Matt Dale

Matthew Dale asked about the weakness in APAC manufacturing over the past one to two years, identifying specific end markets causing trouble, and inquired about the performance of the 'other' segment and the timeline for acquisitions to become accretive to the bottom line.

Answer

Sanjiv Lamba, CEO, explained that APAC manufacturing trends vary by region: China's markets are largely bottoming out with green shoots in EV and battery development; Australia (RSP) is stabilizing after declines; India shows strong growth, boosted by trade agreements; and ASEAN remains stable but flattish, linked to China's weakness. Electronics stands out with strong growth. Matt White, CFO, clarified that full run-rate synergies from acquisitions typically take 12-24 months, with a significant portion within 0-12 months. He detailed the 'other' segment, which includes the global helium supply group (facing pricing impact but expecting relief), the global materials business (performing well in aerospace and 3D printing), and corporate overhead costs, with the goal for the businesses to cover overhead.

Matthew Dale asked about the weakness in APAC manufacturing (1-year and 2-year stack), specific end markets causing trouble, and any Q4 strength. He also inquired about the 'other' segment's performance and the typical time for acquisitions to become accretive.

Answer

Sanjiv Lamba, CEO, explained that China manufacturing is largely bottoming out with green shoots in EV and battery development. Australia (RSP) is stabilizing, and India shows strong growth. ASEAN remains stable but flat, linked to China's weakness. Matt White, CFO, clarified that the 'other' segment includes global helium supply (impacted by pricing), global materials (aerospace, 3D printing, growing well), and corporate overhead. He added that acquisitions typically achieve full run-rate synergies within 12-24 months, with significant benefits in the first 0-12 months.

Matthew Dale from Bank of America questioned the sequential pricing trend, noting it didn't move up, and asked about Linde's confidence in continuing to increase pricing amidst a slower macroeconomic environment.

Answer

CFO Matt White explained that sequential pricing can vary due to contract anniversary and escalation timings, emphasizing that year-over-year pricing of 2% aligns with globally weighted inflation. CEO Sanjiv Lamba added that helium and rare gases, though a small portion of revenue, have been a drag on pricing, particularly in APAC.

Matthew Dale inquired about the sequential movement of pricing, noting it didn't move up, and asked about Linde's confidence in continuing to increase prices given the slower macroeconomic environment.

Answer

Matt White, CFO, explained that sequential pricing can vary due to timing differences in contract anniversaries and escalations, preferring to focus on the 2% year-over-year increase which aligns with global inflation. Sanjiv Lamba, CEO, added that helium and rare gases, particularly in APAC, have been a drag on pricing, though their overall impact on enterprise revenue is small.

Matt Dale from Bank of America questioned why supply chain inefficiencies appeared to be a larger headwind in the quarter and asked about the outlook for fixed cost leverage if business conditions were to deteriorate further.

Answer

SVP of Finance & CFO Al Mestyshin explained that production schedules were adjusted downward in Q2 to match lower sales, resulting in lost absorption of fixed costs. For the second half, he noted that these inefficiencies account for about 20% of the expected gross profit reduction, and stressed the company's discipline in managing inventory to match demand.

Matt Dale of Bank of America asked for more detail on the supply chain inefficiencies, why they became a larger headwind in Q2, and how to think about fixed cost leverage if demand deteriorates further.

Answer

CFO Allen Mistysyn explained that production schedules were adjusted down to match lower sales volumes, which negatively impacted absorption of fixed costs, as manufacturing sites are about 60% fixed. He noted that for the second half, about 20% of the gross profit reduction is due to these inefficiencies, and the company is managing inventory tightly to prevent issues in 2026.