filings.toolsItem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")
Non-GAAP Measures
Throughout MD&A, the company provides adjusted operating results exclusive of certain items such as Cost reduction program and other charges, purchase accounting impacts of the Linde AG merger and pension settlement charges. Adjusted amounts are non-GAAP measures which are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management find useful in evaluating the company’s operating performance. Items which the company does not believe to be indicative of on-going business performance are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. In addition, operating results, excluding these items, is important to management's development of annual and long-term employee incentive compensation plans. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.
The non-GAAP measures and reconciliations are separately included in a later section in the MD&A titled "Non-GAAP Measures and Reconciliations."
Consolidated Results
The following table provides summary information for the three months ended March 31, 2025 and 2024. The reported amounts are GAAP amounts from the Consolidated Statement of Income. The adjusted amounts are intended to supplement investors' understanding of the company's financial information and are not a substitute for GAAP measures:
| Quarter Ended March 31, | |||||||||||||||||||||||||||||||||||
| (Millions of dollars, except per share data) | 2025 | 2024 | Variance | ||||||||||||||||||||||||||||||||
| Sales | $ | 8,112 | $ | 8,100 | — | % | |||||||||||||||||||||||||||||
| Cost of sales, exclusive of depreciation and amortization | $ | 4,157 | $ | 4,216 | (1) | % | |||||||||||||||||||||||||||||
| As a percent of sales | 51.2 | % | 52.0 | % | |||||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 786 | $ | 860 | (9) | % | |||||||||||||||||||||||||||||
| As a percent of sales | 9.7 | % | 10.6 | % | |||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 910 | $ | 949 | (4) | % | |||||||||||||||||||||||||||||
| Cost reduction program and other charges | $ | 55 | $ | — | NA | ||||||||||||||||||||||||||||||
| Other income (expense) - net | $ | 18 | $ | 58 | (69) | % | |||||||||||||||||||||||||||||
| Operating profit | $ | 2,184 | $ | 2,095 | 4 | % | |||||||||||||||||||||||||||||
| Operating margin | 26.9 | % | 25.9 | % | |||||||||||||||||||||||||||||||
| Interest expense - net | $ | 60 | $ | 65 | (8) | % | |||||||||||||||||||||||||||||
| Net pension and OPEB cost (benefit), excluding service cost | $ | (56) | $ | (50) | 12 | % | |||||||||||||||||||||||||||||
| Effective tax rate | 23.4 | % | 22.3 | % | |||||||||||||||||||||||||||||||
| Income from equity investments | $ | 38 | $ | 48 | (21) | % | |||||||||||||||||||||||||||||
| Noncontrolling interests | $ | (34) | $ | (38) | (11) | % | |||||||||||||||||||||||||||||
| Net Income – Linde plc | $ | 1,673 | $ | 1,627 | 3 | % | |||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 3.51 | $ | 3.35 | 5 | % | |||||||||||||||||||||||||||||
| Diluted shares outstanding | 476,262 | 485,592 | (2) | % | |||||||||||||||||||||||||||||||
| Number of employees | 65,069 | 66,195 | (2) | % | |||||||||||||||||||||||||||||||
| Adjusted Amounts (a) | |||||||||||||||||||||||||||||||||||
| Operating profit | $ | 2,438 | $ | 2,341 | 4 | % | |||||||||||||||||||||||||||||
| Operating margin | 30.1 | % | 28.9 | % | |||||||||||||||||||||||||||||||
| Effective tax rate | 23.5 | % | 22.7 | % | |||||||||||||||||||||||||||||||
| Net Income – Linde plc | $ | 1,880 | $ | 1,821 | 3 | % | |||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 3.95 | $ | 3.75 | 5 | % | |||||||||||||||||||||||||||||
| Other Financial Data (a) | |||||||||||||||||||||||||||||||||||
| EBITDA | $ | 3,132 | $ | 3,092 | 1 | % | |||||||||||||||||||||||||||||
| As percent of sales | 38.6 | % | 38.2 | % | |||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 3,213 | $ | 3,116 | 3 | % | |||||||||||||||||||||||||||||
| As percent of sales | 39.6 | % | 38.5 | % |
(a)Adjusted Amounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliations" section of this MD&A.
Reported
In the first quarter of 2025, Linde's sales were $8,112 million, flat versus prior year. Sales grew 2% from higher price attainment. Cost pass-through, representing the contractual billing of energy cost variances primarily to onsite customers, increased sales by 1% in the quarter, with minimal impact on operating profit. Acquisitions increased sales by 1% in the first quarter. Engineering sales were flat in the quarter. Currency translation decreased sales by 3% in the quarter driven primarily by the weakening of the Brazilian real, Mexican peso and Euro against the U.S. dollar. Volumes decreased sales by 1% in the quarter versus the 2024 respective period, as base volume declines were partially offset by new project start-ups.
Reported operating profit for the first quarter of 2025 of $2,184 million, or 26.9% of sales, was 4% above prior year. The reported year-over-year increase was primarily driven by higher pricing and productivity initiatives which more than offset adverse impacts from cost inflation, cost reduction program and other charges and currency translation. The reported effective
tax rate ("ETR") was 23.4% in the first quarter 2025 versus 22.3% in the first quarter 2024. This increase was primarily due to lower tax benefits from share based compensation in 2025. Diluted earnings per share ("EPS") was $3.51, or 5% above EPS of $3.35 in the first quarter of 2024, primarily due to higher net income - Linde plc and lower diluted shares outstanding.
