Earnings call transcript Q4 2022

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Operator

Good morning and thank you for standing by. Welcome to the Linde Full Year and Fourth Quarter 2022 Earnings Teleconference and Webcast. At this time, all participants are in a listen-only mode. Please be advised today's conference is being recorded. And after the speakers' presentation, there will be a question-and-answer session.

to conference like to now would hand over the Mr. I Head of Pelaez, Investor Juan Relations. sir. ahead, go Please

Juan Pelaez

Thanks, the everyone, webcast. materials Today's Good joined Officer; fourth website Head Devon. and morning, our Investor are this quarter Investors our for of linde.com Chief Lamba, at earnings available XXXX morning attending Matt by on call Chief and White, presentation and Relations, I'm section. Sanjiv Pelaez, and Juan in I'm thank Executive you Officer. Financial

page teleconference. on performance Sanjiv that numbers give disclosure which, of of we statement the and all appendix presentation. note forward-looking the will of Q&A. will the some will wrap read then adjusted and X an up opening it statements slides Please this the in are Linde's made The remarks, to with applies during on Matt the financial outlook, and update after provide reconciliations quarter fourth

call Sanjiv. now to turn me the Let over

Sanjiv Lamba

By on Juan, all another everyone. Thanks, proud XXXX for living record X. created the I'm employee headwinds. their and of how good supporting and also core initiatives And slide determination, I'd employees year challenge key and hundreds just despite commitment our there few incredibly every was but while only real rose successful and the highlight are financial delivering not unprecedented daily to for significant morning, all by measures, a Linde values where performance through examples stakeholders. have value to like Linde,

century. metrics our EPS all for the crisis quarter highs, seen energy reached inflation the margin, shareholders. We not important and the backdrop performance year. delivered for a of half record with full record an operating and ROC, both against Starting financial fourth owners: in and Three

X% form dividends ex In by almost repurchases. or fact, and in that, the cap, to XX% On FX EPS row quarter growing of $X achieved top billion, our was a returned of average owners of we more. in of market ninth our share

expanded The also by shareholder majority results focus shareholders. which simplify by stock technical an fundamental recommended valuation. identifying solution Board listing, beyond to persistent Linde's approved of exchange We a is overwhelming constraints on our

long-term to owners. all employees, sustainable operate very integrate creation communities than stakeholders, to need customers We achieving value in. just requires our successfully and commitment including a However, the more we

So make environmental on exception. progress, XXXX no the continue front, we to great was and

good absolute gas X numbers, XX Scope sites zero-waste the around in at sites despite targets This Looking science-based XXX over towards emissions XXXX, additional our a versus validated reduced recently of XXXX, XX% we reducing emissions Scope tons million initiative. and greenhouse added the stated volumes. which growing start globe. is by X the reaching goal COX by by X gas We of XXXX, was greenhouse

I'll help the through and been by more times customers X emissions we addition, but cover of footprint. major than the which CDP Sustainability committed a the products other from technology, services, COX Jones only the later. reducing organizations. our achievements our have not recognized we're Dow also operational our And In use Index, several playing energy global avoid These in own footprint, carbon role independent and we're to transition,

longstanding accountability. Of When integrity, employees. and first possible our performance commitment human course, of safety, measure to capital, look community and the none inclusion, is without I of our I values this company of

defined vehicle over commercial by lost XXXX continues a workday performance and incidents. double-digit best in cases improvement in to safety Our be as class

I gender us commitment, at support of XXXX entire XX% employees environment organization. for this fully us. the by full and Linde Creating a to of can remains expect implemented We're a diverse potential XX% a across inclusive number and diversity, enterprise. recently has across currently In achieve for the development their priority exceed programs where

engagement represent projects, support XXXX. highlights only of million efforts. accomplishments various the programs, community business our over a support of donated XX% than during XXX million XXXX. in Linde from has STEM enabled an our The relief including and more handful of to These and challenging nature of increase local charitable employees also $X different $XX over Ukrainian

However, here focus the better we to at ahead. optimistic relentless since And for Linde, we've on have four future. how I'm even ourselves great more years positioning looking a including improve, while merger, had the

OCI which The contractual about I'll talk versus $X.X returns, as third due billion with to billion define $X.X project increased shortly. secured we our growth project win, quarter backlog, the which

was another as the the decade on-site more. for small provide XX revenue or contracts XXXX record wins Additionally, next secured year new for will

mind, CapEx project expect in reliability. to with enabling billion this and increasing in this $X.X high-quality density Furthermore, asset over we $X ExxonMobil almost across including invest start our all to in we of while three supply modes, for With up billion expect billion in sale $X projects year, gas XXXX, acquisitions and Singapore. growth

summer. Therefore, during we'll sometime year. backlog recall expected of from phases, it in project You'll up that the this remove this to is this beginning the start middle

