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Item 7. Management’s Discussion and Analysis

2025-02-26 compared with 2024-02-28 · 143 added, 148 removed, 615 unchanged (32% of the section changed)

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BUSINESS OVERVIEW

The company's primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene).

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 2023 90% of sales were generated by Linde's three geographic segments (Americas, EMEA and APAC) and the remaining 10% are 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’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.

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2024 Year in review

• Sales of $32,854 million were 2% below 2022 sales of $33,364 million.

• 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.

Engineering decreased sales by 2%.

Volumes decreased sales by 1%.

Currency translation decreased sales by 1%, largely in APAC.

Divestitures, net of acquisitions, decreased sales by 1% primarily due to the divestment of the GIST business, partially offset by the nexAir, LLC acquisition.

The aforementioned drivers were partially offset by 6% higher price attainment across all geographic segments.

• Reported operating profit of $8,024 million was 49% above 2022.

Adjusted operating profit of $9,070 million was 15% above 2022.

The increase in the reported operating profit was primarily driven by the Russia-Ukraine conflict and other charges recorded in 2022 and included higher pricing, savings from productivity initiatives, and lower depreciation and amortization driven by merger related intangible assets.

These increases more than offset the adverse impacts of cost inflation and lower volumes in the year.

The adjusted operating profit increase was primarily due to higher pricing and productivity initiatives, which more than offset the effects of cost inflation and lower volumes during the year.*

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 $6,989 million and adjusted diluted earnings per share of $14.20 were 13% and 16%, respectively above 2022 adjusted amounts.*

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 from contract liabilities from engineering customer advanced payments.

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 of $3,925 million;

net purchases of ordinary shares were $4,451 million;

and debt borrowings, net were $3,167 million.

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Depreciation and amortization $ 3,780 $ 3,816 (1) %

Other charges (a) $ 40 $ 1,029 —

Cost reduction program and other charges (a) $ 145 $ 40 263 %

Other income (expense) - net $ 185 $ (41) 551 %

Operating profit $ 8,635 $ 8,024 8 %

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2024 Compared With 2023

Linde sales decreased $510 million, or 2%, for the 2023 year versus 2022.

Higher pricing across all geographic segments contributed 6% to sales.

Linde 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.

Volumes decreased sales by 1% primarily driven by the electronics and metals and mining end markets.

The impact of divestitures, net of acquisitions decreased sales by 1%.

Currency translation decreased sales by 1%, largely in APAC, driven by the weakening of the Chinese yuan and Australian dollar against the U.S.

dollar, partially offset by EMEA, driven by the strengthening of the Euro and British pound.

Currency translation decreased sales by 1%, primarily due to the weakening of the Brazilian real, Chinese yuan, and Mexican peso against the U.S.

Cost of sales, exclusive of depreciation and amortization

Cost of sales, exclusive of depreciation and amortization, decreased $1,958 million, or 10%, for the year primarily due to lower cost pass-through and volumes, the net impact of acquisitions and divestitures and productivity gains which more than offset cost inflation.

Cost of sales, exclusive of depreciation and amortization, was 53.2% and 58.3% of sales, respectively, in 2023 compared to 2022.

Cost 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 expenses

Selling, general and administrative expense ("SG&A") increased $188 million, from $3,107 in 2022 to $3,295 million in 2023.

Selling, 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.

Excluding currency impacts, underlying SG&A increased primarily due to higher costs including the acquisition of nexAir.

Depreciation and amortization

Reported depreciation and amortization expense decreased $36 million, or 1%, versus 2023.

The decrease is primarily due to lower depreciation and amortization of assets acquired in the merger.

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 acquisitions and new project start ups.

Other charges

Other charges were $40 million and $1,029 million for 2023 and 2022, respectively.

Excluding currency, underlying depreciation and amortization increased due to the net impact of new project start ups.

Cost reduction program and other charges

Cost 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.

The charge for 2022 relates primarily to the deconsolidation and impairment of Russian subsidiaries resulting from the ongoing war in Ukraine and related sanctions recorded as of June 30, 2022.

On an adjusted basis, these charges have been excluded in both periods.

