Air Products and Chemicals, Inc. (APD) Earnings Call Transcript & Summary

Thanks very much, Dan. Look, for our first presentation today at BMO's Growth and ESG Conference, we couldn't have a more fitting company to kick things off for us than Air Products. Now Air products is an industrial gas company that made a huge splash earlier this year with its announcement of a $7 billion green hydrogen project, the largest in the world by far. Now this project, which will facilitate the production and transportation of green ammonia and hydrogen as well as potentially to eliminate 3 million tons of CO2 emissions per year, or the equivalent emissions of 700,000 cars, this is a really big deal. It's an exciting first-of-its-kind type of project, and it exemplifies Air Products' stated higher purpose of bringing people together to collaborate and innovate solutions to the world's most significant energy and environmentally stability-type challenges. And equally important, Air Products knows that ESG begins at home. And as such, they are committed to reducing their own carbon footprint by 1/3 by 2030 while also having made solid commitments to diversity and inclusion in the workplace as well. Now speaking on behalf of Air Products, we're very happy to have the Chairman and CEO, Seifi Ghasemi. We also have CFO, Scott Crocco and Mun Shieh from Investor Relations, as well as Simon Moore, who heads up the Investor Relations platform. Now since joining Air Products in 2014, Seifi Ghasemi has dramatically transformed the company in pretty much every possible way. Air Products has seen its EBITDA margins improved by over 1,500 basis points to over 40% while driving its EPS at a double-digit compound annual growth rate over that same period. Equally important, they've built a project backlog, including the green hydrogen project we spoke of, that should continue to drive double-digit EPS growth through at least the middle of this next decade. Finally, with all of this done -- all of this was done with a commitment to their employees where injury rates have plunged nearly 65% and diversity has made some notable improvements as well. It's Air Products' and Mr. Ghasemi's commitment to driving growth while keeping a strong focus on the environment, diversity and well-being of its people that makes Air Products such a great company to kick off our Growth and ESG Conference. So first of all, good morning, Seifi. It's great to have you with us today to kick off the BMO's Growth and ESG Conference. Maybe we can start by turning it over to you just to see if you have a couple of open thoughts and remarks, and then we can kick it into the fireside chats.

Well, first of all, John, good morning to you, and good morning and good afternoon and good evening to all of the people who are on the webcast. It is absolutely a pleasure to be here, and thank you very much for such a very nice introduction. I really do not have too much to add to what we said at our November 11 conference call when we announced our 2020 results. So we told you everything we knew at that time. So right now, I'd rather, quite honestly, save the time and give the floor to you to ask me questions and answer your questions rather than me making a monologue speech here.

No, that sounds great. That sounds great, Seifi. So look, as you know, most of the chemical investors out there are very familiar with the Air Products program or platform. But admittedly, we have a broader group of ESG analysts and portfolio managers on that may not be quite as familiar with Air Products and may not have necessarily been updated on a bunch of the calls that you've had in the last few months or quarters. So maybe we can start with the NEOM project that you announced a few months back. Can you hit us some of the high points on this side just to familiarize investors with the project and why it's so exciting at this point?

Look -- Very good. John, the reason that we are doing the NEOM project, and it has taken us about 5 years to develop the project, was a fundamental commitment in terms of implementing our, what I'll call, 20-year strategy, which is looking forward and seeing what is coming and for us to be ready for that. The way that we see the hydrogen space developing is that there will be 3 hydrogen streams that are going to be developed in parallel. One hydrogen stream is the gray hydrogen, the hydrogen that we make every day from hydrocarbon, from natural gas. That is what we do today. We are the largest producer of that hydrogen. And people are going to be attracted to that, not only for cleaning of fuel that you put in your car, that is our main business today, but also using that hydrogen for mobility to drive cars and trucks in order to address the pollution in the cities. Then the next stage of hydrogen development will be blue hydrogen, where people say, "Give me the hydrogen as long as you capture the CO2 which is associated with its production." That is going to be very popular with places like Japan where they are thinking about taking that blue hydrogen in form of blue ammonia, putting it in their power plants and as a result reducing their CO2 emission. And then will be the ultimate solution, which is green hydrogen, where you produce the hydrogen from renewable sources. So we are going to play in all of these things, and we have programs for all of these 3 stages of hydrogen. But NEOM project is about the ultimate goal, which is green hydrogen. What we are going to do there is in order to make green hydrogen in an economical way, you need very cheap electric power, green power. In Saudi Arabia, after looking at many places in the world, we found the location where you have sun during the day and also significant amount of wind in the evening, in the night. Therefore, you can build a power plant which is renewable, but it is almost continuous. Therefore, the cost is lower. Therefore, you can get power almost -- very close to 24 hours a day. You can produce very cheap electricity. Then you take that electricity, and with the hydrolysis of water, produce hydrogen which is now green hydrogen. And then to transport it in an economical way, we convert that to ammonia and transport the ammonia. And then you get to the, what you call the gas station in Munich or Frankfurt, you dissociate that ammonia back to hydrogen, put it in a truck or a bus and it runs. This project is huge. We decided to go with economy of scale because that reduces the unit cost. And it is going to be very competitive in terms of the economics. And we have done the project on the basis that we do not depend on subsidies in order to make the project economically viable. The project is going to come onstream hopefully in 2025. It will produce about 650,000 kilograms a day of hydrogen, which is enough to power 20,000 buses and trucks around the world. And you gave some of the other statistics on that, so.

