Q4 2023 Linde PLC Earnings Call

Operator: Ladies and gentlemen, good day and thank you for standing by. Welcome to the Linde full year and fourth quarter 2023 earnings teleconference and webcast. At this time, all participants are in a listen-only mode.

Ladies and gentlemen, good day and thank you for standing by welcome.

Welcome to the Wendy's full year and fourth quarter 2023 earnings teleconference and webcast.

At this time all participants are in a listen only mode.

Operator: Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. And I would now like to hand the conference over to Mr. Juan Pelaez, Head of Investor Relations.

Please be advised that today's conference is being recorded.

After the speaker's presentation, there will be a question and answer session.

I would now like to hand, the conference over to Mr. Juan Pliers head of Investor Relations. Please go ahead Sir.

Juan Pelaez: Thank you, Abby. Good morning, everyone. And thank you for attending our 2023 fourth quarter earnings call and webcast. I'm Juan Pelaez, Head of Investor Relations, and I'm joined this morning by Sanjiv Lamba, Chief Executive Officer, and Matt White, Chief Financial Officer.

Yeah.

Juan Pelaez: Thank you Abby good morning, everyone and thank you for attending our 2023 fourth quarter earnings call and webcast.

I want the lion's head of Investor Relations and I'm joined this morning by Sanjiv Lambeau Chief.

Juan Pliers: Chief Executive Officer, and Matt White, Chief Financial Officer.

Juan Pelaez: Today's presentation materials are available on our website at linde.com in the investor section. Please read the forward-looking statement disclosure on page 2 of the slides and note that it applies to all statements made during this teleconference. The reconciliations of the adjusted numbers are in the appendix to this presentation.

Today's presentation materials are available on our website at <unk> dot com in the investors section.

Juan Pliers: Please read the forward looking statement disclosure on page two of the slides and note that it applies to all statements made during this teleconference.

Juan Pliers: The reconciliations of the adjusted numbers are in the appendix to this presentation.

Sanjiv Lamba: Sanjiv will provide some opening remarks, and then Matt will give an update on Linde's fourth quarter financial performance and outlook, after which we will wrap up with Q&A. Let me now turn over the call to Sanjiv. Thanks, Juan, and good morning everyone.

Juan Pliers: Rajeev will provide some opening remarks, and then Matt will give an update on <unk> fourth quarter financial performance and outlook.

Matthew J. White: After which we will wrap up with Q&A.

Matthew J. White: Let me now turn over the call to Sanjiv.

Sanjiv: Thanks, Ron and good morning, everyone.

Sanjiv Lamba: By all measures, 2023 was another successful year, thanks to the hard work and dedication from Linde employees around the world. And despite the economic and geopolitical challenges, Linde once again delivered on its commitments with industry-leading results. As I've said before, this doesn't happen by accident.

Sanjiv: By all measures 2023 was another successful year, thanks to the hard work and dedication from Lindsay employees around the world.

Sanjiv: Despite the economic and geopolitical challenges Lindsay once again delivered on its commitments with industry leading results.

Sanjiv: As I've said before this doesn't happen by accident, it's a daily grind across the entire organization.

Sanjiv Lamba: It's a daily grind across the entire organization, underpinned by a disciplined operating rhythm. An important tenet of this rhythm is to maintain a results-driven culture, where we consistently focus on performance metrics that drive shareholder value. Slide 3 provides an overview of those areas I view as critical to running a leading industrial gas company. It starts with: We have a top-notch team who run a safe, reliable, and efficient industrial gas company. During 2023, we made meaningful progress towards our goal of a highly engaged diverse workforce and further supported the communities we operate in. [inaudible] I'd like to thank our employees around the world for delivering these results. Supporting the environment is more than just lip service. We've been working on it for decades. Last year, we reduced absolute greenhouse gas emissions while increasing our active renewable energy purchases by one terawatt hour.

Sanjiv: Underpinned by our disciplined operating rhythm.

Sanjiv: An important tenet of this rhythm is to maintain a results driven culture, where we consistently focus on performance metrics that drive shareholder value.

Sanjiv: Slide three provides an overview of those areas I view as critical to running a leading industrial gas company.

Sanjiv: It starts with people.

Sanjiv: We have a top notch team will run a safe reliable and efficient industrial gas company.

Sanjiv: During 2023.

Sanjiv: We've made meaningful progress towards our goal of a highly engaged and diverse workforce.

Sanjiv: Further supporting the communities we operate in.

Sanjiv: All while maintaining world class safety results.

Sanjiv: I'd like to thank our employees around the world for delivering these results.

Sanjiv: Supporting the environment is more than just lip service that Lindy we.

Sanjiv: <unk> been working on it for decades.

Sanjiv: Last year, we reduced absolute greenhouse gas emissions, while increasing our active renewable energy purchases by one terawatt hour.

Sanjiv Lamba: It's a good start towards our long-term goals, and I'm pleased to see acknowledgement of this progress in our external recognition. We are also positioning the business for high quality future growth. The OCI project, with a capex of approximately $2 billion, will produce $300 million cubic feet per day of blue hydrogen, which will be sold under a standard industrial gas supply contract while partnering with ExxonMobil for CO2 sequestration. And I continue to be confident about winning new backlog projects in the U.S., Europe, the Middle East, and Asia-Pacific worth around 8 to 10 billion dollars in the next few years. Recently, there have been some updates and, indeed, some confusion regarding the IRA regulations.

Sanjiv: It's a good start towards our long term goals and I'm pleased to see acknowledgement of the progress in <unk>.

Sanjiv: Our external recognition.

Sanjiv: We also positioned the business for high quality future growth there.

Sanjiv: OCI project with Capex of approximately $2 billion with produce 300 million.

Sanjiv: Cubic feet per day of Blue hydrogen, which will be sold under standard industrial gas supply contracts.

Sanjiv: While partnering with Exxonmobil for Seo to sequestration.

Sanjiv: And I continue to be confident about winning new backlog projects in the U S.

Sanjiv: Ara Middle East and Asia Pacific was around $8 billion to $10 billion in the next few years.

Sanjiv: Recently, there have been some updates and indeed, some confusion regarding the IRS regulations.

Sanjiv Lamba: We've included a slide in the backup to help explain our... I'm happy to respond to any questions on it, but let me reiterate the key message. We expect future U.S. on-site clean hydrogen projects to primarily leverage 45Q credits since we have not yet identified any large on-site green hydrogen projects that meet our investment criteria. I expect to see small to mid-sized green hydrogen projects, primarily to serve merchant-type demand, but these will likely not meet a backlog definition. Aside from clean energy projects, we continue to position the base business well, as evidenced by our traditional on-site, merchant, small on-site investment. Indeed, but you'll see we have another new record.

Sanjiv: We've included a slide in the backup to help explain our views.

Sanjiv: Happy to respond to any questions on it but let me reiterate the key message.

Sanjiv: We expect future U S onsite clean hydrogen projects to primarily leverage 45 Q credits.

Sanjiv: Since we have not yet identified any large onsite green hydrogen projects that meet our investment criteria.

Sanjiv: I expect to see small to midsized green hydrogen projects, primarily to serve merchant type demand.

Sanjiv: But these will likely not meet our backlog definition.

Sanjiv: Aside from clean energy projects, we continue to position the base business as well as evidenced by our traditional onsite merchant small onsite investments, indeed, where youll see we have another new record.

Sanjiv Lamba: Finally, we deliver on the After all, management's primary purpose is to be a steward of shareholder capital. We've listed a few key accomplishments, but I believe the four most important financial metrics to create shareholder value can be found on the next slide. It's easy for management to get distracted by a myriad of financial metrics through which performance can be measured.

Sanjiv: Finally, we delivered on the numbers after all management's primary purpose is to be a steward of shareholder capital.

Sanjiv: Adjusted a few key accomplishments, but I believe the four most important financial metrics to create shareholder value can be found on the next slide.

Sanjiv: It's easy for management to get distracted by a myriad of financial metrics through which performance can be measured.

Sanjiv Lamba: However, one cannot lose sight of the ultimate objective, to increase shareholder value, which can best be represented by Total Shareholder Return or TSR. From my perspective, the best way to deliver superior TSR is to have industry-leading results in EPS growth, operating cash flow growth, operating profit margins, and return on capital. ROC and operating margin demonstrate the quality and health of the business, and while both have theoretical limits, sustaining them at leading levels while growing EPS and OCF is the best combination for compound value trade. Each chart shows the five-year trend against two members in the Indian government. Linde has led all of them, in some cases by a wide margin.

Sanjiv: However, one cannot lose sight of the ultimate objective to increase shareholder value.

Sanjiv: Which can best be represented by total shareholder return at ESR.

Sanjiv: From my perspective, the best way to deliver superior DSR is still have industry, leading results in EPS growth operating cash flow growth operating profit margins and return on capital.

Sanjiv: <unk> operating margin demonstrates the quality and health of the business.

Sanjiv: And while bolthouse theoretical limits sustaining them at leading levels, while growing EPS and Ocs is the best combination for compound value creation.

Sanjiv: Each chart shows a five year trend against two members in the industry.

Sanjiv: Lindsey has led all of them in some cases by a wide margin.

Sanjiv Lamba: We've maintained leadership despite volatile economic and geopolitical conditions, including unprecedented global events. Linde is an investment for all seasons, and I think these charts demonstrate that. But what about the shareholder? How about metrics that impact TSR? Well, you can find them on the next slide.

Sanjiv: We maintained leadership, despite volatile economic and geopolitical conditions, including unprecedented global events.

Sanjiv: Lindy is an investment for all seasons and I think these jobs to demonstrate.

Sanjiv: That.

Sanjiv: But what about the shareholder how about metrics that impacted DSR well you can find them on the next slide.

Sanjiv Lamba: This graph shows the five-year TSR for Linde compared to members of our industry and the S&P 500. The first observation is that Linde has far exceeded all three, almost double the shareholder return. But equally important, Linde is one of only 12 companies in the entire S&P 500 to deliver positive alpha for five successive years, and the only company in our sector to do so, during good years and bad. Linde consistently outperformed the benchmark to reward its own.

