Linde plc · 10-Q · Item 2 MD&A

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")

Non-GAAP Measures

Throughout MD&A, the company provides adjusted operating results exclusive of certain items such as Cost reduction program and other charges, 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, 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 six months ended June 30, 2026 and 2025. The reported amounts are GAAP amounts from the Consolidated Statement 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 June 30,

Six Months Ended June 30,

(Millions of dollars, except per share data)

Variance

Variance

Sales

$

$

9

%

$

$

9

%

Cost of sales, exclusive of depreciation and amortization

$

$

%

$

$

%

As a percent of sales

%

%

%

%

Selling, general and administrative

$

$

2

%

$

$

8

%

As a percent of sales

%

%

%

%

Depreciation and amortization

$

$

2

%

$

$

3

%

Cost reduction program and other charges

$

—

$

—

N/A

$

—

$

%

Other income (expense) - net

$

$

%

$

$

%

Operating profit

$

$

8

%

$

$

%

Operating margin

%

%

%

%

Interest expense - net

$

$

(9)

%

$

$

(3)

%

Net pension and OPEB cost (benefit), excluding service cost

$

$

%

$

$

(7)

%

Effective tax rate

%

%

%

%

Income from equity investments

$

$

9

%

$

$

7

%

Noncontrolling interests

$

$

%

$

$

%

Net Income – Linde plc

$

$

9

%

$

$

%

Diluted earnings per share

$

$

%

$

$

%

Diluted shares outstanding

(2)

%

(2)

%

Number of employees

—

%

—

%

Adjusted Amounts (a)

Depreciation and amortization

$

$

4

%

$

$

5

%

Operating profit

$

$

7

%

$

$

8

%

Operating margin

%

%

%

%

Effective tax rate

%

%

%

%

Net Income – Linde plc

$

$

8

%

$

$

8

%

Diluted earnings per share

$

$

%

$

$

%

Other Financial Data (a)

EBITDA

$

$

7

%

$

$

8

%

As percent of sales

%

%

%

%

Adjusted EBITDA

$

$

7

%

$

$

7

%

As percent of sales

%

%

%

%

(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.

Reported

In the second quarter of 2026, Linde's sales were $9,289 million, 9% above the prior year. Sales grew 2% from higher price attainment. Volumes increased sales by 2% primarily driven by the electronics, manufacturing, and chemicals and energy end markets. Currency translation increased sales by 2% primarily driven by the strengthening of the Brazilian real, Chinese yuan, and Euro against the U.S. dollar. Acquisitions increased sales by 1%. Cost pass-through, representing the contractual billing of energy cost variances primarily to onsite customers, increased sales by 1%. Engineering sales increased by 1%.

Reported operating profit for the second quarter of 2026 was $2,554 million, or 27.5% of sales, 8% above the prior year. The reported year-over-year increase was primarily driven by higher pricing, currency translation and productivity initiatives, which

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more than offset adverse impacts from cost inflation. The reported effective tax rate ("ETR") was 24.0% in the second quarter of 2026 versus 24.4% in 2025. Diluted earnings per share ("EPS") was $4.15 in the second quarter of 2026, or 11% above EPS of $3.73 in the second quarter of 2025, primarily due to higher net income - Linde plc and lower diluted shares outstanding.

Adjusted

In the second quarter of 2026, adjusted operating profit of $2,744 million, or 29.5% of sales, was 7% higher as compared to the prior year driven by higher pricing, currency translation and productivity initiatives, which more than offset adverse impacts from cost inflation. On an adjusted basis, the ETR was 23.9% for the second quarter of 2026 and 24.3% for the 2025 respective period. On an adjusted basis, EPS was $4.50 for the second quarter of 2026, 10% above the 2025 adjusted EPS of $4.09. The increase was driven by higher adjusted net income - Linde plc 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

Below is a discussion of the results of operations for the second quarter of 2026 and for the six months ended June 30, 2026 compared to the respective 2025 periods.

Sales

% Change

% Change

Factors Contributing to Changes - Sales

Volume

2

%

2

%

Price/Mix

2

%

2

%

Cost pass-through

1

%

1

%

Currency

2

%

3

%

Acquisitions/divestitures

1

%

1

%

Engineering

1

%

—

%

9

%

9

%

Sales increased by 9% both in the second quarter of 2026 and for the six months ended June 30, 2026, versus the respective 2025 periods. T1Currency translation increased sales by 2% in the quarter and increased sales by 3% for the six months ended June 30, 2026, driven primarily by the strengthening of the Chinese yuan, Euro and Brazilian real against the U.S. dollar. Higher price attainment increased sales by 2% both in the quarter and six months ended June 30, 2026. Volumes increased sales by 2% both in the quarter and six months ended June 30, 2026, due primarily to the electronics, manufacturing, and chemicals and energy end markets.

