Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Second Quarter 2025 in Summary			43
Second Quarter 2025 Results of Operations			45
First Six Months 2025 in Summary			54
First Six Months 2025 Results of Operations			56
Reconciliations of Non-GAAP Financial Measures			65
Liquidity and Capital Resources			71
Pension Benefits			76
Critical Accounting Policies and Estimates			76

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 about 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, including, 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 2024 (the "2024 Form 10-K"), which was filed with the SEC on 21 November 2024.

This discussion should be read in conjunction with the interim consolidated financial statements and the accompanying notes contained in this Quarterly Report on Form 10-Q. Financial information is presented on a continuing operations basis. Unless otherwise stated, amounts discussed are in millions of U.S. Dollars, except for per share data, which is calculated and presented on a diluted basis in U.S. Dollars per weighted average common share.

The financial measures discussed below are presented in accordance with U.S. generally accepted accounting principles ("GAAP"), except as noted. We present certain financial measures on an "adjusted", or "non-GAAP", basis because we believe such measures, when viewed together with financial results computed in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our historical financial performance. For each non-GAAP financial measure, including adjusted earnings per share ("EPS"), adjusted EBITDA, adjusted effective tax rate, and capital expenditures, we present a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP. These reconciliations and explanations regarding the use of non-GAAP financial measures are presented under the “Reconciliations of Non-GAAP Financial Measures” section beginning on page 65.

Comparisons included in the discussion that follows are for the second quarter and first six months of fiscal year 2025 versus ("vs.") the second quarter and first six months of fiscal year 2024. The disclosures provided in this Quarterly Report on Form 10-Q are complementary to those made in our 2024 Form 10-K.

We manage our operations, assess performance, and report earnings under five reportable segments: Americas, Asia, Europe, Middle East and India, and Corporate and other. The discussion that follows is based on these operations. Refer to Note 18, Business Segment Information, to the consolidated financial statements for additional information.

For information concerning activity with our related parties, refer to Note 17, Supplemental Information, to the consolidated financial statements.

SECOND QUARTER 2025 VS. SECOND QUARTER 2024

SECOND QUARTER 2025 IN SUMMARY

Sales of $2.9 billion decreased $14.0. On a percentage basis, sales were flat as lower volumes of 3% and an unfavorable impact from currency of 2% were offset by higher energy cost pass-through to customers of 4% and higher pricing of 1%. The lower volumes were attributable to the divestiture of the LNG business in September 2024, which resulted in a headwind of approximately 2%, as well as lower global demand for helium. These items were partially offset by favorability in our on-site business, primarily in the Americas and Europe segments.
Operating loss was $2.3 billion and operating margin was negative 79.8%, primarily due to materially higher charges for business and asset actions in fiscal year 2025. In the prior year, operating income was $637.2 and operating margin was 21.7%.
Equity affiliates' income of $145.5 increased 2%, or $2.2, driven by affiliates in Europe and the Middle East.
Net loss was $1.7 billion, primarily due to materially higher charges for business and asset actions in fiscal year 2025. In the prior year, net income was $580.9.
Adjusted EBITDA of $1.2 billion decreased 3%, or $31.1, primarily due to lower volumes, higher costs, and unfavorable currency. These impacts were partially offset by productivity improvements, higher pricing, and higher equity affiliates' income.
Loss per share of $7.77 was driven by an after-tax charge attributable to Air Products of $2.3 billion for business and asset actions recorded during the second quarter. On a non-GAAP basis, adjusted earnings per share was $2.69. In the prior year, earnings per share ("EPS") was $2.57 and adjusted EPS was $2.85. A summary table of changes to earnings (loss) per share is presented on page 44 below.

Summary of Changes in Earnings (Loss) Per Share

The diluted per share impacts presented in the tables below were calculated independently and do not sum to the total change due to rounding.


	Three Months Ended		Change vs. Prior Year
	31 March
	2025	2024
Earnings (Loss) per share	($7.77)	$2.57	($10.34)


% Change from prior year			******

Operating Items
Underlying business:
Volume			(0.12)
Price, net of variable costs			0.04
Other costs			(0.11)
Currency			(0.04)


Business and asset actions(A)			(10.06)





Shareholder activism-related costs			(0.14)
Total Operating Items			($10.43)
Other Items
Equity affiliates' income:
Equity method investment impairment associated with business and asset actions(A)			($0.02)
Equity affiliates' income			0.03

Interest expense			0.07
Other non-operating income/expense, net:
Loss on de-designation of cash flow hedges(B)			(0.01)
Non-service pension cost, net			0.04
Other			(0.04)

Change in effective tax rate, excluding discrete tax items below			(0.01)

Tax on repatriation of foreign earnings			(0.14)
Tax reform adjustment related to deemed foreign dividends			0.16




Noncontrolling interests(A)			0.02

Total Other Items			$0.10
Total Change			($10.34)
% Change from prior year			******

**Change versus prior period is not meaningful due to the $2.9 billion pre-tax charge for business and asset actions in fiscal year 2025. The per share impact of the charge is primarily reflected in the "Operating Items" section above.

(A)The per share impacts associated with charges for business and asset actions were calculated based on a total after-tax charge attributable to Air Products of $2.3 billion. The amount of the charges attributable to our noncontrolling partners was $3.5.

(B)The 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. The loss attributable to our noncontrolling partners was $7.5.

The table below summarizes the diluted per share impact of our non-GAAP adjustments for the second quarter of fiscal years 2025 and 2024:


	Three Months Ended		Change vs. Prior Year
	31 March
	2025	2024
Earnings (Loss) per Share	($7.77)	$2.57	($10.34)


Business and asset actions(A)	10.28	0.20	10.08









Shareholder activism-related costs	0.14	—	0.14
Loss on de-designation of cash flow hedges	0.01	—	0.01
Non-service pension cost, net	0.04	0.08	(0.04)


Tax reform adjustment related to deemed foreign dividends	(0.16)	—	(0.16)
Tax on repatriation of foreign earnings	0.14	—	0.14



Adjusted Earnings per Share	$2.69	$2.85	($0.16)
% Change from prior year			(6%)

(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.

SECOND QUARTER 2025 RESULTS OF OPERATIONS

Discussion of Second Quarter Consolidated Results


	Three Months Ended
	31 March				Change vs. Prior Year
	2025		2024		$	%
GAAP Measures
Sales	$2,916.2		$2,930.2		($14.0)	—	%
Operating income (loss)	(2,328.0)		637.2		(2,965.2)	**
Operating margin	(79.8	%)	21.7	%		**
Equity affiliates’ income	$145.5		$143.3		$2.2	2	%
Net income (loss)	(1,737.5)		580.9		(2,318.4)	**

Non-GAAP Measure
Adjusted EBITDA	$1,167.2		$1,198.3		($31.1)	(3	%)

**Change versus prior period is not meaningful due to the $2.9 billion pre-tax charge for business and asset actions in fiscal year 2025.

Sales

The table below summarizes the major factors that impacted consolidated sales for the periods presented:



Volume	(3	%)
Price	1	%
Energy cost pass-through to customers	4	%
Currency	(2	%)
Total Consolidated Sales Change	—	%

Sales of $2.9 billion decreased $14.0. On a percentage basis, sales were flat due to lower volumes of 3% and an unfavorable impact from currency of 2%, partially offset by higher energy cost pass-through to customers of 4% and higher pricing of 1%. Unfavorable volumes were attributable to the divestiture of the LNG business in September 2024, which resulted in a headwind of approximately 2%, as well as lower global demand for helium. These items were largely offset by favorability in our on-site business in the Americas and Europe segments. Currency was unfavorable as the U.S. Dollar strengthened against most major currencies. Volumes and currency were mostly offset by higher energy cost pass-through to customers driven by higher natural gas prices in the U.S. Gulf Coast and Europe. The 1% total company price improvement, which equates to a 3% improvement for the merchant business, was primarily attributable to non-helium pricing actions in the Americas and Europe segments.

Cost of Sales and Gross Margin

Cost of sales of $2.1 billion increased 3%, or $62.4, primarily due to higher energy cost pass-through to customers of $95, higher other costs of $35, and higher power and fuel costs in our merchant business of $28. The other costs of $35 were driven by higher expense for maintenance, primarily in the Americas segment, depreciation, and fixed-cost inflation. These impacts were partially offset by lower costs of $62 attributable to sales volumes and a favorable currency impact of $33. Gross margin of 29.6% decreased 240 bp from 32.0% in the prior year due to the impact of higher costs and energy cost pass-through to customers.

