Linde Q4 2025 Linde PLC Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Linde PLC Earnings Call
Speaker #1: Ladies and by. Welcome to the LINDE fourth quarter 2025 gentlemen, good day, and thank you for standing earnings call and webcast. At this time, all participants are in a listen-only mode.
Operator: Ladies and gentlemen, good day, and thank you for standing by. Welcome to the Linde Fourth Quarter 2025 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. 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 Pelaez, Head of Investor Relations. Please go ahead, sir.
Operator: Ladies and gentlemen, good day, and thank you for standing by. Welcome to the Linde Fourth Quarter 2025 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. 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 Pelaez, Head of Investor Relations. Please go ahead, sir.
Speaker #1: 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 Pelaez, Head of Investor Relations.
Speaker #1: Please go ahead, sir.
Speaker #2: Thank you, Abby. Good morning, everyone, and thank you for attending our 2025 fourth quarter earnings call and webcast. joined this morning by Sanjiv I'm Juan Pelaez, Head of Investor Relations, and I'm Lamba, Chief Executive Officer, and Matt White, Chief Financial Officer.
Juan Pelaez: Thank you, Abby. Good morning, everyone, and thank you for attending our 2025 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. 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. 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'll wrap up with Q&A. Let me turn the call over to Sanjiv.
Juan Pelaez: Thank you, Abby. Good morning, everyone, and thank you for attending our 2025 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. 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. 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'll wrap up with Q&A. Let me turn the call over to Sanjiv.
Speaker #2: Today's presentation materials are available on our website at LINDE.com in the Investor section. Please read the slides and note that all forward-looking statement disclosures on page two apply to the statements made during this teleconference.
Speaker #2: The reconciliations of the adjusted numbers are in the appendix to this presentation. some opening remarks, and then Matt will give an update Sanjiv will provide on LINDE's fourth quarter financial performance and outlook.
Speaker #2: After which, we'll wrap up with Q&A. Let me turn the call over to Sanjiv.
Speaker #3: Thanks, Juan, and good morning, everyone. The economic environment in 2025 was a steady and contrast. On one hand, exuberant investment in AI and digital infrastructure drove unprecedented activity.
Sanjiv Lamba: Thanks, Juan, and good morning, everyone. The economic environment in 2025 was a study in contrast. On one hand, exuberant investment in AI and digital infrastructure drove unprecedented activity. On the other hand, traditional industrial markets like manufacturing, metals, chemicals, and energy faced continued retrenchment. This divergence was exemplified in both concentration of returns from the S&P 500 and in persistently weak manufacturing indicators. This created a challenging backdrop for many of our customers operating in these sectors. Despite these headwinds, Linde employees once again rose to the challenge, delivering industry-leading results in areas that matter most to our owners. I've highlighted a few of these accomplishments on slide 3. Running a global enterprise requires balancing the needs of many stakeholders while delivering against both near and long-term expectations.
Sanjiv Lamba: Thanks, Juan, and good morning, everyone. The economic environment in 2025 was a study in contrast. On one hand, exuberant investment in AI and digital infrastructure drove unprecedented activity. On the other hand, traditional industrial markets like manufacturing, metals, chemicals, and energy faced continued retrenchment. This divergence was exemplified in both concentration of returns from the S&P 500 and in persistently weak manufacturing indicators. This created a challenging backdrop for many of our customers operating in these sectors. Despite these headwinds, Linde employees once again rose to the challenge, delivering industry-leading results in areas that matter most to our owners. I've highlighted a few of these accomplishments on slide 3. Running a global enterprise requires balancing the needs of many stakeholders while delivering against both near and long-term expectations.
Speaker #3: On the other hand, traditional industrial markets like manufacturing, metals, chemicals, and energy faced continued retrenchment. This divergence was exemplified in both the concentration of returns from the S&P 500 and in persistently weak manufacturing indicators.
Speaker #3: This created a challenging backdrop for many of our customers operating in these sectors. Despite these headwinds, LINDE employees once again rose to the challenge, delivering industry-leading results in areas that matter most to our owners.
Speaker #3: I've highlighted a few of these accomplishments on slide three. Running a global enterprise requires balancing the needs of many stakeholders. While delivering against both near and long-term expectations, the four areas you see on this slide—people and communities, environmental stewardship, financial performance, and future growth—represent that balanced approach and remain the foundation for LINDE's long-term value creation for our owners.
Sanjiv Lamba: The four areas you see on this slide, people and communities, environmental stewardship, financial performance, and future growth, represent that balanced approach and remain the foundation for Linde's long-term value creation for our owners. Let me start with people and communities. Our employees are the backbone of Linde's success. In 2025, we once again delivered best-in-class safety performance because nothing is more important than ensuring our employees and contractors return home safely every day. We also continue to build an inclusive culture across the footprint of more than 80 countries. Female representation reached nearly 30%, and we progressed multiple employee initiatives that earned third-party accolades as well. As a local business, we also strive to be a good neighbor.
Sanjiv Lamba: The four areas you see on this slide, people and communities, environmental stewardship, financial performance, and future growth, represent that balanced approach and remain the foundation for Linde's long-term value creation for our owners. Let me start with people and communities. Our employees are the backbone of Linde's success. In 2025, we once again delivered best-in-class safety performance because nothing is more important than ensuring our employees and contractors return home safely every day. We also continue to build an inclusive culture across the footprint of more than 80 countries. Female representation reached nearly 30%, and we progressed multiple employee initiatives that earned third-party accolades as well. As a local business, we also strive to be a good neighbor.
Speaker #3: Let me start with people and communities. Our employees are the backbone of LINDE's success. In 2025, we once again delivered best-in-class safety performance, because nothing is more important than ensuring our employees and contractors return home safely every day.
Speaker #3: inclusive culture across the footprint We also continue to build an of more than 80 countries. Female representation reached nearly 30%, and we progressed multiple employee initiatives that earned third-party accolades as well.
Speaker #3: As a local business, we also strive to be a good neighbor. This year, our teams completed almost 900 projects across the world, supporting health, education, and community well-being.
Sanjiv Lamba: This year, our teams completed almost 900 projects across the world supporting health, education, and community well-being, many driven by committed Linde volunteers who pitch in to lead and support these projects. In addition to supporting local communities, Linde is also a good citizen to the planet through actions to improve our environmental footprint. In 2025, we made substantial progress on this front. By increasing active low-carbon power sourcing by 23%, we enabled 50% of Linde's annual power consumption to be low-carbon. This, in turn, supported almost 2 million metric ton reduction of absolute CO2 emissions, moving us forward on the ambitious 35% reduction target by 2035. We've kept a close eye on the future as well, as two-thirds of our backlog supports contracted clean energy projects, in addition to which we also signed more than 90 new gas application wins, many to help customers further decarbonize their operations.
Sanjiv Lamba: This year, our teams completed almost 900 projects across the world supporting health, education, and community well-being, many driven by committed Linde volunteers who pitch in to lead and support these projects. In addition to supporting local communities, Linde is also a good citizen to the planet through actions to improve our environmental footprint. In 2025, we made substantial progress on this front. By increasing active low-carbon power sourcing by 23%, we enabled 50% of Linde's annual power consumption to be low-carbon. This, in turn, supported almost 2 million metric ton reduction of absolute CO2 emissions, moving us forward on the ambitious 35% reduction target by 2035. We've kept a close eye on the future as well, as two-thirds of our backlog supports contracted clean energy projects, in addition to which we also signed more than 90 new gas application wins, many to help customers further decarbonize their operations.
Speaker #3: Many driven by committed LINDE volunteers who pitch in to lead and support these projects. In addition to supporting local communities, LINDE is also a good citizen to the planet.
Speaker #3: Through actions to improve our environmental footprint, we are making progress on this front. By increasing active low-carbon power sourcing by 23%, we enabled 50% of LINDE's annual power consumption to be low-carbon.
Speaker #3: This, in turn, supported almost 2 million metric ton reduction of absolute CO2 emissions, moving us forward on the ambitious $35% reduction target by 2035.
Speaker #3: Close eye on the future as well, as two-thirds of our backlog supports contracted clean energy. And we've kept a—which we also signed more than 90 new gas application wins, many to help customers further decarbonize their operations.
Speaker #3: These are just a few of the highlights, and many more can be found in our annual sustainability report, which will be released in the second quarter.
Sanjiv Lamba: These are just a few of the highlights, and many more can be found in our annual sustainability report, which will be released in Q2. Of course, we must deliver on financial performance since management's primary role is a steward of shareholder capital. Despite weak industrial environments, Linde achieved annual record levels for EPS, operating cash flow, and operating margins. The 24.2% return on capital not only leads the industry but also validates the long-term disciplined capital allocation policy, which enabled the return of more than $7 billion to shareholders. In good times and bad, you can count on Linde to remain laser-focused to deliver shareholder value. Finally, we must position Linde for future growth to remain the long-term compounder. From my perspective, this is the strongest strategic position Linde has held during my tenure.
Sanjiv Lamba: These are just a few of the highlights, and many more can be found in our annual sustainability report, which will be released in Q2. Of course, we must deliver on financial performance since management's primary role is a steward of shareholder capital. Despite weak industrial environments, Linde achieved annual record levels for EPS, operating cash flow, and operating margins. The 24.2% return on capital not only leads the industry but also validates the long-term disciplined capital allocation policy, which enabled the return of more than $7 billion to shareholders. In good times and bad, you can count on Linde to remain laser-focused to deliver shareholder value. Finally, we must position Linde for future growth to remain the long-term compounder. From my perspective, this is the strongest strategic position Linde has held during my tenure.
Speaker #3: Of course, we must deliver on financial primary role is a steward of performance. shareholder capital, Since management's despite weak industrial environments, LINDE achieved annual record levels for EPS, operating cash flow, and operating margins.
Speaker #3: The 24.2% return on capital not only leads the industry, but also validates the long-term discipline capital allocation policy which enabled the return of more than $7 billion to shareholders.
Speaker #3: In good times and bad, you can count on LINDE to remain laser-focused to deliver shareholder value. Finally, we must position LINDE for future growth to remain the long-term compounder.
Speaker #3: From my perspective, this is the strongest strategic position LINDE has held during my tenure. Our project backlog stands at a record $10 billion. And this number does not include over half a billion dollars of investment for rocket propellants, to contracted, space launch customers, in fact, we fully
Sanjiv Lamba: Our project backlog stands at a record $10 billion, and this number does not include over half a billion dollars of investment for rocket propellants to contracted space launch customers. In fact, we fully expect continued investment in the sector as we expand our network to support this rapidly growing opportunity. Linde remains the anchor industrial gas supplier for some of the largest and most successful clean energy and advanced electronics fabs in the world. In fact, I'm highly confident that we will announce new signature fab wins in the coming months. We also continue to see a robust M&A pipeline for creative tuck-in acquisitions that further enhance our supply densities. In summary, Linde delivered a resilient performance in a challenging 2025 environment. But looking ahead, I know we can do better.
Sanjiv Lamba: Our project backlog stands at a record $10 billion, and this number does not include over half a billion dollars of investment for rocket propellants to contracted space launch customers. In fact, we fully expect continued investment in the sector as we expand our network to support this rapidly growing opportunity. Linde remains the anchor industrial gas supplier for some of the largest and most successful clean energy and advanced electronics fabs in the world. In fact, I'm highly confident that we will announce new signature fab wins in the coming months. We also continue to see a robust M&A pipeline for creative tuck-in acquisitions that further enhance our supply densities. In summary, Linde delivered a resilient performance in a challenging 2025 environment. But looking ahead, I know we can do better.
Speaker #1: You expect , continued expand our in the network to sector investment opportunity as we Linda remains the opportunity remains . Linda the industrial gas for some of the growing largest most and clean successful energy supplier advanced electronics fabs in the world .
Speaker #1: In fact, I'm highly and rapidly confident that we will announce new signature fab coming wins in the months ahead. We also continue to see a robust M&A pipeline for creative tuck-ins that further enhance our supply density.
Speaker #1: fact , I'm highly In rapidly confident that we will announce new signature fab the coming wins in months . We also continue to see a robust M&A pipeline for a creative tuck in that further enhance our supply density acquisitions In summary delivered a , Linda resilient performance in a challenging 2020 .
Speaker #1: Five environment . But looking ahead we can do better , I know . Certain regions of world are still not showing signs the of recovery , and we are taking actions near-term to align our resources accordingly .
Sanjiv Lamba: Certain regions of the world are still not showing signs of near-term recovery, and we are taking actions to align our resources accordingly. In other words, growth remains geographically uneven, and we need to adjust our organization to reflect that. Considering this, in Q4, we initiated additional restructuring actions to better position the company for 2026. These actions will have cash payback levels and timing like prior programs, so I expect the bulk of the benefits to be in the second half of the year. When combining these incremental actions with our existing productivity initiatives, and a record backlog of secure growth, I'm confident we will deliver a stronger EPS growth that our owners expect and have enjoyed for many years. I'll now turn the call over to Matt to walk through our financial results.
Sanjiv Lamba: Certain regions of the world are still not showing signs of near-term recovery, and we are taking actions to align our resources accordingly. In other words, growth remains geographically uneven, and we need to adjust our organization to reflect that. Considering this, in Q4, we initiated additional restructuring actions to better position the company for 2026. These actions will have cash payback levels and timing like prior programs, so I expect the bulk of the benefits to be in the second half of the year. When combining these incremental actions with our existing productivity initiatives, and a record backlog of secure growth, I'm confident we will deliver a stronger EPS growth that our owners expect and have enjoyed for many years. I'll now turn the call over to Matt to walk through our financial results.
Speaker #1: In other words , growth remains geographically uneven and we adjust our need to organization to reflect that . this , Considering fourth quarter , in the we additional initiated restructuring actions to better position company for the 2026 .
Speaker #1: These actions will have cash payback timing . Like prior programs , so I expect the bulk of the benefits to be in levels and the second half of the year .
Speaker #1: combining these incremental actions When with our existing productivity and a initiatives record backlog of growth , secured I'm confident we will deliver a stronger EPs growth owners that our expect and have for many years enjoyed .
Speaker #1: I'll now turn the call over to Matt to walk through our financial results . Thanks , Sanjiv .
Juan Pelaez: Thanks, Sanjiv. Q4 results can be found on slide 4. Sales of $8.8 billion increased 6% over prior year and 2% sequentially, versus prior year. Foreign currency translation provided a 3% tailwind as the US dollar weakened against most currencies, especially the euro. I expect this trend to continue into 2026, which we'll discuss later with guidance. Excluding FX, underlying sales increased 3% from 2% pricing and 1% volumes. The 2% price increase aligned with globally weighted inflation after considering APAC challenges associated with helium and China deflationary conditions. Volume growth was driven by project startups in Americas and APAC, as base volume growth in Americas was more than offset by continued industrial softness in EMEA. Sequentially, volumes were flat as normal seasonal declines were offset by project startups. Operating profit at $2.6 billion was up 4% from prior year and resulted in a 29.5% margin.
Matthew White: Thanks, Sanjiv. Q4 results can be found on slide 4. Sales of $8.8 billion increased 6% over prior year and 2% sequentially, versus prior year. Foreign currency translation provided a 3% tailwind as the US dollar weakened against most currencies, especially the euro. I expect this trend to continue into 2026, which we'll discuss later with guidance. Excluding FX, underlying sales increased 3% from 2% pricing and 1% volumes. The 2% price increase aligned with globally weighted inflation after considering APAC challenges associated with helium and China deflationary conditions. Volume growth was driven by project startups in Americas and APAC, as base volume growth in Americas was more than offset by continued industrial softness in EMEA. Sequentially, volumes were flat as normal seasonal declines were offset by project startups. Operating profit at $2.6 billion was up 4% from prior year and resulted in a 29.5% margin.
Speaker #2: can be Fourth quarter results found on slide four . $8.8 billion of increased 6% over prior year , and 2% sequentially versus prior year .
Speaker #2: currency Foreign translation provided a 3% tailwind US as the dollar weakened against currencies most , especially the euro . trend to I expect this continue into 2026 , which discuss later we'll with guidance .
