LIN 10-K diff: FY 2024-12-31 → FY 2025-12-31
Paragraph-level diff of Risk Factors (Item 1A) and Management's Discussion & Analysis (Item 7).
Item 1A · Risk Factors
+17 paragraphs −14 paragraphs ~14 changed
FY 2024-12-31 (earlier)
ITEM 1A. RISK FACTORS
Due to the size and geographic reach of the company’s operations, a wide range of factors, many of which are outside of the company’s control, could materially affect the company’s future operations and financial performance. Management believes the following risks may significantly impact the company:
Weakening economic conditions in markets in which Linde does business may adversely impact its financial results and/or cash flows.
Linde serves a diverse group of industries across more than 80 countries, which generally leads to financial stability through various business cycles. However, a broad decline in general economic or business conditions in the industries served by its customers could adversely affect the demand for Linde’s products and impair the ability of its customers to satisfy their obligations to Linde, resulting in uncollected receivables and/or unanticipated contract terminations or project delays. For example, global political and economic uncertainty could reduce investment activities of Linde’s customers, which could adversely affect Linde’s business.In addition, many of Linde’s customers are in businesses that are cyclical in nature, such as the chemicals, metals and energy industries. Downturns in these industries may adversely impact Linde during these cycles. Additionally, such conditions could impact the utilization of Linde’s manufacturing capacity which may require it to recognize impairment losses on tangible assets such as property, plant and equipment, as well as intangible assets such as goodwill, customer relationships or intellectual property.Increases in the cost of energy and raw materials and/or disruption in the supply of these materials could result in lost sales or reduced profitability.
Energy is the single largest cost item in the production and distribution of industrial gases. Most of Linde’s energy requirements are in the form of electricity, natural gas and diesel fuel for distribution. Linde attempts to minimize the financial impact of variability in these costs through the management of customer contracts and reducing demand through operational productivity and energy efficiency. Large customer contracts typically have escalation and pass-through clauses to recover energy and feedstock costs. Such attempts may not successfully mitigate cost variability, which could negatively impact Linde’s financial condition or results of operations. The supply of energy has not been a significant issue in the geographic areas where Linde conducts business. However, regional energy conditions are unpredictable and may pose future risk.
For hydrogen, helium, carbon dioxide, carbon monoxide, and specialty gases, raw materials are largely purchased from outside sources. Where feasible, Linde sources several of these raw materials, including hydrogen, carbon dioxide, and calcium carbide, as chemical or industrial byproducts. In addition, Linde has contracts or commitments for, or readily available sources of, most of these raw materials; however, their long-term availability and prices are subject to market conditions. A disruption in supply of such raw materials could impact Linde’s ability to meet contractual supply commitments.
Linde’s international operations are subject to the risks of doing business abroad and international events and circumstances may adversely impact its business, financial condition or results of operations.Linde has substantial international operations which are subject to risks including devaluations in currency exchange rates, transportation delays and interruptions, political and economic instability and disruptions, restrictions on the transfer of funds, trade conflicts and the imposition of duties and tariffs, import and export controls, changes in governmental policies, labor unrest, possible nationalization and/or expropriation of assets, changes in U.S. and non-U.S. tax policies and compliance with governmental regulations. These events could have an adverse effect on the international operations of Linde in the future by reducing the demand for its products, decreasing the prices at which it can sell its products, reducing the revenue from international operations or otherwise having an adverse effect on its business.8
Table of ContentsCurrency exchange rate fluctuations and other related risks may adversely affect Linde's results.
Because a significant portion of Linde's revenue is denominated in currencies other than its reporting currency, the U.S. dollar, changes in exchange rates will produce fluctuations in revenue, costs and earnings and may also affect the book value of assets and liabilities and related equity. Although the company from time to time utilizes foreign exchange forward contracts to hedge these exposures, its efforts to minimize currency exposure through such hedging transactions may not be successful depending on market and business conditions. As a result, fluctuations in foreign currency exchange rates could adversely affect Linde’s financial condition, results of operations or cash flows.
Macroeconomic factors may impact Linde’s ability to obtain financing or increase the cost of obtaining financing which may adversely impact Linde’s financial results and/or cash flows.
Volatility and disruption in the U.S., European and global credit and equity markets, from time to time, could make it more difficult for Linde to obtain financing for its operations and/or could increase the cost of obtaining financing. In addition, Linde’s borrowing costs can be affected by short- and long-term debt ratings assigned by independent rating agencies which are based, in significant part, on its performance as measured by certain criteria such as interest coverage and leverage ratios. A decrease in these debt ratings could increase the cost of borrowing or make it more difficult to obtain financing.
An impairment of goodwill or intangible assets could negatively impact the company's financial results.As of December 31, 2024, the net carrying value of goodwill and other indefinite-lived intangible assets was approximately $26 billion and $2 billion, respectively, primarily as a result of the business combination and the related acquisition method of accounting applied to the 2018 merger between Linde plc's predecessor companies. In accordance with generally accepted accounting principles, the company periodically assesses these assets to determine if they are impaired. Significant negative industry or economic trends, disruptions to business, unexpected significant changes or planned changes in use of the assets, divestitures and sustained market capitalization declines may result in recognition of impairments to goodwill or other indefinite-lived assets. Any charges relating to such impairments could have a material adverse impact on Linde's results of operations in the periods recognized.Catastrophic events could disrupt the operations of Linde and/or its customers and suppliers and may have a significant adverse impact on the results of operations.The occurrence of catastrophic events or natural disasters such as extreme weather, including hurricanes and floods; health epidemics; pandemics, such as COVID-19; and acts of war or terrorism, could disrupt or delay Linde’s ability to produce and distribute its products to customers and could potentially expose Linde to third-party liability claims. In addition, such events could impact Linde’s customers and suppliers resulting in temporary or long-term outages and/or the limitation of supply of energy and other raw materials used in normal business operations. Linde evaluates the direct and indirect business risks, consults with vendors, insurance providers and industry experts, makes investments in suitably resilient design and technology, and conducts regular reviews of the business risks with management. Despite these steps, however, these situations are outside Linde’s control and may have a significant adverse impact on its financial results.The inability to attract and retain qualified personnel may adversely impact Linde’s business.
If Linde fails to attract, hire and retain qualified personnel, it may not be able to develop, market or sell its products or successfully manage its business. Linde is dependent upon a highly skilled, experienced and efficient workforce to be successful. Much of Linde’s competitive advantage is based on the expertise and experience of key personnel regarding marketing, technology, manufacturing and distribution infrastructure, systems and products. The inability to attract and hire qualified individuals or the loss of key employees in very skilled areas could have a negative effect on Linde’s financial results.If Linde fails to keep pace with technological advances in the industry or if new technology initiatives do not become commercially accepted, customers may not continue to buy Linde’s products and results of operations could be adversely affected.
Linde’s research and development is directed toward developing new and improved methods for the production and distribution of industrial gases, the design and construction of plants and toward developing new markets and applications for the use of industrial and process gases. This results in the introduction of new applications and the development of new advanced process technologies. As a result of these efforts, Linde develops new and proprietary technologies and employs necessary measures to protect such technologies within the global geographies in which Linde operates. These technologies help Linde to create a competitive advantage and to provide a platform to grow its business. If Linde’s research and9
Table of Contentsdevelopment activities do not keep pace with competitors or if Linde does not create new technologies that benefit customers, future results of operations could be adversely affected.Risks related to pension benefit plans may adversely impact Linde’s results of operations and cash flows.
Pension benefits represent significant financial obligations that will be ultimately settled in the future with employees who meet eligibility requirements. Because of the uncertainties involved in estimating the timing and amount of future payments and asset returns, significant estimates are required to calculate pension expense and liabilities related to Linde’s plans. Linde utilizes the services of independent actuaries, whose models are used to facilitate these calculations. Several key assumptions are used in the actuarial models to calculate pension expense and liability amounts recorded in the consolidated financial statements. In particular, significant changes in actual investment returns on pension assets, discount rates, or legislative or regulatory changes could impact future results of operations and required pension contributions.
Operational risks may adversely impact Linde’s business or results of operations.
Linde’s operating results are dependent on the continued operation of its production facilities and its ability to meet customer contract requirements and other needs. Insufficient or excess capacity threatens Linde’s ability to generate competitive profit margins and may expose Linde to liabilities related to contract commitments. Operating results are also dependent on Linde’s ability to complete new construction projects on time, on budget and in accordance with performance requirements. Failure to do so may expose Linde’s business to loss of revenue, potential litigation and loss of business reputation.
Also inherent in the management of Linde’s production facilities and delivery systems, including storage, vehicle transportation and pipelines, are operational risks that require continuous training, oversight and control. Material operating failures at production, storage facilities or pipelines, including fire, toxic release and explosions, or the occurrence of vehicle transportation accidents could result in loss of life, damage to the environment, loss of production and/or extensive property damage, all of which may negatively impact Linde’s financial results.Linde may be subject to information technology system failures, network disruptions and breaches in data security.
Linde relies on information technology systems and networks for business and operational activities, and also stores and processes sensitive business and proprietary information in these systems and networks. These systems are susceptible to outages due to fire, flood, power loss, telecommunications failures, viruses, break-ins and similar events, or breaches of security.
Linde has taken steps to address these risks and concerns by implementing advanced security technologies, internal controls, network and data center resiliency and recovery processes. Despite these steps, however, our information technology systems have in the past been and in the future will likely be subject to increasingly sophisticated cyber attacks. Operational failures and breaches of security from such attempts could lead to the loss or disclosure of confidential information or personal data belonging to Linde or our employees and customers or suppliers. These failures and breaches could result in business interruption or malfunction and lead to legal or regulatory actions that could result in a material adverse impact on Linde’s operations, reputation and financial results. To date, such attempts have not had any significant impact on Linde's operations or financial results.The inability to effectively integrate acquisitions or collaborate with joint venture partners could adversely impact Linde’s financial position and results of operations.Linde has evaluated and expects to continue to evaluate, a wide array of potential strategic acquisitions and joint ventures. Many of these transactions, if consummated, could be material to its financial condition and results of operations. In addition, the process of integrating an acquired company, business or group of assets may create unforeseen operating difficulties and expenditures. Although historically Linde has been successful with its acquisition strategy and execution, the areas where Linde may face risks include:• the need to implement or remediate controls, procedures and policies appropriate for a larger public company at companies that prior to the acquisition lacked these controls, procedures and policies;
• diversion of management time and focus from operating existing business to acquisition integration challenges;
• cultural challenges associated with integrating employees from the acquired company into the existing organization;
• the need to integrate each company’s accounting, management information, human resources and other administrative systems to permit effective management;
• difficulty with the assimilation of acquired operations and products;
• failure to achieve targeted synergies and cost reductions; and10
Table of Contents• inability to retain key employees and business relationships of acquired companies.
Foreign acquisitions and joint ventures involve unique risks in addition to those mentioned herein, including those related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries.Also, the anticipated benefit of potential future acquisitions may not materialize. Future acquisitions or dispositions could result in the incurrence of debt, contingent liabilities or amortization expenses, or impairments of goodwill, any of which could adversely impact Linde’s financial results.Linde is subject to a variety of international laws and government regulations and changes in, or failure to comply with, these laws or regulations could have an adverse impact on the company’s business, financial position and results of operations.
Linde is subject to regulations in the following areas, among others:• environmental protection, including climate change and energy efficiency laws and policies;
• U.S. and non-U.S. tax laws and currency controls;
• safety;• securities laws applicable in the United States, the European Union, and other jurisdictions;• trade and import/export restrictions, as well as economic sanctions laws;
• antitrust matters;• data protection;• global anti-bribery laws, including the U.S. Foreign Corrupt Practices Act; and
• healthcare regulations.
Changes in these or other regulatory areas may impact Linde’s profitability and may give rise to new or increased compliance risks: it may become more complex and costly to ensure compliance, and the level of sanctions in the event of non-compliance may rise. Noncompliance with such laws and regulations could result in penalties or sanctions, cancellation of marketing rights or restrictions on participation in, or even exclusion from, public tender proceedings, all of which could have a material adverse impact on Linde’s financial results and/or reputation.
Such changes may also restrict Linde’s ability to compete effectively in the marketplace. Changes to regulations in the areas of environmental protection and climate change, for example, may impact customer and competitor behavior driving structural changes in key end markets. While Linde will work to mitigate these risks through the pursuit of strategic alliances and investment in applications technologies to capture new growth areas, given the uncertainty about the type and scope of new regulations, it is difficult to predict how such changes and their impact on market behavior will ultimately impact Linde’s business. However, such changes could have a material adverse impact on Linde's results of operations.
Doing business globally requires Linde to comply with anti-corruption, trade, compliance and economic sanctions and similar laws, and to implement policies and procedures designed to ensure that its employees and other intermediaries comply with the applicable restrictions. These restrictions include prohibitions on the sale or supply of certain products, services and any other economic resources to embargoed or sanctioned countries, governments, persons and entities. Compliance with these restrictions requires, among other things, screening of business partners. Despite its commitment to legal compliance and corporate ethics, the company cannot ensure that its policies and procedures will always protect it from intentional, reckless or negligent acts committed by employees or agents under the applicable laws. If Linde fails to comply with laws governing the conduct of international operations, Linde may be subject to criminal and civil penalties and other remedial measures, which could materially adversely affect its reputation, business and results of operations.The outcome of litigation or governmental investigations may adversely impact the company’s business or results of operations.
Linde’s subsidiaries are party to various lawsuits and governmental investigations arising in the ordinary course of business. Adverse outcomes in some or all of the claims pending may result in significant monetary damages or injunctive relief that could adversely affect Linde’s ability to conduct business. Linde and its subsidiaries may in the future become subject to further claims and litigation, which is impossible to predict. The litigation and other claims Linde faces are subject to inherent uncertainties. Legal or regulatory judgments or agreed settlements might give rise to expenses which are not covered, or are not fully covered, by insurance benefits and may also lead to negative publicity and reputational damage. An unfavorable outcome or determination could cause a material adverse impact on the company’s results of operations.11
Table of ContentsPotential product defects or inadequate customer care may adversely impact Linde’s business or results of operations.
Risks associated with products and services may result in potential liability claims, the loss of customers or damage to Linde’s reputation. Principal possible causes of risks associated with products and services are product defects or an inadequate level of customer care when Linde is providing services.
Linde is exposed to legal risks relating to product liability in the countries where it operates, including countries such as the United States, where legal risks (in particular through class actions) have historically been more significant than in other countries. The outcome of any pending or future products and services proceedings or investigations cannot be predicted and legal or regulatory judgments or agreed settlements may give rise to significant losses, costs and expenses.
The manufacturing and sale of products as well as the construction and sale of plants by Linde may give rise to risks associated with the production, filling, storage, handling and transport of raw materials, goods or waste. Industrial gases are potentially hazardous substances and medical gases and the related healthcare services must comply with the relevant specifications in order to not adversely affect the health of patients treated with them.
Linde’s products and services, if defective or not handled or performed appropriately, may lead to personal injuries, business interruptions, environmental damages or other significant damages, which may result, among other consequences, in liability, losses, monetary penalties or compensation payments, environmental clean-up costs or other costs and expenses, exclusion from certain market sectors deemed important for future development of the business and loss of reputation. All these consequences could have a material adverse effect on Linde’s business and results of operations.
U.S. civil liabilities may not be enforceable against Linde.
Linde is organized under the laws of Ireland and substantial portions of its assets are located outside of the United States. In addition, certain directors and officers of Linde and its subsidiaries reside outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon Linde or such persons, or to enforce outside the United States judgments obtained against such persons in U.S. courts in any action, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. In addition, it may be difficult for investors to enforce, in original actions brought in courts in jurisdictions located outside the United States, rights predicated upon the U.S. federal securities laws.
A judgment for the payment of money rendered by a court in the United States based on civil liability would not be automatically enforceable in Ireland. There is no treaty between Ireland and the United States providing for the reciprocal enforcement of foreign judgments. The following requirements must be met before the foreign judgment will be deemed to be enforceable in Ireland (i) the judgment must be for a definite sum, (ii) the judgment must be final and conclusive; and (iii) the judgment must be provided by a court of competent jurisdiction.
An Irish court will also exercise its right to refuse judgment if the foreign judgment (i) was obtained by fraud; (ii) violated Irish public policy; (iii) is in breach of natural justice; or (iv) if the judgment is irreconcilable with an earlier foreign judgment.
In addition, there is doubt as to whether an Irish court would accept jurisdiction and impose civil liability on Linde or such persons in an original action predicated solely upon the U.S. federal securities laws brought in a court of competent jurisdiction in Ireland against Linde or such member, officer or expert, respectively.
Changes in tax laws or policy could adversely impact the company’s financial position or results of operations.Linde and its subsidiaries are subject to the tax rules and regulations in the U.S., Germany, Ireland, the U.K. and other countries in which they operate. Those tax rules and regulations are subject to change on a prospective or retroactive basis. Under current economic and political conditions tax rates and policies in any jurisdiction, including the U.S., the U.K. and the EU, are subject to significant changes which could result in a significant change to Linde's current and deferred income tax. In particular, since Linde is currently treated as U.K. tax resident, any potential changes in the tax rules applying to U.K. tax-resident companies would directly affect Linde.
A change in Linde’s tax residency could have a negative effect on the company’s future profitability and may trigger taxes on dividends or exit charges. If Linde ceases to be resident in the U.K. and becomes resident in another jurisdiction, it may be subject to U.K. exit charges, and/or could become liable for additional tax charges in the other jurisdiction. If Linde were to be treated as resident in more than one jurisdiction, it could be subject to duplicative taxation. Furthermore, although Linde is incorporated in Ireland and is not expected to be treated as a domestic corporation for U.S. federal income tax purposes, it is possible that the IRS could challenge this result or that changes in U.S. federal income tax law could alter this result. If the IRS successfully asserted such a position or the law were to change, significant adverse tax consequences may result for Linde, the company and Linde’s shareholders.12
Table of ContentsChanges in tax laws may result in higher tax expense and tax payments. In addition, changes in tax legislation and uncertainty about the tax environment in some regions may restrict Linde's opportunity to enforce its respective rights under the law. Linde also operates in countries with complex tax regulations which could be interpreted in different ways. Linde and its subsidiaries are subject to audits by taxing authorities in various jurisdictions or other review actions by the relevant financial or tax authorities. The ultimate tax outcome may differ from the amounts recorded in Linde’s or its subsidiaries’ financial statements and may materially affect their respective financial results for the period when such determination is made.
FY 2025-12-31 (later)
ITEM 1A. RISK FACTORS
Due to the size and geographic reach of the company’s operations, a wide range of factors, many of which are outside of the company’s control, could materially affect the company’s future operations and financial performance. Management believes the following risks may significantly impact the company:
Weakening economic conditions in markets in which Linde does business may adversely impact its financial results and/or cash flows.
