SES AI Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 2, 2023

There are 15 speakers on the call.

Operator

Air Products. Please note that this presentation and the comments made on behalf of Air Products are subject to copyright by Air Products and all rights are reserved. Beginning today's call is Mr. Sidhman Jaswar. Please go ahead.

Speaker 1

Thank you, Kaley. Good morning, everyone. Welcome to Air Products' Q1 2023 earnings results teleconference. This is Sin Mandeswar, Vice President of Investor Relations and Corporate Treasurer. I am pleased to be joined today by Seifi Kazeemi, Our Chairman, President and CEO Doctor.

Speaker 1

Samir Sarhan, our Chief Operating Officer Melissa Schafer, our Senior Vice President and Chief Financial Officer Sean Major, our Executive Vice President, General Counsel and Secretary and Simon Moore, our Vice President of Investor Relations, Corporate Relations and Sustainability, who, as previously announced, will be retiring at the end of March. After our comments, we will be pleased to take your questions. Our earnings release and slides of 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 2.

Speaker 1

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, Operating income, operating margin, EBITDA, EBITDA margin, the effective tax rate and ROCE, Both on a total company and segment basis, we are referring to our adjusted non GAAP financial measures. Adjusted earnings per share, adjusted operating income, adjusted operating margin, 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 Sabin.

Speaker 2

Thank you, Sid, And good day to everyone. Thank you for taking time from your busy schedule to be on our call today. I am proud to say that the people at Air Products delivered great results this quarter Despite the significant macroeconomic headwinds, I would like to thank each of our talented, dedicated and motivated employees for their hard work. Now please turn to Slide number 3, Our safety performance, which is always our highest priority. As you can see, we have made significant progress since 2014, but we always work hard to do better.

Speaker 2

Our goal is to achieve 0 incidents and 0 accidents. Now please turn to Slide 4. For the Q1 of our fiscal year 2023, our earnings per share was $2.64 an improvement of $0.16 per share or 6% versus last year. But our underlying performance versus last year was much better than that. The items that you need to consider to make a fair comparison versus last year are a $0.15 negative impact from currency and a one time gain of $0.20 in the Q1 of last year from the finalization of the Jazan ASU joint venture.

Speaker 2

I would like to point out also that our guidance for the Q1 was to deliver earnings per share of 2.60 to $2.80 Our actual EPS is $2.64 which is within our guidance, But at the lower end, the principal reason is that the Chinese and European economies were bigger That our expectation in early November when we gave you the forecast. Now please turn to Slide number 5. We are committed to rewarding our shareholders while pursuing our long term growth strategy. I am pleased to say that we have again raised our quarterly dividend, this time by 8% to $1.70 per share per quarter or $7 a share on an annual basis. Extending our record of more than 40 consecutive years of dividend increase, We expect to pay out more than $1,500,000,000 to our shareholders in 2023, reflecting our commitment to return cash to our shareholders.

Speaker 2

Now please go to Slide number 6. Still my favorite slide, it shows our EBITDA margin trend. While energy costs remain high, our margin improved this quarter. Our team has worked hard on increasing prices to offset the higher energy costs in our merchant business and we continue to work on productivity. I would also like to point out Three quarters of the margin decline since the peach margin of around 42% Is due to higher energy cost pass through in our outside business, which increases our sales, but does not impact our profit.

Speaker 2

Now please turn to Slide 7. In addition to delivering strong results, we also achieved several significant project milestones during the quarter. In December 2022, we were very excited to announce our $4,000,000,000 green hydrogen project in the United States. This project will be located in Northern Texas and is our latest mega scale, 0 carbon, which means green, hydrogen project Since the announcement of our revolutionary NEO Green Hydrogen Project in 2020, and it will be by far the largest green hydrogen project in the United States. The information about this project and the recording of our December 8 webcast for this project are available on our website.

Speaker 2

Now please turn to Slide 8. We were pleased to announce In January 2019, the completion of the second phase of the $12,000,000,000 Jazan gasification and Power Project, which is 51% maturity owned by Air Products and it is 60% project finance. During the Q1 with the first phase of this project, which was completed in October of 2021. Air Products contributed

Speaker 3

about $5,500,000,000

Speaker 2

for the purchase of $7,100,000,000 of assets from Saudi Aramco. In the second phase, This was just completed. Air Products contributed an additional $900,000,000 for the purchase of $4,200,000,000 of additional assets. Our total cash contribution for this project is $2,500,000,000 As expected, the first phase of the project has earned us $0.80 to $0.85 per share On an annual basis, we significantly contributed to our results in fiscal year 2022. With the completion of the second case, we now expect about the total of $1.35 per share of earning contribution on an annual basis.

Speaker 2

This is fully in line with what we announced to investors more than 3 years ago. Now please turn to Slide 9, I wanted to provide you with an update on our great neon green hydrogen project, which is appropriate to give you an update since we are very close to completing a major milestone, which is signing the definitive project financing agreements for this project. And therefore, we wanted to give you an update Before you read about that in the next few weeks. We have been making excellent progress on this world scale project to bringing Bring energy to the world. The engineering is now about 30% complete.

Speaker 2

All major subcontracts for the project have been awarded, including the electrologers and the power plant and all that. Land preparation is completed and construction has started and the joint venture team is in place and executing the project. Now please turn to Slide 10. As you know, Air Products has a long term ownership position of the Neon Production joint venture. But importantly, and this is very important, we remain the sole off picture 100 percent of the green hydrogen produced in the form of green ammonia produced at this facility and in an exclusive 30 year contract.

Speaker 2

We continue to see Significant opportunities to use this green ammonia to bring green hydrogen to consumers around the world. And as I said, we are the sole offtaker and distributor of this product. Then I want to emphasize that the offtake price for this green ammonia It remains the same as when they negotiated the original project In the summer of 2020, when we announced the project. This is a very key point And the fact that now we are project financing this project and as a result we are absorbing all of the financing charges and so on, That has not changed the offtake price. Then Now please turn to Slide 11.

Speaker 2

Initially, the 3 partners plans, which are Air Products, Neo, which is owned by TIF and Alpha Power, We intended to use our own cash to fund the product, the total project. Over the past 2 years, we have seen significant interest from the global financial institutions. We see tremendous value for position on this product. Therefore, we got tempted and we considered and we decided that the best course of action to minimize our cash contribution And maximize the return on the cash is to non recourse The partners will contribute 25% cash and the remaining 75% will be non recourse project financing. And obviously, if you are doing non recourse project financing, you want to Maximize the amount of money that you can borrow.

