Therefore, we are fully in line with the those rules that Treasury put out, and I really hope that they keep their nerve and execute those principles because those are the right principles, And we are fully supportive of that. And again, I’d like to stress that we are spending billions of dollars. We are — and executing projects right now even before those rules come out, complying with those rules because we think they are the right rules, okay?
Mike Leithead: Great. Thank you so much.
Seifi Ghasemi: Thank you.
Operator: Thank you. We’ll go next to Duffy Fischer from Goldman Sachs.
Duffy Fischer: Yes, good morning, guys.
Seifi Ghasemi: Good morning, Duffy. How are you?
Duffy Fischer: Good. Thank you. Question on cash flow, if I could. At least in the first quarter, cash flow was down or operating cash flow was down double digits even though earnings was up. Will that invert throughout the year? Would you expect operating cash flow to grow roughly at the same level of EPS this year?
Seifi Ghasemi: Duffy, I’m glad you asked this question, but I’ll have Melissa go through the details. But my friend, our EBITDA is going up. If our EBITDA is going up, the cash coming to the company is going up. What we are reporting is accounting and it’s the timing of the cash. We report the number because we book it, but when we get the actual cash it’s different because of our equity affiliates. But I think the best person to qualify to answer this, because I don’t want to get into accounting details, Melissa, would you please explain that?
Melissa Schaeffer: Yes, absolutely. Thank you, Seifi. And hi, Duffy, how are you? So first of all, Duffy, so our EBITDA cash eversion is stable and our distributable and investment cash flow are both positive. So that’s in line with our year-over-year EBITDA improvement. Additionally, we have industry-leading DSO, so all very strong. We did see an incremental reduction in our operating cash flow to EBITDA this quarter. There are a few items that attribute to this, namely it’s really timing component related to our distributions of earnings for our large equity affiliate. Again, not an issue with profit, just timing. And the second one is we do manage and look to derisk our helium supply chain and then so we are building some of our helium inventory, which obviously has an offset to operating cash, but obviously, we’ll attribute to process moving forward.
Seifi Ghasemi: Okay, Duffy?
Duffy Fischer: Thank you. You bet. Thank you on that one. And then just on the announcement that the EPA was given to the state of Louisiana the authority to deal with the CO2 sequestration there. Roughly, can you kind of explain how your relationship is with the state and how quickly you think that will speed up the process there and when we might get permits for Louisiana?
Seifi Ghasemi: Duffy, I’m glad you asked that question. We are very excited about that. I think it was the right decision and that will cut about — we think about a year on the time line of us getting the permit for the Class 6 well. And we do have an excellent relationship with the State of Louisiana, but it’s not the relationship. We are going to do the right thing by having the State Louisiana review that. We gain time because the State of Louisiana will have less Class 6 wells to deal with than EPA. So it’s just a matter of the workload and they did the right thing by distributing the workload. Therefore, now the State of Louisiana will have fewer applications, and therefore, they can approve our project by about a year faster than the federal government would have done that. So that is why it is very helpful and very impactful and gives us a lot more confidence in terms of our ability to get the Class 6 permit if we need it.
Duffy Fischer: Great. Thank you.
Seifi Ghasemi: Thank you very much.
Operator: Thank you. We’ll go to Kevin McCarthy from Vertical Research Partners.
Kevin McCarthy: Yes. Thank you and good morning. Seifi, I wanted to come back to the helium market dynamics. I heard your comments on the demand side. My question is, have you witnessed any material changes on the supply side of the global market such as the operating status of Gazprom’s Amur project in Russia? Or is it strictly a function of demand in terms of the volume shortfall that you cited in the quarter?
Seifi Ghasemi: Well, that is a very good question. Theoretically, whatever Amur produces in Russia, theoretically there is global sanctions on that. That, that is not supposed to be getting into the market. Is it getting into the market illegally and therefore increasing the supply of helium, and therefore that is why people are buying from other people? It could be the case. I am not sure. But the detailed dynamics on that are. And I don’t want to be interpreting sanctions laws and all of that. But what you are suggesting is a possibility. We are looking into that. We haven’t seen any significant factor from that yet, and at least we don’t see it yet, but it might be the case.
Kevin McCarthy: Okay. That’s helpful. And then secondly, I had a few sort of housekeeping questions possibly for Melissa. I think you mentioned devaluation of the Argentine peso and we talked about the cost overrun from the sale of equipment project. Can you quantify the impact of some of those issues in the quarter?
Seifi Ghasemi: I don’t think we want to quantify the details of every one of them, but the Argentine currency is easy. I’ll answer that, make it a lot easy for Melissa, is that effect was about $10 million on our bottom line, for the Argentine currency about $0.03.
Kevin McCarthy: Okay. And the SOE, no comment on that one?
Seifi Ghasemi: No, the rest of it, we don’t want to break down how much was helium, how much was the sale of equipment and how much was the slowdown in China because then we will be giving you very too much competitive information, if you don’t mind.
Kevin McCarthy: I see, okay. Thank you very much.
Seifi Ghasemi: Thank you.
Operator: Thank you. We’ll go next to Patrick Cunningham from Citi.
Patrick Cunningham: Hi, good morning. Could you maybe comment on the direction of price in Europe, how sustainable these margins are going forward?
Seifi Ghasemi: Well, quite frankly, we did — that is one of the areas where we did better than we expected. Our results in Europe are excellent, the margins are up 1,000 basis points, and that is because people have done a good job hanging on to the price while energy prices are going down. How this will develop in the future obviously depends on what happens to energy prices and so on. But I’m very proud of our people in terms of their performance and in terms of making sure that they maintain the pricing and we have been successful. And as Dr. Serhan was saying, our European business did very well during the quarter.
Patrick Cunningham: Great. And then maybe just a related follow-up on the Uzbekistan project. How much volume was up on Uzbekistan? And what sort of contribution should we have throughout the year? I know previously you talked about $0.35 per share. How is Uzbekistan performing relative to your expectations?
Seifi Ghasemi: Dr. Serhan, would you like to answer that?
Samir Serhan: Yes. I just want to start by saying this project really has been a great fit for both Air Products and Uzbekistan. It leverages our core competencies and address the country’s desire for energy independence and socioeconomic development. This project includes the world’s largest ATRs, auto thermal reformer. And just to remind everybody, to produce blue hydrogen, you need to use auto-thermal reformers and those are the largest in the world, or you need to use box units, which are the partial oxidation, which is the technology we bought from GE gasification. We are excited about the operational and technological synergies by operating these large ATRs. The asset was brought onstream in October ’23. We expect that to contribute around $0.35 for the full-year.