Sanjiv: This graph shows the five yes DSR for Lindsay.

Sanjiv: Two members of our industry and the S&P 500 index.

Sanjiv: First observation is that Linda has far exceeded all three.

Sanjiv: With almost double the shareholder return.

Sanjiv: But equally booked Lindsay is one of only 12 companies in the entire S&P 500 to deliver positive alpha for five successive years.

Sanjiv: And the only company in our sector to do so.

Sanjiv: During good isn't bad Linda consistently outperformed the benchmark to reward our owners.

Sanjiv Lamba: Performance Culture and the corresponding compensation programs at Linde are designed to optimize these four metrics at all levels of the organization. Year after year, we've proven how they positively correlate with Superior TSR and Positive Out. Two important ways to gauge shareholder value creation. Because of this...

Sanjiv: The performance sculpture.

Sanjiv: And the corresponding compensation programs that Lindy are designed to optimize these four metrics at all levels of the organization.

Sanjiv: Europe deal, we've proven how they positively correlated to superior DSR and positive also two important ways to gauge shareholder value creation.

Sanjiv: Because of this IRA.

Matthew J. White: I remain confident in our ability to continue creating long-term shareholder value, regardless of, and I'll turn the call over to Matt to walk you through our financial results. Thanks, Sanjiv. Slide six provides a summary of fourth quarter results. Sales of $8.3 billion grew 5% over the prior year and 2% sequentially. Compared with the prior year, sales declined 3% from contractual costs passed through due to lower energy prices in EMEA and America, which had no effect on profit. Foreign currency translation was a 2% tailwind from a weaker U.S. dollar.

Sanjiv: I remain confident in our ability to continue creating long term shareholder value.

Sanjiv: Regardless of the economy.

Sanjiv: I'll now turn the call over to Matt to walk you through our financial results.

Matthew J. White: Thanks Sanjay.

Matthew J. White: Slide six provides a summary of fourth quarter results.

Matthew J. White: Sales of $8 $3 billion grew 5% over prior year and 2% sequentially.

Matthew J. White: Versus prior year sales declined 3% from contractual cost pass through due to lower energy prices in EMEA and Americas, which has no effect on profit.

Matthew J. White: Foreign currency translation was a 2% tailwind from a weaker U S dollar.

Matthew J. White: Acquisitions improved 1% from the Nexair packaged gas purchase, and engineering increased 1% from project backlog execution. Excluding these items, underlying sales increased 4% from higher prices, which continue to track with globally weighted inflation. Year-over-year volumes were flat, as contribution from the project backlog was offset by softer base volumes, primarily in EMEA. Compared to the third quarter, sales grew 2% from engineering project time. However, underlying sales were sequentially flat as higher prices offset seasonally lower volume.

Matthew J. White: Acquisitions improved 1% from the next air packaged gas purchase and engineering increased 1% from project backlog execution.

Matthew J. White: Excluding these items underlying sales increased 4% from higher prices, which continued to track with globally weighted inflation.

Matthew J. White: Year over year volumes were flat as contribution from the project backlog was offset by softer base volumes primarily in EMEA.

Matthew J. White: Versus the third quarter sales grew 2% from engineering project timing.

Matthew J. White: Underlying sales were sequentially flat as higher prices offset seasonally lower volumes.

Matthew J. White: Overall, economic conditions have been stagnant, as the estimated industrial production growth for our weighted countries was close to zero percent for the fourth quarter. Operating profit of $2.3 billion was 14% above last year and resulted in a 27.4% operating margin, excluding cost pass-through operating margins expanded 130 basis points from last year but declined 80 basis points sequentially, driven by EMEA and engineering. The EMEA trend mostly relates to seasonality, but engineering margins are returning to the normal run rate of low to mid teens percent as we begin to lap the impact from sanctioned projects. However, I still expect global operating margins to expand in the future, including in 2025. I'd also like to point out a one-time unfavorable impact embedded in this quarter's results related to the Argentinian peso, which devalued by over 50 percent. As a hyperinflationary country, we recorded a charge of $10 million to America's operating profit and another $20 million to the interest line, or about 5 cents in total. This impact is not reflected in the sales FX translation summary, as it only impacts other operating income and net interest.

Matthew J. White: Overall economic conditions have been stagnant as.

Matthew J. White: As the estimated industrial production growth for our weighted countries was close to zero percent for the fourth quarter.

Matthew J. White: Operating profit of $2 $3 billion was 14% above last year and resulted in a 27, 4% operating margin.

Matthew J. White: Excluding cost pass through operating margins expanded 130 basis points from last year.

Matthew J. White: But declined 80 basis points sequentially, driven by EMEA and engineering.

Matthew J. White: The EMEA trend, mostly relates to seasonality, but engineering margins are returning to the normal run rate of low to mid teens percent.

Matthew J. White: As we begin to lap the impact from sanctioned projects.

However.

Matthew J. White: I still expect global operating margins to expand in the future including 2024.

Matthew J. White: I'd also like to point out a one time unfavorable impact embedded in this quarter's results related to the Argentinian peso, which devalued over 50%.

Matthew J. White: As a hyper inflationary country, we recorded a charge of $10 million to the Americas operating profit and another $20 million to the interest line or about <unk> of total EPS.

Matthew J. White: This impact is not reflected in the sales FX translation summary, as it only impacts other operating income and net interest.

Matthew J. White: We fully expect to recover this over time, as our pricing aligns with the subsequent local. EPS of $3.59 was 14% above last year as pricing net of cost inflation, backlog contribution, and a lower share count more than offset the lower base. The 1% sequential decline was primarily driven by seasonal factors and the devaluation of the Argentinian peso. Disciplined capital management is a hallmark of Lindy stewardship, and 2023 was no exception.

Matthew J. White: We fully expect to recover this over time as our pricing aligns with the subsequent local inflation.

Matthew J. White: EPS of $3.59 was 14% above last year as pricing net of cost inflation.

Matthew J. White: Backlog contribution and a lower share count more than offset lower base volumes.

Matthew J. White: The 1% sequential decline was primarily driven by seasonal factors and the devaluation of the Argentinean peso.

Matthew J. White: Disciplined capital management is a hallmark of Linda stewardship.

Matthew J. White: And 2023 was no exception.

Matthew J. White: Return on capital finished over 25% against the backdrop of healthy operating cash. Slide 7 provides further detail on the full-year capital allocation performance. Operating cash flow of $9.3 billion grew 5% over the prior year despite the significant working capital outflows related to the winding down of engineering projects. Most of this has passed, which should enable a future OCF to EBITDA ratio in the low to mid 80 percent. On the right, you can see uses of cash, which is consistent with our long-standing capital allocation policy, an underlying mandate to maintain a single A rating while growing the dividend, a priority to invest in projects which meet our criteria, and the opportunity to sweep all remaining capital towards share repurchase. With that approach, we return $6.4 billion to shareholders in the form of dividends and share repurchase while investing $4.7 billion back into the business. But investing in the business is much more than just a dollar.

Matthew J. White: Return on capital finished over 25% against the backdrop of healthy operating cash flow.

Matthew J. White: Slide seven provides further detail on full year capital allocation performance.

Matthew J. White: Yeah.

Matthew J. White: Operating cash flow of $9 $3 billion grew 5% over prior year. Despite the significant working capital outflows related to wind down of engineering projects.

Matthew J. White: Most of this is passed which should enable a future ocs to EBITDA ratio in the low to mid 80% range.

Matthew J. White: On the right you can see uses of cash which is consistent with our long standing capital allocation policy.

Matthew J. White: And underlying mandate to maintain a single a rating while growing the dividend.

Matthew J. White: Our priority to invest in projects, which meet our criteria.

Matthew J. White: And the opportunity to sweep all remaining capital towards share repurchases.

Matthew J. White: With that approach, we returned $6 $4 billion to shareholders in the form of dividends and share repurchases.

Matthew J. White: While investing $4.7 billion back into the business.

But investing in the business is much more than just a dollar number.

Matthew J. White: One of the most important responsibilities of management is to ensure capital is invested for an appropriate risk-weighted return. Across Linde, we understand this concept and have integrated it into the culture so our owners can sleep well at night. I'll wrap up with guidance on slide 16. We're initiating 2024 full-year EPS guidance at $15.25 to $15.65, or 8% to 11% growth when excluding an assumed 1% FX head. Consistent with our prior approach, this assumes no economic improvement in the mid-term.

Matthew J. White: One of the most important responsibilities of management is to ensure capital is invested for an appropriate risk weighted return.

Matthew J. White: Across Lindy, we understand this concept and have integrated it into the culture. So our owners can sleep well at night.

Matthew J. White: I'll wrap up with guidance on slide eight.

Matthew J. White: We're initiating 2020 for full year EPS guidance at $15 25 to.

Matthew J. White: $15 65.

Matthew J. White: Or 8% to 11% growth when excluding an assumed 1% FX headwind.

Matthew J. White: Consistent with prior approach this assumes no economic improvement at the midpoint.

Matthew J. White: Therefore, if the economy grows, there will be upside, and if there is a recession, we'll take actions to maintain this. For the first quarter, this translates to a range of $3.58 to $3.68, or 6% to 9% EPS growth excluding FF. While the economic assumption is similar to the full year, the first quarter is traditionally our lightest due to seasonal factors. Heroes aren't made in February, so we believe it's appropriate to remain cautious this early in the year.

Matthew J. White: Therefore, if the economy grows there would be upside and if there is a recession, we'll take actions to maintain this range.

Matthew J. White: For the first quarter. This translates to a range of $3 58 to $3 68.

Matthew J. White: Or 6% to 9% EPS growth excluding FX.

Matthew J. White: While the economic assumption is similar to the full year. The first quarter is traditionally our lightest due to seasonal factors.

Matthew J. White: Heroes aren't made in February so we believe it's appropriate to remain cautious this early in the year.

