LINDE PLC - Quarter Report: 2024 March (Form 10-Q)

Net Income (Including Noncontrolling Interests) Less: noncontrolling interests ()()Net Income – Linde plc$ $ Per Share Data – Linde plc ShareholdersBasic earnings per share $ $ Diluted earnings per share$ $ Weighted Average Shares Outstanding (000’s):Basic shares outstanding Diluted shares outstanding

The accompanying notes are an integral part of these financial statements.

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LINDE PLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of dollars)

(UNAUDITED)


	Quarter Ended March 31,
	2024	2023
NET INCOME (INCLUDING NONCONTROLLING INTERESTS)	$	$

OTHER COMPREHENSIVE INCOME (LOSS)
Translation adjustments:
Foreign currency translation adjustments	()
Income taxes
Translation adjustments	()
Funded status - retirement obligations (Note 7):
Retirement program remeasurements	()	()
Reclassifications to net income	()	()
Income taxes
Funded status - retirement obligations		()
Derivative instruments (Note 4):
Current unrealized gain (loss)		()
Reclassifications to net income		()
Income taxes	()
Derivative instruments		()
TOTAL OTHER COMPREHENSIVE INCOME (LOSS)	()	()

COMPREHENSIVE INCOME (LOSS) (INCLUDING NONCONTROLLING INTERESTS)
Less: noncontrolling interests	()	()
COMPREHENSIVE INCOME (LOSS) - LINDE PLC	$	$

The accompanying notes are an integral part of these financial statements.

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LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

(UNAUDITED)


	March 31, 2024	December 31, 2023
Assets
Cash and cash equivalents	$	$
Accounts receivable - net
Contract assets
Inventories
Prepaid and other current assets
Total Current Assets
Property, plant and equipment - net
Goodwill
Other intangible assets - net
Other long-term assets
Total Assets	$	$
Liabilities and equity
Accounts payable	$	$
Short-term debt
Current portion of long-term debt
Contract liabilities
Other current liabilities
Total Current Liabilities
Long-term debt
Other long-term liabilities
Total Liabilities
Redeemable noncontrolling interests
Linde plc Shareholders’ Equity (Note 10):
Ordinary shares,€ par value, authorized shares, 2024 issued: ordinary shares; 2023 issued: ordinary shares
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)	()	()
Less: Treasury shares, at cost (2024 – shares and 2023 – shares)	()	()
Total Linde plc Shareholders’ Equity
Noncontrolling interests
Total Equity
Total Liabilities and Equity	$	$

The accompanying notes are an integral part of these financial statements.

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LINDE PLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions of dollars)

(UNAUDITED)


	Three Months Ended March 31,
	2024	2023
Increase (Decrease) in Cash and Cash Equivalents
Operations
Net income - Linde plc	$	$
Add: Noncontrolling interests
Net Income (including noncontrolling interests)
Adjustments to reconcile net income to net cash provided by operating activities:
Other charges, net of payments	()	()
Depreciation and amortization
Deferred income taxes	()
Share-based compensation
Working capital:
Accounts receivable	()	()
Inventory	()	()
Prepaid and other current assets	()	()
Payables and accruals	()	()
Contract assets and liabilities, net	()	()
Pension contributions	()	()
Long-term assets, liabilities and other	()	()
Net cash provided by (used for) operating activities
Investing
Capital expenditures	()	()
Acquisitions, net of cash acquired		()
Divestitures, net of cash divested and asset sales
Net cash provided by (used for) investing activities	()	()
Financing
Short-term debt borrowings (repayments) - net	()
Long-term debt borrowings
Long-term debt repayments	()	()
Issuances of ordinary shares
Purchases of ordinary shares	()	()
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	()
Change in cash and cash equivalents		()
Cash and cash equivalents, beginning-of-period
Cash and cash equivalents, end-of-period	$	$

The accompanying notes are an integral part of these financial statements.

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INDEX TO NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Notes to Condensed Consolidated Financial Statements - Linde plc and Subsidiaries (Unaudited)

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million and $ million at March 31, 2024 and December 31, 2023, respectively, and gross receivables aged greater than one year were $ million and $ million at March 31, 2024 and December 31, 2023, respectively. Other receivables were $ million and $ million at March 31, 2024 and December 31, 2023, respectively. Receivables aged greater than one year are generally fully reserved unless specific circumstances warrant exceptions, such as those backed by federal governments.

Accounts receivable net of reserves were $ million at March 31, 2024 and $ million at December 31, 2023. Allowances for expected credit losses were $ million at March 31, 2024 and $ million at December 31, 2023. Provisions for expected credit losses were $ million and $ million for the three months ended March 31, 2024 and 2023, respectively. The allowance activity in the three months ended March 31, 2024 and 2023 related to write-offs of uncollectible amounts, net of recoveries and currency movements is not material.

