Air Products & Chemicals, Inc.
For the period ended Mar 31, 2026. Filed Apr 30, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed Apr 30, 2026
APD$304.84-1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-31; filed 2026-01-30.
0000002969-26-000008
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsFirst Quarter 2026 in SummaryFirst Quarter 2026 Results of OperationsReconciliations of Non-GAAP Financial MeasuresLiquidity and Capital ResourcesPension BenefitsCritical Accounting Policies and EstimatesCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-04-30.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsSecond Quarter 2026 in SummarySecond Quarter 2026 Results of OperationsFirst Six Months 2026 in SummaryFirst Six Months 2026 Results of OperationsReconciliations of Non-GAAP Financial MeasuresLiquidity and Capital ResourcesPension BenefitsCritical Accounting Policies and EstimatesThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 148 previous paragraphs and 223 current paragraphs.
66 unchanged; 55 reworded; 90 added; 25 removed; 2 previous and 12 current paragraphs rearranged.
Tables are not compared: 22 previous and 37 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (90)
Current report
SECOND QUARTER 2026 VS. SECOND QUARTER 2025
Current report
•Sales of $3.2 billion increased 9%, or $255.6, due to higher volumes of 4%, a favorable impact from currency of 4%, and higher energy cost pass-through to customers of 2%, partially offset by lower pricing of 1% driven by lower helium pricing.
Current report
•Operating income of $752.7 increased 132%, or $3.1 billion, from an operating loss of $2.3 billion in the prior year, and operating margin improved to 23.7% from negative 79.8%, primarily due to prior-year charges for business and asset actions related to project exit decisions reached in the second quarter of fiscal year 2025.
Current report
•Adjusted operating income of $752.7 increased 19%, or $121.4, reflecting higher on-site volumes, favorable currency, and lower costs, partially offset by lower helium pricing. Adjusted operating margin improved to 23.7% from 21.6% in the prior year, primarily due to higher volumes and productivity, partially offset by energy cost pass-through to customers and pricing. These non-GAAP results exclude losses resulting from charges for business and asset actions as well as prior-year shareholder activism-related costs, as discussed below.
Current report
•Equity affiliates' income of $179.4 increased 23%, or $33.9, driven primarily by an affiliate in Mexico within the Americas segment.
Current report
•Earnings per share ("EPS") of $3.19 increased $10.96 from a loss per share of $7.77 in the prior year. On a non-GAAP basis, adjusted EPS of $3.20 increased $0.51 compared to $2.69 in the prior year. A summary table of changes in EPS is presented on page 45.
Current report
(B)Per share impact reflected within "Loss on de-designation of cash flow hedges" was calculated based on an after-tax loss attributable to Air Products of $3.0 in fiscal year 2025. The loss attributable to noncontrolling partners was $7.5.
Current report
(A)The charge for business and asset actions in fiscal year 2025 was primarily recorded within operating loss. For additional information regarding this charge, refer to Note 4, Business and Asset Actions, to the consolidated financial statements.
Current report
Discussion of Second Quarter Consolidated Results
Current report
Sales of $3.2 billion increased 9%, or $255.6, due to higher volumes of 4%, a favorable currency impact of 4%, and higher energy cost pass-through to customers of 2%, partially offset by lower pricing of 1%. Volume growth was driven by on-sites, primarily HyCO in the Americas segment. The favorable currency impact reflected a weaker U.S. Dollar, most notably against the Euro, Chinese Renminbi, and British Pound Sterling. Lower pricing was primarily attributable to helium, partially offset by pricing improvements across non-helium product lines.
Current report
Cost of sales of $2.2 billion increased 6%, or $130.5, due to an unfavorable currency impact of $81, higher energy cost pass-through to customers of $45, and higher costs of $19 related to sales volumes. These increases were partially offset by $8 of lower costs driven by productivity improvements and lower depreciation, which more than offset fixed-cost inflation and higher Americas maintenance costs, as well as $6 of lower product sourcing costs in our merchant business. Gross margin of 31.1% increased 150 bp from 29.6% in the prior year, driven by higher volumes.
Current report
Selling and administrative expense of $227.2 increased 2%, or $5.2, as unfavorable currency and labor inflation were partially offset by productivity improvements. Selling and administrative expense as a percentage of sales improved to 7.2% from 7.6% in the prior year.
Current report
We did not record any charges related to business and asset actions in the second quarter of fiscal year 2026.
Current report
Our consolidated prior year income statement for the three months ended 31 March 2025 included charges of $2.9 billion ($2.3 billion attributable to Air Products after tax, or $10.28 per share), consisting of initial charges related to project exit decisions as well as costs incurred in connection with our global cost reduction plan. These charges were not reflected in the results of our reportable segments. For additional information, refer to Note 4, Business and Asset Actions, to the consolidated financial statements.
Current report
We recorded shareholder activism-related costs in fiscal year 2025 in connection with a proxy contest that concluded in January 2025 following certification of the election of directors at the 2025 Annual Meeting of Shareholders. Costs of $31.4 ($31.0 after tax, or $0.14 per share) incurred during the second quarter were primarily for executive separation costs for our former chief executive officer. These costs were not reflected in the results of our reportable segments. For additional information, refer to Note 17, Supplemental Information, to the consolidated financial statements.
Current report
Other income of $14.1 increased 1%, or $0.2.
Current report
Operating Income (Loss) and Operating Margin
Current report
Operating income of $752.7 increased 132%, or $3.1 billion, from an operating loss of $2.3 billion in the prior year. The fiscal year 2025 loss was driven by $2.9 billion of charges for business and asset actions, largely related to project exit decisions reached in the second quarter of fiscal year 2025, and also included $31 of shareholder activism‑related costs. Volume impacts were favorable by $94, driven by on-sites. Currency was favorable by $25, and costs were lower by $13, as productivity improvements and lower depreciation more than offset fixed-cost inflation and higher Americas maintenance costs. These factors were partially offset by lower pricing, net of power costs, of $11, driven by lower helium pricing. Lower helium pricing was partially mitigated by pricing improvements across non-helium product lines. Operating margin was 23.7% compared to negative 79.8% in the prior year, which was primarily attributable to the charges for business and asset actions in fiscal year 2025.
