Hey, good morning, everyone. My name is Mike Sison. I work with Wells Fargo. I cover chemicals. I'd like to welcome you to our second day of our Industrial Materials Conference. With us today, we have the team in Air Products, Sidd and Mann here. Yeah, I'll just get into it. If anybody has questions, feel free to chime in. You know, Sidd, you guys have a really nice slide in your investor presentation. Shows since 2014, you know, very consistent EPS growth, around 11%. In fiscal 2023, which is this year, your guidance is 10%-12% growth, which again, a very difficult year. I guess the question when you think about historically, high energy costs is, increases demand for industrial gases. That seems to be the case this decade so far. There's a lot of opportunity to energy transition going forward. When you think about Air Products' growth algorithm going forward, should that 11% go up? Maybe just sort of talk about the opportunity and increasing that over the next decade. Sure. Great question, Mike. You know, first off, let me say thank you to you and the entire Wells Fargo team for the opportunity to be here. It's great to be here and talking to our investors about our base business and all the clean energy opportunities we see globally. Look for us, if you think about since Seifi's arrival and under his leadership, you know, the hardworking, diligent, you know, committed people at Air Products have delivered an outstanding 11% EPS CAGR over the last 8 years. This on the back of pandemics, other economic, geopolitical uncertainties that we've navigated. I think we're truly proud of that accomplishment. You know, we've consistently delivered not only top line, but earnings growth, right? This year, we're bringing on $2 billion worth of new projects online. I think it's an incredibly exciting time for us at Air Products because we're in this multi-year framework where we continue to invest and win projects in our base business. You know, last year we brought 60 assets online. Then we're also investing significant sums of capital on our traditional projects in our core industrial gas business and accelerating the low and zero carbon energy transition on the back of hydrogen projects globally as well. If you look at all our, the next 5-8 years, we've got projects coming online at a steady clip across the globe in the blue and the green hydrogen space as well. I think for us, if you look at our backlog today, we've got, you know, roughly a $16 billion backlog. $11 billion of that is committed to energy transition. We've committed overall $15 billion of capital to the energy transition overall. If you look at, you know, we've got a capital allocation scorecard in each of our earnings decks. We've got ample capacity to continue to deploy capital as well. To the extent we can use tools like project financing to continue to increase the velocity of capital deployment while deferring some of our capital needs to project finance banks, we look to do that. I think for us, overall, to your point, these projects, we keep bringing them on, they truly drive long-term earnings growth for us, well in excess of the 11% that we've demonstrated over the last eight years. Great. Let's dig a little bit deeper on the IRA Bill in the U.S., and, you know, you sort of touched on clean energy and maybe how that bill, you know, helps boost demand and project growth for you. Sure. Very topical as well. Great question, Mike. You know, we've been on this energy transition for the last several years, and the U.S. IRA, the Green Deal Industrial Plan in Europe, you know, Japan now announcing JPY 15 trillion, that they're gonna put yen behind their hydrogen strategy. The Canadians doing similar things, having given us CAD 500 million in grants already for our Edmonton project. These truly have driven a seismic shift forward for our energy transition strategy. Thankfully, we've been on this for the last several years, but it's truly a game changer. I think, you know, we'd like to congratulate the folks that sort of put together the whole IRA bill, because a carbon tax in the U.S. is a very political, sensitive topic. I think the way the IRA has been designed, it truly gets to the heart of addressing the energy, you know, the clean energy or the climate change needs of the world. By decarbonizing heavy industry. Hydrogen plays a critical role in that. The IRA, what it does for us, is it truly incentivizes and reduces the cost of producing clean energy. It makes it easier for us to produce that clean energy, and candidly, that's driven a lot more, you know, conversations, exciting conversations with customers, because now for them, blue and green hydrogen is a lot more affordable. The other thing what the IRA has done is, it's. You know, the U.S. Europe was kind of surprised when we came up in the U.S., with that form of policy legislation. What it's done also is on the back of the energy crisis in Europe, a lot of industrial companies are considering: Where am I gonna deploy my capital? The U.S. is heavily skewed to producers, but ultimately, those benefits accrue to the consumers as well. Today, a steel manufacturer can easily consider putting an asset in Texas