$APD Air Products and Chemicals Q4 2024 Earnings Conference Call

Thank you, Eric, and good day to everyone. Thank you for taking time from your busiest schedules to join our call today. Please turn to slide number four of the material we have posted on our website for this call. Ten years ago, we set a goal for Air Products to be the safest, most diverse, and most profitable industrial gas company in the world, delivering excellent service to our customers. I am very proud to say that thanks to the outstanding efforts of all of our talented, dedicated, and committed people at Air Products, we are today the safest and most profitable industrial gas company in the world. We have achieved what we set out to do, and now we are ready to move forward. On slide number five, I'd like to point to our safety track record, which is our number one priority. We have made significant progress on both our employee lost time injury rate and recordable injury rate since 2014. We are very proud of this improvement. We will continue to strive to achieve zero accidents and zero incidents as the ultimate goal. We believe that all incidents and accidents are preventable. Now please turn to slide number six for a look at our fourth quarter results. Our fourth quarter adjusted earnings per share of $3.56 was at the upper end of our guidance range of $3.33 to $3.63, up 13% over last year, driven by our three largest reporting segments. Both productivity and pricing actions contributed positively this quarter. We successfully completed the $1.8 billion sale of our LNG process technology and equipment business to Hille at the end of September. The LNG business was part of our full fiscal year 2024 results, but with the sale, it will no longer contribute to our earnings going forward. Our adjusted EBITDA margin was up 460 basis points, and our adjusted operating margin increased 350 basis points versus prior year. Please turn to slide number seven for our fiscal year 2025 outlook, which is 22% higher than last year. We expect our ongoing business, which excludes the LNG business, to deliver adjusted earnings per share of $12.70 to $13.00, demonstrating an improvement of 6% to 9% over last year. We expect our first quarter adjusted earnings per share to be in the range of $2.75 to $2.85, which is flat to up 4% when considering the LNG divestiture. As you know, our first quarter is typically our weakest quarter, impacted by seasonality. In addition, we are not forecasting any significant growth for this quarter due to our concerns about the economic activity in China. It is possible that economic activity in China might improve with actions that the Chinese government might take in the future, but we have not included that in our forecast. We are proud of our results this quarter, and I would like to thank the talented and dedicated people at Air Products for helping us to deliver these strong results. Working together, I am confident that we can achieve what we have put forth in our guidance for fiscal year 2025. Now please turn to slide number eight, where you can see our strong sustained performance over the long term. We have achieved a 10% annual growth rate in our adjusted earnings per share since 2014. We have delivered consistent results throughout significant ups and downs in the world economy, and as I just mentioned, we expect to continue that trajectory in fiscal year 2025 with adjusted EPS growth ranging from 6% to 9% on a like-for-like basis. Now please turn to slide number nine. Another top priority for us is to consistently return cash to our shareholders. Our sustained growth has enabled us to achieve a 9% annual growth rate in our dividend since 2014, and we plan to return about $1.6 billion of cash to our shareholders in dividend payments this year alone. We are proud of our record of increasing our quarterly dividend payments for 42 consecutive years. We take a balanced approach to determine our dividend, and we are confident that our sustained performance will enable us to continue rewarding shareholders through increased dividends while also meeting the cash needs of our growth strategy. Now please turn to slide number 10, which is my favorite slide, again demonstrating long-term performance. Our adjusted EBITDA margin has expanded by almost 2,000 basis points over the last 10 years. We are now at a 44% adjusted EBITDA margin. We lead the industry when it comes to adjusted EBITDA margin, and this track record demonstrates our focus on effectively running our base industrial gases business. Now I would like to turn the call over to Melissa Schaefer, our Chief Financial Officer, to discuss our quarter and full results.