Linde serves a diverse group of industries across more than 80 countries, which generally leads to financial stability through various business cycles. However, a broad decline in general economic or business conditions in the industries served by its customers could adversely affect the demand for Linde’s products and impair the ability of its customers to satisfy their obligations to Linde, resulting in uncollected receivables and/or unanticipated contract terminations or project delays. For example, global political and economic uncertainty could reduce investment activities of Linde’s customers, which could adversely affect Linde’s business.In addition, many of Linde’s customers are in businesses that are cyclical in nature, such as the chemicals and energy, and metals and mining end markets. Downturns in these industries may adversely impact Linde during these cycles. Additionally, such conditions could impact the utilization of Linde’s manufacturing capacity which may require it to recognize impairment losses on tangible assets such as property, plant and equipment, as well as intangible assets such as goodwill, customer relationships or intellectual property.Increases in the cost of energy and raw materials and/or disruption in the supply of these materials could result in lost sales or reduced profitability.
Energy is the single largest cost item in the production and distribution of industrial gases. Most of Linde’s energy requirements are in the form of electricity, natural gas and diesel fuel for distribution. Linde attempts to minimize the financial impact of variability in these costs through the management of customer contracts and reducing demand through operational productivity and energy efficiency. Large customer contracts typically have escalation and pass-through clauses to recover energy and feedstock costs. Such attempts may not successfully mitigate cost variability, which could negatively impact Linde’s financial condition or results of operations. The supply of energy has not been a significant issue in the geographic areas where Linde conducts business. However, regional energy conditions are unpredictable and may pose future risk.
For hydrogen, helium, carbon dioxide, carbon monoxide, and specialty gases, raw materials are largely purchased from outside sources. Where feasible, Linde sources several of these raw materials, including hydrogen, carbon dioxide, and calcium carbide, as chemical or industrial byproducts. In addition, Linde has contracts or commitments for, or readily available sources of, most of these raw materials; however, their long-term availability and prices are subject to market conditions. A disruption in supply of such raw materials could impact Linde’s ability to meet contractual supply commitments.
Linde’s international operations are subject to the risks of doing business abroad and international events and circumstances may adversely impact its business, financial condition or results of operations.Linde has substantial international operations which are subject to risks including devaluations in currency exchange rates, transportation delays and interruptions, political and economic instability and disruptions, restrictions on the transfer of8
Table of Contentsfunds, trade conflicts and the imposition of duties and tariffs, import and export controls, changes in governmental policies, labor unrest, possible nationalization and/or expropriation of assets, changes in U.S. and non-U.S. tax policies and compliance with governmental regulations. These events could have an adverse effect on the international operations of Linde in the future by reducing the demand for its products, decreasing the prices at which it can sell its products, reducing the revenue from international operations or otherwise having an adverse effect on its business.Currency exchange rate fluctuations and other related risks may adversely affect Linde's results.
Because a significant portion of Linde's revenue is denominated in currencies other than its reporting currency, the U.S. dollar, changes in exchange rates will produce fluctuations in revenue, costs and earnings and may also affect the book value of assets and liabilities and related equity. Although the company from time to time utilizes foreign exchange forward contracts to hedge these exposures, its efforts to minimize currency exposure through such hedging transactions may not be successful depending on market and business conditions. As a result, fluctuations in foreign currency exchange rates could adversely affect Linde’s financial condition, results of operations or cash flows.
Macroeconomic factors may impact Linde’s ability to obtain financing or increase the cost of obtaining financing which may adversely impact Linde’s financial results and/or cash flows.
Volatility and disruption in the U.S., European and global credit and equity markets, from time to time, could make it more difficult for Linde to obtain financing for its operations and/or could increase the cost of obtaining financing. In addition, Linde’s borrowing costs can be affected by short- and long-term debt ratings assigned by independent rating agencies which are based, in significant part, on its performance as measured by certain criteria such as interest coverage and leverage ratios. A decrease in these debt ratings could increase the cost of borrowing or make it more difficult to obtain financing.
An impairment of goodwill or intangible assets could negatively impact the company's financial results.As of December 31, 2025, the net carrying value of goodwill and other indefinite-lived intangible assets was approximately $28 billion and $2 billion, respectively, primarily as a result of the business combination and the related acquisition method of accounting applied to the 2018 merger between Linde plc's predecessor companies. In accordance with generally accepted accounting principles, the company periodically assesses these assets to determine if they are impaired. Significant negative industry or economic trends, disruptions to business, unexpected significant changes or planned changes in use of the assets, divestitures and sustained market capitalization declines may result in recognition of impairments to goodwill or other indefinite-lived assets. Any charges relating to such impairments could have a material adverse impact on Linde's results of operations in the periods recognized.Catastrophic events could disrupt the operations of Linde and/or its customers and suppliers and may have a significant adverse impact on the results of operations.Linde's operations are exposed to physical risks associated with the occurrence of natural disasters linked to climate change, such as extreme weather events including hurricanes and floods, as well as catastrophic events such as health epidemics; pandemics; and acts of war or terrorism. These events could disrupt or delay Linde’s ability to produce and distribute its products to customers, result in asset impairments, and could potentially expose Linde to third-party liability claims. In addition, such events could impact Linde’s customers and suppliers resulting in temporary or long-term outages and/or the limitation of supply of energy and other raw materials used in normal business operations.
Linde evaluates the direct and indirect business risks, consults with vendors, insurance providers and industry experts, makes investments in suitably resilient design and technology, and conducts regular reviews of the business risks with management. Despite these steps, however, such events are outside Linde’s control and may have a significant adverse impact on its financial results.The inability to attract and retain qualified personnel may adversely impact Linde’s business.
If Linde fails to attract, hire and retain qualified personnel, it may not be able to develop, market or sell its products or successfully manage its business. Linde is dependent upon a highly skilled, experienced and efficient workforce to be successful. Much of Linde’s competitive advantage is based on the expertise and experience of key personnel regarding marketing, technology, manufacturing and distribution infrastructure, systems and products. The inability to attract and hire qualified individuals or the loss of key employees in very skilled areas could have a negative effect on Linde’s financial results.9
Table of ContentsIf Linde fails to keep pace with technological advances in the industry or if new technology initiatives do not become commercially accepted, customers may not continue to buy Linde’s products and results of operations could be adversely affected.
Linde’s research and development is directed toward developing new and improved methods for the production and distribution of industrial gases, the design and construction of plants and toward developing new markets and applications for the use of industrial and process gases. This results in the introduction of new applications and the development of new advanced process technologies. As a result of these efforts, Linde develops new and proprietary technologies and employs necessary measures to protect such technologies within the global geographies in which Linde operates. These technologies help Linde to create a competitive advantage and to provide a platform to grow its business. If Linde’s research and development activities do not keep pace with competitors or if Linde does not create new technologies that benefit customers, future results of operations could be adversely affected.Risks related to pension benefit plans may adversely impact Linde’s results of operations and cash flows.
Pension benefits represent significant financial obligations that will be ultimately settled in the future with employees who meet eligibility requirements. Because of the uncertainties involved in estimating the timing and amount of future payments and asset returns, significant estimates are required to calculate pension expense and liabilities related to Linde’s plans. Linde utilizes the services of independent actuaries, whose models are used to facilitate these calculations. Several key assumptions are used in the actuarial models to calculate pension expense and liability amounts recorded in the consolidated financial statements. In particular, significant changes in actual investment returns on pension assets, discount rates, or legislative or regulatory changes could impact future results of operations and required pension contributions.
Operational risks may adversely impact Linde’s business or results of operations.
Linde’s operating results are dependent on the continued operation of its production facilities and its ability to meet customer contract requirements and other needs. Insufficient or excess capacity threatens Linde’s ability to generate competitive profit margins and may expose Linde to liabilities related to contract commitments. Operating results are also dependent on Linde’s ability to complete new construction projects on time, on budget and in accordance with performance requirements. Failure to do so may expose Linde’s business to loss of revenue, potential litigation and loss of business reputation.
Also inherent in the management of Linde’s production facilities and delivery systems, including storage, vehicle transportation and pipelines, are operational risks that require continuous training, oversight and control. Material operating failures at production, storage facilities or pipelines, including fire, toxic release and explosions, or the occurrence of vehicle transportation accidents could result in loss of life, damage to the environment, loss of production and/or extensive property damage, all of which may negatively impact Linde’s financial results.Linde may be subject to information technology system failures, network disruptions and cybersecurity breaches or other related incidents.
Linde relies on information technology systems and networks, including systems that utilize advanced technologies for business and operational activities, and also stores and processes sensitive business and proprietary information in these systems and networks. These systems are susceptible to outages due to fire, flood, power loss, telecommunications failures, viruses, break-ins and similar events, or breaches of security.
Linde has taken steps to address these risks and concerns by implementing advanced security technologies, internal controls, network and data center resiliency and recovery processes. Despite these steps, however, our information technology systems have in the past been and in the future will likely be subject to increasingly sophisticated cyber attacks and disruptions. Operational failures and breaches of security from such attempts could lead to the loss or disclosure of confidential information or personal data belonging to Linde or our employees and customers or suppliers. These failures and breaches could result in business interruption or malfunction and lead to legal or regulatory actions that could result in a material adverse impact on Linde’s operations, reputation and financial results. To date, such attempts have not had any significant impact on Linde's operations or financial results.The inability to effectively integrate acquisitions or collaborate with joint venture partners could adversely impact Linde’s financial position and results of operations.Linde has evaluated and expects to continue to evaluate, a wide array of potential strategic acquisitions and joint ventures. Many of these transactions, if consummated, could be material to its financial condition and results of operations. In addition, the process of integrating an acquired company, business or group of assets may create unforeseen operating
10
Table of Contents
difficulties and expenditures. Although historically Linde has been successful with its acquisition strategy and execution, the areas where Linde may face risks include:• the need to implement or remediate controls, procedures and policies appropriate for a larger public company at companies that prior to the acquisition lacked these controls, procedures and policies;
• diversion of management time and focus from operating existing business to acquisition integration challenges;
• cultural challenges associated with integrating employees from the acquired company into the existing organization;
• the need to integrate each company’s accounting, management information, human resources and other administrative systems to permit effective management;
• difficulty with the assimilation of acquired operations and products;
• failure to achieve targeted synergies and cost reductions; and• inability to retain key employees and business relationships of acquired companies.
Foreign acquisitions and joint ventures involve unique risks in addition to those mentioned herein, including those related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries.Also, the anticipated benefit of potential future acquisitions may not materialize. Future acquisitions or dispositions could result in the incurrence of debt, contingent liabilities or amortization expenses, or impairments of goodwill or other intangible assets, any of which could adversely impact Linde’s financial results.Linde is subject to a variety of international laws and government regulations and changes in, or failure to comply with, these laws or regulations could have an adverse impact on the company’s business, financial position and results of operations.
Linde is subject to regulations in the following areas, among others:• securities laws applicable in the United States, the European Union, and other jurisdictions;• U.S. and non-U.S. tax laws and currency controls;• trade and import/export restrictions, as well as economic sanctions laws;
• antitrust matters;• safety;
• environmental protection, including climate change and energy efficiency laws and policies, and environmental related reporting and disclosures;
• data protection including artificial intelligence;• global anti-bribery laws, including the U.S. Foreign Corrupt Practices Act; and
• healthcare regulations.
Changes in these or other regulatory areas may impact Linde’s profitability and may give rise to new or increased compliance risks: it may become more complex and costly to ensure compliance, and the level of sanctions in the event of non-compliance may rise. Noncompliance with such laws and regulations could result in penalties or sanctions, cancellation of marketing rights or restrictions on participation in, or even exclusion from, public tender proceedings, all of which could have a material adverse impact on Linde’s financial results and/or reputation.
Such changes may also restrict Linde’s ability to compete effectively in the marketplace. Changes to regulations in the areas of environmental protection and climate change, for example, may impact customer and competitor behavior driving structural changes in key end markets. While Linde will work to mitigate these risks through the pursuit of strategic alliances and investment in applications technologies to capture new growth areas, given the uncertainty about the type and scope of new regulations, it is difficult to predict how such changes and their impact on market behavior will ultimately impact Linde’s business. However, such changes could have a material adverse impact on Linde's results of operations.
Doing business globally requires Linde to comply with anti-corruption, trade, compliance and economic sanctions and similar laws, and to implement policies and procedures designed to ensure that its employees and other intermediaries comply with the applicable restrictions. These restrictions include prohibitions on the sale or supply of certain products, services and any other economic resources to embargoed or sanctioned countries, governments, persons and entities. Compliance with these restrictions requires, among other things, screening of business partners. Despite its commitment to legal compliance and corporate ethics, the company cannot ensure that its policies and procedures will always protect it from intentional, reckless or negligent acts committed by employees or agents under the applicable laws. If Linde fails to comply with laws governing the conduct of international operations, Linde may be subject to criminal and civil penalties and other remedial measures, which could materially adversely affect its reputation, business and results of operations.11
Table of ContentsThe outcome of litigation or governmental investigations may adversely impact the company’s business or results of operations.
Linde’s subsidiaries are party to various lawsuits and governmental investigations arising in the ordinary course of business. Adverse outcomes in some or all of the claims pending may result in significant monetary damages or injunctive relief that could adversely affect Linde’s ability to conduct business. Linde and its subsidiaries may in the future become subject to further claims and litigation, which is impossible to predict. The litigation and other claims Linde faces are subject to inherent uncertainties. Legal or regulatory judgments or agreed settlements might give rise to expenses which are not covered, or are not fully covered, by insurance benefits and may also lead to negative publicity and reputational damage. An unfavorable outcome or determination could cause a material adverse impact on the company’s results of operations.Potential product defects or inadequate customer care may adversely impact Linde’s business or results of operations.
Risks associated with products and services may result in potential liability claims, the loss of customers or damage to Linde’s reputation. Principal possible causes of risks associated with products and services are product defects or an inadequate level of customer care when Linde is providing services.
Linde is exposed to legal risks relating to product liability in the countries where it operates, including countries such as the United States, where legal risks (in particular through class actions) have historically been more significant than in other countries. The outcome of any pending or future products and services proceedings or investigations cannot be predicted and legal or regulatory judgments or agreed settlements may give rise to significant losses, costs and expenses.
The manufacturing and sale of products as well as the construction and sale of plants by Linde may give rise to risks associated with the production, filling, storage, handling and transport of raw materials, goods or waste. Industrial gases are potentially hazardous substances and medical gases and the related healthcare services must comply with the relevant specifications in order to not adversely affect the health of patients treated with them.
Linde’s products and services, if defective or not handled or performed appropriately, may lead to personal injuries, business interruptions, environmental damages or other significant damages, which may result, among other consequences, in liability, losses, monetary penalties or compensation payments, environmental clean-up costs or other costs and expenses, exclusion from certain market sectors deemed important for future development of the business and loss of reputation. All these consequences could have a material adverse effect on Linde’s business and results of operations.
U.S. civil liabilities may not be enforceable against Linde.
Linde is organized under the laws of Ireland and substantial portions of its assets are located outside of the United States. In addition, certain directors and officers of Linde and its subsidiaries reside outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon Linde or such persons, or to enforce outside the United States judgments obtained against such persons in U.S. courts in any action, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. In addition, it may be difficult for investors to enforce, in original actions brought in courts in jurisdictions located outside the United States, rights predicated upon the U.S. federal securities laws.
A judgment for the payment of money rendered by a court in the United States based on civil liability would not be automatically enforceable in Ireland. There is no treaty between Ireland and the United States providing for the reciprocal enforcement of foreign judgments. The following requirements must be met before the foreign judgment will be deemed to be enforceable in Ireland (i) the judgment must be for a definite sum, (ii) the judgment must be final and conclusive; and (iii) the judgment must be provided by a court of competent jurisdiction.
An Irish court will also exercise its right to refuse judgment if the foreign judgment (i) was obtained by fraud; (ii) violated Irish public policy; (iii) is in breach of natural justice; or (iv) if the judgment is irreconcilable with an earlier foreign judgment.
In addition, there is doubt as to whether an Irish court would accept jurisdiction and impose civil liability on Linde or such persons in an original action predicated solely upon the U.S. federal securities laws brought in a court of competent jurisdiction in Ireland against Linde or such member, officer or expert, respectively.
Changes in tax laws or policy could adversely impact the company’s financial position or results of operations.Linde and its subsidiaries are subject to the tax rules and regulations in the U.S., Germany, Ireland, the U.K. and other countries in which they operate. Those tax rules and regulations are subject to change on a prospective or retroactive basis. Under current economic and political conditions tax rates and policies in any jurisdiction, including the U.S., the U.K. and the EU, are subject to significant changes which could result in a significant change to Linde's current and deferred income12
Table of Contentstax. In particular, since Linde is currently treated as U.K. tax resident, any potential changes in the tax rules applying to U.K. tax-resident companies would directly affect Linde.
A change in Linde’s tax residency could have a negative effect on the company’s future profitability and may trigger taxes on dividends or exit charges. If Linde ceases to be resident in the U.K. and becomes resident in another jurisdiction, it may be subject to U.K. exit charges, and/or could become liable for additional tax charges in the other jurisdiction. If Linde were to be treated as resident in more than one jurisdiction, it could be subject to duplicative taxation. Furthermore, although Linde is incorporated in Ireland and is not expected to be treated as a domestic corporation for U.S. federal income tax purposes, it is possible that the IRS could challenge this result or that changes in U.S. federal income tax law could alter this result. If the IRS successfully asserted such a position or the law were to change, significant adverse tax consequences may result for Linde, the company and Linde’s shareholders.Changes in tax laws may result in higher tax expense and tax payments. In addition, changes in tax legislation and uncertainty about the tax environment in some regions may restrict Linde's opportunity to enforce its respective rights under the law. Linde also operates in countries with complex tax regulations which could be interpreted in different ways. Linde and its subsidiaries are subject to audits by taxing authorities in various jurisdictions or other review actions by the relevant financial or tax authorities. The ultimate tax outcome may differ from the amounts recorded in Linde’s or its subsidiaries’ financial statements and may materially affect their respective financial results for the period when such determination is made.
Item 7 · Management's Discussion & Analysis
+294 paragraphs −285 paragraphs ~285 changed
FY 2024-12-31 (earlier)
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the company’s financial condition and results of operations should be read together with its consolidated financial statements and notes to the consolidated financial statements included in Item 8 of this Form 10-K.