close to our asset or our pipeline, versus now thinking about doing that in Germany and dealing with energy costs there and the energy crisis they continue to go through with their natural gas issues. I think it's transformed the energy transition in the U.S. It's driving a lot more investment, dollars, and companies are looking to come up the adoption curve much sooner as well. Right. Digging a little bit into the opportunities in clean energy. You know, Air Products is the biggest hydrogen player in the world. Green, blue, you know, in Cleveland, it might be orange. I don't know. Who knows? Yeah, I think the blue hydrogen is a pretty big opportunity off the bat. Can you maybe talk about Air Product's, you know, blue hydrogen strategy and where the opportunities are for you here in the U.S.? Sure. For us at Air Products, within our walls, it's not an or strategy. Yeah. We can do blue and green, I'd liken it to, you know, today, if you go to a gas station, you can get basic, you can get supreme, and you can get ultra, right? That's your green, blue, and gray. I think moving forward, the world will see applications for all three. Now, it's just a case of you can't flip a switch and go to green right away, right? You know, the availability of land, natural resources in terms of wind, water, and sun are not as compelling in different parts of the world. I think blue is gonna play a very critical role in the transition, in the energy transition, to gravitate towards low carbon overall. What I'd encourage investors, customers, and regulators to truly focus on is, while the colors are interesting, even the IRA, it doesn't incentivize the color. What it incentivizes is low carbon intensity. It lets companies go figure out what's the cheapest and the lowest or the most innovative way of you producing these products. I think similarly for us for our blue strategy, we want to own the entire value chain. You know, we've got exciting projects, which is a net zero blue project, where we're selling to Exxon of Canada under a multidecade contract. In Edmonton, we've got our Louisiana Blue Hydrogen/Blue Ammonia project. In Louisiana as well, what we've done is we were the first company to get pore space from the Mineral Board of Louisiana, which we were incredibly proud of. There we own the entire value chain, you know, the 45Q benefit that the US IRA gives us. When we announced Louisiana, it was at $50 a ton. Today, it's at $85 a ton. Those are really compelling economics where we get $425 million for Louisiana because we can sequester 5 million tons of CO2, and that's inflation adjusted for 12 years. We're getting $5.2 billion of capital for that project to invest in a large-scale blue project. You know, we'd also own the pore space, so we'll go manage sequestering that carbon as well. I think those are some of our truly competitive advantages. In the Gulf Coast, we've got over a 1,000-km pipeline network in the world with over 2 dozen assets. That is the largest in the world. We now have the opportunity to also retrofit several of our existing assets as well. Some may be end of life, but that also makes customer conversations a lot more interesting today as they look to come up the energy adoption curve. I think for us, what's key is we wanna be side by side by our customers to sort of service their demand growth needs, but also as they go along their decarbonization journeys, to be there to provide the right solution for the right situation that they need. The customers in your pipeline now, I mean, is there any reason they shouldn't consider coming to you and asking to help convert those pipelines to blue for them? You know, we are having conversations with customers. We announced a couple of projects on the carbon monoxide side, which are again, long-term contracts last quarter. Those were on the back of the IRA and some of the mechanisms, incentive mechanisms the IRA provides. We are having those conversations with customers. Like us, all our customers have, you know, net zero targets, you know, interim targets, everyone's coming, looking to get up the energy adoption curve. The IRA, for all of us, has truly been a game changer because the IRA provides you 45V, 45Z credits, 45Q credits. We get benefits either directly or indirectly because the sub markets that we service, like a SAF project, gets benefits under the 45Z. Indirectly, you know, we're selling four to five times more hydrogen to a renewable diesel or a SAF project than what we would sell to a traditional refiner. Right. Overall, I think it's a game changer for the entire ecosystem. Great. Then you mentioned Louisiana. I thought maybe we'd get a little bit of an update. How's that project going? I have two kids going to Tulane. I love New Orleans, so just curious to how that one is, how that one's unfolding. We are full speed ahead on the execution of that project. You know, It's a large, complicated project, but there are several aspects to it. One is, you know, building the hydrogen, the ammonia assets, and then there's also getting your Class VI permits for sequestering the carbon. All that's being done in parallel, so we're full speed ahead. It's a long, complicated