Other income (expense) - net

Reported 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 profit

Reported operating profit increased $2,655 million in 2023, or 49%.

On an adjusted basis, operating profit increased $1,166 million, or 15%, for 2023 versus 2022.

On a reported basis, the increase was primarily driven by Russia-Ukraine conflict and other charges recorded in 2022 and included higher pricing, savings from productivity initiatives, and lower depreciation and amortization driven by merger related intangible assets.

These increases more than offset the adverse impacts of inflation and currency in the year as well as other charges of $40 million.

On an adjusted basis, which excludes the impacts of purchase accounting as well as other charges, operating profit increased $1,166 million, or 15%.

Operating profit growth was driven by higher pricing, and productivity initiatives, partially offset by cost inflation and lower volumes.

On 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.

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Reported interest expense – net in 2024 increased $56 million, or 28%, versus 2023.

On an adjusted basis interest expense increased $118 million, or 120% in 2023 as compared to 2022.

The increase was driven primarily by higher interest rates on debt and included approximately $28 million of devaluation impacts from hyperinflationary countries.

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 cost

Reported net pension and OPEB cost (benefit), excluding service cost were benefits of $190 million and $164 million in 2024 and 2023, respectively.

The decrease in benefit primarily relates to higher interest cost reflective of the higher discount rate environment year-over-year (see Note 16 to the consolidated financial statements).

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 rate

The reported effective tax rate ("ETR") for 2024 was 23.4% versus 22.7% in 2023.

The decrease in the rate is primarily related to a net decrease in the company's uncertain tax positions and the absence of the net unfavorable tax expense resulting from the Russia impairment and deconsolidation in 2022 (see Note 3 to the consolidated financial statements).

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.

The decrease includes higher tax benefits from share based compensation.

Income from equity investments

Reported 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 2023 was $239 million versus $247 million in 2022.

On an adjusted basis, the year-over-year decrease in income from equity investments was primarily driven by the overall performance of investments in APAC.

On an adjusted basis, income from equity investments for 2024 was $242 million versus $239 million million in 2023.

Noncontrolling interests

At December 31, 2023, noncontrolling interests from continuing operations consisted primarily of noncontrolling shareholders’ investments in APAC (primarily in China).

Reported noncontrolling interests from continuing operations increased $8 million, from $134 million in 2022 to $142 million in 2023.

Adjusted noncontrolling interests from continuing operations decreased $2 million in 2023 as compared to 2022.

At 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 plc

Reported net income - Linde plc increased $366 million, or 6%.

On an adjusted basis, which excludes the impacts of purchase accounting and other charges, net income - Linde plc increased $794 million, or 13%, in 2023 versus 2022.

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.

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The increase on both a reported and adjusted basis is primarily due to higher net income - Linde plc and lower diluted shares outstanding.

The number of employees at December 31, 2023 was 66,323, an increase of 2%, or 1,313 employees from 2022, driven primarily by the acquisition of nexAir.

The 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 Data

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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 net income - Linde plc versus prior year.

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, 2023 was a loss of $35 million resulted primarily from losses related to the change in funded status of retirement plans of $380 million and derivative losses of $55 million largely offset by currency translation adjustments of $400 million.

The translation adjustments reflect the impact of translating local currency foreign subsidiary financial statements to U.S.

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

foreign subsidiary financial statements to U.S.

dollars, and are largely driven by the movement of the U.S.

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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.

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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 raise the cost of energy, which is a significant cost for Linde.

Nevertheless, Linde's long-term customer contracts routinely provide rights to recover increased electricity, natural gas, and other costs that are incurred by the company as a result of climate change regulation.

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.

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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 any 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 rigorous operational energy efficiency, sourcing low-carbon source energy, and purchasing hydrogen as a chemical byproduct where feasible.

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, policies and strategies related to environmental matters, including climate change, greenhouse gas reduction goals and decarbonization solutions, such as clean energy and carbon management.

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.

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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.

continues 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.

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Costs Relating to the Protection of the Environment

Environmental protection costs in 2023 were not significant.

The 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.

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Retirement Benefits

The net periodic benefit cost (benefit) for the U.S.

pension plans was a benefit of $80 million, $110 million and $35 million in 2023, 2022 and 2021, respectively.

