apd-20240630

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 2024


☐			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
4.000% Euro Notes due 2035	APD35	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 2024 was 222,314,502.

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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended 30 June 2024

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 2024 and 2023			5
Consolidated Comprehensive Income Statements – Three and Nine Months Ended 30 June 2024 and 2023			6
Consolidated Balance Sheets – 30 June 2024 and 30 September 2023			7
Consolidated Statements of Cash Flows – Nine Months Ended 30 June 2024 and 2023			8
Consolidated Statements of Equity – Three and Nine Months Ended 30 June 2024 and 2023			9
Notes to Consolidated Financial Statements			11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			37
Item 3. Quantitative and Qualitative Disclosures About Market Risk			64
Item 4. Controls and Procedures			65

PART II—OTHER INFORMATION

Item 1. Legal Proceedings			65

Item 5. Other Information			65
Item 6. Exhibits			66
Signature			67

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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 capital expenditures and 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:

•changes in global or regional economic conditions, inflation, and supply and demand dynamics in the market segments we serve, including demand for technologies and projects to limit the impact of global climate change;

•changes 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, scope changes, cost escalations, contract terminations, customer cancellations, or postponement of projects and sales;

•our ability to safely develop, operate, and manage costs of large-scale and technically complex projects;

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

•our ability to develop, implement, and operate new technologies and to market products produced utilizing 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, safety, 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;

•safety incidents relating to our operations;

•the timing, impact, and other uncertainties relating to acquisitions and divestitures, including statements related to the pending sale of our liquefied natural gas process technology and equipment business and its expected impact and timing as well as 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 or those of our business partners or service providers;

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FORWARD-LOOKING STATEMENTS (CONTINUED)

•catastrophic events, such as natural disasters and extreme weather events, pandemics and other public health crises, acts of war, including Russia’s invasion of Ukraine and new and ongoing conflicts in the Middle East, 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 are constructing or that 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 2023. 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.

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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 U.S. Dollars, except for share and per share data)	2024	2023	2024	2023
Sales	$2,985.5	$3,033.9	$8,913.1	$9,408.7
Cost of sales	2,005.6	2,070.7	6,064.3	6,625.8

Selling and administrative expense	235.4	238.7	714.4	724.3
Research and development expense	27.0	29.3	78.1	80.9
Business and asset actions	—	59.0	57.0	244.6



Other income (expense), net	20.1	8.0	42.4	22.9
Operating Income	737.6	644.2	2,041.7	1,756.0
Equity affiliates' income	168.9	165.0	470.6	440.9
Interest expense	55.7	47.4	169.1	129.5
Other non-operating income (expense), net	(1.3)	(11.7)	(25.3)	(26.2)

Income Before Taxes	849.5	750.1	2,317.9	2,041.2
Income tax provision	140.6	139.6	406.5	397.0


Net Income	708.9	610.5	1,911.4	1,644.2
Net income attributable to noncontrolling interests	12.3	14.9	33.1	36.6


Net Income Attributable to Air Products	$696.6	$595.6	$1,878.3	$1,607.6






Per Share Data (U.S. Dollars per share)


Basic earnings per share attributable to Air Products	$3.13	$2.68	$8.44	$7.23



Diluted earnings per share attributable to Air Products	$3.13	$2.67	$8.43	$7.22

Weighted Average Common Shares (in millions)
Basic	222.5	222.4	222.5	222.3
Diluted	222.8	222.8	222.8	222.7

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

(Unaudited)


	Three Months Ended
	30 June
(Millions of U.S. Dollars)	2024	2023
Net Income	$708.9	$610.5
Other Comprehensive Loss, net of tax:
Translation adjustments, net of tax of $4.9 and ($5.0)	(140.2)	(175.8)
Net gain on derivatives, net of tax of ($3.8) and $5.8	13.5	40.8

Reclassification adjustments:

Derivatives, net of tax of $5.1 and ($7.6)	15.5	(24.4)
Pension and postretirement benefits, net of tax of $4.5 and $4.6	13.8	13.5
Total Other Comprehensive Loss	(97.4)	(145.9)
Comprehensive Income	$611.5	$464.6


Net Income Attributable to Noncontrolling Interests	12.3	14.9
Other Comprehensive Income (Loss) Attributable to Noncontrolling Interests	17.8	(4.4)
Comprehensive Income Attributable to Air Products	$581.4	$454.1



