Earnings call transcript Q1 2023

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Operator

Good day, and thank you for standing by. Welcome to the Linde plc First Quarter 2023 Earnings Teleconference and Webcast. At this time, all participants are in a listen-only mode. Please be advised that 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

Chris morning webcast. Officer. you. I'm Executive first Pelaez, thank Officer; Good of joined quarter our for Head White, Sanjiv earnings XXXX this attending and morning call Lamba, Relations. Matt and Investor I by Juan everyone am And and Chief thanks Financial Chief

two statement Investors available the page Today's website the teleconference. this read our the the note in are and statements it of numbers to of adjusted in on to section. presentation disclosure this the that, forward-looking materials linde.com at Please presentation. The all reconciliations appendix are on during slides, applies made

Linde's first financial outlook, provide will with which and some wrap-up quarter we remarks after will Matt opening on will Q&A. then performance Sanjiv update and give an

now Let Sanjiv. call the me to over turn

Sanjiv Lamba

good the new a the delivered We Thanks on of irrespective year very reached economic margin, capital share, and all Linde return highs. operating a to on employees as Juan morning once again headwinds. Earnings geopolitical strong commitments, start per record everyone. and and their had

coupled on with dependable more have compensated a pricing, weaker capital for economy. Robust than return

any just ability volume to and Just there's base opportunity years. the demonstrated four which always growth a recover, And the they when consistently discipline. we've to leverage growth the do, capital an is Linde's in last earnings deliver in resilient like portfolio, excellence, further environment testament to as operating XXXX. global economies

projects, clean projects. business our of like uncertain optimizing times execute high-quality our during base energy growth day, on today, every strategy we to continue capitalizing However, including

to disciplined allocation. gases model, All of this maintaining while coupled capital with a industrial approach our

key are on and three clean under update developed. a of energy, brief construction Slide project projects being a that including an example both provides

three with strategy our reiterating over last the you'll hasn't energy by and to respect which begin me it years, notice it clean changed Let shouldn't.

first the with start principle. Let's

of cornerstone been decades. gases of our model. This stick a to industrial core the will strategy We has for

and equipment. at industrial are experts gases operating, designing, and building, We distributing

what We expect serve continue through making many be makes I markets customers our where the our at and productive will true Linde true competitive is for successful. been our more are years XXX strengths it last what core to the next they do, experts This has for customers and XXX.

within certainty safety, same are reliability, customers is our requirements the industry cost Another gas total of how lowest three which demand ownership. and for supply, the

mode. network capabilities our business to holds element This of for and end of This supply asset the systems the key is irrespective market most supply our customers. and $X why existing strategy billion our molecule, lowest-cost engineering reliable world-class our of a deliver the hydrogen or is leverage to

and I'd these which Following like clean successfully many principles, advanced we've to energy few. a of just highlight won projects,

projects with in ExxonMobil. up growth this energy backlog currently These $X most are including base considered majority and fixed sequestration our capturing hydrogen incremental designated COX executed and CapEx. predictable for our projects left payments CapEx underground clean Currently, supply of the construction. market for returns. side investments project and are project with OCI the through since electrolyzer makes the merchant represents The will Texas, projects nitrogen where just under billion, in new Linde project With under contracts, of partner, therefore, clean by

in as support customer side provide There optimize electronics leveraging hydrogen and criteria. local backlog the recently view technologies, and Currently, other a needs. clean PEM leverage industrial electrolysis for these even hydrogen projects to as well. supply to these and fit that the various transportation local of But are side merchant Furthermore, electrolyzer network hydrogen. existing modules helping costs. projects meet storage high-purity electrolyzer few often we to agreement -- infrastructure, They're outline Evonik network, sometimes and integrated projects supply supply announced including into distribution our our same the by like customers network we here, best

another Sale participate benefit existing opportunities, or our avenue to supply integration network. of with from Plug demands for may in have Linde is which growth not different which customer may

Now constructed, development. we projects to have being under addition projects over in different these XXX

Of course, the from project. profitability being varies project by won of us or to these projects approved

supply On Linde Linde customer. with integrated the net reformer such X has of engineering nitrogen Linde's like air ethylene recently and hydrogen as potentially for industrial was emissions the I'd owned opportunity Dow its of Alberta. and capture right an integrated it by existing will recently public the to which will and partner This selected that side Linde be in slide, gas highlight one and a made announced for proposed carbon clean site design cracker operated in complex. Under operations carbon agreement, for complete framework world-scale autothermal the Canada. Alberta, complex our separation,

anticipated both are underway, approvals investment Engineering is and respective working to and by companies the of work end Final is year. decision obtain regulatory approvals. their board

have details many then. don't really So additional I until

their address continue a We number such the OCI as help strategy as projects needs own new with to other market customers work aligned such operations, the our operations, decarbonize our project Dow of decarbonize on to project. above and

Overall, the best the to environment time. seen long growth exceed in total billion opportunities next the representing $XX long-term decade one a likely are over I've of

we we ultimately progress. making time but can you sign are and see will tell many course, Of meaningful how announce,

coupled differences our assured, participation to will rest across And proven many us a enable these But sheet, follow projects, balance despite fair consistently our win more criteria. will and our full our suite the with strong share. than strategy of investment offerings,

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

Matt White

sales for versus Sanjiv. X% last results. up but to quarter $X.X year, of first overview of prior billion X% were X turn The was FX sequentially, slide with a flat an Thanks, year, Please headwind.

the currencies of see have pass-through to in sequential continue fallen as by also tailwind. energy the we Although as headwind most Cost was evidenced foreign a strengthen prices parts world.

which costs have natural no profit will effect a profit through gas margins. we contractually, power pass on but dollars As reminder, and impact

X% of lapped X% more sale Russia sanctioned have the year. is of States. since we a impact nexAir Net Russian GIST from as last the acquisition divestitures ceased United of deconsolidation the offset and which QX not resulted down in than projects, recent -- the Engineering in decrease

underlying and these most increased items, remain elevated are X% in driving higher and thus countries levels sequentially. last from Inflation X% year sales The Excluding pricing.