Operator: However, regardless of what 2024 brings, investors can rest assured that we will manage what matters most to create shareholder value. I'll now turn the call over to Q&A. Thank you. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad.

Matthew J. White: However.

Matthew J. White: Regardless of what 2024 brings.

Matthew J. White: Investors can rest assured that we will manage what matters most to create shareholder value.

Speaker Change: I'll now turn the call over to Q&A.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: We would like to ask a question. During this time simply press the star key followed by the number one on your telephone keypad.

Operator: If you would like to withdraw your question, press star 1 a second time, and we'll pause for just a moment to compile the Q&A roster. We will take our first question from Duffy Fisher with Goldman Sachs. Your line is open. Yes, good morning, guys.

Speaker Change: If you would like to withdraw your question Press Star one a second time.

We will pause for just a moment to compile the Q&A roster.

Speaker Change: Yeah.

Speaker Change: We will take our first question from Duffy Fischer with Goldman Sachs. Your line is open.

Duffy Fischer: Yes, good morning, guys.

Sanjiv Lamba: Question Just around China, both in industrial and also electronics, we seem to be getting different cross currents from different companies as they report kind of what the outlook is. Could you share with us what you view as kind of the first half outlook for both industrial production and your end markets there and electronics? So Daffy, why don't I just start off by a quick reminder that China is about 7% of our total sales and profits, just as a baseline. And that, of course, is spread across various customers and every possible end market that we have. So, you will recall we've spoken about China and weakness and slow recovery over there. I think all of last year, in fact, and none of this should really come as a surprise.

Duffy Fischer: Question, just around China, both on industrial and also electronics, we seem to be getting different cross currents.

Duffy Fischer: From different companies as they reported kind of what the outlook is could you share with us what you view as kind of the first half outlook for both industrial production.

Duffy Fischer: Your end markets, there and electronics.

Speaker Change: Sure Duffy I just start off by a quick reminder, that China is about 7% of our total sales and profits just just as a baseline.

Speaker Change: And that of course is spread across our various customers in every possible end market that we have so.

You would recall, we spoken about China weakness and slow recovery over there.

Speaker Change: I think all of last year in fact and.

Speaker Change: None of this should really come as a surprise, we've been seeing China being a little bit softer and we've kind of track that for at least six to nine months for now. We are also as a result of that taken some actions in the country already as you would expect us to.

Sanjiv Lamba: We've been seeing China being a little bit softer, and we've kind of tracked that for at least six to nine months now. We've also, as a result of that, taken some actions in the country already, as you would expect us to. So all of that's already in place.

Speaker Change: So all of that is already in place now, let's talk about the outlook for 2024 as far as industrials goal as we said we've seen a lack of momentum we talked about it last year, we see the same carry through into 2020 full for most part.

Sanjiv Lamba: Now let's talk about the outlook for 2024. As far as industrials go, you know, as we said, we've seen a lack of momentum. We talked about it last year. We see the same carry through into 2024 for most parts. I'll walk you through some end markers just to give you a sense of what's going on.

Speaker Change: I'll walk you through some end market just to give you a sense of what's going on some are little bit stronger than others, but.

Sanjiv Lamba: Some are a little bit stronger than others, but, you know, broadly, I think we don't quite see China recovering at a pace that we would have expected. In end markets, let me just kind of mention chemicals to start off with. They did have a solid Q4. It is, of course, weighed down by the fact that construction is a little bit slower, but all in all, you know, the market was in a reasonable shape, and we expect... maybe a mild recovery towards the first half of this year and then maybe a pickup towards the second. Steel, which is the other major market that we've been talking about, has been shrinking for a while. In fact, crude steel production in Q4 shrank about 4%. Some of that was administrative control because they wanted to hold on to their annual capacities, if you will. Don't expect anything to happen on steel.

Speaker Change: Broadly I think we.

Speaker Change: We don't quite see China recovering at a pace at which we would have expected it to.

Speaker Change:

Speaker Change: In end markets, let me just kind of mentioned chemicals to startle wet they did have a solid Q4.

Speaker Change: It is of course weighed down by the fact that construction is a little bit slower, but all in the market was was in a reasonable shape and we expect maybe.

Speaker Change: Maybe a mild recovery towards the first half of this year and then maybe a pickup.

Speaker Change: Towards the second half Steve.

Steel, which is the other major market that we've been talking about has been in has been shrinking for a while in fact crude steel in Q4 shrank about 4%.

Speaker Change: Some of that administrative control because they wanted to hold on to their annual.

Speaker Change: Capacities, if you will.

Speaker Change: Don't expect anything to happen on steel it is really driven around the property market in the property market recovery is not foreseen in 2024. So we expect still to just muddy along for most part of this year.

Sanjiv Lamba: It is really driven around the property market, and the property market recovery is not foreseen in 2024. So we expect steel to just muddy along for most of this year. Manufacturing generally has been a bit lackluster, but there are some bright spots within that. Automobiles, for instance, have shown some good growth in Q4, up about 17%. EV, a large part of that. Batteries up a little bit as well.

Speaker Change: Manufacturing generally has you know has been a bit lackluster, but but there are some bright spots within that automobile for instance have shown some some good growth in Q4 up about 17% EV, a large part of that batteries up a little bit as well as solar cells up a little bit as well.

Sanjiv Lamba: Solar cells are up a little bit as well. Other than this, I'd say, again, manufacturing has been largely flattish beyond that. As far as electronics is concerned, electronics saw a little bit of a recovery in Q4. Again, remember, the thing to watch out for in electronics is less about what is happening with capacities and more about the kind of escalation in geopolitical risk that comes with electronics in China, in particular at this point in time. And again, our view is you will see continued mild recovery probably through the first half of the year, and then the second half, we'll have to just watch and see what happens. Great, thank you guys. And we will take our next question from Mike Leithead with Barclays. Your line is open. Great, thank you. Good morning, guys.

Speaker Change: Other than this I would say again manufacturing has been largely flattish beyond that.

Speaker Change: As far as electronics is concerned electronics saw a little bit of a recovery in Q4 again remember the thing to watch out in electronics is less about what is happening on capacities in more and more about the kind of escalation and geopolitical risks that comes with electronics in China in particular at this point in time and again, our view is you will see.

Speaker Change: See continued mild recovery probably through the first half of the year and then the second half we will have to just watch and see what happens.

Speaker Change: Great. Thank you guys.

Speaker Change: And we will take our next question from Mike <unk> with Barclays. Your line is open.

Mike: Great. Thank you and good morning, guys. Sanjay can you speak to how Youre helium business performed in the fourth quarter and how you would expect that market to trend into 2024.

Sanjiv Lamba: Sanjiv, can you speak to how your helium business performed in the fourth quarter and how you'd expect that market to trend into 2024? So Mike, there's been a lot of excitement apparently around helium, and I'm just a little bit surprised by that. But anyway, let me just kind of start off by just reminding you again that Helium is very low single-digit revenues for Linde. When I look at the market broadly, I see the market more or less in balance across the world. Now, there are some regional imbalances in there. There are some regions that are slightly short, and others that are long.

Sanjay: So Mike there's been a lot of excitement of barley around helium and I'm, just a little bit surprised by that but anyway. Let me just kind of start off by just reminding you again helium is very low single digit revenues for Linda.

Sanjay: When I look at the market broadly I see the market more or less in balance across across the world. Now there are some regional imbalances in there there are some regions slightly short and others that are long, we do see some logistical challenges developing out of the middle East.

Sanjiv Lamba: We do see some logistical challenges developing out of the Middle East, shipping in particular, which might impact regional imbalances and exacerbate them a little bit further. As far as Q4 was concerned, we saw very low single-digit declines in volumes while pricing was steady and stable, um, again, not worthy of mention; you didn't really hear us mention it anywhere. My expectation for 2024 is that helium volumes will kind of remain largely balanced; there'll be markets that are long, which might feel a little bit more pressure, and more broadly, it'll track and mirror what you see on the electronic We'll take our next question from Peter Clark with Societe Generale. Your line is open. Yes, good morning, everyone.

Sanjay: Shipping in particular, which might impact our regional imbalances and exacerbate them a little bit further.

Sanjay: As far as Q4 was concerned we saw very low single digit declines in volumes, while pricing was steady and stable.

Sanjay: Again.

Sanjay: Worthy of mention you didn't really curious mentioned it anywhere.

My expectation on 2024 as helium volumes will kind of remain largely balanced there'll be there'll be markets that along which might feel a little bit more pressure.

Sanjay: And more broadly it will track and mirror, what you see on the electronic side in terms of recovery.

Speaker Change: Great. Thank you.

Speaker Change: Okay.

Speaker Change: And we'll take our next question from Peter Clark with Society Generali. Your line is open.

Peter Clark: Yes, good morning, everyone I wanted to come from volumes to pricing really you alluded to the fact, obviously you're tracking at.

Sanjiv Lamba: I want to jump from volumes to pricing, really. You alluded to the fact, obviously, you're tracking the local inflation pretty well; you've got sequential prices again. When I do a three-year stack, America's actually went up in Q4 against Q3. EMMEA was flattish, but of course, your costs are coming off.

Peter Clark: Local inflation pretty well equal sequential price again, when I do a three year stack.

Peter Clark: And that because it actually went up Q4 against Q3 <unk> was flattish but of course your cost coming off I know theres local inflation in there, but it is a cost bucket.

Sanjiv Lamba: I know there's local inflation in there, but as a cost bucket, it's probably coming off. Just wondering how you see that trending into 24. I'm assuming you're going to say there's no reason to see any different, but effectively, it does feel like the margins are very, very secure here. So, Peter, I think you've answered the question yourself.

Peter Clark: It is probably coming off just wondering how you see that trending into 'twenty.

Peter Clark: 24, I'm, assuming you're going to say no reason to see any different effectively.

Peter Clark: It does feel like the margins are very very secure here.

Peter Clark: Yeah.

Speaker Change: So Peter I think you've answered the question yourself really I am going to tell you no reason to see anything different to what we saw in 2023.

