Increased full-year 2021 adjusted EPS guidance to $10.10 - $10.30, representing 23% to 25% growth year-over-year
Guildford, UK, July 30, 2021 – Linde plc (NYSE: LIN; FWB: LIN) today reported second-quarter 2021 income from continuing operations of $840 million and diluted earnings per share of $1.60, an increase of 84% versus prior year. Excluding Linde AG purchase accounting impacts and other charges, adjusted income from continuing operations was $1,415 million, up 41% versus prior year and 8% sequentially. Adjusted earnings per share was $2.70, 42% above prior year and 8% higher sequentially.
Second-quarter operating profit was $1,142 million. Adjusted operating profit of $1,837 million was up 39% versus prior year led by higher price, strong volumes and continued productivity initiatives across all segments. Adjusted operating margin of 24.2% expanded 350 basis points versus prior year and 90 basis points sequentially.
Second-quarter operating cash flow of $1,827 million increased 4% versus prior year. After capital expenditures of $744 million, free cash flow was $1,083 million, up 10% versus prior year. During the quarter, the company returned $1,748 million to shareholders through dividends and stock repurchases, net of issuance.
In addition, the company ended the second quarter with a total backlog of approximately $7.5 billion which includes both sale of gas and sale of plant projects, all contractually secured with high-quality customers.
For third quarter 2021, Linde expects adjusted diluted earnings per share in the range of $2.60 to $2.70, up 34% to 39% versus the same quarter in 2019 and 21% to 26% versus prior-year quarter. This guidance assumes 3% currency tailwind versus prior year and 1% headwind sequentially.
For full year 2021, the company has updated its adjusted diluted earnings per share guidance to be in the range of $10.10 to $10.30, up 38% to 40% versus 2019 and 23% to 25% versus prior year. This guidance assumes 3% currency tailwind versus 2020. Full-year capital expenditures are expected to be in the range of $3.0 billion to $3.4 billion to support maintenance and growth requirements including the contractual project backlog.
Second-Quarter 2021 Results by Segment
Americas sales of $3,020 million were 25% above prior year. Underlying sales increased 21% driven by 3% higher pricing and 18% higher volume, led by stronger demand across all end markets and project start-ups. Sequentially, price increased 1% and volumes grew 5%, led primarily by higher demand in the cyclical end markets. Operating profit of $871 million was 28.8% of sales, up 310 basis points versus prior year.
APAC (Asia Pacific) sales of $1,544 million were 19% above prior year. Underlying sales grew 21% driven by 2% price attainment and 19% volume growth, led by higher demand across all end markets, plus project start-ups. Sequentially, price increased 1% and volume grew 7%, led by electronics and cyclical end markets. Divestitures were driven by an accounting deconsolidation of a joint venture which reduced sales 12% versus prior year, but had no impact on earnings per share. Operating profit of $389 million was 25.2% of sales, up 250 basis points versus prior year.
EMEA (Europe, Middle East & Africa) sales of $1,875 million were up 29% versus prior year. Underlying sales grew 16% from 4% higher pricing and 12% higher volumes across all end markets. Sequentially, underlying sales were up 3% from 1% pricing and 2% volumes. Operating profit of $487 million was 26.0% of sales, up 510 basis points versus prior year.
Linde Engineering sales were $646 million, 20% below prior year largely due to the timing of plant completion and operating profit was $108 million or 16.7% of sales. Order intake for the quarter was $355 million and third-party sale of plant backlog was $4.1 billion.
Page 2/11
Press release
Earnings Call
A teleconference on Linde’s second-quarter 2021 results is being held today at 9:00 am EDT.
Live conference call
US Toll-Free Dial-In Number: 1 855 758 5442
Germany Toll-Free Dial-In Number: 0800 181 5287
UK Toll-Free Dial-In Number: 0800 028 8438
Access code: 2925099
Live webcast (listen-only)
https://investors.linde.com/events-presentations
Short URL: https://t1p.de/i2ho
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 2020 sales of $27 billion (€24 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 and protect our planet.
The company serves a variety of end markets including chemicals & refining, food & beverage, electronics, healthcare, manufacturing and primary metals. Linde’s industrial gases are used in countless applications, from life-saving oxygen for hospitals to high-purity & specialty gases for electronics manufacturing, hydrogen for clean fuels and much more. 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 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 2021. 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, 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.
