AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 2/4 · Pipeline infrastructure fits the disclosed local production economics and supports a localized cost and reliability advantage. Comparative savings and barriers to rival replication are not quantified.
durability · 2/4 · Existing infrastructure and long-term sales contracts support persistence. Missing contract lengths, renewal outcomes and replication economics prevent a strong demonstrated durability assessment.
customer dependency · 2/4 · Reliable local supply, long-term contracts and growing on-site volumes indicate customer dependence indirectly. Growth includes new assets, and neither switching costs nor customer retention rates are disclosed.
erosion resilience · 2/4 · Contractual energy recovery and improving core segment results show resilience, while price competition, helium weakness and distribution cost pressures show limits. Project losses separately weaken the economics of expansion.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · The nine-month earnings bridge shows a positive contribution from price net of variable costs, and Europe reported 1% higher pricing. Asia reported 1% lower pricing driven by helium. These are mixed observed outcomes rather than uniform pricing strength.
retention · 2/4 · Long-term customer contracts and higher on-site demand provide indirect evidence of recurring relationships and supply dependence. New asset contributions mean volume growth cannot be treated as a renewal or retention rate.
margin resilience · 2/4 · Realized energy pass-through provides protection, and quarterly gross margin improved in fiscal 2026 after declining in fiscal 2025. Segment income improved, but substantial excluded project charges produced a consolidated operating loss. Resilience is stronger in core operations than in total investment outcomes.
contractual freedom · 2/4 · Pricing formulas, surcharges, pass-through and tolling arrangements establish contractual mechanisms to recover input costs, corroborated by actual recovery. They do not establish unilateral repricing freedom or the ability to expand economic spreads at renewal.
Predictability44
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 25.00
- Revenue growth volatility (pp)
- 10.81
- Positive FCF years (%)
- 40.00
- FCF margin volatility (pp)
- 15.36
Financial strength13
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 0.00
- netDebtEbitGrade
- 0.00
- interestCoverageGrade
- 0.00
- currentRatioGrade
- 50.48
- Interest coverage (x)
- -4.10
- Current ratio (x)
- 1.38
Capital allocation58
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 8.49
- 3-year average dilution (%)
- 0.10
- 3-year average SBC / revenue (%)
- 0.54
- cashConversionGrade
- 0.00
Management44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 0/4 · Approximately $3.7 billion of fiscal 2025 business and asset charges were followed by $2.9 billion of fiscal 2026 quarterly project-exit charges, including facilities already under construction. These are direct adverse investment outcomes. Exits may limit further losses, and recent borrowing is lower, but neither establishes successful capital rehabilitation. Full operating cash-flow coverage is unavailable.
incentive alignment · 2/4 · Actual fiscal 2025 outcomes included zero annual incentive payout for the specified executives and an 80.8% long-term performance-share payout factor. Stock awards and multi-year performance periods support alignment, but accelerated separation vesting weakens it. Announced fiscal 2026 return-on-capital measures and subsequent grants do not establish completed performance or vesting.
execution · 2/4 · Improved segment operating income and administrative productivity demonstrate progress in core operations. Repeated cancellations and $78 million of unfavorable equipment-project estimate adjustments provide substantial contrary evidence. This assessment uses operating outcomes, not the CEO's reputation, and does not attribute every legacy investment to current leadership.
governance · 3/4 · Disclosed independent leadership, board independence, shareholder rights and recoupment rules establish substantial governance safeguards. A conflicted director actually abstained from the reimbursement vote. These are demonstrated structures and a specific process, not proof that oversight prevented the investment failures.
Evidence
Overall regional industrial gases sales constituted over 90% of consolidated sales in fiscal years 2025, 2024, and 2023, approximately half of which were attributable to atmospheric gases.
Business: regional industrial gases share of consolidated sales · Filed 20/11/2025
Each of the regional industrial gases segments competes against three global industrial gas companies: Air Liquide S.A., Linde plc, and Messer Group GmbH, as well as regional competitors.