Sanjiv Lamba: Really, I am going to give you no reason to see anything different from what we saw in 2023. I'll make maybe a couple of points just as a point of reiteration. The first, again, I think you mentioned this early on.

Maybe a couple of points just as a point of reiteration. The first again I think you mentioned this early on the best proxy for our pricing is globally weighted inflation and that seems to track reasonably well we've seen that over many years now.

Sanjiv Lamba: The best proxy for our pricing is globally weighted inflation, and that seems to track reasonably well. We've seen that for many years now.

Sanjiv Lamba: So, you know, even though we are seeing disinflation or lower inflation in many parts of the world, my expectation is that this year, despite that, we'll probably produce higher prices than we've seen for the last decade. The only other point I'd make on prices is the fact that... You should expect us to continue to see pricing actions that we take. We talk about pricing as being a management action. It's something that managers do every day.

Speaker Change: So even though we are seeing disinflation or lower inflation in many parts of the world. My expectation is this year. Despite that we will probably produce higher pricing levels than we've seen for the last decade.

Speaker Change: The only other point I'd make I think on pricing is a fact that.

Speaker Change: You should expect us to continue to see pricing actions that we take we talked about pricing as being management action, that's something that they do every day.

Sanjiv Lamba: And that process and discipline that follows, I think, is what makes the pricing mechanism so strong and robust for us. You should expect us to see that continue through in 2024. And you should see that reflected in margins, which should continue to see some improvement as we go into 2024. Thank you. And we will take our next question from Geoff Zekauskas with JP Morgan. Your line is open. Thanks very much.

Speaker Change: And that process and discipline that follows I think is what makes the pricing mechanism. So strong and robust for US you should expect us to see that continue through in 2024, and you should see that reflected in margins, which should continue to see some some improvement as we go into 2024.

Speaker Change: Thank you.

Speaker Change: And we will take our next question from Jeff Zekauskas with J P. Morgan Your line is open.

Jeffrey J. Zekauskas: Thanks very much.

Sanjiv Lamba: In terms of your outlook for 2024, if global industrial production is roughly flat, and you have new projects coming on stream, should your base case volume be up 2% or 3%? And then, if you can comment on whether Russia is now producing more helium. I'll just quickly comment on Russia very quickly to tell you that, you know, we've come out of our contracts with Amor that were previously there, and therefore, really, we aren't in a position to comment on what happens in Russia as far as helium production is concerned. There's a lot of speculation around that, Geoff, as you know, and I think at this point in time, I'll probably reserve a comment on that.

Jeffrey J. Zekauskas: In terms of your outlook for 2024, if global industrial production is roughly flat and you have new projects coming on stream.

Jeffrey J. Zekauskas: Should your base case volume.

Jeffrey J. Zekauskas: Up two or 3%.

Jeffrey J. Zekauskas: And then if you can comment on whether Russia is now producing more helium than it was before.

Jeffrey J. Zekauskas: So I'll just quickly comment on Russia very quickly to tell you that we have.

Jeffrey J. Zekauskas: <unk> come out of our contracts with our more of that that were previously there and therefore, a really we aren't in a position to comment on what happens in Russia as far as helium production is concerned there's a lot of speculation around that Jeff as you know and you know I think at this point in time.

Jeffrey J. Zekauskas: Ill, probably resolve a comment on that as far as outlook is concerned and I might just want to take you back to our guidance.

Sanjiv Lamba: As far as Outlook is concerned, I might just want to take you back to our guidance. As you know, we've said in our guidance that we see, you know, at the midpoint of the guidance, zero help from the economy.

Jeffrey J. Zekauskas: As you know we have said in our guidance that.

Jeffrey J. Zekauskas: We see.

Jeffrey J. Zekauskas: At the midpoint of the guidance zero help from the economy end.

Sanjiv Lamba: And, you know, we kind of maintain that. Your point on backlog contribution again, as a reminder on EPS growth, that we see a backlog contribution range of one to 2% for 2024. I see that at the top end of that range. You know the other levers well, but I'll retread them just quickly as well as a recap.

Jeffrey J. Zekauskas: We kind of maintain that.

Jeffrey J. Zekauskas: Your point on backlog contribution again as a reminder, on EPS growth that we see our backlog contribution ranges from 1% to 2% for 2024 I see that at the at the top end of that range.

Jeffrey J. Zekauskas: You know the other lever as well, but I'll I'll reiterate them just quickly as well as a recap we see share buybacks and share count obviously help us at the EPS growth level by about two percentage points and then the rest is all about management action as far as pricing productivity and total cost management is concerned that's what brings up.

Sanjiv Lamba: We see share buybacks and share count obviously helping us at the EPS growth level by about two percentage points. And then the rest is all about management action as far as pricing, productivity, and total cost management are concerned. That's what brings up the rest to take us to our midpoint of 10 plus percent EPS growth for 2024. And we will take our next question from Tony Jones with Redburn Atlantic. Your line is open.

Jeffrey J. Zekauskas: The rest to take us to <unk>.

Jeffrey J. Zekauskas: Midpoint of 10 plus percent EPS growth for 2024.

Speaker Change: Great. Thank you so much.

Speaker Change: And we will take our next question from Tony Jones with Redburn Atlantic Your line is open.

Sanjiv Lamba: Hi guys, thanks for taking my question. In your prepared remarks, you sort of highlighted that large green hydrogen projects are not where you're likely to be, at least for the foreseeable future. Could you just explain why?

Stephen Byrne: Hi, guys.

Stephen Byrne: Thanks for taking my question in your prepared remarks, you sort of highlighted that large green hydrogen projects not where you're.

Stephen Byrne: Likely to be at least for disabled future could you just explain why is it sort of price.

Sanjiv Lamba: Is it sort of price? Your focus on price and long-term take or pay contracts means the criteria is not quite as tight. That would be really helpful, thank you. Sure. Tony, what we've said very clearly is that the electrolyzer technology that ensures that green hydrogen is produced requires a couple of things to happen for it to get to a point where we will see large on-site green hydrogen projects, right? The distinction I'm making here is between large on-site green hydrogen projects, and I'll talk a bit about small and mid-sized in a minute.

Speaker Change: You'll focus on price.

Stephen Byrne: A long term take or pay contracts. The criteria is not quite as tight that would be really helpful. Thank you.

Speaker Change: Sure Tony So what we've said very clearly is our belief is that the electrolyze. It technology that ensures that green hydrogen is produced.

Speaker Change: A couple of things to happen for it to get to a point, where we will see large onsite green hydrogen projects right. The distinction I'm, making here is large onsite green hydrogen projects I'll talk a bit about the small and mid sized in a minute. So two things need to happen on the Electrolyzed technology, one is that it needs to improve in terms of its reliability and the ability.

Sanjiv Lamba: So two things need to happen with the electrolyzer technology. One is that it needs to improve in terms of its reliability and the ability to operate 24-7 if you're going to have a large, you know, green on-site project to serve a large demand pool if needed. The other piece that needs to happen is capital efficiency on electrolyzers needs to improve dramatically to make sure that we are at a point where that becomes cost-effective. Ultimately, economics will drive those investments. And at the moment, my view is the electrolyzer technology, particularly PEM, isn't quite at a point where the economics work out in favor of a large-scale point of inflection to green hydrogen. My view again, and I've said this many times, so at the point of maybe belaboring the point now, I've said that there's probably a five to seven-year window for electrolyzer technology to scale So that's kind of the one reason why we think it doesn't quite make the grade.

Speaker Change: 80 to operate 27, if youre going to have a large green onsite project to serve a large demand pull if needed. The other piece that needs to happen is capital efficiency on electrolyze those needs to improve dramatically to make sure that we are at a point where that becomes cost effective ultimately economics will drive.

Speaker Change: Those investments and at the moment My view is the Electrolyzed technology, particularly Bam isn't quite at a point, where the economics work out and in favor of.

Speaker Change: A large scale point of inflection to green hydrogen.

Speaker Change: My view again, and I've said this many times over so at the point of maybe the laboring the point now.

Speaker Change: Said that there is probably a five to seven year window for equalizer technology to scale up.

Speaker Change: Both from a technology on a capital point of view such that we get the reliability and the cost effective basis on which you will see large large scale inflection happening. So that's kind of the one reason why we think it doesn't quite make it that doesn't quite make the grade I do expect however in the interim the five to seven years that I referenced.

Sanjiv Lamba: I do expect, however, in the interim, the five to seven years that I referenced, small and medium-sized electrolyzer complexes to be built, and they will largely serve what we call merchant-type demand, where you have a bit of flex in terms of how much product is available, how much product is provided, and reliability, and so on and so forth. We also see the development of liquid hydrogen as an important component, and again, we are excited about this. We are scaling up our technology around liquid hydrogen to make sure that it's there to support the small- to medium-scale green hydrogen development that we think will happen in this interim period. Great, thanks, that's really helpful.

Speaker Change: Small and medium sized electrolyze complexes to be built.

Speaker Change: And they will largely saw what we call merchant type demand.

Speaker Change: You have a bit of flex in terms of how much product is available how much product is provided and reliability and so on and so forth. We also see development of liquid hydrogen as an important component and again. We're excited about this we are scaling our biotechnology around liquid hydrogen to make sure that it's there to support the small to medium scale.

Speaker Change: Green hydrogen development that we think will happen in this interim period.

Speaker Change: Great. Thanks, that's really helpful.

Sanjiv Lamba: And we will take our next question from David Begleiter with Deutsche Bank. Your line is open. Good morning, and thank you.

Speaker Change: And we will take our next question from David Begleiter with Deutsche Bank. Your line is open.

David Begleiter: Good morning, and thank you Sandy even met your return on capital are very very strong.

Sanjiv Lamba: Sanjiv and Matt, your returns on capital are very, very strong. In contrast, these lines have been flat for the last, I think, five quarters. Is there an option to accept some low return but still create value-creating opportunities to drive top line growth going forward? Hey, you know, um... David, I'm going to let Matt answer this.

David Begleiter: Mid twenties.

