Non-GAAP Measures
Throughout MD&A, the company provides adjusted operating results from continuing
operations exclusive of certain items such as cost reduction programs and other
charges, net gains on sale of businesses, purchase accounting impacts of the
Linde AG merger and pension settlement charges. Adjusted amounts are non-GAAP
measures which are intended to supplement investors' understanding of the
company's financial information by providing measures which investors, financial
analysts and management find useful in evaluating the company's operating
performance. Items which the company does not believe to be indicative of
on-going business performance are excluded from these calculations so that
investors can better evaluate and analyze historical and future business trends
on a consistent basis. In addition, operating results from continuing
operations, excluding these items, is important to management's development of
annual and long-term employee incentive compensation plans. Definitions of these
non-GAAP measures may not be comparable to similar definitions used by other
companies and are not a substitute for similar GAAP measures.

The non-GAAP measures and reconciliations are separately included in a later
section in the MD&A titled "Non-GAAP Measures and Reconciliations."
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  Consolidated Results
The following table provides summary information for the quarters and nine
months ended September 30, 2021 and 2020. The reported amounts are GAAP amounts
from the Consolidated Statements of Income. The adjusted amounts are intended to
supplement investors' understanding of the company's financial information and
are not a substitute for GAAP measures:
                                                          Quarter Ended September 30,                                         Nine Months Ended September 30,
(Millions of dollars, except per share
data)                                        2021                         2020               Variance                  2021                 2020               Variance
Sales                                  $      7,668                    $  6,855                     12  %       $       22,495           $ 19,971                     13  %
Cost of sales, exclusive of
depreciation and amortization          $      4,368                    $  3,835                     14  %       $       12,616           $ 11,297                     12  %
As a percent of sales                          57.0   %                    55.9  %                                        56.1   %           56.6  %
Selling, general and administrative    $        793                    $    770                      3  %       $        2,402           $  2,391                      -  %
As a percent of sales                          10.3   %                    11.2  %                                        10.7   %           12.0  %
Depreciation and amortization          $      1,163                    $  1,168                      -  %       $        3,500           $  3,434                      2  %
Cost reduction programs and other
charges (b)                            $         26                    $     48                    (46) %       $          222           $    428                    (48) %

Other income (expense) - net           $         10                    $    (29)                   134  %       $           (3)          $    (14)                    79  %
Operating profit                       $      1,292                    $    969                     33  %       $        3,647           $  2,293                     59  %
Operating margin                               16.8   %                    14.1  %                                        16.2   %           11.5  %
Interest expense - net                 $          8                    $     38                    (79) %       $           46           $     80                    (43) %
Net pension and OPEB cost (benefit),
excluding service cost                 $        (45)                   $    (41)                    10  %       $         (143)          $   (131)                     9  %
Effective tax rate                             24.2   %                    27.3  %                                        24.7   %           25.3  %
Income from equity investments         $          1                    $     23                    (96) %       $           81           $     69                     17  %
Noncontrolling interests from
continuing operations                  $        (31)                   $    (31)                     -  %       $         (105)          $    (91)                    15  %
Income from continuing operations      $        978                    $    699                     40  %       $        2,797           $  1,728                     62  %
Diluted earnings per share from
continuing operations                  $       1.88                    $   1.32                     42  %       $         5.34           $   3.25                     64  %
Diluted shares outstanding                  520,079                     530,415                     (2) %              523,662            531,724                     (2) %
Number of employees                          72,159                      74,648                     (3) %               72,159             74,648                     (3) %
Adjusted Amounts (a)
Operating profit                       $      1,810                    $  1,515                     19  %       $        5,335           $  4,184                     28  %
Operating margin                               23.6   %                    22.1  %                                        23.7   %           21.0  %
Effective tax rate                             23.9   %                    23.5  %                                        24.1   %           23.9  %
Income from continuing operations      $      1,421                    $  1,140                     25  %       $        4,148           $  3,154                     32  %
Diluted earnings per share from
continuing operations                  $       2.73                    $   2.15                     27  %       $         7.92           $   5.93                     34  %
Other Financial Data (a)
EBITDA from continuing operations      $      2,456                    $  2,160                     14  %       $        7,228           $  5,796                     25  %
As percent of sales                            32.0   %                    31.5  %                                        32.1   %           29.0  %
Adjusted EBITDA from continuing
operations                             $      2,559                    $  2,233                     15  %       $        7,582           $  6,298                     20  %
As percent of sales                            33.4   %                    32.6  %                                        33.7   %           31.5  %



(a) Adjusted Amounts and Other Financial Data are non-GAAP performance measures.
A reconciliation of reported amounts to adjusted amounts can be found in the
"Non-GAAP Measures and Reconciliations" section of this MD&A.
(b) See Note 2 to the condensed consolidated financial statements.