Business: named industrial gas competitors · Filed 20/11/2025
We derive a competitive advantage in locations where we have pipeline networks, which enable us to provide a reliable and economic supply of products to our larger customers.
Business: pipeline network competitive advantage · Filed 20/11/2025
5 Table of Contents Production Industrial gases are generally produced at or near the point of use due to the complexity and inefficiency of storing molecules at low temperatures.
Production: point-of-use production and storage inefficiency · Filed 20/11/2025
Our long-term sales contracts to customers are generally matched to the term of these obligations and provide recovery of price increases.
Purchase obligations: matching long-term sales contracts and price recovery · Filed 20/11/2025
We mitigate electricity, natural gas, and hydrocarbon price fluctuations contractually through pricing formulas, surcharges, cost pass-through provisions, and tolling arrangements.
Business: contractual mitigation of energy and feedstock price fluctuations · Filed 20/11/2025
Cost of Sales and Gross Margin Cost of sales of $8.3 billion increased 1%, or $87.3, due to higher energy cost pass-through to customers of $278, higher costs of $73, higher power and fuel costs in our merchant business of $49, and an unfavorable currency impact of $12.
Fiscal 2025 cost of sales: realized energy-cost pass-through and merchant cost pressures · Filed 20/11/2025
Competition in industrial gases is based primarily on price, reliability of supply, and the development of industrial gas applications.
Business: price, supply reliability and applications as competitive factors · Filed 20/11/2025
Prior Year 2026 2025 $ %/bp Sales $2,550.1 $2,401.2 $148.9 6 % Operating income 728.7 624.6 104.1 17 % Operating margin 28.6 % 26.0 % 260 bp Equity affiliates’ income $38.4 $30.3 $8.1 27 % The table below summarizes the major factors that impacted sales in the Asia segment for the periods presented: Volume 3 % Price (1 %) Energy cost pass-through to customers 2 % Currency 2 % Total Asia Sales Change 6 % Sales of $2.6 billion increased 6%, or $148.9, as higher volumes of 3%, favorable currency of 2%, and higher energy cost pass-through to customers of 2% were partially offset by lower pricing of 1%.
Nine months ended June 2026: Asia volume and pricing bridge · Filed 30/07/2026
The decline in pricing was driven by lower helium pricing.
Asia: helium pricing decline · Filed 30/07/2026
In fiscal year 2025, total pre-tax charges related to business and asset actions were approximately $3.7 billion ($3.0 billion attributable to Air Products after tax, or $13.68 per share) compared to $57.0 ($43.8 after tax, or $0.20 per share) in fiscal year 2024.
Fiscal 2025 business and asset action charges · Filed 20/11/2025
50 Table of Contents Business and Asset Actions (Project Exit Costs) During the third quarter of fiscal year 2026, we recognized project exit charges of $2.9 billion ($2.2 billion after-tax, or $9.92 per share) as a result of our decision to cancel a clean energy complex under construction in Louisiana, a green hydrogen production facility under construction in Casa Grande, Arizona, and certain other smaller-scale projects supporting clean energy distribution.
Third quarter fiscal 2026: cancellations of clean-energy projects under construction · Filed 30/07/2026
These benefits were partially offset by higher costs of $16, which included fixed-cost inflation, increased product distribution and dislocation costs, and project development costs, partially offset by lower depreciation expense.
