Good morning, and welcome. My name is David Begleiter of Deutsche Bank's U.S. Chemical team, and I'd like to welcome you to the 2nd day of our Global Industrials, Materials, and Building Products Conference. Leading us off today is the team from Air Products, led by CEO, Seifi Ghasemi, and the Treasurer, Sidd Manjeshwar. With that, we'll go right into the Q&A portion of the presentation. Seifi and Sid, welcome. Thank you. Thank you. It's great to be here. Seifi, Air Products has been leading the way on the energy transition. On that note, what has the Inflation Reduction Act meant for clean energy development in the U.S.? Well, what the IRA, Inflation Reduction Act, does is that it basically creates an incentive to reduce the cost of renewable energy. Now, some countries give that incentive to the consumer. In the U.S., the incentive has been given to supply. It makes it cheaper for us to produce clean energy, and that is obviously an incentive for people to use the green. I think the IRA is a very, very excellent incentive system. It's a great piece of legislation, and the reason that I like it a lot is because it really addresses the key issue of climate change, which is the decarbonization of heavy industry, heavy trucks, steelmaking, chemicals and all that, which requires hydrogen. It, they are the people who have designed it, they're very intelligent, and I congratulate them, that they said, "Look, we need to incentivize where it matters." The pollution from the cars is fine. We can go electric, but that is not the biggest source of carbon dioxide going into the air. It is the heavy industry. For the heavy industry, you cannot electrify ships or steelmaking or chemical. The only solution is hydrogen. Therefore, the IRA is heavily tilted towards hydrogen, which obviously, I think. Since last August, when the IRA was signed into law, what have you seen in terms of clean energy development picking up in the U.S.? What we have seen is two dimensions. One is that a lot of people are a lot more interested in purchasing or buying the, whether it is green hydrogen or blue hydrogen and all that, because they know that it will be more cost competitive. The other thing, which is as important as anybody, is that we are seeing people wanting now to invest in the United States. If they need hydrogen, they are sitting in Germany. The only way to get hydrogen to them is to make it in the U.S., then convert it to ammonia, ship the ammonia, break it back to hydrogen and give it to them. If the steel plant was built in the state of Texas, one can give them hydrogen right from the pipeline, significant cost saving. There is significant amount of talk, serious talk, about people building their chemical plant or steel plant and those kind of industries in the U.S., and just use the hydrogen right here, rather than having to transport the hydrogen. Are you seeing more competition in the U.S. for these projects amongst your competitors? Definitely, David, you know, I'm going to say something which I believe is self-serving, and is that when you say competitors, whom are you talking about? In the sense that we are so far ahead of everybody else that, you know, we don't feel somebody's coming to eat our lunch. They've already eaten our lunch, they're way ahead to dinner. Very good. In contrast, Europe has tried to replicate some way the IRA. How is their Green Industrial Plan progressing today? Well, in Europe, what they are focused on is on incentivizing the consumers, which I fully support, because in Europe, they can't make this stuff. Yesterday, you saw the German government making the announcement that if you convert to green hydrogen, they give you $4 a kilogram. They are incentivizing the customer, that, "Okay, if you sign a contract and you buy the stuff, I give you $4," which is significant. Japan is announcing. I think they are going in the right direction by incentivizing the customers, and there is, as a result, significantly more interest in green hydrogen. How long will it take over there to see that same sort of development we've seen in the U.S.? I don't know. How long will it take to see these projects come to fruition in Europe, do you think? In Europe, it is a question of developing the demand, and I think the demand will develop based on the legislation that is already in place about decarbonization and so on. The demand in Europe is going to take off 25, 26, 27. By 2030, it would require 50 times the capacity of what we are building to supply the demand. On the IRA, is there any risk to the IRA if there would be a change in the Administration or Congress? Well, the only risk for IRA is that the Congress will legislate something different, because the President cannot nullify the IRA, because this is not a treaty, this is law. Therefore, the only way that that can happen is that if the composition of the both houses and the Senate changes in such a way that people would start denying what is happening outside. I mean, it's in our face, I mean, global warming, not a joke. It's right here in New York. Very true. Right. We look over to Asia, how do you see blue and green hydrogen developing in Japan, Korea, and even China? Well, I think that in, when you take Japan has no choice but to import energy, because they don't have sun, they don't have wind, they don't have natural gas. The only thing that they could have had was nuclear, but now that is