Of a ago, driver everyone growth leverage years course, to the of capacity more electronics we mentioning expansions talk than key high-quality of projects. that few I'd remind drivers. how share today stated difficult it's like secular our without fair to and about would win secular we

no transition more to strategy view to X different. energy continue backlog that clean being of project the expect customers energy projects Our Tier of spectrum. than high-quality opportunities as as the fair electronics across lead win I I we current our industry. validates share

and partnering actively that terms become scope large-scale We Linde. developing are contractual global and with with accustomed to with already projects you've conditions and leaders

quarter. is approach I mentioned This consistent with last what

reiterate. it course, Of to hurts never

subsurface experts intend we with geologists. to for not We're operations. First, all underground partner

risk of words, projects our investment follow to other And finally, will a we management our stick gases. commensurate the earn undertaken. criteria. which all In return core, is will for Secondly, industrial

globally We for offtakers to traded have products. or on chemicals. we'll no Rather, speculate interest our own have

OCI on these which slide principles, with win X. can recent with Our perfectly you aligns find

engage profile and hydrogen blue of want and consistent is an terms our in. into logistics something OCI We to the expert in with marketing, contracts. and nitrogen OCI's traditional will on-site return facility long-term as ammonia with billion Linde ammonia production, a invest and $X.X supplier doesn't conditions

world-class are oil In COX and we a partnering company for sequestration. addition, the gas with

start, are energy involve blue This projects large-scale project opportunities our is model and global These that follow partners a great leaders in under development. have and we gas space. several hydrogen traditional more their

industrial In appreciate base three owners productivity addition, we we model. will continue resilience recognize across to modes density that of in business, pricing, all managing because execute our increasing our and the gas the supply

stellar on row vantage growth, of values. is no our relentlessly EPS many in This Stated highs new deliver We across Overall, I've financial that more I fourth despite of see year strong continue. won't why double-digit climate. key I Linde's a XXXX have was another reason this geopolitical irrespective whilst about and focusing core confident headwinds. confidence future. year been From the my metrics results simply, and never we achieved several the point, economic will

I'll now turn call walk Matt you numbers. the financial to over through the to

Matt White

Thanks, Sanjiv.

Please turn X% to fourth that prior sequentially. of overview down X% year X% were slide but the sales underlying results. and billion X an from increased of quarter decreased $X.X XX% year-on-year for Sales sequentially. Note

parts the moving several are trends. there So, distorting

speak might guidance as some have year-on-year This forward. trend evidenced see due can going dollar. I'll to on the to already reverse upside current strong at but sequential U.S. impact. you to end, has by started X% levels, FX the we based flat the First, down FX

sequential deconsolidation and and although in headwind the quarter. a the the this tailwind GIST Divestitures prior year compared when in X% a We’ll that Russia to third of resulted do rest part expect nexAir. X% our June and U.S. I September, of in quarter lap from the and of acquisition first from in

from X% a the decline few I The they Russian timing as year and volatility more decreased business last variance is from a U.S. of lap X% sequentially. driven quarters sequential of expect prior projects. Russian subsequently resolve year engineering The suspended projects, and by project. and engineering is

XXXX, in we reaching ceased liabilities customers. we balance vendors to with continue sheet all settlements Russian upon While former reconcile activity and of our July

are pass-through year Cost stabilize X% trends a X% drop but sequentially. with to over increase starting last

represents you profit pass-through the this contractual no operating costs has of As energy dollars. effect on know, and

gross down impact and or up as this variable sales costs. operating However, will we margins

and Volume start-ups. volume growth in of from and Most X% project more came sequentially. than prior U.S. from customers. weakness This the economic X% is weather slower in in pipeline -- and APAC offset severe down last the EMEA year year, conditions

larger to sales a than the there's profit So, impact payments. given contractual fixed

weather December, weather. run an to seasonal their is of the decline from quarter customers is from issue EMEA's Versus pipeline occurred majority and the normal Therefore, back impact are coming the customer This U.S. toward a Hemisphere mostly to but economy be the expected larger-than-normal not of outages quarter, from impacts LPG. We Southern third this in U.S. end vast forward. rates. pipeline softer going customers, to volume seasonal saw amount of

with broad-based resulted a profit from increase X% These an with rate. the weighted from robust Operating inflation third in are XX.X% and remain aligned quarter. billion increases $X the actions Pricing margin. XXXX operating X% and record of