project, so a lot to do, and we look to bring it online in, I believe, it's 2026, 2027 that we've got on our backlog. As things stand today, we're on schedule and excited about the progress we're making. Great. Your other big hydrogen project in Canada, Alberta, any update on how that's progressing? That's another project, you know, that was probably the first feather in our cap, where we announced a net zero blue project. I think that's progressing really well as well. I think, you know, I'm appreciative of the choir and investors appreciate this, but that's another great example of how a bespoke strategy or a bespoke solution goes and addresses multiple needs. At this point, that asset is fully committed. You know, the majority of the product is sold to Exxon, which is IOL in Canada, through a multi-decade contract. This is on the back of their multi-decade investment in their renewable diesel assets, which they look to bring to the shores of California or British Columbia, you know, to enjoy the benefits of the LCFS mechanisms, et cetera. Now, there, you know, we use our gasification technology. We're gonna lean on the Alberta carbon trunk line to sequester the carbon, but we're also servicing a burgeoning hydrogen for mobility market, for the trucking industry in Alberta. By investing in that project. It's on our pipeline network, so we've got a network of customers we're selling that product to, and we look to do probably more of projects like Edmonton there. What it truly does is we took a couple of different tools in our toolkit, put it all together, helped IOL, helped Canada. We're making Edmonton basically the hub of Western Canada's hydrogen economy, on the back of that, the Canadian provincial and federal governments both collectively gave us CAD 475 million to accelerate the energy transition. That project's also progressing. We're looking to bring that on, late next year. I believe it's 2024. Excited about the progress we're making there and the conversations we're having for other projects in that region. Great. If blue hydrogen is as big of an opportunity as you say, how much should you see come up in your backlog of the year? Is it, you know, if you are successful, will you be announcing $1 billion, $2 billion? There's sort of a, you know, a size and number that you should get annually. Sure. you know, if you think about blue hydrogen, if you think of the two aspects to it, one is capturing the carbon, which is fairly easy. We've been doing it for the last decade plus at two of our SMRs in Port Arthur, Texas, where we capture over 1 million tons, and that's using our patented proprietary VSA technology that we use, right? Which we can then use for retrofitting our other assets as well. There are other main solutions as well, which we can tap into, but I think what I'm trying to bring the conversation to is retrofitting our blue assets, our hydrogen assets in California, I'm not as sanguine about that, because where are we gonna put that carbon, right? Right. Capturing is the easy part. We could do that in Edmonton, which we are, and we've got other assets there, which we could potentially retrofit. We've got pipeline networks in Rotterdam, which we could do that on. You know, the Dutch government has announced projects like Porthos, where they're looking to sequester carbon. Once some of those come to fruition, we should have other, you know, announcements we can make to our investor community. We're looking at, you know, new projects, so other Louisianas, other Edmontons, as well as retrofitting our existing assets as well. I think having access to that pore space is critical. You know, we've got a 25-year lease where we can sequester close to 400 million tons of carbon, so it could handle, you know, not only our existing Louisiana, our overall gray footprint, and more as well. We're excited about the future. I wouldn't want to venture a dollar number, but you can see the pace of which we've been making announcements and developing these projects. We've been on this journey for a couple of years. These projects take a long time to put together. You know, every time we make an announcement, you hear Seifi says, "We've been working on this for a couple of years," getting permits, you know, putting commercial frameworks together. I think some of the big building blocks, Mike, are in place now, which we can then build off. Right. Right. Shifting gears, why don't we talk a little about green hydrogen and how you think that market will unfold over the next decade? It is more expensive, quite a bit more expensive than blue or gray, even with the IRA bill. Why don't we just start there, and you're one of the few companies who actually have projects in the backlog for green hydrogen, so. Yeah. You know, maybe let's start with our flagship Project Neom. Yeah. You know, when we announced Neom in July 2020, at the time, and even today, I think we are the only big mega scale green hydrogen project that comes online in 2026. That asset would produce, you know, between up to 650 tons of green hydrogen per day. We actually financially closed on Neom in the last 2 weeks, with close to 23 of our global financial lending