Good morning and welcome to Air Products & Chemicals' Second 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, Vice President of Investor Relations. Simon R. Moore - Air Products & Chemicals, Inc.: Thank you, Camille. Good morning, everyone. Welcome to Air Products second quarter 2017 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 & CEO; Scott Crocco, our Executive Vice President and Chief Financial Officer; and Corning Painter, Air Products' Executive Vice President, responsible for Industrial Gases. After our comments, we'll be pleased to take your questions. Our earnings release and the slides for this call are available on our website at airproducts.com. Please refer to the forward-looking statement disclosure on page 2 of the slides and in today's earnings release. Just for your information, in May, we plan to file an 8-K with the SEC that will provide revised historical annual financial statements excluding the impacts of the now separated Versum and PMD businesses. You'll recall we moved these businesses to discontinued operations starting last quarter. The updated annual statements will reflect our FY 2016 non-GAAP continuing operations EPS of $5.64 per share. We do not expect this filing to provide any new material information for investors. Now, I'm pleased to turn the call over to Seifi. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Thank you, Simon, and good morning, everyone. Thank you for taking time from your busy schedule to be on our call today. We do appreciate your…

And thank you. We do have our first question from P.J. Juvekar with Citi.

Yes. Good morning, Seifi. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Good morning, P.J. How are you doing this morning?

Doing good. Couple of questions on M&A. First on your Yingde acquisition, was that an opportunistic move on your part or was it more strategic? And if it was strategic, can you drill down more into that, why China, why now? And the second question is on, any potential to get into packaged gases, which is more fragmented area, so maybe it's easier to get in, and would you consider that in Latin America, where you already have Indura assets? Thank you. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Thank you very much, P.J. Our decision to pursue Yingde is definitely strategic. When you look at the projections of the GDP at purchase prosperity, by 2030, it is projected that China will have a GDP of about $33 billion, by far the largest economy in the world. That is where the growth is right now. The growth is in China and in India by any kind of a measure. Therefore it was strategic and that we will continue to be focused on China. There are a lot of other opportunities other than Yingde and we are pursuing those, and I hope in the not too distant a future, we have some more news on that. With respect to packaged gases, we are in the packaged gases business everywhere except the United States. So, the places that we are in packaged gases like in Latin America, like in Europe, like in China, we definitely are interested in expanding our packaged gases business. We continue to look at acquisitions in that area. The only area that we are not and we don't intend to be in packaged gases business is in the United States, because we believe that just the competition makes it very difficult to make money.

Thank you. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Thank you, sir.

Our next question comes from John Roberts with UBS.

Thank you. I was at the Annual IHS Conference recently and it sounded like China had worked out some of the early problems with their coal-to-MEG processes and were going forward with a number of projects. I assume those are going to be new oxygen for gasification for the glycol units there. Are you seeing activity there pick up at all? Seifollah Ghasemi - Air Products & Chemicals, Inc.: First of all, good morning, John. Yes, we are. This is why in the past call on, say, two years, we have been saying that we don't see any slowdown in coal gasification in China. We actually see opportunities. We do see opportunities. We are very well-positioned there. We already have three gigantic coal gasification plants operational, where we are supplying oxygen successfully to our customers. Those plants are running well. We are getting paid and we will be pursuing those from a good pole position.

And could you talk about the complexities that are trying to de-captivate more hydrogen from the refining industry. I think that was, early on, one of the key opportunities that you envisioned, but it seems like it's taking a fair amount of time. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Those opportunities are still there. It is going to take a fair amount of time because this is not a quick process, we have to demonstrate to people that we can create value, but we have a lot of projects underway and we are talking to customers and hopefully in time we will have appropriate news for you.

Okay. Thank you. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Thank you, sir.

