Guildford, UK, February 13, 2020 - Linde plc (NYSE: LIN; FWB: LIN) today reported fourth-quarter income from continuing operations of $507 million and diluted earnings per share of $0.94. Excluding Linde AG purchase accounting impacts and other charges, adjusted pro forma income from continuing operations was $1,024 million, up 22% versus prior year and down 3% sequentially. Adjusted pro forma earnings per share were $1.89, 25% above prior year or 27% excluding negative currency effect.
Linde's sales for the fourth quarter were $7,080 million. Pro forma sales were $7,077 million, up 3% versus prior year excluding negative currency. Volume increased 1% while price improved 2% and was attained across all geographic segments.
Fourth-quarter operating profit was $655 million. Adjusted pro forma operating profit of $1,347 million was 17% above prior year or 19% when excluding unfavorable currency.
Fourth-quarter operating cash flow of $2,174 million increased $302 million versus the third quarter, primarily driven by improved working capital. During the quarter, the company invested $1,015 million in capital expenditures and returned $1,181 million to shareholders through dividends and stock repurchases, net of issuance.
For full-year 2019, reported sales were $28,228 million and adjusted pro forma sales were $28,163 million, flat versus 2018. Underlying sales grew 4% with volume and price each increasing 2%. Volume growth was split between base business and project start-ups while price increased across all geographic segments. Operating profit was $2,933 million and adjusted pro forma operating profit was $5,272 million, up 14% excluding negative currency effects. Diluted earnings per share were $4.00 and on an adjusted pro forma basis, diluted earnings per share were $7.34, up 23% versus prior year when excluding approximately 4% of negative currency translation effects.
In 2019, Linde generated strong operating cash flow of $6,119 million which included more than $800 million of merger-related cash outflows. The company invested $3.7 billion in capital expenditures and paid dividends of $1.9 billion. In addition, Linde repurchased $2.6 billion of stock, net of issuances, and executed the squeeze-out of the German minority shareholders which totaled $3.2 billion. Commenting on the financial results, Chief Executive Officer Steve Angel said, "For the fourth consecutive quarter, Linde delivered double-digit EPS growth, capping off its first successful year as a new organization. I am pleased to see how well the team integrated two high-quality companies in a relatively short period of time while delivering on our commitments to shareholders. For the full year, EPS grew 19%, ROC closed at 11.6% and we returned approximately $8 billion to shareholders. I want to thank our employees around the world for their exemplary work in achieving these strong results."
Angel continued, "Looking ahead to 2020, we anticipate continued softening of macro-economic conditions, but project double-digit EPS growth from our industry-leading backlog and continued efforts to optimize the business. Furthermore, our mission statement is "making our world more productive" and to that end we are setting new sustainability goals, including a 35% reduction in GHG emissions intensity by 2028."
For full-year 2020, Linde expects adjusted diluted earnings per share in the range of $8.00 to $8.25 which represents an increase of 9% to 12% versus prior year. This range includes an estimated full-year currency headwind of 1%. For the first quarter, adjusted earnings per share is expected to be in the range of $1.86 to $1.94, 11% to 16% above prior-year quarter. This range also assumes 1% unfavorable currency.
Fourth-Quarter 2019 Pro Forma Results by Segment Americas sales of $2,737 million were 2% higher versus prior-year quarter and down 1% sequentially. Compared to fourth-quarter 2018, price increased 2% and volume grew 1% led mainly by the resilient end markets of healthcare, food and beverage. Operating profit of $676 million was 24.7% of sales, up 200 basis points versus prior-year quarter.
APAC (Asia Pacific) sales of $1,403 million were 3% below prior year and decreased 4% sequentially. Excluding negative currency and cost pass-through, sales versus prior year were flat. Price increased 2% but was offset by negative volumes driven by weaker economic conditions in South Pacific, lower electronics end market activity and higher sale of equipment in the prior year. Operating profit of $299 million was 21.3% of sales, up 430 basis points versus prior-year quarter.
EMEA (Europe, Middle East & Africa) sales of $1,654 million were down 3% versus prior year and up 1% sequentially. Excluding unfavorable currency and cost pass-through, sales increased 1% versus prior year. Pricing was 3% higher but was partially offset by negative volumes primarily due to weaker manufacturing activity. Operating profit of $353 million was 21.3% of sales, up 390 basis points versus prior-year quarter. Linde Engineering sales were $770 million and operating profit was $93 million or 12.1% of sales. Operating profit grew 21% versus prior year due primarily to strong project execution, productivity and better cost absorption.