Current report
On a non-GAAP basis, which excludes the charges for business and asset actions and prior-year shareholder activism-related costs discussed above, adjusted operating income of $752.7 increased 19%, or $121.4, due to higher volumes, favorable currency, and lower costs, partially offset by lower pricing. Adjusted operating margin improved to 23.7% from 21.6% in the prior year, primarily due to higher volumes and productivity, partially offset by energy cost pass-through to customers and pricing.
Current report
Equity affiliates' income of $179.4 increased 23%, or $33.9, primarily driven by an affiliate in Mexico within the Americas segment. Additionally, the prior year included a project exit-related impairment charge of $6.8 related to a joint venture in China.
Current report
Other non-operating income of $0.9 increased $19.5 compared to an expense of $18.6 in the prior year. The prior year included an expense of $11.5 ($3.0 attributable to Air Products after tax, or $0.01 per share) on certain interest rate swaps held by the NEOM Green Hydrogen Company joint venture. As of 1 January 2026, all swaps were re‑designated as cash flow hedges. Refer to Note 3, Variable Interest Entities, and Note 8, Financial Instruments, to the consolidated financial statements for additional information.
Current report
The increase also reflects income from excluded components from the assessment of effectiveness of our derivatives and lower non-service pension costs, partially offset by lower interest income on short-term investments.
Current report
For the three months ended 31 March 2026, our consolidated income statement includes an income tax expense of $158.7 compared to an income tax benefit of $505.8 in the prior year period. The tax expense in fiscal year 2026 represents an effective tax rate of 18.0% on the pre-tax income of $883.5 reported for the three months ended 31 March 2026. The tax benefit in fiscal year 2025 represented an effective rate of 22.5% on the pre-tax loss of $2.2 billion reported for the three months ended 31 March 2025.
Current report
The prior-year rate was primarily impacted by $2.9 billion of pre-tax charges for business and asset actions and other items as further discussed in Note 16, Income Taxes. Also contributing to a lower rate for the current fiscal year were higher foreign and domestic tax credits and incentives and higher equity affiliates' income. These items were partially offset by a higher cost of U.S. tax on foreign earnings and withholding taxes on foreign earnings we no longer intend to indefinitely reinvest.
Current report
Sales of $1.4 billion increased 8%, or $96.7, due to higher energy cost pass-through to customers of 4%, higher volumes of 3%, and favorable currency of 1%. The higher energy cost pass-through reflects increased natural gas rates in the U.S. Gulf Coast. Volumes were favorable in both on-sites and merchant, including helium, partially offset by income from a favorable one-time customer contract amendment in the prior year.
Current report
Operating income of $373.9 increased 2%, or $8.2, as higher volumes of $15 and favorable currency of $3 were partially offset by higher costs of $6 and lower pricing, net of power costs, of $4. The lower pricing reflected lower helium pricing and higher power costs in our merchant business, which were partially mitigated by favorable pricing actions across non-helium product lines. The increase in costs was primarily due to maintenance turnarounds and fixed-cost inflation, partially offset by lower depreciation. Operating margin of 27.0% decreased 140 bp from 28.4% in the prior year driven by a headwind of approximately 100 bp from higher energy cost pass-through to our on-site customers.
Current report
Equity affiliates’ income of $55.8 increased 79%, or $24.6, driven primarily by an affiliate in Mexico.
Current report
Sales of $832.6 increased 8%, or $58.5, due to higher volumes of 4% primarily related to on-site activity, including new assets, and improved helium, as well as favorable currency of 4% driven by the weakening of the U.S. Dollar against the Chinese Renminbi. Higher energy cost pass-through to customers contributed 1%, offset by lower pricing of 1%. The 1% total segment price decrease equates to a 5% decline in our merchant business, driven by lower helium pricing.
Current report
Equity affiliates’ income of $11.7 increased 11%, or $1.2, driven primarily by an affiliate in Thailand.
Current report
Sales of $789.0 increased 8%, or $61.6, as favorable currency of 9% and higher volumes of 2% were partially offset by lower energy cost pass-through to customers of 2% and lower pricing of 1%. Favorable currency primarily reflected the weakening of the U.S. Dollar against the Euro and British Pound Sterling. Higher volumes were driven by on-sites, including the impact of a prior-year turnaround, partially offset by lower helium. Energy cost pass-through declined due to lower natural gas rates. Lower helium pricing was partially mitigated by favorable pricing actions across non-helium product lines.
Current report
Operating income of $211.6 increased 8%, or $16.1, due to higher volumes of $16, favorable currency of $16, and higher pricing, net of lower power costs, of $4, partially offset by higher costs of $20. The increase in costs was primarily due to higher depreciation and fixed-cost inflation. Operating margin of 26.8% decreased 10 bp from 26.9% in the prior year.
Current report
Equity affiliates’ income of $31.9 increased 15%, or $4.2, driven primarily by an affiliate in Italy.
Current report
Equity affiliates' income of $79.2 increased 1%, or $1.0.
Current report
Sales of $137.1 increased 45%, or $42.4. Operating loss of $77.4 improved 35%, or $41.0, primarily due to lower changes to sale of equipment project estimates and productivity improvements.
Current report
Equity affiliates' income of $0.8 decreased 83%, or $3.9, driven by an affiliate in Algeria.
Current report
FIRST SIX MONTHS 2026 VS. FIRST SIX MONTHS 2025
Current report
•Sales of $6.3 billion increased 7%, or $426.6, due to a favorable currency impact of 3%, higher volumes of 2%, and higher energy cost pass-through to customers of 2%.