Adjusted
In the first quarter of 2025, adjusted operating profit of $2,438 million, or 30.1% of sales, was 4% higher as compared to 2024, driven by higher pricing, and productivity initiatives, partially offset by cost inflation and currency translation. The adjusted ETR was 23.5% in the first quarter 2025 versus 22.7% in the respective 2024 quarter. This increase was primarily due to lower tax benefits from share based compensation in 2025. On an adjusted basis, EPS was $3.95, 5% above the 2024 adjusted EPS of $3.75, driven by higher adjusted net income - Linde plc and lower diluted shares outstanding.
Outlook
Linde provides quarterly updates on operating results, material trends that may affect financial performance, and financial guidance via quarterly earnings releases and investor teleconferences. These updates are available on the company’s website, www.linde.com, but are not incorporated herein.
Results of operations
The changes in consolidated sales compared to the prior year are attributable to the following:
| Quarter Ended March 31, 2025 vs. 2024 | |||||||||||
| % Change | |||||||||||
| Factors Contributing to Changes - Sales | |||||||||||
| Volume | (1) | % | |||||||||
| Price/Mix | 2 | % | |||||||||
| Cost pass-through | 1 | % | |||||||||
| Currency | (3) | % | |||||||||
| Acquisitions/divestitures | 1 | % | |||||||||
| Engineering | — | % | |||||||||
| — | % |
Sales
Sales were flat for the first quarter of 2025 versus the respective 2024 period. Higher price attainment contributed 2% to sales in the quarter. Acquisitions increased sales by 1% in the quarter. Cost pass-through increased sales by 1% in the quarter, with minimal impact on operating profit. Engineering sales were flat in the quarter. Currency translation decreased sales by 3% in the quarter primarily driven by weakening of the Brazilian real, Mexican peso and Euro against the U.S. dollar. Volume decreased sales by 1% in the quarter versus the respective 2024 period, as base volume declines were partially offset by new project start-ups.
Cost of sales, exclusive of depreciation and amortization
Cost of sales, exclusive of depreciation and amortization decreased $59 million, or 1%, for the first quarter of 2025 primarily due to productivity gains and lower volumes, which more than offset cost inflation. Cost of sales, exclusive of depreciation and amortization was 51.2% of sales for the first quarter versus 52.0% for the respective 2024 period. The decrease as a percentage of sales in the quarter was primarily due to higher pricing and productivity gains.
Selling, general and administrative expenses
Selling, general and administrative expense ("SG&A") decreased $74 million, or 9%, for the first quarter of 2025 driven by lower costs, restructuring programs, productivity initiatives and currency. Currency impacts decreased SG&A by approximately $18 million. SG&A was 9.7% of first quarter sales versus 10.6% of the respective 2024 period.
Depreciation and amortization
Reported depreciation and amortization expense decreased $39 million for the first quarter of 2025, primarily due to lower depreciation and amortization of assets acquired in the merger partially offset by the net impact of new project start ups.
On an adjusted basis, depreciation and amortization increased $10 million, for the first quarter of 2025. Currency impacts decreased depreciation and amortization by $16 million. Excluding currency, the underlying depreciation and amortization increase was driven largely by new project start ups.
Cost reduction program and other charges
Cost reduction program and other charges were $55 million for the first quarter of 2025, primarily related to severance charges. On an adjusted basis, these costs have been excluded. There were no charges during the respective 2024 period.
Other income (expense) - net
Reported other income (expense) - net was a benefit of $18 million for the first quarter of 2025 versus benefit of $58 million for the respective 2024 period. 2024 other income included a benefit of $43 million in insurance recoveries primarily within the Other segment.
Operating profit
On a reported basis, operating profit increased $89 million, or 4%, for the first quarter of 2025. The increase in the quarter was primarily due to higher pricing and savings from productivity initiatives which more than offset the adverse impacts of cost inflation, cost reduction program and other charges, lower volumes, and currency.
On an adjusted basis, which excludes the impacts of merger-related purchase accounting as well as cost reduction programs and other charges, operating profit increased $97 million, or 4% in the first quarter of 2025. Operating profit growth was driven by higher pricing and productivity initiatives, which more than offset the effects of cost inflation, lower volumes and currency during the first quarter of 2025. A discussion of operating profit by segment is included in the segment discussion that follows.
Interest expense - net
Reported interest expense - net decreased $5 million for the first quarter of 2025.
Net pension and OPEB cost (benefit), excluding service cost
Reported net pension and OPEB cost (benefit), excluding service cost was a benefit of $56 million for the quarter, versus $50 million for the respective 2024 period. The increase in the benefit primarily relates to lower interest cost due to lower benefit obligations and higher amortization of deferred gains year-over-year, partially offset by lower expected return on plan assets.
Effective tax rate
The reported effective tax rate ("ETR") for the three months ended March 31, 2025 was 23.4% versus 22.3% for the respective 2024 period. On an adjusted basis, the ETR for the first quarter was 23.5% versus 22.7% for the respective 2024 period. The increase in the reported and adjusted ETR was primarily due to lower tax benefits from share based compensation in 2025.
