8-K
LINDE PLC (LIN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported):
February 5, 2021
Linde
plc
(Exact name of registrant as specified in its charter)
| Ireland | 001-38730 | 98-1448883 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of incorporation) | (Commission<br><br><br>File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
The Priestley
Centre
10 Priestley
Road
Surrey
Research Park
Guildford,
Surrey GU2 7XY
United
Kingdom
(Address of principal executive offices) (Zip Code)
+44 1483
242200
(Registrant’s telephone numbers, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title<br>of each class | Trading<br>symbol(s) | Name of<br>each exchange on which registered |
|---|---|---|
| Ordinary shares (€0.001 nominal value per<br>share) | LIN | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02 Results of Operations and Financial
Condition
On February 5, 2021, Linde plc issued a press release setting forth Linde plc’s results of operations for the quarter and year ended December 31, 2020. A copy of Linde plc’s press release is furnished herewith as Exhibit 99.1 and is hereby incorporated by reference in this Item 2.02.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibit is furnished herewith pursuant to Item 2.02 hereof:
| Exhibit No. | Description |
|---|---|
| 99.1 | Press<br>Release dated February 5, 2021 |
| 104 | Cover<br>Page Interactive Data File (embedded within the Inline XBRL<br>document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LINDE PLC | |
|---|---|
| By: | /s/<br>Kelcey E. Hoyt |
| Name: | Kelcey<br>E. Hoyt |
| Title: | Principal<br>Accounting Officer |
Date: February 5, 2021
lin_ex991
Exhibit 99.1
Press release
Linde Reports Full-Year and Fourth-Quarter 2020 Results
Full-Year Highlights
➢ Sales $27.2 billion, down 3%
➢ Operating profit $3.3 billion, adjusted operating profit $5.8 billion, up 10%
➢ Operating profit margin 12.2%; adjusted operating profit margin 21.3%, up 260 basis points versus prior year
➢ EPS $4.70; adjusted EPS $8.23, up 12%
➢ Strong operating cash flow $7.4 billion, up 21%
➢ Returned $4.4 billion to shareholders through dividends and share repurchases
➢ Reduced GHG emissions intensity by 16% versus 2018; target of 35% reduction by 2028
Fourth-Quarter Highlights
➢ Sales $7.3 billion, up 3% YoY
➢ Operating profit $1.0 billion, adjusted operating profit $1.6 billion, up 20%
➢ Operating profit margin 14.2%; adjusted operating profit margin 22.2%, up 320 basis points
➢ EPS $1.45; adjusted EPS $2.30, up 22%
➢ Strong operating cash flow $2.4 billion, up 12%
2021
➢ First-quarter 2021 adjusted EPS guidance $2.20 - $2.25, represents 16% - 19% growth
➢ Full-year 2021 adjusted EPS guidance $9.10 - $9.30, represents 11% - 13% growth
➢ Increased annual dividend 10% and announced new $5 billion share repurchase program
Guildford, UK, February 5, 2021 – Linde plc (NYSE: LIN; FWB: LIN) today reported fourth-quarter 2020 income from continuing operations of $769 million and diluted earnings per share of $1.45. Excluding Linde AG purchase accounting impacts and other charges, adjusted income from continuing operations was $1,217 million, up 19% versus prior year and 7% sequentially. Adjusted earnings per share was $2.30, 22% above prior year and 7% higher sequentially.
Linde’s sales for the fourth quarter were $7,272 million, 3% above prior year and 6% sequentially. Compared to prior year, underlying sales increased 3% from 2% price attainment and 1% higher volumes, largely due to project start-ups. Sequentially, underlying sales increased 2%, mainly driven by higher volumes across all segments.
Fourth-quarter operating profit was $1,029 million. Adjusted operating profit of $1,613 million was up 20% versus prior year led by higher price and continued productivity initiatives across all segments. Adjusted operating margin of 22.2% expanded 320 basis points versus prior year and 10 basis points sequentially.
Fourth-quarter operating cash flow of $2,434 million increased 12% versus prior year and 29% sequentially. After capital expenditures of $1,027 million, free cash flow was $1,407 million, up 21% versus prior year. During the quarter, the company returned $926 million to shareholders through dividends and stock repurchases, net of issuance.
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Press release
For full-year 2020, sales were $27.2 billion, 3% below 2019. Price improved 2% as all geographic segments attained price increases. Volume decreased 2% as growth from project start-ups was more than offset by the global macroeconomic slowdown as a result of the COVID-19 pandemic. Operating profit was $3.3 billion and adjusted operating profit was $5.8 billion, 21.3% of sales, and increased 10% versus 2019. Diluted earnings per share were $4.70 and adjusted diluted earnings per share were $8.23, up 12% versus prior year.
In 2020, Linde generated strong operating cash flow of $7.4 billion, up 21% versus prior year. The company invested $3.4 billion in capital expenditures and paid dividends of $2.0 billion. In addition, Linde repurchased $2.4 billion of stock, net of issuances.
Commenting on the financial results and business outlook, Chief Executive Officer Steve Angel said, “I want to personally thank all our dedicated Linde employees for ensuring a safe and reliable supply of critical gases and services to our customers and patients worldwide. The company responded exceptionally well in a challenging year dominated by the COVID-19 pandemic and I couldn’t be more proud of what we accomplished and continue to do for our shareholders and society at large. Despite all the headwinds we faced throughout the year, Linde grew EPS 12%, operating cash flow 21%, and increased ROC to 13.4% – all while improving our sustainability performance.”
Angel continued, “Looking ahead, the near-term economic outlook remains uncertain. However, I have confidence in our ability to grow EPS double-digit percent irrespective of the macro environment while also leveraging any economic recovery. In addition, I expect to capture more than our fair share of quality growth opportunities in secular markets like healthcare, electronics and clean energy.”