As prior most inflation. proxy to that mentioned in calls, specifically changes inflation have price address weighted be best since the clauses tends globally our local for contracts

equipment lower prior from customers volume flat primarily due base economic to recovery lower, project contribution And is EMEA flat to since start-ups segment-based When the adjusting is were year Volumes from offset by Americas volumes. are mostly offset volumes, as is at looking on-site US APAC year from slower growing sales. prior conditions.

supply resilient to From we mode merchant perspective, see and growing packaged a volumes. continue or

lower are of turnarounds. combination than Although, from a certain weaker planned on-site conditions customers

$X.X flat volumes, Sequential America. US increases of and operating every improvement. of project cost Latin record management profit in was actions recovery through that from Despite and and resulted increased These are see this volumes efforts. growth prior you the contributed price prudent by productivity right from and pipeline QX start-ups driven as APAC This to year XX% flat can offset segment XX% in weather slowdown margin XX.X%. to billion inflation seasonal sequentially. a And operating

Similar mid-teens again segment wind favorable this low long-term an notice sanctioned of we you'll run operating as rate. last from excess to the is XX% to projects. a above in margin delivered down view of due once engineering timing In quarter, appendix, to the the the

While income next this discuss I'll the favorable slide. cash the to in led on unfavorable also resulted benefits on it statement, which timing,

may continue engineering the quarters, results the we to few For next down wind lumpy as projects. be remaining

currency. represents profit ex-FX, in potential EPS upside excluding row guidance. not of a XXth of quarter above However, or or last in effects any of higher we when year the growing was did the EPS XX% more. $X.XX include earnings XX% XX% the This

Furthermore, both CapEx From project to from base. a profit capital And ROC a growth growth and double-digit in XX%. continue investments at cash reached as flow record on we XX% perspective, base percent stable deliver another CapEx. increased

details more first quarter on provides management. the X capital Slide

flow are outflow accruals year. reduction of The timing relates operating and XX% than working cash steady, difference majority and payables. the an or relatively contract this lower last of QX EBITDA a from ratio both While trends liabilities XX% was capital, from cash in engineering to to

contractual we and to milestone income deposit a this over a received year said a quarter related thus customer ago. met booked current cash So differently,

In addition, project. we paid third-party that vendors for related work to

cash swing this creating this experience flow the accelerated magnitude wind-down of a you and projects wouldn't sanctioned but lumpy effect. Normally, are of

flow Excluding projects. EBITDA to company. next expect But engineering remain we continue few to cash in to wind as volatile more healthy remaining mid-XX% could timing, ratio across quite working long-term range. capital levels the down be to our operating low Overall, the quarters the remain I

pre-payments XX% and this recall, these XXXX And was sanctioned driven related customer to ratio projects. by in

base a $X.X which of is operating cash represents at is CapEx average approximately stable better flow cash multiyear So the per operating Available less performance. quarter. flow, indicator billion

to dividends initiatives, cash and deploy part repurchases to growth continue share allocation our capital of stated policy. We as

wrap guidance Slide X. up I'll on with

currencies full we're to XXXX. raising X% recovered. mostly end For any we since range rate XX% the have and Note, bottom growth a $XX.XX to at represents impact assume $XX.XX. $X.XX This guidance do of for XXXX, top new of year FX a not versus

comes for left we raise the In the alone outperformance first from The quarters the words, other of $X.XX remaining now. quarter.

improvement. addition this economic base improvement and with assumes hence, approach, no and volume consistent our prior no In

just projection, a placeholder. but does is This not represent macro our rather

and economy above accordingly. can take So the to adjust be we'll range. mitigate. economy your of actions If if the this view insert improves, And not, we'll you own

to XX% FX year, XXXX current EPS X% to no range economic guidance from second The improvement assumes quarter levels. is XX% Similar to to or XX% growth excluding representing the from XX%, full a when this headwind. $X.XX, $X.XX

sequential seasonal offset basis, it some partially by lower on a recovery, engineering. reflects Although

quarter manage and a control, had remain the deliver unfolds, of confident appropriate we including strong by price, things how continue on doesn't basics start, capital continuing compound shareholders contracts for cautious for regardless one growth. the But value year. cost customer a discipline. our can it's we while securing executing the to to Overall, believe make long-term within but We to we're high-quality year and highly our

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

Operator

is with Our from Leithead Mike Instructions] [Operator Barclays. Operator: first question

Your open. line is

Mike Leithead

and macro around quarter segment I million. EMEA business change be now the on year I $XXX $XXX to profitability million question, really million the in to quarterly But we quarter? give segment. focus $XXX in averaged pretty First you you just it, the last $XXX guidance. a level environment, here broke appreciate step call to EBIT uneven Can used running, wanted don't we million, speak this

run something So rate right here? sort or the is there is this of up underlying going kind of step the forward, else

Sanjiv Lamba

Mike. Sure,

by need off to of going take, been have how kind telling actions actions. business just at start looking back EMEA me you Let the they and management

pricing through that come driven two impact by seeing is we're underlying the So productivity. levers: and

we've talked last aware, undertaking it Productivity that been years now. for of over of period actions the time, about you're they've extended are an as couple

base obviously forward. you're every reset more do come and they've obviously to on impact their seeing So effectively has rate seeing But cost importantly, the we're going continue an that that quarter. upside through. some from pricing run That

recall, that there And up, around you when package if inflation started is might and pricing, happens a back we'd you you merchant around late particularly moving to businesses. that go explained XXXX, catch-up

energy have uplift are some getting Of result posted. environment, course, XX% when as impressive we're that as in coming costs pretty pricing that the down see number which they in of as you current that can a well, an example,

think So and you productivity. but underlying driven as you account in those keep performance pricing business, EMEA's around have primarily to about