A teleconference on Linde's fourth-quarter results is being held this morning, February 13, 2020 at 7:00 am Eastern Time. The US Toll-Free Dial-In Number is 1 855 758 5442 and the access code is 1079316. The call is also available as a webcast live and on-demand at www.linde.com/investors. Materials to be used in the teleconference are also available on the website.
About Linde Linde is a leading global industrial gases and engineering company with 2019 sales of $28 billion (€25 billion). We live our mission of making our world more productive every day by providing high-quality solutions, technologies and services which are making our customers more successful and helping to sustain and protect our planet.
The company serves a variety of end markets including aerospace, chemicals, food and beverage, electronics, energy, healthcare, manufacturing and primary metals. Linde's industrial gases are used in countless applications, from life-saving oxygen for hospitals to high-purity & specialty gases for electronics manufacturing, hydrogen for clean fuels and much more. Linde also delivers state-of-the-art gas processing solutions to support customer expansion, efficiency improvements and emissions reductions.
For more information about the company and its products and services, please visit www.linde.com
Pro forma sales and adjusted operating profit and earnings per share are non-GAAP measures prepared on a basis consistent with Article 11 and includes certain non-GAAP adjustments.
See the attachments (Earnings Release tables: n.eqs.com/c/fncls.ssp?u=DIFQRTPUHN) for a summary of pro forma, adjusted pro forma and non-GAAP reconciliations and calculations. Adjusted amounts, EBITDA, return on capital, free cash flow and net debt are non-GAAP measures.
Attachments: Summary pro forma and adjusted pro forma reconciliations, Statements of Income, Balance Sheets, Statements of Cash Flows, Segment Information and Appendix: 2019 and 2018 pro forma income statement information and non-GAAP Measures.
*Note: We are providing adjusted pro forma earnings per share ("EPS") guidance for 2020. This is a non-GAAP financial measure that represents diluted earnings per share from continuing operations (a GAAP measure) but excludes the impact of certain items that we believe are not representative of our underlying business performance, such as cost reduction and other charges, the impact of potential divestitures or other potentially significant items. Given the uncertainty of timing and magnitude of such items, we cannot provide a reconciliation of the differences between the non-GAAP adjusted pro forma EPS guidance and the corresponding GAAP EPS measure without unreasonable effort.
** Greenhouse Gas (GHG) emission intensity is defined as million tons of CO2 equivalent divided by adjusted EBITDA.
Forward-looking Statements This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by terms and phrases such as: anticipate, believe, intend, estimate, expect, continue, should, could, may, plan, project, predict, will, potential, forecast, and similar expressions. They are based on management's reasonable expectations and assumptions as of the date the statements are made but involve risks and uncertainties. These risks and uncertainties include, without limitation: the ability to successfully integrate the Praxair and Linde AG businesses following the October 2018 Business Combination of both companies (the "Business Combination"); the risk that Linde plc may be unable to achieve expected synergies in connection with the Business Combination or that it may take longer or be more costly than expected to achieve those synergies; the performance of stock markets generally; developments in worldwide and national economies and other international events and circumstances, including trade conflicts and tariffs; changes in foreign currencies and in interest rates; the cost and availability of electric power, natural gas and other raw materials; the ability to achieve price increases to offset cost increases; catastrophic events including natural disasters, epidemics and acts of war and terrorism; the ability to attract, hire, and retain qualified personnel; the impact of changes in financial accounting standards; the impact of changes in pension plan liabilities; the impact of tax, environmental, healthcare and other legislation and government regulation in jurisdictions in which the company operates; the cost and outcomes of investigations, litigation and regulatory proceedings; the impact of potential unusual or non-recurring items; continued timely development and market acceptance of new products and applications; the impact of competitive products and pricing; future financial and operating performance of major customers and industries served; the impact of information technology system failures, network disruptions and breaches in data security; and the effectiveness and speed of integrating new acquisitions into the business. These risks and uncertainties may cause actual future results or circumstances to differ materially from GAAP, IFRS or adjusted projections, estimates or other forward-looking statements.
Linde plc assumes no obligation to update or provide revisions to any forward-looking statement in response to changing circumstances. The above listed risks and uncertainties are further described in "Item 1A Risk Factors in Linde plc's Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on March 18, 2019 which should be reviewed carefully. Please consider Linde plc's forward-looking statements in light of those risks.
Additional features: Document: n.eqs.com/c/fncls.ssp?u=DIFQRTPUHN Document title: Q4 19 Earnings Tables
