Good morning, and welcome to Air Products and Chemicals Fourth Quarter Earnings Release Conference Call. Today's call is being recorded at the request of 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. Simon Moore, Director of Investor Relations. Please go ahead.

Thank you, Sandra. Good morning, everyone. Welcome to Air Products fourth quarter 2015 earnings results teleconference. This is Simon Moore, Director of Investor Relations. I'm pleased to be joined today by Seifi Ghasemi, our Chairman, President and CEO; Scott Crocco, our CFO; and our senior business leaders. After our comments, we will be pleased to take your questions. Please limit yourself to one question and a follow-up. Our earnings release and the slides for this call are available on our website at airproducts.com. Please refer to the forward-looking statement disclosure on page 2 of the slides and at the end of today's earnings release. Now, I'm pleased to turn the call over to Seifi. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you, Simon, and good morning to everyone. Thank you for taking time from your busy schedule to be on our call today. We do appreciate your interest in our company. First, let me introduce the members of our team who are on the call today. In addition to Simon, I have Mr. Scott Crocco, our Senior Vice President and Chief Financial Officer; Mr. Corning Painter, Air Products Executive Vice President responsible for Industrial Gases; and Mr. Guillermo Novo, Air Products Executive Vice President in charge of Materials Technologies. All of us will be participating in the call and in answering your questions. A year ago, we promised our investors we would deliver earnings of $6.30 to $6.55 per share in fiscal year 2015. I am very proud to announce that despite weaker than forecasted economic activity and a headwind of more than $0.40 per share due to currency translation, the people of Air Products delivered earning per share of $6.57, which is higher than the top end of our forecast and a 14% improvement versus last…

Thanks, Scott. Please turn to slide 16. First, I would like to thank the entire Industrial Gases team for delivering a very strong FY 2015. Implementing the five-point plan was our key focus this year. We decentralized the organization to create greater local authority and accountability and more of an entrepreneurial spirit. This allowed us to significantly reduce our cost structure. Our new incentive system, which energizes and rewards local teams for their EBITDA performance, focuses us on cash flow and reinforces the cultural changes we are driving. We have more to do in terms of safety, speed, simplicity and self-confidence, but we are excited to be on our way. The hard work of our people combined with our streamlined and faster organization produced tremendous results in every region. For the full fiscal 2015, Americas' EBITDA margin was up 450 basis points despite modest economic growth. EMEA's EBITDA margin was up 180 basis points despite weak economic growth. And Asia's EBITDA margin was 210 basis points despite the merchant overcapacity and slowing economy in China. Our people delivered these results by staying focused on what we control, namely, working safely and driving costs out with the new and simpler organization, and we stay focused on customers. As Seifi has mentioned, we are very excited to be awarded a number of key projects this year that will support profitable growth into the future. We had a pair of announcements in the last two weeks on our U.S. Gulf Coast pipeline system. First is a new agreement to supply 44 million standard cubic feet a day of hydrogen from our pipeline system to Pallas for ammonia production in Pasadena, Texas. Pallas will enjoy the speed, simplicity and reliability that comes from the world's largest hydrogen pipeline network. Second is a new world-class…

Thank you, Corning. On September 16, Air Products announced the intention to separate our Materials Technologies business through a tax-free spinoff to our U.S. shareholders. This strategic decision will allow both Materials Technologies and Air Products Industrial Gases to leverage our respective strengths and will enable better business performance for both companies over the long term. The Materials Technologies team is very excited about the tremendous opportunity to remain focused on executing our strategy while driving safety, business improvement and taking care of our customers. At the same time, a number of us are working on the key steps required to enable the spin-off. We're making good progress and continue to expect to complete the transaction before September 2016. Prior to the transaction, I look forward to the opportunity to spend time with you to share more details on our plans for the future success of this business. Please turn to slide 20. In Q4, segment sales of $490 million were down 13% versus prior year, including a negative 4% impact from currency. Underlying sales were down 9% on 11% lower volumes and 2% higher prices. As I indicated on the last call, we have begun seeing some of the softening in the macro demand across our portfolio, especially in Asia and particularly in Delivery Systems. Let me share with you the key drivers for Q4 results. For the Electronics segment, the 9% underlying sales reduction is all due to the Delivery Systems business. As we discussed in the past, this business consists of both equipment sales and turnkey installation work. We completed several major turnkey projects last year which did not repeat. These projects had a big impact on 2014 Q4 and 2015 Q1. We also saw the anticipated impact of the CapEx spending softening in the semiconductor industry…