Selling and Administrative Expense

Selling and administrative expense of $222.0 decreased 8%, or $18.6, as productivity improvements were partially offset by inflation. Selling and administrative expense as a percentage of sales decreased to 7.6% from 8.2% in the prior year.

Research and Development Expense

Research and development expense of $22.9 decreased 10%, or $2.5. Research and development expense as a percentage of sales decreased to 0.8% from 0.9% in the prior year.

Business and Asset Actions

Our consolidated income statements for the three months ended 31 March 2025 and 2024 include charges for strategic business and asset actions of $2,934.7 ($2,290.6 attributable to Air Products after tax, or $10.28 per share) and $57.0 ($43.8 after tax, or $0.20 per share), respectively, as further described below and in Note 4, Business and Asset Actions, to the consolidated financial statements. These charges were not allocated to our reportable segments.

Project Exit Costs

During the second quarter of fiscal year 2025, our Board of Directors and Chief Executive Officer initiated a project review in an effort to streamline our backlog and allow us to focus resources on projects that we believe will enhance value for our shareholders. In connection with this review, we decided to exit various projects related to clean energy generation and distribution.

As a result of these decisions, we recorded charges for project exit costs of $2,861.8 and $6.8 through operating loss and equity affiliates' income, respectively. The charge reflected in operating loss primarily includes the write down of project assets to their estimated net realizable value as well as estimated costs required to terminate various contractual commitments. The $6.8 recorded to equity affiliates' income reflects an other-than-temporary impairment of a joint venture in China that had been formed to develop clean hydrogen infrastructure in the region. The amount of these charges attributable to our noncontrolling partners was $3.5.

Our estimates related to exiting these projects, including the net realizable value of assets to be disposed, reflect our best judgment based on information available at the time the project exit costs were recorded. Final settlement of these items may differ materially from our current estimates, which could impact our consolidated financial statements in future periods.

Global Cost Reduction Plan

We initiated a global cost reduction plan in June 2023 that provides employees identified for involuntarily separation with severance and other postemployment benefits. Costs incurred in connection with the plan totaled $66.1 and $57.0 for the second quarter of fiscal years 2025 and 2024, respectively. Once all actions under the plan are fully executed, we expect to realize annual pre-tax savings of approximately $185 to $195, primarily through selling and administrative expense.

Shareholder Activism-Related Costs

During the second quarter of fiscal year 2025, we recorded costs of $31.4 ($31.0 after tax, or $0.14 per share) in connection with a proxy contest led by an activist shareholder that concluded in January upon certification of the election of directors following our 2025 Annual Meeting of Shareholders. Following the election, the Board of Directors appointed a new Chief Executive Officer ("CEO"). The costs incurred during the second quarter primarily reflect executive separation costs for our former CEO, which included a noncash expense of $22.4 to accelerate vesting of share-based awards and $7.3 for severance and other cash benefits that were paid during the quarter.

Other Income (Expense), Net

Other income of $13.9 decreased 35%, or $7.6, primarily due to higher income from non-recurring asset sales in the prior year.

Operating Income (Loss) and Operating Margin

Operating loss was $2.3 billion during the second quarter of fiscal year 2025 compared to income of $637.2 in the prior year. The loss in fiscal year 2025 was driven by materially higher charges for business and asset actions of $2,927.9 compared to $57.0 in the prior year. Volumes were unfavorable by $34 driven by the divestment of the LNG business in September 2024 as well as weaker global helium demand, partially offset by higher volumes in our on-site business. Operating income contributed by the LNG business in the prior year was approximately $35. Fiscal year 2025 also reflects shareholder activism-related costs of $31, higher other costs of $29, and unfavorable currency of $10. The higher other costs of $29 were driven by inflation and higher expense for maintenance and depreciation. Additionally, the prior year included higher income from non-recurring asset sales. These impacts were partially mitigated by productivity improvements. Compared to the prior year, higher pricing driven by non-helium merchant products favorably impacted operating results by $10, which is net of higher power and fuel costs in our merchant business.

Operating margin was negative 79.8% compared to 21.7% in the prior year, which was primarily attributable to the charge for business and asset actions, shareholder activism-related costs, higher other costs, and higher energy cost pass-through to customers.

Equity Affiliates' Income

Equity affiliates' income of $145.5 increased 2%, or $2.2. Higher income from affiliates in Italy and Saudi Arabia was primarily offset by a prior year asset sale in an Americas affiliate. Additionally, as discussed under Project Exit Costs beginning on page 46, fiscal year 2025 includes an impairment charge of $6.8 related to a joint venture in China.

Interest Expense


	Three Months Ended
	31 March
	2025	2024
Interest incurred	$145.8	$125.5
Less: Capitalized interest	103.6	65.6
Interest expense	$42.2	$59.9

Interest incurred increased 16%, or $20.3, primarily due to a higher debt balance. Capitalized interest increased 58%, or $38.0, due to a higher carrying value of projects under construction, including the NEOM Green Hydrogen Project.

Other Non-Operating Income (Expense), Net

Other non-operating expense of $18.6 increased $9.4 from the prior year. The increase was driven by lower interest income on short-term investments, which was primarily due to interest rate fluctuations and a lower investment balance. Additionally, 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) related to certain de-designated interest rate swaps associated with the financing for the NEOM Green Hydrogen Project. Refer to Note 3, Variable Interest Entities, and Note 8, Financial Instruments, to the consolidated financial statements for additional information. These items were partially offset by lower non-service pension costs, which were $10.7 ($8.0 after tax, or $0.04 per share) for the second quarter of fiscal year 2025 compared to $25.1 ($18.9 after tax, or $0.08 per share) in the prior year.

Net Income (Loss)

Net loss was $1.7 billion during the second quarter of fiscal year 2025 compared to income of $580.9 in the prior year. The loss in fiscal year 2025 was driven by materially higher charges for business and asset actions, which had an after-tax impact attributable to Air Products of $2.3 billion in fiscal year 2025 compared to $43.8 in the prior year. Fiscal year 2025 also reflects the impact of shareholder activism-related costs, unfavorable volumes, and higher costs. The higher costs were driven by inflation and higher expense for maintenance and depreciation. Additionally, the prior year included higher income from non-recurring asset sales. These impacts were partially mitigated by productivity improvements and higher pricing as well as lower non-service pension costs in fiscal year 2025.

Adjusted EBITDA

Adjusted EBITDA of $1.2 billion decreased 3%, or $31.1. The decrease was driven by lower volumes, higher costs, and unfavorable currency, partially offset by productivity improvements, higher pricing, and higher equity affiliates' income.

Effective Tax Rate

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.

For the three months ended 31 March 2025, our consolidated income statement includes an income tax benefit of $505.8 compared to an income tax expense of $130.5 in the prior year period. The tax benefit in fiscal year 2025 represents an effective tax rate of 22.5% on the pre-tax loss of $2.2 billion reported for the three months ended 31 March 2025. The tax expense in fiscal year 2024 represented an effective rate of 18.3% on the pre-tax income of $711.4 reported for the three months ended 31 March 2024. The current year rate was primarily impacted by the $2.9 billion pre-tax charge for business and asset actions and other items as further discussed below. Our estimates related to many of these items reflect our best judgment based on information available at the time the items were recorded. The amount and timing of final settlement of these items may differ from our current estimates, which could impact our tax provision in future periods.

For additional information, refer to Note 16, Income Taxes, to the consolidated financial statements.

Tax Impact of Business and Asset Actions

During the second quarter of fiscal year 2025, we recorded a pre-tax charge of $2.9 billion for the business and asset actions discussed in Note 4, Business and Asset Actions, to the consolidated financial statements. This charge had a related net income tax benefit of $640.6.

Tax Reform Adjustment Related to Deemed Foreign Dividends

During the second quarter of fiscal year 2025, we recorded a net income tax benefit of $34.9 related to our intent to file a refund claim after a review of several U.S. Tax Court cases regarding the U.S. taxation of deemed foreign dividends in the transition year of the U.S. Tax Cuts and Jobs Act (our fiscal year 2018).

Tax on Repatriation of Foreign Earnings

During the second quarter of fiscal year 2025, we recorded an income tax expense of $31.4 related to estimated withholding taxes on foreign earnings that we no longer intend to indefinitely reinvest. There were no other changes to our assumptions regarding the reinvestment of foreign earnings during the second quarter of fiscal year 2025.

Shareholder Activism-Related Costs

During the second quarter of fiscal year 2025, we incurred costs of $31.4 related to a proxy contest as further discussed in Note 17, Supplemental Information. We recognized a $0.4 income tax benefit related to these costs in the second quarter.