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, 2020 filed with the SEC on March 1, 2021 which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.
Page 4/11
LINDE PLC AND SUBSIDIARIES
SUMMARY NON-GAAP RECONCILIATIONS
(UNAUDITED)
The following adjusted amounts are Non-GAAP measures and are intended to supplement investors' understanding of the company's financial statements by providing measures which investors, financial analysts and management use to help evaluate the company's operating performance. Items which the company does not believe to be indicative of ongoing business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these Non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures. See the "NON GAAP MEASURES AND RECONCILIATIONS" starting on page 10 for additional details relating to the adjustments.
(Millions of dollars, except per share amounts)
Sales
Operating Profit
Income from Continuing Operations
Diluted EPS from Continuing Operations
2021
2020
2021
2020
2021
2020
2021
2020
Quarter Ended June 30
Reported GAAP Amounts
$
7,584
$
6,377
$
1,142
$
591
$
840
$
458
$
1.60
$
0.87
Cost reduction program and other charges (a)
-
-
204
249
198
187
0.38
0.35
Purchase accounting impacts - Linde AG (b)
-
-
491
477
377
360
0.72
0.68
Total adjustments
-
-
695
726
575
547
1.10
1.03
Adjusted amounts
$
7,584
$
6,377
$
1,837
$
1,317
$
1,415
$
1,005
$
2.70
$
1.90
Sales
Operating Profit
Income from Continuing Operations
Diluted EPS from Continuing Operations
2021
2020
2021
2020
2021
2020
2021
2020
Year to Date June 30
Reported GAAP Amounts
$
14,827
$
13,116
$
2,355
$
1,324
$
1,819
$
1,029
$
3.46
$
1.93
Cost reduction program and other charges (a)
-
-
196
380
170
282
0.32
0.53
Purchase accounting impacts - Linde AG (b)
-
-
974
965
738
703
1.41
1.32
Total adjustments
-
-
1,170
1,345
908
985
1.73
1.85
Adjusted amounts
$
14,827
$
13,116
$
3,525
$
2,669
$
2,727
$
2,014
$
5.19
$
3.78
(a)
To adjust for cost reduction program and other charges; 2021 includes severance of $182 million and $208 million for the quarter and year-to-date periods, other cost reduction charges of $22 million and $40 million for the quarter and year-to-date periods and other charges of $0 million for the quarter and an other net benefit of $52 million for the year-to-date period.
(b)
To adjust for purchase accounting impacts related to the merger.
Page 5/11
LINDE PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED)
Quarter Ended
Year To Date
June 30,
June 30,
2021
2020
2021
2020
SALES
$
7,584
$
6,377
$
14,827
$
13,116
Cost of sales
4,194
3,619
8,248
7,462
Selling, general and administrative
822
760
1,609
1,621
Depreciation and amortization
1,171
1,124
2,337
2,266
Research and development
34
34
69
78
Cost reduction programs and other charges
204
249
196
380
Other income (expense) - net
(17
)
-
(13
)
15
OPERATING PROFIT
1,142
591
2,355
1,324
Interest expense - net
18
18
38
42
Net pension and OPEB cost (benefit), excluding service cost
(49
)
(45
)
(98
)
(90
)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY INVESTMENTS
1,173
618
2,415
1,372
Income taxes
334
164
602
329
INCOME FROM CONTINUING OPERATIONS BEFORE EQUITY INVESTMENTS
839
454
1,813
1,043
Income from equity investments
37
29
80
46
INCOME FROM CONTINUING OPERATIONS (INCLUDING NONCONTROLLING INTERESTS)
876
483
1,893
1,089
Add: income from discontinued operations, net of tax
1
-
2
2
INCOME (INCLUDING NONCONTROLLING INTERESTS)
877
483
1,895
1,091
Less: noncontrolling interests from continuing operations
(36
)
(25
)
(74
)
(60
)
Less: noncontrolling interests from discontinued operations
-
-
-
-
NET INCOME - LINDE PLC
$
841
$
458
$
1,821
$
1,031
NET INCOME - LINDE PLC
Income from continuing operations
$
840
$
458
$
1,819
$
1,029
Income from discontinued operations
$
1
$
-
$
2
$
2
PER SHARE DATA - LINDE PLC SHAREHOLDERS
Basic earnings per share from continuing operations
$
1.62
$
0.87
$
3.49
$
1.95
Basic earnings per share from discontinued operations
-
-
-
-
Basic earnings per share
$
1.62
$
0.87
$
3.49
$
1.95
Diluted earnings per share from continuing operations
$
1.60
$
0.87
$
3.46
$
1.93
Diluted earnings per share from discontinued operations
-
-
-
-
Diluted earnings per share
$
1.60
$
0.87
$
3.46
$
1.93
Cash dividends
$
1.06
$
0.963
$
2.12
$
1.926
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic shares outstanding (000's)
518,950
525,510
520,691
528,385
Diluted shares outstanding (000's)
523,723
529,054
525,380
532,112
Note: See page 10 for a reconciliation to adjusted amounts which are Non-GAAP.