Thank you, Melissa. Now I would like to take this opportunity to discuss our growth strategy. Please turn to slide number 16. Our growth strategy consists of two pillars: our excellent core industrial gases business and our developing clean energy business. Our core industrial gas business is an industry leader. It is a stable business and grows at GDP or industrial production levels around the world. We continue to optimize for maximum efficiency and invest strategically to maintain our market share. In 2023 and 2024, almost half of our capital investment was related to our core industrial gases business. Second, we see tremendous opportunity in clean hydrogen, driven by a strong demand for decarbonization solutions that we are already seeing play out today. We are particularly optimistic about the use of blue hydrogen in the form of clean ammonia to minimize the use of coal in Asia's power plants. Another promising demand is the use of blue ammonia directly to power ships. Dozens of such ships are already on order or under construction. We are equally excited about the application of green hydrogen to meet Europe's emission reduction mandates across the heavy industrial and transport sectors. Clean hydrogen has real demand today, and we expect it to drive outsized growth relative to our core industrial gas business over the long term. The two pillars of our growth strategy are complementary and interrelated, underpinned by our core competencies, technology, and of course more than 65 years of hydrogen experience. We are committed to efficiently running and growing our core industrial gas business while pursuing strategic, high-growth, and high-return opportunities in clean hydrogen. Now please turn to slide 17. I want to expand on my comments about how we developed our clean hydrogen platform. Clean hydrogen is not a new business for Air Products; it's merely an extension of our existing core business. As I said, Air Products has been supplying hydrogen for more than 65 years, over which time we have developed key customer relationships that span both the private and public sectors. About 30 years ago, Air Products pioneered the on-site hydrogen business model with take-or-pay provisions and contractual pass-through, supplying hydrogen over the fence to refineries in California. We then gradually expanded to the US Gulf Coast, Canada, and Europe. We capitalized on global desulfurization regulations to ultimately become the world's largest hydrogen supplier with the most extensive hydrogen pipeline system. Now we are well positioned to capitalize on the next phase of hydrogen development, which is clean hydrogen, supported by the need to decarbonize hard-to-abate sectors. We moved first with focus and conviction to capture the important first-mover advantages, which I will talk more about in a moment. Consistent with our traditional hydrogen business, clean hydrogen uptake will also follow the on-site business model, and we anticipate these projects will provide attractive returns. Our strategic first-mover actions are now creating the opportunity for us to become the world's largest clean hydrogen supplier. Please turn to slide 18. There are clear advantages in moving first. We have been able to secure optimum locations for renewable resources, including areas with strong sun and wind generation, to produce low-cost green hydrogen. For blue hydrogen, we have been able to gain access to the right geologies needed for carbon sequestration, which is the key enabler to making blue hydrogen. As mentioned, we also have been able to apply more than 65 years of hydrogen and technology expertise, which sets us apart. Finally, as we have demonstrated, the first mover gets the best seat at the table with customers to negotiate the best off-take agreements. On slide number 19, you can see an overview of the various regulatory drivers for clean hydrogen in Europe and Asia, focusing on heavy industry and transport sectors where battery electric matters are not effective. A wide range of industries need to decarbonize using clean hydrogen, and we continue to extend our reach into these sectors. Now turning to slide number 20, let me underscore the significant demand for clean hydrogen today. Various leading companies, including TotalEnergies as one key example, have issued requests for quotation requesting capacity equal to requirements that far exceed the capacity of our green hydrogen project under construction in NEOM. Taking a step back, TotalEnergies' RFQ, as large as it is at 500,000 tons per year, accounts for only 10% of gray hydrogen now used by European refineries, and the output of the NEOM project is less than 5% of the gray hydrogen used by European refineries. Beyond refineries, there is demand for several other hard-to-abate sectors, including shipping and steel making. This strong demand in the market today gives us great confidence in our ability to load the green hydrogen facility under construction in NEOM. Turning to slide 21, this demonstrates the sheer scale of the clean hydrogen industry in the coming years. Clean hydrogen is expected to be a more than $600 billion market by 2030 and eventually exceed $1 trillion by 2050. There is significant demand now, and that demand is expected to grow significantly over the long term. Air Products capturing even a very small portion of that demand means that we will be well positioned to deliver significant growth. To demonstrate how large this market opportunity is, Air Products' currently approved clean hydrogen projects account for less than 1% of future market expectations. Before we discuss our key projects, please turn to slide 22 with important takeaways about our strategy and disciplined approach to creating shareholder value. Our core industrial gases business remains fundamentally strong with industry-leading adjusted EBITDA margin and solid GDP and industrial production growth. We are adding to this strong foundation by pursuing attractive growth opportunities in clean hydrogen driven by decarbonization. Future clean hydrogen demand is expected to be significant. We ultimately need to capture, as I said before, only a small portion of this