Linde (LIN) 8-K Linde Reports Second-Quarter 2022 Results

Linde Reports Second-Quarter 2022 Results

Second-Quarter Highlights

➢	Sales $8.5 billion, up 12% versus prior-year quarter
➢	Operating profit $0.6 billion; adjusted operating profit $2.0 billion, up 8%
➢	Operating profit margin 7.0%; adjusted operating profit margin 23.5%, up 100 basis points ex. cost pass-through
➢	EPS $0.74; adjusted EPS $3.10, up 15%
➢	Operating cash flow of $2.1 billion, up 17% versus prior-year quarter
➢	Increased full-year 2022 adjusted EPS guidance to $11.73 - $11.93,represents 10% to 12% growth year-over-year, 15% to 17% ex. FX

Woking, UK, July 28, 2022 – Linde plc (NYSE: LIN; FWB: LIN) today reported second-quarter 2022 income from continuing operations of $372 million and diluted earnings per share of $0.74. Excluding charges primarily from the deconsolidation and impairment of Russian subsidiaries and purchase accounting impacts from the Linde AG merger, adjusted income from continuing operations was $1,566 million, up 11% versus prior year. Adjusted earnings per share was $3.10, 15% above prior year and 6% higher sequentially.

Linde’s sales for the second quarter were $8,457 million, 12% above prior year. Compared to prior year, underlying sales increased 9%, including 7% price attainment and 2% higher volumes, driven by growth in all end markets except healthcare. Sequentially, underlying sales grew 4% driven by higher price and volume, each growing 2%.

Second-quarter operating profit was $589 million. Adjusted operating profit of $1,988 million was up 8% versus prior year led by higher price, strong volumes and continued productivity initiatives across all segments. Excluding the effects of cost pass-through, adjusted operating margins expanded 100 basis points versus prior year.

Second-quarter operating cash flow of $2,133 million more than covered capital expenditures of $826 million resulting in free cash flow of $1,307 million. During the quarter, the company returned $2,183 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 strong quarter with EPS increasing 15% versus prior year or 20% excluding currency translation. Furthermore, ROC reached a new record of 20% and operating margins expanded 100 basis points excluding cost-pass through. Despite the macroeconomic challenges, Linde once again demonstrated its resiliency and the ability to generate shareholder value in any environment.”

Lamba continued, “Looking ahead, the geopolitical and macro environment continues to be very uncertain. Regardless, I have confidence the company will continue to deliver on its commitments to shareholders.”

For the third quarter of 2022, Linde expects adjusted diluted earnings per share in the range of $2.85 to $2.95, up 4% to 8% versus prior-year quarter. This guidance assumes a currency headwind of 6% year-over-year and 3% sequentially.

For the full year 2022, the company expects adjusted diluted earnings per share to be in the range of $11.73 to $11.93, up 10% to 12% versus prior year or 15% to 17% excluding currency headwind. Note that all Russian earnings are excluded prospectively as of July 1, 2022. Full-year capital expenditures are expected to be in the range of $3.0 billion to $3.4 billion to support growth and maintenance requirements including the $3.6 billion contractual sale of gas project backlog.

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Second-Quarter 2022 Results by Segment

Americas sales of $3,518 million grew 16% versus prior-year quarter and 9% sequentially. Compared with second quarter 2021, underlying sales increased 9% driven by 6% higher pricing and 3% higher volume, primarily in the manufacturing, chemicals and energy end markets. Sequentially, underlying sales grew 4%, with pricing and volume each up 2%. Operating profit of $910 million was 25.9% of sales, 290 basis points below prior year or 90 basis points lower when excluding the effects of cost pass-through.

APAC (Asia Pacific) sales of $1,651 million were 7% above prior year and up 3% sequentially. Compared to prior year, underlying sales grew 8% driven by 5% price attainment and 3% volume growth, primarily from project start-ups in the electronics, chemicals and energy end markets. Sequentially, underlying sales grew 6% with pricing up 1% and volume growing 5%. Operating profit of $426 million was 25.8% of sales, 60 basis points above prior year or 160 basis points higher when excluding the effects of cost pass-through.

EMEA (Europe, Middle East & Africa) sales of $2,144 million were up 14% versus prior year and flat sequentially. Compared with second-quarter 2021, underlying sales grew 11%, led by 12% higher pricing. Sequentially, underlying sales grew 3% driven by pricing. Operating profit of $536 million was 25.0% of sales, 100 basis points below prior year or 220 basis points higher when excluding the effects of cost pass-through.