Got it. Thanks very much, Seifi. So I think that helps to put everybody on the -- at least somewhat up to speed on the NEOM project. I guess one question that we got submitted in through the app, and we'll be trying to weave these in throughout the presentation, is, clean hydrogen and the technology for it has been around for a while now. What kind of got us to this tipping point where now it makes sense and it makes sense for Air Products to really make such a large investment in this area? Was it around demand that you were seeing from the regulators and the actual demand for the product? Was it the technology emerging? Was it the cost in terms of renewable energy? Like what was it that got you comfortable that this was the right time and the right type of project to really step in?

Well, John, the main thing is that whatever we do, like any other company, at the end of the day, you are successful if there is a customer that is going to use your product. What got us interested in green hydrogen right now is because we saw the development of fuel cell buses and trucks because unless you have the buses and trucks that can use the hydrogen to drive them, then there's no point in making this stuff. But right now, companies like Hyundai and other people are making buses and trucks who -- which are going to have fuel cells in them. Therefore, they are creating the demand. And we think by the time we are ready 5 years from now, there, a lot of people will be ready to use the product. Because you see, it's -- the whole thing is a little bit chicken and egg, as they say. When you go to a bus operator in Los Angeles and you said that -- okay. Let's say you're Hyundai, and you say that, "Look, I can sell you fuel cell vehicle buses or trucks. Convert to hydrogen." The owner -- the bus operator says, "Okay, I can buy your trucks. But tell me, when am I going to get the hydrogen?" So -- and then if you go to the hydrogen producer, the hydrogen producer says, "Where are there are trucks?" So the 2 of them need to go together. And right now, it is -- we have gotten to the stage that we can clearly see the production of buses and trucks, fuel cell buses and trucks, whether it is in Korea, whether it is in China. And it will be like electric cars, everybody else will be making it. Right now, Cummins is talking about it. You talk about Nikola and all of that. So we see that demand being there. And therefore, we wanted to give assurance to those people, that if you convert your buses and trucks, we will have the products for you that you can run those. And we will have the green hydrogen that you require. Because a lot of people do not want to convert to hydrogen if they cannot get green hydrogen. Because if you just convert to hydrogen and the hydrogen is made from hydrocarbon, then what have you accomplished? You might as well put gas or -- I mean, diesel in there. So that's that conversion. But there is one other subtle thing, John which I think we should all keep in mind. Fundamentally, I think after many, many years, the fundamentally, the public opinion in a lot of countries is going towards the fact that climate change, global warming is real. It is not a hoax. It is going to affect our -- the next generation and the next generation. And therefore, they are putting pressure on the government to do something about it. This trend is obviously very significant in Europe. It is beginning to take root in places like Korea or Japan. And I think in time, if we have its effect in the U.S. Although right now, we have climate deniers all over the place. But in time, that will happen. And that public opinion is going to put pressure on the changeover from fossil fuels to renewable energy. Quite honestly, that is why, as you said at the beginning, you are seeing so much interest in ESG investment because people see that, that is the future.