Inventories

$ Work in process Finished goods Total inventories$ $

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$ Other bank borrowings (primarily non U.S.) Total short-term debt LONG-TERM (a)(U.S. dollar denominated unless otherwise noted)

% Euro denominated notes due 2024 (b)

% Euro denominated notes due 2024 (c)

% Notes due 2024

% Notes due 2025

% Euro denominated notes due 2025

% Euro denominated notes due 2026

% Notes due 2026

% Euro denominated notes due 2027

% Euro denominated notes due 2028 (c)

% Euro denominated notes due 2028 (d)

% Euro denominated notes due 2029

% Notes due 2030

% Euro denominated notes due 2030

% Euro denominated notes due 2031

% Euro denominated notes due 2031 (d)

% Euro denominated notes due 2032

% Euro denominated notes due 2033

% Euro denominated notes due 2034

% Euro denominated notes due 2035

% Euro denominated notes due 2036 (d)

% Notes due 2042

% Notes due 2050

% Euro denominated notes due 2051

Non U.S. borrowings Other Less: current portion of long-term debt()()Total long-term debt Total debt$ $

(a)Amounts are net of unamortized discounts, premiums and/or debt issuance costs as applicable.

(b)In February 2024, Linde repaid € million of % notes that became due.

(c)March 31, 2024 and December 31, 2023 included a cumulative $ million and $ million adjustment to carrying value, respectively, related to hedge accounting of interest rate swaps. Refer to Note 4.

(d)In February 2024, Linde issued € million of % notes due in 2028, € million of % notes due in 2031 and € million of % notes due in 2036.

The company maintains a $ billion and a $ billion unsecured revolving credit agreement with a syndicate of banking institutions that expire on December 7, 2027 and December 4, 2024, respectively. There are no financial maintenance covenants contained within the credit agreements. borrowings were outstanding under the credit agreements as of March 31, 2024.

% and % as of March 31, 2024 and December 31, 2023, respectively.

types of derivatives that the company enters into: (i) those relating to fair-value exposures, (ii) those relating to cash-flow exposures, and (iii) those relating to foreign currency net investment exposures. Fair-value exposures relate to recognized assets or liabilities, and firm commitments; cash-flow exposures relate to the variability of future cash flows associated with recognized assets or liabilities, or forecasted transactions; and net investment exposures relate to the impact of foreign currency exchange rate changes on the carrying value of net assets denominated in foreign currencies.

When a derivative is executed and hedge accounting is appropriate, it is designated as either a fair-value hedge, cash-flow hedge, or a net investment hedge. Currently, Linde designates all interest-rate and treasury-rate locks as hedges for accounting purposes; however, cross-currency contracts are generally not designated as hedges for accounting purposes. Certain currency contracts related to forecasted transactions are designated as hedges for accounting purposes. Whether designated as hedges for accounting purposes or not, all derivatives are linked to an appropriate underlying exposure. On an ongoing basis, the company assesses the hedge effectiveness of all derivatives designated as hedges for accounting purposes to determine if they continue to be highly effective in offsetting changes in fair values or cash flows of the underlying hedged items. If it is determined that the hedge is not highly effective through the use of a qualitative assessment, then hedge accounting will be discontinued prospectively.

Counterparties to Linde's derivatives are major banking institutions with credit ratings of investment grade or better. The company has Credit Support Annexes ("CSAs") in place for certain entities with their principal counterparties to minimize potential default risk and to mitigate counterparty risk. Under the CSAs, the fair values of derivatives for the purpose of interest rate and currency management are collateralized with cash on a regular basis. As of March 31, 2024, the impact of such collateral posting arrangements on the fair value of derivatives was insignificant. Management believes the risk of incurring losses on derivative contracts related to credit risk is remote and any losses would be immaterial.

$ $ $ $ $ Forecasted transactions Total $ $ $ $ $ $ Derivatives Designated as Hedging Instruments:Currency contracts: Forecasted transactions$ $ $ $ $ $ Commodity contracts N/AN/A Interest rate swaps Total Hedges$ $ $ $ $ $ Total Derivatives$ $ $ $ $ $

(a)Amounts as of March 31, 2024 and December 31, 2023 included current assets of $ million and $ million which are recorded in prepaid and other current assets; long-term assets of $ million and $ million which are recorded in other long-term assets; current liabilities of $ million and $ million which are recorded in other current liabilities; and long-term liabilities of $ million and $ million which are recorded in other long-term liabilities.

Balance Sheet Items

Foreign currency contracts related to balance sheet items consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on recorded balance sheet assets and liabilities denominated in currencies other than the functional currency of the related operating unit. Certain forward currency contracts are entered into to protect underlying monetary assets and liabilities denominated in foreign currencies from foreign exchange risk and are not designated as hedging instruments. For balance sheet items that are not designated as hedging instruments, the fair value adjustments on these contracts are offset by the fair value adjustments recorded on the underlying monetary assets and liabilities.

Forecasted Transactions

Foreign currency contracts related to forecasted transactions consist of forward contracts entered into to manage the exposure to fluctuations in foreign-currency exchange rates on (1) forecasted purchases of capital-related equipment and services, (2) forecasted sales, or (3) other forecasted cash flows denominated in currencies other than the functional currency of the related operating units. For forecasted transactions that are designated as cash flow hedges, fair value adjustments are recorded to accumulated other comprehensive income (loss) with deferred amounts reclassified to earnings over the same time period as the income statement impact of the associated purchase. For forecasted transactions that do not qualify for cash flow hedging relationships, fair value adjustments are recorded directly to earnings. Linde is hedging forecasted transactions for a maximum period of .

Commodity Contracts

Commodity contracts are entered into to manage the exposure to fluctuations in commodity prices, which arise in the normal course of business from its procurement transactions. To reduce the extent of this risk, Linde enters into a limited number of electricity, natural gas, and propane gas derivatives. For forecasted transactions that are designated as cash flow hedges, fair value adjustments are recorded to accumulated other comprehensive income (loss) with deferred amounts reclassified to earnings over the same time period as the income statement impact of the associated purchase. Linde is hedging commodity contracts for a maximum period of .