	Nine Months Ended
	30 June
(Millions of U.S. Dollars)	2024	2023
Net Income	$1,911.4	$1,644.2
Other Comprehensive Income, net of tax:
Translation adjustments, net of tax of ($8.2) and ($53.6)	16.6	384.8
Net (loss) gain on derivatives, net of tax of $1.9 and $43.4	(65.3)	147.2
Pension and postretirement benefits, net of tax of $— and $2.4	—	6.7
Reclassification adjustments:
Currency translation adjustment	—	(0.3)
Derivatives, net of tax of $2.9 and ($27.4)	8.1	(87.3)
Pension and postretirement benefits, net of tax of $13.2 and $13.0	41.1	39.8
Total Other Comprehensive Income	0.5	490.9
Comprehensive Income	$1,911.9	$2,135.1


Net Income Attributable to Noncontrolling Interests	33.1	36.6
Other Comprehensive (Loss) Income Attributable to Noncontrolling Interests	(57.8)	9.6
Comprehensive Income Attributable to Air Products	$1,936.6	$2,088.9

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	30 June	30 September
(Millions of U.S. Dollars, except for share and per share data)	2024	2023
Assets
Current Assets
Cash and cash items	$2,375.7	$1,617.0
Short-term investments	61.8	332.2
Trade receivables, net	1,712.2	1,700.4
Inventories	755.6	651.8
Prepaid expenses	170.7	177.0
Other receivables and current assets	601.4	722.1

Total Current Assets	$5,677.4	$5,200.5
Investment in net assets of and advances to equity affiliates	4,714.6	4,617.8
Plant and equipment, at cost	37,597.5	32,746.3
Less: accumulated depreciation	16,115.4	15,274.2
Plant and equipment, net	$21,482.1	$17,472.1
Goodwill, net	879.0	861.7
Intangible assets, net	310.5	334.6
Operating lease right-of-use assets, net	982.1	974.0
Noncurrent lease receivables	437.2	494.7
Financing receivables	1,213.4	817.2
Other noncurrent assets	1,278.0	1,229.9

Total Noncurrent Assets	$31,296.9	$26,802.0
Total Assets(A)	$36,974.3	$32,002.5
Liabilities and Equity
Current Liabilities
Payables and accrued liabilities	$3,168.6	$2,890.1
Accrued income taxes	155.9	131.2
Short-term borrowings	159.1	259.5
Current portion of long-term debt	990.9	615.0

Total Current Liabilities	$4,474.5	$3,895.8
Long-term debt	12,786.4	9,280.6
Long-term debt – related party	96.3	150.7
Noncurrent operating lease liabilities	639.3	631.1
Other noncurrent liabilities	1,108.7	1,118.0
Deferred income taxes	1,182.1	1,266.0

Total Noncurrent Liabilities	$15,812.8	$12,446.4
Total Liabilities(A)	$20,287.3	$16,342.2
Commitments and Contingencies - See Note 12
Air Products Shareholders’ Equity
Common stock (par value $1 per share; issued 2024 and 2023 - 249,455,584 shares)	249.4	249.4
Capital in excess of par value	1,238.1	1,190.5
Retained earnings	17,989.9	17,289.7
Accumulated other comprehensive loss	(2,391.1)	(2,449.4)
Treasury stock, at cost (2024 - 27,141,082 shares; 2023 - 27,255,739 shares)	(1,985.0)	(1,967.3)
Total Air Products Shareholders’ Equity	$15,101.3	$14,312.9
Noncontrolling Interests(A)	1,585.7	1,347.4
Total Equity	$16,687.0	$15,660.3
Total Liabilities and Equity	$36,974.3	$32,002.5

(A)Includes balances associated with a consolidated variable interest entity ("VIE"), including amounts reflected in "Total Assets" that can only be used to settle obligations of the VIE of $3,916.8 and $2,256.8 as of 30 June 2024 and 30 September 2023, respectively, as well as liabilities of the VIE reflected within "Total Liabilities" for which creditors do not have recourse to the general credit of Air Products of $3,293.8 and $1,461.1 as of 30 June 2024 and 30 September 2023, respectively. Refer to Note 3, Variable Interest Entities, for additional information regarding the NEOM Green Hydrogen Company joint venture.