Speaker 2

Therefore, you put a lot of your ongoing costs and you bring them forward to the real present value and borrow against that. I will explain this a little bit more Let me get to the detailed chart. This means that Air Products this project financing means That now our cash contribution to this project will be $800,000,000 less than 800, It is significantly less than the $1,700,000,000 that we originally expected. That is what you would expect us to do. That is the whole point of project finance.

Speaker 2

Now please turn to Slide 12. I am pleased to say that the non B Corp's financing is well underway and we are more than 2 times oversubscribed for what we want to borrow. We have received commitments From over 20 global financial institutions demonstrating their confidence in this project. Later this month, we expect to complete what we call the dry close, which is The signing of the definitive financing agreements and we expect the full financial goals To be completed a few months later, we will obviously be let you know as we make progress on the project financing. Now please turn to Slide 13, so that I can provide you with an overview of the Total Products Capital needs.

Speaker 2

First, the original $5,000,000,000 that we had mentioned before For the capital required to build the facility, we have increased that It has increased by about $500,000 due to inflationary pressure that everybody expects. Then in addition, we have further increased the product investment By $1,200,000,000 to include items that we were going to buy service from other people, But now we want to provide those services ourselves in order to make the project totally self contained and we would be dependent on others. These include power transmission lines and other infrastructure that was needed for the project. This increases the capital cost, but it decreases the operating cost And we decided that was a better trade off, but the key point was to make sure that the product is not dependent Other people doing something that they would have control over the whole thing so that when they come on a stream, they have everything that they need for the project to be operated. Now the other item that I'm sure will be a subject of questions from people is the $1,800,000,000 for project financing costs.

Speaker 2

That is a big number, but it is very explained why that is. Again, as I said, if you are project financing, You want to put and borrow as much money as you can. First of all, about $1,000,000,000 of that 1,800,000,000 It is the interest during construction. So we are spending money. We want to borrow that money.

Speaker 2

There is an interest to that borrowing. Therefore, that adds up for the net total length of the project to about $1,000,000,000 We want to finance that and borrow against that. Then we are using land. Instead of leasing the land for 50 years, we decided to pay for the land upfront That reduces our ongoing costs and we can finance that. That is a few $100,000,000 The space for the project, usually you buy the space as you go forward, you decided to buy all the space upfront and finance that.

Speaker 2

So those are the kind of costs that can comprise the $1,800,000 It makes a lot of sense and that is To be with you of project finance that you can you have the flexibility of bringing The total funding needed for the project is $8,500,000,000 Now please turn to Slide 14, which is the overview of the funding. As I described before, the $8,500,000,000 is made of $6,200,000,000 of non recourse debt, which we wanted to maximize and $2,300,000,000 of cash from the Chief Partners. Therefore, obviously, the Air Products cash contribution is about 1 third of that, which is less than $800,000,000,000 and this is as compared to the $1,700,000,000 that we originally expected. So overall, we are very pleased with where we are. We are very pleased with the fact that we are Project financing this thing, minimizing our cash flow and we are very pleased that the price that we are paying for the ammonia and stay the same as it was in 2020.

Speaker 2

We are very optimistic about projects and the prospects for Good return for the total supply chain as we go forward. Now please turn to Slide 15. I would like to summarize the discussion by sharing some thoughts about our strategy. As I have mentioned before, there are 2 pillars to our growth strategy at Air Products and sustainability Through our core industrial gas business, We supply customers in dozens of industries with critical products and Services that lower emissions and increase efficiency and productivity. To our blue and green hydrogen megawatt projects of the future, we will commit more than $15,000,000,000 by WD 27 to deliver clean hydrogen at a scale, helping to drive the energy transition and moving humanity forward.

Speaker 2

These two pillars, which support each other for success, Put us in the heart of solving DuFour's needs for sustainable energy and Environmental Solutions. I'm proud to say that the people of Air Products have continued to drive these results in the near term and may expand progress in executing our growth project as we move forward. Slide number 16 summarizes our management principles, which I reiterate every quarter, these principles are critical to Air Products' success and will continue to guide us in the future. Now, I'm pleased to turn the call over to Melissa, our Chief Financial Officer. Melissa?

Speaker 4

Thank you, Stacy. As Stacy mentioned earlier, we've delivered another set of impressive results this quarter even with significant macroeconomic headwinds. Our commercial teams across the region continued to execute price actions and their efforts paid off. Price drove the 25% operating income improvement despite a significant negative currency impact and operating margin was also 300 basis points higher compared to last year. I also would like to thank the team at Air Products for their continued outstanding efforts.

Speaker 4

Now please turn to Slide 17 for a review of our Q1 results. In comparison to last year, Sales, volume and price were up nearly 10%.

Speaker 2

The 7%

Speaker 4

gain in price for the total company Equals a nearly 20% improvement in merchant price compared to last year, the 5th quarter in a row of double digit increase. Volumes were up 2% higher, driven by better On-site and merchants, but partially offset by lower sales equipment activities. Volumes were strong in Americas and Asia, both weaker in Europe. Currency translation from the strengthening U. S.

Speaker 4

Dollar reduced sales by about 6% and lowered operating income by a purpose. Despite the headwinds, operating income jumped 25% and operating margin was 300 basis points higher, primarily driven by strong pricing. Operating income was higher across the region and particularly strong in America and Europe. Improvements in EBITDA and EBITDA margins were not as significant as operating income and operating margins due to the prior year one time item, primarily related to the Jazan ASU joint venture finalization. ROCE has climbed steadily in the last 6 quarters, reaching 11.3%, which is 120 basis points higher than last year.

Speaker 4

We expect RoTE to further improve as we bring new projects on stream and continue to put our cash on the balance sheet to work. Adjusting for cash, our ROCE would have been 13.3% this quarter. Sequentially, volume was weaker following a strong prior quarter, which also benefited from spot sales and a favorable contract addendum. Price continues to gain strength across the region. Merchant price improved 3% versus last quarter.