Other

In addition to the items discussed above, our effective tax rate was higher in fiscal year 2025 due to higher net costs on foreign-related income taxed in the U.S., which was partially offset by greater tax benefits for foreign investments.

Adjusted Effective Tax Rate

Our adjusted effective tax rate, which excludes the impact of adjustments presented in the "Reconciliations of Non-GAAP Financial Measures" section beginning on page 65, was 19.1% and 18.9% for the three months ended 31 March 2025 and 2024, respectively.

Discussion of Second Quarter Results by Business Segment

Americas


	Three Months Ended
	31 March				Change vs. Prior Year
	2025		2024		$	%/bp
Sales	$1,287.2		$1,245.8		$41.4	3	%
Operating income	365.7		371.9		(6.2)	(2	%)
Operating margin	28.4	%	29.9	%		(150	bp)
Equity affiliates’ income	$31.2		$44.2		($13.0)	(29	%)
Adjusted EBITDA	575.3		590.2		(14.9)	(3	%)

The table below summarizes the major factors that impacted sales in the Americas segment for the periods presented:



Volume	(2	%)
Price	2	%
Energy cost pass-through to customers	4	%
Currency	(1	%)
Total Americas Sales Change	3	%

Sales of $1.3 billion increased 3%, or $41.4, as higher energy cost pass-through to customers of 4% and favorable pricing of 2% were partially offset by lower volumes of 2% and an unfavorable currency impact of 1%. The increase attributable to energy cost pass-through reflects higher natural gas rates in the U.S. Gulf Coast. The total segment price increase of 2% equates to a 4% improvement in our merchant business, which reflects favorable pricing across most non-helium product lines. Volumes declined due to lower demand for helium, which was partially offset by growth in our on-site hydrogen business and a favorable one-time customer contract amendment.

Operating income of $365.7 decreased 2%, or $6.2, as higher costs of $31 and unfavorable currency of $4 were partially offset by favorable business mix of $18 and higher pricing, net of higher power and fuel costs in our merchant business, of $11. Higher costs of $31 reflect higher maintenance and depreciation, project development, and inflation, which were partially offset by productivity improvements. Operating margin of 28.4% decreased 150 bp from 29.9% in the prior year, of which approximately 100 bp was attributable to energy cost pass-through to customers.

Equity affiliates’ income of $31.2 decreased 29%, or $13.0, driven by our share of income from an asset sale in the prior year as well as lower income from an affiliate in Mexico.

Asia


	Three Months Ended
	31 March				Change vs. Prior Year
	2025		2024		$	%/bp
Sales	$774.1		$779.7		($5.6)	(1	%)
Operating income	191.4		203.6		(12.2)	(6	%)
Operating margin	24.7	%	26.1	%		(140	bp)
Equity affiliates’ income	$10.5		$8.3		$2.2	27	%
Adjusted EBITDA	333.7		328.3		5.4	2	%

The table below summarizes the major factors that impacted sales in the Asia segment for the periods presented:



Volume	1	%
Price	(1	%)

Energy cost pass-through to customers	2	%
Currency	(3	%)
Total Asia Sales Change	(1	%)

Sales of $774.1 decreased 1%, or $5.6, as an unfavorable currency impact of 3% and lower pricing of 1% were partially offset by higher energy cost pass-through to customers of 2% and higher volumes of 1%. Currency was unfavorable due to strengthening of the U.S. Dollar against most major currencies in the region. The total segment pricing decline of 1% equates to a 2% decline in our merchant business, which was primarily attributable to helium. New assets contributed to the volume improvement across the region and were partially offset by weaker demand for helium.

Operating income of $191.4 decreased 6%, or $12.2, due to lower pricing, net of power and fuel costs, of $9 and unfavorable currency of $6, partially offset by lower costs of $3. Operating margin of 24.7% decreased 140 bp from 26.1% in the prior year primarily due to the impact of lower pricing.

Equity affiliates’ income of $10.5 increased 27%, or $2.2, driven by affiliates in Thailand.

Europe


	Three Months Ended
	31 March				Change vs. Prior Year
	2025		2024		$	%/bp
Sales	$727.4		$667.9		$59.5	9	%
Operating income	195.5		201.0		(5.5)	(3	%)
Operating margin	26.9	%	30.1	%		(320	bp)
Equity affiliates’ income	$27.7		$11.7		$16.0	137	%
Adjusted EBITDA	280.0		263.5		16.5	6	%

The table below summarizes the major factors that impacted sales in the Europe segment for the periods presented:



Volume	2	%
Price	4	%
Energy cost pass-through to customers	5	%
Currency	(2	%)
Total Europe Sales Change	9	%

Sales of $727.4 increased 9%, or $59.5, due to higher energy cost pass-through to customers of 5%, higher pricing of 4%, and higher volumes of 2%, partially offset by unfavorable currency of 2%. The 5% increase attributable to energy cost pass-through reflects higher natural gas rates across the region. The total segment price increase of 4% equates to a 5% improvement in our merchant business, which reflects favorable pricing across most non-helium product lines. Higher volumes were driven by our on-site business and were partially offset by lower demand for most merchant products, including helium. Unfavorable currency was primarily attributable to strengthening of the U.S. Dollar against the Euro.

Operating income of $195.5 decreased 3%, or $5.5, due to higher costs of $9, unfavorable business mix of $4, and unfavorable currency of $3, partially offset by higher pricing, net of higher power and fuel costs in our merchant business, of $11. The prior year included higher income from non-recurring asset sales, which contributed to the higher costs in fiscal year 2025. Additionally, higher costs reflect higher depreciation and inflation, which were partially offset by productivity improvements. Operating margin of 26.9% decreased 320 bp from 30.1% in the prior year, of which approximately 150 bp was attributable to energy cost pass-through to customers.

Equity affiliates’ income of $27.7 increased $16.0 primarily due to prior year non-recurring items at an affiliate in Italy.

Middle East and India


	Three Months Ended
	31 March		Change vs. Prior Year
	2025	2024	$	%
Sales	$32.8	$35.7	($2.9)	(8	%)
Operating income (loss)	(2.9)	5.6	(8.5)	(152	%)
Equity affiliates' income	78.2	73.9	4.3	6	%
Adjusted EBITDA	81.7	86.2	(4.5)	(5	%)

Sales of $32.8 decreased 8%, or $2.9, primarily due to lower pricing. Operating loss was $2.9 compared to income of $5.6 in the prior year, which reflects the impact of lower pricing as well higher costs.

Equity affiliates' income of $78.2 increased 6%, or $4.3, driven by JIGPC.

Corporate and other


	Three Months Ended
	31 March		Change vs. Prior Year
	2025	2024	$	%
Sales	$94.7	$201.1	($106.4)	(53	%)
Operating loss	(118.4)	(87.9)	(30.5)	(35	%)
Equity affiliates' income	4.7	5.2	(0.5)	(10	%)
Adjusted EBITDA	(103.5)	(69.9)	(33.6)	(48	%)

Sales of $94.7 decreased 53%, or $106.4, primarily due to the divestiture of the LNG business in September 2024.

Operating loss of $118.4 increased 35%, or $30.5, primarily due to the divestiture of the LNG business, which generated operating income of approximately $35 in the prior year. Additionally, operating results in fiscal year 2025 were negatively impacted by changes to project cost estimates on certain sale of equipment projects. These impacts were partially mitigated by productivity improvements and lower incentive compensation.

Equity affiliates' income of $4.7 decreased 10%, or $0.5.

FIRST SIX MONTHS 2025 VS. FIRST SIX MONTHS 2024

FIRST SIX MONTHS 2025 IN SUMMARY

Sales of $5.8 billion decreased 1%, or $79.9, due to lower volumes of 3% and unfavorable currency of 1%, partially offset by higher energy cost pass-through to customers of 2% and higher pricing of 1%. The lower volumes were attributable to the divestiture of the LNG business in September 2024, which resulted in a headwind of approximately 2%, as well as lower global demand for helium. These items were partially offset by a significant, non-recurring sale of helium to an existing merchant customer in the Americas segment during the first quarter as well as higher volumes in our on-site business, primarily in the Americas segment.
Operating loss was $1.7 billion and operating margin was negative 28.8%, primarily due to materially higher charges for business and asset actions in fiscal year 2025. In the prior year, operating income was $1.3 billion and operating margin was 22.0%.
Equity affiliates' income of $296.1 decreased 2%, or $5.6, primarily due to a prior year asset sale in an Americas affiliate and an impairment charge of $6.8 related to a joint venture in China that was recorded during the second quarter of fiscal year 2025. These impacts were partially offset by higher income from an affiliate in Italy.
Net loss was $1.1 billion, primarily due to materially higher charges for business and asset actions in fiscal year 2025. In the prior year, net income was $1.2 billion.
Adjusted EBITDA of $2.4 billion decreased 1%, or $14.7, as higher costs, lower volumes, and unfavorable currency were partially offset by productivity improvements and higher pricing.
Loss per share of $5.00 was driven by an after-tax charge attributable to Air Products of $2.3 billion for business and asset actions recorded during the second quarter. On a non-GAAP basis, adjusted earnings per share was $5.54. In the prior year, earnings per share ("EPS") was $5.30 and adjusted EPS was $5.67. A summary table of changes to earnings (loss) per share is presented on page 55 below.