David Begleiter: In contrast, the volumes have been flat the last I think five quarters.

David Begleiter: Is there an option to accept some lower return, but still value, creating opportunities to drive top line growth going forward.

David Begleiter: Okay.

Sandy: David I am going to let Matt answer. This this is one of his favorite topics. We have a lot of discussion around this I'll just mentioned very briefly as a headline we always look at our investments on an IRR basis to make sure that we don't kind of get get caught up in the <unk> element, but hey, Matt when you discover that yeah. Thanks, Sanjay even in exactly to start off.

Matthew J. White: This is one of his favorite topics. We have a lot of discussion around this. I'll just mention it very briefly as a headline. We always look at our investments on an IRR basis to make sure that we don't get caught up in the ROC element. But hey, Matt, why don't you just cover that up?

Matthew J. White: Yeah, thanks, Sanjiv. And to start off, you know, IRR is the primary criteria for incremental investment decisions. And ROC, as you know, is basically the accounting metric on the back end. And when you think about where our ROC has been, and as Sanjiv mentioned in the prepared remarks, we believe that maintaining an industry-leading and healthy ROC and operating margin while growing EPS while growing OCF is the best combination for shareholder value creation and ultimately, you know, relative TSR outperformance. So while there, of course, are theoretical limits, 25% we think is a healthy number. Obviously, the pricing has helped; the non-capital intensity of our growth has helped. We are embarking on more capital-intensive growth as we look out on some of the energy transformation, and we see that as good growth because it meets our investment criteria. So therefore, I would see the ROC number, yes, plateauing as it is, maybe even declining a little bit, but we view that as okay as long as we continue to make the right decisions on IRR, which we feel very confident about.

Matthew J. White: No IRR is is the primary criteria for incremental investment decisions.

Matthew J. White: As you know is the basically the accounting metric on the on the backend and when you think about where our RFC has been and as Sanjiv mentioned in the prepared remarks, we believe that maintaining an industry, leading and healthy gross and operating margin while growing EPS, while growing ocs is.

Matthew J. White: The best combination for shareholder value creation, and ultimately relative tsi outperformance. So while there are of course, our theoretical limits.

Matthew J. White: 25%, we think is a healthy number obviously the pricing has helped the non capital intensity of our growth has helped we are embarking on a more capital intensive growth as we look out on some of the energy transformation and we see that as good growth that meets our investment criteria. So therefore, I would see the <unk> number yes plateauing.

Matthew J. White: It is maybe even declining a little bit, but we view that okay. As long as we continue to make the right decisions on IRR, which we feel very confident about so for us it's more about maintaining healthy levels and maintaining leading levels, while growing the organization, but we're not going to let those metrics of either operating margin or R. O C.

Matthew J. White: So for us, it's more about maintaining healthy levels and maintaining leading levels while growing the organization. But we're not going to let those metrics of either operating margin or ROC inhibit our decisions for good growth projects. They never will.

Matthew J. White: Inhibit our decisions for good growth projects they never will.

Speaker Change: Thank you.

Matthew J. White: And we will take our next question from Vincent Andrews with Morgan Stanley. Your line is open. Hey, this is Steve Haines on behalf of Vincent.

Speaker Change: And we will take our next question from Vincent Andrews with Morgan Stanley. Your line is open.

Speaker Change: Hey, this is Steve Haynes on for Vincent.

Sanjiv Lamba: So I think your sales guest backlog was up a little bit over 10% first last quarter. And just kind of comparing it to the slide deck, it looks like the manufacturing share of that backlog is the highest it's been in some time. So maybe you could just talk a little bit about how you see your backlog trending over the next few quarters and, you know, how that will kind of be spread out over the various end markets. Thank you. Chauvin.

Steve Byrne: So I think your sale of gas backlog was up a little bit over 10% versus last quarter.

Steve Byrne: Just kind of comparing versus the slide deck it.

Steve Byrne: It looks like the manufacturing share of that backlog is the highest it's been some time. So maybe can you just talk a little bit about how you see your backlog trending over the next few quarters.

Steve Byrne: How that will kind of be spread out over the various end markets. Thank you.

Speaker Change: Sure so the.

Sanjiv Lamba: So, the sale of gas backlog is today driven by a couple of factors, right? We kind of split that into our traditional onsites, which is what you're referencing as an example from manufacturing, metals, chemicals, energy, etc. And then the decarbonization portion of our backlog, which is growing, and my expectation is that that'll continue to grow as we move forward. Now, what we are seeing is some overlap in that.

Speaker Change: The sale of gas backlog is to date driven by a couple of factors right, we kind of.

Speaker Change: Split that into our traditional loan sites, which is what you're referencing is an example from manufacturing metals chemicals energy et cetera, and then the decarbonization portion of our backlog, which is growing and my expectation is that that will continue to grow as we move forward now what we are seeing is some overlap in that so there are chemical.

Sanjiv Lamba: So there are chemical companies, obviously, who are looking at decarbonization. We're developing a number of projects alongside them, and we'll see that play into the backlog, and of course, that'll kind of boost the chemical side of things. What I say to you is we're winning more than a fair share of projects at the moment in countries like India, with a more traditional end of the market. That's where you're seeing the manufacturing of metals, chemicals, and refining growth actually pick up a little bit more. We're obviously seeing decarbonization projects around both chemicals, as I referenced earlier, but also, you know, some developments around metals which might follow in due course as well.

Speaker Change: Companies, obviously, who are looking at decarbonization, we are developing a number of projects alongside with them and we'll see that play into the backlog and of course that will kind.

Speaker Change: Boost the chemical side of things.

What I'd say to you is we're winning more than our fair share of projects at the moment in countries like India with a more traditional end of the market Thats why youre seeing the manufacturing metals chemicals growth and refining growth actually pick up a little bit more.

Speaker Change: We are obviously seeing.

Speaker Change: The decarbonization projects around both chemicals as I referenced earlier, but also.

Speaker Change: Some developments around metals, which might follow in due course as well. So that's kind of what you should expect to see in terms of momentum and that momentum will translate into projects that are currently in the pipeline getting signed up in the in the next few years as Ive mentioned about 8% to $10 billion of that and then translating into the backlog.

Sanjiv Lamba: So that's kind of what you should expect to see in terms of momentum. And that momentum will translate into projects that are currently in the pipeline, getting signed up in the next few years, as I've mentioned, about eight to 10 billion of that and then translating into the back. Thank you. And we will take our next question from Massimo Bonisoli on behalf of Ecuador. Your line is open.

Speaker Change: Okay. Thank you.

Speaker Change: Yeah.

Speaker Change: And we will take our next question from Massimo <unk> with <unk>. Your line is open.

Matthew J. White: Good morning, and sorry if my question has already been asked; my line dropped a few times. I'm just wondering one question on CAPEX. What is driving your 2024 CAPEX to 4.5 to 5 billion? Is this related to the recent award you announced, or does this indicate an acceleration of growth rates in 2025 and 2026? Matt, if you want to follow that.

Massimo: Good morning, and sorry, if my question has already been asked.

Massimo: Your line dropped a few times.

Massimo: Just wondering one question on Capex, what is driving your 2020 for Capex to $4 525 billion is it.

Massimo: Related to the recent award we announced.

Massimo: Or does this indicate that acceleration of growth rates in 2025 and 2036. Thank you.

Massimo: Matt do you want to call them sure. So as I mentioned earlier with a lot of the energy transformation, we are seeing a little more capital intensity. So our OCI project for one which is our largest project that we've won we are in the early stages of that ordering equipment that will drive. The Capex were also on the final construction or C. A.

Matthew J. White: Sure. So as I mentioned earlier, with a lot of energy transformation, we are seeing a little more capital intensity. So our OCI project, for one, which is our largest project that we've won, we are in the early stages of that ordering equipment that will drive the CapEx. We're also on the final construction phase or C of the EPC on a lot of the electronic projects that will be coming on stream into the back end of this year and the next year. So that's also driving a higher component.

Massimo: The EPC on a lot of the electronic projects that will be coming on stream into the back end of this year into next year. So that's also driving a higher component, but when you think about our capex in general and break it down we tend to have about 2 billion.

Massimo: <unk> towards what we call our base Capex of which a little over half is for growth projects, but growth projects that do not meet our disciplined backlog definition.

Matthew J. White: But when you think about our CapEx in general and break it down, we tend to have about 2 billion plus towards what we call our base CapEx, which a little over half is for growth projects, but growth projects that do not meet our discipline backlog definition. And the remainder, in this case, would be roughly another 2 plus billion will be for our project backlog. So that is contractually committed. It has defined returns, and it has contract terms to ensure we get our return, like things such as date certain or fixed fees.

Massimo: And the remainder in this case would be roughly another two plus billion will be for our project backlog. So that is contractually committed it has defined returns in.

Massimo: And it has contract terms to ensure we get our return like things such as date certain or fixed fees. So therefore, the higher capex, we feel quite good about we feel good about our execution that we're undertaking.

Massimo: And so it's really just a function of the wins, we've had causing that increase.

Massimo: Yes.

Massimo: And we will take our next question from Josh Spector with UBS. Your line is open.

Matthew J. White: So therefore, the higher CapEx we feel quite good about. We feel good about the execution that we're undertaking. And so it's really just a function of the wins we've had causing that increase. And we will take our next question from Josh Spector with UBS. Your line is open. Hi, good morning.

Massimo: Yeah.

Josh Spector: Yeah, Hi, good morning, I had a question around in EMEA. So margins were down sequentially, but sales were roughly flat and when you talk about the variance you talked about lower onsite volumes, which I think about lower margin relative to the mix and pricing was up.

I'm just curious if you could explain the driver of the margins in the quarter and then also just your outlook for next year margins up flat sequentially. What are you expecting there. Thanks.

