Air Products and Chemicals APD · USD

BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION We determine our reportable segments based on the manner in which our Chief Operating Decision Maker ("CODM") reviews financial results and allocates resources. The accounting policies applied to our reportable segments are consistent with those used in the preparation of our consolidated financial statements. Our reportable segments are as follows:•Americas;•Asia;•Europe;•Middle East and India; and•Corporate and otherThe Americas, Asia, Europe, and Middle East and India segments represent the operations of our regional industrial gases business. Each of these segments qualifies as an individual operating segment and does not reflect the aggregation of multiple operating segments. Corporate and other consists of two operating segments that meet the aggregation criteria under GAAP. All segments also include our share of results from several equity method joint ventures, the largest of which operate in Algeria, China, India, Italy, Mexico, and Saudi Arabia.Our CODM, who is our Chief Executive Officer, evaluates the performance of our reportable segments through segment operating income. This measure is reviewed regularly in internal management reports and serves as a key metric to monitor actual results against forecasts and prior periods. Segment operating income informs decisions related to resource allocation, including capital investments and employees, and supports strategic planning and long-term project development.Segment operating income does not include gains or losses that we do not consider to be indicative of our underlying business performance, such as charges related to business or asset actions. Regional Industrial GasesThe industrial gases business in the regional segments produces and sells gases to diversified customers in dozens of industries, including those in refining, chemicals, metals, electronics, manufacturing, medical, and food. Our industrial gas portfolio includes atmospheric gases such as oxygen, nitrogen, and argon; process gases such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas (a mixture of hydrogen and carbon monoxide), and specialty gases. We offer our industrial gas products through either the on-site gases supply mode or the merchant gases supply mode, both of which are described in Note 7, Revenue Recognition.This business also develops, builds, and operates equipment for the production or processing of gases.

REVENUE RECOGNITIONNature of Goods and ServicesThe principal activities from which we generate revenue under our contracts with customers are described below, along with the related revenue recognition policies. For a comprehensive overview of these policies, including payment terms and presentation, refer to Note 1, Basis of Presentation and Major Accounting Policies. Regional Industrial GasesOur industrial gases business, which is organized and operated regionally in the Americas, Asia, Europe, and Middle East and India segments, produces and sells atmospheric gases such as oxygen, nitrogen, and argon (primarily recovered by the cryogenic distillation of air); process gases such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas (a mixture of hydrogen and carbon monoxide); and specialty gases. The majority of our revenue is generated from our sale of gas customers within these regional industrial gases segments.We distribute product to our industrial gas customers through either our on-site or merchant supply mode depending on various factors, including the customer's volume requirements and location. Each sale of gas supply mode is described below:On-site Gases—This supply mode serves customers who require large volumes of gases and have relatively constant demand. Gases are produced and supplied through large facilities constructed or acquired on or near customer facilities, or by pipeline systems from centralized production locations. These sale of gas arrangements are generally governed by long-term contracts ranging from 15- to 20-years. We also deliver smaller quantities of product through small on-site plants (cryogenic or non-cryogenic generators), generally under 10- to 15-year contracts. Contracts in this supply mode commonly include fixed monthly charges and/or minimum purchase requirements with price escalation provisions that are typically based on external indices. Revenue associated with this supply mode is generally recognized over time during the period in which we deliver or make available the agreed upon quantity of goods.Merchant Gases—This supply mode includes liquid bulk and packaged gas products. Liquid bulk gases are delivered in either liquid or gaseous form via tanker or tube trailer and stored, usually in its liquid state, in equipment that we typically design and install at the customer’s site for vaporizing into a gaseous state as needed.

