Air Products and Chemicals Q1 2026 Air Products and Chemicals Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Air Products and Chemicals Inc Earnings Call
Speaker #1: 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.
Speaker #1: Beginning today's call is Megan
Speaker #1: Britt: Hello, and welcome to the first quarter.
Megan Britt: Hello, and welcome to the Q1 fiscal 2026 earnings conference call for Air Products. Our prepared remarks today will be led by Eduardo Menezes, Chief Executive Officer, and Melissa Schaeffer, Chief Financial Officer. We have prepared presentation slides to supplement our remarks during the call, which are posted on the investor relations section of the Air Products website. During this call, we will make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including, but not limited to, those discussed on this call and in the forward-looking statements and risk factors section of our reports filed with or furnished to the SEC. We do not undertake any duty to update any forward-looking statements.
Megan Britt: Hello, and welcome to the Q1 fiscal 2026 earnings conference call for Air Products. Our prepared remarks today will be led by Eduardo Menezes, Chief Executive Officer, and Melissa Schaeffer, Chief Financial Officer. We have prepared presentation slides to supplement our remarks during the call, which are posted on the investor relations section of the Air Products website. During this call, we will make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including, but not limited to, those discussed on this call and in the forward-looking statements and risk factors section of our reports filed with or furnished to the SEC. We do not undertake any duty to update any forward-looking statements.
Speaker #2: Fiscal 2026 earnings conference call for Air Products. Our prepared remarks today will be led by Eduardo Menezes, Chief Executive Officer, and Melissa Schaeffer, Chief Financial Officer.
Speaker #2: We have prepared presentation slides to supplement our remarks during the call, which are posted on the Investor Relations section of the Air Products website.
Speaker #2: During this call, we will make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties.
Q1 2026 Air Products and Chemicals Inc Earnings Call
Speaker #2: Our actual results could materially differ from these statements due to these risks and uncertainties including but not limited to those discussed on this call and in the forward-looking statements and risk factors sections of our reports filed with or furnished to the SEC.
Speaker #2: We do not undertake any duty to update any forward-looking statements. Please note, in today's presentation, we'll refer to various financial measures including earnings per share, capital expenditures, operating income, operating margin, the effective tax rate, ROC, and net debt to EBITDA, either on a total company or segment basis.
Megan Britt: Please note in today's presentation, we'll refer to various financial measures, including earnings per share, capital expenditures, operating income, operating margin, the effective tax rate, ROC, and net debt to EBITDA, either on a total company or segment basis. Unless we specifically state otherwise, statements regarding these measures refer to our adjusted non-GAAP financial measures. Reconciliations of these measures to our most directly comparable GAAP financial measures can be found on our investor website in the relevant earnings release section. It's now my pleasure to turn the call over to Eduardo.
Please note in today's presentation, we'll refer to various financial measures, including earnings per share, capital expenditures, operating income, operating margin, the effective tax rate, ROC, and net debt to EBITDA, either on a total company or segment basis. Unless we specifically state otherwise, statements regarding these measures refer to our adjusted non-GAAP financial measures. Reconciliations of these measures to our most directly comparable GAAP financial measures can be found on our investor website in the relevant earnings release section. It's now my pleasure to turn the call over to Eduardo.
Speaker #2: Unless we specifically state otherwise, statements regarding these measures refer to our adjusted non-gap financial measures. Reconciliations of these measures to our most directly comparable gap financial measures can be found on our Investor website in the relevant earnings release section.
Speaker #2: It's now my pleasure to turn the
Speaker #2: call over to Eduardo. Thank
Eduardo Menezes: Thank you, Megan. Hello, and thank you for joining our call today. Please turn to slide 3. Earlier today, we reported results for Q1 of fiscal 2026. We delivered 12% improvement in adjusted operating income that was broad-based across our reporting segments. Earnings per share were $3.16, up 10% relative to the prior year on stronger productivity despite weak economic conditions. Our operating margin of 24.4% was also up, while return on capital of 11% was slightly lower than last year, but remained stable sequentially. I'm pleased with the progress that our global team is making to improve our bottom line results, and Q1 represents a solid start to our fiscal year. I have now been at Air Products for a full year.
Eduardo Menezes: Thank you, Megan. Hello, and thank you for joining our call today. Please turn to slide 3. Earlier today, we reported results for Q1 of fiscal 2026. We delivered 12% improvement in adjusted operating income that was broad-based across our reporting segments. Earnings per share were $3.16, up 10% relative to the prior year on stronger productivity despite weak economic conditions. Our operating margin of 24.4% was also up, while return on capital of 11% was slightly lower than last year, but remained stable sequentially. I'm pleased with the progress that our global team is making to improve our bottom line results, and Q1 represents a solid start to our fiscal year. I have now been at Air Products for a full year.
Speaker #3: you, Megan. Hello and thank you for joining our call today. Please turn to Slide 3. Earlier today, we reported results for the first quarter of fiscal 2026.
Speaker #3: We delivered a 12% improvement in adjusted operating income that was broad-based across our reporting segments. Earnings per share were $3.16, up 10% relative to the prior year, on stronger productivity despite weak economic conditions.
Speaker #3: Our operating margin of 24.4% was also up while return on capital of 11% was slightly lower than last year, but remained stable sequentially. I'm pleased with the progress that our global team is making to improve our bottom line, results, and the first quarter represents a solid start to our fiscal year.
Speaker #3: I have now been at Air Products for a full year. In that time, we have taken significant actions to refocus on the core industrial gas business, including project cancellations, headcount optimization, and asset rationalization that are showing up in our results.
Eduardo Menezes: In that time, we have taken significant actions to refocus on the core industrial gas business, including project cancellations, headcount optimization, and asset rationalization that are showing up in our results. Moving to slide four. We are focused on 3 key priorities for 2026, consistent with the longer-term strategy that we shared last year. One, unlock earnings growth, two, optimize large projects, and three, maintain capital discipline. On unlocking earnings growth, we are affirming our full year earnings guidance, which implies an improvement of 7 to 9% at the midpoint for the full fiscal year. EPS growth is expected to be achieved primarily through continued focus on pricing actions, productivity, and new assets contribution. We are on track to deliver in line with these expectations, despite continuing helium headwinds in a sluggish macroeconomic environment that will limit volume growth for the fiscal year.
In that time, we have taken significant actions to refocus on the core industrial gas business, including project cancellations, headcount optimization, and asset rationalization that are showing up in our results. Moving to slide four. We are focused on 3 key priorities for 2026, consistent with the longer-term strategy that we shared last year. One, unlock earnings growth, two, optimize large projects, and three, maintain capital discipline. On unlocking earnings growth, we are affirming our full year earnings guidance, which implies an improvement of 7 to 9% at the midpoint for the full fiscal year. EPS growth is expected to be achieved primarily through continued focus on pricing actions, productivity, and new assets contribution. We are on track to deliver in line with these expectations, despite continuing helium headwinds in a sluggish macroeconomic environment that will limit volume growth for the fiscal year.
Speaker #3: Moving to Slide 4, we are focused on three key priorities for 2026, consistent with the longer-term strategy that we shared last year. One, unlocked earnings growth; two, optimize large projects; and three, maintain capital discipline.
Speaker #3: On unlocking earnings growth, we are affirming our full-year earnings guidance, which implies an improvement of 7 to 9% at the midpoint for the full fiscal year.
Speaker #3: EPS growth is expected to be achieved primarily through continued focus on pricing actions and productivity and new assets contribution. We are on track to deliver in line with these expectations despite continued hidden headwinds and a sluggish macroeconomic environment that will limit volume growth for the fiscal year.
Eduardo Menezes: Despite these headwinds, we see pockets of resilience from key sectors, including refining, electronics, and aerospace... For example, earlier this week, we announced our latest supply contract with NASA to provide liquid hydrogen to multiple US facilities. On our second priority, we continue to make strides to optimize our large project portfolio. Coming into our products, I prioritize de-scoping and de-risking our clean energy project portfolio. Along this path, in December, we announced that we are in advanced negotiations with Yara International on the low emission ammonia projects in Saudi Arabia and the US. I will share more detail about our next steps in a minute. Finally, on our third priority, we continue to take actions to drive discipline in our capital allocation to improve our balance sheet position, while at the same time investing in a strong base business growth and returning cash to shareholders.
Despite these headwinds, we see pockets of resilience from key sectors, including refining, electronics, and aerospace... For example, earlier this week, we announced our latest supply contract with NASA to provide liquid hydrogen to multiple U.S. facilities. On our second priority, we continue to make strides to optimize our large project portfolio. Coming into our products, I prioritize de-scoping and de-risking our clean energy project portfolio. Along this path, in December, we announced that we are in advanced negotiations with Yara International on the low emission ammonia projects in Saudi Arabia and the US. I will share more detail about our next steps in a minute. Finally, on our third priority, we continue to take actions to drive discipline in our capital allocation to improve our balance sheet position, while at the same time investing in a strong base business growth and returning cash to shareholders.
Speaker #3: Despite these headwinds, we see pockets of resilience from key sectors, including refining, electronics, and aerospace. For example, earlier this week, we announced our latest supply contracts with NASA to provide liquid hydrogen to multiple U.S. facilities.
Speaker #3: On our second priority, we continue to make strides to optimize our large project portfolio. Coming into Air Products, I prioritize de-scoping and de-risking our clean energy project portfolio.
Speaker #3: Along this path, in December, we announced that we are in advanced negotiations with Yara International on the low-emission ammonia projects in Saudi Arabia and the US.
Speaker #3: I will share more detail about our next steps in a minute. Finally, on our third priority, we continue to take actions to drive discipline in our capital allocation to improve our balance sheet position while at the same time investing in a strong base business growth and returning cash to shareholders.
Speaker #3: As we have previously indicated, we expect to reduce our capital expenditures by approximately $1 billion in fiscal 2026 and remain on track for that objective.
Eduardo Menezes: As we have previously indicated, we expect to reduce our capital expenditures by approximately $1 billion in fiscal 2026, and remain on track on that objective. Fiscal 2026 and the first part of 2027 are heavy CapEx periods for the clean energy products in Canada and the Netherlands, and we expect CapEx to decline significantly after these products go on stream. On return of cash to shareholders, we announced earlier this week that our board has authorized an increase in our dividend, marking our 44th consecutive year of dividend increases. We remain committed to disciplined capital allocation that ensures that we are well positioned to continue our strong track record of returning cash to our shareholders. Please turn to slide 5.
As we have previously indicated, we expect to reduce our capital expenditures by approximately $1 billion in fiscal 2026, and remain on track on that objective. Fiscal 2026 and the first part of 2027 are heavy CapEx periods for the clean energy products in Canada and the Netherlands, and we expect CapEx to decline significantly after these products go on stream. On return of cash to shareholders, we announced earlier this week that our board has authorized an increase in our dividend, marking our 44th consecutive year of dividend increases. We remain committed to disciplined capital allocation that ensures that we are well positioned to continue our strong track record of returning cash to our shareholders. Please turn to slide 5.
Speaker #3: Fiscal 2026 and the first part of 2027 are heavy CapEx periods for the clean energy projects in Canada and the Netherlands. We expect CapEx to decline significantly after these projects go on stream.
Speaker #3: On return of cash to shareholders, we announced earlier this week that our Board has authorized an increase in our dividend, marking our 44th consecutive year of dividend increases.
Speaker #3: We remain committed to disciplined capital allocation that ensures we are well positioned to continue our strong track record of returning cash to our shareholders.
Speaker #3: Please turn to Slide 5. In December, Air Products issued a joint press release with Yara International announcing that we are in advanced negotiations for the low-emission ammonia projects in the U.S. and Saudi Arabia.
Eduardo Menezes: In December, Air Products issued a joint press release with Yara International, announcing that we are in advanced negotiations for the low emission ammonia projects in the US and Saudi Arabia. We believe that the potential collaboration provides a strong strategic fit based on complementary capabilities. The collaboration would connect the global industrial gas expertise of Air Products with the global ammonia supply network and world-leading crop nutrition and ammonia expertise of Yara. In Saudi Arabia, we are in advanced negotiations on a marketing and distribution agreement where Yara would distribute and commercialize all the renewable ammonia that is now used by Air Products to produce green hydrogen in Europe. We expect to have that agreement finalized in the first half of 2026. For the US project in Louisiana, our goal is to have a traditional industrial gas project scope and return for Air Products.
In December, Air Products issued a joint press release with Yara International, announcing that we are in advanced negotiations for the low emission ammonia projects in the US and Saudi Arabia. We believe that the potential collaboration provides a strong strategic fit based on complementary capabilities. The collaboration would connect the global industrial gas expertise of Air Products with the global ammonia supply network and world-leading crop nutrition and ammonia expertise of Yara. In Saudi Arabia, we are in advanced negotiations on a marketing and distribution agreement where Yara would distribute and commercialize all the renewable ammonia that is now used by Air Products to produce green hydrogen in Europe. We expect to have that agreement finalized in the first half of 2026. For the U.S. project in Louisiana, our goal is to have a traditional industrial gas project scope and return for Air Products.
Speaker #3: We believe that the potential collaboration provides a strong strategic fit based on complementary capabilities. The collaboration would connect the global industrial gas expertise of Air Products with the global ammonia supply network and world-leading crop nutrition and ammonia expertise of Yara.
Speaker #3: In Saudi Arabia, we are in advanced negotiations on a marketing and distribution agreement where Yarra would distribute and commercialize all the renewable ammonia that is not used by Air Products to produce clean hydrogen in Europe.
Speaker #3: We expect to have that agreement finalized in the first half of 2026. For the US project in Louisiana, our goal is to have a traditional industrial gas project scoped and returned for Air Products.
Speaker #3: To that end, we are in negotiations for Yarra to acquire the ammonia production and distribution assets from our Louisiana project and execute a 25-year hydrogen and nitrogen supply agreement for an industrial gas facility that we would build, own, and operate by Air Products.
Eduardo Menezes: To that end, we are in negotiations for Yara to acquire the ammonia production distribution assets from our Louisiana project and execute a 25-year hydrogen and nitrogen supply agreement for the industrial gas facility that we would build, and own, and operate by Air Products. Moving to slide six, I want to be very clear that we have set a high bar for moving forward with the Louisiana project, which aligns with our disciplined capital allocation strategy. Already, we have taken action to find a world-class partner for the ammonia production. In this way, we would have traditional industrial gas company scope with a long-term offtake agreement to supply hydrogen and nitrogen to Yara. We also require the partner for the carbon capture and sequestration scope prior to taking a final investment decision.
To that end, we are in negotiations for Yara to acquire the ammonia production distribution assets from our Louisiana project and execute a 25-year hydrogen and nitrogen supply agreement for the industrial gas facility that we would build, and own, and operate by Air Products. Moving to slide six, I want to be very clear that we have set a high bar for moving forward with the Louisiana project, which aligns with our disciplined capital allocation strategy. Already, we have taken action to find a world-class partner for the ammonia production. In this way, we would have traditional industrial gas company scope with a long-term offtake agreement to supply hydrogen and nitrogen to Yara. We also require the partner for the carbon capture and sequestration scope prior to taking a final investment decision.
Speaker #3: Moving to slide 6, I want to be very clear that we have set a high bar for moving forward with the Louisiana project, which aligns with our disciplined capital allocation strategy.
Speaker #3: Already, we have taken action to find a world-class partner for the ammonia production. In this way, we would have traditional industrial gas company scope, with a long-term off-take agreement to supply hydrogen and nitrogen to Yarra.