Linde Engineering sales were $644 million, flat versus prior year, and operating profit was $105 million or 16.3% of sales. Order intake for the quarter was $1,004 million and third-party sale of plant backlog increased to $2.9 billion.

Earnings Call

A teleconference on Linde’s second-quarter 2022 results is being held today at 09:00 am EDT.

Live conference call	US Toll-Free Dial-In Number: 1 800 289 0720 Germany Toll-Free Dial-In Number: 0800 724 5376 UK Toll-Free Dial-In Number: 0800 279 6877 Access code: 7250132
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 2021 sales of $31 billion (€26 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 & energy, food & beverage, electronics, healthcare, manufacturing, metals and mining. 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

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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 2022. 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.

Russia-Ukraine conflict and other charges

In response to the Russian invasion of Ukraine, multiple jurisdictions, including Europe and the U.S., have imposed several tranches of economic sanctions on Russia. As a result, Linde has reassessed its ability to control its Russian subsidiaries and determined that as of June 30, 2022 it can no longer exercise control over these entities. As such, Linde has deconsolidated its Russian gas and engineering business entities as of June 30, 2022. The impact of the deconsolidation and related impairments is reflected in the Russia-Ukraine conflict and other charges of $993 million for quarter ended June 30, 2022.

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, 2021 filed with the SEC on February 28, 2022 which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.

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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 9 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
Quarter Ended June 30	2022		2021		2022		2021		2022		2021		2022		2021
Reported GAAP Amounts	$	8,457	$	7,584	$	589	$	1,142	$	372	$	840	$	0.74	$	1.60
Russia-Ukraine conflict and other charges (a)		—		—		993		204		889		198		1.76		0.38
Purchase accounting impacts - Linde AG (b)		—		—		406		491		305		377		0.60		0.72
Total adjustments		—		—		1,399		695		1,194		575		2.36		1.10
Adjusted amounts	$	8,457	$	7,584	$	1,988	$	1,837	$	1,566	$	1,415	$	3.10	$	2.70

(Millions of dollars, except per share amounts)	Sales				Operating Profit				Income from Continuing Operations				Diluted EPS from Continuing Operations
Year to Date June 30	2022		2021		2022		2021		2022		2021		2022		2021
Reported GAAP Amounts	$	16,668	$	14,827	$	2,069	$	2,355	$	1,546	$	1,819	$	3.04	$	3.46
Russia-Ukraine conflict and other charges (a)		—		—		989		196		888		170		1.75		0.32
Purchase accounting impacts - Linde AG (b)		—		—		835		974		632		738		1.24		1.41
Total adjustments		—		—		1,824		1,170		1,520		908		2.99		1.73
Adjusted amounts	$	16,668	$	14,827	$	3,893	$	3,525	$	3,066	$	2,727	$	6.03	$	5.19

(a) 2022 charges relate primarily to charges associated with the deconsolidation and impairment of Russian subsidiaries resulting from the ongoing war in Ukraine and related sanctions.2021 charges relate to cost reduction program and other charges, primarily severance.

(b) To adjust for purchase accounting impacts related to the merger.

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED) 