Mike Leithead

you. Perfect. Thank

Operator

is with next Paribas. The question Nicola from Tang BNP

open. is line Your

Nicola Tang

billion bit little clean opportunity terms a more about ask to that $XX you in of about this wanted hydrogen. now I

I talked about you that quarters greater than back billion €XX when opportunity. two think

the You're about Linde's U.S. of decarbonize buckets customers talking it you those into broke down decarbonize alone, in but new markets. three

on you see U.S. to you project terms guess could the same wondering the about if the momentum which of of where billion, Thanks. talk I And you perhaps terms was extra could outside of in of most I under the findings. next So couple in do in €XX the years is geography, expect

Matt White

Nicola. Thanks

you that So again, XXX currently my we should is whole -- for by projects I segment The than XXX are just to remind remarks, that -- in application more talked developing. earlier about you, we help. that

which there So we key see projects these buckets three in developed. are being

are There the hydrogen piece or currently application ammonia and a or will bucket. play really decarbonize around carrier, is where role. in customers power, with and is energy the our help Then wheelhouse, existing them ones then mobility methanol industrial its and the is where we last there working to industrial a ones

is set I when the down the and mobility industrial at let's them split and billion, opportunity let's around them large, of under energy but So about that. $XX part around about down is well, a dominant say, We that think XX% applications, balance flip of projects see really power. fewer

it. one about So think that's way to

driving $XX U.S. of already and course, plus reached you mentioned, you coming lot the IRA with said out previously of we've Nicolas, in billion momentum out and development. of a as As know, driven, the that

So billion about talking of you see balance $XX-odd we're outside that the the U.S.

of growth opportunities some Europe, growth they pipeline relative be buildup We're to does We're out we come will And opportunities the a Australia in in U.S. bit likely and Europe of is the U.K. and look seeing seeing out seeing see. our of happen it Middle curve like East. of what Mainland a the behind then, little out the and to Asia, are

Operator

is The Jeff next from Zekauskas question JPMorgan. with

is open. line Your

Jeff Zekauskas

day billion about ExxonMobil facility hydrogen, complex much. Kryotechnik. indicated a or late the cubic of States. hydrogen feet would In X per United generate Hi. it hydrogen very is January, in Thanks build that to standard which wanted That

how see you as market that to enter as the about hydrogen hydrogen entering wants now in the that talk companies other seems integrated you it, do evolving you it market America ExxonMobil Can oil North see well?

Do over the sell idea see that way like years few of looks next in you a the us way from different Can give competitively? what hydrogen it? you an you that's them market in

Matt White

Jeff. Sure,

there So mind. evolution are in think as of aspects keep market, to about you the hydrogen the three

a sequestering heard ExxonMobil the driven you'll And key The mentioned a recall, we partnerships. that earlier range as our a will we first and us around laid speak of hydrogen And be well. through when of development is partnerships at as the partner lot that component are out said that a look you for clean that. me strategy, COX downhole Linde of

hydrogen of a So our developments, just to with develop technology one either and have including provide operating players, around to indeed, own us of sometimes their that's actually or NOC's of and on network. lean keep and in mind that, they're an that benefit number projects those partnering IOC's try experience we are because to intent the

So that's one.

to thing that over existing $X supports I keep our we The business have built we partner partners well. us in have infrastructure leverage second in And Coast. have investment Very as that other us or as advantage think competitive to the Gulf and turns want ability advantage that Linde really, for to that's US is impact where that partners we up. recognize they we a the a carry billion and mind decades that often, infrastructure potential because reach the of out to with that result

that's the piece keep of to So other kind in mind.

operations. players a operations decarbonization The example, what specific about last driven number around their is of Baytown. will want to you're of Jeff, their And decarbonize the speaking in

Here, to attempting significant produce actually do what to hydrogen. is they're

And You that into a own will systems, portion, going most operations, from to go chemical mentioned role refining view. their the development play of that happening. one large systems, undertake obviously, seeing the that hopeful as to of like our the makes that's a their attractive, others we actually and makes downstream a pricing and pretty crackers operating And cap. that XXQ capabilities ExxonMobil I'm those into well. will a not if of that lot people into projects more will decarbonizing the input from point through an have and provision support billion more as you're technology a in hydrogen attractive their is

Matt White

I'd Maybe Matt. is this Jeff, one thing add. just other And

industrial look -- a but market. the our participation the it's when that My be is fraction you energy, in of market you something when a order. not think is industry, for number hydrocarbon transportation in order trillion today it's at that percent. the may of gas and market exact, it And I another way $X in to think about look a at somewhere

a what in view, ultimately market converted my is the actually very $X is will think time addressed that in and of had very, tell. that to things lot being we like that in, small opportunities hydrogen, potentially I But happens, trillion so and that So areas a in past. creates participation if

Jeff Zekauskas

you. Thank

Operator

Duffy from is question Sachs. next with The Goldman Fischer

open. is line Your

Duffy Fischer

Good really. around projects. morning. Yeah. the questions Two One,

roughly, Is or the three that it would OCI, the Dow expect than over or years? years? you the Is four would three next that? four be So announcements the more it cadence like what

you're then but improvement, year? would you're you volume you your Could Matt, What said you what And case. no your would in be seeing macro-wise a expect in base on putting two, guidance, not talk about volume that's what this decent case? base just