Americas: fixed-cost inflation, distribution and dislocation costs · Filed 30/07/2026
Prior Year 30 June 2026 2025 Loss per Share ($0.23) ($1.79) $1.56 Less: Loss per share from discontinued operations — (0.04) 0.04 Loss per share from continuing operations ($0.23) ($1.76) $1.53 % Change from prior year 87 % Operating Items Underlying business: Volume $0.66 Price, net of variable costs 0.10 Other costs 0.03 Currency 0.21 Business and asset actions(A) 0.32 Shareholder activism-related costs 0.32 Gain on sale of business (0.23) Gain on sale of other assets(B) (0.11) Total Operating Items $1.30 Other Items Equity affiliates: Equity affiliates' income $0.32 Equity method investment impairment associated with business and asset actions(A) 0.02 Interest expense (0.03) Other non-operating income/expense, net: Gain on de-designation of cash flow hedges(C) (0.03) Non-operating expense associated with business and asset actions(A) (0.02) Non-service pension cost, net 0.07 Change in effective tax rate, excluding discrete items below 0.03 Tax reform adjustment related to deemed foreign dividends (0.16) Tax on repatriation of foreign earnings 0.14 Noncontrolling interests(A)(C) (0.12) Total Other Items $0.22 Total Change $1.53 % Change from prior year 87 % (A)Per share impacts were calculated based on total after-tax charges for business and asset actions attributable to Air Products of $2.2 billion and $2.3 billion for the first nine months of fiscal years 2026 and 2025, respectively, with $0.6 and $3.5 attributable to noncontrolling partners.
Nine-month earnings bridge: price net of variable costs and other operating drivers · Filed 30/07/2026
Prior Year 2026 2025 $ %/bp Sales $2,386.7 $2,195.1 $191.6 9 % Operating income 665.8 607.2 58.6 10 % Operating margin 27.9 % 27.7 % 20 bp Equity affiliates’ income $87.9 $75.6 $12.3 16 % The table below summarizes the major factors that impacted sales in the Europe segment for the periods presented: Volume 1 % Price 1 % Energy cost pass-through to customers — % Currency 7 % Total Europe Sales Change 9 % Sales of $2.4 billion increased 9%, or $191.6, due to a favorable impact from currency of 7%, higher volumes of 1%, and higher pricing of 1%.
Nine months ended June 2026: Europe pricing, volumes and currency · Filed 30/07/2026
Volume growth was driven by on-site, including HyCO facilities and a new asset contribution.
Americas: on-site volume growth including new asset contribution · Filed 30/07/2026
Gross margin of 31.4% decreased 110 bp from 32.5% in the prior year primarily due to higher costs and increased energy cost pass-through to customers.
Fiscal 2025 gross-margin decline and its drivers · Filed 20/11/2025
45 Table of Contents Reconciliation of Total Segment Operating Income to Consolidated Results The table below reconciles total segment operating income to income (loss) before taxes as reflected on our consolidated income statements: Three Months Ended Nine Months Ended 30 June 30 June 2026 2025 2026 2025 Total Segment Operating Income $810.3 $741.1 $2,319.5 $2,045.9 Business and asset actions (2,907.4) (24.1) (2,929.4) (2,952.0) Shareholder activism-related costs — (25.0) — (86.3) Gain on sale of business — 67.3 — 67.3 Gain on sale of other assets(A) — 31.3 — 31.3 Consolidated Operating Income (Loss) ($2,097.1) $790.6 ($609.9) ($893.8) Equity affiliates' income 205.2 167.6 556.8 463.7 Interest expense 49.4 61.4 153.4 146.2 Other non-operating income (expense), net 3.6 (6.0) 3.1 14.3 Income (Loss) From Continuing Operations Before Taxes ($1,937.7) $890.8 ($203.4) ($562.0) (A) Reflected on the consolidated income statements within “Other income (expense), net".
Reconciliation of segment operating income to consolidated results · Filed 30/07/2026
Gross margin of 32.8% increased 30 bp from 32.5%.