Net Investment Hedges

As of March 31, 2024, Linde has € billion ($ billion) Euro-denominated notes and intercompany loans and ¥ billion ($ billion) CNY-denominated intercompany loans that are designated as hedges of the net investment positions in certain foreign operations. Since hedge inception, the deferred gain recorded within cumulative translation adjustment component of

million (deferred gain of $ million in the consolidated statement of comprehensive income for the three months ended March 31, 2024).

As of March 31, 2024, exchange rate movements relating to previously designated hedges that remain in accumulated other comprehensive income (loss) is at a gain of $ million. These movements will remain in accumulated other comprehensive income (loss), until appropriate, such as upon sale or liquidation of the related foreign operations at which time amounts will be reclassified to the consolidated statements of income.

Interest Rate Swaps

Linde uses interest rate swaps to hedge the exposure to changes in the fair value of financial assets and financial liabilities as a result of interest rate changes. These interest rate swaps effectively convert fixed-rate interest exposures to variable rates; fair value adjustments are recognized in earnings along with an equally offsetting charge/benefit to earnings for the changes in the fair value of the underlying financial asset or financial liability (See Note 3).

In addition, as of December 31, 2023, Linde was using interest rate swaps with a notional value of € billion to hedge the variability of future cash flows of forecasted transactions due to interest rate risk and had designated this as a cash flow hedge. The interest rate swaps were terminated during the first quarter of 2024 with the February debt issuance and the settlement values were .

Derivatives' Impact on Consolidated Statements of Income

)$()Other balance sheet items()()Total$()$()

* The gains (losses) on balance sheet items are offset by gains (losses) recorded on the underlying hedged assets and liabilities. Accordingly, the gains (losses) for the derivatives and the underlying hedged assets and liabilities related to debt items are recorded in the consolidated statements of income as interest expense-net. Other balance sheet items and anticipated net income gains (losses) are generally recorded in the consolidated statements of income as other income (expenses)-net.

The amounts of gain or loss recognized in accumulated other comprehensive income (loss) and reclassified to the consolidated statement of income was not material for the three months ended March 31, 2024 and 2023, respectively. Net impacts expected to be reclassified to earnings during the next twelve months are also not material.

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$ $ $ $ $ Investments and securities*

Total

$ $ $ $ $ LiabilitiesDerivative liabilities$ $ $ $ $ $

* Investments and securities are recorded in prepaid and other current assets and other long-term assets in the company's condensed consolidated balance sheets.

Level 1 investments and securities are marketable securities traded on an exchange. Level 2 investments are based on market prices obtained from independent brokers or determined using quantitative models that use as their basis readily observable market parameters that are actively quoted and can be validated through external sources, including third-party pricing services, brokers and market transactions. Level 3 investments and securities consist of a venture fund. For the valuation, Linde uses the net asset value received as part of the fund's quarterly reporting, which for the most part is not based on quoted prices in active markets. In order to reflect current market conditions, Linde proportionally adjusts by observable market data (stock exchange prices) or current transaction prices.

Changes in level 3 investments and securities were immaterial.

The fair value of cash and cash equivalents, short-term debt, accounts receivable-net, and accounts payable approximate carrying value because of the short-term maturities of these instruments.

The fair value of long-term debt is estimated based on the quoted market prices for the same or similar issues. Long-term debt is categorized within Level 2 of the fair value hierarchy. At March 31, 2024, the estimated fair value of Linde’s long-term debt portfolio was $ million versus a carrying value of $ million. At December 31, 2023, the estimated fair value of Linde’s long-term debt portfolio was $ million versus a carrying value of $ million. Differences between the carrying value and the fair value are attributable to fluctuations in interest rates subsequent to when the debt was issued and relative to stated coupon rates.

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$ Denominator (Thousands of shares)Weighted average shares outstanding Shares earned and issuable under compensation plans Weighted average shares used in basic earnings per share Effect of dilutive securitiesStock options and awards

Weighted average shares used in diluted earnings per share

Basic Earnings Per Share$ $ Diluted Earnings Per Share$ $

There were antidilutive shares for any period presented.

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$ Amount recognized in Net pension and OPEB cost (benefit), excluding service costInterest cost Expected return on plan assets()()Net amortization and deferral()()()() Net periodic benefit cost (benefit)$()$()

Components of net periodic benefit expense for other post-retirement plans for the three months ended March 31, 2024 and 2023 were not material.

million to $ million million have been made through March 31, 2024.

million. Linde has not recorded any liabilities related to such claims based on management judgment and opinions of outside counsel.

During 2023, the Brazilian Supreme Court issued a decision confirming the constitutionality of a specific federal income tax, with retroactive effect. As a result of this decision, the company recorded a reserve based on its best estimate of potential settlement. This decision has not yet been finalized and is subject to ongoing motions for clarification. Because litigation in Brazil historically takes many years to resolve, it is very difficult to estimate the timing of resolution of these matters; however, it is possible that certain of these matters may be resolved within the near term. The company is vigorously defending against the proceedings.

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per share. Any such increase would apply to all Linde AG shares that were outstanding on April 8, 2019, when the cash merger squeeze-out was completed. The period for plaintiffs to file claims expired on July 9, 2019. In November 2023, the court issued a decision rejecting the plaintiffs’ claims in their entirety and determining that the cash merger squeeze-out consideration was appropriate. The plaintiffs have appealed this decision.

