WEBVTT 00:00:00.000 --> 00:00:01.700 Welcome back to the Deep Dive, where we take 00:00:01.700 --> 00:00:05.160 these massive, often unseen engines of the modern 00:00:05.160 --> 00:00:08.259 world and really break them down into their most 00:00:08.259 --> 00:00:11.080 surprising, most important pieces. It's always 00:00:11.080 --> 00:00:13.359 fascinating to peel back the layers on these 00:00:13.359 --> 00:00:15.279 companies that are just hiding in plain sight. 00:00:15.480 --> 00:00:18.039 Absolutely. And today we're talking about a company 00:00:18.039 --> 00:00:20.980 that is foundational to, well, virtually every 00:00:20.980 --> 00:00:23.699 modern industry. I mean, it's necessary for advanced 00:00:23.699 --> 00:00:25.699 manufacturing. It's critical for health care. 00:00:25.800 --> 00:00:28.809 It's the backbone of the food supply chain. And 00:00:28.809 --> 00:00:32.250 yet for most people, for most consumers, it flies 00:00:32.250 --> 00:00:35.630 completely below the radar. It is, I think, the 00:00:35.630 --> 00:00:37.890 ultimate definition of a hidden giant. It really 00:00:37.890 --> 00:00:40.229 is. When you think about the industrial supply 00:00:40.229 --> 00:00:43.869 chain, your mind probably goes to steel or, you 00:00:43.869 --> 00:00:46.090 know, semiconductors. But you very rarely think 00:00:46.090 --> 00:00:47.950 about the specific gases that make all of those 00:00:47.950 --> 00:00:50.149 things possible. The scale of this operation 00:00:50.149 --> 00:00:53.350 is staggering. And the history is incredible. 00:00:53.490 --> 00:00:55.469 The immediate surprise fact that we really want 00:00:55.469 --> 00:00:57.350 to ground this whole conversation in is this. 00:00:57.929 --> 00:01:01.670 We are diving deep into air products and chemicals, 00:01:01.890 --> 00:01:04.609 Inc. An American multinational that, despite 00:01:04.609 --> 00:01:07.189 the kind of quiet name, has been mission critical 00:01:07.189 --> 00:01:09.670 for the U .S. space program for five decades. 00:01:10.549 --> 00:01:12.250 We're talking about the company that supplied 00:01:12.250 --> 00:01:14.390 the very fuel that powered the space shuttle. 00:01:14.859 --> 00:01:17.040 And that rocket fuel anecdote is, I think, the 00:01:17.040 --> 00:01:18.859 perfect lens for this. We're going to spend the 00:01:18.859 --> 00:01:21.579 next 30 plus minutes using this corporate profile 00:01:21.579 --> 00:01:24.180 and historical analysis we have to really understand 00:01:24.180 --> 00:01:28.159 the vast scale, the incredible history and the. 00:01:29.609 --> 00:01:32.689 often complex core business strategy of this 00:01:32.689 --> 00:01:35.790 S &P 500 component. We've got a deep stack of 00:01:35.790 --> 00:01:38.670 sources today. Covers 85 years of history, leadership 00:01:38.670 --> 00:01:41.310 transitions, specific technical products, and 00:01:41.310 --> 00:01:43.730 some very recent, very strategic geopolitical 00:01:43.730 --> 00:01:46.189 shifts that just show how sensitive their business 00:01:46.189 --> 00:01:48.540 is to the global climate. Yeah, that recent stuff 00:01:48.540 --> 00:01:51.200 is fascinating. But to set the stage, let's establish 00:01:51.200 --> 00:01:53.459 their profile immediately. The company is Air 00:01:53.459 --> 00:01:56.579 Products and Chemicals, Inc. It's a U .S.-based 00:01:56.579 --> 00:01:58.799 international corporation, and it specializes 00:01:58.799 --> 00:02:00.920 primarily in producing and selling industrial 00:02:00.920 --> 00:02:04.299 gases and historically certain chemicals. And 00:02:04.299 --> 00:02:06.879 they are massive. We are talking about a major 00:02:06.879 --> 00:02:09.840 publicly traded entity on the New York Stock 00:02:09.840 --> 00:02:13.599 Exchange, ticker APD. Their corporate headquarters, 00:02:13.979 --> 00:02:16.259 which has been this stable fixture for decades, 00:02:16.560 --> 00:02:19.460 is located in Trexler Town, Pennsylvania. Right 00:02:19.460 --> 00:02:22.520 in the heart of the manufacturing intensive Lehigh 00:02:22.520 --> 00:02:25.159 Valley. And when we talk about scale, we have 00:02:25.159 --> 00:02:26.939 to put those numbers on the table right at the 00:02:26.939 --> 00:02:28.439 beginning, just to give you some context for 00:02:28.439 --> 00:02:30.620 this whole discussion. Please do. Based on 2025 00:02:30.620 --> 00:02:33.939 data, this company commands total assets of U 00:02:33.939 --> 00:02:40.169 .S. NECS 41 .6. Billion dollars. 81 billion. 00:02:40.270 --> 00:02:43.030 That's a huge number. And that's plants, equipment, 00:02:43.270 --> 00:02:45.530 supply infrastructure, all of it. All of it. 00:02:45.569 --> 00:02:48.210 And they employ approximately 21 ,300 people 00:02:48.210 --> 00:02:51.389 worldwide, all managing this immense complex 00:02:51.389 --> 00:02:53.849 logistical web that is dedicated almost entirely 00:02:53.849 --> 00:02:55.810 to things you can't see. That's the perfect way 00:02:55.810 --> 00:02:57.610 to put it. They are literally turning the atmosphere 00:02:57.610 --> 00:03:00.569 into a commodity, into an indispensable industrial 00:03:00.569 --> 00:03:03.080 input. So to understand how a company that's 00:03:03.080 --> 00:03:05.740 dedicated to something as, well, as ethereal 00:03:05.740 --> 00:03:08.280 as gas achieved this colossal scale, we have 00:03:08.280 --> 00:03:10.879 to travel back, back to the late 1930s, early 00:03:10.879 --> 00:03:13.879 1940s. Precisely. They are the infrastructure 00:03:13.879 --> 00:03:16.580 behind the infrastructure. And that whole idea 00:03:16.580 --> 00:03:18.840 started with a singular, brilliant strategic 00:03:18.840 --> 00:03:22.240 vision. Okay. Let's unpack this history, starting 00:03:22.240 --> 00:03:25.680 with the very foundation in 1940. Air Products 00:03:25.680 --> 00:03:28.800 was founded in Detroit by a visionary named Leonard 00:03:28.800 --> 00:03:31.919 Parker Poole. Right. And his initial idea was, 00:03:32.099 --> 00:03:35.060 on the surface, simple, but it was incredibly 00:03:35.060 --> 00:03:37.800 disruptive. And it really defines their operational 00:03:37.800 --> 00:03:41.060 model. even today. So what was so disruptive? 00:03:41.300 --> 00:03:43.960 Well, Poole recognized this fundamental inefficiency 00:03:43.960 --> 00:03:46.719 in the industrial gas market of the time. Back 00:03:46.719 --> 00:03:49.620 then, if a factory needed, say, a huge volume 00:03:49.620 --> 00:03:52.860 of oxygen for welding or steel production, what 00:03:52.860 --> 00:03:54.400 did they do? I guess they'd have to buy it from 00:03:54.400 --> 00:03:56.580 some giant centralized plant, right? Exactly. 00:03:56.780 --> 00:03:59.680 And then ship it, often over very long distances, 00:03:59.759 --> 00:04:02.400 in these large, heavy, dangerous vessels. It 00:04:02.400 --> 00:04:04.699 was inefficient, it was very costly, and it introduced 00:04:04.699 --> 00:04:08.129 some serious logistical risk. What if the truck 00:04:08.129 --> 00:04:10.689 was late? Your whole production line stops. Okay, 00:04:10.750 --> 00:04:13.129 so what did Poole propose to fix that? His initial 00:04:13.129 --> 00:04:15.830 objective was the specific goal of on -site production 00:04:15.830 --> 00:04:18.529 and sales of industrial gases. So instead of 00:04:18.529 --> 00:04:21.009 shipping the product, they would build a small, 00:04:21.050 --> 00:04:23.730 dedicated plant, a generator, right next to the 00:04:23.730 --> 00:04:25.810 customer's facility. They'd install it, operate 00:04:25.810 --> 00:04:27.709 it, maintain the equipment, and the customer 00:04:27.709 --> 00:04:29.430 would just pay for the gas flowing through the 00:04:29.430 --> 00:04:31.920 pipe. It was brilliant. That solves the entire 00:04:31.920 --> 00:04:34.379 logistical headache. It eliminates those high 00:04:34.379 --> 00:04:37.019 