Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - LINDE PLC | lin-20201231.htm |
Exhibit 99.1
Press
Release
Linde Reports First-Quarter 2020 Results
Financial Highlights
➢
Strong
operating cash flow of $1.3 billion, up 26% versus prior
year
➢
Robust
balance sheet with ample liquidity for growth
opportunities
➢
Operating
profit of $0.7 billion, up 20% versus prior year; adjusted
operating profit of $1.4 billion up 11%
➢
Operating
profit margin up 210 bps, adjusted operating profit margin up 240
bps versus prior year
➢
EPS
of $1.07 up 35% versus prior year, adjusted EPS of $1.89 up
12%
Guildford,
UK, May 7, 2020 – Linde plc (NYSE: LIN; FWB: LIN) today
reported first-quarter 2020 income from continuing operations of
$571 million and diluted earnings per share of $1.07. Excluding
Linde AG purchase accounting impacts and other charges, adjusted
income from continuing operations was $1,009 million, up 9% versus
prior year. Adjusted earnings per share were $1.89, 12% above prior
year, or 15% higher when excluding negative currency translation
effects.
Linde’s
sales for the first quarter were $6,739 million, 1% above prior
year, excluding negative currency translation and cost
pass-through. Price improved 2% and was attained across all
geographic segments, but was partially offset by volume decrease of
approximately 1% due mainly to the impact of the COVID-19
pandemic.
First-quarter
operating profit was $733 million. Adjusted operating profit of
$1,352 million was 11% above prior year or 14% higher when
excluding unfavorable currency translation effects.
First-quarter
operating cash flow of $1,347 million increased $279 million or 26%
over prior year. During the quarter, the company invested $803
million in capital expenditures and returned $2,326 million to
shareholders through dividends of $511 million and stock
repurchases, net of issuance, of $1,815 million.
Commenting
on the financial results, Chief Executive Officer Steve Angel said,
“Linde delivered another strong quarter with EPS increasing
15%, excluding currency translation. Furthermore, operating cash
flow grew 26% and operating profit margin expanded 240 basis points
from prior year.”
“Linde
entered 2020 with a very robust balance sheet, $10 billion of
contractually secured backlog and significant opportunities to
enhance the portfolio and overall business quality – all of
which will serve us well during these uncertain times. And, we
continue to successfully navigate this crisis through the
dedication and hard work of all Linde employees maintaining safe
and reliable supply to our customers, including critical medical
gases, services and equipment for those afflicted by
COVID-19.”
Angel
continued, “While it is very difficult to predict the future
impact, I have full confidence in our ability to continue to create
shareholder value given our resilient business model and inherent
opportunities to mitigate macroeconomic
headwinds.”
Page
1/11
Press
Release
First-Quarter
2020 Results by Segment
Americas
sales of $2,677 million were 1% below prior-year quarter and down
2% sequentially. Excluding negative currency translation and cost
pass-through, sales versus prior year were up 4%. Price increased
2% and volume also grew 2% led mainly by the resilient healthcare
and food & beverage end markets. Operating profit of $661
million was 24.7% of sales, up 310 basis points versus prior-year
quarter.
APAC
(Asia Pacific) sales of $1,336 million were 6% below prior year and
decreased 5% sequentially. Excluding negative currency translation,
sales versus prior year were down 3%. Price increased 2% but was
more than offset by negative volumes driven by customer shutdowns
due to the COVID-19 impact, primarily in China, and higher sale of
equipment in the prior-year quarter. Operating profit of $281
million was 21.0% of sales, up $8 million and 190 basis points
versus prior year.
EMEA
(Europe, Middle East & Africa) sales of $1,633 million were
down 3% versus prior year and negative 1% sequentially. Excluding
unfavorable currency and cost pass-through, sales increased 1%
versus prior year. Pricing was up 2% but was partially offset by
negative volumes primarily due to weaker manufacturing activity.
Operating profit of $355 million was 21.7% of sales, up 110 basis
points versus prior-year quarter.
Linde
Engineering sales were $608 million and operating profit was $91
million or 15% of sales. Operating profit grew 17% versus prior
year due primarily to strong project execution and productivity
initiatives.