The company believes the consideration paid was fair and that the claims are not supported by sufficient evidence, and no reserve has been established. We cannot estimate the timing of resolution.

•In December 2022, a Russian court based in St. Petersburg ("St. Petersburg Court") issued an injunction preventing (i) the sale of any shares in Linde’s subsidiaries and joint ventures in Russia, and (ii) the disposal of any of the assets in those entities exceeding % of the relevant company’s overall asset value. The injunction was requested by RusChemAlliance (RCA) to secure payment of a possible award under an arbitration proceeding RCA intended to file against Linde Engineering for alleged breach of contract under the agreement to build a gas processing plant in Russia entered into in July 2021. Performance of the agreement was lawfully suspended by Linde Engineering on May 27, 2022 in compliance with applicable sanctions. In March 2023, RCA filed a claim in St. Petersburg against Linde GmbH for recovery of advance payments under the agreement ("GPP Claim"), and subsequently (i) added Linde and other Linde subsidiaries as defendants, and (ii) is seeking payment of alleged damages from Linde and guarantor banks. In March 2024, RCA filed a similar claim for repayment and damages against Linde for alleged breach of contract under the agreement to build a liquefied natural gas plant in Russia entered into in September 2021 (“LNG Claim”, and together with the GPP Claim, the “Russian Claims”).

In accordance with the dispute resolution provisions of the agreements, in 2023, Linde filed a notice of arbitration with the Hong Kong International Arbitration Centre ("HKIAC") against RCA to claim that (i) RCA has no entitlement to payment, (ii) RCA’s Russian Claims claims are in breach of the arbitration agreement which requires HKIAC arbitration, and (iii) RCA must compensate Linde for the losses and damages caused by the injunction. Additionally, Linde filed for and obtained an anti-suit injunction from a Hong Kong court against RCA directing RCA to seek a stay of the claims and ordering it to resolve any disputes in accordance with HKIAC arbitration.

In January, 2024, the Hong Kong court issued a final judgment in Linde’s favor (i) granting a permanent anti-suit injunction against RCA to seek a stay of the GPP claim and not start an LNG claim, (ii) granting a permanent, global anti-enforcement injunction against RCA for the GPP claim, and (iii) ordering that the injunction issued by the St. Petersburg Court be lifted (“HK Court Judgement”).

Despite the judgments of the Hong Kong court and similar orders issued by the HKIAC arbitration tribunals, the St. Petersburg injunction affecting Linde’s shares and assets has not been lifted, the proceeding in St. Petersburg has not been stayed and RCA is continuing to pursue its claims in Russia.

In February 2024, the St. Petersburg Court decided the GPP Claim in favor of RCA. Linde appealed this decision in March 2024. RCA cannot enforce the decision (including foreclosing on the shares of the Russian entities) until after the appeal is decided in St. Petersburg.

Linde does not expect a material adverse impact on earnings from this decision given the liability recorded as of March 31, 2024 and the immaterial remaining investment value of its deconsolidated Russia subsidiaries. As of March 31, 2024, Linde has a contingent liability of $ billion recorded in Other long-term liabilities, which represents advance payments previously recorded in contract liabilities related to terminated engineering projects with RCA. As a result of the contract terminations, Linde no longer has future performance obligations for these projects.

It is difficult to estimate the timing of resolution of these matters. The company intends to vigorously defend its interests in both the Russian Claims and arbitration proceedings.

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$ EMEA APAC Engineering Other Total sales$ $


(Millions of dollars)	2024	2023
SEGMENT OPERATING PROFIT
Americas	$	$
EMEA
APAC
Engineering
Other
Segment operating profit
Other charges		()


Purchase accounting impacts - Linde AG (b)	()	()
Total operating profit	$	$

(a)Sales reflect external sales only. Intersegment sales, primarily from Engineering to the industrial gases segments, were $ million and $ million for the three months ended March 31, 2024 and 2023.

(b)Represents purchase accounting impacts related to the 2018 merger.

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10.

$ $ $ $ $ Net income (a) Other comprehensive income (loss)()()()()()()Noncontrolling interests:Additions (reductions) Dividends and other capital changes ()() ()()

Dividends to Linde plc ordinary share holders ($ per share in 2024 and $ per share in 2023)

() ()() ()Issuances of ordinary shares:For employee savings and incentive plans() ()() ()Purchases of ordinary shares() ()())Share-based compensation Balance, end of period$ $ $ $ $ $

(a) Net income for noncontrolling interests excludes net income related to redeemable noncontrolling interests which is not significant for the three months ended March 31, 2024 and 2023 and which is not part of total equity.

)$()EMEA()()APAC()()Engineering()()Other ()()Derivatives - net of taxes

(Millions of dollars)

Quarter Ended March 31, 2023

Sales

Americas

EMEA

APAC

Engineering

Other

Total

Merchant

On-Site

Packaged Gas

Other

Total

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billion. This amount excludes all on-site sales above minimum purchase requirements, which can be significant depending on customer needs. In the future, actual amounts will be different due to impacts from several factors, many of which are beyond the company’s control including, but not limited to, timing of newly signed, terminated and renewed contracts, inflationary price escalations, currency exchange rates, and pass-through costs related to natural gas and electricity. The actual duration of long-term supply contracts ranges up to . The company estimates that approximately half of the revenue related to minimum purchase requirements will be earned in the next and the remaining thereafter.