COMMITMENTS AND CONTINGENCIES LitigationWe are involved in various legal proceedings, including commercial, competition, environmental, intellectual property, regulatory, product liability, and insurance matters. We do not currently believe there are any legal proceedings for which it is reasonably possible, individually or in the aggregate, to have a material impact on our financial condition, results of operations, or cash flows.In September 2010, the Brazilian Administrative Council for Economic Defense ("CADE") issued a decision against our Brazilian subsidiary, Air Products Brasil Ltda., and several other Brazilian industrial gas companies for alleged anticompetitive activities. CADE imposed a civil fine of R$179.2 million (approximately $34 as of 30 September 2025) on Air Products Brasil Ltda., which was based on a percentage of our total revenue in Brazil in 2003. In May 2014, our appeal was granted and the fine was dismissed. CADE appealed that ruling and in October 2025 the Supreme Court of Brazil rendered a judgment confirming the appellate ruling, which annulled the administrative proceeding and the fine imposed by CADE. Under applicable law, no further remedies are available and the judgment is final.EnvironmentalIn the normal course of business, we are involved in legal proceedings under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA," the federal Superfund law), the Resource Conservation and Recovery Act ("RCRA"), and similar state and foreign environmental laws relating to the designation of certain sites for investigation or remediation. Presently, there are 26 sites on which a final settlement or remediation has not been achieved where we, usually along with others, have been designated as a potentially responsible party by environmental authorities or are otherwise engaged in investigation or remediation, including cleanup activity at certain of our former and current manufacturing sites. We continually monitor these sites for which we have environmental exposure.Accruals for environmental loss contingencies are recorded when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. As of 30 September 2025 and 2024, the consolidated balance sheets included accruals of $85.6 and $79.1, respectively, primarily as part of other noncurrent liabilities. These environmental liabilities will be paid over a period of up to 30 years.

DEBT The table below summarizes our total outstanding debt as reflected on our consolidated balance sheets:30 September20252024Short-term borrowings(A)$34.7 $83.5 Current portion of long-term debt(B)716.3 611.4 Long-term debt16,769.9 13,428.6 Long-term debt – related party177.5 104.4 Total Debt$17,698.4 $14,227.9 (A)Short-term borrowings include bank obligations with weighted average interest rates of 5.0% and 4.0% as of 30 September 2025 and 2024, respectively.(B)Current portion of long-term debt includes amounts of $59.0 and $200.0 owed to related parties as of 30 September 2025 and 2024, respectively.Related Party DebtAs of 30 September 2025, total debt owed to related parties was $236.5, consisting of shareholder loans with our joint venture partner, Lu’An Clean Energy Company. As of 30 September 2024, total debt owed to related parties was $304.4.Fiscal Year 2025 Registered Public OfferingsIn February 2025, we issued Euro-denominated senior fixed-rate notes with an aggregate principal amount of €1.0 billion (approximately $1.0 billion) in a registered public offering (the "February 2025 Offering"). The related proceeds were reduced by deferred financing charges and discounts of approximately $8. In June 2025, we issued U.S. Dollar- and Euro-denominated senior fixed-rate notes with aggregate principal amounts of $1.1 billion and €500 million (approximately $570), respectively, in registered public offerings (the "June 2025 Offerings"). The related proceeds were reduced by deferred financing charges and discounts of approximately $12. Deferred financing charges and discounts are amortized through interest expense over the life of the underlying bonds.We used the net proceeds from the February 2025 Offering to repay commercial paper obligations, including those incurred prior to the closing of the February 2025 Offering that were used to repay €300 million (approximately $311) aggregate principal amount outstanding of our 1.000% Euro-denominated senior fixed-rate notes at maturity, plus accrued interest, and for general corporate purposes. We used the net proceeds from the June 2025 Offerings to repay commercial paper obligations and for general corporate purposes.Summary of Long-Term Debt InstrumentsThe table below summarizes the coupon interest rates, fiscal year maturities, and carrying amounts of our long-term debt, including current portion and amounts owed to related parties. Variable rates are determined as of 30 September 2025.