Excluding and cost operating both as margins improve net all continue pass-through, gas expanded of segments inflation in effects business year-over-year underlying pricing quality. sequentially to

the revenue. Recall until completion bill operating percent sheet cash due abnormally on which of is follows the The we as balance high liabilities engineering liability had deposits margin an income to quarter at the on as point held recognized project favorable segment this the right that statement engineering to the contractual have are timing. Customer accounting a customer, method.

liability all deposits, quarter. This period current as thus revenue. be do us quarter, this related the margin retain expect we not settled enabling a this recognizing large beyond sustainable remaining contract, to to cash I

of going of how percent. X to average sale in recent approach years believe of with margin you A revenue performance. X the profit given best low- backlog are as mid-teen wondering likely forward to the use lot the the engineering next to the is to plant model I

tend backlog, to usually backlog, and higher, During cash the in inflows times declining opposite. of it's a margins whereas rising be

deviating However, due wind-down from pattern the sanctions. project the situation from current is significant to this

volatile may more still a have we few So, ahead. quarters

$X.XX year or XX% of increased from EPS last FX. excluding XX%

more this is sequentially. project mentioned, entirely EPS growth engineering flow a row is ninth or and FX. Sanjiv year prior XX% the versus driven cash is Operating ex in down by This almost quarter timing. As of

cash slide The environment. multiyear to economic of XXXX in of Please steady management. for X billion XX% or any review capital Operating EBITDA, with levels turn $X cash to average. of our deliver was for a continues flow consistent XXXX business

reinvesting leftover capital see growing in dividend, the of how You repurchases. we that stated to share the can and aligned cash, the cash business right using policy with for our allocation invested

year, invested anticipate the shareholders. for the XXXX dividend $X.X up returning healthy back repurchase while investments share raising while step business a program. in new a $X.X meaningful we billion to We maintaining During billion and

on guidance slide with X. up wrap I'll

mostly For an FX. excluding offset when by U.S. to Sequentially, range of $X.XX, are prior pipeline engineering quarter, we’re recovering profit. first and the and versus range increase to seasonality an this to of X% that XX%, lower China X% X% an year $X.XX providing EPS volumes or acquisition assumes

material ranges Full estimated when $XX.XX, at half expected FX $XX.XX we're the although in increase to half, no XX% in of year change economic excluding for recent flat is the of FX have better. estimating a to X% headwind guidance second Furthermore, headwind. or an X% Both year for range trends assume X% been and to the the representing first conditions XX% X% an midpoint.

backdrop in take time, the an we'll XXXX actions upside. like against mitigate this if it's not, believe economy At have we grows, the environment. we did XXXX. we'll And uncertain appropriate If remain cautious and to of to

to predict management deliver happen, in world instead, of our but commitments. will not and execute is job on volatile a Our what

now I'll call the turn Q&A. to

Operator

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

Duffy Fischer

morning. Good part new question project around couple Yes. announcement. the just A

captive lot So, the a used fertilizer production. companies historically, of

Does with I'm an the going maybe something IRA general that you or just one, ATR the or give to with this guys hydrogen just outsourcing industry So pipeline? forward? an outsource, that indicate in your connected advantage, that in particularly to does wondering moving either in

it, just up a I $XXX think run that op way every think kind itself, in we so of of dollar million about to way Is that capital, then, the on to should -- this? put profit of And XXXX. starts for rate about project $X.XX think about the fair in we your whenever

Sanjiv Lamba

Thanks, Duffy.

why in and tell question versus with. And partner this back a there to So, as And why a that become just to as project, our projects like take example, the work Linde translates have OCI as then, are your into favor. let an kind you me that captive. step in a of outsource few attractive things

integrating the one, Linde to successful executing with brings complex things table: a projects; large number a record packages. EPC track of very technology capability and different

to You referenced are -- and ATRs people many ATRs. at own we I facility. mean operate. operate new clearly our already for one

about thinking who So available something that model. then advantage is are becomes that to that outsourcing people

store able to the we're produce Lake hydrogen not hope ATR [ph] that that operational our and to the of pipeline bring, more; and managing are complex. to standalone Add to the We, to at Coast up that Clear to in hydrogen on at does already piece. operate obviously, system we ability, captive to has that unit able which reliability the the U.S. times I Gulf obviously a strong whole when course, you single cabin excess one to adds ASU mentioned and expertise have.

