Good morning. And welcome to the Air Products and Chemicals First Quarter Earnings Release Conference Call. [Operator Instructions] 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, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Dede. Good morning, everyone. Welcome to Air Products' first quarter 2016 earnings results teleconference. This is Simon Moore, Vice President of Investor Relations. I am 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. Our earnings release and the slides for this call are available on our Web site 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.

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 Air Products. 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 our material technologies business. All of us will be participating in the call and in answering your questions. I am very pleased to report that Air Products delivered another set of excellent results this quarter. Despite significant global macro uncertainty and currency headwinds, our team stayed focused on our five-point plan and delivered earnings of $1.78 per share, which is up 15% over last year. Another quarter of outstanding performance is due to the tireless and focused efforts of Air Products' 20,000 talented, committed and motivated employees around the globe. I want to thank the people of Air Products for coming together to prove that they have the determination and the capability to deliver outstanding results and move our company forward so that we can be the best industrial gas company in the world. That is our goal. However, I am disappointed with one aspect of our performance. Please turn to slide number 3. Our safety performance this quarter was worse than previous years and, therefore, it is not acceptable. Our goal includes being the safest industrial gas company in the world. We have a responsibility to our employees and their families to ensure everyone goes home every day with no injuries or accidents. At Air Products, safety is the responsibility of every…

Thank you very much, Seifi. Please turn to slide 9 for a review of our Q1 results. Sales of $2.4 billion decreased 8% versus last year on unfavorable currency and lower energy pass-through impacts of 5% each. Volumes increased 1% as Gases Asia growth continued, while Material Technologies and Gases Americas and Gases Europe volumes were lower. Corning and Guillermo will discuss more on that later. Pricing was 1% higher for the fifth consecutive quarter, again driven by price increases in Gases Americas and Gases Europe and both price increases and mix in Material Technologies. We delivered significant operating leverage again this quarter as EBITDA of $786 million improved by 9% and operating income improved by 17% despite the lower sales. EBITDA margin improved 520 basis points to 33.4%, while operating margin improved 460 basis points to 22%. We saw margin improvements across all segments. Lower energy pass-through only contributed about 60 basis points to the operating margin improvement. The rest of the operating margin improvement of about 400 basis points resulted primarily from lower costs and higher prices. Our actions continued to show results and this quarter is another new record for the highest quarterly operating margin in over 25 years versus prior year net income and earnings per share grew 15%. And we continued to improve our return on capital employed, which increased 160 basis points to 11.7%. Now please turn to slide 10. You have heard Seifi and I talk about our focus on cash flow and that we do not want to borrow money to pay dividends. As you can see, distributable cash flow increased by $88 million this quarter due to higher EBITDA and slightly lower maintenance capital. We remain focused on spending the right amount of maintenance capital at the right time and properly…

Thanks, Scott. First, I would like to thank the entire Industrial Gases team for another very strong quarter and step up in our margins. Despite currency headwinds and challenging economic conditions just about everywhere, we improved overall EBITDA margin by 450 basis points year-on-year. Going forward, we're going to drive operational productivity to new heights at Air Products and we are going to work tirelessly to improve safety. In our highly-distributed business, we often describe operational productivity as 10,000 little things. That means we have many opportunities to act and our new, simpler organization is helping us to act with speed. For example, we used to have a bias to purchase on corporate global, sole-source agreements. And that's a good strategy for some things, but not everything. In our new organization an empowered regional team broke this paradigm. They decided to multi-source. That meant we could introduce low-cost local suppliers and we could select the best supplier for each location. Our other regions are replicating this and we would expect savings in the 40% range. We are also improving distribution routing and fleet efficiency by working with third parties that bring new ideas. We are improving operating and maintenance efficiency by using our data to adjust maintenance intervals and improving network efficiency by consolidating facilities. These are some of the 10,000 things. With that, please turn to slide 12 for a review of our Gases Americas first quarter results. Despite currency headwinds and weaker volumes, our continued focus on cost drove the margin expansion. Sales of $836 million were down 17% versus last year as the pass-through of lower energy prices reduced sales by 12% and currency reduced sales by 4%. Volumes were down 3% on weakness in Latin America and in the North America steel and oilfield services markets.…