Income from equity investments
Reported income from equity investments for the first quarter was $38 million versus $48 million for the respective 2024 period.
On an adjusted basis, income from equity investments for the first quarter was $56 million versus $66 million for the respective 2024 period.
Noncontrolling interests
At March 31, 2025, noncontrolling interests consisted primarily of non-controlling shareholders' investments in APAC (primarily China). Reported noncontrolling interests income was $34 million for the first quarter of 2025 and $38 million for the respective 2024 period.
Net Income – Linde plc
Reported net income - Linde plc increased $46 million, or 3%, for the first quarter of 2025 versus the respective 2024 period. On an adjusted basis, which excludes the impacts of purchase accounting and cost reduction program and other charges, net income - Linde plc increased $59 million, or 3%, for the first quarter of 2025 versus the respective 2024 period. On both a reported and adjusted basis, the increase was driven by higher operating profit.
Diluted earnings per share
Reported diluted earnings per share increased $0.16, or 5%, for the first quarter of 2025 versus the respective 2024 period. On an adjusted basis, diluted EPS increased $0.20 for the first quarter, or 5% versus the respective 2024 period. On both a reported and adjusted basis, the increase was primarily due to higher net income - Linde plc and lower diluted shares outstanding.
Employees
The number of employees at March 31, 2025 was 65,069, a decrease of 1,126 employees from March 31, 2024 primarily due to the ongoing impact of cost reduction programs.
Other Financial Data
EBITDA was $3,132 million for the first quarter of 2025 as compared to $3,092 million in the respective 2024 period. Adjusted EBITDA increased to $3,213 million for the first quarter 2025 from $3,116 million in the respective 2024 period. On a reported and adjusted basis, the increase was driven by higher operating profit versus prior year.
See the "Non-GAAP Measures and Reconciliations" section for definitions and reconciliations of these adjusted non-GAAP measures to reported GAAP amounts.
Other Comprehensive Income (Loss)
Other comprehensive income for the first quarter of 2025 was $131 million. The income in the quarter resulted primarily from currency translation adjustments of $134 million. The translation adjustments reflect the impact of translating local currency foreign subsidiary financial statements to U.S. dollars, and are largely driven by the movement of the U.S. dollar against major currencies including the Euro, British pound and the Chinese yuan. See the "Currency" section of the MD&A for exchange rates used for translation purposes and Note 10 to the condensed consolidated financial statements for a summary of the currency translation adjustment component of accumulated other comprehensive income (loss) by segment.
Segment Discussion
The following summary of sales and operating profit by segment provides a basis for the discussion that follows. Linde plc evaluates the performance of its reportable segments based on operating profit, excluding items not indicative of ongoing business trends. The reported amounts are GAAP amounts from the Consolidated Statement of Income.
| Quarter Ended March 31, | |||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | Variance | ||||||||||||||||||||
| SALES | |||||||||||||||||||||||
| Americas | $ | 3,666 | $ | 3,560 | 3 | % | |||||||||||||||||
| EMEA | 2,031 | 2,091 | (3) | % | |||||||||||||||||||
| APAC | 1,539 | 1,591 | (3) | % | |||||||||||||||||||
| Engineering | 565 | 539 | 5 | % | |||||||||||||||||||
| Other | 311 | 319 | (3) | % | |||||||||||||||||||
| Total sales | $ | 8,112 | $ | 8,100 | — | % | |||||||||||||||||
| SEGMENT OPERATING PROFIT | |||||||||||||||||||||||
| Americas | $ | 1,137 | $ | 1,088 | 5 | % | |||||||||||||||||
| EMEA | 722 | 687 | 5 | % | |||||||||||||||||||
| APAC | 451 | 447 | 1 | % | |||||||||||||||||||
| Engineering | 114 | 100 | 14 | % | |||||||||||||||||||
| Other | 14 | 19 | (26) | % | |||||||||||||||||||
| Segment operating profit | $ | 2,438 | $ | 2,341 | 4 | % | |||||||||||||||||
| Reconciliation to reported operating profit: | |||||||||||||||||||||||
| Cost reduction program and other charges | (55) | — | |||||||||||||||||||||
| Purchase accounting impacts - Linde AG | (199) | (246) | |||||||||||||||||||||
| Total operating profit | $ | 2,184 | $ | 2,095 |
Americas
| Quarter Ended March 31, | |||||||||||||||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | Variance | ||||||||||||||||||||||||||||||||
| Sales | $ | 3,666 | $ | 3,560 | 3 | % | |||||||||||||||||||||||||||||
| Operating profit | $ | 1,137 | $ | 1,088 | 5 | % | |||||||||||||||||||||||||||||
| As a percent of sales | 31.0 | % | 30.6 | % |
| Quarter Ended March 31, 2025 vs. 2024 | |||||||||||
| % Change | |||||||||||
| Factors Contributing to Changes - Sales | |||||||||||
| Volume | 1 | % | |||||||||
| Price/Mix | 3 | % | |||||||||
| Cost pass-through | 1 | % | |||||||||
| Currency | (3) | % | |||||||||
| Acquisitions/divestitures | 1 | % | |||||||||
| 3 | % |
The Americas segment includes Linde's industrial gases operations in approximately 20 countries including the United States, Canada, Mexico, and Brazil.