T2Acquisitions increased sales by 1% both in the quarter and six months ended June 30, 2026. Cost pass-through also increased sales by 1% both in the quarter and six months ended June 30, 2026, with minimal impact on operating profit. Engineering sales increased by 1% in the quarter and were flat in the six months ended June 30, 2026.

Cost of sales, exclusive of depreciation and amortization

Cost of sales, exclusive of depreciation and amortization, increased $555 million, or 13%, for the second quarter of 2026 and increased $921 million, or 11%, for the six months ended June 30, 2026, primarily due to currency translation, and cost inflation, partially offset by productivity gains. Cost of sales, exclusive of depreciation and amortization, was 52.3% and 51.9% of sales for the quarter and six months ended June 30, 2026, respectively, versus 50.7% and 51.0% for the respective 2025 periods. The increase as a percentage of sales was primarily due to higher costs and cost pass-through, partially offset by productivity gains.

Selling, general and administrative

Selling, general and administrative expenses ("SG&A") increased $21 million, or 2%, for the second quarter of 2026 and increased $128 million, or 8%, for the six months ended June 30, 2026. SG&A was 9.6% and 9.9% of sales for the quarter and six months ended June 30, 2026, respectively, versus 10.2% and 10.0% of sales for the respective 2025 periods. Currency

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impact increased SG&A by approximately $16 million for the second quarter of 2026 and $53 million for the six months ended June 30, 2026. Excluding currency impacts, the underlying SG&A increase was driven primarily by higher costs.

Depreciation and amortization

Reported depreciation and amortization expense increased $21 million, or 2%, for the second quarter of 2026 and increased $62 million, or 3%, for the six months ended June 30, 2026. On an adjusted basis, excluding merger-related impacts, depreciation and amortization increased $29 million, or 4%, including currency impact of $14 million in the second quarter of 2026 and increased $70 million, or 5%, including currency impact of $43 million for the six months ended June 30, 2026. Excluding currency, the underlying depreciation and amortization increase was largely driven by new project start-ups.

Cost reduction program and other charges

There were no cost reduction program and other charges for the quarter and six months ended June 30, 2026. For the respective 2025 periods, there were no cost reduction program and other charges for the second quarter of 2025, and $55 million for the six months ended June 30, 2025, primarily related to severance charges. On an adjusted basis, these costs have been excluded.

Other income (expense) - net

Reported other income (expense) - net was a benefit of $17 million for the second quarter of 2026 and $80 million for the six months ended June 30, 2026. The year-to-date period included a gain on a divestiture in the Americas business. For the respective 2025 periods, other income (expense) was a benefit of $15 million for the second quarter of 2025 and $33 million for the six months ended June 30, 2025.

Operating profit

On a reported basis, operating profit increased $200 million, or 8%, for the second quarter of 2026 and increased $455 million, or 10%, for the six months ended June 30, 2026. T3The increases were driven by savings from productivity initiatives, higher pricing, and currency translation, T4which more than offset the adverse impacts of cost inflation.

T5On an adjusted basis, which excludes the impacts of merger-related purchase accounting as well as cost reduction program and other charges, operating profit increased $188 million, or 7%, for the second quarter of 2026 and increased $380 million, or 8%, for the six months ended June 30, 2026. The increases were driven by savings from productivity initiatives, higher pricing, and currency translation, which more than offset the effects of cost inflation. A discussion of operating profit by segment is included in the segment discussion that follows.

Interest expense - net

Reported interest expense - net decreased $6 million, or 9%, for the second quarter of 2026 and decreased $4 million, or 3%, for the six months ended June 30, 2026.

Net pension and OPEB cost (benefit), excluding service cost

Reported net pension and OPEB cost (benefit), excluding service cost, was a benefit of $53 million and $107 million for the quarter and six months ended June 30, 2026, respectively, versus a benefit of $59 million and $115 million for the respective 2025 periods. The decrease for both periods was primarily driven by lower amortization of deferred gains year-over-year.