Matt White

start I'll life of they a these will projects projects. clean Duffy, off important way of I energy remember is frequency go announcements through these on there that thing cycle see think to announcements is to need by talking announced, the about predict to and that projects. just there they no And what get have you types before the

to project important just through. development think stages the maybe remind you I go of that

size by a get and followed which the point by detailed of place in through So where actually the a a feasibility quantities based you followed study typically, got will the engineering a results project which this is FID. design, on the in investment fee, pre-FEED, requirements go you've a to and where

would anywhere months, it's of put all years. a if projects stretching half in That those take complex XX to cases, up to stages together, two XX some a between and

final years two half see you execution will happens. start-up then before that, a Beyond to another three and in

and stages So announcements reflecting have see to you development of you projects. would projects think to frequency at. kind that's expect been projects are the I continue These the for the see about that these under a way different while, those

Matt White

far Duffy. as And as the guidance,

that because think But the production to say that what bring you knows a translation. on to through would it's that adapt it make whatever CPI that two with happen. and you to that that and to that. I'm going when industrial top quickly start focus future elevated, about proxies metrics internally wrong, might sure locally think on as model not we be will can capture sure to -- probably inflation we then contract about So And can I continue on what you seeing is manage and think nobody we inflation what economic can continue I'll our know, we be of stay is, to clearly, we can we're need tell to whatever make to does structures through to pricing be that. continue

volume are to well On it positioned side, recovers. the capture we when

contractual know, are business. a we you As

last be now, comes that improvement and to this As the what we'll the Sanjiv no mentioned, do in doing similar plays does out. at out that. three But left just and matter what we recovery good bring, demonstrated quite we've for to manage that over sort how to will quickly of been with But two it see we'll be prepared XXXX we to well when we back, that it. positioned if and years, view, adapt I very no it feel

Duffy Fischer

Great. Thank guys. you,

Operator

The next with question is from David Bank. Begleiter Deutsche

line Your open. is

David Begleiter

energy with Sanjiv just Thank. morning. rest and that falling, how the pricing, realization on Good or the price year? energy or now should prices the the Matt, pricing flow EMEA QX through of in

Sanjiv Lamba

mentioned of Mike before about and we particular, -- between that inflation mechanism. to explained pass to a a we pricing where David, pass-through through. I'll back pricing, what responding we that but on-site on have in contracts, is as a a pricing, I've costs is in direct we've remind step think briefly also how earlier the take balance that, The when mechanisms, when you that correlation and energy costs happens So think terms about and we just

up inflation of as the that XXXX, was happens is a usually previously in cycle. there beginning picking that explained We've that at lag

energy here. down. said cycle end lag you're lag applies We at between to back of over is same go And two the that are seeing again, that one We've the now a costs we merchant of little in of quarters, of bit benefiting the us, that our the terms on course, and and seeing business. side and package are pricing seeing that lag of we're where

of through. a job takes lot we that number there continue pricing tremendous team price have making surcharges where instances our have of said as occasions a has process in I've hard course, work, that action stick Of of the sure we as on product course, previously and price done of to base push numbers continuous And possible, extent converting over pricing pricing, those to those ensuring term into that we longer a that well. base we surcharges, have a

David Begleiter

on Very year EMEA expect just do for be you down good. volumes, in rest volumes And the quarters? the all EMEA of three to

Sanjiv Lamba

EMEA around softness clearly, EMEA tell of you, terms year-on-year, in seeing in the chemicals specifically. seeing to what some we I'll So, volumes, be volumes, are energy are and tends we particular, in on-site -- business, more

to have particularly I'd of production steel seeing are pickup. say and on-site, little the in we a sequentially, EMEA. around slight It's bit metals On a

a a just bit is Sequentially, movement. volumes bit. there of little are little on-site So a up

So on-site the that's kind of on side.

pretty Merchant flat. been and has package

are seeing. Now, energy volume that's that will up that And rest good some through industrial activities come we pick the as stability the obviously watching because see leverage of to see in relative news, in the happens, we're we with year. costs

tracking carefully. to not many the leverage volume play. we're find positioned factors going our Of I'm we happen consequence. as course, to base that to to likely well this happens, are likely that's of if try the a given what's Europe, that in kind But growth happen predict are around and at

David Begleiter

much. Thank you, very

Operator

The from Société next Générale. question from Clark Peter is

line open. Your is

Peter Clark

Thank Yes. Yes. questions. Good morning, Two everyone. you.

price is the pricing in -- the still on and America, the First, on question. you're sequential getting back

mentioning kick-up of big led think I a the medical competitors for them Americas that as well. was in One was by pricing, your gas and

I'm wondering pack you're your price has gas that. or a seen medical So on just the of kick if ahead already

Europe business. around cylinder and the And then question second the

good hearing You've for Europe fact competitors just alluded I'm in again, we're well, still the margin it's pretty wondering robust on The doing volumes pricing very cylinder been side. and if to also were that, it's the leading the on the on it's your pretty certainly pricing. side. because,

if you're is Europe? Thank between that in real So you. wondering, a driver kick margin underlying that just seeing

Sanjiv Lamba

Peter. Thanks,

we're out. I get going or end are, pretty piece. our with with over medical satisfied And what pricing the around far of across healthcare seen last to on pricing into is as have pricing consistently lead Again, is you've concerned. specifically you played most think the three I industry think across seen say details can quarters, has tend that robust pretty board, I'm around I markets we pricing, to that happy businesses, as So strong to pricing and the most all how growth. we're growth our happening not where the we and segments,

question. package, that's a Europe, great In

I think very this holding we or those watch the good resilient is been through months last The carefully. on been and the well have volumes news XX so. very have side, volume

really been an So important piece. that's

very I that Pricing entire mentioned the we now package referencing. and quarter as has of been good. EMEA performance pricing first over well more broadly. from shown side the pricing period; benefited has that strong that Clearly, are that has including

so see, to -- as in expect the in energy at an in factor up activity place all to seems of was Peter. be certainly stability industrial moment, That important that costs. I picks

in will, still stability it's a what -- role are and But level might we longer-term activity that certainly be. some merchant short impacts think at a and I you very open of play the that helps if the the in there slight medium business. board least term, seeing package industrial in pickup, to across

see I would expect continue. those we to out play So as volume that developments trend see

Peter Clark

Thank you. Okay.