Speaker #2: Excluding FX . Underlying sales increased 3% from 2% . Pricing and 1% volumes . The 2% price increase aligned with globally weighted inflation .
Speaker #2: After considering APAC challenges associated with helium and China , deflationary conditions , volume growth was driven by project start ups and Americas and APAC as base volume in growth Americas than offset by was more continued industrial softness in EMEA .
Speaker #2: Sequentially , volumes were flat as normal seasonal declines were offset by project ups start . Operating profit $2.6 billion at was up year , 4% from prior and resulted in a 29.5% margin .
Juan Pelaez: The quarter margin dilution was attributed to timing of other income, which was down over $30 million. Note full-year operating margin is up 30 basis points, which is within the range of our long-term margin expansion expectation of about 30 to 50 basis points per year. EPS of $4.20 increased 6% as a lower share count more than offset the impact of a higher ETR. Note we stepped up share repurchases in the fourth quarter to $1.4 billion, as we saw an attractive buying opportunity from the stock decline. You can see the 17% growth in CAPEX led by spending for the record project backlog. This trend, coupled with the increased acquisitions, has led to more capital-intensive growth, which negatively affected ROC. This was anticipated, as I expect this metric to remain in the low to mid-20% range for the next few years.
Matthew White: The quarter margin dilution was attributed to timing of other income, which was down over $30 million. Note full-year operating margin is up 30 basis points, which is within the range of our long-term margin expansion expectation of about 30 to 50 basis points per year. EPS of $4.20 increased 6% as a lower share count more than offset the impact of a higher ETR. Note we stepped up share repurchases in the fourth quarter to $1.4 billion, as we saw an attractive buying opportunity from the stock decline. You can see the 17% growth in CAPEX led by spending for the record project backlog. This trend, coupled with the increased acquisitions, has led to more capital-intensive growth, which negatively affected ROC. This was anticipated, as I expect this metric to remain in the low to mid-20% range for the next few years.
Speaker #2: The quarter margin dilution attributed was to timing of other income , which was down over $30 million . Note year full operating margin is up 30 basis points , which is within the range of our long term margin expansion expectation of 30 to 50 basis points per year .
Speaker #2: EPs of $4.20 6% as a lower share about count , more than offset the impact of a higher ETR . Note we up share stepped in the repurchases fourth 12:45 point $4 billion , as we saw an buying attractive opportunity stock from the decline .
Speaker #2: You can see the 17% growth in CapEx led by spending . For the project backlog This . trend record , coupled with the increased has acquisitions , led to more capital intensive growth , which negatively rock affected .
Speaker #2: This was anticipated , as I this expect metric to remain in the low mid 20% to range for the next few . Slide five more provides details on capital management cash exceeded flow $3 billion in the fourth quarter from stronger collections and , operating inventory management .
Juan Pelaez: Slide 5 provides more details on capital management. Operating cash flow exceeded $3 billion in the fourth quarter from stronger collections and inventory management. As mentioned in prior calls, operating cash flow is seasonally stronger in the second half of the year due to timing of tax, incentive, and interest cash payments. The pie chart to the right summarizes full-year allocation of capital. About $6 billion was invested for growth, including half towards secured growth of acquisitions and project backlog contracts. Another $7.4 billion was returned to owners as dividends or share repurchases. This level of distribution requires a focused and disciplined management of both operating and investing cash flows. In fact, sustainable stock repurchase programs are anchored by consistent excess-free cash flow after dividend payments, something Linde has demonstrated for several decades. I'll wrap up with guidance on slide 6.
Matthew White: Slide 5 provides more details on capital management. Operating cash flow exceeded $3 billion in the fourth quarter from stronger collections and inventory management. As mentioned in prior calls, operating cash flow is seasonally stronger in the second half of the year due to timing of tax, incentive, and interest cash payments. The pie chart to the right summarizes full-year allocation of capital. About $6 billion was invested for growth, including half towards secured growth of acquisitions and project backlog contracts. Another $7.4 billion was returned to owners as dividends or share repurchases. This level of distribution requires a focused and disciplined management of both operating and investing cash flows. In fact, sustainable stock repurchase programs are anchored by consistent excess-free cash flow after dividend payments, something Linde has demonstrated for several decades. I'll wrap up with guidance on slide 6.
Speaker #2: As mentioned in prior calls , operating cash flow seasonally stronger in the second half of the is year due timing of tax incentive and interest cash payments .
Speaker #2: The pie chart to the right summarizes year allocation of total. $6 billion was invested for growth, including towards half growth secured of acquisitions, project backlog, and contracts.
Speaker #2: Another $7.4 billion was returned to owners as dividends or repurchases . level of This distribution requires a focused and disciplined management of both investing cash operating flows and .
Speaker #2: In share fact , sustainable stock repurchase are anchored consistent excess free programs cash flow after dividend by , something payments Lindy has demonstrated several decades .
Speaker #2: In share fact , sustainable stock repurchase are anchored consistent excess free programs cash flow after dividend by , something payments Lindy has demonstrated several decades for with guidance on six .
Juan Pelaez: For the full year, EPS is projected in the range of $17.40 to $17.90, or 6% to 9% above 2025. This range assumes a 1% FX tailwind and 0% base volume change at the midpoint. Consistent with prior guidance, we're not going to make predictions on macroeconomic climate. Rather, we'll anchor the midpoint at 0% and let investors insert their own views. The 1% currency tailwind is based on early January forward rates. Note that there could be FX upside if current spot rates hold since the US dollar has weakened over the last month. For the first quarter, we took the same baseline volume assumption but set the FX tailwind to 3% since Q1 of 2025 had the strongest US dollar baseline. Note the 3% quarter assumption still aligns with the 1% full-year assumption, so we don't anticipate as much FX benefit in the second half of the year.
Juan Pelaez: For the full year, EPS is projected in the range of $17.40 to $17.90, or 6% to 9% above 2025. This range assumes a 1% FX tailwind and 0% base volume change at the midpoint. Consistent with prior guidance, we're not going to make predictions on macroeconomic climate. Rather, we'll anchor the midpoint at 0% and let investors insert their own views. The 1% currency tailwind is based on early January forward rates. Note that there could be FX upside if current spot rates hold since the US dollar has weakened over the last month. For the first quarter, we took the same baseline volume assumption but set the FX tailwind to 3% since Q1 of 2025 had the strongest US dollar baseline. Note the 3% quarter assumption still aligns with the 1% full-year assumption, so we don't anticipate as much FX benefit in the second half of the year.
Speaker #2: slide For the full . year EPs is range of projected in the $17.40 to $17.90 , or 6% to 9% above 2025 . This range assumes a 1% FX tailwind and volume 0% base at the change midpoint prior guidance .
Speaker #2: We're to make , consistent with macroeconomic predictions climate , rather , we'll anchor the on midpoint at 0% and investors let their own views .
Speaker #2: The 1% currency tailwind early is based on January forward . there Note that could be upside if current FX spot rates hold , since the US has over the weakened dollar month .
Speaker #2: For the first quarter , we took the baseline volume same assumption , the FX last tailwind to 3% . Since Q1 of Had the 2025 .
Speaker #2: strongest dollar US . Note 3% quarter assumption still aligns with the year but set 1% full assumption . So we don't anticipate as FX much the second half benefit in the year of the .
Speaker #2: baseline backlog of strong projects , productivity and self-help support 2026 EPs However , growth also believe . still early in the and year thus wise to remain on the prudent outlook .
Juan Pelaez: As Sanjiv mentioned, we have a strong backlog of projects, productivity, and self-help actions to support 2026 EPS growth. However, we also believe it's still early in the year and thus wise to remain prudent on the outlook. I've said before that heroes aren't made in the first quarter, so we want to remain vigilant and guarded as the 2026 landscape starts to take shape. I've provided annual guidance now for over a decade, and through that time, I've determined there are two things in February that I can be highly confident on. Number one, no one knows what will happen in the economy. And number two, regardless of what happens in the economy, Linde employees will rise to the occasion and leverage our unique supply network, culture, and operating rhythm to create shareholder value in any environment. I'll now turn the call over to Q&A.
Juan Pelaez: As Sanjiv mentioned, we have a strong backlog of projects, productivity, and self-help actions to support 2026 EPS growth. However, we also believe it's still early in the year and thus wise to remain prudent on the outlook. I've said before that heroes aren't made in the first quarter, so we want to remain vigilant and guarded as the 2026 landscape starts to take shape. I've provided annual guidance now for over a decade, and through that time, I've determined there are two things in February that I can be highly confident on. Number one, no one knows what will happen in the economy. And number two, regardless of what happens in the economy, Linde employees will rise to the occasion and leverage our unique supply network, culture, and operating rhythm to create shareholder value in any environment. I'll now turn the call over to Q&A.
Speaker #2: before I've said aren't that made in the first quarter , so want to remain vigilant and as 2026 landscape the guarded starts to take shape I've .
Speaker #2: Provided now for guidance, annual, decade, and through that time are two things. In over a February that I can be highly determined there on.
Speaker #2: Number one , one knows what will no the economy happen in And . number two , regardless of what happens in the . Linda employees will rise to the economy and leverage unique supply network culture to create rhythm shareholder value .
Speaker #2: any and In environment . turn the call now I'll over to .
Sanjiv Lamba: Thank you. We'll now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question. Again, it is star one if you would like to join the queue. Our first question comes from the line of David Begleiter with Deutsche Bank. Your line is open.
Operator: Thank you. We'll now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question. Again, it is star one if you would like to join the queue. Our first question comes from the line of David Begleiter with Deutsche Bank. Your line is open.
Speaker #3: To ask your question, press star (*) one time. After you are called, please ask your question. If you are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute.
Speaker #3: asking When your many . To be possible , we ask that question limit yourself to questions one question . as is star one .
Speaker #3: If you would like to you please the queue And . join first question from the our of David Begleiter with Bank . Deutsche Your line is open
David Begleiter: Thank you. Good morning. Sanjiv, just on Europe, are you seeing any signs of progress in that region? And I did see that pricing did slow to +1% in Q4. Do you think you can still get pricing of roughly +2% in the region during 2026? Thank you.
David Begleiter: Thank you. Good morning. Sanjiv, just on Europe, are you seeing any signs of progress in that region? And I did see that pricing did slow to +1% in Q4. Do you think you can still get pricing of roughly +2% in the region during 2026? Thank you.
Speaker #4: Thank you . Good
Speaker #4: morning . Sanjiv , just on Europe . Are you seeing any signs of . ? I did And that slow pricing . to see plus Did 1% in Do you think you can still get pricing roughly plus Q4 .
Speaker #4: during 2026 ?
Sanjiv Lamba: David, EMEA tends to be an area that we put a lot of attention to, as you would expect. Unfortunately, based on what we see at the moment, I have to say that the market continues to see broad-based weakness. That's been the theme for a number of quarters over the last couple, three years now. There are some bright spots in EMEA as well. I'd say Europe North, with the Scandinavian countries, continues to grow even in these conditions, so that's good news. Beyond that, there's a little bit of optimism coming out of Germany. I tend to be very cautious on that. The recently announced manufacturing numbers moved up a little bit in Germany. I would watch that to see if there is any momentum underpinning that.
Sanjiv Lamba: David, EMEA tends to be an area that we put a lot of attention to, as you would expect. Unfortunately, based on what we see at the moment, I have to say that the market continues to see broad-based weakness. That's been the theme for a number of quarters over the last couple, three years now. There are some bright spots in EMEA as well. I'd say Europe North, with the Scandinavian countries, continues to grow even in these conditions, so that's good news. Beyond that, there's a little bit of optimism coming out of Germany. I tend to be very cautious on that. The recently announced manufacturing numbers moved up a little bit in Germany. I would watch that to see if there is any momentum underpinning that.
Speaker #1: David Amar tends to
Speaker #1: be , you Thank know , we put attention to , as expect you would unfortunately , based on what we see at the have to say that the market a lot of continues to see broad based weakness .
Speaker #1: a quarters over the you last couple , three number of years . are some . bright There spots in the Now well . I'd say North with the moment , I Scandinavian countries grow even conditions .
Speaker #1: Europe , May as that's good beyond news . there's a So But optimism coming out of Germany . I tend to be very cautious And continues to that .
Speaker #1: The recently announced numbers , you know on , moved up a little bit in . I watch would if there is any Beyond that , there underpinning doesn't seem to be to catalysts really get to Germany that .
Sanjiv Lamba: Beyond that, there doesn't seem to be catalysts to really get to a recovery in Europe that would be substantive. On pricing, Europe's had a fantastic track record on pricing in Linde. The EMEA business does a really good job around that, have done so. I expect them to fully fine pricing in line with their weighted CPI, which is what my expectation of that business remains. And you should see that in the coming year as well, in 2026. Beyond that, I'd say I think there's a lot to watch out for. The complexity of Europe and the European Union, unfortunately, makes execution of any changes there or indeed any catalysts there somewhat provides a bit of a skeptical view from our perspective till we actually see it happen on the ground.
Sanjiv Lamba: Beyond that, there doesn't seem to be catalysts to really get to a recovery in Europe that would be substantive. On pricing, Europe's had a fantastic track record on pricing in Linde. The EMEA business does a really good job around that, have done so. I expect them to fully fine pricing in line with their weighted CPI, which is what my expectation of that business remains. And you should see that in the coming year as well, in 2026. Beyond that, I'd say I think there's a lot to watch out for. The complexity of Europe and the European Union, unfortunately, makes execution of any changes there or indeed any catalysts there somewhat provides a bit of a skeptical view from our perspective till we actually see it happen on the ground.
Speaker #1: recovery in Europe . That would substantive be On Europe's had a fantastic track , you know , record on in pricing . Lindy .
Speaker #1: They pricing may have business does a really good that . Have done so I expect them to find fully pricing line with with their in weighted job around which is what my expectation of that business remains .
Speaker #1: should see that in the coming year as well . And you 2026 . Beyond that , I'd say I think there's a lot watch out to for .
Speaker #1: The complexity of and the European Union . In Europe of any changes . There indeed makes there somewhat . You know , provides a bit of a skeptical view from our perspective until we see it happen on the ground .
David Begleiter: Thank you.
David Begleiter: Thank you.
Speaker #1: actually Yes .
Sanjiv Lamba: Our next question comes from the line of Duffy Fischer with Goldman Sachs. Your line is open.
Operator: Our next question comes from the line of Duffy Fischer with Goldman Sachs. Your line is open.
Speaker #4: Thank you
Speaker #3: And our next comes question line of Fisher Duffy from the Goldman Sachs . line is open Your .
Duffy Fischer: Yes. Good morning, guys. Maybe if you could just go around the rest of the world. You talked a little bit about Europe and maybe about your end markets. You're not putting any growth in your estimates, but what are you seeing? Obviously, you've got pretty good connectivity with the market. So what's your gut say your different end markets and your different geographies end up growing this year?
Duffy Fischer: Yes. Good morning, guys. Maybe if you could just go around the rest of the world. You talked a little bit about Europe and maybe about your end markets. You're not putting any growth in your estimates, but what are you seeing? Obviously, you've got pretty good connectivity with the market. So what's your gut say your different end markets and your different geographies end up growing this year?
Speaker #5: Good morning, and maybe, Europe—talked a little your end markets. You're not putting any bit in your growth estimates, but what are you seeing?
Speaker #5: Maybe guys . if you could just go rest
Speaker #5: Obviously, you've got pretty good connectivity with the market. So, you know, the gut says your different end-user and your different end-market geographies are growing this year.
Sanjiv Lamba: Thanks, Duffy. Let's do that. But before I kind of give you a walk around the world, why don't I say this? Because it kind of prefaces a little bit, and the end market slide in some ways validated this. So you will see the end market slides showing all green, right, and essentially suggesting year-on-year growth across all end markets. And yes, recently, ISM, PMI, etc., have shown a slightly more positive trend. As I stand here today, I'd say to you, if I was reflecting back on the last 12 months, I am today slightly more positive on the industrial activity that I foresee for this year and the potential for growth as well. Now, I'll add to that a caution, as you would expect. We live in a hyper-dynamic world. Things change every day.