anticipated high-growth market for our initial projects to be successful. We believe favorable supply-demand dynamics will enable attractive returns on green hydrogen. We are pursuing this strategy prudently and only approve new projects—and I like to stress, only approve new projects—after securing an anchor customer. As we have said before, we will not take any final investment decision on new projects until our current facilities are loaded at least 75% or more. We have focused teams within Air Products executing this two-pillar strategy. Our employees are dedicated to the ongoing success of both our core industrial gases business and our clean hydrogen business. Now I would like to take a moment to provide an update on our key projects. Sliding on slide number 24, there you can see an actual recent aerial photo of the NEOM project under construction. I'd like to stress this is a real project, it's not computer generated. The slide covers the ammonia production side, the electrolyzer facility, and the jetty. Although this view covers a vast area, it does not capture the wind farms located 50 miles to the north near the Gulf of Aqaba and the solar farms situated 40 miles to the west on the other side of the mountain range. They are full speed ahead on this project. Please turn to slide number 25. We have made immense progress on this green hydrogen project. Construction is about 60% complete, and we are on track to bring this facility on stream at the end of 2026. There are 18,000 workers on the site building this facility today. Importantly, roughly 35% of the total amount of the production has been contracted on a take-or-pay basis. Negotiations are underway for additional offtake which would exceed the production of the facility. NEOM has been financed by 23 banks providing more than 70% of the total capital needed. Air Products is investing about $800 million, or less than 10% of the total project cost. This is significantly less than the $1.7 billion that they originally projected for this project and illustrates our ability to execute highly successful project financing. Now please turn to slide number 26. In June of this year, we were delighted to announce a 15-year agreement to supply 70,000 tons of green hydrogen annually to TotalEnergies beginning in 2030. This was a milestone for us, and the take-or-pay nature of this agreement will drive stability in growing our clean hydrogen business. This pioneering agreement validates our clean hydrogen strategy and demonstrates significant demand for green hydrogen with one of the largest energy companies in the world. Moving to slide 27, let me share the status of two other major clean hydrogen projects. First, our Canada Net-Zero hydrogen energy project. We have committed 60% of the capacity on a long-term take-or-pay contract, and we are in active discussion for the remainder of the capacity. As for our Louisiana project, the blue hydrogen project, we have submitted for permits which we expect to be issued in 2025 and 2026, and we have received major pieces of equipment already on the site in readiness for construction work. We are in active discussion for offtake from this facility also, and discussions with possible equity partnership and also assessing project financing for this project. We will keep you updated as we move forward. Moving to slide number 28, as we have said before, we have put the sustainable aviation fuel project in Paramount, California on hold until we get our full permits. With regard to the proposed $4.5 billion joint venture to produce green hydrogen in Northern Texas, this project never reached final investment decision. It does not meet our established guidelines for new low-carbon project investments, and therefore we have stopped our involvement in this project and we have sold our development rights to our partners. Finally, on slide number 29, you can see that we continue to focus on our core industrial gas business, which accounts for more than 50% of our total fiscal 2023 to fiscal 2025 CapEx. Much of that CapEx is focused on growth projects. Core industrial gas business and clean hydrogen both need to meet or exceed our internal return targets. We regularly evaluate alternative funding opportunities to optimize our cash allocation. Beginning in 2027, we anticipate a meaningful decline in net debt to EBITDA ratio as well as possible net cash flow. Now for an update on succession planning, please turn to slide number 33. As discussed in our last earnings call, we have decided to bring into the company a fully qualified potential successor as President and a member of our Board of Directors. This person should be well known to investors with a clear record of success, preferably a current or former CEO of a public company with significant international experience and relationships. This board-driven process is being led by our independent director, Mr. Ed Manzer, with the support of the full board and the executive search firm Egon Zehnder. I'm happy to say that qualified candidates have already been identified, and we are anticipating announcing the President's name in the first half of fiscal year 2025. Now please turn to slide number 33. At Air Products, our two-pillar growth strategy includes running our core industrial gas business efficiently and continuing to invest and grow it, at the same time leveraging our 65 years of hydrogen experience to serve the large, high-growth clean hydrogen market. We expect our clean hydrogen projects to achieve higher returns than our core industrial gas business. Underpinning all of this is our relentless focus on thoughtful, strategic capital allocation. Being a prudent steward of Air Products' capital has been and will continue to be our top priority. Now please turn to slide number 34. The people of Air Products are working hard every day to deliver for our customers, to do so safely, and to deliver best-in-class profitability. Our operating discipline combined with our focus on delivering shareholder value gives us confidence as we enter into the next chapter of our growth at Air Products. And now we will be delighted to answer your questions. Operator, if you would.