Effective tax rate

The reported effective tax rate ("ETR") for the quarter and six months ended June 30, 2026 was 24.0% and 23.7%, respectively, versus 24.4% and 24.0% for the respective 2025 periods.

On an adjusted basis, the ETR for the quarter and six months ended June 30, 2026 was 23.9% and 23.7%, respectively, versus 24.3% and 23.9% for the respective 2025 periods.

Income from equity investments

Reported income from equity investments for the quarter and six months ended June 30, 2026 was $36 million and $76 million, respectively, versus $33 million and $71 million for the respective 2025 periods.

On an adjusted basis, income from equity investments for the quarter and six months ended June 30, 2026 was $55 million and $114 million, respectively, versus $51 million and $107 million for the respective 2025 periods.

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Noncontrolling interests

At June 30, 2026, noncontrolling interests consisted primarily of non-controlling shareholders' investments in APAC (primarily China). Reported noncontrolling interests income was $44 million and $87 million for the quarter and six months ended June 30, 2026, respectively, versus $40 million and $74 million for the respective 2025 periods.

Net Income – Linde plc

Reported net income - Linde plc increased $162 million, or 9%, for the second quarter of 2026, and increased $346 million, or 10%, for the six months ended June 30, 2026. On an adjusted basis, which excludes the impacts of merger-related purchase accounting and cost reduction program and other charges, net income - Linde plc increased $152 million, or 8%, for the second quarter of 2026, and increased $291 million, or 8%, for the six months ended June 30, 2026. On both a reported and adjusted basis, the increase was largely driven by higher operating profit.

Diluted earnings per share

Reported diluted earnings per share increased $0.42, or 11%, for the second quarter of 2026 and increased $0.89, or 12% for the six months ended June 30, 2026.

On an adjusted basis, diluted EPS increased $0.41, or 10%, for the second quarter of 2026 and increased $0.78, or 10%, for the six months ended June 30, 2026.

On both a reported and adjusted basis, the increase was primarily due to higher net income - Linde plc and lower diluted shares outstanding.

Employees

The number of employees at June 30, 2026 was 64,649, T6a decrease of 193 employees from June 30, 2025 due to the ongoing impact of the cost reduction program, partially offset by acquisitions.

Other Financial Data

EBITDA was $3,553 million for the second quarter of 2026, which increased $224 million compared to $3,329 million in the respective 2025 period. For the six months ended June 30, 2026, EBITDA was $6,983 million, which increased $522 million compared to $6,461 million in the respective 2025 period.

For the second quarter of 2026, adjusted EBITDA increased $221 million to $3,572 million, from $3,351 million in the respective 2025 period. For the six months ended June 30, 2026, adjusted EBITDA increased $457 million to $7,021 million, from $6,564 million in the respective 2025 period.

The increase on both a reported and adjusted basis was driven by higher net income - Linde plc versus prior year.

See the "Non-GAAP Measures and Reconciliations" section for definitions and reconciliations of these adjusted non-GAAP measures to reported GAAP amounts.

Other Comprehensive Income (Loss)

Other comprehensive income for the quarter and six months ended June 30, 2026 was $228 million and $307 million, respectively, which primarily related to currency translation adjustments of $246 million and $301 million, respectively. 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 and British pound. See the "Currency" section of the MD&A for exchange rates used for translation purposes and Note 10 to the condensed consolidated financial statements for a summary of the currency translation adjustment component of accumulated other comprehensive income (loss) by segment.

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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 Consolidated Statement of Income.

Quarter Ended June 30,

Six Months Ended June 30,

(Millions of dollars)

Variance

Variance

SALES

Americas

$

$

7

%

$

$

8

%

EMEA

7

%

7

%

APAC

%

%

Engineering

%

2

%

Other

%

%

Total sales

$

$

9

%

$

$

9

%

SEGMENT OPERATING PROFIT

Americas

$

$

5

%

$

$

8

%

EMEA

6

%

7

%

APAC

8

%

7

%

Engineering

%

(1)

%

Other

%

1

%

Segment operating profit

$

$

7

%

$

$

8

%

Reconciliation to reported operating profit:

Cost reduction program and other charges

—

—

—

Purchase accounting impacts - Linde AG (a)

Total operating profit

$

$

$

$

(a)To adjust for purchase accounting impacts related to the merger.