transportation costs and it ensures a continuous 00:04:37.019 --> 00:04:39.800 reliable supply. Yes. And that initial focus 00:04:39.800 --> 00:04:43.250 on. customized, integrated onsite service is 00:04:43.250 --> 00:04:45.670 just a crucial detail for understanding the air 00:04:45.670 --> 00:04:48.430 products DNA. It wasn't about being the biggest 00:04:48.430 --> 00:04:50.569 plant. It was about being the most integrated 00:04:50.569 --> 00:04:53.089 partner. But that focused industrial objective 00:04:53.089 --> 00:04:55.629 was about to be massively, massively accelerated 00:04:55.629 --> 00:04:58.850 by global conflict. Indeed, the ink was barely 00:04:58.850 --> 00:05:01.410 dry in the incorporation papers when in 1941, 00:05:01.709 --> 00:05:04.250 the U .S. entered World War Two. And everything 00:05:04.250 --> 00:05:06.810 changed. Everything. The need for specialized 00:05:06.810 --> 00:05:09.389 manufacturing just exploded and air products 00:05:09.389 --> 00:05:11.930 with a its expertise in oxygen generation found 00:05:11.930 --> 00:05:14.769 its trajectory instantly changed. They transformed, 00:05:15.029 --> 00:05:17.689 really overnight, from a niche industrial supplier 00:05:17.689 --> 00:05:20.990 into a critical military manufacturer. This is 00:05:20.990 --> 00:05:23.569 where the story gets really compelling. It connects 00:05:23.569 --> 00:05:26.449 their early identity directly to the war effort. 00:05:27.129 --> 00:05:29.670 Air Products began manufacturing mobile generators 00:05:29.670 --> 00:05:32.350 designed specifically for the production of oxygen. 00:05:32.810 --> 00:05:35.990 And the demand was, as you can imagine, immediate 00:05:35.990 --> 00:05:38.300 and overwhelming. And you have to think about 00:05:38.300 --> 00:05:41.779 high altitude warfare during the 1940s. As aircraft 00:05:41.779 --> 00:05:44.560 technology advanced, bombers and fighters began 00:05:44.560 --> 00:05:46.939 operating at higher and higher elevations. To 00:05:46.939 --> 00:05:49.139 avoid anti -aircraft fire and to take advantage 00:05:49.139 --> 00:05:51.920 of jet streams. Exactly. But at those altitudes, 00:05:51.980 --> 00:05:55.240 the air pressure drops drastically and pilots 00:05:55.240 --> 00:05:58.379 face hypoxia. A lack of oxygen to the brain. 00:05:58.439 --> 00:06:01.420 It's incredibly dangerous. So the oxygen that 00:06:01.420 --> 00:06:03.519 was produced by these mobile generators, it wasn't 00:06:03.519 --> 00:06:05.639 for welding a tank on the battlefield. It was 00:06:05.639 --> 00:06:07.480 a matter of life and death for the airmen. That's 00:06:07.480 --> 00:06:10.720 it, precisely. This oxygen was absolutely necessary 00:06:10.720 --> 00:06:14.180 for high elevation military flights. These compact 00:06:14.180 --> 00:06:16.759 mobile generators were distributed globally to 00:06:16.759 --> 00:06:18.620 ensure that the U .S. Air Force and the Allied 00:06:18.620 --> 00:06:20.480 Air Forces in their war against Nazi Germany 00:06:20.480 --> 00:06:23.279 and the Axis powers had a reliable source of 00:06:23.279 --> 00:06:25.199 life support. It was right there on the airfield, 00:06:25.259 --> 00:06:27.660 close to the front lines. Right on the airfield. 00:06:27.800 --> 00:06:30.500 The company was essentially solving a massive, 00:06:30.639 --> 00:06:33.480 urgent operational bottleneck for the entire 00:06:33.480 --> 00:06:36.339 Allied air campaign. I mean, you can't run a 00:06:36.339 --> 00:06:38.720 high altitude bombing campaign if your pilots 00:06:38.720 --> 00:06:41.980 are passing out. The scale of that military contract 00:06:41.980 --> 00:06:45.819 must have been immense. So immense that the company's 00:06:45.819 --> 00:06:48.079 whole operational footprint had to dramatically 00:06:48.079 --> 00:06:51.079 shift just to keep up with production. It did. 00:06:51.220 --> 00:06:53.759 The wartime focus on expanding oxygen production 00:06:53.759 --> 00:06:57.060 manufacturing capacity, it necessitated a physical 00:06:57.060 --> 00:07:01.319 relocation in 1944. Away from Detroit. Yes. They 00:07:01.319 --> 00:07:03.339 moved the entire operation and their headquarters 00:07:03.339 --> 00:07:05.699 from Detroit down to Chattanooga, Tennessee. 00:07:06.000 --> 00:07:08.720 And this move was purely pragmatic. It was all 00:07:08.720 --> 00:07:11.439 about... leveraging specific resources or logistics 00:07:11.439 --> 00:07:14.360 pathways in the South that were necessary to 00:07:14.360 --> 00:07:17.060 scale up production capacity. To meet that relentless 00:07:17.060 --> 00:07:19.839 military demand for these generators. Relentless 00:07:19.839 --> 00:07:22.019 is the word. But the shift to Chattanooga wasn't 00:07:22.019 --> 00:07:24.220 intended to be permanent, was it? No, not at 00:07:24.220 --> 00:07:27.399 all. Following the conclusion of WWII, the company 00:07:27.399 --> 00:07:29.839 began a phased strategic return to Pennsylvania. 00:07:30.910 --> 00:07:32.769 They relocated their operations and headquarters 00:07:32.769 --> 00:07:35.529 initially to Emmaus, specifically drawn to the 00:07:35.529 --> 00:07:37.769 existing industrial and manufacturing density 00:07:37.769 --> 00:07:40.170 of the Lehigh Valley region. Which, as you said, 00:07:40.209 --> 00:07:42.449 is in eastern Pennsylvania. Why there? Well, 00:07:42.509 --> 00:07:45.329 the Lehigh Valley was, and it still is, an industrial 00:07:45.329 --> 00:07:48.730 hub. It provided the necessary access to skilled 00:07:48.730 --> 00:07:52.550 labor, to transport links, and, crucially, proximity 00:07:52.550 --> 00:07:55.269 to major customer markets in the Northeast and 00:07:55.269 --> 00:07:58.170 the Mid -Atlantic. This move was a deliberate 00:07:58.170 --> 00:08:01.389 step to stabilize the company post -war and get 00:08:01.389 --> 00:08:03.889 back to its core industrial customer base. And 00:08:03.889 --> 00:08:06.029 the company eventually solidified its roots there. 00:08:06.170 --> 00:08:08.149 Right. The current corporate headquarters was 00:08:08.149 --> 00:08:10.649 developed and completed in the late 1950s in 00:08:10.649 --> 00:08:12.889 neighboring Trexler Town, Pennsylvania. Yes. 00:08:12.970 --> 00:08:15.129 And it's an enormous complex that has really 00:08:15.129 --> 00:08:17.269 anchored their identity ever since. And that 00:08:17.269 --> 00:08:19.410 decision has had a lasting regional economic 00:08:19.410 --> 00:08:22.089 impact, too. I mean, it's so easy to forget the 00:08:22.089 --> 00:08:24.829 local power of these global multinationals. It 00:08:24.829 --> 00:08:28.160 really is. Our sources note that as of 2024, 00:08:28.740 --> 00:08:31.740 Air Products is cited as the fifth largest employer 00:08:31.740 --> 00:08:35.120 in the entire Lehigh Valley. That is a deep, 00:08:35.179 --> 00:08:38.340 entrenched regional history that was built directly 00:08:38.340 --> 00:08:42.620 on that foundation of wartime necessity and calculated 00:08:42.620 --> 00:08:44.919 industrial growth. That's a powerful narrative 00:08:44.919 --> 00:08:48.100 thread. From a Detroit startup to an emergency 00:08:48.100 --> 00:08:51.279 wartime relocation in Tennessee to a permanent 00:08:51.279 --> 00:08:54.440 establishment as a major economic driver in Pennsylvania. 00:08:55.149 --> 00:08:57.110 It connects their historical resilience right 00:08:57.110 --> 00:08:59.409 back to their current global reality. It does. 00:08:59.509 --> 00:09:01.669 It's a very American industrial story in that 00:09:01.669 --> 00:09:03.409 sense. Now that we understand the origin, let's 00:09:03.409 --> 00:09:05.350 dive into section two and address the core business. 00:09:05.870 --> 00:09:09.250 What exactly is a $41 billion company selling? 