off. Therefore, they have to import energy, low carbon energy. The most practical way of doing that is to import blue ammonia or green ammonia, so that then they can convert it to hydrogen. They just announced again, the day before yesterday, a $107 billion incentive program for doing that. I think the development of the energy transition in Japan would be the first step, would be importing of blue ammonia, where the CO2 is taken out, for going directly into the power plants, so that you don't have to break down the ammonia back to hydrogen. That would be the first phase, and then the second phase would be converting the blue ammonia to hydrogen and then using the hydrogen for steelmaking. They are very focused on developing technologies where you can use the ammonia directly, which would be interesting. You know, the obviously, conversion, one of the biggest uses could be using ammonia directly in ships, which would significantly help with the decarbonization of the marine transport. Korea and China, the same question. Korea is kind of in the same place. With China, I don't want to get ahead of myself in terms of what they want to do. At the end of the day, energy is just like oil. Every country in the world doesn't want to import oil, but they have to because they don't have it. China, they are going to get to the stage where they have to, same way that they are importing oil today, to import their energy. Practically, the only way would be to import, to bring in ammonia and then crack it into hydrogen. And last- We are not that focused on China right now. Last, in terms of a carbon tax, do you think we actually get one in the U.S., in the West? Do we need one in the, in the U.S., in the West? Well, the thing is that when you talk about the carbon tax, obviously politically it's very difficult to do a carbon tax in the United States. Europe is already there, Canada is there, and in the U.S., state of California is already there with the Low Carbon Fuel Standard. Do we get to that? No, but they did the IRA, because IRA is basically giving us a tax break to make this stuff. It's kind of government helping the industry go toward the transition. I think the U.S. is doing its part, and the IRA is really big and meaningful, more than $300 billion. It's going to make a difference. Very good. Moving on to some of your projects. You recently announced plans to acquire a, for $1 billion, a project in Uzbekistan. How did that project come together, and can we see further opportunities in that region for Air Products? Sure. The reason that we got interested in Uzbekistan was in 2017, they had a change of government. They had a new president, there was an encouragement by the government of the United States and so on, that this is a country that might be different than the other places. I went there in 2017 to develop a relationship with people. It has taken us about six years to get to where we are for good reason, because you want to do your due diligence and all that. What we bought there is at the heart of what we do. It's about gas to liquid, it is about gasification, it is about hydrogen. The good thing about what we did is that there is no risk to capital because we know what we are paying, and there is no risk to the return because we know what we are going to charge them. Uzbekistan has a lot of natural gas, and we think the government is very progressive. Our Secretary of State was there and all of that, it's a strategic part of the world, and we are very happy to be there. Very good. Back in May, on your earnings call, you announced a two-quarter delay in your Jiutai coal to syngas project. That raised some concerns amongst investors on the timing and cost potential for overruns on your $16 billion project backlog. My question is, why should investors not be worried about the backlog in terms of timing and cost overruns, and what are you doing to protect against those things from happening? Well, the thing is that only it's kind of putting two and two and coming up with nine. Jiutai is a project, an investment of about $600 million for Air Products. We have built that plant during COVID in China, the capital cost is below what we expected. That's not an issue at all. In terms of when we are commissioning it, well, when you are commissioning a plant of that size, you need people. China, COVID restrictions, we couldn't find enough amount of people, commission that. On our announcement, usually we are conservative. We said two weeks, two quarters, it's quite possible that when we announce our results in August, we'll have a different answer for you in terms of. It just depends on how we can get the people and so forth. It isn't as if something has gone wrong there. As far as the rest of our projects, you know, we just executed a project in Texas, Gulf Coast Ammonia. That's more than a billion-dollar project. We go budget on time. Everybody likes to kind of sometimes exaggerate these things, but we are not concerned about that. We saw that some of these projects that we are doing, we are hoping to be running them for 50 years. One quarter or two quarter, in the overall scheme of things, doesn't make much of a difference. Very good. I'm gonna walk through some of the current projects you have underway. Maybe you can update on those. First is the Alberta Net-Zero Hydrogen Project. How is that progressing? That is progressing very well. We were able to get the support