Linde PLC (NYSE:LIN) Q2 2020 Earnings Conference Call - Final Transcript
Jul 30, 2020 • 10:00 am ET
Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2020 Linde Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded [Operator Instructions]. I would now like to hand the conference over to your speaker today, Juan Pelaez. Thank you, and please go ahead, sir.
Great. Thank you. Good morning, everyone, and thank you for attending our 2020 second quarter earnings call and webcast. I'm 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 linde.com in the Investors 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 of this presentation. Steve and Matt will now give us an update on Linde's business outlook and second quarter performance, and then we'll be available to answer questions.
Let me turn the call over to Steve now.
Stephen F. Angel
Thanks, Juan. Good morning, everyone. Matt will cover the numbers, which were obviously quite good. But just a few comments. We grew earnings per share versus Q1 and year-over-year despite currency headwinds and weaker volumes. Cash flow was very strong. Return on capital continues to improve. Operating margins improved in every segment. In other words, Q2 was like any other quarter, except we had to deliver this one through a pandemic. Safety performance continued to improve, while we battled COVID around the world. Plant reliability is at an all-time high. We brought several large projects online. Our hospital and home care businesses continue to play an important role around the world in the fight against this respiratory illness. We provided a lot of support in our communities through donations and in kind gifts. This type of performance doesn't happen because corporate ordains it. It happens because 80,000 committed and highly capable Linde employees do their jobs exceptionally well around the world.
If we turn to page three, we have talked about what makes Linde resilient in the past. You can see that in a few bullets on the left-hand side of the page. The best-performing markets in Q2, not surprisingly, were more defensive, like health care, food and electronics. And when combined with our commercial terms and conditions, that guarantees us a steady stream of cash flow, irrespective of volumes, you have what we demonstrated during Q2, a very resilient business. We are not directly part of any global supply chain. We source, produce and sell locally. Our businesses are local, and they optimize their cost structure based on local market conditions. Regarding our backlog, it remains firm. We have seen some delays, which we are being compensated for, but the backlog has held together well. And it is all for high-quality customers you know well. We took additional cost actions in early March to ensure we could deliver