INCOME TAXES The table below summarizes income from U.S. and foreign operations before taxes:202520242023United States income (Loss)($1,911.8)$2,602.5 $1,050.5 Foreign income823.4 1,571.0 1,227.6 Equity affiliates' income647.7 647.7 604.3 Income (Loss) From Continuing Operations Before Taxes($440.7)$4,821.2 $2,882.4 The table below details the components of our income tax provision:202520242023Current Tax ProvisionFederal$38.0 $550.3 $167.6 State 5.6 109.2 41.0 Foreign416.9 354.7 367.3 Total Current Tax Provision$460.5 $1,014.2 $575.9 Deferred Tax (Benefit) ProvisionFederal(497.4)(97.8)(12.5)State(95.0)(15.0)(5.8)Foreign37.6 43.5 (6.4)Total Deferred Tax (Benefit) Provision(554.8)(69.3)(24.7)Total Income Tax (Benefit) Provision($94.3)$944.9 $551.2 Cash Paid for Taxes (Net of Cash Refunds)Income tax payments, net of refunds, were $940.7, $615.9, and $645.2 in fiscal years 2025, 2024, and 2023, respectively. Our income tax payments increased in fiscal year 2025 primarily due to tax payments of approximately $395 related to the gain on the sale of the LNG business in fiscal year 2024. Income tax payments for fiscal year 2024 include cash paid to purchase $50.0 of transferable tax credits that were used to offset estimated tax payments in 2024. U.S. Tax Cuts and Jobs ActOn 22 December 2017, the United States enacted the U.S. Tax Cuts and Jobs Act (the “Tax Act” or "Tax Reform"), which significantly changed existing U.S. tax laws, including a reduction in the federal corporate income tax rate to 21%, a deemed repatriation tax on unremitted foreign earnings, as well as other changes. As of 30 September 2025, our outstanding liability for the deemed repatriation tax was $60.8 which will be paid in our second quarter of fiscal year 2026. Effective Tax RateThe effective tax rate equals the income tax provision divided by income from continuing operations before taxes. A reconciliation of the differences between the United States federal statutory tax rate and the effective tax rate is provided below:(Percent of income before taxes)202520242023U.S. federal statutory tax rate21.0%21.0%21.0%State taxes, net of federal benefit16.11.51.0Income from equity affiliates26.6(2.4)(3.8)Foreign tax differentials5.60.30.7Tax on foreign repatriated earnings——0.5Business and asset actions(49.0)—0.7Other1.1(0.8)(1.0)Effective Tax Rate21.4%19.6%19.1%In fiscal year 2025, our effective tax rate was influenced by pre-tax charges of approximately $3.

SHARE-BASED COMPENSATION Our outstanding share-based compensation program includes market-based and time-based deferred stock units. We issue shares from treasury stock upon the payout of deferred stock units and the exercise of stock options. As of 30 September 2025, there were 0.9 million shares available for future grant under our Long-Term Incentive Plan ("LTIP"), which is shareholder approved.Share-based compensation cost recognized on the consolidated income statements is summarized below:202520242023Before-tax share-based compensation cost(A)$76.6 $61.7 $60.7 Income tax benefit(18.3)(14.9)(14.6)After-tax share-based compensation cost$58.3 $46.8 $46.1 (A)Fiscal year 2025 includes noncash executive separation costs of $22.4 to accelerate vesting of share-based awards. Refer to the "Shareholder Activism-Related Costs" disclosure in Note 25, Supplemental Information, for additional information.Before-tax share-based compensation cost is primarily included in "Selling and administrative expense" on our consolidated income statements. The amount of share-based compensation cost capitalized in fiscal years 2025, 2024, and 2023 was not material.Deferred Stock UnitsWe have granted deferred stock units to executives, selected employees, and outside directors. These deferred stock units entitle the recipient to one share of common stock upon vesting, which is conditioned, for employee recipients, on continued employment during the deferral period and may be conditioned on achieving certain performance targets. We grant deferred stock unit awards with a two- to five-year deferral period that are subject to payout upon death, disability, or retirement. Deferred stock units issued to outside directors are paid after their service on the Board of Directors ends at the time elected by the director (not to exceed ten years after service ends). We generally expense the grant-date fair value of awards on a straight-line basis over the vesting period; however, expense recognition is accelerated for retirement eligible individuals who meet the requirements for vesting upon retirement. We have elected to account for forfeitures as they occur, rather than to estimate them. Forfeitures have not been significant historically.Market-based deferred stock units vest as long as the employee continues to be employed by the Company and upon the achievement of the performance target.