	Quarter Ended June 30,						Year To Date June 30,
(Millions of dollars, except per share data)	2022			2021			2022			2021
Sales	$	8,457		$	7,584		$	16,668		$	14,827
Cost of sales		4,940			4,194			9,738			8,248
Selling, general and administrative		771			822			1,573			1,609
Depreciation and amortization		1,091			1,171			2,203			2,337
Research and development		37			34			72			69
Russia-Ukraine conflict and other charges		993			204			989			196
Other income (expense) - net		(36	)		(17	)		(24	)		(13	)
Operating Profit		589			1,142			2,069			2,355
Interest expense - net		5			18			14			38
Net pension and OPEB cost (benefit), excluding service cost		(62	)		(49	)		(126	)		(98	)
Income From Continuing Operations Before Income Taxes and Equity Investments		646			1,173			2,181			2,415
Income taxes		286			334			655			602
Income From Continuing Operations Before Equity Investments		360			839			1,526			1,813
Income from equity investments		50			37			94			80
Income From Continuing Operations (Including Noncontrolling Interests)		410			876			1,620			1,893
Add: income from discontinued operations, net of tax		—			1			—			2
Income (Including Noncontrolling Interests)		410			877			1,620			1,895
Less: noncontrolling interests from continuing operations		(38	)		(36	)		(74	)		(74	)
Net Income – Linde plc	$	372		$	841		$	1,546		$	1,821
Net Income – Linde plc
Income from continuing operations	$	372		$	840		$	1,546		$	1,819
Income from discontinued operations	$	—		$	1		$	—		$	2
Per Share Data – Linde plc Shareholders
Basic earnings per share from continuing operations	$	0.74		$	1.62		$	3.07		$	3.49
Basic earnings per share from discontinued operations		—			—			—			—
Basic earnings per share	$	0.74		$	1.62		$	3.07		$	3.49
Diluted earnings per share from continuing operations	$	0.74		$	1.60		$	3.04		$	3.46
Diluted earnings per share from discontinued operations		—			—			—			—
Diluted earnings per share	$	0.74		$	1.60		$	3.04		$	3.46
Cash dividends	$	1.17		$	1.06		$	2.34		$	2.12
Weighted Average Shares Outstanding (000’s):
Basic shares outstanding (000’s)		501,034			518,950			504,093			520,691
Diluted shares outstanding (000’s)		505,269			523,723			508,432			525,380

Note: See page 9 for a reconciliation to adjusted amounts which are Non-GAAP.                                 

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LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	June 30,			December 31,
(Millions of dollars)	2022			2021
Assets
Cash and cash equivalents	$	3,655		$	2,823
Accounts receivable - net		4,803			4,499
Contract assets		78			134
Inventories		1,786			1,733
Prepaid and other current assets		950			970
Total Current Assets		11,272			10,159
Property, plant and equipment - net		23,993			26,003
Goodwill		25,678			27,038
Other intangibles - net		12,634			13,802
Other long-term assets		4,308			4,603
Total Assets	$	77,885		$	81,605
Liabilities and equity
Accounts payable	$	3,360		$	3,503
Short-term debt		3,215			1,163
Current portion of long-term debt		1,651			1,709
Contract liabilities		2,933			2,940
Other current liabilities		4,136			4,328
Total Current Liabilities		15,295			13,643
Long-term debt		11,177			11,335
Other long-term liabilities		10,373			11,186
Total Liabilities	$	36,845		$	36,164
Redeemable noncontrolling interests		13			13
Linde plc Shareholders’ Equity
Ordinary shares		1			1
Additional paid-in capital		39,978			40,180
Retained earnings		19,159			18,710
Accumulated other comprehensive income (loss)		(6,466	)		(5,048	)
Less: Treasury shares, at cost		(12,998	)		(9,808	)
Total Linde plc shareholders’ equity		39,674			44,035
Noncontrolling interests		1,353			1,393
Total Equity	$	41,027		$	45,428
Total Liabilities and Equity	$	77,885		$	81,605

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LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Quarter Ended June 30,						Year to Date June 30,
(Millions of dollars)	2022			2021			2022			2021
Operations
Net income - Linde plc	$	372		$	841		$	1,546		$	1,821
Less: income from discontinued operations, net of tax and noncontrolling interests		—			(1	)		—			(2	)
Add: noncontrolling interests		38			36			74			74
Net income (including noncontrolling interests)		410			876			1,620			1,893
Adjustments to reconcile net income to net cash provided by operating activities:
Russia-Ukraine conflict and other charges, net of payments (a)		956			171			922			95
Depreciation and amortization		1,091			1,171			2,203			2,337
Accounts receivable		(203	)		(210	)		(543	)		(388	)
Contract assets and liabilities, net		51			(140	)		243			51
Inventory		(109	)		18			(144	)		(42	)
Payables and accruals		19			(30	)		70			39
Pension contributions		(6	)		(16	)		(19	)		(28	)
Deferred income taxes and other		(76	)		(13	)		(219	)		(21	)
Net cash provided by operating activities		2,133			1,827			4,133			3,936
Investing
Capital expenditures		(826	)		(744	)		(1,475	)		(1,506	)
Acquisitions, net of cash acquired		(6	)		(21	)		(49	)		(31	)
Divestitures and asset sales		(10	)		56			17			77
Net cash provided by (used for) investing activities		(842	)		(709	)		(1,507	)		(1,460	)
Financing
Debt increase (decrease) - net		214			(367	)		2,760			314
Issuances of ordinary shares		12			15			22			32
Purchases of ordinary shares		(1,610	)		(1,214	)		(3,329	)		(2,082	)
Cash dividends - Linde plc shareholders		(585	)		(549	)		(1,177	)		(1,102	)
Noncontrolling interest transactions and other		(34	)		(30	)		(35	)		(277	)
Net cash provided by (used for) financing activities		(2,003	)		(2,145	)		(1,759	)		(3,115	)
Effect of exchange rate changes on cash and cash equivalents		(97	)		68			(35	)		22
Change in cash and cash equivalents		(809	)		(959	)		832			(617	)
Cash and cash equivalents, beginning-of-period		4,464			4,096			2,823			3,754
Cash and cash equivalents, end-of-period	$	3,655		$	3,137		$	3,655		$	3,137

