Linde PLC Q1 FY2026 Earnings Call

Ladies and gentlemen, good day, and thank you for standing by. Welcome to the Linde plc First Quarter 2026 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. I would now like to hand the conference over to Mr. Juan Pelaez, Head of Investor Relations. Please go ahead, sir. Abby, thank you.

Good morning, everyone, and thanks for attending our 2026 First Quarter Earnings Call and Webcast. I'm Juan Pelaez, Head of Investor Relations, and I'm joined this morning by Matt White, Chief Financial Officer. Today's presentation materials are available on our website at linde.com in the Investors section. Please read the forward-looking statement disclosure on Page 2 of the slides and note that it applies to all statements made during this teleconference. Reconciliations of the adjusted numbers are in the appendix to this presentation. Matt will provide some opening remarks. I'll give an update on Linde plc's first quarter financial performance, and then Matt will finish with the updated outlook, after which we will wrap up with Q&A. Now turn the call over to Matt.

Thanks, Juan. Good morning, everyone. The Linde plc team delivered another solid quarter against a challenging economic backdrop. EPS of $4.33 grew 10%. Operating margins reached 30%. And return on capital remained at a healthy level of 24%. The high-quality compounding growth of our company, no matter what the environment, is a testament to the unwavering commitment of all 65,000 employees to create shareholder value. And given the recent geopolitical volatility, it may be helpful to provide a brief update by end market, which you can find on Slide 3. As a reminder, the top half shows consumer-related end markets, at approximately one third of sales, while the bottom half represents industrial-related markets for the remaining two thirds. The growth rates reflect price and volume but exclude FX or M&A. Starting at the top, health care at 16% of global sales grew 1% year-over-year. We provide gases, equipment, and services to medical institutions such as hospitals, and direct to the home. Normally, a resilient market like this should grow in line with demographic trends, or low- to mid-single-digit percent. And while we are experiencing those growth rates in most countries, the US home care business has been relatively flat. In late 2025, a new US health care policy resulted in less services for a specific piece of equipment which is reflected in the current run rate and will continue for the next several quarters. Aside from this particular issue, the rest of health care is performing as anticipated while providing a resilient balance to the more cyclical markets. At 9% of sales, food and beverage grew 5% from broad-based strength. The largest contributor is the US beverage business, where we continue to see increased customer need for new services and applications. In addition, traditional bottling and food freezing growth remain quite strong, especially in North and South America. Overall, food and beverage has grown mid- to high-single digits over the last several years, and is expected to remain a steady contributor. Electronics increased the most at 10%, primarily driven by continued investments in advanced chips to support AI. The growth is heavily weighted toward the US, China, and Korea, since our substantial electronic sales in Taiwan are excluded as a nonconsolidated 50% joint venture. As both the scale and industrial gas intensity continue to expand in this sector, Linde plc remains well positioned. We are currently investing more than $1 billion of the project backlog for ultra-high-purity plants, which will support the most advanced fabs in the world. And there is more to come, as we have a high degree of confidence in adding substantial new projects to the backlog this year. Moving to industrial end markets, you can see growth across the board, which supports the notion we are starting to lap more difficult comps after years of stagnant industrial activity. Chemicals and energy, representing 22% of sales, increased 3% as growth in Americas and APAC more than offset contractions in EMEA. Americas was driven by higher activity hydrogen and nitrogen in US Gulf Coast refining, and Latin American upstream energy. While APAC increases primarily came from our recent investments in the Jurong Island integrated complex. EMEA continues to experience negative volumes primarily from on-site customers shifting production to more competitive assets outside Continental Europe. It remains to be seen what the longer-term effects could be from the Middle East conflict. But so far, it appears activity is relocating to more feedstock-advantaged assets in Americas and, to a lesser extent, APAC. And while we are on this topic, I think it is worth providing a brief update on our helium business. Helium was in oversupply for a few years up to 2025. But recent events have created acute global shortages. Linde plc sources from a very broad base since supply chain constraints are a recurring challenge. Therefore, we are currently well positioned despite some of the recent outages. Given our business is largely contracted, the priority is to meet existing customer commitments. After that, we still anticipate excess molecules allowing us to pursue new, multiyear contracts with high-quality customers. Therefore, I do not anticipate significant spot sales this year since we are focused on securing long-term agreements. Returning to the end market slide, metals and mining grew 3%. Similar to chemicals and energy, the entire growth is coming from Americas, as both APAC and EMEA are relatively flat. A combination of better industrial activity and protectionist policies from US to Latin America have supported local metals production over imports. Furthermore, we are seeing renewed competitiveness from customers of more gas-intensive integrated blast furnaces when compared to EAFs, primarily from constraints associated with cost-effective scrap and electrical infrastructure. The last industrial end market of manufacturing grew 5%. Half of the increase came from aerospace activity in the United States, primarily supporting space vehicle production, testing, and launch. As this venue continues to see strong double-digit percent growth, we will isolate aerospace as a separate end market when it consistently exceeds 5% or more of global sales, which will be a function of the frequencies, size, and propellant type of future space launch. Excluding aerospace, the remaining end market grew low single-digit percent, as strength across the Americas, especially in the US, was partially offset by continued weakness in EMEA, while APAC slightly improved over last year. Within the US, packaged gases grew mid-single digit and hard goods double-digit percent, which aligns with the recent favorable US production statistics. In the US, growth was balanced between consumables and equipment, and driven by energy, construction, and general metal fabrication. EMEA activity was softer, from continued weak industrial activity including direct and indirect impacts from the Middle East conflict. And in APAC, we experienced moderate volume growth driven by China and Southeast Asia. In summary, the portfolio is doing what one would expect. As geopolitical events shift production around the world and secular growth trends drive concentrated investments, our business units continue to adapt and capture their fair share. And while no one can predict how the next few months will play out, let alone the next few years, I am confident the Linde team can navigate the volatility and continue to deliver high-quality compounding growth. And I will turn the call over to Juan to walk through the financial results.

