Air Products and Chemicals, Inc.

Good morning and welcome to the Air Products and Chemicals fourth quarter earnings release conference call. Today's call is being recorded at the request of Air Products. 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. Beginning today's call is Mr. Simon Moore, Vice President of Investor Relations.

Thank you, Leanne, and good morning, everyone. Welcome to Air Products fourth quarter 2019 earnings results teleconference. This is Simon Moore, Vice President of Investor Relations. I'm pleased to be joined today by Stacey Gassemi, our Chairman, President, and CEO, Scott Krakow, our Executive Vice President and Chief Financial Officer, and Sean Major, our Executive Vice President, General Counsel, and Secretary. After our comments, we'll be pleased to take your questions. Our earnings release and the slides for this call are available on our website at airproducts.com. This discussion contains forward-looking statements. Please refer to the forward-looking statement disclosure that can be found in our earnings release and on slide number two. In addition, throughout today's discussion, we will refer to various financial measures. Unless we specifically state otherwise, we are referring to adjusted non-GAAP measures, including adjusted earnings per share, adjusted EBITDA and adjusted EBITDA margin on both the company-wide and segment basis, and ROCE. Reconciliations can be found on our website in the relevant earnings release section. Now, I'm pleased to turn the call over to Sethi.

Thank you, Simon, and good morning, everyone. Thank you for taking time from your busy schedule to be on our call today. We are very pleased that our record fiscal year earnings per share of $8.21 represents our fifth consecutive year of double-digit earnings growth. And our earning per share of $2.27 for the quarter also represents another record up 14% over last year's strong results. And is the 22nd, and I like to stress 22nd consecutive quarter of year-over-year earnings growth. Scott will comment on our financial results in more details, so I'm going to focus my comments on safety, our higher purpose as a company, the very large acquisition in Saudi Arabia that we announced last week, and the press release we issued yesterday. Now please turn to slide number three. Safety, without question, is job number one for all of us at Air Products, and our goal has always been zero accidents and zero incidents. Although you can see our good progress versus 2014, our safety performance in 2019 was not acceptable, as we did not show improvement versus 2018. Our people are certainly redoubling their efforts in this area so that we can move toward our ultimate goal of an accident-free work environment. Now please turn to slide number six, our five-point plan. I want to comment on point number five on the right-hand side which describes our higher purpose. We believe that in addition to creating value for our shareholders through strong financial results, we do have a responsibility as a public company to define the higher purpose in what we do. Our higher purpose at Air Products is to create a diverse company where people from all around the world and from all sections of the society feel they belong and are treated as an equal part of the team. A company where people's contributions are recognized and appropriately rewarded. A company that people want to work for, where they are proud to be part of the innovative process to solve the world's energy and environmental challenges. a company that is absolutely committed to sustainability and to the environment, and a company that is supportive of the local communities where we live and work. That is our higher purpose, and we are committed to it. Now please go to slide number one, number nine, please, to discuss our very large $11.5 billion acquisition in Saudi Arabia. You have seen this picture before, but it has been updated to reflect the latest information. Saudi Aramco is close to completing the construction of a 400,000 barrels per day refinery in Jazan, Saudi Arabia. The high sulfur vacuum residue from this refinery can no longer be used to fuel ships due to the new IMO 2020 regulation. Therefore, this liquid resin will be mixed with oxygen and gasified to produce synthetic gas. This same gas is almost equivalent to natural gas and it will be used to drive turbines to produce 3,900 megawatt of power. The joint venture is acquiring all of the assets, including the air suppression units, the gasifiers, power generation, and the related utilities for almost $11.5 billion. The joint venture will own and operate the facility and deliver power and hydrogen to Saudi Aramco for a monthly fee. This, of course, is the same business model as our traditional on-site business. Now please go to slide number 10. This very large acquisition will be owned by a new joint venture company called the Jazan Integrated Gasification Company. The joint venture will be owned 20% by Saudi Aramco, 25% by Aqua Power, the largest independent power producer in the Middle East, 46% directly by Air Products, and 9% by Air Products Kudra, which we call ATQ, which is a joint venture of Air Products and Kudra Energy, where Air Products owns 51%. So Air Products' total ownership will be just over 50%. Now please turn to slide number 11. The acquisition will be funded by 40% equity from the shareholders and 60% debt. In terms of timing, we had expected the transaction to be closed by the end of calendar 2019. But recently we have been informed that due to the extensive documentation required to launch the financing, The closing is now expected to be in the first quarter of calendar year 2020. In terms of accounting, at this point, we are not expecting to consolidate the full financial results of this entity and their products, so the results will be reflected in equity-affiliated income. Based on the ownership percentage and the debt equity split, Air Products' cash contribution to this project will be $2.3 billion. We do not, and I like to stress, we do not plan to disclose the details of this project in terms of profitability. But I do want to confirm for you that the return on this investment will be better than the general guidance for investment that we have given to our investors in the past. As for the press release we issued last night, that is related to our plans to build an industrial gas pipeline system in Jubeir Saudi Arabia, which could be similar to our hydrogen, oxygen, and nitrogen pipeline system in the U.S. Gulf Coast to sell all of the refineries and chemical plants in that part of the world. The press release confirms that the Royal Commission has given us permission to proceed with the project, and we will update you about this project every quarter in terms of what we are doing. This is a major step forward for us in Saudi Arabia in addition to the acquisition. Now please turn to my favorite slide, number 13. You can see our record EBITDA margin of almost 42%, which is up almost 1,700 basis points from early 2014. Now, I would like to turn the call over to Mr. Scott Krakow, our Executive Vice President and Chief Financial Officer, to give you the details of our financial performance. Scott?