(a) Russia-Ukraine conflict and other charges were $993 million and $204 million for the quarters ended June 30, 2022 and 2021, respectively, and $989 million and $196 million for the six months ended June 30, 2022 and 2021, respectively. Related cash outflows were $37 million and $33 million for the quarters ended June 30, 2022 and 2021, respectively, and $67 million and $101 million for the six months ended June 30, 2022 and 2021, respectively.

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LINDE PLC AND SUBSIDIARIES

SEGMENT INFORMATION

(UNAUDITED)

	Quarter Ended June 30,						Year to Date June 30,
(Millions of dollars)	2022			2021			2022			2021
Sales
Americas	$	3,518		$	3,020		$	6,759		$	5,860
EMEA		2,144			1,875			4,292			3,674
APAC		1,651			1,544			3,253			2,980
Engineering		644			646			1,372			1,320
Other		500			499			992			993
Total segment sales	$	8,457		$	7,584		$	16,668		$	14,827
Operating Profit
Americas	$	910		$	871		$	1,814		$	1,666
EMEA		536			487			1,039			938
APAC		426			389			825			740
Engineering		105			108			248			217
Other		11			(18	)		(33	)		(36	)
Segment operating profit		1,988			1,837			3,893			3,525
Russia-Ukraine conflict and other charges		(993	)		(204	)		(989	)		(196	)
Purchase accounting impacts - Linde AG		(406	)		(491	)		(835	)		(974	)
Total operating profit	$	589		$	1,142		$	2,069		$	2,355

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LINDE PLC AND SUBSIDIARIES

APPENDIX

NON-GAAP MEASURES AND RECONCILIATIONS

(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.

	2022									2021
(Millions of dollars, except per share data)	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	$	2,069		$	589		$	1,480		$	2,355		$	1,337		$	1,292		$	1,142		$	1,213
Add: Russia-Ukraine conflict and other charges		989			993			(4	)		196			51			26			204			(8	)
Add: Purchase accounting impacts - Linde AG (c)		835			406			429			974			453			492			491			483
Total adjustments		1,824			1,399			425			1,170			504			518			695			475
Adjusted operating profit	$	3,893		$	1,988		$	1,905		$	3,525		$	1,841		$	1,810		$	1,837		$	1,688
Reported percentage change		(12	)%		(48	)%		22	%		78	%		30	%		33	%		93	%		65	%
Adjusted percentage change		10	%		8	%		13	%		32	%		14	%		19	%		39	%		25	%
Reported sales	$	16,668		$	8,457		$	8,211		$	14,827		$	8,298		$	7,668		$	7,584		$	7,243
Reported operating margin		12.4	%		7.0	%		18.0	%		15.9	%		16.1	%		16.8	%		15.1	%		16.7	%
Adjusted operating margin		23.4	%		23.5	%		23.2	%		23.8	%		22.2	%		23.6	%		24.2	%		23.3	%
Adjusted Depreciation and amortization
Reported depreciation and amortization	$	2,203		$	1,091		$	1,112		$	2,337		$	1,135		$	1,163		$	1,171		$	1,166
Less: Purchase accounting impacts - Linde AG (c)		(819	)		(401	)		(418	)		(957	)		(437	)		(469	)		(479	)		(478	)
Adjusted depreciation and amortization	$	1,384		$	690		$	694		$	1,380		$	698		$	694		$	692		$	688
Adjusted Other Income (Expense) - net
Reported Other Income (Expense) - net	$	(24	)	$	(36	)	$	12		$	(13	)	$	(23	)	$	10		$	(17	)	$	4
Add: Purchase accounting impacts - Linde AG (c)		(16	)		(5	)		(11	)		(17	)		(16	)		(23	)		(12	)		(5	)
Adjusted Other Income (Expense) - net	$	(8	)	$	(31	)	$	23		$	4		$	(7	)	$	33		$	(5	)	$	9
Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service Cost
Reported net pension and OPEB cost (benefit), excluding service cost	$	(126	)	$	(62	)	$	(64	)	$	(98	)	$	(49	)	$	(45	)	$	(49	)	$	(49	)
Add: Pension settlement charges		—			—			—			—			—			(4	)		—			—
Adjusted Net Pension and OPEB cost (benefit), excluding service costs	$	(126	)	$	(62	)	$	(64	)	$	(98	)	$	(49	)	$	(49	)	$	(49	)	$	(49	)
Adjusted Interest Expense - Net
Reported interest expense - net	$	14		$	5		$	9		$	38		$	31		$	8		$	18		$	20
Add: Purchase accounting impacts - Linde AG (c)		19			9			10			33			10			10			15			18
Adjusted interest expense - net	$	33		$	14		$	19		$	71		$	41		$	18		$	33		$	38