Matt, thank you. Please turn to Slide 4 for our consolidated results. Sales of $8.8 billion were up 8% year-over-year, and flat sequentially. Versus prior year, foreign currency was a 5% tailwind driven primarily by the strengthening of the euro. Net acquisitions contributed 1% from attractive roll-ups we have been executing globally. This quarter alone, we signed nine more bolt-on acquisitions, primarily in the Americas, which will continue adding to future EPS growth. Underlying sales increased 3% versus last year, 2% higher pricing, and 1% higher volumes. Volume increase was driven by the project start-ups, primarily in APAC. Both Americas and APAC continue to see base volume growth but it was mostly offset by EMEA, due to the weaker economic activity in the region. Sequentially, underlying sales were flat as higher pricing was offset by lower volumes, mainly in APAC and EMEA. The lower volumes were driven by seasonal factors, especially in APAC, followed by EMEA where we continue experiencing weaker trends in the industrial end markets. Price continues to drive underlying sales growth, highly correlated to local inflation levels. Recall that actual price increases are higher for the combined packaged and merchant gases, which represent roughly two thirds of total sales. Operating profit of $2.6 billion increased 8% year-over-year and resulted in a margin of 30%, similar to prior year. Sequentially, margins improved 50 basis points, driven by management actions and pricing and cost productivity that more than compensated for seasonal volume declines. We expect management actions to continue to support profit growth and margin expansion for 2026. EPS of $4.33 was 10% over prior year, or 5% when excluding the effects of currency translation. We finished the quarter slightly above the top end of the guidance range due to better effects as the business performed as anticipated, considering the many challenges globally. Operating cash flow was $2.2 billion, 4% higher than prior year. Capital expenditures were $1.3 billion, and as a result, our free cash flow was $900 million, which we used primarily to pay dividends and repurchase shares. The CapEx of $1.3 billion was roughly split between base CapEx and project backlog. Keep in mind that base CapEx is primarily maintenance and all other growth investments not meeting our stringent backlog definition, for example, current investments to serve commercial space. In this quarter, we started up 10 projects from the sale-of-gas backlog, mostly in Americas and APAC, with investments of approximately $300 million. Furthermore, we signed five new projects that added $100 million to the sale-of-gas backlog, which ended the quarter at $7.1 billion. Industry-leading return on capital ended the quarter at 23.8%, a reflection of capital discipline, consistent earnings growth, and good backlog execution. Slide 5 provides further details on quarterly management. The operating cash flow trend can be seen to the left, with the most recent quarter of $2.2 billion. Note, the first half of the year is weaker due to the seasonality of cash payment timing for interest, taxes, and incentives. For 2026, we anticipate a similar trend as last year. To the right of the slide, you will find a pie chart that demonstrates the balance across investing into the business and returning capital to shareholders. Disciplined capital allocation is a hallmark at Linde plc and is something that differentiates us from others. During the quarter, we raised the annual dividend by 7%, making it 33 consecutive years of dividend growth with an average growth rate of 13%. We also repurchased $800 million of stock during the quarter, while reinvesting almost $1.5 billion into the business. Our capital allocation model remains consistent across all environments. In periods of uncertainty and volatility like today, a fortress balance sheet is critical, not only to maintain stability, but also to capitalize on growth and share repurchase opportunities as they arise. Thank you. I'll now turn the call over to Matt, who will wrap up with the guidance update.