Operator

America. The with Byrne Steve Bank from next is of question

is Your open. line

Steve Byrne

plunged in on multiple that another Thank by month and the to costs gas the to you. similar Is that yet like passed through, have effect or Is better was how the natural your pass-through cost fairly would lag Yes. pricing. I a mechanisms Europe is neutral. months delay cost. in given the US understand there European comment you made and pass-through

These just lag? operating You lag things by have quarter regions profit really that two combined this did was they in in some represent effect. driven the those first

Sanjiv Lamba

Okay.

point that just, as kind profit concerned, our by says start at OP. add of, terms. an to dollars from from it's is top as top any me let it is down when pass-through So moment, and add is far view. a dollar anything headline away on OP goes on way its kind off there and the of the to operating doesn't it the adds impact doesn't of the as no providing in it It's And

when cycle and consequence impact does the concerned. down as as that of far improve course, of are a mathematical as a Of it does numbers the margin combination on the margin you're costs

say, question, pass-through able your Addressing the would I specific consider on, we're what real-time a would I to manage contractually, basis.

methodology fortnight how to contracts depending significant on not allow pass-through. week, So tends the us pricing isn't for to pass in or any of where be structured. effectively, mentioned, month, the lag, our contractual case There a as the to are of it two would quarters, one invoicing merchant a package I on action every there on and lag

Steve Byrne

you. Thank Okay.

Operator

question Wells is from next with The Michael Sison Fargo.

open. is line Your

Michael Sison

guys. year. Hi, the Nice start to

fair Just there a of limit Clean how in follow-up your on road? how you energy backlog? is in opportunities. the big Energy much for a backlog put successful And sale you share, on is can then clean that the you're clean gas your of be winning energy How And do much now? down your if think backlog will

Sanjiv Lamba

moment, the backlog coming the about $X if of just projects, think, billion. earlier. about decarbonizing slide at billion We would That's out We've So got of in you will. gas. Mike, got the of I what under under just referenced $X you this I show sale

the making in than be advanced investment we're are years on based that anywhere is decisions next billion expectation years, we two Our which projects will worth. three others. to further developing, between to This $XX $X the billion is

look ones that due start we and once course. win the pursue providing on the then and depending get in for impact up backlog the up that moved they start then decisions, would we into will those and And sign

we the backlog happens billion finally that I've over next $X in referenced it decision anywhere ahead. to to that the you what a I can make the not three expect that expect will I $XX it grow. in projects years So backlog. years be reasonably to to up steady before determine continue over -- do down. growth expect backlog to and peak those And clean billion decisions the of that between energy in

Michael Sison

Okay. Thank you.

Operator

question Vincent with is from Morgan next Stanley. The Andrews

line Your open. is

Vincent Andrews

had acquisition, -- shareholders? morning in about I it in the the that the packaged in given guess incremental the the at to the and Frankfurt on guessed you're have you Good given money have balance you of put look and with -- I just generate that large this cash capital like but you more would you capital balance, wanted cash you using that to to return to cash but delisting are that flow buyback, work of didn't the first year might so balance thinking you. I ask a quarter in still year gas end sitting buyback. of cash terms the everyone. Thank big free from did how pretty the

Matt White

is Sure, Vince. This Matt.

Specifically recall much month to of at were out structure given you for merger we delist. pretty officially QX, used the all, do buybacks nature the the January, blacked to was any that from of may the

So opportunity pretty, month had we we days right and act, therefore, and as did less we some get up to there. lost leading or it but say, I to so, about a good we saw would aggressive

on these return our And criteria. decaps, That and priority underlying as mandate -- mandate looking We on going it to that them allocation is them a starts business. consistent is to to those are treat it's evaluate reiterate long-term mandate, simple after the it long-standing to forward, call, we the And capital But should really it's invest acquisitions, base in risk for CapEx. to maintain grow which is same with against the meeting investments anything core that investment study going our dividend because projects, is rating just it's a every and single year. we our then model. A and be our the to is our need that approach meets model. It's a we're

be is over then left whatever to buybacks. is going And

and based we'll in the we step rely be over. So consistent macro for macro as we will substantial profiles, current very that us buying therefore, see every And capital our to pretty times, continue we and haul. opportunities, up. have long for on almost allocation will something capital on good through to But cash be that left that's policy day. you can that the market much continue bad times And

Vincent Andrews

Great. Thanks the for update.

Laurence from Jefferies. The Alexander next with Operator: is question

Dan Rizzo

for my you taking Rizzo question. Dan is This morning. Thank Laurence. Good for

I in don't if missed You macro having earlier, weakened? North outlook if America I guidance particular, the but macro the assuming no, your really meet about in mentioned in you not know this, any improvement can environment environment. I think, significantly your --

Matt White

that. I Sure. Matt. This handle is can

all, remarks, mentioned is consistent any of view couple than going more in not anyone how of been accurate of very economy our prepared first And frankly. for As the we've approaching our and to we believe I in else's. this be approach is the the last years,

be. put just and house no let baseline there that in you view put whatever we'll So may and improvement a your

the rate was in if year in take case EPS to that rate. mitigate. growth Clearly, growth And it recall, to So our in may will actions. deteriorates, and we of XXXX, macro the we XXXX actions took XX% full saw we you close

was did pretty mitigate actions from a those decline what help unexpected So macro the pandemic.

year, last energy the some XXXX, macro related saw obviously, and Similarly, in crisis the we invasion. softness to

I those what mentioned happen, those, disruptions be when so given we in operating than build quickly the and being in that's macro able rhythm we as case different was are how act things record able to expected. our respond to to Duffy, to And track is have a of

happens need I will it. given approach may So, But we view local, the what locally same, to time to very different. macro country react base how tell. And every you know, as and the be we can is locally this because, our that's

Dan Rizzo

much. very you, Thank

Operator

Vertical McCarthy question from The is next Research Kevin Partners. with

Your line is open.

