Air Products & Chemicals 10-Q 2025-12-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

For the quarterly period ended 31 December 2025

or

For the transition period from to

Commission File Number 001-04534

AIR PRODUCTS AND CHEMICALS, INC.

(Exact name of registrant as specified in its charter)

1940 Air Products Boulevard

Allentown, Pennsylvania 18106-5500

(Address of principal executive offices and Zip Code)

610-481-4911

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock, par value $1 per share, outstanding at 31 December 2025 was 222,656,008.

AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended 31 December 2025

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts and can generally be identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” "future," “goal,” “intend,” “may,” “outlook,” “plan,” “position,” “possible,” “potential,” “project,” “should,” “target,” “will,” “would,” and similar expressions or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements. Forward-looking statements are based on management’s expectations and assumptions as of the date of this report and are not guarantees of future performance. You are cautioned not to place undue reliance on our forward-looking statements.

Forward-looking statements may relate to a number of matters, including expectations regarding revenue, margins, expenses, earnings, tax provisions, cash flows, pension obligations, share repurchases or other statements regarding economic conditions or our business outlook; statements regarding capital expenditures and plans, projects, investment opportunities, and potential transactions that are subject to ongoing negotiations and their expected impact and timing; strategies and objectives for our future operations, including our ability to win new projects and execute the projects in our backlog; and statements regarding our expectations with respect to pending legal claims or disputes. While forward-looking statements are made in good faith and based on assumptions, expectations and projections that management believes are reasonable based on currently available information, actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation:

• changes in global or regional economic conditions, inflation, and supply and demand dynamics in the market segments we serve, including demand for technologies and projects to limit the impact of global climate change;

• changes in the financial markets that may affect the availability and terms on which we may obtain financing;

• the ability to execute agreements with customers and implement price increases to offset cost increases;

• disruptions to our supply chain and related distribution delays and cost increases;

• risks associated with having extensive international operations, including political risks, risks associated with unanticipated government actions and risks of investing in developing markets;

• project delays, scope changes, cost escalations, contract terminations, customer cancellations, or postponement of projects and sales;

• our ability to safely develop, operate, and manage costs of large-scale and technically complex projects;

• the future financial and operating performance of major customers, joint ventures, and equity affiliates;

• our ability to safely and effectively develop, implement, and operate new technologies and to market products produced utilizing new technologies;

• our ability to execute the projects in our backlog and refresh our pipeline of new projects;

• tariffs, economic sanctions and regulatory activities in jurisdictions in which we, our affiliates and joint ventures, and our customers and other counterparties operate;

• the impact of environmental, tax, safety, or other legislation, as well as regulations and other public policy initiatives affecting our business and the business of our affiliates and related compliance requirements, including legislation, regulations, or policies intended to address global climate change;

• changes in tax rates and other changes in tax law;

• safety incidents relating to our operations;

• the timing, impact, and other uncertainties relating to acquisitions, divestitures, joint venture activities and other commercial transactions, as well as our ability to integrate acquisitions and separate divested businesses, respectively;

FORWARD-LOOKING STATEMENTS (CONTINUED)

• risks relating to cybersecurity incidents, including risks from the interruption, failure or compromise of our information systems or those of our business partners or service providers;

• catastrophic events, such as natural disasters and extreme weather events, pandemics and other public health crises, acts of war, including Russia’s invasion of Ukraine and new and ongoing conflicts in the Middle East, or terrorism;

• the impact on our business and customers of price fluctuations in oil and natural gas and disruptions in markets and the economy due to oil and natural gas price volatility;

• costs and outcomes of legal or regulatory proceedings and investigations;

• asset impairments due to economic conditions or specific events;

• significant fluctuations in inflation, interest rates, and foreign currency exchange rates from those currently anticipated;

• damage to facilities, pipelines or delivery systems, including those we are constructing or that we own or operate for third parties;

• availability and cost of electric power, natural gas, and other raw materials; and

• the commencement and success of any productivity and operational improvement programs.