For the full year, the company expects adjusted diluted earnings per share to be in the range of $9.10 to $9.30, up 11% to 13% versus prior year and 10% to 12% when excluding estimated currency tailwinds. Full-year capital expenditures are expected to range between $3.0 billion to $3.5 billion to support operating and growth requirements including the $3.6 billion contractual sale of gas project backlog.
Fourth-Quarter 2020 Results by Segment
Americas sales of $2,724 million were flat versus prior-year quarter, but increased 3% sequentially. Compared with fourth quarter 2019, underlying sales increased 3% driven by 2% higher pricing and 1% higher volume, primarily in the healthcare end market. Sequentially, price was stable and volumes grew 2%, led by higher demand in metals and manufacturing end markets. Operating profit of $748 million was 27.5% of sales, up 280 basis points versus prior year.
APAC (Asia Pacific) sales of $1,572 million were 12% above prior year and up 6% sequentially. Compared to prior year, underlying sales grew 8% driven by 1% price attainment and 7% volume growth, primarily in the electronics end market and project start-ups. Sequentially, price was steady and volumes grew 3% led by higher demand in the electronics and metals end markets. Operating profit of $365 million was 23.2% of sales, up 190 basis points versus prior year.
EMEA (Europe, Middle East & Africa) sales of $1,746 million were up 6% versus prior year and grew 8% sequentially. Compared with fourth quarter 2019, underlying sales grew 4%, primarily led by 3% higher pricing. Sequentially, underlying sales grew 5% driven by 2% higher pricing and 3% volume growth, mainly in the healthcare end market. Operating profit of $437 million was 25.0% of sales, up 370 basis points versus prior year.
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Press release
Linde Engineering sales were $755 million, 2% below prior year, and operating profit was $100 million or 13.2% of sales. Order intake for the quarter was $355 million and third-party sale of equipment backlog was $4.7 billion.
Earnings Call
A teleconference on Linde’s fourth-quarter 2020 results is being held today at 10:00 am EST.
| Live conference call | US<br>Toll-Free Dial-In Number: 1 855 758 5442<br><br><br>Germany<br>Toll-Free Dial-In Number: 0800 181 5287<br><br><br>UK<br>Toll-Free Dial-In Number: 0800 028 8438<br><br><br>Access<br>code: 7237505 |
|---|---|
| Live webcast (listen-only) | https://investors.linde.com/events-presentations<br><br><br>Short<br>URL: https://t1p.de/i2ho |
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 2020 sales of $27 billion (€24 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
Adjusted amounts, free cash flow and return on capital are non-GAAP measures. 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.
*Note: We are providing adjusted earnings per share (“EPS”) guidance for 2021. 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.
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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 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 Item 1A. of Linde plc's Form 10-Q for the period ending March 31, 2020 filed with the SEC on May 7, 2020, which should be reviewed carefully. Please consider Linde plc’s forward-looking statements in light of those risks.
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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 10 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 December 31 | ||||||||
| Reported GAAP<br>Amounts | $7,272 | $7,080 | $1,029 | $655 | $769 | $507 | $1.45 | $0.94 |
| Cost reduction<br>program and other charges (a) | - | - | 78 | 212 | 54 | 159 | 0.10 | 0.29 |
| Pension<br>settlement charges (b) | - | - | - | - | - | 5 | - | 0.01 |
| Merger-related<br>divestitures (c) | - | (3) | - | (1) | - | (1) | - | - |
| Purchase<br>accounting impacts - Linde AG (d) | - | - | 506 | 481 | 382 | 354 | 0.73 | 0.65 |
| Bond<br>Redemption (e) | - | - | - | - | 12 | - | 0.02 | - |
| Total<br>adjustments | - | (3) | 584 | 692 | 448 | 517 | 0.85 | 0.95 |
| Adjusted<br>amounts | $7,272 | $7,077 | $1,613 | $1,347 | $1,217 | $1,024 | $2.30 | $1.89 |
| Sales | Operating Profit | Income from Continuing Operations | Diluted EPS from Continuing Operations | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Year to Date December 31 | ||||||||
| Reported GAAP<br>Amounts | $27,243 | $28,228 | $3,322 | $2,933 | $2,497 | $2,183 | $4.70 | $4.00 |
| Cost reduction<br>program and other charges (a) | - | - | 506 | 567 | 372 | 449 | 0.70 | 0.83 |
| Pension<br>settlement charges (b) | - | - | - | - | 5 | 81 | 0.01 | 0.16 |
| Merger-related<br>divestitures (c) | - | (65) | - | (16) | - | (12) | - | (0.03) |
| Purchase<br>accounting impacts - Linde AG (d) | - | - | 1,969 | 1,952 | 1,485 | 1,410 | 2.80 | 2.59 |
| Bond<br>Redemption (e) | - | - | - | - | 12 | - | 0.02 | - |
| Gain on sale<br>of businesses (f) | - | - | - | (164) | - | (108) | - | (0.21) |
| Total<br>adjustments | - | (65) | 2,475 | 2,339 | 1,874 | 1,820 | 3.53 | 3.34 |
| Adjusted<br>amounts | $27,243 | $28,163 | $5,797 | $5,272 | $4,371 | $4,003 | $8.23 | $7.34 |
(a) To adjust for cost reduction program and other charges; 2020 includes severance of $19 million and $300 million for the quarter and year-to-date periods, other cost reduction charges of $44 million and $93 million for the quarter and year-to-date periods, and other charges of $15 million and $113 million for the quarter and year-to-date periods.
(b) To adjust for pension settlement charges. 2019 charges primarily related 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.
(e) To adjust for $16 million charge to interest expense in the 2020 fourth quarter related to a bond redemption.
(f) To adjust for gains recognized related to the sale of businesses related to the merger.