my mind, green very complementary in blue and their increasingly Linde their efforts as are players, seeing to expansion as a well. on partner, start Ammonia supporting subsequently programs

that think Duffy. argument, compelling I together, a You put it's all of

we a and factor this. us, different capital other that there, into returns for project would like to coming investment the As some the any industrial far -- hitting digits heard the as is profile return would gas returns we then back post-tax our our how again, no is goes disciplined we return criteria, I'd returns say numbers and this double EPS. is we -- do, concerned, you the and This see assess about project, back think unlevered traditional to how I would and a you way that's to the

Operator

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

John McNulty

hydrogen Maybe the another opportunities. just blue one on

carbon much part allocated? You're about about you've negotiation the how as you carbon on the in that got gets a how this sequestration think side. capture of a position so some we think or value I maybe versus we guess, I set sequestration capturing up credits the them, there's now of there, when QXX partner guess, should how where you the

be there way a thumb? be your and different, or of little about that thinking a a we like to but sure every Is that going to bit one. sounds steady be partner is should a rule long-term I'm going contract it's

Sanjiv Lamba

Exactly.

of sorry, -- off just let me identifying. let just Duffy, kind me by start So John, quickly

entity working offtaker. three streams develop project these investing At on like as the ASU, customer equipment who developing There advanced how carbon part that that The a COX. think in. is linked of there which we the saw numerous a ATRs Without XXQ core X, you project conversations is the offtaker, number in with is are this partners, We've coming of deal don't slide this this examples you that Linde an capture and As the moment, to this, the are the back is There a we we components in together. about forward strategy. captures we when obviously, our the to projects. the are scope, the with instance, defined partners this. In are multiple for moves project. like very is

with of obviously structures tipping basis. potentially for could which take where permanent essentially, a them a And is allow the call injecting agreeing have and fee, cost that what we're the on you what we transmitting would and underground to them storage COX managing

negotiation sequestration pursuing that with a So, discussion and three part see carbon are that how experts. are the that's we different benefits would couple, you XXQ it. structurally of Obviously, currently

Operator

comes with Barclays. Leithead from Mike Our next question

Mike Leithead

theme OCI another I'll and the project. ask the stay on one on

connect You mentioned existing to pipeline. it will your

traditional For supplying on you're existing I'd about at your correctly? an blue sell there's thinking hydrogen. some that assume I customers to value currently price Am gray also or I premium. pipeline, that now them assume opportunity them hydrogen

would for those be returns incremental or pipeline, the returns, then, your base upside here? hydrogen you in And opportunities, on the blue think potential is from it, when upshift project, hurdle that, rates or base this your call about home considered

Sanjiv Lamba

that very some So pipeline we the facility. linkage that. scoped excess obviously network take reliability for will at this me a is opportunity of OCI, time, same gives Gulf factor, as into there and blue out for The attractive surplus works is It Coast to system. blue right? Mike, you're hydrogen U.S. right have hydrogen hydrogen my We've that into the space, put the back that both it

the to and that be explained for past, for are And premiums the is and pipeline onto have I've that that the hydrogen exist, a it. the and blue pay will demand between putting We there have hydrogen. gray In willingness into we blue customers for who premium. yes, moving blue,

economics. that to that surplus we we extent, have, So have our into factored whatever

some As you'd here. tend you a potential and to blue around stuff, be that fairly model will term? longer happens. always Is there conservative as of to going we also see be expect, how There that we upside that to transition is hydrogen

Operator

comes Our next with from question Nicola Paribas. BNP Tang

Nicola Tang

theme. AGM. the stepped the that a about everyone. or your be court. Thanks, your I few quarter of was through actually. to see do a to Hi. I’m it usual off I like restrictions billion restrictions there the from in pay bit a ask little assume to down QX, process, around bit ability ahead little approval Irish of sort you the may $X from per I the which getting I'd correctly until buyback a If due get understand delisting around dividends buyback

of whether the the any buyback Thanks. you can terms clarify timing see period? So, that or constraints around in your delisting of just dividend of you sort

Sanjiv Lamba

by I but Nicola, I'm to you headline I'll little going give saying to any just a more color Matt see on that constraints, ask don't that.

Matt White

Nicola. Hi, Sure.