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Americas

Quarter Ended June 30,

Six Months Ended June 30,

(Millions of dollars)

Variance

Variance

Sales

$

$

7

%

$

$

8

%

Operating profit

$

$

5

%

$

$

8

%

As a percent of sales

%

%

%

%

% Change

% Change

Factors Contributing to Changes - Sales

Volume

2

%

2

%

Price/Mix

2

%

3

%

Cost pass-through

—

%

1

%

Currency

2

%

2

%

Acquisitions/divestitures

1

%

—

%

7

%

8

%

The Americas segment includes Linde's industrial gases operations in approximately 20 countries including the United States, Canada, Mexico, and Brazil.

Sales

Sales for the Americas segment increased $271 million, or 7%, in the second quarter of 2026 and increased $630 million, or 8%, for the six months ended June 30, 2026. Higher pricing increased sales by 2% in the quarter and 3% year-to-date. Volumes increased sales by 2% both in the quarter and year-to-date periods primarily driven by the electronics and manufacturing end markets. Cost pass-through was flat in the quarter and increased sales by 1% year-to-date, with minimal impact on operating profit. Currency translation increased sales by 2% both in the quarter and year-to-date periods, driven primarily by the strengthening of the Mexican peso and Brazilian real against the U.S. dollar. Acquisitions increased sales by 1% in the quarter and were flat year-to-date.

Operating profit

Operating profit in the Americas segment increased $63 million, or 5%, in the second quarter of 2026, and increased $198 million, or 8%, for the six months ended June 30, 2026. The increase was driven primarily by higher pricing, continued productivity initiatives, higher volumes, and currency translations, which more than offset cost inflation.

EMEA

Quarter Ended June 30,

Six Months Ended June 30,

(Millions of dollars)

Variance

Variance

Sales

$

$

7

%

$

$

7

%

Operating profit

$

$

6

%

$

$

7

%

As a percent of sales

%

%

%

%

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% Change

% Change

Factors Contributing to Changes - Sales

Volume

(1)

%

(2)

%

Price/Mix

2

%

2

%

Cost pass-through

2

%

—

%

Currency

3

%

6

%

Acquisitions/divestitures

1

%

1

%

7

%

7

%

The EMEA segment includes Linde's industrial gases operations in approximately 50 European, Middle Eastern and African countries including Germany, the United Kingdom, France, the Republic of South Africa and Sweden.

Sales

Sales for the EMEA segment increased $141 million, or 7%, in the second quarter of 2026 and increased $281 million, or 7%, for the six months ended June 30, 2026. Currency translation increased sales by 3% in the quarter and 6% year-to-date largely due to the strengthening of the Euro against the U.S. dollar. Higher price attainment increased sales by 2% both in the quarter and the year-to-date periods. Acquisitions increased sales by 1% both in the quarter and the year-to-date periods. Cost pass-through increased sales by 2% in the quarter, with minimal impact on operating profit, and was flat year-to-date. Volumes decreased sales by 1% in the quarter and decreased sales by 2% year-to-date primarily driven by the manufacturing end market.

Operating Profit

Operating profit in the EMEA segment increased $43 million, or 6%, for the second quarter of 2026, and increased $105 million, or 7%, for the six months ended June 30, 2026. The increase was driven by continued productivity initiatives, currency translation, and higher pricing, which more than offset cost inflation and lower volumes.

APAC

Quarter Ended June 30,

Six Months Ended June 30,

(Millions of dollars)

Variance

Variance

Sales

$

$

%

$

$

%

Operating profit

$

$

8

%

$

$

7

%

As a percent of sales

%

%

%

%

% Change

% Change

Factors Contributing to Changes - Sales

Volume/Equipment

6

%

6

%

Price/Mix

2

%

1

%

Cost pass-through

2

%

1

%

Currency

3

%

3

%

Acquisitions/divestitures

—

%

1

%

%

%

The APAC segment includes Linde's industrial gases operations in approximately 15 Asian and South Pacific countries and regions including China, Australia, India, and South Korea.

Sales

Sales for the APAC segment increased $215 million, or 13%, in the second quarter of 2026 and increased $377 million, or 12%, for the six months ended June 30, 2026. Volumes increased sales by 6% both in the quarter and year-to-date periods, primarily driven by new project start-ups and equipment sales. Currency translation increased sales by 3% both in the quarter and year-to-

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date periods primarily due to the strengthening of the Australian dollar and Chinese yuan against the U.S. dollar. Acquisitions were flat in the quarter and increased sales by 1% year-to-date. Price increased sales by 2% in the quarter and 1% year-to-date. Cost pass-through increased sales by 2% in the second quarter and 1% year-to-date, with minimal impact on operating profit.