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| LINDE PLC AND SUBSIDIARIES | ||||
|---|---|---|---|---|
| CONSOLIDATED STATEMENT OF INCOME | ||||
| (Millions of dollars, except per share data) | ||||
| (UNAUDITED) | ||||
| Quarter Ended | Year To Date | |||
| --- | --- | --- | --- | --- |
| December 31, | December 31, | |||
| 2020 | 2019 | 2020 | 2019 | |
| SALES | $7,272 | $7,080 | $27,243 | $28,228 |
| Cost of<br>sales | 4,086 | 4,187 | 15,383 | 16,644 |
| Selling,<br>general and administrative | 802 | 844 | 3,193 | 3,457 |
| Depreciation<br>and amortization | 1,192 | 1,162 | 4,626 | 4,675 |
| Research and<br>development | 38 | 49 | 152 | 184 |
| Cost reduction<br>programs and other charges | 78 | 212 | 506 | 567 |
| Net gain on<br>sale of business | - | - | - | 164 |
| Other income<br>(expense) - net | (47) | 29 | (61) | 68 |
| OPERATING PROFIT | 1,029 | 655 | 3,322 | 2,933 |
| Interest<br>expense - net | 35 | 8 | 115 | 38 |
| Net pension<br>and OPEB cost (benefit), excluding service cost | (46) | (25) | (177) | (32) |
| INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND EQUITY<br>INVESTMENTS | 1,040 | 672 | 3,384 | 2,927 |
| Income<br>taxes | 253 | 162 | 847 | 769 |
| INCOME FROM CONTINUING OPERATIONS BEFORE EQUITY<br>INVESTMENTS | 787 | 510 | 2,537 | 2,158 |
| Income from<br>equity investments | 16 | 24 | 85 | 114 |
| INCOME FROM CONTINUING OPERATIONS (INCLUDING NONCONTROLLING<br>INTERESTS) | 803 | 534 | 2,622 | 2,272 |
| Add: income<br>from discontinued operations, net of tax | 1 | 4 | 4 | 109 |
| INCOME (INCLUDING NONCONTROLLING INTERESTS) | 804 | 538 | 2,626 | 2,381 |
| Less:<br>noncontrolling interests from continuing<br>operations | (34) | (27) | (125) | (89) |
| Less:<br>noncontrolling interests from discontinued<br>operations | - | - | - | (7) |
| NET INCOME - LINDE PLC | $770 | $511 | $2,501 | $2,285 |
| NET INCOME - LINDE PLC | ||||
| Income from<br>continuing operations | $769 | $507 | $2,497 | $2,183 |
| Income from<br>discontinued operations | $1 | $4 | $4 | $102 |
| PER SHARE DATA - LINDE PLC SHAREHOLDERS | ||||
| Basic earnings<br>per share from continuing operations | $1.47 | $0.94 | $4.74 | $4.03 |
| Basic earnings<br>per share from discontinued operations | - | 0.01 | 0.01 | 0.19 |
| Basic earnings<br>per share | $1.47 | $0.95 | $4.75 | $4.22 |
| Diluted<br>earnings per share from continuing operations | $1.45 | $0.94 | $4.70 | $4.00 |
| Diluted<br>earnings per share from discontinued operations | - | 0.01 | 0.01 | 0.19 |
| Diluted<br>earnings per share | $1.45 | $0.95 | $4.71 | $4.19 |
| Cash<br>dividends | $0.963 | $0.875 | $3.85 | $3.50 |
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||
| Basic shares<br>outstanding (000's) | 524,442 | 536,768 | 526,736 | 541,094 |
| Diluted shares<br>outstanding (000's) | 529,038 | 540,919 | 531,157 | 545,170 |
Note: See page 10 for a reconciliation to adjusted amounts which are Non-GAAP.
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LINDE PLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Millions of dollars)
(UNAUDITED)
| December 31, | December 31, | |
|---|---|---|
| 2020 | 2019 | |
| ASSETS | ||
| Cash and cash<br>equivalents | $3,754 | $2,700 |
| Accounts<br>receivable - net | 4,167 | 4,322 |
| Contract<br>assets | 162 | 368 |
| Inventories | 1,729 | 1,697 |
| Prepaid and<br>other current assets | 1,112 | 1,265 |
| TOTAL CURRENT ASSETS | 10,924 | 10,352 |
| Property,<br>plant and equipment - net | 28,711 | 29,064 |
| Goodwill | 28,201 | 27,019 |
| Other<br>intangibles - net | 16,184 | 16,137 |
| Other<br>long-term assets | 4,209 | 4,040 |
| TOTAL ASSETS | $88,229 | $86,612 |
| LIABILITIES AND EQUITY | ||
| Accounts<br>payable | $3,095 | $3,266 |
| Short-term<br>debt | 3,251 | 1,732 |
| Current<br>portion of long-term debt | 751 | 1,531 |
| Contract<br>liabilities | 1,769 | 1,758 |
| Other current<br>liabilities | 4,874 | 3,873 |
| TOTAL CURRENT LIABILITIES | 13,740 | 12,160 |
| Long-term<br>debt | 12,152 | 10,693 |
| Other<br>long-term liabilities | 12,755 | 12,124 |
| TOTAL LIABILITIES | 38,647 | 34,977 |
| REDEEMABLE NONCONTROLLING INTERESTS | 13 | 113 |
| LINDE PLC SHAREHOLDERS' EQUITY: | ||
| Common<br>stock | 1 | 1 |
| Additional<br>paid-in capital | 40,202 | 40,201 |
| Retained<br>earnings | 17,178 | 16,842 |
| Accumulated<br>other comprehensive income (loss) | (4,690) | (4,814) |
| Less: Treasury<br>stock, at cost | (5,374) | (3,156) |
| Total Linde<br>plc shareholders' equity | 47,317 | 49,074 |
| Noncontrolling<br>interests | 2,252 | 2,448 |
| TOTAL EQUITY | 49,569 | 51,522 |
| TOTAL LIABILITIES AND EQUITY | $88,229 | $86,612 |
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| LINDE PLC AND SUBSIDIARIES | ||||
|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||
| (Millions of dollars) | ||||
| (UNAUDITED) | ||||
| Quarter Ended | Year to Date | |||
| --- | --- | --- | --- | --- |