Page
Business Overview17
Executive Summary – Financial Results & Outlook18Consolidated Results and Other Information19Segment Discussion24Liquidity, Capital Resources and Other Financial Data
30
Off-Balance Sheet Arrangements
32
Critical Accounting Estimates
32
New Accounting Standards
34
Fair Value Measurements
34
Non-GAAP Financial Measures
35
Supplemental Guarantee Information
3816Table of Contents
BUSINESS OVERVIEW
The company's primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, electronic gases, specialty gases, acetylene). The company also designs, engineers, and builds equipment that produces industrial gases and offers its customers a wide range of gas production and processing services such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants and other types of plants.Linde’s industrial gas operations are managed on a geographical basis and in 2024 89% of sales were generated by Linde's three geographic segments (Americas, EMEA and APAC) and the remaining 11% were related largely to the Engineering segment, and to a lesser extent Other (see Note 18 to the consolidated financial statements for operating segment details).Linde serves a diverse group of industries including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. The diversity of end-markets supports financial stability for Linde in varied business cycles.
Linde's industrial gas business generates most of its revenues and earnings in the following geographies where the company has its strongest market positions and where distribution and production operations allow the company to deliver the highest level of service to its customers at the lowest cost.
North and South America ("Americas") Europe, Middle East and Africa (“EMEA”) Asia and Pacific (“APAC”)
United States Germany China
Brazil United Kingdom Australia
Mexico Eastern Europe South Korea
Canada India
The company manufactures and distributes its industrial gas products through networks of thousands of production plants, pipeline complexes, distribution centers and delivery vehicles. Major pipeline complexes are primarily located in the United States and China. These networks are a competitive advantage, providing the foundation of reliable product supply to the company’s customer base. The majority of Linde’s business is conducted through long-term contracts which provide stability in cash flow and the ability to pass through changes in energy and feedstock costs to customers. The company has growth opportunities in all major geographies and in diverse end-markets such as healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics.17Table of Contents
EXECUTIVE SUMMARY – FINANCIAL RESULTS & OUTLOOK2024 Year in review
• Sales of $33,005 million were flat versus 2023 sales. Sales increased 2% from higher price attainment primarily in the Americas and EMEA segments. Sales from volume were flat as growth from new project start-ups was offset by base volume declines. Cost pass-through, representing the contractual billing of energy cost variances primarily to onsite customers, decreased sales by 1% with minimal impact on operating profit. Currency translation decreased sales by 1%, largely in the Americas and APAC.
• Reported operating profit of $8,635 million was 8% above 2023 reported operating profit of $8,024 million. Adjusted operating profit of $9,720 million was 7% above 2023 adjusted operating profit of $9,070 million. The increase in the reported and adjusted operating profit was primarily driven by higher pricing and savings from productivity initiatives in 2024. These increases more than offset the adverse impacts of cost inflation and currency translation.*
• Net income - Linde plc of $6,565 million and diluted earnings per share of $13.62 increased from $6,199 million and $12.59, respectively in 2023. Adjusted net income - Linde plc of $7,475 million and adjusted diluted earnings per share of $15.51 were 7% above 2023 adjusted amounts.*
• Cash flow from operations of $9,423 million was $118 million above 2023. The increase was driven by higher net income, partially offset by higher net working capital requirements, including lower inflows for contract liabilities from engineering customer advance payments and higher cash taxes. Capital expenditures were $4,497 million; dividends paid were $2,655 million; net purchases of ordinary shares were $4,451 million; and debt borrowings, net were $3,167 million.*A reconciliation of the adjusted amounts can be found in the "Non-GAAP Financial Measures" section in this MD&A.2025 OutlookLinde provides quarterly updates on operating results, material trends that may affect financial performance, and financial guidance via earnings releases and investor teleconferences. These materials are available on the company’s website, www.linde.com, but are not incorporated herein.18Table of Contents
CONSOLIDATED RESULTS AND OTHER INFORMATIONThe discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2024 and 2023. For the discussion comparing the years ended December 31, 2023 and 2022, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Form 10-K for the year ended December 31, 2023.
The following table provides summary information for 2024 and 2023. The reported amounts are GAAP amounts from the Consolidated Statements of Income. The adjusted amounts are intended to supplement investors' understanding of the company's financial information and are not a substitute for GAAP measures.(Millions of dollars, except per share data)
Year Ended December 31,2024 2023 VarianceReported AmountsSales $ 33,005 $ 32,854 — %
Cost of sales, exclusive of depreciation and amortization $ 17,143 $ 17,492 (2) %
As a percent of sales 51.9 % 53.2 %
Selling, general and administrative $ 3,337 $ 3,295 1 %
As a percent of sales 10.1 % 10.0 %
Depreciation and amortization $ 3,780 $ 3,816 (1) %
Cost reduction program and other charges (a) $ 145 $ 40 263 %
Other income (expense) - net $ 185 $ (41) 551 %
Operating profit $ 8,635 $ 8,024 8 %
Operating margin 26.2 % 24.4 %
Interest expense - net $ 256 $ 200 28 %
Net pension and OPEB cost (benefit), excluding service cost $ (190) $ (164) 16 %
Effective tax rate 23.4 % 22.7 %
Income from equity investments $ 170 $ 167 2 %
Noncontrolling interests $ (172) $ (142) 21 %
Net Income – Linde plc $ 6,565 $ 6,199 6 %
Diluted earnings per share $ 13.62 $ 12.59 8 %
Diluted shares outstanding 482,092 492,290 (2) %
Number of employees 65,289 66,323 (2) %Adjusted Amounts (b)Operating profit $ 9,720 $ 9,070 7 %
Operating margin 29.5 % 27.6 %
Net Income – Linde plc $ 7,475 $ 6,989 7 %
Diluted earnings per share $ 15.51 $ 14.20 9 %Other Financial Data (b)EBITDA $ 12,585 $ 12,007 5 %
As percent of sales 38.1 % 36.5 %
Adjusted EBITDA $ 12,819 $ 12,133 6 %
As percent of sales 38.8 % 36.9 %________________________
(a) See Note 3 to the consolidated financial statements.
(b) Adjusted amounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Financial Measures" section of this MD&A.19Table of Contents
Results of Operations
The following table provides a summary of changes in consolidated sales:2024 vs 2023% Change
Factors Contributing to Changes - Sales
Volume — %
Price/Mix 2 %Cost pass-through (1) %
Currency (1) %
Acquisitions/Divestitures — %Engineering — %— %
2024 Compared With 2023SalesLinde sales were flat for the 2024 year versus 2023. Sales grew 2% from higher price attainment. Volumes were flat, as new project start-ups were largely offset by base volume declines. Cost pass-through, representing the contractual billing of energy cost variances primarily to onsite customers decreased sales by 1%, with minimal impact on operating profit. Currency translation decreased sales by 1%, primarily due to the weakening of the Brazilian real, Chinese yuan, and Mexican peso against the U.S. dollar.Cost of sales, exclusive of depreciation and amortizationCost of sales, exclusive of depreciation and amortization, decreased $349 million, or 2%, for the year primarily due to lower cost pass-through and productivity gains, which more than offset cost inflation. Cost of sales, exclusive of depreciation and amortization, was 51.9% and 53.2% of sales, in 2024 and 2023, respectively. The decrease as a percentage of sales was primarily due to higher pricing and lower cost pass-through.Selling, general and administrative expensesSelling, general and administrative expense ("SG&A") increased $42 million, or 1%, from $3,295 million in 2023 to $3,337 million in 2024 driven by higher costs. SG&A was 10.1% of sales in 2024 versus 10.0% in 2023. Currency impacts decreased SG&A by approximately $28 million in 2024.Depreciation and amortizationReported depreciation and amortization expense decreased $36 million, or 1%, versus 2023. The decrease is due to lower depreciation and amortization of assets acquired in the merger partially offset by the net impact of new project start ups.
On an adjusted basis, depreciation and amortization expense increased $32 million, or 1%, versus 2023. Currency impacts decreased depreciation and amortization by $17 million in 2024. Excluding currency, underlying depreciation and amortization increased due to the net impact of new project start ups.Cost reduction program and other chargesCost reduction program and other charge s were $145 million and $40 million for 2024 and 2023, respectively. 2024 includes severance charges of $165 million, other cost reduction charges of $23 million, and other benefit of $43 million related to a divestiture in APAC. In 2023, the costs primarily related to severance in the Engineering segment and expenses incurred due to the intercompany reorganization.On an adjusted basis, these charges have been excluded in both periods.
Other income (expense) - netReported other income (expense) - net was a benefit of $185 million in 2024 and expense of $41 million in 2023. In 2024, other income included a benefit of $41 million related to a settlement with a supplier in the Americas and $45 million in insurance recoveries primarily within the Other segment (Note 7).Operating profit20Table of ContentsOn a reported basis, operating profit increased $611 million in 2024, or 8%. The increase was primarily driven by higher pricing and savings from productivity initiatives, which more than offset the effects of cost inflation, cost reduction program and other charges and currency.
On an adjusted basis, which excludes the impacts of merger-related purchase accounting as well as cost reduction program and other charges, operating profit increased $650 million, or 7%, for 2024 versus 2023. Operating profit growth was driven by higher pricing and productivity initiatives, which more than offset the effects of cost inflation and currency during 2024. A discussion of operating profit by segment is included in the segment discussion that follows.Interest expense - netReported interest expense – net in 2024 increased $56 million, or 28%, versus 2023. The increase was driven primarily by higher outstanding borrowings due to net issuances in 2024 and higher interest rates on borrowings.Net pension and OPEB cost (benefit), excluding service costReported net pension and OPEB cost (benefit), excluding service cost were benefits of $190 million and $164 million in 2024 and 2023, respectively. The increase was driven primarily by a higher expected return on assets and lower interest cost due to decrease in benefit obligations, partially offset by lower amortization of deferred gains year-over-year. (see Note 16 to the consolidated financial statements).Effective tax rateThe reported effective tax rate ("ETR") for 2024 was 23.4% versus 22.7% in 2023. The increase in the rate is primarily related to a prior year benefit from a net decrease in the company’s uncertain tax positions. On an adjusted basis, the ETR for 2024 was 23.4% versus 23.6% in 2023.Income from equity investmentsReported income from equity investments for 2024 was $170 million as compared to $167 million in 2023. On an adjusted basis, income from equity investments for 2024 was $242 million versus $239 million million in 2023.Noncontrolling interestsAt December 31, 2024, noncontrolling interests consisted primarily of noncontrolling shareholders’ investments in APAC (primarily in China). Reported noncontrolling interests increased $30 million, from $142 million in 2023 to $172 million in 2024 and included the impact of a divestiture in the APAC segment.
Adjusted noncontrolling interests increased $14 million in 2024 as compared to 2023.Net Income - Linde plcReported net income - Linde plc increased $366 million, or 6%. On an adjusted basis, which excludes the impacts of purchase accounting and cost reduction program and other charges, net income - Linde plc increased $486 million, or 7%, in 2024 versus 2023. On both a reported and adjusted basis, the increase was driven by higher operating profit.Diluted earnings per shareReported diluted earnings per share increased $1.03, or 8%, in 2024 as compared to 2023. On an adjusted basis, diluted EPS of $15.51 in 2024 increased $1.31 versus 2023. The increase on both a reported and adjusted basis is primarily due to higher net income - Linde plc and lower diluted shares outstanding.EmployeesThe number of employees at December 31, 2024 was 65,289, a decrease of 2%, or 1,034 employees from 2023, driven primarily by the impact of cost reduction programs and a divestiture in APAC .Other Financial DataEBITDA increased to $12,585 million in 2024 from $12,007 million in 2023. Adjusted EBITDA increased to $12,819 million for 2024 as compared to $12,133 million in 2023. The increase in both periods was driven by higher operating profit versus prior year.See the "Non-GAAP Financial Measures" section for definitions and reconciliations of these non-GAAP measures to reported GAAP amounts.
Other Comprehensive Income (Loss)Other comprehensive income (loss) for the year ended December 31, 2024 was a loss of $1,126 million that resulted primarily from currency translation adjustments of $1,632 million partially offset by gains related to change in funded status of retirement plans of $519 million. The translation adjustments reflect the impact of translating local currency
21
Table of Contents
foreign subsidiary financial statements to U.S. dollars, and are largely driven by the movement of the U.S. dollar against major currencies including the Euro, British pound and the Chinese yuan. See the "Currency" section of the MD&A for exchange rates used for translation purposes and Note 7 to the consolidated financial statements for a summary of the currency translation adjustment component of accumulated other comprehensive income (loss) by segment.Related Party Transactions
The company’s related parties are primarily unconsolidated equity affiliates. The company did not engage in any material transactions involving related parties that included terms or other aspects that differ from those which would be negotiated with independent parties.
Environmental MattersLinde’s principal operations relate to the production and distribution of atmospheric and other industrial gases, many of which are used to help customers reduce their emissions. Worldwide costs relating to environmental protection may continue to grow due to increasingly stringent laws and regulations. In addition, Linde may face physical risks from climate change and extreme weather.
Climate Change
Linde operates in jurisdictions that have, or are developing, laws and/or regulations to reduce or mitigate the adverse effects of greenhouse gas ("GHG") emissions and therefore faces a highly uncertain regulatory environment in this area. Linde continues to evaluate ongoing regulatory changes and assess appropriate response. For example, the U.S. Environmental Protection Agency ("EPA") has promulgated rules requiring reporting of GHG emissions to which Linde, its suppliers and customers are subject to. EPA has also promulgated regulations to restrict GHG emissions, including final rules regulating GHG emissions from light-duty vehicles and certain large manufacturing facilities, including some of Linde’s suppliers and customers. In addition to these developments in the United States, several other countries worldwide have implemented carbon taxation or trading systems which impact the company and its customers, including regulations in China, Singapore and the European Union. Among other impacts, such regulations are expected to affect the cost of energy, which is a significant cost for Linde. Nevertheless, Linde's long-term customer contracts typically provide rights to recover increased electricity, natural gas, and other costs that are incurred by the company as a result of climate change regulation.
Linde anticipates continued growth in hydrogen sales due to increased focus on decarbonization projects. Traditionally, hydrogen production plants and a large number of other manufacturing and electricity-generating plants have been identified as sources of carbon dioxide emissions and these plants are subject to cap-and-trade regulations in jurisdictions including California and the European Union. Linde believes it will be able to mitigate the costs of these regulations through the terms of its product supply contracts. However, legislation that limits GHG emissions may impact growth by increasing capital, compliance, operating and maintenance costs and/or decreasing demand.
To manage business risks from current and potential GHG emission regulation as well as physical consequences of climate change, Linde actively monitors current developments, evaluates the direct and indirect business risks, and takes appropriate actions. Among others, actions include: increasing relevant resources and training; maintaining contingency plans; obtaining advice and counsel from expert vendors, insurance providers and industry experts; incorporating GHG provisions in commercial agreements; and conducting regular reviews of the business risks with management. Although there are considerable uncertainties, Linde believes that the business risk from potential regulations can be effectively managed through its commercial contracts. Additionally, Linde’s plant design, operations, and risk management teams are engaged to manage and mitigate losses from physical climate change, and the company does not anticipate material effects regarding its plant operations or business arising from potential physical risks of climate change.
Linde continuously seeks opportunities to optimize energy use and GHG emissions through research and development in customer applications and operational energy efficiency, sourcing low-carbon source energy, and purchasing hydrogen as a chemical byproduct where feasible. Linde tracks GHG emission performance versus targets and reports regularly to business management and annually to Linde's Board of Directors. The Sustainability Committee is responsible for oversight of the Company's programs and policies related to environmental matters, including climate change, greenhouse gas reduction goals and decarbonization solutions, such as clean energy and carbon management.
At the same time, external factors may provide Linde with future business opportunities. Examples include current legislation, such as the Inflation Reduction Act in the U.S., which provides for investments in production of clean hydrogen and decarbonization technologies. Other factors include governmental regulation of GHG and other emissions; uncertain costs of energy and certain natural resources; the development of renewable energy alternatives; and new technologies that help extract natural gas, improve air quality, increase energy efficiency and mitigate the impacts of climate change. Linde
22Table of Contentscontinues to develop new applications that can help customers lower emissions by reducing energy consumption and increasing product throughput. Stricter regulation of water quality in emerging economies such as China provide a growing market for a number of gases, e.g., oxygen for wastewater treatment. Increased concern about drought in areas such as California and Australia may create additional markets for carbon dioxide for desalination. Renewable fuel standards in the European Union and U.S. can create a market for second-generation biofuels which use industrial gases such as oxygen, carbon dioxide, and hydrogen.Costs Relating to the Protection of the EnvironmentThe environmental protection costs incurred in 2024 were not significant. Linde anticipates that future annual environmental protection expenditures will be similar to 2024, subject to any significant changes in existing laws and regulations. Based on historical results and current estimates, management does not believe that environmental expenditures will have a material adverse effect on the consolidated financial position, the consolidated results of operations or cash flows in any given year.Legal Proceedings
See Note 17 to the consolidated financial statements for information concerning legal proceedings.
Retirement Benefits
PensionsThe net periodic benefit cost (benefit) was a benefit of $106 million, $80 million and $110 million in 2024, 2023 and 2022, respectively.
The funded status (pension benefit obligation ("PBO") less the fair value of plan assets) for the U.S. plans was a surplus of $86 million and deficit of $137 million at December 31, 2024 and 2023, respectively. The funded status for non-U.S. plans was a surplus of $464 million and deficit of $207 million at December 31, 2024 and 2023, respectively. During 2024, the U.S. and non U.S plans derived a benefit from actuarial gains due to higher discount rate environment.
Global pension contributions were $35 million in 2024, $46 million in 2023, and $51 million in 2022. At a minimum, Linde contributes to its pension plans to comply with local regulatory requirements (e.g., ERISA in the U.S.). Discretionary contributions in excess of the local minimum requirements are made based on many factors, including long-term projections of the plans' funded status, the economic environment, potential risk of overfunding, pension insurance costs and alternative uses of cash. Changes to these factors can impact the timing of discretionary contributions from year to year. Estimated required contributions for 2025 are currently expected to be in the range of $25 million to $35 million.
Linde assumes expected returns on plan assets for 2025 of 7.00% and 6.02% f or the U.S. and non-U.S. plans, respectively, which are consistent with the long-term expected returns on its investment portfolios.
Excluding the impact of any settlements, 2025 consolidated pension expense is expected to be a benefit of approximately $145 million . Th e benefit derived from the expected return on assets assumption for Linde's most significant plans is anticipated to more than offset the expense from service and interest cost accruals and the higher amortization of deferred losses.Refer to the Critical Accounting Estimates section and Note 16 to the consolidated financial statements for a more detailed discussion of the company’s retirement benefits, including a description of the various retirement plans and the assumptions used in the calculation of net periodic benefit cost (benefit) and funded status.