In addition to the foregoing factors, forward-looking statements contained herein are qualified with respect to the risks disclosed elsewhere in this document, including in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 3, Quantitative and Qualitative Disclosures About Market Risk, as well as with respect to the risks described in Item 1A, Risk Factors, to our Annual Report on Form 10-K for the fiscal year ended 30 September 2025 and in Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q. Any of these factors, as well as those not currently anticipated by management, could cause our results of operations, financial condition or liquidity to differ materially from what is expressed or implied by any forward-looking statement. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.

PART I—FINANCIAL INFORMATION

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED INCOME STATEMENTS

(Unaudited)

The accompanying notes are an integral part of these statements.

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS

(Unaudited)

The accompanying notes are an integral part of these statements.

Air Products and Chemicals, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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This Management’s Discussion and Analysis contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding business outlook. These forward-looking statements are based on management’s expectations and assumptions as of the date of this Quarterly Report on Form 10-Q and are not guarantees of future performance. Actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors not anticipated by management. These factors include, without limitation, those described in "Forward-Looking Statements" and Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended 30 September 2025 (the "2025 Form 10-K"), which was filed with the SEC on 20 November 2025, as well as in "Forward-Looking Statements" and Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q.

This discussion should be read together with the accompanying interim consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. Financial information is presented on a continuing operations basis. Unless otherwise stated, amounts are stated 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 discuss certain financial measures on an "adjusted", or "non-GAAP", basis, which exclude gains or losses that management does not consider to be representative of our underlying business operations. These adjustments, which are described below for the periods presented, are not reflected in the results of our reportable segments. When viewed together with our GAAP results, we believe these non-GAAP financial measures offer a more complete understanding of the factors and trends affecting our financial performance and support analysis of our results on a more consistent basis. For each non-GAAP financial measure, including adjusted operating income, adjusted operating margin, adjusted earnings per share, the 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 further explanations of our use of non-GAAP financial measures are presented under the “Reconciliations of Non-GAAP Financial Measures” section beginning on page 48.

Comparisons included in the discussion that follows are for the first quarter of fiscal year 2026 versus ("vs.") the first quarter of fiscal year 2025. The disclosures provided in this Quarterly Report on Form 10-Q are complementary to those made in our 2025 Form 10-K.

We manage our operations, assess performance, and report earnings under five reportable segments: Americas, Asia, Europe, Middle East and India, and Corporate and other. Refer to Note 16, Business Segment Information, to the consolidated financial statements for additional information.

For information concerning activity with our related parties, refer to Note 15, Supplemental Information, to the consolidated financial statements.

FIRST QUARTER 2026 VS. FIRST QUARTER 2025

FIRST QUARTER 2026 IN SUMMARY

• Sales of $3.1 billion increased 6%, or $171.0, due to higher energy cost pass-through to customers of 3%, a favorable impact from currency of 2%, and higher pricing of 1%. Volumes were flat on a percentage basis as higher on-sites were offset by lower helium demand and a significant prior year, non-recurring helium sale to an existing merchant customer in the Americas segment.

• Operating income of $734.5 increased 14%, or $90.9, primarily due to favorable business mix, lower costs, and higher non‑helium merchant pricing. Operating margin of 23.7% increased 170 basis points ("bp") from 22.0% in the prior year. On a non-GAAP basis, adjusted operating income of $756.5 increased 12%, or $83.0, and adjusted operating margin of 24.4% increased 140 bp compared to 23.0% in the prior year. These non-GAAP results exclude charges recorded in fiscal year 2026 to update cost estimates related to prior-year business and asset actions as well as prior-year shareholder activism-related costs as discussed below.

• Earnings per share ("EPS") of $3.04 increased 10%, or $0.27 per share. A summary table of changes in EPS is presented on page 40. On a non-GAAP basis, adjusted EPS of $3.16 increased 10%, or $0.30 per share, and also excludes non‑operating adjustments for a prior‑year gain on certain de‑designated hedging instruments and non‑service pension cost as discussed below.

