Linde plc: Linde Reports Full-Year and Fourth-Quarter 2023 Results (Earnings Release Tables Attached)

Rhea-AI Summary

Linde plc (NASDAQ:LIN) reported a 2% decrease in sales for the full year 2023, but underlying sales increased by 5%. Operating profit was $8.0 billion, adjusted operating profit was $9.1 billion, up 15%. The company returned $6.4 billion to shareholders. Fourth-quarter sales were $8.3 billion, up 5% YoY, with an operating profit of $2.0 billion. The company expects adjusted diluted earnings per share for 2024 to be in the range of $15.25 to $15.65, up 7% to 10% versus prior year. Linde generated strong operating cash flow of $9.3 billion in 2023 and invested $3.8 billion in capital expenditures.

Positive

• Linde reported a 2% decrease in sales for full-year 2023, but underlying sales increased by 5%.
• Operating profit was $8.0 billion, and adjusted operating profit was $9.1 billion, up 15%.
• The company returned $6.4 billion to shareholders through dividends and share repurchases.
• Fourth-quarter sales were $8.3 billion, up 5% YoY, with an operating profit of $2.0 billion.
• Linde expects adjusted diluted earnings per share for 2024 to be in the range of $15.25 to $15.65, up 7% to 10% versus prior year.
• Linde generated strong operating cash flow of $9.3 billion in 2023 and invested $3.8 billion in capital expenditures.

Negative

• None.

Insights

Financial Analyst

The reported financial results by Linde show a mix of growth in underlying sales and adjusted earnings, despite a nominal decrease in total sales year-over-year. This indicates a resilience in the company's pricing power and successful cost management. The reported increase in operating profit margin by 390 basis points and adjusted EPS growth of 16% are particularly notable as they suggest significant operational efficiency improvements and effective cost control measures. The return of $6.4 billion to shareholders underscores the company's commitment to shareholder returns, which can be attractive to investors seeking income in addition to capital gains.

Looking forward, the projected capital expenditures of $4.5 to $5.0 billion indicate a strategic investment in growth initiatives, which may include expansion into new markets or technology advancements. The high-quality project backlog of $8.5 billion is indicative of future revenue streams and potential earnings growth, which could be a positive signal for long-term investors. However, the acknowledgment of an uncertain geopolitical and macro environment suggests potential volatility ahead, which could impact the company's performance.

Market Research Analyst

Linde's performance in different market segments reveals strategic insights into the industrial gas sector's current landscape. The Americas and APAC regions demonstrated solid growth, with the Americas showing a notable operating profit margin of 30.0%. This strength in the Americas could be attributed to robust industrial demand and effective cost pass-through mechanisms. The APAC's growth, particularly in chemicals and energy, aligns with the region's ongoing industrialization and infrastructure development.

EMEA's performance, with a 420 basis points increase in operating profit margin, reflects the company's ability to navigate challenging market conditions, possibly due to economic uncertainties and energy market volatility in Europe. The engineering segment's 17% sales growth year-over-year suggests a healthy demand for industrial gas infrastructure, which could be linked to global trends in energy transition and environmental initiatives.

Economist

The provided financial guidance for 2024, with an expected increase in adjusted EPS of 8%-11% excluding currency headwinds, reflects confidence in the company's ability to grow amidst uncertain economic conditions. The anticipated unfavorable currency impact suggests that Linde is exposed to exchange rate volatility, which could be a concern for international investors. The company's strong operating cash flow, which increased by 30% in the fourth quarter, indicates healthy liquidity and operational efficiency.

The emphasis on the uncertain geopolitical and macro environment in the CEO's statement could be interpreted as a cautionary note for investors, highlighting potential risks in the global economy that may affect Linde's operations. These could include trade tensions, regulatory changes, or shifts in energy policy, which are particularly relevant given the company's global footprint and the nature of the industrial gas business.