Sanjiv Lamba: Thanks, Duffy. Let's do that. But before I kind of give you a walk around the world, why don't I say this? Because it kind of prefaces a little bit, and the end market slide in some ways validated this. So you will see the end market slides showing all green, right, and essentially suggesting year-on-year growth across all end markets. And yes, recently, ISM, PMI, etc., have shown a slightly more positive trend. As I stand here today, I'd say to you, if I was reflecting back on the last 12 months, I am today slightly more positive on the industrial activity that I foresee for this year and the potential for growth as well. Now, I'll add to that a caution, as you would expect. We live in a hyper-dynamic world. Things change every day.
Speaker #1: Thanks , Duffy . Let's let's do that . But before I give you a walk around kind of the don't I say this ?
Speaker #1: world , why of prefaces bit in the with a little some ways slide in validated this . will see the So you end market slides showing all green .
Speaker #1: essentially And your and your growth suggesting all end across yes markets . And , recently ism etc. , PMI shown a slightly positive trend more .
Speaker #1: stand here today , I'd say to you , if I was back reflecting am last 12 today slightly more months , I the positive industrial on that I foresee for this year and the for growth as potential Now well .
Speaker #1: I'll you would expect , we live add to that a dynamic world . Things change every in a day , caution , as so know you would expect us to you you a far more informed and insightful view .
Sanjiv Lamba: So you would expect us to bring you a far more informed and insightful view in April when we have this conversation. But, fair to say, we, and I'll say this about particularly, we've been very conservative in how we are looking at the markets, and you'll see that reflected in the guidance as well. Now, let's walk around and just tell you what I've seen in the last quarter and the first part of this month as well, or last month now. Let's start with the Americas. The US, and I've said this over and over again, has proven to be a really resilient market. Sales are up across almost every end market. Obviously, electronics and commercial space kind of stand out in that, in terms of growth that we've seen there. Manufacturing has been stable. There is still some caution when we speak to our customers.
Sanjiv Lamba: So you would expect us to bring you a far more informed and insightful view in April when we have this conversation. But, fair to say, we, and I'll say this about particularly, we've been very conservative in how we are looking at the markets, and you'll see that reflected in the guidance as well. Now, let's walk around and just tell you what I've seen in the last quarter and the first part of this month as well, or last month now. Let's start with the Americas. The US, and I've said this over and over again, has proven to be a really resilient market. Sales are up across almost every end market. Obviously, electronics and commercial space kind of stand out in that, in terms of growth that we've seen there. Manufacturing has been stable. There is still some caution when we speak to our customers.
Speaker #1: April when we In have this on the conversation . But fair to say , we and I'll say about particularly , this we've been very conservative in are looking at the markets , and guidance as well .
Speaker #1: Now let's in the walk around and just tell you what I've seen you'll see that in the And the first part of this month as well , or last month .
Speaker #1: Now let's Americas . The US . And I've said this over and proven to be a really again , over market . You know , up sales are across almost every end market .
Speaker #1: Obviously electronics space , , commercial you know , kind of stand out in that in terms of we've seen growth that . Manufacturing has been there stable .
Sanjiv Lamba: I look at a leading indicator. You hear me talk about the Hard Goods business often or our package business often as a good leading indicator. Now, Hard Goods sales, particularly in automation, saw a pickup in the last quarter. But beyond that, on consumers, we haven't seen anything reflect a pickup. So the expectation at this stage is people are investing in the automation equipment to be prepared for any recovery that might happen or indeed to look for more productivity. So a little bit difficult to gauge, which is why I say when we come back in April, you'll have a far more informed we will have a far more informed view, and you'll get a far more informed view of what we think is likely to happen for the rest of the year.
Sanjiv Lamba: I look at a leading indicator. You hear me talk about the Hard Goods business often or our package business often as a good leading indicator. Now, Hard Goods sales, particularly in automation, saw a pickup in the last quarter. But beyond that, on consumers, we haven't seen anything reflect a pickup. So the expectation at this stage is people are investing in the automation equipment to be prepared for any recovery that might happen or indeed to look for more productivity. So a little bit difficult to gauge, which is why I say when we come back in April, you'll have a far more informed we will have a far more informed view, and you'll get a far more informed view of what we think is likely to happen for the rest of the year.
Speaker #1: is still caution when we speak some to our customers . I a leading indicator , you talk hear me about the hard goods business often , or our packaged business often good leading as a indicator .
Speaker #1: Now hard good sales , you know , particularly in automation , pickup in the last quarter saw a . But beyond that on consumables we anything haven't pickup .
Speaker #1: So the expectation reflect a people are seen stage is automation equipment to Right . As I There be prepared for any recovery that might happen or at this look for productivity .
Speaker #1: So, a more difficult gauge, too, which is why I say when we come back in April, you'll have a far more informed—
Speaker #1: We will have a far more informed view , and you'll get a far more informed view of what we think is happen for the likely to rest of the year .
Sanjiv Lamba: If I think about LATAM, across the board, LATAM sales have been stable and growing. Brazil stands out as having had a really good year last year, and we saw that play out in Q4 as well. Canada, on the other hand, remains flat, and I don't see any catalysts for that changing anytime soon. If I move from the Americas to talk about APAC, I think the best way to talk about APAC is to start with China. In my assessment, the China markets that we supply and work with closely are largely bottoming out.
Sanjiv Lamba: If I think about LATAM, across the board, LATAM sales have been stable and growing. Brazil stands out as having had a really good year last year, and we saw that play out in Q4 as well. Canada, on the other hand, remains flat, and I don't see any catalysts for that changing anytime soon. If I move from the Americas to talk about APAC, I think the best way to talk about APAC is to start with China. In my assessment, the China markets that we supply and work with closely are largely bottoming out.
Speaker #1: If I about Latam think , you know , across the board , Latam sales have stable been and growing . Brazil stands out as having had a really good year last year , and we saw that play out in Q4 as .
Speaker #1: remains hand , other Canada , on the don't see any catalyst changing for that . If I move from the Americas to about APAC , I think the best anytime way to talk about APAC is to start talk with .
Speaker #1: my In assessment , the China that we supply and work with closely largely are bottoming markets out . In fact , in I got a recent from email Will Lee , who's the our president of China business , he wrote , I have to wrote say with pride , he some after quite a few quarters , our China our well business , to merchant customers and our end our distributors and channels , but to our end grew at a rate higher than business , the published IP number , which , as you all know , was 5% for the last quarter .
Sanjiv Lamba: In fact, in a recent email I got from Will Li, who's the president of our China business, he wrote, I have to say with some pride, he wrote that after quite a few quarters, our China business, our merchant business, to our end customers, not distributors and channels, but to our end customers, grew at a rate higher than the published IP number, which as you all know was 5% for the last quarter. And we tend to take that with a pinch of salt as well. So the rate of growth in China has certainly in the last quarter shown an improvement. The China team done some excellent work to get that growth, so I'm happy to see that. But I remain watchful to see whether we see that momentum carry on into Q1, which obviously will be disrupted by the Chinese New Year.
Sanjiv Lamba: In fact, in a recent email I got from Will Li, who's the president of our China business, he wrote, I have to say with some pride, he wrote that after quite a few quarters, our China business, our merchant business, to our end customers, not distributors and channels, but to our end customers, grew at a rate higher than the published IP number, which as you all know was 5% for the last quarter. And we tend to take that with a pinch of salt as well. So the rate of growth in China has certainly in the last quarter shown an improvement. The China team done some excellent work to get that growth, so I'm happy to see that. But I remain watchful to see whether we see that momentum carry on into Q1, which obviously will be disrupted by the Chinese New Year.
Speaker #1: And we tend to take that with a pinch of salt as well . customers So the rate of growth in China know , certainly in the has , you last an quarter shown improvement .
Speaker #1: The China done some excellent work to get that growth . So I'm But I see that . happy to remain team watchful to see whether we see that momentum carry Q1 , which into obviously on will be disrupted by the Chinese New Year .
Sanjiv Lamba: So we'll have to kind of look through and sift through the data to see if that trend is holding. India also had a continued strong growth. I think we were happy to see that almost all end markets in India were improving and moving forward. And in fact, by distribution modes as well, we saw growth across all of those distribution modes. Again, the India team does a really good job of making sure we win more than our fair share, so happy to see that momentum. But again, I also expect further growth and momentum in the India market given that two of the recent events will support that growth story there. First is the EU Treaty and Agreement. That'll help kind of build some momentum around industrial activity and exports from India.
Sanjiv Lamba: So we'll have to kind of look through and sift through the data to see if that trend is holding. India also had a continued strong growth. I think we were happy to see that almost all end markets in India were improving and moving forward. And in fact, by distribution modes as well, we saw growth across all of those distribution modes. Again, the India team does a really good job of making sure we win more than our fair share, so happy to see that momentum. But again, I also expect further growth and momentum in the India market given that two of the recent events will support that growth story there. First is the EU Treaty and Agreement. That'll help kind of build some momentum around industrial activity and exports from India.
Speaker #1: So we'll of look sift through through and the to see if that that trend is holding have to kind data . also had India a continued strong growth .
Speaker #1: think we were I happy to see almost that all end markets in India were improving and forward . And in fact , distribution modes as by well .
Speaker #1: growth We across saw all of those distribution modes . Again , the India team does a really good job of making sure we win more than our fair share .
Speaker #1: So happy to see that momentum again. But I also expect further growth and momentum in the Indian market, given that two of the recent events will support that growth story there.
Speaker #1: The EU free trade agreement first is the one that will help, you know, kind of build some momentum around industrial activity and exports from India.
Sanjiv Lamba: And of course, the US-India tariffs getting sorted out is also an element that will provide some catalysts for further growth. The rest of APAC, to be honest, largely stable, nothing exciting. Australia, which has had a tough year in 2025, we saw some I mean, they were still declining in Q4, but we saw some signs of that stabilizing, and my expectation is Australia should see the comps will also get better, as you can expect, but should see some kind of a recovery this year as we move forward. So that's kind of a walk around the world. And I think if I was to just talk about end markets, I'd say to you, electronics stands out. We are seeing good, strong growth there. My expectation remains that we'll see a lot more investment in that space.
Sanjiv Lamba: And of course, the US-India tariffs getting sorted out is also an element that will provide some catalysts for further growth. The rest of APAC, to be honest, largely stable, nothing exciting. Australia, which has had a tough year in 2025, we saw some I mean, they were still declining in Q4, but we saw some signs of that stabilizing, and my expectation is Australia should see the comps will also get better, as you can expect, but should see some kind of a recovery this year as we move forward. So that's kind of a walk around the world. And I think if I was to just talk about end markets, I'd say to you, electronics stands out. We are seeing good, strong growth there. My expectation remains that we'll see a lot more investment in that space.
Speaker #1: And of course , the US , India tariffs getting moving is also an element that will provide some catalysts further for for growth .
Speaker #1: The rest of APAC , to be honest , largely stable . exciting . Australia , which a tough year Nothing in 2025 . We saw some .
Speaker #1: I mean , they were still declining in has had Q4 , but we saw signs of that stabilizing in my is expectation Australia should see the comps will also get better .
Speaker #1: As you can But , but but should see kind of a some This recovery . year as we expect . forward . So kind of a walk around the world .
Speaker #1: think if And I I was to just talk markets , I'd say to you stands , electronics out . We are seeing good , growth there strong in my expectation remains that we'll see a more investment in that space .
Sanjiv Lamba: Usually, when we talk about it, when I talk about backlog, I'm sure there'll be a question on backlog, and I'll talk a bit more about how I see that playing out. Of course, the other markets also appearing to be stable to slightly up as we spoke.
Sanjiv Lamba: Usually, when we talk about it, when I talk about backlog, I'm sure there'll be a question on backlog, and I'll talk a bit more about how I see that playing out. Of course, the other markets also appearing to be stable to slightly up as we spoke.
Speaker #1: And when we talk lot about backlog on , there'll be a I talk backlog I'm sure talk a bit how I see that more about playing out .
Speaker #1: And of course , the other markets appearing also to be , stable to know , to slightly up as we you .
Duffy Fischer: Awesome. Thank you, guys.
Duffy Fischer: Awesome. Thank you, guys.
Speaker #5: Awesome . Thank you guys .
Sanjiv Lamba: Our next question comes from the line of Laurent Favre with BNP Paribas. Your line is open.
Operator: Our next question comes from the line of Laurent Favre with BNP Paribas. Your line is open.
Speaker #3: And our next question comes from the line of Laurent Fava with BNP Paribas. Your line is open.
Laurent Favre: Yes. Good morning, all. And Sanjiv, I don't want to disappoint. So it's a question on the trajectory of the sale of gas backlog. So with Beaumont startup, I guess we would be coming down towards $5.5 billion. I heard your conviction on electronics, but I'm just wondering, I guess, what sales we should be focusing on. Is $5.5 billion the new norm, or would you hope to get back closer to $7 billion in the next year or so? Thank you.
Laurent Favre: Yes. Good morning, all. And Sanjiv, I don't want to disappoint. So it's a question on the trajectory of the sale of gas backlog. So with Beaumont startup, I guess we would be coming down towards $5.5 billion. I heard your conviction on electronics, but I'm just wondering, I guess, what sales we should be focusing on. Is $5.5 billion the new norm, or would you hope to get back closer to $7 billion in the next year or so? Thank you.
Speaker #6: Yes . Good morning all . And Sanjiv I don't want to disappoint . So it's a question on the trajectory of the sale of gas backlog .
Speaker #6: So with Beaumont start up , I guess we would be coming down towards 5.5 billion . I heard your conviction on electronics , but I'm just wondering , what we I sales guess , focusing should be on half the is five and a new norm , or hope to would you get back closer to 7 billion in the in the or so ?
Sanjiv Lamba: Laurent, you know the answer to that. We will be heading towards that $7 billion mark. You know I was going to say that anyway, right? So let's just break out what happens with backlog every year. And I say this often, and I think it's worth reiterating that. The best backlog is one that shrinks before it grows back up again. So my expectation is this year, as you know, in 2025, we started about $1 billion of projects. This year, in 2026, is a big year for us. You all know that OCI Woodside startup is going to be phased through the course of the year. So I would expect fully that the backlog will see projects between $2.5 to 3 billion come off and get started up and start contributing to revenue and earnings. So that's exactly what we would like to see happen.
Sanjiv Lamba: Laurent, you know the answer to that. We will be heading towards that $7 billion mark. You know I was going to say that anyway, right? So let's just break out what happens with backlog every year. And I say this often, and I think it's worth reiterating that. The best backlog is one that shrinks before it grows back up again. So my expectation is this year, as you know, in 2025, we started about $1 billion of projects. This year, in 2026, is a big year for us. You all know that OCI Woodside startup is going to be phased through the course of the year. So I would expect fully that the backlog will see projects between $2.5 to 3 billion come off and get started up and start contributing to revenue and earnings. So that's exactly what we would like to see happen.
Speaker #6: Thank you next year Laura .
Speaker #1: You know the answer to that. We will be heading to that $7 billion mark. I was going to say that anyway.
Speaker #1: Right . So just break out what happens with backlog year . And I say this every it's worth reiterating that the backlog is one that shrinks before often and back again .
Speaker #1: So my is this expectation year , as you know , in 2025 , we started up a billion of of projects about In this year .
Speaker #1: 2026 is a big year for us . all know You that OCI worksite going to startup is be phased through of the So I year .
Speaker #1: would the course fully that the backlog will see projects between two and a half to and get started up 3 billion come off and start contributing to that's revenue and earnings .
Sanjiv Lamba: The pressure on the businesses, and the teams are aware of my expectations, that we will grow back the backlog. And I feel good about the pipeline of projects that we're currently working on and some fairly advanced as well, which I expect we will fully make, as I mentioned in my prepared remarks a little bit earlier, some really large wins around fabs that I'm hopeful that we will be able to get to a point of being able to get to announcing, having signed them up, and put them in the backlog soon. So yeah, the target is to get back to that $7 billion. We'll be close to that, my view. We'll see whether we get there, cross it, or how close we can get that business to get us there.