Good morning, John. Thank you for your question. John, for fiscal 2025, we obviously have one of our major concerns and unknowns: how does the demand develop in Asia? We have a pretty decent handle on our opportunities in the Middle East, in Europe, and in America. The big unknown is China. That is why we have taken a conservative approach. Things might change depending on what the Chinese government does, but we are going to be conscious and cautious in terms of right now. Our expectation for price overall is similar to last year, about 1% to 2% price increase. Our volume growths are very much adjusted to the expected GDP and industrial production growths forecasted for the different regions in the world, which is not that much, it's about 2%, sometimes 2% to 3%, depending on which area you are. And then we do not have too many significant large projects coming on stream, but we do have a lot of smaller projects coming on stream which are going to contribute to our growth. We feel pretty good about our fiscal year guidance. I have to admit that we are very conservative on the first quarter because of the immediate weakness that we see in China.

Well, the ideal thing would be to have an equity partnership with somebody who is going to take the off-take, so that's kind of the obvious solution. But there are a lot of people who have raised significant funds, so-called clean funds, and want to participate in equity with us. But our preference obviously would be with somebody who is going to take the off-take.

No, I think we would be interested in partnering with people on the manufacturing part too, equity participation in the entire project.

Thank you.

Jeff, thank you for your question. I mean, Air Products has 220 million shares. We have many, many investors, and we have respect for all of our investors. As you know very well, we meet very often with our investors, and we believe the view of all of the investors is as important as the view of one investor. So I don't want to single out the fact that we listen to a particular investor. We listen to all of our investors, and the suggestions that have been made by all of our different investors is pretty consistent. They want us to focus on our base industrial gases business, which we are, and they also want to make sure that we are investing in the developing clean hydrogen business in a responsible way, and we are obviously doing that. And all of our investors throughout the years always ask about succession planning, and we have always been very diligent about succession planning, and we have now laid out very specifically what we want to do. So as I said, we listen to all of our shareholders and we take their views very seriously and consider them and then act on them if necessary.

Jeff, we expect to fully load NEOM, and we are working toward that in 2027. Yes, that is our expectation. That is what we are working on because there are other customers beyond Total. Total, we got their permission to announce it publicly. With the other people, we don't have such permission, and when the time comes, we will announce that.

Thank you, sir.

Well, that's a very good question, and I'd like to give Melissa a chance to respond to that.

So if I may add to that, that means that during 2025, we obviously have taken and will continue to take actions in terms of productivity, and we have growth from the smaller projects as I said, and we hope that the strong economic activity that we saw in the US will continue in 2025, which we think it will, and in Europe we have opportunities for some of our on-sites to do a little bit better than they did last year.