of the Canadian government. The Canadian government is giving us a cash grant of CAD 470 million toward that facility, which is about 30% of the cost of the plant. We are very happy about that. That is progressing, and we are building it, and we are very excited about that. When we announced that project, we said we don't have any sales for that. We'll be on the safe side. Right now, that plant is basically sold out on long-term contract, and one of our long-term contract, the people that we have a contract with is actually Exxon. It operates under the name IOL, Imperial Oil Limited in Canada. We are very happy with that project. We will do more projects like that in Canada. What we did was the first phase. I wouldn't be surprised if we double or triple the size of that investment. That one is very exciting. How is the pricing on that project? Is it a premium to traditional hydrogen you might sell? Of course, it's blue hydrogen. It's a significant premium to ordinary hydrogen. Yes, very good. Onto NEOM, t here was some news over the last few quarters, last few weeks, so I'm maybe give us update on that project. With NEOM, when we started the project and announced it in 2020, we said that we are going to finance the project ourselves, because, quite frankly, I didn't think that it is possible to go and finance a project, it' s in Saudi Arabia. It's making green hydrogen, and we don't have any contracts that we can show people, that people are going to buy this stuff. Once we announced it, once we made progress, once we got the engineering done, people saw that we are doing, then quite honestly, we got approached by the banks. That, look, this is a great project, and we would like to finance it, which we obviously said, more than welcome. That's $8.5 billion. We are 25% equity, which is about $2.5 billion. Our share is 1/3 of that, so we are going to invest about $700 million of our own cash. We got $6.1 billion from 23 international banks, which, quite honestly, is an endorsement of the fact that this is a real project. Otherwise, people wouldn't give you money. I don't care what a lot of people say, they don't have sales. Well, the banks would, they would generally just think that we are okay. That's a significant step forward for us, because not only now we have the money to, or should build the plant, but we also have a lot of firing power to do other projects. That plan will come on the stream at the end of 2026. In 2027, Air Products will be the only company who has green hydrogen of any scale. The other thing about NEOM, that people, I hope have focused on, that although we are partners with people in building the facility, Air Products is the sole off-taker of the product. All of the production goes to us, we are totally in charge of where we take it, what we sell it for, and what we do with it. We are not competing with anybody. What are the plans for this product, where are you going to sell it, and in what form? The product is in form of green ammonia, we can ship it at very reasonable cost to anywhere in the world. The market for that is anywhere. We can take it to Europe, we can take it to California, we can take it to Japan, we can take it to anywhere. Obviously, we take it to the place where we can make the most amount of money. In terms of, we just put a little bit of a dimension to that, is that we are going to make 650 tons a day of hydrogen, 650,000 kg a day. If you convert one heavy-duty truck, just one heavy-duty truck, that heavy-duty truck will use at least 50 kg a day. For us to sell the entire production, you need to convert only 12,000 trucks around the world, and there are more than 2 million trucks. That's the dimension. Or if you use that for making green steel, the world makes 1.5 million tons of steel. If you convert a plant to 2.5 million tons, it uses all of production. The demand, I mean, we just need a tiny, tiny bit of people converting, and it will consume everything that we are making at NEOM. That is why when people get excited about what are we doing with the product. Well, what we want to do with the product is wait until we get the highest price. We can go sell the product today. Today we will be competing with the, what I call, three guys in a truck, who claim they can make hydrogen for X price. Our position with the customer is, go buy from them. When it comes 2027, and nobody else has the product, and people have committed to convert, then we can sell it for a lot, a lot higher price. We are business people. That is what they are paying me to do. I mean, if we were just robotic, saying, "It costs us this, we sell it this," then why do they have to pay me $15 million a year? I mean, they can have an idiot like some of the people who are running other companies. Very good. Switching to U.S., how is the Louisiana blue hydrogen project progressing? Very well. We have the land. We have the cleared land. We are doing the engineering. We have spent about $1 billion on that project, pre-ordering the material and all of that, and that is working out very well. We are very excited about that, and that is a different product. It is going to be making blue hydrogen, and we made the announcement of that project before the IRA. With the IRA, we are going to be sequestering 5 million tons a year of CO2, and the government is going to give us $85 per ton. It was a $425 million a year for 12 years boost to that project. It