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	2022									2021
(Millions of dollars, except per share data)	Year to Date June 30,			Q2			Q1			Year to Date June 30,			Q4			Q3			Q2			Q1
Adjusted Income Taxes (a)
Reported income taxes	$	655		$	286		$	369		$	602		$	339		$	321		$	334		$	268
Add: Purchase accounting impacts - Linde AG (c)		216			108			108			234			103			115			116			118
Add: Pension settlement charges		—			—			—			—			—			1			—			—
Add: Russia-Ukraine conflict and other charges		101			104			(3	)		26			—			3			6			20
Total adjustments		317			212			105			260			103			119			122			138
Adjusted income taxes	$	972		$	498		$	474		$	862		$	442		$	440		$	456		$	406
Adjusted Effective Tax Rate (a)
Reported income before income taxes and equity investments	$	2,181		$	646		$	1,535		$	2,415		$	1,355		$	1,329		$	1,173		$	1,242
Add: Pension settlement charge		—			—			—			—			—			4			—			—
Add: Purchase accounting impacts - Linde AG (c)		816			397			419			941			443			482			476			465
Add: Russia-Ukraine conflict and other charges		989			993			(4	)		196			51			26			204			(8	)
Total adjustments		1,805			1,390			415			1,137			494			512			680			457
Adjusted income before income taxes and equity investments	$	3,986		$	2,036		$	1,950		$	3,552		$	1,849		$	1,841		$	1,853		$	1,699
Reported Income taxes	$	655		$	286		$	369		$	602		$	339		$	321		$	334		$	268
Reported effective tax rate		30.0	%		44.3	%		24.0	%		24.9	%		25.0	%		24.2	%		28.5	%		21.6	%
Adjusted income taxes	$	972		$	498		$	474		$	862		$	442		$	440		$	456		$	406
Adjusted effective tax rate		24.4	%		24.5	%		24.3	%		24.3	%		23.9	%		23.9	%		24.6	%		23.9	%
Income from Equity Investments
Reported income from equity investments	$	94		$	50		$	44		$	80		$	38		$	1		$	37		$	43
Add: Russia-Ukraine conflict and other charges (e)		—			—			—			—			—			35			—			—
Add: Purchase accounting impacts - Linde AG (c)		39			19			20			38			20			19			19			19
Total adjustments		39			19			20			38			20			54			19			19
Adjusted income from equity investments	$	133		$	69		$	64		$	118		$	58		$	55		$	56		$	62
Adjusted Noncontrolling Interests from Continuing Operations
Reported noncontrolling interests from continuing operations	$	(74	)	$	(38	)	$	(36	)	$	(74	)	$	(30	)	$	(31	)	$	(36	)	$	(38	)
Add: Purchase accounting impacts - Linde AG (c)		(7	)		(3	)		(4	)		(7	)		(4	)		(4	)		(2	)		(5	)
Adjusted noncontrolling interests from continuing operations	$	(81	)	$	(41	)	$	(40	)	$	(81	)	$	(34	)	$	(35	)	$	(38	)	$	(43	)
Adjusted Income from Continuing Operations (b)
Reported income from continuing operations	$	1,546		$	372		$	1,174		$	1,819		$	1,024		$	978		$	840		$	979
Add: Pension settlement charge		—			—			—			—			—			3			—			—
Add: Russia-Ukraine conflict and other charges		888			889			(1	)		170			51			58			198			(28	)
Add: Purchase accounting impacts - Linde AG (c)		632			305			327			738			356			382			377			361
Total adjustments		1,520			1,194			326			908			407			443			575			333
Adjusted income from continuing operations	$	3,066		$	1,566		$	1,500		$	2,727		$	1,431		$	1,421		$	1,415		$	1,312