| December 31, | December 31, | |||
| 2020 | 2019 | 2020 | 2019 | |
| OPERATIONS | ||||
| Net income -<br>Linde plc | $770 | $511 | $2,501 | $2,285 |
| Less: income<br>from discontinued operations, net of tax and noncontrolling<br>interests | (1) | (4) | (4) | (102) |
| Add:<br>noncontrolling interests | 34 | 27 | 125 | 89 |
| Net income<br>(including noncontrolling interests) | 803 | 534 | 2,622 | 2,272 |
| Adjustments to<br>reconcile net income to net cash provided by operating<br>activities: | ||||
| Cost reduction<br>programs and other charges, net of payments (a) | 18 | 120 | 258 | (236) |
| Amortization<br>of merger-related inventory step up | - | - | - | 12 |
| Net gain on<br>sale of business | - | - | - | (108) |
| Depreciation<br>and amortization | 1,192 | 1,162 | 4,626 | 4,675 |
| Accounts<br>receivable | 95 | 110 | 19 | 80 |
| Contract<br>assets and liabilities, net | 1 | 122 | 90 | 87 |
| Inventory | 119 | (20) | 18 | (81) |
| Payables and<br>accruals | 121 | 237 | 109 | (174) |
| Pension<br>contributions | (15) | (25) | (91) | (94) |
| Deferred<br>income taxes and other | 100 | (66) | (222) | (314) |
| Net cash<br>provided by operating activities | 2,434 | 2,174 | 7,429 | 6,119 |
| INVESTING | ||||
| Capital<br>expenditures | (1,027) | (1,015) | (3,400) | (3,682) |
| Acquisitions,<br>net of cash acquired | (27) | (64) | (68) | (225) |
| Divestitures<br>and asset sales | 47 | 136 | 482 | 5,096 |
| Net cash<br>provided by (used for) investing activities | (1,007) | (943) | (2,986) | 1,189 |
| FINANCING | ||||
| Debt increase<br>(decrease) - net | (2,022) | 484 | 1,313 | (1,260) |
| Issuances of<br>ordinary shares | 6 | 12 | 47 | 72 |
| Purchases of<br>ordinary shares | (427) | (724) | (2,457) | (2,658) |
| Cash dividends<br>- Linde plc shareholders | (505) | (469) | (2,028) | (1,891) |
| Noncontrolling<br>interest transactions and other (b) | (19) | (3) | (220) | (3,260) |
| Net cash<br>provided by (used for) financing activities | (2,967) | (700) | (3,345) | (8,997) |
| DISCONTINUED OPERATIONS | ||||
| Cash provided<br>by operating activities | - | 2 | - | 69 |
| Cash provided<br>by investing activities | - | (1) | - | (60) |
| Cash provided<br>by financing activities | - | - | - | 5 |
| Net cash<br>provided by (used for) discontinued operations | - | 1 | - | 14 |
| Effect of<br>exchange rate changes on cash and cash<br>equivalents | 95 | 49 | (44) | (77) |
| Change in cash<br>and cash equivalents | (1,445) | 581 | 1,054 | (1,752) |
| Cash and cash<br>equivalents, beginning-of-period | 5,199 | 2,120 | 2,700 | 4,466 |
| Cash and cash<br>equivalents, including discontinued operations | 3,754 | 2,701 | 3,754 | 2,714 |
| Cash and cash<br>equivalents of discontinued operations | - | (1) | - | (14) |
| Cash and cash<br>equivalents, end-of-period | $3,754 | $2,700 | $3,754 | $2,700 |
(a) Cost reduction programs and other charges of $78 million and $212 million for the quarters ended December 31, 2020 and 2019 were partially offset by related cash outflows of $60 million and $92 million, respectively. Cost reduction programs and other charges of $506 million and $567 million for the years ended December 31, 2020 and 2019 were offset by related cash outflows of $248 million and $803 million, respectively.
(b) Noncontrolling interest transactions and other for the 2019 year to date period includes approximately $3.2 billion related to the cash merger squeeze-out of the 8% Linde AG shares which were not tendered in the exchange offer.
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Press release
LINDE PLC AND SUBSIDIARIES
SEGMENT INFORMATION
(Millions of dollars)
(UNAUDITED)
| Quarter Ended December 31, | Year to Date December 31, | |||
|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |
| SALES | ||||
| Americas | $2,724 | $2,737 | $10,459 | $10,989 |
| EMEA | 1,746 | 1,654 | 6,449 | 6,643 |
| APAC | 1,572 | 1,403 | 5,687 | 5,779 |
| Engineering | 755 | 770 | 2,851 | 2,799 |
| Other | 475 | 513 | 1,797 | 1,953 |
| Segment<br>sales | $7,272 | $7,077 | $27,243 | $28,163 |
| Merger-related<br>divestitures (a) | - | 3 | - | 65 |
| Total<br>sales | $7,272 | $7,080 | $27,243 | $28,228 |
| OPERATING PROFIT | ||||
| Americas | $748 | $676 | $2,773 | $2,577 |
| EMEA | 437 | 353 | 1,465 | 1,367 |
| APAC | 365 | 299 | 1,277 | 1,184 |
| Engineering | 100 | 93 | 435 | 390 |
| Other | (37) | (74) | (153) | (246) |
| Segment<br>operating profit | $1,613 | $1,347 | $5,797 | $5,272 |
| Cost reduction<br>programs and other charges | (78) | (212) | (506) | (567) |
| Merger-related<br>divestitures (a) | - | 1 | - | 16 |
| Net gain on<br>sale of business (b) | - | - | - | 164 |
| Purchase<br>accounting impacts - Linde AG | (506) | (481) | (1,969) | (1,952) |
| Total<br>operating profit | $1,029 | $655 | $3,322 | $2,933 |
(a) To adjust for the results of Praxair's merger-related divestitures.
