Linde plc Investor Teleconference Presentation Fourth Quarter 2024 February 6, 2025 2 Key Highlights - 2024 People and Communities Environment 6 – 5 Financials Positioning for the Future A successful year despite the challenges Forward-Looking Statement This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, conti ...

Financial Data and Key Metrics Changes - Linde reported fourth quarter sales of $8.3 billion, flat compared to the prior year and down 1% sequentially, with foreign currency translation being a 2% headwind [30][31] - Operating profit increased by 9% to $2.5 billion, resulting in a margin of 29.9%, driven by management actions around price, cost, and productivity [33] - EPS grew by 11% to $3.97, or 13% excluding foreign exchange impacts [33] Business Line Data and Key Metrics Changes - The volume growth was flat, with contributions from project backlog in the Americas and APAC offsetting lower base volumes in EMEA [32] - Linde signed 59 long-term agreements for small on-site projects, totaling 64 plants, which are expected to enhance reliability and network density [18][19] - The company also completed 18 acquisitions of small tuck-in packaged gas opportunities, generating annualized revenues of approximately $200 million [19] Market Data and Key Metrics Changes - The company anticipates low to mid-single-digit growth in resilient end markets, particularly driven by electronics and food and beverage sectors [68] - In the Americas, low single-digit growth is expected, while EMEA is projected to experience continued softening, particularly in Western Europe [71][72] - In Asia Pacific, particularly China, Linde does not expect significant improvements in 2025, with industrial volumes remaining stable but flat [74][80] Company Strategy and Development Direction - Linde emphasizes the importance of maintaining a disciplined capital allocation policy and focusing on core business areas to ensure long-term growth [15][21] - The company aims to achieve a 10% EPS growth annually through a combination of capital allocation and management actions, despite macroeconomic challenges [24][25] - Linde is committed to sustainability, with a goal to reduce greenhouse gas emissions by 35% by 2035 and has increased its low carbon and renewable energy consumption by 19% year-over-year [11][12] Management's Comments on Operating Environment and Future Outlook - Management noted that discussions with potential project partners have slowed down slightly due to increased rigor before final investment decisions (FID) [44] - The company remains confident in its ability to navigate macroeconomic challenges and create shareholder value through disciplined execution and capital allocation [29][41] - Management expects margin expansion across all segments in 2025, with a range of 20 to 50 basis points [55] Other Important Information - Linde's backlog at year-end exceeded $10 billion, including a record sale of gas backlog of $7 billion [16] - The company returned $7 billion to shareholders through dividends and stock repurchases, highlighting a strong commitment to shareholder returns [36] Q&A Session Summary Question: How have discussions with potential project partners evolved? - Management noted that discussions have slowed down slightly as partners are applying more rigor before reaching FID, which is seen as a positive development [44] Question: Will Americas margins gain ground in 2025? - Management expects margin expansion in both Americas and APAC, with no impediments to achieving higher margins across segments [55] Question: What is the leverage of industrial production (IP) on EPS? - Management indicated that base volumes are closely aligned with IP, with higher leverage seen in developing countries [62] Question: What are the concerns regarding market share? - Management emphasized that Linde is winning more than its fair share of large projects, with a focus on network density rather than traditional market share metrics [102][104] Question: What is the outlook for the healthcare segment? - Management expects long-term mid-single-digit growth in healthcare, with current numbers reflecting portfolio rationalization efforts [90] Question: How does the backlog break down between sale of gas and equipment? - Approximately $3.1 billion of the backlog is in the sale of equipment, with the remainder in the sale of gas, and management has protections in place against tariffs [126][128]

Core Insights - Linde reported strong earnings per share (EPS) of $3.97, exceeding analyst expectations, but revenue fell short at $8.28 billion compared to the forecast of $8.42 billion due to currency fluctuations [1][2] Financial Performance - Q4 2024 EPS was $3.97, up 11.2% from $3.57 in Q4 2023 [2] - Revenue for Q4 2024 was $8.28 billion, a slight increase of 0.2% from $8.30 billion in Q4 2023 [2] - Adjusted operating profit reached $2.48 billion, reflecting a 9.3% increase from $2.27 billion in Q4 2023 [2] - Free cash flow was $1.56 billion, down 1.1% from $1.58 billion in Q4 2023 [2] Business Overview - Linde is the world's largest industrial gas company, providing a wide range of gases essential for various industries, including healthcare, chemicals, manufacturing, and electronics [3] - The company is a leader in innovative gas technologies, enhancing service delivery [3] Strategic Focus - Linde is concentrating on the clean energy sector and long-term customer agreements, with advancements in hydrogen solutions and gas processing techniques [4] - The company’s adjusted operating profit margin increased by 2.5 percentage points to 29.9%, indicating effective cost management [5] Regional Performance - Sales in the Americas grew by 1%, driven by manufacturing, food, and electronics sectors [6] - The Asia-Pacific region saw a 2% sales increase, primarily due to growth in the electronics sector [6] - Conversely, sales in the Europe/Middle East/Africa region declined by 2% due to reduced manufacturing volumes, impacted by foreign currency fluctuations [6] Strategic Developments - Linde signed a significant $2 billion contract with Dow, showcasing its commitment to clean energy and strategic partnerships [7] - The company has a project backlog exceeding $10 billion, indicating strong future earnings growth potential [7] - Linde returned $1.99 billion to shareholders through dividends and stock repurchases during the quarter [7] Future Outlook - Linde projects its 2025 adjusted diluted EPS to be between $16.15 and $16.55, reflecting anticipated growth of 8% to 11% when excluding foreign currency impacts [8] - The guidance indicates Linde's confidence in navigating macroeconomic challenges while focusing on technological advancements and energy solutions [8] Investment Considerations - Investors should pay attention to Linde's initiatives in clean energy projects and its ability to secure long-term contracts, positioning the company for consistent growth [9]

