LIN - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q4 and Full-Year 2019 Linde Earnings Conference Call.

[Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Juan Pelaez, Head of Investor Relations. Thank you. Please go ahead, sir.

Juan Pelaez

Daniel. you, Thank and quarter everyone for our attending Good call thank and fourth earnings webcast. XXXX afternoon, you Once again, Chief this and is Officer. Juan Pelaez, Head this Matt Chief by and I’m of morning Steve Officer, Angel, Executive White, Financial joined Investor Relations, available materials website our section. are the at Today’s in Investors on presentation linde.com

the The on numbers Please applies made statements to disclosure of to reconciliations adjusted slides forma Page appendix teleconference. pro of read in the forward-looking and presentation. the are all during X statement note it this this that

Steve will performance Matt sustainability our now and update give on including new us Linde’s targets. and an XXXX highlights XXXX

will to We answer available be questions. then

Let me Steve. over turn the to call

Steve Angel

A I year. per X%, plans of I’m and XXX work had you we is would executed XX% say as highlights if margins lot climbed earnings would to where in So beautifully. team basis of had delighted. a we company, ex-FX. growth today have grew had We financial underlying place me nicely that been points the pleased a but XX.X% the year ago the half be volume. to this new saw told Operating and few for And share half do. a to price We

Matt of to the between our out for billion more had into good strong which projects, let is improving for on $X business invested and returned a in sign we and the back the always that. buybacks shareholders. the dividends, and shareholders with of CapEx, cash flow, billion in large We cash expand minority contract share $X strong squeeze the flow I’ll half business. a especially And year, second half, a healthy

basis single for capital, business, on points return any capital-intensive most rose metric XX.X%. to XXX the And important

for online. to of chose project well we our to in business, This third-party our first This to total. We high-quality in employee provides a business the how billion period practically billion $X.X billion And growth of projects, every our We foundation results. we $XX as the won good bring a the pleased years integrated say record backlog gas indication with that engineering projects for a overall and it’s largely for two sale also in $X.X done. team reached of I’m pursue. is pleased of companies integration, these respect time. we with survey relatively were and short we future conducted

core in implementing the sale that merger, fair growth and our significant capture are and full every share our technology in than which the gas industrial is more our day. is network win began We value of opportunities, of of geographies, engineering which we to the it advantage and strategy leverage And build more and latter density excited and gas about to more cost CapEx getting includes synergies. efficiencies,

will come this definitely most experience three-year top and capabilities. believe base additional year, start-ups. our Coming production, price from typical see of industrial I merger the created we And expect collective merger to of from sharing the project value our that, out beyond growth from beyond phase, enduring knowledge, greatest of synergies post-merger of kind the on and and

We also strong foundation establish excellence. of want to operational a

in trend performance performance to Our with many best-in-class categories. continues safety positively

for revitalized productivity end. years the we Productivity priority to that initiative, come. year and need time see our time key company a a our toward initiatives of and tools driving digital continuous progress was implement from improvement lot Another this to robust expansion be we for of in to and capabilities made to

is profit When is It’s strong, bad on that cash economic a shareholders. double-digit generate in understand resiliency more country-by-country have flow sales the XXXX. generate and of I It through confident Let’s we economy so the a the third of can And business time by talk is see the it of uncertain a an our Yes, merger, to for idea basis. growth. you weaker, back, when a to never your is of nearly cash we to model. return CapEx ability why me States. value to our about in can Add invest good strong our earnings that remind and our continue in world. We cycle. We created gave for you more growth. operating am it the you chart a exposure the in you to United to

change. if to solution. part know climate part or wants the Everyone Regarding problem of you’re of the

the part solution. of at Linde, are we Here definitely

We in record Sustainability in World for been and company the XX chemical XXXX only that Index sector chemical Jones that of make have years, success long sustainability, recognized having claim. can a track the Dow consecutive

aligned are the Paris the We also of with climate aspirations accord.

will to requires part role. an active industrial many can more society sustainable. certainly do this to and industry come government, play However, I whole you a to make we together parties, as that our as continue leading and a our company, tell

fact, making more planet. we productive. and customers In and sustain successful is statement, making are our solutions, services, our helping our and that more technologies our our rural mission protect Through to

make whole. beneficial Linde, as we that society products to are our a At and environment

benefits. for for insulation. our portfolio social purify is is and environmental that make more for oxygen drinking. that In make bring XX% engines safer. make efficient. energy our fact, come coatings and used to purity manufacture of sustainability products helps from sales aircraft today operations over for customers' We high needs that water medical our We nitrogen that turbine produce krypton blades We keep We that

environmental to and desulfurize make decarbonize standards. we fuels And hydrogen ever-stricter transportation meet to

In customers of That as are provide Linde an as mission twice statement out to gas making greenhouse our emits our to the much terms our is world enable entire more want productive. we emissions of to live than impact, more record track certainly company. as and products we of we continue avoid a greenhouse gas proud

South we the build just Examples year hydrogen the XX which will carbon stations and new fuels. decarbonization sustainability at produce from hydrogen in But By agreement in refueling like projects. capital invest capture hydrogen billion to to marks and renewable least to would of that $X for merger, hydrogen be Korea, want customers we in XXXX, goals. projects mobility years sequestration, addition to green industrial our of signed that, new the set we date

will at spend least one-third We of annual R&D decarbonization. our on budget

conjunction This feedstock to economically like to them We developed COX our reforming, BASF. a dry industry-leading make will continue viable. a we develop steam as we to advance lieu technologies want continue technology produce is capture which to in of And technologies uses more to with in carbon own syngas.