Summary of Changes in Earnings (Loss) Per Share

The diluted per share impacts presented in the tables below were calculated independently and may not sum to the total change due to rounding.


	Six Months Ended		Change vs. Prior Year
	31 March
	2025	2024
Earnings (Loss) per share	($5.00)	$5.30	($10.30)


% Change from prior year			******

Operating Items
Underlying business:
Volume			($0.13)
Price, net of variable costs			0.13
Other costs			(0.18)
Currency			(0.03)


Business and asset actions(A)			(10.06)
Shareholder activism-related costs			(0.24)






Total Operating Items			($10.51)
Other Impacts
Equity affiliates' income:
Equity method investment impairment associated with business and asset actions(A)			($0.02)


Interest expense			0.11
Other non-operating income/expense, net:
Gain on de-designation of cash flow hedges(B)			0.03
Non-service pension cost, net			0.10
Other			(0.04)

Change in effective tax rate, excluding discrete tax items below			(0.03)

Tax on repatriation of foreign earnings			(0.14)
Tax reform adjustment related to deemed foreign dividends			0.16




Noncontrolling interests (A)			0.04

Total Other Items			$0.21
Total Change			($10.30)
% Change from prior year			******

(B)The 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. The gain attributable to our noncontrolling partners was $17.7.

The table below summarizes the diluted per share impact of our non-GAAP adjustments for the first six months of fiscal years 2025 and 2024:


	Six Months Ended		Change vs. Prior Year
	31 March
	2025	2024
Earnings (Loss) per Share	($5.00)	$5.30	($10.30)


Business and asset actions(A)	10.28	0.20	10.08
Shareholder activism-related costs	0.24	—	0.24









Gain on de-designation of cash flow hedges	(0.03)	—	(0.03)
Non-service pension cost, net	0.07	0.17	(0.10)


Tax reform adjustment related to deemed foreign dividends	(0.16)	—	(0.16)
Tax on repatriation of foreign earnings	0.14	—	0.14



Adjusted Earnings per Share	$5.54	$5.67	($0.13)
% Change from prior year			(2	%)

FIRST SIX MONTHS 2025 RESULTS OF OPERATIONS

Discussion of First Six Months Consolidated Results


	Six Months Ended
	31 March				Change vs. Prior Year
	2025		2024		$	%
GAAP Measures
Sales	$5,847.7		$5,927.6		($79.9)	(1	%)
Operating income (loss)	(1,684.4)		1,304.1		(2,988.5)	**

Operating margin	(28.8	%)	22.0	%		**

Equity affiliates’ income	$296.1		$301.7		($5.6)	(2	%)
Net income (loss)	(1,087.7)		1,202.5		(2,290.2)	**



Non-GAAP Measure
Adjusted EBITDA	$2,358.1		$2,372.8		($14.7)	(1	%)

**Change versus prior period is not meaningful due to the $2.9 billion pre-tax charge for business and asset actions in fiscal year 2025.

Sales

The table below summarizes the major factors that impacted consolidated sales for the periods presented:


Volume	(3	%)
Price	1	%
Energy cost pass-through to customers	2	%
Currency	(1	%)
Total Consolidated Sales Change	(1	%)

Sales of $5.8 billion decreased 1%, or $79.9, due to lower volumes of 3% and unfavorable currency of 1%, partially offset by higher energy cost pass-through to customers of 2% and higher pricing of 1%. Unfavorable volumes were attributable to the divestiture of the LNG business in September 2024, which resulted in a headwind of approximately 2%, as well as lower global demand for helium. These items were largely offset by a significant, non-recurring sale of helium to an existing merchant customer in the Americas segment in the first quarter as well as higher volumes in our on-site business, primarily in the Americas segment. The 1% total company price improvement, which equates to a 3% improvement for the merchant business, was attributable to non-helium pricing actions in the Americas and Europe segments.

Cost of Sales and Gross Margin

Cost of sales of $4.1 billion increased $11.7 due to higher energy cost pass-through to customers of $90, higher other costs of $62, and higher power and fuel costs in our merchant business of $30. The other costs of $62 were driven by fixed-cost inflation, depreciation, and incentive compensation. These impacts were partially offset by lower costs of $124 attributable to sales volumes and a favorable currency impact of $46. Gross margin of 30.4% decreased 110 bp from 31.5% in the prior year primarily due to the impact of higher costs.

Selling and Administrative Expense

Selling and administrative expense of $464.4 decreased 3%, or $14.6, as productivity improvements were partially offset by inflation and incentive compensation. Selling and administrative expense as a percentage of sales decreased to 7.9% from 8.1% in the prior year.

Research and Development Expense

Research and development expense of $44.9 decreased 12%, or $6.2. Research and development expense as a percentage of sales decreased to 0.8% from 0.9% in the prior year.

Business and Asset Actions

Our consolidated income statements for the six months ended 31 March 2025 and 2024 include charges for strategic business and asset actions of $2,934.7 ($2,290.6 attributable to Air Products after tax, or $10.28 per share) and $57.0 ($43.8 after tax, or $0.20 per share), respectively, as further described below and in Note 4, Business and Asset Actions, to the consolidated financial statements. These charges were not allocated to our reportable segments.

Project Exit Costs

Global Cost Reduction Plan

We initiated a global cost reduction plan in June 2023 that provides employees identified for involuntarily separation with severance and other postemployment benefits. Costs incurred in connection with the plan totaled $66.1 and $57.0 for the first six months of fiscal years 2025 and 2024, respectively. Once all actions under the plan are fully executed, we expect to realize annual pre-tax savings of approximately $185 to $195, primarily through selling and administrative expense.

Shareholder Activism-Related Costs

During the first half of fiscal year 2025, we recorded costs in connection with a proxy contest led by an activist shareholder that concluded in January upon certification of the election of directors following our 2025 Annual Meeting of Shareholders. These costs totaled $61.3 ($52.9 after tax, or $0.24 per share) for the six months ended 31 March 2025.

The costs incurred during the second quarter were primarily related to executive separation costs for our former CEO, which included a noncash expense of $22.4 to accelerate vesting of share-based awards and $7.3 for severance and other cash benefits that were paid during the quarter. On a year-to-date basis, shareholder activism-related costs also include those incurred for legal and other professional service fees as well as incremental proxy solicitation costs related to the 2025 Annual Meeting of Shareholders, most of which were incurred during the first quarter.

Other Income (Expense), Net

Other income of $36.8 increased 65%, or $14.5, primarily due to the sale of an equity method investment during the first quarter of fiscal year 2025 and a prior year unfavorable foreign exchange impact related to the devaluation of the Argentine peso. These items were partially offset by higher income from non-recurring asset sales in the prior year.

Operating Income (Loss) and Operating Margin

Operating loss was $1.7 billion during the first six months of fiscal year 2025 compared to income of $1.3 billion in the prior year. The loss in fiscal year 2025 was driven by materially higher pre-tax charges for business and asset actions of $2,927.9 compared to $57.0 in the prior year. Volumes were unfavorable by $37 driven by the divestment of the LNG business in September 2024 as well as weaker global helium demand, partially offset by higher volumes in our on-site business. Operating income contributed by the LNG business in the prior year was approximately $60. Fiscal year 2025 also reflects shareholder activism-related costs of $61, higher other costs of $49, and unfavorable currency of $7. The higher other costs were driven by inflation, depreciation, and incentive compensation. Additionally, the prior year included higher income from non-recurring asset sales. These impacts were partially mitigated by productivity improvements and the sale of a U.S. equity method investment during the first quarter of fiscal year 2025. Compared to the prior year, higher pricing favorably impacted operating results by $37, which is net of higher power and fuel costs in our merchant business. The higher pricing was primarily attributable to non-helium merchant products.

