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Air Products & Chemicals Inc (NYSE:APD)
Q3 2021 Earnings Call
Nov 4, 2021, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to Air Products' Fourth Quarter Earnings Release Conference Call. [Operator Instructions]

Beginning today's call is Mr. Simon Moore.

Simon Moore -- Vice President of Investor Relations, Corporate Relations and Sustainability

Thank you, Christina. Good morning, everyone. Welcome to Air Products' Fourth Quarter 2021 Earnings Results Teleconference. This is Simon Moore, Vice President of Investor Relations, Corporate Relations and Sustainability. I am pleased to be joined today by Seifi Ghasemi, our Chairman, President and CEO; Dr. Samir Serhan, our Chief Operating Officer; Melissa Schaeffer, our Senior Vice President and Chief Financial Officer; and Sean Major, our Executive Vice President, General Counsel and Secretary. After our comments, we'll be pleased to take your questions. Our earnings release and the slides for this call are available on our website at airproducts.com. This discussion contains forward-looking statements. Please refer to the forward-looking statement disclosure that can be found in our earnings release and on slide number two. In addition, throughout today's discussion, we will refer to various financial measures. Unless we specifically state otherwise, when we refer to earnings per share, EBITDA, EBITDA margin, the effective tax rate and ROCE, both on a companywide and segment basis, we are referring to our adjusted non-GAAP financial measures, adjusted earnings per share, adjusted EBITDA, adjusted EBITDA margin, adjusted effective tax rate and adjusted return on capital employed. Reconciliations of these measures to our most directly comparable GAAP financial measures can be found on our website in the relevant earnings release section.

Now I'm pleased to turn the call over to Seifi.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you, Simon, and good day to everyone. Thank you for taking time from your very busy schedule to be on our call today. Before we discuss the results, I would like to say that despite the well-known global challenges in 2020 and 2021, the talented, committed and motivated people of Air Products demonstrated resilience and resolve and delivered excellent results, and in addition, continue to execute our growth strategy. I want to thank every one of our employees for standing together, working hard and delivering for our customers and shareholders. Now please turn to slide number three, where you can see some of our key highlights for this year. We delivered strong EPS this year, achieving 11% compounded annual growth since fiscal year 2014, and we increased the dividend for the 39th consecutive year. We were again recognized by prestigious raters and organizations for outstanding sustainability performance, including one we just announced this week, the EcoVadis for the fifth year in a row.

Our growth strategy and sustainability strategy are one and the same. And to that end, we proudly completed the asset acquisition and project financing transaction for the $12 billion Jazan joint venture with Aramco, ACWA Power and Air Products Qudra, as we announced last week. In conjunction with the government of Canada and the province of Alberta, we announced the new net-zero hydrogen energy complex in Edmonton, Alberta, Canada. This modest-scale energy complex will begin with a transformative $1 billion net-zero hydrogen production and liquefaction facility expected onstream in 2024. And just a few weeks ago, we announced the $4.5 billion world-class clean energy complex in Louisiana. Air Products will build, own and operate this mega project, which will produce over 750 million standard cubic feet per day of blue hydrogen for local and global markets by 2026. We will also capture and permanently sequester five million metric tons per year of carbon dioxide, making it the largest carbon capture for sequestration facility in the world.

By combining our core strengths and competencies, we successfully develop, execute and operate these larger-scale gasification, carbon capture and hydrogen projects to address the significant energy and environmental needs of the world. This is fully aligned with our higher purpose as a company. Now please turn to slide number four. As always, safety is the most important focus for all of us at Air Products, and our goal will always be to achieve 0 accidents and incidents. Despite the challenging COVID-19 condition this year, our team continues to focus on working safely, following our strict protocols to help protect our own employees, our customers and our communities. We are pleased with the focus by the team that improved our safety performance in fiscal year '21 versus last year. slides number, six and seven, which we have shared with you many times before, includes our goal, our management philosophy and our five-point strategic plan. These are the principles that we follow every day, and they will continue to guide us in the future.

Now please turn to slide number eight. As we speak, world leaders are gathered in Glasgow to work on closing the gap between climate aspirations and climate action. We are actively engaged in this rapidly evolving global dialogue and committed to ensuring that Air Products is best positioned to deliver on behalf of all of our stakeholders through this critical period of energy transition. We believe a successful energy transition requires successful development and execution of large-scale mega projects. Without that, the job cannot be done. The scope and complexity of these projects require talented people with a variety of skills and backgrounds from different parts of the world to work together as one team. This is the higher purpose of our company. We can overcome the world's significant energy and environmental sustainability challenges with our focus and united people working together to provide real solutions for our customers. Now please turn to slide number nine.

As I have said before, we believe that hydrogen is one of the energy sources of the future along with electricity. We are scaling hydrogen production and developing a structure -- infrastructure to ensure this successful adoption as a sustainable fuel. Hydrogen will be the sustainable fuel of the future. Our customers count on us to deliver this hydrogen produced in a highly efficient manner. Meanwhile, we are making significant investments in new facilities to produce low-carbon and carbon-free hydrogen made from hydrocarbons. By executing on new clean hydrogen projects in Alberta and Louisiana, we will be a leader in blue hydrogen as well as green hydrogen as we continue to execute our innovative new green hydrogen project in the Kingdom of Saudi Arabia.

Now with that background, I'm happy to turn the call over to Dr. Samir Serhan, our Chief Operating Officer, to talk about our major projects. Dr. Serhan?

Dr. Samir J. Serhan -- Chief Operating Officer

Thank you, Seifi. Now please turn to slide 10, which highlights our key growth projects. We are committed to our growth strategy and continue to execute and pursue exciting projects around the world. In June, we announced the world-scale $1 billion net-zero hydrogen project in Alberta, Canada, with the strong support of the Canadian federal and local governments. This project will use natural gas to make net-zero hydrogen, which has the same zero carbon footprint as a green hydrogen made from renewable energy. 95% of the CO2 resulting from our net-zero project will be permanently sequestered, and the remaining 5% will be offset by exporting a clean electricity produced by the clean hydrogen. The project provides a road map for hydrocarbon-based economies to significantly reduce their CO2 emissions. Just a few weeks ago, we had the honor of joining the Governor of Louisiana and state officials to announce our world-scale $4.5 billion blue hydrogen project.