Our next question comes from Robert Koort with Goldman Sachs. Robert Andrew Koort - Goldman Sachs & Co.: Thank you. Good morning, Seifi. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Good morning. How are you? Robert Andrew Koort - Goldman Sachs & Co.: I'm well. I'm trying to reconcile maybe some competitor commentary and maybe broader industrial end market commentary in the U.S. with the still fairly anemic volume growth. Is there something particular to your asset base or chassis relative to where the growth is coming from in North America or do you think there really isn't much industrial growth in North America at the moment? Seifollah Ghasemi - Air Products & Chemicals, Inc.: Well, I'd like Corning to comment more on this, but first of all, there isn't anything unique about our portfolio that would prevent us from participating in economic growth if there is some. But the economic growth in the U.S. is not that much. It is – when you look at industrial production and all of that, so it is not that positive, but we have seen growth in the – actually when you look at gases volumes in the U.S. – I'm sure Corning will comment on this – but this is the first time in about six quarters that we're actually seeing growth. So, there is some, but we don't have any competitive disadvantage there. Corning, would you like to expand on this? Corning F. Painter - Air Products & Chemicals, Inc.: Yes. So, thank you, Bob, for the opportunity. So, we feel good about our volume growth that we had. You see the headline looking at overall Americas, obviously, that's impacted heavily on LOX/LIN, and there's also some HyCO sales in that, and that's impacted when we have outages. But if…

Sorry about that. And our next question comes from Chris Parkinson with Credit Suisse. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC: Thank you. Can you just walk us through the puts and takes on some of the other various drivers in your merchant businesses across both developed and emerging markets? I know you mentioned France on the former, but also if you could hit on China on the latter. And then also, maybe just what you're seeing in terms of operating rates in the Chinese market as well, especially your longer term assumptions. Thank you. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Sure, Chris. Corning, I think, will address that. Corning F. Painter - Air Products & Chemicals, Inc.: Yeah. So let's start with the operating rates. So operating rates for us are in the 70s around the world. Actually our highest rates are in Asia, where they're in the upper 70s and that would include China. The merchant business, by its virtue, is one that sees a wide range of customers, so that's what I would say is the driver for us, no specific one industry but a wide range of opportunities. And in general, throughout the world, but particularly in China, we've driven a lot of strength in moving from retail to wholesale. So that's at a ratio really where it should be – I'm sorry, from wholesale to retail, and that's now at a ratio that's sort of at a global world-class for us. So all in all, I'd say the merchant business is positive for us. Even in South America, the liquid/bulk business for us has been a positive last quarter and this quarter. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC: And actually, if I may, just on Brazil, a few…

And now for our next question from Steve Byrne of Bank of America. Steve, if you could check your mute function, please. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Why don't you move on to the next question.

I'll do that. We've got Jim Sheehan with SunTrust Robinson Humphrey.

Thank you. Seifi, regarding your cautiousness on the geopolitical outlook, aside from that, we are seeing a little bit of a pickup here in some of your organic volumes and maybe some pricing in various regions of the world, North America and Europe. What would you have to see, what would have to occur to make you less cautious on the geopolitical side? Seifollah Ghasemi - Air Products & Chemicals, Inc.: Very simply, a very concrete economic policy that has passed Congress and it is enacted into law, so that we can make an assessment of what is happening in the United States. The second one is a concrete indication of what Brexit actually is going to mean. And the third thing is going to be hopefully a lessening of tensions in Far East and in the Middle East, that we are not going to get into another war. Those would be the three things. Please, Jim, we are cautious about the future because we don't know what is going to happen in the future, so we need to be cautious about that. But as I said, Air Products is doing fine and we are very confident about what Air Products does, but if something significant happens, we need to be prepared for that. But right now, everything about the U.S. economy is a guess. Nothing has passed Congress into law, whether it is taxes, whether it is infrastructure projects, nothing has passed into law, so we don't know what to expect and that's why we are being cautious. And Brexit, there is a lot of discussion about what's going to happen. One day it's going to be a hard negotiation, one day it's going to be soft negotiation. Now we are going to have election in UK. So, those are the ones that makes us a little bit cautious. Well, maybe we are too cautious, but that's usually not a bad thing.

