Supplemental Information

3 Months Ended

Dec. 31, 2023

Disclosure Text Block Supplement [Abstract]

Supplemental Information

SUPPLEMENTAL INFORMATION

Related Party Transactions

We have related party sales to some of our equity affiliates and joint venture partners as well as other income primarily from fees charged for use of Air Products' patents and technology. Sales to and other income from related parties totaled approximately $95 and $80 for the three months ended 31 December 2023 and 2022, respectively. Sales agreements with related parties include terms that are consistent with those that we believe would have been negotiated at an arm’s length with an independent party. As of 31 December 2023 and 30 September 2023, our consolidated balance sheets included related party trade receivables of approximately $90 and $80, respectively.

Total debt owed to related parties was $294.8 and $328.3 as of 31 December 2023 and 30 September 2023, respectively, of which $136.9 and $177.6, respectively, was reflected within "Current portion of long-term debt" on our consolidated balance sheets. Our related party debt primarily includes a loan with our joint venture partner, Lu’An Clean Energy Company.

Uzbekistan Asset Purchase

On 25 May 2023, we entered into an investment agreement with the Government of the Republic of Uzbekistan and Uzbekneftegaz JSC (“UNG”) to purchase a natural gas-to-syngas processing facility in Qashqadaryo Province, Uzbekistan, for $1 billion. Under the agreement, Air Products will acquire, own, and operate the facility and supply all offtake products to UNG under a 15-year on-site contract, with UNG supplying the feedstock natural gas and utilities. We are accounting for the transaction as a financing arrangement because UNG has the right to reacquire the facility at the end of the contract term. Accordingly, progress payments of approximately $910, of which $100 was paid during the first quarter of fiscal year 2024, are reflected within "Financing receivables" on our consolidated balance sheet as of 31 December 2023.

Accrual for Business and Asset Actions

In fiscal year 2023, we recognized an expense of $27.0 for severance and other benefits associated with position eliminations and restructuring of certain organizations globally. The charge was not recorded in segment results. The table below reconciles the charge to the carrying amount of the accrual included within "Payables and accrued liabilities" on our consolidated balance sheets as of 31 December 2023:

Fiscal year 2023 charge	$27.0
Cash payments	(6.8)
Currency translation adjustment	(0.4)
Accrual as of 30 September 2023	$19.8
Cash payments	(3.4)
Currency translation adjustment	0.4
Accrual as of 31 December 2023	$16.8

Debt

Third-party long-term debt was $11,715.4 and $9,280.6 as of 31 December 2023 and 30 September 2023, respectively. The increase from 30 September 2023 was primarily due to the issuance of commercial paper as well as additional borrowings under the project financing associated with the NEOM Green Hydrogen Project as discussed in Note 3, Variable Interest Entities. As of 31 December 2023, we classified the outstanding commercial paper, which totaled approximately $1.3 billion, as well as our 3.35% Senior Note of $400 maturing in July 2024 as long-term debt as we have the ability to refinance the debt under our $2.75 billion revolving credit agreement (the “2021 Credit Agreement”) maturing in 2026. Our current intent is to refinance this debt via the U.S. public debt market.

Changes in Estimates

Changes in estimates on sale of equipment projects accounted for under the cost incurred input method are recognized as a cumulative adjustment for the inception-to-date effect of such change. We recorded changes to project estimates that unfavorably impacted operating income by approximately $30 and $25 for the three months ended 31 December 2023 and 2022, respectively.

Income Taxes

Our effective tax rate was 17.9% and 18.9% for the three months ended 31 December 2023 and 2022, respectively.

Income tax payments, net of refunds, were $90.1 and $88.5 for the three months ended 31 December 2023 and 2022, respectively.