Matthew J. White: I had a question about EMEA. So margins were down sequentially, but sales were roughly flat. And when you talk about the variance, you talked about lower onsite volumes, which I think about, you know, lower margin relative to the mix, and pricing was up. So I'm just curious if you could explain the driver of the margins in the quarter, and then also just your outlook for next year, you know, margins up flat sequentially, what are you expecting there? Josh, as you know, EMEA hasn't seen a lot of growth. So one of the things they've done tremendously well, and I give the team credit for having been really one of our profit growth stories over the last three to four years, despite having negative negative volume trends in that same period. So, you know, they've actually done a tremendous job of just managing that. So let's go to the fourth quarter, which is what your question is about.

Josh Spector: Josh as you know EMEA hasn't seen a lot of growth. So one of the things they've done tremendously well and I give the team credit for having been really one of our profit growth stories over the last three to four years, despite having negative negative volume trends in that same period. So they are actually.

Josh Spector: <unk> done a tremendous job of just managing that so let's go to the fourth quarter, which is what your question is and I think basically the point I think that I'd want to make over there is there are some one time costs.

Josh Spector: Along side the volume decline that we've seen over there that actually impact that that volume for the fourth quarter. My expectation is in terms of outlook. My expectation is in the first quarter will be back with a three handle on that volume and I think.

Josh Spector: My.

Josh Spector: The momentum that the EMEA team is built around managing the profit growth my expectation would be that we continue to see margin improvement in 2024 as well.

Matthew J. White: And I think basically the point I think that I'd want to make over there is that there are some one-time costs alongside the volume decline that we've seen over there that actually impact that volume for the fourth quarter. My expectation is, in terms of outlook, my expectation is that in the first quarter we'll be back with a three-handle on that volume. And I think, you know, my, the momentum that the EMEA team has built around managing profit growth; my expectation would be that we continue to see margin improvement in 2024 as well. We will take our next question from Stephen Richardson with Evercore ISI. Your line is open. Thanks. Good morning.

Speaker Change: Thank you.

Speaker Change: We will take our next question from Stephen Richardson with Evercore ISI. Your line is open.

Stephen F. Angel: Thanks, Good morning, since you can Matt.

Stephen F. Angel: Wonder if you could talk a little bit on the drivers of <unk> that you talked about in the script.

Stephen F. Angel: Clearly the business has shown a huge amount of stability and appreciate that the dividend has been growing at a healthy clip year over year for the last couple of years can you just talk about is your.

Stephen F. Angel: As you think about the two levers there is the buyback.

Stephen F. Angel: Buyback is it agnostic to the value of the stock is at.

Stephen F. Angel: Do you think about that as terms of the buyback amount I guess, what I'm getting at is your your dividend coverage ratio is very healthy and has continued to improve and so is there not a place where you could consider kind of rebase the dividend higher just considering the stability of the business. Thanks.

Sanjiv Lamba: Sanjiv and Matt, I wonder if we could talk, and dig in a little bit on the drivers of TSR that you talked about in the script. You know, clearly, the business has shown a huge amount of stability, and I appreciate that the dividend's been growing at a healthy clip year over year for the last couple of years. But you talk about your, you know, as you think about the two levers there, is the buyback, is it agnostic to the value of the stock? Is it, you know, do you think about that in terms of the buyback amount? I guess what I'm getting at is your, you know, your dividend coverage ratio is very healthy and has continued to improve. And so is there not a place where you could consider kind of rebasing the dividend higher, just considering the stability of the business? Thanks.

Speaker Change: I'll just address the buyback piece and I'll ask Matt to kind of give you a more comprehensive response, there, Steve but essentially the share buyback piece, we see as being an <unk>.

Matthew J. White: Intrinsic part of our capital allocation, we think it's an important part of how we deploy and return capital back to our investors and I think it is and it has been and continues to be a very important part of the capital allocation philosophy that we've deployed in the business and therefore reflected in the EPS growth targets that we've set for ourselves.

Matthew J. White: Well, which is 10 plus percent EPS growth as I said earlier.

Matthew J. White: Feel pretty confident about pushing forward on that 10 plus percent EPS growth. Despite all the challenges around et cetera that people talk about because we know that we have the levers in place to make sure that we hit that.

Sanjiv Lamba: I'll just address the buyback piece on the last map to kind of give you a more comprehensive response there, Steve. But essentially, the share buyback piece we see as being an intrinsic part of our capital allocation. We think it's an important part of how we deploy and return capital back to our investors. And I think it has been and continues to be a very important part of the capital allocation philosophy that we've deployed in the business, and therefore reflected in the EPS growth targets that we've set for ourselves as well, which are 10 plus percent EPS growth. As I said earlier, you know, I feel pretty confident about pushing forward on that 10 plus percent EPS growth, despite all the challenges around, et cetera, that people talk about, because we know that we have the levers in place to make sure that we hit that. Matt, do you want to cover other TSR drivers?

Matthew J. White: Do you want to cover other Tsi driver sure Yeah, and obviously, both the buybacks and dividends are important we have shareholders that value both on the dividend we commit to growing it every year and to your point, we have very healthy ratios that enable us to continue to grow that but one.

Matthew J. White: The thing I will never promise as a dividend yield absolutely not that makes no sense. If we do our job well every year, we grow the dividend with a healthy clip, but we also grow the capital base of the stock. Therefore, we will never commit to a dividend yield on the buyback side. This is because we have such excess cash in the organization.

Matthew J. White: And we see a very attractive opportunity to continue buying our stock back I can tell you ive been asked many times at honored $80 $280 $380 on intrinsic valuation and questions like that that's not exactly how we think about it we look at the long term prospects.

Sanjiv Lamba: Sure. Yeah. And obviously, look, both the buybacks and dividends are important. We have shareholders that value both. On the dividend, we commit to growing it every year. And to your point, we have very healthy ratios that enable us to continue to grow that. But one thing I will never promise is a dividend yield. Absolutely not. That makes no sense.

Matthew J. White: Just like we do any other use of capital it's very important to understand that we treat our capital the same whether it's for buybacks projects because it's one homogeneous pool of capital and we have to find the best use of it for our owners. So when we look at the long term repurchases of stock.

Matthew J. White: That has been a good continued use of excess capital.

Matthew J. White: And it also instill discipline in the organization that if we don't meet our investment criteria on projects. We have an alternate use of capital because the one thing about this industry is if you invest poorly in a project. It can create problems for you for two decades.

Matthew J. White: If we do our job well every year, we grow the dividend at a healthy clip, but we also grow the capital base of the stock. Therefore, we will never commit to a dividend yield. On the buyback side, this is because we have such excess cash in the organization and we see a very attractive opportunity to continue buying our stock back. I could tell you I've been asked many times at $180, $280, $380 on intrinsic valuation and questions like that. That's not exactly how we think about it.

Matthew J. White: For us it's an important element of our overall capital allocation process and this is something we're going to continue to do but dividend growth and buybacks are both intricate important for our capital allocation will continue to be.

Speaker Change: Thanks, so much.

Speaker Change: We will take our next question from Patrick Cunningham with Citi. Your line is open.

Hi, Good morning, I, just had a follow up on EMEA I know clearly.

Matthew J. White: We look at the long-term prospects just like we do any other use of capital. It's very important to understand that we treat our capital the same, whether it's for buybacks or projects, because it's one homogeneous pool of capital, and we have to find the best use of it for our owners. When we look at the long-term repurchases of stock, that has been a good continued use of excess capital. It also instills discipline in the organization that if we don't meet our investment criteria on projects, we have an alternate use of capital.

Patrick Cunningham: <unk> been a strong performer price and productivity in the face of weaker onsite volumes I'm curious on your thinking of the region longer term in the face of potential the industrialization and do you see any risk to holding these margin levels. If we see continued industrialization and weakness going forward.

Patrick Cunningham: Patrick as I mentioned earlier on EMEA Hasnt quite been the industrial growth story other than maybe a couple of countries broadly our growth capital is largely been deployed in Americas, and APAC, which is where we saw most of the growth come through.

Patrick Cunningham: Now, having said that EMEA has as I mentioned earlier on and been a very strong profit growth story for us the manage that whole process right through the negative volume trend.

Matthew J. White: The one thing about this industry is if you invest poorly in a project, it can create problems for you for two decades. So for us, it's an important element of our overall capital allocation process, and this is something we're going to continue to do. But dividend growth and buybacks are both intricate and important for our capital allocation and will continue to be. Thanks so much.

Patrick Cunningham: As I look ahead I see two trends first a very resilient base business look there was a view that.

Patrick Cunningham: Volumes in EMEA with crash two years ago. When we saw the energy crisis that didn't happen. We have seen a steady decline. We are you know I'm looking at the January numbers, as we speak and I'm seeing that start to flatten out a little bit. So my expectation is the resilience of that base business, which is also driven by the contract structure.

Operator: And we will take our next question from Patrick Cunningham with Citi. Your line is open. Hi, good morning.

Sanjiv Lamba: I just had a follow up on EMEA. You know, clearly, it's been a strong performer in price and productivity in the face of weaker onsite volumes. I'm curious about your thinking on the region, you know, longer term in the face of potential deindustrialization. Do you see any risk to holding these margin levels if we see continued industrialization and weakness going forward?

Patrick Cunningham: That we have with fixed fees in rentals and so on so forth actually remains a very important part of that portfolio. The other piece, which I think is encouraging is we are seeing large project opportunities led largely by decarbonization.

Patrick Cunningham: The European unit has very complex rules as you know well, but it hasnt intent very steady and stable intend to move forward with decarbonization and push industries in that direction, we see that spring growing momentum around projects.

Sanjiv Lamba: Patrick, as I mentioned earlier on, EMEA hasn't quite been the industrial growth story, other than maybe a couple of countries. Broadly, our growth capital has largely been deployed in America as APAC, which is where we saw most of the growth come through. Now, having said that, you know, EMEA has, as I mentioned earlier on, been a very strong profit growth story for us. They've managed that whole process right through the negative volume trend. As I look ahead, I see two traps.

Patrick Cunningham: And you should expect that there will be projects that will develop and announced even from a lending point of view in the next one to three years and again that'll kind of underpin the long term trends that we see over there I will I will end off by just saying that I expect the EMEA market to continue to be an import.