(b) To adjust for gains recognized related to the sale of businesses related to the merger.
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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 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Year to Date<br><br><br>December 31, | Q4 | Q3 | Q2 | Q1 | Year to Date<br><br><br>December 31, | Q4 | Q3 | Q2 | Q1 | |
| Adjusted Sales | ||||||||||
| Reported<br>Sales | $27,243 | $7,272 | $6,855 | $6,377 | $6,739 | $28,228 | $7,080 | $7,000 | $7,204 | $6,944 |
| Less:<br>Merger-related divestitures (d) | - | - | - | - | - | (65) | (3) | (7) | (25) | (30) |
| Adjusted<br>Sales | $27,243 | $7,272 | $6,855 | $6,377 | $6,739 | $28,163 | $7,077 | $6,993 | $7,179 | $6,914 |
| Adjusted Operating Profit and Operating Margin | ||||||||||
| Reported<br>operating profit | $3,322 | $1,029 | $969 | $591 | $733 | $2,933 | $655 | $1,000 | $669 | $609 |
| Less:<br>Merger-related divestitures (d) | - | - | - | - | - | (16) | (1) | (2) | (6) | (7) |
| Add: Cost<br>reduction programs and other charges | 506 | 78 | 48 | 249 | 131 | 567 | 212 | 125 | 141 | 89 |
| Less: Net gain<br>on sale of businesses | - | - | - | - | - | (164) | - | (164) | - | - |
| Add: Purchase<br>accounting impacts - Linde AG (c) | 1,969 | 506 | 498 | 477 | 488 | 1,952 | 481 | 425 | 515 | 531 |
| Total<br>adjustments | 2,475 | 584 | 546 | 726 | 619 | 2,339 | 692 | 384 | 650 | 613 |
| Adjusted<br>operating profit | $5,797 | $1,613 | $1,515 | $1,317 | $1,352 | $5,272 | $1,347 | $1,384 | $1,319 | $1,222 |
| Reported<br>percentage change | 13% | 57% | (3)% | (12)% | 20% | |||||
| Adjusted<br>percentage change | 10% | 20% | 9% | -% | 11% | |||||
| Reported<br>sales | $27,243 | $7,272 | $6,855 | $6,377 | $6,739 | $28,228 | $7,080 | $7,000 | $7,204 | $6,944 |
| Adjusted<br>sales | $27,243 | $7,272 | $6,855 | $6,377 | $6,739 | $28,163 | $7,077 | $6,993 | $7,179 | $6,914 |
| Reported<br>operating margin | 12.2% | 14.2% | 14.1% | 9.3% | 10.9% | 10.4% | 9.3% | 14.3% | 9.3% | 8.8% |
| Adjusted<br>operating margin | 21.3% | 22.2% | 22.1% | 20.7% | 20.1% | 18.7% | 19.0% | 19.8% | 18.4% | 17.7% |
| Adjusted Depreciation and amortization | ||||||||||
| Reported<br>depreciation and amortization | $4,626 | $1,192 | $1,168 | $1,124 | $1,142 | $4,675 | $1,162 | $1,095 | $1,195 | $1,223 |
| Less: Purchase<br>accounting impacts - Linde AG (c) | (1,920) | (489) | (487) | (468) | (476) | (1,940) | (481) | (423) | (515) | (521) |
| Adjusted<br>depreciation and amortization | $2,706 | $703 | $681 | $656 | $666 | $2,735 | $681 | $672 | $680 | $702 |
| Adjusted Other Income (Expense) - net | ||||||||||
| Reported Other<br>Income (Expense) - net | $(61) | $(47) | $(29) | $- | $15 | $68 | $29 | $11 | $10 | $18 |
| Add: Purchase<br>accounting impacts - Linde AG (c) | (49) | (17) | (11) | (9) | (12) | - | - | - | - | - |
| Adjusted Other<br>Income (Expense) - net | $(12) | $(30) | $(18) | $9 | $27 | $68 | $29 | $11 | $10 | $18 |
| Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service<br>Cost | ||||||||||
| Reported net<br>pension and OPEB cost (benefit), excluding service<br>cost | $(177) | $(46) | $(41) | $(45) | $(45) | $(32) | $(25) | $2 | $(24) | $15 |
| Add: Pension<br>settlement charges | (6) | - | (6) | - | - | (107) | (6) | (40) | (10) | (51) |
| Adjusted Net<br>Pension and OPEB cost (benefit), excluding service<br>costs | $(183) | $(46) | $(47) | $(45) | $(45) | $(139) | $(31) | $(38) | $(34) | $(36) |
| Adjusted Interest Expense - Net | ||||||||||
| Reported<br>interest expense - net | $115 | $35 | $38 | $18 | $24 | $38 | $8 | $(3) | $10 | $23 |
| Add: Purchase<br>accounting impacts - Linde AG (c) | 85 | 18 | 23 | 22 | 22 | 96 | 22 | 22 | 25 | 27 |
| Less: Bond<br>Redemption | (16) | (16) | - | - | - | - | - | - | - | - |
| Adjusted<br>interest expense - net | $184 | $37 | $61 | $40 | $46 | $134 | $30 | $19 | $35 | $50 |
| Adjusted Income Taxes (a) | ||||||||||
| Reported<br>income taxes | $847 | $253 | $265 | $164 | $165 | $769 | $162 | $298 | $169 | $140 |
| Add: Purchase<br>accounting impacts - Linde AG (c) | 399 | 107 | 75 | 95 | 122 | 450 | 105 | 99 | 119 | 127 |