Slide 6 provides the updated 2026 guidance. Starting with the second quarter, we anticipate EPS in the range of $4.40 to $4.50, or 8% to 10% growth. This includes a 1% currency benefit but, consistent with prior quarters, assumes no economic improvement at the midpoint. For the full year, we are updating to a new range of $17.60 to $17.90, or 7% to 9% growth. Like the second quarter, this includes a 1% currency tailwind, and assumes no economic improvement at the midpoint. Also note, both ranges do not include any improvements in the helium business versus the February guidance. So any incremental volumes or price would be upside. And when compared to the prior guidance, we raised the bottom by $0.20 from increased confidence in the overall business resiliency. However, we left the top at $17.90 because it is still early to signal increased optimism. There are a lot of things happening in the world right now. And I would like a few more months before considering a top-end raise. Overall, we had a decent start to the year, but remain guarded until we see more clarity on current geopolitical events. We will now open the call for questions.

Thank you. And we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, it is 1 to join the queue. And our first question comes from the line of Laurent Favre with BNP Paribas. Your line is open.

Yes. Good morning, guys. Thank you. My first question is on margins. You mentioned a strong improvement in the Americas, and I was wondering if you could talk about, I guess, the big moving parts of why, while Europe was flat, Asia down. Is it helium? Is it the rapid cost inflation in March which created the temporary squeeze? Any help there would be very helpful. And as a follow-up, you mentioned that you would disclose space when you get to 5% of the group, which is about $1.7 billion. And I think recently or on the prior call, you mentioned that you thought sales in commercial space would get to about $1 billion by the end of the decade. So I am just wondering, are you now thinking that we may get to $1.7 billion by the end of the decade? It is a big change.

Sure, Laurent. I'll start with, and we said this last time, but I just want to reiterate it again this time. On a full-year basis, we feel pretty confident we are not only going to raise margins for the full year 2026, but probably at the upper end or even above our traditional range that we tend to talk about of 40 to 60 basis points. Now stating that on the full year, you are always going to have some moving parts within the quarters. I think when you think about Europe, clearly, the volume is a bit of a drag. Within EMEA as a whole, we mentioned on the call a combination of the overall weaker industrial environment, weaker chemicals environment, and both direct and indirect impacts from the current Middle East conflict. We are just not seeing the volume recovery there. But I could tell you we are not happy with the performance. The business team is taking actions to improve that. They know that. So I expect to see some improvements there in Europe. With APAC, we did mention on the backup slides we had about half of the sales growth was a sale of equipment. But, actually, it is equipment that is connected to long-term merchant contracts and electronics. So that does come with future contracted merchant sales. But that will tend to be a little bit lower margin on average. It is a kind of a one-off. But also, as you know, Q1 is traditionally weaker in APAC just given some of the seasonality effects. So I expect APAC to kind of get back up to the 29-type percent margins we saw last year as the team there continues to work towards improving that. So some of it is timing. Some of it is just a little bit of some effects on the volume. But, on the full year, we fully expect to not only raise margins, but probably the top end or above. And, again, this is all ex pass-through, up or down, as you know, which is just more optics on the margin and no real effect on profit dollars. So, Laurent, on space, we feel very good about our positioning to support the space economy as that develops. Clearly, in the US, you are seeing that much more rapidly with the private commercial space sector. But even outside the US, we are definitely seeing acceleration in those efforts. Controlling the cadence is going to be their determination on launch. But it is, like I mentioned on the call, going to be a function of frequency, size, and propellant type. Frequency is self-evident, how many launches occur. With size, it could be dramatically different. Much larger rockets and much larger booster systems can use orders of magnitude higher propellant. For example, the largest rockets versus smaller ones could see 10x difference on fuel and propellant. And then the fuel or propellant type is important because while we supply oxygen for the oxidizer and nitrogen for densification, there are really three types today you will see: kerosene, methane, or hydrogen. Obviously, we supply hydrogen. We do not supply the other two; we would do only sale of equipment for things like LNG. So if you do see more hydrogen-based rockets, that could also accelerate the growth for us depending on the fuel type used. So we feel pretty good about it. You look at the ambition on getting satellites and constellations in space today. You look at the existing population and what needs to be replaced in low Earth orbit roughly every five years. I think it continues to bode well for launch. And not only the major players, but there is more room for maybe some new players that can be supporting the demand out there to get more constellations in space. So we will see where it ends up. I think it will all be a function of the launch cadence. But we feel quite good about our positioning to supply that when it happens.