Third quarter fiscal 2026: gross-margin improvement · Filed 30/07/2026
145 Table of Contents Business Segment Information Americas Asia Europe Middle East and India Corporate and other Total 2025 Sales(A) $5,125.9 $3,271.0 $2,984.5 $135.9 $520.0 $12,037.3 Cost of sales (3,423.5) (2,323.3) (1,893.2) (107.4) (508.6) (8,256.0) Selling and administrative expense (206.6) (118.3) (254.0) (24.1) (303.1) (906.1) Other segment items(B) 23.8 21.7 7.4 5.2 (75.6) (17.5) Operating income (loss)(C) $1,519.6 $851.1 $844.7 $9.6 ($367.3) $2,857.7 Other segment information: Depreciation and amortization 732.1 518.9 247.4 25.9 39.9 1,564.2 Equity affiliates' income(D) 157.0 42.3 101.9 340.9 12.4 654.5 Investments in net assets of and advances to equity affiliates 555.2 331.3 649.9 3,713.2 116.5 5,366.1 Total assets 12,058.7 6,712.2 6,916.8 10,919.4 4,452.4 41,059.5 Expenditures for long-lived assets 2,610.7 406.6 1,010.6 2,868.6 126.1 7,022.6 2024 Sales(A) $5,040.1 $3,224.3 $2,823.4 $134.4 $878.4 $12,100.6 Cost of sales (3,284.8) (2,255.8) (1,783.7) (101.0) (743.4) (8,168.7) Selling and administrative expense (212.5) (122.0) (243.2) (28.2) (336.5) (942.4) Other segment items(B) 22.3 12.7 13.5 0.7 (91.2) (42.0) Operating income (loss)(C) $1,565.1 $859.2 $810.0 $5.9 ($292.7) $2,947.5 Other segment information: Depreciation and amortization 699.3 471.0 207.1 26.6 47.1 1,451.1 Equity affiliates' income 158.8 32.9 88.1 347.5 20.4 647.7 Investments in net assets of and advances to equity affiliates 472.9 322.9 573.8 3,317.7 105.2 4,792.5 Total assets 12,383.8 7,436.5 5,849.2 8,477.4 5,427.7 39,574.6 Expenditures for long-lived assets 2,733.1 574.8 865.2 2,517.5 106.1 6,796.7 2023 Sales(A) $5,369.3 $3,216.1 $2,963.1 $162.5 $889.0 $12,600.0 Cost of sales (3,715.5) (2,194.6) (2,080.1) (120.0) (722.8) (8,833.0) Selling and administrative expense (222.4) (123.7) (224.0) (26.9) (360.0) (957.0) Other segment items(B) 8.3 8.7 4.4 1.3 (93.5) (70.8) Operating income (loss)(C) $1,439.7 $906.5 $663.4 $16.9 ($287.3) $2,739.2 Other segment information: Depreciation and amortization 649.3 433.5 196.2 27.5 51.8 1,358.3 Equity affiliates' income 109.2 29.7 102.5 349.8 13.1 604.3 Expenditures for long-lived assets 2,033.7 663.4 482.4 1,312.7 134.2 4,626.4 (A)Sales relate to external customers only.
Business segment information: operating results and long-lived asset expenditures · Filed 20/11/2025
Cash Flows From Financing Activities Nine Months Ended 30 June 2026 2025 Long-term debt proceeds $644.0 $3,978.2 Payments on long-term debt (662.8) (380.1) Net increase in commercial paper and short-term borrowings 77.0 214.7 Dividends paid to shareholders (1,200.0) (1,185.7) Investments by noncontrolling interests 301.5 485.9 Other financing activities (36.1) (78.7) Cash (Used for) Provided by Financing Activities ($876.4) $3,034.3 For the first nine months of fiscal year 2026, cash used for financing activities was $876.4.
Nine-month financing cash flows: borrowing, repayments and dividends · Filed 30/07/2026
Accordingly, we recorded cumulative effect adjustments that unfavorably impacted operating income (loss) by $78 for the nine months ended 30 June 2026.