A
teleconference on Linde’s first-quarter 2020 results is being
held today at 10:00 am EST. The U.S. Toll-Free Dial-In Number is 1
855 758 5442; the access code is 3688359. The call is also
available as a live webcast and on-demand at
www.linde.com/investors. 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
2019 sales of $28 billion (€25 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 &
refining, food & beverage, electronics, healthcare,
manufacturing and primary metals. 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
See the
attachments 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.
Page
2/11
Press
Release
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: that Linde plc may be unable to achieve expected
synergies from the business combination of Praxair and Linde AG or
that it may take longer or be more costly than expected to achieve
those synergies; 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 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 actual future results or
circumstances to differ materially from accounting principles
generally accepted in the United States of America, International
Financial Reporting Standards or 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, 2019 filed with the SEC on March 2, 2020 and in
subsequent filings with the SEC, which should be reviewed
carefully. Please consider Linde plc’s forward-looking
statements in light of those risks.
Page
3/11
Press
Release
LINDE PLC AND SUBSIDIARIES
SUMMARY NON-GAAP RECONCILIATIONS
(UNAUDITED)
The following adjusted amounts are Non-GAAP measures and are
intended to supplement investors' understanding of the company's
financial statements by providing measures which investors,
financial analysts and management use to help evaluate the
company's operating performance. Items which the company does not
believe to be indicative of ongoing 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. See the "NON-GAAP MEASURES AND
RECONCILIATIONS" starting on
page 9 for additional details relating to the
adjustments.
(Millions of dollars, except per share amounts)
|
|
Sales
|
Operating Profit
|
Income from Continuing Operations
|
Diluted EPS from Continuing Operations
|
||||
|
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
|
Quarter Ended March 31
|
|
|
|
|
|
|
|
|
|
Reported GAAP
Amounts
|
$6,739
|
$6,944
|
$733
|
$609
|
$571
|
$435
|
$1.07
|
$0.79
|
|
Cost reduction
program and other charges (a)
|
—
|
—
|
131
|
89
|
95
|
70
|
0.18
|
0.13
|
|
Pension
settlement charges (b)
|
—
|
—
|
—
|
—
|
—
|
51
|
—
|
0.09
|
|
Merger-related
divestitures (c)
|
—
|
(30)
|
—
|
(7)
|
—
|
(5)
|
—
|
(0.01)
|
|
Purchase
accounting impacts - Linde AG (d)
|
—
|
—
|
488
|
531
|
343
|
376
|
0.64
|
0.69
|
|
Total
adjustments
|
—
|
(30)
|
619
|
613
|
438
|
492
|
0.82
|
0.90
|
|
Adjusted
amounts
|
$6,739
|
$6,914
|
$1,352
|
$1,222
|
$1,009
|
$927
|
$1.89
|
$1.69
|
(a) To adjust
for cost reduction program and other charges.
(b) To adjust
for pension settlement charges relates to the
merger.
(c) To adjust
for the results of Praxair's merger-related
divestitures.
(d) To adjust
for purchase accounting impacts related to the
merger.