And our next question comes from the line of Patrick Cunningham with Citi. Your line is open.

Hi, good morning. Thanks for taking my question. I guess, first, as you think of maybe the longer-term implications of this crisis, it seems like there is probably a heightened focus on energy security, deglobalization. So I am curious as to how you are thinking about the potential for how potential conventional energy and energy transition projects should trend as a result? And just on European outlook, how should we think about on-site volumes and potential earnings upside for the balance of the year? I think despite some of the feedstock and energy challenges, we have heard some more advantaged or flexible refining and pet chem assets running a bit harder sort of month-to-date. So how do you square that with the sort of outlook? What are the puts and takes in terms of mix there as well?

Thanks, Patrick. The natural reaction is exactly like you stated. Energy independence will be more accelerated. One can argue we have already been deglobalizing as a global economy and this may have accelerated some of that. But energy security continues to get a lot of spotlight when you see these supply-type shocks. Ultimately, it still comes down to economics and ability. While renewable energy will continue to be an area of high interest, it is still going to require government intervention. It will require some support, sponsorship, potentially some kind of subsidies as we have seen in certain geographies. Without that, it is hard to see it happen on its own at the desired pace. Time will tell. As far as other hydrocarbons, I absolutely believe you will see more of that. With other LNG and areas that are probably less of concern, you could see areas like oil sands of Canada become more interesting given the exploration risk is almost nonexistent and it is more of a logistics challenge to get it seaborne or piped to where it is needed. So some traditional areas will get another hard look given uncertainties in the hydrocarbon space. I do think you will get renewed interest in renewables, but again, without government support on everything from right of ways to land to permitting to bridging some of the economics, it will be hard to accelerate as desired. Regarding on-site volumes in Europe, we have some on-site that are running well—state champions or regional champions—but on the flip side, we have definitely seen some production shifting into assets we supply in other geographies, primarily in Americas. Part of it in Europe is uncertainty around energy policy and environmental policy. There is a lot of imports on base materials and finished goods. At this point, it is hard to see a significant change without a catalyst. Whether that catalyst is some type of restrictive import policy or more clarity on environmental policy, that could help. If the incentives and money find their way to the ground, that could help turn some of that around. So, overall, I think it needs a catalyst to drive a meaningful change.

And our next question comes from the line of Vincent Andrews with Morgan Stanley. Your line is open.

Thank you, good morning. Matt, circling back on the space side of the equation and the idea of getting to that 5% of sales. Do you have the capacity you need to get there, or should we be anticipating some type of capacity increase, maybe it is in different geographies? And would you do that in concert with customers, or would you do that on your own and make it more of a merchant business? How should we be thinking about it?

I think it is really in concert with customers. Several launch providers are doing a variety of different engine testing, static testing, gimbal testing, etc., and locations they want to do that could be different than where their pad is. Once they start migrating to more frequent launches, you want to be as close to the pad as possible. We are working with major launch providers and many up-and-coming providers to ensure we have the capacity and contractual relationships to support them and their ambition. Early stages will involve longer logistics hauls when demand is infrequent. As cadence improves, you start talking about new requirement contracts to support a more stable launch cycle with facilities closer to the pad, which reduces logistics costs and lowers propellant costs for customers. It will be a combination of sale of gas and sale of plant; we do both. It is similar to what you see in large on-site arrangements where sometimes we have sold plants and then sell gas and operate the system. There are specific areas where launch sites are concentrated given regulatory constraints on airspace, and that is where we have strong capacity today, and we are working to secure more contracts for future launch needs.