Critical accounting estimates: unfavorable equipment-project estimate adjustments · Filed 30/07/2026
Selling and Administrative Expense Selling and administrative expense of $219.1 decreased 2%, or $3.5, driven by productivity improvements related to our global cost reduction plan, partially offset by higher incentive compensation, fixed-cost inflation, and unfavorable currency.
Third quarter fiscal 2026: administrative productivity improvements · Filed 30/07/2026
Maione) Adjusted EPS 0 % ESG Modifier 1.0 Final Payout Factor 0% Fiscal 2023 – 2025 Long-Term Incentive Performance Shares Relative TSR 80.8 % 2026 Proxy Statement 41 Executive Compensation Target Total Direct Compensation for 2025 Named Executive Officers At the beginning of the fiscal year, after benchmarking against peer companies as discussed below, the Committee established the fiscal 2025 target total direct compensation for our then-serving executive officers.
Executive compensation: fiscal 2025 annual incentive and long-term performance-share payout factors · Filed 11/12/2025
For fiscal 2025, the Committee maintained its practice of utilizing two types of long-term incentives for our executive officers: performance shares, which are conditioned on relative TSR performance compared to the S&P 500 Index over a three-year period (for fiscal 2025-2027); and RSUs, which generally vest four years after the grant date, subject to the recipient’s continued service to the Company.
Executive compensation: fiscal 2025 performance shares and restricted stock units · Filed 11/12/2025
Share-based compensation cost recognized on the consolidated income statements is summarized below: Three Months Ended Nine Months Ended 30 June 30 June 2026 2025 2026 2025 Before-tax share-based compensation cost(A) $12.3 $11.0 $38.6 $65.8 Income tax benefit (2.9) (2.8) (9.1) (15.8) After-tax share-based compensation cost $9.4 $8.2 $29.5 $50.0 (A)Fiscal year 2025 includes noncash executive separation costs of $22.4 to accelerate vesting of share-based awards.
Share-based compensation: recognized expense and accelerated executive separation vesting · Filed 30/07/2026
Highlights of our corporate governance framework are included below: •Declassified Board •Board consists of 100% independent directors (other than CEO) •Separate CEO and Chairman •Independent Chairman •Independent Vice Chairman •Majority voting standard in uncontested director elections •Director resignation policy for unelected directors •Shareholders have right to call special meeting (10% threshold) •Proxy access bylaw •Annual say-on-pay vote •No super-majority voting standards •No poison pill •Stringent stock ownership guidelines for directors and executive officers •All directors attend 75% or more of meetings •Board committees consist entirely of independent directors (other than the Executive Committee) •Board and committee oversight of risk management, including key topics such as succession planning, enterprise risk management, cybersecurity, sustainability, political engagement, human capital and compensation 6 Air Products and Chemicals, Inc.
Corporate governance: board independence, shareholder rights and committee structure · Filed 11/12/2025
The reimbursement was unanimously approved by our Board of Directors, with one director abstaining from the vote due to his role as founder and Chief Executive Officer of Mantle Ridge.
Related-party reimbursement: board approval and conflicted-director abstention · Filed 30/07/2026
•Our Recoupment Policy also provides that excess incentive compensation shall be recouped in the event of an accounting restatement, in accordance with SEC and NYSE rules.
Compensation governance: accounting-restatement recoupment policy · Filed 11/12/2025
Deferred Stock Units During the nine months ended 30 June 2026, we granted 100,048 performance shares to be earned over the performance period beginning 1 October 2025 and ending 30 September 2028.
Share-based compensation: actual performance-share grants for the 2025–2028 performance period · Filed 30/07/2026
Long-Term Incentive •Performance shares awarded as long-term incentives beginning in fiscal 2026 will be equally weighted between TSR measured against a fixed group of companies that comprise the S&P 500 Industrials Index and the S&P 500 Materials Index and return on capital, calculated as the three-year average of adjusted return on capital after-tax divided by adjusted capital employed.
Executive compensation: announced fiscal 2026 performance-share measures · Filed 11/12/2025