Sanjiv Lamba: The pressure on the businesses, and the teams are aware of my expectations, that we will grow back the backlog. And I feel good about the pipeline of projects that we're currently working on and some fairly advanced as well, which I expect we will fully make, as I mentioned in my prepared remarks a little bit earlier, some really large wins around fabs that I'm hopeful that we will be able to get to a point of being able to get to announcing, having signed them up, and put them in the backlog soon. So yeah, the target is to get back to that $7 billion. We'll be close to that, my view. We'll see whether we get there, cross it, or how close we can get that business to get us there.
Speaker #1: exactly So like to what we would see . The pressure business is on the and the happen teams are expectations that we grow will back the backlog .
Speaker #1: And feel I good about the pipeline of projects that we're working on . And some fairly currently well , which I expect expect we will fully make .
Speaker #1: As I mentioned in my prepared remarks a little bit earlier , some really large wins around fabs that I'm hopeful that we will able to get to being a point of able to get to announcing , having signed them up and put them in the backlog soon .
Speaker #1: So yeah , the target is to get back to that 7 billion . close to that . My view , We'll be see whether get there we , cross it or how close get that business get to there get us we can .
Sanjiv Lamba: Our next question comes from the line of Tony Jones with Rothschild. Your line is open.
Operator: Our next question comes from the line of Tony Jones with Rothschild. Your line is open.
Speaker #3: our next And question comes from the line of Jones with Tony Rothschild . Your line is open
[Analyst] (Rothschild): Yes. Good morning, everybody. Sanjiv, earlier you talked about your restructuring that you booked in Q4. If we take that $230 million, can we assume a roughly one-to-one ratio to savings? If we do, that points to something like a 70 basis point margin uplift in 2026, or maybe we get it in the second half, but it rolls forward. Is that reasonable? And then just to think about net margin expansion, how do you see OPEX inflation tracking over the year? Thank you.
Tony Jones: Yes. Good morning, everybody. Sanjiv, earlier you talked about your restructuring that you booked in Q4. If we take that $230 million, can we assume a roughly one-to-one ratio to savings? If we do, that points to something like a 70 basis point margin uplift in 2026, or maybe we get it in the second half, but it rolls forward. Is that reasonable? And then just to think about net margin expansion, how do you see OPEX inflation tracking over the year? Thank you.
Speaker #6: Yes . Good morning .
Speaker #7: Everybody . Sanjeev , earlier you talked about your you booked restructuring that in the fourth quarter . If we take that to 30 million , can we assume a roughly 1 to 1 ratio to If we savings ?
Speaker #7: do that points to something like a point in 26 . So maybe we get it in the margin rolls forward . Is that reasonable ?
Speaker #7: And think about then just to net margin expansion , how do you see opex uplift tracking over the year . Thank you .
Sanjiv Lamba: Thanks, Tony. So the easy way to answer that is typically you've heard us say this previously as well, so I'll just reiterate that. Our restructuring paybacks on a cash basis tend to be on average about two years. And I think if you take that into account, you can kind of do the math and get to the numbers that you're looking for. What I would say to you for 2026, my expectation remains that we will be above the long-term margin range that we normally offer you. We always say 30 to 50 basis points is what you should expect. My view is in 2026, we will beat that number.
Sanjiv Lamba: Thanks, Tony. So the easy way to answer that is typically you've heard us say this previously as well, so I'll just reiterate that. Our restructuring paybacks on a cash basis tend to be on average about two years. And I think if you take that into account, you can kind of do the math and get to the numbers that you're looking for. What I would say to you for 2026, my expectation remains that we will be above the long-term margin range that we normally offer you. We always say 30 to 50 basis points is what you should expect. My view is in 2026, we will beat that number.
Speaker #1: Tony . So the easy Thanks , way to answer that is typically you've heard you've heard us say this previously as well . So I'll just reiterate that restructuring our basis a cash tend on to be paybacks on average .
Speaker #1: two years And I take that think if you if you into about kind of do and get numbers that you're looking for . What I would say to you 2026 , my for remains that expectation we will be above long term range that margin we the offer you .
Speaker #1: We always say 30 to 50 basis points is what you should expect . My view is in 2026 , we will beat number .
[Analyst] (Rothschild): That's very helpful. Thank you.
Tony Jones: That's very helpful. Thank you.
Speaker #7: That's really helpful . Thank you .
Sanjiv Lamba: Our next question comes from the line of Josh Spector with UBS. Your line is open.
Operator: Our next question comes from the line of Josh Spector with UBS. Your line is open.
Speaker #3: And our next from the question comes
Speaker #3: Josh Spector with line of Your line is open .
[Analyst] (Bank of America): Yeah. Hi. Good morning. I had a couple of questions I put together around the space opportunity for you guys. I mean, first, I wanted to ask if any of that is contributing to the CAPEX increase you're projecting for 2026. And then secondly, if you could provide your view of the size, your share, and the growth that you expect. Your competitor made some comments the other day, wondering if you could set the view on what you're seeing. And how do you factor this into guidance? Is it material to 2026? It's not macro growth. It's not backlog. So is it in there? Is it upside? How should we think about that? Thank you.
Josh Spector: Yeah. Hi. Good morning. I had a couple of questions I put together around the space opportunity for you guys. I mean, first, I wanted to ask if any of that is contributing to the CAPEX increase you're projecting for 2026. And then secondly, if you could provide your view of the size, your share, and the growth that you expect. Your competitor made some comments the other day, wondering if you could set the view on what you're seeing. And how do you factor this into guidance? Is it material to 2026? It's not macro growth. It's not backlog. So is it in there? Is it upside? How should we think about that? Thank you.
Speaker #8: Yeah . Hi . Good morning . I had a couple questions that I put around the together space opportunity for you guys . I mean , first I wanted to ask if any of that is contributing to the CapEx increase you're projecting for 2026 .
Speaker #8: And then if you , secondly , could provide your view of the size , your share and the growth that expect your you competitor made some comments wondering if you on what the view the other day could set seeing factor this you in to guidance ?
Speaker #8: Is it you're and how do 2026 ? It's not macro growth . It's not backlog . to is it in there ? Is it upside ?
Speaker #8: How should we think about that . Thank you .
Sanjiv Lamba: Hey, Josh, I briefly glanced through the report that he sent out. It was a nice report. Well done. I'll say this to you. The CapEx in the backlog section does not include about $ half a billion of projects that we have invested in, and we continue to make investments in 2026 as well to be able to support this growth opportunity. So you're spot on. This is a secular growth opportunity. We are excited about it. We are really well positioned to be able to serve this. The two major investment hubs that we see around this, building the network out, are in Texas and Florida. We have extremely strong positions in supporting launches here. Let's talk about launches because I know there's been some confusion and questions around this.
Sanjiv Lamba: Hey, Josh, I briefly glanced through the report that he sent out. It was a nice report. Well done. I'll say this to you. The CapEx in the backlog section does not include about $ half a billion of projects that we have invested in, and we continue to make investments in 2026 as well to be able to support this growth opportunity. So you're spot on. This is a secular growth opportunity. We are excited about it. We are really well positioned to be able to serve this. The two major investment hubs that we see around this, building the network out, are in Texas and Florida. We have extremely strong positions in supporting launches here. Let's talk about launches because I know there's been some confusion and questions around this.
Speaker #1: Hey Josh I briefly glanced through the report that you set out . It was a report . Well nice done . I'll say you .
Speaker #1: this to You know , in the the backlog section does not include about half a billion of of CapEx projects that we have invested in .
Speaker #1: And we continue to make investments in 2026 as well , to be able to support this growth opportunity . So you're spot on .
Speaker #1: This is a secular growth opportunity . We are about it . We are really positioned to be able to serve this . well The two major investment that hubs we see around this building , the network out are in Texas and Florida .
Speaker #1: We have extremely strong positions in supporting here . Let's talk about launches because I know there's been some questions this . launches Look , the easy we only this answer to confusion and measure by the number of launches where Lindy is directly some cases , others are involved .
Sanjiv Lamba: Look, the easy answer to this is we only measure by the number of launches where Linde is directly involved. In some cases, others are also involved in launches, so they may be double counting. I think about six months ago, one, I think it was in Q2, we talked about more than 3/4 of all launches are supplied by Linde. At that point in time, that was absolutely the right number. I think the number ranges between 65% to 75% on average, and I think that's a really robust number, and we do that by launch. Last year, there were 189 launches. You can do the math. I mean, Juan can help you with some more details if you need, but solid growth, extremely well positioned. Florida and Texas is where bulk of the launches are expected. And you know what?
Sanjiv Lamba: Look, the easy answer to this is we only measure by the number of launches where Linde is directly involved. In some cases, others are also involved in launches, so they may be double counting. I think about six months ago, one, I think it was in Q2, we talked about more than 3/4 of all launches are supplied by Linde. At that point in time, that was absolutely the right number. I think the number ranges between 65% to 75% on average, and I think that's a really robust number, and we do that by launch. Last year, there were 189 launches. You can do the math. I mean, Juan can help you with some more details if you need, but solid growth, extremely well positioned. Florida and Texas is where bulk of the launches are expected. And you know what?
Speaker #1: In launches , so they may be double also involved in I think counting about six months ago . One , I think it .
Speaker #1: It was in the second quarter. We talked about, you know, more than launches are supplied by three quarters of all number.
Speaker #1: I think the number ranges between 65 to 75% on average . And I a really robust number . And think that's that by launch .
Speaker #1: there were 189 launches . You can do the math . Last year , mean , one can help you with some more details if you need , but solid , solid extremely growth positioned Florida and Texas where the well launches is are the expected .
Sanjiv Lamba: We are expecting to get more than our fair share of that just given the unique position we built up there. In fact, we started up a plant in Brownsville earlier this year, in early January, in fact. So we just can't get enough product availability in our network to be able to make sure we meet all of that demand. It is factored into the guidance. It's a secular trend for sure. But remember. And I'm looking forward to having a billion-dollar business year that I can split it up in the end markets and show it to you guys separately. I expect to see that happen in the next few years, but it isn't big enough to move the needle for Linde as a company overall. So it's in the guidance. We are excited about it. Double-digit growth. Expect to see that continue over the next few years.
Sanjiv Lamba: We are expecting to get more than our fair share of that just given the unique position we built up there. In fact, we started up a plant in Brownsville earlier this year, in early January, in fact. So we just can't get enough product availability in our network to be able to make sure we meet all of that demand. It is factored into the guidance. It's a secular trend for sure. But remember. And I'm looking forward to having a billion-dollar business year that I can split it up in the end markets and show it to you guys separately. I expect to see that happen in the next few years, but it isn't big enough to move the needle for Linde as a company overall. So it's in the guidance. We are excited about it. Double-digit growth. Expect to see that continue over the next few years.
Speaker #1: And you know what we are expecting to get more than our fair that , just given the unique we built up there . In positions fact , we started up a share of in Brownsville earlier this year in early In fact .
Speaker #1: we just January . can't get availability in our enough , you know , enough product network to be able meet all of sure we that demand .
Speaker #1: is factored into to make guidance . secular but trend , for sure , the It's a you know , I'm looking It forward to having $1 billion business here that can split it I up in the end markets and show it to you guys separately .
Speaker #1: I expect to see that happen in the in the next few years . But it isn't big enough to move the needle for Linda as a company So it's guidance .
Speaker #1: We're overall . excited Double about it . digit growth to see that continue over the . Expect next few years . And at some split it out stage we'll actually see the and you'll numbers and feel it as well good about .
Sanjiv Lamba: At some stage, we'll split it out, and you'll actually see the numbers and feel good about it as well.
Sanjiv Lamba: At some stage, we'll split it out, and you'll actually see the numbers and feel good about it as well.
[Analyst] (Bank of America): Thank you.
Josh Spector: Thank you.
Sanjiv Lamba: Our next question comes from the line of Patrick Cunningham with Citi. Your line is open.
Operator: Our next question comes from the line of Patrick Cunningham with Citi. Your line is open.
Speaker #8: Thank you
Speaker #3: next question comes
Speaker #3: from the line of Patrick Cunningham with Citi . . And our Your line is open .
Patrick Cunningham: Good morning. Thanks for taking my question. Maybe just on the 90 new customer wins in Oxy-fuel Combustion, can you just help us understand the specific customer base, whether it's concentrated in any particular region, and what sort of contribution this has to the backlog and overall growth algorithm?
Patrick Cunningham: Good morning. Thanks for taking my question. Maybe just on the 90 new customer wins in Oxy-fuel Combustion, can you just help us understand the specific customer base, whether it's concentrated in any particular region, and what sort of contribution this has to the backlog and overall growth algorithm?
Speaker #9: Hi . Thanks for Good morning . my question . Maybe just the 90 new on customer wins and Oxyfuel combustion . Can you just specific customer base , whether it's concentrated in any particular region understand the what sort contribution this has to to the help us overall backlog and algorithm growth and ?
Sanjiv Lamba: Patrick, I always love a question on gas application wins, and I think this is a good example. I think if you go back and read some of the transcripts from maybe a couple of years ago, you heard us talk about us ramping up activity on oxy-fuel wins and providing some great technology that helps customers reduce emissions, reduce natural gas consumption, and increase throughput. What a real win-win story that was. And I think that's what we're seeing play out in this. So we're seeing this across the world, to be honest. There is a little bit of a concentration in terms of China wins being disproportionately high, but we see the wins both across Americas and EMEA as well. It's great technology. Customers are loving it.
Sanjiv Lamba: Patrick, I always love a question on gas application wins, and I think this is a good example. I think if you go back and read some of the transcripts from maybe a couple of years ago, you heard us talk about us ramping up activity on oxy-fuel wins and providing some great technology that helps customers reduce emissions, reduce natural gas consumption, and increase throughput. What a real win-win story that was. And I think that's what we're seeing play out in this. So we're seeing this across the world, to be honest. There is a little bit of a concentration in terms of China wins being disproportionately high, but we see the wins both across Americas and EMEA as well. It's great technology. Customers are loving it.
Speaker #1: Patrick , I always love a gas question on application wins , and I think this is example . good I you go back , you think if a back and know , go read some of the transcripts from maybe a couple of years ago , you heard us talk about us ramping up activity on oxy fuel wins and great technology that providing helps reduce reduce natural gas emissions , consumption , and increase throughput .
Speaker #1: a real win win story that And I what we're think that's was . out in So seeing play seeing this across the across the world to be a little bit honest .
Speaker #1: of a There is concentration in in terms China of being disproportionately high . wins But you know , we see the wins both across the Americas EMEA as well .
Sanjiv Lamba: I think we've seen that momentum that we built up on business development at this playing out, and actually these wins being signed up and actually under execution as we speak.
Sanjiv Lamba: I think we've seen that momentum that we built up on business development at this playing out, and actually these wins being signed up and actually under execution as we speak.
Speaker #1: great technology loving it . and And I think you know we've seen that we built momentum that up on . business development at this playing out .
Speaker #1: And actually, customers—are these wins being signed up, actually under execution as we speak?
Sanjiv Lamba: Our next question comes from the line of Vincent Andrews with Morgan Stanley. Your line is open.
Operator: Our next question comes from the line of Vincent Andrews with Morgan Stanley. Your line is open.
Speaker #3: next Andrews with Vincent from the line of Morgan Stanley . Your line is open question comes .
Vincent Andrews: Thank you and good morning, everyone. You mentioned $400 million of bolt-ons were completed in 2025. Just curious how much of an impact that's having to the top line in 2026, and also if you could talk about that lever in general of capital allocation and how much, particularly as we remain sort of at the bottom of a cycle, is there increasing opportunity to do more bolt-ons or decaps at this point in the cycle? And should we be thinking about this as more of a growth lever than perhaps it's been over the past five, 10 years? Thanks.