Speaker #3: We'd also require a partner for the carbon capture and sequestration scope prior to taking a final investment decision. We
Eduardo Menezes: We have already launched an RFP process for the CO2 transport and storage scope, and are in active discussions with several key sequestration service providers. More importantly, we must have a highly reliable capital cost estimate based on agreements with reputable EPCs that meet our return requirements. A key FID requirement for Air Products is having a project return on the go-forward capital significantly higher than our traditional hurdle rates. We expect to have full clarity on the project costs in the next few months. Overall, the project has many positive economic aspects, including location and the ability to receive 45Q tax credits, which drives significantly higher returns per share for the project during the first 12 years of operation. We are monitoring recent reports related to fertilizers CBAM tariffs in Europe.
We have already launched an RFP process for the CO2 transport and storage scope, and are in active discussions with several key sequestration service providers. More importantly, we must have a highly reliable capital cost estimate based on agreements with reputable EPCs that meet our return requirements. A key FID requirement for Air Products is having a project return on the go-forward capital significantly higher than our traditional hurdle rates. We expect to have full clarity on the project costs in the next few months. Overall, the project has many positive economic aspects, including location and the ability to receive 45Q tax credits, which drives significantly higher returns per share for the project during the first 12 years of operation. We are monitoring recent reports related to fertilizers CBAM tariffs in Europe.
Speaker #1: We have already launched an RFP process for the CO2 transport and storage scope, and are in active discussions with several key sequestration service providers.
Speaker #1: More importantly , we must have a highly reliable , active discussions with several key sequestration service providers . More importantly , we must have a highly reliable capital cost estimate based on agreements with reputable EPCs that meet our return requirements key .
Speaker #1: requirement for A our products is having a project return on the go forward capital , significantly higher than our traditional hurdle rates . We expect to have full clarity on the project costs in the next few months .
Speaker #1: Overall , the project has many positive economic aspects , including location and the ability to receive 45 Q2 tax credits , which drive significantly higher returns per share for the project .
Eduardo Menezes: CBAM came into effect in 1 January 2026, and proposals to modify the current scheme would need to be discussed and approved by the EU. Any change in the CBAM rules would have an indirect effect on our potential Louisiana project, as only gray ammonia imports are subject to significant CBAM tariffs. Overall, Yara bears the regulatory risk related to CBAM changes if the project goes forward. We are following this subject closely with Yara and continue to work on the cost estimate. Please be assured that the Air Products management team and board will take the time needed and drive a very high level of diligence on the capital costs before we reach our own FID. Now, I will turn the call over to Melissa to discuss our financial results in great depth and review our 2026 outlook. Melissa?
CBAM came into effect in 1 January 2026, and proposals to modify the current scheme would need to be discussed and approved by the EU. Any change in the CBAM rules would have an indirect effect on our potential Louisiana project, as only gray ammonia imports are subject to significant CBAM tariffs. Overall, Yara bears the regulatory risk related to CBAM changes if the project goes forward. We are following this subject closely with Yara and continue to work on the cost estimate. Please be assured that the Air Products management team and board will take the time needed and drive a very high level of diligence on the capital costs before we reach our own FID. Now, I will turn the call over to Melissa to discuss our financial results in great depth and review our 2026 outlook. Melissa?
Speaker #1: During the first 12 years of operation, we are monitoring recent reports related to fertilizer C-band tariffs in Europe. C-band came into effect on January 1, 2026, and proposes to modify the current scheme, which would need to be discussed and approved by the EU.
Speaker #1: Any change in the C-band rules would have an indirect effect on our potential Louisiana project, as only gray ammonia imports are subject to significant C-band tariffs.
Speaker #1: Overall , the Arab bears the regulatory risk related to C-band changes . If the project goes forward , we are following this subject closely with Yara and continue to work on the cost estimate .
Speaker #1: Please be assured that the Air Products management team and Board will take the time needed to drive a very high level of diligence on the capital cost before we reach our own FID.
Speaker #1: Now I will turn the call over to Melissa to discuss our financial results in greater depth and review our 2026 outlook . Alison .
Melissa Schaeffer: Thank you, Eduardo. Hello, and welcome to those joining our call today. Please move to slide 7 for a high-level summary of our Q1 financial results. With respect to sales, volume was flat, as favorable on-site volume was offset by lower helium, which included a sizable non-recurring helium sale in the Americas in the prior year, providing for tough comparison in the Q1. Price improved on non-helium merchant products, particularly in the Americas and Europe. Operating income was up 12%, and margin was up 140 basis points on business mix and non-helium price, offsetting tough year-on-year comparison. Margin also improved despite a 50 basis point headwind from higher energy costs pass-through, driven by the Americas. Lower costs also improved results, primarily driven by productivity, net of fixed cost inflation, and lower maintenance.
Melissa Schaeffer: Thank you, Eduardo. Hello, and welcome to those joining our call today. Please move to slide 7 for a high-level summary of our Q1 financial results. With respect to sales, volume was flat, as favorable on-site volume was offset by lower helium, which included a sizable non-recurring helium sale in the Americas in the prior year, providing for tough comparison in the Q1. Price improved on non-helium merchant products, particularly in the Americas and Europe. Operating income was up 12%, and margin was up 140 basis points on business mix and non-helium price, offsetting tough year-on-year comparison. Margin also improved despite a 50 basis point headwind from higher energy costs pass-through, driven by the Americas. Lower costs also improved results, primarily driven by productivity, net of fixed cost inflation, and lower maintenance.
Speaker #2: Thank you . Eduardo . Hello and welcome to those joining our call today . Please move to slide seven for a high level summary of our first quarter financial results .
Speaker #2: respect to With sales , volume was flat as favorable on site volume was offset by lower helium , which included a sizable non-recurring helium sale in the Americas in the prior year , providing for tough comparisons in the first quarter .
Speaker #2: Price improved on helium merchant products , particularly in the Americas and Europe . Operating income was up 12% and margin was up 140 basis points on business mix and non helium price offsetting tough year on year comparisons .
Speaker #2: Margin also improved despite a 50 basis point headwind from higher energy costs . Pass through driven by the Americas . Lower costs . Also improved results , primarily driven by productivity , net of fixed cost inflation and lower maintenance earnings per share of $3.16 , which grew 10% from prior year .
Melissa Schaeffer: Earnings per share of $3.16, which grew 10% from prior year, exceeded the top end of our guidance range. Return on capital of 11% was lower versus prior year, but stable sequentially as we continue to execute on our project backlog. Moving now to slide 8. Our Q1 earnings per share of $3.16 increased $0.30 or 10% from prior year. Despite continued helium headwinds, which include the prior year non-recurring helium sale in the Americas of approximately $0.10, the base business continues to demonstrate strong resilience in an uncertain macroeconomic environment. Favorable on-site volume, non-helium pricing actions, and ongoing productivity improvements drove results this quarter. Moving now to slide 9. I will provide an overview of our results by segment. You can find additional details of the quarterly segment results in the appendix.
Earnings per share of $3.16, which grew 10% from prior year, exceeded the top end of our guidance range. Return on capital of 11% was lower versus prior year, but stable sequentially as we continue to execute on our project backlog. Moving now to slide 8. Our Q1 earnings per share of $3.16 increased $0.30 or 10% from prior year. Despite continued helium headwinds, which include the prior year non-recurring helium sale in the Americas of approximately $0.10, the base business continues to demonstrate strong resilience in an uncertain macroeconomic environment. Favorable on-site volume, non-helium pricing actions, and ongoing productivity improvements drove results this quarter. Moving now to slide 9. I will provide an overview of our results by segment. You can find additional details of the quarterly segment results in the appendix.
Speaker #2: We exceeded the top end of our guidance range. Return on capital of 11% was lower versus the prior year, but stable sequentially as we continue to execute on our project backlog.
Speaker #2: Moving now to slide eight , first quarter our earnings per share of $3.16 increased $0.30 , or 10% , from prior year , despite continued helium headwinds , which include the prior year non-recurring helium sale in the Americas of approximately $0.10 .
Speaker #2: The base business continues to demonstrate strong resilience and an uncertain macroeconomic environment favorable on site volume non helium pricing actions , and ongoing productivity improvements drove results this quarter .
Speaker #2: Moving now to slide nine. I will provide an overview of our results by segment. You can find additional details of the quarterly segment results in the appendix for the quarter.
Melissa Schaeffer: For the quarter, Americas sales were up 4%, driven by higher energy pass-through. Operating income improved on price, on-site volume, and lower maintenance, partially offset by prior-year non-recurring items and fixed cost inflation. Sales in our Asia segment were up 2%, while operating income was up 7%. This improvement was driven by productivity and reduced depreciation from certain gasification assets held for sale, partially offset by lower helium. We saw a modest contribution from our new assets as they continued to ramp up, contributing further in the second half of the fiscal year. Europe sales and operating income both increased due to volume and price, as well as favorable currency. Higher volumes were driven by on-site, including a prior-year turnaround and non-helium merchant. Operating income was also impacted by higher costs associated with depreciation and fixed cost inflation despite productivity improvements.
For the quarter, Americas sales were up 4%, driven by higher energy pass-through. Operating income improved on price, on-site volume, and lower maintenance, partially offset by prior-year non-recurring items and fixed cost inflation. Sales in our Asia segment were up 2%, while operating income was up 7%. This improvement was driven by productivity and reduced depreciation from certain gasification assets held for sale, partially offset by lower helium. We saw a modest contribution from our new assets as they continued to ramp up, contributing further in the second half of the fiscal year. Europe sales and operating income both increased due to volume and price, as well as favorable currency. Higher volumes were driven by on-site, including a prior-year turnaround and non-helium merchant. Operating income was also impacted by higher costs associated with depreciation and fixed cost inflation despite productivity improvements.
Speaker #2: Americas sales were up 4%, driven by higher energy pass-through operating income, improved on price on set volume, and lower maintenance, partially offset by prior year non-recurring items and fixed cost inflation.
Speaker #2: Sales in our Asia segment were up 2%, while operating income was up 7%. This improvement was driven by productivity and reduced depreciation from certain gasification assets held for sale, partially offset by lower helium.
Speaker #2: We saw a modest contribution from our new assets as they continue to ramp up, contributing further in the second half of the fiscal year.
Speaker #2: Europe sales and operating income , both increased due to volume and price , as well as favorable currency . Higher volumes were driven by on site , including a prior year turnaround and non helium merchant operating income was also impacted by higher costs associated with depreciation and fixed cost inflation .
Melissa Schaeffer: In our Middle East and India segment, operating income improved on lower cost, while equity affiliate income remained flat. Lastly, the corporate and other segment results improved from lower costs, including productivity actions. Moving now to slide 10. We continue to generate strong cash flows from our base business. Our investments in both energy transition and traditional industrial gas projects remain on track with our expected capital spend for the fiscal year. Additionally, we returned nearly $400 million in cash to our shareholders, increased the quarterly dividend, marking the 44th consecutive year of dividend increases. As it relates to our leverage, our net debt to EBITDA ratio is 2.2 times.
In our Middle East and India segment, operating income improved on lower cost, while equity affiliate income remained flat. Lastly, the corporate and other segment results improved from lower costs, including productivity actions. Moving now to slide 10. We continue to generate strong cash flows from our base business. Our investments in both energy transition and traditional industrial gas projects remain on track with our expected capital spend for the fiscal year. Additionally, we returned nearly $400 million in cash to our shareholders, increased the quarterly dividend, marking the 44th consecutive year of dividend increases. As it relates to our leverage, our net debt to EBITDA ratio is 2.2 times.
Speaker #2: Despite productivity improvements in our Middle East and India segment, operating income improved on lower cost, while equity affiliate income remained flat.
Speaker #2: Lastly , the corporate and other segment results improved from lower costs , including productivity actions . Moving now to slide ten , we generate continue to cash flows from strong business our base .
Speaker #2: Our investments in both energy transition and traditional industrial gas projects remain on track with our expected capital spend for the fiscal year . Additionally , we returned nearly $400 million in cash to our shareholders , increased the quarterly dividend , marking the 44th consecutive year of dividend increases .
Melissa Schaeffer: As a reminder, we are currently consolidating the joint venture's investment in the NEOM Green Hydrogen project on our balance sheet during the construction phase, and as previously communicated, we plan to deconsolidate once the project is on stream and being operated by the joint venture. Therefore, we've adjusted our leverage ratio to better represent Air Products' investments. Please turn to slide 11, where we will review our outlook. We are maintaining our fiscal full-year guidance of $12.85 to $13.15, given uncertainty around the macroeconomic environment. We remain focused on delivering these results through pricing actions and productivity, while bringing new set assets on stream, from which we expect increased contributions in the second half.
As a reminder, we are currently consolidating the joint venture's investment in the NEOM Green Hydrogen project on our balance sheet during the construction phase, and as previously communicated, we plan to deconsolidate once the project is on stream and being operated by the joint venture. Therefore, we've adjusted our leverage ratio to better represent Air Products' investments. Please turn to slide 11, where we will review our outlook. We are maintaining our fiscal full-year guidance of $12.85 to $13.15, given uncertainty around the macroeconomic environment. We remain focused on delivering these results through pricing actions and productivity, while bringing new set assets on stream, from which we expect increased contributions in the second half.
Speaker #2: As it relates to our leverage, our net debt to EBITDA ratio is 2.2 times. As a reminder, we are currently consolidating the joint venture's investment in the NEOM Green Hydrogen Project.
Speaker #2: On our balance sheet during the construction phase, and as previously communicated, we plan to deconsolidate once a project is on stream and being operated by the joint venture.
Speaker #2: Therefore, we have adjusted our leverage ratio to better represent our products' investments. Please turn to slide 11, where we will review our outlook.
Speaker #2: We are maintaining our fiscal full year guidance of $12.85 to $13.15. Given uncertainty around the macroeconomic environment, we remain focused on delivering these results through pricing actions and productivity.
Melissa Schaeffer: For Q2 2026, we expect to deliver earnings per share in the range of $2.95 to 3.10, representing a 10% to 15% improvement from the prior year. Our outlook assumes growth from pricing actions and productivity, partially offset by lower helium. As a reminder, we expect our Q2 earnings per share to be lower sequentially due to normal seasonality, particularly related to the Lunar New Year and higher planned maintenance. We are also maintaining our guidance for capital expenditures at approximately $4 billion in fiscal 2026 as we work to de-risk our Louisiana project and optimize our portfolio. Now we'll open up the call for questions. Operator?
For Q2 2026, we expect to deliver earnings per share in the range of $2.95 to 3.10, representing a 10% to 15% improvement from the prior year. Our outlook assumes growth from pricing actions and productivity, partially offset by lower helium. As a reminder, we expect our Q2 earnings per share to be lower sequentially due to normal seasonality, particularly related to the Lunar New Year and higher planned maintenance. We are also maintaining our guidance for capital expenditures at approximately $4 billion in fiscal 2026 as we work to de-risk our Louisiana project and optimize our portfolio. Now we'll open up the call for questions. Operator?
Speaker #2: While bringing new assets on stream from which we expect increased contributions in the second half . For the second quarter of 2026 , we expect to deliver earnings per share in the range of $2.95 to $3.10 , representing a 10 to 15% improvement from the prior year .
Speaker #2: outlook Our assumes growth from pricing actions and productivity , partially offset by lower helium . As a reminder , we expect our second quarter earnings per share to be lower sequentially due to the normal seasonality , particularly related to the Lunar New Year and higher planned maintenance .
Speaker #2: are also We maintaining our guidance for capital expenditures at approximately 4 billion in fiscal 2026 , as we work to de-risk our Louisiana project and optimize our portfolio .
Operator: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, you may press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal. We'll take our first caller from David Begleiter with Deutsche Bank.