Operating profit

Operating profit in the APAC segment increased $41 million, or 8%, in the second quarter of 2026 and increased $67 million, or 7%, for the six months ended June 30, 2026. The increase was driven primarily by higher pricing, continued productivity initiatives, volumes, and currency translation, which more than offset cost inflation.

Engineering

Quarter Ended June 30,

Six Months Ended June 30,

(Millions of dollars)

Variance

Variance

Sales

$

$

%

$

$

2

%

Operating profit

$

$

%

$

$

(1)

%

As a percent of sales

%

%

%

%

% Change

% Change

Factors Contributing to Changes - Sales

Currency

2

%

4

%

Other

%

(2)

%

%

2

%

Sales

Sales for the Engineering segment increased $74 million, or 13%, in the second quarter of 2026 and increased $26 million, or 2%, for the six months ended June 30, 2026 primarily due to project timing. Currency translation increased sales by 2% in the quarter and 4% year-to-date primarily due to the strengthening of the Euro against the U.S. dollar.

Operating profit

Operating profit for the Engineering segment increased $10 million, or 11% for the second quarter of 2026, primarily driven by project timing and currency translation. For the six months ended June 30, 2026, operating profit decreased $3 million, or 1%, primarily driven by project timing, partially offset by currency translation.

Other

Quarter Ended June 30,

Six Months Ended June 30,

(Millions of dollars)

Variance

Variance

Sales

$

$

%

$

$

%

Operating profit (loss)

$

$

%

$

$

1

%

As a percent of sales

%

%

%

%

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% Change

% Change

Factors Contributing to Changes - Sales

Volume/price

%

%

Cost pass-through

4

%

5

%

Currency

—

%

1

%

Acquisitions/divestitures

—

%

—

%

%

%

Other consists of corporate costs and a few smaller businesses including Linde Advanced Material Technologies (LAMT) and global helium wholesale, which individually do not meet the quantitative thresholds for separate presentation.

Sales

Sales for Other increased $93 million, or 30%, in the second quarter of 2026 and increased $149 million, or 24%, for the six months ended June 30, 2026. Sales increased primarily due to higher volume/price and pass through costs in LAMT. Currency translation was flat in the quarter and increased sales by 1% year-to-date.

Operating profit

Operating profit in Other increased $31 million, or 238%, in the second quarter of 2026 and $13 million, or 1,300%, year-to-date. The increases were primarily driven by higher volume/price in LAMT and lower corporate costs.

Currency

The results of Linde’s non-U.S. operations are translated to the company’s reporting currency, the U.S. dollar, from the functional currencies used in the countries in which the company operates. For most foreign operations, Linde uses the local currency as its functional currency. There is inherent variability and unpredictability in the relationship of these functional currencies to the U.S. dollar and such currency movements may materially impact Linde’s results of operations in any given period.

To help understand the reported results, the following is a summary of the significant currencies underlying Linde’s consolidated results and the exchange rates used to translate the financial statements (rates of exchange expressed in units of local currency per U.S. dollar):

Percentage of YTD 2026 Consolidated Sales

Exchange Rate for

Income Statement

Exchange Rate for

Balance Sheet

Year-To-Date Average

Currency

Euro

%

Chinese yuan

7

%

British pound

4

%

Brazilian real

4

%

Australian dollar

4

%

Mexican peso

4

%

Korean won

3

%

Canadian dollar

3

%

Indian rupee

2

%

Swedish krona

1

%

South African rand

1

%

Swiss franc

1

%

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Liquidity, Capital Resources and Other Financial Data

The following selected cash flow information provides a basis for the discussion that follows:

Six Months Ended June 30,

(Millions of dollars)

NET CASH PROVIDED BY (USED FOR):

OPERATING ACTIVITIES

Net income (including noncontrolling interests)

$

$

Non-cash charges (credits):

Add: Depreciation and amortization

Add: Deferred income taxes

Add: Share-based compensation

Add: Cost reduction program and other charges, net of payments

Net income adjusted for non-cash charges

Less: Working capital

Less: Pension contributions

Other

Net cash provided by (used for) operating activities

$

$

INVESTING ACTIVITIES

Capital expenditures

Acquisitions, net of cash acquired

Divestitures, net of cash divested and asset sales

Other investing, net

—

Net cash provided by (used for) investing activities

$

$

FINANCING ACTIVITIES

Debt increase (decrease) - net

Issuances (purchases) of common stock - net

Cash dividends - Linde plc shareholders

Noncontrolling interest transactions and other

Net cash provided by (used for) financing activities

$

$

Effect of exchange rate changes on cash and cash equivalents

$

$

Cash and cash equivalents, end-of-period

$

$

Cash Flow from Operations

Cash provided by operations of $4,511 million for the six months ended June 30, 2026, increased $139 million, or 3%, versus 2025. The increase was driven primarily by higher net income.

