Linde (LIN) Q1 2026 Earnings Call Transcript

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Date

Friday, May 1, 2026, at 9 a.m. ET

Call participants

• Chief Financial Officer — Matthew White
• Vice President, Investor Relations — Juan Pelaez

Takeaways

• EPS -- $4.33, representing a 10% increase; excluding currency, EPS grew 5%.
• Sales -- $8.8 billion, up 8% year over year, flat sequentially; foreign currency contributed a 5% tailwind and acquisitions 1% of this growth.
• Underlying Sales -- Increased 3%, comprised of 2% higher pricing and 1% volume growth.
• Operating Profit -- $2.6 billion, up 8% from the prior year; operating margin reached 30% and improved 50 basis points sequentially.
• Return on Capital -- 23.8%, sustaining Linde plc's capital discipline.
• Operating Cash Flow -- $2.2 billion, 4% higher, exhibiting first-half seasonality tied to payment timing.
• Free Cash Flow -- $900 million after $1.3 billion of capital expenditures, allocated mainly to dividends and share repurchases.
• Dividend -- Annual dividend raised by 7%, reflecting 33 consecutive years of increases with an average 13% growth rate.
• Share Repurchases -- $800 million of stock repurchased during the quarter.
• Project Backlog -- Ended at $7.1 billion after starting 10 sale-of-gas projects ($300 million investment) and signing 5 new projects ($100 million addition); higher backlog targeted by year end.
• Bolt-on Acquisitions -- Nine executed globally this quarter, primarily in the Americas, to support future EPS growth.
• Healthcare -- 16% of global sales; grew 1% with US home care flat due to recent policy but resilience in other geographies.
• Food and Beverage -- 9% of sales, up 5% on broad-based demand, especially from US beverage and food freezing in the Americas.
• Electronics -- Gained 10% largely on advanced chip investment in the US, China, and Korea; Linde plc investing over $1 billion to support ultra-high-purity fabs.
• Chemicals and Energy -- 22% of sales, increased 3%, led by growth in Americas and APAC, offsetting EMEA declines.
• Metals and Mining -- Grew 3%, entirely driven by the Americas; EMEA and APAC were flat.
• Manufacturing -- Increased 5%; aerospace contributed about half the growth, particularly from US space vehicle activities; remaining segments saw modest gains, mainly in the Americas.
• Helium Business -- Supply disruptions led to global shortages; Linde plc remains largely contracted and is prioritizing long-term agreements, anticipating continued price increases throughout the year.
• Guidance Update -- Q2 EPS expected at $4.40-$4.50 (8%-10% growth with 1% currency benefit, no midpoint economic improvement assumed). Full-year 2026 EPS guided to $17.60-$17.90 (7%-9% growth, including 1% currency, no implied helium upside).
• Dividend and Shareholder Return Model -- Capital allocation maintained between dividends, share repurchases, and reinvestment; described as consistent and "a hallmark at Linde plc."

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Risks

• Matthew White said, "EMEA continues to experience negative volumes primarily from on-site customers shifting production to more competitive assets outside Continental Europe," indicating persistent regional weakness and limited recovery.
• CFO White indicated, For the full year, we are updating to a new range of $17.60 to $17.90, or 7% to 9% growth. Like the second quarter, this includes a 1% currency tailwind, and assumes no economic improvement at the midpoint.
• Cost inflation, energy price volatility, and lingering industrial demand stagnation were referenced throughout, and "continued weak industrial activity including direct and indirect impacts from the Middle East conflict" were explicitly cited in EMEA.

Summary

Linde (NASDAQ:LIN) reported double-digit EPS growth and steady margins, while underlying sales, cash flows, and a large project backlog provided continued support for capital deployment. The earnings call clarified that price increases and disciplined capital allocation, rather than broad-based volume growth, were the primary EPS drivers this quarter. Management signaled no assumption of global economic improvement in the 2026 guidance, citing ongoing weakness in EMEA and the impact of geopolitical volatility, but expressed high confidence in backlog expansion and future contract wins for electronics, helium, and commercial space projects.

• Management increased confidence in the bottom end of full-year guidance, raising it by $0.20, but left the upper bound unchanged due to geopolitical uncertainties.
• "We finished the quarter slightly above the top end of the guidance range due to better effects"—currency was cited as a primary reason, not structural operational outperformance.
• The call highlighted ongoing seasonality in cash flows with no anticipated deviation from prior years in timing or magnitude.
• Helium sales are 85%-90% contractually locked, limiting spot exposure and creating incremental pricing opportunities given current global shortages.
• CFO White said, On a full-year basis, we feel pretty confident we are not only going to raise margins for the full year 2026, but probably at the upper end or even above our traditional range that we tend to talk about of 40 to 60 basis points.
• Expected Americas performance continues to lead global volumes, while EMEA remains a laggard, and APAC is slightly positive driven by China.

Industry glossary

• Sale-of-gas backlog: Value of signed long-term contracts for delivery of industrial gases via new or existing capacity, not yet producing revenue until project startup.
• ATR: Autothermal Reformer, used to produce hydrogen from natural gas in large-scale industrial projects.
• TNS: Terminal Nitrogen Sequestration, Linde plc's terminology for hydrogen purification and CO₂ sequestration systems in blue hydrogen projects.
• EMEA: Europe, Middle East, and Africa region.
• Base CapEx: Recurring investment in maintenance and smaller growth projects outside the defined project backlog.