Thanks, Guillermo. Our Corporate segment consists of our LNG and helium container businesses as well as corporate costs which are not business-specific. Sales were up this quarter versus last year as we continue to see higher LNG sales more than offsetting lower helium container sales. The LNG projects in our backlog continue with no delays or cancellations. However, we have seen a slowdown in customer decision-making on new projects that will likely impact our FY 2016 results. The improved profitability this quarter was primarily driven by the higher LNG activity and the benefit of reduced corporate costs. Now, I'll turn the call back over to Seifi. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you again, Simon. Now, please turn to slide number 22 for a discussion of our outlook. The Air Products team continues to stay focused on our goal of becoming the safest and most profitable industrial gas company in the world. We have made great progress in fiscal year 2015 and delivered a 14% improvement in our operating profit. And we expect to continue our journey during fiscal year 2016. Our guidance for fiscal year 2016 is to actually deliver earnings per share of $7.25 to $7.50 per share. At mid point, this will be an increase of $0.81 or 12% over our very strong fiscal year 2015 performance. Our guidance for the first quarter of fiscal year 2016 is for earnings per share of $1.65 to $1.75. At mid point, this will be an increase of $0.15 or 10% over the fiscal first quarter of last year. The full year and quarterly guidance obviously includes Materials Technologies. We expect our CapEx expense to be about $1.5 billion to $1.6 billion in 2016 which is down slightly from this year. As you have seen from our recent project announcements, we see great opportunities to invest Air Products substantial cash flow into good high-return projects in our core Industrial Gases business. Despite an uncertain economic environment, the Air Products team will stay focused, as they did this year, to take actions that we control to actually deliver the results that we promise despite economic conditions or currency exchange rates. I would like to add that I have now been Chairman and CEO of Air Products for the past 16 months. I am now convinced more than ever that Air Products has a great future ahead of it. We do have an outstanding team of talented, dedicated and motivated people who are driving change, and we are blessed with having the great portfolio of businesses around the world with more than 700,000 outstanding customers to serve. I'm proud of our people and considered it an honor and a privilege to be part of this winning team. Now, we are delighted to answer your questions.

And we'll go first to Duffy Fischer of Barclays. Mr. Fischer, your line is open. Please go ahead.

Yes. Good morning, fellows. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Hi, Duffy. How are you?

Good. Thanks. Maybe start on Seifi's favorite slide, slide 8. Very impressive performance in the margin there. Can you break out into buckets where the big chunks of that have come from? How much has been from the cost savings? How much has been from new plants coming online? And then maybe talk about how that would have been different than what you would have thought day one that you took the job where that was going to come from? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Well, approximately half of that 700 basis points is cost savings and the other half is related to price increases, volumes and the new plants coming onstream. And in terms of my expectations the day that I started, I thought that it would take us three years to get that 300 basis points improvement and it has been accomplished in one year and I'm very proud of that.

Great. And then from your slide 9 where you walked through the cash flow there, maintenance capital last year was $311 million, maintenance capital this year $250 million. When you think about maintenance capital, I would have thought there isn't that much variation from year to year. How should we think about a normalized maintenance cap level for you guys? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: We have always said that order of magnitude around $300 million.

Okay. Great. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Yeah. Sure. Thank you.

Thank you, guys. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you.

Thanks, Duffy.

And we'll go next to Jeff Zekauskas of JPMorgan.

Hi. Good morning. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Good morning, Jeff.

Hi. You said that your CapEx next year would be, I don't know, $1.5 billion or $1.6 billion. Is that also your non-GAAP CapEx or is your non-GAAP CapEx different? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Scott, you want to... Michael Scott Crocco - Chief Financial Officer & Senior Vice President: Yeah. Hi, Jeff. That is both our GAAP and non-GAAP CapEx. We haven't been doing – the adjustment that you're referring to is the capital leases in the 2001-2008. We haven't been doing those lately, so that's both GAAP and non-GAAP.

And you were kind enough to give an indication of what you thought you would earn next year. Your GAAP earnings have been lower than your adjusted earnings. Do you have an idea of what your GAAP range would be for next year? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: I don't expect too many so called one-off items. The biggest one-off items we have had this year has been the restructuring, which has been about $212 million, $213 million. And next year, there will be some restructuring charge, but I don't expect the magnitude to be as big, Jeff.