$XX to scale up in technology and industrial technology We ITM will their million investment continue to electrolyzer hydrogen invest mobility hydrogen our in promising green like for applications.

we million the our We is of will renewable buy we about X.X purchases renewable How year. to might in annual to $X electricity our about amount purchase. of renewable goal billion double you XX That will enough power power renewable power. that, power power of And each terawatts Germany. of homes or ask. is purchase Today, double here much is

result, we will lower our gas a XX%. As greenhouse by emissions intensity

would do all that countries we are of sustainable. passionate can of to function availability you far in Why our to certain tell and Linde, not is love operate at world. we more more, power, in of make everyone about the We reliability excited XX,XXX us, the renewable many you be can might world I a to, around what today from but which and of the going that’s ask.

And to now I Matt. will turn it over

Matt White

volume more based year with to and third Price billion good Steve. X% X% Sales across quarter. are pricing. and on underlying And sales of over XXXX, X. Versus X% start summary improvements fourth which to and Slide providing region can increased everyone. Thanks, in found X% afternoon, line $X.X of improved quarter like by a higher every inflation prior I’d results, both rates. due global-weighted broad the be

and The mostly driven engineering Furthermore, the lower underlying X%, Comparing increase third market to end in sales were conditions quarter in volumes to from volume by growth electronics declined sequential stable, prior-year start-up timing Pacific. economic Asia engineering organic XXXX, weaker in by in project sales. business. mostly from Europe activity, primarily South activity improved offset relatively due equipment is and as volumes Americas and the

rounding continue Note that pricing, has sequential in we experience but the resulted to X%. positive

which of appendix, by gases the are information and gas sales, XX overall engineering of global clarify and XX XX% on geography. XX, Slide represent Europe. geographies portfolio information of key This comprised and exposure for global to XX% the Two account mix. quarters XX included the country that that top and countries XXXX more to two Linde of Continental different are respectively. Slide geographies top have three detailed sales. sales We in These intended note is over including provides sub-regions And points

to in resulted declined productivity margin or billion employees increased efforts margin profit due price managing local Slide largely improvement. basis year expansion all profit X% engineering sales, X, operating and margin XXX prior anticipated operating $X.XX Referring XX% significant back from the of basis to project was attributed and decline to XX% This from Sequentially, cost completions. of was This operating point of decreased points. timing and XX inflation.

all segments management business as to However, sequential geographic operating margins increased continued improve quality. in actions

to Year-over-year EPS have target credit the improved The XX% or cushion net A share interest been has in how significant operating divestiture count. either XX% versus balance deploying The difference still proceeds, expense sheet we profit. reduce increase lower to compared relates to the our rating.

growth both distributions back ample have shareholders. dry we investments So to for and powder

more that quarter see cash Obviously, XX% operating which billion fourth above XXX% quarter EBITDA. strong cash of quarter can In is speak performance, to of and fact, flow next fourth the very approximately represents you slide. $X.X third I’ll the on a

It This such sequentially CapEx capital And of reminder, meet The shows directly to in CapEx. contribution a X% listed and initiatives. which replacement to small last other the increase a important improved that that as maintenance, third $X.X of quarter most return due XXX plants. project sale on-site the points due metrics billion for by capital increased CapEx would from is gas industry. backlog stable do criteria capital, cost and pricing, basis from growth backlog the on base. and was relatively driven XXXX, one any investments include points project represents management base spending not base over this primarily basis XX not as figure is and growth

billion quarter, Slide flow. shows $X.X related cash billion, merger including to left on operating and details for $X.X XXXX further full-year X turn outflow restructuring one-time by to The Please cash payments. to flow summing side

You improvement averaged half, the billion drivers per to quarter, first can $X billion the are primary three a There second $X averaged quarter. from half, which improvement. to per substantial which see this

as reduced first in the half the half. merger-related $XXX the anticipated, from million million second $XXX in cash First, outflows

expect the decline. million only quarter In $XX this fact, as fourth number we had continue to to

the than of second half. cash payments in where inherent to the and half tax more due there flows interest seasonality is Second, timing outflows first cash has bonus,

working the Finally, and the back cash of stronger the half year. improved operating flow results in management capital supported

of $XX.X Looking EBITDA form $X.X almost deployment ahead, billion chart The payment. I proceeds from percentile still the after to to the merger-related including flow, for right The debt, billion, capital, adjusting anticipate for we that capital low-XX share outflows. billion one-time cash and $X.X ratios full-year merger in $X the in shows flow billion any the billion and lower combination $X.X how of cash going percentile squeeze-out provide with available cash XXXX. of operating primarily the operating range, divestiture to dividends high-XX allocated repurchases, in pie shareholders to