Page 6/11
LINDE PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Millions of dollars)
(UNAUDITED)
June 30,
December 31,
2021
2020
ASSETS
Cash and cash equivalents
$
3,137
$
3,754
Accounts receivable - net
4,342
4,167
Contract assets
173
162
Inventories
1,692
1,729
Prepaid and other current assets
1,102
1,112
TOTAL CURRENT ASSETS
10,446
10,924
Property, plant and equipment - net
26,917
28,711
Goodwill
27,621
28,201
Other intangibles - net
14,493
16,184
Other long-term assets
4,868
4,209
TOTAL ASSETS
$
84,345
$
88,229
LIABILITIES AND EQUITY
Accounts payable
$
3,143
$
3,095
Short-term debt
3,681
3,251
Current portion of long-term debt
1,827
751
Contract liabilities
1,787
1,769
Other current liabilities
4,238
4,874
TOTAL CURRENT LIABILITIES
14,676
13,740
Long-term debt
9,984
12,152
Other long-term liabilities
12,457
12,755
TOTAL LIABILITIES
37,117
38,647
REDEEMABLE NONCONTROLLING INTERESTS
13
13
LINDE PLC SHAREHOLDERS' EQUITY:
Common stock
1
1
Additional paid-in capital
40,200
40,202
Retained earnings
17,820
17,178
Accumulated other comprehensive income (loss)
(4,908
)
(4,690
)
Less: Treasury stock, at cost
(7,336
)
(5,374
)
Total Linde plc shareholders' equity
45,777
47,317
Noncontrolling interests
1,438
2,252
TOTAL EQUITY
47,215
49,569
TOTAL LIABILITIES AND EQUITY
$
84,345
$
88,229
Page 7/11
LINDE PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)
(UNAUDITED)
Quarter Ended
Year to Date
June 30,
June 30,
2021
2020
2021
2020
OPERATIONS
Net income - Linde plc
$
841
$
458
$
1,821
$
1,031
Less: income from discontinued operations, net of tax and noncontrolling interests
(1
)
-
(2
)
(2
)
Add: noncontrolling interests
36
25
74
60
Net income (including noncontrolling interests)
876
483
1,893
1,089
Adjustments to reconcile net income to net cash provided by operating activities:
Cost reduction programs and other charges, net of payments (a)
171
199
95
239
Depreciation and amortization
1,171
1,124
2,337
2,266
Accounts receivable
(210
)
(9
)
(388
)
(118
)
Contract assets and liabilities, net
(140
)
(105
)
51
71
Inventory
18
(20
)
(42
)
(82
)
Payables and accruals
(30
)
156
39
(27
)
Pension contributions
(16
)
(24
)
(28
)
(41
)
Deferred income taxes and other
(13
)
(40
)
(21
)
(286
)
Net cash provided by operating activities
1,827
1,764
3,936
3,111
INVESTING
Capital expenditures
(744
)
(783
)
(1,506
)
(1,586
)
Acquisitions, net of cash acquired
(21
)
-
(31
)
(41
)
Divestitures and asset sales
56
149
77
380
Net cash provided by (used for) investing activities
(709
)
(634
)
(1,460
)
(1,247
)
FINANCING
Debt increase (decrease) - net
(367
)
411
314
3,523
Issuances of ordinary shares
15
12
32
25
Purchases of ordinary shares
(1,214
)
-
(2,082
)
(1,828
)
Cash dividends - Linde plc shareholders
(549
)
(506
)
(1,102
)
(1,017
)
Noncontrolling interest transactions and other
(30
)
(121
)
(277
)
(148
)
Net cash provided by (used for) financing activities
(2,145
)
(204
)
(3,115
)
555
Effect of exchange rate changes on cash and cash equivalents
68
1
22
(178
)
Change in cash and cash equivalents
(959
)
927
(617
)
2,241
Cash and cash equivalents, beginning-of-period