Okay. Great. And then regarding your $8 billion capital deployment figure. You talked about a three-year timeframe for deploying that capital. And could you just elaborate a little further on how you think about deploying that capital internally through growth versus returning cash to shareholders? Do you stop every year or so and decide how you separate those two goals, or would you start to remunerate shareholders only after the three-year time period is up for assessing M&A opportunities? Seifollah Ghasemi - Air Products & Chemicals, Inc.: Jim, first of all, I'd just like to clarify, I didn't give you a three-year timeline. So, the timeline is open. Number two, currently, we don't have any plans to return money to the shareholders because we think we can deploy the money. As time goes by, we'll see how well we are doing. I mean, if in the first year and the second year, we have deployed zero, then I think the strategy will change. But overall, as I said before, considering what we are working on, we continue to be confident that we can put that money to work in good returns and create value for our shareholders. That is what distinguishes Air Products from the other companies. That is our future. That is why we are not interested in big mergers and acquisitions. That's why, we are not running after buying another big company, because we do have the capability and a clear vision of what we are going to do. Air Products is going to do very well [as a] standalone, we don't need anybody's help.

Thank you. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Thank you.

Our next question is from Kevin McCarthy with Vertical Research Partners.

Yes, good morning. Seifi. How are you? Seifollah Ghasemi - Air Products & Chemicals, Inc.: I'm very fine, Kevin, and yourself?

Well, thank you. I wanted to ask you about the capital deployment and specifically, the category of DCAPs that you mentioned versus acquisitions in large projects. Just wondering if you could educate us a little bit more on how you see the opportunity set there? For example, I imagine, it would take quite a lot of a DCAP deals to go about one by one and address individual oxygen or hydrogen units. And so, I'm wondering, if you see larger collections of assets and counterparties that would be, perhaps interested in doing a more wholesale a deal. And also why is it that things are apparently moving a bit slowly? For example, is there a dearth of interested counterparties at this particular juncture, or is that not the case and maybe there's just a wide bid-ask on the economics? Any color there would be appreciated. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Sure. Kevin, we are chasing pretty sizable projects. In order to deploy the $8 billion, it sounds like a lot of money, if we just had another four Jazan projects, that deploys all of the cash. We are pursuing very big projects and, as a result, it's going to take time, it's going to be more difficult, it's going to be more complicated, but that is the reason that we remain confident. There are people who are very interested in talking to us about gasification, about expanding our scope of supply to syngas, those projects are all $2 billion, $3 billion projects. And in addition with the hydrogen, yes, we are looking at, sometimes, kind of making a wholesale deal with people in terms of acquiring many plants rather than just one or two plants. And in addition to that, there is a possibility that some assets will come available as a result of the merger of some other companies, so we are looking at all of that. So, putting all of that together, again at this stage, we believe we can deploy the cash, but time – thank you, Kevin.

Thank you very much. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Sure, sir.

Our next question comes from Don Carson with Susquehanna International Group.

Good morning. This is Emily Wagner on for Don. Just a question on EMEA. I noticed you mentioned you were gaining positive pricing but this was offset by customer mix. Can you just describe the dynamic there and is there an opportunity to increase pricing to help offset the currency headwinds? Seifollah Ghasemi - Air Products & Chemicals, Inc.: Sure. Corning? Corning F. Painter - Air Products & Chemicals, Inc.: Yeah. The issue for us in pricing has, to date, really been around the power cost that Seifi referred to earlier that incurred in the first half. What's happened is we have made moves to recover those power cost increases. We've actually recovered about 50% of it so far. You don't see that when you look at that slide right now, because at the same time, we had a mix in our customers where large customers took more product. And typically, with a large customer, our cost of supply is less, and therefore the pricing is less. So, for example, the person who takes a large container or a large load of helium in liquid phase versus in gaseous phase, lower cost of supply per molecule, lower molecule price to them. So, that's what's going on. If we were going to look at, let's just say, March, where power rates were more where we expect them to run for the rest of the year and the overall gains we've made in pricing, we see ourselves well on track to recover the remaining 50%. So, we're quite confident on that. I'd rather not go into a timing discussion of that because I think that has some commercial implications for us in negotiations, but we think we're in a good position there.

Thank you.

