APD: APD to Exit Darrow Project; Expect Positive Reaction

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APD: APD to Exit Darrow Project; Expect Positive Reaction

EQUITY RESEARCH QUICK TAKE

RBC Capital Markets, LLC

Arun Viswanathan, CFA (Analyst)

Brian Dong (Senior Associate)

Adam Hamilton (AVP)

June 30, 2026

Air Products and Chemicals, Inc.

APD to Exit Darrow Project; Expect Positive Reaction

NYSE: APD | USD 271.35 | Outperform | Price Target USD 341.00

Sentiment: Positive

On June 30, APD announced that it would exit the Darrow Project and incur up to $2.9B of pre-tax charges during Q3 due to

the project not meeting internal return thresholds. These charges are primarily related to asset write-downs and termination

of contractual commitments. The company will also discontinue a zero-carbon liquid hydrogen facility in Casa Grande, Arizona

and other smaller scale projects supporting clean energy distribution due to challenging commercial conditions, project-specific

economic factors, and delayed development for certain markets including hydrogen for mobility. Moreover, APD intends to

redeploy select assets to existing/future projects and work to lower exposure of existing contractual agreements. The company is

also finalizing a marketing and distribution agreement with Yara for renewable ammonia for its NEOM project.

Expect positive stock reaction. Overall, we expect for there to be a positive stock reaction today. Even though we think this

outcome was somewhat expected, our impression is that investors will react favorably as most preferred a cancellation, and

management has consistently hinted at rising EPC costs and project economics needing to be more favorable to proceed. While the

$2.9B of pre-tax charges is considerably higher than our $1-$2B sunk cost expectations, we view this development as a positive

sign of improving capital discipline.

Maintain Outperform.