Got it. No, that makes sense. So Seifi, electrolysis technologies have been out there for a while. And admittedly, they're not perfect. They're continuing to kind of improve. Ammonia production has been out there as well. So it seems like you brought a lot of these together in order to have kind of a fulsome solution. But I guess how do you see the competitive environment when it comes to green hydrogen playing out? Do you think we'll see other large-scale projects coming online or similar to the NEOM-type project? Or will they be smaller regional ones? Or is it a little bit early to tell? Or maybe it goes both ways? Maybe you get a little bit of each. How should we be thinking about that?

Well, John, let's -- you're asking an excellent question. Let's look at the NEOM project. What was the most difficult thing for us to put that project together? It wasn't the fact that wind, solar, fine. Electrolysis, as you said, you go to 'krupp and they do it for you. They have the ASU technology. They have the ammonia technology. The technology part was not the difficult part. The difficult part was putting this thing together to come up with a commercial project. That means finding where it is that you can make cheap electricity. Somebody says, "Oh, the technology is there. So why don't put a plant in the middle of the Mojave Desert? There is a lot of sun." Yes, there is a lot of sun, but it's 6 hours a day, 7 hours a day. Then the cost of trying to have 24-hour power, you need to have so much storage that it just doesn't work. So the creativity on NEOM was the ability to put all of the pieces together, find a location where you have wind and solar so that you can make very cheap power. Find the government that can give you the piece of property that you need and is friendly. You need to be close to a port. I mean, you can't put a project like NEOM next to the port of Los Angeles. You need a space. The whole innovation in NEOM was not so much the technology, it was putting all of the pieces together and making it happen and getting the financing for it and getting the people to invest in it so that you have a real project. That is the difficult part, John. And that is why we think we are 5 years ahead of anybody else who wants to do something like this. I think in time, people will try to do this thing. Maybe they can put projects together like this. I hope they do. We are not afraid of competition. And besides that, NEOM, as I said, is going to produce, although it's $7 billion, it's a lot of money. But it will make enough hydrogen to fuel 20,000 buses and trucks. I mean, around the world, we have 220 million buses and trucks and vans. So the opportunity is astronomical. So other people want to play in the field, so much for the better. But at the same time, I mean, I don't want to exaggerate this, but right now, everybody can make a cell phone, right, like the ones that you have. But there's still Apple that is making a lot of money. Why? Because they were the first ones who brought it to the market. I mean, there are other people who are making cell phones, but still, Apple had -- was the first in the market, they were the innovators, and they are very ahead of everybody else. So that is, I think, our competitive advantage. Our competitive advantage is not only putting the technologies together, but actually putting the project together, bringing all of the elements to make something real that is actionable.

Got it. No, it makes sense. So we've gotten a couple of questions that have come in around the cost side. So maybe I can raise those. The first one is around, can you give us your thoughts in terms of the economics and the efficiency of converting that green hydrogen to ammonia and then back? Why did you choose that as an avenue to bring green hydrogen to the markets? Can you speak to that a bit?

Sure. Because when you make the -- I mean, let's say you are in Saudi Arabia, you are -- and you are making the hydrogen from electrolysis. That hydrogen comes out in form of hydrogen gas. And as you know, it's a very light gas. So how do you take that hydrogen from NEOM to a truck in Munich? You cannot transport hydrogen gas. That is just impossible. The other thing is to liquefy the hydrogen and then not that because a lot of energy. And then even transporting liquid hydrogen, which needs to be at almost minus 200 degrees centigrade. To try to transport that, that is not very practical. So as a result, the only practical way of transporting that hydrogen, the only practical way of transporting the hydrogen to different places around the world was to convert it to ammonia. Because then, you can transport the ammonia. Ammonia is something that is being transported all the time. And so that was the reason for that. The cost of making the ammonia and dissociating the ammonia is not that huge as compared to the cost of trying to transport hydrogen. That's why it becomes very economical to do that.

Got it. No, it makes sense. And I assume at this point, the NEOM project and the costs aren't necessarily competitive with gray hydrogen. But at the same time, we are going to continue to see the costs gradually push lower as the electrolysis technology improves and the conversion improves. Is that the right way to think about it at this point, where you do need at least a little bit of a premium for green hydrogen? But one, that customers are willing to pay for that because they do see the importance of it. And two, over time, those costs will come down. Are we thinking about that right? That's one of the questions that we've gotten from another investor coming in.