What is holding up the permit was the fact that the permit that was issued was challenged by some people who call themselves environmentalists, but they are doing an environmentally friendly project, but they go and object to our permit. So that is what is holding it up, and we have decided that we do not want to take the risk of building the project and continuing with the project and then challenged again. So we want to make sure we have all of the permits before we go forward. That's the reason we have put that project on hold. In terms of our relationship with our partners there, the relationship between Air Products and World Energy is excellent, and we are working in concert hand in hand to make that project a successful investment. At the same time, as I say on the slides, Air Products is looking at other alternatives for that project because some people have expressed interest in buying us out of that project, and we obviously will listen to all alternatives.

Thank you.

Well, thank you for your question. The amount of investment in the downstream obviously depends on who the final end customers are, but $2 billion order of magnitude for that is in the ballpark, but it might be a lot less than that depending on who the actual customers are going to be. In terms of, as I said, there are a lot of ways to sell the product out of that plant. One is to take it, crack it, and put it in a refinery. Another one is that some people might be interested in just buying the ammonia FOB NEOM and using it for applications where you don't need cracking. So there are a lot of different possibilities there, and as we finalize the contracts, we will give you more visibility on that.

Well, first of all, can I just make a comment? We are committed to low-carbon hydrogen, green and blue. That is why we are doing the project in NEOM for green and the project in Louisiana for blue, because we think the lowest cost place to produce green is in Northern Saudi Arabia, and the lowest cost place to produce blue is in the US Gulf Coast. No place in the world can compete with the US Gulf Coast because of the low natural gas, but more importantly, when people talk about blue, they need to keep in mind you can only make blue if you have a place to sequester the CO2, and it is not that easy to find those places. So we are committed to both of them, and we look at those opportunities in an equal way. We don't have any preference for one over the other.

Thank you.

Well, the thing is that I think we need to explain that because the big headcount increase was in order to engineer NEOM and our blue hydrogen project and several other projects that we had. So those headcounts are going to come down, but they are not going to affect our bottom line because those costs were capitalized as part of the capital. So our earnings per share and so on was not being affected by those increases. We did have increased costs, significant increase in costs in terms of development cost while we were developing those projects. Those costs are going to come down, and I'm sure that you have taken a look at our SG&A line and you see that our SG&A for the quarter is less than last year's quarter, and for the year it's less than last year. So the headcount thing which went up is going to come down, but in terms of our bottom line, we are going to continue to march toward the 8%, 9%, 10% growth on EPS as we have done in the past 10 years.

Oh, go ahead.

No significant income is included in our fiscal year 2025 income for that project.

Thank you.

Well, at this point in time, I do not expect to name a president until March, April, May. We have identified very highly qualified people. They are being interviewed by our board and going through the process. I mean, choosing a president for Air Products, they have to go through the process. Our board needs to feel very comfortable, and they need to meet the criteria that I set out that we want people who have been CEOs of public companies. People who have not been CEOs of public companies do not qualify. So the process is underway. I just wanted to give you an update, but we have no expectation of announcing a president before, as I said before, March, April, May, depending on the availability of the people. Because if these people are CEOs of current companies, they have obligations and to unwind their present position, so it's not going to be you snap your finger and have them start.

Thank you, John.

