Linde Reports First-Quarter 2023 Results

First-Quarter Highlights

• Sales $8.2 billion, flat YoY, up 3% ex. FX
• Operating profit $1.9 billion, adjusted operating profit $2.2 billion, up 16%
• Operating profit margin 23.6%; adjusted operating profit margin 26.9%, up 370 basis points
• EPS $3.06, up 33%; adjusted EPS $3.42, up 17% YoY or 20% ex. FX
• Increased full-year 2023 adjusted EPS guidance to $13.45 - $13.85, represents 9% to 13% growth year-over-year

WOKING, UK / ACCESSWIRE / April 27, 2023 / Linde plc (NYSE:LIN) today reported first-quarter 2023 net income of $1,516 million and diluted earnings per share of $3.06, up 29% and 33% respectively. Excluding Linde AG purchase accounting impacts and other charges, adjusted net income was $1,693 million, up 13% versus prior year. Adjusted earnings per share was $3.42, 17% above prior year.

Linde's sales for the first quarter were $8,193 million, flat versus prior year or 3% above when excluding negative currency impact. Compared to prior year, underlying sales increased 8% from price attainment.

First-quarter operating profit was $1,933 million. Adjusted operating profit of $2,206 million was up 16% versus prior year led by higher price and continued productivity initiatives across all segments. Adjusted operating profit margin of 26.9% was 370 basis points above prior year and 360 basis points higher when excluding the effects of cost pass-through.

First-quarter operating cash flow of $1,908 million decreased 5% versus prior year driven primarily by lower engineering project prepayments. After capital expenditures of $829 million, free cash flow was $1,079 million. During the quarter, the company returned $1,469 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 set of strong results in the first quarter, including record ROC of 24.0%, expanding operating margin to 26.9% and a tenth consecutive quarter of 20% or more EPS growth ex. FX. This performance is a result of our unwavering focus to optimize the base business, capitalize on high-quality growth opportunities and leverage our asset network to increase density, all while maintaining rigorous capital discipline."

Lamba continued, "Looking ahead, the geopolitical and macro environment continues to remain uncertain. Regardless, we will continue to create shareholder value in any economic scenario."

For the second quarter of 2023, Linde expects adjusted diluted earnings per share in the range of $3.40 to $3.50, up 10% to 13% versus prior-year quarter. This guidance assumes a currency headwind of 1% year-over-year and flat sequentially.

For the full year 2023, the company expects adjusted diluted earnings per share to be in the range of $13.45 to $13.85, up 9% to 13% 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 $4.2 billion contractual sale of gas project backlog.

First-Quarter 2023 Results by Segment

Americas sales of $3,551 million grew 10% versus prior-year quarter. Compared with first quarter 2022, underlying sales increased 8% driven by 7% higher pricing and 1% volume growth, primarily in the manufacturing and food and beverage end markets. Operating profit of $1,025 million was 28.9% of sales, 100 basis points above prior year and 60 basis points higher when excluding the effects of cost pass-through.

APAC (Asia Pacific) sales of $1,598 million were flat versus prior year. Compared with first quarter 2022, underlying sales grew 6% driven by 5% price attainment and 1% volume growth, primarily in the electronics, chemicals and energy end markets including project start-ups. Operating profit of $423 million was 26.5% of sales, 160 basis points above prior year. Year over year cost pass-through was immaterial.

EMEA (Europe, Middle East & Africa) sales of $2,177 million were up 1% versus prior year. Compared with first quarter 2022, underlying sales grew 10%, driven by 13% higher pricing partially offset by 3% lower volumes. Operating profit of $607 million was 27.9% of sales, 450 basis points above prior year and 470 basis points higher when excluding the effects of cost pass-through.

Linde Engineering sales were $540 million, 26% below prior year, and operating profit was $149 million or 27.6% of sales. Order intake for the quarter was $478 million and third-party sale of equipment backlog was $3.5 billion.

Earnings Call

A teleconference on Linde's first-quarter 2023 results is being held today at 9:00 am EST.

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

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=30e8adcb3902b197e713033fba1ef3c5) 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 are enacted that 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.

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.

File: Q1_2023_Earnings_Release_Tables

SOURCE: Linde plc