Linde plc

Ladies and gentlemen, good day and thank you for standing by. Welcome to Lindy's third quarter 2023 earnings teleconference and webcast. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. And 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.

Thanks, Abby, and thanks for pronouncing my name correctly. Good morning, everyone, and thank you for attending our 2023 Third Quarter Earnings Call and Webcast. I am Juan Fredaiz, Head of Investor Relations, and I'm joined this morning by Sanjit Lamba, Chief Executive Officer, and Matt White, Chief Financial Officer. Today's presentation materials are available on our website at lindy.com in the Investor section. Please read the forward-looking statement disclosure on page two of the slides and note that it applies to all statements made during this teleconference. The reconciliations of the adjusted numbers are in the appendix to this presentation. Sanjeev will provide some opening remarks, and then Matt will give an update on Lindy's third quarter financial performance and outlook, after which we will wrap up with Q&A. Let me now turn the call over to Sanjeev.

Thanks, Juan, and a very good morning, everyone. Lindy employees delivered another solid quarter despite the economic headwinds. Earnings per share grew 17%. Return on capital closed at 25.6%. Operating cash flow was $2.5 billion. And operating margins expanded 550 basis points, finishing at 28.3%. And we delivered these results while continuing to responsibly deploy capital for high-quality growth opportunities and consistent shareholder returns. This is what our owners expect. It's not new and not a surprise. Time and again, through recessions and global economic shocks, Linde has consistently delivered industry-leading results through a relentless productivity culture while increasing network density. And I see no reason why that won't continue going forward. In fact, rather than waste time trying to predict what will happen, we are constantly striving to perfect a model for all seasons. Here at Linde, We acknowledge the world is a volatile place. And as stewards of shareholder capital, we are focused on running an organization which can sustainably deliver on owner expectations. Quality earnings growth, leading return on capital, and strong cash generation are hallmarks of our history and will be integral to our future performance. I think it's important to remind investors of these key tenets at Lindy especially during uncertain times like today. The combination of inflation, rising interest rates, and geopolitical tension is curtailing risk appetite, and hence overall economic activity. However, I remain confident in Lindy's ability to weather any economic downturn based on the strength of our diverse portfolio and long-term contracts, which is further demonstrated on slide three. When you read the news or government statistics, I know it's hard to be bullish on the global economy. However, when looking at underlying trends by end market, we see a mixed picture, with some increasing while others are flat or slightly down. Overall, underlying sales were up 3%, with base volumes down low single-digit percent which was more than offset by pricing and contribution from project backlog. In other words, the Lindy operating model allows us to quickly adapt to maintain steady and compounding value creation regardless of the macro environment. The resilient consumer-related end markets, which represent about one-third of sales, saw solid growth in food and health care. but a mid-single-digit percent decrease in electronics. Now, all-site electronic volumes remain stable, with reductions in merchant and packaged gases primarily from rare gas sales in Asia. Based on customer feedback, I believe we'll begin seeing signs of recovery in the first half of 2024 due to growing AI demand and inventory levels stabilizing. Industrial-related markets make up the remaining two-thirds of sales. And similar to the other sectors, we're seeing mixed trends here. Manufacturing and chemicals and energy are both up, primarily led by the United States. We continue to see U.S. packaged gas volumes stable at a high watermark, including METFAP, as well as a recovery in Gulf Coast hydrogen pipeline volumes, which have carried into the fourth quarter as well. Conversely, metals end market volumes are down slightly from weaker economic conditions. Overall, higher prices and growth from contractual project backlog more than offset weaker base volumes. This is because our long-term customer contracts stabilize results through inflation adjustment and fixed payment clauses. Said differently, we have the right business model and operating rhythm to weather any storm. Looking ahead into the fourth quarter, the U.S. economy continues to navigate at high levels, with pretty much every end market expected to grow year on year and remain stable sequentially. China volumes are expected to remain flattish, even as manufacturing, chemicals and energy end markets may show a mild recovery, while steel and electronic volumes continue to remain flat. Regarding Europe, we have not yet seen an inflection point. So the expectation is that volumes will hold around the third quarter levels, X of normal seasonal impact. Despite the softer macro environment and higher interest rates, proposal activity continues to be robust, and our backlog has increased by 300 million to 8.1 billion, of which 4.5 billion are sale of gas projects. In addition, our clean energy projects continue to progress well as our customers remain committed to decarbonizing their assets. Finally, our priorities remain intact. Be best in class in safety, compliance, sustainability, and talent development while maintaining a high-performance culture which remains focused on delivering on our commitments. So although the global economy seems tepid, I can only tell you that Lindy will continue to deliver on its commitments. I will now turn the call over to Matt to walk you through the financial results.