Speaker 4

EBITDA was down 5%, primarily due to weaker volumes, while EBITDA margin was up 200 basis points as positive price and energy cost pass through more than offset the lower volume. Now please turn to Slide 18 for a discussion of our earnings per share results. Our first quarter adjusted EPS was $2.64 per share this year, up $0.60 or 6% compared to last year. Strong price drove the improved results. Price, net of variable costs, contributed over $0.70 this quarter as our price actions more than offset the higher variable cost increases.

Speaker 4

Cost was $0.11 unfavorable, primarily due to inflation and higher maintenance. Price, volume and cost together added $0.63 for a 25% increase compared to last year. However, the negative $0.15 from currency and a roughly $0.20 of prior year one time benefit associated with the finalization of the Jazan ASU joint venture to moderate the strong underlying results. The Jazan item accounted for much of the $0.14 decline in equity affiliate income and an unfavorable $0.10 in non controlling interest. The effective tax rate of 19.1% was 210 basis points unfavorable due to less tax benefits this year.

Speaker 4

We expect an effective tax rate of 19% to 20% in FY 2023. For the quarter, the non service component of our defined benefit plans were favorable $0.04 last year and unfavorable $0.07 this year. As I shared with you last quarter, we now exclude this component from our adjusted results. Now please turn to Slide 19. Our distributable cash flow continued to climb driven by improving EBITDA, While cash expenses included interest, cash tax and maintenance CapEx remained relatively stable over the last 3 years.

Speaker 4

Over the last 12 months, we generated close to $3,100,000,000 of distributable cash flow or almost $14 per share. From our digital cash flow, we paid over 45% or over $1,400,000,000 as dividends to our shareholders, while still having almost $1,700,000,000 to invest for growth. Our ability to grow the Treviro's cash flow, especially in challenging conditions, demonstrates the strength and stability of our business. It enables us to continue to create shareholder value by increasing dividends and deploying capital for high return projects. Slide 20 provides an update of our capital deployment.

Speaker 4

As you can see, we have over $36,000,000,000 of capital deployment potential through fiscal 2027. The $36,000,000,000 includes over $8,000,000,000 of cash and additional debt capacity available today, About $17,000,000,000 we expect to be available by 2027 and almost $12,000,000,000 already spent. We still believe that capacity is conservative given the potential for additional EBITDA growth, which would generate additional cash flow and additional borrowing capacity. As always, we continue to focus on managing our debt balance to maintain our current targeted AA2 rate. So you can see our backlog of nearly $20,000,000,000 will provide a substantial amount of growth in the future.

Speaker 4

However, please note this figure still includes The second phase of Jazan's project that was completed in January as well as the capital required for NEOM at its original higher value as we work through the finalization of project financing. Moreover, we will include the $4,000,000,000 Texas green hydrogen project when the project reaches final investment decision. We've already spent over 30% and committed 74% and the updated capacity we show on this slide. We have made great progress and still have substantial investment capacity remaining to invest in high return Project. We believe that investing in these high return projects is the best way to create shareholder value for the long run.

Speaker 4

We continue to evaluate our capital deployment options and determine the best way to use available cash entrusted to us by our shareholders. Now to begin the review of our business segment results, I'll turn the call back over to Stacy.

Speaker 2

Thank you, Melissa. Now please turn to Slide number 21 for our Asia first quarter results. Our businesses were able to deliver positive volume and price despite the negative COVID impact in certain parts of China. Volume improved 7% supported by new assets. This quarter, we benefited from more than 25 new small to midsize Traditional industrial gas plants, which came on the stream across the region over the last years.

Speaker 2

Price was up 1% in total, which translates to 3% in our merchant business. Although underlying sales grew 8% versus last year and energy pass through was a positive 2%, Overall sales was flat offset by a 10% weaker currency, which is obviously translation. Negative currency also reduced operating income and EBITDA each by about 10%. Operating income and EBITDA both improved versus prior year as better volume and price more than offset the negative COVID impact. Higher price and volume also drove margin improvement.

Speaker 2

Although China's government As we last its rules related to COVID, the Subsequent high infection rates have impacted business activity. We expect economic recovery in China to take time. We anticipate power costs across the region to continue to rise and we are taking action, which I mean pricing action to mitigate the impact. Sequentially results compared and favorably to last quarter, which benefited from some specific spot sales. At this point, I would like to turn the call over to Sid to discuss our European results.

Speaker 2

Sid?

Speaker 1

Thank you, Seifi. Now please turn to Slide 22. As the chart shows, power costs for Europe moderated sequentially this quarter, but are still at a historically elevated level. Our commercial team has executed significant price actions to compensate for these costs in our Merchant business and their hard work has paid off. Although we have fully recovered the

Speaker 2

higher power costs For the

Speaker 1

quarter, we are keeping a close eye on the dynamic power market in this region. As a reminder, Power cost in our merchant business is the primary focus when managing the escalating energy costs in Europe. Our On-site business has contractual pass through, which enables us to pass energy cost to our customers and almost all our natural gas usage is for on-site hydrogen production. Now please turn to Slide 23 for a review of our Europe results. Successful price actions we have worked hard to implement the last few quarters drove a significant improvement in Europe's results.

Speaker 1

Compared to prior year, price increased 14% for the region, corresponding to a 24% improvement

Speaker 2

in merchant

Speaker 1

pricing. Volume declined 6%, reflecting challenging conditions in the region. Demand for our hydrogen was weaker as customers continued to optimize their own hydrogen operations. Our merchant business was lower, partly due to the divestment of our business in Russia. Energy cost pass through was up 9% Due to higher natural gas costs, although it had no impact in profit.

Speaker 1

Operating income jumped nearly 50%, While EBITDA was up almost 30%, primarily due to strong price, although unfavorable currencies reduced Operating income and EBITDA, each by more than 10%. Price primarily drove the more than 400 basis point EBITDA margin increase. This was net of the higher energy cost pass through, which lowered the margin by about 200 basis points. Compared to the prior quarter, volume was unfavorable due to weaker merchant this quarter and a favorable contract amendment in the prior quarter. Now I would like to turn the call over to Doctor.

Speaker 1

Saran for a discussion of our other segments.

Speaker 5

Thank you, Chad. Now please turn to Slide 24 for a review of our American results. Underlying sales increased 15% despite the adverse effect of severe weather in December. Slides improved further by 9%. This is equivalent to a 26% increase in the merchant business.