Sales
Sales for the Americas segment increased $106 million, or 3%, in the first quarter versus the respective 2024 period. Higher pricing contributed 3% to sales in the quarter. Cost pass-through increased sales by 1% in the first quarter with minimal impact on operating profit. Volumes increased sales by 1% in the first quarter primarily driven by electronics and chemicals & energy end markets including to project start-ups. Acquisitions increased sales by 1% in the first quarter. Currency translation decreased sales by 3% in first quarter, driven primarily by the weakening of the Brazilian real and Mexican peso against the U.S. dollar.
Operating profit
Operating profit in the Americas segment increased $49 million, or 5%, in the first quarter versus the respective 2024 period, driven primarily by higher pricing and continued productivity initiatives, which more than offset cost inflation and currency translation.
EMEA
| Quarter Ended March 31, | |||||||||||||||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | Variance | ||||||||||||||||||||||||||||||||
| Sales | $ | 2,031 | $ | 2,091 | (3) | % | |||||||||||||||||||||||||||||
| Operating profit | $ | 722 | $ | 687 | 5 | % | |||||||||||||||||||||||||||||
| As a percent of sales | 35.5 | % | 32.9 | % |
| Quarter Ended March 31, 2025 vs. 2024 | |||||||||||
| % Change | |||||||||||
| Factors Contributing to Changes - Sales | |||||||||||
| Volume | (3) | % | |||||||||
| Price/Mix | 2 | % | |||||||||
| Cost pass-through | 1 | % | |||||||||
| Currency | (3) | % | |||||||||
| Acquisitions/divestitures | — | % | |||||||||
| (3) | % |
The EMEA segment includes Linde's industrial gases operations in approximately 45 European, Middle Eastern and African countries including Germany, United Kingdom, France, the Republic of South Africa and Sweden.
Sales
EMEA segment sales decreased $60 million, or 3%, in the first quarter compared to the respective 2024 period. Higher price attainment increased sales by 2% in the quarter. Cost pass-through increased sales by 1% in the quarter with minimal impact on operating profit. Currency translation decreased sales by 3% in the first quarter, driven primarily by the weakening of the Euro against the U.S. dollar. Volumes decreased sales by 3% in the quarter, primarily driven by the metals & mining and chemicals & energy end markets.
Operating Profit
Operating profit for the EMEA segment increased by $35 million, or 5%, in the first quarter compared to the respective 2024 period. The increase in the first quarter was driven primarily by higher pricing and continued productivity initiatives, partially offset by cost inflation, lower volumes and currency translation.
APAC
| Quarter Ended March 31, | |||||||||||||||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | Variance | ||||||||||||||||||||||||||||||||
| Sales | $ | 1,539 | $ | 1,591 | (3) | % | |||||||||||||||||||||||||||||
| Operating profit | $ | 451 | $ | 447 | 1 | % | |||||||||||||||||||||||||||||
| As a percent of sales | 29.3 | % | 28.1 | % |
| Quarter Ended March 31, 2025 vs. 2024 | |||||||||||
| % Change | |||||||||||
| Factors Contributing to Changes - Sales | |||||||||||
| Volume/Equipment | (1) | % | |||||||||
| Price/Mix | — | % | |||||||||
| Cost pass-through | — | % | |||||||||
| Currency | (2) | % | |||||||||
| Acquisitions/divestitures | — | % | |||||||||
| (3) | % |
The APAC segment includes Linde's industrial gases operations in approximately 20 Asian and South Pacific countries and regions including China, Australia, India, and South Korea.
Sales
Sales for the APAC segment decreased $52 million, or 3%, in the first quarter versus the respective 2024 period. Currency translation decreased sales by 2% in the quarter, primarily due to the weakening of the Korean won and Australian dollar against the U.S. dollar. Volumes decreased sales by 1% in the quarter as base volume declines primarily in metals & mining
and manufacturing were partially offset by new project start-ups. Price, cost pass-through and acquisitions & divestitures were flat in the first quarter.
Operating profit
Operating profit in the APAC segment increased $4 million, or 1%, in the first quarter driven primarily by productivity initiatives, which more than offset cost inflation and currency translation.
Engineering
| Quarter Ended March 31, | |||||||||||||||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | Variance | ||||||||||||||||||||||||||||||||
| Sales | $ | 565 | $ | 539 | 5 | % | |||||||||||||||||||||||||||||
| Operating profit | $ | 114 | $ | 100 | 14 | % | |||||||||||||||||||||||||||||
| As a percent of sales | 20.2 | % | 18.6 | % |
| Quarter Ended March 31, 2025 vs. 2024 | |||||||||||
| % Change | |||||||||||
| Factors Contributing to Changes - Sales | |||||||||||
| Currency | (2) | % | |||||||||
| Other | 7 | % | |||||||||
| 5 | % |
Sales
Engineering segment sales increased $26 million, or 5%, in the first quarter as compared to the respective 2024 period, driven by project timing. Currency translation decreased sales by 2% in the quarter, primarily due to the weakening of the Euro against the U.S. dollar.
Operating profit
Engineering segment operating profit increased $14 million, or 14%, in the first quarter compared to the respective 2024 period primarily driven by project timing.