LEASES Lessee AccountingWe are the lessee under various agreements for real estate, vehicles, aircraft, and other equipment that are accounted for as operating leases. Our finance leases principally relate to the right to use machinery and equipment and are not material. Amounts associated with operating leases and their presentation on our consolidated balance sheets are as follows:30 September20252024Operating lease right-of-use assets, net$944.0 $1,047.7 Operating lease liabilitiesPayables and accrued liabilities91.8 100.3 Noncurrent operating lease liabilities616.0 677.9 Total operating lease liabilities$707.8 $778.2 30 September20252024Weighted-average remaining lease term in years(A)20.720.0Weighted-average discount rate(B)2.9%2.9%(A)Calculated on the basis of the remaining lease term and the lease liability balance for each lease as of the reporting date.(B)Calculated on the basis of the discount rate used to calculate the lease liability for each lease and the remaining balance of the lease payments for each lease as of the reporting date. The following maturity analysis of our operating lease liabilities as of 30 September 2025 presents the undiscounted cash flows for each of the next five years and thereafter with a reconciliation to the lease liability recognized on our balance sheet:OperatingLeases2026$109.0 202772.6 202862.0 202949.9 203048.5 Thereafter647.9 Total undiscounted lease payments989.9 Imputed interest(282.1)Present value of lease liability recognized on balance sheet$707.8 Operating lease expense was $124.0, $122.4, and $109.9 for fiscal years 2025, 2024, and 2023, respectively. These amounts do not include short-term and variable lease expenses, which were not material. The impacts associated with our operating leases on the consolidated statements of cash flows are reflected within "Other adjustments" within operating activities. This includes the noncash operating lease expense as well as a use of cash of $125.2, $154.6, and $337.8 for payments on amounts included in the measurement of the lease liability for fiscal years 2025, 2024, and 2023, respectively. Payments in fiscal year 2023 included a lump-sum payment of $209 for a land lease associated with the NGHC joint venture. Refer to Note 3, Variable Interest Entities, for additional information.We recorded noncash right-of-use asset additions of approximately $65, $159, and $150 in fiscal years 2025, 2024, and 2023, respectively.

ACQUISITIONS AND DIVESTITURES Acquisition of Ijsfabriek StrombeekOn 30 April 2025, we acquired a 100% interest in Ijsfabriek Strombeek, an independent industrial gases company located in Belgium. Total consideration, net of cash acquired, was $74.2, which included $59.9 paid in cash at closing. Ijsfabriek Strombeek produces and distributes a portfolio of merchant gases, including medical gases, dry ice, and carbon dioxide.We accounted for the acquisition as a business combination within our Europe segment. Assets recognized primarily consisted of plant and equipment of $32.2; goodwill of $31.3; and intangible assets of $15.8. The goodwill is not expected to be deductible for income tax purposes. Intangible assets acquired primarily include customer relationships with a weighted-average amortization period of approximately 10 years. The acquired assets were recorded at their estimated fair values based primarily on a preliminary purchase price allocation. We may record adjustments to these assets during the preliminary purchase price allocation period, which could be up to one year from the acquisition date.Financing Arrangement: Uzbekistan FacilityOn 25 May 2023, we entered into an investment agreement with the Government of the Republic of Uzbekistan and Uzbekneftegaz JSC (“UNG”) to purchase a natural gas-to-syngas processing facility in Qashqadaryo Province, Uzbekistan, for $1 billion. Under the agreement, Air Products owns and operates the acquired facility and is supplying all offtake products to UNG under a 15-year on-site contract, with UNG supplying the feedstock natural gas and utilities. Throughout this term, we receive a fixed monthly fee (regardless of whether UNG requires the output) comprised of two components: a plant capacity fee and an operating and maintenance fee.We are accounting for the transaction as a financing arrangement as we did not obtain accounting control of the facility due to UNG having the unilateral right to reacquire the facility at the end of the contract term. The repurchase price on a discounted basis, which consists of the total monthly plant capacity fees received over the term of the arrangement plus the repurchase option price, exceeds our purchase price. Accordingly, our payments related to the facility are reflected within "Financing receivables" on our consolidated balance sheets.