This will also be the world's largest permanent CO2 sequestration operation. This project will provide clean hydrogen to our customers along our 700-mile U.S. Gulf Coast hydrogen pipeline system and also produce blue ammonia, targeting heavy transport around the world. The pipeline will be able to carry a variety of carbon intensity hydrogen, including gray and blue. These two projects will use advanced gasification technologies available to Air Products to produce clean hydrogen while using hydrocarbon feedstock in a sustainable way. Both projects also combine in one project the three pillars of our growth strategy: gasification, carbon capture and hydrogen. We have made good progress on our Jiutai project, and we expect the facility to be onstream in fiscal year '23. We also expect the Debang project onstream in fiscal year '23. Successful execution of the Gulf Coast ammonia project continues with field construction on Air Products' largest single train, 175 million standard cubic feet per day of hydrogen steam methane reformer as well as the related 90 million standard cubic feet per day nitrogen ASU facility and related utilities. Construction is also progressing well on the 30-mile hydrogen pipeline network expansion to our world's largest hydrogen pipeline network.

The project onstream schedule remains as originally planned for the first half of fiscal year '23. We're forging ahead in Indonesia and making good progress despite some challenges with COVID. We expect to complete this project in '25. For NEOM, as you can see in the picture on the slide, we are laying the groundwork for the project, preparing the land and doing detailed engineering. We're even more excited now about this project since our announcement last year. We're forecasting to export the zero carbon hydrogen in the form of ammonia in 2026. In addition to our mega projects, Air Products has also continued to make significant investments in small and midsized on-site generators in our regional industrial gases business with fiscal year '21 being a record year for investments in this category. These on-site plants, which typically have project investment values from USD0.5 million to USD50 million, cover a range of technologies from a PRISM hydrogen generators; PRISM oxygen VSA, vacuum swing adsorption; and small/midsized PRISM ASUs.

Specifically, fiscal year '21 was a record year for investments in our PRISM Oxygen VSA product line, with the new projects in North America, Europe, India, China and South Korea predominantly supplying several major glass manufacturers around the world. The Oxygen VSAs are frequently integrated with Air Products' oxy-fuel burner technology, which help reduce emissions, provide fuel savings, improve productivity and deliver operational savings for the customer.

Now I'm pleased to turn the call back to Seifi.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you, Dr. Serhan. Please turn to slide number 11. As we shared with you last week, we, along with our joint venture partners, completed the asset acquisition and project financing transaction of the $12 billion air separation unit, gasification and power joint venture with Aramco, ACWA Power and Air Products Qudra in Jazan, Saudi Arabia, making a significant milestone after the hard work of our people as well as our customers and partners. The project return is expected to be better than we originally envisioned. As we said last week, we expect Phase one of the project to contribute an annual run rate of $0.80 to $0.85 of earnings per share, starting as of last week. The project is expected to contribute about $1.35 to $1.40 for the first 10 years after first -- Phase two closes. Now please turn to slide number 12, which shows our EPS growth. We remain vigilant and motivated to deliver excellent financial results, consistent with our strategy. As you can see, we have delivered 11% annual EPS growth on average since 2014 while laying a strong foundation for our future growth. The excellent results and key milestones we have achieved this year are just the beginning of our journey, delivering gasification, carbon capture and hydrogen solutions to the world.

I am very optimistic about our company's prospects, completing -- participating in a very meaningful way in the energy transition. Now please turn to slide number 13. As a reminder, we share our earnings growth directly with our investors. Both our EPS and dividend have grown by double digits since 2014. We are committed to deliver increased dividend while we continue to execute our growth opportunities. We have significant cash flow that supports our substantial dividend. And as you know, we have increased that now for the 39th consecutive year. And finally, slide number 14, as always, my favorite slide, shows that our EBITDA margins are up 1,100 basis points since 2014. Our margin is down in recent quarters, impacted by higher energy pass-through, which increases our sales but doesn't impact profits. 2/3 of the margin decline from our peak margin is due to the impact of higher energy pass-through. But I do want to stress that we are determined and focused on improving our margins back to around 40% by increasing prices to cover significant increases in energy costs and by improving productivity.

Now I'm happy to turn the call over to Melissa Schaeffer, our Senior Vice President and Chief Financial

Melissa Schaeffer -- Senior Vice President and Chief Financial Officer

Thank you, Seifi. We have made great strides at building our growth strategy this year, completing multiple projects and winning exciting new projects. At the same time, we continue to focus our base business and deliver excellent results for the quarter and the year. We grew our EPS 8% this year, overcoming various external challenges and absorbing the cost of additional resources needed to support our growth strategy. Our distributable cash flow remains strong at $2.7 billion. Furthermore, these large-scale projects currently under development will substantially add to our earnings once we bring them on stream. I share Seifi's conviction that for Air Products, the best is indeed yet to come. This is a testament to the hard work and commitment of the people of Air Products. And I, too, want to thank them.

Now please turn to slide 15 for more details on our full year results. Sales grew 17% to more than $10 billion. Volume and price together gained 7%. The 5% volume growth was primarily driven by our EMEA and Global Gases segment. Although the adverse impact from the pandemic has eased through the year, it still had a negative impact on FY '21. Price improved every quarter in all three regions and across most major product lines. Overall, price increased 2% and our merchant price was up 5%. EBITDA was up 7%, approaching $4 billion due to favorable price, currency and equity affiliate income, which was partially offset by higher costs. EBITDA margin declined 330 basis points, of which 200 basis points are attributed to higher energy pass-through, which increases sales but negatively impacts margin. ROCE was 160 basis points lower. The increase in the denominator from our additional $5 billion of debt raised last year reduced ROCE by about 300 basis points. Adjusting for the cash on our balance sheet, our ROCE would be 14.2%. We expect ROCE to improve as we deploy the cash and bring projects onstream. Now please turn to slide 16 for a discussion of full year EPS. Our full year adjusted EPS from continuing operations was up $0.64 or 8%.