And our next question comes from the line of Duffy Fischer with Goldman Sachs. Your line is open.

Yes. Good morning, guys. By far, the most incoming questions I am getting on you guys is around helium. I know you talk about it being a small part of your business, but in the last supply shock we had with Russia, you did see pricing start to roll into some of the contractual business. How do you see this supply shock playing out differently than the Russian supply shock did? And how long would the strait have to be closed before you would start to see some of that pricing roll through your contractual business?

Sure, Duffy. Maybe I can level set with what we saw in Q1. Our helium business is anywhere from 85% to 90% contracted on our customer base, so that is a starting point. In Q1 year-over-year, our global helium sales were roughly flat. We saw a couple percent decline in pricing year-on-year and a couple percent increase in volumes. The Iranian conflict occurred about two thirds into the quarter, so you had about two months before and one month after based on the date. What we have seen is pricing has started to rise on average. I fully would anticipate that price will continue to go up and roll through over the year. Separately, our volumes are up, and we have already secured some long-term agreements and expect to secure more. That is our priority. When thinking about the helium situation, you have two distinct issues: operational outages affecting supply (for example, a supplier with damage) and geopolitical issues affecting exports. The latter could fix itself more quickly. Either way, we built guidance conservatively and did not take a directional view; any pricing or volume upside would be incremental to the guidance. We will pursue long-term agreements preferentially to spot sales.

And our next question comes from the line of David Begleiter with Deutsche Bank. Your line is open.

Matt, on electronics, I know you are expecting a couple of large contracts this year. Are they still in progress for 2026? And just on Woodside, there has been some confusion and some conflicting news stories. Can you level set us as to where you stand on that project and what is embedded in 2026 guidance?

Yeah, David. Consistent with the prepared remarks, we have a pretty high degree of confidence that we will be announcing some of these electronics contracts here shortly. Our sale-of-gas project backlog is a little over $7 billion right now, and I would expect these to be added such that the backlog by year-end could be higher and potentially reach an $8 billion handle depending on timing. On Woodside, as we have discussed previously, very large projects phase in. We originally expected to bring nitrogen on mid this year and then the ATR and the TNS for the sequestration back end later this year so they could make gray hydrogen as soon as possible and then convert to blue by year-end. On the ATR and TNS, that has slipped a few months into essentially Q1 of next year due to construction and subcontractor challenges in the US Gulf Coast. We still expect to start up the nitrogen portion this year; that would be a pro rata startup on the backlog this quarter. The ATR/TNS slip will push a portion of the hydrogen contribution into Q1 of next year. The team is focused on getting the project up as fast, safe, and reliably as possible.

And our next question comes from the line of Josh Spector with UBS. Your line is open.

Yes. Hi. Good morning. I was wondering if you could talk about the overall volume landscape across the two major areas here between Asia and then Europe and the Americas. Understanding your guidance is kind of no economic improvement, but given the geographic location of your assets relative to where there is disruption, it would seem like there is probably some volume benefits on the Americas and Europe side versus Asia. Is that right, or is there more disruption in Asia that makes it kind of even? Also, if you can comment just in North America specifically, are you seeing any kind of benefits from what we have seen from positive PMIs the last few months? Thanks. If I could also quickly clarify a prior question: when you have talked about commercial space getting to $1 billion, my understanding is that was more commercial space launch. You have another $600 million plus in commercial aero that is more of the coatings business. So your prior comments were more that maybe you get to that 5% in 2030 timeframe. Maybe your comments today about some of the disclosures suggest you can get there sooner than expected. Is that the right interpretation, or do I have it wrong?