Well, thank you very much, Chris, for your very thoughtful question. The project in Louisiana, the most important part of that project was finding a place that is credible and proven that you can sequester CO2. We have achieved that. We have identified sites, we have the rights to that, we have done extensive work, spent about $75 million with the seismic studies and so on to prove that it is possible to sequester the CO2 in there. We have submitted all of that to the Louisiana Department of Environmental Resources for an application for a Class 6 well. They have gotten feedback that our application is complete, meaning that they accept that they have done all of the work, and now we need to wait until they make their assessment and issue the final permit for us to construct that. That was the major risk for that project. The rest of the project, what is it? It is making the hydrogen that we know how to do. It is PARC units, it's our own technology. They have similar units in operation around the world, and therefore there is no technology risk there. And then the ammonia plant is the ammonia plant. Everybody is very familiar with ammonia plants, so we are not taking any technology risk. The CO2 sequestration is secure, and now it is the question of how fast we build this thing. We have said previously that this project we expect to come on stream sometimes in 2028, depending on the timing of the permits. We feel pretty good about that. We feel pretty good about the number that we have announced publicly about the $7 billion. So right now our task is, we don't want to spend $7 billion of Air Products' capital into the project, so the issue is how do we finance this thing? Do we finance it the way we financed NEOM? Do we bring in an equity partner? Those are the things that we are evaluating. And in the meantime, we are not in a hurry. We have time. We have done most of the engineering. We are going to start bringing contractors where the engineering is done so that we can get lump sum prices from the contractors. So we are executing this project in a very prudent way and trying to find the optimum way for us to finance the project. In terms of the demand for the product, we feel very good about that because the demand is not only decarbonizing and reducing the use of coal in Asia, but another significant demand which is developing, as I mentioned in my prepared remarks, is ammonia as a direct fuel for ships. Low-carbon ammonia used as a direct fuel for ships significantly reduces the emissions, it makes ships comply, and it is very attractive to the people who ship their product across the board because that helps them to decarbonize their scope three emissions. So we feel very good about that project, and as I said, as we move forward, we'll update you about the progress on all of those fronts.

Well, thank you very much. I'm just trying to fully digest your question. In terms of, you're asking a very good question, but fundamentally, originally when we announced the project, we said that we will need $3.7 billion of cash, and we broke it down to $1.7 billion invested in the project and $2 billion for the so-called terminals to sell it. What we are saying is that the $1.7 billion investment in the production is now $800 million because we were able to successfully project finance this. The $2 billion for the downstream part, I can't make a commitment exactly what that would be, but there is half of it, 10% lower, and so on until they finalize who the off-takers are. So that's where we are, Chris. So overall, in terms of our total commitment from before, the number has not really changed.

Thank you, Chris.

That is kind of what I was trying to allude to when I said that in the future we will not take an FID on any clean hydrogen project until we have an anchor customer, just like our industrial gases business. When we go and sell oxygen to a steel plant, we build the air separation unit, 50% of the off-take is guaranteed with the take-or-pay to the steel maker, and then the other 50% is merchant. That's what we do. So we are saying that in the future, we wanted to be the first mover. We did what we did with NEOM and with Darlington, and it has turned out to be a good experience. We are seeing that we can load these facilities now. We are saying that in the future, we are not going to announce a project without having and telling you a clear view of who will take 50% to 60% of the product on a long-term basis.

Well, I think that if we put everything together and things work out the way we think it is, we will be able to deliver about 9% to 10% in 2025, 2026, and then 2027, 2028 can be significantly higher than that. You know, because these projects coming on stream with the kind of volumes that they are talking about, we can have significant growth higher than 10%. That's why I feel confident to say that for the next 10 years, considering what is going on, I think Air Products will deliver at least 10% growth in EPS as we go forward, at least.

Thank you very much.

Well, that's a very detailed question about the details of the contract. We are continuing to negotiate the details, but I have my chief legal officer, Mr. Sean Major, who was very instrumental in negotiating that contract, so I think it's better if I turn it over to him to try to amplify on that.

Well, I'm very happy that you asked the question. We evaluate the projects on the basis of unlevered IRR. That is our criteria. Then later on, if we are able to project finance it, obviously hopefully the financing is less than our cost of capital, and therefore the return on equity will be higher than the IRR. So we do not approve projects on the basis of leverage. It is all unlevered, and then if we are able to finance it, then obviously it will improve the return on equity that Air Products has put into the project.

Thank you very much.

Thank you very much, Kevin, for the question. I'd like to turn that over to Melissa to answer that.