| Add: Pension<br>settlement charges | 1 | - | 1 | - | - | 26 | 1 | 10 | 2 | 13 |
| Add: Cost<br>reduction programs and other charges | 130 | 20 | 12 | 62 | 36 | 83 | 53 | (2) | 26 | 6 |
| Less:<br>Merger-related divestitures (d) | - | - | - | - | - | (5) | - | (1) | (2) | (2) |
| Less: Net gain<br>on sale of businesses | - | - | - | - | - | (56) | - | (56) | - | - |
| Less: Bond<br>Redemption | 4 | 4 | - | - | - | - | - | - | - | - |
| Total<br>adjustments | 534 | 131 | 88 | 157 | 158 | 498 | 159 | 50 | 145 | 144 |
| Adjusted<br>income taxes | $1,381 | $384 | $353 | $321 | $323 | $1,267 | $321 | $348 | $314 | $284 |
| Adjusted Effective Tax Rate (a) | ||||||||||
| Reported<br>income before income taxes and equity<br>investments | $3,384 | $1,040 | $972 | $618 | $754 | $2,927 | $672 | $1,001 | $683 | $571 |
| Less:<br>Merger-related divestitures (d) | - | - | - | - | - | (16) | (1) | (2) | (6) | (7) |
| Add: Pension<br>settlement charge | 6 | - | 6 | - | - | 107 | 6 | 40 | 10 | 51 |
| Add: Purchase<br>accounting impacts - Linde AG (c) | 1,884 | 488 | 475 | 455 | 466 | 1,856 | 459 | 403 | 490 | 504 |
| Add: Cost<br>reduction programs and other charges | 506 | 78 | 48 | 249 | 131 | 567 | 212 | 125 | 141 | 89 |
| Less: Bond<br>Redemption | 16 | 16 | - | - | - | - | - | - | - | - |
| Less: Net gain<br>on sale of businesses | - | - | - | - | - | (164) | - | (164) | - | - |
| Total<br>adjustments | 2,412 | 582 | 529 | 704 | 597 | 2,350 | 676 | 402 | 635 | 637 |
| Adjusted<br>income before income taxes and equity<br>investments | $5,796 | $1,622 | $1,501 | $1,322 | $1,351 | $5,277 | $1,348 | $1,403 | $1,318 | $1,208 |
| Reported<br>Income taxes | $847 | $253 | $265 | $164 | $165 | $769 | $162 | $298 | $169 | $140 |
| Reported<br>effective tax rate | 25.0% | 24.3% | 27.3% | 26.5% | 21.9% | 26.3% | 24.1% | 29.8% | 24.7% | 24.5% |
| Adjusted<br>income taxes | $1,381 | $384 | $353 | $321 | $323 | $1,267 | $321 | $348 | $314 | $284 |
| Adjusted<br>effective tax rate | 23.8% | 23.7% | 23.5% | 24.3% | 23.9% | 24.0% | 23.8% | 24.8% | 23.8% | 23.5% |
| Income from Equity Investments | ||||||||||
| Reported<br>income from equity investments | $85 | $16 | $23 | $29 | $17 | $114 | $24 | $28 | $28 | $34 |
| Add: Purchase<br>accounting impacts - Linde AG (c) | 57 | 15 | 14 | 14 | 14 | 57 | 14 | 15 | 14 | 14 |
| Adjusted<br>income from equity investments | $142 | $31 | $37 | $43 | $31 | $171 | $38 | $43 | $42 | $48 |
| Adjusted Noncontrolling Interests from Continuing<br>Operations | ||||||||||
| Reported<br>noncontrolling interests from continuing<br>operations | $(125) | $(34) | $(31) | $(25) | $(35) | $(89) | $(27) | $(3) | $(29) | $(30) |
| Add: Cost<br>reduction programs and other charges | (4) | (4) | - | - | - | (35) | - | (35) | - | - |
| Add: Purchase<br>accounting impacts - Linde AG (c) | (57) | (14) | (14) | (14) | (15) | (54) | (14) | (8) | (17) | (15) |
| Total<br>adjustments | (61) | (18) | (14) | (14) | (15) | (89) | (14) | (43) | (17) | (15) |
| Adjusted<br>noncontrolling interests from continuing<br>operations | $(186) | $(52) | $(45) | $(39) | $(50) | $(178) | $(41) | $(46) | $(46) | $(45) |
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Press release
LINDE PLC AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES AND RECONCILIATIONS
(Millions of dollars, except per share data)
(UNAUDITED)
| 2020 | 2019 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Year to Date<br><br><br>December 31, | Q4 | Q3 | Q2 | Q1 | Year to Date<br><br><br>December 31, | Q4 | Q3 | Q2 | Q1 | |
| Adjusted Income from Continuing Operations (b) | ||||||||||
| Reported<br>income from continuing operations | $2,497 | $769 | $699 | $458 | $571 | $2,183 | $507 | $728 | $513 | $435 |
| Add: Pension<br>settlement charge | 5 | - | 5 | - | - | 81 | 5 | 30 | 8 | 38 |
| Less:<br>Merger-related divestitures (d) | - | - | - | - | - | (12) | (1) | (2) | (4) | (5) |
| Add: Cost<br>reduction programs and other charges | 372 | 54 | 36 | 187 | 95 | 449 | 159 | 92 | 115 | 83 |
| Less: Net gain<br>on sale of business | - | - | - | - | - | (108) | - | (108) | - | - |
| Add: Purchase<br>accounting impacts - Linde AG (c) | 1,485 | 382 | 400 | 360 | 343 | 1,410 | 354 | 312 | 368 | 376 |
