Linde Plc Q2 FY2025 earnings call

• Sanjiv highlighted that the sale of gas project backlog doubled from $3.6 billion to $7.1 billion in over 4 years, with 70 projects compared to 33 previously, and over $9.2 billion of new projects added, with $5.7 billion started up. - Base CapEx is stable, enabling healthy cash flow for shareholder returns, M&A, and project investments. - Small tuck-in acquisitions contribute to annual 1% or 2% bottom line improvement. - Matt discussed second quarter financial results, capital allocation with $6.5 billion year-to-date deployed, $2.8 billion in investments meeting risk-reward criteria, and ability to access low-cost capital with CHF 0.5 billion bonds issued at <1% yield.

Sales of $8.5 billion increased 3% over prior year and 5% sequentially. Year-over-year FX headwinds abated with a 3% sequential improvement from U.S. dollar weakening. Acquisitions lifted sales 1% over prior year. Excluding acquisitions, underlying sales grew 1% over prior year and 3% sequentially. Volumes were down 1% from last year. Operating profit of $2.6 billion increased 6% over prior year, with an operating margin of 30.1% which is an all-time quarterly high. Operating cash flows grew 15%, and ROC was 25.1%.

• Third quarter EPS guidance: $4.10 to $4.20, or 4% to 7% above last year, including a 1% currency tailwind. - Full year guidance: $16.30 to $16.50, or 5% to 6% growth, including a 1% currency tailwind. FX assumption improved but offset by negative economic assumption at the top end.

• Macro environment uncertainty impacting volumes. - Currency volatility. - Headwinds in Europe with softening demand. - Helium oversupply leading to high single-digit price declines in pricing.

Q: Could you take some time and just go geographically and by end markets kind of what you're seeing and what you expect to see in the back half of the year?

A: Sanjiv discussed Americas with confidence in U.S. market, Europe expected to soften, Asia mixed with India as bright spot.

Q: Do you see any risk to not getting future price increases given the weak macro we're now in?

A: Sanjiv stated pricing has tracked globally weighted CPI over 25 years and expects to continue, with China being an exception.

Q: Is there any risk of slowdown or slippage on intake so that your backlog may finish the year below $7 billion?

A: Sanjiv expects backlog to end the year with a 7 handle, with $1 billion of investments starting up in the second half.

Q: How do you think the recent agreement in space will convert into an on-site and frame up growth potential?

A: Sanjiv mentioned space is an attractive growth opportunity, with helium volumes flat, and recent investments in Texas and Florida.