InsuranceLinde purchases insurance to limit a variety of property and casualty risks, including those related to property, business interruption, third-party liability and workers’ compensation. Currently, the company self retains up to $10 million per occurrence for vehicle liability in the United States and $5 million per occurrence for workers' compensation and general liability. Through December 31, 2024, the company self retained risk up to €5 to €7.5 million at its various properties worldwide for property damage resulting from fire, flood and other perils affecting its properties along with a separate €5 to €7.5 million deductible on business interruption resulting from a major peril loss. As of January 1, 2025 Linde has a captive insurance company that provides coverage for up to $50 million per event, and $100 million, in the annual aggregate, of losses above local deductibles for property damage and business interruption at the group’s sites globally. To mitigate the risk of losses above these self retention levels, the company purchases catastrophic insurance coverage from highly rated insurance companies.
23Table of ContentsAt December 31, 2024 and 2023, the company had recorded a total of $80 million and $75 million, respectively, representing an estimate of the retained liability for the ultimate cost of claims incurred and unpaid as of the balance sheet dates. The estimated liability is established using statistical analysis and is based upon historical experience, actuarial assumptions and professional judgment. These estimates are subject to the effects of trends in loss severity and frequency and are subject to a significant degree of inherent variability. If actual claims differ from the company’s estimates, they will be adjusted at that time and financial results could be impacted.Linde recognizes estimated insurance proceeds relating to damages at the time of loss only to the extent of incurred losses. Any insurance recoveries for business interruption and for property damages in excess of the net book value of the property are recognized only when realized or pending payments confirmed by its insurance companies.
SEGMENT DISCUSSION
Linde’s operations consist of two major product lines: industrial gases and engineering. As further described in the following paragraph, Linde’s industrial gases operations are managed on a geographic basis, which represents three of the company's reportable segments - Americas, EMEA (Europe/Middle East/Africa), and APAC (Asia/South Pacific); a fourth reportable segment, which represents the company's Engineering business, designs and manufactures equipment for air separation and other industrial gas applications specifically for end customers and is managed on a worldwide basis operating in all geographic segments. Other consists of corporate costs and a few smaller businesses which individually do not meet the quantitative thresholds for separate presentation.
The industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, electronic gases, specialty gases, acetylene). Many of these products are co-products of the same manufacturing process. Linde manufactures and distributes nearly all of its products and manages its customer relationships on a regional basis. Linde’s industrial gases are distributed to various end-markets within a regional segment through one of three basic distribution methods: on-site or tonnage; merchant or bulk; and packaged or cylinder gases. The distribution methods are generally integrated in order to best meet the customer’s needs and very few of its products can be economically transported outside of a region. Therefore, the distribution economics are specific to the various geographies in which the company operates and are consistent with how management assesses performance.
The company’s measure of profit/loss for segment reporting purposes is segment operating profit. Segment operating profit is defined as operating profit excluding purchase accounting impacts of the Linde AG merger, cost reduction program and other charges, and items not indicative of ongoing business trends. This is the manner in which the company’s Chief Operating Decision Maker ("CODM") assesses performance and allocates resources.24
Table of Contents
The table below presents sales and operating profit information about reportable segments and Other for the years ended December 31, 2024 and 2023.(Millions of dollars)
Year Ended December 31,2024 2023 VarianceSalesAmericas $ 14,442 $ 14,304 1 %
EMEA 8,352 8,542 (2) %
APAC 6,632 6,559 1 %
Engineering 2,322 2,160 8 %
Other 1,257 1,289 (2) %
Total sales $ 33,005 $ 32,854 — %Operating ProfitAmericas $ 4,550 $ 4,244 7 %
EMEA 2,780 2,486 12 %
APAC 1,918 1,806 6 %
Engineering 410 491 (16) %
Other 62 43 44 %
Segment operating profit 9,720 9,070 7 %Reconciliation to reported operating profit:
Cost reduction program and other charges (Note 3)(145) (40)
Purchase accounting impacts - Linde AG (940) (1,006)
Total operating profit $ 8,635 $ 8,024Americas
(Dollar amounts in millions) Variance
Year Ended December 31,2024 2023 2024 vs 2023
Sales $ 14,442 $ 14,304 1 %
Operating profit $ 4,550 $ 4,244 7 %
As a percent of sales 31.5 % 29.7 %
2024 vs 2023% Change
Factors Contributing to Changes - SalesVolume — %Price/Mix 3 %Cost pass-through (1) %
Currency (2) %Acquisitions/Divestitures 1 %1 %The Americas segment includes Linde’s industrial gases operations in approximately 20 countries including the United States, Canada, Mexico and Brazil.
SalesSales for the Americas segment increased $138 million, or 1%, in 2024 versus 2023. Higher pricing contributed 3% to sales. The impact of net acquisitions increased sales by 1%. Cost past-through decreased sales by 1% with minimal impact
25
Table of Contents
on operating profit. Currency translation decreased sales by 2% driven primarily by the weakening of the Brazilian real and Mexican peso against the U.S. Dollar. Volumes remained flat due base volume declines largely offset by project start-ups.Operating ProfitOperating profit in the Americas segment increased $306 million, or 7%, in 2024 versus 2023 driven primarily by higher pricing, continued productivity initiatives and a settlement gain with a supplier, which more than offset cost inflation.EMEA
(Dollar amounts in millions) VarianceYear Ended December 31, 2024 2023 2024 vs 2023
Sales $ 8,352 $ 8,542 (2) %
Operating profit $ 2,780 $ 2,486 12 %
As a percent of sales 33.3 % 29.1 %
2024 vs 2023% Change
Factors Contributing to Changes - SalesVolume (1) %
Price/Mix 3 %
Cost pass-through (4) %
Currency — %Acquisitions/Divestitures — %(2) %
The EMEA segment includes Linde's industrial gases operations in approximately 45 European, Middle Eastern and African countries including Germany, the U.K., France, Sweden and the Republic of South Africa.SalesEMEA segment sales decreased $190 million, or 2%, in 2024 versus 2023. Cost pass-through decreased sales by 4% with minimal impact on operating profit. Higher price attainment increased sales by 3%. Volumes decreased sales by 1% led by the manufacturing end market. Currency translation was flat.Operating ProfitOperating Profit for the EMEA segment increased $294 million, or 12%, in 2024 versus 2023. The increase was driven primarily by higher pricing and continued productivity initiatives, partially offset by cost inflation and lower volumes.APAC
(Dollar amounts in millions) VarianceYear Ended December 31, 2024 2023 2024 vs 2023
Sales $ 6,632 $ 6,559 1 %
Operating profit $ 1,918 $ 1,806 6 %
As a percent of sales 28.9 % 27.5 %
26
Table of Contents
2024 vs 2023% Change
Factors Contributing to Changes - SalesVolume 2 %Price/Mix — %Cost pass-through 1 %
Currency (2) %
Acquisitions/Divestitures — %
1 %
The APAC segment includes Linde's industrial gases operations in approximately 20 Asian and South Pacific countries and regions including China, Australia, India and South Korea.SalesSales for the APAC segment increased $73 million, or 1%, in 2024 versus 2023. Volumes increased 2% including project start-ups in the electronics end market. Currency translation decreased sales by 2% driven primarily by the weakening of the Korean won and Chinese yuan against the U.S. Dollar. Cost pass-through increased sales by 1% with minimal impact on operating profit. Pricing was flat.Operating ProfitOperating profit in the APAC segment increased $112 million, or 6%, in 2024 versus 2023. The increase was primarily driven by volume including project start-ups and continued productivity initiatives which more than offset the impact of currency and cost inflation.Engineering
(Dollar amounts in millions) VarianceYear Ended December 31, 2024 2023 2024 vs 2023
Sales $ 2,322 $ 2,160 8 %
Operating profit $ 410 $ 491 (16) %
As a percent of sales 17.7 % 22.7 %
2024 vs 2023% Change
Factors Contributing to Changes - SalesCurrency — %
Other 8 %
8 %SalesEngineering segment sales increased $162 million, or 8%, in 2024 versus 2023 driven by project timing.Operating profitEngineering segment operating profit decreased $81 million, or 16%, in 2024 versus 2023 due to larger benefits in the prior year from higher margin on lawful wind down of projects subject to sanctions in Russia.
27
Table of ContentsOther
(Dollar amounts in millions) VarianceYear Ended December 31, 2024 2023 2024 vs 2023
Sales $ 1,257 $ 1,289 (2) %
Operating profit $ 62 $ 43 44 %
As a percent of sales 4.9 % 3.3 %
2024 vs 2023% Change
Factors Contributing to Changes - SalesVolume/Price (2) %
Currency — %Acquisitions/Divestitures — %(2) %Other consists of corporate costs and a few smaller businesses including: Linde Advanced Materials Technology ("LAMT") and global helium wholesale; which individually do not meet the quantitative thresholds for separate presentation.
SalesSales for Other decreased $32 million, or 2%, in 2024 versus 2023. Underlying s ales decreased 2% in 2024 versus 2023 primarily due to lower volumes in global helium and LAMT. The impact of currency translation was flat in 2024 versus 2023.Operating profitOperating profit in Other increased $19 million, or 44%, in 2024 versus 2023. The increase was driven by insurance recovery for LAMT partially offset by higher costs due to helium.Currency
The results of Linde’s non-U.S. operations are translated to the company’s reporting currency, the U.S. dollar, from the functional currencies used in the countries in which the company operates. For most foreign operations, Linde uses the local currency as its functional currency. There is inherent variability and unpredictability in the relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Linde’s results of operations in any given period.
28
Table of Contents
To help understand the reported results, the following is a summary of the significant currencies underlying Linde’s consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):Percentage of 2024 Consolidated SalesExchange Rate for Statements of Income Exchange Rate for Balance Sheet
Average Year Ended December 31, December 31,Currency 2024 2023 2024 2023
Euro 18 % 0.92 0.92 0.97 0.92
Chinese yuan 8 % 7.20 7.08 7.30 7.10
British pound 5 % 0.78 0.80 0.80 0.79
Australian dollar 4 % 1.52 1.50 1.62 1.47
Brazilian real 4 % 5.37 4.99 6.18 4.86
Mexican peso 3 % 18.22 17.71 20.83 16.97
Canadian dollar 3 % 1.37 1.35 1.44 1.32
Korean won 3 % 1,363 1,306 1,472 1,288
Indian rupee 2 % 83.67 84.51 85.61 83.21
South African rand 1 % 18.32 18.43 18.84 18.36
Swedish krona 1 % 10.57 10.60 11.07 10.07
Thailand bhat 1 % 35.24 34.78 34.09 34.1429
Table of Contents
LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA
(Millions of dollars)
Year Ended December 31,2024 2023Net Cash Provided by (Used for)
Operating ActivitiesNet income (including noncontrolling interests) $ 6,737 $ 6,341Non-cash charges (credits):Add: Cost reduction program and other charges, net of payments (a) 31 (118)
Add: Depreciation and amortization 3,780 3,816
Add (Less): Deferred income taxes (142) (84)
Add (Less): Non-cash charges and other 88 184
Net income adjusted for non-cash charges and other 10,494 10,139
Less: Pension contributions (35) (46)
Add (Less): Working capital (845) (483)
Add (Less): Other (191) (305)
Net cash provided by (used for) operating activities $ 9,423 $ 9,305Investing ActivitiesCapital expenditures $ (4,497) $ (3,787)
Acquisitions, net of cash acquired (317) (953)
Divestitures, net of cash divested and asset sales 170 70
Net cash provided by (used for) investing activities $ (4,644) $ (4,670)Financing ActivitiesDebt increases (decreases) – net $ 3,167 $ 1,060
Issuances (purchases) of ordinary shares – net (4,451) (3,925)
Cash dividends – Linde plc shareholders (2,655) (2,482)
Noncontrolling interest transactions and other (420) (53)
Net cash provided by (used for) financing activities $ (4,359) $ (5,400)
Effect of exchange rate changes on cash $ (234) $ (7)
Cash and cash equivalents, end-of-period $ 4,850 $ 4,664____________________
(a) See Note 3 to the consolidated financial statements.Cash increased $186 million in 2024 versus 2023. The primary sources of cash in 2024 were cash flows from operations of $9,423 million and net debt borrowings of $3,167 million. The primary uses of cash included capital expenditures of $4,497 million, net purchases of ordinary shares of $4,451 million, and cash dividends to shareholders of $2,655 million.
2024 compared with 2023Cash Flows From OperationsCash flows from operations was $9,423 million, an increase of $118 million from 2023. The increase was primarily attributable to higher net income, which was partially offset by higher net working capital requirements, including lower inflows for contract liabilities from engineering customer advance payments, and higher cash taxes.InvestingNet cash used for investing activities was $4,644 million in 2024 compared to $4,670 million in 2023. The decrease was due to lower acquisition spend and higher proceeds from divestiture and asset sales, which more than offset higher capital expenditures.
Capital expenditures in 2024 were $4,497 million, an increase of $710 million from 2023. Capital expenditures during 2024 related primarily to investments in new plant and production equipment for backlog growth requirements.30
Table of ContentsApproximately 58% of the capital expenditures were in the Americas segment with 22% in the APAC segment and the rest largely in the EMEA segment.
At December 31, 2024, Linde's sale of gas backlog of large projects under construction was approximately $7.1 billion. This represents the total estimated capital cost of large plants under construction.
Acquisitions, net of cash acquired for 2024 were $317 million, a decrease of $636 million from 2023. In 2024, acquisitions were primarily related to packaged gas businesses in the Americas. Acquisitions in the prior year were $953 million related primarily to the acquisition of nexAir in the Americas (see Note 2 to the consolidated financial statements).
Divestitures, net of cash divested and asset sales in 2024 were $170 million compared with $70 million in 2023. Divestiture proceeds in 2024 include $69 million in net proceeds for a divestiture in APAC and a settlement with a supplier in the Americas.Financing
Linde’s financing strategy is to secure long-term committed funding by issuing public notes and debentures and commercial paper backed by a long-term bank credit agreement. Linde’s international operations are funded through a combination of local borrowing and intercompany funding to minimize the total cost of funds and to manage and centralize currency exchange exposures. As deemed necessary, Linde manages its exposure to interest-rate changes through the use of financial derivatives (see Note 12 to the consolidated financial statements and Item 7A. Quantitative and Qualitative Disclosures About Market Risk).Cash used for financing activities was $4,359 million in 2024 compared to $5,400 million in 2023. Cash provided by debt was $3,167 million in 2024 versus $1,060 million in 2023, driven primarily by higher net debt issuances partially offset by lower commercial paper issuances in 2024. In February 2024, Linde repaid €550 million of 1.20% notes that became due and issued €700 million of 3.00% notes due in 2028, €850 million of 3.20% notes due in 2031 and €700 million of 3.40% notes due in 2036. In May 2024, Linde repaid €300 million of 1.875% notes that became due. In June 2024, Linde issued €750 million of 3.375% notes due in 2030, €750 million of 3.500% notes due in 2034 and €700 million of 3.75% notes due in 2044. In December 2024, Linde repaid $300 million of 4.800% notes that became due.
In February 2025, Linde issued €850 million o f 2.625% notes due in 2029, €750 million of 3.00% notes due in 2033 and €650 million of 3.25% notes due in 2037. Linde redeemed $600 million of 4.70% notes that were due in 2025.
Net purchases of ordinary shares were $4,451 million in 2024 versus $3,925 million in 2023. For additional information related to share repurchase programs, see Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Cash dividends increased to $2,655 million in 2024 versus $2,482 million in 2023 driven primarily by a 9% increase in dividends per share to $5.56 per share from $5.10 per share, partially offset by lower shares outstanding. Cash used for Noncontrolling interest transactions and other was $420 million for the year ended December 31, 2024 versus cash used of $53 million for the respective 2023 period, primarily driven by financing related derivative outflows.
Linde’s total net debt outstanding at December 31, 2024 was $16,773 million, $2,064 million higher than $14,709 million at December 31, 2023. The December 31, 2024 net debt balance includes $21,140 million in public securities, and $483 million representing primarily worldwide bank borrowings, net of $4,850 million of cash. Linde’s global effective borrowing rate was approximately 2.5% for 2024.
The company believes that it has sufficient operating flexibility, cash reserves, and funding sources to maintain adequate amounts of liquidity to meet its business needs around the world. At December 31, 2024, Linde's credit ratings as reported by Standard & Poor’s and Moody’s were A-1 and P-1 for short-term debt, respectively, and A and A2 for long-term debt, respectively. The company maintains a $5 billion and a $1.5 billion unsecured and undrawn revolving credit agreements with no associated financial covenants. No borrowings were outstanding under the credit agreements as of December 31, 2024. The company does not anticipate any limitations on its ability to access the debt capital markets and/or other external funding sources and remains committed to its strong ratings from Moody’s and Standard & Poor’s.
Note 11 to the consolidated financial statements includes information with respect to the company’s debt activity, current debt position, debt covenants and the available credit facilities; and Note 12 includes information relating to derivative financial instruments. Linde's credit facilities are with major financial institutions and are non-cancelable until maturity. Therefore, the company believes the risk of the financial institutions being unable to make required loans under the credit facilities, if requested, to be low. Linde’s major bank credit and long-term debt agreements contain standard covenants. The company was in compliance with these covenants at December 31, 2024 and expects to remain in compliance for the foreseeable future.31
Table of Contents
OFF-BALANCE SHEET ARRANGEMENTSAs discussed in Note 17 to the consolidated financial statements, at December 31, 2024, Linde had undrawn outstanding letters of credit, bank guarantees and surety bonds entered into in connection with normal business operations and they are not reasonably likely to have a material impact on Linde’s consolidated financial condition, results of operations, or liquidity.CRITICAL ACCOUNTING ESTIMATES
The policies discussed below are considered by management to be critical to understanding Linde’s financial statements and accompanying notes prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Their application places significant importance on management’s judgment as a result of the need to make estimates of matters that are inherently uncertain. Linde’s financial position, results of operations and cash flows could be materially affected if actual results differ from estimates made. These policies are determined by management and have been reviewed by Linde’s Audit Committee.
Revenue Recognition
Long-Term Construction Contracts
The company designs and manufactures equipment for air separation and other varied gas production and processing plants manufactured specifically for end customers. Revenues for sale of equipment contracts are generally recognized over time as Linde has an enforceable right to payment for performance completed to date and performance does not create an asset with alternative use. For contracts recognized over time, revenue is recognized primarily using a cost incurred input method. Costs incurred to date relative to total estimated costs at completion are used to measure progress toward satisfying performance obligations. The result is applied to total expected revenue and results in financial statement recognition of revenue in addition to costs incurred to date. Any expected loss on a contract is recognized as an expense immediately. Contract modifications are typically accounted for as part of the existing contract and are recognized as a cumulative adjustment for the inception-to-date effect of such change. We assess performance as progress towards completion is achieved on specific projects, earnings will be impacted by changes to our forecast of revenues and costs on these projects.