Speaker 5

Our team in the Americas has successfully raised the prices to cover the higher energy costs. Volume grew 6% due to their merchant and on-site. Volume also benefited from a new short term agreement, which will benefit Americas results for the next few quarters. Operating income was up almost 30% over last year and operating margin improved 300 basis points, It's driven primarily by the strong price. Volume also contributed to profits, but costs were unfavorable.

Speaker 5

EBITDA improved less than operating income because of a lower equity affiliate income due to unfavorable one time items And lower medical oxygen volume in Mexico as the COVID impact subsided. Sequentially, the price continued to gain strength. Merchant price was up 7%, but volume was down 3% following a strong EBITDA margin improved by around 400 basis points, the primary due to lower energy cost status We expect our planned maintenance activity to increase next quarter in parallel with our customers' planned turnaround. Please now turn to Slide 26 for our Corporate segment. This segment includes our I'm sorry.

Speaker 2

Shamir, you need to describe the slide of the 25

Speaker 5

I'm sorry, review them Middle East results and India before going to that. So please let's go to Slide 25 first for review of our Middle East and India segment. Sales and operating income in this segment are modest since our Middle East and India wholly owned operations are smaller in size. However, the segment's EBITDA is significant since it includes the equity affiliate income related to the Jazan Gasification and Power joint venture, our India joint venture, Enax Air Products and other joint ventures. For the quarter, an acquisition benefited sales and operating income versus last year, but was partially offset by planned maintenance activities.

Speaker 5

Although our share of the ongoing design gas And Power joint venture net profit added to the region's results. The equity affiliate income declined by 28,000,000 primarily due to the one time benefit associated with the design ASU joint venture finalization in the Q1 of last year. As Seifi mentioned before, we have successfully completed the second phase of the design gasification and power project. And we have begun to receive additional income in the second quarter. Now please turn to Slide 26 for our Corporate segment.

Speaker 5

This segment includes our sales of equipment businesses as well as our centrally managed functions and corporate For our sale of equipment activities, our LNG business historically has been the anchor, But our non LNG related project activities have also grown in recent years to become major contributors to this segment. The cadence of project activities and timing of sales and profit recognition can vary the segment results. Our ongoing effort to support our growth strategy has also increased the centrally managed functions and corporate costs. For the quarter, the segment sales and profits were lower than last year, primarily due to lower sale of equipment project activities. We also continue to add resources to support our growth strategy.

Speaker 5

As mentioned before, inquiries for potential LNG projects have picked up recently. However, these projects take time to develop. We're excited, however, that we have signed one new agreement in the quarter and working hard to sign additional new projects. At this point, I would like to return the call back over to Seifi to provide his closing comments.

Speaker 2

Thank you, Doctor. Serho. Now please turn to Slide number 27. The outlook for the global economy remains uncertain. However, we remain confident in Air Products and the prospects that we have in the future and the stability of our business, which is supported by our robust capital deployment strategy, as you have seen.

Speaker 2

Therefore, for fiscal year 2023, we have left our guidance unchanged despite There's significant uncertainties that exist in the world. For the Q2 of fiscal year 2023, which is usually our weakest quarter. Our earnings per share guidance is $2.50 to 2.70 up 7% to 15% over last year. We still see our CapEx at $5,000,000,000 to $5,500,000,000 for the year, including approximately $1,000,000,000 for the completion of the Jazan project that we just talked about. Now please turn to Slide 28.

Speaker 2

We include this slide in all our earnings call presentations. It describes very clearly my view that an enterprise can only be successful for the long term when the people in the enterprise are motivated and committed to a mission. At Air Products, our higher purpose, our mission as a company Is to bring people together so that they can collaborate and innovate solutions to the world's most significant energy, environmental and sustainability challenges. We continue to build a diverse and inclusive culture There are more than 21,000 people feel they belong and matter and are motivated to achieve our goals. I believe Air Products is uniquely positioned to help the Board transition to a cleaner and better future and we are putting our efforts toward that each and every day.

Speaker 2

Now, we are very pleased to answer your questions. Operator, we are ready for questions.

Operator

We'll We'll go first to Christopher Parkinson with Mizuho.

Speaker 6

Great. Thank you so much. Saphy, just given all the macro uncertainty that's Yes, prevailing across the globe. Can you just give us your current assessments of where you think you stand as well as The operating rates are for the regional merchant businesses. Thank you.

Speaker 2

Thank you very much, Chris. Right now, obviously, it's very difficult under the current circumstances to predict What is going to happen in the next few quarters. But we feel very confident about our own operation and about our ability Keep our plants running and service our customers. And as I look around the world, we obviously Saw the Chinese economy a little bit deeper in the Q1 than we expected. Right now, my view on the Chinese economy is We have to wait and see how it comes out after the Chinese New Year.

Speaker 2

We don't expect any kind of disaster or any bad news, but it's just a question of that the rate of improvement, How would that be? We are very well positioned there. We have taken action to increase prices. And most important, as I said, We are benefiting from the fact that we had 2025 smaller projects that we usually don't announce, But they are standard industrial gas projects. They are coming on a stream and they are contributing.

Speaker 2

So We feel that we will be able to deliver on Asia in general. In Europe, the economy again was weaker than we expected in the Q1, But right now, energy prices seem to have stabilized. Power prices have stabilized. Natural gas prices have not yet. But overall, we think that we should be okay in Europe.

Speaker 2

And in the U. S, you saw our actions in respect to pricing. Last quarter, we got Overall, 7% overall for the whole company, we got 7%. But in the U. S, we got almost 14% price increase, This translates to almost 19%, 20% price increase on the merchant side.

Speaker 2

Latin America is always very big, Don't talk about it too much. So overall, we feel pretty confident that we should be able to deliver the forecast that we have given you for the year.

Speaker 6

That's helpful. And just as a quick follow-up, just given now that Investors and your team has had an opportunity to digest the IRA. Is there any key opportunity that's, Let's say specific to Air Products that you believe investors are missing, is there something on the HEICO facility retrofits? Is there just anything else in terms of that materialization over the next several years that we all should be paying attention to? Thank you.

Speaker 2

Hi, Krish. That's a very, very good question. I don't want to comment too much about the IRA benefits because the law is there, everybody can read that. But the opportunities for Air Products that we will definitely Followed through is number 1, we will put carbon capture on our existing facilities. There is 2 benefits on that.