Full Conference Call Transcript

Matthew White: Thanks, Juan. Good morning, everyone. The Linde plc team delivered another solid quarter against a challenging economic backdrop. EPS of $4.33 grew 10%. Operating margins reached 30%. And return on capital remained at a healthy level of 24%. The high-quality compounding growth of our company no matter what the environment is a testament to the unwavering commitment of all 65 employees to create shareholder value. And given the recent geopolitical volatility, it may be helpful to provide a brief update by end market, which you can find on Slide 3. As a reminder, the top half shows consumer-related end markets, at approximately one third of sales, while the bottom half represents industrial-related markets for the remaining two thirds.

The growth rates reflect price and volume but exclude FX or M&A. Starting at the top, health care at 16% of global sales grew 1% year-over-year. We provide gases, equipment, and services to medical institutions such as hospitals, and direct to the home. Normally, a resilient market like this should grow in line with demographic trends, or low- to mid-single-digit percent. And while we are experiencing those growth rates in most countries, the US home care business has been relatively flat. In late 2025, a new US health care policy resulted in less services for a specific piece of equipment which is reflected in the current run rate and will continue for the next several quarters.

Aside from this particular issue, the rest of health care is performing as anticipated while providing a resilient balance to the more cyclical markets. At 9% of sales, food and beverage grew 5% from broad-based strength. The largest contributor is the US beverage business, where we continue to see increased customer need for new services and applications. In addition, traditional bottling and food freezing growth remain quite strong, especially in North and South America. Overall, food and beverage has grown mid- to high-single digits over the last several years, and is expected to remain a steady contributor. Electronics increased the most at 10%, primarily driven by continued investments in advanced chips to support AI.

The growth is heavily weighted toward the US, China, and Korea, since our substantial electronic sales in Taiwan are excluded as a nonconsolidated 50% joint venture. As both the scale and industrial gas intensity continue to expand in this sector, Linde plc remains well positioned. We are currently investing more than $1 billion of the project backlog for ultra-high-purity plants, which will support the most advanced fabs in the world. And there is more to come, as we have a high degree of confidence in adding substantial new projects to the backlog this year.

Moving to industrial end markets, you can see growth across the board, which supports the notion we are starting to lap more difficult comps after years of stagnant industrial activity. Chemicals and energy, representing 22% of sales, increased 3% as growth in Americas and APAC more than offset contractions in EMEA. Americas was driven by higher activity hydrogen and nitrogen in US Gold Coast refining, and Latin American upstream energy. While APAC increases primarily came from our recent investments in the Jurong Island integrated complex. EMEA continues to experience negative volumes primarily from on-site customers shifting production to more competitive assets outside Continental Europe. It remains to be seen what the longer-term effects could be for the Middle East conflict.

But so far, it appears activity is relocating to more feedstock-advantaged assets in Americas and, to a lesser extent, APAC. And while we are on this topic, think it is worth providing a brief update on our helium business. Helium was in oversupply for a few years, 2025. But recent events have created acute global shortages. Linde plc sources from a very broad based since supply chain constraints are a recurring challenge. Therefore, we are currently well positioned despite some of the recent outages. Given our business is largely contracted, the priority is to meet existing customer commitments. After that, we still anticipate excess molecules allowing us to pursue new, multiyear contracts with high-quality customers.

Therefore, I do not anticipate significant spot sales this year since we are focused on securing long-term agreements. Returning to the end market slide, metals and mining grew 3%. Similar to chemicals and energy, the entire growth is coming from Americas, as both APAC and EMEA are relatively flat. A combination of better industrial activity and protectionist policies from US to Latin America have supported local metals production over imports. Furthermore, we are seeing renewed competitiveness from customers of more gas-intensive integrated blast furnaces when compared to EAS, primarily from constraints associated with cost-effective SCRAM, and electrical infrastructure. The last industrial end market of manufacturing grew 5%.

Half of the increase came from aerospace activity in the United States, primarily supporting space vehicle production, testing, and launch. As this venues continues to see strong double-digit percent growth, we will isolate aerospace as a separate end market when it consistently exceeds 5% or more of global sales, which will be a function of the frequencies, size, and propellant type of future space launch. Excluding aerospace, the remaining end market grew low single-digit percent, as strength across the Americas, especially in the US, was partially offset by continued weakness in EMEA, while APAC slightly improved over last year.

Within the US, packaged gases grew mid-single digit and hard goods double-digit percent, which aligns with the recent favorable US production statistics. In Hargus, growth was balanced between consumables and equipment, and driven by energy, construction, and general metal fabrication. EMEA activity was softer, from continued weak industrial activity including direct and indirect impacts from the Middle East conflict. And in APAC, we experienced moderate volume growth driven by China and Southeast Asia. In summary, the portfolio is doing what one would expect. As geopolitical events shift production around the world and secular growth trends drive concentrated investments, our business units continue to adapt and capture their fair share.

And while no one can predict how the next few months will play out, let alone the next few years, I am confident the lending team can navigate the volatility and continue to deliver high-quality compounding growth. And I will turn the call over to Juan to walk through the financial results.

Juan Pelaez: Matt, thank you. Please turn to Slide 4 for our consolidated results. Sales of $8.8 billion were up 8% year-over-year, and flat sequentially. Versus prior year, foreign currency was a 5% tailwind driven primarily by the strengthening of the euro. Net acquisitions contributed 1% from attractive roll-ups we have been executing globally. This quarter alone, we signed nine more bolt-on acquisitions. Primarily in the Americas. Which will continue adding to future EPS growth. Underlying sales increased 3% versus last year, 2% higher pricing, and 1% higher volumes. Volume increase was driven by the project start-ups, primarily in APAC.

