UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended 30 June 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-04534

AIR PRODUCTS AND CHEMICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	23-1274455
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1940 Air Products Boulevard

Allentown, Pennsylvania 18106-5500

(Address of principal executive offices and Zip Code)

610-481-4911

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00 per share	APD	New York Stock Exchange
1.000% Euro Notes due 2025	APD25	New York Stock Exchange
0.500% Euro Notes due 2028	APD28	New York Stock Exchange
0.800% Euro Notes due 2032	APD32	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock, par value $1 per share, outstanding at 30 June 2022 was 221,798,982.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended 30 June 2022

TABLE OF CONTENTS

Forward-Looking Statements	3
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Income Statements – Three and Nine Months Ended 30 June 2022 and 2021	5
Consolidated Comprehensive Income Statements – Three and Nine Months Ended 30 June 2022 and 2021	6
Consolidated Balance Sheets – 30 June 2022 and 30 September 2021	7
Consolidated Statements of Cash Flows – Nine Months Ended 30 June 2022 and 2021	8
Consolidated Statements of Equity – Three and Nine Months Ended 30 June 2022 and 2021	9
Notes to Consolidated Financial Statements	11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3. Quantitative and Qualitative Disclosures About Market Risk	59
Item 4. Controls and Procedures	59
PART II—OTHER INFORMATION
Item 6. Exhibits	60
Signature	61

2

FORWARD-LOOKING STATEMENTS

This quarterly report contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts and can generally be identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” "future," “goal,” “intend,” “may,” “outlook,” “plan,” “positioned,” “possible,” “potential,” “project,” “should,” “target,” “will,” “would,” and similar expressions or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements. Forward-looking statements are based on management’s expectations and assumptions as of the date of this report and are not guarantees of future performance. You are cautioned not to place undue reliance on our forward-looking statements.

Forward-looking statements may relate to a number of matters, including expectations regarding revenue, margins, expenses, earnings, tax provisions, cash flows, pension obligations, share repurchases or other statements regarding economic conditions or our business outlook; statements regarding plans, projects, strategies and objectives for our future operations, including our ability to win new projects and execute the projects in our backlog; and statements regarding our expectations with respect to pending legal claims or disputes. While forward-looking statements are made in good faith and based on assumptions, expectations and projections that management believes are reasonable based on currently available information, actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation:

•the duration and impacts of the ongoing COVID-19 global pandemic and efforts to contain its transmission, including the effect of these factors on our business, our customers, economic conditions and markets generally;

•changes in global or regional economic conditions, inflation and supply and demand dynamics in the market segments we serve, or in the financial markets that may affect the availability and terms on which we may obtain financing;

•the ability to implement price increases to offset cost increases;

•disruptions to our supply chain and related distribution delays and cost increases;

•risks associated with having extensive international operations, including political risks, risks associated with unanticipated government actions and risks of investing in developing markets;

•project delays, contract terminations, customer cancellations, or postponement of projects and sales;

•our ability to develop, operate, and manage costs of large scale and technically complex projects, including gasification and hydrogen projects;

•the future financial and operating performance of major customers, joint ventures, and equity affiliates;

•our ability to develop, implement, and operate new technologies;

•our ability to execute the projects in our backlog and refresh our pipeline of new projects;

•tariffs, economic sanctions and regulatory activities in jurisdictions in which we and our affiliates and joint ventures operate;

•the impact of environmental, tax, or other legislation, as well as regulations and other public policy initiatives affecting our business and the business of our affiliates and related compliance requirements, including legislation, regulations, or policies intended to address global climate change;

•changes in tax rates and other changes in tax law;

•the timing, impact, and other uncertainties relating to acquisitions and divestitures, including our ability to integrate acquisitions and separate divested businesses, respectively;

•risks relating to cybersecurity incidents, including risks from the interruption, failure or compromise of our information systems;

3

FORWARD-LOOKING STATEMENTS (CONTINUED)