Operator: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, you may press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal. We'll take our first caller from David Begleiter with Deutsche Bank.
Speaker #2: Now we'll open up the call for questions . Operator .
Speaker #3: If you Thank you . would like to ask a question , please signal by pressing star one on your telephone keypad . If you are using a please speakerphone , that your make sure function mute is turned off to allow your signal to reach our equipment .
Speaker #3: Again, you may press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal.
[Analyst] (Deutsche Bank): Hi, this is Emily Fusco. I'm for Dave Begleiter. You're targeting double-digit return on the go-forward CapEx. How should we think about the returns on the $2 billion of capital already invested in the project?
Emily Fusco: Hi, this is Emily Fusco. I'm for Dave Begleiter. You're targeting double-digit return on the go-forward CapEx. How should we think about the returns on the $2 billion of capital already invested in the project?And, is the 45Q credit included in the double-digit return on a go forward CapEx? Thank you.
Speaker #3: We'll take our first caller from David Begleiter with Deutsche Bank .
Speaker #4: is Emily Hi , this Fusco on for David Begleiter . For your targeting , double digit return on the go forward CapEx . How should we think about the returns on the $2 billion of capital already invested in the project ?
Melissa Schaeffer: ... And, is the 45Q credit included in the double-digit return on a go forward CapEx? Thank you.
Speaker #4: And is credit the 45 Q included in the double digit return on go forward CapEx ? Thank you .
Eduardo Menezes: I imagine this question is related to the project in there, right? So, yes, the 45Q credit is gonna be taken by Air Products, and it's included on the return. And, you know, it's an overall return for the project in the go forward basis, and that's all we're gonna disclose at this point.
Eduardo Menezes: I imagine this question is related to the project in there, right? So, yes, the 45Q credit is gonna be taken by Air Products, and it's included on the return. And, you know, it's an overall return for the project in the go forward basis, and that's all we're gonna disclose at this point.
Speaker #5: I imagine this question is related to the project in Barrel, right? So yes,
Speaker #1: The 45 Q credit is going to be taken by Air Products and it's included on the on the return and yeah , you know , it's it's an overall return for the project in the , in the go forward basis .
Speaker #1: And that's all we're going to disclose at this point.
Operator: We'll take our next question from Duffy Fischer with Goldman Sachs.
Operator: We'll take our next question from Duffy Fischer with Goldman Sachs.
Duffy Fischer: Yeah, good morning, guys. First question is just on helium. Obviously, this quarter, you had to eat the one-time sale a year ago in your year-over-year comps. But could you just talk about how much the kind of continuing business is still down, and how much of a headwind do you think that will be kind of in Q2 and throughout the rest of the year?
Duffy Fischer: Yeah, good morning, guys. First question is just on helium. Obviously, this quarter, you had to eat the one-time sale a year ago in your year-over-year comps. But could you just talk about how much the kind of continuing business is still down, and how much of a headwind do you think that will be kind of in Q2 and throughout the rest of the year?
Speaker #3: We'll take our next question from Duffy Fischer with Goldman Sachs.
Speaker #6: Yeah . Good morning guys . First question is just on helium . Obviously this quarter you had to eat the one time sale a year ago .
Speaker #6: Year over year and your year comps. But could you just talk about how much the kind of continuing business is still down, and how much of a headwind you think that will be?
Eduardo Menezes: Hi, Duffy. Yeah, I would say that in general, we had a better than expected quarter. I think the volume from the aerospace segment in the Americas was very strong for helium for us in the last quarter. Other than that, we continue to see the same trends we've seen before. As we said, we've continued to try to increase our volumes for new accounts, and we're working very hard to, you know, increase our sales with new customers and new deals, especially on the electronic side.
Eduardo Menezes: Hi, Duffy. Yeah, I would say that in general, we had a better than expected quarter. I think the volume from the aerospace segment in the Americas was very strong for helium for us in the last quarter. Other than that, we continue to see the same trends we've seen before. As we said, we've continued to try to increase our volumes for new accounts, and we're working very hard to, you know, increase our sales with new customers and new deals, especially on the electronic side.
Speaker #6: Kind of in Q2 and throughout the rest of the year?
Speaker #1: Yeah , Hi , Duffy . we we I would say that in general , we had a better than expected quarter . I think the volume from the aerospace segment in , in the Americas was very strong for helium for us in the last quarter .
Speaker #1: than Other that , we to see continue the same trends we've seen before . As we said , we've continued to try to increase our volumes for for new accounts .
Eduardo Menezes: But I would say overall, you know, the information that we gave you in the beginning of the year, that we would be down for the year, around 4%, you know, EPS effect, is still our best forecast at this point.
But I would say overall, you know, the information that we gave you in the beginning of the year, that we would be down for the year, around 4%, you know, EPS effect, is still our best forecast at this point.
Speaker #1: And we're working very hard to , you know , increase our sales with new customers and new deals , especially in the electronics side .
Speaker #1: would say But I overall , the the , you know , the information that we gave you in the beginning of the year that we would be down for the year , about 4% , you know , EPs effect is still our our best forecast at this point .
Duffy Fischer: Thank you. And then on the gasification plants in China, what was the benefit from moving them to held for sale? And then what's the expectation for kind of timing, and should we expect any meaningful proceeds coming from those?
Duffy Fischer: Thank you. And then on the gasification plants in China, what was the benefit from moving them to held for sale? And then what's the expectation for kind of timing, and should we expect any meaningful proceeds coming from those?
Speaker #6: Thank you . And then on the gasification plants in China , what was the benefit from moving them to for sale . then And the what's expectation for kind of timing .
Eduardo Menezes: It was about 1%, David, from the overall results for the quarter. I would say that, you know, we're still working on the process to sell the assets. We've received some offers. We've proceeded with the negotiations. It's always difficult to forecast these things, but we still expect to get this done on this fiscal year.
Eduardo Menezes: It was about 1%, David, from the overall results for the quarter. I would say that, you know, we're still working on the process to sell the assets. We've received some offers. We've proceeded with the negotiations. It's always difficult to forecast these things, but we still expect to get this done on this fiscal year.
Speaker #6: And should we expect any meaningful proceeds coming from those.
Speaker #1: It was about 1% . David , from the overall results for the quarter , I would say that , you know , the the we still working on the on the process to sell the assets .
Speaker #1: We received some offers . We proceed with the negotiations . It's always difficult to forecast these things , but we still expect to get this done on this fiscal year .
Duffy Fischer: Great. Thank you, guys.
Duffy Fischer: Great. Thank you, guys.
Eduardo Menezes: Hopefully sooner than later.
Eduardo Menezes: Hopefully sooner than later.
Operator: We'll take our next question from Jeffrey Zekauskas with J.P. Morgan.
Operator: We'll take our next question from Jeffrey Zekauskas with J.P. Morgan.
Speaker #6: Great . Thank you guys .
[Analyst] (Aiera): Thanks very much. Is Air Products receiving income from or full income from Gulf Coast Ammonia? And how much did you invest in that project, and what are the assets that you actually own?
Speaker #1: than later Hopefully sooner .
Jeffrey Zekauskas: Thanks very much. Is Air Products receiving income from or full income from Gulf Coast Ammonia? And how much did you invest in that project, and what are the assets that you actually own?
Speaker #3: next We'll take our question from Jeff Zekauskas with J.P. Morgan .
Speaker #7: very Thanks much . Is Air Products receiving income from or full income from Gulf Coast ammonia ? And how much did you invest in that project and what are the assets that you actually own ?
Eduardo Menezes: Thank you for the question, Jeff. Yeah, we, we, you know, we are in the process of, you know, starting the plant. So the plant is making product. It was running at, you know, up to 80, 90 percent capacity for the last few months. In fact, this week, we are taking a, a, you know, a turnaround that we were expecting to do that, to finalize the, the last components, and, we hope to be up and running, at 100 percent, and, and finalize all the commitments for that site in the, in the next few weeks. So, that's the overall picture of the project.
Eduardo Menezes: Thank you for the question, Jeff. Yeah, we, we, you know, we are in the process of, you know, starting the plant. So the plant is making product. It was running at, you know, up to 80, 90 percent capacity for the last few months. In fact, this week, we are taking a, a, you know, a turnaround that we were expecting to do that, to finalize the, the last components, and, we hope to be up and running, at 100 percent, and, and finalize all the commitments for that site in the, in the next few weeks. So, that's the overall picture of the project.
Speaker #1: Thank you for the question , Jeff . Yeah , we we you know , we are in the process of , you know , restarting the plant .
Speaker #1: So the plant is making product . It was running at , you know , up to 80 , 90% capacity for the last few months .
Speaker #1: fact , this at In week we are taking , you know , a turnaround that we were expecting to do to that finalize the last components .
Speaker #1: And we hope to be up running and at 100% . And finalize the all commitments for that the few in side the in the next weeks .
Eduardo Menezes: I think when Air Products announced this project, you know, 5, 6 years ago, I think we made clear what the investments were on, on the numbers. I can go offline and get you the numbers that we published at that time. Air Products, in this case, we own the SMRs, so the hydrogen production. We own the air separation plant, and the customer owns the ammonia production and the ammonia tank. So this is basically the, you know, the setup that we have there. The plant is connected to our hydrogen pipeline system and in fact, imports some hydrogen.
I think when Air Products announced this project, you know, 5, 6 years ago, I think we made clear what the investments were on, on the numbers. I can go offline and get you the numbers that we published at that time. Air Products, in this case, we own the SMRs, so the hydrogen production. We own the air separation plant, and the customer owns the ammonia production and the ammonia tank. So this is basically the, you know, the setup that we have there. The plant is connected to our hydrogen pipeline system and in fact, imports some hydrogen.
Speaker #1: So , so that's the that's the the the overall picture of the project . I think when our products announced this project , you know , five , six years ago , I think we , we made clear what the investments on , were on the numbers .
Speaker #1: I , I can go offline and get you the numbers that we that published at time . Air products in this case , we own the Smrs .
Speaker #1: So the hydrogen production , we own the plant separation and the customer owns the ammonia production and the ammonia tank . So this is basically the the , you know , the , the , the setup that we have there .
Eduardo Menezes: So we have a reformer there that I think is around 175 million cubic feet/day, which is probably 70% of the total volume required by the ammonia loop when running at 100%, and the balance of the hydrogen is imported through the pipeline.
So we have a reformer there that I think is around 175 million cubic feet/day, which is probably 70% of the total volume required by the ammonia loop when running at 100%, and the balance of the hydrogen is imported through the pipeline.
Speaker #1: is The plant connected to our hydrogen pipeline system . And in fact import some hydrogen . So we have a reformer there that I think is around 175,000,000 cubic feet a day , which is probably 70% of the total volume required by by the ammonia loop when running at 100% .
[Analyst] (Aiera): Thank you. In your corporate line, it looks like there was some kind of sale of equipment cost overrun. How much was that? And, how much was that versus last year?
Jeffrey Zekauskas: Thank you. In your corporate line, it looks like there was some kind of sale of equipment cost overrun. How much was that? And, how much was that versus last year?
Speaker #1: And the balance of the hydrogen is imported through the pipeline .
Speaker #7: you . Thank In your in your corporate line , it looks like there was some kind of sale of equipment cost overrun . How much was that ?
Speaker #7: And . How much was that versus last year ?
Melissa Schaeffer: Yeah. Hi, Jeff. This is, this is Melissa. How are you doing?
Melissa Schaeffer: Yeah. Hi, Jeff. This is, this is Melissa. How are you doing?
[Analyst] (Aiera): Hi, Melissa.
Jeffrey Zekauskas: Hi, Melissa.
Melissa Schaeffer: We did see some increase in our sale of equipment this quarter. In the Q, you will see that we had an impact to our results of about $30 million this quarter. That is comparable to what we saw last year in this quarter. And we obviously, as we bring this on stream, will stop seeing that headwind in our results, but again, it was about $32 million this quarter. And as you know, that is a percent of completion accounting, and so that is our best estimate of future costs as well. So we've recognized the full future cost.
Melissa Schaeffer: We did see some increase in our sale of equipment this quarter. In the Q, you will see that we had an impact to our results of about $30 million this quarter. That is comparable to what we saw last year in this quarter. And we obviously, as we bring this on stream, will stop seeing that headwind in our results, but again, it was about $32 million this quarter. And as you know, that is a percent of completion accounting, and so that is our best estimate of future costs as well. So we've recognized the full future cost.
Speaker #2: Hi , Yeah . Jeff . This is this is Melissa . How are you doing ? We did see some increase in our our quarter equipment sale of in this the Q you will see that we had an impact to our results of about 30 million .
Speaker #2: This quarter . That is comparable to what we saw last year . In this quarter . And we obviously , as we bring this on stream , we will stop seeing that headwind in our results .
Speaker #2: But again , it was about 32 million this quarter . And as you know , that is a percent of completion . Accounting .
[Analyst] (Aiera): Yep. Thank you.
Jeffrey Zekauskas: Yep. Thank you.
Speaker #2: And so that is our best of estimate future costs as well . So we've recognized the full future cost .
Melissa Schaeffer: Thank you, Jeff.
Melissa Schaeffer: Thank you, Jeff.
Operator: We'll take our next question from John McNulty with BMO Capital Markets.
Operator: We'll take our next question from John McNulty with BMO Capital Markets.
Speaker #7: Yep . Thank you .
John McNulty: Yeah, good morning. Thanks for taking my question. Maybe on the first one, can we unpack a little bit the margin improvement seen in the Americas? I, you know, certainly looks like price may have helped, but the volume drop of, I think it was 4%, you know, is pretty meaty. So I guess, can you help us to unpack where that 150 basis points of improvement came from?
John McNulty: Yeah, good morning. Thanks for taking my question. Maybe on the first one, can we unpack a little bit the margin improvement seen in the Americas? I, you know, certainly looks like price may have helped, but the volume drop of, I think it was 4%, you know, is pretty meaty. So I guess, can you help us to unpack where that 150 basis points of improvement came from?
Speaker #2: Thank you Jeff
Speaker #3: our next
Speaker #3: question from . We'll take John McNulty with BMO Capital Markets .
Speaker #8: Yeah . Good morning . Thanks for taking my question . Maybe on the first one can can we unpack a little bit the margin improvement seen in the Americas ?
Speaker #8: You know , certainly it looks like price may have helped , but the volume drop of I think it was 4% , you know , is pretty meaty .
Eduardo Menezes: Yeah, I'll let Melissa answer the question, but that one-time helium impact that we have is reflected in the volumes in the Americas. Melissa?
Eduardo Menezes: Yeah, I'll let Melissa answer the question, but that one-time helium impact that we have is reflected in the volumes in the Americas. Melissa?
Speaker #8: So I guess, can you help us unpack where that came—150 basis points of improvement—from?
Speaker #1: Yeah , I'll let Melissa answer the question , but that that one time hidden impact that we have is reflected in the volumes in the Americas .
Melissa Schaeffer: Yep, absolutely. Thanks for the question, John. So we did see strong on-site volumes in the Americas. This is specific to our, our HYCO and non-helium merchants. So positive in the volumes. Price was also strong in the Americas this quarter across products outside of helium. And then costs, unfortunately, costs were slightly negative, driven versus prior year. But obviously we're continuing to look for cost productivity. So the margins were better this quarter, but we're continuing to see improvement there as we continue to focus on productivity.
Melissa Schaeffer: Yep, absolutely. Thanks for the question, John. So we did see strong on-site volumes in the Americas. This is specific to our, our HYCO and non-helium merchants. So positive in the volumes. Price was also strong in the Americas this quarter across products outside of helium. And then costs, unfortunately, costs were slightly negative, driven versus prior year. But obviously we're continuing to look for cost productivity. So the margins were better this quarter, but we're continuing to see improvement there as we continue to focus on productivity.