We have no intention of competing with gray hydrogen because these are 2 different products. I mean, gray hydrogen to me for mobility doesn't make much sense in the long term because what is the point of taking hydrocarbon, converting it to hydrogen and then putting it in the car? You might as they just put the hydrocarbon in the car, I mean, put the diesel in the -- why go through all of that? The only advantage is that maybe you save a pollution in the city, but you don't save pollution overall as far as the greenhouse gases are concerned.

Sure.

Therefore, it is 2 different products. We have absolutely no intention of competing with gray hydrogen because gray hydrogen is something that is a totally different product.

Got it. No, makes sense.

Yes. But I would like to say that we -- that the cost of the green hydrogen that we are making, once you take it and you put it in a car, in a bus or in a truck -- not in a car. We are not talking about passenger cars because the passenger cars, my god, if you can generate the electricity from wind and solar, then why put it -- convert it to hydrogen? You just put it in a car and the car drives. So the whole idea is going into buses and trucks that electricity is not an option. But if you take the green hydrogen that we produce in NEOM and put it in a bus and a truck, the cost of operating that bus and truck at the prices that you are going to sell the green hydrogen will not be that much more. There will be a premium, but not that much more than if you were trying to run those buses on diesel. That -- so -- but fundamentally, there is no comparison between the product that you are going to make at NEOM, which it has 0 carbon footprint. With gray hydrogen that you make, which is used, as I said, for mobility, it doesn't do anything good for you because you still have put CO2 in the air for making the gray -- making the gray hydrogen.

Got it. No, makes sense. Maybe we can ask another question because we've gotten a lot of questions on this one. So your big NEOM project is in Saudi. And you made it known earlier this past quarter, actually, that one of your other projects in Saudi, the Jazan project hasn't made it to the finish line. There's some negotiation-related issues around the contract structure, et cetera. And you basically told the investors, "Look, don't put it into the backlog at this point." Is there any risk that the NEOM project doesn't make it to the finish line as well, just given the partnership is with the Saudis as well? I guess how should we be thinking about that?

Well, John, first of all, I don't think people should extrapolate because these are 2 different projects with 2 different entities and all of that. So I don't think, one, you can extrapolate one to the other. The second thing, the importance of this project for the government of Saudi Arabia is totally different than Jazan. This is a national project for the long term where the Saudi government wants to demonstrate that they can be an exporter of green energy to the world. Jazan is a hydrocarbon project. So I wouldn't link the 2 of them together. But there is always a risk with any project, John. And that is why, if we are prudent, which hopefully we are, we are looking at other places to see if we can do a similar project in other locations now that we know how to do this thing.

Got it. And that was actually going to be my last question on the hydrogen front, is looking at it from another angle of the NEOM project, it does look solid. And you've got -- and I think one of the things that really made it attractive was you have -- Saudi has access to cheap renewable energy. However, we see other regions that have cheap, renewable energy costs as well, like the U.S., India, China. I mean, there's a whole host where renewable fuel costs or renewable energy price are actually pretty thin or pretty low and may be compelling. Have you've seen interest from other regions outside of Saudi where they're looking to partner with someone like Air Products in a project similar to NEOM? How should -- how should we be thinking about that?

Yes, there is a lot of interest, John. But the thing is that -- the question is the economics. Because right now, there is a lot of interest in Europe. But in Europe, the cost of renewable power is around EUR 0.07 per kilowatt hour. Actually, that's the best you can get. In some places, it's almost EUR 0.10. And if you look at those numbers, then the production of green hydrogen will become very expensive. So it's a little bit like oil, and nobody wants to buy oil from the Middle East. But at the end of the day, we do it because we don't have the oil. So fundamentally, there are other locations in the world where you can get a combination of wind and sun in such a way that the cost of production of the electricity will be low enough to make an economical project. And we are working on those things, obviously.

Got it. Got it. No, that's great. Well, maybe, look, we've talked a lot about the green hydrogen side, maybe we can move on to some other topics of interest as well. We've gotten a handful of questions. So one of the things that is of note for Air Products is the sizable backlog of projects that you have. And in our opinion at least, it should, with the help of NEOM, toward the end of it, it should really help Air Products to see at least low double-digit growth in terms of EPS through the middle of the next decade. That said, there have been some questions of late on the resiliency of that backlog because we have seen the Jazan joint venture seemed to stall out a little bit. There's also been, I guess, some questions around the contract -- or excuse me, around Lu'an and that asset having been temporarily taken down. So I guess tied to that, we have a couple of questions. First of all, can you speak to the resiliency of the products that you currently have in your backlog and the confidence that Air Products will get a proper return on these and get them to the finish line? Can you give us some color and some comfort around that?