Sanjiv Lamba: First, a very resilient base business. Look, there was a view that volumes in EMEA would crash two years ago when we saw the energy crisis. That didn't happen.

Patrick Cunningham: In the industrial gas market for Us I don't think that will ever change and they will have a strong contribution to make to the EPS growth that we look at.

Speaker Change: Great. Thank you so much.

Sanjiv Lamba: We have seen a steady decline. I'm looking at the January numbers as we speak, and I'm seeing that start to flatten out a little bit. So my expectation is that the resilience of that base business, which is also driven by the contract structures that we have with fixed fees and rentals and so on and so forth, actually remains a very important part of that portfolio. The other piece, which I think is encouraging, is that we are seeing large project opportunities led largely by decarbonization. The European Union has very complex rules, as you know well, but it has an intent, a very steady and stable intent, to move forward with decarbonization and push industries in that direction.

Speaker Change: We will take our next question from John Mcnulty with BMO capital markets. Your line is open.

John P. McNulty: Yes. Good morning, Thanks for taking my question.

John P. McNulty: Sanjiv on the you spoke on the IRR, a bill and kind of your views on the on the Green hydrogen opportunity can you help us think about the types of customers that youre seeing for the liquid green hydrogen and also the types of premiums if they are willing to pay.

John P. McNulty: Sure.

John P. McNulty: So.

Speaker Change: That's a good question John because.

Sanjiv: The distinction I want to make because I want to just talk about carbon intensity and blue hydrogen to begin with and then transition to green. So my view is large onsite customers recognize the benefits.

Sanjiv: <unk> come from low technical risk established references in and around Blue hydrogen development through hydrogen is all about using existing natural gas converting that into into hydrogen capturing this yield.

Sanjiv Lamba: We see that spurring growing momentum around projects, and you should expect that there will be projects that will develop and be announced, even from a Linde point of view, in the next one, two, three years. And again, that'll kind of underpin the long-term trends that we see over there. I will end off by just saying that I expect the EMEA market to continue to be an important industrial gas market for us. I don't think that will ever change, and they will have a strong contribution to make to the EPS growth that we look at. Thank you so much.

Sanjiv: Two and sequestering it add.

Sanjiv: To enable a low carbon intensity hydrogen to be developed and given the example of celanese, where we're doing it already.

Sanjiv: At an existing facility and with OCI project, we will do that is.

Sanjiv: As we start that project up in a couple of years. So there is an example of a large onsite customer looking for a reliable.

Sanjiv: With low technology risk option in terms of something that they can then sustained over a 10 15 20 year period.

Sanjiv Lamba: We will take our next question from John McNulty with BMO Capital Markets. Your line is open. Yeah, good morning.

Sanjiv: We are so that's kind of the baseline against which I'm now going to reference what's happening with green hydrogen.

Sanjiv Lamba: Thanks for taking my question. Sanjiv, you spoke about the IRA bill and your kind views on the green hydrogen opportunity. Can you help us to think about the types of customers that you're seeing for liquid green hydrogen and also the types of premiums that they're willing to pay? Sure. So, uh, and that's a good question, uh, John, because the distinction I want to make is I want to just talk about carbon intensity and blue hydrogen to begin with and then transition to green.

Sanjiv: As far as green hydrogen is concerned.

Sanjiv: People are increasingly recognizing that these electrolyzed electrolyse the technology is fairly crude.

Sanjiv: <unk> got the same level of reliability cost effectiveness and I think those factors.

Sanjiv: During long term offtake agreements that will enable green hydrogen.

Sanjiv: That offtake agreement will enable the monetization of green hydrogen technology to be more effective longer term.

Sanjiv: There are small green hydrogen customers and thats largely built around mobility of au expect small volumes and you are starting to build an infrastructure and you want to have small volumes feed that infrastructure as it transitions.

Sanjiv Lamba: So my view is large on-site customers recognize the benefits that come from low technical risk and established references in and around blue hydrogen development. Blue hydrogen is all about using existing natural gas, converting that into hydrogen, filtering the CO2 and sequestering it to enable a low carbon intensity hydrogen to be developed. And we've given the example of Celanese where we are doing it already at an existing facility, and with the OCI project, we will do that as we start that project up in a couple of years. So there's an example of a large on-site customer looking for a reliable, low technology risk option in terms of something that they can then sustain over a 10, 15, 20 year period. We are, so that's kind of the baseline against which I'm now going to, you know, reference what's happening with green hydrogen.

Sanjiv: Into.

Sanjiv: Larger broad scale infrastructure. So I think that's where you'll see most of the green hydrogen there are some small mandates that countries are imposed in terms of green hydrogen being utilized in some of the chemicals processes fertilizers et cetera, but again. These are really small scale and the last one I just want to make because I think it'll people talk about gigawatts as.

Sanjiv: Far as high.

Sanjiv: Hydrogen is concerned the reality is.

Sanjiv: The facility that we are setting up far for OCI is an example of the facility that we set up in Sweeney for Phillips 66.

Sanjiv: Those are both traditional hydrogen with carbon capture sequestration, producing new hydrogen theyre, both a gigawatt plus.

Sanjiv: Whereas building a gigawatt facility for Electrolyze. It just hasnt happened yet Youre building 2030, 40 megawatts, which is miniscule in terms of the volume requirements that a typical large onsite customer would typically have so that scale is what it does.

Sanjiv Lamba: As far as green hydrogen is concerned, people are increasingly recognizing that the electrolyzer technology is fairly crude, hasn't got the same level of reliability, and cost-effectiveness, and I think those factors are deterring long-term off-take agreements that will enable green hydrogen to... That off-take agreement will enable the monetization of green hydrogen technology to be more effective in the longer term. There are small green hydrogen customers, you know, and that's largely built around mobility, where you expect small volumes and you're starting to build an infrastructure, and you want to have small volumes feed that infrastructure as it transitions into a kind of larger, broad-scale infrastructure. So I think that's where you'll see most of the green hydrogen. There are some small mandates that countries have imposed in terms of green hydrogen being utilized in some chemicals, processes, fertilizers, etc.

Sanjiv: Large onsite development at the moment that scale of 2013 megawatts only allows for some of the developments around mobility and smaller end users.

Speaker Change: Got it thanks very much for the color.

Speaker Change: And we will take our next question from Stephen Byrne with Bank of America. Your line is open.

Stephen Byrne: Yes. Thank you.

Stephen Byrne: So in the last two years your sale of plant in your sale of gas backlog of both roughly increased 50%.

Stephen Byrne: Do you expect the ladder the sale of gas to to increase maybe a faster clip either by.

Stephen Byrne: By your preference.

Stephen Byrne: You do have benefits in Europe, and the rest of your business from that.

Stephen Byrne: Or from.

Stephen Byrne: Clean energy.

Stephen Byrne: <unk>, presumably would be more in sale of gas and then just one more for that.

Sanjiv Lamba: But again, these are really small scale. And the last point I just want to make is that people talk about gigawatts as far as hydrogen is concerned, but the reality is, you know, the facility that we are setting up for OCI, as an example, or the facility that we set up in Sweeney for Phillips 66. Those are both traditional hydrogen facilities with carbon capture sequestration producing blue hydrogen.

Stephen Byrne: 10 billion.

Stephen Byrne: That that you highlighted.

Stephen Byrne: Our pipeline for clean energy, how much of that would be associated with existing customers, where you could either retrofit or expand existing facilities, which could January and even higher or IRR.

Steve: Steve So.

Sanjiv Lamba: They are both a gigawatt and plus, whereas building a gigawatt facility for electrolyzers just hasn't happened yet. You're building 20, 30, 40 megawatts, which is minuscule in terms of the volume requirements that a typical large onsite customer would typically have. So, that scale is what deters large onsite development. At the moment, that scale of 20, 30 megawatts only allows for some of the developments around mobility and smaller end uses.

Steve: Let me, let me kind of provide the headlines first and then I'll dive a little bit deeper. So the headline is you should expect a sale of gas backlog to continue to grow.

Steve: And you're absolutely right that the 8% to 10 billion that I referenced earlier on.

Steve: Over the next few years, we will see that translate into projects that go into the backlog that $8 billion to $10 billion is probably weighted as far as we're concerned. So clearly we understand that many of those projects will move forward, some may not and Thats, where the opportunity pipeline, which is rich with 200 plus projects that I've referenced a few times in the past.

Sanjiv Lamba: Thanks very much for the call. And we will take our next question from Stephen Byrne with Bank of America. Your line is open. Yes, thank you.

Steve: Is a good feeder into that eight to 10 billion. The number that I've talked about so we should really see that sale of gas backlog reflect those projects moving from in the opportunity pipeline into contracts and then being reflected into the backlog number.

Sanjiv Lamba: So in the last two years, your sale of plants and your sale of gas backlogs have both roughly increased by 50%. Do you expect the latter, the sale of gas, to increase, maybe at a faster clip, either by your preference in that you do have benefits in your rest of your business from that or from the clean energy opportunities, which presumably would be more in the sale of gas? And then just one more, for that, you know, eight to 10 billion that you highlighted, you know, as your pipeline for clean energy, how much of that would be associated with existing customers where you See, so let me kind of provide the headline for us, and then I'll dive a little bit deeper.

Steve: An incumbency and new projects by default I would say to you that that mix is a little bit opportunistic.

Steve: We have made a commitment you might recall.

Steve: Steve from our sustainability side, we've said that we expect to invest about $3 billion.

Steve: In retrofitting and Repurposing, our existing assets with carbon capture facilities to ensure we capture its condition C O two to be able to sequester it and convert those facilities to glue hydrogen.

Steve: That's where most of the retrofit will likely happen.

Steve: And you might recall when we said that 3 billion number that is in the context of about a pipeline we expected over a decade of $30 billion of investments in the U S. So that's a good ratio I think just kind of if you were looking for a ratio. That's the ratio I would give to you as pointing in the direction of saying, that's where we think the retrofits.