Linde Reports Full-Year and Fourth-Quarter 2023 Results

Full-Year Highlights

• Sales $32.9 billion, down 2%, underlying sales up 5%
• Operating profit $8.0 billion; adjusted operating profit $9.1 billion, up 15%
• Operating profit margin 24.4%; adjusted operating profit margin 27.6%, up 390 basis points versus prior year
• EPS $12.59; adjusted EPS $14.20, up 16%
• Returned $6.4 billion to shareholders through dividends and share repurchases
• Total project backlog of $8.5 billion

Fourth-Quarter Highlights

• Sales $8.3 billion, up 5% YoY, underlying sales up 4%
• Operating profit $2.0 billion, adjusted operating profit $2.3 billion, up 14%
• Operating profit margin 24.4%; adjusted operating profit margin 27.4%, YoY up 210 basis points
• EPS $3.16, up 18%; adjusted EPS $3.59, up 14%

2024 Guidance

• First-quarter 2024 adjusted EPS guidance $3.58 - $3.68, represents 6%-9% growth ex. FX
• Full-year 2024 adjusted EPS guidance $15.25 - $15.65, represents 8%-11% growth ex. FX

WOKING, UK / ACCESSWIRE / February 6, 2024 / Linde plc (NASDAQ:LIN) today reported fourth-quarter 2023 net income of $1,543 million and diluted earnings per share of $3.16, up 16% and 18% respectively. Excluding Linde AG purchase accounting impacts and other charges, adjusted net income was $1,753 million, up 11% versus prior year. Adjusted earnings per share was $3.59, 14% above prior year.

Linde's sales for the fourth quarter were $8,302 million, 5% above prior year or 3% above when excluding positive currency impact. Compared to prior year, underlying sales increased 4% from price attainment and flat volumes.

Fourth-quarter operating profit was $2,028 million. Adjusted operating profit of $2,272 million was up 14% versus prior year led by higher price and continued productivity initiatives across all segments. Adjusted operating profit margin of 27.4% was 210 basis points above prior year or 130 basis points higher when excluding the effects of cost pass-through.

Fourth-quarter operating cash flow of $2,727 million increased 30% versus prior year driven primarily by higher earnings and better working capital. After capital expenditures of $1,151 million, free cash flow was $1,576 million. During the quarter, the company returned $1,641 million to shareholders through dividends and stock repurchases, net of issuances.

For full-year 2023, sales were $32.9 billion, 2% below 2022. Compared to prior year, underlying sales increased 5% from 6% price attainment partially offset by 1% lower volumes. Operating profit was $8.0 billion and adjusted operating profit was $9.1 billion, 15% above prior year. Adjusted operating profit margin was 27.6% of sales, 390 basis points higher versus 2022, or 310 basis points higher when excluding the effects of cost pass-through. Diluted earnings per share were $12.59 and adjusted diluted earnings per share were $14.20, up 16% versus prior year.

In 2023, Linde generated strong operating cash flow of $9.3 billion. The company invested $3.8 billion in capital expenditures and returned $6.4 billion to shareholders in the form of dividends and share buybacks.

Commenting on the financial results and business outlook, Chief Executive Officer Sanjiv Lamba said, "Despite the challenging environment in 2023, the Linde team once again delivered industry leading results including a 25.4% ROC, 27.6% operating margin and EPS growth rate of 16%. In addition, we closed the year with a strong balance sheet and a high-quality project backlog of $8.5 billion which will contribute earnings growth for years to come."

Lamba continued, "Looking ahead, the geopolitical and macro environment remain uncertain. However, we are well positioned to win more than our fair share of high-quality projects and again create shareholder value by leveraging all of the opportunities that lie ahead."

