Linde (LIN) 31 Oct 242024 Q3 Earnings call transcript

Company Profile

Participants

Juan Pelaez	executive
Sanjiv Lamba	executive
Matthew White	executive
Michael Leithead	analyst
Vincent Andrews	analyst
Patrick Fischer	analyst
David Begleiter	analyst
Peter Anthony Clark	analyst
Jeffrey Zekauskas	analyst
Steve Byrne	analyst
Stephen Richardson	analyst
Michael Sison	analyst
John McNulty	analyst
Patrick Cunningham	analyst
Joshua Spector	analyst
Kevin McCarthy	analyst
John Ezekiel Roberts	analyst
Daniel Rizzo	analyst
Tony Jones	analyst
Michael Harrison	analyst

Call transcript

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Operator

Ladies and gentlemen, good day, and thank you for standing by. Welcome to the Linde Third Quarter 2024 Earnings Teleconference and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] And I would now like to hand the conference over to Mr. Juan Pelaez, Head of Investor Relations. sir. ahead, go Please

Juan Pelaez

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

that numbers Please wrap the performance all of update financial presentation. available statement and disclosure forward-looking the up on some made in are then materials adjusted at will remarks, the presentation teleconference. will of the and quarter third and our website are The Q&A. to linde.com this Page read outlook. X the appendix it in during opening an Linde's Sanjiv this to Matt Today's After on the statements give will we supplement, note Investors applies provide section. reconciliations which on

Let to over me Sanjiv. turn the now call

Sanjiv Lamba

morning, good and Juan, everyone. Thanks,

again across none challenging resolve in once came highs and despite countries. demonstrated economic resilience EPS, results surprise. a as margin this new operating frankly, But globe. quarter and most the Third reached the employees of conditions Linde of ROC

it anticipated Some this and activity that expected. played of out we sluggish quarter, as you recall may industrial

concerns economic regarding ahead, Looking have I weakness. continued

end light trends, months. X. these workforce of you be few and completed it So find In on will the provide approximately is color cost to of additional this can on which affects in market we've next more expected be charge, taken targeted globally the the series including proactive of mostly X% provide helpful actions, you Slide on may details a to actions, reductions. Matt and it

our This consistent to well declined from X% have industrial-related the macroeconomic with second markets trend quarter. comments sequentially the as end as statistics. X% is prior Industrial-related

growth up the merchant global spot. positive are U.S. year, be slightly which almost America, at continues experience in prior in sales volumes bright On-site XX% However, we and of including North some to over did a

parts and primarily to this see we steel, In trend addition, and trends to to prudent purchases, of industrial The don't this for APAC, of remainder chemicals. reverse embedded combination with in continues said, We Currently, take and North suppressed this uncertainty time. thus economic EMEA of meaningful is catalyst ticket tension most large these progress. our American This with most China. glass correlate project believe activity the any this at as the tend which such this view markets positive position to and has guidance. contrast have of year geopolitical

slightly food are with positive up and second versus growth high in markets end digit care. continued consumer-related previous in was stability quarter over Conversely, health single year. and Electronics beverage

a recovery at As to in clip. electronics expected, move lower continues but forward,

project recovery next in including expect provide While electronics growth quarter, sequential ramp-ups. we the is to slow, fully backlog

stagnant to Taken together, declining slightly or economic a point these backdrop. trends

However, and secured the with robust combined a ability and to our shareholder of of combination actions stock contractually costs, challenges. continue project on support repurchases pricing, regardless deliver to value productivity backlog

gas of third cost-effective and in signed projects a sale contract win gas in Dow core is In history. with quarter fact, our Chemical as hit to billion our in our investment project backlog of we the supply. $XX largest reliable pursue to disciplined company and competence approach our This testament industrial

for atmospheric Scope capture hydrogen or emissions to cleanup. carbon industrial otherwise gas ambitious both low investment more and $X acids, carbon partner including and blue zero We're COX embarking to carbon fall X natural provides X searching known and proud services as hydrogen. gas the be provide selected a through in Dow complex fuel plus billion initiatives, an on from net as to project to low series off-gas this of Alberta Canada their achieve X Slide is details on

over be to expected over-the-fence is investment investment total supply underpinned our that $X Linde's by with criteria. a gas aligns traditional billion, X, contract Phase For

expect project in late up XXXX. to start this We

note the different product clean capabilities, we It's greater gas draw it's scope transition just offerings important upon I size are solutions in energy think and and Linde low to will since expertise demand. hydrogen carbon several undertaking. are more integrated management production. The than

to enhance supplying future Dow, addition will existing this footprint provide for extensions. substantial In investment and our density

owners. in, in regions in incredibly in pursue see backlog future the after balance a I've fact, gas be industrial may time potential lean with rewarding and proven in we're challenging a traditional well-focused density. strong on of of successfully strategy with in our while our time. record Overall, a are navigating confident Linde's to the largest sale this track future, I conditions while industrial prepared. not heading economy, company sheet more into already And project results never customers Linde aligns is In an gas with conversations uncertainty typical this well core industry-leading to bullish key with geographic and customers. global with well sustain contracts we been economic workforce history, but All high-quality ability