capital XXXX also coupled secured all our surplus investment that while growth. the very the supporting half process with met into billion to back $X to disciplined in cash business, strong We Overall, investors. enabled criteria, a us the returning pursue opportunities with generation allocation reinvested

bottom of X. to to up also XX% sales earnings the actions we share of continue Slide to The incremental on project by range earnings. EPS I’d and greatest earnings XXXX that be the productivity and when deliver the see Incremental currency headwind. opportunities with Furthermore, to slide. wrap the growth, inflation this reviewing customer cost drivers $X.XX assumed structure. can section payment impact $X.XX, on XX% contracts in underpinned positive to fixed Full-year guidance guidance will anticipated backlog represents backlog a the factors. found have base growth long-term project net Recall excluding like is Pricing an repurchases incremental as X% business. or are range by to round growth key initiatives to EPS rate up left optimize

variability. dollar or volume the growth are base Note management or factor, thus and that indicators. EPS of and drivers would top macroeconomic by and actions are the leads four U.S. capital, the The primary from average FX are these the and final macroeconomic deployed the thus of climate, Industrial production effects. either spot to be independent geopolitical most impacted a rate

assumes economy. As from help range the the you see, can guidance no current

is it currently be a headwind. In estimated to fact,

this the is will assumption trends. capture this economy assumption course, is But is believe in stage. we at an recent just economic that light we this Of of better, If value. prudent

For are Chinese currency we the the headwind. the our merchant normal to volumes an first seasonality, $X.XX due in to of headwinds of XX% estimating to increase to or excluding package range in assumes quarter, X% coronavirus addition This and EPS in range outbreak. $X.XX, XX%

still While early overall the range of too incorporates this it’s assess most our recent effect virus, to the the of customers' estimate impact.

one. as a on marked XX came worldwide XX,XXX employees commitments having the integrate summary, months into tirelessly successful inaugural deliver our and effective In great to only merger despite year, XXXX together and since companies date. two one worked

optimization, to And in our we growing call double-digit and I’d to earnings the about ahead, ability continue now share additional per outlook technology business to the like Looking confidence excited while sharing maybe economic through create unclear, further over enhancements. value turn portfolio to have we’re percent. opportunities Q&A.

Operator

Our Instructions] question Duffy Fischer Barclays. comes [Operator with first from

now line open. Your is

Duffy Fischer

morning. good Yes,

First you you spend think than and in question little highlighted, which you put way of on capital one now and number billion. $XX probably there footprint a touch is, more is to stuff was that capital $X in about billion $X wanted between to think XXXX, admirable. the billion, total just the bit But carbon you’ll north of some

capital that investment move small kind these you don’t as signify what does some to this That’s or rectify that others? carbon there in what green real new to you just percent. numbers? you technologies about to think of of is a Can you’re So lower going you can your aspiration? that those Does footprint relatively that talk

Steve Angel

extrapolating years. Half $XX the you’re billion. Yes, over That’d XX be be $X would billion $XX large that billion, just it taking of and projects.

$X we talking everything about projects. would So in be kind large about number just be that of billion would

at very good the some very that of number but them going projects I looking is on think size a They’re in based to all are today. there the than some the quite of stages, do stages, be of larger early the is chance significant. various projects I’m that are that that

start So I over continue think we’ll that’s and to a good that to number time. with reevaluate

Duffy Fischer

numbers be discount Great. larger Or the rate the them? if historic same returns than get would the expect And range then that on they $X billion or to applied what was? you would $X billion, different to in the as a Linde-Praxair

Steve Angel

No, I them expect returns. same to be the

So, just...

Duffy Fischer

you, Great, thank guys.

Steve Angel

IRR, Just got of to always good a to be our clear about risk-adjusted. cost above that. But if are you capital, spread look we at earn looking

Duffy Fischer

you. thank Terrific,

Operator

you. Thank

Our next question Exane. comes from Nicola Tang with

Your now line open. is

Nicola Tang

everyone. questions. taking my for Thanks, Thanks

end was you was headwinds specific base the wondering, volume and one either the the of flagging outlook sort on of markets? specific or first I more the could volume by The side, by on and outlook you’re be FX side. in base the terms geography on

the sustainability second regions. question was I expand across actually perhaps mentioned the but could think targets. then headwinds in And on China, your also comments, in the you you QX the

XX% gases XX dollar for Could in reference emissions next greenhouse EBITDA years. reduction today? per point us in of give you. you the You Thank mentioned of sort COX your the the equivalent

Steve Angel

think were as of as looking December in numbers think assumptions, at in you we at aware conduct was the what I So X% I here volume IP people we’re far it’s many real Europe. sequentially, year-over-year. – is, are – And the about production, down all what of particularly Germany. X%

unfortunate for look is of in clearly industrial reasons think positive some not So if to at And the world, declining a the start the is for weak production industrial then In them. the due very China production certainly Europe. rest quite today. U.S., I I

kind So see just what based in view. our today, on we the that’s world I of think