institutions. We are excited that, you know, those financiers came up and have given us multi-decade financing terms, where they basically validated our strategy of taking this to the shores of Europe, the US, and other parts of the world. Since then, you know, we've announced 3 large green energy import terminals in Hamburg and Rotterdam, where we have an existing pipeline infrastructure, as well as in the UK. If you think about, you know, Neom, maybe just talk about 2 aspects. One is the price visibility, as well as the second is the volume visibility for customers. You know, for us to fully load Neom, if it entirely went for a mobility application, it's 13,000 trucks. In Germany, you know, in the H2Global program that was announced late last year, they're looking to convert their 650,000 trucks that ply on their roads today to hydrogen. We need 13,000, which is 2% of an energy adoption to occur, and that's Germany alone. For us, these volumes are a drop in the ocean. We're trying to figure out how many more Neoms we need to develop to truly address this burgeoning market. If you think of other applications, right? If you think of the three big, broad use cases, hydrogen can serve as a fuel for mobility applications that could be for trucking, trains, shipping. Green ammonia could be put into ships or a derivative as a green methanol, right? Planes are now thinking about liquid hydrogen as well, or a derivative, which is SAF, which is our World Energy project. The second is hydrogen as a feedstock, where it goes into chemicals, petchem, refining today, right? Steel companies converting to DRI. Given the carbon EU ETS scheme and the allowances and the targets that EU has set for steel companies of net zero by 2050 and a 30% by 2030, it's gonna get very expensive for people to do nothing. It's much cheaper to transform to DRI with hydrogen and, you know, the H2Global program, the REPowerEU program, the Climate Protection Contracts or the Hydrogen Bank Contract for Difference contracts, where you can get up to 4 kgs of a subsidy. Basically, you know, truly help people come up the adoption curve and make things a lot more affordable for our customers. On the mobility side, you've got these mechanisms called RFNBO. It's a renewable fuel of a non-biological origin. Those are roughly 9 EUR a kg in Germany today. These are really, you know, incredible policy levers that are gonna help Europe come up the energy adoption curve for us. And that's where, you know, we primarily look to bring Neom molecules apart from other places in the world where we see needs today. For Neom, a lot of investors tend to ask me, what are the risks on the project? How do you manage those risks? How, what do you think those are and, you know, what are the measures that you're taking to minimize those? Yeah, you know, look, all our projects that we execute globally, we are the EPC. Yeah. We are incredibly hands-on. We're not delegating this to somebody else. There are fewer cooks in the kitchen, you know, when we execute projects. You know, bureaucracy isn't something that you can sort of, you know, say Air Products is burdened or laden with, right? We wear a four F pin on our labels. Speed and simplicity are two of them, right? We tend to do a really good job of managing our projects, being efficient with our decision making. We are the EPC, so we're fully focused on every aspect of the project. We hire, you know, very reputable, large scale, subcontractors that help us with construction as well. We've got, you know, engineering centers across the globe. We've got including in Allentown and in Houston and in the U.S., in London and in Rotterdam. As you move east, you've got them in India and China. What that means is, as the sun rises in the east, where our engineers are working 24 hours a day across our platforms and all the projects that we are executing, that's. Given that we've got a footprint globally, that tends to help manage our engineering costs across the world. Then we tend to do things where we've got a three sixty degree learning. Once we develop Neom 2.0 is likely gonna be cheaper than Neom 1, right? Right. The lessons learned are being put to use there. Within our assets as well, if we've got an ammonia loop across three asset bases, we're not redesigning the wheel each time. Right. There's a lot of synergistic savings that we can get, not only on the engineering, but the procurement, the construction, et cetera. I think we're very keenly focused on managing our schedules on our projects, our capital increase, because I know with inflation rampant, that's something that investors are very focused on, and managing safety as well. If you recollect, when we won the Jazan transaction, the, you know, the $12.3 billion large integrated gas power plant project in Saudi Arabia, the precursor to that was a $2 billion 6-train ASU transaction that we did for Aramco. Yeah. That was done under budget, on time, with an outstanding safety track record. I think part of that, along with the technological advantage, that we only had that gasification technology and the relationship earned us the Jazan transaction. I think that is another place where we see