For the full year 2024, the company expects adjusted diluted earnings per share to be in the range of $15.25 to $15.65, up 7% to 10% versus prior year or 8% to 11% when excluding estimated currency headwinds. Full-year capital expenditures are expected to range between $4.5 billion and $5.0 billion to support operating and growth requirements, including the contractual sale of gas backlog. For the first quarter 2024, adjusted earnings per share is expected to be in the range of $3.58 to $3.68, 5% to 8% above prior-year quarter. This range assumes 1% unfavorable currency.

Fourth-Quarter 2023 Results by Segment

Americas sales of $3,583 million grew 5% versus prior-year quarter. Compared with fourth quarter 2022, underlying sales increased 6% driven by 5% higher pricing and 1% volumes. Operating profit of $1,075 million was 30.0% of sales, 240 basis points above prior year and 100 basis points higher when excluding the effects of cost pass-through.

APAC (Asia Pacific) sales of $1,639 million were 5% above prior year. Compared to prior year, underlying sales grew 5% driven by 2% price attainment and 3% volume growth, primarily in the chemicals and energy end markets including project start-ups. Operating profit of $452 million was 27.6% of sales, 110 basis points above prior year. Year over year cost pass-through was immaterial.

EMEA (Europe, Middle East & Africa) sales of $2,100 million were up 4% versus prior year. Compared with fourth-quarter 2022, underlying sales grew 2%, driven by 6% higher pricing partially offset by 4% lower volumes. Operating profit of $615 million was 29.3% of sales, 420 basis points above prior year and 350 basis points higher when excluding the effects of cost pass-through.

Linde Engineering sales were $658 million, 17% above prior year, and operating profit was $119 million or 18.1% of sales. Order intake for the quarter was $567 million and third-party sale of equipment backlog was $3.6 billion.

Earnings Call

A teleconference on Linde's fourth-quarter 2023 results is being held today at 9:00 am EST.

Live conference call	US Toll-Free Dial-In Number: 1 888 770 7292 UK Toll-Free Dial-In Number: 0800 358 0970 Access code: 6877110
Live webcast (listen-only)	https://investors.linde.com/events-presentations

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 2023 sales of $33 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, decarbonize and protect our planet.

The company serves a variety of end markets such as chemicals & energy, food & beverage, electronics, healthcare, manufacturing, metals and mining. Linde's industrial gases and technologies are used in countless applications including production of clean hydrogen and carbon capture systems critical to the energy transition, life-saving medical oxygen and high-purity & specialty gases for electronics. 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/c/fncls.ssp?u=e1c53ca64fa68a408050a6d341fa48e6) 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 2024. 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, 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.

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 management's 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 plc's Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on February 28, 2023, which should be reviewed carefully. Please consider Linde plc's forward-looking statements in light of those risks.

Contacts:
Investor Relations Juan Pelaez Phone: +1 203 837 2213 Email: juan.pelaez@linde.com	Media Relations Anna Davies Phone: +44 1483 244705 Email: anna.davies@linde.com

Additional features: File: Q4 2023 Earnings Release Tables

SOURCE: Linde plc

View the original press release on accesswire.com

FAQ

What was Linde plc's sales for the full year 2023?

Linde plc reported sales of $32.9 billion for the full year 2023, which was a 2% decrease from the previous year.

What was the adjusted operating profit for Linde plc in 2023?

Linde plc's adjusted operating profit for 2023 was $9.1 billion, representing a 15% increase from the previous year.

What was Linde plc's fourth-quarter sales in 2023?

Linde plc's fourth-quarter sales in 2023 were $8.3 billion, which was up 5% year-over-year.

What is Linde plc's expected adjusted diluted earnings per share for 2024?

Linde plc expects its adjusted diluted earnings per share for 2024 to be in the range of $15.25 to $15.65, up 7% to 10% versus the prior year.

How much operating cash flow did Linde plc generate in 2023?

Linde plc generated strong operating cash flow of $9.3 billion in 2023.

How much did Linde plc invest in capital expenditures in 2023?

Linde plc invested $3.8 billion in capital expenditures in 2023.