Price net of variable cost was again strong, favorable $0.34, the fourth consecutive year of double-digit EPS net price improvement. Volume was flat as acquisitions, new plants, merchant recovery and higher sale of equipment activity were offset by lower contribution from Lu'An. Different business mix caused volume to have a positive impact on sales but minimum impact on profit. Our costs were $0.46 unfavorable, primarily due to the addition of resources to support our future growth and higher planned maintenance costs. Currency was favorable $0.35, primarily driven by the Chinese RMB, euro, British pound and South Korean won. Our equity affiliates also had strong underlying business results, adding $0.23, with several joint ventures reporting stronger medical oxygen sales. Nonoperating income was $0.16 favorable, primarily due to lower pension expense. Interest expense was $0.12 favorable due to the $5 billion of debt to support our future growth projects. Our effective tax rate of 18.9% was roughly equal to last year, and we expect an effective tax rate of 19% to 20% in FY 2022. Now please turn to slide 17 for a brief discussion on our fourth quarter results. Compared to last year, sales increased 22% to more than $2.8 billion.

Volume, price, energy pass-through and currencies were all up. Volume improved 9% as strong hydrogen and merchant demand and new assets more than offset reduced Lu'An contribution. Prices were up again with improvement in all three regions. This is the 17th consecutive quarter of year-over-year price gain. Overall, prices were up 3% in total, which equaled a 6% increase for the merchant business. We experienced significantly higher energy costs in our merchant business this quarter. The situation is particularly challenging in EMEA due to the extremely high natural gas and electricity costs. Our onsite business, about half of our total company's sales, has contractual protection from energy cost fluctuations. We are actively executing additional price actions across product lines to recover the higher energy costs impacting our merchant business. EBITDA climbed 11%, exceeding $1 billion mark as favorable volume, price, currency and equity affiliate income more than offset higher costs. EBITDA margin declined 380 basis points primarily due to higher energy pass-through, which negatively impacted margins by about 300 basis points. Sequentially, sales were up 9%, supported by 5% stronger volumes and 1% higher price.

EBITDA grew 7% sequentially as better volume, price and equity affiliate income more than offset higher energy costs. Now please turn to slide 18. Our fourth quarter adjusted EPS was $2.51, which is $0.32 or 15% above last year. Volume was a favorable $0.19 and price, net of variable costs contributed $0.04 as our price increases exceeded variable cost inflation driven by higher power costs. Like the prior few quarters, our plans to add resources and strengthen our organization to support growth have increased our costs. We also saw higher costs due to disruptions across the supply chain in all three regions. Currency and foreign exchange contributed $0.06, primarily due to the Chinese RMB and British pound. Equity affiliate income added $0.09 on strong underlying business results. The $0.04 of nonoperating income was primarily driven by lower pension expense. The effective tax rate of 18.1% was 130 basis points higher than last year due to the last year's higher share-based compensation benefits and a tax benefit associated with the PBF acquisition. Now please turn to slide 19.

The stability of our business allows us to continue to generate strong cash flow. Over the last 12 months, we generated about $2.7 billion of distributable cash flow or almost $12 per share. From our EBITDA of about $3.9 billion, we paid interest, taxes and maintenance capital. Note that our maintenance capital is a little higher than usual, driven in part by spending on our new global headquarters, which is essentially now complete. From the distributable cash flow, we paid $0.45 or about $1.3 billion as dividends to our shareholders and still have about $1.4 billion available for high-return industrial gas investments. This strong cash flow, even in uncertain times, enables us to continue to create shareholder value through increasing dividends and capital deployment. Slide number 20 provides an update of our capital deployment. As we discussed last quarter, we've extended our time horizon another five years to fiscal 2027. We see tremendous project opportunities beyond 2022 and the investment potential far exceeding the original capacity of $15 billion. Based on this updated view, we see our capital deployment potential reaching approximately $34 billion through fiscal 2027.

The $34 billion includes roughly $10 billion of cash and additional debt capacity available today, almost $17 billion we expect to be available by 2027 and about $7 billion already spent. We still believe this figure is conservative given the potential for additional EBITDA growth, which generates additional cash flow, and therefore, additional borrowing capacity. We will continue to focus on managing our debt balance to maintain our current targeted A/A2 rating. So you can see we have already spent 21% and have already committed 67% of the updated capacity we show here. I should note that this is as of September 30, so it does not reflect the closing of the Jazan Phase one but does include the Louisiana project. Before I turn the call back to Seifi, I would like to share with you that we plan to reorganize our reporting segments starting in Q1 of FY '22. Our EMEA segment will be separated into Europe and a Middle East and India segment to reflect the addition of the significant Jazan project in the Middle East segment and to provide more visibility for our geographic regions. In addition, our Global Gases and Corporate segment will be combined. We will provide historical resegmented financial information before the year-end.

Now to begin the review of our business segment results, I'll turn the call back over to Seifi. Thank you very much, Melissa. Now please turn to slide number 21 for our Asia results. Sales increased 6% compared to last year on 5% favorable currencies and 1% positive price increase, the 18th consecutive quarter of year-on-year price improvement in this region. Volumes were flat with new plants, mostly outside of China, offsetting the lower Lu'An contribution. Regarding Lu'An, there is no change for the -- from the previous updates that we have given you. The plant continues to operate at full capacity despite the coal shortage in China. As I said last quarter, under the interim supply agreement, we are recognizing reduced fees through fiscal year '22 before we return to the full year fee in 2023. This quarter, China's effort to reduce energy usage and intensity, the so-called dual control had a modest adverse effect on our results. It reduced some merchant customers' demand and caused isolated disruptions in operations. We continue to monitor this developing situation very closely. In the long term, though, we do see positive growth opportunities as China continues to focus on reducing its carbon intensity. EBITDA for this region grew 3%, supported by favorable currencies and price. Costs compared unfavorably primarily due to higher variable energy costs, resources needed to support project and start-ups, the timing of China government incentives last year and the disruption called by its dual control policy to reduce energy consumption. Sequentially, EBITDA and margins were lower as higher costs more than offset better volumes. Price is up but rounded to zero. Now I would like to turn the call over to Dr. Serhan to talk about our Americas results. Dr. Serhan?