Page
4/11
Press
Release
LINDE PLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Millions of dollars, except per share data)
(UNAUDITED)
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
2019
|
|
|
|
|
|
SALES
|
$6,739
|
$6,944
|
|
Cost of
sales
|
3,843
|
4,116
|
|
Selling,
general and administrative
|
861
|
879
|
|
Depreciation
and amortization
|
1,142
|
1,223
|
|
Research and
development
|
44
|
46
|
|
Cost reduction
programs and other charges
|
131
|
89
|
|
Other income
(expense) - net
|
15
|
18
|
|
OPERATING PROFIT
|
733
|
609
|
|
Interest
expense - net
|
24
|
23
|
|
Net pension
and OPEB cost (benefit), excluding service cost
|
(45)
|
15
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY
INVESTMENTS
|
754
|
571
|
|
Income
taxes
|
165
|
140
|
|
INCOME FROM CONTINUING OPERATIONS BEFORE EQUITY
INVESTMENTS
|
589
|
431
|
|
Income from
equity investments
|
17
|
34
|
|
INCOME FROM CONTINUING OPERATIONS (INCLUDING NONCONTROLLING
INTERESTS)
|
606
|
465
|
|
Add: income
from discontinued operations, net of tax
|
2
|
89
|
|
INCOME (INCLUDING NONCONTROLLING INTERESTS)
|
608
|
554
|
|
Less:
noncontrolling interests from continuing
operations
|
(35)
|
(30)
|
|
Less:
noncontrolling interests from discontinued
operations
|
—
|
(7)
|
|
NET INCOME - LINDE PLC
|
$573
|
$517
|
|
|
|
|
|
NET INCOME - LINDE PLC
|
|
|
|
Income from
continuing operations
|
$571
|
$435
|
|
Income from
discontinued operations
|
$2
|
$82
|
|
|
|
|
|
PER SHARE DATA - LINDE PLC SHAREHOLDERS
|
|
|
|
|
|
|
|
Basic earnings
per share from continuing operations
|
$1.07
|
$0.80
|
|
Basic earnings
per share from discontinued operations
|
—
|
0.15
|
|
Basic earnings
per share
|
$1.07
|
$0.95
|
|
|
|
|
|
Diluted
earnings per share from continuing operations
|
$1.07
|
$0.79
|
|
Diluted
earnings per share from discontinued operations
|
—
|
0.15
|
|
Diluted
earnings per share
|
$1.07
|
$0.94
|
|
|
|
|
|
Cash
dividends
|
$0.963
|
$0.875
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
|
Basic shares
outstanding (000's)
|
531,215
|
545,554
|
|
Diluted shares
outstanding (000's)
|
534,956
|
549,147
|
Note: See page 9 for a reconciliation to adjusted amounts which are
Non-GAAP.
Page
5/11
Press
Release
LINDE PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Millions of dollars)
(UNAUDITED)
|
|
March 31,
|
December 31,
|
|
|
2020
|
2019
|
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$4,014
|
$2,700
|
|
Accounts
receivable - net
|
4,084
|
4,322
|
|
Contract
assets
|
311
|
368
|
|
Inventories
|
1,689
|
1,697
|
|
Assets held
for sale
|
160
|
125
|
|
Prepaid and
other current assets
|
1,255
|
1,140
|
|
TOTAL CURRENT ASSETS
|
11,513
|
10,352
|
|
Property,
plant and equipment - net
|
27,418
|
29,064
|
|
Goodwill
|
26,073
|
27,019
|
|
Other
intangibles - net
|
15,339
|
16,137
|
|
Other
long-term assets
|
4,026
|
4,040
|
|
TOTAL ASSETS
|
$84,369
|
$86,612
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
Accounts
payable
|
$2,965
|
$3,266
|
|
Short-term
debt
|
4,848
|
1,732
|
|
Current
portion of long-term debt
|
2,006
|
1,531
|
|
Contract
liabilities
|
1,854
|
1,758
|
|
Liabilities of
assets held for sale
|
45
|
2
|
|
Other current
liabilities
|
3,772
|
3,871
|
|
TOTAL CURRENT LIABILITIES
|
15,490
|
12,160
|
|
Long-term
debt
|
10,021
|
10,693
|
|
Other
long-term liabilities
|
11,615
|
12,124
|
|
TOTAL LIABILITIES
|
37,126
|
34,977
|
|
|
|
|
|
REDEEMABLE NONCONTROLLING INTERESTS
|
92
|
113
|
|
|
|
|
|
LINDE PLC SHAREHOLDERS' EQUITY:
|
|
|
|
Common
stock
|
1
|
1
|
|
Additional
paid-in capital
|
40,185
|
40,201
|
|
Retained
earnings
|
16,850
|
16,842
|
|
Accumulated