The cost incurred input method places considerable importance on accurate estimates of the extent of progress towards completion and may involve estimates on the scope of deliveries and services required to fulfill the contractually defined obligations. The key source of estimation uncertainty is the total estimated costs at completion including material, labor and overhead costs and the resultant state of completion of the contracts. There are inherent uncertainties associated with the estimation process, including technical complexity, duration of construction cycle, potential cost inflation (whether equipment or manpower), and scope considerations all of which may affect the total estimation process. Changes in these estimates may lead to a significant impact on future financial statements.
Pension Benefits
Pension benefits represent financial obligations that will be ultimately settled in the future with employees who meet eligibility requirements. Because of the uncertainties involved in estimating the timing and amount of future payments, significant estimates are required to calculate pension expense and liabilities related to the company’s plans. The company utilizes the services of independent actuaries, whose models are used to facilitate these calculations.
Several key assumptions are used in actuarial models to calculate pension expense and liability amounts recorded in the financial statements. Management believes the three most significant variables in the models are the expected long-term rate of return on plan assets, the discount rate, and the expected rate of compensation increase. The actuarial models also use assumptions for various other factors, including long-term inflation rates, employee turnover, retirement age, and mortality. Linde management believes the assumptions used in the actuarial calculations are reasonable, reflect the company’s experience and expectations for the future and are within accepted practices in each of the respective geographic locations in which it operates. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. The sensitivities to each of the key assumptions presented below exclude the impact of special items that occurred during the year.The weighted-average expected long-term rates of return on pension plan assets were 7.00% for U.S. plans and 6.02% for non-U.S. plans at December 31, 2024 (7.00% and 5.64%, respectively at December 31, 2023). The expected long-term rate of return on the U.S. and Non-U.S. plan assets is estimated based on the plans' investment strategy and asset allocation, historical capita l market performance and, to a lesser extent, historical plan performance. A 0.50% change in these expected long-term rates of return, with all other assumptions held constant, would change Linde’s pension expense by approximately $44 million.32
Table of ContentsThe company has consistently used a market-related value of assets rather than the fair value at the measurement date to determine annual pension expense. The market-related value recognizes investment gains or losses over a five-year period. As a result, changes in the fair value of assets from year to year are not immediately reflected in the company’s annual pension expense. Instead, annual pension expense in future periods will be impacted as deferred investment gains or losses are r ecognized in the market-related value of assets over the five-year period. The consolidated market-related value of assets was $8,839 million, or $713 million higher than the fair value of assets of $8,126 million at December 31, 2024 . These net deferred investment losses of $713 million wil l be recognized in the calculation of the market-related value of assets ratably over the next four years and will impact future pension expense. Future actual investment gains or losses will impact the market-related value of assets and, therefore, will impact future annual pension expense in a similar manner.
Discount rates are used to calculate the present value of plan liabilities and pension costs and are determined annually by management. The company measures the service and interest cost components of pension and OPEB expense for significant U.S. and non-U.S. plans using the spot rate approach. U.S. plans that do not use the spot rate approach continue to determine discount rates by using a cash flow matching model provided by the company's independent actuaries. The model includes a portfolio of corporate bonds graded AA or better by at least half of the ratings agencies and matches the U.S. plans' projected cash flows to the calculated spot rates. Discount rates for the remaining Non-U.S. plans are based on market yields for high-quality fixed income investments representing the approximate duration of the pension liabilities on the measurement date. Refer to Note 16 to the consolidated financial stat ements for a summary of the discount rates used to calculate plan liabilities and benefit costs, and to the Retirement Benefits section of the Consolidated Results and Other Information section of this MD&A for a further discussion of 2024 benefit costs. A 0.50% reduction in discount rates, with all other variables held constant, would increase Linde’s pension expense by approximately $1 million whereas a 0.50% increase in discount rates would result in a decrease of $5 million. A 0.50% reduction in discount rates would increase the PBO by approximately $429 million whereas a 0.50% increase in discount rates would have a favorable impact to the PBO of approximately $392 million.
The weighted-average expected rate of compensation increase was 3.50% for U.S. plans and 2.55% for non-U.S. plans at December 31, 2024 (3.50% and 2.58%, respectively, at December 31, 2023). The estimated annual compensation increase is determined by management every year and is based on historical trends and market indices. A 0.50% change in the expected rate of compensation increase, with all other variables held constant, would change Linde’s pension expense by approximately $4 million and would impact the PBO by approximately $33 million.Asset Impairments
Goodwill and Other Indefinite-Lived Intangibles AssetsAt December 31, 2024, the company had goodwill of $25,937 million and $1,650 million of other indefinite-lived intangible assets. Goodwill represents the aggregate of the excess consideration paid for acquired businesses over the fair value of the net assets acquired. Indefinite-lived other intangibles relate to the Linde name.
The company performs a goodwill impairment test annually as of October 1 or more frequently if events or circumstances indicate that an impairment loss may have been incurred. The impairment test performed during the fourth quarter of 2024 indicated no impairment. At December 31, 2024, Linde’s enterprise value was approximately $215 billion (outstanding shares multiplied by the year-end stock price plus net debt, and without any control premium) while its total capital was approximately $56 billion.The impairment test allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than carrying value then the company will estimate and compare the fair value of its reporting units to their carrying value, including goodwill. Reporting units are determined based on one level below the operating segment level.Management believes that the quantitative and qualitative factors used to perform its annual goodwill impairment assessment are appropriate and reasonable. Although the 2024 assessment indicated that it is more likely than not that the fair value of each reporting unit exceeded its carrying value, changes in circumstances or conditions affecting this analysis could have a significant impact on the fair value determination, which could then result in a material impairment charge to the company's results of operations.Other indefinite-lived intangible assets are evaluated for impairment on an annual basis or more frequently if events and circumstances indicate that an impairment loss may have been incurred, and no impairments were indicated.
See Notes 9 and 10 to the consolidated financial statements.
33
Table of Contents
Long-Lived AssetsLong-lived assets, including property, plant and equipment and finite-lived other intangible assets, are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an individual asset or asset group may not be recoverable. For purposes of this test, asset groups are determined based upon the lowest level for which there are independent and identifiable cash flows. Based upon Linde's business model an asset group may be a single plant and related assets used to support on-site, merchant and packaged gas customers. Alternatively, the asset group may be a collection of distribution related assets (cylinders, distribution centers, and stores) or be a pipeline complex which includes multiple interdependent plants and related assets connected by pipelines within a geographic area used to support the same distribution methods. As a result of the Russia-Ukraine conflict, Linde deconsolidated its Russian gas and engineering business entities as of June 30, 2022. See Note 3 to the consolidated financial statements.Income TaxesAt December 31, 2024, Linde had deferred tax assets of $1,289 million (net of valuation allowances of $146 million), and deferred tax liabilities of $6,520 million. At December 31, 2024, uncertain tax positions totaled $292 million (see Note 1 and Note 5 to the consolidated financial statements). Income tax expense was $2,002 million for the year ended December 31, 2024, or about 23.4% of pre-tax income (see Note 5 to the consolidated financial statements for additional information related to taxes).In the preparation of consolidated financial statements, Linde estimates income taxes based on diverse legislative and regulatory structures that exist in various jurisdictions where the company conducts business. Deferred income tax assets and liabilities represent tax benefits or obligations that arise from temporary differences due to differing treatment of certain items for accounting and income tax purposes. Linde evaluates deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character (e.g. capital gain versus ordinary income treatment), amount and timing to result in their recovery. A valuation allowance is established when management determines that it is more likely than not that a deferred tax asset will not be realized to reduce the assets to their realizable value. Considerable judgments are required in establishing deferred tax valuation allowances and in assessing exposures related to tax matters. As events and circumstances change, related reserves and valuation allowances are adjusted to income at that time. Linde’s tax returns are subject to audit and local taxing authorities could challenge the company’s tax positions. The company’s practice is to review tax filing positions by jurisdiction and to record provisions for uncertain income tax positions, including interest and penalties when applicable. Linde believes it records and/or discloses such potential tax liabilities as appropriate and has reasonably estimated its income tax liabilities and recoverable tax assets. If new information becomes available, adjustments are charged or credited against income at that time. Management does not anticipate that such adjustments would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a material impact on the company’s reported results of operations.
Contingencies
The company accrues liabilities for non-income tax contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized or realizable. If new information becomes available or losses are sustained in excess of recorded amounts, adjustments are charged against income at that time. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a material impact on the company’s reported results of operations.Linde is subject to various claims, legal proceedings and government investigations that arise from time to time in the ordinary course of business. These actions are based upon alleged environmental, tax, antitrust and personal injury claims, among others (see Note 17 to the consolidated financial statements). Such contingencies are significant and the accounting requires considerable management judgments in analyzing each matter to assess the likely outcome and the need for establishing appropriate liabilities and providing adequate disclosures. Linde believes it records and/or discloses such contingencies as appropriate and has reasonably estimated its liabilities.NEW ACCOUNTING STANDARDS
See Note 1 to the consolidated financial statements for information concerning new accounting standards and the impact of the implementation of these standards on the company’s financial statements.
FAIR VALUE MEASUREMENTS
Linde does not expect changes in the aggregate fair value of its financial assets and liabilities to have a material impact on the consolidated financial statements. See Note 13 to the consolidated financial statements.
34
Table of Contents
NON-GAAP FINANCIAL MEASURES
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 financial leverage and operating performance. Special items which the company does not believe to be indicative of on-going business performance 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.
The non-GAAP measures in the following reconciliations are presented in this MD&A.
Adjusted Amounts
(Dollar amounts in millions, except per share data)Year Ended December 31, 2024 2023Adjusted Operating Profit and Operating MarginReported operating profit $ 8,635 $ 8,024
Add: Cost reduction program and other charges 145 40
Add: Purchase accounting impacts - Linde AG (c) 940 1,006
Total adjustments 1,085 1,046
Adjusted operating profit $ 9,720 $ 9,070
Reported percentage change 8 %
Adjusted percentage change 7 %
Reported sales $ 33,005 $ 32,854
Reported operating margin 26.2 % 24.4 %
Adjusted operating margin 29.5 % 27.6 %
Adjusted Depreciation and amortization
Reported depreciation and amortization $ 3,780 $ 3,816
Less: Purchase accounting impacts - Linde AG (c) (923) (991)
Adjusted depreciation and amortization $ 2,857 $ 2,825Adjusted Other Income (Expense) - netReported Other Income (Expense) - net $ 185 $ (41)
Add: Purchase accounting impacts - Linde AG (c) (17) (15)
Adjusted Other Income (Expense) - net $ 202 $ (26)Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service CostReported net pension and OPEB cost (benefit), excluding service cost $ (190) $ (164)
Add: Pension settlement charges (10) (16)
Adjusted Net Pension and OPEB cost (benefit), excluding service costs $ (200) $ (180)Adjusted Interest Expense - NetReported interest expense - net $ 256 $ 200
Add: Purchase accounting impacts - Linde AG (c) 3 16
Adjusted interest expense - net $ 259 $ 21635
Table of Contents
(Dollar amounts in millions, except per share data)Year Ended December 31, 2024 2023Adjusted Income Taxes (a)Reported income taxes $ 2,002 $ 1,814
Add: Purchase accounting impacts - Linde AG (c) 220 232
Add: Pension settlement charges 2 3
Add: Cost reduction program and other charges 36 81
Total adjustments 258 316
Adjusted income taxes $ 2,260 $ 2,130Adjusted Effective Tax Rate (a)Reported income before income taxes and equity investments $ 8,569 $ 7,988
Add: Pension settlement charge 10 16
Add: Purchase accounting impacts - Linde AG (c) 937 990
Add: Cost reduction program and other charges 145 40
Total adjustments 1,092 1,046
Adjusted income before income taxes and equity investments $ 9,661 $ 9,034
Reported Income taxes $ 2,002 $ 1,814
Reported effective tax rate 23.4% 22.7%
Adjusted income taxes $ 2,260 $ 2,130
Adjusted effective tax rate 23.4% 23.6%Income from Equity InvestmentsReported income from equity investments $ 170 $ 167Add: Purchase accounting impacts - Linde AG (c) 72 72Adjusted income from equity investments $ 242 $ 239Adjusted Noncontrolling InterestsReported noncontrolling interests $ (172) $ (142)
Add: Purchase accounting impacts - Linde AG (c) (12) (12)
Add: Cost reduction program and other charges 16 —
Total adjustments 4 (12)
Adjusted noncontrolling interests $ (168) $ (154)Adjusted Net Income - Linde plc (b)Reported net income $ 6,565 $ 6,199
Add: Pension settlement charge 8 13
Add: Cost reduction program and other charges 125 (41)
Add: Purchase accounting impacts - Linde AG (c) 777 818
Total adjustments 910 790
Adjusted net income - Linde plc $ 7,475 $ 6,989
Adjusted Diluted EPS (b)
Reported diluted EPS $ 13.62 $ 12.5936
Table of Contents
(Dollar amounts in millions, except per share data)Year Ended December 31, 2024 2023
Add: Pension settlement charge 0.02 0.03
Add: Cost reduction program and other charges 0.26 (0.08)
Add: Purchase accounting impacts - Linde AG (c) 1.61 1.66
Total adjustments 1.89 1.61
Adjusted diluted EPS $ 15.51 $ 14.20
Reported percentage change 8 %
Adjusted percentage change 9 %Adjusted EBITDA and % of SalesNet Income - Linde plc $ 6,565 $ 6,199
Add: Noncontrolling interests 172 142
Add: Net pension and OPEB cost (benefit), excluding service cost (190) (164)
Add: Interest expense 256 200
Add: Income taxes 2,002 1,814
Add: Depreciation and amortization 3,780 3,816
EBITDA 12,585 12,007
Add: Cost reduction program and other charges 145 40
Add: Purchase accounting impacts - Linde AG (c) 89 86
Total adjustments 234 126
Adjusted EBITDA $ 12,819 $ 12,133
Reported sales $ 33,005 $ 32,854% of salesEBITDA 38.1 % 36.5 %
Adjusted EBITDA as a % of Sales 38.8 % 36.9 %(a) The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.
(b) Net of income taxes which are shown separately in “Adjusted Income Taxes and Effective Tax Rate”.(c) The company believes that its non-GAAP measures excluding Purchase accounting impacts - Linde AG are useful to investors because: (i) the 2018 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 was37
Table of Contentsdetermined 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: Represents the noncontrolling interests’ ownership portion of the adjustments described above determined on an entity by entity basis.Net Debt and Adjusted Net Debt
Net debt is a financial liquidity measure used by investors, financial analysts and management to evaluate the ability of a company to repay its debt. Purchase accounting impacts have been excluded as they are non-cash and do not have an impact on liquidity.
(Millions of dollars)
December 31,2024 2023
Debt $ 21,623 $ 19,373
Less: cash and cash equivalents (4,850) (4,664)
Net debt 16,773 14,709
Less: purchase accounting impacts - Linde AG (4) (7)
Adjusted net debt $ 16,769 $ 14,702SUPPLEMENTAL GUARANTEE INFORMATION
On May 3, 2023, the company filed a Form S-3 Registration Statement with the SEC ("the Registration Statement").
Linde plc may offer debt securities, preferred shares, depositary shares and ordinary shares under the Registration Statement, and debt securities exchangeable for or convertible into preferred shares, ordinary shares or other debt securities. Debt securities of Linde plc may be guaranteed by Linde Inc and/or Linde GmbH. Linde plc may provide guarantees of debt securities offered by its wholly owned subsidiaries Linde Inc. or Linde Finance under the Registration Statement.
Linde Inc. is a wholly owned subsidiary of Linde plc. Linde Inc. may offer debt securities under the Registration Statement. Debt securities of Linde Inc. will be guaranteed by Linde plc, and such guarantees by Linde plc may be guaranteed by Linde GmbH. Linde Inc. may also provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) upstream guarantees of downstream guarantees provided by Linde plc of debt securities of Linde Finance offered under the Registration Statement.
Linde Finance B.V. is a wholly owned subsidiary of Linde plc. Linde Finance may offer debt securities under the Registration Statement. Linde plc will guarantee debt securities of Linde Finance offered under the Registration Statement. Linde GmbH and Linde Inc. may guarantee Linde plc’s obligations under its downstream guarantee.
Linde GmbH is a wholly owned subsidiary of Linde plc. Linde GmbH may provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) upstream guarantees of downstream guarantees provided by Linde plc of debt securities of Linde Inc. or Linde Finance offered under the Registration Statement.
In September 2019, Linde plc provided downstream guarantees of all pre-existing Linde Inc. and Linde Finance notes, and Linde GmbH and Linde Inc., respectively, provided upstream guarantees of Linde plc’s downstream guarantees.Linde plc has filed a base prospectus with the Luxembourg Stock Exchange, as supplemented, for a €15.0 billion debt issuance program, under which Linde plc may offer debt securities. Linde Inc. and Linde GmbH have provided to Linde plc upstream guarantees in relation to debt securities of Linde plc offered under the European debt program.
For further information about the guarantees of the debt securities registered under the Registration Statement (including the ranking of such guarantees, limitations on enforceability of such guarantees and the circumstances under which such guarantees may be released), see “Description of Debt Securities – Guarantees” and “Description of Debt Securities – Ranking” in the Registration Statement, which subsections are incorporated herein by reference.38
Table of ContentsThe following tables present summarized financial information for Linde plc, Linde Inc., Linde GmbH and Linde Finance on a combined basis, after eliminating intercompany transactions and balances between them and excluding investments in and equity in earnings from non-guarantor subsidiaries.
(Millions of dollars)Statement of Income Data Twelve Months Ended December 31, 2024 Twelve Months Ended December 31, 2023
Sales $ 7,995 $ 8,143
Operating profit 1,526 1,656
Net income 3,553 735
Transactions with non-guarantor subsidiaries 7,177 3,004Balance Sheet Data (at period end)Current assets (a) 7,827 4,423
Long-term assets (b) 14,481 13,833
Current liabilities (c) 10,309 10,882
Long-term liabilities (d) 64,848 56,546(a) From current assets above, amount due from non-guarantor subsidiaries4,425 1,753
(b) From long-term assets above, amount due from non-guarantor subsidiaries 1,031 816
(c) From current liabilities above, amount due to non-guarantor subsidiaries 1,841 1,684
(d) From long-term liabilities above, amount due to non-guarantor subsidiaries $ 45,378 $ 39,45839
Table of Contents
FY 2025-12-31 (later)
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the company’s financial condition and results of operations should be read together with its consolidated financial statements and notes to the consolidated financial statements included in Item 8 of this Form 10-K.