Speaker 2

Number 1, to reduce our CO2 emissions and number 2, that gives us an opportunity to have a Lower carbon hydrogen that we can set at higher prices. We will definitely do that. Then we are benefiting From the IRA on a project that we had announced before the IRA, which was the project in Louisiana. We did that project with the economic space on no IRA benefit on $85 for CO2 capture. We've been counting on about $50 so that additional $35 enhances the returns on that project.

Speaker 2

And then we will do significant amount of green projects in the United States. We did announce The project in Northern Texas and we definitely are working on other mega projects to produce green hydrogen in the United States. The IRA credits for $3 for green hydrogen production, plus the fact that if you make an integrated facility, you also get credit For the renewable power that you generate makes it very attractive to make these investments in the U. S. We are extremely well positioned with our pipeline in the Gulf Coast and with our know how and with our distribution capabilities To do things that other people cannot do, because anybody cannot be take advantage of the Credits, if you can do something with the hydrogen.

Speaker 2

I mean, people can run it out and say, okay, I'm going to build a plant to produce green electricity and produce hydrogen. But then what do you do with the hydrogen? And Air Products is one of the very few companies Who knows what to do with the hydrogen, we are a hydrogen company. Therefore, we are in a very unique position to take full advantage of the IRA legislation. We are very pleased with that.

Speaker 2

That was a very significant step forward in the United States. And then The very good news for us is that, that has prompted other countries to take action. And I think yesterday The day before that, you saw an announcement from the European Union that They are going to have a program of about €280,000,000,000 to promote the same kind of things, which would obviously be very good for us because we are a global company. Okay, Chris.

Speaker 6

That's very helpful, Seifi. Thank you so much.

Speaker 2

Thank you.

Operator

We'll take our next question from David Begleiter with Deutsche Bank.

Speaker 7

Thank you. Good morning. This is Anthony Mercandetti on for David, Savi, you mentioned in your slides your new capital structure and The changes on the capital costs and contributions to NEOM, what is the return on this project versus what you were expecting when you first announced the project in July of 2020?

Speaker 2

Well, the thing is that I have 3 partners and I don't want to speak for them and disclose the return on the project. But the thing that you have to take a look at is that we don't look at the return on the project because we are going to take the offtake and sell that and make money on that and that is how we take a look at the return on the total investment. So on that one, the return on that is going to be in accordance with what we have given you in guidance, which is for every dollar that we invest, You should expect about $0.10 of operating income. So you have to look at total supply chain from Air Products point of view. In terms of the specific return on the product, that is up to my partners to decide whether they want to disclose that or not.

Speaker 2

I don't want to disclose that because for us that doesn't mean anything. It's the total supply chain. The important thing that you need to focus on is the fact that We are off taking the ammonia at the same price that it was negotiated in 2020.

Speaker 7

Okay. Yes, understood. And as a follow-up on the green ammonia, if you did not lock in this price of purchase, how much higher do you think It would be today versus when the project comes on stream?

Speaker 2

Well, it depends on what we would have negotiated with our partners. I don't expect it to have been significantly different, but Because I mean, you talked about additional capital costs, but as I said, a lot of the operating costs is being capitalized. So that Certainly doesn't affect the return on the project. But again, I just don't I have 2 other partners And I respect them and I don't want to disclose their financials there. But as I said, please, from an Air Products Point of view, you need to look at the total supply chain.

Speaker 2

Okay.

Speaker 7

Yes. Thank you very much.

Speaker 2

Thank you, sir.

Operator

We'll take our next question from John McNulty with BMO Capital Markets.

Speaker 7

Yes, good morning. Thanks for taking my question, Seifi. So, Seifi, you seem excited about the price of the offtake Air Products. For NEOM basically remaining flat. So I guess why is that?

Speaker 7

Are you seeing interest from buyers right now that are higher than what you thought they would be at the time that you originally signed into this contract. I guess how should we be thinking about that?

Speaker 2

Well, I think that's one way of putting it. The thing that we see is significant interest in the product. And obviously, as a businessman, we would like to take anything that we buy at the most favorable price that we can get. But I'm particularly interested in the reason I keep mentioning that because I just want to make sure that people don't think that, well, These guys said $5,000,000,000 now it's $8,500,000,000 Therefore, the price of ammonia must have gone up. It did not.

Speaker 2

And it's just look, one other thing, John, you know this better than I do. We are project financing this thing with some of the biggest banks in the world giving us money. They have looked at this project. They have looked at the return of the project and they are willing to finance it. So I guess they all think this is a good project and a good prospect and they're going to get their money back.

Speaker 2

You know what I mean?

Speaker 7

Yes. No, for sure. I guess, maybe looking at it from a slightly different angle. So When you think about like when I think about project financing, the benefit of it is they tend to juice the returns a little bit more. But it does take out some of the EPS on the tied to the equity that's being put to work because there's less equity involved.

Speaker 7

I guess when you think about the total capital of the project overall, the distribution side as well as the actual production side and the economics around that. I guess how has that changed relative to what you thought originally with the project financing now in place.

Speaker 2

John, it has obviously improved because I'm putting less cash on the production side. So we are better off. And as long as the price of ammonia is the same, so We have made an improvement. Instead, we have another $1,000,000,000 that we were going to invest to do other things.

Speaker 7

Got it. Fair enough.

Speaker 3

Thanks very

Speaker 7

much, Stacy.

Speaker 3

Thank you.

Operator

We'll go next to John Roberts with Credit Suisse.

Speaker 8

Thank you. ExxonMobil recently announced a blue Hydrogen Project in the Gulf Coast that includes ammonia as well. And it looks like it has merchant ambitions here. Since refiners are a large customer for Air Products, help us understand, would you have bid for that project as well? Or how do we think about how your customers Might play in the hydrogen and potentially ammonia market?

Speaker 2

Well, I mean, I can't comment on the strategy of Exxon and what they want to do, but this is a competitive Board. If Exxon decides that they want to get into their Merchant ammonia business and make glue ammonia to sell, then we will have an extra an additional competitor. Hydrogen that they are going to produce, a significant amount of that from what I understand It's going to be used to replace the natural gas that they are using because the whole purpose of the project is to reduce their carbon emissions. So if they do that, now are they going to make so much hydrogen that they have extra amount To do merchant, I don't know, I don't have any visibility on that and all of that. That's up to them to do what they want to do.

Speaker 2

You know what we are doing. And as I said, I'm sure other people will get attracted to these projects. But it's one thing Talking about these things is actually doing the details. They just announced they're doing the FEED. They have to wait and then they do the FEED, then they add the cost And then they find out what the total cost is and all of that.