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended
	30 June
(Millions of U.S. Dollars)	2024	2023
Operating Activities
Net income	$1,911.4	$1,644.2
Less: Net income attributable to noncontrolling interests	33.1	36.6


Net income attributable to Air Products	$1,878.3	$1,607.6


Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization	1,070.3	1,001.0
Deferred income taxes	(74.3)	(14.1)
Business and asset actions	57.0	244.6

Undistributed earnings of equity method investments	(124.1)	(130.1)
Gain on sale of assets and investments	(23.3)	(5.2)
Share-based compensation	46.2	45.8
Noncurrent lease receivables	59.2	60.9


Other adjustments	36.4	152.3
Working capital changes that provided (used) cash, excluding effects of acquisitions:
Trade receivables	(10.4)	(49.2)
Inventories	(111.0)	(133.5)
Other receivables	82.4	(98.5)
Payables and accrued liabilities	(175.1)	(375.4)
Other working capital	(21.9)	(102.8)
Cash Provided by Operating Activities	$2,689.7	$2,203.4
Investing Activities
Additions to plant and equipment, including long-term deposits	(4,721.5)	(3,163.5)

Investment in and advances to unconsolidated affiliates	—	(912.0)
Investment in financing receivables	(396.2)	(665.0)
Proceeds from sale of assets and investments	26.3	13.3
Purchases of investments	(141.4)	(443.4)
Proceeds from investments	413.1	766.0

Other investing activities	45.9	4.8
Cash Used for Investing Activities	($4,773.8)	($4,399.8)
Financing Activities
Long-term debt proceeds	4,119.9	2,116.3
Payments on long-term debt	(76.7)	(605.8)
(Decrease) Increase in commercial paper and short-term borrowings	(183.3)	567.3

Dividends paid to shareholders	(1,171.4)	(1,107.9)

Proceeds from stock option exercises	6.2	19.5
Investments by noncontrolling interests	278.7	188.8

Other financing activities	(125.7)	(79.3)
Cash Provided by Financing Activities	$2,847.7	$1,098.9





Effect of Exchange Rate Changes on Cash	(4.9)	24.2
Increase (Decrease) in cash and cash items	758.7	(1,073.3)
Cash and cash items – Beginning of year	1,617.0	2,711.0
Cash and Cash Items – End of Period	$2,375.7	$1,637.7

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Nine Months Ended 30 June 2024
(Millions of U.S. 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 as of 30 September 2023	$249.4	$1,190.5	$17,289.7	($2,449.4)	($1,967.3)	$14,312.9	$1,347.4	$15,660.3
Net income	—	—	1,878.3	—	—	1,878.3	33.1	1,911.4
Other comprehensive income (loss)	—	—	—	58.3	—	58.3	(57.8)	0.5
Dividends on common stock ($5.29 per share)	—	—	(1,176.1)	—	—	(1,176.1)	—	(1,176.1)
Distributions to noncontrolling interests	—	—	—	—	—	—	(15.7)	(15.7)
Share-based compensation	—	44.0	—	—	—	44.0	—	44.0
Issuance of treasury shares for stock option and award plans	—	3.4	—	—	(17.7)	(14.3)	—	(14.3)
Investments by noncontrolling interests	—	—	—	—	—	—	278.7	278.7


Other equity transactions	—	0.2	(2.0)	—	—	(1.8)	—	(1.8)
Balance as of 30 June 2024	$249.4	$1,238.1	$17,989.9	($2,391.1)	($1,985.0)	$15,101.3	$1,585.7	$16,687.0


	Nine Months Ended 30 June 2023
(Millions of U.S. 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(A)	Total Equity
Balance as of 30 September 2022	$249.4	$1,141.4	$16,520.3	($2,786.1)	($1,981.0)	$13,144.0	$558.4	$13,702.4
Net income	—	—	1,607.6	—	—	1,607.6	36.6	1,644.2
Other comprehensive income	—	—	—	481.3	—	481.3	9.6	490.9
Dividends on common stock ($5.12 per share)	—	—	(1,137.3)	—	—	(1,137.3)	—	(1,137.3)
Distributions to noncontrolling interests	—	—	—	—	—	—	(7.9)	(7.9)
Share-based compensation	—	42.3	—	—	—	42.3	—	42.3
Issuance of treasury shares for stock option and award plans	—	(7.2)	—	—	10.6	3.4	—	3.4
Investments by noncontrolling interests(A)	—	—	—	—	—	—	636.1	636.1


Other equity transactions	—	0.4	(3.7)	—	—	(3.3)	(0.1)	(3.4)
Balance as of 30 June 2023	$249.4	$1,176.9	$16,986.9	($2,304.8)	($1,970.4)	$14,138.0	$1,232.7	$15,370.7

(A)Includes noncash activity for conversion of shareholder loans to equity in the NEOM Green Hydrogen Company joint venture.

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EQUITY (cont.)