| Less: Bond<br>Redemption | 12 | 12 | - | - | - | - | - | - | - | - |
| Total<br>adjustments | 1,874 | 448 | 441 | 547 | 438 | 1,820 | 517 | 324 | 487 | 492 |
| Adjusted<br>income from continuing operations | $4,371 | $1,217 | $1,140 | $1,005 | $1,009 | $4,003 | $1,024 | $1,052 | $1,000 | $927 |
| Adjusted Diluted EPS from Continuing Operations<br>(b) | ||||||||||
| Reported<br>diluted EPS from continuing operations | $4.70 | $1.45 | $1.32 | $0.87 | $1.07 | $4.00 | $0.94 | $1.34 | $0.94 | $0.79 |
| Add: Pension<br>settlement charge | 0.01 | - | 0.01 | - | - | 0.16 | 0.01 | 0.07 | 0.01 | 0.07 |
| Add: Cost<br>reduction programs and other charges | 0.70 | 0.10 | 0.07 | 0.35 | 0.18 | 0.83 | 0.29 | 0.17 | 0.22 | 0.15 |
| Less:<br>Merger-related divestitures (d) | - | - | - | - | - | (0.03) | - | (0.01) | (0.01) | (0.01) |
| Less: Net gain<br>on sale of business | - | - | - | - | - | (0.21) | - | (0.21) | - | - |
| Less: Bond<br>Redemption | 0.02 | 0.02 | - | - | - | - | - | - | - | - |
| Add: Purchase<br>accounting impacts - Linde AG | 2.80 | 0.73 | 0.75 | 0.68 | 0.64 | 2.59 | 0.65 | 0.58 | 0.67 | 0.69 |
| Total<br>adjustments | 3.53 | 0.85 | 0.83 | 1.03 | 0.82 | 3.34 | 0.95 | 0.60 | 0.89 | 0.90 |
| Adjusted<br>diluted EPS from continuing operations | $8.23 | $2.30 | $2.15 | $1.90 | $1.89 | $7.34 | $1.89 | $1.94 | $1.83 | $1.69 |
| Reported<br>percentage change | 18% | 54% | (1)% | (7)% | 35% | |||||
| Adjusted<br>percentage change | 12% | 22% | 11% | 4% | 12% | |||||
| Adjusted Diluted EPS from Continuing Operations Guidance<br>(e) | First Quarter 2021 | Full Year 2021 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||
| Low End | High End | Low End | High End | |||||||
| 2021 Adjusted<br>Guidance | 2.20 | 2.25 | $9.10 | 9.30 | ||||||
| Adjusted<br>percentage change versus 2020 adjusted diluted<br>EPS | 16% | 19% | 11% | 13% | ||||||
| Add: Estimated<br>currency tailwind | (2)% | (2)% | (1)% | (1)% | ||||||
| Adjusted<br>percentage change excluding currency | 14% | 17% | 10% | 12% | ||||||
| Adjusted EBITDA and % of Sales | ||||||||||
| Income from<br>continuing operations | $2,497 | 769 | 458 | $2,183 | 507 | $513 | $435 | |||
| Add:<br>Noncontrolling interests related to continuing<br>operations | 125 | 34 | 25 | 89 | 27 | 29 | 30 | |||
| Add: Net<br>pension and OPEB cost (benefit), excluding service<br>cost | (177) | (46) | (45) | (32) | (25) | (24) | 15 | |||
| Add: Interest<br>expense | 115 | 35 | 18 | 38 | 8 | 10 | 23 | |||
| Add: Income<br>taxes | 847 | 253 | 164 | 769 | 162 | 169 | 140 | |||
| Add:<br>Depreciation and amortization | 4,626 | 1,192 | 1,124 | 4,675 | 1,162 | 1,195 | 1,223 | |||
| EBITDA from<br>continuing operations | 8,033 | 2,237 | 1,744 | 7,722 | 1,841 | 1,892 | 1,866 | |||
| Less:<br>Merger-related divestitures (d) | - | - | - | (16) | (1) | (6) | (7) | |||
| Less: Net gain<br>on sale of business | - | - | - | (164) | - | - | - | |||
| Add: Cost<br>reduction programs and other charges | 506 | 78 | 249 | 567 | 212 | 141 | 89 | |||
| Add: Purchase<br>accounting impacts - Linde AG | 106 | 32 | 23 | 69 | 14 | 14 | 24 | |||
| Total<br>adjustments | 612 | 110 | 272 | 456 | 225 | 149 | 106 | |||
| Adjusted<br>EBITDA from continuing operations | $8,645 | 2,347 | 2,016 | $8,178 | 2,066 | $2,041 | $1,972 | |||
| Reported<br>sales | $27,243 | 7,272 | 6,377 | $28,228 | 7,080 | $7,204 | $6,944 | |||
| Adjusted<br>sales | $27,243 | 7,272 | 6,377 | $28,163 | 7,077 | $7,179 | $6,914 | |||
| % of<br>sales | ||||||||||
| EBITDA from<br>continuing operations | 29.5% | 30.8% | 27.3% | 27.4% | 26.0% | 26.3% | 26.9% | |||
| Adjusted<br>EBITDA from continuing operations | 31.7% | 32.3% | 31.6% | 29.0% | 29.2% | 28.4% | 28.5% |
All values are in US Dollars.
(a) The income tax expense (benefit) on the on-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 and the allocation of fair value step-up for ongoing Linde AG asset disposals (reflected in Other Income/(Expense)).
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.
(e) We are providing adjusted earnings per share ("EPS") guidance for 2021. 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.