Thank you, Corning. Please turn to slide 15. Let me start with a few general comments before I go into the numbers. In September of last year, Air Products announced its intention to separate Materials Technologies business through a spin-off to our shareholders. This strategic decision will allow 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 new company will be called Versum Materials and will be highly profitable with strong cash flow generation and solid growth prospects. Our team is very excited about this tremendous opportunity and as you can see from our strong results, we remain focused on executing our strategy while driving safety, business improvement and taking care of our customers. We are also making good progress on key steps required to enable the spin-off, which we expect to be completed before September of 2016. For example, in December we submitted the initial draft of our Form-10. On February 24, George Bitto, Versum's future CFO, Simon, and I plan to host a conference call to help you understand our business including our key markets, products, as well as our plans for future success. Given the progress we have made in the spin-off process and the level of financial information we have provided, you will see we are sharing more details about our business. I will first make a few comments on our overall Materials Technologies segment and then make more specific comments on Electronic Materials and Performance Materials results for the quarter. Segment sales of $490 million were down 6% versus last year, including a negative 2% currency impact. As a reminder, for Materials Technologies, currency volatility has a greater impact on our business than on the industrial gas business of…

Thanks, Guillermo. Our corporate segment consists of our LNG and helium container business, as well as corporate costs which are not business specific. Sales were flat versus last year as higher LNG sales were offset by lower helium container sales. The LNG projects in our backlog continue with no delays or cancellations this quarter. However, we have seen a slowdown in customer decision-making on new projects that will likely impact our FY'16 results. The improved profitability this quarter was primarily driven by the higher LNG activity and the benefit of reduced corporate costs. Now I will turn the call back over to Seifi.

Thank you again, Simon. Now please turn to slide number 20 for a discussion of our outlook. The Air Products team is focused on the things we can control toward our goal of becoming the safest and most profitable industrial gas company in the world. Our guidance for the second quarter of fiscal year 2016 is for earnings per share of $1.78 to $1.83. At midpoint this will be an increase of $0.26, or 16%, over the second quarter of last year and will represent our seventh consecutive quarter of double-digit earnings growth. Despite an increasingly uncertain economic background and increased currency headwinds, we are confident in delivering on and are maintaining our full-year fiscal year 2016 guidance of $7.25 to $7.50 per share. At midpoint this will be a 12% increase over our very strong fiscal year 2015 performance. The full-year and quarterly guidance includes the Materials Technologies business as part of Air Products for the full 2016. Primarily as a result of our decision to suspend construction of Tees Valley II project, we now expect our CapEx to be about $1.3 billion for the year, down about 25% from fiscal year 2015. As you can see from our results, we improved free cash flow by $200 million this quarter. You have heard me talk about priorities for the use of cash we generate and I would like to reiterate them in the order of priority. Our number one priority is to maintain an A credit rating. Number two, we will use our cash to invest in good projects and good and accretive acquisitions. Number three, we will continue to increase our dividends. And number four, finally, if and only if, there is excess cash available, we are very comfortable returning money to our shareholders in the form of…

[Operator Instructions] We will take our first question from Mr. Bob Koort with Goldman Sachs.

Good morning, everybody. This is Chris Evans on for Bob. I was wondering if your increasing free cash flow position changes your appetite for share repurchases going forward?

Well, I've just been through our priorities in terms of what we will do with the free cash. As I said, we are going to maintain our A rating. We are already there. So we don't need to spend more cash to do that. And then I said that we are going to invest in new projects. We of a lot of new projects in place and a lot of future ones that will require cash. We are focused on making good acquisitions and there are plenty of opportunities to take a look at that, but -- and we want to increase our dividend. Now after that, if we still have cash left, yes, we will buy shares, but as I said, please just take a look at our order of priorities.

I would ask you then if the credit market environment, if that changes any of your thoughts about the MT spin or your expectations for what your interest expense is going to be there.

Well, we have said that we are going to spin Material Technologies by September of 2016. So I understand that there are difficulties right now with the credit markets and the stock market in general, but we are not about to spin Material Technologies next week or next month. So we are obviously going to monitor what is going on in the world and when the time comes, we will take everything into consideration about what we want to do.

Thank you.

Thank you.

The next question comes from David Begleiter with Deutsche Bank.

Thank you. Good morning, Seifi.

Good morning, David. How are you?

Very good. Thank you. Seifi, on pricing, trends remain positive. What's your view on potentially -- should they remain positive for the full year? And what's the potential for these trends to actually increase or accelerate going forward?