4,096
4,014
3,754
2,700
Cash and cash equivalents, end-of-period
$
3,137
$
4,941
$
3,137
$
4,941
(a)
Cost reduction programs and other charges were $204 million and $249 million for the quarters ended June 30, 2021 and 2020, respectively, and $196 million and $380 million for the six months ended June 30, 2021 and 2020, respectively. Related cash outflows were $33 million and $50 million for the quarters ended June 30, 2021 and 2020, respectively, and $101 million and $141 million for the six months ended June 30, 2021 and 2020, respectively.
Page 8/11
LINDE PLC AND SUBSIDIARIES
SEGMENT INFORMATION
(Millions of dollars)
(UNAUDITED)
Quarter Ended June 30,
Year to Date June 30,
2021
2020
2021
2020
SALES
Americas
$
3,020
$
2,417
$
5,860
$
5,094
EMEA
1,875
1,448
3,674
3,081
APAC
1,544
1,295
2,980
2,631
Engineering
646
810
1,320
1,418
Other
499
407
993
892
Total segment sales
$
7,584
$
6,377
$
14,827
$
13,116
OPERATING PROFIT
Americas
$
871
$
622
$
1,666
$
1,283
EMEA
487
303
938
658
APAC
389
294
740
575
Engineering
108
138
217
229
Other
(18
)
(40
)
(36
)
(76
)
Segment operating profit
$
1,837
$
1,317
$
3,525
$
2,669
Cost reduction programs and other charges
(204
)
(249
)
(196
)
(380
)
Purchase accounting impacts - Linde AG
(491
)
(477
)
(974
)
(965
)
Total operating profit
$
1,142
$
591
$
2,355
$
1,324
Page 9/11
LINDE PLC AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES AND RECONCILIATIONS
(Millions of dollars, except per share data)
(UNAUDITED)
The following Non-GAAP measures are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management use to help evaluate the company’s operating performance and liquidity. Items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these Non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.
2021
2020
Year to Date June 30,
Q2
Q1
Year to Date June 30,
Q4
Q3
Q2
Q1
Adjusted Operating Profit and Operating Margin
Reported operating profit
$
2,355
$
1,142
$
1,213
$
1,324
$
1,029
$
969
$
591
$
733
Add: Cost reduction programs and other charges
196
204
(8
)
380
78
48
249
131
Add: Purchase accounting impacts - Linde AG (c)
974
491
483
965
506
498
477
488
Total adjustments
1,170
695
475
1,345
584
546
726
619
Adjusted operating profit
$
3,525
$
1,837
$
1,688
$
2,669
$
1,613
$
1,515
$
1,317
$
1,352
Reported percentage change
78
%
93
%
65
%
4
%
(12
)%
20
%
Adjusted percentage change
32
%
39
%
25
%
5
%
- %
11
%
Reported sales
$
14,827
$
7,584
$
7,243
$
13,116
$
7,272
$
6,855
$
6,377
$
6,739
Reported operating margin
15.9
%
15.1
%
16.7
%
10.1
%
14.2
%
14.1
%
9.3
%
10.9
%
Adjusted operating margin
23.8
%
24.2
%
23.3
%
20.3
%
22.2
%
22.1
%
20.7
%
20.1
%
Adjusted Depreciation and amortization
Reported depreciation and amortization
$
2,337
$
1,171
$
1,166
$
2,266
$
1,192
$
1,168
$
1,124
$
1,142
Less: Purchase accounting impacts - Linde AG (c)
(957
)
(479
)
(478
)
(944
)
(489
)
(487
)
(468
)
(476
)
Adjusted depreciation and amortization
$
1,380
$
692
$
688
$
1,322
$
703
$
681
$
656
$
666
Adjusted Other Income (Expense) - net
Reported Other Income (Expense) - net
$
(13
)
$
(17
)
$
4