Speaker #1: Melissa .
Speaker #2: Yep , absolutely . Thanks for the question , John . So we did see strong on site volumes in the Americas . This was specific to our hyco and non helium merchants .
Speaker #2: So, positive in the volumes. Price also strong, was in the Americas this quarter across products, outside of helium. And then costs.
Speaker #2: Unfortunately, costs were slightly negative driven versus prior year. But obviously, we're continuing to look for cost productivity. So the margins were better this quarter.
John McNulty: Okay. Fair, fair enough. I appreciate the color. And then, can you give us an update on Alberta at this point, in terms of, you know, the potential for project off-takes, how that's progressing, and as well as any updates on the construction timing and costs? Thank you.
John McNulty: Okay. Fair, fair enough. I appreciate the color. And then, can you give us an update on Alberta at this point, in terms of, you know, the potential for project off-takes, how that's progressing, and as well as any updates on the construction timing and costs? Thank you.
Speaker #2: But we're continuing to see improvement there as we continue to focus on productivity. Okay.
Speaker #8: Fair fair enough . I appreciate the color . And then can you give us an update Alberta point on potential the terms at this in of for project Offtakes ?
Speaker #8: that's How progressing and as well as any updates on the on the construction timing and costs . Thank you .
Eduardo Menezes: Yeah, the construction time and cost is still the same, John. We did the same estimate that we provided, probably a year ago. So around, you know, $3.3 billion and start up, you know, first part of 2018. So we continue to work on that direction. I think we have, you know, a much higher level of certainty in this project than we had before in terms of scope and cost. The negotiations with other potential off-takers, you know, continues. It's not something that we'll be able to talk about until we have something more definitive to share with you.
Eduardo Menezes: Yeah, the construction time and cost is still the same, John. We did the same estimate that we provided, probably a year ago. So around, you know, $3.3 billion and start up, you know, first part of 2018. So we continue to work on that direction. I think we have, you know, a much higher level of certainty in this project than we had before in terms of scope and cost. The negotiations with other potential off-takers, you know, continues. It's not something that we'll be able to talk about until we have something more definitive to share with you.
Speaker #1: Yeah, the construction time and cost is still the same, John. We did the same estimate that we provided probably a year ago.
Speaker #1: So around , you know , $3.3 billion and start up , you know , first quarter for 2018 . So we continue to work on that direction .
Speaker #1: I think we have a , you know , a much higher level , higher level of certainty on this project than we had before in terms of scope and cost .
Speaker #1: The negotiations with other potential off takers , you know , continues . It's not something that we'll be able to talk about until we have something more definitive to , to , to share with you
John McNulty: Got it. Thanks very much for the color.
John McNulty: Got it. Thanks very much for the color.
Operator: Our next question comes from Vincent Andrews with Morgan Stanley.
Operator: Our next question comes from Vincent Andrews with Morgan Stanley.
Speaker #8: Thanks Got it . the very much for color .
Vincent Andrews: Thank you, and good morning. Eduardo, I wanted to ask you on the fiscal Q4 call, you were asked about, you know, you spent $2 billion on Darrow so far, and how much of that could you recover? And I think you said you could recover about half of it through sale of equipment and so forth. But I wanted to make sure that that that was not interpreted entirely as the answer to this question. Maybe it is, so please tell us. If you decide, for whatever reason, not to move forward with Darrow, is it just that you sell the equipment and whatever else, and you recover, you know, $1 billion, the $2 billion spent? Or would there be other costs to Air Products, small or large, to not move forward with the project?
Vincent Andrews: Thank you, and good morning. Eduardo, I wanted to ask you on the fiscal Q4 call, you were asked about, you know, you spent $2 billion on Darrow so far, and how much of that could you recover? And I think you said you could recover about half of it through sale of equipment and so forth. But I wanted to make sure that that that was not interpreted entirely as the answer to this question. Maybe it is, so please tell us. If you decide, for whatever reason, not to move forward with Darrow, is it just that you sell the equipment and whatever else, and you recover, you know, $1 billion, the $2 billion spent? Or would there be other costs to Air Products, small or large, to not move forward with the project? And then I have a follow-up.
Speaker #3: next question Our comes from Vincent Andrews with Morgan Stanley .
Speaker #9: Thank you . And good morning . Eduardo . I wanted to ask you on the fiscal fourth quarter call . You were asked about .
Speaker #9: You know, you spent $2 billion on Darrow so far. And how much of that could you recover? And I think you said you could recover about half of it through sale of equipment and so forth.
Speaker #9: But I wanted to make sure that that that was not interpreted entirely as the as the answer to this question . Maybe it is .
Speaker #9: So please tell us if you , for decide whatever reason , not to move forward with Darrow , is it just that you sell the equipment and whatever else and you recover $1 billion , the $2 billion spent , or would there be other costs to air products , small or large , to not move forward with the project ?
Vincent Andrews: And then I have a follow-up.
Eduardo Menezes: Yeah, I think what I tried to say is that nobody really can answer that question, right? So that 50% is, you know, at that point was a guess. You know, the number can be higher, it can be lower. It's impossible to determine what the value will be to recover the, you know, if you don't go forward until you get that negotiation, because at the end of the day, it's the value that that equipment has to a potential buyer, right? So of course, we are looking at that in parallel. I would say that, you know, the assets that we built already, in some cases, for this project, they are very specific for this project.
Eduardo Menezes: Yeah, I think what I tried to say is that nobody really can answer that question, right? So that 50% is, you know, at that point was a guess. You know, the number can be higher, it can be lower. It's impossible to determine what the value will be to recover the, you know, if you don't go forward until you get that negotiation, because at the end of the day, it's the value that that equipment has to a potential buyer, right? So of course, we are looking at that in parallel. I would say that, you know, the assets that we built already, in some cases, for this project, they are very specific for this project.
Speaker #9: And then I have a follow up .
Speaker #1: Yeah , I think what we we , I try to say is that we nobody really can answer that question . Right . So that that 50% is , you know , at that point guess .
Speaker #1: was a You the number can be high , it can be lower . It's impossible to to determine what the , the , the value will be to , to recover the , the , you know , if you don't go forward until you , you get that negotiation because at the day end of the is the value that that equipment has to to a potential buyer .
Speaker #1: Right ? So of course , we are looking at that in parallel . I would say that , you know , the assets that we are , you know , that we build already in some cases for this project .
Eduardo Menezes: You know, probably for the exception of the ammonia loop, which is, you know, quite standard and similar to other projects. So that asset would have a better chance of getting a high market value. Air separation plants are also, you know, common, but this is a very high pressure in the plant that was designed and built for the US and the, you know, US codes, and so, you know, has a limited market. So at the end of the day, we cannot... No one can tell exactly how much that will be recoverable if we don't go forward.
You know, probably for the exception of the ammonia loop, which is, you know, quite standard and similar to other projects. So that asset would have a better chance of getting a high market value. Air separation plants are also, you know, common, but this is a very high pressure in the plant that was designed and built for the US and the, you know, U.S. codes, and so, you know, has a limited market. So at the end of the day, we cannot... No one can tell exactly how much that will be recoverable if we don't go forward.
Speaker #1: are very They specific for this project , you know , probably for the exception of ammonia loop , which the is , you know , quite standard .
Speaker #1: And , and similar to , to other that projects , so that asset would a have better chance of getting a high market value .
Speaker #1: Air separation plants are also , you know , common , but this is a very high pressure . And and the plant that was designed and built for , for the US and the , you know , US codes .
Speaker #1: And so , know , has limited market . at the end So we you day , a no one can can can tell you exactly how much that will be recoverable if we don't go forward .
Eduardo Menezes: I would say that this is really the exposure that we have, is the capital that was spent before we decided to stop new purchases in the project, which we did, you know, one month after I joined the company. So, the only money we are spending in this project is really the equipment that is arriving that we purchased before that time.
I would say that this is really the exposure that we have, is the capital that was spent before we decided to stop new purchases in the project, which we did, you know, one month after I joined the company. So, the only money we are spending in this project is really the equipment that is arriving that we purchased before that time.
Speaker #1: I would say that this is really the exposure that we have . Is the is the capital that was spent before we decided to to stop new purchases in the project , which we did .
Speaker #1: know , You one month after I joined the company . So the only money we're spending in this project is really the equipment that is arriving that we purchased before that time .
Vincent Andrews: Okay. And just as a follow-up, I know you're intending to make a go, no-go decision on this by the middle of the year, but is that a hundred percent firm date? Or now with this CBAM uncertainty, which, let's just assume is very important to Yara's economics, you know, if there's a need to push that out while the EU finalizes whatever it is that they're gonna do or not do, is it possible that the timing of final investment decision could move later into the year?
Vincent Andrews: Okay. And just as a follow-up, I know you're intending to make a go, no-go decision on this by the middle of the year, but is that a hundred percent firm date? Or now with this CBAM uncertainty, which, let's just assume is very important to Yara's economics, you know, if there's a need to push that out while the EU finalizes whatever it is that they're gonna do or not do, is it possible that the timing of final investment decision could move later into the year?
Speaker #9: Okay . And just as a follow up , I know you're you're intending to make a go no go decision on this by the middle of the year , but is that a is that a 100% firm date or now with this cbam uncertainty , which which let's just assume is very important to Yara is economics .
Speaker #9: You know , if there's a need to to push that out . While the EU finalizes that they're do whatever it is going to do or , is it not possible that the timing of final investment decision could , could move , could move later into the year ?
Eduardo Menezes: No, there is no 100% or anything in life, right? But, I would say that, you know, our goal is around the middle of the year. The main issue for us continues to be the, you know, to make sure that we have a capital cost, that we feel, you know, we have high certainty of the execution. So that is what we are working on. The issue of the CBAM, as we try to explain that in our slides. ... you know, it's a very indirect, if something happens, it's an indirect impact, and it's an indirect impact to Yara, to be honest, right?
Eduardo Menezes: No, there is no 100% or anything in life, right? But, I would say that, you know, our goal is around the middle of the year. The main issue for us continues to be the, you know, to make sure that we have a capital cost, that we feel, you know, we have high certainty of the execution. So that is what we are working on. The issue of the CBAM, as we try to explain that in our slides. ... you know, it's a very indirect, if something happens, it's an indirect impact, and it's an indirect impact to Yara, to be honest, right?
Speaker #1: No . There is no 100% or anything in life . Right . But I would say that , you know , our goal is around the mid of the year , the main issue for us continues to be the the , you know , to make sure that we have a capital cost that we , we feel , you know , we have high certainty of execution .
Speaker #1: So that is what we are working on . The issue of the CBM , as I , I , we try to explain that in our slides , you know , it's a very indirect if , if something happens is an indirect impact and is an indirect impact to , to be to be honest , right .
Eduardo Menezes: The way this agreement would work, we would produce hydrogen and nitrogen, sell that to them, they would make ammonia, and from there, it becomes their accountability. They can take ammonia, you know, sell the ammonia in US, sell the ammonia in Asia or in Europe. If it goes to Europe, you know, it still is subject to a very low CBAM tariff. The impact is really indirect, if you know, something happened with the CBAM, what happens with the gray sale? So you know, this is a decision that Yara has to make. Verbally, we understand from them that they believe it's a low probability, but it's something that they need to take into account in their decision, and we wait for that.
The way this agreement would work, we would produce hydrogen and nitrogen, sell that to them, they would make ammonia, and from there, it becomes their accountability. They can take ammonia, you know, sell the ammonia in US, sell the ammonia in Asia or in Europe. If it goes to Europe, you know, it still is subject to a very low CBAM tariff. The impact is really indirect, if you know, something happened with the CBAM, what happens with the gray sale? So you know, this is a decision that Yara has to make. Verbally, we understand from them that they believe it's a low probability, but it's something that they need to take into account in their decision, and we wait for that. But at the end of the day,
Speaker #1: The , the way this agreement would work , we would produce hydrogen and nitrogen , sell that to them , they would make ammonia and from there it becomes accountability .
Speaker #1: can their take They ammonia . You know , sell them on in the US , sell the ammonia in in Asia or in Europe if it goes to Europe , you know , it's still is subject to a very low CPM tariff .
Speaker #1: The impact is really If indirect . you know , something happened with the CPM , what happens with the grey sale . So , so you know , all I you know , this is a decision that has to has to make verbally .
Speaker #1: We understand from them that they believe is a low probability . But it's something that they need to take into account in their decision .
Eduardo Menezes: But at the end of the day, I would say that, you know, 99% of the, the decision is related to the construction cost more than anything else.
I would say that, you know, 99% of the, the decision is related to the construction cost more than anything else.
Speaker #1: And and I will wait for that . But at the end of the day , I would say that , you know , 99% of the the decision is , is related to the construction costs more than anything else .
Operator: Okay. Thank you for all the detail.
Operator: Okay. Thank you for all the detail.
Operator: Our next question comes from James Hooper with Bernstein.
Operator: Our next question comes from James Hooper with Bernstein.
Speaker #9: Okay . Thank you for all the detail .
James Hooper: Morning, guys. Thanks for the, thanks for the question. First question is about the space opportunity. Clearly, you've just signed some contracts with NASA this week. Can you talk a little bit about the kind of the opportunity there, your opportunity with commercial space providers, how that business is performing, and where you see the growth output is? And then I've got a follow-up to that.
James Hooper: Morning, guys. Thanks for the, thanks for the question. First question is about the space opportunity. Clearly, you've just signed some contracts with NASA this week. Can you talk a little bit about the kind of the opportunity there, your opportunity with commercial space providers, how that business is performing, and where you see the growth output is? And then I've got a follow-up to that.
Speaker #3: Our next question comes from James Hooper with Bernstein .
Speaker #10: thanks for the thanks for the guys . And Morning , question . First question is about the space opportunity . Clearly , you've just signed some contracts with NASA this week .
Speaker #10: Can you talk a little bit about the kind of opportunity there? For the opportunity with commercial space providers, how is that business performing, and where do you see the growth outlook?
Eduardo Menezes: Yeah, it's a very hot segment. It's a segment that our products participate in since the 1960s, right? Since we started supplying liquid hydrogen for NASA, and it continues to this date. I would say that probably over 2% of our total sales is in this segment, you know, in aerospace, when you add all the products, you know, hydrogen, helium, and oxygen and nitrogen. So it continues to be a very important segment for us. Of course, the market is changing. There are more commercial launches. Some of them use hydrogen, some of them do not use hydrogen. So we are working on these opportunities, and we are trying to grow our market share, but it's a very important market for us.
Eduardo Menezes: Yeah, it's a very hot segment. It's a segment that our products participate in since the 1960s, right? Since we started supplying liquid hydrogen for NASA, and it continues to this date. I would say that probably over 2% of our total sales is in this segment, you know, in aerospace, when you add all the products, you know, hydrogen, helium, and oxygen and nitrogen. So it continues to be a very important segment for us. Of course, the market is changing. There are more commercial launches. Some of them use hydrogen, some of them do not use hydrogen. So we are working on these opportunities, and we are trying to grow our market share, but it's a very important market for us.
Speaker #10: And then I've got a follow up to that .
Speaker #1: Yeah . It's a it's a it's a very hard segment . It's a segment that we products participate since the 60s . Right .
Speaker #1: Since we , we started supplying liquid hydrogen for NASA and , and continues to this date , I would say that probably over 2% of our total sales is in this segment .
Speaker #1: You know , you know , in in aerospace , when you add all the products , you know , hydrogen , helium and oxygen and nitrogen .
Speaker #1: So, it continues to be a very important US segment for us. Of course, the market is changing. There are more launches.