As I said, we are optimistic about our future. We have given you a forecast for the year, which is -- has a wide range on it, $7.25 to $7.50. So we obviously -- our goal is to make the $7.50 not the $7.25. And our self-help projects are actually delivering results. That's why we were able to beat the guidance for the first quarter, because our cost savings delivered more than what we expected. So we do remain positive.

Just one more thing, Seifi. Given the combination of Air Liquide and Air Gas, can you discuss any threats or opportunities that combination might present to you in the short term or longer term?

Well, David, that's an interesting question and I'm at a loss about how to respond to that without hurting anybody's feelings on either side. But fundamentally, as we had always said, Airgas was not a strategic acquisition for us. We never thought it was. At the end of the day, if you take our industrial gas sales of about $8 billion, the overlap with Airgas is only about $1.5 billion, if you exclude our HyCO business and our business in Europe and Asia. So it was never a strategic thing. We don't feel that we have lost anything, but by -- there are other people going and paying an arm and a leg to buy the business. So we have to wait and see how it develops, but we certainly are focused on taking advantage of any opportunity that may arise.

Thank you very much.

Thank you, David.

Thanks David.

Next, we will go to Steve Byrne with Bank of America.

Hi. I was just wondering, out of your plants in China that are in coal gasification operations, what end-markets are you most levered to? Is it polyethylene, ammonia, methanol? Some of those are not doing very well. And is the profitability of your take-or-pay contracts -- is affected by operating rates?

First of all, as you know the nature of our business, our supply contracts have a fixed monthly charge. It is not dependent on the profitability of the customer. So whether those markets are up or down doesn't really affect our monthly fee that we get. The second thing is that most of our exposure is to coal to liquids and we don't have a lot of exposure to methanol and all of that. But I would like Corning to expand on this.

I think the key thing here is they are all operating. These are plants with high fixed costs, low operating costs. We have a mix of end-markets that it goes into. We've got strong contract coverage and you can see the impact in our results. It's quite a positive for us.

But you do have an effect on operating rate? It does -- beyond the monthly fee?

No, it doesn't.

No, no.

It doesn't. It's a fixed price. Whether a customer operates at 70%, 50%, or 90%, we get the same fee.

Okay, thank you.

Thank you.

And our next question comes from P.J. Juvekar with Citi.

Yes. Hi. Good morning.

Good morning P.J. How are you doing this morning?

I'm doing well. In Asia your volumes are up nicely, 11%. How much of that was base business and how much of that was any new plant start-ups that you had?

Well, I'd like to have Corning answer that.

Right. So thank you for the question. A little more than half of that is the new plant startups, and we all expect that and so forth. But nearly half of that step up is the base business, including in China, so I really think that's tremendous and speaks a lot about the resilience of the business we have there.

With oil prices near $30 are you seeing any project delays or cancellations in energy end-markets? I noticed that you dropped your CapEx guidance. Is that because you're going after high-return projects or is that because there is not a growth -- lack of growth opportunities or sort of combination of both?

P.J., we have not seen any cancellations of the projects that we are working on. We have dropped CapEx because -- primarily because we have stopped spending money on Tees Valley II. That expenditure, P.J., was at the rate of more than $20 million a month. So that is where the saving is coming from.

Thank you.

Thank you, sir.

Thanks P.J.

Our next question comes from Jeff Zekauskas with JPMorgan.

Hi. Good morning.

Good morning.

Can you talk about your backlog in LNG and how much risk you think is in the business this year if you think there is risk in it?

There is no risk on the business this year. The projects that we are working on are -- have not been canceled, Jeff. I think we said that at the -- Simon said that in his comments.

Sure.

We haven't seen any cancellation. The issue that we have is for the future projects that we were counting on, on the years to come. Those projects have been put on hold. None of them have been canceled, but they have been put on hold. So that's the part that we have to see but this year we are not at risk at all.

Okay. Thank you for that. And then, for my follow-up, if you look at your industrial gas demand in Europe and in the United States, it seems to be somewhat below GDP growth. And there are all kinds of reasons why there are pressures on the industrial gas business. Has the sort of the makeup of your customer base changed so much that it's difficult for industrial gas to grow at a GDP rate now or do you see this as merely cyclical?

