Air Products and Chemicals(APD) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Sales for Q1 2021 were $2.4 billion, up 5% year-over-year driven by strong pricing, higher energy pass-through, and positive currency impact [20] - EBITDA increased to $932 million, a 3% rise compared to the previous year, with an EBITDA margin of nearly 40% despite challenges [19][20] - Adjusted EPS for the quarter was $2.12, comparable to the previous year despite a negative impact from COVID-19 estimated at $0.10 to $0.15 [22] Business Line Data and Key Metrics Changes - Asia sales increased by 4% year-over-year, with a 1% price rise and a 4% volume decline primarily due to Lu'An's impact [27] - Americas sales were flat year-over-year, with a 3% price increase offset by lower volumes due to COVID-19 [29] - EMEA region saw a 13% year-on-year sales growth, with volumes up 5% and a 3% price increase [32] Market Data and Key Metrics Changes - The company experienced a 4% reduction in overall sales due to COVID-19 impacts, particularly affecting the US market [21][35] - The merchant business in Asia showed slight volume declines compared to pre-crisis levels, while Europe faced a larger impact on packaged gases [36] Company Strategy and Development Direction - The company aims to be the safest, most diverse, and most profitable industrial gas company globally, focusing on sustainable solutions for energy and environmental challenges [11][12] - Significant projects include a $2 billion coal to methanol project in Indonesia and the NEOM project in Saudi Arabia, aimed at transitioning to carbon-free energy [14][37] - The company is committed to gasification strategies and expects to announce additional projects in the future [10][16] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding the ongoing impact of COVID-19 on global economies and refrained from providing EPS or CapEx guidance for Q2 or fiscal year 2021 [35] - The company remains optimistic about future growth opportunities in gasification, carbon capture, and hydrogen for mobility [37][38] Other Important Information - A 12% dividend increase was announced, raising the quarterly dividend to $1.50 per share, marking the 39th consecutive year of dividend increases [18] - The company generated nearly $2.6 billion in distributable cash flow over the last 12 months, with over 40% allocated to dividends [24] Q&A Session Summary Question: Impact of Lu'An contract renegotiation on economics - Management indicated that the renegotiation will improve overall returns once the plant is operational again [41] Question: Timing for NEOM project segments - Groundbreaking for NEOM is expected around May or June, with long lead-time equipment already ordered [42] Question: Future projects in China and Lu'An impact - Management reassured that Lu'An is a specific case and that they remain committed to investing in China despite challenges [43] Question: Concerns about COVID-19 impact on future quarters - Management expressed caution about the ongoing pandemic and its potential effects on business, particularly in the US [46] Question: Jazan project ramp-up status - The Jazan facility is in the commissioning phase, with significant support from the company [54] Question: Future green hydrogen projects - Management refrained from providing specifics on potential announcements for green hydrogen projects [70]