Linde estimates that the total 2026 required contributions to its pension plans will be in the range of approximately $25 million to $35 million, of which $18 million has been made through June 30, 2026.

Investing

Net cash used for investing activities of $3,042 million for the six months ended June 30, 2026 increased $216 million, or 8%, versus 2025 as higher capital expenditures and acquisition spend, net of cash acquired more than offset cash inflows from divestitures and asset sales.

T7Capital expenditures for the six months ended June 30, 2026 were $2,780 million, $253 million higher than the prior year, primarily due to investments in new plant and production equipment for backlog growth requirements.

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At June 30, 2026, Linde's sale of gas backlog of large projects under construction was approximately $8.1 billion. This represents the total estimated capital cost of large plants under construction.

Acquisitions, net of cash acquired, were $385 million for the six months ended June 30, 2026, and primarily related to businesses in the Americas and EMEA. Acquisitions, net of cash acquired, were $270 million for the six months ended June 30, 2025 and related primarily to businesses in the Americas and APAC.

Divestitures, net of cash divested and asset sales, for the six months ended June 30, 2026 were $123 million and included proceeds from the sale of a business in the Americas. Divestitures for the six months ended June 30, 2025, net of cash divested and asset sales, were $24 million.

Cash outflows related to other investing, net decreased $53 million for the six months ended June 30, 2026, versus 2025, due to a decrease in cash settlements of foreign exchange contracts designated in a net investment hedging relationship.

Financing

Cash used for financing activities was $1,647 million for the six months ended June 30, 2026 as compared to $1,754 million for the six months ended June 30, 2025. Cash provided by debt was $1,645 million for the six months ended June 30, 2026, versus cash provided by debt of $1,839 million for the six months ended June 30, 2025, driven primarily by lower net debt issuances in 2026. During the six months ended June 30, 2026, Linde issued €1.6 billion of Euro-dominated notes and repaid $725 million of U.S. dollar-denominated notes.

T8Net purchases of ordinary shares were $1,656 million for the six months ended June 30, 2026, versus $2,207 million for the six months ended June 30, 2025. For additional information related to the share repurchase programs, see Part II Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Cash dividends for the six months ended June 30, 2026 were $1,479 million, having increased $67 million from the six months ended June 30, 2025, driven primarily by a 7% increase in quarterly dividends per share from $1.50 per share to $1.60 per share and partially offset by lower shares outstanding. Cash used for noncontrolling interest transactions and other was $157 million for the six months ended June 30, 2026 versus cash provided by noncontrolling interest transactions and other of $26 million for the six months ended June 30, 2025, primarily due to higher cash requirements for withholding taxes related to share-based compensation arrangements and lower cash inflows from financing related derivatives.

The company continues to believe it has sufficient operating flexibility, cash, and funding sources to maintain adequate amounts of liquidity to meet its business needs around the world. The company maintains a $5.0 billion and a $1.5 billion unsecured and undrawn revolving credit agreement with no associated financial covenants. No borrowings were outstanding under the credit agreements as of June 30, 2026. The company does not anticipate any limitations on its ability to access the debt capital markets and/or other external funding sources and remains committed to its strong ratings from Moody’s and Standard & Poor’s.

Legal Proceedings

See Note 8 to the condensed consolidated financial statements.

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NON-GAAP MEASURES AND RECONCILIATIONS

(Millions of dollars, except per share data)

The following non-GAAP measures are intended to supplement investors’ understanding of the company’s financial information by providing measures which investors, financial analysts and management use to help evaluate the company’s operating performance and liquidity. Items which the company does not believe to be indicative of on-going business trends are excluded from these calculations so that investors can better evaluate and analyze historical and future business trends on a consistent basis. 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.