Josh, to start, we are definitely seeing improvements in Americas. We are seeing some contraction in EMEA, including Continental Europe, and APAC for us is relatively neutral to slightly positive. In Americas we have benefits in the US Gulf Coast refining—high Nelson complexity refineries can use a variety of crude slates and manage spreads—so they are in a strong position. We have also seen Latin American upstream improvements given seaborne Brent pricing. In EMEA, chemicals was one of our weaker performing segments and we saw reduced volumes there. In APAC, it is a tale of two stories: some countries are negatively impacted but we do not supply many of those (we have no presence in Japan), while other areas like coal-to-chemicals in China are performing better and we have customers in that segment. The simple way to think about it: if your feedstock is seaborne, it tends to be a tougher scenario right now; if it is land-based—pipeline or rail—you are in a better position. On PMI and North America, our hard goods business is up double-digit percent and packaged gases are up mid-single digit. Strength is in construction, energy, and metal fabrication; hard goods growth is split between consumables and equipment. So yes, we are seeing positive benefits from US PMI prints. On space versus aviation: aviation is a different business (jet engines). The numbers we discuss on commercial space exclude aviation. We feel good about our propellant launch infrastructure capabilities and opportunities across xenon, krypton, argon for electric propulsion, and other needs; overall, we feel confident about growing the space business, and timing will depend on launch cadence.

And our next question comes from the line of Matthew DeYoe with Bank of America. Your line is open.

Morning. European energy prices clearly up from pre-conflict levels, and I know it gets passed through on on-site. But how are you managing market, merchant and package pricing? Is this going to be something where you go out with structural price or you surcharge? Is it not enough inflation yet to be pushing price more in Europe than normal? And if you are, what should we think about as the year-over-year price traction for the EMEA market come April?

Matt, the way to think about it is: is it a sustained increase in energy, or is it volatile up and down? Right now, it has been volatile. When it is volatile up and down, we use surcharges that go up and down. That is what we are seeing. When you see a sustained long-range increase, it eventually becomes price and starts to work its way into overall inflation metrics and then into contractual price adjustments. For example, early 2022 started as surcharges and then became price as it sustained. Right now, it is surcharges. If it stays sustained and shows up in major inflation metrics, then it would find its way into price. Time will tell how this plays out.

And our next question comes from the line of Michael Sison with Wells Fargo. Your line is open.

Hey, guys. Good morning. This is going to be the third or fourth year of no economic improvement for industrial demand. I cannot imagine the Iran conflict is going to help move that in the right direction. So what do you think needs to happen to get industrial demand globally to improve over time? And a quick follow-up for chemicals and energy: sales were up 3% in the first quarter on Slide 3. What do you think the run rate of that is heading into Q2? I would imagine March was much stronger than the other two months, given the conflict. Where is that segment moving into this quarter?

Mike, some level of stability always helps. Industrial demand tends to be large-ticket, long-horizon projects that require financing and clear returns, and often some government support for infrastructure projects. Right now, the macro has been volatile and that has weighed on industrial capex decisions in some regions. The service economy and resilient consumer spending have propped up GDP, and if that changes it could ironically lead to more industrial stimulus. Catalysts could include import restriction policies, clarity and deployment of industrial-oriented incentives like the IAA reaching the ground, or other policy actions that inject capital that is industrially intensive. Americas has shown strength; protectionist policies have supported local metals production. I think the Americas trajectory should remain positive and help drive industrial demand. Regarding chemicals and energy, we are seeing better performance in Americas but weaker in EMEA. Q1 had some normal weather-related impacts and seasonality; Q2 could benefit as you get past those. The lowest-cost suppliers tend to win during supply shocks, and many assets in Americas are advantaged and competitive, so we feel good about the near-term outlook for Americas in that segment.

And our next question comes from the line of Jeff Zekauskas with JPMorgan. Your line is open.

Thanks very much. In your commentary on the Americas for the first quarter, you talked about weakness in chemicals and energy end markets, and I assume that will strengthen. As a base case, should volume of 2% year-over-year move up to, say, three or more in second quarter? And are there pricing opportunities because energy and chemicals are better? Second, your other income in the quarter was $63 million versus $26 million a year ago. What happened there? And was the currency benefit in the quarter about 3% on EPS or maybe $80 million pretax?

Jim, with chemicals and energy, yes: better in Americas and weaker in EMEA as mentioned. Much of this is on-site, so pricing follows contractual annual escalations. We are seeing more merchant activity in upstream oil in Latin America, which offers volume opportunities. Q1 had some weather effects that can dampen numbers; Q2 can recover. Our FX impact: take the sales variance—5% in this case—and that impact flows through sales, SG&A, operating income, and EPS due to our localized business structure; the 5% is the translation effect. On other income, historically it has ranged from $100 million to $200 million; for the full year I expect us to be on the lower end of that range. This quarter included a cash gain on a sale, which drove the $63 million. I do not expect similar levels each quarter, hence full year will be toward the lower end of the recent range.