So, since as we of the think, structure, the to market just of is actual most your the buyback questions, December. of we Yes, out were two a on merger were the first, month essentially entirely classified -- of for this I pace.

active will couple are We a our XXbX-X, traditional of and in open as up days. back in then to again buybacks it

at. reductions needed So officially that given that to we would quarterly drive some of be the

is track It you're record the through know, Linde this original especially far same we went the merger buybacks, the exercise, is referring and somewhat between and in perfunctory distributable you have which now Praxair a process a as history. AG. that we on Irish as reserves, dividends As to on

any So, we issue. see don't this as

It the got this affect not affect the and And it, not dividend. of ahead accounted for. buybacks. well will will well that are We we've

there's that So, concerns no on part. my in

Operator

Jeff question with next Our from JPMorgan. comes Zekauskas

Jeff Zekauskas

Linde operational fourth hydrogen With in quarter? the itself all of in issues did the winter storms, have

Sanjiv Lamba

Jeff, et our We cetera, were impact primarily on-site there them the storm requirements, of the there, was nitrogen with customer support outages to on the outages. were but at customers' customers, end. resulting winter in the were whatever

Jeff Zekauskas

so Great. you much. Thank

Operator

with comes Our Bank. next David question Begleiter Deutsche from

David Begleiter

OCI it Sanjiv. to Back is or as think we that to the you, tax the about additive credit Thank should your return low-double-digit assumption? in XXQ embedded project,

Sanjiv Lamba

-- It David, is it's embedded.

And embedded model. appropriately the relevant obviously, a digit, is the economic range. So as know, are wide portions obviously, into you double

the it together. comes So, project it's us for way attractive an

David Begleiter

Very good. in in you the on, last months working or the Would projects Thank of IRA we on mentioned XX And like quarter perhaps implementation. you. the few next back few I OCI about announced be think, a the you're additional stand projects, in U.S. quarters?

Sanjiv Lamba

of that David, two billion $X large billion $X three visibility I projects we a of decisions over on. the still to of overall over announced, that next to I've billion the in mentioned $X projects making. decisions expect that that, We've And now said billion working the $X.X number a I two years. decisions see to for see that we're to billion terms we we've have now terms decade about that years. that three robust next we as mentioned had I $X also being over despite $XX be on in of of investment billion number to

Operator

from Société Clark Our with question Générale. next Peter comes

Peter Clark

that mean, a OCI plays strengths. bit. the obviously, I your to back going it's Again, to little

talk a there. see Coast. same as IRA. the of pipelines quite footprint lot coming of see Gulf the Europe, and the I can response Obviously, your now to out not a infrastructure, And there's the that It's You everything. though with with the

the the have don't and pipelines, expense You same stuff. hydrogen

your advantages a Just risk. see there, wondering there is you if how real

Sanjiv Lamba

the we that to Germany where in exactly going Gulf give of have the example I'm the have and -- we Leuna Peter, you U.S. So Coast. here

Peter, can hear us? you

Peter Clark

think I same saying -- Gulf have infrastructure Well, you have don't the I'm on yes. that pipeline in Europe, the you Coast.

So...

Sanjiv Lamba

and Leuna I multiple structure, the network. And we do. to refineries that same and you example in chemical of an where industrial have give network, going exactly customers, was We serving pipeline companies Germany

where an that's strength. So, have incumbent example of we

network. electrolyzers to into our In some there are fact, green provide very pipeline building we that

and So, one leverage that expand operate to Germany. industrial have part to that example ability that the Leuna have and do the position we where that's into that incumbent activity we as a we win in use in more

So, that's Europe. in an example

tend you then I to Europe different, producing complex What will the I'd say putting there going be quite projects a the be also and to a product pipeline where think nature of is network. is it to into in

remains therefore, can very that of I previously Our to David's referenced to I the question, of Europe a I well. currently projects also strong. as tell developed in ability, participate see response in being of islanded you number developments those And that number these in

Peter Clark

add Got -- on in up. trading? sneak the just Just it. one on margin obviously, I Can shot Europe,

that You on-site was the had the lot volumes down. business. A of

you the energy is So against I I But the the terms price/cost how cost helped selling margin. presume pushing argument that you of through through in and the Because you with presume effectively, of most caught see price that up. it situation now?

So you in Thank you. see how progressing just 'XX? that

Sanjiv Lamba

energy about cost implications power terms our natural think I twofold, way terms In it the up right? down in that happens Peter, or mechanism. our anything gas going pass-through for is gets in business and costs, costs contractual and for of accounted of So cost their

a of will some moves see yes, as So, you and result if that. shifts happen up down, that

nothing For we to you that And the we've know, is now our way move different got XX-year as the rest, I pricing. suggest manage the see impact we no way track we business there'd difference pricing. any and a positive different be -- of recover record And as inflationary forward.

go piece. that mechanism up, That's through a other If a go inflation costs pricing we manage mechanism. manage as up, we pricing cost that costs well. the through fuel If

that do manage And is surcharging. where stands we good And we'll pricing how pricing of that that through forward. cope and about of able it feel is only we we quite that and stability as pretty we be the product therefore, sound. move with term not One the to things longer

