Air Products And Chemicals, Inc. · NYSE:APD
Air Products And Chemicals — Q4 2024 Earnings Presentation
46 slides from Air Products And Chemicals's earnings presentation, Nov 7, 2024
Slide 1: Creating Shareholder Value
Creating Shareholder Value Fourth Quarter 2024 Earnings Results Teleconference November 7, 2024
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
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-looking statements
Slide 3: Fourth Quarter Results and FY25 Guidance
Fourth Quarter Results and FY25 Guidance
Slide 4: Our Goal
Our Goal Air Products will be the safest, most diverse and most profitable industrial gas company in the world, providing excellent service to our customers 4
Slide 5: Safety Results
Safety Results FY14* FY24 % Change Employee Lost Time Injury Rate 0.24 0.06 75% better Employee Recordable Injury Rate 0.58 0.25 57% better *FY14 includes former Materials Technologies businesses divested in FY2017 5
Slide 6: Fourth Quarter Results
Fourth Quarter Results Q4 Y-o-Y • Q4 adjusted EPS* of $3.56 ($ million) FY2024 Growth - At the upper end of our guidance range Sales $3,188 - Adjusted EBITDA* $1,407 +12% - Up 13% vs. prior year on strong results in Americas, Europe and Asia segments Adjusted EBITDA Margin* 44.1% +460bp - Continued
Slide 7: FY25 Outlook
FY25 Outlook* Q1 FY25 Vs. Prior Year FY25 Vs. Prior Year Adjusted EPS*(A) Vs. Prior Year (adj. for LNG)(A) Adjusted EPS*(A) Vs. Prior Year (adj. for LNG) (A) $2.75 to $2.85 -2% to 1% -% to 4% $12.70 to $13.00 +2% to 5% +6% to 9% FY25 capital expenditures* of $4.5B to $5.0B (A)Air Products completed
Slide 8: Air Products Adjusted EPS
Air Products Adjusted EPS* Delivering double-digit, long-term EPS growth +6% to 9% vs. PY adj. for LNG(A) $14.00 $13.00 Adjusted Earnings Per Share* $12.00 $11.00 $10.00 $9.00 $8.00 +8% $7.00 +12% +17% $6.00 +8% +10% +2% $5.00 +18% +12% $4.00 +16% +10% $3.00 (B) (B) (B) (B) 2014 2015 2016 2017 2018
Slide 9: Dividend History
Dividend History 40+ consecutive years of dividend increases $7.50 $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 2024 • Increased dividend to $1.77 per share as announced in January 2024 • ~$1.6 billion of dividend
Slide 10: Adjusted EBITDA Margin Improved ~2,000 basis points since FY2014
Adjusted EBITDA Margin* Improved ~2,000 basis point since FY2014 45% 44% 43% 42% 42% 40% 41% 40% 40% 40% 40% 39% 40% 40% 38% 38% 39% 36% 36% 37% 35% 35% 37% 36% 34% 35% 35% 35% 33% 36% 36% 34% 35% 34% 34% 34% 34% 31% 33% 33% 30% 32% 30% 29% 29% 27% 25% 25% 20% Q314 Q217 Q214 Q414 Q115 Q215 Q315 Q415
Slide 11: Q4 Results
Q4 Results Fav/(Unfav) vs. ($ million) Q4FY24 Q4FY23 Q3FY24 Sales $3,188 -% 7% - Volume 1% 5% - Price 1% -% - Energy cost pass-through (2%) 1% - Currency -% 1% Adjusted EBITDA* $1,407 12% 11% - Adjusted EBITDA Margin* 44.1% 460bp 170bp Adjusted Operating Income* $849 15% 15% - Adjusted Operating Mar
Slide 12: Growth in Q4 Adjusted EPS
Growth in Q4 Adjusted EPS* Q4FY23 Q4FY24 Change GAAP EPS from cont. ops $3.08 $8.81 Non-GAAP items 0.08 (5.26) Adjusted EPS* $3.15 $3.56 $0.41 Volume 0.15 Price, net of variable costs 0.23 Other cost 0.05 $0.43 Currency ($0.02) Equity affiliates’ income 0.05 Interest expense (0.01) Non-op. income &
Slide 13: Results by Business Segment
Results by Business Segment Q4 Comparison vs. Prior Year – Price +3% (merchant price +6%), increase across most product lines – Weaker merchant volume drove lower sales AMERICAS MIDDLE EAST & – Adjusted EBITDA* lower due to unfavorable – Price and mix drove higher adjusted EBITDA* up 11% INDIA volum
Slide 14: Core Industrial Gas Business Remains as Strong as Ever
Core Industrial Gas Business Remains as Strong as Ever • Strong core industrial gas business drives EPS growth and industry-leading adjusted EBITDA margin • Air Products pioneered the onsite business model - Onsite ~50% total company - Take-or-pay and cost pass-through underpin business stability •
Slide 15: Our Growth Strategy
Our Growth Strategy GENERATING A CLEANER FUTURE Ak f.