Reported


In the third quarter of 2021, Linde's sales were $7,668 million, 12% above prior
year, primarily driven by 3% price attainment and 8% higher volumes. Currency
translation increased sales by 2% in the third quarter of 2021 as compared to
2020. Cost pass-through, representing the contractual billing of energy cost
variances primarily to onsite customers, increased sales by 3% in the quarter,
with minimal impact on operating profit.

Reported operating profit for the third quarter of 2021 of $1,292 million, or
16.8% of sales, was 33% above prior year. The reported year-over-year increase
was primarily due to higher price and volumes, partially offset by the
deconsolidation of a joint venture with operations in APAC. The reported
effective tax rate ("ETR") was 24.2% in the third quarter 2021 versus 27.3% in
the third quarter 2020. Diluted earnings per share from continuing operations
("EPS") was $1.88, or 42% above EPS of $1.32 in the third quarter of 2020
primarily due to higher income from continuing operations and lower diluted
shares outstanding.
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Adjusted


In the third quarter of 2021, adjusted operating profit of $1,810 million, or
23.6% of sales, was 19% higher as compared to 2020 driven by higher price and
volumes and continued productivity initiatives across all segments. The adjusted
ETR was 23.9% in the third quarter 2021 versus 23.5% in the 2020 quarter. On an
adjusted basis, EPS was $2.73, 27% above the 2020 adjusted EPS of $2.15, driven
by higher adjusted income from continuing operations and lower diluted shares
outstanding.
Outlook

Linde provides quarterly updates on operating results, material trends that may
affect financial performance, and financial guidance via quarterly earnings
releases and investor teleconferences. These updates are available on the
company's website, www.linde.com, but are not incorporated herein.
Results of operations
The changes in consolidated sales compared to the prior year are attributable to
the following:
                                                                                                                 Nine Months Ended September 30,
                                                               Quarter Ended September 30, 2021 vs. 2020                  2021 vs. 2020
                                                                               % Change                                     % Change

Factors Contributing to Changes - Sales
Volume                                                                                                8  %                                  8  %
Price/Mix                                                                                             3  %                                  2  %
Cost pass-through                                                                                     3  %                                  2  %
Currency                                                                                              2  %                                  4  %
Acquisitions/divestitures                                                                            (3) %                                 (2) %
Engineering                                                                                          (1) %                                 (1) %
                                                                                                     12  %                                 13  %



Sales
Sales increased $813 million, or 12%, for the third quarter of 2021 and
increased $2,524 million, or 13%, for the nine months ended September 30, 2021
versus the respective 2020 periods. Volume growth across all end markets and
project start-ups increased sales by 8% in the quarter and year-to-date periods.
Higher pricing across all geographic segments contributed 3% to sales in the
quarter and 2% in the year-to-date period. Currency translation increased sales
by 2% in the quarter and 4% in the year-to-date period, largely in EMEA and
APAC, driven by the strengthening of the Euro, Australian dollar, Chinese yuan
and British pound against the U.S. dollar. Cost pass-through increased sales by
3% in the quarter and 2% in the year-to date period with minimal impact on
operating profit. The deconsolidation of a joint venture with operations in APAC
decreased sales by 3% in the quarter and 2% in the year-to-date period (see Note
13 to the condensed consolidated financial statements).
Cost of sales, exclusive of depreciation and amortization
Cost of sales, exclusive of depreciation and amortization increased $533
million, or 14%, for the third quarter of 2021 and increased $1,319 million, or
12% for the nine months ended September 30, 2021, primarily due to higher
volumes, cost pass-through and currency impacts, partially offset by
productivity initiatives. Cost of sales, exclusive of depreciation and
amortization was 57.0% and 56.1% of sales, respectively, for the third quarter
and nine months ended September 30, 2021 versus 55.9% and 56.6% of sales for the
respective 2020 periods. The increase as a percentage of sales for the third
quarter of 2021 was due primarily to higher cost pass-through. The decrease as a
percentage of sales for the nine months ended September 30, 2021 was due
primarily to productivity initiatives which more than offset the impact of
higher cost pass-through.
Selling, general and administrative expenses
Selling, general and administrative expense ("SG&A") increased $23 million, or
3%, for the third quarter of 2021 and increased $11 million, for the nine months
ended September 30, 2021. SG&A was 10.3% of third quarter sales and 10.7% sales
for the nine months ended September 30, 2021 versus 11.2% and 12.0% for the
respective 2020 periods. Currency impacts increased SG&A by approximately
$10 million in the quarter and $71 million for the nine months ended September
30, 2021. Excluding currency impacts, underlying SG&A increased in the third
quarter of 2021 driven by higher incentive compensation and decreased for the
nine months ended September 30, 2021 due to continued productivity initiatives.