Current report
•Operating income of $1.5 billion increased 188%, or $3.2 billion, from an operating loss of $1.7 billion in the prior year, and operating margin improved to 23.7% from a negative 28.8%, primarily due to prior-year charges for business and asset actions related to project exit decisions reached in the second quarter of fiscal year 2025.
Showing the first 40 of 90 passages. Open the source sections for the rest.
Removed paragraphs (25)
Previous report
FIRST QUARTER 2026 VS. FIRST QUARTER 2025
Previous report
•Sales of $3.1 billion increased 6%, or $171.0, due to higher energy cost pass-through to customers of 3%, a favorable impact from currency of 2%, and higher pricing of 1%. Volumes were flat on a percentage basis as higher on-sites were offset by lower helium demand and a significant prior year, non-recurring helium sale to an existing merchant customer in the Americas segment.
Previous report
•Earnings per share ("EPS") of $3.04 increased 10%, or $0.27 per share. A summary table of changes in EPS is presented on page 40. On a non-GAAP basis, adjusted EPS of $3.16 increased 10%, or $0.30 per share, and also excludes non‑operating adjustments for a prior‑year gain on certain de‑designated hedging instruments and non‑service pension cost as discussed below.
Previous report
Discussion of First Quarter Consolidated Results
Previous report
During the first quarter of fiscal year 2026, we recorded charges of $28.3 ($24.6 after tax, or $0.11 per share) related to updated estimates for prior year project exits as described in Note 4, Business and Asset Actions, to the consolidated financial statements. These charges are not reflected in the results of our reportable segments.
Previous report
During the first quarter of fiscal year 2025, we recorded shareholder activism-related costs of $29.9 ($21.9 after tax, or $0.10 per share) in connection with a proxy contest. These costs, which were not reflected in the results of our reportable segments, included legal and other professional service fees and proxy solicitation expenses.
Previous report
Operating Income and Operating Margin
Previous report
Operating income of $734.5 increased 14%, or $90.9, due to favorable business mix of $26, lower costs of $23, higher pricing, net of power and fuel costs, of $22 driven by non-helium merchant, and favorable currency of $12. The lower costs include productivity improvements and lower maintenance, partially offset by fixed-cost inflation and the prior year sale of a U.S. equity method investment. A charge of $22 recorded in fiscal year 2026 to update cost estimates related to prior-year business and asset actions was more than offset by prior-year shareholder activism-related costs of $30. Operating margin of 23.7% increased 170 bp compared to 22.0% in the prior year, despite an approximate 50-basis-point headwind from higher energy cost pass-through to customers driven by the Americas segment.
Previous report
Equity affiliates' income of $172.2 increased 14%, or $21.6, driven by affiliates in the Americas and Europe segments.
Previous report
Lower interest income on short-term investments and a loss on cross‑currency interest rate swaps terminated in connection with business and asset actions were partially offset by lower non-service pension costs, which decreased to $3.4 ($2.5 after tax, or $0.01 per share) for the first quarter of fiscal year 2026 compared to $10.5 ($7.9 after tax, or $0.04 per share) in the prior year.
Previous report
Our effective tax rate was 18.7% and 17.8% for the three months ended 31 December 2025 and 2024, respectively. Our effective rate was higher in fiscal year 2026 primarily due to higher net costs on foreign-related income taxed in the U.S. and lower U.S. tax benefits for foreign-derived income, which were impacted by tax deductions for prior year business and asset actions. Also contributing to the higher current year rate were prior-year non-recurring gains on the de-designation of cash flow hedges in jurisdictions with lower tax rates. These increases were partially offset by the release of certain unrecognized tax benefits resulting from tax settlements in the current year.
Previous report
Equity affiliates’ income of $51.7 increased 47%, or $16.6, driven by an affiliate in Mexico.
Previous report
Sales of $831.5 increased 2%, or $14.4, as higher energy cost pass-through to customers of 2% and a favorable currency impact of 1% were partially offset by lower pricing of 1% primarily driven by helium. The 1% total segment price decrease equates to a 4% decline in our merchant business. Volumes were flat as new on-site assets were offset by lower demand for helium.
Previous report
Equity affiliates’ income of $23.4 increased 29%, or $5.2, driven by an affiliate in Italy.
Previous report
** Percentage change versus prior period is not meaningful.
Previous report
Equity affiliates' income of $84.5 decreased 1%, or $0.5.
Previous report
** Percentage change versus prior period is not meaningful.
Previous report
Sales of $117.0 increased 21%, or $20.2. Operating loss of $108.9 decreased 7%, or $8.1, primarily due to productivity-driven cost improvements.
Previous report
Business and Asset Actions
Previous report
During the first quarter of fiscal year 2025, we recorded shareholder activism-related costs of $29.9 ($21.9 after tax, or $0.10 per share) in connection with a proxy contest. These costs included legal and other professional service fees and proxy solicitation expenses.
Previous report
For the first three months of fiscal year 2025, cash provided by operating activities was $811.7. Other adjustments of $122.6 primarily reflected non‑cash currency impacts on intercompany balances. The working capital accounts were a net use of cash of $16.5. A $47.8 use of cash for trade receivables, driven by the timing of cash collections, was partially offset by a $30.5 source of cash within payables and accrued liabilities. The source of cash for payables and accrued liabilities primarily resulted from higher accrued utilities and changes in the fair value of derivative contracts that hedge intercompany loans, partially offset by payments for incentive compensation.
Previous report
On 19 November 2025, the Board of Directors declared a quarterly dividend of $1.79 per share that is payable on 9 February 2026 to shareholders of record at close of business on 2 January 2026.
Reworded paragraphs (55)
Previous wording
This Management’s Discussion and Analysis contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding business outlook. These forward-looking statements are based on management’s expectations and assumptions as of the date of this Quarterly Report on Form 10-Q and are not guarantees of future performance. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors not anticipated by management. These factors include, without limitation, those described in "Forward-Looking Statements" and Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended 30 September 2025 (the "2025 Form 10-K"), which was filed with the SEC on 20 November 2025, as well as in "Forward-Looking Statements" and Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q.