other comprehensive income (loss)
|
(7,388)
|
(4,814)
|
|
Less: Treasury
stock, at cost
|
(4,872)
|
(3,156)
|
|
Total Linde
plc shareholders' equity
|
44,776
|
49,074
|
|
Noncontrolling
interests
|
2,375
|
2,448
|
|
TOTAL EQUITY
|
47,151
|
51,522
|
|
TOTAL LIABILITIES AND EQUITY
|
$84,369
|
$86,612
|
Page
6/11
Press
Release
LINDE PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)
(UNAUDITED)
|
|
Quarter Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
2019
|
|
OPERATIONS
|
|
|
|
Net income -
Linde plc
|
$573
|
$517
|
|
Less: income
from discontinued operations, net of tax and noncontrolling
interests
|
(2)
|
(82)
|
|
Add:
noncontrolling interests
|
35
|
30
|
|
Net income
(including noncontrolling interests)
|
606
|
465
|
|
|
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Cost reduction
programs and other charges, net of payments (a)
|
40
|
(167)
|
|
Depreciation
and amortization
|
1,142
|
1,223
|
|
Accounts
receivable
|
(109)
|
(56)
|
|
Contract
assets and liabilities, net
|
176
|
(84)
|
|
Inventory
|
(62)
|
(32)
|
|
Payables and
accruals
|
(183)
|
(31)
|
|
Pension
contributions
|
(17)
|
(18)
|
|
Deferred
income taxes and other
|
(246)
|
(232)
|
|
Net cash
provided by operating activities
|
1,347
|
1,068
|
|
|
|
|
|
INVESTING
|
|
|
|
Capital
expenditures
|
(803)
|
(843)
|
|
Acquisitions,
net of cash acquired
|
(41)
|
(152)
|
|
Divestitures
and asset sales
|
231
|
3,455
|
|
Net cash
provided by (used for) investing activities
|
(613)
|
2,460
|
|
|
|
|
|
FINANCING
|
|
|
|
Debt increase
(decrease) - net
|
3,112
|
(1,027)
|
|
Issuances of
ordinary shares
|
13
|
28
|
|
Purchases of
ordinary shares
|
(1,828)
|
(725)
|
|
Cash dividends
- Linde plc shareholders
|
(511)
|
(477)
|
|
Noncontrolling
interest transactions and other
|
(27)
|
(10)
|
|
Net cash
provided by (used for) financing activities
|
759
|
(2,211)
|
|
|
|
|
|
DISCONTINUED OPERATIONS
|
|
|
|
Cash provided
by operating activities
|
—
|
63
|
|
Cash provided
by investing activities
|
—
|
(58)
|
|
Cash provided
by financing activities
|
—
|
5
|
|
Net cash
provided by (used for) discontinued operations
|
—
|
10
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash
equivalents
|
(179)
|
8
|
|
|
|
|
|
Change in cash
and cash equivalents
|
1,314
|
1,335
|
|
Cash and cash
equivalents, beginning-of-period
|
2,700
|
4,466
|
|
Cash and cash
equivalents, including discontinued operations
|
4,014
|
5,801
|
|
Cash and cash
equivalents of discontinued operations
|
—
|
(10)
|
|
Cash and cash
equivalents, end-of-period
|
$4,014
|
$5,791
|
(a) Cost reduction programs and other charges cash outflows were
$91 million and $256 million for the quarters ended March 31, 2020
and 2019, respectively.
Page
7/11
Press
Release
LINDE PLC AND SUBSIDIARIES
SEGMENT INFORMATION
(Millions of dollars)
(UNAUDITED)
|
|
Quarter Ended March 31,
|
|
|
|
2020
|
2019
|
|
SALES
|
|
|
|
Americas
|
$2,677
|
$2,702
|
|
EMEA
|
1,633
|
1,682
|
|
APAC
|
1,336
|
1,427
|
|
Engineering
|
608
|
636
|
|
Other
|
485
|
467
|
|
Segment
sales
|
$6,739
|
$6,914
|
|
Merger-related
divestitures (a)
|
—
|
30
|
|
Total
sales
|
$6,739
|
$6,944
|
|
|
|
|
|
|
|
|
|
OPERATING PROFIT
|
|
|
|
Americas
|
$661
|
$584
|
|
EMEA
|
355
|
347
|
|
APAC
|
281
|
273
|
|
Engineering
|
91
|
78
|
|
Other
|
(36)
|
(60)
|
|
Segment
operating profit
|
$1,352
|
$1,222
|
|
Cost reduction
programs and other charges
|
(131)
|
(89)
|
|
Merger-related
divestitures (a)
|
—
|
7
|
|
Purchase
accounting impacts - Linde AG
|
(488)
|
(531)
|
|
Total
operating profit
|
$733
|
$609
|
(a) To adjust for the results of Praxair's merger-related
divestitures.