$
15
$
(47
)
$
(29
)
$
-
$
15
Add: Purchase accounting impacts - Linde AG (c)
(17
)
(12
)
(5
)
(21
)
(17
)
(11
)
(9
)
(12
)
Adjusted Other Income (Expense) - net
$
4
$
(5
)
$
9
$
36
$
(30
)
$
(18
)
$
9
$
27
Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service Cost
Reported net pension and OPEB cost (benefit), excluding service cost
$
(98
)
$
(49
)
$
(49
)
$
(90
)
$
(46
)
$
(41
)
$
(45
)
$
(45
)
Add: Pension settlement charges
-
-
-
-
-
(6
)
-
-
Adjusted Net Pension and OPEB cost (benefit), excluding service costs
$
(98
)
$
(49
)
$
(49
)
$
(90
)
$
(46
)
$
(47
)
$
(45
)
$
(45
)
Adjusted Interest Expense - Net
Reported interest expense - net
$
38
$
18
$
20
$
42
$
35
$
38
$
18
$
24
Add: Purchase accounting impacts - Linde AG (c)
33
15
18
44
18
23
22
22
Less: Bond Redemption
-
-
-
-
(16
)
-
-
-
Total adjustments
33
15
18
44
2
23
22
22
Adjusted interest expense - net
$
71
$
33
$
38
$
86
$
37
$
61
$
40
$
46
Adjusted Income Taxes (a)
Reported income taxes
$
602
$
334
$
268
$
329
$
253
$
265
$
164
$
165
Add: Purchase accounting impacts - Linde AG (c)
234
116
118
217
107
75
95
122
Add: Pension settlement charges
-
-
-
-
-
1
-
-
Add: Cost reduction programs and other charges
26
6
20
98
20
12
62
36
Less: Bond Redemption
-
-
-
-
4
-
-
-
Total adjustments
260
122
138
315
131
88
157
158
Adjusted income taxes
$
862
$
456
$
406
$
644
$
384
$
353
$
321
$
323
Adjusted Effective Tax Rate (a)
Reported income before income taxes and equity investments
$
2,415
$
1,173
$
1,242
$
1,372
$
1,040
$
972
$
618
$
754
Add: Pension settlement charge
-
-
-
-
-
6
-
-
Add: Purchase accounting impacts - Linde AG (c)
941
476
465
921
488
475
455
466
Add: Cost reduction programs and other charges
196
204
(8
)
380
78
48
249
131
Less: Bond Redemption
-
-
-
-
16
-
-
-
Total adjustments
1,137
680
457
1,301
582
529
704
597
Adjusted income before income taxes and equity investments
$
3,552
$
1,853
$
1,699
$
2,673
$
1,622
$
1,501
$
1,322
$
1,351
Reported Income taxes
$
602
$
334
$
268
$
329
$
253
$
265
$
164
$
165
Reported effective tax rate
24.9
%
28.5
%
21.6
%
24.0
%
24.3
%
27.3
%
26.5
%
21.9
%
Adjusted income taxes
$
862
$
456
$
406
$
644
$
384
$
353
$
321
$
323
Adjusted effective tax rate
24.3
%
24.6
%
23.9
%
24.1
%
23.7
%
23.5
%
24.3
%
23.9
%
Income from Equity Investments
Reported income from equity investments
$
80
$
37
$
43
$
46
$
16
$
23
$
29
$
17
Add: Purchase accounting impacts - Linde AG (c)
38
19
19
28
15
14
14
14
Adjusted income from equity investments
$
118
$
56
$
62
$
74
$
31
$
37
$
43
$
31
Adjusted Noncontrolling Interests from Continuing Operations
Reported noncontrolling interests from continuing operations
$
(74
)
$
(36
)
$
(38
)
$
(60
)
$
(34
)
$
(31
)
$
(25
)
$
(35
)
Add: Cost reduction programs and other charges
-
-
-
-
(4
)
-
-
-
Add: Purchase accounting impacts - Linde AG (c)
(7
)
(2
)
(5
)
(29
)
(14
)
(14
)
(14
)
(15
)
Total adjustments
(7
)
(2
)
(5
)
(29
)
(18
)
(14
)
(14
)
(15
)
Adjusted noncontrolling interests from continuing operations
$
(81
)
$
(38
)
$
(43
)
$
(89
)
$
(52
)
$
(45
)
$
(39
)
$
(50
)
Page 10 of 10 (cont'd)