Current wording
This Management’s Discussion and Analysis contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding business outlook. These forward-looking statements are based on management’s expectations and assumptions as of the date of this Quarterly Report on Form 10-Q and are not guarantees of future performance. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors not anticipated by management. These factors include, without limitation, those described in "Forward-Looking Statements" and Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended 30 September 2025 (the "2025 Form 10-K"), which was filed with the SEC on 20 November 2025, as well as in "Forward-Looking Statements" of this Quarterly Report on Form 10-Q.
Previous wording
Comparisons included in the discussion that follows are for the first quarter of fiscal year 2026 versus ("vs.") the first quarter of fiscal year 2025. The disclosures provided in this Quarterly Report on Form 10-Q are complementary to those made in our 2025 Form 10-K.
Current wording
Comparisons included in the discussion that follows are for the second quarter and first six months of fiscal year 2026 versus ("vs.") the second quarter and first six months of fiscal year 2025. The disclosures provided in this Quarterly Report on Form 10-Q are complementary to those made in our 2025 Form 10-K.
Previous wording
(A)EPS impacts associated with charges for business and asset actions were calculated based on a total after-tax charge of $24.6 ($0.11 per share).
Current wording
(A)Per share impacts were calculated based on total after-tax charges for business and asset actions attributable to Air Products of $2.3 billion. Charges attributable to noncontrolling partners was $3.5.
Previous wording
The table below summarizes the per share impact of our non-GAAP adjustments for the first quarter of fiscal years 2026 and 2025. These impacts were calculated independently and may not sum to totals due to rounding.
Current wording
The table below summarizes the per share impact of our non-GAAP adjustments for the second quarter of fiscal years 2026 and 2025. These impacts were calculated independently and may not sum to totals due to rounding.
Previous wording
FIRST QUARTER 2026 RESULTS OF OPERATIONS
Current wording
SECOND QUARTER 2026 RESULTS OF OPERATIONS
Previous wording
Research and development expense of $20.4 decreased 7%, or $1.6. Research and development expense as a percentage of sales decreased to 0.7% from 0.8% in the prior year.
Current wording
Research and development expense of $21.6 decreased 6%, or $1.3. Research and development expense as a percentage of sales decreased to 0.7% from 0.8% in the prior year.
Previous wording
•Operating income of $734.5 increased 14%, or $90.9, primarily due to favorable business mix, lower costs, and higher non‑helium merchant pricing. Operating margin of 23.7% increased 170 basis points ("bp") from 22.0% in the prior year. On a non-GAAP basis, adjusted operating income of $756.5 increased 12%, or $83.0, and adjusted operating margin of 24.4% increased 140 bp compared to 23.0% in the prior year. These non-GAAP results exclude charges recorded in fiscal year 2026 to update cost estimates related to prior-year business and asset actions as well as prior-year shareholder activism-related costs as discussed below.
Current wording
Prior Year Shareholder Activism-Related Costs
Previous wording
Interest expense increased 28%, or $11.9, driven by higher interest incurred on principal borrowings from Euro- and U.S. Dollar-denominated senior fixed-rate notes issued in fiscal year 2025. Higher interest incurred was partially offset by a higher carrying value of ongoing projects under construction.
Current wording
Interest expense increased 17%, or $7.3, driven by higher interest on principal borrowings from Euro- and U.S. Dollar-denominated senior fixed-rate notes issued in fiscal year 2025.
Previous wording
The effective tax rate equals the income tax provision divided by income before taxes. Equity affiliates' income is primarily included net of income taxes within income before taxes on our consolidated income statements.
Current wording
The effective tax rate equals the income tax expense (benefit) divided by income or loss before taxes. Equity affiliates' income is primarily included net of income taxes within income or loss before taxes on our consolidated income statements.
Previous wording
Our adjusted effective tax rate, which excludes the impact of adjustments presented in the "Reconciliations of Non-GAAP Financial Measures" section beginning on page 48, was 18.5% and 18.7% for the three months ended 31 December 2025 and 2024, respectively.
Current wording
Our adjusted effective tax rate, which excludes the impact of adjustments presented in the "Reconciliations of Non-GAAP Financial Measures" section beginning on page 62, was 18.0% and 19.1% for the three months ended 31 March 2026 and 2025, respectively.
Previous wording
Discussion of First Quarter Results by Business Segment
Current wording
Discussion of Second Quarter Results by Business Segment
Previous wording
Operating income of $232.3 increased 7%, or $15.9, due to lower costs of $15 driven by productivity, favorable business mix of $7, and favorable currency of $4, partially offset by lower pricing of $10. Depreciation was reduced in fiscal year 2026 due to certain coal gasification assets being classified as held for sale. Operating margin of 27.9% increased 140 bp from 26.5% in the prior year.
Current wording
Operating income of $240.0 increased 25%, or $48.6, due to higher volumes of $34, lower costs of $16 driven by productivity, and favorable currency of $8, partially offset by lower pricing, net of power costs, of $10. Depreciation was lower in fiscal year 2026 primarily due to certain gasification assets being classified as held for sale. Operating margin of 28.8% increased 410 bp from 24.7% in the prior year, primarily due to the impact of higher volumes and favorable costs, partially offset by lower pricing.
Previous wording
Sales of $30.3 decreased 8%, or $2.5, due to lower volumes. Operating income was $5.8 compared to a loss of $0.6 in the prior year, primarily due to lower costs following the deconsolidation of Blue Hydrogen Industrial Gases Company ("BHIG") in the second quarter of fiscal year 2025 as well as productivity improvements.