00:09:09.470 --> 00:09:11.409 This is where we bridge that gap between their 00:09:11.409 --> 00:09:13.649 history and their essential role today. They 00:09:13.649 --> 00:09:15.929 established themselves as essential by mastering 00:09:15.929 --> 00:09:19.149 complex physical chemistry. And today that mastery 00:09:19.149 --> 00:09:21.509 serves an astonishing range of customer markets. 00:09:21.750 --> 00:09:24.090 When you look at their service spectrum. The 00:09:24.090 --> 00:09:27.509 breadth is truly astonishing. Our sources list 00:09:27.509 --> 00:09:30.669 technology, energy, healthcare, food, and general 00:09:30.669 --> 00:09:33.590 industrial markets worldwide. If you are producing 00:09:33.590 --> 00:09:36.090 something, chances are you need one of their 00:09:36.090 --> 00:09:38.590 products. Let's break that down with some tangible 00:09:38.590 --> 00:09:40.830 examples because, you know, listing the sectors 00:09:40.830 --> 00:09:42.690 is one thing, but seeing the application really 00:09:42.690 --> 00:09:44.870 brings it to light. Okay, go deeper. How does 00:09:44.870 --> 00:09:47.509 an industrial gas company impact my technology, 00:09:47.769 --> 00:09:50.889 for instance? Great question. In the technology 00:09:50.889 --> 00:09:53.590 sector, particularly in semiconductor manufacturing, 00:09:54.129 --> 00:09:56.549 the purity of the environment is everything. 00:09:57.029 --> 00:09:59.610 Absolutely everything. You mean inside the clean 00:09:59.610 --> 00:10:02.029 rooms where they make the chips? Exactly. You 00:10:02.029 --> 00:10:04.649 need highly specialized gases to etch microscopic 00:10:04.649 --> 00:10:07.509 circuits onto silicon wafers or to grow crystals 00:10:07.509 --> 00:10:10.429 without any contamination. Even a single speck 00:10:10.429 --> 00:10:12.690 of dust can ruin a whole batch. So what does 00:10:12.690 --> 00:10:15.500 air products do? They supply the ultra high purity 00:10:15.500 --> 00:10:18.340 nitrogen and specialty gases necessary to create 00:10:18.340 --> 00:10:20.539 what are called inert atmospheres inside those 00:10:20.539 --> 00:10:23.159 clean rooms. The nitrogen basically pushes out 00:10:23.159 --> 00:10:25.419 all the oxygen and moisture, protecting those 00:10:25.419 --> 00:10:27.580 delicate processes from any kind of reaction. 00:10:27.899 --> 00:10:30.519 OK, that makes sense. Now, what about food? I 00:10:30.519 --> 00:10:32.399 wouldn't immediately connect an industrial gas 00:10:32.399 --> 00:10:35.139 supplier. To my groceries. Think about cryogenic 00:10:35.139 --> 00:10:38.440 freezing. Flash freezing food with ultra cold 00:10:38.440 --> 00:10:41.120 liquid nitrogen locks in freshness and texture 00:10:41.120 --> 00:10:44.919 far better than traditional slower freezing methods. 00:10:45.279 --> 00:10:48.200 So like frozen pizzas or berries. Perfect example. 00:10:48.519 --> 00:10:51.360 Nitrogen is also used for what's called blanketing 00:10:51.360 --> 00:10:54.840 in food packaging. They pump nitrogen into a 00:10:54.840 --> 00:10:57.700 bag of potato chips, for instance, which displaces 00:10:57.700 --> 00:11:00.679 the oxygen. And no oxygen means no spoilage. 00:11:00.720 --> 00:11:02.940 It extends the shelf life. Precisely. So that 00:11:02.940 --> 00:11:05.259 bag of chips or that box of frozen berries you 00:11:05.259 --> 00:11:08.019 buy often owes its longevity directly to air 00:11:08.019 --> 00:11:10.139 products and nitrogen supply. That's a great 00:11:10.139 --> 00:11:11.679 illustration of how essential these products 00:11:11.679 --> 00:11:14.360 are, even if they're invisible. So shifting to 00:11:14.360 --> 00:11:16.639 the core products, we can synthesize them into 00:11:16.639 --> 00:11:18.559 the category you mentioned earlier, atmospheric 00:11:18.559 --> 00:11:22.460 industrial gases. Yes. They are literally processing 00:11:22.460 --> 00:11:24.759 the air we breathe and some other basic compounds 00:11:24.759 --> 00:11:27.019 and then selling them in various highly specialized 00:11:27.019 --> 00:11:29.980 forms. This includes the major players that anchor 00:11:29.980 --> 00:11:35.940 their business, oxygen. It sounds simple when 00:11:35.940 --> 00:11:37.860 you list them like that, but the process is anything 00:11:37.860 --> 00:11:41.279 but. Can you briefly explain the necessity of, 00:11:41.360 --> 00:11:44.240 say, oxygen and nitrogen in heavy industry? Sure. 00:11:44.279 --> 00:11:46.919 Let's start with nitrogen. Nitrogen is all about 00:11:46.919 --> 00:11:50.039 exclusion. It's an inert gas, which means it 00:11:50.039 --> 00:11:52.080 doesn't readily react with other substances. 00:11:52.539 --> 00:11:55.740 So it's very stable. Extremely. This makes it 00:11:55.740 --> 00:11:58.909 invaluable for safety. You can pump it into pipes 00:11:58.909 --> 00:12:01.750 or storage tanks to displace flammable vapors, 00:12:01.750 --> 00:12:04.350 which prevents explosions in chemical plants 00:12:04.350 --> 00:12:07.070 or refineries. And in manufacturing. It creates 00:12:07.070 --> 00:12:10.389 a pure, non -oxidizing atmosphere, which is essential 00:12:10.389 --> 00:12:13.490 for high -quality metal treatment and electronics 00:12:13.490 --> 00:12:16.289 production. You don't want your high -tech metals 00:12:16.289 --> 00:12:19.350 to rust or oxidize during production. Okay, and 00:12:19.350 --> 00:12:21.269 what about oxygen? That's for combustion. It's 00:12:21.269 --> 00:12:24.509 for efficiency. Adding pure oxygen to a combustion 00:12:24.509 --> 00:12:33.379 process like melting steel in a blast... So you 00:12:33.379 --> 00:12:36.039 get more bang for your buck, fuel -wise. A lot 00:12:36.039 --> 00:12:38.980 more. It reduces fuel consumption, lowers operational 00:12:38.980 --> 00:12:41.720 costs for the customer, and can even reduce emissions. 00:12:42.059 --> 00:12:45.879 It transforms a slow, dirty process into a faster, 00:12:45.980 --> 00:12:48.580 cleaner one. So it goes far beyond those basic 00:12:48.580 --> 00:12:51.279 atmospheric gases. Our sources highlight that 00:12:51.279 --> 00:12:54.330 they also deal in highly specific... process 00:12:54.330 --> 00:12:57.750 and specialty gases, performance materials and 00:12:57.750 --> 00:12:59.649 chemical intermediates. And this is where they 00:12:59.649 --> 00:13:02.870 move from massive volume sales to high margin 00:13:02.870 --> 00:13:05.570 specialized applications. This is where the really 00:13:05.570 --> 00:13:07.769 high value products come in, integrating them 00:13:07.769 --> 00:13:10.350 into the core energy and chemical infrastructure 00:13:10.350 --> 00:13:12.769 of the world. Like what? For instance, they are 00:13:12.769 --> 00:13:16.250 enormous producers of refinery hydrogen. Why 00:13:16.250 --> 00:13:18.769 is refinery hydrogen so crucial? I think most 00:13:18.769 --> 00:13:21.029 people associate hydrogen with, you know, bombs 00:13:21.029 --> 00:13:23.149 or maybe fuel cells. Well, modern environment. 00:13:23.279 --> 00:13:26.000 regulations demand cleaner fuels. Crude oil, 00:13:26.120 --> 00:13:27.820 as it comes out of the ground, contains a lot 00:13:27.820 --> 00:13:30.039 of sulfur and other contaminants. The stuff that 00:13:30.039 --> 00:13:33.039 causes acid rain and pollution. Exactly. Refineries 00:13:33.039 --> 00:13:35.100 use hydrogen in processes like hydrocracking 00:13:35.100 --> 00:13:37.580 and hydrotreating to chemically remove those 00:13:37.580 --> 00:13:40.100 contaminants. This process yields cleaner gasoline, 00:13:40.360 --> 00:13:43.159 diesel and jet fuel. So Air Products builds, 00:13:43.360 --> 00:13:46.940 owns and operates the large scale hydrogen production 00:13:46.940 --> 00:13:49.580 and supply infrastructure needed for these massive 00:13:49.580 --> 00:13:52.460 refineries. They're essentially making clean 00:13:52.490 --> 00:13:54.769 fuel possible. That's a huge part of their business. 