Kevin McCarthy

discussions with earlier relates Yes, to offtake in that with indicated three I good you this Sanjiv, that an you partnership were companies. strategy quarter, provide we understanding you've Beaumont update specifically. last ExxonMobil. OCI think morning. And on learned is My partner to carbon chosen can your month, you

a projects, Thank navigate be, hydrogen of time the can you each offtake So, you need the these basis? costs on comment and case in would of also, questions do blue negotiate you. to of on future recovery a case-by-case costs as you the couple those projects? And

Sanjiv Lamba

Kevin. Thanks,

would driven capture So out and providing that about COX, IRA of the $XX we that's look per particularly are around the really, in sequester fee mentioned take would capture time provide a and the the tipping that that then where storage Linde which captured come to And tipping projects sequester. a benefits who would spoke models storage manage a fee, pipeline create be COX to ground. that last tonne I of for and at two hydrogen storage, we a that and would the mentioned ways in on there on blue this, COX i.e., the and was that And the partner US. of the two I XXQ

to come build read with as take the assets in a That's that them to we selected through passed part production tax achieve the We've players. and mentioned ExxonMobil ExxonMobil down the and to have by COX capture allow and the the long to option XXQ credits or path. of sequestration us other and the were offtaken the continue that with that where that partners you blue order of their COX the whatever assets and carbon would was out benefit worked and announcement, coming of conversations as that and ownership they be of number process -- in to sequested that. buy term. for on we we the the hydrogen The OCI of And from of OCI manage sell

progress on available basis. think have will that with we it to ExxonMobil, on for opportunity projects work the ExxonMobil to infrastructure extent, pursue about have we some extent, including and that and well-established the it case-by-case basis, us developing, the partners in that them, US and able to depend, on move partners, a forward to at kind with are we some dorms this of look we an in work does given we sequester ground geology well new therefore, that others a in and to currently model we be with the other but on will as As to and with

I up as are recognizing build recovery trying seven have want far reasonably direct for concerned, years, that to fact that line, we're a goes mechanism to a first below we're to As we years cost the balance having. that conversations operating XXQ the we those in credits period pursue that pay the tax as models is that, mean, the well credit of have we understood. make much flexibility that the into for The five

with been those that just kind basis. of of the One follow we've worked ExxonMobil, and has others on a will decided case-by-case

Kevin McCarthy

Thank you much. very

Operator

is question from next The Haire UBS. Geoff with

open. Your line is

Geoff Haire

some noticed down small just businesses had Matt specific or mind, on I wind there engineering and for issues year think the Asia. year, the that that one down And for additional, there the projects? volumes, X%. then plays rest just as just in the quick something Russian said or I the question I you around morning. out question cash the flow. the I were of just you sequentially Good a on were QX? given of don't that out business was if does Yeah. you How play wonder rest that you how obviously,

Sanjiv Lamba

Geoff. Thanks,

I'll Asia on So the I'll respond cash flow. the Matt to take you piece, and let

-- So the just usually quick quarter a Lunar has Geoff, across in impacted a The Asia by seasonality. as reminder, impact region. first Year New is big that

So you'll to something you sequential mind. that's movements see And see when that. keep in

and are but chemicals primarily seeing in snapshot of new and give strong also kind in we're was manufacturing, Year-on-year startups. Electronics are across of energy, Asia just strong food Now you care, growing. me a first what was the health anyway. beverage, growth quarter, that however, sales let pretty They

As marginal weakness. far as are electronics is some seeing concerned, we

think the kind that towards second from is see being of think of trend and the also end. we're coming we feedback the I've in that out slide half, movement probably So of that market end sequential we likely in in mentioned soft. customers that can see to normalization a terms of that continue, previously, of you volumes that see I Geoff, in back feel China, activity the most suggest provided. We memory

you markets. at region course, the the year-on-year. But is with I when New and the well. equipment of of kind And to to that help to year-on-year mind sales doesn't had continue We Year see keep you about impact some think Lunar across mentioned things across end it which impact movement of Matt? that the SOE New last movements Chinese you sequentially, that in One look that happened sale in the we comps the Year or then of different as year, when the QX primarily

Matt White

Sanjiv. Thanks, sure. Yeah,

what's So Geoff, I the And for the called percent get you in think paid completion that, start with engineering, of it part, accounting. we can when about most basics of advance. follows

we'll income then working portion that advance a recognize recognized is in then the negative a as And statement contract essentially, called a work against capital, will what's and and what then will and reverse liability that cash it's contract. it of liability. of And good we which would project, So debit then credit happens then customer we go thing. is a and work, go the we that that pay And to as be time, and over would we revenue. would us

in structured, And you've build In that's a for all the projects from rate. the that of case since QX to the we normal sanctioned created the an very immediately three, what stop project, event essentially four merger, last work in right, obviously well defined about maybe needed where a of years. engineering last year. us and four disciplined that's year very And seen

Engineering contracts E&P, address a called They news construction. called really don't do contracts, good but what have clause, much primarily is can suspension Now we Procurement. imagine is & this. We our the what's you what's these in do

So from labor Europe P that's the things with are United procuring internally or our in and E, vendors around world or China are the the we the States.