Pacific Now I can well. throw too. South doing not in particularly that Australia is

reflected that top question? a respect So gas the numbers. where look on greenhouse If it’s we’ll today? will slow growth to no you our matter it be world. line in bottom your was to world, – certainly be around With better, Was that footprint what question, our is it IP or does and your able line the capitalize

Nicola Tang

What’s today? of reference was. it by COX sort Yes, point emission EBITDA on the base

Steve Angel

penalized then two buy emissions, to which Well, that sustainability are what basically published as consumer, annually, means report. COX sustainability that We you percent big of yes, you that if that some electricity just a – metric by electricity the equivalent on with number of electrical thank we in call is our tons our is grid, we COX that The produced and that’s is about XX published available you. speak of what’s so carbons, and million an Scope emission. in

ends number magnitude. the that of being why that’s up So something

Nicola Tang

Okay. Is correct? that scope But X. it also includes

Steve Angel

and number. X in Scope that scope two is No. what’s

Nicola Tang

doesn’t it. include It

Okay, thank you.

Steve Angel

Thank you.

Operator

Thank comes Mike question next with you. And Wells from our Fargo.

is line Your open. now

Mike Sison

will, talked EPS accelerate Hey, areas good sales of don’t Nice one us but part the end in And synergy you of if color synergy of the does see is what forward. sales I drivers, that terms Steve, bit morning, a the productivity you the in is on maybe Where year. guys. give little up? going could you show area? in of that about it of that the XXXX. excites

Steve Angel

not graph. Yes, on is it that

I contributions. of of to not of portfolio is talking really and spent applications the that capitalize I conference in we not on we decarbonization the a attempt at bit will growth, this I comments. advantage combination both line just a product our other forward. And of have, display So was my at we And being out further work of of a what of our talked to XXXX. to that’s take about that in about areas to said, the just looking year, that Conference, kind we strength XXXX. good little meaning into be had what the Global referring part there the that. cross-selling and being Leadership opportunities expected and we of me I some of. terms coming of kind get look excites see bring to more that done did then And growth equation optimize can even that you able going lot and I parties to

the year is before, do coming on excited I’ve I seeing to So believe think hard to more it’s a number put it getting potential. see but it, going as out do about it forward. this said that I I’m start something we’re and going I

Mike Sison

then in are XXXX pricing. in pricing much follow-up as just how XXXX? pricing for as and And that base What lending you maybe a the side terms Right. the as improving on the looking from of you into quick well of is business, had culture

Steve Angel

Well, point. could at we’ll X% a not Christmas that you at infer thing. and right at in you we’re the again, I this that that we think, chart for another think This It’s price number together that is work. one-year And little looking about XXXX. you, if look put tree from continue to that’s done I something

I So making we’re good think progress.

Mike Sison

Great, thank you.

Operator

next you. comes Zekauskas question from JP with our Jeff Thank Morgan. And

line open. Your is now

Jeff Zekauskas

vision consolidated a to volumes In basis, or expect grow much. on very Thanks for you XXXX, do your no?

Matt White

Hi Jeff, this is Matt.

Jeff Zekauskas

Hi Matt.

Matt White

an FX now, at stage. out economic When upper-end range have slightly to of at inclusive right this yes. this the growth. is FX, So positive the were you the the IP may the look look laid project we backlog, you on look again, just And at when zero, negligible the if that absolutely,

merchant actions of some try even As Steve the mentioned, above to package base technology. grow on and the with are there IP

may this view it this is point. at this conservative, we’ve outlook You at looked but as how

mitigate that appropriate right but And extent, be also it’s to as any better, But project and the Remember, at the most there the what’s markets. to package. through in expected. large contractual absolutely that decline be the the slightly performs to actions in come base is assured, the would view would that. even will now, is negative. business stage, a economy obviously driving will section contributions we try taking range rest various to we continue merchant up then And And and a this is, if of capture

Jeff Zekauskas

Okay.

restructuring cash flows, that. million something will guess of $XXX reduction cash like drop I I like it terms know, In your cost – don’t and looks outflows year, next your for

outflows? smaller So should another operating generated by that? other this your benefit of $XXX million flow, in whatever be flows cash year you a because million cash $XXX cash or that going should schedule ahead In it. of words, your that? comment And Plus on period. over of seems you’re so, Is is a top could grow on It to three-year right? like you cost-cutting

Matt White

part is you’re of Jeff. I Absolutely, This right. the again, Matt, can the first question. answer

$XXX of Because some be XXXX. correct. behind to XXXX million. least million year. They’re are in your had costs say final at in would small the basis. a the to going merger will we You cash $XXX the exact on lot I that point, some are of much occurred The that ones lower the be in back us a on divestitures here half of

You either just have late taxes invoices. or income some of payments

that I so in be some gate it’s And of probably effect will corporate have restructuring. calls, part the Americas. then from And was the prior Asia out discussed mostly the but it’ll out, in on first been think here half, and first as

the in in are Europe. some We of midst

see this cash be decline think XXXX. stage, perspective, upon That you depending will that through, a determined. definitely XXXX. be absolutely from the it I through some to extend from and – But at a to of XXXX, XXXX into possibly could be will going effect would economies, So still

