2026 06 03 Linde LIN Q1 2026 Earnings Call

Summary

Linde Q1 2026 delivered EPS of $4.33 (+10% YoY, +5% ex-currency), operating margin 30%, FCF $900M. Electronics +10% YoY on advanced chip fab investments across US/China/Korea — Linde investing >$1B in ultra-high-purity fab plants. Helium thesis: 85-90% of business contractually locked, limiting spot exposure while "price will continue to go up" through 2026; helium upside excluded from guidance (pure optionality).

Transcript

Matthew White: "Solid quarterly performance amid challenging conditions. EPS growth of 10% reaching $4.33, operating margins at 30%, and return on capital sustaining 24%."

"Electronics showed the strongest performance, jumping 10%, driven primarily by advanced chip investments across the U.S., China, and Korea. Linde is investing more than $1 billion in ultra-high-purity fabrication plants."

On helium supply disruptions:

Matthew White: "The business remains largely contracted with 85%-90% contractually locked positions, limiting spot exposure while creating pricing opportunities."

Duffy Fischer (Goldman Sachs): "Asked about how current helium supply shock differs from previous disruptions and pricing impacts timeline."

Matthew White: "Q1 helium sales were roughly flat year-over-year despite supply tightness. With 85% to 90% contracted business, pricing rises gradually through existing contracts. Multiple sourcing and long-term agreement prioritization minimize spot exposure. Price will continue to go up throughout 2026."

Juan Pelaez: "Sales of $8.8 billion, up 8% year-over-year and flat sequentially. Foreign currency provided a 5% tailwind; net acquisitions contributed 1%. Underlying sales increased 3%, comprising 2% pricing and 1% volume growth."

"Operating profit reached $2.6 billion (up 8%), with margins at 30%. EPS of $4.33 represented 10% growth (5% excluding currency). Operating cash flow was $2.2 billion, while free cash flow totaled $900 million after $1.3 billion in capital expenditures."

"The company started 10 sale-of-gas projects ($300 million investment) and signed 5 new projects ($100 million addition), bringing backlog to $7.1 billion."

Matthew White (Guidance): "For Q2 2026, Linde anticipates EPS of $4.40-$4.50 (8-10% growth), including 1% currency benefit with no assumed midpoint economic improvement. Full-year 2026 EPS guidance was updated to $17.60-$17.90 (7-9% growth). The company raised the guidance floor by $0.20 based on increased confidence in overall business resiliency, but left the ceiling unchanged due to geopolitical uncertainties. Guidance excludes helium upside."

David Begleiter (Deutsche Bank): "Updates on electronics contract progress and Woodside project status."

Matthew White: "Pretty high degree of confidence in announcing major electronics contracts here shortly, expecting backlog to reach approximately $8 billion by year-end, up from current $7.1 billion. On Woodside, nitrogen startup remains on track mid-year, but ATR and TNS systems slipped to Q1 2027 due to challenging construction environments on the U.S. Gulf Coast."

Josh Spector (UBS): "Geographic volume analysis and North America PMI benefits commentary."

Matthew White: "Americas showing improvement with not only benefits in the US Gulf Coast refining plus Latin American upstream strength. EMEA remains weak while APAC is neutral to slightly positive. Hard goods grew double-digits while packaged gases expanded mid-single digit, supported by construction and hyperscaler activities."

Laurent Favre (BNP Paribas): "Inquired about margin drivers and timing for commercial space reaching 5% of sales threshold."

Matthew White: "On commercial space, growth depends on frequency, size, and propellant type of launches. Manufacturing grew 5%, with aerospace contributing approximately half, driven by U.S. space vehicle activities."

Patrick Cunningham (Citi): "Energy security and deglobalization implications for conventional and transition projects."

Matthew White: "Energy independence acceleration is likely, though ultimately, it still comes down to economics and ability. Renewable energy will require sustained government support."

Arun Viswanathan (RBC Capital Markets): "FX contribution to earnings algorithm."

Matthew White: "1% FX tailwind embedded in full-year guidance, with recent spot rates suggesting potential upside. To return to 8% to 12% range excluding macro, company must work through helium drag and project engineering timing. Management actions and capital allocation remain tools to bridge toward double-digit growth targets."

Matthew White: "On helium and pricing: Our guidance excludes helium upside — it's pure optionality sandbagged in the numbers. We expect pricing to continue rising through 2026 as contracts roll."

Kevin McCarthy (Vertical Research Partners): "Whether Americas momentum indicates cyclical upswing or warrants caution."

Matthew White: "Remained a little guarded. All three cylinders needing to run simultaneously — Americas, APAC, and EMEA — for true cyclical upturn. Base volumes have turned positive though not rounding to 1% yet."