you in accomplished, build determine you and due had customer. to that when sanctions, have the contract at you've of point how what through get lots like So a a with go to but work we've you process suspension to have to

and very be time, that it lumpy. quarters, sometimes many So could takes

we at the billion. $X you'll as the when for issue is so in the And March what's volatility. today, see liabilities that this what about balance sheet so contract total stands XX-Q that's of of engineering later And end creating date,

in billion essentially have again, of which So customer what we $X payments, means work received we that off. is to yet

specifically that, of part been billion that's are sanctioned. X.X within projects Now

the be is of with project kind it that X.X, specific address. take to that's one $X.X My time million -- more. or will number year working within view probably is in a could called So some RCA, that we're

just We some in work were that done of But the work. that to that as and $XXX good substantially to address. these amount the advance projects I had that looking recognition substantial will few volatility contracts. contracts paid a time that's would million a say close given projects were of next amount final that resolve. will in, probably complete, remaining handful all in the the a portion ahead it's suspension the are the done we've it substantial we of take create we've get are of So And process then quarters

Geoff Haire

Thanks.

Operator

from is question John next Roberts The Suisse. with Credit

Your is open. line

John Roberts

of greenhouse plants? going replacement which Thank could hydrogen rules your will help EPA simply it's you. the power adoption US coal-fired Do proposed you plants of do to or think backlog, you for combustion, gas think accelerate drive ammonia the new power

Sanjiv Lamba

example, an are very John, seeing we Clearly, Japan complex this about thermal couple not there considering. things in in think sure to are do that's it lending. call, when a question. I say through. to that we to but of plants, avenues three have you, justice the going I'm I'm ammonia to and a we're work power Korea, What they as is would

to operating of in plant emissions down So going successfully by they XX% thermal ammonia a bring to of amount. there to currently significant usage up possible number a have XX% it pilots is

power I some do around development yes, thermal plants. will see that believe emissions of ammonia blending as part to level So we the of manage

The results suggest a get kind into they for worked that longer direct part injection direct see path when Again, And promising. power on installed. therefore, be would ammonia would source XX-megawatt as on seem this. at and there's if benefit Initial and currently looks potentially to it of deployed new such effective. of term turbines is being see turbine I piloted other operational, turbine that piece moment to power is the obviously a on that's being as

in there's right? tax and the even with try geology levels the well. little as opportunity particular, of to and to Lastly, given and more there the always kind that option available consider, attractive abate. made it emissions credits small to that try consider capture option, US COX of XXQ a always option as the though the It's But hard to is in become the the another it's in capture particularly sequester to

think will things combination be there of we that happen. a will So

We're injection. development look We partners ammonia of will with are out. take time injection, but to at support on to working play to OEMs the with all that that working ammonia

John Roberts

Thank you. Nice quarter.

Operator

with is next Mizuho. The Christopher question from Parkinson

open. Your line is

Christopher Parkinson

so you much. Great. Thank

had projects on and of little just the your you Linde can talk you've specific commentary about the backlog about Thank what plan you and highlighting? billion previously prioritization deploy. so been a to You But $X you much.

Sanjiv Lamba

you're Chris, right.

on earlier and when operations, $X So, invest to out own our mean go we decarbonizing at look when what I back billion we we about talked billion. we the put about $XX-plus said

that. I'll We have XX have for on that qualify looking that in about first would think we a fact, there in assets And active Coast in later happening. the is today, that US work we're projects those Gulf one space. discussion of

that generate is a long-term make sure contract into we hydrogen to you asset ability a at have looking the on network. when control. timing to it, and what I'm so underpinning $X that my provide decisions an customer tell and that that in looking Obviously, But back have we that that we the blue has is I combination I'm two billion talked that those make at upfront things our about. of be I'd

is meets second the effective And make sure to an criteria out. just project we that have set that that investment I

ground the our that the own returns assets. our emissions what terms of is to clearly committed as in same decarbonize I'm money sure to we when committed reducing provide shareholders a happens or While our for of on appropriate X, consequence I'm also to time, I putting making assets Scope which At operations.

five make match two in like happen. a then go to see hydrogen offtake who the We're to blue see and we allow the more we'll that sure that. that ahead with certainly have customers lot willingness building momentum years, that have those us to up projects trying I to expect to next of to seven

Christopher Parkinson

you Very so much. Thank helpful.

Operator

with The next Andrew is from Stifel. Hain question

Your line open. is

Andrew Hain

margin I and I look look been basis with it's QX, difference, most EMEA ones if left. questions and on two points. have compare that small the answered. If Americas the My on XXX are Only just

in higher prices would first. fair Americas. this at to America. the that higher that margin conclusion That's unit EMEA in than significantly function energy the is the conclusion? come I is energy Europe in that stage, and outlined you in your prices obviously Is of a margin substantially As sales are the basically

smaller give as are project questions. do flavor more significantly delivering assume would secondly, how the I Dow could And the big itself you you might would this is it contract that line. be my these And the product than and be that of some part energy to?

