Air Products and Chemicals, Inc.

Good morning and welcome to the Air Products first 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 Simon Moore. Please go ahead.

Thank you, Allie. Good morning, everyone. Welcome to Air Products First Quarter 2022 Earnings Results Teleconference. This is Simon Moore, Vice President of Investor Relations, Corporate Relations, and Sustainability. I'm pleased to be joined today by Sefi Ghasemi, our Chairman, President, and CEO, Dr. Samir Surhan, our Chief Operating Officer, Melissa Schaefer, our Senior Vice President and Chief Financial Officer, and Sean Major, our Executive Vice President, General Counsel, and Secretary. After our comments, we will 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, the effective tax rate, 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, adjusted effective tax rate, and adjusted return on capital employed. Reconciliations of these measures to our most directly comparable GAAP financial measures can be found on our website in the relevant earnings release section. Also, as we shared with you on our last call, this is the first quarter we reported our results with our new Middle East and India and our new corporate segments. Now, I'm pleased to turn the call over to Safey.

Thank you, Simon, and good day to everyone. Thank you for taking time from your very busy schedule to be on our call today. I am proud to say that despite significant challenges, including unprecedented energy cost increases, and I mean unprecedented, especially in Europe, supply chain disruptions, and the continued adverse effects caused by the pandemic, the talented, committed, and motivated people of Air Products continue to deliver excellent results, including earning per share this quarter in the top half of our guidance range. This quarter, we closed on phase one of the JASAN project, which is the single largest project in our company's history and will create significant value for many years to come. As always, I want to thank our more than 20,000 employees around the globe for standing together working hard, staying agile, and delivering for our customers and shareholders. Let me start this presentation with our highest priority, which is obviously safety. Please take a look at the slide number three. Although we have made significant progress in this area since fiscal year 2014, Our first quarter safety performance was slightly behind last year. That is not acceptable. Our goal remains zero accidents and zero incidents, and we are committed to drive toward that goal across the organization, knowing that the right attitude and constant attention to safety is absolutely necessary and required. Slides number four, five, and six include our goal, our management philosophy, and our five-point plan. We have shared these slides with you before, so I'm not going to go through the details, but these are the principles that we follow every day, and they will guide us in the future. Now please turn to slide number seven. We are focused on making air products a leader in providing solution to today's significant energy and environmental challenges through gasification, carbon capture, and clean hydrogen. I am proud to say that we have continued to create and win projects that help customers and countries meet their growing needs for cleaner energy and environmental solutions. Last year, we announced two landmark blue hydrogen projects, one in Alberta, Canada, and the other in Louisiana, United States of America. Adding to our slate of world-scale megaprojects, supporting the energy transition. At the beginning of our fiscal year, this fiscal year, we successfully closed on phase one of the $12 billion Jazan Gasification and Power Project, fulfilling one of our major commitments. We continue to expect phase one of this project to contribute 80 to 85 cents per share on a full year basis, consistent with what we have committed to you before. We also continue to make great progress on our significant project backlog. Now please turn to slide number eight. Creating a cleaner future requires experience, investment, and innovation on a world scale. At Air Products, we have the technology, the track record, the capital, and the ambition to execute our bold strategy. In bringing people around the world together to collaborate in an inclusive environment and help solve sustainability challenges, We are living our higher purpose as a company. That is our higher purpose. Now, please stand to slide number nine. It is clear that at Air Products, sustainability is our growth strategy. Sustainability creates our growth opportunities, and our growth opportunities support our sustainability goals and focus. We are very proud to help drive the energy transition, in particular through our world-scale hydrogen megawatt projects. Our NEON project in Saudi Arabia, our BIRTA project in Canada, and Louisiana project in the United States of America represent almost $10 billion of direct air products capital create the zero and low carbon hydrogen needed to drive decarbonization and accelerate the energy transition. These projects will significantly reduce CO2 equivalent emissions for our customers, for air products itself, and for the world. As a first mover taking real action through these real projects, we can bring a portfolio of experiences and technologies together to provide lower carbon forms of energy, improve our customers' sustainability, and help solve significant energy and environmental challenges. As I said, this is our higher purpose as a company. In addition, it is important that our commitments are aligned with our strategies. we introduced our third by 30 carbon intensity reduction goal more than a year ago. And I'm very proud to say that the major projects we have announced, along with our day-to-day focus on operational efficiency, puts us in a great position to meet or exceed this goal by 2030. But as a company, we are never satisfied with our current performance. Therefore, we are taking another look at our opportunities to make even more meaningful progress toward higher environmental goals. Under the purview of our Sustainability Leadership Council, we are reviewing additional areas of opportunity, which could include a scope three emissions goal, the benefits of avoided emissions, and or other potential scenarios. I expect to share more with you on these exciting topics by mid-year. Now please turn to slide number 10, which shows our EPS growth. While we focus on our strong long-term prospects, we remain vigilant and motivated to deliver excellent near-term results consistent with our strategy and what we have already promised to investors. As you can see, we have delivered on what we promised you in 2014 and achieved an 11% annual cumulative EPS growth on average since 2014 while building a strong foundation for our future growth. The excellent results and key projects we have executed represent the initial stages of our strategy to advance the world toward the cleaner energy future. I am very optimistic about our company's prospects to capitalize on these growing opportunities by being a meaningful player in the energy transition. Now please turn to slide number 11. As a reminder, we do share our earning growth directly with our customers through our dividend while we continue to invest in growth opportunities. The whole team at Air Products is very proud that we just announced our 40th consecutive year of dividend increase. This tremendous long-term record is a testament to our people and our strength and consistency of our business model. The most recent increase is 8%, which increases our dividend to $1.62 per share per quarter. which we expect will translate to directly returning more than $1.4 billion to our shareholders in 2022. And as Melissa Schaffer, our Senior Vice President and Chief Financial Officer, will share with you in a moment, we have significant remaining cash flow to support our many project opportunities. And finally, please turn to slide number 12. It's still my favorite slide since it captures in one chart the progression of our business since 2014. We continue to deliver strong underlying results, but our margin declined in recent quarters primarily driven by higher energy pass-through, which increases our sales but doesn't impact profit. Two-thirds of the margin decline from our peak is due to the impact of this higher energy pass-through. But as I indicated last quarter, we are continuing to take action to improve our margins through controlling costs and increasing prices to cover cost increases. Now I'm happy to turn the call over to Melissa to discuss our results in more detail. Vanessa?