•catastrophic events, such as natural disasters and extreme weather events, public health crises, acts of war, including Russia’s invasion of Ukraine and the ongoing civil war in Yemen, or terrorism;

•the impact on our business and customers of price fluctuations in oil and natural gas and disruptions in markets and the economy due to oil and natural gas price volatility;

•costs and outcomes of legal or regulatory proceedings and investigations;

•asset impairments due to economic conditions or specific events;

•significant fluctuations in inflation, interest rates and foreign currency exchange rates from those currently anticipated;

•damage to facilities, pipelines or delivery systems, including those we own or operate for third parties;

•availability and cost of electric power, natural gas, and other raw materials; and

•the success of productivity and operational improvement programs.

In addition to the foregoing factors, forward-looking statements contained herein are qualified with respect to the risks disclosed elsewhere in this document, including in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 3, Quantitative and Qualitative Disclosures About Market Risk, as well as with respect to the risks described in Item 1A, Risk Factors, to our Annual Report on Form 10-K for the fiscal year ended 30 September 2021. Any of these factors, as well as those not currently anticipated by management, could cause our results of operations, financial condition or liquidity to differ materially from what is expressed or implied by any forward-looking statement. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.

4

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED INCOME STATEMENTS

(Unaudited)

	Three Months Ended		Nine Months Ended
	30 June		30 June
(Millions of dollars, except for share and per share data)	2022	2021	2022	2021
Sales	$3,189.3	$2,604.7	$9,128.6	$7,481.9
Cost of sales	2,342.1	1,801.9	6,717.3	5,179.8
Facility closure	—	—	—	23.2
Selling and administrative	216.9	213.3	676.7	626.3
Research and development	24.8	23.2	71.8	67.8
Gain on exchange with joint venture partner	—	—	—	36.8
Other income (expense), net	21.9	10.8	49.5	43.1
Operating Income	627.4	577.1	1,712.3	1,664.7
Equity affiliates' income	116.1	63.2	384.7	202.3
Interest expense	32.7	35.6	95.5	108.4
Other non-operating income (expense), net	10.5	21.1	42.2	56.5
Income From Continuing Operations Before Taxes	721.3	625.8	2,043.7	1,815.1
Income tax provision	134.2	101.7	370.2	337.5
Income From Continuing Operations	587.1	524.1	1,673.5	1,477.6
Income from discontinued operations, net of tax	—	8.2	—	18.5
Net Income	587.1	532.3	1,673.5	1,496.1
Net income (loss) attributable to noncontrolling interests of continuing operations	5.0	(1.3)	0.5	7.4
Net Income Attributable to Air Products	$582.1	$533.6	$1,673.0	$1,488.7
Net Income Attributable to Air Products
Net income from continuing operations	$582.1	$525.4	$1,673.0	$1,470.2
Net income from discontinued operations	—	8.2	—	18.5
Net Income Attributable to Air Products	$582.1	$533.6	$1,673.0	$1,488.7
Per Share Data*
Basic EPS from continuing operations	$2.62	$2.37	$7.54	$6.63
Basic EPS from discontinued operations	—	0.04	—	0.08
Basic EPS Attributable to Air Products	$2.62	$2.41	$7.54	$6.72
Diluted EPS from continuing operations	$2.62	$2.36	$7.52	$6.61
Diluted EPS from discontinued operations	—	0.04	—	0.08
Diluted EPS Attributable to Air Products	$2.62	$2.40	$7.52	$6.69
Weighted Average Common Shares (in millions)
Basic	222.0	221.6	222.0	221.6
Diluted	222.5	222.5	222.5	222.5

*Earnings per share ("EPS") is calculated independently for each component and may not sum to total EPS due to rounding.

The accompanying notes are an integral part of these statements.