Speaker #1: commercial Some of them use hydrogen , some of them do not use hydrogen . So we are working on on on these opportunities and we are trying to grow our market share .
Eduardo Menezes: But I think, Melissa, you have more comments.
Eduardo Menezes: But I think, Melissa, you have more comments.
Melissa Schaeffer: Yeah. Yeah. Thanks, Eduardo. Having many conversations because this has gotten a lot of attention lately. Based on the customers we serve, it's our estimate that Air Products has about 40 to 50% of the total space market share in the US. And from a growth trajectory, I think our expectations is that for projected sales, we see about a 6 to 7% growth per year. So obviously, a market where we have been focused on for many decades and something that we're gonna continue to focus on.
Melissa Schaeffer: Yeah. Yeah. Thanks, Eduardo. Having many conversations because this has gotten a lot of attention lately. Based on the customers we serve, it's our estimate that Air Products has about 40%-50% of the total space market share in the U.S. And from a growth trajectory, I think our expectations is that for projected sales, we see about a 6% to 7% growth per year. So obviously, a market where we have been focused on for many decades and something that we're gonna continue to focus on.
Speaker #1: But it's a very important market for us. But I think, Melissa, you have more.
Speaker #2: Yeah . Yeah . Thanks , Eduardo . So , so having many conversations because this has gotten a lot of attention lately . So , so based on the customers reserve , it's it's our estimate that Air Products has about 40 to 50% of the total space market share in the US .
Speaker #2: And from a growth trajectory , I think our expectations is that for projected sales , we see about a 6 to 7% growth per year .
Speaker #2: So, obviously, a market where we have been focused on for many decades, and something that we're going to continue to focus on.
James Hooper: Thank you very much. And then just on, just on your volumes, it was interesting that the European volumes are up 5% year-over-year. Is Europe back? Are we looking at some a recovery here, or is... Are we remaining cautious about, about European volumes?
James Hooper: Thank you very much. And then just on, just on your volumes, it was interesting that the European volumes are up 5% year-over-year. Is Europe back? Are we looking at some a recovery here, or is... Are we remaining cautious about, about European volumes?
Speaker #10: Thank you very much . And then just on just on your volumes , it was interesting that European volumes were 5% year on up year .
Speaker #10: Is , is is Europe back ? Are we looking at some a recovery here or is we remain cautious about about European volumes .
Eduardo Menezes: No, we remain cautious. You know, there's a lot of things go on this calculation, so we have some turnarounds last year, so they were lacking this turnarounds this year, so that created a good, you know, tailwind for us on the volume side. But, you know, things in Europe, they, you know, as reported, they are, you know, let's say, complicated at this point. But I would remind that, you know, our business in Europe is different from our business in other areas of the globe, because it's really fully integrated into packaged gases and other areas.
Eduardo Menezes: No, we remain cautious. You know, there's a lot of things go on this calculation, so we have some turnarounds last year, so they were lacking this turnarounds this year, so that created a good, you know, tailwind for us on the volume side. But, you know, things in Europe, they, you know, as reported, they are, you know, let's say, complicated at this point. But I would remind that, you know, our business in Europe is different from our business in other areas of the globe, because it's really fully integrated into packaged gases and other areas.
Speaker #1: We now remain cautious. You know, a lot of things go on this calculation. So we have some turnarounds. Last year.
Speaker #1: So there we are lapping these turnarounds this year . So that created a good a tailwind for us . And the volume side .
Speaker #1: you know things But in Europe they you know as , as reported they are you know let's say complicated at this point . But I would remind that , you know , our business in Europe is different from our business in other in other areas of the globe because it's really fully integrated into packaged gases .
Eduardo Menezes: You know, I like the other industrial gas companies; we see much more pressure in the large customers in on-site than we see in the retail, in the packaged gases, and so forth. So, you know, it's still an important business for us, very profitable. We have a, you know, very experienced management team that is, you know, doing the blocking and tackling and being able to extract good results despite the economic environment we have there.
You know, I like the other industrial gas companies; we see much more pressure in the large customers in on-site than we see in the retail, in the packaged gases, and so forth. So, you know, it's still an important business for us, very profitable. We have a, you know, very experienced management team that is, you know, doing the blocking and tackling and being able to extract good results despite the economic environment we have there.
Speaker #1: And other areas . And , and , you know , I like the other industrial gas companies . We see much more pressure in the large customers in on site than we see in the in the retail , in the packaged gases and so forth .
Speaker #1: So , so , you know , it's important business for us very , you know , very have profitable . We a experienced , managed team that management team that is , you know , doing the blocking and tackling and being able to extract good results despite the economic environment we have there .
James Hooper: Thank you both.
James Hooper: Thank you both.
Operator: We'll take our next question from Chris Parkinson with Wolfe Research.
Operator: We'll take our next question from Chris Parkinson with Wolfe Research.
Chris Parkinson: Great. Thank you so much. Eduardo, now that you're, you know, a year in, and you've had a time to evaluate, you know, prior pricing strategies as well as the cost front, you know, how do you see these things progressing throughout the year? I imagine you have a good handle on cost now, but also it seems like there's this divergence between kind of cost, you know, pricing improvements versus obviously some helium headwinds. But I'm just kind of curious on how, you know, what the cadence of that narrowing is as we progress through the fiscal year. So any color on those two topics would be greatly appreciated.
Chris Parkinson: Great. Thank you so much. Eduardo, now that you're, you know, a year in, and you've had a time to evaluate, you know, prior pricing strategies as well as the cost front, you know, how do you see these things progressing throughout the year? I imagine you have a good handle on cost now, but also it seems like there's this divergence between kind of cost, you know, pricing improvements versus obviously some helium headwinds. But I'm just kind of curious on how, you know, what the cadence of that narrowing is as we progress through the fiscal year. So any color on those two topics would be greatly appreciated.
Speaker #10: you Thank both .
Speaker #3: our next We'll take question from Chris Parkinson with Wolfe Research .
Speaker #11: so much . Great . Thank you Now that you're you know , a year in and you've had time to evaluate , you know , prior pricing strategies as well cost as the you know , front , you see these things progressing throughout the year ?
Speaker #11: mentioned you have a good I handle on cost now , but also it seems like there's this divergence kind between of cost pricing improvements versus obviously some helium headwinds .
Speaker #11: And I'm just kind of curious on how—you know—what the cadence of that narrowing is as we progress through the fiscal year.
Eduardo Menezes: Thank you, Chris. You were breaking a little bit, but if I understand correctly, it's about the pricing opportunity. You know, as you can see in the results on the first quarter, a lot of our gain coming from price and productivity. I think this is again a normal block and tackling of the business. You know, when you operate in 40 countries and you have over 20,000 employees, that's what you do. I think Air Products has a good management system and good management talent to continue to make progress in both price and productivity.
Eduardo Menezes: Thank you, Chris. You were breaking a little bit, but if I understand correctly, it's about the pricing opportunity. You know, as you can see in the results on the first quarter, a lot of our gain coming from price and productivity. I think this is again a normal block and tackling of the business. You know, when you operate in 40 countries and you have over 20,000 employees, that's what you do. I think Air Products has a good management system and good management talent to continue to make progress in both price and productivity.
Speaker #11: Any color on those two topics would be greatly appreciated.
Speaker #1: . Chris , Thank you you were breaking a little bit , but I , if I understand correctly , it's it's the pricing about opportunity .
Speaker #1: You know , as you can see in the results on the first quarter , a lot of our , our gain coming from price and productivity , I think this is again , this is a normal blocking and tackling of the business .
Speaker #1: know , when You you operate in 40 countries and you have , you know , over 20,000 employees . That's what you do .
Speaker #1: I think your product has good management system and good management talent to continue to to make progress in both price and productivity . I would say that we expect that going forward for the for the the balance of the fiscal year , that the results will be from , from those two aspects to be similar to what we had in the first quarter .
Eduardo Menezes: I would say that we expect that, going forward for the balance of the fiscal year, that the results will be from those two aspects to be similar to what we had in Q1. The situation helium is an exception that we are also working on to do the best we can in a long market. But I would say outside of helium, you know, we have the right tools, and we keep pushing, and we expect the same results we had in Q1.
I would say that we expect that, going forward for the balance of the fiscal year, that the results will be from those two aspects to be similar to what we had in Q1. The situation helium is an exception that we are also working on to do the best we can in a long market. But I would say outside of helium, you know, we have the right tools, and we keep pushing, and we expect the same results we had in Q1.
Speaker #1: The situation with helium is an exception that we are also working on, to do the best we can in a long market.
Speaker #1: But I would say outside helium tools and , you know , have the we keep pushing and we expect the same results we had in the first quarter .
Chris Parkinson: And just as a quick follow-up, there's obviously a lot going on in the tech world right now, and just given the scale that you have in Asia, as well as some of those customers abroad, can you perhaps just give us a little bit of insights in terms of how the investor community should be thinking about content when we're, you know, looking at things like N2, HBM, et cetera, et cetera? You know, in terms of purified nitrogen, you know, neon, all specialty, rare gases, how should we be thinking about the growth in your customers relative to when we should be seeing that show up in your results, presumably throughout this year and obviously for many years to come? Thank you so much.
Chris Parkinson: And just as a quick follow-up, there's obviously a lot going on in the tech world right now, and just given the scale that you have in Asia, as well as some of those customers abroad, can you perhaps just give us a little bit of insights in terms of how the investor community should be thinking about content when we're, you know, looking at things like N2, HBM, et cetera, et cetera? You know, in terms of purified nitrogen, you know, neon, all specialty, rare gases, how should we be thinking about the growth in your customers relative to when we should be seeing that show up in your results, presumably throughout this year and obviously for many years to come? Thank you so much.
Speaker #11: And just as a quick follow up , there's obviously a lot going on tech world in the right now . And just given the the scale that you have in Asia , as well as some of those customers abroad , can you just perhaps just give us a little bit of insight in terms of how the investment community should about be thinking content when we're looking at things like N2 , HBM , etc.
Speaker #11: , etc. ? You know , in terms of purified nitrogen , you know , neon , all specialty , rare gases , how should we be thinking about the growth in your customers relative to when we should be seeing that show up in your results ?
Eduardo Menezes: Thank you, Chris. Yeah, electronics is the star segment of the market nowadays. You know, of course, with AI, you can see the results of the chip manufacturers, the results of ASML, and so forth. We see a lot of RFPs, a lot of inquiries. It is a market that traditionally the products are getting, you know, the products are increasing in size, they're getting bigger and bigger. And we used to have, you know, the products coming every, you know, two, three years. And what I think you've seen the last 24 months and will continue to see in the next 24 months is an acceleration of this, you know, investment decisions by the large chip manufacturers.
Eduardo Menezes: Thank you, Chris. Yeah, electronics is the star segment of the market nowadays. You know, of course, with AI, you can see the results of the chip manufacturers, the results of ASML, and so forth. We see a lot of RFPs, a lot of inquiries. It is a market that traditionally the products are getting, you know, the products are increasing in size, they're getting bigger and bigger. And we used to have, you know, the products coming every, you know, two, three years. And what I think you've seen the last 24 months and will continue to see in the next 24 months is an acceleration of this, you know, investment decisions by the large chip manufacturers.
Speaker #11: throughout Presumably , this year and obviously for many years to come . much Thank you so .
Speaker #1: Thank you . Yeah . Electronics is is is a star segment of the market nowadays . You know , of course with AI you can see the results of the cheap manufacturers results of ASML and so We forth .
Speaker #1: see a lot of a lot of reps , a lot of inquiries . It is a market that traditionally the products are getting , you know , the products are increasing size .
Speaker #1: They are getting bigger and bigger . And we used to have , you know , products coming every , you know , two , three years .
Speaker #1: And what I think you’ve seen the last 24 months, and we’ll continue to see in the next 24 months, is an acceleration of this.
Eduardo Menezes: You know, we have very strong positions, as you know, in Asia. We continue to push hard on signing new business. Over there, we are executing projects that, you know, combine in one site can go up in CapEx to close to $1 billion. And we see an opportunity for new projects in the same range of CapEx, you know, being decided in the next 12 months.
You know, we have very strong positions, as you know, in Asia. We continue to push hard on signing new business. Over there, we are executing projects that, you know, combine in one site can go up in CapEx to close to $1 billion. And we see an opportunity for new projects in the same range of CapEx, you know, being decided in the next 12 months.
Speaker #1: You know , investment decisions by the large ship manufacturers and , you know , we we have , a very strong positions , as you know , in in Asia , we we continue to to push hard on , on , on , you know , signing new business over there .
Speaker #1: We , we are executing projects that , you know , combine in one site . Can go up in to CapEx close to $1 billion and , and we see an opportunity for new projects in the same range of of CapEx .
Melissa Schaeffer: Yes, and one additional comment to your question, Chris, and you did mention that, you know, we new assets. We absolutely are having new assets come on stream, as we talked about when we set our guidance. And additionally, as we talked about, this is a ramp, as you know, with electronics business, so we will see the majority of those contributions towards the back half of this year.
Melissa Schaeffer: Yes, and one additional comment to your question, Chris, and you did mention that, you know, we new assets. We absolutely are having new assets come on stream, as we talked about when we set our guidance. And additionally, as we talked about, this is a ramp, as you know, with electronics business, so we will see the majority of those contributions towards the back half of this year.
Speaker #1: You know, being decided in the next 12 months.
Speaker #2: Yes . And one one additional comment to to your question , Chris , and you did mention that , you know , new assets we are absolutely having new assets come on stream , as we talked about when we our set guidance and additionally , as we talked about this is a ramp , as you know , with electronics business .
Chris Parkinson: Thank you so much.
Chris Parkinson: Thank you so much.
Speaker #2: So, we will see the majority of those contributions back half towards the year of this.
Operator: We'll take our next question from Kevin McCarthy with Vertical Research Partners.
Operator: We'll take our next question from Kevin McCarthy with Vertical Research Partners.
Speaker #11: Thank you so much .
Kevin McCarthy: Yes, thank you, and good morning. I wanted to unpack, if I could, the upcoming deconsolidation of NEOM. Can you comment on the expected timing of that event and the specific trigger? And then, with regard to the financial impact, I, I appreciate the color that you provided on slide 10 with regard to your net debt balance and leverage ratio. I wanted to ask whether there would be any appreciable impact on your income statement as well, moving through that event.
Kevin McCarthy: Yes, thank you, and good morning. I wanted to unpack, if I could, the upcoming deconsolidation of NEOM. Can you comment on the expected timing of that event and the specific trigger? And then, with regard to the financial impact, I, I appreciate the color that you provided on slide 10 with regard to your net debt balance and leverage ratio. I wanted to ask whether there would be any appreciable impact on your income statement as well, moving through that event.
Speaker #3: We'll take our next question from Kevin McCarthy with Vertical Research Partners.
Speaker #12: Yes . Thank you . And good morning . I wanted to unpack . If I could , the upcoming deconsolidation of Neom . Can you comment on the expected timing of that event and specific trigger the then ?
Speaker #12: And with regard to the financial impact , I appreciate the color that you provided on slide ten with regard to your net debt balance and ratio .
Speaker #12: I wanted to ask whether there would be any appreciable impact on your income statement as well . Moving through that event .
Melissa Schaeffer: Yeah. Thanks, Kevin. So we've been talking about the deconsolidation for quite a while now, but I think we need to unpack it a little bit more, for our investor community. So because we are the EPC or the engineering, procurement, and construction group, Air Products is, to the joint venture, we do consolidate that because we do make the key decisions during that period of time. So at this point in time, with that control aspect, we do consolidate. Once the joint venture is operational, however, the decisions are even amongst the three shareholders. So during operations, which, as we've talked about, is in the mid-2027, we will then deconsolidate that joint venture. As you rightly mentioned, that means that the debt would come off of the full balance sheet and would be within the equity affiliate line.
