helium.
So I apologize for that.
Speaker Change: From the scale.
Speaker Change: From the sale Whoa, I'm sorry fantastic.
Speaker Change: Yes.
Speaker Change: Yeah, so sorry.
Speaker Change: Sorry, sorry go ahead.
Speaker Change: From the outsized sale what was the benefit from that.
Speaker Change: Yeah. So from the one time sale are the what we're calling the nonrecurring America sale and that is about a 10% E. P. S.
Speaker Change: Contribution for this quarter.
Speaker Change: 10% for the whole company or 10% for that Pat.
Speaker Change: Handset handsets like 10 central.
Speaker Change: Okay, Yes.
Speaker Change: Great and then.
Speaker Change: Leslie can you talk about the overall helium market and what's happening with pricing is different in the different geographic jurisdiction.
Speaker Change: Yeah, let's talk about our helium thanks, Jeff So the helium market as Youre aware is silicon nature, we've worked through these cyclical.
Speaker Change: Ups and downs for many decades at this moment that the market is long we are seeing helium come from the Russian assets are into Asia, which is making the market along but we're continuing to manage and optimize our helium business and obviously, we are in a unique position to really reliably supply our customers.
Speaker Change: Okay. Thank you.
Jeff Zekauskas: Thank you Jeff.
Speaker Change: Yes.
Speaker Change: And our next question comes from David Begleiter with Deutsche Bank.
David Begleiter: Thank you good morning, Melissa and the Americas volume ex helium volumes down around 3%.
David Begleiter: No.
Helium was a contributor contributor, but we really saw very strong.
David Begleiter: Merchant volumes, and our HEICO business, especially along the Gulf Coast continues to be very strong. So helium was a bit of a headwind outside of the one time, but again merchant volumes are very strong in HEICO was strong as well.
Speaker Change: Understood and just in the Middle East and India.
Speaker Change: Talk about the equity affiliate income decline and what drove that.
Speaker Change: Sure absolutely great question.
Speaker Change: So the equity affiliate income noise was really around arches, Dan joint venture given the nature of that contract, we do see some fluctuations quarter by quarter.
Speaker Change: The Jews Dam project is contrary reading as expected and we do anticipate that contribution to be on par with what we saw in 2024.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you Dave.
Speaker Change: And our next question comes from Mike Leach pad with Barclays.
Mike Leach: Great. Thanks, Good morning, just on the <unk> guide it looks like EPS is maybe about a nickel better sequentially. If we back out the 10 cents herself from the helium nonrecurring sale.
Speaker Change: Speak high level, what sequentially getting better or worse as we think about modeling here.
Speaker Change: Sure for the second quarter, we are looking to see some headwinds from used Pakistan, but we obviously have some ah Ah Ah seasonality going into Q1, and many of our geographies. So we will see.
Speaker Change: Improved volumes in the Americas, we're continuing to focus on pricing in Europe, especially with the higher power costs that we're seeing there and as I mentioned, we are closing out the execution of our productivity programs that we had over the last couple of years. So those are really start to show through as many of our Irish law.
Speaker Change: Our results.
Speaker Change: Great. Thank you and then just a quick clarification or confirmation its full year guidance. It does not assume any contributive contribution from the Alberta project. This year is that correct.
Speaker Change: That is correct.
Speaker Change: Great. Thanks.
Speaker Change: And our next question comes from Patrick Cunningham with Citi.
Patrick Cunningham: Hi, good morning.
Patrick Cunningham: So you mentioned monitoring the tariff impact from customers I'm just wondering what your latest thoughts are there any conversations with customers, suggesting that it could be maybe a short term negative to production, but is there any sort of long term benefit of higher manufacturing here in the Americas for example.
Patrick Cunningham: Sure Yeah tariffs are definitely on everybody's mind, Patrick So first as you know for the vast majority of our products. We're in region for region industrial glasses of localized model, so likely from a supply chain and localized customer perspective.
Patrick Cunningham: That should have little impact.
Patrick Cunningham: There could be an impact on projects.
Patrick Cunningham: We anticipate relative to the size of our projects to be moderate and of course, we have a global diversified supply chain.
Patrick Cunningham: To reduce that exposure.
Patrick Cunningham: As you note, we do need to consider the macro impact to our customers and the knock on effect to these tariffs. So we're staying very close to them and updating our forecast to meet their new production needs.
Speaker Change: Got it very helpful. And then interest expense came in a bit lower than what was expected maybe down seven or $8 million sequentially. I mean is there anything any additional interest being capitalize anything strange about the quarter or sort of quarterly rate that we can expect going forward.
Speaker Change: So you know interests, obviously has a little bit of movement based on the timing of the debt draw. So we did obviously had capitalized interests associated to our neon projects as well as our other projects largest contribution is capitalized interest of course going to name them, but but no nothing.
Speaker Change: Else really significant other than that capitalized interest you know obviously as we take on new debt that will increase but well look to maximize capitalize interest as much as we can on our significant projects.