Sanjiv Lamba

more contract. Dow color Andrew let Matt with the give let you margins. a little me the I'll on start

in to Although the which pretty margin has been improvement we've EMEA, everyone on I do want seen solid. remind

applying terms are say On the out is we many of in feel at we this -- pretty learnings see good on to early side size it's project too the scale here. Dow to currently are learnings Dow stage, really contract, we're are about feed all stage I we contract this getting in can that that being there are what of the doing the OCI that we that, those Dow and tell. applied over But beyond at

at investment looks the what end able I like before that looks properly expect, FID to an we'll and and be to stage, kind define and that what get that you of year. think the of I of like. tell size We'll asset the

quarter to EMEA Matt, four at XXXX to go to but people sometimes just over that you and hand -- I remind in back margins before about margins I were XX.X%. on I Just want forget, now,

driven by margins then, about getting points, were to today. we're us driven energy, talking not by that that we necessary but thought Since we've by all almost year every basis actions XX.X% X,XXX management EMEA improve the seen just that

has in to that just gradual of I else on the there spectacular the by to laud and has many team, want So in put been do amount improvement absolutely anything effort add say and Matt, been a that, that ways. fantastic effort margins? EMEA

Matt White

Andreas, little kind maybe Mike's of question. bit a to first also gets and it Sure.

many to them similar And different on segments is it We back and in can view on I of margins homogeneous-type said think based EMEA at for and when several a businesses the view the as perspective, in analyze I is and you achieve theory, internally longer-term ways. all which now, Americas. of calls lot think years we've way view a on on But them. think how look broader able be my going something should lot increment the run profiles. to margin we APAC, from we that essentially the geographic they you operate how about

to regions baseline something three initially very And we a XXXX is viewed we geographic we that's when converging. have that exact the had and across merged that not them work point, Sanjiv's takes we -- to disparate lot this essentially years, margin see hard profiles through something it's And started time, is homogeneously. through of easy, great the

quality now, fronts. seeing help their to the resting are They what leader they're not are the of convergence. of a things and doing clearly, their Americas, who's Now different is the on you across stopping, they're lot business, to that's not a continue But laurels. improve many actions

catch up. You're seeing EMEA to start

be all three should theory, in view, the in my similar run. quite in And up. catch to start APAC seeing long You're

And think quarterly so of that's in of are at businesses rather individual end the about long-range I how these quite a because view than would analysis it terms similar. day, the

Andrew Hain

these look energy still the And different to on very, margin input maybe, for factor sales big -- across add that, are completely I a gases this, prices if If the you Matt, I in given industrial an margin. Europe that Is higher much then elucidate I very the and regions. that are capital energy investment be then be unit, the energy… looking in say for return than margin at how If a would at similar might same other the fair regions. is

Matt White

would disagree actually I Yes. with that.

us, From I of here, When we maybe return difference of about make investments, these a at look energy. sort no project we different as can investments, we're about things right? after-tax couple talking And think will through perspective, unlevered the them. know, energy IRRs. look talk and we we a pass you to at in

So at from returns. look price on have does energy how perspective, that the cash bearing really we any not

point, higher general, may create also Separate seeing in a because also high costs and region of EMEA we're margins. a higher to what high that and realize hence inflation, is when high there lot in inflation are you energy and gas your environment but in pricing, that pass-through is that pricing which dilutes is a distinct

will on margins. will to you pass-throughs you effect higher high tends the both inflation, effect which ways. have on the no work dilution also pricing, it more When dollars create operating may profit but So see you have a have

our So with at inflation this seeing pricing across been of end is day, irrespective a view of profile the works then decades over each eventually part of many movements, for segment pass-through investment of something these will we've but view a start the within is way time. countries and movements, we but energy the to and be pass-through, should margins function the converge

Andrew Hain

Thanks a lot

Operator

We Partners. will final our take Mike Research now with Harrison from question Seaport

Your line open. is

Mike Harrison

there. couple Hi, morning. A of Good Congrats a questions. nice on quarter.

helping to question bit maybe potential that is now in First see slowdown? you goods a into is, packaged do curious side your capital gas of do around and US, like gases? Are the can look that in a my recession hard robotics. you equipment drive within in opportunities footprint consolidate deal the fold, brought I'm you're interesting second business, signs areas any And US talk and to at packaged about have indicators nexAir terms of the US for some little guys all, more how actually seeing on expand that you what manufacturing further seeing leading in you And the of concerns you've synergies?

Sanjiv Lamba

good questions. Thanks, Both Mike.

to over So recap, the we let again, had kind me growth in double-digit US gas quarter. packaged the just start sales And of business.

and So that goods grew mid-single volumes is both for base hard digits. pretty Even solid. gases

well. trend that quarter, we to saw a within continue are was space that growth see has will end that did as down forward move hard which year-on-year the that down. as little toward the growth we of goods referring to, say bit. to I'd back we And see towards started equipment I trend to Still particular expect we you Now starting the

you've think obviously leading So watching we're -- I as pointed that's those the carefully. I out, and mean, indicator, it

does be but going I'm and a in there try I'd of point it just of to that. to what and whatever seeing will wait bit that if you, suggest, and going recession to and downturn. a little state downturn, speculate not we're really economy see and that this a be say you a would is But a bit time we'll track that to of there little at the is

concerned, nexAir as is very the with far firstly, that As closed happy fact it. we

XXX know, you in has As it announced million top we line. that about

geography Equipment which part US, nexAir that to footprint seeing packaged business the business, the of country in and our a that our investment, gas great to particularly that inbound a see Gas that we Linde should and that drive have we and that see provide Southeast and LG&E through and have get we as run lot onto of being us projects from to is that cross-sell We emerge the in now manages synergies US more platform, platform into already we in growth new integrate very an the as established healthy, the opportunity in network exists. for benefit

don't I a as see that's We -- all to don't love I that. as I'm we more many year, think consolidation, climate do acquisitions, these and FCC think large we tuck-in further could. if do I we tuck-in affords getting as But year. acquisitions do for that between going ones. and many if many number continue As certainly all and can. think Mike, do. other can far as expect But a I'd them of to every I small to not we this

Mike Harrison

very All right. much. Thanks

Operator

turn call now closing over Pelaez the remarks. I'd for back Juan or like to additional to any

Juan Pelaez

participating. everyone and nice you Chris, thank job, online, for

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

Operator

you gentlemen, now your you participation. and today’s Thank disconnect. may conclude call. for will That Ladies conference

Linde (LIN) 27 Apr 232023 Q1 Earnings call transcript