LINDE PLC AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES AND RECONCILIATIONS
(Millions of dollars, except per share data)
(UNAUDITED)
2021
2020
Year to Date June 30,
Q2
Q1
Year to Date June 30,
Q4
Q3
Q2
Q1
Adjusted Income from Continuing Operations (b)
Reported income from continuing operations
$
1,819
$
840
$
979
$
1,029
$
769
$
699
$
458
$
571
Add: Pension settlement charge
-
-
-
-
-
5
-
-
Add: Cost reduction programs and other charges
170
198
(28
)
282
54
36
187
95
Less: Bond redemption
-
-
-
-
12
-
-
-
Add: Purchase accounting impacts - Linde AG (c)
738
377
361
703
382
400
360
343
Total adjustments
908
575
333
985
448
441
547
438
Adjusted income from continuing operations
$
2,727
$
1,415
$
1,312
$
2,014
$
1,217
$
1,140
$
1,005
$
1,009
Adjusted Diluted EPS from Continuing Operations (b)
Reported diluted EPS from continuing operations
$
3.46
$
1.60
$
1.86
$
1.93
$
1.45
$
1.32
$
0.87
$
1.07
Add: Pension settlement charge
-
-
-
-
-
0.01
-
-
Add: Cost reduction programs and other charges
0.32
0.38
(0.05
)
0.53
0.10
0.07
0.35
0.18
Less: Bond Redemption
-
-
-
-
0.02
-
-
-
Add: Purchase accounting impacts - Linde AG
1.41
0.72
0.68
1.32
0.73
0.75
0.68
0.64
Total adjustments
1.73
1.10
0.63
1.85
0.85
0.83
1.03
0.82
Adjusted diluted EPS from continuing operations
$
5.19
$
2.70
$
2.49
$
3.78
$
2.30
$
2.15
$
1.90
$
1.89
Reported percentage change
79
%
84
%
74
%
12
%
54
%
(1
)%
(7
)%
35
%
Adjusted percentage change
37
%
42
%
32
%
7
%
22
%
11
%
4
%
12
%
Adjusted Diluted EPS from Continuing Operations Guidance (d)
Third Quarter 2021
Full Year 2021
Low End
High End
Low End
High End
2021 Adjusted Guidance
$
2.60
$
2.70
$
10.10
$
10.30
Adjusted percentage changes versus 2020 adjusted diluted EPS
21
%
26
%
23
%
25
%
Add: Estimated currency headwind/(tailwind)
(3
)%
(3
)%
(3
)%
(3
)%
Adjusted percentage change excluding currency
18
%
23
%
20
%
22
%
Adjusted EBITDA and % of Sales
Income from continuing operations
$
1,819
$
840
$
979
$
1,029
$
769
$
699
$
458
$
571
Add: Noncontrolling interests related to continuing operations
74
36
38
60
34
31
25
35
Add: Net pension and OPEB cost (benefit), excluding service cost
(98
)
(49
)
(49
)
(90
)
(46
)
(41
)
(45
)
(45
)
Add: Interest expense
38
18
20
42
35
38
18
24
Add: Income taxes
602
334
268
329
253
265
164
165
Add: Depreciation and amortization
2,337
1,171
1,166
2,266
1,192
1,168
1,124
1,142
EBITDA from continuing operations
4,772
2,350
2,422
3,636
2,237
2,160
1,744
1,892
Add: Cost reduction programs and other charges
196
204
(8
)
380
78
48
249
131
Add: Purchase accounting impacts - Linde AG
55
31
24
49
32
25
23
26
Total adjustments
251
235
16
429
110
73
272
157
Adjusted EBITDA from continuing operations
$
5,023
$
2,585
$
2,438
$
4,065
$
2,347
$
2,233
$
2,016
$
2,049
Reported sales
$
14,827
$
7,584
$
7,243
$
13,116
$
7,272
$
6,855
$
6,377
$
6,739
% of sales
EBITDA from continuing operations
32.2
%
31.0
%
33.4
%
27.7
%
30.8
%
31.5
%
27.3
%
28.1
%
Adjusted EBITDA from continuing operations
33.9
%
34.1
%
33.7
%
31.0
%
32.3
%
32.6
%
31.6
%
30.4
%
(a)
The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.