Page
8/11
Press
Release
LINDE PLC AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES AND RECONCILIATIONS
(Millions of dollars, except per share data)
(UNAUDITED)
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.
|
|
2020
|
2019
|
|||
|
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
|
Adjusted Sales
|
|
|
|
|
|
|
Reported
Sales
|
$6,739
|
$7,080
|
$7,000
|
$7,204
|
$6,944
|
|
Less:
Merger-related divestitures (d)
|
—
|
(3)
|
(7)
|
(25)
|
(30)
|
|
Adjusted
Sales
|
$6,739
|
$7,077
|
$6,993
|
$7,179
|
$6,914
|
|
|
|
|
|
|
|
|
Adjusted Operating Profit and Operating Margin
|
|
|
|
|
|
|
Reported
operating profit
|
$733
|
$655
|
$1,000
|
$669
|
$609
|
|
Less:
Merger-related divestitures (d)
|
—
|
(1)
|
(2)
|
(6)
|
(7)
|
|
Add: Cost
reduction programs and other charges
|
131
|
212
|
125
|
141
|
89
|
|
Less: Net gain
on sale of businesses
|
—
|
—
|
(164)
|
—
|
—
|
|
Add: Purchase
accounting impacts - Linde AG (c)
|
488
|
481
|
425
|
515
|
531
|
|
Total
adjustments
|
619
|
692
|
384
|
650
|
613
|
|
Adjusted
operating profit
|
$1,352
|
$1,347
|
$1,384
|
$1,319
|
$1,222
|
|
|
|
|
|
|
|
|
Reported
percentage change
|
20%
|
|
|
|
|
|
Adjusted
percentage change
|
11%
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
sales
|
$6,739
|
$7,080
|
$7,000
|
$7,204
|
$6,944
|
|
Adjusted
sales
|
$6,739
|
$7,077
|
$6,993
|
$7,179
|
$6,914
|
|
|
|
|
|
|
|
|
Reported
operating margin
|
10.9%
|
9.3%
|
14.3%
|
9.3%
|
8.8%
|
|
Adjusted
operating margin
|
20.1%
|
19.0%
|
19.8%
|
18.4%
|
17.7%
|
|
|
|
|
|
|
|
|
Adjusted Depreciation and amortization
|
|
|
|
|
|
|
Reported
depreciation and amortization
|
$1,142
|
$1,162
|
$1,095
|
$1,195
|
$1,223
|
|
Less: Purchase
accounting impacts - Linde AG (c)
|
(476)
|
(481)
|
(423)
|
(515)
|
(521)
|
|
Adjusted
depreciation and amortization
|
$666
|
$681
|
$672
|
$680
|
$702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service
Cost
|
|
|
|
|
|
|
Reported net
pension and OPEB cost (benefit), excluding service
cost
|
$(45)
|
$(25)
|
$2
|
$(24)
|
$15
|
|
Add: Pension
settlement charges
|
—
|
(6)
|
(40)
|
(10)
|
(51)
|
|
Adjusted Net
Pension and OPEB cost (benefit), excluding service
costs
|
$(45)
|
$(31)
|
$(38)
|
$(34)
|
$(36)
|
|
|
|
|
|
|
|
|
Adjusted Interest Expense - Net
|
|
|
|
|
|
|
Reported
interest expense - net
|
$24
|
$8
|
$(3)
|
$10
|
$23
|
|
Add: Purchase
accounting impacts - Linde AG (c)
|
22
|
22
|
22
|
25
|
27
|
|
Adjusted
interest expense - net
|
$46
|
$30
|
$19
|
$35
|
$50
|
|
|
|
|
|
|
|
|
Adjusted Income Taxes (a)
|
|
|
|
|
|
|
Reported
income taxes
|
$165
|
$162
|
$298
|
$169
|
$140
|
|
Add: Purchase
accounting impacts - Linde AG (c)
|
122
|
105
|
99
|
119
|
127
|
|
Add: Cost
reduction programs and other charges
|
36
|
54
|
1
|
28
|
19
|
|
Less:
Merger-related divestitures (d)
|
—
|
—
|
(1)
|
(2)
|
(2)
|
|
Less: Net gain
on sale of businesses
|
—
|
—
|
(49)
|
—
|
—
