Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — Q1 2023 Earnings Presentation
32 slides from Air Products And Chemicals's earnings presentation, Feb 2, 2023
Slide 1: Create Shareholder Value – Q1 FY23 Earnings Conference Call
Moving forward Create Shareholder Value Q1 FY23 Earnings Conference Call February 2, 2023
Slide 2: Forward-looking statements; 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 Q1FY23 vs FY14 Q1FY23 FY14 Employee Lost Time Injury Rate 0.24 0.13 46% better Employee Recordable Injury Rate 0.58 0.41 29% better FY14 includes former Materials Technologies businesses divested in FY2017 3
Slide 4: Air Products Adjusted EPS
Air Products Adjusted EPS* Moving forward Strong underlying results +9% to +12% $11.50 $11.00 $10.50 $10.00 $9.50 $9.00 $8.50 $8.00 +17% $7.50 +8% $7.00 +2% $6.50 $6.00 +10% +18% $5.50 +12% $5.00 +16% $4.50 +10% $4.00 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 (A) FY23 (A) Guidance • Q1 FY23 adjus
Slide 5: 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 • 8%, or $0.13 per share, quarterly dividend increase announced Jan 2023 (to $1.75 per share
Slide 6: Adjusted EBITDA Margin
Adjusted EBITDA Margin* Moving forward 44% 42.7% 41.9% 42% 40.1% 40.4% 40% 40.3% 40.3% 39.2% 37.7% 38% 37.5% 36.3% 35.9% 35.2% 37.3% 36% 34.8% 36.6% 34.9% 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% 26.5% 26% 25.1% 24% Q
Slide 7: APD/AES JV in Texas: $4B Investment
APD/AES JV in Texas: $4B Investment The largest green hydrogen project in the United States Upstream Downstream Wind and solar Electrolyzers capable of installed capacity producing > 200 MT/D ~1.4 GW of green hydrogen + - Hydrogen Industrial market Hydrogen Power Total investment: $4 billion Heavy d
Slide 8: Jazan Project (JIGPC) – Phase 2 Completed
Moving forward Jazan Project (JIGPC) – Phase 2 Completed Total Assets ~$12 Billion Shareholders (51% Air Products) 25% 46% 9% 20% Refinery Vacuum JIGPC JV Residual Gasification Power Generation H2 / Power Utilities Water / Steam Air Separation End Markets Lenders (Diesel, Gasoline, Power) 8
Slide 9: NEOM Project Status Update
Moving forward NEOM Project Status Update • Making great progress: - Engineering is ~30% complete - All major subcontracts have been awarded - Land preparation is complete, construction has started - Joint venture team in place and executing 9
Slide 10: NEOM Project Offtake
Moving forward NEOM Project Offtake • Air Products is the sole offtaker and marketer of 100% of the green ammonia under an exclusive 30-year contract • The offtake price of the green ammonia to Air Products remains the same as what was negotiated in July 2020 when the project was announced 10
Slide 11: NEOM Project Capital Structure
Moving forward NEOM Project Capital Structure • Significant interest from financial institutions who see tremendous value proposition • The three equal-ownership partners―Air Products, NEOM, and ACWA Power―will now fund the project with a mix of 25% cash and 75% non-recourse project financing • Air
Slide 12: NEOM Project Financing
Moving forward NEOM Project Financing • Non-recourse financing is well underway • >2X over-subscribed; commitments from >20 major global financial institutions • Expect the signing of definitive financing agreements (“dry close”) very soon • Expect full financial close a couple of months after the d
Slide 13: NEOM Project Capital Needs
Moving forward NEOM Project Capital Needs Original capital estimate $5.0B Inflation since 2020 $0.5B $6.7B Additional scope to make project more $1.2B self-sufficient and lower operating costs Project financing costs, up-front fees, interest $1.8B during construction, additional JV costs, spares, la
Slide 14: NEOM Project Funding Sources
Moving forward NEOM Project Funding Sources • Total funds required $8.5B - 75% debt (non-recourse) $6.2B - 25% cash from three partners $2.3B Air Products’ cash contribution: <$800M (significantly less than original $1.7B) • In summary: - Great progress - New capital structure enhances return on equ
Slide 15: Two Pillars of Our Strategy
Moving forward Two Pillars of Our Strategy Core Industrial Blue and Green Gases Business Hydrogen & Sustainability 15
Slide 16: Management Philosophy
Moving forward Management Philosophy • Our Goal – to be the safest, most diverse and most profitable industrial gas company in the world, providing excellent service to our customers • Creating Shareholder Value – cash is king; long-term increase in per share value of our stock; capital allocation i