Other
| Quarter Ended March 31, | |||||||||||||||||||||||||||||||||||
| (Millions of dollars) | 2025 | 2024 | Variance | ||||||||||||||||||||||||||||||||
| Sales | $ | 311 | $ | 319 | (3) | % | |||||||||||||||||||||||||||||
| Operating profit (loss) | $ | 14 | $ | 19 | (26) | % | |||||||||||||||||||||||||||||
| As a percent of sales | 4.5 | % | 6.0 | % |
| Quarter Ended March 31, 2025 vs. 2024 | |||||||||||
| % Change | |||||||||||
| Factors Contributing to Changes - Sales | |||||||||||
| Volume/price | (2) | % | |||||||||
| Cost pass-through | — | % | |||||||||
| Currency | (1) | % | |||||||||
| Acquisitions/divestitures | — | % | |||||||||
| (3) | % | ||||||||||
Other consists of corporate costs and a few smaller businesses including Linde Advanced Material Technologies (LAMT) and global helium wholesale, which individually do not meet the quantitative thresholds for separate presentation.
Sales
Sales for Other decreased $8 million, or 3%, for the first quarter versus the respective 2024 period. Underlying sales decreased by 2% in the quarter primarily due to lower volumes in global helium. Currency translation decreased sales by 1% in the quarter.
Operating profit
Operating profit in Other decreased $5 million in the first quarter versus the respective 2024 period. The decrease in the quarter was driven by higher costs due to helium and an insurance recovery in 2024, partially offset by lower corporate costs and continued productivity initiatives.
Currency
The results of Linde's non-U.S. operations are translated to the company’s reporting currency, the U.S. dollar, from the functional currencies. For most operations, Linde uses the local currency as its functional currency. There is inherent variability and unpredictability in the relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Linde's results of operations in any given periods.
To help understand the reported results, the following is a summary of the significant currencies underlying Linde's consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):
| Percentage of YTD 2025 Consolidated Sales | Exchange Rate for Income Statement | Exchange Rate for Balance Sheet | |||||||||||||||||||||||||||
| Year-To-Date Average | March 31, | December 31, | |||||||||||||||||||||||||||
| Currency | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||
| Euro | 17 | % | 0.95 | 0.92 | 0.92 | 0.97 | |||||||||||||||||||||||
| Chinese yuan | 7 | % | 7.27 | 7.19 | 7.26 | 7.30 | |||||||||||||||||||||||
| British pound | 5 | % | 0.79 | 0.79 | 0.77 | 0.80 | |||||||||||||||||||||||
| Brazilian real | 4 | % | 5.85 | 4.95 | 5.71 | 6.18 | |||||||||||||||||||||||
| Australian dollar | 3 | % | 1.59 | 1.52 | 1.60 | 1.62 | |||||||||||||||||||||||
| Mexican peso | 3 | % | 20.43 | 16.97 | 20.47 | 20.83 | |||||||||||||||||||||||
| Korean won | 3 | % | 1,452 | 1,329 | 1,473 | 1,472 | |||||||||||||||||||||||
| Canadian dollar | 3 | % | 1.44 | 1.35 | 1.44 | 1.44 | |||||||||||||||||||||||
| Indian rupee | 2 | % | 86.60 | 83.04 | 85.46 | 85.61 | |||||||||||||||||||||||
| Swiss Franc | 1 | % | 0.90 | 0.88 | 0.88 | 0.91 | |||||||||||||||||||||||
| Swedish krona | 1 | % | 10.67 | 10.40 | 10.04 | 11.07 | |||||||||||||||||||||||
| South African rand | 1 | % | 18.50 | 18.89 | 18.32 | 18.84 |
Liquidity, Capital Resources and Other Financial Data
The following selected cash flow information provides a basis for the discussion that follows:
| (Millions of dollars) | Three Months Ended March 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| NET CASH PROVIDED BY (USED FOR): | |||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income (including noncontrolling interests) | $ | 1,707 | $ | 1,665 | |||||||
| Non-cash charges (credits): | |||||||||||
| Add: Depreciation and amortization | 910 | 949 | |||||||||
| Add: Deferred income taxes | 9 | (35) | |||||||||
| Add: Share-based compensation | 42 | 38 | |||||||||
| Add: Cost reduction program and other charges, net of payments | 18 | (55) | |||||||||
| Net income adjusted for non-cash charges | 2,686 | 2,562 | |||||||||
| Less: Working capital | (469) | (553) | |||||||||
| Less: Pension contributions | (5) | (11) | |||||||||
| Other | (51) | (44) | |||||||||
| Net cash provided by (used for) operating activities | $ | 2,161 | $ | 1,954 | |||||||
| INVESTING ACTIVITIES | |||||||||||
| Capital expenditures | (1,270) | (1,048) | |||||||||
| Acquisitions, net of cash acquired | (112) | — | |||||||||
| Divestitures, net of cash divested and asset sales | 13 | 7 | |||||||||
| Net cash provided by (used for) investing activities | $ | (1,369) | $ | (1,041) | |||||||
| FINANCING ACTIVITIES | |||||||||||
| Debt increase (decrease) - net | 1,493 | 1,215 | |||||||||
| Issuances (purchases) of common stock - net | (1,100) | (1,025) | |||||||||
| Cash dividends - Linde plc shareholders | (708) | (669) | |||||||||
| Noncontrolling interest transactions and other | (73) | (189) | |||||||||
| Net cash provided by (used for) financing activities | $ | (388) | $ | (668) | |||||||
| Effect of exchange rate changes on cash and cash equivalents | $ | 40 | $ | (61) | |||||||
| Cash and cash equivalents, end-of-period | $ | 5,294 | $ | 4,848 |
Cash Flow from Operations
Cash provided by operations of $2,161 million for the three months ended March 31, 2025 increased $207 million, or 11% versus 2024. The increase was driven primarily by higher net income adjusted for non-cash charges and lower net working capital requirements.