Page
Business Overview18Executive Summary – Financial Results & Outlook19Consolidated Results and Other Information
20Segment Discussion25Liquidity, Capital Resources and Other Financial Data
30
Off-Balance Sheet Arrangements
32
Critical Accounting Estimates
32
New Accounting Standards
34
Fair Value Measurements
34
Non-GAAP Financial Measures
35
Supplemental Guarantee Information
3817Table of Contents
BUSINESS OVERVIEW
The company's primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, electronic gases, specialty gases, acetylene). The company also designs, engineers, and builds equipment that produces industrial gases and offers its customers a wide range of gas production and processing services such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants and other types of plants.Linde’s industrial gas operations are managed on a geographical basis and in 2025 90% of sales were generated by Linde's three geographic segments (Americas, EMEA and APAC) and the remaining 10% were related largely to the Engineering segment, and to a lesser extent Other (see Note 18 to the consolidated financial statements for operating segment details).Linde serves a diverse group of industries including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. The diversity of end-markets supports financial stability for Linde in varied business cycles.
Linde's industrial gas business generates most of its revenues and earnings in the following geographies where the company has its strongest market positions and where distribution and production operations allow the company to deliver the highest level of service to its customers at the lowest cost.
North and South America ("Americas") Europe, Middle East and Africa (“EMEA”) Asia and Pacific (“APAC”)
United States Germany China
Brazil United Kingdom Australia
Mexico Eastern Europe South Korea
Canada India
The company manufactures and distributes its industrial gas products through networks of thousands of production plants, pipeline complexes, distribution centers and delivery vehicles. Major pipeline complexes are primarily located in the United States and China. These networks are a competitive advantage, providing the foundation of reliable product supply to the company’s customer base. The majority of Linde’s business is conducted through long-term contracts which provide stability in cash flow and the ability to pass through changes in energy and feedstock costs to customers. The company has growth opportunities in all major geographies and in diverse end-markets such as healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics.18Table of Contents
EXECUTIVE SUMMARY – FINANCIAL RESULTS & OUTLOOK2025 Year in review
• Sales of $33,986 million were 3% above 2024 sales of $33,005 million. Sales increased 2% from higher price attainment primarily in the Americas and EMEA segments. Acquisitions increased sales by 1% largely in APAC and Americas. Sales from volumes were flat as base volume declines were largely offset by new project start-ups. Currency translation and cost pass-through, representing the contractual billing of energy cost variances primarily to onsite customers, were flat.
• Reported operating profit of $8,923 million was 3% above 2024 reported operating profit of $8,635 million. Adjusted operating profit of $10,137 million was 4% above 2024 adjusted operating profit of $9,720 million. The increase in the reported and adjusted operating profit was primarily driven by higher pricing and savings from productivity initiatives in 2025. These increases more than offset the adverse impacts of cost inflation.*
• Net income - Linde plc of $6,898 million and diluted earnings per share of $14.61 increased from $6,565 million and $13.62, respectively, in 2024. Adjusted net income - Linde plc of $7,772 million and adjusted diluted earnings per share of $16.46 were 4% and 6%, respectively, above 2024 adjusted amounts.*
• Cash flow from operations of $10,350 million was $927 million above 2024. The increase was driven primarily by higher net income and lower net working capital requirements. Capital expenditures were $5,261 million; dividends paid were $2,811 million; net purchases of ordinary shares were $4,578 million; and debt borrowings, net were $2,911 million.*A reconciliation of the adjusted amounts can be found in the "Non-GAAP Financial Measures" section in this MD&A.2026 OutlookLinde provides quarterly updates on operating results, material trends that may affect financial performance, and financial guidance via earnings releases and investor teleconferences. These materials are available on the company’s website, www.linde.com, but are not incorporated herein.19Table of Contents
CONSOLIDATED RESULTS AND OTHER INFORMATIONThe discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2025 and 2024. For the discussion comparing the years ended December 31, 2024 and 2023, refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Form 10-K for the year ended December 31, 2024.
The following table provides summary information for 2025 and 2024. The reported amounts are GAAP amounts from the Consolidated Statements of Income. The adjusted amounts are intended to supplement investors' understanding of the company's financial information and are not a substitute for GAAP measures.(Millions of dollars, except per share data)
Year Ended December 31,2025 2024 VarianceReported AmountsSales $ 33,986 $ 33,005 3 %
Cost of sales, exclusive of depreciation and amortization $ 17,389 $ 17,143 1 %
As a percent of sales 51.2 % 51.9 %
Selling, general and administrative $ 3,433 $ 3,337 3 %
As a percent of sales 10.1 % 10.1 %
Depreciation and amortization $ 3,763 $ 3,780 — %
Cost reduction program and other charges (a) $ 273 $ 145 88 %
Other income (expense) - net $ (58) $ 185 (131) %
Operating profit $ 8,923 $ 8,635 3 %
Operating margin 26.3 % 26.2 %
Interest expense - net $ 255 $ 256 — %
Net pension and OPEB cost (benefit), excluding service cost $ (229) $ (190) 21 %
Effective tax rate 22.4 % 23.4 %
Income from equity investments $ 150 $ 170 (12) %
Noncontrolling interests $ (160) $ (172) (7) %
Net Income – Linde plc $ 6,898 $ 6,565 5 %
Diluted earnings per share $ 14.61 $ 13.62 7 %
Diluted shares outstanding 472,195 482,092 (2) %
Number of employees 65,177 65,289 — %Adjusted Amounts (b)Depreciation and amortization $ 2,986 $ 2,857 5 %
Operating profit $ 10,137 $ 9,720 4 %
Operating margin 29.8 % 29.5 %
Net Income – Linde plc $ 7,772 $ 7,475 4 %
Diluted earnings per share $ 16.46 $ 15.51 6 %Other Financial Data (b)EBITDA $ 12,836 $ 12,585 2 %
As percent of sales 37.8 % 38.1 %
Adjusted EBITDA $ 13,351 $ 12,819 4 %
As percent of sales 39.3 % 38.8 %________________________
(a) See Note 3 to the consolidated financial statements.
(b) Adjusted amounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Financial Measures" section of this MD&A.20Table of Contents
Results of Operations
The following table provides a summary of changes in consolidated sales:2025 vs 2024% Change
Factors Contributing to Changes - Sales
Volume — %
Price/Mix 2 %Cost pass-through — %
Currency — %
Acquisitions/Divestitures 1 %Engineering — %3 %
2025 Compared With 2024SalesLinde sales increased $981 million, or 3%, for the 2025 year versus 2024. Sales grew 2% from higher price attainment. Acquisitions increased sales by 1% during the year. Volumes were flat, as new project start-ups were largely offset by base volume declines. Currency translation and cost pass-through, representing the contractual billing of energy cost variances primarily to onsite customers, were flat.Cost of sales, exclusive of depreciation and amortizationCost of sales, exclusive of depreciation and amortization, increased $246 million, or 1%, for the year primarily due to cost inflation partially offset by productivity gains. Cost of sales, exclusive of depreciation and amortization, was 51.2% and 51.9% of sales, in 2025 and 2024, respectively. The decrease as a percentage of sales was primarily due to higher pricing and productivity gains.Selling, general and administrative expensesSelling, general and administrative expense ("SG&A") increased $96 million, or 3%, from $3,337 million in 2024 to $3,433 million in 2025. SG&A was 10.1% of sales in 2025 and 2024. SG&A increased in 2025 due to acquisitions and cost inflation, partially offset by savings from cost reduction programs and productivity initiatives.Depreciation and amortizationReported depreciation and amortization expense decreased $17 million versus 2024. The decrease was due to lower depreciation and amortization of assets acquired in the merger, partially offset by the net impact of new project start-ups.
On an adjusted basis, depreciation and amortization expense increased $129 million, or 5%, versus 2024, driven largely by new project start-ups.Cost reduction program and other chargesCost reduction program and other charges include global severance charges of $308 million largely related to Engineering, and other benefits of $35 million largely related to a divestiture. 2024 includes severance charges of $165 million, other charges of $23 million and other benefit of $43 million related to a divestiture.On an adjusted basis, these charges have been excluded in both periods.
Other income (expense) - netReported other income (expense) - net was an expense of $58 million in 2025 and a benefit of $185 million in 2024. In 2025, other expense included a charge of $164 million for merger-related purchase accounting impacts. In 2024, other income included a benefit of $41 million related to a settlement with a supplier in the Americas and $45 million in insurance recoveries primarily within the Other segment (Note 7).
On an adjusted basis, which excludes merger-related purchase accounting impacts, other income (expense) - net decreased $96 million from income of $202 million in 2024 to income of $106 million in 2025.Operating profit21Table of ContentsOn a reported basis, operating profit increased $288 million in 2025, or 3%. The increase was primarily driven by higher pricing and savings from productivity initiatives which more than offset the adverse impacts of cost inflation, and higher cost reduction program and other charges.
On an adjusted basis, which excludes the merger-related purchase accounting impacts as well as cost reduction program and other charges, operating profit increased $417 million, or 4%, for 2025 versus 2024. Operating profit growth was driven by higher pricing and productivity initiatives, which more than offset the effects of cost inflation during 2025. A discussion of operating profit by segment is included in the segment discussion that follows.Interest expense - netReported interest expense – net was an expense of $255 in 2025 and $256 in 2024.Net pension and OPEB cost (benefit), excluding service costReported net pension and OPEB cost (benefit), excluding service cost were benefits of $229 million and $190 million in 2025 and 2024, respectively. The increase primarily relates to lower interest cost due to lower benefit obligations and higher amortization of deferred gains year-over-year. (see Note 16 to the consolidated financial statements).Effective tax rateThe reported effective tax rate ("ETR") for 2025 was 22.4% versus 23.4% in 2024. The decrease in the rate was primarily due to a tax rate decrease in Germany including merger-related purchase accounting impacts, partially offset by tax benefits in 2024 from a repatriation that did not recur in 2025. The benefit related to the tax rate decrease in Germany was $158 million.
On an adjusted basis, the ETR for 2025 was 23.7% versus 23.4% in 2024. The increase in the rate is largely due to tax benefits from a repatriation in 2024 that did not recur in 2025, partially offset by a tax rate decrease in Germany excluding merger-related purchase accounting impacts.
On July 4, 2025, H.R.1 - One Big Beautiful Bill Act was enacted into law (OBBBA). The Bill makes permanent key elements of the 2017 Tax Cuts and Jobs Act, including 100% bonus depreciation and domestic research cost expensing. These changes provide current and future cash tax benefits to the company. OBBBA did not have a material impact to 2025 results.Income from equity investmentsReported income from equity investments for 2025 was $150 million as compared to $170 million in 2024. On an adjusted basis, income from equity investments for 2025 was $228 million versus $242 million in 2024.Noncontrolling interestsAt December 31, 2025, noncontrolling interests consisted primarily of noncontrolling shareholders’ investments in APAC (primarily in China). Reported noncontrolling interests decreased $12 million, from $172 million in 2024 to $160 million in 2025. 2024 noncontrolling interests income included the impact of a divestiture in the APAC segment.
Adjusted noncontrolling interests increased $3 million in 2025 as compared to 2024.Net Income - Linde plcReported net income - Linde plc increased $333 million, or 5%. On an adjusted basis, which excludes merger-related purchase accounting impacts and cost reduction program and other charges, net income - Linde plc increased $297 million, or 4%, in 2025 versus 2024. On both a reported and adjusted basis, the increase was driven by higher operating profit.Diluted earnings per shareReported diluted earnings per share increased $0.99, or 7%, in 2025 as compared to 2024. On an adjusted basis, diluted EPS of $16.46 in 2025 increased $0.95 versus 2024. The increase on both a reported and adjusted basis was primarily due to higher net income - Linde plc and lower diluted shares outstanding.EmployeesThe number of employees at December 31, 2025 was 65,177, a decrease of 112 employees from 2024, primarily driven by the impact of ongoing cost reduction programs partially offset by acquisitions.Other Financial DataEBITDA increased to $12,836 million in 2025 from $12,585 million in 2024. Adjusted EBITDA increased to $13,351 million for 2025 as compared to $12,819 million in 2024. The increase on both a reported and adjusted basis was driven by higher net income - Linde plc versus prior year.
22
Table of ContentsSee the "Non-GAAP Financial Measures" section for definitions and reconciliations of these non-GAAP measures to reported GAAP amounts.
Other Comprehensive Income (Loss)Other comprehensive income (loss) for the year ended December 31, 2025 was income of $693 million that resulted primarily from currency translation adjustments of $646 million. The translation adjustments reflect the impact of translating local currency foreign subsidiary financial statements to U.S. dollars, and are largely driven by the movement of the U.S. dollar against major currencies including the Euro and British pound. See the "Currency" section of the MD&A for exchange rates used for translation purposes and Note 7 to the consolidated financial statements for a summary of the currency translation adjustment component of accumulated other comprehensive income (loss) by segment.Related Party Transactions
The company’s related parties are primarily unconsolidated equity affiliates. The company did not engage in any material transactions involving related parties that included terms or other aspects that differ from those which would be negotiated with independent parties.
Environmental MattersLinde’s principal operations relate to the production and distribution of atmospheric and other industrial gases, many of which are used to help customers reduce their emissions. The production and distribution of industrial gases, however, is energy intensive resulting in significant greenhouse gas ("GHG") emissions. Given its own carbon footprint, and the opportunities its gases provide for carbon productivity and energy transition, climate change is an area of significant impact for Linde.
Linde operates in jurisdictions that have, or are developing, laws and/or regulations to reduce or mitigate the adverse effects of GHG emissions and therefore faces a highly uncertain regulatory environment in this area. Linde continues to evaluate emerging regulatory changes and assess appropriate responses. For example, hydrogen production plants and other manufacturing and electricity-generating plants have been identified as sources of carbon dioxide emissions and are subject to carbon taxation or cap-and-trade regulations in jurisdictions including California, China, Singapore and the European Union impacting both Linde and its customers. Linde believes it will be able to mitigate the costs of these regulations through the terms of its product supply contracts. However, legislation that limits GHG emissions may impact growth by increasing capital, compliance, operating and maintenance costs and/or decreasing demand.
To manage business risks from current and potential GHG emission regulation as well as physical risks associated with climate change, Linde actively monitors emerging developments, evaluates the direct and indirect business risks, and takes appropriate actions. Among others, actions include: increasing relevant resources and training; maintaining contingency plans; obtaining advice and counsel from expert vendors, insurance providers and industry experts; incorporating GHG provisions in commercial agreements; and conducting regular reviews of the business risks with management. Although there are considerable uncertainties, Linde believes that the business risk from potential regulations can be effectively managed through its commercial contracts. Additionally, Linde’s plant design, operations, and risk management teams are engaged to manage and mitigate losses from physical climate change, and the company does not anticipate material effects regarding its plant operations or business arising from potential physical risks of climate change.
At the same time, external factors may provide Linde with future business opportunities. Linde anticipates continued growth in clean hydrogen sales due to increased focus on decarbonization projects. Other factors include governmental regulation of GHG and other emissions; uncertain costs of energy and certain natural resources; the development of renewable energy alternatives; and new technologies that help extract natural gas, improve air quality, increase energy efficiency and mitigate the impacts of climate change. Linde continues to develop new applications that can help customers lower emissions by reducing energy consumption and increasing product throughput. Linde’s oxyfuel combustion technology is a significant advancement in industrial combustion processes offering enhanced efficiency, higher productivity, reduced emissions and effective carbon capture solutions across various industries including metals, glass, refining and chemicals processes. Stricter regulation of water quality in emerging economies such as China provide a growing market for a number of gases, e.g., oxygen for wastewater treatment. Increased concern about drought in areas such as California and Australia may create additional markets for carbon dioxide for desalination. Renewable fuel standards in the European Union and U.S. can create a market for second-generation biofuels which use industrial gases such as oxygen, carbon dioxide, and hydrogen.
Linde continuously seeks opportunities to optimize energy use and reduce GHG emissions through research and development in customer applications and operational energy efficiency, sourcing low-carbon energy, and purchasing hydrogen as a chemical byproduct where feasible. Linde tracks GHG emission performance versus targets and reports regularly to business management and the Sustainability Committee of Linde's Board of Directors. The Sustainability
23Table of ContentsCommittee is responsible for oversight of the company's programs and policies related to environmental matters, including climate change, greenhouse gas reduction goals and decarbonization and clean energy efforts.Costs Relating to the Protection of the EnvironmentThe environmental protection costs incurred in 2025 were not significant. Linde anticipates that future annual environmental protection expenditures will be similar to 2025, subject to any significant changes in existing laws and regulations.Legal Proceedings
See Note 17 to the consolidated financial statements for information concerning legal proceedings.
Retirement Benefits
PensionsThe net periodic benefit cost (benefit) was a benefit of $147 million, $106 million and $80 million in 2025, 2024 and 2023, respectively.
The funded status (pension benefit obligation ("PBO") less the fair value of plan assets) for the U.S. plans was a surplus of $169 million and $86 million at December 31, 2025 and 2024, respectively. The funded status for non-U.S. plans was a surplus of $615 million and $464 million at December 31, 2025 and 2024, respectively. During 2025, the U.S. and non-U.S. plans derived a benefit from plan asset performance and currency translation impacts, partially offset by actuarial losses due to discount rate environment.
Global pension contributions were $25 million in 2025, $35 million in 2024, and $46 million in 2023. At a minimum, Linde contributes to its pension plans to comply with local regulatory requirements (e.g., ERISA in the U.S.). Discretionary contributions in excess of the local minimum requirements are made based on many factors, including long-term projections of the plans' funded status, the economic environment, potential risk of overfunding, pension insurance costs and alternative uses of cash. Changes to these factors can impact the timing of discretionary contributions from year to year. Estimated required cash contributions for 2026 are currently expected to be in the range of $25 million to $35 million.
Linde assumes expected returns on plan assets for 2026 of 7.00% and 6.01% f or the U.S. and non-U.S. plans, respectively, which are consistent with the long-term expected returns on its investment portfolios.
Excluding the impact of any settlements, 2026 consolidated pension expense is expected to be a benefit of approximately $136 million. The benefit derived from the expected return on assets assumption for Linde's most significant plans is anticipated to more than offset the expense from service and interest cost accruals and the higher amortization of deferred losses.Refer to the Critical Accounting Estimates section and Note 16 to the consolidated financial statements for a more detailed discussion of the company’s retirement benefits, including a description of the various retirement plans and the assumptions used in the calculation of net periodic benefit cost (benefit) and funded status.
InsuranceLinde purchases insurance to limit a variety of property and casualty risks, including those related to property, business interruption, third-party liability and workers’ compensation. Currently, the company self retains up to $10 million per occurrence for vehicle liability and $5 million per occurrence for workers' compensation and general liability in the United States. Linde has a captive insurance company that provides coverage for property damage resulting from fire, flood and other perils and business interruption up to $50 million per event, and $100 million, in the annual aggregate, of losses above local deductibles (ranging from $5 to $7.5 million per event) at the group's sites globally. To mitigate the risk of losses above these self retention levels, the company purchases catastrophic insurance coverage from highly rated insurance companies.