Vincent Andrews: Thank you and good morning, everyone. You mentioned $400 million of bolt-ons were completed in 2025. Just curious how much of an impact that's having to the top line in 2026, and also if you could talk about that lever in general of capital allocation and how much, particularly as we remain sort of at the bottom of a cycle, is there increasing opportunity to do more bolt-ons or decaps at this point in the cycle? And should we be thinking about this as more of a growth lever than perhaps it's been over the past five, 10 years? Thanks.
Speaker #10: Thank you . And good morning , . You $400 million of mentioned ons were completed in 2025 . Just curious how much of an impact that's having to the in 26 .
Speaker #10: Thank you . And good morning , . You $400 million of mentioned ons were completed in 2025 . Just curious how much of an impact that's having to the in top line And also , if you could about that lever in general of capital allocation , you know , particularly as we remain the bottom cycle , of a talk is is and how increasing sort of at opportunity to do more bolt ons or decaps there at this point in the thinking about this as more of a should we be cycle ?
Speaker #10: Leverage perhaps—and been ten over the past five.
Speaker #10: it's
Matthew White: Hey, Vince. Yeah, it's Matt. I can handle that one. So as you see from our sales variance, we're getting 1% right now. It is a weaker percent, but it rounds to 1% on the acquisitions from the 2025 contribution. Right now, we expect we should be able to maintain that into 2026. Time will tell. But as you can see, this sort of $400 to 500 million number, at least on this current baseline, is able to get us around at 1%. As far as how we think about them, number one, we buy into density. We want to buy into our core strength, and we're buying based on synergies. We justify these on the synergies we can bring with our existing network and our existing density. We don't really tend to speculate on the growth around them.
Matthew White: Hey, Vince. Yeah, it's Matt. I can handle that one. So as you see from our sales variance, we're getting 1% right now. It is a weaker percent, but it rounds to 1% on the acquisitions from the 2025 contribution. Right now, we expect we should be able to maintain that into 2026. Time will tell. But as you can see, this sort of $400 to 500 million number, at least on this current baseline, is able to get us around at 1%. As far as how we think about them, number one, we buy into density. We want to buy into our core strength, and we're buying based on synergies. We justify these on the synergies we can bring with our existing network and our existing density. We don't really tend to speculate on the growth around them.
Speaker #2: Hey , Vince . Yeah , it's Matt . I can handle that one .
Speaker #2: see from , as you years ? variance , you know , getting a
Speaker #2: 2025 contribution . percent Now now we expect we should be able to maintain that into Time will we're 26 . right tell can .
Speaker #2: But as you see, this sort of $400 to $500 million number at baseline is at least able to get us, you know, a rounded think about them.
Speaker #2: as how we You buy 1% as far buy into our core strength . And this current we're on synergies . We synergies justify these we can buying on the bring our existing with You know , density .
Speaker #2: really we tend to on the don't speculate around them . growth we any can achieve So is upside to usually the . And sentiment , yeah , I would say , you know , a lot of these are They're players .
Matthew White: So any growth we can achieve is usually upside to the models. And as far as the sentiment, yeah, I would say a lot of these are regional players. They're generally smaller independents. The concentration of that right now is more in North America. There is some in parts of Asia. We're seeing in China and in the South Pacific area. That's where you tend to see a little bit more of the independent opportunities. So this is something that we've been doing for a long time. We have a very strong capability on not just identifying and acquiring, but more importantly, integrating and achieving the synergies that we set forth. So it's absolutely integral to our growth, but we also are not going to lose our discipline, and we're not going to get out of our swim lane, so to speak.
Matthew White: So any growth we can achieve is usually upside to the models. And as far as the sentiment, yeah, I would say a lot of these are regional players. They're generally smaller independents. The concentration of that right now is more in North America. There is some in parts of Asia. We're seeing in China and in the South Pacific area. That's where you tend to see a little bit more of the independent opportunities. So this is something that we've been doing for a long time. We have a very strong capability on not just identifying and acquiring, but more importantly, integrating and achieving the synergies that we set forth. So it's absolutely integral to our growth, but we also are not going to lose our discipline, and we're not going to get out of our swim lane, so to speak.
Speaker #2: generally regional independents . The concentration of that now is North is some in . There America we're in in China South and Pacific area see a little tend to .
Speaker #2: bit more of the That's where you opportunities . something that we've been doing is So this have a for a long not strong identifying just and very importantly and achieving the , integrating we synergies that set forth .
Speaker #2: So acquiring , but more integral to parts of our But we also are going to lose our And discipline . get out of not our So swimlane .
Speaker #2: So acquiring , but more integral to parts of our But we also are going to lose our And discipline . get out of not our So speak .
Matthew White: So expect to continue to see these kind of numbers, and where opportunities present themselves for larger ones, we will absolutely be in the mix, and we'll make sure we continue to apply our investment criteria for each incremental opportunity.
Matthew White: So expect to continue to see these kind of numbers, and where opportunities present themselves for larger ones, we will absolutely be in the mix, and we'll make sure we continue to apply our investment criteria for each incremental opportunity.
Speaker #2: Of numbers. And where opportunities present themselves for ones, we absolutely will make sure to continue to follow our investment criteria for each incremental opportunity.
Speaker #2: apply our
Sanjiv Lamba: Our next question comes from the line of John Roberts with Mizuho. Your line is open.
Operator: Our next question comes from the line of John Roberts with Mizuho. Your line is open.
Speaker #3: And our next question the line comes from of John Roberts with Mizuho . Your line is open
Vincent Andrews: Thank you. Sanjiv, late last year, it sounded like you were working on a new six-point blueprint to extend the growth for Linde. Have you formalized that, and is there anything you can tease us with?
John Roberts: Thank you. Sanjiv, late last year, it sounded like you were working on a new six-point blueprint to extend the growth for Linde. Have you formalized that, and is there anything you can tease us with?
Speaker #11: you . last Sanjiv . Late year it sounded like you were working on a
Speaker #11: six point new blueprint to extend the growth for Lindy . Have you formalized there and is can tease us with ? that
Speaker #11: Six-point new blueprint to extend the growth for Linde. Have you formalized there, and can you tease us with it? John, I'd...
Sanjiv Lamba: John, I'd love to tease you, but I'm probably going to resist that temptation. We have a Growth Six out there. You've seen that. You were here with us in Danbury in December, I recall, and I showed you a page out of my notebook. So those Growth Six have been formalized. They have been rolled out. We are measuring progress against that. And Linde, you know we are an execution machine. So once we set the goals, I think that's when the execution delivers. So I'm feeling good about how momentum is picking up on that, but those elements. And I think I'd say to you, there is no rocket science over there.
Sanjiv Lamba: John, I'd love to tease you, but I'm probably going to resist that temptation. We have a Growth Six out there. You've seen that. You were here with us in Danbury in December, I recall, and I showed you a page out of my notebook. So those Growth Six have been formalized. They have been rolled out. We are measuring progress against that. And Linde, you know we are an execution machine. So once we set the goals, I think that's when the execution delivers. So I'm feeling good about how momentum is picking up on that, but those elements. And I think I'd say to you, there is no rocket science over there.
Speaker #1: I'm
Speaker #1: probably going to resist
Speaker #1: that a We have growth six out temptation . you were you anything you were here that with us in December . in I You've seen recall .
Speaker #1: I showed And my Thank out of you a page Danbury growth six have been They have been rolled out . We are formalized .
Speaker #1: against progress Lindy , you know , we are an execution machine . So once we set that the So those And when the execution delivers .
Speaker #1: So feeling there . goals , I think that's about how momentum is picking up on that . But you know those those elements think say to you there is no rocket I there .
Sanjiv Lamba: These are things that we know how to do well, and we just focus the organization to go out and get the wins in, particularly in an economic environment where there isn't national momentum coming for growth. So it's good to see that we are getting traction across the organization in there. And while today I haven't spoken about small onsites, small onsites sit within that piece. Matt just talked briefly about the expectation that we want to see that 1% top line and a little bit more coming through on the bottom line once we integrate them effectively. So those would be all elements that you should see within that, as would be application, sales, etc. So the Growth Six has been rolled out. The organization knows it well. They live and breathe it every morning. And when they don't, I remind them very quickly.
Sanjiv Lamba: These are things that we know how to do well, and we just focus the organization to go out and get the wins in, particularly in an economic environment where there isn't national momentum coming for growth. So it's good to see that we are getting traction across the organization in there. And while today I haven't spoken about small onsites, small onsites sit within that piece. Matt just talked briefly about the expectation that we want to see that 1% top line and a little bit more coming through on the bottom line once we integrate them effectively. So those would be all elements that you should see within that, as would be application, sales, etc. So the Growth Six has been rolled out. The organization knows it well. They live and breathe it every morning. And when they don't, I remind them very quickly.
Speaker #1: that we These to do know how we just focus the go out and get the wins in , particularly organization to a economic environment where , you there is a national momentum coming know , it's good to are things we're getting traction see that So organization And you today I haven't know , while spoken sites , you know , small about sites on that , acquisitions .
Speaker #1: Matt just talked you briefly about the expectation that small on we want to see that 1% top and a line little bit more coming through on the Once we bottom line .
Speaker #1: effectively , you know , so integrate them those would be all elements that you for should see would be sales , etc. our application .
Speaker #1: that , as they're feeling So good about where that stands . when they
Speaker #1: So growth it organization knows out . The has been rolled the well . it every morning . piece when they don't , I remind them very quickly .
Sanjiv Lamba: So I'm feeling good about where that stands.
Sanjiv Lamba: So I'm feeling good about where that stands.
Vincent Andrews: Thank you.
John Roberts: Thank you.
Sanjiv Lamba: Our next question comes from the line of Matthew DeYoe with Bank of America. Your line is open.
Operator: Our next question comes from the line of Matthew DeYoe with Bank of America. Your line is open.
Speaker #11: you Thank .
Speaker #3: next question And our comes from the line of Matthew Deyoe with Bank of America . Your line is open .
[Analyst] (Bank of America): Morning, everyone. I hear you on the China IP commentary and the growth that's encouraging. I wanted to dig in a little bit more on APAC, if I could. Manufacturing as an end market looks to be pretty weak on a 1-year and 2-year stack. So I'm just trying to get a sense for what exactly is at issue there, which specific end markets are maybe causing the trouble, and if that was a particular area where you saw some strength because it seemed like data pointed to a softer Q4 as well. And then, conversely, this bucket of other; it's actually doing seemingly pretty well. I don't want to get lost to rounding on some of these breakouts, but what is that in relation to? And if I could, just one more ask on it, Vincent. It seems like these acquisitions aren't immediately accretive.
Matthew DeYoe: Morning, everyone. I hear you on the China IP commentary and the growth that's encouraging. I wanted to dig in a little bit more on APAC, if I could. Manufacturing as an end market looks to be pretty weak on a 1-year and 2-year stack. So I'm just trying to get a sense for what exactly is at issue there, which specific end markets are maybe causing the trouble, and if that was a particular area where you saw some strength because it seemed like data pointed to a softer Q4 as well. And then, conversely, this bucket of other; it's actually doing seemingly pretty well. I don't want to get lost to rounding on some of these breakouts, but what is that in relation to? And if I could, just one more ask on it, Vincent. It seems like these acquisitions aren't immediately accretive.
Speaker #12: Morning , everyone . I on the China IP commentary and growth the that's encouraging . I wanted to dig in a little bit hear you APAC .
Speaker #12: on I could If , manufacturing end market looks to be weak on pretty a one year and two year stack . So I'm just trying to a sense get what exactly is at for issue .
Speaker #12: specific end causing the maybe trouble . particular area where There . if that was a pointed Which data to as an a seemed like softer for Q and then as well , conversely , bucket of this And seemingly well .
Speaker #12: And I don't want to get to lost rounding on some of these breakouts . is pretty relation to ? markets are But I could just one more attack on the Vincent how what these seems like immediately if you do a accretive .
[Analyst] (Bank of America): If you do a steady cadence, maybe that's irrelevant, but how long does it take for a year, an acquisition, to show up on the bottom line?
Matthew DeYoe: If you do a steady cadence, maybe that's irrelevant, but how long does it take for a year, an acquisition, to show up on the bottom line?
Speaker #12: maybe it how long does it And if that's a year , like an And on the acquisition to show up bottom
Sanjiv Lamba: All right. Matt, let me talk about APAC, and then I'll ask my Matt to give you a quick view on the other piece, which he always ensures is doing what it needs to do to make sure it's accretive to the business overall or the PLC overall. Look, in APAC, you have to split that by different regions, and I'm going to give you a little bit of a deeper dive there just to kind of give you a sense. So let's start with China. We talked about China earlier on. China manufacturing, as you know, a lot of that underwritten by large-scale exports to markets, which may or may not be welcoming those exports in, but has provided a little bit of momentum. And within that, there are clear green shoots in manufacturing.
Sanjiv Lamba: All right. Matt, let me talk about APAC, and then I'll ask my Matt to give you a quick view on the other piece, which he always ensures is doing what it needs to do to make sure it's accretive to the business overall or the PLC overall. Look, in APAC, you have to split that by different regions, and I'm going to give you a little bit of a deeper dive there just to kind of give you a sense. So let's start with China. We talked about China earlier on. China manufacturing, as you know, a lot of that underwritten by large-scale exports to markets, which may or may not be welcoming those exports in, but has provided a little bit of momentum. And within that, there are clear green shoots in manufacturing.
Speaker #1: Let me talk Let me talk about Matt . All right . about then I'll my ask Matt to a quick view . On the
Speaker #1: piece , other you are ? is always it needs to do to ensures make sure accretive to the it's business which APAC , and the of the give you in APAC , you have split by different regions , and that .
Speaker #1: dive to give you there just to kind of give you a sense . So start with let's China . We talked about China earlier bit of manufacturing .
Speaker #1: China As you know , a lot of that by , in underwritten markets large scale which may know , welcoming those be , you provided a little has , has bit of momentum within .
Sanjiv Lamba: The EV piece, when I was with BYD, one of our customers in China, the chairman was complaining that he wasn't seeing as much growth as he was expecting, and he was unhappy that he was only growing 28%. But hey, 28% in this environment is a good place to be, right? So things like that, battery developments continue to be positive within that piece. So also in manufacturing is commercial space today. We haven't split it out, and we've been talking about space quite a lot, so I won't repeat all of that, but there is clearly momentum over there as well. So you put that piece together, and obviously, commercial space applies more to the US market than APAC, but we have had some small contributions in APAC as well. So that's kind of the broader piece around China.
Sanjiv Lamba: The EV piece, when I was with BYD, one of our customers in China, the chairman was complaining that he wasn't seeing as much growth as he was expecting, and he was unhappy that he was only growing 28%. But hey, 28% in this environment is a good place to be, right? So things like that, battery developments continue to be positive within that piece. So also in manufacturing is commercial space today. We haven't split it out, and we've been talking about space quite a lot, so I won't repeat all of that, but there is clearly momentum over there as well. So you put that piece together, and obviously, commercial space applies more to the US market than APAC, but we have had some small contributions in APAC as well. So that's kind of the broader piece around China.
Speaker #1: are clear green And in exports in . manufacturing . Look EV . You know , when I was with , that there one of our customers in the chairman was China , complaining that he wasn't growth expecting .
Speaker #1: And he was much he was only shoots growing 28% , was 28% in this environment . is Is a good place to be , right ?
Speaker #1: So things like battery , you know But but , developments continue to be seeing as that within piece . within So also in manufacturing is commercial today with BYD , space split it haven't we you know we've been talking about space I won't quite a lot .
Speaker #1: repeat all of that . So But there is momentum over there as well . So put that piece together you and obviously that commercial space applies more to out . market than than APAC .
Speaker #1: repeat all of that . So But there is momentum over there as well . So put that piece together you and obviously that commercial space applies more to out .
Speaker #1: clearly that's So broader around piece RSP China kind of the has been and RSP down numbers continue to reflect manufacturing that broad based weakness .