|
|
Total
adjustments
|
158
|
159
|
50
|
145
|
144
|
|
Adjusted
income taxes
|
$323
|
$321
|
$348
|
$314
|
$284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Effective Tax Rate (a)
|
|
|
|
|
|
|
Reported
income before income taxes and equity
investments
|
$754
|
$672
|
$1,001
|
$683
|
$571
|
|
Less:
Merger-related divestitures (d)
|
—
|
(1)
|
(2)
|
(6)
|
(7)
|
|
Add: Pension
settlement charge
|
—
|
6
|
40
|
10
|
51
|
|
Add: Purchase
accounting impacts - Linde AG (c)
|
466
|
459
|
403
|
490
|
504
|
|
Add: Cost
reduction programs and other charges
|
131
|
212
|
125
|
141
|
89
|
|
Less: Net gain
on sale of businesses
|
—
|
—
|
(164)
|
—
|
—
|
|
Total
adjustments
|
597
|
676
|
402
|
635
|
637
|
|
Adjusted
income before income taxes and equity
investments
|
$1,351
|
$1,348
|
$1,403
|
$1,318
|
$1,208
|
|
|
|
|
|
|
|
|
Reported
Income taxes
|
$165
|
$162
|
$298
|
$169
|
$140
|
|
Reported
effective tax rate
|
21.9%
|
24.1%
|
29.8%
|
24.7%
|
24.5%
|
|
|
|
|
|
|
|
|
Adjusted
income taxes
|
$323
|
$321
|
$348
|
$314
|
$284
|
|
Adjusted
effective tax rate
|
23.9%
|
23.8%
|
24.8%
|
23.8%
|
23.5%
|
Page
9/11
Press
Release
LINDE PLC AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES AND RECONCILIATIONS
(Millions of dollars, except per share data)
(UNAUDITED)
|
Income from Equity Investments
|
|
|
|
|
|
|
Reported
income from equity investments
|
$17
|
$24
|
$28
|
$28
|
$34
|
|
Add: Purchase
accounting impacts - Linde AG (c)
|
14
|
14
|
15
|
14
|
14
|
|
Adjusted
income from equity investments
|
$31
|
$38
|
$43
|
$42
|
$48
|
|
|
|
|
|
|
|
|
Adjusted Noncontrolling Interests from Continuing
Operations
|
|
|
|
|
|
|
Reported
noncontrolling interests from continuing
operations
|
$(35)
|
$(27)
|
$(3)
|
$(29)
|
$(30)
|
|
Add: Cost
reduction programs and other charges
|
—
|
—
|
(35)
|
—
|
—
|
|
Add: Purchase
accounting impacts - Linde AG (c)
|
(15)
|
(14)
|
(8)
|
(17)
|
(15)
|
|
Total
adjustments
|
(15)
|
(14)
|
(43)
|
(17)
|
(15)
|
|
Adjusted
noncontrolling interests from continuing
operations
|
$(50)
|
$(41)
|
$(46)
|
$(46)
|
$(45)
|
|
|
|
|
|
|
|
|
Adjusted Income from Continuing Operations (b)
|
|
|
|
|
|
|
Reported
income from continuing operations
|
$571
|
$507
|
$728
|
$513
|
$435
|
|
Add: Pension
settlement charge
|
—
|
8
|
40
|
—
|
51
|
|
Less:
Merger-related divestitures (d)
|
—
|
(1)
|
(2)
|
(4)
|
(5)
|
|
Add: Cost
reduction programs and other charges
|
95
|
156
|
89
|
123
|
70
|
|
Less: Net gain
on sale of business
|
—
|
—
|
(115)
|
—
|
—
|
|
Add: Purchase
accounting impacts - Linde AG (c)
|
343
|
354
|
312
|
368
|
376
|
|
Total
adjustments
|
438
|
517
|
324
|
487
|
492
|
|
Adjusted
income from continuing operations
|
$1,009
|
$1,024
|
$1,052
|
$1,000
|
$927
|
|
|
|
|
|
|
|
|
Adjusted Diluted EPS from Continuing Operations
(b)
|
|
|
|
|
|
|
Reported
diluted EPS from continuing operations
|
$1.07
|
$0.94
|
$1.34
|
$0.94
|