00:13:55.070 --> 00:13:57.789 They're also listed as major developers of liquefied 00:13:57.789 --> 00:14:00.210 natural gas or LNG technologies and equipment. 00:14:00.409 --> 00:14:02.470 Which places them right at the center of the 00:14:02.470 --> 00:14:05.330 global energy supply chain and a lot of geopolitical 00:14:05.330 --> 00:14:08.289 energy decisions. It certainly does. LNG is just 00:14:08.289 --> 00:14:11.549 natural gas that's been cooled to minus 260 degrees 00:14:11.549 --> 00:14:14.029 Fahrenheit until it becomes a liquid. When it 00:14:14.029 --> 00:14:17.210 liquefies, its volume shrinks by 600 times, which 00:14:17.210 --> 00:14:19.450 makes it efficient to transport by ship across 00:14:19.450 --> 00:14:22.320 oceans. And air products roll in that. They design 00:14:22.320 --> 00:14:25.639 and build the massive, complex, cryogenic heat 00:14:25.639 --> 00:14:28.259 exchangers necessary for this liquefaction process. 00:14:28.779 --> 00:14:31.620 Their technology is literally the heart of an 00:14:31.620 --> 00:14:34.600 LNG facility. It's the specialized hardware that 00:14:34.600 --> 00:14:36.700 makes the global natural gas trade possible. 00:14:36.940 --> 00:14:38.740 And we also see them in more traditional chemical 00:14:38.740 --> 00:14:41.960 applications, producing things like epoxy additives, 00:14:42.000 --> 00:14:44.799 advanced coatings, and adhesives. These are listed 00:14:44.799 --> 00:14:47.500 as chemical intermediates, which is a term we 00:14:47.500 --> 00:14:49.320 should probably define for you. Yeah, that's 00:14:49.320 --> 00:14:51.759 a good idea. A chemical intermediate is a compound 00:14:51.759 --> 00:14:53.879 that's produced during one stage of a chemical 00:14:53.879 --> 00:14:56.340 synthesis that is then used as the raw material 00:14:56.340 --> 00:14:58.440 for the next stage. So they're not the final 00:14:58.440 --> 00:15:00.679 product you buy in a store. Right. They are components 00:15:00.679 --> 00:15:03.259 used to make the final product. For example, 00:15:03.440 --> 00:15:05.980 their epoxy additives might be sold to another 00:15:05.980 --> 00:15:08.179 company to manufacture high performance industrial 00:15:08.179 --> 00:15:10.779 flooring or, you know, composite aircraft parts. 00:15:11.080 --> 00:15:14.629 They're a key link in a very long chain. And 00:15:14.629 --> 00:15:16.710 because many of these specialty gases, like the 00:15:16.710 --> 00:15:18.870 ones used in electronics or pharmaceuticals, 00:15:18.889 --> 00:15:22.570 are highly toxic or reactive or just dangerous, 00:15:22.809 --> 00:15:25.970 the company also provides the necessary manufacturing 00:15:25.970 --> 00:15:29.100 hardware. Specifically, the provision of gas 00:15:29.100 --> 00:15:31.779 cabinets. Right. And a gas cabinet is far more 00:15:31.779 --> 00:15:34.460 than a simple storage locker. It's a precisely 00:15:34.460 --> 00:15:37.179 engineered containment system. It's designed 00:15:37.179 --> 00:15:39.980 to house gas cylinders under strict flow and 00:15:39.980 --> 00:15:42.379 safety control. Safety device. A very sophisticated 00:15:42.379 --> 00:15:45.460 one. They ensure that toxic specialty gases are 00:15:45.460 --> 00:15:47.779 delivered to the process tool safely, preventing 00:15:47.779 --> 00:15:50.019 leaks, managing the high pressures involved. 00:15:50.279 --> 00:15:52.860 It just underscores their role as a comprehensive 00:15:52.860 --> 00:15:56.389 solutions provider, not just a gas vendor. That 00:15:56.389 --> 00:15:59.429 is immense breadth from refinery inputs and LNG 00:15:59.429 --> 00:16:02.169 technology all the way down to safety containment 00:16:02.169 --> 00:16:05.070 hardware. But as we mentioned earlier, if you 00:16:05.070 --> 00:16:07.149 want the ultimate high tech application that 00:16:07.149 --> 00:16:09.929 binds their past to their present, you have to 00:16:09.929 --> 00:16:13.070 look up straight to space. This is the historical 00:16:13.070 --> 00:16:15.289 through line. This is what connects with those 00:16:15.289 --> 00:16:19.250 mobile oxygen generators of WWII to modern rocketry. 00:16:19.710 --> 00:16:22.970 Our sources detail a longstanding, deep working 00:16:22.970 --> 00:16:25.789 relationship with NASA that spans five decades. 00:16:26.149 --> 00:16:28.789 I mean, just think about the immense trust that 00:16:28.789 --> 00:16:31.350 is placed in the supplier when the product is 00:16:31.350 --> 00:16:33.769 the literal engine of human space exploration. 00:16:34.210 --> 00:16:36.350 It's a mission critical collaboration built on 00:16:36.350 --> 00:16:39.190 decades of impeccable reliability. Air products 00:16:39.190 --> 00:16:41.950 supplied the liquid hydrogen LH2 and the liquid 00:16:41.950 --> 00:16:44.929 oxygen LOX fuel used for every single space shuttle 00:16:44.929 --> 00:16:46.809 external tank launch. And those are the most 00:16:46.809 --> 00:16:49.200 powerful cryogenic propellants available. They 00:16:49.200 --> 00:16:51.980 are. They're also incredibly difficult and dangerous 00:16:51.980 --> 00:16:54.379 to handle because of their extremely cold temperatures. 00:16:54.679 --> 00:16:56.960 We're talking hundreds of degrees below zero. 00:16:57.220 --> 00:17:00.980 The precision required to produce, store, and 00:17:00.980 --> 00:17:03.799 then deliver these cryogenic propellants must 00:17:03.799 --> 00:17:07.799 be beyond staggering. There is just zero margin 00:17:07.799 --> 00:17:11.220 for error in the final product. Zero. Any impurity 00:17:11.220 --> 00:17:13.380 could cause a catastrophic failure. And that 00:17:13.380 --> 00:17:15.920 immense legacy, it doesn't just start with the 00:17:15.920 --> 00:17:18.160 space shuttle program. No, the relationship traces 00:17:18.160 --> 00:17:20.500 back much further. It does. They provided liquid 00:17:20.500 --> 00:17:23.200 hydrogen for the earlier Mercury and Apollo missions 00:17:23.200 --> 00:17:26.140 as well. So from the earliest human spaceflight 00:17:26.140 --> 00:17:28.519 efforts in the 1960s right up through the end 00:17:28.519 --> 00:17:31.680 of the space shuttle program in 2011, this one 00:17:31.680 --> 00:17:34.539 company was providing the literal propulsion. 00:17:35.039 --> 00:17:37.559 It just solidifies their status as masters of 00:17:37.559 --> 00:17:40.059 cryogenic chemistry. That is the ultimate. proof 00:17:40.059 --> 00:17:42.440 of expertise. You are not getting that contract 00:17:42.440 --> 00:17:45.299 without proving absolute mastery over gas purity 00:17:45.299 --> 00:17:47.799 and handling. And speaking of demanding technological 00:17:47.799 --> 00:17:50.759 challenges, that level of rigor leads us seamlessly 00:17:50.759 --> 00:17:53.240 into Section 3, where we discuss their impact 00:17:53.240 --> 00:17:56.220 on fundamental science and their groundbreaking 00:17:56.220 --> 00:17:58.519 environmental contributions. It's fascinating, 00:17:58.680 --> 00:18:01.220 isn't it, that the same rigor required to safely 00:18:01.220 --> 00:18:04.359 launch a rocket is also applied to redefine universal 00:18:04.359 --> 00:18:07.700 physical constants. Okay, let's talk about the 00:18:07.700 --> 00:18:09.920 scientific contribution, because this is truly 00:18:09.920 --> 00:18:12.980 one of the most surprising aha moments in our 00:18:12.980 --> 00:18:15.759 source material. In 2013, one of their specific 00:18:15.759 --> 00:18:18.339 products was utilized to help determine a more 00:18:18.339 --> 00:18:21.400 accurate value for the Boltzmann constant. This 00:18:21.400 --> 00:18:23.660 is a detail that just sticks with you. To understand 00:18:23.660 --> 00:18:25.480 why this matters, we have to talk about what 00:18:25.480 --> 00:18:28.099 the Boltzmann constant even is. It's often denoted 00:18:28.099 --> 00:18:30.480 as K. Right. It's a fundamental constant of physics. 