Matt our call the financial over through turn to to now walk results. I'll

Matthew White

Sanjiv. Thanks,

Third project X. can year, demand Sales for last increased from X% Versus up quarter and from sequentially. results sales infrastructure. and year be billion activity engineering are X% prior LNG higher of found $X.X X% Slide on higher

down While X%. pass-through currency are and both cost translation

energy impact changes reminder, no building has of the profit customers operating to a to and on-site cost As contractual dollars. pass-through represents

up volumes. Excluding offset from flat driven backlog growth these mostly project by increases. is are as base items, organic weaker the sales Volumes by price X%, are

As in levels. X% full XXX growth. drove of to trends, basis year, industrial X% from XX% rate recognized higher. points represents in next from of regions million for weaker impact exclude reduction mentioned These or translation. by which is second XXXX earlier, operating up workforce contribution, $XXX an increased savings of last excluding in the when of industrial X% and profit environment price figures or costs Project XX.X% be stagnant EPS as affected the restructuring remains run a We billion $X.X most economies flat resulting half productivity $X.XX these the of continue year. margin charge, net anticipate report global volumes. many operating severance production currency a to negative cost the Despite to profit

Slide than our XX% quarter cash and X management. second provides above X% the higher the capital last for $X.X year Operating was quarter. an update on billion,

As for anticipated, we to saw a significant expect timing. sequential by fourth improvement and driven incentive level tax quarter. this I OCF interest, maintain the

to backlog, of base with but XX% XX% the $X quarter, CapEx invested allocation from capital down X%. is the policy and up versus the remains with third into is billion Our return total In project billion CapEx stable up CapEx executing $X.X spending year, business shareholders. prior gas billion sale $X.X

termination reminder, a only the customer a project with returns are projects provisions. As fixed growth Linde contains backlog underpinned that contract, protected with by fee

and market spend the aligning The conditions. the unique is with is industry. definition as CapEx most across decline non-backlog base from local productivity stringent Our as better well initiatives

Slide with I'll up on guidance wrap X.

the guidance year. initiating an not an range fourth we economic For contraction to at quarter, seen assumes since improvement. range we're growth midpoint to from the $X.XX of of prior indicators EPS X% $X.XX, near-term This XX% or sufficient have

election. in since guide end as dollar thus impact, sequential we from The no although approach from a U.S. The range range to by QX a prior presidential was this full to assumption noticeably and the strengthened quarter has updated U.S. or contraction. $XX.XX, neutral assumes incorporates last weeks year merely economic the $X.XX addition, currency we few X% the the becomes XX% excluding reduced growth, X% $XX.XX our top to FX headwind. In

this environment. is While we happen, prudent for knows for this believe one no approach sure what will

weak, been has activity industrial not near-term and global summary, anticipate improvement. In we do

and downside In fact, regulatory and appear events. potential to volatility tensions geopolitical uncertainty add only

However, prepared Sanjiv we're mentioned, this uncertainty. for as

We balance years project to sheet billion, come. backlog industry in have high-quality $XX growth ensuring disciplined the the with most strongest the for at

supply a every our actions rhythm, opportunity. modes have respective network decisive and across employees densest operating markets. have all And well-honed enabling to capitalize on We take the for growth their we to timely X

what the matter deliver future I over continue to to have No industry-leading Q&A. now the confidence we I'll will call turn performance. brings,

Operator

And comes your the Instructions] from Michael Barclays. with question line first of [Operator Leithead

Michael Leithead

of that into It year. seems cost this you're like positioning to perhaps some macro heading the I to you're economic in contraction next ask quarter, your actions fourth incremental wanted guiding the caution some for quarter. there's taking

to either market macro the or So most today? regionally where seeing end speak where business in your you pressures you're can

Sanjiv Lamba

I there aren't Mike, world, said describing remarks, prepared many as in my would I think I bright the think you spots. have that heard

there was a know to the in really, around seeing in that industrial broadly, near in progression where catalyst a that's that see there we reflecting more We've China market. the developments is underlying that may So see are essence, in unlikely term. and not We the stimulus. change short-lived with euphoria the market, have seen and European clearly we the that volume pressure, EMEA reflected seeing

North bright back spots, into the I those high was see we at So sluggish remarks, are America, And sparks in watermark far. growth be a bright that thus to U.S., seen, more hopefully rate. has or to and that proven move slight or softness and steady which defined primarily a is very we've as that stable hoping in resilient really