Current wording
Sales of $29.2 decreased 11%, or $3.6, primarily due to lower volumes. Operating income was $4.6 compared to a loss of $2.9 in the prior year, reflecting lower costs, including productivity improvements and the impact of the deconsolidation of Blue Hydrogen Industrial Gases Company ("BHIG") in the second quarter of fiscal year 2025.
Previous wording
The per share impacts for the items presented in the table below were calculated independently and may not sum to the total change in EPS due to rounding.
Current wording
The per share impacts for the line items presented in the table below were calculated independently and may not sum to the total change in EPS due to rounding.
Previous wording
(B)EPS impact reflected within "Gain on de-designation of cash flow hedges" was calculated based on an after-tax gain attributable to Air Products of $10.3. The gain attributable to our noncontrolling partners was $25.2.
Current wording
(B)Per share impact reflected within "Gain on de-designation of cash flow hedges" was calculated based on an after-tax gain attributable to Air Products of $7.3 in fiscal year 2025. The gain attributable to our noncontrolling partners was $17.7.
Previous wording
Sales of $3.1 billion increased 6%, or $171.0, due to higher energy cost pass-through to customers of 3%, a favorable impact from currency of 2%, and higher pricing of 1%. The increase in energy cost pass-through to customers primarily reflects higher natural gas prices in North America, which are contractually recoverable under our on-site agreements. Currency was favorable as the U.S. Dollar weakened, most notably against the Euro. The 1% total company price improvement, which equates to a 2% improvement for the merchant business, was driven by non-helium pricing actions in the Americas and Europe segments. Volumes were flat as higher on-sites were offset by lower helium demand and a significant, non-recurring helium sale to an existing merchant customer in the Americas segment in the prior year.
Current wording
Sales of $6.3 billion increased 7%, or $426.6, due to a favorable currency impact of 3%, higher volumes of 2%, and higher energy cost pass-through to customers of 2%. Currency was favorable as the U.S. Dollar weakened, most notably against the Euro. Volume growth was driven by on-sites, primarily from new assets and Americas HyCO facilities, partially offset by lower helium demand and a significant, non-recurring helium sale to an existing merchant customer in the Americas segment in the prior year. Pricing was flat as improvement across non-helium product lines was offset by lower helium pricing.
Previous wording
Cost of sales of $2.1 billion increased 5%, or $91.0, primarily due to higher energy cost pass-through to customers of $79 and an unfavorable currency impact of $47. These increases were partially offset by $22 of lower costs related to sales volumes and $10 driven by productivity improvements and lower maintenance, which more than offset fixed-cost inflation. Gross margin of 32.1% increased 90 bp from 31.2% in the prior year as the benefits from favorable business mix and higher pricing were partially offset by higher energy cost pass-through to customers.
Current wording
Cost of sales of $4.3 billion increased 5%, or $221.5, due to an unfavorable currency impact of $128 and higher energy cost pass-through to customers of $124. These increases were partially offset by $16 of lower costs driven by productivity improvements and reduced depreciation, which more than offset fixed-cost inflation, lower product sourcing costs of $9, and lower costs of $5 related to sales volumes. Gross margin of 31.6% increased 120 bp from 30.4% in the prior year as the benefits from higher volumes were partially offset by higher energy cost pass-through to customers.
Previous wording
Selling and administrative expense of $228.7 decreased 6%, or $13.7, as productivity improvements were partially offset by labor inflation. Selling and administrative expense as a percentage of sales decreased to 7.4% from 8.3% in the prior year.
Current wording
Selling and administrative expense of $455.9 decreased 2%, or $8.5, as productivity improvements were partially offset by unfavorable currency and fixed-cost inflation. Selling and administrative expense as a percentage of sales improved to 7.3% from 7.9% in the prior year.
Previous wording
Other income of $10.6 decreased 54%, or $12.3, primarily due to the prior year sale of a U.S. equity method investment.
Current wording
Other income of $24.7 decreased 33%, or $12.1, primarily due to the prior year sale of a U.S. equity method investment.
Previous wording
On a non-GAAP basis, which excludes the charge for business and asset actions and prior year shareholder activism-related costs discussed above, adjusted operating income of $756.5 increased 12%, or $83.0, and adjusted operating margin of 24.4% increased 140 bp compared to 23.0% in the prior year.
Current wording
On a non-GAAP basis, which excludes the charges for business and asset actions and prior year-shareholder activism-related costs discussed above, adjusted operating income of $1.5 billion increased 16%, or $204.4 due to higher volumes, favorable currency, lower costs, and higher pricing, net of power costs. Adjusted operating margin improved to 24.1% from 22.3% in the prior year, primarily due to higher volumes and productivity, partially offset by energy cost pass-through to customers.
Previous wording
Of the first quarter charge, $22.0 was recorded to operating income and related to the settlement of project‑related commitments and sale of associated assets. The remaining $6.3 was recorded to "Other non‑operating income (expense), net" and reflects losses on cross‑currency interest rate swaps terminated in connection with the early repayment of related intercompany loans for one of the affected gasification projects.
Current wording
Other Non-Operating Income (Expense), net
Previous wording
Other non-operating expense of $1.4 decreased $40.3 compared to income of $38.9 in the prior year, which included a $38.8 gain ($10.3 attributable to Air Products after tax, or $0.05 per share) on certain interest rate swaps held by the NEOM Green Hydrogen Company joint venture. The majority of these swaps were re‑designated as cash flow hedges by the end of fiscal year 2025, and the impact of any swaps that remained de‑designated in the first quarter of fiscal year 2026 was not material. Refer to Note 3, Variable Interest Entities, and Note 8, Financial Instruments, to the consolidated financial statements for additional information.
Current wording
Other non-operating expense of $0.5 decreased $20.8 from income of $20.3 in the prior year. The prior year included a gain of $27.3 ($7.3 attributable to Air Products after tax, or $0.03 per share) on certain interest rate swaps held by the NEOM Green Hydrogen Company joint venture. As of 1 January 2026, all swaps were re‑designated as cash flow hedges. Refer to Note 3, Variable Interest Entities, and Note 8, Financial Instruments, to the consolidated financial statements for additional information. We also recognized lower interest income on short-term investments in fiscal year 2026.