00:18:30.720 --> 00:18:33.079 It is. It relates the average kinetic energy 00:18:33.079 --> 00:18:35.720 of particles in a gas to the temperature of that 00:18:35.720 --> 00:18:38.880 gas. Essentially, it's the bridge between the 00:18:38.880 --> 00:18:41.380 microscopic world of atoms and the macroscopic 00:18:41.380 --> 00:18:44.019 world of thermodynamics and observable temperature. 00:18:44.339 --> 00:18:47.380 So refining its value has massive implications 00:18:47.380 --> 00:18:49.799 across all of physics, and especially in the 00:18:49.799 --> 00:18:52.200 field of metrology, which is the science of measurement. 00:18:52.829 --> 00:18:55.549 Why would an industrial gas company be involved 00:18:55.549 --> 00:18:57.970 in refining this constant? The specific product 00:18:57.970 --> 00:19:00.690 used was the company's high -purity built -in 00:19:00.690 --> 00:19:03.569 purifier argon. To measure the Boltzmann constant 00:19:03.569 --> 00:19:06.450 with unprecedented precision, scientists rely 00:19:06.450 --> 00:19:08.829 on something called acoustic gas thermometry. 00:19:09.069 --> 00:19:11.470 Which is, exactly. They measure the speed of 00:19:11.470 --> 00:19:14.769 sound in a monatomic gas -like argon at various 00:19:14.769 --> 00:19:16.950 temperatures to infer the thermal properties 00:19:16.950 --> 00:19:20.640 of the gas. The speed of sound is directly related 00:19:20.640 --> 00:19:22.859 to the movement of the atoms, which is related 00:19:22.859 --> 00:19:24.799 to the temperature through the Boltzmann constant. 00:19:25.019 --> 00:19:27.859 And the requirement for purity? It must be virtually 00:19:27.859 --> 00:19:31.799 flawless. Any contamination, even trace amounts 00:19:31.799 --> 00:19:34.240 of other gases like water vapor or nitrogen, 00:19:34.539 --> 00:19:36.880 would introduce minute molecular interference. 00:19:37.319 --> 00:19:39.680 It would cause the pressure and volume readings 00:19:39.680 --> 00:19:42.059 to be inaccurate, throwing off the whole calculation. 00:19:42.970 --> 00:19:45.430 So Air Products specialized argon, which was 00:19:45.430 --> 00:19:47.890 processed using their proprietary built -in purifier 00:19:47.890 --> 00:19:50.849 technology, achieved the necessary level of near 00:19:50.849 --> 00:19:53.289 -absolute purity to eliminate these variables. 00:19:53.509 --> 00:19:56.049 It provided the reliable medium needed for the 00:19:56.049 --> 00:19:58.289 definitive measurement. That's such a powerful 00:19:58.289 --> 00:20:00.930 connection. The ability to strip contaminants 00:20:00.930 --> 00:20:02.890 from the atmosphere, perfected through decades 00:20:02.890 --> 00:20:05.869 of industrial supply, applied directly to advancing 00:20:05.869 --> 00:20:08.470 fundamental human knowledge. It just confirms 00:20:08.470 --> 00:20:11.069 their status as a specialized technology powerhouse. 00:20:11.480 --> 00:20:14.380 Absolutely. The rigor required for that level 00:20:14.380 --> 00:20:17.259 of purity is their signature expertise. And they 00:20:17.259 --> 00:20:19.539 have also applied that intense rigor to their 00:20:19.539 --> 00:20:22.599 own operations, particularly regarding sustainability 00:20:22.599 --> 00:20:25.019 and corporate responsibility in the 21st century. 00:20:25.200 --> 00:20:27.960 Their track record here is substantiated by concrete 00:20:27.960 --> 00:20:31.440 metrics, not just lofty goals. Let's look at 00:20:31.440 --> 00:20:33.920 their water conservation success recognized all 00:20:33.920 --> 00:20:37.339 the way back in 2001. They received an award 00:20:37.339 --> 00:20:40.660 of merit from the Water Use Association for outstanding 00:20:40.660 --> 00:20:43.359 water conservation efforts. And this is not a 00:20:43.359 --> 00:20:45.680 small symbolic gesture. We have the specific 00:20:45.680 --> 00:20:48.480 metrics that make this achievement quantifiable 00:20:48.480 --> 00:20:51.019 and highly impactful. Their conservation efforts 00:20:51.019 --> 00:20:53.000 involved converting their water source for the 00:20:53.000 --> 00:20:54.980 cooling process at their Santa Clara, California 00:20:54.980 --> 00:20:57.240 facility. And what was the key change they made? 00:20:57.549 --> 00:20:59.730 They converted to using recycled water instead 00:20:59.730 --> 00:21:02.250 of potable, drinking -quality water. Cooling 00:21:02.250 --> 00:21:04.829 processes in industrial facilities are notoriously 00:21:04.829 --> 00:21:07.150 thirsty. They use a huge amount of water. So 00:21:07.150 --> 00:21:09.210 by making the switch... They achieved annual 00:21:09.210 --> 00:21:12.650 savings of 62 million U .S. gallons. That's over 00:21:12.650 --> 00:21:15.710 230 ,000 cubic meters of drinking water annually. 00:21:16.109 --> 00:21:19.849 62 million gallons annually from a single facility's 00:21:19.849 --> 00:21:22.660 cooling system. That demonstrates real operational 00:21:22.660 --> 00:21:25.799 change and a real commitment to reducing their 00:21:25.799 --> 00:21:28.700 footprint in a high -demand, arid region like 00:21:28.700 --> 00:21:31.319 Santa Clara. It goes far beyond simply adhering 00:21:31.319 --> 00:21:34.079 to minimum regulatory standards. It does. And 00:21:34.079 --> 00:21:36.599 furthermore, they have consistently been recognized 00:21:36.599 --> 00:21:38.700 for their broader climate and carbon management 00:21:38.700 --> 00:21:41.119 strategies. They were named to the prestigious 00:21:41.119 --> 00:21:43.660 Dow Jones Sustainability North America Index 00:21:43.660 --> 00:21:47.319 for four consecutive years, from 2008 to 2011. 00:21:47.660 --> 00:21:50.220 And being on that index is a big deal. It placed 00:21:50.220 --> 00:21:52.099 them among the top tier of companies globally 00:21:52.099 --> 00:21:54.859 for economic, environmental, and social performance 00:21:54.859 --> 00:21:57.140 during that time. And recognition also came from 00:21:57.140 --> 00:22:00.259 groups like Maplecroft. In 2004, they were named 00:22:00.259 --> 00:22:03.660 Maplecraft Climate Innovation Indexes, or CII's. 00:22:04.240 --> 00:22:07.519 That evaluation placed them as the 17th largest 00:22:07.519 --> 00:22:09.900 U .S.-based company specifically for climate 00:22:09.900 --> 00:22:12.160 -related innovation and for having robust carbon 00:22:12.160 --> 00:22:14.619 management programs. It's important to understand 00:22:14.619 --> 00:22:16.900 what carbon management means for a gas company. 00:22:17.140 --> 00:22:20.019 It involves optimizing their massive energy consumption, 00:22:20.460 --> 00:22:23.039 implementing energy -efficient production technologies, 00:22:23.319 --> 00:22:26.500 and actively seeking to capture or reuse CO2 00:22:26.500 --> 00:22:28.779 that might otherwise be vented into the atmosphere. 00:22:29.059 --> 00:22:31.539 And this historical focus is clearly driving 00:22:31.539 --> 00:22:34.380 their current investments. SourceMaterial confirms 00:22:34.380 --> 00:22:36.740 their active involvement in several preeminent 00:22:36.740 --> 00:22:39.319 carbon capture and storage demonstration projects 00:22:39.319 --> 00:22:41.539 around the world today. They are leveraging their 00:22:41.539 --> 00:22:44.140 core expertise in gas separation and handling 00:22:44.140 --> 00:22:46.619 directly into climate solutions for heavy industry. 00:22:46.799 --> 00:22:49.960 It's a natural evolution. A company that separates 00:22:49.960 --> 00:22:52.519 nitrogen from oxygen in the atmosphere can certainly 00:22:52.519 --> 00:22:55.480 separate CO2 from industrial effluent. They also 00:22:55.480 --> 00:22:58.119 demonstrated remarkable foresight regarding hydrogen 00:22:58.119 --> 00:23:01.539 as a clean fuel source. Back in 2010, they won 00:23:01.539 --> 00:23:03.559 the Rushlight Hydrogen Awards. Fuel Cells Industry 00:23:03.559 --> 00:23:06.519 Award for their Series 10 hydrogen fueling station. 