5

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

(Unaudited)

	Three Months Ended
	30 June
(Millions of dollars)	2022	2021
Net Income	$587.1	$532.3
Other Comprehensive (Loss) Income, net of tax:
Translation adjustments, net of tax of $27.7 and ($3.5)	(576.1)	128.7
Net (loss) gain on derivatives, net of tax of ($8.4) and $7.1	(16.0)	8.5
Reclassification adjustments:
Derivatives, net of tax of $3.7 and ($3.9)	11.4	(12.0)
Pension and postretirement benefits, net of tax of $5.7 and $6.1	17.5	18.7
Total Other Comprehensive (Loss) Income	(563.2)	143.9
Comprehensive Income	23.9	676.2
Net Income (Loss) Attributable to Noncontrolling Interests	5.0	(1.3)
Other Comprehensive (Loss) Income Attributable to Noncontrolling Interests	(18.2)	1.4
Comprehensive Income Attributable to Air Products	$37.1	$676.1

	Nine Months Ended
	30 June
(Millions of dollars)	2022	2021
Net Income	$1,673.5	$1,496.1
Other Comprehensive (Loss) Income, net of tax:
Translation adjustments, net of tax of $44.5 and ($5.1)	(594.3)	399.8
Net (loss) gain on derivatives, net of tax of ($34.8) and ($3.4)	(55.9)	17.1
Reclassification adjustments:
Derivatives, net of tax of $18.4 and $7.3	56.1	22.7
Pension and postretirement benefits, net of tax of $16.6 and $17.9	49.4	55.3
Total Other Comprehensive (Loss) Income	(544.7)	494.9
Comprehensive Income	1,128.8	1,991.0
Net Income Attributable to Noncontrolling Interests	0.5	7.4
Other Comprehensive (Loss) Income Attributable to Noncontrolling Interests	(10.0)	36.7
Comprehensive Income Attributable to Air Products	$1,138.3	$1,946.9

The accompanying notes are an integral part of these statements.

6

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	30 June	30 September
(Millions of dollars, except for share and per share data)	2022	2021
Assets
Current Assets
Cash and cash items	$2,957.4	$4,468.9
Short-term investments	357.6	1,331.9
Trade receivables, net	1,768.6	1,451.3
Inventories	514.0	453.9
Prepaid expenses	179.3	119.4
Other receivables and current assets	590.4	550.9
Total Current Assets	6,367.3	8,376.3
Investment in net assets of and advances to equity affiliates	3,339.5	1,649.3
Plant and equipment, at cost	28,349.1	27,488.8
Less: accumulated depreciation	14,217.4	14,234.2
Plant and equipment, net	14,131.7	13,254.6
Goodwill, net	866.8	911.5
Intangible assets, net	376.8	420.7
Noncurrent lease receivables	641.9	740.3
Other noncurrent assets	1,765.0	1,506.5
Total Noncurrent Assets	21,121.7	18,482.9
Total Assets	$27,489.0	$26,859.2
Liabilities and Equity
Current Liabilities
Payables and accrued liabilities	$2,544.4	$2,218.3
Accrued income taxes	107.9	93.9
Short-term borrowings	207.3	2.4
Current portion of long-term debt	547.3	484.5
Total Current Liabilities	3,406.9	2,799.1
Long-term debt	6,348.0	6,875.7
Long-term debt – related party	483.6	274.6
Other noncurrent liabilities	1,726.2	1,640.9
Deferred income taxes	1,308.6	1,180.9
Total Noncurrent Liabilities	9,866.4	9,972.1
Total Liabilities	13,273.3	12,771.2
Commitments and Contingencies - See Note 13
Air Products Shareholders’ Equity
Common stock (par value $1 per share; issued 2022 and 2021 - 249,455,584 shares)	249.4	249.4
Capital in excess of par value	1,130.8	1,115.8
Retained earnings	16,297.9	15,678.3
Accumulated other comprehensive loss	(2,050.6)	(1,515.9)
Treasury stock, at cost (2022 - 27,656,602 shares; 2021 - 28,058,829 shares)	(1,983.6)	(1,987.9)
Total Air Products Shareholders’ Equity	13,643.9	13,539.7
Noncontrolling Interests	571.8	548.3
Total Equity	14,215.7	14,088.0
Total Liabilities and Equity	$27,489.0	$26,859.2

The accompanying notes are an integral part of these statements.