Linde estimates that total 2025 required contributions to its pension plans will be in the range of approximately $25 million to $35 million, of which $5 million has been made through March 31, 2025.
Investing
Net cash used for investing activities of $1,369 million for the three months ended March 31, 2025 increased $328 million versus 2024, due to higher capital expenditures and acquisition spend, net of cash acquired.
Capital expenditures for the three months ended March 31, 2025 were $1,270 million, $222 million higher than the prior year due primarily to investments in new plant and production equipment for backlog growth requirements.
At March 31, 2025, Linde's sale of gas backlog of large projects under construction was approximately $7.0 billion. This represents the total estimated capital cost of large plants under construction.
Acquisitions, net of cash acquired were $112 million for the three months ended March 31, 2025 and relate primarily to businesses in the Americas and APAC.
Divestitures, net of cash divested and asset sales for the three months ended March 31, 2025 were $13 million. 2024 divestitures, net of cash divested and asset sales were $7 million.
Financing
Cash used for financing activities was $388 million for the three months ended March 31, 2025 as compared to $668 million for the three months ended March 31, 2024. Cash provided by debt was $1,493 million in 2025 versus $1,215 million in 2024, driven primarily by higher commercial paper issuances partially offset by lower net debt issuances in 2025. In February 2025, Linde issued €850 million of 2.625% notes due in 2029, €750 million of 3.00% notes due in 2033, €650 million of 3.250% notes due in 2037. In February 2025, Linde redeemed $600 million of 4.70% notes that were due in 2025 and repaid $400 million of 2.65% notes that became due.
Net purchases of ordinary shares were $1,100 million in 2025 versus $1,025 million in 2024. For additional information related to the share repurchase programs, see Part II Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Cash dividends of $708 million increased $39 million from 2024 driven primarily by a 8% increase in quarterly dividends per share from $1.39 per share to $1.50 per share, partially offset by lower shares outstanding. Cash used for Noncontrolling interest transactions and other was $73 million for the three months ended March 31, 2025 versus cash used of $189 million for the respective 2024 period primarily driven by lower cash requirements for financing related derivatives and withholding taxes related to share-based compensation arrangements.
The company continues to believe it has sufficient operating flexibility, cash, and funding sources to maintain adequate amounts of liquidity to meet its business needs around the world. The company maintains a $5 billion and a $1.5 billion unsecured and undrawn revolving credit agreement with no associated financial covenants. No borrowings were outstanding under the credit agreements as of March 31, 2025. The company does not anticipate any limitations on its ability to access the debt capital markets and/or other external funding sources and remains committed to its strong ratings from Moody’s and Standard & Poor’s.
Legal Proceedings
See Note 8 to the condensed consolidated financial statements.
NON-GAAP MEASURES AND RECONCILIATIONS
(Millions of dollars, except per share data)
The following non-GAAP measures are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management use to help evaluate the company’s operating performance and liquidity. Items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. Definitions of these non-GAAP measures may not be comparable to similar definitions used by other companies and are not a substitute for similar GAAP measures.
| Quarter Ended March 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Adjusted Operating Profit and Operating Margin | |||||||||||||||||
| Reported operating profit | $ | 2,184 | $ | 2,095 | |||||||||||||
| Add: Cost reduction program and other charges | 55 | — | |||||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | 199 | 246 | |||||||||||||||
| Total adjustments | 254 | 246 | |||||||||||||||
| Adjusted operating profit | $ | 2,438 | $ | 2,341 | |||||||||||||
| Reported percentage change | 4 | % | |||||||||||||||
| Adjusted percentage change | 4 | % | |||||||||||||||
| Reported sales | $ | 8,112 | $ | 8,100 | |||||||||||||
| Reported operating margin | 26.9 | % | 25.9 | % | |||||||||||||
| Adjusted operating margin | 30.1 | % | 28.9 | % | |||||||||||||
| Adjusted Depreciation and amortization | |||||||||||||||||
| Reported depreciation and amortization | $ | 910 | $ | 949 | |||||||||||||
| Less: Purchase accounting impacts - Linde AG (c) | (191) | (240) | |||||||||||||||
| Adjusted depreciation and amortization | $ | 719 | $ | 709 | |||||||||||||
| Adjusted Other Income (Expense) - net | |||||||||||||||||
| Reported Other Income (Expense) - net | $ | 18 | $ | 58 | |||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | (8) | (6) | |||||||||||||||
| Adjusted Other Income (Expense) - net | $ | 26 | $ | 64 | |||||||||||||
| Adjusted Interest Expense - Net | |||||||||||||||||
| Reported interest expense - net | $ | 60 | $ | 65 | |||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | — | 2 | |||||||||||||||
| Adjusted interest expense - net | $ | 60 | $ | 67 | |||||||||||||
| Adjusted Income Taxes (a) | |||||||||||||||||
| Reported income taxes | $ | 511 | $ | 463 | |||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | 44 | 60 | |||||||||||||||
| Quarter Ended March 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Add: Cost reduction program and other charges | 18 | 5 | |||||||||||||||
| Total adjustments | 62 | 65 | |||||||||||||||