Melissa Schaeffer: Yeah. Thanks, Kevin. So we've been talking about the deconsolidation for quite a while now, but I think we need to unpack it a little bit more, for our investor community. So because we are the EPC or the engineering, procurement, and construction group, Air Products is, to the joint venture, we do consolidate that because we do make the key decisions during that period of time. So at this point in time, with that control aspect, we do consolidate. Once the joint venture is operational, however, the decisions are even amongst the three shareholders. So during operations, which, as we've talked about, is in the mid-2027, we will then deconsolidate that joint venture. As you rightly mentioned, that means that the debt would come off of the full balance sheet and would be within the equity affiliate line.
Speaker #2: Yeah . Thanks , Kevin . So we've been talking about the Deconsolidation a for quite while now , but I think we need to unpack it a little bit more for our investor community .
Speaker #2: So, because we are the EPC, or the Engineering, Procurement, and Construction group, Air Products is to the joint venture. We do consolidate that because we do make the key decisions during that period of time.
Speaker #2: So at this point in time , with that control aspect , we do consolidate once the venture is joint operational . However , the decisions are even amongst the three shareholders .
Speaker #2: So during operations, which, as we've talked about, is in, as we've talked, we then joint 27, the mid venture, as you rightly mentioned, that means that the debt would come off of the full balance sheet and would be within the equity affiliate line.
Melissa Schaeffer: And so you will see the reduction in our debt profile at that point in time. As we lead up to the deconsolidation in 2027, obviously, the operating company will be adding resources. So we will see additional costs being run through the O&M, as we lead up to the onstream. And once that is deconsolidated, obviously you'll see that come off, and we will only see the impact of 1/3 of that operating cost. So there will be a slight increase in operating costs as we ramp up, getting closer to onstream in 2027, and then that would then be deconsolidated, and you'd only see the 33% through the equity affiliate line.
And so you will see the reduction in our debt profile at that point in time. As we lead up to the deconsolidation in 2027, obviously, the operating company will be adding resources. So we will see additional costs being run through the O&M, as we lead up to the onstream. And once that is deconsolidated, obviously you'll see that come off, and we will only see the impact of 1/3 of that operating cost. So there will be a slight increase in operating costs as we ramp up, getting closer to onstream in 2027, and then that would then be deconsolidated, and you'd only see the 33% through the equity affiliate line.
Speaker #2: And so you will see the reduction debt in our profile at that point in time , as we lead up to the Deconsolidation in 27 , obviously , the operating company will be adding resources , so we will see additional costs being run through the O&M as we lead up to the on stream .
Speaker #2: And once that is deconsolidated, obviously you'll see that come off, and we will only see the impact of one-third of that operating cost.
Speaker #2: So there will be a slight increase in operating costs as we ramp up getting closer to on-stream in ’27. And that would then be deconsolidated.
Kevin McCarthy: Understood. Very, very helpful. And then secondly, if I may, can you comment on the sequential price change for helium and, whether or not your Asia price of -1 would have been, you know, flat or, or possibly positive, if we were to carve out helium?
Kevin McCarthy: Understood. Very, very helpful. And then secondly, if I may, can you comment on the sequential price change for helium and, whether or not your Asia price of -1 would have been, you know, flat or, or possibly positive, if we were to carve out helium?
Speaker #2: And see the 33% through the you'd only equity affiliate line .
Speaker #2: And see the 33% through the you'd only equity affiliate line .
Speaker #12: Very Understood . helpful . And then secondly , if I may . Can you comment on the sequential price change for helium and whether or not you're Asia ?
Speaker #12: Price of negative one would have been , you know , flat or possibly positive if we were to carve out helium .
Melissa Schaeffer: Yes. Thanks for the question. So yes, we continue to see helium as a headwind, both to volume and price. For this quarter, on a global perspective, price was a 1% decrease from helium, specifically. In Asia, Asia is an interesting market right now because of the macroeconomic headwinds. We would have seen price up slightly. However, because of the helium impact, we did see that negative in Asia. However, in Americas and Europe, the price would have been up quite more significantly, but the helium headwind did bring that down a bit. But Asia, without a doubt, is the largest impacted region.
Melissa Schaeffer: Yes. Thanks for the question. So yes, we continue to see helium as a headwind, both to volume and price. For this quarter, on a global perspective, price was a 1% decrease from helium, specifically. In Asia, Asia is an interesting market right now because of the macroeconomic headwinds. We would have seen price up slightly. However, because of the helium impact, we did see that negative in Asia. However, in Americas and Europe, the price would have been up quite more significantly, but the helium headwind did bring that down a bit. But Asia, without a doubt, is the largest impacted region.
Speaker #2: Yes . Thanks for the question . So yes , we continue to see helium as a headwind both to volume and price for this quarter on a global perspective , price was a 1% decrease from helium , specifically in Asia .
Speaker #2: Asia is an interesting market right now because of the macroeconomic headwinds . We would have seen price up slightly . However , because of the helium impact , we did see that negative in Asia .
Speaker #2: in However , Americas and Europe price would , the have been up quite more . But the significantly helium headwind did down a But bring that bit .
John Roberts: Okay. Thank you so much.
John Roberts: Okay. Thank you so much.
Speaker #2: Asia without a doubt is is largest the impacted region .
Operator: Our next question comes from Mike Harrison with Seaport Research Partners.
Operator: Our next question comes from Mike Harrison with Seaport Research Partners.
Speaker #12: Okay . Thank you so much .
Mike Harrison: Hi, good morning. I wanted to ask about Europe operating margin. It looks like you saw about 150 basis points of sequential decline from Q4 into Q1. I think the energy pass-through maybe should have been a little bit favorable sequentially. The top line was pretty similar. Depreciation was lower. Is this maintenance costs that we're seeing there? Or maybe help us understand what was causing that sequential margin headwind, and how should we think about margin trajectory in Europe in the rest of the year?
Mike Harrison: Hi, good morning. I wanted to ask about Europe operating margin. It looks like you saw about 150 basis points of sequential decline from Q4 into Q1. I think the energy pass-through maybe should have been a little bit favorable sequentially. The top line was pretty similar. Depreciation was lower. Is this maintenance costs that we're seeing there? Or maybe help us understand what was causing that sequential margin headwind, and how should we think about margin trajectory in Europe in the rest of the year?
Speaker #3: next Our question comes from Mike Harrison with Seaport Research Partners .
Speaker #13: Hi. Good morning. I wanted to ask about Europe operating margin. It looks like you saw about 150 basis points of sequential decline from Q4 into Q1.
Speaker #13: I think the energy pass through maybe should have been a little bit favorable sequentially . The top line was pretty similar . Depreciation was was lower .
Speaker #13: So is this maintenance cost that we're there seeing ? Or maybe help us understand what was causing that sequential margin headwind . And how should we think about margin trajectory in Europe in the rest of the year ?
Melissa Schaeffer: Yes, thanks for the question, Mike. So it, the specific margin for Europe actually is being affected by costs. And so we have some significant productivity in that region. However, we did have sizable depreciation. So the depreciation year-over-year is in fact, I believe, up a bit. That is largely some insourcing and some purchases of our supply chain assets, that we are seeing a hit of depreciation and some fixed cost inflation. They are largely wage inflation that we're seeing in Europe that is shrinking the margin a little bit.
Melissa Schaeffer: Yes, thanks for the question, Mike. So it, the specific margin for Europe actually is being affected by costs. And so we have some significant productivity in that region. However, we did have sizable depreciation. So the depreciation year-over-year is in fact, I believe, up a bit. That is largely some insourcing and some purchases of our supply chain assets, that we are seeing a hit of depreciation and some fixed cost inflation. They are largely wage inflation that we're seeing in Europe that is shrinking the margin a little bit.
Speaker #2: Yes . Thanks for the question , So Mike . . The specific margin for for Europe actually being is affected by costs . And so we have some significant productivity in that region .
Speaker #2: However , we did have sizable depreciation . So the depreciation year over year is in fact I believe up a bit . That is largely some insourcing and some purchases of our supply chain assets that we are seeing a hit of depreciation and some fixed cost inflation .
Eduardo Menezes: Yeah, and there is also some seasonality-
Eduardo Menezes: Yeah, and there is also some seasonality-
Melissa Schaeffer: Yes, of course.
Melissa Schaeffer: Yes, of course.
Eduardo Menezes: In the quarter, which is normal at this, for this, you know, the last quarter of the calendar year.
Eduardo Menezes: In the quarter, which is normal at this, for this, you know, the last quarter of the calendar year.
Speaker #2: There's largely wage inflation that we're seeing in Europe. That is shrinking the margin.
Speaker #1: also seasonality some in the in quarter , which is the And there is normal at this , at this , for this , last quarter of the you know , calendar year .
Mike Harrison: All right, and then my other question is, if you can comment on what portion of your customers are running below take-or-pay minimums, in terms of their volume consumption right now. And I'm just curious, is that most pronounced in Europe? Or, maybe if you could comment on what you're seeing region by region in terms of take-or-pay minimums.
Mike Harrison: All right, and then my other question is, if you can comment on what portion of your customers are running below take-or-pay minimums, in terms of their volume consumption right now. And I'm just curious, is that most pronounced in Europe? Or, maybe if you could comment on what you're seeing region by region in terms of take-or-pay minimums.
Speaker #13: All right . And then my , my other question is if you can comment on what portion of your customers are running below , take or pay minimums in terms of their volume consumption right now .
Speaker #13: just And I'm curious , is that most pronounced in Europe ? Or maybe if you could comment on on what you're seeing , region by terms take pay region , in minimums of ?
Eduardo Menezes: Yeah, we don't normally disclose that, Mike. We have some cases in Europe, but I would say that is not a very large percentage of our business. But Melissa?
Eduardo Menezes: Yeah, we don't normally disclose that, Mike. We have some cases in Europe, but I would say that is not a very large percentage of our business. But Melissa?
Speaker #1: Yeah . We don't we don't normally disclose that , but we , we we we have some cases in Europe and but I would say that is , is not a very large percentage of our business .
Melissa Schaeffer: So one of the things that we do track is really utilization. So if I think about utilization across the Americas, Europe, and Asia, it's pretty similar in the mid- to high 70s. So that's pretty similar to what we saw in fiscal 2025 as well. So we're not seeing a significant change in utilization, but there is-
Melissa Schaeffer: So one of the things that we do track is really utilization. So if I think about utilization across the Americas, Europe, and Asia, it's pretty similar in the mid- to high 70s. So that's pretty similar to what we saw in fiscal 2025 as well. So we're not seeing a significant change in utilization, but there is-
Speaker #1: But .
Speaker #2: So one of the things that we , we do track is , is really utilization . So if I think about utilization across the Americas , Europe and Asia , it's it's pretty similar in the mid to high 70s .
Speaker #2: So that's pretty similar to what we saw in fiscal 25 as well . So we're not seeing a significant change in in utilization .
Eduardo Menezes: Yeah, take-or-pay is contract by contract.
Eduardo Menezes: Yeah, take-or-pay is contract by contract.
Melissa Schaeffer: Yes. Yeah, it is. It's very different.
Melissa Schaeffer: Yes. Yeah, it is. It's very different.
Eduardo Menezes: Case by case.
Eduardo Menezes: Case by case.
Melissa Schaeffer: Absolutely.
Melissa Schaeffer: Absolutely.
Eduardo Menezes: Of course, the steel industry, the chemical industry in Europe is being affected, but it's not a, you know, it's not affect every customer in every location the same way, right? So it's a question of where your assets are and what customers you have. I think, if you want to put this way, we, you know, I don't think it's a question of luck, it's a question of the work that was done 20, 30 years ago, selecting the right customers. But so far, we're not having a lot of impact in Europe, and with the caveat that, you know, our on-site business in Europe is not as big as it is in Asia and in the US.
Eduardo Menezes: Of course, the steel industry, the chemical industry in Europe is being affected, but it's not a, you know, it's not affect every customer in every location the same way, right? So it's a question of where your assets are and what customers you have. I think, if you want to put this way, we, you know, I don't think it's a question of luck, it's a question of the work that was done 20, 30 years ago, selecting the right customers. But so far, we're not having a lot of impact in Europe, and with the caveat that, you know, our on-site business in Europe is not as big as it is in Asia and in the U.S.
Speaker #2: But there there is .
Speaker #1: A
Speaker #1: contract by
Speaker #2: It is. Yeah, contract.
Speaker #2: It's very .
Speaker #1: Case by case . And absolutely of course the the steel industry , the chemical industry in Europe is , is being affected . But it's not a , you know , it's not affect every customer in every location the same way .
Speaker #1: Right . So it's a it's your a question of where and what customers you have . I think if you if you want to it this way , you we , know , I don't think it's a question of luck .
Speaker #1: It's a question of the work that was done . 20 , 30 years ago , selecting the right customers . But so far , we're not having a lot of impact in Europe .
Speaker #1: And with the caveat that , you know , we our our own side business in Europe is not as big as as it is in Asia and in the US .
Operator: We'll take our next question from John Roberts with Mizuho.
Operator: We'll take our next question from John Roberts with Mizuho.
John Roberts: Thank you. Back to CBAM for ammonia. Is Section 27 a key issue to watch here? And, do you know what the next step is on Section 27? I don't think it's approved yet.
John Roberts: Thank you. Back to CBAM for ammonia. Is Section 27 a key issue to watch here? And, do you know what the next step is on Section 27? I don't think it's approved yet.
Speaker #3: We'll take our next question from John Roberts with Mizuho .
Speaker #14: you . Thank Back to sebum for ammonia is section 27 a key issue to watch here ? And do you know what the next step is on section 27 ?
Eduardo Menezes: Yeah, I'm not an expert on EU regulations, John. I don't know anyone is, but you know, from what I understand, this is a proposal that has to be approved. And you know, there are several levels of legislation in Europe. You know, there are directives, which is like a suggestions that the countries have to implement. You know, CBAM is more like a tariff, so it's a legislation, also has to be approved by the entire EU, and any changes have to be approved as well. And as you probably know, the CBAM is, you know, connected to the CO2 ETS scheme. So, it's really a compensation for European producers for the CO2 tax that they have to pay.
Eduardo Menezes: Yeah, I'm not an expert on EU regulations, John. I don't know anyone is, but you know, from what I understand, this is a proposal that has to be approved. And you know, there are several levels of legislation in Europe. You know, there are directives, which is like a suggestions that the countries have to implement. You know, CBAM is more like a tariff, so it's a legislation, also has to be approved by the entire EU, and any changes have to be approved as well. And as you probably know, the CBAM is, you know, connected to the CO2 ETS scheme. So, it's really a compensation for European producers for the CO2 tax that they have to pay.
Speaker #14: I don't think it's approved yet
Speaker #14: .
Speaker #1: I'm not an Yeah , expert on you regulations , John . I don't know Is . But anyone . you know , from what I understand , this is a proposal has to that be approved .
Speaker #1: there are , you know , several And levels of legislation in Europe that are directives , which is like a the countries have to suggestions that implement , you to know , Cbam is is more like a tariff .
Speaker #1: So it's a legislation . So it has to be approved by the the entire EU . And any changes have to be approved as well .
Speaker #1: And as you probably know , the sebum is is , you know , connected to the CO2 ETS scheme . So it's really a compensation for , for European producers , for the CO2 tax that they have to pay .