Previous wording
Sales of $1.3 billion increased 4%, or $54.1, as higher energy cost pass-through to customers of 6% and favorable pricing of 2% were partially offset by lower volumes of 4%. The higher energy cost pass-through reflects increased natural gas rates in the U.S. Gulf Coast and California. Pricing improved for non-helium products. The 2% total segment price increase equates to a 4% improvement in our merchant business. Volumes were unfavorable primarily due to a significant, non-recurring helium sale to an existing merchant customer in the prior year. Currency was flat compared to the prior year.
Current wording
Sales of $2.7 billion increased 6%, or $150.8, due to higher energy cost pass-through to customers of 5%, higher pricing of 1%, and a favorable currency impact of 1%, partially offset by lower volumes of 1%. Higher energy cost pass-through reflects increased natural gas rates in the U.S. Gulf Coast. The 1% total segment price increase equates to a 2% improvement in our merchant business, driven by non-helium product lines. The modest volume decline was primarily due to favorable non‑recurring items in the prior year, including a significant helium sale to an existing merchant customer and a one‑time customer contract amendment, partially offset by higher on‑site volumes in fiscal year 2026.
Previous wording
Operating income of $403.8 increased 4%, or $15.6, as higher pricing of $16 and favorable business mix of $3 were partially offset by higher costs of $4. Costs were modestly unfavorable as prior‑year income from the sale of an equity method investment and fixed-cost inflation more than offset lower maintenance. Operating margin of 30.1% was flat compared to prior year, as the benefits from favorable business mix and pricing were offset by a headwind of approximately 150 basis points from higher energy cost pass‑through to customers.
Current wording
Operating income of $777.7 increased 3%, or $23.8, as favorable business mix of $18, positive pricing, net of higher power costs, of $12, and favorable currency of $4 were partially offset by higher costs of $10. The increase in costs was primarily due to fixed-cost inflation and prior‑year income from the sale of an equity method investment, partially offset by lower depreciation. Operating margin of 28.5% decreased 80 bp from 29.3% as a headwind of approximately 150 basis points from higher energy cost pass‑through to customers was partially offset by favorable business mix.
Previous wording
Equity affiliates’ income of $13.8 increased 34%, or $3.5, driven by affiliates in China.
Current wording
Equity affiliates’ income of $25.5 increased 23%, or $4.7, driven by affiliates in China and Thailand.
Previous wording
Sales of $782.0 increased 12%, or $84.8, due to favorable currency of 8%, higher volumes of 5%, and higher pricing of 1%, partially offset by lower energy cost pass-through to customers of 2%, primarily due to lower natural gas rates. Favorable currency primarily reflected the weakening of the U.S. Dollar against the Euro. The higher volumes were driven by on-sites, including the impact of a prior-year turnaround, and non-helium merchant. Pricing improved for non-helium products. The 1% total segment price increase equates to a 2% improvement in our merchant business.
Current wording
Sales of $1.6 billion increased 10%, or $146.4, due to a favorable impact from currency of 9% and higher volumes of 3%, partially offset by lower energy cost pass-through to customers of 2%, primarily due to lower natural gas rates. Favorable currency primarily reflected the weakening of the U.S. Dollar against the Euro. The higher volumes were driven by on-sites, including the impact of a prior-year turnaround, partially offset by lower helium. Pricing was flat as improvement across non-helium product lines was offset by lower helium pricing.
Previous wording
Operating income of $223.5 increased 20%, or $37.0, due to higher volumes of $21, higher pricing of $16, and favorable currency of $11, partially offset by higher costs of $11. The increase in costs was primarily due to higher depreciation and fixed-cost inflation, partially offset by productivity-driven improvements. Operating margin of 28.6% increased 190 bp from 26.7% in the prior year, as the benefits from higher volumes and pricing were partially offset by higher costs.
Current wording
Operating income of $435.1 increased 14%, or $53.1, due to higher volumes of $37, favorable currency of $27, higher pricing, net of lower power costs, of $19, partially offset by higher costs of $30. The increase in costs was primarily due to higher depreciation and fixed-cost inflation. Operating margin of 27.7% increased 90 bp from 26.8% in the prior year as the benefits from higher volumes and pricing were partially offset by higher costs.
Previous wording
Equity affiliates' loss was $1.2 compared to income of $2.0 in the prior year, driven by an affiliate in Algeria.
Current wording
Equity affiliates' loss of $0.4 was unfavorable by $7.1 compared to income of $6.7 in the prior year, driven primarily by an affiliate in Algeria.
Previous wording
During the first quarter of fiscal year 2026, we recorded charges for business and asset actions totaling $28.3 ($24.6 after tax, or $0.11 per share) related to project exits announced in fiscal year 2025. Of these charges, $22.0 were recorded within operating income to reflect updated cost estimates as we settle project‑related commitments and sell associated assets. The remaining $6.3 was recorded to "Other non‑operating income (expense), net" and reflects losses on cross‑currency interest rate swaps terminated in connection with the early repayment of related intercompany loans for one of the affected gasification projects.
Current wording
In the first half of fiscal year 2026, we recorded charges of $28.3 ($24.6 after tax, or $0.11 per share) related to project exit decisions reached in fiscal year 2025. Of these charges, $22.0 were recorded to operating income to update cost estimates as we settle project‑related commitments and dispose of associated assets, and $6.3 was recorded in "Other non‑operating income (expense), net" for losses on cross‑currency interest rate swaps terminated in connection with the early repayment of related intercompany loans for one of the affected gasification projects in China. No additional charges were recorded during the second quarter of fiscal year 2026.
Previous wording
Our estimates reflect our best judgment based on information available as of 31 December 2025. Final settlement of these items may differ materially from current estimates, which could impact our consolidated financial statements in future periods.