00:23:06.839 --> 00:23:09.680 This award specifically recognized their work 00:23:09.680 --> 00:23:12.380 in the UK and Ireland for its role in reducing 00:23:12.380 --> 00:23:15.380 carbon emissions. And this isn't just a lab project. 00:23:15.440 --> 00:23:18.500 This was a deployable commercial solution for 00:23:18.500 --> 00:23:21.640 hydrogen infrastructure over a decade ago. It 00:23:21.640 --> 00:23:23.720 showcases their early commitment to the hydrogen 00:23:23.720 --> 00:23:26.619 economy long before it became a, you know, a 00:23:26.619 --> 00:23:28.940 global government priority. And to wrap up this 00:23:28.940 --> 00:23:30.980 section on their corporate identity. They were 00:23:30.980 --> 00:23:34.400 recognized more broadly in 2010 by being included 00:23:34.400 --> 00:23:36.900 in Corporate Responsibility Magazine's 100 Best 00:23:36.900 --> 00:23:39.400 Corporate Citizens list. Which highlights that 00:23:39.400 --> 00:23:41.579 their focus extends beyond just environmental 00:23:41.579 --> 00:23:43.980 metrics and into broader social and governance 00:23:43.980 --> 00:23:47.470 areas as well. So we have a clear picture. a 00:23:47.470 --> 00:23:49.990 company built on wartime necessity, anchored 00:23:49.990 --> 00:23:52.549 by technological mastery and cryogenics impurity, 00:23:52.670 --> 00:23:55.410 and operating as a responsible, forward -thinking 00:23:55.410 --> 00:23:57.710 corporate citizen for decades. And that sets 00:23:57.710 --> 00:23:59.990 the stage perfectly for Section 4, which deals 00:23:59.990 --> 00:24:02.130 with the modern company, the intense strategic 00:24:02.130 --> 00:24:05.069 transformation, the geopolitical pivots, and 00:24:05.069 --> 00:24:07.630 the startling recent financial results. This 00:24:07.630 --> 00:24:09.609 is where we see the immense pressure of corporate 00:24:09.609 --> 00:24:12.619 realignment and global instability. This modern 00:24:12.619 --> 00:24:15.400 era is really defined by a philosophical shift. 00:24:15.740 --> 00:24:18.880 A profound strategic decision made by the leadership 00:24:18.880 --> 00:24:21.799 to narrow the company's focus almost exclusively 00:24:21.799 --> 00:24:25.559 back to core industrial gases. It was a move 00:24:25.559 --> 00:24:27.799 to simplify and sharpen the business model. It 00:24:27.799 --> 00:24:30.339 was. Let's explore the rationale behind this 00:24:30.339 --> 00:24:33.200 divestiture philosophy. Before the major spinoffs, 00:24:33.220 --> 00:24:35.859 Air Products was a much broader conglomerate. 00:24:36.240 --> 00:24:38.720 Why did management feel the need to shed what 00:24:38.720 --> 00:24:41.619 were profitable divisions? This ties back to 00:24:41.619 --> 00:24:44.180 what investors often call the conglomerate discount. 00:24:44.359 --> 00:24:46.640 When a company operates disparate businesses, 00:24:46.900 --> 00:24:49.099 you know, industrial gases, specialty chemicals, 00:24:49.319 --> 00:24:52.299 materials technologies, the market often struggles 00:24:52.299 --> 00:24:55.329 to value it accurately. So the stock price doesn't 00:24:55.329 --> 00:24:57.710 reflect the sum of its parts. Exactly. Investors, 00:24:57.769 --> 00:25:00.089 especially in recent years, prefer focus. They 00:25:00.089 --> 00:25:01.869 want to know exactly what they're buying. The 00:25:01.869 --> 00:25:04.250 previous leadership under Sefi Ghasemi aimed 00:25:04.250 --> 00:25:07.230 to unlock shareholder value by creating a pure 00:25:07.230 --> 00:25:10.130 play industrial gas giant. So let's detail that 00:25:10.130 --> 00:25:12.349 massive restructuring, starting with the spinoff. 00:25:12.369 --> 00:25:14.589 The intent to spin off the materials technologies 00:25:14.589 --> 00:25:18.140 business was announced in 2015. Right. And the 00:25:18.140 --> 00:25:20.920 result was the creation of a brand new standalone 00:25:20.920 --> 00:25:23.839 publicly traded company named Versam Materials. 00:25:24.039 --> 00:25:27.299 The spinoff was completed on October 3, 2016. 00:25:27.779 --> 00:25:30.119 And what did Versam do? Versam was specifically 00:25:30.119 --> 00:25:32.839 focused on high purity chemicals and materials 00:25:32.839 --> 00:25:35.180 for the semiconductor and electronics industries, 00:25:35.420 --> 00:25:38.299 a highly technical and profitable niche, but 00:25:38.299 --> 00:25:41.220 one that didn't fit that new pure gas strategy. 00:25:41.339 --> 00:25:44.240 And the decision proved sound for Versam, right? 00:25:44.700 --> 00:25:46.640 Because they found a perfect, high -value home 00:25:46.640 --> 00:25:49.279 in a different sector shortly after. They did, 00:25:49.420 --> 00:25:52.059 very quickly. Versam was later acquired by the 00:25:52.059 --> 00:25:54.240 major pharmaceutical and science company Merck. 00:25:54.420 --> 00:25:56.920 This separation allowed that specific business 00:25:56.920 --> 00:25:59.559 unit to find its ultimate high -value home in 00:25:59.559 --> 00:26:02.259 a related science sector. It really validated 00:26:02.259 --> 00:26:04.079 the idea that the business was better off standing 00:26:04.079 --> 00:26:07.140 alone. But the divestiture didn't stop with Versam. 00:26:07.240 --> 00:26:10.660 In January 2017, they completed the sale of the 00:26:10.660 --> 00:26:13.599 performance materials division to Avonic, a major 00:26:13.599 --> 00:26:15.720 German specialty chemicals company. This was 00:26:15.720 --> 00:26:18.440 the second equally defining sale in quick succession. 00:26:18.759 --> 00:26:21.359 Performance materials focused on areas like advanced 00:26:21.359 --> 00:26:23.700 coatings, adhesives, and specialty additives. 00:26:23.880 --> 00:26:27.000 So after these two massive sales, what was left? 00:26:27.529 --> 00:26:29.950 The company was left focused squarely and purely 00:26:29.950 --> 00:26:32.769 on its industrial gases business, the production, 00:26:32.930 --> 00:26:35.289 delivery, and application of oxygen, nitrogen, 00:26:35.549 --> 00:26:38.769 hydrogen, argon, and all the associated equipment. 00:26:39.049 --> 00:26:42.089 This strategic shift placed them in a highly 00:26:42.089 --> 00:26:45.150 focused, capital -intensive position, just as 00:26:45.150 --> 00:26:47.970 the world entered a period of extreme geopolitical 00:26:47.970 --> 00:26:50.450 volatility. And that forced them to navigate 00:26:50.450 --> 00:26:52.809 some significant economic headwinds starting 00:26:52.809 --> 00:26:56.460 in 2022. The first major headwind was the Russia 00:26:56.460 --> 00:26:59.140 divestiture following the 2022 invasion of Ukraine. 00:26:59.400 --> 00:27:01.240 And this is an action that we have to report 00:27:01.240 --> 00:27:03.940 on impartially, relying strictly on the documentation 00:27:03.940 --> 00:27:06.819 of corporate actions. Right. Initially, when 00:27:06.819 --> 00:27:08.779 international sanctions were levied against Russia, 00:27:09.000 --> 00:27:10.920 the company took the position of continuing its 00:27:10.920 --> 00:27:13.339 operations in the country. And that stance attracted 00:27:13.339 --> 00:27:16.039 considerable attention during a period when many 00:27:16.039 --> 00:27:18.240 multinationals were rapidly exiting the market. 00:27:18.400 --> 00:27:20.970 It did. However, the source material confirms 00:27:20.970 --> 00:27:24.029 that likely due to mounting operational, legal 00:27:24.029 --> 00:27:26.569 or reputational pressure, they reversed that 00:27:26.569 --> 00:27:29.589 position. According to data tracked by the Yale 00:27:29.589 --> 00:27:31.670 School of Management. which details corporate 00:27:31.670 --> 00:27:34.309 responses to the conflict, Air Products has since 00:27:34.309 --> 00:27:37.250 fully divested its interests in Russia. And unwinding 00:27:37.250 --> 00:27:40.089 operations in a major complex market like Russia 00:27:40.089 --> 00:27:43.430 has to be a massive logistical and financial 00:27:43.430 --> 00:27:46.190 challenge for a company that relies on fixed 00:27:46.190 --> 00:27:48.549 assets and long term contracts. Oh, it's immense. 