Core Insights - Linde reported $8.28 billion in revenue for Q4 2024, a slight year-over-year decline of 0.2%, with an EPS of $3.97 compared to $3.59 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $8.36 billion, resulting in a surprise of -0.89%, while the EPS exceeded expectations by 1.02% [1] Financial Performance - Revenue by region: - EMEA: $2.06 billion, below the estimate of $2.13 billion, a year-over-year decline of 2% [4] - APAC: $1.67 billion, slightly below the estimate of $1.68 billion, with a year-over-year increase of 1.8% [4] - Other: $318 million, above the estimate of $307.95 million, a year-over-year decline of 1.2% [4] - Americas: $3.61 billion, below the estimate of $3.65 billion, with a year-over-year increase of 0.7% [4] - Engineering: $628 million, slightly above the estimate of $620.74 million, a year-over-year decline of 4.6% [4] Stock Performance - Linde's shares have returned +8% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Viewpoint - Linde reported quarterly earnings of $3.97 per share, exceeding the Zacks Consensus Estimate of $3.93 per share, and showing an increase from $3.59 per share a year ago, indicating a positive earnings surprise of 1.02% [1] Group 1: Earnings Performance - The company has surpassed consensus EPS estimates for the last four quarters [2] - Linde's revenues for the quarter ended December 2024 were $8.28 billion, slightly missing the Zacks Consensus Estimate by 0.89%, and down from $8.3 billion year-over-year [2] - The company has not beaten consensus revenue estimates in the last four quarters [2] Group 2: Stock Performance and Outlook - Linde shares have increased approximately 8.4% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] - The future performance of Linde's stock will depend on management's commentary during the earnings call and the earnings outlook [3][4] - The current consensus EPS estimate for the upcoming quarter is $4 on revenues of $8.47 billion, and for the current fiscal year, it is $16.73 on revenues of $34.42 billion [7] Group 3: Industry Context - The Chemical - Specialty industry, to which Linde belongs, is currently ranked in the bottom 22% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [5][6]

Financial Performance - Fourth-quarter 2024 net income was $1,725 million, with diluted earnings per share of $3.60, representing increases of 12% and 14% respectively compared to the prior year[1]. - Fourth-quarter sales were $8,282 million, flat year-over-year, but underlying sales increased by 2% when excluding negative currency impact[2]. - Adjusted operating profit for the fourth quarter was $2,480 million, up 9% year-over-year, with an adjusted operating profit margin of 29.9%, an increase of 250 basis points[3]. - For the full year 2024, sales totaled $33.0 billion, flat compared to 2023, while adjusted operating profit was $9.7 billion, a 7% increase year-over-year[5]. - Operating profit for Q4 2024 rose to $2,270 million, a 12% increase from $2,028 million in Q4 2023, with year-to-date operating profit at $8,635 million compared to $8,024 million in the previous year[27]. - Net income for Q4 2024 was $1,725 million, up from $1,543 million in Q4 2023, resulting in a year-to-date net income of $6,565 million compared to $6,199 million[30]. - Basic earnings per share for Q4 2024 increased to $3.63 from $3.19 in Q4 2023, with year-to-date earnings per share rising to $13.71 from $12.70[27]. - Reported diluted EPS for 2024 was $13.62, an increase of 8% compared to 2023[38]. - Adjusted diluted EPS for 2024 reached $15.51, reflecting a 9% increase from the previous year[38]. Cash Flow and Shareholder Returns - The company generated operating cash flow of $9.4 billion in 2024 and returned $7.1 billion to shareholders through dividends and share buybacks[6]. - Cash dividends per share for Q4 2024 were $1.39, up from $1.275 in Q4 2023, with year-to-date dividends increasing to $5.56 from $5.10[27]. - Free Cash Flow (FCF) for 2024 was $1,559 million, slightly down from $1,665 million in 2023[46]. Segment Performance - Americas segment sales for the fourth quarter were $3,609 million, a 1% increase year-over-year, with operating profit margin at 31.9%[8]. - EMEA segment sales were $2,059 million, down 2% year-over-year, but operating profit margin improved to 33.3%, up 400 basis points[11]. - The Americas segment reported sales of $3,609 million in Q4 2024, up from $3,583 million in Q4 2023, contributing to a year-to-date total of $14,442 million compared to $14,304 million[32]. Balance Sheet and Capital Expenditures - Total assets as of December 31, 2024, were $80,147 million, a slight decrease from $80,811 million in 2023[29]. - Total liabilities increased to $40,659 million in 2024 from $39,716 million in 2023, while total equity decreased to $39,475 million from $41,082 million[29]. - Capital expenditures for Q4 2024 were $1,250 million, compared to $1,151 million in Q4 2023, with year-to-date capital expenditures at $4,497 million versus $3,787 million[30]. Future Outlook - For 2025, the company expects adjusted diluted earnings per share to be in the range of $16.15 to $16.55, indicating a growth of 4% to 7% compared to the prior year[7]. - First-quarter 2025 adjusted earnings per share guidance is projected to be between $3.85 and $3.95, representing a growth of 3% to 5% year-over-year[7]. - The company anticipates further growth in the upcoming quarters, supported by strategic initiatives and market expansion efforts[36]. - The estimated currency headwind for 2025 is projected to be around 4%[38]. Cost Management - The company implemented a cost reduction program, resulting in charges of $145 million for the year ended December 31, 2024, compared to $40 million in 2023[30]. - The company has implemented a cost reduction program, contributing an additional $145 million to the operating profit[36]. Adjusted Metrics - Adjusted net income for the year to date is $7.475 billion, with a reported net income of $6.565 billion[37]. - Adjusted operating margin improved to 29.5%, up from 27.6% in the previous year[36]. - Adjusted EBITDA for 2024 was $12,819 million, representing 38.8% of sales[38]. - Reported sales for 2024 totaled $33,005 million, with an adjusted EBITDA margin of 38.8%[38]. - Adjusted income from equity investments is reported at $242 million, reflecting a significant increase[37]. Capital Structure - Net debt as of December 31, 2024, was $16,773 million, a decrease from $17,075 million in 2023[48]. - Adjusted net debt increased to $16.769 billion in Q4 2024 from $15.466 billion in Q1 2024[50]. - Total reported capital decreased from $55.804 billion in Q3 2023 to $55.700 billion in Q1 2024[50]. - Linde plc shareholders' equity was $38.092 billion in Q4 2024, down from $39.720 billion in Q3 2023[50].