Eduardo Menezes: And this CO2 ETS scheme is, you know, in place for probably 15 years now. And, you know, I would say that to make a change there, you will need to make a change in the entire CO2 ETS scheme. So, that's why I think people are telling us that the probability is very, very low. But again, it's our job is to run the business and make our decisions. And the regulatory is just a signal that we need to use to make those decisions.
And this CO2 ETS scheme is, you know, in place for probably 15 years now. And, you know, I would say that to make a change there, you will need to make a change in the entire CO2 ETS scheme. So, that's why I think people are telling us that the probability is very, very low. But again, it's our job is to run the business and make our decisions. And the regulatory is just a signal that we need to use to make those decisions.
Speaker #1: And this , this CO2 , ETS scheme is , you know , in place for probably 15 years now . And , and you know , I would say that to make a change there , you will need to make a change in the entire CO2 .
Speaker #1: ETS scheme . So that's I why think people are telling us that the probability is very , again , very low . But it's our , it's our job is to to run the business and make our decisions .
John Roberts: Okay. And then in the US, is contracting for new electric power an issue at all, and bidding for new ASU business, with all the data center competition and so forth?
John Roberts: Okay. And then in the US, is contracting for new electric power an issue at all, and bidding for new ASU business, with all the data center competition and so forth?
Speaker #1: And the , the regulatory is just a signal that we need to use to , to , to make that decisions .
Speaker #14: then Okay . And in the US is contracting for new electric power in issue at all and bidding for new ASU business with all the data center competition and so forth
Eduardo Menezes: Yeah, no question. We are seeing, you know, increases in power costs for new contracts. You know, we have a very sophisticated power procurement process in Air Products. As you can imagine, it's the main input that we have in our air separation business. So it's an ongoing relationship with suppliers. I would say that, if you have something new today, you would need to go and negotiate the tariffs. But at the end of the day, when we have, like, an on-site contract, as you know, this is a pass-through the formulas that we have, so ends being in the customer side.
Eduardo Menezes: Yeah, no question. We are seeing, you know, increases in power costs for new contracts. You know, we have a very sophisticated power procurement process in Air Products. As you can imagine, it's the main input that we have in our air separation business. So it's an ongoing relationship with suppliers. I would say that, if you have something new today, you would need to go and negotiate the tariffs. But at the end of the day, when we have, like, an on-site contract, as you know, this is a pass-through the formulas that we have, so ends being in the customer side.
Speaker #14: .
Speaker #1: question . We are
Speaker #1: seeing Yeah , no , you know , increases in in in power costs for for new contracts . You know , we we have a very sophisticated power procurement process in their products as you can imagine .
Speaker #1: It's it's the main input that we have in our operation business . So it's a it's an on relationship with , with suppliers I would say that if you have something today , new you would need to to go and negotiate the tariffs .
Speaker #1: But at the end of the day when , when , when we have like an on site contract , as you know , this is a this is a pass through in the formulas that we have .
Eduardo Menezes: For the merchant product, any energy that we use in the energy, in the, to make liquid oxygen, liquid nitrogen, so forth, you know, we work very hard also to pass those costs to our customers. So, it's not that we are completely immune to power, but we work very hard to make sure that we pass this cost to the market and try to be ready for any cost increase. But there is no question that, you know, the data centers, they are creating demand, and they are creating distortions in the power market today.
For the merchant product, any energy that we use in the energy, in the, to make liquid oxygen, liquid nitrogen, so forth, you know, we work very hard also to pass those costs to our customers. So, it's not that we are completely immune to power, but we work very hard to make sure that we pass this cost to the market and try to be ready for any cost increase. But there is no question that, you know, the data centers, they are creating demand, and they are creating distortions in the power market today.
Speaker #1: So ends being in the , in the customer side . And for the merchant product , any energy we that use in the energy in the to to make liquid oxygen , liquid liquid nitrogen and so forth , you know , we , we , we work very hard also to pass those costs to customers .
Speaker #1: our So it's not that we we are completely immune to , to to power , but we work very hard to make sure that we pass this cost to , to the market .
Speaker #1: And , and try to be ready for any cost increase . But there is no questions that , you know , the data they they are centers , creating demand and they are creating a in the distortions in the power market today .
Patrick Cunningham: Thank you.
John McNulty: Thank you.
Operator: Our next question comes from Patrick Cunningham with Citi.
Operator: Our next question comes from Patrick Cunningham with Citi.
Patrick Cunningham: Hi, good morning. Just, just a few follow-ups related to prior questions on NEOM. Is there any dependency on the relationship with Yara at Darrow? And are these no-go, no-go decisions being viewed separately? And do you foresee the same CBAM-related risks for Yara's appetite for the NEOM offtake?
Patrick Cunningham: Hi, good morning. Just, just a few follow-ups related to prior questions on NEOM. Is there any dependency on the relationship with Yara at Darrow? And are these no-go, no-go decisions being viewed separately? And do you foresee the same CBAM-related risks for Yara's appetite for the NEOM offtake?
Speaker #15: Thank you .
Speaker #3: Our next question comes from Citi, Cunningham, with Patrick.
Speaker #16: morning . Hi . Good Just a few follow ups related to prior questions on Neom . Is there any dependency on the relationship with Yara at Darrow ?
Speaker #16: And are these no go no go decisions being viewed separately ? And do you foresee the same cbam related risks for Yara's appetite for the Neom offtake ?
Eduardo Menezes: No, there are no dependence between the two projects or the two potential contracts. And again, this is the same, is the same answer from the other one, right? The product from NEOM will be green, so that's gonna be absolutely zero CBAM effect on that product. You know, the effect on other products coming to Europe would be an indirect effect on the overall market, and we need to see if that happens, you know, what the effect is. But again, going back to my previous answer, it's you know, very, very, you know, uncertain that there will be any impact on the CBAM scheme today. But and if there is, it's gonna be an indirect impact on this project.
Eduardo Menezes: No, there are no dependence between the two projects or the two potential contracts. And again, this is the same, is the same answer from the other one, right? The product from NEOM will be green, so that's gonna be absolutely zero CBAM effect on that product. You know, the effect on other products coming to Europe would be an indirect effect on the overall market, and we need to see if that happens, you know, what the effect is. But again, going back to my previous answer, it's you know, very, very, you know, uncertain that there will be any impact on the CBAM scheme today. But and if there is, it's gonna be an indirect impact on this project.
Speaker #1: No , there are no no dependence between the . The two projects or the two potential contracts . And again , it's same .
Speaker #1: the It's the same answer from Right . from the other one . The the product from neon is will be green . So that's going to be absolutely zero .
Speaker #1: Cbam effect on that product . You know , the effect on , on other products coming to Europe would be an indirect effect on the on the overall market .
Speaker #1: And we need to see if that happens . You know , what the effect is . But again , going back to my previous answer , it's , you know , very , very uncertain that there will be any impact on , on on the CBM scheme today .
Patrick Cunningham: Got it. That, that's very helpful. And what do you anticipate the run rate contribution of the NEOM JV will be from an equity affiliates perspective? And should we expect that to be at a loss when the asset first ramps up, given the debt profile and initial fixed cost burden?
Patrick Cunningham: Got it. That, that's very helpful. And what do you anticipate the run rate contribution of the NEOM JV will be from an equity affiliates perspective? And should we expect that to be at a loss when the asset first ramps up, given the debt profile and initial fixed cost burden?
Speaker #1: But and if there is , it's going to be an indirect impact on this project .
Speaker #16: That's very helpful. And what do you anticipate the run rate contribution of NEOM, the JV, will be from an equity affiliates perspective?
Speaker #16: And should we expect that to be at a loss when the asset first ramps up , given the debt profile and initial fixed cost burden
Eduardo Menezes: No, it's not gonna be at a loss, and, but, you know, we cannot disclose results from our joint ventures. We know that we own 33%, or expected results in this case, but maybe it's not gonna be at a loss.
Eduardo Menezes: No, it's not gonna be at a loss, and, but, you know, we cannot disclose results from our joint ventures. We know that we own 33%, or expected results in this case, but maybe it's not gonna be at a loss.
Speaker #16: ?
Speaker #1: it's not going to be No , at a at a loss . And but you know , we cannot disclose results from from joint our ventures .
Patrick Cunningham: Thank you.
Patrick Cunningham: Thank you.
Speaker #1: that You know we own 33% of or expected results in this case . But it's not going to be at a loss .
Operator: We'll take our next question from Josh Spector with UBS.
Operator: We'll take our next question from Josh Spector with UBS.
Speaker #16: Thank you .
Josh Spector: Yeah. Hi, good morning. I guess I'll follow up on Darrow and CBAM and see if maybe you'll answer it a little bit differently at all or not. But when you think about, like, the decision here that Yara would need to make, I understand CBAM doesn't impact Air Products directly, but it does impact the economics for Yara, assuming they're intending to bring that into Europe. And, you know, if they say that we don't know what the regulation's gonna be, and we need another year to think about it, we wanna see if anything's gonna change, is that time value something that you're willing to accept? Or does that then trigger, we need to look at a plan B or some of these other options, 'cause we're not gonna sit around for a year? How do you game theory that yourself?
Josh Spector: Yeah. Hi, good morning. I guess I'll follow up on Darrow and CBAM and see if maybe you'll answer it a little bit differently at all or not. But when you think about, like, the decision here that Yara would need to make, I understand CBAM doesn't impact Air Products directly, but it does impact the economics for Yara, assuming they're intending to bring that into Europe. And, you know, if they say that we don't know what the regulation's gonna be, and we need another year to think about it, we wanna see if anything's gonna change, is that time value something that you're willing to accept? Or does that then trigger, we need to look at a plan B or some of these other options, 'cause we're not gonna sit around for a year? How do you game theory that yourself?
Speaker #3: take our We'll next question from Josh Spector with UBS .
Speaker #17: Hi . Good morning . Yeah . I guess I'll follow up on Darrow and Cbam and see if maybe you answer a little bit differently at all , or not .
Speaker #17: But when you think about , like , the decision that here Yara would need to make , I understand Cbam doesn't impact air products directly , but it does impact the economics for Yara , assuming they're intending to bring that into Europe .
Speaker #17: And you know, if they say that we don't know what the regulation is going to be, and we need another year to think about it, we want to see if anything's going to change.
Speaker #17: Is that time value something that you're willing to accept, or does that then mean we need to look at a trigger, a plan B, or some of these other options? Because we're not going to sit around for a year.
Eduardo Menezes: Yeah, it's a theoretical question at this point, right? So we didn't, you know, think about that, and I need to see when that happens. I would just say that the way we look at this project, right? When I came on board here, you know, Air Products was building a full ammonia project, you know, and doing the CO2 sequestration itself and was going to be an ammonia producer and seller. We stopped the project as is, right? So today, the base case is that we stopped the project.
Eduardo Menezes: Yeah, it's a theoretical question at this point, right? So we didn't, you know, think about that, and I need to see when that happens. I would just say that the way we look at this project, right? When I came on board here, you know, Air Products was building a full ammonia project, you know, and doing the CO2 sequestration itself and was going to be an ammonia producer and seller. We stopped the project as is, right? So today, the base case is that we stopped the project.
Speaker #17: How do you game theory that yourself?
Speaker #1: Yeah . You is a theoretical question at this point . Right . So we we we didn't say think about And , and I need to see when , when that happens I would just say that the way we look at this project , right when I , when I came on board here , you know , our product was building a full ammonia project , you know , and doing the CO2 sequestration itself and was going to be an ammonia producer and seller .
Eduardo Menezes: But we at the same time, we said the project has positive attributes and has a chance of being a good project, so let's try to see if there is a solution to generate some value from this project. And I think we did the most difficult step at this point, which is to find a credible, you know, really world-class partner that would be willing to take the commercial risk on the ammonia, which is what this is, right? They're buying the hydrogen and the nitrogen and making the ammonia, so they're taking that commercial and operational risk of the ammonia. So this is the most difficult piece of the puzzle here.
But we at the same time, we said the project has positive attributes and has a chance of being a good project, so let's try to see if there is a solution to generate some value from this project. And I think we did the most difficult step at this point, which is to find a credible, you know, really world-class partner that would be willing to take the commercial risk on the ammonia, which is what this is, right? They're buying the hydrogen and the nitrogen and making the ammonia, so they're taking that commercial and operational risk of the ammonia. So this is the most difficult piece of the puzzle here.
Speaker #1: We we stopped the project as it is . Right . So today , the the the base case is that that we stopped the project , but we , we at the same time we said the project has positive attributes and has a chance of being a good project .
Speaker #1: So let's try to find—let's try to see if there is a solution to generate some value from this, from this project.
Speaker #1: And I think we did the most difficult step at this point , which is to find a credible , you know , really world class partner .
Speaker #1: That would be willing to take the commercial risk on the on the ammonia , which , which is what what this is . Right .
Speaker #1: The buying the hydrogen and the nitrogen and making the ammonia . So they're taking that commercial . And operational risk of ammonia . this is the So most difficult piece of the puzzle here .
Eduardo Menezes: We need to make sure that the capital cost is, that the project is feasible for both parties, so that the project, the capital costs will be within the numbers that we assume to be with them. But, you know, I would say that, you know, at this point, this is more like a which one is a plan A, which one is a plan B? Depends on how you see it, but, you know, where we are today, if nothing happens, we're gonna go back to where we were, 11 months ago, which is, you know, we're not gonna go forward with the project as proposed.
We need to make sure that the capital cost is, that the project is feasible for both parties, so that the project, the capital costs will be within the numbers that we assume to be with them. But, you know, I would say that, you know, at this point, this is more like a which one is a plan A, which one is a plan B? Depends on how you see it, but, you know, where we are today, if nothing happens, we're gonna go back to where we were, 11 months ago, which is, you know, we're not gonna go forward with the project as proposed.
Speaker #1: We need to to make sure that the capital cost is that the project is feasible for both parties . So that the project , the capital cost will be within the numbers that we we assume to to be with them .
Speaker #1: But , you know , the , the I would say that , you know , at this point , this is more like a which one is the plan ?
Speaker #1: A which one is the plan B depends you see on how it , but you know , where we are today . If if nothing happens , we're going to go back to where we were 11 months ago , which is , you know , we're not going to go forward with the project has proposed .
Eduardo Menezes: So that is the situation, and I would say that you know, the way I look at this is that we have only two possibilities here, right? We're not gonna go forward, or we're gonna go forward with a good project, right? And those are the only two cases I'm working with. Of course, there's a lot of work to make sure that when you go forward, that you are certain on your capital costs and the project is good, but those are the two outcomes. So I hope our shareholders are looking at this as a free option, you know, for a good project on top of the current base case, which is not going forward.
So that is the situation, and I would say that you know, the way I look at this is that we have only two possibilities here, right? We're not gonna go forward, or we're gonna go forward with a good project, right? And those are the only two cases I'm working with. Of course, there's a lot of work to make sure that when you go forward, that you are certain on your capital costs and the project is good, but those are the two outcomes. So I hope our shareholders are looking at this as a free option, you know, for a good project on top of the current base case, which is not going forward.
Speaker #1: So , so that that that is the situation . And I would say that . You know , the way I look at this is that we have only two possibilities here , right ?
Speaker #1: We're not going to go forward or we're going to go forward with a good project . Right . And and those are the only two cases I'm working with .
Speaker #1: Of course, there's a lot of work to do to make sure that when you go forward, you are certain on your capital costs and the project is good.
Speaker #1: But those are the two outcomes . So I hope our shareholders are looking at this as a free option . You know , for a good project on top of the current base case , which is not going forward .
Laurence Alexander: ... Okay, thank you.
Josh Spector: Okay, thank you.
Operator: Our next question comes from Matthew DeYoe with Bank of America.