Slide 17: Q1 Results
Q1 Results Moving forward Fav/(Unfav) vs. ($ million) Q1FY23 Q1FY22 Q4FY22 Sales $3,175 6% (11%) - Volume 2% (6%) - Price 7% 1% - Energy cost pass-through 3% (5%) - Currency (6%) (1%) Adjusted EBITDA* $1,084 8% (5%) - Adjusted EBITDA Margin* 34.1% 60bp 200bp Adjusted Operating Income* $652 25% (7%)
Slide 18: Q1 Adjusted EPS
Q1 Adjusted EPS* Moving forward Strong operating performance Q1FY22 Q1FY23 Change GAAP EPS from cont. ops $2.52 $2.57 Non-GAAP items (0.04) 0.07 Adjusted EPS* $2.48 $2.64 $0.16 Volume 0.03 Price, net of variable costs 0.71 Other cost (0.11) $0.63 Currency ($0.15) Equity affiliates’ income (0.14) Non
Slide 19: Cash Flow Focus
Moving forward Cash Flow Focus ($ million) Q1FY23 LTM Adjusted EBITDA* $4,327 Interest, net* (100) Cash Tax (467) Maintenance Capex* (688) Distributable Cash Flow* $3,072 $13.80/Share* Dividends (1,411) Investable Cash Flow* $1,661 • ~$14/share of Distributable Cash Flow* • Paid over 45% of Distribu
Slide 20: FY18-27 Capital Deployment Scorecard
FY18-27 Capital Deployment Scorecard Moving forward Significant progress made, substantial investment capacity remaining Available Now (12/31/22) ($Billion) Total Debt Capacity $ 13.0 Assuming 3xLTM Adj EBITDA* Less: Net Debt* $ 4.9 Debt ($8.1B) minus cash1 ($3.2B) Additional Available Now $ 8.1 Est
Slide 21: Asia
Moving forward Asia Fav/(Unfav) vs. Q1FY23 Q1FY22 Q4FY22 Sales $778 -% (10%) - Volume 7% (8%) - Price 1% 1% - Energy cost pass-through 2% -% - Currency (10%) (3%) Adjusted EBITDA* $345 2% (7%) - Adjusted EBITDA Margin* 44.4% 100bp 110bp Operating Income $236 7% (10%) - Operating Margin 30.3% 200bp (
Slide 22: Europe Power Costs Remained Elevated
Europe Power Costs Moving forward Remained elevated Europe Power Index (Jan21 = 100) 650 Q4 avg. 550 522 450 Q2 avg. 350 Q1 avg. Q3 avg. Q1 avg. 327 318 301 295 250 Q4 avg. 173 150 Q3 avg. Q2 avg. 109 88 50 Jun-21 Apr-21 Nov-21 Apr-22 Jun-22 Nov-22 Mar-21 Mar-22 Feb-21 Jul-21 Feb-22 Jul-22 Jan-21 Ma
Slide 23: Europe
Moving forward Europe Fav/(Unfav) vs. Q1FY23 Q1FY22 Q4FY22 Sales $792 6% (8%) - Volume (6%) (4%) - Price 14% 1% - Energy cost pass-through 9% (6%) - Currency (11%) 1% Adjusted EBITDA* $208 28% (4%) - Adjusted EBITDA Margin* 26.2% 430bp 110bp Operating Income $146 47% (3%) - Operating Margin 18.4% 51
Slide 24: Americas
Moving forward Americas Fav/(Unfav) vs. Q1FY23 Q1FY22 Q4FY22 Sales $1,384 13% (10%) - Volume 6% (3%) - Price 9% 2% - Energy cost pass-through (1%) (9%) - Currency (1%) -% Adjusted EBITDA* $515 13% -% - Adjusted EBITDA Margin* 37.2% (10bp) 380bp Operating Income $343 28% 3% - Operating Margin 24.8% 3
Slide 25: Middle East & India
Moving forward Middle East & India Fav/(Unfav) vs. Q1FY23 Q1FY22 Q4FY22 Sales $41 $18 $- Operating Income $7 $2 $2 Equity Affiliates’ Income $64 ($28) $1 Adjusted EBITDA* $77 ($26) $2 • Sales and Operating Income increased due to an acquisition • Higher maintenance activities negatively impacted Ope
Slide 26: Corporate and Other
Moving forward Corporate and Other Fav/(Unfav) vs. Q1FY23 Q1FY22 Sales $179 ($42) Adjusted EBITDA* ($62) ($4) Operating Income ($79) ($10) • Sales and profit lower on reduced sale of equipment activity • Additional resources to support growth strategy • LNG inquiries increasing 26 * Non-GAAP financi
Slide 27: Outlook
Moving forward Outlook* Q2 FY23 FY23 Adjusted EPS* vs Prior Year Adjusted EPS* vs Prior Year $2.50 to $2.70 +7% to +15% $11.20 to $11.50 +9% to +12% FY23 Capital Expenditures* $5.0 - $5.5 billion *Non-GAAP financial measure. 27 Fiscal year 2022 comparisons have been updated to reflect adjustment for
Slide 28: 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 28
Slide 29: Appendix slides
Appendix slides 29
Slide 30: Major Projects
Major Projects Moving forward Plant Customer/Location Project Size Timing Market ONSTREAM (last five quarters) Liquid H2 LaPorte, TX ~30 tons per day Q1 FY22 Merchant ASU/Gasifier/ AP / ACWA / SA / APQ – Jazan, ~$12 billion total JV Q1 FY22 Gasif to Refinery Power Saudi Arabia – Phase I ASU/Liquid E
Slide 31: Capital Expenditures
Capital Expenditures* Moving forward FY $MM 2023 $5.0 - $5.5 billion# a 2022 $4,650 2021 $2,551 2020 $2,717 2019 $2,129 2018 $1,914 2017 $1,056 2016 $908 2015 $1,201 FY23 $MM Q1 $834 Q2 Q3 Q4 YTD $834 Capital expenditures are calculated independently for each quarter and may not sum to full year amo
Slide 32: Thank you
Moving forward Thank you tell me more
Air Products and Chemicals — Q1 2023 Earnings Presentation on 6ix