Air Products and Chemicals, Inc.

Good morning and welcome to Air Products and Chemicals' second quarter earnings release 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. Good morning, everyone. Welcome to Air Products' second quarter 2020 earnings results teleconference. This is Simon Moore, Vice President of Investor Relations. I'm pleased to be joined today by Seifi Ghasemi, 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, when we refer to earnings per share, EBITDA, EBITDA margin, and ROCE, both on a company-wide and segment basis, We are referring to our adjusted non-GAAP financial measures, adjusted earnings per share, adjusted EBITDA, adjusted EBITDA margin, and return on capital employed. Reconciliations can be found on our website in the relevant earnings release section. With the significant social and economic challenges the world is currently facing from the COVID-19 pandemic, we have restructured our call today to focus on the key information we believe is most important to our investors. You can find our Q2 segment slides in the backup section, but we won't go through them in detail on the call today. Also, given the significant uncertainty that remains regarding the duration of the crisis, the pace of recovery, and the negative impact on the global economy, Air Products is not providing Q3 FY20 EPS guidance. In addition, we believe it is prudent to withdraw our FY20 EPS and capital expenditure guidance And therefore, we advise our investors that such guidance should no longer be relied upon. We are not providing new FY20 guidance at this time. And like all of you, we are conducting this call remotely. So during the Q&A, we will intentionally pause to help with any time delay and avoid two people speaking over each other. We appreciate if you would do the same, and we also appreciate your patience. Now I'll turn the call over to Sethi. Thank you, Simon.

And good morning, everyone. Particularly during these challenging times, we thank you for taking time from your busy schedule to be on our call today. Before we talk about the quarter, I wanted to share some thoughts on the current situation. Please turn to slide number three. The true character and leadership of individuals and companies is revealed during times of crisis. We are certainly going through a crisis, something that none of us has experienced in our lifetime. But I am delighted to report to you that the people of Air Products are demonstrating our culture and character to the world. They are responding to the crisis with caring for our fellow employees and our fellow citizens around the world. They are responding with passion to keep our plants operating so that we can provide our customers with the vital products that they need. As they are responding with their commitment and dedication to move air products forward, no matter what the challenges. We have always been a leader committed to safety as our number one priority. In managing through this crisis, we have provided the right protective equipment and procedures to protect our people on the front lines. We are quick to act to limit travel and transition many employees to work from home mode to minimize risk. We are also committed to providing financial security for our people. During this crisis, we have not laid off any of our employees or cut their salaries. We will work to maintain this approach as we navigate through this crisis together. We have a strong financial position necessary to carry our people and their families through these unusual times. Air Product is looking after our customers. Our customers expect us to provide them with the products they need on time, with the right quality, and a focus on providing excellent service. I am proud that during this crisis, we have kept All of our 750 plants operating around the world, I'd like to repeat, we have kept operating all of our 750 plants around the world. Significant accomplishment during these times. We provide products, services, and equipment essential to basic human needs, including medical oxygen, helium for MRI machines, products for food freezing, hydrogen for energy, and related equipment critical to energy and medical needs. We are proud to be identified as a critical industry by all the governments around the world. I want to thank our people on the front lines for keeping all our plans running and delivering to our customers the product they need. In addition, the rest of our people working from home have helped us maintain our business continuity by keeping key processes running and continuing to pursue and win new projects like the PBF hydrogen plant acquisition that we announced in March and closed last week. Air Products is also a leader in looking after our communities. I am proud of how our teams have mobilized safely and quickly to meet increasing oxygen demand. We are actively supporting medical facilities and the establishment of critical temporary hospitals. We have also made financial contributions, donated critical PPE and equipment, and offered our talents to non-profit organizations. that are meeting so many urgent human needs during this crisis. We are making a difference in people's lives. Air Products is also a leader in creating and preserving shareholder value. With the prudent management of cash over the last six years, we now have a very strong balance sheet and plenty of cash on hand to weather the current crisis. continue to pay dividends, and invest in attractive opportunities. I would like to thank our team for their commitment and dedication during these difficult times. Their hard work and our resilient business model allowed us to deliver our 24th and I'll repeat, our 24th consecutive quarter of year-on-year earnings growth, despite the negative impact in the second quarter of about six to eight cents of earnings per share from COVID-19 virus. Now please turn to slide number four. I am pleased that our team stayed focused on working safely. This is always important, and particularly during these challenging times. Now please go to slide number five, which shows our goal, which remains unchanged. And now please go to slide number six, our management philosophy. We have included this slide in every presentation that I have made to our shareholders in the last six years. It is at times like this that one can fully appreciate the value of following this key management philosophy that I have pursued in my 50 years career. Yes, cash is king, and yes, the most important job of the CEO is prudent capital allocation. We have been focused on generating and preserving cash. We did not waste our cash on frivolous acquisitions or share buybacks. And we saved our cash for a black swan event that we have the cash to take care of our people, to continue to run our business, serve our customers, contribute to the welfare of our communities, and create value for our shareholders. Now please turn to slide number seven, which is our long-term business strategy. You have seen this many times before. There is no change to this strategy, and we will continue to pursue it as stated. On slide number eight, you can see our exciting gas vacation strategy. The fundamental drivers creating significant growth opportunities in gasification remain. Countries and large companies around the world continue to focus on gasification to utilize the abundant natural resources they have to produce chemicals, transportation fuels, and energy in sustainable management. At this point, I think it's appropriate for me to update you on our important $12 billion the JASAN project for Saudi Aramco. Despite the current challenging times, I'm happy to report that we have now completed the discussions regarding the legal documents, and these legal documents are being submitted to the lender's legal advisor. Therefore, we now expect to go to the markets for the $7 billion project financing by the end of May, and we expect to close this transaction by October of 2020. Now, please go to slide number one, number nine, please, which summarizes the PBF hydrogen plants acquisition we announced a few weeks ago. Despite the unprecedented challenges in the world these days, I'm proud that we continue to win large on-site opportunities. We have closed on the purchase of the five operating hydrogen plants in California and Delaware for $530 million and have started providing long-term hydrogen supply to three PBF energy refineries. This project will have returns in excess of the minimum requirements we previously shared with you, and it will be accretive to our bottom line this year, in 2020. I'm proud of our team who have worked diligently to negotiate, sign, and close this deal in less than 30 days. This project is aligned with our on-site growth strategy, using our strong balance sheet to acquire own and operate assets for customers and supply gases under long-term contracts. We are pleased to expand our strong relationship with PBF. In addition, we are working on many other opportunities around the world so that we remain confident in our ability to deploy our available capital create significant shareholder value. Now, please turn to slide number 10. Again, with the hard work of our team and the strength of our business model, our EBITDA margin remained over 40%, which is up over 1,500 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 provide a financial overview. Scott?