Operator: Our next question comes from Matthew DeYoe with Bank of America.
Speaker #17: Okay . Thank .
Speaker #18: You .
Matthew DeYoe: Good morning. I have two, so Uniper from Germany announced an agreement to offtake 500 KT of green ammonia from the new AM Green green hydrogen project in India, which looks to be commissioning on, like, 2028. Can I ask if you bid on this project, and if you did, why you don't think you won, or if you didn't bid on it, why you didn't, considering kind of the profile at NEOM? And then last, sorry to ask another one on Darrow, I guess. So from what I understand, the company's kind of bidding the construction across a few different EPCs to try to lock in fixed economics. Is there any reason to believe this strategy would be more successful than just choosing, like, one?
Matthew DeYoe: Good morning. I have two, so Uniper from Germany announced an agreement to offtake 500 KT of green ammonia from the new AM Green green hydrogen project in India, which looks to be commissioning on, like, 2028. Can I ask if you bid on this project, and if you did, why you don't think you won, or if you didn't bid on it, why you didn't, considering kind of the profile at NEOM? And then last, sorry to ask another one on Darrow, I guess. So from what I understand, the company's kind of bidding the construction across a few different EPCs to try to lock in fixed economics. Is there any reason to believe this strategy would be more successful than just choosing, like, one?
Speaker #3: Our next question comes from Matthew Dio with Bank of America.
Speaker #19: Good morning . I have I have two , but so uniper from Germany announced an agreement to off take 500 kt of green ammonia from the new Am green green hydrogen project in India , which looks to be commissioning like 2028 .
Speaker #19: Can can I ask if you bid on this project and if you did , why you don't think you won or if you didn't bid on it , why you didn't , considering kind of the profile at Neom and then last , sorry to ask another one on Daryl , I guess , but from what I understand , the company's kind of bidding the construction across a few different EPCs to try to lock in fixed economics .
Speaker #19: Is there any reason to believe this strategy would be more successful than just choosing one?
Eduardo Menezes: Okay, two different questions, right?
Eduardo Menezes: Okay, two different questions, right?
Matthew DeYoe: Yeah.
Matthew DeYoe: Yeah.
Eduardo Menezes: So on the green ammonia, right, you know, it's a complicated subject here, right? So I would, you know, the way I like to think about this is, you know, if you wanna make ammonia starting from electrolysis, right? For every metric ton of ammonia, you need about 10 megawatts of power, right? So when I see people saying, you know, we're gonna develop this project in a place like India, and we're gonna have a price of ammonia, you know, and I read the same articles you probably read, so people talk about $600, $700, something like that.
Eduardo Menezes: So on the green ammonia, right, you know, it's a complicated subject here, right? So I would, you know, the way I like to think about this is, you know, if you wanna make ammonia starting from electrolysis, right? For every metric ton of ammonia, you need about 10 megawatts of power, right? So when I see people saying, you know, we're gonna develop this project in a place like India, and we're gonna have a price of ammonia, you know, and I read the same articles you probably read, so people talk about $600, $700, something like that.
Speaker #1: Okay , to two different questions , right . So on the the on on the green ammonia . Right . You know , I , I it's a it's a it's a complicated subject here .
Speaker #1: Right . I would you know the way I like to think about this is you know , if you want to make ammonia starting from electrolysis .
Speaker #1: Right . For every metric ton of ammonia , you need about ten megawatts of power , right ? So when I see people saying , you know , we're going to develop this project in , in a place like India and we're going to have a price of ammonia , you know , and , and I read the same articles , you probably read .
Eduardo Menezes: You need to—when you see a number like that, you need to realize that it's like, you know, exporting power from India and investing a lot of capital to, at the end of the day, export power from India at $60 a megawatt or $70 a megawatt, right? So which is, you know, lower than the local price. So it's very difficult to understand the economics when people talk about doing green hydrogen and green ammonia in this type of jurisdiction. So when our project in Saudi Arabia, it's public information, you can look around. You know, Saudi Arabia has a very active renewable power market, and they sign agreements with power prices below $0.02 or $20 per megawatt. So we are within that system.
You need to—when you see a number like that, you need to realize that it's like, you know, exporting power from India and investing a lot of capital to, at the end of the day, export power from India at $60 a megawatt or $70 a megawatt, right? So which is, you know, lower than the local price. So it's very difficult to understand the economics when people talk about doing green hydrogen and green ammonia in this type of jurisdiction. So when our project in Saudi Arabia, it's public information, you can look around. You know, Saudi Arabia has a very active renewable power market, and they sign agreements with power prices below $0.02 or $20 per megawatt. So we are within that system.
Speaker #1: So people talk about $600 , $700 , something like that . You need to when you see a number like that , you need to realize that it's like , you know , exporting power from Ninja at investing a lot of capital to of the day , at the end , export power from at $60 , a megawatt or 70,000 megawatt , right .
Speaker #1: So which is , you know local , lower than the price . So it's very difficult to understand the economics when when people talk about doing green hydrogen and green ammonia in this type of jurisdictions , right .
Speaker #1: When our project in Saudi Arabia , it's public information . You can you can look around , you know , Saudi Arabia has a very active renewable power market .
Speaker #1: And they sign agreements with power prices below $0.02 or $20 per megawatt . So , so we are within that system , you know , we are building our own renewable power and our let's say if you if you want to calculate our internal power costs for our project is also below $0.02 per kilowatt or $20 per megawatt .
Eduardo Menezes: You know, we are building our own renewable power. Our ... Let's say, if you wanna calculate our internal power cost for our project is also below 2 cents per kW or $20 per MW. Our project is under construction. We can show you the videos, we can take you there. The power economics makes sense, and I'm not gonna make comments about what other people are doing and MOUs and that kind of stuff. There are a lot of activities like that in Europe, a lot of announcements. But you know, the only real project being built at this point is ours.
You know, we are building our own renewable power. Our ... Let's say, if you wanna calculate our internal power cost for our project is also below 2 cents per kW or $20 per MW. Our project is under construction. We can show you the videos, we can take you there. The power economics makes sense, and I'm not gonna make comments about what other people are doing and MOUs and that kind of stuff. There are a lot of activities like that in Europe, a lot of announcements. But you know, the only real project being built at this point is ours.
Speaker #1: So our project is under construction . We can show you the videos . We can take you there . The the . Power economics makes sense .
Speaker #1: I'm not And make going to comments about what other people are doing . And and that kind of stuff MOU . lot of There are a that , and activities like in Europe , a lot of announcements .
Eduardo Menezes: I understand in India it's a little different because they're trying to use an existing facility, and I'm not doubting that they will, at the end, build something. But I would say that, you know, the regulatory risk, the, you know, the if something looks too good to be true, normally it is, right? You know, to have this kind of exporting power at this low price from a country like India, you know, it's a question mark for me. So that's the green ammonia piece. On the Darrow side, your question about the EPCs, we, you know, we're not gonna make a comment on what we're doing in our activities. I would say that, you know, the ...
I understand in India it's a little different because they're trying to use an existing facility, and I'm not doubting that they will, at the end, build something. But I would say that, you know, the regulatory risk, the, you know, the if something looks too good to be true, normally it is, right? You know, to have this kind of exporting power at this low price from a country like India, you know, it's a question mark for me. So that's the green ammonia piece. On the Darrow side, your question about the EPCs, we, you know, we're not gonna make a comment on what we're doing in our activities. I would say that, you know, the ...
Speaker #1: But you know , the , the only real project being built at this point is ours . I understand in India it's it's a little different because they're trying to use an existing facility .
Speaker #1: And I'm not doubting that they will at the end build something . But I would say that , you know , the regulatory risk , the the , you know , the if , if something looks too good to be true , normally it is right .
Speaker #1: to have know , You to this kind of exporting power at this low price from a country like India , you know , it's it's a , it's a question mark for me .
Speaker #1: So , so that's the , green ammonia the piece on the , on the their side . Your question about the EPCs , we , we , you know , we we're not going to make a comment on on what we're doing in our activities .
Eduardo Menezes: In general, this project is a very large block plant with, you know, very well-defined blocks. So you have an air separation plant, you have a hydrogen plant, you have an ammonia plant. So you can go in different directions. It is a question of, you know, to determine what makes sense. You need to go through a process, and you need to understand the local market, know how, what is the appetite of the EPCs and what alternatives they have. So, we are looking at every case here, and we are trying to make sure that we do the best for our shareholders, for Yara, for our customer, in this case, for Yara.
In general, this project is a very large block plant with, you know, very well-defined blocks. So you have an air separation plant, you have a hydrogen plant, you have an ammonia plant. So you can go in different directions. It is a question of, you know, to determine what makes sense. You need to go through a process, and you need to understand the local market, know how, what is the appetite of the EPCs and what alternatives they have. So, we are looking at every case here, and we are trying to make sure that we do the best for our shareholders, for Yara, for our customer, in this case, for Yara.
Speaker #1: I would say that , you know , the in general , this this project is , a is very large plot plant with , you know , very well defined blocks .
Speaker #1: So you have a aspiration plant , you have a hydrogen plant , you have an ammonia plant . So you can go in different directions and it is a question of , you know , to , to , to , to determine what makes sense , you need to go to a process and you need to understand the local market , know how , what is the appetite of the apex and and what alternatives they have .
Speaker #1: So we are looking at every case here and we are trying to make best sure that we do the for our for shareholders , for our customers , in this case for , for Yara .
Eduardo Menezes: And in fact, they will participate in the process with us, and we are not ready to say exactly how we're gonna execute this project at this point.
And in fact, they will participate in the process with us, and we are not ready to say exactly how we're gonna execute this project at this point.
Speaker #1: And in fact , they will participate in the process with us . And we are not ready to say exactly how we're going to execute this project at this point .
Matthew DeYoe: Understood. Thank you.
Matthew DeYoe: Understood. Thank you.
Operator: We'll take our last question from Laurence Alexander with Jefferies.
Operator: We'll take our last question from Laurence Alexander with Jefferies.
Speaker #19: Understood . Thank you .
Laurence Alexander: Good morning. A question around sort of AI-related productivity. You know, if it comes in better than expected or compared to expectations a few years ago, do the benefits accrue to your on-site business, or do your contracts mean that you pass some or all of those benefits through to the customers? And then similarly, I guess for merchants, it would be, you know, more just sort of competitive dynamics in the local market. Is that fair?
Laurence Alexander: Good morning. A question around sort of AI-related productivity. You know, if it comes in better than expected or compared to expectations a few years ago, do the benefits accrue to your on-site business, or do your contracts mean that you pass some or all of those benefits through to the customers? And then similarly, I guess for merchants, it would be, you know, more just sort of competitive dynamics in the local market. Is that fair?
Speaker #3: We'll take our last question from Lorax Alexander Lawrence Alexander with Jefferies .
Speaker #20: Good morning . A question around sort of AI related productivity . You know , if it comes in better than expected or compared to expectations , a few years ago , do the benefits accrue to your on site business or do your contracts mean that you some or pass all of those benefits through to the customers and then similarly , I guess for merchant , it would be more just sort of competitive dynamics in the local market .
Eduardo Menezes: Yeah, it's... You know, AI is can be used everywhere, right? So when you talk about how you're using it, you know, and where the benefit will accrue, it depends on what the usage is, right? So if you say, "I'm using AI to lower my power costs, right, in the negotiations with my power suppliers." If I have an agreement with the customer that is a really pass-through on the cost, that will be somehow shared. If we're using AI to reduce our power consumption, normally we will capture that to our products, because at the end of the day, what we do, we give the customer a guarantee of a maximum power consumption. So it's case by case, and but that's a very specific application of AI.
Eduardo Menezes: Yeah, it's... You know, AI is can be used everywhere, right? So when you talk about how you're using it, you know, and where the benefit will accrue, it depends on what the usage is, right? So if you say, "I'm using AI to lower my power costs, right, in the negotiations with my power suppliers." If I have an agreement with the customer that is a really pass-through on the cost, that will be somehow shared. If we're using AI to reduce our power consumption, normally we will capture that to our products, because at the end of the day, what we do, we give the customer a guarantee of a maximum power consumption. So it's case by case, and but that's a very specific application of AI.
Speaker #20: that Is fair ?
Speaker #1: Yeah , it's it's , you know , AI is is can be used everywhere . Right . So when you when you talk about how you're using it , you know , and where the benefit will accrue , it depends on on , what the is .
Speaker #1: Right . So if you say I'm using AI to lower my , my power costs right . In the negotiations with my power suppliers , if I have an agreement with the customer , that is a really pass through on the , on the , on the cost , that will be somehow .
Speaker #1: If we're using AI to reduce our power consumption , normally we will capture that to to a product , because at the end of the day , what we do , we give the customer a guarantee of a maximum power consumption .
Eduardo Menezes: We're using a lot of AI to look at our, let's say, administration, our SG&A activities, our engineering activities, and those are, you know, internal costs, and those are not, you know, contractually passed to customers. Although, like any other company, we try to be more efficient in order to be more competitive in the marketplace. So you can make the conclusion as well, that in the long run, somehow, these benefits will go to our customers. But, you know, it's very difficult to determine, you know, what share, you know, that will represent at the end. I hope that was clear, and I'm not sure if that's exactly what you were asking.
We're using a lot of AI to look at our, let's say, administration, our SG&A activities, our engineering activities, and those are, you know, internal costs, and those are not, you know, contractually passed to customers. Although, like any other company, we try to be more efficient in order to be more competitive in the marketplace. So you can make the conclusion as well, that in the long run, somehow, these benefits will go to our customers. But, you know, it's very difficult to determine, you know, what share, you know, that will represent at the end. I hope that was clear, and I'm not sure if that's exactly what you were asking.
Speaker #1: So it's case case by , but that's a very specific application of AI . We're a using lot of AI to to look at our , let's say , administration , our SG&A engineering activities , our activities those and you know , internal costs .
Speaker #1: And those are not , you know , contractually passed to customers , although , like any other company , we try to be more efficient in order to be more , more competitive in the marketplace .
Speaker #1: So you can make the the conclusion as well , that in the long run , somehow this this benefits will go to our customers .
Speaker #1: But , you know , it's a very difficult to determine . You know what share . You know that that will represent again , I hope that was clear .
Mike Harrison: Thank you.
Laurence Alexander: Thank you.
Eduardo Menezes: Okay.
Eduardo Menezes: Okay.
Operator: This concludes our question and answer session. I'd like to turn the conference back over to Eduardo for any additional or closing remarks.
Operator: This concludes our question and answer session. I'd like to turn the conference back over to Eduardo for any additional or closing remarks.
Speaker #1: I'm not sure if that's exactly what you're asking .
Speaker #20: Thank you .
Speaker #1: Okay .
Eduardo Menezes: Thank you. I would like to, again, thank everyone for joining our call today. Appreciate your interest in our products, and we look forward to discussing our results with you again next quarter. Have a good and safe day. Thank you. Bye.
Eduardo Menezes: Thank you. I would like to, again, thank everyone for joining our call today. Appreciate your interest in our products, and we look forward to discussing our results with you again next quarter. Have a good and safe day. Thank you. Bye.
Speaker #3: This concludes our question and answer session . I'd like to turn the conference back over to Eduardo for any additional or closing remarks .
Speaker #1: thank you . No I would like to again , thank everyone for joining our call today . We appreciate your interest in our products , and we look forward to discussing our results with you again next quarter .
Operator: This concludes today's call. Thank you again for your participation. You may now disconnect and have a great day.
Operator: This concludes today's call. Thank you again for your participation. You may now disconnect and have a great day.
Speaker #1: Have a good and safe day. Thank you. Bye.
