Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — Q4 2023 Earnings Presentation
28 slides from Air Products And Chemicals's earnings presentation, Nov 7, 2023
Slide 1: Creating Shareholder Value Q4 FY23 Earnings Conference Call
Moving forward Creating Shareholder Value Q4 FY23 Earnings Conference Call November 7, 2023
Slide 2: Forward-looking statements and Non-GAAP financial measures
Moving forward Forward-looking statements This presentation contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about earnings guidance, business outlook and investment opportunities. These forward-look
Slide 3: Safety Results
Moving forward Safety Results FY23 vs FY14 FY23 FY14 Employee Lost Time Injury Rate 0.24 0.09 63% better Employee Recordable Injury Rate 0.58 0.29 50% better FY14 includes former Materials Technologies businesses divested in FY2017 3
Slide 4: Management Philosophy
Moving forward Management Philosophy • Our Goal: to be the safest, most diverse and most profitable industrial gas company in the world, providing excellent service to our customers • Creating Shareholder Value: cash is king; long-term increase in per share value of our stock; capital allocation is
Slide 5: Strong Business Model
Moving forward Strong Business Model • New on-site projects drove volume growth ➢ On-site (~1/2 total sales) underpins stability • Higher prices and pass-through mitigated inflation impact • Continue execution of large project strategy to be the leader in blue and green hydrogen • Multi-year growth
Slide 6: Adjusted Earnings Per Share
Moving forward Adjusted Earnings Per Share* Exceeded top end of guidance range • Q4 FY23 adjusted EPS* of $3.15, up 11% over prior year. • FY 2023 adjusted EPS* of $11.51, up 12% over prior year • Delivered 11% average annual adjusted EPS growth* in last 9 years 6 * Non-GAAP financial measure. See w
Slide 7: Air Products Adjusted EPS
Air Products Adjusted EPS* Moving forward Deliver double-digit, long-term EPS growth $13.50 +11% to 14%(A) $13.00 $12.50 $12.00 $11.50 $11.00 $10.50 $10.00 $9.50 $9.00 12% $8.50 +17% $8.00 $7.50 +8% $7.00 +2% $6.50 $6.00 +10% +18% $5.50 $5.00 +12% +16% $4.50 +10% $4.00 FY14 FY15 FY16 FY17 FY18 FY19
Slide 8: Dividend History
Dividend History Moving forward 40+ consecutive years of dividend increases $7.00 $6.50 $6.00 $5.50 Dividend/Share* $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 • Increased dividend to $1.75 per share, up 8% ($0.13 per share) compared to prior year; ann
Slide 9: Adjusted EBITDA Margin
Moving forward Adjusted EBITDA Margin* 44% 42.7% 41.9% 42% 40.1% 40.4% 39.8% 40% 40.3% 40.3% 39.5% 39.2% 37.7% 38% 37.5% 36.3% 35.9% 35.2% 37.3% 36.0% 36% 34.8% 34.9% 36.6% 35.8% 35.7% 34.6% 33.9% 34.1% 34.3% 33.9% 34% 33.2% 34.8% 34.1% 33.2% 33.5% 32% 31.1% 32.9% 32.1% 29.6% 30% 28.7% 28% 28.8% 26.
Slide 10: Outlook
Moving forward Outlook* Q1 FY24 FY24 Adjusted EPS* vs Prior Year Adjusted EPS* vs Prior Year $2.90 to $3.05 +10% to +16% $12.80 to $13.10 +11% to +14% Expect FY24 capital expenditures* of $5 billion - $5.5 billion *Non-GAAP financial measure. See website for reconciliation. 10
Slide 11: Major Project Commitments
Major Project Commitments Moving forward Expect strong pipeline of growth projects to extend leadership position in low- and zero-carbon hydrogen Plant Customer/Location Supply Mode/Off-take Key Investment Recently Onstream Attributes ASU/Gasifier/Power Aramco/Jazan, Saudi Arabia On-site/Long Term •
Slide 12: Louisiana Project Update
Moving forward Louisiana Project Update Expanded Original estimate U.S. IRA capital/scope $4.5B passed $7.0B Oct 2021 August 2022 November 2023 Blue H2 and NH3 Began considering Infrastructure expansion CO2 capture expanding project scope • Facility optimization • U.S. IRA: 45Q • Additional land, ut
Slide 13: Q4 Results
Q4 Results Moving forward Fav/(Unfav) vs. ($ million) Q4FY23 Q4FY22 Q3FY23 Sales $3,191 (11%) 5% - Volume -% 4% - Price 2% -% - Energy cost pass-through (14%) 2% - Currency 1% (1%) Adjusted EBITDA* $1,259 10% 4% - Adjusted EBITDA Margin* 39.5% 740bp (30bp) Adjusted Operating Income* $739 5% 5% - Adj
Slide 14: Q4 Adjusted EPS
Q4 Adjusted EPS* Moving forward Up 11% on strong operating performance Q4FY22 Q4FY23 Change GAAP EPS from cont. ops $2.56 $3.08 Non-GAAP items 0.28 0.08 Adjusted EPS* $2.85 $3.15 $0.30 Volume (0.03) Price, net of variable costs 0.44 Other cost (0.28) $0.13 Currency $0.01 Equity affiliates’ income 0.