looks a lot better than when we announced. In that project, you're drilling your own well. Why is that not a risk, for Air Products, given your lack of experience drilling well and actually sequestering the carbon? First of all, that is the narrative in the outside world, that we are going to do our own well. Yes, we have the pore space, and we are planning to do sequestration ourselves. One of the reasons that we are advertising that, at the same time, we are talking to other people doing that. You want to have leverage when you are negotiating with them, that because otherwise, if you don't have any other option, people would charge you a lot different. We are very open, and if somebody else wants to come and sequester the CO2 at a lower price and guarantee that they will take the risk, we'll be happy to talk, and we are talking to them. This is not a secret. We do not consider sequestration of carbon dioxide as a core competence. Other people can do it fine. This is not like hydrogen. Hydrogen is our core competence. For me, somebody says, "I'm going to charge you $X a ton, and I can take the CO2 from there or from any other one of our facilities, and sequester it for you." We look at the economics. If it's cheaper than what we can do it, we have no problem doing it. That's not a proprietary technology for us and so on, with de-risk what we are trying to do. The only thing that you have to be careful is that what are, do you de-risking? If you are going to get a subcontractor or somebody else to come and say, "Okay, you give me the CO2, I'll build the well and put it into the ground." If there is any problem with the well, or it comes out, the liability is yours, then you haven't done anything. It has to be that somebody says, "I'll take the CO2, and then you don't have to worry about anything. I'm responsible if I put it in the ground. If it ever comes out or any other issues, I'll take the liability for that." It is worthwhile, I think. Very clear. How is your L.A. SAF project progressing, sustainable aviation fuel? We have basically done the engineering for that. We have gotten all of the critical permits. We are in the middle of building that. We hope that that plant comes on the stream in end of 2025, beginning of 2026. It is going to be a great facility, making sustainable airline fuel and a unique kind of sustainable airline fuel because we have added some special units to make the quality even better. It will be 25,000 bbl a day, which is 320,000 gal a year of, more than that, of 340,000 gal a year of sustainable airline fuel. The facility that we have is connected directly by pipeline to Los Angeles Airport. We are pretty excited about that project there. You don't lack for projects, that's for sure. How's the New York Green Hydrogen project progressing? That is under construction. We obviously have the power allocation, which was the most important thing, and we are building that. That's not a huge plant. That's about 35 ton a year, 35 ton a day. We think that plant will be a very good position to provide green hydrogen fuel for fuel cell trucks in the New York and Massachusetts, and, I mean, northeastern part of the United States. With hydrogen in that plant, we are going to not only make the green hydrogen, but we are going to liquefy it. Once you liquefy the hydrogen, you can transport it at low cost anywhere. Today, we make liquid hydrogen in Canada and sell it in California and make a lot of money. That plant will have a lot of flexibility. A bigger project, your Texas Green Hydrogen plant, more recently announced. How's that progressing? The Texas Green Hydrogen plant? Yeah. The Texas Green Hydrogen plant is about a $4 billion investment to produce green hydrogen in northern Texas, near Oklahoma. That plant will be an integrated plant, where we will have wind, solar, about 1,500 MW, and we convert that to about 200 ton a day of hydrogen, that we will liquefy and use it for, again, it's centrally located in the U.S., and that can go everywhere for, basically, fueling trucks. That one, we are in a joint venture with AES, the power company. Again, on that one, we are joint venturing the production because they have expertise in the power production. Air Products is the sole off-taker of the product, so we are not creating the competitor. How is now the U.S. pipeline for new projects, post these we've discussed? Huge. The potential is just absolutely astronomical in terms of the amount of things that can be. I mean, you just, all you need to do is just take the state of California and go through the regulations that they are putting in place in terms of zero-emission vehicles. I mean, there will be a lot of product required. I'm very happy that we have. You know, we have been working on this energy transition, as you know, from the day I joined the company in 2014. Right now, if somebody tries to do what we are doing, they are about 10 years behind or eight years behind. That, and we think that is worth a lot. How do you manage this entire transition, these projects? How do you allocate resources? How do you prioritize the projects? What's the organizational structure that's realizing these projects coming to fruition? Well, that's an excellent question. We have, significantly, obviously, increased our workforce. We have hired close to 4,000 new people in the last two years, even during COVID. The fortunate thing about Air Products is that