Our next question comes from Jeff Zekauskas with JPMorgan.

Hi, thanks very much. Seifi, you indicated that you were no longer pursuing Yingde. I was wondering how you came to the decision to no longer pursue it. And then in the way you termed it at the beginning of the call, you said that we're choosing no longer to pursue Yingde at this time. So, does that mean that under a different set of circumstances you might pursue it again? Seifollah Ghasemi - Air Products & Chemicals, Inc.: Jeff, first of all, good morning. And as usual, you've always asked very good questions. I did use my words very carefully when I said at this time, because you never know what happens in terms of how the events turn out. There were many reasons that we decided to stop. And what did stop mean? If we wanted to pursue it, it means that we would have had to offer more than $6 a share. We decided that this is not the time to do that. At some future time, it might be the time to do that. So, I just wanted to not close the door there.

And when we look across your businesses, there's very slow growth for the industrial gas company and pricing is roughly zero or close to zero. So, does that mean that your products might have to reassess its cost initiatives again to see whether it can lift returns by another means? Seifollah Ghasemi - Air Products & Chemicals, Inc.: Well, the thing is that – there is no question that the pricing is flat and the volume growth in the merchant business is nothing to write home about. We fully understand that. And that is why Air Products has chosen not to significantly expand our merchant business and our packaged gases business, and you know very well that that's why we didn't pursue some opportunities in that area. We are focused on the large onsite projects and there are plenty of those projects to pursue. So, we believe that we will be able – by pursuing those projects, we will continue to be able to maintain our margins. Our goal is to maintain our margins at around 35%. And if because of the circumstances or certain events in the world, we would need to take a look at improving our productivity and our cost position in order to maintain our margins, we certainly will do that.

Okay. Good. Thank you so much. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Thank you, sir.

Our next question comes from David Begleiter with Deutsche Bank.

Thank you. Good morning, Seifi. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Good morning. How are you, Dave?

Good. Thank you. Just on pricing in North America, Seifi, I know it remains challenging right now, but what's the potential, do you think, over the next two to three years for some pricing traction to be gained here in North America? Seifollah Ghasemi - Air Products & Chemicals, Inc.: Dave, you do know that it will be very difficult for us to make any comments about prices. So, I would like to take a rain check on that, if you don't mind, Dave.

Understood. Just lastly on the maintenance costs that we're seeing, a little bit elevated currently. Can you quantify the impact and how that might benefit perhaps Q4 or even next year? Seifollah Ghasemi - Air Products & Chemicals, Inc.: I think Corning should address that. I obviously don't like it, but Corning will have comments on that. Corning F. Painter - Air Products & Chemicals, Inc.: So, I'd say we're in the neighborhood of $0.03 for us on maintenance in this quarter. We'll see a slightly higher – also we'll see, relative to last year, higher costs next quarter, fourth quarter we'll be a little less. Let me just stress though, these are maintenance costs, and we're talking about hydrogen SMRs largely being what swings the numbers around. These are plants that come down every three years, four years for maintenance. And so it's, by its nature, lumpy. I think we have made great progress in this area. And the outage that we took this last quarter in Europe, that plant had been operating for over 1,300 days, right. And we're going to push and push with regulatory people, the right to continue to operate that plant longer, as we've gotten smarter and better in how we operate and maintain these plants on the fly. So, I think there's a positive story there, but we're always going to have this up and down as when this project is scheduled.

Thank you very much. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Thank you, Dave.

Next question comes from Mike Harrison with Seaport Global Securities.

Hi. Good morning. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Good morning, Mike. How are you? You have another difficult question for me, huh?

Doing well. Thank you. Yes, I'll try. Looking for some color on replacing the $70 million of lost revenue to Airgas, do you have efforts underway already to find the new customers to replace that? And how much of a headwind could that loss be to your capacity utilization? In other words, trying to get to an idea of what the decremental margin could look like on that $70 million. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Corning, will answer the question, but I just want to say that we were not making a lot of money selling anything to Airgas, so that's why we have stopped, but – Corning? Corning F. Painter - Air Products & Chemicals, Inc.: Yeah. So, you can imagine, we have known for quite a long time where this contract – when it was going to terminate. We're on it. We've got people focused on filling in the volumes. I'd rather not talk a lot about particular progress or margins just because I think that gives one competitor, in particular, a pretty good ability to calculate into our economics.