Both Americas and APAC continue to see base volume growth but it was mostly offset by EMEA, due to the weaker economic activity in the region. Sequentially, underlying sales were flat as higher pricing was offset by lower volumes, mainly in APAC and EMEA. The lower volumes were driven by seasonal factors, especially in APAC, followed by EMEA where we continue experiencing weaker trends in the industrial end markets. Price continues to drive underlying sales growth, highly correlated to local inflation levels. Recall that actual price increases are higher for the combined packaged and merchant gases, which represent roughly two thirds of total sales.

Operating profit of $2.6 billion increased 8% year-over-year and resulted in a margin of 30%, similar to prior year. Sequentially, margins improved 50 basis points, driven by management actions and pricing and cost productivity that more than compensated for seasonal volume declines. We expect management actions to continue to support profit growth and margin expansion for 2026. EPS of $4.33 was 10% over prior year, or 5% when excluding the effects of currency translation. We finished the quarter slightly above the top end of the guidance range due to better effects as the business performed as anticipated, considering the many challenges globally. Operating cash flow was $2.2 billion, 4% higher than prior year.

Capital expenditures were $1.3 billion, and as a result, our free cash flow was $900 million, which we used primarily to pay dividends and repurchase shares. The CapEx of $1.3 billion was roughly split between base CapEx and project backlog. Have in mind that base CapEx is primarily maintenance and all other growth investments not meeting our stringent backlog definition, for example, current investments to serve commercial space. In this quarter, we started up 10 projects from the sale-of-gas backlog, mostly in Americas and APAC, with investments of approximately $300 million. Furthermore, we signed five new projects that added $100 million to the sale-of-gas backlog, which ended the quarter at $7.1 billion.

Industry-leading return on capital ended the quarter at 23.8%, a reflection of capital discipline, consistent earnings growth, and good backlog execution. Slide 5 provides further details on quarterly management. The operating cash flow trend can be seen to the left, with the most recent quarter of $2.2 billion. Note, the first half of the year is weaker due to the seasonality of cash payment timing for interest, taxes, and incentives. For 2026, we anticipate a similar trend as last year. To the right of the slide, you will find a pie chart that demonstrates the balance across investing into the business and returning capital to shareholders.

Disciplined capital allocation is a hallmark at Linde plc and is something that differentiates us from others. During the quarter, we raised the annual dividend by 7%, making it 33 consecutive years of dividend growth with an average growth rate of 13%. We also repurchased $800 million of stock during the quarter, while reinvesting almost $1.5 billion into the business. Our cap allocation model remains consistent across all environments. In periods of uncertainty and volatility like today, a fortress balance sheet is critical, not only to maintain stability, but also to capitalize on growth and share repurchase opportunities as they arise. Thank you. I'll now turn the call over to Matt, who will wrap up with the guidance update.

Matthew White: Slide 6 provides the updated 2026 guidance. Starting with the second quarter, we anticipate EPS in the range of $4.40 to $4.50, or 8% to 10% growth. This includes a 1% currency benefit but, consistent with prior quarters, assumes no economic improvement at the midpoint. For the full year, we are updating to a new range of $17.60 to $17.90, or 7% to 9% growth. Like the second quarter, this includes a 1% currency tailwind, and assumes no economic improvement at the midpoint. Also note, both ranges do not include any improvements in the helium business versus the February guidance. So any incremental volumes or price would be upside.

And when compared to the prior guidance, we raised the bottom by $0.20 from increased confidence in the overall business resiliency. However, we left the top at $17.90 because it is still early to signal increased optimism. There are a lot of things happening in the world right now. And I would like a few more months before considering a top-end raise. Overall, we had a decent start to the year, but remain guarded until we see more clarity on current geopolitical events. We will now open the call for questions.

Operator: Thank you. And we will now begin the question and answer session. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. 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. Again, it is 1 to join the queue. And our first question comes from the line of Laurent Favre with BNP Paribas. Your line is open.

Laurent Favre: Yes. Good morning, guys. Thank you. My first question is on margins. You mentioned a strong improvement in the Americas, and I was wondering if you could talk about, I guess, the big moving parts of why, while Europe was flat, Asia down. Is it helium? Is it the rapid cost inflation in March which created the temporary squeeze? Any help there would be very helpful. And as a follow-up, you mentioned that you would disclose spaces when you get to 5% of the group, which is about $1.7 billion. And I think recently or on the prior call, you mentioned that you thought sales in commercial space would get to about $1 billion by the end of the decade.

So I am just wondering, I mean, are you now thinking that we may get to $1.7 billion by the end of the decade? It is a big change.

Matthew White: Sure, Laurent. I'll start with, and we said this last time, but I just want to reiterate it again this time. On a full-year basis, we feel pretty confident we are not only going to raise margins for the full year 2026, but probably at the upper end or even above our traditional range that we tend to talk about of 40 to 60 basis points. Now stating that on the full year, you are always going to have some moving parts within the quarters. I think when you think about Europe, clearly, the volume is a bit of a drag.

You know, I think within EMEA as a whole, we mentioned on the call between a combination of the overall weaker industrial environment, weaker chemicals environment, add to it both direct and indirect impacts from the current Middle East conflict, you know, we are just not seeing the volume recovery there. But I could tell you we are not happy with the performance. The business team is taking actions to improve that. They know that. So I expect to see some improvements there in Europe. With APAC, you know, we did mention on the backup slides, we had about half of the sales growth was a sale of equipment.

But, actually, it is equipment that is connected to long-term merchant contracts and electronics. So that does come with future contracted merchant sales. But that will tend to be a little bit lower margin on average. It is a kind of a one-off. But also, as you know, Q1 is traditionally weaker in APAC just given some of the seasonality effects. So I expect APAC to kind of get back up to the 29-type percent margins we saw year as the team there continues to work towards improving that. So some of it is timing. Some of it is just a little bit of some effects on the volume.

