10-QPeriod: Q3 FY2022

LINDE PLC Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 27, 2022For Securities:LIN

Summary

Linde plc reported a strong third quarter for 2022, demonstrating robust sales and earnings growth. Total sales increased by 15% year-over-year, driven by a combination of higher pricing (8%) and increased volumes (3%), alongside an 8% contribution from cost pass-through mechanisms. This top-line growth translated into a significant increase in profitability, with reported operating profit up 25% and adjusted operating profit up 11%. Diluted earnings per share (EPS) from continuing operations saw a substantial increase of 35% on a reported basis and 14% on an adjusted basis, signaling effective operational management and pricing power. The company's performance was broad-based across its segments, with notable sales growth in the Americas (20%) and Engineering (38%). Despite inflationary pressures and unfavorable currency movements (which negatively impacted sales by 7%), Linde successfully navigated these challenges through pricing strategies, productivity initiatives, and cost pass-through. The company also continued its commitment to shareholder returns, with significant share repurchases during the quarter. Looking ahead, Linde's diversified business model and strategic focus on essential industrial gases position it well to manage economic uncertainties.

Financial Highlights

52 data points
Beta

Revenue

$8.80B

Net Income

$1.27B

14.5% Net Margin

EPS (Diluted)

$2.54

Total Assets

$74.32B

Cash & Equivalents

$3.76B

Free Cash Flow

$1.87B

Financial Statements
Beta
Revenue$8.80B
R&D Expenses$35.00M
SG&A Expenses$770.00M
Operating Income$1.61B
Net Income$1.27B
EPS (Basic)$2.56
EPS (Diluted)$2.54
Shares Outstanding (Basic)497.19M
Shares Outstanding (Diluted)501.15M

Key Highlights

  • 1Total sales increased by 15% to $8,797 million in Q3 2022 compared to Q3 2021, driven by 8% price attainment and 3% higher volumes.
  • 2Reported operating profit surged by 25% to $1,613 million, with operating margin improving to 18.3% from 16.8% year-over-year.
  • 3Adjusted diluted EPS from continuing operations grew by 14% to $3.10, indicating strong underlying profitability.
  • 4The Americas segment experienced robust sales growth of 20%, while the Engineering segment saw a significant 38% increase in sales.
  • 5The company repurchased approximately $4.013 billion of its ordinary shares during the third quarter as part of its $10.0 billion share repurchase program.
  • 6Despite a 7% negative impact from currency translation, Linde effectively offset this through pricing and cost pass-through mechanisms.
  • 7Cash provided by operations increased by 4% to $6,769 million for the nine months ended September 30, 2022, reflecting healthy cash generation.

Frequently Asked Questions

Linde's sales growth in Q3 2022 was primarily driven by a combination of higher pricing (8% contribution) and increased volumes (3% contribution). Additionally, cost pass-through mechanisms, which allow for the contractual billing of energy cost variances, contributed 8% to sales, with minimal impact on operating profit. Engineering also saw a 4% increase in sales.

Currency translation had a negative impact on Linde's reported sales, decreasing them by 7% in the third quarter of 2022. This was largely due to the weakening of currencies like the Euro, Chinese yuan, and British pound against the U.S. dollar, particularly impacting the EMEA and APAC regions. Despite this, the company's pricing strategies and cost pass-through initiatives helped to mitigate the overall impact on profitability.

Linde uses non-GAAP measures like adjusted operating profit and adjusted EPS to provide investors with a clearer view of the company's ongoing operational performance. These measures exclude items such as costs related to the Russia-Ukraine conflict, purchase accounting impacts from the Linde AG merger, and other charges. The adjusted figures allow for a more consistent comparison of historical and future business trends by removing one-time or non-operational events.

Linde demonstrates a strong commitment to returning capital to shareholders. During the third quarter of 2022, the company repurchased approximately $4.013 billion of its ordinary shares under its $10.0 billion share repurchase program, which was approved in February 2022. This program is set to expire in July 2024, indicating a continued focus on enhancing shareholder value through share buybacks.