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	2022									2021
(Millions of dollars, except per share data)	Year to Date June 30,			Q2			Q1			Year to Date June 30,			Q4			Q3			Q2			Q1
Adjusted Diluted EPS from Continuing Operations (b)
Reported diluted EPS from continuing operations	$	3.04		$	0.74		$	2.30		$	3.46		$	1.98		$	1.88		$	1.60		$	1.86
Add: Pension settlement charge		—			—			—			—			—			0.01			—			—
Add: Russia-Ukraine conflict and other charges		1.75			1.76			—			0.32			0.10			0.11			0.38			(0.05	)
Add: Purchase accounting impacts - Linde AG (c)		1.24			0.60			0.63			1.41			0.69			0.73			0.72			0.68
Total adjustments		2.99			2.36			0.63			1.73			0.79			0.85			1.10			0.63
Adjusted diluted EPS from continuing operations	$	6.03		$	3.10		$	2.93		$	5.19		$	2.77		$	2.73		$	2.70		$	2.49
Reported percentage change		(12	)%		(54	)%		24	%		79	%		37	%		42	%		84	%		74	%
Adjusted percentage change		16	%		15	%		18	%		37	%		20	%		27	%		42	%		32	%

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				Third Quarter 2022						Full Year 2022
Adjusted Diluted EPS from Continuing Operations Guidance (d)				Low End			High End			Low End			High End
2022 Adjusted Guidance				$	2.85		$	2.95		$	11.73		$	11.93
Adjusted percentage changes versus 2021 adjusted diluted EPS					4	%		8	%		10	%		12	%
Add: Estimated currency headwind/(tailwind)					6	%		6	%		5	%		5	%
Adjusted percentage change excluding currency					10	%		14	%		15	%		17	%
Adjusted EBITDA and % of Sales
Income from continuing operations	$	1,546		$	372		$	1,174		$	1,819		$	1,024		$	978		$	840		$	979
Add: Noncontrolling interests related to continuing operations		74			38			36			74			30			31			36			38
Add: Net pension and OPEB cost (benefit), excluding service cost		(126	)		(62	)		(64	)		(98	)		(49	)		(45	)		(49	)		(49	)
Add: Interest expense		14			5			9			38			31			8			18			20
Add: Income taxes		655			286			369			602			339			321			334			268
Add: Depreciation and amortization		2,203			1,091			1,112			2,337			1,135			1,163			1,171			1,166
EBITDA from continuing operations		4,366			1,730			2,636			4,772			2,510			2,456			2,350			2,422
Add: Russia-Ukraine conflict and other charges		989			993			(4	)		196			51			61			204			(8	)
Add: Purchase accounting impacts - Linde AG (c)		54			23			31			55			36			42			31			24
Total adjustments		1,043			1,016			27			251			87			103			235			16
Adjusted EBITDA from continuing operations	$	5,409		$	2,746		$	2,663		$	5,023		$	2,597		$	2,559		$	2,585		$	2,438
Reported sales	$	16,668		$	8,457		$	8,211		$	14,827		$	8,298		$	7,668		$	7,584		$	7,243
% of sales
EBITDA from continuing operations		26.2	%		20.5	%		32.1	%		32.2	%		30.2	%		32.0	%		31.0	%		33.4	%
Adjusted EBITDA from continuing operations		32.5	%		32.5	%		32.4	%		33.9	%		31.3	%		33.4	%		34.1	%		33.7	%

(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.

Page 13 of 15

(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 purchasing 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 and the allocation of fair value step-up for ongoing Linde AG asset disposals (reflected in Other Income/(Expense)).

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 2022. 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.

(e) Impairment charge related to a joint venture in the APAC segment.