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Press release
LINDE PLC AND SUBSIDIARIES
APPENDIX
NON-GAAP MEASURES AND RECONCILIATIONS
(Millions of dollars)
(UNAUDITED)
| 2020 | 2019 | 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |
| Free Cash Flow (FCF)<br>- Free cash flow is a measure used by<br>investors, financial analysts and management to evaluate the<br>ability of a company to pursue opportunities that enhance<br>shareholder value. FCF equals cash flow from operations less<br>capital expenditures. | |||||||||
| Operating Cash<br>Flow | $2,434 | $1,884 | $1,764 | $1,347 | $2,174 | $1,872 | $1,005 | $1,068 | $1,305 |
| Less: Capital<br>Expenditures | (1,027) | (787) | (783) | (803) | (1,015) | (959) | (865) | (843) | (827) |
| Free Cash Flow | $1,407 | $1,097 | $981 | $544 | $1,159 | $913 | $140 | $225 | $478 |
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 | $16,154 | $17,803 | $17,480 | $16,875 | $13,956 | $13,201 | $13,957 | $14,146 | $15,296 |
|---|---|---|---|---|---|---|---|---|---|
| Less: Cash and<br>cash equivalents | (3,754) | (5,199) | (4,941) | (4,014) | (2,700) | (2,120) | (2,686) | (5,791) | (4,466) |
| Net<br>debt | 12,400 | 12,604 | 12,539 | 12,861 | 11,256 | 11,081 | 11,271 | 8,355 | 10,830 |
| Less: Purchase<br>accounting impacts - Linde AG | (121) | (133) | (150) | (170) | (195) | (211) | (243) | (262) | (291) |
| Adjusted net<br>debt | $12,279 | $12,471 | $12,389 | $12,691 | $11,061 | $10,870 | $11,028 | $8,093 | $10,539 |
| Less: Net<br>assets held for sale | (3) | (2) | (2) | (115) | (123) | (223) | (272) | (1,629) | (4,730) |
| Adjusted net<br>debt less net assets held for sale | $12,276 | $12,469 | $12,387 | $12,576 | $10,938 | $10,647 | $10,756 | $6,464 | $5,809 |
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<br>income from continuing operations | $769 | $699 | $458 | $571 | 507 | $513 | $435 | $2,870 |
|---|---|---|---|---|---|---|---|---|
| Add:<br>noncontrolling interests from continuing<br>operations | 34 | 31 | 25 | 35 | 27 | 29 | 30 | (33) |
| Add: interest<br>expense - net | 35 | 38 | 18 | 24 | 8 | 10 | 23 | 72 |
| Less: tax<br>benefit on interest expense - net * | (9) | (10) | (5) | (6) | (2) | (3) | (6) | (18) |
| Reported NOPAT | $829 | $758 | $496 | $624 | 540 | $549 | $482 | $2,891 |
| Adjusted<br>income from continuing operations | $1,217 | $1,140 | $1,005 | $1,009 | 1,024 | $1,000 | $927 | $841 |
| Add: adjusted<br>noncontrolling interests from continuing<br>operations | 52 | 45 | 39 | 50 | 41 | 46 | 45 | 40 |
| Add: adjusted<br>interest expense - net | 37 | 61 | 40 | 46 | 30 | 35 | 50 | 50 |
| Less: tax<br>benefit on interest expense - net * | (9) | (15) | (10) | (12) | (7) | (9) | (13) | (12) |
| Adjusted NOPAT | $1,297 | $1,231 | $1,074 | $1,093 | 1,088 | $1,072 | $1,009 | $919 |
| 4-quarter<br>trailing reported NOPAT | $2,707 | $2,418 | $2,389 | $2,442 | 2,300 | |||
| 4-quarter<br>trailing adjusted NOPAT | $4,695 | $4,486 | $4,367 | $4,365 | 4,281 | |||
| Equity and<br>redeemable noncontrolling interests: | ||||||||
| Redeemable<br>noncontrolling interests | $13 | $13 | $13 | $92 | 113 | $15 | $15 | $16 |
| Linde plc<br>shareholders' equity | 47,317 | 46,175 | 45,537 | 44,776 | 49,074 | 50,564 | 51,175 | 51,596 |
| Noncontrolling<br>interests | 2,252 | 2,404 | 2,387 | 2,375 | 2,448 | 2,315 | 5,457 | 5,484 |
| Total equity<br>and redeemable noncontrolling interests | $49,582 | $48,592 | $47,937 | $47,243 | 51,635 | $52,894 | $56,647 | $57,096 |
| Reported<br>capital | $61,979 | $61,194 | $60,474 | $59,989 | 62,768 | $63,893 | $63,373 | $63,196 |
| Total equity<br>and redeemable noncontrolling interests | $49,582 | $48,592 | $47,937 | $47,243 | 51,635 | $52,894 | $56,647 | $57,096 |
| Add: Adjusted<br>net debt less net assets held for sale | 12,276 | 12,469 | 12,387 | 12,576 | 10,938 | 10,756 | 6,464 | 5,809 |
| Less: Linde AG<br>Goodwill (a) | 24,256 | 24,256 | 24,256 | 24,256 | 24,256 | 24,197 | 24,197 | 24,197 |
| Less: Linde AG<br>Indefinite lived intangibles (a) | 1,868 | 1,868 | 1,868 | 1,868 | 1,868 | 1,868 | 1,868 | 1,868 |
| Adjusted<br>capital | $35,734 | $34,937 | $34,200 | $33,695 | 36,449 | $37,585 | $37,046 | $36,840 |
| (a)<br>Represent balance sheet purchase accounting impacts of<br>non-amortizing assets related to the Linde AG merger. | ||||||||
| Ending capital<br>(see above) | $61,979 | $61,194 | $60,474 | $59,989 | 62,768 | |||
| 5-quarter<br>average ending capital | $61,281 | $61,318 | $61,858 | $62,438 | 63,079 | |||
| Ending<br>adjusted capital (see above) | $35,734 | $34,937 | $34,200 | $33,695 | 36,449 | |||
| 5-quarter<br>average ending adjusted capital | $35,003 | $35,034 | $35,564 | $36,133 | 36,762 | |||
| After-tax ROC (4 quarter reported NOPAT / 5-quarter average ending<br>capital) | 4.4% | 3.9% | 3.9% | 3.9% | 3.6% | |||
| Adjusted after-tax ROC (4 quarter trailing adjusted NOPAT /<br>5-quarter average ending adjusted capital) | 13.4% | 12.8% | 12.3% | 12.1% | 11.6% |
All values are in US Dollars.
* Tax benefit on interest expense - net is generally presented using the reported effective rate.
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