But, on the full year, we fully expect to not only raise margins, but probably the top end or above. And, again, this is all ex pass-through, up or down, as you know, which is just more optics on the margin and no real effect of profit dollars. So, Laurent, I mean, I'll start with look. We feel very good about our positioning to support the space economy as that develops. Clearly, in the US, you are seeing that much more rapidly with the private commercial space sector. But even across outside the US, we are definitely seeing acceleration in those efforts. Controlling the customer, that is going to be their determination on launch.

But it is like I mentioned on the call, it is going to be a function of frequency, size, and propellant type. And what that means, you know, I think frequency is self-evident, how many launches occur. With size, it could be dramatically different. Much larger rockets and much larger booster systems can use orders of magnitude higher of propellant. As you can imagine, something, for example, the largest rockets out there versus smaller ones, you could see 10x difference on fuel and propellant.

And then the fuel or propellant type is important because while we supply oxygen for the oxidizer and nitrogen for densification, there are really three types today you will see, which is either kerosene, methane, or hydrogen. Obviously, we supply hydrogen. We do not supply the other two. We would do only sale of equipment for things like LNG. And so if you do see more hydrogen-based rockets, that could also accelerate the growth for us depending on the fuel type used. So we feel pretty good about it. You look at the ambition on getting satellites and constellations in space today.

You look at the existing population and what needs to be replaced in low Earth orbit roughly every five years. I think it continues to bode well for launch. And not only the major players, but there is more room for maybe some new players that can be supporting the demand out there to get more constellations in space. So we will see where it ends up. I think it will all be a function of the launch cadence. But we feel quite good about our positioning to supply that when it happens.

Operator: And our next question comes from the line of Patrick Cunningham with Citi. Your line is open.

Patrick Cunningham: Hi, good morning. Thanks for taking my question. I guess, first, as you think of maybe the longer-term implications of this crisis, it seems like there is probably a heightened focus on energy security, deglobalization. So I am curious as to how you are thinking about the potential for how potential conventional energy and energy transition projects should trend as a result? Got it. And just on European, you know, sort of outlook, how should we think about on-site volumes and potential earnings upside for the balance of the year? I think despite some of the feedstock and energy challenges, we have heard some more advantaged or flexible refining and pet chem assets running a bit harder sort of month-to-date.

So how do you square that with sort of the outlook? What are sort of the puts and takes in terms of mix there as well?

Matthew White: Yes. Thanks, Patrick. I mean, the natural reaction is exactly like you stated. Right? Energy independence will be more accelerated. You know, one can argue we have already been deglobalizing as a global economy and this may have accelerated some of that. But energy security continues to get a lot of highlight and spotlight when you see these supply-type shocks that occur. But my opinion, ultimately, it still comes down to economics and ability. So while renewable energy will continue to be an area of high interest, it is still going to require government intervention. It will require some support, sponsorship, potentially some kind of subsidies as we have seen in certain geographies.

And so I think without that, it is hard to see that happen on its own as we have seen. But, time will tell. I think as far as other hydrocarbons, I absolutely believe you will see more of that. You know, clearly, with other LNG and areas that are probably less of concern, countries, you could see areas like oil sands of Canada become more interesting. Again, just given that the exploration risk is almost nonexistent. They know the product is there. It is just more of a logistics challenge to get it seaborne or to get it, you know, piped to where it is needed.

So I just think that some of the more traditional areas will get another hard look given the uncertainties in the hydrocarbon space. I do think you will get renewed interest in renewables, but, again, without the support of government to help that on everything from right of ways to land to permitting to bridging some of the economics, it will be hard to see that accelerate at a clip that people want it to. I think we do have some on-site that are running well that you could argue are state champions or regional champions. But on the flip side, we have definitely seen some shift production. Right?

And they are shifting into some of the assets we supply in other geographies, primarily in Americas. You know, I do think part of it also in Europe right now, in my opinion, you have a bit of a challenge with some of the uncertainties, right, around energy policy, around some of the environmental policy. Clearly, there is a lot of imports and not just on the base material sides, but on the finished goods sides as well. And so at this point, it is hard to see how all of those factors will create any significant change without some catalyst. You know?

And whether that catalyst is some type of restrictive import policy or more clarity on the environmental policy, clearly, with the IAA, that could help. I think it just needs that money needs to find its way on the ground. If it does, that could help turn some of that around. So that is, to me, what we just need to see. If we see a catalyst there of some significant type, it should help. And it could be anywhere from maybe some import restrictions to the IAA hitting the ground. But aside from that, it is hard to see a major shift.

Operator: And our next question comes from the line of Vincent Andrews with Morgan Stanley. Your line is open.

Vincent Andrews: Thank you, good morning. Matt, circling back on the space side of the equation and the idea of getting to that 5% of sales. Do you have the capacity you need to get there, or should we be anticipating some type of capacity increase, maybe it is in different geographies? And would you do that in concert with customers, or would you do that on your own and make it more of a merchant business? How should we be thinking about it?

Matthew White: Yeah. Sure. I think it is really in concert with customers. My opinion, you have several launch providers that are doing a variety of different engine testing, you know, that could do static testing, gimbal testing, whatever they are doing. And the locations they want to do that could very well be different than where their pad is where they will launch. Once they start migrating to more frequent launches, which can migrate from, you know, wet dress rehearsals all the way to full launch, you are going to want to make sure logistically you are as close to the pad as you can be.

So from my perspective, you know, we are working with the major launch providers and also a lot of the up-and-coming providers to make sure that we have the capacity and the contractual relationships to support them and their ambition. And the way it kind of works is, you know, in the early stages, you are probably going to do longer logistics hauls when it is more infrequent and intermittent. And then as they get on to a better cadence, then you start talking about new requirements contracts in supporting a more stable launch cycle that you put closer. And so you eliminate the logistics costs, which obviously makes their costs lower on the propellant. So it is a combination.