(b)
Net of income taxes which are shown separately in “Adjusted Income Taxes and Effective Tax Rate”.
(c)
The company believes that its non-GAAP measures excluding Purchase accounting impacts - Linde AG are useful to investors because: (i) the business combination was a merger of equals in an all-stock merger transaction, with no cash consideration, (ii) the company is managed on a geographic basis and the results of certain geographies are more heavily impacted by purchase accounting than others, causing results that are not comparable at the reportable segment level, therefore, the impacts of purchase accounting adjustments to each segment vary and are not comparable within the company and when compared to other companies in similar regions, (iii) business management is evaluated and variable compensation is determined based on results excluding purchase accounting impacts, and; (iv) it is important to investors and analysts to understand the purchase accounting impacts to the financial statements.
A summary of each of the adjustments made for Purchase accounting impacts - Linde AG are as follows:
Adjusted Operating Profit and Margin: The purchase accounting adjustments for the periods presented relate primarily to depreciation and amortization related to the fair value step up of fixed assets and intangible assets (primarily customer related) acquired in the merger.
Adjusted Interest Expense - Net: Relates to the amortization of the fair value of debt acquired in the merger.
Adjusted Income Taxes and Effective Tax Rate: Relates to the current and deferred income tax impact on the adjustments discussed above. The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.
Adjusted Income from Equity Investments: Represents the amortization of increased fair value on equity investments related to depreciable and amortizable assets.
Adjusted Noncontrolling Interests from Continuing Operations: Represents the noncontrolling interests’ ownership portion of the adjustments described above determined on an entity by entity basis.
(d)
We are providing adjusted earnings per share ("EPS") guidance for 2021. 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, 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.
Page 10/11
LINDE PLC AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES AND RECONCILIATIONS
(Millions of dollars)
(UNAUDITED)
2021
2020
2019
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Free Cash Flow (FCF) - Free cash flow is a measure used by investors, financial analysts and management to evaluate the ability of a company to pursue opportunities that enhance shareholder value. FCF equals cash flow from operations less capital expenditures.
Operating Cash Flow
$
1,827
$
2,109
$
2,434
$
1,884
$
1,764
$
1,347
$
2,174
$
1,872
$
1,005
$
1,068
Less: Capital Expenditures
(744
)
(762
)
(1,027
)
(787
)
(783
)
(803
)
(1,015
)
(959
)
(865
)
(843
)
Free Cash Flow
$
1,083
$
1,347
$
1,407
$
1,097
$
981
$
544
$
1,159
$
913
$
140
$
225
Net Debt - Net debt is a financial liquidity metric used by investors, financial analysts and management to evaluate the ability of a company to repay its debt and is calculated as total debt (excluding purchase accounting impacts) less liquid assets.
Debt
$
15,492
$
15,750
$
16,154
$
17,803
$
17,480
$
16,875
$
13,956
$
13,201
$
13,957
$
14,146
Less: Cash and cash equivalents
(3,137
)
(4,096
)
(3,754
)
(5,199
)
(4,941
)
(4,014
)
(2,700
)
(2,120
)
(2,686
)
(5,791
)
Net debt
12,355
11,654
12,400
12,604
12,539
12,861
11,256
11,081
11,271
8,355
Less: Purchase accounting impacts - Linde AG
(84
)
(98
)
(121
)
(133
)
(150
)
(170
)
(195
)
(211
)
(243
)
(262
)
Adjusted net debt
$
12,271
$
11,556
$
12,279
$
12,471
$
12,389
$
12,691
$
11,061
$
10,870
$
11,028
$
8,093
Less: Net assets held for sale
(1
)
(4
)
(3
)
(2
)
(2
)
(115
)
(123
)
(223
)
(272
)
(1,629
)
Adjusted net debt less net assets held for sale
$
12,270
$
11,552
$
12,276
$
12,469
$
12,387
$
12,576
$
10,938
$
10,647
$
10,756
$
6,464
After-tax Return on Capital and Adjusted After-tax Return on Capital (ROC) - After-tax return on capital is a measure used by investors, financial analysts and management to evaluate the return on net assets employed in the business. ROC measures the after-tax operating profit that the company was able to generate with the investments made by all parties in the business (debt, noncontrolling interests and Linde plc shareholders’ equity).