Operating margin was negative 28.8% compared to 22.0% in the prior year, which was primarily attributable to the charge for business and asset actions, shareholder activism-related costs, and higher operating costs.

Equity Affiliates' Income

Equity affiliates' income of $296.1 decreased 2%, or $5.6, primarily due to a prior year asset sale in an Americas affiliate and an impairment charge of $6.8 related to a joint venture in China that was recorded during the second quarter of fiscal year 2025. The impairment charge was related to the business and asset actions discussed under Project Exit Costs beginning on page 57. These impacts were partially offset by higher income from an affiliate in Italy.

Interest Expense


	Six Months Ended
	31 March
	2025	2024
Interest incurred	$285.7	$234.1
Less: Capitalized interest	200.9	120.7
Interest expense	$84.8	$113.4

Interest incurred increased 22%, or $51.6, primarily due to a higher debt balance. Capitalized interest increased 66%, or $80.2, due to a higher carrying value of projects under construction, including the NEOM Green Hydrogen Project.

Other Non-Operating Income (Expense), net

Other non-operating income of $20.3 increased $44.3 from an expense of $24.0 in the prior year. The increase was driven by lower non-service pension costs, which were $21.2 ($15.9 after tax, or $0.07 per share) for the first six months of fiscal year 2025 compared to $50.0 ($37.6 after tax, or $0.17 per share) for the first six months of fiscal year 2024. Additionally, during the first six months of fiscal year 2025, we recorded an unrealized gain of $27.3 ($7.3 attributable to Air Products after tax, or $0.03 per share) related to certain de-designated interest rate swaps associated with the financing for the NEOM Green Hydrogen Project. Refer to Note 3, Variable Interest Entities, and Note 8, Financial Instruments, to the consolidated financial statements for additional information. These items were partially offset by lower interest income on short-term investments, which was primarily due to interest rate fluctuations and a lower investment balance.

Net Income (Loss)

Net loss was $1.1 billion during the first half of fiscal year 2025 compared to net income of $1.2 billion in the prior year. The loss in fiscal year 2025 was driven by materially higher charges for business and asset actions, which had an after-tax impact attributable to Air Products of $2.3 billion in fiscal year 2025 compared to $43.8 in the prior year. Fiscal year 2025 also reflects the impact of shareholder activism-related costs, higher costs, and unfavorable volumes. The higher costs reflect inflation, depreciation, and incentive compensation, which were partially mitigated by productivity improvements. Additionally, the prior year included higher income from non-recurring asset sales; however, this impact was partially offset by the sale of an equity method investment during the first quarter of fiscal year 2025. These unfavorable impacts were partially offset by higher pricing, net of power and fuel costs, which was primarily attributable to non-helium merchant products. We also recognized lower non-service pension costs as well as a gain on de-designated cash flow hedges during the first half of fiscal year 2025.

Adjusted EBITDA

Adjusted EBITDA of $2.4 billion decreased 1%, or $14.7, primarily due to higher costs, lower volumes, and unfavorable currency, partially offset by productivity improvements and higher pricing.

Effective Tax Rate

For the six months ended 31 March 2025, our consolidated income statements include an income tax benefit of $365.1 compared to an income tax expense of $265.9 in the prior year period. The tax benefit in fiscal year 2025 represents an effective tax rate of 25.1% on the pre-tax loss of $1.5 billion reported for the six months ended 31 March 2025. The tax expense in fiscal year 2024 represented an effective rate of 18.1% on the pre-tax income of $1.5 billion reported for the six months ended 31 March 2024.

The current year rate was primarily impacted by the $2.9 billion pre-tax charge for business and asset actions and other items as further discussed below. Our estimates related to many of these items reflect our best judgment based on information available at the time the items were recorded. The amount and timing of final settlement of these items may differ from our current estimates, which could impact our tax provision in future periods.

For additional information, refer to Note 16, Income Taxes, to the consolidated financial statements.

Tax Impact of Business and Asset Actions

Tax Reform Adjustment Related to Deemed Foreign Dividends

Tax on Repatriation of Foreign Earnings

Shareholder Activism-Related Costs

During the first half of fiscal year 2025, we incurred costs of $61.3 related to a proxy contest as further discussed in Note 17, Supplemental Information, to the consolidated financial statements. We recognized an income tax benefit of $8.4 primarily related to costs incurred during the first quarter for legal and other professional service fees as well as incremental proxy solicitation costs related to the 2025 Annual Meeting of Shareholders.

Other

In addition to the items discussed above, our effective tax rate was higher in fiscal year 2025 due to higher net costs on foreign-related income taxed in the U.S. and larger benefits in the prior year for the release of certain unrecognized tax benefits upon expiration of the statute of limitations for uncertain tax positions taken in prior years. These increases were partially offset by larger excess tax benefits on share-based compensation in the current year and by greater tax benefits for foreign investments.

Adjusted Effective Tax Rate

Our adjusted effective tax rate, which excludes the impact of adjustments presented in the "Reconciliations of Non-GAAP Financial Measures" section beginning on page 65, was 18.9% and 18.5% for the six months ended 31 March 2025 and 2024, respectively.

Discussion of First Six Months Results by Business Segment

Americas


	Six Months Ended
	31 March				Change vs. Prior Year
	2025		2024		$	%/bp
Sales	$2,574.8		$2,497.9		$76.9	3	%
Operating income	753.9		726.3		27.6	4	%
Operating margin	29.3	%	29.1	%		20	bp
Equity affiliates’ income	$66.3		$81.3		($15.0)	(18	%)
Adjusted EBITDA	1,172.0		1,151.4		20.6	2	%

The table below summarizes the major factors that impacted sales in the Americas segment for the periods presented:



Volume	1	%
Price	2	%
Energy cost pass-through to customers	1	%
Currency	(1	%)
Total Americas Sales Change	3	%

Sales of $2.6 billion increased 3%, or $76.9, as higher pricing of 2%, higher volumes of 1%, and higher energy cost pass-through to customers of 1% were partially offset by an unfavorable currency impact of 1%. The total segment pricing increase of 2% equates to a 4% improvement in our merchant business, which reflects favorable pricing across most non-helium product lines. The volume improvement reflects a significant, non-recurring sale of helium to an existing merchant customer during the first quarter of fiscal year 2025, growth in our on-site hydrogen business, and a favorable one-time customer contract amendment in the second quarter of fiscal year 2025, which were mostly offset by lower demand for helium.

Operating income of $753.9 increased 4%, or $27.6, due to favorable volumes of $53 and positive pricing, net of power and fuel costs, of $30, partially offset by higher costs of $47 and unfavorable currency of $8. The higher costs primarily reflect higher maintenance and depreciation, inflation, and project development, which were partially offset by productivity improvements and income recognized on the sale of an equity method investment in the first quarter. Operating margin of 29.3% increased 20 bp from 29.1% in the prior year as the volume improvement was mostly offset by higher costs.

Equity affiliates’ income of $66.3 decreased 18%, or $15.0, driven by our share of income from an asset sale in the prior year as well as lower income from an affiliate in Mexico.

Asia


	Six Months Ended
	31 March				Change vs. Prior Year
	2025		2024		$	%/bp
Sales	$1,591.2		$1,573.5		$17.7	1	%
Operating income	407.8		414.8		(7.0)	(2	%)
Operating margin	25.6	%	26.4	%		(80	bp)
Equity affiliates’ income	$20.8		$12.5		$8.3	66	%
Adjusted EBITDA	683.3		655.5		27.8	4	%

The table below summarizes the major factors that impacted sales in the Asia segment for the periods presented:



Volume	2	%
Price	(1	%)
Energy cost pass-through to customers	2	%
Currency	(2	%)
Total Asia Sales Change	1	%

Sales of $1.6 billion increased 1%, or $17.7, as higher volumes of 2% and higher energy cost pass-through to customers of 2% were partially offset by an unfavorable currency impact of 2% and lower pricing of 1%. New assets contributed to the volume improvement across the region and were partially offset by weaker helium demand. Currency was unfavorable due to strengthening of the U.S. Dollar against most major currencies in the region. The total segment pricing decline of 1% equates to a 2% decline in our merchant business, which was primarily attributable to helium.

Operating income of $407.8 decreased 2%, or $7.0, primarily due to lower pricing, net of power and fuel costs, of $11 and unfavorable currency of $8, partially offset by lower costs of $10. The cost improvement was primarily attributable to productivity, which was partially offset by higher costs related to incentive compensation and inflation. Operating margin of 25.6% decreased 80 bp from 26.4% in the prior year.