Okay. Good. Thank you so much. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you.

And we'll go next to P.J. Juvekar of Citi.

Yes. Hi, good morning. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Good morning, P.J.

Couple of questions on China. First, three major projects you're starting up with 20,000 tons per day of oxygen. What is the EPS impact of these projects? And then secondly, you mentioned that you have this new strategy of increasing your retail sales in China and reducing your wholesale volumes in China. Can you just talk a little bit more about that strategy? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Sure. I think Corning would be delighted to answer the questions.

So I'm not sure that we've given out specific guidance on specific projects, but I think, in general, we would expect them to come in with the profitability that you would expect from the guidelines we put out. I think the key point is this is a question of exactly what's the timing and when are they on and fully onstream but, again, we see all of our customers progressing their plants, building them to construction. They don't operate without oxygen, so they need us and they pay us for it. I don't expect big surprises there. In terms of retail versus wholesale, so I think it's common when people first bring on a new liquefier that in terms of getting loading, a lot of that volume may go into a wholesale sort of environment. We don't have new liquid to bring on at this point. All of our liquid is currently on. And so we're naturally in the process of preferentially signing and selling to retail customers and, to a large extent, that's about application sales, helping customers to be more efficient and more productive in their own operations and that's something you can do in any economic environment, right, because you're helping them to be more competitive. And when you think an emerging market, right, they're not typically as, let's say, industrial gas intensive or developed as a more mature economy and that's another reason we're able to push that in China today even in the current economic environment.

Thank you. And my second question is on your free cash flow. Can you talk about sort of if you have any growth, long term growth for free cash flow? And Scott, maybe a rationale for buying out Indura now? Thank you. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Go ahead. Michael Scott Crocco - Chief Financial Officer & Senior Vice President: Sure. So in terms of free cash flow, as we've talked in the past, we're going to make sure that we maintain our A rating. We're going to drive EBITDA up, generating as much cash out of the existing assets we have and then we're going to evaluate the growth opportunities with organic growth opportunities being the ones that we're going to be able to create the most value for our shareholder. That's what we done under Seifi over the last 16 months and that's what we're going to continue going forward. In terms of Indura, that was exercised by our minority partner per the contract, and so that was a put that he put to us. And now that we own that, we have the opportunities to take control and drive improvements across the business that we weren't able to do previously. By the way, you'll see that also in a variety of forms, including the fact that we paid down some high cost debt, about $147 million bond that was out there at roughly 10%. And so, we're going to see some improvement in interest expense as part of what we did here this quarter. So, another example of the things that we're doing in Indura to drive improvement.

Thank you. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you, P.J.

And we'll go next to David Begleiter of Deutsche Bank.

Thank you. Good morning. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Good morning, David.

Hi, David.

Seifi, very impressive margins in Gases-Americas, EBITDA of 34.9% in 2015. How much higher can it go in 2016 do you think? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Well, obviously, some of that is dependent, David, on what the economy will do and what kind of a leverage we get. But at the same time, we have said that we are going to have another $75 million of cost savings in 2016. A lot of that is in the Americas, so I expect those margins to continue to improve.

Very good. And just on Tees Valley, Seifi, do you have an update? And what should we think about the impact from a earnings standpoint from Tees Valley to be in 2016? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: There will be no income from Tees Valley in 2016. In our forecast that we have given you, there is no consideration for any contribution from Tees Valley.

Will it be a loss-making entity in 2016? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: I'm sorry?

Will it lose money in 2016? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: No. I don't expect it to lose money.

Thank you very much. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you.

And we'll go next to Bob Koort of Goldman Sachs. Robert Andrew Koort - Goldman Sachs & Co.: Thanks. Good morning, guys. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Good morning, Bob. Robert Andrew Koort - Goldman Sachs & Co.: Seifi, I want to follow up on Tees. I recognize your desire to be pretty cautious and conservative on that. But you guys are plunking down $1 billion. And at the time the contracts were written, I thought they were fixed price. Has something changed about the revenue base that you'd previously contracted for that would put it into a breakeven position instead of a moneymaker? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Well, the Tees Valley, Bob, we are in the process of starting up that plant. So we don't expect that plant to really be in commercial operation in 2016. So that's why we have assumed that it would not be contributing to the bottom line. Robert Andrew Koort - Goldman Sachs & Co.: Sorry. Just to be clear, so the contract terms you had on the waste fee, power fee, renewables, none of that's changed? It's just the ability to get it into commercialization and it's... Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Yes. Robert Andrew Koort - Goldman Sachs & Co.: ...I guess it's at least three years behind. Is that an indictment of the technology or is there some other issue at work? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: No. It's just related to the technology. We have always said that there is a chance that the technology will not work, Bob, so we are still working to figure out whether it does work or not. Robert Andrew Koort - Goldman Sachs & Co.: Okay. Thanks.…

Take care, Bob.