At December 31, 2025 and 2024, the company had recorded a total of $84 million and $80 million, respectively, representing an estimate of the retained liability for the ultimate cost of claims incurred and unpaid as of the balance sheet dates. The estimated liability is established using statistical analysis and is based upon historical experience, actuarial assumptions and professional judgment. These estimates are subject to the effects of trends in loss severity and frequency and are subject to a significant degree of inherent variability. If actual claims differ from the company’s estimates, they will be adjusted at that time and financial results could be impacted.
24Table of ContentsLinde recognizes estimated insurance proceeds relating to damages at the time of loss only to the extent of incurred losses. Any insurance recoveries for business interruption and for property damages in excess of the net book value of the property are recognized only when realized or pending payments confirmed by its insurance companies.
SEGMENT DISCUSSION
Linde’s operations consist of two major product lines: industrial gases and engineering. As further described in the following paragraph, Linde’s industrial gases operations are managed on a geographic basis, which represents three of the company's reportable segments - Americas, EMEA (Europe/Middle East/Africa), and APAC (Asia/South Pacific); a fourth reportable segment, which represents the company's Engineering business, designs and manufactures equipment for air separation and other industrial gas applications specifically for end customers and is managed on a worldwide basis operating in all geographic segments. Other consists of corporate costs and a few smaller businesses which individually do not meet the quantitative thresholds for separate presentation.
The industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (hydrogen, helium, carbon dioxide, carbon monoxide, electronic gases, specialty gases, acetylene). Many of these products are co-products of the same manufacturing process. Linde manufactures and distributes nearly all of its products and manages its customer relationships on a regional basis. Linde’s industrial gases are distributed to various end-markets within a regional segment through one of three basic distribution methods: on-site or tonnage; merchant or bulk; and packaged or cylinder gases. The distribution methods are generally integrated in order to best meet the customer’s needs and very few of its products can be economically transported outside of a region. Therefore, the distribution economics are specific to the various geographies in which the company operates and are consistent with how management assesses performance.
The company’s measure of profit/loss for segment reporting purposes is segment operating profit. Segment operating profit is defined as operating profit excluding purchase accounting impacts of the Linde AG merger, cost reduction program and other charges, and items not indicative of ongoing business trends. This is the manner in which the company’s Chief Operating Decision Maker ("CODM") assesses performance and allocates resources.The table below presents sales and operating profit information about reportable segments and Other for the years ended December 31, 2025 and 2024.(Millions of dollars)
Year Ended December 31,2025 2024 VarianceSalesAmericas $ 15,208 $ 14,442 5 %
EMEA 8,549 8,352 2 %
APAC 6,661 6,632 — %
Engineering 2,250 2,322 (3) %
Other 1,318 1,257 5 %
Total sales $ 33,986 $ 33,005 3 %Operating ProfitAmericas $ 4,747 $ 4,550 4 %
EMEA 3,055 2,780 10 %
APAC 1,933 1,918 1 %
Engineering 408 410 (1) %
Other (6) 62 (110) %
Segment operating profit 10,137 9,720 4 %Reconciliation to reported operating profit:
Cost reduction program and other charges (Note 3)(273) (145)
Purchase accounting impacts - Linde AG (941) (940)
Total operating profit $ 8,923 $ 8,635
25
Table of ContentsAmericas
(Dollar amounts in millions) Variance
Year Ended December 31,2025 2024 2025 vs 2024
Sales $ 15,208 $ 14,442 5 %
Operating profit $ 4,747 $ 4,550 4 %
As a percent of sales 31.2 % 31.5 %
2025 vs 2024% Change
Factors Contributing to Changes - SalesVolume 1 %Price/Mix 3 %Cost pass-through 1 %
Currency (1) %Acquisitions/Divestitures 1 %5 %The Americas segment includes Linde’s industrial gases operations in approximately 20 countries including the United States, Canada, Mexico and Brazil.
SalesSales for the Americas segment increased $766 million, or 5%, in 2025 versus 2024. Higher pricing contributed 3% to sales. Volumes increased sales by 1% primarily driven by electronics, metals and mining, and chemicals and energy end markets including project start-ups. Cost pass-through increased sales by 1% with minimal impact on operating profit. The impact of net acquisitions increased sales by 1%. Currency translation decreased sales by 1% driven primarily by the weakening of the Brazilian real and Mexican peso against the U.S. dollar.Operating ProfitOperating profit in the Americas segment increased $197 million, or 4%, in 2025 versus 2024 driven primarily by higher pricing and continued productivity initiatives, which more than offset cost inflation. 2024 included a settlement gain with a supplier.EMEA
(Dollar amounts in millions) VarianceYear Ended December 31, 2025 2024 2025 vs 2024
Sales $ 8,549 $ 8,352 2 %
Operating profit $ 3,055 $ 2,780 10 %
As a percent of sales 35.7 % 33.3 %
2025 vs 2024% Change
Factors Contributing to Changes - SalesVolume (3) %
Price/Mix 2 %
Cost pass-through — %
Currency 3 %Acquisitions/Divestitures — %2 %
26
Table of Contents
The EMEA segment includes Linde's industrial gases operations in approximately 50 European, Middle Eastern, and African countries including Germany, the U.K., France, Sweden and the Republic of South Africa.SalesEMEA segment sales increased $197 million, or 2%, in 2025 versus 2024. Currency translation increased sales by 3% driven primarily by the strengthening of the Euro and British pound against the U.S. dollar . Higher price attainment increased sales by 2%. Cost pass-through was flat. Volumes decreased sales by 3% primarily driven by the metals and mining, manufacturing, and chemicals and energy end markets.Operating ProfitOperating Profit for the EMEA segment increased $275 million, or 10%, in 2025 versus 2024. The increase was driven primarily by higher pricing, currency translation, and continued productivity initiatives, partially offset by lower volumes.APAC
(Dollar amounts in millions) VarianceYear Ended December 31, 2025 2024 2025 vs 2024
Sales $ 6,661 $ 6,632 — %
Operating profit $ 1,933 $ 1,918 1 %
As a percent of sales 29.0 % 28.9 %
2025 vs 2024% Change
Factors Contributing to Changes - SalesVolume (1) %Price/Mix — %Cost pass-through — %
Currency (1) %
Acquisitions/Divestitures 2 %
— %
The APAC segment includes Linde's industrial gases operations in approximately 15 Asian and South Pacific countries and regions including China, Australia, India and South Korea.SalesSales for the APAC segment were flat in 2025 versus 2024. Acquisitions increased sales by 2%. Volumes decreased sales by 1%. Currency translation decreased sales by 1% primarily due to the weakening of the Australian dollar and Korean won against the U.S. dollar . Cost pass-through and pricing were flat.Operating ProfitOperating profit in the APAC segment increased $15 million, or 1%, in 2025 versus 2024. The increase was primarily driven by productivity initiatives and acquisitions, partially offset by cost inflation, lower volumes, and currency translation.Engineering
(Dollar amounts in millions) VarianceYear Ended December 31, 2025 2024 2025 vs 2024
Sales $ 2,250 $ 2,322 (3) %
Operating profit $ 408 410 (1) %
As a percent of sales 18.1 % 17.7 %
27
Table of Contents
2025 vs 2024% Change
Factors Contributing to Changes - SalesCurrency 3 %
Other (6) %
(3) %SalesEngineering segment sales decreased $72 million, or 3%, in 2025 versus 2024 driven by project timing. Currency translation increased sales by 3%, primarily due to the strengthening of the Euro against the U.S. dollar.Operating profitEngineering segment operating profit decreased $2 million, or 1%, in 2025 versus 2024, as declines driven by project timing were largely offset by currency translation impacts.Other
(Dollar amounts in millions) VarianceYear Ended December 31, 2025 2024 2025 vs 2024
Sales $ 1,318 $ 1,257 5 %
Operating profit $ (6) $ 62 (110) %
As a percent of sales (0.5) % 4.9 %
2025 vs 2024% Change
Factors Contributing to Changes - SalesVolume/Price 4 %
Currency 1 %Acquisitions/Divestitures — %5 %Other consists of corporate costs and a few smaller businesses including: Linde Advanced Materials Technology ("LAMT") and global helium wholesale; which individually do not meet the quantitative thresholds for separate presentation.
SalesSales for Other increased $61 million, or 5%, in 2025 versus 2024. Underlying s ales increased 4% in 2025 versus 2024 primarily due to higher volumes in LAMT partially offset by helium. Currency translation increased sales by 1% in 2025 versus 2024.Operating profitOperating profit in Other decreased $68 million, or 110%, in 2025 versus 2024. The decrease was driven by helium and an insurance recovery in 2024, partially offset by LAMT volumes and continued productivity initiatives .Currency
The results of Linde’s non-U.S. operations are translated to the company’s reporting currency, the U.S. dollar, from the functional currencies used in the countries in which the company operates. For most foreign operations, Linde uses the local currency as its functional currency. There is inherent variability and unpredictability in the relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Linde’s results of operations in any given period.
28
Table of Contents
To help understand the reported results, the following is a summary of the significant currencies underlying Linde’s consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):Percentage of 2025 Consolidated SalesExchange Rate for Statements of Income Exchange Rate for Balance Sheet
Average Year Ended December 31, December 31,Currency 2025 2024 2025 2024
Euro 17 % 0.89 0.92 0.85 0.97
Chinese yuan 7 % 7.19 7.20 6.99 7.30
British pound 4 % 0.76 0.78 0.74 0.80
Brazilian real 4 % 5.59 5.37 5.47 6.18
Australian dollar 4 % 1.55 1.52 1.50 1.62
Mexican peso 3 % 19.17 18.22 18.01 20.83
Korean won 3 % 1,421 1,363 1,440 1,472
Canadian dollar 3 % 1.40 1.37 1.37 1.44
Indian rupee 2 % 87.13 83.67 89.88 85.61
Swedish krona 1 % 9.79 10.57 9.21 11.07
South African rand 1 % 17.87 18.32 16.56 18.84
Swiss franc 1 % 0.83 0.88 0.79 0.9129
Table of Contents
LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA
(Millions of dollars)
Year Ended December 31,2025 2024Net Cash Provided by (Used for)
Operating ActivitiesNet income (including noncontrolling interests) $ 7,058 $ 6,737Non-cash charges (credits):Add: Cost reduction program and other charges, net of payments (a) 139 31
Add: Depreciation and amortization 3,763 3,780
Add (Less): Deferred income taxes (465) (142)
Add (Less): Non-cash charges and other 187 88
Net income adjusted for non-cash charges and other 10,682 10,494
Less: Pension contributions (25) (35)
Add (Less): Working capital (240) (845)
Add (Less): Other (67) (191)
Net cash provided by (used for) operating activities $ 10,350 $ 9,423Investing ActivitiesCapital expenditures $ (5,261) $ (4,497)
Acquisitions, net of cash acquired (412) (317)
Divestitures, net of cash divested and asset sales 42 170
Other investing, net (90) —
Net cash provided by (used for) investing activities $ (5,721) $ (4,644)Financing ActivitiesDebt increases (decreases) – net $ 2,911 $ 3,167
Issuances (purchases) of ordinary shares – net (4,578) (4,451)
Cash dividends – Linde plc shareholders (2,811) (2,655)
Noncontrolling interest transactions and other (76) (420)
Net cash provided by (used for) financing activities $ (4,554) $ (4,359)
Effect of exchange rate changes on cash $ 131 $ (234)
Cash and cash equivalents, end-of-period $ 5,056 $ 4,850____________________
(a) See Note 3 to the consolidated financial statements.Cash increased $206 million in 2025 versus 2024. The primary sources of cash in 2025 were cash flows from operations of $10,350 million and net debt borrowings of $2,911 million. The primary uses of cash included capital expenditures of $5,261 million, net purchases of ordinary shares of $4,578 million, and cash dividends to shareholders of $2,811 million.
2025 compared with 2024Cash Flows From OperationsCash flows from operations were $10,350 million, an increase of $927 million from 2024. The increase was driven primarily by higher net income adjusted for non-cash charges and lower net working capital requirements, including higher inflows for contract liabilities from engineering customer advance payments when compared with 2024.InvestingNet cash used for investing activities was $5,721 million in 2025 compared to $4,644 million in 2024. The increase was primarily attributable to higher capital expenditures.
Capital expenditures in 2025 were $5,261 million, an increase of $764 million from 2024. Capital expenditures during 2025 related primarily to investments in new plant and production equipment for backlog growth requirements.30
Table of ContentsApproximately 60% of the capital expenditures were in the Americas segment with 21% in the APAC segment and the rest largely in the EMEA segment.
At December 31, 2025, Linde's sale of gas backlog of large projects under construction was approximately $7.3 billion. This represents the total estimated capital cost of large plants under construction.
Acquisitions, net of cash acquired for 2025 were $412 million, an increase of $95 million from 2024. In 2025, acquisitions were primarily related to the EMEA and APAC segments. Acquisitions in the prior year were $317 million, primarily related to packaged gas businesses in the Americas (see Note 2 to the consolidated financial statements).
Divestitures, net of cash divested and asset sales in 2025 were $42 million compared with $170 million in 2024. Divestiture proceeds in 2024 included $69 million in net proceeds for a divestiture in APAC and a settlement with a supplier in the Americas.
Other investing, net for 2025 was an outflow of $90 million and relates to the cash settlement of foreign exchange contracts designated in a net investment hedging relationship. There were no cash settlements in 2024.Financing
Linde’s financing strategy is to secure long-term committed funding by issuing public notes and debentures and commercial paper backed by a long-term bank credit agreement. Linde’s international operations are funded through a combination of local borrowing and intercompany funding to minimize the total cost of funds and to manage and centralize currency exchange exposures. As deemed necessary, Linde manages its exposure to interest-rate changes through the use of financial derivatives (see Note 12 to the consolidated financial statements and Item 7A. Quantitative and Qualitative Disclosures About Market Risk).Cash used for financing activities was $4,554 million in 2025 as compared to $4,359 million in 2024. Cash provided by debt was $2,911 million in 2025 versus $3,167 million in 2024, driven primarily by lower net debt issuances in 2025 partially offset by higher commercial paper issuances. For the twelve months ended December 31, 2025, Linde issued €4,000 million Euro-denominated notes and CHF500 million Swiss-franc denominated notes, and redeemed or repaid $1,000 million U.S. dollar-denominated notes and €1,000 million Euro denominated notes (see Note 11).
Net purchases of ordinary shares were $4,578 million in 2025 versus $4,451 million in 2024. For additional information related to share repurchase programs, see Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Cash dividends increased to $2,811 million in 2025 versus $2,655 million in 2024 driven primarily by an 8% increase in dividends per share to $6.00 per share from $5.56 per share, partially offset by lower shares outstanding. Cash used for Noncontrolling interest transactions and other was $76 million for the year ended December 31, 2025 versus cash used of $420 million for the respective 2024 period, driven primarily by cash inflows from financing related derivatives and the collection of notes receivable from the sale of the Company's GIST business (see Note 7).
Linde’s total net debt outstanding at December 31, 2025 was $21,933 million, $5,160 million higher than $16,773 million at December 31, 2024, and included higher foreign currency translation impacts of approximately $2,400 million. The December 31, 2025 net debt balance includes $26,388 million in public securities, and $601 million representing primarily worldwide bank borrowings, net of $5,056 million of cash. Linde’s global effective borrowing rate was approximately 2.3% for 2025.
The company believes that it has sufficient operating flexibility, cash reserves, and funding sources to maintain adequate amounts of liquidity to meet its business needs around the world. At December 31, 2025, Linde's credit ratings as reported by Standard & Poor’s and Moody’s were A-1 and P-1 for short-term debt, respectively, and A and A2 for long-term debt, respectively. The company maintains a $5 billion and a $1.5 billion unsecured and undrawn revolving credit agreement with no associated financial covenants. No borrowings were outstanding under the credit agreements as of December 31, 2025. The company does not anticipate any limitations on its ability to access the debt capital markets and/or other external funding sources and remains committed to its strong ratings from Moody’s and Standard & Poor’s.
Note 11 to the consolidated financial statements includes information with respect to the company’s debt activity, current debt position, debt covenants and the available credit facilities; and Note 12 includes information relating to derivative financial instruments. Linde's credit facilities are with major financial institutions and are non-cancelable until maturity. Therefore, the company believes the risk of the financial institutions being unable to make required loans under the credit facilities, if requested, to be low. Linde’s major bank credit and long-term debt agreements contain standard covenants. The company was in compliance with these covenants at December 31, 2025 and expects to remain in compliance for the foreseeable future.31
Table of Contents
OFF-BALANCE SHEET ARRANGEMENTSAs discussed in Note 17 to the consolidated financial statements, at December 31, 2025, Linde had undrawn outstanding letters of credit, bank guarantees and surety bonds entered into in connection with normal business operations and they are not reasonably likely to have a material impact on Linde’s consolidated financial condition, results of operations, or liquidity.CRITICAL ACCOUNTING ESTIMATES
The policies discussed below are considered by management to be critical to understanding Linde’s financial statements and accompanying notes prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Their application places significant importance on management’s judgment as a result of the need to make estimates of matters that are inherently uncertain. Linde’s financial position, results of operations and cash flows could be materially affected if actual results differ from estimates made. These policies are determined by management and have been reviewed by Linde’s Audit Committee.
Revenue Recognition
Long-Term Construction Contracts
The company designs and manufactures equipment for air separation and other varied gas production and processing plants manufactured specifically for end customers. Revenues for sale of equipment contracts are generally recognized over time as Linde has an enforceable right to payment for performance completed to date and performance does not create an asset with alternative use. For contracts recognized over time, revenue is recognized primarily using a cost incurred input method. Costs incurred to date relative to total estimated costs at completion are used to measure progress toward satisfying performance obligations. The result is applied to total expected revenue and results in financial statement recognition of revenue in addition to costs incurred to date. Any expected loss on a contract is recognized as an expense immediately. Contract modifications are typically accounted for as part of the existing contract and are recognized as a cumulative adjustment for the inception-to-date effect of such change. We assess performance as progress towards completion is achieved on specific projects, earnings will be impacted by changes to our forecast of revenues and costs on these projects.
The cost incurred input method places considerable importance on accurate estimates of the extent of progress towards completion and may involve estimates on the scope of deliveries and services required to fulfill the contractually defined obligations. The key source of estimation uncertainty is the total estimated costs at completion including material, labor and overhead costs and the resultant state of completion of the contracts. There are inherent uncertainties associated with the estimation process, including technical complexity, duration of construction cycle, potential cost inflation (whether equipment or manpower), and scope considerations all of which may affect the total estimation process. Changes in these estimates may lead to a significant impact on future financial statements.