Speaker 2

But it's entirely up to them. They decided to do it themselves, which is fine.

Speaker 8

Okay. And then, since the Alberta Blue hydrogen plant will be the first really big project up online. Do you think you'll get a premium on all of the hydrogen out of that plant? Or do you I think some of the hydrogen is going to be sold to the existing grade hydrogic market.

Speaker 2

Well, Interesting thing is that you mentioned Exxon. Our project in Canada, the customer for that project is Exxon. We are right now almost sold out of that project and we are getting a significant premium, yes, Because Exxon through their subsidiary, which we have announced this publicly, so I'm not putting anything new, To their

Speaker 3

side,

Speaker 2

which is the Imperial Chemical Limited, they are going to use the blue hydrogen we give them to produce renewable diesel that they are going to sell in California at premium prices. And as a result, they are giving us a significant premium For the blue hydrogen that they are buying from us in Canada. Great. Thank you.

Speaker 3

Thanks, Peter.

Operator

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

Speaker 8

Yes. You had some pretty hefty Merchant price increases in Europe and Americas, my question for you is, how much of that Had a surcharge in it given gas costs have dropped in both regions, could you see some sequential decline And pricing in those regions.

Speaker 2

What the question that you're asking Steve is very relevant. We obviously have increased the prices in order to recover the power costs. Obviously, at some point in time, if the power costs go down, Then some of the customers would expect us to decrease those prices. And we will listen to that and we will make a decision based on Supply demand situation as we always do. So it is possible, but if the price declines in the future, Then that would be as a result of power price declining.

Speaker 2

Therefore, theoretically, there shouldn't be an impact on our bottom line.

Speaker 8

Okay. And just a follow-up on NEOM. Has the design of the change, is it still Couple of gigawatts of electrolyzer capacity or has this changed? Could you produce more than the 1,200,000 tons of ammonia? Seems like you could with battery backup.

Speaker 8

Is that also enabling you to lead to have An unchanged ammonia price from this project.

Speaker 2

Well, Steve, you're asking a very good question, which is subject This is the first Significant project that we are doing for green. We are obviously installing a significant amount of wind and solar capacity and we are installing a significant amount of electrolyzer capacity. What these electrolyzers and the wind and the solar will do actually might end up giving us the capability of making a lot more than the one But I don't want to get ahead of ourselves. I don't want to promise that, but you are on the right track that there might be an upside in that side. And I personally think there could be an upside, but we have to wait and see.

Speaker 2

Thank you. Thank you.

Operator

We'll take our next question from Mike Leithead with Barclays.

Speaker 9

Great. Thanks. Good morning, guys. First question on Neom. On the new $8,500,000,000 kind of all in CapEx number, Can you just give us some comfort or framework around how locked in that number is?

Speaker 9

Obviously, there's still about 70% or so of the engineering work left. Just any comfort Around kind of what you're doing to make sure that number is not going to move again, say, in the next 3 years?

Speaker 2

At this point, I can say That we have enough contingency there and we have done enough work that I think that's a pretty good number. But nothing is 100%, but I feel pretty good about that number at this stage.

Speaker 9

Got it. Makes sense. I have

Speaker 2

Prathyusha on the line who is in charge of All of our engineering and all of that, but I think both of us feel pretty comfortable that, that is a good number. We spend a lot of time making sure that when we are doing project financing that we don't have to go back for additional financing, but we feel pretty good about the number at this stage.

Speaker 1

Besides the engineering, we have to make

Speaker 5

the major orders on the project. So basically that's also locked in for the equipment and even for the construction for the green cement that's also being placed.

Speaker 9

Great. Thank you. Yes, and just as a quick follow on with the new capital structure, Debt obviously can sometimes come with some level of covenants or restrictions around distribution. So just how should we think about the cash Dividends from the projects, should they generally match income or are there some constraints or restrictions around the cash you can get back to Air Products?

Speaker 2

Well, the cash income from the project itself, obviously, the project will have a cash flow That will go to servicing the debt and if there is any extra of debt, which I hope there is, that will come back to the shareholders.

Speaker 9

Got it.

Speaker 2

Thank you.

Speaker 3

We'll take

Operator

our next question from Kevin McCarthy with Vertical Research Partners.

Speaker 10

Yes, good morning. With regard to Asia, you had healthy volume growth of 7%. But in the prepared remarks, I think you made a comment That you started 25 new assets in the region over the past year, which sounds like a fairly large number. So I was hoping you might be able to Put that into context for us. Looking ahead, would you expect the contributions from those startups to remain Elevated or regressed by some amount, how would you describe the shape of that profile in Asia?

Speaker 2

Kevin, go down and say that's a very good question. First of all, good morning. I think this is a good opportunity for me to make a comment. A lot of times people think that Air Products, the only thing we do is make our project. We have our base business and we are making good progress in our base business.

Speaker 2

We are getting our share of all of these small products. We don't announce it every time we have a $50,000,000 nitrogen generator, but these things do add up. We have about 25 of them coming on stream in Asia. What they are doing is that they are helping us to deliver the volume increases despite the fact that Economic activity in China was almost it has gone from 6%, 7% back to about 2% or 3%. So We are getting the benefit of that and these things will help us in the future to make up for any weakness and therefore Continue to help us to deliver good results for that region, despite the fact that China might be flat or slowing down.

Speaker 2

So these are the good things. They are going to contribute and we are very excited about them.

Speaker 10

Okay. Thank you for that. And then secondly, if I may, in North America, you made a comment that Volume benefited from a new short term agreement. Can you elaborate on that? What impact did that have and how long might it persist?

Speaker 2

Well, I don't want to disclose the name of the customer and so on, but we did get an opportunity because Could serve customers that other people couldn't serve. So we did get that benefit. But I would like to turn it over to Melissa To expand on that, Melissa?

Speaker 4

Yes. So thank you. So from a volume perspective in the Americas, that Agreement was about 3% of the increase in the volume. Now we will see that over the next 4 quarters be pretty consistent. So that's what we would see attributed to 2023.

Speaker 10

That's helpful. Thank you very much.

Speaker 3

Thank you.

Operator

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

Speaker 11

Thanks very much. In the NEOM ammonia production project, did the net Present value of your 1 third ownership stake in your mind change, that is you had a net present value assessment. Is it different now or is it the same or lower or higher?