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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 Other charges, net gains or losses 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, 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 three months ended March 31, 2024 and 2023. 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 March 31,
(Millions of dollars, except per share data)	2024			2023			Variance
Sales	$	8,100		$	8,193		(1)	%
Cost of sales, exclusive of depreciation and amortization	$	4,216		$	4,431		(5)	%
As a percent of sales	52.0		%	54.1		%
Selling, general and administrative	$	860		$	822		5	%
As a percent of sales	10.6		%	10.0		%
Depreciation and amortization	$	949		$	948		—	%
Other charges	$	—		$	18		(100)	%
Other income (expense) - net	$	58		$	(5)		1,260	%
Operating profit	$	2,095		$	1,933		8	%
Operating margin	25.9		%	23.6		%
Interest expense - net	$	65		$	37		76	%
Net pension and OPEB cost (benefit), excluding service cost	$	(50)		$	(45)		11	%
Effective tax rate	22.3		%	22.2		%
Income from equity investments	$	48		$	41		17	%
Noncontrolling interests	$	(38)		$	(36)		6	%
Net Income – Linde plc	$	1,627		$	1,516		7	%
Diluted earnings per share	$	3.35		$	3.06		9	%
Diluted shares outstanding	485,592			495,676			(2)	%
Number of employees	66,195			65,381			1	%
Adjusted Amounts (a)
Operating profit	$	2,341		$	2,206		6	%
Operating margin	28.9		%	26.9		%
Effective tax rate	22.7		%	24.1		%
Net Income – Linde plc	$	1,821		$	1,693		8	%
Diluted earnings per share	$	3.75		$	3.42		10	%
Other Financial Data (a)
EBITDA	$	3,092		$	2,922		6	%
As percent of sales	38.2		%	35.7		%
Adjusted EBITDA	$	3,116		$	2,963		5	%
As percent of sales	38.5		%	36.2		%

(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 first quarter of 2024, Linde's sales were $8,100 million, $93 million below prior year. Cost pass-through, representing the contractual billing of energy cost variances primarily to onsite customers, decreased sales by 2% in the quarter, with minimal impact on operating profit. Volumes decreased sales by 1% in the quarter versus the 2023 respective period. The aforementioned drivers were partially offset by 2% higher price attainment.

Reported operating profit for the first quarter of 2024 of $2,095 million, or 25.9% of sales, was 8% above prior year. The reported year-over-year increase was primarily driven by higher pricing and productivity initiatives which more than offset adverse impacts from cost inflation and lower volumes. The reported effective tax rate ("ETR") was 22.3% in the first quarter 2024 versus 22.2% in the first quarter 2023. Diluted earnings per share ("EPS") was $3.35, or 9% above EPS of $3.06 in the first quarter of 2023, primarily due to higher net income - Linde plc and lower diluted shares outstanding.

Adjusted

In the first quarter of 2024, adjusted operating profit of $2,341, or 28.9% of sales, was 6% higher as compared to 2023, driven by higher pricing, and productivity initiatives, partially offset by cost inflation and lower volumes. The adjusted ETR was 22.7% in the first quarter 2024 versus 24.1% in the 2023 quarter, primarily due to higher tax benefits from share based

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compensation. On an adjusted basis, EPS was $3.75, 10% above the 2023 adjusted EPS of $3.42, 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.

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Results of operations

The changes in consolidated sales compared to the prior year are attributable to the following:


	Quarter Ended March 31, 2024 vs. 2023
	% Change
Factors Contributing to Changes - Sales
Volume	(1)	%
Price/Mix	2	%
Cost pass-through	(2)	%
Currency	—	%
Acquisitions/divestitures	—	%
Engineering	—	%
	(1)	%

Sales

Sales decreased $93 million or 1% for the first quarter of 2024 versus the respective 2023 period. Cost pass-through decreased sales by 2% in the quarter, with minimal impact on operating profit. Volumes decreased sales by 1% in the quarter versus the respective 2023 period, primarily driven by the manufacturing end market. Currency translation was flat in the quarter. Higher pricing across all geographic segments contributed 2% to sales in the quarter.

Cost of sales, exclusive of depreciation and amortization

Cost of sales, exclusive of depreciation and amortization decreased $215 million, or 5%, for the first quarter of 2024 primarily due to lower cost pass-through, lower volumes and productivity gains which more than offset cost inflation. Cost of sales, exclusive of depreciation and amortization was 52.0% of sales, respectively, for the first quarter versus 54.1% respective 2023 period. The decrease as a percentage of sales in the quarter was primarily due to higher pricing and lower cost pass-through.

Selling, general and administrative expenses

Selling, general and administrative expense ("SG&A") increased $38 million, or 5%, for the first quarter of 2024 driven by higher costs. SG&A was 10.6% of first quarter sales versus 10.0% for the respective 2023 period.

Depreciation and amortization

Reported depreciation and amortization expense increased $1 million for the first quarter of 2024.

On an adjusted basis, depreciation and amortization increased $11 million, for the first quarter of 2024 driven by new project start ups.

Other charges

There were no other charges during the first quarter of 2024 and other charges were $18 million for the first quarter of 2023, primarily due to the intercompany reorganization related to delisting from the Frankfurt Stock Exchange.

On an adjusted basis, these benefits and costs have been excluded in both periods.