Pension Benefits
Pension benefits represent financial obligations that will be ultimately settled in the future with employees who meet eligibility requirements. Because of the uncertainties involved in estimating the timing and amount of future payments, significant estimates are required to calculate pension expense and liabilities related to the company’s plans. The company utilizes the services of independent actuaries, whose models are used to facilitate these calculations.
Several key assumptions are used in actuarial models to calculate pension expense and liability amounts recorded in the financial statements. Management believes the three most significant variables in the models are the expected long-term rate of return on plan assets, the discount rate, and the expected rate of compensation increase. The actuarial models also use assumptions for various other factors, including long-term inflation rates, employee turnover, retirement age, and mortality. Linde management believes the assumptions used in the actuarial calculations are reasonable, reflect the company’s experience and expectations for the future and are within accepted practices in each of the respective geographic locations in which it operates. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors. The sensitivities to each of the key assumptions presented below exclude the impact of special items that occurred during the year.The weighted-average expected long-term rates of return on pension plan assets were 7.00% for U.S. plans and 6.01% for non-U.S. plans at December 31, 2025 (7.00% and 6.02%, respectively at December 31, 2024). The expected long-term rate of return on the U.S. and Non-U.S. plan assets is estimated based on the plans' investment strategy and asset allocation, historical capital market performance and, to a lesser extent, historical plan performance. A 0.50% change in these expected long-term rates of return, with all other assumptions held constant, would change Linde’s pension expense by approximately $45 million.32
Table of ContentsThe company has consistently used a market-related value of assets rather than the fair value at the measurement date to determine annual pension expense. The market-related value recognizes investment gains or losses over a five-year period. As a result, changes in the fair value of assets from year to year are not immediately reflected in the company’s annual pension expense. Instead, annual pension expense in future periods will be impacted as deferred investment gains or losses are recognized in the market-related value of assets over the five-year period. The consolidated market-related value of assets was $9,245 million, or $334 million higher than the fair value of assets of $8,911 million at December 31, 2025. These net deferred investment losses of $334 million will be recognized in the calculation of the market-related value of assets ratably over the next four years and will impact future pension expense. Future actual investment gains or losses will impact the market-related value of assets and, therefore, will impact future annual pension expense in a similar manner.
Discount rates are used to calculate the present value of plan liabilities and pension costs and are determined annually by management. The company measures the service and interest cost components of pension and OPEB expense for significant U.S. and non-U.S. plans using the spot rate approach. U.S. plans that do not use the spot rate approach continue to determine discount rates by using a cash flow matching model provided by the company's independent actuaries. The model includes a portfolio of corporate bonds graded AA or better by at least half of the ratings agencies and matches the U.S. plans' projected cash flows to the calculated spot rates. Discount rates for the remaining Non-U.S. plans are based on market yields for high-quality fixed income investments representing the approximate duration of the pension liabilities on the measurement date. Refer to Note 16 to the consolidated financial statements for a summary of the discount rates used to calculate plan liabilities and benefit costs, and to the Retirement Benefits section of the Consolidated Results and Other Information section of this MD&A for a further discussion of 2025 benefit costs. A 0.50% reduction in discount rates, with all other variables held constant, would increase Linde’s pension expense by approximately $3 million, whereas a 0.50% increase in discount rates would result in a decrease of $4 million. A 0.50% reduction in discount rates would increase the PBO by approximately $433 million whereas a 0.50% increase in discount rates would have a favorable impact to the PBO of approximately $394 million.
The weighted-average expected rate of compensation increase was 3.50% for U.S. plans and 2.53% for non-U.S. plans at December 31, 2025 (3.50% and 2.55%, respectively, at December 31, 2024). The estimated annual compensation increase is determined by management every year and is based on historical trends and market indices. A 0.50% change in the expected rate of compensation increase, with all other variables held constant, would change Linde’s pension expense by approximately $3 million and would impact the PBO by approximately $25 million.Asset Impairments
Goodwill and Other Indefinite-Lived Intangibles AssetsAt December 31, 2025, the company had goodwill of $27,927 million and $1,826 million of other indefinite-lived intangible assets. Goodwill represents the aggregate of the excess consideration paid for acquired businesses over the fair value of the net assets acquired. Indefinite-lived other intangibles relate to the Linde name.
The company performs a goodwill impairment test annually as of October 1 or more frequently if events or circumstances indicate that an impairment loss may have been incurred. The impairment test performed during the fourth quarter of 2025 indicated no impairment. At December 31, 2025, Linde’s enterprise value was approximately $220 billion (outstanding shares multiplied by the year-end stock price plus net debt, and without any control premium) while its total capital was approximately $62 billion.The impairment test allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than carrying value. If it is determined that it is more likely than not that the fair value of a reporting unit is less than carrying value then the company will estimate and compare the fair value of its reporting units to their carrying value, including goodwill. Reporting units are determined based on one level below the operating segment level.Management believes that the quantitative and qualitative factors used to perform its annual goodwill impairment assessment are appropriate and reasonable. Although the 2025 assessment indicated that it is more likely than not that the fair value of each reporting unit exceeded its carrying value, changes in circumstances or conditions affecting this analysis could have a significant impact on the fair value determination, which could then result in a material impairment charge to the company's results of operations.Other indefinite-lived intangible assets are evaluated for impairment on an annual basis or more frequently if events and circumstances indicate that an impairment loss may have been incurred, and no impairments were indicated.
See Notes 9 and 10 to the consolidated financial statements.
33
Table of Contents
Long-Lived AssetsLong-lived assets, including property, plant and equipment and finite-lived other intangible assets, are tested for impairment whenever events or changes in circumstances indicate that the carrying amount of an individual asset or asset group may not be recoverable. For purposes of this test, asset groups are determined based upon the lowest level for which there are independent and identifiable cash flows. Based upon Linde's business model an asset group may be a single plant and related assets used to support on-site, merchant and packaged gas customers. Alternatively, the asset group may be a collection of distribution related assets (cylinders, distribution centers, and stores) or be a pipeline complex which includes multiple interdependent plants and related assets connected by pipelines within a geographic area used to support the same distribution methods.Income TaxesAt December 31, 2025, Linde had deferred tax assets of $1,284 million (net of valuation allowances of $151 million), and deferred tax liabilities of $6,417 million. At December 31, 2025, uncertain tax positions totaled $315 million (see Note 1 and Note 5 to the consolidated financial statements). Income tax expense was $1,989 million for the year ended December 31, 2025, or about 22.4% of pre-tax income (see Note 5 to the consolidated financial statements for additional information related to taxes).In the preparation of consolidated financial statements, Linde estimates income taxes based on diverse legislative and regulatory structures that exist in various jurisdictions where the company conducts business. Deferred income tax assets and liabilities represent tax benefits or obligations that arise from temporary differences due to differing treatment of certain items for accounting and income tax purposes. Linde evaluates deferred tax assets each period to ensure that estimated future taxable income will be sufficient in character (e.g. capital gain versus ordinary income treatment), amount and timing to result in their recovery. A valuation allowance is established when management determines that it is more likely than not that a deferred tax asset will not be realized to reduce the assets to their realizable value. Considerable judgments are required in establishing deferred tax valuation allowances and in assessing exposures related to tax matters. As events and circumstances change, related reserves and valuation allowances are adjusted to income at that time. Linde’s tax returns are subject to audit and local taxing authorities could challenge the company’s tax positions. The company’s practice is to review tax filing positions by jurisdiction and to record provisions for uncertain income tax positions, including interest and penalties when applicable. Linde believes it records and/or discloses such potential tax liabilities as appropriate and has reasonably estimated its income tax liabilities and recoverable tax assets. If new information becomes available, adjustments are charged or credited against income at that time. Management does not anticipate that such adjustments would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a material impact on the company’s reported results of operations.
Contingencies
The company accrues liabilities for non-income tax contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized or realizable. If new information becomes available or losses are sustained in excess of recorded amounts, adjustments are charged against income at that time. Management does not anticipate that in the aggregate such losses would have a material adverse effect on the company’s consolidated financial position or liquidity; however, it is possible that the final outcomes could have a material impact on the company’s reported results of operations.Linde is subject to various claims, legal proceedings and government investigations that arise from time to time in the ordinary course of business. These actions are based upon alleged environmental, tax, antitrust and personal injury claims, among others (see Note 17 to the consolidated financial statements). Such contingencies are significant and the accounting requires considerable management judgments in analyzing each matter to assess the likely outcome and the need for establishing appropriate liabilities and providing adequate disclosures. Linde believes it records and/or discloses such contingencies as appropriate, and has reasonably estimated its liabilities.NEW ACCOUNTING STANDARDS
See Note 1 to the consolidated financial statements for information concerning new accounting standards and the impact of the implementation of these standards on the company’s financial statements.
FAIR VALUE MEASUREMENTS
Linde does not expect changes in the aggregate fair value of its financial assets and liabilities to have a material impact on the consolidated financial statements. See Note 13 to the consolidated financial statements.
34
Table of Contents
NON-GAAP FINANCIAL MEASURES
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 financial leverage and operating performance. Special items which the company does not believe to be indicative of on-going business performance 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.
The non-GAAP measures in the following reconciliations are presented in this MD&A.
Adjusted Amounts
(Dollar amounts in millions, except per share data)Year Ended December 31, 2025 2024Adjusted Operating Profit and Operating MarginReported operating profit $ 8,923 $ 8,635
Add: Cost reduction program and other charges 273 145
Add: Purchase accounting impacts - Linde AG (c) 941 940
Total adjustments 1,214 1,085
Adjusted operating profit $ 10,137 $ 9,720
Reported percentage change 3 %
Adjusted percentage change 4 %
Reported sales $ 33,986 $ 33,005
Reported operating margin 26.3 % 26.2 %
Adjusted operating margin 29.8 % 29.5 %
Adjusted Depreciation and Amortization
Reported depreciation and amortization $ 3,763 $ 3,780
Less: Purchase accounting impacts - Linde AG (c) (777) (923)
Adjusted depreciation and amortization $ 2,986 $ 2,857Adjusted Other Income (Expense) - netReported other income (expense) - net $ (58) $ 185
Add: Purchase accounting impacts - Linde AG (c) (d) (164) (17)
Adjusted other income (expense) - net $ 106 $ 202Adjusted Net Pension and OPEB Cost (Benefit), Excluding Service CostReported net pension and OPEB cost (benefit), excluding service cost $ (229) $ (190)
Add: Pension settlement charges (2) (10)
Adjusted Net Pension and OPEB cost (benefit), excluding service costs $ (231) $ (200)Adjusted Interest Expense - NetReported interest expense - net $ 255 $ 256
Add: Purchase accounting impacts - Linde AG (c) — 3
Adjusted interest expense - net $ 255 $ 25935
Table of Contents
(Dollar amounts in millions, except per share data)Year Ended December 31, 2025 2024Adjusted Income Taxes (a)Reported income taxes $ 1,989 $ 2,002
Add: Purchase accounting impacts - Linde AG (c) 328 220
Add: Pension settlement charges — 2
Add: Cost reduction program and other charges 81 36
Total adjustments 409 258
Adjusted income taxes $ 2,398 $ 2,260Adjusted Effective Tax Rate (a)Reported income before income taxes and equity investments $ 8,897 $ 8,569
Add: Pension settlement charge 2 10
Add: Purchase accounting impacts - Linde AG (c) 941 937
Add: Cost reduction program and other charges 273 145
Total adjustments 1,216 1,092
Adjusted income before income taxes and equity investments $ 10,113 $ 9,661
Reported Income taxes $ 1,989 $ 2,002
Reported effective tax rate 22.4% 23.4%
Adjusted income taxes $ 2,398 $ 2,260
Adjusted effective tax rate 23.7% 23.4%Income from Equity InvestmentsReported income from equity investments $ 150 $ 170Add: Purchase accounting impacts - Linde AG (c) 72 72Add: Cost reduction program and other charges 6 —
Total adjustments 78 72
Adjusted income from equity investments $ 228 $ 242Adjusted Noncontrolling InterestsReported noncontrolling interests $ (160) $ (172)
Add: Purchase accounting impacts - Linde AG (c) (11) (12)
Add: Cost reduction program and other charges — 16
Total adjustments (11) 4
Adjusted noncontrolling interests $ (171) $ (168)Adjusted Net Income - Linde plc (b)Reported net income $ 6,898 $ 6,565
Add: Pension settlement charge 2 8
Add: Cost reduction program and other charges 198 125
Add: Purchase accounting impacts - Linde AG (c) 674 777
Total adjustments 874 910
Adjusted net income - Linde plc $ 7,772 $ 7,47536
Table of Contents
(Dollar amounts in millions, except per share data)Year Ended December 31, 2025 2024
Adjusted Diluted EPS (b)
Reported diluted EPS $ 14.61 $ 13.62
Add: Pension settlement charge — 0.02
Add: Cost reduction program and other charges 0.42 0.26
Add: Purchase accounting impacts - Linde AG (c) 1.43 1.61
Total adjustments 1.85 1.89
Adjusted diluted EPS $ 16.46 $ 15.51
Reported percentage change 7 %
Adjusted percentage change 6 %Adjusted EBITDA and % of SalesNet Income - Linde plc $ 6,898 $ 6,565
Add: Noncontrolling interests 160 172
Add: Net pension and OPEB cost (benefit), excluding service cost (229) (190)
Add: Interest expense 255 256
Add: Income taxes 1,989 2,002
Add: Depreciation and amortization 3,763 3,780
EBITDA 12,836 12,585
Add: Cost reduction program and other charges 279 145
Add: Purchase accounting impacts - Linde AG (c) 236 89
Total adjustments 515 234
Adjusted EBITDA $ 13,351 $ 12,819
Reported sales $ 33,986 $ 33,005% of salesEBITDA 37.8 % 38.1 %
Adjusted EBITDA as a % of Sales 39.3 % 38.8 %(a) The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.
(b) Net of income taxes which are shown separately in “Adjusted Income Taxes and Effective Tax Rate”.(c) The company believes that its non-GAAP measures excluding merger Purchase accounting impacts - Linde AG are useful to investors because: (i) the 2018 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 merger purchase accounting than others, causing results that are not comparable at the reportable segment level, therefore, the impacts of merger 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 merger 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.37
Table of ContentsAdjusted 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: Represents the noncontrolling interests’ ownership portion of the adjustments described above determined on an entity by entity basis.
(d) 2025 Adjusted other income (expense) - net excludes a charge of $150 million associated with Linde AG merger-related purchase accounting impacts.Net Debt and Adjusted Net Debt
Net debt is a financial liquidity measure used by investors, financial analysts and management to evaluate the ability of a company to repay its debt. Purchase accounting impacts have been excluded as they are non-cash and do not have an impact on liquidity.
(Millions of dollars)
December 31,2025 2024
Debt $ 26,989 $ 21,623
Less: cash and cash equivalents (5,056) (4,850)
Net debt 21,933 16,773
Less: purchase accounting impacts - Linde AG (3) (4)
Adjusted net debt $ 21,930 $ 16,769SUPPLEMENTAL GUARANTEE INFORMATION
On May 3, 2023, the company filed a Form S-3 Registration Statement with the SEC ("the Registration Statement").
Linde plc may offer debt securities, preferred shares, depositary shares and ordinary shares under the Registration Statement, and debt securities exchangeable for or convertible into preferred shares, ordinary shares or other debt securities. Debt securities of Linde plc may be guaranteed by Linde Inc and/or Linde GmbH. Linde plc may provide guarantees of debt securities offered by its wholly owned subsidiaries Linde Inc. or Linde Finance under the Registration Statement.
Linde Inc. is a wholly owned subsidiary of Linde plc. Linde Inc. may offer debt securities under the Registration Statement. Debt securities of Linde Inc. will be guaranteed by Linde plc, and such guarantees by Linde plc may be guaranteed by Linde GmbH. Linde Inc. may also provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) upstream guarantees of downstream guarantees provided by Linde plc of debt securities of Linde Finance offered under the Registration Statement.
Linde Finance B.V. is a wholly owned subsidiary of Linde plc. Linde Finance may offer debt securities under the Registration Statement. Linde plc will guarantee debt securities of Linde Finance offered under the Registration Statement. Linde GmbH and Linde Inc. may guarantee Linde plc’s obligations under its downstream guarantee.
Linde GmbH is a wholly owned subsidiary of Linde plc. Linde GmbH may provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) upstream guarantees of downstream guarantees provided by Linde plc of debt securities of Linde Inc. or Linde Finance offered under the Registration Statement.
In September 2019, Linde plc provided downstream guarantees of all pre-existing Linde Inc. and Linde Finance notes, and Linde GmbH and Linde Inc., respectively, provided upstream guarantees of Linde plc’s downstream guarantees.Linde plc established a European debt issuance program on May 11, 2020, and filed a base prospectus with the Luxembourg Stock Exchange as subsequently updated on May 8, 2025 and supplemented by the first supplement on August 21, 2025 and the second supplement on October 31, 2025, for a €20.0 billion debt issuance program (or the equivalent in other currencies), under which Linde plc may offer debt securities. Linde Inc. and Linde GmbH have provided to Linde plc upstream guarantees in relation to debt securities of Linde plc offered under the European debt issuance program, as confirmed to the current program amount. Under the European debt issuance program, Linde plc may issue unsecured notes with such terms, including currency, interest rate and maturity, as agreed by Linde plc and the purchasers of such notes at the time of sale and as set out in the final terms for the relevant issue of notes. The current38
Table of ContentsEuropean debt issuance program will be valid for a period of one year from May 8, 2025, after which it will require updating prior to any further issuance of notes.
For further information about the guarantees of the debt securities registered under the Registration Statement (including the ranking of such guarantees, limitations on enforceability of such guarantees and the circumstances under which such guarantees may be released), see “Description of Debt Securities – Guarantees” and “Description of Debt Securities – Ranking” in the Registration Statement, which subsections are incorporated herein by reference.The following tables present summarized financial information for Linde plc, Linde Inc., Linde GmbH and Linde Finance on a combined basis, after eliminating intercompany transactions and balances between them and excluding investments in and equity in earnings from non-guarantor subsidiaries.
(Millions of dollars)Statement of Income Data
Year Ended December 31, 2025 2024
Sales $ 8,844 $ 7,995
Operating profit 1,512 1,526
Net income 3 3,553
Transactions with non-guarantor subsidiaries 3,989 7,177Balance Sheet Data (at period end)Current assets (a) 4,815 7,827
Long-term assets (b) 16,808 14,481
Current liabilities (c) 10,085 10,309
Long-term liabilities (d) 73,336 64,848(a) From current assets above, amount due from non-guarantor subsidiaries1,097 4,425
(b) From long-term assets above, amount due from non-guarantor subsidiaries 724 1,031
(c) From current liabilities above, amount due to non-guarantor subsidiaries 1,325 1,841
(d) From long-term liabilities above, amount due to non-guarantor subsidiaries $ 48,301 $ 45,37839
Table of Contents