Look, Jeff, on that one I will you an answer and then I will allow Corning to expand on that.

Sure.

I mean, you know, very well that the GDP in the United States, 70% of that GDP is discretionary consumer spendings. The industrial production, which our sales are related to, that one is not growing as much. So our correlation of our sales has always been with industrial production. So as a result of that, we don't see any change in our customer mix to make us believe that we will have lower growth rates as compared to the past. But, Corning, you want to make any comment?

Maybe just one other insight I can add to that. I think we're in a market situation where it's maybe a little less likely to make -- useful to look at a broad, sweeping statement about a market -- Europe, North America, China in that different segments within each industrial economy are doing better and worse and have very different approaches. Even in steel you could say, well, there's overcapacity. It is impacted by lower oil, but automotive demand is quite strong. So I think we are sort of in a spiky market where some specific end-markets do better and worse than others.

Okay, great. Thank you so much.

Thank you very much.

The next question will come from Vincent Andrews with Morgan Stanley.

Thank you and good morning, everyone.

Good morning.

The comments you made on the Americas pricing, it sounded like you saw solid pricing in South America. I'm just wondering how much of that was sort of trying to recover currency and was that ultimately offsetting negative pricing in the United States or what's the trend as you move across the different sub geographies of the Americas?

Sure, Corning?

Maybe the best way to get to this question of underlying cost versus pricing is we had margin expansion, let's say from the mix of that, in both regions. Does that answer your question?

Yes. That answers my question. Then just as a follow-up. Do you have an update on Tees Valley I to share with us?

Not really, Vincent. What we have been doing with Tees Valley I is for the past year we start the plant up, learn something; the plant goes down because something goes wrong. So we're in an iterative process of trying to learn how the gasifier behaves and if we can make it work on a sustainable basis. There is a still significant outstanding question about if we will ever be able to get it to work on a sustainable basis. And as I said, we have given ourselves a few months to keep trying it, but there will come a time that we might stop trying. The technology is proving to be a lot more difficult than people thought at the beginning and I have to say we haven't made a lot of significant progress since we talked to you last time.

Okay. Thank very much.

Thank you.

And next we have John Roberts with UBS.

Good morning, nice quarter.

Thanks John.

Corning, was most of the 2% price increase in the Americas in South America? It sounded like you made a comment like that. And so we should think about that as recovering currency?

We had pricing success in both North and South America. If I were going to lay this all back to underlying what's behind it, I would say, as much as anything, it is good service, which gets you the right to raise their price, combined with good discipline. Obviously, power rates and other inputs are a factor to it, but particularly to the comments I made before about margin, I think it comes down to discipline and service.

And then, secondly, do you still expect Versum to be as leveraged as you originally thought? Rates for higher debt companies have gone up, so I was wondering whether you are rethinking that.

We will decide that finally about, quite honestly, two weeks before we actually go public and raise the debt. The markets, as you know better than I do, change just about almost on a weekly basis. So right now we have no reason to believe that we shouldn't be able to do what we have suggested before. But obviously in a few months, when we are actually going to do that, we will consult with our advisors who are already working on it and decide what is the appropriate number to put in there. We certainly, as we've always said, we are determined to set up Versum for success and we will not load it up with leverage that is inappropriate or load them up with significant interest charges that they cannot afford. But the company, as Guillermo has been explaining to you, they are doing very well and their capacity for debt is significantly even more than what we have suggested no matter what the markets. But we will make that decision right before we actually do it.

Thank you.

Thank you.

And next we have Mike Harrison with Seaport Global Securities.

Hi. Good morning.

Good morning, Mike.

Guillermo, I was wondering if you could talk about the big decline in delivery systems within Electronic Materials. Should we view that as a negative leading indicator, or can you maybe give us some color on what that suggests about the overall health of the electronics market? And also maybe comment, was there any tailwind from inventory revaluation in the quarter?

First, let me talk on the delivery systems. Actually nothing we've said is new. I think in the last two calls we already predicted that this -- the delivery systems, the equipment business was going to be slowing down versus prior year, a lot of it was because of some projects that we did last year. So our delta was probably more driven from that project differential. Now if you look at a lot of the projections and this has been how the actual demand has been tracking from a lot of the third party industry -- the projection was for a softening in CapEx that would start to pick up in the back end of 2016. And we are still tracking that. So it hasn't been a big surprise for us. Regarding the inventory reval, this is why I'm a little bit more cautious for the second quarter. Not that we are seeing a big change in dynamics versus what we've projected in the past, but in the near-term the headwinds of currency, oil price deflation and the impact it's having on our price so we should have some inventory reval. But also on the demand side, a lot of our customers -- unlike gases, we have inventory; our customers have inventory. And some of the demand softness that we are seeing is just people taking actions on their inventory levels.