Other income (expense) - net

Reported other income (expense) - net was a benefit of $58 million for the first quarter of 2024 driven by $43 million in insurance recoveries primarily within the Other segment.

Operating profit

On a reported basis, operating profit increased $162 million, or 8%, for the first quarter of 2024 . The increase in the quarter was primarily due to higher pricing, savings from productivity initiatives and lower other charges, which more than offset the adverse impacts of cost inflation and lower volumes in the first quarter of 2024.

On an adjusted basis, which excludes the impacts of merger-related purchase accounting as well as other charges, operating profit increased $135 million, or 6% in the first quarter of 2024. Operating profit growth was driven by higher pricing and productivity initiatives, which more than offset the effects of cost inflation and lower volumes during the period. A discussion of operating profit by segment is included in the segment discussion that follows.

Interest expense - net

Reported interest expense - net increased $28 million for the first quarter of 2024. On an adjusted basis, interest expense increased $21 million for the first quarter of 2024 versus the respective 2023 period. The increase in both periods was driven primarily by higher interest rates on debt.

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

Reported net pension and OPEB cost (benefit), excluding service cost were benefits of $50 million versus $45 million for the respective 2023 period. The increase in the benefit primarily relates to higher expected return on assets and lower amortization of deferred losses year-over-year.

Effective tax rate

The reported effective tax rate ("ETR") for the quarter was 22.3% versus 22.2% for the respective 2023 period. While the rate is relatively flat year over year, 2024 included higher tax benefits from share based compensation and 2023 included a net decrease in uncertain tax positions. Effective January 1, 2024, Linde is subject to the 15% global minimum tax rate provisions of the OECD’s framework for Pillar Two, the implementation of which did not have a significant impact on the effective tax rate for the quarter.

On an adjusted basis, the ETR for the quarter was 22.7% versus 24.1% for the respective 2023 period. The decrease in the adjusted ETR is primarily due to higher tax benefits from share based compensation in 2024.

Income from equity investments

Reported income from equity investments for the first quarter of 2024 was $48 million versus $41 million for the respective 2023 period.

On an adjusted basis, income from equity investments for the first quarter was $66 million versus $59 million in the respective 2023 period.

Noncontrolling interests

At March 31, 2024, noncontrolling interests consisted primarily of non-controlling shareholders' investments in APAC (primarily China). Reported noncontrolling interests income increased $2 million for the first quarter of 2024 from the respective 2023 period.

Net Income – Linde plc

Reported net income - Linde plc increased $111 million, or 7%, for the first quarter of 2024 versus the respective 2023 period.

On an adjusted basis, which excludes the impacts of purchase accounting and other charges, net income - Linde plc increased $128 million, or 8%, for the first quarter of 2024 versus the respective 2023 period.

On both a reported and adjusted basis, the increase was driven by higher operating profit.

Diluted earnings per share

Reported diluted earnings per share increased $0.29, or 9%, for the first quarter of 2024 versus the comparable 2023 period.

On an adjusted basis, diluted EPS increased $0.33, or 10%, for the first quarter of 2024 versus the respective 2023 period.

The increase on both a reported and adjusted basis is primarily due to higher net income - Linde plc and lower diluted shares outstanding.

Employees

The number of employees at March 31, 2024 was 66,195, an increase of 814 employees from March 31, 2023 due primarily to acquisitions.

Other Financial Data

EBITDA was $3,092 million for the first quarter of 2024 as compared to $2,922 million in the respective 2023 period. The increase was driven by higher net income - Linde plc versus prior year.

Adjusted EBITDA increased to $3,116 million for the first quarter 2024 from $2,963 million in the respective 2023 period. The higher EBITDA was primarily due to higher net income - Linde plc versus the respective prior period.

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 losses for the first quarter were $738 million. The loss in the quarter resulted primarily from currency translation adjustments of $744 million. 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 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 Statements of Income.


(Millions of dollars)	2024		2023		Variance
SALES
Americas	$	3,560	$	3,551	—	%
EMEA	2,091		2,177		(4)	%
APAC	1,591		1,598		—	%
Engineering	539		540		—	%
Other	319		327		(2)	%
Total sales	$	8,100	$	8,193	(1)	%

SEGMENT OPERATING PROFIT
Americas	$	1,088	$	1,025	6	%
EMEA	687		607		13	%
APAC	447		423		6	%
Engineering	100		149		(33)	%
Other	19		2		850	%
Segment operating profit	$	2,341	$	2,206	6	%
Reconciliation to reported operating profit:
Other charges	—		(18)
Purchase accounting impacts - Linde AG	(246)		(255)
Total operating profit	$	2,095	$	1,933

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Americas


	Quarter Ended March 31,
(Millions of dollars)	2024			2023			Variance
Sales	$	3,560		$	3,551		—	%

Operating profit	$	1,088		$	1,025		6	%
As a percent of sales	30.6		%	28.9		%


	Quarter Ended March 31, 2024 vs. 2023
	% Change
Factors Contributing to Changes - Sales
Volume	(1)	%
Price/Mix	3	%
Cost pass-through	(2)	%
Currency	—	%
Acquisitions/divestitures	—	%
	—	%

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 $9 million in the first quarter versus the respective 2023 period. Higher pricing contributed 3% to sales in the quarter. Cost pass-through decreased sales by 2% for the first quarter with minimal impact on operating profit. Volumes decreased sales by 1% for the first quarter driven primarily by the manufacturing and healthcare end markets.