00:27:48.789 --> 00:27:51.430 It just highlights how swiftly global events 00:27:51.430 --> 00:27:54.029 can force a multinational corporation to adjust 00:27:54.029 --> 00:27:56.809 its operational footprint, even at an immense 00:27:56.809 --> 00:27:59.589 cost. And that wasn't the only high profile withdrawal 00:27:59.589 --> 00:28:01.420 they've had. had recently, which demonstrates 00:28:01.420 --> 00:28:04.539 the complexity of navigating public policy. We 00:28:04.539 --> 00:28:07.119 also have the case of the UK Green Hydrogen Project. 00:28:07.440 --> 00:28:09.900 A much more recent strategic pullback dating 00:28:09.900 --> 00:28:13.759 to 2025. And this was a commitment that fit perfectly 00:28:13.759 --> 00:28:16.680 with their historical sustainability goals and 00:28:16.680 --> 00:28:18.920 their long history of hydrogen fueling innovation. 00:28:19.640 --> 00:28:23.440 In 2022, Air Products had announced these ambitious 00:28:23.440 --> 00:28:26.460 plans for the development of a major green hydrogen 00:28:26.460 --> 00:28:29.059 production plant in the Humberside region of 00:28:29.059 --> 00:28:31.319 the United Kingdom. This was intended to be a 00:28:31.319 --> 00:28:34.940 flagship project, a massive commitment to decarbonization 00:28:34.940 --> 00:28:38.319 in a key industrial region of the UK. But then, 00:28:38.460 --> 00:28:41.880 in June 2025, the company pulled the plug. They 00:28:41.880 --> 00:28:44.099 did. They withdrew their involvement and their 00:28:44.099 --> 00:28:46.819 investment entirely. And given their decades 00:28:46.819 --> 00:28:50.059 -long dedication to hydrogen, this was a staggering 00:28:50.059 --> 00:28:52.359 decision. The significance of this withdrawal, 00:28:52.559 --> 00:28:54.859 I think, lies in the specific reason given in 00:28:54.859 --> 00:28:57.420 our source material. They cited a lack of commitment 00:28:57.420 --> 00:28:59.359 by the British government. And that phrase is 00:28:59.359 --> 00:29:01.380 highly instructive. It tells you so much about 00:29:01.380 --> 00:29:03.400 the challenges of the energy transition. What 00:29:03.400 --> 00:29:05.559 does it tell you? Well, when a company like Air 00:29:05.559 --> 00:29:08.319 Products commits to a multi -billion dollar green 00:29:08.319 --> 00:29:11.259 hydrogen facility, they are taking on enormous 00:29:11.259 --> 00:29:13.970 capital risk. They need certainty, certainty 00:29:13.970 --> 00:29:16.609 regarding future demand, pricing and operational 00:29:16.609 --> 00:29:18.789 support from the government. So what would a 00:29:18.789 --> 00:29:21.650 lack of commitment likely mean in this context? 00:29:22.250 --> 00:29:25.109 It suggests a few possibilities, none of which 00:29:25.109 --> 00:29:28.430 are good for massive long term investors. It 00:29:28.430 --> 00:29:30.789 could mean insufficient progress on regulatory 00:29:30.789 --> 00:29:34.369 frameworks, a lack of firm government power purchase 00:29:34.369 --> 00:29:36.529 agreements. Which are essentially guaranteed 00:29:36.529 --> 00:29:40.130 buyers for the high cost green hydrogen. Exactly. 00:29:40.309 --> 00:29:43.470 Or uncertainty surrounding subsidies, which are 00:29:43.470 --> 00:29:45.789 necessary to make green hydrogen competitive 00:29:45.789 --> 00:29:48.410 with cheaper fossil fuel derived alternatives. 00:29:48.869 --> 00:29:51.569 It signals that even the biggest players won't. 00:29:51.660 --> 00:29:54.319 commit billions if the foundational policy framework 00:29:54.319 --> 00:29:57.660 is perceived as unstable or insufficient to de 00:29:57.660 --> 00:30:00.170 -risk the investment. That really sets the high 00:30:00.170 --> 00:30:02.230 -stakes backdrop for the current corporate landscape. 00:30:02.470 --> 00:30:04.250 So let's provide a quick overview of the corporate 00:30:04.250 --> 00:30:06.109 leadership that guided them through these 85 00:30:06.109 --> 00:30:08.970 years of shifts, from wartime scaling to massive 00:30:08.970 --> 00:30:11.690 spinoffs. The company has seen periods of remarkable 00:30:11.690 --> 00:30:14.609 stability. Leonard Poole, the founder, obviously 00:30:14.609 --> 00:30:16.869 holds the longest tenure, leading the company 00:30:16.869 --> 00:30:20.950 from 1940 until 1973. That's a 33 -year run defining 00:30:20.950 --> 00:30:23.309 the foundational structure. And following Poole, 00:30:23.430 --> 00:30:25.869 there was a steady stream of leadership, including 00:30:25.869 --> 00:30:28.769 names like Ed Donley, Dexter Baker, Cap Wagner, 00:30:28.930 --> 00:30:32.170 J .P. Jones, and John Maglade. The recent transitions, 00:30:32.190 --> 00:30:34.450 however, are particularly important for understanding 00:30:34.450 --> 00:30:36.410 the strategic reline that we just discussed. 00:30:37.069 --> 00:30:40.309 Sefi Ghasemi took the helm in 2014, and he was 00:30:40.309 --> 00:30:42.670 the architect of that pure play industrial gas 00:30:42.670 --> 00:30:45.589 strategy. He guided the company through the spinoffs 00:30:45.589 --> 00:30:48.309 of Versam and the sale to Evanek. He led until 00:30:48.309 --> 00:30:51.769 2025. And the current CEO, taking over in 2025, 00:30:51.990 --> 00:30:54.990 is Eduardo F. Menezes, stepping into the role 00:30:54.990 --> 00:30:57.869 of a highly focused industrial giant. And we 00:30:57.869 --> 00:30:59.910 should note that Wayne T. Smith, who played a 00:30:59.910 --> 00:31:02.049 role in that leadership transition, remains as 00:31:02.049 --> 00:31:04.089 chairman. Which ensures institutional knowledge 00:31:04.089 --> 00:31:06.309 is retained during this period of intense focus. 00:31:06.569 --> 00:31:09.170 This focused, highly capitalized company brings 00:31:09.170 --> 00:31:11.430 us to our final and perhaps most interesting 00:31:11.430 --> 00:31:14.750 segment of the deep dive, the 2025 financial 00:31:14.750 --> 00:31:17.670 figures. This is where we see the costs of the 00:31:17.670 --> 00:31:19.809 transition laid bare. It really is a financial 00:31:19.809 --> 00:31:22.930 paradox. On the top line, the revenue in 2025 00:31:22.930 --> 00:31:28.519 was U .S. $12 .4 billion. billion dollars that 00:31:28.519 --> 00:31:31.319 is a colossal revenue stream confirming their 00:31:31.319 --> 00:31:33.640 continued dominance in the industrial gas sector 00:31:33.640 --> 00:31:36.099 that revenue confirms the operational strength 00:31:36.099 --> 00:31:39.319 of the pure play gas business no question however 00:31:39.319 --> 00:31:42.539 the 2025 bottom line figures are striking and 00:31:42.539 --> 00:31:44.240 this is where the context becomes absolutely 00:31:44.240 --> 00:31:47.539 crucial for you we see significant negative figures 00:31:47.539 --> 00:31:50.180 recorded in key income areas. Specifically, the 00:31:50.180 --> 00:31:53.920 operating income for 2025 was a negative $877 00:31:53.920 --> 00:31:57.480 million. And the net income, the actual profit 00:31:57.480 --> 00:32:01.380 figure, was negative $395 million. Those are 00:32:01.380 --> 00:32:03.559 huge losses for a company that is fundamentally 00:32:03.559 --> 00:32:05.740 healthy. This is a critical moment for financial 00:32:05.740 --> 00:32:07.920 learners because these figures do not mean the 00:32:07.920 --> 00:32:09.720 business suddenly stopped making money on its 00:32:09.720 --> 00:32:11.619 gas sales. That's not what's happening. It is 00:32:11.619 --> 00:32:13.940 happening. When a company executes a major strategic 00:32:13.940 --> 00:32:16.180 realignment, the accounting for those divestitures 00:32:16.180 --> 00:32:18.519 and geopolitical shifts like the Russia pullout 00:32:18.519 --> 00:32:22.140 can generate massive one -time non -cash charges. 