Slide 16: Decarbonization Creates Opportunity
Decarbonization Creates Opportunity Clean hydrogen is a trillion-dollar market opportunity Core Industrial Blue and Green Gases Business Hydrogen Most profitable industrial gas Initial Blue hydrogen demand business in the world, growing driven by Asia to decarbonize at GDP or industrial production &
Slide 17: Clean Hydrogen: An Extension of Our Core Business
Clean Hydrogen: An Extension of Our Core Business Core Hydrogen Business Clean Hydrogen Business • 65+ years of experience in end-to-end • Clean hydrogen offtake based on traditional hydrogen supply on-site business model (take-or-pay, cost pass-through) • Pioneered hydrogen on-site business (take-o
Slide 18: First Mover Advantage
First Mover Advantage Clean hydrogen projects are driven by location, technology and markets and our first mover status allows us to: 1. Secure the best locations in the world for producing clean hydrogen - Renewable resources for green hydrogen (e.g. sun and wind) - Geology for carbon sequestration
Slide 19: Global Decarbonization Requirements Create Market Opportunity
Global Decarbonization Requirements Create Market Opportunity EUROPE JAPAN KOREA Fuel EU Maritime Deep Sea NH3 • • IMO 2023 GHG Strategy • IMO 2023 GHG Strategy • IMO 2023 GHG Strategy Shipping • EU Emission Trading System • Korea ETS • Japan carbon tax Power NH3 • EU Emission Trading System • Ammon
Slide 20: Significant Market Demand for Clean Hydrogen Today
Significant Market Demand for Clean Hydrogen Today Demand for clean hydrogen today far exceeds Air Products’ capacity Customers Demanding Europe Refinery Total Clean Hydrogen Today Hydrogen Demand ~12,700Tpd Remainder ~90% of Market TotalEnergies ~10% RFQ Expect to fully load NEOM before onstream da
Slide 21: Clean Hydrogen is a Trillion Dollar Market Opportunity
Clean Hydrogen is a Trillion Dollar Market Opportunity Air Products’ approved clean H2 projects <1% of future market • Decarbonization of Evolution of Clean Hydrogen Demand by Sector hard-to-abate sectors (Heavy industry and 2030 2050 heavy-duty Iron & Steel transportation) Diversified Industrial (A
Slide 22: Key Pillars of Air Products Strategy
Key Pillars of Air Products Strategy Disciplined investment approach for long-term value creation • Capital allocation remains paramount • Clean hydrogen demand exists today, and it is expected to be a >$600B market by 2030** • Most profitable industrial gas business* in the world – fully attributab
Slide 23: Energy Transition Projects Update
Energy Transition Projects Update 23
Slide 24: NEOM Green Hydrogen Project Update
NEOM Green Hydrogen Project Update 24
Slide 25: NEOM Green Hydrogen Project
NEOM Green Hydrogen Project Project Update: - ~60% of construction complete - 18,000 workers onsite, >42MM labor hours of Dimensions of the World’s construction complete Largest Green Hydrogen Project - On-stream end of 2026, first delivery early 2027 - >5MM solar panels - Take-or-pay commitment for
Slide 26: TotalEnergies: World's largest green hydrogen agreement
TotalEnergies: World’s largest green hydrogen agreement • June 7th, 2024, announced 15-year take-or-pay agreement to supply 70,000 tpy of green hydrogen starting in 2030 • All 70,000 tpy will be used to decarbonize Leuna refinery in Germany • Air Products continuing discussions with TotalEnergies fo
Slide 27: Existing Energy Transition Projects Update
Existing Energy Transition Projects Update In Progress Canada Net-Zero Hydrogen Energy Project Louisiana Clean Energy Complex • Construction in process • Submitted for permits: Air permit expected in 2025, class VI & Army Corps permits mid-2026 • ~60% of facility capacity is already committed; in ac
Slide 28: Existing Energy Transition Projects Update
Existing Energy Transition Projects Update On-Hold No Longer Being Pursued World Energy SAF Facility Texas Green Hydrogen JV • On hold awaiting permits • Never reached FID • Not moving forward with this project - Does not meet our established guidelines for new, low-carbon projects • Sold developmen
Slide 29: Capital Allocation Strategy
Capital Allocation Strategy Maximize sustainable long-term shareholder value Our Approach • Invest in new projects that meet or exceed internal return targets aligned with our two-pillar growth strategy Core industrial gas capex represents >50% of FY’23-25 total capex − Traditional industrial gas bu
Slide 30: Governance and Succession Update
Governance and Succession Update 30
Slide 31: President / Succession Update
President / Succession Update • President search announced in August 2024 • The President will also sit on the Company’s Board • The process is led by the Lead Director with the support of the Board and search firm • Highly qualified candidates have been identified • Anticipate announcement of new P