Equity affiliates’ income of $20.8 increased 66%, or $8.3, driven by prior year maintenance expense at an affiliate in China as well as higher income from affiliates in Thailand.

Europe


	Six Months Ended
	31 March				Change vs. Prior Year
	2025		2024		$	%/bp
Sales	$1,424.6		$1,399.1		$25.5	2	%
Operating income	382.0		398.6		(16.6)	(4	%)
Operating margin	26.8	%	28.5	%		(170	bp)
Equity affiliates’ income	$45.9		$32.4		$13.5	42	%
Adjusted EBITDA	539.2		530.0		9.2	2	%

The table below summarizes the major factors that impacted sales in the Europe segment for the periods presented:



Volume	(2	%)
Price	3	%
Energy cost pass-through to customers	2	%
Currency	(1	%)
Total Europe Sales Change	2	%

Sales of $1.4 billion increased 2%, or $25.5, due to higher pricing of 3% and higher energy cost pass-through to customers of 2%, partially offset by lower volumes of 2% and an unfavorable impact from currency of 1%. The total segment price increase of 3% equates to a 4% improvement in our merchant business, which reflects favorable pricing across most non-helium product lines. Unfavorable volumes were driven by lower demand for helium in our merchant business and a lower year-to-date contribution from our on-site business.

Operating income of $382.0 decreased 4%, or $16.6, primarily due to unfavorable volumes of $27 and higher costs of $7, partially offset by favorable pricing, net of power and fuel costs, of $21. The higher costs reflect inflation, depreciation, and higher income from non-recurring asset sales in the prior year, which were partially offset by productivity improvements and lower maintenance. Operating margin of 26.8% decreased 170 bp from 28.5% in the prior year primarily due to lower volumes.

Equity affiliates’ income of $45.9 increased 42%, or $13.5, driven by prior year non-recurring items at an affiliate in Italy.

Middle East and India


	Six Months Ended
	31 March		Change vs. Prior Year
	2025	2024	$	%
Sales	$65.6	$71.1	($5.5)	(8	%)
Operating income (loss)	(3.5)	9.5	(13.0)	(137	%)
Equity affiliates' income	163.2	166.8	(3.6)	(2	%)
Adjusted EBITDA	172.6	189.6	(17.0)	(9	%)

Sales of $65.6 decreased 8%, or $5.5, primarily due to lower merchant volumes and pricing. Operating loss was $3.5 compared to income of $9.5 in the prior year, which was primarily driven by higher costs.

Equity affiliates' income of $163.2 decreased 2%, or $3.6, driven by JIGPC.

Corporate and other


	Six Months Ended
	31 March		Change vs. Prior Year
	2025	2024	$	%
Sales	$191.5	$386.0	($194.5)	(50	%)
Operating loss	(235.4)	(188.1)	(47.3)	(25	%)
Equity affiliates' income	6.7	8.7	(2.0)	(23	%)
Adjusted EBITDA	(209.0)	(153.7)	(55.3)	(36	%)

Sales of $191.5 decreased 50%, or $194.5, primarily due to the divestiture of the LNG business in September 2024.

Operating loss of $235.4 increased 25%, or $47.3, primarily due to the divestiture of the LNG business, which generated operating income of approximately $60 in the prior year. Additionally, operating results in fiscal year 2025 were negatively impacted by changes to project cost estimates on certain sale of equipment projects as well as higher costs for incentive compensation and inflation. These impacts were partially offset by lower project development costs and productivity improvements.

Equity affiliates' income of $6.7 decreased 23%, or $2.0.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

(Millions of U.S. Dollars unless otherwise indicated, except for per share data)

We present certain financial measures, other than in accordance with U.S. generally accepted accounting principles ("GAAP"), on an "adjusted" or "non-GAAP" basis. On a consolidated basis, these measures include adjusted earnings per share ("EPS"), adjusted EBITDA, the adjusted effective tax rate, and capital expenditures, while on a segment basis, we present adjusted EBITDA. In addition to these measures, we also present certain supplemental non-GAAP financial measures to help the reader understand the impact that certain disclosed items, or "non-GAAP adjustments," have on the calculation of our adjusted EPS. For each non-GAAP financial measure, we present a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP.

We provide these non-GAAP financial measures to allow investors, potential investors, securities analysts, and others to evaluate the performance of our business in the same manner as our management. We believe these measures, when viewed together with financial results computed in accordance with GAAP, provide a more complete understanding of the factors and trends affecting our historical financial performance and projected future results. However, we caution readers not to consider these measures in isolation or as a substitute for the most directly comparable measures calculated in accordance with GAAP. Readers should also consider the limitations associated with these non-GAAP financial measures, including the potential lack of comparability of these measures from one company to another.

In many cases, non-GAAP financial measures are determined by adjusting the most directly comparable GAAP measure to exclude gains or losses that we believe are not representative of our underlying business performance. For example, we exclude the impact of the non-service components of net periodic benefit/cost for our defined benefit pension plans. 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. Additionally, our adjustments this quarter include other gains and losses that are not associated with the ongoing operation of our business. These items are oftentimes difficult to predict; however, the reader should be aware that we may recognize similar gains or losses in the future.

When applicable, the tax impact of our pre-tax non-GAAP adjustments reflects the expected current and deferred income tax impact of our non-GAAP adjustments. These tax impacts are primarily driven by the statutory tax rate of the various relevant jurisdictions and the taxability of the adjustments in those jurisdictions. Additionally, in some cases, we may adjust for tax-only items, such as the income tax benefit related to U.S. tax reform and additional withholding taxes related to the repatriation of foreign earnings.

ADJUSTED EPS

The table below provides a reconciliation to the most directly comparable GAAP measure for each of the major components used to calculate adjusted EPS, which we view as a key performance metric, for the second quarter of fiscal years 2025 and 2024. In periods that we have non-GAAP adjustments, we believe it is important for the reader to understand the per share impact of each such adjustment because management does not consider these impacts when evaluating underlying business performance. Per share impacts are calculated independently and may not sum to total GAAP EPS and total adjusted EPS due to rounding.


	Three Months Ended 31 March
Q2 2025 vs. Q2 2024	Operating Income/Loss	Equity Affiliates' Income	Other Non-Operating Inc/Exp, Net	Income Tax Benefit/Expense	Net Income/Loss Attributable to Air Products	Earnings/Loss per Share(A)
Q2 2025 GAAP	($2,328.0)	$145.5	($18.6)	($505.8)	($1,730.6)	($7.77)
Q2 2024 GAAP	637.2	143.3	(9.2)	130.5	572.4	2.57
$ Change GAAP						($10.34)
% Change GAAP						**
Q2 2025 GAAP	($2,328.0)	$145.5	($18.6)	($505.8)	($1,730.6)	($7.77)



Business and asset actions(B)	2,927.9	6.8	—	640.6	2,290.6	10.28








Shareholder activism-related costs	31.4	—	—	0.4	31.0	0.14

Loss on de-designation of cash flow hedges(C)	—	—	11.5	1.0	3.0	0.01
Non-service pension cost, net	—	—	10.7	2.7	8.0	0.04


Tax reform adjustment related to deemed foreign dividends	—	—	—	34.9	(34.9)	(0.16)
Tax on repatriation of foreign earnings	—	—	—	(31.4)	31.4	0.14




Q2 2025 Adjusted Measures	$631.3	$152.3	$3.6	$142.4	$598.5	$2.69
Q2 2024 GAAP	$637.2	$143.3	($9.2)	$130.5	$572.4	$2.57


Business and asset actions	57.0	—	—	13.2	43.8	0.20










Non-service pension cost, net	—	—	25.1	6.2	18.9	0.08








Q2 2024 Adjusted Measures	$694.2	$143.3	$15.9	$149.9	$635.1	$2.85
$ Adjusted Change						($0.16)
% Adjusted Change						(6%)
(A)Calculated and presented on a diluted basis from continuing operations attributable to Air Products. Because we reported a loss from operations in fiscal year 2025, GAAP loss per share is calculated using the basic weighted average share value of 222.8 million, which does not consider outstanding share-based awards due to their anti-dilutive effect. Adjusted earnings per share is calculated using a diluted weighted average share value of 222.9 million.
(B) Includes $3.5 attributable to noncontrolling interests.
(C) Includes $7.5 attributable to noncontrolling interests.
** Change versus prior period is not meaningful due to the $2.9 billion pre-tax charge for business and asset actions in fiscal year 2025.