Dr. Samir J. Serhan -- Chief Operating Officer

Thank you, Seifi. Now please turn to slide 22 for a review of our Americas results. Sales increased more than 20% versus last year, and EBITDA posted another double-digit gain. Volume grew 3%, primarily due to better hydrogen and merchant demand. Although Hurricane Ida interrupted our U.S. Gulf Coast operations this quarter, our team worked very hard to limit the impact to our business. While most of our merchant products have returned to pre-COVID levels, our hydrogen volume has increased but has not yet fully recovered. Demand for jet fuel, which consumes more hydrogen on a unit basis compared to gasoline, is still lagging. Also, the industry continued to use more light sweet crude, which requires less hydrogen. We are confident in the long-term growth of hydrogen demand, particularly in the U.S. Gulf Coast. Price for the quarter was again strong.

The 4% gain for the region was equivalent to 10% on the merchant business. Price was better across all major products. This is the 13th consecutive quarter of year-on-year price improvement. Energy cost pass-through drove a 15% sales increase with the much higher natural gas prices. EBITDA was 16% ahead of last year as positive volume price at our equity affiliate income and lower maintenance costs more than offset higher inflation. EBITDA margin was 230 basis points lower. However, energy cost pass-through negatively impacted EBITDA margin by approximately 500 basis points. In other words, EBITDA margin would have been significantly up excluding energy pass-through. Sequentially, energy pass-through drove margin 250 basis points lower.

Now I would like to turn the call back over to Simon to discuss our other segments. Simon?

Simon Moore -- Vice President of Investor Relations, Corporate Relations and Sustainability

Thank you, Dr. Serhan. Now please turn to slide 23 for a review of our Europe, Middle East and Africa region results. Our EMEA team delivered another set of outstanding results this quarter. Sales jumped 33% versus last year and EBITDA was up 14%. Volume was strong, increasing 14%, driven primarily by improved hydrogen and merchant demand and new assets. Our liquid bulk partially recovered from the pandemic, but packaged gases and hydrogen are still below pre-COVID levels. Price increased for the 15th consecutive quarter and was higher across most major product lines and subregions. The 4% price gain for the region corresponds to a 6% improvement for the merchant business. Consistent with what most consumers and businesses are experiencing, our European business faced unprecedented energy cost escalation this quarter. Supply chain-related interruptions further exacerbated the difficult situation. Our team has done an excellent job coping with these challenges, executing pricing actions and keeping our customers supplied.

As Melissa said, our onsite contracts allow us to pass through the higher energy costs. For our merchant business, we continue to work hard to recover the recent cost increases through additional pricing actions already underway. Currencies were favorable 3%, primarily due to the strong British pound versus the U.S. dollar. EBITDA was up 14% to about $230 million, primarily due to the strong volume, while better price, equity affiliate income and favorable currencies offset most of the energy cost increase. EBITDA margin was down 560 basis points, with higher energy pass-through responsible for about 400 basis points. The remaining roughly 150 basis point reduction was mainly attributable to unfavorable costs, partially offset by favorable equity affiliate income and better volume. Compared to prior quarter, sales climbed 8% primarily due to pass-through, while positive price and volume were offset by unfavorable currencies. Operating income was 3% below last quarter as the positive price and volume were more than offset by higher costs. Meanwhile, EBITDA was 8% higher due to the inclusion of positive equity affiliate income.

And as Melissa mentioned, we will separate the current EMEA segment into two segments, Europe and Middle East and India, starting next quarter. Now please turn to slide 24, Global Gases, which includes our non-LNG sale of equipment businesses as well as central costs. Sales and profit were up on higher project activities. We continue to add resources to support project development. Please turn to slide 25, Corporate, which includes LNG and other businesses as well as our corporate costs. Corporate segment sales were higher this quarter, driven by increased project activities as we continue to execute multiple large LNG and other projects, but profit was lower on higher corporate costs. Sequentially, sales and profits were better than last quarter. Again, as Melissa said, we will combine Global and Corporate starting next quarter.

Now to provide closing comments, I'll turn the call back over to Seifi.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you very much, Simon. Air Products continues to deliver consistent results despite significant ongoing challenges in the world. Our volumes, price and profit all grew in 2021, overcoming the pandemic, the storms, supply chain disruption and rising costs globally. I truly believe that we have become an even stronger company and fully expect to deliver significant earning growth as the economies around the world recover and our projects come onstream. Now please turn to slide number 26. For fiscal year 2022, our earnings per share guidance is $10.20 to $10.40, up 13% to 15% over last year. For quarter one of fiscal year '22, our earnings per share guidance is $2.45 to $2.55, up 16% to 20% over last year, and will include about two months of the Phase one of the Jazan project. We see our capex at around $5.5 billion (sic) $4.5 billion to $5 billion for fiscal year '22, including approximately $1.5 billion of Phase one of the Jazan project. Now please turn to slide number 27. We are confident that the security of employment and compensation that we provided to our employees during this difficult pandemic period positions us very well and very strongly for the future. We demonstrated to our people that we will support them in times of difficulty. We are committed to this approach since the only sustainable long-term competitive advantage of any company is the degree of commitment and motivation of the people in the enterprise.

The strong results and significant milestones we achieved this year are just part of our continued growth. As I said before, Air Products is supported by and supportive of the world's focus on sustainability. Our customers choose Air Products because they know we can help them meet their sustainability goals, and we continue to innovate so that we can be a partner on their sustainability journey for the future. The Board's environmental and sustainability challenges are immerse -- immense. There are huge issues that need to be addressed. And our growth strategy, which is focused on gasification, carbon capture and hydrogen, is designed specifically to address these critical needs. We know that our continued success depends on the expertise, dedication and commitment of our talented people around the world. And we consistently have been adding resources around the world in order to position ourselves properly to meet the growth demand and the execution of the projects that we have undertaken. Rising to the energy challenges that face our world today, we are committed to having a diverse workforce, significant development of applications and mega project expertise and a collaborative spirit within our companies. I believe Air Products is uniquely positioned to help the world transition to a cleaner and better future. It's a better future we believe in and in which we have already totally invested.