Current wording
Estimates related to business and asset actions reflect our best judgment based on information available at the time the charges were recorded. Final settlement of these items may differ materially from current estimates, which could impact our consolidated financial statements in future periods.
Previous wording
In fiscal year 2024, we discontinued cash flow hedge accounting for certain interest rate swaps due to changes in the anticipated drawdown timeline for hedged borrowings related to the NEOM Green Hydrogen Project. These swaps are held by NEOM Green Hydrogen Company, a consolidated joint venture accounted for under the variable interest model, in which Air Products holds a one-third ownership interest. As a result, unrealized gains and losses for the de-designated swaps were recorded to "Other non-operating income (expense), net" on our consolidated income statements. During the first quarter of fiscal year 2025, we recorded an unrealized gain of $38.8 ($10.3 attributable to Air Products after tax, or $0.05 per share), with $25.2 attributable to our noncontrolling partners.
Current wording
In fiscal year 2024, we discontinued cash flow hedge accounting for certain interest rate swaps due to changes in the anticipated drawdown timeline for hedged borrowings related to the NEOM Green Hydrogen Project. These swaps are held by NEOM Green Hydrogen Company, a consolidated joint venture accounted for under the variable interest model, in which Air Products holds a one-third ownership interest. As a result of the de-designation, unrealized gains and losses related to the affected swaps were recorded in "Other non-operating income (expense), net" on our consolidated income statements. During the second quarter of fiscal year 2025, we recorded an unrealized loss of $11.5 ($3.0 attributable to Air Products after tax, or $0.01 per share), with $7.5 attributable to our noncontrolling partners. For the six months ended 31 March 2025, the total amount recorded was a net unrealized gain of $27.3 ($7.3 attributable to Air Products after tax, or $0.03 per share), with $17.7 attributable to our noncontrolling partners, respectively.
Previous wording
We re-designated the affected swaps as outstanding borrowings under the available project financing became commensurate with the swaps’ notional values. The unrealized gain on swaps that remained de-designated during the first quarter of fiscal year 2026 was not material. As of 1 January 2026, all swaps have been re-designated as cash flow hedges.
Current wording
We re-designated the affected swaps as cash flow hedges when the outstanding borrowings under the available project financing became commensurate with the swaps’ notional values. As of 1 January 2026, all swaps were re-designated as cash flow hedges. The unrealized gain on swaps that remained de-designated during the first quarter of fiscal year 2026 was not material.
Previous wording
Non-service related pension items resulted in net non-operating costs of $3.4 ($2.5 after tax, or $0.01 per share) in the first quarter of fiscal year 2026 compared to $10.5 ($7.9 after tax, or $0.04 per share) in the first quarter of fiscal year 2025. Non-service related components are recurring, non-operating items that include interest cost, expected returns on plan assets, prior service cost amortization, actuarial loss amortization, as well as special termination benefits, curtailments, and settlements. The net impact of non-service related components is reflected within “Other non-operating income (expense), net” on our consolidated income statements. Adjusting for the impact of non-service pension components provides management and users of our financial statements with a more accurate representation of our underlying business performance because these components are driven by factors that are unrelated to our operations, such as volatility in equity and debt markets. Further, non-service related components are not indicative of our defined benefit plans’ future contribution needs due to the funded status of the plans.
Current wording
Non-service related pension items resulted in net non-operating costs of $4.6 ($3.5 after tax, or $0.02 per share) and $8.0 ($6.0 after tax, or $0.03 per share) for the three and six months ended 31 March 2026, respectively, compared to $10.7 ($8.0 after tax, or $0.04 per share) and $21.2 ($15.9 after tax, or $0.07 per share) for the three and six months ended 31 March 2025, respectively. Non-service related components are recurring, non-operating items that include interest cost, expected returns on plan assets, prior service cost amortization, actuarial loss amortization, as well as special termination benefits, curtailments, and settlements. The net impact of non-service related components is reflected within “Other non-operating income (expense), net” on our consolidated income statements. Adjusting for the impact of non-service pension components provides management and users of our financial statements with a more accurate representation of our underlying business performance because these components are driven by factors that are unrelated to our operations, such as volatility in equity and debt markets. Further, non-service related components are not indicative of our defined benefit plans’ future contribution needs due to the funded status of the plans.
Previous wording
The effective tax rate represents income tax expense divided by income before taxes as reported under GAAP. We calculate our adjusted effective tax rate by adjusting both the numerator and the denominator to exclude the tax and pre‑tax effects of our non‑GAAP adjustments, respectively.
Current wording
The effective tax rate represents income tax expense (benefit) divided by income or loss before taxes as reported under GAAP. We calculate our adjusted effective tax rate by adjusting both the numerator and the denominator to exclude the tax and pre‑tax effects of our non‑GAAP adjustments, respectively.
Previous wording
As of 31 December 2025, we held cash and cash items of $1.0 billion, substantially all of which was held outside the U.S. We do not expect a significant portion of the earnings from our foreign subsidiaries and affiliates to be subject to U.S. income tax upon repatriation. Depending on the country in which these entities operate, repatriation of earnings may be subject to foreign withholding and other taxes. However, we intend to indefinitely reinvest the majority of our foreign cash and cash items that would be subject to additional taxes outside the U.S.
Current wording
As of 31 March 2026, we held cash and cash items of $951.0, substantially all of which were held outside the U.S. We do not expect a significant portion of the earnings from our foreign subsidiaries and affiliates to be subject to U.S. income tax upon repatriation. Depending on the country in which these entities operate, repatriation of earnings may be subject to foreign withholding and other taxes. However, we intend to indefinitely reinvest the majority of our foreign cash and cash items that would be subject to additional taxes outside the U.S.