| Adjusted income taxes | $ | 573 | $ | 528 | |||||||||||||
| Adjusted Effective Tax Rate (a) | |||||||||||||||||
| Reported income before income taxes and equity investments | $ | 2,180 | $ | 2,080 | |||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | 199 | 244 | |||||||||||||||
| Add: Cost reduction program and other charges | 55 | — | |||||||||||||||
| Total adjustments | 254 | 244 | |||||||||||||||
| Adjusted income before income taxes and equity investments | $ | 2,434 | $ | 2,324 | |||||||||||||
| Reported Income taxes | $ | 511 | $ | 463 | |||||||||||||
| Reported effective tax rate | 23.4 | % | 22.3 | % | |||||||||||||
| Adjusted income taxes | $ | 573 | $ | 528 | |||||||||||||
| Adjusted effective tax rate | 23.5 | % | 22.7 | % | |||||||||||||
| Income from Equity Investments | |||||||||||||||||
| Reported income from equity investments | $ | 38 | $ | 48 | |||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | 18 | 18 | |||||||||||||||
| Adjusted income from equity investments | $ | 56 | $ | 66 | |||||||||||||
| Adjusted Noncontrolling Interests | |||||||||||||||||
| Reported noncontrolling interests | $ | (34) | $ | (38) | |||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | (3) | (3) | |||||||||||||||
| Total adjustments | (3) | (3) | |||||||||||||||
| Adjusted noncontrolling interests | $ | (37) | $ | (41) | |||||||||||||
| Adjusted Net Income - Linde plc (b) | |||||||||||||||||
| Reported net income | $ | 1,673 | $ | 1,627 | |||||||||||||
| Add: Cost reduction program and other charges | 37 | (5) | |||||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | 170 | 199 | |||||||||||||||
| Total adjustments | 207 | 194 | |||||||||||||||
| Adjusted net income - Linde plc | $ | 1,880 | $ | 1,821 | |||||||||||||
| Quarter Ended March 31, | |||||||||||||||||
| 2025 | 2024 | ||||||||||||||||
| Adjusted Diluted EPS (b) | |||||||||||||||||
| Reported diluted EPS | $ | 3.51 | $ | 3.35 | |||||||||||||
| Add: Cost reduction program and other charges | 0.08 | (0.01) | |||||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | 0.36 | 0.41 | |||||||||||||||
| Total adjustments | 0.44 | 0.40 | |||||||||||||||
| Adjusted diluted EPS | $ | 3.95 | $ | 3.75 | |||||||||||||
| Reported percentage change | 5 | % | |||||||||||||||
| Adjusted percentage change | 5 | % | |||||||||||||||
| Adjusted EBITDA and % of Sales | |||||||||||||||||
| Net Income - Linde plc | $ | 1,673 | $ | 1,627 | |||||||||||||
| Add: Noncontrolling interests | 34 | 38 | |||||||||||||||
| Add: Net pension and OPEB cost (benefit), excluding service cost | (56) | (50) | |||||||||||||||
| Add: Interest expense | 60 | 65 | |||||||||||||||
| Add: Income taxes | 511 | 463 | |||||||||||||||
| Add: Depreciation and amortization | 910 | 949 | |||||||||||||||
| EBITDA | $ | 3,132 | $ | 3,092 | |||||||||||||
| Add: Cost reduction program and other charges | 55 | — | |||||||||||||||
| Add: Purchase accounting impacts - Linde AG (c) | 26 | 24 | |||||||||||||||
| Total adjustments | 81 | 24 | |||||||||||||||
| Adjusted EBITDA | $ | 3,213 | $ | 3,116 | |||||||||||||
| Reported sales | $ | 8,112 | $ | 8,100 | |||||||||||||
| % of sales | |||||||||||||||||
| EBITDA | 38.6 | % | 38.2 | % | |||||||||||||
| Adjusted EBITDA as a % of Sales | 39.6 | % | 38.5 | % |
| (a) The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts. | |||||||||||||||||||||||||||||||||||||||||
| (b) Net of income taxes which are shown separately in “Adjusted Income Taxes and Effective Tax Rate”. | |||||||||||||||||||||||||||||||||||||||||
| (c) The company believes that its non-GAAP measures excluding Purchase accounting impacts - Linde AG are useful to investors because: (i) the 2018 business combination was a merger of equals in an all-stock merger transaction, with no cash consideration, (ii) the company is managed on a geographic basis and the results of certain geographies are more heavily impacted by purchase accounting than others, causing results that are not comparable at the reportable segment level, therefore, the impacts of purchase accounting adjustments to each segment vary and are not comparable within the company and when compared to other companies in similar regions, (iii) business management is evaluated and variable compensation is determined based on results excluding purchase accounting impacts, and; (iv) it is important to investors and analysts to understand the purchase accounting impacts to the financial statements. A summary of each of the adjustments made for Purchase accounting impacts - Linde AG are as follows: Adjusted Operating Profit and Margin: The purchase accounting adjustments for the periods presented relate primarily to depreciation and amortization related to the fair value step up of fixed assets and intangible assets (primarily customer related) acquired in the merger and the allocation of fair value step-up for ongoing Linde AG asset disposals (reflected in Other Income/(Expense)). Adjusted Interest Expense - Net: Relates to the amortization of the fair value of debt acquired in the merger. Adjusted Income Taxes and Effective Tax Rate: Relates to the current and deferred income tax impact on the adjustments discussed above. The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts. Adjusted Income from Equity Investments: Represents the amortization of increased fair value on equity investments related to depreciable and amortizable assets. Adjusted Noncontrolling Interests: Represents the noncontrolling interests’ ownership portion of the adjustments described above determined on an entity by entity basis. | |||||||||||||||||||||||||||||||||||||||||
Supplemental Guarantee Information
On May 3, 2023, the company filed a Form S-3 Registration Statement with the SEC ("the Registration Statement").