Speaker 2

Good morning, Jeff. Hi, good morning. We were saying that we had a net present value, Which was the discounting of all of the cash flows that we expect in the few years. And now with the project financing, is that Higher or lower, I think it should be about the same or even better because we are doing project financing, Jeff.

Speaker 11

Right, because you're using more capital or the whole there's more capital that's going in. The second question is, Have you determined how much ammonia you're going to make in your Louisiana project? And does that project Is it necessary for there to be a substantial amount of ammonia for that project to go forward?

Speaker 2

Jeff, that's a very good question. We have disclosed publicly that that project will produce about 18.50 ton a day Approximately of hydrogen.

Speaker 5

Yes.

Speaker 2

That project is literally next to our pipeline. So we are assessing how much of that We can put to the pipeline and sell, because 18.50 ton of Hydrogen is not that huge compared to the total sale of hydrogen that we have on our pipeline, because our pipeline over there can do significantly more than that, Significantly more than that. Therefore, one scenario Is that all of the customers on the pipeline due to environmental regulations or the big legislation develops and so on decide, hey, I want blue hydrogen. Then we can just about all of the hydrogen into the pipeline. Then it is possible that not all of them would convert.

Speaker 2

Some of them would say, no, I'm still okay with great hydrogen, then we didn't have excess hydrogen to put and make it into ammonia. Therefore, what we are doing is that in terms of the actual building of the plant, We are building the plant to have ammonia facility. That means we will build the ammonia plants And then we will have ultimate capacity to and ultimate flexibility to use as much of the hydrogen in the pipeline and whatever we can use we make into ammonia. The ammonia plants themselves, Yes, in the context of the overall, don't cost that much. The ammonia plant, once you have the infrastructure, Putting a 1,200,000 ton ammonia plant by itself is only $250,000,000 So We are not going to lose anything significant by having basically like a spare capacity.

Speaker 2

And then the other thing is obviously how the demand for blue ammonia develop as we go forward in the next few years. So we are building a plant to give us the flexibility and this is the beauty of The situation that Air Products has that nobody else has is that we can make through hydrogen and we have total flexibility whether we can sell it as hydrogen or we can sell it as ammonium. Because of the unique situation, because we have the pipeline, and as a result of that, I think we can maximize the profitability of that Better than anybody else possibly

Speaker 3

can.

Speaker 11

So you haven't determined how much ammonia you're going to make

Speaker 2

I said we haven't determined how much ammonia we are going to sell,

Speaker 4

but we

Speaker 2

haven't determined How many ammonia plants you're going to build?

Speaker 11

Great. Thanks so much.

Speaker 2

Thank you. Thank you very much, Jeff. Yes.

Operator

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

Speaker 12

Yes. Good morning.

Speaker 2

Good morning, Vijay. How are you?

Speaker 12

Good. Seifi, on the Neom project, you had inflation And then you also had that $1,200,000,000 of increased sort of financing cost, etcetera. What is it? And that is so not the financing cost, I'm sorry. There's the additional cost, additional scope, I should say, And you're going to build transmission lines yourself, etcetera.

Speaker 12

What does that mean? Does that additional scope mean that The project could get delayed or do you think it's still on time for 2027?

Speaker 2

BBB is still on time for 2027. The additional scope is something that we have been thinking of and planning on it. And The progress on this project is that at the beginning you go over there and you say, okay, I'm going to build the plant. All of the infrastructure is already there or is going to be there and therefore we can draw on that. As the project goes forward, you will start getting a little bit concerned about the ability of other people to build things that you need.

Speaker 2

Therefore, With the project finance, we decided that we are going to do all of that. That increases the capital, but it saves us operating costs as I mentioned before.

Speaker 12

Okay. Thank you. And there was earlier discussion about hydrogen price. The IRA gives $3 per kilogram benefit to green hydrogen. But how much of that you think you and the industry will have to pass it on to customers, So they get lower hydrogen price.

Speaker 12

And I think that's the ultimate goal of the government is to lower the hydrogen price. So do you have any thoughts on how the industry Or the hydrogen price evolves over

Speaker 2

time? Thank you. Thank you, P. J. Obviously, That will be the case because if you are building a plant and we are going to get $3 for the green hydrogen And as I said, that $3 is actually more because if you build an integrated facility like we are doing, that means that the Wind and the solar is part of the project.

Speaker 2

You also get a benefit air product. So the total thing translated to per kilogram of hydrogen is more than $3 So We obviously when we do projects, we expect a return. If we are getting the subsidy, that improves the return. So we will pass through some of that to the customer And we will achieve the goal of the government, which is the goal of is to fundamentally reduce the price of hydrogen so that people can convert. That is exactly the goal and that is exactly what we'll have, PJ.

Speaker 12

Thank you very much.

Speaker 2

Thank you, sir.

Operator

We'll take our next question from Mike Sison with Wells Fargo.

Speaker 3

Hey, good morning. So on Slide 30, you talk about downstream hydrogen supply chain is about $2,000,000,000 between $25,000,000 to 28. Is that $2,000,000,000 a number that could go up as new projects or you look for new opportunities and the supply chain. And any thoughts in terms of the timing between 2025 and 28?

Speaker 2

Well, that was our estimate before about $2,000,000,000 but that number Could be less, could be more. And let me just explain. It depends on The customers, it is possible That you can have because when you look at the customers, there are some customers That are right, mobility, where you need a lot of infrastructure to serve. You have to bring the hydrogen to a port, have an ammonia tank, crack it, Liquify it, have the trucks to go and deliver to the gas stations and sell it to them. That is one way of selling the hydrogen.

Speaker 2

Another way is that somebody develops ships that can use ammonia and they want green ammonia. Then in that case, there is no infrastructure because the ship can dock in NEOM, Put ammonia in it and then use it as fuel. Then there is no infrastructured cost. Another customer could be somebody That you bring the ammonia to a port, you crack it and then you put it in a pipeline And that goes into a chemical plant or some other kind of a plant and They use all of that, then you don't have to liquefy, you don't have to build the infrastructure for trucks and so on. So the cost of that infrastructure is Very much dependent on the exact kind of customers.