Core Viewpoint - Linde plc is expected to report its fourth-quarter 2024 results on February 6, with various factors influencing its performance, including previous earnings results and market conditions. Group 1: Previous Performance - In the last reported quarter, Linde's earnings were $3.94 per share, surpassing the Zacks Consensus Estimate of $3.89, primarily due to higher pricing in the Americas segment [2] - Linde has consistently beaten the Zacks Consensus Estimate in the last four quarters, with an average surprise of 1.84% [2] - The Zacks Consensus Estimate for fourth-quarter earnings per share is $3.93, reflecting a 9.47% improvement from the same quarter last year [2] Group 2: Revenue Estimates - The Zacks Consensus Estimate for fourth-quarter revenues is $8.36 billion, indicating a year-over-year increase of 0.65% [3] Group 3: Influencing Factors - Long-term contracts with major on-site clients are expected to positively impact Linde's performance in the fourth quarter, particularly from its Americas business unit, which is estimated to generate an operating profit of $1.15 billion, up from $1.07 billion in the previous year [4] - Economic slowdowns in Europe and China may have negatively affected industrial output and demand for industrial gases, potentially impacting Linde's revenues [5] - Rising energy prices due to geopolitical tensions in the Middle East are likely to have further pressured margins [5] Group 4: Engineering Segment Performance - The Zacks Consensus Estimate for the operating profit of the Engineering business unit is $106 million, down from $119 million a year ago, indicating challenges in this segment [6] Group 5: Earnings Predictions - The current model does not predict an earnings beat for Linde, with an Earnings ESP of -0.68% and a Zacks Rank of 3 (Hold) [7]

In its upcoming report, Linde (LIN) is predicted by Wall Street analysts to post quarterly earnings of $3.93 per share, reflecting an increase of 9.5% compared to the same period last year. Revenues are forecasted to be $8.36 billion, representing a year-over-year increase of 0.7%.The consensus EPS estimate for the quarter has undergone a downward revision of 1.4% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial estim ...

Key Points - Jason Hall and Tyler Crowe have no positions in any of the stocks mentioned [1] - The Motley Fool holds positions in and recommends Linde [1] - Jason Hall is affiliated with The Motley Fool and may receive compensation for promoting its services [1]

Company Overview - Linde plc (LIN) is the seventh largest firm in the industrial gases industry by market share and revenue, with approximately $33 billion in revenue as of 2023 [3] - The stock has shown steady growth over the past 10 years, indicating a strong long-term growth trajectory [3] Industry Position - Linde plc holds a significant position in the industrial gases industry, ranking seventh by market share and revenue [3] Financial Performance - The company's revenue stands at approximately $33 billion as of 2023, reflecting its substantial market presence [3] Stock Performance - Linde plc's stock has experienced consistent growth over the past decade, suggesting a robust investment opportunity [3]