Speaker Change: Great. Thank you so much.
Speaker Change: And well move to our next question from Josh Spector with UBS.
Josh Spector: Yeah, Hi, good morning, I wanted to follow up on the second half bridge I think in response to the earlier question you talked about pricing actions. So specifically to that I mean, I assume higher energy costs are having an impact negatively on two Q is your comment about second half improvement that you recover some of that or do you have vis.
Josh Spector: Ability to pricing actions beyond response to near term energy that you have visibility to that you're baking into your guidance.
Speaker Change: Josh Thanks, it's good to hear from you. So as I mentioned, we are seeing power cost increase specifically in Europe. So as you know there is usually a month or a quarter, depending on the customer delay and being able to capture that increase.
Speaker Change: And power costs with pricing actions. So obviously the teams are working very hard with our customer base to be able to quickly action on those pricing actions, but there is usually about a month or so maybe even a quarter delay. So we are looking to take those pricing actions likely into the second half.
Speaker Change: Of this fiscal year.
Speaker Change: Okay. Thanks, and can you just comment on what corporate cost is baked into your guide I think the quarter came in a bit higher than we expected. So we're not sure what the right run rate as you're assuming there.
Speaker Change: So we did see this quarter a bit of a headwind let's call. It about seven cents now as I mentioned in my comments there is some inflation baked in there. The other main driver of that is obviously, we had a tougher our results last.
Speaker Change: So we took incentive compensation down so as we accrue for this year, you'll see a little bit of a headwind with the incentive compensation accrual and obviously last year, we're looking to take the actions and there was a little bit of cost associated with our productivity actions, having individuals' come on and then.
Speaker Change: Being able to exit other individuals in the other geographies their productivity actions will start to really flow through this year and likely in the second half you'll see that really ramp up.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from John Roberts with Mizuho.
John Roberts: Thank you Wayne good to talk again, and congratulations toward Gerardo and Dennis.
John Roberts: Wayne how do you see the role is different between chairman and Vice Chairman.
John Roberts: [laughter].
Speaker Change: Thanks, John for your question listen I think you can understand that we've got a lot of change going on right now the board really is coalescing and working nicely together lots of do I think we can talk more on that in the future.
John Roberts: Once we've got.
Speaker Change: Things moving along a little bit better, but thanks. Thanks for the question John.
Speaker Change: Maybe Melissa is back to stand as a relatively new plant, what what upgrades does it need.
Speaker Change: Yeah. Thanks for the question John So.
Speaker Change: As I mentioned, you could see I was going through a planned maintenance.
Speaker Change: The U S and asset when we took that asset on we did determine that there was a need for a turnaround to allow some of the improvement.
Speaker Change: To bring the plant up to speed to air Products' standard.
Speaker Change: So this is all part of the plan, we'll see that coming back on stream in Q through three and we'll see that that does for BSD run through the rest of the year, but again was plan was built into the original acquisition.
Speaker Change: Reising and plan for the BSD moving forward.
Speaker Change: Thank you.
Speaker Change: And our next question comes from Laurence Alexander with Jefferies.
Speaker Change: Hi, This is Dan Rizzo on for Laurence does your outlook for 2025 assume any improvement in like industrial activity or in consumer demand.
Speaker Change: So we thanks for the question.
Speaker Change: And we are not looking for very much improvement from a global perspective, and industrial production you guys can see the numbers. There is not a lot of significant improvement in any geographies that we're seeing them theres about 2% I believe from an average globally. So we're not looking to say there is gonna be signet.
Speaker Change: Second industrial production improvement throughout this year.
Speaker Change: And can you guys remind us in 2017 2018 did those tariffs have any effect at all on the demand on your demand on you and your customer production levels, particularly in Asia, I guess, where the weather was focus last time.
Speaker Change: So I'm going to have to come back to you on that question I was not CFO at that time. So I will have the teams come back to you with that answer on 27 2018.
Speaker Change: Alright, Thank you very much.
Speaker Change: Yes. Thank you.
Speaker Change: Well move now to Kevin Mccarthy with vertical research partners.
Kevin Mccarthy: Yes. Thank you and good morning, I was wondering if you could provide an update on your blue hydrogen project in Louisiana, and specifically I'm interested in the prospect for partnerships I think in the past you've discussed.
Kevin Mccarthy: Potentially bringing in an equity partner and or partners for sequestration or blue ammonia offtake I. Appreciate you've had your hands full perhaps in recent months, but wondering if.
Kevin Mccarthy: There has been any any progress.
Kevin Mccarthy: Made toward those ends.
Kevin Mccarthy: Yeah, Kevin good to hear from you.
Kevin Mccarthy: As associated to our Louisiana project, it's being executed on the normal course, no significant updates on the project execution.
Kevin Mccarthy: On on the normal course, as we projected.
Kevin Mccarthy: From a partnership perspective.