All right. And then, was also hoping that you could comment on the Jazan project in the Global Gases segment. The $24.5 million in EBITDA for this quarter, can we model a similar EBITDA number for Q3 and Q4? Can you give us any guidance on that? Seifollah Ghasemi - Air Products & Chemicals, Inc.: Well, we don't want to give you any numbers, but I would like to say that the Jazan project is making good progress. We are on schedule. We are on plan. So I don't see any reason why the number – why we would have any kind of a significant change there. But overall, I'd rather not break it down because then you have to break down what is the negative effect of LNG and all of that. But overall, for Jazan, we are doing fine.

Thank you very much. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Thank you, sir.

Next question is from Vincent Andrews with Morgan Stanley. Vincent Stephen Andrews - Morgan Stanley & Co. LLC: Thank you, and good morning, everyone. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Good morning. Vincent Stephen Andrews - Morgan Stanley & Co. LLC: I just have one question left and I'm just hoping, Scott, you can maybe boil down all the moving parts on the margin, we x-out the pass-through. Just give us some guidance on how we should be modeling underlying margins for the balance of the fiscal year sequentially would be helpful. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Okay. Scott, do you want to comment? Michael Scott Crocco - Air Products & Chemicals, Inc.: Absolutely. So, maybe just let me reiterate here for this quarter versus last year. So, we have a 140 basis point decline from the higher energy pass-through and then a 120 impact from the SOE mix as was described, which leaves an underlying margin down of about 40 basis points. Then as we move forward, and we don't know where natural gas is going to go, we've given you the sensitivity in the past that for every change in natural gas, $1 per MMbtu, is about $250 million per year in revenue. So, you can put it in whatever you think for natural gas on that. In terms of [what] Seifi just mentioned, we'll continue to execute on Jazan and that project is going well. And also as we've talked about, the LNG business continues to be down towards the bottom. And so we don't see a lot of change in either one of those. I would say though, just kind of all else equal and keeping natural gas where it is, maybe it's in the 33-type of range, and we were just short of that this past quarter, and for the year maybe it's something in that area. But again, I'd ask you to go back and plug in what you assume the natural gas is going be, okay? Vincent Stephen Andrews - Morgan Stanley & Co. LLC: Thanks very much. That was very helpful. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Thank you, Vincent.

Our next question comes from Laurence Alexander with Jefferies.

Good morning, two quick ones. First, how much of a tailwind, if any, is your HyCO business going to see from refiners gearing up to deal with the new marine fuel regulations starting in 2020? And secondly, as you look at your pursuit of larger projects in gasification, are you going to see sort of a longer ramp-up for those projects, as they become larger in size? Are we looking at more like three to four-year ramps as opposed to two-year ramps? Seifollah Ghasemi - Air Products & Chemicals, Inc.: Well, I'll answer your second question and I'll have Corning answer your first question. Yes, as the projects become bigger and so on, you're right. Instead of a two-year turnaround for an ASU, it will be a four-year, five-year, that is very correct assumption. And on your first question, Corning? Corning F. Painter - Air Products & Chemicals, Inc.: Yeah, I'm sorry to confirm for you, when you look at the crude light's blend and everything else, the split, how they run it, we don't see a huge impact for us in terms of incremental demand with the new marine regs. I think that's not going to be a huge impact.

Okay. Thank you. Seifollah Ghasemi - Air Products & Chemicals, Inc.: Okay. With that then, I think that we would like to – we have gone over the time, but no problem. I just like to thank everybody for being on the call, we do appreciate that. Thanks for taking time from your busy schedule to listen to our presentation. We appreciate your interest and we look forward to discussing our results with you again next quarter. In the meantime, have a nice day and all the best to all of you. Thanks again.

Once again, that does concludes today's call. We appreciate your participation.