Financial Data and Key Metrics Changes - Adjusted earnings per share (EPS) for the third quarter was $3.09, exceeding guidance and higher than the previous year, excluding the impact of LNG business sales [4][8] - Sales volume decreased by 4% year-over-year, primarily due to the sale of the LNG business and lower helium demand [8][10] - Total company price increased by 1%, with a 2% improvement for the merchant business [8][10] - Adjusted operating income remained unchanged, with operating margin flat but improved by approximately 300 basis points sequentially due to favorable volume and productivity improvements [9][10] Business Line Data and Key Metrics Changes - The core industrial gas business showed resilience, with strong performance in non-helium products across all regions [4][9] - Helium EPS contributions were down about 4% versus the prior year, with an anticipated headwind of around 55 to 60 cents for the full year [24][25] - The company is executing a global cost reduction plan expected to generate annual savings of $185 to $195 million [5][30] Market Data and Key Metrics Changes - The Americas experienced a 6% decline in volume, primarily due to project exits and lower helium demand, although strong on-site volumes were noted [36][38] - The company anticipates that the helium market may stabilize in the coming years, despite current down cycles [66][70] Company Strategy and Development Direction - The company aims for high single-digit adjusted EPS growth starting in fiscal year 2026, with a target of operating margins of 30% and return on capital employed (ROCE) in the mid to high teens by 2030 [7][8] - Investments are being made in AI and digital transformation tools to enhance productivity [6][30] - The company is focused on disciplined capital allocation and project execution, particularly in hydrogen and electronics sectors [6][8] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the economic outlook, recognizing significant global uncertainties [11] - The company is optimistic about the competitiveness of its projects, particularly in the blue ammonia market [16][51] - Inflation and tariffs are ongoing concerns, impacting pricing strategies [82] Other Important Information - The company has committed to reducing headcount by about 10% as part of its productivity actions, with approximately 60% of this process completed [30] - Capital expenditures for the fiscal year are expected to be around $5 billion [11] Q&A Session Summary Question: Update on the plan to use third parties at Darrow for ammonia and carbon capturing - Management is optimistic about finalizing partnerships by the end of the current year, with competitive CapEx numbers for their projects [14][16] Question: Average prices year over year and dissociation characteristics - Management did not disclose specific numbers but indicated that helium continues to be a headwind, and the goal for dissociation remains a 10% loss [20][21][24] Question: Cost opportunities and digital initiatives - The cost opportunities discussed are in addition to previously outlined savings, with a focus on digital and energy management initiatives [28][30][32] Question: Volume performance in the Americas - The decline in volume was primarily due to project exits and lower helium demand, with strong performance in other areas [35][38] Question: Update on low-risk projects and bidding activity - Management continues to see project activity, particularly in electronics in Asia, and will provide updates on smaller projects in future calls [44][46] Question: Long-term return on capital employed goals - Current ROC is around 11.1%, with expectations to improve as capital expenditures are reduced and cash generation increases [78][80] Question: Helium market cycle outlook - Management believes the helium market may stabilize, but significant changes in supply and demand dynamics are expected [66][70] Question: Update on underperforming projects - Projects in Edmonton, Rotterdam, and Arizona are on schedule, with no significant changes anticipated [86][88]

Financial Data and Key Metrics Changes - The second quarter adjusted earnings per share (EPS) was $2.69, below the previous guidance of $2.75 to $2.85, primarily due to changes in cost estimates and lower helium contributions [21][24] - Sales volume decreased by 3%, with 2% attributed to the LNG business divestment, while total company price increased by 1% [21][22] - Adjusted operating income decreased by 9%, mainly due to the LNG divestiture and unfavorable helium impact, with operating margin down by 210 basis points [22][24] Business Line Data and Key Metrics Changes - The core industrial gas business generated approximately $12 billion in sales with an operating margin of 24% [6] - The LNG divestiture accounted for a $0.12 headwind on EPS, while helium volume was down, largely offset by favorable on-site volumes [22][23] - The company anticipates base business growth of 2% to 5% for the fiscal year despite a 5% headwind from helium [24] Market Data and Key Metrics Changes - The company has seen a slight uptick in manufacturing before tariffs were implemented, but expects a negative impact moving forward, particularly in the U.S. and China [96] - The helium market has become more cyclical, with operating income still higher than pre-COVID levels despite recent declines [81] Company Strategy and Development Direction - The company plans to refocus on its core industrial gas business and aims to invest about $1.5 billion per year in industrial gas projects going forward [11][19] - There is a commitment to return to operational excellence and improve margins through disciplined cost productivity and pricing [6][11] - The company intends to pursue clean energy opportunities that align with its