The 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 deficit of $137 million and $238 million at December 31, 2023 and 2022, respectively.

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 deficit of $207 million and surplus of $208 million at December 31, 2023 and 2022, respectively.

plan derived a benefit from the actual return on plan assets.

plans also experienced an increase in plan assets, offset by unfavorability generated from a higher PBO due to a decrease in discount rates.

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.

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Linde 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, $5 million per occurrence for workers' compensation and general liability.

In addition, the company self retains 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.

To mitigate its aggregate loss potential above these retentions, the company purchases catastrophic insurance coverage from highly rated insurance companies.

The company does not currently operate or participate in any captive insurance companies or other non-traditional risk transfer alternatives.

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.

At 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.

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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 (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene).

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.

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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, intercompany royalties, and items not indicative of ongoing business trends.

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.

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Reconciliation to reported operating profit:

Other charges (Note 3)

Cost reduction program and other charges (Note 3)

Purchase accounting impacts - Linde AG (940) (1,006)

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Cost pass-through (1) %

Currency (2) %

Acquisitions/Divestitures 1 %

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Higher pricing contributed 3% to sales.

The impact of net acquisitions increased sales by 3% primarily due to the acquisition of nexAir, LLC (See Note 2 to the consolidated financial statements).

Cost past-through decreased sales by 6% with minimal impact on operating profit.

Volumes and currency translation remained flat.

The impact of net acquisitions increased sales by 1%.

Cost past-through decreased sales by 1% with minimal impact

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.

Volumes remained flat due base volume declines largely offset by project start-ups.

Operating Profit

Operating profit in the Americas segment increased $512 million, or 14%, in 2023 versus 2022 driven primarily by higher pricing, acquisitions and continued productivity initiatives which more than offset cost inflation the year.

Operating 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.

(Dollar amounts in millions) Variance

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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.

EMEA segment sales increased by $99 million, or 1%, in 2023 versus 2022.

Higher price attainment increased sales by 9%.

Volumes decreased sales by 4% led by the chemicals and energy end market.

EMEA segment sales decreased $190 million, or 2%, in 2024 versus 2023.

Cost pass-through decreased sales by 4% with minimal impact on operating profit.

Currency translation increased sales by 1% du e largely to the strengthening of the Euro and British pound against the U.S.

The impact of net divestitures decreased sales by 2% primarily due to the deconsolidation of the Russian subsidiaries in June 2022.

Higher price attainment increased sales by 3%.

Volumes decreased sales by 1% led by the manufacturing end market.

Currency translation was flat.

Operating Profit

Operating 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, lower volumes and divestitures.

The increase was driven primarily by higher pricing and continued productivity initiatives, partially offset by cost inflation and lower volumes.

(Dollar amounts in millions) Variance

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Factors Contributing to Changes - Sales

Volume/Equipment 2 %

Price/Mix — %

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Sales for the APAC segment increased $73 million, or 1%, in 2024 versus 2023.

Volume increased 2% including project start-ups in the electronics and chemicals and energy end markets.

Higher price increased sales by 4%.

Cost pass-through decreased sales by 1% with minimal impact on operating profit.

Currency translation decreased sales by 4% driven primarily by the weakening of the Australian dollar, Indian rupee and Chinese Yuan against the U.S.

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.

Cost pass-through increased sales by 1% with minimal impact on operating profit.

Pricing was flat.

Operating Profit

Operating profit in the APAC segment increased $112 million, or 6%, in 2024 versus 2023.

The increase was primarily driven by higher pricing and continued productivity initiatives which more than offset the impact of currency and cost inflation.

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.

(Dollar amounts in millions) Variance

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Factors Contributing to Changes - Sales

Engineering segment sales decreased $602 million, or 22%, in 2023 versus 2022 .

The decrease was driven by project timing.

Projects for Russia that were sanctioned, and therefore terminated or suspended, have been lawfully wound down and represented approximately $238 million and $894 million of the Engineering segment sales during 2023 and 2022, respectively.

Engineering segment sales increased $162 million, or 8%, in 2024 versus 2023 driven by project timing.

Operating profit

Engineering segment operating profit decreased $64 million, or 12%, in 2023 versus 2022.