Sanjiv Lamba: APAC has been down, and APAC manufacturing numbers continue to reflect that broad-based weakness. We are seeing that things are a little bit better in Q4 versus what they were in Q1 and Q2. So expectation remains that you might see a continued improvement or a gradient towards a recovery in the APAC or the Asia Pacific market, Australia being the large market there. And then India, I kind of briefly talked about providing a bit of tailwind on the manufacturing side, particularly. And again, the expectation with the free trade agreement and the tariff issues getting resolved, you'll see further improvements there. So I'm not sure that's entirely factored into the 1- to 2-year outlook that you're looking at. Where I think there is probably a degree of disappointment is ASEAN.
Sanjiv Lamba: APAC has been down, and APAC manufacturing numbers continue to reflect that broad-based weakness. We are seeing that things are a little bit better in Q4 versus what they were in Q1 and Q2. So expectation remains that you might see a continued improvement or a gradient towards a recovery in the APAC or the Asia Pacific market, Australia being the large market there. And then India, I kind of briefly talked about providing a bit of tailwind on the manufacturing side, particularly. And again, the expectation with the free trade agreement and the tariff issues getting resolved, you'll see further improvements there. So I'm not sure that's entirely factored into the 1- to 2-year outlook that you're looking at. Where I think there is probably a degree of disappointment is ASEAN.
Speaker #1: are seeing that things bit We better are a little versus what they were in in fourth quarter quarter . So expectation you remains that might see a continued or a , you improvement know , a gradient towards a towards recovery in South the Pacific And market , being Australia large the the there market then India , I kind .
Speaker #1: briefly talked providing , you know , a bit of tailwind about on the on the manufacturing particularly again , the expectation with the free agreement .
Speaker #1: trade tariff and the issues getting resolved , you'll see further improvements And not sure there . I'm entirely that's factored the into 1 to 2 year outlook that you're looking at think , where I there is And probably a degree of disappointment .
Sanjiv Lamba: If you recall, ASEAN used to have a reasonably strong growth, not as strong as China and India, but nonetheless in the middle part. And we haven't seen that. They have been stable but flattish at best. And I think, unfortunately, the ASEAN futures are inextricably linked to what happens in China, and the weakness in China has permeated there as well. So again, a recovery on that will take a little longer. So your view on a slightly softer outlook there would be absolutely right. But that's kind of where manufacturing kind of adds up. Matt, do you want to cover the other piece?
Sanjiv Lamba: If you recall, ASEAN used to have a reasonably strong growth, not as strong as China and India, but nonetheless in the middle part. And we haven't seen that. They have been stable but flattish at best. And I think, unfortunately, the ASEAN futures are inextricably linked to what happens in China, and the weakness in China has permeated there as well. So again, a recovery on that will take a little longer. So your view on a slightly softer outlook there would be absolutely right. But that's kind of where manufacturing kind of adds up. Matt, do you want to cover the other piece?
Speaker #1: Is . If you recall , have a reasonably strong growth , but Asean used to Asean as not as China and strong as India , but nonetheless , you know , in the middle and we haven't seen that .
Speaker #1: largely been stable , they have flattish best . And I think the unfortunately , the Asean , you know , futures are linked to what inextricably happens in China and the weakness in China has at permeated there as So again , a well .
Speaker #1: recovery on that will a little longer . take So , you know , your view on a slightly softer would be . There absolutely that's kind of right .
Speaker #1: Where manufacturing kind of—but adds, Matt. Up. You want to cover the other.
Matthew White: Yeah, sure. And Matt, I think 2 questions, right? One on M&A timing and one on other segment. So if we start on M&A timing, I would say that for an average M&A deal, generally, we tend to see full run-rate synergies within 12 to 24 months on full run rate. When you think about synergies, it can come down to a few things. Clearly, headcount is one, and that tends to be the fastest that you can recognize, I would say, sometimes between 0 and 6 months. You're also going to have any type of real estate or site consolidation, and you're also going to have supply. Since a lot of these tend to be packaged gas acquisitions, you're going to have supply of merchant. Those are more a function of contract expirations of the target that we acquire.
Matthew White: Yeah, sure. And Matt, I think 2 questions, right? One on M&A timing and one on other segment. So if we start on M&A timing, I would say that for an average M&A deal, generally, we tend to see full run-rate synergies within 12 to 24 months on full run rate. When you think about synergies, it can come down to a few things. Clearly, headcount is one, and that tends to be the fastest that you can recognize, I would say, sometimes between 0 and 6 months. You're also going to have any type of real estate or site consolidation, and you're also going to have supply. Since a lot of these tend to be packaged gas acquisitions, you're going to have supply of merchant. Those are more a function of contract expirations of the target that we acquire.
Speaker #2: Yeah ,
Speaker #2: sure . And I think two questions , right . One on M&A outlook segment . Matt , one on other start on M&A timing .
Speaker #2: would I say an average M&A deal that for , generally , we tend to see full rate run within run 12 to 24 months on full rate .
Speaker #2: think about synergies , it can come down things . You know , When you clearly to a few headcount is one , and that tends to be the fastest that you can recognize .
Speaker #2: would I sometimes between 0 and 6 months , going to also of any type real have consolidation , also going supply . Since a lot of these site tend to be packaged acquisitions , you're gas have supply going to of and you're synergies merchant .
Speaker #2: you're function of Those contract are more the target that we acquire . And obviously as those or supply those agreements leases we either our substitute with But sites , our supply .
Matthew White: And obviously, as those either leases or those supply agreements lap, then we substitute with either our sites or our supply. But all in, I'd say usually somewhere between 12 and 24 months, you have full run rate, and you get a pretty significant chunk that you can get within the first 0 to 12 months. So that's how I would think about the synergy timing. As far as other segment, just to kind of remind what's in there, there's really three pieces that are in the global other. You have what we call sort of our global helium supply group. And what they do is they sell all the helium intercompany to the geographic regions, and they also sell some wholesale direct out of this segment. So clearly, you saw some retrenchment and pricing impact in the helium business, of which is reflected in this other segment.
Matthew White: And obviously, as those either leases or those supply agreements lap, then we substitute with either our sites or our supply. But all in, I'd say usually somewhere between 12 and 24 months, you have full run rate, and you get a pretty significant chunk that you can get within the first 0 to 12 months. So that's how I would think about the synergy timing. As far as other segment, just to kind of remind what's in there, there's really three pieces that are in the global other. You have what we call sort of our global helium supply group. And what they do is they sell all the helium intercompany to the geographic regions, and they also sell some wholesale direct out of this segment. So clearly, you saw some retrenchment and pricing impact in the helium business, of which is reflected in this other segment.
Speaker #2: Lap, you have rate and you have a pretty significant chunk between 12 and 24 months, within the 0 to 12 months. So first, that's how I would think about synergy timing.
Speaker #2: As far as other segment , just to remind what's in get a really kind of three pieces that other . You what we have call sort global of our our global helium what they do they is sell helium to the intercompany geographic all the and they also group .
Speaker #2: some sell you So clearly some And segment . of this direct out saw wholesale pricing impact in the business , of which is and segment .
Matthew White: Now, going forward, I do expect some relief on the supply side, and that should start to manifest itself in the other segment in time. But it obviously had to take the brunt of these changes in the intercompany transfer pricing in some of that over the last two years. The second business in here is our global materials business. They continue to perform quite well, actually. This is mostly in the aerospace and in primarily 3D printing powders. As you can imagine, that is a pretty hot field right now when you think about aerospace and commercial space. So they've been growing quite nicely. You may recall Q1 of last year, we had a large insurance claim. That also was in this business to the tune of around $40 million or so.
Matthew White: Now, going forward, I do expect some relief on the supply side, and that should start to manifest itself in the other segment in time. But it obviously had to take the brunt of these changes in the intercompany transfer pricing in some of that over the last two years. The second business in here is our global materials business. They continue to perform quite well, actually. This is mostly in the aerospace and in primarily 3D printing powders. As you can imagine, that is a pretty hot field right now when you think about aerospace and commercial space. So they've been growing quite nicely. You may recall Q1 of last year, we had a large insurance claim. That also was in this business to the tune of around $40 million or so.
Speaker #2: reflected in going retrenchment do expect this some supply side . And relief on the should start to manifest itself in the other segment in time .
Speaker #2: it obviously had to brunt of these changes in the intercompany transfer of that in some last two years . The business in take the over the second is our global materials helium business .
Speaker #2: It obviously had to bear the brunt of these changes in the supply of—that is, business growing around primarily to the tune of other income, part of the—seen a change year on year for a full year.
Speaker #2: They perform other continue to to have quite well , . This in the is mostly actually aerospace and in 3D printing powders . As can is a pretty hot now .
Matthew White: That is part of the other income on line that you may have seen a change year-over-year for a full year. Then the third piece is our corporate overhead costs. We put all of the overhead costs in this bucket. We do not allocate it. So as you can imagine, the goal is that our wholesale helium business and that our materials business can basically pay for all the corporate overhead to run a publicly listed company. So every time this is positive OP, we're achieving that. From our perspective, that's our goal, is to continue to have positive OP in this business to be able to basically subsidize the cost to run this company.
Matthew White: That is part of the other income on line that you may have seen a change year-over-year for a full year. Then the third piece is our corporate overhead costs. We put all of the overhead costs in this bucket. We do not allocate it. So as you can imagine, the goal is that our wholesale helium business and that our materials business can basically pay for all the corporate overhead to run a publicly listed company. So every time this is positive OP, we're achieving that. From our perspective, that's our goal, is to continue to have positive OP in this business to be able to basically subsidize the cost to run this company.
Speaker #2: may have third piece is our corporate costs . all of the costs in this We do not allocate overhead imagine , you can the bucket .
Speaker #2: wholesale helium business business can . materials it . Basically our So as overhead all the overhead to run a pay for So listed every company .
Speaker #2: positive , and that we're achieving that . our perspective that's goal is to continue to have our And from OP positive this business , to be able to basically in subsidize the cost to run this publicly company
[Analyst] (Bank of America): Thanks, Matt. Sorry.
Matthew DeYoe: Thanks, Matt. Sorry.
Sanjiv Lamba: My apologies. Our next question comes from the line of Jeffrey Zekauskas with J.P. Morgan. Your line is open.
Matthew DeYoe: My apologies.
Operator: Our next question comes from the line of Jeffrey Zekauskas with J.P. Morgan. Your line is open.
Speaker #3: Thanks
Speaker #3: My Our next from the apologies . line of Jeff Zekauskas with J.P. line is . Morgan . Your .
Vincent Andrews: Thanks very much. A two-part question. Manufacturing PMIs in the US in January went from negative to positive. Is that something that your business can perceive? And do you feel that there's an acceleration in US manufacturing growth relative to the fourth quarter? And then secondly, can you discuss how much helium was a drag on your either EBIT or prices or EBITDA in 2025 and how you expect helium to perform in 2026 and why?
Jeffrey Zekauskas: Thanks very much. A two-part question. Manufacturing PMIs in the US in January went from negative to positive. Is that something that your business can perceive? And do you feel that there's an acceleration in US manufacturing growth relative to the fourth quarter? And then secondly, can you discuss how much helium was a drag on your either EBIT or prices or EBITDA in 2025 and how you expect helium to perform in 2026 and why?
Speaker #13: much . Thanks very A two part question , manufacturing PMIs in the US and January negative went from to positive . Is that something that business can perceive and there's do feel that an in us manufacturing growth relative to the acceleration And fourth quarter .
Speaker #13: Secondly, could you discuss how much helium was a drag on either your EBIT or prices or EBITDA in 2025? And how do you expect helium to perform, and why?
Sanjiv Lamba: Thanks, Jeff. So let's start with the US manufacturing. The ISM PMI, etc., have shown a positive trend. You're right. I'd just say it's too early to tell. As I said before, when I kind of talked about my walk around the world, I do see. I am a little bit more positive, but still, we would say guarded in how we think about the manufacturing developments playing out in the US, particularly. Yes, we have more conversations with customers. The reshoring, nearshoring kind of efforts that we've been talking about for some time continue to progress. Semiconductors are well ahead, as you know, but other sectors and markets moving forward as well. So I'd just say it's a bit early to call. I think the next couple of months will give us a much better view.
Sanjiv Lamba: Thanks, Jeff. So let's start with the US manufacturing. The ISM PMI, etc., have shown a positive trend. You're right. I'd just say it's too early to tell. As I said before, when I kind of talked about my walk around the world, I do see. I am a little bit more positive, but still, we would say guarded in how we think about the manufacturing developments playing out in the US, particularly. Yes, we have more conversations with customers. The reshoring, nearshoring kind of efforts that we've been talking about for some time continue to progress. Semiconductors are well ahead, as you know, but other sectors and markets moving forward as well. So I'd just say it's a bit early to call. I think the next couple of months will give us a much better view.
Speaker #1: Thanks , Jeff . let's start with the ISM etc. have US , PMI , trend positive . You're right
Speaker #1: shown a . I just say it's too early to tell . As I said before , when I kind of talked about my my around the walk , I do see I 2026 , am a little bit more positive , still , you know , we say guarded how we but about the manufacturing .
Speaker #1: manufacturing playing out in developments the U.S. in The think , particularly more conversations have with know , the You reshoring of nearshoring kind efforts that for to continue and to .
Speaker #1: time ahead , as Semiconductors are know , you other , other but sectors and well markets moving as well . forward So say , you know , bit early to think the I'd just call .
Sanjiv Lamba: But there is some potential for a very resilient US market to see some good growth probably towards the end of this year or the back end of this year anyway. And anything before that, we'd be thrilled. As you know, we would be able to get the tailwind and make a really strong impact on our earnings should that happen. On helium impact, just on 2026, I see nothing different. Helium is going to be long in the medium term, at least. But I'd say to you, again, as a reminder, Jeff, and you know this well, helium is a low single-digit business for us when we look at the overall portfolio. I think you're aware that pricing has been high single-digit, negative on helium for a few quarters now. I'm not seeing anything change dramatically in the helium space.
Sanjiv Lamba: But there is some potential for a very resilient US market to see some good growth probably towards the end of this year or the back end of this year anyway. And anything before that, we'd be thrilled. As you know, we would be able to get the tailwind and make a really strong impact on our earnings should that happen. On helium impact, just on 2026, I see nothing different. Helium is going to be long in the medium term, at least. But I'd say to you, again, as a reminder, Jeff, and you know this well, helium is a low single-digit business for us when we look at the overall portfolio. I think you're aware that pricing has been high single-digit, negative on helium for a few quarters now. I'm not seeing anything change dramatically in the helium space.
Speaker #1: us a much view . But , you know , is some better there is there very resilient US market to see good some I growth , probably of this year or towards the end this year .
Speaker #1: Anyway . And before be As you know , we'd know , would be able to we get the tailwind make and a really strong on on our impact earnings .
Speaker #1: Should that happen helium on impact just on 2026 , I see nothing that , you is going to be long different . the back term , at least medium .
Speaker #1: I'd say to But . you as a again , reminder , you know this Jeff , and well , you know , helium is a a is low business for look at the digit portfolio us .
Speaker #1: single overall When we aware , I that pricing has high digit think you're been negative on helium quarters for a few now . I'm not change anything dramatically in the helium seeing space .
Sanjiv Lamba: There are differences across the world, regional differences, that is. China clearly, we've been seeing the impact of the Russian helium coming into that market, and in some ways leaking out a little bit to other markets from there as well, whereas the other markets in Europe and the US or America are probably a little bit more balanced from that perspective. You might also be aware that we made a couple of investments, including one in a cavern, which actually provides us with a really good opportunity to balance supply and demand in a way that works for us and gives us an opportunity for us to continue to optimize that whole piece. Anything else?
Sanjiv Lamba: There are differences across the world, regional differences, that is. China clearly, we've been seeing the impact of the Russian helium coming into that market, and in some ways leaking out a little bit to other markets from there as well, whereas the other markets in Europe and the US or America are probably a little bit more balanced from that perspective. You might also be aware that we made a couple of investments, including one in a cavern, which actually provides us with a really good opportunity to balance supply and demand in a way that works for us and gives us an opportunity for us to continue to optimize that whole piece. Anything else?
Speaker #1: across differences the world . You know , if There are regional differences , that is China clearly very long seeing the , you know , impact of the Russian helium coming into that the market .