And our next question comes from the line of John Roberts with Mizuho. Your line is open.

Thank you. Could I ask if Sanjeev is not available today? Or is this the new format for the earnings calls? Also, I thought shortages from the Persian Gulf conflict were severe such that Europe would have to run at higher rates even though it is higher cost—so it sounds like you are still expecting it to be soft in EMEA.

John, in the past we have alternated which executives are on calls. Sanjeev is not on today but will be on a future call. On guidance, our midpoint assumes no economic improvement, which is the baseline. If you take that forward, it implies Q1 trends continue. On EMEA on-site chemicals and energy, we saw a year-over-year decline in Q1 due to operating asset effects, so the current expectation is soft near term unless catalysts change the outlook.

And our next question comes from the line of Kevin McCarthy with Vertical Research Partners. Your line is open.

Yes. Thank you, and good morning. Matt, looking at your Americas number of plus two, I think that is the best you have posted since 2022. Are we now on the cyclical upswing, or is there too much war-related uncertainty and potential for an oil shock to start affecting the Americas? Also, on helium, how much incremental volume opportunity do you think may be available via long-term contracts you are pursuing? Could you speak to your flexibility on sourcing and how much of an inventory cushion you may be able to take advantage of?

Kevin, I remain guarded. I think of our business as an engine with three cylinders: Americas, APAC, and EMEA. Americas is running strong, but EMEA is not, so for a true global recovery I'd like to see all three trend the same way. We turned positive on base volumes, though not large enough to round materially yet. The Americas strength includes packaged gases, hard goods, and competitiveness in the US Gulf Coast. On helium, we feel good about sourcing and capability to meet current customer contractual commitments and to have excess molecules to support future new customers. We will be selective and focus on long-term agreements with quality counterparties. We have already signed some new long-term commitments and expect more over the coming quarters.

And our next question comes from the line of Laurence Alexander with Jefferies. Your line is open.

Good morning. Two quick ones. First, are you seeing in any regions significant delays in projects where CapEx decisions are getting delayed even if production is stable? Second, if customers have to shut down capacity because of outages or feedstock supply issues, do your contracts give them adjustment protection, or do they still pay the same rate or face full exit penalties?

On delays, our existing backlog projects are moving forward as expected with no concerns. As for new project FIDs, it is end-market and geography-specific: electronics and commercial space continue to push forward; traditional industrial markets vary by geography—US is more interested in investments, India is growing, other regions less so. On contracts, it comes down to force majeure language, which we focus on heavily. Economic conditions are not a force majeure. We have robust, well-tested contract language over decades. We will work with customers when necessary, but generally we are protected against economic force majeure. Each situation will be a contract-by-contract review when needed.

And our final question comes from the line of Arun Viswanathan with RBC Capital Markets. Your line is open.

Great. Thanks for taking my question. Congrats on the results. Just on the earnings algorithm: if I heard you correctly, FX was maybe a 5% contribution to Q1 of that 10% you saw. You are guiding to 7% to 9% for the year. So do you expect FX would continue to play that contribution for the year's EPS? And if you do fall short of your 10% goal, at what point would you consider other actions like increased buybacks or management actions to get there?

Arun, for the algorithm, we assume a 1% FX tailwind in the guidance ranges and base our FX assumptions on the first-of-month forwards. Spots have strengthened since that point, which would provide upside if sustained. On management actions and capital allocation, our target long-term is to get back to 8% to 12% EPS growth excluding macro. We had a drag from helium for a period and roughly a percentage drag from timing in the engineering business related to internal capitalized projects versus external projects. Working through those factors should help get back into the 8% to 12% range. We will take incremental management actions if needed to bridge to that objective; our capital allocation remains disciplined.

And that concludes our question-and-answer session. I would now like to turn the call back over to Mr. Juan Pelaez for any additional or closing remarks.

Abby, once again, nice job. Thank you, everyone, for participating in today's call. If you have any further questions, please feel free to reach out to me directly.

Have a great day.

And, ladies and gentlemen, that concludes today's call, and we thank you for your participation. You may now disconnect.