7

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	30 June
(Millions of dollars)	2022	2021
Operating Activities
Net income	$1,673.5	$1,496.1
Less: Net income attributable to noncontrolling interests of continuing operations	0.5	7.4
Net income attributable to Air Products	1,673.0	1,488.7
Income from discontinued operations	—	(18.5)
Income from continuing operations attributable to Air Products	1,673.0	1,470.2
Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization	1,005.4	988.7
Deferred income taxes	69.0	87.0
Facility closure	—	23.2
Undistributed earnings of equity method investments	(184.8)	(77.8)
Gain on sale of assets and investments	(21.4)	(30.3)
Share-based compensation	37.0	34.6
Noncurrent lease receivables	65.5	78.3
Other adjustments	(139.2)	(26.8)
Working capital changes that provided (used) cash, excluding effects of acquisitions:
Trade receivables	(389.7)	(84.3)
Inventories	(80.8)	(36.4)
Other receivables	(22.8)	53.6
Payables and accrued liabilities	320.1	139.8
Other working capital	(118.1)	(110.9)
Cash Provided by Operating Activities	2,213.2	2,508.9
Investing Activities
Additions to plant and equipment, including long-term deposits	(2,139.1)	(1,847.8)
Acquisitions, less cash acquired	(65.1)	(9.8)
Investment in and advances to unconsolidated affiliates	(1,650.9)	(75.9)
Proceeds from sale of assets and investments	32.8	30.0
Purchases of investments	(1,247.9)	(1,953.8)
Proceeds from investments	2,219.2	1,535.2
Other investing activities	6.9	4.1
Cash Used for Investing Activities	(2,844.1)	(2,318.0)
Financing Activities
Long-term debt proceeds	357.0	160.9
Payments on long-term debt	(400.0)	(462.8)
Net increase in commercial paper and short-term borrowings	255.0	38.7
Dividends paid to shareholders	(1,023.9)	(924.7)
Proceeds from stock option exercises	16.3	8.1
Other financing activities	(16.5)	(23.3)
Cash Used for Financing Activities	(812.1)	(1,203.1)
Discontinued Operations
Cash provided by operating activities	—	6.7
Cash provided by investing activities	—	—
Cash provided by financing activities	—	—
Cash Provided by Discontinued Operations	—	6.7
Effect of Exchange Rate Changes on Cash	(68.5)	44.1
Decrease in cash and cash items	(1,511.5)	(961.4)
Cash and Cash items – Beginning of year	4,468.9	5,253.0
Cash and Cash Items – End of Period	$2,957.4	$4,291.6

The accompanying notes are an integral part of these statements.

8

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

	Nine Months Ended
	30 June 2022
(Millions of dollars, except for per share data)	Common  Stock	Capital in  Excess of  Par Value	Retained  Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury  Stock	Air Products Shareholders' Equity	Non- controlling Interests	Total Equity
Balance at 30 September 2021	$249.4	$1,115.8	$15,678.3	($1,515.9)	($1,987.9)	$13,539.7	$548.3	$14,088.0
Net income	—	—	1,673.0	—	—	1,673.0	0.5	1,673.5
Other comprehensive loss	—	—	—	(534.7)	—	(534.7)	(10.0)	(544.7)
Dividends on common stock (per share $4.74)	—	—	(1,051.2)	—	—	(1,051.2)	—	(1,051.2)
Dividends to noncontrolling interests	—	—	—	—	—	—	(1.0)	(1.0)
Share-based compensation	—	35.6	—	—	—	35.6	—	35.6
Issuance of treasury shares for stock option and award plans	—	(20.9)	—	—	4.3	(16.6)	—	(16.6)
Investments by noncontrolling interests	—	—	—	—	—	—	33.0	33.0
Purchase of noncontrolling interests	—	—	—	—	—	—	(1.9)	(1.9)
Other equity transactions	—	0.3	(2.2)	—	—	(1.9)	2.9	1.0
Balance at 30 June 2022	$249.4	$1,130.8	$16,297.9	($2,050.6)	($1,983.6)	$13,643.9	$571.8	$14,215.7