The decline from lower sales was partially offset by higher margin on wind down of terminated or suspended projects sanctioned in Russia.

Engineering 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.

(Dollar amounts in millions) Variance

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Other consists of corporate costs and a few smaller businesses including:

Linde Advanced Materials Technology and global helium wholesale;

Linde Advanced Materials Technology ("LAMT") and global helium wholesale;

which individually do not meet the quantitative thresholds for separate presentation.

Sales for Other decreased $32 million, or 2%, in 2024 versus 2023.

Divestitures decreased sales by 31% primarily due to sale of GIST business in third quarter of 2022.

Volume/Price increased sales by 2% driven primarily by price in the coatings and global helium businesses, partially offset by lower coatings volumes.

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 profit

Operating profit in Other increased $109 million, or 165%, in 2023 versus 2022 d riven primarily by higher pricing in global helium and coatings and lower corporate costs which more than offset the impact of divestitures and lower volumes.

Operating 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.

The results of Linde’s non-U.S.

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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.

Percent of 2023 Statements of Income Balance Sheets

Consolidated Average Year Ended December 31, December 31,

Currency Sales 2023 2022 2023 2022

Percentage of 2024 Consolidated Sales

Exchange 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

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Brazilian real 4 % 5.37 4.99 6.18 4.86

Korean won 3 % 1,306 1,286 1,288 1,266

Canadian dollar 3 % 1.35 1.36 1.32 1.36

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

Republic of South African rand 1 % 18.43 16.30 18.36 17.04

South African rand 1 % 18.32 18.43 18.84 18.36

Swedish krona 1 % 10.57 10.60 11.07 10.07

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Operating Activities

Income from continuing operations (including noncontrolling interests) $ 6,341 $ 4,281

Net income (including noncontrolling interests) $ 6,737 $ 6,341

Non-cash charges (credits):

Other charges, net of payments (a) (118) 902

Cost reduction program and other charges, net of payments (a) 31 (118)

Depreciation and amortization 3,780 3,816

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Non-cash charges and other 88 184

Income from continuing operations adjusted for non-cash charges and other 10,139 9,062

Net income adjusted for non-cash charges and other 10,494 10,139

Pension contributions (35) (46)

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Acquisitions, net of cash acquired (317) (953)

Divestitures and asset sales, net of cash divested 70 195

Divestitures, net of cash divested and asset sales 170 70

Net cash provided by (used for) investing activities $ (4,644) $ (4,670)

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(a) See Note 3 to the consolidated financial statements.

Cash decreased $772 million in 2023 versus 2022.

The primary sources of cash in 2023 were cash flows from operations of $9,305 million and debt borrowings, net of $1,060 million.

The primary uses of cash included capital expenditures of $3,787 million, net purchases of ordinary shares of $3,925 million, cash dividends to shareholders of $2,482 million.

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 2023

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Cash flows from operations was $9,423 million, an increase of $118 million from 2023.

The increase was driven primarily by higher net income adjusted for non-cash charges, partially offset by higher working capital requirements, including lower inflows from contract liabilities from engineering customer advanced payments and higher cash tax payments.

Other charges were $40 million and $1,029 million, for the years ended December 31, 2023 and 2022, respectively.

2022 charges related primarily to the deconsolidation and impairment of Russian subsidiaries resulting from the ongoing war in Ukraine and related sanctions.

Related Other charges cash outflows were $158 million and $127 million for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, Linde has approximately $418 million recorded in contract liabilities within the consolidated balance sheet related to suspended engineering projects in Russia.

Net cash used for investing activities was $4,670 million in 2023 compared to $3,088 million in 2022 due to higher acquisitions, net of cash acquired and higher capital expenditures.

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.

Net 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 2023 related primarily to investments in new plant and production equipment for operating and growth requirements.

Approximately 63% of the capital expenditures were in the Americas segment with 21% in the APAC segment and the rest primarily in the EMEA segment.

Capital expenditures during 2024 related primarily to investments in new plant and production equipment for backlog growth requirements.

Approximately 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 2023 were $953 million, an increase of $843 million from 2022, and related primarily to the acquisition of nexAir in the Americas (see Note 2 to the consolidated financial statements).