We be a have seeing other example good consistent smaller countries. India where would growth. we are

be market We deploying. we near-shoring, Therefore, continue reshoring from like benefiting are leader that. are Similarly, we there. strategies be benefiting continue India -- also that to Mexico people the to the from

long actions recall. see many weaknesses. also And been that Mike, reflection a this is This quarters going the we've are of or new. our the about taken I So the industrial weakness there forward, what see would industrial space. the we view the we the now talking in fact world, think broadly challenges across industrial you recession a for been of but has now, really And as we've

Operator

question next of the Andrews Vincent Stanley. with your line And comes Morgan from

Vincent Andrews

came in there, in in more last a or activity given or believe, there you India, just been activity, seeing at sheet? get X the I of announced looking assets decaptivation interest that while earlier a they economic You something week some for week. the their Are ASUs weakness off customers was just to you've Or maybe to the fruition? until looking are balance

Sanjiv Lamba

specific I and view that a slightly give about broader see decaptivation around what then first, I'll opportunity globally. you talk will I of

Orissa, that with were in which particularly start able had those by competitor. Linde did. we Kalinganagar, a plants very The keen that today one our who over we India's that to is were constructed them from assets. decaptivation the of large steel network because being They into plants integrate the extensive customer sourced enclaves. the exists Let's were

to great a also solution, energy our network from density were reliable both project. speak from It's So again, about. that leveraging and network, providing a supply asset often we safe very innovative sourcing but we able provide that

decaptivation. in a and come to factors That I together have meets criteria asked project long-standing that. customer. relationship enhances have I combination We when is our look investment couldn't network at of better density. for what we with The for our a looked

a done take might as we've quarters exact well. assets China. And these Fujian onboard were conditions in You that few ago of recaptivation recall us in of now, all satisfied for these a to metrics for

broadly we on XX is every assess decaptivation, to year, every you, opportunities probably for year, I'd not anywhere deactivation. So new, say between to X we this

we we importantly, to are very, ability our find because ones us density as see network end at to for will more these them We options leverage pursue at well. is When certainly we the on. integrate that attractive creating into value play, both supply about network very the great and but selective we're take for creating our the to for customer, benefit

Operator

next with Goldman the Fischer Duffy your from question line comes Sachs. of And

Patrick Fischer

some pruning the were around care that. Earlier of this health Question parts you business. year,

just are on end? think the And one you walk a more 'XX growth When pruned tap through that then going forward? to that. come? care you to anniversary does structural can And health third there to what's So do What just rate anniversary-ing? is for what us and and is we maybe been

Sanjiv Lamba

Duffy. Thanks,

was it So care but is the business headline small which very as care recall, care, grew markets, would part the of the well home business the we let's And U.S. care to U.S. Hospital The to stable all That, you, completed. participate pruning home care the around in been And in has health the go across Duffy, home Healthcare there a largely here I world. piece. cleaning and as obviously, in we is business. portfolio grew. of a home you elements the business, Much of think large specific year-on-year, say up care that market to that we serve business have our the back it our I a care. largely for health of percentage, two

recall might in the end that you fact, said year, call, by completed. be last the In expect I cleanup to all of I of the

by done the see year. that the will end we think of I

growth there see expectation, health of we the expect mid-single our That's and to to be between on single space. fully care I are in We business structurally rates ahead. look digit track low the health digit kind to as care

Operator

comes And with Bank. question line your next Begleiter the Deutsche of David from

David Begleiter

reflect contraction see economic longer-than-normal year-end seasonally this well in as would normally planned and Matt, over So, planned QX, shutdowns? perhaps as Or seasonal and shutdowns? you does above extended even that is slowdowns what

Matthew White

David, The about point, we at it Matt. way it is sequential. it's think your

there, your sequential we the volumes. contraction. And view not as it seasonal. be would organic exact statement So a to base It it would be across

you consistent. extended view the usually have is you weakness, pace. you outages, order when or we those the average extend you But And an at we front the a a the as on tend may to have we that that to workload As know, back that intake have customer and the seasonal see is pattern would if outage periods. not end, are normal work because right? harder there certain, a holiday view for Because it call could

they extend outages. so And to around tend

this wrong it is only know just is that be see that we're we're seasonality. a So it. and for We're it. extent, getting just want guidance. then include that make better, people of potential in wrong. taking does things This this around could to prepared. view us. is would If a not the that's state the we're ahead do If to feel don't extending I we right But upside does outages are happen, if volumes. Obviously, we actions that. I definitely sure given It or base we But

Operator

Clark Your comes of Peter question line next Bernstein. the with from

Peter Anthony Clark

one targets X billion Is XX to on the the investment. for billion

blue understanding positive been closely at out have very as space of place looking some in that maybe Europe, close going So X I study that obviously on Signature. think particularly ammonia. U.S. My the financing companies finally feasibility well done getting or place increasingly you've three, the on getting some Equinor, or backlog. certainly on down is made your positive these dragged in into got very side four relationships to the with and BSF at and very incentives positive in some has well close on.