And we'll go next to Don Carson of Susquehanna Financial.

Yes. Thank you. Seifi, just wondering, in next year's guidance, how much greater is the contribution from new projects? And as you look at the backlog, I notice you indicated your new Baytown facility was sold out the day you announced it. So should we assume more announcements on U.S. Gulf Coast hydrogen, and could that be offset by sort of the end of the Chinese coal gasification opportunity? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Well, first of all, I don't expect that the Chinese coal gasification would – that it is the end. I think there's still a lot of opportunity there, and we will appropriately participate on that. We have gotten off of the habit of giving you a specific forecast about new projects because that is too much competitive information to give away. So I apologize for not giving you that. But we are very optimistic. You have seen the projects that we have announced. And we are saying that next year, our forecast right now is that we will increase our profits by 15% as compared to other people. So I think that's a good indication that we will see additional volumes.

Okay. And then as a follow-up on price, I notice your October 1st price increase initiative. It seems pretty aggressive for North America, given where operating rates are, I think 20% on liquid argon, 15% LIN/LOX. And I know these take time to roll through, but are conditions in the North American merchant market improving to the point where you think you can get a lot of this price? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Well, obviously, we hope that that would be the case. And then what happens in the real world, it remains to be seen but it certainly is our intent to implement the price increases.

Okay. Thank you. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you.

And we'll go next to John Roberts of UBS.

Thank you. 2016 will be the fourth year of lower capital spending. Based on these new wins and so forth you've been having recently, do you think this is the bottom in 2016? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: I wouldn't want – well, you have to consider that Air Products spent a significant amount of money on the waste to energy project. Obviously, we are not going to invest in waste to energy projects in the future. So if you take that out, then I think we will continue to see a growth in the investment in the gases business.

Okay. So, the total number might decline but gases would be turning around? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Yes, sir.

And then, in the Materials segment, the dispensing equipment part of the business has always had greater cyclicality. I don't believe that you manufacture the equipment. So, is there a different business model you might take in that business that would make it more variabilized so that you reduce the cyclicality on the total business? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: That's a very good question. I'm going to have Guillermo address that question.

Thank you for the question. If you look at our Delivery Systems business, it's roughly around 10% of the portfolio. As I indicated, there's really two parts to it: the equipment side and the turnkey projects. The equipment side, we actually do manufacture all the delivery equipment both for the specialty gases, the specialty materials and we also have a business for slurry delivery in part of the portfolio. So those we do manufacture and we do sell. There is some volatility in that part of it, but it's pretty steady. Where we get the majority of the volatility is in the turnkey projects, and those are really project-driven activities. And those are just going to be the nature of when the projects come. But the turnkey projects is not the majority of the business. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you.

Thanks.

And we'll go next to Jim Sheehan of SunTrust Robinson Humphrey.

Morning, Seifi. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Hey, Jim. How are you?

Great. Say, on your 2016 outlook, what are you incorporating there as your assumption for FX headwinds, and how much of the growth is going to be attributable to organic growth, please? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: In the forecast that we have given you, we have assumed that we will have a hit of about $0.10 for exchange rate translation. That's the assumption that is in there. In terms of organic growth versus – we have assumed not much of a organic growth because we don't believe that the economic conditions around the world will be that robust next year. So, most of our growth is going to – the growth in EPS is going to come from cost reduction and from our on-site businesses.

Thank you very much. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you, Jim.

Thanks, Jim.

And we'll go next to David Manthey of Robert W. Baird. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Hi. Good morning. Seifi, it looks like you achieved the first $300 million of cost improvement about three months ahead of your recent plan, so you're on to the next $300 million. Can you outline some of the examples of operational improvement that you hope to achieve over this four-year period? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Sure. I think I'd like to have Corning kind of address this because he is in charge of the delivering the other $300 million. Corning?