Sanjiv Lamba: So the headline is you should expect the sale of gas backlog to continue to grow. And you're absolutely right that the 8 to 10 billion that I referenced earlier will translate into projects that go into the backlog. That 8 to 10 billion is probably overstated as far as we're concerned.

Steve: We'll be that's where the conversions are likely to happen.

Sanjiv Lamba: So clearly, we understand that many of those projects will move forward; some may not. And that's where the opportunity pipeline, which is rich with 200 plus projects that I've referenced a few times in the past, is a good feeder into that 8 to 10 billion, the number that I've talked about. So we should really see that sale of gas backlog reflect those projects moving from an opportunity pipeline into contracts and then being reflected in the backlog. Your question on incumbency and new projects by default, I'd say to you that that mix is a little bit opportunistic.

Steve: And the new projects will obviously come.

Steve: Alongside that with Decarbonization happening, where we are helping our customers decarbonize, but also new markets opening up such as blue ammonia et cetera.

Speaker Change: Thank you.

Speaker Change: And we will take our next question from Mike Sison with Wells Fargo. Your line is open.

Michael Sison: Hey, nice.

Michael Sison: Nice quarter and outlook.

Michael Sison: Just curious when you mentioned that at the midpoint.

Michael Sison: Or you're not looking for much economic growth in 2024, Yes, I think I took a look at your global end market trends.

Michael Sison: For Greens and yellows so I.

Michael Sison: Are you sort of run rating above that midpoint.

Michael Sison: I mean are you seeing more growth now than maybe the midpoint.

Sanjiv Lamba: We have made a commitment. You might recall, Steve, on the sustainability side, we've said that we expect to invest about $3 billion in retrofitting and repurposing our existing assets with carbon capture facilities to ensure we capture and condition CO2 to be able to sequester it and convert those facilities to blue hydrogen. That's where most of the retrofit will likely happen.

Michael Sison: In terms of economic growth.

Hey, Mike This is Matt So a couple of things I think first referencing the end markets to your point as you know that includes backlog price and base volume.

Matthew J. White: So all three of those will influence the growth as.

Matthew J. White: As Sanjay mentioned earlier, the backlog, we would expect 1% to 2% based on the cadence.

Matthew J. White: We feel very confident on given our contractual terms and conditions.

Sanjiv Lamba: And you might recall, when we said that $3 billion number, that was in the context of a pipeline we expected over a decade of $30 billion of investments in the US. So that's a good ratio, I think, to just kind of, if you were looking for a ratio, that's the ratio I'd give to you as pointing in the direction of saying, that's where we think the retrofits will be, that's where the conversions are likely to happen, and the new projects will obviously come alongside that with decarbonization happening, where we are helping our customers decarbonize, but also new Thank you. And we will take our next question from Mike Sison with Wells Fargo. Your line is open. Hey, cheers.

Matthew J. White: Pricing I'll hold off separately right that we say is based on globally weighted inflation and so whatever your assumptions are there we should be able to deliver on and the remaining being base volumes in that base volume is where we're taking basically a no growth type assumption.

Matthew J. White: This guidance the way we are structuring it very similar to how we've been approaching the last really four to five years.

Matthew J. White: So we'll see how it plays out but right now that that is the sort of underpinnings of what this zero growth assumption means and it's really around the base volumes as they correlate to an industrial production type.

Matthew J. White: Metric.

Got it thank you.

Matthew J. White: Yes.

Matthew J. White: And we will take our next question from Laurence Alexander with Jefferies. Your line is open.

Matthew J. White: Nice quarter and outlook. I was curious when you mentioned that at the midpoint, you're not looking for much economic growth in 2024. I took a look at your global ed market trends. You have sort of four greens and two yellows, so are you sort of running a rating above that midpoint, and are you seeing more growth now than maybe the midpoint in terms of economic growth? Hey, Mike, this is Matt.

Matthew J. White: Good morning, it's Dan Rizzo on for Laurence. Thank you for taking my question.

Dan Rizzo: Wanted to check you mentioned that China is relatively small part of your business, but you did mentioned opportunities in India. I was wondering if we should start looking to India is more of a growth opportunity than what people usually look at it which is obviously China.

Well.

Dan Rizzo: India is an important market for us we've been in the market for about 90 years, so well positioned.

Dan Rizzo: We've got a lead but strong network density all of that provides us.

Matthew J. White: So a couple things, I think, first, referencing the end markets, to your point, as you know, that includes backlog, price, and base. So all three of those will influence growth. As Sanjiv mentioned earlier, the backlog, we'd expect one to two percent based on the cadence, and that we feel very confident on given our contractual terms and conditions. Pricing, I'll hold off separately, right, that we say is based on globally weighted inflation, and so whatever your assumptions are there, we should be able to deliver on. And the remaining being base volumes, and that base volume is where we're taking basically a no growth type assumption in this guidance, the way we're structuring it. Very similar to how we've been approaching the last really four to five years.

Dan Rizzo: In many ways, a unique position to be able to kind of win more than our fair share of the opportunities that we see and there will be an important.

Dan Rizzo: Opportunity for for our industry and for Lindsay in particular.

Dan Rizzo: But again the scale of which.

Dan Rizzo: China is in terms of the deployed assets on the ground the capacity that had been built up there. It's a market that obviously will continue to be to be important as well. So we will be looking to winning more than our fair share in India, which we've been doing in 'twenty three as well and we look forward to doing that going forward, but we also continue to kind of track what happens.

Dan Rizzo: In China and make sure that we are getting our fair share there as well.

Speaker Change: Alright, Thank you very much.

Dan Rizzo: Okay.

Dan Rizzo: I'll now take our final question from John Roberts with Mizuho. Your line is open.

Matthew J. White: So we'll see how it plays out, but right now, that is the sort of underpinnings of what this zero growth assumption means, and it's really around the base volumes as they correlate to an industrial production type metric. Got it. Thank you. And we will take our next question from Lawrence Alexander with Jeffreys. Your line is open. Good morning, it's Dan Rizzo on for Lawrence.

John P. McNulty: Thank you slide 16 shows food and beverage up 9% year over year, almost almost all processed food companies are showing down volume could you parse volume and price and the food and beverage market.

Is C O two seeing any price impact from the <unk> 45.

Sanjiv Lamba: Thank you for taking my question. I just want to check that, you know, you mentioned that China is a relatively small part of your business, but you did mention opportunities in India. I was wondering if we should start looking to India as more of a growth opportunity than what people usually look at, which is obviously China. [inaudible] India is an important market for us. We've been in the market for about 90 years, so we are very well positioned. We kind of lead with strong network density. All of that provides us, you know, in many ways a unique position to be able to kind of win more than a fair share of the opportunities that we see. India will be an important opportunity for our industry and for Linde in particular. But again, the scale at which China is in terms of the deployed assets on the ground, and the capacities that have been built up there.

John P. McNulty: Dale.

Dale: So, let's see how to market really is what drives that food and beverage market in particular, I think the food and beverage as you can as you can imagine is broken up into food freezing and and into beverage combination the seo to pricing, obviously, helping helping and supporting that.

Dale: There has been a lot of innovation done around food freezing Linda leads the end market in there we win more than our fair share and again some of that benefit come through in the growth that we see.

Dale: On that line in the sales line that you see over there for food and beverage. So I'd say to you that again strong performance across fluid. My expectation is it is a secular growth trend we call a resilient market for a reason and my expectation remains that we will see continued strong growth in that space innovation around application development and use of gases for <unk>.

Dale: Food freezing in particular, I think are continuing to be a very small and small.

Dale: Important part of that that growth story.

Sanjiv Lamba: It's a market that obviously will continue to be important as well. So we will be looking to win more than our fair share in India, which we've been doing in 23 countries as well. And we look forward to doing that going forward. But we also continue to kind of track what happens in China and make sure that we are getting our fair share there as well. Thank you very much, and we will now take our final question from John Roberts with Mizuho. Your line is open.

Dale: But beverage combination in CRE pricing, obviously, helping as well I would say to you that we don't we don't see at the moment any linkage between 45 <unk> to pricing.

Dale: Longer term you know you could have a pieces around that but for now there is there is no apparent linkage.

Yeah.

Stephen Byrne: And I would now like to turn the call back to Mr. Kwon plans for any additional or closing remarks.

Kwon: Thanks, guys for all your questions. Thank you everyone for participating in today's calls have a great rest of your day.

Kwon: Yeah.

Speaker Change: And ladies and gentlemen that will conclude today's conclude today's conference call. We thank you for your participation you may now disconnect.

Sanjiv Lamba: Thank you. Slide 16 shows food and beverage up 9% year-over-year. Almost all processed food companies are showing down volume. Could you parse volume and price in the food and beverage market? And is CO2 seeing any price impact from the 45Q? So the CO2 market really is what drives the food and beverage market in particular. I think the food and beverage sector, as you can imagine, is broken up into food freezing and beverage carbonation, with CO2 pricing obviously helping and supporting that. There has been a lot of innovation done around food freezing. Linde leads the end market in there. We win more than our fair share.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Sanjiv Lamba: And again, some of that benefit comes through in the growth that we see on that line in the sales line that you see over here for food and beverage. So I'd say to you that, again, strong performance across food. My expectation is that this is a secular growth trend. We call it a resilient market for a reason. My expectation remains that we'll see continued strong growth in that space. Innovation around application development and the use of gases for food freezing, in particular, I think are continuing to be a very small, important part of that growth story. Beverage carbonation and CO2 pricing are obviously helping as well. But I'd say to you that we don't see at the moment any linkage between 45Q and CO2 pricing. Longer term, you could have a thesis around that, but for now, there is no apparent link.

Speaker Change: Okay.

[music].

Speaker Change: Okay.

Speaker Change: [music].

Juan Pelaez: And I would now like to turn the call back to Mr. Juan Pelaez for any additional or closing remarks. Thanks, guys, for all your questions. Thank you, everyone, for participating in today's calls. Have a great rest of your day. And ladies and gentlemen, that will conclude today's conference call. We thank you for your participation, and you may now disconnect.