Quarter Ended June 30,

Six Months Ended June 30,

Adjusted Operating Profit and Operating Margin

Reported operating profit

$

$

$

$

Add: Cost reduction program and other charges

—

—

—

Add: Purchase accounting impacts - Linde AG (c)

Total adjustments

Adjusted operating profit

$

$

$

$

Reported percentage change

8

%

%

Adjusted percentage change

7

%

8

%

Reported sales

$

$

$

$

Reported operating margin

%

%

%

%

Adjusted operating margin

%

%

%

%

Adjusted Depreciation and Amortization

Reported depreciation and amortization

$

$

$

$

Less: Purchase accounting impacts - Linde AG (c)

Adjusted depreciation and amortization

$

$

$

$

Adjusted Other Income (Expense) - net

Reported other income (expense) - net

$

$

$

$

Add: Purchase accounting impacts - Linde AG (c)

—

(4)

—

Adjusted other income (expense) - net

$

$

$

$

Adjusted Income Taxes (a)

Reported income taxes

$

$

$

$

Add: Purchase accounting impacts - Linde AG (c)

Add: Cost reduction program and other charges

—

—

—

Total adjustments

Adjusted income taxes

$

$

$

$

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Quarter Ended June 30,

Six Months Ended June 30,

Adjusted Effective Tax Rate (a)

Reported income before income taxes and equity investments

$

$

$

$

Add: Purchase accounting impacts - Linde AG (c)

Add: Cost reduction program and other charges

—

—

—

Total adjustments

Adjusted income before income taxes and equity investments

$

$

$

$

Reported Income taxes

$

$

$

$

Reported effective tax rate

%

%

%

%

Adjusted income taxes

$

$

$

$

Adjusted effective tax rate

%

%

%

%

Adjusted Income from Equity Investments

Reported income from equity investments

$

$

$

$

Add: Purchase accounting impacts - Linde AG (c)

Adjusted income from equity investments

$

$

$

$

Adjusted Noncontrolling Interests

Reported noncontrolling interests

$

$

$

$

Add: Purchase accounting impacts - Linde AG (c)

(3)

(3)

(6)

(6)

Adjusted noncontrolling interests

$

$

$

$

Adjusted Net Income - Linde plc (b)

Reported net income

$

$

$

$

Add: Cost reduction program and other charges

—

—

—

Add: Purchase accounting impacts - Linde AG (c)

Total adjustments

Adjusted net income - Linde plc

$

$

$

$

Adjusted Diluted EPS (b)

Reported diluted EPS

$

$

$

$

Add: Cost reduction program and other charges

—

—

—

Add: Purchase accounting impacts - Linde AG (c)

Total adjustments

Adjusted diluted EPS

$

$

$

$

Reported percentage change

%

%

Adjusted percentage change

%

%

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Quarter Ended June 30,

Six Months Ended June 30,

Adjusted EBITDA and % of Sales

Net Income - Linde plc

$

$

$

$

Add: Noncontrolling interests

Add: Net pension and OPEB cost (benefit), excluding service cost

Add: Interest expense

Add: Income taxes

Add: Depreciation and amortization

EBITDA

$

$

$

$

Add: Cost reduction program and other charges

—

—

—

Add: Purchase accounting impacts - Linde AG (c)

Total adjustments

Adjusted EBITDA

$

$

$

$

Reported sales

$

$

$

$

% of sales

EBITDA

%

%

%

%

Adjusted EBITDA as a % of Sales

%

%

%

%

(a) The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.

(b) Net of income taxes which are shown separately in “Adjusted Income Taxes and Effective Tax Rate”.

(c) The company believes that its non-GAAP measures excluding merger Purchase accounting impacts - Linde AG are useful to investors because:

(i) the 2018 business combination was a merger of equals in an all-stock merger transaction, with no cash consideration,

(ii) the company is managed on a geographic basis and the results of certain geographies are more heavily impacted by merger purchase accounting than others, causing results that are not comparable at the reportable segment level, therefore, the impacts of merger purchase accounting adjustments to each segment vary and are not comparable within the company and when compared to other companies in similar regions,

(iii) business management is evaluated and variable compensation is determined based on results excluding merger purchase accounting impacts, and;

(iv) it is important to investors and analysts to understand the purchase accounting impacts to the financial statements.

A summary of each of the adjustments made for Purchase accounting impacts - Linde AG are as follows:

Adjusted Operating Profit and Margin: The purchase accounting adjustments for the periods presented relate primarily to depreciation and amortization related to the fair value step up of fixed assets and intangible assets (primarily customer related) acquired in the merger and the allocation of fair value step-up for ongoing Linde AG asset disposals (reflected in Other Income/(Expense)).