(Unaudited)


	Three Months Ended 30 June 2024
(Millions of U.S. 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 as of 31 March 2024	$249.4	$1,215.7	$17,690.0	($2,275.9)	($1,965.8)	$14,913.4	$1,421.5	$16,334.9
Net income	—	—	696.6	—	—	696.6	12.3	708.9
Other comprehensive income (loss)	—	—	—	(115.2)	—	(115.2)	17.8	(97.4)
Dividends on common stock ($1.77 per share)	—	—	(393.6)	—	—	(393.6)	—	(393.6)
Distributions to noncontrolling interests	—	—	—	—	—	—	(2.0)	(2.0)
Share-based compensation	—	14.5	—	—	—	14.5	—	14.5
Issuance of treasury shares for stock option and award plans	—	7.9	—	—	(19.2)	(11.3)	—	(11.3)
Investments by noncontrolling interests	—	—	—	—	—	—	136.1	136.1


Other equity transactions	—	—	(3.1)	—	—	(3.1)	—	(3.1)
Balance as of 30 June 2024	$249.4	$1,238.1	$17,989.9	($2,391.1)	($1,985.0)	$15,101.3	$1,585.7	$16,687.0



	Three Months Ended 30 June 2023
(Millions of U.S. 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(A)	Total Equity
Balance as of 31 March 2023	$249.4	$1,163.4	$16,781.3	($2,163.3)	($1,972.5)	$14,058.3	$631.9	$14,690.2
Net income	—	—	595.6	—	—	595.6	14.9	610.5
Other comprehensive loss	—	—	—	(141.5)	—	(141.5)	(4.4)	(145.9)
Dividends on common stock ($1.75 per share)	—	—	(388.8)	—	—	(388.8)	—	(388.8)
Distributions to noncontrolling interests	—	—	—	—	—	—	(2.3)	(2.3)
Share-based compensation	—	13.3	—	—	—	13.3	—	13.3
Issuance of treasury shares for stock option and award plans	—	0.1	—	—	2.1	2.2	—	2.2
Investments by noncontrolling interests(A)	—	—	—	—	—	—	563.3	563.3


Other equity transactions	—	0.1	(1.2)	—	—	(1.1)	29.3	28.2
Balance as of 30 June 2023	$249.4	$1,176.9	$16,986.9	($2,304.8)	($1,970.4)	$14,138.0	$1,232.7	$15,370.7

(A)Includes noncash activity for conversion of shareholder loans to equity in the NEOM Green Hydrogen Company joint venture.

The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Millions of U.S. Dollars, unless otherwise indicated


1.	Basis of Presentation and Major Accounting Policies	12
2.	New Accounting Guidance	12
3.	Variable Interest Entities.	13
4.	Business and Asset Actions	15

5.	Revenue Recognition	16

6.	Inventories	17

7.	Goodwill	18


8.	Financial Instruments	18
9.	Fair Value Measurements	26
10.	Debt	28
11.	Retirement Benefits	29
12.	Commitments and Contingencies	30
13.	Share-Based Compensation	32
14.	Accumulated Other Comprehensive Loss	33
15.	Earnings per Share	34

16.	Supplemental Information	34
17.	Business Segment Information	35
18.	Subsequent Event	36

Table of Contents

1. BASIS OF PRESENTATION AND MAJOR ACCOUNTING POLICIES

As used in this report, unless the context indicates otherwise, the terms “we”, “our”, “us”, the “Company”, "Air Products", or “registrant” include our controlled subsidiaries and affiliates.

Basis of Presentation

The interim consolidated financial statements of Air Products and Chemicals, Inc. and its subsidiaries included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In our opinion, the accompanying statements reflect adjustments necessary to fairly present the financial position, results of operations, and cash flows for those periods indicated and contain adequate disclosures to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the notes to the interim consolidated financial statements.

To fully understand the basis of presentation, the interim consolidated financial statements and related notes included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended 30 September 2023 (the "2023 Form 10-K"), which was filed with the SEC on 16 November 2023. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.

Major Accounting Policies

Refer to our 2023 Form 10-K for a description of major accounting policies. There have been no significant changes to these accounting policies during the first nine months of fiscal year 2024.