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Depreciation and amortization
Reported depreciation and amortization expense decreased $5 million for the
third quarter of 2021 and increased $66 million, or 2%, for the nine months
ended September 30, 2021.
On an adjusted basis depreciation and amortization increased $13 million, or 2%,
for the third quarter of 2021 and increased $71 million, or 4% for the
year-to-date period, primarily due to currency translation impacts which
increased depreciation and amortization by $11 million and $65 million,
respectively. Excluding currency impacts, underlying depreciation was relatively
flat as the impact of new project start ups largely offset the decrease related
to the deconsolidation of a joint venture with operations in APAC (see Note 13
to the condensed consolidated financial statements).
Cost reduction programs and other charges
Cost reduction programs and other charges were $26 million and $48 million for
the third quarter 2021 and 2020, respectively, primarily related to merger and
synergy-related costs (see Note 2 to the condensed consolidated financial
statements).
Cost reduction programs and other charges were $222 million and $428 million,
respectively, for the nine months ended September 30, 2021 and 2020.
On an adjusted basis, these costs have been excluded in both periods.
Operating profit
On a reported basis, operating profit increased $323 million, or 33%, for the
third quarter of 2021 and increased $1,354 million, or 59% for the nine months
ended September 30, 2021. The increase was primarily due to higher volumes and
price, partially offset by the deconsolidation of a joint venture with
operations in APAC. Cost reduction programs and other charges were $26 million
for the third quarter of 2021, versus $48 million for the respective 2020
period. In the year-to-date periods, cost reduction programs and other charges
were $222 million and $428 million for the nine months ended September 30, 2021
and 2020, respectively.

On an adjusted basis, which excludes the impacts of purchase accounting and cost
reduction programs and other charges, operating profit increased $295 million,
or 19% in the 2021 quarter and increased $1,151 million, or 28%, for the nine
months ended September 30, 2021. Operating profit growth was driven by higher
volume and price and the benefit of cost reduction programs and productivity
initiatives, partially offset by the deconsolidation of a joint venture with
operations in APAC. A discussion of operating profit by segment is included in
the segment discussion that follows.
Interest expense - net
Reported interest expense - net decreased $30 million for the third quarter of
2021 and decreased $34 million for the nine months ended September 30, 2021. On
an adjusted basis interest expense decreased $43 million for the third quarter
of 2021 and decreased $58 million for the nine months ended September 30, 2021
versus the respective 2020 periods. The decrease in both periods was driven by a
lower effective borrowing rate, a gain on the sale of an investment security and
the impact of unfavorable foreign currency revaluation on an unhedged
intercompany loan in the prior year periods.
Net pension and OPEB cost (benefit), excluding service cost
Reported net pension and OPEB cost (benefit), excluding service cost was a
benefit of $45 million and $143 million for the quarter and nine months ended
September 30, 2021, respectively, versus a benefit of $41 million and $131
million for the respective 2020 periods. The increase in benefit for both the
quarter and year-to-date periods largely relates to a higher expected return on
assets and lower interest costs, partially offset by higher amortization of
deferred losses. The third quarter of 2021 and 2020 included settlement charges
of $4 million and $6 million, respectively (see Note 8 to the condensed
consolidated financial statements).
Effective tax rate
The reported effective tax rate ("ETR") for the quarter and nine months ended
September 30, 2021 was 24.2% and 24.7%, respectively, versus 27.3% and 25.3% for
the respective 2020 periods. The 2020 quarter and year-to-date periods include a
deferred income tax charge related to the revaluation of net deferred tax
liabilities for a tax rate increase in the United Kingdom. The 2021 year-to-date
period includes net tax charges of $38 million primarily related to $81 million
of a deferred income tax charge related to the revaluation of net deferred tax
liabilities for a tax rate increase in United Kingdom, partially offset by a tax
settlement benefit of $33 million (see Note 2 to the condensed consolidated
financial statements).
On an adjusted basis, the ETR for the quarter and nine months ended September
30, 2021 was 23.9% and 24.1%, respectively, versus 23.5% and 23.9% for the
respective 2020 periods. The increase in both periods is primarily due to lower
tax benefits from share option exercises.