All right. And then, you guys commented that refinery hydrogen volumes in EMEA were lower. Can you give some additional details on that? Were there some shutdowns or what's going on?

Well, we did have a steam methane reformer that we shut down last year, but if I were going to say sequentially I think it's just a shift to slightly sweeter feedstock taking place there right now.

All right, thank you very much.

Thanks Mike.

Thank you.

Our next question comes from Nils Wallin with CLSA.

Yes. Good morning and thanks for taking my question. First off on Jazan, it looks the timing might have been pushed out a little bit, yet you are booking revenues now. So is there anything that is new or that you can update us on, on that project?

First of all, we are not aware of anything being pushed out. The project is on schedule and Saudi Aramco is actually pushing us to complete the project on time. So we haven't had any delays on that. No, we are executing with great speed on that.

Understood. And just with respect to the LOX/LIN market in China, certainly there's been some talk about steel closures in some of the Chinese producers. Do you think that will affect overall LOX/LIN volumes or there will be no change there?

I'll have Corning to comment on that.

First of all, the results that we reported today reflect everything that has happened to-date. I think the question of what's going to happen in steel is interesting. Many of those steel mills have their own captive air separation plant. Many of them sell that onto the market and if those were to close, that would be an interesting impact and might take some capacity out.

Got it. Thanks very much.

Thank you.

Next we have Duffy Fisher with Barclays.

Hey, good morning, fellows.

Hi. Good morning, Duffy. How are you?

Good. Thanks. Maybe first one for Scott, on the cost programs, which have been very successful so far, the first $300 million is kind of $75 million run rate per quarter. Did we see all of that impacting the first quarter? And then, when this year will we anniversary or when do you think we will anniversary that first $300 million? And then, on the second $300 million over four years, you would think about that as being $75 million per year. Is it back-end loaded, front-end loaded? How should we think about that rolling through?

Well, first of all, on the $300 million, we did see the $75 million savings in the first quarter. And on the second thing, we have said $75 million a year, but we are beginning -- starting that beginning of 2016, so we expect to deliver about half of that in 2016. So in our forecast, we have about $35 million, $36 million of additional savings in 2016, but then in 2017 we should have the whole $75 million.

Okay, understood. Great. Then just a follow-up on the China situation. You guys were reporting good volumes there or improving volumes. How long do you think that needs to continue before that market starts to get healthy? I know, Seifi, you've talked about it being massively oversupplied. I mean, is it a six-quarter issue? Is it a 12-quarter issue? How long before that market can start to get healthy?

Well, it's obviously going to take a while because, as you know, the overcapacity, the installed capacity is about 55,000 and the demand is about 27,000 tons a day. But the shutdown of some of these older steel plants will help. Obviously, China is growing, so whether it will take another three years, another four years, or another five years is debatable. Anyway, that's my view. I'll have Corning to kind of comment on that too.

I think we talk a lot focusing on what we control and we don't really fully control that marketplace and I really hesitate to guess how that's all going to be. But I think what matters for us is continuing to drive our retail sales, which sequentially are up again for us, working with end-use customers, continuing to load the capacity that we have in the ground and we are highly focused on that.

Terrific. Thank you, guys.

Thank you.

And our next question will come from Jim Sheehan with SunTrust.

Good morning, Seifi.

Good morning.

You guys gave some good commentary on the Asia market and then China. Was wondering if you could also give us an update on what merchant utilization rates look like in the other regions and what your outlook is in each one.

Sure. Corning will be happy to do that.

Our utilization really runs in the 70s and a little bit lower, I guess, I would say, in South America right now. And I think we see ourselves continuing to operate in that range.

And Europe?

So I'm speaking for Europe as well. Europe would be in the 70s as well.

Great. And in terms of your cash from operations outlook in 2016, how much growth are you expecting?

