Air Products and Chemicals Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Chris Parkinson - Wolf Research - Analyst : Great. Thank you so much for taking my question. Just very quickly, just given all the moving parts in Asia, should the Street be thinking about, obviously, some of the past headwinds in the helium business and electronics recovery and just general macroeconomic conditions in China. Are there just general things you can do to [triangulate] the forward outlook from this point in time?

Question: Chris Parkinson - Wolf Research - Analyst : Got it. And just as a quick follow-up. Can we just get a quick update on the Alberta project, please?

Question: Duffy Fischer - Goldman Sachs - Analyst : Yes, good morning, guys. So at the midpoint of both your Q2 and the full year, you need the second half to be about $1.50 per share better than the first half. Can you give us a walk how much of that is seasonality and how much is stuff like the Uzbekistan plant coming back? Obviously, the helium going away, just some of the one-off stuff that helps us in the walk from first half to second half?

Question: Duffy Fischer - Goldman Sachs - Analyst : Okay. And then if you look at the Americas, excluding that onetime sale of helium, what would price and volume have been in Q1?

Question: Duffy Fischer - Goldman Sachs - Analyst : Okay. Thank you.

Question: Steve Byrne - Bank of America - Analyst : Yes. Good morning. Can you provide a breakdown on the outlook for the fiscal year, the $4.5 billion to $5 billion, how do you expect that CapEx to be deployed by projects?

Question: Steve Byrne - Bank of America - Analyst : Okay, Melissa. And any update on the permitting project in the World Energy?

Question: Steve Byrne - Bank of America - Analyst : Okay. Thank you.

Question: Jeff Zekauskas - JPMorgan Chase & Co - Analyst : Thanks very much. What was the helium EBITDA contribution in the Americas in the quarter, if there was one?

Question: Jeff Zekauskas - JPMorgan Chase & Co - Analyst : From the sale.

Question: Jeff Zekauskas - JPMorgan Chase & Co - Analyst : The outsized sale, what was the benefit from that?

Question: Jeff Zekauskas - JPMorgan Chase & Co - Analyst : 10% for the whole company or 10% for that unit? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 1:00PM, APD.N - Q1 2025 Air Products and Chemicals Inc Earnings Call

Question: Jeff Zekauskas - JPMorgan Chase & Co - Analyst : Great. And then, lastly can you talk about the overall helium market and what's happening with pricing? Is it different in the different geographic jurisdiction?

Question: David Begleiter - Deutsche Bank - Analyst : Thank you. Good morning. Melissa, in the Americas on volume, ex helium volumes down around 3%?

Question: David Begleiter - Deutsche Bank - Analyst : Understood. And just in the Middle East and India, can you talk about the equity affiliate income decline and what drove that?

Question: David Begleiter - Deutsche Bank - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 1:00PM, APD.N - Q1 2025 Air Products and Chemicals Inc Earnings Call

Question: Mike Leithead - Barclays Bank PLC - Analyst : Great. Thanks. Good morning. Just on the 2Q guide, it looks like EPS is maybe about a nickel better sequentially if we back out the $0.10 or so from the helium nonrecurring sale. Can you just speak high level with sequentially getting better or worse as we think about modeling here?

Question: Mike Leithead - Barclays Bank PLC - Analyst : Great. And then just a quick clarification or confirmation. Is full year guidance, it does not assume any contribution from the Alberta project this year. Is that correct?

Question: Patrick Cunningham - Citi - Analyst : Hi. Good morning. Melissa, you mentioned monitoring the tariff impact from customers. I'm just wondering what your latest thoughts are there. Any conversations with customers suggesting this could be maybe a short-term negative to production, but is there any sort of long-term benefit of higher manufacturing here in the Americas, for example.

Question: Patrick Cunningham - Citi - Analyst : Got it. Very helpful. And then interest expense came in a bit lower than what maybe down $7 million or $8 million sequentially. I mean, is there anything -- any additional interest being capitalized, anything strange about the quarter? Or is this a sort of quarterly rate that we can expect going forward?

Question: Patrick Cunningham - Citi - Analyst : Great. Thank you so much.

Question: Josh Spector - UBS - Analyst : Yeah. Hi. Good morning. I wanted to follow up on the second half bridge. I think in response to the earlier question, you talked about pricing actions. So specifically to that, I mean, I assume higher energy costs are having an impact negatively on 2Q? Is your comment about second half improvement that you recover some of that? Or do you have visibility to pricing actions beyond response to near-term energy that you have visibility to that you're baking into your guidance?

Question: Josh Spector - UBS - Analyst : Okay. And can you just comment on what corporate cost is baked into your guide? I think the quarter came in a bit higher than we expected. So we're not sure what the right run rate is you're assuming there.

Question: John Roberts - Mizuho Financial Group, Inc - Analyst : Thank you. And Wayne, good to talk again and congratulations to Eduardo and Dennis. Wayne, how do you see the roles different between Chairman and Vice Chairman?

Question: John Roberts - Mizuho Financial Group, Inc - Analyst : Okay. Maybe Melissa, Uzbekistan is a relatively new plan? What upgrades does it need?

Question: John Roberts - Mizuho Financial Group, Inc - Analyst : Thank you.

Question: Daniel Rizzo - Jefferies - Analyst : Hi, this is Daniel Rizzo for Laurence. Does your outlook for 2025 assume any improvement in like industrial activity or in consumer demand?

Question: David Begleiter - Deutsche Bank - Analyst : And can you guys remind us, in 2017, 2018, did those tariffs have any effect at all on the demand -- on your demand -- on you and on your customer production levels, particularly in Asia, I guess, where the weather was focused last time?

Question: Daniel Rizzo - Jefferies - Analyst : All right.

Question: Kevin McCarthy - Vertical Research Partners - Analyst : Thank you, and good morning. I was wondering if you could provide an update on your blue hydrogen project in Louisiana. And specifically, I'm interested in the prospects for partnerships. I think in the past, you've discussed potentially bringing in an equity partner and or partners for sequestration or blue ammonia offtake, I appreciate you've had your hands full perhaps in recent months. But wondering if there has been any progress made towards those ends.

Question: Kevin McCarthy - Vertical Research Partners - Analyst : Very good. And then secondly, Melissa, I think your products have signaled in the past that you would intend to be free cash flow positive in fiscal 2027, I believe. Is that still the case? And perhaps you can elaborate on the free cash flow trajectory as you see it shaping up here through the management transition, if possible?

Question: John McNulty - BMO Capital Markets - Analyst : Yeah, good morning. Thanks for taking my question. So I know Air Products had a number of cost-cutting and restructuring initiatives in kind of late '23 and then in '24 as -- can you help us to think about how much in terms of the benefit of that we should see in 2025 and how it sequences through the year?

Question: John McNulty - BMO Capital Markets - Analyst : Got it. Okay. So at least as of now, $75 million through 2025 offset by some inflation. Am I understanding that right?

Question: John McNulty - BMO Capital Markets - Analyst : Okay. And then just one follow-up on Uzbek. I think that was supposed to add about $0.35, $0.36 to EPS on an annualized basis. Given what the turnaround work that you're doing, what do you expect that contribution to be in '25, just so we can kind of think about when we get to normalize what the additional help is going to be in '26?

Question: John McNulty - BMO Capital Markets - Analyst : Got it. Thanks for the color.