Previous wording
For the first three months of fiscal year 2026, cash provided by operating activities was $900.7. The working capital accounts were a net use of cash of $215.1, primarily driven by a $191.3 use related to payables and accrued liabilities. This use included payments for incentive compensation under the fiscal year 2025 plan, contract terminations tied to our business and asset actions, and previously accrued severance actions under our global cost reduction plan.
Current wording
For the first six months of fiscal year 2026, cash provided by operating activities was $2.0 billion. The adjustment for deferred income taxes of $125.6 primarily reflects the timing of tax deductions associated with prior-year charges for business and asset actions. For additional information, refer to Note 4, Business and Asset Actions, to the consolidated financial statements. The working capital accounts were a net use of cash of $271.3, primarily driven by a $246.4 use related to payables and accrued liabilities. This use primarily included payments for incentive compensation under the fiscal year 2025 plan, contract terminations tied to our business and asset actions, and previously accrued severance actions under our global cost reduction plan.
Previous wording
For the first three months of fiscal year 2026, cash used for investing activities of $1.2 billion was primarily driven by additions to plant and equipment, including long-term deposits, as discussed in the "Capital Expenditures" section below.
Current wording
For the first six months of fiscal year 2026, cash used for investing activities of $2.3 billion was primarily driven by additions to plant and equipment, including long-term deposits, as discussed in the "Capital Expenditures" section below.
Previous wording
For the first three months of fiscal year 2025, cash used for investing activities was $2.2 billion. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $2.1 billion as discussed in the "Capital Expenditures" section below. Purchases of investments of $117.6 consisted of time deposits with maturities between three months and one year.
Current wording
For the first six months of fiscal year 2025, cash used for investing activities was $4.4 billion. The use of cash primarily resulted from additions to plant and equipment, including long-term deposits, of $4.0 billion. 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.
Previous wording
Capital expenditures for the first three months of fiscal year 2026 totaled $910.7 compared to $1.2 billion in the prior year. Additions to plant and equipment in both periods primarily reflect cash deployed to support our clean energy initiatives, including the NEOM Green Hydrogen Project, and clean energy complexes in Louisiana, United States, and Alberta, Canada. Spending for the NEOM Green Hydrogen Project is lower in fiscal year 2026 as we near completion of the project.
Current wording
Capital expenditures for the first six months of fiscal year 2026 totaled $1.8 billion compared to $2.9 billion in the prior year. Cash outflows for both periods primarily reflect investments in clean energy initiatives, including the NEOM Green Hydrogen Project and clean energy complexes in Louisiana, United States, and Alberta, Canada, as well as ongoing capital spending to maintain and replace assets in our core industrial gases business. Spending on the NEOM Green Hydrogen Project declined in fiscal year 2026 as the project nears completion.
Previous wording
We expect capital expenditures for fiscal year 2026 to be approximately $4.0 billion, reflecting continued investment in our energy transition projects, traditional industrial gas projects, and maintenance within our core business. Approximately $1 billion is expected to be dedicated to traditional industrial gas projects. We anticipate funding these expenditures through our existing cash balance and cash generated from continuing operations. We also have access to capital and money market financing as well as other sources of funding as discussed in the "Financing and Capital Structure" section below.
Current wording
We expect capital expenditures for fiscal year 2026 to be approximately $4.0 billion, reflecting continued investment in our energy transition projects, traditional industrial gas projects, and maintenance within our core business. Approximately $1 billion of this amount is expected to be dedicated to traditional industrial gas projects. We anticipate funding these expenditures through our existing cash balance and cash generated from continuing operations. We also have access to capital and money market financing as well as other sources of funding as discussed in the "Financing and Capital Structure" section below.
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Current report — wording carried from elsewhere
The per share impacts for the items presented in the table below were calculated independently and do not sum to the total change in EPS due to rounding.
Current report — wording carried from elsewhere
The table below summarizes the per share impact of our non-GAAP adjustments for the first six months of fiscal years 2026 and 2025. These impacts were calculated independently and may not sum to totals due to rounding:
Current report — wording carried from elsewhere
The table below summarizes the major factors that impacted consolidated sales for the periods presented:
Current report — wording carried from elsewhere
Cost of Sales and Gross Margin
Current report — wording carried from elsewhere
Research and development expense of $42.0 decreased 6%, or $2.9. Research and development expense as a percentage of sales decreased to 0.7% from 0.8% in the prior year.
Current report — wording carried from elsewhere
Interest expense increased 23%, or $19.2, driven by higher interest on principal borrowings from Euro- and U.S. Dollar-denominated senior fixed-rate notes issued in fiscal year 2025.
Current report — wording carried from elsewhere
The effective tax rate equals the income tax expense (benefit) divided by income or loss before taxes. Equity affiliates' income is primarily included net of income taxes within income or loss before taxes on our consolidated income statements.
Current report — wording carried from elsewhere
Our adjusted effective tax rate, which excludes the impact of adjustments presented in the "Reconciliations of Non-GAAP Financial Measures" section beginning on page 62, was 18.3% and 18.9% for the six months ended 31 March 2026 and 2025, respectively.
Current report — wording carried from elsewhere
Discussion of First Six Months Results by Business Segment
Current report — wording carried from elsewhere
The table below summarizes the major factors that impacted sales in the Americas segment for the periods presented:
Current report — wording carried from elsewhere
The table below summarizes the major factors that impacted sales in the Asia segment for the periods presented:
Current report — wording carried from elsewhere
The table below summarizes the major factors that impacted sales in the Europe segment for the periods presented:
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Our estimates reflect our best judgment based on information available as of 31 December 2025. Final settlement of these items may differ materially from current estimates, which could impact our consolidated financial statements in future periods.
Previous report — wording carried elsewhere
In January 2026, the Board of Directors approved a $0.02 per share increase to our quarterly dividend, raising it to $1.81 per share and marking our 44 th consecutive year of dividend increases. The first dividend at this increased rate was declared on 27 January 2026 and is payable on 11 May 2026 to shareholders of record at close of business on 1 April 2026.