Slide 15: FY23-32 Capital Deployment
Moving forward FY23-32 Capital Deployment Significant investment capacity & backlog to support growth 10-Year Capital Deployment Outlook Assumes 3.0x LTM Adjusted EBITDA* less net debt* as of Current Additional Debt Capacity $ 6.9 Q4 FY23 Future Investable Cash Flow*1 16.9 Cumulative Investable Cash
Slide 16: Americas
Moving forward Americas Fav/(Unfav) vs. Q4FY23 Q4FY22 Q3FY23 Sales $1,351 (12%) 7% - Volume 3% 2% - Price 4% 1% - Energy cost pass-through (19%) 5% - Currency -% (1%) Adjusted EBITDA* $601 17% 6% - Adjusted EBITDA Margin* 44.5% 1,110bp (50bp) Operating Income $398 20% 6% - Operating Margin 29.4% 780
Slide 17: Asia
Moving forward Asia Fav/(Unfav) vs. Q4FY23 Q4FY22 Q3FY23 Sales $802 (7%) (3%) - Volume (7%) -% - Price 2% -% - Energy cost pass-through 2% -% - Currency (4%) (3%) Adjusted EBITDA* $318 (15%) (11%) - Adjusted EBITDA Margin* 39.6% (370bp) (370bp) Operating Income $197 (25%) (18%) - Operating Margin 24
Slide 18: Europe
Moving forward Europe Fav/(Unfav) vs. Q4FY23 Q4FY22 Q3FY23 Sales $712 (18%) 1% - Volume -% 3% - Price (1%) (2%) - Energy cost pass-through (24%) -% - Currency 7% -% Adjusted EBITDA* $250 15% (1%) - Adjusted EBITDA Margin* 35.1% 1,000bp (80bp) Operating Income $168 12% (4%) - Operating Margin 23.6% 6
Slide 19: Europe's Largest Blue Hydrogen Plant
Europe’s Largest Blue Hydrogen Plant First carbon capture project in the Netherlands • Build, own and operate state-of- the-art carbon capture and CO2 treatment facility at Air Products’ existing hydrogen production plant • Transport and storage of CO2 performed by Porthos - Sequester in depleted ga
Slide 20: Middle East & India
Moving forward Middle East & India Fav/(Unfav) vs. Q4FY23 Q4FY22 Sales $37 ($5) Operating Income $3 ($2) Equity Affiliates’ Income $91 $28 Adjusted EBITDA* $102 $27 • Sales decreased due to lower volume • Jazan Project Phase II, completed in January 2023, added to equity affiliates’ income 20 * Non-
Slide 21: Corporate and Other
Moving forward Corporate and Other Fav/(Unfav) vs. Q4FY23 Q4FY22 Sales $290 $28 Adjusted EBITDA* ($11) $25 Operating Income ($27) $23 • Increased LNG sale of equipment activities improved results 21 * Non-GAAP financial measure. See website for reconciliation.
Slide 22: Our Competitive Advantage
Moving forward Our Competitive Advantage The only sustainable element of long-term competitive advantage is the degree of commitment and motivation of the people in the enterprise 22
Slide 23: Appendix slides
Appendix slides 23
Slide 24: Fiscal Year Results
Moving forward Fiscal Year Results ($ million) FY22 FY23 Change Sales $12,699 $12,600 (1%) - Volume 3% - Price 5% - Energy cost pass-through (6%) - Currency (3%) Adjusted EBITDA* $4,247 $4,702 11% - Adjusted EBITDA Margin* 33.4% 37.3% 390bp Adjusted Operating Income* $2,413 $2,739 14% - Adjusted Ope
Slide 25: Full Year Adjusted EPS
Full Year Adjusted EPS* Moving forward Adjusted EPS* Up 12% vs. PY FY22 FY23 Change GAAP EPS from cont. ops $10.08 $10.30 Non-GAAP items 0.17 1.21 Adjusted EPS* $10.25 $11.51 $1.26 Volume 0.22 Price, net of variable costs 2.39 Other cost (1.11) $1.50 Currency ($0.29) Equity affiliates’ income 0.40 N
Slide 26: Cash Flow Focus
Cash Flow Focus Moving forward Supports dividend and capital deployment ($ million) FY22 FY23 Change Adjusted EBITDA* $4,247 $4,702 $455 Interest, net* (66) (217) (151) Cash Tax (429) (646) (217) Maintenance CapEx* (693) (655) 38 Distributable Cash Flow* $3,059 $3,184 $125 $13.75/Share* $14.30/Share
Slide 27: Capital Expenditures
Capital Expenditures* Moving forward FY $MM 2024 $5 - $5.5 billion# 2023 $5,224 2022 $4,650 2021 $2,551 2020 $2,717 2019 $2,129 FY23 $MM Q1 $725 Q2 $1,693 Q3 $1,667 Q4 $1,140 FY $5,224 Capital expenditures are calculated independently for each quarter and may not sum to full year amount due to round
Slide 28: Thank you
Moving forward Thank you tell me more
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