John, the way I like to put it is that we made a commitment to the investors in 2014 that our goal is to increase Air Products' EPS by 10% a year at least. In the last 6 years, including 2020, with the COVID, our cumulative average growth rate of EPS is more than 10%. So the comfort that I can give the investor is that is our goal for the next 10 years, that, on the average, we will deliver that. We will deliver that through a combination of new projects, our base business and anything -- everything else that we do. And we have multiple levers that we can pull, whether it is the growth of our base business, whether it is pricing, whether it is new projects, that the combination of all of these coming at different times, I think, will give us the ability to deliver on the promise that we have made to the investors of growing EPS 10% a year throughout the next 5 years and throughout the next 10 years. So I have a lot of confidence in the resiliency of our backlog. I think that people should look at a situation in Jazan and actually get some comfort rather than getting discomfort by being convinced that Air Products is not about dragging up how many projects that are born and how many -- how much backlog I have. But we are focused on making to those projects have the profit and return. And if they don't, they wouldn't do them. Jazan, as painful as it is to walk away from it, but we are trying to demonstrate to people that we are not -- I mean, it's very easy, John. I mean, any fool can go and buy something if you pay a lot of money for it. We can go and spend a lot of money. Isn't that what happens to a lot of companies? They go and spend a lot of money, buy stuff and show a lot of growth and then everything implodes. Look at GE. We don't want to do that. We want to act responsibly. And when we see projects where the return is not where we want it, we are not going to do it. So the projects that we are doing, I mean, right now, people are looking at Jazan and looking at Lu'an and looking at NEOM. But we have done many, many other projects which is in that backlog that you're talking about which are for the electronics and all of that. They are a smaller project, they are $200 million, $300 million, $400 million project. But they are all very good return projects, and they are all going to help us grow our EPS as we go forward. So I'm very confident about that.

Got it. No, that's helpful. Maybe we can speak a little bit more directly to the Lu'an project because we've gotten a handful of questions on those. So you took the project -- or they took the product, I should say, down for some planned maintenance where you get paid kind of a modest reduction from your normal Fee. And now they've decided not to bring it back up right away. There's a lot of speculation as to what necessarily drove this, whether it was low oil prices or any economics or regional coal mergers that they're involved in, et cetera. Can you shed a little light as to what may be stalling their production time line?

John, we have started with that project in 2007. That project is a very profitable project for us as we have disclosed the numbers. We operated that project very successfully. And then that is a huge plant. Like any huge normal plant, it require maintenance after 3 or 4 years of operation. That was scheduled for July, August and September. We shut it down. We did the maintenance. Everything is fine. And the customer keeps paying us -- or kept paying us our fixed fee and all of that until the beginning of October. Beginning of October, we were supposed to a 3-year start. The customer asked us that they would like to delay this thing a few months because there was a big merger of all of the different industries and the management has changed, and the new management wanted a few months to study all of their options. We are partners with these people. We are going to be the partner for another 20 years. We want to get additional projects from these people. Therefore, as a responsible partner, we said, "Fine. We will work with you. And during the time that you are down, we will kind of stop invoicing you until we see what you are going to do." This is a normal thing. We are working with our customer. I don't have any major issues with that. This is a good project. It's a significant investment on part of Lu'an. Lu'an is one of the biggest coal companies in China. Lu'an belongs to the state of Shaanxi. It's a government company. We have a very good contract with them. So it's a temporary thing. We had 2 options. One was, look, this is a normal course of business. We don't tell you -- make a big announcement. If we have a shutdown of our hydrogen plant for Exxon and Exxon refinery starts up 3 months later or 2 months later, we don't make a big announcement. We decided that with Lu'an, considering that it is a big project, it has had a lot of visibility and all of these questions about gasification and all that, we decided to -- although we were not required, we decided to be very transparent with the investors and tell them exactly where we are. We are not saying the sky is falling. We are not saying these guys are going away and we are going to go to court to enforce our contract or anything like that. All we are saying is that this thing is shut down, and we will give you an update in January.