Matt White

looking mean, would changes I are I see a the indication I think these to point. this just for trends. to you're add good Sanjiv's Peter, is sequential And Matt.

sequential can That to is that X%. in pass-through EMEA So, when at coming pricing was natural pricing, that, look you up energy point, this most gas recent quarter, down, pricing the the see Sanjiv's is trends you is negative yet X%.

of stability comes pass-through as still energy the pricing in. the large levels. So, course, we're we that seeing are in in But seeing reductions

Operator

with comes question Kevin from next McCarthy Vertical Partners. Research Our

Kevin McCarthy

Sanjiv, would you trajectory Asia in comment holiday? China ExxonMobil demand the they your And of then, for on as any for Year are New in What account baking there expectations 'XX? Singapore. I'd project Lunar your welcome from terms you as in baseline well, start-up into emerge non-China, thoughts on taking

Sanjiv Lamba

Sure.

about that are I've talking on I'll we to that the just bridge gap. Americas try moving Again, business through you looking business, before Kevin, the back at as saw. you that would said APAC and That just APAC more operating that and a margins. target and in XX.X%. So overall, pricing, to up of and for. had you're They the had direction color EMEA the folks We walk you you record solid give there's APAC broadly. are

were stable, in chemicals, strong APAC see It in electronics, manufacturing expect. a the if two also some extremely and you I'm of We seeing January, Pacific carrying and that business bit seasonal in electronics, through. and momentum Sales same South energy energy China, normally engineering, Ex that level chemicals that LPG impact a would of again, manufacturing. strong, very is then you particular, halves, across followed story will. in of by strong pretty

The last New quarter, steel our now. to Year, weak. how obviously, In in reasonably given of been is impedes in the through Chinese January we to automotive that's being saw come reopening ability itself, going touted China really recovery see kind that the

up, to think how year watching really that and to going I of growth I'm expect China in on I I last that moderated see our be. what we've of that's of next kind is trend considered determine shapes weeks, that's couple view guidance. what going China, out carefully the that said long-term to and

Operator

Our from Suisse. John with Roberts next question Credit comes

John Roberts

if don't in Since there number and nitrogen? that ammonia targeted for in a market. projects general. to could more guess, be sell there and don't know is hydrogen extra I companies Is but Linde OCI of underway disassociation interested any back local who of some the be I'm blue in the available of and interested hydrogen disassociation, ammonia for are And ammonia will cargoes I that eventually by export nitrogen

Sanjiv Lamba

John, answer I'll two parts. that in

the about a technology, I'll side of talk and bit commercial Let's then things. about talk little

catalysts As has really far good concerned, back. some backtracking, some in and And technology running ammonia cracking speak -- technology is as a back doing We're new more the -- lot that a developments those in some get that the one gas make over there world to with new we to Linde and and as process. companies around oil which efficient of running are, get trials. of largest hydrogen on pilots we is as that disassociate kind fact,

particular that the through, the and about running that technology about feel ahead. weeks we're I I good more you'll very have. project very good on that feel hear So, in we

molecule. to put the really B far ammonia a from a struggle to ship. molecule then make for energy move As into I this. blue process. as get commercials We'll us point point A ammonia with that or the we are The reality that concerned, is large of We lot in green,

economics We other then you take a viable that will not we to end, the storage back-crack in makes usage, near for I my term. sense blending, fuel injection more don't lot mind. of a the it loss makes ammonia process either that as direct see amount in front me, the see energy direct in fertilizer or the at -- or fuel and entire it. will a on The so

more it balancing are doing, then in that technology to improve, fact, work becomes the as changes we pilot improves and in term. continues longer As viable energy and a our little

Operator

question Byrne Steve from of comes Our Bank with America. next

Steve Byrne

end how that provide XX% sales slowed? a in that's granularity year-over-year little got you the more Can growth market given you electronics on clearly

Sanjiv Lamba

We constructed are has a long we actually elements up capacity or we're to also to that ramp that, they that of molecules So given -- fabs a there and I'll X that that When fab came And pricing call favor. in contracts happening course, fab ramp-ups these to is special that see well. into world. of to with years three element technologies and that over the continuing are been always that constructed, is utilization production when as the growing right? of new terms them happening improve talking ago, in to that. manage solid -- fab two our gases. new about we there. bring on gases some we that add point, there both strong That have into Steve, growth a Tier there. -- a operational across electronic to market continue And is the over addition continue works we our And to good that are we are in increasing players

Steve Byrne

injection perhaps plant I if at you to XXXX on comment your your the classic does project, getting key XXXX OCI partner, underway? seem your blue the ammonia sequestration not quite construction partner the is Can way start-up ambitious. well their on for a if does contract Is on is could, bottlenecks? stream? in with already on take them And particularly effect well? for And other those your -- their And end, maybe