$0.79
|
|
Add: Pension
settlement charge
|
—
|
0.01
|
0.07
|
—
|
0.09
|
|
Add: Cost
reduction programs and other charges
|
0.18
|
0.29
|
0.17
|
0.23
|
0.13
|
|
Less:
Merger-related divestitures (d)
|
—
|
—
|
(0.01)
|
(0.01)
|
(0.01)
|
|
Less: Net gain
on sale of business
|
—
|
—
|
(0.21)
|
—
|
—
|
|
Add: Purchase
accounting impacts - Linde AG
|
0.64
|
0.65
|
0.58
|
0.67
|
0.69
|
|
Total
adjustments
|
0.82
|
0.95
|
0.60
|
0.89
|
0.90
|
|
Adjusted
diluted EPS from continuing operations
|
$1.89
|
$1.89
|
$1.94
|
$1.83
|
$1.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA and % of Sales
|
|
|
|
|
|
|
Income from
continuing operations
|
$571
|
$507
|
$728
|
$513
|
$435
|
|
Add:
Noncontrolling interests related to continuing
operations
|
35
|
27
|
3
|
29
|
30
|
|
Add: Net
pension and OPEB cost (benefit), excluding service
cost
|
(45)
|
(25)
|
2
|
(24)
|
15
|
|
Add: Interest
expense
|
24
|
8
|
(3)
|
10
|
23
|
|
Add: Income
taxes
|
165
|
162
|
298
|
169
|
140
|
|
Add:
Depreciation and amortization
|
1,142
|
1,162
|
1,095
|
1,195
|
1,223
|
|
EBITDA from
continuing operations
|
1,892
|
1,841
|
2,123
|
1,892
|
1,866
|
|
Less:
Merger-related divestitures (d)
|
—
|
(1)
|
(2)
|
(6)
|
(7)
|
|
Less: Net gain
on sale of business
|
—
|
—
|
(164)
|
—
|
—
|
|
Add: Cost
reduction programs and other charges
|
131
|
212
|
125
|
141
|
89
|
|
Add: Purchase
accounting impacts - Linde AG
|
26
|
14
|
17
|
14
|
24
|
|
Total
adjustments
|
157
|
225
|
(24)
|
149
|
106
|
|
Adjusted
EBITDA from continuing operations
|
$2,049
|
$2,066
|
$2,099
|
$2,041
|
$1,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported
sales
|
$6,739
|
$7,080
|
$7,000
|
$7,204
|
$6,944
|
|
Adjusted
sales
|
$6,739
|
$7,077
|
$6,993
|
$7,179
|
$6,914
|
|
% of
sales
|
|
|
|
|
|
|
EBITDA from
continuing operations
|
28.1%
|
26.0%
|
30.3%
|
26.3%
|
26.9%
|
|
Adjusted
EBITDA from continuing operations
|
30.4%
|
29.2%
|
30.0%
|
28.4%
|
28.5%
|
(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 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 purchasing 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.
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 from Continuing Operations: Represents the noncontrolling interests’
ownership portion of the adjustments described above determined on
an entity by entity basis.
(d) To adjust for the results of Praxair's merger-related
divestitures.
Page
10/11
Press
Release
LINDE PLC AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES AND RECONCILIATIONS
(Millions of dollars)
(UNAUDITED)
|
|
2020
|
2019
|
2018
|
|||
|
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
|
Net Debt - Net debt is a financial liquidity metric used by
investors, financial analysts and management to evaluate the
ability of a company to repay its debt and is calculated as total
debt (excluding purchase accounting impacts) less liquid
assets.