Jeff Zekauskas

you much. Okay, so great. Thank

Operator

Thank you.

question next with Peter comes Our from Societe Generale. Clark

open. Your is line now

Peter Clark

clearly is you portfolio the on can the pretty probably healthy if help I side, impressive through cylinders, in. you. sequential Yes, added value pushing of you in that just think when price Linde cylinders look everyone. morning, because came on the at We going, are particularly the had how thank again. Good a can. wondering, two I Obviously, EMEA, I’m questions terms things

XXXX? of kicker the thinking of second Europe right gate. produces probably And this, you Thank in in I first biggest maybe on synergies lot be alluded the think year. A the out you. moats obviously last Asia synergy to one front on synergies, the the proportionately Would then regionally. that’s It’s I

Steve Angel

price as good heard I you’ve price gases. always before, Yes, And it’s Yes. on XX% price the is a Thanks, me this business this X% to seeing say of basis. know trending Peter. sequentially. be packaged year-over-year.

well unless of doing transaction with customers. So don’t a you’re – a move prices basis in a lot a job good lot you on of that

European great old plc, is Linde Linde Eastern The a now that was franchise. business AG Yes. business of the – is part

appropriately think quickly. respect With the that talking Matt out out. Asia of pointed it. to productivity, you I Yes, started gates about was

Corporate this, moved that councils, quickly. that that Councils, coming pretty are Americas that’s Works knew work moved on And a through well. the constructive works addressing pretty adjustments into bit terms work we is European the need through we’ve slower EMEA of personnel the basis. local of we And a some in something little doing part and of to the been very merger.

there that place, negotiations as to be taken But result the have come more a to of date. will

Peter Clark

you. All thank right,

Operator

Thank David Begleiter you. from Deutsche And comes Bank. our with next question

Your line open. now is

David Begleiter

on morning. – up perhaps Thank to under-levered. Matt’s sheet, still a you. stock? thinking Steve, What’s Good sheet more little balance just thinking little on you levering a your you. more Thank maybe balance the the your or buyback bit bit year entered

Steve Angel

going I’m let that. Matt to answer

Matt White

David, you’re right. exactly So

prepared for of I current mentioned significant to AaX our reach looking sheet and We rating remarks. in to room there, target as are has go a balance the

a of is lot probably a that. kind ended depends on raise Clearly, of – different that think we it possibly conditions. the look round conditions number view to more, debt around a net at minimum, – billion My we’re of to at we would it, going is raise $XX So $X year a figure billion. I

like But in we billion when capital. to I I utilize distribute and look think were you XXXX, of able $XX – almost at mentioned,

were good So higher cash – have. anticipated, were I proceeds a than anticipated, we think to those to than are had higher start. was we able good problems And

a got opportunity us probably on that’s little we as we powder forward. behind bit gives just capital, but look the ample So, dry deploying more and

sheet in knows utilize, do. continue that’s a to can balance very will we markets, continue something leverage and happen the but what nobody that and So have will to we’ll strong we

David Begleiter

cost kind know XXXX merger you and cost incremental the just on XXXX? can Steve are about versus And they’re productivity, what Matt, in of I merger synergies. in embedded Perfect. talk the but synergies

Steve Angel

out at came of of don’t to to out came whether looking a operating David, margins, of in bucket I I the productivity really try out – larger bucket. anymore try as to I’m separate merger terms don’t don’t buckets. just it I those or distinguish it buckets. productivity

saving me, saving the at the that way really to it. cost we’re a and So – looking is cost the cost is

you else will that And margins continue coming what merger if expand, we to operating they the know we’re way and is everybody in hope accomplishing and do this are. to

If you the were engineering, if excluding just gas math, quarter do margins, fourth the with – I XX%.

to progress. make So we’re good starting some

flowing. and I think that’s and well. going working sign Matt obviously merger to flow the talking the that good that’s a as continue. flow this And costs has is are morning been about is that cash very coming out the cash

David Begleiter

you. Thank

Operator

Thank you.

Alexander from next Laurence with Jefferies. Our question comes

Your line open. now is

Laurence Alexander

you a touch secondly, the Linde’s to think broader environment, about to as you address the you can One, through footprint? about extent carbon different of And of or pass I rationalize any guess two is showing this the investor on Could directly in softer the parts world? Good enacted end impact that things? ability process market accelerating Linde to the they’re concern morning. prices

Steve Angel

around combination. the footprint and the plans have looking we merger, we as some that far of itself, time of the have As a footprint. all We at result of we as countries we we that. spent at the that are the in, both in, to that at been look brought businesses lot all a We the have look of

of like, that takes it time, Now, longer some I’d but takes than process. usually we a have

carbon to we I’m not able really diligently, familiar not we being to world. We’re the pass want working something do. we that around point what with on is contractually That it prices. have through know through the higher

that that six aware I’d or this had we and tax sure making could making if environmental and or might And that as would we that to type say electricity through a or you, be of provisions our something if COX five as any a terms. pass contracts we’ve some result consumption been accept type those is there was years, that going able byproduct, hydrogen back that that of customers have happen, any cause of started carbon what legislation