2. NEW ACCOUNTING GUIDANCE

New Accounting Guidance to be Implemented

Climate-Related Disclosures

In March 2024, the SEC issued Release No. 33-11275, “The Enhancement and Standardization of Climate-Related Disclosures for Investors", which includes final rules for providing qualitative and quantitative disclosures regarding certain climate-related topics on an annual basis. As a result of ongoing litigation in the U.S., the SEC issued an order in April 2024 to stay the effectiveness of the rules while judicial review is pending. If the rules are not overturned and take effect on schedule, prospective adoption will be permitted with phased-in compliance beginning with our Annual Report on Form 10-K for the fiscal year ending 30 September 2026. We are evaluating the impact these rules will have on our disclosures.

Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". The update includes enhanced disclosures about significant segment expenses and identification of the chief operating decision maker. The update will be effective in our Annual Report on Form 10-K for the fiscal year ending 30 September 2025 as well as interim periods thereafter, although early adoption is permitted. The amendments must be applied retrospectively to all prior periods presented. We are evaluating the impact this update will have on our disclosures.

Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740)—Improvements to Income Tax Disclosures” to expand income tax disclosures, primarily through disaggregation requirements for the rate reconciliation and income taxes paid. The update will be effective in our Annual Report on Form 10-K for the fiscal year ending 30 September 2026, although early adoption is permitted. The amendments should be applied on a prospective basis with a retrospective option. We are evaluating the impact this update will have on our disclosures.

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3. VARIABLE INTEREST ENTITIES

We are the primary beneficiary of the NEOM Green Hydrogen Company joint venture ("NGHC"), which is a variable interest entity ("VIE") that is consolidated in our Middle East and India segment. We are not the primary beneficiary of any other material VIEs. We account for a VIE for which we have an equity interest and exercise significant influence but are not the primary beneficiary, such as the Jazan Integrated Gasification and Power Company joint venture ("JIGPC"), as an equity method investment. During the first quarter of fiscal year 2024, we determined that World Energy, LLC ("World Energy") is a VIE for which we have no equity interest and are not the primary beneficiary. Our variable interests in NGHC, JIGPC, and World Energy are further discussed below.

NGHC Joint Venture

The NEOM Green Hydrogen Project is a multi-billion dollar green hydrogen-based ammonia production facility that is being constructed in NEOM City, Saudi Arabia. Owned and operated by NGHC, the facility will be powered by renewable energy to produce green ammonia for Air Products as the exclusive offtaker under a long-term take-if-tendered agreement. We intend to transport the green ammonia around the world to be dissociated to produce green hydrogen for transportation and industrial markets.

In May 2023, NGHC finalized the $6.7 billion engineering, procurement, and construction ("EPC") agreement with Air Products named as the main contractor and system integrator for the facility. NGHC secured non-recourse project financing of approximately $6.1 billion, which is expected to fund about 73% of the project and will be drawn over the construction period. At the same time, NGHC secured additional non-recourse credit facilities totaling approximately $500 primarily for working capital needs. Under the financing, the assets of NGHC can only be used to settle obligations of the joint venture, and creditors of NGHC do not have recourse to the general credit of Air Products. Borrowings under the financing are reflected net of unamortized discounts and debt issuance costs primarily within "Long-term debt" on our consolidated balance sheets. Total principal borrowings were $2,910.5 and $1,364.8 as of 30 June 2024 and 30 September 2023, respectively. The amount borrowed as of 30 June 2024 includes additional draws from the facilities that were outstanding as of 30 September 2023 as well as approximately $655 drawn from a 2.00% fixed-rate Saudi Riyal loan facility that matures in November 2040.

In May 2023, NGHC entered into floating-to-fixed interest rate swaps designed to hedge long-term variable rate debt facilities available under the project financing during the construction period of the project. We discontinued cash flow hedge accounting for certain swaps during the third quarter of fiscal year 2024 and recorded an unrealized gain of $11.2 within "Other non-operating income (expense), net" ($3.0 attributable to Air Products after tax) on our consolidated income statements for the three and nine months ended 30 June 2024. Refer to Note 8, Financial Instruments, for additional information.

Air Products is an equal owner in NGHC with our joint venture partners, ACWA Power and NEOM Company. While we only hold one-third of the voting interests in the joint venture, substantially all the activities of the joint venture involve or are conducted on behalf of Air Products. Since we have disproportionately few voting rights relative to our economic interests in the joint venture, we determined that NGHC is a VIE. In addition, we determined that we are the primary beneficiary of NGHC since we have the power to unilaterally direct certain significant activities, including key design and construction decisions, and we share power with our joint venture partners related to other activities that are significant to the economic performance of NGHC. Therefore, we consolidate NGHC within the Middle East and India segment.

