Linde Reports Third Quarter 2023 Results

Third Quarter Highlights

• Sales $8.2 billion, down 7% YoY, underlying sales up 3%
• Operating profit $2.1 billion; adjusted operating profit $2.3 billion, up 15%
• Operating profit margin 25.2%; adjusted operating profit margin 28.3%, up 550 basis points
• EPS $3.19 up 26%; adjusted EPS $3.63, up 17% YoY
• Increased full-year 2023 adjusted EPS guidance to $14.00 - $14.10, representing 14% to 15% growth year-over-year

Woking, UK, October 26, 2023 – Linde plc (NYSE: LIN) today reported third-quarter 2023 net income of $1,565 million and diluted earnings per share of $3.19, up 23% and 26% respectively.  Excluding Linde AG purchase accounting impacts and other charges, adjusted net income was $1,783 million, up 15% versus prior year.  Adjusted earnings per share was $3.63, 17% above prior year.

Linde’s sales for the third quarter were $8,155 million, 7% below prior year but underlying sales increased 3% from 5% price attainment partially offset by 2% lower volumes.

Third quarter operating profit was $2,052 million.  Adjusted operating profit of $2,306 million was up 15% versus prior year led by higher price and continued productivity initiatives across all segments.  Adjusted operating profit margin of 28.3% was 550 basis points above prior year and 400 basis points higher when excluding the effects of cost pass-through. 

Third-quarter operating cash flow of $2,520 million decreased 4% versus prior year driven primarily by lower engineering payments.  After capital expenditures of $948 million, free cash flow was $1,572 million.  During the quarter, the company returned $1,774 million to shareholders through dividends and stock repurchases, net of issuances.

Commenting on the financial results and business outlook, Chief Executive Officer Sanjiv Lamba said, “Linde employees delivered another quarter of strong results, with EPS growth of 17%, ROC of 25.6%, OCF of $2.5 billion and operating margin expansion of 550 basis points to 28.3%.  This performance is driven by our relentless culture to optimize the base business while increasing network density and deploying capital to high-quality growth initiatives.” 

Lamba continued, “We have a proven track record of creating long-term, compounding shareholder value despite macro challenges.” 

For the fourth quarter of 2023, Linde expects adjusted diluted earnings per share in the range of $3.38 to $3.48, up 7% to 10% versus prior-year quarter.  This guidance assumes a currency tailwind of 1% year-over-year and a 2% headwind sequentially. 

For the full year 2023, the company expects adjusted diluted earnings per share to be in the range of $14.00 to $14.10, up 14% to 15% versus prior year and assumes no currency impact.  Full-year capital expenditures are expected to be in the range of $3.5 billion to $4.0 billion to support growth and maintenance requirements including the $4.5 billion contractual sale of gas project backlog.
 

Third-Quarter 2023 Results by Segment

Americas sales of $3,629 million were 2% lower versus prior year.  Compared with third quarter 2022, underlying sales increased 3% driven by 5% higher pricing, partially offset by 2% lower volumes.  Underlying sales growth was primarily in the healthcare, food & beverage and chemicals & energy end markets.  Operating profit of $1,074 million was 29.6% of sales, 320 basis points above prior year and 90 basis points higher when excluding the effects of cost pass-through. 

APAC (Asia Pacific) sales of $1,639 million were 1% lower versus prior year.  Compared with third quarter 2022, underlying sales grew 3% driven by 3% price attainment and stable volumes.  Underlying sales growth was primarily in the chemicals & energy end markets, including project start-ups, and to a lesser extent the healthcare and manufacturing end markets.  Operating profit of $459 million was 28.0% of sales, 220 basis points above prior year.  Year over year cost pass-through was immaterial.

EMEA (Europe, Middle East & Africa) sales of $2,105 million were down 1% versus prior year.  Compared with third quarter 2022, underlying sales grew 2%, driven by 6% higher pricing partially offset by 4% lower volumes.  Operating profit of $634 million was 30.1% of sales, 820 basis points above prior year and 600 basis points higher when excluding the effects of cost pass-through. 

Linde Engineering sales were $467 million, 44% below prior year, and operating profit was $116 million or 24.8% of sales.  Order intake for the quarter was $633 million and third-party sale of equipment backlog was $3.6 billion.
 

Earnings Call

A teleconference on Linde’s third quarter 2023 results is being held today at 9:00 am EDT. 

Materials to be used in the teleconference are also available on the website.
 

About Linde

Linde is a leading global industrial gases and engineering company with 2022 sales of $33 billion.  We live our mission of making our world more productive every day by providing high-quality solutions, technologies and services which are making our customers more successful and helping to sustain, decarbonize and protect our planet.

The company serves a variety of end markets such as chemicals & energy, food & beverage, electronics, healthcare, manufacturing, metals and mining. Linde's industrial gases and technologies are used in countless applications including production of clean hydrogen and carbon capture systems critical to the energy transition, life-saving medical oxygen and high-purity & specialty gases for electronics. Linde also delivers state-of-the-art gas processing solutions to support customer expansion, efficiency improvements and emissions reductions.

For more information about the company and its products and services, please visit www.linde.com

NON-GAAP Financial Measures

Adjusted amounts, free cash flow and return on capital are non-GAAP measures.  See the attachments (Earnings release tables: https://eqs-cockpit.com/c/fncls.ssp?u=bc3b9657c4fa6b929957103487cb487e) for a summary of non-GAAP reconciliations and calculations for adjusted amounts. 

Attachments: Summary Non-GAAP Reconciliations, Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information and Appendix: Non-GAAP Measures and Reconciliations.

*Note: We are providing adjusted earnings per share (“EPS”) guidance for 2023. This is a non-GAAP financial measure that represents diluted earnings per share from continuing operations (a GAAP measure) but excludes the impact of certain items that we believe are not representative of our underlying business performance, such as cost reduction and other charges, any impairment or other charges related to scaling back operations in Russia as actions are defined and executed and as sanctions  impact the Company’s operations, the impact of potential divestitures or other potentially significant items. Given the uncertainty of timing and magnitude of such items, we cannot provide a reconciliation of the differences between the non-GAAP adjusted EPS guidance and the corresponding GAAP EPS measure without unreasonable effort.

Transfer of Stock Exchange Listing

Linde (NYSE: LIN) intends to transfer the listing of its ordinary shares from the New York Stock Exchange (NYSE) to the Nasdaq Stock Market (Nasdaq) on November 6,2023 after market close. Linde expects to commence trading as a Nasdaq-listed company upon market open on November 7, 2023 and will continue trading under the ticker symbol "LIN".  The transfer to Nasdaq provides Linde with Nasdaq index inclusion opportunities in addition to certain cost savings.

Forward-looking Statements

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, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions.  They are based on management’s reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties.  These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics, pandemics such as COVID-19 and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business.  These risks and uncertainties may cause future results or circumstances to differ materially from adjusted projections, estimates or other forward-looking statements.

Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances.  The above listed risks and uncertainties are further described in Item 1A.  Risk Factors in Linde plc’s Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 28, 2023 which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.