Speaker #1: And in some ways to other markets from there as little bit in and the Europe US or Americas , probably a little bit more balanced , you might also be aware markets we made an that including one in a cavern which actually provides us with a really good opportunity to balance supply demand that gives an in a works for optimize , for us to you know , that that to whole piece
Matthew White: Yeah, Jeff, this is Matt. I think just to answer your other question on impact. 2025, I tend to combine helium and rare gas. And when you combine those two, the kind of range we've laid out is about a 1% to 2% headwind on EPS. I would say towards the upper end of that range is how I would think about both of those. To Sanjiv's point, helium at this point, hard to see any real change in the supply-demand dynamics. Rare gas does feel a little bit better right now, especially with some of the electronics recovery. And so that's a way to think about the '25 impact. And then as far as '26, we'll see how that plays out in that range.
Matthew White: Yeah, Jeff, this is Matt. I think just to answer your other question on impact. 2025, I tend to combine helium and rare gas. And when you combine those two, the kind of range we've laid out is about a 1% to 2% headwind on EPS. I would say towards the upper end of that range is how I would think about both of those. To Sanjiv's point, helium at this point, hard to see any real change in the supply-demand dynamics. Rare gas does feel a little bit better right now, especially with some of the electronics recovery. And so that's a way to think about the '25 impact. And then as far as '26, we'll see how that plays out in that range.
Speaker #2: Yeah . this is Matt . I think just other answer your on impact
Speaker #2: Yeah . this is Matt . I
Speaker #2: You for 25 . know , Jeff , tend to helium and I , I rare gas . And when you . combine
Speaker #2: those two , the kind of range we've
Speaker #2: a EPs . would say on towards the of range that think I would about both those of to Sanjay's point way At this point , see any real change hard to demand dynamics .
Speaker #2: Does Rare feel a little right, especially with some of the now electronics? So that's a way to think about the '25 impact.
Speaker #2: And then about 26 , you know , we'll see how that as far out in that helium . leaking out a range
Sanjiv Lamba: Thank you.
Jeffrey Zekauskas: Thank you.
Speaker #2: .
Sanjiv Lamba: Our next question comes from the line of Kevin McCarthy with Vertical Research Partners. Your line is open.
Operator: Our next question comes from the line of Kevin McCarthy with Vertical Research Partners. Your line is open.
Speaker #13: Thank you
Speaker #3: And our next
Speaker #3: Kevin, question comes. McCarthy with your line is Partners. Vertical open.
Kevin McCarthy: Yes, thank you and good morning. Sanjiv, would you comment on your US packaged gas business sales trends with regard to both gas and rent and hard goods? Just curious as to whether you're seeing any improvement on the leading hard goods side. And then more broadly, besides hard goods, are there any other businesses that you would tend to look to across Linde's portfolio that you would consider leading, maybe certain markets or even individual customers that have been useful leading indicators in the past?
Kevin McCarthy: Yes, thank you and good morning. Sanjiv, would you comment on your US packaged gas business sales trends with regard to both gas and rent and hard goods? Just curious as to whether you're seeing any improvement on the leading hard goods side. And then more broadly, besides hard goods, are there any other businesses that you would tend to look to across Linde's portfolio that you would consider leading, maybe certain markets or even individual customers that have been useful leading indicators in the past?
Speaker #14: Thank you . Yes . And good Sanjiv , would you . morning . your US packaged gas recovery . business sales regard trends with and rent goods ?
Speaker #14: Just as curious to
Speaker #14: Just as curious to hard you're seeing any improvement
Speaker #14: broadly then more , besides hard there any goods or are businesses tend to that you look would to Linda's portfolio whether that you would leading And ?
Speaker #14: Maybe , maybe certain markets or even as customers across that have useful , consider leading indicators in .
Sanjiv Lamba: Thanks, Kevin. I think I briefly alluded to this before. Let me kind of maybe provide a slightly more detailed view on this. The US packaged gas business, as you've rightly pointed out, Kevin, is a leading indicator that we watch closely. Within that, there are three separate elements that you can look at: the gas consumption, the consumption of consumable hard goods, and the consumption or purchase of hard goods automation equipment, right? Each one of them gives us a different perspective in terms of how we see US manufacturing more broadly playing out. What I'd say is the US hard goods automation equipment sales in Q4 were up again. I think we said that in prior quarters as well. We were seeing investment in hard goods automation, which usually has two potential outcomes.
Sanjiv Lamba: Thanks, Kevin. I think I briefly alluded to this before. Let me kind of maybe provide a slightly more detailed view on this. The US packaged gas business, as you've rightly pointed out, Kevin, is a leading indicator that we watch closely. Within that, there are three separate elements that you can look at: the gas consumption, the consumption of consumable hard goods, and the consumption or purchase of hard goods automation equipment, right? Each one of them gives us a different perspective in terms of how we see US manufacturing more broadly playing out. What I'd say is the US hard goods automation equipment sales in Q4 were up again. I think we said that in prior quarters as well. We were seeing investment in hard goods automation, which usually has two potential outcomes.
Speaker #1: Kevin . Thanks ,
Speaker #15: .
Speaker #1: alluded briefly So to this before . Let
Speaker #1: slightly more detailed view on this . So packaged gas business , you've pointed out , Kevin , is is a leading rightly indicator that as we watch the US been closely within there that are three separate elements that you can look at .
Speaker #1: slightly more detailed view on this . So packaged gas business , you've pointed out , Kevin , is is a leading rightly indicator that as we watch the US been closely within there that are three separate elements that you can look at . The the consumption , gas of hard .
Speaker #1: or consumption of hard purchase , automation Right . And each one of them gives us perspective goods we see us manufacturing more broadly .
Speaker #1: out And what , playing I'd say And is the equipment . , automation goods sales in the fourth quarter were up that in again .
Speaker #1: equipment So we were investment in hard goods , automation , but usually has two potential One , that outcomes . has a the order pickup in intake .
Sanjiv Lamba: One, that there is an expectation of a pickup in the order intake and therefore growth as a consequence of that. And along with that, that there is a shortage of skilled labor, and therefore automation becomes more attractive for the small to medium enterprises or even in some cases, large customers, which we'll talk about in a minute. So that is a good trend as things stand. I think we want to watch the next couple of months to see how that plays out. But an initial investment in automation equipment is a good sign. Having said that, on the consumables end, we do not see that optimism or that growth come through. Consumables are flat at best, maybe a little bit down, and gas is following a very similar pattern.
Sanjiv Lamba: One, that there is an expectation of a pickup in the order intake and therefore growth as a consequence of that. And along with that, that there is a shortage of skilled labor, and therefore automation becomes more attractive for the small to medium enterprises or even in some cases, large customers, which we'll talk about in a minute. So that is a good trend as things stand. I think we want to watch the next couple of months to see how that plays out. But an initial investment in automation equipment is a good sign. Having said that, on the consumables end, we do not see that optimism or that growth come through. Consumables are flat at best, maybe a little bit down, and gas is following a very similar pattern.
Speaker #1: And therefore expectation of growth . As a consequence of that . And with that , that there is a shortage of of therefore automation attractive becomes more to for the small medium along cases , large enterprises or even customers , which we'll talk about in a minute .
Speaker #1: So there is . As a good things think , you we want to watch the couple of months to see next how that out .
Speaker #1: plays But an stand , I investment in automation a good equipment is sign said . on the Having consumables that , end , optimism skilled or labor and growth come through .
Speaker #1: we Consumers are flat at best , maybe a down and following a very little bit trend similar gas is So I'd say to you , are people what is likely to come that some , maybe what I would call cautious optimism that some level of recovery preparing beyond where we are .
Speaker #1: we Consumers are flat at best , maybe a down and following a very little bit trend similar gas is So I'd say to you , are people what is likely to come that some , maybe what I would call cautious optimism that some level of recovery preparing beyond where we are today But but we aren't seeing actual that in just yet consumption .
Sanjiv Lamba: So I'd say to you, people are preparing for what is likely to come and have some maybe what I would call cautious optimism around growth in manufacturing and some level of recovery beyond where we are today. But we aren't seeing that in actual consumption just yet. So you have to hold your breath for a while. Now, talking about customers, one of the areas we look at quite carefully is automotive and large ag equipment. They're usually good indicators as to how we see manufacturing trends play out. And I think the feedback from those customers broadly tends to continue to be cautious, with an expectation that hopefully things will improve in the second half, but caution for now.
Sanjiv Lamba: So I'd say to you, people are preparing for what is likely to come and have some maybe what I would call cautious optimism around growth in manufacturing and some level of recovery beyond where we are today. But we aren't seeing that in actual consumption just yet. So you have to hold your breath for a while. Now, talking about customers, one of the areas we look at quite carefully is automotive and large ag equipment. They're usually good indicators as to how we see manufacturing trends play out. And I think the feedback from those customers broadly tends to continue to be cautious, with an expectation that hopefully things will improve in the second half, but caution for now.
Speaker #1: So you'll have to hold your breath for a while . Now , talking about that , know , of the one we look manufacturing and quite at is automotive one of the areas and large ag equipment and are usually good indicators as to how .
Speaker #1: see we trends out . play I think the feedback those And customers broadly tends to from cautious to be expectation that , you know .
Speaker #1: things will improve in the Hopefully caution for now . And said as I second half . But bit early in the for us know , a more give , year insightful or informed on expecting to play out .
Sanjiv Lamba: As I said before, a bit early in the year for us to give a more insightful or informed view on how we are expecting the markets to play out.
Sanjiv Lamba: As I said before, a bit early in the year for us to give a more insightful or informed view on how we are expecting the markets to play out.
Kevin McCarthy: Thank you for that.
Kevin McCarthy: Thank you for that.
Speaker #14: Thank you that for .
Sanjiv Lamba: Our next question comes from the line of Laurence Alexander with Jefferies. Your line is open.
Operator: Our next question comes from the line of Laurence Alexander with Jefferies. Your line is open.
Speaker #3: question next comes from the line of Laurence Alexander with Jefferies . Your line is open . And our
[Analyst] (Jefferies): Hi, this is Dan Rizzo from Jefferies. Thanks for taking my question. You mentioned during the commentary about doing some restructuring, cost-cutting. I was just wondering if that's addressing cyclical issues that can be kind of added back when things do ultimately turn, or if this is more of a structural, permanent changes that you're making in different regions based upon what you see over the long term.
Dan Rizzo: Hi, this is Dan Rizzo from Jefferies. Thanks for taking my question. You mentioned during the commentary about doing some restructuring, cost-cutting. I was just wondering if that's addressing cyclical issues that can be kind of added back when things do ultimately turn, or if this is more of a structural, permanent changes that you're making in different regions based upon what you see over the long term.
Speaker #16: is Dan Hi , this Rizwan for Laurence . Thanks my question . You for taking mentioned during the how we are commentary about about doing some some restructuring , cost I was wondering if that's like addressing cyclical that can be kind of added back when things do ultimately turn issues of a or if this is more structural , permanent that you're making in different
Speaker #16: cutting . over the long term based changes what you see
Matthew White: Hey, Dan, this is Matt. I can handle that one. Yeah, when we put it into restructuring, we view it as structural, right? We view this as changing our organization or changing how we're addressing our market in a structural way. The kind of cyclical that you refer to tends to be more just a function of our normal ongoing attrition, ebbing and flowing of our headcount. These restructuring charges we took are predominantly related to headcount options around the world. So this is more a function of that. The majority of it right now is in the engineering segment, given how we're navigating that business and organizing that business, given how we're looking at some of the third-party opportunities. So that's really how I would describe that, that this is not expected to come back. It is more a function of how we run our company.
Matthew White: Hey, Dan, this is Matt. I can handle that one. Yeah, when we put it into restructuring, we view it as structural, right? We view this as changing our organization or changing how we're addressing our market in a structural way. The kind of cyclical that you refer to tends to be more just a function of our normal ongoing attrition, ebbing and flowing of our headcount. These restructuring charges we took are predominantly related to headcount options around the world. So this is more a function of that. The majority of it right now is in the engineering segment, given how we're navigating that business and organizing that business, given how we're looking at some of the third-party opportunities. So that's really how I would describe that, that this is not expected to come back. It is more a function of how we run our company.
Speaker #2: Hey , Dan , handle that one . I can we put Yeah . it into When this is restructuring , we view it as structural , right ?
Speaker #2: We view changing this as our how we're addressing our market . And changing a structural way . The kind of organization or cyclical that you refer to more just a tends to be our normal function of , ebbing and of our flowing you attrition headcount .
Speaker #2: structural took our These are . predominantly related to We headcount charges actions around the world . So this is more a function of right majority of it that .
Speaker #2: Now as in engineering, given how segment we're navigating that, the business and organizing that business, given how of the third-party opportunities.
Speaker #2: So we're looking really how I that's that , that would this is not expected to describe come function of how our . It is more a we run at some
Speaker #2: So we're looking really how I that's that , that would this is not expected to describe come function of how our . It is more a we run at some back
[Analyst] (Jefferies): So, I guess, does that mean that there will be significant leverage when things do turn, though? Or do you have to, I guess I'm just wondering if you have to hire back.
Dan Rizzo: So, I guess, does that mean that there will be significant leverage when things do turn, though? Or do you have to, I guess I'm just wondering if you have to hire back.
Speaker #16: I guess , does that So there would be significant leverage when things do turn though mean that , or I mean , or do you have to I , I guess I'm just wondering if or .
Matthew White: Yeah, I mean, that is the expectation. I mean, look at 2025 as an example, and I'll just use SG&A as a proxy line to kind of understand that. Our SG&A during calendar year 2025 is up 3% year-over-year, right? And when you take the M&A portion, obviously, we acquired SG&A, and there is about a, I'd say, probably 0.5% or so of FX. It's just footing to zero on the table. But you're looking at probably 1.5%+ of that growth was just FX and acquired SG&A. So our underlying SG&A is only up 1% and change. Why? Well, you've had about a 3% or so merit inflation cycle, and that was mitigated against the actions we took back last year from October, coupled with some of the productivity initiatives.
Matthew White: Yeah, I mean, that is the expectation. I mean, look at 2025 as an example, and I'll just use SG&A as a proxy line to kind of understand that. Our SG&A during calendar year 2025 is up 3% year-over-year, right? And when you take the M&A portion, obviously, we acquired SG&A, and there is about a, I'd say, probably 0.5% or so of FX. It's just footing to zero on the table. But you're looking at probably 1.5%+ of that growth was just FX and acquired SG&A. So our underlying SG&A is only up 1% and change. Why? Well, you've had about a 3% or so merit inflation cycle, and that was mitigated against the actions we took back last year from October, coupled with some of the productivity initiatives.
Speaker #2: Yeah , I mean
Speaker #2: is the that that expectation . I mean , look , example . at 2025 as an And I'll just use hire back as a as proxy line a to kind look of that , you know , understand SG&A year calendar 2025 is up 3% year over right year , when you ?
Speaker #2: take portion , M&A obviously And the , we acquired and there SG&A during is about a I'd say probably a half percent FX .
Speaker #2: of It's just footing to zero on the on the table . But you're looking at probably or so percent growth one and a half FX .
Speaker #2: acquired just And SG&A . our of that underlying only up percent and a change . Well , Why ? know , about a you've plus 3% or so merit inflation had , you cycle .
Speaker #2: So was mitigated against the actions we took back year from last October , coupled with some of the productivity So this is kind of how we think about it , that get ahead of this .
Matthew White: So this is kind of how we need to think about it, that you have to get ahead of this. You have to get ahead of the inflation. You have to structure your organizations around the regions you operate in. And that's one of the, I'll say, attributes of this very local model is that we can quickly act in each individual region around what is occurring in that region without having any ramifications or impacts in other parts of the company because we do not have integrated supply chains in our company. They are standalone markets that are fully self-sufficient in each small geography they operate and allows them to adjust quickly to the conditions they're seeing. And you see that benefit in our cost stack.