Reported income from continuing operations
$
840
$
979
$
769
$
699
$
458
$
571
$
507
$
728
$
513
$
435
Add: noncontrolling interests from continuing operations
36
38
34
31
25
35
27
3
29
30
Add: interest expense - net
18
20
35
38
18
24
8
(3
)
10
23
Less: tax benefit on interest expense - net *
(5
)
(5
)
(9
)
(10
)
(5
)
(6
)
(2
)
1
(3
)
(6
)
Reported NOPAT
$
889
$
1,032
$
829
$
758
$
496
$
624
$
540
$
729
$
549
$
482
Adjusted income from continuing operations
$
1,415
$
1,312
$
1,217
$
1,140
$
1,005
$
1,009
$
1,024
$
1,052
$
1,000
$
927
Add: adjusted noncontrolling interests from continuing operations
38
43
52
45
39
50
41
46
46
45
Add: adjusted interest expense - net
33
38
37
61
40
46
30
19
35
50
Less: tax benefit on interest expense - net *
(8
)
(10
)
(9
)
(15
)
(10
)
(12
)
(7
)
(5
)
(9
)
(13
)
Adjusted NOPAT
$
1,478
$
1,383
$
1,297
$
1,231
$
1,074
$
1,093
$
1,088
$
1,112
$
1,072
$
1,009
4-quarter trailing reported NOPAT
$
3,508
$
3,115
$
2,707
$
2,418
$
2,389
$
2,442
$
2,300
4-quarter trailing adjusted NOPAT
$
5,389
$
4,985
$
4,695
$
4,486
$
4,367
$
4,365
$
4,281
Equity and redeemable noncontrolling interests:
Redeemable noncontrolling interests
$
13
$
13
$
13
$
13
$
13
$
92
$
113
$
14
$
15
$
15
Linde plc shareholders' equity
45,777
46,210
47,317
46,175
45,537
44,776
49,074
48,953
50,564
51,175
Noncontrolling interests
1,438
1,410
2,252
2,404
2,387
2,375
2,448
2,341
2,315
5,457
Total equity and redeemable noncontrolling interests
$
47,228
$
47,633
$
49,582
$
48,592
$
47,937
$
47,243
$
51,635
$
51,308
$
52,894
$
56,647
Reported capital
$
59,582
$
59,283
$
61,979
$
61,194
$
60,474
$
59,989
$
62,768
$
62,166
$
63,893
$
63,373
Total equity and redeemable noncontrolling interests
$
47,228
$
47,633
$
49,582
$
48,592
$
47,937
$
47,243
$
51,635
$
51,308
$
52,894
$
56,647
Add: Adjusted net debt less net assets held for sale
12,270
11,552
12,276
12,469
12,387
12,576
10,938
10,647
10,756
6,464
Less: Linde AG Goodwill (a)
24,256
24,256
24,256
24,256
24,256
24,256
24,256
24,197
24,197
24,197
Less: Linde AG Indefinite lived intangibles (a)
1,868
1,868
1,868
1,868
1,868
1,868
1,868
1,868
1,868
1,868
Adjusted capital
$
33,374
$
33,061
$
35,734
$
34,937
$
34,200
$
33,695
$
36,449
$
35,890
$
37,585
$
37,046
(a) Represent opening balance sheet purchase accounting impacts of non-amortizing assets related to the Linde AG merger.
Tax benefit on interest expense - net is generally presented using the reported effective rate.
Page 11/11
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