Got it. No, that helps to put it a little bit more in perspective, especially with some of the merger-related issues, the change in management. I mean, it sounds like you guys really have built up a true partnership here. So I assume this asset being down isn't necessarily about, well, coal gasification doesn't work or anything like that. So one of the questions that we had is, does the dynamics that are happening in this project give you any pause about any of the other coal gasification projects in your backlog? I assume by your tone and by how you've explained the Lu'an situation, that it really doesn't. But maybe you can clarify that for investors.

John, let me address this thing. Everybody is talking about Lu'an. Lu'an is not the only coal gasification facility in China. China is converting 260 million ton a year of coal into diesel fuel and all of that. We, as Air Products, are involved in 4 other coal gasification projects in China. All of those other 4 are running. So this is not as if the Lu'an situation is not an indication that coal gasification in China has suddenly become an uneconomical thing. All of the other plants we have, [ TCEC ], Yitai, YK and Jiutai, they are all working. So this is not an indication that there is a -- even with the low oil prices, those plants are running. We are supplying the oxygen to those plants. We are getting paid. And China has about more than 100 other coal gasification facilities that are running. So I think it is a significant leap of extrapolation to say Lu'an is shut down. Therefore, there is a problem with coal gasification. That is not the case. Coal gasification is something that will continue to happen in China. It is part of the 14-year plan -- the 14th 5-year plan. It is going to happen in India. It's going to happen in Indonesia. So I'm not concerned about that.

Got it. And that actually brings up another question that we were going to be asking as well, which is, I know you said you don't want to announce projects before everything has been contractually locked up and that type of thing, which obviously makes sense. At the same time, at least in the foreign press, we've seen some projects with your name on them in Indonesia. And actually, it sounds like something may be taking place in India as well. I guess can you speak to at least whether you're in discussions with the governments around these types of projects? Is that something that's fair?

Well, John, the one thing we have learned from Jazan is that we don't want to make premature announcements and then I have to say it didn't happen, right? So we are going to be very cautious about making any kind of an announcement. But the fact that we are in discussions with people in India and Indonesia about coal gasification, we have said that we are, of course we are. They are the people who have the coal and they are the people who are interested in gasifying it. Now whether those discussions end up getting into a real project that we are going to go and start putting the shovel in the ground, and 4 years from now, creating an EPS, we have to wait and see.

Got it. That makes sense and fair. It's certainly fair enough. So one -- I guess one other topic that's come up is, look, Jazan is a question mark at this point. It sounds like it's not something we should necessarily assume it's 100% gone, but certainly take it out of the backlog. If -- I guess, one, is that right? Is that a proper characterization around it? And I guess the second question would be, okay, this leaves you with a chunky $2.5 billion to put to work. I guess, where should we think about where that capital goes? Would you consider doing some sort of an accelerated buyback? I know in the past, you've kind of frowned on that because you have a lot of growth opportunities. But it would maybe fill some of the near-term void that Jazan has created. And if not, can you speak to the potential projects that you're looking at and working on right now?

John, we do not have any issue with coming up with projects to deploy the capital that we were going to deploy in Saudi Arabia on Jazan. The backlog of the different projects that we are working on, on different parts of the world. On the 3 growth projects that we are talking about, gasification, carbon capture and hydrogen for mobility, that backlog, if you add up all of the project, is more than $50 billion. Obviously, a lot of it is not going to happen, but some of it is going to happen. So I don't have any heartburns that if the -- to deploy the $2.5 billion from Jazan. As a result, I can tell you categorically, Air Products is not in the business of buying shares. We definitely are in the business of growing our dividend. We definitely will increase our dividend. By how much, we'll tell you that in January. And so that is one form of returning money to the shareholders. And the other part of our free cash flow, we have plenty of opportunities to invest that. We are not going to buy shares.

Got it. Fair enough. And then -- so maybe to that, we've spoken a lot about the green hydrogen opportunity. We've spoken a lot about the gasification story, and it looks like there's still a lot of breath left there. Can you speak to some of the other opportunities that you see out there? You mentioned carbon capture. I guess, how should we be thinking about how your pipeline develops going forward around carbon capture? Is it going to be exclusively tied into blue hydrogen opportunities? Is it broader than that? I guess how should we be thinking about the opportunities and the growth that may be tied into the carbon capture side?

Well, the carbon capture is going to be in 2 areas. One is for the production of blue ammonia, for sure, because that is something -- a product which is in demand. The Japanese are desperate to get their hands on blue ammonia, and that is why you see a lot of ammonia manufacturers talking about that. So that is one thing. And then the other thing is that CO2 capture will be very interesting for the production of so-called green diesel in terms of the low-carbon fuel standards which are in California and producing product for that category. So we will invest in carbon capture in the U.S. and in other places in the world. That is definitely something that we are working on. Carbon capture is applicable anywhere in the world, especially with some of the coal gasification facilities that we have. We generate a lot of CO2, and the issue is finding a place that we can sequester them, but that's what we are working on. So our investments will be in gasification. It will be in carbon capture. It will be in clean diesel. And it will be very much focused on hydrogen for mobility, whether it is gray hydrogen, blue hydrogen or green hydrogen.

Got it. No, makes sense. And it seems like there's a lot of opportunities in all of them.

Yes, there are.

When you look at the blue ammonia front, is that something that you would take on, on your [ own ]? Or is that one where you may be more encouraged to handle the carbon sequestration side of it and maybe turn the actual ammonia production over to one of the more traditional players? Because you do have that ability now to take it on yourself, just given some of the alliances and agreements that you've put in place. But is that -- would that be your goal? Or would you rather, for the most part, handle the carbon sequestration part of it and leave the ammonia reduction to more traditional players in the ammonia space? How should we think about that?

John, we are going to look at both options.

Got it. Fair enough. You got to keep them all open for sure. So Seifi, we've spoken a lot about the green hydrogen side when it comes to ESG. But Air Products has a lot of other initiatives that they've been working on both internally and externally from an ESG perspective. Maybe as we wrap up this session, maybe you can speak to some of those, so -- just so that our ESG investors that are on can get a little bit more familiarized with some of the initiatives that you've really been pushing.

John, thank you for asking that question because that is very, very relevant. Obviously, ESG is environmental, social and governance. And Air Products is not -- the good thing about Air Products is that we do not have to invent programs to meet or be an ESG investable company. When you look at our strategy and our broader strategy, that just fits exactly into the requirements of an ESG company. Because environmental, everything that we are doing in terms of growth is environmental. We are talking about gasification of coal. That is environmentally positive. It's a lot better to gasify the coal rather than burn it in a power plant. Carbon capture is all about the environment. Blue hydrogen, green hydrogen is all about the environment. So everything that we do on a day-to-day basis in terms of growth and our production and activity is related to the environment. So we have that covered in the space. Then on the social side, there are 2 elements. One is, as you said, fundamentally, the higher purpose within the company and the way we run the company, we are very focused on having a company where we have people from all parts of the world and all different nationalities, relations, races and all of that come together and work together. That, creating a diverse company is part of our goal. In order to make that real, we have actually announced real goals, a specific numbered goals. Rather than just talking about it, we have said that by 2025, we're going to have x percent of our managers to be women, x percent of our people being minorities and all of that. We have actually translated that into numbers. So that is definitely in terms of the social side of it. On the social side, in terms of relationship with our communities, we are very much involved with all of our communities. We support the communities where we in are, not only with -- financially, but most important, with the time and effort of our people. Our people volunteer for all kinds of activities within the communities that helps them. I mean, we are going as far as, for example, you talked about Lu'an. We are -- our people are involved in providing clean water for 28 communities around Lu'an, financially and with the help of our people. Those are the kind of things that we do. Environmentally, as you said at the beginning, we have to set the goal for ourselves for 2030, not for 2050, when nobody is around to be accountable for. For 2030, where we will be -- we can held accountable for. So in social, as I said, the diversity, community outreach. And then in terms of government -- governance. Look at the quality of our Board of Directors in terms of the people there. We have very good governance. We have very tight governance in terms of all of the procedures that we have. So when you look at Air Products, what we do every day is related to environmental, social and government. We don't have to kind of look for special programs to tell people, "Hey, look. Look over here. I'm doing something which is related to ESG." We are, by nature, as a company, fortunately, we have the kind of products that lend itself to being an environmentally friendly company. And that has been our conscious goal from day one, to focus our activities on doing things which are good for humanity, which is the most important part is the environment.

I couldn't have come up with a better ending for our fireside chat. Look, Seifi, I want to thank you and the rest of the team for joining us today. We really appreciate your time and your thoughts. And we're going to let you go. I know you got a bunch of one-on-ones throughout the rest of the day and you also have business to conduct as well. But thank you so much for your time. And with that, I think we'll end the fireside chat now. Take care.

John, thank you very much. Pleasure to be with you. Thank you.