	Six months ended 31 March
2025 vs. 2024	Operating Income/Loss	Equity Affiliates' Income	Other Non-Operating Inc/Exp, Net	Income Tax Benefit/Expense	Net Income/Loss Attributable to Air Products	Earnings/Loss per Share(A)
2025 GAAP	($1,684.4)	$296.1	$20.3	($365.1)	($1,113.2)	($5.00)
2024 GAAP	1,304.1	301.7	(24.0)	265.9	1,181.7	5.30
$ Change GAAP						($10.30)
% Change GAAP						**
2025 GAAP	($1,684.4)	$296.1	$20.3	($365.1)	($1,113.2)	($5.00)



Business and asset actions(B)	2,927.9	6.8	—	640.6	2,290.6	10.28









Shareholder activism-related costs	61.3	—	—	8.4	52.9	0.24
Gain on de-designation of cash flow hedges(C)	—	—	(27.3)	(2.3)	(7.3)	(0.03)
Non-service pension cost, net	—	—	21.2	5.3	15.9	0.07


Tax reform adjustment related to deemed foreign dividends	—	—	—	34.9	(34.9)	(0.16)
Tax on repatriation of foreign earnings	—	—	—	(31.4)	31.4	0.14




2025 Adjusted Measures	$1,304.8	$302.9	$14.2	$290.4	$1,235.4	$5.54
2024 GAAP	$1,304.1	$301.7	($24.0)	$265.9	$1,181.7	$5.30



Business and asset actions	57.0	—	—	13.2	43.8	0.20










Non-service pension cost, net	—	—	50.0	12.4	37.6	0.17









2024 Adjusted Measures	$1,361.1	$301.7	$26.0	$291.5	$1,263.1	$5.67
$ Adjusted Change						($0.13)
% Adjusted Change						(2%)
(A)Calculated and presented on a diluted basis from continuing operations attributable to Air Products. Because we reported a loss from operations in fiscal year 2025, GAAP loss per share is calculated using the basic weighted average share value of 222.7 million, which does not consider outstanding share-based awards due to their anti-dilutive effect. Adjusted earnings per share is calculated using a diluted weighted average share value of 222.9 million.
(B) Includes $3.5 attributable to noncontrolling interests.
(C) Includes $17.7 attributable to noncontrolling interests.
** Change versus prior period is not meaningful due to the $2.9 billion pre-tax charge for business and asset actions in fiscal year 2025.

ADJUSTED EBITDA

We define adjusted EBITDA as net income or loss less income or loss from discontinued operations, net of tax, and excluding non-GAAP adjustments, which we do not believe to be indicative of underlying business trends, before interest expense, other non-operating income (expense), net, income tax expense (benefit), and depreciation and amortization expense. Adjusted EBITDA provides a useful metric for management to assess operating performance on both a consolidated and a segment basis.

The table below presents a reconciliation of net income (loss) on a GAAP basis to adjusted EBITDA:


	Three Months Ended 31 March			Six Months Ended 31 March
	2025	2024		2025	2024



Net income (loss)	($1,737.5)		$580.9		($1,087.7)	$1,202.5

Add: Interest expense	42.2		59.9		84.8	113.4
Less: Other non-operating income (expense), net	(18.6)		(9.2)		20.3	(24.0)
Add: Income tax expense (benefit)	(505.8)		130.5		(365.1)	265.9
Add: Depreciation and amortization	383.6		360.8		750.4	710.0
Add: Business and asset actions	2,927.9		57.0		2,927.9	57.0


Add: Shareholder activism-related costs	31.4		—		61.3	—





Add: Equity method investment impairment associated with business and asset actions	6.8		—		6.8	—
Adjusted EBITDA	$1,167.2		$1,198.3		$2,358.1	$2,372.8

Change GAAP
Net income (loss) $ change	($2,318.4)			($2,290.2)
Net income (loss) % change	**			**



Change Non-GAAP
Adjusted EBITDA $ change	($31.1)			($14.7)
Adjusted EBITDA % change	(3%)			(1%)

** Change versus prior period is not meaningful due to the $2.9 billion pre-tax charge for business and asset actions in fiscal year 2025.

The tables below present a reconciliation of operating income (loss) by segment to adjusted EBITDA by segment for the three and six months ended 31 March 2025 and 2024:


	Three Months Ended					Six Months Ended
	31 March		Change vs. Prior Year			31 March		Change vs. Prior Year
Americas	2025	2024	$	%		2025	2024	$	%






Operating income	$365.7	$371.9	(6.2)	(2	%)	$753.9	$726.3	$27.6	4	%
Add: Depreciation and amortization	178.4	174.1				351.8	343.8
Add: Equity affiliates' income	31.2	44.2				66.3	81.3
Adjusted EBITDA	$575.3	$590.2	($14.9)	(3	%)	$1,172.0	$1,151.4	$20.6	2	%


	Three Months Ended					Six Months Ended
	31 March		Change vs. Prior Year			31 March		Change vs. Prior Year
Asia	2025	2024	$	%		2025	2024	$	%






Operating income	$191.4	$203.6	(12.2)	(6	%)	$407.8	$414.8	($7.0)	(2	%)
Add: Depreciation and amortization	131.8	116.4				254.7	228.2
Add: Equity affiliates' income	10.5	8.3				20.8	12.5
Adjusted EBITDA	$333.7	$328.3	$5.4	2	%	$683.3	$655.5	$27.8	4	%


	Three Months Ended					Six Months Ended
	31 March		Change vs. Prior Year			31 March		Change vs. Prior Year
Europe	2025	2024	$	%		2025	2024	$	%






Operating income	$195.5	$201.0	(5.5)	(3	%)	$382.0	$398.6	($16.6)	(4	%)
Add: Depreciation and amortization	56.8	50.8				111.3	99.0
Add: Equity affiliates' income	27.7	11.7				45.9	32.4
Adjusted EBITDA	$280.0	$263.5	$16.5	6	%	$539.2	$530.0	$9.2	2	%


	Three Months Ended					Six Months Ended
	31 March		Change vs. Prior Year			31 March		Change vs. Prior Year
Middle East and India	2025	2024	$	%		2025	2024	$	%




Operating income (loss)	($2.9)	$5.6	(8.5)	(152	%)	($3.5)	$9.5	($13.0)	(137	%)
Add: Depreciation and amortization	6.4	6.7				12.9	13.3
Add: Equity affiliates' income	78.2	73.9				163.2	166.8
Adjusted EBITDA	$81.7	$86.2	($4.5)	(5	%)	$172.6	$189.6	($17.0)	(9	%)


	Three Months Ended					Six Months Ended
	31 March		Change vs. Prior Year			31 March		Change vs. Prior Year
Corporate and other	2025	2024	$	%		2025	2024	$	%




Operating loss	($118.4)	($87.9)	(30.5)	(35	%)	($235.4)	($188.1)	($47.3)	(25	%)
Add: Depreciation and amortization	10.2	12.8				19.7	25.7
Add: Equity affiliates' income	4.7	5.2				6.7	8.7
Adjusted EBITDA	($103.5)	($69.9)	($33.6)	(48	%)	($209.0)	($153.7)	($55.3)	(36	%)

ADJUSTED EFFECTIVE TAX RATE

The effective tax rate equals the income tax provision divided by income before taxes. We calculate our adjusted effective tax rate by adjusting the numerator and denominator to exclude the tax and before tax impacts of our non-GAAP adjustments, respectively. The table below presents a reconciliation of the GAAP effective tax rate to our adjusted effective tax rate:



	Three Months Ended 31 March				Six Months Ended 31 March
	2025		2024		2025		2024
Income tax expense (benefit)	($505.8)		$130.5		($365.1)		$265.9
Income (Loss) before taxes	(2,243.3)		711.4		(1,452.8)		1,468.4
Effective tax rate	22.5	%	18.3	%	25.1	%	18.1	%



Reconciliation of GAAP to Non-GAAP:
Income tax expense (benefit)	($505.8)		$130.5		($365.1)		$265.9

Business and asset actions tax impact	640.6		13.2		640.6		13.2

Shareholder activism-related costs tax impact	0.4		—		8.4		—
Loss (Gain) on de-designation of cash flow hedges tax impact	1.0		—		(2.3)		—
Non-service pension cost, net tax impact	2.7		6.2		5.3		12.4









Tax reform adjustment related to deemed foreign dividends	34.9		—		34.9		—
Tax on repatriation of foreign earnings	(31.4)		—		(31.4)		—