When you say cash from operations, do you mean free cash flow? Well, we did about $200 million in the first quarter, so I'm hoping that that trend to continue, but I'm not suggesting we will have $800 million of free cash. But we might. I mean it depends on the project. It depends on how much money we spend on the new projects that are coming on stream, but we feel pretty good about significant free cash generation. Scott, you want to make any additional comments?

Sure, just to build on it. As I've said in the past, we're focused on generating as much cash as we can from our existing assets. That's the EBITDA. And then, as Seifi mentioned, going through our cash flow priorities, recognizing where to spend the right amount of money on the maintenance capital. And so we feel good about where we are. We are going to continue to focus on cash. Again, generating from the assets we have in the ground and then making sure that we are very disciplined in how we deploy that capital.

Thank you.

Thank you.

And our next question will come from David Manthey with Robert W. Baird.

Hey, guys. Good morning. Seifi, in response to a previous question about the current global situation, I'm wondering if you can just help us understand, do you view the recent changes in global industrial demand, in energy and emerging markets, do you view that as cyclical or secular? And are there any implications on your growth strategy as you go forward?

Quite honestly, we haven't seen anything earth-shattering change in the last quarter since we talked to you last time. Obviously, as you know better than I do, it's very difficult to predict what's going to happen, but right now we don't have any reason to be pessimistic about growth opportunities for industrial gases. I have always said that I have a little bit of a different point of view from my colleagues. I see a lot of opportunities for us to engage in new projects. We have engaged in new projects and we have been able to win projects that were north of 10% return. So we continue to be optimistic about the opportunities for growth in different sectors around the world, especially U.S. Gulf Coast and obviously China in terms of bigger projects. We are focused on those. We have opportunities in the Middle East that we are working on. So I don't have any reason to be really pessimistic about the future of the industrial gases in general. Specifically, in terms of the liquid market in the different parts of the world, a little bit up, a little bit down, but nothing has really changed since we talked to you last time to make us more optimistic or less optimistic.

Okay. Thanks for taking the question.

Thank you.

Next we have a question from Mike Sison from KeyBanc.

Hey, good morning, guys. Nice quarter.

Hi, Mike.

A couple of quick ones on Versum. What type of growth, earnings growth do you expect to see this year? And could you give us kind of how to think about that business over the next three to five years?

Guillermo, will be happy to answer that. Whatever he says is not enough, we should do more than that, but go ahead.

We are continuing to see good progress. I mean the core driver of our business, at the end of the day, is innovation and how we are playing in the different segments of the businesses that we are in, both in electronics and performance materials. So we are very bullish. We see the longer-term trends on mobility continue to grow, especially towards the back end of the year, environmental drivers, performance drivers that are driving our PMD business. So we said that we expect to grow at 1.5x to 2x GDP and we are still comfortable with that long-term outlook. Obviously, in the near term we have a little bit more fluctuation based on what's happening with the base business and that's more linked to GDP growth and global demand.

Okay, great. Quick follow-up, in terms of the capacity expansions for advanced materials, do you have customers lined up for that? And how much growth does that support for you over the next couple years?

If you look at our materials business, this is very different from the gases where it's more project oriented, you build it and then you sell it out. For us, we sell it out, we develop the products, we develop markets and then we built the capacity to support our long-term growth. So we don't look at it as we're going to start this plant and generate new business. We will reload our entire network and that will give us opportunities not only to support new volume growth, but optimize our cost structure, our supply chain and our productivity across the network.

Thank you, Guillermo. We are well past the one hour usually allocated, so we will take one more question, please.

And the final question will come from Don Carson with Susquehanna Financial Group.

Good morning. This is actually Emily Wagner on for Don Carson.

Yes. Good morning.

Good morning. We just had a few questions on EMEA. Do you think you could break down the 470 basis points operating margin improvement from restructuring versus lower energy pass-through?

So, I think we are going to scramble to do that in the moment, but I would say the energy pass-through is a much smaller portion there than what we see in North America.

Yes. For the exact, exact number, obviously -- I would say -- I don't have the exact number to quote you, but I can confidently say that most of it is from restructuring. Simon can give you the exact number later, but I wouldn't be surprised if 90% of it is restructuring. As a matter of fact, it is 90% restructuring.

All right. Thank you.

Okay. Well, with that, thank you very much for being on our call. We very much appreciate your interest in the company and we look forward to talk to you next quarter and report even better results. Thank you again.