Now we are pleased to answer any questions that you have.

Questions and Answers:

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

[Operator Instructions] We'll take our first question from David Begleiter with Deutsche Bank.

David Begleiter -- Deutsche Bank -- Analyst

Thank you. Good Morning.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Good morning.

David Begleiter -- Deutsche Bank -- Analyst

Good morning, Seifi, you had a couple of delays in your projects, most notably, NEOM and Indonesia by roughly a year. Can you just talk about why those projects are being pushed out by a year?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

David, I wouldn't call them delays. I mean these are mega projects. And when we announced them, we give you our best judgment about when they come onstream. But all of these projects need to be permitted, they need government approvals and all of that. So each time we had a call, we give you our latest estimate of what we think these projects will come onstream. So right now, our best estimate for these projects are the dates that we have given you. If we can move them forward, we will tell you. If there's further delays, we will let you know. Because as I said, we cannot forecast everything because we are dependent on getting significant permits for a lot of these projects.

David Begleiter -- Deutsche Bank -- Analyst

Understood. And just on the capex increase ex Jazan, can you just talk about the pieces of that $500 million to $1 billion increase? How much is maybe Alberta, how much is Louisiana, etc.? Thank you.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Well, Alberta and Louisiana are not going to consume a huge amount of capital next year, but it is all related to the projects that Dr. Serhan mentioned. I mean people focus on our mega projects, and obviously, we are delighted to talk about it. But don't forget, we still have a base business, which is very resilient, and we are doing many, many, many projects. Actually, as Dr. Serhan mentioned, last year was a record year for our small and midsized projects. We are getting our fair share of the market on those projects. They are going to be executed, and they require capital.

David Begleiter -- Deutsche Bank -- Analyst

Thank you very much.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you very much, David.

Operator

Our next question, from John McNulty with BMO.

John McNulty -- BMO -- Analyst

Thanks for taking my question. So Seifi, with the huge in spike energy prices that you saw over in Europe, and I imagine maybe even a little bit in Asia as well, I guess, can you speak to how quickly you can offset it with regard to price? Is it something where, look, you automatically kind of immediately put it all in? Or is it something that has to ease in over the next few quarters? I guess, how should we be thinking about that?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Good morning, John. John, as you know very well, we have two parts to our business. On the onsite, they immediately go in because that's just pass-through. Our merchant side and packaged gases business, some of it has clauses, but a lot of it don't have clauses. And therefore, we need to go and increase prices and invoice the customers and convince them that energy prices have gone down -- gone up. And then there is a competitive environment. Some people try to use this as an excuse to get market share and all of that. So we need work to do. But what has compounded our issue in terms of being able to recover them fast enough is that the rate of energy increases. I mean, if energy increases, we do forecast these things. But what happened in Europe in the month of August and September was something that -- it was impossible to forecast that things would go up 200%. So as a result, we are lagging in terms of price increases in our merchant business, especially in Europe. But our team is doing a fantastic job. They did a great job in September and October, but there is more work to be done. So we will be delayed about a quarter maybe.

John McNulty -- BMO -- Analyst

Got it. So a quarter to kind of catch up on that? Okay.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Yes.

John McNulty -- BMO -- Analyst

And then I guess when thinking about your margin target, where you expect to get the margins back up to kind of that 40% range, give or take, admitting that the rest of it really is more energy pass-through and doesn't -- isn't really a reflection of the business, I guess, can you speak to the timing of when you think you can get there? Is it something where we can kind of see the margins approaching that type of a level by the end of 2022? Is it going to take longer than that, I guess? And what are some of the measures that you really have to kind of enact in order to get back to those 40%-type levels?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

John, as far as I'm concerned, I'd like to see those margins back there next time we talk in January. I mean we don't like to see our margins go down. Therefore, the pricing actions that we have put in place has a lot to do with that because it's all about -- the margins are all about pricing. The volumes are the volumes. The margin is how much profit you make per unit of volume. So we need to catch up with the energy costs. And our goal is to catch up with it as soon as possible. So when you say -- my target is we're able to report that our margins have gone back up to 40% in -- by next quarter or the quarter after that. How much of it we achieve is obviously going to depend on the efforts of all of us over here, but we are doing our best to get there as soon as we can. And we also intend to improve productivity, absolutely.

John McNulty -- BMO -- Analyst

Got it. Thanks very much for the color.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you, John.

Operator

We'll go to our next question from Kevin McCarthy with Vertical Research Partners.

Kevin McCarthy -- Vertical Research Partnersa

Yes. Good morning Seifi, just to follow up on the previous question, can you talk about the level of price increases that you're seeking today in various regions to keep up with this energy inflation? And do you think the pace of realization could differ versus history?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Good morning, Kevin, what it means is that -- I mean, obviously, the pace of price increases, you have seen what we have done in the past. It's about 18, 19 consecutive quarters that you're getting for our merchant business. We are getting 3%, 4%, 5% price increases in different regions around the world. So now -- before, we've been increasing prices to improve our margins. Now we have to increase prices to maintain our margins. And therefore, there is a significant sense of urgency on that. And how successful we are, we're going to report that to you next quarter. I don't want to forecast that because there is a lot of activities that we do and a lot involved. But the fact is that energy prices have gone up, and we need to recover that from -- by increasing prices. Everybody needs to do that. I mean there is global inflation. And if people can't deal with that, they are going to see their margins go down. And at the same time, we need to also continue to work on our productivity goals. And our people know that, and we are all very focused on that, Kevin.