Thank you, Seifi. So, the reality is in this business, the nature of our business, this is the 10,000 little things that we talk about. And even if I was going to say improving spec power, well, it's spec power over many different plants, all of whom have their own operating situation. So I think the thing I'd really like to stress here is what enables you to drive 10,000 things better than you used to? And it heavily goes to the organizational changes that we've made, right? So, we've gone to a much more decentralized and empowered field organization where those production assets are. Number two, we have one owner for these assets. It used to be there might be someone who had the tonnage business or electronics business and then the merchant business, different debates about how to optimize the use of that. That's over. That's done. That's behind us. And then, we've got the incentive plan, right, which motivates every one of these local teams to think about their EBITDA, how do they drive productivity, every one of them each day. And I think those three drivers are a very powerful move that's moving us through to optimize those 10,000 and to hit these productivity targets. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Okay. And your confidence level there, I would imagine you have folks that have run these types of facilities for you that have also run them at other companies and roughly 300 basis points of the overall you think is a reasonable estimate for how inefficient your operations are relative to what something would be running it if it's optimal today?

So, I think I'd rather not get into is it optimal, unoptimal today, this and that. I think a couple of things here. Number one, there is something going on in this company and we are absolutely, positively committed to being the safest and most profitable company while giving our customers excellent service. That's what this is about. And if other companies move up, then we just need to do more. We are committed to that. We're motivated for that. We've kind of unleashed the productivity with this new organization. And do we see opportunities to do things better in line with what we're doing? Yes. Do we have plans in place for this? Yes, we do. David J. Manthey - Robert W. Baird & Co., Inc. (Broker): Okay. Thank you.

And we'll go next to Vincent Andrews of Morgan Stanley. Vincent Stephen Andrews - Morgan Stanley & Co. LLC: Thanks. Just a quick one for you, Scott. In Asia, you mentioned there were these catch-up payments. I'm just wondering if you could give a little bit more detail on what they were, whether there are any more to come going forward and whether they were 100% margin in the quarter? That'd be helpful. Michael Scott Crocco - Chief Financial Officer & Senior Vice President: Yeah. Corning?

Yeah. Thank you. So these are, of course, specific to an individual or a set of customers, so it's very difficult to go into the specifics about them. I think the key point is associated typically with a start-up and which products they want and where are we in terms of the start-up process at different points in time. And perhaps the other really key point is we've collected everything. So it's all in the P&L and it's all been in. And so I don't see that repeating in a significant way going forward. Vincent Stephen Andrews - Morgan Stanley & Co. LLC: Okay. Great. Thanks very much, guys. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: All right Vince. Okay. Why don't we take one more question?

And we'll take our final question from Mike Harrison of Seaport Global.

Hi. Good morning. Thanks for squeezing me in. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Good morning. We knew you were on the line, so go ahead, Mike.

Thanks very much. Was curious if you could delineate what the split is between your retail and wholesale merchant volumes in China now and how has that changed over time? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Sure. Well, I think Corning can answer that question easily. Go ahead, Corning.

Yeah. Because of the competitive nature, I think we would rather not go into the specifics of this other than to say that, let's say, in LOX/LIN, we are, at this point, certainly predominantly retail direct to customers, and we see a slow but steady improvement. With a large basis like that, it doesn't change overnight. But I'd rather not get into exact specifics just for competitive reasons.

Okay. And then, looking at the Industrial Gases- Global segment, there was much better profitability this quarter. You called out some lower costs, but are we starting to see the Jazan ASU sales trickle in there and can you give any guidance for that segment for next year? Seifollah Ghasemi - Chairman, President & Chief Executive Officer: There isn't much of Jazan in the numbers that we have for 2015. And for 2016, I think Jazan is a project that is a 20-year project and the profits will come after the plant starts up four years from now. For 2016, we are going to be very cautious in recognizing any profit in terms of the sales from the plant because these plants need to come onstream. You had a lot of obligations in terms of performance guarantees and all of that. So one has to be cautious and there is a lot of accounting rules that we have to follow on that. So there isn't a lot of projections for a lot of profit for that in 2016.

All right. Thank you very much. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: Thank you. Seifollah Ghasemi - Chairman, President & Chief Executive Officer: And so with that, I'd like to thank everybody. Thank you for taking the time again to be on our call. We appreciate that and we look forward to discussing our results with you in the next quarter.

And this does conclude today's conference. We thank you for your participation. You may now disconnect.