Summary of Changes in EPS

The per share impacts for the items presented in the table below were calculated independently and may not sum to the total change in EPS due to rounding.

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Information on our utilization of financial instruments and an analysis of the sensitivity of these instruments to selected changes in market rates and prices is included in our 2025 Form 10-K.

Our net financial instrument position decreased from a liability of $17.2 billion at 30 September 2025 to a liability of $17.0 billion at 31 December 2025. The decrease was primarily due to the repayment of $550.0 principal amount outstanding of our 1.50% U.S. senior note at maturity in October 2025. This decrease was partially offset by approximately $365 of additional long-term principal borrowings under the project financing associated with the NEOM Green Hydrogen Project as discussed in Note 3, Variable Interest Entities, to the consolidated financial statements.

Interest Rate Risk

Our debt portfolio as of 31 December 2025, including the effect of currency and interest rate swap agreements, was composed of 92% fixed-rate debt and 8% variable-rate debt. Our debt portfolio as of 30 September 2025, including the effect of currency and interest rate swap agreements, was composed of 91% fixed-rate debt and 9% variable-rate debt. The decrease in variable-rate debt is primarily due to the maturity of interest rate swaps designated as fair value hedges during October 2025.

The sensitivity analysis related to the interest rate risk on the fixed portion of our debt portfolio assumes an instantaneous 100 bp parallel move in interest rates from the level at 31 December 2025, with all other variables held constant. A 100 bp increase in market interest rates would result in a decrease of $1,116 and $1,128 in the net liability position of financial instruments at 31 December 2025 and 30 September 2025, respectively. A 100 bp decrease in market interest rates would result in an increase of $1,276 and $1,290 in the net liability position of financial instruments at 31 December 2025 and 30 September 2025, respectively.

There were no material changes to the sensitivity analysis related to the variable portion of our debt portfolio since 30 September 2025.

Foreign Currency Exchange Rate Risk

The sensitivity analysis related to foreign currency exchange rates assumes an instantaneous 10% change in the foreign currency exchange rates from their levels at 31 December 2025, with all other variables held constant. A 10% strengthening or weakening of the functional currency of an entity versus all other currencies would result in a decrease or increase, respectively, of $750 and $565 in the net liability position of financial instruments at 31 December 2025 and 30 September 2025, respectively. The increase in sensitivity is primarily due to the origination of cross currency interest rate swaps between the U.S. Dollar and each of the Chinese Renminbi, South Korean Won, and New Taiwan Dollar.

Disclosure Controls and Procedures

We maintain a comprehensive set of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Under the supervision of the Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures as of 31 December 2025. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of 31 December 2025, our disclosure controls and procedures were effective.

Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended 31 December 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

We are supplementing the risk factors described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended 30 September 2025 with the additional risk factor set forth below.

The sale of our common stock could cause volatility in and otherwise adversely impact the price of our common stock.

The sale of a substantial number of shares of our common stock in the public market, or transactions by our directors or affiliated entities thereof, executive officers and significant stockholders, or the perception that these transactions might occur, could result in volatility in or otherwise adversely impact the price of our common stock. In this regard, Mantle Ridge LP, of which one of the Company’s directors, Paul C. Hilal, is founder and chief executive officer, and certain of its affiliated entities (collectively, “Mantle Ridge”) hold approximately 4.1 million shares of our common stock, representing approximately 1.8% of our outstanding shares. In January 2026 Mantle Ridge informed us that, pursuant to limited partner liquidity rights, it may effect distributions to its limited partners, either in kind or in cash funded by share sales, with respect to a significant percentage of its shares as early as the first half of calendar year 2026 and that it expects all such distributions to be completed no later than early 2028. To the extent that these investors receive shares of our common stock, they would be able to sell those shares at their discretion. We are unable to predict the specific timing of these transactions.

None of the Company’s directors or Section 16 reporting officers adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K) during the first quarter of fiscal year 2026.

(a) Exhibits required by Item 601 of Regulation S-K

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.