It will be sale of gas. It also could be some sale of plant. We do both. We support. It is very similar to what you would see in the large on-site where at times we have sold plants and sell a gas, and we would literally run the system of all the plants. So I think that is what you are seeing. And as you can imagine, there are some very specific areas where the launch sites are concentrated, given FAA regs and what you need to do around that for the airspace.

And so that is where we have a very strong capacity today, and we are working to secure more contracts with our customers for the future launch needs.

Operator: And our next question comes from the line of Duffy Fischer with Goldman Sachs. Your line is open.

Duffy Fischer: Yes. Good morning, guys. By far, the most incoming questions I am getting on you guys is around helium. And I know you guys talk about it being kind of a small part of your business, but in the last supply shock we had with Russia, you did see pricing start to roll into some of the contractual business. I guess, how do you see this supply shock playing out differently than what the Russian supply shock did? And how long would the strait have to be closed before you would start to see some of that pricing roll through your contractual business?

Matthew White: Sure, Duffy. Yeah. Maybe I can level set it with, you know, what are we seeing in helium in the first quarter? So I'll start with our helium business depending on the time, we are anywhere from 85% to 90% contracted on our customer base. So that is kind of a starting point. And when I look at Q1 year-over-year, our global helium sales for the most part were roughly flat. And what we saw was a couple percentage decline in pricing year-on-year and a couple percentage increase on volumes year-on-year. Now as you know, with the Iranian conflict, it sort of happened two thirds into the quarter.

So one can roughly argue you had kind of two months before and one month after, based on the date. And what we saw, we have been seeing the pricing rise on the average pricing. So even though we are a few percent below, pre and post that, there is a difference. And likely, that price will continue to go up and roll its way through. I fully would anticipate that to happen throughout the year. Separately, our volumes are up, and we have actually already secured some long-term agreements. I fully expect we will secure more long-term agreements. That is our priority. And that is how I would see that play out.

Now when you think about the helium situation, you have two sort of distinct issues happening at once. You obviously have the strayed over moose with Cutter and their inability to get product out and also the question of how much capacity is out for multi years based on damage. Separate and distinct, you have this Russian issue going on, which is probably a little more political in nature. We do not take Russian supplies, as you can imagine, but that is having an effect primarily on the Chinese market. That one could fix itself much quicker, as you could imagine. And so that one, we will see how long that lasts.

But I think, either way, you know, the way we build the guidance just did not want to take a view either way. We just left it as we had it. But when opportunity presents itself both on pricing and volume, that will be incremental. And that is something we will get above how this is guided today.

Operator: And our next question comes from the line of David Begleiter with Deutsche Bank. Your line is open.

David Begleiter: Matt, on electronics, I know you are expecting a couple of large contracts this year. Are they still in progress for 2026? And just on Woodside, there has been some confusion, some conflicting news stories. Can you level set us as to where you stand on that project and what is embedded in 2026 guidance?

Matthew White: Yeah, David. So consistent with how the prepared remarks, we have a pretty high degree of confidence that we will be announcing some here shortly. And when I think about the project backlog itself for sale of gas, we are sitting a little over $7 billion right now. And I would look to these being added. And based on some timing of some other projects, I would fully expect us to have a higher backlog by end of year based on this. Higher than the $7 billion and could potentially have an eight handle on it, based on this. So we feel pretty good about that.

And that is something I expect in a few months we will be able to lay out there. Sure. Yeah. I think, David, you may recall in prior conversations, we described this project and other very, very large projects like it. They tend to phase in how they start up. You will start up pieces and phases. And, originally, our expectations were that we would be bringing nitrogen on mid this year, and then the ATR and what is called the TNS for the sequestration back end of this year. And the reason was so they could make gray hydrogen as soon as possible, and then convert it to blue by end of year.

And on the nitrogen, we still fully expect that. So that would be a pro rata, so to speak, startup on the backlog this quarter. But on the ATR and the TNS, that has slipped a few months into essentially Q1 of next year. You know, the construction and subcontractor environment in the US Gold Coast remains challenging. So and we have had some delays there. But I rest assured the team is 100% focused on this to get this up as fast, as safe, and as reliably as possible. So that is our focus, but this slip has caused a little bit of that.

So my expectation in that project is you will have a small portion contributing to the startup this year through the atmospheric side of it. And then the hydrogen and TNS side will kick into probably Q1 of next year.

Operator: And our next question comes from the line of Josh Spector with UBS. Your line is open.

Josh Spector: Yes. Hi. Good morning. I was wondering if you could talk about the overall volume landscape across kind of the two major areas here between Asia and then Europe and the Americas. I mean, understanding your guidance is kind of no economic improvement, but just the geographic location of your assets relative to where there is disruption, it would seem like there is probably some volume benefits on the Americas and Europe side versus Asia. I would be curious, one, is that right, or is there more disruption in Asia that makes it kind of even?

Then also, if you can comment just in your North America specifically, are you seeing any kind of benefits from what we have seen from positive PMIs the last few months? Thanks. If I could just also quickly clarify a prior question. Is that when you have talked about commercial space getting to $1 billion, my understanding is that was more commercial space launch. You have another $600 million plus in commercial aero that is more of the coatings business. So your prior comments were more that maybe you get to that 5% in 2030 time frame maybe. And then maybe your comments today about some of the disclosures, maybe you can get there sooner than expected.

Is that the right interpretation, or do I have it wrong?

