DGAP-News: Linde plc: Linde Reports Second-Quarter 2022 Results (Earnings Release Tables Attached)

Linde Reports Second-Quarter 2022 Results

Second-Quarter Highlights

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

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

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

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

Second-quarter operating cash flow of $2,133 million more than covered capital expenditures of $826 million resulting in free cash flow of $1,307 million.  During the quarter, the company returned $2,183 million to shareholders through dividends and stock repurchases, net of issuances.

Commenting on the financial results and business outlook, Chief Executive Officer Sanjiv Lamba said, Linde employees delivered another strong quarter with EPS increasing 15% versus prior year or 20% excluding currency translation.  Furthermore, ROC reached a new record of 20% and operating margins expanded 100 basis points excluding cost-pass through.  Despite the macroeconomic challenges, Linde once again demonstrated its resiliency and the ability to generate shareholder value in any environment.

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

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

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

Second-Quarter 2022 Results by Segment

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

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

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

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

Earnings Call

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

Materials to be used in the teleconference are also available on the website.

About Linde

Linde is a leading global industrial gases and engineering company with 2021 sales of $31 billion (26 billion).  We live our mission of making our world more productive every day by providing high-quality solutions, technologies and services which are making our customers more successful and helping to sustain and protect our planet.

The company serves a variety of end markets including chemicals & energy, food & beverage, electronics, healthcare, manufacturing, metals and mining.  Linde's industrial gases are used in countless applications, from life-saving oxygen for hospitals to high-purity & specialty gases for electronics manufacturing, hydrogen for clean fuels and much more.  Linde also delivers state-of-the-art gas processing solutions to support customer expansion, efficiency improvements and emissions reductions.

For more information about the company and its products and services, please visit www.linde.com

Adjusted amounts, free cash flow and return on capital are non-GAAP measures.  See the attachments (Earnings release tables: https://eqs-cockpit.com/cgi-bin/fncls.ssp?u=06cad8588f1c0566de7842e4d1da7bf2) for a summary of non-GAAP reconciliations and calculations for adjusted amounts. 

Attachments:  Summary Non-GAAP Reconciliations, Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information and Appendix: Non-GAAP Measures and Reconciliations.

*Note:  We are providing adjusted earnings per share (EPS) guidance for 2022.  This is a non-GAAP financial measure that represents diluted earnings per share from continuing operations (a GAAP measure) but excludes the impact of certain items that we believe are not representative of our underlying business performance, such as cost reduction and other charges, any impairment or other charges related to scaling back operations in Russia as actions are defined and executed and as sanctions are enacted that impact the Companys operations, the impact of potential divestitures or other potentially significant items.  Given the uncertainty of timing and magnitude of such items, we cannot provide a reconciliation of the differences between the non-GAAP adjusted EPS guidance and the corresponding GAAP EPS measure without unreasonable effort.

Russia-Ukraine conflict and other charges

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

Forward-looking Statements

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions.  They are based on managements reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties.  These risks and uncertainties include, without limitation: the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, Natural Gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics, pandemics such as COVID-19 and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business.  These risks and uncertainties may cause future results or circumstances to differ materially from adjusted projections, estimates or other forward-looking statements.

Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances.  The above listed risks and uncertainties are further described in Item 1A.  Risk Factors in Linde plcs Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on February 28, 2022 which should be reviewed carefully. Please consider Linde plcs forward-looking statements in light of those risks.