X sort around billion billion can you much. XX if you halfway of that Just because to comment out scenario there you're pretty got there, still

You've that obviously got confidence some you're get going to target.

Sanjiv Lamba

Peter. Thanks,

$X broader assessing just give where you billion, we seeing $XX with billion and around hydrogen. against development off are start stand that probably what we to let's of So slightly overview I'll a

a about about On front-end Alongside between billion billion, that will the Dow committed a remember yet, Peter, Dow that, to a we in Phase are rightly that has obviously it, I. we moment are. but the haven't course. you'll $X at develop of $XX obviously, as signed OCI you put we I which feel of that lot where just up to pretty its work and We've own projects. of doing X, number on half Phase confident

I something back I seeing $XX as more a number intact as I the give about. that, I confident billion looks broadly, around that to that those much on hydrogen. pretty will, however, few and what pretty feel the $X of And And step developments You I you'll feel years I'm next couple already. you billion confident referenced think broader probably overview see see well. hydrogen over this a around and just

saying at surprise of a come there this high all. developments a have talking So as euphoria. been that shouldn't But hydrogen about degree and we is

the of you, and hearing So and getting project indeed seeing recently. segment we a are the cancellations you about had hydrogen a would development what expected. into following announced number say is elements to I we're what today seeing

costs rise. capital least, costs we that recognize a people that be the or promising hydrogen, on as haven't around expected incentives haven't elevated. driven aren't projects hydrogen threshed And on last not as what known green when to People most are returns still factors, work quite that but call is renewable early framework of fact announcing might of fact, them being by otherwise number they capital amongst are be. the to In as regulatory but and enough thought tend or key them out, done are unclear,

work those, are are That's the and that or ones hydrogen the low we as projects that mature of many very the we've we or what which before, is carbon expect, as consequence getting expertise are hydrogen as are a projects end cost -- up most operating around. high-quality still said currently thing substantive and growth All are how and is see down competitive. that the sanity scaled term. initial that economically, those the factors know. are what a a known in dying hydrogen. a is and is news key feel technology a make in decisions a their for on today. challenge and economic we otherwise which The product good and as check projects, pretty development on in is you available is you euphoria manage projects, would developing, So blue good ways, There of they check. decarbonization are people become reality long around you being good I of making as space The when on, the that. projects, bit And sense selective element a And is very about

the see we need So we that's I'm what hydrogen substantial check trend space. is in actually pleased that's because kind on reality that, today. the of where for And place that development

Operator

line of Zekauskas your Jeff JPMorgan. with next And from comes question the

Jeffrey Zekauskas

were prices Your flat. sequential

deflationary If you -- now we're in a something of environment.

another maybe was merchant business way your it, the pricing if flat? price/mix case was on-site grown? have in quarter? negative the the grow packaged Or it it was there during pricing exclude of price/mix you sequentially that negative in Or did business, and if your sequentially So would saying

Matthew White

Matt. it's Jeff,

all about not for think think. that double might because of we And merchant what across gases. a deflation Maybe seeing still But in the of it China X% when issue of tend deflationary. about positive you're and I calculate disinflationary translate know, talk and couple as area, you I seeing be number we're as wouldn't of It's an describe a the you It's pricing it base globally, on-site. we more things, So say globally. way to in package. I when merchant we're package. And just to our primarily so would

flat, see like think a your to to I maybe all Clearly, and on more pricing when on that that going we declining just concerned to I on pricing tend So helium, timing you're the And slightly positive we know there something you'll contracts, it's quarters, have you continue still could that. there. point, have there. to some there, year-over-year dates and positive anniversary based happen. increases the both look globally to also the an little be sequential is have Certain effect But overly supply/demand. within impacts. not

you on So quite We we some the stand that. can still be good fourth see lumpiness. and feel where where and timing we'll about quarter,

not overly concerned. I'm So

still think weighted I our global in it our positive but to disinflation the we will regions. will pricing and lower And be think CPI the still number a see the with at I that it continues of little contribute. bit track globally still will have a level,

Operator

Steve comes question next Bank the line with your And Byrne America. from of of

Steve Byrne

want develop you will potentially is then network the then will to lastly, ability gas an the hydrogen ATR more heat this this hydrogen then before? area? this employed required in the approach APR CX reforming need going Dow, natural And something not could Have going CX reform ATR You're like this this And whole designed U.S. in own by of crackers, be if or cracker you and see build to to you customers Dow you in to Gulf? their methane. and for to if hydrogen down reform of byproducts, just is you your have you're

Sanjiv Lamba

Thanks, Steve. Great question.

technical where the by and technology that of kind provide Linde So packages whatever huge integrates various solution amount our to this required ability of customer. I is is think value, provide a a end brings

through talk clearly a going you've I'm we're minute and maybe that. just actually take what spotted doing. So to

as two and do, you the say, a ground, large to ATR expect, XXX on assets So of natural gas normal which earlier. point is process ATRs There put as to and would to your that. going we're a consequence to provide let's hydrogen is an of day, million going

know, high provides ATR very from COX concentration, you the high onstream. As reformer an perspective, purity technology autothermal

is our do COX step can that which in very capturing next process, coming the ATR So we out easily. a of

running of operating piece So that's fact, about actually X top for of years, in lot the Yes, fact, to anything, it's and in before? one the and their in a that it's, the because kind we we have package, world. so X your designed in that to of we been point, have on doing best one how technology if are today provided customers anywhere bring ATRs this

at So are feel technology, before, good building and decided about having currently very we OCI. also the it

good So takes technology record out, that, ATR cash. will is the the on which putting, pointed have off to second as on Again, good Add track PSA overall. the about a process unit we rightly we're technology that package, you a the that. We feel which

We it up. clean will

that that as will We well. for fuel out, back as And will well will coming or to as Dow. provide clean that is rest, and provide Dow capture provide either COX there the we we if hydrogen to

Gulf again, very solution. great is point The providing Coast way a Coast. you on that PSA already we smart So do the this integrating the unit of in a ATR made Texas, the of Gulf actually technical plus

having it track the a the customer. units have gas provide up from these PSC we So and off clean back to it record coming of built take cracker, to

that applying solid actually creating here really, for of some those are and we out learnings came really a of solution Dow. that So

Operator

Stephen of with line the from Evercore ISI. comes Richardson question next your And

Stephen Richardson

had you the Can at chemicals European of about from bit and acceleration extent announcements, like. and an of the down Sanjiv, to having from have the you're how traditionally conversations shut late and talk your to go customers that about of risk any we've or restructuring any as on on you exit think like all or you do industry, continent do those customers potential it seems that or a want particularly an the with how assets opportunity restructure? kind that -- discussions a

Sanjiv Lamba

So absolutely not you're large heard I of these any that our customers that companies major Steve, some that about actions closures. lot read you only in proposed tell from press, in a Europe the are you we've discussing taking. right of that currently, major can

So -- we eye a not on to don't say it. keep that close

We the tracking haven't news very, go things But I recognizing in had stand, think the conversations very when are you tell obviously that the already, closely, of me that's those as we and any customers we of of on that, also air. that reiterate and know part to our discipline just but model, this you contracts will yet. let bring I'll that have I And that's place part think to shutdown, part in the do undertake. we contracting decide about that's that investment. ensure that in that every project solid of undertake we protect that our we

of where terms we the least about at protecting in pretty good feel our interest stand I So of investors.

Operator

line comes question from Sison with of next Mike your And the Fargo. Wells

Michael Sison

A buybacks about great. now. for fairly when depicted And what Is initially? you that and to talked the similar, which give lot I have stock of general, half but you companies felt be think algorithm, 'XX, second a guidance, 'XX, hinted first this you lot similar that know a growth as you would got bit little not half pricing potential, in about then of to 'XX of specific early see the it's backlog 'XX of they have kind

Sanjiv Lamba

because to comprehensive bring, to on sure you're a you you'll have key very from on in on come hold February while that. but I'm will hear Mike, give what we and a us So view for that to XXXX back

energy for the are next planned we our planning internally happen and expect, X next of putting lot As the you might to those weeks. doing a year, meetings are think I into going in

about about and XXXX. and see we we'll lot a much how thinking lot of we'll you on more talking view better a and give back in a So spend that, come that, granularity time February

Operator

of with comes John McNulty from next line BMO And question Markets. your Capital the

John McNulty

on question of a gas backlog. So the sale

you backlog relatively traditional the It the the half usual far or speak So you doubled about the about Dow billion over that of more It's guess, last projects guess, next, duration is coming of other think from up looks terms to almost down out can just than it's how it. of quarter. are to and project that, to in? of tied X.X that's $X to comes for I the Can half you mix about that to of us like the think that. X in materializes. of kind and just I And on it rest added, you kind the whatever, more your when gas in is sale and of if projects the timing -- years? help

Matthew White

Matt. Yes. it's John,

completion and a up. projects it's would timeframe announcement our more traditional from start upon I announcement, is So a years. with to start signing -- say, usually, about X That's, normalized would I

our plus one, tend a of where little Hence, Sometimes much is accelerated a clean been longer end, the scope amount we what's Dow much prior is be to say of to feed extensive energy reimbursement. scope the I'd the with little and about undertake traditional But a have at larger. amount like more with They called preordering it's the greater. for to reimbursable because where on larger. you some the be most projects large the can you're Clearly, part, times is if X on a project. have it just years announcement X-year

normalized year on backlog be of contribution. more your say, remainder for a I X to average of the the yes, So question, would answer would

clean prior contract. far how more are it's along again, going the projects of scope. And some larger of a of signing we always to the But to magnitude X be be could a energy plus the because of on function feed

Sanjiv Lamba

at what's backlog good about, add comfort year. just the view year, on know, to a that you back back is know of to over XX backlog up that it projects, thing. to that come about other tell $X out. happening. I'll we or a to my This backlog that's give the projects backlog starting these $X billion right? shrinking moment in backlog, few up. this just into come see And don't John, A we'll and And we're Dow projects grow you you And of billion I brought XX and

So we should how that's exactly be about thinking backlog.

Operator

And next with Citi. Cunningham line comes Patrick of your question the from

Patrick Cunningham

change your on the I'm Do repurchases some the you years, just curious the projects for split allocation added few next to XXXX given in capital over XXXX. chunkier in or path backlog? you've expect

Matthew White

Matt. our commitment no allocation that process, the long-term view start absolutely capital. on no, We I'll right? it's a Patrick, with how to as allocate going capital change, we're

we our that fully from ownership so base. expect for be it consistent And perspective, to

Just as policy just what capital can those it. is, reminder, of for our in, a listening reiterate I location

We a dividend underlying raised to the rating have and single A an year. mandate credit maintain every

underlying mandate, over is capital, using to where in business priority meet mandate. want after criteria. buybacks. investment And That's put our that but that's our or our to to our investment So we left the invest have criteria. whatever then meeting our the is And projects

because we'll this be view buybacks flow that clearly, year opportunities there I our of still more for of it these that when build investment So the we are those cash gas as We next advantage We as naturally to one, means backlog approach. will billion, seeing will we perspective, well. a has that buybacks Clearly, cash being generate of as right with that feel But will And continue good to are But excess that CapEx take generation. continue criteria. now apply rise, sale thing. today flow, growth now $X just and as will capital year be to that more to have there deployment will excess projects. something that of from consistent free our which our view free we increase. as the meets

Operator

Spector the And next question your UBS. of line Josh comes with from

Joshua Spector

could if I electronics, year-on-year parts about wondering performance in the so of down talk you was some strong moving slightly. sequentially

You baking in on the or not. talked if about quarter, view macro but you're clear your improvement into I'm guidance fourth the not actually

you actually can into what what's So guidance? baked quarter about and the happened within talk your

Sanjiv Lamba

little bit electronics slower it out, you go mentioned the are maybe expectations. It's as year-on-year. sales, X% electronic we had the expected So path directionally we that than a We've saw to. Josh, point that recovery up down

more been look the have OEMs expectations line in So see commitments perspective, out. we broadly to laid from with we the being a place how have by the investment been that macro made We ahead that see as in midterm. large

on of we expect that path QX. electronics the the gases will sales LAMT, the mean, of actually the that normalized of the of your seeing growth comment that sequentially, about provide normalization components components LAMT serves difference be is to What -- electronics also we and the of the the inventory in say sequential out continue the you're because in we in certainly the other quarter quarter, solid part get those Hence, business, or movement. I to happened recovery see our global which or destocking an AMT course advanced with which saw Sequentially, that some The gas we confidence Electronics on have back, and question and business, that components. was itself, we asking some material happened that reported in here think. that come aerospace segment, sequentially up. I were

Operator

with Research question the of And Vertical McCarthy your Kevin Partners. comes next line from

Kevin McCarthy

anticipate talk quarters, or startups that company-specific And the the next there idiosyncratic to speak macroeconomic project few top contraction. similar over about X was wondering think potential the do a if to or so At about year of project significant or lot growth they'll X would sources next could the be or over pipeline. of from last volume discussion quarters you the about conversation, contributions we lower? maybe of you or higher well. you If next your think the you I was for the as can

Sanjiv Lamba

give as on we So view of Matt point numbers little more what let think a from bit a Kevin, color a you high-level give view well. I'll I'll and you

also past, startups So from of is a the that happen a in Josh that high-level the within I we just provide are perspective, I'd if gas backlog good to Certainly, of we're EPS when X% growth grow. of a sitting and billion that that backlog remains say consistent. X% of I backlog as about I've plus. that number algorithm, about you backlog, you to example to you, about. of growth itself expect. from We translate said to would can and number talked element that, EPS see think I've to quarter that to this continue that sale will that Electronics and the the expect We continuing at that trends. billion of said secular backlog $X our that previously project see of evidence come $XX

So growth. again, contracted into that translates backlog

course about. XX-odd X% I backlog that over being we I growth EPS This the converted that year. see set up we started revenues mentioned in providing X% of about the that $X year, talked to getting see will earnings, startups projects billion to in and We that of through. also the come happen

it. So I are about of how the at think that's looking backlog, we thinking kind

secular, some and think support else, there are geographies getting converting revenues traditional Matt, growth also A of and earnings. example want backlog to high-growth end that projects more in also India, are in are EPS which we the algorithm. our markets, the good Was anything to add? Some more I seeing started helping converting, in you

Matthew White

color. kind mean, further of just I add even I could

buckets. think start I algorithm that. we when intact. EPS And you management Mike It's it growing fully how about our That's that to it's simplified way is still view our It's at a and we the look the in take. we we mean it's question, -- allocation capital this how I that I do. And about think we we macro. environment, think with actions think the X

tax. capital project or capital that may terms would here, buybacks that in a we that structure include M&A. of about includes EPS allocation, we're on either interest any includes when talking our think do specifically, you so of it also so because about having backlog. synergies And That And That capital. includes is use

and use of And to committed And these the that stable, so contributory capital almost of it's independent sort the are buybacks case the for couple has of of countercyclical. it's ironically, X% contractually where it's that or either macro because the last very consistently, throughout X% it's decades. macro for been unrelated a to are

weak, the gets we and when buybacks. macro opportunities So for cash we tend more to have have free more

important, the that to less Clearly, take a of well. continue having a It's volumes around piece tends confidence that's continue in weaker to macro some we uncertainty. function here macro. price a management dollar, of algorithm. seeing of is and confidence of as market actions. the ahead of of strengthening it brings unfortunately, Obviously, have programs we management allocation getting function high a in on usually local the of in a the That base cost. the and stability mostly be right similarly, dollar we with just every strengthen So to is the actions the but productivity. the on degree world. The in we're a the FX. capital high the have contribution And place It's actions the degree that and given comes And

And positively you you that it weaker industrial see so it it headwind for industrial with when And usually currency comes correlated levels. with production tailwind, tends currency see to when be, us, say, I'll comes production. stronger usually

allocation but macro capital when on least we're algo looking our what seeing from the the we the going near to that take. management to and from actions to think continue from tremendous we are at contribution . we're now, that about right you confidence ahead on So cautious being have the term,

Operator

line John next your Roberts of with the comes And from question Mizuho.

John Ezekiel Roberts

Enclave. an think When customer when typically you of SMR, the everything. plus, being of customer you the after think you new I about baseload build then after I do XX% half a you demand being build complete And ASU, on-site the out the

original an one out sell in be the of Can what You the new customer oxygen, excess build on-site ASU build ATR of these out. everything these all all and argon, projects after the you an the projects would you here. in and nitrogen,

Sanjiv Lamba

our which around model density network need at further merchant we density we ATR. very conversations network the the Dow, on think that's to put here, on-site is we have got typically. over the often maybe we able And then is potentially about. plus separation thereabouts I often. try into integrated because question expect to go an your feeding tend that at right optimize the and that anchor point a customer great that's to take in and creating we've in you're talk to an looking create keep we up are quite The and ATR the the John, XX% we balance where what oxygen even that company referencing to business I we package of example normally of downstream, the obviously, heart about density And ASUs, think, where plan or when kind the operationally of

Dow some their their oxygen gases the There complex. little. So as providing to those some within atmospheric we available. nitrogen remember, for surplus is here, Again, is are quite back well of consumption

that fairly footprint established our slate. great anchor take is that are example leverage really it we've atmospheric a promoting able that the able the all been But to in much, density to Alberta, on a place to we're in quickly given of So also to area, the large in get where customer we the side. product fact, part to able of of be product

prepared little an the and bit that have expect to wanted build was we be taking, my build Dow add to hydrogen able Alberta. my fact, actually a referenced the we got and hydrogen, Dow in a in is, we expectation anchor we've have foundation we on briefly in have which that surplus I also in in be And Dow will Phase extra that future. We customer, to of significant that hydrogen in X will capacity build network as right? beyond what out hydrogen Alberta is remarks, of will to network

take you a same network hydrogen attractive of network. the my that's is U.S. in of ways, the me, we're of for want to see kind in literally we for what's well. to where be scale that building going -- vision very Gulf foundation Alberta be of the So the but what as It won't many this Coast, directionally kind is at

Operator

comes of with line question Laurence Jefferies. next your from Alexander the And

Daniel Rizzo

This is actually Dan on Lawrence. for

a second running? obviously to. Dow, and committed was is mentioned is kind with this wondering next larger the to not You step up one after or But of what were a sense, if broad phase I just that it magnitude like in happen you're after the

Sanjiv Lamba

Right.

play will decision a than which a expect and what agreed be is get Obviously, initial that the how That of investment out. some have an line made. planning we bit that maybe that phase we've there over would thinking think lot lower in around phase. we I time done little just will So done first to

see will So years, as we substance in on the to phase. few the laid an over next and the happens hopefully build when first put we investment that being that of decision foundation

Daniel Rizzo

care. whole health you And Okay. up in pruning finishing then mentioned obviously

of Given around divesting in or soft world, doing like is regions, such still? areas fairly other the for happening in things what's elsewhere some where regions kind Europe pruning in other as care opportunity are there health different outside

Sanjiv Lamba

portfolio, One our isn't visibility. action that portfolio to you evaluating it lot I Obviously, happens. to like much of is we'd that about have of puzzle that large and briefly. enough bring for a of to two on lot want always is portfolio. that there We're pieces of tell to what But our a

is we acquisitions that consistently every something tuck-in year. on So execute

brought tuck-in we healthy on year in in that well. pipeline space. those fairly acquisitions of number opportunity a this We have And a fact, as

value integrate a the if will, So to we well feel platform, and you very that. of ability as to result about on bring create them our them good

you piece So as portfolio incoming aware, alongside constantly elements at and looking our us divest. well. we're the where more that's and that, We've done see broadly will we continue that past looking you're the that then do at -- to and in as

Operator

from And Redburn your Jones Tony line next of with Atlantic. question the comes

Tony Jones

Can actions? to part with X% lift to incremental from will price reduction up And I that one in normal X% is or gained squeeze by the quick and in at be a management growth EPS versus end. it all the if cost check X% math the EPS Just my quick to following around X%, that of that, XXXX? new

Matthew White

remarks, be of effect the full prepared run this I'll do year. it's to rate mentioned you X-year expect could half we Tony, second take that. -- And so Matt. on expect in a math the we start return, the next to roughly with in the as

So based This of majority won't XXXX. is to something clearly approach. this It incremental. about XXXX, to be would we full think benefit on benefit need When you is get anticipate take. a that, a -- the in the we but is in you bottoms-up action feel we

their in part to what regions this and do to respective seeing we of with But So they're we ahead management view effort environment. action adjusting this cost that of all get this each accordingly. need market aligned their

see I year, we to as beneficial. is this undertake, it next weaker. a as mentioned need in to is see clearly, outlook but of So our We it earlier, all the because bit part the incremental effort we on macro

some in view need we make areas up actions we other so be one. which And it to on would management

Operator

And Harrison Partners. the your Mike final with Research line question from of Seaport comes

Michael Harrison

comment in big you automation to in mentioned curious, You purchases demand seen have you due behavior Can goods uncertainty. economic that to and on ticket been any hard sluggish lower you've equipment in have a or interest And customer I'm North rates? and what change little regions? seen response bit in other America

Sanjiv Lamba

The hard market the closely. talk is is we And goods trend about business this the first in let's and here about Mike, good really for we us biggest track U.S. So rates. interest very hard a talk then

I it a indicator. a think say me As you've leading heard of of previously, bit as

a we've that goods mid-single-digit We hard We weakness numbers sales. are middle the the of good times referenced the call hard this in number actually on in industrial declines right are that. about because of see reflecting

large other. there sequentially, point, when -- quarter is split. automation that that the And think one to we Now your are that swung purchases about to there some some are

large is are particularly places that's on of people little true spend But more and to a that's we hard like that's rest in And that see the little as question that particular. goods decisions Europe elsewhere finding the large a I sector is ties change expected. you U.S. I'll recognize weakness down isn't isn't is of which that world to isn't have the term. that the think ticket a that there about briefly. would broadly think, the described kind of seeing in propensity the economic consumer the in normally across although just our as manufacturing side, world, come goods your of are as bit reference on hard you. there is across on market the consumer which well, the happening behavior items I'll to across the weakness And people as change we world going the I and think bit. that where industrial talk and numbers So near obviously, the and mentioned I well And reflective to that an in think the largest consistent where with market U.S., also world there items China, People and weakness is does of on I sentiment, spend underlying then I with to what the

and a phenomenal. is the behavior more that. has caution reflected the U.S. degree of there over been So in sentiment that's consumer Hey,

a about think the benefited rise. and sentiment of concerns from Fed's has bullish. actions of we're on around that to tremendously signals including that, are other that. think I more the some that some But you Obviously, lot anything seeing not delinquencies is auto economy we anticipation seeing loans it suggest are the becomes if where in -- areas

yet. to happy seen I quarter see that be But a wrong, I'm does haven't that. plays proven bit. anything, out. consumer think If like how little behavior We seem it's the and see tightening just we'll Don't this

Operator

back to or Pelaez Juan call additional now Mr. would I any And like to remarks. the turn closing for

Juan Pelaez

today's today. Everyone thank job in a Avi, participating great else, thanks for for again call. you

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

Operator

call, this participation. gentlemen, today's and for you we concludes your and Ladies thank

You may disconnect. now

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