not only do we have good people, but the fortunate thing is because of what we are doing and because of the way we have defined the purpose of the company, that we have a higher purpose, which is more than just making a buck, and we are trying to do something about climate change, that especially the younger generation is very focused on. It is. We have no problem whatsoever in hiring people and hiring very good people, and we are very fortunate on that, and we are fortunate to have all this. As a result, we have the resources, and then we have been operating all over the world. We have focused our operations from an engineering point of view. In U.S., we have engineering center in Allentown, with a lot of people in it. We have built a significant engineering center in Houston. We have an engineering center near London. We have developed a pretty good-sized engineering center in Netherlands now. We have a huge engineering center in India, close to 1,500 people, and we have almost 1,500 people engineering center in Shanghai. When you look at these things, there are six centers. With all of the digital capabilities, we really can work on a project 24 hours a day, from the different offices, and that makes you a lot more efficient. In terms of execution, we obviously have hired a lot of very experienced people. But as I said, we don't have any issue acquiring talent, which we are very fortunate about. You know us very well, David. I mean, we try to have a collegial, forward-looking, and diverse organization. Everybody is welcome. We try to make our work environment such that people like to come to work, not because they have to come to work to get a salary, and we are doing something positive. Because, honestly, can you imagine in the past few days, some of our people looking outside and saying, "Look, the last six months, I'm going to be working on a project that is going to do something about this." That's pretty exciting. Yeah, it is, and, we thank you for that. Being so forward-looking. I want to ask about Jazan. It is not clean energy, but it's your largest project to date. One, how is it operating? Two, are there any lessons you can learn from that successful execution, applied to the rest of your backlog? With Jazan, it is, thank God, it's operating very successfully. Quite frankly, now that we have disclosed the numbers, you can calculate the return. That project is a lot better than what we say. For every dollar we invest, you get $0.10 operating profit. It's a hell of a lot better than that. We are very excited about it. The lessons that we have learned, why did we win Jazan? Why would Saudi Aramco, with all of its might, they don't need our cash. Why would they give such a big project to a partner? The reason is, number one, we had the technology. Nobody else has. I mean, that is in a space, gasification, and it is the technology that we bought from Shell and GE. That has distinguished us. Most of the refineries in the world are going to do what Jazan is doing. That is going to create a huge opportunity for us. Sometimes people say, "What have you done with gasification?" Jazan is gasification, $12 billion of gasification project. We had the technology, and the second thing is we had the track record of demonstrating to Saudi Aramco that we built the air separation unit, which was a big project, $2 billion project. We built that ahead of everybody else in that refinery. We had that plant operating to produce hydrogen, to oxygen and nitrogen, three years before they finished the refinery. They see that you can perform, you have the technology, and we had the commitment, and we had built a relationship. It all goes together. We have, I'm very proud to say, we have a relationship from the CEO of Saudi Aramco, all the way down to the person who is running the facility and the operator. That is what it takes. It takes a long time to do that. We started working on the Jazan thing in October of 2014, about three months after I started. It took us a long time to develop the relationship, develop the track record, and so on, and end up with that kind of a project. It's doing very well, and obviously, it is contributing to our bottom line. We are very open that is now contributing next year, it will contribute $1.45 per share to our bottom line. That is times 220 million shares. That's another one. Last question. Broadly speaking, how demand trends by region, by business right now? I mean, we run the business. The way we run the business is that we have the so-called day-to-day operation, very decentralized. We have a business unit president for Americas, for Europe, for Middle East, and for Asia. These business unit presidents, who are very experienced people, are responsible for running what they have in the most productive way, keep the plants running, serve the customers, and all. We have what is called project development, which is people who go and look for and develop these big projects. Those people, we have about 50 of them, very experienced people. They report to me directly, because I'm involved in all of these big projects. I run that part of the business directly. We have our engineering and project execution, which is really the responsibility of Dr. Serhan, who is the, what we call our Chief Operating Officer. Get that. It's very well, yeah. We'll stop there. Seifi, Sid, thank you very much. Thanks for having me. Thank you. Appreciate it.