Acquisitions, net of cash acquired for the year ended December 31, 2022 were $110 million related primarily to the Americas and EMEA segments.

Divestitures and asset sales, net of cash divested in 2023 were $70 million as compared to $195 million in 2022.

Divestiture proceeds in 2022 include cash received from the sale of the company's GIST business of $184 million, net of cash divested of $75 million, for net proceeds of $109 million (see Note 2 to the consolidated financial statements).

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.

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.

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Cash used for financing activities was $4,359 million in 2024 compared to $5,400 million in 2023.

Cash provided by debt was $1,060 million in 2023 versus $4,475 million in 2022, driven primarily by lower inflows from commercial paper borrowings and lower net debt issuances in 2023.

In February 2023, Linde repaid $500 million of 2.70% notes that became due.

In April 2023, Linde repaid €650 million of 2.00% notes and £300 million of 5.875% notes that became due.

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 February 2024, Linde 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 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.

On October 23, 2023, the company's board of directors approved a new share repurchase program for up to $15 billion of Linde's ordinary shares.

For additional information related to share repurchase programs, see Part II Item 5.

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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 $53 million for the year ended December 31, 2023 versus cash used of $88 million for the respective 2022 period.

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.

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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.

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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 lo of $952 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.

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.

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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.

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.

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Reported operating profit $ 8,635 $ 8,024

Other charges (a) 40 1,029

Cost reduction program and other charges 145 40

Purchase accounting impacts - Linde AG (c) 940 1,006

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Adjusted interest expense - net $ 259 $ 216

(Dollar amounts in millions, except per share data)

Year Ended December 31, 2024 2023

Adjusted Income Taxes (a)

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Pension settlement charges 2 3

Other charges (a) 81 136

Cost reduction program and other charges 36 81

Total adjustments 258 316

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Purchase accounting impacts - Linde AG (c) 937 990

Other charges (a) 40 1,029

Cost reduction program and other charges 145 40

Total adjustments 1,092 1,046

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Purchase accounting impacts - Linde AG (c) 72 72

Total adjustments 72 75

Adjusted income from equity investments $ 242 $ 239

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Purchase accounting impacts - Linde AG (c) (12) (12)

Cost reduction program and other charges 16 —

Total adjustments 4 (12)

Adjusted noncontrolling interests $ (168) $ (154)

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Pension settlement charge 8 13

Other charges (a) (41) 893

Cost reduction program and other charges 125 (41)

Purchase accounting impacts - Linde AG (c) 777 818

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Reported diluted EPS $ 13.62 $ 12.59

(Dollar amounts in millions, except per share data)

Year Ended December 31, 2024 2023

Pension settlement charge 0.02 0.03

Other charges (a) (0.08) 1.77

Cost reduction program and other charges 0.26 (0.08)

Purchase accounting impacts - Linde AG (c) 1.61 1.66

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EBITDA 12,585 12,007

Other charges (a) 40 1,029

Cost reduction program and other charges 145 40

Purchase accounting impacts - Linde AG (c) 89 86

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EBITDA 38.1 % 36.5 %

Adjusted EBITDA 36.9 % 32.6 %

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.

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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.

The income tax expense (benefit) on the non-GAAP pre-tax adjustments was

determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.

Adjusted Income from Equity Investments:

Represents the amortization of increased fair value on equity investments related to depreciable and amortizable assets.

Adjusted Noncontrolling Interests from Continuing Operations:

Adjusted Noncontrolling Interests:

Represents the noncontrolling interests’ ownership portion of the adjustments described above determined on an entity by entity basis.

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Purchase accounting impacts have been excluded as they are non-cash and do not have an impact on liquidity.

2023 December 31,

(Millions of dollars)

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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 for a €10.0 billion debt issuance program, under which Linde plc may offer debt securities.

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.

and Linde GmbH have provided to Linde plc upstream guarantees in relation to debt securities of Linde plc offered under the European debt program.

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(a) From current assets above, amount due from non-guarantor subsidiaries

$ 1,753 $ 7,260

(b) From long-term assets above, amount due from non-guarantor subsidiaries 1,031 816

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis