Air Products Chemicals Inc

We believe we have sufficient cash, cash flows from operations, and funding sources to meet our liquidity needs. As further discussed in the "Cash Flows From Financing Activities" section below, we have the ability to raise capital through a variety of financing activities, including accessing capital or commercial paper markets or drawing upon our credit facilities.

As of 31 March 2025, we had $1,423.1 of foreign cash and cash items compared to total cash and cash items of $1,491.4. We do not expect that a significant portion of the earnings of our foreign subsidiaries and affiliates will be subject to U.S. income tax upon repatriation to the U.S. Depending on the country in which the subsidiaries and affiliates reside, the repatriation of these earnings may be subject to foreign withholding and other taxes. However, since we have significant current investment plans outside the U.S., it is our intent to permanently reinvest the majority of our foreign cash and cash items that would be subject to additional taxes outside the U.S.

Cash Flows From Operations

For the first six months of fiscal year 2025, cash provided by operating activities was $1,139.8. The adjustment for deferred income taxes of $540.1 is primarily driven by the tax impacts of the charge recorded for business and asset actions in the second quarter of fiscal year 2025. For additional information regarding this charge, refer to Note 4, Business and Asset Actions, to the consolidated financial statements. Other adjustments of $87.8 primarily included adjustments for noncash currency impacts of intercompany balances. The working capital accounts were a use of cash of $703.5, which was primarily driven by a use of cash of $571.0 within "Other working capital". Further, "Other working capital" includes income tax payments in excess of expense of $515.4, which was driven by payments of $395 related to the gain on the sale of the LNG business in September 2024. The use of cash of $66.9 within "Trade receivables", primarily relates to the timing of cash collections.

For the first six months of fiscal year 2024, cash provided by operating activities was $1,428.3. We recorded a charge of $57.0 for the accrual of severance and other post-employment benefits. The working capital accounts were a use of cash of $486.1. A use of cash of $301.0 within "Payables and accrued liabilities" primarily resulted from payments for incentive compensation under the fiscal year 2023 plan, a reduction of customer advances for sale of equipment projects as we recognized revenue, and a reduction of liabilities associated with accrued utilities. The use of cash of $111.7 within "Other working capital" primarily related to the timing of tax payments. The use of cash of $72.7 within "Inventories" primarily related to purchases of helium. The use of cash of $31.6 within "Other receivables" primarily related to the payment of value added taxes incurred in the construction of our larger projects for which we will claim a refund in the near term.

Cash Flows From Investing Activities

For the first six months of fiscal year 2025, cash used for investing activities was $4,419.4. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $4,009.1. Refer to the "Capital Expenditures" section below for further detail. Investments in and advances to unconsolidated affiliates resulted in a use of cash of $365.4. Purchases of investments of $117.6 included purchases of time deposits, which have terms greater than three months but less than one year, and exceeded proceeds from investments of $11.1.

For the first six months of fiscal year 2024, cash used for investing activities was $3,226.0. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $3,114.9 and an investment in financing receivables of $392.4. Proceeds from investments of $367.4 resulted from maturities of time deposits and treasury securities with terms greater than three months but less than one year and exceeded purchases of investments of $136.4.

Capital Expenditures (Non-GAAP Financial Measure)

The components of our capital expenditures are detailed in the table below. Refer to page 71 for a definition of this non-GAAP financial measure as well as a reconciliation to cash used for investing activities.

(A)Reflects the portion of "Additions to plant and equipment, including long-term deposits" that is associated with NGHC, less our approximate cash investment in the joint venture.

Capital expenditures for the first six months of fiscal year 2025 totaled $2,939.4 compared to $2,671.1 for the first six months of fiscal year 2024. Spending for plant and equipment primarily included project spending for our clean energy projects such as the NEOM Green Hydrogen Project in NEOM City, Saudi Arabia, as well as our clean energy complexes in Louisiana, United States, and Alberta, Canada. Additionally, we continue to invest capital in our core industrial gas business for new industrial gas plants as well as maintaining and replacing existing facilities. The investment in and advances to unconsolidated affiliates of $365.4 includes approximately $212 associated with Blue Hydrogen Industrial Gases, and approximately $115 associated with our final investment in JIGPC joint venture. The investment in financing receivables of $35.8 relates to remaining payments associated with the purchase of a natural gas-to-syngas processing facility in Uzbekistan. The prior year investment in financing receivables of $392.4 primarily reflects payments associated with the purchase of renewable fuel assets from World Energy as well as the purchase of a natural gas-to-syngas processing facility in Uzbekistan. Refer to Note 3, Variable Interest Entities, and Note 17, Supplemental Information, to the consolidated financial statements for additional information.

Outlook for Investing Activities

It is not possible, without unreasonable efforts, to reconcile our forecasted capital expenditures to future cash used for investing activities because we are unable to identify the timing or occurrence of our future investment activity, which is driven by our assessment of competing opportunities at the time we enter into transactions. These decisions, either individually or in the aggregate, could have a significant effect on our cash used for investing activities.

We expect capital expenditures for fiscal year 2025 to be approximately $5 billion. We anticipate capital expenditures to be funded with our current cash balance, cash generated from continuing operations, and additional financing activities.

Cash Flows From Financing Activities

For the first six months of fiscal year 2025, cash provided by financing activities was $1,825.1. The source of cash was driven by long-term debt proceeds of $2.0 billion, which included approximately $1 billion from Eurobonds issued in February 2025. We used the proceeds from the offering to repay commercial paper obligations, including those incurred prior to the closing of our 2025 Eurobond offering for repayment of €300 million aggregate principal amount outstanding of our 1.000% Eurobonds at maturity, plus accrued interest. The remaining $1 billion was borrowed by the NGHC joint venture as further discussed below. Additionally, we received proceeds of $645.6 from commercial paper and short-term borrowings, and $355.7 from investments by noncontrolling interests. These sources of cash were partially offset by dividend payments to shareholders of $787.4.

For the first six months of fiscal year 2024, cash provided by financing activities was $2,712.5. The source of cash was primarily driven by long-term debt proceeds of $3,649.0, which was largely attributable to U.S. Dollar-denominated green bonds totaling $2.5 billion that were issued during the second quarter of fiscal year 2024 under our Green Finance Framework as well as borrowings from project financing associated with the NGHC joint venture, partially offset by dividend payments to shareholders of $777.9.

Financing and Capital Structure

Debt

Total debt increased to $15.9 billion as of 31 March 2025 from $14.2 billion as of 30 September 2024 due to Eurobond and commercial paper issuances, and project financing associated with the NEOM Green Hydrogen Project as further discussed below. Total debt includes related party debt of $294.4 and $304.4 as of 31 March 2025 and 30 September 2024, respectively.

Various debt agreements to which we are a party include financial covenants and other restrictions, including restrictions pertaining to the ability to create property liens and enter into certain sale and leaseback transactions. As of 31 March 2025, we were in compliance with all of the financial and other covenants under our debt agreements.

Credit Facilities

During the second quarter of fiscal year 2025, we refinanced our existing 364-day $500 revolving credit agreement to extend its maturity date from 27 March 2025 to 26 March 2026. All other terms remain consistent with the original agreement, including our ability to convert the facility into a term loan maturing 26 March 2027. Separately, we also have a five-year $3.0 billion revolving credit agreement that matures on 31 March 2029. Both the five-year agreement and the 364-day agreement are syndicated facilities that provide a source of liquidity and support our commercial paper program through availability of senior unsecured debt to us and certain of our subsidiaries. No borrowings were outstanding under either of the agreements as of 31 March 2025.

We also have credit facilities available to certain of our foreign subsidiaries totaling $415.7, all of which was borrowed and outstanding as of 31 March 2025. The amount borrowed and outstanding as of 30 September 2024 was $1,129.0, which included long-term borrowings of approximately $675 that we derecognized upon deconsolidation of the Blue Hydrogen Industrial Gases Company ("BHIG") subsidiary during the second quarter. Refer to Note 17, Supplemental Information, to the consolidated financial statements for additional information.

NEOM Green Hydrogen Project Financing

NGHC has access to project financing of approximately $6.1 billion, which is expected to fund approximately 73% of the NEOM Green Hydrogen Project and is being drawn over the construction period, as well as additional credit facilities totaling approximately $500 primarily for NGHC's working capital needs. Creditors of NGHC do not have recourse to the general credit of Air Products. As of 31 March 2025, the joint venture had borrowed short- and long-term principal amounts totaling $4.3 billion compared to $3.3 billion as of 30 September 2024. Refer to Note 3, Variable Interest Entities, to the consolidated financial statements for additional information.

Dividends

The Board of Directors determines whether to declare cash dividends on our common stock and the timing and amount based on financial condition and other factors it deems relevant. We believe providing a consistent dividend plays a critical part in the creation of shareholder value and expect to return approximately $1.6 billion to shareholders in 2025.

Dividends are paid quarterly, usually during the sixth week after the close of the fiscal quarter. On 21 November 2024, the Board of Directors declared a quarterly dividend of $1.77 per share that was payable on 10 February 2025 to shareholders of record at the close of business on 2 January 2025. Additionally, on 22 January 2025, the Board of Directors approved a $0.02 per share increase to our quarterly dividend, marking the 43 rd consecutive year of dividend increases. The $1.79 per share dividend declared in January is payable on 12 May 2025 to shareholders of record at the close of business on 1 April 2025. We expect to continue our history of increasing our quarterly dividend.