Speaker 2

Right now, our best estimate Is that with the $2,000,000,000 we will be able to build an office infrastructure to use the capacity of new. But that could be significantly less or it could be more depending on exact infrastructure. But if it is more, Then that means that the infrastructure needed for the trucking is obviously more extensive, which means that the price of hydrogen at the pump It's a lot higher than the price of selling it if you didn't have to liquefy. So it will all adjust for itself. Okay.

Speaker 3

Got it. Thank you.

Operator

We'll take our next question from Vincent Andrews with Morgan Stanley.

Speaker 9

Hi, this is Steve Haines on for Vincent. Thanks for taking my question. Just I just wanted to ask a quick one on the other cost line and your EPS bridge, it was about $0.11 of headwinds in the quarter. How should we kind of be thinking about that going forward? Thank you.

Speaker 2

Well, the other costs, I'd like to have Melissa Comment on that, Alicia? Yes, absolutely. So the

Speaker 4

other cost line, we had a number of components this quarter play into there. We had a sizable maintenance, both in the Americas as well as in our India, joint venture our India segment. So that added additional costs this quarter. We should see that go down in next quarter. Fixed cost inflation, however, is a driver and at $0.11 and that will be consistent throughout this fiscal year.

Speaker 3

Thank you.

Operator

Okay. Hello? Thank you. We'll take our next question from Josh Spector with UBS.

Speaker 13

Yes. Hi. Thanks for taking my question. Just on the near term, when I look at your next quarter guidance, Jazan closed based on your math, maybe it adds $0.10 or $0.12 or so sequentially. I would think there's maybe some merchant benefit as energy Prices come down, maybe there's volumes down a little bit, but December quarter wasn't super strong from a demand perspective.

Speaker 13

So I guess, why wouldn't earnings be up Sequentially given some of the tailwinds, what am I missing?

Speaker 2

I don't think you're missing anything. Your logic is very, That is correct. The only thing is that when we make guidance, we have to kind of be cautious to make sure that we deliver it. The part that we are very concerned about and we don't have any visibility is What is going to happen in the Chinese and European economy? I don't know how the Chinese economy is going to come out of the New Year holiday.

Speaker 2

And we don't have much visibility currency in how energy prices These are going to develop in Europe. That is why we are a little bit cautious and you are very correct to kind of say that maybe you are being conservative, maybe Maybe we are, but we just wanted to make sure that we don't get ahead of ourselves.

Speaker 3

Fair enough. Appreciate it. Sure.

Speaker 2

Absolutely. Thank you.

Speaker 13

Sorry, if you had more go ahead, but I was going to ask just second quickly. The Canada project financing. Was that expected that anticipated in your economics? Does that change your cash margins at all?

Speaker 2

I'm sorry, I didn't understand.

Speaker 4

So thank you for asking that. So just to be Clear, on our Alberta project, we have no project financing associated to that project.

Speaker 2

Exactly. On the project financing, we do this project by project. In the Odessa thing, Because it's a very complicated project and so on, difficult to finance. Neon was pretty easy because there's an update price and so on and you can calculate it. Now with our project in changes, the $4,000,000,000 project that we announced, we will most probably look at project finance on that.

Speaker 2

But we make the decision step by step. The options that Air Products has, which is I love is that we have the option of using our own cash because we have the cash. We have the option of raising money by going to the market as Air Products and raising bonds and then we have the option of project finance. So we take everything into consideration and come up with the best possible solution. So with NIO, with the partners and so on, we decided project Finance was the best thing.

Speaker 2

Obviously, for Project Finance, you're going to pay a higher interest than if you have gotten increased bonds, Well, that was a joint decision with the other partners. Now for the project in Texas, we will probably do project finance. For the project in Louisiana, we probably would. It depends. And this is something that keeps our finance department and our treasury We've been busy trying to assess all of these things and we do ask all of those questions and we make the most optimum decision.

Speaker 3

Okay. Thank you. Okay.

Speaker 2

Any more questions, operator?

Operator

We'll take our next question from Laurent Favre with

Speaker 4

BNP. Okay.

Speaker 14

Hello. Good morning. Good morning. My question is on inflation risk for the rest Of the backlog, so if we take our NIM from the $19,400,000,000 there's about $15,000,000,000 left. I was wondering if you could talk about the risk that there we also see $1,000,000,000 or $1,500,000,000 of extra costs and whether you have flexibility on selling prices to adjust for that to maintain returns.

Speaker 14

Thank you.

Speaker 2

Well, thank you. The rest of our projects, obviously, some of them are a lot of the other projects that we have announced are actually in a much more advanced stage than NIM. So we have a pretty good feel for their cost and all of that. But I don't want to here deny the fact that there is inflation, but we just don't think that the inflation thing It's something that we cannot manage or it will significantly cause a struggle because with some of the projects I mean, let's take the project in Louisiana. The project in Louisiana, if there is inflation and our capital cost goes up, Then we will price the ammonia and the hydrogen out of that facility accordingly.

Speaker 2

So this is not the kind of project that we have Committed to a sales price for the product and now we have to keep the additional project cost. We do have process like that, but most of those things are just about that. So that's why we think we can manage. Okay. Thank you.

Speaker 2

Thank you. And operator, we have time for one more question, please.

Operator

Thank you. We'll take our final question from Laurence Alexander with Jefferies.

Speaker 7

Hi. This is Kevin Feksek on for Laurence. Thank you for taking my question. Just giving forecasts that we'll be likely entering a recession, I just wanted to get a sense of how merchant volumes and pricing fared during the last recession.

Speaker 14

If you can give me

Speaker 7

an overview of that, I would appreciate it. Thank you.

Speaker 2

Well, that's a very good question. The good thing is that I can I answered that very definitely because you have seen our results during the last recession? The last big recession Obviously, it was in 2008, 2009 and the second one was during COVID. And you saw what we have always said that industrial gains We have a lot of resiliency because half of our business is on track. That doesn't get really affected by recession because of the take or pay contracts.

Speaker 2

And our fixed volumes usually go down, but they do not go down significantly. We take actions to control our costs and therefore You can take a look at our actual results during 2019, 2010,008 or our results

Speaker 1

Thank you.

Speaker 2

Okay. Well, thank you very much. And this is Sage. I would like to thank everyone for joining our call today. We appreciate your interest and we look forward to discussing our results with you again next quarter.

Speaker 2

As I said earlier, please stay safe and healthy and all the best to all of you. Thank you.

Operator

Thank you. That will conclude today's call. We appreciate your participation.

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