00:32:22.539 --> 00:32:24.380 Can you give us an analogy to explain why they 00:32:24.380 --> 00:32:26.799 lost almost $900 million in operating income 00:32:26.799 --> 00:32:29.420 while bringing in $12 billion in revenue? Sure. 00:32:29.480 --> 00:32:31.539 Think of it. it like a family that sells off 00:32:31.539 --> 00:32:36.279 two major long -held assets, say a separate vacation 00:32:36.279 --> 00:32:39.759 property and a side business. Even if those assets 00:32:39.759 --> 00:32:42.380 were valuable when you sell them, you might have 00:32:42.380 --> 00:32:44.440 to take the immediate hit for all the accumulated 00:32:44.440 --> 00:32:47.859 costs of separation, legal fees, impairment charges, 00:32:48.160 --> 00:32:51.180 and non -cash write -downs in that specific tax 00:32:51.180 --> 00:32:52.980 year. You're clearing the balance sheet. You're 00:32:52.980 --> 00:32:55.480 clearing the balance sheet. For air products, 00:32:55.740 --> 00:32:58.140 the costs associated with shuttering or selling 00:32:58.140 --> 00:33:01.160 assets in Russia, combined with potentially large 00:33:01.160 --> 00:33:03.619 impairment charges related to the UK hydrogen 00:33:03.619 --> 00:33:06.839 withdrawal, are often recorded as enormous expenses 00:33:06.839 --> 00:33:09.349 on the income state. Impairment charges are key 00:33:09.349 --> 00:33:11.829 here, right? Yes. An impairment charge is simply 00:33:11.829 --> 00:33:14.589 recognizing that an asset you own, like a plant 00:33:14.589 --> 00:33:16.769 in Russia or early infrastructure costs in the 00:33:16.769 --> 00:33:19.450 UK, is now worth less than the value you carried 00:33:19.450 --> 00:33:21.930 it for on your books. Because you decided to 00:33:21.930 --> 00:33:24.450 exit the market? Precisely. You have to write 00:33:24.450 --> 00:33:26.190 down that loss immediately, even if it's not 00:33:26.190 --> 00:33:28.730 cash going out the door today. It makes the profit 00:33:28.730 --> 00:33:30.849 and loss statement look awful for a year, but 00:33:30.849 --> 00:33:33.529 it's a structural cleanup. And we can confirm 00:33:33.529 --> 00:33:36.089 that this is a temporary structural anomaly. 00:33:36.670 --> 00:33:39.150 Not a sign of imminent crisis when we look at 00:33:39.150 --> 00:33:42.190 their equity position. Absolutely. Despite those 00:33:42.190 --> 00:33:45.609 huge negative income figures, the total equity, 00:33:45.789 --> 00:33:47.710 which represents the underlying value of the 00:33:47.710 --> 00:33:50.430 assets owned by the shareholders, remains substantially 00:33:50.430 --> 00:33:55.009 positive at 15 point. $2 billion. And that $15 00:33:55.009 --> 00:33:58.349 billion provides the necessary financial buffer 00:33:58.349 --> 00:34:01.109 to absorb those hundreds of millions in transitional 00:34:01.109 --> 00:34:03.970 costs and losses. It confirms the underlying 00:34:03.970 --> 00:34:06.170 strength and asset base of the newly focused 00:34:06.170 --> 00:34:08.789 company. So the final data point we leave you 00:34:08.789 --> 00:34:11.429 with is a picture of a company that has successfully 00:34:11.429 --> 00:34:14.949 achieved its pure play vision. But 2025 was the 00:34:14.949 --> 00:34:17.050 year they paid the steep immediate financial 00:34:17.050 --> 00:34:19.269 price for that strategic realignment and for 00:34:19.269 --> 00:34:21.869 navigating global instability. Focused immensely. 00:34:22.219 --> 00:34:24.239 valuable in terms of assets, but dealing with 00:34:24.239 --> 00:34:27.019 the complex, costly reality of being a massive 00:34:27.019 --> 00:34:30.039 global player in a volatile world. So let's synthesize 00:34:30.039 --> 00:34:32.679 this deep dive. We've covered a remarkable trajectory, 00:34:32.940 --> 00:34:35.699 from Leonard Parker Poole's foundational idea 00:34:35.699 --> 00:34:38.099 of on -site production in Detroit, accelerated 00:34:38.099 --> 00:34:40.920 by manufacturing mobile oxygen generators during 00:34:40.920 --> 00:34:44.579 WWII, to fueling the Mercury, Apollo, and Space 00:34:44.579 --> 00:34:46.949 Shuttle programs. We saw how that commitment 00:34:46.949 --> 00:34:49.369 to purity extends from rocket science down into 00:34:49.369 --> 00:34:52.250 fundamental physics, with their high purity argon 00:34:52.250 --> 00:34:54.369 contributing to the refinement of the Boltzmann 00:34:54.369 --> 00:34:57.210 constant, and how that translates into concrete 00:34:57.210 --> 00:34:59.710 environmental achievements like conserving 62 00:34:59.710 --> 00:35:02.829 million gallons of drinking water annually. The 00:35:02.829 --> 00:35:05.190 key insight in the modern era is how corporate 00:35:05.190 --> 00:35:08.119 identity can shift so dramatically. The journey 00:35:08.119 --> 00:35:10.320 from a sprawling, diverse chemicals and materials 00:35:10.320 --> 00:35:12.900 company with divisions later sold to Merck and 00:35:12.900 --> 00:35:15.360 Eveneg to a purely focused industrial gas giant 00:35:15.360 --> 00:35:18.380 was complex, expensive and driven by a philosophical 00:35:18.380 --> 00:35:21.619 desire to unlock shareholder value through singularity 00:35:21.619 --> 00:35:24.579 of purpose. We've given you the key facts, the 00:35:24.579 --> 00:35:28.840 $41 billion scale, the specific high -tech products, 00:35:29.059 --> 00:35:32.000 the decades of dedication to hydrogen and the 00:35:32.000 --> 00:35:34.380 corporate decisions that make this company a 00:35:34.380 --> 00:35:37.380 hidden giant of global industry. Essential to 00:35:37.380 --> 00:35:39.860 everything from semiconductor manufacturing to 00:35:39.860 --> 00:35:42.199 food preservation. You now have the shortcut 00:35:42.199 --> 00:35:44.860 to understanding air products. And that brings 00:35:44.860 --> 00:35:47.099 us to our final provocative thought for you to 00:35:47.099 --> 00:35:50.079 consider as you wrap up this deep dive. We saw 00:35:50.079 --> 00:35:52.840 that Air Products has a deep, demonstrable commitment 00:35:52.840 --> 00:35:56.119 to sustainability, carbon management and hydrogen 00:35:56.119 --> 00:35:59.260 innovation. So what does the sudden and highly 00:35:59.260 --> 00:36:01.860 public withdrawal from a massive green hydrogen 00:36:01.860 --> 00:36:04.820 project in the UK, a project perfectly aligned 00:36:04.820 --> 00:36:07.760 with their stated goals, citing a lack of commitment 00:36:07.760 --> 00:36:10.219 from a national government? What does that truly 00:36:10.219 --> 00:36:12.340 imply about the current state of global energy 00:36:12.340 --> 00:36:14.760 transition? It raises a vital question, I think, 00:36:14.780 --> 00:36:17.380 about the complex intersection of private investment 00:36:17.380 --> 00:36:19.739 and public policy. Does the withdrawal signal 00:36:19.739 --> 00:36:22.340 that governments need to de -risk these massive 00:36:22.340 --> 00:36:25.349 first of a kind energy transition projects? Maybe 00:36:25.349 --> 00:36:27.789 through guaranteed offtake contracts or stronger 00:36:27.789 --> 00:36:30.449 subsidies to attract the necessary industrial 00:36:30.449 --> 00:36:33.309 giants who possess the technology in the capital. 00:36:33.469 --> 00:36:35.750 Or does it highlight that even the most committed 00:36:35.750 --> 00:36:38.610 corporate climate pledges can be abandoned when 00:36:38.610 --> 00:36:40.650 the financial uncertainty surrounding regulatory 00:36:40.650 --> 00:36:43.889 stability just becomes too high? It's a tension 00:36:43.889 --> 00:36:46.889 between political will and private capital that 00:36:46.889 --> 00:36:49.510 will define the success or failure of decarbonization 00:36:49.510 --> 00:36:52.210 efforts worldwide. It's something well worth 00:36:52.210 --> 00:36:54.480 mulling over. Thank you for diving deep with 00:36:54.480 --> 00:36:55.559 us today until next time.