Slide 32: Competitive Advantage
32 Competitive Advantage GENERATING A CLEANER FUTURE Ak f.
Slide 33: Our Competitive Advantage to Drive Shareholder Value
Our Competitive Advantage to Drive Shareholder Value • Run core industrial gas business efficiently • Significant clean hydrogen demand exists and invest for growth today and is a >$600B market by 2030* • Leverage 65+ years of hydrogen experience • Clean hydrogen projects anticipated to be at to ser
Slide 34: Our Goal
Our Goal Air Products will be the safest, most diverse and most profitable industrial gas company in the world, providing excellent service to our customers 34
Slide 35: Appendix slides
35 Appendix slides GENERATING A CLEANER FUTURE Ak f.
Slide 36: Americas
Americas Fav/(Unfav) vs. Q4FY24 Q4FY23 Q3FY24 Sales $1,308 (3%) 6% - Volume -% 3% - Price 3% -% - Energy cost pass-through (5%) 3% - Currency (1%) -% Adjusted EBITDA* $668 11% 10% - Adjusted EBITDA Margin* 51.1% 660bp 220bp Operating Income $448 13% 14% - Operating Margin 34.2% 480bp 250bp Versus pr
Slide 37: Asia
Asia Fav/(Unfav) vs. Q4FY24 Q4FY23 Q3FY24 Sales $861 7% 9% - Volume 7% 8% - Price (1%) -% - Energy cost pass-through 1% -% - Currency -% 1% Adjusted EBITDA* $383 21% 18% - Adjusted EBITDA Margin* 44.5% 490bp 340bp Operating Income $244 24% 22% - Operating Margin 28.4% 380bp 310bp Versus prior year:
Slide 38: Europe
Europe Fav/(Unfav) vs. Q4FY24 Q4FY23 Q3FY24 Sales $731 3% 5% - Volume -% 2% - Price 2% 1% - Energy cost pass-through (1%) -% - Currency 2% 2% Adjusted EBITDA* $292 17% 3% - Adjusted EBITDA Margin* 40.0% 490bp (80bp) Operating Income $207 23% 1% - Operating Margin 28.3% 470bp (120bp) Versus prior yea
Slide 39: Middle East & India
Middle East & India Fav/(Unfav) vs. Q4FY24 Q4FY23 Sales $31 ($6) Operating Income ($2) ($5) Equity Affiliates’ Income $92 $0 Adjusted EBITDA* $96 ($6) − Lower sales due to weaker merchant volume − Adjusted EBITDA* lower driven by unfavorable volume and costs 39 *Non-GAAP financial measure. See websi
Slide 40: Corporate and Other
Corporate and Other Fav/(Unfav) vs. Q4FY24 Q4FY23 Sales $257 ($33) Adjusted EBITDA* ($32) ($21) Operating Income ($48) ($20) − Lower equipment sales and higher cost estimates drove lower sales and profits 40 *Non-GAAP financial measure. See website for reconciliation.
Slide 41: Major Project Commitments
Major Project Commitments Expect strong pipeline of growth projects to extend leadership position in low and zero-carbon hydrogen Projects Under Execution Key Investment Attributes Customer / Supply Mode / Plant Location Off-take • Projects with long-term contracts Green H2 AP/NEOM, Saudi Arabia Lon
Slide 42: Full Year Results
Full Year Results ($ million) FY23 FY24 Change Sales $12,600 $12,101 (4%) - Volume -% - Price 1% - Energy cost pass-through (5%) - Currency -% Adjusted EBITDA* $4,702 $5,046 7% - Adjusted EBITDA Margin* 37.3% 41.7% 440bp Adjusted Operating Income* $2,739 $2,948 8% - Adjusted Operating Margin* 21.7%
Slide 43: Full Year Adjusted EPS
Full Year Adjusted EPS* FY23 FY24 Change GAAP EPS from cont. ops $10.30 $17.24 Non-GAAP items 1.21 (4.82) Adjusted EPS* $11.51 $12.43 $0.92 Volume 0.23 Price, net of variable costs 0.70 Other cost (0.08) $0.85 Currency ($0.09) Equity affiliates’ income 0.16 Interest expense (0.15) Non-op. income & e
Slide 44: Cash Flow Focus
Cash Flow Focus Supports dividend and capital deployment ($ million) FY23 FY24 Change Adjusted EBITDA* $4,702 $5,046 $344 Interest, net* (217) (293) (76) Cash Tax (646) (616) 30 Maintenance Capex* (655) (781) (126) Distributable Cash Flow* $3,184 $3,356 $172 $14.30/Share* $15.06/Share* Dividends (1,
Slide 45: Capital Expenditures
Capital Expenditures* FY $MM 2025 $4.5 - $5.0 billion# 2024 $5,152 2023 $5,224 2022 $4,650 2021 $2,551 2020 $2,717 FY24 $MM Q1 $1,386 Q2 $1,285 Q3 $1,205 Q4 $1,276 Capital expenditures are calculated independently for each quarter and may not sum to full year amount due to rounding. * Non-GAAP finan
Slide 46: Thank You
Thank You GENERATING A CLEANER FUTURE
Air Products and Chemicals — Q4 2024 Earnings Presentation on 6ix