Linde plc

Ladies and gentlemen, a good day and thank you for standing by. Welcome to the Lindy fourth quarter and full year 2024 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. After the speaker's presentation, there will be a question and answer session. And I would now like to hand the conference over to Mr. Juan Pelayas, Head of Investor Relations. Please go ahead, sir.

Abby, thank you. Good morning, everyone, and thanks for attending our 2024 fourth quarter earnings call and webcast. I'm Humphrey Dyes, head of investor relations, and I'm joined this morning by Sanjeev Bamba, chief executive officer, and Matt White, chief financial officer. Today's presentation materials are available on our website at lindy.com in the investor sections. 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 and 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 fourth quarter financial performance and 2025 outlook, after which we will wrap up with Q&A. Let me now turn the call over to Sanjeev.

Thanks, Juan, and good morning, everyone. 2024 was another successful year for the Lindy organization. I'd like to personally thank the 65,000 plus employees for their relentless drive to deliver shareholder value while they live our core values every day. This isn't something that happens overnight or can be copied or indeed driven top-down from a handful of individuals. Rather, it is a result stemming from decades-long culture, mindset, and operating rhythm. and it can best be exemplified by the results shown on slide three. From my perspective, there are four key categories that Lindy must excel at, day in and day out, to maintain a long-term industry-leading position. Of course, we must deliver on our key financial metrics and remain responsible stewards of our owners' capital. That's a given. But we have a sustainable leadership position For that and the long term, that requires continual investment in our people and surrounding communities, as well as doing our part to help improve the environment. Finally, we must position ourselves for the future to ensure resilient and continuous growth and improvement. We can never be complacent based on past performance. I want to start with our people and communities, because Lindy's success has always been and always will be attributed to our employees' ownership mentality and collective efforts. We continuously strive to be good corporate citizens in thousands of communities where we live and work. Also, having a safe and diverse workforce is a top priority in order to ensure Lindy's competitiveness for many years to come. And you can see the improvements we've made from an already leading position. More work is to be done, and I fully expect to leverage technology in that effort. But I am pleased to see the progress made to date. While people and communities are a priority, efforts towards ensuring a sustainable environment are becoming more challenging every day. I think it's fair to say we're seeing more extreme weather now than in prior years. And here at Lindy, we will continue to do our part to help the environment. Through an increased focus on low carbon power, Linde increased its active low carbon and renewable energy consumption by 19% year over year. In 2024, over 40% of our total power consumption is now low carbon based. These are just a few of the many accomplishments, and I want to encourage you to read our annual report for many more. Furthermore, It is rewarding to see our sustainability efforts being recognized by some of the most prestigious names, such as the Dow Jones, which included Lindy in its Sustainability World Index for the 22nd consecutive year. In addition, we pride ourselves in helping our customers avoid more than two times our CO2 emissions through the use of our products and services. But there is much more work ahead to achieve our ambitious sustainability goals. including reducing our greenhouse gas emissions 35% by 2035. Turning to financial performance, Lindsay once again led the industry across key metrics. 25.9% ROC. EBIT margins increased 190 basis points to 29.5%. EPS increasing 10% XFX and 7 billion of capital returned to shareholders. from the significant excess free cash flow. These are the best metrics in the industry, some by a wide margin. This provides us with a source of pride and ownership, but we also recognize this is the past. Valuations are derived from a combination of past performance and future expectations. So we must continuously position ourselves for future growth, regardless of the macroeconomic condition. Positioning for future starts with a concise strategy and a capital allocation policy. At Linde, we know that the investments we make and the ones we avoid are equally important because mistakes in this industry can have long-lasting consequences. This is why sticking to our core business while maintaining disciplined contract terms is critical to building safe, reliable, and profitable supply infrastructure. The year ended with more than $10 billion in backlog, including a record sale of gas backlog of $7 billion. Included in this is a $2-plus billion Dow win in Canada, which is a great example of a high-quality project in a core geography. This project not only has fixed payment structure with predicted returns, but materially improves our local supply density in a fast-growing region for clean energy. I fully expect to be announcing new projects and customers in the near future. But growing in industrial gases in more than just megaprojects, we have to continue keeping our eye on smaller opportunities, as well ensuring that they add attractive annuity-like growth. During 2024, we once again set a record for small on-site wins, signing 59 long-term agreements for a total of 64 plus, all of which will increase reliability and strengthen our network density. Acquisitions of small tuck-in packaged gas opportunities also remain an important part of synergized growth with 18 signed transactions with annualized revenues of approximately $200 million. All in, 2024 was another successful year, despite the many challenges. That being said, it's time to move forward and look ahead. All of you have seen the new earnings guidance for 2025, and therefore I believe it's important to reiterate the components of our longstanding EPS growth algorithm on slide four. For many years now, we've defined our EPS growth into three categories. of which both capital allocation and management actions are within our control. And the economy is not. Capital allocation represents contributions from a long-standing and stable capital management policy. The main elements include our contractual project backlog, share repurchases, small bolt-on acquisitions, and capital structure efficiencies generally achieved through interest and tax management. important to note that our backlog definition is unique in our industry as it only includes incremental growth from contractually committed customers with fixed payment elements and termination provisions to ensure a minimum return on capital while no other company follows the strict interpretation it certainly provides linda greater certainty of backlog eps contribution in any environment similarly The majority of acquisitions are justified on cost synergies only and therefore provide a high degree of confidence on capital return and thus EPS generation. Finally, share repurchases offer an attractive and flexible use of excess free cash flow as project startup and acquisition cadence will ebb and flow, enabling a highly consistent EPS contribution from overall capital allocation. All of these elements have historically contributed 4% to 6% EPS growth, and I feel confident this will continue for the years to come. Management actions represent the daily self-help initiatives our employees undertake to ensure growth, regardless of the macro climate. Digital solutions and AI are increasingly supporting productivity, price, and cost management, which are controllable initiatives deeply embedded into our culture and operating rhythm, and which allow us to grow earnings regardless of the economy. History has proven for these to be the largest compound value generators, as they are not directly correlated to overall economic activity. This combination of capital allocation and management actions is expected to deliver 10 plus percent EPS growth each year with margin expansion. and 2025 is no exception. With a pre- or post-merger, these two components have been the dominant drivers of our long-term double-digit EPS growth gaggle. While I remain confident in our ability to deliver on this 10%, we are constantly striving to find more opportunities to improve. Conversely, we cannot control the third category, which represents macroeconomic factors. For Lindy, these are two factors that matter the most, the foreign exchange rates and industrial production as a proxy for base volume trends. Recall that we are a US dollar functional company with approximately two-thirds of earnings denominated in foreign currencies and thus exposed to FX translation. Similarly, while our customers are often under long-term contracts with fixed facility fees, The incremental gas they consume is a function of their own production rates, which typically highly correlates to industrial demand. Hence why global IP is a generic proxy for our customer gas consumption or base volumes. The current 2025 guidance range assumes a 4% FX translation headwind, while the midpoint of the range assumes 0% IP growth environment. Overall, It's clear that the growth algorithm is well intact, but we have our work cut out regarding unfavorable FX translation. This does not come as a surprise, as you may recall from our statements last quarter and subsequent self-help actions that we initiated. Furthermore, we will continue to identify and execute additional management actions to mitigate macro weaknesses. Eventually, these economic headwinds will convert to tailwind. as they always do. And until then, you can be rest assured that the entire Lindy organization will be focused on creating shareholder value and maintaining a long-term industry leadership, no matter the environment. I'll turn the call over to Matt to walk through our financial results. Thanks, Sanjeev.