Linde PLC (NYSE:LIN) Q4 2019 Earnings Conference Call - Final Transcript

Feb 13, 2020 • 01:00 pm ET


Linde PLC (NYSE:LIN) Q4 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by and welcome to the Q4 and Full-Year 2019 Linde Earnings Conference Call.

[Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Juan Pelaez, Head of Investor Relations. Thank you. Please go ahead, sir.

Juan Pelaez

Thank you, Daniel.

Good afternoon, everyone and thank you for attending our 2019 fourth quarter earnings call and webcast. Once again, this is Juan Pelaez, Head of Investor Relations, and I'm joined this morning by Steve Angel, Chief Executive Officer, and Matt White, Chief Financial Officer. Today's presentation materials are available on our website at in the Investors 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 adjusted pro forma numbers are in the appendix to this presentation.

Steve and Matt will now give us an update on Linde's performance including 2019 highlights and our new 2028 sustainability targets. We will then be available to answer questions. Let me turn the call over to Steve.

Steve Angel

So if you had told me a year ago that this is where we would be today as a new company, I would have been delighted. We had the plans in place but we had a lot of work to do. And I'm pleased to say the team executed beautifully. A few financial highlights for the year. We saw underlying growth of 4%, half price and half volume. Operating margins climbed nicely 160 basis points to 18.7% and earnings per share grew 23% ex-FX. We had strong cash flow for the year, especially in the second half, which is always a good sign of a healthy and improving business. I'll let Matt expand more on that. And with the strong cash flow, we invested $4 billion back into the business in capex, half for contract a large projects, and returned $8 billion to shareholders between dividends, share buybacks and the squeeze out of our minority shareholders.

And return on capital, the single most important metric for any capital-intensive business, rose 130 basis points to 11.6%. We also reached a record backlog of projects, $4.4 billion for our sale of gas business and $5.7 billion for our third-party engineering business, $10 billion in total. I'm pleased to say that we won practically every project we chose to pursue. This provides the foundation for growth in future years as we bring these projects online. And with respect to integration, it's largely done. We conducted our first employee survey and we were pleased with the overall results. This is a good indication of how well the team integrated two high-quality companies in a relatively short period of time.

We began implementing our strategy which is to build network density in core industrial gas geographies, leverage our significant advantage in engineering and technology to win more than our fair share of sale of gas opportunities, and capture the full value of the