Matthew White: Yeah, Josh. So let me start with the first part. Definitely, we are seeing improvements in Americas. On the dislocation or shifting of product, we are seeing some contraction in EMEA. And both Continental Europe. Now we have a very, very small Middle East business, but as you can imagine, that is most impacted as a percentage basis. But Continental Europe itself, we also saw some drag there. And then APAC for us is relatively neutral to slightly positive. So when you kind of break those three down, in Americas, as I mentioned on the prepared remarks, we are seeing not only benefits in the US Gulf Coast refining.

I mean, you think about refining in the US Gulf Coast, you tend to have very high Nelson complexity. You have ability to use a variety of slates of crude. And so given where the three one spreads have gone, given their ability to manage some of the crude spread, I think they are in a very, very strong position. And a lot of their product is supplied via the continent, and so they can take advantage of that, and we have seen that. We have also seen Latin American upstream improvements, given the price of seaborne Brent. It just makes it more attractive for them to produce. So we have clearly seen that.

In EMEA, you have seen, as we mentioned, some of the chemicals was one of our weaker performing chemicals and energy, as we have seen some reduced volumes on that front. APAC, you know, I think with APAC, there is probably it is a tale of two stories in the sense that, you know, certain countries are very negatively impacted, but we really do not supply them. When you think about Japan or certain industrial markets maybe in Korea, where they rely on seaborne delivery for some of their hydrocarbon chains, that is very negatively affected. Right? Whether it is NASA or LNG or oil. But we are really not supplying many of those. We have no presence in Japan.

On the flip side, coal-to-x, you know, coal to chemicals or coal to something, in China is actually performing better. And we are seeing that. We have several customers that are c-to-x customers within China. They do have an advantage in this scenario. So the simple way I think about it is, you know, if your feedstock is coming on a ship, it is probably a tough scenario for you. But if it is land-based, right, either a pipeline or maybe even a rail car, you are probably in a little bit better position. And that is kind of how I would say we are seeing it play out today. As far as the PMI, yeah.

That was kind of per the prepared remarks. You know, our hard goods business is up double-digit percent right now. The US package business. Our packaged gases are up mid-single digit. And, really, where we are seeing that strength is on some of the construction energy side, which you can imagine plays a little bit to some of the hyperscaler constructions and things you are seeing on that front. And so I think that continues to be good. Metal fabrication continues to be strong. So we have really seen that pickup across. And then on the hard goods, it is really split between consumables and equipment, which is a healthy split.

I think you are absolutely seeing that positive benefit from the US PMI prints. No. I think you are right, Josh. I mean, look. I have used the word aviation within aerospace. And, yes, aviation is a very different animal. That is for primarily jet engines. That business is doing quite well. Addition. But you know, the one that is always the same, never give a number in a year. Right? But I think we put something out there to give us enough room to do it.

But we feel quite good on not just our propellant launch infrastructure and capability, but even when you get to things like electric propulsion, for positioning of space vehicles on things like xenon, krypton, argon. And so when you add all the opportunities together, yeah, I think feel pretty good about our ability to grow this business quite well. And, really, like I said, it will just be a function of the space line. But you are right that any of those numbers fully exclude aviation or anything to do with land-based pieces around jets or jet engines.

Operator: And our next question comes from the line of Matthew DeYoe with Bank of America. Your line is open.

Matthew DeYoe: Morning. European energy prices clearly up from pre-conflict levels, and I know it gets passed through on-site. But how are you managing market, merchant and package pricing? Is this going to be something where you go out with structural price or you surcharge? Is it not enough inflation yet to be pushing price more in Europe than normal? And if you are, what should we think about as being kind of the year-over-year price traction for the EMEA market come, like, April?

Matthew White: So, Matt, the way to think about it is, is it a sustained increase in energy, or is it a volatile up and down? Right now, so far, it has been volatile up and down. When it is volatile up and down, it is surcharging. That goes up. That goes down. And that is what we are seeing. When you see a sustained long range, it eventually then it becomes price. And it starts to work its way into the overall inflation of the market. You know, 2021 was an example—2022, I should say. In early 2022, as that evolved throughout the year, you saw a more sustained impact to inflation that worked its way through the entire economy.

It started as surcharges. It eventually became price. Right now, it is just surcharges. But if it does stay sustained and you start to see it show up in a lot of the major basic inflation metrics, then it does find its way in the price. That is the way I would characterize it today, and time will tell how that plays out.

Operator: And our next question comes from the line of Michael Sison with Wells Fargo. Your line is open.

Michael Sison: Hey, guys. Good morning. You know, this, I guess it is going to be, what, the third or fourth year of no economic improvement for industrial demand. I cannot imagine the Iran conflict is going to help that move in the right direction. So just curious, what do you think this sort of needs to happen as it seems like overall, there has been some impairment for industrials? And what do you think needs to happen to get that overall globally to improve over time? And then a quick follow-up for chemicals and energy. You know, sales were up 3% in the first quarter on Slide 3. What do you think the run rate of that is heading into 2Q?

I would imagine March was much stronger than the other two months, given the conflict. Just curious where that segment is sort of moving into this quarter.

Matthew White: Well, Mike, I think some level of stability always helps. Right? When you think about industrial demand, at least in my opinion, it tends to be large items, nondurable or durable goods. Nonresi infrastructure. And to embark on those kinds of projects, they usually require financing. They usually require a long-range view on a return profile. They usually require some form of government engagement support. And so right now, it has been a little volatile. It has been volatile in the macro. One can argue in certain micropolitics and microeconomics it has been volatile in certain countries. And so I think that has been part of the challenge.