Sanjiv Lamba

Sure.

to develop, projects these months take cases, years. typically in So, many some

have we working And while, for this been Steve. a project on so,

reasonably XXXX So, confident that's this production. up reason in we are in why running getting the about commercial and and

local complex projects a that. Linde pretty a Having on So, ability from with where engineering EPC to very do a competitive helps about obviously feel is advantage perspective. and things stand I organization good with

activity. time obviously terms their well working project have period of Our of and on for advanced customers are own been well their construction as in a

contractually, And the date if the done again, have protect that, us not we done -- that needed that paid I we for basis. we Having certain that. to investments that we have ensure watching on always we then their to facility on and charges certain to delays construction do and able end. that So we are facility ourselves, contracts am said a fees ensure date about you, then concerned or our good are to are

on the activity. to Coming downhole

well. carbon And some three, sequestration. obviously, if very discussions world-class stand those more, ability you are process. to least do in sake, to companies permits expect around progressing would that their are where to We us experts at not And get talking are they diligence competent that in

applied. when terms readiness to good preparation. they how of terms the of pipeline. feel to are it advanced we in already Others the comes have manage in their Some are about sequestration fairly of Again, kind

Operator

Stanley. Our comes Vincent with Morgan from next Andrews question

Vincent Andrews

Just box sticking growth. industrial quarter the of it. last And And then with aspects turn that that within global end-market sequential secondly, had yellow sales healthcare trend of other green? is start difficult to should the to piece this worst comparisons? slide, the going two be actually One,

that particular minus bucket what sequentially? was within So, driving that in X% other

Sanjiv Lamba

Right.

Vince, we are you're about lapping largely the now. that volumes. So, that right COVID see we will lap

movement that I note that sequential right that suggests point in we also think direction. is the a you on actually the can are headed

the up -- that you You'll quarters see if green of the greening it, like, ahead. in

So, that we that. much for have along pretty looks in expectations -- the

so Matt a I'm of due has As a range I U.S. business chemicals the highlight clearly, make One, that told here energy. between concerned, different in as them, and just the of going most referenced on-site metals saw that affected outages elements to things. That have rest you this. and that. is the far customer cover there I winter that sequential couple we U.S. sure to -- over of we storm are obviously

before, just We have I'll repeat you've it. again, and but -- heard this

you above. look as customers in seasonal back on-site our Our rates, Most January seen. good. very that expectations might to are mentioned trends with We already, QX have line or even in run slightly guidance

pretty that good of Americas developments where about So, feeling of in the you trend the terms is out saw. that

EMEA, been of year, across activity and for the far cover there especially this true know chemicals that the that. the volatility EMEA impacted let customers given on-site economic our and obviously, course energy just As briefly by perspective, metals, lower costs, I'll on has energy, you has from in business been the as on

down EMEA to and bridge can concerned. which they previous volumes see as to try that So, year I'd and margin. you hit the in our business a as the set was on-site gap that were again, far high-quality as the and margin, strong was target versus contracts that that mark, customers down for But moved which them portfolio helps, having Americas XX% journey

some creeping of and far the course, below volume to levels, that And waiting as we're But you concerned, just that remain stability see Europe as energy earlier in all previous is, course, is up far starting they on-site I As on. of how given up. pricing, mentioned business improving. that year watching to we're still slowly sentiment as and shapes

Vincent Andrews

anything And other in on is that which slide, that is bottom specific just piece? one market, end to under other that there the industrial,

Sanjiv Lamba

want you take to this? do Matt,

Matt White

Vince. Sure, Yes.

component represent it's identified. that particular things categories clearly, in end an have it wouldn't that that seasonal the LPG the the it. can our large of is a right? the mainly competitor In That's of still driven the would residential case, is just big retail could that couple Generally, since it represents, shows moves driver don't This fit component. You or a seasonality of market what so on a Southern other. business. smallest component of on year-over-year, items percent, component LPG. sort distributors shift is the represents And this that a of actual year-over-year of we see up is slightly. it above the some Hemisphere by It So

Operator

next with Redburn. Jones question Tony comes from Our

Tony Jones

wanted I about volumes. just to ask

you think U.S., from of and visibility good of slower the quarters, have up some couple ramping things deteriorate the new end-market EMEA, the you projects over maybe trends, offset next particularly the With even will here? do if

Sanjiv Lamba

so above also period, look around we're particular, at we broadly More really or in seasonal rate slightly in them And January the seeing run site I after that holiday the looking customers expect back at good. mentioned that. were said, seeing to as on- we're at Tony, manufacturing, the I snapback be I that a volume would trends them that grew are the out if good QX, gases And to seasonal that beyond double as January us into at what as look seeing we Again, the showed kind sales happens on in continue watch goods, momentum clear I hard packaged and In and January path impact. that. for goods, a well. digits, of the both U.S. our well.