Matthew White: So this is kind of how we need to think about it, that you have to get ahead of this. You have to get ahead of the inflation. You have to structure your organizations around the regions you operate in. And that's one of the, I'll say, attributes of this very local model is that we can quickly act in each individual region around what is occurring in that region without having any ramifications or impacts in other parts of the company because we do not have integrated supply chains in our company. They are standalone markets that are fully self-sufficient in each small geography they operate and allows them to adjust quickly to the conditions they're seeing. And you see that benefit in our cost stack.
Speaker #2: have to get inflation . You have to You structure your organizations around the regions you in . And that's ahead of the need to attributes of model is local very can in each quickly individual that we act around region occurring in that operate region without what is this or in other parts impacts company .
Speaker #2: having do of the not have supply integrated chains in our are standalone markets that company , they are fully in self-sufficient each small geography .
Speaker #2: They operate allows to , and it them adjust quickly to the conditions seeing . And you benefit see that they're cost .
Sanjiv Lamba: Matt, the only thing I'd add is what does happen is when there is a bit of volume tailwind, you get a pickup in volumes because of industrial activity. That leverage then flows through very quickly to the EPS. And I think that's what we were able to show in 2021. We always give that as a good example where volumes went up 7-8%, and we saw EPS grow up 30%. So maintaining that tight control on the cost structure and ensuring that we are well-positioned for any recovery as and when it happens, I think, has always held in good stead for us.
Sanjiv Lamba: Matt, the only thing I'd add is what does happen is when there is a bit of volume tailwind, you get a pickup in volumes because of industrial activity. That leverage then flows through very quickly to the EPS. And I think that's what we were able to show in 2021. We always give that as a good example where volumes went up 7-8%, and we saw EPS grow up 30%. So maintaining that tight control on the cost structure and ensuring that we are well-positioned for any recovery as and when it happens, I think, has always held in good stead for us.
Speaker #1: But the I'd add
Speaker #1: only thing
Speaker #1: what does stack happen is when there is of volume is get a pickup in volumes because of industrial activity . You know that leverage that flows through very to the EPs .
Speaker #1: And I think that's what we were able to show in 2021 . We always give that as a good example where quickly volumes went tailwind , you and we EPs grow up 30% .
Speaker #1: saw So in our that maintaining that tight control on the on the cost ensuring that we are well up 7 or 8% , any and positioned for recovery as and when happens , I think has always held good stead in us
[Analyst] (Jefferies): Thank you very much.
Dan Rizzo: Thank you very much.
Sanjiv Lamba: Our next question comes from the line of Eric Boyes with Evercore ISI. Your line is open. Eric, your line is live. Please check your mute button. Hearing no response, we will move to our next question. It comes from the line of Arun Viswanathan with RBC Capital Markets. Your line is open.
Operator: Our next question comes from the line of Eric Boyes with Evercore ISI. Your line is open. Eric, your line is live. Please check your mute button. Hearing no response, we will move to our next question. It comes from the line of Arun Viswanathan with RBC Capital Markets. Your line is open.
Speaker #1: .
Speaker #16: Thank you very
Speaker #16: much .
Speaker #3: And our next question
Speaker #3: And our next
Speaker #3: . Eric , your line is live . Please check your mute button boys And hearing no response , move to our we will next question .
Speaker #3: It comes from the line of Arun line of line is open Markets . Your .
Arun Viswanathan: Great. Thanks for taking my question. Hope you guys are well. I just wanted to, I guess, understand the EPS guidance just a little bit. I'm back in December. You guys had discussed the possibility of getting to 10%+. The guidance here is maybe slightly below that, and maybe that would be mostly attributed to the base business as maybe you discussed. But if you were to see a pathway back to that level, what would you think would really need to improve? Maybe Europe. Is there anything in the backlog that space or electronics that we could point to? Thanks a lot.
Arun Viswanathan: Great. Thanks for taking my question. Hope you guys are well. I just wanted to, I guess, understand the EPS guidance just a little bit. I'm back in December. You guys had discussed the possibility of getting to 10%+. The guidance here is maybe slightly below that, and maybe that would be mostly attributed to the base business as maybe you discussed. But if you were to see a pathway back to that level, what would you think would really need to improve? Maybe Europe. Is there anything in the backlog that space or electronics that we could point to? Thanks a lot.
Speaker #17: Thanks for Great . taking my question . Hope . I well just guess you guys are , understand I the EPs just a little bit wanted to .
Speaker #17: know , back You December , you in said , you discussed the the possibility getting to 10% plus the guidance here is maybe below that .
Speaker #17: And maybe most of that would be attributed to business, as we discussed. If you go back to that pathway level, what were, maybe, you think?
Speaker #17: You know , would really improve ? need to You know , , is there anything in the Europe maybe backlog that space or electronics that we could point to ?
Matthew White: Hey, Arun, it's Matt. Yeah, so we'll start with its guidance, and it's early in the year, as you know. So when you kind of think about the 6 to 9, I mean, I agree with you. The upper end of that range maybe catches the low 8 to 12 that we've laid out there, economic impact. So we know we've got room to improve. We know we've got opportunities that we need to pursue this year. But at this stage, I think it's appropriate for us to just remain guarded. I do feel better. The comps we have this year are definitely better than what we were facing this time last year on a year-over-year basis. And time will tell where we ultimately finish. But I can say that between the project backlog, between the acquisitions we've done, so the capital contribution of our algorithm, we feel quite good.
Matthew White: Hey, Arun, it's Matt. Yeah, so we'll start with its guidance, and it's early in the year, as you know. So when you kind of think about the 6 to 9, I mean, I agree with you. The upper end of that range maybe catches the low 8 to 12 that we've laid out there, economic impact. So we know we've got room to improve. We know we've got opportunities that we need to pursue this year. But at this stage, I think it's appropriate for us to just remain guarded. I do feel better. The comps we have this year are definitely better than what we were facing this time last year on a year-over-year basis. And time will tell where we ultimately finish. But I can say that between the project backlog, between the acquisitions we've done, so the capital contribution of our algorithm, we feel quite good.
Speaker #17: Thanks a lot
Speaker #17: . Arun , it's
Speaker #2: . Yeah . So we'll start its with guidance early in the year Matt , as you So when you kind of think about the 6 to 9 , I mean I agree with you , the , the upper that end of range captures low maybe 8 to 12 that we've laid out .
Speaker #2: Economic So we know we've got there room to impact . improve . We know got we've need to pursue that we this . But at this stage , I and it's guarded .
Speaker #2: You know , I do feel this better . remain year are The comps than what we were facing this time last year . On basis a year over .
Speaker #2: time will tell where And we ultimately finish . But I can say the project backlog , the we have between the acquisitions , we've year that , you done the , so the capital our contribution of algorithm , we feel quite good .
Matthew White: When you look at the management actions of price and productivity, and we took actions this quarter to better position us. Sanjiv mentioned, we continue to expect to price with inflation. And so from the elements of both management actions and capital contribution, we still feel quite strong about that algorithm, and we expect to deliver on the expected range. Time will tell where we finish, and time will tell what will happen on the macro piece. But we know our goal is to get that double-digit percent growth in long term, and we will get back to there.
Matthew White: When you look at the management actions of price and productivity, and we took actions this quarter to better position us. Sanjiv mentioned, we continue to expect to price with inflation. And so from the elements of both management actions and capital contribution, we still feel quite strong about that algorithm, and we expect to deliver on the expected range. Time will tell where we finish, and time will tell what will happen on the macro piece. But we know our goal is to get that double-digit percent growth in long term, and we will get back to there.
Speaker #2: When you look at the management actions of price and took and we quarter to this better position productivity , Sanjeev us . mentioned , you know , we we expect to price continue to with inflation from .
Speaker #2: The elements of both management actions and capital contribution, we still feel quite strong about that algorithm. And we expect to deliver on to the expected.
Speaker #2: Time will tell where we range finish and time will tell what happen will on the macro piece . So but our we know our get that double digit And and long percent growth you know , we will get .
Sanjiv Lamba: Arun, we thought a lot about how we should describe this guidance, and the words we used internally when we were discussing it are guarded, prudent, and I would say conservative, Matt?
Sanjiv Lamba: Arun, we thought a lot about how we should describe this guidance, and the words we used internally when we were discussing it are guarded, prudent, and I would say conservative, Matt?
Speaker #2: .
Speaker #1: We
Speaker #1: talked a lot about how we And should describe guidance words we and the internally when we were discussing it . guarded prudent . And
Speaker #1: this that .
Matthew White: Time will tell.
Matthew White: Time will tell.
[Analyst] (Jefferies): Thanks.
Arun Viswanathan: Thanks.
Sanjiv Lamba: That's the prudent piece.
Sanjiv Lamba: That's the prudent piece.
Speaker #2: tell
Speaker #2: .
Speaker #1: Thanks. Time will—that's the prudent, piece-conservative.
Sanjiv Lamba: Our next question comes from the line of Eric Boyes with Evercore ISI. Your line is open.
Operator: Our next question comes from the line of Eric Boyes with Evercore ISI. Your line is open.
Speaker #3: question comes And our from the line of next Eric Boyce Evercore ISI . Your with open .
[Analyst] (Evercore ISI): Thank you and good morning. Could you please provide a timeline update on when you anticipate your unit to start up at TSMC's Arizona Fab 2? And then could you remind on how gas intensity increases from Fab 1 to Fab 2 and what that means from a profitability standpoint for Linde? Thank you.
Eric Boyes: Thank you and good morning. Could you please provide a timeline update on when you anticipate your unit to start up at TSMC's Arizona Fab 2? And then could you remind on how gas intensity increases from Fab 1 to Fab 2 and what that means from a profitability standpoint for Linde? Thank you.
Speaker #18: Thank you . And good
Speaker #18: . Could you provide morning a timeline when you anticipate update on to start up at your unit TSMC ? Arizona Fab two , and then could you please remind us how intensity increases that from gas fab one to fab two and what that means from a profitability standpoint for Lindy ?
Sanjiv Lamba: So as you know, our plans for Fab 1 and 2 are in operation already. Fab 2, as you're aware probably from TSMC, is ramping up at their end, and obviously, we're there fully supporting them on that. So those assets are on the ground. They have been commissioned. They are in different stages of utilization. Fab 1 fully utilized. Fab 2 kind of ramping up exactly as planned. The next round of fabs is now under discussion and being worked through. And as you know, the yields that came out of the first couple of fabs positively surprised everybody. So the commitment to major investments in advanced nodes at Phoenix is strong, and with that comes higher gas intensity. I think, Juan, you've done a paper where you've done a lot of work around gas intensity. You should reach out, Eric, to Juan and have a chat with him.
Sanjiv Lamba: So as you know, our plans for Fab 1 and 2 are in operation already. Fab 2, as you're aware probably from TSMC, is ramping up at their end, and obviously, we're there fully supporting them on that. So those assets are on the ground. They have been commissioned. They are in different stages of utilization. Fab 1 fully utilized. Fab 2 kind of ramping up exactly as planned. The next round of fabs is now under discussion and being worked through. And as you know, the yields that came out of the first couple of fabs positively surprised everybody. So the commitment to major investments in advanced nodes at Phoenix is strong, and with that comes higher gas intensity. I think, Juan, you've done a paper where you've done a lot of work around gas intensity. You should reach out, Eric, to Juan and have a chat with him.
Speaker #18: Thank you line is
Speaker #1: as you know , know you So , our plans fab for one and two have are in already
Speaker #1: Fab two , . probably from you're aware ramping at their up TSMC is obviously And we're they're fully supporting them on that . So on the assets are They have been ground .
Speaker #1: those commissioned . They different in utilization . Fab stages of utilize fab two , you know , kind of ramping up exactly as planned of .
Speaker #1: under now discussion . . worked as you The know , And through . And being yields that came out of the first couple of fabs , positively everybody .
Speaker #1: So you know commitment the major investments in nodes at surprised advanced Phoenix is strong . And with that comes higher gas think I I think you've done intensity paper where you've around done a lot of work gas intensity .
Sanjiv Lamba: He'll show you some of the analysis we've done around gas intensity. Two things happen, right? Because we are going to advanced nodes, the intensity or the usage of gas goes up per node. But more importantly, we also see new gases being introduced and used in much bigger quantities. And I think all of that contributes then to the overall increase in gas intensity for these new fabs.
Sanjiv Lamba: He'll show you some of the analysis we've done around gas intensity. Two things happen, right? Because we are going to advanced nodes, the intensity or the usage of gas goes up per node. But more importantly, we also see new gases being introduced and used in much bigger quantities. And I think all of that contributes then to the overall increase in gas intensity for these new fabs.
Speaker #1: You should reach out, Eric, to Juan and have a chat—show you with him some of the analysis we've done around intensity.
Speaker #1: Both two things happen right ? Because we are going to surprised nodes . The intensity advance usage of gas up per node , but more importantly , we new gases being also see introduced and used in much bigger quantities .
Speaker #1: I think And all of that that to the overall increase in gas intensity for for these new fabs .
Sanjiv Lamba: Our final question comes from the line of Abigail Eberts with Wells Fargo. Your line is open.
Operator: Our final question comes from the line of Abigail Eberts with Wells Fargo. Your line is open.
Speaker #3: And our question comes from Abigail Ebertz the with Wells Fargo . Your line open is .
Abigail Eberts: Hi there. Good morning, and thank you for taking my question. I wanted to follow up on your walk around the world, and if I missed this, I apologize. But could you clarify your pricing expectations for Americas and APAC for the year?
Abigail Eberts: Hi there. Good morning, and thank you for taking my question. I wanted to follow up on your walk around the world, and if I missed this, I apologize. But could you clarify your pricing expectations for Americas and APAC for the year?
Speaker #19: and thank you for taking my Hi there . wanted to follow up on your walk around Good morning And if I missed this , I apologize , but pricing expectations for Americas year APAC for the
Sanjiv Lamba: The pricing expectations, Abigail, remain consistent with the view that we've always given, which is globally weighted CPI. We should be at around that. And I think consistently, we have, including for the last quarter, if you take out the impact of helium and China deflation weakness, we are seeing our businesses perform to that. That's a long-term trend. As you know, we've had positive pricing for 25 years, and we see that continuing for this year as well.
Sanjiv Lamba: The pricing expectations, Abigail, remain consistent with the view that we've always given, which is globally weighted CPI. We should be at around that. And I think consistently, we have, including for the last quarter, if you take out the impact of helium and China deflation weakness, we are seeing our businesses perform to that. That's a long-term trend. As you know, we've had positive pricing for 25 years, and we see that continuing for this year as well.
Speaker #19: ?
Speaker #1: expectations ? The Abigail , remain pricing with the view that we've always given , consistent which is globally weighted CPI . We should be at or that .
Speaker #1: think And consistently . We have last including for the quarter , if around take out the impact of helium and deflation China , weakness , you know , we are our seeing businesses perform to that .
Speaker #1: long That's a term trend . As you know , we've had pricing for 25 years , and we see that continuing for this year as well .
Abigail Eberts: Okay. Thank you.
Abigail Eberts: Okay. Thank you.
Sanjiv Lamba: That concludes our question-and-answer session. I would now like to turn the call back over to Mr. Juan Pelaez for any additional or closing remarks.
Speaker #19: Okay . and
Operator: That concludes our question-and-answer session. I would now like to turn the call back over to Mr. Juan Pelaez for any additional or closing remarks.
Speaker #19: .
Speaker #3: concludes our And question and that answer session . I would now turn the like to over to call back Mr. Juan Pelaez . For any additional or closing remarks .
Matthew White: Abby, thank you very much for hosting this call. Everyone online, we appreciate your participation. Have a great day.
Juan Pelaez: Abby, thank you very much for hosting this call. Everyone online, we appreciate your participation. Have a great day.
Speaker #15: thank you very much Abby , for this call . line . hosting Everyone in We appreciate your
Sanjiv Lamba: Ladies and gentlemen, that concludes today's call. We thank you for your participation, and you may now disconnect.
Speaker #15: participation . Have a great .
Operator: Ladies and gentlemen, that concludes today's call. We thank you for your participation, and you may now disconnect.
Speaker #15: .
Speaker #3: And gentlemen , call . concludes We that today's ladies and thank you participation . And you may now disconnect .