Kevin McCarthy -- Vertical Research Partnersa

Thank you for that. Seifi, I wanted to ask your opinion on a high-level question related to clean hydrogen. One can look at this business and recognize it's got vastly different growth potential than, say, atmospheric gases and different capital requirements, different technology, discrete assets, etc. And you could look at multiples for, let's say, lithium producers or other high-growth businesses. And they're quite high today. And so that might argue for separating the business at some point in time. On the other hand, you've got a lot of benefits of integration, including inexpensive cost of capital and a high-quality balance sheet. So as you consider all of those things, how do you think about how the business might develop over time and whether or not it will remain within the portfolio on an integrated basis for the long term?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Well, Kevin, you are asking me a very intelligent question. My answer to that is that our commitment is to create value for our shareholders. If at some point in time what you are suggesting is significant opportunity for significantly increasing shareholder value, we would obviously consider that. But I don't want to give the impression that we want to do anything tomorrow. And besides that, we need to kind of demonstrate the success of the hydrogen business in all of that. So the question that you're asking is a very good question; and b, as a company, as a Board, always look at those options. Now when we would act or if we act on it depends on the circumstances, depends on the market, depends on the development of the hydrogen business and all of that. So sorry to give you a general answer, Kevin, but I'm sure you appreciate what I'm saying.

Kevin McCarthy -- Vertical Research Partnersa

I do and sorry for putting you on the spot there, but certainly welcome those thoughts. Much appreciated.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you.

Operator

We'll go to our next question from Steve Byrne with Bank of America.

Steve Byrne -- Bank of America -- Analyst

Yes. Thank you. Just wanted to drill into your guidance a little bit. If I understood it correctly, Jazan is in the 2022 guide. If you back out that 11 months' worth, it seems like kind of a mid-single-digit EPS guide. Is there anything that you are expecting that is a particular headwind in the year? Or are you just being conservative here?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Steve, first of all, good morning and thanks for your question. I'm very happy that you are breaking it down the way that you are breaking it down. We are showing that -- first of all, I think we should get credit for Jazan. At the end of the day, that's part of the company, and we are increasing the EPS 15%. But if you want to look at it that way by saying, "Okay. I know you have done that, but the base business looks like it's growing 6%." Well, that is the way we see the world right now because the base business, Kevin, as you know better than I do, is dependent on the growth of GDP or industrial production. And I'm not sitting here getting too excited about prospects of GDP or industrial production gold anywhere in the world. I mean everybody likes to say that COVID is over, now everything is growth. China, the biggest growth engine that the world had last quarter grew only 3%. Europe, GDP and industrial production is not going anywhere. In the U.S., not that much happening. And Latin America is not going anywhere. So I think within the circumstances and then considering all of the issues about energy costs and then -- that we need to recover, all of the issues that is related to supply chain, which is affecting our ability to move helium containers around the world, that's the real issue.

And then all of the fundamental supply chain that I mentioned and the overall economic activity, these are all real issues. Our job is to give you a guidance that is reasonable. We gave you a guidance for fiscal year 2021. The average of that was 902.5, and we delivered 902 despite the hurricanes, which we didn't forecast, despite the power outages and all of that. It's our job to have a balance. We know the business very well. It's our job to look at growth things, look at the other things and put it all together and give you the best judgment that we have at the time we give it to you. And right now, our best judgment is that, yes, you're right, that overall, our base business is going to grow about 6% or 7%. I hope it does better, but I -- we are responsible for giving you a responsible forecast rather than daydreaming about the fact that everything will be fine. And COVID hasn't gone away either. So sorry to give you a long answer but -- Steve, but I hope that helps.

Steve Byrne -- Bank of America -- Analyst

It does. Thank you, Seifi. And I did want to ask you a question about your blue hydrogen outlook. When we drill into the Alberta and Louisiana projects, it seems to us that a majority of the capital is really to produce incremental hydrogen supply more so than it is for carbon sequestration or capture. And if that's a fair assumption, what, in your view, is the key driver for that outlook for needing incremental hydrogen supply in these regions? And is it driven by renewable fuel?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Kevin, there is two fundamental dynamics. We are talking here about 2020 -- the time that we have, so 2026, when these projects are going to come on stream. Number one, we do need increased hydrogen demand on our -- on the pipeline because we have new customers that are coming on. And we foresee ourselves sold out on that, and therefore, we need additional hydrogen in the pipeline. The second thing is that we think there will be significant additional customers if we can give them blue hydrogen, and they will convert and get the benefits of that. But then a significant part of their production, especially in Canada, is going to be liquid, which is going to go for mobility where we see people converting to hydrogen for their mobility and the program they have. Then in Louisiana, the massive amount of hydrogen that we are making, a significant part of that or part of that, we haven't given you the details until we figure out all of the details. But fundamentally, a significant amount will be converted to blue ammonia, which will be exported, and you know where the destination of that export is. That's basically in Japan, where they have no other choice. But how is Japan going to decarbonize? They don't have oil. They don't have gas. They don't have nuclear, and they don't have shallow water to do any kind of windmills offshore. So they need to import their energy. And the best form of energy to import is import blue ammonia where the CO2 has been captured and to burn it in their power plants to generate electricity so that then they can use that electricity to drive their cars and all that. So that is the thinking that we have in terms of the outlet for the blue hydrogen. Does that help, Steve?

Steve Byrne -- Bank of America -- Analyst

Very good. Yes. Thank you.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

And we'll go to our next question from Duffy Fischer with Barclays.

Duffy Fischer -- Barclaysa -- Analyst

Yes. Good morning. First question is just Dr. Serhan talked about 2021 being a record year for the investment kind of in that midsized capex for you guys. So when we look at that roughly, how accretive is that to 2022 and 2023 going forward? Is that significantly a bigger jump than normal? Or how should we figure that into our model?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Well, it will be accretive as we go forward. I mean all of those projects that he's talking about take two or three years to build. So 2021, we got the project, so it will be 2022-2023. It will start having an impact on our results in 2024-2025. Those things are not something that you turn it down right away. They still need to be engineered and built. But he is absolutely correct that we had a very good year on those midsized projects. We don't usually talk about that, but we decided to talk about it this quarter because I was just getting concerned that people are under the impression that the only thing we like is mega projects. No, we are committed to our existing business, and we are getting more than our fair share of the existing business on the smaller-sized. And our people are doing a great job in getting those projects and executing them.