Kevin Mccarthy: We've been busy but the teams have been focused on going out and having the right conversations with parties that would be interested in equity partnerships coupled with offtake. So we are having those active conversations focusing are largely in Asia, Japan Korea on potential equity partnerships, but it really are open.
Kevin Mccarthy: It up to other partnerships from an industry perspective, as well when we have an update and progress those discussions obviously, we'll bring that forward it to you.
Steve Byrne: Very good and then secondly, Melissa I think air products has signaled in the past that you would intend to be free cash flow positive in fiscal 2027 I believe.
Speaker Change: Is that still the case and perhaps you can elaborate on.
Speaker Change: On the free cash flow trajectory as you see it shaping up here.
Speaker Change: Through the management transition as possible.
Speaker Change: Great question, yes, but let's talk about cash flow.
Speaker Change: So we are still projecting to be net cash flow positive in FY 'twenty 'twenty seven that's still the forecast we could look as we just talked about for opportunities for equity partnerships potentially even in project financing if the portfolio fits and as those progress obviously.
Speaker Change: I said I will keep you updated them at at this point in time I look forward to working with Eduardo and the board to understand what their plans are for the projects and as we have updates from that perspective, and how that affects our cash flow, obviously will bring thus far it as well.
Speaker Change: No changes at this point.
Speaker Change: And our next question comes from Michael She's done with Wells Fargo.
Speaker Change: Hi, This is on for Mike and I know you touched on pricing in Europe being higher because energy prices are higher are you similarly going to be pushing for higher pricing in Americas and Asia as well.
Speaker Change: So lately so pricing is something that we focus on on a day to day hourly basis right. So our teams are actively working pricing and that is not just unique to Europe Europe I spiked out specifically because we are seeing how our cost increase but we are trying to.
Speaker Change: Maximize pricing and the balance of pricing and volume every single day with our customers. So absolutely. The teams are looking to take pricing actions, where they can in the Americas and in the Asia market as well.
Speaker Change: Got it thanks and are you able to give us a feel for the capital intensity of these back with an upgrade.
Speaker Change: So there is no a little bit of what I spoke about before is it's an interesting situation. Because this was negotiated into the acquisition price.
Speaker Change: So there will be no additional capital outlay associated to these upgrades that will be a discount to the $100 million that we have outstanding on that acquisition. So the acquisition price doesn't change no additional capital outlets and what we've spoke about before it would just be a discount associated to the $100 million.
Speaker Change: Outstanding we expect it to be much less.
Speaker Change: But that again will be no additional outlay for air products.
Speaker Change: Thank you for that question got it.
Speaker Change: And we'll move to our next question from John Mcnulty from BMO capital markets.
John Mcnulty: Yes. Good morning, Thanks for taking my question so.
Speaker Change: So I know air products had a number of cost cutting and restructuring initiatives and kind of late 'twenty three and then in 'twenty four as well can you help us to think about how much in terms of.
Speaker Change: The the benefit of that we should see in 2025 and how it sequences through the year.
Speaker Change: Yeah, John it's great to hear from you and thank you for the question. So you're right. We've had let's call. It two significant tranches of cost productivity actions in aggregate, we've taken about 5%.
Speaker Change: Of our workforce down.
Speaker Change: If you look about that over our fiscal year, it's about $75 million that being said, obviously as you could consider there is inflation as well as wage increases that could compensate or overcompensate some of that but we're still looking for the cost productivity to really.
Speaker Change: Support us in the back half of this fiscal year.
Speaker Change: Got it okay. So so at least as of now $75 million through 2025.
Speaker Change: <unk> by some inflation is am I understanding that right.
Speaker Change: Proportional so we'll see that ramp up in the back half of the fiscal year, we are seeing so.
Speaker Change: What for you on Q2, but not the full ramp.
Speaker Change: Okay, and then just one follow up on Uzbek I think that was supposed to add about 35 36 cents to EPS on an annualized basis.
Speaker Change: Given the turnaround work that you're doing what do you expect that contribution to be in 'twenty five.
Speaker Change: Just so we can kind of think about when when we get to normalize what the additional help is going to be in 'twenty six.
Speaker Change: So starting in Q3 will be fully ramped up again, so you should take the proportional corridors for Q3 and Q4, we had about let's call. It a month and a half of contributions in Q1 Q2 will be down in Q3, and Q4 should be fully ramped.
Speaker Change: Got it okay. Thanks for the color.
Speaker Change: Yeah, absolutely. Thank you.
Speaker Change: And ladies and gentlemen that concludes today's question and answer session. At this time I will turn the conference back to our speakers for any additional or closing remarks.
Speaker Change: Yes. Thank you I would like to thank everyone again for joining our call today. We appreciate your interest in air products and we look forward to discussing our results with you again next quarter and please stay safe and healthy and all the best and have a wonderful day.
Speaker Change: And ladies and gentlemen. This concludes today's call. Thank you for your participation you may now disconnect and have a great day.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].