Adjusted Income Taxes and Effective Tax Rate: Relates to the current and deferred income tax impact on the adjustments discussed above. The income tax expense (benefit) on the non-GAAP pre-tax adjustments was determined using the applicable tax rates for the jurisdictions that were utilized in calculating the GAAP income tax expense (benefit) and included both current and deferred income tax amounts.

Adjusted Income from Equity Investments: Represents the amortization of increased fair value on equity investments related to depreciable and amortizable assets.

Adjusted Noncontrolling Interests: Represents the noncontrolling interests’ ownership portion of the adjustments described above determined on an entity-by-entity basis.

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Supplemental Guarantee Information

On May 5, 2026, the company filed a Form S-3 Registration Statement with the SEC ("the Registration Statement").

Linde plc may offer debt securities, preferred shares, depositary shares and ordinary shares under the Registration Statement, and debt securities exchangeable for or convertible into preferred shares, ordinary shares or other debt securities. Debt securities of Linde plc may be guaranteed by Linde Inc. and/or Linde GmbH. Linde plc may provide guarantees of debt securities offered by its wholly owned subsidiary Linde Inc. under the Registration Statement.

Linde Inc. is a wholly owned subsidiary of Linde plc. Linde Inc. may offer debt securities under the Registration Statement. Debt securities of Linde Inc. will be guaranteed by Linde plc, and such guarantees by Linde plc may be guaranteed by Linde GmbH. Linde Inc. may also provide guarantees of debt securities offered by Linde plc under the Registration Statement.

Linde GmbH is a wholly owned subsidiary of Linde plc. Linde GmbH may provide (i) guarantees of debt securities offered by Linde plc under the Registration Statement and (ii) upstream guarantees of downstream guarantees provided by Linde plc of debt securities of Linde Inc. offered under the Registration Statement.

In September 2019, Linde plc provided downstream guarantees of all pre-existing Linde Inc. and Linde Finance notes, and Linde GmbH and Linde Inc., respectively, provided upstream guarantees of Linde plc’s downstream guarantees.

Linde plc established a European debt issuance program on May 11, 2020, and filed a base prospectus with the Luxembourg Stock Exchange as subsequently updated on May 4, 2026, for a €25.0 billion debt issuance program (or the equivalent in other currencies), under which Linde plc may offer debt securities. Linde Inc. and Linde GmbH have provided to Linde plc upstream guarantees in relation to debt securities of Linde plc offered under the European debt issuance program, as confirmed to the current program amount. Under the European debt issuance program, Linde plc may issue unsecured notes with such terms, including currency, interest rate and maturity, as agreed by Linde plc and the purchasers of such notes at the time of sale and as set out in the final terms for the relevant issue of notes. The current European debt issuance program will be valid for a period of one year from May 4, 2026, after which it will require updating prior to any further issuance of notes.

By virtue of these guarantee structures, unless specified otherwise, debt securities of Linde plc and Linde Inc. offered under the Registration Statement will be pari passu in right of payment with each other and with the existing Linde Inc. notes, any Linde plc notes issued under the European debt program and any existing Linde Finance notes.

For further information about the guarantees of the debt securities registered under the Registration Statement (including the ranking of such guarantees, limitations on enforceability of such guarantees and the circumstances under which such guarantees may be released), see “Description of Debt Securities – Guarantees” and “Description of Debt Securities – Ranking” in the Registration Statement, which subsections are incorporated herein by reference.

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The following tables present summarized financial information for Linde plc, Linde Inc., Linde GmbH and Linde Finance on a combined basis, after eliminating intercompany transactions and balances between them and excluding investments in and equity in earnings from non-guarantor subsidiaries.

(Millions of dollars)

Statement of Income Data

Sales

$

$

Operating profit

Net income

3

Transactions with non-guarantor subsidiaries

Balance Sheet Data (at period end)

Current assets (a)

$

$

Long-term assets (b)

Current liabilities (c)

Long-term liabilities (d)

(a) From current assets above, amount due from non-guarantor subsidiaries

$

$

(b) From long-term assets above, amount due from non-guarantor subsidiaries

(c) From current liabilities above, amount due to non-guarantor subsidiaries

(d) From long-term liabilities above, amount due to non-guarantor subsidiaries