Duffy Fischer -- Barclaysa -- Analyst

Okay. Fair enough. And then, Seifi, you had made a comment that there was some disruption in your business in China, in particular. Was that power being cut off to your plants? Was that power being cut off to your customers where they couldn't run? Can you break that out a little bit more? How were you impacted, where you had to shut down your operations there?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

First of all -- and let me just characterize. Those disruptions in the fourth quarter was not material. They weren't that much. We felt obligated to mention them because there were a few incidents, but they were not material. Now are they going to be material this quarter or the next quarter? We have to wait and see. And then the other thing is that we have two kinds of business, as you very well know. We have the onsite business. The onsite business, we will only shut down our plant if the customer is forced to shut down. Let's say, it's a steel plant and they say, "Shut down their steel plant. The customer doesn't need oxygen." They have to shut down the power plant. Then we have our merchant business. Our merchant business, we rarely shut down our merchant business because we are not a dirty business. So they don't specifically say, "Shut down the ASU." It's mainly the customers that they shut down, which affects us.

Duffy Fischer -- Barclaysa -- Analyst

Great. Thank you guys.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you, Duffy.

Operator

We'll go to our next question from Marc Bianchi with Cowen.

Marc Bianchi -- Cowen -- Analyst

Hi. Thank you. I wanted to first start with the blue hydrogen projects that you have announced and using the technologies of ATR and POX. And I think you commented earlier that there's a competitive advantage of gasification that's at play there. I was hoping you could talk about that a little bit more, especially after we've heard from peers saying that they too can offer both technologies and even capture 95% of the CO2 through SMR.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Well, I'm very happy that you're asking me the question because the blue hydrogen projects that we have announced, we are using new technology in Canada and another technology in Louisiana, where we can capture 95% of the CO2 sequestered. When it comes to the SMR, what happens in an SMR? When you take the natural gas, you have a steam methane reformer. You take some of the natural gas directly into the process, goes over a catalyst, and you break down CH4 to CO and hydrogen. And then you shift it, you have hydrogen. And the CO becomes CO2, and it goes up at the atmosphere. You can capture 95% of that. Sure. But then you use a lot of the natural gas to burn -- to heat up the tubes, which contain the catalyst. That is combustion, like a combustion in a furnace or in a power plant. Theoretically, you can capture that CO2, but it will cost you an arm and a leg to capture that. So making the statement that I can capture 95% of the CO2 from SMR, sure, you can capture the CO2 in air, too.

But the issue is that, is it cost-effective or not. So what we are saying is that the technology that we have makes it possible to capture the CO2 in a cost-effective way. But I mean you have to put a lot of equipment on the SMR to capture the CO2 from combustion. Theoretically, you can say, "Yes, I can put special boxes and do that." And I really don't want to comment on what our competitors say. They have to defend what they say. It's their business. But from our point of view, when we put carbon capture on SMRs, as we have done, and we actually operate the biggest one in Port Arthur, everybody can go and take a look at it. We have the CO2 capture on the process part because that is economical. We can capture that and use it for a financial recovery. But on the combustion part, we don't do that because that becomes cost-prohibitive. Can it be done? Yes, sure. Anything can be done at a cost. I hope that helps, Marc.

Marc Bianchi -- Cowen -- Analyst

That's helpful. Thank you, Seifi. Earlier, Dr. Serhan mentioned, I think, some increased confidence on NEOM versus last year. I'm curious what's behind that statement. Is there anything to say about perhaps customers being signed up? Or what's driving that statement?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

I can have Dr. Serhan answer that, but he's not going to make any comments about customers. But he can tell you why he feels better about the project as compared to before. Dr. Serhan?

Dr. Samir J. Serhan -- Chief Operating Officer

Thanks, Seifi. As we communicated before, this is really a first-mover project in this world-scale for production of green hydrogen. And I can tell you, we have around maybe 30 different work streams going in parallel in developing, optimizing, producing products, improving the cost. And that's really where this additional confidence coming that we really feel that we have a very good solution, very, very competitive. And we are targeting for 2026 that we need to have it onstream. It will be competitive, very low carbon intensity, and it really meets the specifications that are being imposed in the different countries in the world.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you very much, Serhan. Yes, thank you. Okay. I hope you got your answer, Marc. Okay?

Marc Bianchi -- Cowen -- Analyst

Yes. Thank you.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you. Thank you very much.

Operator

We'll go to our next question from Bob Koort with Goldman Sachs.

Mike Harris -- Goldman Sachs -- Analyst

Yes. Good morning. This is actually Mike Harris sitting in for Bob. Just curious, is there a scenario where Lu'An could return to full fees before 2023? And then on -- I guess, on the other hand, what is the likelihood that, that production could become permanent?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

I understood the first part of your question, and that thing is that the agreement that we have with them -- the plant is running at full capacity. The agreement we have with them in terms of structure of the fees and so on, that is not going to improve in 2022 versus what we have right now. It will improve in 2023. The second part of your question, I wasn't sure I heard it because you got -- there was a disruption on what you said. Can you just repeat the second part?

Mike Harris -- Goldman Sachs -- Analyst

I'm sorry. Yes. The second part was, is there a possibility or likelihood that, that reduction could become permanent?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Well, we don't anticipate that. Oh, you mean that in 2023, Lu'An comes and says, you are charging me reduced fee, continue doing that?

Mike Harris -- Goldman Sachs -- Analyst

Yes.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Well, that's not our agreement. That's not our agreement. I don't want to anticipate what Lu'An will do and what we would do in that case. But right now, we don't expect that.

Mike Harris -- Goldman Sachs -- Analyst

Okay. Thank you.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you, Mike.

Operator

And we'll take our next question from John Roberts with UBS. [Operator Instructions] Due to no response, we'll go to our next question from Vincent Andrews with Morgan Stanley.

Vincent Andrews -- Morgan Stanley -- Analyst

Thank you. Good morning, everyone.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Good morning. How are you, Vincent?