Linde plc may offer debt securities, preferred shares, depositary shares and ordinary shares under the Registration Statement, and debt securities exchangeable for or convertible into preferred shares, ordinary shares or other debt securities. Debt securities of Linde plc may be guaranteed by Linde Inc and/or Linde GmbH. Linde plc may provide guarantees of debt securities offered by its wholly owned subsidiaries Linde Inc. or Linde Finance under the Registration Statement.
Linde Inc. is a wholly owned subsidiary of Linde plc. Linde Inc. may offer debt securities under the Registration Statement. Debt securities of Linde Inc. will be guaranteed by Linde plc, and such guarantees by Linde plc may be guaranteed by Linde GmbH. Linde Inc. may also provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) upstream guarantees of downstream guarantees provided by Linde plc of debt securities of Linde Finance offered under the Registration Statement.
Linde Finance B.V. is a wholly owned subsidiary of Linde plc. Linde Finance may offer debt securities under the Registration Statement. Linde plc will guarantee debt securities of Linde Finance offered under the Registration Statement. Linde GmbH and Linde Inc. may guarantee Linde plc’s obligations under its downstream guarantee.
Linde GmbH is a wholly owned subsidiary of Linde plc. Linde GmbH may provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) upstream guarantees of downstream guarantees provided by Linde plc of debt securities of Linde Inc. or Linde Finance offered under the Registration Statement.
In September 2019, Linde plc provided downstream guarantees of all pre-existing Linde Inc. and Linde Finance notes, and Linde GmbH and Linde Inc., respectively, provided upstream guarantees of Linde plc’s downstream guarantees.
Linde plc established a European debt issuance program on May 11, 2020, as subsequently updated with a base prospectus filed with the Luxembourg Stock Exchange on May 8, 2024, as supplemented by the 1st supplement on November 4, 2024 and the 2nd supplement on February 7, 2025, for a €15.0 billion debt issuance program (or the equivalent in other currencies), under which Linde plc may offer debt securities. Linde Inc. and Linde GmbH have provided to Linde plc upstream guarantees in relation to debt securities of Linde plc offered under the European debt issuance program, as confirmed to the current program amount. Under the European debt issuance program, Linde plc may issue unsecured notes with such terms, including currency, interest rate and maturity, as agreed by Linde plc and the purchasers of such notes at the time of sale and as set out in the final terms for the relevant issue of notes. The current European debt issuance program will be valid for a period of one year from May 8, 2024 after which it will require updating prior to any further issuance of notes.
For further information about the guarantees of the debt securities registered under the Registration Statement (including the ranking of such guarantees, limitations on enforceability of such guarantees and the circumstances under which such guarantees may be released), see “Description of Debt Securities – Guarantees” and “Description of Debt Securities – Ranking” in the Registration Statement, which subsections are incorporated herein by reference.
The following tables present summarized financial information for Linde plc, Linde Inc., Linde GmbH and Linde Finance on a combined basis, after eliminating intercompany transactions and balances between them and excluding investments in and equity in earnings from non-guarantor subsidiaries.
| (Millions of dollars) | |||||||||||
| Statement of Income Data | Three Months Ended March 31, 2025 | Twelve Months Ended December 31, 2024 | |||||||||
| Sales | $ | 2,101 | $ | 7,995 | |||||||
| Operating profit | 398 | 1,526 | |||||||||
| Net income | (23) | 3,553 | |||||||||
| Transactions with non-guarantor subsidiaries | 833 | 7,177 | |||||||||
| Balance Sheet Data (at period end) | |||||||||||
| Current assets (a) | $ | 8,561 | $ | 7,827 | |||||||
| Long-term assets (b) | 14,924 | 14,481 | |||||||||
| Current liabilities (c) | 10,336 | 10,309 | |||||||||
| Long-term liabilities (d) | 68,980 | 64,848 | |||||||||
| (a) From current assets above, amount due from non-guarantor subsidiaries | $ | 4,542 | $ | 4,425 | |||||||
| (b) From long-term assets above, amount due from non-guarantor subsidiaries | 798 | 1,031 | |||||||||
| (c) From current liabilities above, amount due to non-guarantor subsidiaries | 1,888 | 1,841 | |||||||||
| (d) From long-term liabilities above, amount due to non-guarantor subsidiaries | 46,977 | 45,378 |
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