Adjusted income tax expense	$142.4		$149.9		$290.4		$291.5


Income (Loss) before taxes	($2,243.3)		$711.4		($1,452.8)		$1,468.4


Business and asset actions	2,927.9		57.0		2,927.9		57.0
Shareholder activism-related costs	31.4		—		61.3		—
Loss (Gain) on de-designation of cash flow hedges	11.5		—		(27.3)		—
Non-service pension cost, net	10.7		25.1		21.2		50.0
Business and asset actions- equity method investment	6.8		—		6.8		—










Adjusted income before taxes	$745.0		$793.5		$1,537.1		$1,575.4
Adjusted effective tax rate	19.1	%	18.9	%	18.9	%	18.5	%

CAPITAL EXPENDITURES

Capital expenditures is a non-GAAP financial measure that we define as the sum of cash flows for additions to plant and equipment, including long-term deposits, acquisitions (less cash acquired), investment in and advances to unconsolidated affiliates, and investment in financing receivables on our consolidated statements of cash flows. Additionally, we adjust additions to plant and equipment to exclude NEOM Green Hydrogen Company (“NGHC”) expenditures funded by the joint venture's project financing, which is non-recourse to Air Products, as well as our partners’ equity contributions to arrive at a measure that we believe is more representative of our investment activities. Substantially all the funding we provide to NGHC is limited for use by the venture for its capital expenditures.

A reconciliation of cash used for investing activities to our reported capital expenditures is provided below:



	Six Months Ended
	31 March
	2025	2024
Cash used for investing activities	$4,419.4	$3,226.0
Proceeds from sale of assets and investments	36.5	20.2
Purchases of investments	(117.6)	(136.4)
Proceeds from investments	11.1	367.4
Other investing activities	60.9	30.1
NGHC expenditures not funded by Air Products' equity(A)	(1,470.9)	(836.2)
Capital expenditures	$2,939.4	$2,671.1

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

Cash Flows From Operations


	Six Months Ended
	31 March
	2025	2024
Net income (loss) attributable to Air Products	($1,113.2)	$1,181.7

Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization	750.4	710.0
Deferred income taxes	(540.1)	6.9
Tax reform repatriation	(34.9)	—
Business and asset actions	2,927.9	57.0

Undistributed earnings of equity method investments	(129.4)	(118.2)
Gain on sale of assets and investments	(12.3)	(18.2)
Share-based compensation	54.7	28.5
Noncurrent lease receivables	28.0	40.2


Other adjustments	(87.8)	26.5
Changes in working capital accounts	(703.5)	(486.1)
Cash Provided by Operating Activities	$1,139.8	$1,428.3

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

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

Cash Flows From Investing Activities


	Six Months Ended
	31 March
	2025	2024
Additions to plant and equipment, including long-term deposits	($4,009.1)	($3,114.9)

Investment in and advances to unconsolidated affiliates	(365.4)	—
Investment in financing receivables	(35.8)	(392.4)
Proceeds from sale of assets and investments	36.5	20.2
Purchases of investments	(117.6)	(136.4)
Proceeds from investments	11.1	367.4

Other investing activities	60.9	30.1
Cash Used for Investing Activities	($4,419.4)	($3,226.0)

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

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

Capital Expenditures (Non-GAAP Financial Measure)

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


	Six Months Ended
	31 March
	2025	2024
Additions to plant and equipment, including long-term deposits	$4,009.1	$3,114.9

Investment in and advances to unconsolidated affiliates	365.4	—
Investment in financing receivables	35.8	392.4
NGHC expenditures not funded by Air Products' equity(A)	(1,470.9)	(836.2)
Capital Expenditures	$2,939.4	$2,671.1

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

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

Outlook for Investing Activities

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

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

Cash Flows From Financing Activities


	Six Months Ended
	31 March
	2025	2024
Long-term debt proceeds	$2,002.5	$3,649.0
Payments on long-term debt	(332.3)	(64.7)
Increase (Decrease) in commercial paper and short-term borrowings	645.6	(131.9)
Dividends paid to shareholders	(787.4)	(777.9)

Proceeds from stock option exercises	1.1	5.7
Investments by noncontrolling interests	355.7	142.6

Other financing activities	(60.1)	(110.3)
Cash Provided by Financing Activities	$1,825.1	$2,712.5

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

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

Financing and Capital Structure

Debt

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

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

Credit Facilities

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

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

NEOM Green Hydrogen Project Financing

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

Dividends

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

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

PENSION BENEFITS

We and certain of our subsidiaries sponsor defined benefit pension plans and defined contribution plans that cover a substantial portion of our worldwide employees. The principal defined benefit pension plans are the U.S. salaried pension plan and the U.K. pension plan. These plans were closed to new participants in 2005, after which defined contribution plans were offered to new employees. The shift to defined contribution plans is expected to continue to reduce volatility of both plan expense and contributions. For additional information, refer to Note 11, Retirement Benefits, to the consolidated financial statements.

Net Periodic Cost

The table below summarizes the components of net periodic cost for our U.S. and international defined benefit pension plans:


	Three Months Ended		Six Months Ended
	31 March		31 March
	2025	2024	2025	2024
Service cost	$5.0	$5.2	$10.2	$10.4







Non-service cost	10.7	25.1	21.2	50.0
Other	—	0.1	0.1	0.2
Net Periodic Cost	$15.7	$30.4	$31.5	$60.6

Net periodic cost was $15.7 and $31.5 for the three and six months ended 31 March 2025, respectively. Net periodic cost was $30.4 and $60.6 for the three and six months ended 31 March 2024, respectively. The decrease in costs versus the prior year were primarily attributable to non-service costs, which were driven by a higher expected return on plan assets due to a higher beginning balance of plan assets, lower interest cost, and a decrease in actuarial loss amortization. Non-service related components of net periodic cost are reflected within "Other non-operating income (expense), net" on our consolidated income statements.

Service costs result from benefits earned by active employees and are reflected as operating expenses primarily within "Cost of sales" and "Selling and administrative expense" on our consolidated income statements. The amount of service costs capitalized in the first six months of fiscal years 2025 and 2024 was not material.

Company Contributions

Management considers various factors when making pension funding decisions, including tax, cash flow, and regulatory implications. For the six months ended 31 March 2025 and 2024, our cash contributions to funded pension plans and benefit payments for unfunded pension plans were $14.3 and $19.2, respectively.

Total contributions for fiscal year 2025 are expected to be approximately $30 to $40. During fiscal year 2024, total contributions were $34.7.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A description of our major accounting policies, including those that we consider to be the most critical to understanding our financial statements, is included in our 2024 Form 10-K. There were no significant changes to our accounting policies during the first six months of fiscal year 2025.

Management’s Discussion and Analysis of our financial condition and results of operations is based on the consolidated financial statements and accompanying notes that have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates reflect our best judgment about current and/or future economic and market conditions and their effect based on information available as of the date of our consolidated financial statements. If conditions change, actual results may differ materially from these estimates.

Judgments and estimates of uncertainties are required to apply our accounting policies in many areas. However, application of policies that management has identified as critical places significant importance on management’s judgment, often as the result of the need to make estimates about the effects of matters that are inherently uncertain.

During the second quarter of fiscal year 2025, we recorded a charge of approximately $2.9 billion ($2.3 billion attributable to Air Products after tax, or $10.28 per share) for the strategic actions described in Note 4, Business and Asset Actions, to the consolidated financial statements. This charge included approximately $1.7 billion to reduce the carrying value of assets associated with exited projects to their estimated net realizable value of $22.5. We estimated the net realizable value of the assets assuming an orderly liquidation through a secondary equipment market based on our experience with selling similar equipment. An asset’s orderly liquidation value is the amount that could be realized from a liquidation sale, given a reasonable period of time to find a buyer, selling the asset in the existing condition where it is located, and assuming the highest and best use of the asset by market participants. The inputs used for the valuation include significant unobservable inputs, or "Level 3" inputs, based on our best judgment regarding assumptions we expect market participants would use. The loss was measured as the difference between the orderly liquidation value of the assets and the net book value of the assets.

Additionally, during the first six months of fiscal year 2025, we recorded changes to project revenue and cost estimates on certain sale of equipment projects that are accounted for under the cost incurred input method. Accordingly, we recorded cumulative effect adjustments that unfavorably impacted operating loss by approximately $15 and $45 for the three and six months ended 31 March 2025, respectively.

There were no other changes to our estimates during the first six months of fiscal year 2025 that had a significant impact on our financial condition, change in financial condition, liquidity, or results of operations.

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