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    LIN
    Earnings call· Jun 2026(Q2 FY26)

    LINDE Q2 FY26 earnings call LIN

    Jul 31, 2026 Source

    Executive summary

    Linde Q2 FY26 — Record Sales & EPS Driven by Electronics and Backlog Growth

    Linde delivered record sales and EPS in Q2 FY26, fueled by strong electronics demand and significant backlog additions. While the core industrial gas business performed well, margin performance was impacted by the U.S. home care business and mix effects from equipment sales. Management is actively addressing these challenges and expects sequential improvement, maintaining a robust long-term growth outlook.

    Highlights

    5

    • Achieved record sales and EPS levels, with both growing at near double-digit percent.

    • Increased backlog by $1 billion to a record $8.1 billion, driven by new electronics wins.

    • Electronics is the fastest-growing end market, with 18% YoY growth in Q2 FY26.

    • Manufacturing showed robust recovery, particularly in the U.S., with aerospace accounting for over 1/3 of growth.

    • Deployed $6 billion of capital year-to-date, split evenly between business investments and shareholder returns.

    Concerns

    4

    • Operating margins, excluding cost pass-through, declined approximately 30 basis points year-over-year.

    • U.S. home care business negatively impacted Americas margins, with a headwind estimated to be over $100 million in Q2 FY26.

    • APAC margin erosion mostly due to lower margin equipment sales for electronic customers.

    • Helium supply chain dislocation leading to higher costs, making its contribution positive on a dollar basis but dilutive on a margin basis.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year 2026 Adjusted EPS
    $17.70 to $17.90
    high materiality
    High
    Q3 2026 Adjusted EPS
    $4.45 to $4.55
    high materiality
    High
    Project Start-ups (number of projects)
    more than 20 projects
    medium materiality
    High
    Sale of Gas Backlog (end of year)
    finish the year with an 8 handle
    high materiality
    High
    Space Market Opportunity
    $1 billion plus
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Americas (excluding U.S. home care)
    The gases business is doing well, with margins increasing when excluding the U.S. home care business and cost pass-through.
    		———up 20 bps
    APAC
    Margin erosion mostly due to lower margin equipment sales for electronic customers. Volume up 6% YoY, driven by base volume, significant equipment sales, and ramp-ups of backlog projects in ASEAN.
    		—6%—erosion

    Operational metrics

    14
    Adjusted EPS growth
    10%YoY
    Q2 FY26

    Operating profit rolled down to an EPS of $4.50 or 10% over prior year.

    Operating margin decline (ex-cost pass-through)
    30YoY
    Q2 FY26

    Operating margins, excluding cost pass-through, declined approximately 30 basis points year-over-year, primarily driven by the Americas segment.

    Operating margin
    29.5%down 60 bps YoY
    Q2 FY26

    Operating margins of 29.5% decreased 60 basis points from prior year or 30 basis points when excluding the impact of cost pass-through.

    Underlying sales growth
    4%YoY
    Q2 FY26

    Excluding FX, acquisitions, engineering, and cost pass-through, underlying sales rose 4% YoY.

    Underlying sales growth
    4%QoQ
    Q2 FY26

    Sequentially, underlying sales increased 4% from 3% volume and 1% pricing.

    Capital deployed
    $6 billion
    YTD FY26

    Year-to-date, we've deployed $6 billion of capital, split evenly between business investments, and shareholder returns.

    Secured growth capital deployed
    $1.9 billion
    YTD FY26

    $1.9 billion of secured growth represents capital deployed for acquisitions and the project backlog.

    Electronics end market growth
    18%YoY
    Q2 FY26

    Electronics, as you saw year-on-year had 18% growth in the second quarter.

    Manufacturing growth contribution from aerospace
    more than 1/3
    Q2 FY26

    aerospace accounted for more than 1/3 of the manufacturing growth during the quarter.

    Manufacturing hardgoods sales growth
    double-digit percentYoY
    Q2 FY26

    Here, the gases side has been growing mid- to high single digit with the hardgoods themselves growing double digit.

    Manufacturing gases sales growth
    mid- to high single digitYoY
    Q2 FY26

    Here, the gases side has been growing mid- to high single digit with the hardgoods themselves growing double digit.

    Q2 to Q3 sequential EPS increase
    $0.05sequential increase
    Q2 FY26 to Q3 FY26

    The Q2 to Q3 sequential EPS trend is projected to increase $0.05 at the midpoint when excluding FX.

    CapEx estimate increase
    $500 millionincrease
    FY26

    The CapEx number on the estimate was bumped up... by adding the new project that Sanjiv mentioned in the prepared remarks, that is contributing to that. And yes, there are going to be more commercial space activities and the base CapEx that also are contributing to that as well.

    Revenue to CapEx conversion range
    20% to 50%
    null

    traditionally, for us, revenue has ranged anywhere from 20% to 50% depending upon energy pass-through or -- and I would just say, of the ones we've won, they're very, very similar to the structure and ones we've already had in place on the first few phases, there's no real difference from that perspective.

