Air Products & Chemicals, Inc.

A description of our major accounting policies, including those that we consider to be the most critical to understanding our financial statements, is included in our 2025 Form 10-K. There were no significant changes to our accounting policies during the first nine months of fiscal year 2026.

Management’s Discussion and Analysis of our financial condition and results of operations is based on the consolidated financial statements and accompanying notes that have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates reflect our best judgment about current and/or future economic and market conditions and their effect based on information available as of the date of our consolidated financial statements. If conditions change, actual results may differ materially from these estimates.

Judgments and estimates of uncertainties are required to apply our accounting policies in many areas. However, application of policies that management has identified as critical places significant importance on management’s judgment, often as the result of the need to make estimates about the effects of matters that are inherently uncertain.

During the first nine months of fiscal year 2026, we recorded project exit charges of $2.9 billion pre-tax ($2.2 billion after-tax, or $10.03 per share) as described in Note 4, Business and Asset Actions, to the consolidated financial statements. The pre-tax charges included an impairment loss of $2.2 billion for plant and equipment associated with project exit decisions. These assets had a carrying value of $201.2 as of 30 June 2026.

The fiscal year 2026 pre-tax charges also included $22.0 recorded to operating income during the first quarter to update estimates for project-related commitments and asset disposal costs associated with project exits previously announced in fiscal year 2025.

In addition to the plant and equipment discussed above, our balance sheet as of 30 June 2026 includes long-lived assets classified as held for sale with a carrying value of $461.6. These assets are associated with prior-year project exit decisions and met the held-for-sale criteria beginning in the fourth quarter of fiscal year 2025. The related impairment charges were recognized upon classification of the assets as held for sale. We continue to actively market these assets and remain engaged in sales and negotiation efforts. Fair value, including costs to sell, was estimated using an internally developed discounted cash flow analysis as of 30 September 2025. There were no material changes in valuation assumptions or the estimated fair value, including costs to sell, for these assets as of 30 June 2026.

Estimates related to project exit decisions are considered critical because they involve significant assumptions regarding future cash flows, asset disposition strategies, and market conditions, all of which are subject to change and could materially affect the measurement and timing of impairment charges. The fair value measurements associated with these project exit decisions were classified within Level 3 of the fair value hierarchy due to the absence of observable market prices and significant use of management judgment and estimation techniques. Additionally, because the project review is ongoing, we may make further project-related decisions that could impact the intended use or recoverability of certain assets, potentially resulting in the recognition of additional charges in future periods.

During the first nine months of fiscal year 2026, we also recorded changes to project revenue and cost estimates on certain sale of equipment projects that are accounted for under the cost incurred input method. Accordingly, we recorded cumulative effect adjustments that unfavorably impacted operating income (loss) by $78 for the nine months ended 30 June 2026.

There were no other changes to our estimates during the first nine months of fiscal year 2026 that had a significant impact on our financial condition, change in financial condition, liquidity, or results of operations.