Additionally, you know, the service economy, the consumer has been pretty resilient over the last few years, which has held GDP up. If that changes, I think that could actually ironically bode well for industrials. Because then there could be more call to action to support injections into economies. You could argue that IAA to some extent is that. Right? You have seen continued lagging in Europe. And they have made determination they need to inject capital into the economy. And that capital tends to be more industrial intensive. Now it has to reach the ground. It has to have clarity around its use and its ability to be deployed. But that is kind of the type of catalyst.

And, look. I think the Americas and the US especially has been a little bit of an indicator that to some extent, certain placed protectionist policies can work. I mean, we have seen it in the metals. We have seen it in some other areas. Yes. It brings some confusion initially, but the US has seemed to bounce back. And so we all know there is excess capacity in certain markets in the world. We kind of know where it is coming from. And so I think it is really a function of who is making the capacity for what. So we will see.

I think right now, though, the Americas, we continue to feel pretty bullish on and the trajectory it is on. And as I mentioned, I think with EMEA, it really is going to come down at some catalysts to try and change that trajectory. And APAC is fine right now. I think APAC is—we are seeing certain geographies do better than others, clearly. But our Chinese business is very stable. India is growing. And we will just have to see how the rest play out. It is led by the Americas, as mentioned. And really have not seen any reason that should decline or abate. I think the strength is still there and is still anticipated.

And the comps, as I mentioned, definitely get a little easier here on out. It starts to lap, as we mentioned, a couple years of some industrial stagnant conditions. We will see, but I feel pretty good it will remain positive throughout the year, and we will have to see how much it remains positive.

Operator: And our next question comes from the line of Jeff Zekauskas with JPMorgan. Your line is open.

Jeff Zekauskas: Thanks very much. In your commentary on the Americas for the first quarter, you talked about weakness in chemicals and energy end markets, and, you know, I assume that will strengthen. So as a base case, should volume of, you know, 2% year-over-year move up to, I do not know, three or more in second quarter? And, you know, are there also pricing opportunities because energy and chemicals are better? And then secondly, your other income in the quarter was $63 million versus $26 million a year ago. What happened there? And was the currency benefit in the quarter about 3% on EPS or maybe $80 million pretax? Or do you have a different number?

Matthew White: So, Jim, I think with chemicals and energy, yeah, we are better in Americas but weaker in EMEA, as mentioned. I think this is mostly on-site. So the pricing will just be a function of the annual escalation, which the contract would state. That being said, we are seeing some more merchant activity for upstream oil, primarily Latin America, which offers an opportunity for further volume expansion. So I feel pretty good about the Americas' position, competitiveness, and capability in chemicals and energy. You know, as mentioned before, it has been on a good trend, and I would expect that to continue.

And, recall, there were a little bit of some normal weather aspects that happened in Q1, which could always dampen it a little bit. And you get through that Q2. So we feel pretty good about what we could see in Q2 on those trends. And, again, it always comes down to my mind to the same basic situation, which is the lowest-cost suppliers in this environment tend to win in these times of supply shock stress. And when you think about a lot of the assets in Americas, with their advantaged feedstock, their infrastructure, their capabilities, the complexity they can handle, they tend to be some of the lowest cost and best producers in these environments.

And so I feel pretty good about how they will perform looking forward and especially in the near term. Okay. So let us just take the second question first. On FX, the simple way to think about it is just take whatever we put in the sales variance. So in this case, we had the 5% globally, and that pretty much drops all the way down. That is sales, that is SG&A, that is operating income, that is EPS. Because of the way our business is structured, it is very localized. And so our exposure to sales on translation is quite similar to our exposure to costs. So 5% would be that impact. As far as other income, yeah.

You know, in the last few years, other income has been anywhere from $100 million to $200 million. I would expect this year for the full year, we will be on the lower end of that range. And to sort of characterize what is there. Right? It is operating income. It is part of operations. But we tend to put things there that usually are settlements, could be time lags, could be gains, losses on sales of things. So we put it there generally to isolate it so it does not get embedded into the sales and cost of goods sold from a trending perspective. So in this particular quarter, we had a gain on a sale.

It was a cash gain. It was a real gain. But that basically created that. I do not expect very much in the next couple quarters. Hence, why I think the full year will probably be in the lower end of the range from the last couple years.

Operator: And our next question comes from the line of John Roberts with Mizuho. Your line is open.

John Roberts: Thank you. Could I ask if Sanjeev is not available today? Or is this the new format for the earnings calls? I am a little confused about EMEA. I thought the shortages from the Persian Gulf conflict were so severe that Europe was actually going to have to run at higher rates. Even though it is higher cost, we are going to need most of the latent capacity in the world to run higher. And so it sounds like you are still expecting it to be soft in June in EMEA.

Matthew White: So, John, yeah, if you may recall in the past, we have always kind of alternated, and sometimes Sanjeev would be on or Steve would be on or not, and Sanjeev would kind of evolve to that. So now he is not on today, but he will definitely be on in a future call. Well, let us start with, as you know, the guidance of what we said is no economic improvement at midpoint. So that is just the baseline based on the guidance. So if you take that and extend it out, what it is implying is what we are seeing in Q1 just continues going forward. Whether or not it improves, we will see.

But from what we experienced in our EMEA in Q1 on the on-site chemicals and energy on a year-over-year basis, we saw a decline based on the effects from those operating assets of the—

John Roberts: Okay. Thank you.

Operator: Our next question comes from the line of Kevin McCarthy with Vertical Research Partners. Your line is open.

Kevin McCarthy: Yes. Thank you, and good morning. Matt, just to follow up on the volume discussion. If I look at your Americas number of plus two, I think that is the best that you have posted since 2022, which is coincidentally when we tend to think of the onset of the industrial recession, certainly in the chemicals industry anyway. So, you know, I am listening to you today talk about hard goods up double digits, energy and chemicals trending for the better.