    Industry KPIs

    3
    MetricValueDetails
    Volume vs price split4%%
    Helium supply demand pricingdilutive on a margin basis
    Productivity cost savings program—

    Orderbook & backlog

    1
    Sale of Gas Backlog$8.1 billionQ2 FY26

    increased by $1 billion

    Record level, after securing a new electronic spin in the U.S. Expects to finish the year with an '8 handle' despite $1.3 billion in project start-ups.

    Capital programs

    1
    Taiwan JV Semiconductor Fab & Advanced Packaging Facilitiesunder development$800 million
    Funding: Taiwan JV

    Benefit: ASUs and hydrogen production units

    Not included in the backlog are a couple of electronics wins by our Taiwan JV, which will invest approximately $800 million to build, own and operate ASUs and hydrogen production units to supply to new semiconductor fab and advanced packaging facilities there.

    Risks & headwinds

    4
    U.S. Home Care Business (Lincare) underperformanceQ2 FY26

    headwind estimated to be over $100 million

    Mitigation: Actively pruning portfolio, series of actions underway to improve performance, evaluating strategic fit within Linde.

    Operating margin declineQ2 FY26

    30 basis points year-over-year

    Mitigation: Actions underway to improve, expect sequential improvement into Q3. Many headwinds expected to be temporary.

    Helium supply chain dislocation and higher costsQ2 FY26, extending into early next year

    positive on a dollar basis, but dilutive on a margin basis

    Mitigation: Ensuring reliable and safe supplies to existing customers, signing new long-term contracts, leveraging diverse supply sources, maintaining cabin, and strong logistics.

    Middle East crisis impact on Asian industrial activityQ2 FY26

    countries highly dependent on hydrocarbons coming out of the Middle East have had to scale back industrial activity

    Mitigation: Everybody is hoping for resolution. Once that happens, you will see that normalization happen fairly quickly.

    What to watch in Q3 FY26

    4

    U.S. Home Care Business (Lincare) margin improvement

    Q3 FY26
    Currentnegatively impacted Americas margins
    Targetsequential improvement

    Why it matters

    Lincare's underperformance was a primary driver of overall margin decline, and its improvement is key to overall profitability.

    Even though we have been actively pruning this portfolio, it simply has not been enough to overcome the continued headwinds led by higher cost inflation and policy changes. We have a series of actions underway, and I fully expect sequential improvement into the third quarter.

    Q&A highlights

    6

    How much of a headwind has Lincare been, and is it currently profitable?

    Sanjiv Lamba stated that without Lincare, Americas margins would have been up 20 basis points (ex-pass through). He acknowledged Lincare's negative impact due to cost inflation and policy changes, but emphasized aggressive actions are underway for sequential improvement, while also evaluating strategic fit.

    “the Americas business ex the U.S. home care or Lincare business would be up 20 basis points on margin, ex pass through as we normally do.”

    asked by Laurent Favre · answered by Sanjiv Lamba

    2 min read6 chapters

    Detailed Narrative

    01

    Electronics Growth and Backlog

    Linde secured $1 billion in new electronics wins, contributing to a record $8.1 billion sale of gas backlog. The company expects electronics to remain the largest backlog contributor and fastest-growing market, with strong pipelines in the U.S., Taiwan, and Korea. This includes an $800 million investment by their Taiwan JV for ASUs and hydrogen production units for new semiconductor fabs.

    02

    U.S. Home Care Business Challenges

    The U.S. home care business (Lincare) negatively impacted Americas segment margins, contributing to a 30 basis point year-over-year decline in operating margins (excluding cost pass-through). This is attributed to higher cost inflation and policy changes. Management is implementing aggressive actions for operational improvement and productivity, while also evaluating strategic options for the business.

    03

    End-Market Performance

    Consumer-related markets (healthcare, food & beverage) grew consistently. Electronics grew 18% year-over-year. Manufacturing showed robust growth, particularly in the U.S., driven by aerospace (over 1/3 of manufacturing growth) and construction activity related to data centers. Metals and Mining, and Chemicals Energy markets grew low single digits, with APAC project backlog contributions driving chemicals growth.

    04

    Capital Management and Deployment

    Year-to-date, Linde deployed $6 billion of capital, evenly split between business investments ($1.9 billion for acquisitions and project backlog) and shareholder returns. The company expects secured growth to remain a significant use of capital given the record backlog and project pipeline. Operating cash flow showed moderate year-over-year growth, with expectations for a stronger second half.

    05

    Helium Market Dynamics

    The company successfully navigated the complex helium market, ensuring reliable supplies to contracted customers and signing new long-term contracts due to diverse supply sources and logistics capabilities. While pricing has improved, higher dislocation costs currently make the margin contribution dilutive, though positive on a dollar basis. Normalization of the helium market is expected to be slow, likely extending into early next year, contingent on resolution of Strait of Hormuz issues.

    06

    CapEx Increase and Commercial Space

    The CapEx estimate for the year was increased by $500 million, driven by new backlog wins and commercial space activities. For commercial space customers, Linde anticipates a blend of sale of gas and sale of plant models, with the company participating in both, particularly for atmospheric gases, while hydrogen remains primarily a sale of gas opportunity.

    AI-generated summary of the company’s earnings call. Not investment advice.