Vincent Andrews -- Morgan Stanley -- Analyst

I am very well. Thank you, Seifi. I'd be curious to get your thoughts on in the long term, not obviously where things are today, but if you think in the medium to long term, what do you think the cost of carbon is going to be? And maybe on a regional basis, you could talk about it. And to the extent you want to discuss what you're assuming when you think about looking at a new project, that might be helpful, too.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Well, Vincent, you're asking a very, very insightful question. I mean, right now, different parts of the Board have put different numbers in place. I mean in California, they have put $200, right? Per ton of CO2, you get an incentive for that. Canada is talking about $50 to $100 per ton. Other parts of the world that we have exposure to, that -- the number is somewhere between $100, $50, $75, $150. It's all over the place. I think that the way we look at these projects and all of that, we try to kind of look at the profitability on the basis that we don't get too much of these kind of things because we don't want to rely on government subsidies every time we do something. But overall, these numbers are all going to develop based on the commitments that people have made. And fundamentally, what is going to happen, Vincent? If people are going to -- I mean I see a great deal of fascination, all of these promises being made at Glasgow. But if you add up all of those things, the amount of carbon credits that you need in order to meet the requirements becomes gigantic. And therefore, in order to generate those things, customers need to start using these low-carbon energy sources. And therefore, you have to have real incentives for people to convert from diesel for ships and trains and planes and all of that and steelmaking to really shift to clean energy. And that one, a little bit of incentive is not going to do that. So I think if the governments are serious to achieving those goals, they have to put in steep incentives to incentivize people to actually do that. So the prospect of that is very encouraging for our business. But we have to see how it develops, Vincent, as we go forward. Is that OK?

Vincent Andrews -- Morgan Stanley -- Analyst

Yes. I appreciate the answer. Thank you so much. I appreciate the time. I'll pass it on.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you very much, Vincent. I really appreciate that.

Operator

We'll take our next question from Jeff Zekauskas with JPMorgan.

Jeff Zekauskas -- JPMorgan -- Analyst

Thanks very much. Seifi, I was looking at your project commitments, and I didn't see any commitments in the electronics area through 2026. Is that something strategic where Air Products is moving away from the electronics area in favor of other opportunities? And when you look at your $4.5 billion or so in capex for next year, can you talk about what the big chunks that you're going to spend on?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Jeff, Good morning. I hope all is well. Yes. One of the reasons that we wanted Dr. Serhan to talk about is smaller facilities and all of that was because my concern about the fact that the question that you just asked. We are winning our fair share of business in electronics. We are doing some very big projects for people like all of these big electronic manufacturers like Intel, like Samsung, like TSMC and all of that. You don't see it. You don't highlight them because they are not mega projects, but we are winning our fair share of those. So we are not -- that is actually one of the sectors we are very focused on. We are very strong in Asia Pacific, where most of these projects are happening, and we are definitely on top of that. Now in terms of the breakdown, I will hesitate to give you the breakdown because then people know exactly these projects. We have bondage projects. We have [Indecipherable] and all of that. But believe me, Air Products has been and continues to be extremely focused on the electronics sector. And I can claim that we are definitely winning our fair share of those projects for those big customers. Is that OK, Are you OK, Jeff?

Jeff Zekauskas -- JPMorgan -- Analyst

Yes. Thank you very much.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you.

Operator

We'll go to our next question from P.J. Juvekar with Citi.

P.J. Juvekar -- Citi -- Analyst

Yes. Thank you. Seifi, I'll ask one quick question. What's happening globally when you look at the narrative about COP26 in a move toward decarbonization and less investments in fossil fuels, do you see a scenario where fossil fuel prices just keep going up as a result, similar to what has happened in Europe? And if that does happen, hypothetically, how do your projects in China and other parts of the world fare in an environment of higher energy prices? Thank you.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Well, P.J., thank you very much for asking a very excellent question. The thing is that there is no question that if hydrocarbon prices go up, like the oil price having gone up, that does help some of the existing projects that we have in China. I mean, right now, one of the reasons that Lu'An is operating at full capacity despite the very high price of coal in China is because -- what are they doing? They are taking coal and they are making diesel, and they are selling the diesel fuel at higher prices because the oil price is $84 a barrel. So in a roundabout way, if hydrocarbon costs go up, it helps those kind of projects. But then the other interesting part is that if hydrocarbon costs go up, then the cost of renewable energy compared to hydrocarbons becomes even more attractive. So you would say that it's easier to convert a truck driver from diesel to hydrogen because now the diesel is costing more. So in a funny way, if actually hydrocarbon prices go up, it will help our strategy in terms of focusing on renewables. Does that make sense, P.J.?

P.J. Juvekar -- Citi -- Analyst

Yes, that does. But does it impact your coal gasification plants?

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

It helps us because the coal gasification plants are producing chemicals, which are competing with production from oil. I mean the whole reason that China is using a lot of coal or Indonesia wants to use a lot of coal or India wants to use coal is because they want to use coal to produce chemicals so that they don't have to pay foreign currency for the oil they import. So if energy prices go up, coal prices are in the ground. Therefore, that would help. Any other questions or that's...

P.J. Juvekar -- Citi -- Analyst

Great. I'll pass it along. Thank you.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Thank you. I really appreciate that.

Operator

It appears there are no further questions at this time.

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Okay. With that then, I would like to thank everybody who was on the call. We very much appreciate your very good and insightful and sometimes difficult questions, but that's the way it is. We do appreciate that. And we look forward to talking to you when we announce our first quarter results sometime in January or early February. Thank you again, and have a very nice day.

Operator

[Operator Closing Remarks]

Duration: 80 minutes

Call participants:

Simon Moore -- Vice President of Investor Relations, Corporate Relations and Sustainability

Seifi Ghasemi -- Chairman, President and Chief Executive Officer

Dr. Samir J. Serhan -- Chief Operating Officer

Melissa Schaeffer -- Senior Vice President and Chief Financial Officer

David Begleiter -- Deutsche Bank -- Analyst

John McNulty -- BMO -- Analyst

Kevin McCarthy -- Vertical Research Partnersa

Steve Byrne -- Bank of America -- Analyst

Duffy Fischer -- Barclaysa -- Analyst

Marc Bianchi -- Cowen -- Analyst

Mike Harris -- Goldman Sachs -- Analyst

Vincent Andrews -- Morgan Stanley -- Analyst

Jeff Zekauskas -- JPMorgan -- Analyst

P.J. Juvekar -- Citi -- Analyst

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