Do you have enough confidence to say we are now on the cyclical upswing, or do you think there is too much war-related uncertainty and potential for an oil shock to start playing offense, if you will, in the Americas? And then, wanted to follow up on helium as well. I guess my simple question would be how much incremental volume opportunity do you think may be available again, through long-term contracts that you are pursuing? Maybe you could speak to your flexibility on sourcing and how much of an inventory cushion you may be able to take advantage of here.

Matthew White: So, Kevin, I always remain a little guarded. Right? I think I need to. But I sort of think about it as, you know, we have an engine here with a few cylinders. Right? And one cylinder is Americas, one is APAC, and one is EMEA. And we are not running on all three cylinders. So while the Americas both results and trend, I think, are positive, we are just not seeing that in EMEA, for example, today. So I think to see a true, what I view, global recovery, I would like to see all three running in the same direction. But time will tell how that ends up.

But I feel in the Americas and, like you mentioned, the packaged gases, what we are seeing on some of the competitiveness in the US Gulf Coast, that does include commercial space, as you know. We expect that to continue to post some pretty good numbers. As far as are there offsets to that or not elsewhere in the world, that is the challenge that we need to see to kind of break out of this and start to see global positive buy. So I will say, you know, the global basis, while we showed 1% global volume, which is mostly our project backlog contribution, we did turn positive on base volumes.

It is just not positive enough to round to 1% but it has started to turn positive. So we will see if that trend continues and actually breaks out and rounds to a positive base volume. But right now, you are seeing puts and takes around the world. And we will see if the comps lap to where that could be positive. Well, I mean, we feel good about our source. And we feel good about our capability to not only meet our current customer contractual commitments, but that we would have some excess molecules and assets to be able to deliver to future, new customers.

As far as how much, it is really just going to be a function of the extension of this situation and where it goes. But we will be, you know, selective. We want to make sure we get the right kind of contracts that make sense with the right kind of customers that we know will make that commitment to supply. So time will tell. I mean, we have already been able to sign a few new long-term commitments. And we will just have to see how it plays out over the next several quarters.

Operator: And our next question comes from the line of Laurence Alexander with Jefferies. Your line is open.

Laurence Alexander: So good morning. Two quick ones. Just first, are you seeing in any regions or significant delays in projects where you are seeing kind of the CapEx decisions at least get delayed, even if the underlying production rates are fairly stable? And secondly, if customers have to shut down capacity because of outages because of feedstock supply issues, whether government-mandated or just they cannot get the molecules, your contracts do not give them any adjustment for that. I mean, they still need to pay you the same rate or pay the full exit penalty. Is that correct?

Matthew White: Okay. So first on the delays. Just to segregate now, in our backlog, no. No concern. Right? What is in our project backlog right now is moving forward as expected. No concerns on that front. As far as potential new projects to be signed with customers' willingness to go to FID, essentially sign a contract, it depends on the end market. You know, I would say, as you imagine, electronics, commercial space, you are seeing a continued very strong push to move forward with projects and investments. I think when you get to the more traditional industrial markets, it is really geographic specific right now. I think in the US, there are a lot of interest for future investments.

I think places like India, you are seeing some good positive views, but in other parts of the world, not so much. So that is more of a geographic specific. You know, as far as contracts, I mean, what it gets to is force majeure language. You know, this has been something you focus on heavily in any contractual business. We have worked and tested our force majeure language over many, many decades. Economic is not a force majeure as you can imagine. And so this is something that we always will work with our customers in these scenarios. But when we build these assets, you know, we do not benefit when things go great.

And in the same token, we do not take the downside when they do not. So from that perspective, we are well protected against any type of economic force majeure or other aspects of that. But it is really, you know, something that is going to be a contract-by-contract review.

Operator: And our final question comes from the line of Arun Viswanathan with RBC Capital Markets. Your line is open.

Arun Viswanathan: Great. Thanks for taking my question. Congrats on the results. Just a quick question on the earnings algorithm. So if I heard you correctly, it sounded FX was maybe 5% contribution to Q1 of that 10% that you saw. You are guiding to 7% to 9% for the year. So do you expect FX would continue to play that contribution for the year's EPS? And if you do fall short of your 10% goal, at what point is there other actions you would consider getting up there? Maybe increased buybacks or, you know, management actions or anything else that we should consider? Thanks.

Matthew White: Arun, I think with the algo, as you well know, we have the management actions. We have the capital allocation. We have the macro. If you just take the macro in isolation, yes, we put a 1% FX tailwind in the assumption. I will say, and as you probably well know, you know, we base this number on sort of the first-of-month forwards, which is about a month old. Right now, spots are better. The foreign currency strengthened since that time. So that would provide FX upside if these spots remained. But we can set that aside. You know, as far as the management actions and the capital allocation, look.

We know we need to get back to that 8% to 12% range excluding macro. I think we had a little bit of a drag, as you know, with helium for a period of time. We have about percent or so drag just on the engineering business from its timing of projects, which is really more just a function of what is done as internal projects that is capitalized versus external projects for a profit. And so we have got to get through those two, and I think that can get us back into that 8% to 12% range. So we will see. You know, right now, it is 7% to 9%, kind of range we have out there.

And we have got to work through to get higher than that. Right? And we know that. And so that is how I would think about it. But the algo is still intact. And we will take incremental actions if we need to bridge this further to help get us back to that double-digit EPS growth.

Operator: And 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.

Juan Pelaez: Abby, once again, nice job. Thank you, everyone, for participating in today's call. If you have any further questions, please feel free to reach out to me directly.

Matthew White: Have a great day.

Operator: And, ladies and gentlemen, that concludes today's call, and we thank you for your participation. You may now disconnect.

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