Linde plc(US:LIN)2022-07-27 16:00PART I - FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for Linde plc for the quarterly and six-month periods ended June 30, 2022, and 2021, including statements of income, comprehensive income, balance sheets, cash flows, and accompanying notes Quarterly Financial Performance | Indicator | Quarter Ended June 30, 2022 | Quarter Ended June 30, 2021 | | :--- | :--- | :--- | | Sales | $8,457 million | $7,584 million | | Operating Profit | $589 million | $1,142 million | | Net Income – Linde plc | $372 million | $841 million | | Diluted EPS | $0.74 | $1.60 | Six-Month Financial Performance | Indicator | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Sales | $16,668 million | $14,827 million | | Operating Profit | $2,069 million | $2,355 million | | Net Income – Linde plc | $1,546 million | $1,821 million | | Diluted EPS | $3.04 | $3.46 | Balance Sheet Summary | Balance Sheet Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $11,272 million | $10,159 million | | Total Assets | $77,885 million | $81,605 million | | Total Current Liabilities | $15,295 million | $13,643 million | | Total Liabilities | $36,845 million | $36,164 million | | Total Equity | $41,027 million | $45,428 million | Cash Flow Summary | Cash Flow Item (Six Months Ended June 30) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,133 million | $3,936 million | | Net cash used for investing activities | ($1,507) million | ($1,460) million | | Net cash used for financing activities | ($1,759) million | ($3,115) million | | Change in cash and cash equivalents | $832 million | ($617) million | Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures supporting the figures in the main financial statements, covering the Russia-Ukraine conflict's financial impact, debt structure, segment performance, revenue recognition, and legal contingencies - The company recorded significant charges related to the Russia-Ukraine conflict, primarily from the deconsolidation of its Russian gas and engineering business entities as of June 30, 20222931 Russia-Ukraine Conflict and Other Charges | Charge Type | Quarter Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Russia deconsolidation charges | $787 million | $787 million | | Other Russia related charges | $114 million | $114 million | | Merger-related and other charges | $92 million | $88 million | | Total Charges | $993 million | $989 million | - Total debt increased to $16.04 billion at June 30, 2022, from $14.21 billion at year-end 2021, primarily due to a significant increase in short-term commercial paper borrowings47 - The company estimates that future revenue from minimum purchase requirements in long-term contracts and plant sales is approximately $51 billion, with about half expected to be recognized in the next five years, excluding Russian projects impacted by sanctions102 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management analyzes the company's Q2 and H1 2022 financial performance, covering consolidated results, segment performance, liquidity, and capital resources, highlighting price attainment, productivity, and the impact of the Russia-Ukraine conflict Consolidated Results Consolidated results for Q2 2022 show sales growth driven by pricing and cost pass-through, while reported operating profit was significantly impacted by charges related to Russian business deconsolidation Q2 2022 vs Q2 2021 Performance | Metric (Q2 2022 vs Q2 2021) | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Sales | $8,457 M | $7,584 M | 12% | | Reported Operating Profit | $589 M | $1,142 M | (48)% | | Adjusted Operating Profit | $1,988 M | $1,837 M | 8% | | Reported Diluted EPS | $0.74 | $1.60 | (54)% | | Adjusted Diluted EPS | $3.10 | $2.70 | 15% | Sales Growth Drivers | Sales Growth Drivers | Q2 2022 vs 2021 | H1 2022 vs 2021 | | :--- | :--- | :--- | | Volume | 2% | 2% | | Price/Mix | 7% | 6% | | Cost pass-through | 7% | 7% | | Currency | (5)% | (4)% | | Total | 12% | 12% | - Reported operating profit was significantly impacted by $993 million in charges for the second quarter, primarily related to the deconsolidation and impairment of Russian subsidiaries due to the war in Ukraine and related sanctions110121 Segment Discussion This section details the performance of Linde's operating segments, with Americas, EMEA, and APAC showing growth driven by pricing, while Engineering results were impacted by project timing and currency Segment Sales (Q2 2022) | Segment Sales (Q2 2022) | Sales | % Change vs Q2 2021 | | :--- | :--- | :--- | | Americas | $3,518 M | 16% | | EMEA | $2,144 M | 14% | | APAC | $1,651 M | 7% | | Engineering | $644 M | 0% | Segment Operating Profit (Q2 2022) | Segment Operating Profit (Q2 2022) | Operating Profit | % Change vs Q2 2021 | | :--- | :--- | :--- | | Americas | $910 M | 4% | | EMEA | $536 M | 10% | | APAC | $426 M | 10% | | Engineering | $105 M | (3)% | Liquidity, Capital Resources and Other Financial Data The company's liquidity and capital resources remain strong, supported by increased operating cash flow, while significant funds were allocated to share repurchases and dividends Cash Flow Summary (Six Months Ended June 30, 2022) | Cash Flow Summary (Six Months Ended June 30, 2022) | Amount | | :--- | :--- | | Net cash provided by operating activities | $4,133 million | | Capital expenditures | ($1,475) million | | Net cash used for investing activities | ($1,507) million | | Net purchases of ordinary shares | ($3,307) million | | Cash dividends paid | ($1,177) million | | Net cash used for financing activities | ($1,759) million | - The company's sale of gas backlog for large projects under construction was approximately $3.6 billion as of June 30, 2022169 - Linde's Board of Directors approved an additional $10.0 billion share repurchase program on February 28, 2022172 Item 3. Quantitative and Qualitative Disclosures about Market Risk This section refers the reader to the company's 2021 Annual Report on Form 10-K for a discussion of quantitative and qualitative disclosures about market risk, indicating no material changes during the quarter - The company directs investors to its 2021 Annual Report on Form 10-K for information regarding market risk, as there have been no material updates200 Item 4. Controls and Procedures Management, including the principal executive and financial officers, evaluated the company's disclosure controls and procedures and concluded they were effective as of the end of the quarter, with no material changes in internal control over financial reporting during the period - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures are effective202 - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting202 PART II - OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 9 of the condensed consolidated financial statements for a description of the company's current legal proceedings - For details on legal proceedings, the report refers to Note 9 in the financial statements, which discusses matters including Brazilian tax disputes and antitrust fines, and appraisal proceedings from former Linde AG shareholders20474 Item 1A. Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes to the risk factors disclosed in the company's 2021 Annual Report on Form 10-K205 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities during Q2 2022, including the number of shares bought back and the remaining authorization under the program - On February 28, 2022, the board approved a new $10.0 billion share repurchase program, which expires on July 31, 2024209 Share Repurchase Activity (Q2 2022) | Period (2022) | Total Shares Purchased (Thousands) | Average Price Paid Per Share | Value of Shares Remaining for Purchase (Millions) | | :--- | :--- | :--- | :--- | | April | 1,535 | $316.40 | $8,257 | | May | 2,196 | $310.10 | $7,576 | | June | 1,323 | $305.97 | $7,171 | | Q2 Total | 5,054 | $310.93 | $7,171 | Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, which include officer certifications as required by the Sarbanes-Oxley Act and Interactive Data Files (XBRL) - The exhibits filed with this report include Rule 13a-14(a) and Section 1350 certifications, along with XBRL instance and taxonomy documents210