Again, an excellent question. We are actually what we see is more bullish than what is on those slides and those projections. The reason is that when you say other people, other people don't have anything to sell, and as a result, they are not engaged with the people who want to buy. I mean, why would anybody go and talk to one of our competitors when they don't have a plan? We are the ones who are engaged with real customers, so we have a much better view. This is one of the things about being the first mover. I mean, if you are a customer, if you are a steel plant, if you are a refinery, and you want to make a commitment about going to green hydrogen, there is a heck of a difference between us sitting across the table from them and showing them a picture of NEOM rather than somebody saying that well, I might have a project in Timbuktu that might produce green hydrogen in the future. So we have a much better visibility in terms of what the real demand is and what the real customers are talking about. So as I said, we are obviously very excited about the opportunities, and we see that growing every day because more and more people are talking to us. I mean, right now we are in a position to send people to go visit NEOM, and once they visit, they are a lot more enthusiastic in talking to us than they were before. So we have put ourselves in a favorable position because we took the risk to be the first mover.

Thank you.

Well, the impact wasn't that huge, but I'd like to turn that over to Melissa to qualify that.

Melissa did a great explanation. If I may just add, it is not uncommon when we have a long-term agreement with the customer, in the contract the customer has an option to come and terminate the contract, pay us a cancellation fee because they want to do something different with the asset. So this was a small refunder in southern part of Texas, and that's what happened. It's not anything unusual, it's part of our normal course of business.

That is the normal course of business. It's a guarantee about certain payment. It is insignificant, but it obviously does become public, and we obviously always protect our rights and so on. But that doesn't mean that there is a bad relationship between Air Products and World Energy. Just the normal course routine action. I can have Sean make a comment on that if you want.

Thank you very much.

It is a combination of both of them. It is supply-demand, and there is some impact on helium because of the helium coming from Russia.

Well, why don't I have Melissa address that?

Thank you very much.

Well, thank you for your question. With respect to our pricing assumption for 2025, that is a little bit of a forward-looking statement about pricing, and we usually do not do that. So if you forgive me, I cannot really answer that question because that's not appropriate for us to make comments about future pricing. With respect to the contracts, well, if you are the only people who are going to have green hydrogen available by the time that people need to comply with the regulation, wouldn't you think that we would be in a better shape to negotiate the contracts than somebody who might have something available in 2035? So I think being the first mover and having the product, please don't forget, nobody else in the world is going to have green hydrogen at commercial scale to decarbonize a refinery by 2030. Any new project requires permitting, land, those things take a long time. Believe me, we started on the project in Saudi Arabia, our green hydrogen project, in 2017. Our project is going to come on stream in 2027. It takes us 10 years. It's a long process. That is what I was referring to about why we have an advantage.

Okay, thank you.

Well, thank you very much. I will answer the second question, and then I will turn it over to Melissa to answer your first question about the Middle East. With respect to your second question, I do not think that it is a correct assumption that we are doing 100% of what we are doing right now about NEOM and about Louisiana in-house. That is not a correct assumption. We are not experts in carbon sequestration. We are going to get people who are experts on that to engineer that, that's what they are doing, and to do that for us. We are not going to be designing Class 6 wells. We have people who oversee the process, but we are going to go to people who are world experts on these things, and they will do that for us. When it comes to some of the engineering or the detail technical engineering of some of these facilities, we are using some of the largest engineering firms in the world to do those. What we are keeping and what we have put together is the key people for the key technologies. I mean, in NEOM, building the ammonia plant is not the key technology. Building the solar plant is not the key technology, or building the wind farm is not the key technology. The real expertise is how do you put these things together and run them simultaneously so that it works. That is the know-how that we have people, and we are going to be very protective of that know-how. And then in Louisiana, we are doing some of the engineering but not all of it. We have not hired new people to start designing rebars for foundations. We are focused on the key technologies that enable the implementation of these projects. So I just wanted to explain that. And now I'd like to turn it over to Melissa to answer your question about the Middle East.

Okay, well, thank you. At this time, I would like to thank everybody for participating in our call. I appreciate you taking time to listen to our presentation, which was a little bit longer than usual. We appreciate that, and we look forward to talking to you next quarter. In the meantime, have a great day, good health, and success. Thanks, everybody.