Laurence Alexander

you. Thank

Operator

you. Thank

Koort Our next Goldman Sachs. question from with comes Bob

now open. line is Your

Bob Koort

you Thank much. very

if wondering you in the Just what different XXXX in growth, happened do growth the you when had look year-on-year the could than talk, drivers X, you XXXX. on contribution? of it, Steve, tree variances those earnings the or slightly there Slide called of How terms in higher Christmas

Matt White

Hey answer I Bob, Matt. that. it’s could probably

productivity, price of those you look at – can you of you do way, when think net productivity were do self-help. amount, the it two those put call price/cost of of management to the inflation I largest the say, would if inflation, put net contributors the you I But combination inflation. either at or you want look

think Share are from in start XXXX, a backlog we to billion up in in expecting billion. a range. basis net than on due $X.X the we repurchases. more I XXXX perspective, XXXX. $X.X Obviously, repurchased

ample but as positive capacity do FX X%. quite Looking you or forward, was volumes actually at to that saw base minus severe we The X%, was base have more. the volume FX.

So that negative would’ve X%. created a

a anticipating than in that. outlook worse XXXX are We

an stage all But would in So – on around obviously for if be again, assumption. this is XXXX, assumption. at XXXX’s macroeconomic was that this a us this a repeat positive

trying we’ll accordingly. that future. to or not We We’re assumption an the have we out and the guidelines, business know projecting just lay the basic manage

Bob Koort

XX% that’s obviously at return And than is you basis, Can to about, on a it. portfolio. look more much you looking backlog project core maybe about your you think your tilted your I the hurdles execution Asia current talk relative generating to how in Asia comment returns Got those risk-adjusted project made business today? Steve, at the

Steve Angel

cost what example it with, I’ll with for say we return, is adjusting your the when customer. speak. It’s a risks. give capital start you And to it with very large look that I of the risk, off expected Longstanding project We starting as starting we’re up way. at same of an Samsung

who think great over I we had We’ve years. them a relationship with is. know all Samsung

of XX in an their several They incumbent about have We in days. locations. position pay

go a an when as well they risk. of come return. through it’s very risk, So I assessment low normal out excellent And the

look you would it’s that any profile at go at make Asia risk other is return them get, think through in to projects you look sure differently I the important I So to parts what get don’t should in of than actually will you world, always really that that a it. but

Bob Koort

you. thank Great,

Operator

Thank you.

Securities. Geoff UBS Our comes from with next question Haire

Your line is open. now

Geoff Haire

morning. Good

questions. wanted ask to quick two Just

us point First call, think could green very the And of with the go Power in a in just of number could coronavirus? of also, update a Thank if is. the investment And you the the on the in things comment I just the units you view, ITM electrolyzer was you wondering all, from that hydrogen China the give quick start where of you that relation at how you. Linde’s at made are future? just on us to average moment. size what tell got you’ve of

Steve Angel

right. All Okay.

about XX have electrolyzers operation, megawatts. we XX So about under

larger-scale modules, that. in So you and of terms can size are do be a you stacked about them ITM plans the then remaining out X There math can to out around lot there today systems is of making the which and small. that build plant module megawatts. equipment grow are can quite of Typical

particularly to number put the for larger forward, at to much going I be, projects I on number hard a me connected what quite on they high load, looking can the customers in industrial of it’s hydrogen. a looking interest we’re – it megawatt be the with would but some I��m based some think load think have sincere – the an we’re of talking And interest things at. to, moving green the

a grow lot. going to So it’s

Today, of probably hurdles? from based through producing what hydrogen steam-methane times on it gas are or like based what four electrolysis hydrogen cost be electrolysis the reforming. so the is more means conventional would Now, some natural producing of

down, of to some part are done to more needs it, is working of bring very that much of be power up and those are is part efficient scaling the it. cost there part that, renewable we Lower that work so is is cost, that, So things we’re on. modules of cognizant

down. the So to those marketplace, drive, this that will help ability costs bring

and provides of that more that in steps government some difference, if quickly. move it would course, Of help

region. coronavirus, China in China have in To Wuhan X,XXX and we about people

We Wuhan. are about our people have in of – X%

We there operations have very small today.

have coronavirus. we’re no our our around So of world No employees respect been today, the with confirmed employees have X,XXX as with nor to a dramatically one fortunately, affected. not any confirmed – – of of Wuhan,

watching needed an we’ve of And medical not to been really a not business gases. and fight yet. flow that. to hear that products is to this virus pleased effect, We shown of very We obviously, a we’re prioritized like oxygen, team are that the customers as So very flowing aid the Wuhan. from closely provided of much our Chinese corporation situation to standpoint. On-site much key have

– The saw week about capacity than in we an seeing rather of we’ve what about give that two weeks year, merchant you typical drop one we’ve know merchant Lunar in Year, year, that. for – accounted New on, liquid on coming this back probably would liquid XX%, virus, Matt as example, accounted and guidance. during a to our that certainly they’re we that And for the explained from early to slowly based

the for situation. but they’re that’s the people So it. through working Tough situation there,

Geoff Haire

you. Thank Okay.

Operator

Thank you.

with Our Morgan next Stanley. question comes from Andrews Vincent

open. now Your line is

Vincent Andrews

morning, Thank you. Good everyone.

Just I macroeconomic And past, counter-party’s move a sort there, set terms the of that’s the in think deceleration are talked we’ve opportunity around maybe seeing question talked the of on backlog I’m urgency out curious, or signings. dynamics. in in changing the a desire slowing about project the to forward? anything you’ve Steve, about you just activity.

Steve Angel

$XXX to is looking a to in large of nothing we’re not $XX a than I on it’s million, million. that, of characterize smaller hurry. are proposal would hurry range, maybe bigger maybe still what up not is as, but closed. of lot $XXX projects this Their it a projects over Most in million, low. rate lot at People little get

look continue of are to an natural with were believe low just in going that’s downstream of is we think of that’s of backlog, chemical with still terms to cost to Coast attract where Gulf could U.S. to kind think if respect I gas customers. economy. the especially, kind as reflective I advantaged what still happen to I try I the But that

in could we growth Gulf like U.S. with hydrogen think places see to – that. more the growth I some Coast, restricted but not

during they result that quickly some a that some but develop, to decarbonization working again, them projects how of could IMO we’re of evolve be fairly but As XXXX, then have look are the it’ll a to low you at especially the additive fourth half in in – think and XXXX and been be though quarter. electronics I backlog this and second it’s of the of see the to interesting past large, on,

long-term positive. I trends are very think the

So electronics will this could demand geometry, there products the and adding it nanometer going intelligence, others that to increased is EUV technology that in I result Samsung And lower drive adopting. and been stronger forward, XG, have think backlog. artificial

Vincent Andrews

to math’s in probably part the of CapEx maybe And and follow Okay. XXXX But what that of just just XXXX – reduction bridge the synergies versus synergies CapEx correct, down you it’s XXXX. CapEx on the to. you’ve is for the differential up my I terms If is? And the know XXXX. for guided the could us

Matt White

Yes. Vincent. It’s Matt.

right. absolutely You’re

break in basis. you VPSAs stated, realize base, the small If year-over-year we $XXX growth we down probably expecting we that there the see absolutely $XXX synergies it the recently announced. as of project to And the that would between that projects, are I XX between are million CapEx anticipate base a and had million, like base, on kind

we long. when those take can those, day get all we’ll So

quarterly So they cause can number movement. some

in end line. the definitely that of in we the day, synergies anticipate some But

As we’re the I project, schedule. project am, happier is, ahead that our means because far the on number bigger as frankly the that

But with So that managed in timing on just schedules. tightly outlooks can imagine, that project terms something And continue and we’ll are, one basis of engineering is pretty project those construction. to that’s team. from as a build our you much to just our very our engineering lockstep

Vincent Andrews

you much. Thank very

Operator

you. Thank

comes question next with Our Vertical. Kevin from McCarthy

open. now is line Your

Kevin McCarthy

questions, every project in you backlog. chose that Yes, pursue. prepared a to that good the of I sticking comment practically you made couple project Steve, morning. A your with remarks, think you won

may does current push And suggest the remains rate of returns that to above upside sufficient, that XX.X%? you have increase so if and the envelope activity

my question $XXX engineering Slide then on referenced or increased million your Looks project. backlog. And XX, is more Amur On you the second that so specific like sequentially.

can you would of that and yourselves? if and specifically project that Just pull more wonder what you Thank that you much. market some on to could the have helium helium expect off whether comment very impact on you

Steve Angel

Yes.

accretive are up that projects starting we’re capital. on the all going to to be return So

these then ROC. looking are internal of few So they it’s to at XX.X%, capital. years, of to above looking time, already number that these at. I rate are unlevered projects, typically cost rate over course, I the return believe return, But when look after of at and definitely I’m And of projects that’s you’re the internal accretive after-tax ROC, accretive a

we say about look – would I just that every So project. at

a at cost a But described we’ll all straightforward. In look the my they’re pretty capital has or we and forward, a I fact, bring I is the fit our and has whether encourage participating. to teams use criteria it and think to to always above decide strategy of projects we It we’ll worth company, have take earlier. return good as not as

are mixed-feed up to look do for practically respect is backlog And for there. the SIBUR. the cracker yes, everything but numbers out we’re helium, that’s at twin to related criteria, is Amur With maintain we sure. Engineering, Linde want not project Amur to going the that project to The

will about. helium that online, and have Gazprom so are natural up what year thinking are next we’ll you’re being And the that’s second to start for see half starting that be related that. impact gas would when you But the – to say not there I plants is from of would built

Kevin McCarthy

you very Thank much.

Operator

Thank you.