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The table below summarizes balances associated with NGHC as reflected on our consolidated balance sheets:


	30 June	30 September
	2024	2023
Assets
Cash and cash items	$233.6	$78.2

Trade receivables, net	0.4	—

Prepaid expenses	30.6	21.4
Other receivables and current assets	82.7	181.6
Total current assets	$347.3	$281.2



Plant and equipment, net	3,123.9	1,396.1


Operating lease right-of-use assets, net	225.8	228.9


Other noncurrent assets	219.8	350.6
Total noncurrent assets	$3,569.5	$1,975.6
Total assets	$3,916.8	$2,256.8
Liabilities
Payables and accrued liabilities	$530.6	$141.0
Accrued income taxes	1.3	0.6
Short-term borrowings	149.4	—

Total current liabilities	$681.3	$141.6
Long-term debt	2,552.3	1,274.4

Noncurrent operating lease liabilities	18.9	18.9
Other noncurrent liabilities	24.3	2.1
Deferred income taxes	17.0	24.1
Total noncurrent liabilities	$2,612.5	$1,319.5
Total liabilities	$3,293.8	$1,461.1
Equity
Accumulated other comprehensive income	$54.8	$77.7
Noncontrolling interests	911.6	723.6

JIGPC Joint Venture

JIGPC is a joint venture with Saudi Aramco Power Company (a subsidiary of Aramco), ACWA Power, and Air Products Qudra (“APQ”). JIGPC entered into project financing to purchase power blocks, gasifiers, air separation units, syngas cleanup assets, and utilities to supply electricity, steam, hydrogen, and utilities to Aramco’s refinery and terminal complex under a 25-year agreement, which commenced in the first quarter of fiscal year 2022. JIGPC recorded financing receivables upon acquisition of the assets and recognizes financing income over the supply term.

We determined JIGPC is a VIE for which we exercise significant influence but are not the primary beneficiary as we do not have the power to direct the activities that are most significant to its economic performance. Instead, these activities, including plant dispatch, operating and maintenance decisions, budgeting, capital expenditures, and financing, require unanimous approval of the owners or are controlled by the customer. Accordingly, we account for our 55% investment, which includes 4% that is attributable to the noncontrolling partner of APQ, under the equity method within the Middle East and India segment. The carrying value of our investment, including amounts attributable to noncontrolling interests, totaled $2,880.3 and $2,862.2 as of 30 June 2024 and 30 September 2023, respectively. Our loss exposure is limited to our investment in the joint venture.

Our investment primarily consists of shareholder loans that qualify as in-substance common stock in the joint venture. Certain shareholders receive a preferred cash distribution pursuant to the joint venture agreement, which specifies each shareholder’s share of income after considering the amount of cash available for distribution. As such, the earnings attributable to Air Products may not be proportionate to our ownership interest in the venture.

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World Energy

In November 2023, we finalized an agreement to purchase a sustainable aviation fuel (“SAF”) facility in Paramount, California from World Energy. We determined the acquisition contains an embedded sales-type lease. As a result, we are accounting for the transaction as a financing arrangement and recorded a financing receivable, which totaled approximately $300 as of 30 June 2024.

At the time of acquisition, we entered into a Master Project Agreement (“MPA”) containing terms for operation of the acquired facility as well as amended terms for the construction and operation of an SAF expansion project subject to construction at the same location. The MPA includes a tolling arrangement whereby we will receive feedstock from and produce renewable fuels for World Energy over a term that will conclude 15 years after onstream of the expansion project with the option to renew for two five-year terms.

During the first quarter of fiscal year 2024, we determined that World Energy is a VIE and our financing receivable represents a variable interest in World Energy. We are not the primary beneficiary as we do not have control over their key operating decisions, including feedstock supply, production of renewable fuels, and negotiating and executing supply agreements with customers. As of 30 June 2024, our maximum exposure to loss is approximately $2.1 billion. This includes project-related spending of $1.5 billion that is primarily capitalized within “Plant and equipment, net” and approximately $250 for open purchase commitments, both of which relate to the SAF expansion project, as well as approximately $300 for our investment in the financing receivables discussed above.

4. BUSINESS AND ASSET ACTIONS

Our consolidated income statements reflect charges for strategic business and asset actions intended to optimize costs and focus resources on our growth projects. These charges were not recorded in segment results. As further discussed below, charges for business and asset actions were $57.0 ($43.8 after tax) for the nine months ended 30 June 2024 and $59.0 ($51.2 after tax) and $244.6 ($204.9 attributable to Air Products after tax) for the three and nine months ended 30 June 2023, respectively.