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Income from equity investments
Reported income from equity investments for the third quarter of 2021 and nine
months ended September 30, 2021 was $1 million and $81 million, respectively,
versus $23 million and $69 million for the respective 2020 periods. On an
adjusted basis, income from equity investments for the third quarter and nine
months ended September 30, 2021 was $55 million and $173 million, respectively,
versus $37 million and $111 million, in the prior year respective periods.
On a reported basis, income from equity investments decreased in the third
quarter of 2021 due to a $35 million impairment charge related to a joint
venture in the APAC segment (see Note 2 to the condensed consolidated financial
statements), which more than offset the increase due to the deconsolidation of a
joint venture with operations in APAC which is reflected in equity income
effective January 1, 2021. Income from equity investments increased for the nine
months ended September 30, 2021 as the increase related to the deconsolidation
more than offset the impairment charge.
The increase in adjusted income from equity investments for the quarter and
year-to-date periods was driven by the deconsolidation of a joint venture with
operations in APAC which is reflected in equity income effective January 1, 2021
(See Note 13 to the condensed consolidated financial statements). The quarter
and year-to-date 2020 periods also include the impact of unfavorable foreign
currency revaluation on an unhedged loan of an investment in EMEA.
Noncontrolling interests from continuing operations
At September 30, 2021, noncontrolling interests from continuing operations
consisted primarily of non-controlling shareholders' investments in APAC
(primarily China) and surface technologies.
Reported noncontrolling interests from continuing operations was flat for the
third quarter of 2021 and increased $14 million for the nine months ended
September 30, 2021 versus the respective 2020 periods primarily driven by higher
income from continuing operations, partially offset by the deconsolidation of a
joint venture with operations in APAC (See Note 13 to the condensed consolidated
financial statements) and the buyout of minority shareholders in the Republic of
South Africa.
Adjusted noncontrolling interests from continuing operations decreased $10
million for the third quarter of 2021 and decreased $18 million for the nine
months ended September 30, 2021 versus the respective 2020 periods primarily
driven by the deconsolidation of a joint venture with operations in APAC (See
Note 13 to the condensed consolidated financial statements) and the buyout of
minority shareholders in the Republic of South Africa, which more than offset
the increase from higher income from continuing operations.
Income from continuing operations
Reported income from continuing operations increased $279 million, or 40%, for
the third quarter of 2021 and increased $1,069 million, or 62%, for the nine
months ended September 30, 2021 versus the respective 2020 periods, primarily
due to higher overall operating profit.
On an adjusted basis, which excludes the impacts of purchase accounting and
other non-GAAP adjustments, income from continuing operations increased $281
million, or 25%, for the quarter and increased $994 million, or 32% for the nine
months ended September 30, 2021 versus the respective 2020 periods. The increase
in the quarter and year-to-date periods was driven by higher overall adjusted
operating profit.
Diluted earnings per share from continuing operations
Reported diluted earnings per share from continuing operations increased $0.56,
or 42%, for the third quarter of 2021 and increased $2.09, or 64% for the nine
months ended September 30, 2021 versus the comparable 2020 periods.
On an adjusted basis, diluted EPS for the third quarter of 2021 increased $0.58,
or 27%, and increased $1.99, or 34% for the nine months ended September 30, 2021
versus the respective 2020 periods, primarily due to higher income from
continuing operations and lower diluted shares outstanding.
Employees
The number of employees at September 30, 2021 was 72,159, a decrease of 2,489
employees from September 30, 2020 primarily driven by cost reduction actions and
divestitures.
Other Financial Data
EBITDA was $2,456 million for the third quarter of 2021 as compared to $2,160
million in the respective 2020 period. EBITDA increased to $7,228 million for
the nine months ended September 30, 2021 from $5,796 million in the respective
2020 period. Adjusted EBITDA from continuing operations increased to $2,559
million for the third quarter 2021 from $2,233 million in the respective 2020
period. Adjusted EBITDA from continuing operations increased to $7,582 million
from $6,298 million for the nine months ended September 30, 2021 as compared to
the respective 2020 period primarily due to higher income from continuing
operations versus the prior period.
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See the "Non-GAAP Measures and Reconciliations" for adjusted amounts sections
below for definitions and reconciliations of these adjusted non-GAAP measures to
reported GAAP amounts.
Other Comprehensive Income (Loss)
Other comprehensive losses for the third quarter of 2021 and the nine months
ended September 30, 2021 were $723 million and $938 million, respectively,
resulted primarily from currency translation adjustments of $819 million during
the quarter and $1,124 million during the year-to-date period. The translation
adjustments reflect the impact of translating local currency foreign subsidiary
financial statements to U.S. dollars, and are largely driven by the movement of
the U.S. dollar against major currencies including the Euro, British pound and
the Chinese yuan. See the "Currency" section of the MD&A for exchange rates used
for translation purposes and Note 11 to the condensed consolidated financial
statements for a summary of the currency translation adjustment component of
accumulated other comprehensive income by segment.
Segment Discussion
The following summary of sales and operating profit by segment provides a basis
for the discussion that follows. Linde plc evaluates the performance of its
reportable segments based on operating profit, excluding items not indicative of
ongoing business trends. The reported amounts are GAAP amounts from the
Condensed Consolidated Statements of Income.

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