Operator

from Our next P.J. Citi. Juvekar comes question with

P.J. Juvekar

three morning. in you past, about capital. Good talked buckets Yes. Sanjiv, the of

price $X billion, each other? Linde Thank on could about then, in decarbonized and think similar you. And $XX XX, customers that projects decarbonized was costs do have hydrogen and these returns I hydrogen $XX Are of was given you -- to down go buckets how be then these three the greenfield projects XX-year billion. billion, kind forecasting was long-term been substantially? coming

Sanjiv Lamba

and look P.J., them. let me the we we talk how about the can quickly about and talk price three at buckets then hydrogen

about far business the XX now. in as been we've as hydrogen years concerned, hydrogen is So, for price

we've hydrogen got experience some pricing. long-term So, around

said unlevered In we terms we the feet. projects, at, we their those I to how IRRs at sure that pricing, ground post-tax of think that our hydrogen on put projects look about make as the before, double-digit look on capital stand and

back good the pricing. in we the that And lead offer. You and U.S. what world, we pretty terms the hydrogen walk into elsewhere hydrogen in competitive that both to very given being feel obviously, bring the of market, about we in

neither come it of things, the that referencing today. scale-up Even I yet. least a out to is side of that the Now, X the isn't the that might see there green years X is the point be of of green that with to to I needed. cost-effective is going say largely per IRA, you're of But for lot there. hydrogen quite right. price scalable largely Green you on development a you're at inflection PTC would $X here nor journey variability kg is going come to today, over

some years will a X see inflection that the point X on of get on kind next pricing volumes. to curves -- make to to develop of You'll it in

in There we then partner when Coast, U.S. The there specific there about, that asset existing today, and that that have. sequestration capture elements you work have you're Gulf base on think spoke can a capital to three the to example, two I'm the base the assets that little are an and as capability we an getting installed When they adding buckets put that with in right, of three buckets. different which on are we about first. a to ground downhole, I the incremental add is more leverage the

will look clearly, So attractive. more return the

just plus the an will rest, are markets, new have be in decarbonizing it's whether carbon case, OCI plus ASU or assets, For which an largely customers we our new up capture. ATR as setting the we in

put then a You profile to have returns for the we contract we that risk and gas with look that structures traditional return expect commensurate undertake. would where industrial together, again would we

really of kind how I two that buckets you So, would to say that's those would out. play

Operator

Christopher Parkinson Mizuho. from Our with final question comes

Christopher Parkinson

the Can of opportunities well call, remember, of on helpful you assessing I'm in lot How the and a a last low-hanging the the have fruit. earnings you. short, was buckets, U.S. be it decarbonized projects, we as sure clean accelerating seems transition. fairly -- and one just intermediate terms It had On smaller should hit I'd you the energy like the actually new for, say IRA versus, of you we Linde? Thank very opportunity, slide as those longer your opportunities with $X-plus-billion customers prioritizations obviously, markets?

Sanjiv Lamba

Chris. Thanks,

That well. spend our $X have XX midterm, that that we really, on the today. we I bucket earlier briefly on referenced to installed we as assets are about looking billion at we I And There list So, question talked to for that bucket, that be XX that. and have will in that, expect P.J.'s this is that assets decarbonizing about.

There we're demand that. of drivers are buildup across seeing One, conversions hydrogen network. our for two and blue existing

our to want supply assets that. we make to and clearly, So are ready sure able

The absolute will operate base second, reformers made view, Coast. which in remember we of Gulf point a of our steam methane that coming commitment sustainability that from a from emissions, the are we we've that to Scope that X reductions bring installed

to we sustainability from In creating of actions absolute be midterm, that we up scope a on commitments emissions. on that. value, economic see reducing the also both tackling that all but So, made our in point will of you'll living

Operator

Juan call concludes to session. over now I remarks. Pelaez That the turn closing Q&A back today's for

Juan Pelaez

for call. to today's thanks thank you, everyone, participating in and Devon,

you If Have questions, safe a feel any out. further day. have reach to free

Operator

Ladies call. conference today's you concludes disconnect. you now That participation. your for and Thank may gentlemen,

Linde (LIN) 7 Feb 232022 Q4 Earnings call transcript