|
|
Debt
|
$16,875
|
$13,956
|
$13,201
|
$13,957
|
$14,146
|
$15,296
|
|
Less: Cash and
cash equivalents
|
(4,014)
|
(2,700)
|
(2,120)
|
(2,686)
|
(5,791)
|
(4,466)
|
|
Net
debt
|
12,861
|
11,256
|
11,081
|
11,271
|
8,355
|
10,830
|
|
Less: Purchase
accounting impacts - Linde AG
|
(170)
|
(195)
|
(211)
|
(243)
|
(262)
|
(291)
|
|
Adjusted net
debt
|
$12,691
|
$11,061
|
$10,870
|
$11,028
|
$8,093
|
$10,539
|
|
Less: Net
assets held for sale
|
(115)
|
(123)
|
(223)
|
(272)
|
(1,629)
|
(4,730)
|
|
Adjusted net
debt less net assets held for sale
|
$12,576
|
$10,938
|
$10,647
|
$10,756
|
$6,464
|
$5,809
|
|
|
|
|
|
|
|
|
|
Equity and
redeemable noncontrolling interests:
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
92
|
113
|
14
|
15
|
15
|
16
|
|
Linde plc
shareholders' equity
|
44,776
|
49,074
|
48,953
|
50,564
|
51,175
|
51,596
|
|
Noncontrolling
interests
|
2,375
|
2,448
|
2,341
|
2,315
|
5,457
|
5,484
|
|
Total equity
and redeemable noncontrolling interests
|
47,243
|
51,635
|
51,308
|
52,894
|
56,647
|
57,096
|
|
|
|
|
|
|
|
|
|
Reported
capital
|
59,989
|
62,768
|
62,166
|
63,893
|
63,373
|
63,196
|
|
Adjusted
capital
|
59,819
|
62,573
|
61,955
|
63,650
|
63,111
|
62,905
|
|
|
|
|
|
|
|
|
|
Less: Linde AG
Goodwill
|
24,256
|
24,256
|
24,197
|
24,197
|
24,197
|
24,146
|
|
Less: Linde AG
Indefinite lived intangibles
|
1,868
|
1,868
|
1,868
|
1,868
|
1,868
|
1,648
|
|
Adjusted
capital
|
$33,695
|
$36,449
|
$35,890
|
$37,585
|
$37,046
|
$37,111
|
After-tax
Return on Capital and Adjusted After-tax Return on Capital
(ROC) - After-tax return on
capital is a measure used by investors, financial analysts and
management to evaluate the return on net assets employed in the
business. ROC measures the after-tax operating profit that the
company was able to generate with the investments made by all
parties in the business (debt, noncontrolling interests and Linde
plc shareholders’ equity).
|
Reported
income from continuing operations
|
$571
|
$507
|
$728
|
$513
|
$435
|
$2,870
|
|
Add:
noncontrolling interests from continuing
operations
|
35
|
27
|
3
|
29
|
30
|
(33)
|
|
Add: interest
expense - net
|
24
|
8
|
(3)
|
10
|
23
|
72
|
|
Less: tax
benefit on interest expense - net *
|
(6)
|
(2)
|
1
|
(3)
|
(6)
|
(18)
|
|
Reported NOPAT
|
$624
|
$540
|
$729
|
$549
|
$482
|
$2,891
|
|
|
|
|
|
|
|
|
|
Adjusted
income from continuing operations
|
$1,009
|
$1,024
|
$1,052
|
$1,000
|
$927
|
$841
|
|
Add: adjusted
noncontrolling interests from continuing
operations
|
50
|
41
|
46
|
46
|
45
|
40
|
|
Add: adjusted
interest expense - net
|
46
|
30
|
19
|
35
|
50
|
50
|
|
Less: tax
benefit on interest expense - net *
|
(12)
|
(7)
|
(5)
|
(9)
|
(13)
|
(13)
|
|
Adjusted NOPAT
|
$1,093
|
$1,088
|
$1,112
|
$1,072
|
$1,009
|
$919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4-quarter
trailing reported NOPAT
|
$2,442
|
$2,300
|
|
|
|
|
|
4-quarter
trailing adjusted NOPAT
|
$4,365
|
$4,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending capital
(see above)
|
$59,989
|
$62,768
|
|
|
|
|
|
5-quarter
average ending capital
|
$62,438
|
$63,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
adjusted capital (see above)
|
$33,695
|
$36,449
|
|
|
|
|
|
5-quarter
average ending adjusted capital
|
$36,133
|
$36,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After-tax ROC (4 quarter reported NOPAT / 5-quarter average ending
capital)
|
3.9%
|
3.6%
|
|
|
|
|
|
Adjusted after-tax ROC (4 quarter trailing adjusted NOPAT /
5-quarter average ending adjusted capital)
|
12.1%
|
11.6%
|
|
|
|
|
* Tax benefit on interest expense -
net is generally presented using the reported effective
rate.
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