Air Products and Chemicals, Inc.

Good day and welcome to the Air Products fourth quarter earnings release conference call. Today's conference is being recorded at the request of Air Products. Please know 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 Megan Britt. Please go ahead.

Hello and welcome to the fourth quarter and full year fiscal 2025 earnings conference call for Air Products. Our prepared remarks today will be led by Eduardo Menezes, Chief Executive Officer, and Melissa Schaefer, Executive Vice President and Chief Financial Officer. We have prepared presentation slides to supplement our remarks during the call, which are posted on the Investor Relations section of the Air Products website. During this call, we'll make forward-looking statements, which are our expectations about the future. These statements are based on current expectations and assumptions that are subject to various risks and uncertainties. Our actual results could materially differ from these statements due to these risks and uncertainties, including but not limited to those discussed on this call and in the forward-looking statements and risk factors sections of our reports filed with the SEC. We do not undertake any duty to update any forward-looking statements. Please note in today's presentation, we will refer to various financial measures, including earnings per share, capital expenditures, operating income, operating income margin, the effective tax rate and ROC, either on a total company or segment basis. Unless we specifically state otherwise, statements regarding these measures refer to our adjusted non-GAAP financial measures. Reconciliations of these measures to our most directly comparable GAAP financial measures can be found on our investor website in the relevant earnings release section. It's now my pleasure to turn the call over to Eduardo.

Thank you, Megan. Hello, and thank you for joining our call today. please turn to slide three. Earlier today, we reported our fourth quarter and full fiscal year 2025 results. Our numbers show consistent progress related to commitments we shared earlier this year. We deliver earnings per share of $12.03, which is above the midpoint of our full year fiscal guidance range. Our operating income margin of 23.7% and return on capital of 10.1% were also in line with our commitments for these metrics. Also, this year marks the 43rd consecutive year of increasing our dividend. In total, we returned $1.6 billion to our shareholders in fiscal 2025. I'm encouraged we are setting challenging but achievable targets in delivering on those commitments. We have taken several key actions starting in the second quarter to focus on the core industrial gas business and expect to unlock earnings growth through productivity, pricing, operational excellence, and disciplined capital allocation. The last three quarters demonstrate that we are already making progress. Moving to slide four, we have three key priorities for 2026. that were part of the strategy we shared earlier this year. First, we expect to deliver high single-digit annual EPS growth. To be clear, our 2026 guidance anticipates additional hedging headwinds in a sluggish macroeconomic environment. On our second priority, we will continue to make strides to optimize our large projects portfolio. We are working diligently to finalize our NEON project and expect to improve our underperforming project portfolio with a goal of generating positive cash returns. On our third priority, we continue to take actions to balance our capital allocation and improve our balance sheet. We expect to reduce our capital expenditure to roughly $2.5 billion per year following the completion of several large projects. At this level of capex, we believe we can support our ongoing maintenance and invest in traditional industrial gas projects while growing our dividend and, longer term, returning additional cash to shareholders via share buybacks. In 2026, we expect our capital expenditures to be about $4 billion. In summary, we expect fiscal 2026 to demonstrate our commitment to continuously driving improvement in our core industrial gas business and growing alongside our customers. Please turn to slide five. We highlighted earlier this year that a portion of our productivity improvement will come from returning to an organizational headcount similar to what we had before we started several large clean energy projects. This slide offers a progress report on our actions in the savings that are being created. Since 2022, we have identified a total of 3,600 headcount reductions, which translates to 16% of our peak workforce. We expect these reductions to contribute approximately $250 million in annual cost savings or $0.90 per share in earnings once the reductions are complete. These cuts are not something we do lightly, but they are critical to offset inflation and adapt the organization to a lower level of capex spending. Our objective remains to return to staffing levels 2018, adjusted for employee growth to support new assets, minus any other productivity we can find with new initiatives like AI. Moving to slide six, we have a summary of our expected capex expenditures after 2026. As we have previously said, we are also moving forward with several underperforming projects, given our commercial obligations and project status. We have roughly $2.5 billion remaining to be spent on these projects from 2026 to 2028. Though these projects are not expected to contribute materially to operating income, we continue to work to improve their results through commercial negotiations, operational improvement, and productivity. For our NEON project, this light reflects the capex related to our equity contribution to the overall project, which will be completed in 2027. Any further investments for ammonia dissociation in Europe will need to be approved separately. After we bring these projects on stream, we expect capital expenditures of roughly $2.5 billion per year, which can sustain both our future growth and ongoing maintenance. For our Blue Hydrogen project in Louisiana, we have halted making new commitments until an offtake agreement is reached. In this slide, our capital investment for this project in 26 reflects only prior commitments on the project, and we have excluded any spending beyond 2026. Like in the case of NEON downstream investments, they would need to be justified and approved based on firm offtake commitments. I'll talk more about the Louisiana and Neon projects in our next slide. On traditional core growth, we expect to invest approximately $1.5 billion per year going forward. These are air separation hydrogen projects that we normally execute in 18 to 30 months, so there are always new projects being added and completed projects being removed from that list. The CAPEX figures for fiscal year 2027 and beyond represents our expected average spend. Our focus will be, as always, on opportunities that meet our return thresholds with quality customers and contractual uptake. Moving to slide seven, I wanted to close with a brief update on NEON in Louisiana. To start with NEON, the project is progressing well and is about 90% complete. Solar and wind power generation will be completed by early 2026, and we will start commissioning the electrolyzers and ammonia production. We expect to have ammonia production on stream with full product availability in 2027. We are, of course, following the regulation developments in Europe. It is important to highlight that the scale of the energy transition is such that the volumes required to meet even the smaller mandates such as the Red 3 EU mandate to convert 1% of fuels sold to RFNBO fuels, would create a green hydrogen demand equal to approximately 7 times the total production of our NEON project by 2030. Obviously, a significant part of the volume is expected to be supplied by local electrolyzers using renewable power, but it's important to highlight that our solution to bring green ammonia from Saudi Arabia for dissociation in Europe is competitive in terms of pricing and requires zero public subsidies. As mentioned before, the market for green ammonia is also being developed, and that will be our main target from the time the NEON project starts. Additional feedback on the market development will be provided during 2026. Regarding our Blue Hydrogen project in Louisiana, we are evaluating proposals to divest the carbon sequestration and ammonia production assets. We will only go forward with this project if we can sign firm offtake agreements for hydrogen and nitrogen from the facilities that will be owned and operated by Air Products. these agreements will need to comply with our return expectations with one or more high-quality counterparts. As previously committed, we expect to provide further updates related to this project prior to the end of 2025, so in less than two months from today. Let me finish by saying that I'm excited to launch my first full operating year with their products team. We have been working hard to right the ship and bring the company back to a position where we can deliver maximum value to our shareholders, customers, and employees. Now I'll turn the call over to Melissa to discuss our financial results in greater depth and discuss our 2026 outlook. Melissa?