traditional industrial gases model, focusing on projects with contracted take-or-pay agreements [7][19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the green hydrogen project in Saudi Arabia and the blue hydrogen facility in Louisiana, emphasizing the need for firm off-take agreements before proceeding [12][19] - The company expects to achieve high single-digit adjusted EPS growth and improved operating margins in the coming years, despite challenges from underperforming projects [18][19] - Management acknowledged the importance of transparent communication with investors and emphasized a disciplined approach to capital allocation [19] Other Important Information - The company has identified approximately 2,400 positions for reduction, aiming for a run rate of around $100 million in savings from these actions [51] - The total cost for the previously announced net zero hydrogen project in Edmonton is now expected to be $3.3 billion, with operations starting between late 2027 and early 2028 [15] Q&A Session Summary Question: What is the EBITDA contribution from underperforming projects? - Management expects to recover capital on an undiscounted basis, indicating that the EBITDA contribution will not meet initial expectations due to significant capital increases [27][28] Question: What is the status of the Alberta project and its cost overruns? - Management acknowledged self-inflicted issues leading to delays and cost increases, emphasizing the need for improved project management and contractor performance [29][30] Question: How does the company view its gasification projects? - The EPS contribution from gasification projects in China has been close to zero, with management focusing on optimizing underperforming assets [33][35] Question: What is the rationale for continuing the Louisiana project? - The company aims to reduce total CapEx while focusing on hydrogen production, with plans to potentially divest non-core elements of the project [40][41] Question: What are the expected cash flow trends over the next few years? - Management anticipates being cash flow positive as early as next year, with a focus on maintaining a neutral cash flow position [76][104]

Financial Data and Key Metrics Changes - The second quarter adjusted earnings per share (EPS) was $2.69, below previous guidance of $2.75 to $2.85, primarily due to changes in cost estimates and lower helium contributions [20][24] - Sales volume decreased by 3%, with 2% attributed to the LNG business divestment, while total company price increased by 1% [20][21] - Adjusted operating income decreased by 9%, mainly due to LNG divestiture and unfavorable helium impact, with operating margin down by 210 basis points [21][22] Business Line Data and Key Metrics Changes - The core industrial gas business generated approximately $12 billion in sales with an operating margin of 24% [6] - The LNG business divestiture accounted for a $0.12 headwind on EPS, while helium volume was down, offset by favorable on-site volumes [22][23] - The company anticipates base business growth of 2% to 5% for the fiscal year despite a 5% headwind in helium [24] Market Data and Key Metrics Changes - The company has become the leading supplier of hydrogen and high purity gases for the electronics industry, with significant pipeline networks in the U.S. Gulf Coast [4][5] - The company expects to unlock significant potential with projects in Saudi Arabia and Louisiana, aiming for a 30% adjusted operating margin by 2030 [17][18] Company Strategy and Development Direction - The company plans to refocus on its core industrial gas business and invest approximately $1.5 billion per year in industrial gas projects [10][11] - The strategy includes canceling underperforming projects and prioritizing high-return opportunities with contracted take-or-pay agreements [12][14] - The company aims to maximize profitability through operational excellence and rightsizing the organization [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding green hydrogen projects in Saudi Arabia and Louisiana, focusing on derisking strategies [11][12] - The company anticipates high single-digit adjusted EPS growth and improved operating margins in the coming years, despite challenges from underperforming projects [17][18] - Management emphasized the importance of transparent communication with investors and a disciplined approach to capital allocation [18] Other Important Information - The company has identified approximately 2,400 positions for reduction, aiming for a run rate of around $100 million in savings from FY 2025 actions [50][51] - The total cost for the net zero hydrogen project in Edmonton is now expected to be $3.3 billion, with a projected on-stream date between late 2027 and early 2028 [14] Q&A Session Summary Question: What is the EBITDA contribution from underperforming projects? - Management expects to recover capital on an undiscounted basis, indicating a challenging situation with significant increases in capital costs [28][29] Question: What is the status of the Alberta project? - The Alberta project has faced delays and cost overruns due to construction challenges and contractor productivity issues [29][31] Question: What is the rationale for pursuing ammonia in Louisiana? - The company is considering focusing solely on hydrogen, aiming to reduce total CapEx while securing firm offtake agreements [40][41] Question: What is the expected contribution from helium? - Helium remains a volatile earnings contributor, with expectations of continued headwinds in pricing through 2026 and 2027 [78][80] Question: What are the cash flow expectations for 2026? - The company anticipates being cash flow positive, including dividends, with a focus on managing capital expenditures effectively [74][86]