	Nine Months Ended
	30 June 2021
(Millions of dollars, except for per share data)	Common  Stock	Capital in  Excess of  Par Value	Retained  Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury  Stock	Air Products Shareholders' Equity	Non- controlling Interests	Total Equity
Balance at 30 September 2020	$249.4	$1,094.8	$14,875.7	($2,140.1)	($2,000.0)	$12,079.8	$363.3	$12,443.1
Net income	—	—	1,488.7	—	—	1,488.7	7.4	1,496.1
Other comprehensive income	—	—	—	458.2	—	458.2	36.7	494.9
Dividends on common stock (per share $4.34)	—	—	(960.5)	—	—	(960.5)	—	(960.5)
Dividends to noncontrolling interests	—	—	—	—	—	—	(4.6)	(4.6)
Share-based compensation	—	32.9	—	—	—	32.9	—	32.9
Issuance of treasury shares for stock option and award plans	—	(21.7)	—	—	10.0	(11.7)	—	(11.7)
Investments by noncontrolling interests	—	—	—	—	—	—	10.0	10.0
Purchase of noncontrolling interests	—	(1.2)	—	—	—	(1.2)	(4.1)	(5.3)
Other equity transactions	—	0.4	(3.7)	—	—	(3.3)	—	(3.3)
Balance at 30 June 2021	$249.4	$1,105.2	$15,400.2	($1,681.9)	($1,990.0)	$13,082.9	$408.7	$13,491.6

The accompanying notes are an integral part of these statements.

9

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY (cont.)

(Unaudited)

	Three Months Ended
	30 June 2022
(Millions of dollars, except for per share data)	Common  Stock	Capital in  Excess of  Par Value	Retained  Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury  Stock	Air Products Shareholders' Equity	Non- controlling Interests	Total Equity
Balance at 31 March 2022	$249.4	$1,120.8	$16,075.9	($1,505.6)	($1,985.4)	$13,955.1	$555.6	$14,510.7
Net income	—	—	582.1	—	—	582.1	5.0	587.1
Other comprehensive loss	—	—	—	(545.0)	—	(545.0)	(18.2)	(563.2)
Dividends on common stock (per share $1.62)	—	—	(359.3)	—	—	(359.3)	—	(359.3)
Share-based compensation	—	9.9	—	—	—	9.9	—	9.9
Issuance of treasury shares for stock option and award plans	—	0.1	—	—	1.8	1.9	—	1.9
Investments by noncontrolling interests	—	—	—	—	—	—	29.4	29.4
Other equity transactions	—	—	(0.8)	—	—	(0.8)	—	(0.8)
Balance at 30 June 2022	$249.4	$1,130.8	$16,297.9	($2,050.6)	($1,983.6)	$13,643.9	$571.8	$14,215.7

	Three Months Ended
	30 June 2021
(Millions of dollars, except for per share data)	Common  Stock	Capital in  Excess of  Par Value	Retained  Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury  Stock	Air Products Shareholders' Equity	Non- controlling Interests	Total Equity
Balance at 31 March 2021	$249.4	$1,094.4	$15,200.0	($1,824.4)	($1,993.2)	$12,726.2	$408.6	$13,134.8
Net income	—	—	533.6	—	—	533.6	(1.3)	532.3
Other comprehensive income	—	—	—	142.5	—	142.5	1.4	143.9
Dividends on common stock (per share $1.50)	—	—	(332.0)	—	—	(332.0)	—	(332.0)
Dividends to noncontrolling interests	—	—	—	—	—	—	(1.2)	(1.2)
Share-based compensation	—	10.6	—	—	—	10.6	—	10.6
Issuance of treasury shares for stock option and award plans	—	—	—	—	3.2	3.2	—	3.2
Investment by noncontrolling interests	—	—	—	—	—	—	1.3	1.3
Other equity transactions	—	0.2	(1.4)	—	—	(1.2)	(0.1)	(1.3)
Balance at 30 June 2021	$