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LINDE PLC AND SUBSIDIARIES

APPENDIX

NON-GAAP MEASURES AND RECONCILIATIONS

(UNAUDITED)

	2022						2021
(Millions of dollars)	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	$	2,133		$	2,000		$	3,233		$	2,556		$	1,827		$	2,109
Less: Capital Expenditures		(826	)		(649	)		(839	)		(741	)		(744	)		(762	)
Free Cash Flow	$	1,307		$	1,351		$	2,394		$	1,815		$	1,083		$	1,347
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	$	16,043		$	16,456		$	14,207		$	16,727		$	15,492		$	15,750
Less: Cash and cash equivalents		(3,655	)		(4,464	)		(2,823	)		(4,700	)		(3,137	)		(4,096	)
Net debt		12,388			11,992			11,384			12,027			12,355			11,654
Less: Purchase accounting impacts - Linde AG		(38	)		(50	)		(61	)		(72	)		(84	)		(98	)
Adjusted net debt		12,350			11,942			11,323			11,955			12,271			11,556
Less: Net assets held for sale		—			—			—			(1	)		(1	)		(4	)
Adjusted net debt less net assets held for sale	$	12,350		$	11,942		$	11,323		$	11,954		$	12,270		$	11,552
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	$	372		$	1,174		$	1,024		$	978		$	840		$	979
Add: noncontrolling interests from continuing operations		38			36			30			31			36			38
Add: interest expense - net		5			9			31			8			18			20
Less: tax benefit on interest expense - net *		(1	)		(2	)		(8	)		(2	)		(5	)		(5	)
Reported NOPAT	$	414		$	1,217		$	1,077		$	1,015		$	889		$	1,032
Adjusted income from continuing operations	$	1,566		$	1,500		$	1,431		$	1,421		$	1,415		$	1,312
Add: adjusted noncontrolling interests from continuing operations		41			40			34			35			38			43
Add: adjusted interest expense - net		14			19			41			18			33			38
Less: tax benefit on interest expense - net *		(3	)		(5	)		(10	)		(5	)		(8	)		(10	)
Adjusted NOPAT	$	1,618		$	1,554		$	1,496		$	1,469		$	1,478		$	1,383
4-quarter trailing reported NOPAT	$	3,723		$	4,198		$	4,013		$	3,765		$	3,508		$	3,115
4-quarter trailing adjusted NOPAT	$	6,137		$	5,997		$	5,826		$	5,627		$	5,389		$	4,985

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	2022						2021
(Millions of dollars)	Q2			Q1			Q4			Q3			Q2			Q1
Equity and redeemable noncontrolling interests:
Redeemable noncontrolling interests	$	13		$	13		$	13		$	13		$	13		$	13
Linde plc shareholders’ equity		39,674			42,963			44,035			44,323			45,777			46,210
Noncontrolling interests		1,353			1,414			1,393			1,401			1,438			1,410
Total equity and redeemable noncontrolling interests	$	41,040		$	44,390		$	45,441		$	45,737		$	47,228		$	47,633
Reported capital	$	53,428		$	56,382		$	56,825		$	57,763		$	59,582		$	59,283
Total equity and redeemable noncontrolling interests	$	41,040		$	44,390		$	45,441		$	45,737		$	47,228		$	47,633
Add: Adjusted net debt less net assets held for sale		12,350			11,942			11,323			11,954			12,270			11,552
Less: Linde AG Goodwill (a)		24,256			24,256			24,256			24,256			24,256			24,256
Less: Linde AG Indefinite lived intangibles (a)		1,868			1,868			1,868			1,868			1,868			1,868
Adjusted capital	$	27,266		$	30,208		$	30,640		$	31,567		$	33,374		$	33,061
(a) Represent opening balance sheet purchase accounting impacts of non-amortizing assets related to the Linde AG merger.
Ending capital (see above)	$	53,428		$	56,382		$	56,825		$	57,763		$	59,582		$	59,283
5-quarter average ending capital	$	56,796		$	57,967		$	59,086		$	59,960		$	60,502		$	60,584
Ending adjusted capital (see above)	$	27,266		$	30,208		$	30,640		$	31,567		$	33,374		$	33,061
5-quarter average ending adjusted capital	$	30,611		$	31,770		$	32,875		$	33,735		$	34,261		$	34,325
After-tax ROC (4 quarter reported NOPAT / 5-quarter average ending capital)		6.6	%		7.2	%		6.8	%		6.3	%		5.8	%		5.1	%
Adjusted after-tax ROC (4 quarter trailing adjusted NOPAT / 5-quarter average ending adjusted capital)		20.0	%		18.9	%		17.7	%		16.7	%		15.7	%		14.5	%

*Tax benefit on interest expense - net is generally presented using the reported effective rate.