Operating profit

Operating profit in the Americas segment increased $63 million, or 6%, in the first quarter versus the respective 2023 period, driven primarily by higher pricing and continued productivity initiatives which more than offset cost inflation and lower volumes during the quarter.

EMEA


	Quarter Ended March 31,
(Millions of dollars)	2024			2023			Variance
Sales	$	2,091		$	2,177		(4)	%

Operating profit	$	687		$	607		13	%
As a percent of sales	32.9		%	27.9		%


	Quarter Ended March 31, 2024 vs. 2023
	% Change
Factors Contributing to Changes - Sales
Volume	(2)	%
Price/Mix	3	%
Cost pass-through	(5)	%
Currency	—	%
Acquisitions/divestitures	—	%
	(4)	%

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The EMEA segment includes Linde's industrial gases operations in approximately 45 European, Middle Eastern and African countries including Germany, United Kingdom, France, the Republic of South Africa and Sweden.

Sales

EMEA segment sales decreased by $86 million, or 4%, in the first quarter compared to the respective 2023 period. Higher price attainment increased sales by 3% in the quarter . Volumes decreased sales by 2% in the quarter led by the manufacturing end market. Cost pass-through decreased sales by 5% in the quarter with minimal impact on operating profit. Currency translation was flat in the quarter.

Operating Profit

Operating profit for the EMEA segment increased by $80 million, or 13%, in the first quarter compared to the respective 2023 periods. The increase in operating profit in the first quarter was driven primarily by higher pricing and continued productivity initiatives, partially offset by cost inflation and lower volumes.

APAC


	Quarter Ended March 31,
(Millions of dollars)	2024			2023			Variance
Sales	$	1,591		$	1,598		—	%

Operating profit	$	447		$	423		6	%
As a percent of sales	28.1		%	26.5		%


	Quarter Ended March 31, 2024 vs. 2023
	% Change
Factors Contributing to Changes - Sales
Volume/Equipment	3	%
Price/Mix	1	%
Cost pass-through	—	%
Currency	(4)	%
Acquisitions/divestitures	—	%
	—	%

The APAC segment includes Linde's industrial gases operations in approximately 20 Asian and South Pacific countries and regions including China, Australia, India, and South Korea.

Sales

Sales for the APAC segment decreased $7 million in the first quarter versus the respective 2023 period. Higher pricing contributed 1% to sales in the quarter. Volumes increased 3% in the quarter including project start-ups in the electronics and chemicals and energy end markets. Currency translation decreased sales by 4%, driven primarily by the weakening of the Australian dollar, Korean won and Chinese yuan against the U.S. dollar.

Operating profit

Operating profit in the APAC segment increased $24 million, or 6%, in the first quarter versus the respective 2023 period, driven by continued productivity initiatives which more than offset the impact of currency and cost inflation during the first quarter.

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Engineering


	Quarter Ended March 31,
(Millions of dollars)	2024			2023			Variance
Sales	$	539		$	540		—	%

Operating profit	$	100		$	149		(33)	%
As a percent of sales	18.6		%	27.6		%


	Quarter Ended March 31, 2024 vs. 2023
	% Change
Factors Contributing to Changes - Sales
Currency	—	%
Other	—	%
	—	%

Sales

Engineering segment sales were flat in the first quarter as compared to the respective 2023 periods.

Operating profit

Engineering segment operating profit decreased $49 million, or 33%, in the first quarter compared to the respective 2023 period due to prior year's benefit from higher margin on lawful wind down of projects subject to sanctions in Russia.

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Other


	Quarter Ended March 31,
(Millions of dollars)	2024			2023			Variance
Sales	$	319		$	327		(2)	%

Operating profit (loss)	$	19		$	2		850	%
As a percent of sales	6.0		%	0.6		%


	Quarter Ended March 31, 2024 vs. 2023
	% Change
Factors Contributing to Changes - Sales
Volume/price	(2)	%
Currency	—	%
Acquisitions/divestitures	—	%
	(2)	%

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 decreased $8 million for the first quarter versus the respective 2023 period. Sales decreased 2% due to lower volumes in the helium business partially offset by higher pricing in the coatings business.

Operating profit

Operating profit in Other increased $17 million in the first quarter versus the respective 2023 period. The increase in the quarter was driven primarily by an insurance recovery in the period for the coatings business partially offset by higher costs due to helium and corporate.

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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. For most 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 2024 Consolidated Sales		Exchange Rate for Income Statement		Exchange Rate for Balance Sheet
			Year-To-Date Average		March 31,	December 31,
Currency			2024	2023	2024	2023
Euro	18	%	0.92	0.93	0.93	0.92
Chinese yuan	7	%	7.19	6.84	7.22	7.10
British pound	5	%	0.79	0.82	0.79	0.79
Australian dollar	4	%	1.52	1.46	1.53	1.47
Brazilian real	4	%	4.95	5.19	5.01	4.86
Canadian dollar	3	%	1.35	1.35	1.35	1.32
Korean won	3	%	1,329	1,275	1,347	1,288
Mexican peso	3	%	16.97	18.66	16.56	16.97
Indian rupee	2	%	83.04	82.24	83.40	83.21
South African rand	1	%	18.89	17.74	18.88	18.36
Swedish krona	1	%	10.40	10.45	10.66	10.07
Thailand bhat	1	%	35.66	33.94	36.39	34.14

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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:


(Millions of dollars)	Three months ended March 31,
	2024		2023
NET CASH PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net income (including noncontrolling interests)	$	1,665	$	1,552
Non-cash charges (credits):
Add: Depreciation and amortization	949		948
Add: Deferred income taxes	(35)		4
Add: Share-based compensation	38		30
Add: Other charges, net of payments	(55)		(61)
Net income adjusted for non-cash charges	2,562		2,473
Less: Working capital	(553)		(325)
Less: Pension contributions	(11)		(10)
Other	(44)		(230)
Net cash provided by (used for) operating activities	$	1,954	$	1,908
INVESTING ACTIVITIES
Capital expenditures	(1,048)		(829)
Acquisitions, net of cash acquired	—		(808)
Divestitures, net of cash divested and asset sales	7		3
Net cash provided by (used for) investing activities	$	(1,041)	$	(1,634)
FINANCING ACTIVITIES
Debt increase (decrease) - net	1,215		717
Issuances (purchases) of common stock - net	(1,025)		(846)
Cash dividends - Linde plc shareholders	(669)		(623)
Noncontrolling interest transactions and other	(189)		(12)
Net cash provided by (used for) financing activities	$	(668)	$	(764)

Effect of exchange rate changes on cash and cash equivalents	$	(61)	$	16
Cash and cash equivalents, end-of-period	$	4,848	$	4,962

Cash Flow from Operations

Cash provided by operations of $1,954 million for the three months ended March 31, 2024 increased $46 million, or 2%, versus 2023. The increase was driven primarily by higher net income adjusted for non-cash charges, partially offset by higher net working capital and other cash requirements.

Linde estimates that total 2024 required contributions to its pension plans will be in the range of approximately $30 million to $40 million, of which $11 million has been made through March 31, 2024.

Investing

Net cash used for investing of $1,041 million for the three months ended March 31, 2024 decreased $593 million versus 2023, due to lower acquisitions, net of cash acquired partially offset by higher capital expenditures.

Capital expenditures for the three months ended March 31, 2024 were $1,048 million, $219 million higher than the prior year due primarily to investments in new plant and production equipment for backlog growth requirements.

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At March 31, 2024, Linde's sale of gas backlog of large projects under construction was approximately $4.9 billion. This represents the total estimated capital cost of large plants under construction.

There were no acquisitions for the three months ended March 31, 2024. Acquisitions, net of cash acquired were $808 million, for the three months ended March 31, 2023 and related primarily to the acquisition of nexAir in the Americas.

Divestitures, net of cash divested and asset sales for the three months ended March 31, 2024 and 2023 were $7 million and $3 million, respectively.

Financing

Cash used for financing activities was $668 million for the three months ended March 31, 2024 as compared to $764 million for the three months ended March 31, 2023. Cash provided by debt was $1,215 million in 2024 versus cash provided by debt of $717 million in 2023, driven primarily by higher net debt issuances. In the first quarter of 2024 Linde issued €700 million of 3.00% notes due in 2028, €850 million of 3.20% notes due in 2031 and €700 million of 3.40% notes due in 2036. In February 2024, Linde repaid €550 million of 1.20% notes that became due.

Net purchases of ordinary shares were $1,025 million in 2024 versus $846 million in 2023. 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 of $669 million increased $46 million from 2023 driven primarily by a 9% increase in quarterly dividends per share from $1.275 per share to $1.39 per share, partially offset by lower shares outstanding. Cash used for Noncontrolling interest transactions and other was $189 million for the three months ended March 31, 2024 versus cash used of $12 million for the respective 2023 period.

The company continues to believe it has sufficient operating flexibility, cash, and funding sources to meet its business needs around the world. The company had $4.8 billion of cash as of March 31, 2024, and has a $5 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 March 31, 2024. 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.






Adjusted Operating Profit and Operating Margin
1,933




2,206

Reported percentage change	8	%
Adjusted percentage change	6	%

8,193

%
%

Adjusted Depreciation and amortization
948

698

Adjusted Other Income (Expense) - net
(5)

—






Adjusted Interest Expense - Net
37

46

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Adjusted Income Taxes (a)
430




532

Adjusted Effective Tax Rate (a)
1,941




2,205

430
%

532
%

Income from Equity Investments
41

59

Adjusted Noncontrolling Interests
(36)

(39)

Adjusted Net Income - Linde plc (b)
1,516




1,693

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Adjusted Diluted EPS (b)
3.06




3.42

Reported percentage change	9	%
Adjusted percentage change	10	%

Adjusted EBITDA and % of Sales
1,516





2,922



2,963

8,193
% of sales
%
%

*Indicates a management contract or compensatory plan or arrangement.

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SIGNATURE

Linde plc and Subsidiaries

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						Linde plc

						(Registrant)

Date: May 2, 2024						By: /s/ Kelcey E. Hoyt

						Kelcey E. Hoyt
						Chief Accounting Officer



Note 1. Summary of Significant Accounting Policies			9

Note 2 . Supplemental Information			10

Note 3 . Debt			11

Note 4 . Financial Instruments			11

Note 5 . Fair Value Disclosures			13

Note 6 . Earnings Per Share – Linde plc Shareholders			15

Note 7 . Retirement Programs			16

Note 8 . Commitments and Contingencies			16

Note 9 . Segments			18

Note 10 . Equity			19

Note 11 . Revenue Recognition			19

LINDE PLC - Quarter Report: 2024 March (Form 10-Q)

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