huge opportunity for us globally, but it's something we take very seriously and are very focused on. As I recall, you take green hydrogen, you put it in ammonia, you ship it, and you reconvert it back to green hydrogen. That's right. Is there any pricing risk in that equation down the road? I think just generally across our projects, either blue or green, we like to own the entire value chain. Okay. Right? Today we do that. We produce over 9,000 tons of hydrogen today globally or across our 110 assets globally. We move it in our pipes. We move it as a liquid on a truck, as a gas on a truck as well. We've got a very good sense of what distribution costs are globally for this. We've also got a company called Gardner, where we have the lion's share of the ISO market for moving helium and hydrogen, liquid hydrogen. We've got a very good sense of the technology, the distribution costs, what it takes to put all this together. I think ammonia truly is the most efficient way of moving hydrogen. Today, we've got a network of four, five assets in the U.S. and Canada. We move liquid hydrogen from Canada to the U.S., from New Orleans to Texas to California. When you move it within country or within a region, you can move it up to 1,000+ miles as a liquid. When you move it across oceans, ammonia tends to be the most effective, seamless way of doing it. There's an existing ammonia shipping infrastructure network today, which you can tap into. It's not like you're, again, reinventing something. You know, what's a game changer for us, is we've been on this journey of developing our ammonia dissociation technology for the last several years. You know, anecdotally, you hear about people talking about a 30% loss. Our numbers are a fraction of that, which we are incredibly proud of, and that's what we can bring to bear for our customers as well. You know, if you A simple example, if you brought Neom to Rotterdam, we've got a pipeline network there, so we can easily disassociate and put into our pipes that our existing customers, all mobility names like, you know, we announced a long-term contract with Aers Energy België in Belgium. We're gonna build a multi-fuel, large hydrogen refueling station in the port of Zeebrugge. Every single fuel cell truck that goes in and out of that port has access to our hydrogen now. I think those are sorts of the projects that we're now piecing together and, you know, sort of connecting the dots for our investor base as well. Great. Shifting gears a little bit, you know, a lot of investors ask me about your strategy in gasification. You know, Jazan seems to be running really well right now, a little bit delayed. You got out of Indonesia, had some issues with Lu'an. You know, a lot of folks just wonder, is that still a good place to put your capital, put in the backlog? You just did a new one in Uzbekistan, right? Uzbekistan. Uzbekistan, sorry. Maybe just talk about the gasification strategy, what the growth opportunity is, and why those projects make a lot of sense for investors. Absolutely. You know, when we announced Lu'an and other, the IRA and other blue and green opportunities hadn't developed the way they have. The energy transition landscape has changed for the better dramatically in the last couple of years. That's sort of helped us inform our capital deployment choices globally. I think on our last earnings call, you heard Seifi mention, you know, 80% of our deployments are likely to be towards blue and green projects. Gasification is still a very effective, you know, technology in our toolkit. Look, our Louisiana project is a gasifier. Our Edmonton project is a gasifier, which is gasifying natural gas. What that allows us to do is, it allows Edmonton to be a net zero project, because you can capture in excess of 95% of the carbon there, right? Similarly, on Louisiana. The Indonesia project, that was a situation where, you know, the country of Indonesia needed us to come and provide certain energy solutions to beef up their energy security and independence needs. You know, the pace of progress on that project and the line of sight to getting certain things done wasn't, you know, as we had hoped. We decided it was time to, you know, redeploy that capital elsewhere. On the back of what we've done, I've heard anecdotally several other oil majors have pulled out on similar projects there in that country. Now, for us, to your point, the reason we won Jazan was this, the Shell and GE gasification technology that we only have access to, was truly a game changer here, right? I think that's something that we look to delever, sort of, you know, bring to bear elsewhere. You know, in the last several years, you've seen us do, you know, the PBF acquisition, the Jazan transaction, the Uzbekistan. These are classic traditional gas, which is our core competency, decaf deals, right? Yeah. Part of it is this technology advantage, knowing how to run these assets, bringing, you know, our efficiency and reliability to bear. Uzbekistan is another example. I think there was some concern when we pulled out of Indonesia around, you know, customer relationships and credibility. That's another perfect example of another nation