01—Abstract
Summary
Summary of the 10-Q filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.
Linde plc's Q3 2024 10-Q shows steady underlying performance.
Reported sales rose 2% to $8,356 milliona, driven by 2% price gains, with flat volumes, a 1% currency headwind and a 1% cost pass-through headwind. Reported operating profit rose 2% to $2,086 million, but adjusted operating profit (excluding Linde AG purchase accounting and cost reduction charges) grew 7% to $2,477 million, with the adjusted operating margin expanding to 29.6% from 28.3%. Reported diluted EPS was $3.22 (up 1%), while adjusted diluted EPS was $3.94 (up 9%), helped by a 2% lower diluted share count from buybacks.
The quarter included $145 millionb of cost reduction program and other charges, mainly severance, which weighed on reported results. Nine-month results are stronger: reported net income attributable to Linde rose 4% to $4,840 million, and operating cash flow was $6,614 million, up 1%. Capital expenditures rose sharply to $3,247 million, up $611 million, reflecting growth investment tied to a $7.0 billion large-project backlog.
Balance sheet leverage increased. Long-term debt rose to $17,475 millionc from $13,397 million after several Euro bond issuances, while short-term commercial paper fell. Net debt reached $17.1 billion versus $14.7 billion at year-end 2023.
Linde also repurchased $3.1 billiond of shares year-to-date and paid $2.0 billion in dividends. The most significant risk disclosed is the Russia dispute with RusChemAlliance, where Linde carries a $1.2 billion contingent liability. Management says it does not expect a material earnings impact.
02—Key points
Key Highlights
- Q3 2024 reported sales rose 2% to $8,356 million, with price/mix contributing +2%, volumes flat, and currency and cost pass-through each reducing sales by 1%.
- Adjusted operating margin expanded to 29.6% in Q3 2024 from 28.3% a year earlier, and adjusted operating profit rose 7% to $2,477 million, driven by pricing and productivity.
- Reported Q3 diluted EPS was $3.22 (+1%), and adjusted diluted EPS was $3.94 (+9%), supported by a 2% reduction in diluted shares outstanding.
- Cost reduction program and other charges were $145 million in Q3 2024, mainly severance, which pressured reported operating profit and net income.
- Nine-month operating cash flow was $6,614 million (+1%), while capital expenditures rose 23% to $3,247 million to support large-project backlog growth.
- Total debt rose to $22.3 billion from $19.4 billion at year-end 2023, after €-denominated bond issuances in February and June 2024; net debt reached $17.1 billion.
- Linde repurchased $3.1 billion of shares and paid $2.0 billion in dividends year-to-date, and $13.3 billion remains authorized under the 2023 buyback program.
- A $1.2 billion contingent liability tied to Russia contract disputes with RusChemAlliance is recorded, which management does not expect to have a material earnings impact.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 31, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $8.36B$8.15B | +2.5% |
| R&D Expenses | $37.00M$36.00M | +2.8% |
| SG&A Expenses | $823.00M$808.00M | +1.9% |
| Operating Income | $2.09B$2.05B | +1.7% |
| Net Income | $1.55B$1.56B | −1.0% |
| EPS (Basic) | $3.24$3.21 | +0.9% |
| EPS (Diluted) | $3.22$3.19 | +0.9% |
| Shares Outstanding (Basic) | 477.66M487.12M | −1.9% |
| Shares Outstanding (Diluted) | 480.90M491.08M | −2.1% |
05—Questions
Frequently Asked Questions
How did Linde perform in Q3 2024 on a reported versus adjusted basis?
Reported Q3 operating profit was $2,086 million (+2%), with a 25.0% margin, after $145 million of cost reduction charges and $246 million of Linde AG purchase accounting impacts. Adjusted operating profit was $2,477 million (+7%), with a 29.6% margin. Adjusted EPS of $3.94 was up 9%, while reported EPS of $3.22 rose 1%.
What drove revenue growth, and was volume a factor?
Sales rose 2% to $8,356 million, driven by 2% higher pricing. Volumes were flat as base volume declines were offset by new project start-ups. Engineering sales rose 31% on project timing, while currency and cost pass-through each reduced sales by 1%.
Has Linde's debt load changed materially this year?
Yes. Long-term debt rose to $17.5 billion from $13.4 billion, following several Euro-denominated bond issuances in 2024, including €700 million, €850 million and €700 million in February and €750 million, €750 million and €700 million in June. Short-term commercial paper fell to $3.3 billion. Linde has $6.5 billion of undrawn revolving credit facilities and no financial maintenance covenants, and management says it retains strong Moody's and S&P ratings.
What are the key legal and contingent risks disclosed?
The main item is the dispute with RusChemAlliance over Linde Engineering contracts in Russia. Linde has a $1.2 billion contingent liability recorded in other long-term liabilities, and a Russian court has issued an injunction affecting its Russian subsidiaries. A Brazilian tax dispute and a German appraisal proceeding are also ongoing. Management does not expect a material adverse effect on earnings or financial position, but timing and outcomes are uncertain.
How is Linde returning capital to shareholders?
Year-to-date, Linde paid $1,996 million in dividends, up 7% from 2023, with the quarterly dividend raised to $1.39 per share from $1.275. It also made $3,148 million in share purchases, and $13.3 billion remains authorized under the 2023 program.
06—Continue