Global Cost Reduction Plan

During the second quarter of fiscal year 2024, we recognized an expense of $57.0 for severance and other postemployment benefits payable to employees identified under a global cost reduction plan. We originated this plan during the third quarter of fiscal year 2023, which resulted in an initial charge of $27.0. In total, approximately 1,100 employees globally are eligible to receive benefits under the plan. We estimated benefits payable according to our ongoing benefit arrangements.

The table below reconciles these charges to the carrying amount of the remaining accrual for unpaid benefits as of 30 June 2024. This balance primarily relates to the additional actions identified during the second quarter of fiscal year 2024. We expect to pay the majority of the remaining benefits over the next nine months.


Third quarter fiscal year 2023 charge			$27.0
Cash payments			(6.8)
Currency translation adjustment			(0.4)
Amount accrued as of 30 September 2023(A)			$19.8
Second quarter fiscal year 2024 charge			57.0
Cash payments			(33.3)
Currency translation adjustment			(0.2)
Amount accrued as of 30 June 2024(A)			$43.3

(A)Reflected within "Payables and accrued liabilities" on our consolidated balance sheets.

Asset Actions

During the third quarter and first nine months of fiscal year 2023, we recorded noncash charges of $32.0 and $217.6, respectively, to write off assets associated with exited projects that were previously under construction in our Asia and Europe segments. The assets written off included those related to our withdrawal from coal gasification in Indonesia as well as a project in Ukraine that was permanently suspended due to Russia's invasion of the country.

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5. REVENUE RECOGNITION

The majority of our revenue is generated from our sale of gas customers within the regional industrial gases segments. We distribute gases through either our on-site or merchant supply mode depending on various factors, including the customer's volume requirements and location. We also design and manufacture equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. The Corporate and other segment serves our sale of equipment customers.

Disaggregation of Revenue

The tables below present our consolidated sales disaggregated by supply mode for each of our reportable segments for the third quarter and first nine months of fiscal years 2024 and 2023. We believe this presentation best depicts the nature, timing, type of customer, and contract terms for our sales.


	Three Months Ended 30 June 2024
	Americas	Asia	Europe	Middle East and India	Corporate and other	Total	%

On-site	$680.3	$506.9	$218.3	$18.4	$—	$1,423.9	48	%
Merchant	554.4	282.7	475.1	14.4	—	1,326.6	44	%
Sale of equipment	—	—	—	—	235.0	235.0	8	%
Total	$1,234.7	$789.6	$693.4	$32.8	$235.0	$2,985.5	100	%


	Three Months Ended 30 June 2023

	Americas	Asia	Europe	Middle East and India	Corporate and other	Total	%

On-site	$704.1	$496.8	$220.5	$16.9	$—	$1,438.3	47	%
Merchant	556.6	326.1	486.1	22.8	—	1,391.6	46	%
Sale of equipment	—	—	—	—	204.0	204.0	7	%
Total	$1,260.7	$822.9	$706.6	$39.7	$204.0	$3,033.9	100	%




	Nine Months Ended 30 June 2024
	Americas	Asia	Europe	Middle East and India	Corporate and other	Total	%
On-site	$2,089.9	$1,506.0	$672.0	$54.4	$—	$4,322.3	48	%
Merchant	1,642.7	857.1	1,420.5	49.5	—	3,969.8	45	%
Sale of Equipment	—	—	—	—	621.0	621.0	7	%
Total	$3,732.6	$2,363.1	$2,092.5	$103.9	$621.0	$8,913.1	100	%


	Nine Months Ended 30 June 2023

	Americas	Asia	Europe	Middle East and India	Corporate and other	Total	%
On-site	$2,351.8	$1,444.8	$808.0	$58.5	$—	$4,663.1	50	%
Merchant	1,666.2	969.8	1,443.4	67.4	—	4,146.8	44	%
Sale of Equipment	—	—	—	—	598.8	598.8	6	%
Total	$4,018.0	$2,414.6	$2,251.4	$125.9	$598.8	$9,408.7	100	%

Interest income associated with financing and lease arrangements accounted for approximately 2% and 1% of our total consolidated sales during the three and nine months ended 30 June 2024, respectively.

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Remaining Performance Obligations

As of 30 June 2024, the transaction price allocated to remaining performance obligations is estimated to be approximately $27 billion. This amount includes fixed-charge contract provisions associated with our on-site and sale of equipment supply modes. We estimate that approximately half of this revenue will be recognized over the next five years and the balance thereafter.