Our with Capital comes McNulty next Markets. from question John BMO

Your is line open. now

John McNulty

regard taking versus type normal of my what Yes, to portion tied thanks for question. is that more revenue efficiency the the CapEx, generating kind of or projects? actually base to With maintenance projects

Matt White

growth, evaluate. we that part it’s gets a imagine, this number you is very what I replacement. fine meaningful into can is things is tanks, cylinder, number, it disclose. like as But That’s and can equipment, But it’s something get a of John, what we you tell when not storage, you Matt. Hey a line transportation,

and is disclose. spend But are a number can on something not type tell $X a under we but on. announced, we they million plants that it’s end. upper in this there externally the that have just So like of are spend, But those internally we I you time VPSAs of lot

million. to $X million $X they’re So

lower. little Sometimes, be a they could

this in included be would as number well. those So

John McNulty

you kind I those more the projects more how it. or pipeline, the think of on returns big Got do compare? of about project returns – kind base And guess when versus the the

Steve Angel

facility it’s XXX% project of Well, configuration they’re typical a very solid. fee. small The on-site is,

to easy always we that liked construct, these have they’re about the and between so on-site the I’ve capability two I’m now companies. projects. So excited small

every small They contracts. have something much simpler and XXX% strong, covered focused We Very it’s easier are take-or-pay company. commercial to now on-site, on a in much of very offering kind configuration. as that we’re construct,

the is really you customer. have to do all select right So

John McNulty

Got it. Thanks for the color.

Operator

Thank you.

Our next from comes Martin question with Kepler. Roediger

now is line open. Your

Martin Roediger

Steve, Matt, only. Actually, questions two Juan. minor Hello,

topic means Is that agenda? your logistics the of company. Horizon, Some refer is your activities. disposing non-core do a on I freeing, which also it portfolio competitors

Just – first question. that’s my

Steve Angel

you’ll term, active not we from companies get prefer belong pretty to I geographies you – more all at really, look at going as into that we say just Martin, year about that I’m specifics a will businesses in as looking which portfolio strategic about and And think is standpoint. we to long progresses. the we’re that divesting. don’t are our And hear

Martin Roediger

certificates are you gas better it that the how not short And in European us you your you to the the greenhouse Trading for in intensity second anymore understand terms much question the reduce in will emission to to Trading prepared European And do be help certificates? sustainability the i.e., when Phase think topics. X you actions the comes short on help Can of Scheme? are to you is Scheme,

Steve Angel

going exactly targets. are to I Well, the I know management trading how is believe these work point. scheme don’t at this that

So as we team, that things a we go are to decided after. these wanted

the be. of emissions world our converts renewable what to earlier, off the do – looks has better the with I And ultimately best a power a to sooner As renewable, will availability we lot lot like. do has the renewable said power profile to

in active power. very be for renewable to out terms contracting of and going going We’re

far But some point would $X as And to that’s neutrality other how you increased are the are future, billion. carbon that at purchases to need reaching in able things to as from $X happen. billion there

longer but Beyond the world. XXX% we time advancements strong in be carbon things will need think need a frame. all can that take tax a achieved, around power, very We they renewable just technology, I

Martin Roediger

Okay, thanks.

Operator

you. Thank with Harrison Securities. And Global Seaport Mike our final from comes question

is line now Your open.

Mike Harrison

markets in Hi, good some slowing in Steve, Asia. morning. you electronics noted

number in are the players starting a encouraged we’re that to recovery. space think a see I that semiconductor of

And So particularly talk your QX? outlook were seeing comment for and of kind electronics? in second half, on in about maybe in you XXXX just what can you the

Steve Angel

Yes.

had. builds So, here as inventory quarter big they’ve recently. Samsung chips, ever announced there prices in memory dropped best They precipitously, did are have not

that that and in trends think a it – bottom, the it’s going XXXX. several quarters is of what’s lot to the So going that improve to that think improve in on in that’s last Most it’s XXXX I really be been earlier. people news mentioned the I will that this better, based

but that big So additive. quite have don’t of I I number when you, up will be a think for it some we be should in start better projects these certainly and XXXX,

Mike Harrison

in during that in have U.S. also And are to also and then about sense could that about in you goods seeing weaker. manufacturing those in impact maybe XXXX? manufacturing new the place. the you versus commented And you’re agreements packaged in trade gases? that Any on Americas, comment some on the Talk hard positive what ask markets metals metals were wanted

Steve Angel

Yes.

goods sequentially, double high-single goods flat, year-over-year down digits. gas QX, is flat. whereas digits, hard to hard is is down So, Gas QX is

is effect, goods is feeling the so much gas So nearly not clearly hard so.

capital that some it’s we think extent effects. Looking huge effect, quite forward agreements, into to some trade could don’t the that think companies positive positive going be the export it I frankly to have year a equipment, have with will number, I but large respect to supply

Matt White

And Mike, Matt. is this just,

very reminder, franchise have a strong as and a Mexican well. Canadian we As

of which our to of and goes, regardless border think business. we where that I ability capture feel the confident the So in side quite

Mike Harrison

very Thanks much.

Operator

Ladies Thank this you. concludes today’s for Thank you participating. and conference gentlemen, call.

You now disconnect. may

Linde (LIN) 13 Feb 202019 Q4 Earnings call transcript