which is, you know, top 10 in the world for gold, copper, and natural gas exports, looking to bring our solutions to bear again, for their energy security needs. Today, they import a lot of these high synthetic fuel products. By now generating it internally, they're saving foreign currency reserves. Incredibly progressive nation, you know, looking to attract a lot of foreign direct investments, and we're one of the few that's done this. There's been other big oil majors that have entered that recently. It's a progressive regime. you know, we're happy about what we are doing there, and it's an acquisition, so there's no capital risk. It comes online next year, and we immediately accretive to our earnings as well. Right. Great. Shifting gears a little bit, you guys have a nice perspective around the world. You sell to everybody. Maybe can you give us just your thoughts on how China's recovering, anything on Europe, and how the U.S. industrial land is taking off? Sure. You know, usually we're not supposed to be commenting intra-quarter on trends, but, you know, what I'd guide you to is when we announced our earnings last quarter as well, is we were pleased with the recovery we were seeing in China, post, you know, going to a zero COVID and a Lunar New Year recovery. I think we're cautiously optimistic. We're on a wait and see. You hear different stories from, you know, specialty commodity camps. Yeah. Other industries, we're still in a wait and see, and we're continuing to see improvement. Now, the question is, at what pace does that occur? You know, we continue to invest in China. Last quarter, we brought 30 plus assets online. We continue to see price and volume growth through those mechanisms as well. In Europe, you know, they've seen staggering energy prices for the last 18 plus months, right? That does take a toll on the industrial and manufacturing sectors. You know, with pricing coming down, Europe has primarily been a price story, right? Yeah. I think us and our peers, the pricing discipline everyone has demonstrated, to sort of help protect margins has been truly incredible to see. As you see energy prices come down, you know, some of the surcharges are likely to roll off. Again, we'd encourage investors to focus on price and variable costs in terms of how we protect margins there. In the Americas and just globally, our HyCO franchise and our onsites have done tremendously well overall. America still continues to perform as well as expected. You know, you hear it's the recession waiting for the door, kind of thing, that, you know, every day you turn the news on, people are talking about it. We haven't seen it as yet. Yeah. Right. Maybe talk about pricing a little bit. It's been a, you know, the industrial gas station has done a really nice job pricing. You're seeing deflation. Does that affect the way you price your product going forward? What do you think the pricing power is over the next decade for the industrial gas industry? I think the pricing discipline and capital discipline on all our project executions will continue. I think we focus on price. We're not a cost plus mentality. You heard Seifi mention that all the time. I think we continue to, you know. We're not in the market of trying to steal volume based on price, right? I think we hold the price discipline. Let's see how the energy, you know, the energy prices globally plays out. That has a lot to do with that. You know, if you even look at our margin, you know, the EBITDA margin slide that we put on our earnings there, 75% of that movement in that margin has been on the back of these energy pass-throughs, right? That has a large piece of how things play out. We'll continue, you know, stay disciplined and focused. Great. I guess last question, given time, you know, can you maybe just talk about the opportunities in traditional industrial gas backlogs, so oxygen, argon, maybe some of the end markets and electronics is a good growth area for the industry? Any thoughts there? Sure. You know, we continue to focus on our base business and execute on that and win projects. We deploy between $600 million-$800 million of capital in that business on an ongoing basis year-over-year. You know, last year we brought 60 assets online. This past quarter, was 30 assets. These are all our traditional base industrial gas products across, you know, electronics, semiconductors, glass, fiberglass, chemicals. We stay focused there and continue to win projects. You know, we've announced some large wins in the semiconductor space in Asia. We also have a flourishing LNG business. We announced a large contract in Qatar recently, but we've had several wins globally, and we have a lion's share of that market. That's another place where truly, you know, each of us in our oligopoly are, you know, world-class organizations. That's another place where our technological prowess and know-how truly differentiates us against our competitors. We keep deploying capital and winning projects there as well. Great. Well, great. Thanks, Sidd. I appreciate your time. Thanks, Mann. We'll look forward to hearing you next down the road. Sounds good. Thanks, Mike. Great discussion. Thanks for your time.