Our remaining performance obligations do not include (1) expected revenue associated with new on-site plants that are not yet on-stream; (2) consideration associated with contracts that have an expected duration of less than one year; and (3) variable consideration for which we recognize revenue at the amount to which we have the right to invoice, including energy cost pass-through to customers.

In the future, actual amounts will differ due to events outside of our control, including, but not limited to, inflationary price escalations; currency exchange rates; and amended, terminated, or renewed contracts.

Contract Balances

The table below details balances arising from contracts with customers:


		30 June	30 September
	Balance Sheet Location	2024	2023
Assets
Contract assets – current	Other receivables and current assets	$97.6	$124.7
Contract fulfillment costs – current	Other receivables and current assets	113.4	89.0
Liabilities
Contract liabilities – current	Payables and accrued liabilities	$365.8	$413.0
Contract liabilities – noncurrent	Other noncurrent liabilities	132.0	136.9

During the first nine months of fiscal year 2024, we recognized sales of approximately $280 associated with sale of equipment contracts that were included within our current contract liabilities as of 30 September 2023.

6. INVENTORIES

The components of inventories are as follows:


	30 June	30 September
	2024	2023
Finished goods	$204.7	$211.6
Work in process	35.1	28.4
Raw materials, supplies, and other	515.8	411.8
Inventories	$755.6	$651.8

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7. GOODWILL

Changes to the carrying amount of consolidated goodwill by segment for the nine months ended 30 June 2024 are as follows:


	Americas	Asia	Europe	Middle East and India	Corporate and other	Total
Goodwill, net as of 30 September 2023	$146.6	$171.9	$493.5	$15.8	$33.9	$861.7


Currency translation	(2.2)	(0.3)	19.8	—	—	17.3
Goodwill, net as of 30 June 2024	$144.4	$171.6	$513.3	$15.8	$33.9	$879.0


	30 June	30 September
	2024	2023
Goodwill, gross	$1,160.1	$1,158.4
Accumulated impairment losses(A)	(281.1)	(296.7)
Goodwill, net	$879.0	$861.7

(A)We recorded impairment charges related to the Latin America reporting unit ("LASA") in the Americas segment in fiscal years 2017 and 2014. The balance of accumulated impairment losses fluctuates over time due to currency translation.

We review goodwill for impairment annually in the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate that the carrying value of goodwill might not be recoverable.

8. FINANCIAL INSTRUMENTS

Currency Price Risk Management

Our earnings, cash flows, and financial position are exposed to foreign currency risk from foreign currency-denominated transactions and net investments in foreign operations. It is our policy to seek to minimize our cash flow volatility from changes in currency exchange rates. This is accomplished by identifying and evaluating the risk that our cash flows will change in value due to changes in exchange rates and by executing strategies necessary to manage such exposures. Our objective is to maintain economically balanced currency risk management strategies that provide adequate downside protection.

Forward Exchange Contracts

We enter into forward exchange contracts to reduce the cash flow exposure to foreign currency fluctuations associated with highly anticipated cash flows and certain firm commitments, such as the purchase of plant and equipment. We also enter into forward exchange contracts to hedge the cash flow exposure on intercompany loans and third-party debt. This portfolio of forward exchange contracts consists primarily of Euros and U.S. Dollars. The maximum remaining term of any forward exchange contract currently outstanding and designated as a cash flow hedge at 30 June 2024 is 2.7 years.

Forward exchange contracts are also used to hedge the value of investments in certain foreign subsidiaries and affiliates by creating a liability in a currency in which we have a net equity position. The primary currency pair in this portfolio of forward exchange contracts is Euros and U.S. Dollars.

We also utilize forward exchange contracts that are not designated as hedges. These contracts are used to economically hedge foreign currency-denominated monetary assets and liabilities, primarily working capital. The primary objective of these forward exchange contracts is to protect the value of foreign currency-denominated monetary assets and liabilities from the effects of volatility in foreign exchange rates that might occur prior to their receipt or settlement. This portfolio of forward exchange contracts consists of multiple foreign currency pairs, with a profile that changes from time to time depending on our business activity and sourcing decisions.

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The table below summarizes our outstanding currency price risk management instruments:


	30 June 2024		30 September 2023
	US$ Notional	Years Average Maturity	US$ Notional	Years Average Maturity
Forward Exchange Contracts:
Cash flow hedges	$4,605.3	0.6	$4,463.2	0.7
Net investment hedges	875.1	2.6	864.0	2.5
Not designated	1,703.0	0.3	709.4	0.3
Total Forward Exchange Contracts	$